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+Prospectus summary This summary highlights information contained elsewhere in this prospectus. This summary sets forth the material terms of this offering but does not contain all of the information that you should consider before deciding to invest in our Common Stock. You should read the entire prospectus carefully before making an investment decision, especially the risks of investing in our Common Stock discussed in the section titled Risk factors and our financial statements and related notes appearing elsewhere in this prospectus. Unless the context otherwise requires, the terms Company, ALC, we, our and us refer to Air Lease Corporation and its subsidiaries. Our company Air Lease Corporation is an aircraft leasing company that was launched in February 2010 by aviation industry pioneer Steven F. Udvar-H zy. We are principally engaged in purchasing commercial aircraft which we, in turn, lease to airlines around the world to generate attractive returns on equity. We lease our aircraft to airlines pursuant to net operating leases that require the lessee to pay for maintenance, insurance, taxes and all other aircraft operating expenses during the lease term. As of June 30, 2011, we owned 65 aircraft of which 13 were new aircraft and 52 were used aircraft. Our fleet is comprised of fuel-efficient and newer technology aircraft, consisting of narrowbody (single-aisle) aircraft, such as the Airbus A319/320/321 and the Boeing 737-700/800, and select widebody (twin-aisle) aircraft, such as the Airbus A330-200 and the Boeing 777-300ER. We manage lease revenues and take advantage of changes in market conditions by acquiring a balanced mix of aircraft types, both new and used. Our used aircraft are generally less than five years old. All of the aircraft we own were leased as of June 30, 2011. Additionally, as of June 30, 2011, we had entered into binding and non-binding purchase commitments to acquire an additional 234 new aircraft through 2020 and nine used aircraft in 2011. Through careful management and diversification of our leases and lessees by geography, lease term, and aircraft age and type, we mitigate the risks of owning and leasing aircraft. We believe that diversification of our leases and lessees reduces the risks associated with individual lessee defaults and adverse geopolitical and regional economic events. We manage lease expirations in our fleet portfolio over varying time periods in order to minimize periods of concentrated lease expirations and mitigate the risks associated with cyclical variations in the airline industry. We target to place new aircraft under leases with a minimum term of six years for narrowbody aircraft and nine years for widebody aircraft. As of June 30, 2011, the weighted average lease term remaining on our current leases was 6.1 years, and we leased the aircraft in our portfolio to 43 airlines in 26 countries. We operate our business on a global basis, providing aircraft to airline customers in every major geographical region, including emerging and high-growth markets such as Asia, the Pacific Rim, Latin America, the Middle East and Eastern Europe. According to AVITAS, many of these emerging markets are experiencing increased demand for passenger airline travel and have lower market saturation than more mature markets such as North America and Western Europe. In addition, airlines in some of these emerging markets have fewer financing alternatives, enabling us to command relatively higher lease rates compared to more mature markets. With our well-established industry contacts and access to capital, we believe we will be able to continue successfully implementing our business strategy worldwide. As of June 30, 2011, we The information in this prospectus is not complete and may be changed. The selling stockholders may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and the Company is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. Subject to Completion, dated September 2, 2011. Prospectus 59,981,528 shares of Class A Common Stock 1,829,339 shares of Class B Non-Voting Common Stock This prospectus relates to the following shares of Class A Common Stock and Class B Non-Voting Common Stock of Air Lease Corporation (together, the Common Stock ), all of which may be offered for sale by the selling stockholders named in this prospectus: (i) 59,981,528 shares of Class A Common Stock, including up to 482,625 shares of Class A Common Stock issuable upon exercise of outstanding warrants, and (ii) 1,829,339 shares of Class B Non-Voting Common Stock. The selling stockholders acquired the shares of Common Stock offered by this prospectus in a private placement. We are registering the offer and sale of the shares of Common Stock to satisfy registration rights we granted to the selling stockholders. We are not selling any shares of Common Stock under this prospectus and we will not receive any proceeds from the sale of Common Stock by the selling stockholders. The shares of Common Stock to which this prospectus relates may be offered and sold from time to time directly by the selling stockholders or alternatively through underwriters or broker-dealers or agents on terms to be determined at the time of sale. The shares of Common Stock may be sold in one or more transactions, at fixed prices, at prevailing market prices at the time of sale or at negotiated prices. Because all of the shares being offered under this prospectus are being offered by selling stockholders, we cannot determine the price or prices at which the shares of Common Stock may be sold under this prospectus. To the extent required, the names of any agent or broker-dealer and the applicable commissions or discounts and any other required information with respect to any particular offer will be set forth in a prospectus supplement that will accompany this prospectus. A prospectus supplement also may add, update or change information contained in this prospectus. We recently completed our initial public offering of 34,825,470 shares of our Class A Common Stock. Our Class A Common Stock is listed on the New York Stock Exchange, or the NYSE, under the symbol AL. On September 1, 2011, the last reported sale price of our Class A Common Stock on the NYSE was $22.37 per share. Our Class B Non-Voting Common Stock is not currently listed on any national securities exchange or market system. Investing in our Common Stock involves a high degree of risk. See Risk factors beginning on page 14. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. The date of this prospectus is , 2011. have entered into leases and future lease commitments with airlines in Australia, Brazil, Bulgaria, Canada, China, Columbia, the Czech Republic, Ethiopia, France, Germany, India, Indonesia, Ireland, Italy, Japan, Kazakhstan, Kenya, Malaysia, Mexico, Mongolia, the Netherlands, New Zealand, Norway, the Republic of Seychelles, Russia, South Africa, South Korea, Spain, Sri Lanka, Thailand, Trinidad Tobago, Turkey, United Arab Emirates, the United Kingdom, the United States and Vietnam. While our primary business is to own and lease aircraft, we also plan to provide fleet management and remarketing services to third parties for a fee. These services are similar to those we perform with respect to our fleet, including leasing, re-leasing, lease management and sales services. Air Lease Corporation is led by a highly experienced management team that includes Mr. Udvar-H zy, our Chairman and Chief Executive Officer, John L. Plueger, our President and Chief Operating Officer, Grant A. Levy, our Executive Vice President, General Counsel and Secretary, Marc H. Baer, our Executive Vice President, Marketing, Alex A. Khatibi, our Executive Vice President, Jie Chen, our Executive Vice President and Managing Director of Asia, James C. Clarke, our Senior Vice President and Chief Financial Officer, Gregory B. Willis, our Vice President, Finance, and Chief Accounting Officer, and John D. Poerschke, our Senior Vice President of Aircraft Procurement and Specifications. On average, our senior management team has over 23 years of experience in the aviation industry. Operations to date Current fleet As of June 30, 2011, our aircraft fleet consisted of 55 narrowbody aircraft and ten widebody aircraft, and the weighted average age of our aircraft fleet was 3.6 years. Aircraft purchase commitments As of June 30, 2011, we had commitments to acquire a total of 234 new aircraft and nine used aircraft at an estimated aggregate purchase price (including adjustment for anticipated inflation) of approximately $11.9 billion for delivery as shown below. Aircraft Type 2011 (1) 2012 2013 2014 2015 Thereafter Total Airbus A319-100 1 1 Airbus A320/321-200 5 10 13 12 7 47 Airbus A320/321 NEO(2)(3) 50 50 Airbus A330-200/300 6 6 12 Boeing 737-700 2 2 Boeing 737-800(2) 2 3 12 12 14 37 80 Boeing 767-300ER 2 2 Boeing 777-300ER(3) 2 3 5 Boeing 787-9(3) 4 4 Embraer E175/190 11 19 30 ATR 72-600 2 8 10 Total 31 46 25 26 24 91 243 (1) Of the 31 aircraft that we will acquire in the remainder of 2011, the following nine aircraft will be used aircraft: the Airbus A319-100, one Airbus A320-200, one Airbus A330-200, both Boeing 737-700s, both Boeing 737-800s and both Boeing 767-300ERs. (2) We have cancellation rights with respect to 14 of the Airbus A320/321 NEO aircraft and four of the Boeing 737-800 aircraft. (3) As of June 30, 2011, all of the Airbus A320/321 NEO aircraft, the Boeing 777-300ER aircraft and the Boeing 787-9 aircraft were subject to non-binding memoranda of understanding for the purchase of these aircraft. Our new aircraft are being purchased pursuant to binding purchase agreements with each of Airbus S.A.S. ( Airbus ), The Boeing Company ( Boeing ), Embraer S.A. ( Embraer ) and Avions de Transport R gional ( ATR ), or through sale-leaseback transactions with other airline customers, other than, as of June 30, 2011, the Airbus A320/A321 NEO aircraft, the Boeing 777-300ER aircraft and the Boeing 789-9 aircraft, the purchase of which were subject to non-binding memoranda of understanding. Under certain circumstances, we have the right to alter the mix of aircraft types that Table of contents Page Industry and market data i Prospectus summary 1
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+This summary highlights information contained elsewhere in this prospectus. This summary may not contain all the information that may be important to you, and we urge you to read this entire prospectus carefully, including the Risk Factors, Business and Management s Discussion and Analysis of Financial Condition and Results of Operations sections and our consolidated financial statements and notes to those statements, included elsewhere in this prospectus, before deciding to invest in our class A shares. Our Business Overview We are the world s largest McDonald s franchisee in terms of systemwide sales and number of restaurants, according to McDonald s, representing 5.1% of McDonald s global sales in 2010, and we are the largest fast food chain in Latin America and the Caribbean in terms of systemwide sales, according to Euromonitor, with a regional market share in terms of sales of 10.4% in 2010, according to Euromonitor. We have the exclusive right to own, operate and grant franchises of McDonald s restaurants in 20 countries and territories in Latin America and the Caribbean, including Argentina, Aruba, Brazil, Chile, Colombia, Costa Rica, Cura ao, Ecuador, French Guiana, Guadeloupe, Martinique, Mexico, Panama, Peru, Puerto Rico, Trinidad and Tobago (since June 3, 2011), Uruguay, the U.S. Virgin Islands of St. Croix and St. Thomas, and Venezuela, which we refer to as the Territories. As of June 30, 2011, we operated or franchised 1,767 McDonald s-branded restaurants, which represented 6.6% of McDonald s total franchised restaurants worldwide. In the six months ended June 30, 2011 and 2010, we paid $80.0 million and $64.0 million, respectively, in royalties to McDonald s (not including royalties paid on behalf of our franchisees). In 2010 and 2009, we paid $141.0 million and $121.9 million, respectively, in royalties to McDonald s (not including royalties paid on behalf of our franchisees). We commenced operations on August 3, 2007, as a result of our purchase of McDonald s operations and real estate in the Territories (except for Trinidad and Tobago), which we refer to collectively as the McDonald s LatAm business, and the acquisition of McDonald s franchise rights pursuant to the MFAs, as described below, which, together with the purchase of the McDonald s LatAm business, we refer to as the Acquisition. We operate McDonald s-branded restaurants under two different operating formats, those directly operated by us, or Company-operated restaurants, and those operated by franchisees, or franchised restaurants. As of June 30, 2011, of our 1,767 McDonald s-branded restaurants in the Territories, 1,302 (or 73.7%) were Company-operated restaurants and 465 (or 26.3%) were franchised restaurants. We generate revenues primarily from two sources: sales by Company-operated restaurants and revenues from franchised restaurants that primarily consist of rental income, which is generally based on the greater of a flat fee or a percentage of sales reported by franchised restaurants. We own the land for 510 of our restaurants (totaling approximately 1.2 million square meters) and the buildings for all but 12 of our restaurants. Our business has grown significantly since the Acquisition: we have increased our presence in existing and new markets in the Territories by opening 253 restaurants (185 Company-operated and 68 franchised), 137 McCaf locations, where we sell a variety of customizable beverages, and 478 Dessert Centers, where we sell desserts, since the Acquisition. The McDonald s brand s market share of the fast food industry in Latin America and the Caribbean in terms of sales has increased from 10.1% in 2007 to 10.4% in 2010 according to Euromonitor. We have increased our total revenues by 15.8% from 2008 to 2010. More recently, our consolidated total revenues, net income and Adjusted EBITDA (as defined under Presentation of Financial and Other Information Other Financial Measures ) increased 25.9%, 39.1% and 21.6%, respectively, in the six months ended June 30, 2011 as compared to the six months ended June 30, 2010, to $1,715.1 million, $49.7 million and $140.2 million, respectively. In addition, our consolidated total revenues, net income and Adjusted EBITDA increased 13.2%, 32.5% and 12.3%, respectively, in 2010 as compared to 2009, to $3,018.1 million, $106.0 million and $299.1 million, respectively. Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. Subject to completion Preliminary Prospectus dated October 17, 2011 PROSPECTUS 40,432,690 Class A Shares Arcos Dorados Holdings Inc. (incorporated in the British Virgin Islands) The selling shareholders named in this prospectus are offering a total of 40,432,690 class A shares, no par value, of Arcos Dorados Holdings Inc. The selling shareholders will receive all of the net proceeds from this offering. The underwriters may also purchase up to 4,043,268 class A shares from the selling shareholders within 30 days to cover over-allotments, if any. The selling shareholders will receive the net proceeds from any class A shares sold pursuant to the underwriters over-allotment option. Our class A shares are listed on the New York Stock Exchange under the symbol ARCO. On October 14, 2011, the last sale price of our class A shares as reported by the New York Stock Exchange was $25.74 per class A share. Neither the U.S. Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. Investing in our class A shares involves risks. See Risk Factors beginning on page 18 of this prospectus. Per Share Total Public offering price $ $ Underwriting discounts and commissions $ $ Proceeds, before expenses, to selling shareholders $ $ Our class A shares will be ready for delivery on or about , 2011. J.P. Morgan Morgan Stanley Citigroup BofA Merrill Lynch Itau BBA Credit Suisse The date of this prospectus is , 2011. Table of Contents We have not authorized anyone to provide any information other than that contained in this prospectus or in any free writing prospectus prepared by or on behalf of us or to which we may have referred you. We take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. We and the underwriters have not authorized any other person to provide you with different or additional information. Neither we nor the underwriters are making an offer to sell the class A shares in any jurisdiction where the offer or sale is not permitted. This offering is being made in the United States and elsewhere solely on the basis of the information contained in this prospectus. You should assume that the information appearing in this prospectus is accurate only as of the date on the front cover of this prospectus, regardless of the time of delivery of this prospectus or any sale of the class A shares. Our business, financial condition, results of operations and prospects may have changed since the date on the front cover of this prospectus. Table of Contents We divide our operations into four geographical divisions: Brazil; the Caribbean division, consisting of Aruba, Cura ao, French Guiana, Guadeloupe, Martinique, Puerto Rico, Trinidad and Tobago and the U.S. Virgin Islands of St. Croix and St. Thomas; the North Latin America division, or NOLAD, consisting of Costa Rica, Mexico and Panama; and the South Latin America division, or SLAD, consisting of Argentina, Chile, Colombia, Ecuador, Peru, Uruguay and Venezuela. As of June 30, 2011, 35.4% of our restaurants were located in Brazil, 29.7% in SLAD, 26.8% in NOLAD and 8.1% in the Caribbean division. We focus on our customers by managing operations at the local level, including marketing campaigns and special offers, menu management and monitoring customer satisfaction, while leveraging our size by conducting administrative and strategic functions at the divisional or corporate level, as appropriate. The following table presents certain operating results and data by operating segment: As of and for the Six Months Ended June 30, As of and for the Years Ended December 31, 2011 2010 2010 2009 2008 2007(1) (in thousands of U.S. dollars, except percentages) (unaudited) Total Revenues Brazil $ 892,063 $ 718,520 $ 1,595,571 $ 1,200,742 $ 1,237,208 $ 461,868 Caribbean division 132,056 127,385 260,617 244,774 231,734 90,796 NOLAD 171,743 141,464 305,017 240,333 232,083 91,932 SLAD(2) 519,284 374,442 856,913 979,627 905,817 296,743 Total 1,715,146 1,361,811 3,018,118 2,665,476 2,606,842 941,339 Adjusted EBITDA(3) Brazil $ 128,566 $ 99,241 $ 250,606 $ 160,037 $ 144,965 $ 39,800 Caribbean division 6,282 9,531 23,556 21,167 22,013 13,099 NOLAD 7,868 4,202 15,400 3,918 15,961 10,655 SLAD(2) 42,933 32,742 83,998 129,889 138,683 36,530 Corporate and others (45,455 ) (30,379 ) (74,446 ) (48,628 ) (33,648 ) (9,187 ) Total 140,194 115,337 299,114 266,383 287,974 90,897 Adjusted EBITDA Margin(4) Brazil 14.4 % 13.8 % 15.7 % 13.3 % 11.7 % 8.6 % Caribbean division 4.8 7.5 9.0 8.6 9.5 14.4 NOLAD 4.6 3.0 5.0 1.6 6.9 11.6 SLAD(2) 8.3 8.7 9.8 13.3 15.3 12.3 Total 8.2 8.5 9.9 10.0 11.0 9.7 Systemwide comparable sales growth(5)(6) 13.7 % 14.9 % 5.5 % Brazil 9.7 17.5 2.7 Caribbean division 0.9 4.7 4.2 NOLAD 8.5 9.1 (1.7 ) SLAD 29.5 16.1 12.2 Table of Contents This is an offering by certain selling shareholders of Arcos Dorados Holdings Inc. and not by McDonald s Corporation or any of its affiliates. Table of Contents (1) Data for the year ended December 31, 2007 includes only five months of operations, beginning August 3, 2007, the date on which we commenced operations in the Territories. (2) Currency controls in Venezuela and related accounting changes have a significant effect on our results of operations and impact the comparability of our results of operations in 2010 compared to 2009. See Management s Discussion and Analysis of Financial Condition and Results of Operations Factors Affecting Comparability of Results Impact of Venezuelan Currency Controls and Related Accounting Changes on Our Results of Operations for information regarding the translation of the results of our Venezuelan operations. (3) Adjusted EBITDA is a measure of our performance that is reviewed by our management. Adjusted EBITDA does not have a standardized meaning and, accordingly, our definition of Adjusted EBITDA may not be comparable to Adjusted EBITDA as used by other companies. For our definition of Adjusted EBITDA and a reconciliation thereof, see Presentation of Financial and Other Information Other Financial Measures and Selected Financial and Other Information. (4) Adjusted EBITDA margin is Adjusted EBITDA divided by total revenues, expressed as a percentage. (5) Systemwide comparable sales growth refers to the change in our restaurant sales in one period from a comparable period for restaurants that have been open for thirteen months or longer. Systemwide comparable sales growth is provided and analyzed on a constant currency basis, which means it is calculated using the same exchange rate over the periods under comparison to remove the effects of currency fluctuations from this trend analysis. We believe this constant currency measure provides a more meaningful analysis of our business by identifying the underlying business trend, without distortion from the effect of foreign currency movements. (6) Systemwide comparable sales growth is presented on a systemwide basis, which means it includes sales by our Company-operated restaurants and our franchised restaurants. While sales by our franchisees are not recorded as revenues by us, we believe the information is important in understanding our financial performance because these sales are the basis on which we calculate and record franchised revenues and are indicative of the financial health of our franchisee base. Our Industry We operate in the quick-service restaurant, or QSR, sub-segment of the fast food segment of the Latin American and Caribbean food service industry. In Latin America and the Caribbean, the fast food segment has benefited from the region s increasing modernization, as people in more densely populated areas adopt lifestyles that increasingly seek convenience, speed and value. According to Euromonitor, fast food segment sales in Latin America and the Caribbean are expected to total an estimated $43.2 billion (nominal value) in 2011. Euromonitor estimates that the fast food segment in Latin America and the Caribbean grew 69.1% in the period from 2005 to 2010, which is 18 percentage points higher than the growth of the Latin American and Caribbean food service industry as a whole, representing a compound annual growth rate of 11.1%, which in turn is significantly higher than the 2.4% compound annual growth rate of the U.S. fast food segment. Euromonitor estimates that QSRs have captured 59.8% of market share within the fast food segment in Latin America and the Caribbean due to the popularity of standardized menus, the consistency of products and services, cost efficient operating systems, the development of products targeted to meet consumer demands, economies of scale, convenience, speed and value. Euromonitor estimates that the growth of QSRs in Latin America and the Table of Contents Caribbean will outpace the growth of the fast food segment generally in the near future, as QSRs tend to be better capitalized and are therefore able to expand through additional restaurant openings and innovation, and as consumers increasingly prefer the convenience and reliability associated with a well-established brand. Euromonitor estimates that the QSR sub-segment in Latin America and the Caribbean grew 63.4% during the period from 2005 to 2010. McDonald s, Burger King, Subway and KFC have positioned themselves as market leaders within the QSR segment. According to Euromonitor, the McDonald s brand is the largest in Latin America and the Caribbean with more than three times the sales of Burger King, our closest competitor, in Latin America and the Caribbean and with more sales than our next five competitors combined. In addition to these international brands, strong local brands, such as Habib s, Bob s, Servicompras and Giraffa s, exist in certain key markets. The chart below indicates the percentage market share held by certain major brands in the fast food segment in Latin America and the Caribbean for 2010: Source: Euromonitor Our Strengths We believe the following are our competitive strengths: Superior Brand and Image. The McDonald s brand is one of the top ten most widely recognized consumer brands in the world, according to Millward Brown Optimor, and it is one of the most widely recognized consumer brands in Latin America and the Caribbean, according to Euromonitor. In addition, we believe that in Latin America and the Caribbean the McDonald s brand benefits from an aspirational cachet as a destination restaurant with a reputation for safe, fresh and good-tasting food in an attractive setting. With the exclusive right to own, operate and grant franchises of McDonald s restaurants in 20 countries and territories in Latin America and the Caribbean, we believe we represent an important part of the McDonald s system. As of June 30, 2011, our 1,767 restaurants represented 6.6% of McDonald s total franchised restaurants. Leading Position in a Region with Favorable Demographics and Economic Conditions. We are the leading fast food chain in Latin America and the Caribbean, according to Euromonitor, with a 10.4% market share, Table of Contents which was more than three times that of our closest competitor, based on systemwide sales in 2010. As a business focused on young adults in the 14 to 35 age range and families with children, our operations have benefited, and we expect to continue to benefit, from our Territories population size, younger age profile when compared to more developed markets and improving socio- economic conditions. Based on data from the United Nations Economic Commission for Latin America and the Caribbean, the Territories represented a market of approximately 575.9 million people in 2010, of which approximately 28% are under 14 years old and 46% are under 25 years old. In addition, improvements in macroeconomic conditions in the Territories are leading to a modernization of consumption patterns and increased affordability of our products across socio-economic segments, and we believe we are well placed to capitalize on these trends. For example, according to the Brazilian Ministry of Finance, 29 million Brazilians joined the middle class between 2003 and 2009 and the percentage of the Brazilian population living in poverty decreased by 45.6% during the same period. Moreover, according to Euromonitor, the percentage of households in Brazil with annual disposable incomes of $5,000 or more was greater than that in China and India in 2010. Pan-regional Market Leader with Geographical Diversification. As the largest QSR chain in Latin America and the Caribbean, according to Euromonitor, our operations include some of the region s largest markets such as Brazil, Mexico, Argentina, Puerto Rico and Colombia. We believe our diversified market presence reduces our dependence on any one market and helps stabilize the impact of individual countries economic cycles on our revenues. Our leading market position and in-depth market knowledge across the Territories also allow us to capitalize on demand for new quick service restaurants in an efficient manner. Furthermore, our long-standing presence in the region has allowed us to build a significant property portfolio with hard-to-replicate locations in key markets across the region that enhance our customers experience and ultimately support our brand and market position. Operational Excellence Translated into Solid Financial Performance. We employ many of the operating procedures used by McDonald s prior to the Acquisition. We support our McDonald s-based training programs with an extensive set of quality controls throughout production, processing and distribution and also in our restaurants, where we monitor restaurant managers performance and use ongoing external customer satisfaction opportunity reports that analyze key operating indicators. In addition, we develop long-term relationships with reliable suppliers who comply with McDonald s rigorous quality standards. These procedures allow us to consistently provide our customers with a high-quality experience in both Company-operated and franchised restaurants across the Territories, thereby allowing us to increase the average check on a constant currency basis as well as the number of transactions per restaurant since the Acquisition. Experienced Management Team and Lead Shareholder. Our senior management team is led by Mr. Woods Staton, our Chairman, Chief Executive Officer, or CEO, and controlling shareholder. Prior to the Acquisition, Mr. Staton was the joint venture partner of McDonald s Corporation in Argentina for over 20 years and was president of McDonald s South Latin America division from 2004 until the Acquisition. Mr. Staton will not be selling any shares in this offering. Our senior management team is comprised of committed, experienced restaurant industry executives, almost all of whom have worked for McDonald s and/or with Mr. Staton in non-McDonald s businesses for over 10 years. Moreover, none of our divisional presidents, vice presidents, chief financial officer, chief operating officer or CEO have left the Company since the Acquisition. The experience of our management team has been a critical component in enhancing operational performance after the Acquisition. Our Strategy We believe there are significant opportunities to further enhance our profitability, grow our business and expand our leadership in the Latin American and Caribbean QSR market by executing the following strategies: Table of Contents Focus Growth in Selected Countries. We believe we have significant opportunities to increase our presence and market share in those countries that we believe offer the best growth prospects and those that are most economically and financially stable, such as Brazil, Chile, Colombia, Mexico and Peru. For example, in many of the Territories, including Argentina, Brazil, Chile, Colombia, Ecuador, Mexico and Peru, we believe there are opportunities for growth as the ratio of gross domestic product purchase power parity, or GDP PPP, per McDonald s-branded restaurant, a measure we use to determine penetration, is at least 2.5 times greater than in the United States. As the macroeconomic conditions of the countries in the Territories continue to improve, we believe we will have significant opportunities to expand our business as consumers benefit from expanding purchasing power and higher levels of disposable income, which in turn increase consumer demand for our safe, fresh and good-tasting food, comfortable settings and affordable prices as aspects of food convenience. We expect to continue to open new restaurants opportunistically as we identify attractive markets throughout the Territories. In addition, we have committed to open at least 250 new restaurants throughout the Territories from 2011 to 2013 under our agreement with McDonald s, and in the first three years since the Acquisition (from August 3, 2007 to December 31, 2010), we exceeded our restaurant opening commitments under our agreement with McDonald s by 45.0%. We estimate that the cost to comply with our restaurant opening commitments under our MFAs with McDonald s, as described below, from 2011 to 2013 will be between $100 million and $250 million (not including restaurants we intend to open with the proceeds of the 2016 notes, as further described below), depending on, among other factors, the type and location of restaurants we open. Our expansion strategy seeks to continue capitalizing on the positive economic developments in these markets and the untapped demand to fuel our growth. Continue Our Restaurant Reimaging and Brand Extension Program. We are undertaking an extensive restaurant reimaging and brand extension program throughout the Territories. Our efforts focus on remodeling existing restaurants, creating an inviting, contemporary and highly aspirational environment. We seek to obtain compelling returns on investment, and our restaurants that have undergone reimaging have experienced an additional estimated 5.8% increase in sales per restaurant in the last three years over the comparable sales growth experienced by restaurants which have not been reimaged in the same period. As of June 30, 2011, 549, or 31.1%, of our restaurants had been opened or reimaged since the Acquisition. Our brand extension efforts focus on the development of additional McCaf locations and Dessert Centers. The McCaf concept differentiates the McDonald s brand and attracts new customers from different market segments to our existing restaurants, particularly during breakfast and after lunch. With an average return on investment from McCaf locations of 46.0% in the first half of 2011, the McCaf concept is well-suited for restaurants in large-scale shopping centers and commercial areas. McCaf locations have been a key factor in adding value to our customers experience and represented 8.9% of the total transactions and 5.1% of total sales of the restaurants in which they were located in the first half of 2011. Our Dessert Centers are conveniently located to attract customers, thereby serving as important transaction generators and providing an effective method of extending our brand presence to non-traditional areas. Dessert Centers represented 34.1% of our transactions and 11.3% of our total sales in the first half of 2011 and, with a return on investment of 206.8% in the first half of 2011, provide a low-risk investment alternative. From the Acquisition through June 30, 2011, we have opened 137 McCaf locations and 478 Dessert Centers. We believe our restaurant reimaging and brand extension program, which leverages McDonald s brand relevance and competitive position to generate growth, has been a key source of our growth since the Acquisition. Expand Product Offerings and Marketing Initiatives. We are required under our agreement with McDonald s to spend at least 5% of our sales on advertising and promotional activities. We intend to continue our promotional campaigns, such as our successful Big Pleasures, Small Prices value menu program in Brazil, through which we offer a rotating selection of our existing products at reduced prices, to increase traffic to our restaurants. We will continue to develop innovative and locally tailored product offerings, such as breakfast, bone-in-chicken, low-calorie and low-sodium products, and value items, to increase restaurant traffic and expand our customer base. To support these product offerings, we will Table of Contents sponsor regionally popular sporting events such as the Copa Libertadores soccer tournament and leverage global marketing initiatives led by McDonald s, such as sponsorship of major sporting events and participation in various movie promotions. We believe these branding events provide a cost-effective manner to increase our market recognition. Maintain Our Focus on Cost Savings Related to Operating Efficiencies. We are focused on streamlining our operations further by reducing costs at the corporate and operating level, including expanding our shared service center, which provides centralized administrative services such as payroll, accounts payable and accounts receivable. Additionally, we intend to further develop and increase our use of local suppliers where appropriate to reduce both import and transportation costs and the volatility of our supply costs. We continue to leverage our operating scale by centralizing our marketing and strategic operations, including menu management, Happy Meal promotions and designs, without losing sight of the need to cater to local preferences. We are currently rolling out a new kitchen operating platform in our major markets called Made For You, or MFY, which we believe will allow us to improve product quality and labor productivity and to reduce food waste. Our History and Relationship with McDonald s McDonald s Corporation has a longstanding history in Latin America and the Caribbean, dating to the opening of its first restaurant in Puerto Rico in 1967. Since then, McDonald s expanded its presence across the region as consumer markets and opportunities arose, opening its first stores in Brazil in 1979, in Mexico and Venezuela in 1985 and in Argentina in 1986. We commenced operations on August 3, 2007, as a result of the Acquisition of McDonald s LatAm business. Woods Staton, our Chairman, CEO and controlling shareholder, was the joint venture partner of McDonald s Corporation in Argentina for over 20 years prior to the Acquisition and also served as President of McDonald s South Latin America division from 2004 until the Acquisition. Our senior management team is comprised mostly of executives who had previously worked in McDonald s LatAm business or with Mr. Staton. We own our McDonald s franchise rights pursuant to a Master Franchise Agreement for all of the Territories except Brazil, which we refer to as the MFA, and a separate, but substantially identical, Master Franchise Agreement for Brazil, which we refer to as the Brazilian MFA. We refer to the MFA and the Brazilian MFA, as amended or otherwise modified to date, collectively as the MFAs. The MFAs set forth terms such as the initial 20-year terms of the franchises (our franchise rights for French Guiana, Guadeloupe and Martinique have 10-year terms which we have the option to extend by 10 years), our right to operate and franchise McDonald s-branded restaurants and the franchise fees payable by us to McDonald s. We offer McDonald s core menu items, including the Big Mac, Happy Meal and Quarter Pounder. Since the Acquisition through June 30, 2011, we have opened 253 new restaurants. We have also undertaken an extensive restaurant reimaging program throughout the Territories, expanded the number of McCaf and Dessert Center locations and focused on adding locally relevant menu items, such as breakfast, bone-in-chicken, low-calorie and low-sodium products, and value items. We have also integrated many of our operations, including our supply chain and distribution functions. Our Corporate Structure We were incorporated on December 9, 2010 under the laws of the British Virgin Islands as a direct, wholly-owned subsidiary of Arcos Dorados Limited, the prior holding company for the Arcos Dorados business. On December 13, 2010, Arcos Dorados Limited effected a downstream merger into and with us, with us as the surviving entity. Following the merger, we replaced Arcos Dorados Limited in the corporate structure and replicated its governance structure. We conduct substantially all our business through our indirect, wholly-owned Dutch subsidiary Arcos Dorados B.V. Our majority shareholder is Los Laureles Ltd., a British Virgin Islands company, which is beneficially owned by Mr. Staton, our Chairman and CEO. Under the MFAs, Los Laureles Ltd. is required to hold at all times at least 51% of our voting interests, which is accomplished through its ownership of 100% of the class B shares of Arcos Table of Contents Dorados Holdings Inc., each having five votes per share. Los Laureles Ltd. has established a voting trust with respect to the voting interests in us held by Los Laureles Ltd. and has contributed its interests in Los Laureles Ltd. to a trust whose sole beneficiaries are Mr. Staton and his descendants. See Principal and Selling Shareholders Los Laureles Ltd. Arcos Dorados B.V. owns all the equity interests of LatAm, LLC, the master franchisee, and owns, directly or indirectly, all the equity interests of the subsidiaries operating our restaurants in the Territories. On April 19, 2011, we completed our initial public offering and listed our class A shares on the New York Stock Exchange, or NYSE. In the initial public offering, we sold 9,529,412 class A shares and certain selling shareholders sold 74,977,376 class A shares, including 11,022,624 class A shares sold to the underwriters pursuant to the underwriters over-allotment option. The following chart shows our corporate structure after giving effect to the contemplated issuance and sale of 40,432,690 class A shares in this offering, assuming no exercise of the underwriters over-allotment option. (1) Los Laureles Ltd. is beneficially owned by Mr. Staton, our Chairman and CEO. See Principal and Selling Shareholders Los Laureles Ltd. (2) Includes operating subsidiaries held directly and, in some cases, indirectly through certain intermediate subsidiaries. Other than as described above, all of our significant subsidiaries are wholly owned by us, except Arcos Dorados Argentina S.A., of which Mr. Staton owns 0.03%. Recent Developments and Guidance On June 3, 2011, we declared a dividend totaling $12.5 million, which was paid on July 6, 2011 to our registered shareholders as of June 17, 2011. In October 2009, our subsidiary, Arcos Dorados B.V., issued senior notes for an aggregate principal amount of $450 million that mature on October 1, 2019 and bear interest of 7.5% per year, which we refer to as the 2019 notes. On June 13, 2011, Arcos Dorados B.V. exercised its option to redeem on July 18, 2011 a total of $141.4 million of the aggregate principal amount of the 2019 notes. Following the redemption, a total of $308.6 million of the Table of Contents aggregate principal amount of the 2019 notes remains outstanding. As a result of the redemption, we incurred a one-time loss of $13.9 million in July 2011, including $2.3 million related to the accelerated amortization of deferred financing costs and $11.6 million related to the redemption of the 2019 notes at a redemption price above the book value of the 2019 notes. In July 2011, we issued R$400 million aggregate principal amount of notes due 2016 bearing interest of 10.25% per year, payable in U.S. dollars, which we refer to as the 2016 notes. The 2016 notes are denominated in reais, but payment of principal and interest will be made in U.S. dollars. The 2016 notes mature on July 13, 2016. Interest will be paid semi-annually in arrears on January 13 and July 13 of each year, beginning on January 13, 2012. The proceeds from the issuance of the 2016 notes will be used to satisfy a capital expenditure program agreed upon with McDonald s, including to open at least 100 restaurants and to reimage others, and for general corporate purposes, including the settlement of our cross-currency interest rate swaps and our mirror swaps (as described below). On July 19, 2011 and July 20, 2011, we settled our cross-currency interest rate swaps and our mirror swaps, paying $95.5 million and collecting $3.9 million, respectively. As a result of these settlements, we recognized a loss amounting to $5.2 million in July of 2011, which includes accrued interest, the monthly effect of the change in the real forward rate curve and the cost of the unwind. On August 3, 2011, our subsidiary, Arcos Dorados B.V., entered into a committed revolving credit facility with Bank of America, N.A., as lender, for $50 million with a maturity date one year from the date of closing thereof. The obligations of Arcos Dorados B.V. under the revolving credit facility are jointly and severally guaranteed by certain of our subsidiaries on an unconditional basis. This revolving credit facility will permit us to borrow from time to time to cover our working capital needs and for other general corporate purposes. Finally, on September 13, 2011, we declared a dividend totaling $12.5 million, which was paid on October 5, 2011 to our registered shareholders as of September 27, 2011. Expectations for Third Quarter 2011 Results On a constant currency basis, our sales growth for the third quarter of 2011 improved upon the growth we experienced in the first half of the year. As evidence of this trend, we expect our systemwide comparable sales growth in the third quarter of 2011 to be within a range of 14.8% to 16.2%. However, in light of certain factors which have affected our results in prior periods and which we have previously reported, we expect our net income for the third quarter of 2011 when compared to the net income for the third quarter of 2010 to be negatively impacted by: an increase in compensation expense related to the outstanding awards granted under our long-term incentive plan (in light of the increase in the current quoted market price of our class A shares (based on a closing price of $23.19 per share as of September 30, 2011, compared to $21.09 as of June 30, 2011)), the one-time charges associated with the partial redemption of our 2019 Notes (as further described above), and the depreciation of certain local currencies against the U.S. dollar during September 2011, which primarily generated a non-cash charge over certain balance sheet accounts. This depreciation was offset, in part, by gains from certain foreign currency derivative transactions. We also expect that our effective tax rate for the third quarter of 2011 will be higher than our effective tax rate for the first half of 2011 as a result of several factors, including (i) the partial recovery of our valuation allowance related to our deferred tax assets during the first half of 2011 and (ii) withholding tax and additional expenses of our holding company. For a discussion of the factors we consider in determining our valuation allowance, see Management s Discussion and Analysis Critical Accounting Policies and Estimates Accounting for Income Taxes. As a result of these factors, for the three months ended September 30, 2011, we anticipate that our revenues will likely range from $970 to $990 million, our operating income will likely range from $69 to $75 million and our net income will likely range from $18 to $20 million, representing an approximately 23.0% to 25.5% increase, an approximately 0.4% to 9.1% increase and an approximately 38.2% to 31.3% decrease, respectively, as compared to the three months ended September 30, 2010. In the view of our management, the estimated financial information above was prepared on a reasonable basis, reflects the best currently available estimates and judgments, and presents, to the best of management s knowledge and belief, our expected performance for the third quarter of 2011. However, this information is not fact and no assurances can be given that our actual systemwide comparable sales growth, revenues, operating income and net income for the three months ended September 30, 2011 will not differ from these estimated amounts. Readers of this prospectus are cautioned not to place undue reliance on the estimates. These estimated amounts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These estimated amounts are preliminary, are based on management s internal estimates and are subject to further internal review by management and approval by our audit committee. Neither our independent auditors, nor any other independent accountants, have compiled, examined, or performed any procedures with respect to the estimated amounts contained herein, nor have they expressed any opinion or any other form of assurance on such information or its achievability, and assume no responsibility for, and disclaim any association with, the estimates. These estimated amounts may or may not be realized, and they may be based upon judgments or assumptions that prove to be incorrect. Our actual systemwide comparable sales growth, revenues, operating income and net income for the three months ended September 30, 2011 may vary from these estimated amounts. General Information Our principal executive offices are located at Roque Saenz Pe a 432, Olivos, Buenos Aires, Argentina (B1636 FFB). Our telephone number at this address is +54(11) 4711-2000. Our registered office in the British Virgin Islands is Maples Corporate Services (BVI) Limited, Kingston Chambers, P.O. Box 173, Road Town, Tortola, British Virgin Islands. Investors should contact us for any inquiries through the address and telephone number of our principal executive office. Our principal website is www.arcosdorados.com. The information contained on our website is not a part of this prospectus. Table of Contents
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+PROSPECTUS SUMMARY As used in this prospectus, references to the Company, we, our , us or Cassidy Ventures refer to Cassidy Ventures Inc. unless the context otherwise indicates. The following summary highlights selected information contained in this prospectus. Before making an investment decision, you should read the entire prospectus carefully, including the Risk Factors section, the financial statements, and the notes to the financial statements. OUR COMPANY Cassidy Ventures Inc. was incorporated on September 14, 2009, under the laws of the State of Nevada, for the purpose of conducting mineral exploration activities. We are an exploration stage company that has not realized any revenues to date, and our accumulated net loss as of September 30, 2011 is $ 46,660 . We anticipate that our current cash of $ 34,313 will be sufficient to operate our company for a period of one year from the date of this prospectus and complete the first and second phases of our planned exploration program on the Mobert mining claim. None of our officers and directors, or our consulting geologist, has ever visited the Mobert property. In Phase 1, we will make localized soil surveys, trenching and sampling over known and indicated mineralized zones. In Phase 2, we will make VLF-EM and magnetometer surveys. The third phase of our planned exploration program entails diamond drill testing, subject to the results of phases 1 and 2. We will require additional funding to proceed with phase 3 work on the claim; we have no current plans on how to raise the additional funding. We are an exploration stage company formed for the purposes of acquiring, exploring, and if warranted and feasible, developing natural resource property. We raised an aggregate of $47,500 through private placements of our securities. Proceeds from these placements were used to acquire a mineral property and for working capital. The Mobert property, comprised of 1 mining claim totaling 12 units and covering 190 hectares, 1.6 km long by roughly 1.2 km wide in a rectangular shape, is located in the south central part of the Black River Area Township within the Thunder Bay Mining Division of Northwestern Ontario, Canada and was recorded with the Ministry of Northern Development, Mines and Forestry, in the Province of Ontario, Canada on September 23, 2010. We had a qualified consulting geologist prepare a geological evaluation report on the claim. We intend to conduct exploratory activities on the claim and if feasible, develop the claim. Each of Edward Hayes and Linda Lamb, our two officers and directors, did not agree to serve as an officer or director of the Company at least in part due to a plan, agreement or understanding that he and she, respectively, would solicit, participate in, or facilitate the sale of the enterprise to (or a business combination with) a third party looking to obtain or become a public reporting entity, and each of Mr. Hayes and Ms. Lamb also confirms that he and she, respectively, has no such present intention. The Company s principal offices are located at #358 - 315 Place d Youville, Montreal, Quebec, Canada H2Y 0A4, and our telephone number is (514) 221-3017. THE OFFERING Securities offered: The selling stockholders are offering hereby up to 1,750,000 shares of common stock. Offering price: The selling stockholders will offer and sell their shares of common stock at a fixed price of $0.10 per share until our shares are quoted on the OTC Bulletin Board, if our shares of common stock are ever quoted on the OTC Bulletin Board, and thereafter at prevailing market prices or privately negotiated prices. Shares outstanding prior to offering: 6,750,000 Shares outstanding after offering: 6,750,000 Market for the common shares: There is no public market for our shares. Our common stock is not traded on any exchange or quoted on the over-the-counter market. After the effective date of the registration statement relating to this prospectus, we hope to have a market maker file an application with the Financial Industry Regulatory Authority ( FINRA ) for our common stock to eligible for trading on the Over The Counter Bulletin Board. We do not yet have a market maker who has agreed to file such application. There is no assurance that a trading market will develop, or, if developed, that it will be sustained. Consequently, a purchaser of our common stock may find it difficult to resell the securities offered herein should the purchaser desire to do so when eligible for public resale. Use of proceeds: We will not receive any proceeds from the sale of shares by the selling security holders SUMMARY FINANCIAL INFORMATION The tables and information below are derived from our audited financial statements for the period from September 14, 2009 (Inception) to June 30, 2011, and our unaudited financial statements for the three months ended September 30, 2011. Our working capital as at September 30, 2011 was $ 30,952 . June 30, 2011 ($) Financial Summary (Audited) Cash and Deposits 39,379 Total Assets 45,267 Total Liabilities 5,075 Total Stockholder s Equity 40,192 Accumulated From September 14, 2009 (Inception) to June 30, 2011 ($) Statement of Operations Total Expenses 38,808 Net Loss for the Period 38,808 Net Loss per Share - September 30, 2011 ($) Financial Summary (Unaudited) Cash and Deposits 34,313 Total Assets 40,201 Total Liabilities 3,361 Total Stockholder s Equity 36,840 Accumulated From September 14, 2009 (Inception) to September 30, 2011 ($) Statement of Operations Total Expenses 46,660 Net Loss for the Period 46,660 Net Loss per Share -
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+S-1/A Registration No. 333-178245 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Amendment No.1 to FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 AURA SYSTEMS, INC. (Exact Name of Registrant as Specified in Its Charter) Delaware 3662 95-4106894 (State or other jurisdiction of incorporation or organization) (Primary Standard Industrial Classification Code Number) (I.R.S. Employer Identification No.) 1310 E. Grand Avenue El Segundo, California 90245 (310) 643-5300 (Address, including zip code, and telephone number, including area code, of registrant s principal executive offices) Melvin Gagerman Chief Executive Officer 1310 East Grand Avenue El Segundo, California 90245 (310) 643-5300 (Name, address, including zip code, and telephone number, including area code, of agent for service) Copies to: Erick Richardson, Esq. Edgar D. Park, Esq. Richardson & Patel, LLP 1100 Glendon Avenue, Suite 850 Los Angeles, California 90024 Telephone: (310) 208-1182 Facsimile: (310) 208-1154 As soon as practicable after the effective date of this Registration Statement. (Approximate date of commencement of proposed sale to the public) If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box. x If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act (check one): Large accelerated filer o Accelerated filer o Non-accelerated filer o Smaller reporting company x (Do not check if a smaller reporting company) CALCULATION OF REGISTRATION FEE Title of Each Class of Securities to be Registered Amount to be Registered (2) Proposed Maximum Aggregate Offering Price Amount of Registration Fee (1) Common stock, $0.0001 par value per share, to be issued upon conversion of Senior Secured Convertible Notes 6,517,000 $ 4,301,220 $ 492.92 Common stock, $0.0001 par value per share, to be issued upon exercise of Warrants 6,517,000 $ 4,301,220 $ 492.92 Total $ 985.84 (1) Calculated in accordance with Rule 457(c) of Regulation C promulgated under the Securities Act of 1933 as of November 23, 2011, and an average of the high and low prices reported on the OTC Bulletin Board on such date of $0.66 per share. This amount has been previously paid. (2) This registration statement also relates to an indeterminate number of shares of the Registrant s common stock that may be issued to prevent dilution resulting from stock splits, stock dividends or similar transactions in accordance with Rule 416 under the Securities Act of 1933, as amended. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until this Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. Table of Contents THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THESE SECURITIES MAY NOT BE SOLD UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND WE ARE NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED. SUBJECT TO COMPLETION, DATED __________ PRELIMINARY PROSPECTUS 13,034,000 Shares of Common Stock AURA SYSTEMS, INC. This prospectus covers the resale by the selling security holders named on page 52 of up to 13,034,000 shares of our common stock which include: Up to 6,517,000 shares of common stock underlying senior secured convertible notes of the Company issued to investors on September 26, 2011, upon conversion of the notes; Up to 6,517,000 shares of common stock underlying common stock purchase warrants issued to investors on September 26, 2011, upon exercise of the warrants.
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index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad
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+PROSPECTUS SUMMARY 1
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+contained elsewhere in this prospectus. To understand this offering fully, you should read the entire prospectus carefully, including the risk factors, the summary reserve reports and the financial statements and notes to those statements. Definitions for certain terms relating to the oil and natural gas business can be found in Glossary of Certain Oil and Natural Gas Terms and Terms Related to the Trust beginning on page 124. Ryder Scott Company, L.P., referred to in this prospectus as Ryder Scott, an independent engineering firm, provided the estimates of proved oil, natural gas liquids and natural gas reserves as of June 30, 2011 included in this prospectus. These estimates are contained in summaries prepared by Ryder Scott of its reserve reports for (a) the properties held by Chesapeake from which the royalty interests will be conveyed to the trust and (b) the royalty interests to be held by the trust. These reports are included as Annex A to this prospectus and are referred to in this prospectus as the reserve reports. References to Chesapeake in this prospectus are to Chesapeake Energy Corporation and, where the context requires, its subsidiaries. The royalty interests to be held by the trust are sometimes referred to herein as the trust properties. Unless otherwise indicated, all information in this prospectus assumes an initial public offering price of $20.00 per common unit (the midpoint of the price range set forth on the cover page of this prospectus) and no exercise of the underwriters option to purchase additional common units. Chesapeake Granite Wash Trust Chesapeake Granite Wash Trust is a Delaware statutory trust formed in June 2011 to own (a) royalty interests to be conveyed to the trust by Chesapeake in 69 existing horizontal wells in the Colony Granite Wash play located in Washita County in western Oklahoma (the Producing Wells ), and (b) royalty interests in 118 horizontal development wells (calculated as described under The Development Wells beginning on page 4) to be drilled exclusively in the Colony Granite Wash (the Development Wells ) on properties within an Area of Mutual Interest (as such area may be extended as described below, the AMI ). The AMI is limited to only the Colony Granite Wash formation and is depicted by the area identified in the inside front cover of this prospectus, currently consisting of approximately 45,400 gross acres (28,700 net acres) held by Chesapeake. The Colony Granite Wash is a formation encountered at depths between approximately 11,500 feet and 13,000 feet that lies between the top of the Des Moines formation (or top of Colony Granite Wash A ) and the top of the Prue formation (or base of Colony Granite Wash C ). Chesapeake intends to drill, or cause to be drilled, the Development Wells from proved undeveloped ( PUD ) drilling locations in the AMI by June 30, 2015 and is obligated to complete such drilling by June 30, 2016. The royalty interests will be conveyed from Chesapeake s interest in the Producing Wells and the Development Wells (the Underlying Properties ) effective as of July 1, 2011. As of July 1, 2011, 64 of the Producing Wells were producing from the Colony Granite Wash and the remaining five Producing Wells had been drilled and were awaiting completion. As of October 28, 2011, all of the Producing Wells were completed and producing. The royalty interest in the Producing Wells (the PDP Royalty Interest ) entitles the trust to receive 90% of the proceeds (exclusive of any production or development costs but after deducting post-production expenses and any applicable taxes) from the sale of production of oil, natural gas liquids and natural gas attributable to Chesapeake s net revenue interest in the Producing Wells. The royalty interest in the Development Wells (the Development Royalty Interest ) entitles the trust to receive 50% of the proceeds (exclusive of any production or development costs but after deducting post-production expenses and any applicable taxes) from the sale of oil, natural gas liquids and natural gas production attributable to Chesapeake s net revenue interest in the Development Wells. As of June 30, 2011 and after giving effect to the conveyance of the PDP Royalty Interest and the Development Royalty Interest to the trust, the total reserves estimated to be attributable to the trust were 44.3 mmboe (47.0% oil and natural gas liquids by volume). This amount includes 18.6 mmboe attributable to the PDP Royalty Interest and 25.7 mmboe attributable to the Development Royalty Interest. Table of Contents Index to Financial Statements EXPLANATORY NOTE This Amendment No. 6 to the Registration Statement on Forms S-1 and S-3 (Registration Nos. 333-175395 and 333-175395-01) of Chesapeake Granite Wash Trust and Chesapeake Energy Corporation ( Chesapeake ) is being filed to amend the section of the prospectus entitled Where You Can Find More Information to clarify that filings made by Chesapeake with the U.S. Securities and Exchange Commission pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934, as amended, that are incorporated by reference in the prospectus include those made after the date of the initial registration statement and prior to the effectiveness of the registration statement. Table of Contents Index to Financial Statements Generally, the percentage of production proceeds to be received by the trust with respect to a well will equal the product of (a) the percentage of proceeds to which the trust is entitled under the terms of the conveyances (90% for the Producing Wells and 50% for the Development Wells) multiplied by (b) Chesapeake s net revenue interest in the well. Chesapeake currently owns on average a 52.8% net revenue interest in the Producing Wells. Therefore, the trust will initially receive an average 47.5% net revenue interest in the Producing Wells. Chesapeake on average owns a 52.0% net revenue interest in the properties on which it expects to drill the Development Wells, and based on this net revenue interest, the trust would have an average 26.0% net revenue interest in the Development Wells. Chesapeake s actual net revenue interest in any particular Producing Well or Development Well may differ from these averages. Chesapeake will retain 10% of the proceeds from the sale of oil, natural gas liquids and natural gas attributable to its net revenue interest in the Producing Wells, and 50% of the proceeds from the sale of future production attributable to its net revenue interest in the Development Wells. Chesapeake initially will own 50% of the trust units (without giving effect to the exercise of the underwriters option to purchase additional common units). By virtue of Chesapeake s retained interest in the Producing Wells and the Development Wells, as well as its ownership of 50% of the trust units, it would have an effective average net revenue interest of 29.0% in the Producing Wells and 39.0% in the Development Wells, compared with an effective average net revenue interest for the holders of trust units other than Chesapeake of 23.8% in the Producing Wells and 13.0% in the Development Wells. The trust will not be responsible for any costs related to the drilling of the Development Wells or any other operating and capital costs. The trust s cash receipts in respect of the trust properties will be determined after deducting post-production expenses and any applicable taxes associated with the PDP Royalty Interest and the Development Royalty Interest. These post-production expenses will generally consist of costs incurred to gather, store, compress, transport, process, treat, dehydrate and market the oil, natural gas liquids and natural gas produced. However, the trust will not be responsible for costs of marketing services provided by Chesapeake. Cash distributions to unitholders will be increased or decreased by the effect of the trust s hedging arrangements related to oil and natural gas liquids production and reduced by trust expenses. The trust will be a party to hedging arrangements covering a portion of its oil and natural gas liquids production through September 30, 2015. As a party to these contracts, the trust will receive payments directly from its counterparties and be required to pay any amounts owed directly to its counterparties. The trust will hedge approximately 50% of the expected oil and natural gas liquids production and 37% of the trust s expected revenues (based on NYMEX strip oil prices as of October 28, 2011) upon which the target distributions from October 1, 2011 through September 30, 2015 are based. Following this offering, except in limited circumstances involving the restructuring of an existing hedge, the trust will have no ability to terminate its hedging arrangements or enter into additional hedges. Except in connection with the restructuring of an existing hedge, no production after September 30, 2015 will be hedged. The trust s royalty interests in the Underlying Properties will be pledged to the hedge counterparties to provide credit support for the hedge transactions, and the hedging counterparties may foreclose on such lien if, among other things, the trust or Chesapeake is in material default of the drilling, payment or reporting requirements under the hedging arrangements, subject to applicable cure and notice periods. Please see The Trust Hedging Arrangements beginning on page 48 and Target Distributions and Subordination and Incentive Thresholds beginning on page 52. The trust will make quarterly cash distributions of substantially all of its cash receipts, after deducting the trust s expenses, approximately 60 days following the completion of each quarter through (and including) the quarter ending June 30, 2031, except that the first distribution, which will cover the third quarter of 2011 (consisting of proceeds Table of Contents Index to Financial Statements The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities, and we are not soliciting an offer to buy these securities, in any state where the offer or sale is not permitted. PROSPECTUS (Subject to Completion) Issued November 8, 2011 23,375,000 Common Units Chesapeake Granite Wash Trust REPRESENTING BENEFICIAL INTERESTS This is an initial public offering of common units representing beneficial interests in Chesapeake Granite Wash Trust. The trust is selling all of the common units offered hereby. Chesapeake Energy Corporation ( Chesapeake ) will convey to the trust certain royalty interests in exchange for common and subordinated units collectively representing a 50% beneficial interest in the trust (without giving effect to the exercise of the underwriters option to purchase additional units), as well as all of the net proceeds of this offering. Prior to this offering, there has been no public market for the common units. Chesapeake anticipates that the initial public offering price will be between $19.00 and $21.00 per common unit. The common units have been approved for listing on the New York Stock Exchange under the symbol CHKR. The Trust Units. Trust units, consisting of common and subordinated units, are units representing undivided beneficial interests in the property of the trust. They do not represent any interest in Chesapeake. The Trust. The trust will own term and perpetual royalty interests in oil, natural gas liquids and natural gas properties leased by Chesapeake in the Colony Granite Wash play, located in Washita County, Oklahoma. These royalty interests will entitle the trust to receive, after the deduction of post-production expenses and taxes, (a) 90% of the proceeds attributable to Chesapeake s net revenue interest in the sale of production from 69 horizontal producing wells and (b) 50% of the proceeds attributable to Chesapeake s net revenue interest in the sale of production from 118 horizontal development wells to be drilled within an Area of Mutual Interest consisting of approximately 45,400 gross acres (28,700 net acres) held by Chesapeake. The number of wells required to be drilled may increase or decrease in proportion to Chesapeake s actual net revenue interest in each well and other factors described herein. The trust will not be responsible for any costs related to the drilling of these wells. The trust will be treated as a partnership for U.S. federal income tax purposes. The Trust Unitholders. As a trust unitholder, you will receive quarterly distributions of cash from the proceeds that the trust receives from Chesapeake s sale of oil, natural gas liquids and natural gas from properties subject to the royalty interests to be held by the trust. The amount of the distributions will be impacted by oil and natural gas liquids hedges to which the trust will be a party. For information on target distributions and related matters pertinent to trust unitholders, including Chesapeake s right to receive incentive distributions and ownership of subordinated units, please see Target Distributions and Subordination and Incentive Thresholds beginning on page 50. Investing in the common units involves a high degree of risk. See Risk Factors beginning on page 20. These risks include the following: Drilling for and producing oil, natural gas liquids and natural gas involves many risks that could delay the anticipated drilling schedule for the development wells and adversely affect future production, which could decrease cash distributions to unitholders. Price fluctuations for oil, natural gas liquids and natural gas could reduce proceeds to the trust and decrease cash distributions to unitholders. Actual reserves and future production may be less than current estimates. Estimates of target distributions to unitholders are based on assumptions that are inherently subjective and are subject to significant risks and uncertainties that could cause actual distributions to differ materially from estimates. Hedging arrangements will cover only a portion of the expected production attributable to the trust, and such arrangements will limit the trust s ability to benefit from commodity price increases for hedged volumes above the corresponding hedge price. If the trust were treated as a corporation for U.S. federal income tax purposes, then its cash available for distribution to unitholders would be substantially reduced. If the IRS contests the tax positions the trust takes, the value of the trust units may be adversely affected, the cost of any IRS contest will reduce the trust s cash available for distribution and income, gain, loss and deduction may be reallocated among trust unitholders. The tax treatment of an investment in trust units could be affected by potential legislative changes, possibly on a retroactive basis. PRICE $ A COMMON UNIT Price to Public Underwriting Discounts and Commissions(1) Proceeds to Trust(2) Per Common Unit $ $ $ Total $ $ $ (1) Excludes an aggregate structuring fee equal to 0.50% of the gross proceeds of this offering, or approximately $ million, payable to Morgan Stanley & Co. LLC and Raymond James & Associates, Inc. (2) The trust will deliver all of the proceeds it receives in this offering to a wholly owned subsidiary of Chesapeake. The trust has granted the underwriters an option to purchase up to an additional 3,506,250 common units. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The underwriters expect to deliver the common units to purchasers on , 2011. MORGAN STANLEY RAYMOND JAMES Deutsche Bank Securities Goldman, Sachs & Co. Wells Fargo Securities , 2011 Table of Contents Index to Financial Statements attributable to July and August 2011 production), is expected to be made on or about December 28, 2011 to record unitholders on or about December 15, 2011. The Bank of New York Mellon Trust Company, N.A., as trustee, intends to withhold $1.0 million from the first distribution to establish an initial cash reserve available for trust expenses. The PDP Royalty Interest and the Development Royalty Interest will each consist of two separate royalty interests conveyed by Chesapeake to the trust: (a) a term royalty interest for a period of 20 years commencing on July 1, 2011 and ending on June 30, 2031 (such date is referred to as the Termination Date and such interests are referred to as the Term Royalties ) and (b) a perpetual royalty interest that does not terminate (together, the Perpetual Royalties ). The trust will dissolve and begin to liquidate on the Termination Date and will soon thereafter wind up its affairs and terminate. At the Termination Date, the Term Royalties will revert automatically to Chesapeake. Following the Termination Date, the Perpetual Royalties will be sold by the trust, and the net proceeds of the sale, as well as any remaining trust cash reserves, will be distributed to the unitholders pro rata. Chesapeake will have a right of first refusal to purchase the Perpetual Royalties from the trust following the Termination Date. Chesapeake currently operates 94% of the Producing Wells and expects to operate approximately 93% of the Development Wells until the completion of its drilling obligation. Chesapeake will market, or cause to be marketed, the oil, natural gas liquids and natural gas produced from the Underlying Properties. The conveyance instruments obligate Chesapeake to conduct operations and market production in good faith and in accordance with the Reasonably Prudent Operator Standard described under The Development Wells below. Prior to fulfilling its drilling obligation to the trust, Chesapeake may cause the trust to exchange leased acreage in the AMI for other leased acreage in the sections adjacent to the AMI (such adjacent sections are referred to as the Development Area ). If additional acreage in the Development Area becomes subject to the royalty interests, then the AMI will automatically expand to include such acreage. In addition, if Chesapeake acquires any additional leases or interests in the AMI, Chesapeake may make such additional leases or interests subject to the royalty interests of the trust with respect to any Development Wells subsequently drilled on such acreage. However, the aggregate acreage attributable to the exchanged leases or additional leases or acreage may not exceed five percent of the acreage initially subject to the royalty interests and the reserve profile of the newly burdened acreage must be consistent with the reserve profile of the acreage released by the trust. See Description of the Royalty Interests Additional Features of the Royalty Interests Exchange and Addition of Acreage on page 84. Following the satisfaction of its drilling obligation to the trust, Chesapeake may, without the consent or approval of the trust unitholders, sell all or any part of its retained interest in the Underlying Properties. In any such sale by Chesapeake, the Underlying Properties must be sold subject to and burdened by the trust s royalty interests, except that Chesapeake may require the trust to release the trust s royalty interests on such Underlying Properties with an aggregate value of up to $5.0 million during any 12-month period. In such event, the trust must receive an amount equal to the fair value to the trust of any royalty interests it sells. See Description of the Royalty Interests Additional Features of the Royalty Interests Sale and Release of Underlying Properties on page 84. The business and affairs of the trust will be managed by the trustee. The trustee will have no ability to manage or influence the operation of the Underlying Properties. Chesapeake will have no ability to manage or influence the management of the trust except through its limited voting rights as a holder of trust units. Please see Description of the Trust Units Voting Rights of Trust Unitholders beginning on page 93. The principal offices of the trust are located at 919 Congress Avenue, Suite 500, Austin, Texas 78701, and its telephone number is (512) 236-6599. Table of Contents Index to Financial Statements portions of the reservoir only if geoscience, engineering, or performance data and reliable technology establish the higher contact with reasonable certainty. (iv) Reserves which can be produced economically through application of improved recovery techniques (including, but not limited to, fluid injection) are included in the proved classification when: (A) Successful testing by a pilot project in an area of the reservoir with properties no more favorable than in the reservoir as a whole, the operation of an installed program in the reservoir or an analogous reservoir, or other evidence using reliable technology establishes the reasonable certainty of the engineering analysis on which the project or program was based; and (B) The project has been approved for development by all necessary parties and entities, including governmental entities. (v) Existing economic conditions include prices and costs at which economic producibility from a reservoir is to be determined. The price shall be the average price during the 12-month period prior to the ending date of the period covered by the report, determined as an unweighted arithmetic average of the first-day-of-the-month price for each month within such period, unless prices are defined by contractual arrangements, excluding escalations based upon future conditions. RYDER SCOTT COMPANY PETROLEUM CONSULTANTS A-13 Petroleum Reserves Definitions Table of Contents Index to Financial Statements Table of Contents Index to Financial Statements The Development Wells Pursuant to a development agreement with the trust, Chesapeake intends to drill, or cause to be drilled, 118 Development Wells in the AMI by June 30, 2015 and is obligated to complete such drilling by June 30, 2016. Chesapeake will be credited for drilling one full Development Well if the perforated length of the well is equal to or greater than 3,500 feet and Chesapeake s net revenue interest in the well is equal to 52.0%. For wells with a perforated length that is less than 3,500 feet, and for wells in which Chesapeake has a net revenue interest greater than or less than 52.0%, Chesapeake will receive proportionate credit. As a result, Chesapeake may be required to drill more or less than 118 wells in order to fulfill its drilling obligation. See The Trust Development Agreement and Drilling Support Lien beginning on page 46. Since July 1, 2011, Chesapeake has drilled and completed seven Development Wells and has drilled two additional wells in the AMI that are awaiting completion as of the date of this prospectus. Assuming the successful completion of these two wells, such wells will count toward the satisfaction of Chesapeake s drilling obligation. Until Chesapeake has satisfied its drilling obligation, it will not be permitted to drill or complete any well on lease acreage included within the AMI for its own account. For the life of the trust, Chesapeake will not be permitted to drill or complete any well that will have a perforated segment within 600 feet of any perforated interval of any Development Well or Producing Well. In drilling the Development Wells, Chesapeake is required to act diligently and as a reasonably prudent oil and gas operator would act under the same or similar circumstances as if it were acting with respect to its own properties, disregarding the existence of the royalty interests as burdens affecting such properties. We refer to this standard as the Reasonably Prudent Operator Standard. Where Chesapeake does not operate the Underlying Properties, Chesapeake is required to use commercially reasonable efforts to exercise its contractual rights to cause the operators of such Underlying Properties to adhere to the Reasonably Prudent Operator Standard. Chesapeake expects that the drilling and completion techniques used for the Development Wells will be generally consistent with those used for the Producing Wells and other Colony Granite Wash producing wells outside of the AMI. The proved undeveloped reserves reflected in the reserve reports assume that Chesapeake will drill and complete the 118 Development Wells with the same completion technique as the 69 Producing Wells. Chesapeake will grant to the trust a lien on its interest in the AMI (except the Producing Wells and any other wells that are already producing and not subject to the royalty interests) in order to secure the estimated amount of the drilling costs for the trust s interests in the Development Wells (the Drilling Support Lien ). The amount obtained by the trust pursuant to the Drilling Support Lien initially may not exceed $262.7 million. As Chesapeake fulfills its drilling obligation over time, Development Wells that are completed or that are perforated for completion and then plugged and abandoned will be released from the Drilling Support Lien and the total dollar amount that may be recovered by the trust for Chesapeake s failure to fulfill its drilling obligation will be proportionately reduced. As of the date of this prospectus, Chesapeake s drilling activity with respect to the Development Wells is consistent with the drilling schedule contemplated by the development agreement. The drilling schedule provides that approximately 30 wells are expected to be drilled each year until the drilling obligation is fulfilled. Underlying Properties The Underlying Properties are located in the Colony Granite Wash play in Washita County in western Oklahoma. The Colony Granite Wash is a subset of the greater Granite Wash plays of the Anadarko Basin. The Colony Granite Wash is situated at the eastern end of a series of Des Moines-age granite wash fields that extend along the southern flank of the Anadarko basin, approximately 60 miles into the Texas Panhandle. These granite wash fields were generally deposited as deep-water turbidites that result in relatively low risk, laterally extensive reservoirs. The productive members of the Colony Granite Wash are encountered between Table of Contents Index to Financial Statements approximately 11,500 and 13,000 feet and lie stratigraphically between the top of the Des Moines formation (or top of Colony Granite Wash A ) and the top of the Prue formation (or base of Colony Granite Wash C ). The individual productive members within the Colony Granite Wash may reach 200 feet or more in gross interval thickness and the targeted porosity zones within these individual members are generally 20 to 75 feet thick. The Colony Granite Wash is primarily a natural gas and natural gas condensate reservoir based on reserve volumes. However, oil and natural gas liquids production generates more revenue than natural gas production in the Colony Granite Wash due to prices that have historically been, and currently are, significantly higher for oil and natural gas liquids than for natural gas. Development costs for horizontal wells drilled and completed in the AMI average approximately $8.31 per boe, which is comparable to the development costs in other large-scale resource developments in the Mid-Continent in which Chesapeake operates. Chesapeake began drilling horizontal wells in the Colony Granite Wash in 2007. Chesapeake is the largest leaseholder in the Colony Granite Wash, with approximately 61,100 net acres (of which 28,700 net acres will be subject to the trust s royalty interests), the most active driller in the play, based on rig count, and the largest producer in the play. Since 2007, there have been 173 Des Moines horizontal wells drilled in the Colony Granite Wash. Of those 173 wells, Chesapeake has drilled 133 wells and participated in another 35 wells. As of June 30, 2011, there were 15 rigs drilling horizontal wells in the formation, with nine of those rigs drilling for Chesapeake. While horizontal wells are more expensive than vertical wells, a horizontal well increases the production of hydrocarbons and adds significant recoverable reserves per well. In addition, an operator can achieve better returns on drilling investments with horizontal drilling because the production from one horizontal well is equal to the production from several vertical wells. While Chesapeake is the most active company in this play, other operators in the Colony Granite Wash include publicly-listed companies such as Penn Virginia Corporation, Apache Corporation, QEP Resources, Inc., SM Energy Company and Marathon Oil Corporation, and privately-held companies such as Samson Oil & Gas Limited, Chaparral Energy, Inc. and Ward Petroleum Corporation. Target Distributions and Subordination and Incentive Thresholds Chesapeake has established quarterly target levels of cash distributions to unitholders for the life of the trust as set forth in Annex B to this prospectus. Actual cash distributions to the trust unitholders will fluctuate quarterly based on the quantity of oil, natural gas liquids and natural gas produced from the Underlying Properties, the prices received for such production, when Chesapeake receives payment for such production, payments under the hedge arrangements, the trust s expenses and other factors. As shown in Annex B, while target distributions initially increase as Chesapeake completes its drilling obligation and production increases, over time target distributions decline as a result of the depletion of the reserves in the Underlying Properties. While these target distributions do not represent the actual distributions you will receive with respect to your common units, they were used to calculate the subordination and incentive thresholds described in more detail below. The target distributions were derived by assuming that oil, natural gas liquids and natural gas production from the trust properties will equal the volumes reflected in the reserve reports included as Annex A to this prospectus and that prices received for such production will be consistent with spot and settled NYMEX pricing for July through November 2011, monthly NYMEX forward pricing as of October 28, 2011 for the remainder of the period ending June 30, 2014 and assumed price increases after June 30, 2014 of 2.5% annually, capped at $120.00 per bbl of oil and $7.00 per mmbtu of natural gas. Using these assumptions, the price of oil would reach the $120.00 per bbl cap in 2025 and the price of natural gas would reach the $7.00 per mmbtu cap in 2028. The target distributions also give effect to estimated post-production expenses, projected trust administrative expenses and actual production for July and August of 2011. In order to provide support for cash distributions on the common units, Chesapeake has agreed to subordinate 11,687,500 of the trust units it will retain following this offering, which will constitute 25% of the outstanding trust units. The subordinated units will be entitled to receive pro rata distributions from the trust each quarter if and to the extent there is sufficient cash to pay a cash distribution on the common units that is no less Table of Contents Index to Financial Statements than the applicable quarterly subordination threshold. If there is not sufficient cash to fund such a distribution on all of the common units, the distribution to be made with respect to the subordinated units will be reduced or eliminated for such quarter in order to make a distribution, to the extent possible, of up to the subordination threshold amount on all the common units, including the common units held by Chesapeake. Each quarterly subordination threshold is 20% below the target distribution level for the corresponding quarter (each, a subordination threshold ). In exchange for agreeing to subordinate a portion of its trust units, and in order to provide additional financial incentive to Chesapeake to satisfy its drilling obligation and perform operations on the Underlying Properties in an efficient and cost-effective manner, Chesapeake will be entitled to receive incentive distributions equal to 50% of the amount by which the cash available for distribution on all of the trust units in any quarter is 20% greater than the target distribution for such quarter (each, an incentive threshold ). The remaining 50% of cash available for distribution in excess of the incentive thresholds will be paid to trust unitholders, including Chesapeake, on a pro rata basis. By way of example, if the target distribution per unit for a particular quarterly period is $0.54, then the subordination threshold would be $0.43 and the incentive threshold would be $0.65 for such quarter. This means that if the cash available for distribution to all holders for that quarter would result in a per unit distribution below $0.43, the distribution to be made with respect to subordinated units will be reduced or eliminated in order to make a distribution, to the extent possible, up to the amount of the subordination threshold, on the common units. If, on the other hand, the cash available for distribution to all holders would result in a per unit distribution above $0.65, then Chesapeake would receive 50% of the amount by which the cash available for distribution on all the trust units exceeds $0.65, with all trust unitholders (including Chesapeake on a pro rata basis) sharing in the other 50% of such excess amount. See Target Distributions and Subordination and Incentive Thresholds beginning on page 52. At the end of the fourth full calendar quarter following Chesapeake s satisfaction of its drilling obligation with respect to the Development Wells, the subordinated units will automatically convert into common units on a one-for-one basis and Chesapeake s right to receive incentive distributions will terminate. After such time, the common units will no longer have the protection of the subordination threshold, and all trust unitholders will share on a pro rata basis in the trust s distributions. Chesapeake currently intends to complete its drilling obligation on or before June 30, 2015 and accordingly, Chesapeake expects the subordinated units will convert into common units on or before June 30, 2016. Chesapeake is obligated to complete its drilling obligation by June 30, 2016, in which event the subordinated units would convert into common units on or before June 30, 2017. The period during which the subordinated units are outstanding is referred to as the subordination period. Chesapeake s management has prepared the prospective financial information set forth below to present the target cash distributions to the holders of the trust units based on the estimates and assumptions described under Target Distributions and Subordination and Incentive Thresholds beginning on page 52. The accompanying prospective financial information was not prepared with a view toward complying with the regulations of the U.S. Securities and Exchange Commission (the SEC ) or the guidelines established by the American Institute of Certified Public Accountants with respect to preparation and presentation of prospective financial information. More specifically, such information omits items that are not relevant to the trust. Chesapeake s management believes the prospective financial information was prepared on a reasonable basis, reflects the best currently available estimates and judgments, and presents, to the best of management s knowledge and belief, the expected course of action and the expected future financial performance of the royalty interests. However, this information is based on estimates and judgments, and readers of this prospectus are cautioned not to place undue reliance on the prospective production or financial information. Table of Contents Index to Financial Statements The prospective financial information included in this prospectus has been prepared by, and is the responsibility of, Chesapeake s management. PricewaterhouseCoopers LLP, the trust s and Chesapeake s independent registered public accountant, has neither examined, compiled nor performed any procedures with respect to the accompanying prospective financial information and, accordingly, PricewaterhouseCoopers LLP does not express an opinion or any other form of assurance with respect thereto. The reports of PricewaterhouseCoopers LLP included or incorporated by reference in this prospectus relate to the Statement of Assets and Trust Corpus of the trust, the historical Statements of Revenues and Direct Operating Expenses of the Underlying Properties and the historical financial statements of Chesapeake. The reports do not extend to the prospective financial information and should not be read to do so. The following table sets forth the target distributions and subordination and incentive thresholds for each calendar quarter through the second quarter of 2017 (the last quarter for which subordinated units would be outstanding if Chesapeake does not complete its drilling obligation on or before June 30, 2016). The effective date of the conveyance of the royalty interests is July 1, 2011, which means that the trust will be credited with the proceeds of production attributable to the royalty interests from that date even though the trust properties will not be conveyed to the trust until the closing of this offering. Please see Calculation of Target Distributions below. The first distribution, which will cover the third quarter of 2011, is expected to be made on or about December 28, 2011 to record unitholders on or about December 15, 2011. Due to the timing of the payment of production proceeds to the trust, the trust expects that the first distribution will include royalties attributable to sales of oil, natural gas liquids and natural gas for two months (July and August 2011). Thereafter, quarterly distributions will generally include royalties attributable to sales of oil, natural gas liquids and natural gas for three months, including the first two months of the quarter just ended and the last month of the quarter prior to that one. The trustee intends to withhold $1.0 million from the first distribution to establish an initial cash reserve available for trust expenses. Table of Contents Index to Financial Statements Period Subordination Threshold(1) Target Distribution Incentive Threshold(1) (per unit) 2011: Third Quarter(2) $ 0.43 $ 0.54 $ 0.65 Fourth Quarter 0.54 0.68 0.82 2012: First Quarter 0.59 0.74 0.89 Second Quarter 0.61 0.76 0.91 Third Quarter 0.63 0.79 0.94 Fourth Quarter 0.67 0.84 1.01 2013: First Quarter 0.69 0.87 1.04 Second Quarter 0.69 0.86 1.04 Third Quarter 0.71 0.89 1.07 Fourth Quarter 0.69 0.86 1.04 2014: First Quarter 0.69 0.87 1.04 Second Quarter 0.68 0.85 1.02 Third Quarter 0.69 0.86 1.03 Fourth Quarter 0.66 0.83 0.99 2015: First Quarter 0.66 0.83 0.99 Second Quarter 0.68 0.85 1.02 Third Quarter 0.64 0.80 0.96 Fourth Quarter 0.56 0.70 0.84 2016 First Quarter 0.51 0.63 0.76 Second Quarter 0.47 0.58 0.70 Third Quarter 0.44 0.55 0.66 Fourth Quarter 0.41 0.52 0.62 2017 First Quarter 0.39 0.49 0.59 Second Quarter 0.37 0.47 0.56 (1) For each quarter, the subordination threshold equals 80% of the target distribution and the incentive threshold equals 120% of the target distribution. The subordination and incentive thresholds terminate after the fourth full calendar quarter following Chesapeake s completion of its drilling obligation. (2) Includes proceeds attributable to two months of actual production from July 1, 2011 to August 31, 2011, and gives effect to the establishment of $1.0 million of reserves for expenses withheld by the trustee. For additional information with respect to the subordination and incentive thresholds, please see Target Distributions and Subordination and Incentive Thresholds beginning on page 52. Table of Contents Index to Financial Statements Calculation of Target Distributions The following table presents the calculation of the target distributions for each quarter through and including the quarter ending June 30, 2012. The target distributions were prepared by Chesapeake based on assumptions of production volumes, pricing and other factors. The production forecasts used to calculate target distributions are based on estimates by Ryder Scott contained in the reserve reports. Payments to unitholders will be made approximately 60 days following the end of each calendar quarter, except that the first distribution is expected to be made on or about December 28, 2011 to record unitholders on or about December 15, 2011. Please read Target Distributions and Subordination and Incentive Thresholds Significant Assumptions Used to Calculate the Target Distributions beginning on page 58. Three Months Ending Period September 30, 2011(1)(2) December 31, 2011(1) March 31, 2012(1) June 30, 2012(1) (In thousands, except volumetric and per unit data) Estimated production from trust properties Oil sales volumes (mbbls) 133 176 181 181 Natural gas liquids sales volumes (mbbls) 218 298 302 304 Natural gas sales volumes (mmcf) 2,153 2,867 2,909 2,923 Total sales volumes (mboe) 710 952 967 972 % PDP sales volumes 98 % 84 % 69 % 61 % % PUD sales volumes 2 % 16 % 31 % 39 % % Oil volumes 19 % 19 % 19 % 19 % % Natural gas liquids volumes 31 % 31 % 31 % 31 % % Natural gas volumes 50 % 50 % 50 % 50 % Commodity price and derivative contract positions NYMEX price(3) Oil ($/bbl) $ 91.52 $ 85.43 $ 93.20 $ 93.00 Natural gas liquids ($/bbl) $ 45.06 $ 42.03 $ 45.85 $ 45.75 Natural gas ($/mmbtu) $ 4.36 $ 3.71 $ 4.00 $ 4.02 Assumed realized weighted unhedged price(4) Oil ($/bbl) $ 87.94 $ 81.85 $ 89.62 $ 89.41 Natural gas liquids ($/bbl) $ 42.66 $ 39.73 $ 43.47 $ 43.23 Natural gas ($/mcf) $ 3.12 $ 2.42 $ 2.76 $ 2.93 Assumed realized weighted hedged price(5) Oil ($/bbl) $ 87.94 $ 81.21 $ 85.37 $ 85.66 Natural gas liquids ($/bbl) $ 42.66 $ 39.41 $ 41.38 $ 41.38 Percent of oil volumes hedged 33.4 % 49.9 % 50.0 % Oil hedged price ($/bbl) $ $ 84.18 $ 84.74 $ 85.48 Percent of natural gas liquids volumes hedged 33.6 % 50.0 % 50.0 % Natural gas liquids hedged price ($/bbl) $ $ 41.41 $ 41.68 $ 42.05 Estimated cash available for distribution Oil sales revenues $ 11,736 $ 14,422 $ 16,184 $ 16,198 Natural gas liquids sales revenues 9,285 11,838 13,126 13,121 Natural gas sales revenues 6,707 6,945 8,038 8,578 Realized gains (losses) from derivative contracts (207 ) (1,398 ) (1,241 ) Operating revenues and realized gains (losses) from derivative contracts 27,729 32,998 35,951 36,656 Production taxes (1,023 ) (924 ) (987 ) (974 ) Trust administrative expenses(6) (1,327 ) (250 ) (250 ) (250 ) Total trust expenses (2,350 ) (1,174 ) (1,237 ) (1,224 ) Cash available for distribution $ 25,379 $ 31,825 $ 34,714 $ 35,432 Trust units outstanding 46,750 46,750 46,750 46,750 Target distribution per trust unit $ 0.54 $ 0.68 $ 0.74 $ 0.76 Subordination threshold per trust unit $ 0.43 $ 0.54 $ 0.59 $ 0.61 Incentive threshold per trust unit $ 0.65 $ 0.82 $ 0.89 $ 0.91 Table of Contents Index to Financial Statements (1) The three months ending September 30, 2011 include proceeds attributable to two months of production from July 1, 2011 to August 31, 2011. Thereafter, quarterly distributions will generally include royalties attributable to sales of oil, natural gas liquids and natural gas for three months, including the first two months of the quarter just ended as well as the last month of the quarter prior to that one. (2) The three months ending September 30, 2011 reflect historical production volumes for July and August 2011 and management estimates of production taxes for July and August 2011. (3) Average NYMEX spot, settled and futures prices, as reported October 28, 2011. For a description of the effect of lower NYMEX prices on target cash distributions, please read Target Distributions and Subordination and Incentive Thresholds Sensitivity of Target Distributions to Changes in Oil, Natural Gas Liquids and Natural Gas Prices and Volumes beginning on page 63. (4) Sales price net of forecasted gravity quality, btu content, transportation costs, and marketing costs. For information about the estimates and assumptions made in preparing the table above, see Target Distributions and Subordination and Incentive Thresholds Significant Assumptions Used to Calculate the Target Distributions beginning on page 58. (5) No hedging arrangements will cover natural gas. (6) Includes the establishment of an initial cash reserve of $1.0 million for trust expenses in period ending September 30, 2011. Chesapeake Energy Corporation Chesapeake is the second-largest producer of natural gas, is among the top 15 producers of oil and natural gas liquids and is the most active driller, based on rig count, of new oil and natural gas wells in the U.S. Chesapeake s operations are focused on discovering and developing unconventional natural gas and oil fields onshore in the U.S. Chesapeake owns leading positions in the Barnett, Haynesville, Bossier, Marcellus and Pearsall natural gas shale plays and in the Granite Wash, Cleveland, Tonkawa, Mississippian, Bone Spring, Avalon, Wolfcamp, Wolfberry, Eagle Ford, Niobrara, Frontier, Codell, Bakken/Three Forks and Utica unconventional liquids plays. It has also vertically integrated its operations and owns substantial midstream, compression, drilling and oilfield service assets. As of June 30, 2011, Chesapeake had total assets of approximately $36.7 billion and total estimated net proved reserves of 16.5 tcfe. Chesapeake has approximately 61,100 net acres leased in the Colony Granite Wash and as of June 30, 2011, Chesapeake was operating nine rigs in the Colony Granite Wash. Chesapeake s principal executive offices are located at 6100 North Western Avenue, Oklahoma City, Oklahoma 73118 and its telephone number is (405) 848-8000. Chesapeake s website is www.chk.com; however, the information contained on Chesapeake s website is not incorporated by reference into this prospectus. The trust units do not represent interests in or obligations of Chesapeake. Key Investment Considerations The following are some key investment considerations related to the Underlying Properties, the royalty interests and the common units: The royalty interests being contributed to the trust are from the highly-productive Colony Granite Wash Play. The existing Producing Wells and the Development Wells to be drilled target the Colony Granite Wash play within the broader Granite Wash formation of the Anadarko Basin, which is the largest non-shale resource play in the Mid-Continent. This highly-productive play has been a focus area for recent development, with 173 horizontal wells targeting the Des Moines formation drilled in the Colony Granite Wash since 2007. Of those 173 wells, Chesapeake has drilled 133 wells and participated in another 35 wells. As of June 30, 2011, there were 15 active rigs drilling horizontal wells in the play, with nine of those rigs drilling for Chesapeake. Liquids-weighted revenue and production profiles provide long-term exposure to oil prices. Over the 20-year producing life of the trust, 72% of net revenues (based on October 28, 2011 strip prices) and 48% of production are projected to be derived from oil and natural gas liquids. Although natural gas Table of Contents Index to Financial Statements liquids typically sell for less than oil on a volume equivalency basis, natural gas liquids prices have historically been highly correlated with oil prices. As a result, the unhedged portion of liquids revenues during the hedge period and all liquids revenues beyond the hedge period are directly exposed to oil prices, and the amount of trust distributions and consequently trust performance is expected to be highly correlated to fluctuations in the price of oil. Royalty interests not burdened by operating or capital costs. The trust will not be responsible for any operating or capital costs associated with the Underlying Properties, including the costs to drill and complete the Development Wells. The trust will bear its proportionate share of post-production expenses, any applicable taxes and trust expenses. Exposure to oil and natural gas liquids price volatility mitigated through September 30, 2015. The trust will be a party to hedging arrangements covering a portion of the trust s expected oil and natural gas liquids production through September 30, 2015. The trust will hedge approximately 50% of the expected oil and natural gas liquids production and approximately 37% of the trust s expected revenues (based on NYMEX strip oil prices as of October 28, 2011) upon which the target distributions from October 1, 2011 through September 30, 2015 are based. These hedging arrangements are expected to reduce the trust s exposure to fluctuations in the prices of oil through the third quarter of 2015. Alignment of interests between Chesapeake and the trust unitholders. Chesapeake has significant incentives to complete its drilling obligation and increase production from the Underlying Properties as a result of the following factors: Chesapeake will initially have a significant economic interest in the Underlying Properties through its 50% retained interest in the Development Wells, 10% retained interest in the Producing Wells and its ownership of approximately 50% of the trust units. A portion of the trust units that Chesapeake will own, constituting 25% of the total outstanding trust units, will be subordinated units that will not be entitled to receive distributions unless there is sufficient cash to pay the subordination threshold amount to the common units. In addition, these subordinated units will only convert into common units at the end of the fourth full calendar quarter following Chesapeake s satisfaction of its drilling obligation to the trust. To the extent that the trust has cash available for distribution in excess of the incentive thresholds during the subordination period, Chesapeake will be entitled to receive 50% of such cash as incentive distributions, plus its pro rata share of the remaining 50% of such cash by virtue of its ownership of 23,375,000 total units. Chesapeake will not be permitted to drill or complete any wells for its own account within the AMI or sell the Underlying Properties until it has satisfied its drilling obligation. If Chesapeake does not fulfill its drilling obligation by June 30, 2016, the trust may foreclose on the Drilling Support Lien on the Underlying Properties. See The Trust Development Agreement and Drilling Support Lien beginning on page 46. The Colony Granite Wash represents a core asset for Chesapeake. The approximately 61,100 net acres held by Chesapeake in the Colony Granite Wash represent one of its core assets. Chesapeake has grown its position in the Colony Granite Wash since it began drilling horizontal wells there in 2007 based on its belief that the formation can provide attractive returns on invested capital and its belief that the play will further Chesapeake s goal of increasing the proportion of its liquids production. As of June 30, 2011, Chesapeake had nine rigs drilling horizontal wells in the Colony Granite Wash. Chesapeake is an experienced operator in the Colony Granite Wash. Since 2007, Chesapeake has drilled, as operator, 133 of the 173 horizontal wells drilled by the industry in the Colony Granite Wash to date, 131 of which are completed and the remaining two of which are awaiting completion and expected to be Table of Contents Index to Financial Statements productive. Of the 133 horizontal wells drilled by Chesapeake in the Colony Granite Wash, 125 are located in Washita County, in which the Underlying Properties are located. Chesapeake expects to operate approximately 93% of the Development Wells until the completion of its drilling obligation, allowing Chesapeake to control the timing and amount of discretionary expenditures for operational and development activities with respect to the majority of the Development Wells. The Colony Granite Wash is serviced by well-developed gathering systems and transportation pipelines. Chesapeake s affiliate, Chesapeake Midstream Partners, L.P. ( Chesapeake Midstream Partners ), provides Chesapeake with gathering, treating and compression services for natural gas produced in the Colony Granite Wash and is expected to continue to provide these services with respect to substantially all of the natural gas and natural gas liquids produced by the Underlying Properties. The natural gas gathering systems are connected to an extensive intrastate natural gas transportation pipeline system owned by Enogex LLC ( Enogex ), a subsidiary of publicly-held OGE Energy Corp. Chesapeake s wholly owned subsidiary, Chesapeake Midstream Development, L.P. ( Chesapeake Midstream Development ), gathers oil production from the Colony Granite Wash through its gathering systems and third parties gather other oil by truck. The oil is further transported to Plains All American Pipeline, L.P. ( Plains ), a publicly-held master limited partnership, through its pipeline and by truck. The well-developed gathering systems in the Colony Granite Wash and Chesapeake s affiliation with the primary service providers allow close coordination regarding the availability of midstream services and reduce the risk that such services would not be available as Development Wells are drilled. Rigs and services readily available to allow timely drilling and completion of wells. Chesapeake s substantial oilfield service operations, including drilling rigs, pressure pumping equipment, trucking, oilfield tools, location and road construction and roustabout services, support its drilling activities and will allow Chesapeake to manage the development of the trust s leasehold efficiently and strategically. As of June 30, 2011, Chesapeake had nine drilling rigs operating in the Colony Granite Wash and owned or leased a total of 133 drilling rigs, which it uses to drill wells for its own account. Chesapeake estimates that only four to five rigs will be required to complete its drilling obligation within its contractual commitment to the trust. Chesapeake may use a combination of its own rigs and oilfield service businesses and third party rigs and services to drill and complete the Development Wells. Chesapeake s direct access to drilling rigs and related oilfield services should substantially mitigate any potential shortage of drilling and completion equipment and enable Chesapeake to achieve its projected drilling schedule. Potential for initial depletion to be offset by results of development drilling. Chesapeake intends to drill, or cause to be drilled, all of the Development Wells on PUD drilling locations in the AMI by June 30, 2015 and is obligated to complete such drilling by June 30, 2016. Furthermore, Chesapeake is incentivized to increase production in the near term due to its substantial ownership of trust units, the subordination and incentive distribution provisions of those units and its retained interest in the Underlying Properties. While production from the trust properties will decline over the long term, the anticipated production from the Development Wells is expected to more than offset depletion of the Producing Wells during the drilling period. Recognized sponsor with a successful track record and active drilling program. Chesapeake maintains the industry s most active drilling program, based on rig count. In 2010, Chesapeake drilled 1,445 gross (938 net) operated wells and participated in another 1,586 gross (211 net) wells operated by other companies. Chesapeake s drilling success rate in 2010 was 98% for both company-operated and non-operated wells. Daily production for 2010 averaged 2.836 bcfe, an increase of 355 mmcfe, or 14%, over the 2.481 bcfe of daily production for 2009, and consisted of 2.534 bcf of natural gas (89% on a natural gas equivalent basis) and 50,397 bbls of oil and natural gas liquids (11% on a natural gas equivalent basis). 2010 was Chesapeake s 21st consecutive year of production growth. Table of Contents Index to Financial Statements Proved Reserves Proved Reserves of Underlying Properties and Royalty Interests. The following table sets forth certain estimated proved reserves and the PV-10 value as of June 30, 2011 attributable to the Underlying Properties, the PDP Royalty Interest and the Development Royalty Interest, in each case derived from the reserve reports. The reserve reports were prepared by Ryder Scott in accordance with criteria established by the SEC. Proved reserve quantities attributable to the royalty interests are calculated by multiplying the gross reserves for each property attributable to Chesapeake s interest by the royalty interest assigned to the trust in each property. The reserves related to the Underlying Properties include all proved reserves expected to be economically produced during the life of the properties. The reserves attributable to the trust s interests include only the reserves attributable to the Underlying Properties that are expected to be produced within the 20-year period prior to the Termination Date as well as the residual 50% interest in the royalty interests that the trust will own on the Termination Date and subsequently sell. A summary of the reserve reports is included as Annex A to this prospectus. Proved Reserves(1) Oil (mbbl) Natural Gas Liquids (mbbl) Natural Gas (mmcf) Total (mboe) PV-10 Value(2) (In thousands) Underlying Properties: Developed 2,648 7,791 75,689 23,054 343,504 Undeveloped 8,290 18,640 179,931 56,919 510,087 Total 10,938 26,431 255,620 79,973 853,591 Royalty Interests: Developed (90%) 2,233 6,235 60,536 18,557 325,434 Undeveloped (50%) 4,002 8,319 80,325 25,709 485,706 Total 6,235 14,554 140,861 44,266 811,140 (1) The proved reserves were determined using a 12-month unweighted arithmetic average of the first-day-of-the-month prices for oil, natural gas liquids and natural gas for the period from July 1, 2010 through June 1, 2011, without giving effect to derivative transactions, and were held constant for the life of the properties. The prices used in the reserve reports, as well as Chesapeake s internal reports, yield weighted average prices at the wellhead, which are based on first-day-of-the-month reference prices and adjusted for transportation and regional price differentials and, for the royalty interests, costs of marketing services provided by Chesapeake affiliates, which will not be charged to the trust. The reference prices and the equivalent weighted average wellhead prices as of June 30, 2011 are presented in the table below. Oil (per bbl) Natural gas liquids (per bbl) Natural gas (per mcf) Trailing 12-month average pricing $ 89.86 $ 89.86 $ 4.21 Weighted average wellhead prices (Underlying Properties) $ 86.08 $ 39.83 $ 2.93 Weighted average wellhead prices (royalty interests) $ 86.09 $ 39.80 $ 2.86 (2) PV-10 is the present value of estimated future net revenue to be generated from the production of proved reserves, discounted using an annual discount rate of 10% (as required by the SEC), calculated without deducting future income taxes. PV-10 is a non-GAAP financial measure and generally differs from standardized measure of discounted net cash flows, or Standardized Measure, the most directly comparable GAAP financial measure, because it does not include the effects of income taxes on future net revenues. Because the historical financial information related to the Underlying Properties consists solely of revenues and direct operating expenses and does not include the effect of income taxes, we expect the PV-10 and Standardized Measure attributable to the Underlying Properties for each period to be the same. Because the trust will not bear federal income tax expense, we also expect the PV-10 and Standardized Measure attributable to the royalty interests for each period to be the same. Neither PV-10 nor Standardized Measure represents an estimate of the fair market value of the Underlying Properties or the royalty interests. We and others in our industry use PV-10 as a measure to compare the relative size and value of proved reserves held by companies without regard to the specific tax characteristics of such entities. PV-10 for the royalty interests has been calculated without deduction for production and development costs, as the trust will not bear those costs. Table of Contents Index to Financial Statements At the Termination Date, the estimated reserves attributable to the residual 50% interest in the royalty interests that the trust will own on the Termination Date and subsequently sell are 5.0 mmboe. The PV-10 value of such reserves calculated using 12-month trailing SEC pricing as of June 30, 2011 is $9.2 million. Underlying Production Attributable to Target Distributions. The following production bar graph summarizes estimated production underlying trust revenues used to determine Target Distributions. (1) Due to the July 1, 2011 effective date of the royalty interests and the timing of payments received by the trust for production in determining Target Distributions, the 2011 production forecast includes production from July 1, 2011 through November 30, 2011. (2) Due to the June 30, 2031 termination date of the trust and the timing of payments received by the trust for production in determining Target Distributions, the 2031 production forecast includes production from December 1, 2030 to June 30, 2031. (3) Net production for 2011 includes historical production volumes for July and August 2011. Table of Contents Index to Financial Statements
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+Cost of Sales - Intellectual Property Licenses We recorded cost of sales - intellectual property licenses of $73,538 for the fiscal year ended March 31, 2011 compared to $19,057 for the fiscal year ended March 31, 2010, an increase of $54,481. The increase in cost of sales intellectual property licenses was due to the revenue increase noted above. Cost of sales - intellectual property licenses consists of certain royalty expenses, amortization of prepaid royalty costs and amortization of certain intangible assets. In the fiscal years ended March 31, 2011, and 2010, all of the cost of sales intellectual property licenses related to royalties for the Left Behind, Keys of the Kingdom and Charlie Church Mouse games as noted below: Fiscal Year Ended March 31, 2011 2010 Left Behind License $ 59,783 $ 3,196 Charlie Church Mouse License 600 10,155 Keys of the Kingdom License 13,155 5,706 Total Cost of Sales - intellectual Property Costs $ 73,538 $ 19,057 Selling, General and Administrative Expenses Selling, general and administrative expenses were $929,815 for the fiscal year ended March 31, 2011, compared to $1,038,790 for the fiscal year ended March 31, 2010, a decrease of $108,975 or 10%. This decrease was primarily the result of a credit of $119,535 in the prior year related to the reversal of a lease-related reserve for an abandoned office space. Consulting and Professional Fees Consulting and professional fees were $1,918,430 for the fiscal year ended March 31, 2011, compared to $9,193,481 for the fiscal year ended March 31, 2010, a decrease of $7,275,051, or 79%. This decrease was largely due to a $5,563,764 reduction in payments to our marketing consultants, which in turn was driven by a $4,618,000 decrease in the cost of share-based payments under convertible notes to consultants The reason for this significant change was because our consulting arrangements, which have since been terminated, were based upon a number of shares to be issued monthly if converted. Accordingly, based upon fair-value accounting rules the price of our stock determined the amount of each expense, rather than the cash amount converted into shares. Salaries and Wages Wages and salaries were $1,606,636 for the fiscal year ended March 31, 2011, compared to $4,152,041 for the fiscal year ended March 31, 2010, a decrease of $2,545,405 or 61%. We paid certain of our employees and directors in shares of restricted common stock rather than in cash. During the fiscal years ended March 31, 2011 and 2010, we recorded expenses relating to these non-cash payments to employees and directors of $203,981 and $3,657,100, a decrease of $3,453,119. The non-cash payments in the fiscal year ended March 31, 2010 included stock issued to our CEO, Troy Lyndon, equal to $3,270,100 and our Director, Richard Knox, Jr. equal to $327,000. The non-cash payments in the fiscal year ended March 31, 2011 were to a number of full-time and part-time employees. Product Development Expenses Product development expenses were $1,680,578 for the fiscal year ended March 31, 2011 compared to $1,600,807 for the fiscal year ended March 31, 2010, an increase of $79,771, or 5%. This increase was due to greater fees paid under the Cloud 9 license. Other Income and Expenses We recorded other expense of $182,825 in the fiscal year ended March 31, 2011. This other expense was all related to our interest expense and loss on settlement of debt. We recorded other expense of $5,380,855 in the fiscal year ended March 31, 2010. This other expense was all related to our interest expense, including $336,498 in amortization of debt discounts, $2,770,899 related to induced conversions of our convertible notes payable and $2,204,434 of a loss on settlement of debt due to the fair value of our common stock exceeded the carrying value of the related debt that was settled. Net Loss As a result of the above factors, we reported a net loss of $5,487,843 for the fiscal year ended March 31, 2011, compared to a net loss of $21,327,855 for the fiscal year ended March 31, 2010, resulting in a decreased loss of $15,840,012. In addition, our accumulated deficit at March 31, 2011, totaled $70,870,169. These increases are attributable primarily to the factors discussed above. LIQUIDITY AND CAPITAL RESOURCES At June 30, 2011, we had $24,616 of cash compared to $21,180 of cash at March 31, 2011, an increase of $3,436. At June 30, 2011, we had a working capital deficit of $1,854,791 compared to a working capital deficit of $1,633,122 at March 31, 2011. Operating Activities For the three month periods ended June 30, 2011 and 2010, net cash used in operating activities was $313,276 and $435,036, respectively. The net losses for the three month periods ended June 30, 2011 and 2010 were $1,150,025 and $2,912,802, respectively, a decrease of $1,762,777. Investing Activities We did not invest in fixed assets during the three month period ended June 30, 2011 compared to an investment of $14,447 in the 2010 period. Financing Activities For the three month periods ended June 30, 2011 and 2010, net cash provided by financing activities was $286,812 and $409,588, respectively. The primary elements of cash provided by financing activities in both periods were the sale of common stock and borrowings under notes payable. Future Financing Needs Since our inception in August 2002 through June 30, 2011, we have raised approximately $14 million through funds provided by private placement offerings and convertible notes. This was sufficient to enable us to develop our first product and expand our product line to include 11 games. Although we expect this trend of financing our business through private placement offerings to continue, we can make no guarantee that we will be adequately financed going forward. We do not currently have enough capital to sustain our operations for the next 12 months. We will need to continue raising capital through privately placed offerings in order to continue our operations over the next 12 months. It is also anticipated that in the event we are able to continue raising funds at a pace that exceeds our minimum capital requirements, we may elect to spend cash to expand operations or take advantage of business and marketing opportunities for our long-term benefit. Additionally, we intend to continue to use equity whenever possible to finance marketing, public relations and development services that we may not otherwise be able to obtain without cash. To date, we have financed our operations primarily through the sale of shares of our common stock and through the issuance of debt instruments. During the three months ended June 30, 2011, we raised $159,812 of cash through the sale of common stock to certain accredited investors. We continue to generate operating losses. We are currently authorized to issue up to 10 billion shares of common stock. To date, 8,483,677,147 shares of common stock are issued and outstanding. In addition, we have reserved 1 billion shares of common stock for issuance under our 2011 Stock Incentive Plan and are obligated to issue an aggregate of 425,000,000 shares of common stock pursuant to securities exercisable or convertible into shares of common stock. In order to raise additional capital through the issuance of shares of common stock or securities exercisable or convertible into shares of common stock, we will have increase our authorized common stock which requires us to file an Information Statement with the Securities and Exchange Commission and an Amendment to our Articles of Incorporation with the Secretary of State of the State of Nevada. Furthermore, the report by our Independent Registered Public Accounting Firm on our financial statements includes a paragraph describing substantial doubt about our ability to continue as a going concern as of and for the year ended March 31, 2011. Going Concern The accompanying consolidated financial statements have been prepared assuming we will continue as a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the ordinary course of business. Since our inception, we have an accumulated deficit of $72,020,194. We have suffered continuing losses from operations and have negative working capital of $1,854,791, which, among other matters, raises substantial doubt about our ability to continue as a going concern. A significant amount of additional capital will be necessary to advance the development and distribution of our products to the point at which they may generate sufficient gross profits to cover our operating expenses. We intend to fund operations through debt and/or equity financing arrangements, which management believes may be insufficient to fund our capital expenditures, working capital and other cash requirements (consisting of accounts payable, accrued liabilities, amounts due to related parties and amounts due under various notes payable) for the fiscal year ending March 31, 2012. Therefore, we will be required to seek additional funds to finance our long-term operations. We are currently addressing our liquidity issue by continually seeking investment capital through the public markets, specifically, through private placements of common stock and debt. However, no assurance can be given that we will receive any funds in addition to the funds we have received to date. The successful outcome of future activities cannot be determined at this time and there is no assurance that, if achieved, we will have sufficient funds to execute our intended business plan or generate positive operating results. The consolidated financial statements do not include any adjustments related to recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result should we be unable to continue as a going concern. Critical Accounting Policies Our consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis of making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions, however, in the past the estimates and assumptions have been materially accurate and have not required any significant changes. Specific sensitivity of each of the estimates and assumptions to change based on other outcomes that are reasonably likely to occur and would have a material effect is identified individually in each of the discussions of the critical accounting policies described below. Should we experience significant changes in the estimates or assumptions which would cause a material change to the amounts used in the preparation of our financial statements, material quantitative information will be made available to investors as soon as it is reasonably available. We believe the following critical accounting policies, among others, affect our more significant judgments and estimates used in the preparation of our consolidated financial statements: Software Development Costs. Research and development costs, which consist of software development costs, are expensed as incurred. Software development costs primarily include payments made to independent software developers under development agreements. Accounting standards provide for the capitalization of certain software development costs incurred after technological feasibility of the software is established or for the development costs that have alternative future uses. We believe that the technological feasibility of the underlying software is not established until substantially all product development is complete, which generally includes the development of a working model. No software development costs have been capitalized to date. Impairment of Long-Lived Assets. We review our long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of the assets to future net cash flows expected to be generated by the assets. If the assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount exceeds the present value of estimated future cash flows. At June 30, 2011, our management believes there is no impairment of our long-lived assets other than the lease-hold improvements of its abandoned office space and certain trademark costs both of which have been written off in the fiscal year ended March 31, 2008. There can be no assurance however; that market conditions will not change or that there will be demand for our products, which could result in impairment of long-lived assets in the future. Stock-Based Compensation. Effective April 1, 2006, on the first day of our fiscal year 2006, we adopted the fair value recognition provisions of the accounting standards applied at that time, using the modified-prospective transition method. Under this transition method, compensation cost recognized in the fiscal year ended March 31, 2007 includes: (a) compensation cost for all share-based payments granted and not yet vested prior to April 1, 2006, based on the grant date fair value estimated in accordance with the accounting standards, and (b) compensation cost for all share-based payments granted subsequent to March 31, 2006 based on the grant-date fair value estimated in accordance with the provisions of accounting standards. Accounting standards requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. As of March 31, 2008, we had no options outstanding and therefore believe the adoption of this accounting standard had an immaterial effect on the accompanying consolidated financial statements. Stock-based awards to non-employees are accounted for using the fair value method in accordance with accounting standards. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. The measurement date used to determine the fair value of the equity instrument issued is the earlier of the date on which the third-party performance is complete or the date on which it is probable that performance will occur. We account for stock-based awards to non-employees by using the fair value method. In accordance with accounting standards, an asset acquired in exchange for the issuance of fully vested, non-forfeitable equity instruments should not be presented or classified as an offset to equity on the grantor s balance sheet once the equity instrument is granted for accounting purposes. Accordingly, we have recorded the fair value of the common stock issued for certain future consulting services as prepaid expenses in its consolidated balance sheet. Revenue Recognition. We evaluate the recognition of revenue based on the criteria set forth in accounting standards. We evaluate revenue recognition using the following basic criteria and recognize revenue when all four of the following criteria are met: Persuasive evidence of an arrangement exists: Evidence of an agreement with the customer that reflects the terms and conditions to deliver products must be present in order to recognize revenue. Delivery has occurred: Delivery is considered to occur when the products are shipped and risk of loss and reward have been transferred to the customer. The seller s price to the buyer is fixed and determinable: If an arrangement includes rights of return or rights to refunds without return, revenue is recognized at the time the amount of future returns or refunds can be reasonably estimated or at the time when the return privilege has substantially expired in accordance with SFAS No. 48, Revenue Recognition When Right of Return Exists. If an arrangement requires us to rebate or credit a portion of our sales price if the customer subsequently reduces its sales price for our product to its customers, revenue is recognized at the time the amount of future price concessions can be reasonably estimated, or at the time of customer sell-through. Collectibility is reasonably assured: At the time of the transaction, we conduct a credit review of each customer involved in a significant transaction to determine the creditworthiness of the customer. Collection is deemed probable if we expect the customer to be able to pay amounts under the arrangement as those amounts become due. If we determine that collection is not probable, we recognize revenue when collection becomes probable (generally upon cash collection). For sales to our large retail customers, we defer revenue recognition until the resale of the products to the end customers, or the sell-through method. Under sell-through revenue accounting, accounts receivable are recognized and inventory is relieved upon shipment to the channel partner or retail customer as title to the inventory is transferred upon shipment, at which point we have a legally enforceable right to collection under normal terms. The associated sales and cost of sales are deferred by recording deferred income product sales (gross profit margin on these sales) as shown on the face of the consolidated balance sheet. When the related product is sold by our primary channel partner or our largest retail customer to their end customers, we recognize previously deferred income as sales and cost of sales. Our large retail customers provide us with sell-through information on a frequent basis regarding sales to end customers and in-channel inventories. For sales to our on-line store customers, revenues are deferred until such time as the right of return privilege granted to the customers lapses, which is thirty (30) days from the date of sale for unopened games. For sales to our Christian bookstore customers and all other customers that cannot provide us with sell-through information and for which we may accept product returns from time to time, revenues are recognized on a cash receipts basis. In the future, we intend to continue using the sell-through methodology from customers that supply us with sell through reports. We also plan to continue recognizing sales on our on-line store after a one month lag to allow for the right that we have given our on-line customers to return unopened games for thirty (30) days. We continue to accumulate historical product return and price concession information related to our Christian bookstore customers and all other customers. In future periods, we may elect to return to the accrual methodology of recording revenue for those customers upon shipment with estimated reserves at which time we believe we can reasonably estimate returns and price concessions to these customers based upon our historical results. Revenue from Sales of Consignment Inventory. We have placed consignment inventory with certain customers. We receive payment from those customers only when they sell our product to the end consumers. We recognize revenue from the sale of consignment inventory only when we receive payment from those customers. Shipping and Handling: In accordance with accounting standards, we recognize amounts billed to customers for shipping and handling as revenue. Additionally, shipping and handling costs incurred by us are included in cost of goods sold. Historically, we promoted our products with advertising, consumer incentive and trade promotions. Such programs include, but are not limited to, cooperative advertising, promotional discounts, coupons, rebates, in-store display incentives, volume based incentives and product introductory payments (i.e. slotting fees). In accordance with accounting standards, certain payments made to customers by us, including promotional sales allowances, cooperative advertising and product introductory expenditures have been deducted from revenue. During the three months ended June 30, 2011, we had no such types of arrangements. Off-Balance Sheet Arrangements We presently do not have any off-balance sheet arrangements. BUSINESS Background Left Behind Games Inc. d/b/a Inspired Media Entertainment (herein referred to as the Company , LFBG , we , us , our or similar terms), was founded on December 31, 2001, and incorporated in the State of Delaware on August 22, 2002, and reincorporated in the State of Nevada on January 17, 2011. The Company is the only publicly-traded exclusive publisher of Christian modern media. It is the world leader in the publication of Christian video games and a Christian social network provider. Trade names include Inspired Media Entertainment , LB Games , Cloud 9 Games and MyPraize. The Company and its subsidiaries produce quality interactive experiences including entertainment products that perpetuate positive values and appeal to faith-based and mainstream audiences. Our common stock is quoted on the OTCQB under the ticker symbol LFBG. Left Behind Games Inc. became a public company on February 7, 2006. On that date, through a reverse merger, we acquired the public entity Bonanza Gold, Inc., a Washington corporation which had been in operation since 1961. As a result of the share exchange agreement, LFBG shareholders and management controlled the new public company. As part of the transaction, we changed the Company s name to Left Behind Games, Inc. and are currently doing business under our various trade names.
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+PROSPECTUS SUMMARY This summary highlights certain information contained elsewhere in this prospectus. This summary does not contain all of the information you should consider before investing in our common stock. You should carefully read the entire prospectus, including Risk Factors and our financial statements and related notes, before you decide whether to invest in our common stock. Investing in our common stock involves risks. See Risk Factors beginning on page 3. All dollar amounts referred to in this prospectus are in U.S. dollars unless otherwise indicated. Any discrepancies in the tables included herein between the amounts listed and the totals thereof are due to rounding. Unless otherwise indicated or unless the context otherwise requires, all references in this document to we, us, our, the Company and similar expressions are references to Tri-Valley Corporation and, depending on the context, its subsidiaries. Our Company and Business We operate as the parent company for our principal subsidiaries, Tri-Valley Oil & Gas Co., or TVOG, which explores for and produces oil and natural gas in California, and Select Resources Corporation, Inc., or Select Resources, which holds and maintains two major mineral assets in the State of Alaska. Risks Associated with Our Business Our business is subject to numerous risks. Please see the Risk Factors section beginning on page 3 of this prospectus. Corporate Information We were incorporated in Delaware in September 1971 and changed our name to Tri-Valley Corporation in January 1991. Our executive offices are located at 4550 California Avenue, Suite 600, Bakersfield, California 93309, and our telephone number is (661) 864-0500. The URL of our website is www.tri-valleycorp.com. The information on, or that can be accessed through, our website is not incorporated by reference into this prospectus and should not be considered to be a part of this prospectus. THE OFFERING Common stock offered by us None Common stock offered by selling stockholders 10,070,000 shares NYSE Amex Symbol TIV Proceeds to us None
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0000040528_medclean_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0000040528_medclean_prospectus_summary.txt
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+PROSPECTUS SUMMARY This summary highlights selected information contained elsewhere in this Prospectus. This summary does not contain all the information that a person should consider before investing in the Company s securities. A potential investor should carefully read the entire Prospectus, including Risk Factors and the Consolidated Financial Statements, before making an investment decision. In this prospectus, MCLN, the Company, we, us and our refers to MedClean Technologies, Inc. Aduromed refers to the Company s former wholly-owned subsidiary which was merged with and into the Company effective January 2, 2009. The Company Background MedClean Technologies, Inc. ( MCLN, MedClean or the Company ) is in the business of providing medical waste treatment solutions. MedClean designs, sells, and installs turnkey regulated medical waste solutions that are flexible enough to be installed as a custom configuration at a customer location, delivered as a self-contained portable solution for specific applications, and can also scale in size to support the needs of independent waste processing facilities serving a wide variety of customer s needs. MedClean also provides services, through its extensive distributor and transport partner program that enables the Company the flexibility to service most, if not all, regulated medical waste streams as well as support HIPAA document destruction. The principal business offices of MedClean are located at 3 Trowbridge Drive, Bethel, Connecticut 06801, and their telephone number at that address is (203) 798-1080. On November 1, 2008, the Company began leasing the remaining 11,834 sq ft of space at its existing facility in Bethel, CT., in order to provide additional space for assembling the MedClean systems (See Description of Properties below). Recent Developments On March 31, 2011, Mr. Scott Grisanti resigned as Chairman of the Company s board of directors. Mr. Grisanti will continue to serve as a director of the Company. Further, on March 31, 2011, Mr. Jay Bendis was appointed as Chairman of the Company s board of directors. A description of the relevant work experience of Messrs. Grisanti and Bendis can be found under Item 10. Directors, Executive Officers, and Corporate Governance and such descriptions are incorporated herein by reference. On April 1, 2011, Mr. Ronald LaMorte retired from his position on the board of directors. His retirement was not the result of any disagreements with the Company on any matters relating to the Company s operations, policies or practices. History Effective January 2, 2009, the Company changed its corporate name from Aduromed Industries, Inc. to MedClean Technologies, Inc. Also, effective January 2, 2009, the Company merged its former wholly-owned subsidiary, Aduromed Corporation ( Aduromed ), with and into the Company. On July 10, 2008, Aduromed entered into a Master Restructuring Agreement ( MRA ) with Pequot Capital Management, Inc. ( Pequot ), on behalf of various funds managed by Pequot (the Pequot Funds ), Sherleigh Associates Inc. Defined Benefit Pension Plan ( Sherleigh ), holders of $1,225,000 in principal amount of the Company s 12% Secured Promissory Notes due July 31, 2008 (the Bridge Loan Holders ), and Mr. Joseph Esposito, corporate and business development advisor to the Company ( Esposito ) regarding their respective investments in the Company (the MRA ). Existing investments in the Company were restructured pursuant to the terms of the MRA and certain other changes were implemented and all transactions were deemed to occur contemporaneously as of August 4, 2008 (the Effective Time ). The major terms of the MRA are as follows: Sherleigh (i) exchanged its shares of Series A and Series B Preferred Stock into 20,000,081 shares of common stock of the Company, par value $0.0001 per share ( Common Stock ), (ii) exchanged accumulated dividends payable on its Series A and Series B Preferred Stock as of June 30, 2008 in the amount of $383,576 into 15,343,040 shares of Common Stock and received additional common stock purchase warrants for 15,343,040 shares of Common Stock at an exercise price of $0.025 per share, and (iii) exchanged liquidated damages in the amount of $215,000 payable to Sherleigh by the Company into 8,600,000 shares of Common Stock and received additional common stock purchase warrants for 8,600,000 shares of Common Stock at an exercise price of $0.025 per share. The Pequot Funds surrendered their shares of Series A and Series B Preferred Stock to the Company, which shares were cancelled, and the Pequot Funds forfeited their right to receive accumulated dividends payable on their Preferred Stock as of June 30, 2008 in the amount of $690,436 and liquidated damages in the amount of $387,000 payable to the Pequot Funds by the Company. The Series A and B Preferred warrants were amended such that they collectively represent the right to purchase 55,999,998 shares of Common Stock at an exercise price of $0.025 per share, of which Pequot Funds hold warrants for the purchase of 36,000,001 shares of Common Stock and Sherleigh holds warrants for the purchase of 19,999,997 shares of Common Stock. Further, the weighted average anti-dilution rights were terminated. Aduromed was formed in 1997, as a Connecticut limited liability company by Mr. Damien R. Tanaka and two investors/members under the name Automated Process LLC. In September, 2002, (i) the two investors/members withdrew as members, (ii) Aduromed was reorganized as a Delaware corporation, changing its name to Aduromed Corporation and (iii) several third parties invested funds in Aduromed to become minority shareholders, warrant holders and creditors. MCLN s Business The principal product of MedClean is providing medical waste treatment solutions. The Company designs, sells, and installs turnkey regulated medical waste solutions that are flexible enough to be installed as a custom configuration at a customer location, delivered as a self-contained portable solution for specific applications, and can also scale in size to support the needs of independent waste processing facilities serving a wide variety of customer s needs. The Company also provides services, through its extensive distributor and transport partner program that enables the Company the flexibility to service most, if not all, regulated medical waste streams as well as support HIPAA document destruction. All MedClean products and services are focused on the conversion of Regulated Medical Waste (RMW) into municipal solid waste (MSW). The disposal of both RMW and MSW is generally regulated on the state and local levels. RMW is solid non-hazardous waste generated in connection with the diagnosis, treatment or immunization of human beings or animals, in research pertaining thereto, or in the production of testing of biologicals, and includes bandages and other materials containing potentially infectious bodily fluids, culture dishes and other glassware, discarded surgical gloves and surgical instruments, sharps (e.g. needles), cultures, stocks, swabs and lancets. The MedClean System is comprised of integrated equipment installed at a generator s medical facility or a processor s treatment facility and is comprised of (i) an autoclave vessel to sterilize the material, (ii) a shredding device to convert the material into unrecognizable confetti-like material, (iii) its Auto-Touch proprietary control panel, (iv) and related services as required. Ancillary equipment includes Quiet Carts with disposable plastic liners used for intramural collection of the RMW at points of generation within the medical facility, the containerization of the waste during the autoclave sterilization process and the mechanical dumping of the waste into the shredding device. The System is automated to minimize personnel contact with the material and to assure regulatory compliance in the conversion process (See Business of the Company - Products below). MedClean s consumable supplies, sold periodically to customers, include the liners for the Quiet Carts , cutting blades for the shredder and supplies such as deodorizers and paper print rolls for use with the autoclaves and control panels. (See Business of the Company - Products below). The Offering Common stock offered by selling security holders 400,000,000 shares of common stock. Common stock outstanding before the offering 1,300,631,369 shares of common stock as of May 2, 2011. Common stock outstanding after the offering 1,700,631,369 shares of common stock. Terms of the Offering The selling security holders will determine when and how they will sell the common stock offered in this prospectus. Termination of the Offering This offering will terminate thirty six (36) months after the registration statement to which this prospectus is made a part is declared effective by the SEC pursuant to the Equity Credit Agreement. Use of proceeds We will not receive any proceeds from the sale of the shares of common stock offered by the Selling Security Holders. However, we will receive proceeds from sale of our common stock under the Equity Credit Agreement. The proceeds from the offering will be used for working capital and general corporate purposes. See Use of Proceeds.
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0000055604_keystone_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0000055604_keystone_prospectus_summary.txt
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+Record date 5:00 p.m., New York City time, on [ ], 2011. Subscription price The subscription price is $[ ] per share, payable in cash. The subscription price represents a premium of [ ]% to the last reported sales price of our common stock on the OTCQB on May 18, 2011, the last trading day prior to the announcement of our intent to commence this subscription rights offering. Basic subscription right The basic subscription right of each subscription right will entitle you to purchase 0.25 shares of our common stock at a subscription price of $[ ] per share. We will not issue fractional shares of common stock in the subscription rights offering, and holders will only be entitled to purchase a whole number of shares of common stock, rounded down to the nearest whole number a holder would otherwise be entitled to purchase. Over-subscription privilege If you elect to exercise your basic subscription right in full, then you may also subscribe for additional shares at the same subscription price per share. If an insufficient number of shares are available to satisfy fully the over-subscription requests, then the available shares will be distributed proportionately among subscription rights holders who exercised their over-subscription privilege based on the number of shares each subscription rights holder subscribed for under his, her or its basic subscription rights. The subscription agent will return any excess subscription price payments by mail without interest or deduction promptly after the expiration of the subscription rights offering. Fractional shares We will not issue fractional shares in the subscription rights offering. Holders of our common stock will only be entitled to purchase a whole number of shares of our common stock, rounded down to the nearest whole share a holder would otherwise be entitled to purchase. Expiration date The subscription rights offering will expire at 5:00 p.m., New York City time, on [ ], 2011, unless we decide, in our sole discretion, to extend the expiration date. No one may exercise subscription rights after the expiration date. Use of proceeds The proceeds from the sale of shares of common stock in this subscription rights offering will be approximately $[ ] million. This amount includes the $[ ] million aggregate proceeds relating to the 2,274,095 shares of our common stock in the subscription rights offering that Contran has agreed to purchase pursuant to its basic subscription rights. Contran has agreed to reimburse us for all reasonable out-of-pocket fees and expenses we incur in connection with the subscription rights offering (except for any such fees and expenses which we and Contran mutually agree are not so reimbursable, such as the $40,000 in fees, along with reasonable out-of-pocket expenses, that we have agreed to pay Value Incorporated in connection with the financial advisory services and opinion it has agreed to render in connection with the subscription rights offering). Accordingly, the proceeds from this subscription rights offering will not be reduced by any material fees or expenses. Assuming the subscription rights offering is completed, we intend to use all of the proceeds of the subscription rights offering to declare and pay a special one-time cash dividend of $[ ] per share to all of the holders of record of our common stock on the record date to be determined by our board of directors shortly after completion of the subscription rights offering. Based on the 15,127,415 shares of common stock that would be outstanding after the completion of the subscription rights offering (including shares to be issued to Contran in the subscription rights offering in reliance on an exemption from the registration requirements of the Securities Act), the aggregate amount of such special one-time cash dividend would be $[ ]. Agreement with Contran Contran beneficially owns 9,096,379 shares of our common stock, which represents approximately 75.2% of the outstanding shares. Contran has agreed to fully exercise its basic subscription right to acquire 2,274,095 shares of common stock pursuant to this subscription rights offering. Contran has further agreed to exercise its over-subscription privilege to the fullest extent possible. Because of this, the subscription rights offering will be fully subscribed, regardless of the extent (if any) to which our other stockholders participate in the subscription rights offering. The subscription rights offering is being made to Contran in reliance on an exemption from the registration requirements of the Securities Act, and shares issued in respect of its participation in the subscription rights offering are not covered by the registration statement of which this prospectus forms a part. All purchases of our common stock to be made by Contran pursuant to the subscription rights offering will be made for investment purposes and not with a view to resale. The number of shares which Contran can actually subscribe for in this subscription rights offering will depend on the actual number of rights exercised by the other holders of our common stock and will be between 2,274,095 and 3,025,483. If no stockholders other than Contran exercise their subscription rights, Contran will acquire all 3,025,483 shares of common stock being offered pursuant to this subscription rights offering for an aggregate purchase price of $[ ], which shares will be issued to Contran in the subscription rights offering in reliance on an exemption from the registration requirements of the Securities Act. In return for such commitment of Contran that ensures the subscription rights offering will be fully subscribed, regardless of the extent (if any) to which our other stockholders participate in the subscription rights offering, and in return for Contran s agreement to reimburse us for all reasonable out-of-pocket fees and expenses we incur in connection with the subscription rights offering (except for any such fees and expenses which we and Contran mutually agree are not so reimbursable, such as the fees and expenses we have agreed to pay Value Incorporated in connection with the financial advisory services and opinion it has agreed to render in connection with the subscription rights offering), we have agreed with Contran that Contran may offset the amount it would be required to pay us upon exercise of its subscription rights (including its over-subscription privilege) by the aggregate amount of the special one-time cash dividend that would otherwise be payable by us to Contran. We have also agreed with Contran that our board of directors will declare the special one-time cash dividend immediately following the completion of the subscription rights offering, and that all amounts to be paid by Contran and all of our other stockholders who may participate in the subscription rights offering (to the extent such other stockholders acquire shares of our common stock in the subscription rights offering) will be retained by the subscription agent (which is also the transfer agent and dividend paying agent for our common stock) until the payment date for the special one-time cash dividend, thereby assuring that our transfer agent will have the funds necessary to pay the special one-time cash dividend to all of our stockholders other than Contran at the time of the completion of the subscription rights offering. See The Subscription Rights Offering Agreement with Contran. Extension, termination and amendment The period for exercising your subscription rights may be extended by us in our sole discretion. We do not anticipate extending the expiration date. We may also terminate or cancel the subscription rights offering in our sole discretion at any time on or before the expiration date of the subscription rights offering for any reason. In the event that the subscription rights offering is terminated or cancelled for any reason, all funds received from subscriptions by stockholders will be returned without interest or deduction. In addition, if we cancel or terminate the subscription rights offering, we would not pay the special one-time cash dividend of $[ ] per share. We also reserve the right to amend or modify the terms of the subscription rights offering (including the maximum number of shares of common stock we may issue in the subscription rights offering or the subscription price per share to be paid to exercise your subscription rights) at any time in our sole discretion. If we amend or modify certain terms of the subscription rights offering, then we will extend the expiration date of the subscription rights offering. Condition to completion It is a condition to the completion of the subscription rights offering that no court or regulatory body prohibit or restrict any of our stockholders from participating in the subscription rights offering on the terms described in this prospectus, and that no action or proceeding be underway or threatened which could so prohibit or restrict any such participation. If these conditions are not satisfied as of the expiration date of the subscription rights offering, then Contran may terminate its obligations under its letter agreement with us dated [ ], 2011 (other than its obligation to reimburse us for our reasonable out-of-pocket fees and expenses we incur in connection with the subscription rights offering, except for any such fees and expenses which we and Contran mutually agree are not so reimbursable, such as the fees and expenses we have agreed to pay Value Incorporated in connection with the financial advisory services and opinion it has agreed to render in connection with the subscription rights offering), and we may extend the expiration date of the subscription rights offering, or we may terminate and cancel the subscription rights offering. Exercising your subscription rights Your subscription rights will be evidenced by a subscription rights certificate that will be distributed to stockholders of record as of the close of business on the record date. You may exercise any number of your subscription rights, or you may choose not to exercise any subscription rights. If you exercise your basic subscription rights in full, you may exercise your over-subscription privilege. Subscription rights not exercised by the expiration date of the offering will be null and void. You will receive all shares of common stock for which you subscribe pursuant to your basic subscription right. If your requested over-subscription is not completely filled, then we will send you a refund check for the subscription price of any shares of common stock we were unable to allocate to you. Revocation You may revoke your exercise of your subscription rights at any time prior to the expiration of the subscription rights offering. Non-transferability of subscription rights You may not sell, give away or otherwise transfer your subscription rights. The subscription rights will not be listed on any securities exchange or national market or quoted on any quotation system. Subscription procedures If you are a record holder that holds shares of our common stock in certificated form or directly in a direct registration account with Computershare Trust Company, N.A., the transfer agent of our common stock, then you may exercise your basic subscription right and, if you elect to do so, your over-subscription privilege, by properly completing and signing the subscription rights certificate which accompanies this prospectus. You must then return the completed and signed subscription rights certificate with full payment for the number of shares of common stock which you are subscribing for, including any shares subscribed for by exercise of your over-subscription privilege, to the subscription agent. Your payment may be made by check or bank draft drawn upon a U.S. bank or postal, or express money order payable to Computershare Trust Company, N.A., as subscription agent. The subscription agent must receive the properly completed and signed subscription rights certificate and payment prior to the expiration date of the subscription rights offering. See The Subscription Rights Offering Subscription Procedures and The Subscription Rights Offering Subscription Payments. You may also exercise your subscription rights by using the guaranteed delivery procedures described in The Subscription Rights Offering Notice of Guaranteed Delivery. If your shares are held in the name of a broker, dealer, bank or other nominee, then you should instruct your broker, dealer, bank or other nominee in accordance with the procedures described in The Subscription Rights Offering Beneficial Owners. No Board recommendation Our board of directors makes no recommendation to you about whether you should exercise any subscription rights. You are urged to make an independent investment decision about whether to exercise your subscription rights based on your own assessment of our business and the subscription rights offering. See Risk Factors beginning on page [ ] for a discussion of some of the risks involved in investing in our common stock. Subscription agent Computershare Trust Company, N.A. Information agent Georgeson Inc. Material United States federal income tax consequences A holder of subscription rights should not recognize income or loss for United States federal income tax purposes in connection with the receipt or exercise of subscription rights in the subscription rights offering. A holder of common stock will recognize income for United States federal income tax purposes in connection with receipt of the $[ ] per share special one-time cash dividend. See Material United States Federal Income Tax Consequences. Questions Questions regarding the subscription rights offering should be directed to the information agent, Georgeson Inc., at 199 Water Street 26th Floor, New York, NY 10038, banks and brokers call (212) 440-9800, all others call toll-free (888) 613-3524. Shares outstanding before the subscription rights offering 12,101,932, as of August 8, 2011. Shares outstanding after completion of the subscription rights offering 15,127,415, assuming the subscription rights offering is fully subscribed (including shares to be issued to Contran in the subscription rights offering in reliance on an exemption from the registration requirements of the Securities Act). Since Contran has agreed to fully exercise its basic subscription rights and to exercise its over-subscription privilege to the fullest extent possible, the subscription rights offering will be fully subscribed even if no stockholders other than Contran exercise subscription rights. Risk factors Stockholders considering exercising their subscription rights should carefully consider the risk factors described in the section of this prospectus entitled Risk Factors, beginning on page [ ]. Issuance of common stock If you purchase shares of common stock through the subscription rights offering, we will deliver certificates representing shares or credit your account at your record holder with shares of our common stock that you purchased pursuant to the subscription rights offering as soon as practicable after the subscription rights offering has expired. Fees and expenses We will bear (and Contran will reimburse us for) the fees and expenses relating to the subscription rights offering (except for any such fees and expenses which we and Contran mutually agree are not so reimbursable, such as the $40,000 in fees, along with reasonable out-of-pocket expenses, that we have agreed to pay Value Incorporated in connection with the financial advisory services and opinion it has agreed to render in connection with the subscription rights offering). No portion of the fee payable to Value Incorporated was contingent upon approval or completion of the subscription rights offering. We have hired First Southwest Company, a registered broker dealer, to assist us on a best efforts basis with respect to the offer and sale of our shares of common stock in the subscription rights offering to holders of record of our common stock who reside in the State of Arizona. Except for the foregoing, the shares of common stock offered pursuant to the subscription rights offering are being offered directly by us without the services of an underwriter or selling agent. You are responsible for paying any other commissions, fees, taxes or other expenses incurred in connection with the exercise of the subscription rights. Shares of our common stock are quoted on the OTCQB under the symbol KYCN. The last reported sales price of our common stock on the OTCQB on August 8, 2011, was $8.50.
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0000106455_westmorela_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0000106455_westmorela_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..dbb755c59daeac1c594d6924dc1df0b7a571788e
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0000106455_westmorela_prospectus_summary.txt
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+PROSPECTUS SUMMARY This summary contains basic information about us and the resale of the securities being offered by the selling securityholder. Because it is a summary, it does not contain all of the information that you should consider before investing. You should read this entire prospectus carefully, including the section entitled Risk Factors and our financial statements and the related notes incorporated by reference in this prospectus, before making an investment decision. As used in this prospectus, the terms we, our, ours and us may, depending on the context, refer to Westmoreland Coal Company or to Westmoreland Coal Company s subsidiaries or to Westmoreland Coal Company and its subsidiaries, taken as a whole. Our Business We are an energy company organized as a Delaware corporation in 1910. We mine coal, which is used to produce electric power, and we own power-generating plants. We own five surface mines located in the United States, which supply coal to power plants. Several of these power plants are located adjacent to our mines, and we sell virtually all our coal under multi-year contracts. Due to the generally longer duration and terms of our contracts, we enjoy relatively stable demand compared to competitors who sell more of their production on the spot market and under short-term contracts. We sold 25.2 million tons of coal in 2010. We conduct our mining operations through our wholly-owned subsidiaries Westmoreland Resources, Inc. ( WRI ) and Westmoreland Mining LLC ( WML ). In addition to our mining operations, we own the Roanoke Valley power plants ( ROVA ). ROVA consists of two coal-fired generating units with a total capacity of 230 megawatts. ROVA supplies power pursuant to long-term contracts to one customer. For a more comprehensive overview of our business, we refer you to Item 1 and Item 2 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2010, which are incorporated by reference herein. Corporate Information Our principal executive offices are located at 2 North Cascade Avenue, 2nd Floor, Colorado Springs, CO 80903. Our telephone number is (719) 442-2600. Our website is www.westmoreland.com. The contents of our website are not a part of this prospectus. The Offering Issuer Westmoreland Coal Company Seller The Westmoreland Coal Company Retirement Plan Trust, referred to as the selling securityholder or the Trust. We are not selling any of the securities offered under this prospectus or any prospectus supplement. Securities Offered Up to 425,000 shares of common stock. Use of Proceeds We will not receive any proceeds from the sale by the selling securityholder of the securities offered under this prospectus or any prospectus supplement. See Use of Proceeds. Our Common Stock Our common stock is quoted on NASDAQ Global Market under the symbol WLB.
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0000719152_integral_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0000719152_integral_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..dbf11f67a3dae7b4545d9ea3a23b55835ae76514
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@@ -0,0 +1 @@
+SUMMARY PROSPECTUS The following summary highlights key information contained elsewhere in this prospectus. It does not contain all the information that may be important to you in deciding whether to purchase shares of our common stock. You should read this entire prospectus carefully, especially the discussion of Risk Factors and our financial statements and related notes, before deciding to invest in shares of our common stock. In this prospectus, Integral Vision, the Company, we, us and our refer to Integral Vision, Inc. unless the context requires otherwise. The Company Integral Vision, Inc. develops, manufactures and markets flat panel display inspection systems to ensure product quality in the display manufacturing process. We have over eleven years of experience in the display industry. Our products have been used for inspections of liquid crystal displays (LCD) and flat panel displays like those used in cell phones, electronic organizers, hand-held video games, camcorders, rear projection computer monitors, digital still cameras, HDTV, projectors, video headsets and other products. Using various software tools, our display inspection systems detect cosmetic and functional defects and employ a special interface to provide the results, images and statistics to production personnel. Our production process consists principally of assembling standard electrical, electronic and optical components and hardware subassemblies purchased from suppliers into finished products. We do not rely on a single source for parts and subassemblies. This mitigates our exposure to product interruption due to shortages of parts or limited suppliers. In developing and designing our products we utilize our proprietary intellectual property, which we protect using mechanisms and methods available to us by law. We presently own 14 U.S. patents. However, there can be no assurance that our patents would be considered valid if challenged or would not become obsolete due to technological advancement. The market for machine vision products is characterized by rapid and continuous technological development and product innovation. In an effort to maintain our competitive advantage, we allocate a significant portion of our resources to enhancing existing products and advancing new product development programs. We also seek to maintain close relationships with customers to remain responsive to their needs. The nature of our product offerings may result in significant sales to one or a limited number of customers in any one year. It is possible that the specific customers reaching this threshold may change from year to year. Loss of any one of these customers could have a material impact on our results of operations. Although we generally market our products to end users, we have had success integrating our products with original equipment manufacturers (OEMs) in certain circumstances. Our company faces significant risks. Because of our continuing operating losses and our need for an increased sales level to achieve profitability, our independent auditors included a going concern uncertainty in their audit report on our audited financial statements for the years ended December 31, 2009 and 2008. The going concern uncertainty signifies that substantial doubt exists about our ability to continue in business. Please see the section of this prospectus entitled Risk Factors for more information about the risks faced by us. Our principal executive office is located at 49113 Wixom Tech Drive, Wixom, Michigan 48393, and our telephone number is (248) 668-9230. INTEGRAL VISION, INC. (Exact name of registrant as specified in its charter) Michigan 3823 38-2191935 (State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer incorporation or organization) Classification Code No.) Identification No.) 49113 Wixom Tech Drive, Wixom, Michigan 48393 (248) 668-9230 (Address, including zip code, and telephone number, including area code, of registrant s principal executive offices) Charles J. Drake Chairman Integral Vision, Inc. 49113 Wixom Tech Drive, Wixom, Michigan 48393 (248) 668-9230 (Name, address, including zip code, and telephone number, including area code, of agent for service) Copies to: David S. Song, Esq. Mazzeo Song & Bradham LLP 708 Third Avenue, 19th Floor New York, New York 10017 Telephone: (212) 599-0700 From time to time after the effective date of this Registration Statement. (Approximate date of commencement of proposed sale to the public) If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1993, check the following box: x If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company x CALCULATION OF REGISTRATION FEE Title of Each Class Proposed Maximum Proposed Maximum of Securities to be Amount to Offering Price Per Aggregate Offering Amount of Registered be Registered (1) Unit (2) Price (2) Registration Fee Common Stock (3) 20,812,450 shares $ 0.195 $ 4,058,427.75 $ 226.46 (4) (1) Includes an indeterminable number of additional shares of common stock, pursuant to Rule 416 under the Securities Act, that may be issued to prevent dilution resulting from stock splits, stock dividends or similar transactions. (2) The proposed maximum offering price per share was estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(c) under the Securities Act. The calculation is based upon the average of the bid and asked prices per share of $0.195 on December 12, 2008, as quoted on the OTC Bulletin Board. (3) This Registration Statement covers the disposition by certain warrant holders and note holders of up to 20,812,450 shares of common stock issuable upon exercise of their warrants, which have a per share exercise price of $0.001 or $0.25, and issuable upon conversion of their notes, which have a per share conversion price of $0.25. (4) Previously paid. EXPLANATORY NOTE The registrant filed a Form S-3 on December 15, 2008, an Amendment No. 1 to Form S-3 on December 17, 2008 and an Amendment No. 2 to Form S-1 on September 22, 2009. The registrant is filing this Amendment No. 3 on Form S-1 to provide the information required by Form S-1. The Offering Common stock covered hereby 20,812,450 shares. Terms of the offering The selling shareholders may, from time to time, sell, transfer or otherwise dispose of any or all of the shares of common stock covered hereby or interests in such shares of common stock on any stock exchange, market or trading facility on which the shares are traded or in private transactions. These dispositions may be at fixed prices, at prevailing market prices at the time of sale, at prices related to the prevailing market price, at varying prices determined at the time of sale, or at negotiated prices. See Plan of Distribution . Use of proceeds We will not receive any proceeds from the disposition of the common stock or interests therein by the selling shareholders. We may, however, receive up to $380,600.50 in connection with the exercise of the warrants which are exercisable for common stock. Any such proceeds we receive will be used for working capital purposes and reduction of our outstanding debt. Please see the section of this prospectus entitled Use of Proceeds for more information. OTC Bulletin Board symbol for our common stock INVI Summary Financial Information You should read the following summary of historical financial data together with the Management s Discussion and Analysis or Plan of Operation and our financial statements and related notes included in our annual report on Form 10-K/A for the year ended December 31, 2009. We have derived the data for each of the fiscal years ended December 31, 2009 and 2008 from our audited financial statements. The historical results are not necessarily indicative of future operating results. We have never paid a dividend and do not anticipate doing so in the foreseeable future. We expect to retain earnings, if any, to finance the expansion and development of our business. The following tables provide selected financial and operating data for the years ended December 31, 2009 and 2008 (dollars in thousands). Statement of Operations Data Year Ended December 31, 2009 2008 Net Revenue $ 1,754 $ 1,027 Gross Margin 883 437 Operating Loss (1,926 ) (2,981 ) Net Loss (2,761 ) (10,733 ) The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission acting pursuant to said section 8(a), may determine. Balance Sheet Data Dec. 31, Dec. 31, 2009 2008 Current Assets $ 366 $ 808 Total Assets 617 1,037 Current Liabilities Notes payable-current 7,377 1,786 Other current liabilities 1,616 1,008 Deferred revenue for product sales 72 656 Total current liabilities 9,065 3,450 Long Term Debt 0 3,671 Total liabilities 9,065 7,121 Stockholders Deficit Preferred stock, 400,000 shares authorized; none issued 0 0 Common stock, without par value, stated value $.20 per share; 90,000,000 shares authorized; 30,866,409 shares issued and outstanding (29,566,409 in 2008) 6,173 5,913 Additional paid-in capital 47,528 47,391 Accumulated deficit (62,149 ) (59,388 ) Total stockholders deficit (8,448 ) (6,084 ) RISK FACTORS An investment in our common stock involves a high degree of risk. Before investing in our common stock, you should carefully consider the risks described below, as well as other information contained in this prospectus. The risks described below are not the only ones facing our company. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also affect our business operations. If any of the adverse events described in this Risk Factors section actually occur, our business, results of operations and financial condition could be materially adversely affected, the market price of our common stock could decline and you could lose all or part of your investment in our common stock. This section includes or refers to forward-looking statements. You should refer to the explanation of the qualifications and limitations on forward-looking statements discussed in Cautionary Statement About Forward-Looking Information. Subject to completion, dated January 12, 2011 INTEGRAL VISION, INC. 20,812,450 Shares of Common Stock This prospectus covers 20,812,450 shares of the common stock of Integral Vision, Inc., which may be disposed of by the selling shareholders identified in this prospectus. We will receive no part of the proceeds from dispositions of the shares covered by this prospectus. This prospectus relates to shares of our common stock underlying outstanding warrants and convertible notes and there can be no assurance that any of the outstanding warrants or convertible notes will be exercised or converted. If all of the outstanding warrants are exercised for cash, we may receive proceeds of up to approximately $380,600.50. This prospectus also covers, to the extent permitted by Rule 416 under the Securities Act, such indeterminate number of additional shares of common stock as may become issuable upon the exercise and conversion of such warrants and notes in order to prevent dilution resulting from stock splits, stock dividends or similar events. We have agreed to pay the expenses incurred in connection with the registration of the shares covered hereby, but all selling and other expenses incurred by the selling shareholders will be borne by the selling shareholders. Please see the section of this prospectus entitled Use of Proceeds for more information. The shares of common stock covered by this prospectus are restricted securities under the Securities Act of 1933, as amended (the Securities Act ), before their sale under this prospectus. This prospectus has been prepared for the purpose of registering these shares of common stock under the Securities Act to allow for a sale or other disposition by the selling shareholders to the public without restriction. The selling shareholders and any participating brokers or dealers may be deemed to be underwriters within the meaning of the Securities Act, in which event any profit on the disposition of shares by the selling shareholders, and any commissions or discounts received by the brokers or dealers, may be deemed to be underwriting compensation under the Securities Act. Our common stock is quoted on the OTC Bulletin Board of the National Association of Securities Dealers under the trading symbol INVI . The last reported sale price of our common stock on the OTC Bulletin Board on January 11, 2011 was $0.03 per share. The information in this prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. Investing in our common stock involves a high degree of risk. Please carefully consider the Risk Factors beginning on page 3 of this prospectus before investing in our common stock. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. We have a history of operating losses. We may incur future losses. This condition has caused our independent auditors to express substantial doubt about our ability to continue as a going concern. We have experienced net operating losses and incurred negative cash flows from operations since 1997. As of December 31, 2009, we had a stockholders deficit of $8,448,000. During the years ended December 31, 2009 and 2008, the Company incurred losses from continuing operations of approximately $1.9 million and $3.0 million, respectively. This condition has caused our independent auditors to express substantial doubt about our ability to continue as a going concern in their report on our December 31, 2009 financial statements. Currently, our ability to continue as a going concern is dependent on securing sufficient sales orders to allow us to achieve profitable operations. Although management believes that revenues from operations as well as financing strategies will be adequate to permit the Company to meet its obligations, there can be no assurance that such revenues or strategies will be accomplished or that we will be able to continue as a going concern in the normal course of business. The Company s present cash position requires it to secure funding for the immediate future as well as funding to provide working capital for anticipated orders. Unless we are able to obtain additional funding, we may not be able to pay our debts when they become due. For the last several years, we have financed our operations through the sale of our securities and by borrowing money. Our present cash position and current sales level require that we seek additional financing to continue operations. There can be no assurance that we will be able to find additional financing sufficient to meet our capital needs. Any additional financing found could involve significant dilution to existing shareholders depending on the terms. The Company is in default under the terms of the Fifth Amended and Restated Note and Warrant Purchase Agreement. We are in default of the Fifth Amended and Restated Note and Warrant Purchase Agreement because we have failed to make full payment of principal and interest on certain Class 2 and Class 3 Notes on their respective maturity dates. The Class 2 and Class 3 Notes are secured by the Company's intellectual property pursuant to a Collateral Assignment of Proprietary Rights and Security Agreement (the Collateral Assignment ), and the Class 2 Notes are also secured by the Company's accounts receivable and inventory pursuant to a Security Agreement (the Security Agreement ). The Class 2 and Class 3 Notes have begun to accrue interest at their default interest rates, which is equal to their respective interest rates plus an additional four percent. Pursuant to the Collateral Assignment and the Security Agreement, the Class 2 and Class 3 Note holders (or the collateral agent acting on their behalf) have the right to foreclose on the collateral covered by such agreements, and exercise any of several remedies provided in such agreements, including taking possession of such collateral and selling such collateral. The Company is in discussions with the note holders about curing or waiving the default. The note holders have continued to purchase new notes to provide additional funding to the Company after the default. Unless we are able to generate greater revenues, our ability to pay our debt when they become due may be compromised. Our ability to generate profits depends upon our future financial and operating performance, which in turn, is subject to prevailing economic conditions and financial, business, competitive, legislative and regulatory factors. Many of these factors are beyond our control. If we do not obtain orders and ship our products at the rate we presently anticipate, our cash flow and capital resources may become insufficient to fund our operations until we begin to receive sufficient orders. We may be forced to diminish capital expenditures, sell assets or obtain additional financing through equity capital or debt. We are currently in the process of establishing a branch office in Taiwan to enhance our ability to serve our current and prospective Asian customers. Certain of our customers have asked us to establish a physical presence in Taiwan to assure that we can be responsive to their needs. This will require employing local personnel to help maintain and service our equipment. There can be no assurance that we will be able to successfully hire, train, and retain qualified personnel in Taiwan or that we will have the resources to financially support the branch office once established. Failure to successfully establish the branch office could have a negative impact on the willingness of our Taiwanese customers to continue to place orders for our equipment. We are dependant on sales growth to achieve profitability. Sales of our machine vision products are expected to grow when new technologies are adopted in mass production. Our sales should also grow when automated inspection of display products becomes more accepted. Our sales in the last few years have involved small quantities of inspection systems sold to several companies that are developing new display technologies. Our growth is dependent upon the rate of commercialization and mass production of the following display technologies: E-Paper; Micro ElectroMechanical Systems (MEMS); and Organic Light Emitting Diode (OLED). However, adoption of new technologies may not occur in the near future. Further delays in the full production of these new display technologies, or the abandonment of these technologies, would have significant negative consequences to our survival and future growth. If a viable market fails to develop or develops more slowly than we anticipate, we may be unable to recover the losses we will have incurred to develop our products. We may also be unable to achieve profitability. In addition, we have begun to sell products for the automated inspection of Liquid Crystal Displays (LCD)-. When automatic inspection of LCD displays becomes more widespread, we expect our products to become more attractive and the demand for our products to increase. However, automation of LCD inspection has grown slower than previously anticipated, and such growth could continue to be delayed. Our financial condition may limit our ability to secure and fulfill new sales orders. Because of our financial position, certain customers and potential customers have expressed concerns regarding our stability and our resulting ability to fill any potential large orders. We are currently working with a number of large customers who are evaluating our products for use in their manufacture of products using new microdisplay technologies. We expect that additional sales orders will be placed by these customers within the next six months, but there is no assurance that we will be successful in securing sales orders from these or other potential customers or that we will be able to fill any orders which are placed. Our future will depend on our ability to develop and successfully introduce new products and product enhancements. The markets in which we compete are characterized by rapid technological change. If we do not update and enhance our technologies, they will become obsolete. Our continued success will depend in large part upon our ability to develop and successfully introduce new products and product enhancements. We have devoted, and will continue to devote, substantial resources to product development. We cannot guarantee that we will be able to successfully develop, introduce or market new products or enhancements. We are also not certain that our new products or enhancements will meet the requirements of the marketplace or achieve market acceptance. If we are unable to develop and introduce new products or enhancements in a timely manner in response to changing market conditions or customer requirements, the success of our business will be materially and adversely affected. In addition, technological developments have resulted and may continue to result in the obsolescence of components and subassemblies which we hold as inventory. We may experience difficulties with third parties who supply electrical, electronic and optical components and hardware subassemblies for the compilation of our products. We rely on third party vendors to supply key components and subassemblies for our products. If those suppliers fail to develop and supply these components in a timely manner or at all, or fail to develop or supply components that meet our quality, quantity or cost requirements, we may become unable to obtain the necessary parts and subassemblies. If such an event occurs, and if we are unable to obtain substitute sources of these components on a timely basis or on terms acceptable to us, we may not be able to assemble our products on schedule or at all. In addition, to the extent that our supply partners use technology or manufacturing processes that are proprietary, we may be unable to obtain comparable components from alternative sources. We may also need to scale back implementation of our business development plans in the absence of needed vendors, which would adversely affect our future prospects. While we have entered into relationships with suppliers of some key components for our products, we do not know when or whether we will secure supply relationships for all required components and subassemblies for our products, or whether such relationships will be on terms that will allow us to achieve our objectives. Our business, prospects, results of operations and financial condition could be harmed if we fail to secure relationships with entities which can supply the required components for our products or if such suppliers suffer shortages of parts. Failure of our products to pass testing could negatively impact demand for our products. We may encounter problems and delays during testing of our products for a number of reasons, including: failure of our technology; failure of technology of third parties; and our failure to design, maintain and service our products properly. Many of these potential problems and delays are beyond our control. Any problem or perceived problem with our product tests could materially harm our reputation and impair market acceptance of, and demand for, our products. We face competition from manual inspection and from other companies and may be unable to compete successfully. The markets in which we intend to compete are new and require technological advancement. However, we anticipate that the rate of mass production and automation of inspection of micro-display products will grow and the markets will attract more competition. Presently, most final inspection of small flat panel displays is manual. Higher resolution, increased brightness, and increased contrast in newer versions of the diplays are stretching human capabilities. While automated inspection addresses these problems and offers a good return on investment, there can be no assurance that it will be accepted by our customers in place of the manual inspection they are already familiar with. For optical inspection, our primary competitor is Westar Display Technologies, Inc. We believe that the principal competitive factors for optical inspection are quality, price, cycle times and features. While we believe we currently compete favorably with respect to the above factors, we cannot guarantee that we will be able to continue to do so or that competition will not have a material adverse effect on our results of operations and financial condition. While we may face competition from additional sources in all aspects of our business, we believe that competition in the optical inspection of small flat panel displays, in particular, may intensify and that companies with substantially greater financial, technical, research and development, manufacturing and marketing resources than us may enter our markets. We may be unable to secure or enforce patent rights, trademarks, trade secrets or other intellectual property. As a result, we could lose our competitive advantage. We believe that we currently have a competitive advantage based on the technological superiority of our products. We may not be successful in securing or maintaining proprietary patent protection for our products or technologies that we develop or license. In addition, our competitors may develop products similar to ours using methods and technologies that are beyond the scope of our intellectual property protection, which could reduce our anticipated sales. While some of our products have proprietary patent protection, a challenge to these patents may result in litigation. Prosecuting or defending patent infringement suits or otherwise protecting our intellectual property rights can be protracted, expensive and may distract management and other personnel from performing their duties for us. However, failure to do so may diminish our ability to compete effectively and may harm our operating results. In order to develop and protect our competitive position, we rely upon: patents; trade secrets; procedures related to confidentiality; contractual provisions; unpatented proprietary know-how; and continuing technological innovation. Confidentiality agreements to which we are party may be breached, and we may not have adequate remedies for any breach. We cannot assure you that others will not independently develop substantially equivalent proprietary technology and techniques or otherwise gain access to our trade secrets and technology. Our inability to maintain the proprietary nature of our technology and processes could allow our competitors to limit or eliminate any competitive advantages we may have. If we are unable to secure or enforce patent rights, trademarks, trade secrets or other intellectual property, the success of our business could be materially adversely affected. In addition, there is no guarantee that foreign intellectual property laws will protect our patents and other intellectual property rights to the same extent as the laws of the United States. Third parties may also claim infringement by us with respect to past, current or future technologies. We expect that participants in our markets will be increasingly involved in infringement claims as litigation concerning patents, other forms of intellectual property and proprietary technology is becoming more widespread. Any claim, whether meritorious or not, could be time consuming and result in costly litigation, operational delays and distraction of management. If we are found to have infringed on the intellectual property of others, our products could be removed from the market, or we could suffer a substantial delay in, or prevention of, the introduction of new products to the market. Any of these factors could have a material adverse effect on our business. Our business depends on retaining and attracting highly capable management and operating personnel. Our continued success depends in large part on certain key management and technical personnel, the loss of one or more of whom could adversely affect our future. In particular, we rely upon the services and expertise of: our CEO, Charles J. Drake; our President, Mark R. Doede; our Chief Technical Officer, Andrew Blowers; and our product development and engineering staff. If any of them were to become unavailable to work for us, our financial condition, operating results and future prospects for success would be adversely affected. Our growth strategy will require the following: expanded customer services and support; increased personnel throughout the Company; expanded operational and financial systems; and implementation of additional control procedures. To retain and attract key personnel, we use various measures, including employment agreements, a stock incentive plan and incentive bonuses for key employees. We believe that our future success will depend significantly upon our ability to attract, retain and motivate skilled technical, sales and management employees. However, we cannot guarantee that we will be able to attract and retain qualified personnel. We may be unable to manage rapid growth effectively. When automated inspection of display products becomes more widespread, as is anticipated, we expect to expand our production capabilities, accelerate the marketing of our products and enter a period of rapid growth. This will place a significant strain on our senior management team and our financial and other resources. The proposed expansion will expose us to increased competition, greater overhead, marketing and support costs and other risks associated with the development and production of technologically advanced new products. Our ability to manage our rapid growth effectively will require us to do the following: continue to improve our operations; improve our financial and management information systems; and train, motivate and manage our employees. Difficulties in effectively managing the budgeting, forecasting and other process control issues presented by such a rapid expansion could harm our business, prospects, results of operations and financial condition. All of our operations are consolidated in a single location and we are susceptible to business interruption in the event of damage to or disruptions in our facility. Our headquarters and all of our employees are located in the same building in Wixom, Michigan. We have no present plans to establish any offices in addition to our headquarters. Because our operations are consolidated in one location, we are more susceptible to power and equipment failures and business interruptions in the event of fires, floods and other natural disasters than if we had multiple office locations. We cannot assure you that we are adequately insured to cover the amount of any losses relating to any of these potential events, business interruptions resulting from damage to or destruction of our headquarters or other events affecting us that do not occur on our premises. Our principal shareholders have substantial control over our affairs. Our directors and executive officers, together with our other principal shareholders, own or control approximately 54%of our outstanding common stock as of the date of this prospectus. These shareholders are able to exert substantial influence over all matters submitted to a vote of the shareholders, including the election and removal of directors, amendments to our articles of incorporation and by-laws, and the approval of a merger, consolidation or sale of all or substantially all of our assets. In addition, this concentration of ownership could inhibit the management of our business and affairs and have the effect of delaying, deferring or preventing a change in control or impeding a merger, consolidation, takeover or other business combination which you, as a shareholder, may view favorably. Product liability or defects could negatively impact our operations and demand for our products. Any liability we incur for damages resulting from malfunctions or design defects of our products could be substantial and could materially adversely affect our business, financial condition, results of operations and prospects. In addition, a publicized actual or perceived problem could adversely affect the market s perception of our products resulting in a decline in demand for our products. Such an event could divert the attention of our management, which may materially and adversely affect our business, financial condition, results of operations and prospects. Our common stock price has been and could remain volatile because of several factors, including a limited public float. The market price of our common stock has historically experienced and may continue to experience significant volatility. During the year ended December 31, 2010, the sale price of our common stock fluctuated from $0.02 to $0.13 per share. We believe that our common stock is subject to wide price fluctuations because of several factors, including the following: absence of meaningful earnings; relatively thin trading market for our common stock, which causes trades of small blocks of stock to have a significant impact on our stock price; announcements by us or our competitors of new products, significant contracts, acquisitions or strategic relationships; general volatility in recent years of the stock markets, especially the markets for technology-related stocks; and investor sentiment regarding equity markets generally, including public perception of corporate ethics and governance and the accuracy and transparency of financial reporting. This volatility has affected the market prices of securities issued by many companies for reasons unrelated to their operating performance and may adversely affect the price of our common stock. If our shareholders sell a large number of shares of common stock or if we issue a large number of shares in connection with future acquisitions or financings, the market price of our common stock could decline significantly. Further, the perception in the public market that our shareholders might sell a large number of shares of common stock could cause a decline in the market price of our common stock. In addition, we may become subject to securities class action litigation as a result of volatility in the price of our common stock, which could result in substantial costs and diversion of management s attention and resources and could harm our stock price, business, prospects, results of operations and financial condition. The terms of our agreements related to issued common stock, notes and warrants may restrict our operations and future financing arrangements. Certain of our debt and equity securities contain restrictive covenants that impose certain limitations on our activities, including, among other things, the manner in which we effectufate financings, the amount of equity we grant to our employees, our ability to engage in major transactions such as mergers and asset sales. These covenants may limit our ability to respond to changing business and economic conditions and needs. As a result, we may be hindered from engaging in transactions that might be considered important to our business strategy or otherwise beneficial to us. In the event that we obtain additional capital, existing shareholders could face significant dilution from our financing efforts depending on the terms. For the last several years, we have financed our operations through the sale of our securities and by borrowing money. These transactions have resulted in the dilution of ownership interests held by existing shareholders. We expect to raise additional capital through public or private financing. We could issue debt securities, capital stock or a combination of these securities. If we raise additional funds through the sale of equity or convertible debt securities, your ownership percentage of our common stock will be reduced, and the reduction could be significant. In addition, these transactions may dilute the value of our common stock. We may also have to issue securities that have rights, preferences and privileges superior to our common stock. We could be subject to legal action by the investors and by state and federal securities regulators if we have failed to comply with all applicable laws in connection with our private placement transactions. We have offered and sold securities in private placements in reliance upon exemptions from the registration requirements of the Commission and state agencies. These exemptions are highly technical in nature and if we inadvertently failed to comply with the requirements of any of the exemptive provisions, investors might have the right to rescind their purchase of our securities or sue for damages. If one or more investors were to successfully seek rescission or prevail in any suit, we could face severe financial demands that could materially and adversely affect our financial position. Further, the Commission and state agencies could take action against us that could, among other things, divert management s attention from the operation of our business, cause us to pay fines and penalties and cause us to have to repay investors their original investment. CAUTIONARY STATEMENT ABOUT FORWARD-LOOKING INFORMATION Some of the information contained in this prospectus and the documents incorporated by reference into this prospectus may contain forward-looking statements , as defined in Section 27A of the Securities Act, Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act ), and the Federal Private Securities Litigation Reform Act of 1995. Forward-looking statements relate to events or transactions that have not yet occurred, our expectations or estimates for our future operations, objectives, growth strategies, business plans or other facts that have not yet occurred. These statements can be identified by the use of forward-looking terminology such as might, may, will, could, expect, anticipate, estimate, likely, believe, or continue or the negative of those words, or other variations or comparable terminology. You should understand that these forward-looking statements are necessarily estimates reflecting our judgment, not guarantees of future performance. They are subject to a number of assumptions, risks and uncertainties that could cause actual results to differ materially from those expressed or implied in the forward-looking statements. The
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+S-1/A 1 a2203993zs-1a.htm S-1/A Table of Contents As filed with the Securities and Exchange Commission on June 24, 2011 Registration No. 333-173042 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 TABLE OF CONTENTS Market and Industry Information ii Special Note Regarding Forward-Looking Statements ii Summary 1
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0000733076_brighthous_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0000733076_brighthous_prospectus_summary.txt
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+SUMMARY -------------------------------------------------------------------------------- MetLife Target Maturity is a single Purchase Payment modified guaranteed annuity. Modified guaranteed annuities offer a guaranteed fixed rate of return on Your principal investment if You do not surrender Your Contract before the Guarantee Period ends. If You do surrender Your Contract before the end of the Guarantee Period, generally Your Cash Value is subject to a Market Value Adjustment and surrender charge. The Contract is offered by MetLife Insurance Company of Connecticut (the "Company", "We" or "Us"). MetLife Insurance Company of Connecticut is a wholly- owned subsidiary of MetLife, Inc. The Contract is available only in those states where it has been approved for sale. You may select an initial Guarantee Period from those available from the Company. Currently, We offer Guarantee Periods up to ten years. Interest on the Purchase Payment is credited on a daily basis and so compounded in the Guaranteed Interest Rate. (See "Guarantee Periods" and "Establishment of Guaranteed Interest Rates.") At the end of each Guarantee Period, a subsequent Guarantee Period of one year will automatically begin unless You elect another duration within thirty days before the Guarantee Period ends. You may surrender Your Contract, but the Cash Value may be subject to a surrender charge and/or a Market Value Adjustment. A full or partial surrender made prior to the end of a Guarantee Period will be subject to a Market Value Adjustment. The surrender charge may be deducted from any surrender made before the end of the seventh Contract Year. The surrender charge is computed as a percentage of the Cash Value being surrendered. <Table> <Caption> CONTRACT YEAR CHARGE AS A IN WHICH SURRENDER PERCENTAGE OF IS MADE CASH VALUE ------------------ ------------- <S> <C> 1 7% 2 6% 3 5% 4 4% 5 3% 6 2% 7 1% Thereafter 0% </Table> There is no surrender charge for full or partial surrenders: (1) at the end of an initial Guarantee Period of at least three years, or (2) at the end of any other Initial Guarantee Period if the surrender occurs on or after the fifth Contract Year. We may waive surrender charges in certain instances. (See "Surrenders -- Waiver of Surrender Charge".) There is no Market Value Adjustment if You surrender at the end of a Guarantee Period. Any such surrender request must be in writing and received by Us within 30 days before the Guarantee Period ends. You may request any interest that has been credited during the prior Contract Year. No surrender charge or Market Value Adjustment will be imposed on such interest payments; however, all applicable Premium Taxes will be deducted. Any such surrender may also be subject to federal and state taxes. (See "Surrenders and Federal Tax Considerations.") The Market Value Adjustment reflects the relationship between the current Guaranteed Interest Rate for the time left in the Guarantee Period at surrender and the Guaranteed Interest Rate that applies to Your Contract. The Market Value Adjustment amount primarily depends on the interest rates the Company receives on its investments when the current Guaranteed Interest Rates are established. The Market Value Adjustment is sensitive, therefore, to changes in interest rates. It is possible that the amount You receive upon surrender may be less than Your original Purchase Payment if interest rates increase. It is also possible that if interest rates decrease, the amount You receive upon surrender may be more than Your original Purchase Payment plus accrued interest. On the Annuity Commencement Date specified by You, the Company will make either a lump sum payment or start to pay a series of payments based on the annuity options You select. (See "Annuity Period".) The Contract may provide for a death benefit that is the Account Value on the date We receive written notification of death. If the Annuitant dies before the Annuity Commencement Date with no designated Contingent Annuitant surviving, or if the Owner dies before the Annuity Commencement Date with the Annuitant surviving, We will pay
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0000753224_china_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0000753224_china_prospectus_summary.txt
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+detail later in this prospectus. This summary provides an overview of selected information and does not contain all of the information you should consider. Therefore, you should also read the more detailed information contained in this prospectus, including our financial statements and the notes thereto and matters
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+S-1/A 1 a2203993zs-1a.htm S-1/A Table of Contents As filed with the Securities and Exchange Commission on June 24, 2011 Registration No. 333-173042 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 TABLE OF CONTENTS Market and Industry Information ii Special Note Regarding Forward-Looking Statements ii Summary 1
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0000789860_yayi_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0000789860_yayi_prospectus_summary.txt
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+PROSPECTUS SUMMARY The items in the following summary are described in more detail later in this prospectus. You should read the following summary together with the more detailed information regarding our company and the common stock being sold in this offering, including Risk Factors and our consolidated financial statements and related notes, included elsewhere in, or incorporated by reference into, this prospectus. Conventions Used in this Prospectus In this prospectus, unless indicated otherwise, BVI refers to the British Virgin Islands; China, Chinese and PRC, refer to the People s Republic of China and for the purpose of this prospectus, do not include Taiwan and the special administrative regions of Hong Kong and Macau; Exchange Act refers to the Securities Exchange Act of 1934, as amended; Fuping Milkgoat refers to Fuping Milkgoat Dairy Co., Ltd., a company organized under the laws of the PRC; Milkgoat China refers to Milkgoat (China) Goat Dairy Co., Ltd., a company organized under the laws of the PRC; Milkgoat Industrial refers to Milkgoat Industrial Co., Ltd, a limited liability company organized under the laws of BVI; Renminbi and RMB refer to the legal currency of China; SEC refers to the United States Securities and Exchange Commission; Securities Act refers to the Securities Act of 1933, as amended; U.S. dollars, dollars and $ refer to the legal currency of the United States; we, us, our company, our and Yayi refer to the combined business of Yayi International Inc. and/or its consolidated subsidiaries, as the case may be; and Weinan Milkgoat refers to Weinan Milkgoat Production Co., Ltd., a company organized under the laws of the PRC. Registration No. 333 -170172 As filed with the Securities and Exchange Commission on July 14, 2011 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 AMENDMENT NO. 5 TO FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 YAYI INTERNATIONAL INC. (Exact name of registrant as specified in its charter) Delaware 2020 87-0046720 (State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer incorporation or organization) Classification Code Number) Identification No.) No. 9 Xingguang Road, Northern Industrial Park of Zhongbei Town, Xiqing District, Tianjin 300384, China (86)22-2798-4033 (Address and telephone number of principal executive offices) ____________________________ Copies of Correspondence to: CT, a Wolters Kluwer business Louis A. Bevilacqua, Esq. 111 Eighth Avenue, 13th Floor Pillsbury Winthrop Shaw Pittman LLP New York, New York 10011 2300 N Street, NW Tel: (212) 894-8940 Washington, DC 20037 (202) 663-8000 (Names, addresses and telephone numbers of agents for service) Approximate date of commencement of proposed sale to public: From time to time after the effective date of this Registration Statement, as determined by market conditions and other factors. If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. [X] If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement the same offering. [ ] If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [ ] Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of large accelerated filer," "accelerated filer, and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [ ] Smaller reporting company [X] (Do not check if a smaller reporting company) The Company Overview of Our Business According to the China Quality Net, maintained by China Quality Inspection Association, we are the first and one of the leading producers and distributors of premium goat milk formula products for infants, toddlers, young children, and adults in China. We began selling powder products in Tianjin and Beijing in 2001, in Southern China in 2004 and Northern China in 2006. We currently manufacture and distribute goat milk powder products. In strict compliance with various national standards, we developed our goat milk powder products with multiple formulations designed to meet nutritional requirements and help promote an infant or toddler s healthy growth at each developmental stage. Through several years of laboratory tests, we developed the goat odor elimination technology based on know-how licensed from a third party, which substantially eliminates the goat odor from our goat milk powder products without adding any artificial flavors. Most of our goat milk products are formulated through the inclusion of supplements such as vitamins, calcium, iron, selenium, chromium and omega-3 fatty acids, as needed to address the nutritional or health needs of the consumers. To ensure the product quality and safety, we import all of these supplements from other countries, such as Malaysia, the United States and Ireland. Our current formula product lines are targeted at the premium segment of the dairy market and health-conscious consumers. Headquartered in Tianjin, China, we sell and distribute our products through a nationwide network of retail points across China in 23 provinces and municipalities including infant-maternity chain stores, supermarkets (including multinational chains) and drug stores, as well as catalogue sales and a dedicated online store at Taobao.com. We are vertically integrated and source raw goat milk from our proprietary dairy farms as well as neighboring goat dairy farmers on a long-term contract basis in milk collection centers, which helps us maintain quality control. Since the end of 2009, we have been working with Trout & Partners to streamline our product portfolio and refine our brand image in order to position and strengthen our "Milk Goat" brand as the premium goat milk brand throughout China. We have restructured our original product portfolio of dozens of products and specifications and refined our marketing strategy. Our new product portfolio consists of three segments, infant formula products, adult products and children products with an aggregate 26 formula products under the "Milk Goat" brand with three package sizes of 600, 665 and 365 grams. Most of our goat milk products are formulated through the inclusion of supplements such as vitamins, calcium, iron, selenium, chromium and omega-3 fatty acids, as needed to address the nutritional or health needs of the consumers. We sell and distribute our products through a network of approximately 3,800 retail points including infant-maternity chain stores, domestic and multinational supermarkets and drug stores, as well as catalogue sales across China. We sell most of our products to more than 200 distributors, who in turn sell our products to the retail points. The distributors are located in 23 provinces in China. In addition, since the end of December 2010, we have been selling our products with 365-gram, 600-gram and 665-gram package sizes to the infant-maternity retail stores. We expect such new sales strategy to help further strengthen our market presence in this distribution channel. Our Competitive Strengths We believe that our success to date and potential for future growth can be attributed to a combination of our strengths, including the following: First Mover Advantage. Various researches and publications indicate that goat milk is emerging as an ideal substitute to cow milk as consumers are increasingly aware of its benefits particularly for infants, who prefer a dairy product with a nutritional and molecular composition closer to human milk. Goat milk differs from cow milk in a number of ways and some of its attributes make it closer to human milk, such as high level of bioactive components, similar casein composition and secretion process in both human milk and goat milk. We are the first Chinese company to produce, sell and distribute goat milk formula products throughout China and we have been doing so since 2001. Dedication to Quality Control. We source raw milk from our proprietary dairy farms and other goat dairy farmers on a long-term contractual basis in Shaanxi Province in northwestern China, where dairy goats are abundant and of optimal breed for milk production. Vertically integrated production and the ability to control raw goat milk sources enable us to secure raw material supply, and thus maintain our leading position in the market. High-end Products. Our current formula product lines are targeted at the premium segment of the dairy market and health-conscious consumers. Given goat milk s nutritional and molecular composition closer to human milk as well as the relative scarcity of goat milk since dairy goats have limited production capacity when compared to dairy cows, our goat milk products are positioned at the higher end of the dairy cost spectrum. Experienced Management. Our senior management team has extensive operating experience and industry knowledge. For instance, Ms. Li Liu, who is our founder, Chairwoman, CEO and President, started the Company s goat milk business in 2001. She is a pioneer in the goat milk industry. Mr. Fung Shek, who has served as our Director, Vice President and Deputy General Manager, also has significant experience in the goat milk business. He was formerly Director of Sales for P&G Taiwan, a company that provides consumer products in various areas. CALCULATION OF REGISTRATION FEE Title of securities to be registered Amount to be registered(1) Proposed maximum offering price per share Proposed maximum aggregate offering price Amount of registration fee Common stock, par value $0.001 per share, underlying convertible notes held by certain selling stockholders (1) 4,460,000 (2) $1.48 (3) $6,600,800 (3) $471 Common stock, par value $0.001 per share, underlying warrants held by certain selling stockholders (1) 1,115,000 (4) $2.50 (5) $2,787,500 (5) $199 Total 5,575,000 $9,388,300 $670(6) (1) In accordance with Rule 416(a), the Registrant is also registering hereunder an indeterminate number of shares that may be issued and resold resulting from stock splits, stock dividends or similar transactions. (2) Represents shares of common stock issuable upon the conversion of the principal amount of the Registrant s 9% convertible notes held by certain selling stockholders named in this registration statement. (3) Estimated pursuant to Rule 457(c) of the Securities Act of 1933 solely for the purpose of computing the amount of the registration fee based on the average of high and low prices reported on the Over-the-Counter Bulletin Board on October 25, 2010. (4) Represents shares of common stock issuable upon exercise of Series F common stock purchase warrants to purchase shares of common stock held by certain selling stockholders named in this registration statement. (5) Calculated in accordance with Rule 457(g) based upon the exercise price of the Series F common stock purchase warrants held by certain selling stockholders named in this registration statement. (6) Previously paid. The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall hereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to such Section 8(a), may determine. Our Growth Strategy As a leading goat milk producer and distributor in China, we believe we are well positioned to capitalize on future industry growth in China. We are dedicated to providing healthy and high quality products to our consumers. We will implement the following strategic plans to take advantage of industry opportunities and our competitive strengths: Focus on brand development. In order to manifest our position as China s leader in goat milk products and to educate consumers about the benefits of goat milk, we plan to invest in strengthening our brand equity. In November 2009, we engaged US-based branding and strategic positioning agency, Trout & Partners to enhance our brand position and build Milk Goat into a household brand in China. We have increased our advertising expenses and plan to continue advertising on China Central Television, or CCTV, in order to market our products as premium goat milk powder products. Increase production capacity. We are in the process of increasing our production capacity for goat milk products by more than 400%. We broke ground on a new spray drying processing facility in Shaanxi Province in November 2009, which is expected to commence production by the fourth calendar quarter of 2013 and become the largest raw goat milk processing base in China with an expected production capacity of approximately 4,600 metric tons per annum. We have also invested in a new packing facility and warehouse in Tianjin, which is expected to go into operation in the fourth calendar quarter of 2012. Expand distribution network. We sell and distribute our products through a network of approximately 3,800 retail points including infant-maternity chain stores, supermarkets (including multinational chains) and drug stores, as well as catalogue sales across China. Since 2010, we have expanded aggressively into the supermarkets segment as well as online sales through our online store at Taobao.com. Focus on quality control. We continue to improve our product inspection procedures and monitor our raw milk suppliers in order to ensure the high quality of our products. We believe we can maintain our production of high quality dairy products by continuing to enter exclusive contracts with dairy farmers who can deliver quality goat milk, strengthening our company-owned large-scale dairy farm operations, expanding our company-owned collection stations and production facilities, and employing comprehensive testing and quality control measures. Our Background and History We were originally incorporated in Delaware in 1986 under the name of Commercial Ventures Ltd. We changed our name to FIN U.S.A., Inc. in 1987, and in 1993 to I/NET, INC, when we developed and marketed computer software for mid range computers. In 2006, Tryant acquired a majority of our outstanding capital stock. In connection with that acquisition, we ceased our operations and became a shell company in search of an operating business to acquire. On April 15, 2007, our name was changed to Ardmore Holding Corporation and in September 2008, following the Merger with Milkgoat Industrial as described below, we ceased being a shell company and began active goat milk and related products production and sale operations. On September 12, 2008, we filed an amended and restated certificate of incorporation with the Secretary of State of the State of Delaware and changed our name to Yayi International Inc. Acquisition of Milkgoat Industrial On June 6, 2008, pursuant to an agreement and plan of merger, or the Merger Agreement, we, our wholly owned subsidiary, Ardmore Acquisition Corp., Milkgoat Industrial and Tryant consummated a merger, or the Merger, pursuant to which Ardmore Acquisition Corp. was merged with and into Milkgoat Industrial. As the surviving entity in the Merger, Milkgoat Industrial became our wholly-owned subsidiary. PROSPECTUS Subject to completion, dated July 14, 2011 5,575,000 Shares YAYI INTERNATIONAL INC. Common stock, par value $0.001 per share _________________________ This prospectus relates to 5,575,000 shares of common stock of Yayi International Inc. that may be sold from time to time by the selling stockholders named in this prospectus, which include: 4,460,000 shares of common stock issuable to the selling stockholders upon conversion of $8,920,000 aggregate amount of 9% convertible promissory notes, or the Convertible Notes; and 1,115,000 shares of common stock issuable to the selling stockholders upon the exercise of Series F common stock purchase warrants, or the Series F Warrants. We will not receive any proceeds from the sales of outstanding shares of common stock by the selling stockholders, but we will receive funds from the exercise of Series F Warrants held by the selling stockholders, if exercised for cash. Our common stock is quoted on the Over-the-Counter Bulletin Board, or the OTCBB, under the symbol YYIN. The closing price for our Common Stock on July 8, 2011 was $0.52 per share, as reported on the OTCBB. You are urged to obtain current market quotations of our Common Stock before purchasing any of the shares being offered for sale pursuant to this prospectus. The shares of our common stock offered under this prospectus are being registered to permit the selling stockholders to sell the shares from time to time in the public market. The selling stockholders may sell the shares through ordinary brokerage transactions or through any other means described in the section titled Plan of Distribution. We do not know when or in what amount the selling stockholders may offer the shares for sale. The selling stockholders may sell any, all or none of the shares offered by this prospectus. Investing in the shares being offered pursuant to this prospectus involves a high degree of risk. You should carefully read and consider the information set forth in the section of this prospectus titled Risk Factors, beginning on page 8, when determining whether to purchase any of these shares. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The date of this prospectus is , 2011. In connection with the Merger, all of the outstanding shares of Milkgoat Industrial were converted into an aggregate of 22,325,000 shares of our common stock, par value $0.001 per share, or the Common Stock. In addition, Jeff D. Jenson, Steve Markee and Alex Ferries resigned from their positions as our directors and Li Liu, Fung Shek, and Cili Yan were appointed as our new directors. Our executive officers were also replaced by the Milkgoat China s executive officers upon the closing of the Merger. Private Placement Transaction in 2008 Contemporaneously with, and as a condition to, the completion of the Merger, we issued, pursuant to an amended and restated securities purchase agreement, 52 units to certain investors for an aggregate purchase price of $1.3 million. Each unit consisted of: (i) an 8% convertible promissory note in the principal amount of $25,000 and (ii) series A common stock purchase warrant to acquire 11,575 shares of our Common Stock, or the Series A Warrant. As a result, we issued to the investors an aggregate of $1,300,000 principal amount of 8% convertible promissory notes and the Series A Warrants to purchase 601,900 shares of our Common Stock. We paid the placement agent, WestPark Capital, Inc., or WestPark, $104,000 in commissions and approximately $20,000 for expenses (including its non-accountable expense allowance) for its services in the offering and issued to it and its designees series D common stock purchase warrants (with the same terms as the Series A Warrants) to acquire an aggregate of 144,448 shares of our Common Stock, or the Series D Warrants. Private Placement Transaction in 2009 On June 18, 2009, we entered into a series A preferred stock purchase agreement, or the Stock Purchase Agreement with our majority shareholder, Global Rock Stone Industrial Ltd, a BVI company, or Global Rock, Milkgoat Industrial, Milkgoat China, the individuals named thereto and an accredited investor, SAIF Partners III L.P., or SAIF. Pursuant to the Stock Purchase Agreement, we issued and sold to SAIF 1,530,612 shares of our series A preferred stock, par value $0.001 per share, or the Series A Preferred Stock, at a price per share of $9.80 for an aggregate purchase price of $15.0 million. The Series A Preferred Stock is convertible into our Common Stock at an initial conversion price at $0.98 per share, which conversion price is subject to stock split, recapitalization and other anti-dilution protection. In anticipation of the above private placement transaction, on June 16, 2009, we filed a Certificate of Designation of Series A Preferred Stock with the Secretary of State of the State of Delaware, or the Certificate, which became effective upon filing. Pursuant to the Certificate, there are 1,530,612 shares of Series A Preferred Stock authorized. The holders of the Series A Preferred Stock are entitled to receive non-cumulative dividends, when, as and if declared by the Board. The shares of Series A Preferred Stock may be converted into the Company s Common Stock at the option of the holders of the Series A Preferred Stock in whole or in part at any time at an initial conversion price of $0.98, subject to future adjustments set forth in the Certificate. As described below, the Certificate was amended and restated by us on July 20, 2010. Private Placement Transaction in 2010 On September 27, 2010, we entered into a securities purchase agreement, or the Securities Purchase Agreement, with 119 U.S. accredited investors, or the PIPE Investors, and Euro Pacific Capital, Inc., or Euro Pacific, as representative of the PIPE Investors, pursuant to which we issued and sold to the PIPE Investors 892 units at a purchase price of $10,000 per unit, resulting in gross proceeds of $8.92 million to us. Each unit consists of a three-year, 9% Convertible Note in the principal amount of $10,000, and a three-year Series F Warrant, to purchase 1,250 shares of our Common Stock at an exercise price of $2.50 per share. The Convertible Notes are payable at an interest rate of 9% per annum, semiannually in arrears on the last day of the first and third calendar quarters commencing March 31, 2011 and mature on September 26, 2013, or the Maturity Date. The Convertible Notes are also convertible into shares of Common Stock at any time prior to the Maturity Date at $2.00 per share, which conversion price is subject to weighted average and other customary anti-dilution protections. At any time after September 26, 2011, we may redeem all but not less than all of the outstanding principal amount of any Convertible Note by payment of 108% of the outstanding principal amount of the Convertible Note, together with accrued but unpaid interest. The Series F Warrants entitle the PIPE Investors to purchase an aggregate of 1,115,000 shares of Common Stock at an initial exercise of $2.50 per share, which exercise price is subject to the customary weighted average and stock based anti-dilution protection. The Series F Warrants may be exercised in a cash or cashless way at any time upon the election of the holders until September 26, 2013. Euro Pacific acted as the sole placement agent of this private placement transaction, in which it received from us a cash commission of $713,600, which is equal to 8% of the gross proceeds of the financing. In addition, we issued Series F Warrants to the designees of Euro Pacific to purchase an aggregate of 312,200 shares of Common Stock at an exercise price of $2.50 per share, as partial compensation for services provided by them in connection with the private placement transaction. Corporate Information All of our business operations are conducted through our indirectly, wholly-owned Chinese subsidiaries. The following chart reflects our organizational structure as of the date of this prospectus. Our corporate headquarters are located at No. 9 Xingguang Road, Northern Industrial Park of Zhongbei Town, Xiqing District, Tianjin 300384, China. Our telephone number is (86)22-2798-4033. We maintain a website at http://www.milkgoatchina.com that contains information about us, but that information is not a part of this prospectus. The Offering Common Stock offered by selling stockholders 5,575,000 shares, consisting of 4,460,000 shares of Common Stock issuable upon the conversion of the Convertible Notes and 1,115,000 shares of Common Stock issuable upon the exercise of Series F Warrants held by the selling stockholders. Common Stock outstanding before the offering 26,454,558 shares Common Stock outstanding after the offering, assuming all the shares are issued upon the conversion of the Convertible Notes and all the Series F Warrants held by selling stockholders are exercised for cash. 32,029,558 shares Proceeds to us We will not receive any proceeds from the sale of Common Stock covered by this prospectus. We will, however, receive approximately $2.79 million from the exercise of the warrants held by the selling stockholders, if all of such warrants are exercised for cash. Trading Symbol Our Common Stock is quoted on the OTCBB under the symbol YYIN Summary Consolidated Financial Information The following summary consolidated statement of income data for the years ended March 31, 2011 and October 31, 2009 and for the five months ended March 31, 2010 and 2009 and the consolidated balance sheet data as of March 31, 2011 and 2010 are derived from our consolidated financial statements included in this prospectus. The financial information provided for the five months ended March 31, 2009 is unaudited, since it represented an interim period of the fiscal year ended October 31, 2009. Such unaudited financial information includes all adjustments, consisting of only normal recurring accruals, which our management considers necessary for the fair presentation of our financial position and results of operations for such interim periods. The data set forth below should be read in conjunction with Management s Discussion and Analysis of Financial Condition and Results of Operations and our consolidated financial statements and related notes appearing elsewhere in this prospectus. Our historical results are not necessarily indicative of our results for any future periods. STATEMENT OF INCOME Year Ended March 31, Five Months Ended March 31, Year Ended October 31, 2011 2010 2009 2009 (Unaudited) Net sales $26,909,879 $6,085,193 $9,283,420 $24,845,685 Operating expenses (16,657,594) (5,226,650) (2,659,055) (7,732,636) Operating income (Loss) 176,833 (1,511,099) 3,731,656 9,088,040 Income tax (expense) benefit (468,086) 289,093 (869,614) (2,201,032) Net (loss) income from continuing operations $(1,291,499) $(1,602,795) $2,175,164 $5,395,981 Earnings Per Share Basic $(0.05) $(0.06) $0.09 $0.22 Diluted $(0.05) $(0.06) $0.09 $0.22 BALANCE SHEET DATA As of March 31, 2011 2010 Working capital $9,738,658 $2,958,109 Current assets 25,772,598 13,147,476 Total assets 55,594,305 39,803,111 Current liabilities 16,033,940 10,189,367 Total liabilities 28,795,017 15,519,177 Stockholders equity $11,054,123 $10,019,063
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0000790652_imaging_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0000790652_imaging_prospectus_summary.txt
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+PROSPECTUS SUMMARY This summary highlights information in this document. You should carefully review the more detailed information and financial statements included in this document and other material that may be available. The summary is not complete and may not contain all of the information you may need to consider before investing in our common stock. We urge you to carefully read this document and other material that may be available, including the "Risk Factors and the financial statements and their accompanying notes. The Company Imaging Diagnostic Systems, Inc. ( IDSI ) is a development stage medical technology company. Since inception in December 1993, we have been engaged in the development and testing of a laser breast imaging system that uses computed tomography and laser techniques designed to detect breast abnormalities. The CT Laser Mammography system ( CTLM ) is currently being commercialized in certain international markets where regulatory approvals have been obtained. However, it is not yet approved for sale in the U.S. market. The CTLM system must obtain marketing clearance through the U.S. Food and Drug Administration ( FDA ) before commercialization can begin in the U.S. market. Our financial statements have been prepared assuming that we will continue as a going concern. Our auditors, in their report for the fiscal year ended June 30, 2011, stated that we have incurred recurring operating losses and will have to obtain additional capital to sustain operations. These conditions raise substantial doubt about our ability to continue as a going concern. Management s plans in regard to these matters are also described in Note 5 Going Concern , in the Notes to the Financial Statements. The accompanying financial statements to this prospectus do not include any adjustments to reflect the possible effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty. Originally, the FDA determined the CTLM to be a new medical device for which there was no predicate device and designated it as a Class III medical device. Consequently; the CTLM was required to go through the FDA Premarket approval ( PMA ) application process. In May 2003 we filed a PMA application for the CTLM with the FDA. In August 2003, we received a letter from the FDA citing deficiencies in our PMA application requiring a response to the deficiencies. We initially planned on submitting an amendment to the PMA application to resolve the deficiencies and requested an extension. In March 2004 we received an extension to respond with the amendment; however, in October 2004, we made a decision to voluntarily withdraw the original PMA application and resubmit a modified PMA in a simpler and more clinically and technically robust filing. In November 2004, we received a letter from the FDA stating that the CTLM study has been declared a Non-Significant Risk ( NSR ) study when used for our intended use. In 2005, we initiated the PMA process by designing a new clinical study protocol and a modified intended use, which limited the participants in the study to patients with dense breast tissue. The inclusion criteria was modified because we believed that we would be more successful in proving our hypothesis of the CTLM system s intended use and have the most success at obtaining marketing clearance from the FDA. Concurrently, we identified qualified clinical sites and retained them to proceed with our clinical study. In 2006, we made changes to bring the CTLM system to its most current design level. We believe these changes improved the CTLM s image quality and reliability. Upgraded CTLM systems were installed at our U.S. clinical sites and data collection proceeded in accordance with our clinical protocol. The objective was to demonstrate the safety and efficacy of the CTLM system when used per the Intended Use statement. The data collection continued from 2006 to 2010, progressing slowly due to low patient volume pursuant to the inclusion criteria of our clinical protocol. We announced in March 2009 that our research and development team achieved a technical breakthrough with a new reconstruction algorithm that improved the visualization of angiogenesis in the CTLM images. Angiogenesis is the process in which new blood vessels are formed in response to a chemical signal sent out by cancerous tumors. The CTLM visualizes the blood distribution in the breast, to detect the new blood vessels (angiogenesis) required for cancerous lesions to grow. The improved algorithm enhances the images by reducing the number of artifacts occasionally produced during an examination, thereby making diagnosis easier. We also incorporated streamlined 10-Q Table of Contents IMAGING DIAGNOSTIC SYSTEMS, INC. A Development Stage Company (Unaudited) Condensed Statements of Operations Three Months Ended From Inception September 30, December 10, 1993 to 2011 2010 September 30, 2011 * Net Sales $ 38,409 $ 11,461 $ 2,418,191 Gain on sale of fixed assets - - 2,794,565 Cost of Sales 4,729 4,259 948,611 Gross Profit 33,680 7,202 4,264,145 Operating Expenses: General and administrative 741,813 565,674 62,412,044 Research and development 212,905 239,800 23,535,742 Sales and marketing 101,557 74,336 9,667,778 Inventory valuation adjustments 7,739 5,687 4,923,184 Depreciation and amortization 16,715 27,699 3,419,140 Amortization of deferred compensation - - 4,064,250 1,080,729 913,196 108,022,138 Operating Loss (1,047,049 ) (905,994 ) (103,757,993 ) Interest income 187 312 311,021 Other income 6,404 35,664 1,000,450 Other income - LILA Inventory - - (69,193 ) Change in fair value of derivative liability 389,528 (19,355 ) 460,410 Interest expense (264,489 ) (67,092 ) (9,770,761 ) Net Loss (915,419 ) (956,465 ) (111,826,066 ) Dividends on cumulative Preferred stock: From discount at issuance - - (5,402,713 ) Earned - - (1,445,047 ) Net loss applicable to common shareholders $ (915,419 ) $ (956,465 ) $ (118,673,826 ) Net Loss per common share: Basic and diluted $ (0.00 ) $ (0.00 ) $ (0.41 ) Weighted average number of common shares outstanding: Basic and diluted 966,093,349 853,250,235 288,733,313 * The numbers presented from inception December 10, 1993 to June 30, 2005 are unaudited by our current auditor. The accompanying notes are an integral part of these condensed financial statements. If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [_] If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration number of the earlier effective registration statement for the same offering. [_] If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [_] Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non- accelerated filer. See definition of accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act. Large accelerated filer Accelerated filer Non Accelerated filer x Smaller reporting company (Do not check if a smaller reporting company) S-1 Main Table of Contents numerical methods into the software so that the new algorithm does not require additional computing resources, allowing us to provide the improved functionality to existing customers as a software upgrade. As of May 2009, 10 clinical sites had participated in the clinical trials and at the time we believed we had sufficient clinical data to support our PMA application but only our independent biostatistician could make that determination. However, at the time we did not have sufficient financing to perform the statistical analysis study, support the clinical sites, initiate the reading phase and complete the submission of the PMA application to the FDA. Through the years, new MRI and other dedicated breast imaging systems gained FDA marketing clearance pursuant to applications under the FDA s Section 510(k) premarket notification of intent to market (a Section 510(k) premarket notification ). In the last several years, the De Novo 510(k) process became an alternate pathway for new technologies with low to moderate risk an opportunity to seek FDA marketing clearance through this simpler process. In addition, laser safety data and clinical safety and efficacy data were obtained through previous clinical trials to support an FDA application through the traditional 510(k) process. We believe our CTLM system is of low to moderate risk due to the series of technical studies conducted as well as the series of clinical studies we were engaged in which led the FDA to determine in 2004 that our clinical studies were a Non Significant Risk (NSR) device study. A Section 510(k) premarket notification is a premarket submission made to the FDA to demonstrate that the device to be marketed is at least as safe and effective as, that is, substantially equivalent to, a legally marketed device that is not subject to PMA. Submitters must compare their device to one or more similar legally marketed devices and make and support their substantial equivalency claims. A legally marketed device is a device that was legally marketed prior to May 28, 1976 for which a PMA is not required, or a device which has been reclassified from Class III to Class II or I, or a device which has been found to be substantially equivalent through the 510(k) process. The legally marketed device(s) to which equivalence is drawn is commonly known as the "predicate" device. To submit a Section 510(k) premarket notification application, a company must meet the following guidelines: To demonstrate substantial equivalence to another legally U.S. marketed device, the 510(k) applicant must demonstrate that the new device, in comparison to the predicate: has the same intended use as the predicate; and has the same technological characteristics as the predicate; or has the same intended use as the predicate; and has different technological characteristics when compared to the predicate, and does not raise new questions of safety and effectiveness; and demonstrates that the device is at least as safe and effective as the legally marketed device. One possible outcome resulting from applying for a Section 510(k) premarket notification of intent to market that we believed would have been an option, was the evaluation of automatic class III designation, commonly referred to De Novo process . The De Novo process is an alternate pathway provided by the FDA to classify certain new devices that had automatically been placed in Class III due to lack of a predicate. The De Novo classification process was created to provide a mechanism for the classification of certain lower-risk devices for which there is no predicate, but would otherwise fall into Class III. The De Novo process is most applicable when the risks of a device are well-understood and appropriate special controls can be established to mitigate those risks. The De Novo process cannot be requested until a Section 510(k) premarket notification has been submitted and the FDA responds with a determination that the device is not substantially equivalent (NSE) to the predicate device. The FDA then classifies the applicant devices into Class III designation. Applicants who receive a class III determination from the FDA may request an evaluation for reclassification into Class I or II. Although we did not have a final determination on whether the clinical collection allotment for the PMA study was complete, in March 2010, we decided to focus on the possibility of obtaining FDA marketing clearance through a Section 510(k) premarket notification for our CTLM system instead of a PMA application based on our own research of other medical imaging devices that received a Section 510(k) premarket notification, such as the Aurora MRI Breast Imaging System (the breast MRI ). Other sources of our research were obtained through reading medical imaging industry publications, the FDA s website, and discussions with attendees at medical imaging trade shows; specifically the Radiological Society of 10-Q Table of Contents IMAGING DIAGNOSTIC SYSTEMS, INC. (A Development Stage Company) (Unaudited) Condensed Statement of Cash Flows Three Months From Inception Ended September 30, December 10, 1993 to 2011 2010 September 30, 2011 * Cash flows from operations: Net loss $ (915,419 ) $ (956,466 ) $ (111,826,066 ) Changes in assets and liabilities 239,743 319,097 35,339,668 Net cash used in operations (675,676 ) (637,369 ) (76,486,398 ) Cash flows from investing activities: Proceeds from sale of property & equipment - - 4,390,015 Capital expenditures - - (7,578,436 ) Net cash provided (used in) investing activities - - (3,188,421 ) Cash flows from financing activities: Repayment of capital lease obligation - - (50,289 ) Other financing activities 507,500 - 9,424,530 Proceeds from issuance of preferred stock - - 18,389,500 Net proceeds from issuance of common stock - 800,000 51,932,037 Net cash provided by financing activities 507,500 800,000 79,695,778 Net increase (decrease) in cash (168,176 ) 162,631 20,959 Cash, beginning of period 189,135 73,844 - Cash, end of period $ 20,959 $ 236,475 $ 20,959 * The numbers presented from inception December 10, 1993 to June 30, 2005 are unaudited by our current auditor. The accompanying notes are an integral part of these condensed financial statements. Explanatory Note Imaging Diagnostic Systems, Inc. (the Company or IDSI ) is filing this Amendment No. 3 to our Registration Statement on Form S-1 originally filed with the Securities and Exchange Commission (the SEC ) on July 12, 2011 (the Original Filing ), amended on September 28, 2011 (the Amendment No. 1 Filing ), and amended on October 26, 2011 (the Amendment No. 2 Filing ) to address comments from the staff of the SEC in connection with the staff s review of the Amendment No. 2 Filing. We are filing this Amendment No. 3 in response to further SEC staff comments to clarify the disclosure on the FDA process, revise our Risk Factor pertaining to accrued payroll taxes, penalties and interest owed to government agencies, revise our Use of Proceeds disclosure, added a risk factor regarding obligations to our current vendors; to amend the Report of our Independent Registered Public Accounting Firm dated September 22, 2011 and to add the word Unaudited in the inception to date column where applicable in our Financial Statements. We have also updated disclosures and risk factors where necessary to reflect our current stock price and its effect on such disclosures and risk factors. S-1 Main Table of Contents North America in Chicago, IL in November 2009; Arab Health Show in Dubai, UAE in January 2010, and European Congress of Radiology in Vienna, Austria in March 2010. We began the process of examining the various potential predicate devices that could be credible to support our Section 510(k) premarket notification application. In July 2010, we made our decision to select as our predicate device the breast MRI. This decision was made as a result of our examination of comparative clinical images between CTLM and breast MRI, which are both functional molecular imaging devices having the ability to visualize angiogenesis in the breast. We began preparing the Section 510(k) premarket notification submission and engaged the services of a FDA regulatory consultant to review our preliminary draft and then re-engaged the services of our FDA regulatory counsel to complete the Section 510(k) premarket notification application and to submit it to the FDA. On November 22, 2010, we submitted a Section 510(k) premarket notification application to the FDA for its review. We believed that the Section 510(k) premarket notification submission was the best process to obtain U.S. marketing clearance in the least burdensome and most timely manner. FDA marketing clearance would enable us to market and sell the CTLM system throughout the United States. Also, we believed that receipt of U.S. marketing clearance will substantially enhance our ability to sell the CTLM in the international market. On January 21, 2011, we received a request for additional information from the FDA regarding our Section 510(k) premarket notification application. A request for additional information is quite common during the FDA review process. Due to the extensive amount of additional information requested, we filed the response to the FDA request on July 8, 2011. Upon receipt of our response at the FDA offices, the FDA 90-day response time clock was re-activated. Consequently, we expected to get either an FDA determination on our Section 510(k) application or another request for additional information within the next 90-day time frame. On August 2, 2011, we received official notification from the FDA that the review of our Section 510(k) premarket notification application had been completed and that the FDA determined that the device, (CTLM ), is not substantially equivalent to devices marketed in interstate commerce prior to May 28, 1976, the enactment date of the Medical Device Amendments, or to any device which has been reclassified into Class I (General Controls) or Class II (Special Controls), or to another device found to be substantially equivalent through the Section 510(k) process. This decision was based on the fact that the FDA was not aware of a legally marketed preamendments device labeled or promoted for using Diffuse Optical Tomography (DOT) to image the optical attenuation properties of breast tissue in order to aid the diagnosis of cancer, other conditions, diseases, or abnormalities. Although the FDA did not use the term rejected in the NSE letter, the effect of this letter is that our Section 510(k) premarket notification of intent to market the device (CTLM ) has been rejected. Therefore, this device was classified by statute into class III (Premarket Approval), under Section 513(t) of the Federal Food, Drug, and Cosmetic Act (the Act ). All FDA determined Class III devices must fall under Section 515(a)(2) of the Act (which) requires a class III device to have an approved application (PMA) before it can be legally marketed. The determination by the FDA that our CTLM imaging technology will now be recognized as a DOT device and that there are no other DOT devices known to the FDA, presents us with a unique technological opportunity. Essentially, IDSI could be the first medical imaging company to file a PMA application for a Diffuse Optical Tomography breast imaging device. Since the FDA has identified CTLM as a class III device, a formal clinical study will be required to obtain PMA approval. We have begun the PMA process and plan to use clinical studies previously collected from 2006 to 2010 , if permitted to do so by the FDA, in addition to new studies we plan to collect over the next several months. Essentially, the FDA has stated that the CTLM technology will require a full PMA application based on a DOT clinical imaging format. Previously collected patient data from 2006 to 2010 was based on a protocol identifying CTLM as an adjunct to mammography . We believe that our technology has always been based on a DOT scientific principle, that our patient collection technique will not change with a future DOT protocol, and that the patient inclusion/exclusion criteria for the new study will not change. Consequently, it is our belief that previously collected and non-analyzed patient data may be allowed by the FDA to be included in a future DOT protocol. This belief will either be accepted or rejected during the official pre- IDE meeting, which is a pre-clinical meeting, to be held at the FDA. Although we have collected substantial clinical data from 2006 to 2010 , it is very likely that additional cases will be needed to support the statistical analysis protocol devised to demonstrate safety and efficacy of the CTLM system. Ultimately, the FDA must decide as to how many patient cases will need to be bio-statistically analyzed to support the CTLM intended use claims. We would rely on our independent bio-statistician regarding the actual number of case studies required; however, the FDA has the ultimate authority to determine the number of clinical cases needed for the PMA application. Like other governmental institutions, the FDA prefers to reserve the right to make bio-statistical 10-Q Table of Contents IMAGING DIAGNOSTIC SYSTEMS, INC. NOTES TO CONDENSED FINANCIAL STATEMENTS (Unaudited) NOTE 1 - BASIS OF PRESENTATION We have prepared the accompanying unaudited condensed financial statements of Imaging Diagnostic Systems, Inc. in accordance with generally accepted accounting principles for interim financial information and pursuant to the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, the financial statements do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In our opinion, all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation have been included. Operating results for three month period ended September 30, 2011 are not necessarily indicative of the results that may be expected for any other interim period or for the year ending June 30, 2012. These condensed financial statements have been prepared in accordance with Financial Accounting Standards guidance for Development Stage Enterprises, and should be read in conjunction with our condensed financial statements and related notes included in our Annual Report on Form 10-K filed on September 22, 2011. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires that management make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of expenses incurred during the reporting period. Actual results could differ from those estimates. NOTE 2 - GOING CONCERN Imaging Diagnostic Systems, Inc. ( IDSI ) is a development stage enterprise and our continued existence is dependent upon our ability to resolve our liquidity problems, principally by obtaining additional debt and/or equity financing. IDSI has yet to generate a positive internal cash flow, and until significant sales of our product occur, we are dependent upon debt and equity funding. See Item 2 Management s Discussion and Analysis of Financial Condition and Results of Operations . In the event that we are unable to obtain debt or equity financing or we are unable to obtain such financing on terms and conditions acceptable to us, we may have to cease or severely curtail our operations, which would materially impact our ability to continue as a going concern. Management has been able to raise the capital necessary to reach this stage of product development and has been able to obtain funding for capital requirements to date. Recently we have relied on raising additional capital through our new Private Equity Credit Agreement with Southridge Partners II, L.P. ( Southridge ) dated January 7, 2010, which replaced the Charlton Agreement and through the issuance of short term promissory notes. We also intend to raise capital through other sources of financing. See Part II, Item 5. Other Information Financing/Equity Line of Credit. In the event we are unable to draw from this new private equity line, alternative financing will be required to continue operations, and there is no assurance that we will be able to obtain alternative financing on commercially reasonable terms. There is no assurance that, if and when Food and Drug Administration ( FDA ) marketing clearance is obtained, the CTLM will achieve market acceptance or that we will achieve a profitable level of operations. We currently manufacture and sell our sole product, the CTLM - Computed Tomography Laser Mammography. We are appointing distributors and installing collaboration systems as part of our global commercialization program. We have sold 16 systems as of September 30, 2011; however, we continue to operate as a development stage enterprise because we have yet to produce significant revenues. We are attempting to create increased product awareness as a foundation for developing markets through an international distributor network. We may be able to exit reporting as a Development Stage Enterprise upon two successive quarters of sufficient revenues such that we would not have to utilize other funding to meet our quarterly operating expenses. Calculation Of Registration Fee Title OF Each Class Of Securities To Be Registered Amount to be registered Proposed Maximum Offering Price per Share (2) Proposed Maximum Aggregate Offering Price (2) Amount of Registration Fee(5) Common Stock, no par value (1) 180,000,000 $0.0065 $1,170,000.00 $134.08 TOTAL 180,000,000 $0.0065 $1,170,000.00 $134.08 (1) This registration statement covers the shares that become due and payable to the selling security holder as settlement for put notices and the related imputed interest as a result of the discount of 93% of the three lowest bid prices in the ten day window following the date of each put notice. In the event that adjustment provisions of the equity line agreement require us to issue more shares than are being registered in this registration statement, for reasons other than those stated in Rule 416 of the Securities Act, we will file a new registration statement to register those additional shares. (2) Estimated solely for purposes of calculating the registration fee according to Rule 457(c) of the Securities Act of 1933, as amended, on the basis of the average bid and ask price of our common stock on the NASDAQ Electronic Bulletin Board on November 30 , 2011 . (3) In the event that the shares registered in this prospectus are insufficient to meet the delivery requirement at the actual time of the put date settlement, we will file a new registration statement to register the additional shares. (4) All of the shares of common stock registered in this registration statement will be sold by the selling security holder. (5) A registration fee of $359.91 was paid on July 12, 2011 upon the initial filing of the Registration Statement on Form S-1, which is amended by this Form S-1/A3. The fee was calculated on the average bid and ask price of our common stock on the NASDAQ Electronic Bulletin Board on July 11, 2011. THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE. S-1 Main Table of Contents determinations on an individual case-by-case basis. Therefore, it is very likely that a clinical trial will need to begin again, which will require approval by an IRB (Institutional Review Board - an organization required to review and approve clinical protocols outlining the study to be conducted at the hospital or imaging sites). In addition, after the collection of clinical data is completed, a radiologist reading study of the clinical cases will be required and a statistical analysis of the results of the reading study will have to be performed in order to support the "Intended Use" and demonstrate safety and efficacy of the CTLM system prior to PMA submission. We need to secure funding to continue with the PMA process. If funding is obtained, then we can begin to: contract with the FDA regulatory consultants, contract with the identified clinical sites (hospitals and imaging centers) to collect the clinical data, seek an IRB approval of the clinical protocol, which could take up to 30 to 120 days, place the CTLM system at the selected sites, train the clinical staff on the CTLM system and the clinical protocol at the selected sites, and recruit patients to volunteer for the clinical study. Our main hurdle for completion of the PMA application is our lack of financial resources. Historically, we have contracted with outside FDA consultants both for guidance and to ensure that our FDA related submissions meet FDA requirements, as we did not have sufficient resources to hire qualified full-time FDA clinical staff. Further, this approach is more cost effective than employing full time FDA experienced staff that will not be required once FDA marketing clearance has been obtained. Our management has identified FDA regulatory consultants who have proven ability in achieving FDA marketing clearance for diagnostic imaging devices. We cannot move forward until such time as we secure sufficient financing to engage these FDA regulatory consultants. In previous filings, management had disclosed the potential to have our CTLM device approved through the FDA De Novo process. This process would only become an option to us if the FDA did not approve our 510(k) premarket notification of intent to market the device. While waiting for a ruling from the FDA on our 510(k) premarket notification of intent to market the CTLM , management continued to research the advantages and disadvantages regarding the potential option to initiate a De Novo application if the FDA determined our traditional 510(k) application to be Not Substantially Equivalent . Our research identified several articles illustrating the potential pitfalls of going down the De Novo pathway. One such article from Medical Device Consultants (MDCI), a full service contract research organization and consulting firm that helps emerging and established firms commercialize novel and innovative medical devices, dated March 21, 2011(included below) best summarizes the issues that we would face if we choose the De Novo pathway. The De Novo process has been around since the implementation of the FDA Modernization Act of 1997 (FDAMA). The FDAMA was intended to help improve the efficiency of bringing low-risk medical devices to market, allowing for simpler reclassification of devices that were classified as Class III due to the lack of a suitable predicate. The section of the FDAMA that handled this aspect of medical device classification (Section 513(f)(2)) became known as the De Novo process. De Novo is a two-step process that requires a company to submit a 510(k) and complete a standard review, including an analysis of the risk to the patient and operator associate with the use of the device and the substantial equivalence rationale. Once that has been accomplished, and the medical device in question has been determined to be Not Substantially Equivalent (NSE) by the FDA, the product is automatically classified as a Class III device. The manufacturer can then submit a request for evaluation of Automatic Class III designation to have the product reclassified from Class III into Class I or Class II. The FDA will review the device classification proposal and either recommend special controls to create a new Class I or II device classification or determine that the product is a Class III device. If FDA determines that the level of risk associated with the use of the device is appropriate for a Class II or Class I designation, then the product can be cleared as a 510(k) and FDA will issue a new classification regulation and product code. This also adds the device in question to the predicate pool, which in turn broadens the market for other medical device companies considering products in a similar therapeutic area. If the device is not approved through De Novo, then it must go through the standard premarket approval (PMA) process for Class III devices. The number of FDA NSE determinations due to the lack of a suitable predicate is very low for those low risk medical devices that have the potential for reaching the market via the De Novo process. Medical device manufacturers are attracted to the cost efficiencies associated with the De Novo process when compared against the investment and post-market FDA oversight associated with a PMA. Unfortunately, the time to market for devices eligible for the De Novo process can be very long. FDAMA calls for the FDA to review and return a decision on a De Novo reclassification submission within 60 days of receipt (the initial submission must be sent by the 10-Q Table of Contents NOTE 3 - INVENTORY Inventories included in the accompanying condensed balance sheet are stated at the lower of cost or market as summarized below: Sept. 30, 2011 June 30, 2011 Unaudited Raw materials consisting of purchased parts, components and supplies $ 499,371 $ 508,176 Work-in-process including units undergoing final inspection and testing 31,662 28,943 Finished goods 185,678 184,443 Sub-Total Inventories 716,711 721,562 Less Inventory Reserve (399,000 ) (399,000 ) Total Inventory - Net $ 317,711 $ 322,562 We review our Inventory for parts that have become obsolete or in excess of our manufacturing requirements and our Finished Goods for valuation pursuant to our Critical Accounting Policy for Inventory. For the quarter ending September 30, 2011, we reclassified the net realizable value of $11,928 from Clinical Equipment to Consignment Inventory due to a CTLM system being purchased by one of our Distributors in an installment sale. For the fiscal year ending June 30, 2011, we reclassified the net realizable value of $6,525 of CTLM systems in Inventory to Clinical equipment. For the fiscal year ending June 30, 2009, we reclassified the net realizable value of $8,591 as this CTLM system is being used as a clinical system at the University of Florida. For the fiscal year ending June 30, 2008 since such finished goods are being utilized for collecting data for our FDA application, we reclassified the net realizable value of $311,252 of CTLM systems in Inventory to Clinical equipment. For the fiscal year ending June 30, 2010 we identified $399,000 of Inventory that we deem impaired due to the lack of inventory turnover. There were no changes to Inventory Reserve for the quarter ending September 30, 2011. NOTE 4 - REVENUE RECOGNITION We recognize revenue in accordance with the guidance provided in SEC Staff Accounting Bulletin No. 104. We sell our medical imaging products, parts, and services to independent distributors and in certain unrepresented territories directly to end-users. Revenue is recognized when persuasive evidence of a sales arrangement exists, delivery has occurred such that title and risk of loss have passed to the buyer or services have been rendered, the selling price is fixed or determinable, and collectibility is reasonable assured. Unless agreed otherwise, our terms with international distributors provide that title and risk of loss passes F.O.B. origin. To be reasonably assured of collectibility, our policy is to minimize the risk of doing business with distributors in countries which are having difficult financial times by requesting payment via an irrevocable letter of credit ( L/C ) drawn on a United States bank prior to shipment of the CTLM . It is not always possible to obtain an L/C from our distributors so in these cases we must seek alternative payment arrangements which include third-party financing, leasing or extending payment terms to our distributors. NOTE 5 - RECENT ACCOUNTING PRONOUNCEMENTS In June 2009, FASB approved the FASB Accounting Standards Codification ( the Codification ) as the single source of authoritative nongovernmental GAAP. All existing accounting standard documents, such as FASB, American Institute of Certified Public Accountants, Emerging Issues Task Force and other related literature, excluding guidance from the The information in this Prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This Prospectus is not an offer to sell these securities and is not seeking an offer to buy these securities in any state where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED December __, 2011 PROSPECTUS IMAGING DIAGNOSTIC SYSTEMS, INC. 180,000,000 shares of common stock This Prospectus is part of the registration statement we filed with the Securities and Exchange Commission using a shelf registration process. This means: We may issue up to 180,000,000 shares of our common stock pursuant to our $15 million Private Equity Credit Agreement dated November 23, 2009 and amended January 7, 2010 (the Southridge Private Equity Credit Agreement ) between us and the selling stockholder, Southridge Partners II, LP ( Southridge ), for which we would receive net proceeds after 7% discount of approximately $736,560 upon the exercise of our put options. See Financing/Equity Line of Credit . Proceeds from our exercise of the put options would be used for general corporate purposes. Southridge is an underwriter within the meaning of the Securities Act of 1933 in connection with its sales of our common stock acquired under the Southridge Private Equity Credit Agreement. Our common stock is traded on the OTC Bulletin Board under the symbol "IMDS". On November 30, 2011 the closing bid price of our common stock on the OTC Bulletin Board was $0.0044 . THE SECURITIES OFFERED IN THIS PROSPECTUS INVOLVE A HIGH DEGREE OF RISK. YOU SHOULD CAREFULLY CONSIDER THE FACTORS DESCRIBED UNDER THE HEADING "RISK FACTORS" BEGINNING ON PAGE 8 OF THIS PROSPECTUS. __________________________________________________ NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. __________________________________________________ The date of this Prospectus is December __, 2011 S-1 Main Table of Contents manufacturer within 30 days of receiving NSE notification). In practice, however, the amount of time taken to review De Novo requests by the FDA and issue the special controls guidance has risen from 62 days in 2006 to 241 days since 2007. Tacked on to the 510(k) review times, devices traveling the De Novo pathway average 482 days of review time from beginning to end. Further compounding the delays associated with De Novo is the fact that the entire process resembles a procedural black hole. The FDA is not required to provide any updates concerning the status of a De Novo application, nor is there any simple way for medical device manufacturers to track a De Novo submission on their own. De Novo is rare in the realm of low-risk medical devices a mere 54 products took this particular route between 1998 and 2009. Given the extensive delays associated with the process, MDCI advises medical device companies to consider all other market approval pathways before deciding on to pursue a De Novo reclassification. Prepared by Benjamin Hunting, Cindy Nolte, and Helen Mayfield MDCI Blogging Team Understanding that the above statements were a fair representation of the regulatory industry's general feelings towards the FDA De Novo process, management decided to accept and heed the FDA's letter (received on August 2, 2011) detailing their decision of CTLM being not substantially equivalent and furthermore, accepting their recommendation that CTLM is a class III device that would require a PMA submission. Other considerations such as comparing time frames between De Novo and the PMA process were taken into account. The average De Novo application took 482 days to be reviewed compared to the average PMA review of 284 days. In addition, upon further review, both the De Novo and PMA process require virtually identical clinical safety and efficacy data; therefore, the PMA path was chosen. Management has identified potential FDA regulatory consultants who can guide us through the complete PMA application process and is presently in contract negotiations with several prospective consulting firms. In summary, our management team believes that the more structured and proven PMA application approach with its semi-rigid timetable for mandatory responses would provide us with the best route to achieve marketing clearance for our innovative new imaging modality that in the future will be classified as Diffuse Optical Tomography. The CTLM system is a Diffuse Optical Tomography (DOT) CT-like scanner. Its energy source is a laser beam and not ionizing radiation such as is used in conventional x-ray mammography or CT scanners. The advantages of imaging without ionizing radiation may be significant in our markets. CTLM is an emerging new imaging modality offering the potential of functional molecular imaging, which can visualize the process of angiogenesis which may be used by the radiologist to distinguish between benign and malignant tissue. X-ray mammography is a well-established method of imaging the breast but has limitations especially in dense breast cases. While x-ray mammography and ultrasound produce two dimensional images (2D) of the breast, the CTLM produces 3D images. Ultrasound is often used as an adjunct to mammography to help differentiate tumors from cysts or to localize a biopsy site. We believe the CTLM will be used to provide the radiologist with additional information to manage the clinical case; help diagnose breast cancer earlier; reduce diagnostic uncertainty especially in mammographically dense breast cases; and may help decrease the number of biopsies performed on benign lesions. Because breast cancers nearly always develop in the dense tissue of the breast (not in the fatty tissue), older women who have mostly dense tissue on a mammogram are at an increased risk of breast cancer. Abnormalities in dense breasts can be more difficult to detect on a mammogram. The CTLM technology is unique and patented. We intend to develop our technology into a family of related products. We believe these technologies and clinical benefits constitute substantial markets for our products well into the future. As of the date of this prospectus we have had no substantial revenues from our operations and have incurred net losses applicable to common shareholders since inception through September 30, 2011 of $118,673,826 after discounts and dividends on preferred stock. We anticipate that losses from operations will continue for at least the next 12 months, primarily due to an anticipated increase in marketing and manufacturing expenses associated with the international commercialization of the CTLM , expenses associated with our FDA approval process, and the costs associated with advanced product development activities. We will need sufficient financing through the sale of equity or debt securities to complete the approval process and, in the event that we obtain marketing clearance, to have sufficient funding to launch the CTLM in the U.S. There can be no assurance that we will obtain this financing. Finally, there can be no assurance that we will obtain FDA marketing clearance, that the CTLM will achieve market acceptance or that sufficient revenues will be generated from sales of the CTLM to allow us to operate profitably. 10-Q Table of Contents Securities and Exchange Commission ( SEC ), have been superseded by the Codification. All other non-grandfathered, non-SEC accounting literature not included in the Codification has become non-authoritative. The Codification did not change GAAP, but instead introduced a new structure that combines all authoritative standards into a comprehensive, topically organized online database. The Codification is effective for interim or annual periods ending after September 15, 2009, and impacts our financial statements as all future references to authoritative accounting literature will be referenced in accordance with the Codification. There have been no changes to the content of our financial statements or disclosures during the quarter ended September 30, 2011 as a result of implementing the Codification. All other issued but not yet effective FASB issued guidances have been deemed to be not applicable hence when adopted, these guidances are not expected to have any impact on the financial position of the company. NOTE 6 STOCK-BASED COMPENSATION The Company relies on the guidance provided by ASC 718, ( Share Based Payments ). ASC 718 requires companies to expense the value of employee stock options and similar awards and applies to all outstanding and vested stock-based awards. In computing the impact, the fair value of each option is estimated on the date of grant based on the Black-Scholes options-pricing model utilizing certain assumptions for a risk free interest rate; volatility; and expected remaining lives of the awards. The assumptions used in calculating the fair value of share-based payment awards represent management s best estimates, but these estimates involve inherent uncertainties and the application of management judgment. As a result, if factors change and the Company uses different assumptions, the Company s stock-based compensation expense could be materially different in the future. In addition, the Company is required to estimate the expected forfeiture rate and only recognize expense for those shares expected to vest. In estimating the Company s forfeiture rate, the Company analyzed its historical forfeiture rate, the remaining lives of unvested options, and the amount of vested options as a percentage of total options outstanding. If the Company s actual forfeiture rate is materially different from its estimate, or if the Company reevaluates the forfeiture rate in the future, the stock-based compensation expense could be significantly different from what we have recorded in the current period. The impact of applying ASC 718 approximated $2,290 and $94,043, respectively, in additional compensation expense for the three months ended September 30, 2011 and 2010. The fair value concepts were not changed significantly in ASC 718, however, in adopting this Standard, companies were given the option to choose among alternative valuation models and amortization assumptions. We elected to continue to use the Black-Scholes option pricing model and expense the options as compensation over the requisite service period of the grant. We will reconsider use of the Black-Scholes model if additional information becomes available in the future that indicates another model would be more appropriate, or if grants issued in future periods have characteristics that cannot be reasonably estimated using this model. For purposes of the following disclosures the weighted-average fair value of options has been estimated on the date of grant using the Black-Scholes options-pricing model with the following weighted-average assumptions used for grants for the three months ended September 30, 2011: no dividend yield; expected volatility of 126%; risk-free interest rate of 4%; and an expected eight-year term for options granted. For the quarter ending September 30, 2011, the net income and earnings per share reflect the actual deduction for option expense as a non-cash compensation expense. Stock-based compensation expense recorded during the three months ended September 30, 2011, was $2,290 compared to $94,043 from the corresponding period in fiscal 2010. See Item 2, Results of Operations, Liquidity and Capital Resources, Sale/Lease-Back . The weighted average fair value per option at the date of grant for the three months ended September 30, 2011 using the Black-Scholes Option-Pricing Model was $0.015. The weighted Table Of Contents Forward-Looking Statements 2 Prospectus Summary 3
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0000802851_logic_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0000802851_logic_prospectus_summary.txt
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--- /dev/null
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@@ -0,0 +1 @@
+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0000803044_electronic_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0000803044_electronic_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..10f375e752515232767fd9df33322115e4952274
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@@ -0,0 +1 @@
+The following summary highlights selected information contained in this prospectus. This summary does not contain all the information you should consider before investing in the securities. Before making an investment decision, you should read the entire prospectus carefully, including the information set forth under the headings Risk Factors and Management s Discussion and Analysis of Financial Condition and Results of Operations, and the financial statements and the notes to the financial statements included in this prospectus. General Electronic Control Security Inc. is engaged in the design, develop, manufacture and marketing of technology-based integrated entry control and perimeter security solutions. We also perform support services consisting of risk assessment and vulnerability studies to ascertain a client's security requirements in developing a comprehensive risk management and mitigation program as well as product design and engineering services in support of the systems integrators and dealers/installers providing these services to a client. We market our products domestically and internationally to: security system integrators; national and local government entities; large industrial facilities and major office complexes; energy facilities, including nuclear power stations, power utilities and pipelines; and commercial transportation centers, such as airports and seaports. We believe we are one of the few true comprehensive security solution providers in the industry. We are able to analyze a security risk and develop security solutions specifically tailored to mitigate that risk, including design, engineering and manufacturing individual components of a system as may be necessary to deliver a fully integrated security system customized to a client's requirements. We are frequently engaged by security system integrators, security system dealers/installers, and commercial architects and engineers because we are able to deliver the integrated platform of design, engineering services and fully integrated security solutions that support their requirements for the completion of a given project. We believe that we have developed a superior reputation as a provider of integrated security systems since our inception in 1976 because we: offer the complete range of solutions-driven responses to accommodate our customers' needs; offer technologically superior products; are able to design, engineer and manufacture systems customized to our clients' specific requirements; deliver systems that are easy to operate and maintain while providing superior life cycle cost performance compared to systems offered by competitors; have established solid credentials in protecting high value targets; and offer customers perhaps the best warranty in the industry. Drawdown Equity Financing Agreement. On February 8, 2011, we executed a drawdown equity financing agreement and registration rights agreement (collectively the "Agreements") with Auctus Private Equity Fund, LLC ("Auctus"), one of the selling stockholders. In accordance with the Agreements, Auctus has committed, subject to certain conditions, to purchase up to $10 million of our Common Stock, over a term of up to five years commencing from the effective date of the Registration Statement of which this Prospectus forms a part. While we are not required to sell shares under the Agreements, the Agreements give us the option to sell to Auctus shares of Common Stock at a per share purchase price of equal to 96% of the lowest closing volume weighted average price (VWAP) during the five trading days following our delivery to Auctus of a draw-down notice (the "Notice"). At our option, we may set a floor price under which Auctus may not sell the shares which were the subject of the Notice. A floor price, if established by us, would be applicable only to the shares subject to the particular drawdown Notice during the pricing period. This may result in a reduction of the amount of funds raised and ultimately delivered to us at any drawdown closing date. The maximum amount of Common Stock that we can sell pursuant to any Notice is the greater of: (i) an amount of shares with an aggregate maximum purchase price of $200,000 or (ii) 200% of the average daily volume based on the trailing ten (10) trading days preceding the Notice date, whichever is of a larger value. Auctus is not required to purchase the shares, unless the shares which are subject to the Notice have been registered for resale and are freely tradable in accordance with the Federal securities laws, including the Securities Act of 1933, as amended and except for conditions outside of Auctus control. The Company is obligated to file with the U.S. Securities and Exchange Commission (the "SEC") this registration statement on Form S-1 within 180 days from the date of the Agreements and to use all commercially reasonable efforts to have such registration statement declared effective by the SEC within 120 days of filing. The Company has paid to Auctus a non-refundable fee of $5,000 and an additional $7,500 will be taken out of the proceeds of the first drawdown. Summary Financial Information The table below summarizes our audited financial statements for the fiscal years ended June 30, 2010 and 2009, as well as the unaudited financial statements for the nine months ended March 31, 2011 and 2010. Balance Sheet Summary: Fiscal Year Ended At March 31, At June 30, 2010 (Audited) At June 30, 2009 (Audited) 2011 (Unaudited) Balance Sheet Cash $ 168,465 $ 15,735 $ 41,723 Total Assets $ 5,960,425 $ 5,510,138 $ 4,880,552 Total Liabilities $ 2,889,765 $ 2,872,224 $ 1,346,638 Total Stockholders Equity $ 3,070,660 $ 2,637,194 $ 3,533,914 Statement of Operations Summary: For the Fiscal Year Ended June 30 For the Nine Months Ended March 31, 2010 2009 2011 2010 (Audited) (Audited) (Unaudited) (Unaudited) Statement of Operations: Revenue $ 4,513,737 $ 3,472,696 $ 2,888,625 $ 2,923,381 Net Income (Loss) $ 248,266 ) $ (788,992 ) $ 269,498 ) $ 282,743 ) Net loss per common share basic and diluted 0.02 ) (0.08 ) 0.03 ) 0.03 ) THE OFFERING Securities Being Offered: 4,536,863 shares of common stock. Offering Period: Until all shares are sold or until 60 months from the date that the registration statement becomes effective, whichever comes first. Common Stock Outstanding Before the Offering: 10,429,911 shares of common stock issued. Before and After the Offering: After the Offering: 12,429,911 shares of common stock. Use of Proceeds: We will not receive any proceeds from the sale of the common stock by the selling stockholders.
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0000804561_central_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0000804561_central_prospectus_summary.txt
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@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights specific information contained elsewhere or incorporated by reference in this prospectus. However, this summary is not complete and does not contain all of the information you should consider before investing in our common stock, and it is qualified in its entirety by the more detailed information included in or incorporated by reference into this prospectus. To understand this offering fully, you should carefully read this entire prospectus, including the risks discussed under the Risk Factors section and our financial statements and related notes. Our Company We are a bank holding company headquartered in Powhatan, Virginia. Through our wholly-owned bank subsidiary, Central Virginia Bank (the Bank ), we engage in a general community and commercial banking business, targeting the banking needs of individuals and small to medium sized businesses in Powhatan and Cumberland Counties, eastern Goochland County, western Chesterfield and western Henrico Counties. We offer all traditional loan and deposit banking services as well as newer services such as Internet banking, telephone banking, debit cards, and other ancillary services such as the sales of non-deposit investment products through a partnership with Infinex Investments, Inc., a registered broker-dealer and member of NASD, SIPC. We make seasonal and term loans, both alone and in conjunction with other banks or governmental agencies. We also offer other related services, such as ATMs, travelers checks, safe deposit boxes, deposit transfer, notary public, escrow, drive-in facilities and other customary banking services. Our lending policies, deposit products and related services are intended to meet the needs of individuals and businesses in our market area. Our common stock is traded on the Nasdaq Global Market under the ticker symbol CVBK. Market Areas and Growth Strategy The Bank s primary service areas are Powhatan and Cumberland Counties, eastern Goochland County and western Chesterfield and western Henrico Counties of Virginia. Based on FDIC deposit statistics as of June 30, 2010, the Bank has a strong position in both Powhatan and Cumberland Counties with greater than 50% and 75% of the deposits, respectively, in each locality. However, in Goochland, Chesterfield and Henrico Counties, the Bank encounters stronger competition for its banking services from large banks and other community banks located in the Richmond metropolitan area. Due to the current economic environment in our markets and our expectations for the future, our near-term focus will be on continuing to increase our regulatory capital levels. We do not expect a substantial near-term increase in the growth of our assets. At such time that we see the local economy grow and customer demand return, we do expect to prudently increase our lending activities within regulatory capital limitations. We will continue to focus on our current market areas and have no plans to grow outside of our market areas at this time. Corporate Information Our principal executive offices are located at 2036 New Dorset Road, Powhatan, Virginia 23139 and our telephone number is (804) 403-2000. We maintain a website at www.centralvabank.com, which contains information relating to us. Information on our website is not incorporated by reference and is not a part of this prospectus. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box. x If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. Large accelerated filer Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company x The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. The Offering Securities Offered We are distributing to you, at no charge, one non-transferable subscription right for every one share of our common stock that you owned on the record date, either as a holder of record or, in the case of shares held of record by brokers, banks, or other nominees, on your behalf, as a beneficial owner of such shares, subject to adjustments to eliminate fractional rights. We are offering any shares that are not subscribed for in the rights offering, plus an additional shares of our common stock, in a public offering. Common Shares to be Outstanding If all of our shares of common stock being offered are sold, approximately shares will be outstanding following closing of the offering.1 Basic Subscription Right The basic subscription right will entitle you to purchase shares of our common stock at a subscription price of $ per share for each share of our common stock that you own; however, fractional shares of our common stock resulting from the exercise of the basic subscription right will be eliminated by rounding down to the nearest whole share. Over-Subscription Privilege In the event that you purchase all of the shares of our common stock available to you pursuant to your basic subscription right, you may also choose to subscribe for a portion of any shares of our common stock that are not purchased by our shareholders through the exercise of their basic subscription rights. You may subscribe for shares of common stock pursuant to your over-subscription privilege, subject to the purchase and ownership limitations described below. Limitation on the Purchase of Shares We will not issue shares of common stock pursuant to the exercise of basic subscription rights or over-subscription privileges or to any shareholder who, in our sole opinion, could be required to obtain prior clearance or approval from or submit a notice to any state or federal bank regulatory authority to acquire, own or control such shares if, as of , such clearance or approval has not been obtained and/or any applicable waiting period has not expired. Rights Offering Subscription Price $ per full share, payable in cash. To be effective, any payment related to the exercise of a subscription right must clear prior to the expiration of the rights offering. If the public offering price is less than $ per share, at the closing of the offering we will release from escrow and deliver to the rights offering subscribers that portion of the subscription price equal to the difference between $ and the public offering price, without interest. In accordance with applicable securities laws, we will file with the Securities and Exchange Commission: (i) a supplement to this prospectus once the price of the public offering has been determined to include the public offering price and final rights offering price, and (ii) all marketing materials, as exhibits to the registration statement of which this prospectus is a part or as free writing prospectuses. Record Date 5:00 p.m., Eastern Time, on , 2011 The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED November 18, 2011 PRELIMINARY PROSPECTUS Up To $15,000,000 Central Virginia Bankshares, Inc. Common Stock We are distributing to holders of our common stock, at no charge, non-transferable subscription rights to purchase up to shares of our common stock. We refer to this offering as the rights offering. In the rights offering, you will receive one subscription right for each full share of common stock owned at 5:00 p.m., Eastern Time, on , 2011, the record date of the rights offering. Each subscription right will entitle you to purchase shares of our common stock at a subscription price of $ per share, which we refer to as the basic subscription right. If you fully exercise all of your basic subscription rights, and other shareholders do not fully exercise their basic subscription rights, you will be entitled to exercise an over-subscription privilege to purchase a portion of the unsubscribed shares at the same price of $ per share, subject to proration and subject, further, to reduction by us under certain circumstances. To the extent you properly exercise your over-subscription privilege for an amount of shares that exceeds the number of the unsubscribed shares available to you, any excess subscription payments will be returned promptly, without interest or penalty. The subscription rights will expire if they are not exercised by 5:00 p.m., Eastern Time, on , 2011, but we may extend the rights offering for additional periods ending no later than , 2011. Once made, all exercises of subscription rights are irrevocable. We have agreed with to serve as the subscription agent for the rights offering. The subscription agent will hold in escrow the funds we receive from subscribers until we complete or cancel the rights offering. We have agreed with to serve as information agent for the rights offering. Any unsubscribed shares, after taking into account all over-subscription rights exercised, plus an additional shares of our common stock, will be offered in a public offering on a best efforts basis by and as underwriters, at a price currently anticipated to be between $ and $ per share. If the public offering price exceeds $ per share, subscribers for shares in this rights offering will not pay more than $ per share. If the public offering price is less than $ per share, at the closing of the offering we will release from escrow and deliver to the rights offering subscribers that portion of the subscription price equal to the difference between $ and the public offering price, without interest. In accordance with applicable securities laws, we will file with the Securities and Exchange Commission: (i) a supplement to this prospectus once the price of the public offering has been determined to include the public offering price and final rights offering price, and (ii) all marketing materials, as exhibits to the registration statement of which this prospectus is a part or as free writing prospectuses. Because the public offering is on a best-efforts basis, the underwriters are not required to sell any specific number or dollar amount of shares and is not obligated to purchase the shares if they are not sold to the public. We reserve the right to increase the total number of shares offered in the public offering by not more than shares. The public offering is expected to terminate on or about , 2011. All subscriptions for shares in the public offering are irrevocable. We are not requiring an overall minimum subscription to complete the rights and public offering (together, the offering ). However, our board of directors reserves the right to cancel the offering for any reason, including if we do not receive aggregate subscriptions in the offering that we believe will satisfy our capital plans. If we cancel the offering, all subscription payments received will be returned promptly, without interest or penalty. We expect to close the offering on or about , 2011. Expiration of Rights Offering 5:00 p.m., Eastern Time, on , 2011 Procedures for Exercising Rights To exercise your subscription rights, you must take the following steps: If you are a registered holder of our common stock, you must deliver payment and a properly completed rights certificate to the subscription agent to be received before 5:00 p.m., Eastern Time, on , 2011. You may deliver the documents and payments by first class mail or courier service. If you use first class mail for this purpose, we recommend using registered mail, properly insured, with return receipt requested. If you are a beneficial owner of shares that are registered in the name of a broker, dealer, custodian bank or other nominee, you should instruct your broker, dealer, custodian bank or other nominee to exercise your subscription rights on your behalf. Please follow the instructions of your nominee, who may require that you meet a deadline earlier than 5:00 p.m., Eastern Time, on , 2011. Non-Transferability of Rights The subscription rights may not be sold, transferred or assigned and will not be listed for trading on The Nasdaq Global Market or on any stock exchange or market Participation of Directors and Officers Each of our directors and executive officers, together with their affiliates, has committed to exercising a portion of his or her basic subscription rights personally. Our board of directors is not making a recommendation regarding your exercise of the subscription rights. You are urged to make your decision to invest based on your own assessment of our business and the offering. Please see Risk Factors for a discussion of some of the risks involved in investing in our common stock. No Revocation All exercises of subscription rights are irrevocable, even if you later learn of information that you consider to be unfavorable to the exercise of your subscription rights. You should not exercise your subscription rights unless you are certain that you wish to purchase additional shares of our common stock at a subscription price of $ per full share Public Offering Any unsubscribed shares, after taking into account all over-subscription rights exercised, plus an additional shares of our common stock, will be offered in a public offering on a best efforts basis by and , as our underwriters and subscription agent, at a price currently anticipated to be between $ and $ per share. If the public offering price exceeds $ per share, subscribers for shares in this rights offering will not pay more than $ per share. If the public offering price is less than $ per share, at the closing of the offering we will release from escrow and deliver to the rights offering subscribers that portion of the subscription price equal to the difference between $ and the public offering price, without interest. In accordance with applicable securities laws, we will file with the Securities and Exchange Commission: (i) a supplement to this prospectus once the price of the public offering has been determined to include the public offering price and final rights offering price, and (ii) all marketing materials, as exhibits to the registration statement of which this prospectus is a part or as free writing prospectuses. We are undertaking the offering to improve our capital position and to inject additional capital into our subsidiary bank, Central Virginia Bank, so that we can address our current regulatory capital deficiencies. We will not close the offering unless we believe that the proceeds will satisfy our capital plans, set forth in Use of Proceeds beginning on page 26. However, we cannot guarantee that the amount we raise in the offering will be sufficient to satisfy the current or future regulatory capital requirements that apply to us. It is possible that, if you invest in the offering, you will hold our common stock at a time when we do not meet our regulatory capital requirements, either following this offering or in the future. Any such failure to satisfy regulatory capital requirements could result in significant regulatory actions by our regulators, including the possibility of the regulatory takeover by our state or federal regulators. Our common stock is traded on The Nasdaq Global Market under the ticker symbol CVBK. The last reported sales price of our common stock on November 17, 2011 was $0.85 per share. The shares of common stock issued in the offering will be listed on The Nasdaq Global Market under the same ticker symbol. Investing in our common stock involves risks. See Risk Factors beginning on page 14 to read about factors you should consider before making your investment decision. Subscription Offering Price Proceeds to Us Before Expenses(1) Rights Offering Per Share $ $ Public Offering Per Share $ $ Total $ $ (1) Assumes the sale of all rights offering shares at $ per share and public offering shares at $ per share and the payment to of a financial advisory fee of % of the aggregate sales price. OUR BOARD OF DIRECTORS IS NOT MAKING A RECOMMENDATION REGARDING YOUR EXERCISE OF THE SUBSCRIPTION RIGHTS. You should carefully consider whether to exercise your subscription rights before the rights offering expires. All exercises of subscription rights and all subscriptions in the public offering are irrevocable. Neither the Securities and Exchange Commission nor any state securities commission or other regulatory agency has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. These securities are not savings accounts, deposits or obligations of our bank and are not insured or guaranteed by the Federal Deposit Insurance Corporation s Deposit Insurance Fund or any other governmental agency. The date of this prospectus is , 2011. Use of Proceeds We expect the gross proceeds from the offering to be $ ($ from the rights offering , assuming full participation, and $ from the public offering, assuming full subscription of additional shares). We intend to use the net proceeds we receive from the offering to ensure that the Bank significantly exceeds the well capitalized regulatory capital requirement, to improve the Company s regulatory capital position and for general corporate purposes. (See Use of Proceeds. ) U.S. Federal Income Tax Consequences For U.S. federal income tax purposes, you should not recognize income or loss upon receipt or exercise of a subscription right. You should consult your own tax advisor as to the tax consequences to you of the receipt, exercise or lapse of the subscription rights in light of your particular circumstances. Closing We expect to close the offering on or about , 2011. Extension and Cancellation Although we do not presently intend to do so, we have the option to extend the offering for additional periods ending no later than . Our board of directors may for any reason cancel the offering at any time before the closing. If we cancel the offering, all subscription payments will be returned promptly, without interest or penalty. Dividend Policy Our future dividend policy is subject to the discretion of the board of directors and will depend upon a number of factors, including future consolidated earnings, financial condition, liquidity and capital requirements of the Company and the Bank, applicable governmental regulations and policies and other factors deemed relevant by the board of directors. In view of the current economic conditions and the Company s participation in the TARP Capital Purchase Program, it is unlikely that dividends in the next few years will be in amounts substantially in excess of the most recent dividends paid. In addition, we have entered into a written agreement with the Bureau of Financial Institutions and the Federal Reserve and, as a result, are prohibited from making distributions on our Preferred Stock, interest payments on our trust preferred securities or declaring common dividends without prior approval from the Bureau of Financial Institutions and Federal Reserve. Although we can seek to obtain this prior approval, banking regulators may choose not to grant it, and we would not expect to be granted a waiver or be released from this obligation until our financial performance improves significantly. Our ability to distribute cash dividends will depend primarily on the amount of cash and liquid assets held as well as the ability of the Bank to declare and pay dividends to us. As a state member bank, the Bank is subject to certain restrictions imposed by the reserve and capital requirements of federal and Virginia banking statutes and regulations. Furthermore, neither we nor the Bank may declare or pay a cash dividend on any capital stock if it is insolvent or if the payment of the dividend would render it insolvent or unable to pay its obligations as they become due in the ordinary course of business. We are also subject to certain limitations on our ability to pay dividends as a result of our participation in the TARP Capital Purchase Program. For additional information on these limitations, see Business Regulation and Supervision Payment of Dividends.
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0000805326_emisphere_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0000805326_emisphere_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0000805326_emisphere_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0000808047_qkl_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0000808047_qkl_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0000808047_qkl_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0000810084_bioject_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0000810084_bioject_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0000810084_bioject_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0000811271_entech_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0000811271_entech_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..e05ccc8397e6278043c90206370ebd454f906f9d
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0000811271_entech_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights selected information contained elsewhere in this Prospectus. This summary does not contain all the information that a person should consider before investing in the Company s securities. A potential investor should carefully read the entire prospectus, including
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/CIK0000840264_capitol_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0000840264_capitol_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..bb02ec5c741281354f317b137da181a7c526105d
--- /dev/null
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+PROSPECTUS SUMMARY This prospectus summary contains basic information about Capitol and this offering. Because it is a summary, it does not contain all of the information that you should consider before deciding whether or not you should exercise your subscription rights. You should carefully read this prospectus, including the Risk Factors section, and the information included or incorporated by reference herein, including Capitol s audited consolidated financial statements and the accompanying notes included in Capitol s Annual Report on Form 10-K for the year ended December 31, 2009, before you decide to exercise your subscription rights. Company Information Capitol is a community banking company, with a current network of individual banks and bank operations in 14 states and total consolidated assets which approximated $4.2 billion as of September 30, 2010. Capitol is registered as a bank holding company under the Bank Holding Company Act of 1956, as amended, with principal executive offices located at the Capitol Bancorp Center, 200 Washington Square North, Fourth Floor, Lansing, Michigan 48933. Capitol s telephone number is 517-487-6555. Capitol also has executive offices located at 2777 East Camelback Road, Suite 375, Phoenix, Arizona 85016 (telephone number: 602-955-6100). Capitol s operating strategy is to provide transactional, processing and administrative support and mentoring to aid in the effective operation and development of its banks. It provides access to support services and management with significant experience in community banking. These administrative and operational support services do not require a direct interface with the bank customer and therefore can be consolidated more efficiently without affecting the bank customer relationship. Economic conditions throughout the United States, and in the regions in which Capitol and its banking operations are located, have deteriorated to an extent not experienced since the Great Depression of the 1930s. Capitol s operations are focused on community banking and helping small, local businesses meet their financial needs, primarily through making loans to those businesses and their owners, funded by locally-gathered deposits. A substantial portion of those loans are secured by commercial real estate property, as part of the overall collateral to support those individual loans. In this adverse economic environment, small businesses and their owners have suffered significant financial hardships, which preclude repaying loans in accordance with their terms. In addition, recent economic factors have resulted in a variety of stresses impacting depositors and the availability of deposits to fund lending activities. Further, and more importantly, the underlying values of the real estate collateral have plummeted in this sustained adverse environment, resulting in massive loan losses and dramatic growth in levels of nonperforming assets not seen previously in the banking industry in general and, in particular, at Capitol. Prospects of economic recovery are uncertain, unpredictable and subject to variables completely outside the control or influence of financial institutions, including Capitol. Capitol has incurred significant losses from operations in periods since 2007. In addition, Capitol has experienced significant increases in nonperforming loans, foreclosed real estate, loan losses and other materially adverse circumstances including, but not limited to, a very material erosion of its common equity and related regulatory capital levels, resulting in Capitol becoming classified as less than adequately-capitalized from a regulatory perspective. In 2009, Capitol entered into a written agreement with the Federal Reserve Bank of Chicago (its primary federal regulator) which requires Capitol to improve operating results and its overall condition, in addition to refraining from a number of activities without prior written consent from that Federal Reserve Bank. The current less than adequately-capitalized classification of Capitol exposes it to increased regulatory scrutiny and enforcement action and other materially adverse consequences. Because of Capitol s financial condition and recent changes affecting its ability (as well as that of other bank holding companies in the U.S.) to include any portion of trust-preferred securities in regulatory capital computations, only a portion of trust-preferred securities are included in Capitol s current regulatory capital measurements and may not be includable in the future. When such trust-preferred securities were originally issued, and until recently, substantially all of those securities were a crucial element of Capitol s compliance with regulatory capital requirements because they were a very material component of its regulatory capital. Because those securities will no longer qualify for inclusion with other qualifying capital elements for regulatory purposes, Capitol is seeking successful attainment of the requisite consent from the trust-preferred securities holders in a separate consent solicitation, exchange of Capitol s trust-preferred securities for previously unissued common stock of Capitol and The information contained in this prospectus is not complete and may be changed. Capitol may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and Capitol is not soliciting offers to buy these securities in any jurisdiction where the offer or sale is not permitted. this rights offering. If Capitol does not obtain the requisite consent from the trust-preferred securities holders to sufficiently complete the exchange of Capitol s trust-preferred securities for previously-unissued shares of Capitol s common stock and adequately complete the rights offering, its ability to continue to operate as a going concern will be jeopardized. Like a large number of financial institutions across the United States, Capitol has been materially impacted by adverse economic conditions. As a result of this economic downturn and depressed real estate markets, Capitol s banking subsidiaries have experienced a decline in the performance of loans, particularly real estate construction and development loans, which has resulted in Capitol incurring a net loss of $195.2 million for the year ended December 31, 2009 and a net loss of $129.6 million for the nine months ended September 30, 2010. If Capitol s banking subsidiaries continue to experience adverse performance in the consolidated loan portfolio, large loan losses and losses associated with foreclosed real estate and, as a result, Capitol continues incurring net losses, some or all of Capitol s banking subsidiaries may be unable to meet or maintain adequate regulatory capital ratios unless Capitol raises additional capital. Furthermore, during this adverse economic environment, analysts and others have focused on additional measures of a financial institution s capital position, such as tangible common equity to tangible assets and regulatory Tier 1 capital as a percentage of risk-weighted assets, to assess the financial health and stability of the institution, which also tends to impact an institution s stock price. As a result of the foregoing considerations, Capitol has been pursuing the execution of a multi-faceted capital strategy to improve Capitol s capital position by increasing common equity as a component of regulatory capital and shareholders equity and reducing Capitol s indebtedness. Capitol believes that successful completion of one or more components of this capital strategy will significantly enhance Capitol s capital position, strengthen the composition of Capitol s capital base by increasing common equity and give Capitol added flexibility to take advantage of potential market opportunities. Capitol s multi-faceted capital strategy currently contemplates three components in addition to this rights offering, which include: (i) the exchange of any or all of the outstanding trust-preferred securities issued by each of Capitol Trust I, Capitol Trust II, Capitol Trust III, Capitol Trust IV, Capitol Trust VI, Capitol Trust VII, Capitol Trust VIII, Capitol Trust IX, Capitol Trust X, Capitol Trust XI and Capitol Trust XII (the TruPS Exchange Offer ) for shares of Capitol s common stock, of which there are approximately $170.8 million aggregate liquidation preference currently outstanding; (ii) the exchange of the outstanding shares issued by each of Capitol Development Bancorp Limited IV, Capitol Development Bancorp Limited V, Capitol Development Bancorp Limited VI, Capitol Development Bancorp Limited VII and Capitol Development Bancorp Limited VIII (the CDBLs Exchange Offer ) for shares of Capitol s common stock; and (iii) a common stock or preferred stock offering if and when market conditions become favorable for such an offering. As of the date of this prospectus, however, except in connection with the TruPS Exchange Offer and the CDBLs Exchange Offer, which commenced on January 3, 2011, Capitol does not have any immediate or definitive plans, understandings, agreements or commitments to issue additional shares of common stock or preferred stock for any purposes. Those three components of Capitol s capital strategy, if executed, will require a significant number of authorized but previously unissued shares of Capitol s common stock. Further, the significant decline in Capitol s stock price in recent months has increased the number of shares that Capitol believes will be necessary to effect Capitol s capital strategy. Accordingly, Capitol is undertaking steps to seek approval, from holders of its common stock, to authorize additional shares of common stock in order to execute each component of Capitol s capital strategy and to take advantage of favorable market opportunities and other opportunities. If such approval is not obtained, Capitol may be unable to complete the rights offering and other transactions including the issuance of previously unissued common stock. In light of the foregoing, Capitol has decided to pursue this rights offering to raise capital which can be used to support Capitol and its banking subsidiaries and improve Capitol s capital position. In addition, Capitol decided to pursue this rights offering to raise additional capital to assist Capitol and its banking subsidiaries in contributing towards achieving compliance with the regulatory capital requirements of the enforcement actions that Capitol and its banking subsidiaries have entered into with their respective banking regulators. For additional information about Capitol s business, see Capitol s annual and quarterly reports, and the other documents Capitol files with the SEC, which are incorporated into this registration statement by reference. See Where You Can Find More Information on page 58. Preliminary and Subject to Completion, dated January __, 2011 PROSPECTUS of Capitol Bancorp Ltd. $[__0,000,000] Subscription Rights to Purchase up to ___0,000,000 Shares of Common Stock at [ ] per Share The Rights Offering The following summary describes the principal terms of the rights offering, but is not intended to be complete. See the information under the heading Description of the Subscription Rights in this prospectus for a more detailed description of the terms and conditions of the rights offering. Basic Subscription Privilege: For each whole right that you own, you will have a basic subscription privilege to buy from Capitol one share of Capitol s common stock at a subscription price of $ [ ] per share. You may exercise your basic subscription privilege for some or all of your rights, or you may choose not to exercise your rights. Each holder of record of Capitol s common stock on _________, 2011, (the Record Date ) will receive ______ right(s) for each share of Capitol s common stock held as of the Record Date. The rights are being distributed to record-holders of Capitol s common stock as of the Record Date on _______, 2011. Oversubscription Privilege: In the event that you purchase all of the shares of Capitol s common stock available to you pursuant to your basic subscription privilege, you may also choose to purchase a portion of any shares of Capitol s common stock that are not purchased by Capitol s other shareholders through the exercise of their basic subscription privileges. If holders exercise their oversubscription privileges for more shares than are available to be purchased pursuant to the oversubscription privileges, Capitol would either increase the size of the offering or allocate the shares of Capitol s common stock to be issued pursuant to the exercise of oversubscription privileges pro rata among those over-subscribing rights holders. Pro rata means in proportion to the number of shares of Capitol s common stock that you and the other subscription rights holders have agreed to purchase by exercising your basic subscription privileges. If you are not allocated the full amount of shares for which you oversubscribe, you will receive a refund of the subscription price, without interest or penalty, that you delivered for those shares of Capitol s common stock that are not allocated to you. The subscription agent will mail such refunds as soon as practicable after the completion of the offering. Extended Oversubscription Privilege: In the event that any shareholders fail to exercise their oversubscription privilege as of the expiration of the rights offering, Capitol may, at Capitol s discretion, extend the rights offering for a limited time period to allow those shareholders who did exercise their oversubscription privilege to purchase additional shares of Capitol s common stock. Capitol may extend the rights offering as many times as Capitol deems necessary to complete the offering. Subscription Price: $ [ ] per share of common stock, payable in cash, which represents the average of the closing sales prices of Capitol s common stock for the 10 trading days ended on [ ], 2011, less a [ ]% discount. To be effective, any payment related to the exercise of a right must clear prior to the expiration of the rights offering. Record Date: 5:00 p.m., Eastern Time, on [ ], 2011. Expiration of the Rights Offering: 5:00 p.m., Eastern Time, on [ ], 2011, unless the expiration date is extended. Capitol reserves the right to extend the rights offering at Capitol s sole discretion. Capitol Bancorp Ltd., a Michigan corporation ( Capitol ), is distributing, at no charge, to holders of Capitol s common stock, nontransferable subscription rights to purchase up to ___0,000,000 shares of Capitol s common stock. You will receive approximately [ ] of a subscription right for each share of common stock owned at 5:00 p.m., Eastern Time, on [ ], 2011. Each whole subscription right will entitle you to purchase one share of Capitol s common stock at a subscription price of [ ] per share of common stock, which Capitol refers to as the basic subscription privilege. The per share price was determined by Capitol s board of directors and represents the average of the closing sales prices of Capitol s common stock for the 10 trading days ended on [ ], 2011, less a [ ]% discount. Subscription rights may only be exercised in whole numbers; Capitol will not issue fractional shares and will round all of the subscription rights down to the nearest whole number. If you fully exercise your basic subscription privilege and other shareholders do not fully exercise their basic subscription privileges, you will be entitled to exercise an oversubscription privilege to purchase a portion of the unsubscribed shares of Capitol s common stock at the same subscription price of $[ ] per share, subject to proration and subject, further, to reduction by Capitol under certain circumstances. To the extent you properly exercise your oversubscription privilege for an amount of shares that exceeds the number of the unsubscribed shares available to you, any excess subscription payments received by the subscription agent will be returned, without interest or penalty, as soon as practicable. The subscription rights will expire if they are not exercised by 5:00 p.m., Eastern Time, on [ ], 2011, unless Capitol extends the rights offering period in Capitol s sole discretion. If any subscription rights (including any oversubscriptions) remain unexercised after the expiration of the rights offering, they will expire and have no value. You should carefully consider whether to exercise your subscription rights prior to the expiration of the rights offering. All exercises of subscription rights are irrevocable. Capitol s board of directors is not making a recommendation regarding your exercise of the subscription rights. The subscription rights may not be sold, transferred or assigned and will not be listed for trading on any stock exchange or market or on the NYSE. Your participation in this rights offering is very important to enable Capitol to enhance its overall capital position, improve its capital base by increasing common equity, thereby increasing capital to aid in meeting regulatory requirements and provide Capitol with added flexibility to take advantage of market opportunities and implement its operating strategy. This is not an underwritten offering. Shares of Capitol s common stock are being offered directly by Capitol without the services of an underwriter or selling agent. Capitol has engaged _____________ to serve as the subscription agent for the rights offering. The subscription agent will hold in escrow the funds received from subscribers until Capitol completes or cancels the rights offering. For further information about this offering please contact Capitol s Corporate President, Cristin K. Reid at: Capitol Bancorp Ltd., Capitol Bancorp Center, 200 Washington Square North, Fourth Floor, Lansing, Michigan 48933, or by telephone at 517-487-6555. Use of Proceeds: Capitol intends to use the proceeds of the rights offering to improve the capital position of Capitol and some of its banking subsidiaries. Non-Transferability of Rights: The subscription rights may not be sold, transferred or assigned and will not be listed for trading on the NYSE or on any stock exchange or trading market. No Board Recommendation: Capitol s board of directors is making no recommendation regarding your exercise of the subscription rights. You are urged to make your decision based on your own assessment of Capitol s business and the rights offering. See Risk Factors for a discussion of some of the risks involved in investing in Capitol s common stock. No Revocation: All exercises of subscription rights are irrevocable, even if you later learn information about Capitol that you consider to be unfavorable. You should not exercise your subscription rights unless you are certain that you wish to purchase additional shares of Capitol s common stock offered pursuant to this rights offering. Federal Income Tax Considerations: The receipt and exercise of subscription rights pursuant to the basic subscription privilege or subscription for shares pursuant to the oversubscription privilege will generally not be taxable for U.S. federal income tax purposes. You should, however, seek specific tax advice from your tax advisor in light of your particular circumstances and as to the applicability and effect of any other tax laws. See Material U.S. Federal Income Tax Treatment of Rights Distribution. Extension, Cancellation and Amendment: Capitol has the option to extend the rights offering and the period for exercising your subscription rights for a period or successive periods, although Capitol does not presently intend to do so. Capitol s board of directors may cancel the rights offering at any time prior to the expiration of the rights offering for any reason. In the event that the rights offering is cancelled, all subscription payments received by the subscription agent will be returned, without interest or penalty, as soon as practicable. Capitol also reserves the right to amend or modify the terms of the rights offering, including increasing the size of the offering, as appropriate. Procedures for Exercising Rights: To exercise your subscription rights, you must take the following steps: If you are a registered holder of Capitol s common stock, you may deliver payment and a properly completed rights certificate to the subscription agent, ____________, before 5:00 p.m., Eastern Time, on [ ], 2011, unless the expiration date is extended. You may deliver the documents and payments by mail or overnight courier. If regular mail is used for this purpose, Capitol recommends using registered mail, properly insured, with return receipt requested. If you are a beneficial owner of shares that are registered in the name of a broker, dealer, custodian bank or other nominee, or if you would rather an institution conduct the transaction on your behalf, you should instruct your broker, dealer, custodian bank or other nominee to exercise your subscription rights on your behalf and deliver all documents and payments before 5:00 p.m., Eastern Time, on [ ], 2011. If you wish to purchase shares of Capitol s common stock through the rights offering, please promptly contact your broker, dealer, custodian bank or other nominee as record holder of your shares. Capitol will ask your record holder to notify you of the rights offering. You should complete and return to your record holder the form entitled Beneficial Owner Election Form. Capitol s board of directors may cancel the rights offering at any time prior to the expiration of the rights offering for any reason. In the event the rights offering is cancelled, the subscription agent will return all subscription payments it has received, without interest or penalty, as soon as practicable. Shares of Capitol s common stock are traded on the New York Stock Exchange, Inc. (the NYSE ) under the symbol CBC. On [ ], 2011, the closing sale price for Capitol s common stock was $[ ] per share. Capitol currently intends to list the shares of common stock issued in the rights offering on the NYSE under the same symbol, but no guaranty can be made that Capitol will continue to meet the listing requirements of the NYSE in the future. Following the effectiveness of this prospectus, Capitol reserves the right to negotiate and enter into standby purchase agreements with certain institutional investors and high-net-worth individuals, or standby purchasers, pursuant to which purchasers may agree to acquire from Capitol, at the same subscription price offered to holders of its common stock, any shares of Capitol s common stock not subscribed for in the rights offering. Capitol may offer any such unsubscribed shares, after taking into account all oversubscription rights exercised and any shares sold to standby purchasers, if any, at the expiration of the rights offering to the public at $[ ] per share. Any offering of shares of common stock that remain unsubscribed will be on a best efforts basis by Capitol s officers and directors. Any public offering of unsubscribed shares of common stock will terminate on [ ], 2011, unless extended or terminated by Capitol. The exercise of your subscription rights for shares of Capitol s common stock involves risks. See Risk Factors beginning on page 17 of this prospectus and the documents incorporated by reference in this prospectus to read about important factors you should consider before exercising your subscription rights. Neither the U.S. Securities and Exchange Commission (the SEC ) nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. These securities are not savings accounts, deposits or other obligations of any bank and are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other governmental agency. The date of this prospectus is [ ], 2011. [The remainder of this page intentionally left blank] Issuance of Common Stock: If you purchase shares of common stock through the rights offering, Capitol will issue those shares to you as soon as practicable after the completion of the rights offering. Shares Outstanding Before the Rights Offering: [ ] shares of Capitol s common stock were outstanding as of [ ], 2011. Shares Outstanding After Completion of the Rights Offering: Assuming no stock options or outstanding warrants for the purchase of Capitol s common stock are exercised prior to the expiration of the rights offering and the full $ [ ] million is subscribed for, Capitol expects that approximately [ ] shares of Capitol s common stock will be outstanding immediately after completion of the rights offering. Capitol reserves the right to increase the size of the offering, which would increase the number of shares outstanding. Public Offering: If shares of Capitol s common stock remain available for sale after the closing of the rights offering, Capitol may offer and sell those shares to the public on a best efforts basis at the $[ ] per share subscription price. Subscription Agent: _______________________. Fees and Expenses: Capitol will pay the fees and all of Capitol s expenses related to the rights offering. Trading Symbol: Shares of Capitol s common stock are traded on the NYSE under the symbol CBC. Additional Information: For additional information, please see the description of this offering contained in the sections of this prospectus captioned Incorporation of Certain Information by Reference and Where You Can Find More Information or contact Capitol s Corporate President, Cristin K. Reid at: Capitol Bancorp Ltd., Capitol Bancorp Center, 200 Washington Square North, Fourth Floor, Lansing, Michigan 48933, or by telephone at 517-487-6555. [The remainder of this page intentionally left blank]
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+PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0000873375_first-ulb_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0000873375_first-ulb_prospectus_summary.txt
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+PROSPECTUS SUMMARY This summary highlights certain information appearing elsewhere or incorporated by reference in this prospectus. For a more complete understanding of this offering, you should carefully read the entire prospectus, the registration statement of which this prospectus is a part and the information incorporated by reference in this prospectus, including the risk factors, the financial statements and the notes thereto. Unless the context indicates otherwise, all references to we, us, our and Company in this prospectus include the Company and the Bank, on a consolidated basis. All references to year refer to our fiscal year, which ends September 30. About our Company First ULB Corp. ( Company ) was incorporated in California on October 17, 1990 and is a thrift holding company headquartered in Oakland, California. The Company is the parent of United Labor Bank, F.S.B. ( Bank ). Our Company s principal business consists of managing its investment in the Bank, which is our wholly owned subsidiary. Our Company also owns First ULB Trust I, a Delaware statutory business trust formed during the fourth quarter of 2004, which has for its sole purpose the issuance of trust preferred securities. About our Bank Our Bank was incorporated and opened for business on May 4, 1990 as a federally chartered stock savings bank. Our Bank engages in substantially all the business operations customarily conducted by independent community banks in California, such as accepting deposits into checking and various types of deposit accounts, offering a full range of real estate, commercial and other installment and term loans and providing other customary banking services. Our Bank s deposits are insured by the Federal Deposit Insurance Corporation ( FDIC ) up to the maximum legal limits and we are a member of the Federal Home Loan Bank of San Francisco ( FHLB-SF ). See DESCRIPTION OF BUSINESS. Our objective is to be a superior performing bank serving the needs of the communities in which we operate by expanding our branch network. Market areas We are a community-oriented financial institution which primarily originates real estate loans within our market areas. Our deposit gathering and lending efforts are focused primarily in the San Francisco Bay Area, the Los Angeles and Sacramento metropolitan areas of California and Seattle, Washington. Aside from our principal office and branch location in Oakland, we maintain branches in San Francisco, San Jose, Sacramento, Long Beach, Glendale, San Diego and Seattle. In the third quarter of 2011, our Bank added a Small Business Loan Department, headquartered in Los Angeles. Growth strategies We primarily market our products and services to small and medium-sized businesses and to retail consumers. Our strategy is to provide service through our employees, who are relationship-oriented and committed to our customers. Through this strategy, we intend to grow our business, expand our customer base and improve our profitability. The key elements of our strategy are to: Utilize the strength of our management team. The experience and market knowledge of our management team is one of our greatest strengths and competitive advantages. Leverage our existing foundation for additional growth. Based on our management s depth of experience and certain infrastructure investments, we believe that we will be able to take advantage of Table of Contents certain economies of scale typically enjoyed by larger organizations to expand our operations both organically and through strategic cost-effective branch or bank acquisitions. We believe that the investments we have made in our data processing, staff and branch network will be able to support a much larger asset base. We are committed, however, to control any additional growth in a manner designed to minimize the risk and to maintain strong capital ratios. We believe that the net proceeds raised in this offering will assist us in implementing our growth strategies by providing the capital necessary to support future asset growth, both organically and through strategic acquisitions. Pursue selective acquisition opportunities. Acquisitions have not been a part of our growth in the past, but we intend to pursue this avenue of growth in the future. We will continue to review branch and whole bank acquisition opportunities, including possible acquisitions of failed financial institutions in FDIC-assisted transactions and will pursue these opportunities if they represent the most efficient use of our capital under the circumstances. We believe that we have the skill set and experience to acquire and integrate successfully both bank and branch acquisitions, and that with the stronger capital positions we expect to have following this offering, we will be well positioned to take advantage of acquisition opportunities as they may arise. We intend to focus on targets in our market areas or other attractive areas with significant core deposits and/or a potential customer base compatible with our growth strategy. Build and maintain customer loyalty through superior service. Our goal at the Bank is to attract labor unions, small to medium-sized businesses and retail consumers in our markets to turn to us first for their banking needs, as a result of our superior personal service and the tailored products and services that we provide. To achieve this goal, we: have a standing credit committee that meets as often as necessary to review completed loan applications, making extensive use of technology to facilitate and expedite our internal communications and thereby enabling us to respond to our customers promptly; and provide Internet business banking at www.laborbank.com which allows our business customers 24-hour Web-based access to their accounts so they can confirm or transfer balances, pay bills, download statements and use our cash management services. Maintain local decision making and accountability. We believe that we have a competitive advantage over larger national and regional financial institutions by providing superior customer service with experienced, knowledgeable management, localized decision making capabilities and prompt credit decisions. We believe that our customers want to deal directly with the individuals who make the credit decisions. Focus on asset quality and strong underwriting. We consider asset quality to be of primary importance and have taken measures in an effort to ensure that, despite the growth in our loan portfolio, we consistently maintain strong asset quality. As of June 30, 2011, we had $4.9 million in nonperforming assets, which as a percentage to total assets, was 1.79%. We also seek to maintain a prudent allowance for loan losses. The ratio of our allowance for loan losses to total loans as of June 30, 2011 was 1.39%. Maintain and grow a stable core deposit base. We intend to continue to grow a stable core deposit (NOW, demand, money market and passbook accounts) base of customers. To the extent that our asset growth outpaces this local deposit funding source, we plan to borrow and raise deposits in the national market using deposit intermediaries. We intend to continue our practice of developing a deposit relationship with each of our loan customers. As of June 30, 2011, the aggregate amount of our NOW, demand, money market and passbook accounts, was $185 million, or 77% of our total deposits and our time deposits were $55 million or 23% of our total deposits. Table of Contents Corporate information Our principal executive offices are located at 100 Hegenberger Road, Oakland, California 94621. Our telephone number is 1-800-734-6888. Our website is www.laborbank.com. Information on our website www.laborbank.com is not incorporated by reference and is not a part of this prospectus. The offering Common stock offered shares Common stock to be outstanding immediately after this offering shares Use of proceeds We intend to use these net proceeds to provide capital to our Bank to support its anticipated organic growth, to support potential future acquisitions of branches or whole banks, including the possible acquisitions of failed financial institutions in FDIC-assisted transactions and for other general corporate purposes. See Use of Proceeds. Dividend policy We have not historically declared or paid dividends on our common stock and we do not expect to do so in the foreseeable future. Any future determination relating to dividend policy will be at the discretion of our Board of Directors ( Board ) and will depend on a number of factors, including our earnings and financial condition, liquidity and capital requirements, the general economic and regulatory climate, our ability to service any equity or debt obligations senior to the common stock, state and federal banking law requirements and other factors deemed relevant by our Board. See Dividend Policy.
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0000878802_quadrant_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0000878802_quadrant_prospectus_summary.txt
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+PROSPECTUS SUMMARY This summary highlights some important information from this prospectus, and it may not contain all of the information that is important to you. You should read the following summary together with the more detailed information regarding us and our common stock being sold in this offering, including Risk Factors and our financial statements and related notes, included elsewhere in this prospectus. Our Company Quadrant 4 Systems Corporation is a Florida corporation. Our primary focus and business model relate to providing business process consulting and information technology, which we refer to as IT, consulting to other businesses. We are a provider of software development, outsourcing and consulting services. In May 2010, we acquired a business involving IT consulting and that area of business is the primary focus of our business model. Our current customer base is primarily medium to large companies primarily in three market segments; healthcare, telecommunications and financial services. Corporate information Our principal executive offices are located at 2850 Golf Road, Suite 405, Rolling Meadows, IL 60010 and our telephone number is (732) 798-3000. Our website address is www.quadrantfour.com. The information contained therein or connected thereto shall not be deemed to be incorporated into this prospectus or the registration statement of which it forms a part. Business Strategy We are a supplier of IT and IT Enabled Services, which we refer to as ITES, based products and solutions specific to the health care, telecommunications and financial services industries. We have adopted a business strategy to acquire, build and deploy a broad range of products and solutions and be a single source one stop supplier of advanced IT solutions that allows our clients to take advantage of recent trends in the information technology field. Table of Contents ABOUT THIS PROSPECTUS You should only rely on the information contained in this prospectus. We have not authorized anyone to give any information or make any representation about this offering that differs from, or adds to, the information in this prospectus or in its documents that are publicly filed with the SEC. Therefore, if anyone does give you different or additional information, you should not rely on it. The delivery of this prospectus does not mean that there have not been any changes in our condition since the date of this prospectus. If you are in a jurisdiction where it is unlawful to offer the securities offered by this prospectus, or if you are a person to whom it is unlawful to direct such activities, then the offer presented by this prospectus does not extend to you. This prospectus speaks only as of its date except where it indicates that another date applies. Market data and certain industry forecasts used in this prospectus were obtained from market research, publicly available information and industry publications. We believe that these sources are generally reliable, but the accuracy and completeness of such information is not guaranteed. We have not independently verified this information, and we do not make any representation as to the accuracy of such information. In this prospectus, the terms we , us , our , our company and Quadrant 4 Systems refer to Quadrant 4 Systems Corporation, a Florida corporation. The trademarks and product names appearing in this prospectus are the property of their respective owners. Table of Contents
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0000883505_glacier_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0000883505_glacier_prospectus_summary.txt
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+S-1/A 1 v59450a1sv1za.htm FORM S-1/A sv1za Table of Contents As filed with the Securities and Exchange Commission on July 28, 2011 Registration No. 333-174162 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Amendment No. 1 to Form S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 GLACIER WATER SERVICES, INC. (Exact name of registrant as specified in its charter) Delaware 5960 33-0493559 (State or other jurisdiction of incorporation or organization) (Primary Standard Industrial Classification Code Number) (I.R.S. Employer Identification Number) 1385 Park Center Drive Vista, California 92081 (760) 560-1111 (Address, including zip code, and telephone number, including area code, of registrant s principal executive offices) Brian H. McInerney President and Chief Executive Officer Glacier Water Services, Inc. 1385 Park Center Drive Vista, California 92081 (760) 560-1111 (Name, address, including zip code, and telephone number, including area code, of agent for service) Please send copies of all communications to: Howard Hart Weissmann Wolff Bergman Coleman Grodin Evall LLP 9665 Wilshire Boulevard, Suite 900 Beverly Hills, CA 90212 (310) 858-7888 Robert Verigan Sidley Austin LLP One South Dearborn Chicago, IL 60603 (312) 853-7000 Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company (Do not check if a smaller reporting company) The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to Section 8(a), may determine. Table of Contents SUMMARY This summary highlights information about our Company and this offering contained elsewhere in this prospectus and is qualified in its entirety by the more detailed information and financial statements included elsewhere in this prospectus. You should read this entire prospectus carefully, including
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+PROSPECTUS SUMMARY 1
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+This summary highlights information contained elsewhere in this Prospectus and may not contain all of the information that may be important to you. For a more complete understanding of our business and the spin-off, you should read this summary together with the more detailed information and financial statements appearing elsewhere in this Prospectus. You should read this entire Prospectus carefully, including the Risk Factors and Cautionary Statement Concerning Forward-Looking Statements sections. Orchard, the Company, we, our, and us refer to Orchard Supply Hardware Stores Corporation and our subsidiaries. Our Company We are a California specialty retailer primarily focused on the consumer segment of the home improvement market. Our stores are designed to appeal to convenience-oriented customers, whose purchase occasions are largely driven by their home repair, maintenance and improvement needs throughout the home, garden and outdoor living areas. As of July 30, 2011, we operated 89 full-service hardware stores in California. We opened four new stores in California within the past three years one in 2010, two in 2009, and one in 2008. Our stores average approximately 43,600 square feet of enclosed space, plus approximately 8,300 square feet of nursery and garden area. Our stores carry a broad assortment of repair and maintenance, lawn and garden and in-home products. We strive to provide our customers with best-in-class customer service by staffing our stores with knowledgeable managers and employees. We design our stores to be easy to shop in, by using high visibility signage for ease of navigation and lower profile shelving than is typically found in our larger warehouse home center competitors. We operate in one reportable segment and provide a merchandise mix which consists of various product categories. Our repair and maintenance category consists of plumbing, electrical, paint, tools, hardware, and industrial products. Our lawn and garden category consists of nursery, garden, outdoor power and seasonal products. Our in-home category consists mainly of our housewares and appliances products. We also focus on the convenience-oriented purchases of the small professional customer. The professional customer s convenience-oriented purchases are largely motivated by a need for incremental supplies and tools to complete construction projects. Recent Developments On October 24, 2011, a subsidiary of the Company entered into a Purchase and Sale Agreement pursuant to which a subsidiary of the Company sold for $21.3 million, all of its interest in its distribution center located in Tracy, California, which is comprised of a building containing approximately 458,000 square feet and the underlying land. In connection with the closing of the sale of the distribution center, a subsidiary of the Company entered into a lease agreement with respect to the distribution center. The commencement date of the lease was October 28, 2011. The lease is a 20-year lease and provides for three five-year extension options. The initial base rent under the lease is $1.7 million per year with 10% increases every five years. The Company will record a loss in the amount of approximately $14 million on the sale of the distribution center in the third quarter of fiscal 2011. Set forth below is our preliminary financial data for the 13 week period ended October 29, 2011 compared to the 13 week period ended October 30, 2010. Our independent registered public accounting firm has not completed its review with respect to our preliminary financial data. Table of Contents EXPLANATORY NOTE This Registration Statement has been prepared on a prospective basis on the assumption that, among other things, the spin-off of the Registrant from Sears Holdings (as described in the Prospectus which is a part of this Registration Statement) and the related transactions and approvals contemplated to occur prior to or contemporaneously with the spin-off will be consummated as contemplated by the Prospectus. There can be no assurance, however, that any or all of such transactions will occur or will occur as so contemplated. Any significant modifications to or variations in the transactions contemplated will be reflected in an amendment or supplement to this Registration Statement. Table of Contents We expect that, for the 13 week period ended October 29, 2011 compared to the 13 week period ended October 30, 2010, our results will be: For the third quarter of fiscal 2011, net sales were $158.7 million, an increase of $4.2 million, or 2.7% as compared to net sales of $154.5 million for the third quarter of fiscal 2010. The increase in net sales was driven primarily by increased demand for seasonal products. Additionally, net sales were positively impacted by the relocation of an existing store. Comparable store sales increased by 1.5%, which was driven by an increase of 4.8% in average ticket comparables offset by a decline in comparable transaction volume of 3.3% for the third quarter of fiscal 2011, as compared to the third quarter of fiscal 2010. Gross margin of $51.5 million, or 32.5% of net sales, for the third quarter of fiscal 2011, as compared to $51.7 million, or 33.5% of net sales, for the third quarter of fiscal 2010. The decrease in gross margin was primarily due to an increase in occupancy costs and inventory shrink costs. Merchandise inventory was $161.2 million at the end of the third quarter of fiscal 2011, a decrease of $4.2 million, or 2.5% as compared to merchandise inventory of $165.4 million at the end of the third quarter of fiscal 2010. Selling and administrative expenses were $55.1 million for the third quarter of fiscal 2011, an increase of $14.8 million, or 36.7 % as compared to selling and administrative costs of $40.3 million for the third quarter of fiscal 2010. The increase in selling and administrative costs was primarily due to a non-cash loss of $14.3 million on the sale and leaseback of our distribution center located in Tracy, California. In addition, the Company incurred additional spending on strategic initiatives and transition costs, offset by a $1.6 million legal benefit as a result of a settlement in the case of Save Mart Supermarkets v. Orchard Supply Hardware LLC. For further information on the case, see note 5 to the interim condensed consolidated financial statements. Depreciation and amortization expense was $7.7 million for the third quarter of fiscal 2011, as compared to $7.8 million for the third quarter of fiscal 2010. The slight decrease of $0.1 million of depreciation and amortization expense was primarily due to an increase in fully depreciated assets. Interest expense was $5.7 million for the third quarter of fiscal 2011, as compared to $4.3 million for the third quarter of fiscal 2010. The increase in interest expense was primarily due to the increase in our applicable interest rate spreads as a result of the amendment of both our Senior Secured Term Loan and our new Real Estate Secured Term Loan. Income tax benefit was $7.0 million for the third quarter of fiscal 2011, as compared to $0.3 million for the third quarter of fiscal 2010. The effective tax rate was 40.8% in the third quarter of fiscal 2011 and 39.0% in the third quarter of fiscal 2010. The change in our effective tax rate was primarily due to differences in tax credits applicable year over year. Net loss was $10.1 million for the third quarter of fiscal 2011, as compared to $0.4 million for the third quarter of fiscal 2010. Adjusted EBITDA, as defined below, was $9.3 million for the third quarter of fiscal 2011, as compared to $11.7 million for the third quarter of fiscal 2010. The decrease in Adjusted EBITDA was primarily due to the increased spending on strategic initiatives and transition costs. We believe that we were in compliance with the Senior Secured Term Loan covenants, including the maximum leverage ratio of 5.50 to 1.00. Our leverage ratio was 5.02 at October 29, 2011. Adjusted EBITDA In addition to our net income (loss) determined in accordance with GAAP, for purposes of evaluating operating performance, we use an Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization ( Adjusted EBITDA ), which is adjusted to exclude certain significant items as set forth below. Our management uses Adjusted EBITDA to evaluate the operating performance of our business, as well as executive compensation metrics, for comparable periods. Adjusted EBITDA should not be used by investors Table of Contents The information in this Preliminary Prospectus is not complete and may be changed. We may not issue these securities until the Registration Statement filed with the Securities and Exchange Commission is effective. This Preliminary Prospectus is not an offer to sell nor does it seek an offer to buy these securities. SUBJECT TO COMPLETION DATED DECEMBER 9, 2011 PROSPECTUS Orchard Supply Hardware Stores Corporation Shares of Class A Common Stock, Par Value $0.01 Per Share Shares of Series A Preferred Stock, Par Value $0.00001 Per Share This Prospectus is being furnished to you as a shareholder of Sears Holdings Corporation ( Sears Holdings ) in connection with the planned distribution (the Distribution or the spin-off ) by Sears Holdings to its shareholders of all the shares of Class A Common Stock, par value $0.01 per share (the Class A Common Stock ), and Series A Preferred Stock, par value $0.00001 per share (the Preferred Stock ), of Orchard Supply Hardware Stores Corporation ( Orchard ) held by Sears Holdings immediately prior to the spin-off. Immediately prior to the time of the Distribution, Sears Holdings will hold all of Orchard s outstanding shares of Class A Common Stock and Preferred Stock. At the time of the Distribution, Orchard s outstanding capital stock will be composed of the following classes of capital stock, each of which is described in greater detail in the Description of Our Capital Stock section of this Prospectus: Class A Common Stock, which is being distributed in the spin-off, will represent approximately 80% of the general voting power of Orchard s outstanding capital stock, and will entitle holders thereof to one vote per share; Orchard s Class B Common Stock, par value $0.01 per share (the Class B Common Stock ), will represent less than 0.5% of the general voting power of Orchard s outstanding capital stock, and will entitle holders thereof to one-tenth of one vote per share; Orchard s Class C Common Stock, par value $0.01 per share (the Class C Common Stock ), will represent approximately 20% of the general voting power of Orchard s outstanding capital stock, and will entitle holders thereof to one vote per share; and Preferred Stock, which is being distributed in the spin-off, will represent 100% of Orchard s outstanding nonvoting capital stock. At the time of the Distribution, Sears Holdings will distribute all of the outstanding shares of Class A Common Stock and Preferred Stock on a pro rata basis to holders of Sears Holdings common stock. Every 22.141777 shares of Sears Holdings common stock outstanding as of the close of business on December 16, 2011, the record date for the spin-off (the record date ), will entitle the holder thereof to receive one share of Class A Common Stock and one share of Preferred Stock, except that holders of unvested shares of restricted stock of Sears Holdings will receive cash in lieu of shares. The Distribution will be made in book-entry form. Fractional shares of Class A Common Stock or Preferred Stock will not be distributed. Instead, the distribution agent will aggregate fractional shares of the Class A Common Stock and the Preferred Stock into whole shares of each security, sell such whole shares in the open market at prevailing rates and distribute the net cash from proceeds from the sales pro rata to each holder who would otherwise have been entitled to receive fractional shares in the Distribution. We expect that the spin-off will be tax-free to Sears Holdings shareholders for U.S. federal income tax purposes, except for any cash received in lieu of fractional shares. The Distribution will be effective as of 11:59 p.m., New York City Time on December 30, 2011, which we refer to hereinafter as the distribution date. Immediately after the Distribution is completed, we will be a publicly traded company independent from Sears Holdings. From and after the Distribution, certificates representing Sears Holdings common stock will continue to represent Sears Holdings common stock, which at that point will include the remaining businesses of Sears Holdings. No action will be required of you to receive shares of Class A Common Stock and Preferred Stock, which means that: no vote of Sears Holdings shareholders is required in connection with this Distribution and we are not asking you for a proxy and you are requested not to send us a proxy; you will not be required to pay for the shares of our Class A Common Stock and Preferred Stock that you receive in the Distribution; and you do not need to surrender or exchange any of your Sears Holdings shares in order to receive shares of our Class A Common Stock and Preferred Stock, or take any other action in connection with the spin-off. There is currently no trading market for our Class A Common Stock or Preferred Stock. We intend to list our Class A Common Stock on the NASDAQ Capital Market under the symbol OSH and to quote our Preferred Stock on the OTCQB, and expect that trading for both will begin the first trading day after the completion of the Distribution. We do not plan to have a when-issued market for our Class A Common Stock or Preferred Stock prior to the Distribution. All share and per share information relating to our capital stock in this prospectus reflects the 6 to 1 stock split, which became effective on December 8, 2011. In reviewing this Prospectus, you should carefully consider the matters described under Risk Factors beginning on page 22 for a discussion of certain factors that should be considered by recipients of our Class A Common Stock and Preferred Stock. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. This Prospectus does not constitute an offer to sell or the solicitation of an offer to buy any securities. The date of this Prospectus is , 2011. Table of Contents or other third parties as the sole basis for formulating investment decisions as it excludes a number of important cash and non-cash recurring items. The Adjusted EBITDA should not be considered as a substitute for GAAP measurements. While Adjusted EBITDA is a non-GAAP measurement, management believes that it is an important indicator of operating performance because: Adjusted EBITDA excludes the effects of financing and investing activities by eliminating the effects of interest and depreciation costs; Management considers gain/(loss) on the sale of assets and impairment to result from investing decisions rather than ongoing operations; and Other significant items, while periodically affecting our results, may vary significantly from period to period and have a disproportionate effect in a given period, which affects comparability of results. Adjusted EBITDA was determined as follows: (in thousands) 13 Weeks Ended October 29, 2011 October 30, 2010 Net loss $ (10,108 ) $ (430 ) Interest expense, net 5,725 4,315 Income tax benefit (6,971 ) (275 ) Depreciation and amortization 7,722 7,801 Loss on disposal, sale and impairment of assets 14,418 95 Stock-based compensation 59 157 Other significant items (1,507 ) Adjusted EBITDA $ 9,338 $ 11,663 The Adjusted EBITDA is not the same as the EBITDA as defined in our Senior Secured Term Loan. Other significant items include certain reserves and charges not in the normal course of our operations periodically affecting the comparability of our results. The Company recorded a $0.1 million severance charge in the third quarter of fiscal 2011 due to changes in our management structure. In the third quarter of fiscal 2011, we entered into a Settlement Agreement with Save Mart and recorded a $1.6 million legal benefit. Our Competitive Strengths Our success depends on our ability to remain competitive with respect to our stores shopping convenience, the in-stock availability of merchandise and superior customer service by knowledgeable sales professionals. We believe that our competitive strengths are the following: Our Stores Carry a Wide Variety of Merchandise. We offer our customers a broad selection of products, including well-known consumer brand names, and we strive to offer high in-stock levels. A typical Orchard store offers a selection of repair and maintenance products comparable to larger warehouse competitors and carries more products than the typical smaller independent hardware store. Each of our stores offers a wide selection of well-known consumer brand names, such as 3M, Ames/Tru-Temper Tools, Black & Decker, Craftsman, DeWalt, Dickies, Dutch Boy, General Electric, Leviton, Makita, Milwaukee, Miracle-Gro, Moen, Quikrete, RainBird, Rubbermaid, Scotts, Stanley, Toro and Weber. Our private Table of Contents label brands typically generate higher gross profit margins than third-party brands and include Aqua Vista, Bridgewater Orchard, OSH, Pacific Bay and Western Hawk; these private label brands also add to the distinctive nature of our product selection. In addition, we believe that our year-round garden and nursery categories are key in drawing customers to our stores and will provide a platform for our growth. While we believe that participating in these categories better positions us to successfully compete against the larger warehouse home centers, it also acts as a competitive advantage over smaller independent retailers that typically do not carry the same breadth of assortment as we do in this category. We believe that our lifetime plant guarantee policy also drives customer loyalty. We Stock High Margin Product Categories. While our stores offer a wide range of merchandise, in contrast to our larger warehouse home center competitors, we stock repair and maintenance products, not construction materials that typically yield lower gross margins and require substantial selling space. Our limited offerings in these areas allow us to dedicate valuable selling space to higher-margin items that meet the needs of our convenience-oriented customers. Our Stores Are Easy to Navigate and Convenient to Shop. To facilitate the shopping experience, our stores are generally designed in a conventional format using lower profile shelving and higher visibility signage than is usually found in our larger warehouse home center competitors that are typified by warehouse racking and over-stacked aisles. Customers can generally view the majority of our store upon entering, helping them to easily and quickly locate items. Related departments are generally located adjacent to each other, and most merchandise is displayed according to centrally developed floor plans that are designed to optimize space utilization. Product labels and descriptive signage assist customers in easily identifying merchandise. In addition, we strive to select store sites that are easily accessible, conveniently located and have ample parking capacity. These features are intended to provide customers with a comfortable and convenient shopping environment. We Strive to Deliver Outstanding Customer Service and Value Added Services. We believe that our customers associate us with providing outstanding customer service and attractive value added services. We drive customer loyalty by striving to deliver outstanding customer service, a broad selection of products and high in-stock levels through friendly, experienced and knowledgeable sales people and store managers. Many of our in-store personnel have repair experience and our associates pass written tests on store policies and products in their respective departments. In addition, we offer repair services on gas outdoor power products through our Eager Beaver Engine House, which we believe distinguishes us from many of our competitors. We also provide pickup and delivery services. We Have an Experienced Management Team and Store Leadership. We have recruited an experienced executive management team with the objective of increasing our profitability and stimulating our growth. Our executive management team has an average of over 18 years of retail related experience and an average of 8 years in the home improvement industry. Our executive management is supported by what we believe is one of the more stable and experienced groups of store-level managers in the industry. The average tenure of an Orchard store manager is approximately 15 years. In addition, we believe that we have a pool of highly qualified assistant store managers who are Table of Contents experienced and ready to become store managers as we continue to expand. The average tenure for an assistant store manager with Orchard is approximately 10 years. Our stores are generally open seven days per week. Depending on the size and sales volume of the store, the total number of personnel assigned to a particular store varies from about 35 to 105, approximately 10 to 35 of whom are full-time employees. Our stores are operated by store managers, who report to one of eight district managers. Our store managers are responsible for day-to-day store operations, subject to operating procedures established at our store support center. A typical store is staffed with a store manager, two assistant managers and seven department leads. Our Capital Stock At the time of the spin-off, Orchard s outstanding capital stock will be composed of the following classes of capital stock: Class A Common Stock, Class B Common Stock, Class C Common Stock and Preferred Stock. Class A Common Stock. Class A Common Stock, all the outstanding shares of which will be held by Sears Holdings immediately prior to the spin-off, is being distributed in the spin-off and will represent approximately 80% of the general voting power of Orchard s outstanding capital stock. Holders of Class A Common Stock will be entitled to one vote per share. With respect to the election of our directors, the holders of Class A Common Stock will vote as a separate class and be entitled to elect eight members of our ten member board of directors, subject to adjustment based on ACOF I LLC s ownership of our capital stock as more fully described in the Description of Our Capital Stock section of this Prospectus. The Class A Common Stock is presently held by a subsidiary of Sears Holdings and by ACOF I LLC ( ACOF ); ACOF will exchange its shares of Class A Common Stock for shares of Class C Common Stock immediately prior to the spin-off, such that immediately following the spin-off, the Class A Common Stock will be 100% held by Sears Holdings shareholders. Class B Common Stock. Class B Common Stock is not being distributed in the spin-off and will represent less than 0.5% of the general voting power of Orchard s outstanding capital stock. Holders of Class B Common Stock will be entitled to one-tenth of one vote per share. With respect to the election of our directors, the holders of Class B Common Stock will vote together with holders of Class C Common Stock as a single class and be entitled to elect two members of our ten member board of directors, subject to adjustment based on ACOF s ownership of our capital stock as more fully described in the Description of Our Capital Stock section of this Prospectus. Our outstanding shares of Class B Common Stock are held by certain former employees of Orchard who acquired such shares of Class B Common Stock in connection with past equity investment programs of Orchard. Our Class B Common Stock is also the class of capital stock underlying options granted to certain employees prior to the date of the spin-off. Class C Common Stock. Class C Common Stock is not being distributed in the spin-off and will represent approximately 20% of the general voting power of Orchard s outstanding capital stock. Holders of Class C Common Stock will be entitled to one vote per share. With respect to the election of our directors, the holders of Class C Common Stock will vote together with holders of Class B Common Stock as a single class and be entitled to elect two members of our ten member board of directors, subject to adjustment based on ACOF s ownership of our capital stock as more fully described in the Description of Our Capital Stock section of this Prospectus. Immediately prior to the spin-off, we will authorize the creation of Class C Common Stock, and all of the Class A Common Stock then owned by ACOF will be exchanged for Class C Common Stock immediately prior to the spin-off, such that ACOF will own 100% of our outstanding Class C Common Stock. Preferred Stock. Preferred Stock, all the outstanding shares of which will be held by Sears Holdings immediately prior to the spin-off, is being distributed in the spin-off and will represent 100% of Table of Contents Orchard s outstanding nonvoting capital stock. The terms of the Preferred Stock do not entitle the holders thereof to any dividends. The terms of the Preferred Stock will provide that dividends and other distributions may not be paid on any shares of our capital stock until all outstanding shares of the Preferred Stock have been repurchased or redeemed unless such dividend or distribution (i) has been unanimously approved by our board of directors, (ii) relates to a poison pill stockholder rights plan or (iii) is a distribution of cash in lieu of fractional shares made in connection with this Distribution. No shares of our capital stock, other than our Preferred Stock, may be redeemed, repurchased or otherwise acquired by us until all outstanding shares of the Preferred Stock have been redeemed or otherwise repurchased unless such redemption or repurchase (i) is made in connection with an employee incentive or benefit plan or other compensatory arrangement, (ii) has been unanimously approved by our board of directors, (iii) relates to a poison pill stockholder rights plan or (iv) is a distribution of cash in lieu of fractional shares made in connection with this Distribution. Risk Factors Our business is subject to various risks, such as those highlighted in the section entitled Risk Factors beginning on page 22 of this Prospectus, including: our ability to offer merchandise and services desirable to our customers and compete effectively in the highly competitive home improvement retail industry; the impact on our revenues of adverse worldwide and Californian economic conditions and, in particular, economic factors that negatively impact the home improvement industry; the adverse effect of extended cold or wet weather in California on our operating results; our ability to obtain suitable replacement financing upon the maturing of our existing financing arrangements; our substantial leveraging, which may place us at a competitive disadvantage in our industry; and our ability to generate the significant amount of cash necessary to service our debt and comply with the terms of our existing financing arrangements. Our Relationship with Sears Holdings We were originally formed as a purchasing cooperative by a group of farmers in California s Santa Clara Valley. We opened for business in March 1931 with a single store in San Jose, California and we were incorporated in Delaware on March 31, 1989. In 1996, we were acquired by Sears, Roebuck and Co. ( Sears Roebuck ), a company that is now a wholly owned subsidiary of Sears Holdings. Sears Holdings is the company that was formed in connection with the merger of Sears Roebuck and Kmart Holding Corporation ( Kmart ) on March 24, 2005, and Sears Holdings is the parent company of Sears Roebuck and Kmart. Following the Distribution, we will be a publicly traded company independent from Sears Holdings, and Sears Holdings will not retain any ownership interest in us. However, we anticipate that immediately following the Distribution, ESL Investments, Inc. and affiliated entities (collectively, ESL ), which currently owns approximately 61% of Sears Holdings common stock, will own approximately 61% of our outstanding Class A Common Stock, representing approximately 61% of Class A Common Stock voting power and approximately 49% of the general voting power of our outstanding capital stock. Following the spin-off, ESL will also own approximately 61% of our outstanding Preferred Stock, which is our outstanding nonvoting capital stock. As a result of ESL holding more than 50% of our voting power for the election of eight of ten directors immediately after the consummation of the Distribution, we may qualify as a controlled company under the Nasdaq Marketplace rules, which would allow us to rely on exemptions from certain corporate governance requirements otherwise applicable to Nasdaq-listed companies. However, we do not currently intend to rely on such exemptions. Immediately following the Table of Contents Distribution, ACOF I LLC ( ACOF ), a wholly owned subsidiary of Ares Corporate Opportunities Fund, L.P. ( ACOF I ), an affiliate of Ares Management LLC ( Ares Management ), will own 100% of our Class C Common Stock, representing approximately 20% of the general voting power of our outstanding capital stock. See Security Ownership by Certain Beneficial Owners and Management in this Prospectus for a more detailed description of the beneficial ownership of our capital stock by certain shareholders following the Distribution. Historically we have had agreements with Sears Holdings subsidiaries to sell certain Sears Holdings proprietary branded products and in preparation for the Distribution we will negotiate and enter into new agreements. In connection with the Distribution, we have entered into or will enter into various agreements with Sears Holdings or certain of its subsidiaries which, among other things, (i) govern the principal transactions relating to the Distribution and certain aspects of our relationship with Sears Holdings following the spin-off, (ii) establish terms under which Sears Holdings will provide us with certain transition services, (iii) establish terms pursuant to which we may sell certain appliances and related protection agreements supplied to us by Sears Holdings on a consignment basis and (iv) establish terms pursuant to which we may acquire and sell certain Sears Holdings proprietary branded merchandise. These agreements were made or will be made in the context of a parent-subsidiary relationship and were or will be negotiated in the overall context of our separation from Sears Holdings. The terms of these agreements may be more or less favorable than those we could have negotiated with unaffiliated third parties. However, these agreements generally incorporate arm s length terms and conditions, including market-based pricing and term of duration. For more information regarding the agreements between us and Sears Holdings or certain of its subsidiaries, see Certain Relationships and Related Party Transactions Agreements with Sears Holdings in this Prospectus. Trademarks and Service Marks We have registered a number of trademarks and service marks in the United States including OSH , ORCHARD SUPPLY HARDWARE , BRIDGEWATER , OSH ORCHARD SUPPLY HARDWARE , WESTERN HAWK and PACIFIC BAY . We also use the following trademarks, some of which are pending registration as intend-to-use applications: ORCHARD SUPPLY HARDWARE EST. 1931 and PACIFIC BAY . All other trademarks or service marks appearing in this Prospectus are the property of their respective owners. Corporate Information We conduct substantially all our operations through our direct, wholly owned subsidiary, Orchard Supply Hardware LLC. Our principal executive offices are located at 6450 Via Del Oro, San Jose, California 95119 and our telephone number is (408) 281-3500. Our website address is www.osh.com. Table of Contents Summary of the Spin-Off The following is a summary of the terms of the spin-off. See The Spin-Off in this Prospectus for a more detailed description of the matters described below. Distributing company Sears Holdings Corporation ( Sears Holdings ) is the distributing company in the spin-off. Immediately following the Distribution, Sears Holdings will not own any capital stock of Orchard Supply Hardware Stores Corporation ( Orchard ). Distributed company Orchard is the distributed company in the spin-off. Primary purposes of the spin-off For the reasons more fully discussed in Questions and Answers About the Company and The Spin-off What are the reasons for the spin-off? , the Sears Holdings board of directors believes that separating Orchard from Sears Holdings is in the best interests of both Sears Holdings and Orchard. Distribution ratio Each holder of Sears Holdings common stock will receive one share of Class A Common Stock and one share of Preferred Stock for every 22.141777 shares of Sears Holdings common stock held on December 16, 2011, the record date for the Distribution. Cash will be distributed in lieu of any fractional shares of Class A Common Stock and Preferred Stock you are otherwise entitled to, as described below. Securities to be distributed All of the shares of Class A Common Stock and Preferred Stock owned by Sears Holdings, which will be 100% of our Class A Common Stock and 100% of our Preferred Stock outstanding immediately prior to the Distribution. The Class A Common Stock will represent approximately 80% of the general voting power of Orchard s outstanding capital stock (subject to the discussion under Description of Our Capital Stock regarding relative rights of our Class A Common Stock, Class B Common Stock and Class C Common Stock to vote for the election of directors) and the outstanding shares of Preferred Stock will represent 100% of Orchard s outstanding nonvoting capital stock. Based on the approximately 106,413,379 shares of Sears Holdings common stock outstanding on December 16, 2011, and applying the distribution ratio of one share of Class A Common Stock and one share of Preferred Stock for every 22.141777 shares of Sears Holdings common stock, approximately 4,806,000 of our shares of Class A Common Stock and 4,806,000 of our shares of Preferred Stock will be distributed to Sears Holdings shareholders who hold Sears Holdings common stock as of the record date. The number of shares of Class A Common Stock and Preferred Stock that Sears Holdings will distribute to its shareholders will be reduced to the extent that cash payments are made in lieu of the issuance of fractional Class A Common Stock and Preferred Stock. In connection with the Distribution, each person who as of the record date holds outstanding unvested restricted stock issued pursuant to the Sears Holdings Corporation 2006 Stock Plan will Table of Contents receive a cash amount in lieu of any and all rights such holder may have to any shares of Class A Common Stock and Preferred Stock distributed in the Distribution with respect to such unvested restricted stock. Such cash amount will represent the right to receive on the applicable vesting date a cash payment from Sears Holdings equal to the value of the Class A Common Stock, Preferred Stock and cash in lieu of fractional shares that would have been distributed in the Distribution to such holder had such holder s unvested restricted stock been Sears Holdings common stock, calculated on the basis of the volume-weighted average price per share of Class A Common Stock and Preferred Stock, as the case may be, for the 10 trading-day period immediately following the distribution date. Record date The record date for the Distribution is the close of business on December 16, 2011. Distribution date The distribution date will be December 30, 2011. The spin-off On the distribution date, Sears Holdings will release all of its shares of Class A Common Stock and Preferred Stock to the distribution agent to distribute to Sears Holdings shareholders. The Distribution will be made in book-entry form on the distribution date. It is expected that it will take the distribution agent up to ten business days following the distribution date to complete the mailing of Direct Registration Account Statements and/or checks for cash in lieu of fractional shares. You will not be required to make any payment, surrender or exchange your Sears Holdings common stock or take any other action to receive your shares of Class A Common Stock and Preferred Stock. Class B and C Common Stock Immediately following the Distribution, Orchard will have shares of Class B Common Stock outstanding that collectively represent less than 0.5% of the voting power of Orchard and shares of Class C Common Stock outstanding that collectively represent approximately 20% of the general voting power of Orchard. Post-Distribution ownership Based on the ownership of Sears Holdings common stock outstanding on December 16, 2011, we anticipate that immediately following the Distribution, ESL will own approximately 61% of our outstanding Class A Common Stock, representing approximately 61% of the voting power of our outstanding Class A Common Stock and approximately 49% of the general voting power of our outstanding capital stock, and ESL will own approximately 61% of our outstanding Preferred Stock, which is our outstanding nonvoting capital stock. Immediately following the Distribution, ACOF will own 100% of our Class C Common Stock representing approximately 20% of the general voting power of our outstanding capital stock. See Security Ownership by Certain Beneficial Owners and Management in this Prospectus for a more detailed description of the beneficial ownership of our capital stock by certain shareholders following the Distribution. Table of Contents No fractional shares No fractional shares of Class A Common Stock or Preferred Stock will be distributed. Instead, the distribution agent will aggregate fractional shares into whole shares, sell the whole shares in the open market at prevailing market prices and distribute the aggregate net cash proceeds of the sales pro rata to each holder who otherwise would have been entitled to receive a fractional share in the Distribution. Accordingly, if you hold fewer than 22.141777 shares of Sears Holdings common stock as of the record date, you will not receive any shares of our Class A Common Stock or Preferred Stock. Recipients of cash in lieu of fractional shares will not be entitled to any interest on payments made in lieu of fractional shares. The receipt of cash in lieu of fractional shares generally will be taxable to the recipient shareholders that are subject to U.S. federal income tax as described in The Spin-Off Material U.S. Federal Income Tax Consequences of the Spin-Off, in this Prospectus. Conditions to the spin-off The spin-off is subject to the satisfaction or waiver by Sears Holdings of the following conditions: the Sears Holdings board of directors shall have authorized and approved the Distribution and related transactions and not withdrawn such authorization and approval, and shall have declared the dividend of Class A Common Stock and Preferred Stock to Sears Holdings shareholders; each ancillary agreement contemplated by the distribution agreement between Orchard and Sears Holdings (the Distribution Agreement ) shall have been executed by each party thereto; the Securities and Exchange Commission (the SEC ) shall have declared effective our Registration Statement on Form S-1, of which this Prospectus is a part, under the Securities Act of 1933, as amended (the Securities Act ), and no stop order suspending the effectiveness of the Registration Statement shall be in effect, and no proceedings for such purpose shall be pending before or threatened by the SEC; our Class A Common Stock shall have been accepted for listing on the NASDAQ Capital Market or another national securities exchange or quotation system approved by Sears Holdings and our Preferred Stock shall have been accepted for quotation on the OTCQB, subject to official notice of issuance in each case; Sears Holdings shall have received the written opinion of Simpson Thacher & Bartlett LLP as to the satisfaction of certain requirements necessary for the spin-off to receive tax-free treatment under Section 355 of the Internal Revenue Code of 1986, as amended (the Code ), upon which the IRS will not rule; the Internal Transactions (as described in Certain Relationships and Related Party Transactions Agreements with Sears Table of Contents Holdings Distribution Agreement in this Prospectus) shall have been completed; no order, injunction or decree issued by any governmental authority of competent jurisdiction or other legal restraint or prohibition preventing consummation of the Distribution shall be in effect, and no other event outside the control of Sears Holdings shall have occurred or failed to occur that prevents the consummation of the Distribution; no other events or developments shall have occurred prior to the Distribution that, in the judgment of the board of directors of Sears Holdings, would result in the Distribution having a material adverse effect on Sears Holdings or the shareholders of Sears Holdings; Sears Holdings shall have received a certificate signed by our Chief Financial Officer, dated as of the distribution date, certifying that prior to the Distribution we have made capital and other expenditures, and have operated our cash management, accounts payable and receivables collection systems, in the ordinary course consistent with prior practice; prior to the distribution date, this Prospectus shall have been made available to the holders of Sears Holdings common stock as of the record date; the individuals listed as members of our post-Distribution board of directors in this Prospectus shall have been duly elected, and such individuals shall be the members of our board of directors immediately after the Distribution; prior to the Distribution, Sears Holdings shall deliver or cause to be delivered to Orchard resignations, effective as of immediately after the Distribution, of each individual who will be an officer or director of Sears Holdings (other than Sears Canada Inc.) after the Distribution and who is an officer or director of Orchard immediately prior to the Distribution; immediately prior to the Distribution, our amended and restated certificate of incorporation ( Amended and Restated Certificate of Incorporation ) and Amended and Restated Bylaws ( Amended and Restated Bylaws ), each in substantially the form filed as an exhibit to the Registration Statement on Form S-1 of which this Prospectus is a part, shall be in effect; and the private letter ruling from the Internal Revenue Service (the IRS Ruling ) received by Sears Holdings shall not have been revoked or modified in any material respect. The fulfillment of the foregoing conditions will not create any obligation on the part of Sears Holdings to effect the spin-off. We are not aware of any material federal or state regulatory requirements that must be complied with or any material approvals that must be obtained, other than compliance with SEC rules and regulations and Table of Contents the declaration of effectiveness of the Registration Statement by the SEC, in connection with the Distribution. Sears Holdings has the right not to complete the spin-off if, at any time, the board of directors of Sears Holdings determines, in its sole discretion, that the spin-off is not in the best interests of Sears Holdings or its shareholders, or that market conditions are such that it is not advisable to effect the Distribution. In addition, Sears Holdings may at any time and from time to time until the Distribution decide to abandon the Distribution or modify or change the terms of the Distribution, including by accelerating or delaying the timing of the consummation of all or part of the Distribution. Trading market and symbol We intend to list our Class A Common Stock on the NASDAQ Capital Market under the symbol OSH and to quote our Preferred Stock on the OTCQB, and expect that trading for both will begin the first trading day after the completion of the Distribution. We do not plan to have a when-issued market for our Class A Common Stock or Preferred Stock prior to the Distribution. Dividend policy We do not expect to pay dividends on our Class A Common Stock, Preferred Stock or any other shares of our capital stock for the foreseeable future. The terms of the Preferred Stock do not entitle the holders thereof to any dividends. The terms of the Preferred Stock will provide that dividends and other distributions may not be paid on any shares of our capital stock until all outstanding shares of the Preferred Stock have been repurchased or redeemed unless such dividend or distribution (i) has been unanimously approved by our board of directors, (ii) relates to a poison pill stockholder rights plan or (iii) is a distribution of cash in lieu of fractional shares made in connection with this Distribution. The loan documents relating to our Senior Secured Credit Facility (the Senior Secured Credit Facility ), our Senior Secured Term Loan (the Senior Secured Term Loan ), and our Real Estate Secured Term Loan (the Real Estate Secured Term Loan ) also restrict our ability to make distributions with respect to and to repurchase our capital stock and the capital stock of certain of our subsidiaries. The loan documents contain customary exceptions, including the ability to make distributions with additional shares of capital stock and to repurchase stock in accordance with benefit plans for our management and employees. Tax consequences to Sears Holdings shareholders Assuming that the spin-off qualifies as a tax-free transaction under Section 355 of the Code, Sears Holdings shareholders are not expected to recognize any gain or loss for U.S. federal income tax purposes solely as a result of the Distribution except to the extent of any cash received in lieu of fractional shares. See The Spin-Off Material U.S. Federal Income Tax Consequences of the Spin-Off in this Prospectus for a more detailed description of the U.S. federal income tax consequences of the Distribution. Table of Contents Each shareholder is urged to consult his, her or its tax advisor as to the specific tax consequences of the Distribution to that shareholder, including the effect of any state, local or non-U.S. tax laws and of changes in applicable tax laws. Relationship with Sears Holdings after the spin-off We will enter into the Distribution Agreement and other agreements with Sears Holdings and certain of its subsidiaries related to the spin-off. These agreements will govern the relationship between Orchard and Sears Holdings up to and subsequent to the completion of the Distribution. The Distribution Agreement, in particular, will provide for the principal steps to be taken in connection with the spin-off, the settlement or extinguishment of certain obligations between us and Sears Holdings and certain aspects of our relationship with Sears Holdings following the Distribution. We will enter into a transition services agreement with a subsidiary of Sears Holdings pursuant to which certain services will be provided on an interim basis following the Distribution (the Transition Services Agreement ). Further, in 2005 we entered into an agreement with Sears Holdings regarding the sharing of tax liabilities (the Tax Sharing Agreement ) in connection with our deconsolidation from Sears Holdings consolidated U.S. federal income tax group that governs certain indemnification rights with respect to tax matters. On October 26, 2011, the Company entered into an appliances agreement with a subsidiary of Sears Holdings relating to our sale of certain appliances and related protection agreements supplied to us by Sears Holdings on a consignment basis (the Appliances Agreement ). We also entered into three brand license agreements, subject to the approval of the audit committee of Sears Holdings (the Brands Agreements ), with a subsidiary of Sears Holdings pursuant to which Sears Holdings will allow us to purchase a limited assortment of Sears Holdings proprietary-branded Craftsman products, Easy Living and Weatherbeater paints, Kenmore-branded water heaters and consumer household products directly from vendors. We describe these arrangements in greater detail under Certain Relationships and Related Party Transactions Agreements with Sears Holdings and describe some of the risks of these arrangements under Risk Factors Risks Relating to the Spin-Off. Transfer agent After the Distribution, the transfer agent for our Class A Common Stock and Preferred Stock will be Wells Fargo Bank, N.A., South St. Paul, Minnesota. Distribution agent The distribution agent for the spin-off will be Wells Fargo Bank, N.A., South St. Paul, Minnesota. Risk factors You should carefully consider the matters discussed under the section entitled Risk Factors. Table of Contents
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+PROSPECTUS SUMMARY 1
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+PROSPECTUS SUMMARY This is only a summary of certain terms of the prospectus. You should review the more detailed information contained elsewhere in this prospectus prior to making an investment in Peerless Systems Corporation ( Peerless ). For a more complete understanding of Peerless and this offering, we encourage you to read this prospectus in its entirety, especially the risks regarding Peerless discussed under Risk Factors and Peerless financial statements incorporated by reference hereto. Additional important information is set forth in the Fund Prospectus attached as Appendix A hereto. The Offeror Peerless Systems Corporation, a Delaware corporation, is transitioning its primary business from licensing imaging technology to the asset management industry. Peerless newly-formed subsidiary, Peerless Asset Management Inc., a Delaware corporation ( PAM ), is seeking to become a leading provider to investors of alternative investment strategies in a closed-end fund structure, which strategies are typically offered by hedge funds. Peerless will also continue to operate its legacy technology licensing business. Peerless common stock, par value $.001 per share (the Peerless Common Stock ), is traded on The Nasdaq Capital Market under the symbol PRLS . Locksmith Capital Advisors Inc., a Delaware corporation ( LCA ) will apply to become registered under the Investment Advisers Act of 1940, as amended (the Investment Advisers Act ). LCA is a direct, wholly-owned subsidiary of PAM and will be the investment advisor to Peerless Value Opportunity Fund, a Delaware business trust and a newly organized, non-diversified, closed-end management investment company (the Fund ). The Fund is the issuer of the Fund Common Shares included in the Units. Peerless executive offices are located at 300 Atlantic Street, Suite 301, Stamford, Connecticut 06901, and its telephone number is (203) 350-0040. The Offering Peerless is offering [ ] Units at a price of $10 per Unit. Each Unit is comprised of: (i) one Fund Common Share and (ii) one Peerless Warrant. The Fund Prospectus, which accompanies this prospectus, includes detailed information regarding the Fund and the Fund Common Shares. This prospectus provides information regarding Peerless and the offer and sale by Peerless of the Units, the Peerless Warrants and the Peerless Common Stock. You should read this prospectus, together with the Fund Prospectus, and keep both for future reference. The Underwriters have been granted an option to purchase up to [ ] additional Units to cover over-allotments, if any. See Plan of Distribution. Peerless has agreed to pay all organizational costs of the Fund and all offering costs of the Fund and Peerless (other than the sales load) that exceed $.04 per Unit. The Peerless Warrants The Peerless Warrants become exercisable 60 days following the effective date of this prospectus, provided that no exercise shall be permitted which would either result in (i) an increase in ownership of 20% or more of, or (ii) an aggregate ownership of 25% or more of, the Peerless Common Stock by any person or group. Each Peerless Warrant has an exercise price of $5.00 and is exercisable for one share of Peerless Common Stock. The Peerless Warrants expire on [ ][ ], 2013, two years after the effective date of this prospectus. See Peerless Systems Corporation Description of Peerless Securities in this prospectus. Who May Want to Invest Investors should consider their own investment goals, time horizon and risk tolerance before investing in the Units. An investment in the Fund may not be appropriate for all investors and is not intended to be a complete investment program. The Units may be an appropriate investment for you if you are seeking to invest in the Fund and the opportunity to participate through the Peerless Warrants in the growth of Peerless, the parent of the Fund s investment advisor. See Peerless Systems Corporation." Listing of Securities We have applied to list the Units, and Peerless Warrants and the Fund Common Shares on The Nasdaq Capital Market upon the consummation of the offering, subject to notice of issuance. The trading or ticker symbols of the Units, Peerless Warrants and Fund Common Shares will be PRLSU, PRLSW and PVOF, respectively. Subject to notice of issuance, the shares of Peerless Common Stock underlying the Peerless Warrants will be listed on The Nasdaq Capital Market under the symbol PRLS, the symbol under which the existing shares of Peerless Common Stock are listed.
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+S-1/A U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 We believe a significant contributing factor to our prospects are government regulations mandating the use of energy-efficient lighting, including the elimination of the production of traditional incandescent light bulbs in Europe by 2012 and in the United States by 2014, and regulations restricting the use of hazardous substances such as the mercury contained in CFLs. We believe these developments disrupt the well-entrenched lighting industry of past decades and, given the energy conservation and eco-friendly characteristics of our ESL lighting products, create significant opportunities for us to introduce our products into the market in place of incandescent bulbs, as well as CFLs and LEDs. Unlike LEDs, our lights also work with existing lighting fixtures without modification. In October 2011, we established a key strategic business relationship with Huayi Lighting Company Ltd., an experienced lighting products manufacturer. Under a new manufacturing agreement, Huayi Lighting has agreed, under our direction, to produce substantially all of our ESL lighting products for resale to our customers over the next five years. Through this relationship, Huayi Lighting is responsible for fabricating the required electronic components of our lights, sourcing the glass components from its multiple approved suppliers and using its established automated processes to assemble and package finished products. We expect the first shipment of lights from Huayi Lighting in January 2012. We have begun to transition our manufacturing operations to Huayi Lighting from our existing facility in the Czech Republic, which in the past has primarily provided us with product testing, engineering development and pilot production of our initial products. Through these development efforts in the Czech Republic, we have filed nine U.S. and related foreign patent applications, of which three patents have been granted and one application is expected to be granted shortly, covering important features of our current and planned lighting technology and products, and have accumulated over the past six years a substantial amount of technical know-how relating to our ESL technology. As of November 23, 2011, we employed a team of 28 research scientists, engineers and laboratory technicians concentrating on technology development and innovation. We intend in the future to establish a research and development center in New England to develop new products for the lighting industry by taking advantage of the latest technology advancements. Our executive officers and directors have significant experience in developing and executing a go-to-market business model in a competitive, high growth industry. In addition, our management team has assembled highly-skilled technical personnel in Europe and the United States to conduct ongoing research and product development of new lighting products and next-generation technologies. Corporate Information We were incorporated under the laws of the State of California in August 1996 under the name of Telegen Corporation. In late 2004, we began research and product development on our lighting technology and, in May 2008, changed our name to Vu1 Corporation to better reflect this business focus. Our principal executive offices are located at 469 Seventh Avenue, Suite 356, New York, New York 10018, and our telephone number is (212) 359-9503. Our Internet website address is http://www.vu1.com. The information on our website is not incorporated by reference into this prospectus, and you should not consider it part of this prospectus. AMENDMENT NO. 1 TO FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 (1) Based on 5,567,872 shares outstanding on November 23, 2011, the number of shares to be outstanding after this offering excludes the following: 591,181 shares of common stock reserved for issuance upon the exercise of outstanding stock options under our 2007 Stock Incentive Plan, 921,963 shares of common stock reserved for issuance upon the exercise of outstanding warrants, 374,346 shares of common stock reserved for issuance upon the conversion of our outstanding original issue discount convertible debentures, and 142,500 shares of common stock reserved for issuance under the underwriters warrants. Vu1 Corporation (Exact name of registrant as specified in its charter) California 3461 84-067714 (State or other jurisdiction of incorporation or organization) (Primary Standard Industrial Classification Code Number) (I.R.S. Employer Identification Number) 469 Seventh Avenue, Suite 356 New York, New York 10018 (212) 359-9503 (Address, including zip code, and telephone number, including area code, of registrant s principal executive offices) (1) Reflects our sale of 2,850,000 shares of common stock offered by this prospectus at an assumed public offering price of $7.00 per share, after deducting the underwriting discount and the estimated offering expenses that we will pay. Scott C. Blackstone, Ph.D. Vu1 Corporation Chief Executive Officer 469 Seventh Avenue, Suite 356 New York, New York 10018 (212) 359-9503 (Name, address, including zip code, and telephone number, including area code, of agent for service)
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0000912607_mace_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0000912607_mace_prospectus_summary.txt
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+PROSPECTUS SUMMARY This prospectus summary contains basic information about us and this rights offering. Because it is a summary, it does not contain all of the information that you should consider before deciding whether or not you should exercise your subscription rights. To understand this offering fully, you should carefully read this entire prospectus, including the Risk Factors section, and the documents incorporated herein by reference. The following summary is qualified in its entirety by reference to the detailed information appearing elsewhere in this registration statement or incorporated by reference into this registration statement. Our Company Mace Security International, Inc. was incorporated in Delaware on September 1, 1993 and currently conducts its operations through one segment, the Security Segment. Our Business The Security Segment consists of three operating or reporting units: Mace Personal Defense, Inc., which sells consumer safety and personal defense products; Mace Security Products, Inc., which sells electronic surveillance equipment and products; and Mace CSSS, Inc., which provides wholesale security monitoring services. Table of Contents Our Products and Markets The Security Segment designs, manufactures, assembles, markets and sells a wide range of security products. The products include less-than-lethal Mace defense sprays, intrusion fencing, access control, security cameras and security digital recorders. The Security Segment also owns and operates an Underwriters Laboratories ( UL ) listed monitoring center that monitors video and security alarms for approximately 470 security dealer clients with over 63,500 end-user accounts including the March 31, 2011 acquisition of The Command Center, Inc. ( TCCI ). The Security Segment s electronic surveillance products and components are purchased from Asian and European manufacturers. Many of our products are designed to our specifications. Other products in the Security Segment are monitors, high-end digital and machine vision cameras and professional imaging components. We sell the electronic surveillance products and components primarily to installing dealers, distributors, system integrators and end users. The main marketing channels for our products are industry shows, trade publications, catalogs, the internet, telephone orders, distributors and mass merchants. Corporate Information Our principal executive offices are located at 240 Gibraltar Road, Suite 220, Horsham, Pennsylvania 19044. Our web site is www.mace.com. Information on our website is not incorporated in this prospectus and is not a part of this prospectus. Assets Held for Sale As of March 31, 2011, the Company owned three legacy car washes which are currently held for sale. Two of the car washes are located in Arlington, Texas and one car wash is located in Fort Worth, Texas. The Fort Worth, Texas car wash is leased by the Company. The three car washes are being marketed by the Company; but none of the car washes are currently under an Agreement of Sale. The Agreement of Sale for an Arlington, Texas car wash expired on May 31, 2011 without the sale having occurred. The assets and liabilities of the car washes are classified as assets and liabilities held for sale in the Company s consolidated balance sheets and the results of operations are classified as discontinued operations in the Company s consolidated statements of operations and the consolidated statements of cash flows. The Company has also listed for sale its warehouse office building located in Farmers Branch, Texas. We will use the proceeds from any sale of the assets for working capital. Liquidity As of March 31, 2011, we had working capital of approximately $6.4 million including cash and cash equivalents of $2.3 million. Our business requires a substantial amount of capital, most notably to fund our losses. We plan to meet these capital needs from various financing sources, including borrowings, cash generated from the sale of car washes and other assets, and the issuance of common stock. We have two loans outstanding to Merlin. The first loan with a principal balance of $675,000 which was due on April 28, 2011 was extended to July 6, 2011. The second loan in the amount of $1.4 million is due March 30, 2013. However, Merlin has the right to call the loan thirty days after the conclusion of the rights offering and Merlin s purchase of the Additional Stock. The $1.4 million loan also may be converted to common stock at Merlin s option upon the occurrence of certain trigger events. The proceeds of this rights offering will be used in part to pay the loans owed Merlin. We anticipate that the three remaining car washes held for sale will generate proceeds, net of related mortgages, in the range of approximately $1.7 million to $2.0 million. Our Texas warehouse is also listed for sale. We estimate the sale of the Texas warehouse will generate proceeds, net of related mortgage debt, of approximately $1.0 million to $1.2 million. Additionally, our debt covenants with JP Morgan Chase Bank, N.A. require us to maintain a total unencumbered cash and marketable securities balance of $1.5 million. We have been funding our losses to-date through the sale of assets. In 2010, we generated $3.1 million in cash from the sale of assets, including $990,000 from the sale of Linkstar and $2.1 million from the sale of four car washes, net of related mortgages. Our business is currently generating negative cash flow of approximately $250,000 to $300,000 per month. The current economic climate has made it difficult to sell the assets held for sale. This rights offering is being conducted to provide additional liquidity for the operation of the Company s business and for future acquisitions of wholesale security monitoring businesses and accounts. Merlin Partners, LP Loans The Company borrowed $1.35 million from Merlin Partners, LP ( Merlin ) on December 28, 2010 to fund a portion of a settlement payment to the Company s ex-CEO. The loan, which had an original maturity date of March 28, 2011, was extended to July 6, 2011. The loan was payable in two installments of $675,000 each upon the closing of each of two car washes that were under agreements of sale at December 31, 2010. The Company made a payment of $675,000 to Merlin upon the sale of the Lubbock, Texas car wash on March 8, 2011. The Company expects to pay the remaining balance owed plus accrued interest from the proceeds generated by the sale of a Dallas, Texas area car wash. Merlin is a fund managed by Ancora Advisors, a subsidiary of the Ancora Group. Richard A. Barone, a Company director, is Chairman of the Ancora Group. The loan bears interest at a rate of 12% per annum, and is secured by second liens on the Dallas, Texas area car wash and a security interest in the tradename Mace. As part of the consideration for the financing, Merlin was also granted a Common Stock Purchase Warrant (the Warrant ) to purchase up to 314,715 shares of the Company s common stock at an exercise price of $0.20 per share, expiring December 28, 2015. The Warrant contains anti-dilution provisions providing that Merlin will receive additional warrants exercisable into 2% of any common stock of Table of Contents the Company issued by the Company through December 28, 2011. The exercise price of the Warrant will be adjusted lower to equal the stock issuance price of any stock issued through December 28, 2011 at a price below $0.20. On March 30, 2011, we borrowed $1.4 million with an interest rate of 6% per annum from Merlin to fund the acquisition of a security monitoring company. The loan is due March 30, 2013. However, Merlin has the right to call the loan thirty days after the conclusion of the rights offering and Merlin s purchase of the Additional Stock ( Call Trigger Event ). Merlin s right to call the loan expires six months and forty business days after the Call Trigger Event. If the Call Trigger Event occurs and Merlin does not call the loan within the time allowed, the loan s maturity date becomes extended to March 30, 2016. The $1.4 million loan may also be converted to common stock at Merlin s option upon the occurrence of certain trigger events. The first trigger event, giving Merlin the right to convert the loan is the Company s failure to make the rights offering to the stockholders. If the Company does not make the rights offering to the stockholders, Merlin may convert the loan into common stock at a per share price equal to the lower of 75% of (i) the tangible book value of the Company; or (ii) the ten day average closing sales price of the common stock starting with the day that Merlin notifies the Company that Merlin has elected to convert the loan. If the rights offering is made to stockholders, and Merlin does not exercise its right to call for the payment of the loan, Merlin has the right to convert the loan into common stock through March 30, 2016, the new maturity date. The conversion right is at a per share price equal to the ten day average closing sales price of the common stock, starting with the trading day which is 30 trading days after the Call Trigger Event. In accordance with ASC 815, Derivatives and Hedging , the Company determined that the conversion feature of the loan met the criteria of an embedded derivative, and therefore the conversion feature of this loan needed to be bifurcated and accounted for as a derivative. The fair value of the embedded conversion was estimated at the date of issuance using the Monte Carlo model with the following assumptions: risk free interest rate: 0.16%; expected life of the option to convert of 4.7 years; and volatility: 48%. The fair value of the conversion option as of March 31, 2011 is $590,000 and is recorded as a derivative liability and as a discount to the debt. The conversion option will be marked-to-market each reporting period, with the changes in fair value reported in earnings. As compensation for the loan, Merlin received a five year warrant exercisable into 157,357 shares of common stock at an exercise price of $0.20 per share. The warrant contains an anti-dilution provision that provides that the Company will issue Merlin a warrant equal to 1% percent of any shares issued by the Company for one year after the date the warrant was issued. Any new warrant issued will be exercisable at $0.20 cents per share. The loan is secured by a security interest in the Mace name, a pledge of the stock of Mace CSSS, Inc. (the monitoring company subsidiary) and a security interest in the assets of Mace CSSS, Inc. The conversion features of the loan and the warrant may result in additional dilution to stockholders. Summary of this Offering Securities Offered We are distributing to holders of our common stock as of 5:00 p.m., Eastern Standard Time, on June , 2011, the record date, at no charge, non-transferable subscription rights to purchase shares of our common stock. You will receive one subscription right for every share of our common stock you owned as of the record date. Each subscription right entitles the holder to purchase three shares of our common stock for a price of $0.20 per share. We anticipate that the total purchase price for the securities sold in this rights offering will be up to $9.4 million. No assurances can be given, however, as to the level of participation in this rights offering. Basic subscription privilege The basic subscription privilege of each subscription right will entitle you to purchase three shares of our common stock for each share you owned on the record date, at a subscription price of $0.20 per share. We will not issue fractional shares of common stock in the rights offering, and holders will only be entitled to exercise a whole number of rights. Subscription price $0.20 per share To be effective, any payment related to the exercise of a subscription right must clear prior to the expiration of the rights offering. Over-subscription privilege If you purchase all of the shares of common stock available to you pursuant to your basic subscription privilege, you may also choose to subscribe for shares of our common stock that are not purchased by other holders through the exercise of their basic subscription privileges. You may subscribe for shares of our common stock pursuant to your over-subscription privilege, subject to proration of available shares. If there are not enough unsubscribed shares to honor all requests under the over-subscription privilege, all requests will not be filled. Record date 5:00 p.m., Eastern Standard Time, on June , 2011. Table of Contents Expiration date 5:00 p.m., Eastern Standard Time, on July , 2011, twenty five days after mailing this prospectus, unless we extend the rights offering period. Over-Subscription Limitation on Common Stock Purchase If sufficient shares of common stock are available, we will seek to honor your over-subscription request in full. If, however, over-subscription requests exceed the number of shares of common stock available for sale in the rights offering, we will allocate the available shares of common stock among each person properly exercising the over-subscription privilege first in an amount that will maintain the shareholder s percentage of ownership of issued common stock (calculated based on the percentage owned prior to the rights offering and issuance of the Additional Stock, if known by the Company) and then, if there is any remaining unsubscribed for shares, in proportion to the number of shares of common stock each person subscribed for under the basic subscription privilege. If this allocation results in any person receiving a greater number of shares of common stock than the person subscribed for pursuant to the exercise of the over-subscription privilege, then such person will be allocated only that number of shares for which the person over-subscribed, and the remaining shares of common stock will be allocated among all other persons exercising the over-subscription privilege on the same basis described above. The allocation process will be repeated until all shares of common stock have been allocated or all over-subscription requests have been satisfied, whichever occurs first. We reserve the right to reject any over subscription and we will, in most cases, reject an over-subscription to the extent the stockholder together with the stockholder affiliates would own 5% or more of the common stock after the over-subscription is exercised. If there are not enough unsubscribed shares to honor all requests pursuant to the over-subscription privilege, a portion of requested shares will not be fulfilled. No Minimum Subscription There is no minimum purchase requirement as a condition to accepting subscriptions. Additional Stock and Selling Stockholders We have entered into a Securities Purchase Agreement with Merlin Partners, a hedge fund which is under common control with Ancora. In accordance with the Securities Purchase Agreement, Merlin and two assignees of Merlin will purchase $4,000,000 of our common stock at the conclusion or termination of the rights offering. The assignees are Umberto Fedeli for 2,500,000 shares, and Peter Spitalieri for 2,500,000 shares. The purchase price will be $0.20 per share (the same price as the rights offering stock) less a $250,000 fee. The assignees and Merlin are sometimes collectively referred to in this Prospectus as the Selling Stockholders . The obligation of the Selling Stockholders to purchase the Additional Stock is not subject to any conditions in the control of Merlin or the other Selling Stockholders. The conditions to Merlin s obligation to purchase are within the control of the Company and, include: (i) the conclusion or termination of the Rights Offering; (ii) the Company s expansion of its Board of Directors to seven persons, and (iii) the compliance by the Company to the provisions of the Securities Purchase Agreement. The Additional Stock is being registered for resale under the Securities Act by the Selling Stockholders. Richard A. Barone, a member of our Board of Directors, is a controlling owner of Ancora Securities, Inc. and Ancora Advisors, LLC. Ancora Advisors, LLC is the manager of Merlin. Public Offering of Unsubscribed Stock Any unsubscribed shares remaining unsold at the conclusion of the rights offering may be offered to the public at, the per share rights offering exercise price, $0.20 per share. There will not be a public offering of unsubscribed shares, unless Ancora agrees to the public offering. See The Public Offering of Unsubscribed Shares of Common Stock. The offering period for the unsubscribed common stock, if offered, would commence on the trading date immediately following the date of the closing of the rights offering, and would expire at the earlier of the sale of all the shares or 5:00 p.m., Eastern Standard Time, on the tenth trading day after the closing of the rights offering. Subscription Price $0.20 per share exercise price for the common stock is payable in immediately available funds. To be effective any payment related to the exercise of the right must clear prior to the expiration of the rights offering. Table of Contents Use of Proceeds The proceeds from the rights offering, less fees and expenses incurred by us in connection with the rights offering, are intended to be used for general corporate purposes, including working capital, expansion of our personal defense product operation s marketing programs, possible repayment of loans made to the Company by Merlin, and further acquisitions of wholesale security monitoring businesses and accounts which the Company has identified. Non-Transferability of Subscription Rights The subscription rights may not be transferred or assigned at any time during or after the subscription period. Net Operating Loss Carryforwards In part, because the subscription rights being distributed to our stockholders are nontransferable, we do not anticipate that the rights offering would affect our ability to utilize our net operating loss carryforwards (NOLs) for federal income tax purposes if a majority of our stockholders exercise this rights to acquire shares in the rights offering, After applying the provisions of Internal Revenue Code regarding changes in ownership of corporations (i.e., Internal Revenue Code Section 382), the maximum amount of operating loss carryforwards that could be used to offset future taxable income is $51.3 million as of December 31, 2010. No Recommendation Neither our Board of Directors nor the dealer manager of this rights offering makes any recommendation to you about whether you should exercise your subscription rights. You are urged to consult your own financial advisors in order to make an independent investment decision about whether to exercise any of your subscription rights. We cannot assure you that the market price for our common stock will continue to be above the subscription price or that anyone purchasing shares of our common stock at the subscription price will be able to sell those shares in the future at the same price or a higher price than the subscription price. You are urged to make your decision based on your own assessment of our business and this rights offering. No Minimum Subscription Requirement There is no minimum subscription requirement. We will consummate the rights offering regardless of the amount raised from the exercise of subscription rights by the expiration date. Maximum Offering Size Unless our Board of Directors waives or changes the offering amount, we will raise no more than $9.4 million of subscription proceeds in this rights offering. No Revocation If you exercise any of your subscription rights, you will not be permitted to revoke or change the exercise or request a refund of monies paid. You should not exercise your subscription rights unless you are sure that you wish to purchase additional shares of our common stock at the subscription price. Once you exercise your subscription rights, you cannot revoke the exercise of your subscription rights even if you later learn information that you consider to be unfavorable and even if the market price of our common stock is below the subscription price. Material U.S. Federal Income Tax Considerations A holder of common stock should not recognize income, gain, or loss for U.S. federal income tax purposes in connection with the receipt, exercise or expiration of subscription rights in the rights offering. However, if this rights offering is deemed to be part of a disproportionate distribution under Section 305 of the Internal Revenue Code, your receipt of subscription rights in this offering may be treated as the receipt of a taxable distribution to you. You should consult your own tax advisor as to the particular tax consequences to you of the receipt, exercise or expiration of the subscription rights in light of your particular circumstances. Extension, Cancellation and Amendment Our Board of Directors may extend the expiration date for exercising your subscription rights Table of Contents for up to an additional 30 trading days in its sole discretion. Our Board of Directors may also cancel this rights offering. Any extension or cancellation of this offering will be followed as promptly as practicable by an announcement. In the event that we cancel this rights offering, all subscription payments that the subscription agent has received will be returned, without interest or deduction, as soon as practicable. We reserve the right to amend or modify the terms of the rights offering at any time prior to the expiration date of the offering. Procedure for Exercising Subscription Rights To exercise your subscription rights, you must take the following steps: If you are a registered holder of our common stock, the subscription agent must receive your payment for each share of common stock subscribed for pursuant to your subscription right at the initial subscription price of $0.20 per share and properly completed subscription rights certificate before 5:00 p.m., Eastern Standard Time, on July , 2011. You may deliver the documents and payments by mail or commercial carrier. If regular mail is used for this purpose, we recommend using registered mail, properly insured, with return receipt requested. If you are a beneficial owner of shares that are registered in the name of a broker, dealer, custodian bank, or other nominee, or if you would prefer that an institution conduct the transaction on your behalf, you should instruct your broker, dealer, custodian bank, or other nominee to exercise your subscription rights on your behalf and deliver all documents and payments to the subscription agent before 5:00 p.m., Eastern Standard Time, July , 2011. If you wish to purchase shares of our common stock through the rights offering, please promptly contact any broker, dealer, custodian bank, or other nominee who is the record holder of your shares. We will ask your record holder to notify you of the rights offering. You should complete and return to your record holder the appropriate subscription documentation you receive from your record holder. Foreign Stockholders We will not mail subscription rights certificates to foreign stockholders whose address of record is outside the United States, or is an Army Post Office (APO) address or Fleet Post Office. The subscription agent will hold the subscription rights certificates for such holder s account. To exercise subscription rights, stockholders with such addresses must notify the subscription agent and timely follow the procedures described in The Rights Offering Foreign Stockholders. Subscription Agent American Stock Transfer Trust Company, LLC Information Agent Phoenix Advisory Partners Dealer Manager Ancora Securities, Inc. Shares Outstanding after Completion of this Rights Offering Up to 62,942,900 shares of our common stock will be outstanding, assuming the maximum offering amount is subscribed for pursuant to this offering. An additional 20,000,000 shares of our common stock will be outstanding after Merlin s purchase of the Additional Stock.
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+PROSPECTUS SUMMARY This summary highlights some of the information contained elsewhere in this prospectus or incorporated by reference in this prospectus. It is not complete and does not contain all of the information that you should consider before investing in our common stock. You should carefully read this entire prospectus, including the information set forth under Risk Factors, as well as the information incorporated by reference, before you decide to invest in our common stock. In this prospectus, the Company , Spot Mobile International , we , us and our refer to Spot Mobile International Ltd. and its subsidiaries.
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0000920189_quark_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0000920189_quark_prospectus_summary.txt
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+This summary highlights selected information appearing elsewhere in this prospectus and does not contain all the information you should consider before investing in our common stock. You should carefully read this prospectus in its entirety before investing in our common stock, including the section entitled Risk Factors, and our financial statements and related notes included elsewhere in this prospectus. Our Business We are a clinical-stage pharmaceutical company engaged in discovering and developing novel RNAi interference or RNAi-based therapeutics. We have a fully integrated drug development platform that spans therapeutic target identification based on our proprietary gene discovery science and technology, to clinical drug development. We have initially been focusing on RNAi-based therapeutics for the treatment of diseases associated with oxidative stress and ischemic injury. We believe that our insight into the molecular mechanisms underlying these diseases, combined with our ability to design, chemically modify and successfully deliver synthetic small-interfering RNA, or siRNA, to specific organs in the body, enables us to rapidly develop drug candidates, often directed against the same target across multiple therapeutic areas. We have three product candidates in clinical development in five different indications: PF-655 (also called PF-04523655 and previously RTP801i-14) for the treatment of diabetic macular edema and for wet age-related macular degeneration; QPI-1002 (previously I5NP or AKIi-5) for the prevention of acute kidney injury and for the prevention of delayed graft function in kidney transplant patients; and QPI-1007 for ocular neuroprotection. We have licensed PF-655 to Pfizer on an exclusive worldwide basis and we granted an option for an exclusive license to QPI-1002 to Novartis. In March 2011, we received the results of the Phase II DEGAS trial of PF-655 for diabetic macular edema, which demonstrated that the drug was well tolerated, with no observed drug related serious adverse events, and showed a dose dependent improvement in visual acuity over the standard of care. We have a broad pipeline based on our internally developed and proprietary chemically modified siRNA structures. Several of our product candidates are based on novel targets and therapeutic concepts discovered using our BiFARTM target gene discovery platform. We believe that our platform technologies, siRNA capabilities and intellectual property combined with expertise of our regulatory, medical, preclinical and clinical development group will enable us to continue to advance new product candidates into clinical development, either directly or through collaborations with major pharmaceuticals companies. RNAi Overview RNA interference, or RNAi, is a recently discovered process that occurs naturally within cells and, facilitated by siRNA, selectively silences the activity of specific genes. Genes are the basic units of inheritance. Genes provide cells with instructions for producing proteins encoded by them. Many human diseases are caused by the abnormal behavior of proteins. The ability to stop or reduce production of a protein by selectively silencing the gene that directs its synthesis could be very beneficial in the treatment of disease. We believe that RNAi-based therapeutics potentially have significant advantages over traditional therapies, including broad applicability to treat many diseases, the ability to selectively inhibit expression of disease-associated target genes, inherent drug potency and shortened drug discovery timelines. To date, the major challenges in the development of RNAi-based therapeutics have been delivery of siRNA molecules to the organ and cells relevant to a particular disease as well as siRNA drug specificity, nuclease stability and pro-inflammatory properties associated with innate immune response. TABLE OF CONTENTS The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment that specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. TABLE OF CONTENTS Our Approach Our insight into the pathogenesis of diseases, combined with our proprietary targets and concepts and our siRNA delivery strategies, led us to select siRNA as the modality for our clinical programs. We believe that our integrated discovery and development approach, our siRNA technology platform and intellectual property are particularly well-suited to RNAi-based therapeutics and are based on the following main capabilities: Identifying clinically attractive drug targets and concepts, often but not exclusively using our BiFAR discovery platform. Using our BiFARTM discovery platform, we have identified and validated many gene and protein targets for diseases, including diseases associated with oxidative stress and ischemic injury. Our current clinical programs focus on diseases in organs that we viewed as attractive based on our ability to successfully deliver our siRNA molecules to the target cells in that organ. Selection of diseases associated with oxidative stress/ischemic injury across several therapeutic areas for the same target. We believe that our focus on diseases, which share common molecular mechanisms, will enable us to more quickly identify drug candidates capable of treating multiple diseases based on proprietary targets common to diseases in different organs of the body. For example, we have demonstrated in preclinical models that inhibition of the RTP801 gene has beneficial therapeutic effects in various diseases associated with oxidative stress, such as wet age-related macular degeneration in the eye and chronic obstructive pulmonary disease, or COPD in the lung. Furthermore, we have also demonstrated that temporary and reversible inhibition of the gene p53 limits the injury caused by oxidative stress in the kidney and in the inner ear, and thus is potentially useful for the treatment of acute renal failure and acute hearing loss. Designing and modifying our siRNA molecules to enable successful local or systemic delivery. Our siRNA drug candidates have a chemically modified, stabilized structure and properties that we believe offer significant advantages over standard siRNAs. In preclinical studies, we have successfully delivered siRNA molecules and suppressed target genes in the back of the eye, inner ear, proximal tubules of the kidney, lung and spinal cord, demonstrating both local and systemic delivery. We select the route of delivery that is clinically relevant for the given organ. Two of our siRNAs were delivered via local administration to the back of the eye in Phase I and Phase II studies. Our QPI-1002 was, according to publicly available information, the first siRNA administered systemically to human patients. Optimizing our siRNA molecules for improved potency, stability and selectivity. We use our internally developed siRNA structure and intellectual property to design lead drug candidates with enhanced properties and intellectual property position. We believe that our approach has the potential to generate several additional Investigational New Drug applications, or INDs, in the coming years, either for new indications for the same drug or for new drugs. In addition, our BiFARTM target discovery platform directly identifies clinically relevant critical genes and proteins that are responsible for certain disease traits, has historically been important to us. We have applied this platform in several disease programs. The application of the BiFARTM platform to diseases associated with oxidative stress yielded our pool of proprietary targets from which we have derived part of our current product candidates. In addition, from 1995 through 2005, the BiFARTM platform allowed us to generate cash for our operations as well as rights to potential products through agreements with several pharmaceutical companies. TABLE OF CONTENTS The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and is not soliciting offers to buy these securities in any state where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED MARCH 28, 2011 PRELIMINARY PROSPECTUS QUARK PHARMACEUTICALS, INC. Minimum Offering of 30,000 Units Maximum Offering of 45,000 Units Each Unit consisting of 100 Shares of Common Stock and 50 Warrants Quark Pharmaceuticals, Inc. is offering on a best efforts basis a maximum of 45,000 units and a minimum of 30,000 units, with each unit consisting of 100 shares of common stock, par value $0.001 per share, and 50 warrants, with each warrant exercisable into one share of common stock. This is our initial public offering, and no public market currently exists for our units or our common stock or our warrants. We estimate the offering price of each unit will be between 3,400 New Israeli Shekels (NIS) and 3,800 NIS per unit (which is between 34 NIS and 38 NIS per share and a corresponding one-half of a warrant comprising each unit). The offering price will be determined in an auction process and shall not be lower than 3,400 NIS (approximately $944.44), the minimum price for the purpose of this offering. Unless the offering is fully subscribed at a price higher than the minimum price, the offering will be priced at the minimum offering price. For further details regarding the auction process, see under the heading Plan of Distribution beginning on page 133 of this prospectus. The investors who participate in the auction process, subject to certain conditions, may be able to purchase, at the offering price, an additional allotment of units that does not exceed in the aggregate 15% of the maximum number of units offered in the public tender. For additional details regarding the additional allotment, see under heading Plan of Distribution beginning on page 133 of this prospectus. Each warrant shall be exercisable into one share of our common stock at an exercise price of NIS (approximately $ ) (such amount being equal to 125% of the offering price of one share of common stock and one-half of a warrant comprising a portion of a unit), which exercise price is linked to the representative U.S. dollar exchange rate as determined by the Bank of Israel on and subject to adjustment as described under the heading Description of Capital Stock'' beginning on page 122 of this prospectus. The warrants will be exercisable for two years from the date on which they are issued. Upon the closing of the offering, the shares of our common stock and the warrants comprising the units will be issued and will trade separately on the Tel Aviv Stock Exchange, or TASE. The effective price of one share of common stock comprising the units is NIS. The economic value of one warrant comprising the units is approximately NIS. The above-mentioned value of each warrant is based on the formula specified in the TASE guidelines, with a weekly standard deviation based on the Biomed sector as of February 28, 2011 of 6.74%. The annual capitalization rate is 48.60%, according to the capitalization coefficients for March 2011. The offering price per unit will be determined in an auction process on the TASE and shall not be lower than 3,400 NIS (approximately $944.44), the minimum price for the purpose of this offering. Unless the offering is fully subscribed at a price higher than the minimum price, the offering will be priced at the minimum offering price, and if the offering is not subscribed at the minimum offering price, the offering will be cancelled. For further details regarding the auction process, see under the heading Plan of Distribution beginning on page 133 of this prospectus. We have appointed a member of the TASE to act as our offering coordinator to administrate the offering. This offering is not underwritten. The NIS to U.S. dollar exchange rate used for amounts described in this prospectus is the exchange rate determined by the Bank of Israel on March 7, 2011 (which exchange rate is 3.60 NIS per $1.00). Investing in our common stock involves a high degree of risk. See Risk Factors beginning on page 12. Per Share Minimum Total Maximum Total Public minimum offering price $ $ $ Distribution commissions $ $ $ Minimum proceeds, before expenses, to Quark Pharmaceuticals, Inc. $ $ $ Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The date of this prospectus is , 2011 TABLE OF CONTENTS Our Product Candidates The following table sets forth the status of our product pipeline: Product Candidate Indication Status Commercialization Rights PF-655 Diabetic Macular Edema Phase II DEGAS study terminated. Phase IIb study expected to be initiated during first half of 2011. Pfizer (Worldwide) PF-655 Wet Age-related Macular Degeneration Phase II MONET study ongoing, enrollment completed. Interim data received in November 2010. Final data expected in the second half of 2011. Pfizer (Worldwide) QPI-1002 Acute Kidney Injury Phase II expected to initiate dosing in the second half of 2011. Option granted to Novartis for Worldwide rights QPI-1002 Delayed Graft Function in Kidney Transplant patients Phase II ongoing (interim analysis expected by mid 2012). Option granted to Novartis for Worldwide rights QPI-1007 Non Arteritic Anterior Ischemic Optic Neuropathy Stratum 2 of Phase I, which may give early indication of the biological activity of QPI-1007, is ongoing. (Dosing and preliminary review of data expected to be completed during the second half of 2011.) Quark (Worldwide) QPI-1007 Glaucoma indication Preclinical toxicity studies initiated to enable Phase II multiple dosing. Quark (Worldwide) Program for pipeline siRNAs for neuro protection and neural regeneration Diseases of the central nervous system, eyes, ears, spinal cord injury, peripheral nerve injuries, neuropathic pain, hearing loss conditions, vestibular diseases. In vivo proof-of-concept was accomplished in spinal cord injury with a drug candidate with endpoints of post-injury recovery and reduction of neuropathic pain. Further in vivo studies are ongoing in several indications, including glaucoma, hearing loss and others. Quark (Worldwide) Program for respiratory system conditions Acute Lung Injury, Lung Transplantation In vivo proof-of-concept studies were accomplished in lung transplantation models. Further in vivo studies are ongoing. Quark (Worldwide) Program for chronic conditions by systemic administration of siRNA Chronic Kidney Disease Cancer Delivery studies and in vivo proof-of-concept studies at various stages. Quark (Worldwide) TABLE OF CONTENTS Product Candidate Indication Status Commercialization Rights Fibrotic diseases in collaboration with Nitto Denko Fibrotic conditions in the liver and other organs Preliminary proof of concept was successfully performed by Nitto Denko. We are currently performing siRNA design and delivery studies. Nitto Denko (Worldwide) PF-655 Phase II for Diabetic Macular Edema and for Wet Age-Related Macular Degeneration. PF-655 has been studied in two Phase II clinical trials for the treatment of diabetic macular edema and for the treatment of wet age-related macular degeneration. PF-655 is a stabilized, synthetic, chemically modified siRNA that inhibits our proprietary target RTP801, a gene we believe plays a significant role in wet age-related macular degeneration and diabetic macular edema. Wet age-related macular degeneration is the leading cause of central vision loss in the elderly and occurs when the light sensing cells in the central portion of the retina, called the macula, malfunction and over time cease to work. Diabetic macular edema is the result of retinal microvascular changes that occur in patients with diabetes and is the major cause of visual impairment in diabetic patients. We have licensed PF-655 to Pfizer on an exclusive worldwide basis. We have successfully completed our Phase I clinical trial in wet age-related macular degeneration patients. No drug-related adverse events were observed. Approximately 80% of subjects showed stable or improved vision two weeks after a single injection of the siRNA. A subset of patients in this study, 18 of the total 27 patients enrolled, showed a mean improvement of 4 letters (about one line gain) on a visual acuity test at 28 days after a single injection of PF-655. While the study was designed to test for safety, and not to establish efficacy, these changes were presented as clinically meaningful at the ARVO conference in 2009 by a lead investigator of the study, Dr. Quan Nguyen from the Wilmer Ophthalmological Institute of the Johns Hopkins University School of Medicine. We have received results in both Phase II trials. In the Phase II DEGAS trial for diabetic macular edema, the results demonstrated that the drug was well tolerated, with no observed drug related serious adverse events. 184 patients were randomly assigned to four treatment groups, with three dose levels of PF-04523655 (RTP801I-14) (0.4mg, 1mg, and 3mg) or laser. Following 12-months treatment with PF-655, a dose dependent improvement in visual acuity was observed with the best results achieved at the 3 mg level. At this dose, the mean improvement from baseline on a visual acuity test was 5.8 letters for all patients enrolled in this dose group while in patients treated with laser photocoagulation control (the current standard of care) visual acuity improved by only 2.4 letters on average (p=0.08). Furthermore, in a separate secondary analysis of the 111 patients who completed the 12 months follow-up visit, the mean improvement from baseline on a visual acuity test in the 3 mg group was 9.1 letters while in patients treated with laser photocoagulation control visual acuity improved by only 3.2 letters on average (p<0.01). Based on the results of this study, and the demonstration of dose related effect on vision, it was decided to conduct a further phase IIb study in order to test higher doses of PF-655 and to determine the optimal dose to be included in the pivotal phase III studies. The Phase II trial of PF-655 in wet age-related macular degeneration continues to be conducted by Pfizer. Patient dosing is complete, and an interim review of data in November 2010 determined that PF-655 produced increasing improvements in mean visual acuity over the 3-month dosing period but at 4 months, the primary time point, PF-655 was not numerically superior to Lucentis for mean visual acuity at any of the doses used in the study. Overall, in the review of data up to 4 months no safety concerns were identified in continuing the study. The study is therefore continuing as planned. Full data is expected in the second half of 2011. In March 2011, we amended our License Agreement with Pfizer. Under the amendment, Quark will conduct at its own expense a Phase IIb trial of PF-655 in diabetic macular edema at higher doses, under a protocol mutually agreed by Quark and Pfizer. A portion of the proceeds of this offering will be used to conduct this trial. We will deliver the trial data to Pfizer upon completion. After its review of the data, Pfizer will either make a milestone payment to us at that time in an amount which exceeds the anticipated cost of the trial and resume responsibility for continued development of PF-655 at Pfizer s expense, or will terminate its license and return the rights to the product. In consideration of us conducting the Phase IIb trial, Pfizer agreed to increase the overall development and product approval milestone payments associated with the first ophthalmic use of PF-655 and to increase the royalty rates under the agreement. TABLE OF CONTENTS QPI-1002 for Acute Kidney Injury and Delayed Graft Function. We completed two Phase I trials for the prevention of acute kidney injury in patients undergoing major cardiac surgery and for prevention of delayed graft function in kidney transplant patients. In both trials, QPI-1002 was administered systemically via intravenous injection with no dose-limiting toxicities observed. Based on publicly available information, we believe that this was the first siRNA administered systemically in a human clinical trial. QPI-1002 is a synthetic, chemically modified siRNA molecule designed to temporarily inhibit the expression of p53, a gene we believe plays a significant role in ischemic injury related conditions in the kidney. Acute kidney injury is a syndrome characterized by a rapid decline of kidney function leading to death in a high percentage of cases. Major cardiovascular surgery is one of the many causes of acute kidney injury. Currently, there are no effective drug therapies to prevent acute kidney injury. Delayed graft function results most often from ischemia-reperfusion injury that can occur during the transplantation process and is particularly common in kidneys from deceased donors. Delayed graft function is associated with poorer long-term outcome for the kidney transplant patient, with increased incidence of acute rejection, increased hospital stays and increased consumption of peri-transplant resources. We have recently initiated dosing in a Phase II trial for delayed graft function and expect to initiate dosing in a Phase II clinical trial for AKI within the second half of 2011. In August 2010 we granted to Novartis an option for a worldwide exclusive license to QPI-1002 for all indications. QPI-1007 for Non arteritic Anterior Ischemic Optic Neuropathy. QPI-1007 is being developed as a neuroprotective agent for the treatment of sudden vision loss associated with non-arteritic anterior ischemic optic neuropathy. We are conducting a Phase I trial to evaluate the safety and tolerability of QPI-1007 in patients suffering from of non-arteritic anterior ischemic optic neuropathy. QPI-1007 is a chemically modified siRNA and it is our first drug candidate based on novel siRNA structures developed internally by Quark. QPI-1007 is designed to inhibit the expression of the pro-apoptotic gene, caspase 2, via the RNAi pathway. Apoptosis (programmed cell death) is thought to be the main cause of the death of retinal ganglion cells in non-arteritic anterior ischemic optic neuropathy and glaucoma. In preclinical studies, QPI-1007 was effective in preserving retinal ganglion cell integrity in three different ocular disease models of retinal ganglion cell damage. If QPI 1007 is determined to be safe and effective in non-arteritic anterior ischemic optic neuropathy we may develop QPI-1007 also for glaucoma and/or other ocular disease in need for neuroprotective treatment. We expect to complete dosing and have preliminary results in our Phase I clinical trial in the second half of 2011. In addition to safety data, we have designed the study to identify a potential trend in biological activity compared to historical data. Depending on the results and subject to our future financial position, we may initiate Phase II trials in a glaucoma condition, in non-arteritic anterior ischemic optic neuropathy, in both indications or none of them. Pipeline Programs: We have three broad programs that aim to design and develop siRNA molecules based on our internally developed siRNA structures to treat diseases that are unmet medical needs. Most of the programs are in proof of concept studies in animal models, a subset of these is in lead candidate optimization stage, some are at the stage of delivery studies in vivo. We expect to file at least one IND application in 2012 based on research in these programs. We also expect to file an IND application in the research program we perform in collaboration with Nitto Denko. Our major internal research and development programs comprise: Neuroprotection and neural regeneration program. We include in this category our pipeline programs in diseases of the central nervous system, and diseases of the eyes and ear, in particular those diseases where nerve cell or neuron protection and /or regeneration of the long fibers of a nerve cell, or axons, carrying outgoing sensory and motor messages, is important. Also, in many cases neuronal injury is associated with allodynia, or neuropathic pain. We have demonstrated siRNA delivery to the neurons in several disease conditions listed below and we are developing a novel non-invasive delivery to the back of the eye, inner ear and brain. Our primary siRNA drug candidate for neuroregeneration and neuropatic pain is a siRNA designed to inhibit expression of a gene called RhoA with which we have shown proof of concept for both end points in spinal cord injury. We are now optimizing RhoA siRNA with the purpose of generating the lead siRNA for formal preclinical development. In line with our strategy of developing a drug candidate in several diseases based on common pathological mechanism, we are testing RhoA siRNA, together with TABLE OF CONTENTS siRNAs targeting other genes, in animal models for spinal cord injury, optic nerve regeneration, neuropathic pain, hearing loss and vestibular diseases such as Meneiere s disease, and other central nervous system diseases based on invasive and non invasive delivery to the back of the eye, inner ear and brain. Respiratory and inflammatory diseases program. Based on siRNA delivery by inhalation we have shown proof of concept for our dual siRNA drug candidate for prevention of primary graft dysfunction an animal model of lung transplantation. This drug cocktail may be useful for treatment of acute lung injury in conditions other than lung transplantation since the pathological mechanism of response to ischemic injury is essentially unchanged in diverse disorders. Treatment of chronic diseases by systemic administration. This category includes our development for treatment of chronic kidney disease and cancer indications. We are currently performing delivery optimization studies. Fibrotic diseases in collaboration with Nitto Denko. No effective treatments are available for most of the serious fibrotic diseases and our objective is to develop potential therapies within our fully-funded collaboration with Nitto Denko. The collaboration aims to develop one or more new siRNA drugs that may offer an effective treatment for fibrotic diseases. The collaboration utilizes Quark s technology and intellectual property in RNAi, potentially combined with Nitto Denko s delivery technology to identify, select, optimize and develop a new siRNA drug based on a therapeutic concept and target gene identified by Nitto Denko and its collaborating scientists. While the initial disease indication for development is yet to be determined by joint teams of Quark and Nitto Denko, potential diseases include liver fibrosis, lung fibrosis, bone marrow fibrosis and kidney fibrosis, all major unmet medical needs. Quark successfully performed a feasibility study funded by Nitto Denko confirming the validity of the concept of treating fibrotic disease with an siRNA drug inhibiting the Nitto Denko target gene. The collaboration was initiated in July 2010 and several potential drug candidates were generated and are being tested. We expect to file a first IND application in 2012. siRNA Technology Development We have an ongoing program that aims to develop new siRNA-related technologies and to improve our current technology platform and our intellectual property position in the RNAi space. This program has two arms: Development of novel siRNA structures that are free from third party IP. We have developed a number of novel structures and filed six patent applications to date. Based on our understanding of the siRNA mechanism, this program uses our siRNA expertise to identify critical positions and chemical modification patterns to enhance activity, reduce unwanted or off-target effects, minimize unwanted immune response effects and increase the stability of our siRNA drug candidates. Development of proprietary drug delivery methods. This program includes novel non- invasive delivery of siRNA to the inner ear, brain, back of the eye and novel methods of delivery to tumor cells. Israeli National siRNA Project Consortium The Israeli Chief Scientist and the head of the research and development national projects approved the establishment of a consortium headed by the wholly owned subsidiary of Quark, QBI Enterprises Ltd (QBI), together with several leading members of the industry and prominent scientists in academia in Israel, to develop novel generic technologies in the field of RNAi. We believe that the approval of a national project for siRNA is recognition of the government of Israel to financially support a project of national importance that can potentially create jobs and generate revenues for the State of Israel. TABLE OF CONTENTS Our License Agreement with Pfizer In September 2006, we granted Pfizer an exclusive worldwide license to develop and commercialize drug candidates that inhibit our proprietary target gene RTP801 through RNAi for both ophthalmic and non-ophthalmic indications. Under the agreement, Pfizer is responsible for all future preclinical and clinical development costs of the licensed drug candidates, as well as all regulatory filings and approvals with the exception of the Phase IIb trial in diabetic macular edema described in this paragraph. In March 2011, we amended our License Agreement with Pfizer to cause Quark to conduct at its own expense a Phase IIb trial of PF-655 in diabetic macular edema, under a protocol mutually agreed by Quark and Pfizer. We will deliver the data to Pfizer upon completion. After its review of the data, Pfizer will either make a milestone payment to us at that time in an amount which exceeds the anticipated cost of the trial and resume responsibility for continued development of PF-655 at Pfizer s expense, or will terminate its license and return to us the rights to the product. In consideration of us conducting the Phase IIb trial, Pfizer agreed to increase the overall development and product approval milestone payments associated with the first ophthalmic use of PF-655 and to increase the royalty rates under the agreement. We can terminate the Phase IIb trial if an independent monitoring committee determines the study to be futile, based on data at an interim point provided in the protocol. Pfizer continues performing the Phase II clinical trial in wet age-related macular degeneration in collaboration with us. Israel has been a major source of patients in the Phase II studies. Through December 31, 2010, Pfizer had paid us an aggregate of approximately $52.5 million in up-front fees, cost reimbursements and milestone payments. The agreement as amended provides for up to $384 million in development and product approval milestone payments, assuming the development and approval in all major markets of a product for two ophthalmic indications and at least one non-ophthalmic indication. Pfizer is required to pay us royalties on any sales of licensed products and up to an additional $309 million of sales-based milestone payments. Our Option Agreement with Novartis In August 2010, we granted Novartis an option for an exclusive worldwide license to develop and commercialize QPI-1002 and any other p53-directed siRNAs controlled by us for any indication. Under the agreement, Novartis paid us a non-refundable option grant fee of $10 million and has the right to exercise the option during the Phase II trials of QPI-1002. This right will expire on different dates depending on whether interim and/or final results of these trials meet pre-defined criteria. If Novartis exercises the option, Novartis will be responsible for further development following the current Phase II trials and Quark will be entitled to option exercise fees and development, product approval, and sales-based milestone payments of up to $670 million as well as to royalties on sales. Corporate Information We were incorporated in California in December 1993 under the name Expression Systems, Inc. In April 1997, we changed our name to Quark Biotech, Inc. In June 2007, we changed our name to Quark Pharmaceuticals, Inc. Our principal executive offices are located at 6501 Dumbarton Circle, Fremont, California, 94555, and our telephone number is (510) 402-4020. Our website address is www.quarkpharma.com. The information contained on our website is not incorporated into and does not constitute a part of this prospectus, and the only information that you should rely on in making your decision whether to invest in our common stock is the information contained in this prospectus and any free writing prospectus. As used in this prospectus, references to Quark, our, us and we refer collectively to Quark Pharmaceuticals, Inc. and all of its subsidiaries unless the context requires otherwise. TABLE OF CONTENTS THE OFFERING Securities offered by us 37,500 units (the mid point of the range of the units offered, as stated on the cover page of this prospectus), with each unit consisting of 100 shares of common stock and 50 warrants, with each warrant exercisable into one share of common stock Upon the closing of the offering, the shares of our common stock and the warrants comprising the units will be issued and will trade separately on the TASE Common stock to be outstanding after this offering 25,134,630 shares, assuming an offering of 37,500 units (or shares, if the additional allotment, if any, is purchased in full) Warrants to be outstanding after this offering 1,875,000 warrants, assuming an offering of 37,500 units, excluding 187,500 warrants to be issued to the distributors in this offering as part of their commission (or warrants, if the additional allotment, if any, is purchased in full) Terms of Warrants issued as part of the offering Exercise price of $, which is equal to 125% of the offering price of one share of common stock and one-half of a warrant comprising a unit being offered hereby. The Warrants may not be exercised by means of a cashless exercise. Exercisability each warrant is exercisable for one share of common stock. Exercise period each warrant will be immediately exercisable upon issuance and will expire two years from the date of issuance. Use of proceeds To conduct a Phase IIb clinical trial of PF-655, two Phase II clinical trials of our current product candidates QPI-1002, a Phase I clinical trial of QPI-1007 and continuation of the development of our product candidates in preclinical development, all subject to the receipt of necessary regulatory approvals and achievement of other milestones. If our financial resources permit, we would also seek to conduct a Phase II clinical trial of our product candidate QPI-1007 in non-arteritic anterior ischemic neuropathy and/or glaucoma. However, these clinical trials would be secondary to the completion of the trials described above as to which we have contractual commitments. Proposed Tel Aviv Stock Exchange symbol TABLE OF CONTENTS The number of shares of common stock that will be outstanding immediately after this offering is based on 25,134,630 shares of common stock outstanding as of February 28, 2011 and excludes: 2,610,274 shares of common stock issuable upon the exercise of outstanding options with a weighted average exercise price of $1.90 per share; 796,289 shares of common stock reserved for future issuance under our 1997 Stock Plan and 2007 Equity Incentive Plan; 500,000 shares of common stock reserved for future issuance under our 2010 Employee Stock Purchase Plan. 1,875,000 warrants, with each warrant exercisable for one share of common stock, upon issuance of 37,500 units in this offering; an additional allotment of units, if any; and 187,500 warrants to be issued to the distributors in this offering as part of their commission, with each warrant exercisable for one share of common stock. Except as otherwise indicated, all information in this prospectus assumes the conversion of all our outstanding shares of preferred stock into 17,996,100 shares of common stock prior to the completion of this offering. Currently, there is no public market for our common stock in the United States or anywhere else in the world and no assurances can be given that a public market will develop the United States or, if developed, that it will be sustained. We have applied to have our common stock is listed on the TASE. The shares of our common stock and Warrants which are being offered under this prospectus are expected to be listed for trading on TASE promptly after the registration statement filed with the SEC of which this prospectus is a part is declared effective. Concurrently with the effectiveness of the registration statement of which this prospectus forms a part, we are publishing a Supplemental Notice to an Incomplete Prospectus published by us in Israel which is intended for non-U.S. investors based in Israel. Such investors should refer to the Incomplete Prospectus and the Supplemental Notice, which together form the Israeli prospectus that we filed with the Israel Securities Authority, or ISA, and which will be available at http://www.magna.isa.gov.il. The Auction Process We plan to conduct this offering using an auction process for all investors, both individual and institutional. To participate in the auction, investors will submit bids to purchase units that specify the number of units the investor would be interested in purchasing and the price the investor would be willing to pay. Bids must be submitted to TASE members. We intend to use the auction to determine the offering price per unit for the offering. All valid bids to purchase units at or above the determined offering price per unit will receive an allocation of units at the offering price. If the number of units represented by successful bids exceeds the number of units we are offering, then all bidders making bids above the offering price per unit will receive all the units for which they bid, all bidders making bids at the offering price per unit will receive some of the units for which they bid, on a pro-rata basis, and all bidders making bids below the offering price per unit will receive no units. During the period in which the TASE members collect bids by potential investors, potential investors can withdraw or amend their bids. However, immediately at the conclusion of the auction period, which will occur on the day of the auction at a time to be published in a supplemental notice and either a free writing prospectus or an amendment to the registration statement of which this prospectus is a part, TASE members will stop accepting any amendments to placed bids or withdrawals thereof. At this point, the bids will become irrevocable. We will publish a press release announcing the commencement of the bidding process a few hours prior to the commencement including a detailed timetable of the auction day. See the section entitled Plan of Distribution for a description of how this process will work. TABLE OF CONTENTS SUMMARY FINANCIAL DATA The following summary financial data should be read together with our audited financial statements and accompanying notes and Management s Discussion and Analysis of Financial Condition and Results of Operations appearing elsewhere in this prospectus. Our historical results are not necessarily indicative of our future results. Years Ended December 31, Audited 2008 2009 2010 (in thousands, except share and per share data) Statements of Operations Data: Revenues $ 17,276 $ 2,655 $ 5,201 Cost of development services 1,719 1,712 1,200 Gross profit 15,557 943 4,001 Operating costs and expenses: Research and development 18,726 15,744 18,682 General and administrative 5,018 5,087 6,340 Total operating costs and expenses 23,744 20,831 25,022 Operating income (loss) (8,187 ) (19,888 ) (21,021 ) Financial income (expenses), net 722 87 (538 ) Income (loss) before income taxes (7,465 ) (19,801 ) (21,559 ) Income taxes (1,677 ) 160 (283 ) Net income (loss) (9,132 ) (19,641 ) (21,842 ) Changes of redemption value of Series F and H Preferred Stock (468 ) Deemed dividend as a result of warrants modification Income attributable to preferred shareholders Net loss to common Stockholders $ (9,132 ) $ (19,641 ) $ (22,310 ) Net loss per share of common stock: Basic and diluted income (loss) per share $ (2.76 ) $ (5.80 ) $ (6.58 ) Weighted average number of shares used in computing basic and diluted net loss per share: 3,307,871 3,388,119 3,388,530 Proforma net loss per share of common stock: Basic and diluted net loss per share pro forma (unaudited) (1.07 ) Weighted average number of shares used in computing basic net loss per share pro forma (unaudited): 20,394,767 TABLE OF CONTENTS As of December 31, 2010 Actual As adjusted 1 (in thousands) Balance Sheet Data: Cash and cash equivalents $ 13,887 $ 48,182 Working capital 5,856 39,794 Total assets 17,571 50,801 Deferred revenues 9,920 9,920 Redeemable convertible preferred stock 38,500 Total stockholders equity (deficiency) (37,383 ) 35,055 (1) The as adjusted balance sheet data reflects (i) the conversion of all our outstanding shares of preferred stock into shares of common stock prior to the completion of this offering, and (ii) the sale of 37,500 units (the mid point of the range of the units offered, as stated on the cover page of this prospectus) in this offering at an assumed initial public offering price of $10.00 per share and a corresponding one-half of a warrant which is the midpoint of the estimated price range, as set forth on the cover page of this prospectus, after deducting distribution commissions and estimated offering expenses. (2) Each $1.00 increase (decrease) in the assumed initial public offering price of $10.00 per share and a corresponding one-half of a warrant which is the midpoint of the estimated price range, as set forth on the cover page of this prospectus, would increase (decrease) each of cash and cash equivalents, working capital, total assets and total shareholders equity by approximately $3.50 million, assuming that the number of units offered by us, as set forth on the cover page of this prospectus, remains the same, and after deducting commissions and estimated offering expenses payable by us. We may also increase or decrease the number of units we are offering. Each increase (decrease) of one thousand units (or 100,000 shares of common stock and a corresponding 50,000 Warrants) in the number of units offered by us would increase (decrease) each of cash and cash equivalents, working capital, total assets and total shareholders equity by approximately $0.94 million, assuming that the assumed initial public offering price remains the same, and after deducting the estimated discounts and commissions and offering expenses payable by us. The proforma as adjusted information discussed above is illustrative only and will be adjusted based on the actual initial public offering price and other terms of this offering determined at pricing. TABLE OF CONTENTS
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+PROSPECTUS SUMMARY 1
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+This summary highlights certain information contained elsewhere in this prospectus or incorporated by reference herein. This summary does not contain all of the information that you should consider before investing in our common stock. You should read the entire prospectus carefully, including the risks related to our business and investing in our common stock discussed under
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+Prospectus Summary 1
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+PROSPECTUS SUMMARY This summary highlights selected information contained elsewhere or incorporated by reference in this prospectus and may not contain all the information that you need to consider in making your investment decision. You should carefully read this entire prospectus, as well as the information incorporated herein by reference, before deciding whether to invest in our Common Stock. You should carefully consider the risks, among other things, described under the heading Risk Factors in this prospectus and in the documents incorporated by reference into this prospectus to determine whether an investment in our Common Stock is appropriate for you. General First Federal Bancshares of Arkansas, Inc. The Company is a Texas corporation organized in January 1996 by the Bank for the purpose of becoming a unitary holding company of the Bank. The significant asset of the Company is the capital stock of the Bank. The business and management of the Company consists of the business and management of the Bank. The Company does not presently own or lease any property, but instead uses the premises, equipment and furniture of the Bank. At the present time, the Company does not employ any persons other than officers of the Bank, and the Company utilizes the support staff of the Bank from time to time. Additional employees will be hired as appropriate to the extent the Company expands or changes its business in the future. At March 31, 2011, the Company had $577.7 million in total assets, $542.9 million in total liabilities and $34.8 million in stockholders equity. The Company s executive office is located at the home office of the Bank at 1401 Highway 62-65 North, Harrison, Arkansas 72601, and its telephone number is (870) 741-7641. First Federal Bank. The Bank is a federally chartered stock savings and loan association formed in 1934. The Bank conducts business from its main office and seventeen full service branch offices, all of which are located in a six county area in Northcentral and Northwest Arkansas comprised of Benton, Marion, Washington, Carroll, Baxter and Boone counties. The Bank s deposits are insured by the Deposit Insurance Fund ( DIF ), which is administered by the Federal Deposit Insurance Corporation ( FDIC ), to the maximum extent permitted by law. The Bank is a community-oriented financial institution offering a wide range of retail and business deposit accounts, including noninterest bearing and interest bearing checking, savings and money market accounts, certificates of deposit, and individual retirement accounts. Loan products offered by the Bank include residential real estate, consumer, construction, lines of credit, commercial real estate and commercial non-real estate. However, the Bank s lending activities are currently restricted by regulatory orders. See Regulatory Enforcement Actions below. Other financial services include investment products offered through UVEST Financial Services; automated teller machines; 24-hour telephone banking; internet banking, including account access, bill payment, e-statements and online loan applications; Bounce ProtectionTM overdraft service; debit cards; and safe deposit boxes. The Bank is subject to examination and comprehensive regulation by the OTS, which is the Bank s chartering authority and primary regulator. The Bank is also regulated by the FDIC, the administrator of the DIF. The Bank is also subject to certain reserve requirements established by the Board of Governors of the Federal Reserve System and is a member of the Federal Home Loan Bank ( FHLB ) of Dallas, which is one of the 12 regional banks comprising the FHLB System. Regulatory Enforcement Actions. The OTS is the primary federal regulator of the Bank. As a result of the financial losses in 2009 and the increase in nonperforming assets and based on a regulatory examination of the Company and the Bank in the Fall of 2009, on April 12, 2010, the Company and the Bank consented to the Company Order and the Bank Order, respectively. The Orders became effective on April 14, 2010. Each of the Orders will remain in effect until terminated, modified or suspended by the OTS. Also, the Orders impose certain operations restrictions on the Company and, to a greater extent, the Bank, including lending and dividend restrictions. The Orders also require the Company and the Bank to take certain actions, including the submission to the OTS of capital plans and business plans to, among other things, preserve and enhance the capital of the Company and the Bank and strengthen and improve the consolidated Company s operations, earnings and Table of Contents profitability. The Bank Order specifically requires the Bank to achieve and maintain, by December 31, 2010, a Tier 1 (Core) Capital Ratio of at least 8% and a Total Risk-Based Capital Ratio of at least 12%. The Bank did not achieve these required levels by December 31, 2010, but after giving effect to the First Closing (see Recapitalization Plan below), the Bank did achieve these required levels by May 3, 2011. Copies of the stipulations and the Orders are included as Exhibits 10.7 to 10.10 to the Company s 2009 Annual Report on Form 10-K filed with the SEC on April 15, 2010 and are incorporated into this prospectus by reference. The descriptions of the Orders set forth in this prospectus do not purport to be complete, and are qualified by reference to the full text of the Orders. The Company and the Bank have taken such actions as necessary to comply with the provisions of the Orders which are currently effective and are continuing to work toward compliance with the provisions of the Orders with future compliance dates. Any material failure by the Company and the Bank to comply with the provisions of the Orders could result in further enforcement actions by the OTS. While the Company and the Bank intend to take such actions as may be necessary to comply with the requirements of the Orders, there can be no assurance that the Company or the Bank will be able to comply fully with the Orders, or that efforts to comply with the Orders will not have adverse effects on the operations and financial condition of the Company or the Bank. See Risk Factors, beginning on page 23 of this prospectus and in the documents incorporated by references into this prospectus. Recent Developments Results of the Special Meeting of the Stockholders. On April 29, 2011, at the Special Meeting of the Stockholders, the Company s stockholders approved, among other things, (i) an amendment to our Articles of Incorporation, as amended ( Articles of Incorporation ), to effect the Reverse Split and (ii) the issuance to Bear State of (A) 15,425,262 post-Reverse Split shares (the First Closing Shares ) of the Company s Common Stock at $3.00 per share (or $0.60 per share pre-Reverse Split) in a private placement, (B) a warrant (the Investor Warrant ) to purchase 2 million post-Reverse Split shares of our Common Stock at an exercise price of $3.00 per share (or $0.60 per share pre-Reverse Split) in a private placement, and (C) any unsold shares offered in the Rights Offering at a purchase price of $3.00 per share (or $0.60 per share pre-Reverse Split) in a private placement, subject to an overall limitation on Bear State s ownership of 94.90% of our Common Stock. Purchase of TARP Preferred Stock and TARP Warrant from Treasury. On May 3, 2011, pursuant to the terms of the Investment Agreement, Bear State purchased from the United States Department of Treasury ( Treasury ) for $6 million aggregate consideration, the Company s 16,500 shares of Fixed Rate Cumulative Perpetual Preferred Stock, Series A ( Series A Preferred Stock ), including any accrued but unpaid dividends thereon, and related warrant dated March 6, 2009 to purchase 321,847 shares of the Company s Common Stock at an exercise price of $7.69 per share (the TARP Warrant ), both of which were previously issued to the Treasury by the Company through the Troubled Asset Relief Program Capital Purchase Program. Following its acquisition of the Series A Preferred Stock and the TARP Warrant, Bear State tendered each to the Company for cancellation in exchange for a $6 million credit towards the purchase price of the First Closing Shares. The Company then filed, on May 3, 2011, a Resolution Regarding a Series of Shares with the Texas Secretary of State, thereby cancelling the Series A Preferred Stock. Changes to the Company s Board of Directors and Senior Management. On April 29, 2011, in anticipation of Bear State s acquisition of the First Closing Shares and Investor Warrant and as contemplated by the terms of the Investment Agreement, the Company increased the size of its Board of Directors from five (5) to seven (7) members, and appointed Richard N. Massey, W. Dabbs Cavin, Scott T. Ford and K. Aaron Clark to serve on each Board of Directors effective immediately following Bear State s purchase of the First Closing Shares and Investor Warrant. On April 29, 2011, Kenneth C. Savells and Jeffrey L. Brandt, two members of the Company s Board of Directors, submitted resignations that became effective upon Bear State s purchase of the First Closing Shares and Investor Warrant. The foregoing new members of the Board of Directors were designated by Bear State pursuant to the terms of the Investment Agreement. Table of Contents Immediately following Bear State s purchase of the First Closing Shares and Investor Warrant, on May 3, 2011, the Board of Directors of the Company appointed the following individuals to serve on the senior management team of the Company: W. Dabbs Cavin, President; Christopher M. Wewers, Executive Vice President and Chief Operating Officer; and J. Russell Guerra, Executive Vice President and Chief Lending Officer. Larry Brandt remains Chief Executive Officer of the Company, Tommy Richardson has assumed the role of Executive Vice President and Chief Administrative Officer of the Company, and Sherri Billings remains Chief Financial Officer of the Company. Consummation of the Reverse Split and First Closing. On May 3, 2011, the Company amended its Articles of Incorporation to effect the Reverse Split and sold to Bear State (i) the First Closing Shares and (ii) the Investor Warrant (the effectiveness of the Reverse Split, the issuance of the First Closing Shares and the delivery of the Investor Warrant are referred to in this prospectus as the First Closing ) in exchange for aggregate consideration paid by Bear State to the Company of approximately $46.3 million, consisting of (x) $40.3 million in cash, and (y) the surrender by Bear State to the Company of the Series A Preferred Stock and TARP Warrant for a $6 million credit against the purchase price of the First Closing Shares. The sale of the First Closing Shares and Investor Warrant to Bear State is referred to herein as the Bear State Investment. After giving effect to the Bear State Investment in the Company and the aspects of the Recapitalization Plan that have occurred as of the date of this prospectus, Bear State owns approximately 94.70% of the Company s Common Stock (after taking into account the assumed exercise of the Investor Warrant), and, following the expiration of the Rights Offering, could own as much as 94.90% of the Company s Common Stock (after taking into account the overall limitation on Bear State s ownership and the exercise of the Investor Warrant and assuming no current stockholders subscribe to the Rights Offering). If the Rights Offering is fully subscribed by Legacy Stockholders, Bear State would own approximately 81.80% of the Company s Common Stock (after taking into account the assumed exercise of the Investor Warrant). As a result, the Company s current stockholders will own between approximately 5.10% and 18.20% of the Company s Common Stock following the Bear State Investment in the Company and the Rights Offering. Effect of First Closing on Net Operating Loss ( NOL ) Carryforwards. At March 31, 2011, the Bank had a $14.9 million federal NOL carryforward, and we expect the Bank to generate additional NOL carryforwards subsequent to this date. As a result of the Bear State Investment and the Company s market capitalization on May 3, 2011, the Company s ability to use its NOL carryforwards to offset future taxable income could be as low as $132,000 on an annual basis for a period of 20 years depending on the outcome of the Company and its advisors analysis of the available carryforward. Proposed Reincorporation into Arkansas. On May 3, 2011, the Board of Directors unanimously approved, and recommended that the Company s stockholders approve, a reincorporation of the Company from Texas to Arkansas by means of a plan of conversion. On June 22, 2011, at the Company s annual meeting of stockholders, stockholders will be asked to approve the reincorporation. If the reincorporation proposal is approved, the Company will be converted into an Arkansas corporation, and thereafter each share of Common Stock of the Company will represent one share of Common Stock in the resulting Arkansas corporation. A description of the resulting Arkansas corporation s capital stock is set forth herein under the section titled Description of Capital Stock Post-Reincorporation. Table of Contents The Rights Offering Issuer First Federal Bancshares of Arkansas, Inc. Securities Offered We are distributing at no charge to record holders of our Common Stock as of 5:00 p.m., Eastern Time, on the record date of March 23, 2011, one (1) non-transferable Right for each share of Common Stock then held on record (after taking into account the Reverse Split). For each Right that you own, you will have a Basic Subscription Right to buy from us three (3) shares of our Common Stock at a subscription price of $3.00 per share of Common Stock (or $0.60 per share pre-Reverse Split) and an Oversubscription Privilege. Subscription Price $3.00 per share of Common Stock (or $0.60 per share pre-Reverse Split). To be effective, any payment related to the exercise of a Right must clear prior to the Expiration Date. Right Each Right consists of a Basic Subscription Right and an Oversubscription Privilege. Basic Subscription Right For each whole Right that you own, you will have a Basic Subscription Right to buy from us three (3) shares of our Common Stock at the subscription price. You may exercise your Basic Subscription Right for some or all of the shares of Common Stock available for purchase under such Right, or you may choose not to exercise any portion of your Basic Subscription Right. Oversubscription Privilege Pursuant to the Oversubscription Privilege, if you timely and fully exercise your Basic Subscription Right, you may also subscribe for a portion of the shares of Common Stock offered in the Rights Offering that the other Rights holders do not purchase pursuant to their Basic Subscription Rights, subject to availability and allocation of such shares, and provided that no Rights holder may thereby acquire, together with its affiliates, beneficial ownership of 4.9% or more of the shares of our outstanding Common Stock. If oversubscription requests exceed the number of shares available, we will allocate the available shares pro rata among the Rights holders exercising the Oversubscription Privilege in proportion to the number of shares of our Common Stock a Rights holder owned on the Record Date relative to the aggregate number of shares of our Common Stock owned on the Record Date by all Rights holders exercising their Oversubscription Privilege. For additional details regarding the pro rata allocation process, see Questions and Answers Relating to the Rights Offering What is the Oversubscription Privilege? If you properly exercise your Oversubscription Privilege for a number of shares that exceeds the number of shares allocated to you, any excess subscription payments received by the subscription agent will be returned to you as soon as practicable, without interest or penalty, following the expiration of the Rights Offering. There is no minimum subscription amount required for consummation of the Rights Offering. However, your ability to purchase Common Stock in the Rights Offering is subject to an overall beneficial ownership limit of 4.9% of our outstanding shares of Common Stock, after giving effect to your participation in the Rights Table of Contents Offering and taking into account the holdings of your affiliates. No Fractional Shares Legacy Stockholders may only exercise the Basic Subscription Right and Oversubscription Privilege for whole shares. In the event, however, that fractional shares of Common Stock result from the application of the Oversubscription Allocation Formula to oversubscription requests, then such fractional shares will be eliminated by rounding down to the nearest whole share, with the total exercise price being adjusted accordingly. Any excess subscription payments received by the subscription agent will be returned, without interest or penalty, as soon as practicable. Record Date March 23, 2011. Expiration Date The Rights will expire at 5:00 p.m., Eastern Time, on June [ ], 2011. We do not intend to extend the Expiration Date. Use of Proceeds The total proceeds to us from the Rights Offering will depend on the number of Rights that are exercised. If we issue all 2,908,071 shares available, either in the Rights Offering or to Bear State, pursuant to its commitment in the Investment Agreement to backstop the Rights Offering in a private placement and assuming the backstop commitment would not require Bear State to exceed its overall ownership limitation of 94.90% of our Common Stock, the total proceeds to us, after deducting estimated offering expenses, will be approximately $8.5 million. We intend to first contribute a significant portion of the net proceeds from the Rights Offering in the form of capital to the Bank, which will use such amounts to further bolster its regulatory capital in compliance with the Bank Order, address its classified assets and then for general corporate purposes. Procedure for Exercising Rights To exercise your Rights, you must take the following steps: If you are a registered holder of Common Stock, you must deliver payment and a properly completed Rights certificate to the subscription agent before 5:00 p.m., Eastern Time, on June [ ], 2011. If you are a beneficial owner of shares that are registered in the name of a broker, dealer, custodian bank or other nominee, your nominee will contact you. You will not receive a Rights certificate from the Company. Your broker, dealer, custodian bank or other nominee must exercise your subscription rights on your behalf and deliver all documents and payments to the subscription agent before 5:00 p.m., Eastern Time, on June [ ], 2011. Please follow the instructions of your nominee, who may require that you meet an earlier deadline for the delivery of your subscription forms and payment to the nominee. If you hold shares in a 401(k) Plan account, you must deliver a properly completed 401(k) Plan Participant Election Form to the Company before 5:00 p.m., Eastern Time, on June [ ], 2011. No Revocation All exercises of Rights are irrevocable, even if you later learn information that you consider to be unfavorable to the exercise of your Rights. You should not exercise your Rights unless you are certain that you wish to purchase additional shares of Common Stock at a subscription price of Table of Contents At or For the Three Months Ended March 31, At or For the Year Ended December 31, 2011 2010 2010 2009 2008 2007 2006 (Unaudited) Selected Operating Ratios(1): Return on average assets (1.02 )% 0.50 % (0.60 )% (5.84 )% 0.31 % 0.32 % 0.85 % Return on average equity (16.70 ) 8.25 (9.43 ) (57.33 ) 3.38 3.52 9.40 Average equity to average assets 6.13 6.01 6.34 10.19 9.24 9.21 9.04 Interest rate spread(2) 3.53 3.47 3.37 2.98 2.99 2.92 3.19 Net interest margin(2) 3.44 3.42 3.31 2.99 3.01 2.98 3.29 Net interest income after provision for loan losses to noninterest expense 57.23 84.63 48.25 (78.88 ) 68.75 79.21 111.28 Noninterest expense to average assets 5.05 3.62 4.00 3.84 2.92 2.82 2.59 Average interest earning assets to average interest bearing liabilities 93.73 96.82 96.37 100.40 100.49 101.68 102.92 Operating efficiency(3) 122.10 88.49 91.68 103.41 75.07 76.62 64.78 Asset Quality Ratios(4): Nonaccrual loans to total assets 8.89 6.68 8.22 5.86 2.83 3.84 2.16 Nonperforming assets to total assets(5) 16.48 11.50 15.68 10.67 6.77 5.17 2.69 General allowance for loan losses to classified loans(6) 23.12 28.14 22.00 28.17 12.12 7.45 9.42 General allowance for loan losses to total loans 5.94 4.93 5.68 4.97 0.61 0.35 0.27 Capital Ratios(7): Tangible capital to adjusted total assets 6.38 6.17 6.36 5.75 8.89 9.22 8.76 Core capital to adjusted total assets 6.38 6.17 6.36 5.75 8.89 9.22 8.76 Risk-based capital to risk-weighted assets 10.81 10.64 10.72 9.97 13.35 13.20 11.94 Other Data: Dividend payout ratio(8) Note (9) Note (9) Note (9) Note (9) 123.74 % 117.71 % 39.26 % Full service offices at end of period 18 18 18 20 20 18 Table of Contents $3.00 per share (or $0.60 per share pre-Reverse Split). However, notwithstanding any election forms received from participants (and other account holders) in the 401(k) Plan regarding the exercise of their Rights held by (or through) the 401(k) Plan, no Rights held by the 401(k) Plan will be exercised if the per share public trading price of our Common Stock at the close of trading on June [ ], 2011is not greater than or equal to the subscription price. For additional information, see The Rights Offering Special Instructions for Participants in Our 401(k) Plan. No Board Recommendation Neither our Board of Directors nor Bear State is making any recommendation regarding any exercise of your Rights. You should make your decision based on your own assessment of our business and the terms of the Rights Offering. For a discussion of some of the risks involved in investing in our Common Stock, see Risk Factors beginning on page 23 as well as the other information contained or incorporated by reference in this prospectus. Issuance of Common Stock If you purchase shares of Common Stock through the Rights Offering, we will issue those shares to you in book-entry, or uncertificated, form as soon as practicable after the completion of the Rights Offering. If you are a registered holder of Common Stock, we will mail to you a direct registration account statement detailing the number of shares of Common Stock that you have purchased in the Rights Offering. If you are a beneficial owner of shares that are registered in the name of a broker or other nominee, you should receive from your broker or other nominee confirmation of your purchase of shares of Common Stock in the Rights Offering. Stock certificates will not be issued for shares of our Common Stock purchased in the Rights Offering, except, however, if you are a registered holder, you may request a stock certificate once you receive your direct registration account statement. No Transfer or Sale of Rights The Rights may not be sold, transferred or assigned and will not be listed for trading on the NASDAQ Global Market or any other stock exchange or trading market. Market and trading symbol for the Common Stock Our Common Stock is listed on the NASDAQ Global Market under the symbol FFBH. Shares of our Common Stock issued in connection with the Rights Offering will also be listed on the NASDAQ Global Market under the same symbol. Federal Income Tax Consequences The receipt and exercise of Rights should not be taxable for U.S. federal income tax purposes. You should consult your tax advisor as to your particular tax consequences resulting from the Rights Offering. See Certain Material U.S. Federal Income Tax Considerations. Subscription Agent Registrar and Transfer Company Shares Outstanding After Completion of the Rights Offering As of the Record Date, we had 4,846,785 pre-Reverse Split shares of Common Stock outstanding. After giving effect to the Reverse Stock Split, which occurred on May 3, 2011, total issued and outstanding shares of Common Stock decreased from 4,846,785 to approximately 969,357. After giving effect to the issuance of the First Closing Shares, which occurred on May 3, 2011 immediately following the Reverse Split, total Table of Contents issued and outstanding shares of Common Stock increased from approximately 969,357 to approximately 16,394,619. After giving effect to the 2,908,071 shares to be issued in the Rights Offering and to Bear State as the backstop purchaser, in a private placement, if any, total issued and outstanding shares of Common Stock would increase from approximately 16,394,619 to approximately 19,302,690. On May 3, 2011 the Reverse Split became effective, which was prior to mailing this prospectus to stockholders. The number of shares offered and the subscription price in the Rights Offering have been adjusted to account for the Reverse Split. Shares purchased in the Rights Offering will not be subject to any further adjustments by reason of the Reverse Split. Backstop Commitment in Investment Agreement In accordance with the provisions of the Investment Agreement, Bear State has agreed to backstop the Rights Offering by purchasing from us in a private placement, at a price of $3.00 per share (or $0.60 per share pre-Reverse Split), any shares not purchased by the Rights holders, subject an overall limitation on Bear State s ownership of 94.90% of our Common Stock. If all the conditions to the Investment Agreement are met, the backstop commitment will ensure that we raise net proceeds of approximately $8.5 million through the Rights Offering and the commitment under the Investment Agreement to backstop the Rights Offering in a private placement (assuming the backstop commitment would not require Bear State to exceed its overall ownership limitation of 94.90% of our Common Stock). See Questions and Answers Relating to the Offering How does the backstop commitment work? Risk Factors Investing in our Common Stock involves risks. You should carefully consider the information under Risk Factors beginning on page 23 as well as the other information contained or incorporated by reference in this prospectus before making a decision to invest in our Common Stock. * Earnings (loss) per share and cash dividends declared per share have been restated to take account of the Reverse Split. (1) Ratios are based on average daily balances and are annualized, where appropriate, for the three month periods ended March 31, 2011 and 2010. (2) Interest rate spread represents the difference between the weighted average yield on average interest earning assets and the weighted average cost of average interest bearing liabilities, and net interest margin represents net interest income as a percent of average interest earning assets. (3) Noninterest expense to net interest income plus noninterest income. (4) Asset quality ratios are end of period ratios. (5) Nonperforming assets consist of nonperforming loans, net of specific valuation allowances, and real estate owned. Nonperforming loans consist of nonaccrual loans, net of specific valuation allowances and accruing loans 90 days or more past due. (6) Classified loans consist of loans graded substandard, doubtful or loss, net of specific valuation allowances. (7) Capital ratios are end of period ratios for First Federal Bank. (8) Dividend payout ratio is the total Common Stock dividends declared divided by net income available to common stockholders. (9) Dividend payout ratio is not meaningful for 2009 due to the Company s net loss in that year. No dividends were paid in 2010 or 2011. Table of Contents RISK FACTORS An investment in our Common Stock involves a high degree of risk. Before making an investment decision, you should carefully read and consider the risk factors described below as well as the other information included or incorporated by reference in this prospectus. Any of these risks, if they actually occur, could materially and adversely affect our business, financial condition, liquidity, results of operations and prospects, as well as the market price and liquidity of our Common Stock. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also materially and adversely affect us. In any such case, you could lose all or a portion of your original investment. General Risks Our or the Bank s failure to comply with applicable regulatory requirements and regulatory enforcement actions could result in further restrictions and enforcement actions. The Bank is subject to supervision and regulation by the OTS and FDIC. As a federally chartered stock savings and loan association, the Bank s good standing with its regulators is of fundamental importance to the continuation of its business and the business of the Company. On April 12, 2010, the Company and the Bank both consented to the Orders issued by the OTS. The Orders require the Company and the Bank to, among other things, file with the OTS an updated business plan and capital plan and submit to the OTS, on a quarterly basis with respect to the business plan and monthly with respect to the capital plan, variance reports related to the plans. The Bank Order also substantially restricts the Bank s lending activities. We have incurred and expect to continue to incur significant additional regulatory compliance expense in connection with the Orders, and we will incur ongoing expenses attributable to compliance with the terms of the Orders. In addition, the OTS must approve any deviation from our business plan, which could limit our ability to make any changes to our business, which could negatively impact the scope and flexibility of our business activities. The Company and the Bank may be unable to comply fully with the Orders, and efforts to comply with the Orders may have adverse effects on the operations and financial condition of the Company or the Bank. Any material failure to comply with the provisions of the Orders could result in further restrictions and enforcement actions by the OTS, which could impair our ability to operate in the normal course of business and, thereby, adversely affect our results of operation. The current economic environment poses significant challenges for us and could continue to adversely affect our financial condition and results of operations. The Company is operating in a challenging and uncertain economic environment, including generally uncertain national and local conditions. Financial institutions continue to be affected by sharp declines in the real estate market and constrained financial markets. Dramatic declines in the housing market over the past several years, with falling home prices and increasing foreclosures and unemployment, have resulted in significant write-downs of asset values by the Bank and other financial institutions. Continued declines in real estate values, home sales volumes, and financial stress on borrowers as a result of the uncertain economic environment could continue to have an adverse effect on the Bank s borrowers or their customers, which could adversely affect the Company s financial condition and results of operations. A worsening of these conditions would likely exacerbate the adverse effects on the Company and others in the financial services industry. For example, further deterioration in local economic conditions in the Company s markets could drive losses beyond that which is provided for in its allowance for loan losses or could require further writedowns in the Bank s real estate owned properties. The Company may also face the following risks in connection with these events: Economic conditions in the markets in which we operate that negatively affect housing prices and the job market have resulted, and may continue to result, in deterioration in credit quality of the Bank s loan portfolio, and such deterioration in credit quality has had, and could continue to have, a negative impact on the Company s business and financial condition. Table of Contents Market developments may affect consumer confidence levels and may cause adverse changes in payment patterns, causing increases in delinquencies and default rates on loans and other credit facilities. The processes the Company uses to estimate the allowance for loan losses may no longer be reliable because they rely on complex judgments, including forecasts of economic conditions, which may no longer be capable of accurate estimation. The Bank s ability to assess the creditworthiness of its customers may be impaired if the processes and approaches it uses to select, manage, and underwrite its customers become less predictive of future charge-offs. The Company has faced and expects to continue to face increased regulation of its industry, and compliance with such regulation has increased and may continue to increase its costs, limit its ability to pursue business opportunities, and increase compliance challenges. As these conditions or similar ones continue to exist or worsen, the Company could experience continuing or increased adverse effects on its financial condition and results of operations. We have a high percentage of nonperforming loans and classified assets relative to our total assets. If our allowance for loan losses is not sufficient to cover our actual loan losses, our results of operations will be adversely affected. At March 31, 2011, our net nonperforming loans totaled $51.4 million, representing 13.2% of total loans and 8.9% of total assets. At March 31, 2011, real estate owned totaled $43.9 million or 7.6% of total assets. As a result, the Company s total nonperforming assets amounted to $95.2 million or 16.5% of total assets at March 31, 2011. Further, assets classified by management as substandard, including nonperforming loans and real estate owned, totaled $143.7 million, representing 24.9% of total assets. At March 31, 2011, our allowance for loan losses was $29.1 million, consisting of $23.1 million of general loan loss allowances and $6.0 million of specific valuation allowances. The general valuation allowance represents 45.0% of nonperforming loans. In the event our loan customers do not repay their loans according to their terms and the collateral securing the payment of these loans is insufficient to pay any remaining loan balance, we may experience significant loan losses, which could have a material adverse effect on our financial condition and results of operations. Management maintains an allowance for loan losses based upon, among other things: historical experience; repayment capacity of borrowers; an evaluation of local, regional and national economic conditions; regular reviews of delinquencies and loan portfolio quality; collateral evaluations; current trends regarding the volume and severity of problem loans; the existence and effect of concentrations of credit; and results of regulatory examinations. Based on these factors, management makes various assumptions and judgments about the ultimate collectability of the respective loan portfolios. The determination of the appropriate level of the allowance for loan losses inherently involves a high degree of subjectivity and our management must make significant estimates of Table of Contents current credit risks and future trends, all of which may undergo material changes. In addition, our Board of Directors and the OTS periodically review our allowance for loan losses and may require an increase in the provision for possible loan losses or the recognition of further loan charge-offs. The OTS judgments may differ from those of our management. In connection with the OTS examination in the third quarter of 2010, the Company provided an additional $5.6 million to the allowance for loan losses for the quarter ended September 30, 2010. Another OTS/FDIC examination was conducted in the first quarter of 2011. While the OTS/FDIC examination report has not been provided to the Company as of the date of this prospectus, it is anticipated that the Company will not be required to increase the general valuation allowance for loans. While we believe that the allowance for loan losses is adequate to cover current losses, we may determine that we need to increase our allowance for loan losses or regulators may require an increase in our allowance. Either of these occurrences could materially and adversely affect our financial condition and results of operations. In the event the proceeds from the First Closing are not available for any reason, we would not have any capital available to invest in the Bank and any further increases to our allowance for loan losses and operating losses would negatively impact our capital levels and make it more difficult to achieve the capital levels set forth in the Bank Order. Liquidity needs could adversely affect our results of operations and financial condition. The Bank s primary sources of funds are deposits, sales, calls or maturities of securities, and loan repayments. While scheduled loan repayments are a relatively stable source of funds, they are subject to the ability of borrowers to repay the loans. The ability of borrowers to repay loans can be adversely affected by a number of factors outside of our control, including changes in economic conditions, adverse trends or events affecting business industry groups, reductions in real estate values or markets, business closings or lay-offs, inclement weather, natural disasters and international instability. Additionally, deposit levels may be affected by a number of factors, including rates paid by competitors, general interest rate levels, returns available to customers on alternative investments, financial condition or regulatory status of the Bank, actions by the OTS and general economic conditions. Accordingly, we may be required from time to time to rely on secondary sources of liquidity to meet withdrawal demands or otherwise fund operations. Those sources may include Federal Home Loan Bank advances, repurchase agreements and the Federal Reserve discount window. Currently, however, the Bank may only borrow from the Federal Home Loan Bank on a short-term basis and the Federal Reserve discount window is available only when no other sources of liquidity are available. Our financial flexibility will be constrained if we continue to incur losses and are unable to maintain our access to funding or if adequate financing is not available at acceptable interest rates. We may seek additional debt in the future. Additional borrowings, if sought, may not be available to us or, if available, may not be available on reasonable terms. If additional financing sources are unavailable, or are not available on reasonable terms, our financial condition, results of operations and future prospects could be materially adversely affected. Finally, if we are required to rely more heavily on more expensive funding sources to support future growth, our revenues may not increase proportionately to cover our costs. In addition, we may be required to slow or discontinue capital expenditures or make other investments or liquidate assets should those sources not be adequate. A significant portion of our loan portfolio is related to commercial real estate, construction, commercial business and consumer lending activities and certain of our loans are secured by vacant or unimproved land. Uncertainties related to these lending activities may negatively impact these loans and could adversely impact our business. As of March 31, 2011, approximately 27% of our loans were related to commercial real estate and construction projects. Commercial real estate and construction lending generally is considered to involve a higher degree of risk than single-family residential lending due to a variety of factors, including generally larger loan balances, the dependency on successful completion or operation of the project for repayment, the difficulties in estimating construction costs and loan terms which often do not require full amortization of the loan over its term and, instead, provide for a balloon payment at stated maturity. Our loan portfolio also includes commercial business loans to small- to medium-sized businesses, which generally are secured by various equipment, machinery and other corporate assets, and a variety of consumer loans, including automobile loans, deposit account secured loans and unsecured loans. Although commercial business loans and consumer loans generally have shorter terms and higher interest rates than mortgage loans, they generally involve more risk than mortgage loans because of the nature of, or in certain cases the absence of, the collateral which secures such loans. In addition, a portion of our loan portfolio is Table of Contents secured by vacant or unimproved land. Loans secured by vacant or unimproved land are generally more risky than loans secured by improved one- to four- family residential property. Since vacant or unimproved land is generally held by the borrower for investment purposes or future use, payments on loans secured by vacant or unimproved land will typically rank lower in priority to the borrower than a loan the borrower may have on their primary residence or business. These loans are susceptible to adverse conditions in the real estate market and local economy. Uncertainties related to these lending activities could result in higher delinquencies and greater charge-offs in future periods, which could adversely affect our financial condition or results of operations. We have had losses in recent periods and may be unable to return to profitability in the near future which would adversely affect our stock price. We incurred net losses available to common stockholders of $1.7 million for the quarter ended March 31, 2011 and $4.9 million and $46.2 million for the years ended 2010 and 2009, respectively. Our ability to return to profitability will depend on whether we are able to implement our business plan and reduce credit losses in the future, which will depend, in part, on whether economic conditions in our markets improve. We may be unsuccessful in executing our business plan. Further, even if we successfully implement our business plan, we may be unable to curtail our losses now or in the future. If we continue to incur significant operating losses, our stock price may decline. Future FDIC insurance premiums or special assessments may adversely impact our earnings. The Bank s deposits are insured up to applicable limits by the Deposit Insurance Fund of the FDIC. Under the FDIC s risk-based assessment system, insured institutions are assessed in accordance with one of four risk categories based on supervisory evaluations, regulatory capital levels and certain other factors, with less risky institutions paying lower assessments. An institution s assessment rate depends upon the category to which it is assigned, and certain adjustments specified by FDIC regulations. On May 22, 2009, the FDIC adopted a final rule levying a five basis point special assessment on each insured depository institution s assets minus Tier 1 capital as of June 30, 2009. We recorded an expense of approximately $350,000 during the quarter ended June 30, 2009 to reflect the special assessment. In addition, the FDIC increased the general assessment rate and, therefore, our FDIC general insurance premium expense increased compared to prior periods. The FDIC also has adopted a rule pursuant to which all insured depository institutions were required to prepay their estimated assessments for the fourth quarter of 2009, and for all of 2010, 2011 and 2012. This pre-payment was due on December 30, 2009. Under the rule, the assessment rate for the fourth quarter of 2009 and for 2010 is based on each institution s total base assessment rate for the third quarter of 2009, modified to assume that the assessment rate in effect on September 30, 2009 had been in effect for the entire third quarter, and the assessment rate for 2011 and 2012 would be equal to the modified third quarter assessment rate plus an additional 3 basis points. In addition, each institution s base assessment rate for each period is calculated using its third quarter assessment base, adjusted quarterly for an estimated 5% annual growth rate in the assessment base through the end of 2012. The Bank received an exemption from this prepayment requirement due to its potential impact on the Bank s liquidity position but will pay each quarterly assessment as it becomes due. Recent insured institution failures, as well as deterioration in banking and economic conditions, have significantly increased the loss provisions of the FDIC, resulting in a decline in the designated reserve ratio to historical lows. The FDIC expects a higher rate of insured institution failures in the next few years compared to recent years. Therefore, the reserve ratio may continue to decline. These developments have caused the premiums assessed on us by the FDIC to increase and materially increase FDIC insurance expense. Our FDIC insurance expense totaled $1.9 million, $1.7 million and $374,000, respectively, in the years ended 2010, 2009 and 2008, respectively, and totaled $433,000 and $515,000 for the quarters ended March 31, 2011 and 2010, respectively. The increased assessment rates discussed above, together with any further increases in assessment rates or additional special assessments, may negatively impact future earnings. On February 7, 2011, the FDIC finalized the rule to redefine the deposit insurance assessment base as required by the Dodd-Frank Act. The base is defined as average consolidated total assets for the assessment period Table of Contents less average tangible equity capital with potential adjustments for unsecured debt, brokered deposits and depository institution debts. The FDIC also adopted a new rate schedule and suspended dividends indefinitely. In lieu of dividends, the FDIC adopted progressively lower assessment rate schedules that will take effect when the reserve ratio exceeds 1.15 percent, 2 percent and 2.5 percent. All changes and revised rates went into effect April 1, 2011. Based on the new assessment base and rate schedule, the Bank expects its FDIC insurance premiums to decline in 2011 compared to 2010. We are heavily regulated, and that regulation could limit or restrict our activities and adversely affect our financial condition. We operate in a highly regulated industry and are subject to examination, supervision, and comprehensive regulation by various federal and state agencies, including the OTS and the FDIC. Our compliance with these regulations is costly and may restrict some of our activities, including payment of dividends, mergers and acquisitions, investments, loans and interest rates and locations of offices. The regulators interpretation and application of relevant regulations are beyond our control and may change rapidly and unpredictably. Banking regulations are primarily intended to protect depositors. The regulations to which we are subject may not always be in the best interest of investors. In light of current conditions in the global financial markets and the global economy, regulators have increased their focus on the regulation of the financial services industry. Over the past several years, the U.S. financial regulators responding to directives of the Obama Administration and Congress have intervened on an unprecedented scale. New legislative proposals continue to be introduced in the U.S. Congress that could further substantially increase regulation of the financial services industry and impose restrictions on the operations and general ability of firms within the industry to conduct business consistent with historical practices, including with respect to compensation, interest rates and the effect of bankruptcy proceedings on consumer real property mortgages. Further, federal and state regulatory agencies may adopt changes to their regulations and/or change the manner in which existing regulations are applied. We cannot predict the substance or effect of pending or future legislation or regulation or the application of laws and regulation to us. Compliance with current and potential regulation and scrutiny may significantly increase our costs, impede the efficiency of our internal business processes, require us to increase our regulatory capital and limit our ability to pursue business opportunities in an efficient manner by requiring us to expend significant time, effort and resources to ensure compliance. Additionally, evolving regulations concerning executive compensation may impose limitations on us that affect our ability to compete successfully for executive and management talent. In addition, given the current economic and financial environment, our regulators may elect to alter standards or the interpretation of the standards used to measure regulatory compliance or to determine the adequacy of liquidity, certain risk management or other operational practices for financial services companies in a manner that impacts our ability to implement our strategy and could affect us in substantial and unpredictable ways and could have an adverse effect on our business, financial condition and results of operations. Furthermore, the regulatory agencies have extremely broad discretion in their interpretation of the regulations and laws and their interpretation of the quality of our loan portfolio, securities portfolio and other assets. If any regulatory agency s assessment of the quality of our assets differs from our assessment, we may be required to take additional charges that would have the effect of materially reducing our earnings, capital ratios and stock price. The U.S. Congress passed the Dodd-Frank Act on July 21, 2010, which includes sweeping changes in the banking regulatory environment. The Dodd-Frank Act will change our primary regulator and may, among other things, restrict or increase the regulation of certain of our business activities and increase the cost of doing business. While many of the provisions in the Dodd-Frank Act are aimed at financial institutions significantly larger than us, and some will affect only institutions with different charters than us or institutions that engage in activities in which we do not engage, it will likely increase our regulatory compliance burden and may have other adverse effects on us, including increasing the costs associated with our regulatory examinations and compliance measures. We are closely monitoring all relevant sections of the Dodd-Frank Act to ensure continued compliance with laws and regulations. While the ultimate effect of the Dodd-Frank Act on us cannot be determined yet, the law is likely to result in increased compliance costs and fees paid to regulators, along with possible restrictions on our operations. Table of Contents
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+PROSPECTUS SUMMARY The following summary highlights selected information contained in this prospectus. This summary does not contain all the information you should consider before investing in the securities. Before making an investment decision, you should read the entire prospectus carefully, including the "risk factors" section, the financial statements and the notes to the financial statements. As used throughout this prospectus, the terms China Kangtai, CKGT, the Company, we, us, and our refer to China Kangtai Cactus Bio-Tech Inc., and all of its subsidiaries and affiliated companies. OUR COMPANY The Company is principally engaged in the production, R&D, sales and marketing of products derived from cacti. The Company s product lines include cactus nutraceuticals, cactus nutritional food and drinks, as well as cactus raw and intermediate materials. The Company has over 387 acres of cactus-farming bases in the Guangdong and Heilongjiang Provinces of China. The Company predominantly grows three species of cacti which are Mexican Pyramid, Mexican Milpa-Alta and Mexican Queen. Mexican Pyramid and Queen cacti are used for cactus fruit drinks and nutraceutical products; Mexican Milpa-Alta is mainly used for cactus nutritional food products. Most of the cactus fruits are processed into cactus fruit juice, which is the raw material for cactus nutritional drinks. Most of the harvested edible cacti are processed into dry powders, which are raw materials for cactus nutraceuticals. The Company s annual production capability of edible cacti in 2010 is 11,976 tons. The Company engages with, by co-operative production agreements, local pharmaceutical, food and beverage manufacturers to produce its products. This strategy allows the Company to fill the orders quickly with short production runs and to reduce the requirements in fixed assets investment. The Company currently has entered into co-production agreements with five processors in China. They are Harbin Bin County Hualan Dairy Factory, Harbin Ice Lantern Noodle Factory, Tsingtao Brewry (Harbin) Inc., Harbin Diwang Pharmacy Co., Ltd. (a GMP certified processor), and Mudanjiang Kangwei Health Food Company, Ltd. Pursuant to these contracts, the Company provides raw materials, quality control guidelines and technical support while the processors provide other materials, processing facilities and labor to manufacture products for the Company. These processors are required to follow strictly the Company s guidelines and instructions for production. The Company inspects all final products. The Company currently has long term agreements with all five processors which may be renewed at expiration in 2012. GMP or Good Manufacturing Practice certifications are awarded by the State Food and Drug Administration of China to processors which meet the safety and quality assurance standards set by the State Food and Drug Administration of China. In October 2007, the Company has signed a new agreement with Harbin Meijia Bio-Tech Co., Ltd. All of the above co-operative production agreements have been renewed during January and March of 2008. The Company has also established its own cactus beverage and fruit wine production facilities. The Company s cactus beverage product category includes cactus beer, cactus fruit wine (including the brand name of Overlord Scourge Flower Imperial Wine), cactus palm juices and cactus fruit drinks. The Company has its own R&D facility, the Heilongjiang Sino-Mexico Cactus Development and Utilization Institute, which is certified by Heilongjiang Science & Technology Committee. The Institute has independently developed many patented cactus-based nutraceuticals and nutritional food and drink product formulas and production processes. In order to quickly penetrate the markets in China, enhance the efficiency of distributions, lower sales costs and administrative overheads, starting August 2006, the Company has reformed its sales and distribution models and gradually disposed its own domestic distribution network of approximately 200 self-owned, franchised chain and Kangtai branded stores in Harbin, Beijing, Guangzhou and other cities in China. The Company has adopted the strategies of distributions and sales of its products primarily through various types and levels of provincial and municipal distributors and agents in Dalian, Heilongjiang, Harbin, Beijing, Guangzhou, Tianjin, Shenzhen, Jilin, Hebei, Liaoning, Shanxi, Hunan, Gansu and Shandong in China. The Company s major revenue breakdown by region in China for the 2010 fiscal year is as follows: As filed with the Securities and Exchange Commission on April 28, 2011 Registration No. 333- Sales( in U.S. Percentage in Region Dollars) Revenue Heilongjiang $ 9,866,031 27% Jilin $ 755,375 2% Shandong $ 1,291,733 4% Beijing $ 5,001,193 14% Guangdong $ 4,724,854 13% Liaoning $ 1,177,811 3% Shanxi $ 1,393,739 4% Hunan $ 1,762,199 5% Gansu $ 1,493,667 4% Other $ 8,562,948 24% Total $ 36,029,550 100% In addition to the network of regional distributors, the Company also uses other third party distributors who buy and resell our products to supermarkets, food and nutrition stores, department store counters, liquor boutiques, hotels, restaurants, and disco and karaoke bars. There are also consumer groups and individuals, such as schools, factories, community groups and government organizations, who buy our products directly from the Company for their own consumption in large volumes on a regular basis. Our principal executive offices are located at 99 Taibei Road, Limin Economic and Technological Development Zone, Harbin, Heilongjiang Province, People s Republic of China, and our telephone number at that address is 86-451-5735-1189. We maintain Internet websites at www.xrz.cn (Chinese language) and www.biocactus.com (English language). Information on our websites is not part of this prospectus.
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001021282_quantum_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001021282_quantum_prospectus_summary.txt
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+Prospectus Summary 5
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001028536_hyperview_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001028536_hyperview_prospectus_summary.txt
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+PROSPECTUS SUMMARY The Offering Common Stock Being Offered By Selling Stockholders 11,728 shares of Common Stock. Initial Offering Price The initial offering price for shares of our Common Stock will be determined by prevailing prices established on the OTCBB or as negotiated in private transactions, or as otherwise described in Plan of Distribution. Terms of the Offering The Selling Stockholders will determine when and how they will sell the Common Stock offered in this prospectus. Termination of the Offering The offering will conclude upon the earliest of (i) such time as all of the Common Stock has been sold pursuant to the registration statement, (ii) one year or (iii) such time as all of the Common Stock become eligible for resale without volume limitations pursuant to Rule 144 under the Securities Act of 1933, as amended (the Securities Act ), or any other rule of similar effect. Use of Proceeds We are not selling any shares of Common Stock in this offering and, as a result, will not receive any proceeds from this offering. Trading Symbol ICPC.OB
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001029389_qualink_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001029389_qualink_prospectus_summary.txt
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+PROSPECTUS SUMMARY 1
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+PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001032044_amc_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001032044_amc_prospectus_summary.txt
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+S-1/A 1 a2203993zs-1a.htm S-1/A Table of Contents As filed with the Securities and Exchange Commission on June 24, 2011 Registration No. 333-173042 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 TABLE OF CONTENTS Market and Industry Information ii Special Note Regarding Forward-Looking Statements ii Summary 1
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001042728_cpc-of_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001042728_cpc-of_prospectus_summary.txt
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+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001043825_iron_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001043825_iron_prospectus_summary.txt
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+PROSPECTUS SUMMARY You should read the entire prospectus carefully, including the risk factors beginning on page 6 and our financial statements and the notes thereto. Unless the context otherwise requires, all references in this prospectus to "the Company," "we," "our" and "us" refer to Iron Eagle Group, Inc., formerly known as Pinnacle Resources, Inc. and our wholly- owned subsidiaries, Sycamore Enterprises, LLC and Delta Mechanical Contractors, LLC. Unless the context otherwise requires, all references in this prospectus to "Iron Eagle" refers solely to Iron Eagle Group, Inc. Unless the context otherwise requires, the information contained in this prospectus gives effect to the January 21, 2011 acquisition of 100% of the members interest in Sycamore Enterprises LLC which, in turn, owns 100% of the member's interest in Delta Mechanical Contractors LLC. All references in this prospectus to Iron Eagle's outstanding shares of common stock and per share data gives effect to a one-for-eight reverse stock split of our common stock that we intend to consummate prior to completion of this offering. Our Company ----------- Through our DMC subsidiary, we provide construction and contracting services in both the infrastructure and government markets. DMC is a regional subcontractor providing commercial and industrial installation of plumbing, heating, ventilation and air conditioning and fire protection services in the regions of Rhode Island, Southeastern Massachusetts and Eastern Connecticut. We typically procure and install equipment to our customers design specifications. We provide contracting services for both new construction projects and the rehabilitation of existing infrastructure, commercial, and industrial facilities. Our services primarily consist of: - Plumbing and piping systems - Specialty, process piping & equipment - Heating Ventilation and Air Conditioning - Upgrades and repairs of HVAC equipment - Medical gas piping (e.g. Hospitals) - Laboratory service piping = Fire protection services - Specialty pump installation We service the following core commercial and industrial construction markets: - Military - Federal, State and Local Public Works = University/College = Pharmaceutical Facility - Manufacturing Facility - Medical - Office Building and Towers - Specialty Plants and Mills - Hotel/Motel - Distribution/Warehouse - Assisted Living - R&D and Laboratory - Retail/Entertainment/Recreational - Institutional Most of our work is performed on a fixed-price basis. Although we bear the risk of project cost overruns, we believe that we have the ability to seek to recover unforeseen additional costs through project change orders or claims. We had a backlog of anticipated revenue from the uncompleted portions of awarded contracts totaling approximately $31,000,000 as at March 31, 2011 and received contract awards of $3,200,000 from Electric Boat Company and the University of Rhode Island in the quarter ended March 31, 2011. Subsequent to March 31, 2011, we received contract awards and change orders for an additional $3,300,000. Our backlog as of December 31, 2010 was $39,500,000, compared to approximately $42,400,000 as of December 31, 2009. We believe that approximately $6,000,000 of our backlog as at March 31, 2011 is for work that is not anticipated to be completed in calendar 2011 and is expected to be reflected in 2012 revenues. The schedule for each project is different and subject to change due to circumstances beyond our control. Accordingly it is not reasonable to assume that performance of backlog will be evenly distributed throughout the course of a year. We believe that our backlog is firm notwithstanding provisions in our contracts allowing the customers to modify or cancel the contract at any time, subject in certain cases, to our receipt of cost reimbursement and cancellation fees. Our Strategy and Key Corporate Objectives ----------------------------------------- Our goal is to become a leading construction and contracting service provider to both the infrastructure and government markets throughout the United States. We believe that the highly-fragmented construction and contracting business for infrastructure and other public projects lends itself to such strategy. We intend to achieve this goal by implementing the following strategies: - Growth through acquisitions. We believe that there are a number of opportunities to acquire for a combination of cash, earn-outs and our securities, the assets or equity of a number of small and medium sized prime contractors and subcontractors to federal, state and municipal public projects as well as government sponsored institutions. Our acquisition model is to seek to acquire established and profitable well-managed companies with revenues of between $35.0 and $100.0 million at multiples of approximately 3.5 to 5.0 times their historical earnings before interest, taxes, depreciation and amortization, or EBITDA. - Internal growth opportunities. We believe that there are a number of revenue growth opportunities for DMC in its existing markets as work repairing and upgrading certain infrastructures, such as roads, bridge and schools in the New England market area require municipalities to make necessary expenditures. - Achieve a cost savings integration strategy. As we make strategic acquisitions, we intend to pursue a non-invasive cost- savings and integration strategy with easily-outsourced back- office functions being integrated at the corporate-level in order to achieve cost savings and to allow each of our operating subsidiaries to focus on their construction operations and not administrative tasks. - Highly experienced management team - We believe that our management team has the unique set of skills to effectively implement our growth strategy. Our management team has over 30 years of experience identifying, acquiring and managing regional, national and international construction companies which had revenues ranging from $20.0 million to $1.8 billion. In order to achieve our growth strategy, we will be required to raise additional capital through a combination of loans and equity financings. There is no assurance that such financing will be available or terms that will be acceptable to us. Recent Events ------------- On January 21, 2011, Iron Eagle acquired 100% of the member's interest of Sycamore and its DMC operating subsidiary from Bruce Bookbinder, the sole member of Sycamore. The total purchase price was paid by delivery of Iron Eagle's 5% $9.0 million note that was payable on or before June 2, 2011. Under the terms of our agreement, the note was subject to reduction on a dollar for-dollar basis if the working capital of Sycamore and its DMC subsidiary as at the January 21, 2011 closing date was less than $5.0 million. On May 18, 2011, we and Mr. Bookbinder agreed, based on the $4,675,463 closing date working capital of Sycamore, to reduce the principal amount of the note to $8,675,463 and on May 31, 2011 we agreed to extend its maturity date to September 2, 2011. The note is secured by 100% of the equity of DMC, which can revert to Mr. Bookbinder if the entire note, together with accrued interest thereon, is not paid in full by September 2, 2011. In addition, as per the purchase agreement for DMC executed on January 18, 2011, in the event that Sycamore and its DMC subsidiary achieve consolidated net income before interest, taxes, depreciation and amortization, or EBITDA in any one or more of the four fiscal years ending December 31, 2011 through December 31, 2014, we are obligated to pay Mr. Bookbinder future contingent payments based on the DMC results for such fiscal years 2014, with such contingent payments not to exceed $250,000 in any one of such four fiscal years or $1.0 million in the aggregate. We also agreed to employ Mr. Bookbinder as president of our DMC subsidiary for a period of four years through December 31, 2014. In connection with our May 31, 2011 agreement to extend the maturity date of the note to September 2, 2011, we agreed, following payment of such note, to either secure a full release to Mr. Bookbinder from his personal indemnity liability to Berkley Regional Insurance Company, a bonding company to DMC, or to provide an indemnity bond or other acceptable form of indemnity to Mr. Bookbinder. We are totally dependent upon receipt of the net proceeds from this offering to pay the principal and accrued interest on the note payable to Mr. Bookbinder. If only the 2,000,000 minimum number of shares are sold, the net proceeds we expect to receive will be only approximately $8.75 million, and we may be required to utilize approximately $192,000 of the existing cash balances of DMC in order to retire the purchase note, including accrued interest of approximately $266,000. As a result, DMC's bonding capability and our working capital may be adversely impacted. Our History ----------- Iron Eagle Group., was originally operated as a mining and exploration company, and was incorporated under the laws of Wyoming in January 1995 under the name of Pinnacle Resources, Inc. In March 2010, Pinnacle re- domiciled in Delaware and changed its name to Iron Eagle Group, Inc. We discontinued all mining and exploration activities as of April 2009. Iron Eagle entered into a share exchange agreement to acquire 100% of the outstanding common stock of Iron Eagle Group, Inc., a Nevada corporation. On August 18, 2010, Iron Eagle issued 9,337,296 shares of common stock (1,167,162 post reverse split) in exchange for a 100% equity interest in Iron Eagle-Nevada. As a result of the share exchange, Iron Eagle-Nevada became a wholly owned subsidiary of Iron Eagle and the shareholders of Iron Eagle-Nevada acquired a majority of the voting stock of Iron Eagle. As a result, the transaction was regarded as a reverse merger whereby Iron Eagle-Nevada was considered to be the accounting acquirer as its shareholders retained control of we after the exchange, although Iron Eagle is the legal parent company. For accounting purposes, the share exchange was treated as a recapitalization and Iron Eagle-Nevada and its historical financial statements is the continuing entity for financial reporting purposes. The financial statements have been prepared as if we had always been the reporting company and then, on the share exchange date, reorganized its capital stock. At the time of the exchange transaction, Iron Eagle had assets of approximately $830,065 and equity of approximately $49,967 and Iron Eagle-Nevada had assets of approximately $10,000 with a deficit of approximately $382,707. Available Information --------------------- Our website is www.ironeaglegroup.com. Our periodic reports and all amendments to those reports required to be filed or furnished pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 are available free of charge through our website. Our periodic reports on Form 10-K, 10-Q and our current reports on Form 8-K and any amendments to those documents to our website as soon as reasonably practicable after those reports are filed with or furnished to the Securities and Exchange Commission. Material contained on our website is not incorporated by reference in this prospectus. Securities offered A minimum of 2,000,000 and a maximum of 3,000,000 shares of our common stock. Terms of the Offering The underwriter and selling agents will be selling the common stock offered hereby on a "best efforts, 2,000,000 shares or none" basis during an offering period commencing on the date of this prospectus and ending on or before September 2, 2011, subject to extension only with the approval of the former owner of DMC, as the holder of our $8,675,463 purchase note. Pending the sale during the offering period of not less than 2,000,000 of the shares, all proceeds will be held in a special interest bearing escrow account at Signature Bank, New York, New York. In addition to our receipt of not less than $10,000,000 of gross proceeds, in order to complete this offering, Iron Eagle will be required to obtain approval from Nasdaq to list its shares on such stock exchange and retire the $8,941,669 note payable and accrued interest to the former owner of DMC. In the event that the offering is not completed for any reason, all proceeds will be returned to investors, together with accrued interest. Offering price $5.00 per share. Common stock 1,506,337 outstanding before this offering Common stock to be A minimum of 3,737,535 common shares and a outstanding after maximum of 4,727,535 common shares this offering(1) 4,737,535 common shares. Use of proceeds We plan to use the net proceeds of this offering to pay approximately $8,941,669 of principal and accrued interest on a purchase note issued in January 2011 in connection with the acquisition of DMC. To the extent that we sell more than 2,000,000 common shares, we will use the additional net proceeds to reduce certain accounts payable, and for working capital purposes to enable us to implement our acquisition strategy. If only the minimum 2,000,000 common shares are sold, the net proceeds we expect to receive will be only approximately $8,750,000, and we anticipate that we may be required to utilize approximately $192,000 of the existing cash balances of DMC in order to retire the purchase note. As a result DMC's bonding capability on future construction projects it bids for and our available working capital may be adversely impacted. Risk Factors An investment in our common shares involves a high degree of risk. You should carefully consider the Risk Factors beginning on page 20 of this prospectus before deciding to invest in Iron Eagle common shares. (1) Includes an aggregate of 243,095 restricted common shares issuable upon completion of this offering to certain executive officers of Iron Eagle, members of its board of directors and other stockholders or their affiliates in connection with their agreement to convert an aggregate of $972,374 of Iron Eagle notes and other accrued obligations outstanding at March 31, 2011 into common stock at a conversion price of $4.00 per share. The number of common shares to be outstanding after the closing of this offering excludes: - 24,219 shares issuable upon exercise of options outstanding and having a weighted average exercise price of $9.47 per share; - a maximum of 350,000 common shares issuable upon exercise of 50,000 Series A warrants at an exercise price of $4.00 per common share, and 50,000 Series B warrants at an exercise price of $4.00 per common share, and 250,000 Series C warrants at an exercise price of $0.08 per common share, issued in connection with a private placement of $200,000 of 13% notes due December 31, 2012 completed in August 2011, and - a minimum of 80,000 and a maximum of 120,000 shares issuable upon exercise of warrants issued to the underwriter and/or selling agents in this offering at an exercise price of $6.00 per share.
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001045390_colombia_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001045390_colombia_prospectus_summary.txt
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+S-1 1 v211134_s-1.htm Unassociated Document As Filed with the Securities and Exchange Commission on February 14, 2011 Registration No. 333-_______ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 COLOMBIA CLEAN POWER & FUELS, INC. (Exact name of Registrant as Specified in Its Charter) Nevada 1221 87-0567033 (State or other jurisdiction of incorporation or organization) (Primary Standard Industrial Classification Code Number) (I.R.S. Employer Identification No.) 181 3rd Street Suite 150-B San Rafael, CA 94901 (415) 460-1165 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) Daniel F. Carlson, CFO Colombia Clean Power & Fuels, Inc. 181 3rd Street Suite 150-B San Rafael, CA 94901 (415) 460-1165 (Name, address, including zip code, and telephone number including area code, of agents for service) Copies to: Ronald N. Vance, P.C. Attorney at Law 1656 Reunion Avenue Suite 250 South Jordan, UT 84095 (801) 446-8802 (801) 446-8803 (fax) _____________ Approximate date of commencement of proposed sale to the public: From time to time after this Registration Statement becomes effective. If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. x If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of large accelerated filer, accelerated filer, and smaller reporting company in Rule 12b-2 of the Exchange Act. Large Accelerated Filer o Accelerated Filer o Non-Accelerated Filer o Smaller reporting company x 1 The Colombian Ministry of Mines assesses annual fees to concessionaires prior to production. Post-production concessionaires are required to pay royalties to the Ministry pursuant to government regulations. COLOMBIA CLEAN POWER & FUELS, INC. (AN EXPLORATION STAGE COMPANY) UNAUDITED FINANCIAL STATEMENTS September 30, 2010 & December 31, 2009 FREEDOM RESOURCES ENTERPRISES, INC. [A Development Stage Company] FINANCIAL STATEMENTS DECEMBER 31, 2009 and 2008 CALCULATION OF REGISTRATION FEE Title of Each Class of Securities to be Registered Amount to be Registered (1) Proposed Maximum Offering Price Per Share Proposed Maximum Aggregate Offering Price Amount of Registration Fee Primary Offering: Series A Preferred Stock, $.001 par value(3) 3,000,000 $ 7.50 $ 22,500,000 $ 2,612 Secondary Offering: Common Stock, $.001 par value 2,518,600 $ 2.175 (2) $ 5,477,955 $ 636 Common Stock, $.001 par value issuable upon exercise of notes 3,200,000 $ 2.175 (2) $ 6,960,000 $ 808 TOTALS 9,532,001 $ 34,937,955 $ 4,056 _______________ (1) In accordance with Rule 416(a), the registrant is also registering hereunder an indeterminate number of shares that may be issued and resold to prevent dilution resulting from stock splits, stock dividends or similar transactions. Should the conversion ratio result in our having insufficient shares, we will not rely upon Rule 416 but will file a new registration statement to cover the resale of such additional shares should that become necessary. (2) Estimated solely for the purpose of computing the amount of the registration fee pursuant to Rule 457(c) based upon the average bid and asked price as reported by the OTC Bulletin Board. (3) In addition to any preferred stock that may be issued directly under this registration statement, there are being registered hereunder such indeterminate amount of common stock shares as may be issued upon conversion of preferred stock for which no separate consideration will be received by the registrant. The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to Section 8(a), may determine. TABLE OF CONTENTS Page Prospectus Summary 1 Risk Factors 3 Forward-Looking Statements 15 Use Of Proceeds 15 Dilution 16 Market For Our Common Stock 16 Management s Discussion And Analysis Of Financial Condition And Results Of Operations 18 Business And Properties 21 Legal Proceedings 38 Management 38 Executive Compensation 44 Security Ownership Of Certain Beneficial Owners And Management 48 Selling Stockholders 50 Change Of Accountants 54 Description Of Securities 55 Plan Of Distribution 56 Legal Matters 58 Experts 58 Additional Information 58 Appendix A Glossary Of Terms 59 We have not authorized anyone to provide you with information different from that contained in this prospectus. We and the selling stockholders are offering to sell, and seeking offers to buy, shares of our preferred and common stock only in jurisdictions where offers and sales are permitted. Throughout this prospectus, unless otherwise designated, the terms we, us, our, the Company and our Company refer to Colombia Clean Power & Fuels, Inc., a Nevada corporation, and its subsidiaries. All amounts in this prospectus are in U.S. Dollars, unless otherwise indicated. In December 2010 we completed a private placement of $8,000,000 in aggregate principal amount of our 10% Secured Convertible Notes due June 30, 2012 and five-year warrants to purchase in aggregate up to 3,200,000 shares of our common stock at an exercise price of $0.01 per share. The promissory notes are convertible at the rate of $2.50 per share and the 3,200,000 shares issuable upon conversion of the promissory notes are included in the registration statement of which this prospectus is a part. In January 2011 we commenced a core drilling program on our Colombian mining concessions consisting of 50 holes through August 2011 with an aggregate of 4,550 meters at a projected average cost of $100 per meter. We also plan to conduct a non-cored drilling program between April and August with an aggregate of 3,300 meters at a projected average cost of $75 per meter. We have produced no revenues from our new business operations and have achieved losses since inception. As of February 1, 2011, our cash position was approximately $4,100,000. Over the next 12 to 36 months we have the following principal objectives: to complete our existing drilling program and, if warranted, commence coal extraction operations on these properties; to secure additional coal mining concessions in the Santander region of Colombia, with and without developed operations; develop mine plans and obtain necessary licenses and permits for these concessions; complete feasibility studies for the Santander Clean Energy Park; and secure a lease for the proposed industrial energy park. Following this, depending upon our ability to obtain additional funding or entering into proposed joint venture agreements, we plan to construct our coke and gasification plants and fully develop the industrial energy park which we propose to supply with the coal from our mining concessions. The Offering Securities offered by us This is a best-efforts public offering of up to 3,000,000 shares of our Series A Convertible Preferred Stock. Each share of our Series A stock is convertible at any time into three fully paid and nonassessable shares of our common stock. Common stock offered by selling stockholders Up to 2,518,600 outstanding shares of common stock owned by the selling stockholders; and Up to 3,200,000 shares of common stock issuable upon the conversion of the 10% Secured Convertible Notes held by the selling stockholders. Common stock outstanding immediately prior to the offering 20,717,500 Common stock to be outstanding after the offering by us and the selling stockholders 32,917,500 Proceeds: Maximum Proceeds $22,500,000 Offering Costs (100,000) Selling Commissions (1 ,350,000) Net Proceeds $21,050,000 COLOMBIA CLEAN POWER & FUELS, INC. (AN EXPLORATION STAGE COMPANY) CONDENSED BALANCE SHEETS (unaudited) September 30, 2010 December 31, 2009 (1) ASSETS Current Assets Cash and Cash Equivalents $ 861,655 $ 89 Other Current Assets 163,540 - Total Current Assets 1,025,195 $ 89 Property and Equipment Mining Concession 263,767 - Other Assets 68,886 - TOTAL ASSETS $ 1,357,848 $ 89 LIABILITIES & STOCKHOLDERS' DEFICIT Liabilities Current Liabilities Accounts Payable and Accrued Liabilities $ 241,773 6,681 Accrued Interest Related Party - 1,339 Loans from Officers & Directors 5,100 117,000 Total Current Liabilities 246,873 125,020 Long Term Liabilities Convertible Notes - Related Party - 5,000 Convertible Notes Payable (Net of Issuance Discount) 1,607,617 - Accrued Interest on Convertible Notes Payable 21,137 - Total Long Term Liabilities 1,628,754 5,000 Total Liabilities 1,875,626 130,020 Commitments and Contingencies Stockholders' Deficit Preferred stock, $.001 par value, 5,000,000 shares authorized, no shares issued and outstanding - - Common Stock, $.001 par value, 100,000,000 shares authorized, 20,280,001 shares and 1,120,000 shares issued and outstanding, respectively 20,280 1,120 Additional Paid in Capital 533,664 94,556 Deficit Accumulated during the Exploration Stage (1,069,260 ) (225,607 ) Other Comprehensive Loss (2,462 ) - Total Stockholders' Deficit (517,778 ) (129,931 ) TOTAL LIABILITIES & STOCKHOLDERS' DEFICIT $ 1,357,848 $ 89 (1) Derived from the audited financial statements at December 31, 2009. FREEDOM RESOURCES ENTERPRISES, INC. [A Development Stage Company] CONTENTS PAGE - Report of Independent Registered Public Accounting Firm 3 - Balance Sheets, December 31, 2009 and 2008 4 - Statements of Operations, for the years ended December 31, 2009 and 2008 and from inception on November 6, 1996 through December 31, 2009 5 - Statement of Stockholders Equity (Deficit), from inception on November 6, 1996 through December 31, 2009 6 7 - Statements of Cash Flows, for the years ended December 31, 2009 and 2008 and from inception on November 6, 1996 through December 31, 2009 8 9 - Notes to Financial Statements 10 16 The information contained in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. Preliminary Prospectus Subject to Completion, February 14, 2011 Colombia Clean Power & Fuels, Inc. 3,000,000 Shares of Series A Convertible Preferred Stock $7.50 Per Share 5,718,600 Shares of Common Stock We are offering up to 3,000,000 shares of our Series A Convertible Preferred Stock at $7.50 per share. Each preferred share is convertible at any time into three shares of our common stock. The selling stockholders named in this prospectus are offering 5,718,600 shares, including 3,200,000 shares reserved for issuance upon exercise of outstanding convertible promissory notes that we have issued to the selling stockholders. Our common stock is currently quoted on the OTC Bulletin Board under the symbol CCPF. The last reported sales price of our common stock on the OTC Bulletin Board on February 9, 2011, was $2.15 per share. The offering of the preferred shares is being made on a best efforts basis either by our management or one or more placement agents, which means that they will use their best efforts to sell up to the maximum number of the preferred shares but that no one has agreed to purchase any of these shares. There is no minimum number of preferred shares to be sold in this offering. We have authorized maximum selling commissions of 6% for any placement agents we may engage, plus placement agent warrants equal to 6% of the common shares into which the Series A preferred stock is convertible. We have entered into preliminary discussions with prospective placement agents but have not entered into any definitive agreements or arrangements. No selling commissions will be paid to management for the sale of the preferred shares. The offering of the preferred shares will terminate upon the earlier of: (i) a date all of the preferred shares are sold, or (ii) six months after the date of this prospectus, unless extended for up to 30 days by us. The proceeds of this offering will not be placed into an escrow account but will be immediately available to us. Offering Price Selling Commissions Selling Costs Proceeds to Company Per Share $ 7.50 $ 0.45 $ 0.03 $ 7.02 Total $ 22,500,000 $ 1,350,000 $ 100,000 $ 21,050,000 The selling stockholders, or their pledgees, donees, transferees or other successors-in-interest, may offer the shares of our common stock for resale on the OTC Bulletin Board, in isolated transactions, or in a combination of such methods of sale. They may sell their shares at fixed prices that may be changed, at market prices prevailing at the time of sale, at prices related to prevailing market prices, or at negotiated prices with institutional or other investors, or, when permissible, pursuant to the exemption of Rule 144 under the Securities Act of 1933. There will be no underwriter s discounts or commissions, except for the charges to a selling stockholder for sales through a broker-dealer. All net proceeds from a sale will go to the selling stockholder and not to us. We will pay the expenses of registering these shares. Investing in our stock involves risks. You should carefully consider the
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+PROSPECTUS SUMMARY 1
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+PROSPECTUS SUMMARY You should read the following summary together with the more detailed information concerning our company, the common stock being sold in this offering, and our financial statements appearing elsewhere in this prospectus. Because this is only a summary, you should read this entire prospectus carefully,
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001053584_macatawa_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001053584_macatawa_prospectus_summary.txt
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in, or incorporated by reference into, this prospectus. As a result, it does not contain all of the information that may be important to you or that you should consider before investing in our common stock. Before making an investment decision, you should read this entire prospectus, including the "Risk Factors" section, and the documents incorporated by reference into this prospectus, which are described below under "Incorporation of Certain Information by Reference" on page 54. Overview Macatawa Bank Corporation is a Michigan corporation and a registered bank holding company. Macatawa's business is concentrated in a single industry segment - commercial banking. Through its wholly-owned subsidiary, Macatawa Bank, Macatawa offers a full range of commercial and personal banking services, including checking, savings and certificates of deposit accounts, cash management, safe deposit boxes, trust services and commercial, mortgage and consumer loans through its twenty-six branch offices and a lending and operation service facility in Ottawa County, Kent County and northern Allegan County, Michigan. Other services we offer include ATMs, internet banking, telephone banking and debit cards. Macatawa Bank provides various brokerage services, including discount brokerage through Infinex, personal financial planning and consultation regarding mutual funds. The Bank was formed in 1997 and until 2009 our strategy has been to profitably grow our business based upon our mission to attract clients who prefer to conduct business with a locally managed institution that demonstrates an active interest in their business and personal financial affairs, places high priority on local decision-making and contributes financial and employee support to community initiatives. Beginning in late 2009, our strategic direction and focus has turned from growth to improving our internal operations, including complying with the Consent Order, working out of problem loans and assets and returning the Company to profitable operations. At March 31, 2011, we had total assets of $1.56 billion, total loans of $1.15 billion, total deposits of $1.26 billion and shareholders' equity of $69.2 million. During the first quarter of 2011, we recognized net income of $1.3 million, compared to a net loss of $21.1 million in the first quarter of 2010. During the fourth quarter of 2010, we recognized net income of $835,000 compared to a net loss of $9.2 million in the fourth quarter of 2009. During the third quarter of 2010, we recognized net income of $703,000 compared to a net loss of $19.9 million in the third quarter of 2009. During the second quarter of 2010, we recognized net income of $1.7 million compared to a net loss of $30.4 million in the second quarter of 2009. This represents four consecutive quarters of profitability following six consecutive quarters of net losses. During 2008 and 2009, Macatawa reported operating losses of $38.9 million and $63.6 million, respectively. The losses for 2008 and 2009 were largely attributable to loan losses, lost interest on nonperforming assets and rising costs of administering problem assets associated with the rapid increase in problem loans and other real estate assets. Losses in 2009 included the establishment of a tax valuation allowance and losses in 2008 included the write-off of goodwill. The loan and problem asset related losses continued in the first quarter of 2010, as the Company reported a net loss of $21.1 million for that quarter. In February 2010, Macatawa Bank entered into a Consent Order with the Federal Deposit Insurance Corporation ("FDIC") and the Michigan Office of Financial and Insurance Regulation ("OFIR"), in which the Bank agreed to increase management and board oversight, improve process and controls, limit lending to certain borrowers, obtain regulatory approval of future dividends, and improve regulatory capital ratios. Please see "Consent Order with Macatawa Bank and its Regulators" below for more information regarding the Consent Order. In July 2010, the Company entered into a Written Agreement with the Federal Reserve Bank of Chicago ("FRB"). Among other things, the Written Agreement provides that the Company must take appropriate steps to utilize its financial and managerial resources to serve as a source of strength to Macatawa Bank and the Company may not declare or pay any dividends without the prior written consent of the FRB. Please see "Written Agreement with the Company and its Regulator" below for more information regarding the Written Agreement. The Board of Directors of Macatawa has significantly changed the strategic direction and focus of the Bank to improve its internal operations and to work out of its problem loans and assets. During the fourth quarter of 2009, the Macatawa Board of Directors elected a new independent Chairman of the Board. Macatawa has since worked If this Form is filed to register additional shares for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. &nbsp ; Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company CALCULATION OF REGISTRATION FEE Title of Each Class of Securities to be Registered Proposed Maximum Aggregate Offering Price (1) Amount of Registration Fee Non-transferable Common Stock subscription rights N/A (2) Common Stock, no par value $41,000,000 $4,760.10(3) (1) Estimated solely for the purpose of calculating the registration fee pursuant to Section 457(o) under the Securities Act. (2) The non-transferable subscription rights are being issued without consideration. Pursuant to Rule 457(g), no separate registration fee is payable with respect to the rights being offered hereby because the rights are being registered in the same registration statement as the securities to be offered pursuant to the rights. (3) The Company has increased the maximum aggregate offering price from $30,000,000 to $41,000,000. The Company previously paid to the Commission a registration fee of $3,483.00. Pursuant to Rule 457(o), included with this pre-effective amendment is the additional registration fee of $1,277.10. The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this registration statement shall become effective on such date as the Commission acting pursuant to said Section 8(a), may determine. TABLE OF CONTENTS closely with the FRB and Macatawa Bank's regulators at the FDIC and OFIR to put in place improved controls and procedures. The Board of Directors has implemented more robust corporate governance practices and disciplined business and banking principles, implemented more conservative lending principles that comply with regulatory standards, and appointed experienced and disciplined lending and compliance personnel. The focus of our management team has turned from growth in our business to executing these disciplined business and banking procedures and policies, limiting future losses, preserving capital and improving operational efficiencies. As a result of these efforts, the Company has achieved significantly improved results: Our four most recently completed quarters were profitable; Our liquidity has improved dramatically since the end of 2009 primarily through large reductions in volatile funding balances; The Bank's capital ratios have improved since March 31, 2010; and We have reduced our level of delinquent and nonperforming loans and have achieved lower levels of loan charge-offs for the first quarter 2011 (the lowest level of quarterly charge-offs since the third quarter of 2008) and for 2010 compared to 2009 and 2008. Our Capital Needs We need additional capital in order to take advantage of the opportunities that may be presented to us. Management believes that with additional capital, the Company will be able to act upon opportunities to improve its profitability and enhance its franchise and overall shareholder value. While additional capital will give us a tool we believe we can use to build shareholder value, we also need capital to comply with the terms of our regulatory Consent Order, to provide an increased ability to absorb potential future losses and to provide us with the foundation for future growth. At March 31, 2011, the Bank's Tier 1 Leverage Capital Ratio was 7.1% and the Total Risk Based Capital Ratio was 10.4%, which would ordinarily qualify the Bank as "well capitalized" under the regulatory capital standards absent the Consent Order. As of March 31, 2011, the Bank needed a capital injection of approximately $14.0 million to comply with the Tier 1 Leverage Capital Ratio requirement and needed a capital injection of approximately $7.1 million to comply with the Total Risk Based Capital Ratio requirement of the Consent Order. The amounts of capital needed may increase in the event of future losses and other events. Because the Bank is subject to the Consent Order, it cannot be categorized as "well capitalized," regardless of actual capital levels. At a Special Meeting of Shareholders held on March 25, 2011, our shareholders overwhelmingly approved a proposal to amend the Articles of Incorporation to increase the number of authorized shares of our common stock from 40,000,000 to 200,000,000. Over 84% of the shares voted on the proposal were voted for approval of the proposal. We believe that the results of the voting at the special meeting show that our shareholders support our plans to raise capital. The Company has sufficient authorized and unissued shares of common stock to complete the offerings. Our Strengths Our focus on community banking and strong customer service has historically positioned us well in the markets that we serve and we believe those strengths will help position us for a return to sustained profitability. We have achieved strong pre-tax, pre-provision income through a stable and substantial core funding base, which has resulted in a comparatively strong net interest margin and expansion of core deposits in our markets. For additional information about our pre-tax, pre-provision income, see "Summary of Selected Consolidated Financial Information." Our key strengths include: Well Developed Retail and Business Banking Franchise. We operate 26 full-service branches located in some of Michigan's strongest economic markets covering a solid and diverse economic and entrepreneurial base. We have established and cultivated a strong brand identity in our markets as a local community bank The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION, DATED MAY 3, 2011 17,826,086 Shares Common Stock Subscription Rights to Purchase Shares of Common Stock We are distributing to our shareholders, free of charge, non-transferable subscription rights to purchase shares of our common stock. This is called the "rights offering." You will receive one right to purchase one share of common stock for each whole share of common stock that you hold of record as of 5:00 p.m., Eastern Time, on May 2, 2011. There is no over-subscription privilege. Shareholders who wish to purchase additional shares in the offering may submit an expression of interest to participate in the public offering. Subscription rights may not be sold, transferred or assigned to anyone else and will not be listed for trading on any stock exchange or trading market. We are offering for sale a total of 17,826,086 shares of common stock in the rights offering. The exercise of subscription rights is irrevocable and may not be cancelled or modified. We are also offering to sell to the public any shares offered but not sold in the rights offering. This is called the "public offering." The public offering and the rights offering are collectively referred to in this prospectus as the "offerings." We intend to use a portion of the net proceeds of the offerings to contribute to the capital of the Bank to increase the Bank's capital and regulatory capital ratios and for general corporate purposes, including funding organic loan growth and long-term strategic opportunities. A portion of the net proceeds of the offerings will be retained by the Company to pay its continuing operating expenses while the Company is unable to fund those expenses with dividends from the Bank. The purchase price for shares in the rights offering and in the public offering is $2.30 per share. Subscription rights will expire at 5:00 p.m., Eastern Time, on June 7, 2011, and the public offering will terminate at 5:00 p.m., Eastern Time, on June 20, 2011, unless we extend either or both offering periods in our discretion. Neither the rights offering nor the public offering is an underwritten offering. Our shares of common stock are being offered directly by us without the services of an underwriter or selling agent. Our common stock is traded on The Nasdaq Global Select Market under the ticker symbol "MCBC." The last reported sales price of our common stock on The Nasdaq Global Select Market on April 29, 2011 was $2.59 per share. The average of the last reported sale prices during the 30 trading days before May 2, 2011, the date on which our Board of Directors determined the offering price, was $2.70 per share. We intend to list the shares of common stock issued in the offerings on The Nasdaq Global Select Market under the same ticker symbol. We have engaged Registrar and Transfer Company to serve as subscription agent and Eagle Rock Proxy Advisors, LLC to serve as information agent for the rights offering. The subscription agent will hold in escrow the funds we receive from subscribers in the rights offering until we complete or cancel the rights offering. Investing in our common stock involves risks. The rights offering does not contain a minimum subscription condition. Shareholders who subscribe may continue to own shares in the Company when it and the Bank do not satisfy all minimum regulatory capital requirements. Failure to meet minimum regulatory capital requirements could result in significant enforcement actions against the Company and the Bank, including a regulatory takeover of the Bank, in which case shareholders would receive little if anything for their investment. See "Risk Factors" beginning on page 23. Per Share Total Offering price $ 2.30 $ 41,000,000 Proceeds to Macatawa Bank Corporation (before expenses) (1) 2.30 41,000,000 (1) Based on all shares offered being sold. No assurance can be given that all or any of the shares will be sold. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. The shares of common stock are not savings accounts, deposits or other obligations of a bank or savings institution and are not insured by the Federal Deposit Insurance Corporation or any other government agency. The date of this prospectus is May [ ], 2011 TABLE OF CONTENTS that offers superior customer service and a convenient branch network. As a result, we are well positioned to provide retail and business banking services to customers and potential customers in our market area. We have kept our network of 26 branches and many of our key business assets intact despite extremely challenging economic conditions and intense competition. While we have faced extraordinary challenges in the past three years, we have maintained high service standards and as a result retained our strong and valuable core deposit customer base. Focus on Local Communities as a Competitive Advantage. We have over 400 trained and experienced employees who we believe provide exceptional customer service, and we maintain local management authority in the communities we serve. This enables our employees to make prompt and responsible decisions for our customers, which we believe makes them feel important and appreciated. While there are many bank, thrift, credit union and other financial institution offices located within our market area, many are branches of larger financial institutions that utilize centralized out-of-market decision making. We compete for loans, deposits and other financial services based on our knowledge of and ability to communicate effectively with our customers and our ability to understand and meet our customers' needs by providing high quality customer service. We also intimately understand the communities in which our customers do business, as they are the same communities in which we conduct our business. Our management believes that our personal service philosophy, our local decision-making and understanding of local markets, and diverse delivery channels enhance our ability to compete favorably in attracting individuals and local businesses. Independent and Focused Leadership. The board of directors of the Company and the Bank consists of 11 directors, including ten non-employee directors. Our Board is led by Chairman Richard L. Postma, an independent director and respected business leader with a demonstrated record of business successes. Please see "Our Board of Directors" and "Strengthening our Board of Directors and Board Oversight" below. Substantial Core Funding Base. We internally fund our operations through a stable base of core deposits that provides cost-effective funding for our lending operations. The majority of our deposits are derived from core client sources, relating to long term relationships with local clients. At March 31, 2011, core deposits accounted for 97% of our total deposits. For this presentation, core deposits consist of total deposits less national certificates of deposit and brokered deposits. In addition, 15% of our deposits and other forms of funding were composed of wholesale deposits and FHLB advances as of March 31, 2011. As a result of our strong core funding, our cost of funds for 2010 and 2009 was 1.88% and 2.56%, respectively. We were also able to build our liquidity and still maintain a net interest margin of 3.28% for 2010. For the first quarter of 2011, our cost of funds was 1.42% and our net interest margin was 3.22%. Risks We Face Investing in our common stock involves risks. See "Risk Factors" beginning on page 23 of this prospectus to read about risks you should carefully consider before buying our common stock. Our Market Area Our primary market area includes Ottawa, Kent and northern Allegan Counties, all located in Western Michigan. This area includes two mid-sized cities, Grand Rapids and Holland, and rural areas. Grand Rapids is the second largest city in Michigan. Holland is the largest city in Ottawa County. Both cities and surrounding areas have a solid and diverse economic base, which includes health and life sciences, tourism, office furniture, automotive components and assemblies, pharmaceutical, transportation, equipment, food and construction supplies. Grand Valley State University, a 24,000-student regional university with nearly 2,000 employees, has its three main campuses in our market area. GVSU and several smaller colleges and university affiliates located in our market area help stabilize the local economy because they are not as sensitive to the fluctuations of the broader economy. While Michigan has the fifth highest seasonally adjusted unemployment rate in the United States (as of March 2011), the seasonally-adjusted unemployment rate decreased from 13.3% in March 2010 to 10.3% in March 2011 and the unadjusted employment rate decreased from 14.2% in March 2010 to 11.0% in March 2011. The Michigan March 2011 seasonally-adjusted unemployment rate of 10.3% was the lowest seasonally-adjusted monthly TABLE OF CONTENTS Page PROSPECTUS SUMMARY 1
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+PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001058624_osi_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001058624_osi_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad
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+PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001058626_transworld_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001058626_transworld_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad
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+PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001058767_biomoda_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001058767_biomoda_prospectus_summary.txt
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+PROSPECTUS SUMMARY The following summary highlights selected information contained in this prospectus. This summary does not contain all the information you should consider before investing in the securities. Before making an investment decision, you should read the entire prospectus carefully, including the risk factors section, the financial statements and the notes to the financial statements. BIOMODA, INC. We are a development stage company incorporated in the state of New Mexico on January 3, 1990. On August 13, 2003, we formed Biomoda Holdings, Inc., a Nevada corporation, for the purpose of research, development, production and marketing of medical and biomedical products. On January 8, 2010, we dissolved Biomoda Holdings as no longer necessary or useful for operations. We have laboratories and offices at 609 Broadway NE, in Albuquerque, New Mexico that are used for corporate and research and development activities. Our telephone number is (505) 821-0875 and our fax number is (866) 519-6156. We are an in-vitro diagnostics company that develops assays, or tests, to detect cancer. These assays are performed in clinical reference laboratories using body-fluid samples. The technology is based on scientific work originally done at Los Alamos National Laboratory. We were issued a patent in January 2005, and have received a Divisional and a Continuation-In-Part extension of that owned patent. The technology is based on a porphyrin molecule that has an affinity to bind with cancer cells in high concentrations and cause them to fluoresce under specific frequencies of light. The porphyrin molecule is easy to obtain, manufacture and use. This is a broad-based technology that works with a variety of cancers. We are developing a product line of assays for a variety of cancers based on adaptations of this technology. While we believe the technology has great potential as a cancer screening tool for large populations, the true breakthrough may be its potential as a non-invasive diagnostic for multiple cancers. Our first product, trademarked under the name CyPath , is an assay for the detection of early-stage lung cancer. Lung cancer represents a large market with unmet diagnostic needs. The five-year survival rates for lung cancer are dismal, due in large part to the fact that this disease is typically diagnosed late in its progression. Our lung cancer assay tests deep-lung sputum which is collected from the patient, processed and incubated in the CyPath molecular marker labeling solution, and then scored for cancer cells. This technology has the potential to diagnose other cancers as well. We have identified breast, circulating tumor cells, cervical, bladder, colorectal, oral, and prostate cancers as potentially significant business opportunities for us. We have incurred losses since our inception. For the years ended December 31, 2010 and 2009, we did not generate any revenues and incurred net losses of $655,781 and $905,289, respectively. For the six months ended June 30, 2011, we incurred net losses of $3,794,135. At June 30, 2011, we had a working capital deficit of $979,022 and an accumulated deficit of $12,886,076. These factors raise substantial doubt about our ability to continue as a going concern. Table of Contents The Offering Common stock offered by selling stockholders Up to 206,387,725 shares of our common stock, including 203,887,725 shares of common stock issuable upon exercise of common stock purchase warrants currently exercisable at $0.01 per share. Shares outstanding prior to the offering 130,314,363 shares as of September 23, 2011. Shares to be outstanding after the offering 334,202,088 shares. Use of proceeds We will not receive any proceeds from the sale of the common stock. However, we will receive the sale price of any common stock we sell to the selling stockholder upon exercise of the warrants. The warrants entitle the holder to exercise their warrants on a cashless basis under certain conditions. In the event that any selling stockholder exercises their warrants on a cashless basis, then we will not receive any proceeds from the exercise of those warrants. We expect to use the proceeds received from the exercise of the warrants, if any, for general working capital purposes. UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON D.C. 20549 ____________________________ FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 _____________________________ BIOMODA, INC. (Name of registrant in its charter) New Mexico 8060 85-0392345 (State or other Jurisdiction of Incorporation or Organization) (Primary Standard Industrial Classification Code Number) (I.R.S. Employer Identification No.) 609 Broadway NE, #215 Albuquerque, New Mexico 87102 (505) 821-0875 (Address and telephone number of principal executive offices and principal place of business) Maria Zannes, Chief Executive Officer BIOMODA, INC. 609 Broadway NE #215 Albuquerque, New Mexico 87102 (505) 821-0875 (Name, address and telephone number of agent for service) Copies to: Thomas A. Rose, Esq. James M. Turner, Esq. Sichenzia Ross Friedman Ference Anslow LLP 61 Broadway, 32nd Flr. New York, New York 10006 (212) 930-9700 (212) 930-9725 (fax) APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC: From time to time after this Registration Statement becomes effective. If any securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box: x If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ________ If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. _________ If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. _________ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a small reporting company. See definitions of large accelerated filer, accelerated filed, and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer o Accelerated filer o Non-accelerated filer o Smaller reporting company x (Do not check if a smaller reporting company) Table of Contents Summary of Related Transactions March 2010 Financing On March 17, 2010, we entered into a securities purchase agreement with five accredited investors pursuant to which we sold in a private placement transaction (i) 6,875,001 shares of our common stock, at a purchase price of $0.16 per share, (ii) Series I warrants to purchase approximately an additional 6,250,001 shares of common stock with an exercise price of $0.25 per share, subject to adjustment as described herein, (iii) Series II warrants to purchase up to approximately an additional 3,750,001 shares of common stock, subject to adjustment as described herein, on an automatic cashless exercise basis with an exercise price of $0.01 per share, and (iv) Series III warrants to purchase an additional 6,250,001 shares of common stock with an exercise price of $0.16 per share. We received aggregate gross proceeds of $1,000,000 from the sale of the shares and the warrants. As a result of the antidilution protection provided in the Series I Warrants, they are currently exercisable to purchase an aggregate of 153,887,725 shares of our common stock over a 5-year term at a current exercise price of $0.01 per share, subject to antidilution protection that could further reduce the exercise price and increase the number of shares issuable upon exercise of the Series I Warrants. The Series I Warrants expire on March 17, 2015. In connection with the private placement, we paid our placement agent, LifeTech Capital, Inc., a division of Aurora Capital LLC, a cash fee of $100,000 and issued it a 5-year warrant to purchase 625,000 shares of our common stock with an exercise price of $0.16 per share. As a result of the antidilution protection provided therein, LifeTech Capital currently has warrants to purchase 15,625,000 shares of common stock at an exercise price of $0.01 per share. These shares are included in the Series I totals. September 2010 Financing On September 15, 2010, we entered into a securities purchase agreement with two accredited investors pursuant to which we sold in a private placement transaction (i) an aggregate of $560,000 in principal amount of convertible notes, with a conversion price equal to the lesser of $.25 or 80% of the average of the three lowest daily VWAPs for the 20 consecutive trading days prior to the date on which the holder elects to convert all or part of its note and (ii) 5-Year warrants to purchase an aggregate of 2,000,000 shares of common stock with an exercise price of $0.25 per share. As a result of the antidilution protection provided in the warrants, they are currently exercisable to purchase an aggregate of 50,000,000 shares of our common stock over a 5-year term at a current exercise price of $0.01 per share, subject to antidilution protection that could further reduce the exercise price and increase the number of shares issuable upon exercise of the warrants. The warrants expire on September 15, 2015. August 2011 Financing In August 2011, we sold 2,500,000 shares of restricted common stock to Gemini Master Fund, Ltd. in exchange for $25,000. Table of Contents CALCULATION OF REGISTRATION FEE Title of Each Class Of Securities To Be Registered Amount To Be Registered Proposed Maximum Offering Price Per Security (1) Proposed Maximum Aggregate Offering Price Amount Of Registration Fee Common Stock, no par value per share 2,500,000 $ 0.02 $ 50,000 $ 5.81 Common Stock, no par value per share issuable upon exercise of warrants exercisable at $0.01 per share 203,887,725 $ 0.02 $ 4,077,754.50 $ 473.43 Total 206,387,725 $ 4,127,754.50 $ 479.24 (1) Estimated solely for purposes of calculating the registration fee in accordance with Rule 457(c) and Rule 457(g) under the Securities Act of 1933, using the average of the high and low price as reported on the Over-The-Counter Bulletin Board on September 23, 2011, which was $0.02 per share. The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine. Table of Contents
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+Prospectus Summary 1
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+in this prospectus. Because this is only a summary, it does not contain all of the information that you should consider before deciding whether to exercise your subscription rights. You should carefully read this entire prospectus, including the information contained in the sections entitled Risk Factors and Management s Discussion and Analysis of Financial Condition and Results of Operations, our audited consolidated financial statements and the accompanying notes for the year ended December 31, 2009, and our unaudited consolidated financial statements for the quarter ended September 30, 2010, in their entirety before you decide to exercise your subscription rights. Company Information Overview Capital Bank Corporation is a bank holding company incorporated under the laws of North Carolina on August 10, 1998. Our primary wholly-owned subsidiary is Capital Bank, a state-chartered banking corporation that was incorporated under the laws of North Carolina on May 30, 1997 and commenced operations on June 20, 1997. Capital Bank is a community bank engaged in the general commercial banking business, primarily in growth markets in central and western North Carolina. As of December 31, 2010, the Bank had assets of approximately $1.6 billion, $1.3 billion in loans, $1.3 billion in deposits and $76.9 million in shareholders equity. Our principal executive office is located at 333 Fayetteville Street, Suite 700, Raleigh, North Carolina 27601, and our telephone number is (919) 645-6400. We operate 32 branch offices in North Carolina: five in Raleigh, four in Asheville, three in Burlington, two in Cary, four in Fayetteville, three in Sanford, and one each in Clayton, Graham, Hickory, Holly Springs, Mebane, Morrisville, Oxford, Pittsboro, Siler City, Wake Forest, and Zebulon. The Bank offers a full range of banking services, including the following: checking accounts; savings accounts; NOW accounts; money market accounts; certificates of deposit; individual retirement accounts; loans for real estate, construction, businesses, agriculture, personal use, home improvement and automobiles; equity lines of credit; mortgage loans; credit loans; consumer loans; credit cards; safe deposit boxes; bank money orders; internet banking; electronic funds transfer services including wire transfers and remote deposit capture; traveler s checks; and free notary services to all Bank customers. In addition, the Bank provides automated teller machine access to its customers for cash withdrawals through nationwide ATM networks. Through a partnership between the Bank s financial services division and Capital Investment Companies, an unaffiliated Raleigh, North Carolina-based broker-dealer, the Bank also makes available a complete line of uninsured investment products and services. As a bank holding company, we are subject to the supervision of the Board of Governors of the Federal Reserve System (the Federal Reserve ). We are required to file with the Federal Reserve reports and other information regarding our business operations and the business operations of our subsidiaries. As a North Carolina-chartered bank, the Bank is subject to primary supervision, periodic examination and regulation by the NC Commissioner and by the FDIC as its primary federal regulator. Memorandum of Understanding On October 28, 2010, the Bank entered into an informal Memorandum of Understanding with the FDIC and the NC Commissioner. In accordance with the terms of the MOU, the Bank has agreed to, among other things, (i) increase regulatory capital to achieve and maintain a minimum Tier 1 leverage capital ratio of at least 8% and a total risk-based capital ratio of at least 12%, (ii) monitor and reduce its commercial real estate concentration, (iii) timely identify and reduce its overall level of problem loans, (iv) establish and maintain an adequate allowance for loan losses, and (v) ensure adherence to loan policy guidelines. In addition, the Bank must obtain regulatory approval prior to paying any dividends to the Company. The MOU will remain in effect until modified, terminated, lifted, suspended or set aside by the regulatory authorities. In addition, the Table of Contents CALCULATION OF REGISTRATION FEE Title of Each Class of Securities Proposed Maximum Amount of to be Registered Aggregate Offering Price Registration Fee Common Stock, no par value per share, underlying Subscription Rights(1) $12,750,000(2) $1,480.28(3) (1) This Registration Statement relates to the shares of Common Stock deliverable upon the exercise of non-transferable subscription rights pursuant to the rights offering described herein. Pursuant to Rule 416(a) under the Securities Act of 1933, as amended (the Securities Act ), this Registration Statement also covers such additional shares of Common Stock as may be issued to prevent dilution of the shares of Common Stock covered hereby resulting from stock splits, stock dividends or similar transactions. (2) Represents the gross proceeds from the assumed exercise of all non-transferable subscription rights to be issued. (3) Calculated pursuant to Rule 457(o) under the Securities Act. This fee is fully offset by a fee of $3,069.00, which was previously paid in connection with the Registration Statement on Form S-1 (File No. 333-162637) filed by Capital Bank Corporation on October 22, 2009. No securities were issued or sold under the prior Registration Statement. Pursuant to Rule 457(p) under the Securities Act, such unused filing fee may be applied to the filing fee payable in connection with this Registration Statement. The registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission acting pursuant to said Section 8(a), may determine. Table of Contents CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS Information set forth in this prospectus may contain various forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the Securities Act ) and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act ), which statements represent our judgment concerning the future and are subject to business, economic, and other risks and uncertainties, both known and unknown, that could cause our actual operating results and financial position to differ materially from the forward-looking statements. Such forward-looking statements can be identified by the use of forward-looking terminology such as may, will, expect, anticipate, estimate, believe, or continue, or the negative thereof or other variations thereof or comparable terminology. We caution that any such forward-looking statements are further qualified by important factors that could cause our actual operating results to differ materially from those in the forward-looking statements, including without limitation: any effects of our recent change of control, in which North American Financial Holdings, Inc. ( NAFH ) acquired a majority ownership of our voting power, including any change in management, strategic direction, business plan, or operations; our ability to comply with the minimum capital ratio requirements imposed by the Bank s Memorandum of Understanding ( MOU ) with the Federal Deposit Insurance Corporation ( FDIC ) and the North Carolina Commissioner of Banks (the NC Commissioner ) and the potential negative consequences that may result; the effect of other requirements of the MOU and any further regulatory actions; our new management s ability to successfully integrate into our business and effectively execute our business plan; the inability to receive dividends from the Bank and to service debt and satisfy obligations as they become due; local economic conditions affecting retail and commercial real estate; our ability to manage disruptions in the credit and lending markets; the risks of changes in interest rates on the levels, composition and costs of deposits, loan demand and the values of loan collateral, securities, and other interest-sensitive assets and liabilities; risks related to loans secured by real estate, including further adverse developments in the real estate markets that would decrease the value and marketability of collateral; the failure of assumptions and estimates underlying the establishment of reserves for possible loan losses and other estimates; competition within the industry; our dependence on attracting and retaining the services of key personnel and management; uncertainty regarding the amount of proceeds received from the rights offering; effects of the rights offering or the terms thereof on the price of our common stock; our ability to cancel the rights offering; the risk that we are required to change the record date for the rights offering to comply with the bylaws of the Company; with respect to the participation in the rights offering by participants and other account holders in the Capital Bank 401(k) Retirement Plan (the 401(k) Plan ), a failure to obtain an exemption from the U.S. Department of Labor (the DOL ), on a retroactive basis, effective to the commencement of the rights offering, such that the acquisition, holding, and exercise of the subscription rights by the 401(k) Table of Contents Company consults with the Federal Reserve Bank of Richmond prior to payment of any dividends or interest on debt. Closing of the Investment On January 28, 2011, the Company completed the issuance and sale to NAFH of 71,000,000 shares of common stock for $181,050,000 in cash. The Company s shareholders approved the issuance of such shares to NAFH, and an amendment to the Company s articles of incorporation to increase the authorized shares of common stock to 300,000,000 shares from 50,000,000 shares, at a special meeting of shareholders held on December 16, 2010. In connection with the Investment, each existing Company shareholder received one contingent value right ( CVR ) per share that entitles the holder to receive up to $0.75 in cash per CVR at the end of a five-year period based on the credit performance of the Bank s existing loan portfolio. Also in connection with the Investment, pursuant to an agreement among NAFH, the U.S. Department of the Treasury (the Treasury ), and the Company, the Company s Fixed Rate Cumulative Perpetual Preferred Stock, Series A (the Series A Preferred Stock ) and warrant to purchase shares of common stock issued by the Company to the Treasury in connection with the Treasury s Troubled Asset Relief Program ( TARP ) were repurchased (the TARP Repurchase ). Following the TARP Repurchase, the Series A Preferred Stock and warrant are no longer outstanding, and accordingly the Company no longer expects to be subject to the restrictions imposed upon us by the terms of our Series A Preferred Stock, or certain regulatory provisions of the Emergency Economic Stabilization Act of 2008 ( EESA ) and the American Recovery and Reinvestment Act ( ARRA ) that are imposed on TARP recipients. As a result of the Investment, NAFH currently owns approximately 84.6% of the Company s common stock. This rights offering is being conducted pursuant to an obligation of the Company under the Investment Agreement. Appointments to the Board of Directors and Management Effective as of the closing of the Investment, R. Eugene Taylor (Chairman), Christopher G. Marshall, Peter N. Foss, William A. Hodges, and R. Bruce Singletary were named to the Board of Directors of the Company and the Bank. Oscar A. Keller, III and Charles F. Atkins, existing members of the Company and Bank Boards of Directors, remained as such following the closing. All other members of the Board of Directors of the Company and the Bank resigned effective January 28, 2011. In addition, the Company has appointed several new executive officers: R. Eugene Taylor as Chief Executive Officer, Christopher G. Marshall as Chief Financial Officer, and R. Bruce Singletary as Chief Risk Officer. See Management. Fiscal 2010 Results On January 31, 2011, the Company announced financial results for the fourth quarter and full year of 2010. Key items for the fourth quarter and full year of 2010 and a subsequent event from early 2011 included the following: On January 28, 2011, North American Financial Holdings, Inc. ( NAFH ) completed its investment of approximately $181 million in the Company through the purchase of 71 million shares of the Company s common stock at $2.55 per share, resulting in NAFH owning approximately 85% of the Company s outstanding common stock and leaving the Company in a well capitalized position. Net loss to common shareholders was ($34.1) million, or ($2.59) per share in the fourth quarter of 2010 compared with ($7.8) million, or ($0.68) per share, in the fourth quarter of 2009. In 2010, net loss to common shareholders was ($63.8) million, or ($4.98) per share, compared with ($9.2) million, or ($0.80) per share, in 2009. Net interest margin was 3.16% in the fourth quarter of 2010 compared with 3.48% in the third quarter of 2010 and 3.25% in the fourth quarter of 2009. Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED FEBRUARY 10, 2011 PROSPECTUS Common Stock Underlying Subscription Rights to Purchase up to 5,000,000 Shares of Common Stock We are distributing at no charge to holders of our common stock, no par value per share, non-transferable subscription rights to purchase up to 5,000,000 shares of our common stock in the aggregate. You will receive 0.3882637 subscription rights for each share of common stock held by you of record as of 5:00 p.m., Eastern Standard time, on January 27, 2011. Each whole subscription right will entitle you to purchase one share of our common stock at a subscription price of $2.55 per share of common stock, subject to an overall beneficial ownership limit of 4.9% for each participant. The subscription rights will expire if they are not exercised by 5:00 p.m., Eastern Standard time, on March 4, 2011, unless we extend the offering period in our sole discretion. You should carefully consider whether to exercise your subscription rights before the expiration of the rights offering period. All exercises of subscription rights are irrevocable. Our Board of Directors is making no recommendation regarding your exercise of the subscription rights. The subscription rights may not be sold or transferred. Investing in our common stock
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001073429_u-s_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001073429_u-s_prospectus_summary.txt
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+Prospectus Summary This summary highlights material information about us and this offering, but does not contain all of the information that you should consider before investing in our Notes. The following summary is qualified in its entirety by the more detailed information and our consolidated financial statements and the accompanying notes included elsewhere or incorporated by reference into this prospectus. You should read this entire prospectus and the information incorporated by reference herein carefully, including the Risk Factors included and incorporated by reference in this prospectus and our consolidated financial statements and the accompanying notes incorporated by reference into this prospectus, before investing. This prospectus and the documents incorporated by reference include forward-looking statements that involve risks and uncertainties. See Cautionary Note Regarding Forward-Looking Statements. Unless otherwise specified or the context requires otherwise, the terms U.S. Concrete, the Company, we, us, our, or USCR, refer to U.S. Concrete, Inc. and its subsidiaries. Selling noteholders refers to the selling noteholders named in the section of this prospectus entitled Selling Noteholders and certain of their transferees after the date of this prospectus. Our Company We are a major producer of ready-mixed concrete, precast concrete products and concrete-related products in select markets in the United States. We operate our business through our ready-mixed concrete and concrete-related products segment and our precast concrete products segment. We are a leading producer of ready-mixed concrete or precast concrete products in substantially all the markets in which we have operations. Ready-mixed and precast concrete products are important building materials that are used in a vast majority of commercial, residential and public works construction projects. All of our operations are in (and all of our sales are made within) the United States. We operate principally in Texas, California and New Jersey/New York, with those markets representing approximately 36%, 25%, and 19%, respectively, of our consolidated revenues from continuing operations for the year ended December 31, 2010. According to publicly available industry information, those states represented an aggregate of 28% of the consumption of ready-mixed concrete in the United States in 2010 (Texas, 13.1%; California, 9.3%; and New Jersey/New York, 5.4%). Our consolidated revenues from continuing operations for the year ended December 31, 2010 were $455.7 million, of which we derived approximately 87.7% from our ready-mixed concrete and concrete-related products segment and 12.3% from our precast concrete products segment. As of August 31, 2011, we had 102 fixed and 11 portable ready-mixed concrete plants, seven precast concrete plants and seven aggregates facilities. During 2010, these plants and facilities produced approximately 3.8 million cubic yards of ready-mixed concrete and 3.1 million tons of aggregates. We lease two of the seven aggregates facilities to third parties and retain a royalty on production from those facilities. Our ready-mixed concrete and concrete-related products segment engages principally in the formulation, preparation and delivery of ready-mixed concrete to the job sites of our customers. We also provide services intended to reduce our customers overall construction costs by lowering the installed, or in-place, cost of concrete. These services include the formulation of mixtures for specific design uses, on-site and lab-based product quality control, and customized delivery programs to meet our customers needs. Our marketing efforts primarily target concrete sub-contractors, general contractors, governmental agencies, property owners and developers and home builders whose focus extends beyond the price of ready-mixed concrete to product quality, on-time delivery and reduction of in-place costs. We generally do not provide paving or other finishing services, which construction contractors or subcontractors typically perform. To a lesser extent, this segment is also engaged in the mining and sale of aggregates and the resale of building materials, primarily to our ready-mixed concrete customers. These businesses are generally complementary to our ready-mixed concrete operations and provide us opportunities to cross-sell various products in markets where we sell both ready-mixed concrete and concrete-related products. We provide our ready-mixed concrete and concrete-related products from our continuing operations in north and west Texas, northern California, New Jersey, New York, Washington, D.C. and Oklahoma. Our precast concrete products segment produces precast concrete products at seven plants in three states, with five plants in California, one in Arizona and one in Pennsylvania. Our customers choose precast technology for a variety of architectural applications, including free-standing walls used for landscaping, soundproofing and security walls, panels used to clad a building fa ade and storm water drainage. Our operations also specialize in a variety of finished products, among which are utility vaults, manholes, catch basins, highway barriers, curb inlets, pre-stressed bridge girders, concrete piles and custom-designed architectural products. For a description of our business, financial condition, results of operations and other important information regarding the Company and our consolidated financial statements and the accompanying notes, we refer you to our filings with the Securities and Table of Contents Primary State or Other Standard I.R.S. Jurisdiction of Industrial Employer Incorporation or Classification Identification Name Organization Code Number Number Superior Concrete Materials, Inc. District of Columbia 3272 52-1046503 Titan Concrete Industries, Inc. Delaware 3272 76-0616374 USC Atlantic, Inc. Delaware 3272 20-4166002 USC Management Co., LLC Delaware 3272 27-1015638 USC Payroll, Inc. Delaware 3272 76-0630665 USC Technologies, Inc. Delaware 3272 20-4166055 U.S. Concrete On-Site, Inc. Delaware 3272 76-0630662 U.S. Concrete Texas Holdings, Inc. Delaware 3272 20-4166120 The address of each of the additional registrants is c/o U.S. Concrete, Inc., 2925 Briarpark, Suite 1050, Houston, Texas 77042. TABLE OF CONTENTS Prospectus Summary 1
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+PROSPECTUS SUMMARY As used in this prospectus, the terms we , us , and our refer to Manas Petroleum Corporation, its wholly-owned subsidiaries DWM Petroleum AG, a Swiss company, Manas Petroleum AG , a Swiss company, Manas Energia Chile Limitada, a Chilean company, Manas Petroleum of Chile Corporation, a Canadian company, and Manas Management Services Ltd., a Bahamian company, and its partially owned subsidiaries CJSC Somon Oil Company, a Tajikistan company, Gobi Energy Partners GmbH, a Swiss company, and Gobi Energy Partners LLC, a Mongolian company, and its 25% ownership interest in CJSC South Petroleum Company, a Kyrgyz company and its 31.7 % ownership interest in Petromanas Energy Inc., a British Columbia company listed on the TSX Venture Exchange in Canada (TSXV: PMI), as the context may require. The following is a summary of the principal features of this distribution and should be read together with the more detailed information and financial data and statements contained elsewhere in this prospectus. The Offering We have engaged Raymond James Ltd. to conduct this offering on a reasonable commercial efforts all or nothing basis as to the minimum number of units to be sold and a reasonable commercial efforts basis as to the balance. The offering is being made without a firm commitment by the Raymond James Ltd., which have no obligation or commitment to purchase any of the units. See Plan of Distribution . Minimum units offered 40,000,000 units Maximum units offered 60,000,000 units Units Each unit consists of one share of our common stock and one common stock purchase warrant. Each common stock purchase warrant entitles its holder to purchase one share of our common stock at a price of $0.70 for a period of 36 months from the date of closing of this offering. Offering price per unit $0.50 Shares to be outstanding, if minimum offering is sold(1) 165,916,792 shares of our common stock Shares to be outstanding, if maximum offering is sold(1) 185,916,792 shares of our common stock Expected net proceeds, if minimum offering is sold(2) $18,650,000 Expected net proceeds, if maximum offering is sold(2) $27,975,000 Use of proceeds Proceeds will be used primarily for seismic, drilling, geological and geophysical works, production sharing contract costs and working capital. See Use of Proceeds . Closing of offering The offering contemplated by this prospectus will terminate upon the earlier of (i) a date mutually acceptable to us and Raymond James Ltd. after the minimum offering is sold or (ii) <>. We will not close the offering if we do not receive subscriptions to purchase at least the minimum offering amount. See Plan of Distribution . Subscription proceeds Subscription proceeds will be held by Raymond James Ltd. until the earlier of our receipt of commitments to purchase 40,000,000 units or <>. Lock-up agreements Our executive officers and directors entered into lock-up agreements with our company and Raymond James Ltd. whereby such executive officers and directors agreed not to sell, assign, convey or otherwise dispose of any of shares of our common stock beneficially owned, directly or indirectly, by them until 120 days after the closing date of this offering. TSX Venture Exchange escrow agreements In order to list the shares of our common stock and common stock purchase warrants on the TSX Venture Exchange, the TSX Venture Exchange requires that all securities of our company held by a director, senior officer and person who holds more than 20% of outstanding shares of our common stock to be subject to an escrow agreement prior to the closing of this offering. These securities will be subject to the following release schedule: 10% of the securities are to be released upon the date of issuance of the final exchange bulletin respecting this offering and listing on the TSX Venture Exchange and an additional 15% of the securities are to be released every 6 months thereafter. (1) The calculation of the number of shares of our common stock that will be outstanding after completion of this offering is based on 125,916,792 shares issued and outstanding as of April 26, 2011 and excludes the shares issuable upon exercise of any outstanding warrants or options as of April 26, 2011 and the shares issuable upon exercise of the warrants included in the units being offered. (2) Before deduction of the expenses of this offering, estimated to be approximately $463,000. Our Business We are in the business of exploring for oil and gas, primarily in Central and East Asia. In particular, we focus on the exploration of large under-thrust light oil prospects in areas where, though there has often been shallow production, their deeper potential has yet to be evaluated. If we discover sufficient reserves of oil or gas, we intend to exploit them. Although we are currently focused primarily on projects located in certain geographic regions, we remain open to attractive opportunities in other areas. We do not have any known reserves on any of our properties. We carry out our operations both directly and through participation in ventures with other oil and gas companies. We are involved in projects in Mongolia and Tajikistan and we were recently involved in a project in Chile. In addition, we own shares of Petromanas Energy Inc., which is involved in oil and gas activities in Albania, and shares of CJSC South Petroleum Company, which is involved in a project in the Kyrgyz Republic. See Description of Business . Corporate Information Our principal executive offices are located at Bahnhofstrasse 9, 6341 Baar, Switzerland, and our telephone number is +41 (44) 718 1030. Our website is www.manaspetroleum.com. Information contained on, or that can be accessed through our website is not incorporated by reference into this prospectus, and such information should not be considered to be part of this prospectus. The following chart reflects our organizational structure as of the date of this prospectus: * We are in the process of restructuring our organization: Currently, DWM Petroleum AG holds record title to 100% of Gobi Energy Partners LLC, of which 26% is held in trust for others (8% is held in trust for each of two investor groups and 10% is held in trust for Shunkhlai Group LLC, a Mongolian oil and gas company). After restructuring, DWM Petroleum AG is to hold 74% of Gobi Energy Partners GmbH and Gobi Energy Partners GmbH is to hold 100% of Gobi Energy Partners LLC. Directors and Executive Officers Our directors and executive officers are as follows: Name Position Held with the Company Heinz J. Scholz Executive Director and Chairman of the Board of Directors Michael J. Velletta Executive Director Dr. Richard Schenz Director Dr. Werner Ladwein Director Peter-Mark Vogel President and Chief Executive Officer Ari Muljana Chief Financial Officer and Treasurer See Directors and Executive Officers . Share Capital We are authorized to issue 300,000,000 shares of common stock with a par value of $0.001 per share and no shares of preferred stock. Each share of common stock entitles the holder to one vote on all matters submitted to a vote of the stockholders including the election of directors. See Description of Securities . Summary of Financial Data The following information represents selected audited financial information for our company for the years ended December 31, 2010 and 2009. The summarized financial information presented below is derived from and should be read in conjunction with our audited financial statements including the notes to those financial statements which are included elsewhere in this prospectus along with the section entitled Management s Discussion and Analysis of Financial Condition and Results of Operations beginning on page 59 of this prospectus. See Financial Statements. Statements of Operations Data Year Ended December 31, 2010 (Audited) Year Ended December 31, 2009 (Audited) Total Revenues Nil Nil Total Operating Expenses $(9,421,318) $(9,501,901) Net Income/(Loss) $74,442,353 $(21,618,015) Basic Earnings/(Loss) Per Share $0.61 $(0.18) Balance Sheet Data At December 31, 2010 (Audited) At December 31, 2009 (Audited) Cash and Cash Equivalents $1,736,571 $804,663 Working Capital $1,714,847 $(7,528,797) Total Assets $74,773,454 $2,753,648 Total Liabilities $532,523 $9,782,835 Total Stockholders Equity (Deficit) $71,723,484 $(7,029,187) Retained Earnings (Accumulated Deficit) $17,710,747 $(56,731,607)
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001082526_sciquest_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001082526_sciquest_prospectus_summary.txt
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+PROSPECTUS SUMMARY The following summary highlights information contained elsewhere in this prospectus. This summary is not complete and does not contain all of the information that you should consider before investing in our common stock. You should read the entire prospectus, including the section entitled Risk Factors, before making a decision to invest in shares of our common stock. In this prospectus, references to our company, we, us, and our mean SciQuest, Inc., a Delaware corporation. Unless otherwise indicated, the information contained in this prospectus assumes (1) the shares of common stock to be sold in this offering are sold at $14.67 per share, which was the last reported sale price of our common stock on March 4, 2011 and (2) no exercise by the underwriters of their overallotment option to purchase up to an additional 590,309 shares of common stock from us and the selling stockholders. Our Business Overview We provide a leading on-demand strategic procurement and supplier enablement solution that integrates our customers with their suppliers to improve procurement of indirect goods and services. Our on-demand software enables organizations to realize the benefits of strategic procurement by identifying and establishing contracts with preferred suppliers, driving spend to those contracts and promoting process efficiencies through electronic transactions. Strategic procurement is the optimization of tasks throughout the cycle of finding, procuring, receiving and paying for indirect goods and services, which can result in increased efficiency, reduced costs and increased insight into an organization s buying patterns. Using our managed SciQuest Supplier Network, our customers do business with more than 30,000 unique suppliers and spend billions of dollars annually. Our current target markets are higher education, life sciences, healthcare and state and local governments, and our customers are the purchasing organizations and individual employees that purchase indirect goods and services using our solution. We tailor our solution for each of the vertical markets we serve by offering industry-specific functionality, content and supplier connections. Once connected to our network, customers and suppliers can easily exchange real-time electronic procurement information and conduct transactions. As of December 31, 2010, we serve 195 customers operating in 14 countries and offer our solution in five languages and 22 currencies. In addition, as a result of our January 2011 acquisition of AECsoft USA, Inc., or AECsoft, we have added more than 100 additional customers operating in four countries. Our value proposition has led to an average annual customer renewal rate, on a dollar basis, of approximately 100% over the last three fiscal years. We believe our renewal rates are among the highest of on-demand model companies. We deliver our solution over the Internet using a Software-as-a-Service, or SaaS, model, which enables us to offer greater functionality, integration and reliability with less cost and risk to the organization than traditional on-premise solutions. Customers pay us subscription fees and implementation service fees for the use of our solution under multi-year contracts that are generally three to five years in length. We typically receive subscription payments annually in advance and implementation service fees as the services are performed, typically within the first three to eight months of contract execution. Unlike many other providers of procurement solutions, we do not charge suppliers any fees for the use of our network, because suppliers ultimately may pass on such costs to the customer. Industry Background Indirect goods and services procurement is the purchase of the day-to-day necessities of the workplace such as office supplies, laboratory supplies, furniture, computers, MRO (maintenance, repair and operations) supplies, and food and beverages. Indirect goods and services tend to be low cost but are usually bought in high volumes by a wide variety of employees throughout an organization. Table of Contents The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is declared effective. This prospectus is not an offer to sell these securities and we are not soliciting offers to buy these securities in any state where the offer or sale is not permitted. PRELIMINARY PROSPECTUS 3,935,393 Shares Common Stock $ per share SciQuest, Inc. is selling 1,000,000 shares of our common stock and the selling stockholders identified in this prospectus are selling an additional 2,935,393 shares. We will not receive any of the proceeds from the sale of the shares of the selling stockholders. We and the selling stockholders have granted the underwriters a 30-day option to purchase up to an additional 590,309 shares of common stock to cover over-allotments, if any. On March 4, 2011, the last reported sale price of our common stock on the NASDAQ Global Market was $14.67 per share. Our common stock is traded on the NASDAQ Global Market under the symbol SQI. Investing in our common stock involves risks. See Risk Factors beginning on page 11. Per Share Total Public offering price $ $ Underwriting discount $ $ Proceeds, before expenses, to us $ $ Proceeds, before expenses, to the selling stockholders $ $ Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. Stifel Nicolaus Weisel William Blair Company JMP Securities Pacific Crest Securities Canaccord Genuity The date of this prospectus is , 2011. Table of Contents Our target market for strategic procurement of indirect goods and services is a subset of the broader supply procurement and sourcing application chain management market, which AMR Research estimates in a July 2009 report entitled The Global Enterprise Application Market Sizing Report, 2008-2013 as a $2.9 billion global opportunity in 2010, growing at an 8% compounded annual growth rate from 2010 through 2013. Based on our own internal analysis, we believe that our current addressable market is approximately $1.0 billion within our current target markets as follows: higher education ($305 million), life sciences ($300 million), healthcare ($175 million) and state and local government ($250 million). The procurement process for indirect goods and services is often not well-managed or controlled. Characteristics of these traditional processes include: Lack of clearly defined procurement guidelines and awareness of preferred suppliers. In many cases, because processes are cumbersome, ill-defined and time consuming, many employees have difficulty following the procurement approval processes and fail to purchase from preferred suppliers. Limited ability to analyze spend. Given the lack of automation and centralized reporting, organizations have difficulty analyzing what they are buying from suppliers. Dissatisfied employees. Manual, non-integrated processes often lead to excess costs, delays and errors, resulting in a frustrating experience for the employee. Efforts to automate the procurement function for indirect goods and services initially consisted of add-on modules to enterprise resource planning, or ERP, systems and first generation procurement systems developed 10 to 15 years ago. The introduction of SaaS strategic procurement solutions within the past few years has enabled buyers and suppliers to transact with each other online more efficiently. However, these offerings still suffer from the fact that they are primarily horizontal solutions that neither provide functionality and content specific to vertical markets nor have a robust supplier network that drives economies of scale. Our Solution We offer an on-demand strategic procurement and supplier enablement solution that enables organizations to more efficiently source indirect goods and services, manage their spend and obtain the benefits of compliance with purchasing policies and negotiating power with suppliers. Our on-demand strategic procurement software suite coupled with our managed supplier network forms our integrated solution, which is designed to achieve rapid and sustainable savings. Our solution provides customers with a set of products and services that enable them to optimize existing procurement processes by automating the entire source-to-settle process. The SciQuest Supplier Network acts as a communications hub that connects our customers to their suppliers. Our solution provides the following key benefits: Significant return on investment ( ROI ). Our customers are able to achieve significant returns on investment through savings from negotiated discounts, automated requisition/order processing, contract lifecycle management, settlement automation and sourcing. Content and functionality specific to our vertical markets. Our software has specific configurable content and functionality that meets the unique needs of our targeted vertical markets. Easier access to customers supplier network. Customers can easily access their preferred suppliers using a single solution and avoid the costs and inefficiencies associated with traditional one-to-one supplier management. Greater adoption by employees. Our intuitive shopping interface provides employees with easy and automated visibility and access to goods and services. Greater adoption by suppliers. Suppliers typically are motivated to join our network due to ease of enablement and lack of supplier fees. Visibility into spending patterns and activity. Our solution provides granular detail into user spending behavior and provides detailed analytics that allow organizations to continually improve their purchasing practices. Table of Contents Table of Contents Visibility into suppliers. Our solution provides customers with greater insight into their supplier base by identifying supplier data and qualities, such as supplier capabilities and diversity qualifications, that may impact purchasing decisions. Ease of deployment via integration with existing systems. Our highly-configurable solution integrates with many leading ERP systems to speed deployment and facilitate the interchange of transaction, accounting, settlement and user data. Our Business Strengths In addition to our differentiated customer solution, we believe our market approach and business model offer specific benefits that are instrumental to our successful growth. These include: Focus on customer value. We focus extensively on ensuring that customers achieve maximum benefit from our solution, and we proactively engage with our customers to continually improve our software and services. Expertise in our targeted vertical markets. Our domain expertise allows us to provide our customers with a highly tailored and differentiated solution that is difficult for our competitors to replicate. Extensive content and supplier network. Suppliers are not charged any fees or transaction costs for purchases consummated through the SciQuest Supplier Network, which has facilitated the growth of our network to over 30,000 unique suppliers servicing the higher education, life sciences, healthcare and state and local government markets. Ability to manage costs. Our culture of lean management principles that extends from our senior management throughout our company has kept our capital expenditures low and helped lower our operating expenses as a percentage of revenues from 95% in 2007 to 75% in 2010. High visibility business model. The recurring nature of our revenues provides high visibility into future performance, and the upfront payments result in cash flow generation in advance of revenue recognition. For each of the last three fiscal years, greater than 80% of our revenues were recognized from contracts that were in place at the beginning of the year. Our Growth Strategy We seek to become the leading provider of strategic procurement solutions for indirect goods and services. Our key strategic initiatives include: Further penetrating our existing vertical markets. We will continue to focus our efforts on acquiring new customers in our newer healthcare and state and local government markets while increasing our emphasis on mid-sized customer acquisition opportunities in our core higher education and life sciences markets. Capitalizing on cross-selling opportunities into our installed customer base. We plan to develop and/or acquire additional modules and products to sell to our existing customers by leveraging our position as a trusted strategic procurement solution vendor in our targeted vertical markets. Selectively pursuing acquisitions. We may pursue acquisitions to accelerate our growth, enhance the capabilities of our existing solution, broaden our solution offerings or expand into new verticals or geographies. Selectively expanding into new vertical markets. We may pursue new vertical expansion through internal product development, sales and marketing initiatives or strategic acquisitions. Investing in international expansion to acquire new customers. We intend to continue our international expansion by increasing our international direct sales force and establishing additional third-party sales relationships. TABLE OF CONTENTS Page Prospectus Summary 1
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+PROSPECTUS SUMMARY
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001094058_ediets_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001094058_ediets_prospectus_summary.txt
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+This summary highlights information contained elsewhere in this prospectus or incorporated by reference therein. This summary may not contain all of the information that you should consider before deciding whether or not you should exercise your rights. You should read the entire prospectus carefully, including the section entitled Risk Factors beginning on page 13 of this prospectus. This prospectus and the documents incorporated by reference herein contain more detailed descriptions of the terms and conditions of the rights offering and provide additional information about us and our business, including potential risks related to the rights offering, our common stock, and our business. Our Business Products and Services eDiets.com, Inc. leverages the power of technology to bring weight loss solutions to both consumers and businesses. We generate revenue in four ways. We sell digital weight-loss programs. We offer a nationwide weight loss oriented meal delivery service. We derive licensing revenues for the use of our intellectual property and development revenues related to the planning, design and development of private-label nutrition Websites. We sell advertising throughout our content assets, which are primarily our diet, fitness and healthy lifestyle-oriented Websites. Subscription Business (includes our digital subscription-based plans and our meal delivery plans) We have been offering digital subscription-based plans in the United States since 1998, when we launched our first diet plan. Our digital diet plans are personalized according to an individual s weight goals, food and cooking preferences and include the related shopping lists and recipes. eDiets offers a variety of approximately twenty different diet plans, some of which we have developed and some of which we have licensed from third parties under exclusive arrangements. We also offer a subscription-based nationwide weight loss oriented meal delivery service. Subscribers to our digital diet and meal delivery plans are acquired through our own advertising or through co-marketing arrangements with third parties. In addition to a digital diet or meal delivery product, they receive access to support offerings including interactive online information, communities and education as well as telephone and online support. eDiets offers message boards on various topics of interest to our subscribers, online meetings presented by registered dietitians and the resources of approximately 30 customer service representatives and nutritionists. Digital subscription programs ranging from four weeks to 52 weeks are billed in advance in varying increments of time. Substantially all of our digital subscribers purchase programs via credit/debit cards, with renewals billed automatically, until cancellation. During 2010 we recorded approximately $3.7 million in digital plans revenue, or approximately 16.0% of total revenues for 2010. Meal delivery subscribers purchase a full week or five days of prepared breakfasts, lunches, and dinners, supplemented by snacks that are generally shipped to arrive within two to three days. During 2010 we recorded approximately $16.2 million in meal delivery revenue, or approximately 69.5% of total revenues for 2010. License Business (includes business-to-business and royalty revenue) Our eDiets Corporate Services subsidiary is actively engaged in providing private label online nutrition, fitness and wellness programs to companies mainly in the health insurance, pharmaceutical and food industries. During 2010 we recorded approximately $2.5 million in business-to-business revenue, or approximately 10.7% of total revenues for 2010. Table of Contents We also recognized $0.6 million in royalty revenue in 2010 as a result of having licensed to Tesco plc ( Tesco ) the exclusive rights to use eDiets brand and diet plan technology in the UK and Ireland. Effective July 31, 2009, we terminated this exclusive licensing agreement with Tesco. The termination agreement provides Tesco with certain continuing rights in the Company technology used by or incorporated into Tesco s diet website prior to termination, including a three-year non-exclusive right to use such technology and, thereafter, an assignment of certain intellectual property rights relating to such technology. Content Business (includes advertising and ecommerce revenue) Our advertising sales revenues were approximately $0.2 million, or 1.0% of total revenues for 2010, and are derived from our flagship Website, www.eDiets.com. The site includes free, regularly updated content developed primarily by our in-house editorial staff. Content is grouped into channels including Diet & Nutrition, Fitness, Mind & Body, Health, Food & Recipes and Success Stories. Additional advertising revenues are generated through placements in our free opt-in email newsletters and through placements within the subscription sales process. Our principal executive offices are located at 1000 Corporate Drive, Suite 600, Fort Lauderdale, FL 33334. Our telephone number is: (954) 360-9022. Table of Contents Summary Financial Information The following table summarizes certain selected consolidated financial data of the Company as of, and for each of the years in the five-year period ended December 31, 2010. The selected consolidated financial data has been derived from our audited Consolidated Financial Statements. The selected consolidated financial data should be read in conjunction with our Management s Discussion and Analysis of Financial Condition and Results of Operations and our Consolidated Financial Statements and Notes contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2010 incorporated by reference into this prospectus. YEAR ENDED DECEMBER 31, 2010 2009 2008 2007 2006 (in thousands, except per share data) Consolidated Statement of Operations Data: Continuing Operations: Revenue Digital plans $ 3,745 $ 4,970 $ 9,345 $ 19,482 $ 38,025 Meal delivery 16,239 7,839 9,405 3,994 3,172 Business-to-business 2,499 4,054 3,646 2,573 1,655 Other 874 1,245 1,539 3,680 5,962 Total Revenue 23,357 18,108 23,935 29,729 48,814 Costs and Expenses: Cost of revenue Digital plans 515 863 2,610 3,112 6,137 Meal delivery 10,599 5,912 9,358 3,665 3,170 Business-to-business 130 198 136 200 96 Other 180 236 321 245 219 Total cost of revenue 11,424 7,209 12,425 7,222 9,622 Technology and development 2,801 3,710 4,297 3,723 3,203 Sales, marketing and support 14,003 8,896 11,664 17,029 30,445 General and administrative 4,595 4,882 6,070 6,984 8,549 Amortization of intangible assets 31 295 882 1,213 760 Impairment of goodwill and intangible assets 6,865 5,191 2,296 Total costs and expenses 39,719 24,992 40,529 38,467 52,579 Loss from operations (16,362 ) (6,884 ) (16,594 ) (8,738 ) (3,765 ) Interest income 3 11 109 282 255 Interest expense (2,741 ) (5,170 ) (3,357 ) (781 ) (71 ) Interest expense incurred with debt conversion (23,961 ) Loss on extinguishment of related party debt (213 ) Loss before income tax provision (43,274 ) (12,043 ) (19,842 ) (9,237 ) (3,581 ) Income tax benefit (provision) 1 (18 ) (6 ) (171 ) (66 ) Net loss from continuing operations (43,273 ) (12,061 ) (19,848 ) (9,408 ) (3,647 ) Discontinued Operations: Loss from operations, net of tax (412 ) Loss on disposal, net of tax (41 ) Loss from discontinued operations, net of tax (453 ) Net loss $ (43,273 ) $ (12,061 ) $ (19,848 ) $ (9,408 ) $ (4,100 ) Table of Contents YEAR ENDED DECEMBER 31, 2010 2009 2008 2007 2006 (in thousands, except per share data) Per Share Data: Basic and diluted loss per common share: Loss from continuing operations $ (0.94 ) $ (0.47 ) $ (0.79 ) $ (0.38 ) $ (0.16 ) Loss from discontinued operations (0.02 ) Net loss $ (0.94 ) $ (0.47 ) $ (0.79 ) $ (0.38 ) $ (0.18 ) Weighted average common and common equivalent shares outstanding: Basic and Diluted 46,258 25,721 25,115 24,811 23,421 YEAR ENDED DECEMBER 31, 2010 2009 2008 2007 2006 (in thousands) Consolidated Statement of Cash Flows Data: Net cash provided by (used in): Operating activities $ (6,901 ) $ (4,590 ) $ (8,202 ) $ (4,774 ) $ (3,110 ) Investing activities (719 ) (74 ) (1,148 ) (4,062 ) (10,609 ) Financing activities 6,497 3,637 4,652 10,009 11,010 DECEMBER 31, 2010 2009 2008 2007 2006 (in thousands) Consolidated Balance Sheet Data: Total assets $ 3,596 $ 12,456 $ 15,671 $ 27,691 $ 27,544 Total debt 1,044 16,890 11,958 7,029 355 Debt (excluding capital lease obligations) 1,000 16,824 11,808 6,247 Stockholders (deficit) equity (1,970 ) (9,570 ) (2,781 ) 12,862 16,196 Table of Contents The Rights Offering The following summary describes the principal terms of the rights offering, but is not intended to be complete. See the information in the section entitled The Rights Offering in this prospectus for a more detailed description of the terms and conditions of the rights offering. Total number of shares of common stock available for subscription 9,196,581 Securities offered We are distributing to you, at no charge, one non-transferable subscription right for every share of our common stock that you own as of 5:00 p.m., New York time, on the record date, either as a holder of record or, in the case of shares held of record by brokers, dealers, custodian banks or other nominees on your behalf, as a beneficial owner of such shares. Basic subscription privilege The basic subscription privilege of each subscription right will entitle you to purchase .15 shares of our common stock at a subscription price of $[ ] per share. We will not issue fractional shares of common stock in the rights offering, and holders will only be entitled to purchase a whole number of shares of common stock, rounded down to the nearest whole number a holder would otherwise be entitled to purchase. Subscription price $[ ] per share. To be effective, any payment related to the exercise of a subscription right must clear prior to the expiration of the rights offering. Over-subscription privilege If you purchase all of the shares of common stock available to you pursuant to your basic subscription privilege, you may also choose to subscribe for shares of our common stock that are not purchased by other holders through the exercise of their basic subscription privileges. You may subscribe for shares of our common stock pursuant to your over-subscription privilege, subject to proration of available shares. Record date 5:00 p.m., New York time, on April 18, 2011. Expiration date 5:00 p.m., New York time, on May 11, 2011, unless we extend the rights offering period. Use of proceeds Although the actual amount will depend on participation in the rights offering, if the rights offering is fully subscribed for we expect the gross proceeds from the rights offering to be approximately $[ ] million. We intend to use the proceeds of the rights offering to provide additional liquidity for working capital and general corporate purposes. Transferability of rights The subscription rights are non-transferable during the course of the subscription period. No Board Recommendation Our board of directors makes no recommendation to you about whether you should exercise any rights. You are urged to make an independent investment decision about whether to exercise your Table of Contents rights based on your own assessment of our business and the rights offering. Please see the section of this prospectus entitled Risk Factors for a discussion of some of the risks involved in investing in our common stock. No revocation Any exercise of subscription rights is irrevocable, even if you later learn information that you consider to be unfavorable to the exercise of your rights. You should not exercise your subscription rights unless you are certain that you wish to purchase additional shares of common stock at a subscription price of $[ ] per share. Material U.S. federal income tax consequences For U.S. federal income tax purposes, you should not recognize income or loss upon receipt or exercise of subscription rights. You should consult your own tax advisor as to your particular tax consequences resulting from the rights offering. For a detailed discussion, see Material U.S. Federal Income Tax Consequences. Purchase commitment Kevin Richardson agreed to purchase up to $300,000 of common stock in the rights offering pursuant to his basic subscription privilege and, subject to the availability of shares, his over-subscription privilege. As of the record date, Mr. Richardson individually owned approximately 3.1% of our outstanding shares, which would entitle him to purchase 285,372 shares pursuant to his basic subscription privilege. Extension, cancellation, and Amendment We have the option to extend the rights offering and the period for exercising your subscription rights, although we do not presently intend to do so. Our board of directors may cancel the rights offering at any time for any reason. If the rights offering is cancelled, all subscription payments received by the subscription agent will be returned promptly, without interest or penalty. We also reserve the right to amend or modify the terms of the rights offering. Procedure for exercising rights To exercise your subscription rights, you must take the following steps: If you are a registered holder of our shares of common stock, you may deliver payment and a properly completed rights certificate to the subscription agent before 5:00 p.m., New York time, on May 11, 2011. You may deliver the documents and payments by mail or commercial carrier. If regular mail is used for this purpose, we recommend using registered mail, properly insured, with return receipt requested. If you are a beneficial owner of shares that are registered in the name of a broker, dealer, custodian bank or other nominee, or if you would rather an institution conduct the transaction on your behalf, you should instruct your broker, dealer, custodian bank or other nominee to exercise your subscription rights on your behalf and deliver all documents and payments before 5:00 p.m., New York time, on May 11, 2011. Subscription agent American Stock Transfer & Trust Company, LLC. Information agent Phoenix Advisory Partners. Table of Contents Questions Questions regarding the rights offering should be directed to our investor relations department at (310) 954 -1105 or Phoenix Advisory Partners, toll-free at (877) 478-5038. Shares outstanding before the rights offering 61,310,542 shares as of April 7, 2011. Shares outstanding after completion of the rights offering Assuming no outstanding options or warrants for our common shares are exercised prior to the expiration of the rights offering and the full 9,196,581 shares are subscribed for, we expect 70,507,123 shares of common stock will be outstanding immediately after completion of the rights offering.
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001104040_asia-cork_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001104040_asia-cork_prospectus_summary.txt
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+PROSPECTUS SUMMARY Because this is only a summary, it does not contain all of the information that may be important to you. You should carefully read the more detailed information contained in this prospectus, including our financial statements and related notes. Our business involves significant risks. You should carefully consider the information under the heading Risk Factors beginning on page 12. As used in this prospectus, unless otherwise indicated, the terms we , our , us , Company and Hanxin refer to ASIA CORK, INC., a Delaware corporation, formerly known as Hankersen International Corp. ( Hankersen ); its wholly-owned subsidiary, Hanxin (Cork) International Holding Co., Ltd., a Company organized in the British Virgin Islands ( Hanxin International ); its wholly-owned subsidiary, Xi An Cork Investments Consultative Management co., Ltd., a Company organized in the People s Republic of China ( Xi An ); Xian Hanxin Technology co., Ltd. ( Hanxin ), the subsidiary which it owns 92% equity interest and was organized in the People s Republic of China, and Cork Import and Export Co., Ltd., a subsidiary in which Hanxin owns a 75% equity interest Company and was organized in the People s Republic of China ( Cork I&E ). China or PRC refers to the People s Republic of China. RMB or Renminbi refers to the legal currency of China and $ or U.S. Dollars refers to the legal currency of the United States. THE COMPANY Asia Cork, Inc. We are a holding company whose primary business operations are conducted through our wholly-owned subsidiary Hanxin International, and its subsidiaries, Hanxin and Cork I&E. We are engaged in the development, manufacture and distribution of cork wood floor, wall, sheets, rolls and other cork decorating materials in China and other countries. Our Background History Asia Cork Inc. (f/k/a Hankersen International Corp.), was incorporated under the laws of the State of Delaware on August 1, 1996. We were formed in connection with the merger acquisition of Kushi Macrobiotics Corp. ( KMC ) with American Phoenix Group, Inc. ( APGI ) in 1996. Prior to such acquisition, KMC had operated a business of marketing a line of natural foods (the Kushi Cuisine ). This business was not successful and management determined that it would be in the shareholder s interest for KMC to operate a different business. In August 2005, we, through Kushi Sub, Inc., a newly formed Delaware corporation and wholly-owned subsidiary of us ("Acquisition Sub") acquired all the ownership interest in Hanxin (Cork) International Holding Co., Ltd. ("Hanxin International"), a British Virgin Islands limited liability corporation, organized in September 2004. We acquired Hanxin International in exchange for 24,000,000 shares of Common Stock and 1,000 shares of the Series A Preferred Stock, which such shares converted into 29,530,937 shares of Common Stock. Subsequent to the merger and upon the conversion of the Series A Preferred Stock, the former shareholders of Hanxin International own 95% of the outstanding shares of our Common Stock. Hanxin International has no other business activities other than owning 100% of Xi'An Cork Investments Consultative Management Co., Ltd. ("Xi'An"), which owns 92% of Xian Hanxin Technology Co., Ltd. ("Hanxin"), incorporated in July 2002, both Xi'An and Hanxin are People's Republic of China (PRC) corporations. Most of our operating and business activities are conducted through Hanxin. Hanxin is our principal operating subsidiary. During the year ended December 31, 2005, Hanxin acquired a 75% equity interest of Cork Import and Export Co. Ltd. ( Cork I&E ), a PRC corporation that engages in cork trading businesses. We are a reporting Company under Section 13 of the Securities Exchange Act of 1934, as amended. Our shares of Common Stock are not currently listed or quoted for trading on any national securities exchange or national quotation system but are quoted on the OTC Bulletin Board under the symbol AKRK. . We are applying for the listing of our Units and Common Stock on NASDAQ or AMEX on or promptly after the date of this prospectus. Prior to the separate trading of the Common Stock and Warrants, we will apply to have the Warrants comprising the Units listed on NASDAQ or AMEX. UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 AMENDMENT NO 5 TO FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ASIA CORK INC. (Name of Registrant as Specified in Its Charter) Delaware 2435 13-3912047 (State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer Incorporation or Organization) Classification Code Number) Identification No.) 3rd Floor, A Tower of Chuang Xin Information Building No. 72 Second Keji Road, Hi Tech Zone Xi An China (011) 86 - 13301996766 (Address and Telephone Number of Principal Executive Offices) Steve Schuster, Esq. McLaughlin & Stern, LLP 260 Madison Avenue New York, NY 10016 (212) 448-1100 Fax (212) 448-0066 (Name, Address and Telephone Number of Agent for Service) COPIES TO: Steve Schuster, Esq. McLaughlin & Stern, LLP SUNNY J. BARKATS, ESQ JSBarkats , PLLC 260 Madison Avenue New York, New York 10016 (212) 448 1100 Fax (212) 448 0066 110 E. 40 th St., 9 th Fl New York, NY 10016 (646) 502-7001 Fax (646) 607-5544 Approximate Date of Proposed Sale to the Public: As soon as practicable after the effective date of this Registration Statement. If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company (5) Represents shares of the Registrant s Common Stock being registered for resale that have been or may be acquired upon the conversion of promissory notes that have been previously issued to selling stockholders (the Promissory Notes ) named in the Resale Prospectus. This amount represents the conversion of $350,000 of the entire $700,000 of principal of the notes plus accrued but unpaid interest through January 31, 2011 at a conversion rate of $.21 per share based upon the average of the high and low prices of the Common Stock on January 21, 2011. Of this amount, no shares of Common Stock have already been issued to the selling stockholders in connection with the conversion of Promissory Notes. (6) Represents shares of the Registrant s Common Stock being registered for resale that have been or may be acquired upon the exercise of warrants that have been previously issued to selling stockholders named in the Resale Prospectus. Of this amount, no shares of Common Stock have already been issued to the selling stockholders in connection with the exercise of warrants. (7) Represents shares of the Registrant s Common Stock being registered for sale by a selling stockholder. (8) Previously paid. THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPE CIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933, AS AMENDED OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTIN G PURSUANT TO SAID SECTION 8(a) MAY DETERMINE. Recent Events Merger and Change of Name On July 11, 2008, the Company's wholly-owned subsidiary, Asia Cork Inc., was merged into its parent, the Company, in order to change the name of the Company, after approval by the Board of Directors of the Company pursuant to the Delaware General Corporation Law. The Company is the surviving Company of the merger and, except for the adoption of the new name its Certificate of Incorporation is otherwise unchanged. The wholly-owned subsidiary was formed in July 2008 and had no material assets. As permitted by Delaware General Corporation Law, the Company assumed the name of its wholly owned subsidiary following the merger and now operates under the name Asia Cork Inc. Reverse Stock Split Concurrently with the date of this prospectus, the Company will effectuate a reverse stock split (the Reverse Split ) in an amount to be ultimately agreed upon between the Board of Directors of the Company and ICM Capital Markets LTD., however, the Reverse Split will be within a range of 1-for-10 to 1-for-30. On September 2, 2010, the Board of Directors adopted a resolution seeking shareholder approval of the Company to amend the Company s certificate of incorporation to affect the Reverse Split and thereafter, stockholders holding approximately 53% of the outstanding shares of the Company s Common Stock approved the Reverse Split. The Company filed with the Securities and Exchange Commission and circulated to its shareholders an Information Statement detailing the terms of the Reverse Split. None of the references to the outstanding shares of our Common Stock in this prospectus give effect to the Reverse Split. THE OFFERING Securities we are Offering 1,250,000 Units, each Unit consisting of one share of Common Stock and one warrant to purchase one share of Common Stock (1) Common Stock: Outstanding Prior to Offering 39,175,517 shares (2) Outstanding After Offering _________ shares Warrants: Outstanding Prior to Offering 0 Outstanding After Offering ____ (3) Exercisability Each Warrant is exercisable for one share of Common Stock Exercise period The Warrants expire five years from the date of this prospectus and become exercisable one year from the date of issuance. Each share of Common Stock and Warrant will not be separately tradable for a period of one year, unless sooner as may be approved by the representatives of the Underwriters in their sole discretion. EXPLANATORY NOTE This Registration Statement contains two prospectuses, as set forth below. Public Offering Prospectus. A prospectus (the Public Offering Prospectus ) to be used for the public Offering by the Registrant of up to Units of the Registrant, each consisting of one share of Common Stock and one Warrant to purchase one share of Common Stock through the Underwriters and such other underwriters as may participate in the Offering (collectively, the Underwriters ) named on the cover page of the Public Offering Prospectus. We are also registering the Units (including the securities comprising the Units) issuable upon exercise of the warrants to be received by the Underwriter in this Offering (the Public Offering Prospectus ). Resale Prospectus. A prospectus to be used for the resale by selling stockholders (the Selling Stockholders ) of up to 5,178,334 shares of the Registrant s Common Stock (including shares that may be acquired upon the exercise of warrants, and shares that may be acquired upon the conversion of Promissory Notes that have been previously issued to selling stockholders named in the Resale Prospectus) (the Resale Prospectus ). The Resale Prospectus is substantively identical to the Public Offering Prospectus, except for the following principal points: It contains different outside and inside front covers; It contains different Offering sections in the Prospectus Summary section on page 81; It contains different Use of Proceeds sections on page 82; The Capitalization and Dilution sections are deleted from the Resale Prospectus; A Selling Stockholders section is included in the Resale Prospectus beginning on page 83; References in the Public Offering Prospectus to the Resale Prospectus will be deleted from the Resale Prospectus; The Underwriting section from the Public Offering Prospectus on page 72 is deleted from the Resale Prospectus and a Plan of Distribution is inserted in its place on page 85; The Legal Matters section in the Resale Prospectus on page 87 deletes the reference to counsel for the Underwriters; and The outside back cover of the Public Offering Prospectus is deleted from the Resale Prospectus. The Registrant has included in this Registration Statement, after the financial statements, a set of alternate pages to reflect the foregoing differences of the Resale Prospectus as compared to the Public Offering Prospectus. The Selling Stockholders named in the Resale Prospectus holding an aggregate of 5,178,334 shares of Common Stock, including, shares of Common Stock issuable upon the exercise of warrants and shares of Common Stock underlying Promissory Notes, have agreed that they will not sell any of such shares of Common Stock for a period of nine months after the Offering is completed (except for 250,000 of the 5,178,334 shares which are subject to a restriction on sales for a period of six months after the Offering is completed), without the Underwriters consent, when all of their shares will be released from the lock-up restrictions. None of the references to the outstanding shares of our Common Stock in this prospectus give effect to a reverse stock split that the Company will effectuate concurrently with the date of this prospectus (the Reverse Split ), except that the 1,250,000 Units being sold in the Offering, referenced throughout this prospectus assumes that the ratio of the Reverse Split is 1 for 12.5. The Reverse Split will be in an amount to be ultimately agreed upon between the Board of Directors of the Company and the Underwriters within a range of 1-for-10 to 1-for-30. Redemption The Warrants are subject to redemption commencing one year after the date hereof at $.05 per Warrant on twenty (20) days prior written notice, provided the closing price of the Common Stock for the twenty (20) consecutive trading days ending within fifteen (15) days of the date of notice of redemption averages in excess of $11.70 per share (180% of the initial Offering price). Anticipated Offering Price $5.50 to $7.50 per Unit. For purposes of this prospectus, the Company assumes a $6.50 per Unit price, which is the midpoint of the anticipated offering price, consisting of $6.25 per share and $.25 per Warrant. Use of proceeds We intend to use the net proceeds of this Offering for general corporate purposes, including, without limitation, increasing our working capital and expanding both our domestic and overseas market share by increasing our marketing efforts, expanding our sales channels through additional distributors and increasing our production capacity. See Use of Proceeds on page 17 for more information on the use of proceeds. OTC Bulletin Board symbol for our Common Stock AKRK.OB Lock-Up Agreement All of our officers, directors and 5% stockholders have agreed that, for a period of 18 months, they will be subject to a Lock-Up agreement prohibiting any sales or hedging transactions of our securities owned by them. Risk Factors Investing in these securities involves a high degree of risk. As an investor you should be able to bear a complete loss of your investment. You should carefully consider the information set forth in the Risk Factors section beginning on page 12. (1) Excludes up to 125,000 units underlying warrants to be received by the Underwriters in this Offering. The number of Units being sold assumes that the ratio of the Reverse Split is 1 for 12.5. (2) Based on 35,663,850 shares of Common Stock issued and outstanding as of January 24, 2011 plus (i) 3,261,667 shares issuable to the Selling Stockholders upon conversion of certain promissory notes (the Selling Stockholder Promissory Notes ) and (ii) 250,000 shares issuable to a Selling Stockholder. Such amount does not give effect to (i) the Reverse Split,(ii) the 1,250,000 shares of Common Stock included in the Units being issued in the Offering, (iii) the 1,250,000 shares of Common Stock issuable upon exercise of the Warrants, (iv) the 125,000 shares of Common stock issuable upon exercise of the Underwriters Warrants to purchase up to 10% of the Units issued in the Offering) and (v) 1,666,667 shares that may be issuable to the Selling Stockholders upon exercise of their warrants (3) Excludes the 125,000 warrants underlying warrants to be received by the Underwriters in this Offering. SUMMARY OF CONSOLIDATED FINANCIAL INFORMATION The following tables summarize our consolidated financial data for the periods presented. You should read the following financial information together with the information under Management s Discussion and Analysis of Financial Condition and Results of Operations and our consolidated financial statements and the related notes to these consolidated financial statements appearing elsewhere in this Prospectus. The selected consolidated statements of operations data for the nine months financial period ended September 30, 2010 and 2009, and the selected consolidated balance sheet data as of September 30, 2010 are derived from our unaudited consolidated financial statements, which are included elsewhere herein. The unaudited consolidated financial statements have been prepared on the same basis as our audited financial statements and include, in the opinion of management, all adjustments that management considers necessary for a fair presentation of the financial information set forth in those statements. The selected consolidated statements of operations data for the financial years ended December 31, 2009, 2008 and 2007 and the selected consolidated balance sheet data as of December 31, 2009 are derived from our consolidated financial statements, and which for the periods ended December 31,l 2009 and 2008 are included elsewhere herein, have been audited by MS Group CPA, LLC, an independent registered public accounting firm, as indicated in their report. Historical results are not necessarily indicative of the results to be expected in future periods. Year Ended December 31, Nine Months Ended September 30, 2007 2008 2009 2009 2010 (Unaudited) Revenue $ 16,051 $ 21,378 $ 24,393 $ 17,056 $ 22,436 Cost of sales 10,990 13,937 16,005 11,032 15,745 Gross profit 5,061 7,441 8,388 6,024 6,691 Depreciation and amortization 249 286 310 223 254 Selling and distribution expenses 1,954 2,712 3,115 2,723 1,426 General and administrative expenses 513 759 772 501 604 Loss on disposal of fixed assets 342 159 - Other income (expense) 23 74 136 79 98 Interest income (expense) (6 ) (275 ) (304 ) (259 ) (72 ) Income (loss) before income taxes 2,269 3,610 4,333 2,620 4,687 Income taxes expenses 349 597 692 477 702 Net income attributable to the Shareholders of the Company $ 1,762 $ 2,732 $ 3,345 $ 1,964 $ 3,665 Earnings per Share basic (US$) (1) $ 0.05 $ 0.08 $ 0.09 $ 0.06 $ 0.10 Earnings per Share diluted (US$) (2) $ 0.05 $ 0.08 $ 0.09 $ 0.06 $ 0.09 Note: (1) Figures in thousands and assume there are shares of basic Common Stock outstanding after this Offering was applied retrospectively. (2) Figures in thousands and assume there are shares of diluted Common Stock outstanding after this Offering was applied retrospectively. As at December 31, As of September 30, (figures in thousands) 2008 2009 2010 (Unaudited) Balance Sheet Data: Cash and cash equivalents $ 24 $ 50 $ 1,637 Total current assets 11,806 13,829 22,502 Total assets 22,348 26,265 32,236 Short-term borrowings 1,014 915 700 Total current liabilities 2,905 3,192 4,627 Total stockholders equity 17,641 20,975 25,192 RISK FACTORS Any investment in our Units involves a high degree of risk. Investors should carefully consider the risks described below and all of the information contained in this prospectus before deciding whether to purchase our Units. Our business, financial condition or results of operations could be materially adversely affected by these risks if any of them actually occur. The trading price could decline due to any of these risks, and an investor may lose all or part of his investment. Some of these factors have affected our financial condition and operating results in the past or are currently affecting our Company. This prospectus also contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including the risks we face as described below and elsewhere in this prospectus. RISKS RELATED TO OUR BUSINESS If we fail to obtain additional financing, we will be unable to execute our business plan. The revenues from the production and sale of cork products and the projected revenues from these products are not adequate to support our expansion and product development programs. Despite our recent financing and the financing described in this prospectus, we may need additional funds to obtain regulatory approvals; file, prosecute, defend and enforce our intellectual property rights; and market our products. Should such needs arise, we intend to seek additional funds through public or private equity or debt financing, strategic transactions and/or from other sources. We cannot assure you that future funding will be available on favorable terms or at all. If additional funding is not obtained, we will need to reduce, defer or cancel development programs, planned initiatives or overhead expenditures, to the extent necessary. The failure to fund our capital requirements would have a material adverse effect on our business, financial condition and results of operations. We must be able to effectively improve our products; and if we are unable to improve our products, our business may be adversely affected. We are seeking to improve our profitability by producing more finished cork products, which generally have higher profit margins, as a percentage of total sales. If we are unable to improve and develop our products, we may not be able to improve our profit margins or improve our ability to compete effectively. We are dependent on raw materials. Any shortages of the necessary materials would have a materially adverse effect on our business. The supply of cork raw material is the base of production. The shortfall of raw material will impair the development and production of our products. The supply of these raw materials can also be adversely affected by any material change in the climate or other environmental conditions, which may have a material adverse impact on the costs of raw materials. Our financial performance may be affected by changes in production costs brought about by fluctuations in the prices of our raw materials which may fluctuate due to changes in supply and demand conditions. Any shortage in supply or upsurge in demand of our major raw materials may lead to an increase in prices, which may adversely affect our profitability due to increased production costs and lower profit margins. The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission becomes effective. This prospectus is not an offer to sell these securities and we are not soliciting offers to buy these securities in any state where the offer or sale is not permitted. Subject to Completion Preliminary Prospectus Dated January 25, 2011 PROSPECTUS ASIA CORK, INC. 1,250,000 Units Each Unit Consisting of One Share of Common Stock and One Warrant to Purchase One Share of Common Stock We are offering 1,250,000 units (the Units ) of Asia Cork, Inc., a Delaware corporation (the Company ) for aggregate gross proceeds of $8,125,000 (the Offering ). The number of Units being sold assumes that the Reverse Split ratio is 1 for 12.5. Each of the Units offered hereby consists of one share of our Common Stock, $.0001 par value per share (the Common Stock ), and one warrant entitling the registered holder of the Unit to purchase one share of Common Stock (the Warrants ). The Warrants are exercisable to purchase one share of Common Stock at $7.80 per share through January ___, 2016 (five years after the date of the closing). Each share of Common Stock and Warrant will not be separately tradeable for a period of one year, unless sooner as may be approved by the Underwriters, in its sole discretion. The Warrants are subject to redemption commencing one year after the date hereof at $.05 per Warrant on 20 days prior written notice provided the closing price of the Common Stock for the twenty (20) consecutive trading days ending within fifteen (15) days of the date of notice of redemption averages in excess of $11.70 per share (180% of the initial Offering price) See Description of Securities. None of our officers, directors or affiliates may purchase Units in this Offering. We expect that the Offering price of the Units will be between $5.50 and $7.50 per Unit. For purposes of this prospectus, a mid-point price range of $6.50 per Unit shall be used. We are a reporting Company under the Securities Exchange Act of 1934, as amended. Our Common Stock is quoted on the OTC Bulletin Board maintained by the Financial Industry Regulatory Authority ( FINRA ) under the symbol AKRK. The last reported sale price for our Common Stock on January 24, 2011 was $0.40 per share, as reported on the OTC Bulletin Board. We intend to apply to have the Units and Common Stock underlying the Units listed on either the NASDAQ Stock Market LLC ( NASDAQ ) or on NYSE Amex LLC ( AMEX ) under the symbol AKRK on or promptly after the date of this prospectus. Prior to the separate trading of the Common Stock and Warrants, we will apply to have the Warrants comprising the units listed on NASDAQ or AMEX. Concurrently with this Offering, there are being offered, pursuant to a Resale Prospectus, by certain security holders (collectively, the Selling Stockholders ), 5,178,334shares of Common Stock (collectively, the Selling Stockholders Securities ). Each of the Selling Stockholders has agreed not to sell any of the Selling Stockholders Securities for a period of nine months after the closing of the Offering. (except for 250,000 shares which are subject to a restriction on sales for a period of six months after the closing of the Offering) without the prior consent of the Underwriters of the Offering. Sales of the Selling Stockholders Securities in such offering (the Concurrent Offering ) will be subject to the prospectus delivery requirements and other requirements of the Securities Act. The Concurrent Offering is not underwritten by the Underwriters. The purchase of the securities involves a high degree of risk. See section entitled Risk Factors beginning on page 12 for more information on these risks. Underwriter Discount Per Unit (3) Offering Offering Assumed Public Offering Price $ 6.50 (3) Discount and Commission (1) $ .585 Proceeds to us, before expenses (2) $ .591 (3) (1) Does not include additional compensation to the Underwriters in the form of (i) a non-accountable expense allowance equal to 2.0% of the gross proceeds of this Offering (of which $50,000 has been paid), (ii) the Underwriters Warrants to purchase up to ten percent of the Units sold in the Offering (each Unit consisting of one share of Common Stock and one Warrant at an exercise price equal to $7.80 per Unit), and (iii) a $120,000 consulting agreement with ICM Capital Markets LTD. In addition, the Company has agreed to indemnify the Underwriters against certain civil liabilities, including liabilities under the Securities Act of 1933, as amended. See "Underwriting." Asia Cork, Inc. TABLE OF CONTENTS Page Prospectus Summary 1 Risk Factors 5 Risks Related To Our Business 5 Risks Related To Doing Business in China 8 Risks Related to the Market of Our Stock 13 Use of Proceeds 17 Dividend Policy 17 Capitalization 18 Market for Common Equity and Related Stockholder Matters 19 Dilution 19 Accounting for the Share and Exchange 20 Description of Business 21 Management s Discussion and Analysis of Financial Condition and Results of Operation 40 Management 54 Certain Relationships and Related Transactions 63 Security Ownership of Certain Beneficial Owners and Management 65 Description of Securities 66 Shares Eligible for Future Sale 71 Underwriting 73 Legal Matters 76 Experts 76 Additional Information 76 Financial Statements F-1 Please read this prospectus carefully. It describes our business, our financial condition and results of operations. We have prepared this prospectus so that you will have the information necessary to make an informed investment decision. You should rely only on information contained in this prospectus. We have not, and the Underwriters have not, authorized any other person to provide you with different information. This prospectus is not an offer to sell, nor is it seeking an offer to buy, these securities in any state where the offer or sale is not permitted. The information in this prospectus is complete and accurate as of the date on the front cover, but the information may have changed since that date. We do not undertake to update this prospectus, except as required by law. We Do Not Own All Of The Cork Processing Technology Related Patents We Are Using And Are Subject To The Terms And Conditions Of A Licensing Agreement. We are dependent on the patents licensed to us from Fangshe Zhang, our Chairman and principal shareholder. He owns 14 cork processing technology related patents in China. Hanxin has an exclusive license to three patents in consideration for annual payments and Hanxin has an exclusive right to use another 11 patents for free. Hanxin also owns three patents transferred from Mr. Zhang. As a result, our business activities related to exploiting these patents are dependent on the license granted to us from him. In the event that the license is terminated, such a result would have a material adverse affect on the Company as it would prevent us from using them in our business and deriving revenue associated therewith. Our overseas growth is dependent on the strategic plan on expanding in foreign markets. We plan to expand into the foreign markets, especially the U.S. market, within the next few years. We have established cooperation relationships with several large building and decoration material dealers in the U.S. and Taiwan. Should there be any economic turndown that significantly weakens the sales ability of these dealers and other foreign wholesalers and retailers, we may not achieve our goal of revenues and our strategic growth would be significantly and adversely affected. Due To Fluctuations Any Quarter-To-Quarter Comparisons In Our Consolidated Financial Statements May Not Be Meaningful Our business is subject to fluctuations, which may cause our operating results to fluctuate from quarter to quarter. As a result, any comparisons from period to period in our financial statements may not provide an accurate picture of our financial condition. Further, this fluctuation may result in volatility or have an adverse effect on the market price of our Common Stock. Changes In The Extensive Regulations To Which Hanxin Is Subject Could Increase Its Cost Of Doing Business Or Affect Its Ability To Grow. The governments of countries where Hanxin s exports products, including, but not limited to India, the United States, Germany and Japan, may, from time to time, consider regulatory proposals relating to raw materials, market, and environmental regulation, which, if adopted, could lead to disruptions in supply and/or increases in operational costs, and hence indirectly affect Hanxin s profitability. To the extent that Hanxin increases its product prices as a result of such changes, its sales volume and revenues may be adversely affected. Furthermore, these governments may change certain regulations or impose additional taxes or duties on certain Chinese imports from time to time. Such regulations, if effected, may have a material adverse impact on Hanxin s operations revenue and/or profitability. Our Business Activities Are Subject To Certain Laws And Regulations And Our Operation May Be Affected If We Fail To Have In Force The Requisite Licenses And Permits. We are required to obtain various licenses and permits in order to conduct our business of production and export of cork products. The business is also subject to applicable laws and regulations. Any failure to comply with the conditions stipulated in our licenses and permits may lead to their revocation or non-renewal. Any failure to observe the applicable laws and regulations may lead to the termination or suspension of some or all of our business activities or penalties being imposed on us. The occurrence of any of these events may adversely affect our business, financial condition and results of operations. We Are Dependent On Our Customers Ability To Maintain And Expand Their Sales And Distribution Channels. Should These Distributors Be Unsuccessful In maintaining And Expanding Their Distribution Channels, Our Results Of Operation Will Be Adversely Affected. Demand for our products from end-consumers and our prospects depend on the retail growth and penetration rate of our products to end-consumers. Sales of our products are conducted mainly through distributors, over whom we have limited control. These distributors sub-distribute our products. We are thus dependent on the sales and distribution channels of our distributors for broadening the geographic reach of our products. Should these distributors be unable to maintain and expand their distribution channels, our results of operations and financial position will be adversely affected. (2) Before deducting expenses payable by the Company (including the Underwriter s non-accountable expense allowance and consulting agreement) estimated at approximately $627,734. (3) Includes only the Units being offered hereby by the Company. ICM Capital Markets LTD. and Aegis Capital Corporation have agreed to act as co-managing underwriters in connection with this Offering. The Underwriters are not purchasing the securities offered by us, and are not required to sell any specific number or dollar amount of Units, but will assist us in this Offering on a best efforts basis. We have agreed to pay the Underwriters a cash fee equal to an aggregate of 9% of the gross proceeds of the Offering of Units by us, as well as the Underwriters Warrants to purchase Units equal to up to 10% of the aggregate number of Units sold in the Offering. The Underwriters Warrants will have terms substantially similar to the warrants included in the Units offered hereby, except that the Underwriters Warrants will have an exercise price equal to 120% of the public offering price per share of the shares sold at the Closing. We estimate the total expenses of this Offering, excluding the Underwriters fees, will be approximately $507,700. Because there is no minimum Offering amount required as a condition to closing in this Offering, the actual public Offering amount, Underwriters fees, and proceeds to us, if any, are not presently determinable and may be substantially less than the total maximum Offering amounts set forth above. See Underwriting beginning on page 72 of this prospectus for more information on this Offering and the Underwriters arrangements. This Offering will terminate on June 1, 2011, unless the Offering is fully subscribed before that date or we, together with the Underwriters decide to terminate the Offering prior to that date. In either event, the Offering may be closed without further notice to you. All costs associated with the registration will be borne by us. Neither the U.S. Securities and Exchange Commission nor any state securities commission has approved or disapproved of anyone s investment in these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. ICM Capital Markets LTD. Aegis Capital Corporation The Date of this Prospectus is: January ____, 2011 We may not be entitled to certain benefits that we receive from the Chinese government, which may have an adverse affect on our business. We take advantage of favorable tax rates and other beneficial governmental policies afforded to us as a result of the nature of our business. In the event that the program offered to us is amended or rescinded or our business no longer meets the eligibility requirements of the program, we may not be able to enjoy the benefits of these programs and as a result may have to pay higher income taxes, which may have a material adverse affect on us. Further, the Chinese government may adjust the current industrial policies and tax rates with the growth of its political and economic environment, which may negatively impact our business. We are controlled by principal shareholders, officers and directors, which may limit our ability to conduct certain activities or take certain actions without their consent. Messrs. Fangshe Zhang, our Chairman, and Pengcheng Chen, our Chief Executive Officer own in the aggregate approximately 37 percent (37.33%) of our Common Stock. Both were former stockholders of Hanxin International. As a result, such persons may have the ability to control us and direct our affairs and business. Such concentration of ownership may also have the effect of delaying, deferring or preventing change in control of us. See Security Ownership Of Certain Beneficial Owners And Management. After giving effect to the Offering and the conversion of the promissory notes held by certain Selling Stockholders (the Promissory Notes ), Messrs. Zhang and Chen will own, in the aggregate, approximately 36% of our Common Stock. We Are Dependent On Certain Major Suppliers For Our Raw Materials. In The Event That We Are No Longer Able To Secure Raw Materials From These Suppliers And Are Unable To Find Alternative Sources of Supply At Similar Or More Competitive Rates, Our Operations And Profitability Will Be Adversely Affected. For the production of our products, we rely on our major suppliers for a significant portion of the supply of raw cork material. Although we purchase supplies from approximately 23 suppliers, four suppliers accounted for about 40% of our supply of raw material in 2009. In the event that we are unable to secure our raw materials from these suppliers and we are unable to find alternative sources of supply at similar or more competitive rates, our business and operations will be adversely affected. The elimination of monetary liability against our directors, officers and employees under Delaware law and the existence of indemnification rights to our directors, officers and employees may result in substantial expenditures that could be a drain on our resources by our Company and may discourage lawsuits against our directors, officers and employees. Our Certificate of Incorporation and applicable Delaware law limits monetary liability against our directors, officers and employees and provide for the indemnification of our directors, officers, employees, and agents, under certain circumstances, against attorney s fees and other expenses incurred by them in any litigation to which they become a party arising from their association with or activities on behalf of us. Accordingly, we will have a much more limited right of action against our directors than otherwise would be the case. We will also bear the expenses of such litigation for any of our directors, officers, employees, or agents, upon such person s promise to repay us if it is ultimately determined that any such person shall not have been entitled to indemnification. This indemnification policy could result in substantial expenditures by us that we would be unable to recoup. These provisions and resultant costs may also discourage our Company from bringing a lawsuit against directors and officers for breaches of their fiduciary duties, and may similarly discourage the filing of derivative litigation by our stockholders against our directors and officers even though such actions, if successful, might otherwise benefit our Company and stockholders. We do not foresee paying cash dividends in the foreseeable future and, as a result, our investors sole source of gain, if any, will depend on capital appreciation, if any. We do not plan to declare or pay any cash dividends on our shares of Common Stock in the foreseeable future and currently intend to retain any future earnings for funding growth. As a result, investors should not rely on an investment in our securities if they require the investment to produce dividend income. Capital appreciation, if any, of our shares may be investors sole source of gain for the foreseeable future. Moreover, investors may not be able to resell their shares of the Company at or above the price they paid for them. We are dependent on key personnel, and the loss of any key employees, officers and/or directors may have a materially adverse effect on our operations. Our success is substantially dependent on the continued services of our executive officers, particularly Fangshe Zhang, our Chairman, and Pengcheng Chen, our Chief Executive Officer, and other key personnel who generally have extensive experience in the cork industry and have been employed by us for substantial periods of time. The loss of the services of any key employees, or our failure to attract and retain other qualified and experienced personnel on acceptable terms, could have a material adverse effect on our business and results of operations. The extended payment terms to our major customers may result in a reduction in cash flow. In connection with the expansion of our domestic market and to promote a series of new products, the Company decided to extend the payment terms to major customers in Beijing, Shanghai, Guangzhou and Sichuan Hanxin from six months to one year. The extended payment terms contributed to an increase in our accounts receivable as of September 30, 2010 to $10,010,818, compared to $5,445,498 as of December 31, 2009. The large amount of accounts receivable may cause losses as a result of increased bad debt expenses in the event our customers fail to pay us in time or at all. Reduced cash flow as a result of the extended payment terms may affect our ability to purchase raw materials and may reduce our production and sales. RISKS RELATED TO DOING BUSINESS IN CHINA Substantially all of our assets are located in the PRC and substantially all of our revenues are derived from our operations in China, and changes in the political and economic policies of the PRC government could have a significant impact upon the business we may be able to conduct in the PRC and accordingly on the results of our operations and financial condition. Our business operations may be adversely affected by the current and future political environment in the PRC. The Chinese government exerts substantial influence and control over the manner in which we must conduct our business activities. Our ability to operate in China may be adversely affected by changes in Chinese laws and regulations, including those relating to taxation, import and export tariffs, raw materials, environmental regulations, land use rights, property and other matters. Under the current government leadership, the government of the PRC has been pursuing economic reform policies that encourage private economic activity and greater economic decentralization. There is no assurance, however, that the government of the PRC will continue to pursue these policies, or that it will not significantly alter these policies from time to time without notice. Our operations are subject to PRC laws and regulations that are sometimes vague and uncertain. Any changes in such PRC laws and regulations, or the interpretations thereof, may have a material and adverse effect on our business. We conduct our business primarily through our affiliate Chinese entity, Xi'an Hanxin. Our operations in China are governed by Chinese laws and regulations. We are generally subject to laws and regulations applicable to foreign investments in China and, in particular, laws applicable to wholly foreign-owned enterprises. The Chinese legal system is based on written statutes. Prior court decisions may be cited for reference but have limited precedential value. The legal system in China is a system of civil laws, based on provisions and written codes, therefore precedents and cases are not binding on the future decisions of the courts. There are substantial uncertainties regarding the interpretation and application of PRC laws and regulations, including, but not limited to, the laws and regulations governing our business, or the enforcement and performance of our arrangements with customers in the event of the imposition of statutory liens, death, bankruptcy or criminal proceedings. Only after 1979 did the Chinese government begin to promulgate a comprehensive system of laws that regulate economic affairs in general, deal with economic matters such as foreign investment, corporate organization and governance, commerce, taxation and trade, and encourage foreign investment in China. Although the influence of the law has been increasing, China has not developed a fully integrated legal system and recently enacted laws and regulations may not sufficiently cover all aspects of economic activities in China. Also, because these laws and regulations are relatively new, and because of the limited volume of published cases and judicial interpretation and their lack of force as precedents, interpretation and enforcement of these laws and regulations involve significant uncertainties. New laws and regulations that affect existing and proposed future businesses may also be applied retroactively. In addition, there have been constant changes and amendments of laws and regulations over the past 30 years in order to keep up with the rapidly changing society and economy in China. Because government agencies and courts provide interpretations of laws and regulations and decide contractual disputes and issues, their inexperience on new business and new polices or regulations in certain less developed areas causes uncertainty and may affect our business. In some provincial areas, the government agencies and the courts are protectionist and may not fully enforce contractual rights against local parties. In certain areas, the intellectual property and trade secret protections are not as effective as those in the other areas in China or in the U.S. in general. Consequently, we cannot clearly foresee the future direction of Chinese legislative activities with respect to either businesses with foreign investment or the effectiveness on enforcement of laws and regulations in the less developed areas in China. The uncertainties, including new laws and regulations and changes of existing laws, as well judicial interpretation by inexperienced officials in the agencies and courts in certain areas, may cause possible problems to foreign investors. Investors may experience difficulties in effecting service of legal process, enforcing foreign judgments or bringing original actions in China based upon U.S. laws, including the federal securities laws or other foreign laws against us or our management . Most of our current operations, including the manufacturing and distribution of our products, are conducted in China. Moreover, all of our directors and officers are nationals and residents of China. All or substantially all of the assets of these persons are located outside the United States and in the PRC. As a result, it may not be possible to effect service of process within the United States or elsewhere outside China upon these persons. In addition, uncertainty exists as to whether the courts of China would recognize or enforce judgments of U.S. courts obtained against us or such officers and/or directors predicated upon the civil liability provisions of the securities laws of the United States or any state thereof, or be competent to hear original actions brought in China against us or such persons predicated upon the securities laws of the United States or any state thereof. We are subject to a variety of environmental laws and regulations related to our manufacturing operations. Our failure to comply with environmental laws and regulations may have a material adverse effect on our business and results of operations. Potential liability in connection with environmental regulation arises from the possibility that pollution will be caused by the dust generated when cork barks are ground into fine granules, which is typical for the artificial board industry. This problem is usually solved by installing dust removing facilities. We believe that Hanxin has installed sufficient dust removing systems in its workshops and has been effectively controlling its dust emission. The dust removing systems have been designed by the Company. The cost for installing these facilities is part of the cost for establishing the production lines. Although such dust removing systems consume additional electricity, the additional utility expense increased is minimal compared to the total production expenses. We believe that we face no other issues regarding compliance with environmental laws as our production procedure (1) consumes no water and thus produces no waste water and (2) generates no solid waste as all cork residue is sold as the raw material for feed or fertilizer. Despite the foregoing, we cannot assure you that at all times we will be in compliance with environmental laws and regulations or that we will not be required to expend significant funds to comply with, or discharge liabilities arising under, environmental laws, regulations and permits. We may be affected by global climate change or by legal, regulatory, or market responses to such change. The growing political and scientific sentiment is that increased concentrations of carbon dioxide and other greenhouse gases in the atmosphere are influencing global weather patterns. Changing weather patterns, along with the increased frequency or duration of extreme weather conditions, could impact the availability or increase the cost of key raw materials that we use to produce our products. Additionally, the sale of our products can be impacted by weather conditions. Concern over climate change, including global warming, has led to legislative and regulatory initiatives directed at limiting greenhouse gas (GHG) emissions. For example, proposals that would impose mandatory requirements on GHG emissions continue to be considered by policy makers in the territories that we operate. Laws enacted that directly or indirectly affect our production, distribution, packaging, cost of raw materials, fuel, ingredients, and water could all impact our business and financial results. Our labor costs are likely to increase as a result of changes in Chinese labor laws. We expect to experience an increase in our cost of labor due to recent changes in Chinese labor laws which are likely to increase costs further and impose restrictions on our relationship with our employees. In June 2007, the National People s Congress of the PRC enacted new labor law legislation called the Labor Contract Law and more strictly enforced existing labor laws. The new law, which became effective on January 1, 2008, amended and formalized workers rights concerning overtime hours, pensions, layoffs, employment contracts and the role of trade unions. As a result of the new law, the Company has had to reduce the number of hours of overtime its employees can work, substantially increase the salaries of its employees, provide additional benefits to its employees, and revise certain other of its labor practices. The increase in labor costs has increased the Company s operating costs, which the Company has not always been able to pass through to its customers. As a result, the Company has incurred certain operating losses as its cost of manufacturing increased. In addition, under the new law, employees who either have worked for the Company for 10 years or more or who have had two consecutive fixed-term contracts must be given an open-ended employment contract that, in effect, constitutes a lifetime, permanent contract, which is terminable only in the event the employee materially breaches the Company s rules and regulations or is in serious dereliction of his duty. Such non-cancelable employment contracts will substantially increase its employment related risks and limit the Company s ability to downsize its workforce in the event of an economic downturn. No assurance can be given that the Company will not in the future be subject to labor strikes or that it will not have to make other payments to resolve future labor issues caused by the new laws. Furthermore, there can be no assurance that the labor laws will not change further or that their interpretation and implementation will vary, which may have a negative effect upon our business and results of operations. The ability of our Chinese operating subsidiaries to pay dividends may be restricted due to foreign exchange control and other regulations of China. Under applicable PRC regulations, foreign-invested enterprises in China may pay dividends only out of their accumulated profits, if any, determined in accordance with PRC accounting standards and regulations. In addition, a foreign-invested enterprise in China is required to set aside at least 10.0% of its after-tax profit based on PRC accounting standards each year to its general reserves until the accumulative amount of such reserves reach 50.0% of its registered capital. These reserves are not distributable as cash dividends. The board of directors of a foreign-invested enterprise has the discretion to allocate a portion of its after-tax profits to staff welfare and bonus funds, which may not be distributed to equity owners except in the event of liquidation. Furthermore, the ability of our Chinese operating subsidiaries to pay dividends may be restricted due to the foreign exchange control policies and availability of cash balance of the Chinese operating subsidiaries. Because substantially all of our operations are conducted in China and a substantial majority of our revenues are generated in China, a majority of our revenue being earned and currency received are denominated in Renminbi (RMB). RMB is subject to the exchange control regulation in China, and, as a result, we may unable to distribute any dividends outside of China due to PRC exchange control regulations that restrict our ability to convert RMB into U.S. Dollars. Our inability to receive dividends or other payments from our Chinese operating subsidiary could adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our business, pay dividends, or otherwise fund and conduct our business. Our funds may not be readily available to us to satisfy obligations which have been incurred outside the PRC, which could adversely affect our business and prospects or our ability to meet our cash obligations. Accordingly, if we do not receive dividends from our Chinese operating subsidiary, our liquidity, financial condition and ability to make dividend distributions to our stockholders will be materially and adversely affected. The foreign currency exchange rate between U.S. Dollars and Renminbi could adversely affect our financial condition. To the extent that we need to convert U.S. Dollars into Renminbi for our operational needs, our financial position and the price of our Common Stock may be adversely affected should the Renminbi appreciate against the U.S. Dollar at that time. Conversely, if we decide to convert our Renminbi into U.S. Dollars for the operational needs or paying dividends on our Common Stock, the dollar equivalent of our earnings from our subsidiaries in China would be reduced should the U.S. Dollar appreciate against the Renminbi. Until 1994, the Renminbi experienced a gradual but significant devaluation against most major currencies, including U.S. Dollars, and there was a significant devaluation of the Renminbi on January 1, 1994 in connection with the replacement of the dual exchange rate system with a unified managed floating rate foreign exchange system. Since 1994, the value of the Renminbi relative to the U.S. Dollar has remained stable and has appreciated slightly against the U.S. Dollar. Countries, including the United States, have argued that the Renminbi is artificially undervalued due to China s current monetary policies and have pressured China to allow the Renminbi to float freely in world markets. In July 2005, the PRC government changed its policy of pegging the value of the Renminbi to the U.S. Dollar. Under the new policy the Renminbi is permitted to fluctuate within a narrow and managed band against a basket of designated foreign currencies. While the international reaction to the Renminbi revaluation has generally been positive, there remains significant international pressure on the PRC government to adopt an even more flexible currency policy, which could result in further and more significant appreciation of the Renminbi against the U.S. Dollar. Inflation in the PRC could negatively affect our profitability and growth. While the PRC economy has experienced rapid growth, such growth has been uneven among various sectors of the economy and in different geographical areas of the country. Rapid economic growth can lead to growth in the money supply and rising inflation. During the past decade, the rate of inflation in China has been as high as approximately 20% and China has experienced deflation as low as approximately minus 2%. If prices for our products and services rise at a rate that is insufficient to compensate for the rise in the costs of supplies such as raw materials, it may have an adverse effect on our profitability. In order to control inflation in the past, the PRC government has imposed controls on bank credits, limits on loans for fixed assets and restrictions on state bank lending. The implementation of such policies may impede economic growth. In October 2004, the People s Bank of China, the PRC s central bank, raised interest rates for the first time in nearly a decade and indicated in a statement that the measure was prompted by inflationary concerns in the Chinese economy. In April 2006, the People s Bank of China raised the interest rate again. Repeated rises in interest rates by the central bank would likely slow economic activity in China which could, in turn, materially increase our costs and also reduce demand for our products and services. Failure to comply with the United States Foreign Corrupt Practices Act could subject us to penalties and other adverse consequences. As our ultimate holding Company is a Delaware corporation, we are subject to the United States Foreign Corrupt Practices Act, which generally prohibits United States companies from engaging in bribery or other prohibited payments to foreign officials for the purpose of obtaining or retaining business. Foreign companies, including some that may compete with us, are not subject to these prohibitions. Corruption, extortion, bribery, pay-offs, theft and other fraudulent practices may occur from time-to-time in the PRC. We can make no assurance, however, that our employees or other agents will not engage in such conduct for which we might be held responsible. If our employees or other agents are found to have engaged in such practices, we could suffer severe penalties and other consequences that may have a material adverse effect on our business, financial condition and results of operations. If we make equity compensation grants to persons who are PRC citizens, they may be required to register with the State Administration of Foreign Exchange of the PRC, or SAFE. We may also face regulatory uncertainties that could restrict our ability to adopt an equity compensation plan for our directors and employees and other parties under PRC law. On April 6, 2007, SAFE issued the Operating Procedures for Administration of Domestic Individuals Participating in the Employee Stock Ownership Plan or Stock Option Plan of An Overseas Listed Company, also known as Circular 78. It is not clear whether Circular 78 covers all forms of equity compensation plans or only those which provide for the granting of stock options. For any plans which are so covered and are adopted by a non-PRC listed Company after April 6, 2007, Circular 78 requires all participants who are PRC citizens to register with and obtain approvals from SAFE prior to their participation in the plan. In addition, Circular 78 also requires PRC citizens to register with SAFE and make the necessary applications and filings if they participated in an overseas listed Company s covered equity compensation plan prior to April 6, 2007. We intend to adopt an equity compensation plan in the future and make substantial option grants to our officers and directors, most of who are PRC citizens. Circular 78 may require our officers and directors who receive option grants and are PRC citizens to register with SAFE. We believe that the registration and approval requirements contemplated in Circular 78 will be burdensome and time consuming. If it is determined that any of our equity compensation plans are subject to Circular 78, failure to comply with such provisions may subject us and participants of our equity incentive plan who are PRC citizens, including or Chief Executive Officer, to fines and legal sanctions and prevent us from being able to grant equity compensation to our PRC employees. In that case, our ability to compensate our employees and directors through equity compensation would be hindered and our business operations may be adversely affected. A downturn in the economy of the PRC may slow our growth and profitability. The growth of the Chinese economy has been uneven across geographic regions and economic sectors. There can be no assurance that growth of the Chinese economy will be steady or that any downturn will not have a negative effect on our business, especially if it results in either a decreased use of our products or in pressure on us to lower our prices. Our operations in the PRC are subject to the laws and regulations of the PRC. As our products are exported from the PRC, we are subject to and have to operate within the framework of the PRC legal system. Any changes in the laws or policies of the PRC or the implementation thereof, for example in areas such as foreign exchange controls, tariffs, trade barriers, taxes, export license requirements and environmental protection, may have a material impact on our operations and financial performance. The corporate affairs of our companies in the PRC are governed by their articles of association and the corporate and foreign investment laws and regulations of the PRC. The principles of the PRC laws relating to matters such as the fiduciary duties of directors and other corporate governance matters and foreign investment laws in the PRC are relatively new. Hence, the enforcement of investors or shareholders' rights under the articles of association of a PRC Company and the interpretation of the relevant laws relating to corporate governance matters remain largely untested in the PRC. We cannot predict what effect the interpretation of existing or new the PRC laws or regulations may have on our businesses. If the relevant authorities find us in violation of the PRC laws or regulations, they would have broad discretion in dealing with such a violation, including, without limitation: levying fines; revoking our business license, other licenses or authorities; requiring that we restructure our ownership or operations; and requiring that we discontinue any portion or all of our business. Our subsidiaries, operations and significant assets are located outside the U.S. Shareholders may not be accorded the same rights and protection that would be accorded under the Securities Act. In addition, it could be difficult to enforce a U.S. judgment against our Directors and officers. Our subsidiaries, operations and assets are located in the PRC. Our subsidiaries are therefore subject to the relevant laws in the PRC. U.S. law may provide shareholders with certain rights and protection which may not have corresponding or similar provisions under the laws of the PRC. As such, investors in our Common Stock may or may not be accorded the same level of shareholder rights and protection that would be accorded under the Securities Act. In addition, all our current executive directors are non-residents of the U.S. and the assets of these persons are mainly located outside the U.S. As such, there may be difficult for our shareholders to effect service of process in the U.S., or to enforce a judgment obtained in the U.S. against any of these persons. The Chinese government exerts substantial influence over the manner in which we must conduct our business activities. China only recently has permitted provincial and local economic autonomy and private economic activities. The Chinese government has exercised and continues to exercise substantial control over virtually every sector of the Chinese economy through regulation and state ownership. Our ability to continue to operate in China may be affected by changes in its laws and regulations, including those relating to taxation, import and export tariffs, environmental regulations, land use rights, property and other matters. We believe that our operations in China are in material compliance with all applicable legal and regulatory requirements. However, the central or local governments of the jurisdictions in which we operate may impose new, stricter regulations or interpretations of existing regulations that would require additional expenditures and efforts on our part to ensure our compliance with such regulations or interpretations. Accordingly, government actions in the future including any decision not to continue to support recent economic reforms and to return to a more centrally planned economy or regional or local variations in the implementation of economic policies, could have a significant effect on economic conditions in China or particular regions thereof, and could require us to divest ourselves of any interest we then hold in Chinese properties or joint ventures. RISKS RELATED TO THE MARKET FOR OUR STOCK Sales of our Common Stock by the Selling Stockholders in a concurrent Offering may depress our stock price . Commencing nine months after the Offering, our Selling Stockholders (with the exception of Brill Securities Inc. which may commence selling its 250,000 shares six months after the Offering) may offer for sale, from time to time, 5,178,334 shares of our Common Stock. If we sell all 1,250,000 Units we are offering, we would have 42,092,184 shares outstanding (without giving effect to the Reverse Split but after giving effect to the conversion of the Selling Stockholder Promissory Notes and after giving effect to the exercise of the Selling Stockholder warrants and including the shares issuable to Brill Securities), _of which would be freely tradable in the public. Sales of a substantial number of shares of our Common Stock by the Selling Stockholders within a relatively short period of time could have the effect of depressing the market price of our Common Stock and could impair our ability to raise capital through the sale of additional equity securities. We will issue warrants to our Underwriters in connection with the public Offering. We will issue to the Underwriters for the Offering, as additional compensation, the Underwriters Warrants to purchase one Unit for each ten Units sold in the Offering, or up to a maximum of 125,000 warrants. The Underwriters Warrants may be exercised at any time commencing six months from the date of this prospectus and continuing for five years thereafter to purchase Units at an exercise price equal to 120% of the Offering price of the Units in this Offering. During the term of the Underwriters Warrants, our Underwriters will have the opportunity to profit from an increase in the price of the shares of Common Stock underlying the Underwriters Warrants. The existence of the Underwriters Warrants may adversely affect the market price of the shares if they become publicly traded on the terms on which we can obtain additional financing. The holders of the Underwriters Warrants may exercise their warrants at a time when we would, in all likelihood, be able to obtain additional capital on terms more favorable than those contained in the Underwriters Warrants. Please see Underwriting and Description of Securities for additional information regarding the Underwriters Warrants and our Common Stock and Warrants. Certain provisions of our Certificate of Incorporation may make it more difficult for a third party to effect a change in control. Specific rights granted to future holders of preferred stock could be used to restrict our ability to merge with, or sell assets to, a third party. The ability of our board of directors to issue preferred stock could make it more difficult, delay, discourage, prevent or make it more costly to acquire or effect a change-in-control, which in turn could prevent the stockholders from recognizing a gain in the event that a favorable offer is extended and could materially and negatively affect the market price of our Common Stock. The Company s Bylaws or Certificate of Incorporation do not contain any other provisions that would have the effect of delaying or preventing a change in control. You may be one of only a small number of investors in the Offering and, as a result, a substantial percentage of the Offering proceeds may be used to pay for the Offering s expenses. This is a best efforts offering, which means that we are not required to sell any specific number of Units or dollar amount of Units in this Offering. To the extent that we sell significantly less than the total number of Units that we are offering through this prospectus, you may be one of only a small number of investors in this Offering and a substantial percentage of the Offering proceeds may be used to pay for the Offering expenses, and not for our general corporate purposes. Compliance with changing regulation of corporate governance and public disclosure will result in additional expenses. Changing laws, regulations and standards relating to corporate governance and public disclosure, including the Sarbanes-Oxley Act of 2002 and related SEC regulations, have created uncertainty for public companies and significantly increased the costs and risks associated with accessing the public markets and public reporting. Our management team will need to invest significant management time and financial resources to comply with both existing and evolving standards for public companies, which will lead to increased general and administrative expenses and a diversion of management time and attention from revenue generating activities to compliance activities. If we fail to maintain effective internal controls over financial reporting, the price of our Common Stock may be adversely affected. As directed by Section 404 of the Sarbanes-Oxley Act of 2002 or SOX 404, the SEC adopted rules requiring public companies to include a report of management on the Company s internal controls over financial reporting in their annual reports, including Form 10-K. We have established disclosure controls and procedures effective for the purposes set forth in the definition thereof in Exchange Act Rule 13a-15(e) as of December 31, 2009. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree or compliance with the policies or procedures may deteriorate. The application of the penny stock rules could adversely affect the market price of our Common Stock and increase your transaction costs to sell those shares. The trading price of our common shares is below $5 per share, thus we are deemed a penny stock company and the open-market trading of our common shares will be subject to the penny stock rules. The penny stock rules impose additional sales practice requirements on broker-dealers who sell securities to persons other than established customers and accredited investors (generally those with assets in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 together with their spouse). For transactions covered by these rules, the broker-dealer must make a special suitability determination for the purchase of securities and have received the purchaser s written consent to the transaction before the purchase. Additionally, for any transaction involving a penny stock, unless exempt, the broker-dealer must deliver, before the transaction, a disclosure schedule prescribed by the Securities and Exchange Commission relating to the penny stock market. The broker-dealer also must disclose the commissions payable to both the broker-dealer and the registered representative and current quotations for the securities. Finally, monthly statements must be sent disclosing recent price information on the limited market in penny stocks. These additional burdens imposed on broker-dealers may restrict the ability or decrease the willingness of broker-dealers to sell our common shares, and may result in decreased liquidity for our common shares and increased transaction costs for sales and purchases of our common shares as compared to other securities. The market for penny stocks has suffered in recent years from patterns of fraud and abuse. Such patterns include (i) control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer; (ii) manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases; (iii) boiler room practices involving high-pressure sales tactics and unrealistic price projections by inexperienced sales persons; (iv) excessive and undisclosed bid-ask differential and markups by selling broker-dealers; and (v) the wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the resulting inevitable collapse of those prices and with consequent investor losses. Our common shares are thinly traded and you may be unable to sell at or near ask prices or at all if you desire to liquidate your shares. We cannot predict the extent to which an active public market for our Common Stock will develop or be sustained. Our common shares have historically been sporadically or thinly-traded on the OTC Bulletin Board, meaning that the number of persons interested in purchasing our common shares at or near bid prices at any given time may be relatively small. This situation is attributable to a number of factors, including the fact that we are a small Company which is relatively unknown to stock analysts, stock brokers, institutional investors and others in the investment community that generate or influence sales volume, and that even if we came to the attention of such persons, they tend to be risk-averse and would be reluctant to purchase or recommend the purchase of our shares until such time as we became more seasoned and viable. As a consequence, there may be periods of several days or more when trading activity in our shares is minimal or non-existent, as compared to a seasoned issuer which has a large and steady volume of trading activity that will generally support continuous sales without an adverse effect on share price. We cannot give you any assurance that a broader or more active public trading market for our Common Stock will develop or be sustained, or that current trading levels will be sustained. We are applying for listing the Units and Common Stock on the NASDAQ or AMEX, but cannot assure you that this listing or listing on any other exchange will ever occur. If we do not meet the listing standards established by national securities exchange markets such as NASDAQ and NYSE Amex LLC, our common stock may not become listed for trading on one of those markets, which may restrict the liquidity of shares held by our stockholders. We have applied for listing of our Units and Common Stock for trading on a national securities exchanges promptly after our registration statement is declared effective. The listing of our Units and Common Stock on a national securities exchange may result in a more active public market for our common stock, resulting in turn in greater liquidity of shares held by our stockholders. National securities exchanges such as NASDAQ and NYSE Amex LLC have established certain quantitative criteria and qualitative standards that companies must meet in order to become and remain listed for trading on these markets. We cannot guarantee that we will be able to maintain all necessary requirements for listing; therefore, we cannot guarantee that our common stock will be listed for trading on a national securities exchange. Our shares are subject to significant price volatility, which may prevent you from selling your stock at or above your purchase price if at all. The market for our common shares is characterized by significant price volatility when compared to seasoned issuers, and we expect that our share price will continue to be more volatile than a seasoned issuer for the indefinite future. The volatility in our share price is attributable to a number of factors. First, as noted above, our common shares are sporadically and/or thinly traded. As a consequence of this lack of liquidity, the trading of relatively small quantities of shares by our stockholders may disproportionately influence the price of those shares in either direction. The price for our shares could, for example, decline precipitously in the event that a large number of our common shares are sold on the market without commensurate demand, as compared to a seasoned issuer, which could better absorb those sales without adverse impact on its share price. In addition, actual or anticipated variations in our quarterly or annual operating results, adverse outcomes and additions or departures of our key personnel may also add to the volatility in the price of our common shares. The price at which you purchase our Common Stock may not be indicative of the price that will prevail in the trading market. You may be unable to sell your Common Stock at or above your purchase price if at all, which may result in substantial losses to you. Secondly, we are a speculative or risky investment due to our fluctuating level of revenues or profits to date and uncertainty of future market acceptance for our current and potential products. As a consequence of this enhanced risk, more risk-averse investors may, under the fear of losing all or most of their investment in the event of negative news or lack of progress, be more inclined to sell their shares on the market more quickly and at greater discounts than would be the case with the stock of a seasoned issuer. Many of these factors are beyond our control and may decrease the market price of our common shares, regardless of our operating performance. We cannot make any predictions or projections as to what the prevailing market price for our common shares will be at any time, including as to whether our common shares will sustain their current market prices, or as to what effect that the sale of shares or the availability of common shares for sale at any time will have on the prevailing market price. Volatility in our common share price may subject us to securities litigation. The market for our Common Stock has, when compared to seasoned issuers, price volatility and we expect that our share price will continue to be more volatile than a seasoned issuer for the indefinite future. In the past, plaintiffs have often initiated securities class action litigation against a Company following periods of volatility in the market price of its securities. We may, in the future, be the target of similar litigation. Securities litigation could result in substantial costs and liabilities and could divert management s attention and resources. Legislative actions, higher insurance costs and potential new accounting pronouncements may impact our future financial position and results of operations. There have been regulatory changes, including the Sarbanes-Oxley Act of 2002, and there may potentially be new accounting pronouncements or additional regulatory rulings that will have an impact on our future financial position and results of operations. The Sarbanes-Oxley Act of 2002 and other similar rule changes are likely to increase general and administrative costs and expenses. In addition, insurers are likely to increase premiums as a result of high claims rates over the past several years, which we expect will increase our premiums for insurance policies. Further, there could be changes in certain accounting rules. These and other potential changes could materially increase the expenses we report under generally accepted accounting principles, and adversely affect our operating results. SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS This registration statement contains forward-looking statements that involve substantial risks and uncertainties. You can identify these statements by forward-looking words such as anticipate , believe , could , estimate , expect , intend , may , plan , potential , should , will and would or similar words. You should read statements that contain these words carefully because they discuss our future expectations, contain projections of our future results of operations or of our financial position or state other forward-looking information. We believe that it is important to communicate our future expectations to our investors. However, there may be events in the future that we are not able to predict accurately or control. The factors listed above in the section captioned Risk Factors, as well as any cautionary language in this Prospectus, provide examples of risks, uncertainties and events that may cause our actual results to differ materially from the expectations we describe in our forward-looking statements. Before you invest in our Common Stock, you should be aware that the occurrence of the events described in these risk factors and elsewhere in this Prospectus could have a material adverse effect on our business, results of operations and financial position. We do not intend or assume any obligation to update or reverse these forward-looking statements in light of developments which differ from those anticipated, unless as required by law. USE OF PROCEEDS We estimate that the net proceeds from the sale of the 1,250,000 Units in the Offering will be approximately $7,393,750 if the maximum Offering is sold after deducting the estimated underwriting discounts and commissions but before estimated offering expenses. This assumes a mid-point price range of $6.50 per Unit. Percentage of Net Proceeds (1) Acquisition of Inventory and Marketing Expenses Related to Expansion of Domestic Markets ____ % Acquisition of Inventory and Marketing Expenses Related to Expansion of International Markets ____ % Purchase of Equipment to Expand Production ____ % Working Capital (2) ____ % Total net proceeds 100 %(1) (1) The principal purposes of this Offering are to increase our working capital and to expand both our domestic and oversea market shares by increasing our marketing efforts, expanding our sales channels through additional distributors and increasing our production capacity. The foregoing represents our best estimate of its allocation of the net proceeds of this Offering based upon the current state of our business operations, its current plans, and current economic and industry conditions and is subject to reapportionment among the categories listed above or to new categories. The amounts and timing of our actual expenditures will depend on numerous factors, including the status of our development efforts, sales and marketing activities, and the amount of cash generated or used by our operations and competition. We may find it necessary or advisable to use portions of the proceeds for other purposes, and we will have broad discretion in the application of the net proceeds. Pending these uses, the proceeds will be invested in short-term, investment grade, interest-bearing securities. DIVIDEND POLICY We do not expect to declare or pay any cash dividends on our Common Stock in the foreseeable future, and we currently intend to retain future earnings, if any, to finance the expansion of our business. The decision whether to pay cash dividends on our Common Stock will be made by our board of directors, in their discretion, and will depend on our financial condition, operating results, capital requirements and other factors that our board of directors considers significant. We did not pay any cash dividends in the nine months ended September 30, 2010 or the fiscal years ended December 31, 2009 and 2008. Under applicable PRC regulations, foreign-invested enterprises in China may pay dividends only out of their accumulated profits, if any, determined in accordance with PRC accounting standards and regulations. In addition, a foreign-invested enterprise in China is required to set aside at least 10% of its after-tax profit based on PRC accounting standards each year to its general reserves until the accumulative amount of such reserves reach 50% of its registered capital. These reserves are not distributable as cash dividends. The board of directors of a foreign-invested enterprise has the discretion to allocate a portion of its after-tax profits to staff welfare and bonus funds, which may not be distributed to equity owners except in the event of liquidation. Furthermore, the ability of our Chinese operating subsidiaries to pay dividends may be restricted due to the foreign exchange control policies and availability of cash balance of the Chinese operating subsidiaries. Because substantially all of our operations are conducted in China and a substantial majority of our revenues are generated in China, a majority of our revenue being earned and currency received are denominated in Renminbi (RMB). RMB is subject to the exchange control regulation in China, and, as a result, we may unable to distribute any dividends outside of China due to PRC exchange control regulations that restrict our ability to convert RMB into US Dollars. Our inability to receive dividends or other payments from our Chinese operating subsidiary could adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our business, pay dividends, or otherwise fund and conduct our business. Our funds may not be readily available to us to satisfy obligations which have been incurred outside the PRC, which could adversely affect our business and prospects or our ability to meet our cash obligations. Accordingly, if we do not receive dividends from our Chinese operating subsidiary, our liquidity, financial condition and ability to make dividend distributions to our stockholders will be materially and adversely affected. CAPITALIZATION The following table sets forth our capitalization as of September 30, 2010 (Unaudited): On a pro forma basis as adjusted to give further effect to reflect our receipt of estimated net proceeds from the sale of 1,250,000 units in this Offering at an assumed Reverse Split ratio of 1 for 12.5 and an assumed public offering price of $6.50 per Unit, which is the mid-point of the estimated range of the per Unit Offering price, and after deducting estimated underwriting discounts and commissions and estimated Offering expenses of approximately $507,734.38. You should read this table in conjunction with Use of Proceeds, Summary Financial Information, Management s Discussion and Analysis of Financial Condition and Results of Operations and our financial statements and related notes included elsewhere in this prospectus. 1,250,000 shares of Common Stock (assuming no exercise of warrants) September 30, 2010 Actual (1) Pro Forma Adjustments (2) Pro Forma, As Adjusted (Unaudited) Due to shareholder $ 181,187 $ - $ 181,187 Stockholders' equity: Common Stock, $0.0001 par value, 200,000,000 shares authorized, 35,663,850 and 36,913,850 issued and outstanding on an actual basis, issued and outstanding on a pro forma basis, and issued and outstanding on a pro forma as-adjusted basis 3,566 125 3.691 Additional paid-in capital (3) 4,485,446 6,885,891 11,371,337 Additional paid-in capital stock warrant 279,386 - 279,386 Accumulated other comprehensive income 3,209,301 3,209,301 Statutory surplus reserve fund 3,406,136 3,406,136 Retained earnings 13,808,249 - 13,808,249 Total stockholders' equity $ 25,192,084 $ 6,886,016 $ 32,078,100 Total capitalization $ 25,373,271 $ 6,886,016 $ 32,259,287 (1) Before giving effect to the share split of our Common Stock that is being completed as a condition to the Offering. (2) Before (i) giving effect to the share split of our common shares that is being completed as a condition to the Offering, and (ii) giving effect to the sale of 1,250,000 Units (on a 1 for 12.5 Reverse Split basis) at an assumed public Offering price of $6.50 per share and to reflect the application of the proceeds after deducting the estimated underwriting discounts and our estimated Offering expenses. (3) Pro forma adjusted for IPO additional paid in capital reflects the net proceeds we expect to receive, after deducting a 9 % underwriting discount, 2% non-accountable expense allowance and $345,234.38 in other expenses. In a 1,250,000 Unit Offering, we expect to receive net proceeds of approximately $6,886,015.62 ($8,125,000 Offering, less underwriting discount of $731,250, non-accountable expense allowance of $162,500 and Offering expenses of $345,234.38). MARKET FOR THE COMMON EQUITY AND RELATED STOCKHOLDER MATTERS Our Common Stock is traded on Over-The-Counter Bulletin Board under the symbol AKRK.OB. As of January 24, 2011, there were approximately 94 holders of record of our Common Stock. We are applying for the listing of our Units and Common Stock on the NASDAQ or AMEX. The following table sets forth the range of high and low bid information for the period from first quarter of 2008 to the fourth quarter of 2010. High Bid Low Bid Period 2010 First quarter $ 0.55 $ 0.32 Second quarter $ 0.57 $ 0.27 Third quarter $ 0.31 $ 0.18 Fourth quarter $ 0.52 $ 0.21 2009 First quarter $ 0.21 $ 0.11 Second quarter $ 0.26 $ 0.10 Third quarter $ 0.28 $ 0.20 Fourth quarter $ 0.53 $ 0.23 2008 First quarter $ 0.20 $ 0.09 Second quarter $ 0.43 $ 0.07 Third quarter $ 0.30 $ 0.21 Fourth quarter $ 0.244 $ 0.11 The above quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions. Our transfer agent is Olde Monmouth Stock Transfer, whose address is 200 Memorial Parkway, Atlantic Highlands, NJ 07716, and their contact number is (732) 872 2727. There are no securities authorized for issuance under equity compensation plans. DILUTION If you invest in our Units, your interest will be diluted immediately to the extent of the difference between the public Offering price per share you will pay in this Offering and the net tangible book value per share of Common Stock immediately after this Offering. Dilution results from the fact that the per common share Offering price is substantially in excess of the book value per common share attributable to the existing shareholders for our presently outstanding Common Stock. Our net tangible book value as of September 30, 2010 was $25.19 million, or $0.71 per share (unaudited) based on 35,663,850 shares of Common Stock outstanding, before giving effect to the Reverse Split. The following table sets forth the estimated net tangible book value per common share after the Offering and the dilution to persons purchasing common shares based on the foregoing 1,250,000 Units maximum Offering assumptions as described throughout this prospectus. Units Offering (1) Offering price per common share $ 6.50 Net tangible book value per common share before the Offering (unaudited) $ 0.71 Increase per common share attributable to payments by new investors $ 0.16 Pro forma net tangible book value per common share after the Offering $ 0.87 Dilution per common share to new investors $ 5.63 (1) Assumes net proceeds from Offering of 1,250,000 Units (1,250,000 shares of Common Stock and assuming no exercise of the Warrants). The discussion and tables above is based on 35,663,850 shares of Common Stock issued and outstanding as of January 24, 2011, (i) including, 1,250,000 shares of Common Stock included in the Units that are to be issued in the Offering (ii) excluding 125,000 shares of Common Stock issuable upon exercise of the warrants contained in the Units and the Underwriters Warrants to purchase up to 125,000 shares of Common Stock but (iii) excluding the shares issuable to the Selling Stockholders. In addition, we may choose to raise additional capital due to market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans. To the extent that additional capital is raised through the sale of equity or convertible debt securities, the issuance of these securities could result in further dilution to our stockholders. ACCOUNTING FOR THE SHARE EXCHANGE On August 9, 2005, the Company completed the acquisition of all of the Common Stock of Hanxin International pursuant to a Share Exchange Agreement. We acquired Hanxin International in exchange for 24,000,000 shares of Common Stock and 1,000 shares of the Series A Preferred Stock, which such shares of Common Stock as converted into 29,530,937 shares of Common Stock. Subsequent to the merger and upon the conversion of the Series A Preferred Stock, the former shareholders of Hanxin International own 95% of the outstanding shares of our Common Stock. As a result of this transaction, Hanxin International became a wholly-owned subsidiary of the Company. The transaction is accounted for using the reverse merger acquisition method of accounting in accordance with the FASB issued ASC805, Business Combinations. DESCRIPTION OF BUSINESS Overview As used in this prospectus, unless otherwise indicated, the terms we, our, us, Company and Asia Cork refer to ASIA CORK, INC., a Delaware corporation, formerly known as Hankersen International Corp ( HANKERSEN ). Our Corporate Structure The corporate structure of the Company is illustrated as follows: Corporate History Asia Cork Inc. (f/k/a Hankersen International Corp.), was incorporated under the laws of the State of Delaware on August 1, 1996. The Company was formed in connection with the merger acquisition of Kushi Macrobiotics Corp. ( KMC ) with American Phoenix Group, Inc. ( APGI ) in 1996. Prior to such acquisition, KMC had operated a business of marketing a line of natural foods (the Kushi Cuisine ). This business was not successful and management determined that it would be in the shareholder s interest for KMC to operate a different business. In August 2005, the Company, through Kushi Sub, Inc., a newly formed Delaware corporation and wholly-owned subsidiary of Company us ("Acquisition Sub") acquired all the ownership interest in Hanxin (Cork) International Holding Co., Ltd. ("Hanxin International"), a British Virgin Islands limited liability corporation, organized in September 2004. The Company acquired Hanxin International in exchange for 24,000,000 shares of Common Stock and 1,000 shares of the Series A Preferred Stock, which such shares converted into 29,530,937 shares of Common Stock. Subsequent to the merger and upon the conversion of the Series A Preferred Stock, the former shareholders of Hanxin International currently own 95% of the outstanding shares of Company our Common Stock. Kushi Sub, the surviving entity of the merger with Hanxin International, has no other business activities other than owning 100% of Xi'An Cork Investments Consultative Management Co., Ltd. ("Xi'An"), which owns 92% of Xian Hanxin Technology Co., Ltd. ("Hanxin"), incorporated in July 2002, both Xi'An and Hanxin are People's Republic of China (PRC) corporations. Most of the Company s operating and business activities are conducted through Hanxin. During the year ended December 31, 2005, Hanxin acquired a 75% equity interest of Cork Import and Export Co. Ltd. ( Cork I&E ), a PRC corporation that engages in cork trading businesses. On July 11, 2008, the Company's wholly owned subsidiary, Asia Cork Inc. was merged into its parent, the Company as approved by the Board of Directors of the Company pursuant to the Delaware General Corporation Law. The Company is the surviving company of the merger and, except for the adoption of the new name, its Certificate of Incorporation is otherwise unchanged. The wholly-owned subsidiary was formed in July 2008 and had no material assets. The Certificate of Merger was filed with the Secretary of State of Delaware on July 11, 2008. As permitted by Delaware General Corporation Law, the Company assumed the name of its wholly-owned subsidiary following the merger and now operates under the name Asia Cork Inc. The Company s Common Stock is quoted on the Over the Counter Bulletin Board under the trading symbol AKRK.OB. Reverse Stock Split and Change of Domicile Concurrently with the date of this prospectus, the Company will effectuate the Reverse Split. The Reverse Split is a condition to the Offering. None of the references to the outstanding shares of our Common Stock in this prospectus give effect to the Reverse Split. Business Overview The Company, through its subsidiaries, engages in the development, manufacture and distribution of cork wood floor, wall, sheets, rolls and other cork decorating materials, which are generally regarded as environmentally friendly. Located in Xi an, China, Asia Cork, Inc. is a rapidly growing leader in the industry of cork-based building materials. Cork is a green renewable resource harvested only from the bark of the cork oak tree, thus leaving forests generally undamaged. Compared to other similar products, cork products have the characteristics of their impermeability, buoyancy, elasticity, and fire resistance. The sustainability of production and the easy recycling of cork products and by-products are two of its most distinctive aspects. The Company s product lines include raw cork materials, semi-finished cork products, finished cork products, and by-products, including cork roll, cork paper, crafts and ornaments, cork floorboards and wallboards. The average wholesale price of Hanxin cork floors is around $60/m2, while products from Portugal are usually priced at 75/m2 on average. Hanxin enjoys significant cost advantage as its production activities are all performed in China. Raw cork materials, mainly cork granules in China, cost only 30~40% of the cost of the raw materials from Portugal and, and the average labor cost in China is around 20~10% of the cost in Europe, which gives Asia Cork a pricing advantage and higher margin. The aforementioned data is assessed by us from our industry experience, information from our clients or business partners, and information generally available in the cork product industry. We have the right to use 17 patents developed by Fangshe Zhang, our Chairman regarding cork processing technologies. We own 3 patents, lease 3 patents, and have exclusive right to use another 11 patents for free. We believe that these 17 patents give us competitive advantages in our product quality. 3 patents owned: ZL01121762.0 Effective date from Oct. 24th, 2001 to Oct. 23th, 2021 ZL01131761.2 Effective date from Oct. 24th, 2001 to Oct. 23th, 2021 ZL01131763.9 Effective date from Oct. 24th, 2001 to Oct. 23th, 2021 3 patents subject to exclusive lease: ZL02114508.3 Effective date from Feb. 9th, 2002 to Feb. 8th, 2022 ZL02114507.5 Effective date from Feb. 9th, 2002 to Feb. 8th, 2022 ZL02114510.5 Effective date from Feb. 9th, 2002 to Feb. 8th, 2022 11 patents licensed exclusively on a royalty free basis: ZL200410025960.x Effective date from Mar. 17th, 2004 to Mar. 16th, 2024 ZL200420041668.2 Effective date from Mar. 17th, 2004 to Mar. 16th, 2014 ZL03241926.0 Effective date from Jun. 19th, 2003 to Jun. 18th, 2013 ZL03241927.9 Effective date from Jun. 19th, 2003 to Jun. 18th, 2013 ZL03241928.7 Effective date from Jun. 19th, 2003 to Jun. 18th, 2013 ZL02261996.8 Effective date from July 29th, 2002 to July 28th, 2012 ZL03262604.5 Effective date from Aug. 11th, 2003 to Aug. 10th, 2013 ZL200420086143.0 Effective date from Nov. 4th, 2004 to Nov. 3rd, 2014 ZL200420042256.0 Effective date from July 27th, 2004, to July 26th, 2014 We sell our products under the Hanxin brand to customers through sales agents. All of our sales are to distributors in China, some of whom resell the products or reprocess the products and sell their products overseas. Our products are currently being exported to India, the United States, Japan, and Germany by those unrelated national distributors and agents. Our objective is to utilize our technology and cost advantages of being based in China in order to become a leading cork product developer and manufacturer. We intend to continue to develop new products, expand the market for cork floorboard, wallboard and other products globally, and increase our sales revenue. In order to achieve our objectives, we intend to, among other things, increase our sales and marketing efforts, enhance production capacity, ensure our raw material incoming source, acquire other cork manufacturing factories and other cork exporting companies in China, continue expanding domestic market by establishing sales network in China, export our cork products to overseas countries by our own sales network, and establish our own cork plantation in China. Provided that our expansion plans above mentioned can succeed, we expect that our production capacity will increase substantially. There is no assurance that we will be able to achieve these objectives. Hanxin intended to purchase a factory s fixed assets through an unrelated agent, and both parties signed the Entrust Purchase Agreement on November 10, 2005. Hanxin has paid deposits $2,021,717 (equivalent to RMB 13,800,000) to the agent as of December 31, 2009. The agency agreement has no firm commitment on the purchase but it states a maximum price of RMB 50,000,000 that the Company is willing to pay for the fixed assets. However, due to disputes with the factory s creditors, the agent has been unable to close this purchase. As a result, Hanxin executed a supplementary agreement with this agent on September 27, 2009 to postpone the term. Pursuant to the supplementary agreement, the deposit which Hanxin had paid to the agent is fully refundable if the purchase does not close by June 30, 2010. Since various issues within the factory s creditors were not resolved during the second quarter of 2010, the agent was unable to fulfill this agreement. Therefore, the deposit was returned to Hanxin in June 2010 by the unrelated agent Cork Material and Cork Products Cork material is a green material, a subset of generic cork tissue that is harvested for commercial use primarily from the cork oak tree. Cork is composed of Suberin (please see below the compound structure of cork), hydrophobic substance, and because of its impermeability, buoyancy, elasticity, and fire resistance, it is used in a variety of products. Compound Structure of Cork Source: Universita' Cattolica, Italy Honeycomb structure of cork Cork's extraordinary properties derive from its distinctive cellular structure. A one inch cube of natural cork contains more than 200 million tiny air-filled pockets. Some 50% of cork is captive air, which results in excellent buoyancy, compressibility, elasticity, a high degree of imperviousness to both air and water penetration and low thermal conductivity. The following table shows the physical properties, constitutive monomers and average content of the main cork components: Component Properties Monomers Average content Suberin Resilience Impermeability Fatty acids Alcohols 45 % Lignin Resistance to compression Aromatic alcohols 27 % Poly-saccharides Resistance to elongation Monosaccharides 12 % Tannins Ellagic acid Proanthocyanidins 6 % Waxes Impermeability Phenols Fatty acids 7 % Source: Universita' Cattolica, Italy Due to the special structure and constitution, cork is noted for the following properties: Environmentally friendly cork barks are harvested with no harmful chemicals used in the harvesting process. Moreover, the cork production process uses no water, emits no CO 2 or other gases, and produces no waste materials that cannot be recycled. As a result, the cork products can be widely used even in food-related industry, ranging from wine stoppers to the medium for growing mushrooms. No toxic evaporation - Cork floor planks contains only 6 milligram formaldehyde every 100 gram, lower than the Chinese national standard of 9 milligram. Durability Cork has a high friction coefficient. As a result, cork products have outstanding durability and can be used for many years when properly maintained. Lightness and Low Density The cellular structure of cork makes it very lightweight, resulting in cork's celebrated buoyancy. Impermeability Cork is impermeable to both liquids and gases, giving it superior sealing capabilities. Elasticity Cork is pliable and rebounds well to original size and shape Low conductivity Cork has one of the best insulating values of any natural material, with very low conductivity of heat, sound or vibrations. This enables cork to reduce heating and cooling costs and makes cork a good sound-proof material for construction and decoration. Fire resistance Cork has a high tolerance to heat. Anti-moth Cork floor is fully resistant to damage by moths The distinct appearance of cork facilitates its use for decorating purposes, from floor and wall tiles to wallpaper to decorative specialty uses. Cork s resilience helps cork products recover from compression or puncture. Longevity under heavy usage is a cork trademark. With many special properties, cork building material can be used to practical and aesthetic effect in diverse environments, including retail stores, restaurants, offices, hotel rooms and lobbies, clinics, resorts, universities, public buildings, houses of worship, and many more public and private environments. Our Products We produce the following cork products: Cork Granule: Cork granule comes in varies sizes and is the early stage of cork material processing. Granules of cork can also be mixed into concrete by natural resin glue which is also environmental friendly. The composites made by mixing cork granules and cement have low thermal conductivity, low density and good energy absorption. Cork Sheet and Roll: Cork board and sheet/roll are of different thickness according to their usage, which need advanced processing techniques and manufacturing requirements. Production of cork sheet and cork roll cost more raw bark materials than that of other base materials. Customers process them into cork art crafts and into underlayment for wood floors, notepads and similar products. Glue-down Floor: Glue-down cork floor is made of two layers of cork and can be glued down to the flat ground when being installed. The special features of cork material have enabled it to be an ideal flooring material. With its elasticity, cork is a natural floor cushion, being soft, comfortable and less tiring to walk on. Cork flooring maintains warmth and is used for sound proofing. Unlike other materials, it resists appearing worn out . Cork flooring can also be crafted into many different designs and patterns, many of which are difficult to achieve using other raw materials. We currently produce several series of glue-down cork floor with different designs, colors and granules. This product is of comparatively high profit margin and is currently our major product. Floating Floor: Floating cork floor is the high-end cork floor board. The tiles can interlock with each other and are therefore fast and convenient to install. Different from glue-down floor which is usually made of two layers which are both made completely by cork, floating cork floor tiles consist of three layers. The surface layer is made of about three millimeter thick cork with well designed pattern and color; the middle layer made of about seven millimeter thick high density fiberboard, and the under layer is made of about one millimeter thick cork sheet. Besides being convenient and environmentally friendly to install, the thickness provides for better comfort and a more luxurious feeling. This product produces the highest profit margin among all our products f and we are gradually moving our focus from sheet and roll to the production and sale of floating cork floor. The specifications of cork floors we produce are listed below Testing Data National Standard Formaldehyde emission E=7 E 9 Collision sound 14-16dB No requirement on collision sound for normal floorboard/wallboard Heat transmission coefficient 0.06mk No requirement on Heat transmission coefficient for normal floorboard/wallboard* Anti static electricity 2.2kv No requirement on static electricity resistance for normal floorboard/wallboard Abrasion resistance 5000 wear cycles 4000 wear cycles Fire resistant coefficient 22.2 No requirement on fire resistance for normal floorboard/wallboard Fire resistance rating Level B two Divided into 4 levels according to National Standard GB8624-1997 ** Chemical resistance Can resist muriatic acid for one hour No requirement on chemical resistance for normal floorboard/wallboard*** Source: Tested by Han Xin Quality Control Department. (Hanxin Quality Control Department is an internal department of Hanxin) *The construction and decoration materials industry in China usually regards materials with the heat transmission coefficient of 0.06 W/(m K) as heat insulating material, while materials with the heat transmission coefficient that is equal to or less than 0.05 W/(m K) as high-efficiency heat insulating material, although there are no official standards to classify heat insulation materials. The heat transmission coefficient of normal wood floorboard is ranging from 0.070 to 0.233W/(m K). **National Standard GB8624-1997 is the fire resistance rating system for general construction materials. Construction materials are categorized into 4 levels as follows: A Non-flammable B1 Flame retardant B2 Flammable B3 Highly flammable ***According to ISO3810-1987, the international standard on cork floor, cork floor should be able to resist muriatic acid for half an hour. Our quality control is done internally through Hanxin. Tests for quality control systems are done for every batch of finished products. Only when test results of the products meets the standards can those products be sold. These standards are established by Hanxin, and are also applied by several other domestic cork producers. All test standards are much higher than those of the national standards for artificial boards. Based on these high standards, we believe the quality of our products is superior in the industry. Cork Wallboard: Wallboard is a high-end decorative material. All of the wallboard products utilize Hanxin s special staining technology to create different colors. We produce 16 types of cork wallboard with different patterns. Besides giving a beautiful and luxurious impression for the decorative use, cork wallboard also possesses soundproof qualities, making it especially suitable for rooms and structures that demand quiet. Basic Board : Basic cork board is similar as glue-down cork floor except that it has not been covered by a UV membrane. Basic board can therefore be tailored to different uses according to a customer s specific needs, such as the underlayment for wood floor or soundproof material. The first two columns pictured above are selected sample pictures of wall boards. The last two columns pictured above are selected sample pictures of floor boards. As of December 31, 2009, the sales percentage based on categories of products for 2009 is as follows: The sales percentages based on categories of products in 2008 are as follows: Production Procedures, Facilities, & Capacity According to the special characteristic of cork material produced in China, we have designed a tailored production process and specified the operating requirements in each step, which ensures the quality of our products and becomes our key competitive edge. The basic manufacturing procedure is as follows: From 2002 until 2008, we built five workshops in sequence on over 80 thousand square meters of leased lands which are all located in the vicinity of Xi an, Shaanxi Province. All of the production procedures are performed in these workshops. Workshop number one to number three were all established and started operation before August 2003. The fourth workshop was built in June 2005 and started operation in September 2005. We have two production lines installed in the first four workshops. One line is for the production of floor plank and wallboard, the annual production of which is approximately 300,000 square meters. The other line is for production of cork sheets and semi-finished products, such as rolls of cork, the annual production of which is approximately 60,000 boxes. Due to the unique non-standard production procedures for our product, each production line involves several workshops. The major function and output of the four workshops are shown as the following: No. Functions No. of workers Major product Output (per shift, 2~3 shifts every day) 1 Cutting, grinding, seasoning, film pressing, slicing, heated compounding, coating, waxing, etc. 80~90 Cork granule, sheet/role, wall boards 100 boxes 500 m 2 wall board 2 Cutting, grinding, film pressing, slicing, polishing, etc. 70~80 Cork sheet/roll 100 boxes 3 Inspection, packaging, warehousing Around 30 Not applicable Not applicable 4 Heated pressing and compounding, edging, coating, inspection 70~80 Cork floor boards >300 m 2 The fifth workshop has about 6,000 square meters of capacity. Construction commenced in the third quarter 2007 and completed in September 2008. We planned to establish a third production line to produce high-end cork floor planks in the fifth workshop. We started to install production equipment in the fifth workshop in October 2008. We expect that, upon fund availability, the new facility will utilize the Company s advanced patented technologies to primarily produce floating cork floorboards of around 300,000 square meters. However, due to the adverse market conditions we stopped purchasing new production facilities for the fifth workshop after the completion of part of the production line at the end of 2008. We have not determined when the additional production lines will be completed. At present the fifth workshop is used for part of the production procedure of the new high-end products and for the warehouse of our final products. Until September 20, 2010, we had an option to acquire Sichuan Hanxin Cork Merchandises Co, Ltd. ( Sichuan Hanxin ), one of the major cork raw material providers located in Sichuan Province China and our major supplier. On September 20, 2009, we entered into an agreement ( Agreement ) with the two shareholders of Sichuan Hanxin, Huadong Li and Xiaojun Wu. The Agreement grants us an option to acquire 100% of the shares of Sichuan Hanxin by September 20, 2010. The acquisition price would have been between 120%~150% of the net asset value as shown in the audited financial statements as of December 31, 2009 of Sichuan Hanxin as determined by an audit firm we designate. Since the Company did not obtain financing and the closing conditions were not satisfied as of September 20, 2010, the acquisition agreement terminated. Sichuan Janxian agreed with us to apply the acquisition deposit of RMB9.3 million (equivalent to $1,362,234 as of December 31, 2009) to the amounts owed by us for the purchase of cork floor products from Sichuan Hanxin in 2010. We still intend to purchase Sichuan Hanxin but there can be no assurance that the parties can agree upon terms for such acquisition or that we will have sufficient capital to consummate such acquisition. In order to intend to expand our production capacity and lower our production costs, we signed a cooperation agreement with Sichuan Hanxin for the production of cork floor boards on October 15, 2009. Sichuan Hanxin and we are cooperating to build another production line for manufacturing the cork floor planks at their location in Sichuan province. According to the Cork Floor Production Cooperation Agreement, we provided a set of production equipment and Sichuan Hanxin agreed to provide the workshop and supplementary equipment. We agreed to prepay for raw materials and provide secondary raw materials to Sichuan Hanxin. Nevertheless, Sichuan Hanxin shall be responsible for the production of cork floor products according to our quality specifications and standards.. According to the agreement, we have the exclusive right to sell the cork floor products produced by this production line. This new cork floor production line is expected to commence operation in 2011, with an annual production capacity of approximately 200,000 square meters of products. Accordingly, we will be able to increase our total annual output to 500,000 square meters. Producing the finished product at Sichuan Hanxin allows us to produce product at a lower cost, as we save the higher transportation costs associated with transporting raw material as compared to finished product. Sichuan Hanxin also has existing buildings with the capacity to house additional production lines. As of September 30, 2010, we were operating at 98% of our maximum production capacity. Our own production capacity cannot meet expanding market demand. We are negotiating with several other mid-sized cork product manufacturers to be original equipment manufacturer ( OEM ) and receive our support of technology and standards. We have not yet entered into any OEM contracts, but expect to develop long-term OEM cooperation with several manufacturers in the near future to enlarge our production output in a more stable manner while saving the cost of building new production facilities. Raw Materials Cork is the outer bark of a cork oak tree. During a harvest, the outer bark of a cork oak s trunk and major branches is carefully stripped by hand no mechanical stripping devices are allowed. Experienced cork strippers use a specialized cork axe to slit the outer bark and peel it away from the tree. The cork bark is then sorted by quality and thickness. The remaining cork (called blocker waste," although it is perfectly good material!) is then ground up and processed to be used in the production of agglomerated cork and cork & rubber compounds. These materials are used in a variety of applications from construction and gaskets and friction plates to sound proof materials. A cork tree regenerates its precious outer layer 9 or 10 times during its 150~200-year lifetime. The first stripping of the cork bark occurs when the tree is between 15 years of age, with subsequent yields at 9 to 10 year intervals. Because of the limited time of harvesting the cork tree during its life circle, access to abundant natural resources of cork forest is a very important aspect of our business. At present, the supply and price of raw materials have been stable. There are only two species of cork oak tree which can produce barks that are suitable for manufacture of cork building materials, Quarks Suber and Quarks Variabilis. Quarks Suber belongs to evergreen arbor tree, and is native to the western Mediterranean area. On average, ten hectare Quarks Suber can shed cork about 150 kilograms every ten years, while high-quality Portugal Quarks Suber can produce 200 250, or even 500 kilograms every hectare. With its vast reservation of over 700 thousand hectare, Portugal is the largest source of cork products. The following graph shows the world distribution of Quarks Suber in 2006 . Country Forest Area Hectares % of Worlds Forest Area Production Tons (000) % of Total Production Portugal 736,000 32 % 157 52 % Spain 506,000 22 % 88 30 % Algeria 414,000 18 % 17 6 % Morocco 345,000 15 % 11 4 % France 92,000 4 % 3 1 % Tunisia 92,000 4 % 8 3 % Italy 92,000 4 % 15 5 % TOTAL 2,277,000 100 % 340 100 % Source: The Natural Cork Quality Council, US Quarks Variabilis is a kind of wide-leaved deciduous tree that mainly grows in China. The wild forest area is about 1.2 million hectares. The most important growing area is Shaanxi Province, especially the Qin Ba Mountain area whose reservation occupies over 65% of the wild forest in China. Different from Quarks Suber, the cork from Quarks Variabilis is completely wild grown, while trees of Quarks Suber in Portugal are mainly grown on plantations. Raw material, namely bark of Quarks Variablilis is an important aspect of our business. We have abundant access to the cork raw materials. We purchase all raw materials, including bark, glue, PVC membrane, paint and other materials from over 10 suppliers. None of the suppliers individually provide more than 15% of our total purchase of raw materials. Three suppliers accounting for approximately 40% of our supply of raw materials in 2008 and 2009 and we have purchased product from each of our largest bark suppliers for more than three years. We usually enter into one year purchase agreements with our suppliers. We believe we have good relationships with our suppliers, and the raw materials supply stays comparatively stable except for normal price fluctuations. Commencing in the 4th quarter of 2010, the market prices of raw materials and secondary materials began to increase. It is estimated that raw materials have increased by 15% and parts of the secondary raw materials (such as resin glue) have increased by over 20%. In December 2010, the purchase agreements for raw materials were renewed with the suppliers with the new market prices and as a result, the gross profit margin will be affected. In anticipation of the increase in prices, the Company purchased large amounts of raw materials which the Company believes will be sufficient for approximately six months. The effect of the increase in prices of raw materials shall have a greater impact during the second half of 2011. To deal with this situation, the Company may increase its products sales prices in 2011 relative to the actual increase of raw materials and secondary raw materials prices. All our workshops are located in Shaanxi PRC which accounts for more than 65% of total bark production in PRC. Besides purchasing the barks from wild Quarks Variablilis, we may also acquire lands to establish our own plantation for high quality cork oak trees. Our major supplier, Sichuan Hanxin, obtained a three-year exclusive right (from 2009 to 2011) from Mian Yang City Forestry Administration which is one of the government bureaus in Mian Yang City Sichuan province to collect, purchase, transport and process the cork bark raw material in four counties in MianYang City. Sichuan Hanxin has the exclusive right to purchase cork bark from designated areas each year in order to conserve the supply of cork and allow the tress in harvested areas to regrow their bark. The MianYang Municipal government passed a regulation on April 22, 2009 to protect the right of Sichuan Hanxin, which gives Sichuan Hanxin an advantage in the development of its business. Pursuant to our agreement with Shaanxi Shuta dated October 20, 2009, we agreed to purchase from Shaanxi Shuta a land use right of 7,000 Mu (equal to 4,669,000 square meters) located in Baoji District, Shaanxi province. We plan to develop our own cork forest on the land, which will help assure our raw material supply at a lower cost. Shuta incurred RMB10,000,000 (equivalent to $1,494,509) expenses in the process of the acquisition. The agreement provides that in the event that we do not purchase the land by October 20, 2011, we will be liable to pay RMB10,000,000 to Shuta as reimbursement for the acquisition expenses. The parties anticipate that should we not purchase the land by October 20, 2011, Shuta will not repay the RMB10 million loan pursuant to Loan Agreement dated October 28, 2009 and the parties will have no further obligation to each other regarding the loan or the land purchase. Our Marketing Strategy We sell our products in China through sales agents, retail sellers, and our own sales employees. The overseas markets primarily are approached through unrelated overseas distributors and agents. Domestic market Sales Agents Strategic Cooperation Agreement with Shaanxi Shuta Shaanxi Shuta is one of the largest wholesale distributors of cork floor boards and wall boards in China. As of December 31, 2009, Shaanxi Shuta had over 10 wholesale stores and four showrooms. According to our strategic cooperation agreement,, Shaanxi Shuta shall Order three types of Shuta Brand cork flooring plank products to be produced by Hanxin based on the Shuta s specification and Order three types of Shuta Brand flooring plank semi-finished products to be processed by Hanxin. As to the Shuta Brand cork plank products, Shaanxi Shuta has the exclusive right to distribute these products produced by Hanxin. Other Sales Agents In addition to Shaanxi Shuta, we have distribution contracts with several other companies to distribute our flooring plank and other products. In January 2009, we entered into Distribution Agreements with Shanghai Yuanrui Limited., Suzhou Juwang Ltd., Hangzhou Zhongheng Ltd. and Shanghai Tangyi Ltd. These companies mainly distribute glue-down flooring planks and floating flooring planks. We provide product warranties. We plan to increase the number of our distributors and enhance support for our distributors by providing more high-quality and delicately designed samples, and increasing our efforts in advertising our brand name and educating consumers. Our Sales Team We also distribute products through our own sales team and established sales network of regional distributors. Xi An is the headquarters for our sales force, with sales representatives in Beijing, Shanghai and Guangzhou. We plan to hire more contracted sales representatives in two major cities: Jinan and Shenyang, within the central and northeast regions of China to attempt to increase our market reach. Besides our contracted sales representatives within the central and northeast regions of China, we also have long term relationships with over 50 independent sellers in many regions of China. We also seek to expand our existing sales channel for semi-finished products and other cork products such as decoration products, cork office equipment and cork art crafts. We focus on educating the consumer about cork products through media advertisement. We also may establish our own sales network through a franchise store in China, in order to enhance the sales of our end-products including cork floor and cork wall board. International market Our products have been sold internationally though unrelated national distributors and agents. Our products are currently being exported to India, the United States, Japan, and Germany by those unrelated national distributors and agents. Commencing in May 2007, we began selling our products to overseas clients directly through unrelated national distributors and agents. In 2011, we expect to start our own oversea export sales network to Asian and North American markets. The export destinations and percentage of our exports in 2009 were approximately as follows: Our strategic plan is to aggressively explore foreign markets in the next several years. We have established relationships with two building and decorative material dealers in New Jersey. We do not have written agreements with these distributors. As the construction industry recovers from the financial crisis, and because foreign retailers actively search for suppliers with quality products and lower prices, we intend to more directly penetrate foreign markets and gradually establish our brand name worldwide. As of December 31, 2009, none of our customers accounted for more than 10% of our sales. Market Opportunities and Competition Market Opportunities As an environmentally-friendly construction material, cork has an increased demand for building and home improvement purposes from China s rapidly-growing middle-class population. Even though cork is priced at a 10-15% premium over hardwood floorboards, significant market demand exists for the obvious advantages mentioned above that only cork flooring possesses. According to National Bureau of Statistics of China, in 2009, the total sales of commercial residential building were 937,130,000m2, with increase of 42.1% compared to 2008. The decoration industry in China has also grown in recent years. From the data of The First China Economic Census, released by National Bureau of Statistics of China, in 2008, the total output of construction decoration and installation industry was around RMB 1 trillion, while in 2 0 04, this number was RMB430 billion, the annual compound growth rate was 23.5%. Although the global financial shocks commencing in 2008 has had some negative effect to the industry in China, based on the sharp rebound in 2009 we believe that significant market opportunities exist. The above data is from construction and decoration industry annual statistical reports released by National Bureau of Statistics of China. Chinese consumers are gradually adopting a more proactive environmental stance. According to the director of Interior Environment Supervision Center of China Interior Decoration Association, over 50% of consumers express concerns over environmental safety issue regarding interior decoration materials. Also, more consumers are concerned about the environmental impact of the production procedures for decoration materials. This growing concerns from consumers creates great opportunity for cork decoration products, the harvesting and manufacture process of which is much more environmental protective than that of wooden and other compound floorings, as only the bark is harvested once every nine years, leaving the forest undamaged. In the international market, cork building and decoration materials have been widely recognized as environmentally friendly high-end products. Yet because of the rareness of raw materials and the very limited output of cork floors and wallboards compared to ordinary wood floors, cork decoration materials are not yet fully advertised to and used by end users. We believe there is a much larger potential market in the developed countries as a result of environmental concerns from consumers in these countries who are more educated and informed. In addition, the price of cork floors in these countries is similar to prices for high quality wood floors and ceramic tiles. We also believe we will benefit should the recent financial shock incentivize more distributors and retailers to search for less expensive supplies with outstanding quality. We are able to offer products that can compete with European products in quality and fashion design at only half to 2/3 of their wholesale prices. We believe this will be a competitive advantage. Competition International Competition The cork industry is originated from Portugal, where the largest cork enterprises such as Amorim are located. The cork industry has a long history in Portugal as the country has the best Mediterranean climate for oak trees to produce high quality bark. According to information from these large companies, their major product is cork stopper used for wine bottles, which usually accounts for one third of their total sales and even higher percentage of profit. The Portugal cork enterprises usually have their own cork oak plantations where cork oak are grown and thinned by specialized personnel. As a result, the production of cork from these plantations is quite limited and the market volume is heavily dependent on the actual output capacity of these large companies. Spain is also a significant producer of cork. Domestic Competition While our competition for international sales is primarily from Portuguese manufacturers, our competitors within China are other local mid-sized cork manufacturers. These companies major products are semi-finished cork boards, sheets and roles. Compared to the competitors, Hanxin s excels in its technology, experience, as well as product quality and design. Hanxin s patented technologies cannot be easily circumvented for Chinese manufacturers to produce high quality cork floor and wallboard, which form a high entry barrier for most of their competitors to compete with Hanxin in the high-end cork floor and wallboard market. Thus the competition between domestic cork manufacturers has not fully developed. We intend to continue to focus our production from our semi-finished products to higher-margin end products, where there is less domestic competition. Our competitive strengths include the following: Access to abundant raw material resources There are about 2.3million hectares of Quarks Suber cork forest worldwide; 32% in Portugal, and 22% in Spain. However, in terms of production, China trailed Portugal with an annual production of approximately 100,000 tons of Chinese cork oak (Quarks Variabilis), which is abundant in the Shaanxi, Gansu, Henan, Hubei and Sichuan provinces. The raw materials supply to Hanxin is stable and of much lower price compared to that of European raw materials. Experienced Management Team Our senior management team has extensive business and industry experience in cultivating and monitoring forests of oak cork trees, developing technologies in the production of cork products, and marketing of cork products both in China and overseas market. Strategic Alliance with Top Research Institutions We have been striving to improve the quality of its products through research and development (R&D) collaboration with educational institutions such as the Northwest Sci-Tech University of Agriculture & Forestry. Senior professors from this institution serve as technical consultants to equip us with the latest technical advancements. In recent years, Hanxin has reduced research and development efforts. Hanxin intends to strengthen its research and development to develop new products should the sales improve. Quality Control We place great emphasis on the quality of Hanxin s products and quality control system. In particular: In March, 2005, Hanxin cork floor was approved by State plywood Quality Supervision and Test Center for formaldehyde emission, TS water immersion testing. (Certification No. Floor 2005-65/66/6768) In March, 2005, Hanxin cork wallboard was approved by State plywood Quality Supervision and Test Center for formaldehyde emission testing. (Certification No. Floor 2005-64) In February 2005, Hanxin cork floor passed material sound absorption testing by Acoustics Research Center from Tong Ji University In October. 2003, Hanxin cork floor was approved by Xi an Institute of Supervision & Testing on Product Quality in standard testing of GB18580, GB/T18102-2000, GB/T18103-2000 with Certification NO.G0300708. In Nov. 2003, Hanxin cork wallboard was approved by Xi an Institute of Supervision & Testing on Product Quality in standard testing of Q/HX01-2001 with Certification NO.G0300742. In October 2001, Hanxin s products and standards were certified by the Xi an Quality Technology Supervision Bureau, the governmental agency responsible for the inspection of commodities being imported and exported to and from China Currently, our ISO9000: 2000 and ISO14001 certifications are pending. Intellectual Property We have the right to use 17 patents regarding cork processing technologies. We own 3 patents, lease 3 patents from Mr. Fangshe Zhang, our Chairman and a principal shareholder, and also have an exclusive right to use another 11 patents of Mr. Zhang without payment of any royalties. When our royalty payments with respect to the three patents end in 2011, we will receive an exclusive right to use these patents leased without payment of any royalties. See Certain Relationships and Related Transactions. 3 patents owned: ZL01121762.0 Effective date from Oct. 24th, 2001 to Oct. 23th, 2021 ZL01131761.2 Effective date from Oct. 24th, 2001 to Oct. 23th, 2021 ZL01131763.9 Effective date from Oct. 24th, 2001 to Oct. 23th, 2021 3 patents leased: ZL02114508.3 Effective date from Feb. 9th, 2002 to Feb. 8th, 2022 ZL02114507.5 Effective date from Feb. 9th, 2002 to Feb. 8th, 2022 ZL02114510.5 Effective date from Feb. 9th, 2002 to Feb. 8th, 2022 11 patents used for free: ZL200410025960.x Effective date from Mar. 17th, 2004 to Mar. 16th, 2024 ZL200420041668.2 Effective date from Mar. 17th, 2004 to Mar. 16th, 2014 ZL03241926.0 Effective date from Jun. 19th, 2003 to Jun. 18th, 2013 ZL03241927.9 Effective date from Jun. 19th, 2003 to Jun. 18th, 2013 ZL03241928.7 Effective date from Jun. 19th, 2003 to Jun. 18th, 2013 ZL02261996.8 Effective date from July 29th, 2002 to July 28th, 2012 ZL03262604.5 Effective date from Aug. 11th, 2003 to Aug. 10th, 2013 ZL200420086143.0 Effective date from Nov. 4th, 2004 to Nov. 3rd, 2014 ZL200420042256.0 Effective date from July 27th, 2004, to July 26th, 2014 PRC Government Regulations Environmental Regulations The major environmental regulations applicable to us include the PRC Environmental Protection Law, the PRC Law on the Prevention and Control of Water Pollution and its Implementation Rules, the PRC Law on the Prevention and Control of Air Pollution and its Implementation Rules, the PRC Law on the Prevention and Control of Solid Waste Pollution, and the PRC Law on the Prevention and Control of Noise Pollution. We do not believe that the costs and effects of compliance with applicable environmental laws are applicable to our business. Potential liability in connection with environmental regulation arises from the possibility that pollution will be caused by the dust generated when cork barks are ground into fine granules, which is typical for the artificial board industry. This problem is usually solved by installing dust removing facilities. We believe that Hanxin has installed sufficient dust removing systems in its workshops and has been effectively controlling its dust emission. The dust removing systems have been designed by the Company. The cost for installing these facilities is part of the cost for establishing the production lines. Although such dust removing systems consume additional electricity, the additional utility expense increased is minimal compared to the total production expenses. We believe that we face no other issues regarding compliance with environmental laws as our production procedure (1) consumes no water and thus produces no waste water and (2) generates no solid waste as all cork is sold as the raw material foe feed or fertilizer. We have not been named as a defendant in any legal proceedings alleging violation of environmental laws. We have no reasonable basis to believe that there is any threatened claim, action or legal proceedings against us that would have a material adverse effect on our business, financial condition or results of operations due to any non-compliance with environmental laws. Patent Protection in China The PRC s intellectual property protection regime is consistent with those of other modern industrialized countries. The PRC has domestic laws for the protection of rights in copyrights, patents, trademarks and trade secrets. The PRC is also a signatory to most of the world s major intellectual property conventions, including: Convention establishing the World Intellectual Property Organization (WIPO Convention) (June 4, 1980); Paris Convention for the Protection of Industrial Property (March 19, 1985); Patent Cooperation Treaty (January 1, 1994); and The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs) (November 11, 2001). Patents in the PRC are governed by the China Patent Law and its Implementing Regulations, each of which went into effect in 1985. Amended versions of the China Patent Law and its Implementing Regulations came into effect in 2001 and 2003, respectively. The PRC is signatory to the Paris Convention for the Protection of Industrial Property, in accordance with which any person who has duly filed an application for a patent in one signatory country shall enjoy, for the purposes of filing in the other countries, a right of priority during the period fixed in the convention (12 months for inventions and utility models, and 6 months for industrial designs). The Patent Law covers three kinds of patents, i.e., patents for inventions, utility models and designs respectively. The Chinese patent system adopts the principle of first to file. This means that, where more than one person files a patent application for the same invention, a patent can only be granted to the person who first filed the application. Consistent with international practice, the PRC only allows the patenting of inventions or utility models that possess the characteristics of novelty, inventiveness and practical applicability. For a design to be patentable, it should not be identical with or similar to any design which, before the date of filing, has been publicly disclosed in publications in the country or abroad or has been publicly used in the country, and should not be in conflict with any prior right of another. PRC law provides that anyone wishing to exploit the patent of another must conclude a written licensing contract with the patent holder and pay the patent holder a fee. One rather broad exception to this, however, is that, where a party possesses the means to exploit a patent but cannot obtain a license from the patent holder on reasonable terms and in reasonable period of time, the PRC State Intellectual Property Office, or SIPO, is authorized to grant a compulsory license. A compulsory license can also be granted where a national emergency or any extraordinary state of affairs occurs or where the public interest so requires. SIPO, however, has not granted any compulsory license up to now. The patent holder may appeal such decision within three months from receiving notification by filing a suit in a people s court. PRC law defines patent infringement as the exploitation of a patent without the authorization of the patent holder. A patent holder who believes his patent is being infringed may file a civil suit or file a complaint with a PRC local Intellectual Property Administrative Authority, which may order the infringer to stop the infringing acts. Preliminary injunction may be issued by the People s Court upon the patentee s or the interested parties request before instituting any legal proceedings or during the proceedings. Evidence preservation and property preservation measures are also available both before and during the litigation. Damages in the case of patent infringement is calculated as either the loss suffered by the patent holder arising from the infringement or the benefit gained by the infringer from the infringement. If it is difficult to ascertain damages in this manner, damages may be reasonably determined in an amount ranging from one to three times of the license fee under a contractual license. The infringing party may be also fined by the Administration of Patent Management in an amount of up to three times the unlawful income earned by such infringing party. If there is no unlawful income so earned, the infringing party may be fined in an amount of up to RMB 500,000, or approximately $73,195. Tax Pursuant to the Provisional Regulation of China on Value Added Tax and their implementing rules, all entities and individuals that are engaged in the sale of goods, the provision of repairs and replacement services and the importation of goods in China are generally required to pay VAT at a rate of 17.0% of the gross sales proceeds received, less any deductible VAT already paid or borne by the taxpayer. Further, when exporting goods, the exporter is entitled to a portion of or a full refund of the VAT that it has already paid or borne. Our imported raw materials that are used for manufacturing export products and are deposited in bonded warehouses are exempt from import VAT. Foreign Currency Exchange Under the PRC foreign currency exchange regulations applicable to us, the Renminbi is convertible for current account items, including the distribution of dividends, interest payments, trade and service-related foreign exchange transactions. Conversion of Renminbi for capital account items, such as direct investment, loan, security investment and repatriation of investment, however, is still subject to the approval of the PRC State Administration of Foreign Exchange, or SAFE. Foreign-invested enterprises may only buy, sell and/or remit foreign currencies at those banks authorized to conduct foreign exchange business after providing valid commercial documents and, in the case of capital account item transactions, obtaining approval from the SAFE. Capital investments by foreign-invested enterprises outside of China are also subject to limitations, which include approvals by the Ministry of Commerce, the SAFE and the State Reform and Development Commission. Dividend Distributions Under applicable PRC regulations, foreign-invested enterprises in China may pay dividends only out of their accumulated profits, if any, determined in accordance with PRC accounting standards and regulations. In addition, a foreign-invested enterprise in China are required to set aside at least 10.0% of their after-tax profit based on PRC accounting standards each year to its general reserves until the accumulative amount of such reserves reach 50.0% of its registered capital. These reserves are not distributable as cash dividends. The board of directors of a foreign-invested enterprise has the discretion to allocate a portion of its after-tax profits to staff welfare and bonus funds, which may not be distributed to equity owners except in the event of liquidation. Employees As of September 30, 2010, we had 270 employees, and believe our relationship with our employees is good. All of our employees are based in China. There are no collective bargaining contracts covering any of our employees and we believe that we have good relations with our employees. Properties Hanxin owns one property in Xi An of approximately 10,360.3 square meters.. However, in 2007, we renovated the space and built an additional student dormitory. The construction was completed in June 2008. The YuLerYuan Resort, including the new student dormitory, was leased for $22,037 (equivalent to RMB150,000) per month to the university nearby at YuLerYuan and this agreement was extended to February 28, 2011. Hanxin also leases office space of about 436 square meters in Xi an for approximately $2,402 (equivalent to RMB16,352 included rent maintenance fee and cleaning fee) per month. The lease for this office space expires on December 31, 2008, and has been renewed for one more year until December 31, 2010. Hanxin also leases the right to use four parcels of land which are all used as our cork processing plant. One parcel is approximately 53,120 square meters. The lease fee for this processing plant is about $1,469 (equivalent to RMB10,000) per month, and the lease has been extended to October 2047. The second parcel of land is approximately 26,666 square meters. The lease fee for this land use right is about $11,753 (equivalent to RMB80,000) per month, and lease term will be expired on December 31, 2010. The landlord from this property had forgiven us approximately $152,793 (equivalent to RMB1,040,000) rent for years 2009 and 2008 international economic crisis, and we had equally allocated this forgiveness to all lease periods. The third parcel of land is approximately 3,333 square meters. The lease fee for this land use right is about $1,469 (equivalent to RMB10,000) per month, and the lease term also will be expired on December 31, 2010. The landlord from this property also had forgiven us approximately $22,037 (equivalent to RMB150,000) rent for years 2009 and 2008 international economic crisis, and we had equally allocated this forgiveness to all lease periods. The forth parcel of land is leased from Sichuan Hanxin. The lease fee for this land is about $5,877 (equivalent to RMB40,000) per month, and the lease term is expiring on October 2, 2011. For the Quarter Ending September 30, Amount 2011 $ 114,048 2012 17,826 2013 17,630 2014 17,630 2015 17,630 Thereafter 564,157 Total minimum rental payments required $ 748,921 Rent and properties maintenance expenses amounted to $143,808 and $87,480 for the nine months ended September 30, 2010 and 2009, respectively. Legal Proceedings There are no material pending legal proceedings to which the Company is a party or as to which any of its property is subject, and no such proceedings are known to the Company to be threatened or contemplated against it. MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Forward-Looking Statements The following analysis of our consolidated financial condition and results of operations should be read in conjunction with the consolidated financial statements, including footnotes. This prospectus contains forward-looking statements. The words anticipated, believe, expect, plan, intend, seek, estimate, project, could, may, and similar expressions are intended to identify forward-looking statements. These statements include, among others, information regarding future operations, future capital expenditures, and future net cash flow. Such statements reflect our management s current views with respect to future events and financial performance and involve risks and uncertainties, including, without limitation, general economic and business conditions, changes in foreign, political, social, and economic conditions, regulatory initiatives and compliance with governmental regulations, the ability to achieve further market penetration and additional customers, and various other matters, many of which are beyond our control. Should one or more of these risks or uncertainties occur, or should underlying assumptions prove to be incorrect, actual results may vary materially and adversely from those anticipated, believed, estimated or otherwise indicated. Consequently, all of the forward-looking statements made in this prospectus are qualified by these cautionary statements and we cannot assure you of the actual results or developments. We do not intend or assume any obligation to update or revise these forward-looking statements in light of developments which differ from those anticipated, unless as required by law. Overview Business Summary The Company, through its subsidiaries, engages in developing, manufacturing and distribution of cork wood floor, wall and decorating products. The cork industry is generally regarded as environmentally friendly. The sustainability of production and the easy recycling of cork products and by products are two of its most distinctive aspects. For the years ended December 31, 2009 and 2008, we sold all our products to our clients in China, and then part of our China clients resold our products to their overseas clients. Approximately 75% of Hanxin s products sold in 2009 and approximately 70% in 2010 were to the end users in China by our own sales persons and domestic distributors and agents, with the remaining sales being made to customers overseas through our China clients who included unrelated distributors and sales agents. Internationally, our products have been distributed into India, the United States of America, Germany and Japan. The sales to the distributors, the sales agent and directly to clients have no difference as reflected in accounting policies, as the price and the means of delivery has no material differences. All sales revenues are recognized when reception and inspection of goods are finished by clients. We have the right to use 17 patents developed by Fangshe Zhang, our Chairman regarding cork processing technologies. We own 3 patents, lease 3 patents, and have exclusive right to use another 11 patents for free. We believe that these 17 patents give us a competitive advantage in our product quality. With the patents we own and develop, we believe that we will be able to keep our leading status in cork production industry in China. Foreign Exchange Considerations Even though we are a U.S. Company, because all of our operations are located in the PRC, we face certain risks associated with doing business in that country. These risks include risks associated with the ongoing transition from state business ownership to privatization, operating in a cash-based economy, dealing with inconsistent government policies, unexpected changes in regulatory requirements, export restrictions, tariffs and other trade barriers, challenges in staffing and managing operations in a communist country, differences in technology standards, employment laws and business practices, longer payment cycles and problems in collecting accounts receivable, changes in currency exchange rates and currency exchange controls. We are unable to control the vast majority of these risks associated both with our operations and the country in which they are located and these risks could result in a significant decline in our revenue. Because revenues from our operations in the PRC accounted for 100% of our consolidated net revenues, how we report net revenues from our PRC-based operations is of particular importance to understanding our financial statements. Transactions and balances originally denominated in U.S. dollars are presented in their original amounts. Transactions and balances in other currencies are converted into U.S. dollars in accordance with Statement of Financial Accounting Standards (SFAS) No. 52, "Foreign Currency Translation," and are included in determining comprehensive net income or loss. For foreign operations with the local currency as the functional currency, assets and liabilities are translated from the local currencies into U.S. dollars. Translation adjustments resulting from the process of translating the local currency financial statements into U.S. dollars are included in determining comprehensive income or loss. The functional currency of our Chinese subsidiaries is the Chinese RMB, the local currency. The financial statements of the subsidiaries are translated into U.S. dollars using year-end rates of exchange for assets and liabilities, and average rates of exchange for the period for revenues, costs, and expenses. Net gains and losses resulting from foreign exchange transactions are included in the consolidated statements of operations and were not material during the periods presented. Until 1994, the RMB experienced a gradual but significant devaluation against most major currencies, including U.S. dollars, and there was a significant devaluation of the RMB on January 1, 1994 in connection with the replacement of the dual exchange rate system with a unified managed floating rate foreign exchange system. Since 1994, the value of the RMB relative to the U.S. Dollar has remained stable and has appreciated slightly against the U.S. dollar. Countries, including the United States, have argued that the RMB is artificially undervalued due to China's current monetary policies and have pressured China to allow the RMB to float freely in world markets. On July 21, 2005, the PRC reported that it would have its currency pegged to a basket of currencies rather than only tying it to a fixed exchange rate to the dollar. The PRC also increased the value of its currency 2% higher against the dollar, effective immediately. If any devaluation of the RMB were to occur in the future, returns on our operations in China, which are expected to be in the form of RMB, will be negatively affected upon conversion to the U.S. dollar. Although we attempt to have most future payments (mainly repayments of loans and capital contributions) denominated in U.S. dollars, if the value of the RMB increases, our product sales in China and in other countries may be negatively affected. Critical Accounting Policies and Estimates The discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. A summary of significant accounting policies is included in Note 3 to the consolidated financial statements. Management believes that the application of these policies on a consistent basis enables us to provide useful and reliable financial information about our operating results and financial condition. We record property and equipment at cost. Depreciation is provided using the straight-line method over the estimated economic lives of the assets, which are from 1 to 35 years. Expenditures for major renewals and betterments that extend the useful lives of property and equipment are capitalized. Expenditures for maintenance and repairs are charged to expense as incurred. We review the carrying value of long-lived assets for impairment at least annually or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of long-lived assets is measured by comparison of its carrying amount to the undiscounted cash flows that the asset or asset group is expected to generate. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the property, if any, exceeds its fair market value. Our revenues from the sale of products are recognized when reception and inspection of goods are finished by clients. Persuasive evidence of an arrangement is demonstrated via purchase order from customer, product delivery is evidenced by warehouse shipping log as well as bill of lading from the trucking Company and no product return is allowed except defective or damaged products, the sales price to the customer is fixed upon acceptance of purchase order, there is no separate sales rebate, discounts, and volume incentives. Revenue recognition: The Company's revenues from the sale of products are recognized when reception and inspection of goods are finished by clients , the sales price to the customer is fixed and collectability is reasonably assured. Persuasive evidence of an arrangement is demonstrated via purchase order from distributor, our customers, product delivery is evidenced by warehouse shipping log as well as signed bill of lading, or shipping documents from the trucking Company and no product return is allowed except defective or damaged products, the sales price to the customer is fixed upon acceptance of purchase order, there is no separate sales rebate, discounts, and volume incentives. The Company s PRC subsidiaries recognize their revenues net of value-added taxes ( VAT ). The Company s PRC subsidiaries are subject to VAT which is levied on the majority of their products at the rate of 17% on the invoiced value of sales. Output VAT is borne by customers in addition to the invoiced value of sales and input VAT is borne by the Company's PRC subsidiaries in addition to the invoiced value of purchases. Income taxes The Company and its U. S. subsidiary will file consolidated federal income taxes return and state franchise tax annual report individually. The Company's PRC subsidiaries file income tax returns under the Income Tax Law of the People's Republic of China concerning Foreign Investment Enterprises and Foreign Enterprises and local income tax laws. The Company's BVI subsidiary is exempt from income taxes. The Company follows the FASB issued ASC 740 - Accounting for Income Taxes, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The Company adopted the provisions of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes , ( FIN 48 ), codified in FASB ASC Topic 740, on January 1, 2007. As a result of the implementation of FIN 48, the Company made a comprehensive review of its portfolio of tax positions in accordance with recognition standards established by FIN 48, and the Company recognized no material adjustments to liabilities or stockholders equity. When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. The benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits in the accompanying balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination. Interest associated with unrecognized tax benefits is classified as interest expense and penalties are classified in selling, general and administrative expenses in the statements of income. The adoption of FIN 48 did not have a material impact on the Company s financial statements. At September 30, 2010 and December 31, 2009, the Company did not take any uncertain positions that would necessitate recording of tax related liability. Foreign currency translation The reporting currency of the Company is the U.S. dollar. The functional currencies of the Company's subsidiaries are local currencies, primarily the Chinese Renminbi. The financial statements are translated into U.S. dollars using period-end rates of exchange for assets and liabilities and average rates of exchange for the period for revenues and expenses. Translation adjustments resulting from the process of translating the local currency financial statements into U.S. dollars are included in other comprehensive income or loss. Recently Adopted Accounting Pronouncements On February 25, 2010, the FASB issued Accounting Standards Update ( ASU ) 2010-09 Subsequent Events Topic 855, Amendments to Certain Recognition and Disclosure Requirements, effective immediately. The amendments in the ASU remove the requirement for an SEC filer to disclose a date through which subsequent events have been evaluated in both issued and revised financial statements. Revised financial statements include financial statements revised as a result of either correction of an error or retrospective application of US GAAP. The FASB believes these amendments remove potential conflicts with the SEC s literature. Subsequent events have been evaluated through the date the financial statements were issued. In January 2010, FASB amended ASC 820, " Disclosures about Fair Value Measurements ." The new disclosures and clarifications of existing disclosures are effective for interim and annual reporting periods beginning after December 15, 2009, except for the disclosures about purchases, sales, issuances, and settlements in the roll forward of activity in Level 3 fair value measurements. Those disclosures are effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. The Company has determined the adoption of this ASU does not have a material impact on its financial statements. In December, 2009, FASB amended " Financial Reporting by Enterprises Involved with Variable Interest Entities." The amendments in this Accounting Standards Update replace the quantitative-based risks and rewards calculation for determining which reporting entity, if any, has a controlling financial interest in a variable interest entity with an approach focused on identifying which reporting entity has the power to direct the activities of a variable interest entity that most significantly impact the entity s economic performance and (1) the obligation to absorb losses of the entity or (2) the right to receive benefits from the entity. An approach that is expected to be primarily qualitative will be more effective for identifying which reporting entity has a controlling financial interest in a variable interest entity. The amendments in this Update also require additional disclosures about a reporting entity s involvement in variable interest entities, which will enhance the information provided to users of financial statements. The Company has determined the adoption of this rule does not have a material impact on its financial statements. Results of Operations NINE MONTHS ENDED SEPTEMBER 30, 2010 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30, 2009 For The Nine Months Ended September 30, 2010 2009 (Unaudited) (Unaudited) (Decrease)/ Increase Revenues $ 22,436,245 $ 17,056,777 $ 5,379,468 31.54 % Cost of Goods Sold 15,744,727 11,032,415 4,712,312 42.71 % Gross Profit 6,691,518 6,024,362 667,156 11.07 % Gross Profit Percentage 29.82 % 35.32 % Operating Expenses Selling expenses 1,205,358 2,470,208 (1,264,850 ) -51.20 % Bad debt 220,666 253,104 (32,438 ) -12.82 % Research & development costs 110,187 73,181 37,006 50.57 % General and administrative expense 493,970 427,381 66,589 15.58 % Total Operating Expenses 2,030,181 3,223,874 (1,193,693 ) -37.03 % Income From Operations 4,661,337 2,800,488 1,860,849 66.45 % Other Income (Expense) Interest (expense), net (72,269 ) (259,117 ) 186,848 -72.11 % Other income, net 98,134 78,760 19,374 24.60 % Total Other Income (Expense) 25,865 (180,357 ) 206,222 -114.34 % Income from Continuing Operations Before Taxes 4,687,202 2,620,131 2,067,071 78.89 % Income Tax Provision 702,063 477,030 225,033 47.17 % Net Income Before Noncontrolling Interest 3,985,139 2,143,101 1,842,038 85.95 % Less: Net income attributable to the noncontrolling interest 319,663 179,190 140,473 78.39 % Net Income Attributable to Asia Cork Inc. $ 3,665,476 $ 1,963,911 $ 1,701,565 86.64 % Revenues For the nine months ended September 30, 2010, our revenues were $22,436,245 as compared to $17,056,777 for the nine months ended September 30, 2009, an increase of $5,379,468 or 31.54%. The primary reason for the increase was that our sales of major finished goods of boards increased for the nine months ended September 30, 2010 as compared to the same period of 2009. Moreover, we manufactured more series of products for wood materials commencing April 2010, which caused the quantities of wood materials to increase significantly during the nine months ended September 30, 2010. In addition, we sold secondary raw materials in the amount of $1,189,002 to Sichuan Hanxin during the first quarter of 2010. No such sales were made in the first quarter of 2009. The following table sets forth information regarding the sales of our principal products during the nine months ended September 30, 2010 and 2009 For The Nine Months Ended September 30 2010 2009 2010 Less 2009 Product Name Quantities (Square Meter) Amount Sale % Quantities (Square Meter) Amount Sale % Quantity (square meter) Amount Sale % Wood Materials 2,684,477 7,035,666 31.2 % 737,150 4,220,428 25 % 1,947,327 2,815,238 67 % Boards 230,989 2,448,256 11.1 % 113,717 1,024,081 6 % 117,272 1,424,175 139 % Floors 599,206 11,731,326 52.3 % 586,085 11,747,160 69 % 13,121 (15,834 ) 0 % Secondary raw Materials - 1,189,002 5.3 % - - 0 % - 1,189,002 0 % Others - 31,995 0.1 % - 65,108 0 % - (33,113 ) -51 % Total 3,514,672 22,436,245 100 % 1,436,952 17,056,777 100 % 2,077,720 5,379,468 32 % The increase in quantities per square meter, as reflected in the table, is primarily attributable to the fact that we increased orders from our new and existing major customer. We increased sales volume of our products from 1,436,952 for the nine months ended September 30, 2009 to 3,514,672 during the nine months ended September 30, 2010. The following table sets forth information regarding the average unit sales price per square meter of our principal products during the nine months ended September 30, 2010 and 2009 Average Unit Sales Price Per Square Meter Basic Change Per Square Product Name 2010 2009 Meter Wood Materials 2.62 5.73 (3.11 ) Boards 10.60 9.01 1.59 Floors 19.58 20.04 (0.46 ) Overall Average Products 6.38 11.87 (5.49 ) The decrease in average sales price per square meter, as reflected in the table, is primarily because we sold more lower unit sales price products of wood materials in the current period rather than a decrease in the sales price of major products of wood materials. Despite slightly lower unitt sales price for boards commencing October 2009, we sold more products of wood materials during the nine months ended September 30, 2010. Therefore, the average sales price per square meter declined significantly for the nine months ended September 30, 2010. Cost of Sales and Gross Profit For the nine months ended September 30, 2010, cost of sales amounted to $15,744,727 or 70.18% of net revenues as compared to cost of sales of $11,032,415 or 64.68% of net revenues for the nine months ended September 30, 2009. Gross profit for the nine months ended September 30, 2010 was $6,691,518 or 29.82% of revenues, as compared to $6,024,362 or 35.32% of revenues for the nine months ended September 30, 2009. Gross margin decreased primarily as a result of selling more products of wood materials which generated low gross margins to our major customers for the nine months ended September 30, 2010. Moreover there was a low margin sale of secondary raw materials to Sichuan Hanxin in the first quarter of 2010. In addition, we raised employee salaries commencing in October 2009 and in May 2010. As a result, our unit costs increased slightly for the nine months ended September 30, 2010 as compared to the same period of 2009. The following table sets forth information regarding the average cost per square meter of our principal products during the nine months ended September 30, 2010 and 2009 Average Cost Per Square Meter Basic Change Per Square Product Name 2010 2009 Meter Wood Materials $ 2.10 4.06 (1.96 ) Boards 5.99 5.95 0.04 Floors 11.60 11.52 0.08 Overall Average Products 4.48 7.68 (3.20 ) The decrease in average cost per square meter, as reflected in the table, is primarily because we sold more lower unit cost products of wood materials for the nine months ended September 30, 2010 as compared to the same periods of 2009. The following table sets forth information regarding the sales and costs of secondary raw materials during the nine months ended September 30, 2010 and 2009 For T he Nine Months Ended September 30, 2010 Total Quantities Sales Amount Unit Sales Price Costs Amount Gross Profit Unit Costs Price Secondary Raw Materials 567,673 $ 1,189,002 2.09 $ 1,171,147 $ 17,855 2.06 Because it is difficult to control the application amount of secondary raw materials in the course of manufacturing cork floor product in Sichuan Hanxin, and in order to avoid too much cash flow into the secondary raw materials, in January 2010, the Company entered into a sales agreement with Sichuan Hanxin to sell secondary raw materials without any profit. Additional information is disclosed in Note 4 of the Company s financial statements. Commencing in the 4th quarter of 2010, the market prices of raw materials and secondary materials began to increase. It is estimated that raw materials have increased by 15% and parts of the secondary raw materials (such as resin glue) have increased by over 20%. In December 2010, the purchase agreements for raw materials were renewed with the suppliers with the new market prices and as a result, the gross profit margin will be affected. In anticipation of the increase in prices, the Company purchased large amounts of raw materials which the Company believes will be sufficient for approximately six months. The effect of the increase in prices of raw materials shall have a greater impact during the second half of 2011. To deal with this situation, the Company may increase its products sales prices in 2011 relative to the actual increase of raw materials and secondary raw materials prices. Operating Expenses For the nine months ended September 30, 2010, total operating expenses were $2,030,181 as compared to $3,223,874 for the nine months ended September 30, 2009, an decrease of $1,193,693 or 37.03%. This decrease was attributable to a decrease in selling expenses. The decrease in selling expenses was primary attributable to a decline in commission fees. An increase in freight costs was also associated with our increased revenue. However the amount of the potential increase was reduced by a change in the commission rate from 10% to 2% starting the fourth quarter of 2009. The increase in general and administrative expenses was primarily attributable to increases in employee salaries and professional fees for the nine months ended September 30, 2010 as compared to the same period in 2009. For the nine months ended September 30, 2010, bad debt reserve amounted to $220,666 as compared to $253,104 for nine months ended September 30, 2009, a decrease of $32,438 or 12.82%. The reason for the decrease is primarily attributable to an increase in bad debt allowance from 0.5% to 5% of the outstanding accounts receivable commencing as of July 2009. For the nine months ended September 30, 2010, research and development costs amounted to $110,187 as compared to $73,181 for the nine months ended September 30, 2009, an increase of $37,006 or 50.57%. The reason is primarily due to the Company engaging an unrelated party in August 2009 to develop a project focused on cork material carbonizing in order to acquire advanced technical procedures for future manufacturing. Other Income (expense) For the nine months ended September 30, 2010, other income net amounted to $25,865as compared to other expense net of $180,357 for the nine months ended September 30, 2009, a increase of $206,222 or114.34%. Other income for the nine months ended September 30, 2010 and 2009 is related to the income received from the leasing of our Yu Ler Yuan Resort. For the nine months ended September 30, 2010, net interest expense was $72,269 as compared to net interest expenses of $259,117 for nine months ended September 30, 2009, a decrease of $186,848, or 72.11%. In June 2008, the Company issued convertible notes and common stock purchase warrants resulting in aggregate gross proceeds of $700,000. The notes matured one year from the date of issuance and bore interest at an annual rate of 18%, payable at maturity in USD. Since the notes were not paid at maturity, the annual interest rate increased to 24%. On July 6, 2010, the Company and those investors entered in to an amendment agreement. Pursuant to the amendment agreement, the maturity date was extended to October 31, 2010 and the interest rate under the note remained at 18% per annum from the issuance date through the maturity date. On October 31, 2010, a second amendment agreement was entered into between the Company and the noteholders whereby the maturity date was extended again to February 28, 2011 and the interest rate under the notes remained at 18% per annum from the issuance date through the maturity date. Upon the closing of the concurrent Offering, the Company shall: (1) pay the investors cash by wire transfer in an amount equal to $350,000 (50% of the outstanding principal amount of the notes) and (2) the investors shall receive, upon conversion of the balance due under the note, such whole number of fully paid and non-assessable shares of the securities that is equal to the quotient of the sum of (i) $350,000 and (ii) all accrued a unpaid interest thereon, divided by fifty percent of the offering price per share of Common Stock included in the Units. In the event that the closing shall not occur by February 28, 2011, the interest rate under the note shall increase to 24% per annum, accruing from the first anniversary of the issuance of the note. As a result, the Company recalculated interest expense from 24% to 18% for the nine months ended September 30, 2010, which caused the interest expense declined significantly for the nine months ended September 30, 2010. Income Tax Net income taxes expense increased by $225,033 to $702,063 for the nine months ended September 30, 2010 as compared to $477,030 for the nine months ended September 30, 2009. This increase was primarily due to an increase in net income before income taxes in the first three quarters of 2010 as compared to the same period in 2009. Years Ended December 31, 2009 and 2008 Revenues For the year ended December 31, 2009 our revenues were $24,393,625 as compared to $21, 378,041 for the year ended December 31, 2008, an increase of $3,015,584 or approximately 14.11%. The primary reason for the increase is the significant improvement in the market condition for home and commercial renovation in China and the success of our marketing efforts, increased sales of our major finished goods (wood materials, floors, and boards) increased as compared to the sales quantities in year 2008. For the year ended December 31, 2009, our revenues from wood materials, boards, and floor sales were $1,567,272, $349,730, and $1,542,369 respectively more than the revenue from sales of those items during the year ended December 31, 2008. The following table sets forth information regarding the sales of our principal products during the years ended December 31, 2009 and 2008. For the Year Ended December 31 2009 2008 2009 Less 2008 Product Name Quantities (Square Meter) Amount Sale % Quantities (Square Meter) Amount Sale % Quantity (square meter) Amount Sale % Wood Materials 1,128,943 $ 6,412,040 26 % 902,660 $ 4,844,768 23 % 226,283 $ 1,567,272 32 % Boards 180,819 1,716,013 7 % 154,251 1,366,283 6 % 26,568 349,730 26 % Floors 809,238 16,189,786 66 % 735,601 14,647,417 69 % 73,637 1,542,369 11 % Mechanical and Electric - 10,666 0 % - 438,269 2 % - (427,603 ) 0 % Others - 65,120 0 % - 81,304 0 % - -16,184 -20 % Total 2,119,000 $ 24,393,625 100 % 1,792,512 $ 21,378,041 100 % 326,488 $ 3,015,584 14 % The following table sets forth information regarding the average unit sales price per square meter of our principal products during the years ended December 31, 2009 and 2008 Average Unit Sales Price Per Square Meter Basic Change Per Square Product Name 2009 2008 Meter Wood Materials $ 5.68 $ 5.37 $ 0.31 Boards 9.49 8.86 0.63 Floors 20.01 19.91 0.10 Overall Average Products 11.51 11.93 (0.42 ) The decrease in average sales price per square meter, as reflected in the table, is primarily attributable to our selling higher quantities of lower unit priced products of wood materials in the year ended December 31, 2009. Despite the fact that we received slightly lower unit sales price for boards commencing from October 2009, we sold more products of wood materials during the current periods. Therefore, the average sales price per square meter declined for the year ended December 31, 2009 as compared to the year ended December 31, 2008. Cost of Sales and Gross Profit For the year ended December 31, 2009, cost of sales amounted to $16,005,148 or 65.61% of net revenues as compared to cost of sales of $13,937,361 or 65.19% of net revenues for the year ended December 31, 2008, a percentage increase of 0.42%. The increase was primarily as a result of slightly increase manufacturing costs which following with the increased lease fees for the year ended December 31, 2009, compared to the last year. Accordingly, the gross margin had been slightly reduced 0.42% in year 2009 as compared to prior year. Even though we had less gross margin in year 2009 as compared to 2008, but we increased significant sales revenues in year 2009 which had increased our gross profit in amount of $947,797 to $8,388,477 for the year ended December 31, 2009 as compared to $7,440,680 for the year ended December 31, 2008. The following table sets forth information regarding the average cost per square meter of our principal products during the years ended December 31, 2009 and 2008 Average Cost Per Square Meter Basic Change Per Square Product Name 2009 2008 Meter Wood Materials 4.05 3.85 $ 0.20 Boards 6.07 5.96 0.11 Floors 11.67 11.62 0.05 Overall Average Products 7.55 7.78 (0.23 ) The decrease in average cost per square meter, as reflected in the table, is relatively primarily attributable to the facts that we sold much more quantities lower unit cost products of wood materials in the current year as compare to the same periods of 2009. Operating Expenses For the year ended December 31, 2009, total operating expenses were $3,887,070 as compared to $3,630,355 for the year ended December 31, 2008, an increase of $256,715 or 7.07%. Included in this increase were: For the year ended December 31, 2009, selling expenses amounted to $2,869,612 as compared to $2,701,225 for the year ended December 31, 2008, an increase of $168,387 or 6.23%. For the year ended December 31, 2009, we experienced a significant increase in freight expenses of $327,530 with our increased revenue. In 2009 the Company had hoped to develop additional new customers, however, the customer base did not increase as high as the Company expected. As a result, the Company changed the commission rate from 10% to 2% in the fourth quarter of 2009. Accordingly, the increased freight expenses were offset by reduced commission expenses for the year ended December 31, 2009. For the year ended December 31, 2009, bad debt expenses amounted to $245,341 as compared to $10,539 for the year ended December 31, 2008, an increase of $234,802 or 2227.93%. The reason for the increase is primarily attributable to improved bad debt allowance from 0.5% to 5% of the outstanding accounts receivable commencing from July 2009. For the year ended December 31, 2009, general and administrative expenses were reduced to $589,130, a decrease of $170,097 or 22.40% compared to $759,227 for the year ended December 31, 2008. The decrease in general and administrative costs was primarily attributable to decreased consulting fees, advisory fees and USA capital market fund raising and public relationship advisory charges in the current year. For the year ended December 31, 2009, research and development costs amounted to $182,987. The reason is primarily due to the Company engaging an unrelated party in August 2009 to develop a project focused on cork material carbonizing in order to acquire advanced technical procedures for future manufacturing. Other Income (Expense) For the year ended December 31, 2009, other expense amounted to $167,866 as compared to other expense of $201,014 for the year ended December 31, 2008. Other (expense) income, net for the years ended December 31, 2009 and 2008 were primarily related to net rental income $130, 276 and $159,495 respectively from the leasing of our Yu Ler Yuan Resort. These rental net incomes had been offset by the franchise taxes accrued and credited in 2009 and 2008. For the year ended December 31, 2009, net interest expense was $303,882 as compared to net interest expense of $275,105 for the year ended December 31, 2008, an increase of $28,777. This increase was primarily attributable to the Company issuing a convertible note for certain investors in the aggregate price [a; amount of $700,000 (approximately RMB4.8 million)] in June 2008, and which accrued interest at a rate of 18% per year. The note was due in June 2009, however, the Company was unable to repay it. Therefore the interest rate was increased to 24% from 18% commencing as of June 2009. Accordingly, the Company has incurred more interest expense for the year ended December 31, 2009, as compared to the year ended December 31, 2008. Income Tax The net income taxes increased by $95,086 to $692,539 for the year ended December 31, 20009 as compared to $597,453 for the year ended December 31, 2008 . This increase was due to an increase in net income before income taxes in 2009, however, this amount was offset with deferred income taxes benefits $33,308 in year 2009. Net Income Our net income during the year ended December 31, 2009 was $3,345,410 compared to 2,732,154 for the year ended December 31, 2008. Such an increase was primarily due to our increased revenues during the year ended December 31, 2009, compared to the same period of 2008. Noncontrolling Interest For the year ended December 31, 2009, the Company reported a noncontrolling interest in income of subsidiary of $295,592 as compared to $279,704 for the year ended December 31, 2008. The minority interests in income of subsidiaries were attributable to Hanxin and Cork I&E, which we allocated to the minority stockholders, and reduced our net income. Liquidity and Capital Resources Nine Months Ended September 30, 2010 and 2009 Operating working capital (cash and equivalents plus accounts receivable plus inventory less accounts payable and accrued expenses) increased by $8,511,502 from $9,665,058 as of December 31, 2009 to $18,176,560 as of September 30, 2010. The increase was primarily due to an increase in inventories and accounts receivable in the amount of $3,360,855 and $4,335,379 during the current year, respectively. At the same time, we had an increase in accounts payable and accrued expenses in the amount of $771,672. Cash provided by operating activities was $441,775 for the nine months ended September 30, 2010 as compared to $1,455,045 for the nine months ended September 30, 2009. The decrease in cash provided by operating activities for the nine months ended September 30, 2010 was a result of an increase of accounts receivable. Investing activities for the nine months ended September 30, 2010 was $1,297,319 of net cash provided as compared to $708,962 of net used for the nine months ended September 30, 2009. The provision of cash for the nine months ended September 30, 2010 was primarily attributable to proceeds from the withdrawal of a deposit for the purchase of fixed assets from an unrelated agent. Financing activities for the nine months ended September 30, 2010 was $186,026 of net cash used, as compared to $224,132 used for the nine months ended September 30, 2009. The use of cash for the nine months ended September 30, 2010 and 2009 were primarily attributable to repayment of a loan from an unrelated party. In June 2008, the Company issued convertible notes and common stock purchase warrants resulting in aggregate gross proceeds of $700,000. The notes matured one year from the date of issuance and bore interest at an annual rate of 18%, payable at maturity in USD. Since the notes were not paid at maturity, the annual interest rate increased to 24%. Upon the closing of a financing of at least $2,000,000, the promissory notes were convertible into shares of common stock at a 50% discount to the price per share of common stock sold in such financing. Each holder also has the option to either be paid the principal and interest due under the promissory note or, convert the note into shares of common stock at a conversion price of $0.228 per share. The warrants are exercisable at any time after the consummation of such financing through the fourth anniversary of the consummation of such financing. The interest payable regarding the convertible notes has been accrued and recorded as of September 30, 2010. The PromissoryNnotes are secured by common stock pledged by Pengcheng Chen, our Chief Executive Officer and Fangshe Zhang, our Chairman. On July 6, 2010, the Company and those investors entered in to an amendment agreement. Pursuant to the amendment agreement, the maturity date was extended to October 31, 2010 and the interest rate under thePromissory Notes remained at 18% per annum from the issuance date through the maturity date. On October 31, 2010, a second amendment agreement was executed that extended the maturity date to February 28, 2011. Upon the closing of the concurrent Offering, the Company shall: (1) pay the investors cash by wire transfer in an amount equal to $350,000 (50% of the outstanding principal amount of the notes) and (2) the investors shall receive, upon conversion of the balance due under the note, such whole number of fully paid and non-assessable shares of the securities that is equal to the quotient of the sum of (i) $350,000 and (ii) all accrued a unpaid interest thereon, divided by fifty percent of the offering price per share of Common Stock included in the Units. In the event that the closing shall not occur by February 28, 2011, the interest rate under the Promissory Note shall increase to 24% per annum, accruing from the first anniversary of the issuance of the notes. We have approximately $17.88 million of net working capital (total current assets less total current liabilities). This increase was primarily because our accounts receivable balance increased from improvements in credit sales for the nine months ended September 30, 2010, despite our extension of the payment terms by our major customers to one year commencing July 2010. We have been improving collection of our accounts receivable as our customers gradually recover from the financial crisis in 2009, For the nine months ended September 30, 2010, as a result of the extended payment terms to ours major customers, we generated total sales revenues of $22,436,245, and the gross balance of accounts receivable was $10,010,818 an increase of $4,565,320 during the nine months ended September 30, 2010, which accounts for 20.4% of the total sales revenue. In order to reduce the risk in collection, we will control payment terms of those major customers during the fourth quarter of 2010. Based on the foregoing, we believe that we has sufficient resources to finance our operations for the coming year provided we keeps the current payment terms and maintains collection of accounts receivable . Since the Company s PRC operation subsidiaries, Xian Hanxin Technology Co., Ltd. ("Hanxin") and Cork Import and Export Co. Ltd ( CIE ) have not paid or declared any dividends on their common stock within the past three years and do not foresee doing so in the foreseeable future. Hanxin and CIE intend to retain any future earnings for the operation and expansion of their business in the PRC. Any decision as to future payment of dividends will depend on the future available earnings, the capital requirements of Hanxin and CIE, their general financial condition and other factors deemed pertinent by the Board of Directors. In addition, as discussed below, there are restrictions on the ability of our Chinese operating subsidiaries to pay dividends due to foreign exchange control and other regulations of China. Under applicable PRC regulations, foreign-invested enterprises in China may pay dividends only out of their accumulated profits, if any, determined in accordance with PRC accounting standards and regulations. In addition, a foreign-invested enterprise in China is required to set aside at least 10% of its after-tax profit based on PRC accounting standards each year to its general reserves until the accumulated amount of such reserves reaches 50% of its registered capital. These reserves are not distributable as cash dividends. The board of directors of a foreign-invested enterprise has the discretion to allocate a portion of its after-tax profits to staff welfare and bonus funds, which may not be distributed to equity owners except in the event of a liquidation. Furthermore, the ability of our Chinese operating subsidiaries to pay dividends may be restricted due to the foreign exchange control policies and availability of cash balance of the Chinese operating subsidiaries. Because substantially all of our operations are conducted in China, all of our revenue and currency received are denominated in Renminbi (RMB). RMB is subject to the exchange control regulations in China, and, as a result, we may unable to distribute any dividends outside of China due to PRC exchange control regulations that restrict our ability to convert RMB into U.S. Dollars. Our inability to receive dividends or other payments from our Chinese operating subsidiaries could adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our business, pay dividends, or otherwise fund and conduct our business. The funds of Hanxin and CIE may not be readily available to us to satisfy obligations which have been incurred outside the PRC, which could adversely affect our business and prospects or our ability to meet our cash obligations. Accordingly, if we do not receive dividends from our Chinese operating subsidiaries, we may not have sufficient cash flow to fund our corporate overhead and regulatory obligations in the United States and may be unable to pay dividends on our shares of capital stock. Years Ended December 31, 2009 and 2008 Operating working capital (cash plus accounts receivable plus inventory less accounts payable and accrued interest) increased by $3,324,803 from $6,340,255 as of December 31, 2008 to $9,665,058 as of December 31, 2009. The increase was primarily due to an increase in accounts receivable of $220,234 from $4,956,005 at December 31, 2008 as compared to $5,176,239 at December 31, 2009, an increase in inventory of $3,215,328 from $2,756,011 at December 31, 2008 as compared to $5,971,339 at December 31, 2009, and an increase in accounts payable and accrued expenses of $137,103 from $1,395,366 at December 31, 2008 as compared to $1,532,469 at December 31, 2009. The net increase in working capital was primarily due to increased sales from our customers and increased inventories to assure manufacture during the year ended December 31, 2009. Cash provided by operating activities was $988,865 for the year ended December 31, 2009 as compared to ($364,209) used for the year ended December 31, 2008. This increase in cash provided in operating activities was a result of a primary increase of net income for the year ended December 31, 2009. Net cash used in investing activities increased $435,461 to $738,193 for the year ended December 31, 2009 from $302,732 for the year ended December 31, 2008. This change was primarily due to the payments for unrelated parties and construction in progress for amounts of $1,465, 738 and $207,282 in year ended December 31, 2008. These amounts were offset by the proceeds from the rescission of the purchase of intangible assets in the amount of $1,370,877 in 2008. Financing activities for the year ended December 31, 2009 was $224,109 net cash used as compared to $568,084 net cash provided for the year ended December 31, 2008. This change was primarily attributable to the acquisition of a convertible note in the amount of $700,000 from USA investors in June, 2008. Occasionally we have borrowed short-term loans from local banks to fund our operations. On November 30, 2007, the Company obtained a short-term loan of RMB3.9 million (equivalent at that time to $534,642) from Xian Xitaoyuan Credit Bank by pledging the Company's building in YuLerYuan as collateral,. The Company paid the principal of RMB3.9 million and all accrued interest on June 30, 2008. On the same day, the Company borrowed RMB3 million (equivalent to $439,722) from the same bank. This loan was fully paid when due on June 29, 2009. On November 10, 2005, Hanxin signed the Entrust Purchase Agreement to purchase a factory s fixed assets through an unrelated agent. Hanxin has paid deposits of $2,021,380 (equivalent to RMB 13,800,000) to the agent as of December 31, 2009. The agency agreement has no firm commitment on the purchase but it states a maximum price of RMB 50,000,000 that Hanxin is willing to pay for the fixed assets. The deposit is fully refundable if the purchase does not close by June 30, 2010. However, there is no assurance that the deposits will be returned to Hanxin. In 2008, to assist the operation of our customer Shaanxi Shuta, we loaned RMB10 million (equivalent to $1,464,916) to Shaanxi Shuta for one year starting from October 27, 2008. One day subsequent to the due date of the loan, October 28, 2009, Hanxin signed another loan agreement with Shaanxi Shuta and loaned the same amount of RMB10 million to Shaanxi Shuta again for two years term from October 27, 2009 to October 27, 2011. This loan is non-interest bearing and unsecured Pursuant to our agreement with Shaanxi Shuta dated October 20, 2009, we agreed to purchase from Shaanxi Shuta undeveloped land of 7,000 Mu (equal to 4,669,000 square meters) located in Baoji District, Shaanxi province. We plan to develop our own cork forest on the land, which will help assure our raw material supply at a lower cost. Shuta incurred approximately RMB10,000,000 expenses in the process of the acquisition. The agreement provides that in the event that we do not purchase the land by October 20, 2011, we will be liable to pay RMB10,000,000 to Shaanxi Shuta as reimbursement for the acquisition expenses. The parties anticipate that should we not purchase the land by October 20, 2011, Shaanxi Shuta will not repay the loan and the parties will have no further obligation to each other regarding the loan or the land purchase. With approximately $10.6 million of net working capital (total current assets less total current liabilities), improvements in our collections of accounts receivable and positive cash flow from operations as of December 31, 2009. Despite our cash and equivalents had been represented less at the end of year 2009, approximately 1% of our account receivable outstanding exceeded six months at December 31, 2009. In order to ensure sufficient cash and equivalents, we will actively collect the outstanding accounts receivable in the near future. As a result, we believe we have sufficient resources to finance our operations for the coming year. Off-Balance Sheet Arrangements None. OPERATING RISK (a) Country risk Our revenues are mainly derived from the sale of wood floors, boards, and basis materials products in the Peoples Republic of China (PRC). We expect to expand our sales to the countries outside the PRC by our own sales network, however, there are no assurances that we will be able to achieve such an expansion successfully in the future. Therefore, a downturn or stagnation in the economic environment of the PRC and the countries that our products are sold by unrelated distributor or agents could have a material adverse effect on our financial condition. (b) Product risk In addition to competing with other Chinese companies, we could have to compete with larger US and European companies who have greater funds available for expansion, marketing, research and development and the ability to attract more qualified personnel if access is allowed into the PRC market. If U.S. and European companies do gain access to the PRC markets, they may be able to offer products at a lower price. There can be no assurance that we will remain competitive should this occur. (c) Exchange risk We cannot guarantee that the current exchange rate will remain steady, therefore there is a possibility that we could post the same amount of profit for two comparable periods and because of a fluctuating exchange rate actually post higher or lower profit depending on exchange rate of Chinese Renminbi converted to US dollars on that date. The exchange rate could fluctuate depending on changes in the political and economic environments without notice. (d) Political risk Currently, PRC is in a period of growth and is openly promoting business development in order to bring more business into PRC. Additionally PRC allows a Chinese corporation to be owned by a United States corporation. If the laws or regulations are changed by the PRC government, our ability to operate the PRC subsidiaries could be affected. (e) Key personnel risk Our future success depends on the continued services of executive management in China. The loss of any of their services would be detrimental to us and could have an adverse effect on business development. We do not currently maintain key-man insurance on their lives. Future success is also dependent on the ability to identify, hire, train and retain other qualified managerial and other employees. Competition for these individuals is intense and increasing. (f) Performance of subsidiaries risk All of our revenues are derived via the operations of our Chinese subsidiaries. Economic, governmental, political, industry and internal Company factors outside of our control affect each of the subsidiaries. If the subsidiaries do not succeed, the value of the assets and the price of our Common Stock could decline. Some of the material risks relating to the partner companies include the fact that the subsidiaries are located in China and have specific risks associated with that and the intensifying competition for our products and services and those of the subsidiaries. Off Balance Sheet Arrangements We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition or results of operations. Federal Income Tax Aspects of Investment in us The discussion contained herein has been prepared by us and is based on existing law as contained in the Code, amended United States Treasury Regulations ( Treasury Regulations ), administrative rulings and court decisions as of the date of this Registration Statement. No assurance can be given that future legislative enactments, administrative rulings or court decisions will not modify the legal basis for statements contained in this discussion. Any such development may be applied retroactively to transactions completed prior to the date thereof, and could contain provisions having an adverse effect upon us and the holders of the Common Stock. In addition, several of the issues dealt with in this summary are the subject of proposed and temporary Treasury Regulations. No assurance can be given that these regulations will be finally adopted in their present form. Basis in Common Stock The tax basis that a Shareholder will have in his Common Stock will equal his cost in acquiring his Common Stock. If a Shareholder acquires Common Stock at different times or at different prices, he must maintain records of those transactions so that he can accurately report gain or loss realized upon disposition of the Common Stock. Dividends on Common Stock Distributions made by us with respect to the Common Stock will be characterized as dividends that are taxable as ordinary income to the extent of our current or accumulated earnings and profits ( earnings and profits ), if any, as determined for U.S. federal income tax purposes. To the extent that a distribution on the Common Stock exceeds the holder s allocable share of our earnings and profits, such distribution will be treated first as a return of capital that will reduce the holder s adjusted tax basis in such Common Stock, and then as taxable gain to the extent the distribution exceeds the holder s adjusted tax basis in such Common Stock. The gain will generally be taxed as a long-term capital gain if the holder s holding period for the Common Stock is more than one year. The availability of earnings and profits in future years will depend on future profits and losses which cannot be accurately predicted. Thus, there can be no assurance that all or any portion of a distribution on the Common Stock will be characterized as a dividend for general income tax purposes. Corporate shareholders will not be entitled to claim the dividends received deduction with respect to distributions that do not qualify as dividends. See the discussion regarding the dividends received deduction below. Redemption of Common Stock We do not have the right to redeem any Common Stock. However, any redemption of Common Stock, with the consent of the holder, will be a taxable event to the redeemed holder. We do not believe that the Common Stock will be treated as debt for federal income tax purposes. However, in the event that the Common Stock is treated as debt for federal tax purposes, a holder generally will recognize gain or loss upon the redemption of the Common Stock measured by the difference between the amount of cash or the fair market value of property received and the holder s tax basis in the redeemed Common Stock. To the extent the cash or property received are attributable to accrued interest, the holder may recognize ordinary income rather than capital gain. Characterization of the Common Stock as debt would also cause a variety of other tax implications, some of which may be detrimental to either the holders, us, or both (including, for example, original issue discount treatment to the Investors). Potential Investors should consult their tax advisors as to the various ramifications of debt characterization for federal income tax purposes. Other Disposition of the Common Stock Upon the sale or exchange of shares of Common Stock, to or with a person other than us, a holder will recognize capital gain or loss equal to the difference between the amount realized on such sale or exchange and the holder s adjusted basis in such stock. Any capital gain or loss recognized will generally be treated as a long-term capital gain or loss if the holder held such stock for more than one year. For this purpose, the period for which the Common Stock was held would be included in the holding period of the Common Stock received upon a conversion. State, Local and Foreign Taxes In addition to the federal income tax consequences described above, prospective investors should consider potential state, local and foreign tax consequences of an investment in the Common Stock. ERISA Considerations for Tax-Exempt Investors/Shareholders General Fiduciary Requirements Title I of ERISA includes provisions governing the responsibility of fiduciaries to their Qualified Plans. Qualified Plans must be administered according to these rules. Keogh plans that cover only partners of a partnership or self-employed owners of a business are not subject to the fiduciary duty rules of ERISA, but are subject to the prohibited transaction rules of the Code. Under ERISA, any person who exercises any authority or control respecting the management or disposition of the assets of a Qualified Plan is considered to be a fiduciary of such Qualified Plan (subject to certain exceptions not here relevant). ERISA Section 404(a)(1) requires a fiduciary of a Qualified Plan to discharge his duties with respect to a plan solely in the interest of the participants and beneficiaries and (A) for the exclusive purpose of: (i) providing benefits to participants and their beneficiaries, and (ii) defraying reasonable expenses of administering the plan; (B) with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims; (C) by diversifying the investments of a plan so as to minimize the risk of large losses, unless under the circumstances it is clearly prudent not to do so; and (D) in accordance with the documents and instruments governing the plan. Fiduciaries who breach the duties that ERISA imposes may suffer a wide variety of legal and equitable remedies, including (i) the requirement to restore qualified plan losses and to pay over any fiduciary s profits to the qualified plan; (ii) removal as fiduciary of the qualified plan; and (iii) liability for excise taxes that Section 4975 of the Code imposes QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Not Applicable. FINANCIAL STATEMENTS AND SUPPLEMENT DATA The information required by Item 8 appears after the signature page to this report. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. ITEM 9B. OTHER INFORMATION None. MANAGEMENT DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CORPORATE GOVERNANCE The following table sets forth the names, ages, principal offices and positions and the date each such person became a director or executive officer. Executive officers are elected annually by our Board of Directors. Each executive officer holds his office until he resigns, is removed by the Board or his successor is elected and qualified. Directors are elected annually by our stockholders at the annual meeting. Each director holds his office until his successor is elected and qualified or his earlier resignation or removal. Name Age Positions Held Fangshe Zhang 52 Chairman/Director Pengcheng Chen 34 CEO/Director Yi Tong 38 Chief Financial Officer Shengli Liu 42 Chief Operating Officer/Vice Manager/Director Tianbao Guo 61 Chief Technical Officer Genshe Bai 50 Director Genhu Yang 56 Director Xiaodong Wen 41 Director Tao Wang 39 Director The directors named above will serve until the annual meeting of our stockholders. Thereafter, directors are elected for one-year terms at the annual stockholders meeting. Officers will hold their positions at the pleasure of the Board of Directors, absent any employment agreement, of which none currently exists. There is no arrangement or understanding between our directors and officers and any other person pursuant to which any director or officer was or is to be selected as a director or officer. Biographical Information Mr. Fangshe Zhang, Chairman/Director Mr. Zhang founded Hanxin in 2001 and has acted as its Chairman of the Board of Directors since its inception. Prior to forming Hanxin, Mr. Zhang was the general manager of Xi an Dong Da Terrestrial Heat Heating Co., Ltd., a Company whose primary business was the development of terrestrial heat. Mr. Zhang is a technical expert in cork processing technology, holding more than fourteen patents in China. The Board believes that Mr. Zhang has the experience, qualifications, attributes and skills necessary to serve on the Board because of his expertise in the cork processing industry, his having provided leadership and strategic direction to the Company and his unparalleled knowledge of the Company and its business. Mr. Zhang is not a member of the Board of any other public company or any investment company, neither has he been a member of the boards of directors of such companies for the past five years. Mr. Pengcheng Chen, CEO/Director Mr. Chen is our Chief Executive Officer and a director since 2004, and has worked at Hanxin since 2002. From 1997 to 1998 he worked for Xi'an Tangcheng Hotel as an assistant general manager. From 1998 to 2000 he served as general manager of Xi'an Qingye Virescence Co. Ltd, a gardening engineering Company. The Board believes that Mr. Chen has the experience, qualifications, attributes and skills necessary to serve on the Board because of his experience in the cork processing industry, his having provided leadership and strategic direction to the Company and his unparalleled knowledge of the Company and its business. Mr. Chen is not a member of the Board of any other public company or any investment company, neither has he been a member of the boards of directors of such companies for the past five years. Mr. Shengli Liu, Chief Operating Officer/Vice Manager/Director Mr. Liu has served as our Chief Operating Officer and Vice Manager since October 2009, has been a director since 2004, and worked for Hanxin since 2002. From 1997 to 2002 he was the director for the 12th section of Xikang railway project of China Railway 18th Bureau Group Co., Ltd. From 1989 to 1997 he worked as a manager in the metals division of the Xi'an Commodity Bureau. The Board believes that Mr. Liu has the experience, qualifications, attributes and skills necessary to serve on the Board because of his experience in the industry, his having provided leadership and strategic direction to the Company and his unparalleled knowledge of the Company and its business. Mr. Liu is not a member of the Board of any other public company or any investment company, neither has he been a member of the boards of directors of such companies for the past five years. Mr. Yi Tong, Chief Financial Officer Mr. Tong has served as our Chief Financial Officer since February 2004. Mr. Tong was a director from 2004 through October 2009. Mr. Tong has previously worked for several financial institutions. From May 2003 to February 2004, he served as chief representative of Federal International Finance Inc., Canada. From August 2001 to May 2003 he worked as a senior manager for China Dragon Securities Co., Ltd. and from April 2001 to August 2001 he worked as project manager of China Eagle Securities Co., Ltd. Mr. Tianbao Guo, Chief Technical Officer Mr. Guo has been our Chief Technical Officer since October 2009, and he has worked for Hanxin since 2005. Before joining Hanxin he worked in Xi an Forestry Chemicals factory as engineer beginning 1982 and had become the president of that factory in 1992. The Board believes that Mr. Guo has the experience, qualifications, attributes and skills necessary to serve on the Board because of his experience in the biotech industry, his having provided leadership and strategic direction to the Company and his unparalleled knowledge of the Company and its business. Mr. Bai is not a member of the Board of any other public company or any investment company, neither has he been a member of the boards of directors of such companies for the past five years. Mr. Genshe Bai, Director Mr. Bai has been an independent director since 2002. From 1996 to 2002, he worked as the general manager of Xi an Commodity Development Co., Ltd., a Company engaged in the purchase and sale of commodities. From 1980 through 1996, Mr. Bai worked as a manager of the auditing department for Xi an Commodity Bureau, a governmental agency responsible for the regulation of commodities. The Board believes that Mr. Bai has the experience, qualifications, attributes and skills necessary to serve on the Board because of his auditing experience and experience working with the government, his having provided leadership and strategic direction to the Company and his unparalleled knowledge of the Company and its business. Mr. Bai is not a member of the Board of any other public company or any investment company, neither has he been a member of the boards of directors of such companies for the past five years. Mr. Genhu Yang, Director Mr. Yang has been an independent director since December 2009. He obtained his bachelor degree in Materials Science in Xi an Science and Technology University in 1980. He has been a technician in the Xi an Wood Company and Xi an Forestry Chemicals Factory for12 years. He had been awarded the 3rd Price of Technological Invention by Xi an Science and Technology Counsel. The Board believes that Mr. Yang has the experience, qualifications, attributes and skills necessary to serve on the Board because of his experience in the cork processing industry, his having provided leadership and strategic direction to the Company and his unparalleled knowledge of the Company and its business. Mr. Yang is not a member of the Board of any other public company or any investment company, neither has he been a member of the boards of directors of such companies for the past five years. Mr. Xiaodong Wen, Director Mr. Xiaodong Wen has been an independent director since December 2009. He has a MBA degree in New York University of U.S. and a bachelor degree in Law in Beijing University of International Business and Economics. Mr. Wen had been working in Solomon Brothers from 1993 to 1995 in the area of issuance and listing of ABS, MBS, and junk bond. From 1995 to 1999, he worked for Nomura Securities and First Pacific Rim, Inc to be in charge of the investment banking and consulting business in Asia-pacific areas. Mr. Wen founded Shanghai Genes Capital Investment and Consulting Company in 2001 and has worked there as the Executive Director. In January 2009 he established another Company, Dayang Tiancheng Holding Company where he also works as the Executive Director. Mr. Wen has over 15 years of professional experience in capital markets, especially in public Offerings and private equity in Hong Kong and the U.S. for Chinese companies. The Board believes that Mr. Wen has the experience, qualifications, attributes and skills necessary to serve on the Board because of his experience in the finance industry, his having provided leadership and strategic direction to the Company and his unparalleled knowledge of the Company and its business. Mr. Wen is not a member of the Board of any other public company or any investment company, neither has he been a member of the boards of directors of such companies for the past five years. Mr. Tao Wang, Director Mr. Tao Wang has been an independent director and chairman of the Audit Committee since December 2009. He is a CPA in China and has been working as professional auditor since 1995. He established Shaanxin Zhixin Auditing Firm in 2001, a local auditing firm in Shaaxi Province, where he currently works. Mr. Wang has extensive experience both in finance and management. The Board believes that Mr. Wang has the experience, qualifications, attributes and skills necessary to serve on the Board because of his experience in the finance industry, his having provided leadership and strategic direction to the Company and his unparalleled knowledge of the Company and its business. Mr. Wang is not a member of the Board of any other public company or any investment company, neither has he been a member of the boards of directors of such companies for the past five years. Significant employees Other than the officers described above, we do not expect any other individuals to make a significant contribution to our business. Family Relationships There are no family relationships among our officers, directors, persons nominated for such positions, or significant shareholders. Involvement in Certain Legal Proceedings None of our directors, executive officers, or control persons has been involved in any of the following events during the past ten years: Any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of bankruptcy or within two years prior to that time; Any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); Being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; or Being found by a court of competent jurisdiction (in a civil violation), the SEC or the Commodity Future Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated. Being the subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of: any Federal or State securities or commodities law or regulation; or any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity. This violation does not apply to any settlement of a civil proceeding among private litigants; or Being the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26)), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29)), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member. Board Committees The Board of Directors is composed of seven directors, Mr. Fangshe Zhang, Mr. Pengcheng Chen, Mr. Shengli Liu, Mr. Genshe Bai, Mr. Genhu Yang, Mr. Xiaodong Wen, and Mr. Tao Wang. In determining whether a director is independent, we evaluate whether such member has a material relationship with the Company which would interfere with the director s exercise of independent judgment The last four directors are independent directors, who (i) have not taken any positions inside the Company except for being the independent directors, (ii) . (ii) been compensated for serving as directors, (iii) have not and currently do not have any business relationships with the Company, (iv) are not involved with any other company by which any of the Company s officers serve on the compensation committee of such other companies and (v) have not worked on any audit related matters with the Company . All board action requires the approval of a majority of directors in attendance at a meeting at which a quorum is present. In December, 2009, we established an Audit Committee of the Board with the responsibility for assisting the Board in fulfilling its oversight role regarding the Company s financial reporting process, its system of internal control and its compliance with applicable laws, regulations and Company policies. Tao Wang, Genshe Bai, and Xiaodong Wen were elected to be members of the Audit Committee and shall serve the Committee until their successors are duly elected and qualified. In December 2009, we also established a Governance Committee and a Compensation Committee, and elected Genshe Bai and Xiaodong Wen as members of each Committee. The Audit Committee is primarily responsible for reviewing the services performed by our independent auditors, evaluating our accounting policies and our system of internal controls. The Governance Committee is primarily responsible for nominating directors and setting policies and procedures for the nomination of directors. The Governance Committee is also responsible for overseeing the creation and implementation of our corporate governance policies and procedures. The Compensation Committee is primarily responsible for reviewing and approving our salary and benefit policies (including equity plans), including compensation of executive officers. Code of Ethics The Company has a Code of Ethics pursuant to Section 406 of the Sarbanes-Oxley Act of 2002 on January 24, 2008, which is applicable to all directors, officers and employees of the Company. The Code is designed to deter wrongdoing and to promote: Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; Full, fair, accurate, timely and understandable disclosure in reports and documents that we file with, or submit to, the SEC, and in other public communications that we made; Compliance with applicable governing laws, rules and regulations; The prompts internal reporting of violations of the Code to the appropriate person or persons; and Accountability for adherence to this Code. This Code requires the highest standard of ethical conduct and fair dealing of its Directors and employees While, per Sarbanes-Oxley, this policy is intended to only cover the actions of the CFO, we expect our other officers, directors and employees to also review the Code and abide by its provisions. We believe that our reputation is a valuable asset and must continually be guarded by all associated with us so as to earn the trust, confidence and respect of our suppliers, customers and stockholders. Our CFO is committed to conducting business in accordance with the highest ethical standards. The CFO must comply with all applicable laws, rules and regulations. Furthermore, the CFO must not commit an illegal or unethical act, or instruct or authorize others to do so. EXECUTIVE COMPENSATION Compensation Discussion and Analysis Background and Compensation Philosophy Our Compensation Committee consists of Genshe Bai and Xiaodong Wen , both independent directors The Compensation Committee and , prior to its establishment, our board of directors determined the compensation to be paid to our executive officers based on our financial and operating performance and prospects, and contributions made by the officers to our success. Each of the named officers will be measured by a series of performance criteria by the board of directors, or the compensation committee on a yearly basis. Such criteria will be set forth based on certain objective parameters such as job characteristics, required professionalism, management skills, interpersonal skills, related experience, personal performance and overall corporate performance. Our board of directors and Compensation Committee have not adopted or established a formal policy or procedure for determining the amount of compensation paid to our executive officers. The Compensation Committee will make an independent evaluation of appropriate compensation to key employees, with input from management. The Compensation Committee has oversight of executive compensation plans, policies and programs. Elements of Compensation Before 2009 we provided our executive officers solely with a base salary to compensate them for services rendered. Our policy of compensating our executives with a cash salary has served us well. To better attract and retain executive talent, and to stimulate executive activeness, we believe it is necessary at this time to provide our executives discretionary bonuses and equity incentives in order for us to continue to be successful. We plan to distribute bonus, and to allocate Company stocks and stock options to our executive officers commencing in 2010, the actual amount of which shall be based on considerations of the board of directors. We shall also issue certain amount of Company stock options to the executive officers on an annual basis commencing from 2010. We plan to grant our CEO Pengcheng Chen shares of stock, stock options or stock awards as compensation for his contribution to the Company as he had successfully lead the Company through the worldwide financial crisis since 2008. Notwithstanding the foregoing, our compensation program for our executive officers and all other employees is designed such that it will not incentivize unnecessary risk-taking. Base Salary The base salaries paid to Fangshe Zhang, Pengcheng Chen, Yi Tong, Yi Zhang, and Pingjun Zhang during 2009, 2008 and 2007 are listed in the compensation table below. All such amounts were paid in cash. The value of base salary reflects each executive s skill set and the market value of that skill set in the sole discretion of our board of directors and/or our executive officers. The board of directors assesses the executive's skill set by considering their education, professional certificates, working experiences and length, and their contributions to the Company. The average salaries of the management professionals of the local labor market are taken as reference to decide the salary of the Company's management staff. In 2009 the base salary was increased. Discretionary Bonus The Board of Directors has decided to provide our executive officers with discretionary bonuses at the end of each fiscal year. Our Compensation Committee and board of directors review the grant of bonuses on a yearly basis based on our financial and operating performance and prospects, the level of compensation paid to similarly situated executives in comparably sized companies and contributions made by the officers to our success. The Company plans to issue stocks and stock options as part of bonus to the executive officers. The basic principle for such equity compensation plan is based upon the increase in operating profit of the Company at the year end. If the operating profit of the current year exceeds that of the former year by over 30%, the executive officers shall be granted between 500,000 and 600,000 shares of Company stock and around 1,000,000 stock options in total. The exercise price of the options shall be the price on the last day of the operational year, which shall be Dec. 31 of the operational year in the Company's case. The Compensation Committee and Board of Directors reviews the grant of bonuses on a yearly basis based on our financial and operating performance and prospects, the level of compensation paid to similarly situated executives in comparably sized companies and contributions made by the officers resulting in our success. The Board of Directors, in a meeting in August 2009, approved a distribution to the executive officers of bonuses in an aggregate amount of RMB250,000 (USD $36,599) if the net profit exceeded 2008 by 20% and RMB500,000 (USD $73,196) if the net profit exceeded 2008 by 30% at the end of year. A total amount of USD $33,406 was ultimately distributed to the executive officers at the end of 2009 as the increase of net profit exceeded 20% as compared to 2008. Equity Incentives We have not established equity based incentive program and have not granted stock based awards as a component of compensation. We are planning to adopt and establish an equity incentive plan, as our board of directors has determined that it is in the best interests of our stockholders and the Company. The incentive program includes issuing stock and options to executive officers for services rendered in 2009, and to issue certain amount of options to executive officers every year starting from 2010. Retirement Benefits Our executive officers are not presently entitled to Company-sponsored retirement benefits. Perquisites We have not provided our executive officers with any material perquisites and other personal benefits and, therefore, we do not view perquisites as a significant or necessary element of our executive s compensation. Deferred Compensation We do not provide our executives the opportunity to defer receipt of annual compensation. Summary Compensation Tables The following table discloses executive compensation received for the fiscal year ended December 31, 2009 as well as the preceding three years. SUMMARY COMPENSATION TABLE Annual Compensation Long-Term Compensation Awards Name and Principal Position Year Salary Cash Bonus Restricted Stock Award Securities Underlying Options Total Compensation Fangshe Zhang, 2009 $ 5,226 $ 7,319 $ - 0 - $ - 0 - $ 12,545 Chairman 2008 $ 3,013 $ -0- $ - 0 - $ -0 - $ 3,013 2007 $ 3,971 $ 3,945 $ - 0 - $ - 0 - $ 7,916 Pengcheng Chen, 2009 $ 7.850 $ 5,592 $ - 0 - $ - 0 - $ 13,442 Chief Executive Officer 2008 $ 5, 182 $ 0 $ - 0 - $ - 0 - $ 5,182 2007 $ 6,143 $ 3,945 $ - 0 - $ - 0 - $ 10,088 Yin Tong, 2009 $ 5,621 $ 8,783 $ - 0 - $ - 0 - $ 14,404 Chief Financial Officer 2008 $ 3,013 $ 0 $ - 0 - $ - 0 - $ 3,013 2007 $ 3,656 $ 13,151 $ - 0 - $ - 0 - $ 16,807 Shengli Liu, 2009 $ 6,697 $ 5,856 $ - 0 - $ - 0 - $ 12,553 Chief Operating Officer 2008 $ 4,764 $ -0- $ - 0 - $ - 0 - $ 4,764 2007 $ 4,445 $ 1,315 $ - 0 - $ - 0 - $ 5,760 Tianboa Guo, 2009 $ 5,878 $ 5,856- 0 - $ - 0 - $ - 0 - $ 11,734 Chief Technical Officer 2008 $ 3,148 $ -0- $ - 0 - $ - 0 - $ 3,148 2007 $ 4,734 $ 1,315 $ - 0 - $ - 0 - $ 6,049 Outstanding Equity Awards There were no option exercises or options outstanding as of December 31, 2009. EMPLOYEE STOCK OPTION PLAN None COMPENSATION OF INDEPENDENT DIRECTORS No compensation had been paid to any director solely in connection with their role as a director. Employment Agreements We have employment contracts with four of our executive officers, Pengcheng Chen, our CEO, Yi Tong, our CFO, Tianbao Guo, our CTO, and Shengli Liu, our COO and Vice Manager. The terms of the contracts are one year subject to renewal. Our employment contract with Yi Tong was signed on April 1, 2009, and the other three executive officers contracts were signed on October 9, 2009. According to the employment agreements, the base salaries to Pengcheng Chen, , Tianbao Guo, and Shengli Liu for one year term ended October 9, 2010 are RMB 109,200 (equivalent to $15,986), RMB85,200 (equivalent to $12,472), and RMB 84,000 (equivalent to $12,297), respectively.. The base salary payable to Yi Tong for the one year term ended April 20, 2010 was RMB91,200 (equivalent to $13,351). To better attract and retain executive talent, and to stimulate performance we intend to provide our executives with discretionary bonuses and equity incentives. We plan to distribute bonus, and to issue Common Stocks and/or stock options to our executive officers for services rendered in 2009. The amount of such equity awards will be determined by the Compensation Committee and the Board of Directors. Currently the Company does not have specific rules for calculating the bonus for executive officers. The actual bonuses are determined through discussions during the meetings of board of directors and Compensation Committee. The board of directors and Compensation Committee determines the amount of bonus for each executive officer annually, based mainly on three factors, the contribution to the Company made by the officer, the officer's length of service and the operating result of the Company. Director Compensation The Company did not and does not currently have an established policy to provide compensation to members of its board of directors for their services in that capacity. The Company intends to develop such a policy in the near future. Indemnifications of Directors and Executive Officers and Limitations of Liability Under Section 145 of the General Corporation Law of the State of Delaware, we can indemnify our directors and officers against liabilities they may incur in such capacities, including liabilities under the Securities Act. Our certificate of incorporation provides that, pursuant to Delaware law, our directors shall not be liable for monetary damages for breach of the directors fiduciary duty of care to us and our stockholders. This provision in the certificate of incorporation does not eliminate the duty of care, and in appropriate circumstances equitable remedies such as injunctive or other forms of non-monetary relief will remain available under Delaware law. In addition, each director will continue to be subject to liability for breach of the director s duty of loyalty to us or our stockholders, for acts or omissions not in good faith or involving intentional misconduct or knowing violations of the law, for actions leading to improper personal benefit to the director, and for payment of dividends or approval of stock repurchases or redemptions that are unlawful under Delaware law. The provision also does not affect a director s responsibilities under any other law, such as the federal securities laws or state or federal environmental laws. Our Certificate of Incorporation provides for the indemnification of our directors, officers, employees, and agents, under certain circumstances, against attorney s fees and other expenses incurred by them in any litigation to which they become a party arising from their association with or activities on behalf of us. We will also bear the expenses of such litigation for any of its directors, officers, employees, or agents, upon such person s promise to repay us therefore if it is ultimately determined that any such person shall not have been entitled to indemnification. This indemnification policy could result in substantial expenditures by us which it will be unable to recoup. We have been advised that in the opinion of the Securities and Exchange Commission, insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers and controlling persons pursuant to the foregoing provisions, or otherwise, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable. In the event a claim for indemnification against such liabilities (other than our payment of expenses incurred or paid by our director, officer or controlling person in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, we will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by us is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. We may enter into indemnification agreements with each of our directors and officers that are, in some cases, broader than the specific indemnification provisions permitted by Delaware law, and that may provide additional procedural protection. As of the closing of the Share Exchange, we have not entered into any indemnification agreements with our directors or officers, but may choose to do so in the future. Such indemnification agreements may require us, among other things, to: indemnify officers and directors against certain liabilities that may arise because of their status as officers or directors; advance expenses, as incurred, to officers and directors in connection with a legal proceeding, subject to limited exceptions; or obtain directors and officers insurance. At present, there is no pending litigation or proceeding involving any of our directors, officers or employees in which indemnification is sought, nor are we aware of any threatened litigation that may result in claims for indemnification. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Loan to Related Parties As of September 30, 2010, amounts due to stockholder/officer are unsecured, non-interest bearing and due on demand. The total net amount due to the stockholder/officer was $181,187 which represented the net amount lent by Mr. Pencheng Chen, the Chief Executive Officer of the Company to us. Patent License Agreement and Patent Assignment Agreement Mr. Fangshe Zhang, our Chairman and a principal shareholder leases us three cork processing technology related patents in China under operating lease agreements that expire on April 16, 2011. During the years ended December 31, 2009 and December 31, 2008 respectively, we paid him license fees for these patents in the aggregate amount of $351,334 and $345,444. In addition, we paid him patent license fees in amount of $264,499 and $263,685 for the nine months ended September 30, 2010 and 2009, respectively. The following is a schedule of future minimum rental payments required under these operating leases as of September 30, 2010. For The Nine Months Ending September 30, 2010, Amount 2011 $ 190,991 Total minimum rental payments required $ 190,991 Review Approval or Ratification of Transactions with Related Persons All ongoing and future transactions between us and any of our officers and directors and their respective affiliates, including loans by our officers and directors, will be on terms believed by us to be no less favorable than are available from unaffiliated third parties. Such transactions or loans, including any forgiveness of loans, will require prior approval by the Corporate Governance and Nominating Committee (whose members are independent directors) and by a majority of our disinterested independent directors (to the extent we have any) or the members of our board who do not have an interest in the transaction, in either case who had access, at our expense, to our attorneys or independent legal counsel. We will not enter into any such transaction unless our disinterested independent directors) determine that the terms of such transaction are no less favorable to us than those that would be available to us with respect to such a transaction from unaffiliated third parties. We will not enter into a business combination or invest alongside any of our directors, officers, any affiliate of ours or of any of our directors or officers or a portfolio company of any affiliate of our directors or officers. Potential Conflicts of Interests Save as disclosed below and under the section Interested Person Transactions , during the past three financial years: a) None of our directors, executive officers or controlling shareholder or their affiliates had any interest, direct or indirect, in any material transaction to which we are a party. b) None of our directors, executive officers or controlling shareholder or their affiliates had any interest, direct or indirect, in any Company that carries the same business or similar trade which competes materially and directly with our existing business. c) None of our directors, executive officers or controlling shareholder or their affiliates had any interest, direct or indirect, in any enterprise or Company that is our major customer or supplier of goods or services. d) None of our directors, executive officers or controlling shareholder or their affiliates has had any interest, direct or indirect, in any material transaction we have undertaken within the last three years. (1) Having an address at No. 23, Tiyu Street, Chang an District, Xi an, China. (2) Having an address at No. 5, Beisan Street, Beida Village, Dongda Town, Chang'an County, Xi'an, China. DESCRIPTION OF SECURITIES Preferred Stock We are authorized to issue up to 5,000,000 shares of $.0001 par value preferred stock. We have no shares of preferred stock outstanding. Under our Amended Certificate of Incorporation, our board of directors has the power, without further action by the holders of the Common Stock, to determine the relative rights, preferences, privileges and restrictions of the preferred stock, and to issue the preferred stock in one or more series as determined by the board of directors. The designation of rights, preferences, privileges and restrictions could include preferences as to liquidation, redemption and conversion rights, voting rights, dividends or other preferences, any of which may be dilutive of the interest of the holders of the Common Stock. The issuance of any preferred stock could diminish the rights of holders of our Common Stock, and therefore could reduce the value of such Common Stock. In addition, specific rights granted to future holders of preferred stock could be used to restrict our ability to merge with, or sell assets to, a third party. The ability of our board of directors to issue preferred stock could make it more difficult, delay, discourage, prevent or make it more costly to acquire or effect a change-in-control, which in turn could prevent the stockholders from recognizing a gain in the event that a favorable offer is extended and could materially and negatively affect the market price of our Common Stock. The Company s Bylaws or Certificate of Incorporation do not contain any other provisions that would have the effect of delaying or preventing a change in control. Common Stock We are authorized to issue 200,000,000 shares of Common Stock, $0.0001 par value per share, of which 35,663,850 shares are issued and outstanding as of January 24, 2011, before giving effect to the Reverse Split, the shares of Common Stock included in the Units issuable in the Offering, and the shares of Common Stock issuable to the Selling Stockholders. Each outstanding share of Common Stock is entitled to one vote, either in person or by proxy, on all matters that may be voted upon by their holders at meetings of the stockholders. Holders of our Common Stock: (i) have equal ratable rights to dividends from funds legally available therefore, if declared by our board of directors; (ii) are entitled to share ratably in all of the Company s assets available for distribution to holders of Common Stock upon our liquidation, dissolution or winding up; (iii) do not have preemptive, subscription or conversion rights or redemption or sinking fund provisions; and (iv) are entitled to one non-cumulative vote per share on all matters on which stockholders may vote at all meetings of our stockholders. The holders of shares of our Common Stock do not have cumulative voting rights, which means that the holders of more than fifty percent (50%) of outstanding shares voting for the election of directors can elect all of our directors if they so choose and, in such event, the holders of the remaining shares will not be able to elect any of our directors. We have never paid or declared dividends. However, holders of our Common Stock are entitled to dividends if declared by our board of directors out of funds legally available. We do not, however, anticipate the declaration or payment of any dividends in the foreseeable future. We intend to retain earnings, if any, to finance the development and expansion of our business. Future dividend policy will be subject to the discretion of our board of directors and will be contingent upon future earnings, if any, our financial condition, capital requirements, general business conditions and other factors. Therefore, we cannot assure you that any dividends of any kind will ever be paid. Warrants The Warrants expire five years from the date of this Prospectus and become exercisable one year from the date of issuance. Warrants are not separately tradable for a period of one year after issuance, unless sooner as may be approved by the Underwriters, in its sole discretion. During the exercise period, each Warrant will entitle the holder thereof to purchase one share of Common Stock at an exercise price of $7.80 per share (120% of the Offering price). Warrants may be exercised by surrendering the Warrants to the warrant agent and paying the exercise price. No fractional shares of Common Stock will be issued in connection with the exercise of Warrants. Upon exercise, the Company will pay to the holder the value of any such fractional shares based upon the market value of the Common Stock at such time. We are required to keep available a sufficient number of authorized shares of Common Stock for issuance to permit exercise of the Warrants. The Warrants are redeemable by the Company at a price of $.05 per Warrant commencing one year after the completion of the Offering and prior to their expiration, provided that (i) prior notice of not less than twenty (20) days is given to the holders of the Warrants, and (ii) the closing sale price of the Common Stock as reported on the national exchange on which the shares of Common Stock are listed, or if the shares of Common Stock are not listed on a national securities exchange, the closing bid price on the OTCBB for 20 consecutive trading days, ending on the tenth day prior to the date on which the Company gives notice of redemption, has been at least $11.70, 180% of the Offering price of the Shares. The holders of the Warrants shall have the exercise rights until the close of the business day preceding the date fixed for redemption. The Warrants will expire at 5:00 p.m., New York time, on the fifth anniversary of the effective date of this Prospectus. Holders of the Warrants as such will not have any of the rights or privileges as shareholders of the Company prior to the exercise of the Warrants. In the event a holder of Warrants fails to exercise the Warrants prior to their expiration, the Warrants will expire and the holder thereof will have no further rights with respect thereto. A holder of Warrants as such will not have any rights, privileges, or liabilities as a shareholder of the Company. In the event of the liquidation, dissolution or winding up of the Company, holders of the Warrants as such are entitled to participate in the distribution of our assets. The exercise price of the Warrants and the number of shares issuable upon exercise of the Warrants will be subject to adjustment to protect against dilution in the event of stock dividends, stock splits, combinations, subdivisions, and reclassifications. We cannot assure you that the market price of the Common Stock will exceed the exercise price of the Warrants at any time during the exercise period. Purchasers of the Warrants will have the rights to exercise the Warrants to purchase shares of Common Stock only if a current registration statement relating to such shares is then in effect and only if the shares are qualified for sale under the securities laws of the jurisdictions in which the various holders of the Warrants reside. We have undertaken to maintain the effectiveness of the Registration Statement of which this Prospectus is a part or to file and maintain the effectiveness of another registration statement so as to permit the purchase of the Common Stock underlying the Warrants, but there can be no assurance that the Company will be able to do so. The Warrants may be deprived of any value if this Registration Statement or another registration statement covering the shares issuable upon the exercise thereof is not kept effective or if such Common Stock is not qualified or exempt from qualification in the jurisdictions in which the holders of the Warrants reside. If a warrant holder seeks to exercise the Warrant but the Company is unable to issue the shares underlying such Warrant that are registered under the Securities Act pursuant to a current Registration Statement, then the Company would be obligated to pay the warrant holder the difference between the market value of the Common Stock on the date of exercise (based on the volume weighted average price of the Common Stock) and the exercise price. The volume weighted average price of the Common Stock for a day is a measure of the price at which the majority of a given day s trading for such stock took place. It is calculated by determining the dividend of: (a) the total number of the shares traded on that day multiplied by the price per share; and (b) the total number of shares traded for such day. For the life of the Warrants, a holder thereof is given the opportunity to profit from a rise in the market price of the Common Stock. In addition, the Company may find it more difficult to raise equity capital if it should be needed for the business of the Company while the Warrants are outstanding. At any time when the holders of Warrants might be expected to exercise them, the Company would, in all likelihood, be able to obtain additional equity capital on terms more favorable than those provided in the Warrants. Underwriters' Warrants On the closing date, the Company will be obligated to issue Underwriters Warrants for a nominal amount, which entitles the holder to purchase up to 125,000 Units (representing 10% of the total Units sold in the Offering) at a price of $.01 per Unit. At the closing of this Offering the Company will issue the Underwriters Warrants. Underwriters Warrants will be exercisable, in whole or in part, for a period of five years, commencing on the date, which is six months after the closing date. The Underwriters have been granted certain registration rights with respect to such warrant and the underlying Common Stock. See "Underwriting." Delaware Anti-Takeover Law and Charter and Bylaw Provisions We are subject to Section 203 of the Delaware General Corporation Law. This provision generally prohibits a Delaware corporation from engaging in any business combination with any interested stockholder for a period of three years following the date the stockholder became an interested stockholder, unless: prior to such date, the board of directors approved either the business combination or the transaction that resulted in the stockholder becoming an interested stockholder; upon consummation of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for purposes of determining the number of shares outstanding those shares owned by persons who are directors and also officers and by employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or on or subsequent to such date, the business combination is approved by the board of directors and authorized at an annual meeting or special meeting of stockholders and not by written consent, by the affirmative vote of at least 66 2/3% of the outstanding voting stock that is not owned by the interested stockholder. Section 203 defines a business combination to include: any merger or consolidation involving the corporation and the interested stockholder; any sale, transfer, pledge or other disposition of 10% or more of the assets of the corporation involving the interested stockholder; subject to certain exceptions, any transaction that results in the issuance or transfer by the corporation of any stock of the corporation to the interested stockholder; any transaction involving the corporation that has the effect of increasing the proportionate share of the stock of any class or series of the corporation beneficially owned by the interested stockholder; or the receipt by the interested stockholder of the benefit of any loans, advances, guarantees, pledges or other financial benefits provided by or through the corporation. In general, Section 203 defines an interested stockholder as any entity or person beneficially owning 15% or more of the outstanding voting stock of a corporation, or an affiliate or associate of the corporation and was the owner of 15% or more of the outstanding voting stock of a corporation at any time within three years prior to the time of determination of interested stockholder status; and any entity or person affiliated with or controlling or controlled by such entity or person. Our certificate of incorporation and bylaws contain provisions that could have the effect of discouraging potential acquisition proposals or making a tender offer or delaying or preventing a change in control of our Company, including changes a stockholder might consider favorable. In particular, our certificate of incorporation and bylaws, as applicable, among other things, will: provide our board of directors with the ability to alter its bylaws without stockholder approval; provide for an advance notice procedure with regard to the nomination of candidates for election as directors and with regard to business to be brought before a meeting of stockholders; and provide that vacancies on our board of directors may be filled by a majority of directors in office, although less than a quorum. Such provisions may have the effect of discouraging a third-party from acquiring us, even if doing so would be beneficial to our stockholders. These provisions are intended to enhance the likelihood of continuity and stability in the composition of our board of directors and in the policies formulated by them, and to discourage some types of transactions that may involve an actual or threatened change in control of our Company. These provisions are designed to reduce our vulnerability to an unsolicited acquisition proposal and to discourage some tactics that may be used in proxy fights. We believe that the benefits of increased protection of our potential ability to negotiate with the proponent of an unfriendly or unsolicited proposal to acquire or restructure our Company outweigh the disadvantages of discouraging such proposals because, among other things, negotiation of such proposals could result in an improvement of their terms. However, these provisions could have the effect of discouraging others from making tender offers for our shares that could result from actual or rumored takeover attempts. These provisions also may have the effect of preventing changes in our management. Transfer Agent Our transfer agent is Olde Monmouth Stock Transfer Co., Inc., 200 Memorial Parkway, Atlantic Highlands, NJ 07716, and their contact number is (732)-872-2727. Listing Our shares of Common Stock are currently quoted on the Over-The Counter Bulletin Board under the symbol AKRK. We intend to have our Units and the Common Stock and Warrants issued as part of the Units approved for listing on either NASDAQ or AMEX under the trading symbol AKRK SHARES ELIGIBLE FOR FUTURE SALE As of January 24, 2011, we had 35,663,850 outstanding shares of Common Stock (without giving effect to the Reverse Split, the shares of Common Stock issued in the Offering, or the shares of Common Stock issuable to the Selling Stockholders) Of such shares, are considered restricted securities within the meaning of the Securities Act of 1933, including shares owned by affiliates. Upon completion of this Offering, we will have outstanding an aggregate of ______ shares of Common Stock, assuming no exercise of the Underwriters Warrants. All of the restricted shares will be freely tradable without restriction or further registration under the Securities Act, except that any shares owned or shares purchased by our affiliates, as that term is defined in Rule 144 of the Securities Act, may generally only be sold in compliance with the limitations of Rule 144 and the Lock-Up Agreements described below . Shares covered by this Prospectus All of the shares being registered in this Offering may be sold without restriction under the Securities Act. Rule 144 In general, under Rule 144 a person, or persons whose shares are aggregated, who is not deemed to have been one of our affiliates at any time during the three months preceding a sale and who has beneficially owned shares of our Common Stock for at least six months, including the holding period of any prior owner, except if the prior owner was one of our affiliates, would be entitled to sell all of their shares, provided the availability of current public information about the Company during the six months following satisfaction of the six-month holding period requirement. Affiliates that have held restricted securities for at least twelve months may sell such restricted securities in accordance with the traditional conditions of Rule 144, including the public information requirement, the volume limitations, manner of sale provisions and notice requirements. In particular, an affiliate who has beneficially owned shares of our Common Stock for at least one year would be entitled to sell within any three-month period a number of shares that does not exceed 1% of the number of shares of our Common Stock then outstanding. No prediction can be made as to the effect, if any, that future sales of shares, or the availability of shares for future sales, will have on the market price of our Common Stock prevailing from time to time. The sale of substantial amounts of our Common Stock in the public market, or the perception that such sales could occur, could harm the prevailing market price of our Common Stock. Any substantial sale of Common Stock pursuant to any resale prospectus by the Selling Stockholders or Rule 144 may have an adverse effect on the market price of our Common Stock by creating an excessive supply. Lock-Up Agreements and Registration Our directors and officers and any other holder of more than five percent (5%) of the outstanding shares of Common Stock (or securities exercisable for or convertible into shares of Common Stock), at the effective date of this Prospectus, have entered into customary "lock-up agreements in favor of the Underwriters pursuant to which such persons and entities agreed, for a period of eighteen (18) months after the Offering is completed, that they shall neither publicly offer, issue, sell, contract to sell, encumber, grant any option for the sale of or otherwise dispose of any securities of our Company without the Underwriters prior written consent, and any sale of such securities shall be executed by the Underwriters, except for the issuance of shares of Common Stock upon the exercise of outstanding options, warrants and options which may be issued pursuant to an Incentive Compensation Plan reasonably acceptable to the Underwriters. In addition, the Selling Stockholders have entered into customary lock-up agreements in favor of the Underwriters pursuant to which such persons and entities (other than Brill Securities Inc.) shall agree, for a period of nine months after the Offering is completed, that they shall neither publicly offer, issue, sell, contract to sell, encumber, grant any option for the sale of or otherwise dispose of any securities of the Company without the Underwriters prior written consent. The aforementioned restriction on Brill Securities Inc. shall be for a period of six months after the Offering. We have been advised by our Underwriters, that they have no present intention and there are no agreements or understandings, explicit or tacit, relating to the early release of any locked-up shares. The Underwriters may, however, consent to an early release from the lock-up period if, in its opinion, the market for the Common Stock would not be adversely impacted by sales. The release of any lock-up would be considered on a case-by-case basis. Factors that the Underwriters may consider in deciding whether to release shares from the lock-up restriction include the length of time before the lock-up expires, the number of shares involved, the reason for the requested release, market conditions, the trading price of our securities, historical trading volumes of our securities and whether the person seeking the release is an officer, director or affiliate of us. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT Beneficial ownership is determined in accordance with the rules of the SEC. In computing the number of shares beneficially owned by a person and the percentage of ownership of that person, shares of Common Stock subject to options and warrants held by that person that are currently exercisable or become exercisable within 60 days of the date of this report are deemed outstanding even if they have not actually been exercised. Those shares, however, are not deemed outstanding for the purpose of computing the percentage ownership of any other person. The following table sets forth, as of January 24, 2011, information with respect to the beneficial ownership of our outstanding Common Stock by (i) each director and executive officer of us, (ii) all directors and executive officers of us as a group, and (iii) each shareholder who was known by us to be the beneficial owner of more than 5% of our outstanding Common Stock. Except as otherwise indicated, the persons or entities listed below have sole voting and investment power with respect to all shares of Common Stock beneficially owned by them. The table is based on 35,663,850 shares outstanding, before giving effect to the Reverse Split, the shares of Common Stock included in the Units issuable in the Offering and the shares of Common Stock issuable to the Selling Stockholders. Name and Address of Beneficial Owner of Shares Position Number of shares held by Owner Percent of Class Pengcheng Chen (1) CEO/Director 7,911,450 (1) 22.18 % Fangshe Zhang (2) Chairman 5,402,900 (2) 15.15 % Yi Tong CFO Shengli Liu Chief Operating Officer/Vice Manager/Director 800,000 2.24 % Tianbao Guo Chief Technical Officer Genshe Bai Director 1,200,000 3.37 % Genhu Yang Director 800,000 2.24 % Xiaodong Wen Director Tao Wang Director Executive Officers & Directors as a Group 16,114,363 45.18 % UNDERWRITING We have engaged the Underwriters to conduct this Offering on a best efforts" basis. Because the Offering is on a best efforts basis, the Underwriters are not required to sell any specific number or dollar amount of Units and are not obligated to purchase any Unit if any such Unit is not sold to the public. We have agreed to indemnify our Underwriters against certain civil liabilities. None of our officers, directors or affiliates may purchase Units in this Offering. Unless sooner withdrawn or canceled by either us or the Underwriters, the Offering will continue until the earlier of (i) a date mutually acceptable to us and the Underwriters and (ii) February 14, 2011 (either the Offering Termination Date ). This Offering is not subject to the sale of a minimum number of Units. To the extent that we sell significantly less than the total number of Units that we are offering through this prospectus, you may be one of only a small number of investors in this Offering and a substantial percentage of the Offering proceeds may be used to pay for the Offering expenses, and not for our general corporate purposes. Furthermore, because there is no minimum offering amount required as a condition to closing in this Offering, the actual public offering amount, Underwriters fee and net proceeds to us, if any, in this Offering are not presently determinable and may be substantially less than Offering amounts set forth in this prospectus. The Underwriters have the right to reject any order in whole or in part. We will not be able to use such proceeds in China, however, until we complete certain remittance procedures in China. On the closing date, we will issue Units to the investors and Underwriters Warrants to the Underwriters to purchase up to 125,000 Units in the aggregate (representing 10% of the total Units sold in the Offering). The Company and the Underwriters reserves the right to have multiple closings until the earlier of the total amount of Units have been sold and the Offering Termination Date. For purposes of the Offering, references to Closing Date shall refer to the initial closing and any additional closings. Interested investors must pay in full for all Units such interested investor will purchase at the time of investment. Payment for the Units may be made by wire transfer to the relevant Underwriter no less than four (4) business days before the closing date. Pursuant to that certain Underwriting Agreement by and between the Underwriters and us (the Underwriting Agreement ) and the agreement amongst the Underwriters and such other underwriters as may participate in the Offering, the obligations of each Underwriter to solicit offers to purchase the Units and of interested investors solicited by each Underwriter to purchase the Units are subject to approval of certain legal matters by counsel to each Underwriter. The Underwriters ability to complete this best efforts transaction is dependent upon the existence of stable U.S. trading markets. As such, the Underwriters obligations under the Underwriting Agreement are also subject to various conditions which are customary in transactions of this type, including that, as of the closing of the Offering, there shall not have occurred (i) a suspension or material limitation in trading in securities or the publication of quotations on the NASDAQ Capital Market or AMEX; (ii) a general moratorium on commercial banking activities in the State of New York or China; (iii) the engagement by the United States or China in hostilities which have resulted in the declaration of a national emergency or war if any such event would have a material adverse effect, in the Underwriters s reasonable judgment, as to make it impracticable or inadvisable to proceed with the solicitation of offers to consummate the Offering with respect to interested investors solicited by the Underwriters on the terms and conditions contemplated herein. We have agreed to indemnify each Underwriter against certain liabilities, including liabilities under the Securities Act of 1933, as amended, or to contribute to payments either Underwriter may be required to make in respect of those liabilities. Each Underwriter is offering the Units, subject to prior sale, when, as and if issued to and accepted by it, subject to conditions contained in the Underwriting Agreement, such as the receipt by the Underwriters of officers certificates and legal opinions. Each Underwriter reserves the right to withdraw, cancel or modify offers to the public and to reject orders in whole or in part in the event (i) our representations or warranties are incorrect or misleading or we fail to fulfill our agreements with the Underwriters; (ii) a material adverse change occurs affecting our business, management, property, assets, results of operations, condition or prospects; (iii) trading is suspended on any national securities exchange; (iv) war is declared; (v) a banking moratorium is declared in New York or the U.S.; or (vi) any laws, regulations, court or administrative order or other governmental or agency act causes the Underwriters to believe that our business or the U.S. securities markets will be materially adversely affected. The Underwriters discretion in this regard is broad. Each Underwriter intends to offer the Units to its retail customers only in states in which we are permitted to offer the Units. We have relied on an exemption to the blue sky registration requirements afforded to covered securities . Securities listed on the NASDAQ Capital Market or AMEX are covered securities. If we were unable to meet the NASDAQ Capital Market s or AMEX s listing standards, then we would be unable to rely on the covered securities exemption to blue sky registration requirements and we would need to register the Offering in each state in which we planned to sell shares. Consequently, we will not complete this Offering unless we meet the NASDAQ Capital Market s or AMEX s listing requirements. In connection with this Offering, each Underwriter or certain of the securities dealers may distribute prospectuses electronically. No forms of prospectus other than printed prospectuses and electronically distributed prospectuses that are printable in Adobe PDF format will be used in connection with this Offering. Pricing of Securities Each Underwriter has advised us that it proposes to offer the Units directly to the public at the public Offering price set forth on the cover page of this prospectus. This price should not be considered an indication of the actual value of the Units and are subject to change as a result of market conditions and other factors. No variation in those terms will change the amount of proceeds to be received by us as set forth on the cover page of this prospectus. Our Common Stock is quoted on the OTC Bulletin Board under the symbol AKRK.OB . On January 24, 2011, the last reported sales price of our Common Stock was $.40 before giving effect to the Reverse Split to be effected concurrently to the effectiveness of the registration statement of which this prospectus is a part. The public Offering price for the Units was determined by negotiation between us and the Underwriters. The principal factors considered in determining the public Offering price of the shares included: the information in this prospectus and otherwise available to the Underwriters; the history and the prospects for the industry in which we will compete; the valuation of our Company based on, among other factors, the offering prices of our recent private Offerings; our current financial condition and the prospects for our future cash flows and earnings; the general condition of the economy and the securities markets at the time of this Offering; the recent market prices of, and the demand for, publicly-traded securities of generally comparable companies; and the public demand for our securities in this Offering. We cannot be sure that the public Offering price will correspond to the price at which our shares will trade in the public market following this Offering or that an active trading market for our shares will develop and continue after this Offering. Foreign Regulatory Restrictions on Purchase of our Shares We have not taken any action to permit a public Offering of our shares outside the United States or to permit the possession or distribution of this prospectus outside the United States. People outside the United States who come into possession of this prospectus must inform themselves about and observe any restrictions relating to this Offering of our shares and the distribution of this prospectus outside the United States. Commissions and Discounts Underwriters Each Underwriter has advised us that it proposes to offer the Common Stock to the public at the initial public Offering price on the cover page of this prospectus. The following table shows the public Offering price, Underwriters fee to be paid by us to the Underwriters and the proceeds, before expenses, to us. Per Common share Units Offering Assumed public Offering price $ 6.50 $ 8,125,000 Placement discount $ .585 $ 731,250 Proceeds to us, before expenses $ 5.915 $ 7,393,750 We expect our total cash expenses for this Offering to be approximately $507,700, exclusive of the above commissions but inclusive of paying the Underwriters a non-accountable expense allowance of 2% of the amount of the Offering, or $162,500 ( exclusive of shares registered under Rule 462(b)). The Offering will terminate upon the earlier of: (i) a date mutually acceptable to us and the Underwriters, and (ii) February 14, 2011. On the closing date, we will issue Units to the investors and Underwriters Warrants to our Underwriters. Underwriters' Warrants On the closing date, we will be obligated to issue Underwriters Warrants to the Underwriters for a nominal amount, which entitles the holder to purchase up to 125,000 Units (representing 10% of the total Units sold) at a price of $.01 per Unit. At the closing of this Offering, we will issue the Underwriters Warrants. The Underwriters Warrants will be exercisable, in whole or in part, for a period of five years, commencing on the date, which is six months after the closing date. The Underwriters have been granted certain registration rights with respect to such Underwriters Warrants and the underlying Common Stock. See "Underwriting." LEGAL MATTERS The validity of the Common Stock, the Units and the Warrants offered by this prospectus will be passed upon for us by McLaughlin & Stern LLP, New York, NY. The law firm of JSBarkats, PLLC, is acting as counsel for the Underwriters. EXPERTS The consolidated financial statements of ASIA CORK, INC. for the years ended December 31, 2009 and 2008have been audited by MS Group CPA LLC Certified Public Accountants PC, an independent registered public accounting firm, as set forth in their report thereon appearing elsewhere herein, and are included in reliance upon such report given on the authority of such firm as experts in accounting and auditing. ADDITIONAL INFORMATION We filed with the Securities and Exchange Commission a registration statement under the Securities Act of 1933, as amended, for the Units in this Offering. This prospectus does not contain all of the information in the registration statement and the exhibits and schedules that were filed with the registration statement. For further information with respect to us and our Common Stock, we refer you to the registration statement and the exhibits and schedules that were filed with the registration statement. Statements contained in this prospectus about the contents of any contract or any other document that is filed as an exhibit to the registration statement are not necessarily complete, and we refer you to the full text of the contract or other document filed as an exhibit to the registration statement. A copy of the registration statement and the exhibits and schedules that were filed with the registration statement may be inspected without charge at the Public Reference Room maintained by the Securities and Exchange Commission at 100 F Street, N.E. Washington, DC 20549, and copies of all or any part of the registration statement may be obtained from the Securities and Exchange Commission upon payment of the prescribed fee. Information regarding the operation of the Public Reference Room may be obtained by calling the Securities and Exchange Commission at 1-800-SEC-0330. The Securities and Exchange Commission maintains a website that contains reports, proxy and information statements, and other information regarding registrants that file electronically with the SEC. The address of the website is www.sec.gov. We file periodic reports under the Securities Exchange Act of 1934, as amended, including annual, quarterly and special reports, and other information with the Securities and Exchange Commission. These periodic reports and other information are available for inspection and copying at the regional offices, public reference facilities and website of the Securities and Exchange Commission referred to above. PART II INFORMATION NOT REQUIRED IN THE PROSPECTUS ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION The following table sets forth the costs and expenses, other than underwriting discounts and commissions, if any, payable by the Registrant relating to the sale of Common Stock being registered. Securities and Exchange Commission registration fee (1) $ 734.38 FINRA Filing Fee (1) 4,500 NASDAQ Listing Fee (1) 50,000 AMEX Listing Fee (1) 50,000 (1) Transfer Agent Fees 5,000 Accounting fees and expenses 75,000 Legal fees and expenses 150,000 Blue Sky/Underwriter s counsel fees and expenses 10,000 Miscellaneous (2) 162,500 Total $ 507,734.38 (1) All amounts are estimates other than the Commission s registration fee, FINRA filing fee and NASDAQ and AMEX listing fee. (2) Includes non-accountable expense allowance payable to the Underwriters of two percent (2%) of the gross proceeds of the Offering. ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS Under Section 145 of the General Corporation Law of the State of Delaware, we can indemnify our directors and officers against liabilities they may incur in such capacities, including liabilities under the Securities Act. Our certificate of incorporation provides that, pursuant to Delaware law, our directors shall not be liable for monetary damages for breach of the directors fiduciary duty of care to us and our stockholders. This provision in the certificate of incorporation does not eliminate the duty of care, and in appropriate circumstances equitable remedies such as injunctive or other forms of non-monetary relief will remain available under Delaware law. In addition, each director will continue to be subject to liability for breach of the director s duty of loyalty to us or our stockholders, for acts or omissions not in good faith or involving intentional misconduct or knowing violations of the law, for actions leading to improper personal benefit to the director, and for payment of dividends or approval of stock repurchases or redemptions that are unlawful under Delaware law. The provision also does not affect a director s responsibilities under any other law, such as the federal securities laws or state or federal environmental laws. Our bylaws provide for the indemnification of our directors to the fullest extent permitted by the Delaware General Corporation Law. Our bylaws further provide that our board of directors has discretion to indemnify our officers and other employees. We are required to advance, prior to the final disposition of any proceeding, promptly on request, all expenses incurred by any director or executive officer in connection with that proceeding on receipt of an undertaking by or on behalf of that director or executive officer to repay those amounts if it should be determined ultimately that he or she is not entitled to be indemnified under the bylaws or otherwise. We are not, however, required to advance any expenses in connection with any proceeding if a determination is reasonably and promptly made by our board of directors by a majority vote of a quorum of disinterested board members that (i) the party seeking an advance acted in bad faith or deliberately breached his or her duty to us or our stockholders and (ii) as a result of such actions by the party seeking an advance, it is more likely than not that it will ultimately be determined that such party is not entitled to indemnification pursuant to the applicable sections of our bylaws. We have been advised that in the opinion of the Securities and Exchange Commission, insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers and controlling persons pursuant to the foregoing provisions, or otherwise, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable. In the event a claim for indemnification against such liabilities (other than our payment of expenses incurred or paid by our director, officer or controlling person in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, we will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by us is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. We may enter into indemnification agreements with each of our directors and officers that are, in some cases, broader than the specific indemnification provisions permitted by Delaware law, and that may provide additional procedural protection. As of the date of this prospectus, we have not entered into any indemnification agreements with our directors or officers, but may choose to do so in the future. Such indemnification agreements may require us, among other things, to: indemnify officers and directors against certain liabilities that may arise because of their status as officers or directors; advance expenses, as incurred, to officers and directors in connection with a legal proceeding, subject to limited exceptions; or obtain directors and officers insurance. At present, there is no pending litigation or proceeding involving any of our directors, officers or employees in which indemnification is sought, nor are we aware of any threatened litigation that may result in claims for indemnification. Shares of Common Stock ASIA CORK, INC. PROSPECTUS Until , 2011, all dealers that effect transactions in these securities, whether or not participating in this Offering, may be required to deliver a prospectus. This is in addition to the dealers obligation to deliver a prospectus when acting as Underwriters and with respect to their unsold allotments or subscriptions. January , 2011 [RESALE PROSPECTUS ALTERNATE PAGE] The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission becomes effective. This prospectus is not an offer to sell these securities and we are not soliciting offers to buy these securities in any state where the offer or sale is not permitted. PROSPECTUS SUBJECT TO COMPLETION, PRELIMINARY PROSPECTUS DATED January , 2011 Shares of Common Stock ASIA CORK, INC. This prospectus relates to the resale (this Resale Prospectus ) by the investors (the Selling Stockholders ) of up to 5,178,334 shares (the Shares ) of Common Stock, $.0001 par value per share Asia Cork, Inc., a Delaware corporation (the Company ). The Shares are sometimes collectively referred to as the Selling Stockholders Securities . No underwriting agreements have been entered into by the Selling Stockholders with respect to the Securities offered hereby. We will not receive any proceeds from the sales by the Selling Stockholders, but we will receive funds from the exercise of warrants held by Selling Stockholders, if exercised. Concurrently with this Offering (the Selling Stockholders Offering ), the Company offered, by separate Prospectus (the Concurrent Offering ), up to 1,250,000Units, each Unit consisting of one share of the Company s Common Stock and one warrant to purchase one share of Common Stock, and to the Underwriters, to purchase Common Stock Underwriters up to ten percent of the Units sold. The concurrent Offering and the Selling Stockholders Offering are collectively referred to as the Offerings. Our shares of Common Stock are currently quoted on the Over-The-Counter Bulletin Board under the symbol AKRK. We are applying for the listing of the Units and Common Stock on the NASDAQ Stock Market LLC ( NASDAQ ) and AMEX. The shares of Common Stock issuable upon conversion of the promissory notes issued to the Selling Stockholders (the Promissory Notes ) and exercise of the warrants issued to the Selling Stockholders in June 2008 are the Selling Stockholders Securities being offered for resale pursuant to this Resale Prospectus. The Selling Stockholders have entered into customary lock-up agreements in favor of the Underwriters pursuant to which such persons and entities shall agree (with the exception of Brill Securities Inc.), for a period of nine (9) months after the Offering is completed, that they shall neither publicly offer, issue, sell, contract to sell, encumber, grant any option for the sale of or otherwise dispose of any securities of the Company without the Underwriters prior written consent. The aforementioned restriction on Brill Securities Inc. shall be for a period of six (6) months after the Offering is completed. The Selling Stockholders may sell Common Stock from time to time in the principal market on which the stock is traded at the prevailing market price or in negotiated transactions or a combination of such methods of sale directly or through brokers. The Selling Stockholders and any participating broker-dealers may be deemed to be Underwriters within the meaning of the Securities Act of 1933, as amended (the Securities Act ) and any commissions or discounts given to any such broker-dealer may be regarded as underwriting commissions or discounts under the Securities Act. The Selling Stockholders have informed us that they do not have any agreement or understanding, directly or indirectly, with any person to distribute their Common Stock. The purchase of the securities involves a high degree of risk. See section entitled
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+You should read the following summary together with the more detailed information contained elsewhere in this prospectus, including the section titled Risk Factors, regarding us and the common stock being sold in this offering. Unless the context otherwise requires, when we refer to our company, we, us or our, we are referring to Debt Resolve, Inc., the issuer of this prospectus. Overview We provide a patented software solution to consumer lenders based on our licensed, proprietary DebtResolve system. Our Internet-based bidding system facilitates the settlement and collection of defaulted consumer debt via the Internet. Our existing and target creditor clients include banks and other credit originators, credit card issuers and third-party collection agencies and collection law firms, as well as assignees and buyers of charged-off consumer debt. We also recently implemented our first client in the retail sector and are expanding into the healthcare sector. We believe that our system, which uses a client-branded user-friendly web interface, provides our clients with a less intrusive, less expensive, more secure and more efficient way of pursuing delinquent debts than traditional labor-intensive methods. Our DebtResolve system brings creditors (or parties who service their credit) and consumer debtors together to resolve defaulted consumer debt online through a series of steps. The process is initiated when one of our creditor or servicer clients electronically forwards to us a file of debtor accounts, and sets rules or parameters for handling each class of accounts. The client then invites its consumer debtor to visit a client-branded website, developed and hosted by us, where the consumer is presented with an opportunity to satisfy the defaulted debt through our DebtResolve system. Through our hosted website, the debtor is allowed to make three or four offers, or select other options to resolve or settle the obligation. If the debtor makes an offer acceptable to our creditor client, payment can then be collected directly through the DebtResolve system and deposited into the client s account. We then bill our client for the applicable fee. The entire resolution process is accomplished online. We completed product development and commenced use of our software solution in 2004. We currently have written contracts in place with two banks, a collection law firm, a collection agency and a national retailer, and are actively processing select portfolios for them. We are using a substantial portion of the net proceeds of our August - September private placement to focus on revenue growth through the acceleration of our marketing and sales initiatives, the formation of strategic alliances with credit report and payment processing providers and collection agency vendors, and the completion of technology enhancements to our DebtResolve system. Since 2007, the default rate of credit card debt in the United States has increased by 400%, according to published industry reports. We believe the most efficient way for creditors to service this significant increase in debt is through the use of an Internet-based system like our DebtResolve system. During 2008 and 2009, we experienced significant financial difficulties as a result of two unsuccessful acquisitions and two failed financing efforts. We were also impacted during this period by the dramatic downturn in the U.S. and global economies particularly because our main clients, banks and other financial institutions, were most severely affected. As a result, we were required to significantly reduce our employee base and take drastic cost containment measures. Beginning in 2009 and through 2010, we successfully eliminated approximately $7.0 million of current cash liabilities from our balance sheet by converting debt to common stock or settling debt at a significant discount to the amounts due. As a result of our balance sheet restructuring and the funding provided by the private placements discussed in this prospectus, we believe that we are a significantly stronger company than we have been over the past three years and are currently signing contracts with new clients. Corporate Information We were incorporated under the laws of the State of Delaware in April 1997. Our principal executive offices are located at 150 White Plains Road, Suite 108, Tarrytown, New York 10591, and our telephone number is (914) 949-5500. We maintain a corporate website at www.debtresolve.com. The contents of our website are not part of this prospectus and should not be relied upon with respect to this Offering. Table of Contents The information in this prospectus is not complete and may be changed. Our selling stockholders may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities, and we are not soliciting offers to buy these securities in any state where the offer or sale is not permitted. PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION, DATED JANUARY 24, 2011 DEBT RESOLVE, INC. 36,936,334 Shares Common Stock This prospectus relates to the sale of up to 36,936,334 shares of our common stock by the selling stockholders listed in this prospectus. These shares consist of 16,000,000 outstanding shares of common stock and 20,936,334 shares of common stock issuable upon exercise of warrants. The shares offered by this prospectus may be sold by the selling stockholders from time to time in the over-the-counter market or other national securities exchange or automated interdealer quotation system on which our common stock is then listed or quoted, through negotiated transactions or otherwise at market prices prevailing at the time of sale or at negotiated prices. We are registering these shares following our August-September 2010 and February-April 2010 private placements. The distribution of the shares by the selling stockholders is not subject to any underwriting agreement. We will receive none of the proceeds from the sale of the shares by the selling stockholders, except upon exercise of the warrants. We will bear all expenses of registration incurred in connection with this offering, but all selling and other expenses incurred by the selling stockholders will be borne by them. Our common stock is quoted on the OTC Bulletin Board under the symbol DRSV.OB. The high and low bid prices for shares of our common stock on January 21, 2011, were $0.06 and $0.01 per share, respectively, based upon bids that represent prices quoted by broker-dealers on the OTC Bulletin Board. These quotations reflect inter-dealer prices, without retail mark-up, mark-down or commissions, and may not represent actual transactions. The selling stockholders may be deemed, and any broker-dealer executing sell orders on behalf of the selling stockholders will be considered, underwriters within the meaning of the Securities Act of 1933. Commissions received by any broker-dealer will be considered underwriting commissions under the Securities Act of 1933. ______________ An investment in these securities involves a high degree of risk. Please carefully review the section titled Risk Factors beginning on page 4. ______________ NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. ______________ The date of this prospectus is ___ ___, 2011 Table of Contents About this Offering This prospectus relates to the public offering, which is not being underwritten, of up to 36,936,334 shares of our common stock by the selling stockholders listed in this prospectus. These shares consist of 16,000,000 outstanding shares of common stock and 20,936,334 shares of common stock issuable upon exercise of warrants. The shares offered by this prospectus may be sold by the selling stockholders from time to time in the over-the-counter market or other national securities exchange or automated interdealer quotation system on which our common stock is then listed or quoted, through negotiated transactions or otherwise at market prices prevailing at the time of sale or at negotiated prices. We will receive none of the proceeds from the sale of the shares by the selling stockholders, except upon exercise of the warrants. We will bear all expenses of registration incurred in connection with this offering estimated to be no more than $50,000, but all selling and other expenses incurred by the selling stockholders will be borne by them. 35,200,000 shares of common stock being offered by this prospectus relate to shares of common stock and warrants issued in our August - September 2010 private placement. At two closings, we completed a private placement to institutional investors and other accredited investors of 16,000,000 shares of our common stock at a purchase price of $0.10 per share, for gross proceeds of $1,600,000. As part of the private placement, the investors were issued warrants to purchase up to 16,000,000 shares of our common stock at an exercise price of $0.25 per share, and National Securities Corporation, the placement agent in the private placement, was issued warrants to purchase up to 1,600,000 shares of our common stock at an exercise price of $0.10 per share and 1,600,000 shares of our common stock at an exercise price of $0.25 per share. For a more detailed discussion regarding the private placement, please see Selling Stockholders - August - September 2010 Private Placement in this prospectus. An additional 1,736,334 shares of common stock being offered by this prospectus relate to warrants issued in our February-April 2010 private placement. At three closings, we received $225,000 in gross proceeds through a private placement of our secured convertible notes to five investors. The notes have a three-year term and accrue interest at a rate of 14% per year, payable at maturity. The investors have the option of converting the principal amount of the notes and accrued interest into shares of our common stock at a conversion price of $0.15 per share. To date, the notes have not been converted, and we are not registering the shares of common stock underlying the notes in this registration statement. The investors in the private placement also received warrants to purchase 1,278,000 shares of our common stock at an exercise price of $0.40 per share. Finance 500, Inc., the placement agent in the February-April 2010 private placement, was issued warrants to purchase 458,334 shares of our common stock at an exercise price of $0.15 per share. For a more detailed discussion regarding the private placement, please see Selling Stockholders - February-April 2010 Private Placement in this prospectus. The number of shares being offered by this prospectus represents approximately 37.2% of our outstanding shares of common stock (assuming the exercise of the warrants included in the number of shares covered by this prospectus) as of January 21, 2011. THE OFFERING Common stock being offered by the selling stockholders: Number of outstanding shares 16,000,000 shares. Number of shares that may be issued upon exercise of warrants 20,936,334 shares. Total 36,936,334 shares. Common stock outstanding (1) 78,259,515 shares. U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _______________ FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 _______________ DEBT RESOLVE, INC. (Exact name of registrant as specified in its charter) Delaware 7389 33-0889197 (State or other jurisdiction of incorporation or organization) (Primary Standard Industrial Classification Code Number) (I.R.S. Employer Identification Number) 150 White Plains Road, Suite 108 Tarrytown, New York 10591 Tel: (914) 949-5500 (Address, including zip code, and telephone number, including area code, of registrant s principal executive offices) ______________ David M. Rainey President and Chief Financial Officer Debt Resolve, Inc. 150 White Plains Road, Suite 108 Tarrytown, New York 10591 Tel: (914) 949-5500; Fax: (914) 428-3044 (Name, address, including zip code, and telephone number, including area code, of agent for service) ______________ Copy to: Spencer G. Feldman, Esq. Greenberg Traurig, LLP MetLife Building 200 Park Avenue 15th Floor New York, New York 10166 Tel: (212) 801-9200; Fax: (212) 801-6400 Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one): Large Accelerated Filer o Accelerated Filer o Non-accelerated Filer o Smaller Reporting Company In considering the acquisition of the common stock described in this prospectus, you should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with information different from that contained in this prospectus. ______________ TABLE OF CONTENTS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001119643_nutra_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001119643_nutra_prospectus_summary.txt
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. You should read the entire prospectus carefully including the section entitled Risk Factors before making an investment decision. Our Company We are a biopharmaceutical company that engages in the acquisition, licensing and commercialization of pharmaceutical products and technologies as well as homeopathic and ethical drugs for the management of pain, neurological disorders, cancer, autoimmune and infectious diseases. An ethical drug is a licensed drug which has obtained Federal Drug Administration ( FDA ) approval after extensive pre-clinical and clinical testing. We seek strategic licensing partnerships to reduce the risks associated with the drug development process. Our wholly owned subsidiary and drug discovery arm, ReceptoPharm, carries out our homeopathic and drug discovery research and clinical development and has fully developed three homeopathic drugs for the treatment of pain: Cobroxin , an over-the-counter pain reliever designed to treat moderate to severe (Stage 2) chronic pain; and Nyloxin and Nyloxin Extra Strength: stronger versions of Cobroxin Our business plan will continue its efforts to produce, market and distribute our Cobroxin and Nyloxin branded products both domestically and internationally. Since October 2009, our operations have centered on the marketing of Cobroxin and Nyloxin and Nyloxin Extra Strength, from which we have earned accumulated revenues of $1,990,006. Additionally, ReceptoPharm has developed two drug candidates: RPI-78M, to treat neurological diseases, including Multiple Sclerosis (MS), Adrenomyeloneuropathy (AMN), Amyotrophic Lateral Sclerosis (ALS or Lou Gehrig s disease ) and Myasthenia Gravis; and RPI-MN, to treat the viral diseases, including HIV/AIDS and Herpes. ReceptoPharm is developing proprietary therapeutic protein products primarily for the prevention and treatment of viral and neurological diseases, including Multiple Sclerosis, Adrenomyeloneuropathy (AMN), Human Immunodeficiency Virus (HIV) and pain in humans. These potential products are subject to FDA approval. ReceptoPharm also provides contract research services through its ISO class 5 and Good Manufacturing Practice ( GMP ) certified facilities. Our wholly-owned subsidiary, Designer Diagnostics, has developed diagnostic test kits designed to be used for the rapid identification of infectious diseases, such as Nontuberculous Mycobacteria (NTM). These diagnostic test kits are currently being validated by National Jewish Hospital in Denver, Colorado. We continue to identify intellectual property and companies in the biotechnology arena with similar synergies to us with which we may potentially be able to enter into arrangements, agreements or to potentially acquire. Corporate Information We are a California corporation. Our principal executive offices are located at 2776 University Drive, Coral Springs, Florida 33065. Our telephone number is (954) 509-0911. The address of our website is www.nutrapharma.com. Information on our website is not part of this prospectus. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. THE OFFERING Securities Offered Common
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001121680_newgistics_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001121680_newgistics_prospectus_summary.txt
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+PROSPECTUS SUMMARY You should read the following summary together with the more detailed information concerning our company, the common stock being sold in this offering, and our consolidated financial statements and related notes appearing in this prospectus and in the documents incorporated by reference in this prospectus. Because this is only a summary, you should read the rest
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001122388_ellie-mae_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001122388_ellie-mae_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
--- /dev/null
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@@ -0,0 +1 @@
+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001123846_exergetic_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001123846_exergetic_prospectus_summary.txt
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+PROSPECTUS SUMMARY The following summary highlights selected information contained in this Prospectus. This summary does not contain all the information you should consider before investing in the securities. Before making an investment decision, you should read the entire Prospectus carefully, including the information set forth under the headings Risk Factors and Management s Discussion and Analysis of Financial Condition and Results of Operations, and the financial statements and the notes to the financial statements included in this Prospectus. Our Company Exergetic Energy, Inc., was founded on May 27, 2010 as a Michigan corporation, and was created to improve upon and expand the various energy options/resources available for prospective customers. While specializing in both renewable and efficient non-renewable sources, Exergetic believes itself to be well positioned to capitalize upon the opportunities that are taking place as the world moves to a more enlightened stance on energy consumption. Specialized Services, Inc. was incorporated in Michigan in January, 1988 and focused on the non-renewable fuel distribution side of the business. On October 5, 2005, SSI entered into an Agreement and Plan of Merger with and into Fifth Avenue Acquisition II Corp., a publicly-traded company. In 2010, SSI merged with Exergetic Energy, Inc. and changed its name to Exergetic Energy, Inc, pursuant to a Final Definitive Agreement dated December 3, 2010 and certain SSI shareholders, wherein Exergetic agreed to purchase (a) 76% of the outstanding shares of SSI; and (b) 1,750,000 shares of common stock. The Purchase Price was $185,250, which is being paid in accordance with the terms of a Promissory Note executed and was finalized on December 10, 2010. The parties have modified the time deadlines in the Agreement and the parties are continuing to operate under the terms of the Agreement as of the date hereof. The non-renewable fuel distribution business of SSI has been incorporated into Exergetic s business lines as a division. As a full service energy company Exergetic Energy, Inc ( Exergetic ) has with its tripartite organizational structure the means to address a myriad of different energy challenges facing our customers. Represented by three distinct divisions: Non-Renewables, Renewables & Energy Optimization, Exergetic is a solutions provider for a myriad of different energy solutions. The three main divisions that exist within Exergetic possess the following strategic objectives: Provide innovative technology driven solutions that meet our client s needs and align with the larger US Energy Plan as defined by the Obama Administration. CALCULATION OF REGISTRATION FEE Title of Each Class of Securities to be Registered Amount to be Registered(1) Proposed Maximum Offering Price per Share Proposed Maximum Offering Price(2) Amount of Registration Fee(3) Common Stock, par value $.0001 per share 15,000,000 .15 $ 2,250,000 $ 261__ (1) This Registration Statement covers the Offering of common stock of the Company according to a Drawdown Equity Financing Agreement and for resale by the selling stockholder named in this Prospectus. The Company is making a good faith estimate on the number of shares that it may issue under the Drawdown Equity Financing Agreement. (2) The proposed maximum Offering price per share and the proposed maximum aggregate Offering price have been estimated solely for the purpose of calculating the amount of the registration fee in accordance with Rules 457(c) under the Securities Act of 1933 on the basis of the average of the high and low prices of the Common Stock on the OTC.QB on April 25, 2011, a date within five (5) trading days prior to the date of the filing of this Registration Statement. (3) Registration fee has been paid via Fedwire The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine. Information contained herein is subject to completion or amendment. A registration statement relating to these securities has been filed with the Securities and Exchange Commission. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This Prospectus shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any State in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such State. This S-1/A is filed to address the failure to include the company s financials in the S-1 filed by the Company on April 25, 2011. Leverage our expertise in government contract work via Small Business Administrations 8A program in order to provide efficient, clean energy solutions to the Departments of Defense and Energy, respectively. Expand the use of renewable energy sources into mainstream customer applications per the use of smart device technology Continue to develop/market/manufacture leading edge technology for the vast array of energy needs that occur within the residential and commercial arenas at optimum price points Our executive offices are located at 440 Burroughs Street, Suite 386, Detroit, Michigan, 48202. Our telephone number is (313) 378-0834. The company maintains its website at www.exergeticenergy.com. Drawdown Equity Financing Agreement. This prospectus relates to the resale of up to 15,000,000 shares of our common stock by Auctus. Auctus will obtain our common stock pursuant to a Drawdown Equity Financing Agreement ( Agreement ), dated February 18, 2011, entered into by Auctus and Exergetic Energy, Inc. The Agreement provides for a Fifteen Thousand and No/100 Dollar ($15,000) non-refundable origination fee be paid to Auctus, $5,000 of which was paid in cash at the signing of the Agreement and $10,000 of which is due out of the proceeds of the first and any subsequent drawdown until the full amount is paid. Although the Company is not mandated to sell shares under the Agreements, the Agreement gives the Company the option to sell to Auctus, up to $10,000,000 worth of our common stock ( Shares ), par value $0.0001 per share over a three year period. At the date of filing, we may not obtain the full $10,000,000 in funding as our average trading price is too low. The $10,000,000 was stated as the total amount of available funding in the Agreement because this was the maximum amount that Auctus agreed to offer us in funding. There is no assurance that the market price of our common stock will increase substantially in the near future. The number of common shares that remains issuable may not be sufficient, dependent upon the share price, to allow us to access the full amount contemplated under the Agreement. Therefore, we may not have access to the remaining commitment under the equity line unless we amend our Articles of Incorporation to increase the number of authorized common shares and/or the market price of our common stock increases substantially. Based on our stock price as of April 25, 2011, the registration statement covers the offer and possible sale of only approximately $ 2,092,500 worth of our shares at current discounted market price of $0.1395 or approximately 93% of $0.15 (our market price at April 25, 2011.) We are authorized to issue 100,000,000 shares of common stock and have 14,863,341 shares issued and outstanding as of April 25, 2011. The number of common shares that remains issuable is lower than the number of common shares we need to issue in order to have access to the full amount under the Agreement. Therefore, we may not have access to the remaining commitment under the equity line unless we amend our Articles of Incorporation to increase the number of authorized common shares and/or the market price of our common stock increase substantially. The maximum amount that we shall be entitled to request from each advance ( Advance ) shall be equal to, at the Company s election, either (i) $250,000 or (ii) 200% of the average daily volume (U.S. market only) of the common stock based on the ten (10) trading days preceding the Drawdown Notice Date (as defined in the Agreement), whichever is larger. The purchase price of the common stock shall be set at ninety-three percent (93%) of the lowest closing bid price of the common stock during the pricing period. The pricing period shall be the five (5) consecutive trading days immediately after the Drawdown Notice Date. If the average trading in our common stock is too low, it is possible that we may not be permitted to draw the full amount of proceeds of the drawdown of $250,000, which may not provide adequate funding for our planned operations. Under the Agreement, Auctus shall immediately cease selling any shares within a Drawdown Notice if the price falls below a fixed-price floor provided by the Company or seventy-five percent (75%) of the average closing bid price of the common stock over the preceding ten (10) trading days prior to the Drawdown Notice Date (the Floor ). Notwithstanding, we may, in our sole and absolute discretion, waive its right with respect to the Floor and allow Auctus to sell any shares below the Floor Price. In the event that we do not waive its right with respect to the Floor, Auctus shall immediately cease selling any shares within the Drawdown Notice if the price falls below the Floor Price. If we do waive the floor price it could cause the share price to fall substantially. SELLING STOCKHOLDERS PROSPECTUS SUBJECT TO COMPLETION, DATED ____________ The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and we are not soliciting offers to buy these securities in any state where the offer or sale is not permitted. EXERGETIC ENERGY, INC. 15,000,000 Shares of Common Stock This prospectus relates to the resale of up to 15,000,000 shares of the common stock of Exergetic Energy, Inc., a Michigan corporation, by Auctus Private Equity Fund, LLC, a Massachusetts limited liability company ( Auctus or Selling Shareholder ), a selling shareholder pursuant to Drawdown Notice under a Drawdown Equity Financing Agreement (the Drawdown Equity Financing Agreement or Agreement that we have entered into with Auctus. The Drawdown Equity Financing Agreement permits us to sell shares of our common stock to Auctus enabling us to drawdown up to $10,000,000 million from Auctus. The registration statement covers the offer and possible sale of approximately $2,250,000 in common stock based on our April 25, 2011 closing market price of $0.15 per share before the discount offered to Auctus. We will not receive any proceeds from the sale of these shares of common stock offered by Auctus. However, we will receive proceeds from the sale of securities pursuant to each Drawdown Notice we send to Auctus. We will bear all costs associated with this registration. The total amount of shares of common stock which may be sold pursuant to this Prospectus would constitute 101% of our issued and outstanding common stock as of April 25, 2011, if all of the shares had been sold by that date. As of April 25, 2011, the closing market price of the Company s common stock was $.15. Based on that price, and disregarding limitations on the number of shares Auctus may hold at any given time and the maximum advance provisions of the Drawdown Agreement, the maximum amount of shares of common stock which may be sold would be 15,000,000, representing 101% of the outstanding common stock as of April 25, 2011 (14,863,341). Auctus is an underwriter within the meaning of the Securities Act of 1933, as amended (the Securities Act ) in connection with the resale of our common stock under the Equity Line of Credit. Auctus will pay us 93 % of the lowest closing best bid price of the common stock during the five consecutive trading days immediately following the date of our notice to Auctus of our election to put shares pursuant to the Drawdown Equity Financing Agreement. There are no underwriting agreements in place. We have agreed to pay all the costs and expenses of this registration. Our shares of common stock are traded on the OTC Markets Group (the OTC.QB ) under the symbol "XNGR.QB." Our Independent Registered Public Accounting Firm has raised substantial doubts about our ability to continue as a going concern. We may amend or supplement this Prospectus from time to time by filing amendments or supplements as required. You should read the entire Prospectus and any amendments or supplements carefully before you make your investment decision. In addition, there is an ownership limit of 4.99% (see section 7.2 (g) of the Agreement) and, neither the company s right to waive the floor price and/or the ownership limit of 4.99% can impact the price at which we can put the shares to Auctus. On the Advance Date, we shall deliver to Auctus the number of shares of the Common Stock registered in the name of Auctus as specified in the Drawdown Notice. In addition, we must deliver the other required documents, instruments and writings required. If we have not paid the fees, expenses, and disbursements of Auctus in accordance with the Agreement, Section 12.4, the amount of such fees, expenses, and disbursements may be deducted by Auctus directly out of the proceeds of the Advance with no reduction in the amount of shares of our Common Stock to be delivered on the Advance Date. Auctus is not required to purchase the shares unless: The shares delivered to Auctus must be done so through a Deposit/Withdrawal at Custodian (DWAC) from a Deposit Trust Company and shares must have proof that they are free of restrictive legends. Our Registration Statement with respect to the resale of the shares of Common Stock delivered in connection with the Advance shall have been declared effective. We shall have obtained all material permits and qualifications required by any applicable state for the offer and sale of the Registrable Securities.. We shall have filed with the SEC in a timely manner all reports, notices and other documents required. All fees set forth in Section 12.4 of the Agreement shall have been paid or withheld. Our transfer agent is DWAC eligible. We believe that we will be able to meet all of the above obligations mandated in Section 2.3 of the Agreement (mentioned above). We are aware that if we fail to perform our obligations and we fail to deliver to Auctus on the Advance Date the shares of Common Stock corresponding to the applicable Advance, Auctus shall suffer financial hardship and therefore we acknowledge that we will be liable for any and all losses, commission, fees, interest, legal fees or any other financial hardships caused to the Investor. Fees and penalties for such losses (liquidated damages) to Auctus shall be paid by the Company in accordance with the following schedule: Payments for Each Number of Days Overdue For each $10,000 Worth of Common Stock 1 $ 100 2 $ 200 3 $ 300 4 $ 400 5 $ 500 6 $ 600 7 $ 700 8 $ 800 9 $ 900 10 $ 1000 Over 10 $1000 + $200 for each Business Day beyond the tenth day THESE SECURITIES ARE SPECULATIVE AND INVOLVE A HIGH DEGREE OF RISK AND SHOULD BE CONSIDERED ONLY BY PERSONS WHO CAN AFFORD THE LOSS OF THEIR ENTIRE INVESTMENT. PLEASE REFER TO RISK FACTORS BEGINNING ON PAGE 9. THE SECURITIES AND EXCHANGE COMMISSION AND STATE SECURITIES REGULATORS HAVE NOT APPROVED OR DISAPPROVED OF THESE SECURITIES, OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. The date of this prospectus is May 3, 2011. TABLE OF CONTENTS Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001126216_nts-inc_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001126216_nts-inc_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..1df4f59d2062f4658143f8a2d757e5202ebf12df
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+U.S. Subscription Agent The U.S. Subscription Agent's main role is to send this Prospectus and the ancillary offering documents to our shareholders who are eligible to participate in the Rights Offering and to collect all of the completed subscription rights certificates and related payments from such shareholders. The U.S. Subscription Agent for the Rights Offering is our transfer agent, Transfer Online, Inc. Israeli Nominee Company The Israeli Nominee Company s main role is to send this Prospectus and the ancillary offering documents to the TASE Clearing House and to collect all of the completed subscription rights certificates and related payments from the TASE Clearing House. For information regarding the process after delivery to the TASE Clearing House, see The Rights Offering - Procedures Applicable to Holders of Shares Through Our Israeli Nominee Company beginning on page 25 of this Prospectus. The Israeli Nominee Company for the Rights Offering is Mizrahi Tefahot Nominee Company Ltd. (Mizrahi Tefahot Hevra Le-Rishumim B.M.) Information Agent The Information Agent's main role is to answer any shareholders questions and provide further information about the Rights Offering. The Information Agent for the Right Offering is Institutional Marketing Services ("IMS") Amex and TASE trading symbol Shares of our common stock are currently listed for quotation on Amex and TASE under the symbol XFN , and any shares issued to you in connection with the Rights Offering will be eligible for trading on the Amex and the TASE. If such shares are issued to Affiliates of the Company they will bear the appropriate restricted legends.
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001126994_cyoptics_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001126994_cyoptics_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..6fd1b31a26ec10bc1fd1e216e073634da63e7929
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+Prospectus summary 1
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001128353_enerteck_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001128353_enerteck_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..4a32188bb6e7988de0a27b64edabeae5fe44566a
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+PROSPECTUS SUMMARY The following summary highlights selected information contained in this prospectus. This summary does not contain all the information you should consider before investing in our securities. Before making an investment decision, you should read the entire prospectus carefully, including the risk factors section, the financial statements and the notes to the financial statements. About Us EnerTeck Corporation (the Company or EnerTeck Parent ) was incorporated in the State of Washington on July 30, 1935 under the name of Gold Bond Mining Company for the purpose of acquiring, exploring, and developing and, if warranted, the mining of precious metals. We subsequently changed our name to Gold Bond Resources, Inc. in July 2000. We acquired EnerTeck Chemical Corp. ( EnerTeck Sub ) as a wholly owned subsidiary on January 9, 2003. For a number of years prior to our acquisition of EnerTeck Sub, we were an inactive, public shell corporation seeking to merge with or acquire an active, private company. As a result of this acquisition, we are now acting as a holding company, with EnerTeck Sub as our only operating business. Subsequent to this transaction, on November 24, 2003 we changed our domicile from the State of Washington to the State of Delaware, changed our name from Gold Bond Resources, Inc. to EnerTeck Corporation and affected a one for 10 reverse common stock split. Unless the context otherwise requires, the terms we, us or our refer to EnerTeck Corporation and its consolidated subsidiary. EnerTeck Sub, our wholly owned operating subsidiary, was incorporated in the State of Texas on November 29, 2000. It was formed for the purpose of commercializing a diesel fuel specific combustion catalyst known as EnerBurn (TM), as well as other combustion enhancement and emission reduction technologies. Nalco/Exxon Energy Chemicals, L.P. ( Nalco/Exxon L.P. ), a joint venture between Nalco Chemical Corporation and Exxon Corporation commercially introduced EnerBurn in 1998. When Nalco/Exxon L.P. went through an ownership change in 2000, our founder, Dwaine Reese, formed EnerTeck Sub. It acquired the EnerBurn trademark and related assets and took over the Nalco/Exxon L.P. relationship with the EnerBurn formulator and blender, and its supplier, Ruby Cat Technology, LLC ( Ruby Cat ). We utilize a sales process that includes detailed proprietary customer fleet monitoring protocols in on-road applications that quantify data and assists in managing certain internal combustion diesel engine operating results while utilizing EnerBurn. Test data prepared by Southwest Research Institute and actual customer usage has indicated that the use of EnerBurn in diesel engines improves fuel economy, lowers smoke, and decreases engine wear and the dangerous emissions of both Nitrogen Oxide (NOx) and microscopic airborne solid matter (particulates). Our principal target markets presently include the trucking, heavy construction and maritime shipping industries. We also expect that revenues will be derived in the future from the railroad, mining and offshore drilling industries. Each of these industries shares certain common financial characteristics, i.e. (i) diesel fuel represents a disproportionate share of operating costs; and (ii) relatively small operating margins are prevalent. Considering these factors, management believes that the use of EnerBurn and the corresponding derived savings in diesel fuel costs can positively effect the operating margins of its customers while contributing to a cleaner environment. Our corporate address is 10701 Corporate Drive, Suite 150, Stafford, Texas 77477. Our telephone number is (281) 240-1787. About this Offering This prospectus relates to the resale of up to 4,000,000 shares of our common stock issuable to Kodiak Capital Group, LLC, a Delaware limited liability company ( Kodiak ), subject to the terms of an Investment Agreement with us dated as of July 15, 2011 (the Investment Agreement ) pursuant to which we have the right to put to Kodiak (the Put ), from time to time during the Open Period (as defined below), up to $4.0 million in shares of our common stock, based on a pre-determined formula (the Financing ). Accordingly, this prospectus relates to the resale of up to 4,000,000 shares of our common stock by Kodiak. For the purpose of determining the number of shares of common stock to be offered by this prospectus, we have assumed that we will issue not more than 4,000,000 shares pursuant to the exercise of the Put. We currently do not intend to exercise the Put in a manner which would result in our issuance of more than 4,000,000 shares, but if we were to exercise the Put in that manner, we would be required to file a subsequent registration statement with the Securities and Exchange Commission (the SEC ) and that registration statement would have to be declared effective prior to the issuance of any additional shares. Under the terms of the Investment Agreement, we have the right to deliver from time to time a written notice (the Put Notice ) to Kodiak stating the dollar amount of shares of common stock we intend to sell to Kodiak with the price per share based on the following formula: ninety percent (90%) of the lowest daily volume-weighted average price of the Company s common stock during the period beginning on the date of the Put Notice and ending five (5) days thereafter. The amount that we are entitled to sell to Kodiak under any single Put Notice will be equal to, at the Company s election, an amount up to but not exceeding the greater of (i) 200% of the average daily volume of the common stock for three (3) trading days prior to the date of the applicable Put Notice multiplied by the average of the three (3) daily closing bid prices immediately preceding the date of the applicable Put Notice, or (ii) $200,000. Under the Investment Agreement, the Company may not deliver the Put Notice until after the resale of the shares has been registered pursuant to a registration statement filed with the Securities and Exchange Commission. Additionally, provided that the Investment Agreement does not terminate earlier, the Company has a twenty-four (24) month period, beginning on the trading day immediately following the effectiveness of the registration statement, during which it may deliver the Put Notice or Notices to Kodiak (the Open Period ). In addition, the Company cannot submit a new Put Notice until the closing of the previous Put Notice, and in no event shall Kodiak be entitled to purchase that number of shares of common stock which when added to the sum of the number of shares of common stock already beneficially owned by Kodiak would exceed 9.99% of the number of shares of common stock outstanding on the applicable closing date. As part of the consideration for the Financing, we have agreed to pay Kodiak a document preparation fee of $10,000 and we have agreed to issue to Kodiak an additional 200,000 shares of newly-issued common stock upon completion of the first closing of the Financing which is no less than $200,000. The Investment Agreement also provides that the Company shall not be entitled to deliver a Put Notice and Kodiak shall not be obligated to purchase any shares of common stock unless each of the following conditions are satisfied: (i) a registration statement has been declared effective and remains effective for the resale of the shares until the closing with respect to the subject Put Notice; (ii) at all times during the period beginning on the date of the Put Notice and ending on the date of the related closing, the Company s common stock has been listed on the Principal Market as defined in the Investment Agreement (which includes, among others, the Over-the-Counter Bulletin Board and the OTC Market Group s OTC Link quotation system) and shall not have been suspended from trading thereon for a period of two (2) consecutive trading days during the Open Period; (iii) the Company has complied with its obligations and is otherwise not in breach of or in default under the Investment Agreement, the Registration Rights Agreement or any other agreement executed in connection therewith; (iv) no injunction has been issued and remains in force, and no action has been commenced by a governmental authority which has not been stayed or abandoned, prohibiting the purchase or the issuance of the shares; and (v) the issuance of the shares will not violate any shareholder approval requirements of the market or exchange on which the Company s common stock are principally listed. The Investment Agreement will terminate when any of the following events occur: (i) Kodiak has purchased an aggregate of $4.0 million of the Company s common stock, (ii) on the date which is twenty-four (24) months following the effectiveness of the registration statement, or (iii) upon written notice from the Company to Kodiak. Similarly, the Investment Agreement, may, at the option of the non-breaching party, terminate if Kodiak or the Company commits a material breach, or becomes insolvent or enters bankruptcy proceedings. We have also entered into a Registration Rights Agreement with Kodiak on July 15, 2011. Pursuant to the Registration Rights Agreement, we are obligated to file a registration statement registering the resale of the shares covered by the Investment Agreement. All of the shares, when sold, will be sold by Kodiak. Kodiak has indicated that it will resell the shares in the open market, resell our shares to other investors through negotiated transactions, or hold our shares in its portfolio. This prospectus covers the resale of our common stock by Kodiak either in the open market at prevailing market prices or to other investors through negotiated transactions. Kodiak s obligations under the Investment Agreement are not transferrable and this registration statement does not cover sales of our common stock by transferees of Kodiak. This prospectus also covers such indeterminate number of additional shares of common stock as may become issuable upon stock splits, stock dividends or similar transactions in accordance with Rule 416 promulgated under the Securities Act of 1933. We will not receive any proceeds from the sale of the shares of common stock by Kodiak. The Offering Common stock offered: Up to 4,000,000 shares of our common stock issuable to Kodiak Capital Group, LLC ( Kodiak ) subject to the terms of an Investment Agreement with us dated as of July 15, 2011 (the Investment Agreement ) pursuant to which we have the right to put to Kodiak (the Put ), from time to time during the Open Period, up to $4.0 million in shares of our common stock, based on a pre-determined formula. Capital stock outstanding: As of the date hereof, we had outstanding 22,419,683 shares of common stock; warrants to purchase 3,990,048 shares of common stock; and options to purchase 553,401 shares of common stock. Proceeds to the Company: We will not receive any proceeds from the sale of the 4,000,000 shares of common stock subject to sale by the selling stockholders under this prospectus. However, we will receive proceeds from the sale of securities pursuant to our exercise of the Put. Any net proceeds we receive from the selling stockholders through our exercise of the Put will be used for working capital and general corporate purposes. Stock Symbol: ETCK
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001129048_weedhire_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001129048_weedhire_prospectus_summary.txt
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+PROSPECTUS SUMMARY
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. You should read the following summary together with the more detailed information appearing in this prospectus, especially the Risk Factors section beginning on page 11 and our consolidated financial statements and related notes, before deciding whether to purchase shares of our common stock. As used in this prospectus, unless the context otherwise requires, references to we, us, our and Zipcar refer to the consolidated operations of Zipcar, Inc., and its subsidiaries. Zipcar, Inc. Overview Zipcar operates the world s leading car sharing network. Founded in 2000, Zipcar provides the freedom of wheels when you want them to members in major metropolitan areas and on university campuses. We provide over 560,000 members, also known as Zipsters , with self-service vehicles that are located in reserved parking spaces throughout the neighborhoods where they live and work. Our vehicles are available for use by the hour or by the day through our reservation system, which is available by phone, internet or wireless mobile devices. Once the vehicle is reserved, a Zipster simply unlocks the vehicle with his or her keyless entry card (called a Zipcard ) and drives away. Our all-inclusive rates include gas and insurance so Zipsters can easily estimate the total cost of their trips. Zipsters choose the make, model, type and even the color of the Zipcar they want depending on their specific needs and desires for each trip and the available Zipcars in their neighborhood. Upon returning the Zipcar, the member locks the vehicle and walks away. We believe Zipcar provides its members a convenient, cost-effective and enjoyable alternative to car ownership. We operate our membership-based business in 14 major metropolitan areas and on more than 230 college campuses in the United States, Canada and the United Kingdom. We target large, densely populated markets with high parking costs and strong public transportation systems. Based on these criteria, we initially focused our operations in three metropolitan areas: Boston, New York and Washington, D.C. These metropolitan areas have since developed into large-scale car sharing markets that continue to grow. We then applied our knowledge and experience to develop and grow additional markets, such as San Francisco, Chicago, Baltimore, Toronto, Vancouver and London as well as to university campuses. We further increased our geographic footprint to include Seattle, Portland, Atlanta, Philadelphia and Pittsburgh through a merger with Flexcar, Inc. in 2007. Our revenue has grown from $30.7 million in 2006 to $186.1 million in 2010. We incurred a net loss of $14.1 million in 2010. We generated an Adjusted EBITDA of $4.2 million in 2010. We believe that Adjusted EBITDA is an important measure of our operating performance because it allows management, investors and analysts to evaluate and assess our core operating results after removing the impact of changes in our capital structure, income tax status and method of vehicle financing, and other items of a non-operational nature that affect comparability. For a definition of Adjusted EBITDA and reconciliations of Adjusted EBITDA to net income, see the section entitled Key financial and operating metrics, Non-GAAP financial measures and supplemental disclosure. In April 2010, we acquired Streetcar Limited, a car sharing service in the United Kingdom. We believe our presence there will help support our expansion into other European markets by providing an existing infrastructure that can serve as a European center of operations and management experienced in operating in Europe. Streetcar s revenue was $23.1 million in 2009. In June 2010, we responded to a May 2010 inquiry letter from the U.K. Office of Fair Trading, or OFT, seeking information relating to our acquisition of Streetcar and entered into an agreement to hold the two companies separate while this transaction was under review. Table of Contents The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. PRELIMINARY PROSPECTUS Subject to Completion. Dated April 7, 2011 8,333,333 Shares Common Stock This is an initial public offering of shares of common stock of Zipcar, Inc. Zipcar is offering 6,666,667 of the shares to be sold in the offering. The selling stockholders identified in this prospectus are offering an additional 1,666,666 shares. Zipcar will not receive any of the proceeds from the sale of the shares being sold by the selling stockholders. Prior to this offering, there has been no public market for the common stock. It is currently estimated that the initial public offering price per share will be between $14.00 and $16.00. Our common stock has been approved for listing on the Nasdaq Global Select Market under the symbol ZIP . See Risk Factors on page 11 to read about factors you should consider before buying shares of the common stock. Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense. Per Share Total Initial public offering price $ $ Underwriting discount $ $ Proceeds, before expenses, to Zipcar $ $ Proceeds, before expenses, to the selling stockholders $ $ To the extent that the underwriters sell more than 8,333,333 shares of common stock, the underwriters have the option to purchase up to an additional 1,250,000 shares from certain management selling stockholders, including our chief executive officer, president and chief operating officer and chief financial officer, and from certain other selling stockholders pursuant to the order of priority set forth in the registration rights agreement by and among Zipcar and the parties thereto, at the initial public offering price less the underwriting discount. The underwriters expect to deliver the shares against payment in New York, New York on , 2011. Goldman, Sachs & Co. J.P. Morgan Cowen and Company Needham & Company, LLC Oppenheimer & Co. Prospectus dated , 2011. Table of Contents The OFT subsequently referred the matter to the Competition Commission, or CC. In December 2010, the CC concluded its inquiry and issued a final determination that it did not expect our acquisition of Streetcar to lead to a substantial lessening of competition in the United Kingdom. We commenced the integration of our London operations with those of Streetcar following the CC s final determination. We believe we have several significant advantages over our competitors. First, we offer our members the largest fleet of car sharing vehicles in nearly all the major markets in which we operate. No other car sharing service offers the size and diversity of our Zipcar fleet or operates across as many cities as we do. Second, because our business is solely focused on car sharing, we are committed to ensuring the highest quality member experience. Third, we have a proprietary and scalable technology platform specifically designed for car sharing. Fourth, Zipcar is one of the most recognized brands in car sharing. Lastly, we have accumulated ten years of car sharing data, which we can leverage to drive loyalty and growth by continually enhancing our member experience. No other car sharing service in the United States has been operating as long as we have. Operating a self-service car sharing business within and across major metropolitan areas requires a technology platform capable of managing the complex interactions of real-time, location-based activities. Our custom-designed technology platform supports a fully integrated set of activities across our rapidly growing operations, including member sign-up, online and wireless reservations, keyless vehicle access, fleet management and member management. Our technology also enables us to collect and analyze vast amounts of member usage and fleet operations information to enhance the Zipster experience. On the member side, our system also provides two-way texting, an integrated in-vehicle toll collection system and the first car sharing iPhone application. We have identified more than 100 global major metropolitan areas and hundreds of universities as attractive markets for car sharing. Today, we operate only in 14 of these major metropolitan areas, which we believe have tremendous further potential for growth. We currently estimate that ten million driving age residents, business commuters and university community residents live or work within a short walk of a Zipcar in the markets we serve. We do not expect that all of these driving age residents will become members of Zipcar or any other car sharing service. In addition, some may not qualify for membership in a car sharing service for many reasons, including lacking a valid driver s license. Nevertheless, we expect that as we increase our fleet and our geographic footprint, the number of driving age residents living or working within a short walk of a Zipcar will increase. We intend to continue to grow our business by increasing awareness and adoption in existing markets, expanding into new international and domestic markets, broadening our relationships with existing members and building relationships with businesses, universities and governmental organizations. Our Solutions We believe the benefits we offer through our solutions are simple and compelling: A cost saving alternative to car ownership. Convenient neighborhood access to a varied fleet of makes and models. Freedom and flexibility beyond other alternatives such as taxis, public transportation and traditional car rental. A socially responsible and sustainable lifestyle. Table of Contents Table of Contents We offer four primary solutions: Individual Membership. We offer a solution for individuals seeking an alternative to the high cost of urban car ownership. In a member survey we conducted, the majority of respondents report selling a car or electing not to buy a car when they join Zipcar. As a result, we estimate that the percentage of Zipster household income spent on transportation is substantially less than the national average, making urban life more affordable. Zipcar for Universities. We provide college students, faculty, staff and local residents living on or near campuses with access to Zipcars while helping university administrators maximize the use of limited on-campus parking and reduce campus congestion. Zipcar for Business and Zipcar for Government. We help businesses and local governments save money, meet environmental sustainability goals and reduce parking requirements by providing their employees with access to Zipcars. We have also partnered with residential property managers and developers who provide their commercial and residential tenants with access to Zipcar memberships and Zipcars. FastFleet. We offer a fleet management solution, called FastFleet, on a software-as-a-service, or SaaS, basis to organizations that manage their own fleets of vehicles. FastFleet enables these organizations to maximize efficiency and reduce the administrative costs of managing their own fleets by monitoring and improving per-vehicle utilization levels. Market Opportunity We believe the global addressable market for car sharing is substantial and in the early stages of development. Given our estimate that ten million driving age residents, business commuters and university community residents live or work within a short walk of a Zipcar, we believe the adoption in our current cities represents only a small fraction of the existing market opportunity. Additionally, we believe there are many attractive international and domestic markets with very limited or no car sharing services today. Zipcar is building a new lifestyle brand based on our mission, Enabling Simple and Responsible Urban Living. Our brand building and business are supported by a number of important global trends that we believe will continue to aid in the development of a large global car sharing market: Urbanization. As population density increases in urban areas, traffic and pollution increase. To address the negative effects of increasing urbanization, local governments are searching for solutions, like car sharing, to make cities more livable for urban residents. Affordability. The cost of living in urban areas is high and increasing. The costs associated with urban car ownership make affordable living even more challenging. Car sharing provides a convenient and cost effective alternative. Trends Toward Self-Service and Pay-Per-Use Consumption. The increased usage of online and mobile services for shopping, banking, travel and entertainment has heightened consumer interest in accessing goods and services anytime, anywhere and paying only for what they use. We believe that car sharing is a natural extension of this trend in consumer behavior. Focus on Sustainability. We believe an important and growing population of consumers, businesses, universities and governments is motivated to adopt and promote sustainable transportation solutions. Table of Contents TABLE OF CONTENTS Page PROSPECTUS SUMMARY 1
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+PROSPECTUS SUMMARY The items in the following summary are described in more detail later in this prospectus. This summary provides an overview of selected information and does not contain all of the information you should consider before investing in our common stock. Therefore, you should also read the more detailed information set out in this prospectus, including the financial statements and the related notes appearing elsewhere in this prospectus and the information set forth under the headings "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations," in each case appearing elsewhere in this prospectus. Overview We are a leading provider of disk-based storage systems that enable mid-sized organizations to store digital information. Our products are optimized for the efficient storage and protection of unstructured data, the type of digital information that mid-sized organizations are producing in increasingly greater quantities. Unstructured data generally refers to data that is fixed and not subject to frequent change, such as digital records, e-mail, medical images, scientific data and video. Our systems are specifically designed for the growing data storage needs of mid-sized organizations by providing a small footprint, low power use, scalability, ease of use, and cost-effectiveness while delivering the enterprise-class reliability, features and performance that are sought by these mid-sized organizations. Our storage systems incorporate innovative technologies, such as advanced power management and capacity optimization, to significantly lower the initial and ongoing cost of storage for our customers compared to typical storage solutions. We sell our products through our network of over 600 channel partners, including value added resellers, or VARs, original equipment manufacturers, or OEMs, and systems integrators, which enables us to leverage an extensive worldwide channel network to access our broad and diverse target customer base and to cost-effectively scale our business. We serve several industry vertical markets including medical, digital surveillance, local government, scientific and research, museums and archives, law enforcement, gaming, video and entertainment, financial, transportation and cloud storage. To date, we have shipped over 27,000 systems in more than 60 countries. Our storage systems are currently being utilized by organizations worldwide, including traditional small-and medium-sized organizations, branch offices of large enterprises, federal, state and local government agencies and some large organizations with unique unstructured data storage needs. Our systems target the specific needs of these customers by: providing an optimal entry point for mid-sized organizations with a multi-tiered, scalable architecture that can expand with the customers' requirements; offering enterprise-class reliability, accessibility, integrity and security of stored data; providing industry-leading densities, which reduce the overall storage footprint and the total cost of ownership; significantly reducing power consumption and cooling costs per terabyte of storage; providing enterprise-class storage features such as multi-tiered storage, multi-protocol storage, high-availability and replication, specifically designed for these mid-sized organizations; Pre-Effective Amendment No. 8 To FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Table of Contents being available through a global channel network oriented to mid-sized organizations worldwide; and providing a system that is easy to set up, simple to use and requires little maintenance. Industry Background The Rapid Growth of Unstructured Data in Mid-Sized Organizations The amount of unstructured data being created, stored, archived and protected on disk-based storage systems by mid-sized organizations is growing rapidly. Unstructured data, including digital records, e-mail, medical images, scientific data and video, is being created faster than data generated from traditional data center applications such as transaction-oriented database applications. Additionally, unstructured data is typically replicated in multiple instances for data protection and stored for longer periods of time. Evolving business practices and regulations are also changing the requirements placed on systems that store and manage unstructured data and are driving the need for readily-available, long-term storage. Additionally, mid-sized organizations are increasingly migrating their long-term storage of information from tape and optical media to disk. Some of the key growth drivers creating increased amounts of unstructured data in the mid-sized organization market include: Increasing number of applications that create unstructured data; Evolving business practices, such as the transition to digital records and increased data retention for business and regulatory requirements; Larger-sized and more frequently shared files; and Growing importance of data protection and availability. Limitations of Traditional Solutions for the Mid-Sized Organization Market Mid-sized organizations face the particular challenge of implementing storage systems to manage their newly growing amounts of unstructured data, which requires greater storage capacity and results in increased system acquisition and management costs. Data growth is taxing organizations in critical areas such as staffing, training, disaster recovery, capacity management, power and cooling, and regulatory compliance. We believe that mid-sized organizations remain underserved by larger enterprise storage vendors, who traditionally have not effectively addressed the needs of the mid-sized organization market in terms of ease of use, total cost of ownership, feature sets and delivery model. Many storage solutions have been designed and priced for larger enterprises with complex storage needs and substantial IT staff; however, many mid-sized organizations do not have the resources to implement and support these larger complex solutions which often include costly feature sets that may not be required for these mid-sized organizations. Also, the storage system requirements of mid-sized organizations are continuing to expand and these organizations increasingly seek certain features and functionality provided by storage systems targeting large enterprises. As a result, a substantial need has developed among mid-sized organizations for cost-effective storage systems that provide enterprise-class features such as seamless capacity growth, high-reliability, advanced data protection and ease-of-management. Our Solutions Our focus on providing first-to-market technologies has made us a leading provider of innovative disk-based storage systems that enable our end users in mid-sized organizations to store unstructured data efficiently, intelligently, economically and securely. Our storage solutions are specifically designed for the unique needs of this large and growing market segment, which we believe has a proportionally Table of Contents greater need for capacity-optimized storage. We believe this focus has enabled us to deliver storage systems with particular benefits for mid-sized organizations. These benefits include: Flexible storage platform. Our flexible storage platform enables many storage technologies to be incorporated in one system. This is particularly useful to mid-sized organizations that prefer a single-system solution over having to buy many disparate systems. We pioneered storage systems that featured simultaneous multi-protocol access, and we designed our systems to be multi-tiered, supporting high-speed and high-cost SSD, mid-speed and mid-cost SAS and low-speed and low-cost SATA drives in one chassis. Solutions developed for mid-sized organizations. Mid-sized organizations can purchase our storage solutions with the capacity and software features appropriate for their needs at a lower entry point when compared to traditional enterprise storage solutions. These systems have the ability to scale both capacity and additional functionality as their needs grow at a much lower cost than has traditionally been available. We provide an optimized mix of enterprise-class features and functionality scaled for the needs of mid-sized organizations. Optimized for storing unstructured data. Our systems include features specifically designed for storing unstructured data, including capacity optimization, low power usage, and technology designed to maximize performance from SATA drives, which are the optimal drives for unstructured data due to their cost and capacity. Easy to use. We focus our product development and design efforts on ease of use. Our storage systems can be managed by IT generalists without the need for professional services or additional software. Technology-driven, lower total cost of ownership. We develop innovative technology to reduce the entry point, acquisition, maintenance and ancillary costs associated with digital storage. Three principal storage products have formed the core of our flexible storage platform since 2006: the Beast, the Boy and Assureon. We recently announced three new additions to our flexible storage platorm: the E60, the E18 and the E60X. The E60 and the E18 are enterprise-class storage systems designed to meet the needs of organizations that store significant amounts of data. The E60X is a version of the E60 that is cost-reduced by not including processors and software. The E60X is connected to either of the E60, the E18 or the Beast to provide an additional 60 drives of expansion capacity. The Beast and Boy share a common architecture and are different system configurations that incorporate the same bundled storage system software. On a standalone basis, the Beast and Boy operate as fully functional block storage systems, specifically designed to meet the needs of mid-sized organizations. Our storage systems can also be integrated with optional storage applications software packages to create "turnkey" configurations such as our archive-focused Assureon. Our storage applications software runs on standard, off-the-shelf servers, which are packaged with the storage systems and delivered as integrated products. Strategy Our goal is to be a leading provider of disk-based storage solutions for the storage of unstructured data at mid-sized organizations worldwide. Key elements of our strategy include: Targeting mid-sized organizations' use of capacity-optimized storage; Evolving and expanding our flexible storage platform; 555 St. Charles Drive, Suite 202 Thousand Oaks, California 91360 (805) 418-2700 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) Table of Contents Expanding our software content; and Being the leading independent storage provider to the channel. Corporate Information We were incorporated in Delaware in November 2000 and are currently headquartered in Thousand Oaks, California, with 147 employees throughout North America and Europe as of December 31, 2010. Our website address is www.nexsan.com. The information contained on our website is not a part of this prospectus. We have three principal operating subsidiaries, Nexsan Technologies Incorporated, a Delaware corporation, Nexsan Technologies Limited, a United Kingdom, U.K., corporation, and Nexsan Technologies Canada Inc., a Canadian corporation. Office Location Our principal executive offices are located at 555 St. Charles Drive, Suite 202, Thousand Oaks, California 91360, and our telephone number is (805) 418-2700. Philip Black President and Chief Executive Officer Nexsan Corporation 555 St. Charles Drive, Suite 202 Thousand Oaks, California 91360 (805) 418-2700 (Name, address, including zip code, and telephone number, including area code, of agent for service) Table of Contents The Offering Common stock offered shares Common stock offered by selling stockholder shares Common stock to be outstanding after this offering shares Over-allotment option shares Use of proceeds We intend to use the proceeds of this offering for working capital and other general corporate purposes. We may use a portion of the proceeds for potential acquisitions. See "Use of Proceeds." NASDAQ Global Market symbol NXSN The common stock outstanding after this offering is based on 11,389,552 shares outstanding as of December 31, 2010, IPO Bonus Shares to be issued upon completion of this offering, see "Compensation Discussion and Analysis Equity-Based Incentives," and excludes: 2,805,985 shares issuable upon exercise of options outstanding as of December 31, 2010, at a weighted average exercise price of $6.80 per share, including 403,570 shares subject to options that are subject to call options held by us, exercisable as of December 31, 2010 at $9.79 per share; 294,865 restricted stock units, or RSUs, outstanding as of December 31, 2010; 85,500 shares issuable upon exercise of options granted between January 1, 2011 and February 28, 2011, at an exercise price of $7.80 per share; 292,318 shares issuable upon exercise of warrants outstanding as of December 31, 2010, at a weighted average exercise price of $8.03 per share; and 490,360 shares reserved for future issuance under our 2001 stock plan as of February 28, 2011 and to be transferred into our 2011 equity incentive plan and 193,045 shares reserved for future issuance under our 2011 employee stock purchase plan, such plans to be effective upon completion of this offering. Except as otherwise noted, all information in this prospectus: reflects the filing of our restated certificate of incorporation prior to the completion of this offering; reflects the conversion of all of our outstanding shares of convertible preferred stock into an aggregate of 6,516,176 shares of common stock, effective upon the completion of this offering; reflects the exchange of all of the outstanding exchangeable shares of our wholly owned Canadian subsidiary into an aggregate of 464,283 shares of our common stock; Table of Contents value. Inherent in our estimates of market value in determining inventory valuation reserves are estimates related to economic trends, future demand for our products and technological obsolescence of our products. If future demand or market conditions are less favorable than our projections, additional inventory valuation reserves could be required and would be reflected in cost of revenue in the period in which the reserves are taken. Once a reserve is established, it is maintained until the related inventory is sold or scrapped. Allowance for Doubtful Accounts We review our allowance for doubtful accounts on an ongoing basis by assessing individual accounts receivable. Risk assessment for these accounts includes historical collections experience with the specific account and with our similarly-situated accounts coupled with other related credit factors that may evidence a risk of default and loss to us. Accordingly, the amount of this allowance will fluctuate based upon changes in revenue levels, collection of specific balances in accounts receivable and estimated changes in channel partner credit quality or likelihood of collection. If the financial condition of our channel partners were to deteriorate, resulting in their inability to make payments, additional allowances may be required. The allowance for doubtful accounts represents management's best estimate, but changes in circumstances, including unforeseen declines in market conditions and collection rates, may result in additional allowances in the future or reductions in allowances due to future recoveries. Results of Operations The following table sets forth selected consolidated statements of operations data as a percentage of revenue for each of the periods indicated: Year Ended June 30, Six Months Ended December 31, 2008 2009 2010 2009 2010 (unaudited) Revenue 100 % 100 % 100 % 100 % 100 % Cost of revenue 65 58 60 59 56 Gross profit 35 42 40 41 44 Operating expenses: Research and development 9 9 9 10 9 Sales and marketing 17 18 22 22 23 General and administrative 10 8 7 8 7 Postponed public offering costs 5 1 0 0 0 Total operating expenses 41 35 38 39 39 Income (loss) from operations (6 ) 6 2 2 5 Other income (expense), net (3 ) 0 0 0 0 Income (loss) before income taxes (9 ) 6 1 2 5 Income tax benefit (expense) 0 0 0 (1 ) 0 Net income (loss) (9 )% 6 % 1 % 1 % Copies to: William R. Schreiber, Esq. Jeffrey R. Vetter, Esq. Fenwick & West LLP Silicon Valley Center 801 California Street Mountain View, California 94041 (650) 988-8500 Craig W. Adas, Esq. Alexander D. Lynch, Esq. Weil, Gotshal & Manges LLP 201 Redwood Shores Parkway Redwood Shores, California 94065 (650) 802-3000 Table of Contents assumes the issuance of IPO Bonus Shares on an after-tax basis, based on an assumed initial public offering price of $ per share of our common stock, immediately prior to the completion of this offering; reflects, on a retroactive basis, a 10.5-for-1 reverse split of our common stock, Series A and C convertible preferred stock and exchangeable shares effected in March 2010; and assumes no exercise of the underwriters' over-allotment option. Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act of 1933, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act of 1933, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act of 1933, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company CALCULATION OF REGISTRATION FEE Title of Each Class of Securities to be Registered Proposed Maximum Aggregate Offering Price(1)(2) Amount of Registration Fee(3) Common Stock, $0.001 par value $69,000,000.00 $4,919.70 (1)Includes shares the underwriters have the option to purchase to cover over-allotments, if any. (2)Estimated pursuant to Rule 457(o) solely for the purpose of calculating the amount of the registration fee. (3)Previously paid. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment that specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. (1)Includes stock-based compensation expense as follows: Year Ended June 30, Six Months Ended December 31, 2008 2009 2010 2009 2010 (unaudited) (in thousands) Cost of revenue $ 16 $ 18 $ 79 $ 12 $ 77 Research and development 103 19 255 130 199 Sales and marketing 1,099 (15 ) 417 817 556 General and administrative 2,255 315 657 475 470 Total stock-based compensation expense $ 3,473 $ 337 $ 1,408 $ 1,434 $ 1,302 (Footnotes continued on following page) Table of Contents The information in this prospectus is not complete and may be changed. We and the selling stockholder may not sell these securities until the Securities and Exchange Commission declares our registration statement effective. This prospectus is not an offer to sell these securities, and neither we nor the selling stockholder are soliciting an offer to buy these securities in any state where the offer or sale is not permitted. SUBJECT TO COMPLETION. DATED MARCH 9, 2011. Shares NEXSAN Common Stock $ per share (1)Each $1.00 increase or decrease in the assumed initial public offering price of $ per share would increase or decrease, respectively, the amount of cash and cash equivalents, working capital, total assets and total stockholders' equity on a pro forma as adjusted basis by approximately $ million, assuming the number of shares offered by us, as set forth on the cover of this prospectus, remains the same and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us. Nexsan Corporation is selling shares of our common stock and the selling stockholder named in this prospectus is selling an additional 116,000 shares. We will not receive any of the proceeds from the sale of the shares by the selling stockholder. This is an initial public offering of our common stock. We currently expect the initial public offering price to be between $ and $ per share. Our common stock has been approved for listing on the NASDAQ Global Market under the symbol "NXSN," subject to official notice of issuance. Table of Contents
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+Prospectus Summary 1
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+Prospectus summary 1
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+This summary highlights information contained elsewhere in this prospectus. It does not contain all the information that you may consider important in deciding whether to participate in the exchange offer. Therefore, you should read the entire prospectus carefully, including, in particular, the section entitled Risk Factors and the financial statements and the related notes to those statements. Unless otherwise indicated or the context otherwise requires, all references in this prospectus to Michael Foods Group , our company , we , our , ours , us or similar terms refer to Michael Foods Group, Inc., together with its subsidiaries. Michael Foods, Inc., a wholly owned subsidiary of Michael Foods Group, is referred to as Michael Foods . MFI Holding Corporation is referred to as MFI Holding and MFI Midco Corporation is referred to as Parent . The Company We are a diversified producer and distributor of food products in three areas egg products, potato products and cheese and other dairy case products. Our Egg Products Division produces and distributes egg products to the foodservice, retail and food ingredient markets. Our Potato Products Division processes and distributes refrigerated potato products to the foodservice and retail grocery markets in North America. Our Crystal Farms Division markets a broad line of refrigerated grocery products to U. S. retail grocery outlets, including branded and private-label cheese, eggs and egg products, bagels, butter, muffins, potato products and ethnic foods. We have a strategic focus on value-added processing of food products. The strategy is designed to capitalize on key food industry trends, such as (i) the desire for improved safety and convenience, (ii) the focus by foodservice operators on reducing labor and waste, and (iii) the long-term trend toward food consumption away from home, which continues to be slowed somewhat by the recent economic conditions. We believe our operational scale, product breadth and geographic scope make us an attractive and important strategic partner for our customers. The Egg Products Division, comprised of our wholly owned subsidiaries M. G. Waldbaum Company ( Waldbaum ), Papetti s Hygrade Egg Products, Inc. ( Papetti s ), Abbotsford Farms, Inc., and MFI Food Canada Ltd., produces, processes and distributes numerous egg products. Based on management estimates, we believe that our Egg Products Division is the largest processed egg products producer in North America. Our principal value-added egg products are ultrapasteurized, extended shelf-life liquid eggs ( Easy Eggs and Excelle ), egg white based egg products ( All Whites and Better n Eggs ), and hardcooked and precooked egg products ( Table Ready ). Our other egg products include frozen, liquid and dried products that are used as ingredients in other food products, as well as organic and cage free egg products. Our Egg Products Division distributes its egg products to food processors and foodservice customers primarily throughout North America, with limited international sales in the Far East, South America and Europe. Our extended shelf-life liquid eggs (the largest selling product line within the Division) and other egg products are marketed to a wide variety of foodservice and food ingredients customers. The Egg Products Division also is a supplier of egg white-based egg products sold in the U.S. retail and foodservice markets. Our Crystal Farms Division markets a wide range of refrigerated grocery products directly to retailers and wholesale warehouses. We believe that the Crystal Farm Division s strategy of offering quality branded products at a good value relative to national brands has contributed to the Crystal Farm Division s growth. Crystal Farms cheese is positioned in the mid-tier pricing category and is priced below national brands such as Kraft and Sargento and above store brands (private label). The Crystal Farms Division s distributed refrigerated products, which consist principally of cheese, eggs and egg products, bagels, butter, muffins, potato products and ethnic foods, are supplied by various vendors or our other divisions, to Crystal Farms specifications. Cheese accounted for approximately 69% of the Crystal Farms Division s 2010 sales. While we do not produce cheese, we operate a cheese packaging facility in Lake Mills, Wisconsin, which processes and packages various cheese products for our Crystal Farms brand cheese business and for various private-label customers. Table of Contents Table of Additional Registrants Exact Name of Registrant as Specified in its Charter (Or Other Organizational Document) State or Other Jurisdiction of Incorporation or Organization I.R.S Employer Identification Number Address and Telephone Number of Registrant s Principal Executive Offices Abbotsford Farms, Inc. Minnesota 26-1615833 * Casa Trucking, Inc. Minnesota 22-3493806 * Crystal Farms Refrigerated Distribution Company Minnesota 41-1669454 * Farm Fresh Foods, Inc. Nevada 91-2086470 * MFI Food Asia, LLC Delaware 00-0000000 * MFI International, Inc. Minnesota 27-1428245 * Michael Foods, Inc. Delaware 13-4151741 * Michael Foods of Delaware, Inc. Delaware 41-1579532 * Minnesota Products, Inc. Minnesota 41-1394918 * M. G. Waldbaum Company Nebraska 47-0445304 * Northern Star Co. Minnesota 41-1468193 * Papetti s Hygrade Egg Products, Inc. Minnesota 22-3493805 * * Address and telephone number of Registrant s principal executive office is same as that of Michael Foods Group, Inc. The primary industrial classification number for each additional Registrant is 2015. Table of Contents The Crystal Farms Division has expanded its market area using both company-owned and leased facilities and independent distributors. The Crystal Farms Division s market area is the United States, with a large customer concentration in the central United States. We sell our products to a large number of retail stores, a majority of which are served via customers warehouses. The Crystal Farms Division also maintains a fleet of refrigerated tractor-trailers to deliver products daily to its retail customers from nine distribution centers centrally located in its key marketing areas. Our Potato Products Division consists of shredded hash browns and diced, sliced, mashed and other specialty potato products. Refrigerated potato products are produced and sold by our wholly owned subsidiaries, Northern Star Co. ( Northern Star ) and Farm Fresh Foods, Inc. ( Farm Fresh ), to both the foodservice and retail markets. In 2010, approximately 51% of the Potato Products Division s net sales were to the retail market, with the balance to the foodservice market. The Potato Products division sells refrigerated potato products in the United States in the retail grocery market, where they are marketed under the Simply Potatoes brand and in the foodservice market, where they are principally marketed under the Northern Star and Farm Fresh brands. Due to their freshness and quality, refrigerated potato products are generally sold at higher price points than frozen or dehydrated potato products. The Potato Products Division s largest customers include major retail grocery store chains and major foodservice distributors. The Potato Products Division maintains its main processing facility in Minnesota, with a smaller facility located in Nevada. At April 2, 2011 and January 1, 2011, we had total assets of approximately $2,138.1 million and $2,164.1 million, respectively. For the three-month period ended April 2, 2011 and the six-month period ended January 1, 2011, the Company had net sales of approximately $417.1 million and $858.3 million, respectively, and net earnings (loss) of approximately $(0.4) million and $3.3 million, respectively. For the three-month period ended April 2, 2010 and the six-month period ended June 26, 2010, the Predecessor had net sales of approximately $395.3 million and $744.0 million, respectively, and net earnings (loss) of approximately $15.0 million and $(34.3) million, respectively. Corporate History On June 29, 2010, M-Foods Holdings, Inc. and its subsidiaries (the Predecessor ) was merged with and into the Company, with the Company as the surviving entity and MFI Holding as its direct parent. MFI Holding is owned by GS Capital Partners VI Fund, L.P. and its affiliates (collectively, GS Capital Partners ), Thomas H. Lee Partners, L.P. (collectively, THL and together with GS Capital Partners, the Sponsors ) and certain members of management (the Management Stockholders ). Following the merger, GS Capital Partners, THL and the Management Stockholders indirectly own approximately 74%, 21% and 5%, respectively, of the Company. Our Executive Offices Our principal executive offices are located at 301 Carlson Parkway, Suite 400, Minnetonka, Minnesota 55305, and our telephone number at that address is (952) 258-4000. Our website address is www.michaelfoods.com. Information contained on our website is expressly not incorporated by reference into this prospectus. Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED JULY 15, 2011 PRELIMINARY PROSPECTUS MICHAEL FOODS GROUP, INC. 9.750% Senior Notes due 2018 On June 29, 2010, we issued $430,000,000 9.750% Senior Notes due July 15, 2018 (the Restricted Notes ) in a transaction exempt from the registration requirements of the Securities Act. As part of the issuance of the Restricted Notes, holders were granted benefits pursuant to an exchange and registration rights agreement (the registration rights agreement ) among us, the guarantors and the initial purchasers of the Restricted Notes. To satisfy our obligations under the registration rights agreement, on July 7, 2011, we launched an offer to exchange (the exchange offer ) all Restricted Notes for $430,000,000 9.750% Senior Notes due 2018, the issuance of each of which has been registered under the Securities Act of 1933 (the notes ). The notes bear interest at a rate of 9.750% per annum and mature on July 15, 2018. Interest on the notes is payable on January 15 and July 15 of each year. We have the option to redeem all or a portion of the notes at any time on or after July 15, 2014 at the redemption prices set forth in this prospectus. On or prior to July 15, 2013, we have the option to redeem up to 35% of the notes with proceeds of certain equity offerings at a redemption price equal to 109.750% of their principal amount, plus accrued and unpaid interest, if any, to the date of redemption. In addition, at any time prior to July 15, 2014, we may redeem all or a portion of the notes at a price equal to 100% of the principal amount of the notes, plus a make-whole premium and accrued and unpaid interest, if any, to the date of redemption, as described in this prospectus. The notes are guaranteed on a senior unsecured basis by all of our existing wholly-owned domestic restricted subsidiaries that guarantee our senior secured credit facilities and our future subsidiaries that are wholly-owned domestic subsidiaries or that guarantee our senior secured credit facilities (in each case, subject to certain exceptions). The notes effectively rank behind all of our secured debt, including our senior secured credit facilities, to the extent of the value of the assets securing such debt. In addition, the notes are structurally subordinated to all liabilities of our subsidiaries that do not guarantee the notes. This prospectus includes additional information on the terms of the notes, including redemption and repurchase prices, covenants and transfer restrictions. We do not intend to apply for listing of the notes on any securities exchange or for inclusion of the notes in any automated quotation system. Consider carefully the Risk Factors beginning on page 5 of this prospectus. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. This prospectus has been prepared for and may be used by Goldman, Sachs & Co. and its affiliates in connection with offers and sales of the notes related to market-making transactions in the notes in the secondary market effected from time to time. Goldman, Sachs & Co. and its affiliates may act as principal or agent in such transactions, including as agent for the counterparty when acting as principal or as agent for both counterparties, and may receive compensation in the form of discounts and commissions, including from both counterparties, when it acts as agents for both. Sales of notes pursuant to this prospectus will be made at prevailing market prices at the time of sale, at prices related thereto or at negotiated prices. We will not receive any proceeds from such sales. The date of this prospectus is , 2011 Table of Contents Summary of the Terms of the Notes The following summary describes the principal terms of the notes and is provided solely for your convenience. For a more detailed description of the notes, see Description of Notes . Securities Offered $430,000,000 aggregate principal amount of 9.750% Senior Notes due 2018. Maturity July 15, 2018. Interest Interest will be payable in cash on January 15 and July 15 of each year. Optional Redemption We may redeem all or a portion of the notes beginning on July 15, 2014. The initial redemption price is 104.875% of their principal amount, plus accrued and unpaid interest, if any, to the redemption date. The redemption price will decline each year after 2014 and will be 100% of their principal amount, plus accrued and unpaid interest, if any, to the redemption date, beginning on July 15, 2016. At any time prior to July 15, 2014, we may redeem all or a portion of the notes at a price equal to 100% of the principal amount of the notes plus a make-whole premium and accrued and unpaid interest, if any, to the redemption date, in each case as described in this prospectus under Description of Notes Optional Redemption . In addition, before July 15, 2013, we may redeem up to 35% of the aggregate principal amount of notes with the proceeds of certain equity offerings at 109.750% of their principal amount plus accrued and unpaid interest, if any, to the redemption date. We may make such redemption only if, after any such redemption, at least 65% of the aggregate principal amount of notes originally issued remains outstanding. Offers to Purchase If we sell certain assets without applying the proceeds in a specified manner or experience certain change of control events, each holder of notes may require us to purchase all or a portion of its notes at the purchase prices set forth in this prospectus, plus accrued and unpaid interest, if any, to the purchase date. See Description of Notes Repurchase at the Option of Holders . Our senior secured credit facilities or other agreements may restrict us from repurchasing any of the notes, including any purchase we may be required to make as a result of a change of control or certain asset sales. See Risk Factors Risks Related to the Notes We may not have the ability to raise the funds necessary to finance the change of control offer required by the indenture governing the notes. Ranking The notes will rank equally to all of our other unsecured and unsubordinated indebtedness, but will effectively be junior to all of our secured indebtedness, to the extent of the value of the assets Table of Contents securing that indebtedness. The notes will also be structurally subordinated to all liabilities of our subsidiaries that do not guarantee the notes. Guarantees The notes will be guaranteed by all of our existing wholly-owned domestic restricted subsidiaries that guarantee our senior secured credit facilities. In addition, subject to certain exceptions, the notes will be guaranteed by all of our future wholly-owned domestic restricted subsidiaries and any other domestic restricted subsidiary that guarantees our senior secured credit facilities. The guarantees will rank equally to all other unsecured and unsubordinated indebtedness of the guarantors, but will be effectively junior to all of the secured indebtedness of the guarantors, to the extent of the value of the assets securing that indebtedness. Certain Covenants The terms of the notes restrict our ability and the ability of our restricted subsidiaries (as described in Description of Notes ) to: incur additional indebtedness; create liens; pay dividends or make distributions in respect of capital stock; purchase or redeem capital stock; make investments or certain other restricted payments; sell assets; issue or sell stock of restricted subsidiaries; enter into transactions with affiliates; or effect a consolidation or merger. However, these limitations will be subject to a number of important qualifications and exceptions. For more information, see Description of Notes Certain Covenants . Use of Proceeds This prospectus is delivered in connection with the sale of notes by Goldman, Sachs & Co. and its affiliates in market-making transactions. We will not receive any of the proceeds from such transactions.
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001139457_farm_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001139457_farm_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..5018a9e4278945a612ddee141e8e537894afedee
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001139457_farm_prospectus_summary.txt
@@ -0,0 +1 @@
+This summary highlights information contained elsewhere in this prospectus. It does not contain all the information that you may consider important in deciding whether to participate in the exchange offer. Therefore, you should read the entire prospectus carefully, including, in particular, the section entitled Risk Factors and the financial statements and the related notes to those statements. Unless otherwise indicated or the context otherwise requires, all references in this prospectus to Michael Foods Group , our company , we , our , ours , us or similar terms refer to Michael Foods Group, Inc., together with its subsidiaries. Michael Foods, Inc., a wholly owned subsidiary of Michael Foods Group, is referred to as Michael Foods . MFI Holding Corporation is referred to as MFI Holding and MFI Midco Corporation is referred to as Parent . The Company We are a diversified producer and distributor of food products in three areas egg products, potato products and cheese and other dairy case products. Our Egg Products Division produces and distributes egg products to the foodservice, retail and food ingredient markets. Our Potato Products Division processes and distributes refrigerated potato products to the foodservice and retail grocery markets in North America. Our Crystal Farms Division markets a broad line of refrigerated grocery products to U. S. retail grocery outlets, including branded and private-label cheese, eggs and egg products, bagels, butter, muffins, potato products and ethnic foods. We have a strategic focus on value-added processing of food products. The strategy is designed to capitalize on key food industry trends, such as (i) the desire for improved safety and convenience, (ii) the focus by foodservice operators on reducing labor and waste, and (iii) the long-term trend toward food consumption away from home, which continues to be slowed somewhat by the recent economic conditions. We believe our operational scale, product breadth and geographic scope make us an attractive and important strategic partner for our customers. The Egg Products Division, comprised of our wholly owned subsidiaries M. G. Waldbaum Company ( Waldbaum ), Papetti s Hygrade Egg Products, Inc. ( Papetti s ), Abbotsford Farms, Inc., and MFI Food Canada Ltd., produces, processes and distributes numerous egg products. Based on management estimates, we believe that our Egg Products Division is the largest processed egg products producer in North America. Our principal value-added egg products are ultrapasteurized, extended shelf-life liquid eggs ( Easy Eggs and Excelle ), egg white based egg products ( All Whites and Better n Eggs ), and hardcooked and precooked egg products ( Table Ready ). Our other egg products include frozen, liquid and dried products that are used as ingredients in other food products, as well as organic and cage free egg products. Our Egg Products Division distributes its egg products to food processors and foodservice customers primarily throughout North America, with limited international sales in the Far East, South America and Europe. Our extended shelf-life liquid eggs (the largest selling product line within the Division) and other egg products are marketed to a wide variety of foodservice and food ingredients customers. The Egg Products Division also is a supplier of egg white-based egg products sold in the U.S. retail and foodservice markets. Our Crystal Farms Division markets a wide range of refrigerated grocery products directly to retailers and wholesale warehouses. We believe that the Crystal Farm Division s strategy of offering quality branded products at a good value relative to national brands has contributed to the Crystal Farm Division s growth. Crystal Farms cheese is positioned in the mid-tier pricing category and is priced below national brands such as Kraft and Sargento and above store brands (private label). The Crystal Farms Division s distributed refrigerated products, which consist principally of cheese, eggs and egg products, bagels, butter, muffins, potato products and ethnic foods, are supplied by various vendors or our other divisions, to Crystal Farms specifications. Cheese accounted for approximately 69% of the Crystal Farms Division s 2010 sales. While we do not produce cheese, we operate a cheese packaging facility in Lake Mills, Wisconsin, which processes and packages various cheese products for our Crystal Farms brand cheese business and for various private-label customers. Table of Contents Table of Additional Registrants Exact Name of Registrant as Specified in its Charter (Or Other Organizational Document) State or Other Jurisdiction of Incorporation or Organization I.R.S Employer Identification Number Address and Telephone Number of Registrant s Principal Executive Offices Abbotsford Farms, Inc. Minnesota 26-1615833 * Casa Trucking, Inc. Minnesota 22-3493806 * Crystal Farms Refrigerated Distribution Company Minnesota 41-1669454 * Farm Fresh Foods, Inc. Nevada 91-2086470 * MFI Food Asia, LLC Delaware 00-0000000 * MFI International, Inc. Minnesota 27-1428245 * Michael Foods, Inc. Delaware 13-4151741 * Michael Foods of Delaware, Inc. Delaware 41-1579532 * Minnesota Products, Inc. Minnesota 41-1394918 * M. G. Waldbaum Company Nebraska 47-0445304 * Northern Star Co. Minnesota 41-1468193 * Papetti s Hygrade Egg Products, Inc. Minnesota 22-3493805 * * Address and telephone number of Registrant s principal executive office is same as that of Michael Foods Group, Inc. The primary industrial classification number for each additional Registrant is 2015. Table of Contents The Crystal Farms Division has expanded its market area using both company-owned and leased facilities and independent distributors. The Crystal Farms Division s market area is the United States, with a large customer concentration in the central United States. We sell our products to a large number of retail stores, a majority of which are served via customers warehouses. The Crystal Farms Division also maintains a fleet of refrigerated tractor-trailers to deliver products daily to its retail customers from nine distribution centers centrally located in its key marketing areas. Our Potato Products Division consists of shredded hash browns and diced, sliced, mashed and other specialty potato products. Refrigerated potato products are produced and sold by our wholly owned subsidiaries, Northern Star Co. ( Northern Star ) and Farm Fresh Foods, Inc. ( Farm Fresh ), to both the foodservice and retail markets. In 2010, approximately 51% of the Potato Products Division s net sales were to the retail market, with the balance to the foodservice market. The Potato Products division sells refrigerated potato products in the United States in the retail grocery market, where they are marketed under the Simply Potatoes brand and in the foodservice market, where they are principally marketed under the Northern Star and Farm Fresh brands. Due to their freshness and quality, refrigerated potato products are generally sold at higher price points than frozen or dehydrated potato products. The Potato Products Division s largest customers include major retail grocery store chains and major foodservice distributors. The Potato Products Division maintains its main processing facility in Minnesota, with a smaller facility located in Nevada. At April 2, 2011 and January 1, 2011, we had total assets of approximately $2,138.1 million and $2,164.1 million, respectively. For the three-month period ended April 2, 2011 and the six-month period ended January 1, 2011, the Company had net sales of approximately $417.1 million and $858.3 million, respectively, and net earnings (loss) of approximately $(0.4) million and $3.3 million, respectively. For the three-month period ended April 2, 2010 and the six-month period ended June 26, 2010, the Predecessor had net sales of approximately $395.3 million and $744.0 million, respectively, and net earnings (loss) of approximately $15.0 million and $(34.3) million, respectively. Corporate History On June 29, 2010, M-Foods Holdings, Inc. and its subsidiaries (the Predecessor ) was merged with and into the Company, with the Company as the surviving entity and MFI Holding as its direct parent. MFI Holding is owned by GS Capital Partners VI Fund, L.P. and its affiliates (collectively, GS Capital Partners ), Thomas H. Lee Partners, L.P. (collectively, THL and together with GS Capital Partners, the Sponsors ) and certain members of management (the Management Stockholders ). Following the merger, GS Capital Partners, THL and the Management Stockholders indirectly own approximately 74%, 21% and 5%, respectively, of the Company. Our Executive Offices Our principal executive offices are located at 301 Carlson Parkway, Suite 400, Minnetonka, Minnesota 55305, and our telephone number at that address is (952) 258-4000. Our website address is www.michaelfoods.com. Information contained on our website is expressly not incorporated by reference into this prospectus. Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED JULY 15, 2011 PRELIMINARY PROSPECTUS MICHAEL FOODS GROUP, INC. 9.750% Senior Notes due 2018 On June 29, 2010, we issued $430,000,000 9.750% Senior Notes due July 15, 2018 (the Restricted Notes ) in a transaction exempt from the registration requirements of the Securities Act. As part of the issuance of the Restricted Notes, holders were granted benefits pursuant to an exchange and registration rights agreement (the registration rights agreement ) among us, the guarantors and the initial purchasers of the Restricted Notes. To satisfy our obligations under the registration rights agreement, on July 7, 2011, we launched an offer to exchange (the exchange offer ) all Restricted Notes for $430,000,000 9.750% Senior Notes due 2018, the issuance of each of which has been registered under the Securities Act of 1933 (the notes ). The notes bear interest at a rate of 9.750% per annum and mature on July 15, 2018. Interest on the notes is payable on January 15 and July 15 of each year. We have the option to redeem all or a portion of the notes at any time on or after July 15, 2014 at the redemption prices set forth in this prospectus. On or prior to July 15, 2013, we have the option to redeem up to 35% of the notes with proceeds of certain equity offerings at a redemption price equal to 109.750% of their principal amount, plus accrued and unpaid interest, if any, to the date of redemption. In addition, at any time prior to July 15, 2014, we may redeem all or a portion of the notes at a price equal to 100% of the principal amount of the notes, plus a make-whole premium and accrued and unpaid interest, if any, to the date of redemption, as described in this prospectus. The notes are guaranteed on a senior unsecured basis by all of our existing wholly-owned domestic restricted subsidiaries that guarantee our senior secured credit facilities and our future subsidiaries that are wholly-owned domestic subsidiaries or that guarantee our senior secured credit facilities (in each case, subject to certain exceptions). The notes effectively rank behind all of our secured debt, including our senior secured credit facilities, to the extent of the value of the assets securing such debt. In addition, the notes are structurally subordinated to all liabilities of our subsidiaries that do not guarantee the notes. This prospectus includes additional information on the terms of the notes, including redemption and repurchase prices, covenants and transfer restrictions. We do not intend to apply for listing of the notes on any securities exchange or for inclusion of the notes in any automated quotation system. Consider carefully the Risk Factors beginning on page 5 of this prospectus. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. This prospectus has been prepared for and may be used by Goldman, Sachs & Co. and its affiliates in connection with offers and sales of the notes related to market-making transactions in the notes in the secondary market effected from time to time. Goldman, Sachs & Co. and its affiliates may act as principal or agent in such transactions, including as agent for the counterparty when acting as principal or as agent for both counterparties, and may receive compensation in the form of discounts and commissions, including from both counterparties, when it acts as agents for both. Sales of notes pursuant to this prospectus will be made at prevailing market prices at the time of sale, at prices related thereto or at negotiated prices. We will not receive any proceeds from such sales. The date of this prospectus is , 2011 Table of Contents Summary of the Terms of the Notes The following summary describes the principal terms of the notes and is provided solely for your convenience. For a more detailed description of the notes, see Description of Notes . Securities Offered $430,000,000 aggregate principal amount of 9.750% Senior Notes due 2018. Maturity July 15, 2018. Interest Interest will be payable in cash on January 15 and July 15 of each year. Optional Redemption We may redeem all or a portion of the notes beginning on July 15, 2014. The initial redemption price is 104.875% of their principal amount, plus accrued and unpaid interest, if any, to the redemption date. The redemption price will decline each year after 2014 and will be 100% of their principal amount, plus accrued and unpaid interest, if any, to the redemption date, beginning on July 15, 2016. At any time prior to July 15, 2014, we may redeem all or a portion of the notes at a price equal to 100% of the principal amount of the notes plus a make-whole premium and accrued and unpaid interest, if any, to the redemption date, in each case as described in this prospectus under Description of Notes Optional Redemption . In addition, before July 15, 2013, we may redeem up to 35% of the aggregate principal amount of notes with the proceeds of certain equity offerings at 109.750% of their principal amount plus accrued and unpaid interest, if any, to the redemption date. We may make such redemption only if, after any such redemption, at least 65% of the aggregate principal amount of notes originally issued remains outstanding. Offers to Purchase If we sell certain assets without applying the proceeds in a specified manner or experience certain change of control events, each holder of notes may require us to purchase all or a portion of its notes at the purchase prices set forth in this prospectus, plus accrued and unpaid interest, if any, to the purchase date. See Description of Notes Repurchase at the Option of Holders . Our senior secured credit facilities or other agreements may restrict us from repurchasing any of the notes, including any purchase we may be required to make as a result of a change of control or certain asset sales. See Risk Factors Risks Related to the Notes We may not have the ability to raise the funds necessary to finance the change of control offer required by the indenture governing the notes. Ranking The notes will rank equally to all of our other unsecured and unsubordinated indebtedness, but will effectively be junior to all of our secured indebtedness, to the extent of the value of the assets Table of Contents securing that indebtedness. The notes will also be structurally subordinated to all liabilities of our subsidiaries that do not guarantee the notes. Guarantees The notes will be guaranteed by all of our existing wholly-owned domestic restricted subsidiaries that guarantee our senior secured credit facilities. In addition, subject to certain exceptions, the notes will be guaranteed by all of our future wholly-owned domestic restricted subsidiaries and any other domestic restricted subsidiary that guarantees our senior secured credit facilities. The guarantees will rank equally to all other unsecured and unsubordinated indebtedness of the guarantors, but will be effectively junior to all of the secured indebtedness of the guarantors, to the extent of the value of the assets securing that indebtedness. Certain Covenants The terms of the notes restrict our ability and the ability of our restricted subsidiaries (as described in Description of Notes ) to: incur additional indebtedness; create liens; pay dividends or make distributions in respect of capital stock; purchase or redeem capital stock; make investments or certain other restricted payments; sell assets; issue or sell stock of restricted subsidiaries; enter into transactions with affiliates; or effect a consolidation or merger. However, these limitations will be subject to a number of important qualifications and exceptions. For more information, see Description of Notes Certain Covenants . Use of Proceeds This prospectus is delivered in connection with the sale of notes by Goldman, Sachs & Co. and its affiliates in market-making transactions. We will not receive any of the proceeds from such transactions.
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/CIK0001139458_crystal_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001139458_crystal_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..5018a9e4278945a612ddee141e8e537894afedee
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001139458_crystal_prospectus_summary.txt
@@ -0,0 +1 @@
+This summary highlights information contained elsewhere in this prospectus. It does not contain all the information that you may consider important in deciding whether to participate in the exchange offer. Therefore, you should read the entire prospectus carefully, including, in particular, the section entitled Risk Factors and the financial statements and the related notes to those statements. Unless otherwise indicated or the context otherwise requires, all references in this prospectus to Michael Foods Group , our company , we , our , ours , us or similar terms refer to Michael Foods Group, Inc., together with its subsidiaries. Michael Foods, Inc., a wholly owned subsidiary of Michael Foods Group, is referred to as Michael Foods . MFI Holding Corporation is referred to as MFI Holding and MFI Midco Corporation is referred to as Parent . The Company We are a diversified producer and distributor of food products in three areas egg products, potato products and cheese and other dairy case products. Our Egg Products Division produces and distributes egg products to the foodservice, retail and food ingredient markets. Our Potato Products Division processes and distributes refrigerated potato products to the foodservice and retail grocery markets in North America. Our Crystal Farms Division markets a broad line of refrigerated grocery products to U. S. retail grocery outlets, including branded and private-label cheese, eggs and egg products, bagels, butter, muffins, potato products and ethnic foods. We have a strategic focus on value-added processing of food products. The strategy is designed to capitalize on key food industry trends, such as (i) the desire for improved safety and convenience, (ii) the focus by foodservice operators on reducing labor and waste, and (iii) the long-term trend toward food consumption away from home, which continues to be slowed somewhat by the recent economic conditions. We believe our operational scale, product breadth and geographic scope make us an attractive and important strategic partner for our customers. The Egg Products Division, comprised of our wholly owned subsidiaries M. G. Waldbaum Company ( Waldbaum ), Papetti s Hygrade Egg Products, Inc. ( Papetti s ), Abbotsford Farms, Inc., and MFI Food Canada Ltd., produces, processes and distributes numerous egg products. Based on management estimates, we believe that our Egg Products Division is the largest processed egg products producer in North America. Our principal value-added egg products are ultrapasteurized, extended shelf-life liquid eggs ( Easy Eggs and Excelle ), egg white based egg products ( All Whites and Better n Eggs ), and hardcooked and precooked egg products ( Table Ready ). Our other egg products include frozen, liquid and dried products that are used as ingredients in other food products, as well as organic and cage free egg products. Our Egg Products Division distributes its egg products to food processors and foodservice customers primarily throughout North America, with limited international sales in the Far East, South America and Europe. Our extended shelf-life liquid eggs (the largest selling product line within the Division) and other egg products are marketed to a wide variety of foodservice and food ingredients customers. The Egg Products Division also is a supplier of egg white-based egg products sold in the U.S. retail and foodservice markets. Our Crystal Farms Division markets a wide range of refrigerated grocery products directly to retailers and wholesale warehouses. We believe that the Crystal Farm Division s strategy of offering quality branded products at a good value relative to national brands has contributed to the Crystal Farm Division s growth. Crystal Farms cheese is positioned in the mid-tier pricing category and is priced below national brands such as Kraft and Sargento and above store brands (private label). The Crystal Farms Division s distributed refrigerated products, which consist principally of cheese, eggs and egg products, bagels, butter, muffins, potato products and ethnic foods, are supplied by various vendors or our other divisions, to Crystal Farms specifications. Cheese accounted for approximately 69% of the Crystal Farms Division s 2010 sales. While we do not produce cheese, we operate a cheese packaging facility in Lake Mills, Wisconsin, which processes and packages various cheese products for our Crystal Farms brand cheese business and for various private-label customers. Table of Contents Table of Additional Registrants Exact Name of Registrant as Specified in its Charter (Or Other Organizational Document) State or Other Jurisdiction of Incorporation or Organization I.R.S Employer Identification Number Address and Telephone Number of Registrant s Principal Executive Offices Abbotsford Farms, Inc. Minnesota 26-1615833 * Casa Trucking, Inc. Minnesota 22-3493806 * Crystal Farms Refrigerated Distribution Company Minnesota 41-1669454 * Farm Fresh Foods, Inc. Nevada 91-2086470 * MFI Food Asia, LLC Delaware 00-0000000 * MFI International, Inc. Minnesota 27-1428245 * Michael Foods, Inc. Delaware 13-4151741 * Michael Foods of Delaware, Inc. Delaware 41-1579532 * Minnesota Products, Inc. Minnesota 41-1394918 * M. G. Waldbaum Company Nebraska 47-0445304 * Northern Star Co. Minnesota 41-1468193 * Papetti s Hygrade Egg Products, Inc. Minnesota 22-3493805 * * Address and telephone number of Registrant s principal executive office is same as that of Michael Foods Group, Inc. The primary industrial classification number for each additional Registrant is 2015. Table of Contents The Crystal Farms Division has expanded its market area using both company-owned and leased facilities and independent distributors. The Crystal Farms Division s market area is the United States, with a large customer concentration in the central United States. We sell our products to a large number of retail stores, a majority of which are served via customers warehouses. The Crystal Farms Division also maintains a fleet of refrigerated tractor-trailers to deliver products daily to its retail customers from nine distribution centers centrally located in its key marketing areas. Our Potato Products Division consists of shredded hash browns and diced, sliced, mashed and other specialty potato products. Refrigerated potato products are produced and sold by our wholly owned subsidiaries, Northern Star Co. ( Northern Star ) and Farm Fresh Foods, Inc. ( Farm Fresh ), to both the foodservice and retail markets. In 2010, approximately 51% of the Potato Products Division s net sales were to the retail market, with the balance to the foodservice market. The Potato Products division sells refrigerated potato products in the United States in the retail grocery market, where they are marketed under the Simply Potatoes brand and in the foodservice market, where they are principally marketed under the Northern Star and Farm Fresh brands. Due to their freshness and quality, refrigerated potato products are generally sold at higher price points than frozen or dehydrated potato products. The Potato Products Division s largest customers include major retail grocery store chains and major foodservice distributors. The Potato Products Division maintains its main processing facility in Minnesota, with a smaller facility located in Nevada. At April 2, 2011 and January 1, 2011, we had total assets of approximately $2,138.1 million and $2,164.1 million, respectively. For the three-month period ended April 2, 2011 and the six-month period ended January 1, 2011, the Company had net sales of approximately $417.1 million and $858.3 million, respectively, and net earnings (loss) of approximately $(0.4) million and $3.3 million, respectively. For the three-month period ended April 2, 2010 and the six-month period ended June 26, 2010, the Predecessor had net sales of approximately $395.3 million and $744.0 million, respectively, and net earnings (loss) of approximately $15.0 million and $(34.3) million, respectively. Corporate History On June 29, 2010, M-Foods Holdings, Inc. and its subsidiaries (the Predecessor ) was merged with and into the Company, with the Company as the surviving entity and MFI Holding as its direct parent. MFI Holding is owned by GS Capital Partners VI Fund, L.P. and its affiliates (collectively, GS Capital Partners ), Thomas H. Lee Partners, L.P. (collectively, THL and together with GS Capital Partners, the Sponsors ) and certain members of management (the Management Stockholders ). Following the merger, GS Capital Partners, THL and the Management Stockholders indirectly own approximately 74%, 21% and 5%, respectively, of the Company. Our Executive Offices Our principal executive offices are located at 301 Carlson Parkway, Suite 400, Minnetonka, Minnesota 55305, and our telephone number at that address is (952) 258-4000. Our website address is www.michaelfoods.com. Information contained on our website is expressly not incorporated by reference into this prospectus. Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED JULY 15, 2011 PRELIMINARY PROSPECTUS MICHAEL FOODS GROUP, INC. 9.750% Senior Notes due 2018 On June 29, 2010, we issued $430,000,000 9.750% Senior Notes due July 15, 2018 (the Restricted Notes ) in a transaction exempt from the registration requirements of the Securities Act. As part of the issuance of the Restricted Notes, holders were granted benefits pursuant to an exchange and registration rights agreement (the registration rights agreement ) among us, the guarantors and the initial purchasers of the Restricted Notes. To satisfy our obligations under the registration rights agreement, on July 7, 2011, we launched an offer to exchange (the exchange offer ) all Restricted Notes for $430,000,000 9.750% Senior Notes due 2018, the issuance of each of which has been registered under the Securities Act of 1933 (the notes ). The notes bear interest at a rate of 9.750% per annum and mature on July 15, 2018. Interest on the notes is payable on January 15 and July 15 of each year. We have the option to redeem all or a portion of the notes at any time on or after July 15, 2014 at the redemption prices set forth in this prospectus. On or prior to July 15, 2013, we have the option to redeem up to 35% of the notes with proceeds of certain equity offerings at a redemption price equal to 109.750% of their principal amount, plus accrued and unpaid interest, if any, to the date of redemption. In addition, at any time prior to July 15, 2014, we may redeem all or a portion of the notes at a price equal to 100% of the principal amount of the notes, plus a make-whole premium and accrued and unpaid interest, if any, to the date of redemption, as described in this prospectus. The notes are guaranteed on a senior unsecured basis by all of our existing wholly-owned domestic restricted subsidiaries that guarantee our senior secured credit facilities and our future subsidiaries that are wholly-owned domestic subsidiaries or that guarantee our senior secured credit facilities (in each case, subject to certain exceptions). The notes effectively rank behind all of our secured debt, including our senior secured credit facilities, to the extent of the value of the assets securing such debt. In addition, the notes are structurally subordinated to all liabilities of our subsidiaries that do not guarantee the notes. This prospectus includes additional information on the terms of the notes, including redemption and repurchase prices, covenants and transfer restrictions. We do not intend to apply for listing of the notes on any securities exchange or for inclusion of the notes in any automated quotation system. Consider carefully the Risk Factors beginning on page 5 of this prospectus. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. This prospectus has been prepared for and may be used by Goldman, Sachs & Co. and its affiliates in connection with offers and sales of the notes related to market-making transactions in the notes in the secondary market effected from time to time. Goldman, Sachs & Co. and its affiliates may act as principal or agent in such transactions, including as agent for the counterparty when acting as principal or as agent for both counterparties, and may receive compensation in the form of discounts and commissions, including from both counterparties, when it acts as agents for both. Sales of notes pursuant to this prospectus will be made at prevailing market prices at the time of sale, at prices related thereto or at negotiated prices. We will not receive any proceeds from such sales. The date of this prospectus is , 2011 Table of Contents Summary of the Terms of the Notes The following summary describes the principal terms of the notes and is provided solely for your convenience. For a more detailed description of the notes, see Description of Notes . Securities Offered $430,000,000 aggregate principal amount of 9.750% Senior Notes due 2018. Maturity July 15, 2018. Interest Interest will be payable in cash on January 15 and July 15 of each year. Optional Redemption We may redeem all or a portion of the notes beginning on July 15, 2014. The initial redemption price is 104.875% of their principal amount, plus accrued and unpaid interest, if any, to the redemption date. The redemption price will decline each year after 2014 and will be 100% of their principal amount, plus accrued and unpaid interest, if any, to the redemption date, beginning on July 15, 2016. At any time prior to July 15, 2014, we may redeem all or a portion of the notes at a price equal to 100% of the principal amount of the notes plus a make-whole premium and accrued and unpaid interest, if any, to the redemption date, in each case as described in this prospectus under Description of Notes Optional Redemption . In addition, before July 15, 2013, we may redeem up to 35% of the aggregate principal amount of notes with the proceeds of certain equity offerings at 109.750% of their principal amount plus accrued and unpaid interest, if any, to the redemption date. We may make such redemption only if, after any such redemption, at least 65% of the aggregate principal amount of notes originally issued remains outstanding. Offers to Purchase If we sell certain assets without applying the proceeds in a specified manner or experience certain change of control events, each holder of notes may require us to purchase all or a portion of its notes at the purchase prices set forth in this prospectus, plus accrued and unpaid interest, if any, to the purchase date. See Description of Notes Repurchase at the Option of Holders . Our senior secured credit facilities or other agreements may restrict us from repurchasing any of the notes, including any purchase we may be required to make as a result of a change of control or certain asset sales. See Risk Factors Risks Related to the Notes We may not have the ability to raise the funds necessary to finance the change of control offer required by the indenture governing the notes. Ranking The notes will rank equally to all of our other unsecured and unsubordinated indebtedness, but will effectively be junior to all of our secured indebtedness, to the extent of the value of the assets Table of Contents securing that indebtedness. The notes will also be structurally subordinated to all liabilities of our subsidiaries that do not guarantee the notes. Guarantees The notes will be guaranteed by all of our existing wholly-owned domestic restricted subsidiaries that guarantee our senior secured credit facilities. In addition, subject to certain exceptions, the notes will be guaranteed by all of our future wholly-owned domestic restricted subsidiaries and any other domestic restricted subsidiary that guarantees our senior secured credit facilities. The guarantees will rank equally to all other unsecured and unsubordinated indebtedness of the guarantors, but will be effectively junior to all of the secured indebtedness of the guarantors, to the extent of the value of the assets securing that indebtedness. Certain Covenants The terms of the notes restrict our ability and the ability of our restricted subsidiaries (as described in Description of Notes ) to: incur additional indebtedness; create liens; pay dividends or make distributions in respect of capital stock; purchase or redeem capital stock; make investments or certain other restricted payments; sell assets; issue or sell stock of restricted subsidiaries; enter into transactions with affiliates; or effect a consolidation or merger. However, these limitations will be subject to a number of important qualifications and exceptions. For more information, see Description of Notes Certain Covenants . Use of Proceeds This prospectus is delivered in connection with the sale of notes by Goldman, Sachs & Co. and its affiliates in market-making transactions. We will not receive any of the proceeds from such transactions.
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001139459_casa_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001139459_casa_prospectus_summary.txt
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+This summary highlights information contained elsewhere in this prospectus. It does not contain all the information that you may consider important in deciding whether to participate in the exchange offer. Therefore, you should read the entire prospectus carefully, including, in particular, the section entitled Risk Factors and the financial statements and the related notes to those statements. Unless otherwise indicated or the context otherwise requires, all references in this prospectus to Michael Foods Group , our company , we , our , ours , us or similar terms refer to Michael Foods Group, Inc., together with its subsidiaries. Michael Foods, Inc., a wholly owned subsidiary of Michael Foods Group, is referred to as Michael Foods . MFI Holding Corporation is referred to as MFI Holding and MFI Midco Corporation is referred to as Parent . The Company We are a diversified producer and distributor of food products in three areas egg products, potato products and cheese and other dairy case products. Our Egg Products Division produces and distributes egg products to the foodservice, retail and food ingredient markets. Our Potato Products Division processes and distributes refrigerated potato products to the foodservice and retail grocery markets in North America. Our Crystal Farms Division markets a broad line of refrigerated grocery products to U. S. retail grocery outlets, including branded and private-label cheese, eggs and egg products, bagels, butter, muffins, potato products and ethnic foods. We have a strategic focus on value-added processing of food products. The strategy is designed to capitalize on key food industry trends, such as (i) the desire for improved safety and convenience, (ii) the focus by foodservice operators on reducing labor and waste, and (iii) the long-term trend toward food consumption away from home, which continues to be slowed somewhat by the recent economic conditions. We believe our operational scale, product breadth and geographic scope make us an attractive and important strategic partner for our customers. The Egg Products Division, comprised of our wholly owned subsidiaries M. G. Waldbaum Company ( Waldbaum ), Papetti s Hygrade Egg Products, Inc. ( Papetti s ), Abbotsford Farms, Inc., and MFI Food Canada Ltd., produces, processes and distributes numerous egg products. Based on management estimates, we believe that our Egg Products Division is the largest processed egg products producer in North America. Our principal value-added egg products are ultrapasteurized, extended shelf-life liquid eggs ( Easy Eggs and Excelle ), egg white based egg products ( All Whites and Better n Eggs ), and hardcooked and precooked egg products ( Table Ready ). Our other egg products include frozen, liquid and dried products that are used as ingredients in other food products, as well as organic and cage free egg products. Our Egg Products Division distributes its egg products to food processors and foodservice customers primarily throughout North America, with limited international sales in the Far East, South America and Europe. Our extended shelf-life liquid eggs (the largest selling product line within the Division) and other egg products are marketed to a wide variety of foodservice and food ingredients customers. The Egg Products Division also is a supplier of egg white-based egg products sold in the U.S. retail and foodservice markets. Our Crystal Farms Division markets a wide range of refrigerated grocery products directly to retailers and wholesale warehouses. We believe that the Crystal Farm Division s strategy of offering quality branded products at a good value relative to national brands has contributed to the Crystal Farm Division s growth. Crystal Farms cheese is positioned in the mid-tier pricing category and is priced below national brands such as Kraft and Sargento and above store brands (private label). The Crystal Farms Division s distributed refrigerated products, which consist principally of cheese, eggs and egg products, bagels, butter, muffins, potato products and ethnic foods, are supplied by various vendors or our other divisions, to Crystal Farms specifications. Cheese accounted for approximately 69% of the Crystal Farms Division s 2010 sales. While we do not produce cheese, we operate a cheese packaging facility in Lake Mills, Wisconsin, which processes and packages various cheese products for our Crystal Farms brand cheese business and for various private-label customers. Table of Contents Table of Additional Registrants Exact Name of Registrant as Specified in its Charter (Or Other Organizational Document) State or Other Jurisdiction of Incorporation or Organization I.R.S Employer Identification Number Address and Telephone Number of Registrant s Principal Executive Offices Abbotsford Farms, Inc. Minnesota 26-1615833 * Casa Trucking, Inc. Minnesota 22-3493806 * Crystal Farms Refrigerated Distribution Company Minnesota 41-1669454 * Farm Fresh Foods, Inc. Nevada 91-2086470 * MFI Food Asia, LLC Delaware 00-0000000 * MFI International, Inc. Minnesota 27-1428245 * Michael Foods, Inc. Delaware 13-4151741 * Michael Foods of Delaware, Inc. Delaware 41-1579532 * Minnesota Products, Inc. Minnesota 41-1394918 * M. G. Waldbaum Company Nebraska 47-0445304 * Northern Star Co. Minnesota 41-1468193 * Papetti s Hygrade Egg Products, Inc. Minnesota 22-3493805 * * Address and telephone number of Registrant s principal executive office is same as that of Michael Foods Group, Inc. The primary industrial classification number for each additional Registrant is 2015. Table of Contents The Crystal Farms Division has expanded its market area using both company-owned and leased facilities and independent distributors. The Crystal Farms Division s market area is the United States, with a large customer concentration in the central United States. We sell our products to a large number of retail stores, a majority of which are served via customers warehouses. The Crystal Farms Division also maintains a fleet of refrigerated tractor-trailers to deliver products daily to its retail customers from nine distribution centers centrally located in its key marketing areas. Our Potato Products Division consists of shredded hash browns and diced, sliced, mashed and other specialty potato products. Refrigerated potato products are produced and sold by our wholly owned subsidiaries, Northern Star Co. ( Northern Star ) and Farm Fresh Foods, Inc. ( Farm Fresh ), to both the foodservice and retail markets. In 2010, approximately 51% of the Potato Products Division s net sales were to the retail market, with the balance to the foodservice market. The Potato Products division sells refrigerated potato products in the United States in the retail grocery market, where they are marketed under the Simply Potatoes brand and in the foodservice market, where they are principally marketed under the Northern Star and Farm Fresh brands. Due to their freshness and quality, refrigerated potato products are generally sold at higher price points than frozen or dehydrated potato products. The Potato Products Division s largest customers include major retail grocery store chains and major foodservice distributors. The Potato Products Division maintains its main processing facility in Minnesota, with a smaller facility located in Nevada. At April 2, 2011 and January 1, 2011, we had total assets of approximately $2,138.1 million and $2,164.1 million, respectively. For the three-month period ended April 2, 2011 and the six-month period ended January 1, 2011, the Company had net sales of approximately $417.1 million and $858.3 million, respectively, and net earnings (loss) of approximately $(0.4) million and $3.3 million, respectively. For the three-month period ended April 2, 2010 and the six-month period ended June 26, 2010, the Predecessor had net sales of approximately $395.3 million and $744.0 million, respectively, and net earnings (loss) of approximately $15.0 million and $(34.3) million, respectively. Corporate History On June 29, 2010, M-Foods Holdings, Inc. and its subsidiaries (the Predecessor ) was merged with and into the Company, with the Company as the surviving entity and MFI Holding as its direct parent. MFI Holding is owned by GS Capital Partners VI Fund, L.P. and its affiliates (collectively, GS Capital Partners ), Thomas H. Lee Partners, L.P. (collectively, THL and together with GS Capital Partners, the Sponsors ) and certain members of management (the Management Stockholders ). Following the merger, GS Capital Partners, THL and the Management Stockholders indirectly own approximately 74%, 21% and 5%, respectively, of the Company. Our Executive Offices Our principal executive offices are located at 301 Carlson Parkway, Suite 400, Minnetonka, Minnesota 55305, and our telephone number at that address is (952) 258-4000. Our website address is www.michaelfoods.com. Information contained on our website is expressly not incorporated by reference into this prospectus. Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED JULY 15, 2011 PRELIMINARY PROSPECTUS MICHAEL FOODS GROUP, INC. 9.750% Senior Notes due 2018 On June 29, 2010, we issued $430,000,000 9.750% Senior Notes due July 15, 2018 (the Restricted Notes ) in a transaction exempt from the registration requirements of the Securities Act. As part of the issuance of the Restricted Notes, holders were granted benefits pursuant to an exchange and registration rights agreement (the registration rights agreement ) among us, the guarantors and the initial purchasers of the Restricted Notes. To satisfy our obligations under the registration rights agreement, on July 7, 2011, we launched an offer to exchange (the exchange offer ) all Restricted Notes for $430,000,000 9.750% Senior Notes due 2018, the issuance of each of which has been registered under the Securities Act of 1933 (the notes ). The notes bear interest at a rate of 9.750% per annum and mature on July 15, 2018. Interest on the notes is payable on January 15 and July 15 of each year. We have the option to redeem all or a portion of the notes at any time on or after July 15, 2014 at the redemption prices set forth in this prospectus. On or prior to July 15, 2013, we have the option to redeem up to 35% of the notes with proceeds of certain equity offerings at a redemption price equal to 109.750% of their principal amount, plus accrued and unpaid interest, if any, to the date of redemption. In addition, at any time prior to July 15, 2014, we may redeem all or a portion of the notes at a price equal to 100% of the principal amount of the notes, plus a make-whole premium and accrued and unpaid interest, if any, to the date of redemption, as described in this prospectus. The notes are guaranteed on a senior unsecured basis by all of our existing wholly-owned domestic restricted subsidiaries that guarantee our senior secured credit facilities and our future subsidiaries that are wholly-owned domestic subsidiaries or that guarantee our senior secured credit facilities (in each case, subject to certain exceptions). The notes effectively rank behind all of our secured debt, including our senior secured credit facilities, to the extent of the value of the assets securing such debt. In addition, the notes are structurally subordinated to all liabilities of our subsidiaries that do not guarantee the notes. This prospectus includes additional information on the terms of the notes, including redemption and repurchase prices, covenants and transfer restrictions. We do not intend to apply for listing of the notes on any securities exchange or for inclusion of the notes in any automated quotation system. Consider carefully the Risk Factors beginning on page 5 of this prospectus. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. This prospectus has been prepared for and may be used by Goldman, Sachs & Co. and its affiliates in connection with offers and sales of the notes related to market-making transactions in the notes in the secondary market effected from time to time. Goldman, Sachs & Co. and its affiliates may act as principal or agent in such transactions, including as agent for the counterparty when acting as principal or as agent for both counterparties, and may receive compensation in the form of discounts and commissions, including from both counterparties, when it acts as agents for both. Sales of notes pursuant to this prospectus will be made at prevailing market prices at the time of sale, at prices related thereto or at negotiated prices. We will not receive any proceeds from such sales. The date of this prospectus is , 2011 Table of Contents Summary of the Terms of the Notes The following summary describes the principal terms of the notes and is provided solely for your convenience. For a more detailed description of the notes, see Description of Notes . Securities Offered $430,000,000 aggregate principal amount of 9.750% Senior Notes due 2018. Maturity July 15, 2018. Interest Interest will be payable in cash on January 15 and July 15 of each year. Optional Redemption We may redeem all or a portion of the notes beginning on July 15, 2014. The initial redemption price is 104.875% of their principal amount, plus accrued and unpaid interest, if any, to the redemption date. The redemption price will decline each year after 2014 and will be 100% of their principal amount, plus accrued and unpaid interest, if any, to the redemption date, beginning on July 15, 2016. At any time prior to July 15, 2014, we may redeem all or a portion of the notes at a price equal to 100% of the principal amount of the notes plus a make-whole premium and accrued and unpaid interest, if any, to the redemption date, in each case as described in this prospectus under Description of Notes Optional Redemption . In addition, before July 15, 2013, we may redeem up to 35% of the aggregate principal amount of notes with the proceeds of certain equity offerings at 109.750% of their principal amount plus accrued and unpaid interest, if any, to the redemption date. We may make such redemption only if, after any such redemption, at least 65% of the aggregate principal amount of notes originally issued remains outstanding. Offers to Purchase If we sell certain assets without applying the proceeds in a specified manner or experience certain change of control events, each holder of notes may require us to purchase all or a portion of its notes at the purchase prices set forth in this prospectus, plus accrued and unpaid interest, if any, to the purchase date. See Description of Notes Repurchase at the Option of Holders . Our senior secured credit facilities or other agreements may restrict us from repurchasing any of the notes, including any purchase we may be required to make as a result of a change of control or certain asset sales. See Risk Factors Risks Related to the Notes We may not have the ability to raise the funds necessary to finance the change of control offer required by the indenture governing the notes. Ranking The notes will rank equally to all of our other unsecured and unsubordinated indebtedness, but will effectively be junior to all of our secured indebtedness, to the extent of the value of the assets Table of Contents securing that indebtedness. The notes will also be structurally subordinated to all liabilities of our subsidiaries that do not guarantee the notes. Guarantees The notes will be guaranteed by all of our existing wholly-owned domestic restricted subsidiaries that guarantee our senior secured credit facilities. In addition, subject to certain exceptions, the notes will be guaranteed by all of our future wholly-owned domestic restricted subsidiaries and any other domestic restricted subsidiary that guarantees our senior secured credit facilities. The guarantees will rank equally to all other unsecured and unsubordinated indebtedness of the guarantors, but will be effectively junior to all of the secured indebtedness of the guarantors, to the extent of the value of the assets securing that indebtedness. Certain Covenants The terms of the notes restrict our ability and the ability of our restricted subsidiaries (as described in Description of Notes ) to: incur additional indebtedness; create liens; pay dividends or make distributions in respect of capital stock; purchase or redeem capital stock; make investments or certain other restricted payments; sell assets; issue or sell stock of restricted subsidiaries; enter into transactions with affiliates; or effect a consolidation or merger. However, these limitations will be subject to a number of important qualifications and exceptions. For more information, see Description of Notes Certain Covenants . Use of Proceeds This prospectus is delivered in connection with the sale of notes by Goldman, Sachs & Co. and its affiliates in market-making transactions. We will not receive any of the proceeds from such transactions.
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/CIK0001139467_mg_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001139467_mg_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..5018a9e4278945a612ddee141e8e537894afedee
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001139467_mg_prospectus_summary.txt
@@ -0,0 +1 @@
+This summary highlights information contained elsewhere in this prospectus. It does not contain all the information that you may consider important in deciding whether to participate in the exchange offer. Therefore, you should read the entire prospectus carefully, including, in particular, the section entitled Risk Factors and the financial statements and the related notes to those statements. Unless otherwise indicated or the context otherwise requires, all references in this prospectus to Michael Foods Group , our company , we , our , ours , us or similar terms refer to Michael Foods Group, Inc., together with its subsidiaries. Michael Foods, Inc., a wholly owned subsidiary of Michael Foods Group, is referred to as Michael Foods . MFI Holding Corporation is referred to as MFI Holding and MFI Midco Corporation is referred to as Parent . The Company We are a diversified producer and distributor of food products in three areas egg products, potato products and cheese and other dairy case products. Our Egg Products Division produces and distributes egg products to the foodservice, retail and food ingredient markets. Our Potato Products Division processes and distributes refrigerated potato products to the foodservice and retail grocery markets in North America. Our Crystal Farms Division markets a broad line of refrigerated grocery products to U. S. retail grocery outlets, including branded and private-label cheese, eggs and egg products, bagels, butter, muffins, potato products and ethnic foods. We have a strategic focus on value-added processing of food products. The strategy is designed to capitalize on key food industry trends, such as (i) the desire for improved safety and convenience, (ii) the focus by foodservice operators on reducing labor and waste, and (iii) the long-term trend toward food consumption away from home, which continues to be slowed somewhat by the recent economic conditions. We believe our operational scale, product breadth and geographic scope make us an attractive and important strategic partner for our customers. The Egg Products Division, comprised of our wholly owned subsidiaries M. G. Waldbaum Company ( Waldbaum ), Papetti s Hygrade Egg Products, Inc. ( Papetti s ), Abbotsford Farms, Inc., and MFI Food Canada Ltd., produces, processes and distributes numerous egg products. Based on management estimates, we believe that our Egg Products Division is the largest processed egg products producer in North America. Our principal value-added egg products are ultrapasteurized, extended shelf-life liquid eggs ( Easy Eggs and Excelle ), egg white based egg products ( All Whites and Better n Eggs ), and hardcooked and precooked egg products ( Table Ready ). Our other egg products include frozen, liquid and dried products that are used as ingredients in other food products, as well as organic and cage free egg products. Our Egg Products Division distributes its egg products to food processors and foodservice customers primarily throughout North America, with limited international sales in the Far East, South America and Europe. Our extended shelf-life liquid eggs (the largest selling product line within the Division) and other egg products are marketed to a wide variety of foodservice and food ingredients customers. The Egg Products Division also is a supplier of egg white-based egg products sold in the U.S. retail and foodservice markets. Our Crystal Farms Division markets a wide range of refrigerated grocery products directly to retailers and wholesale warehouses. We believe that the Crystal Farm Division s strategy of offering quality branded products at a good value relative to national brands has contributed to the Crystal Farm Division s growth. Crystal Farms cheese is positioned in the mid-tier pricing category and is priced below national brands such as Kraft and Sargento and above store brands (private label). The Crystal Farms Division s distributed refrigerated products, which consist principally of cheese, eggs and egg products, bagels, butter, muffins, potato products and ethnic foods, are supplied by various vendors or our other divisions, to Crystal Farms specifications. Cheese accounted for approximately 69% of the Crystal Farms Division s 2010 sales. While we do not produce cheese, we operate a cheese packaging facility in Lake Mills, Wisconsin, which processes and packages various cheese products for our Crystal Farms brand cheese business and for various private-label customers. Table of Contents Table of Additional Registrants Exact Name of Registrant as Specified in its Charter (Or Other Organizational Document) State or Other Jurisdiction of Incorporation or Organization I.R.S Employer Identification Number Address and Telephone Number of Registrant s Principal Executive Offices Abbotsford Farms, Inc. Minnesota 26-1615833 * Casa Trucking, Inc. Minnesota 22-3493806 * Crystal Farms Refrigerated Distribution Company Minnesota 41-1669454 * Farm Fresh Foods, Inc. Nevada 91-2086470 * MFI Food Asia, LLC Delaware 00-0000000 * MFI International, Inc. Minnesota 27-1428245 * Michael Foods, Inc. Delaware 13-4151741 * Michael Foods of Delaware, Inc. Delaware 41-1579532 * Minnesota Products, Inc. Minnesota 41-1394918 * M. G. Waldbaum Company Nebraska 47-0445304 * Northern Star Co. Minnesota 41-1468193 * Papetti s Hygrade Egg Products, Inc. Minnesota 22-3493805 * * Address and telephone number of Registrant s principal executive office is same as that of Michael Foods Group, Inc. The primary industrial classification number for each additional Registrant is 2015. Table of Contents The Crystal Farms Division has expanded its market area using both company-owned and leased facilities and independent distributors. The Crystal Farms Division s market area is the United States, with a large customer concentration in the central United States. We sell our products to a large number of retail stores, a majority of which are served via customers warehouses. The Crystal Farms Division also maintains a fleet of refrigerated tractor-trailers to deliver products daily to its retail customers from nine distribution centers centrally located in its key marketing areas. Our Potato Products Division consists of shredded hash browns and diced, sliced, mashed and other specialty potato products. Refrigerated potato products are produced and sold by our wholly owned subsidiaries, Northern Star Co. ( Northern Star ) and Farm Fresh Foods, Inc. ( Farm Fresh ), to both the foodservice and retail markets. In 2010, approximately 51% of the Potato Products Division s net sales were to the retail market, with the balance to the foodservice market. The Potato Products division sells refrigerated potato products in the United States in the retail grocery market, where they are marketed under the Simply Potatoes brand and in the foodservice market, where they are principally marketed under the Northern Star and Farm Fresh brands. Due to their freshness and quality, refrigerated potato products are generally sold at higher price points than frozen or dehydrated potato products. The Potato Products Division s largest customers include major retail grocery store chains and major foodservice distributors. The Potato Products Division maintains its main processing facility in Minnesota, with a smaller facility located in Nevada. At April 2, 2011 and January 1, 2011, we had total assets of approximately $2,138.1 million and $2,164.1 million, respectively. For the three-month period ended April 2, 2011 and the six-month period ended January 1, 2011, the Company had net sales of approximately $417.1 million and $858.3 million, respectively, and net earnings (loss) of approximately $(0.4) million and $3.3 million, respectively. For the three-month period ended April 2, 2010 and the six-month period ended June 26, 2010, the Predecessor had net sales of approximately $395.3 million and $744.0 million, respectively, and net earnings (loss) of approximately $15.0 million and $(34.3) million, respectively. Corporate History On June 29, 2010, M-Foods Holdings, Inc. and its subsidiaries (the Predecessor ) was merged with and into the Company, with the Company as the surviving entity and MFI Holding as its direct parent. MFI Holding is owned by GS Capital Partners VI Fund, L.P. and its affiliates (collectively, GS Capital Partners ), Thomas H. Lee Partners, L.P. (collectively, THL and together with GS Capital Partners, the Sponsors ) and certain members of management (the Management Stockholders ). Following the merger, GS Capital Partners, THL and the Management Stockholders indirectly own approximately 74%, 21% and 5%, respectively, of the Company. Our Executive Offices Our principal executive offices are located at 301 Carlson Parkway, Suite 400, Minnetonka, Minnesota 55305, and our telephone number at that address is (952) 258-4000. Our website address is www.michaelfoods.com. Information contained on our website is expressly not incorporated by reference into this prospectus. Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED JULY 15, 2011 PRELIMINARY PROSPECTUS MICHAEL FOODS GROUP, INC. 9.750% Senior Notes due 2018 On June 29, 2010, we issued $430,000,000 9.750% Senior Notes due July 15, 2018 (the Restricted Notes ) in a transaction exempt from the registration requirements of the Securities Act. As part of the issuance of the Restricted Notes, holders were granted benefits pursuant to an exchange and registration rights agreement (the registration rights agreement ) among us, the guarantors and the initial purchasers of the Restricted Notes. To satisfy our obligations under the registration rights agreement, on July 7, 2011, we launched an offer to exchange (the exchange offer ) all Restricted Notes for $430,000,000 9.750% Senior Notes due 2018, the issuance of each of which has been registered under the Securities Act of 1933 (the notes ). The notes bear interest at a rate of 9.750% per annum and mature on July 15, 2018. Interest on the notes is payable on January 15 and July 15 of each year. We have the option to redeem all or a portion of the notes at any time on or after July 15, 2014 at the redemption prices set forth in this prospectus. On or prior to July 15, 2013, we have the option to redeem up to 35% of the notes with proceeds of certain equity offerings at a redemption price equal to 109.750% of their principal amount, plus accrued and unpaid interest, if any, to the date of redemption. In addition, at any time prior to July 15, 2014, we may redeem all or a portion of the notes at a price equal to 100% of the principal amount of the notes, plus a make-whole premium and accrued and unpaid interest, if any, to the date of redemption, as described in this prospectus. The notes are guaranteed on a senior unsecured basis by all of our existing wholly-owned domestic restricted subsidiaries that guarantee our senior secured credit facilities and our future subsidiaries that are wholly-owned domestic subsidiaries or that guarantee our senior secured credit facilities (in each case, subject to certain exceptions). The notes effectively rank behind all of our secured debt, including our senior secured credit facilities, to the extent of the value of the assets securing such debt. In addition, the notes are structurally subordinated to all liabilities of our subsidiaries that do not guarantee the notes. This prospectus includes additional information on the terms of the notes, including redemption and repurchase prices, covenants and transfer restrictions. We do not intend to apply for listing of the notes on any securities exchange or for inclusion of the notes in any automated quotation system. Consider carefully the Risk Factors beginning on page 5 of this prospectus. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. This prospectus has been prepared for and may be used by Goldman, Sachs & Co. and its affiliates in connection with offers and sales of the notes related to market-making transactions in the notes in the secondary market effected from time to time. Goldman, Sachs & Co. and its affiliates may act as principal or agent in such transactions, including as agent for the counterparty when acting as principal or as agent for both counterparties, and may receive compensation in the form of discounts and commissions, including from both counterparties, when it acts as agents for both. Sales of notes pursuant to this prospectus will be made at prevailing market prices at the time of sale, at prices related thereto or at negotiated prices. We will not receive any proceeds from such sales. The date of this prospectus is , 2011 Table of Contents Summary of the Terms of the Notes The following summary describes the principal terms of the notes and is provided solely for your convenience. For a more detailed description of the notes, see Description of Notes . Securities Offered $430,000,000 aggregate principal amount of 9.750% Senior Notes due 2018. Maturity July 15, 2018. Interest Interest will be payable in cash on January 15 and July 15 of each year. Optional Redemption We may redeem all or a portion of the notes beginning on July 15, 2014. The initial redemption price is 104.875% of their principal amount, plus accrued and unpaid interest, if any, to the redemption date. The redemption price will decline each year after 2014 and will be 100% of their principal amount, plus accrued and unpaid interest, if any, to the redemption date, beginning on July 15, 2016. At any time prior to July 15, 2014, we may redeem all or a portion of the notes at a price equal to 100% of the principal amount of the notes plus a make-whole premium and accrued and unpaid interest, if any, to the redemption date, in each case as described in this prospectus under Description of Notes Optional Redemption . In addition, before July 15, 2013, we may redeem up to 35% of the aggregate principal amount of notes with the proceeds of certain equity offerings at 109.750% of their principal amount plus accrued and unpaid interest, if any, to the redemption date. We may make such redemption only if, after any such redemption, at least 65% of the aggregate principal amount of notes originally issued remains outstanding. Offers to Purchase If we sell certain assets without applying the proceeds in a specified manner or experience certain change of control events, each holder of notes may require us to purchase all or a portion of its notes at the purchase prices set forth in this prospectus, plus accrued and unpaid interest, if any, to the purchase date. See Description of Notes Repurchase at the Option of Holders . Our senior secured credit facilities or other agreements may restrict us from repurchasing any of the notes, including any purchase we may be required to make as a result of a change of control or certain asset sales. See Risk Factors Risks Related to the Notes We may not have the ability to raise the funds necessary to finance the change of control offer required by the indenture governing the notes. Ranking The notes will rank equally to all of our other unsecured and unsubordinated indebtedness, but will effectively be junior to all of our secured indebtedness, to the extent of the value of the assets Table of Contents securing that indebtedness. The notes will also be structurally subordinated to all liabilities of our subsidiaries that do not guarantee the notes. Guarantees The notes will be guaranteed by all of our existing wholly-owned domestic restricted subsidiaries that guarantee our senior secured credit facilities. In addition, subject to certain exceptions, the notes will be guaranteed by all of our future wholly-owned domestic restricted subsidiaries and any other domestic restricted subsidiary that guarantees our senior secured credit facilities. The guarantees will rank equally to all other unsecured and unsubordinated indebtedness of the guarantors, but will be effectively junior to all of the secured indebtedness of the guarantors, to the extent of the value of the assets securing that indebtedness. Certain Covenants The terms of the notes restrict our ability and the ability of our restricted subsidiaries (as described in Description of Notes ) to: incur additional indebtedness; create liens; pay dividends or make distributions in respect of capital stock; purchase or redeem capital stock; make investments or certain other restricted payments; sell assets; issue or sell stock of restricted subsidiaries; enter into transactions with affiliates; or effect a consolidation or merger. However, these limitations will be subject to a number of important qualifications and exceptions. For more information, see Description of Notes Certain Covenants . Use of Proceeds This prospectus is delivered in connection with the sale of notes by Goldman, Sachs & Co. and its affiliates in market-making transactions. We will not receive any of the proceeds from such transactions.
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001140028_talon_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001140028_talon_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..d2c75bdf3e3244d1c82e72c280f294e8a9d20f29
--- /dev/null
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@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. Because it is a summary, it may not contain all of the information that is important to you. Accordingly, you are urged to carefully review this prospectus in its entirety, including the risks of investing in our securities discussed under the caption Risk Factors and the financial statements and other information that is contained in or incorporated by reference into this prospectus or the registration statement of which this prospectus is a part before making an investment decision. References to the Company, Talon, we, us, or our in this prospectus refer to Talon Therapeutics, Inc. (formerly known as Hana Biosciences, Inc.), a Delaware corporation, unless the context indicates otherwise. Company Overview We are a biopharmaceutical company dedicated to developing and commercializing new, differentiated cancer therapies designed to improve and enable current standards of care. We currently have rights to the following product candidates in various stages of development: Marqibo (vincristine sulfate liposomes injection), our lead product candidate, is a novel, targeted Optisome encapsulated formulation product candidate of the Food and Drug Administration (FDA)-approved anticancer drug vincristine, currently in development primarily for the treatment of adult acute lymphoblastic leukemia, or ALL, in second relapse or that has progressed following two or more prior lines of anti-leukemia therapy. Menadione Topical Lotion, a novel supportive care product candidate being developed for the prevention and/or treatment of the skin toxicities associated with the use of epidermal growth factor receptor inhibitors, or EGFRIs, a type of anti-cancer agent used in the treatment of lung, colon, head and neck, pancreatic and breast cancer. Brakiva (topotecan liposome injection), a novel targeted Optisome encapsulated formulation product candidate of the FDA-approved anticancer drug topotecan. Alocrest (vinorelbine liposome injection), a novel, targeted Optisome encapsulated formulation product candidate of the FDA-approved anticancer drug vinorelbine. Our executive offices are located at 2207 Bridgepointe Parkway, Suite 250, San Mateo, California 94404. Our telephone number is (650) 588-6404 and our Internet address is www.talontx.com. Information contained in, or accessible through, our website does not constitute a part of this prospectus. We were originally incorporated under Delaware law in 2002 under the name Hudson Health Sciences, Inc. In July 2004, we acquired Email Real Estate.com, Inc., a Colorado corporation and public shell company in a reverse acquisition. In September 2004, we reincorporated under Delaware law under the name Hana Biosciences, Inc. In December 2010, we changed our name to Talon Therapeutics, Inc.
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001141788_health_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001141788_health_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..0c8a08b28f9a2ef334b8f53b5d480ef793bc4d11
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001141788_health_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights selected information contained elsewhere in this prospectus. This summary does not contain all of the information you should consider before investing in our common stock. You should read the entire prospectus carefully, including Risk Factors and the financial statements, before making an investment decision. Our Company Overview HDC is a pattern recognition company that uses advanced mathematical techniques to analyze large amounts of data to uncover patterns that might otherwise be undetectable. The Company operates primarily in the emerging field of molecular diagnostics where such tools are critical to scientific discovery. The terms artificial intelligence and machine learning are sometimes used to describe pattern recognition tools. HDC s mission is to use its patents, intellectual prowess, and clinical partnerships principally to identify patterns that can advance the science of medicine, as well as to advance the effective use of our technology in other diverse business disciplines, including the high-tech, financial, and homeland security markets. Our historical foundation lies in the molecular diagnostics field where we have made a number of important discoveries that may play a critical role in developing more personalized approaches to the diagnosis and treatment of certain diseases. However, our SVM assets in particular have broad applicability in many other fields. Intelligently applied, HDC s pattern recognition technology can be a portal between enormous amounts of otherwise undecipherable data and truly meaningful discovery. Our Company s principal asset is its intellectual property which includes advanced mathematical algorithms called Support Vector Machines (SVM) and Fractal Genomic Modeling (FGM), as well as biomarkers that we discovered by applying our SVM and FGM techniques to complex genetic and proteomic data. Biomarkers are biological indicators or genetic expression signatures of certain disease states. Our intellectual property is protected by more than 88 patents that have been issued or are currently pending around the world. Our business model has evolved over time to respond to business trends that intersect with our technological expertise and our capacity to professionally manage these opportunities. In the beginning, we sought only to use our SVMs internally in order to discover and license our biomarker signatures to various diagnostic and pharmaceutical companies. Today, our commercialization efforts include: utilization of our discoveries and knowledge to help develop biomarkers for use as companion diagnostics, surrogate biomarkers, and diagnostic and prognostic predictive tests; licensure of the SVM and FGM technologies directly to diagnostic and pharmaceutical companies; and, the formation of new ventures with domain experts in other fields where our pattern recognition technology holds commercial promise. Our Principal Market The principal healthcare market for our pattern recognition technology and biomarker discoveries is medical diagnostics, particularly the rapidly growing field of molecular diagnostics. The market consists of two basic types of diagnostic procedures: in vitro tests performed on a patient s fluid or tissue samples and in vivo tests performed directly on the body, including blood pressure monitoring and imaging analysis such as x-rays. In vitro diagnostics (IVD) can be further divided into several major segments , including clinical chemistry, immunochemistry, hematology/cytometry, microbiology, and molecular diagnostics. According to a Visiongain Pharmaceutical Report, the IVD portion of the diagnostics market currently accounts for over $31 billion in sales worldwide. Today, the molecular diagnostics segment represents a fraction of the IVD revenues with about $2.5 billion in sales, but it is widely considered to be the fastest growing segment, estimated at a 20-25% compounded annual growth rate, mainly in the U.S. and EU markets, versus 6-7% for IVD as a whole. It is difficult to accurately assess the size of this segment since many countries do not have reference laboratories external to hospitals. Areas of particular growth include infectious diseases, oncology, genetic diseases, and pharmacogenetic analyses. Companies involved in this space include several major pharmaceutical and diversified corporations, including Roche Holdings Ltd., Abbott Laboratories, Inc., and Johnson & Johnson. Siemens AG and General Electric Company operate medical imaging segments that are expanding in diagnostics. Other market players include large technology companies like Becton , Dickinson and Company, Beckman Coulter, Inc. and Bio-Rad Laboratories, Inc. IVDs have been established as effective tools for all aspects of disease management, especially in areas of unmet clinical need. Such tests have been developed for screening and prognosis as well as for applications, such as determination of genetic predisposition to disease, detection of presymptomatic disease, and prediction of individual drug response. The Offering Common Stock offered upon Exercise of Warrants 17,875,000 Shares Common Stock offered 16,263,888 Shares Common Stock to be outstanding after this offering (1) 247,350,747 Shares Exercise Price of Warrants 3,333,333 at $0.20/share 3,333,333 at $0.25/share 3,333,334 at $0.30/share 1,000,000 at $0.13/share 6,875,000 at $0.17/share Net Proceeds The Company will not receive any proceeds from this offering. The Company will receive cash upon the exercise of certain warrants of up to $1,298,750 (2). Use of proceeds from Exercise of Warrants We will use the proceeds from the exercise of the warrants for general corporate purposes, which may include, among other things, our working capital needs and other general corporate purposes, including research and product development. See Use of Proceeds on page 13.
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001141961_prometheus_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001141961_prometheus_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001141961_prometheus_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001156871_intelsat_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001156871_intelsat_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001156871_intelsat_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001160958_inphi-corp_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001160958_inphi-corp_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001160958_inphi-corp_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001162816_neah_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001162816_neah_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..5af62c6a0bc218d030546a191b25f447abb0340e
--- /dev/null
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@@ -0,0 +1 @@
+Series A Preferred Stock In February 2011, we issued 2,312,727 shares of Series A Preferred Stock ( Series A ) at a purchase price of $0.055 per share for net proceeds of $127,200 to a Purchaser under a Series A Securities Purchase Agreement. In accordance with the terms of the Series A Preferred Stock, the Purchaser was entitled, after the issuance of the Series A Preferred Stock, to vote as a single class with the our outstanding Common Stock only with respect to any proposal to increase the our authorized Common Stock. With respect to such a proposal, Purchaser was entitled to forty votes per share of the Series A Preferred Stock. Accordingly, the Purchaser was entitled to 92,509,080 votes or 53% of the Company s voting power with respect to the Consent Solicitation Statement proposal to increase our authorized Common Stock. Apart from this provision, the Purchaser is not entitled to vote with the Company s Common Stock except as required by law. Any shares of Series A Preferred Stock may, at any time, at the sole option of the Company, be converted into fully paid and non-assessable shares of Common Stock (a Conversion ). The number of shares of Common Stock to be issued upon a Conversion is 9,472,340. In July 2011, the Purchaser assigned to Southridge Series A Preferred Stock in the face amount of $51,300 of which the number of shares of Common Stock to be issued upon conversion is 3,820,213. Series B Preferred Stock On July 8, 2011, we filed a Certificate of Designation with the Nevada Secretary of State. The Certificate of Designation sets forth the rights, preferences and privileges of our Series B Preferred Stock ("Series B"). The Company may issue up to 1,000,000 of Series B. The Series B ranks on parity with the Company s common stock and any class or series of capital stock of the Company later created specifically ranking by its terms on parity with the Series B or Common Stock, in each case as to the distribution of the Company s assets upon liquidation, dissolution or winding up of the Company. The holder of each share of Series B shall be entitled to interest at a simple interest rate of 6% per annum. In the event the Company declares a dividend payable to holders of any class of stock, the holder of each share of the Series B will be entitled to receive a dividend equal to that payable to the holder of the number of shares of Common Stock that the Series B is convertible on the record date for the dividend. The holders of the Series B are entitled to vote with the Company s Common Stock with number of votes equal to the number of common shares available by conversion to the holders of the Series B. The Series B are convertible into the Company s Common Stock at the sole option of the Company at any time, except that the holders of the Series B, upon or after the resignation or termination of the Company CEO, Gerard C. D Couto, may elect to convert the Series B into fully paid and nonassessable shares of Common Stock. The number of shares of Common Stock to be issued upon a conversion is calculated by (i) multiplying the number of Series B being converted by the per share purchase price received by the Company for such Series B, and then, multiplying such number by 130% and then dividing this calculated value by the average closing bid price of the Common Stock during the five (5) Trading Days prior to the date a notice to convert the Series A Preferred Stock into the Company s Common Stock is delivered to the Company Trading Day means a day on which the OTCBB (or any of its successors) is open for trading, or by (ii) first, allocating the Series B proportionately according to the amounts by date of individual cash tranches received by the Company then, second, multiplying the number of Series B being converted, identified by tranche, by the per share purchase price received by the Company for such Series B, and then, multiplying such number or numbers by 130% and, finally, dividing the calculated value(s) by the average closing bid price of the Common Stock during the five (5) Trading Days prior to the date of the associated tranche or tranches. The summary of the rights, preferences and privileges of the Series B described above is qualified in its entirety by reference to the certificate of designation, a copy of which is attached as an exhibit to this report and is incorporated herein by reference. In July 2011, we issued, under a Series B Preferred Stock Purchase Agreement, 322,904 shares of Series B to Summit Trading Limited at a price of $1.00 per share for $304,500 advanced to us plus $18,404 as payment of debt we owed to Summit Trading Limited. The number of shares of Common Stock to be issued upon conversion is approximately 48,249,884 (the exact number of which is not determinable at this time because the Series B are convertible into shares of our common stock based on the future trading price of our common stock). Common Stock Purchase Warrants As of August 17, 2011, there were 7,338,785 outstanding warrants to purchase shares of our common stock which are held by multiple investors. The following table summarizes the terms of these warrants. Grant Date Expiration Date Exercise Price Quantity 12/27/06 12/26/11 44.3300 2,448 05/11/07 03/27/12 18.3300 3,750 05/11/07 05/11/12 66.6700 90,029 05/11/07 05/11/12 53.3300 90,029 05/11/07 05/11/12 36.6700 90,029 11/09/07 11/08/12 9.6700 15,000 11/28/07 11/28/12 7.3300 7,500 08/12/09 08/12/14 2.0800 120,000 11/17/09 11/17/14 0.0010 120,000 01/01/11 01/01/18 0.0110 100,000 02/01/11 02/01/18 0.0110 100,000 03/01/11 03/01/18 0.0110 100,000 04/01/11 04/01/18 0.0110 100,000 04/13/11 04/12/18 0.0089 1,000,000 05/02/11 05/02/12 0.0100 1,666,667 05/01/11 05/01/21 0.0120 100,000 06/01/11 06/01/12 0.0100 1,666,667 06/01/11 06/01/21 0.0140 100,000 07/01/11 07/01/21 0.0130 100,000 07/01/11 07/01/12 0.0100 1,666,666 08/01/11 08/01/21 0.0110 100,000 Total 7,338,785 Options to Purchase Common Stock As of August 17, 2011, there are 21,282,543 outstanding options to purchase shares of our common stock which granted under our Long Term Incentive Plan. The following table summarizes the terms of these options. Grant Date Expiration Date Exercise Price Quantity 03/14/06 03/14/16 $ 6.6667 7,500 04/21/08 04/21/18 1.6667 12,000 07/21/08 07/21/18 0.6667 1,950 06/11/10 06/11/20 0.0800 3,708,735 11/16/10 11/16/20 0.0230 7,440,000 04/13/11 04/13/21 0.0089 10,112,358 Total 21,282,543 INTERESTS OF NAMED EXPERTS AND COUNSEL The consolidated financial statements of Neah Power Systems, Inc. appearing in Neah Power System, Inc. s Annual Report on Form 10-K for the year ended September 30, 2010 have been audited by Peterson Sullivan LLP, independent registered public accounting firm, as set forth in its report thereon (which contains an explanatory paragraph describing conditions that raise substantial doubt about our ability to continue as a going concern as described in Note 1 to the consolidated financial statements), and are included herein. Such consolidated financial statements are included herein in reliance upon such reports given on the authority of such firm as experts in accounting and auditing. Gersten Savage LLP, 600 Lexington Avenue, New York, NY 10022-6018, will pass upon the validity of the Common Stock being offered hereby. DESCRIPTION OF BUSINESS Overview We are engaged in the development and sale of renewable energy solutions. We have developed what we believe is a breakthrough, disruptive, direct methanol micro fuel cell which can serve as a replacement for batteries in a variety of products. Our fuel cells are designed to replace existing rechargeable battery technology in mobile electronic devices and small-scale transportation vehicles. Our long-lasting, efficient and safe power solutions for these devices, such as notebook PCs, military radios, and other power-hungry computer, entertainment and communications products, use our patented, silicon-based design. This fuel cell design creates higher power densities and enables lighter-weight, smaller form-factors, and will potentially create more cost effective, manufacturing and potentially lower product costs. Based on the research and state of our technology, we believe our fuel cell will outperform lithium ion batteries and other batteries in terms of run time, recharge time, portability, and other measures of performance. We anticipate that our fuel cell solution will be particularly beneficial in applications requiring the use of more than one battery because the user will only need to use a single fuel cell with a supply of smaller fuel cartridges, which will result in reduced overall size and weight. Based on our eleven issued patents and 2 additional U.S. patent applications, we believe our technology is proprietary and can be protected. We have won awards for our technology over the years, the most recent recognition being the Best of What s NewTM 2010 award from the distinguished publication Popular ScienceTM. In 2010 we continued to advance the development and maturity of our systems. This included the completion of the fuel cell prototype and the subsequent completion of a system not requiring the availability of oxygen from the environment ( anaerobic or closed loop system ). We also demonstrated an air-breathing ( aerobic ) system. We believe that these technologies provide the foundation for products to be produced for sale over the next fiscal year. To date, we have not engaged in any field tests of the fuel cell prototype. In furtherance of our efforts to gain commercial acceptance of our technology and products, we entered into non-binding letters of intent with EKO Vehicles of Bangalore ( EKO ), Hobie Cat Company ( Hobie Cat ), and a United States based large defense supplier. The agreements with EKO have expired and we intend to negotiate extensions or new agreements. Partnering with these companies, we anticipate that we will develop early production devices for evaluation by original equipment manufacturers ( OEM ) for the eventual deployment of our fuel cell products during 2012. We anticipate that we will ultimately sell or license our products for resale by distributors and OEM customers. We also intend to design and distribute the fuel cartridges that these fuel cells require for refueling. We anticipate that we will generate future revenues from the sale and licensing of both fuel cartridges and the completed fuel cells. Our business plan contemplates that we will subcontract to third parties substantially all of the production and assembly of the fuel cells and fuel cartridges. We announced in May 2011 a non-binding memorandum of understanding to acquire privately-held Exigent Security Products which markets and develops advanced radiation sensors for use by medical, homeland security, defense and other industries. We currently have an unsecured note receivable from Exigent Security Products, Inc. in the amount of $35,000 and bearing interest at 10% per annum, compounded monthly, and with all principal and interest due June 2012. No additional agreements have been entered into at this time. The delay in our ability to acquire capital has led to postponement in the deployment of our business strategy. We intend to produce and deliver products in conjunction with the receipt of required financing. Background Neah Power Systems, Inc. was incorporated in the State of Nevada on February 1, 2001 under the name Growth Mergers, Inc. Effective March 9, 2006, Growth Mergers, Inc. entered into an Agreement and Plan of Merger, as amended on April 10, 2006, whereby Growth Acquisitions, Inc., a Washington corporation and wholly-owned subsidiary of Growth Mergers, Inc., merged with and into Neah Power Washington. Following the merger, Growth Mergers, Inc. changed its corporate name from Growth Mergers, Inc. to Neah Power Systems, Inc. By virtue of this merger, Growth Mergers, Inc. (as Neah Power Systems, Inc.) became the parent corporation of Neah Power Washington. The purpose of the merger was to enable Neah Power Washington, as Growth Mergers, Inc. s subsidiary, to access the capital markets via a public company. Our Common Stock currently trades on the OTCBB under the symbol NPWZ. Research and Development We conduct our research and development, marketing and sales activities at our headquarters in Bothell, Washington. Contingent upon the receipt of adequate financing, we plan to continue investing in research and development, marketing, and sales. We anticipate that these efforts and resulting costs will increase in 2011 compared to prior years due to increased product development related to specific customer products and to additional improvements to our technology. The Company s Patented Technology Rather than joining numerous other companies attempting to create Proton Exchange Membrane ( PEM )-based direct methanol fuel cells ( DMFCs ), we felt an entirely new design approach was necessary to achieve the power density, manufacturability, cost and reliability, and the unique ability to operate in anaerobic (non-air breathing) environments required by portable electronic devices and transportation applications. Our unique fuel cell design utilizes a patented porous silicon electrode structure and circulating liquid streams of fuel, oxidant and electrolyte that produce the chemical reactions needed to generate power. We believe that our use of porous silicon and liquid oxidant is unique in the fuel cell industry. In final form, our products can be packaged in plastic casings to create self-contained systems that retain the excess water produced during operation and prevent contamination to the cathode as occurs in traditional PEM-based DMFCs. Furthermore, since our design is based largely on standard silicon wafer processing, we believe that it should have significant manufacturing advantages over traditional fuel cells. Compared to competing DMFC technologies that use carbon-based electrodes and solid PEM s, we believe that our fuel cell s silicon-based approach will deliver higher power output, lower cost for the equivalent size of fuel cell, a cost efficient manufacturing model that is used by the semiconductor industry, and aerobic and anaerobic operations. In addition, our fuel cell contains all chemical reactants within the fuel cell and/or cartridge. We believe these attributes will give Neah distinct competitive advantages. Porous Silicon Electrodes Our electrode architecture uses conductive porous silicon as the catalyst support structure rather than carbon typically used in fuel cells. We use silicon wafers that are commonly used in the semiconductor industry. As part of our patented technology, the wafers are patterned with millions of micron sized pores, which significantly increase the available active surface area of the silicon. A conductive film is then applied to the surface of the pore walls followed by a catalyst coating over the conductive film. The process can be used to produce either anode or cathode electrodes depending on the type of catalyst used. The final result is a porous electrode that enables a larger reactive surface area to generate more power per unit area. While our focus has been on the closed loop non air ( anaerobic ) systems in 2009 and 2010 we also demonstrated an aerobic system which could be used where the quality of the air is high and predictable. This would reduce the complexity of the system, as well as increase the energy density of the system. Comparison Between Porous Silicon Fuel Cells and PEM-Based Designs We believe that the principal advantages of our approach over PEM-based designs include: Our use of porous silicon electrodes and the liquid electrolyte eliminate a range of possible failure modes that have hampered introduction of PEM-based systems. These include degradation of the PEM membrane, crossover of methanol fuel and degradation of the cathode catalyst, damage to the cathode catalyst by exposure to airborne contaminants such as sulfur, and flooding or alternatively drying out of the cathode catalyst. We believe that these advantages will allow our fuel cells to operate in a broader range of environmental conditions, in all orientations, with high reliability. The use of silicon technology allows us to make use of existing silicon production infrastructure, with reduced need to create specialized production facilities. We can also use standard silicon technology to optimize the dimension of the pores for high power, while optimizing the thickness to reduce cost and overall dimensions of the fuel cell. The larger reaction area, coupled with the use of oxidizer at the cathode, leads to greater available power density, which reduces the size and cost of the fuel cell system. Our technology allows us to create alternative product designs that do not require interactions with the environment for operation. This allows the use of our fuel cell products for applications like sensor networks that require operation without breathing air or expelling gases. The design of the fuel cell avoids conflicts with numerous patents and is furthermore patented by Neah Power Systems. Water created in the fuel cell reaction is retained in the fuel cartridge and not vented where it can damage the host device. We believe that the principal disadvantages of our approach consist of the following factors: Our approach requires both the fuel cell and the cartridge to contain acids at corrosive concentrations, but at concentrations lower than those extant in various liquid acid batteries. It is therefore important to ensure that users of the technology are safely separated from these acids. The need to select materials compatible with the chemistry. As an ongoing effort to increase the competitiveness of our product, we must focus on the following continuous improvement programs (CIP) that would further enhance the performance differentiation of our fuel cell, reduce the cost, and enhance manufacturability and increase lifetime and reliability: Increase the volumetric power density over the power density currently available in our fuel cells - this will enable more compact solutions; Continue development of manufacturing techniques for fuel cell and fuel cartridge assembly, allowing the unit to meet relevant specifications (such as those of the Underwriters Laboratories) that are required by many customers; Further develop manufacturing techniques for key components of the fuel cells and locate suitable manufacturing partners or subcontractors; Reduce the gold and platinum precious metal content of the fuel cells from present levels according to a staged program in order to meet and exceed our production cost objectives; and Improve the aerobic solution that will provide higher energy density for aerobic applications, while leveraging other capabilities from our anaerobic system. Commercialization Strategy We are focusing our initial strategy on markets requiring anaerobic or low oxygen content environments, such as underwater, transportation, aerospace and military applications. EKO and Hobie Cat currently have electric drive consumer products where power capacity is limited by the need for extensive battery re-charging. Implementation of a fuel cell into such electric vehicles could enable continuous operation of these electric drive vehicles by the use of fuels cells with supplies of fuel cartridges. We have a non-binding letter of intent with a large US defense supplier where we are exploring application for a variety of defense oriented applications. Also, competing PEM-based fuel cells could have significant operational limitations when environments contain diesel fumes or high or low humidity. We expect that the partnerships with these initial customers, and other potential customers, will enable us to validate our product, supply chain and overall product strategy. To date, we have not engaged in any field tests of any of our products. Beyond these initial markets, we intend to pursue the military, industrial and consumer markets, since we believe that our product can also provide significant benefits to these business segments. The Fuel Cell Market Revenues generated in the global fuel cell portable power market is estimated to have been $177 million in 2009 and is expected to reach $1.3 billion per year by 2016, according to market research companies like Frost and Sullivan and from our own research. The market for batteries for transportation is expected to be in the $10 billion range by 2015. We believe that significant portions of the transportation market can be served either by a fuel cell replacement of, or complement to, the existing battery technology. Fuel cells can be categorized by the market applications they potentially serve and by their power output. We are focused on providing an alternative or a complementary technology to conventional batteries for portable electronic devices that typically operate in the 5-2000+ Watt range. Specifically, we are targeting small scale and two and four wheeler transportation vehicles, military, industrial and consumer markets with potential applications for computer, electronic media as well as products for military and homeland security electronic equipment. These segments of the fuel cell market include low power systems (less than 10 Watts) for low power devices and trickle chargers, and higher power systems (greater than 100 Watt) typically aimed at stationary power generation or vehicle power plants. In particular, our technology may provide some unique advantages over batteries and other types of fuel cells in harsh environments or where access is limited or unavailable. Our target market segment has a number of specific requirements and unique challenges. To succeed in this segment, fuel cells must have a high power density (high wattage for their size and weight), be relatively insensitive to the quality of the surrounding air and be cost effective. They must also be safe, easily portable, and long-lasting. The fuel cells must be transportable and operate reliably in a wide range of environmental conditions. Within the 10-100 watt battery replacement space, the dominant technology direction over the last 30 years has been the ongoing development of fuel cells based on PEM. A PEM is usually a polymeric structure resembling a thin sheet of plastic that conducts protons, acting as a solid state electrolyte for electrochemical reactions. Typical PEM based fuel cells use this material as a basic building block of the electrochemical power generation unit. PEM -based solutions may use either the oxidation of hydrogen gas as the fuel source or the direct oxidation of liquid methanol in the DMFC configuration. The commercial development of PEM-based solutions has been hampered by a number of technical issues. Performance of these PEM membranes is highly dependent on maintaining tight environmental control of the operating conditions which has been difficult to achieve in product based designs. Longevity of the PEM based systems has also been a challenge with membrane and catalyst degradation issues limiting the operating life of the systems. Finally, PEMs are expensive to manufacture because they use costly proprietary materials and because the industry has not been able to develop the scalable low-cost manufacturing processes that are needed for the unique PEM fuel cell requirements. Remote Area Power Supplies ( RAPS ) Market We are pursuing the RAPS market which can provide 1kW to 10+ kW power systems that can operate off-the-grid. These systems would include a renewable, DC-based generation system (solar, wind, etc.), a power modulation system (DC-DC converter, DC-AC inverter) and storage systems. We expect increasing demand based on the current focus on renewable energy, and the need to reduce dependence on depleting fossil fuel resources. Based our internal marketing estimates and reports published by the marketing research firm of Frost and Sullivan, this global market was estimated to be approximately $500 million in 2009 and is expected to grow to $2.5 billion by 2016. In addition, RAPS products could provide backup power for critical infrastructure like cell phone towers, communication infrastructure and other command and control systems in developed and developing countries. Market for Military Applications Our R&D efforts to date have demonstrated the potential use of our fuel cells in a variety of military applications. The completion of our prototype and the extended testing has demonstrated that the technology has the potential to provide higher density power at longer durations in a more reliable fashion than PEM based fuel cell technologies. In addition, we believe our fuel cells will provide a more environmentally friendly solution compared with rechargeable or non-rechargeable batteries solutions as it relates to manufacturing processes and waste disposal. Our products particularly address anaerobic needs such as underwater, underground, close quarters and high altitude and no atmosphere applications specific to military needs. We believe that the market for military applications will be a significant portion of the market, as reflected in market research by Frost and Sullivan, as well as our internal marketing estimates. This market includes battery replacement and new fuel cell alternatives for specialized applications such underwater and/or unmanned vehicles. Our product could also provide an effective backup power solution. During the year ended September 30, 2009, we received payments of approximately $1,147,000 from the Office of Naval Research ( ONR ) pursuant to the terms of a grant providing expense reimbursement for continuing research and development having to do with certain technology. This contract included various technical developments, and the demonstration of a closed loop, self-contained, anaerobic system. This system was successfully developed and demonstrated to the ONR in September 2009. Market for Industrial Applications, RAPS, and Transportation We are currently developing RAPS that are renewable energy, fuel cell-based power generation and storage systems that can be used for distributed power applications where the quality of the electrical grid is non-existent or sub par, or where back up power is needed. In an initial effort to test prototypes of our technology and sell our products, we entered into non-binding letters of intent and other agreements beginning in 2009. In July 2009, we signed non-binding letters of intent with EKO, one of India s larger manufacturers of electric two wheel vehicles, to develop fuel cell battery charging units for integration into their electric scooters, as well as RAPS to act as charging stations for the scooters and off -grid power sources. The agreements with EKO have expired and we intend to negotiate extensions or new agreements. With sufficient funding, we expect to deliver several beta prototype units in 2012 and, upon successful testing, we expect to sell several hundred additional units. In July 2009, we signed a technology license agreement with Hobie Cat to explore the use of our proprietary fuel cells to power various recreational water craft products. Additionally, we signed a non-binding letter of intent with Hobie Cat to produce on-board fuel cell battery chargers for their line of electric kayaks. With sufficient funding, we anticipate delivery of several beta prototype systems in 2012, and several hundred systems on successful completion of the beta evaluations. In April 2010, we signed a non-binding letter of intent with a large U.S. defense supplier to provide our innovative fuel cell technology for a variety of defense applications. With sufficient funding, we anticipate delivery of several beta prototype systems in 2012, and additional business on successful completion of the beta evaluations. Market for Consumer Mobile Electronics Recent trends continue to demonstrate a clear need for better and longer-lasting power solutions to close the power gap, which is defined as the difference between the power capacity and the power need, thus enhancing mobility and productivity. Based on user demand, mobile electronics companies continue to add features for richer experiences. Notebook PC makers, for example, in recent years have enhanced their products with larger, more vivid color displays, faster processors, larger hard drives, DVD and/or CD drives, as well as multimedia and wireless networking capabilities. Each of these additions requires more power and, taken together, can be a significant drain on a PC s limited battery capacity. Users are also more dependent on these mobile devices and are using them longer without access to outlet power. Sales of notebook PCs continue to grow faster than those of the overall PC market, and now represent more than half of all PCs sold. The size of the consumer market fuel cells as battery replacements is estimated to be between $6 billion and $8 billion per year, as reflected in market research by Frost and Sullivan and our internal marketing estimates. Moreover, with the growth and widespread availability of high-speed wireless connections (Wi-Fi) in corporate offices and public locations, persistent computing - constant connectivity to the Internet, e-mail and corporate files - is becoming commonplace, creating additional demand for longer-lasting power. While this is a large, and growing, market, we believe that our fuel cells, when fully developed, will be capable of bridging the mobile electronics power gap. We expect to offer products that produce more power and last longer than battery or other power solutions can offer. Proprietary Rights and Intellectual Property We rely primarily on patents and contractual obligations with employees and third parties to protect our proprietary rights. We continue to seek appropriate patent protection for our proprietary technologies by filing patent applications in the U.S. and in certain foreign countries. As of August 17, 2011, we owned or controlled eleven issued or allowed U.S. patents and two pending U.S. patent applications, including provisional patent applications. Our patents and patent applications are directed to the components and systems involved in our fuel cell design and the use of porous substrates coated with catalyst as fuel cell electrodes and electrode structures, cell bonding techniques, and cartridges Our financial success will depend in large part on our ability to: obtain patent and other proprietary protection for our intellectual property; enforce and defend patents and intellectual property once obtained; operate without infringing on the patents and proprietary rights of third parties; and preserve our trade secrets. In addition, we believe our fuel cell design and technology are not in conflict with the U.S. patents covering PEM-based DMFCs held by several organizations. Employees As of August 17, 2011, we had four employees, including two executive officers, one administrative and one technical employee. We have previously reported that we had furloughed most of our employees. We intend to rehire personnel and hire additional staff after raising sufficient funds. We also expect to continue to using outside business development consultants, whose compensation will be based on revenue opportunities they create. Competition The development and marketing of fuel cells and fuel cell systems is extremely competitive. In many cases, we may compete directly with alternative energy, fuel cell, and entrenched power-generation and power-storage technologies. In addition, a number of firms throughout the world have established fuel cell development programs, albeit most of them PEM-based. Competitors range from development stage companies to major domestic and international companies, many of which have: substantially greater financial, technical, marketing and human resource capabilities; established relationships with original equipment manufacturers; name-brand recognition; and established positions in the markets that we have targeted for penetration. These or other companies may succeed in developing and bringing to market products or technologies that are more cost-effective than those we develop or that would render our products and technology obsolete or non-competitive in the marketplace. Available Information We are a public reporting company and file annual, quarterly and special reports, and other information with the SEC. You may read and copy these reports at the SEC s Public Reference Room at 100 F Street, NE, Washington, DC 20549. Please call the SEC at 1-800-SEC-0330 or email the SEC at publicinfo@sec.gov for more information on the operation of the public reference room. Our SEC filings are also available at the SEC s website at http://www.sec.gov. DESCRIPTION OF PROPERTY Our corporate offices and laboratory facilities are located at 22118 20th Ave SE, Suite 142, Bothell Washington, where we lease approximately 5,700 square feet of office space and 5,300 square feet of laboratory space. We currently lease on a month-to-month basis, and intend to negotiate with the landlord for a lease extension. The average monthly rental payment including utilities and operating expenses for the facility is approximately $19,000 per month. We believe that the leased facility is in good condition and adequate to meet our current and anticipated requirements. We are currently in arrears on rent payments and, in January 2010, we received a notice of eviction. The landlord has not taken any additional actions pertaining to eviction and we are currently negotiating with the landlord for a long-term extension on our lease. LEGAL PROCEEDINGS On September 11, 2009, a consultant of the Company filed a lawsuit in the Superior Court of California, County of Santa Clara, styled Novellus Systems, Inc. v. Neah Power Systems, Inc. alleging breach of contract due to unpaid vendor bills. The consultant obtained a default judgment in December 2009 in the amount of $62,524. In March 2011, Novellus sold the rights to this obligation to an investor. The obligation has since been paid and there remain no claims against the Company. On December 4, 2009, our landlord filed a lawsuit against us for unpaid rent in the amount of $76,069 in the case styled Teachers Insurance & Annuity v. Neah Power Systems, Inc. in the Superior Court of the State of Washington, County of King (Case No. 09-2112914). Our landlord was granted a default judgment in December 2009 in the amount of $81,106.11. Pursuant to that judgment, in January 2010 we received a notice of eviction from our landlord because of the unpaid rent. Since the notice, we have paid $145,000 against that balance. The landlord has not taken any additional actions pertaining to eviction. We owe approximately $339,000 of rent to the landlord as of the date of this report. We are currently negotiating with the landlord for a long-term extension on our lease. The landlord has indicated the willingness to incorporate our past due rent into the terms of the new lease and forgive past due penalties and interest. On January 20, 2010, our former Chief Executive Officer, Paul Abramowitz, initiated a lawsuit against us in the Superior Court for the State of Washington styled Abramowitz v. Neah Power Systems, et al. (Case No. 10-2-3688-1 SEA) in which Mr. Abramowitz has sued for breach of his employment contract in the amount of $275,000, plus interest, and willful failure to pay wages for which he seeks double damages or twice the amount of the wages allegedly withheld, plus attorneys fees and interest. Other persons presently affiliated with the Company or affiliated with the Company in the past, including Gerard C. D Couto, Stephen M. Wilson, Jon M. Garfield, Ed Cabrera, Michael Selsman, Paul Sidlo, James Smith and Robert J. McGovern, were also named as defendants in the Abramowitz lawsuit. During the quarter ended June 30, 2011, the Court dismissed the claims against all these persons with the exception of Dr. D Couto, finding that they are not personally liable under Washington wage law. We have filed a third party complaint against the following former officers and directors who may be implicated by Abramowitz s claims due to their presence on the Neah Power board of directors: Michael Solomon, Eugene Buzz Aldrin, Leroy Ohlsen and David Barnes. We have also filed counterclaims against Mr. Abramowitz for breach of fiduciary duties as a director and officer, conversion and violation of state and federal securities laws. In connection with the Abramowitz lawsuit, our former director, James Smith, has filed a cross-complaint against the Company, the other defendants in the Abramowitz lawsuit, Michael Solomon, Leroy Olsen and Buzz Aldrin for breach of contract and unpaid wages related to Mr. Smith s past service on our board of directors. Smith has also made a claim for indemnification for the defense of the Abramowitz action, which was granted by the Court. The amount to be assessed for this claim has not yet been determined. On March 3, 2010, a complaint was filed by the Chapter 7 Trustee of the law firm Dreier Stein Kahan Browne Woods George LLP in the Superior Court of California, Los Angeles Central District (Case No. BC432899) alleging breach of contract for past legal services and seeking $66,000. Dreier Stein obtained a default judgment in November 2009 in the amount of approximately $63,000 which includes the unpaid legal fee amounts plus interest. The judgment remains unpaid. In August 2010, Protingent Staffing, Inc. filed a lawsuit in the South District Court, County of Snohomish, State of Washington styled Protingent Staffing, Inc. v. Neah Power Systems, Inc. (Case No. 10-2-09637) alleging breach of contract due to unpaid vendor bills and seeking $35,382. Protingent obtained a default judgment on November 22, 2010 in the amount of $42,604 which includes the unpaid vendor bill amounts plus interests. The judgment remains unpaid. Other than those matters outlined above, we are currently not involved in any litigation that we believe could have a material adverse effect on our financial condition or results of operations. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our company or any of our subsidiaries, threatened against or affecting our company, our common stock, any of our subsidiaries or of our companies or our subsidiaries officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS Market Information Our common stock trades on the OTCBB under the symbol NPWZ. Set forth below are the range of high and low bid quotations for the periods indicated as reported by the OTCBB. The market quotations reflect inter-dealer prices, without retail mark-up, mark-down or commissions and may not necessarily represent actual transactions. High Low Fiscal Year Ended September 30, 2009: First Quarter (October 1, 2008 December 31, 2008) $ 0.33 $ 0.08 Second Quarter (January 1, 2009 March 31, 2009) $ 0.27 $ 0.12 Third Quarter (April 1, 2009 June 30, 2009) $ 8.93 $ 0.12 Fourth Quarter (July 1, 2009 September 30, 2009) $ 5.27 $ 0.93 Fiscal Year Ended September 30, 2010: First Quarter (October 1, 2009 December 31, 2009) $ 1.30 $ 0.59 Second Quarter (January 1, 2010 March 31, 2010) $ 0.79 $ 0.18 Third Quarter (April 1, 2010 June 30, 2010) $ 0.29 $ 0.04 Fourth Quarter (July 1, 2010 September 30, 2010) $ 0.12 $ 0.05 Fiscal Year Ended September 30, 2011: First Quarter (October 1, 2010 December 31, 2010) $ 0.062 $ 0.014 Second Quarter (January 1, 2011 March 31, 2011) $ 0.025 $ 0.009 Third Quarter (April 1, 2011 June 30, 2011) $ 0.070 $ 0.007 On July 27, 2009, we effected a 200:1 reverse stock split of all issued and outstanding shares of our common stock. On August 14, 2009, we effected a 4:1 forward split and a 0.5 for 1 share dividend of all issued and outstanding shares of our common stock resulting in the equivalent of a 6 for 1 forward stock split. This schedule reflects those changes to the historical prices. The last sale price of our common stock on August 17, 2011, was $0.0089. Holders As of August 17, 2011, there were approximately 350 holders of record of our common stock. This number does not include beneficial owners of common stock whose shares are held in the names of various dealers, clearing agencies, banks, brokers and other fiduciaries. Dividends We have not declared or paid any dividends on our common stock and intend to retain any future earnings to fund the development and growth of our business. Therefore, we do not anticipate paying dividends on our common stock for the foreseeable future. There are no restrictions on our present ability to pay dividends to stockholders of our common stock, other than those prescribed by Nevada law. Selected Financial Data Not applicable. Supplementary Financial Information Not applicable. MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION SPECIAL NOTE ABOUT FORWARD-LOOKING STATEMENTS This registration statement and the documents incorporated herein by reference contain forward-looking statements. Specifically, all statements other than statements of historical facts included in this quarterly report regarding our financial position, business strategy and plans and objectives of management for future operations are forward-looking statements. These forward-looking statements are based on the beliefs of management, as well as assumptions made by and information currently available to management. When used in this annual report, the words anticipate, believe, estimate, expect, may, will, continue and intend, and words or phrases of similar import, as they relate to our financial position, business strategy and plans, or objectives of management, are intended to identify forward-looking statements. These statements reflect our current view with respect to future events and are inherently subject to risks and uncertainties, many of which we cannot predict with accuracy and some of which we might not even anticipate. Although we believe that the expectations reflected in such forward-looking statements are based upon reasonable assumptions at the time made, we can give no assurance that such expectations will be achieved. Future events and actual results, financial and otherwise, may differ materially from those expressed in the forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements. We have no duty to update or revise any forward-looking statements after the date of this Form S-1 and the documents incorporated herein by reference or to conform them to actual results, new information, future events or otherwise. The following factors, among others, could cause our or the industry s future results to differ materially from historical results or those anticipated: our future capital needs and the ability to obtain financing; our ability to obtain governmental approvals, including product and patent approvals; the success or failure of our research and development programs, marketing, and sales efforts; the acceptance and success of our fuel cell products; our ability to develop and commercialize products before our competitors; and our limited operating history, and current debt and working capital conditions These factors are the important factors of which we are currently aware that could cause actual results, performance or achievements to differ materially from those expressed in any of the forward looking statements. We operate in a continually changing business environment and new
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus that we believe is most important to understanding how our business is currently being conducted. It is not complete and may not contain all of the information that is important to you. You should read the entire prospectus carefully, including the Risk Factors section and the consolidated financial statements and related notes included in this prospectus, before making an investment decision. Introduction Vertical Health Solutions, Inc., or VHS, was incorporated in March 2000 as a Florida corporation under the name LabelClick.com, Inc. In January 2001, VHS changed its name to Vertical Health Solutions, Inc. On February 1, 2011, VHS entered into the Agreement and Plan of Merger, by and among OnPoint, on the one hand, and VHS and Vertical HS Acquisition Corp., a Delaware corporation and wholly-owned subsidiary of VHS, referred to herein as Merger Sub, on the other hand, which we refer to as the Reverse Merger Agreement. The transactions contemplated by the Reverse Merger Agreement were consummated on April 15, 2011, referred to herein as the Closing or the Closing Date. Pursuant to the Reverse Merger Agreement, on the Closing Date, Merger Sub merged with and into OnPoint, which we refer to as the Reverse Merger, with OnPoint being the surviving corporation and becoming a wholly-owned subsidiary of VHS, and the outstanding shares of capital stock of OnPoint were converted into an aggregate of 7,143,113 shares of common stock of VHS, on the terms and conditions as set forth in the Reverse Merger Agreement. This summary of the Reverse Merger is qualified in its entirety by reference to the actual agreement, a copy of which was filed as an exhibit to VHS s Current Report on Form 8-K, filed with the SEC, on February 7, 2011. Following the Closing Date of the Reverse Merger, OnPoint became our wholly-owned operating subsidiary. The business of OnPoint constitutes all of our operations. On June 7, 2011, we completed the initial closing of a private placement to accredited investors of 525,000 units, at a purchase price of $1.00 per unit, for approximately $525,000 in gross proceeds. Each unit consisted of one share of common stock and a warrant to purchase 0.5 shares of common stock. As a result, we issued an aggregate of 525,000 shares of common stock, together with warrants to purchase approximately 262,500 shares of common stock at an exercise price of $2.00 per share. In addition, on June 7, 2011, we entered into a bridge note conversion agreement with certain of our bridge note holders to convert all or a portion of the outstanding principal balance (plus accrued interest) of such holders 10% conversion promissory notes, referred to herein as the 10% Notes, into shares of common stock at a conversion price of $0.65 per share. Holders of $1,017,500 of 10% Notes have converted their 10% Notes into 1,637,663 shares of common stock. Unless otherwise indicated or the context otherwise requires, all references below in this prospectus to we, us and the Company are to VHS, together with its wholly-owned subsidiary, OnPoint. Specific discussions or comments relating only to Vertical Health Solutions, Inc. prior to the Reverse Merger reference VHS , those relating only to OnPoint Medical Diagnostics, Inc. reference OnPoint and those relating only to Vertical HS Acquisition Corp. reference Merger Sub . OnPoint was originally incorporated under the name CGI Enterprises II, Inc. in the State of Minnesota. Business Overview OnPoint was founded to commercialize magnetic resonance imaging, or MRI, quality assurance software testing software and technologies developed by Mayo Clinic. Our vision, however, is much broader than this. We intend to leverage technology and intelligent systems to assist the global healthcare industry in delivering the highest quality medical images possible safely, consistently and efficiently. Our enterprise quality assurance solution will be delivered in a Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. x If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. Large accelerated filer o Accelerated filer o Non-accelerated filer o (Do not check if a smaller reporting company) Smaller reporting company x Table of Contents Software as a Service , or SaaS, utility computing model, which will accommodate advanced imaging facilities with multiple diagnostic imaging scanners. Our flagship product for MRI is focused on automating the weekly quality control measures required for accreditation by American College of Radiology, or ACR, with real-time dashboards, analytics and trending to make sure scanners are providing the best possible images of patients. The Offering This prospectus relates to the resale by the selling security holders identified in this prospectus of up to 3,600,000 shares of common stock, all of which are issued and outstanding, of which [ ] were issued in connection with the initial closing of the June 2011 private placement, 1,637,665 were issued upon conversion of the 10% notes and [ ] of which were held by existing VHS stockholders prior to the Reverse Merger. All of the shares, when sold, will be sold by these selling security holders. The selling security holders may sell their shares of common stock from time to time at market prices prevailing at the time of sale, at prices related to the prevailing market price, or at negotiated prices. We will not receive any proceeds from the sale of the shares of common stock by the selling security holders other than as a result of the exercise of warrants for cash held by the selling security holders. Corporate Information Our principal executive offices are located at 7760 France Avenue South, 11th Floor, Minneapolis, Minnesota 55435. Our telephone number is (612) 568-4210. Our website address is www.onpointmd.com. The information contained on our website is not incorporated by reference into, and does not form any part of, this prospectus. CALCULATION OF REGISTRATION FEE Title of each class of securities to be registered Amount to be registered Proposed maximum offering price per share Proposed maximum aggregate offering price Amount of registration fee Common Stock, $.001 par value per share 3,600,000 (1) $ 6.51 (2) $ 23,436,000 (2) $ 2,725 (1) Represents shares to be sold by the selling security holders named herein. Pursuant to Rule 416 of the Securities Act of 1933, as amended, this registration statement shall also cover any additional shares of common stock by reason of any stock dividend, stock split, recapitalization or other similar transaction or to cover such additional shares as may hereinafter be offered or issued to prevent dilution resulting from stock splits, stock dividends, recapitalizations or certain other capital adjustments, effected without the registrant s receipt of consideration, which results in an increase in the number of outstanding shares of the registrant s common stock. (2) In accordance with Rule 457(c), the price is estimated solely for purposes of calculating the registration fee and is based upon the average of the bid and asked prices of the Common Stock as reported on the OTC Bulletin Board on September 1, 2011. Table of Contents
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus; it does not contain all of the information you should consider before investing in our common stock. You should read the entire prospectus before making an investment decision. Throughout this prospectus, the terms the Company, Protext Mobility, we, us, our, and our company refer to ProText Mobility, Inc., a Delaware corporation. Company Overview ProText Mobility Inc. (formerly known as EchoMetrix Inc. and SearchHelp, Inc.) was incorporated in the State of Delaware on September 5, 2001 and completed its initial public offering on July 23, 2003. During the fiscal year ended December 31, 2008, the Company acquired 100% of the stock of EchoMetrix, Inc., a wholly owned subsidiary, and in May of 2009 the Company filed a Certificate of Ownership and Merger with the Secretary of State of Delaware pursuant to which EchoMetrix, Inc. was merged into the Company, and the Company's corporate name was changed from SearchHelp, Inc. to EchoMetrix, Inc. In December of 2010, the Company formed a new subsidiary, ProText Mobility, Inc., and filed a Certificate of Ownership and Merger with the Secretary of State of Delaware pursuant to which ProText Mobility, Inc. was merged into the Company, and the Company s name changed from EchoMetrix, Inc. to ProText Mobility, Inc. Our Business Protext Mobility develops, markets and sells software products and solutions for the internet and mobile communications markets aimed at protecting children from danger on the internet and in mobile communication. The Company has expanded its business plan from developing software solely for personal computers ( PCs ) to developing software for products designed for the mobile industry. We offer three products, one for PCs and two for mobile communications devices. Although we continue to derive substantially all of our revenue from our first PC-based technology, namely FamilySafe Parental Controls, we anticipate deriving a substantial portion of our future revenues from products designed for the mobile industry. Our lead mobile product, SafeText, is a service for mobile devices that provides parents a tool to help manage their children s mobile communication activities. We have generated minimal revenue from operations, have negative working capital and have experienced operating losses over the past two years resulting in an accumulated deficit of approximating $44,916,911, a stockholders deficit of approximately $1,551,768 and a working capital deficiency of $1,504,196 for the six months ended June 30, 2011. For the six months ended June 30, 2011, we generated revenue of $12,691 and incurred net losses of approximately $1,955,885. We generated revenue of approximately $30,853 and $31,428 for the years ended December 31, 2010 and 2009, respectively, and incurred net losses of approximately $5,679,000 and $4,481,000 for the years ended December 31, 2010 and 2009, respectively. We have not made all of the required payments under several notes that matured during 2007 and 2008 in the aggregate principal amount of $114,034. In addition, we have not made required payments under seven notes that matured between February 2011 and September 2011 in the aggregate principal amount of $225,000. Two notes in the aggregate principal amount of $470,125 are due in November 2011 and four notes in the aggregate principal amount of $51,000 are due in December 2011. Should the holders of any of these notes demand payment and we are unable to renegotiate the terms of the notes or raise funds at the time of any such demand to repay amounts owed, the note holders could declare the notes in default and take legal action against us. Our ability to continue to operate is dependent upon our ability to raise additional funds to repay the notes secured by our assets and/or secure forbearance agreements from these lenders. The opinion of our independent auditors for the fiscal years ended December 31, 2010 and December 31, 2009 is qualified subject to substantial doubt as to our ability as a going concern. If we are in fact unable to continue as a going concern, you may lose your entire investment. Our principal executive offices are located at 6800 Jericho Turnpike, Suite 208E, Syosset, New York 11791 and our telephone number is (516) 802-0223. CALCULATION OF REGISTRATION FEE Title of each class of securities to be registered Amount to be registered (1) Proposed maximum offering price per share (2) Proposed maximum aggregate offering price (1) Amount of registration fee (3) Common Stock, $.0001 par value per share 35,000,000 $ .03 $ $1,050,000 $ 121.90 (1) In accordance with Rule 416(a), the registrant is also registering hereunder an indeterminate number of shares that may be issued and resold resulting from stock splits, stock dividends or similar transactions. (2) Estimated in accordance with Rule 457(c) of the Securities Act of 1933 solely for the purpose of computing the amount of the registration fee based on the recent sales of unregistered securities on October 20, 2011. (3) Calculated under Section 6(b) of the Securities Act of 1933 as .00011610 of the aggregate offering price. The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. The Offering Common stock that may be offered by selling stockholder 35,000,000 shares Common stock currently outstanding 169,514,906 shares Total proceeds raised by offering We will not receive any proceeds from the resale or other disposition of the shares covered by this prospectus by the selling shareholder. We will receive proceeds from the sale of shares to Eclipse. Eclipse has committed to purchase up to $7,500,000 worth of shares of our common stock over a period of time terminating on the earlier of: (i) 24 months from the effective date of the registration statement filed in connection with the Equity Credit Agreement; or (ii) the date on which Eclipse has purchased shares of our common stock pursuant to the Equity Credit Agreement (the Equity Line ) for an aggregate maximum purchase price of $7,500,000. The purchase price to be paid by Eclipse will be 93% of the market price of our common stock on the date the purchase price is calculated. The Company will be entitled to put to Eclipse on each put date such number of shares of common stock as equals the lesser of: (i) $250,000; or (ii) 375% of the average of the product of: (a) the closing bid price; and (b) the volume of the principal trading exchange for our common stock for the 15 trading days preceding the put date; provided that the number of shares to be purchased by Eclipse may not exceed the number of shares that, when added to the number of shares of our common stock then beneficially owned by Eclipse, would exceed 4.99% of our shares of common stock outstanding.
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+Table of Contents Within the Renewable Energy area, we primarily use the Power Purchase Agreement ( PPA ), a financial vehicle which affords our clients the opportunity to enjoy the benefits of solar voltaic systems but with no cost to them. The PPA is the standard savings sharing vehicle in the solar industry. We currently offer solar voltaic Renewable Energy solutions as well as wind generating Renewable Energy solutions. We do not currently have any assets associated with PPAs recorded on our balance sheet. We are on the percentage of completion method for recognizing profits on our fixed price contracts including energy management contracts and PPAs for financial reporting purposes and on the cash basis method for income tax purposes. Estimates of percentage of completion are based on direct costs incurred to date as a percentage of the latest estimate of total costs anticipated. This method is used because management considers costs incurred to be the best available measure of progress on these contracts. Because of the inherent uncertainties in estimating costs, it is at least reasonably possible that the Company's estimates of costs and revenues will change in the near future. Provisions for anticipated losses on contracts are made when such losses become apparent. Profits on cost-plus contracts are recognized as costs are incurred for both financial reporting purposes and income tax purposes. On November 2, 2010, we entered into a ten-year lighting retrofit and maintenance contract ( Contract ) to provide energy management lighting installation and services to Riverbay Fund, Inc. ( Riverbay ), the management company of Co-op City, located in Bronx, a borough of New York City. The Contract entails replacing and retrofitting over 6,000 lighting fixtures and elements in eight parking structures within Co-op City. Project inception is subject to final approval from the New York State Energy Research and Development Authority under the American Recovery and Reinvestment Act. During the term of the Contract the Company will receive $800,000, based upon meeting certain installation milestones, from a grant received by Riverbay, plus approximately an additional $15,000 per month over the Contract term. Table of Contents Key Manufacturers and Suppliers Our extensive contacts and relationships within the energy management industry allow us to not carry the substantial expenses associated with a full-scale research and development team. We deal directly with the industry leaders and have the relationship strength to help dictate product development and direction. Currently, we are also committed to helping create efficiencies relating to the manufacture of LED products and photovoltaic cells. Our primary goal with vendor intervention is to ensure bulk pricing but, more importantly, to guarantee product availability and delivery. We have manufacturing relationships with various vendors, including MHT Lighting and Green Apple Lighting, to ensure adequate supply of products with favorable product pricing and transportation cost. Additionally, by having suppliers geographically diverse, we also ensure that our clients are not delayed for delivery and installation of energy efficient products. We have also entered into a technology license agreement (as more fully described in the Patents and Trademarks section below) with PMP Pool Maintenance Protection, Inc. ( PMP ) and Juan Carlos Bocos ( Bocos ), pursuant to which we obtained an exclusive royalty-free license to market and sell certain water valves manufactured through the use of certain technology licensed under the technology license agreement and utilized in our Energy Efficiency solutions. Pursuant to the technology license agreement, PMP shall manufacture all water valves required by our customers. Our team is also highly involved in the green industry through associations and trade shows and is able to stay on the pulse of the market to ensure that we remain on the cutting edge of green technology development. Sales & Marketing With future funding, we plan to establish a formal sales and marketing team. To date, we have marketed, with our existing management team, to a small group of large-scale electricity consumers through targeted sales and attendance at trade shows. We have rapidly broadened our marketing approach to cover other alternative customers by exploring creative uses for available efficiency technologies. Most recently, we have broadened our marketing effort to international clients which exhibit similar Energy Efficiency and cost savings to those domestically. On the effective date of the agreement, PMP was granted 2,112,000 shares of the Company s common stock. Such shares were deemed to be fully vested upon execution of the agreement. Pursuant to the technology license agreement, Bocos agreed to provide certain consulting services to the Company, which shall include assisting in the procurement of customers for the licensed technology. Bocos shall receive a fixed consulting fee of $8,000 per month for such services. In addition, he shall, in the sole discretion of our board of directors, be entitled to certain additional compensation in the form of cash bonuses and/or increases in the consulting fee based upon his performance. On October 26, 2010, we entered into an agreement with Claudio Castella to provide sales leads and certain marketing services. Mr. Castella receives a draw of $8,000 per month against a commission of 5% of net profits of projects we execute that Mr. Castella brings us. Table of Contents We have attended trade shows and have joined regional organizations to better promote ourselves to potential customers for energy management and Energy Efficiency projects. Our technology team has also focused marketing efforts through a web-based presence to remain on the cusp of the industry as well as maintaining communications with existing and future customers. Government Regulation We are not governed by formal government regulations, although the contracts we potentially enter into with our municipal and quasi-public customers are governed by applicable regulations and laws governing public and quasi-public contracting. We ensure that all of our purchased products and services comply with applicable government regulations. We install only Underwriting Laboratories ( UL ) approved lighting products and, when required, we will provide documentation showing that our products are assembled in the USA. Additionally, with photovoltaics, we only use UL approved panels with corresponding 25 year warranties. We also ensure that all of our employees and sub-contractors are in full compliance with the government regulations relating to projects they are working on. Competition Currently, we are not aware of any specific competitor in the turn-key energy management sector. Our competition may, in the future, come from different lighting-related sectors. They could range from the vertically integrated, larger scale light manufacturers such as General Electric Company and Osram Sylvania Inc. to small, local electrical contractors competing while working with their traditional clients. We also compete with the solar integrators who are competing with us in developing projects. We believe that we have the edge over the integrators due to our ongoing energy management relationship with our target clients. Patents and Trademarks On September 29, 2010, we entered into a technology license agreement with PMP and Bocos, pursuant to which we acquired an exclusive royalty-free license to market and sell certain water valves utilized in our Energy Efficiency solutions. The license agreement shall be effective for as long as PMP or any assignee of PMP, retains any rights in the licensed technology and for so long as we pay Bocos the consulting fee provided for under the technology license agreement, which amounts to $8,000 per month. On October 12, 2010, we entered into an agreement with Green RG Management, LLC ( Green RG ) and its affiliates to acquire a license to market exclusively and distribute patented and proprietary light-emitting diode ( LED ) technology from Green RG. Under the agreement, the principal of Green RG may potentially receive between 10 million and 30 million restricted shares of the Company s common stock based upon the achievement of certain performance thresholds. We intend to obtain such shares from existing shareholders of the Company, however, there are presently no formal agreements in place to obtain such shares nor can we provide any assurance that any of our existing shareholders will agree to provide such shares. Within ten days of the execution of the agreement, we were obligated to issue 10 million shares of our common stock to the principal of Green RG, which shares shall be full vested once GEM has executed bona fide written contracts having a value of $25 million. The shares being held in escrow pursuant to the agreement will be released to the principal of Green RG on a quarterly basis pro rata based upon the percentage of the $25 million in contracts GEM has executed as a result of opportunities offered to GEM by Green RG. During the year following September 30, 2010, for every $25 million in additional bona fide written contracts Green RG secures for GEM, the principal of Green RG shall receive an additional 10 million restricted shares of our common stock. Such shares shall be released to the principal of Green RG on a quarterly basis pro rata based upon the percentage of the $25 million in contracts GEM has executed as a result of opportunities offered to GEM by Green RG. We do not expect that we will be issuing any additional shares as a result of this transaction as we intend to obtain such shares from an existing shareholder of the Company. As of January 4, 2011, no shares have been delivered to Green RG. Other than as described above, we hold no patents or trademarks at this time. Properties We have a leased principal executive office comprised of approximately 1,500 square feet located at 381 Teaneck Road, Teaneck, New Jersey 07666 and sales office comprised of approximately 400 square feet located at 3401 North Miami Avenue, Suite 240, Miami, Florida 33127. Lease payments at fiscal year ending December 31, 2010, are $4,500 per month for the Teaneck office and are due on a month-to-month basis. The office space in Miami is provided to us by Mr. Samuel, our Chairman, President, Chief Executive Officer and director, on a no-fee basis. We sublet approximately 500 square feet of our Teaneck office space to a certain stockholder of ours in consideration of monthly payments of $1,500, which we believe represents market rates. We do not own any real property. We consider these facilities to be suitable and adequate for the management and operation of our business. Employees As of January 4, 2011, we had 5 full-time employees and one part-time employee. In addition, we had a consulting agreement with Peter Barrios, a member of the board of directors of GEM, to provide accounting services to us. GEM also may contract for the services of independent consultants involved in Renewable Energy, regulatory, accounting, financial and other disciplines, as needed. None of our employees are represented by labor unions or covered by any collective bargaining agreement. We believe that we have a good relationship with our employees. We also currently utilize the services of 3 consultants. Table of Contents Legal Proceedings From time to time, we may become involved in litigation relating to claims arising out of its operations in the normal course of business. No legal proceedings, government actions, administrative actions, investigations or claims are currently pending against us or involve us which, in the opinion of our management, could reasonably be expected to have a material adverse effect on our business or financial condition. There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial stockholder, is an adverse party or has a material interest adverse to us. Table of Contents MANAGEMENT Set forth below is certain information regarding our current executive officers and directors. Each of the directors listed below was elected to our board of directors to serve until our next annual meeting of stockholders or until his successor is elected and qualified. All directors hold office for one-year terms until the election and qualification of their successors. The following table sets forth information regarding the members of our board of directors and our executive officers as of December 16, 2010: Name Age Position with the Company Michael Samuel 53 Chairman, President and Chief Executive Officer Robert Weinstein 50 Chief Financial Officer William Chip D Angelo 54 Director Michael Rapaport 32 Director Oren Moskowitz 27 Chief Technology Officer of GEM John Morra III 47 President and Director of Project Development of GEM Biographical Information Executive Officers and Directors MICHAEL SAMUEL. Mr. Samuel has been the Chairman and Chief Executive Officer of GEM since March 2010 and became the Chairman and Chief Executive Officer of the Company in August 2010 in connection with the merger. Since 2007, Mr. Samuel has been a principal of SamDevelop, a progressive real estate investment and development firm. SamDevelop has developed and managed over fifty projects in New York, San Francisco, Virginia, Florida and New Orleans. The portfolio of SamDevelop encompasses projects valued in excess of $2.2 billion. From 1997 to 2007, Mr. Samuel founded and operated Samuel & Co, for which he was instrumental in the master planning of ventures, from overseeing day-to-day operations, construction development to financial analysis of the project. In addition to Mr. Samuel s extensive experience and successful track record in real estate development, Mr. Samuel acquired Citywide Management Inc., a property management and full-service building maintenance firm based in Port Washington, New York, which he sold in September 2001. On December 23, 2009, Market Street Properties, L.L.C., a limited liability company in which a limited liability company partially owned by Mr. Samuel had a membership interest and served on the management committee, filed for bankruptcy protection under Chapter 11 of the United States Bankruptcy Code. Mr. Samuel received his Bachelor of Science degree in Economics from Queens College. Key Attributes, Experience and Skills: Mr. Samuel s background as the Chairman and Chief Executive Officer of GEM and his day-to-day leadership of GEM enables him to bring to our board of directors valuable insights and perspectives about GEM, the Energy Efficiency and Renewable Energy industry and the global markets and economies, including a thorough understanding of the business, operations and prospects. Also, Mr. Samuel s extensive real estate development experience allows him to provide insight into many of GEM s prospective real estate-based clients. ROBERT WEINSTEIN. Mr. Weinstein was appointed as the Chief Financial Officer of GEM in April 2010 and became the Chief Financial Officer of the Company in August 2010 in connection with the merger. Prior to joining GEM, from August 2007 to April 2010, Mr. Weinstein served as the Chief Financial Officer for Xcorporeal, Inc., a publicly traded, development-stage medical device company which was sold to Fresenius Medical USA, the largest provider of dialysis equipment and services worldwide, in March 2010. Prior to joining Xcorporeal, Mr. Weinstein was Vice President, Director of Quality Control & Compliance of Citi Private Equity Services (formerly BISYS Private Equity Services), New York, a worldwide private equity fund administrator and accounting service provider. In 2005, Mr. Weinstein was the Founder, Finance & Accounting Consultant for EB Associates, LLC, Irvington, NY, an entrepreneurial service organization. From 2003 to 2004, Mr. Weinstein served as the Chief Financial Officer of Able Laboratories, Inc., located in Cranbury, New Jersey, which was a developer and manufacturer of generic pharmaceutical products in tablet, capsule, liquid and suppository dosage forms and which subsequently filed for Chapter 11 bankruptcy protection in July 2005, which bankruptcy was not accounting-related. From 2002 until 2003, Mr. Weinstein served as Acting Chief Financial Officer for Eurotech, Ltd., Fairfax, VA, a distressed, publicly traded early-stage technology transfer and development company. Mr. Weinstein received his M.B.A in Finance & International Business from the University of Chicago, Graduate School of Business and a Bachelor of Science in Accounting from the State University of New York at Albany. Mr. Weinstein is a Certified Public Accountant (inactive) in the State of New York. Table of Contents WILLIAM CHIP D ANGELO. Mr. D Angelo has been a member of the board of directors of GEM since March 2010 and became a director of the Company in August 2010 in connection with the merger. Since 1992, Mr. D Angelo has been serving as the President of WCD Group, a multi-faceted enterprise, comprised of several wholly-owned businesses specializing in various aspects of the environmental and construction industry, founded by Mr. D Angelo. From 2000 to 2002, Mr. D Angelo served as Vice President of Business Development for McGraw-Hill Construction, a provider of construction market analysis, forecasts and trends for the design and construction industry. Mr. D Angelo has over 27 years of experience in managing and growing environmental service, industrial hygiene, laboratory, engineering, and contracting businesses, as well as extensive hands on experience in operations, finance, sales & marketing, and environmental program management. His additional experience includes raising capital and mergers & acquisitions in both public and private firms and Mr. D Angelo has recent experience in Internet applications to the construction and engineering industries, e-commerce, and web-based supply chain management. Mr. D Angelo has also provided industry information for six publications in the environmental sciences field. Mr. D Angelo received his B.S. Environmental Sciences at Montclair State University and has numerous professional certificates and achievements in his field. Table of Contents Key Attributes, Experience and Skills: In addition to the professional background and experience, senior- and executive-level policy-making positions and intangible attributes, Mr. D Angelo, through his service over the course of eighteen years as President of WCD Consultants, an independent executive management consulting company to the environmental, health and safety industry, as well as executive positions at other companies, possesses 27 years of experience in managing and growing environmental service, industrial hygiene, laboratory, engineering, and contracting businesses, as well as extensive hands on experience in operations, finance, sales & marketing, and environmental program management and raising capital and mergers & acquisitions in both public and private firms, provides our board of directors with an executive and leadership perspective on the management and operations of a public company. MICHAEL RAPAPORT. Michael Rapaport has been a member of the board of directors of GEM since September 2010. Since 2008, Mr. Rapaport has served as the President and CEO of IDT Spectrum, LLC ( IDT ), the largest holder of commercial high frequency exclusively licensed fixed wireless spectrum in the United States, and a subsidiary of IDT Corporation (NYSE: IDT), an international holding company. From February 2007 to December 2008, Mr. Rapaport held a number of key strategic positions within IDT, including Director of Investor Relations and Senior Business Development Associate. In addition, Mr. Rapaport has served as a member of IDT s Investment Committee. Between June 2003 and January 2007, Mr. Rapaport served as the Managing Director for Real Estate Operations at Michael Darius and Partners, a division of Elmhurst Dairy, Inc. ( Elmhurst Dairy ), the largest milk producer in the metropolitan New York region. In this capacity, he managed interdisciplinary teams of attorneys, accountants and marketing and advertising personnel to enhance the company s business development initiatives. Mr. Rapaport has also served as the CIO of Barzap Investment, an investment fund based in Long Island. Mr. Rapaport is an honors graduate of the Masters of Business Administration Degree program at Touro University, where he completed a specialized program of concentration in international business administration. Key Attributes, Experience and Skills: Mr. Rapaport s experience as the CEO and President of IDT, combined with his contributions to a diverse array of IDT s strategic and business development initiatives, his capital markets experience and his experience in managing and expanding Elmhurst Dairy s real estate operations provides the Company s Board of Directors with significant management insight and valuable experience in business development and capital formation. Other Key Employees OREN MOSKOWITZ. Mr. Moskowitz was appointed the Chief Technology Officer of GEM and to its board of directors in March 2010. Mr. Moskowitz s responsibilities at GEM focus on Energy Efficiency product implementation as well as market strategy. Mr. Moskowitz has extensive knowledge and experience in Energy Efficiency work and sustainable business practices. Prior to joining GEM, Moskowitz founded Jade Revolution in 2008, a Renewable Energy company, specializing in the commercial application of Renewable Energy solutions helping off-takers minimize their carbon footprint while maximizing their Renewable Energy potential. In addition, in 2008, Mr. Moskowitz worked as a consultant in formulating sustainability programs for companies affording them the ability to make their commercial real estate portfolio companies as energy efficient as possible. Mr. Moskowitz received his Juris Doctor from The University of Miami and his Bachelor of Science in Politics and Economics from Brandeis University. JOHN MORRA III. Mr. Morra was appointed the President and Director of Project Development of GEM in May 2010. Mr. Morra s responsibilities at GEM focus on designing, estimating, purchasing and managing all current and future GEM projects. Mr. Morra has extensive knowledge and experience in Energy Efficiency work relating to project execution. Mr. Morra formed Southside Electric Corp. in 1989 which merged into GEM in May 2010. Mr. Morra attended Bergen Technical School for project management and estimation and is currently a member of International Brotherhood of Electrical Workers Local Union 164. Family Relationships There are no family relationships among any of our directors or executive officers. Table of Contents Employment Agreements Chief Executive Officer - On August 20, 2010, Michael Samuel entered into an Employment Agreement with us with an initial term of two years, with automatic one year renewals. His annual base salary is $270,000 per annum with annual adjustments pursuant to the applicable regional CPI. Mr. Samuel will be entitled to receive an annual bonus at the discretion of our board of directors based on performance goals and targeted at 50% of his annual salary, and any perquisites and other fringe benefits provided to other executives. In the event Mr. Samuel is terminated by us without Cause (as defined in the Employment Agreement) or due to his death or he resigns for Good Reason (as defined in the Employment Agreement), we will be obligated to pay Mr. Samuel in a lump sum an amount equal to 6 months salary and benefits, payable within 30 days following such termination, plus any accrued but unused vacation (the Termination Benefits ). In addition, if Mr. Samuel elects health care continuation coverage under COBRA, we shall pay for such health insurance coverage for a period of 12 months following the termination of his employment, at the same rate as we pay for health insurance coverage for our active employees (with Mr. Samuel required to pay for any employee-paid portion of such coverage) (the COBRA Benefits ). After the 12-month continuation period concludes, Mr. Samuel shall be responsible for the payment of all premiums attributable to COBRA continuation coverage at the same rate as we charge all COBRA beneficiaries. If Mr. Samuel s employment is terminated during his employment term by (x) us for Cause, (y) Mr. Samuel for any reason other than Good Reason or (z) due to his Disability (as defined in the Employment Agreement), then he will not be entitled to receive the Termination Benefits or the COBRA Benefits, and shall only be entitled to his Accrued Benefits (as defined in the Employment Agreement). President, Green Energy Management Services, Inc. - On May 15, 2010, John Morra III entered into an Employment Agreement with GEM with an initial term of two years, with automatic one year renewals. His base salary is $250,000 per annum plus an automobile allowance of approximately $1,500 per month. In addition to any perquisites and other fringe benefits provided to other executives, entities in which Mr. Morra or his wife owned percentage membership interests, received 118,215,001 shares of GEM restricted common stock pursuant to the acquisition of Southside Electric, Inc. In the event Mr. Morra is terminated by us without good cause or he resigns for good reason, as such terms are defined in the Employment Agreement, we will be obligated to pay Mr. Morra in a lump sum an amount equal to six months salary and benefits. Table of Contents Chief Financial Officer - On April 15, 2010, Robert Weinstein entered into an Employment Agreement with GEM with an initial term of two years, with automatic one year renewals, which Employment Agreement will be assumed by CDSS in connection with the merger. His base salary is $260,000 per annum with annual adjustments pursuant to the applicable regional CPI. Mr. Weinstein will be entitled to receive an annual bonus at the discretion of the Board based on performance goals and targeted at 50% of his annual salary. In addition to any perquisites and other fringe benefits provided to other executives, Mr. Weinstein received 5,475,903 shares of restricted common stock, with certain anti-dilution provisions, and vesting at a rate of 1/24th per month. In the event Mr. Weinstein is terminated by us without good cause or he resigns for good reason, as such terms are defined in the Employment Agreement, we will be obligated to pay Mr. Weinstein in a lump sum an amount equal to 12 months salary and benefits. Independent Directors Our board of directors has determined that each of Messrs. D Angelo and Rapaport is independent within the meaning of applicable listing rules of The New York Stock Exchange, as amended from time to time and the rules promulgated by the SEC. We anticipate that we will add additional independent directors in the future. As of October 27, 2010, our board of directors has a separately designated Audit Committee, Compensation Committee or Corporate Governance and Nominating Committee. The two independent directors are on each of the Audit, Compensation and Nominating Committees. Mr. D Angelo is the Chairman of the Audit Committee while Mr. Rapaport is the Chairman of the Compensation Committee and the Nominating Committee. We anticipate forming the Corporate Governance Committee in the near future, as required. Mr. D Angelo qualifies as an audit committee financial expert, within the meaning of Item 407(d)(5) of Regulation S-K of the SEC. Committees of the Board of Directors We intend to appoint persons to the board of directors and committees of the board of directors as required to meet the corporate governance requirements of a national securities exchange, although we are not required to comply with these requirements until we elect to seek listing on a national securities exchange. Following the appointment of Mr. Rapaport, a majority of our directors are independent directors. Director Compensation The board of directors has granted to each of Messrs. D Angelo and Rapaport 200,000 shares of restricted common stock as director compensation. We will grant 200,000 shares of restricted common stock to newly appointed independent board of directors member. We may adopt an additional compensation plan for our independent directors in order to attract qualified persons and to retain them. We expect that the future compensation arrangements may be comprised of a combination of cash and/or equity awards. Table of Contents EXECUTIVE COMPENSATION Summary Compensation Table The table below sets forth, for the last two fiscal years, the compensation earned by (i) each individual who served as our principal executive officer or principal financial officer during the last fiscal year and (ii) our most highly compensated executive officers, other than those listed in clause (i) above, who were serving as executive officers at the end of the last fiscal year (together, the Named Executive Officers ). No other executive officer had annual compensation in excess of $100,000 during the last fiscal year. Name and Principal Position Year Salary ($) Bonus ($) Option Awards ($) All Other Compensation ($) Total ($) Michael Samuel, 2010 0 0 0 0 0 Chairman of the Board of 2009 0 0 0 0 0 Directors of the Company, President and Chief Executive Officer (1) Robert Weinstein, 2010 184,167 0 0 92 (5) 184,259 Chief Financial Officer (1)(3)(4) 2009 0 0 0 0 John Morra, III 2010 192,250 (4) 0 0 18,183 (6) 210,375 President and Director of Project Development of GEM 2009 0 0 0 0 0 Steven B. Solomon, 2010 0 0 0 0 Former Chief Executive Officer and Chief Financial Officer (2) 2009 0 0 0 0 0 ____________ (1) Messrs Samuel and Weinstein received no compensation from GEM during the years ended December 31, 2009 and 2008. (2) Mr. Solomon resigned from his positions as an officer effective August 20, 2010 and received no cash compensation for 2009. (3) Mr. Weinstein was appointed Chief Financial Officer of GEM on April 15, 2010. (4) Includes salary of $46,287 paid by Southside prior to its merger with GEM and $145,963 paid by GEM following the merger with Southside. (5) Represents life insurance premiums paid on behalf of Mr. Weinstein. (6) Includes (i) $13,200 in payments for COBRA Continuation health coverage, (ii) $59 in life insurance premium payments, (iii) $872 in disability insurance payments, and (iv) $4,052 in payments made to the union to which Mr. Morra formerly belonged on behalf of Mr. Morra. Outstanding Equity Awards at Fiscal Year-End There are no outstanding equity awards at December 31, 2010. Equity Compensation Plan Information There were no equity compensation plans approved by our board of directors as of December 31, 2010. Table of Contents CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Except as set forth below, during the past three years, there have been no transactions, whether directly or indirectly, between the Company and any of its officers, directors or their family members. On August 27, 2008, the Company and Steven B. Solomon, its former Chief Executive Officer, President and Chairman of the Board of Directors, entered into a Convertible Promissory Note (the "Note"). The Note represents advances of approximately $69,451 by Mr. Solomon to the Company through the issue date of the Note. The Note bears interest at eight percent (8%) per year and is payable on August 27, 2010 or upon demand by Mr. Solomon. If the Note had been converted in full at December 31, 2009, Mr. Solomon would have received 228,788,200 shares of the Company's common stock resulting in a beneficial ownership of approximately 90% of the Company's then issued and outstanding common stock. Mr. Solomon historically provided advances to the Company as necessary for working capital and payment of expenses. Furthermore, the Company s board of directors believed that no alternative sources of financing were available to the Company at that time. The funds were advanced on terms and conditions approved by the disinterested directors of the Company. Prior to the issuance of the Note, Mr. Solomon beneficially owned 2,284,828 shares of the Company's common stock. Therefore, at December 31, 2009, Mr. Solomon beneficially owned a total of 78,547,561 shares of the Company s common stock (if the Note were converted into shares of the Company s common stock), or more than 50% of the Company s common stock outstanding on that date, giving him potential control of the Company through the voting power over a majority of the shares of our outstanding common stock. Prior to the merger, on April 30, 2010, Mr. Solomon, our former Chief Executive Officer and director converted $18,821 of the Note into an aggregate of 20,666,667 shares of our common stock. On August 20, 2010, Mr. Solomon converted an additional $29,684 of the Note into an aggregate of 32,596,067 shares of our common stock. In connection with the merger, Mr. Solomon also agreed to forgive the remaining principal balance of the Note in the amount of $20,946. As a condition to the closing of the Merger Agreement, as amended, the Company was required to have raised at least $1,250,000 prior to the closing of the merger. On August 20, 2010, in connection with the closing of the merger, we entered into a subscription agreement with Mr. Solomon, pursuant to which Mr. Solomon purchased a convertible promissory note in the principal amount of $150,000. The note did not bear interest and was due on December 31, 2010. The note was convertible into shares of our common stock at a conversion price of $0.05 per share. Subsequent to the merger, the Company converted the note into an aggregate of 3,000,000 shares of our common stock, which have been issued to Mr. Solomon. In connection with the merger, on August 20, 2010, we entered into a stockholders agreement with GEM, Michael Samuel and our pre-merger officers and directors, pursuant to which, among other things: (i) Messrs. Samuel, Weinstein, D Angelo and other former stockholders of GEM (the GEM Holders ) agreed to enter into lock-up agreements (as more fully described below), pursuant to which the GEM Holders agreed not to transfer, sell, assign, pledge or otherwise dispose of certain shares of our common stock that they beneficially owned as of the closing for a period from August 20, 2010 until certain stated periods after the date of effectiveness of the registration statement of which this prospectus forms a part; (ii) our board of directors following the merger would consist of (a) Michael Samuel, (b) one independent director designated by Mr. Samuel and (c) one additional independent director designated by Mr. Samuel and appointed to our board of directors as soon as reasonably practicable after the date of the merger; and (iii) we agreed to use our best efforts to (a) file with the SEC within 30 days after the closing of the merger a registration statement covering shares of our common stock owned by certain of our pre-merger officers and directors (the "Holders") and (b) obtain the effectiveness of such registration statement from the SEC within 60 days after its filing, provided that we shall not file any registration statement for a period of 90 days after the effectiveness of the registration statement, and (c) if we and the Holders determine that shares held by the Holders are not otherwise available for resale and such shares are otherwise eligible for registration on Form S-8, we shall file a registration statement on Form S-8, and (d) during the period ending 12 months from closing, should we require to issue shares of our common stock to finance our operations or expansion, as determined in the sole discretion of our board, we may make a capital call on Ice Nine to contribute and return to treasury stock up to 40,000,000 shares of our common stock owned by Ice Nine sufficient to raise the additional capital required without the issuance of additional shares of common stock to Ice Nine and without further dilution to our stockholders (the Additional Capital Amount ). In the event we make a capital call on Ice Nine, we are not obligated to issue any additional shares of our common stock to Ice Nine. At the sole discretion of Ice Nine, Ice Nine may fulfill its obligation under the stockholders agreement by contributing cash in an amount equal to the capital raise without the issuance of additional shares of common stock to Ice Nine and without dilution to our other shareholders. Ice Nine was one of the founding shareholders of GEM. Ice Nine is currently the beneficial owner of 40,302,643 shares or approximately 9.2% of our common stock. Ice Nine will not receive any direct benefits under the stockholders agreement. Pursuant to the stockholders agreement, Ice Nine was required to contribute and return to treasury an aggregate of 30,000,000 shares of common stock in order to facilitate the November 2010 private placement. Ice Nine could have fulfilled its obligation under the stockholders agreement by making a cash contribution to our company in the amount of $1,400,000. Due to the fact that our registration statement was not declared effective by the SEC by December 19, 2010, the GEM Holders are required to deliver an aggregate of 10,550,752 shares of our common stock to the affected Holders. Ice Nine, in its sole discretion, may alternatively fulfill its obligation as described above by contributing cash to us equal to the Additional Capital Amount. Table of Contents Pursuant to the lock-up agreements, (i) an aggregate 65,623,216 shares of our common stock may not be transferred, sold, assigned, pledged or otherwise disposed of for a period from August 20, 2010 through the sixth month anniversary after the date of effectiveness of the registration statement of which this prospectus forms a part, and (ii) 110,505,470 shares of our common stock may not be transferred, sold, assigned, pledged or otherwise disposed of for a period from August 20, 2010 through the one year anniversary after the date of effectiveness of the registration statement of which this prospectus forms a part. Southside maintained a line of credit with PNC Bank in the aggregate principal amount of $200,000. Interest on the line of credit was the highest prime rate published in the Money Rates section of the Wall Street Journal. In August 2010, as a condition to the closing of the merger, the line of credit was assumed by John Morra, a principal of Southside and the current President and Director of Project Development of GEM, and is no longer an obligation of our company. The line of credit was secured by The line of credit was secured by all assets of Southside and was guaranteed by Mr. Morra. The assumption was accounted for as a contribution of equity. We no longer have an ability to borrow under this line of credit. The Company utilizes credit card financing to fund certain obligations. The balance of credit card obligations as of September 30, 2010 was approximately $46,000. GEM s wholly owned subsidiary, GEM-New Jersey d/b/a Southside Electric Company, Inc., employs its President s sister as its part time Controller. In addition, the son of Mr. Samuel, our Chairman, President, Chief Executive Officer and director, who also may be an indirect beneficial owner of the Company's outstanding common stock through his membership interests in GEM Lighting, L.L.C. John Morra III serves as President and Director of Project Development for GEM. Mr. Morra is also the indirect beneficial owner of approximately 9.5% of our common stock as managing member of Ocean Drive Investments, L.L.C. Mr. Morra received compensation of $113,000 during the year ended December 31, 2009 and $0 during the year ended December 31, 2008 as consideration for his service as President and Director of Project Development of GEM. Oren Moskowitz, Chief Technology Officer of GEM, has indirect beneficial ownership of approximately 5.1% of our shares of common stock as managing member of Tzameret Holdings, L.L.C. Mr. Moskowitz did not receive any compensation for his service as Chief Technology Officer of GEM during the years ended December 31, 2009 and December 31, 2008. Table of Contents SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth certain information as of December 16, 2010 regarding the beneficial ownership of our common stock by (i) each person or entity who, to our knowledge, owns more than 5% of our common stock; (ii) our named Executive Officers; (iii) each director; and, (iv) all of our executive officers and directors as a group. Unless otherwise indicated in the footnotes to the following table, each person named in the table has sole voting and investment power. Shares of common stock subject to options, warrants, or other rights currently exercisable or exercisable within 60 days of January 4, 2011, are deemed to be beneficially owned and outstanding for computing the share ownership and percentage of the stockholder holding the options, warrants or other rights, but are not deemed outstanding for computing the percentage of any other stockholder. Name and Address of Beneficial Owner (1) Number of Shares Beneficially Owned Percentage Beneficially Owned (2) 5% Owners GEM Lighting, LLC (3) 65,623,216 14.9 % Steven B. Solomon (4) 58,547,562 13.3 % Ocean Drive Investments, L.L.C. (5) 41,575,242 9.5 % Ice Nine, L.L.C. (6) 40,302,643 9.2 % Watz Enterprises, L.L.C. (7) 40,437,071 9.2 % Tzameret Holdings, L.L.C. (8) 22,259,803 5.1 % Esousa Holdings LLC (9) 27,654,313 6.3 % Executive Officers and Directors Michael Samuel (3) 0 0 Robert Weinstein 5,495,184 1.3 % William D Angelo (10) 0 0 Michael Rapaport (10) 0 0 All executive officers and directors as a group (four persons) 5,495,184 1.3 % ____________ (1) Unless otherwise indicated, the address of all of the above named persons is c/o Green Energy Management Services Holdings, Inc., 381 Teaneck Road, Teaneck, NJ 07666. (2) Based on 440,291,636 shares of our common stock outstanding on January 4, 2011. (3) Although Mr. Samuel does not have a direct beneficial ownership of any of the Company s shares of common stock, his wife, Ms. Deborah Samuel, and his son, Jonathan Samuel, are the sole two members of GEM Lighting, L.L.C., which beneficially owns 65,623,216 shares of our common stock. Ms. Samuel and Mr. Jonathan Samuel have the shared voting and investment power over the reported securities. In addition, Ms. Samuel owned convertible promissory notes issued by the Company on July 29, 2010, which were converted into 550,000 shares of our common stock. Mr. Samuel disclaims beneficial ownership of the shares held by GEM Lighting, LLC. (4) Includes (i) 55,547,562 shares of our common stock and (ii) convertible promissory notes issued by the Company on August 20, 2010, which were converted into 3,000,000 shares of our common stock. Mr. Solomon s address is 2828 N. Harwood, Suite 1700, Dallas, Texas 75201. (5) John Morra III, President and Director of Project Development of GEM, has an indirect beneficial ownership interest in common stock as the managing member of Ocean Drive Investments, L.L.C. Mr. Morra has the sole voting and dispositive power over the reported shares. Table of Contents (6) The address of Ice Nine, L.L.C is 2251 Drusilla Lane, Suite B, Baton Rouge, Louisiana 70809. Robert Sawyer, the sole managing member of Ice Nine, L.L.C., has the sole voting and dispositive power over the reported shares. (7) Mark Deleonardis, as the managing member of Watz Enterprises, L.L.C., has the sole voting and investment power over the reported shares. (8) Includes (i) 21,859,803 shares of our common stock and (ii) convertible promissory notes issued by us on August 20, 2010, which were converted into 400,000 shares of our common stock. Oren Moskowitz, GEM s Chief Technology Officer, has an indirect beneficial ownership interest in our shares of common stock as the managing member of Tzameret Holdings, L.L.C. Mr. Moskowitz, has the sole voting and dispositive power over the reported shares. (9) Rachel Glicksman, as Managing Director of Esousa Holdings LLC, has voting and dispositive controls over such shares. (10) Amount does not include 200,000 shares of restricted common stock which were granted to each of our independent directors in consideration for service to our Company which have yet to be issued. Table of Contents SELLING STOCKHOLDERS Up to 77,452,337 shares of common stock are being offered by this prospectus, all of which are being registered for sale for the accounts of the selling security holders and include the following: (i) 53,262,734 shares of our common stock, par value $0.0001 per share, issued upon conversion of convertible notes dated August 27, 2008; (ii) 21,000,000 shares of our common stock, par value $0.0001 per share, issued upon conversion of convertible notes dated August 20, 2010; (iii) 2,000,000 shares of our common stock, par value $0.0001per share, issued in our private placement on July 29, 2010; (iv) 689,236 shares of our common stock, par value $0.0001 per share, issued on May 17, 2002 as a pro rata dividend to the shareholders of our former parent company in connection with our spinoff in May 2002; (v) 500,000 shares of our common stock, par value $0.0001 per share, issued upon exercise of a share exchange right exercised by our former chief executive officer in February 2004; and (vi) 367 shares of our common stock, par value $0.0001 per share, currently held by one of our former directors. Each of the transactions by which the selling stockholders acquired their securities from us was exempt under the registration provisions of the Securities Act. The shares of common stock referred to above are being registered to permit public sales of the shares, and the selling stockholders may offer the shares for resale from time to time pursuant to this prospectus. The selling stockholders may also sell, transfer or otherwise dispose of all or a portion of their shares in transactions exempt from the registration requirements of the Securities Act or pursuant to another effective registration statement covering those shares. We may from time to time include additional selling stockholders in supplements or amendments to this prospectus. The table below sets forth certain information regarding the selling stockholders and the shares of our common stock offered by them in this prospectus. None of the selling stockholders have had a material relationship with us within the past three years other than as described in the footnotes to the table below or as a result of their acquisition of our shares or other securities. To our knowledge, subject to community property laws where applicable, each person named in the table has sole voting and investment power with respect to the shares of common stock set forth opposite such person s name. Beneficial ownership is determined in accordance with the rules of the SEC. Each selling stockholder s percentage of ownership of our outstanding shares in the table below is based upon 440,291,636 shares of common stock outstanding as of January 4, 2011. Table of Contents Ownership Before Offering After Offering(1) Selling Stockholder Number of shares of common stock beneficially owned Number of shares offered Number of shares of common stock beneficially owned Percentage of common stock beneficially owned Steven B. Solomon (21) 58,547,562 57,330,894 (2) 1,216,667 8 * Watz Enterprise LLC (3) 39,387,071 (4) 1,050,000 (4) 38,337,071 8.7 % Tzameret Holdings LLC (5) 22,259,803 (6) 400,000 (6) 21,859,803 5.0 % RPU Services LLC (7) 2,000,000 (8) 2,000,000 (8) 0 0 Esousa Holdings LLC (9) 27,654,313 (10) 10,000,000 (10) 17,654,313 4.0 % Deborah Samuel (20) 550,000 (11) 550,000 (11) 0 0 Handen Ltd. (12) 2,000,000 (13) 2,000,000 (13) 0 0 JDRFC Trust (14) 2,000,000 (15) 2,000,000 (15) 0 0 Merle A. Wood III 1,000,000 (17) 1,000,000 (17) 0 0 Mark Rogers (22) 1,064,292 1,055,958 (16) 8,333 * Major General (Ret.) John A. Leide (23) 8,700 ) 8,333 367 * Chris A. Economou (24) 68,700 60,367 (18) 8,333 * Richard Connelly (25) 54,750 4,750 (19) 50,000 * Table of Contents (1) Represents the amount of shares that will be held by the selling stockholders after completion of this offering based on the assumptions that (a) all shares registered for sale by the registration statement of which this prospectus is part will be sold and (b) no other shares of our common stock are acquired or sold by the selling stockholders prior to completion of this offering. However, the selling stockholders may sell all, some or none of the shares offered pursuant to this prospectus and may sell other shares of our common stock that they may own pursuant to another registration statement under the Securities Act or sell some or all of their shares pursuant to an exemption from the registration provisions of the Securities Act, including under Rule 144. To our knowledge there are currently no agreements, arrangements or understanding with respect to the sale of any of the shares that may be held by the selling stockholders after completion of this offering or otherwise. (2) Represents (i) 53,262,734 shares of our common stock issued upon conversion of convertible note dated August 27, 2008, (ii) 3,000,000 shares of our common stock issued upon conversion of a convertible note dated August 20, 2010; (iii) 568,162 shares of our common stock issued on May 17, 2002 as a pro rata dividend to the shareholders of our former parent company in connection with our spinoff in May 2002; and (iv) 500,000 shares of our common stock issued upon exercise of a share exchange right by Mr. Solomon in February 2004. (3) Mark Deleonardis, as the managing member of Watz Enterprise LLC, has voting and dispositive control over such shares. (4) Includes 1,050,000 shares issued upon conversion of convertible notes dated August 20, 2010. (5) Oren Moskowitz, as Managing Member of Tzameret Holdings LLC, has voting and dispositive control over such shares. Mr. Moskowitz is the Chief Technology Officer of GEM. (6) Includes 400,000 shares issued upon conversion of convertible notes dated August 20, 2010. (7) Ron Ulfers, as President of RPU Services LLC, has voting and dispositive control over such shares. (8) Represents 2,000,000 shares issued upon conversion of convertible notes dated August 20, 2010. (9) Rachel Glicksman, as Managing Director of Esousa Holdings LLC, has voting and dispositive control over such shares. (10) Represents 10,000,000 shares issued upon conversion of convertible notes dated August 20, 2010. (11) Represents 550,000 shares issued upon conversion of convertible notes dated August 20, 2010. (12) Darryl Myers, as Director of Handen Ltd., has voting and dispositive control over such shares. (13) Represents 2,000,000 shares issued in our private placement on July 29, 2010. (14) James Carreker, as Principal, has voting and dispositive control over such shares. (15) Represents 2,000,000 shares issued upon conversion of convertible notes dated August 20, 2010. (16) Includes (i) 1,000,000 shares issued upon conversion of convertible notes dated August 20, 2010; and (ii) 55,958 shares of our common stock issued on May 17, 2002 as a pro rata dividend to the shareholders of our former parent company in connection with our spinoff in May 2002. Table of Contents (17) Includes 1,000,000 shares issued upon conversion of convertible notes dated August 20, 2010. (18) Includes 60,367 shares of our common stock issued on May 17, 2002 as a pro rata dividend to the shareholders of our former parent company in connection with our spinoff in May 2002. (19) Includes 4,750 shares of our common stock issued on May 17, 2002 as a pro rata dividend to the shareholders of our former parent company in connection with our spinoff in May 2002. (20) Ms. Samuel is the wife of Michael Samuel, our Chairman, President and Chief Executive Officer. Mr. Samuel disclaims beneficial ownership of shares held by his wife and son. (21) Mr. Solomon served as our President, Chief Executive Officer, Acting Chief Financial Officer, Secretary and as a member of the board of directors from December 1996 through August 20, 2010. He resigned as an officer and as a member of the board director in connection with the merger. (22) Mr. Rogers served as a member of our board of directors from July 2005 through August 20, 2010. He resigned as a member of the board of directors in connection with the merger. (23) Major General (Ret) Leide served as a member of our board of directors from December 2001 through August 20, 2010. He resigned as a member of the board of directors in connection with the merger. (24) Mr. Economou served as a member of our board of directors from November 2001 through August 20, 2010. He resigned as a member of the board of directors in connection with the merger. (25) Mr. Connelly served as our Chief Financial Officer from March 2002 through April 2, 2007. DESCRIPTION OF SECURITIES Authorized and Outstanding Capital Stock We have authorized 500,000,000 are shares of common stock, par value $0.0001 per share, and 1,000,000 shares of preferred stock, par value $0.0001 per share. As of January 4, 2011, we had 440,291,636 shares of our common stock issued and outstanding and 0 shares of our preferred stock issued and outstanding. Common Stock The holders of our common stock are entitled to one vote per share. In addition, the holders of our common stock will be entitled to receive ratably dividends, if any, declared by our board of directors out of legally available funds; however, the current policy of our board of directors is to retain earnings, if any, for operations and growth. Upon liquidation, dissolution or winding-up, the holders of our common stock will be entitled to share ratably in all assets that are legally available for distribution. The holders of our common stock will have no preemptive, subscription, redemption or conversion rights. The rights, preferences and privileges of holders of our common stock will be subject to, and may be adversely affected by, the rights of the holders of any series of preferred stock, which may be designated solely by action of our board of directors and issued in the future. Preferred Stock Our board of directors is authorized, subject to any limitations prescribed by law, without further vote or action by our stockholders, to issue from time to time shares of preferred stock in one or more series. Each series of preferred stock will have the number of shares, designations, preferences, voting powers, qualifications and special or relative rights or privileges as shall be determined by our board of directors, which may include, among others, dividend rights, voting rights, liquidation preferences, conversion rights and preemptive rights. Table of Contents Registration Rights We have agreed to file a resale registration statement with the SEC covering certain shares of our common stock pursuant to the terms of the stockholders agreement, on or before the date which is 30 days after the closing date of the merger (the Filing Deadline ). We will maintain the effectiveness of the resale registration statement from the effective date through and until twelve (12) months after the final closing date, unless all securities registered under the registration statement have been sold or are otherwise able to be sold pursuant to Rule 144. We have agreed to use reasonable efforts to have the resale registration statement declared effective by the SEC as soon as possible and, in any event, within 60 days after the Filing Deadline provided that we shall not file any registration statement for a period of 90 days after the effectiveness of the registration statement, and (c) if we and the Holders determine that shares held by the Holders are not otherwise available for resale, we shall file a registration statement on Form S-8, and (d) during the period ending 12 months from closing, should we require to issue shares of our common stock to finance our operations or expansion, as determined in the sole discretion of our board, we may make a capital call on Ice Nine to contribute and return to treasury stock up to 40,000,000 shares of our common stock owned by Ice Nine sufficient to raise the additional capital required without the issuance of additional shares of common stock to Ice Nine and without further dilution to our stockholders (the Additional Capital Amount ). Due to the fact that our registration statement was not declared effective by the SEC by December 19, 2010, the GEM Holders are required to deliver an aggregate of 10,550,752 shares of our common stock to the affected Holders.. Ice Nine, in its sole discretion, may alternatively fulfill its obligation as described above by contributing cash to us equal to the Additional Capital Amount. Lock-up Agreements All our shares of common stock issued in the merger to the officers and directors of GEM, as well as to certain stockholders of GEM, in exchange for their shares of common stock of GEM, are subject to lock-up agreements. These lock-up agreements provide that these persons may not sell or transfer any of their shares for periods ranging from 6-12 months following the effectiveness of the registration statement, of which this prospectus forms a part, with the exception of contributions made to non-profit organizations qualified as charitable organizations under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended, or in privately negotiated sales to persons who agree, in writing, to be bound to the terms of the lock-up agreements. Table of Contents Transfer Agent Our transfer agent is Computershare Trust Company N.A. Changes in and Disagreements with Accountants Resignation of KBA Group LLP: Effective June 1, 2009, KBA Group LLP ( KBA ) joined BKD, LLP. As a result, On June 3, 2009, KBA resigned as our independent registered public accounting firm. The reports issued by KBA on our financial statements for the then two most recent fiscal years ended December 31, 2008 and 2007 did not contain an adverse opinion or a disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope or accounting principles. The report issued by KBA on the financial statements for our most recent fiscal year was modified to include an explanatory paragraph describing that our reports on the liquidation basis of accounting. In connection with its audits for the two then most recent fiscal years ended December 31, 2008 and 2007 and through June 3, 2009, the date on which KBA notified us of its intention to resign, there were no disagreements with KBA on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of KBA, would have caused KBA to make reference to the subject matter of the disagreement in connection with its reports on the financial statements for such years, and except as set forth below, no reportable events as set forth in Item 304(a)(1)(v) of Regulation S-K have occurred. As discussed in Part I, Item 4(T) of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2009 filed with the SEC on May 20, 2009, and Part II, Item 9A(T) of our Annual Reports on Form 10-K for the fiscal years ended December 31, 2008 and 2007, filed with the SEC on April 15, 2009 and April 14, 2008, respectively, certain internal control deficiencies were identified as a result of material weaknesses in our internal controls over our documentation and a lack of segregation of duties due to our limited size while we were in the wind down of our business (the Reportable Event ). The material weakness identified did not result in the restatement of any previously reported financial statements or any other related financial disclosure, nor does management believe that it had any effect on the accuracy of our financial statements for the reporting periods. Following the merger, our accounting staff now consists of three individuals: one full-time accountant, one part-time accountant and one part-time accounting consultant. If and when our financial position improves, we intend to hire additional personnel to remedy the existing deficiencies. We can provide no assurance, however, that we will be able to do so. We have authorized KBA to respond fully to the inquiries of its successor independent registered public accounting firm concerning theses material weaknesses. We provided KBA with a copy of the disclosures it made in response to Item 304(a) of Regulation S-K in our Current Report on Form 8-K filed with the SEC on June 9, 2009, prior to its filing with the SEC, and requested that KBA furnish us with a letter addressed to the SEC stating its agreement with the statements concerning KBA in such Current Report on Form 8-K. A copy of the letter, dated June 3, 2009, was filed as Exhibit 16.1 to such Current Report on Form 8-K. Our then existing audit committee was notified of the resignation and the reasons for the resignation of KBA as CDSS certifying accountant. Engagement of MaloneBailey, LLP: On July 29, 2009, we reported that we had engaged MaloneBailey, LLP ( M&B ) as our independent registered public accounting firm for the fiscal year ended December 31, 2009 to replace KBA. The engagement of M&B was effective as of July 24, 2009. During our then two most recent fiscal years ended December 31, 2008 and 2007, and in the subsequent interim period though July 24, 2009, the effective date of M&B s engagement by us, neither we nor anyone on our behalf consulted with M&B regarding (i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on our financial statements, and M&B did not provide either a written report or oral advice to us that was an important factor considered by us in reaching a decision as to any accounting, auditing or financial reporting issue; or (ii) any matter that was either the subject of a disagreement, as defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions, or a reportable event, as defined in Item 304(a)(1)(v) of Regulation S-K, including the Reportable Event described above. The decision to engage M&B was approved by our then existing board of directors. Deemed Change of Accountants in Connection with the Merger Table of Contents As a result of the merger, effective as of August 20, 2010, there was deemed to be a change of our independent registered public accounting firm because the same independent registered public accounting firm did not report on the most recent financial statements of both our predecessor and us. We have selected MaloneBailey, LLP to continue as our independent registered public accounting firm and Hannis T. Bourgeois, LLP ( HTB ) will not act as our independent registered public accounting firm. Prior to the merger, HTB was our independent registered public accounting firm. Accordingly, HTB will no longer be associated with our financial statements and will be treated as our predecessor accountant. Table of Contents HTB s report on our financial statements for the past two fiscal years ended December 31, 2009 and 2008, did not contain an adverse opinion or a disclaimer of opinion and was not qualified or modified as to uncertainty, audit scope or accounting principles. During the two fiscal years ended December 31, 2009 and 2008, and the subsequent interim period through August 20, 2010, the date of the deemed change of accountants, we did not have any disagreements with HTB on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreement(s), if not resolved to the satisfaction of HTB, would have caused it to make reference to the subject matter of this disagreement(s) in connection with its report. We requested HTB to furnish it a letter addressed to the SEC stating whether it agrees with the above statements. A copy of the HTB letter was filed as Exhibit 16.1 to our Current Report on Form 8-K/A filed with the SEC on September 2, 2010. The deemed change of our independent registered public accounting firm was approved by our board of directors. Indemnification of Directors and Officers and Limitations on Liability Certificate of Incorporation and Bylaws Our Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws provide a right to indemnification to the fullest extent permitted by law to any person who was or is a party or is threatened to be made a party to or is involved in any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative and whether by or in our right or otherwise, by reason of the fact that he or she, or a person of whom he or she is the legal representative, is or was our director or officer or is or was serving at our request as a director or officer of another corporation or in a capacity with comparable authority or responsibilities for any partnership, joint venture, trust, employee benefit plan or other enterprise, and that such person will be indemnified and held harmless by us to the fullest extent authorized by, and subject to the conditions and procedures set forth in the DGCL, against all judgments, fines, penalties, excise taxes, amounts paid in settlement and costs, charges and expenses (including attorneys fees, disbursements and other charges). Our Amended and Restated Bylaws authorize us to take steps to ensure that all persons entitled to indemnification are properly indemnified, including, if our board of directors so determines, by purchasing and maintaining insurance. In addition, our Amended and Restated Certificate of Incorporation provides that, subject to certain limitations, an indemnitee shall also have the right to be paid by us the expenses (including attorney s fees) incurred in defending any such proceeding in advance of its final disposition. Our Amended and Restated Certificate of Incorporation provides that none of our directors shall be personally liable to us or our stockholders for monetary damages for breach of fiduciary duty as a director, except liability for: any breach of the director s duty of loyalty to us or our stockholders, acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, the payment of unlawful dividends and unlawful repurchase or redemption of our capital stock prohibited by the DGCL, and any transaction from which the director derived any improper personal benefits. The effect of this provision of our Amended and Restated Certificate of incorporation is to eliminate our rights and the rights of its stockholders to recover monetary damages against a director for breach of the fiduciary duty of care as a director, including breaches resulting from negligent or grossly negligent behavior, except in the situations described above. This provision does not limit or eliminate our rights or the rights of any stockholder to seek non-monetary relief, such as an injunction or rescission in the event of a breach of a director s duty of care. Indemnification Agreements We intend to enter into indemnification agreements with certain of our directors and officers which may, in certain cases, be broader than the specific indemnification provisions contained in our Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws. The indemnification agreements may require us, among other things, to indemnify such officers and directors against certain liabilities that may arise by reason of their status or service as directors, officers or employees of ours and to advance the expenses incurred by such parties as a result of any threatened claims or proceedings brought against them as to which they could be indemnified. Table of Contents Disclosure of Commission Position on Indemnification for Securities Act Liabilities Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers, and persons controlling us, we have been advised that it is the SEC s opinion that such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. Table of Contents PLAN OF DISTRIBUTION We are registering the shares of our common stock covered by this prospectus for the selling shareholders. The selling shareholders and any of their respective pledgees, donees, assignees and other successors-in-interest may, from time to time, sell any or all of their shares of common stock on the OTC Bulletin Board or any stock exchange, market or trading facility on which the shares are then traded or in private transactions. These sales may be at fixed prices which may be changed, at market prices at the time of sale, at prices related to market prices or at negotiated prices. The selling shareholders may use any one or more of the following methods when selling shares: Ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers; Block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction; Purchases by a broker-dealer as principal and resale by the broker-dealer for its account; An exchange distribution in accordance with the rules of the applicable exchange; Privately negotiated transactions; Short sales; Broker-dealers may agree with the selling shareholders to sell a specified number of such shares at a stipulated price per share; Writing of options on the shares; A combination of any such methods of sale; and Any other method permitted pursuant to applicable law. The selling shareholders may also sell shares under Rule 144 under the Securities Act, if available, rather than under this prospectus. The selling shareholders may pledge their shares to their brokers under the margin provisions of customer agreements. If a selling shareholder defaults on a margin loan, the broker may, from time to time, offer and sell the pledged shares. The selling shareholders or their respective pledgees, donees, transferees or other successors in interest may also sell the shares directly to market makers acting as principals and/or broker-dealers acting as agents for themselves or their customers. Such broker-dealers may receive compensation in the form of discounts, concessions or commissions from the selling shareholders and/or the purchasers of shares for whom such broker-dealers may act as agents or to whom they sell as principal or both, which compensation as to a particular broker-dealer might be in excess of customary commissions. Market makers and block purchasers purchasing the shares will do so for their own account and at their own risk. It is possible that a selling shareholder will attempt to sell shares of common stock in block transactions to market makers or other purchasers at a price per share which may be below the then market price. The selling shareholders and any brokers, dealers or agents, upon effecting the sale of any of the shares offered in this prospectus, may be deemed to be underwriters as that term is defined under the Securities Act or the rules thereunder. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. The selling shareholders, alternatively, may sell all or any part of the shares offered in this prospectus through an underwriter. No selling shareholder has entered into any agreement with a prospective underwriter and the selling shareholders have advised us that they have no plans to enter into any such agreement. The selling shareholders and any other persons participating in the sale or distribution of the shares will be subject to applicable provisions of the Exchange Act and the rules thereunder, including Regulation M. These provisions may restrict certain activities of, and limit the timing of purchases and sales of any of the shares by, the selling shareholders or any other such person. Furthermore, under Regulation M, persons engaged in a distribution of securities are prohibited from simultaneously engaging in market making and certain other activities with respect to such securities for a specified period of time prior to the commencement of such distributions, subject to specified exceptions or exemptions. All of these limitations may affect the marketability of the shares. We have agreed to indemnify the selling shareholders including liabilities under the Securities Act or to contribute to payments the selling shareholders may be required to make in respect of such liabilities. If the selling shareholders notify us that they have a material arrangement with a broker-dealer for the resale of the common stock, then we would be required to amend the registration statement of which this prospectus is a part, or file a prospectus supplement to describe the agreements between the selling shareholders and the broker-dealer. Table of Contents We are paying all fees and expenses incident to the registration of the shares, excluding fees and disbursements of any counsel to the selling shareholders, brokerage commissions and underwriting discounts. Table of Contents We have advised each selling shareholder that it may not use shares registered for public sale by this prospectus to cover short sales of our common stock made prior to the date of this prospectus. Each selling shareholder who uses this prospectus for any sale of our common stock will be subject to the prospectus delivery requirements of the Securities Act. The selling shareholders are also responsible for complying with the applicable provisions of the Exchange Act and the rules thereunder including Regulation M in connection with their sales of shares of common stock under this prospectus. LEGAL MATTERS Michael Hill, Esq., will pass upon the validity of the shares of our common stock to be sold in this offering.
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+PROSPECTUS SUMMARY The following summary highlights selected information contained in this prospectus. This summary does not contain all the information you should consider before investing in the securities. Before making an investment decision, you should read the entire prospectus carefully, including the information set forth under the headings Risk Factors and Management s Discussion and Analysis of Financial Condition and Results of Operations, and the financial statements and the notes to the financial statements included in this prospectus. Overview We are a fully integrated alternative energy company - a leader in the development and production of advanced clean propulsion systems, and renewable energy generation systems and services. We believe that we are uniquely positioned to integrate advanced fuel system, electric drive, software control strategies and propulsion control system technologies for alternative fuel vehicles, in particular, plug-in hybrid electric, electric, fuel cell vehicles and hydrogen hybrid vehicles based on our years of experience in vehicle-level design, system and component software development, vehicle electronics, system control strategies and system integration. On April 16, 2010, we acquired Schneider Power Inc. (Schneider Power). Schneider Power is a licensed renewable electricity generator based in Toronto, Canada. Schneider Power develops, builds, owns and operates wind and solar electricity generation facilities. Schneider Power has a portfolio in excess of one gigawatt (1,000 MW) of wind and solar energy projects in various stages of development throughout North America and the Caribbean. We classify our business operations into three reporting segments: Electric Drive & Fuel Systems, Renewable Energy and Corporate. The Corporate segment consists of general and administrative expenses incurred at the corporate level that are not directly attributable to the Electric Drive & Fuel Systems or Renewable Energy business segments. The Corporate segment also includes activities of our anticipated future operating segments. Certain financial information related to each of our reporting segments can be found in the financial statements that are included in this prospectus. Electric Drive & Fuel Systems Segment We provide hybrid drivetrain and advanced fuel system design, powertrain engineering, electronic control and software strategies, system integration, manufacturing and assembly of propulsion systems and sub-systems for a variety of transportation including plug-in hybrid electric, hybrid electric, range extended plug-in electric, fuel cell and other alternative fuel vehicles. Our products, technologies and engineering services are designed to meet the growing demand for better fuel economy, less or lower dependency on crude and foreign oil, and a reduction in harmful emissions. We supply our hybrid electric drive systems and packaged fuel systems for alternative fuel vehicles primarily to OEM customers for use by consumers and for commercial and government fleets. Since 1997, we have sold approximately 20,000 systems for alternative fuel vehicles, primarily to General Motors. We are currently in the final stages of development of a range extended plug-in hybrid electric drive system, which we refer to as Q-Drive. We are developing the Q-Drive for Fisker Automotive, Inc. (Fisker Automotive) for incorporation into its first production vehicle, the Fisker Karma, with production anticipated to commence in the first half of the 2011 calendar year. Our Q-Drive system is comprised of or provides control software for a lithium-ion battery pack, an optimized generator, traction motor(s), transmission/transaxle, inverters, DC-DC converter, hybrid controller, controls strategies and software subsystems designed to improve vehicle fuel economy and performance, leverage existing gas station infrastructure, and utilize home-based battery recharging. We are also engineering and developing variants of the Q-Drive including a parallel drive for plug-in hybrid electric vehicle (PHEV) pickup trucks and a 2nd Generation scaled version of the Q-Drive that is specifically directed at lower-cost light duty vehicles, including mid-size cars and trucks, to significantly advance PHEVs and the average fuel economy in the near term. Table of Contents THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THE SELLING STOCKHOLDERS MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED. Preliminary Prospectus SUBJECT TO COMPLETION, MARCH 31, 2011 QUANTUM FUEL SYSTEMS TECHNOLOGIES WORLDWIDE, INC. 2,672,040 Shares of Common Stock This prospectus relates to resale by the selling stockholders named herein of up to 2,672,040 shares of our common stock, consisting of (i) 1,518,737 shares of common stock that were issued in a private placement that we closed on February 18, 2011 and (ii) 1,153,303 shares of our common stock issuable upon the exercise of warrants that were issued in the private placement. We are not selling any shares of common stock in this offering and, therefore, will not receive any proceeds from this offering. We will, however, receive proceeds from the exercise price of the warrants if and when these warrants are exercised by the selling stockholders for cash. We will bear all of the expenses and fees incurred in registering the shares offered by this prospectus. Our common stock is quoted on The Nasdaq Global Market. Our symbol is QTWW. The last reported sale price of our common stock on March 28, 2011, was $4.53 per share. Our warrants are not and will not be listed for trading on any exchange. The shares included in this prospectus may be sold by the selling stockholders from time to time, in the open market, in privately negotiated transactions, in an underwritten offering, or a combination of methods, at market prices prevailing at the time of sale, at prices related to such prevailing market prices or at negotiated prices. The selling stockholders may engage brokers or dealers who may receive commissions or discounts from the selling stockholders. Any broker-dealer acquiring the common stock from the selling stockholders may sell these securities in normal market making activities, through other brokers on a principal or agency basis, in negotiated transactions, to its customers or through a combination of methods. See Plan of Distribution beginning on page 81. INVESTING IN THE OFFERED SECURITIES INVOLVES RISKS. YOU SHOULD READ THIS PROSPECTUS AND ANY PROSPECTUS SUPPLEMENT CAREFULLY BEFORE YOU INVEST, INCLUDING THE RISK FACTORS WHICH BEGIN ON PAGE 9 OF THIS PROSPECTUS. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THE DATE OF THIS PROSPECTUS IS , 2011. Table of Contents We also design, engineer and manufacture hybrid and fuel cell concept vehicles and hydrogen refueling systems for use in aerospace and military applications. In 2009, we designed, developed and shipped the Clandestine Extended Range Vehicle (CERV) to the U.S. Army Tank Automotive Research Development and Engineering Center (TARDEC). The CERV is a diesel hybrid electric vehicle that incorporates our Q-Force drivetrain and is targeted for quick-paced special operations-type missions involving reconnaissance, surveillance, and targeting. We are also working on a program with Lockheed Martin s Space Systems division for the development and supply of carbon fiber composite hydrogen and oxygen storage vessels and critical hydrogen metering systems for use in Lockheed s Integrated Sensor is the Structure (ISIS) airship which it is developing for the U.S. Defense Advanced Research Projects Agency (DARPA). The ISIS is a large stratospheric airship powered by a regenerative fuel cell and uses an integral radar sensor that can detect small valuable targets from a distance of several hundreds of kilometers away. The ISIS uses solar rays during daylight hours to generate renewable electricity that electrolyzes water to generate hydrogen and oxygen to run the regenerative fuel cell at night. The current market for our hybrid drive systems and packaged fuel systems for PHEVs, electric, fuel cell and hydrogen hybrid applications is the emerging world market for passenger, fleet, industrial and military vehicles. We plan to continue the development of our hybrid drive systems and hydrogen vehicle and refueling technologies to meet market opportunities. We are focusing our enabling technology marketing efforts on North America, Europe and Asia-Pacific. We believe that a commercial market will begin to develop for our Q-Drive system or certain Q-Drive subsystems within the next year, especially for luxury high performance vehicle applications due to Fisker Automotive s planned launch of the Fisker Karma vehicle platform. We believe this is the first step to market introduction and to demonstrate the technical feasibility and fuel economy advantages of PHEV technology. Our hydrogen fuel cell systems and hydrogen refueling products are not currently manufactured in high volumes and will require additional product and application development. We expect initial commercialization for those products to begin in the 2013-2015 time-frame. Renewable Energy Segment Through our wholly-owned subsidiary, Schneider Power, we are a licensed electricity generator, developer and builder of renewable electricity generation facilities. We currently own and operate a 1.6 megawatt (MW) wind farm in Ontario, Canada. In addition, we have a portfolio of wind and solar farm projects in North America and the Caribbean with potential capacity in excess of one gigawatt (1,000 MW) that are in various stages of development. We have capabilities to completely engineer, develop, construct and commission a renewable energy farm. We currently generate electrical power from wind turbines operating in Ontario, Canada under a long term Power Purchase Agreement with a Canadian-based renewable energy reseller. The predictable nature of the wind resource, the demonstrated reliability of the turbines, the low cost of operations including zero cost of fuel, and the long term fixed rate financing structure that supports the Ontario wind farm operations all contribute to a highly predictable and consistent cash flow stream from these operations. As we continue to grow the capacity of our wind and solar power generation asset base, we expect the steady financial return aspect of this business segment to remain in place. Other Interests We also own interests in the following entities: Fisker Automotive, Inc. We co-founded Fisker Automotive in August 2007 with Fisker Coachbuild, LLC for the purpose of producing premium plug-in hybrid automobiles. We own 6.2 million shares of Fisker Automotive s common stock, which represents less than 1% of the issued and outstanding shares of Fisker Automotive s capital stock. Asola Advanced and Automotive Solar Systems GmbH. On January 4, 2008, we acquired a 24.9% ownership interest in Asola, a solar module manufacturer located in Erfurt, Germany. ConSolTec GmbH (ConSolTec) owns 75.1%. Asola has been developing and manufacturing high-efficiency photovoltaic modules for a number of innovative applications, including automotive, residential, and commercial applications for over 20 years. Asola developed the solar roof panel that is incorporated into the Fisker Karma PHEV. Asola s current facility has an annual manufacturing capacity to produce 45 MW of solar panels. Asola Quantum Solarpower AG. We and ConSolTec formed this entity in December 2010 to serve as the holding company for the planned worldwide expansion of Asola s solar panel manufacturing business. We own 24.9% and ConSolTec owns 75.1%. Table of Contents Quantum Solar Energy, Inc. We own 85% of Quantum Solar Energy which was formed in 2008 for the purpose of manufacturing high-efficiency photovoltaic modules for residential, and commercial applications. ConSolTec owns the other 15%. Power Control and Design, Inc. On October 6, 2009, we acquired a 22% interest in Power Control and Design, Inc. (PCD). PCD designs and develops control software for use in motor control, solar-to-grid, wind-turbine, electric vehicle charges and power conversion products and applications for infrastructure, automotive, aerospace and industrial markets. Shigan Quantum. On September 3, 2009, we acquired a 25% interest in Shigan Quantum Technologies PVT LTD (Shigan Quantum), a start-up company organized under India s Corporate Act. Shigan Quantum intends to manufacture and sell gaseous fuel injectors using our injector technologies and variants thereof. Recent Events On March 2, 2011, March 3, 2011, March 14, 2011, and March 28, 2011, we issued a total of 369,010 shares of our common stock to our senior secured lender in payment of $1,750,000 of principal due under the promissory note we refer to in this prospectus as Term Note B. On March 10, 2011, we entered into a global Settlement Agreement and Mutual General Release in connection with the settlement of the litigation described on page 39 of this prospectus. Pursuant to the terms of the Settlement Agreement, we agreed to issue 108,000 shares of our common stock to Richard C. Anderson on or before March 31, 2011. On February 18, 2011, we completed a private placement of our common stock and warrants to which this prospectus relates pursuant to which we received gross proceeds of approximately $7.7 million, of which $5.7 million was paid in cash and $2.0 million was paid by the reduction of debt owed to our senior secured lender. On February 8, 2011, we implemented a reverse stock split pursuant to which all of the issued and outstanding shares of our common stock at the close of business on such date were combined and reconstituted as a smaller number of shares of common stock in a ratio of 1 share of common stock, $0.02 par value, for every 20 shares of common stock, $0.001 par value. Fractional shares were paid in cash. Our authorized shares of common stock were reduced proportionately from 400,000,000 to 20,000,000. The reverse stock split did not affect our 20,000,000 shares of authorized preferred stock. All share and per share data in this prospectus has been adjusted to give effect to the reverse stock split. Our independent registered public accounting firm for the fiscal years ended April 30, 2010, 2009 and 2008, Ernst & Young LLP, issued an unqualified opinion on our consolidated financial statements for this three year period in their original report dated July 12, 2010. In connection with this prospectus, Ernst & Young LLP has updated their report for this three year period ended April 30, 2010 to add an explanatory paragraph in their revised report dated March 4, 2011. Their modified report, included as part of this prospectus, discusses their belief that certain conditions exist that raise substantial doubt about our ability to continue as a going concern and that our consolidated financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result should we be unable to continue as a going concern. See further discussion of our liquidity and capital resources in the section entitled Risk Factors and in the section entitled Management s Discussion and Analysis of Financial Condition and Results of Operations contained within this prospectus. Corporate Information We were incorporated in Delaware in October 2000 as a wholly-owned subsidiary of IMPCO. We spun off from IMPCO and became a separate reporting company on July 23, 2002. Our fiscal year ends April 30. Our principal executive offices are located at 17872 Cartwright Road, Irvine, California 92614. Our telephone number at that location is (949) 399-4500. We maintain a web site at www.qtww.com. Summary Consolidated Financial and Other Data The table on the following page summarizes certain historical financial information at the dates and for the periods indicated prepared in accordance with U.S. Generally Accepted Accounting Principles. The Consolidated Statement of Operations data for the years ended April 30, 2008, 2009 and 2010 and the Consolidated Balance Sheet data as of April 30, 2009 and 2010 have been derived from our audited consolidated financial statements included elsewhere in this prospectus. The Consolidated Statement of Operations data for the years ended April 30, 2006 and 2007 and the Balance Sheet data as of April 30, 2006, 2007 and 2008 have been derived from audited financial statements not included in this prospectus. Table of Contents The statements of operations data for the nine months ended January 31, 2011 and the balance sheet data at January 31, 2011 are derived from our unaudited condensed consolidated financial statements and related notes thereto included elsewhere in this prospectus. Certain reclassifications have been made to amounts for fiscal years 2006 through 2010 to conform to the fiscal 2011 presentation. The selected consolidated financial data should be read in conjunction with Management s Discussion and Analysis of Financial Condition and Results of Operations and the consolidated financial statements and notes thereto, which are included elsewhere in this prospectus. Table of Contents Statement of Operations Data: Year Ended April 30, Nine Months Ended January 31, 2006 2007 2008 2009 2010 (3) 2011 (3) (all amounts in thousands, except per share amounts) Statement of Operations Data: Revenue: Net product sales $ 8,830 $ 10,663 $ 11,856 $ 975 $ 1,450 $ 2,432 Contract revenue from non-affiliates 10,952 7,016 14,641 22,283 8,155 9,619 Total revenue 19,782 17,679 26,497 23,258 9,605 12,051 Cost and expenses: Cost of product sales 9,308 9,484 10,016 2,288 1,573 2,192 Research and development 17,775 14,146 17,499 25,177 13,534 12,928 Selling, general and administrative 10,333 15,811 16,077 13,889 14,986 10,897 Amortization and impairment of long-lived assets 1,661 1,674 1,676 7,021 16 1,285 Operating loss (19,295 ) (23,436 ) (18,771 ) (25,117 ) (20,504 ) (15,251 ) Interest income (expense), net 894 (16 ) (2,557 ) (3,691 ) (2,415 ) (2,638 ) Fair value adjustments of derivatives, net 1,248 (611 ) 27,693 (10,574 ) 8,199 Loss on modification of debt and derivative instruments, net (23,834 ) (14,687 ) (1,513 ) Gain (loss) on settlement of derivative instruments (281 ) (4,294 ) 822 10 Minority interest in losses of subsidiary 56 811 1,719 Equity in earnings (losses) of affiliates 335 (733 ) 1,089 424 Other income (expense), net 1 7 (27 ) 1,985 (19 ) 17 Income tax expense (2 ) (2 ) (2 ) (2 ) (6 ) (70 ) Loss from continuing operations (18,346 ) (21,669 ) (19,914 ) (27,993 ) (46,294 ) (10,822 ) Loss from discontinued operations (1) (17,187 ) (118,184 ) (66,886 ) Net loss $ (35,533 ) $ (139,853 ) $ (86,800 ) $ (27,993 ) $ (46,294 ) $ (10,822 ) Per share data - basic and diluted: Loss from continuing operations $ (6.90 ) $ (7.02 ) $ (5.19 ) $ (6.08 ) $ (7.17 ) $ (1.17 ) Loss from discontinued operations (6.45 ) (38.27 ) (17.42 ) Net Loss $ (13.34 ) $ (45.29 ) $ (22.60 ) $ (6.08 ) $ (7.17 ) $ (1.17 ) Weighted average number of shares outstanding basic and diluted (2) 2,664 3,088 3,840 4,601 6,460 9,270 (1) Consists of the operations of Tecstar Automotive Group, Inc. since the acquisition date of March 3, 2005. All of the historical activities of the Tecstar Automotive Group business segment have been classified as discontinued operations in connection with the disposal of the businesses on January 16, 2008. (2) See Note 15 of the notes to the consolidated financial statements April 30, 2010 included elsewhere in this prospectus for an explanation of the method used to determine the number of shares used to compute the net loss per share. (3) Includes the operations of Schneider Power, Inc. since the acquisition date of April 16, 2010. April 30, January 31, 2006 2007 2008 2009 2010 (1) 2011 (1) (all amounts in thousands) Balance Sheet Data: Cash and cash equivalents $ 4,769 $ 2,526 $ 6,024 $ 2,621 $ 4,027 $ 2,468 Marketable securities held-to-maturity 15,000 Working capital (deficit) 26,435 15,159 (14,317 ) (24,434 ) (11,177 ) (33,532 ) Total assets 282,309 167,543 68,786 59,883 73,018 72,086 Derivative instruments 3,340 16,409 15,198 19,216 8,529 Long-term debt, less current portion 22,311 29,941 18,540 21,134 1,404 Total equity 191,593 80,198 1,786 5,132 24,003 27,018 (1) Includes the balances of Schneider Power, Inc (SPI). SPI was acquired on April 16, 2010. Table of Contents Quarterly Results of Operations A summary of the unaudited quarterly results of operations follows (in thousands, except per share amounts): First Quarter Second Quarter Third Quarter Fourth Quarter Fiscal Year 2008 Net product sales $ 1,455 $ 3,260 $ 2,521 $ 4,620 Contract revenue 2,054 2,917 4,625 5,045 Total revenue 3,509 6,177 7,146 9,665 Cost of product sales 1,591 2,544 2,009 3,871 Gross profit (loss) on product sales (136 ) 716 512 749 Research and development expense 3,196 3,820 4,691 5,791 Income (loss) from continuing operations (1,425 ) (2,782 ) 739 (16,445 ) Income (loss) from discontinued operations (61,313 ) (7,817 ) 2,243 Net Income (loss) (62,738 ) (10,599 ) 2,982 (16,445 ) Net income (loss) per share basic (17.58 ) (2.70 ) 0.76 (4.17 ) Net income (loss) per share diluted (17.58 ) (2.70 ) 0.60 (4.17 ) Weighted average shares outstanding: Basic 3,568 3,928 3,928 3,939 Diluted 3,568 3,928 5,283 3,939 First Quarter Second Quarter Third Quarter Fourth Quarter Fiscal Year 2009 Net product sales $ 214 $ 385 $ 216 $ 161 Contract revenue 3,517 7,019 5,665 6,081 Total revenue 3,731 7,404 5,881 6,242 Cost of product sales 654 423 449 763 Gross profit (loss) on product sales (440 ) (38 ) (233 ) (602 ) Research and development expense 4,619 6,774 7,316 6,468 Net income (loss) (39,008 ) 32,759 (18,550 ) (3,193 ) Net income (loss) per share basic (9.78 ) 7.12 (3.80 ) (0.65 ) Net income (loss) per share diluted (9.78 ) 2.00 (3.80 ) (0.65 ) Weighted average shares outstanding: Basic 3,987 4,603 4,881 4,931 Diluted 3,987 7,623 4,881 4,931 First Quarter Second Quarter Third Quarter Fourth Quarter Fiscal Year 2010 Net product sales $ 188 $ 425 $ 475 $ 363 Contract revenue 2,906 2,230 1,005 2,013 Total revenue 3,094 2,655 1,480 2,376 Cost of product sales 267 595 329 382 Gross profit (loss) on product sales (79 ) (170 ) 146 (19 ) Research and development expense 3,795 3,509 2,946 3,284 Net income (loss) (12,264 ) (42,673 ) 14,143 (5,500 ) Net income (loss) per share basic (2.34 ) (7.00 ) 2.00 (0.74 ) Net income (loss) per share diluted (2.34 ) (7.00 ) 0.40 (0.74 ) Weighted average shares outstanding: Basic 5,238 6,094 7,074 7,465 Diluted 5,238 6,094 8,627 7,465 Table of Contents First Quarter Second Quarter Third Quarter Fiscal Year 2011 Net product sales $ 644 $ 835 $ 953 Contract revenue 2,916 3,050 3,653 Total revenue 3,560 3,885 4,606 Cost of product sales 559 878 754 Gross profit (loss) on product sales 85 (43 ) 199 Research and development expense 3,837 4,282 5,127 Net income (loss) (1,615 ) (1,455 ) (7,753 ) Net income (loss) per share basic (0.18 ) (0.15 ) (0.82 ) Net income (loss) per share diluted (0.18 ) (0.15 ) (0.82 ) Weighted average shares outstanding: Basic and diluted 9,018 9,390 9,400
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001167887_argentex_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001167887_argentex_prospectus_summary.txt
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+Prospectus Summary Our Business We are a junior exploration stage company that has not yet generated or realized any revenues from business operations. We currently hold interests in mineral properties located in the Rio Negro and Santa Cruz provinces of Argentina and in the Province of British Columbia, Canada. All of the surface rights and the mineral exploration licenses with respect to the Argentine claims are registered in the name of our subsidiary, SCRN Properties Ltd., while all of the mineral tenures with respect to our British Columbia claims are registered in the name of our company. One of the properties located in the Santa Cruz province of Argentina consists of surface rights and a group of claims that we refer to as the Pinguino property and we have concentrated the majority of our exploration efforts on this property. During the remainder of the year, we intend to continue to focus our efforts primarily on our Pinguino property and two of our other properties that are also located in the Santa Cruz province of Argentina the Contreras property and the Condor property. We are continuing with targeted exploration in the form of geophysics, soil geochemistry, trenching and drilling on the Pinguino property in an effort to continue to test the limits of known mineralization and to identify new drill targets. We have not determined whether any of our properties contain any mineral reserve. A mineral reserve is defined by the Securities and Exchange Commission in its Industry Guide 7 (which can be viewed over the Internet at http://www.sec.gov/about/forms/industryguides.pdf) as that part of a mineral deposit which could be economically and legally extracted or produced at the time of the reserve determination. We have not begun significant operations and are considered an exploration stage company, as that term is defined in Industry Guide 7. We have not generated any revenue from operations since our inception. We incurred a net loss of $5,164,198 during the year ended January 31, 2011 and a net loss of $3,405,546 during the three month period ended April 30, 2011. From inception through April 30, 2011, we have incurred a net loss of $25,648,674. We anticipate that we will continue to incur losses without generating any revenue from operations unless and until we are able to sell one or more of our resource properties or identify a mineral resource in a commercially exploitable quantity on one or more of our mineral properties and build and operate a mine, and there can be no assurance that we will ever be able to do so. In their report on our financial statements for the year ended January 31, 2011, our independent auditors included an explanatory paragraph expressing concern about our ability to continue as a going concern. On April 29, 2011, our shareholders approved the change of corporate jurisdiction of our company from the State of Delaware to the Province of British Columbia, Canada. We began filing the documents necessary to effect this change on June 3, 2011. On June 3, 2011, our subsidiary SCRN Properties was continued into the Province of British Columbia. On June 3, 2011, our company merged into its wholly-owned Nevada subsidiary (which was incorporated in the State of Nevada for this sole purpose) and, on June 8, 2011, our company was continued from the State of Nevada and into the Province of British Columbia, Canada. Our principal offices are located at Suite 835, 1100 Melville Street, Vancouver, British Columbia V6E 4A6, Canada. Our telephone number at our principal offices is (604) 568-2496. Our fax number is (604) 568-1540. The information in this prospectus is not complete and may be changed. The selling shareholders may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. Subject to Completion, Dated ______________, 2011 Prospectus 2,980,407 Shares Argentex Mining Corporation Common Shares _________________________________ The selling shareholders identified in this prospectus may offer and sell up to 2,980,407 common shares of our company that were issued or may be issued upon exercise of warrants. The warrants were acquired by the selling shareholders directly from our company in private placements that were exempt from the registration requirements of the Securities Act of 1933. The selling shareholders may sell all or a portion of the shares being offered pursuant to this prospectus at fixed prices, at prevailing market prices at the time of sale, at varying prices or at negotiated prices. Our common shares are quoted on Financial Industry Regulatory Authority s OTC Bulletin Board under the symbol AGXMF and are listed on the TSX Venture Exchange under the symbol ATX . Prior to June 27, 2011, our common shares were quoted on Financial Industry Regulatory Authority s OTC Bulletin Board under the symbol AGXM . On June 24, 2011, the closing price of our common shares on the OTC Bulletin Board was $0.79 per share and the closing price of our common shares on the TSX Venture Exchange was CDN$0.78. We will not receive any proceeds from the sale of our common shares by the selling shareholders. We may, however, receive proceeds upon exercise of the warrants by the selling shareholders. We will pay for expenses of this offering, except that the selling shareholders will pay any broker discounts or commissions or equivalent expenses and expenses of their legal counsels applicable to the sale of their shares. Investing in our common shares involves risks. See Risk Factors beginning on page 5. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The date of this prospectus is _____________, 2011. Number of Shares Being Offered This prospectus covers the resale by the selling shareholders named in this prospectus of up to 2,980,407 common shares of our company which were issued or may be issued upon the exercise of warrants that we issued in a private placement of units that was completed on November 27, 2009. Number of Shares Outstanding There were 61,347,545 common shares of our company issued and outstanding as at June 27, 2011. Use of Proceeds We will not receive any proceeds from the sale of any of our common shares by the selling shareholders. We may, however, receive proceeds upon exercise of the warrants by the selling shareholders. If we receive proceeds upon exercise of these warrants, we intend to use these proceeds to fund ongoing exploration programs at our properties in the Patagonia region of Argentina, for working capital and for general corporate purposes. We will pay the expenses of this offering, except that the selling shareholders will pay any broker discounts or commissions or equivalent expenses and expenses of their legal counsel applicable to the sale of their shares. Summary of Financial Data The following information represents selected audited financial information for our company for the years ended January 31, 2011 and 2010 and selected unaudited financial information for our company for the three month periods ended April 30, 2011 and 2010. The summarized financial information presented below is derived from and should be read in conjunction with our audited and unaudited financial statements, as applicable, including the notes to those financial statements which are included elsewhere in this prospectus along with the section entitled Management s Discussion and Analysis of Financial Condition and Results of Operations beginning on page 57 of this prospectus. Statements of Operations Data Three Month Period Ended April 30, 2011 Three Month Period Ended April 30, 2010 From December 21, 2001 (Inception) to April 30, 2011 Total Revenues Nil Nil Nil Total Operating Expenses (3,419,898) (1,344,208) (25,130,219) Net Loss (3,405,546) (1,344,208) (25,648,674) Basic and Diluted Loss Per Share (0.06) (0.03) - Statements of Operations Data Year Ended January 31, 2011 Year Ended January 31, 2010 Total Revenues Nil Nil Total Operating Expenses (5,167,893) (2,644,324) Net Loss (5,164,198) (2,658,296) Basic and Diluted Loss Per Share (0.11) (0.07) Balance Sheets Data At April 30, 2011 At January 31, 2011 At January 31, 2010 Cash and Cash Equivalents 1,924,897 5,959,362 3,209,786 Working Capital 3,358,958 5,316,067 2,877,702 Total Assets 6,161,207 6,963,168 3,372,176 Total Liabilities 1,871,860 (718,220) (441,940) Total Stockholders Equity 4,289,347 6,244,948 2,930,236 Accumulated Deficit (25,648,674) (22,243,128) (17,078,930) Please read this prospectus carefully. You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with different information. You should not assume that the information provided by the prospectus is accurate as of any date other than the date on the front of this prospectus.
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001169440_balqon_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001169440_balqon_prospectus_summary.txt
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+PROSPECTUS SUMMARY To fully understand this offering and its consequences to you, you should read the following summary along with the more detailed information and our financial statements and the notes to those statements appearing elsewhere in this prospectus. In this prospectus, the words we, us, our and similar terms refer to Balqon Corporation unless the context provides otherwise. Our Company We develop and manufacture electric drive systems and battery systems for trucks, tractors, buses, industrial equipment and renewable energy storage devices. We also develop, design, assemble, market and sell zero-emissions heavy-duty electric yard tractors, heavy-duty short haul drayage tractors, heavy-duty inner city Class 7 and Class 8 delivery trucks and medium-duty electric trucks that feature our proprietary electric drive systems and lithium battery modules. Our electric drive systems are comprised of an electric motor, transmission, our proprietary flux vector motor controller, power electronic components and proprietary software configured to specific application needs. Our flux vector motor controllers control the speed of an electric motor by varying the input frequency and voltage from a vehicle s batteries. Our lithium battery modules feature our proprietary battery management system, or BMS. Our BMS is an electronic device mounted on each lithium battery cell to monitor and balance the state of charge of the battery, including its temperature, voltage and current during charge and discharge cycles. Our proprietary software allows our BMS to be used on any battery cell chemistry. We sell our electric drive systems and lithium battery modules to global original equipment manufacturers, or OEMs, of trucks, buses and industrial equipment. Our heavy-duty electric vehicles are suitable for use in the transportation of containers and heavy loads in on-highway and off-highway applications. Our medium-duty electric trucks are designed for inner city applications. Significant orders for our electric drive systems include a purchase order from Winston Global Energy, or WGE, an affiliate of our Chairman of the Board based in China, under which WGE has agreed to purchase 300 of our electric drive systems at an aggregate purchase price of approximately $15.9 million for integration into 14 to 30 passenger mini-buses. We also have an agreement with Ashok Leyland, Ltd., a large manufacturer of trucks and buses based in India, under which we will work with Ashok Leyland to jointly develop and test six electric vehicles (comprised of buses and trucks) using Ashok Leyland s glider chassis and our electric drive systems and lithium battery modules. Significant orders for our electric vehicles includes an agreement with the City of Los Angeles under which we agreed to sell 20 heavy-duty electric yard tractors and five short-haul tractors for use at the Port of Los Angeles. We also have an agreement with T&K Logistics, Inc., the provider of logistics services to Ford Motor Company and the manager of on-site transportation of trailers and containers at Ford Motor Company s assembly plant in Wayne, Michigan, under which T&K Logistics has agreed to lease 10 of our Nautilus yard tractors for use at Ford Motor Company s assembly plant for a period of 36 months. Our Strategy As one of the few companies focused on the zero emissions medium-duty and heavy-duty electric vehicle market worldwide, we are dedicated to providing cost effective solutions to these markets through the continued development and integration of our drive system and battery technologies to increase the performance of our vehicles and the vehicles, material handling equipment and other applications into which our drive systems and battery modules are incorporated. U. S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 We develop technologies that can be easily adapted for use in various vehicle platforms. Our electric drive systems are built as a single integrated unit that can be really installed into the existing electrical and transmission components of fossil fuel powered vehicles or material handling equipment such as container handlers and industrial forklifts. Both our proprietary electric drive system and our lithium battery modules are configurable to meet different vehicle platform specifications, including trucks, tractors. electric buses, delivery vans, forklifts for both off-highway and on-highway applications. The primary elements of our strategy include: increasing our current market presence and selectively pursue new opportunities; developing technologies that can be easily integrated into various platforms; developing global sales and service network; providing superior after market service; and building capital efficient industry alliances. Corporate Information We are a Nevada corporation that was incorporated on November 21, 2001. Our principal executive offices are located at 1420 240th Street, Harbor City, California 90710. Our telephone number is (310) 326-3056 and our Internet website is www.balqon.com . The content of our Internet website does not constitute a part of this prospectus. Information in this Prospectus You should rely only on the information contained in this prospectus in connection with this offering. We have not authorized anyone to provide you with information that is different. The selling security holders are not making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted. You should assume that the information appearing in this prospectus is accurate only as of the date on the front cover of this prospectus. AMENDMENT NO. 1 TO FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 BALQON CORPORATION (Exact name of registrant as specified in its charter) Nevada 3537 33-0989901 (State or other jurisdiction of incorporation or organization) (Primary Standard Industrial Classification Code No.) (I.R.S. Employer Identification No.) 1420 240th Street, Harbor City, California 90710 (310) 326-3056 (Address and telephone number of principal executive offices and principal place of business) (1) Represents 35,591,530 shares of common stock currently outstanding plus 7,560,419 shares of common stock underlying warrants, convertible notes and convertible debentures. The number of shares of common stock being offered by the selling security holders assumes the exercise of the warrants and the conversion of the convertible notes and convertible debentures whose underlying shares of common stock are covered by this prospectus in exchange for 3,659,611 shares, 2,689,829 shares and 1,210,929 shares of common stock, respectively, and the immediate resale of all those shares of common stock. The number of shares of common stock that will be outstanding upon the completion of this offering is based on 35,591,530 shares outstanding as of August 10 , 2011, and excludes the following: 7,500,000 shares of common stock reserved for issuance under our 2008 Stock Incentive Plan, or 2008 Plan, of which options to purchase 1,416,695 shares were outstanding under the 2008 Plan as of that date, at a weighted average exercise price of $2.50 per share; 11,278,755 shares of common stock reserved for issuance under certain warrants to purchase common stock outstanding as of that date, at a weighted average exercise price of $0.93 per share; and any additional shares of common stock we may issue from time to time after that date.
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001169988_boingo_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001169988_boingo_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..e5b53e784b4c9526682854f55dbfd38c2f3483c8
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus and does not contain all of the information you should consider in making your investment decision. You should read this entire prospectus carefully, especially the risks of investing in our common stock discussed under "Risk Factors" and the consolidated financial statements and the related notes included elsewhere in this prospectus, before making an investment decision. Unless the context otherwise requires, we use the terms "Boingo," "company," "we," "us" and "our" in this prospectus to refer to Boingo Wireless, Inc. and, where appropriate, its subsidiaries. Company Overview Boingo makes it simple to connect to the mobile Internet. We make it easy, convenient and cost effective for individuals to find and gain access to the mobile Internet through high-speed, high-bandwidth Wi-Fi networks globally. Our solution includes easy-to-use software for Wi-Fi enabled devices, such as smartphones, laptops and tablet computers, and our sophisticated back-end system infrastructure that detects and enables one-click access to our extensive global Wi-Fi network. Individuals use our solutions to access what we believe is the world's largest commercial Wi-Fi network, consisting of over 325,000 Wi-Fi locations, or hotspots, in over 100 countries at venues such as airports, hotels, coffee shops, shopping malls, arenas, stadiums and quick service restaurants. With the proliferation of smartphones, laptops, tablet computers and other mobile devices, individuals increasingly demand Internet access to facilitate their use, while on-the-go, of data-intensive applications, such as streaming media, online games, social networking and video calling. We believe this demand creates a significant market opportunity that we are uniquely positioned to capture. We have direct customer relationships with over 1.3 million users who have purchased our mobile Internet services in the past 12 months. We also provide solutions to our partners, which include telecom operators, cable companies, technology companies, enterprise software and services companies, and communications companies, allowing their millions of users to connect to the mobile Internet through Wi-Fi hotspots in our network. Our primary source of revenue is from individuals who purchase month-to-month subscription plans, which automatically renew, or hotspot specific, single-use access to our network. Our partners pay us usage-based network access and software licensing fees to allow their customers access to our network. We also generate revenue from telecom operators that pay us build-out fees and access fees so that their cellular customers may use our distributed antenna system, or DAS, at locations where we manage and operate the Wi-Fi network. In addition, we generate revenue from advertisers that seek to reach visitors to our landing pages with display advertising, sponsored access and other promotional programs. We install, manage and operate wireless network infrastructure to provide Wi-Fi services at Boingo managed and operated hotspots, where we have exclusive multi-year agreements. In 2009, these locations had more than 800 million visitors. We extend our network footprint through partnerships with over 125 network operators, such as British Telecommunications, China Telecom, KT Corp. (formerly Korea Telecom Corp.), France Telecom SA and T-Mobile USA Inc. The breadth of our network and functionality of our software provide individuals with a seamless user experience whether they access the mobile Internet through hotspots managed and operated by us or by our global partners. We grew revenue from $56.7 million in 2008 to $65.7 million in 2009, an increase of 16%, we grew the corresponding Adjusted EBITDA from $6.9 million to $13.5 million, an increase of 95%, and we reduced the corresponding net loss attributable to common stockholders from $11.2 million to $4.2 million. We grew revenue from $65.7 million in 2009 to $80.4 million in 2010, an increase of 22%, Amendment No. 5 to FORM S-1 REGISTRATION STATEMENT Under THE SECURITIES ACT OF 1933 Table of Contents we grew the corresponding Adjusted EBITDA from $13.5 million to $18.2 million, an increase of 35%, and we improved the corresponding net loss attributable to common stockholders from $4.2 million to net income attributable to common stockholders of $10.7 million. For a discussion of Adjusted EBITDA and a reconciliation of net income (loss) to Adjusted EBITDA, see footnote 1 to "Selected Consolidated Financial Data." Industry Overview Data-intensive applications are driving the escalation of Internet data traffic. With the proliferation of smartphones, laptops, tablet computers and other Wi-Fi enabled devices, users expect access on-the-go to the same data-intensive applications that they use in the home and office, at similarly high performance levels. The adoption, growth and advancement of Wi-Fi enabled smartphones, tablet computers and application content are key catalysts for the acceleration of high-speed, high-bandwidth mobile Internet usage. The improved computing power, rich graphical user interfaces and Internet capabilities of these devices enable mobile users to make video calls or stream full-length movies, contributing to the vast expansion of the wireless consumption of data. To cope with the expected significant increase in mobile Internet data traffic, telecom operators are investing billions of dollars in technologies such as 3G and 4G cellular networks, but these investments are not anticipated to be sufficient to relieve the strain on networks. Verizon has reported that its Long Term Evolution, or LTE, upgrade will increase capacity four times; however, mobile data consumption is expected to increase by 27 times as projected by Cisco's Visual Networking Index. Cellular users face service quality issues and high cost of mobile data services. To relieve the network congestion that contributes to these problems, telecom operators offer Wi-Fi solutions to off-load data. Wi-Fi provides higher speed and higher bandwidth per user in high density locations, and is simpler and less expensive to deploy than additional cellular network capacity. Hardware manufacturers have responded to demand for Wi-Fi capability by including Wi-Fi as a standard feature on laptops and tablet computers, and increasingly, smartphones, digital cameras and handheld media devices. Wi-Fi has become the standard protocol for residential and office wireless networks and is increasingly prevalent in public venues, such as airports, hotels, coffee shops, shopping malls, arenas, stadiums and quick service restaurants. The mobile Internet is a complex and constantly evolving ecosystem, comprised of over a billion mobile Internet enabled devices, from dozens of manufacturers, powered by many different operating systems. Devices use different network technologies and must be configured with the appropriate software to detect and optimize a connection to the mobile Internet. This complexity is amplified as new device models and operating systems are released, new categories of devices become Internet enabled and new network technologies emerge. The Boingo Solution We make it simple to connect to the mobile Internet. Our proprietary software, wholesale and retail billing system, extensive network and customer support services provide an easy, convenient and cost effective way for individuals to find and gain access to the mobile Internet. We are able to deliver highly reliable, high-speed mobile Internet access with minimal capital investment. Key elements of our solution include: Simple connectivity. We have developed a robust software client with an easy-to-use, intuitive interface that allows individuals to connect to any of our over 325,000 hotspots using Wi-Fi enabled devices. Our software client continuously monitors Wi-Fi network availability and notifies users when a Boingo hotspot is in range, allowing them to connect with one-click confirmation. BOINGO WIRELESS, INC. (Exact name of registrant as specified in its charter) Delaware (State or Other Jurisdiction of Incorporation or Organization) 7389 (Primary Standard Industrial Classification Code Number) 95-4856877 (I.R.S. Employer Identification Number) 10960 Wilshire Blvd., Suite 800 Los Angeles, California 90024 (310) 586-5180 (Address, including zip code and telephone number, including area code, of registrant's principal executive offices) Edward Zinser Chief Financial Officer 10960 Wilshire Blvd., Suite 800 Los Angeles, California 90024 (310) 586-5180 (Name, address, including zip code and telephone number, including area code, of agent for service) Table of Contents Global reach. We provide our customers and partners with access to what we believe is the largest commercial Wi-Fi network in the world, with hotspots located at airports, hotels, coffee shops, shopping malls, arenas, stadiums and quick service restaurants. Fast and reliable services. We provide individuals with reliable, high-speed and high-bandwidth mobile Internet services, enabling users to access streaming media, play online games and use social networking sites while on-the-go at speeds faster than 4G in high density locations. A Boingo user at venues with many simultaneous users running high-bandwidth applications, such as Chicago O'Hare International Airport, could realize speeds that are up to six times faster than 4G. As a result, a Boingo user at O'Hare can stream high definition video, whereas on 4G, streaming even standard definition video could be problematic. Scalable and adaptable. We have designed our mobile Internet platform to enable flexible and rapid expansion of our network infrastructure and real-time configuration updates. This allows our wholesale partners to easily deploy Wi-Fi enabled devices and offer services such as streaming video and VoIP on our network, and allows their users to access new hotspots as soon as they are deployed. Turn-key solution. We install, manage and operate wireless network infrastructure to provide Wi-Fi services at Boingo managed and operated hotspots. As a result, venue operators can easily implement a turn-key Wi-Fi solution with no initial investment or ongoing cost. Online marketing platform. We provide an online marketing platform to our partners. Individuals who visit our landing page at Boingo managed and operated hotspots receive promotions from our partners or advertisers. Flexible and affordable payment options. We offer individuals a number of monthly plans tailored to fit their needs. Individuals are also able to purchase a variety of hotspot specific, single-use mobile Internet services. Our Strategy We believe we are the leading global provider of commercial mobile Wi-Fi Internet solutions. Key elements of our strategy to extend that lead are to: Grow the installed base of our software. We intend to acquire new software users through the growing number of Boingo managed and operated hotspots worldwide and by partnering with leading manufacturers of smartphones, laptops, tablet computers and eReaders to make our software client available in online application marketplaces, or app stores, and preloaded on their devices. Leverage our neutral-host business model. Our neutral-host model enables us to partner with venue operators because we allow their customers to access the venue's network regardless of the customers' Wi-Fi provider. We also partner with telecom operators that are attracted to Boingo because we do not compete for cellular subscribers. We intend to increase the value of our network by partnering with additional venues, network operators, telecom operators and technology companies. Invest in our software to enhance the customer experience. We will continue to extend our platform by adding new features such as the ability to locate and connect to free and open networks, integration with leading social networking sites and support for foreign languages. We also plan to improve the monetization capabilities of our business model through location-based services, in-client advertising and e-commerce. Expand our network. We intend to continue to grow our global network by increasing our managed and operated presence at airports and other venues such as shopping malls, arenas, Copies to: Ilan Lovinsky Elizabeth Wilson Mike Heath Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP 11682 El Camino Real, Suite 100 San Diego, California 92130 (858) 436-8000 Horace Nash James Evans Fenwick & West LLP Silicon Valley Center 801 California Street Mountain View, California 94041 (650) 988-8500 Table of Contents stadiums and quick service restaurants. We also plan to enter into new roaming agreements with other network and hotspot operators. Grow our business internationally. We believe that the market for Wi-Fi mobile Internet services will grow rapidly in Europe and Asia as the penetration of smartphones and other Wi-Fi enabled devices increases. We plan to leverage our recent successes with the British Airports Authority, China Telecom and KT Corp. to increase our presence throughout Europe and Asia. Increase our brand awareness. We will continue to seek new ways to promote the Boingo brand through Boingo managed and operated hotspots. We intend to enhance our brand through low-cost co-marketing arrangements with our partners and through periodic promotional and sponsorship activities, and by continuing to leverage the reach of social media to interact with our customers. Risks Affecting Us Our business is subject to many risks that you should understand before making an investment decision. These risks are discussed more fully in "Risk Factors" following this prospectus summary. Some of these risks are: A significant portion of our revenue is dependent on our relationships with our venue and network partners, and if these relationships are impaired or terminated, or if our partners do not perform as expected, our business and results of operations could be materially and adversely affected; Worldwide economic conditions, and their impact on travel and consumer spending, may adversely affect our business, operating results and financial condition; Our business depends upon demand for mobile Internet services on Wi-Fi networks, market adoption of new technologies and our ability to adapt to such changes; Negotiations with prospective wholesale partners can be lengthy and unpredictable, which may cause our operating results to vary; We may be unsuccessful in expanding into new venue types, which could harm the growth of our business, operating results and financial condition; We have a limited operating history and a relatively new business in an emerging market, so an investment in our company involves more risk than an investment in a more mature company in an established industry; and Our operating results may fluctuate unexpectedly, which makes them difficult to predict and may cause us to fail to meet the expectations of investors, adversely affecting our stock price. Corporate History and Information We were incorporated in the State of Delaware in April 2001 under the name Project Mammoth, Inc. and changed our name to Boingo Wireless, Inc. in October 2001. Our principal executive offices are located at 10960 Wilshire Blvd., Suite 800, Los Angeles, California 90024 and our telephone number is (310) 586-5180. Our website address is www.boingo.com. The information on, or that can be accessed through, our website is not incorporated by reference into this prospectus and should not be considered to be a part of this prospectus. "Boingo Wireless", "Boingo", "Don't just go. Boingo.", our logo and other trademarks or service marks of Boingo appearing in this prospectus are the property of Boingo. This prospectus contains additional trade names, trademarks, and service marks of ours and of other companies. We do not intend our use or display of other companies' trade names, trademarks, or service marks to imply a relationship with these other companies, or endorsement or sponsorship of us by these other companies. Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement. Except as otherwise indicated, this prospectus reflects and assumes the following: a 5-for-1 reverse stock split of our outstanding capital stock prior to the completion of this offering; the conversion of all outstanding shares of our preferred stock into 22,845,764 shares of our common stock immediately prior to the completion of this offering; the filing of our amended and restated certificate of incorporation and the effectiveness of our amended and restated bylaws, which will occur immediately upon the completion of this offering; and no exercise by the underwriters of their option to purchase an additional 865,500 shares of our common stock to cover over-allotments, if any. Table of Contents Annual Cash Incentive Bonuses We use annual cash incentive bonuses to reward our named executive officers for the achievement of company performance goals. Each year, we adopt a management incentive plan to motivate and reward our senior executives, including our named executive officers, to attain specific short-term performance objectives that, in turn, further our long-term business objectives. These objectives are based upon corporate targets, rather than individual objectives. In setting target payout levels under our annual management incentive compensation plan, our board of directors and compensation committee considered historical payouts, the total cost to the company should performance objectives be achieved and our retention needs. The compensation committee retains discretion to reduce or eliminate payment under our management incentive plan. Our 2010 management incentive plan included two components, one based on achievement of specified corporate financial objectives, which we refer to as the financial component, and the other based upon achievement of enumerated strategic initiatives, which we refer to as the strategic component. The financial component includes four financial targets, each with an established threshold and maximum achievement level. The relative weighting of each element is as follows: Financial Objective % Relative Weighting 2010 Target Level Achievement ($) Actual 2010 Achievement Metrics ($)(3) Revenue 60 79.3 million 80.4 million Free cash flow(1) 20 9.7 million 12.9 million Adjusted EBITDA(2) 15 19.3 million 18.2 million Net income If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company Table of Contents Summary Consolidated Financial Data The following tables present summary historical financial data for our business. You should read this information together with "Selected Consolidated Financial Data," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements and the related notes, which are included elsewhere in this prospectus. We derived the consolidated statement of operations data for the years ended December 31, 2008, 2009 and 2010, and the consolidated balance sheet data as of December 31, 2010, from our audited consolidated financial statements included elsewhere in this prospectus. Our historical results are not necessarily indicative of our results to be expected in any future period. The unaudited pro forma per share data give effect to the conversion of all currently outstanding shares of our convertible preferred stock into shares of our common stock upon the closing of this offering, as though the conversion had occurred at the beginning of the indicated fiscal period. For further information concerning the calculation of unaudited pro forma per share information, please refer to notes 2 and 18 of our notes to consolidated financial statements. Year Ended December 31, 2008 2009 2010 (in thousands, except per share amounts) Consolidated Statement of Operations Data: Revenue $ 56,711 $ 65,715 $ 80,420 Costs and operating expenses: Network access 22,979 26,430 31,961 Network operations 11,010 11,667 13,508 Development and technology 6,763 7,374 8,475 Selling and marketing 7,549 5,901 5,985 General and administrative 7,945 8,214 10,645 Amortization of intangible assets 5,972 3,848 2,491 Total costs and operating expenses 62,218 63,434 73,065 Income (loss) from operations (5,507 ) 2,281 7,355 Interest and other income (expense), net 200 (154 ) (137 ) Income (loss) before income taxes (5,307 ) 2,127 7,218 Income taxes 272 706 (9,063 ) Net income (loss) (5,579 ) 1,421 16,281 Net income attributable to non-controlling interests 332 394 547 Net income (loss) attributable to Boingo Wireless, Inc. (5,911 ) 1,027 15,734 Accretion on convertible and redeemable stock (5,256 ) (5,259 ) (5,020 ) Net income (loss) attributable to common stockholders $ (11,167 ) $ (4,232 ) $ 10,714 Net income (loss) per share attributable to common stockholders: Basic $ (1.96 ) $ (0.73 ) $ 1.84 Diluted $ (1.96 ) $ (0.73 ) $ 0.49 Weighted average shares used in computing net income (loss) per share attributable to common stockholders: Basic 5,696 5,801 5,834 Diluted 5,696 5,801 31,899 The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment that specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to such Section 8(a), may determine. (1)We define Adjusted EBITDA as net income (loss) attributable to common stockholders plus accretion of convertible and redeemable stock, depreciation, amortization of intangible assets, interest and other income (expense), net, income taxes, stock-based compensation expense and non-controlling interests expense. For a discussion of Adjusted EBITDA and a reconciliation of net income (loss) to Adjusted EBITDA, see footnote 1 to "Selected Consolidated Financial Data." Table of Contents The information in this prospectus is not complete and may be changed. Neither we nor the selling stockholders may sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities, and neither we nor the selling stockholders are soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED APRIL 29, 2011 5,770,000 Shares Boingo Wireless, Inc. Common Stock Table of Contents Recent Developments Our consolidated financial data for the quarter ended March 31, 2011 discussed below are preliminary, based upon information available to date and management estimates, and subject to completion of our financial closing procedures. Accordingly, these results may change and those changes may be material. Our independent registered public accounting firm, PricewaterhouseCoopers LLP, has not audited, reviewed, compiled or performed any procedures on this preliminary financial data, and accordingly, does not express an opinion or other form of assurance with respect to these data. Revenue We expect revenue for the quarter ended March 31, 2011 to be between $20.5 million and $21.0 million as compared to $18.5 million for the quarter ended March 31, 2010. Excluding the one-time sponsorship revenue of $0.9 million in the prior year first quarter, revenue would have been $17.6 million. The increase in revenue was primarily due to wholesale and to retail subscription growth. Income from operations We expect income from operations for the quarter ended March 31, 2011 to be between $1.7 million and $1.9 million as compared to $1.5 million for the quarter ended March 31, 2010. The increase was primarily due to the revenue growth. Net income We expect net income for the quarter ended March 31, 2011 to be between $0.9 million and $1.0 million as compared to $1.2 million for the quarter ended March 31, 2010. This decline was due to the significant increase in our effective tax rate as a result of the reversal of our valuation allowance in the quarter ended December 31, 2010. Adjusted EBITDA We expect Adjusted EBITDA for the quarter ended March 31, 2011 to be between $5.0 million and $5.2 million as compared to $4.2 million for the quarter ended March 31, 2010. Our Adjusted EBITDA estimate for the quarter ended March 31, 2011 reflects our estimated net income of between $0.9 million and $1.0 million, plus estimated depreciation and amortization of $3.1 million to $3.2 million, income tax expense of $0.7 million, estimated stock-based compensation of $0.2 million, and non-controlling interests of $0.1 million. Our Adjusted EBITDA for the quarter ended March 31, 2010 reflects our net income for the quarter ended March 31, 2010 of $1.2 million plus depreciation and amortization of $2.5 million, stock-based compensation of $0.2 million, income tax expense of $0.2 million, and non-controlling interests of $0.1 million. Adjusted EBITDA is a non-GAAP financial measure, for a definition of Adjusted EBITDA, see footnote 1 to "Selected Consolidated Financial Data." Operating Metrics Three Months Ended Mar. 31, 2011 Dec. 31, 2010 Mar. 31, 2010 Connects (in thousands) 1,914 1,958 1,636 Subscribers (in thousands) 214 200 158 Monthly Churn 9.4 % 9.2 % 9.2 % This is the initial public offering of our common stock. We are selling 3,846,800 shares of common stock and the selling stockholders identified in this prospectus are selling 1,923,200 shares of common stock. We will not receive any proceeds from the sale of shares of common stock by the selling stockholders. Prior to this offering, there has been no public market for our common stock. The initial public offering price of our common stock is expected to be between $12.00 and $14.00 per share. We have been approved to list our common stock on the NASDAQ Global Market under the symbol "WIFI". The underwriters have the option to purchase a maximum of 865,500 additional shares from us to cover over-allotments, if any. Investing in our common stock involves risks. See "Risk Factors" beginning on page 10. Price to Public Underwriting Discounts and Commissions Proceeds to Boingo Proceeds to Selling Stockholders Per share $ $ $ $ Total $ $ $ $ Delivery of the shares of common stock will be made on or about , 2011. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed on the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. Credit Suisse Deutsche Bank Securities Pacific Crest Securities William Blair & Company The date of this prospectus is , 2011. Table of Contents Our connects declined as expected from the seasonally stronger quarter ended December 31, 2010, and grew 17% compared to the quarter ended March 31, 2010 due to connects in our managed and operated locations and in other worldwide hotspots in our network. We added subscribers compared to the quarter ended December 31, 2010 due to growth in smartphone and laptop subscriptions. This represents net subscriber growth of 35% from March 31, 2010. Table of Contents Table of Contents
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001172229_botetourt_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001172229_botetourt_prospectus_summary.txt
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+PROSPECTUS SUMMARY This summary highlights specific information contained elsewhere or incorporated by reference in this prospectus. However, this summary is not complete and does not contain all of the information you should consider before investing in our common stock, and it is qualified in its entirety by the more detailed information included in or incorporated by reference into this prospectus. To understand this offering fully, you should carefully read this entire prospectus, including the risks discussed under the Risk Factors section and our financial statements and related notes. Our Company Botetourt Bankshares, Inc. (the Company ) was incorporated as a Virginia corporation on January 17, 1997 and is the one-bank holding company for and sole shareholder of Bank of Botetourt (the Bank ). The Bank was acquired by the Company on September 30, 1997. The Company has no significant operations other than owning the stock of the Bank. Bank of Botetourt was founded in 1899 and currently operates ten offices in four counties of Virginia. The Bank operates for the primary purpose of providing an adequate return to our shareholders while safely meeting the banking needs of individuals and small to medium sized businesses in the Bank s service area by developing personal, hometown associations with these customers. The Bank offers a wide range of banking services including checking accounts, savings accounts, money market accounts, certificates of deposit, and individual retirement accounts. All deposit accounts are insured by the Federal Deposit Insurance Corporation ( FDIC ) up to the maximum amount allowed by law. We offer a full range of lending services including commercial loans, commercial real estate, consumer, residential, and agricultural and raw land. We offer non-deposit investment products and insurance products for sale to the public through Infinex Investments, Inc. Buchanan Service Corporation provides insurance services for customers of the Bank and the public through a minority ownership interest in Bankers Insurance, LLC. Our affiliation with the Virginia Bankers Association allows us to participate with a consortium of banks in the Commonwealth of Virginia to offer competitive insurance products. Buchanan Service Corporation has an ownership interest in Rockbridge Title Services, LLC and Mountain Valley Title Insurance Agency, LLC. Both companies offer title insurance to our customers and the public. The Bank s primary sources of revenue are interest income from its lending activities, and, to a lesser extent, from its investment portfolio. The Bank also earns fees from lending and deposit activities. The major expenses of the Bank are interest on deposit accounts, bad debt expense, general and administrative expenses, such as salaries, occupancy and related expenses. The Company encounters strong competition from other commercial banks, savings and loan associations, credit unions, finance companies, mutual funds, insurance companies, brokerage and investment banking companies, and other financial intermediaries. A variety of factors affect competition for loans and deposits, including interest rates, types of products offered, the number and location of branch offices, marketing strategies, and the reputation of the Bank within the communities we serve. Our stock is quoted on the OTC Bulletin Board under the symbol BORT . Recent Developments We expect that our net income (loss) for the three months ended and nine months ended 2011 will be approximately $(213,000) and $(2.4) million, respectively, compared to $(359,175) and $212,762, respectively, for the same periods in 2010. All of the following are estimates for the three months ended and nine months ended 2011 compared to the actual results of the three months ended and nine months ended 2010: net interest income of approximately $2.7 million and $8.2 million, respectively, compared to and unchanged from $2.7 million and $8.2 million, respectively, for the same periods of 2010; non-interest income of approximately $0.5 million and $1.5 million, respectively, compared to and unchanged from $0.5 million and $1.5 million, respectively, for the same periods of 2010; and non-interest expense of approximately $2.6 million and $7.3 million, respectively, compared to $2.3 million and $6.8 million, respectively, for the same periods of 2010. In addition, we expect that our non-performing loans, defined as loans on nonaccrual status plus loans greater than ninety days past due still accruing interest, will total approximately $16.2 million as of September 30, 2011, compared to $17.7 million at June 30, 2011. This expected decrease of $1.5 million is the result of combined strategies such as charge-offs through earnings, work out situations with customers, and pay downs from liquidation of collateral. We expect that our provision for loan losses will be $2.0 million for the third quarter of 2011 $6.2 million for the nine months ended September 30, 2011. This compares to $1.4 million and $2.7 million, respectively, for the same time periods of 2010. The Recent Developments section represents our best estimate as of the date of mailing this prospectus. Although unanticipated, this information may change as we complete our review before filing our interim statement with the Securities and Exchange Commission ( SEC ). We expect to file the Form 10-Q with the SEC on approximately November 10, 2011, at which time it should be available to you on our website, www.bankofbotetourt.com, or the SEC s website, www.sec.gov. Corporate Information The Company s and the Bank s principal executive office is at 19747 Main Street, Buchanan, VA 24066, and its phone number is (540) 591-5000. We maintain a website at www.bankofbotetourt.com, which contains information relating to us. Information on our website is not incorporated by reference and is not a part of this prospectus. The Offering Securities Offered We are distributing to you, at no charge, one non- transferable subscription right for every two shares of our common stock that you owned on the record date, either as a holder of record or, in the case of shares held of record by brokers, banks, or other nominees, on your behalf, as a beneficial owner of such shares, subject to adjustments to eliminate fractional rights. Basic Subscription Right The basic subscription right will entitle you to purchase one share of our common stock at a subscription price of $7.65 per share for every two shares of our common stock that you own; however, fractional shares of our common stock resulting from the exercise of the basic subscription right will be eliminated by rounding down to the nearest whole share. Over-Subscription Privilege In the event that you purchase all of the shares of our common stock available to you pursuant to your basic subscription right, you may also choose to subscribe for a portion of any shares of our common stock that are not purchased by our shareholders through the exercise of their basic subscription rights. You may subscribe for shares of common stock pursuant to your over-subscription privilege, subject to the purchase and ownership limitations described below. Limitation on the Purchase of Shares We will not issue shares of common stock pursuant to the exercise of basic subscription rights or over-subscription privileges or to any shareholder who, in our sole opinion, could be required to obtain prior clearance or approval from or submit a notice to any state or federal bank regulatory authority to acquire, own or control such shares if, as of December 30, 2011, such clearance or approval has not been obtained and/or any applicable waiting period has not expired. Subscription Price $7.65 per full share. To be effective, any payment related to the exercise of a subscription right must clear prior to the expiration of the rights offering. Record Date 5:00 p.m., Eastern Time, on November 4, 2011. Expiration of Rights Offering 5:00 p.m., Eastern Time, on December 30, 2011. Procedures for Exercising Rights To exercise your subscription rights, you must take the following steps: If you are a registered holder of our common stock, you must deliver payment and a properly completed rights certificate to the subscription agent to be received before 5:00 p.m., Eastern Time, on December 30, 2011. You may deliver the documents and payments by first class mail or courier service. If you use first class mail for this purpose, we recommend using registered mail, properly insured, with return receipt requested. If you are a beneficial owner of shares that are registered in the name of a broker, dealer, custodian bank or other nominee, you should instruct your broker, dealer, custodian bank or other nominee to exercise your subscription rights on your behalf. Please follow the instructions of your nominee, who may require that you meet a deadline earlier than 5:00 p.m., Eastern Time, on December 30, 2011. Non-Transferability of Rights The subscription rights may not be sold, transferred or assigned and will not be listed for trading on any stock exchange or market. Participation of Directors and Officers Each of our directors and executive officers, together with their affiliates, has committed to exercising a portion of his or her basic subscription rights personally. Our board of directors is not making a recommendation regarding your exercise of the subscription rights. You are urged to make your decision to invest based on your own assessment of our business and the rights offering. Please see Risk Factors for a discussion of some of the risks involved in investing in our common stock. No Revocation All exercises of subscription rights are irrevocable, even if you later learn of information that you consider to be unfavorable to the exercise of your subscription rights. You should not exercise your subscription rights unless you are certain that you wish to purchase additional shares of our common stock at a subscription price of $7.65 per full share. Shares Outstanding As of November 4, 2011, we had 1,253,243 shares of common stock outstanding. Assuming the sale of all 626,621 shares in the offering, we would have 1,879,864 shares outstanding upon the completion of the offering. Use of Proceeds We expect the net proceeds from the rights offering to be approximately $4.8 million, assuming full participation. We intend to use the net proceeds we receive from this offering for general corporate purposes, which may include, without limitation, to improve our regulatory capital position, to invest in the Bank to improve its regulatory capital position, to support future growth, or to reduce or retire outstanding corporate debt. (See Use of Proceeds. ) U.S. Federal Income Tax Consequences For U.S. federal income tax purposes, you should not recognize income or loss upon receipt or exercise of a subscription right. You should consult your own tax advisor as to the tax consequences to you of the receipt, exercise or lapse of the subscription rights in light of your particular circumstances. Extension and Cancellation Although we do not presently intend to do so, we have the option to extend the rights offering for additional periods ending no later than January 13, 2012. Our board of directors may for any reason cancel the rights offering at any time before the expiration date. If we cancel the rights offering, the subscription agent will return all subscription payments promptly, without interest or penalty. Dividends and Distributions Our dividends and distributions, if any, are determined and declared by our board of directors. Our ability to distribute cash dividends will depend primarily on the ability of our subsidiaries to pay dividends to us and will be limited by regulatory restrictions and the need to maintain sufficient capital. We historically pay quarterly dividends, although suspended until the Company s performance and economic conditions improve. (See Dividend Policy. )
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001173927_east_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001173927_east_prospectus_summary.txt
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+Prospectus Summary
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001177274_rodobo_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001177274_rodobo_prospectus_summary.txt
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+PROSPECTUS SUMMARY This summary highlights certain information described in more detail later in this prospectus. This summary is not complete and does not contain all the information you should consider before investing in our Common Stock. You should carefully read the more detailed information set out in this prospectus, especially the risks related to our business and investing in our Common Stock that we discuss under the heading Risk Factors, as well as the consolidated financial statements and related notes appearing elsewhere in this prospectus. References in this prospectus to we, us, our, the Company, our Company and Rodobo refer to Rodobo International, Inc., and its consolidated subsidiaries unless the context requires otherwise. Our Business Summary We are a producer and distributor of powdered milk formula products in the People s Republic of China ( PRC or China ). Our target consumers include infants, children, the middle-aged and the elderly in China. Our products for infants and children are currently sold under the brand names of Rodobo and Peer , and our products for middle-aged and elderly consumers are currently sold under the brand name of Healif . As of September 30, 2010, we had 15 company-owned raw milk collection stations and a dairy farm with 2,165 cows which started operating in July 2009 and provides on average 30 tons of raw milk per day. We currently have two production bases which can process up to 1,200 tons of raw milk per day and produce up to 42,000 tons of milk powder per year. Our products were not implicated in the 2008 wide-spread melamine contamination of milk products in China and given that the Chinese government determined that many of our large competitors violated food safety regulations during this contamination scandal, we expect to leverage our superior quality control in the market. On February 5, 2010, through our wholly-owned subsidiary Harbin Tengshun Technical Development Co., Ltd. ( Tengshun Technology ), we acquired Ewenkeqi Beixue Dairy Co., Ltd. ( Ewenkeqi Beixue ), Hulunbeier Beixue Dairy Co., Ltd. ( Hulunbeier Beixue ), and Hulunbeier Hailaer Beixue Dairy Factory ( Hulunbeier Hailaer Beixue , collectively with Ewenkeqi Beixue and Hulunbeier Beixue, the Beixue Group ). The three entities that comprise the Beixue Group are located in China and are engaged in research and development, packaging, manufacturing and marketing of whole milk powder and formula milk powder products, as described in more detail below in the section of this prospectus titled Description of Business, beginning on page 39 and Corporate History and Structure beginning on page 3. Our Competitive Strengths We believe that our key competitive strengths include the following. Production license advantage: We hold two infant formula production licenses issued by the Chinese government. Our two licenses are among the total of 151 licenses that the Chinese government has issued to qualified infant milk formula manufacturers in the PRC. Favorable geographic location: We have two production bases strategically located in Heilongjiang and Inner Mongolia. The two provinces have the most dairy production in China due to abundant grasslands and fertile black soil, which we believe contribute to a higher milk yield and nutritionally rich content. Secured raw milk resources: We own 15 proprietary milk collection stations where raw milk is automatically received using fully enclosed, stainless-steel vacuum milking machines that prevent human contact and contamination. We also own a dairy farm in Qinggang County, Heilongjiang province which currently houses 2,165 Holstein cows which provide on average 30 tons of raw milk per day. Strong distribution network: We have a well established distribution network with footholds in the following nine provinces of the PRC: Zhejiang; Fujian; Shandong; Hebei; Henan; Sichuan; Anhui; Jiangsu and Hubei. We have a sales team of approximately 2,000 people covering approximately 5,000 retail stores in the PRC. Exclusive right: We were granted an exclusive right for 10 years starting on July 1, 2008 to produce a powdered milk product formula specifically developed for middle-aged and elderly consumers by China Nutrition Society. We are also authorized to use the name of China Nutrition Society Development on our package. We believe there will be a significant market potential for our elderly milk formula product, which is currently in a less competitive niche market. Current Strategy We believe the market for dairy products in China is growing rapidly, especially in second-tier cities, third-tier cities, fourth-tier cities and rural areas. Our growth strategy is to build a leading brand in China s dairy industry through the expansion of market shares, expanding production capacity as well as distribution channels. To implement this strategy, we intend to undertake the following initiatives. As filed with the Securities and Exchange Commission on January 27, 2011 Registration No. 333-______ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 RODOBO INTERNATIONAL, INC. (Exact Name of Registrant as specified in its Charter) Nevada 2020 75-2980786 (State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer incorporation or organization) Classification Code Number) Identification Number) 380 Changjiang Road, Nangang District, Harbin, People s Republic of China 150001 (Address of principal executive offices) Registrant s telephone number, including area code: 011-86-451-82260522 VCorp Services LLC 1645 Village Center Circle, Suite 170 Las Vegas, NV 89134 (888) 528-2677 (Name, address including zip code, and telephone number, including area code, of Agent for Service) Copies to: Stephen D. Brook, Esq. Chad J. Porter, Esq. Burns & Levinson LLP 125 Summer Street Boston, Massachusetts 02110 (617) 345-3000 Stephen E. Older, Esq. McDermott Will & Emery LLP 340 Madison Avenue New York, New York 10173-1922 (212) 547-5400 Approximate date of commencement of proposed sale to the public: As soon as practicable after this registration statement becomes effective. If any securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box: If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. Large Accelerated filer Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company x Expand raw milk supply: We plan to do business with a greater number of local farmers to secure more exclusive contracts for raw milk supply. We plan to build more company-owned raw milk collection stations as well as expand the capacity of our dairy farms to further increase the quantity of raw milk supply. Strengthen our premium quality brand awareness: We believe that our products enjoy a reputation for high quality, and our products routinely pass government and internal quality inspections. We plan to increase our marketing activities and brand awareness and to make our brand more recognizable on a national scale. Enhance and expand our distribution network and increase our marketing efforts: We have pursued, and intend to pursue in the future, strategic acquisition opportunities and organic growth to increase our scale and geographic presence, expansion of our distribution network and the increase of our marketing efforts to further penetrate our existing market. Reinforce the team construction: We believe that our management and sales teams are crucial to our ongoing growth and success. We intend to conduct more training programs for our employees with the objective of increasing our competiveness. Corporate History and Structure On September 30, 2008, our predecessor, Navstar Media Holdings, Inc. ( Navstar ), entered into a Merger Agreement with Navstar s wholly owned acquisition subsidiary, Rodobo International, Inc., a Nevada corporation ( Rodobo Merger Sub ), and Mega Profit Limited ( Cayman Mega ), a corporation formed under the laws of the Cayman Islands, and the sole shareholder of Cayman Mega. Pursuant to the Merger Agreement, Rodobo Merger Sub acquired all of the ownership interest in Cayman Mega and then merged with and into Navstar (the Merger ). In exchange for Navstar obtaining all of the issued and outstanding capital stock of Cayman Mega, the then sole shareholder of Cayman Mega received shares of Common Stock and shares of convertible preferred stock in Navstar, which, upon conversion of the preferred stock into Common Stock, was equal to approximately 93% of the issued and outstanding shares of Common Stock of Navstar. Following the Merger and Navstar acquiring ownership of Cayman Mega, Cayman Mega continued to own and control its existing subsidiaries, including Harbin Rodobo Dairy Co., Ltd. ( Harbin Rodobo ). Concurrently with the Merger, Navstar changed its name to Rodobo International, Inc. , adopting the existing name of our Company. On November 12, 2008, we affected a reverse stock split of our then outstanding Common Stock on a ratio of 37.4 to 1 and, effective on April 2, 2009, we increased our authorized capital stock from 16,604,278 shares, consisting of 1,604,278 shares of Common Stock, par value $0.0001 per share ( Common Stock ), and 15,000,000 shares of preferred stock, par value $0.0001 per share ( Preferred Stock ), to 230,000,000 shares of authorized capital stock, consisting of 200,000,000 shares of Common Stock, and 30,000,000 shares of Preferred Stock. In connection with the Merger, we issued 10,293,359 shares of Common Stock to our former employees and shareholders. Pursuant to an understanding with certain convertible note holders, who collectively held convertible notes in the original aggregate principal amount of $1,000,000 ( Notes ), and the holder of a pre-Merger bridge loan note, the foregoing were converted into 452,830 and 152,003 shares of Common Stock, respectively. In addition, the outstanding shares of Preferred Stock were converted into 12,976,316 shares of Common Stock. On February 5, 2010, through our wholly-owned subsidiary Tengshun Technology, we entered into agreements and acquired Ewenkeqi Beixue, Hulunbeier Beixue, and Hulunbeier Hailaer Beixue. Tengshun Technology acquired 100% of the equity interests in Ewenkeqi Beixue and Hulunbeier Beixue directly on February 5, 2010. Hulunbeier Hailaer Beixue is a sole proprietary enterprise and therefore may only be owned by a natural person under the laws of the PRC. For this reason, although the acquisition of Hulunbeier Hailaer Beixue has closed (and no additional consideration is required to be paid in connection with the acquisition), Mr. Honghai Zhang, the former owner of Hulunbeier Hailaer Beixue, is temporarily holding 100% of the equity interests in Hulunbeier Hailaer Beixue for the benefit of Tengshun Technology pursuant to the terms of a supplemental agreement entered into in connection with the acquisition. In accordance with such supplemental agreement, Mr. Honghai Zhang has agreed to transfer all of his interests and ownership in Hulunbeier Hailaer Beixue to Tengshun Technology or its designee. To complete the Hulunbeier Hailaer Beixue acquisition transfer process, in addition to such equity interest transfer, Mr. Honghai Zhang has also agreed to transfer to Tengshun Technology all of the equity interests in Hulunbeier Hailaer Beixue Dairy Co., Ltd., an unrelated PRC limited liability company owned by Mr. Honghai Zhang ( Hulunbeier Hailaer Beixue Dairy ), and Hulunbeier Hailaer Beixue has agreed to then transfer its assets to Hulunbeier Hailaer Beixue Dairy. Once the foregoing transfers have taken place Hulunbeier Hailaer Beixue will be deregistered. We are currently in the process of effecting this entity conversion process and requesting the approval thereof by the local Administration for Industry and Commerce, or AIC. We expect this conversion and approval process to be completed by the end of March 2011, at which time Tengshun Technology will own all the equity interests in Hulunbeier Hailaer Beixue Dairy. The acquisitions of Ewenkeqi Beixue and Hulunbeier Beixue have already been approved by the AIC. Pursuant to the Equity Transfer Agreements entered into with the Beixue Group on February 5, 2010, we paid RMB 500,000 (approximately $73,236) in cash and issued 800,000 shares of Common Stock in exchange for 100% of the equity interests in Ewenkeqi Beixue; RMB 1,000,000 (approximately $146,473) in cash and 1,000,000 shares of Common Stock in exchange for 100% of the equity interests in Hulunbeier Beixue; and RMB 600,000 (approximately $87,884) in cash, 8,800,000 shares of Common Stock and 2,000,000 shares of our Series A Preferred Stock, par value $0.0001, in exchange for 100% of the equity interests in Hulunbeier Hailaer Beixue (which currently is being held by Mr. Honghai Zhang for the benefit of Tengshun Technology). Mr. Yanbin Wang, who owned 51% of the equity interests in Hulunbeier Beixue and Ewenkeqi Beixue prior to the acquisitions, is also our Chairman, Chief Executive Officer and a major stockholder. An unaffiliated third-party owned 49% of the equity interests in Hulunbeier Beixue and Ewenkeqi Beixue and 100% of the equity interests in Hulunbeier Hailaer Beixue prior to the acquisitions. The Equity Transfer Agreements also provided that the equity portion of the consideration consisting of an aggregate of 10,600,000 shares of Common Stock and 2,000,000 shares of Series A Preferred Stock shall be issued to the designee(s) of the former shareholders of Ewenkeqi Beixue, Hulunbeier Beixue and Hulunbeier Hailaer Beixue. The Equity Transfer Agreements are described in greater detail in the section of this prospectus titled Description of Business, under the Corporate History subtitle beginning on page 39. On April 21, 2010, Hulunbeier Hailaer Mega Profit Agriculture Co., Ltd. ( Hulunbeier Mega ) was incorporated under the PRC laws, as an entity to conduct dairy farming, the new entity is not currently operational. Hulunbeier Mega is a wholly owned subsidiary of Tengshun Technology. CALCULATION OF REGISTRATION FEE Title of Each Class of Securities to be Amount to be Proposed Maximum Offering Price Proposed Maximum Aggregate Offering Amount of Registration Registered Registered Per Share Price (1) (2) Fee (4) Common Stock $ $ 23,000,000 $ 2,670.30 Underwriter s Warrants to Purchase Common Stock (3) Common Stock Underlying Underwriter s Warrants (3) $ $ 1,250,000 $ 145.13 Total $ $ 24,250,000 $ 2,815.43 (1) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o) under the Securities Act of 1933 (the Securities Act ). (2) Includes shares of Common Stock which may be issuable pursuant to the exercise of a 30-day option granted by the registrant to cover over-allotments, if any. (3) The registrant will sell to the underwriter for this public offering warrants to purchase a number of shares of Common Stock equal to 5% of the aggregate number of shares sold in this offering excluding the over-allotment option. The warrants will be exercisable at a per share exercise price equal to 125% of the public offering price per share. As estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(g) under the Securities Act, the proposed maximum aggregate offering price of the underwriter s warrants is $1,250,000, which is equal to 125% of $1,000,000 (5% of $20,000,000). In accordance with Rule 457(g) under the Securities Act, because the shares of the registrant s Common Stock underlying the underwriter s warrants are registered hereby, no separate registration fee is required with respect to the warrants registered hereby. (4) This amount is being paid herewith. The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act, or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. Our corporate entity structure as of the date of this prospectus is as follows: * Hulunbeier Hailaer Beixue is a sole proprietary enterprise and therefore may only be owned by a natural person under the laws of the PRC. For this reason, although the acquisition of Hulunbeier Hailaer Beixue has closed (and no additional consideration is required to be paid in connection with the acquisition), Mr. Honghai Zhang, the former owner of Hulunbeier Hailaer Beixue, is temporarily holding 100% of the equity interests in Hulunbeier Hailaer Beixue for the benefit of Tengshun Technology pursuant to the terms of a supplemental agreement entered into in connection with the acquisition. In accordance with such supplemental agreement, Mr. Honghai Zhang has agreed to transfer all of his interests and ownership in Hulunbeier Hailaer Beixue to Tengshun Technology or its designee. To complete the Hulunbeier Hailaer Beixue acquisition transfer process, in addition to such the equity interest transfer, Mr. Honghai Zhang has also agreed to transfer to Tengshun Technology all of the equity interests in Hulunbeier Hailaer Beixue Dairy and Hulunbeier Hailaer Beixue has agreed to then transfer its assets to Hulunbeier Hailaer Beixue Dairy. Once the foregoing transfers have taken place Hulunbeier Hailaer Beixue will be deregistered. We are currently in the process of effecting this entity conversion process which we expect to be completed by the end of March 2011, at which time Tengshun Technology will own all the equity interests in Hulunbeier Hailaer Beixue Dairy. PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION, DATED JANUARY 27, 2011 The Offering Common stock offered shares Number of shares outstanding immediately after this offering shares(1) Use of Proceeds We estimate that the net proceeds to us from this offering will be approximately $ , or approximately $ if the underwriter exercises its over-allotment option in full, based on the assumed offering price of $ per share, the last reported sale price of our Common Stock on , 2011, and after deducting the estimated underwriting discounts and commissions and offering expenses payable by us related to this offering, including a non-accountable expense allowance equal to 0.5% of the gross proceeds of the offering. We intend to use the net proceeds of this offering for general working capital and other general corporate purposes. You should read the discussion in this prospectus under the heading Use of Proceeds for more information. Over-allotment option We have granted the underwriters an option for a period of 30 days to purchase, on the same terms and conditions set forth above, up to an additional shares to cover over-allotments. Underwriter Warrant In connection with this offering, we have also agreed to sell to the underwriter, for $100, a warrant to purchase up to 5% ( shares) of the shares of Common Stock offered by this prospectus. If this warrant is exercised, each of share of Common Stock may be purchased for $ per share (which is 125% of the price per share of Common Stock offered by this prospectus). Lock Up Agreements All of our officers, directors and certain significant shareholders have agreed that, for a period ranging from 90 to 180 days from the closing date of this offering, they will be subject to a lock-up agreement prohibiting any sales, transfers or hedging transactions of our securities owned by them. See Underwriting Lock-ups described below. Market for our Common Stock Our Common Stock is traded on the OTC Bulletin Board under the symbol RDBO.OB . We intend to apply for listing of our Common Stock on the NYSE Amex to be effective upon consummation of this offering, however no assurance can be given that such listing shall be approved.
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001193311_oncor_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001193311_oncor_prospectus_summary.txt
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@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights selected information appearing elsewhere in this prospectus. This summary is not complete and does not contain all of the information that you should consider before investing in the securities. You should carefully read the entire prospectus, including the section entitled Risk Factors, and the information that is incorporated into this prospectus by reference, including our Annual Report on Form 10-K for the fiscal year ended December 31, 2010 (2010 Form 10-K) and our Quarterly Report on Form 10-Q for the quarter ended June 30, 2011 (Second Quarter 2011 Form 10-Q). See the sections entitled Available Information and Incorporation by Reference. Unless the context otherwise requires or as otherwise indicated, references in this prospectus to Oncor, we, our and us refer to Oncor Electric Delivery Company LLC and its consolidated subsidiary. References to EFH Corp. refer to Energy Future Holdings Corp., and/or its subsidiaries, depending on context. References to the Market Maker refer to Goldman, Sachs & Co. Our Business We are a regulated electricity transmission and distribution company that provides the essential service of delivering electricity safely, reliably and economically to end-use consumers through our distribution systems, as well as providing transmission grid connections to merchant generation plants and interconnections to other transmission grids in Texas. We are neither a seller of electricity nor a purchaser of electricity for resale. We provide transmission services to other electricity distribution companies, cooperatives and municipalities. We provide distribution services to retail electric providers (REPs) that sell power to retail customers in the north-central, eastern and western parts of Texas. This territory has an estimated population in excess of seven million, about one-third of the population of Texas, and comprises 91 counties and over 400 incorporated municipalities, including Dallas/Fort Worth and surrounding suburbs, as well as Waco, Wichita Falls, Odessa, Midland, Tyler and Killeen. We operate the largest transmission and distribution system in Texas, delivering electricity to approximately three million homes and businesses and operating more than 118,000 miles of transmission and distribution lines. Most of our power lines have been constructed over lands of others pursuant to easements or along public highways, streets and rights-of-way as permitted by law. At June 30, 2011, we had approximately 3,700 full-time employees, including approximately 860 in a collective bargaining unit. Our transmission customers consist of municipalities, electric cooperatives and other distribution companies. Our distribution customers consist of more than 75 REPs in our certificated service area, including subsidiaries of our affiliate, Texas Competitive Electric Holdings Company LLC (TCEH), an indirect subsidiary of EFH Corp. Distribution revenues from TCEH represented 36% and 33% of our total revenues for 2010 and the six months ended June 30, 2011, respectively, and revenues from subsidiaries of Reliant Energy, Inc., each of which is a non-affiliated REP, represented 12% of our total operating revenues for both 2010 and the six months ended June 30, 2011. No other customer represented more than 10% of our total operating revenues. The consumers of the electricity delivered by us are free to choose their electricity supplier from REPs who compete for their business. We are a direct subsidiary of Oncor Electric Delivery Holdings Company LLC (Oncor Holdings), which is an indirect, wholly-owned subsidiary of EFH Corp. (formerly TXU Corp.). As of June 30 and August 19, 2011, Oncor Holdings owned 80.03% of our outstanding equity interests, Texas Transmission Investment LLC (Texas Transmission) owned 19.75% of our equity interests, and certain members of our management and board of directors indirectly beneficially owned 0.22% of our equity interests through Oncor Management Investment LLC. On October 10, 2007, we were converted from a Texas corporation to a Delaware limited liability company in connection with the merger of Texas Energy Future Merger Sub Corp (Merger Sub) with and into EFH Corp. (the Merger). As a result of the Merger, investment funds associated with or designated by Kohlberg Kravis Roberts & Co. L.P. (KKR), TPG Capital, L.P. (TPG) and Goldman, Sachs & Co. (Goldman Sachs and, together with KKR and TPG, the Sponsor Group), and certain other co-investors (collectively with the Sponsor Group, the Investors), own EFH Corp. through Texas Energy Future Holdings Limited Partnership (Texas Holdings), with the Sponsor Group controlling Texas Holdings general partner, Texas Energy Future Capital Holdings LLC. Various ring-fencing measures have been taken to enhance our credit quality. These measures serve to mitigate our and Oncor Holdings credit exposure to Texas Holdings and its direct and indirect subsidiaries (Texas Holdings Group) and to reduce the risk that the assets and liabilities of Oncor or Oncor Holdings would be substantively consolidated with the assets and liabilities of the Texas Holdings Group in the event of a bankruptcy of one or more of those entities. Such measures include, among other things: our sale of a 19.75% equity interest to Texas Transmission in November 2008; maintenance of separate books and records for Oncor Holdings and its direct and indirect subsidiaries (Oncor Ring-Fenced Entities); our board of directors being comprised of a majority of independent directors, and prohibitions on the Oncor Ring-Fenced Entities providing credit support to, or receiving credit support from, any member of the Texas Holdings Group. The assets Table of Contents SUBJECT TO COMPLETION, DATED AUGUST 24, 2011 The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities, and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. PROSPECTUS ONCOR ELECTRIC DELIVERY COMPANY LLC $375,595,000 6.375% Senior Secured Notes due 2012 $523,722,000 5.950% Senior Secured Notes due 2013 $500,000,000 6.375% Senior Secured Notes due 2015 $324,405,000 5.000% Senior Secured Notes due 2017 $550,000,000 6.800% Senior Secured Notes due 2018 $126,278,000 5.750% Senior Secured Notes due 2020 $800,000,000 7.000% Debentures due 2022 $500,000,000 7.000% Senior Secured Notes due 2032 $350,000,000 7.250% Senior Secured Notes due 2033 $300,000,000 7.500% Senior Secured Notes due 2038 $475,000,000 5.250% Senior Secured Notes due 2040 These securities accrue interest and mature as follows: Senior Secured Notes due 2012 (the 2012 notes) accrue interest at a rate of 6.375% per annum, payable on May 1 and November 1 of each year, and mature on May 1, 2012; Senior Secured Notes due 2013 (the 2013 notes) accrue interest at a rate of 5.950% per annum, payable on March 1 and September 1 of each year, and mature on September 1, 2013; Senior Secured Notes due 2015 (the 2015 notes) accrue interest at a rate of 6.375% per annum, payable on January 15 and July 15 of each year, and mature on January 15, 2015; Senior Secured Notes due 2017 (the 2017 notes) accrue interest at a rate of 5.000% per annum, payable on March 30 and September 30 of each year, and mature on September 30, 2017; Senior Secured Notes due 2018 (the 2018 notes) accrue interest at a rate of 6.800% per annum, payable on March 1 and September 1 of each year, and mature on September 1, 2018; Senior Secured Notes due 2020 (the 2020 notes) accrue interest at a rate of 5.750% per annum, payable on March 30 and September 30 of each year, and mature on September 30, 2020; and Debentures due 2022 (the debentures) accrue interest at a rate of 7.000% per annum, payable on March 1 and September 1 of each year, and mature on September 1, 2022; Senior Secured Notes due 2032 (the 2032 notes) accrue interest at a rate of 7.000% per annum, payable on May 1 and November 1 of each year, and mature on May 1, 2032; Senior Secured Notes due 2033 (the 2033 notes) accrue interest at a rate of 7.250% per annum, payable on January 15 and July 15 of each year, and mature on January 15, 2033; Senior Secured Notes due 2038 (the 2038 notes) accrue interest at a rate of 7.500% per annum, payable on March 1 and September 1 of each year, and mature on September 1, 2038; and Senior Secured Notes due 2040 (the 2040 notes) accrue interest at a rate of 5.250% per annum, payable on March 30 and September 30 of each year, and mature on September 30, 2040. We collectively refer to the 2012 notes, the 2013 notes, the 2015 notes, the 2017 notes, the 2018 notes, the 2020 notes, the debentures, the 2032 notes, the 2033 notes, the 2038 notes and the 2040 notes in this prospectus as the securities, unless the context otherwise requires. We may redeem any of the securities at any time prior to their maturity at the respective make-whole redemption prices discussed in this prospectus under Description of the Securities May 2002 Indenture Optional Redemption, and Description of the Securities August 2002 Indenture Optional Redemption plus accrued and unpaid interest to the redemption date. The securities have the benefit of a lien on certain of our transmission and distribution assets, mortgaged under a Deed of Trust (as amended, the Deed of Trust), dated as of May 15, 2008, from us to The Bank of New York Mellon Trust Company, N.A. (as successor to The Bank of New York Mellon, formerly The Bank of New York), as collateral agent. The securities are our senior secured obligations and rank pari passu with our other senior indebtedness that is secured by the lien of the Deed of Trust. The securities are senior in right of payment to all subordinated indebtedness. The securities are not listed on any securities exchange. For a more detailed description of the securities, see Description of the Securities beginning on page 13.
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001213018_sige_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001213018_sige_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..af0edc174f35add2966b627d77029e75647fc3c4
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001213018_sige_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus and does not contain all of the information you should consider in making your investment decision. You should read this summary together with the more detailed information, including our historical financial statements and the related notes, elsewhere in this prospectus. You should carefully consider, among other things, the matters discussed in
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001216752_pioneer_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001216752_pioneer_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..5827d888145302d9aa43646b136e4d96ad4c80a5
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001216752_pioneer_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights selected information and does not contain all the information that may be important to you. You should carefully read this prospectus, any related prospectus supplement and the documents we have referred you to in "Where You Can Find More Information" on page 42 before making an investment in the notes, including the "Risk Factors" section beginning on page 8. In this prospectus, references to "Pioneer," "we," "us" and "our" refer to Pioneer Financial Services, Inc. and our subsidiaries. Our Company On a worldwide basis, we purchase consumer loans made exclusively to active-duty or retired career U.S. military personnel or U.S. Department of Defense employees. We purchase primarily from two different types of sources. Our largest source of military loans is the Military Banking Division of MidCountry Bank ("MCB") (a wholly-owned subsidiary of our parent and referred to throughout as "MBD"), an affiliate who originates direct loans through a network of loan production offices and via the Internet; military families use these loan proceeds to purchase goods and services. We also purchase retail installment contracts from retail merchants that sell consumer goods to active-duty or retired career U.S. military personnel or U.S. Department of Defense employees. We plan to hold these military loans and retail installment contracts until repaid. Finance receivables, whether originated or purchased, are effectively unsecured and consist of loans originated by us or purchased from MBD and retail merchants. All finance receivables have fixed interest rates and typically have a maturity of less than 48 months. At acquisition, the size of the average finance receivable that we own was approximately $3,322 during fiscal year 2010. A large portion of our customers are unable to obtain financing from traditional sources due to factors such as age, frequent relocations and lack of credit history. These factors may not allow them to build relationships with traditional sources of financing. We were incorporated in Missouri in 1932, and our principal corporate office is located at 4700 Belleview, Suite 300, Kansas City, Missouri 64112-1359. The telephone number at that address is (816) 756-2020. Information about us can be found at www.investpioneer.com. We do not intend for the information contained on this website to be a part of this prospectus. The Offering Securities Offered We are offering up to $50,000,000 in aggregate principal amount of our investment notes. The notes are governed by an indenture between us and U.S. Bank National Association, the trustee for the notes. The notes generally have maturities ranging from 12 to 120 months. Interest rates and terms on notes in a principal amount equal to or in excess of $100,000 will be negotiated on a case-by-case basis based upon our financial requirements, the term of the investment and prevailing interest rates. The notes do not have the benefit of a sinking fund. See "Description of Investment Notes General." Approximate date of commencement of proposed sale to public: As soon as practicable after this registration statement becomes effective. Table of Contents Interest Rate and Payment The interest rate on each note will be based upon current market conditions, our financial requirements, principal amount of the note and the term to maturity chosen by the purchaser. Interest will begin to accrue on the date we issue the note. At the option of the note holder, we will pay or compound interest annually. Holders of notes may elect to receive monthly interest payments in return for a 1/2% reduction in the interest rate of the note. Once issued, the interest rate applicable to a note will not change prior to maturity. See "Description of Investment Notes Interest." Maturity and Renewal The notes will mature on the date specified on the investment note certificate. So long as there is an effective registration statement on file with the SEC and the securities commissions of the states in which the notes are sold, we currently intend to renew the notes upon maturity unless they are presented for payment by the holder. The principal amount of the renewed note will equal the principal amount of the note on the maturity, plus all accrued and unpaid interest. The term of a renewed note will be equal to the original term of the note, and the interest rate of the note will be equal to the interest rate we are then paying on notes of a like term and principal amount. At least 20 days prior to the maturity date of a note, we will send the note holder (a) a written notice reminding the holder of the pending maturity of the note and that it will be renewed unless the holder requests repayment in writing within 20 days after the maturity date and (b) a copy of the current prospectus for the notes setting forth the current rates. The notice will also state the place where the note may be surrendered for payment. Redemption at Our Option We may redeem the notes at our option, in whole or in part, at any time prior to maturity, at a price equal to 100% of the principal amount of the notes, plus accrued interest on a daily basis to the redemption date. We will pay no premium upon redemption of the notes. Notes may not be redeemed by note holders prior to maturity. See "Description of Investment Notes Redemption at the Option of Pioneer." If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by a check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. Large accelerated filer Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company CALCULATION OF REGISTRATION FEE Title of each class of securities to be registered Amount to be registered Proposed maximum offering price per unit Proposed maximum aggregate offering price(1) Amount of registration fee(2) Investment Notes $50,000,000 100% $50,000,000 $5,805.00 (1)Estimated solely for the purpose of computing the registration fee in accordance with Rule 457(o) under the Securities Act of 1933, as amended. (2)Calculated pursuant to Rule 457(o) based on an estimate of the proposed maximum aggregate offering price. The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine. Table of Contents Subordination Upon the maturity of our senior indebtedness, by lapse of time, acceleration or otherwise, all of our senior indebtedness must be paid in full before any payment is made upon the notes. "Senior indebtedness" is generally defined under the indenture as any debt or liability for money borrowed, regardless of when incurred or created, that is not expressly subordinate or equal in right of payment to the notes. The notes are equal in right of payment to all of our outstanding junior subordinated debentures and investment notes purchased prior to December 31, 2006. There are no restrictions in the indenture that would prevent us from incurring additional senior indebtedness or other indebtedness. As of September 30, 2010, we had approximately $232 million of senior indebtedness outstanding and approximately $40.0 million of investment notes and accrued interest outstanding. See "Description of Investment Notes Subordination." Events of Default Under the indenture, an event of default is generally defined as a default in the payment of principal or interest on the notes that is not cured after 10 days' written notice, our becoming subject to certain events of bankruptcy or insolvency, or our failure to comply with provisions of the notes or the indenture and the failure is not cured or waived within 60 days after receipt of a specific notice. Transfer Restrictions Transfer of a note is effective only upon the receipt of valid transfer instructions by the registrar from the note holder of record. Types of Accounts We are qualified to serve as custodian for IRAs, SEPs, Roth IRAs, and Coverdell education savings accounts. Qualifying investors may choose to establish one of these accounts with us to hold their notes. Trustee U.S. Bank National Association is a trust company organized and existing under the laws of the state of Missouri. Use of Proceeds If all the notes offered by this prospectus are sold we expect to receive approximately $49,200,000 in net proceeds after deducting all costs and expenses associated with this offering. We intend to use substantially all of the cash proceeds from this offering to fund the acquisition of military loans from MBD and the retail installment contracts from retail merchants. Additional proceeds, if any, will be used for general corporate purposes. Table of Contents THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED. SUBJECT TO COMPLETION DATED JANUARY , 2011 $50,000,000 Investment Notes Minimum Investment of $10,000 Pioneer Financial Services, Inc. ("PFS"), a Missouri corporation, is a wholly owned subsidiary of MidCountry Financial Corp., a Georgia corporation ("MCFC"). PFS, with its wholly owned subsidiaries (collectively "we," "us," "our" or the "company"), is offering up to $50,000,000 in aggregate principal amount of our investment notes ("notes" or "investment notes") on a continuous basis. This offering will terminate on 2013 unless terminated earlier at our discretion. Unless otherwise agreed upon, the notes will be offered in maturities ranging from 12 to 120 months, with a minimum investment of $10,000. We are offering the notes through our officers and employees without an underwriter and on a continuous basis. We do not have to sell any minimum amount of notes to accept and use the proceeds of this offering. There is no assurance that all or any portion of the notes we are offering will be sold. We have not made any arrangement to place any of the proceeds from this offering in an escrow, trust or similar account, and thus you will not be entitled to the return of your investment. There is no public trading market for the notes and it is very unlikely that any trading market will develop, and no assurance can be given that the notes may be resold at any price. We have the right to reject any subscription, in whole or in part. We will disclose the interest rates at which notes will be offered, from time to time, in supplements to this prospectus. However, any such change will not affect the interest rate of any notes purchased prior to the effective date of the change. We will pay or compound interest on the notes annually. Holders of notes may elect to receive monthly interest payments in return for a 1/2% reduction in the interest rate of the note. Qualified investors may establish individual retirement accounts, simplified employee pension accounts, Roth IRAs and Coverdell education savings accounts with us in which to hold their notes. You should read this prospectus and the applicable prospectus supplement carefully before you invest in the notes. These notes are our unsecured, subordinated obligations. Payment of the notes is not insured or guaranteed by the Federal Deposit Insurance Corporation, any governmental or private insurance fund, or any other entity. We do not contribute funds to a separate account such as a sinking fund to repay the notes upon maturity. We may redeem the notes in whole or in part any time prior to maturity at a price equal to the principal amount thereof plus accrued interest to the purchase date. See "Risk Factors" beginning on page 8 for certain factors you should consider before buying the notes. These securities have not been approved or disapproved by the Securities and Exchange Commission or any state securities commission nor has the Securities and Exchange Commission or any state securities passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense. Price to Public Underwriting Discount And Commission Proceeds to Company Per Investment Note 100% None 100% Total 100% None $50,000,000(1) (1)We will receive all of the proceeds from the sale of the notes, which, if we sell all of the notes covered by this prospectus, we estimate will total approximately $49,200,000 after offering expenses. The date of this Prospectus is January , 2011 Table of Contents Suitability The notes will be sold only to investors that have a gross income of $65,000 and a net worth of $65,000 (exclusive of home, home furnishings and automobiles); or a net worth of $150,000 (exclusive of home, home furnishings and automobiles); and no more than 10% of their liquid net worth invested in the notes, unless the investor is defined as an accredited investor under Rule 501 of Regulation D under the Securities Act of 1933 in which case these requirements will not apply. See "Plan of Distribution" on page 40.
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+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001235007_endocyte_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001235007_endocyte_prospectus_summary.txt
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+PROSPECTUS SUMMARY This summary highlights information contained in greater detail elsewhere in this prospectus. This summary may not contain all the information that you should consider before investing in our common stock. You should read the entire prospectus carefully, including Risk Factors beginning on page 13 and our financial statements and related notes appearing at the end of this prospectus, before making an investment decision. Unless otherwise indicated, the terms Endocyte, we, us and our refer to Endocyte, Inc., a Delaware corporation. Our Company We are a biopharmaceutical company developing targeted therapies for the treatment of cancer and inflammatory diseases. We use our proprietary technology to create novel small molecule drug conjugates, or SMDCs, and companion imaging diagnostics. Our SMDCs actively target receptors that are over-expressed on diseased cells, relative to healthy cells. This targeted approach is designed to enable the treatment of patients with highly active drugs at greater doses, delivered more frequently, and over longer periods of time than would be possible with the untargeted drug alone. We are also developing companion imaging diagnostics for each of our SMDCs that are designed to identify the patients whose disease over-expresses the target of the therapy and who are therefore more likely to benefit from treatment. This combination of an SMDC with its companion imaging diagnostic is designed to personalize the treatment of patients by delivering effective therapy, selectively to diseased cells, in the patients most likely to benefit. Our lead SMDC, EC145, targets the folate receptor, which is frequently over-expressed in some of the most prevalent, and difficult to treat solid tumor indications, including ovarian, non-small cell lung, breast, colorectal, kidney, endometrial and other cancers. We identify the presence of the folate receptor in cancer patients by using EC20, our proprietary companion imaging diagnostic for EC145. We have chosen platinum-resistant ovarian cancer, or PROC, a highly treatment-resistant disease, as our lead indication for development of EC145 because of the high unmet need in treating this patient population and the high percentage of ovarian cancer patients whose tumors over-express the targeted folate receptor. In the final progression free survival, or PFS, analysis of PRECEDENT, our randomized phase 2 clinical trial in women with PROC, EC145 increased PFS from a median of 11.7 weeks to a median of 21.7 weeks, representing an 85 percent improvement over standard therapy (p=0.031). The p represents p-value, which is the probability that the difference observed between the treatment arm and the control arm is due to chance, in this case 3.1 percent. We studied a subset of patients in which 100 percent of their target lesions over-expressed the folate receptor as determined by an EC20 scan, which patients we refer to as EC20(++). We treated these EC20(++) patients with a combination of EC145 and pegylated liposomal doxorubicin, or PLD, and observed a median PFS of 24.0 weeks compared to a median of 6.6 weeks for patients receiving PLD alone, an improvement of over 260 percent. The hazard ratio was 0.381 (p=0.018), or a reduction in the risk of progression of 61.9 percent. Based on these data we plan to file an application for conditional marketing authorization with the European Medicines Agency, or EMA, for EC145 in patients with PROC in the first quarter of 2012. We began enrolling patients in PROCEED, our phase 3 registration trial for EC145 and EC20, in May 2011. PROCEED is a randomized, double-blinded trial of EC145 in combination with PLD compared to PLD plus placebo. The patient population, those with PROC, is the same as in the PRECEDENT trial, and the primary endpoint is PFS in patients selected by EC20 as folate receptor positive. The trial is statistically powered for overall survival, or OS, as a secondary endpoint with projected enrollment of approximately 500 folate receptor positive patients. The trial will be conducted in approximately 150 sites in the United States, Canada, and Europe. We expect final primary PFS data from this study in the second quarter of 2013. We are also developing EC145 for use in non-small cell lung cancer, or NSCLC, where we have completed a phase 2 single-arm clinical trial in heavily pre-treated patients and observed a disease control rate, or DCR, of 57 percent at the eight week assessment in patients whose target tumors were all identified as over-expressing the folate receptor. This compares to historical DCRs ranging from 21 to 30 percent reported in other trials of approved therapies in less heavily pre-treated patients. In a subset of EC20(++) patients who had received three or fewer prior therapies, the DCR was 70 percent. We also evaluated OS in EC20(++) patients (n=14) compared to patients in which at least one of the target lesions, but not all, over-expressed the folate receptor, which patients we refer to as EC20(+) (n=14). Median OS improved from 14.9 weeks for EC20(+) patients to 47.2 weeks for EC20(++) patients. The hazard ratio was 0.539, meaning EC20(++) patients were 46.1 percent less likely to die when compared to EC20(+) patients when receiving EC145 (p=0.101). We plan to begin enrollment in a randomized phase 2 trial of EC145 in patients with second line NSCLC in the first quarter of 2012. Recent Developments European Regulatory Filing During the second quarter of 2011, we announced our plan to file applications with the EMA for conditional marketing authorization for our lead drug candidate EC145 for the treatment of PROC and its companion imaging diagnostic EC20 for patient selection. The filings will be based on the results of the randomized phase 2 PRECEDENT trial and supported by a phase 2 single agent EC145 clinical trial. This plan was based on consultation with the EMA, including a meeting with the Scientific Advice Working Party and written advice from the Committee for Medicinal Products for Human Use, or CHMP. We plan to seek conditional marketing authorization for treatment of patients with folate receptor positive PROC as selected by EC20. We expect to file both applications in the first quarter of 2012. In addition to data already available from the phase 2 trials, we plan on including additional analyses of the PRECEDENT trial which have not yet been completed. These include, but may not be limited to, the following: EC20 validation: We will conduct an inter-reader analysis that will determine the reliability of EC20. Two independent radiologists will read images from the PRECEDENT study and we will measure the agreement between the two readers. This will provide evidence supporting the reliability of the EC20 scan process to consistently classify patients. Blinded assessment of CT scans: Results from the PRECEDENT trial published to date have been based on analyses of CT scans by investigators who were not blinded to the treatment arm or EC20 scan status. In connection with the EMA applications, radiologists blinded to the patients EC20 scan results and their treatment arm will perform an independent assessment of the CT scans used to measure progression of disease in the PRECEDENT trial. Overall survival: We will include the final OS analysis from the PRECEDENT trial. Initiation of Phase 3 PROCEED Trial of EC145 and EC20 in Patients with PROC In May 2011, we began enrolling patients in our PROCEED phase 3 registration trial of EC145 for the treatment of women with PROC. PROCEED shares the same fundamental design characteristics of the PRECEDENT trial, except that it is a double-blinded trial, it measures PFS based on radiological progression alone without including clinical progression, and it will be powered for an OS analysis with planned enrollment of approximately 500 folate receptor positive patients. As part of the EC20 validation process, we will also enroll a modest number of folate receptor negative patients, but these patients will not be included in the primary efficacy analysis. The primary endpoint, 2 to 1 randomization, dose and schedule are the same as those used in the PRECEDENT trial. In contrast to PRECEDENT, the PLD control arm in PROCEED will include a placebo in order to blind the study, which will be dosed on the same schedule as EC145. As was the case with the PRECEDENT trial, PROCEED s primary endpoint is PFS. The companion imaging diagnostic EC20 will be utilized to select patients whose cancer over-expresses the folate receptor. EC20(-) patients will be excluded from the primary endpoint analysis. Final primary PFS data is expected to be available in the second quarter of 2013. Planned Phase 2 Trial of EC145 and EC20 in Patients with NSCLC Based on results of our single-arm, single agent phase 2 clinical trial of EC145 in patients with heavily pre-treated NSCLC, we plan to initiate a randomized phase 2 trial in the first quarter of 2012. The trial is currently designed to enroll up to 200 patients with adenocarcinoma of the lung who have failed one prior line of therapy. Patients will be selected based on EC20 scan results and only EC20(++) patients will be included. The trial design is intended to evaluate the safety and efficacy of EC145 in second line NSCLC as a single agent and in combination with docetaxel, an U.S. Food and Drug Administration, or FDA, approved and commonly used second line chemotherapy. The study will have three arms: docetaxel alone; EC145 alone; and EC145 plus docetaxel. The details of the trial design and statistical plan are still in development and subject to revision. The primary outcome measure will be PFS with secondary measures of OS, tumor response and duration of response. Final PFS data is expected to be available by the third quarter of 2013. Select Updated Financial Results Our cash, cash equivalents and short-term investment balance was $83.9 million as of June 30, 2011. This reflects a net use of cash in the second quarter of 2011 of $10.5 million. The net loss for the second quarter of 2011 is expected to exceed the net loss of $7.2 million reported in the first quarter of 2011. This is primarily the result of increased spending associated with the initiation of our PROCEED clinical trial. Technology Platform and Product Pipeline Our technology platform has enabled us to develop multiple new SMDCs and companion imaging diagnostics for a range of disease indications, with an initial focus on oncology and inflammatory diseases. Our SMDCs are comprised of three modules: a targeting ligand, a linker and a drug payload. The foundation of our technology is our high-affinity small molecule targeting ligands, which bind to over-expressed receptors on target cells, while largely avoiding healthy cells. We are developing a number of different targeting ligands to address a broad range of cancers and inflammatory diseases. Our linker system attaches the targeting ligand to the drug payload. It is designed to be stable in the bloodstream, but to release the active drug from the targeting ligand when the SMDC is taken up by the diseased cell. The drug payload is the biologically active component of our SMDCs. The majority of our drug payloads are highly active molecules that are too toxic to be administered in their untargeted forms at therapeutic dose levels. To create our companion imaging diagnostics, we replace the drug payload of the SMDC with an imaging agent that is easily seen with widely available nuclear imaging equipment. Below is a table listing our current SMDCs and companion imaging diagnostics. Lead SMDC Candidate (EC145) and Advanced Clinical Trials Our lead SMDC candidate, EC145, consists of a highly cytotoxic anti-cancer drug, DAVLBH, joined by a linker system to the targeting ligand, folate. DAVLBH is a member of a class of proven anti-cancer drugs that destabilize microtubules within the cell, leading to cell death. As folate is required for cell division, many rapidly dividing cancer cell types have been found to over-express high-affinity folate receptors. These folate receptors on cancer cells bind with high-affinity to EC145 and bring it inside the cell through a process known as endocytosis. Once EC145 is inside the cell, the linker system is cleaved, releasing the active drug payload within the cancer cell. We have completed final PFS analysis for PRECEDENT, our randomized phase 2 clinical trial of EC145 in 149 women with PROC. PRECEDENT is a randomized controlled trial in which patients received EC145 in combination with PLD versus PLD alone, which is a current standard of care. The primary endpoint of the trial is PFS. Historically, PROC has proven difficult to treat, and no approved therapy has extended either PFS or OS in a randomized trial. In the final PRECEDENT PFS analysis of 149 patients and 95 PFS events, the combination therapy with EC145 and PLD increased median PFS by 85 percent over therapy with PLD alone. Median PFS increased from a median of 11.7 weeks in the PLD arm to a median of 21.7 weeks in the EC145 and PLD combination therapy arm (p=0.031). The hazard ratio was 0.626, meaning patients receiving EC145 were 37.4 percent less likely to have died or have their cancer progress compared to patients receiving only PLD. The graph below compares PFS in patients receiving EC145 and PLD versus PLD alone. This observed improvement in median PFS was provided in the context of low additional toxicity over PLD. In addition, this analysis suggests an early positive trend in OS with 81 percent of patients treated with EC145 and PLD alive at six months versus 72 percent of patients alive at six months when treated with PLD alone. The OS data set has a 66 percent censoring rate, includes only 50 events and is not considered mature. We currently expect that we will receive final OS data from the PRECEDENT trial by the first quarter of 2012. The predictive power of our EC20 companion imaging diagnostic was also evaluated in the PRECEDENT trial. In an analysis of EC20(++) patients, an increased improvement in PFS was observed. In this subgroup of 38 patients having a greater over-expression of the folate receptor, PFS improved from a median of 6.6 weeks for patients receiving PLD alone to a median of 24.0 weeks for patients receiving the combination of EC145 and PLD, an improvement of over 260 percent. The hazard ratio was 0.381 (p=0.018), or a reduction in the risk of progression of 61.9 percent. We are currently enrolling patients in PROCEED, our phase 3 registration trial of EC145 for the treatment of women with PROC. PROCEED shares the same fundamental design characteristics of the PRECEDENT trial, except that it is a double-blinded trial, it measures PFS based on radiological progression alone without including clinical progression, and it is powered for an OS analysis with a planned enrollment of approximately 500 folate receptor positive patients. As part of the EC20 validation process, we will also enroll a modest number of folate receptor negative patients, but these patients will not be included in the primary efficacy analysis. The primary endpoint, 2 to 1 randomization, dose and schedule are the same as those used in the PRECEDENT trial. As was the case with the PRECEDENT trial, PROCEED s primary endpoint is PFS. We are excluding EC20(-) patients, resulting in a population of EC20(+) and EC20(++) patients. Based on data we collected in the PRECEDENT trial, and the EC145 mechanism of action, we believe that these patients are not expected to benefit from treatment with EC145. PROCEED also includes a co-primary PFS endpoint for EC145 for EC20(++) patients. EC20(+) patients are those patients who have some, but not all, of their target lesions over-express the folate receptor as determined by an EC20 scan. If PROCEED meets either primary endpoint, we intend to file a new drug application, or NDA, with the FDA for use of EC145 in combination with PLD in EC20(+) and EC20(++) patients with PROC or in EC20(++) patients with PROC. The FDA has stated that PROCEED must provide evidence of persuasive and robust statistically significant clinical benefit. If we fail to demonstrate a benefit of this magnitude, we expect that the FDA would require us to conduct a second phase 3 clinical trial in order to file an NDA and receive marketing approval of EC145 for the treatment of PROC. In addition, the results of PROCEED may not yield safety and efficacy results sufficient to be approved by the FDA for commercial sale. Our second indication for EC145 is second line NSCLC. Lung cancer is the leading cause of cancer-related death worldwide and an area of high unmet medical need. Although several therapies are commercially available for the treatment of first and second line NSCLC, ultimately, in most patients the therapy fails and their cancer grows. In our clinical trials that incorporated EC20, approximately 80 percent of NSCLC tumors over-express the folate receptor. As a result, we believe NSCLC is also an attractive indication for EC145 development. In a phase 2 single-arm trial in NSCLC patients who had at least one tumor that over-expressed the folate receptor, EC145 met the primary endpoint by demonstrating clinical benefit, as well as improved median PFS and OS in EC20(++) patients. We plan to initiate a randomized, placebo controlled phase 2 clinical trial in second line NSCLC in up to 200 patients during the first quarter of 2012. EC20 and Companion Imaging Diagnostics We believe the future of medicine includes not only safer and more effective drugs, but also the ability to identify the appropriate therapy for a particular patient. We are committed to this approach, which is commonly referred to as personalized medicine or predictive medicine. To create a companion imaging diagnostic targeting the same diseased cells as the SMDC, we replace the drug payload with a radioisotope imaging agent. The companion imaging diagnostic allows for real-time, full-body assessment of the receptor target without requiring an invasive tissue biopsy. Using full-body imaging, the receptor expression can be measured in every tumor and monitored throughout treatment. EC20 is the companion imaging diagnostic for all of our SMDCs that target the folate receptor. EC20 is a conjugate of the targeting ligand, folate, and the radioisotope imaging agent, technetium-99m. Following intravenous administration, EC20 rapidly binds to tumors that over-express the folate receptor, allowing the treating physician to distinguish between patients who are folate receptor positive or folate receptor negative within one to two hours following its administration. In our phase 2 single-arm clinical trials and the randomized phase 2 PRECEDENT trial with EC145, we have seen correlations between favorable therapeutic outcomes and uptake of our companion imaging diagnostic, which we believe supports this approach. We are utilizing EC20 as part of our phase 3 clinical trial for EC145, PROCEED, and intend to use the data from this trial to file an NDA with the FDA for the approval of EC20 for use in women with PROC. Other Pipeline Programs We are developing a number of other SMDCs and companion imaging diagnostics which leverage our modular platform technology. For example, EC0489 utilizes an alternative linker system to alter the biodistribution of the drug, which may allow for higher dosage of drug payload than that found in EC145. EC0225 utilizes two distinct and highly active drugs, DAVLBH and mitomycin-C. These two drugs are attached to a single targeting ligand and are delivered simultaneously to cancer cells, which may increase the overall anti-cancer activity of the SMDC. In EC17, we incorporate hapten as the drug payload, which can elicit an immunologic response from the host immune system in order to facilitate tumor-cell killing. In EC0652, we replace the folate receptor ligand with a ligand that binds to prostate specific membrane antigen, or PSMA. Beyond cancer, we have discovered that activated macrophages, a type of white blood cell found at sites of acute and chronic inflammation, also over-express the folate receptor. Activated macrophages release a variety of mediators of inflammation that contribute to a broad range of diseases, such as rheumatoid arthritis, osteoarthritis, inflammatory bowel disease and psoriasis. We have a number of SMDCs in preclinical development for autoimmune disease that are designed to inhibit the production of pro-inflammatory cytokines by activated macrophages. In preclinical models of rheumatoid arthritis, our SMDCs targeted to activated macrophages result in significant reduction in inflammation and prevention of bone destruction that often accompanies these diseases. For example, EC0746 is an SMDC constructed with the targeting ligand, folate, and an inhibitor of cellular metabolism, called aminopterin. In preclinical models, we observed that EC0746 was safe and reduced inflammation more than the most commonly prescribed anti-inflammatory agent, methotrexate, and the anti-TNF-alpha agent, etanercept. Our Strategy Our strategy is to develop and commercialize SMDCs to treat patients who suffer from a variety of cancers and inflammatory diseases that are not well addressed by currently available therapies. The critical elements of our business strategy are to: obtain marketing approval of our lead SMDC, EC145, for treatment of women with PROC; expand the use of EC145 to other cancers, including NSCLC; build a pipeline of SMDCs by leveraging our technology platform; develop companion imaging diagnostics for each of our therapies; and build commercial capabilities and partner to maximize the value of our SMDCs. Patents and Proprietary Rights We own or have rights to 64 issued patents and 182 patent applications worldwide covering our core technology, SMDCs and companion imaging diagnostics. Our U.S. patent covering our core technology and our lead SMDC, EC145, expires in 2026, and our U.S. patent covering the EC145 companion imaging diagnostic, EC20, expires in 2024. We entered into exclusive, worldwide licenses that currently encompass 31 issued patents and 71 patent applications for select folate-targeted technology and for select technology related to PSMA owned by Purdue Research Foundation, a non-profit organization which manages the intellectual property of Purdue University. These exclusive, worldwide license agreements expire on the expiration date of the last to expire of the patents licensed thereunder, including those that are issued on patents currently pending and on matters not yet filed. Purdue Research Foundation may terminate the licenses for material default by us, in the event we fail to meet public demand for approved products or upon our bankruptcy. We have royalty obligations to Purdue Research Foundation based on sales of products that are designed, developed or tested using the licensed technology as well as annual minimum royalty obligations. Risks Associated With Our Business Our business is subject to a number of risks of which you should be aware before making an investment decision. These risks are discussed more fully under the heading the Risk Factors beginning on page 13, and include but are not limited to the following: We currently have no commercial products and we have not received regulatory approval for, nor have we generated commercial revenue from, any of our product candidates. As a result, it is difficult to predict our future commercial success and the viability of any of our product candidates. We are dependent on the success of our lead drug candidate, EC145, which has completed phase 2 clinical development in PROC. Recent PRECEDENT results may not be predictive of the results of our phase 3 clinical trial, and as a result, may not be sufficient for approval of EC145. Furthermore, EC145 may not be approved even if we achieve the primary endpoints of our phase 3 clinical trial. We have never been profitable and have incurred net operating losses since our inception. Our net loss for the years ended December 31, 2008, 2009, and 2010, and for the three months ended March 31, 2010 and 2011 was $18.5 million, $17.0 million, $20.1 million, $5.6 million and $7.2 million, respectively. As of March 31, 2011, we had a retained deficit of $105.3 million. We anticipate that our operating losses will increase over the next several years. We will need to raise substantial additional funds to achieve our goals. A failure to raise such additional funds may require us to delay, limit, reduce or terminate current or planned activities. We expect that any product candidate that we commercialize will compete with existing, market-leading products and those that are currently in development. For example, even if EC145 is approved by the FDA for the treatment of PROC, it may compete with current therapies or other products in late-stage development, which may prove to be safer and more effective. We currently have no marketing, sales or distribution capabilities. If our product candidates receive regulatory approval, we intend to establish our sales and marketing organization with technical expertise and supporting distribution capabilities to commercialize our product candidates, which will be expensive and time consuming. Any failure or delay in the development of our internal sales, marketing and distribution capabilities would adversely impact the commercialization of these products. If we do not establish development or commercialization collaborations, we may have to alter our development and marketing plans. As we progress with the clinical development of our SMDCs, we may seek to collaborate with select pharmaceutical and biotechnology companies to assist us in furthering development and potential commercialization of some of our product candidates in the United States or internationally. If we are unable to negotiate collaborations on acceptable terms, we may need to curtail the development of a product candidate, reduce the scope of our sales or marketing activities, or increase our expenditures and undertake development or commercialization activities at our own expense. Our inability to obtain adequate patent protection for our product candidates or technology platform or failure to successfully defend against any third-party infringement claims could also adversely affect our business. We are subject to risks associated with the availability of key raw materials and drugs used in our clinical trials. Our Corporate Information We were incorporated in the State of Indiana in 1995, and we were reincorporated in the State of Delaware in 2001. Our principal executive offices are located at 3000 Kent Avenue, Suite A1-100, West Lafayette, Indiana 47906, and our telephone number is (765) 463-7175. Our website address is www.endocyte.com. Information contained on our website is not incorporated by reference into this prospectus, and you should not consider information contained on our website as part of this prospectus or in deciding whether to purchase shares of our common stock. The name Endocyte and our logo are our trademarks. All other trademarks and trade names appearing in this prospectus are the property of their respective owners.
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+PROSPECTUS SUMMARY The following is a summary of the principal features of this offering and should be read together with the more detailed information and financial data and statements contained elsewhere in this prospectus. This summary does not contain all of the information you should consider before investing in our common stock. You should read this entire prospectus carefully, including the risks of investing in our common stock discussed under Risk Factors beginning on page 8 and the consolidated financial statements and notes to those consolidated financial statements, before making an investment decision. Our Business Rapid product evolution is occurring in the electronics industry. Smart phones and other portable devices already provide mobile television services, video calling and traditional broadband content delivered over wireless networks. Consumer purchasers of smart phones and other new technologies continue to demand further increased functionality, higher speed and lower power consumption all within smaller product form factors. To meet these demands, ever faster, more energy-efficient and much more compact semiconductor integrated circuits ( ICs ) have been developed, which have required the creation of associated new packaging technologies as well in order for these heightened capabilities to be delivered into electronics products. Typical package sizes for many ICs have decreased tenfold since the 1990s, while continual design and materials improvements have enhanced their speeds, temperature handling capacities and other parameters. This trend is expected to make advanced packaging one of the fastest growing sectors of the semiconductor industry. We meet the demand for smaller, high performance packages by designing, manufacturing, selling, installing and servicing highly-engineered semiconductor process equipment that automates the packaging of semiconductor devices. Advanced packaging processes, examples of which include flip chip, package-on-package and emerging three-dimensional through silicon vias ( 3D TSV ) packaging, enable the packaging of integrated circuits that, in turn, enable this broad range of communications, computing and consumer electronic products. We estimate that the advanced packaging equipment market addressed by our current products was approximately $285 million in 2010, and we expect it to exceed $1.0 billion by 2015 as manufacturers adopt new applications, including 3D TSV. Many of our customers have purchased our products for their work in completing development of processes using 3D TSV technologies and other advanced packaging processes. Our mission is to become the leading equipment provider for wafer level packaging. Our solutions are designed specifically for wafer level packaging, and we believe they offer a unique and more efficient process compared to competing technologies. Based on industry awards and repeat orders from customers operating in high volume manufacturing, we believe that our products offer increased throughput, lower cost of ownership, greater ease of use, greater reliability and lower maintenance, helping our customers reduce their costs of manufacturing. We currently offer two product platforms: Apollo, our second-generation sputter deposition system; and Stratus, an electrochemical plating system. Apollo and Stratus provide complementary solutions for a variety of metal deposition processes used in flip chip and other advanced semiconductor packaging applications. The Apollo advances the state-of-the-art in metal deposition for wafer level packaging and is used for applications including the multiple metal layers under bump metallization ( UBM ), redistribution layers, backside metallization, integrated passive devices (which allow placing numerous components on a single chip) and light emitting diodes. Stratus provides the thicker metallization used in through silicon vias, solder bumping, copper pillar, UBM and other advanced packaging applications. These systems enable our customers to produce packaged semiconductor devices with greater functionality at a lower cost. This value proposition is particularly compelling for customers serving the price-sensitive consumer electronics market. We believe that many of our customers have purchased our Stratus product both for applications in flip-chip technologies and for their own development of 3D TSV devices. As more and more customers employ our Stratus product for 3D TSV technologies and other next-generation processes such as copper pillar, we expect to add new equipment features to help them optimize production and reduce costs. Table of Contents The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED JULY 22, 2011 PROSPECTUS 7,000,000 Shares NEXX Systems, Inc. Common Stock We are offering 7,000,000 shares of our common stock. This is our initial public offering, and no public market currently exists for our common stock. We estimate that the initial public offering price will be between $5.50 and $7.00 per share. We have applied to list our common stock on The NASDAQ Global Market under the symbol NEXX. Investing in our common stock involves risks. See Risk Factors beginning on page 8. Per share Total Public offering price $ $ Underwriting discount, and commissions $ $ Proceeds, before expenses, to NEXX Systems, Inc. $ $ We have granted the underwriters the right to purchase up to an additional 1,050,000 shares of our common stock to cover over-allotments. The Securities and Exchange Commission and state securities regulators have not approved or disapproved of these securities or determined if this prospectus is truthful or complete. It is illegal for any person to tell you otherwise. Needham & Company, LLC Oppenheimer & Co. Canaccord Genuity Caris & Company, Inc. The date of this prospectus is , 2011. Table of Contents Our revenues have been derived from products providing the metallization required for flip chips and emerging 3D advanced semiconductor packaging. Stratus accounted for a majority of our revenues for the three months ended March 31, 2011 and the years ended December 31, 2010 and 2008 and substantially all of our product revenues during the year ended December 31, 2009. During the year ended December 31, 2009, the Apollo system was redesigned, which caused customers to postpone purchases while they waited for the introduction of the next-generation product. We expect revenues from Stratus to continue to account for a majority of our revenues for the foreseeable future. We devote significant resources to programs directed at developing new and enhanced products, as well as new applications for existing products. As a result, we have developed a significant intellectual property portfolio that includes 12 U.S. patents issued and 16 U.S. patent applications pending. In order to maintain technology leadership, which is evidenced by our past receipts of industry awards for both our Apollo and Stratus systems, and to pursue customer-driven opportunities for the application of our core technologies, we plan to continue to invest in research and development, expanding our product offerings in complementary areas where we can leverage our core competencies and technologies. Our customers include leading semiconductor manufacturers throughout the world, and consist of outsourced assembly and test providers ( OSATs ) and integrated device manufacturers. From our inception in 2001 through March 31, 2011, 134 of our systems have been installed with 39 different customers, many of whom have purchased multiple systems during the past 24 months. We primarily serve customers through our direct sales force located in strategically placed sales offices in the United States, Taiwan and Singapore and are now introducing our own direct customer sales and support in Korea and China. Over the last four years, we have expanded our sales presence in Asia, where many of the world s semiconductor manufacturing facilities are based. We expect international markets, particularly the markets in Asia, to provide most of the opportunities for our products. In addition to direct sales, we have developed indirect sales channels in Europe and in countries such as China, Korea, Japan and the Philippines. We outsource all of our manufacturing operations, with the exception of completing the final integration and testing in-house for Stratus before shipment to our customers. Our outsourcing strategy is designed to enable us to minimize fixed costs and capital expenditures, gain labor efficiencies and provide us with the flexibility to increase product capacity based on customer demand. We leverage the strengths and skill sets of each of our suppliers to improve manufacturing efficiencies and minimize costs. This strategy also allows us to focus on product differentiation through system design and quality control. Our Competitive Strengths Our success is based on the following competitive strengths: Global Leader in Advanced Semiconductor Packaging Equipment. As evidenced by awards received for our systems and repeat orders from our customers, we believe our industry-leading solutions enable high throughput and yield, low cost of ownership, a small footprint, great reliability, ease of use and low maintenance. Based on the proliferating use of multiple NEXX systems in OSATs throughout Asia where high output and low cost are critical, the effectiveness of our products has been proven in high-volume production environments. Technology Leadership. We have extensive experience and know-how building and supporting production-proven semiconductor manufacturing equipment. Additionally, we have a significant intellectual property portfolio consisting of 12 U.S. patents issued and 16 U.S. patent applications pending, and maintain an active program for the development of additional patent filings. Scalable, Flexible Platform. Our systems are designed on standard platforms that allow us to configure flexible systems to meet our customers specific application and throughput requirements. Table of Contents TABLE OF CONTENTS Page Prospectus Summary 1
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. You should read the entire prospectus carefully, including the section entitled Risk Factors , before deciding to invest in our common stock. As used in this prospectus, the terms we , us , our , and CounterPath refer to CounterPath Corporation, unless otherwise indicated. Company Overview We were incorporated under the laws of the State of Nevada on April 18, 2003. Following incorporation, we commenced the business of operating an entertainment advertising website. On April 30, 2004, we changed our business following the merger of our company with Xten Networks, Inc., a private Nevada company. On August 26, 2005, we entered into an agreement and plan of merger with Ineen, Inc., our wholly-owned subsidiary, whereby Ineen merged with and into our company, with our company carrying on as the surviving corporation under the name CounterPath Solutions, Inc. On October 17, 2007, we changed our name from CounterPath Solutions, Inc. to CounterPath Corporation. On March 19, 2008, our board of directors approved a five for one common stock consolidation. As a result, our authorized capital decreased from 415,384,500 shares of common stock to 83,076,900 shares of common stock. On November 1, 2010, our wholly-owned subsidiary, FirstHand Technologies Inc. was amalgamated with CounterPath Technologies Inc., carrying on as CounterPath Technologies Inc. Our business focuses on the design, development, marketing and sales of desktop and mobile application software, gateway server software and related professional services, such as pre and post sales, technical support and customization services. Our software products are sold into the telecommunications sector, specifically the voice over Internet protocol (VoIP), unified communications and fixed-mobile convergence markets. VoIP, unified communications and fixed-mobile convergence are general terms for technologies that use Internet or mobile protocols for the transmission of packets of data which may include voice, video, text, fax, and other forms of information that have traditionally been carried over the dedicated circuit-switched connections of the public switched telephone network. Our strategy is to sell our software to our customers to allow such customers to deliver session initiation protocol and voice over Internet protocol (VoIP) services. Customers that we are targeting include: (1) large incumbent telecommunications service providers, Internet telephony service providers and content providers, (2) original equipment manufacturers serving the telecommunication market, (3) small, medium and large sized businesses and (4) end users. Our software enables voice communication from the end user through the network to another end user and enables the service provider to deliver other streaming content to end users such as video, radio or the weather. Our acquisitions of FirstHand Technologies Inc. and BridgePort Networks, Inc. in February 2008 expanded the product portfolio of our company to include fixed-mobile-convergence applications for the enterprise and telecom service provider markets. See Description of Business . Our resident agent for service is Incorp Services, Inc. The address of our resident agent is 2360 Corporate Circle, Suite 400, Henderson, NV 89074-7722, telephone: 702.866.2500. Our principle executive offices are located Suite 300, One Bentall Centre, 505 Burrard Street, Vancouver, British Columbia, V7X 1M3. Our telephone number is 604.320.3344. Recent Developments On June 14, 2011, we completed a private placement in which we sold 3,145,800 units at a price of $1.79 (CDN$1.75) per unit for aggregate proceeds of $5,636,170 (CDN$5,505,150). Each unit consists of one share of common stock and one-half of one non-transferable common share purchase warrant. Each whole warrant entitles the holder to purchase one share of common stock at a price of CDN$2.25 per share until June 14, 2013. National Bank Financial Inc. and Canaccord Genuity Corp. acted as our placement agents for the offering and received, in aggregate, a cash fee in the amount of $394,532 (CDN$385,361) and 220,206 common share purchase warrants. Each agents warrant entitles the holder to purchase one share of common stock at a price of CDN$1.75 per share until December 14, 2012. CALCULATION OF REGISTRATION FEE Title of Each Class of Securities to be Registered Amount to be Registered(1) Proposed Offering Price Per Share(2) Proposed Aggregate Maximum Offering Price(2) Amount of Registration Fee(3) Common Stock to be offered for resale by selling stockholders 3,145,800 $1.75 $5,505,150.00 $639.15 Common Stock to be offered for resale by selling stockholders from the exercise of outstanding common share purchase warrants 1,572,900 $1.75 $2,752,575.00 $319.57 Common Stock to be offered for resale by selling stockholders from the exercise of outstanding agents warrants 220,206 $1.75 $385,360.50 $44.74 Total Registration Fee 4,938,906 $1.75 $8,643,085.50 $1,003.46 (1) An indeterminate number of additional shares of common stock shall be issuable pursuant to Rule 416 under the Securities Act of 1933 to prevent dilution resulting from stock splits, stock dividends or similar transactions and in such an event the number of shares registered shall automatically be increased to cover the additional shares in accordance with Rule 416. (2) Estimated solely for the purpose of computing the amount of the registration fee pursuant to Rule 457(c) based on the average of the high and low sales prices ($1.80 high; $1.70 low) for the shares of our common stock on the OTC Bulletin Board on September 6, 2011. (3) The registration fee was previously paid. THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE. Number of Shares Being Offered This prospectus relates to the resale by the selling stockholders named in this prospectus of up to 4,938,906 shares of our common stock which were issued or may be issued upon the exercise of outstanding warrants. The shares and warrants were acquired by the selling stockholders from our company in private placements that were completed on June 14, 2011. The selling stockholders may offer to sell all or a portion of their shares of common stock being offered in this prospectus from time to time. The selling stockholders may offer to sell the shares of common stock being offered in this prospectus at fixed prices, at prevailing market prices at the time of sale, at varying prices or at negotiated prices. All of the shares, when sold, will be sold by the selling stockholders. We will not receive any proceeds from the resale of the shares of common stock by the selling stockholders. Use of Proceeds We will not receive any proceeds from the sale of the shares of common stock by the selling stockholders. We may, however, receive proceeds from the exercise of the warrants by the selling stockholders. If we receive proceeds from the exercise of the warrants, we intend to use such proceeds to expand sales and marketing efforts, working capital, and general corporate purposes. We will pay the expenses of this offering, except that the selling stockholders will pay any broker discounts or commissions or equivalent expenses and expenses of their respective legal counsel applicable to the sale of their shares. Number of Shares Outstanding There were 39,823,874 shares of our common stock issued and outstanding as at September 30 , 2011.
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+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001272906_ucp_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001272906_ucp_prospectus_summary.txt
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+Prospectus Summary The following summary is not complete and does not contain all of the information that may be important to prospective investors. Each prospective investor is urged to read this prospectus in its entirety before making an investment decision to purchase our common stock. As used in this prospectus, unless the context otherwise requires, "the Company", "we", "us", "our" or "Northridge" refers to Northridge Ventures Inc. "SEC" refers to the Securities Exchange Commission. "Securities Act" refers to the Securities Act of 1933, as amended. "Exchange Act" refers to the Securities Exchange Act of 1934, as amended. "NRS" refer to the Nevada Revised Statutes, as amended. Our Business Northridge Ventures Inc. (formerly Portaltochina.com, Inc.) is a mineral exploration company, formed on March 18, 2003, under the laws of the State of Nevada. Our office is located at 2325 Hurontario Street, Suite 204, Mississauga, Ontario L5A 4K4. Our telephone number is (647) 918-4955. Our facsimile number is (416) 850-5739. We are an exploration stage company, which means that we do not have an established commercially mineable deposit for extraction. We are engaged in the business of acquiring mineral exploration rights throughout North America, exploring for commercially producible quantities of minerals, and exploiting any mineral deposits we discover that demonstrate economic feasibility. Exploration for minerals is a speculative venture necessarily involving substantial risk. The expenditures to be made by us on any mineral property may not result in the discovery of commercially exploitable reserves of valuable minerals. The probability of a mineral claim ever having commercially exploitable reserves is extremely remote, and in all probability our mineral claims do not contain any reserves. Any funds spent on the acquisition and exploration of these claims will probably be lost. If we are unable to find reserves of valuable minerals or we cannot remove the minerals because we either do not have the capital to do so, or because it is not economically feasible to do so, then we may cease operations and our investors will lose their investment. We intend to seek out prospective mineral exploration properties by retaining the services of professional mining geologists to be selected. As of the date of this prospectus, we have not selected a geologist. We are initially focusing our exploration efforts in the Province of Newfoundland and Labrador, but we will also consider exploration opportunities elsewhere in North America. We own a 100% undivided mineral interest in 19 non-contiguous mineral claims covering 475 hectares located within the southeastern part of Labrador, in the province of Newfoundland and Labrador, Canada (the "Paradise River Property"). A mineral claim is a mining right that grants the holder the exclusive right to search for and develop any mineral substance within a given area. Our claims give us the exclusive right to all of the mineral deposits situated on the Paradise River Property. Under Newfoundland law, our mineral claims may be held for one year after the date of issuance, and thereafter from year to year if, on or before the anniversary date, we perform assessment work on the underlying claims having a minimum value of not less than C$200 per claim in the first year, C$250 per claim in the second year, and C$300 per claim in the third year. If we are unable to complete the assessment work required to be done in any twelve month period, we can maintain our claims in good standing by posting a cash security deposit for the amount of the deficiency. When the deficient work is completed and accepted, the security deposit will be refunded. Otherwise, the security deposit will be forfeited. If we do not comply with these maintenance requirements, then we will forfeit our claims at the end of the anniversary date for each respective claim. All of our claims are presently in good standing, which means that they are free and clear of all work and/or monetary holding requirements. On June 10, 2011, the Canadian Securities Administrators (CSA) published for comment proposed Multilateral Instrument 51-105 Issuers Quoted in the U.S. Over-the-Counter Markets ("MI 51-105"), which could, if adopted and applicable to Northridge Ventures Ltd., require us to file a technical report concerning the Paradise River Property that will comply with the provisions of the CSA s National Instrument 43-101, Standards of Disclosure for Mineral Projects (a "Technical Report"). While MI 51-105 is not yet in force, our management is of the view that it is in the best interest of the Company to produce a Technical Report before engaging in any exploration of the Paradise River Property. We will not engage in any exploration or any other activity with respect to the Paradise River Property whatsoever until the Technical Report has been completed. The Technical Report will be prepared by a qualified professional engineer, and will follow the guidelines specified by the Canadian Council of Professional Geoscientists ("CCPG"). It will describe the Paradise River Property, its location, history, geological setting, deposit types and mineralization. The Technical Report will also set out the exploration, drilling and sampling method and approach, sample preparation, analyses and security, data verification, along with an estimation of the mineral resource and mineral reserves (if any), and other relevant data and information. In the course of preparing the technical report, the professional engineer will be required to conduct a geologic examination of the mineral property, compile and review all existing documents and data, and prepare a summary of the documents and data in accordance with NI 43-101 requirements. We do not have any plans, arrangements or understandings with any professional engineer or anyone else for the preparation of the Technical Report, and we do not intend to do so until we have completed this offering. U.S. reporting requirements for disclosure of mineral properties are governed by the SEC Guide 7. The standards of disclosure of mineral properties under NI 43-101 and SEC Guide 7 are substantially different. All mineral resources disclosed in our Technical Report will be estimated in accordance with the definition standards on mineral resources and mineral reserves of the Canadian Institute of Mining, Metallurgy and Petroleum referred to in NI 43-101. Accordingly, when the Technical Report is produced, the Company will disclose it on Form 8-K in order to satisfy our "public disclosure" obligations under SEC Regulation FD, but the Technical Report will not be filed with the SEC. If the Technical Report identifies claim positions for which there is sufficient indication of economic geological value to support further exploration ("high priority targets"), we plan to seek additional financing to complete any exploration program concerning the Paradise River Property that may be recommended in the Technical Report. We do not know how much it will cost to implement any such exploration program and there is no way for us to reasonably predict the cost. Subject to financing, our management estimates that the Technical Report will take 30-60 days to produce and will cost $30,000. Due to expected weather conditions in Labrador, we do not expect the Technical Report to be completed until June 2012. We do not presently have sufficient capital to commission the preparation of the Technical Report. We will apply the proceeds of this offering first to pay $75,000 in debt and offering expenses, and then towards commissioning the Technical Report, the acquisition of additional mineral properties, and the payment of professional and administrative fees. If the proceeds from this offering are insufficient to pay for the preparation of the Technical Report, then we will be required to seek additional financing for its preparation. The proceeds from this offering will first be applied to pay for offering expenses of $5,000 and then to repay debt of $70,000 owing to unaffiliated third parties. Included in this debt is a secured loan for $54,000 that accrues interest at the rate of 20% on the unpaid balance, calculated semi-annually. If we sell only the minimum number of offered shares, we will only pay the offering expenses and retire our debt; we will not have sufficient proceeds to fund the acquisition of any additional mineral rights or the preparation of the Technical Report on the Paradise River Property. If we sell the maximum number of offered shares, we will have sufficient proceeds to acquire additional mineral exploration rights and commission the preparation of the Technical Report. We have only just changed our business to mineral exploration. We have no operations upon which to base an evaluation of our performance. We are an exploration stage corporation and have not generated any revenues from operations. We cannot guarantee we will be successful in our business operations. Our business is subject to risks inherent in the establishment of a new business enterprise, including limited capital resources, possible delays in the exploration of properties we may secure, and possible cost overruns due to price and cost increases in services. Our business is in the early stages of development. We have not generated revenue since the date of inception, but have suffered recurring losses and net cash outflows from operations. We expect to continue to incur substantial losses to implement our business plan until we obtain an interest in a property, find mineralized material, delineate an ore body, and begin profitably removing and selling minerals. We have no proven or probable mineral reserves, and there is no assurance that any mineral claims that we now have or may acquire in the future will contain commercially exploitable reserves of valuable minerals. To date, our activities have been financed from the proceeds of share subscriptions and loans from management and non-affiliated third parties. We have not established any other source of equity or debt financing and there can be no assurance that we will be able to obtain sufficient funds to implement our business plan. As a result of the foregoing, our auditors have expressed substantial doubt about our ability to continue as a going concern. If we cannot continue as a going concern, then our investors may lose all of their investment. Our sole officer and director does not have any professional training or technical credentials in the exploration, development, or operation of mines. We therefore intend to retain qualified persons on a contract basis to perform the surveying, exploration, and excavating of the property as needed. We do not have any verbal or written agreement regarding the retention of any qualified engineer or geologist for our exploration program. We currently have no employees other than our sole officer and director, who devotes six hours per week to our operations. We do not intend to hire any employees for the next 12 months or until we have proven mineral reserves. Please carefully read both this prospectus and any prospectus supplement together with the additional information described below under the section entitled "Available Information". The Offering Securities Offered: A minimum of 15,000,000 and a maximum of 24,000,000 shares of common stock, par value $0.0001 Offering price: $0.005 per share Offering period: The offering will remain open until the earlier of the date that all shares offered are sold and 120 days after the date of this prospectus, except that we will have only 90 days to sell at least the first 15,000,000 shares. Net proceeds to us: Minimum: Approximately $70,000, after estimated expenses of $5,000 assuming sale of 15,000,000 shares Maximum: Approximately $115,000, after estimated expenses of $5,000 assuming sale of 24,000,000 shares Use of proceeds: We will use the proceeds to repay debt, acquire mineral exploration properties, commission a technical report, pay professional fees and for working capital. Number of shares outstanding before the offering: 14,000,000 Number of shares outstanding after the offering: Minimum: 29,000,000 assuming sale of 15,000,000 shares Maximum: 38,000,000 assuming sale of 24,000,000 shares
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001278679_michael_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001278679_michael_prospectus_summary.txt
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+This summary highlights information contained elsewhere in this prospectus. It does not contain all the information that you may consider important in deciding whether to participate in the exchange offer. Therefore, you should read the entire prospectus carefully, including, in particular, the section entitled Risk Factors and the financial statements and the related notes to those statements. Unless otherwise indicated or the context otherwise requires, all references in this prospectus to Michael Foods Group , our company , we , our , ours , us or similar terms refer to Michael Foods Group, Inc., together with its subsidiaries. Michael Foods, Inc., a wholly owned subsidiary of Michael Foods Group, is referred to as Michael Foods . MFI Holding Corporation is referred to as MFI Holding and MFI Midco Corporation is referred to as Parent . The Company We are a diversified producer and distributor of food products in three areas egg products, potato products and cheese and other dairy case products. Our Egg Products Division produces and distributes egg products to the foodservice, retail and food ingredient markets. Our Potato Products Division processes and distributes refrigerated potato products to the foodservice and retail grocery markets in North America. Our Crystal Farms Division markets a broad line of refrigerated grocery products to U. S. retail grocery outlets, including branded and private-label cheese, eggs and egg products, bagels, butter, muffins, potato products and ethnic foods. We have a strategic focus on value-added processing of food products. The strategy is designed to capitalize on key food industry trends, such as (i) the desire for improved safety and convenience, (ii) the focus by foodservice operators on reducing labor and waste, and (iii) the long-term trend toward food consumption away from home, which continues to be slowed somewhat by the recent economic conditions. We believe our operational scale, product breadth and geographic scope make us an attractive and important strategic partner for our customers. The Egg Products Division, comprised of our wholly owned subsidiaries M. G. Waldbaum Company ( Waldbaum ), Papetti s Hygrade Egg Products, Inc. ( Papetti s ), Abbotsford Farms, Inc., and MFI Food Canada Ltd., produces, processes and distributes numerous egg products. Based on management estimates, we believe that our Egg Products Division is the largest processed egg products producer in North America. Our principal value-added egg products are ultrapasteurized, extended shelf-life liquid eggs ( Easy Eggs and Excelle ), egg white based egg products ( All Whites and Better n Eggs ), and hardcooked and precooked egg products ( Table Ready ). Our other egg products include frozen, liquid and dried products that are used as ingredients in other food products, as well as organic and cage free egg products. Our Egg Products Division distributes its egg products to food processors and foodservice customers primarily throughout North America, with limited international sales in the Far East, South America and Europe. Our extended shelf-life liquid eggs (the largest selling product line within the Division) and other egg products are marketed to a wide variety of foodservice and food ingredients customers. The Egg Products Division also is a supplier of egg white-based egg products sold in the U.S. retail and foodservice markets. Our Crystal Farms Division markets a wide range of refrigerated grocery products directly to retailers and wholesale warehouses. We believe that the Crystal Farm Division s strategy of offering quality branded products at a good value relative to national brands has contributed to the Crystal Farm Division s growth. Crystal Farms cheese is positioned in the mid-tier pricing category and is priced below national brands such as Kraft and Sargento and above store brands (private label). The Crystal Farms Division s distributed refrigerated products, which consist principally of cheese, eggs and egg products, bagels, butter, muffins, potato products and ethnic foods, are supplied by various vendors or our other divisions, to Crystal Farms specifications. Cheese accounted for approximately 69% of the Crystal Farms Division s 2010 sales. While we do not produce cheese, we operate a cheese packaging facility in Lake Mills, Wisconsin, which processes and packages various cheese products for our Crystal Farms brand cheese business and for various private-label customers. Table of Contents Table of Additional Registrants Exact Name of Registrant as Specified in its Charter (Or Other Organizational Document) State or Other Jurisdiction of Incorporation or Organization I.R.S Employer Identification Number Address and Telephone Number of Registrant s Principal Executive Offices Abbotsford Farms, Inc. Minnesota 26-1615833 * Casa Trucking, Inc. Minnesota 22-3493806 * Crystal Farms Refrigerated Distribution Company Minnesota 41-1669454 * Farm Fresh Foods, Inc. Nevada 91-2086470 * MFI Food Asia, LLC Delaware 00-0000000 * MFI International, Inc. Minnesota 27-1428245 * Michael Foods, Inc. Delaware 13-4151741 * Michael Foods of Delaware, Inc. Delaware 41-1579532 * Minnesota Products, Inc. Minnesota 41-1394918 * M. G. Waldbaum Company Nebraska 47-0445304 * Northern Star Co. Minnesota 41-1468193 * Papetti s Hygrade Egg Products, Inc. Minnesota 22-3493805 * * Address and telephone number of Registrant s principal executive office is same as that of Michael Foods Group, Inc. The primary industrial classification number for each additional Registrant is 2015. Table of Contents The Crystal Farms Division has expanded its market area using both company-owned and leased facilities and independent distributors. The Crystal Farms Division s market area is the United States, with a large customer concentration in the central United States. We sell our products to a large number of retail stores, a majority of which are served via customers warehouses. The Crystal Farms Division also maintains a fleet of refrigerated tractor-trailers to deliver products daily to its retail customers from nine distribution centers centrally located in its key marketing areas. Our Potato Products Division consists of shredded hash browns and diced, sliced, mashed and other specialty potato products. Refrigerated potato products are produced and sold by our wholly owned subsidiaries, Northern Star Co. ( Northern Star ) and Farm Fresh Foods, Inc. ( Farm Fresh ), to both the foodservice and retail markets. In 2010, approximately 51% of the Potato Products Division s net sales were to the retail market, with the balance to the foodservice market. The Potato Products division sells refrigerated potato products in the United States in the retail grocery market, where they are marketed under the Simply Potatoes brand and in the foodservice market, where they are principally marketed under the Northern Star and Farm Fresh brands. Due to their freshness and quality, refrigerated potato products are generally sold at higher price points than frozen or dehydrated potato products. The Potato Products Division s largest customers include major retail grocery store chains and major foodservice distributors. The Potato Products Division maintains its main processing facility in Minnesota, with a smaller facility located in Nevada. At April 2, 2011 and January 1, 2011, we had total assets of approximately $2,138.1 million and $2,164.1 million, respectively. For the three-month period ended April 2, 2011 and the six-month period ended January 1, 2011, the Company had net sales of approximately $417.1 million and $858.3 million, respectively, and net earnings (loss) of approximately $(0.4) million and $3.3 million, respectively. For the three-month period ended April 2, 2010 and the six-month period ended June 26, 2010, the Predecessor had net sales of approximately $395.3 million and $744.0 million, respectively, and net earnings (loss) of approximately $15.0 million and $(34.3) million, respectively. Corporate History On June 29, 2010, M-Foods Holdings, Inc. and its subsidiaries (the Predecessor ) was merged with and into the Company, with the Company as the surviving entity and MFI Holding as its direct parent. MFI Holding is owned by GS Capital Partners VI Fund, L.P. and its affiliates (collectively, GS Capital Partners ), Thomas H. Lee Partners, L.P. (collectively, THL and together with GS Capital Partners, the Sponsors ) and certain members of management (the Management Stockholders ). Following the merger, GS Capital Partners, THL and the Management Stockholders indirectly own approximately 74%, 21% and 5%, respectively, of the Company. Our Executive Offices Our principal executive offices are located at 301 Carlson Parkway, Suite 400, Minnetonka, Minnesota 55305, and our telephone number at that address is (952) 258-4000. Our website address is www.michaelfoods.com. Information contained on our website is expressly not incorporated by reference into this prospectus. Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED JULY 15, 2011 PRELIMINARY PROSPECTUS MICHAEL FOODS GROUP, INC. 9.750% Senior Notes due 2018 On June 29, 2010, we issued $430,000,000 9.750% Senior Notes due July 15, 2018 (the Restricted Notes ) in a transaction exempt from the registration requirements of the Securities Act. As part of the issuance of the Restricted Notes, holders were granted benefits pursuant to an exchange and registration rights agreement (the registration rights agreement ) among us, the guarantors and the initial purchasers of the Restricted Notes. To satisfy our obligations under the registration rights agreement, on July 7, 2011, we launched an offer to exchange (the exchange offer ) all Restricted Notes for $430,000,000 9.750% Senior Notes due 2018, the issuance of each of which has been registered under the Securities Act of 1933 (the notes ). The notes bear interest at a rate of 9.750% per annum and mature on July 15, 2018. Interest on the notes is payable on January 15 and July 15 of each year. We have the option to redeem all or a portion of the notes at any time on or after July 15, 2014 at the redemption prices set forth in this prospectus. On or prior to July 15, 2013, we have the option to redeem up to 35% of the notes with proceeds of certain equity offerings at a redemption price equal to 109.750% of their principal amount, plus accrued and unpaid interest, if any, to the date of redemption. In addition, at any time prior to July 15, 2014, we may redeem all or a portion of the notes at a price equal to 100% of the principal amount of the notes, plus a make-whole premium and accrued and unpaid interest, if any, to the date of redemption, as described in this prospectus. The notes are guaranteed on a senior unsecured basis by all of our existing wholly-owned domestic restricted subsidiaries that guarantee our senior secured credit facilities and our future subsidiaries that are wholly-owned domestic subsidiaries or that guarantee our senior secured credit facilities (in each case, subject to certain exceptions). The notes effectively rank behind all of our secured debt, including our senior secured credit facilities, to the extent of the value of the assets securing such debt. In addition, the notes are structurally subordinated to all liabilities of our subsidiaries that do not guarantee the notes. This prospectus includes additional information on the terms of the notes, including redemption and repurchase prices, covenants and transfer restrictions. We do not intend to apply for listing of the notes on any securities exchange or for inclusion of the notes in any automated quotation system. Consider carefully the Risk Factors beginning on page 5 of this prospectus. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. This prospectus has been prepared for and may be used by Goldman, Sachs & Co. and its affiliates in connection with offers and sales of the notes related to market-making transactions in the notes in the secondary market effected from time to time. Goldman, Sachs & Co. and its affiliates may act as principal or agent in such transactions, including as agent for the counterparty when acting as principal or as agent for both counterparties, and may receive compensation in the form of discounts and commissions, including from both counterparties, when it acts as agents for both. Sales of notes pursuant to this prospectus will be made at prevailing market prices at the time of sale, at prices related thereto or at negotiated prices. We will not receive any proceeds from such sales. The date of this prospectus is , 2011 Table of Contents Summary of the Terms of the Notes The following summary describes the principal terms of the notes and is provided solely for your convenience. For a more detailed description of the notes, see Description of Notes . Securities Offered $430,000,000 aggregate principal amount of 9.750% Senior Notes due 2018. Maturity July 15, 2018. Interest Interest will be payable in cash on January 15 and July 15 of each year. Optional Redemption We may redeem all or a portion of the notes beginning on July 15, 2014. The initial redemption price is 104.875% of their principal amount, plus accrued and unpaid interest, if any, to the redemption date. The redemption price will decline each year after 2014 and will be 100% of their principal amount, plus accrued and unpaid interest, if any, to the redemption date, beginning on July 15, 2016. At any time prior to July 15, 2014, we may redeem all or a portion of the notes at a price equal to 100% of the principal amount of the notes plus a make-whole premium and accrued and unpaid interest, if any, to the redemption date, in each case as described in this prospectus under Description of Notes Optional Redemption . In addition, before July 15, 2013, we may redeem up to 35% of the aggregate principal amount of notes with the proceeds of certain equity offerings at 109.750% of their principal amount plus accrued and unpaid interest, if any, to the redemption date. We may make such redemption only if, after any such redemption, at least 65% of the aggregate principal amount of notes originally issued remains outstanding. Offers to Purchase If we sell certain assets without applying the proceeds in a specified manner or experience certain change of control events, each holder of notes may require us to purchase all or a portion of its notes at the purchase prices set forth in this prospectus, plus accrued and unpaid interest, if any, to the purchase date. See Description of Notes Repurchase at the Option of Holders . Our senior secured credit facilities or other agreements may restrict us from repurchasing any of the notes, including any purchase we may be required to make as a result of a change of control or certain asset sales. See Risk Factors Risks Related to the Notes We may not have the ability to raise the funds necessary to finance the change of control offer required by the indenture governing the notes. Ranking The notes will rank equally to all of our other unsecured and unsubordinated indebtedness, but will effectively be junior to all of our secured indebtedness, to the extent of the value of the assets Table of Contents securing that indebtedness. The notes will also be structurally subordinated to all liabilities of our subsidiaries that do not guarantee the notes. Guarantees The notes will be guaranteed by all of our existing wholly-owned domestic restricted subsidiaries that guarantee our senior secured credit facilities. In addition, subject to certain exceptions, the notes will be guaranteed by all of our future wholly-owned domestic restricted subsidiaries and any other domestic restricted subsidiary that guarantees our senior secured credit facilities. The guarantees will rank equally to all other unsecured and unsubordinated indebtedness of the guarantors, but will be effectively junior to all of the secured indebtedness of the guarantors, to the extent of the value of the assets securing that indebtedness. Certain Covenants The terms of the notes restrict our ability and the ability of our restricted subsidiaries (as described in Description of Notes ) to: incur additional indebtedness; create liens; pay dividends or make distributions in respect of capital stock; purchase or redeem capital stock; make investments or certain other restricted payments; sell assets; issue or sell stock of restricted subsidiaries; enter into transactions with affiliates; or effect a consolidation or merger. However, these limitations will be subject to a number of important qualifications and exceptions. For more information, see Description of Notes Certain Covenants . Use of Proceeds This prospectus is delivered in connection with the sale of notes by Goldman, Sachs & Co. and its affiliates in market-making transactions. We will not receive any of the proceeds from such transactions.
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+PROSPECTUS SUMMARY This summary highlights selected information contained in greater detail elsewhere in this prospectus. This summary does not contain all of the information you should consider before investing in our common stock. You should read this entire prospectus carefully, especially the risks of investing in our common stock discussed under Risk Factors and our consolidated financial statements and related notes included elsewhere in this prospectus, before making an investment decision. Unless otherwise noted or indicated by the context, the term Apache refers to Apache Design Solutions, Inc., and we, us, and our refer to Apache and its consolidated subsidiaries. Our Company Overview We are a leading provider of innovative power analysis and optimization software solutions that enable the design of power-efficient, high-performance, noise-immune integrated circuits, or ICs, and electronic systems. Our solutions consist of a suite of software tools and methodologies that enable design engineers to reduce power consumption, ensure reliable delivery of power to ICs and electronic system components, and mitigate power-induced signal interference, or noise. We believe our solutions are critical to the design of our customers products and allow our customers to deliver power-efficient ICs and electronic systems that are resistant to the impact of noise, or noise-immune, at lower costs and with a faster time to market than with alternative solutions. Our singular focus on power analysis and optimization enables us to address growing market demand for more power-efficient and noise-immune ICs and electronic systems. This demand is being driven primarily by the proliferation of high-performance mobile devices, miniaturization and wireless connectivity of these devices, and the rising costs of electricity for data centers. Our solutions address the challenges posed by increasing design complexity, smaller geometries for ICs, and the integration of various components of an electronic system onto a single IC. The accuracy, efficiency, capacity, and comprehensiveness of our solutions provide design engineers with the confidence in their analyses to progress a design to the next phase in the process, which is known as sign-off. Highly accurate and reliable sign-off solutions are critical to engineers due to the costly and highly visible consequences of design flaws that can lead to product failures and recalls. We believe that our RedHawk platform is the sign-off solution of choice for the analysis of reliable delivery of power to ICs. We generate substantially all of our revenue through the sale of time-based software licenses. Our customers include all of the top 20 semiconductor companies as measured by revenue in 2010 according to iSuppli, as well as leading electronic system companies serving a broad range of end markets. These customers include, among others, ARM Limited, Broadcom Corporation, Intel Corporation, Hynix Semiconductor Inc., LSI Corporation, MediaTek Inc., QUALCOMM Incorporated, Samsung Electronics Co., Ltd., Sony Corporation, STMicroelectronics N.V., Texas Instruments Incorporated, and Toshiba Corporation. All of our top 20 customers in each of 2008, 2009, and 2010 remain our customers today. Our revenue was $25.7 million, $34.6 million, and $44.0 million in 2008, 2009, and 2010, respectively. In the same periods, we had net income of $3.2 million, $3.3 million, and $3.3 million, respectively, and non-GAAP net income of $4.7 million, $5.0 million, and $5.4 million, Table of Contents The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is declared effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. Subject to Completion, Dated May 27, 2011 Apache Design Solutions, Inc. Shares Common Stock This is the initial public offering of Apache Design Solutions, Inc. We are offering shares of our common stock. Selling stockholders are offering an additional shares of our common stock. We will not receive any proceeds from the sale of shares by the selling stockholders. We anticipate that the initial public offering price will be between $ and $ per share. We have applied to list our common stock on the Nasdaq Global Market under the symbol APAD. Investing in our common stock involves a high degree of risk. See Risk Factors beginning on page 11. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. Per Share Total Public offering price $ $ Underwriting discounts and commissions $ $ Proceeds, before expenses, to Apache Design Solutions, Inc. $ $ Proceeds, before expenses, to the selling stockholders $ $ We have granted the underwriters the right to purchase up to additional shares of common stock to cover over-allotments. Deutsche Bank Securities Needham & Company, LLC Canaccord Genuity ThinkEquity LLC D.A. Davidson & Co. The date of this prospectus is , 2011. Table of Contents respectively. Our revenue was $10.4 million and $12.2 million for the three months ended March 31, 2010 and 2011, respectively. In the same periods, we had net income of $1.0 million and $1.3 million, respectively, and non-GAAP net income of $1.5 million and $1.8 million, respectively. For a discussion of non-GAAP net income and a reconciliation of GAAP net income to non-GAAP net income, see note 1 to Summary Consolidated Financial and Other Data. For a discussion of factors that impacted our profitability, see Risk Factors We may be unable to sustain our recent revenue growth or increase our operating income or net income, which could have a negative impact on our stock price. Our Industry Several factors are driving the growing demand for more power-efficient and noise-immune ICs and electronic systems, including: the proliferation of high-performance mobile and other electronic devices with increased functionality, which is requiring manufacturers to develop more power-efficient electronic components to extend battery life; the trend towards smaller electronic systems, which constrains the size of batteries and cooling systems, requiring engineers to design ICs that consume less power while satisfying higher performance requirements; the explosion in system-to-system wireless communication that is amplifying the amount of noise within and between ICs, causing systems to sometimes malfunction or fail; and rising power consumption and electricity costs for information technology, or IT, infrastructure, such as data centers, compelling operators to seek more power-efficient products that consume less energy. Meeting this growing demand for more power-efficient and noise-immune ICs and electronic systems poses significant challenges for design engineers. These engineers must create designs that meet increasingly stringent power specification limits, or power budgets, while reliably and consistently delivering power to all components of ICs and electronic systems. They must also create designs that mitigate adverse effects caused by power-induced noise to prevent failures or performance degradation. To solve these challenges, design engineers use a collection of third-party products and internally developed tools. However, many of these tools only address power analysis for specific phases of the design flow, and lack the ability to share data between the various teams working on separate design phases. Further, many of these tools also lack the capability to efficiently simulate the interaction of an IC with its entire electronic system, which adversely affects the quality and accuracy of the analysis. Our Solutions We offer a suite of software tools and methodologies that provide innovative power analysis and optimization capabilities throughout various phases of the design process, from initial prototyping to full electronic system design completion. We have introduced several products that have been first to market in various aspects of power and noise analysis. We believe our solutions deliver the following benefits: Accuracy Our solutions analyze design models and provide results that are closely correlated to power and noise measurements of the manufactured ICs and electronic systems. We believe Table of Contents Advancing Low-Power Innovation Software solutions enabling power-efficient, high-performance, noise-immune electronic designs Table of Contents our solutions deliver predictable, consistent, and reliable analysis results that help our customers reduce costs and meet increasingly stringent power budget requirements. Capacity Our solutions can simultaneously analyze an entire IC and electronic system design to model the interactions inside an IC and between the various ICs in an electronic system. Our approach contrasts with the divide-and-conquer approach of other solutions, whereby a design is partitioned into sub-blocks and these sub-blocks are analyzed separately, which can result in overlooked design errors. Efficiency Our solutions deliver rapid analyses and increase engineering team productivity. We believe our solutions are able to complete analyses significantly faster than many alternative power analysis tools, if these alternative tools are able to complete the analyses at all. Comprehensiveness Our solutions enable power analyses at various phases of the design of ICs and electronic systems and allow the sharing of data across design process phases. As a result, our solutions reduce the likelihood of costly design errors and development delays that can be caused by the use of incompatible analysis tools and methodologies by engineering teams working on different components of an electronic system. Our Strengths Our core competitive strengths include: Exclusive focus on power We focus exclusively on providing solutions that enable high-performance, power-efficient, and noise-immune IC and electronic system designs. This focus has enabled us to develop what we believe are the most advanced, effective power analysis solutions available on the market. Diverse and growing blue chip customer base Our customers include all of the top 20 semiconductor companies as measured by revenue in 2010 according to iSuppli, as well as leading electronic system companies serving market segments such as mobile devices, high-performance computing and networking, consumer electronics, and automotive and medical electronics. All of our top 20 customers in each of 2008, 2009, and 2010 remain our customers today. From January 1, 2008 to March 31, 2011, we grew our customer base by over 122%, from 53 customers at the beginning of 2008 to 118 customers as of March 31, 2011. Critical solution for power sign-off We believe that our flagship product, RedHawk, is the sign-off solution of choice for the analysis of reliable delivery of power to ICs. Sign-off solutions often enjoy significant competitive advantages, such as product longevity, structural barriers to entry, and substantial market share. Comprehensive power analysis solutions We provide engineers with a unified environment to address the challenges associated with power efficiency and noise immunity throughout various phases of the IC and electronic system design process. Additionally, by generating compact, user-friendly models, our solutions Table of Contents facilitate effective coordination among the multiple engineering teams that work on the design of ICs and complex electronic systems. Power-focused global customer support team Our customer support team consists of application engineers who typically have significant and relevant industry experience and are exclusively focused on helping our customers with their power-efficiency and noise-immunity design challenges. Our Strategy Our goal is to enhance our leadership position as a provider of software tools and methodologies that enable power-efficient, noise-immune IC and electronic system designs. Key components of our strategy include: Extend our core technology leadership We have established ourselves as a market and technology leader for power analysis in the design of ICs and electronic systems. We believe that our RedHawk product is the sign-off tool of choice for the analysis of reliable delivery of power to ICs. We plan to continue to invest in research and development to maintain and extend our technology leadership position. Increase deployment of our products to existing customers As the demand for lower power and higher performance electronic systems continues to rise, and as our customers continue to increase their focus on delivering power-efficient solutions, we plan to increase the number of licenses and products we sell to our existing customer base. Broaden our customer base We plan to continue to increase our market share among leading IC and electronic system companies. Our ability to acquire new customers is an important element of our growth strategy, and our sales organization expends a considerable portion of its efforts on expanding our customer base. We intend to leverage our brand, technology leadership, and customer support to add new customers. Leverage existing partnerships with market leaders to penetrate their customers We plan to leverage our relationships with leading semiconductor customers to expand our sales to their end customers and thus improve their ability to collaborate with their end customers to deliver more power-efficient and noise-immune ICs and electronic systems. Expand our addressable market with new products and enter new markets We plan to develop new products that target adjacent and related markets in which we can leverage our strong brand and our core underlying technologies in power analysis to deliver an even broader suite of software tools and methodologies. We may also extend our product offering through selective strategic acquisitions. Risks Associated with Our Business Our business, financial condition, results of operations, and prospects are subject to numerous risks. These risks include, among others, that: we rely on a small number of customers for a significant portion of our revenue; we depend on the continued financial strength of our customers; Table of Contents we could lose customers to ongoing industry consolidation; we rely on a small number of products for substantially all of our revenue; our addressable market is limited because we rely exclusively on solutions addressing power-efficient and noise-immune design analysis and optimization; we may fail to develop, commercialize or acquire new and enhanced products; we must continue making significant investments in research and development efforts that may be unsuccessful; the markets in which we operate are highly competitive and competitive pressures may prevent us from obtaining new customers and gaining market share, may require us to reduce our pricing or cause us to lose existing customers; we rely on our senior management and other key employees, and may not be able to retain such personnel or attract new personnel; our senior management does not have experience in managing a public reporting company; and we have a small internal accounting and finance staff which does not have significant experience in complying with the reporting obligations of a public company, which could negatively impact the timely and accurate reporting of our financial results. If we are unable to adequately address these and other risks we face, our business, financial condition, results of operations, and prospects may be materially and adversely affected. In addition, there are additional risks related to an investment in our common stock. Following this offering, our executive officers, directors, and other key employees will beneficially own, collectively, % of our outstanding common stock, or % if the underwriters exercise in full their option to purchase additional shares of our common stock. These stockholders will have significant influence in determining the outcome of any corporate transaction or any other matter submitted for approval to our stockholders. You should carefully read Risk Factors beginning on page 11 for an explanation of the foregoing risks before investing in our common stock. Our Corporate Information We were incorporated in Delaware in 2001. Our principal executive offices are located at 2645 Zanker Road, San Jose, California 95134. The telephone number of our principal executive offices is (408) 457-2000, and our main corporate website is www.apache-da.com. The information on, or that can be accessed through, our website is not part of this prospectus. We have rights to a number of marks used in this prospectus that are important to our business, including, without limitation, Apache, Apache Design Solutions, RedHawk, Sentinel, PowerArtist, Totem, and PathFinder. We have omitted the and designations, as applicable, for the trademarks we name in this prospectus. Table of Contents The Offering Common stock offered by us shares Common stock offered by selling stockholders shares Common stock to be outstanding after this offering shares Over-allotment option We have granted the underwriters an option, exercisable for 30 days from the date of this prospectus, to purchase up to an additional shares of common stock to cover over-allotments. Use of proceeds We estimate that the net proceeds from this offering will be approximately $ million (or approximately $ million if the underwriters exercise their over-allotment option in full), after deducting the estimated underwriting discounts and commissions and our estimated offering expenses, assuming the shares are offered at $ per share, the midpoint of the estimated offering range set forth on the cover page of this prospectus. We will not receive any of the proceeds from shares sold by the selling stockholders. We intend to use the net proceeds from our sale of shares of common stock in this offering for working capital and other general corporate purposes, which may include hiring additional personnel and investing in sales, marketing, and research and development. In addition, we may use a portion of the proceeds received by us from this offering for acquisitions of complementary businesses, technologies or other assets. We have no agreements with respect to any acquisitions at this time. Pending the use of the proceeds from this offering as described above, we plan to invest the net proceeds in short-term, investment grade, interest-bearing securities. Dividends We have never paid cash dividends on our common stock. We currently intend to retain any future earnings to fund business development and growth, and we do not anticipate paying any cash dividends for the foreseeable future. Proposed Nasdaq Global Market symbol APAD Table of Contents Unless otherwise noted, the number of shares of common stock to be outstanding after this offering used in this prospectus is based on 17,217,798 shares of common stock outstanding as of April 30, 2011, excluding: 3,117,454 shares of common stock subject to options outstanding as of April 30, 2011, at a weighted-average exercise price of $3.75 per share issued under our 2001 Stock Option/Stock Issuance Plan; 2,400,000 shares of common stock reserved for issuance pursuant to our 2011 Equity Incentive Plan, and 600,000 shares of common stock reserved for issuance pursuant to our 2011 Employee Stock Purchase Plan; and shares of common stock issuable upon the exercise of the underwriters over-allotment option. Unless otherwise expressly stated or the context otherwise requires, all information contained in this prospectus assumes that the amendment of our amended and restated certificate of incorporation and amended and restated bylaws, and the conversion of all outstanding shares of preferred stock into shares of common stock, all of which are expected to occur immediately prior to or upon the closing of this offering, have occurred. Table of Contents Summary Consolidated Financial and Other Data The following table sets forth our summary consolidated financial and other data for the years ended December 31, 2008, 2009, and 2010. The summary consolidated financial data for the years ended December 31, 2008, 2009, and 2010 were derived from our audited consolidated financial statements included elsewhere in this prospectus. The consolidated statements of operations data for the three months ended March 31, 2010 and 2011 and the consolidated balance sheet data as of March 31, 2011 are derived from our unaudited interim consolidated financial statements included in this prospectus. In the opinion of management, the unaudited interim consolidated financial statements reflect all adjustments, consisting of only normal recurring adjustments, necessary for the fair presentation of the financial information set forth in those statements. The historical results presented below are not necessarily indicative of future operating results, and the results for the first three months of 2011 are not necessarily indicative of operating results to be expected for the full year or any other period. You should read this summary consolidated financial data in conjunction with Selected Consolidated Financial and Other Data, Management s Discussion and Analysis of Financial Condition and Results of Operations and our consolidated financial statements and related notes included elsewhere in this prospectus. Year Ended December 31, Three Months Ended March 31, 2008 2009 2010 2010 2011 (unaudited) (in thousands, except per share data) Consolidated Statements of Operations: Revenue $ 25,695 $ 34,601 $ 44,047 $ 10,417 $ 12,180 Cost of revenue 5,812 6,662 8,999 2,099 2,392 Gross profit 19,883 27,939 35,048 8,318 9,788 Operating expenses: Sales and marketing 9,529 9,794 12,930 2,827 2,862 Research and development 7,797 8,588 11,516 2,688 3,289 General and administrative 2,903 3,573 4,926 962 1,543 Total operating expenses 20,229 21,955 29,372 6,477 7,694 Operating income (loss) (346 ) 5,984 5,676 1,841 2,094 Other income (expense) 13 (93 ) 366 (18 ) (25 ) Income (loss) before income tax (333 ) 5,891 6,042 1,823 2,069 Provision (benefit) for income tax (3,507 ) 2,622 2,738 862 799 Net income $ 3,174 $ 3,269 $ 3,304 $ 961 $ 1,270 Net income per share: Basic $ 0.29 $ 0.30 $ 0.30 $ 0.09 $ 0.11 Diluted $ 0.18 $ 0.19 $ 0.19 $ 0.06 $ 0.07 Weighted average common shares outstanding: Basic 10,882 10,930 11,016 10,973 11,202 Diluted 17,253 17,237 17,631 17,346 18,352 Other Consolidated Financial Data (Unaudited): Non-GAAP net income (1) $ 4,735 $ 4,971 $ 5,372 $ 1,495 $ 1,807 Table of Contents As of March 31, 2011 Actual Pro Forma (2) Pro Forma As Adjusted (3) (unaudited) (unaudited) (unaudited) (in thousands) Consolidated Balance Sheet Data: Cash and cash equivalents $ 29,398 $ 29,398 $ Working capital 7,032 7,032 Total assets 51,143 51,143 Long-term debt obligations Redeemable convertible preferred stock 5,996 Total stockholders equity 6,527 12,523 (1) Our consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles, or GAAP. We define non-GAAP net income as GAAP net income plus amortization of intangible assets and stock-based compensation expense, and giving effect to the tax impact of these adjustments to GAAP net income. We believe that non-GAAP net income is useful to investors and other users of our financial information in evaluating our operating performance because it provides them with an additional tool to compare business performance across companies and across periods. We believe that: non-GAAP net income provides investors and other users of our financial information consistency and comparability with our past financial performance, facilitates period-to-period comparisons of operations, and facilitates comparisons with other companies, many of which use similar non-GAAP financial measures to supplement their GAAP results; and adding back certain non-cash charges, such as amortization of intangible assets and stock-based compensation expense, to net income is useful because these non-cash expenses in any specific period may not directly correlate to the underlying performance of our business operations, and these non-cash expenses can vary significantly between periods as a result of full amortization of previously acquired intangible assets and the timing of new stock-based awards. Non-GAAP net income is adjusted by the tax impact of excluding amortization of intangible assets and stock-based compensation from our GAAP net income results, using a blended tax rate of 40%. During the periods presented, there was no tax impact from stock-based compensation expense on our GAAP net income or our non-GAAP net income because of the tax attributes of our historical equity awards. However, we expect that in future periods there may be a tax impact depending on the tax attributes of the equity awards we issue in the future. We use non-GAAP net income in conjunction with traditional GAAP measures as part of our overall assessment of our performance, for planning purposes, including the preparation of our annual operating budget and quarterly forecasts, to evaluate the effectiveness of our business strategies, and to communicate with our board of directors concerning our financial performance. We do not, and you should not, place undue reliance on non-GAAP net income as our only measure of operating performance. You should not consider non-GAAP net income as a substitute for other measures of financial performance reported in accordance with GAAP. There are limitations to using non-GAAP financial measures, including that other companies may calculate these measures differently than we do. We compensate for the inherent limitations associated with using non-GAAP net income through disclosure of these limitations, presentation of our financial statements in accordance with GAAP, and reconciliation of non-GAAP net income to the most directly comparable GAAP measure, net income. The following provides a reconciliation of GAAP net income to non-GAAP net income: Year Ended December 31, Three Months Ended March 31, 2008 2009 2010 2010 2011 (in thousands) GAAP net income $ 3,174 $ 3,269 $ 3,304 $ 961 $ 1,270 Amortization of intangible assets 1,083 1,470 2,244 561 561 Stock-based compensation expense 911 819 720 197 228 Tax impact adjustments (433 ) (587 ) (896 ) (224 ) (252 ) Non-GAAP net income $ 4,735 $ 4,971 $ 5,372 $ 1,495 $ 1,807 Table of Contents (2) The unaudited pro forma data as of March 31, 2011 assumes the conversion of all of our outstanding shares of preferred stock into common stock. (3) The unaudited pro forma as adjusted data gives effect to the conversion referred to in note 2 above and to the sale of shares of common stock by us in this offering at an assumed initial offering price to the public of $ per share, which is the midpoint of the estimated offering range set forth on the cover page of this prospectus, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. A $1.00 increase (decrease) in the assumed initial public offering price of $ per share would increase (decrease) cash and cash equivalents, working capital, total assets, and total stockholders equity by $ million, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. Table of Contents
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@@ -0,0 +1 @@
+Prospectus Summary This summary highlights material information about us and this offering, but does not contain all of the information that you should consider before investing in our Notes. The following summary is qualified in its entirety by the more detailed information and our consolidated financial statements and the accompanying notes included elsewhere or incorporated by reference into this prospectus. You should read this entire prospectus and the information incorporated by reference herein carefully, including the Risk Factors included and incorporated by reference in this prospectus and our consolidated financial statements and the accompanying notes incorporated by reference into this prospectus, before investing. This prospectus and the documents incorporated by reference include forward-looking statements that involve risks and uncertainties. See Cautionary Note Regarding Forward-Looking Statements. Unless otherwise specified or the context requires otherwise, the terms U.S. Concrete, the Company, we, us, our, or USCR, refer to U.S. Concrete, Inc. and its subsidiaries. Selling noteholders refers to the selling noteholders named in the section of this prospectus entitled Selling Noteholders and certain of their transferees after the date of this prospectus. Our Company We are a major producer of ready-mixed concrete, precast concrete products and concrete-related products in select markets in the United States. We operate our business through our ready-mixed concrete and concrete-related products segment and our precast concrete products segment. We are a leading producer of ready-mixed concrete or precast concrete products in substantially all the markets in which we have operations. Ready-mixed and precast concrete products are important building materials that are used in a vast majority of commercial, residential and public works construction projects. All of our operations are in (and all of our sales are made within) the United States. We operate principally in Texas, California and New Jersey/New York, with those markets representing approximately 36%, 25%, and 19%, respectively, of our consolidated revenues from continuing operations for the year ended December 31, 2010. According to publicly available industry information, those states represented an aggregate of 28% of the consumption of ready-mixed concrete in the United States in 2010 (Texas, 13.1%; California, 9.3%; and New Jersey/New York, 5.4%). Our consolidated revenues from continuing operations for the year ended December 31, 2010 were $455.7 million, of which we derived approximately 87.7% from our ready-mixed concrete and concrete-related products segment and 12.3% from our precast concrete products segment. As of August 31, 2011, we had 102 fixed and 11 portable ready-mixed concrete plants, seven precast concrete plants and seven aggregates facilities. During 2010, these plants and facilities produced approximately 3.8 million cubic yards of ready-mixed concrete and 3.1 million tons of aggregates. We lease two of the seven aggregates facilities to third parties and retain a royalty on production from those facilities. Our ready-mixed concrete and concrete-related products segment engages principally in the formulation, preparation and delivery of ready-mixed concrete to the job sites of our customers. We also provide services intended to reduce our customers overall construction costs by lowering the installed, or in-place, cost of concrete. These services include the formulation of mixtures for specific design uses, on-site and lab-based product quality control, and customized delivery programs to meet our customers needs. Our marketing efforts primarily target concrete sub-contractors, general contractors, governmental agencies, property owners and developers and home builders whose focus extends beyond the price of ready-mixed concrete to product quality, on-time delivery and reduction of in-place costs. We generally do not provide paving or other finishing services, which construction contractors or subcontractors typically perform. To a lesser extent, this segment is also engaged in the mining and sale of aggregates and the resale of building materials, primarily to our ready-mixed concrete customers. These businesses are generally complementary to our ready-mixed concrete operations and provide us opportunities to cross-sell various products in markets where we sell both ready-mixed concrete and concrete-related products. We provide our ready-mixed concrete and concrete-related products from our continuing operations in north and west Texas, northern California, New Jersey, New York, Washington, D.C. and Oklahoma. Our precast concrete products segment produces precast concrete products at seven plants in three states, with five plants in California, one in Arizona and one in Pennsylvania. Our customers choose precast technology for a variety of architectural applications, including free-standing walls used for landscaping, soundproofing and security walls, panels used to clad a building fa ade and storm water drainage. Our operations also specialize in a variety of finished products, among which are utility vaults, manholes, catch basins, highway barriers, curb inlets, pre-stressed bridge girders, concrete piles and custom-designed architectural products. For a description of our business, financial condition, results of operations and other important information regarding the Company and our consolidated financial statements and the accompanying notes, we refer you to our filings with the Securities and Table of Contents Primary State or Other Standard I.R.S. Jurisdiction of Industrial Employer Incorporation or Classification Identification Name Organization Code Number Number Superior Concrete Materials, Inc. District of Columbia 3272 52-1046503 Titan Concrete Industries, Inc. Delaware 3272 76-0616374 USC Atlantic, Inc. Delaware 3272 20-4166002 USC Management Co., LLC Delaware 3272 27-1015638 USC Payroll, Inc. Delaware 3272 76-0630665 USC Technologies, Inc. Delaware 3272 20-4166055 U.S. Concrete On-Site, Inc. Delaware 3272 76-0630662 U.S. Concrete Texas Holdings, Inc. Delaware 3272 20-4166120 The address of each of the additional registrants is c/o U.S. Concrete, Inc., 2925 Briarpark, Suite 1050, Houston, Texas 77042. TABLE OF CONTENTS Prospectus Summary 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/CIK0001289947_smith-pre_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001289947_smith-pre_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a695b05a116cab7fa7417f6aa2915a8df529fad0
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001289947_smith-pre_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary This summary highlights material information about us and this offering, but does not contain all of the information that you should consider before investing in our Notes. The following summary is qualified in its entirety by the more detailed information and our consolidated financial statements and the accompanying notes included elsewhere or incorporated by reference into this prospectus. You should read this entire prospectus and the information incorporated by reference herein carefully, including the Risk Factors included and incorporated by reference in this prospectus and our consolidated financial statements and the accompanying notes incorporated by reference into this prospectus, before investing. This prospectus and the documents incorporated by reference include forward-looking statements that involve risks and uncertainties. See Cautionary Note Regarding Forward-Looking Statements. Unless otherwise specified or the context requires otherwise, the terms U.S. Concrete, the Company, we, us, our, or USCR, refer to U.S. Concrete, Inc. and its subsidiaries. Selling noteholders refers to the selling noteholders named in the section of this prospectus entitled Selling Noteholders and certain of their transferees after the date of this prospectus. Our Company We are a major producer of ready-mixed concrete, precast concrete products and concrete-related products in select markets in the United States. We operate our business through our ready-mixed concrete and concrete-related products segment and our precast concrete products segment. We are a leading producer of ready-mixed concrete or precast concrete products in substantially all the markets in which we have operations. Ready-mixed and precast concrete products are important building materials that are used in a vast majority of commercial, residential and public works construction projects. All of our operations are in (and all of our sales are made within) the United States. We operate principally in Texas, California and New Jersey/New York, with those markets representing approximately 36%, 25%, and 19%, respectively, of our consolidated revenues from continuing operations for the year ended December 31, 2010. According to publicly available industry information, those states represented an aggregate of 28% of the consumption of ready-mixed concrete in the United States in 2010 (Texas, 13.1%; California, 9.3%; and New Jersey/New York, 5.4%). Our consolidated revenues from continuing operations for the year ended December 31, 2010 were $455.7 million, of which we derived approximately 87.7% from our ready-mixed concrete and concrete-related products segment and 12.3% from our precast concrete products segment. As of August 31, 2011, we had 102 fixed and 11 portable ready-mixed concrete plants, seven precast concrete plants and seven aggregates facilities. During 2010, these plants and facilities produced approximately 3.8 million cubic yards of ready-mixed concrete and 3.1 million tons of aggregates. We lease two of the seven aggregates facilities to third parties and retain a royalty on production from those facilities. Our ready-mixed concrete and concrete-related products segment engages principally in the formulation, preparation and delivery of ready-mixed concrete to the job sites of our customers. We also provide services intended to reduce our customers overall construction costs by lowering the installed, or in-place, cost of concrete. These services include the formulation of mixtures for specific design uses, on-site and lab-based product quality control, and customized delivery programs to meet our customers needs. Our marketing efforts primarily target concrete sub-contractors, general contractors, governmental agencies, property owners and developers and home builders whose focus extends beyond the price of ready-mixed concrete to product quality, on-time delivery and reduction of in-place costs. We generally do not provide paving or other finishing services, which construction contractors or subcontractors typically perform. To a lesser extent, this segment is also engaged in the mining and sale of aggregates and the resale of building materials, primarily to our ready-mixed concrete customers. These businesses are generally complementary to our ready-mixed concrete operations and provide us opportunities to cross-sell various products in markets where we sell both ready-mixed concrete and concrete-related products. We provide our ready-mixed concrete and concrete-related products from our continuing operations in north and west Texas, northern California, New Jersey, New York, Washington, D.C. and Oklahoma. Our precast concrete products segment produces precast concrete products at seven plants in three states, with five plants in California, one in Arizona and one in Pennsylvania. Our customers choose precast technology for a variety of architectural applications, including free-standing walls used for landscaping, soundproofing and security walls, panels used to clad a building fa ade and storm water drainage. Our operations also specialize in a variety of finished products, among which are utility vaults, manholes, catch basins, highway barriers, curb inlets, pre-stressed bridge girders, concrete piles and custom-designed architectural products. For a description of our business, financial condition, results of operations and other important information regarding the Company and our consolidated financial statements and the accompanying notes, we refer you to our filings with the Securities and Table of Contents Primary State or Other Standard I.R.S. Jurisdiction of Industrial Employer Incorporation or Classification Identification Name Organization Code Number Number Superior Concrete Materials, Inc. District of Columbia 3272 52-1046503 Titan Concrete Industries, Inc. Delaware 3272 76-0616374 USC Atlantic, Inc. Delaware 3272 20-4166002 USC Management Co., LLC Delaware 3272 27-1015638 USC Payroll, Inc. Delaware 3272 76-0630665 USC Technologies, Inc. Delaware 3272 20-4166055 U.S. Concrete On-Site, Inc. Delaware 3272 76-0630662 U.S. Concrete Texas Holdings, Inc. Delaware 3272 20-4166120 The address of each of the additional registrants is c/o U.S. Concrete, Inc., 2925 Briarpark, Suite 1050, Houston, Texas 77042. TABLE OF CONTENTS Prospectus Summary 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/CIK0001289948_american_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001289948_american_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a695b05a116cab7fa7417f6aa2915a8df529fad0
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001289948_american_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary This summary highlights material information about us and this offering, but does not contain all of the information that you should consider before investing in our Notes. The following summary is qualified in its entirety by the more detailed information and our consolidated financial statements and the accompanying notes included elsewhere or incorporated by reference into this prospectus. You should read this entire prospectus and the information incorporated by reference herein carefully, including the Risk Factors included and incorporated by reference in this prospectus and our consolidated financial statements and the accompanying notes incorporated by reference into this prospectus, before investing. This prospectus and the documents incorporated by reference include forward-looking statements that involve risks and uncertainties. See Cautionary Note Regarding Forward-Looking Statements. Unless otherwise specified or the context requires otherwise, the terms U.S. Concrete, the Company, we, us, our, or USCR, refer to U.S. Concrete, Inc. and its subsidiaries. Selling noteholders refers to the selling noteholders named in the section of this prospectus entitled Selling Noteholders and certain of their transferees after the date of this prospectus. Our Company We are a major producer of ready-mixed concrete, precast concrete products and concrete-related products in select markets in the United States. We operate our business through our ready-mixed concrete and concrete-related products segment and our precast concrete products segment. We are a leading producer of ready-mixed concrete or precast concrete products in substantially all the markets in which we have operations. Ready-mixed and precast concrete products are important building materials that are used in a vast majority of commercial, residential and public works construction projects. All of our operations are in (and all of our sales are made within) the United States. We operate principally in Texas, California and New Jersey/New York, with those markets representing approximately 36%, 25%, and 19%, respectively, of our consolidated revenues from continuing operations for the year ended December 31, 2010. According to publicly available industry information, those states represented an aggregate of 28% of the consumption of ready-mixed concrete in the United States in 2010 (Texas, 13.1%; California, 9.3%; and New Jersey/New York, 5.4%). Our consolidated revenues from continuing operations for the year ended December 31, 2010 were $455.7 million, of which we derived approximately 87.7% from our ready-mixed concrete and concrete-related products segment and 12.3% from our precast concrete products segment. As of August 31, 2011, we had 102 fixed and 11 portable ready-mixed concrete plants, seven precast concrete plants and seven aggregates facilities. During 2010, these plants and facilities produced approximately 3.8 million cubic yards of ready-mixed concrete and 3.1 million tons of aggregates. We lease two of the seven aggregates facilities to third parties and retain a royalty on production from those facilities. Our ready-mixed concrete and concrete-related products segment engages principally in the formulation, preparation and delivery of ready-mixed concrete to the job sites of our customers. We also provide services intended to reduce our customers overall construction costs by lowering the installed, or in-place, cost of concrete. These services include the formulation of mixtures for specific design uses, on-site and lab-based product quality control, and customized delivery programs to meet our customers needs. Our marketing efforts primarily target concrete sub-contractors, general contractors, governmental agencies, property owners and developers and home builders whose focus extends beyond the price of ready-mixed concrete to product quality, on-time delivery and reduction of in-place costs. We generally do not provide paving or other finishing services, which construction contractors or subcontractors typically perform. To a lesser extent, this segment is also engaged in the mining and sale of aggregates and the resale of building materials, primarily to our ready-mixed concrete customers. These businesses are generally complementary to our ready-mixed concrete operations and provide us opportunities to cross-sell various products in markets where we sell both ready-mixed concrete and concrete-related products. We provide our ready-mixed concrete and concrete-related products from our continuing operations in north and west Texas, northern California, New Jersey, New York, Washington, D.C. and Oklahoma. Our precast concrete products segment produces precast concrete products at seven plants in three states, with five plants in California, one in Arizona and one in Pennsylvania. Our customers choose precast technology for a variety of architectural applications, including free-standing walls used for landscaping, soundproofing and security walls, panels used to clad a building fa ade and storm water drainage. Our operations also specialize in a variety of finished products, among which are utility vaults, manholes, catch basins, highway barriers, curb inlets, pre-stressed bridge girders, concrete piles and custom-designed architectural products. For a description of our business, financial condition, results of operations and other important information regarding the Company and our consolidated financial statements and the accompanying notes, we refer you to our filings with the Securities and Table of Contents Primary State or Other Standard I.R.S. Jurisdiction of Industrial Employer Incorporation or Classification Identification Name Organization Code Number Number Superior Concrete Materials, Inc. District of Columbia 3272 52-1046503 Titan Concrete Industries, Inc. Delaware 3272 76-0616374 USC Atlantic, Inc. Delaware 3272 20-4166002 USC Management Co., LLC Delaware 3272 27-1015638 USC Payroll, Inc. Delaware 3272 76-0630665 USC Technologies, Inc. Delaware 3272 20-4166055 U.S. Concrete On-Site, Inc. Delaware 3272 76-0630662 U.S. Concrete Texas Holdings, Inc. Delaware 3272 20-4166120 The address of each of the additional registrants is c/o U.S. Concrete, Inc., 2925 Briarpark, Suite 1050, Houston, Texas 77042. TABLE OF CONTENTS Prospectus Summary 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/CIK0001289949_sierra_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001289949_sierra_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a695b05a116cab7fa7417f6aa2915a8df529fad0
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001289949_sierra_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary This summary highlights material information about us and this offering, but does not contain all of the information that you should consider before investing in our Notes. The following summary is qualified in its entirety by the more detailed information and our consolidated financial statements and the accompanying notes included elsewhere or incorporated by reference into this prospectus. You should read this entire prospectus and the information incorporated by reference herein carefully, including the Risk Factors included and incorporated by reference in this prospectus and our consolidated financial statements and the accompanying notes incorporated by reference into this prospectus, before investing. This prospectus and the documents incorporated by reference include forward-looking statements that involve risks and uncertainties. See Cautionary Note Regarding Forward-Looking Statements. Unless otherwise specified or the context requires otherwise, the terms U.S. Concrete, the Company, we, us, our, or USCR, refer to U.S. Concrete, Inc. and its subsidiaries. Selling noteholders refers to the selling noteholders named in the section of this prospectus entitled Selling Noteholders and certain of their transferees after the date of this prospectus. Our Company We are a major producer of ready-mixed concrete, precast concrete products and concrete-related products in select markets in the United States. We operate our business through our ready-mixed concrete and concrete-related products segment and our precast concrete products segment. We are a leading producer of ready-mixed concrete or precast concrete products in substantially all the markets in which we have operations. Ready-mixed and precast concrete products are important building materials that are used in a vast majority of commercial, residential and public works construction projects. All of our operations are in (and all of our sales are made within) the United States. We operate principally in Texas, California and New Jersey/New York, with those markets representing approximately 36%, 25%, and 19%, respectively, of our consolidated revenues from continuing operations for the year ended December 31, 2010. According to publicly available industry information, those states represented an aggregate of 28% of the consumption of ready-mixed concrete in the United States in 2010 (Texas, 13.1%; California, 9.3%; and New Jersey/New York, 5.4%). Our consolidated revenues from continuing operations for the year ended December 31, 2010 were $455.7 million, of which we derived approximately 87.7% from our ready-mixed concrete and concrete-related products segment and 12.3% from our precast concrete products segment. As of August 31, 2011, we had 102 fixed and 11 portable ready-mixed concrete plants, seven precast concrete plants and seven aggregates facilities. During 2010, these plants and facilities produced approximately 3.8 million cubic yards of ready-mixed concrete and 3.1 million tons of aggregates. We lease two of the seven aggregates facilities to third parties and retain a royalty on production from those facilities. Our ready-mixed concrete and concrete-related products segment engages principally in the formulation, preparation and delivery of ready-mixed concrete to the job sites of our customers. We also provide services intended to reduce our customers overall construction costs by lowering the installed, or in-place, cost of concrete. These services include the formulation of mixtures for specific design uses, on-site and lab-based product quality control, and customized delivery programs to meet our customers needs. Our marketing efforts primarily target concrete sub-contractors, general contractors, governmental agencies, property owners and developers and home builders whose focus extends beyond the price of ready-mixed concrete to product quality, on-time delivery and reduction of in-place costs. We generally do not provide paving or other finishing services, which construction contractors or subcontractors typically perform. To a lesser extent, this segment is also engaged in the mining and sale of aggregates and the resale of building materials, primarily to our ready-mixed concrete customers. These businesses are generally complementary to our ready-mixed concrete operations and provide us opportunities to cross-sell various products in markets where we sell both ready-mixed concrete and concrete-related products. We provide our ready-mixed concrete and concrete-related products from our continuing operations in north and west Texas, northern California, New Jersey, New York, Washington, D.C. and Oklahoma. Our precast concrete products segment produces precast concrete products at seven plants in three states, with five plants in California, one in Arizona and one in Pennsylvania. Our customers choose precast technology for a variety of architectural applications, including free-standing walls used for landscaping, soundproofing and security walls, panels used to clad a building fa ade and storm water drainage. Our operations also specialize in a variety of finished products, among which are utility vaults, manholes, catch basins, highway barriers, curb inlets, pre-stressed bridge girders, concrete piles and custom-designed architectural products. For a description of our business, financial condition, results of operations and other important information regarding the Company and our consolidated financial statements and the accompanying notes, we refer you to our filings with the Securities and Table of Contents Primary State or Other Standard I.R.S. Jurisdiction of Industrial Employer Incorporation or Classification Identification Name Organization Code Number Number Superior Concrete Materials, Inc. District of Columbia 3272 52-1046503 Titan Concrete Industries, Inc. Delaware 3272 76-0616374 USC Atlantic, Inc. Delaware 3272 20-4166002 USC Management Co., LLC Delaware 3272 27-1015638 USC Payroll, Inc. Delaware 3272 76-0630665 USC Technologies, Inc. Delaware 3272 20-4166055 U.S. Concrete On-Site, Inc. Delaware 3272 76-0630662 U.S. Concrete Texas Holdings, Inc. Delaware 3272 20-4166120 The address of each of the additional registrants is c/o U.S. Concrete, Inc., 2925 Briarpark, Suite 1050, Houston, Texas 77042. TABLE OF CONTENTS Prospectus Summary 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/CIK0001289953_central_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001289953_central_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a695b05a116cab7fa7417f6aa2915a8df529fad0
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001289953_central_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary This summary highlights material information about us and this offering, but does not contain all of the information that you should consider before investing in our Notes. The following summary is qualified in its entirety by the more detailed information and our consolidated financial statements and the accompanying notes included elsewhere or incorporated by reference into this prospectus. You should read this entire prospectus and the information incorporated by reference herein carefully, including the Risk Factors included and incorporated by reference in this prospectus and our consolidated financial statements and the accompanying notes incorporated by reference into this prospectus, before investing. This prospectus and the documents incorporated by reference include forward-looking statements that involve risks and uncertainties. See Cautionary Note Regarding Forward-Looking Statements. Unless otherwise specified or the context requires otherwise, the terms U.S. Concrete, the Company, we, us, our, or USCR, refer to U.S. Concrete, Inc. and its subsidiaries. Selling noteholders refers to the selling noteholders named in the section of this prospectus entitled Selling Noteholders and certain of their transferees after the date of this prospectus. Our Company We are a major producer of ready-mixed concrete, precast concrete products and concrete-related products in select markets in the United States. We operate our business through our ready-mixed concrete and concrete-related products segment and our precast concrete products segment. We are a leading producer of ready-mixed concrete or precast concrete products in substantially all the markets in which we have operations. Ready-mixed and precast concrete products are important building materials that are used in a vast majority of commercial, residential and public works construction projects. All of our operations are in (and all of our sales are made within) the United States. We operate principally in Texas, California and New Jersey/New York, with those markets representing approximately 36%, 25%, and 19%, respectively, of our consolidated revenues from continuing operations for the year ended December 31, 2010. According to publicly available industry information, those states represented an aggregate of 28% of the consumption of ready-mixed concrete in the United States in 2010 (Texas, 13.1%; California, 9.3%; and New Jersey/New York, 5.4%). Our consolidated revenues from continuing operations for the year ended December 31, 2010 were $455.7 million, of which we derived approximately 87.7% from our ready-mixed concrete and concrete-related products segment and 12.3% from our precast concrete products segment. As of August 31, 2011, we had 102 fixed and 11 portable ready-mixed concrete plants, seven precast concrete plants and seven aggregates facilities. During 2010, these plants and facilities produced approximately 3.8 million cubic yards of ready-mixed concrete and 3.1 million tons of aggregates. We lease two of the seven aggregates facilities to third parties and retain a royalty on production from those facilities. Our ready-mixed concrete and concrete-related products segment engages principally in the formulation, preparation and delivery of ready-mixed concrete to the job sites of our customers. We also provide services intended to reduce our customers overall construction costs by lowering the installed, or in-place, cost of concrete. These services include the formulation of mixtures for specific design uses, on-site and lab-based product quality control, and customized delivery programs to meet our customers needs. Our marketing efforts primarily target concrete sub-contractors, general contractors, governmental agencies, property owners and developers and home builders whose focus extends beyond the price of ready-mixed concrete to product quality, on-time delivery and reduction of in-place costs. We generally do not provide paving or other finishing services, which construction contractors or subcontractors typically perform. To a lesser extent, this segment is also engaged in the mining and sale of aggregates and the resale of building materials, primarily to our ready-mixed concrete customers. These businesses are generally complementary to our ready-mixed concrete operations and provide us opportunities to cross-sell various products in markets where we sell both ready-mixed concrete and concrete-related products. We provide our ready-mixed concrete and concrete-related products from our continuing operations in north and west Texas, northern California, New Jersey, New York, Washington, D.C. and Oklahoma. Our precast concrete products segment produces precast concrete products at seven plants in three states, with five plants in California, one in Arizona and one in Pennsylvania. Our customers choose precast technology for a variety of architectural applications, including free-standing walls used for landscaping, soundproofing and security walls, panels used to clad a building fa ade and storm water drainage. Our operations also specialize in a variety of finished products, among which are utility vaults, manholes, catch basins, highway barriers, curb inlets, pre-stressed bridge girders, concrete piles and custom-designed architectural products. For a description of our business, financial condition, results of operations and other important information regarding the Company and our consolidated financial statements and the accompanying notes, we refer you to our filings with the Securities and Table of Contents Primary State or Other Standard I.R.S. Jurisdiction of Industrial Employer Incorporation or Classification Identification Name Organization Code Number Number Superior Concrete Materials, Inc. District of Columbia 3272 52-1046503 Titan Concrete Industries, Inc. Delaware 3272 76-0616374 USC Atlantic, Inc. Delaware 3272 20-4166002 USC Management Co., LLC Delaware 3272 27-1015638 USC Payroll, Inc. Delaware 3272 76-0630665 USC Technologies, Inc. Delaware 3272 20-4166055 U.S. Concrete On-Site, Inc. Delaware 3272 76-0630662 U.S. Concrete Texas Holdings, Inc. Delaware 3272 20-4166120 The address of each of the additional registrants is c/o U.S. Concrete, Inc., 2925 Briarpark, Suite 1050, Houston, Texas 77042. TABLE OF CONTENTS Prospectus Summary 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/CIK0001289954_san-diego_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001289954_san-diego_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a695b05a116cab7fa7417f6aa2915a8df529fad0
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001289954_san-diego_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary This summary highlights material information about us and this offering, but does not contain all of the information that you should consider before investing in our Notes. The following summary is qualified in its entirety by the more detailed information and our consolidated financial statements and the accompanying notes included elsewhere or incorporated by reference into this prospectus. You should read this entire prospectus and the information incorporated by reference herein carefully, including the Risk Factors included and incorporated by reference in this prospectus and our consolidated financial statements and the accompanying notes incorporated by reference into this prospectus, before investing. This prospectus and the documents incorporated by reference include forward-looking statements that involve risks and uncertainties. See Cautionary Note Regarding Forward-Looking Statements. Unless otherwise specified or the context requires otherwise, the terms U.S. Concrete, the Company, we, us, our, or USCR, refer to U.S. Concrete, Inc. and its subsidiaries. Selling noteholders refers to the selling noteholders named in the section of this prospectus entitled Selling Noteholders and certain of their transferees after the date of this prospectus. Our Company We are a major producer of ready-mixed concrete, precast concrete products and concrete-related products in select markets in the United States. We operate our business through our ready-mixed concrete and concrete-related products segment and our precast concrete products segment. We are a leading producer of ready-mixed concrete or precast concrete products in substantially all the markets in which we have operations. Ready-mixed and precast concrete products are important building materials that are used in a vast majority of commercial, residential and public works construction projects. All of our operations are in (and all of our sales are made within) the United States. We operate principally in Texas, California and New Jersey/New York, with those markets representing approximately 36%, 25%, and 19%, respectively, of our consolidated revenues from continuing operations for the year ended December 31, 2010. According to publicly available industry information, those states represented an aggregate of 28% of the consumption of ready-mixed concrete in the United States in 2010 (Texas, 13.1%; California, 9.3%; and New Jersey/New York, 5.4%). Our consolidated revenues from continuing operations for the year ended December 31, 2010 were $455.7 million, of which we derived approximately 87.7% from our ready-mixed concrete and concrete-related products segment and 12.3% from our precast concrete products segment. As of August 31, 2011, we had 102 fixed and 11 portable ready-mixed concrete plants, seven precast concrete plants and seven aggregates facilities. During 2010, these plants and facilities produced approximately 3.8 million cubic yards of ready-mixed concrete and 3.1 million tons of aggregates. We lease two of the seven aggregates facilities to third parties and retain a royalty on production from those facilities. Our ready-mixed concrete and concrete-related products segment engages principally in the formulation, preparation and delivery of ready-mixed concrete to the job sites of our customers. We also provide services intended to reduce our customers overall construction costs by lowering the installed, or in-place, cost of concrete. These services include the formulation of mixtures for specific design uses, on-site and lab-based product quality control, and customized delivery programs to meet our customers needs. Our marketing efforts primarily target concrete sub-contractors, general contractors, governmental agencies, property owners and developers and home builders whose focus extends beyond the price of ready-mixed concrete to product quality, on-time delivery and reduction of in-place costs. We generally do not provide paving or other finishing services, which construction contractors or subcontractors typically perform. To a lesser extent, this segment is also engaged in the mining and sale of aggregates and the resale of building materials, primarily to our ready-mixed concrete customers. These businesses are generally complementary to our ready-mixed concrete operations and provide us opportunities to cross-sell various products in markets where we sell both ready-mixed concrete and concrete-related products. We provide our ready-mixed concrete and concrete-related products from our continuing operations in north and west Texas, northern California, New Jersey, New York, Washington, D.C. and Oklahoma. Our precast concrete products segment produces precast concrete products at seven plants in three states, with five plants in California, one in Arizona and one in Pennsylvania. Our customers choose precast technology for a variety of architectural applications, including free-standing walls used for landscaping, soundproofing and security walls, panels used to clad a building fa ade and storm water drainage. Our operations also specialize in a variety of finished products, among which are utility vaults, manholes, catch basins, highway barriers, curb inlets, pre-stressed bridge girders, concrete piles and custom-designed architectural products. For a description of our business, financial condition, results of operations and other important information regarding the Company and our consolidated financial statements and the accompanying notes, we refer you to our filings with the Securities and Table of Contents Primary State or Other Standard I.R.S. Jurisdiction of Industrial Employer Incorporation or Classification Identification Name Organization Code Number Number Superior Concrete Materials, Inc. District of Columbia 3272 52-1046503 Titan Concrete Industries, Inc. Delaware 3272 76-0616374 USC Atlantic, Inc. Delaware 3272 20-4166002 USC Management Co., LLC Delaware 3272 27-1015638 USC Payroll, Inc. Delaware 3272 76-0630665 USC Technologies, Inc. Delaware 3272 20-4166055 U.S. Concrete On-Site, Inc. Delaware 3272 76-0630662 U.S. Concrete Texas Holdings, Inc. Delaware 3272 20-4166120 The address of each of the additional registrants is c/o U.S. Concrete, Inc., 2925 Briarpark, Suite 1050, Houston, Texas 77042. TABLE OF CONTENTS Prospectus Summary 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/CIK0001289955_central_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001289955_central_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a695b05a116cab7fa7417f6aa2915a8df529fad0
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001289955_central_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary This summary highlights material information about us and this offering, but does not contain all of the information that you should consider before investing in our Notes. The following summary is qualified in its entirety by the more detailed information and our consolidated financial statements and the accompanying notes included elsewhere or incorporated by reference into this prospectus. You should read this entire prospectus and the information incorporated by reference herein carefully, including the Risk Factors included and incorporated by reference in this prospectus and our consolidated financial statements and the accompanying notes incorporated by reference into this prospectus, before investing. This prospectus and the documents incorporated by reference include forward-looking statements that involve risks and uncertainties. See Cautionary Note Regarding Forward-Looking Statements. Unless otherwise specified or the context requires otherwise, the terms U.S. Concrete, the Company, we, us, our, or USCR, refer to U.S. Concrete, Inc. and its subsidiaries. Selling noteholders refers to the selling noteholders named in the section of this prospectus entitled Selling Noteholders and certain of their transferees after the date of this prospectus. Our Company We are a major producer of ready-mixed concrete, precast concrete products and concrete-related products in select markets in the United States. We operate our business through our ready-mixed concrete and concrete-related products segment and our precast concrete products segment. We are a leading producer of ready-mixed concrete or precast concrete products in substantially all the markets in which we have operations. Ready-mixed and precast concrete products are important building materials that are used in a vast majority of commercial, residential and public works construction projects. All of our operations are in (and all of our sales are made within) the United States. We operate principally in Texas, California and New Jersey/New York, with those markets representing approximately 36%, 25%, and 19%, respectively, of our consolidated revenues from continuing operations for the year ended December 31, 2010. According to publicly available industry information, those states represented an aggregate of 28% of the consumption of ready-mixed concrete in the United States in 2010 (Texas, 13.1%; California, 9.3%; and New Jersey/New York, 5.4%). Our consolidated revenues from continuing operations for the year ended December 31, 2010 were $455.7 million, of which we derived approximately 87.7% from our ready-mixed concrete and concrete-related products segment and 12.3% from our precast concrete products segment. As of August 31, 2011, we had 102 fixed and 11 portable ready-mixed concrete plants, seven precast concrete plants and seven aggregates facilities. During 2010, these plants and facilities produced approximately 3.8 million cubic yards of ready-mixed concrete and 3.1 million tons of aggregates. We lease two of the seven aggregates facilities to third parties and retain a royalty on production from those facilities. Our ready-mixed concrete and concrete-related products segment engages principally in the formulation, preparation and delivery of ready-mixed concrete to the job sites of our customers. We also provide services intended to reduce our customers overall construction costs by lowering the installed, or in-place, cost of concrete. These services include the formulation of mixtures for specific design uses, on-site and lab-based product quality control, and customized delivery programs to meet our customers needs. Our marketing efforts primarily target concrete sub-contractors, general contractors, governmental agencies, property owners and developers and home builders whose focus extends beyond the price of ready-mixed concrete to product quality, on-time delivery and reduction of in-place costs. We generally do not provide paving or other finishing services, which construction contractors or subcontractors typically perform. To a lesser extent, this segment is also engaged in the mining and sale of aggregates and the resale of building materials, primarily to our ready-mixed concrete customers. These businesses are generally complementary to our ready-mixed concrete operations and provide us opportunities to cross-sell various products in markets where we sell both ready-mixed concrete and concrete-related products. We provide our ready-mixed concrete and concrete-related products from our continuing operations in north and west Texas, northern California, New Jersey, New York, Washington, D.C. and Oklahoma. Our precast concrete products segment produces precast concrete products at seven plants in three states, with five plants in California, one in Arizona and one in Pennsylvania. Our customers choose precast technology for a variety of architectural applications, including free-standing walls used for landscaping, soundproofing and security walls, panels used to clad a building fa ade and storm water drainage. Our operations also specialize in a variety of finished products, among which are utility vaults, manholes, catch basins, highway barriers, curb inlets, pre-stressed bridge girders, concrete piles and custom-designed architectural products. For a description of our business, financial condition, results of operations and other important information regarding the Company and our consolidated financial statements and the accompanying notes, we refer you to our filings with the Securities and Table of Contents Primary State or Other Standard I.R.S. Jurisdiction of Industrial Employer Incorporation or Classification Identification Name Organization Code Number Number Superior Concrete Materials, Inc. District of Columbia 3272 52-1046503 Titan Concrete Industries, Inc. Delaware 3272 76-0616374 USC Atlantic, Inc. Delaware 3272 20-4166002 USC Management Co., LLC Delaware 3272 27-1015638 USC Payroll, Inc. Delaware 3272 76-0630665 USC Technologies, Inc. Delaware 3272 20-4166055 U.S. Concrete On-Site, Inc. Delaware 3272 76-0630662 U.S. Concrete Texas Holdings, Inc. Delaware 3272 20-4166120 The address of each of the additional registrants is c/o U.S. Concrete, Inc., 2925 Briarpark, Suite 1050, Houston, Texas 77042. TABLE OF CONTENTS Prospectus Summary 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/CIK0001289978_beall_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001289978_beall_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a695b05a116cab7fa7417f6aa2915a8df529fad0
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001289978_beall_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary This summary highlights material information about us and this offering, but does not contain all of the information that you should consider before investing in our Notes. The following summary is qualified in its entirety by the more detailed information and our consolidated financial statements and the accompanying notes included elsewhere or incorporated by reference into this prospectus. You should read this entire prospectus and the information incorporated by reference herein carefully, including the Risk Factors included and incorporated by reference in this prospectus and our consolidated financial statements and the accompanying notes incorporated by reference into this prospectus, before investing. This prospectus and the documents incorporated by reference include forward-looking statements that involve risks and uncertainties. See Cautionary Note Regarding Forward-Looking Statements. Unless otherwise specified or the context requires otherwise, the terms U.S. Concrete, the Company, we, us, our, or USCR, refer to U.S. Concrete, Inc. and its subsidiaries. Selling noteholders refers to the selling noteholders named in the section of this prospectus entitled Selling Noteholders and certain of their transferees after the date of this prospectus. Our Company We are a major producer of ready-mixed concrete, precast concrete products and concrete-related products in select markets in the United States. We operate our business through our ready-mixed concrete and concrete-related products segment and our precast concrete products segment. We are a leading producer of ready-mixed concrete or precast concrete products in substantially all the markets in which we have operations. Ready-mixed and precast concrete products are important building materials that are used in a vast majority of commercial, residential and public works construction projects. All of our operations are in (and all of our sales are made within) the United States. We operate principally in Texas, California and New Jersey/New York, with those markets representing approximately 36%, 25%, and 19%, respectively, of our consolidated revenues from continuing operations for the year ended December 31, 2010. According to publicly available industry information, those states represented an aggregate of 28% of the consumption of ready-mixed concrete in the United States in 2010 (Texas, 13.1%; California, 9.3%; and New Jersey/New York, 5.4%). Our consolidated revenues from continuing operations for the year ended December 31, 2010 were $455.7 million, of which we derived approximately 87.7% from our ready-mixed concrete and concrete-related products segment and 12.3% from our precast concrete products segment. As of August 31, 2011, we had 102 fixed and 11 portable ready-mixed concrete plants, seven precast concrete plants and seven aggregates facilities. During 2010, these plants and facilities produced approximately 3.8 million cubic yards of ready-mixed concrete and 3.1 million tons of aggregates. We lease two of the seven aggregates facilities to third parties and retain a royalty on production from those facilities. Our ready-mixed concrete and concrete-related products segment engages principally in the formulation, preparation and delivery of ready-mixed concrete to the job sites of our customers. We also provide services intended to reduce our customers overall construction costs by lowering the installed, or in-place, cost of concrete. These services include the formulation of mixtures for specific design uses, on-site and lab-based product quality control, and customized delivery programs to meet our customers needs. Our marketing efforts primarily target concrete sub-contractors, general contractors, governmental agencies, property owners and developers and home builders whose focus extends beyond the price of ready-mixed concrete to product quality, on-time delivery and reduction of in-place costs. We generally do not provide paving or other finishing services, which construction contractors or subcontractors typically perform. To a lesser extent, this segment is also engaged in the mining and sale of aggregates and the resale of building materials, primarily to our ready-mixed concrete customers. These businesses are generally complementary to our ready-mixed concrete operations and provide us opportunities to cross-sell various products in markets where we sell both ready-mixed concrete and concrete-related products. We provide our ready-mixed concrete and concrete-related products from our continuing operations in north and west Texas, northern California, New Jersey, New York, Washington, D.C. and Oklahoma. Our precast concrete products segment produces precast concrete products at seven plants in three states, with five plants in California, one in Arizona and one in Pennsylvania. Our customers choose precast technology for a variety of architectural applications, including free-standing walls used for landscaping, soundproofing and security walls, panels used to clad a building fa ade and storm water drainage. Our operations also specialize in a variety of finished products, among which are utility vaults, manholes, catch basins, highway barriers, curb inlets, pre-stressed bridge girders, concrete piles and custom-designed architectural products. For a description of our business, financial condition, results of operations and other important information regarding the Company and our consolidated financial statements and the accompanying notes, we refer you to our filings with the Securities and Table of Contents Primary State or Other Standard I.R.S. Jurisdiction of Industrial Employer Incorporation or Classification Identification Name Organization Code Number Number Superior Concrete Materials, Inc. District of Columbia 3272 52-1046503 Titan Concrete Industries, Inc. Delaware 3272 76-0616374 USC Atlantic, Inc. Delaware 3272 20-4166002 USC Management Co., LLC Delaware 3272 27-1015638 USC Payroll, Inc. Delaware 3272 76-0630665 USC Technologies, Inc. Delaware 3272 20-4166055 U.S. Concrete On-Site, Inc. Delaware 3272 76-0630662 U.S. Concrete Texas Holdings, Inc. Delaware 3272 20-4166120 The address of each of the additional registrants is c/o U.S. Concrete, Inc., 2925 Briarpark, Suite 1050, Houston, Texas 77042. TABLE OF CONTENTS Prospectus Summary 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/CIK0001289980_titan_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001289980_titan_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a695b05a116cab7fa7417f6aa2915a8df529fad0
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001289980_titan_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary This summary highlights material information about us and this offering, but does not contain all of the information that you should consider before investing in our Notes. The following summary is qualified in its entirety by the more detailed information and our consolidated financial statements and the accompanying notes included elsewhere or incorporated by reference into this prospectus. You should read this entire prospectus and the information incorporated by reference herein carefully, including the Risk Factors included and incorporated by reference in this prospectus and our consolidated financial statements and the accompanying notes incorporated by reference into this prospectus, before investing. This prospectus and the documents incorporated by reference include forward-looking statements that involve risks and uncertainties. See Cautionary Note Regarding Forward-Looking Statements. Unless otherwise specified or the context requires otherwise, the terms U.S. Concrete, the Company, we, us, our, or USCR, refer to U.S. Concrete, Inc. and its subsidiaries. Selling noteholders refers to the selling noteholders named in the section of this prospectus entitled Selling Noteholders and certain of their transferees after the date of this prospectus. Our Company We are a major producer of ready-mixed concrete, precast concrete products and concrete-related products in select markets in the United States. We operate our business through our ready-mixed concrete and concrete-related products segment and our precast concrete products segment. We are a leading producer of ready-mixed concrete or precast concrete products in substantially all the markets in which we have operations. Ready-mixed and precast concrete products are important building materials that are used in a vast majority of commercial, residential and public works construction projects. All of our operations are in (and all of our sales are made within) the United States. We operate principally in Texas, California and New Jersey/New York, with those markets representing approximately 36%, 25%, and 19%, respectively, of our consolidated revenues from continuing operations for the year ended December 31, 2010. According to publicly available industry information, those states represented an aggregate of 28% of the consumption of ready-mixed concrete in the United States in 2010 (Texas, 13.1%; California, 9.3%; and New Jersey/New York, 5.4%). Our consolidated revenues from continuing operations for the year ended December 31, 2010 were $455.7 million, of which we derived approximately 87.7% from our ready-mixed concrete and concrete-related products segment and 12.3% from our precast concrete products segment. As of August 31, 2011, we had 102 fixed and 11 portable ready-mixed concrete plants, seven precast concrete plants and seven aggregates facilities. During 2010, these plants and facilities produced approximately 3.8 million cubic yards of ready-mixed concrete and 3.1 million tons of aggregates. We lease two of the seven aggregates facilities to third parties and retain a royalty on production from those facilities. Our ready-mixed concrete and concrete-related products segment engages principally in the formulation, preparation and delivery of ready-mixed concrete to the job sites of our customers. We also provide services intended to reduce our customers overall construction costs by lowering the installed, or in-place, cost of concrete. These services include the formulation of mixtures for specific design uses, on-site and lab-based product quality control, and customized delivery programs to meet our customers needs. Our marketing efforts primarily target concrete sub-contractors, general contractors, governmental agencies, property owners and developers and home builders whose focus extends beyond the price of ready-mixed concrete to product quality, on-time delivery and reduction of in-place costs. We generally do not provide paving or other finishing services, which construction contractors or subcontractors typically perform. To a lesser extent, this segment is also engaged in the mining and sale of aggregates and the resale of building materials, primarily to our ready-mixed concrete customers. These businesses are generally complementary to our ready-mixed concrete operations and provide us opportunities to cross-sell various products in markets where we sell both ready-mixed concrete and concrete-related products. We provide our ready-mixed concrete and concrete-related products from our continuing operations in north and west Texas, northern California, New Jersey, New York, Washington, D.C. and Oklahoma. Our precast concrete products segment produces precast concrete products at seven plants in three states, with five plants in California, one in Arizona and one in Pennsylvania. Our customers choose precast technology for a variety of architectural applications, including free-standing walls used for landscaping, soundproofing and security walls, panels used to clad a building fa ade and storm water drainage. Our operations also specialize in a variety of finished products, among which are utility vaults, manholes, catch basins, highway barriers, curb inlets, pre-stressed bridge girders, concrete piles and custom-designed architectural products. For a description of our business, financial condition, results of operations and other important information regarding the Company and our consolidated financial statements and the accompanying notes, we refer you to our filings with the Securities and Table of Contents Primary State or Other Standard I.R.S. Jurisdiction of Industrial Employer Incorporation or Classification Identification Name Organization Code Number Number Superior Concrete Materials, Inc. District of Columbia 3272 52-1046503 Titan Concrete Industries, Inc. Delaware 3272 76-0616374 USC Atlantic, Inc. Delaware 3272 20-4166002 USC Management Co., LLC Delaware 3272 27-1015638 USC Payroll, Inc. Delaware 3272 76-0630665 USC Technologies, Inc. Delaware 3272 20-4166055 U.S. Concrete On-Site, Inc. Delaware 3272 76-0630662 U.S. Concrete Texas Holdings, Inc. Delaware 3272 20-4166120 The address of each of the additional registrants is c/o U.S. Concrete, Inc., 2925 Briarpark, Suite 1050, Houston, Texas 77042. TABLE OF CONTENTS Prospectus Summary 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/CIK0001289987_usc_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001289987_usc_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a695b05a116cab7fa7417f6aa2915a8df529fad0
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001289987_usc_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary This summary highlights material information about us and this offering, but does not contain all of the information that you should consider before investing in our Notes. The following summary is qualified in its entirety by the more detailed information and our consolidated financial statements and the accompanying notes included elsewhere or incorporated by reference into this prospectus. You should read this entire prospectus and the information incorporated by reference herein carefully, including the Risk Factors included and incorporated by reference in this prospectus and our consolidated financial statements and the accompanying notes incorporated by reference into this prospectus, before investing. This prospectus and the documents incorporated by reference include forward-looking statements that involve risks and uncertainties. See Cautionary Note Regarding Forward-Looking Statements. Unless otherwise specified or the context requires otherwise, the terms U.S. Concrete, the Company, we, us, our, or USCR, refer to U.S. Concrete, Inc. and its subsidiaries. Selling noteholders refers to the selling noteholders named in the section of this prospectus entitled Selling Noteholders and certain of their transferees after the date of this prospectus. Our Company We are a major producer of ready-mixed concrete, precast concrete products and concrete-related products in select markets in the United States. We operate our business through our ready-mixed concrete and concrete-related products segment and our precast concrete products segment. We are a leading producer of ready-mixed concrete or precast concrete products in substantially all the markets in which we have operations. Ready-mixed and precast concrete products are important building materials that are used in a vast majority of commercial, residential and public works construction projects. All of our operations are in (and all of our sales are made within) the United States. We operate principally in Texas, California and New Jersey/New York, with those markets representing approximately 36%, 25%, and 19%, respectively, of our consolidated revenues from continuing operations for the year ended December 31, 2010. According to publicly available industry information, those states represented an aggregate of 28% of the consumption of ready-mixed concrete in the United States in 2010 (Texas, 13.1%; California, 9.3%; and New Jersey/New York, 5.4%). Our consolidated revenues from continuing operations for the year ended December 31, 2010 were $455.7 million, of which we derived approximately 87.7% from our ready-mixed concrete and concrete-related products segment and 12.3% from our precast concrete products segment. As of August 31, 2011, we had 102 fixed and 11 portable ready-mixed concrete plants, seven precast concrete plants and seven aggregates facilities. During 2010, these plants and facilities produced approximately 3.8 million cubic yards of ready-mixed concrete and 3.1 million tons of aggregates. We lease two of the seven aggregates facilities to third parties and retain a royalty on production from those facilities. Our ready-mixed concrete and concrete-related products segment engages principally in the formulation, preparation and delivery of ready-mixed concrete to the job sites of our customers. We also provide services intended to reduce our customers overall construction costs by lowering the installed, or in-place, cost of concrete. These services include the formulation of mixtures for specific design uses, on-site and lab-based product quality control, and customized delivery programs to meet our customers needs. Our marketing efforts primarily target concrete sub-contractors, general contractors, governmental agencies, property owners and developers and home builders whose focus extends beyond the price of ready-mixed concrete to product quality, on-time delivery and reduction of in-place costs. We generally do not provide paving or other finishing services, which construction contractors or subcontractors typically perform. To a lesser extent, this segment is also engaged in the mining and sale of aggregates and the resale of building materials, primarily to our ready-mixed concrete customers. These businesses are generally complementary to our ready-mixed concrete operations and provide us opportunities to cross-sell various products in markets where we sell both ready-mixed concrete and concrete-related products. We provide our ready-mixed concrete and concrete-related products from our continuing operations in north and west Texas, northern California, New Jersey, New York, Washington, D.C. and Oklahoma. Our precast concrete products segment produces precast concrete products at seven plants in three states, with five plants in California, one in Arizona and one in Pennsylvania. Our customers choose precast technology for a variety of architectural applications, including free-standing walls used for landscaping, soundproofing and security walls, panels used to clad a building fa ade and storm water drainage. Our operations also specialize in a variety of finished products, among which are utility vaults, manholes, catch basins, highway barriers, curb inlets, pre-stressed bridge girders, concrete piles and custom-designed architectural products. For a description of our business, financial condition, results of operations and other important information regarding the Company and our consolidated financial statements and the accompanying notes, we refer you to our filings with the Securities and Table of Contents Primary State or Other Standard I.R.S. Jurisdiction of Industrial Employer Incorporation or Classification Identification Name Organization Code Number Number Superior Concrete Materials, Inc. District of Columbia 3272 52-1046503 Titan Concrete Industries, Inc. Delaware 3272 76-0616374 USC Atlantic, Inc. Delaware 3272 20-4166002 USC Management Co., LLC Delaware 3272 27-1015638 USC Payroll, Inc. Delaware 3272 76-0630665 USC Technologies, Inc. Delaware 3272 20-4166055 U.S. Concrete On-Site, Inc. Delaware 3272 76-0630662 U.S. Concrete Texas Holdings, Inc. Delaware 3272 20-4166120 The address of each of the additional registrants is c/o U.S. Concrete, Inc., 2925 Briarpark, Suite 1050, Houston, Texas 77042. TABLE OF CONTENTS Prospectus Summary 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/CIK0001289988_eastern_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001289988_eastern_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a695b05a116cab7fa7417f6aa2915a8df529fad0
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001289988_eastern_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary This summary highlights material information about us and this offering, but does not contain all of the information that you should consider before investing in our Notes. The following summary is qualified in its entirety by the more detailed information and our consolidated financial statements and the accompanying notes included elsewhere or incorporated by reference into this prospectus. You should read this entire prospectus and the information incorporated by reference herein carefully, including the Risk Factors included and incorporated by reference in this prospectus and our consolidated financial statements and the accompanying notes incorporated by reference into this prospectus, before investing. This prospectus and the documents incorporated by reference include forward-looking statements that involve risks and uncertainties. See Cautionary Note Regarding Forward-Looking Statements. Unless otherwise specified or the context requires otherwise, the terms U.S. Concrete, the Company, we, us, our, or USCR, refer to U.S. Concrete, Inc. and its subsidiaries. Selling noteholders refers to the selling noteholders named in the section of this prospectus entitled Selling Noteholders and certain of their transferees after the date of this prospectus. Our Company We are a major producer of ready-mixed concrete, precast concrete products and concrete-related products in select markets in the United States. We operate our business through our ready-mixed concrete and concrete-related products segment and our precast concrete products segment. We are a leading producer of ready-mixed concrete or precast concrete products in substantially all the markets in which we have operations. Ready-mixed and precast concrete products are important building materials that are used in a vast majority of commercial, residential and public works construction projects. All of our operations are in (and all of our sales are made within) the United States. We operate principally in Texas, California and New Jersey/New York, with those markets representing approximately 36%, 25%, and 19%, respectively, of our consolidated revenues from continuing operations for the year ended December 31, 2010. According to publicly available industry information, those states represented an aggregate of 28% of the consumption of ready-mixed concrete in the United States in 2010 (Texas, 13.1%; California, 9.3%; and New Jersey/New York, 5.4%). Our consolidated revenues from continuing operations for the year ended December 31, 2010 were $455.7 million, of which we derived approximately 87.7% from our ready-mixed concrete and concrete-related products segment and 12.3% from our precast concrete products segment. As of August 31, 2011, we had 102 fixed and 11 portable ready-mixed concrete plants, seven precast concrete plants and seven aggregates facilities. During 2010, these plants and facilities produced approximately 3.8 million cubic yards of ready-mixed concrete and 3.1 million tons of aggregates. We lease two of the seven aggregates facilities to third parties and retain a royalty on production from those facilities. Our ready-mixed concrete and concrete-related products segment engages principally in the formulation, preparation and delivery of ready-mixed concrete to the job sites of our customers. We also provide services intended to reduce our customers overall construction costs by lowering the installed, or in-place, cost of concrete. These services include the formulation of mixtures for specific design uses, on-site and lab-based product quality control, and customized delivery programs to meet our customers needs. Our marketing efforts primarily target concrete sub-contractors, general contractors, governmental agencies, property owners and developers and home builders whose focus extends beyond the price of ready-mixed concrete to product quality, on-time delivery and reduction of in-place costs. We generally do not provide paving or other finishing services, which construction contractors or subcontractors typically perform. To a lesser extent, this segment is also engaged in the mining and sale of aggregates and the resale of building materials, primarily to our ready-mixed concrete customers. These businesses are generally complementary to our ready-mixed concrete operations and provide us opportunities to cross-sell various products in markets where we sell both ready-mixed concrete and concrete-related products. We provide our ready-mixed concrete and concrete-related products from our continuing operations in north and west Texas, northern California, New Jersey, New York, Washington, D.C. and Oklahoma. Our precast concrete products segment produces precast concrete products at seven plants in three states, with five plants in California, one in Arizona and one in Pennsylvania. Our customers choose precast technology for a variety of architectural applications, including free-standing walls used for landscaping, soundproofing and security walls, panels used to clad a building fa ade and storm water drainage. Our operations also specialize in a variety of finished products, among which are utility vaults, manholes, catch basins, highway barriers, curb inlets, pre-stressed bridge girders, concrete piles and custom-designed architectural products. For a description of our business, financial condition, results of operations and other important information regarding the Company and our consolidated financial statements and the accompanying notes, we refer you to our filings with the Securities and Table of Contents Primary State or Other Standard I.R.S. Jurisdiction of Industrial Employer Incorporation or Classification Identification Name Organization Code Number Number Superior Concrete Materials, Inc. District of Columbia 3272 52-1046503 Titan Concrete Industries, Inc. Delaware 3272 76-0616374 USC Atlantic, Inc. Delaware 3272 20-4166002 USC Management Co., LLC Delaware 3272 27-1015638 USC Payroll, Inc. Delaware 3272 76-0630665 USC Technologies, Inc. Delaware 3272 20-4166055 U.S. Concrete On-Site, Inc. Delaware 3272 76-0630662 U.S. Concrete Texas Holdings, Inc. Delaware 3272 20-4166120 The address of each of the additional registrants is c/o U.S. Concrete, Inc., 2925 Briarpark, Suite 1050, Houston, Texas 77042. TABLE OF CONTENTS Prospectus Summary 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/CIK0001297223_handeni_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001297223_handeni_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..32a82536f02d2f07025037759ee76d8b1cad99a0
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001297223_handeni_prospectus_summary.txt
@@ -0,0 +1 @@
+SUBJECT TO COMPLETION The information in this prospectus is not complete and may be changed. The Selling Stockholders may not sell or offer these securities until the registration statement of which this prospectus forms a part is declared effective by the SEC. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. PROSPECTUS DOUGLAS LAKE MINERALS INC. a Nevada corporation 55,589,789 Shares of Common Stock This prospectus relates to the resale of up to 55,589,789 shares of our common stock that may be sold, from time to time, by the selling stockholders (each, a "Selling Stockholder") named in this prospectus for their own account, consisting of: 27,173,372 shares of our common stock that have been issued to certain of the Selling Stockholders; and 28,416,417 shares of our common stock, issuable upon the exercise of outstanding common stock purchase warrants to acquire shares of our common stock by the Selling Stockholders. These transactions are described in this prospectus under "Selling Stockholders." Our common stock is quoted on the OTC Bulletin Board under the symbol "DLKM". On May 6, 2011, the low bid price of our common stock was $0.49 per share, the high ask price of our common stock was $0.50 per share, and the closing price was $0.50 per share. We do not have any securities that are currently traded on any other exchange or quotation system. It is anticipated that the Selling Stockholders will offer to sell the shares of common stock being offered in this prospectus at prevailing market prices of our common stock on the OTC Bulletin Board. Any Selling Stockholder may, in such Selling Stockholder's discretion, elect to sell such shares of common stock at fixed prices, at varying prices or at negotiated prices. We will not receive any proceeds from the resale of shares of our common stock by the Selling Stockholders. We agreed to bear substantially all of the expenses in connection with the registration and resale of the shares offered hereby (other than selling commissions). The purchase of the securities offered by this prospectus involves a high degree of risk. You should invest in our shares of common stock only if you can afford to lose your entire investment. You should carefully read and consider the section of this prospectus entitled "Risk Factors" beginning on page 5 before buying any shares of our common stock. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. The date of this prospectus is , 2011. __________ In this prospectus, unless otherwise specified references to "the Company", "our Company", "we", "us" or "our" mean Douglas Lake Minerals Inc., unless the context otherwise requires. All financial information is stated in United States dollars unless otherwise specified. Our financial statements are prepared in accordance with accounting principles generally accepted in the United States of America. SUMMARY The following summary highlights selected information contained in this prospectus. This summary does not contain all the information you should consider before investing in the securities. Before making an investment decision, you should read the entire prospectus carefully, including the "Risk Factors" section, the financial statements and the notes to the financial statements. The Company We are an exploration stage company engaged in the acquisition and exploration of mineral properties. We have interests in mineral claims known as the Handeni District Project and the Mkuvia Alluvial Gold Project, located in on Tanzania, Africa, through prospecting licenses issued by the government of Tanzania. None of our mineral claims contain any substantiated mineral deposits or reserves of minerals. Minimal exploration has been carried out on these claims. Accordingly, additional exploration of these mineral claims is required before any determination as to whether any commercially viable mineral deposit may exist on our mineral claims. Our plan of operations is to carry out preliminary exploration work on our mineral claims in order to ascertain whether our mineral claims warrant advanced exploration to determine whether they possess commercially exploitable deposits of minerals. We will not be able to determine whether or not any of our mineral claims contain a commercially exploitable mineral deposit, or reserve, until appropriate exploratory work is done and an economic evaluation based on that work concludes economic viability. We are considered an exploration or exploratory stage company because we are involved in the examination and investigation of land that we believe may contain valuable minerals, for the purpose of discovering the presence of ore, if any, and its extent. There is no assurance that a commercially viable mineral deposit exists on the properties underlying our mineral claim interests, and a great deal of further exploration will be required before a final evaluation as to the economic and legal feasibility for our future exploration is determined. We were incorporated under the laws of Nevada effective January 5, 2004. Our principal business offices are located at Suite 500-666 Burrard Street, Vancouver, British Columbia V6C 3P6 and our telephone number is (604) 642-6165. The Offering The Issuer: Douglas Lake Minerals Inc. The Selling Stockholders: The Selling Stockholders are comprised of certain of our existing stockholders who acquired our securities as described below. The Selling Stockholders are named in this prospectus under "Selling Stockholders". Shares Offered by the Selling Stockholders: The Selling Stockholders are offering up to an aggregate of 55,589,789 shares of our common stock comprised of: 11,285,494 shares of common stock and 11,284,494 shares of common stock issuable upon exercise of warrants issued pursuant to the issuance of 11,285,494 units at a price of $0.45 per unit in a private placement that closed on March 11, 2011; 3,576,768 shares of common stock and 3,576,768 shares of common stock issuable upon exercise of warrants issued pursuant to the issuance of an aggregate of 3,576,768 units at a price of $0.45 per unit in a private placement that closed on March 21, 2011; - 3 - 12,311,110 shares of common stock and 12,311,110 shares of common stock issuable upon exercise of warrants issued pursuant to the issuance of 12,311,110 units at a price of $0.45 per unit in a private placement that closed on March 29, 2011; and 1,243,045 shares of common stock issuable upon exercise of warrants issued on March 29, 2011 pursuant to finders' fee agreements. Offering Price: The Selling Stockholders may sell their shares offered under this prospectus at prevailing market prices, privately negotiated prices or otherwise as set forth under "Plan of Distribution" in this prospectus. Terms of the Offering: The Selling Stockholders will determine when and how they will sell the common stock offered in this prospectus. Refer to "Plan of Distribution". Termination of the Offering: The offering will conclude when all of the 55,589,789 shares of common stock have been sold, the shares no longer need to be registered to be sold or we decide to terminate the registration of shares. Use of Proceeds: We will not receive any proceeds from the sale of the common stock by the Selling Stockholders. We will receive proceeds in the event that any warrants are exercised. Market for our Common Stock: Our common stock is quoted on the OTC Bulletin Board under the symbol "DLKM". On May 6, 2011, the low bid price of our common stock was $0.49 per share, the high ask price of our common stock was $0.50 per share, and the closing price was $0.50 per share. We do not have any securities that are currently traded on any other exchange or quotation system. Outstanding Shares of Common Stock: There were 292,416,653 shares of common stock outstanding as of May 6, 2011.
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001299064_horizon_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001299064_horizon_prospectus_summary.txt
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+PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001299325_brightstar_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001299325_brightstar_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..1f05f449e0cc9bf8e274509e4fa101ebbec54d7b
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@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. This summary may not contain all of the information that you should consider before deciding to invest in our Class A common stock. You should read this entire prospectus carefully, including our consolidated financial statements and related notes thereto and the information set forth under the sections Risk Factors and Management s Discussion and Analysis of Financial Condition and Results of Operations , in each case included elsewhere in this prospectus. Overview We are a leading global services company focused on serving the key participants in the wireless device industry: manufacturers, operators, retailers and enterprises. Our principal service is value-added distribution, but we also provide supply chain optimization services, retail services, government and value-added resellers (VARs) services and consumer services. We currently offer over 100 individual services in 51 countries and territories across six continents, and we intend to continue to innovate and add services that deliver value to our customers. We believe that our global presence, scale and position in the wireless device industry provide us with unique insights across the entire wireless device industry and enhance our ability to offer differentiated, value-added services to our customers. We offer the following services: Value-Added Distribution Services are provided to manufacturers of wireless devices and related accessories, operators, retailers and enterprises. Our services include (i) product distribution from manufacturer locations to the point of sale, (ii) manufacturing and assembly of mobile devices, (iii) channel development and management, where we assist a manufacturer to establish their brand in a new market and (iv) marketing. Over 90% of our revenue is derived from sales of wireless devices, a part of our value-added distribution services that operates on a high-volume, low-margin basis. Supply Chain Optimization Services are provided to manufacturers, operators and retailers. Our services include (i) advising customers on what devices to stock, (ii) providing business intelligence, such as product demand and pricing trends, (iii) managing the distribution process (forward logistics) and (iv) managing inventory returns and the disposal of devices (reverse logistics). Retail Services are provided to manufacturers, operators, retailers and enterprises. Our services include (i) retail management outsourcing, where we help educate a retailer s sales force on the different characteristics and capabilities of various wireless devices, (ii) merchandising and promotion management, where we select and purchase devices for promotions, market them at the optimum price and manage the returns process and (iii) virtual inventory and multichannel services, where retailers can sell devices without having to stock them in their stores. Government and VARs (Value-Added Resellers) Services are provided to governments and to enterprises through VARs. Our services include (i) acting as the master agent, where we activate wireless devices, (ii) providing a customized billing platform and (iii) distributing and selling software products. Consumer Services are provided to end users through manufacturers, operators, retailers and enterprises. Our services include (i) handset protection insurance and extended warranty and (ii) device trade-in and buy back. Our customers are some of the leading companies in the wireless device industry. Among others, our customers include manufacturers such as RIM, Samsung, Motorola, LG and Nokia; Table of Contents The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. Subject to Completion. Dated June 27, 2011. Shares Brightstar Corp. Class A Common Stock This is an initial public offering of Class A common stock by Brightstar Corp. We are selling shares of our Class A common stock. The selling stockholders identified in this prospectus, which include R. Marcelo Claure, our Chairman and Chief Executive Officer, and Lindsay Goldberg LLC ( Lindsay Goldberg ), our sponsor, are selling an additional shares of our Class A common stock. We will not receive any proceeds from the sale of shares by the selling stockholders. This is our initial public offering and no public market currently exists for our shares. The estimated initial public offering price is between $ and $ per share. Following this offering, we will have two classes of authorized common stock, Class A common stock and Class B common stock. The rights of the holders of Class A common stock and Class B common stock will be identical, except with respect to voting and conversion. Each share of Class A common stock will be entitled to one vote per share. Each share of Class B common stock will be entitled to 5 votes per share, except in limited circumstances. Following the completion of this offering, Mr. Claure will beneficially own 100% of our outstanding Class B common stock, representing approximately % of the combined voting power of our outstanding common stock and approximately % of our total equity ownership assuming the underwriters option to purchase additional shares is not exercised. We intend to apply to have our Class A common stock listed on The Nasdaq Stock Market under the symbol STAR. Investing in our Class A common stock involves risks. See Risk Factors beginning on page 16. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. Per Share Total Initial public offering price $ $ Underwriting discounts $ $ Proceeds, before expenses, to Brightstar Corp. $ $ Proceeds, before expenses, to selling stockholders $ $ To the extent that the underwriters sell more than shares of Class A common stock, the underwriters have the option to purchase up to an additional shares from Brightstar Corp. and shares from the selling stockholders at the initial public offering price less the underwriting discounts. The underwriters expect to deliver the shares against payment in New York, New York on , 2011. Goldman, Sachs Co. J.P. Morgan Barclays Capital Credit Suisse Jefferies RBC Capital Markets Stifel Nicolaus Weisel Houlihan Lokey Needham Company, LLC Oppenheimer Co. Wedbush Securities Prospectus dated , 2011. TABLE OF CONTENTS Prospectus Page Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001301184_glasshouse_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001301184_glasshouse_prospectus_summary.txt
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+PROSPECTUS SUMMARY This summary highlights the most important features of this offering and the information contained elsewhere in this prospectus. This summary is not complete and does not contain all of the information that you should consider before investing in our common stock. We have experienced recurring operating losses in the past and may continue to do so, and our auditors have raised substantial doubt about our ability to continue as a going concern through December 31, 2011. You should read the entire prospectus carefully, especially the risks of investing in our common stock discussed under the heading Risk Factors and our consolidated financial statements and related notes included in this prospectus. Summary We are a global provider of information technology (IT) consulting, implementation and managed services focused in the data center. We believe that cloud computing, virtualization, the increasing demand for data storage, backup and disaster recovery, and a growing number of government and industry regulations, among other things, are driving a major shift in data center architecture and IT infrastructure. In addition, the increasing demand for energy and computing power in outdated data centers, ongoing data growth and constrained data center budgets are creating a demand for services to help companies adopt, integrate and manage new technologies and capabilities. Our vendor independent services help our clients address inefficiencies in their data center environment and help them fill the gap between their current capabilities and those needed to support these new and emerging data center architectures and technologies. We deliver IT services through Transom, our unique business model consisting of software tools, methodologies and subject matter expertise, each developed over the course of thousands of client engagements. Transom standardizes our global offerings into high quality services we can deliver in a consistent manner to our clients. Our clients include approximately half of the Fortune 100 companies. We have clients across many industries, including financial services and insurance, energy, healthcare and medical, travel and entertainment and government agencies, primarily in North America, Europe and the Middle East. Our clients use our services to reduce costs, minimize risk and improve control and visibility in their data centers. Our Services We offer our clients a number of services aimed at improving the performance of their data centers. A data center is the physical environment that houses IT infrastructure, which typically consists of storage, server and networking hardware and software that supports business functions, such as accounting and payroll, marketing and sales, and customer service. Initiatives like cloud computing cross several areas of IT infrastructure and our services help clients design, plan, execute and manage the new technology in their data centers. Strategic Consulting Services Our strategic consulting services typically consist of customized, industry-specific consulting engagements through which we help our clients develop strategies, architectures and business cases to optimize their IT infrastructure. During these engagements, our consultants work with our client s in-house IT team to understand the current state and the desired future state of their IT environment and design solutions to meet the client s objectives. Implementation Services Our implementation services help clients with the technical deployment, modernization and integration of complex technologies in their data centers. Our services help clients integrate new technologies into their existing IT environments and create a more efficient IT infrastructure that fully leverages assets, reduces costs and meets or exceeds target service levels. Managed Services Our managed services provide operational management of various aspects of a client s IT infrastructure, including storage, backup, databases, virtual server environments and facets of IT security. Governed by a set Table of Contents The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. Subject to Completion. Dated September 9, 2011. Shares Common Stock This is an initial public offering of shares of common stock of GlassHouse Technologies, Inc. All of the shares of common stock are being sold by the company. Prior to this offering, there has been no public market for the common stock. It is currently estimated that the initial public offering price per share will be between $ and $ . We have applied to have our common stock listed on the Nasdaq Global Market under the symbol GLAS . Please see the section titled Risk Factors beginning on page 11 to read about factors you should consider before buying shares of the common stock. Per Share Total Initial public offering price $ $ Underwriting discount $ $ Proceeds, before expenses, to GlassHouse $ $ To the extent that the underwriters sell more than shares of common stock, the underwriters have the option to purchase up to an additional shares from GlassHouse at the initial public offering price less the underwriting discount. The underwriters expect to deliver the shares against payment in New York, New York on , 2011. Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense. Prospectus dated , 2011. Stifel Nicolaus Weisel William Blair & Company Oppenheimer & Co. Needham & Company, LLC Table of Contents of service level agreements, we assume all operational responsibilities on behalf of our clients for day-to-day tasks for these areas of IT infrastructure. We also provide visibility into clients IT infrastructure through reporting and monitoring services, delivered through a software-as-a-service tool suite, and customer support services that include global remote technical support, field services and logistics through our 24 hour, seven days a week, 365 days a year service operations center. Market Overview Our data center consulting, implementation and managed services target a number of large and growing segments of the market. Cloud Computing: Cloud computing is Internet-based computing in which hardware, software and information are provided to the customer as an on-demand service. Cloud infrastructure is the servers, network security and storage that enable cloud computing solutions. According to Gartner Inc. (Gartner), cloud systems infrastructure services are expected to grow at a 47.8% CAGR from $2.8 billion in 2010 to $19.6 billion in 2015.1 We believe that the expected growth in cloud services reflects a shift in business computing that will result in clients utilizing our services as they seek to leverage this new technology. Virtualization: Virtualization is the creation of a virtual (rather than physical) version of something, such as an operating system, a server, a storage device or network resources, resulting in higher utilization of actual physical hardware. According to Gartner, spending on x86 server (the industry s most commonly deployed server) and desktop virtualization software technologies is forecast to grow at a 25.7% CAGR through 2014, reaching $6.3 billion.2 We believe that this growth in the virtualization software market will result in increased spending for our services as clients seek external expertise and support to integrate new technology and migrate to virtualized data center environments. Data Storage/Backup & Recovery: According to Gartner, the data storage services market, which includes consulting and managed services as well as data storage capacity services for backup and recovery operations, is expected to grow at a 4.0% CAGR from $14.7 billion in 2009 to $18.3 billion by 2014.3 Although we do not currently provide data storage capacity as part of our service offerings, we believe the growth in the overall data storage services market will lead to increased demand for our consulting, implementation and managed services offerings. Data Center Consolidations/Migrations: Consolidations and migrations involve the creation of a new architecture for IT hardware and software, relocation of data and the hardware that holds it, technology upgrades and changes to IT management processes. In a recent Enterprise Strategy Group survey, respondents ranked consolidating their data centers in the top quartile of their initiatives over the next 12-18 months.4 We believe that the focus on consolidation will lead to increased demand for our services as we help clients plan and execute these projects. IT Security: The IT security services market is expected to increase at a CAGR of 8.2% from $27.8 billion in 2009 to $41.4 billion in 2014, according to Gartner.5 We believe that this growth will result in increased demand for our IT security services, as we help clients plan and execute projects to improve their IT security. 1. Gartner Inc: Forecast: Public Cloud Services, Worldwide and Regions, Industry Sectors, 2010-2015, 2011 Update. By Ben Pring, Robert H. Brown, Lydia Leong, Fabrizio Biscotti, Laurie F. Wurster, Jeffrey Roster, Susan Cournoyer, Andrew Frank, Michele C. Caminos and Venecia K. Liu. 29 June 2011. The Gartner Reports described herein (the Gartner Reports) represent data, research, opinions or viewpoints published, as part of a syndicated subscription service available only to clients, by Gartner, and are not representations of fact. We have been advised by Gartner that each Gartner Report speaks as of its original publication date (and not as of the date of this prospectus) and the opinions expressed in the Gartner Reports are subject to change without notice. Please see the section titled Industry and Market Data for more information about the industry and market data and other statistical information used by us throughout this prospectus. 2. Gartner Inc: Market Trends: x86 Virtualization Market Driven by Management and Desktop Needs. By Alan Dayley. 17 September 2010. 3. Gartner Inc: Forecast: Storage Professional Services, Worldwide, 2009-2014. By Adam W. Couture, Rob Addy, Yuko Adachi and Freddie Ng. 4 January 2011. 4. Enterprise Strategy Group, 2011 IT Spending Intentions Survey. January 2011 5. Gartner Inc: Forecast: Security Services Markets Worldwide, 2009-2014. By Ruggero Contu, Andrew Walls, Casper Carsten, Jason Harris and Kelly Kavanagh. September 2010. Table of Contents Table of Contents Disaster Recovery: The disaster recovery market crosses several domains, including storage, backup, virtualization and IT security. We believe that as other market areas experience growth, the need for updated disaster recovery plans, processes and technical implementation will increase, resulting in additional demand for our services. The convergence of new technologies and increased demands on IT infrastructure is creating significant challenges for IT executives. In order to remain competitive on a cost and time-to-market basis, IT executives must ensure that they are adapting to new paradigms of efficiency, speed and application delivery. We believe that IT executives recognize that their in-house teams are more focused on managing day-to-day operations and will therefore increasingly turn to third-party consulting firms to help identify and incorporate new and emerging technologies in order to: Capitalize on Cloud Computing and Virtualization Technologies: To improve efficiency and agility, as well as to manage costs, IT executives are looking to optimize existing assets while leveraging new technologies such as cloud computing and virtualization to gain higher efficiency from their IT environments. We believe these initiatives have inherent challenges and are leading enterprises to augment their internal IT teams with third-party consulting and managed services to ensure best practices are implemented and service levels are met. Manage Risk Efficiently and Cost Effectively: IT executives must address both external and internal threats in order to manage risk. External threats include catastrophic weather events and terrorist attacks that are beyond an IT executive s control, but still must be addressed through contingency plans. External threats also include computer and network viruses and attacks from hackers. Internal risks are associated with complex, multi-vendor IT environments. As new and emerging technologies are introduced into the data center, there is an increasing risk of improperly integrating these technologies into an overall IT infrastructure. Minimize Costs Within Constrained IT Budgets: Business and technology leaders are expected to address an increasing scope and complexity of IT challenges with fewer resources and usually under substantial time pressures, and we believe that IT executives will seek third-party assistance to reduce operational expenses and understand asset utilization and total cost of ownership, in an effort to justify current spending and future investments. We believe our services provide compelling benefits to our clients, including: access to leading-edge data center infrastructure strategies and practices; demonstrable return on investment in IT infrastructure; minimized project execution risk; decreased risk of data loss; and enhanced visibility into the IT environment. Our Growth Strategy Our objective is to enhance our industry position, while continuing to grow our revenues and profitability. Our strategy to achieve these objectives includes the following: Deepen and Expand Relationships with Our Current Client Base: We have historically generated a significant amount of our revenues from new projects with existing clients. As clients adopt cloud computing and other new technologies, we expect to continue to sell services to meet their evolving needs. Engage New Clients with Our Direct Sales Force: Our direct sales team pursues a target prospect list of Fortune 2500 companies to establish new client relationships. We also participate in industry events and direct marketing activities to increase broad awareness of our services to prospective clients. We have an inside sales function in the United States and the United Kingdom to pursue and develop these prospects into new clients. Table of Contents TABLE OF CONTENTS Prospectus Page Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001302707_horizon_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001302707_horizon_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad
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+PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001304464_crestwood_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001304464_crestwood_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..3b7ef543e9c22b89dd2b7e4d252261ed7cea23ba
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+S-1/A 1 d221930ds1a.htm AMENDMENT NO. 7 TO FORM S-1 Amendment No. 7 to Form S-1 Table of Contents Index to Financial Statements As filed with the Securities and Exchange Commission on December 7, 2011 Registration No. 333-176445 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Amendment No. 7 to Form S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001305108_advanced_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001305108_advanced_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad
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@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001311241_intermolec_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001311241_intermolec_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
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+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001314592_teavana_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001314592_teavana_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
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@@ -0,0 +1 @@
+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001315718_vapor_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001315718_vapor_prospectus_summary.txt
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+SUMMARY OF OUR OFFERING OUR BUSINESS We had been originally incorporated under the laws of Canada on January 15, 1990, under the name "Creemore Star Printing, Inc." We changed our name on June 15, 2003 to "Smitten Press: Local Lore and Legends, Inc." We domesticated in the State of Nevada by filing Articles of Incorporation in Nevada on May 8, 2007, and we were incorporated in the State of Nevada on May 8, 2007, as Smitten Press: Local Lore and Legends, Inc. On April 30, 2010, our Board of Directors approved a change in our name to DataMill Media Corp. ("Company"), effective at the close of business on June 30, 2010. On April 30, 2010, our Board of Directors approved a reverse-split of our Common Stock on the basis of one new share of Common Stock for each one hundred shares of Common Stock held of record at the close of business on June 30, 2010. These corporate actions were ratified on April 30, 2010 by holders of a majority of the shares of Common Stock of the Company acting on written consent. We are a development stage company. We are a "shell company" as defined in Rule 405 of the Securities Act of 1933, as amended. We are a management consulting firm that plans to educate and assist small businesses to improve their management, corporate governance, regulatory compliance and other business processes, with a focus on capital market participation. We intend to generate revenues, with our two or possibly three employees, by providing consulting and educational services to primarily private companies seeking to become publicly traded companies. We have limited business operations and have achieved losses since inception. For the year ended December 31, 2010, we had no revenue and incurred losses from operations of $67,747. As of December 31, 2010, our assets consisted of $370 in cash. We have been issued a going concern opinion by our independent registered public accounting firm and rely upon the sale of our securities and loans from our officers and directors to fund operations. On January 5, 2011, an unaffiliated entity loaned us $25,000 in exchange for a promissory note for such sum. The promissory note bears interest at the rate of 5% per year and will be due and payable on July 5, 2011. The promissory note requires the Company to issue 75,000 shares of restricted common stock to the lender in lieu of accrued interest on the note when the note is paid. In addition, Vincent Beatty, our President, personally guaranteed payment and performance of the note and pledged 201,000 shares of Datamill restricted common stock owned by Mr. Beatty as collateral to secure this $25,000 loan and to secure his guaranty of the loan. Our monthly "burn rate," the amount of expenses we expect to incur on a monthly basis, is approximately $2,000 for a total of $18,000 for the maximum of 270 days during which this offering will be made. We have relied, and will continue to rely, on loans from our officers and directors to fund operations. However, we do not have any written agreements with our officers and directors to fund our operating expenses during the 270 days during which this offering will be made. In order to complete our plan of operation, we estimate that $90,000 in funds will be required. The source of such funds is anticipated to be the net proceeds from this offering. If we fail to generate $90,000 from this offering, we may not be able to fully carry out our plan of operations. Assuming we raise the minimum amount of $20,000 in this offering, we believe we can satisfy our cash requirements during the next 12 months and begin to implement our business plan at a slower pace than if we raise the maximum amount in this offering. The minimum amount raised will allow us to develop our website to an operational extent, conduct sufficient marketing, purchase a minimal amount of inventory (electronic and hard copies of instruction manuals, instruction booklets and example templates relating to the consulting and educational services we intend to provide) and computer equipment to implement our business plan and begin offering and selling our products on a smaller scale than if we raise the maximum amount in this offering. In addition, if we only raise the minimum amount in this offering, we will not be able to offer any consulting services and we will not have the additional employee required to implement our business plan as quickly as possible. We cannot assure you that we will be able to raise the maximum $100,000 in offering proceeds in this offering. If we do not raise the maximum $100,000 in this offering, then we will not be able to provide our consulting services. Assuming we raise the maximum amount of $100,000 in this offering, we believe we can fully implement our business plan, finalize our product research and development, purchase the required computer equipment and stock our inventory with the electronic and hard copies of the instruction manuals, instruction booklets and example templates relating to the consulting and educational services we intend to provide, including, but not limited to corporate management, corporate governance, regulatory compliance and various business processes. Further, we do not expect significant changes in the number of employees. If we cannot generate sufficient revenues to continue operations, we will suspend or cease operations. Upon completion of our public offering, our goal is to expand and market our operations. We believe that the following steps can be accomplished if we only raise the minimum of $20,000 in this offering: Website Development $ 3,000 Computer Purchase $ 1,000 Inventory Purchase $ 2,000 Marketing and Advertising $ 1,000 We believe the above steps will be accomplished within 30 days of our receipt of proceeds equal to the minimum of $20,000 from this offering. We believe that the following additional steps can only be accomplished if we raise the maximum of $100,000 in this offering: Enhancement of our Website $ 2,500 Additional Computer Purchases $ 8,000 Additional Inventory Purchases $40,000 Hire one additional employee $10,000 Hire second additional employee $10,000 We believe the proceeds from the offering will allow us to operate for twelve months, whether the minimum or maximum is raised. However, the extent of our operations will be less if we only raise the minimum. DUE TO FINANCIAL CONSTRAINTS, THERE ARE MATERIAL WEAKNESSES IN OUR INTERNAL CONTROLS AND DISCLOSURE CONTROLS AND PROCEDURES. As of December 31, 2010, we carried out an evaluation required by Rule 13a-15 or Rule 15d-15 of the Securities Exchange Act of 1934 ("Exchange Act") under the supervision and with the participation of our management, including our Principal Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Disclosure controls and procedures are designed with the objective of ensuring that (i) information required to be disclosed in an issuer's reports filed under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms and (ii) information is accumulated and communicated to management, including our Principal Executive Officer and Principal Financial Officer, as appropriate to allow timely decisions regarding required disclosures. The evaluation of our disclosure controls and procedures included a review of our objectives and processes and effect on the information generated for use in this Report. This type of evaluation is done quarterly so that the conclusions concerning the effectiveness of these controls can be reported in our periodic reports filed with the SEC. We intend to maintain these controls as processes that may be appropriately modified as circumstances warrant. Based upon such evaluation, our Chief Executive Officer and Chief Financial Officer concluded that as of such date, our disclosure controls and procedures were not effective at the reasonable assurance level because, due to financial constraints, the Company does not maintain a sufficient complement of personnel with an appropriate level of technical accounting knowledge, experience and training in the application of generally accepted accounting principles commensurate with our financial accounting and reporting requirements. There have been no changes in our internal control over financial reporting identified in connection with the evaluation that occurred during our last fiscal quarter that have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting. In the event that we receive sufficient funds for internal operational purposes, we plan to retain the services of additional internal management staff to provide assistance to our current management in monitoring and maintaining our internal controls and procedures. Our business office is located at 1205 Hillsboro Mile, Suite 203, Hillsboro Beach, FL 33062, and our telephone number is (954) 876-1181. Our website is www.datamillmedia.com. Our fiscal year end is December 31. Management or affiliates of our Company will not purchase shares in this offering in order to reach the minimum. THE OFFERING Following is a brief summary of this offering: Securities being offered A minimum of 1,000,000 shares of common stock and a maximum of 5,000,000 shares of common stock, par value $0.001. Offering price per share $0.02 Offering period Our shares are being offered for a period not to exceed 270 days. Net proceeds to us Approximately $15,000 assuming the minimum number of shares are sold. Approximately $90,000 assuming the maximum number of shares is sold. Use of proceeds We will use the proceeds to pay for offering expenses, the implementation of our business plan, and for working capital. Number of shares outstanding before the offering 10,325,000 Number of shares outstanding after the offering if all of the shares are sold 15,325,000 SUMMARY FINANCIAL DATA The summary statements of operations data for the years ended December 31, 2010 and 2009 and the summary balance sheet data as of December 31, 2010 and 2009 are derived from our audited financial statements included elsewhere in this prospectus. You should read the summary financial data below together with "Management's Discussion and Analysis of Financial Condition and Plan of Development Stage Activities" and our financial statements and the related notes included elsewhere in this prospectus. STATEMENTS OF OPERATIONS DATA For the Period From June 1, 2003 (Inception) to Year Ended December 31, December 31, 2010 2010 2009 (Unaudited) ----------- ----------- ----------- Revenue $ -- $ -- $ -- Operating loss (67,747) (538) (1,133,616) Other Expense -- -- (3,677) Net loss $ (67,747) $ (538) $(1,137,293) NET LOSS PER SHARE Basic and diluted $ (0.02) $ (0.00) $ (1.55) WEIGHTED-AVERAGE SHARES: Basic and diluted 3,914,041 325,000 738,564 BALANCE SHEET DATA December 31, 2010 2009 ----------- ----------- Total assets $ 370 $ -- Total current liabilities $ 151,517 $ 93,400 Total stockholders'deficit $ (151,147) $ (93,400)
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001317639_image_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001317639_image_prospectus_summary.txt
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+You should read the following summary together with the more detailed information contained elsewhere in this prospectus, including the section titled Risk Factors, regarding us and the common stock being sold in this offering. Unless the context otherwise requires, when we refer to our company, we, us or our, (i) for periods prior to the closing of our share exchange transaction on March 10, 2010, we are referring to Image Metrics Limited, a private company incorporated in England and Wales, and (ii) for periods as of the closing of our share exchange transaction and thereafter, we are referring to Image Metrics, Inc., the current publicly-traded company and the issuer of this prospectus. Overview of Our Business Image Metrics is an established provider of technology-based facial animation solutions to the interactive entertainment industry. Using proprietary software and mathematical algorithms that read human facial expressions, our technology converts video footage of real-life actors into 3D computer generated animated characters. We believe that our technology provides us with competitive advantages and has been used to create some of the most notable video games, music videos and movies made in the past five years. Examples of our notable and innovative facial animation projects include the 2008 Grand Theft Auto IV video game, which generated over $500 million in sales in its first week, the 2009 computer generated aging of Brad Pitt in the feature film The Curious Case of Benjamin Button, which won three Oscars including one for achievement in visual effects, the 2009 Black Eyed Peas Boom Boom Pow music video, which won the Grammy Award for best short form music video, and the 2010 Red Dead Redemption video game, which sold more than 5 million copies in its first two weeks. We were founded in 2000, and have devoted our efforts to the development of our computer vision based software. Our key intellectual property is protected by several patents registered in the United States and significant well-documented trade secrets. We are continually updating our software and are prosecuting a roadmap of technology innovations. Over the past two years, in addition to improving the quality of our animation services and our technology-based tools, and continuing the development of next-generation animation products, we have successfully expanded our customer base to include several large game and entertainment companies. Although our traditional business has been providing animation services to the video gaming and film industries, our technology innovation and new product offerings allow us to enter new markets utilizing new business models to achieve higher revenue growth with higher margins than a full service animation-based business can provide. In particular, we are transforming our business from a services model to a software licensing model, which can be leveraged into the professional, consumer and education markets. Our technology platform can support access to many other potential revenue streams, such as computer animated television series (particularly programming for children), the development of real-time businesses in virtual worlds and social networking, and licensing products and services into non-entertainment markets. Most of these take the form of middleware or software based tools that other software developers use to create applications for consumers. We are also developing software applications that can be used by consumers to produce real-time animation. Amendment No. 2 to FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 In March 2011, we launched our principal professional software-as-a-service product, Faceware, into the professional market. We have already won customers in the video game, television and music video markets. The product won a prestigious Best-in-Show Award at the 2011 Game Developers Conference. In May 2011, we announced the availability of our first consumer-oriented product, which enables online users to create photo-realistic 3D characters from a single standard digital photograph and integrate that character across a range of third-party games, social networks and communications applications. We expect to launch at least two additional products within the next 12 months. We see particular opportunity in the online games sector, where companies may become customers for multiple Image Metrics products. Our primary strategy is to maximize revenue and gross margins from our existing B2B (business to business) markets, and then to significantly develop additional commercial applications, particularly in the B2C (business to consumer) realm. To execute our business plan and further commercialize our technology, we have assembled a senior management team, board of directors and advisory board with extensive experience in managing and ramping technology companies. The collective expertise of this group encompasses building B2B and B2C enterprises, technology and product development, sales and marketing, financial structuring, mergers and acquisitions, public company management and other requisite professional skills. Corporate Information and History On March 10, 2010, we completed a reverse public offering transaction, in which we became a publicly-traded company through our share exchange transaction with International Cellular Accessories, a public company previously engaged in the sale of accessories for cellular phones. Through the share exchange transaction, the stockholders of our privately-held predecessor, Image Metrics Limited, received a majority of the outstanding shares of International Cellular Accessories and its officers and directors assumed similar positions with International Cellular Accessories. Following the share exchange transaction, we changed our corporate name to Image Metrics, Inc. Concurrently with the closing of the share exchange, we also completed a private placement of series A convertible preferred stock and warrants to purchase common stock to institutional investors and other accredited investors, in which we received aggregate gross proceeds of $8,929,098. From July to September 2010, we raised an additional $950,000 in aggregate gross proceeds in a private placement on the same terms as the March 2010 private placement except for the March 2010 offering provided financial remuneration to the subscribers if the Company failed to meet its SEC filing and registration requirements. Our principal executive office in the United States is located at 1918 Main Street, 2nd Floor, Santa Monica, California 90405 and, in the United Kingdom, our executive office is located at 1 Portland Street, Manchester MI 3BE. Our main telephone number in the United States is (310) 656-6551 and in the United Kingdom is +44-161-242-1800. We maintain a corporate website at www.image-metrics.com. The contents of this website are not part of this prospectus and should not be relied upon with respect to making a decision to invest in our common stock. Our shares of common stock are traded in the over-the-counter market and quoted on the OTC Bulletin Board under the symbol IMGX.OB. On November 7, 2011, the closing bid price of our common stock was $0.30 per share. About this Offering This prospectus relates to the public offering, which is not being underwritten, of up to 6,500,000 shares of our common stock by the selling stockholders listed in this prospectus. These shares consist of 2,509,421 outstanding shares of common stock, 47,906 shares of common stock issuable upon conversion of our series A preferred stock, 2,036,996 shares of common stock issuable upon exercise of our warrants and 1,906,487 shares of common stock issuable upon conversion of our convertible promissory notes. The shares offered by this prospectus may be sold by the selling stockholders from time to time in the over-the-counter market or other national securities exchange or automated interdealer quotation system on which our common stock is then listed or quoted, through negotiated transactions or otherwise at market prices prevailing at the time of sale or at negotiated prices. We will receive none of the proceeds from the sale of the shares by the selling stockholders, except upon exercise of the warrants. We will bear all expenses of registration incurred in connection with this offering, but all selling and other expenses incurred by the selling stockholders will be borne by them. The shares of common stock being offered by this prospectus relate to shares of our common stock, as well as shares issuable upon conversion of our convertible promissory notes, outstanding shares of our series A preferred stock and warrants issued in private placements in fiscal 2010 and 2011. The first private placement offering had two closings, March 10, 2010 and March 26, 2010 (which we refer to as the March 2010 private placement). This private placement offering involved institutional investors and other accredited investors and consisted of 9,371,098 shares of our series A convertible preferred stock at a price per share of $1.00, for gross proceeds of $8,929,098. As part of the March 2010 private placement, the investors were issued warrants to purchase up to 7,345,998 shares of our common stock at an exercise price of $1.50 per share. IMAGE METRICS, INC. (Exact name of registrant as specified in its charter) Nevada 5121 20-1719023 (State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer incorporation or organization) Classification Code Number) Identification Number) 1918 Main Street, 2 nd Floor Santa Monica, California 90405 Tel: (310) 656-6565 (Address, including zip code, and telephone number, including area code, of registrant s principal executive offices) (1) As of November 7, 2011. Does not include shares of common stock issuable upon conversion of our series A preferred stock or convertible promissory notes or upon exercise of our warrants. Also does not include shares of our common stock that are reserved for issuance pursuant to outstanding stock options. Robert Gehorsam Chief Executive Officer Image Metrics, Inc. 1918 Main Street, 2 nd Floor Santa Monica, California 90405 Tel: (310) 656-6565; Fax: (310) 656-6566 (Name, address, including zip code, and telephone number, including area code, of agent for service) (1) Prior to the completion of our reverse public offering on March 10, 2010, the financial information above relates to our predecessor, Image Metrics, Inc., as formerly known as Image Metrics, Limited. Copy to: Spencer G. Feldman, Esq. Greenberg Traurig, LLP MetLife Building 200 Park Avenue 15 th Floor New York, New York 10166 Tel: (212) 801-9200; Fax: (212) 801-6400 Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one): Large Accelerated Filer Accelerated Filer Non-accelerated Filer Smaller Reporting Company
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001320218_horizon_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001320218_horizon_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad
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@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001320221_horizon_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001320221_horizon_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001320221_horizon_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001320222_horizon_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001320222_horizon_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001320222_horizon_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001320225_sea-logix_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001320225_sea-logix_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad
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+++ b/parsed_sections/prospectus_summary/2011/CIK0001320225_sea-logix_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001320226_horizon_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001320226_horizon_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad
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+++ b/parsed_sections/prospectus_summary/2011/CIK0001320226_horizon_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001320227_horizon_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001320227_horizon_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad
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+++ b/parsed_sections/prospectus_summary/2011/CIK0001320227_horizon_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001320691_jinhao_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001320691_jinhao_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..21fad5436e8a3b9a72ca0321644f029c138b2de1
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@@ -0,0 +1 @@
+detail later in this prospectus. This summary provides an overview of selected information and does not contain all the information you should consider. Therefore, you should also read the more detailed information set out in this prospectus, including the financial statements, the notes thereto and matters set forth under Risk Factors. For certain defined terms, see Use of Terms on Page 11. Overview of Our Business We are primarily engaged in the production and distribution of motorcycles and small engines in China and to overseas markets. The market for our products in China accounted for approximately 22% of our revenues for the nine months ended September 30, 2010, with the overseas market, primarily Afghanistan, Pakistan, Bangladesh, Lebanon, Egypt, Libya, Angola, Kenya, Venezuela, and Republic of Dominica, making up the remaining 78% of our revenues. Our customers are distributors of our products, such as export agents and domestic and overseas wholesalers. We depend upon commercial relationships with three major customers for a significant portion of our sales revenue. For the nine months ended September 30, 2010, three customers Hainan Maxfine Import and Export Trade Co., Ltd, Zhuhai Jianfeng Import Export Co., Ltd and Gansu Chengxing Import Export Co., Ltd accounted for approximately 30.63%, 29.70% and 11.95%, respectively, and in aggregate, approximately 72.28%, of our revenues. We expect that revenues from a relatively concentrated number of distributors will continue to account for a significant percentage of our revenues for the foreseeable future. We intend to expand into the electric vehicle segment and we have launched our electric vehicle production line and delivered our first order in October 2009. We invested approximately an aggregate of $26 million in the fiscal years ended December 31, 2009 and December 31, 2008 in research and development for electric vehicles, and have entered into exclusive patent license agreements for two technologies to be used in the planned production of electric vehicles. In addition, we have signed sales agency agreements with 6 distributors in China and overseas and have signed sales contracts with buyers from Spain, Finland, Italy, Chile and Thailand. We are also focused on developing distribution channels in the European Union and the United States. For the year ended December 31, 2009, our net income was $15.15 million and our revenue was 192.11 million. For the nine months ended September 30, 2010, our net income was $27.40 million and our revenue was 173.33 million. Our corporate headquarters and manufacturing facilities are located in Zhaoqing, Guangdong Province, PRC. Corporate Structure and History All of our business operations are conducted through our wholly-owned Chinese subsidiary, New Energy, and our variable interest entity, Guangdong Jinhao. We are the 100% direct parent of Jinhao Power and the 100% indirect parent of Jinhao HK and New Energy, respectively. We control 100% of Guangdong Jinhao through New Energy pursuant to the Control Agreements discussed below and elsewhere in this prospectus. The chart below presents our corporate structure: Below is basic information about our subsidiaries: NAME OF ENTITY DATE OF INCORPORATION NATURE OF BUSINESS Jinhao Power January 27, 2010 Holding company Jinhao HK September 4, 2007 Holding company New Energy July 30, 2009 Holding company Guangdong Jinhao March 24, 2003 Manufacturing and sales; variable interest entity We were originally organized under the laws of the State of Nevada, on January 19, 2005, as Georgia International Mining Corporation, or GIMC. From our inception, we were engaged in various business endeavors, including mining. Prior to the end of our fiscal year ended December 31, 2009, we decided to redirect our business focus towards identifying and pursuing options regarding the development of a new business plan and direction. From September 30, 2007 through the date of our share exchange, discussed below, we were a shell company with minimal operations. On April 9, 2010, we changed our name to Jinhao Motor Company. On August 11, 2010, we completed a share exchange transaction under a share exchange agreement, or Share Exchange Agreement, with Jinhao Power, its sole shareholder, Mr. Chak Shing Tsoi, and Mr. Mark Hague, our major stockholder, pursuant to which we acquired 100% of the issued and outstanding capital stock of Jinhao Power in exchange for 45,600,418 shares of our common stock, par value $0.001, which constituted 95% of our issued and outstanding capital stock on a fully-diluted basis as of and immediately after the consummation of the share exchange. As a condition precedent to the consummation of the share exchange transaction, on August 11, 2010, we entered into a share purchase agreement, or Share Purchase Agreement, with Mr. Mark Hague, whereby Mr. Hague agreed to the cancellation of 2,479,523 shares of our common stock owned by him as well as $152,193 debt owed to him, in exchange for all of the shares of our subsidiary, EG Gold Mines, Inc. Upon the closing of the Share Purchase Agreement with Mr. Hague, EG Gold Mines, Inc, was no longer our subsidiary. Upon the closing of the share exchange on August 11, 2010, Mr. Ed Forister resigned from all offices that he held effective immediately and from his position as our director effective as of August 23, 2010. On the same date, our board of directors increased its size from one to six members and appointed Mr. Chak Shing Tsoi, Mr. John Chen, Mr. Stewart Ballard, Dr. Brian Peacock, Mr. Rodger Spainhower, Sr. and Dr. John Shen, to fill the vacancies created by such increase and Mr. Forister s resignation. Mr. Tsoi s appointment became effective on August 11, 2010, and the remaining appointments became effective on August 23, 2010. In addition, our board of directors appointed Mr. Tsoi to serve as our Chief Executive Officer, Mr. John Shen to serve as our President, and Mr. Hai Ming Liu to serve as our Director of Finance and acting Chief Financial Officer, effective immediately at the closing of the share exchange. As a result of the share exchange, we have assumed the business and operations of Jinhao Power and its subsidiaries. Mr. John Shen resigned as our President on November 14, 2010 for personal reasons, but remains a director following his resignation. Mr. Tsoi was appointed as our interim President effective on November 15, 2010. Mr. Hai Ming Liu resigned as Director of Finance and acting Chief Financial Officer effective on December 31, 2010 for personal reasons. For accounting purposes, the share exchange transaction with Jinhao Power was treated as a reverse acquisition, with Jinhao Power as the acquirer and Jinhao Motor Company as the acquired party. Unless the context suggests otherwise, when we refer in this prospectus to business and financial information for periods prior to the consummation of the share exchange, we are referring to the business and financial information of Jinhao Power. For more information, see Corporate Structure and History - Share Exchange with Jinhao Power and Related Financing elsewhere in this prospectus. Guangdong Jinhao was incorporated in 2003 to engage in the machinery production business by U-HARBOUR Co., Ltd., a Hong Kong company controlled by Mr. Tsoi. Mr. Tsoi established Jinhao HK in 2007. In July 2009, U-HARBOUR Co., Ltd. transferred its equity in Guangdong Jinhao to Jinhao HK. In 2009, Jinhao HK established New Energy as its wholly-owned subsidiary and the onshore holding company in China. Mr. Tsoi established Jinhao Power in early 2010 in anticipation of the reverse acquisition. Jinhao HK was reorganized in February 2010 whereby Jinhao Power became Jinhao HK s sole shareholder. Jinhao HK currently owns 49% of Guangdong Jinhao. Jinhao HK controls 100% of Guangdong Jinhao, have a right to all its revenues and are responsible for all its expenses as a result of the Control Agreements. Control Agreements On July 19, 2010, Guangdong Jinhao entered into a series of contractual agreements, or Control Agreements, with Haoyan, the 51% equity holder of Guangdong Jinhao and New Energy, pursuant to which Guangdong Jinhao became our variable interest entity. The Control Agreements include the following arrangements: A Shareholder s Right Proxy and Operation Management Services Agreement; A Shares Pledge Agreement; and An Exclusive Option Agreement. As a result of the foregoing structure, we control 100% of Guangdong Jinhao, have a right to all its revenues and are responsible for all its expenses. For more information, see "Corporate Structure and History - Our Corporate History - Variable Interest Entity". Private Placement On September 2, 2010, we completed a private placement transaction with a group of accredited investors, pursuant to which we issued to the investors 6,857,204 units of securities, or Units, for an aggregate purchase price of $30,000,000. Each Unit consists of one share of Series A Preferred Stock, at a purchase price of $4.37496 per share, and one warrant to purchase 0.5 share of our common stock, at an exercise price of $6.56244 per share. On the same date, we appointed Mr. Stanley Leung as an additional director with immediate effect. Hudson Securities, Inc., or Hudson, acted as the placement agent in connection with the offering of the securities. As compensation for its services, we issued to Hudson a warrant to purchase up to 514,290 shares of common stock. On September 2, 2010, Hudson transferred its warrant to purchase 182,287 shares to some of its affiliates. For more information, see "Corporate Structure and History – Private Placement Transaction". In connection with the closing of the private placement, we and Mr. Chak Shing Tsoi, our controlling stockholder, entered into the Investors Rights Agreement with the investors, pursuant to which we agreed to certain undertakings related to financial and operational benchmarks , or Make Good Provisions, in the event that we do not meet a certain after tax net profits threshold for each of fiscal years 2010, 2011 and 2012. Pursuant to the Make Good Provisions, we agreed to reimburse the investors in cash for any of the fiscal years 2010, 2011 and 2012 where there is an after tax net profit shortage. We also agreed not to enter into certain equity issuance transactions and certain other transactions without the approval of the holders of the Series A Preferred Stock. For more information, see Transactions with Related Persons, Promoters and Certain Control Persons . Overview of Our Industry The motorcycle industry is highly competitive both in China and abroad. Our motorcycles are sold to domestic and international markets, including markets in Southeast Asia, Africa, the Middle East, Central America and South America. For the nine months ended September 30, 2010, our export sales revenues accounted for approximately 78% of total revenues, while domestic sales revenues accounted for approximately 22% of total revenues. We expect to benefit from the rise in the global demand for motorcycles resulting from rising standards of living in the developing world, higher energy prices, along with a rebound in the global economic growth. We expect to partially offset the expected decline in prices with certain new models and more product features. The strongest market advances through 2013 are expected to be registered by the African and Middle East regions. The Asia/Pacific region is expected to post the second strongest gains. China alone is expected to account for 55% of all additional product demand through 2013. Product demand is expected to expand at a more moderate rate in developed countries. Nevertheless, we believe that high energy prices, city center congestion and personal income growth will provide some impetus to motorcycle sales advances in developed countries. According to statistics and analysis of China Association of Automobile Manufacturers, or CAAM, in 2010, China motorcycle industry sales were approximately 26,592,000 units, an increase of 4.40% from 2009, of which approximately 8,416,000 units were exported in 2010, an increase of 33.89% from 2009. Our Competitive Strengths We believe that the following competitive strengths allow us to compete effectively in, and to capitalize on the growth of, the global motorcycle and electric vehicle market: R&D capabilities. We place an emphasis on R&D, particularly on technological innovation and the development of our electric vehicle product line. We have established a dedicated R&D team to improve and upgrade our products. Although we incurred no research and development expenses in the electric vehicle division in the nine months ended September 30, 2010 because we were focused on marketing and production of electric vehicles (on a non-commercial scale) during such period, we incurred research and development expenses of $14.1 million and $10.9 million in the fiscal years ended December 31, 2009 and December 31, 2008, respectively. We are currently in the process of developing a plan to increase our investment in the research and development of electric vehicles and motorcycles in 2011. China-based, low-cost manufacturing model. We conduct all of our manufacturing activities in Zhaoqing City, Guangdong. Our access to China's abundant supply of skilled and low-cost labor, as well as our ability to source raw materials, equipment, land and manufacturing facilities locally and economically, has considerably lowered our operating cost and expenses as a percentage of revenues. Optimal use of efficiency machinery in production process. We selectively use automation in our manufacturing process in an effort to ensure uniformity and precision in our products while maintaining our cost-competitive advantage. As a fully automated production line is very expensive, we tailor our semi-automated solution based on stages of the manufacturing process and product attributes. We use efficiency machinery in key stages of the manufacturing process while using manual labor for other stages to take advantage of the availability of low-cost, skilled labor in China. We believe this considerably reduces our capital expenditure requirements. Management with related operational record. Mr. Chak Shing Tsoi, our Chairman, Chief Executive Officer and Interim President, has over 20 years of experience and expertise in the PRC motor vehicle industry. Mr. Tsoi also has over 17 years of management experience and over 30 years of international trade experience. Our Growth Strategy We intend to achieve growth in our industry by pursuing the following strategies: Motorcycles We intend to capitalize on our strengths and emerging business opportunities to expand our motorcycles' market share: Focus on key markets. We plan to continue to develop the markets in Africa. In China, our main market is in rural areas, and we are actively participating in the Motorcycles Go to the Countryside Program hosted by various central governmental authorities in China. This is a stimulus plan to promote the motorcycle industry, as well as to boost the rural economy, through government funding to consumers in the countryside. We expect to benefit from the Motorcycles Go to the Country Program and capitalize on the increased demand for our products in the rural areas in China fueled by the government funding. For more information, see Our Business Our Industry - Motorcycles . Expand motorcycle product offerings. Our strategy is to develop new products, improve our proprietary technology, upgrade aesthetic styles, and enrich the variety of product offerings. Enhance leading-edge technology through continual innovation. We plan to focus our efforts on (1) developing more advanced technologies to increase our productivity and efficiency; (2) developing and commercializing cost-effective and easily available substitute materials; and (3) enhancing our product quality, reliability and features. Cooperate with our partners to develop new motorcycle markets. We plan to strengthen cooperation with our existing distributors to deepen our understanding of our existing markets by sending more marketing staff to such markets to assist with our distributors after-sale services and to identify additional markets opportunities and also build relationships with new distributors for the development of new markets. Continue our yield improvements and refine our manufacturing process. We intend to achieve greater economies of scale by expanding our production capacity. We also plan to focus on enhancing our yields by reducing our defect ratio through worker training and raw material quality control, and through refining our semi-automated manufacturing process. We plan to increase our productivity and efficiency in the manufacturing process and reduce the per unit cost of production through the use of advanced technologies. We also plan to continue our development and commercialization of motorcycles that utilize cost-effective and easily available substitute materials for expensive raw materials. Electric Vehicles We intend to continue to build on our existing strengths to become a global leader in the development and manufacturing of electric vehicles. We intend to achieve this objective by pursuing the following strategies: Expand electric vehicle production capacity. We have business opportunities that currently cannot be executed due to manufacturing capacity constraints. We expect to have a 215,278 square feet production plant up and running by the third quarter of 2011. We have tested electric vehicles prototypes. We expect to incur aggregate costs of approximately US$141 million, including production lines building, research and development and development of our sales network, in connection with the expansion of our business. Expand Electric Vehicle Product Offerings. There are a number of applications in the domestic Chinese market and the export market, and we believe our electric vehicle is well-suited for each of these segments. Identify Synergistic Acquisition Targets. We intend to acquire suitable automobile production enterprises manufacturing both commercial and consumer class vehicles to enhance our brand name and exposure, and increase our production capacity. In November, 2010, Guangdong Jinhao entered into an equity transfer agreement with the shareholders of Zhangjiagang Chunzhou Station Wagon Co., Ltd., or Station Wagon, a company based in the PRC, to purchase a 60% equity interest in Station Wagon. Station Wagon designs, produces and distributes various models of gasoline commercial vans and buses. We expect to close this transaction in the first half of 2011. For more information, see Management Discussion and Analysis of Financial Condition and Results of Operations Recent Developments .
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001322095_loews_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001322095_loews_prospectus_summary.txt
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+S-1/A 1 a2203993zs-1a.htm S-1/A Table of Contents As filed with the Securities and Exchange Commission on June 24, 2011 Registration No. 333-173042 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 TABLE OF CONTENTS Market and Industry Information ii Special Note Regarding Forward-Looking Statements ii Summary 1
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001322111_lce_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001322111_lce_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..1f77ba5a887ea8e143ebad213eb2a7b18f667636
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+S-1/A 1 a2203993zs-1a.htm S-1/A Table of Contents As filed with the Securities and Exchange Commission on June 24, 2011 Registration No. 333-173042 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 TABLE OF CONTENTS Market and Industry Information ii Special Note Regarding Forward-Looking Statements ii Summary 1
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001322535_lce_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001322535_lce_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..1f77ba5a887ea8e143ebad213eb2a7b18f667636
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+S-1/A 1 a2203993zs-1a.htm S-1/A Table of Contents As filed with the Securities and Exchange Commission on June 24, 2011 Registration No. 333-173042 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 TABLE OF CONTENTS Market and Industry Information ii Special Note Regarding Forward-Looking Statements ii Summary 1
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001322734_advanced_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001322734_advanced_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad
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+PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001328670_crowdgathe_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001328670_crowdgathe_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..68b7a9838dcde1e9c929d202f53fd67f9ca327c4
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+PROSPECTUS SUMMARY The following summary highlights selected information contained in this prospectus. This summary does not contain all the information you should consider before investing in the securities. Before making an investment decision, you should read the entire prospectus carefully, including the Risk Factors section, the financial statements and the notes to the financial statements. Throughout this prospectus, unless otherwise designated, the terms we, us, our, and the Company refer to CrowdGather, Inc., a Nevada corporation, and its subsidiaries. Overview We were incorporated in Nevada on April 20, 2005. Our principal business address is 20300 Ventura Blvd. Suite 330, Woodland Hills, California 91364. Our telephone number is (818) 435-2472 and our Internet website is www.crowdgather.com. The content of our Internet website does not constitute a part of this prospectus. We are an Internet company that specializes in monetizing a network of online forums and message boards designed to engage, provide information to and build community around users. We are in the process of building what we hope will become an important social, advertising and user generated content network by consolidating existing groups of online users that post on message boards and forums. Our goal is to create superb user experiences for forum communities and world class service offerings for forum owners. We believe that the communities built around message boards and forums are one of the most dynamic sources of information available on the web because forums are active communities built around interest and information exchange on specific topics. Our network is comprised of two types of communities: branded forum communities and third-party hosted communities that are built on one of our forum hosting platforms. The branded communities, such as rapmusic.com and anythingbutipod.com, are wholly owned by us and we monetize them through a combination of text and display ads. The third-party hosted communities comprise the majority of our revenues, traffic, and page views, and are built upon one of our leading forum hosting platforms - Freeforums.org and Lefora.com. On these sites we monetize the web traffic through a combination of Internet advertising mediums at our discretion in exchange for providing free software, support and hosting. In some instances, we may derive subscription revenues in lieu of or in addition to advertising revenue because the creator of the site has decided to pay us a monthly fee in exchange for providing an ad free experience for their members. Our goal is to ultimately build an advertising network that allows us to leverage the targeted demographics of the combined network in order to generate the highest advertising rates for all of our member sites. Part of our growth strategy includes identifying and acquiring web properties. Since our inception we have been researching potential opportunities to acquire online forums within targeted content and advertising verticals in our industry in order to expand our operations. In addition to the over 80 web properties and 447 web domain names acquired to date, we also maintain ongoing discussions with representatives of certain web properties and other companies that may be interested in being acquired by us or entering into a joint venture agreement with us. Summary Financial Information The summary financial information set forth below is derived from the more detailed financial statements appearing elsewhere in this Form S-1. We have prepared our financial statements contained in this Form S-1 in accordance with accounting principles generally accepted in the United States. All information should be considered in conjunction with our financial statements and the notes contained elsewhere in this Form S-1. Statements of Operations For the nine months ended January 31, 2011 For the year ended April 30, 2010 For the year ended April 30, 2009 $ $ $ Revenue 1,173,216 309,781 112,546 Total Operating Expenses 2,768,759 2,303,501 2,489,700 Other Income (Expense) (net) 18,245 (1,435,174) (61,053) Net Loss (1,949,004) (3,429,694) (2,439,007) Net Loss Per Share (0.05) (0.08) (0.06) Balance Sheets January 31, 2011 April 30, 2010 April 30, 2009 $ $ $ Total Assets 10,591,331 2,695,631 701,634 Total Liabilities 290,638 207,697 1,341,690 Stockholders' Equity (Deficit) 10,300,693 2,487,934 (640,056) The Offering Common stock offered by selling shareholders 15,906,425 shares of common stock. This includes (i) 9,821,246 shares of common stock, (ii) 5,352,273 shares of common stock issuable upon exercise of the Investor Warrants, and (iii) 570,909 shares of common stock issuable upon exercise of the Placement Agent Warrants and (iv) 161,997 shares of common stock issuable upon exercise of the Buy.com Warrants. Offering Price The selling shareholders may offer all or part of their shares for resale from time to time through public or private transactions, at either prevailing market prices or at privately negotiated prices. Use of Proceeds We will not receive any proceeds from the sale of the common stock by the selling shareholders. However, we will receive the sale price of any common stock we sell to the selling shareholders upon exercise of the warrants. We expect to use the proceeds, if any, received from the exercise of the warrants for general working capital purposes. Trading Our common stock is traded on the Over the Counter Bulletin Board and OTCQB under the symbol: CRWG.
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001334814_zillow-inc_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001334814_zillow-inc_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..020f09a92d2f25219825f8ffe3a5b3c331064ada
--- /dev/null
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+S-1/A Summary 1
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001335104_vicor_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001335104_vicor_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..ebf76941874673e6406801a19d757505a0785d10
--- /dev/null
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@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. Individuals who participate in this offering are urged to read this entire prospectus carefully. An investment in the units offered hereby involves a high degree of risk. This prospectus contains forward-looking statements that involve risks and uncertainties. Our actual results may differ significantly from the projected results discussed in these forward-looking statements. Factors that may cause such a difference include, but are not limited to, those discussed in Risk Factors. We , our , ours , us , Vicor or the Company , when used herein, refer to Vicor Technologies, Inc., including subsidiaries and predecessors, except where it is clear that the term refers only to Vicor Technologies, Inc. Overview Our Business We are a medical diagnostics company, originally incorporated in the State of Delaware on May 24, 2005 as SRKP 6, Inc., focused on commercializing noninvasive diagnostic technology products based on our patented, proprietary point correlation dimension algorithm (the PD2i Algorithm ). The PD2i Algorithm and software facilitates the ability of physicians to accurately risk stratify a specific target population to predict future pathological events, such as cardiac mortality (either from arrhythmic death or congestive heart failure), autonomic nervous system dysfunction and imminent death from trauma. We believe that the PD2i Algorithm and software represents a noninvasive monitoring technology that physicians and other members of the medical community can use as a new and accurate vital sign. We are currently commercializing two proprietary diagnostic medical products which employ software utilizing the PD2i Algorithim: the PD2i Analyzertm (sometimes referred to as the PD2i Cardiac Analyzertm) and the PD2i-VSTM (Vital Sign). It is also anticipated that the PD2i Algorithm and software applications will allow for the early detection of cerebral disorders as well as other disorders and diseases. Our first product, the PD2i Analyzertm, received 510(k) marketing clearance from the Food and Drug Administration, or FDA, on December 29, 2008. It displays and analyzes electrocardiographic ( ECG ) information and measures heart rate variability ( HRV ) in patients at rest and in response to controlled exercise and paced respiration. The PD2i Analyzertm applies patented and proprietary technology to analyze a high resolution electrocardiograph signal and measure R-wave intervals. The clinical significance of HRV and other parameters must be determined by a physician. On April 14, 2011 we received a second 510(k) marketing clearance from the FDA for the PD2i Analyzer. This marketing clearance allows us to market the PD2i Analyzer for the display and analysis of electrocardiographic information and to measure heart rate variability at rest, and in response to controlled exercise and paced respiration in patients undergoing cardiovascular disease testing. The results are to be interpreted by a qualified healthcare practitioner and are not intended for any specific clinical diagnosis. The clinical significance of HRV and other parameters must be determined by a physician. This second clearance should broaden our markets dramatically by enabling the physician to use the PD2i Analyzer to identify patients at elevated risk of mortality for aggressive treatment and life-saving interventions as well as patients at lower risk of mortality for less costly and more conservative patient care. This second clearance should also lead to wider adoption and broader usage by physicians. Revenues commenced in 2010. In September 2010, we hired a National Sales Manager and as of May 31, 2011 we had entered into agreements with independent sales representatives in over 30 states including the District of Columbia. We have also begun the selected hiring of sales personnel in selected states to supplement our independent sales representatives. The PD2i Analyzertm consists of a private-label digital ECG device that incorporates automated blood pressure recording and a laptop computer which utilizes proprietary collection software. The PD2i Analyzertm accesses the internet and sends recorded ECG files to our remote server where the files are analyzed by our proprietary algorithm and software. The analyzed results are then returned to the laptop in the form of an electronic health record together with a report for the physician to interpret and make a diagnosis, as well as information which the physician can use to bill both public and private insurers. Established Current Procedural Terminology Codes, known as CPT Codes, allow the physician to currently bill and collect from public and private insurers. Vicor bills the physician monthly for the number of tests performed, thus enabling us to realize revenue from the recurring use of the PD2i Analyzertm in addition to revenue realized from the sale of the device. We anticipate obtaining additional marketing clearances from the FDA for the PD2i Analyzertm for medical claims which could include trauma triage and the diagnosis of diseases related to autonomic nervous system dysfunction. Some additional marketing clearances from the FDA are not required for us to generate revenue from our existing product(s), but would allow us to accelerate our marketing efforts.
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001335950_chisen_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001335950_chisen_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..9d59e1b0bba1ce2962826845d06af475d53658cf
--- /dev/null
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@@ -0,0 +1 @@
+PROSPECTUS SUMMARY Because this is only a summary, it does not contain all of the information that may be important to you. You should carefully read the more detailed information contained in this prospectus, including our financial statements and related notes. Our business involves significant risks. You should carefully consider the information under the heading Risk Factors beginning on page 13. As used in this prospectus, unless otherwise indicated, the terms we, our, us, Company, the Registrant and Chisen refer to Chisen Electric Corporation, a Nevada corporation. We conduct our business through our subsidiaries, which include our wholly-owned subsidiary, Fast More Limited, a Hong Kong investment holding company ( Fast More ), its 100% owned and chief operating subsidiary, Zhejiang Chisen Electric Co., Ltd., a wholly foreign owned entity ( WFOE ) organized under the laws of the PRC (f/k/a Changxing Chisen Electric Co., Ltd. and hereinafter referred to as CCEC ) and CCEC s subsidiary, Chisen Electric Jiangsu Co., Ltd. ( CEJC ). China or PRC refers to the People s Republic of China. RMB or Renminbi refers to the legal currency of China and $ , US$ or U.S. Dollars refers to the legal currency of the United States. Company Overview We are one of the leading producers of sealed lead-acid motive batteries, also known as valve regulated lead-acid motive batteries, in China's personal transportation device market by ranking as one of the top three manufacturers in China in terms of production. Our motive battery products, sold under our own brand name Chisen , are predominantly used in electric bicycles and are distributed and sold in China. Among all types of batteries for electric bicycles, the lead-acid motive battery is the preferred choice of electric bicycle manufacturers in China, accounting for 95% of the market share because of its cost efficiency. Currently, we manufacture over 14,480,000 sealed lead-acid motive batteries each year, have more than 2,500 employees and are one of China's largest manufacturers of sealed lead-acid motive batteries for electric-powered bicycles (LABEBs). For each of our fiscal years ended March 31, 2010 and 2009, sales revenues were US$177,192,000 and US$109,020,000, respectively, and our net income during the same periods amounted to US$9,500,000 and US$8,880,000, respectively. For the nine months ended December 31, 2010, our sales revenue and net income were US$194,712,000 and US$9,496,000 respectively. China Battery Industry Competitive Business Conditions and Market Trends We believe that in the next several years, due to intensifying global environmental concerns, there will be increased development of the electric bicycle. At the 2009 United Nations Climate Change Conference, the Chinese Government announced that in 2020, greenhouse gas emissions will be reduced approximately 40% to 45% from 2005 levels. Due to the fact that electric bicycle usage is very much in line with the energy-saving and environmental protection policy initiated by the Chinese government, the further development of electric bicycles has garnered government support. The electric bicycle, as an environment-friendly and convenient personal transportation vehicle, bears the advantages of convenience, non-pollution, safety and lower energy consumption. In accordance with the measured data of the electric bicycle market demand in China as reported in a recent online article at www.chinanews.com.cn/cj/cj-cyzh/news/2010/03-31/2201616.shtml, a copy of which was also filed as Exhibit 99.5 to the Registration Statement of which this prospectus is made a part, it was estimated that 25,000,000 electric bicycles will have been sold in China by the end of 2010. - 4 - Chisen Electric Corporation (Name of Registrant As Specified in its Charter) Nevada 3690 20-2190950 (State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer Identification No.) Incorporation Classification Code Number) or Organization) Jingyi Road, Changxing Economic Development Zone, Changxing County, Zhejiang Province, The People s Republic of China (86) 572-6267666 (Address and Telephone Number of Principal Executive Offices) Vcorp Services, LLC 1811 Silverside Road Wilmington, DE 19810 (888) 528-2677 (Name, Address and Telephone Number of Agent for Service) Copies to: Clayton E. Parker, Esq. Richard I. Anslow, Esq. Matthew Ogurick, Esq. Anslow + Jaclin LLP K&L Gates LLP 195 Route 9 South 200 South Biscayne Boulevard, Suite 3900 Manalapan, NJ 07726 Miami, Florida 33131-2399 Telephone: (732) 409-1212 Telephone: (305) 539-3306 Facsimile: (732) 577-1188 Facsimile: (305) 358-7095 Approximate Date of Proposed Sale to the Public: As soon as practicable after this Registration Statement becomes effective. If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company x CALCULATION OF REGISTRATION FEE Proposed Proposed Maximum Maximum Offering Aggregate Amount of Title of Each Class of Amount To Be Price Offering Registration Securities To Be Registered Registered Per Share Price Fee Common Stock, US$0.001 par value per share (1) $ (1) $ 5,000,000 (1) $ 356.50 Underwriters Warrants to Purchase Common Stock (2) N/A N/A $ N/A (3) Common Stock Underlying Underwriters Warrants, US$0.001 par value per share (4) $ 577,500 (5) $ 67.05 (5) Total Registration Fee N/A $ 423.55 (6) (1) The registration fee for securities to be offered by the Registrant is based on an estimate of the Proposed Maximum Aggregate Offering Price of the securities, and such estimate is solely for the purpose of calculating the registration fee pursuant to Rule 457(o). Includes shares that the Underwriters have the option to purchase from the Registrant to cover over-allotments, if any. (2) Represents the maximum number of warrants, each of which will be exercisable at a percentage of the per share offering price, to purchase the Registrant s common stock to be issued to the Underwriters in connection with the public offering. (3) In accordance with Rule 457(g) under the Securities Act, because the shares of the Registrant s common stock underlying the Underwriters warrants are registered hereby, no separate registration fee is required with respect to the warrants registered hereby. (4) Represents the maximum number of shares of the Registrant s common stock issuable upon exercise of the Underwriters warrants. (5) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(g) under the Securities Act. The Registrant shall issue a warrant to the Underwriter covering a number of shares equal to 7% of the total number of shares of common stock being sold in this offering, and the Registrant estimates the aggregate offering price of 7% of the total number of shares of common stock being sold in this offering to be US$350,000. Therefore, since the warrants shall be exercisable at 165% of the public offering price, the Registrant estimates that the aggregate offering price of the underlying common stock to be US$577,500. (6) Previously paid. The Registrant amends this registration statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this registration statement shall hereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, or until the registration statement shall become effective on such date as the Commission, acting pursuant to Section 8(a), may determine. The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission becomes effective. This prospectus is not an offer to sell these securities and we are not soliciting offers to buy these securities in any state where the offer or sale is not permitted. PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION APRIL 29 , 2011 Shares of Common Stock Chisen Electric Corporation This is a public offering of our common stock. We are a reporting company under Section 13 of the Securities Exchange Act of 1934, as amended. Our shares of common stock are not currently listed or quoted for trading on any national securities exchange. However our common stock is traded under the symbol CIEC on the OTCQB. We have commenced the application process for the listing of our common stock on the NYSE Amex under the symbol CIEC . There is no assurance that such application will be approved. We are offering all of the shares of our common stock offered by this prospectus. We expect that the public offering price of our common stock will be between US$ to US$ per share. Investing in our common stock involves a high degree of risk. Before buying any shares, you should carefully read the discussion of material risks of investing in our common stock in Risk Factors beginning on page 13 of this prospectus. Neither the U.S. Securities and Exchange Commission nor any state securities commission has approved or disapproved of anyone s investment in these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. Per Share Total Public offering price $ $ Underwriting discounts and commissions (1) $ $ Proceeds, before expenses, to Chisen Electric Corporation $ $ (1) The underwriters will receive compensation in addition to the discounts and commissions as set forth under Underwriting . The Underwriters have a 45-day option to purchase up to additional shares of common stock at the public offering price solely to cover over-allotments, if any (the Over-allotment Shares ). If the Underwriters exercise this option in full, the total underwriting discounts and commissions will be US$ , and total proceeds to us, before expenses, from the over-allotment option exercise will be US$ . The Underwriters are offering the common stock as set forth under Underwriting. Delivery of the shares will be made on or about , 2011. Newbridge Securities Corporation The Date of this Prospectus is , 2011 - 2 - Please read this prospectus carefully. It describes our business, our financial condition and results of operations. We have prepared this prospectus so that you will have the information necessary to make an informed investment decision. You should rely only on information contained in this prospectus or any free writing prospectus. We have not, and the Underwriters have not, authorized any other person to provide you with different information. This prospectus is not an offer to sell, nor is it seeking an offer to buy, these securities in any state where the offer or sale is not permitted. The information in this prospectus or any free writing prospectus is complete and accurate as of the date on the front cover, but the information may have changed since that date. PROSPECTUS SUMMARY Because this is only a summary, it does not contain all of the information that may be important to you. You should carefully read the more detailed information contained in this prospectus, including our financial statements and related notes. Our business involves significant risks. You should carefully consider the information under the heading Risk Factors beginning on page 13. As used in this prospectus, unless otherwise indicated, the terms we, our, us, Company, the Registrant and Chisen refer to Chisen Electric Corporation, a Nevada corporation. We conduct our business through our subsidiaries, which include our wholly-owned subsidiary, Fast More Limited, a Hong Kong investment holding company ( Fast More ), its 100% owned and chief operating subsidiary, Zhejiang Chisen Electric Co., Ltd., a wholly foreign owned entity ( WFOE ) organized under the laws of the PRC (f/k/a Changxing Chisen Electric Co., Ltd. and hereinafter referred to as CCEC ) and CCEC s subsidiary, Chisen Electric Jiangsu Co., Ltd. ( CEJC ). China or PRC refers to the People s Republic of China. RMB or Renminbi refers to the legal currency of China and $ , US$ or U.S. Dollars refers to the legal currency of the United States. Company Overview We are one of the leading producers of sealed lead-acid motive batteries, also known as valve regulated lead-acid motive batteries, in China's personal transportation device market by ranking as one of the top three manufacturers in China in terms of production. Our motive battery products, sold under our own brand name Chisen , are predominantly used in electric bicycles and are distributed and sold in China. Among all types of batteries for electric bicycles, the lead-acid motive battery is the preferred choice of electric bicycle manufacturers in China, accounting for 95% of the market share because of its cost efficiency. Currently, we manufacture over 14,480,000 sealed lead-acid motive batteries each year, have more than 2,500 employees and are one of China's largest manufacturers of sealed lead-acid motive batteries for electric-powered bicycles (LABEBs). For each of our fiscal years ended March 31, 2010 and 2009, sales revenues were US$177,192,000 and US$109,020,000, respectively, and our net income during the same periods amounted to US$9,500,000 and US$8,880,000, respectively. For the nine months ended December 31, 2010, our sales revenue and net income were US$194,712,000 and US$9,496,000 respectively. China Battery Industry Competitive Business Conditions and Market Trends We believe that in the next several years, due to intensifying global environmental concerns, there will be increased development of the electric bicycle. At the 2009 United Nations Climate Change Conference, the Chinese Government announced that in 2020, greenhouse gas emissions will be reduced approximately 40% to 45% from 2005 levels. Due to the fact that electric bicycle usage is very much in line with the energy-saving and environmental protection policy initiated by the Chinese government, the further development of electric bicycles has garnered government support. The electric bicycle, as an environment-friendly and convenient personal transportation vehicle, bears the advantages of convenience, non-pollution, safety and lower energy consumption. In accordance with the measured data of the electric bicycle market demand in China as reported in a recent online article at www.chinanews.com.cn/cj/cj-cyzh/news/2010/03-31/2201616.shtml, a copy of which was also filed as Exhibit 99.5 to the Registration Statement of which this prospectus is made a part, it was estimated that 25,000,000 electric bicycles will have been sold in China by the end of 2010. - 4 - With respect to new product trends in the market, Europe, the United States and Japan now use primarily a lithium-ion battery. This reflects a trend not only in the electric bicycle industry, but also in the electric automobile and telecommunications industries. In contrast, 95% of all electric bicycles produced in 2009 in China were powered by lead-acid motive batteries, and less than 5% of electric bicycles produced in 2009 were powered by lithium-ion batteries. Governments in the United States, Japan, Europe and China are encouraging the development of motive battery products that are more environmentally friendly with increased power output and less weight. Although we expect the development of lithium-ion batteries to accelerate over the next few years, we do not believe that the lithium-ion battery will replace the usage of the lead-acid motive battery in the electric bicycle industry in the next 3 to 5 years unless there is significant improvement with the safety and cost of production of lithium-ion batteries. The Company has been issued certificates from top electric bicycle manufacturers in China which evidence that the Company s products are the preferred brand of such manufacturers, including Aima and Xinri, whereby we provide to such manufacturers our best pricing and payment terms in exchange for receiving higher priority over our competitors in terms of supplying batteries to such manufacturers. For example, it is general practice that our preferred customers generally pay 8% to 10% lower for our batteries compared with the price our other customers pay and such preferred customers are also entitled to extend the payment term for up to 2 months longer than our other customers and in return, we receive first position on such customers supplier lists which enables us to obtain purchase orders prior to our competitors as well as to sell larger quantities of our batteries to such customers as compared with our competitors. Xinri s electric bicycle was utilized at the Beijing 2008 Olympic Games and at the Paralympics Games, which we believe is a great honor in China. We were also chosen as the only manufacturer to supply lead-acid motive batteries to Xinri for its electric bicycle used at the Beijing 2008 Olympic Games and Paralympics Games. We are also an alternative power source sponsor at the 2010 Shanghai World Expo, providing eco-friendly solutions to power road signage at select Expo Park locations. Based on this, in the next several years, we will strive to create an international first-class brand and become the leader in providing green energy in the electric bicycle marketplace. Simultaneously, through constant research and development of new chemical energy technologies, we believe the Company will provide energy-savings and highly-effective energy solutions to our customers for the purpose of improving the quality of human life and a sustainable ecological environment. Our Market Share According to the China Battery Industry Association (the Association ), we are one of the top three manufacturers of LABEBs in China in terms of production as of December 31, 2009. The China Battery Industry Association is an official organization established by the PRC government comprised of members representing approximately 475 battery manufacturers in China including Mr. Xu Kecheng, our President, Chief Executive Officer and Chairman of the Board, on behalf of the Company. Mr. Xu Kecheng does not sit on the board of the China Battery Industry Association and has no influence on the operations of the Association, including, without limitation, participation in the research activities of the Association. Our Competitive Strengths We believe the following strengths contribute to our competitive advantages and differentiate us from our competitors: Production capacity Established brand awareness Market position Well-established distribution channels - 5 - Our cooperative partnership with clients Research and development Development Strategy of the Company We strive to create an international first-class brand and become one of the leaders in providing green energy in the global electric bicycle market. Our goal is to become the largest battery developer and producer with a first-class sales and service network in China. The top five lead-acid motive battery manufacturers as of March 31, 2010 accounted for over 50% of the total market share in terms of production in China. The Company was ranked third in terms of production in the industry according to data generated by the China Battery Industry Association. In order to maintain the position as one of the leaders in the industry, we actively search for acquisition targets to expand our market share and to develop our production capacity; however as of the date of this prospectus, we do not have any agreements with any targets and are not currently in any negotiations with any target companies. In addition, our development strategy is committed to the following: Expansion of our production capacity Expand offering of highly efficient battery products Expand sales network and distribution channels Build partnerships with new and existing clients Corporate Background and Information Prior Operations of World Trophy Our predecessor, World Trophy Outfitters, Inc. (this prospectus uses the term World Trophy when we discuss the operations of the Registrant prior to November 12, 2008), was formed as a Nevada corporation on January 13, 2005, and was in the business of selling big game hunting packages to high end clients who sought to hunt with the top tier big game outfitters. During the year ended March 31, 2008, World Trophy sold its entire inventory of big game hunts, was unsuccessful in developing a profitable business and ceased its operations effective April 1, 2008. Prior to the Exchange (as defined and discussed below), World Trophy focused its efforts on seeking a business opportunity and had been in the process of locating and negotiating with business entities for the merger of a target company into World Trophy. Reverse Merger Transaction and Our Subsidiaries On November 12, 2008, World Trophy entered into a Share Exchange Agreement (the Exchange ) with Fast More, Cheer Gold Development Limited, a company organized under the laws of Samoa ( Cheer Gold ) and Floster Investment Limited, a company organized under the laws of Samoa ( Floster and together with Cheer Gold, the Stockholders ). Immediately prior to the Exchange, World Trophy was a shell company with US$51,039 in assets and a net loss of US$27,977 for the three months ended September 30, 2008. Upon the closing of the Exchange, the Company did not have any liabilities. As a result of the Exchange, World Trophy acquired all of the issued and outstanding securities of Fast More from the Stockholders in exchange for 35,000,000 newly-issued shares of World Trophy s common stock. Upon the closing of the Exchange, the Stockholders collectively beneficially own 70% of the voting capital stock of the Company, 65.8% of which is owned by Cheer Gold and 4.2% of which is owned by Floster. As a result of the Exchange, Fast More became a wholly-owned subsidiary of World Trophy. Effective February 2, 2009, we amended our Articles of Incorporation to change our name from World Trophy Outfitters, Inc. to Chisen Electric Corporation . - 6 - Fast More is an investment holding company incorporated in Hong Kong on December 17, 2007 with limited liability. CCEC was founded in Huzhou, Zhejiang Province in China on February 25, 2002. On February 16, 2008, Fast More acquired the 51%, 9% and 40% equity interests in CCEC from Mr. Xu Kecheng, Mr. Xu Keyong and BEME International Co., Ltd., respectively. Upon the completion of these acquisition transactions, CCEC became the wholly-owned and chief operating subsidiary of Fast More. On May 18, 2009, the Registrant incorporated Chisen Technology Holdings Corporation in Nevada as its wholly-owned subsidiary with the intention of potentially conducting business in the United States. Chisen Technology Holdings Corporation is authorized to do business in the State of Washington and as of the date of this prospectus, has no operations. The Company intends to dissolve this entity. Corporate Information Our offices are located in the Changxing Economic Development Zone at the bank of the Taihu Lake in the County of Changxing in Zhejiang Province, in close proximity to major national transportation systems, including National Highways 104 and 318, the Shanghai Jiangsu Zhejiang Anhui Hangzhou Nanjing Expressway, the Changxing Huzhou Shanghai Channel, the Xuancheng Hangzhou Railway and the Xinyi Changxing Railway. Our corporate offices are located at Jingyi Road, Changxing Economic Development Zone, Changxing, Zhejiang Province, The People s Republic of China. Our telephone number is (86) 572-6267666 and our corporate website in English is located at www.chisenelectric.com . We are a reporting company under Section 13 of the Securities Exchange Act of 1934, as amended. Our shares of common stock are not currently listed or quoted for trading on any national securities exchange however our common stock currently trades under the symbol CIEC on the OTCQB. We have commenced the application process for the listing of our common stock on the NYSE Amex under the symbol CIEC . Corporate Structure Our corporate structure is illustrated as follows: - 7 - Our Challenges Our ability to achieve our objectives and execute our strategies is subject to risks and uncertainties. We believe the following are the major risks and uncertainties that may materially affect us: We have depended on a small number of customers for the vast majority of our sales. A reduction in business from any of these customers could cause a significant decline in our sales and profitability. A substantial portion of our assets has been comprised of trade receivables representing amounts owed by a small number of customers. If any of these customers fails to timely pay us amounts owed, we could suffer a significant decline in cash flow and liquidity which, in turn, could cause us to be unable to pay our liabilities and purchase an adequate amount of inventory to sustain or expand our sales volume. Risk of fluctuations in the prices of raw materials could adversely affect our business. We choose to rely on a limited number of suppliers for our raw materials and have short term supply agreements with such suppliers, and any unanticipated disruptions or slowdowns by such suppliers, shipping companies and our distribution centers could adversely affect our ability to deliver our products and services to our customers which could materially and adversely affect our relationships with our customers and our revenues. We currently rely on short term bank loans and non-interest bearing credits granted by banks for the issuance of notes payable, however we expect that we will need additional capital to implement our current business strategy of expansion of our production facilities in Changxing County and Jiangsu Province, and we will need to find new sources of financing, which may not be available to us. - 8 - We face a risk of non-compliance with the terms of our notes payable, bill financing and short-term bank loans, which are secured by a significant amount of our assets and could have an adverse affect on our business. In light of recent trends in Europe and the U.S., lead-acid motive battery products may be substituted by other battery products which could have an adverse effect on our business. Lead pollution in China is subject to more attention from the government, which may cause the Chinese government to increase the environmental compliance standards for lead-acid batteries production. As a result, our costs of environmental compliance may increase in order to meet any heightened standards. We may be affected by changes in the policies adopted by the PRC government in relation to the electric bicycle industry and the use of electric bicycles. Our actual losses resulting from our relocation of our production facilities in Changxing County may significantly exceed the estimated amount provided for in our relocation agreement with the Administrative Committee of Changxing Economic Development Zone, which could have an adverse effect on our business. If the land use rights of our landlord are revoked, we would be forced to relocate operations, which could have an adverse affect on our financial condition and results of operations. Please see "Risk Factors" and other information included in this prospectus for a detailed discussion of these risks and uncertainties. The Offering Common stock we are offering shares (1) Common stock included in the Underwriter s option to purchase shares from us to cover over-allotments, if any shares Common stock outstanding after the offering shares (2) Offering price US$ to US$ per share (estimate) Use of Proceeds We intend to use the net proceeds from this offering to construct a new production plant in Changxing County (Zhejiang Province) for the development and production of a new product, lithium-ion batteries. See Use of Proceeds on page 35 or more information on the use of proceeds. Risk factors Investing in these securities involves a high degree of risk. As an investor you should be able to bear a complete loss of your investment. You should carefully consider the information set forth in the Risk Factors section beginning on page 13. NYSE Amex proposed ticker symbol We have commenced the application process for the listing of our common stock on the NYSE Amex under the symbol CIEC . - 9 - Underwriter s Warrants Upon the closing of this offering, we will issue to Newbridge Securities Corporation common stock purchase warrants covering a number of shares of our common stock equal to 7% of the total number of shares of common stock being sold in this offering, including the Over-allotment Shares. The Underwriter s Warrants will be non-exercisable for 6 months after the effective date of this offering and will expire 5 years after such date. The Underwriter s Warrants will be exercisable at a price equal to 165% of the public offering price, and the Underwriter s Warrants will not be redeemable. We are registering the Underwriter s Warrants and the shares of common stock underlying such Underwriter s Warrants hereunder in this offering. The Underwriter s Warrants may not be transferred, assigned, or hypothecated for a period of 6 months following the closing of this offering, except that they may be assigned, in whole or in part, to any successor, officer, manager or member of Newbridge Securities Corporation (or to officers, managers or members of any such successor or member) and to members of the underwriting syndicate or selling group. The Underwriter s Warrants may be exercised as to all or a lesser number of underlying shares of common stock and will provide for cashless exercise and will for a period of 5 years after the effective date of this offering contain provisions for one demand registration of the sale of the underlying shares of common stock at our expense, an additional demand registration at the warrant holders expense and unlimited piggyback registration rights for a period of 5 years following the effective date of this offering at our expense. See Description of Securities on page 107 for more information. Advisory Agreement Upon the closing of this offering, we will enter into a corporate advisory engagement with Newbridge Securities Corporation for a period of 12 months whereby we shall pay to Newbridge Securities Corporation a monthly retainer payment as well as other customary terms to be mutually agreed upon. See Underwriting. (1) Excludes (i) up to shares of common stock underlying warrants to be received by the Underwriter in this offering and (ii) the shares of our common stock that we may issue upon the Underwriter s over-allotment option exercise. (2) Based on 50,000,000 shares of common stock issued and outstanding as of the date of this prospectus and shares of common stock to be issued in the public offering, which (i) excludes the Underwriter s warrants to purchase shares of our common stock, (ii) excludes shares of common stock underlying warrants that are exercisable at US$ per share and (iii) excludes shares of our common stock that we may issue upon the Underwriter s over-allotment option exercise.
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+PROSPECTUS SUMMARY This summary is a brief overview of the key aspects of this offering and highlights selected information contained elsewhere in this prospectus. This summary does not contain all the information that you should consider before investing in the common stock. You should carefully read the entire prospectus, including Risk Factors , Management s Discussion and Analysis of Financial Condition and Results of Operations and the Financial Statements, before making an investment decision. As used in this prospectus, unless the context otherwise requires, the words we , our and us and words of similar import refers to UAN Cultural & Creative Co., Ltd. Specific discussions or comments relating Good Harbor Partners Acquisitions Corp., our predecessor company, will reference Good Harbor . PRELUDE The Company formerly was a shell company. The Company has initiated operations, and is no longer a shell company. The Company has also changed its certifying accounting firm. To date we have had limited operations and have incurred substantial losses. BACKGROUND We were formed on August 10, 2005 to serve as a vehicle to effect a merger, capital stock exchange, asset acquisition or other similar business combination with an entity that has an operating business in the security industry (collectively, a Business Combination ). We completed an initial public offering ( IPO ) on March 15, 2006 based on that business plan. Stockholder funds raised in the IPO were segregated in a trust account and we were obligated to return the segregated funds to the investors in the event the Business Combination was not completed within 18-months (24-months, under certain circumstances). By the end of the 18-month period we had not engaged in any operations, generated any revenues, or incurred any debt or expenses other than in connection with our IPO. Since we were not able to consummate our business plan and the Business Combination was not completed within the required time period, we liquidated the segregated funds held in the trust account, returned the funds to the investors in the IPO, redeemed the Class B Common Stock the investors acquired in the IPO and reconstituted the company as an ongoing business corporation. As a result of the foregoing, we became a public shell company. The securities issued in our IPO consisted of Class A Common Stock, which is now regular Common Stock, Class W Warrants, Class Z Warrants, Class B Common Stock which was redeemed from the stockholders when the funds raised in the IPO were returned to them and is no longer outstanding, Class A Units which consisted of two shares of Class A Common Stock and ten Class Z Warrants, and Class B Units which consisted of two shares of Class B Common Stock and two Class W Warrants. The Class W Warrants expired on March 7, 2011. We experienced a change in control on June 30, 2010, both at the stockholder and director levels as the result of the purchase of 35,095,100 shares of our Common Stock, approximately 95.6 percent of our Common Stock which was issued and outstanding on that date, by 8 persons and the simultaneous reconstitution of our Board of Directors (collectively, the Transaction ). Our new Board of Directors have created a new business plan and we have initiated that business involving the sale and appraisal of authentic and high quality works of art, primarily paintings, initially in Taiwan. In August, 2010, we amended our Certificate of Incorporation (the Certificate ) to change our name from Good Harbor Partners Acquisition Corp. to UAN Cultural & Creative Co., Ltd. and effect a one for ten reverse stock split of our Common Stock. We commenced operations in August 2010. During the period commencing October 21, 2010 and ended November 1, 2010 we completed an off shore private placement of 50,000,000 shares of our common stock at a price of $0.02 per share generating gross proceeds of $1,000,000 (the 2010 Private Placement ). BUSINESS OVERVIEW Since the closing of the Transition and the resulting change of control, our management has been launching our art business plan. On July 23, 2010, two of our stockholders, one of which, David Chen-Te Yen, is our president, chairman and owns approximately 42% of our common stock, loaned us an aggregate of $500,000 ($300,000 of which was from David Chen-Te Yen and $200,000 of which was from Yuan-Hao Chang) which loans are payable on demand and bear interest at the rate of 8% per annum. As of March 31, 2011, the outstanding balance due on these notes were $200,000. On November 1, 2010 we completed an off shore private placement of 50,000,000 shares of our common stock at a price of $0.02 per share generating gross proceeds of approximately $1,000,000 (the 2010 Private Placement ). We have used these funds to initiate and further our art business plan. Additional funds may be required for us to be successful. On August 20, 2010, we signed a lease for our initial art gallery which is located in Luzhu Township, Taiwan. We also acquired furniture, fixtures and improvements, at a cost of $250,000, such that the gallery would provide a showcase from which to initiate our operations. The gallery provides an elegant and comfortable setting from which we sell our artworks and conduct art shows, exhibitions, private showings, meetings, cocktail parties and other gatherings for the benefit of both our customers and featured artists. We are currently offering for sale paintings that we purchased for resale and paintings which we are offering for sale on a consignment basis. The gallery currently opens on weekends during which we sell our artworks and conduct art shows and exhibitions that we advertise to potential customers in the geographic area close to the galley as well as to potential customers in surrounding cities who our sales force has identified as potential purchasers of our art works. During Monday thru Friday, the gallery opens on an appointment basis for private showings of our artwork to potential customers. With this approach, we are able to control our operating expenses. We also are offering on a selective basis customized paintings to our customers through our sales representatives, which include commutative portraits painted by student-artists who we retain as independent contractors at a low cost to us. In addition, our website, http://www.uanusa.com/ main.php, is now operational. It contains a statement of our mission, identifies certain of our featured artists, as well as pictures of certain paintings that we are currently offering for sale at our gallery. We are also offering memberships in our club called, the UAN Club. Members can join UAN Club by registering on-line. Where You Can Find Us Our principal executive office is located at 2095 E. Big Beaver Road, Suite 200, Troy, MI 48083. Our telephone number is (586) 530-5605. Our internet address is http://www.uanusa.com/main.php. The Offering Common stock offered by selling security holders 39,256,735 shares of common stock. Common stock outstanding before the offering 53,672,708 common shares as of July 29, 2011. Common stock outstanding after the offering 53,672,708 shares. Terms of the Offering The selling security holders will determine when and how they will sell the common stock offered in this prospectus. Use of proceeds We are not selling any shares of the common stock covered by this prospectus, and, as a result, will not receive any proceeds from this offering. OTCBB Trading Symbol UCCC Risk Factors The common stock offered hereby involves a high degree of risk and should not be purchased by investors who cannot afford the loss of their entire investment. See Risk Factors beginning on page 9.
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001340127_carbonite_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001340127_carbonite_prospectus_summary.txt
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+PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001341281_intelsat_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001341281_intelsat_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
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+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001353505_voiceserve_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001353505_voiceserve_prospectus_summary.txt
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+PROSPECTUS SUMMARY This summary highlights selected information contained elsewhere in this prospectus. This summary does not contain all the information that you should consider before investing in the common stock. You should carefully read the entire prospectus, including Risk Factors, Management s Discussion and Analysis of Financial Condition and Results of Operations and the Financial Statements, before making an investment decision. In this Prospectus, the terms Voiceserve, Company, we, us and our refer to Voiceserve, Inc. OVERVIEW Our mission is to enhance the telephony business via the internet enabling entrepreneurs to offer a full array of telephony services globally. Since the company was founded, we have worked to achieve this mission by creating technology that addresses the principle communication needs via the economical use of the internet backbone. We develop and market software, services and solutions that we believe empowers our customers to communicate more efficiently and economically through the Internet throughout the world. We believe VoipSwitch s software enables communications providers, businesses, enterprises, hotels and cruise liners to communicate using the latest sophisticated software technology. Our customers purchase a license from us. The VoipSwitch license is a central medium in a telecommunications network that connects telephone calls from one phone line to another entirely by means of software running on a computerized system. This work was formerly carried out by hardware with physical switchboards to route the calls. VoipSwitch has created an environment whereby the VoipSwitch license purchaser can control all his clients activity via the Internet. VoipSwitch controls connections at the junction point between circuit and packet networks. The end user can make calls from a computer, mobile phone, land line or using a device that links to the internet directly. End users can manage their account online via their specific user names and passwords, with all the basic features available with landline communication systems plus many more convenient parameters. These include for example, call forwarding voice mail sending text messages and the most basic telephone exchange standard features. We do not have any patents. Capital devoted to research and development is used towards expanding our current communications business. We generate revenue by developing, manufacturing, licensing, and supporting a wide range of internet software products and services for many different types of communication devices. Our focus is to build on this foundation through ongoing innovation in our integrated software platforms, by delivering compelling value propositions to customers, by responding effectively to customer and partner needs, and by continuing to emphasize the importance of product excellence, business efficacy, and accountability. Software manufacturing is based on developing and creating source codes . Source code is a collection of programming written in human-readable computer programming language. Source code is the means used by programmers to specify the actions to be performed by a computer. The source code which constitutes a program is held in one or more text files, and stored in databases..Our source codes are written by a group of technicians to handle the features we sell and market.. Through the sales of the current features, the clients demands and requirements become more apparent. In turn the developers and engineers work systematically to meet these demands. Part of the capital raised is being used to increase the number of technicians to work on these features. Company History 4306, Inc. was incorporated on December 9, 2005 under the laws of the State of Delaware to engage in any lawful corporate undertaking, including, but not limited to, selected mergers and acquisitions. We act as a holding company for our subsidiaries; we have had no operations since inception. On February 20, 2007, the Company entered into a share exchange agreement with Voiceserve Limited, a United Kingdom corporation whose principal place of business at the time of purchase was located at Cavendish House, 369 Burnt Oak Broadway, Edgware, Middlesex HA8 5AW and the shareholders of Voiceserve Limited. The Agreement provided for the acquisition of Voiceserve by the Company, whereby Voiceserve became a wholly owned subsidiary of the Company. On February 20, 2007, we acquired all of the outstanding capital stock of Voiceserve in exchange for the issuance of 20,000,000 shares of 4306, Inc. common stock to the Voiceserve shareholders. In addition, the shareholders of Voiceserve, agreed to cancel their 100,000 shares of the outstanding common stock of 4306, Inc. Based upon same, Voiceserve became our wholly-owned subsidiary. Following the merger, we operate our business through our wholly-owned subsidiary, Voiceserve Limited, which is engaged in the global telecommunications industry. We changed our name to Voiceserve, Inc. to reflect our new business plan. On January 15, 2008, VoiceServe closed an Acquisition Agreement with VoIPSwitch Inc. ( VoIPSwitch ) whereby VoiceServe acquired all VoIPSwitch issued and outstanding ordinary shares as well as all of VoipSwitch s assets, including customer orders and intangible assets, for total consideration of $3,000,000 ($450,000 cash, $150,000 notes payable due on demand, $600,000 notes payable in total monthly installments of $50,000 per month for 12 months, and 3,750,000 shares of VoiceServe common stock valued at $0.48 per share or $1,800,000). The $150,000 notes payable due to the sellers of VoipSwitch Inc, which was non-interest bearing and due on demand, was satisfied on December 7, 2010 and was added to goodwill. Table of Contents Payment of the monthly installments of the $600,000 notes payable is contingent upon and limited each month to the future monthly net income of VoIPSwitch. Accordingly, pursuant to SFAS No. 141, this $600,000 contingent consideration portion of the $3,000,000 total purchase price was not included in the initial recorded cost of the acquisition or the recorded notes payable. If and when the contingency is resolved and payments of the $600,000 notes payable are made, such paid amounts will be added to goodwill. In February and March 2008, $100,000 of the $600,000 contingent consideration notes payable was paid and added to goodwill. In the year ended March 31, 2009, an additional $99,000 of the $600,000 contingent consideration notes payable was paid and added to goodwill. In the three months ended June 30, 2009, an additional $88,000 of the $600,000 contingent consideration notes payable was paid and added to goodwill. On December 7, 2010, pursuant to a verbal agreement on October 19, 2010, Voiceserve issued a total of 2,250,000 SEC Rule 144 restricted shares of its common stock to the three sellers of VoipSwitch in full and final satisfaction of debt totaling $463,000, consisting of the $150,000 demand note payable and the remaining $313,000 contingent consideration potential amount due the three sellers. PRIVATE OFFERINGS On May 26, 2010, we closed on a private placement which raised gross proceeds of $690,000 through the sale of 2,760,000 shares of our common stock and warrants to purchase 1,380,000 shares of our common stock to certain accredited investors. The investors entered into a securities purchase agreement (the Securities Purchase Agreement ) (see Exhibit 10.1), for the sale of our common stock, $0.0001 par value per share. Pursuant to the terms of the Securities Purchase Agreement, we offered the shares for sale at a purchase price of $0.25 per share. Each investor also received a five (5) year warrant (the Warrant ) (see Exhibit 10.3), to purchase a number of shares of common stock equal to fifty percent (50%) of the number of shares of common stock which the investor purchased in this offering at an exercise price of $0.50 per share. In connection with the securities purchase agreement, the parties entered into a registration rights agreement (the Registration Rights Agreement ) (see Exhibit 10.2), to register the shares for resale. WHERE YOU CAN FIND US Our principal executive office is located at Grosvenor House, 1 High Street Middlesex. HA8 7TA England and our telephone number is +44-208-136-6000. Our internet address is http://www.voiceservegroup.com/. WHERE YOU CAN FIND ADDITIONAL INFORMATION We filed with the Securities and Exchange Commission a registration statement under the Securities Act of 1933 for the shares of common stock in this offering. This prospectus does not contain all of the information in the registration statement and the exhibits and schedule that were filed with the registration statement. For further information with respect to us and our common stock, we refer you to the registration statement and the exhibits and schedule that were filed with the registration statement. Statements contained in this prospectus about the contents of any contract or any other document that is filed as an exhibit to the registration statement are not necessarily complete, and we refer you to the full text of the contract or other document filed as an exhibit to the registration statement. A copy of the registration statement and the exhibits and schedules that were filed with the registration statement may be inspected without charge at the Public Reference Room maintained by the Securities and Exchange Commission at 100 F. Street, N.E., Washington, DC 20549-6010, and copies of all or any part of the registration statement may be obtained from the Securities and Exchange Commission upon payment of the prescribed fee. Information regarding the operation of the Public Reference Room may be obtained by calling the Securities and Exchange Commission at 1-800-SEC-0330. The Securities and Exchange Commission maintains a web site that contains reports, proxy and information statements, and other information regarding registrants that file electronically with the SEC. The address of the site is www.sec.gov. Table of Contents THE OFFERING Terms of the Offering The selling shareholders named in this prospectus are offering all of the shares of common stock offered through this prospectus. The selling stockholders are selling shares of common stock covered by this prospectus for their own account. Use of proceeds We will not receive any of the proceeds from the resale of these shares. See Use of Proceeds on page 10 for more information on the use of proceeds. We have agreed to bear the expenses relating to the registration of the shares for the selling security holders. OTCBB Trading Symbol VSRV. OB Risk Factors The common stock offered hereby involves a high degree of risk and should not be purchased by investors who cannot afford the loss of their entire investment. See Risk Factors beginning on page 6 .
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+PROSPECTUS SUMMARY The following summary highlights selected information contained in this prospectus. Since it is a summary, it does not contain all the information you should consider before investing in our common stock. Before making any investment decision, you should read the entire prospectus carefully, including the Risk Factors section of this prospectus beginning on page 10, the financial statements and the notes to the financial statements. Unless stated otherwise, references in this prospectus to the terms KaChing, the Company, we, us, or our refer to the ongoing operations of KaChing KaChing, Inc., a Delaware corporation, formerly known as Duke Mining Company, Inc; KaChing Nevada refers to KaChing KaChing, Inc., the Nevada corporation with which we merged and whose operations we currently conduct, all as further described elsewhere in this prospectus; and Duke Delaware refers to our operations prior to the merger with KaChing Nevada. The selling stockholders refers, collectively, to the selling stockholders named in this prospectus under the heading Selling Stockholders. Overview We are focused on providing solutions and services to individuals seeking to become Internet-based retailers. Our services and solutions are provided through our website www.kachingkaching.com that we established in September 2009 and officially launched in August 2010. Specifically, we provide the means by which individuals ( Web Store Owners ) may create and manage their own Internet retail websites ( Web Stores ), and earn commissions from the sale of products at their Web Stores. In exchange for an initial license fee and monthly license fees, we make available to Web Store Owners (i) solutions and resources necessary to create, design and maintain a Web Store; (ii) access to a broad selection of high-quality retail goods at competitive prices; and (iii) order fulfillment, customer service and other back-office functions, which assist Web Store Owners with tracking and managing orders and sales from their Web Stores. In turn, Web Store Owners can earn commissions from the sale of products they make available at their Web Stores. Our plan is to generate revenues in the following ways: selling licenses to Web Store Owners; monthly licensing fees that we receive from the Web Store Owners; and product sales that are effected through the Web Stores. We offer a broad selection of products from which Web Store Owners can stock their Web Stores, including the following product categories: books, music, video, games, computer hardware and software, toys, kitchen appliances, home and garden supplies, pet supplies, cosmetics and fragrances, health and wellness products, consumer electronics, office supplies and sporting goods, among others. Major brands available at Web Stores include Sony, Panasonic, Apple, Bulgari and Ralph Lauren, among others. Web Store Owners may market and sell at their Web Stores all of the product categories we offer, or they may opt to market and sell a limited selection of products. In any event, Web Stores may offer only those products we make available to them via our relationships with multiple manufacturers and distributors of quality and brand name consumer products. Web Store Owners also benefit from the comparably low prices at which our manufacturers and distributors make their products available, which allows Web Store Owners to market and sell products at competitive prices. We do not carry product inventory or provide the fulfillment services. All orders placed by purchasers through the Web Stores of our Web Store Owners are shipped directly from the manufacturer or distributor to the customer as requested. As a result, we eliminate all warehousing expenses that we (or the Web Store Owners) would otherwise incur. Additionally, with the assistance of Beyond Commerce, Inc. ( BYOC ), our largest stockholder, we provide order fulfillment, customer service, support and related functions for each Web Store. These arrangements provide our Web Store Owners with access to back-office support for product selection, shipping, returns, refunds, customer service and pricing, and allows them to easily manage their Web Stores and track orders, deliveries and commissions. Our objective is to become the leading e-commerce company focused on providing E-commerce solutions and services to individuals seeking to become Internet retailers. Since our formation in September 2009, we have focused on recruiting Web Store Owners, fine-tuning our licensee compensation structure, transitioning certain support and administrative functions from BYOC to our operations, and launching an updated, fully integrated Web Store platform. As a result, from September 2009 through August 2010, there were only minimal sales of products through the third party Web Stores. Prior to our launch of the fully integrated and operational Web Store platform in August 2010, our Web Store Owners had limited ability to sell products. In August 2010, we launched our new Web Store platform and a new marketing initiative to increase the number of Web Store licenses issued. Now that our Web Store platform is fully capable of effecting on-line sales, we are able to generate revenues from Web Store product sales. As of December 31, 2010, we have sold licenses to approximately 3,500 Web Store Owners and had approximately 105,000 active Web Stores (i.e. Web Stores that currently sell or have the ability to sell). In addition to the Webstores, we also acquired approximately 97,000 ShopToEarth webstores in our November 2010 acquisition of certain assets of ShopToEarth, Inc. described below. In November 2010, we acquired most of the assets of ShopToEarth, Inc., a leading direct sales affiliate e-commerce online retailer that has long-established partnerships with over 2,300 nationally recognized retailers such as Wal-Mart, Home Depot, EBay, Petsmart and Target, and offers over 20,000 green products through its relationship with 300-plus retailers such as Avalon Organics, Burt's Bees, Seventh Generation and Alba. Although ShopToEarth also is an e-commerce online retailer, its business model differs from our Web Store business; customers who purchase products online through the ShopToEarth platform purchase those products from other retailers (such as Walmart, Target, etc.), while customer who purchase products online through the Kaching Kaching Web Store platform purchase those products directly from the product manufacturer or distributor (via KaChing Kaching acting as the conduit). We believe that the ShopToEarth business is complementary to our Web Store business. Accordingly, we currently offer our Web Store owners the opportunity to sell products through a ShopToEarth online transaction, and a number of former sales representatives of ShopToEarth now also operate Kaching Kaching Web Stores. Although we are currently integrating the ShopToEarth operations with our operations, we have not finally determined how these two operations will be ultimately be combined and conducted. Corporate History We were incorporated as a limited liability company in the State of Delaware under the name of Somebox, Inc. on April 28, 2003, and subsequently converted into a C-corporation on April 12, 2005. In October 2006, we changed our name to Boxwoods, Inc. and soon thereafter discontinued our prior business operations. In March 2009, we acquired certain mineral rights to a 640-acre property, located in San Juan County, Utah. In connection with the acquisition, we changed our name to Duke Mining Company, Inc. Because we were unable to finance our proposed commercial exploitation of the mineral rights, in October 2009 we sold those mineral rights. As a result of the sale, we had no operations or assets. On April 22, 2010, we entered into an Agreement and Plan of Merger (the Merger Agreement ), with KaChing KaChing, Inc., a corporation incorporated under the laws of the State of Nevada ( KaChing Nevada ). Pursuant to the Merger Agreement, on April 22, 2010 KaChing Nevada merged with and into us (the Merger ). In connection with the Merger we changed our name to KaChing KaChing, Inc, and succeeded to the business of KaChing Nevada (which currently is our sole line of business). See Description of Business for a more comprehensive description of our business. Our principal executive offices are located at 750 Coronado Center Drive, Suite 120, Henderson, Nevada 89052. Our telephone number is (702) 589-7555 and our website address is www.kachingkaching.com. Information included or referred to on our website is not a part of this prospectus. The information in this prospectus is not complete and may be changed. The securities offered pursuant to this prospectus may not be sold until the registration statement filed with the Securities and Exchange Commission becomes effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. PRELIMINARY PROSPECTUS Subject To Completion January 20, 2011 KACHING KACHING, INC. 12,395,395 SHARES OF COMMON STOCK This prospectus relates to the resale by the selling stockholders identified herein of up to 12,395,395 shares of our common stock, par value $0.0001 per share. The selling stockholders may sell common stock from time to time in the principal market on which the stock is traded at the prevailing market price or in negotiated transactions. We will not receive any proceeds from sales by the selling stockholders. The selling stockholders named herein may be deemed underwriters of the shares of common stock that they are offering. See the discussion under Plan of Distribution. Our common stock is presently quoted for trading on the OTC Bulletin Board under the symbol KCKC . The last sale price of our common stock as listed by Nasdaq on January 13, 2011 was $2.15 per share. We will be responsible for all fees and expenses incurred in connection with the preparation and filing of this registration statement, provided, however, we will not be required to pay any underwriters discounts or commissions relating to the securities covered by the registration statement. This prospectus is not an offer to sell, nor is it seeking an offer to buy, these securities in any state where the offer or sale is not permitted. The information in this prospectus is complete and accurate as of the date on the front cover, but the information may have changed since that date. Investing in our common stock involves a high degree of risk. Before buying any shares, you should carefully read the discussion of material risks of investing in our common stock in Risk Factors beginning on page 10 of this prospectus. Neither the U.S. Securities and Exchange Commission nor any state securities commission has approved or disapproved of anyone s investment in these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The date of this prospectus is __________, 2011. Recent Developments ShopToEarth. On November 15, 2010, we acquired substantially all of the assets of ShopToEarth, Inc., a Nevada corporation and a direct sales affiliate e-commerce online retailer ( ShopToEarth ), in exchange for an aggregate of 2,231,295 shares of our common stock and our assumption of certain liabilities relating to the acquired assets. The acquired assets include intellectual property, trademarks, marketing materials, and sales representatives relating to ShopToEarth s business. Of the 2,231,295 shares issued in consideration of the acquired assets, 1,231,295 shares were issued to the seller immediately and the remaining 1,000,000 shares will be held in escrow, to be distributed, in equal installments, during the period commencing on June 15, 2011 and expiring on November 15, 2011. Concurrently with the execution of the purchase of the ShopToEarth assets, we also entered into an automatically renewing employment agreement with Patrick Welsh, the Chief Executive Officer of ShopToEarth. Under the employment agreement, Mr. Welsh will become a Web Store Owner and also an executive director of business development for the Company. Mr. Welsh s compensation shall be based on commissions generated from our Web Store Owner compensation plan. We also agreed to grant options to Mr. Welsh for the purchase of 3,000,000 shares of our common stock over a three-year period at varying price levels, based upon the achievement of defined goals. The options vest upon the attainment of those goals. ShopToEarth is a leading direct sales affiliate e-commerce online retailer and has long-established partnerships with over 2,300 nationally recognized retailers such as Wal-Mart, Home Depot, EBay, Petsmart and Target, while also providing over 20,000 environmentally friendly ( green ) products through its relationship with 300-plus retailers such as Avalon Organics, Burt's Bees, Seventh Generation and Alba. Please see the discussion under Description of Business ShopToEarth Acquisition and Legacy Affiliate Sales Program for additional details on our acquisition of certain assets of ShopToEarth and the proposed integration of this complementary business into our existing business. Sale of Additional Securities. In order to fund our working capital needs we have sold an aggregate of $2,175,500 of convertible promissory notes to the selling stockholders, this Company s Chief Executive Officer, and to ten other investors (including eight institutional investors) subsequent to the initial Private Placement of April 23, 2010. The convertible promissory notes are convertible at initial conversion prices ranging between $0.30 and $0.75 per share, mature on June 1, 2012, and are secured by a lien on all of this company s assets. In connection with the sale of some of the foregoing convertible promissory notes, we also granted warrants to purchase a total of 6,073,302 shares of our common stock at exercise prices ranging between $0.30 and $1.50 per share. The warrants expire in December 2015. Please see the discussion under Recent Sales of Unregistered Securities for additional details concerning these sales of convertible promissory notes.
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001355607_santa_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001355607_santa_prospectus_summary.txt
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+This is only a summary and does not contain all the information that you should consider before investing in our common stock. You should read the entire prospectus, including Risk Factors and the documents incorporated by reference into the prospectus, which are described below under Incorporation by Reference, before deciding to exercise your subscription rights. Unless we indicate otherwise, the number of shares as well as all per share and financial information in this Summary: assumes an offering price of $[*] per share; and does not give effect to the use of proceeds of the Offering. SUMMARY OF THE OFFERING Subscription Rights We are distributing at no charge to record holders of our common stock as of 5:00 p.m., Pacific Standard Time, on the record date of [*], 2011, [*] transferable subscription rights for each share of common stock then held of record. For each whole subscription right that you own, you will have a right to buy from us one share of our common stock at a subscription price of $[*] per share. You may exercise some or all of your subscription rights, or you may choose not to exercise any of your subscription rights. Subscription Price $[*] per share of common stock. To be effective, any payment related to the exercise of a subscription right must clear prior to the expiration of the Rights Offering period. Record Date [*] Expiration of the rights portion of the Rights Offering [*] Final expiration date for the Rights Offering [*] Procedure for Exercising Your Rights You must properly complete the enclosed subscription rights certificate and deliver it, along with the full subscription price, to the subscription agent, Computershare Trust Company, before the expiration of the rights offering period. Your payment must also clear prior to the expiration of the Rights Offering period. You may deliver the documents and payments by first class mail or courier service. If you are a beneficial owner of shares that are registered in the name of a broker, dealer, custodian bank or other nominee, you should instruct your broker, dealer, custodian bank or other nominee to exercise your subscription rights on your behalf. Please follow the instructions of your nominee, who may require that you meet a deadline earlier than the expiration date of the Rights Offering. No Minimum Offering Amount There is no minimum amount of capital that we must raise through the Rights Offering before we close the offering and issues shares of our common stock. While we hope we can raise sufficient capital through this Rights Offering to satisfy the Consent Order, no assurance can be given that we will in fact raise the required $12 million in capital provided for in the Consent Order. Please see Risk Factors. Use of Proceeds The net proceeds from the Rights Offering are estimated to be as much as $[*] if all of the shares of common stock underlying the rights to purchase shares of our common stock offered hereby are purchased. If one half of the rights are exercised, the net proceeds will be $[*]. We intend to use $[*] of the proceeds from the sale of the securities to contribute to the Bank as additional capital in order to support its capital ratios and for general corporate purposes. We may retain up to $[*] at the Company level to meet its expenses, including servicing debt on the trust preferred securities and payment of dividends on preferred stock. However, our primary goal is to support the capital position of the Bank to comply with the Consent Order and the amount actually retained at Santa Lucia Bancorp will be dependent on satisfying that goal. Amendment; Cancellation; Change of Record Date We may amend the terms of the Rights Offering or extend the subscription period of the Rights Offering. We also reserve the right to cancel the Rights Offering at any time before the completion of the Rights Offering and for any reason. If the Rights Offering is cancelled, all subscription payments received by the subscription agent will be returned, without interest or penalty, as soon as practicable to those persons who subscribed for shares in the Rights Offering. In addition, we reserve the right to change, prior to the distribution of rights, the record date of the Rights Offering, and we may be required to do so to comply with the Company s bylaws. PRE-EFFECTIVE AMENDMENT NO. 1 TO FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 QUESTIONS AND ANSWERS RELATING TO THE RIGHTS OFFERING The following are examples of what we anticipate will be common questions about the Rights Offering. The answers are based on selected information included elsewhere in this prospectus. The following questions and answers do not contain all of the information that may be important to you and may not address all of the questions that you may have about the Rights Offering. This prospectus contains more detailed descriptions of the terms and conditions of the Rights Offering and provides additional information about us and our business, including potential risks related to the Rights Offering, the common stock of the Company, and our business. What is the Rights Offering? We are distributing to holders of our common stock as of 5:00 p.m., Pacific Standard Time, on [*], 2011, which is the record date for the Rights Offering, at no charge, transferable subscription rights to purchase shares of our common stock. You will receive [*] subscription rights for each share of common stock you owned as of 5:00 p.m., Pacific Standard Time, on [*], 2011. Each whole subscription right will entitle you to purchase one share of our common stock at a subscription price of $[*] per share. The subscription rights will not be evidenced by any certificates. Why are we conducting the Rights Offering? Our capital has been significantly reduced as a result of the losses in 2009 and 2010. We must now recapitalize the Company and the Bank in order to ensure that the franchise will be able to continue to face any further deterioration in economic conditions. In addition, we entered into a written agreement (the Written Agreement ) with the Federal Reserve Bank of San Francisco ( FRBSF ), the primary federal regulator for the Bank and Company, in December 2010, that among other things requires the Company and Bank to submit a capital plan containing minimum capital ratios for the Bank that would raise them above their current levels. In addition, effective May 3, 2011, we agreed to the entry of a Consent Order by the California Department of Financial Institutions ( DFI ) that, among other things, required that the Bank raise $12 million in equity capital and then maintain its shareholder s equity at 9% of total assets, which is significantly in excess of current capital levels. Am I required to exercise the subscription rights I receive in the Rights Offering? No. You may exercise any whole number of your subscription rights, or you may choose not to exercise any subscription rights. However, if you choose not to exercise your subscription rights or you exercise less than all of your subscription rights and other shareholders fully exercise their subscription rights or exercise a greater proportion of their subscription rights than you exercise, the percentage of our common stock owned by these other shareholders will increase relative to your ownership percentage, and your voting and other rights in the Company will likewise be diluted. What is a subscription right? For each whole subscription right that you own, you will have a right to buy from us one share of our common stock at a subscription price of $[*] per share. You may exercise some or all of your subscription rights or you may choose not to exercise any of your subscription rights. Fractional subscription rights will be eliminated by rounding down to the nearest whole number of subscription rights and may not be exercised. For example, if you owned 1,000 shares of our common stock as of 5:00 p.m., Pacific Standard Time, on the record date, you would receive [*] subscription rights and would have the right to purchase [*] shares of common stock (rounded down from [*] subscription rights) for $[*] per share. Is there an over-subscription privilege? Yes. If you purchase all of the shares available to you pursuant to your basic subscription rights, you will be able to subscribe for shares that are not being purchased by other existing shareholders through the exercise of their basic subscription rights, subject to the limitations described below. Shares of our common stock will be available for purchase pursuant to the oversubscription privilege only to the extent that those shares have not been subscribed for through exercise of other existing shareholders basic subscription rights. No Revocation by Investors All exercises of subscription rights are irrevocable (unless we are required by law to permit revocation), even if you later learn information about us that you consider unfavorable. You should not exercise your subscription rights unless you are certain that you wish to purchase the shares of common stock offered pursuant to the Rights Offering. Shares Outstanding After Completion of Rights Offering If all [*] of the shares underlying the rights are issued through this Rights Offering, we will have [*] shares of common stock outstanding. Accordingly, assuming such full exercise of rights, the shares being offered in the Rights Offering represent [*]% of our currently outstanding shares of common stock. If only one half the rights are exercised and we issued [*] shares of common stock in the Rights Offering, we will have [*] shares of common stock outstanding. Sale to Backstop Purchasers After the expiration date of the subscription rights, the Company may sell to certain Backstop Purchasers, at the subscription price, unsubscribed shares of common stock. The Backstop Purchasers will be able to purchase shares which remain after the shareholders have exercised their basic subscription rights and any over-subscription privileges. No compensation will be paid to any Backstop Investor as part of this transaction. Issuance of Common Stock If you purchase shares of common stock through the Rights Offering, we will issue those shares to you in book-entry, or un-certificated, form as soon as practicable after the completion of the Rights Offering. Stock certificates will not be issued for shares of our common stock purchased in the Rights Offering. SANTA LUCIA BANCORP We are the bank holding company for Santa Lucia Bank (also referred to as Bank ), a California state chartered bank that is a member of the Federal Reserve System. At March 31, 2011, we had total assets of $246.3 million, total net loans held for investment of $168.7 million, total deposits of $230.7 million and shareholders equity of $7.1 million. Santa Lucia Bancorp (also referred to as Company ) was organized as a California corporation and incorporated in 2006. Effective as of April 2006, Santa Lucia Bancorp became a bank holding company by acquiring all of the outstanding common stock of the Bank. At this time, Santa Lucia Bancorp functions primarily as the holder of all of the Bank s common stock. It may, in the future, acquire or form additional subsidiaries, including other banks to the extent permitted by law, although Santa Lucia Bancorp has no plans to do so in the immediate future. Santa Lucia Bancorp does not own or lease any property and has no paid employees; however, it shares the facilities and employees of the Bank. The principal office of Santa Lucia Bancorp is 7480 El Camino Real, Atascadero, California 93422, and the telephone number is (805) 466-7087. Our common stock is quoted on the Over-the-Counter Bulletin Board ( OTCBB ) under the symbol SLBA . SANTA LUCIA BANK Santa Lucia Bank is a California state bank, and member of the Federal Reserve System, formed in 1985. The Bank is headquartered in Atascadero, California. Santa Lucia Bank has 4 branches in communities on the Central Coast of California, including Paso Robles, Atascadero, Arroyo Grande, and Santa Maria. We deliver a complete array of commercial bank products and services with an emphasis on customer relationships and personalized service. The Bank provides community banking services in its market areas offering a wide variety of deposit products, commercial, residential and consumer loans and other traditional banking products and services that are designed to meet the needs of small and middle market businesses and individuals. As a full service community bank, Santa Lucia Bank seeks to differentiate itself from its competitors through superior personal service, responsiveness and local decision-making. Our customers are generally small- to medium-sized businesses (generally representing businesses with less than $25 million in annual revenues) that require highly personalized commercial banking products and services that we deliver in our relationship banking style. We believe that our customers prefer locally owned and managed banking institutions that provide responsive, personalized service and customized products. A substantial portion of our business is with customers who have long-standing relationships with our officers or directors or who have been referred to us by existing customers. SANTA LUCIA BANCORP (Exact name of registrant as specified in its charter) California 35-2267934 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 6022 (Primary Standard Industrial Classification Code Number) 7480 El Camino Real Atascadero, California 93422 (805) 466-7087 (Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant s Principal Executive Offices) John C. Hansen President and Chief Executive Officer Santa Lucia Bancorp 7840 El Camino Real Atascadero, California 93422 (Name and address of agent for service) (805) 466-7087 (Telephone number, including area code, of agent for service) Copies of communications to: Kenneth E. Moore, Esq. Ryan J. Barncastle, Esq. STUART | MOORE 641 Higuera Street, Suite 302 San Luis Obispo, CA 93401 (805) 545-8590 Will rights be offered to outside investors? If you do not exercise your rights prior to the expiration of the Rights Offering, your rights will expire and the shares of common stock into which your rights are exercisable may be offered to outside investors that are not shareholders (the Backstop Purchasers ). Who are the Backstop Purchasers? The Company does not currently have an agreement with any Backstop Purchaser as of the time of this Rights Offering. However, the Company has identified certain potential Backstop Purchasers and is in the process of identifying others. How does the backstop commitment work? We have not entered into an agreement with any Backstop Purchaser as of the date of this Offering. We plan to have the Backstop Purchasers purchase from us, at the subscription price, unsubscribed shares of common stock. The Backstop Purchasers will purchase shares (in addition to their pro rata portion of the basic subscription right, if any) only if the shareholders do not purchase, in connection with the over-subscription privilege, any shares that remain after shareholders have exercised their basic subscription rights. Why are we seeking Backstop Purchasers? We are seeking Backstop Purchasers to provide the Company with the best chance of receiving a minimum level of net proceeds from the Rights Offering to satisfy our regulatory capital requirements. How soon must I act to exercise my subscription rights? The rights portion of the Rights Offering expires at 5:00 p.m., Pacific Standard Time, on [*], 2011, subject to extension at our discretion. After this time, no one can exercise subscription rights. The final expiration date for the Rights Offering is 5:00 p.m., Pacific Standard Time, on [*], 2011, subject to extension at our discretion. May I transfer my rights? Yes, the rights are freely transferable. Are we requiring a minimum subscription to complete the Rights Offering? No, there is no minimum subscription required. How was the subscription price determined? In determining the subscription price, the board of directors considered a number of factors, including: a fairness opinion of D.A. Davidson, the need to offer the shares at a price that would be attractive to investors relative to the then current trading price for our common stock, historical and current trading prices for our common stock, general conditions in the financial services industry, the need for capital and alternatives available to us for raising capital, potential market conditions, and the desire to provide an opportunity to our shareholders to participate in the rights offering on a pro rata basis. In conjunction with its review of these factors, the board of directors also reviewed our history and prospects, including our past and present earnings, our prospects for future earnings, and the outlook for our industry, our current financial condition and regulatory status and a range of discounts to market value represented by the subscription prices in various prior rights offerings. We retained D.A. Davidson to advise us with respect to an appropriate per share price range for the subscription price of the shares in this rights offering and to render an opinion to our board of directors as to the fairness, from a financial point of view, of the rights offering to our existing shareholders taken as a whole. We have agreed to pay D.A. Davidson a fairness opinion fee of $[*], as well as reasonable out-of-pocket expenses incurred by D.A. Davidson. The subscription price does not necessarily bear any relationship to any other established criteria for value. You should not consider the subscription price as an indication of value of the Company or our common stock. You should not assume or expect that, after the rights offering, our shares of common stock will trade at or above the subscription price in any given time period. The market price of our common stock may decline during or after the rights offering, and you may not be able to sell the underlying shares of our common stock purchased during the rights offering at a price equal to or greater than the subscription price. You should obtain a current quote for our common stock before exercising your subscription rights and make your own assessment of our business and financial condition, our prospects for the future, and the terms of this rights offering. Can the Rights Offering be cancelled? Yes. We may cancel the Rights Offering at any time before the completion of the offering period and for any reason. If the Rights Offering is cancelled, all subscription payments received by the subscription agent will be returned, without interest or penalty, as soon as practicable to those persons who subscribed for shares in the Rights Offering. In addition, we reserve the right to change, prior to the distribution of rights, the record date of the Rights Offering. How do I exercise my subscription rights? You must properly complete the enclosed subscription rights certificate and deliver it, along with the full subscription price, to the subscription agent, Computershare Trust Company, before 5:00 p.m., Pacific Standard Time, on [*]. Do not deliver documents to the Company. If the Rights Offering is not completed, will my subscription payment be refunded to me? Yes. The subscription agent will hold all funds it receives in a segregated bank account until completion of the Rights Offering. If the Rights Offering is not completed, the subscription agent will return all subscription payments, without interest or penalty, as soon as practicable. If you own shares in street name, it may take longer for you to receive payment because the subscription agent will return payments through the record holder of the shares. The Bank s solid core banking operation is driven by a strong core deposit base and relationship banking. Since its inception, the Bank has built a loyal customer base in the communities it serves. In addition, we have a dedicated board of directors and management team, who are committed to enhancing shareholder value and continuing to provide a positive customer experience. Our Board members have businesses located on the Central Coast, particularly in San Luis Obispo County. Our committed employees strive to make a real difference in the community. The Bank s headquarters is located at our Atascadero branch at 7480 El Camino Real, Atascadero, California 93422, and the telephone number is (805) 466-7087. We maintain a website at www.santaluciabank.com . None of the information on such website is deemed to be incorporated herein. Available Information The Company files annual, quarterly and current reports, proxy statements and other information with the Securities and Exchange Commission (the SEC ). You may read and copy any materials that the Company files with the SEC at the SEC s Public Reference Room at 100 F Street NE, Washington, DC 20549. Please call the SEC at 1-800-SEC-0330 for more information about the operation of the Public Reference Room. The SEC also maintains an Internet website, at http://www.sec.gov, that contains the Company s filed reports, proxy and information statements and other information that the Company files electronically with the SEC. Additionally, the Company makes these filings available, free of charge, on its website at http://www.santaluciabank.com as soon as reasonably practicable after the Company electronically files such materials with, or furnishes them to, the SEC. None of the information contained on, or that may be accessed through, the Company s website is a prospectus or constitutes part of, or is otherwise incorporated into, this prospectus. EVENTS OF 2009 AND 2010 In 2009 and 2010, we suffered losses of $1.8 million and $14.8 million, respectively. For the three months ended March 31, 2011, the Company had a net loss of $349 thousand. These losses were primarily the result of: a major economic recession in our market area, California and the nation which resulted in decreasing real estate values and significant unemployment; a concentration in land and construction loans; and weaknesses within the loan administration function, see Summary Regulatory Matters and Risk Factors Risks Related to Our Business and Market. The confluence of these circumstances led to our deteriorating financial condition through 2009 to present. We continue to experience a challenging credit environment and continued economic weakness. During 2010 and through the first quarter of 2011, the Bank continued to be proactive in identifying problem loans, quantifying impairment if any, and developing resolution plans suitable for each, which required a comprehensive loan-by-loan review. Since December 31, 2009, the Bank has experienced significant material deterioration with certain large credit relationships contained in its loan portfolio. At December 31, 2008, 2009, and 2010, non-performing loans totaled $1.61 Million, $6.41 Million, and $23.95 Million, respectively, and total non-performing assets totaled $1.61 Million, $6.84 Million, and $26.07 Million, respectively. For the years ended December 31, 2008, 2009, and 2010, total charge offs, net of recoveries, totaled $338 Thousand, $4.38 Million, and $7.59 Million, respectively. At March 31, 2011, non-performing loans totaled $22.81 Million and total non-performing assets totaled $25.85 Million. For 2011, charge offs, net of recoveries, through March 31, 2011, totaled $902 Thousand. Among other things, the significant deterioration in asset quality has resulted in significant provision expense during 2009 and 2010, and to date in 2011. Provision expense in 2009 was $5.46 Million, was $15.2 million in 2010, and we have recognized $370 thousand in provision expense through March 31, 2011. The significant provision expense has resulted in an allowance for loan and lease losses that totaled $10.47 Million at March 31, 2011, representing 5.82% of total loans at that date. In response to the deterioration in asset quality and recent regulatory examinations, we have undertaken a number of actions, including, among other things, strengthening credit oversight, completing a third party loan review of approximately 90% of the loan portfolio, instituting a policy of obtaining third party credit reviews every six months, and putting in place a policy to seek updated appraisals at least annually but in certain circumstances more frequently on all classified loans secured by real property. We obtain a current appraisal at the time that a loan migrates to other real estate owned. Efforts initiated in 2010 to reinforce the oversight of the loan portfolio, specifically with respect to problem assets, along with expanded independent third party loan review have resulted in applying a more stable methodology in regard to problem asset resolution. However, as a result of the continuing decline in commercial real estate values in our market area, a $15.2 million provision for loan losses was recognized during 2010. This increase in the provision along with other factors resulted in a net loss of $14.8 million for 2010. For the three months ended March 31, 2011, we made a provision of $370 thousand. Our capital has been significantly reduced as a result of the losses in 2009, 2010 and the first quarter of 2011. We must now recapitalize the Company and the Bank. Approximate date of commencement of proposed sale to the public: From time to time after the effective date of this registration statement. If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. x If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act (Check one): Large accelerated filer o Accelerated filer o Non-accelerated filer o Smaller reporting company x (Do not check if a smaller reporting company) After I exercise my subscription rights, can I change my mind? No. All exercises of subscription rights are irrevocable (unless we are required by law to permit revocation), even if you later learn information that you consider to be unfavorable to the exercise of your subscription rights. You should not exercise your subscription rights unless you are certain that you wish to purchase additional shares of our common stock at the subscription price of $[*] per share. Are there risks in exercising my subscription rights? Yes. The exercise of your subscription rights involves numerous risks. Exercising your subscription rights means buying shares of our common stock and should be considered as carefully as you would consider any other equity investment. Among other things, you should carefully consider the risks described under the heading Risk Factors in this prospectus. Has our Board of Directors made a recommendation to our shareholders regarding the rights offering? No. Our Board of Directors is not making any recommendation regarding your exercise of the subscription rights. Shareholders who exercise subscription rights risk investment loss. We cannot assure you that the market price of our common stock will be above the subscription price at the time of exercise or at the expiration of the rights offering period or that anyone purchasing shares at the subscription price will be able to sell those shares in the future at the same price or a higher price or at all. You are urged to decide whether or not to exercise your subscription rights based on your own assessment of our business and the Rights Offering. Among other things, you should carefully consider the risks described under the heading Risk Factors in this prospectus. Will our directors and executive officers participate in the rights offering? We expect our directors and executive officers, together with their affiliates, to participate in this offering at varying levels, but they are not required to do so. Directors and executive officers, as a group, have collectively committed to participate, such that we expect insider ownership to remain at or above existing levels. No director or executive officer, however, will acquire shares that will cause their ownership to exceed 9.9% of our outstanding common stock. If the offering is fully subscribed, we anticipate that directors and executive officers will purchase approximately $[*] million of common stock. Our directors and officers are entitled to participate in the offering on the same terms and conditions applicable to all shareholders. Following the rights offering, our directors and executive officers, together with their affiliates, are expected to own approximately [*] shares of common stock, [*]% of our total outstanding shares of common stock if we sell 17,000,000 shares in the rights offering, including shares of our common stock they currently own. What fees or charges apply if I exercise my subscription rights? We are not charging any fees or sales commissions to issue subscription rights to you or to issue shares to you if you exercise your subscription rights. If you exercise your subscription rights through a broker or other holder of your shares, you are responsible for paying any fees that person may charge. Will I receive interest on any funds I deposit with the subscription agent? No. You will not be entitled to any interest on any funds that are deposited with the subscription agent pending completion or cancellation of the Rights Offering. If the Rights Offering is cancelled for any reason, the subscription agent will return this money to subscribers, without interest or penalty, as soon as practicable. When will I receive my new shares of common stock? All shares that you purchase in the Rights Offering will be issued in book-entry, or un-certificated, form. When issued, the shares will be registered in the name of the subscription rights holder of record. As soon as practicable after the expiration of the Rights Offering period, the subscription agent will arrange for the issuance of the shares of common stock purchased in the Rights Offering. Subject to state securities laws and regulations, we have the discretion to delay distribution of any shares you may have elected to purchase by exercise of your rights in order to comply with state securities laws. What happens if I choose not to exercise my subscription rights? You are not required to exercise your subscription rights or otherwise take any action in response to the Rights Offering. However, if you choose not to exercise your subscription rights or you exercise less than all of your subscription rights and other shareholders fully exercise their subscription rights or exercise a greater proportion of their subscription rights than you exercise, the percentage of our common stock owned by these other shareholders will increase relative to your ownership percentage, and your voting and other rights in the Company will likewise be diluted. As a result of the deterioration we have experienced in the loan portfolio, non-performing assets, which include nonaccrual loans, loans past due 90 days and still accruing, and other real estate owned totaled $25.9 million at March 31, 2011, compared to $26.1 million at December 31, 2010. Reducing the level of non-performing assets will take a significant effort and will continue through 2011 and beyond. We have dedicated additional resources and will continue our proactive approach to managing our non-performing assets with aggressive loan resolution strategies and loan sales, as appropriate. We expect that many of these assets will eventually require foreclosure and subsequent sale by the Bank. This will prove to be a detriment to our earnings since we will not be earning any interest on the non-performing asset, will also have the cost of carrying the property while awaiting sale, and may experience further losses if the value of such property declines. As a result of the continued deterioration in asset quality, earnings and capital our sources of available liquidity have declined. The Bank was prohibited from renewing or obtaining brokered deposits as of August 16, 2010. As of that date, the Bank had no brokered deposits. In order to preserve capital we have deferred TARP dividend payments and trust preferred interest payments. Our ability to raise additional liquidity through deposit campaigns and interest deposits is subject to pricing limitations. STRENGTHS Since 1985, we have served a key role in funding the economic engine in the markets we serve, working hand-in-hand to support local businesses. We have a strong branch system that has continued to grow our customer base. Despite the losses in 2009, 2010 and the first quarter of 2011, which resulted from significant provisions for credit losses and expenses/losses related to other real estate owned ( OREO ), the Company has significant core operating strengths, including ample liquidity, a strong core deposit base, low cost of funds, and a very loyal customer base. We feel that these core strengths are an important measure as they show the effects of the Company s core operations and do not change significantly as a result of outside economic influences. We believe that with an improved economy, we will record significantly smaller provisions for credit losses and will have significantly reduced OREO expenses. OUR MANAGEMENT TEAM Our current senior management team includes John C. Hansen, President and Chief Executive Officer, Margaret A. Torres, Executive Vice President / Chief Financial Officer/ Chief Administrative Officer, and Claudya Ross, Executive Vice President / Chief Credit Officer. Ms. Torres and Ms. Ross are recent additions to the executive management team as part of the Bank s efforts to improve asset quality and management of the Bank. The following are brief biographies for our senior officers: John C. Hansen, President and Chief Executive Officer, for Santa Lucia Bank and its parent, Santa Lucia Bancorp from January 1, 2009 to Present. Responsibilities include overall direction for the Bank and Bancorp to maximize income, return on equity and return on assets; provides leadership in establishing current and long-range objectives, strategies, policies and plans. From 1962 to 1982 he held various positions in operations, data processing, accounting, auditing and administration. He held the position of CFO beginning with San Joaquin Bank, Bakersfield Ca, from 1982 to 1987, Guardian Federal Savings, Bakersfield, Ca. 1987 to 1990, Central Coast National Bank, Arroyo Grande Ca, 1990 to 1993 and from 1993 to 1995 he held the position of President, CEO, CFO and Director of Central Coast National Bank. In 1995 Central Coast National Bank merged with Santa Lucia National Bank and he held various positions until 1998 when he was promoted to CFO of Santa Lucia Bank. Margaret A. Torres, Executive Vice President, Chief Financial Officer and Chief Administrative Officer for Santa Lucia Bank and its parent, Santa Lucia Bancorp from September 2010 to present. Responsibilities include all SEC, Regulatory and Board reporting, Investment Portfolio Management, Bank Operations, Investor Relations and Strategic Planning. From 1970 to 1985 she held various positions in operations, lending, data processing, accounting and administration. She has held the position of CFO beginning with Simi Valley Bank, Simi Valley, Ca from 1985 to 1991, Antelope Valley Bank, Lancaster, Ca from 1991 to 1999 and Heritage Oaks Bank/Heritage Oaks Bancorp from February 1999 to August 2010. CALCULATION OF REGISTRATION FEE Title of each class of securities to be registered Amount to be Registered Proposed maximum offering price per unit Proposed Maximum Aggregate Offering Price Amount of Registration Fee 17,000,000 rights to purchase 17,00,000 share(s) of common stock, no par value per share, plus underlying shares of Common Stock 17,000,000 (1)(2) $ .71 (2) $ 12,070,000 (2) $ 1,401.33 * Total: $ 12,070,000 $ 1,401.33 (1) Calculated in accordance with Rule 457(a) and includes such additional number of shares of Common Stock of a currently indeterminable amount, as may from time to time become issuable by reason of stock splits, stock dividends or similar transactions. (2) Calculated in accordance with Rule 457(i) and Rule 457(c). * 679.19 previously paid. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to Section 8(a), may determine. How many shares of common stock will be outstanding after the Rights Offering? As of the record date, there were [*] shares of our common stock outstanding. If all of our shareholders exercise their subscription rights in full, we will issue 17,000,000 shares of common stock in the rights offering, which represents approximately [*]% of the [*] shares of common stock potentially outstanding upon the completion of the rights offering. How much money will we receive from the Rights Offering and how will such proceeds be used? The net proceeds from the Rights Offering are estimated to be as much as $[*] if all of the shares of common stock underlying the rights to purchase shares of our common stock offered hereby are purchased. If one half of the rights are exercised, the net proceeds will be $[*]. We intend to use $[*] of the proceeds from the sale of the securities to contribute to the Bank as additional capital in order to support its capital ratios and for general corporate purposes. We may retain up to $[*] at the Company level to meet its expenses, including servicing debt on the trust preferred securities and payment of dividends on preferred stock. However, our primary goal is to support the capital position of the Bank to comply with the Consent Order and the amount actually retained at Santa Lucia Bancorp will be dependent on satisfying that goal. What if I have more questions? If you have any questions or requests for assistance concerning the method of exercising your subscription rights or if you need additional copies of this prospectus, please contact Margaret Torres, the Company s Chief Financial Officer, at 805-466-7087. You will not pay any fees for your questions or requests for assistance or documents. To whom should I send my forms and payment? If your shares are held in the name of a broker, dealer, custodian bank or other nominee, then you should send your subscription documents and subscription payment to that record holder. If you are the record holder, then you should send all subscription rights certificates and subscription price payments to the subscription agent before the expiration date at the address below: By First Class Mail Only Santa Lucia Bancorp c/o Computershare Shareholder Services, Inc. By Overnight Courier Santa Lucia Bancorp c/o Computershare Shareholder Services, Inc. You, or, if applicable, your nominee, are solely responsible for completing delivery to the subscription agent of your subscription rights certificate and other documents and subscription payment. You should allow sufficient time for delivery of your subscription materials to the subscription agent and clearance of payment before the expiration of the Rights Offering period. Claudya Ross, Executive Vice President and Chief Credit Officer , for Santa Lucia Bank from July 2010 to present, previously Senior Vice President/ Credit Administration from December 2009 to July 2010. Responsibilities include management of lending activities of the organization including risk management of the loan portfolio. She held various lending positions at American Perspective Bank including Chief Lending Officer from September 2007 to December 2009. Prior to this she was employed by Santa Lucia Bank from 1985 to 2007. BANK RESPONSES Under the leadership of Mr. Hansen, the revised executive management team and the Board of Directors have taken a number of proactive steps to stabilize the Bank and reduce losses. These steps have included: significantly increasing board oversight of management and the Bank in an effort to respond to the recession and weaknesses identified in loan administration through recent Bank examinations; completing a comprehensive review of the loan portfolio; managing and reducing classified assets to reduce the risk profile of the Bank; reorganizing the credit administration and underwriting functions, including internal control enhancement; hiring a number of new senior officers; reducing certain assets in order to reduce balance sheet risk and support regulatory capital ratios; changing the funding mix by reducing time deposits and focusing on building additional core deposits; and becoming more efficient by centralizing operations and reducing non-interest expense. MAJOR CHALLENGES Despite the foregoing efforts and accomplishments, the Board of Directors and management are faced with several major challenges in the short run in attempting to overcome the events of 2009 and 2010. These major challenges include: Recapitalization Our capital has been significantly reduced as a result of the losses in 2009, 2010 and the first quarter of 2011. We must now recapitalize the Company and the Bank. As discussed previously, the Written Agreement requires the Company and Bank to submit a capital plan to the FRBSF containing minimum capital ratios for the Bank that would raise them above their current levels. In addition, and as discussed below, effective May 3, 2011, the Bank entered into a Consent Order (the Order ) with the California Department of Financial Institutions ( DFI ) which, among other things, requires that the Bank achieve and then maintain certain capital ratios significantly in excess of current capital levels. In order to comply with the requirements set forth in the Order, we need to achieve a combination of new equity capital and earnings of approximately $12 million. To achieve such a result, we must: The information in this prospectus is not complete and may be changed. The investors may not sell these securities or accept an offer to buy those securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where such offer or sale is not permitted. SUBJECT TO COMPLETION, DATED [*], 2011 PROSPECTUS SANTA LUCIA BANCORP 17,000,000 RIGHTS TO PURCHASE 17,000,000 SHARES OF COMMON STOCK UNDERLYING SHARES OF COMMON STOCK increase the Bank s capital by a minimum of $12 million through a combination of new equity capital and its earnings; minimize future losses from the $22.8 million in non-performing loans we had at March 31, 2011 or from other assets; and/or reduce assets from the amount at the first quarter end of 2011. If we do not achieve all these goals, we will not be able to adequately recapitalize the Company, which would have a material adverse effect on the Company and the Bank and our ability to continue as a going concern. Failing to adequately recapitalize the Company or satisfy our regulatory capital requirements could lead to, among other things, additional regulatory enforcement actions including the imposition of civil monetary penalties against the Company, the Bank or both, the termination of insurance of the Bank s deposits by the FDIC or the closing of the Bank with the imposition of a conservator or receiver. It is possible that the proceeds of this Rights Offering will be less than the amount that is necessary to comply with the capital requirements set forth in the Order or to adequately recapitalize Santa Lucia Bancorp and Santa Lucia Bank. We view satisfying our capital requirements as only the first step in our recapitalization. We anticipate that further capital will be necessary in order to (i) execute our growth strategy once our financial position improves and (ii) keep us in compliance with the written agreement and the Order. The economic recession has provided a number of opportunities for expansion for a well-capitalized institution which is in satisfactory regulatory condition. Regulatory Matters In light of the challenging operating environment, along with the Bank s elevated level of non-performing assets, Santa Lucia and the Bank are subject to increased regulatory scrutiny. Consent Order with the DFI The DFI completed an examination of the Bank in the fourth quarter of 2010 and the Bank s condition has been further downgraded. Further, as a result of said examination, the Bank received a formal enforcement action from the DFI in the form of a consent order. Effective May 3, 2011, Santa Lucia Bank entered into the Order with DFI addressing, among other items, increased capital for Santa Lucia Bank. Among other things, the Order requires that: The board of directors of Santa Lucia Bank develop, adopt and submit a plan to improve Santa Lucia Bank s current condition, including, but not limited to, increasing the tangible shareholder s equity, or merging or selling Santa Lucia Bank with, or to, an acquirer or investor acceptable to the Commissioner of the DFI (the Commissioner ). Within 90 days from the effective date of the Order, Santa Lucia Bank increase its shareholders equity by $12 million and thereafter, maintain its shareholder s equity in an amount not less than 9% of Santa Lucia Bank s total assets; Every two weeks, Santa Lucia Bank shall provide the Commissioner and the Federal Reserve Bank of San Francisco with a written update on the status of its efforts to either recapitalize Santa Lucia Bank or to effect or a merger, sale or other acquisition of Santa Lucia Bank in accordance with the Order. The Order will remain effective and enforceable until amended, suspended or terminated by the Commissioner. The foregoing description of the Order is a summary and does not purport to be a complete description of its terms, and is qualified in its entirety by reference to the Company s Current Report on Form 8-K filed with the Securities and Exchange Commission on May 9, 2011. As previously disclosed, the Order was the result of a recent examination of Santa Lucia Bank by the DFI that resulted in certain criticisms of Santa Lucia Bank. Many of the requirements of the Order reflect recommendations or requirements from the Report of Examination that Santa Lucia Bank has been working on since the date of the examination. Santa Lucia Bank will continue its efforts to comply with all provisions of the Order, and believes it is taking the appropriate steps necessary to comply in a timely fashion. Written Agreement with FRBSF As previously disclosed by the Company, the FRBSF, which regulates the Company and the Bank, indicated at its last examination that it would seek a formal agreement with the Bank and Company to address certain weaknesses identified in that examination. On December 23, 2010, the Company, the Bank, and the FRBSF entered into the Written Agreement addressing, among other items, management, operations, lending, asset quality and increased capital for the Bank and the Company, as appropriate. This prospectus relates to the potential issuance of transferable subscription rights from time to time by investors of some or all of their respective rights to purchase shares of our common stock and the underlying shares of common stock (the Rights Offering or the Offering ). In this prospectus, we refer to the right to purchase 17,000,000 shares of common stock and the underlying shares of common stock issuable upon exercise of said rights, collectively, as the securities. This prospectus is being prepared in compliance with the registration requirements of the Securities Act of 1933, as amended, or the Securities Act. This is not an underwritten offering. The shares underlying the subscription rights are being offered directly by us without the services of an underwriter or selling agent. The subscriptions being offered are irrevocable. There is no minimum requirement for the offering proceeds. The rights to purchase shares of common stock are not listed on an exchange, and we do not intend to list the same on any exchange. Our common stock is quoted on the over the counter bulletin board ( OTCBB ) under the symbol SLBA. On May 31, 2011, the closing price of our common stock on the over the counter bulletin board was $.46 per share. You are urged to obtain current market quotations concerning the common stock. Investing in our securities involves risks. See Risk Factors beginning on page [*] for a discussion of factors you should consider before buying our securities. You should not purchase these securities if you cannot afford the loss of your investment. The securities offered hereby are not savings accounts, deposits or other obligations of our bank subsidiary and are not insured by the Federal Deposit Insurance Corporation or any other government agency. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. Our principal executive offices are located at 7480 El Camino Real, Atascadero, California 93422, and our telephone number is (805) 466-7087. Our Internet address is http://www.santaluciabank.com. The date of this prospectus is June [*], 2011. The Written Agreement was the result of a recent examination of the Bank and the Company by the FRBSF that resulted in certain criticisms of the Bank, particularly related to the overall quality of the Bank s loan portfolio. The following lists the requirements of the written the Written Agreement and actions taken by the Company or the Bank as to those items: The Company serve as a source of strength for the Bank; o Action Taken: On January, 28, 2011, the Bank submitted a plan to the FRBSF whereby the Company would serve as a source of strength for the Bank; The board of directors of the Bank submit a plan to strengthen board oversight of the management and operations of the Bank; o Action Taken: On February 18, 2011, the Bank submitted a plan to the FRBSF; The Bank submit to the FRBSF a plan to strengthen credit risk management practices; o Action Taken: On February 18, 2011, the Bank submitted a plan to the FRBSF and then on April 29, 2011, the Bank submitted revisions to this plan; The Bank submit to the FRBSF revised written lending and credit administration policies and procedures; o Action Taken: On March 23, 2011, the Bank submitted revised written lending and credit administration policies and procedures to the FRBSF; The Bank submit to the FRBSF a written program for the effective, ongoing third party review of the Bank s loan portfolio, and that the board of directors take appropriate steps to ensure that the findings of such reviews are addressed by management; o Action Taken: On March 23, 2011, the Bank submitted a written program to the FRBSF. In addition, the Bank engaged an independent third party to conduct asset quality reviews on a bi-annual basis. The first engagement in October 2010 included the review of over 73% of the entire loan portfolio with the second visitation in March 2011 that extended the coverage of loans to approximately 92% review overall; The Bank maintain a fully funded Allowance for Loans and Lease Losses ( ALLL ) o Action Taken: On January 28, 2011 and April 29, 2011, the Bank submitted Quarterly Progress Reports to the FRBSF. Since September 2010, the Bank, in consultation with its regulators and third party vendors has been making revisions to the ALLL methodology. Based on the Bank s historical loss migration analysis, the qualitative adjustments made to reflect weakness perceived in the economy, FAS 114 impairments and other available and known information, the Bank believes that the present levels of reserves approximates the appropriate level of loan loss reserves. While there have been changes to the methodology, overall the levels of reserves as a percent of gross loans was 4.95%, 5.84% and 5.82% at September 30, 2010, December 31, 2010 and March 31, 2011, respectively; The Company and the Bank submit to the FRBSF an acceptable joint written plan to maintain sufficient capital at the Bank, and notify the FRBSF following any calendar quarter in which the Bank s capital ratios fall below minimums set forth in such plan, including in such notice steps the Bank or Company intend to take to increase capital ratios; o Action Taken: On January 28, 2011, the Bank submitted its plan to the FRBSF. On April 29, 2011, the Bank submitted revisions to this plan to the FRBSF; The Bank submit to the FRBSF an acceptable written contingency funding plan; o Action Taken: On January 28, 2011, the Bank submitted its plan to the FRBSF. On April 29, 2011, the Bank submitted revisions to this plan to the FRBSF; The Bank submit to the FRBSF a written business plan for 2011 to improve the Bank s earnings and overall condition; o Action Taken: On March 23, 2011, the Bank submitted a written business plan to the FRBSF; The Bank seek regulatory approval for all dividend and other payments to stockholders o Action Taken: The Bank took no actions that required such approval; The Company and its nonbank subsidiary not make any distributions of interest, principal, or other sums on subordinated debentures or trust preferred securities without the prior written approval of the FRBSF and the Director; o Action Taken: The institution took no actions that required such approval; The Bank immediately take all necessary steps to correct all violations of laws and regulations cited in the Report of Examination; o Action Taken: The Bank completed this in December 2010; The Company and the Bank submit any new officer or director, or change in any existing officer s or director s duties, to the FRBSF for prior approval or non-objection; o Action Taken: The Company nor the Bank took no actions that required such approval; The Company and the Bank seek prior approval or non-objection from the FRBSF before making any indemnification or severance payment to an officer or director; o Action Taken: The Company nor the Bank took no actions that required such approval; The Company and the Bank submit to the FRBSF joint quarterly written progress reports on efforts to comply with the Written Agreement; o Action Taken: Written Progress Reports were submitted to the FRBSF on January 28, 2011 and April 29, 2011. The FRBSF completed a targeted asset quality review in the fourth quarter of 2010, and determined that there had been further deterioration in the Bank s loan portfolio. We do not anticipate any action in addition to the Written Agreement because of this targeted asset quality review. The Written Agreement will remain effective and enforceable until stayed, modified, terminated or suspended in writing by the FRBSF. The foregoing description of the Written Agreement is a summary and does not purport to be a complete description of all of its terms, and is qualified in its entirety by reference to a copy of the Written Agreement filed as Exhibit 10.1 to the Company s Current Report on Form 8-K filed with the Securities Exchange Commission on December 29, 2010. As previously disclosed, the Written Agreement was the result of a recent examination of the Bank and the Company by the FRBSF that resulted in certain criticisms of the Bank, particularly related to the overall quality of the Bank s loan portfolio. Many of the requirements of the Written Agreement reflect recommendations or requirements from the Report of Examination that the Bank has been working on since the date of the examination. The Company and the Bank will continue their efforts to comply with all provisions of the Written Agreement, and believe they are taking the appropriate steps necessary to comply in a timely fashion. Our capital has been significantly reduced as a result of the losses in 2009, 2010 and 2011. We must now recapitalize the Company and the Bank. If we do not achieve the requirements imposed by the Order, it will have a material adverse effect on the Company and the Bank and our ability to continue as a going concern. Failing to adequately recapitalize the Company or satisfy our regulatory capital requirements could lead to, among other things, additional regulatory enforcement actions including the imposition of civil monetary penalties against the Company, the Bank or both, the termination of insurance of the Bank s deposits by the FDIC or the closing of the Bank with the imposition of a conservator or receiver. While the Company and Bank are moving diligently to comply with the Written Agreement and the Order and to respond to the criticisms of the FRBSF and DFI, there can be no assurance that full compliance will be achieved with either the Written Agreement or the Order. As a result, the Company and the Bank could become subject to further regulatory restrictions or penalties. Full satisfaction of the Written Agreement and the Order will depend in part on raising a significant amount of additional capital. The Company s ability to raise capital will depend on market conditions, which are outside the Company s control, and also on the Bank s financial performance and condition. Should the Bank s asset quality continue to erode and require significant additional provision for loan losses, resulting in additional future net operating losses at the Bank, the Company s ability to raise capital may be impaired. In addition, further operating losses would cause the Bank s capital levels to decline further, requiring the raising of more capital. Strengthen the Balance Sheet Non-performing assets, which include nonaccrual loans, loans past due 90 days and still accruing, and other real estate owned totaled $25.9 million as of March 31, 2011. Reducing the level of non-performing assets will take a significant effort and will continue through 2011 and beyond. We have dedicated additional resources and will continue our proactive approach to managing our non-performing assets with aggressive loan resolution strategies and loan sales, as appropriate. We expect that many of these assets will eventually require foreclosure and subsequent sale by the Bank. This will prove to be a detriment to our earnings since we will not be earning any interest on the non-performing asset, will also have the cost of carrying the property while awaiting sale, and may experience further losses if the value of such property declines, as discussed below. We have completed reappraisals of the real property securing our non-performing and impaired loans and have marked these assets to their lower market values less costs to sell which contributed to our losses in 2008, 2009, 2010 and through the first quarter of 2011. While we believe that our current loan loss reserve is adequate to absorb future losses based on these reappraisals, any further deterioration in real property values will lead to further losses and a decrease in capital. Based on the requirements of the Order, we estimate that we needed to achieve a combination of new equity capital and earnings of approximately $12 million in order to appropriately recapitalize the Company and Bank. While the Bank has not been able to meet this goal, the Company is continuing its efforts to raise the capital needed to reach and exceed the capital requirements imposed by its regulators. To meet the capital requirements, we must: increase the Bank s capital by a minimum of $12 million through a combination of new equity capital and its earnings; minimize future losses from the $22.8 million in non-performing loans we had at March 31, 2011 or from other assets; and/or reduce assets from the amount at first quarter end of 2011. If we do not achieve all these goals, we will not be able to adequately recapitalize the Company, which would have a material adverse effect on the Company and the Bank and our ability to continue as a going concern. Failing to adequately recapitalize the Company or satisfy our regulatory capital requirements could lead to, among other things, additional regulatory enforcement actions including the imposition of civil monetary penalties against the Company, the Bank or both, the termination of insurance of the Bank s deposits by the FDIC or the closing of the Bank with the imposition of a conservator or receiver. Satisfying the capital requirements imposed by our regulators is only the first step in Company s recapitalization plan. We anticipate that further capital will be necessary in order to (i) execute our growth strategy once our financial position improves and (ii) keep us in compliance with the written agreement and likely consent order. The economic recession has provided a number of opportunities for expansion for a well-capitalized institution which is in satisfactory regulatory condition. Return to Profitability It is essential that we return to profitability to support our long term growth in assets and shareholder value. If we are able to successfully manage our problem assets, management believes that there are several significant earnings drivers which will lead to sustained earnings growth and profitability. These drivers include: decreasing our cost of funds to further enhance our net interest margin; approximately $4.0 million in net operating loss carry forwards to shelter future income from taxes, subject to certain limitations; increasing our SBA department to generate small business government guaranteed loans which can be retained for earnings or, when eligible, sold in the secondary market for a premium with the possibility of service fee income; and increasing operating efficiencies and cost reduction measures which should favorably impact non-interest expense. OUR BUSINESS STRATEGY Our long-term business strategy is to provide comprehensive banking and related services to small- to medium-sized businesses and their employees. The key elements of our strategy are as follows: Maintain our emphasis on business banking: Our focus on providing comprehensive banking services to small- to medium-sized businesses continues to help us grow our core non-interest bearing deposit base and maintain our strong net interest margin. Increase market share: Because of severe market dislocations in San Luis Obispo and northern Santa Barbara Counties related to the financial crisis, we believe that there is significant potential to increase business with current customers, to attract new customers in our existing markets, and to position ourselves to enter new markets. Quality service, which is an integral part of our culture, and doing business locally, are reasons that the Bank s customers prefer our locally-based organization. Use technology to expand customer base: While our strategy continues to emphasize superior personal service, we also take advantage of user-friendly technology-based systems to attract customers who may prefer to interact with their financial institution electronically. We offer technology-based services including voice response banking, debit cards, online banking, bill pay and cash management, remote deposit capture, ATMs and an internet website. We believe the availability of both traditional banking services and electronic banking services enhance our ability to attract a broader range of customers. Maintain and recruit highly competent personnel: We have developed a strong corporate culture that has allowed us to recruit and retain some of the best bankers in the Southern California market. We are committed to attracting, developing and retaining people who are significantly knowledgeable about the banking industry and passionate about the communities which we serve. Our compensation and benefits program is competitive. The individuals who comprise our executive management team have an average of thirty-four years of banking industry experience, and our business development and service personnel are well-respected, as well as, very involved in our communities. Maintain a strong balance sheet by augmenting our capital: To support the strategies outlined above and in addition to a focus on our underwriting and loan portfolio management, we believe that the strength of our balance sheet has thus far enabled us to endure the current economic downturn in California and the Central Coast. While our non-performing loans have remained elevated, the level of non-performing loans that are current with their payments is high at 79.0% at March 31, 2011. As of March 31, 2011, the ratio of our allowance for loan losses to total loans was 5.82% and our liquidity position is strong, with $51.4 million in overnight liquidity and securities. As of March 31, 2011, the Bank's regulatory capital ratios were considered adequately capitalized.
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. This summary may not contain all of the information that may be important to you in making your investment decision. You should read the entire prospectus, including the financial data and related notes and section entitled Risk Factors, before making an investment decision. Unless the context otherwise indicates, as used in this prospectus, the terms SunGard, we, our, us, and the company and similar terms refer to SunGard Data Systems Inc. and its subsidiaries on a consolidated basis. Some of the statements in this prospectus constitute forward-looking statements. See Forward Looking Statements. Our Company We are one of the world s leading software and technology services companies. We provide software and technology services to financial services, higher education and public sector organizations. We also provide disaster recovery services, managed services, information availability consulting services and business continuity management software. We serve more than 25,000 customers in more than 70 countries. Our high quality software solutions, excellent customer support and specialized technology services result in strong customer retention rates across all of our business segments and create long-term customer relationships. We believe that we are one of the most efficient operators of mission-critical IT solutions as a result of the economies of scale we derive from serving multiple customers on shared processing platforms. We have four business segments: Financial Systems ( FS ), Higher Education ( HE ), Public Sector ( PS ) and Availability Services ( AS ). FS provides mission-critical software and technology services to virtually every type of financial services institution, including buy-side and sell-side institutions, third-party administrators, wealth managers, retail banks, insurance companies, corporate treasuries and energy trading firms. Our broad range of complementary software solutions and associated technology services help financial services institutions automate the business processes associated with trading, managing portfolios and accounting for investment assets. HE provides software and technology services primarily to colleges and universities as well as to school districts. Education institutions rely on our broad portfolio of solutions and technology services to improve the way they teach, learn, manage and connect with their constituents. PS provides software and technology services designed to meet the specialized needs of local, state and federal governments, public safety and justice agencies, utilities and other public sector institutions as well as nonprofits. AS provides disaster recovery services, managed services, information availability consulting services and business continuity management software to 10,000 customers in North America and Europe. With five million square feet of data center and operations space, AS assists IT organizations across virtually all industry and government sectors to prepare for and recover from emergencies by helping them minimize their computer downtime and optimize their uptime. Through direct sales and channel partners, AS helps organizations ensure their people and customers have uninterrupted access to the information systems they need in order to do business. We were acquired in August 2005 in a leveraged buy-out ( LBO ) by a consortium of private equity investment funds associated with Bain Capital Partners, The Blackstone Group, Goldman, Sachs & Co., Kohlberg Kravis Roberts & Co., Providence Equity Partners, Silver Lake and TPG ( Sponsors ). As a result of the LBO, we are highly leveraged and our equity is not publicly traded. Our Sponsors continually evaluate various strategic alternatives with respect to the Company, including a potential spin-off of the AS business to our current equity holders. We expect that if we were to spin-off any Table of Contents Exact Name of Registrant Guarantor as Specified in Its Charter State or Other Jurisdiction of Incorporation or Organization I.R.S. Employer Identification Number Address, Including Zip Code and Telephone Number, Including Area Code, of Registrant Guarantor s Principal Executive Offices SunGard Consulting Services LLC Delaware 87-0727844 10375 Richmond Suite 700 Houston, TX 77042 SunGard CSA LLC Delaware 20-4280640 680 E. Swedesford Rd. Wayne, PA 19087 SunGard Development Corporation Delaware 23-2589002 680 E. Swedesford Rd. Wayne, PA 19087 SunGard DIS Inc. Delaware 23-2829670 680 E. Swedesford Rd. Wayne, PA 19087 SunGard Energy Systems Inc. Delaware 13-4081739 601 Walnut St. Suite 1010 Philadelphia, PA 19106 SunGard eProcess Intelligence LLC Delaware 13-3217303 600 Lanidex Plaza Parsippany, NJ 07054 SunGard Financial Systems LLC Delaware 23-2585361 601 2nd Avenue South Hopkins, MN 55343 Sungard Higher Education Inc. Delaware 23-2303679 4 Country View Road Malvern, PA 19355 SunGard Higher Education Managed Services Inc. Delaware 23-2414968 2300 Maitland Center Pkwy Suite 340 Maitland, FL 32751 SunGard Investment Systems LLC Delaware 23-2115509 377 E. Butterfield Road Suite 800 Lombard, IL 60148 SunGard Investment Ventures LLC Delaware 51-0297001 680 E. Swedesford Rd. Wayne, PA 19087 SunGard iWORKS LLC Delaware 23-2814630 11560 Great Oaks Way Suite 100 Alpharetta, GA 30022 SunGard iWORKS P&C (US) Inc. Delaware 13-3248040 200 Business Park Dr. Armonk, NY 10504 SunGard Kiodex LLC Delaware 13-4100480 340 Madison Avenue 8th Floor New York, NY 10173 SunGard NetWork Solutions Inc. Delaware 23-2981034 680 E. Swedesford Rd. Wayne, PA 19087 SunGard Public Sector Inc. Florida 59-2133858 1000 Business Center Drive Lake Mary, FL 32746 Table of Contents business segment, that business segment would incur new debt and we would repay a portion of our existing indebtedness. Additionally, it is possible that along with any spin-off, we would receive cash proceeds from an issuance of equity of SunGard Capital Corp. ( SCC ) or SunGard Capital Corp. II ( SCII ), which together are collectively referred to as our Parent Companies. There can be no assurance that we will ultimately pursue any strategic alternatives with respect to any business segment, including AS, or an equity issuance or, if we do, what the structure or timing for any such transaction would be. SunGard Data Systems Inc. was incorporated under Delaware law in 1982. Our principal executive offices are located at 680 East Swedesford Road, Wayne, Pennsylvania 19087. Our telephone number is (484) 582-2000. Incorporation By Reference The SEC allows us to incorporate by reference the information we file with them into this prospectus. See Incorporation by Reference. Table of Contents Exact Name of Registrant Guarantor as Specified in Its Charter State or Other Jurisdiction of Incorporation or Organization I.R.S. Employer Identification Number Address, Including Zip Code and Telephone Number, Including Area Code, of Registrant Guarantor s Principal Executive Offices SunGard Reference Data Solutions LLC Delaware 72-1571745 340 Madison Avenue 8th Floor New York, NY 10173 SunGard SAS Holdings Inc. Delaware 26-0052190 680 E. Swedesford Rd. Wayne, PA 19087 SunGard Securities Finance LLC Delaware 13-3799258 14 Manor Parkway Salem, NH 03079 SunGard Securities Finance International LLC Delaware 13-3809371 14 Manor Parkway Salem, NH 03079 SunGard Shareholder Systems LLC Delaware 23-2025519 2300 Main Street Suite 400 Kansas City, MO 64108 SunGard Software, Inc. Delaware 51-0287708 680 E. Swedesford Rd. Wayne, PA 19087 SunGard Systems International Inc. Pennsylvania 23-2490902 340 Madison Avenue 8th Floor New York, NY 10173 SunGard Technology Services LLC Delaware 23-2579118 680 E. Swedesford Rd. Wayne, PA 19087 SunGard VeriCenter, Inc Delaware 76-0624039 680 East Swedesford Rd. Wayne, PA 19087 SunGard VPM Inc. New York 11-3159462 1660 Walt Whitman Rd. Suite 130 Melville, NY 11747 SunGard Workflow Solutions LLC Delaware 63-1019430 104 Inverness Place Suite 325 Birmingham, AL 35242 Table of Contents The Notes The summary below describes the principal terms of the notes. Certain of the terms and conditions described below are subject to important limitations and exceptions. The sections captioned Description of Senior Notes Due 2015, Description of Senior Notes Due 2018, Description of Senior Notes Due 2020 and Description of Senior Subordinated Notes in this prospectus contain a more detailed description of the terms and conditions of the notes. Issuer SunGard Data Systems Inc. Securities Offered 10 5/8% Senior Notes due 2015. 7 3/8% Senior Notes due 2018. 7 5/8% Senior Notes due 2020. 10 1/4% Senior Subordinated Notes due 2015. Maturity The senior notes due 2015 mature on May 15, 2015. The senior notes due 2018 mature on November 15, 2018. The senior notes due 2020 mature on November 15, 2020. The senior subordinated notes mature on August 15, 2015. Interest Rate The senior notes due 2015 bear interest at a rate of 10 5/8% per annum. The senior notes due 2018 bear interest at a rate of 7 3/8% per annum. The senior notes due 2020 bear interest at a rate of 7 5/8% per annum. The senior subordinated notes bear interest at a rate of 10 1/4% per annum. Interest Payment Dates We pay interest on the senior notes due 2015 on April 1 and October 1, on the senior notes due 2018 and the senior notes due 2020 on May 15 and November 15 and on the senior subordinated notes on February 15 and August 15. Interest accrues from the most recent date to which interest has been paid or, if no interest has been paid, the issue date of the notes. Guarantees Each of our domestic subsidiaries that guarantees the obligations under our senior secured credit facilities are initially jointly and severally and unconditionally guaranteeing the senior notes on a senior unsecured basis and the senior subordinated notes on an unsecured senior subordinated basis. Ranking The senior notes are our senior unsecured obligations and: rank senior in right of payment to our future debt and other obligations that are, by their terms, expressly subordinated in right of payment to the senior notes, including the senior subordinated notes; rank equally in right of payment to all of our existing and future senior debt and other obligations that are not, by their terms, expressly subordinated in right of payment to the senior notes; and Table of Contents are effectively subordinated in right of payment to all of our existing and future secured debt including obligations under our senior secured credit facilities and the 4.875% senior notes due 2014 (referred to in this prospectus as the senior secured notes ), to the extent of the value of the assets securing such debt, and are structurally subordinated to all obligations of each of our subsidiaries that is not a guarantor of the senior notes. Similarly, the guarantees of the senior notes are senior unsecured obligations of the guarantors and: rank senior in right of payment to all of the applicable guarantor s future debt and other obligations that are, by their terms, expressly subordinated in right of payment to the senior notes, including such guarantor s guarantee under the senior subordinated notes; rank equally in right of payment to all of the applicable guarantor s existing and future senior debt and other obligations that are not, by their terms, expressly subordinated in right of payment to the senior notes; and are effectively subordinated in right of payment to all of the applicable guarantor s existing and future secured debt (including such guarantor s guarantee under our senior secured credit facilities and the senior secured notes), to the extent of the value of the assets securing such debt, and are structurally subordinated to all obligations of any subsidiary of a guarantor if that subsidiary is not also a guarantor of the senior notes. The senior subordinated notes are our unsecured senior subordinated obligations and: are subordinated in right of payment to our existing and future senior debt, including our senior secured credit facilities, the senior secured notes and the senior notes; rank equally in right of payment to all of our future senior subordinated debt; are effectively subordinated in right of payment to all of our existing and future secured debt (including our senior secured credit facilities and the senior secured notes), to the extent of the value of the assets securing such debt, and are structurally subordinated to all obligations of each of our subsidiaries that is not a guarantor of the senior subordinated notes; and rank senior in right of payment to all of our future debt and other obligations that are, by their terms, expressly subordinated in right of payment to the senior subordinated notes. Similarly, the guarantees of the senior subordinated notes are unsecured senior subordinated obligations of the guarantors and: are subordinated in right of payment to all of the applicable guarantor s existing and future senior debt, including such guarantor s guarantee under our senior secured credit facilities, the senior secured notes and the senior notes; Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED May 26, 2011 PRELIMINARY PROSPECTUS SunGard Data Systems Inc. 10 5/8% Senior Notes due 2015 7 3/8% Senior Notes due 2018 7 5/8% Senior Notes due 2020 10 1/4% Senior Subordinated Notes due 2015 The 10 5/8% Senior Notes due 2015 (the senior notes due 2015 ) were issued in exchange for the 10 5/8% Senior Notes due 2015 originally issued on September 29, 2008. The 7 3/8% Senior Notes due 2018 (the senior notes due 2018 ) were issued in exchange for the 7 3/8% Senior Notes due 2018 originally issued on November 16, 2010. The 7 5/8% Senior Notes due 2020 (the senior notes due 2020) were issued in exchange for the 7 5/8% Senior Notes due 2020 originally issued on November 16, 2010. The 10 1/4% Senior Subordinated Notes due 2015 (the senior subordinated notes ) were issued in exchange for the 10 1/4% Senior Subordinated Notes due 2015 originally issued on August 11, 2005. The senior notes due 2015, the senior notes due 2018, the senior notes due 2020 (collectively, the senior notes ) and the senior subordinated notes are collectively referred to herein as the notes, unless the context otherwise requires. The senior notes due 2015 bear interest at a rate of 10 5/8% per annum and mature on May 15, 2015. Interest on the senior notes due 2015 is payable on April 1 and October 1 of each year, beginning April 1, 2009. The senior notes due 2018 bear interest at a rate of 7 3/8% per annum and mature on November 15, 2018. The senior notes due 2020 bear interest at a rate of 7 5/8% per annum and mature on November 15, 2020. Interest on the senior notes due 2018 and the senior notes due 2020 is payable on May 15 and November 15 of each year, beginning May 15, 2011. The senior subordinated notes bear interest at a rate of 10 1/4% per annum and mature on August 15, 2015. Interest on the senior subordinated notes due 2015 is payable on February 15 and August 15 of each year, beginning on February 15, 2006. We may redeem some or all of the notes at any time at the redemption prices set forth in this prospectus. The senior notes are our senior unsecured obligations and rank equal in right of payment to all of our existing and future senior indebtedness. The senior subordinated notes are our unsecured senior subordinated obligations and are subordinated in right of payment to all of our existing and future senior indebtedness, including the senior secured credit facilities, the existing senior notes and the senior notes offered hereby. Each of our domestic subsidiaries that guarantees our senior secured credit facilities are initially unconditionally guaranteeing the senior notes with guarantees that rank equal in right of payment to all of the senior indebtedness of such subsidiary, and are initially unconditionally guaranteeing the senior subordinated notes with guarantees that are subordinated in right of payment to all existing and future senior indebtedness of such subsidiary. The notes and the guarantees are effectively subordinated to our existing and future secured indebtedness and that of the guarantors to the extent of the assets securing such indebtedness. This prospectus includes additional information on the terms of the notes, including redemption and repurchase prices, covenants and transfer restrictions. See Risk Factors beginning on page 10 for a discussion of certain risks that you should consider before investing in the notes. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the notes or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. This prospectus has been prepared for and may be used by Goldman, Sachs & Co. and other affiliates of The Goldman Sachs Group, Inc. in connection with offers and sales of the notes related to market-making transactions in the notes effected from time to time. Such affiliates of The Goldman Sachs Group, Inc. may act as principal or agent in such transactions, including as agent for the counterparty when acting as principal or as agent for both counterparties, and may receive compensation in the form of discounts and commissions, including from both counterparties, when it acts as agents for both. Such sales will be made at prevailing market prices at the time of sale, at prices related thereto or at negotiated prices. We will not receive any proceeds from such sales. The date of this prospectus is , 2011. Table of Contents rank equally in right of payment to all of the applicable guarantor s future senior subordinated debt; are effectively subordinated in right of payment to all of the applicable guarantor s existing and future secured debt (including such guarantor s guarantee under our senior secured credit facilities and the senior secured notes), to the extent of the value of the assets securing such debt, and are structurally subordinated to all obligations of any subsidiary of a guarantor if that subsidiary is not also a guarantor of the senior subordinated notes; and rank senior in right of payment to all of the applicable guarantor s future subordinated debt and other obligations that are, by their terms, expressly subordinated in right of payment to the senior subordinated notes. As of March 31, 2011, (1) the notes and related guarantees ranked effectively junior to approximately $4,636 million of senior secured indebtedness (which includes $250 million face amount of our senior secured notes that are recorded at $239 million), (2) the senior notes and related guarantees ranked senior to the $1,000 million of senior subordinated notes, (3) the senior subordinated notes and related guarantees ranked junior to the senior indebtedness under the senior secured credit facilities, the senior secured notes, the senior notes and $16 million of payment obligations relating to historical acquisitions and capital lease obligations, all of which totaled approximately $7,078 million, (4) we had an additional $850 million of unutilized capacity under our revolving credit facility, after giving effect to certain outstanding letters of credit and (5) our non-guarantor subsidiaries had approximately $466 million (of the $7,748 million described above) of payment obligations relating to historical acquisitions and capital lease obligations. In addition, $330 million was outstanding under our receivables facility which is secured by accounts receivable of our subsidiaries that participate in the facility. Optional Redemption Prior to April 1, 2012, we have the option to redeem some or all of the senior notes due 2015 for cash at a redemption price equal to 100% of their principal amount plus an applicable make-whole premium (as described in Description of Senior Notes Due 2015 Optional Redemption ) plus accrued and unpaid interest to the redemption date. Beginning on April 1, 2012, we may redeem some or all of the senior notes due 2015 at the redemption prices listed under Description of Senior Notes Due 2015 Optional Redemption plus accrued interest on the senior notes to the date of redemption. Prior to November 15, 2013, we have the option to redeem the senior notes due 2018, in whole or in part, at a price equal to 100% of their principal amount plus accrued and unpaid interest, if any, to the redemption date and a make-whole premium, as described under Description of Senior Notes due 2018 Optional Redemption. Beginning on November 15, 2013, we may redeem some or all of the senior notes due 2018 at the redemption prices listed under Description of Senior Notes Due 2018 Optional Redemption plus accrued interest on the senior notes to the date of redemption. Table of Contents You should rely only on the information contained in this prospectus or incorporated by reference into this prospectus. We have not authorized anyone to provide you with different information from that contained in, or incorporated by reference into, this prospectus. The prospectus may be used only for the purposes for which it has been published and no person has been authorized to give any information not contained or incorporated by reference herein. If you receive any other information, you should not rely on it. We are not making an offer of these securities in any state where the offer is not permitted. You should assume that the information in this prospectus or incorporated by reference into this prospectus is accurate only as of the date on the front cover, regardless of the time of delivery of this prospectus or of any sale of our common stock. Our business, prospects, financial condition and results of operations may have changed since that date. TABLE OF CONTENTS Page Prospectus Summary 1
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. This summary may not contain all of the information that may be important to you in making your investment decision. You should read the entire prospectus, including the financial data and related notes and section entitled Risk Factors, before making an investment decision. Unless the context otherwise indicates, as used in this prospectus, the terms SunGard, we, our, us, and the company and similar terms refer to SunGard Data Systems Inc. and its subsidiaries on a consolidated basis. Some of the statements in this prospectus constitute forward-looking statements. See Forward Looking Statements. Our Company We are one of the world s leading software and technology services companies. We provide software and technology services to financial services, higher education and public sector organizations. We also provide disaster recovery services, managed services, information availability consulting services and business continuity management software. We serve more than 25,000 customers in more than 70 countries. Our high quality software solutions, excellent customer support and specialized technology services result in strong customer retention rates across all of our business segments and create long-term customer relationships. We believe that we are one of the most efficient operators of mission-critical IT solutions as a result of the economies of scale we derive from serving multiple customers on shared processing platforms. We have four business segments: Financial Systems ( FS ), Higher Education ( HE ), Public Sector ( PS ) and Availability Services ( AS ). FS provides mission-critical software and technology services to virtually every type of financial services institution, including buy-side and sell-side institutions, third-party administrators, wealth managers, retail banks, insurance companies, corporate treasuries and energy trading firms. Our broad range of complementary software solutions and associated technology services help financial services institutions automate the business processes associated with trading, managing portfolios and accounting for investment assets. HE provides software and technology services primarily to colleges and universities as well as to school districts. Education institutions rely on our broad portfolio of solutions and technology services to improve the way they teach, learn, manage and connect with their constituents. PS provides software and technology services designed to meet the specialized needs of local, state and federal governments, public safety and justice agencies, utilities and other public sector institutions as well as nonprofits. AS provides disaster recovery services, managed services, information availability consulting services and business continuity management software to 10,000 customers in North America and Europe. With five million square feet of data center and operations space, AS assists IT organizations across virtually all industry and government sectors to prepare for and recover from emergencies by helping them minimize their computer downtime and optimize their uptime. Through direct sales and channel partners, AS helps organizations ensure their people and customers have uninterrupted access to the information systems they need in order to do business. We were acquired in August 2005 in a leveraged buy-out ( LBO ) by a consortium of private equity investment funds associated with Bain Capital Partners, The Blackstone Group, Goldman, Sachs & Co., Kohlberg Kravis Roberts & Co., Providence Equity Partners, Silver Lake and TPG ( Sponsors ). As a result of the LBO, we are highly leveraged and our equity is not publicly traded. Our Sponsors continually evaluate various strategic alternatives with respect to the Company, including a potential spin-off of the AS business to our current equity holders. We expect that if we were to spin-off any Table of Contents Exact Name of Registrant Guarantor as Specified in Its Charter State or Other Jurisdiction of Incorporation or Organization I.R.S. Employer Identification Number Address, Including Zip Code and Telephone Number, Including Area Code, of Registrant Guarantor s Principal Executive Offices SunGard Consulting Services LLC Delaware 87-0727844 10375 Richmond Suite 700 Houston, TX 77042 SunGard CSA LLC Delaware 20-4280640 680 E. Swedesford Rd. Wayne, PA 19087 SunGard Development Corporation Delaware 23-2589002 680 E. Swedesford Rd. Wayne, PA 19087 SunGard DIS Inc. Delaware 23-2829670 680 E. Swedesford Rd. Wayne, PA 19087 SunGard Energy Systems Inc. Delaware 13-4081739 601 Walnut St. Suite 1010 Philadelphia, PA 19106 SunGard eProcess Intelligence LLC Delaware 13-3217303 600 Lanidex Plaza Parsippany, NJ 07054 SunGard Financial Systems LLC Delaware 23-2585361 601 2nd Avenue South Hopkins, MN 55343 Sungard Higher Education Inc. Delaware 23-2303679 4 Country View Road Malvern, PA 19355 SunGard Higher Education Managed Services Inc. Delaware 23-2414968 2300 Maitland Center Pkwy Suite 340 Maitland, FL 32751 SunGard Investment Systems LLC Delaware 23-2115509 377 E. Butterfield Road Suite 800 Lombard, IL 60148 SunGard Investment Ventures LLC Delaware 51-0297001 680 E. Swedesford Rd. Wayne, PA 19087 SunGard iWORKS LLC Delaware 23-2814630 11560 Great Oaks Way Suite 100 Alpharetta, GA 30022 SunGard iWORKS P&C (US) Inc. Delaware 13-3248040 200 Business Park Dr. Armonk, NY 10504 SunGard Kiodex LLC Delaware 13-4100480 340 Madison Avenue 8th Floor New York, NY 10173 SunGard NetWork Solutions Inc. Delaware 23-2981034 680 E. Swedesford Rd. Wayne, PA 19087 SunGard Public Sector Inc. Florida 59-2133858 1000 Business Center Drive Lake Mary, FL 32746 Table of Contents business segment, that business segment would incur new debt and we would repay a portion of our existing indebtedness. Additionally, it is possible that along with any spin-off, we would receive cash proceeds from an issuance of equity of SunGard Capital Corp. ( SCC ) or SunGard Capital Corp. II ( SCII ), which together are collectively referred to as our Parent Companies. There can be no assurance that we will ultimately pursue any strategic alternatives with respect to any business segment, including AS, or an equity issuance or, if we do, what the structure or timing for any such transaction would be. SunGard Data Systems Inc. was incorporated under Delaware law in 1982. Our principal executive offices are located at 680 East Swedesford Road, Wayne, Pennsylvania 19087. Our telephone number is (484) 582-2000. Incorporation By Reference The SEC allows us to incorporate by reference the information we file with them into this prospectus. See Incorporation by Reference. Table of Contents Exact Name of Registrant Guarantor as Specified in Its Charter State or Other Jurisdiction of Incorporation or Organization I.R.S. Employer Identification Number Address, Including Zip Code and Telephone Number, Including Area Code, of Registrant Guarantor s Principal Executive Offices SunGard Reference Data Solutions LLC Delaware 72-1571745 340 Madison Avenue 8th Floor New York, NY 10173 SunGard SAS Holdings Inc. Delaware 26-0052190 680 E. Swedesford Rd. Wayne, PA 19087 SunGard Securities Finance LLC Delaware 13-3799258 14 Manor Parkway Salem, NH 03079 SunGard Securities Finance International LLC Delaware 13-3809371 14 Manor Parkway Salem, NH 03079 SunGard Shareholder Systems LLC Delaware 23-2025519 2300 Main Street Suite 400 Kansas City, MO 64108 SunGard Software, Inc. Delaware 51-0287708 680 E. Swedesford Rd. Wayne, PA 19087 SunGard Systems International Inc. Pennsylvania 23-2490902 340 Madison Avenue 8th Floor New York, NY 10173 SunGard Technology Services LLC Delaware 23-2579118 680 E. Swedesford Rd. Wayne, PA 19087 SunGard VeriCenter, Inc Delaware 76-0624039 680 East Swedesford Rd. Wayne, PA 19087 SunGard VPM Inc. New York 11-3159462 1660 Walt Whitman Rd. Suite 130 Melville, NY 11747 SunGard Workflow Solutions LLC Delaware 63-1019430 104 Inverness Place Suite 325 Birmingham, AL 35242 Table of Contents The Notes The summary below describes the principal terms of the notes. Certain of the terms and conditions described below are subject to important limitations and exceptions. The sections captioned Description of Senior Notes Due 2015, Description of Senior Notes Due 2018, Description of Senior Notes Due 2020 and Description of Senior Subordinated Notes in this prospectus contain a more detailed description of the terms and conditions of the notes. Issuer SunGard Data Systems Inc. Securities Offered 10 5/8% Senior Notes due 2015. 7 3/8% Senior Notes due 2018. 7 5/8% Senior Notes due 2020. 10 1/4% Senior Subordinated Notes due 2015. Maturity The senior notes due 2015 mature on May 15, 2015. The senior notes due 2018 mature on November 15, 2018. The senior notes due 2020 mature on November 15, 2020. The senior subordinated notes mature on August 15, 2015. Interest Rate The senior notes due 2015 bear interest at a rate of 10 5/8% per annum. The senior notes due 2018 bear interest at a rate of 7 3/8% per annum. The senior notes due 2020 bear interest at a rate of 7 5/8% per annum. The senior subordinated notes bear interest at a rate of 10 1/4% per annum. Interest Payment Dates We pay interest on the senior notes due 2015 on April 1 and October 1, on the senior notes due 2018 and the senior notes due 2020 on May 15 and November 15 and on the senior subordinated notes on February 15 and August 15. Interest accrues from the most recent date to which interest has been paid or, if no interest has been paid, the issue date of the notes. Guarantees Each of our domestic subsidiaries that guarantees the obligations under our senior secured credit facilities are initially jointly and severally and unconditionally guaranteeing the senior notes on a senior unsecured basis and the senior subordinated notes on an unsecured senior subordinated basis. Ranking The senior notes are our senior unsecured obligations and: rank senior in right of payment to our future debt and other obligations that are, by their terms, expressly subordinated in right of payment to the senior notes, including the senior subordinated notes; rank equally in right of payment to all of our existing and future senior debt and other obligations that are not, by their terms, expressly subordinated in right of payment to the senior notes; and Table of Contents are effectively subordinated in right of payment to all of our existing and future secured debt including obligations under our senior secured credit facilities and the 4.875% senior notes due 2014 (referred to in this prospectus as the senior secured notes ), to the extent of the value of the assets securing such debt, and are structurally subordinated to all obligations of each of our subsidiaries that is not a guarantor of the senior notes. Similarly, the guarantees of the senior notes are senior unsecured obligations of the guarantors and: rank senior in right of payment to all of the applicable guarantor s future debt and other obligations that are, by their terms, expressly subordinated in right of payment to the senior notes, including such guarantor s guarantee under the senior subordinated notes; rank equally in right of payment to all of the applicable guarantor s existing and future senior debt and other obligations that are not, by their terms, expressly subordinated in right of payment to the senior notes; and are effectively subordinated in right of payment to all of the applicable guarantor s existing and future secured debt (including such guarantor s guarantee under our senior secured credit facilities and the senior secured notes), to the extent of the value of the assets securing such debt, and are structurally subordinated to all obligations of any subsidiary of a guarantor if that subsidiary is not also a guarantor of the senior notes. The senior subordinated notes are our unsecured senior subordinated obligations and: are subordinated in right of payment to our existing and future senior debt, including our senior secured credit facilities, the senior secured notes and the senior notes; rank equally in right of payment to all of our future senior subordinated debt; are effectively subordinated in right of payment to all of our existing and future secured debt (including our senior secured credit facilities and the senior secured notes), to the extent of the value of the assets securing such debt, and are structurally subordinated to all obligations of each of our subsidiaries that is not a guarantor of the senior subordinated notes; and rank senior in right of payment to all of our future debt and other obligations that are, by their terms, expressly subordinated in right of payment to the senior subordinated notes. Similarly, the guarantees of the senior subordinated notes are unsecured senior subordinated obligations of the guarantors and: are subordinated in right of payment to all of the applicable guarantor s existing and future senior debt, including such guarantor s guarantee under our senior secured credit facilities, the senior secured notes and the senior notes; Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED May 26, 2011 PRELIMINARY PROSPECTUS SunGard Data Systems Inc. 10 5/8% Senior Notes due 2015 7 3/8% Senior Notes due 2018 7 5/8% Senior Notes due 2020 10 1/4% Senior Subordinated Notes due 2015 The 10 5/8% Senior Notes due 2015 (the senior notes due 2015 ) were issued in exchange for the 10 5/8% Senior Notes due 2015 originally issued on September 29, 2008. The 7 3/8% Senior Notes due 2018 (the senior notes due 2018 ) were issued in exchange for the 7 3/8% Senior Notes due 2018 originally issued on November 16, 2010. The 7 5/8% Senior Notes due 2020 (the senior notes due 2020) were issued in exchange for the 7 5/8% Senior Notes due 2020 originally issued on November 16, 2010. The 10 1/4% Senior Subordinated Notes due 2015 (the senior subordinated notes ) were issued in exchange for the 10 1/4% Senior Subordinated Notes due 2015 originally issued on August 11, 2005. The senior notes due 2015, the senior notes due 2018, the senior notes due 2020 (collectively, the senior notes ) and the senior subordinated notes are collectively referred to herein as the notes, unless the context otherwise requires. The senior notes due 2015 bear interest at a rate of 10 5/8% per annum and mature on May 15, 2015. Interest on the senior notes due 2015 is payable on April 1 and October 1 of each year, beginning April 1, 2009. The senior notes due 2018 bear interest at a rate of 7 3/8% per annum and mature on November 15, 2018. The senior notes due 2020 bear interest at a rate of 7 5/8% per annum and mature on November 15, 2020. Interest on the senior notes due 2018 and the senior notes due 2020 is payable on May 15 and November 15 of each year, beginning May 15, 2011. The senior subordinated notes bear interest at a rate of 10 1/4% per annum and mature on August 15, 2015. Interest on the senior subordinated notes due 2015 is payable on February 15 and August 15 of each year, beginning on February 15, 2006. We may redeem some or all of the notes at any time at the redemption prices set forth in this prospectus. The senior notes are our senior unsecured obligations and rank equal in right of payment to all of our existing and future senior indebtedness. The senior subordinated notes are our unsecured senior subordinated obligations and are subordinated in right of payment to all of our existing and future senior indebtedness, including the senior secured credit facilities, the existing senior notes and the senior notes offered hereby. Each of our domestic subsidiaries that guarantees our senior secured credit facilities are initially unconditionally guaranteeing the senior notes with guarantees that rank equal in right of payment to all of the senior indebtedness of such subsidiary, and are initially unconditionally guaranteeing the senior subordinated notes with guarantees that are subordinated in right of payment to all existing and future senior indebtedness of such subsidiary. The notes and the guarantees are effectively subordinated to our existing and future secured indebtedness and that of the guarantors to the extent of the assets securing such indebtedness. This prospectus includes additional information on the terms of the notes, including redemption and repurchase prices, covenants and transfer restrictions. See Risk Factors beginning on page 10 for a discussion of certain risks that you should consider before investing in the notes. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the notes or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. This prospectus has been prepared for and may be used by Goldman, Sachs & Co. and other affiliates of The Goldman Sachs Group, Inc. in connection with offers and sales of the notes related to market-making transactions in the notes effected from time to time. Such affiliates of The Goldman Sachs Group, Inc. may act as principal or agent in such transactions, including as agent for the counterparty when acting as principal or as agent for both counterparties, and may receive compensation in the form of discounts and commissions, including from both counterparties, when it acts as agents for both. Such sales will be made at prevailing market prices at the time of sale, at prices related thereto or at negotiated prices. We will not receive any proceeds from such sales. The date of this prospectus is , 2011. Table of Contents rank equally in right of payment to all of the applicable guarantor s future senior subordinated debt; are effectively subordinated in right of payment to all of the applicable guarantor s existing and future secured debt (including such guarantor s guarantee under our senior secured credit facilities and the senior secured notes), to the extent of the value of the assets securing such debt, and are structurally subordinated to all obligations of any subsidiary of a guarantor if that subsidiary is not also a guarantor of the senior subordinated notes; and rank senior in right of payment to all of the applicable guarantor s future subordinated debt and other obligations that are, by their terms, expressly subordinated in right of payment to the senior subordinated notes. As of March 31, 2011, (1) the notes and related guarantees ranked effectively junior to approximately $4,636 million of senior secured indebtedness (which includes $250 million face amount of our senior secured notes that are recorded at $239 million), (2) the senior notes and related guarantees ranked senior to the $1,000 million of senior subordinated notes, (3) the senior subordinated notes and related guarantees ranked junior to the senior indebtedness under the senior secured credit facilities, the senior secured notes, the senior notes and $16 million of payment obligations relating to historical acquisitions and capital lease obligations, all of which totaled approximately $7,078 million, (4) we had an additional $850 million of unutilized capacity under our revolving credit facility, after giving effect to certain outstanding letters of credit and (5) our non-guarantor subsidiaries had approximately $466 million (of the $7,748 million described above) of payment obligations relating to historical acquisitions and capital lease obligations. In addition, $330 million was outstanding under our receivables facility which is secured by accounts receivable of our subsidiaries that participate in the facility. Optional Redemption Prior to April 1, 2012, we have the option to redeem some or all of the senior notes due 2015 for cash at a redemption price equal to 100% of their principal amount plus an applicable make-whole premium (as described in Description of Senior Notes Due 2015 Optional Redemption ) plus accrued and unpaid interest to the redemption date. Beginning on April 1, 2012, we may redeem some or all of the senior notes due 2015 at the redemption prices listed under Description of Senior Notes Due 2015 Optional Redemption plus accrued interest on the senior notes to the date of redemption. Prior to November 15, 2013, we have the option to redeem the senior notes due 2018, in whole or in part, at a price equal to 100% of their principal amount plus accrued and unpaid interest, if any, to the redemption date and a make-whole premium, as described under Description of Senior Notes due 2018 Optional Redemption. Beginning on November 15, 2013, we may redeem some or all of the senior notes due 2018 at the redemption prices listed under Description of Senior Notes Due 2018 Optional Redemption plus accrued interest on the senior notes to the date of redemption. Table of Contents You should rely only on the information contained in this prospectus or incorporated by reference into this prospectus. We have not authorized anyone to provide you with different information from that contained in, or incorporated by reference into, this prospectus. The prospectus may be used only for the purposes for which it has been published and no person has been authorized to give any information not contained or incorporated by reference herein. If you receive any other information, you should not rely on it. We are not making an offer of these securities in any state where the offer is not permitted. You should assume that the information in this prospectus or incorporated by reference into this prospectus is accurate only as of the date on the front cover, regardless of the time of delivery of this prospectus or of any sale of our common stock. Our business, prospects, financial condition and results of operations may have changed since that date. TABLE OF CONTENTS Page Prospectus Summary 1
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+PROSPECTUS SUMMARY You should read this summary together with the entire prospectus, including the more detailed information in our financial statements and related notes appearing elsewhere in this prospectus. Our Business Our principal business address is 10575 Katy Freeway, Suite 300, Houston, Texas, 77024. Our telephone number is (832) 436-1832. We were incorporated in the State of Nevada on March 29, 2006 as Green Irons Holdings Corp. to conduct a business in the golfing industry. On November 18, 2009, we completed the purchase of certain oil and gas assets from Alamo Oil Limited, a United Kingdom corporation. As a result of the asset purchase transaction, we changed management, entered the oil and gas business, and ceased all activity in our former business. We are an oil and gas company led by an experienced management team and focused on exploration, production and development of oil and natural gas. Our business plan is to acquire oil and gas properties for exploration, appraisal and development with the intent to bring the projects to feasibility at which time we will either contract out the operations or joint venture the project with qualified interested parties. In the United States, we have an operation base in Gray, Kentucky and are the operator of our wells in Knox County, Kentucky. Our main priority will be given to projects with near term cash flow potential, although consideration will be given to projects that may not be as advanced from a technical standpoint but demonstrate the potential for significant upside. We currently have proved reserves in the States of Texas, Kentucky and West Virginia. In April 2011, we acquired all of the membership interests in KYTX Oil and Gas, LLC, KYTX Pipeline, LLC, and KYTX Drilling Company, LLC from Range Kentucky Holdings, LLC. The interests acquired include: (i) 71 wells located on approximately 4,040 acres in Kentucky, all of which are held by production, (ii) a 23-mile pipeline network capable of handling up to 9,000,000 cubic feet per day and (iii) drilling equipment including one drilling rig, one service rig and additional well-servicing equipment. Our available cash and working capital will not fund our activities for the next twelve months. Therefore, our auditors have expressed substantial doubt about our ability to continue as a going concern. Summary Financial Information The summary financial information set forth below is derived from the more detailed financial statements appearing elsewhere in this prospectus. We have prepared our financial statements contained in this prospectus in accordance with accounting principles generally accepted in the United States. All information should be considered in conjunction with our financial statements and the notes contained elsewhere in this prospectus. Income Statement For the Three Months Ended July 31, 2011 For the Year Ended April 30, 2011 For the Year Ended April 30, 2010 $ $ $ Oil Revenues 204,177 251,337 65,431 Total Expenses 403,960 901,256 456,946 Operating Loss (199,783) (649,919) (391,515) Net Loss (517,440) (1,804,169) (502,262) Net Loss Per Share (0.01) (0.04) (0.03) Balance Sheet July 31, 2011 April 30, 2011 April 30, 2010 $ $ $ Cash 86,056 45,098 285,458 Total Current Assets 182,951 154,901 311,576 Total Assets 8,450,438 8,248,825 954,905 Current Liabilities 502,826 433,175 77,348 Total Liabilities 2,004,333 1,592,835 333,297 Total Stockholders' Equity (Deficit) 6,446,105 6,655,990 621,608 The Offering: The selling shareholders want to sell up to 20,590,519 shares of our $0.001 par value common stock, which includes: (i) 3,000,000 shares of our common stock; (ii) 4,000,000 shares issuable upon conversion of the Eurasian First Notes; (iii) 1,720,000 shares issuable upon the conversion of the Eurasian Second Notes; (iv) 2,000,000 shares issuable upon the exercise of the Eurasian First Warrants; and (v) 860,000 shares issuable upon the exercise of the Eurasian Second Warrants; (vi) 2,621,243 shares issuable upon the conversion of the Investor Debentures; (vii) 262,125 shares issuable as interest due on the Investor Debentures; (viii) 1,638,275 shares issuable upon exercise of the Investor Series A Warrants; (ix) 2,621,243 shares issuable upon exercise of the Investor Series B Warrants; (x) 1,638,275 shares issuable upon exercise of the Investor Series C Warrants; (xi) 229,358 shares issuable upon the exercise of the Placement Agent Warrants. All of these shares of our common stock are being offered for resale by the selling shareholders. Offering Price: The selling shareholders may offer all or part of their shares for resale from time to time through public or private transactions, at either prevailing market prices or at privately negotiated prices. Use of Proceeds: We will not receive any of the proceeds from the sale of those shares being offered by the selling shareholders except the proceeds, if any, from the exercise of warrants held by selling shareholders, which could total $6,138,575. Trading: Our common stock is traded on the Over the Counter Bulletin Board and OTCQB under the symbol ALME.
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+S-1/A 1 a2203993zs-1a.htm S-1/A Table of Contents As filed with the Securities and Exchange Commission on June 24, 2011 Registration No. 333-173042 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 TABLE OF CONTENTS Market and Industry Information ii Special Note Regarding Forward-Looking Statements ii Summary 1
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+S-1/A 1 a2203993zs-1a.htm S-1/A Table of Contents As filed with the Securities and Exchange Commission on June 24, 2011 Registration No. 333-173042 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 TABLE OF CONTENTS Market and Industry Information ii Special Note Regarding Forward-Looking Statements ii Summary 1
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+Prospectus Summary 1
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. You should read the following summary together with the more detailed information appearing in this prospectus, including "Selected Consolidated Financial Data," "Management's Discussion and Analysis of Financial Condition and Results of Operations," "Risk Factors," "Business" and our consolidated financial statements and related notes before deciding whether to purchase shares of our capital stock. Unless the context otherwise requires, the terms "Demand Media," "the Company," "we," "us" and "our" in this prospectus refer to Demand Media, Inc., and its subsidiaries taken as a whole. Our Mission Our mission is to fulfill the world's demand for commercially valuable content. Our Company We are a leader in a new Internet-based model for the professional creation of high-quality, commercially valuable content at scale. While traditional media companies create content based on anticipated consumer interest, we create content that responds to actual consumer demand. Our approach is driven by consumers' desire to search for and discover increasingly specific information across the Internet. By listening to consumers, we are able to create and deliver accurate and precise content that fulfills their needs. Through our innovative platform which combines a studio of freelance content creators with proprietary algorithms and processes we identify, create, distribute and monetize in-demand, long-lived content. We believe continued advancements in search, social media, mobile computing and targeted monetization will continue to be growth catalysts for our business. Our business is comprised of two distinct and complementary service offerings: Content & Media and Registrar. Our Content & Media service offering includes the following components: Content creation studio that identifies, creates and distributes online text articles and videos, utilizing our proprietary algorithms, editorial processes and community of freelance content creators; Enterprise-class social media applications that enable websites to offer features such as user profiles, comments, forums, reviews, blogs and photo and video sharing; and A system of monetization tools that are designed to match targeted advertisements with content in a manner that optimizes advertising revenue and end-user experience. We deploy our proprietary Content & Media platform both to our owned and operated websites, such as eHow.com, and to websites operated by our customers, such as USATODAY.com. As a result, our platform serves a large and growing audience. According to comScore, for the month ended November 30, 2010, our owned and operated websites comprised the 17th largest web property in the United States and we attracted over 105 million unique visitors with over 679 million page views globally. Our reach is further extended through over 375 websites operated by our customers where we deploy one or more features of our platform. These customer websites generated over 1 billion page views to our platform during the month ended November 30, 2010, according to our internal data. As of December 31, 2010, our content studio had approximately 13,000 freelance content creators, and during the year ended December 31, 2010, it generated approximately 2 million text articles and videos. We believe that the volume of output from our content studio makes us one of the world's most prolific producers of professional online content. Our Registrar, with over 10 million Internet domain names under management, is the world's largest wholesale registrar and the world's second largest registrar overall. As a wholesaler, we provide domain name registration services and offer value-added services to over 7,000 active resellers, Amendment No. 8 to Form S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Table of Contents including small businesses, large e-commerce websites, Internet service providers and web-hosting companies. Our Registrar complements our Content & Media service offering by providing us with a recurring base of subscription revenue, a valuable source of data regarding Internet users' online interests, expanded third-party distribution opportunities and proprietary access to commercially valuable domain names that we selectively add to our owned and operated websites. We generate substantially all of our revenue through the sale of advertising in our Content & Media service offering and through domain name registrations in our Registrar service offering. For the year ended December 31, 2009 and the nine months ended September 30, 2010, we reported revenue of $198 million and $179 million, respectively. For these same periods, we reported net losses of $22 million and $6 million, respectively, operating loss of $18 million and $3 million, respectively, and adjusted operating income before depreciation and amortization, or Adjusted OIBDA, of $37 million and $42 million, respectively. See "Summary Consolidated Financial Information and Other Data Non-GAAP Financial Measures" for a reconciliation of Adjusted OIBDA to the closest comparable measures calculated in accordance with GAAP. Industry Background Over the last decade, the Internet has challenged traditional media business models by reshaping how content is consumed, created, distributed and monetized. Consumers today spend more of their time online, venturing beyond major Internet portals and visiting an increasing number of websites to find specific content for their personal needs and interests. In addition, consumers are changing the way they discover content online, primarily through advancements in web search technology and the popularity of social media. However, consumers are often unable to find the precise content that they are seeking because the demand for highly specific, pertinent information outpaces the supply of thoughtfully researched, trusted content. The increased specificity of consumer demand for online content strains many existing content creation business models. Traditional models focus on producing content with sufficiently broad audiences to justify elevated production costs. This traditional approach is less effective for fulfilling at scale the increasingly fragmenting consumer demand for content. Meanwhile, the widespread adoption of social media and other publishing tools has enabled a large number of individuals to more easily create and publish content on the Internet. However, the difficulty in constructing profitable business models has limited such individual endeavors largely to bloggers and passionate enthusiasts who, while often knowledgeable, may lack recognized credibility, production scale and broad distribution and monetization capabilities. The demand for highly specific content also presents new opportunities for advertisers seeking to effectively reach targeted audiences. Finding better ways to reach this fragmented consumer base remains a priority for advertisers, a trend that is likely to accelerate as online advertising growth outpaces that of offline advertising growth, and as advertising dollars follow audiences from offline to online media. From 2009 to 2012, online advertising in the United States is projected to grow to $31 billion, reflecting a compound annual growth rate of 16%. However, over that same period, total media advertising is only expected to grow at a compound annual growth rate of less than 1%, according to ZenithOptimedia. These trends present new and complex challenges for consuming, creating, distributing and monetizing online content that traditional and even new online business models have struggled to address. These challenges have had a profound impact on consumers, content creators, website publishers and advertisers who are in need of a solution that connects this disparate media ecosystem. Demand Media, Inc. (Exact name of registrant as specified in its charter) Delaware 7379 20-4731239 (State or other jurisdiction of incorporation or organization) (Primary Standard Industrial Classification Code Number) (I.R.S. Employer Identification No.) 1299 Ocean Avenue, Suite 500 Santa Monica, California 90401 (310) 394-6400 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) Richard M. Rosenblatt Chairman and Chief Executive Officer Demand Media, Inc. 1299 Ocean Avenue, Suite 500 Santa Monica, California 90401 (310) 394-6400 (Name, address, including zip code, and telephone number, including area code, of agent for service) Table of Contents Our Solution Our solution is based on the following key elements: Content. We create highly relevant and specific online text and video content that we believe will have commercial value over a long useful life. We employ a rigorous process to select the subject matter of our content, including the use of automated algorithms with third-party and proprietary data along with several levels of editorial input. The objective of this process is to determine what content consumers are seeking, if it is likely to be valuable to advertisers and whether it can be cost-effectively produced. To produce professional content at scale, we engage our robust community of approximately 13,000 highly-qualified freelance content creators. Our technology and innovative processes allow us to produce articles and videos in a cost-effective manner while ensuring high quality output. Social Media. Our enterprise-class social media tools allow websites to add feature-rich applications, such as user profiles, comments, forums, reviews, blogs and photo and video sharing. These social media applications facilitate social media interactions and allow websites to better engage their users, as well as ensure interoperability with popular social destinations such as Facebook and Twitter. Monetization. The system of monetization tools in our platform includes contextual matching algorithms that place advertisements based on website content, yield optimization systems that continuously evaluate the performance of online advertisements to maximize revenue, and ad management infrastructures to manage multiple ad formats and control ad inventory. Distribution. We deploy some or all of the components of our platform to our owned and operated websites, such as eHow and LIVESTRONG.com, as well as to over 375 websites operated by our customers, such as the online version of the San Francisco Chronicle and the National Football League website. We also deploy the monetization features of our platform by placing advertising on a portfolio of over 500,000 undeveloped websites that we own. We have also begun to expand the distribution of our content by offering our Registrar customers the ability to add contextually relevant content from our extensive wholly-owned content library to their sites. Through our platform, we are able to deliver significant value to consumers, advertisers, customers and freelance content creators. We make the Internet a more useful resource to the millions of users searching for information online by analyzing consumer demand to create and deliver commercially valuable, high-quality content. Our advertisers benefit from gaining access to targeted audiences by matching their advertisements with our highly specific content delivered to both our owned and operated websites and our network of customer websites. Our customers benefit from the more engaging experience they are able to provide to their visitors by using our platform. Our freelance content creators benefit from the ready supply of work assignments available to them which allow them to earn income that is paid twice-weekly and to gain recognition by creating valuable content that reaches an audience of millions. Our Competitive Advantages Proprietary Technologies and Processes. We have well-developed proprietary technologies and processes that underlie our Content & Media and Registrar service offerings. We continue to refine our algorithms and processes, incorporating the substantial data we are able to collect as a result of the significant scale of our operations. Extensive Freelance Content Creator Community. Our freelance content creator community consists of approximately 13,000 individuals who have satisfied our rigorous qualification standards. A significant majority of our community has had prior journalism experience, and Table of Contents determine resource allocations, formulate financial projections and make strategic business decisions. Measures which we believe are the primary indicators of our performance are as follows: Content & Media Metrics page views: We define page views as the total number of web pages viewed across our owned and operated websites and/or our network of customer websites, including web pages viewed by consumers on our customers' websites using our social media tools. Page views are primarily tracked through internal systems, such as our Omniture web analytics tool, contain estimates for our customer websites using our social media tools and may use data compiled from certain customer websites. We periodically review and refine our methodology for monitoring, gathering, and counting page views in an effort to improve the accuracy of our measure. RPM: We define RPM as Content & Media revenue per one thousand page views. Registrar Metrics domain: We define a domain as an individual domain name paid for by a third-party customer where the domain name is managed through our Registrar service offering. This metric does not include any of the company's owned and operated websites. average revenue per domain: We calculate average revenue per domain by dividing Registrar revenues for a period by the average number of domains registered in that period. The average number of domains is the simple average of the number of domains at the beginning and end of the period. Average revenue per domain for partial year periods is annualized. For example, average revenue per domain for the nine months ended September 30, 2010 is calculated by multiplying Registrar revenue for the nine month period ended September 30, 2010 by twelve ninths, divided by the average number of domains registered in this period. The following table sets forth additional performance highlights of key business metrics for the periods presented: Year ended December 31, Nine Months ended September 30, 2008(1) 2009(1) % Change 2009(1) 2010(1) % Change Content & Media Metrics: Owned & operated Page views (in billions) 5.9 6.8 15 % 5.0 6.0 20 % RPM $ 10.56 $ 10.69 1 % $ 10.33 $ 12.60 22 % Network of customer websites Page views (in billions) 5.4 10.0 84 % 7.4 9.3 26 % RPM $ 4.04 $ 3.45 (15 )% $ 3.25 $ 3.24 Registrar Metrics: End of Period # of Domains (in millions) 8.8 9.1 3 % 9.0 10.6 18 % Average Revenue per Domain $ 9.85 $ 10.11 Copies to: W. Alex Voxman, Esq. Robert A. Koenig, Esq. Latham & Watkins LLP 355 South Grand Avenue Los Angeles, California 90071-1560 (213) 485-1234 Matthew P. Polesetsky, Esq. David T. Ho, Esq. Demand Media, Inc. 1299 Ocean Avenue, Suite 500 Santa Monica, California 90401 (310) 394-6400 Kevin P. Kennedy, Esq. Simpson Thacher & Bartlett LLP 2550 Hanover Street Palo Alto, California 94304 (650) 251-5000 Table of Contents includes Associated Press and Society of Professional Journalists award-winning authors and Emmy award-winning filmmakers. Valuable and Growing Content Library. Our wholly-owned content library, consisting of approximately 3 million articles and approximately 200,000 videos as of December 15, 2010, forms the foundation of our growing and recurring revenue base. We strive to create content with positive growth characteristics over a long useful life. Our content library also provides other benefits to us, including generating strategic data regarding user behavior and preferences, building brand recognition by attracting significant traffic to our owned and operated websites and facilitating strategic revenue-sharing relationships with customers. Substantial and Growing Audience. We believe that the significant audience reach across our owned and operated websites and our network of customer websites increases our advertising opportunities, provides valuable feedback data that we utilize to refine our platform, enhances monetization and end-user experience and delivers economic benefits to our customers through our revenue-sharing program. For the month ended November 30, 2010, our owned and operated websites attracted over 105 million unique visitors who generated over 679 million page views globally according to comScore, and our network of customer websites generated over 1 billion page views to our platform during the same period according to our internal data. Large, Complementary Registrar Service Offering. We own and operate the world's second largest domain name registrar, with over 10 million domain names under management, which provides us with proprietary and valuable data, access to new sources of traffic and valuable websites as well as expanded third-party distribution opportunities for our platform. Highly Scalable Operating Platform. We have built an extensive operating infrastructure that is designed to scale with our growing services. Additionally, our systems have been customized to meet our unique service needs and provide us both the scale and flexibility that we need to manage our highly dynamic and growing service. Our Strategy Key elements of our strategy are to: Grow Our Audiences. We aim to grow our online audience reach and build passionate, online user communities. We intend to specifically target high-value vertical market segments, expand partnerships with brands and leading publishers and increase the scope of our relationships with our current Registrar customers. Improve Monetization. We intend to increase monetization opportunities by improving ad-serving algorithms, growing our advertising base and expanding our direct sales force. Enhance Our Value Proposition to our Content Creators, Website Publishers and Advertisers. We intend to continuously deliver outstanding service, scale of audience and feedback to our freelance content creators, customers and advertisers in a manner that enhances our leadership position in the professional creation of original content at scale. Increase Our Production Scale of High-Quality, Commercially Valuable Content. We intend to build on our success as one of the world's largest creators of professional online content by utilizing our proprietary technologies, algorithms and processes to increase the scale at which we identify, produce and deliver high-quality, commercially valuable content. Expand Internationally. We believe our model is scalable and readily transferrable to international markets. We intend to capitalize on the growing breadth of skills of our freelance creator community and the versatility of our long-lived content that can often transcend geographies and cultures to target certain foreign, including non-English speaking, countries. Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company Table of Contents Embrace New Content Distribution Channels. We intend to leverage and expand our existing distribution network to emerging and alternative channels, including complementary social media platforms, custom applications for mobile platforms and new types of devices used to access the Internet. Grow Our Registrar. We intend to continue to increase the number of domain names under management on our Registrar by offering registration services at attractive price points, increasing customer loyalty through the sale of reliable and affordable value-added services and offering turnkey solutions to help new and existing resellers manage and grow their customer bases. Risk Factors There are numerous risks and uncertainties that may affect our financial and operating performance and our growth. You should carefully consider all of the risks discussed in "Risk Factors," which begins on page 17, before investing in our common stock. These risks include the following: our history of operating losses and the limited operating history in our market, which makes evaluating our business and future prospects difficult; the possibility that we may not be able to maintain or improve our competitive position or market share with respect to our Content & Media and Registrar service offerings; the possibility that our relationship with Google from which a significant portion of our revenue is generated may be terminated or renewed on less favorable terms; the possibility that our future internal rates of return on content may be less than our historic internal rates of return on content; the current dependence of our Content & Media service offering on the success of eHow.com; and the possibility that our customers may not renew their domain name registrations or may transfer their existing registrations to our competitors and we fail to replace their business. Recent Developments Our consolidated financial data for the quarter ended December 31, 2010 presented below are preliminary, based upon our estimates and subject to completion of our financial closing procedures. These data have been prepared by and are the responsibility of management. Our independent registered public accounting firm, PricewaterhouseCoopers LLP, has not audited, reviewed, compiled or performed any procedures, and does not express an opinion or any other form of assurance with respect to these data. This summary is not a comprehensive statement of our financial results for this period and our actual results may differ materially from these estimates due to the completion of our financial closing procedures, final adjustments and other developments that may arise between now and the time the financial results for this period are finalized. The following are preliminary estimates of the financial metrics listed below for the quarter ended December 31, 2010: GAAP Revenue is expected to be between $71.5 million and $73.5 million, an increase of 31% at the midpoint of the range as compared to $55.5 million for the quarter ended December 31, 2009. The estimated increase in revenue is primarily due to estimated growth in Content & Media revenue, which is expected to be between $45.0 million and $47.0 million and represents an The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. Table of Contents increase of 43% at the midpoint of the range, as compared to the corresponding period in 2009. The estimated growth in Content & Media revenue is a result of increased page views and Content & Media revenue per one thousand page views, or RPMs. To a lesser extent, estimated growth in Registrar revenue primarily due to an increase in the number of domain registrations also contributed to the estimated increase in revenue. Income (loss) from operations is expected to be between $(0.1) million and $2.4 million as compared to $(3.2) million for the quarter ended December 31, 2009. The estimated improvement in income (loss) from operations compared to the corresponding period in 2009 is primarily due to the estimated increase in revenue, partially offset by higher estimated operating expenses from increased service costs due to increased domain name registrations and increased general and administrative expenses primarily due to higher personnel costs to support the growth in our business as well as our public company readiness efforts. Net income (loss) is expected to be between $(1.9) million and $0.6 million as compared to net loss of $(3.9) million for the quarter ended December 31, 2009. The estimated improvement in the net income (loss) compared to the corresponding period in 2009 is primarily due to the expected growth in income (loss) from operations partially offset by an increase in our income tax provision, which includes the impact of tax amortization of deductible goodwill and increases in state taxes. Non-GAAP Revenue less TAC is expected to be between $68.0 million and $70.0 million, an increase of 33% at the midpoint of the range as compared to $51.9 million for the quarter ended December 31, 2009. Our Revenue less TAC estimate for the quarter ended December 31, 2010 reflects our GAAP revenue estimate of between $71.5 million and $73.5 million, less estimated traffic acquisition costs (TAC) of $3.5 million. Our Revenue less TAC for the quarter ended December 31, 2009 reflects our GAAP revenue for the quarter ended December 31, 2009 of $55.5 million, less traffic acquisition costs (TAC) for the quarter ended December 31, 2009 of $3.6 million. The estimated increase in Revenue less TAC is primarily due to estimated growth in Content & Media Revenue less TAC, which is expected to be between $41.5 million and $43.5 million and represents an increase of 49% at the midpoint of the range, as compared to the corresponding period in 2009. The estimated growth in Content & Media Revenue less TAC is a result of increased page views and RPMs. To a lesser extent, estimated growth in Registrar revenue primarily due to an increase in the number of domain registrations also contributed to the estimated increase in Revenue less TAC. Adjusted OIBDA is expected to be between $17.5 million and $20.0 million, an increase of 75% at the midpoint of the range, as compared to $10.7 million for the quarter ended December 31, 2009. Our Adjusted OIBDA estimate for the quarter ended December 31, 2010 reflects our estimated income (loss) from operations of between $(0.1) million and $2.4 million, plus estimated depreciation of $5.3 million, estimated amortization of $9.6 million, estimated stock-based compensation of $2.5 million, and certain estimated non-cash purchase accounting adjustments of $0.2 million. Our Adjusted OIBDA for the quarter ended December 31, 2009 reflects our loss from operations for the quarter ended December 31, 2009 of $3.2 million plus depreciation of $4.3 million, amortization of $7.9 million, stock-based compensation of $2.0 million, and certain non-cash purchase accounting adjustments of $0.3 million, less gain on the sale of assets of $0.6 million, in each case for the quarter ended December 31, 2009. The estimated increase in Adjusted OIBDA is primarily due to the increase in expected income (loss) from operations described above, as well as increased adjustments compared to the corresponding period in 2009 due to higher depreciation and amortization from our increased Table of Contents The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED JANUARY 24, 2011 7,500,000 Shares Common Stock Table of Contents investment in media content and related technology assets and additional stock-based compensation expense primarily due to our increased employee headcount. We include Revenue less TAC and Adjusted OIBDA in this prospectus for a number of reasons as described in "Summary Consolidated Financial Information and Other Data Non-GAAP Financial Measures." Our use of Revenue less TAC and Adjusted OIBDA has certain limitations because they do not reflect all items of income and expense that affect our operations; these and other limitations are described in "Summary Consolidated Financial Information and Other Data Non-GAAP Financial Measures." We encourage investors and others to review our financial information in its entirety and not rely on a single financial measure. We have provided a range for the preliminary results described above primarily because our financial closing procedures for the month and quarter ended December 31, 2010 are not yet complete and, as a result, we expect that our final results upon completion of our closing procedures will vary from our preliminary estimates within the ranges as described above. Among the components of our financial results as to which we are unable to determine specific amounts prior to the completion of our year-end closing procedures are: (i) revenue, which we estimate based upon recent historical trends, internal analysis and third-party reporting (to the extent available) and forecasting and actual results for the two months ended November 30, 2010; (ii) certain general operating expenses associated with accrued liabilities arising at the end of the period, which are estimated based upon recent historical trends and internal reporting and forecasting; (iii) our employee bonus expenses, which are included in our operating expenses and estimated based upon a formula that is dependent upon our forecasted Adjusted OIBDA; (iv) certain operating expenses associated with commitments and contingencies; and (v) our income tax provision, which we estimate based upon our current tax position as of and at September 30, 2010, our forecasted pre-tax income (loss) for the period and changes we expect as a result of our quarterly state tax return-to-provision assessment. We expect to complete our closing procedures with respect to the month and quarter ended December 31, 2010 in February 2011. Corporate Information We are incorporated in Delaware and headquartered in Santa Monica, California. We commenced operations in April 2006 with the acquisitions of eHow.com, a leading "how-to" content-oriented website, and eNom, a provider of Internet domain name registration services. Our principal executive offices are located at 1299 Ocean Ave, Suite 500, Santa Monica, California 90401, and our telephone number is (310) 394-6400. Our corporate website is www.demandmedia.com. Information contained on our website is not a part of this prospectus and the inclusion of our website address in this prospectus is an inactive textual reference only. Unless the context requires otherwise, the words "Demand Media," "we," "company," "us" and "our" refer to Demand Media, Inc. and our wholly owned subsidiaries. Demand Media , the Demand Media logo and other trademarks or service marks of Demand Media appearing in this prospectus are the property of Demand Media. Trade names, trademarks, and service marks of other companies appearing in this prospectus are the property of the respective holders. This is an initial public offering of shares of common stock of Demand Media, Inc. Demand Media is offering 4,500,000 of the shares to be sold in the offering. The selling stockholders identified in this prospectus are offering an additional 3,000,000 shares. Demand Media will not receive any of the proceeds from the sale of the shares being sold by the selling stockholders. Prior to this offering, there has been no public market for the common stock. It is currently estimated that the initial public offering price per share will be between $14.00 and $16.00. The common stock of Demand Media has been approved for listing on the New York Stock Exchange under the symbol "DMD." See the section entitled "Risk Factors" on page 17 to read about factors you should consider before buying shares of the common stock. Table of Contents
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. Because this is a summary, it may not contain all of the information that may be important to you. Therefore, you should carefully read this entire prospectus and other documents to which we refer herein before making a decision to invest in our common stock, including the risks discussed under the RISK FACTORS section and our financial statements and related notes which are incorporated by reference from our periodic Exchange Act filings. As used in this prospectus, the terms we, us and our refer to Chino Commercial Bancorp and its subsidiaries unless the context indicates another meaning. Who We Are Chino Commercial Bancorp is a bank holding company headquartered in Chino, California. Chino Commercial Bank has been our wholly owned subsidiary since we completed our holding company reorganization and acquired all of its outstanding shares effective July 1, 2006. Our principal offices are located at 14245 Pipeline Avenue, Chino, California 91710. Our telephone number is (909) 393-8880, and our website address is www.chinocommercialbank.com. Chino Commercial Bank is a national bank headquartered in Chino, California which opened for business in September 2000 and currently operates from three full service locations in Chino, Ontario and Rancho Cucamonga, California. We opened our Ontario branch in January 2006 and our Rancho Cucamonga branch in April 2010. Chino Commercial Bank is a member of both the Federal Reserve System and the Federal Home Loan Bank, and its deposit accounts are insured under the Federal Deposit Insurance Act up to applicable limits thereof. As of September 30, 2011, we had total assets of $106.2 million; total deposits of $94.9 million; loans, net of unearned fees of $56.9 million; and stockholders equity of $7.3 million. We provide a wide variety of lending products for both businesses and consumers. Commercial loan products include lines of credit, letters of credit, term loans, equipment loans, commercial real restate loans, construction loans, accounts receivable financing, working capital financing. Financing products for individuals include auto, home equity, overdraft protection lines and, through a third party provider, MasterCard debit cards. Real estate loan products include construction loans, land loans, mini-perm commercial real estate loans, and home mortgages. As a community-oriented bank, we offer a wide array of personal, consumer and commercial services generally offered by a locally-managed, independently-operated bank. We provide a broad range of deposit instruments and general banking services, including checking, savings accounts (including money market demand accounts), certificates of deposit for both business and personal accounts; internet banking services, such as cash management and Bill Pay; telebanking (banking by phone); and courier services. Performance Highlights Operating Results for Third Quarter 2011 versus Third Quarter 2010. Net income for the quarter ended September 30, 2011 was $120,113 compared with $194,041 for the quarter ended September 30, 2010, a decline of 38.1%. Basic and diluted earnings per share for the third quarter of 2011 was $0.16, compared to $0.26 for the third quarter of 2010. The Company s annualized return on average equity was 6.65% and annualized return on average assets was 0.46% for the quarter ended September 30, 2011, compared to 11.30% and 0.67%, respectively, for same quarter in 2010. The primary reasons for the change in net income during the third quarter of 2011 are as follows: The provision for loan losses decreased to $2,221 during the third quarter of 2011, a decrease of 85.8%, compared to $15,644 for the three months ended September 30, 2010. The decrease in the provision was related to a decrease in net loan charge-offs of $89,056, or 549.1%, for the relative periods. Non-interest income totaled $327,655 for the third quarter of 2011, a decrease of 22.9% compared to $424,989 in the third quarter of 2010. The decrease in non-interest income was due to a gain on sale of repossessed equipment of $127,839, partially offset by loss on sale of OREO for $29,700 in the third quarter of 2010 that was not repeated in the same quarter of 2011. The Company posted net interest income of $870,314 for the quarter ended September 30, 2011 as compared to $1,005,347 for the quarter ended September 30, 2010, a 13.4% decrease. The decrease was caused by a decline in average balances and in yields on earning assets. Average interest-earning assets were $91.3 million with average interest-bearing liabilities of $54.1 million, yielding a net interest margin of 3.78% for the third quarter of 2011; as compared to the average interest-earning assets of $101.7 million with average interest-bearing liabilities of $65.1 million, yielding a net interest margin of 3.92% for the third quarter of 2010. Non-interest expenses were $1,011,489 for the three months ended September 30, 2011 as compared to $1,105,290 for the three months ended September 30, 2010, an 8.5% decrease. The largest component of non-interest expense was salaries and benefits expense of $538,909 for the third quarter of 2011 compared to $543,501 for the same period in 2010, representing a 0.8% decrease. Included in non-interest expenses are occupancy and equipment expenses which decreased $25,676 for the three months ended September 30, 2011 compared to the same period in 2010 due to the differences between the higher rental expense in 2010 and lower building depreciation expense in 2011 for the Company s recently-purchased main office. Regulatory assessments expense decreased $30,438 or 53.9% in the third quarter of 2011 versus 2010 due to anticipated increased assessment rates that were accrued and reversed as the increase did not materialize. Other expenses decreased $29,974 to $109,044 in the third quarter of 2011 due primarily to decreases in expenses of other real estate and expenses paid for deposit accounts with analysis charge arrangements. Operating Results for the Nine Months Ended September 30, 2011 versus the Nine Months Ended September 30, 2010. Net income for the nine months ended September 30, 2011 was $273,474 compared to $249,519 for the first nine months of 2010, an increase of 9.6%. Basic and diluted earnings per share for the nine months ended September 30, 2011 were $0.37 compared to $0.35 for the same period in 2010. Annualized return on average equity was 5.07% and annualized return on average assets was 0.34% for the nine months ended September 30, 2011, compared to an annualized return on average equity of 5.04% and an annualized return on average assets of 0.29% for the same period in 2010. The primary reasons for the change in net income during the nine months of 2011 are as follows: The provision for loan losses decreased to $281,660 during the first nine months of 2011, a reduction of 46.9%, as compared to $529,996 for the nine months ended September 30, 2010. The decrease in the provision was related to a decrease in net loan charge-offs from $495,125 for the nine months ended September 30, 2010 to $186,619 for the nine months ended September 30, 2011. Non-interest income totaled $1,038,768 for the nine months of 2011, an increase of 0.1%, compared to $1,037,752 in the first nine months of 2010. Included in non-interest income was a gain on sale of foreclosed assets of $61,151 in the first nine months of 2011, compared to $98,288 in the first nine months of 2010. Also included were service charges on deposits which increased by $30,010 or 3.5% for the first nine months of 2011 compared to the first nine months of 2010. This is consistent with the 6.0% growth in average non-interest bearing deposits in the first nine months of 2011 over the first nine months of 2010. The Company posted net interest income of $2,797,124 for the first nine months ended September 30, 2011 as compared to $2,935,421 for the same period in 2010. The decrease was caused by a decline in average balances and yields on earning assets. Average interest-earning assets were $93.7 million with average interest-bearing liabilities of $56.7 million, yielding a net interest margin of 3.99% for the first nine months of 2011; as compared to average interest-earning assets of $99.5 million with average interest-bearing liabilities of $64.8 million, yielding a net interest margin of 3.94% for the first nine months of 2010. Non-interest expenses increased $69,428 to $3,148,761 for the first nine months of 2011 compared to the same period in 2010. The largest component of non-interest expense was salaries and benefits expense of $1,647,203 for the first nine months of 2011 compared to $1,637,951 for the same period in 2010, representing an a 0.6% increase. Included in non-interest expenses is legal and other professional fees which increased 62.2% or $119,266 in the nine months ended September 30, 2011 compared to the same period in 2010 as a result of increased loan collection activity, regulatory matters, and complexity of SEC related filings. Also included were other expenses which decreased $101,033 to $282,784 in the first nine months of 2011 due primarily to decreases in expenses paid for deposit accounts with analysis charge arrangements, other lending expenses and expenses of other real estate owned. Operating Results for the Year Ended December 31, 2010 versus Prior Years. For the year ended December 31, 2010, we recorded net income of $305,301 compared with $350,671 for the year ended December 31, 2009, a decrease of 12.9%. Net income in 2009 was $41,723 higher than 2008 net income of $308,948. Net income per basic share was $0.42 for 2010, as compared to $0.50 in 2009 and $0.44 in 2008. Our return on average equity was 4.61% and return on average assets was 0.27% in 2010, compared 5.66% and 0.37%, respectively for 2009, and 5.32% and 0.40%, respectively in 2008. The following are factors impacting our results of operations in recent years: The provision for loan losses declined by $9,296 or 1.2% for the year ended December 31, 2010 as compared to 2009, but increased by $307,510 or 65.2% for the year ended December 31, 2009 as compared to 2008. The ALLL increased to $1,442,153 at December 31, 2010 as compared with $1,277,526 and $702,409 at December 31, 2009 and 2008, respectively. The ALLL as a percentage of total loans increased to 2.38% at December 31, 2010, as compared with 2.08% and 1.41% at December 31, 2009 and 2008, respectively. Though there was a substantial increase in the number and volume of loans classified as non-accrual during 2010, many of these loans were adversely classified based upon formulary calculations concerning debt service capacity rather than on actual delinquency. At December 31, 2010 we had 11 loans classified as nonaccrual totaling $4,167,572; however, only one loan for $440,723 was delinquent more than 30 days. Net interest income increased by $167,761 or 4.5% in 2010 compared to 2009, and by $299,313 or 8.7% in 2009 compared to 2008. The increase in 2010 in net interest income was due primarily to increases in average loans and investments, offset by increases in average interest-bearing liabilities. Average interest earning assets increased by $15.2 million or 18% in 2010 compared to 2009 and by $16.2 million or 23.7% in 2009 compared to 2008. In 2010, average interest-bearing liabilities increased $13.9 million or 26.9%, compared to 2009 and by $17.3 million or 51.1% in 2009, compared to 2008. The net interest margin declined from 5.02% in 2008 to 4.41% in 2009, and to 3.90% in 2010 due principally to a drop in the interest rates on interest earning assets. Non-interest income increased by $400,521, or 36.2%, in 2010 relative to 2009, and by $13,888, or 1.3%, in 2009 over 2008. A substantial portion of this increase was due to a gain on the sale of foreclosed property of $235,766 in 2010, compared to $20,250 in 2009. Another area of improvement in both years was the increase in service charges on deposits, which increased $181,353, or 18.4%, in 2010 relative to 2009, and $34,945, or 3.7%, in 2009 over 2008. This was due to increases in volume subject to analysis charges and returned item charges. We did not increase our per item service charges. Operating expense increased by $659,623, or 18.7%, in 2010 in comparison to 2009, and declined by $38,509, or 1.1%, in 2009 over 2008. In April 2010 we opened a new branch office in Rancho Cucamonga causing salaries and employee benefits to increase $294,510, or 15.5%, compared to 2009, while in 2009 salaries and benefits decreased $25,443 or 1.3%, compared to 2008. Occupancy expense increased $114,110 or 35.3%, in 2010 in comparison to 2009 due mainly to the new branch office, while in 2009 occupancy expense decreased $23,128, or 6.7% compared to 2008. Legal and professional fees increased $99,026, or 54.4%, in 2010 in comparison to 2009, due to an increase in problem loans as well as the preparation for a planned secondary stock offering which was postponed to 2011. Legal and professional fees declined $9,172, or 4.6%, in 2009 over 2008. Financial Condition at September 30, 2011 versus December 31, 2010. The Company s total assets were $106.2 million at September 30, 2011, a decrease of 6.8% as compared to total assets of $113.9 million at December 31, 2010. The most significant changes in the Company s balance sheet during the nine months ended September 30, 2011 are outlined below: Total deposits decreased from $103.0 million at December 31, 2010 to $94.9 million at September 30, 2011, a 7.8% decrease. Noninterest-bearing deposits increased to $44.7 million at September 30, 2011, an increase of $2.8 million or 6.7% from December 31, 2010. Total interest-bearing deposits decreased from $61.1 million at December 31, 2010 to $50.2 million at September 30, 2011, a 17.8% decrease. This was done by design to eliminate higher yielding deposits. The ratio of non-interest bearing deposits to total deposits increased from 40.7% at December 31, 2010 to 47.1% at September 30, 2011. The Company experienced a decrease in interest-earning assets of 8.7% or $8.8 million in the first nine months of 2011, primarily in total investments which decreased to $25.5 million at September 30, 2011, compared to $36.2 million at December 31, 2010. This was caused by the liquidation of lower-yielding interest earning deposits in other banks to pay off higher-yielding interest bearing deposits. Total loans decreased 6.0% or $3.6 million in the first nine months of 2011 as efforts were redirected to reduce the number of criticized and nonperforming assets and because of reduced local loan demand. The reduction in assets also enabled the Bank to maintain its Tier 1 leverage capital ratio at or above 9.0% to comply with the Bank s regulatory capital requirements pending the conclusion of this offering. See REGULATORY MATTERS. Nonperforming assets were comprised of 14 loans and one foreclosed property totaling $4.8 million at September 30, 2011, compared to 11 loans and one foreclosed property totaling $4.7 million at December 31, 2010. All but one of the loans classified as nonperforming as of September 30, 2011, totaling $277,012, are current and paying as agreed. Financial Condition at December 31, 2010 versus 2009. The following are additional factors that are key in understanding our financial condition at December 31, 2010: Total assets increased by $10.4 million, or 10.0%, during 2010. Although net loans decreased $1.1 million, or 1.8%, during 2010, investments and interest bearing deposits in other banks increased $7.6 million, or 22.8%. Included in the increase in investments was a $9.0 million increase in investment securities and a decrease of $6.1 million in short-term, interest-bearing deposits in other banks. Total deposits increased to $103.0 million at December 31, 2010 from $92.3 million at December 31, 2009, an 11.6% increase. Total non-interest bearing deposits increased from $35.9 million at December 31, 2009 to $41.9 million at December 31, 2010, a 16.8% increase. Interest-bearing deposits increased from $56.4 million at December 31, 2009 to $61.1 million at December 31, 2010, an 8.3% increase. During 2010 a number of performing loans were placed on nonaccrual status due either to the application of formulary determinations of debt-service capacity (often based on income tax returns), or to reduced values of the underlying real estate collateral. At December 31, 2010 only one loan in the amount of $440,723 was delinquent more than 30 days. The placement of these additional loans on nonaccrual status caused our nonperforming assets to increase to $4.7 million or 7.7% of total loans and other real estate owned (OREO) at December 31, 2010, compared to $1.5 million or 2.5% of total loans and OREO at December 31, 2009. Nonperforming loans were $4.2 million or 6.9% of total loans at December 31, 2010 compared to $1.5 million or 2.4% at December 31, 2009. At December 31, 2010 our nonperforming assets consisted of four commercial loans secured by real estate, two owner-occupied residential loans, and five commercial loans secured by second and junior trust deeds with collateral values that Management believes are sufficient to cover the debts on each of the loans. OREO at December 31, 2010 consisted of one commercial building at $516,534 compared to $24,861 at December 31, 2009. The allowance for loan losses (ALLL) increased by 12.9% to $1,442,153 at December 31, 2010 as compared with $1,277,526 at December 31, 2009. The ALLL as a percentage of total loans increased to 2.38% at December 31, 2010 from 2.08% in 2009. During 2010 a number of performing loans were subjected to FAS 114 analysis of collateral sufficiency, resulting in partial charge-offs. This process in effect reduces the book balance of an impaired loan down to the expected net cash-flow upon liquidation. In principal, a loan subjected to a FAS 114 adjustment should not need an allocated portion of the ALLL following the adjustment, because the potential loss has already been recognized. The ratio of the ALLL to nonperforming loans decreased to 34.608% at December 31, 2010 compared to 85.54% at December 31, 2009. This decrease resulted in part from the placement of a significant number of performing loans on non-accrual status as discussed in the previous bullet point; and in part from the FAS 114 adjustment taken. As indicated above, at December 31, 2010 we had only one loan more than 30 days past due. Total stockholders equity increased to $7.0 million at December 31, 2010 from $6.5 million at December 31, 2009, due primarily to $305,301 in increased retained earnings and $714,043 from the exercise of stock options, offset by $462,422 in stock repurchases. Recent Developments Regulatory Matters. On April 12, 2011, Chino Commercial Bank (the Bank ) entered into a formal written agreement (the Agreement ) with the Office of the Comptroller of the Currency (the OCC ), the Bank s primary regulator. The Agreement will remain in effect and enforceable until it is modified, waived or terminated in writing by the OCC. Entry into the Formal Agreement does not change the Bank s well-capitalized status. The Agreement requires the Bank to take, among others, the following actions: (i) adopt, implement and adhere to a rolling three year strategic plan and capital program, (ii) refrain from paying dividends without prior OCC non-objection; (iii) add a new independent director with banking experience, or similar accounting or regulatory experience, to the Bank Board; (iv) obtain non-objection from the OCC before adding any individual to the Bank Board or employing any senior executive officer; (v) obtain a review of insider lending compliance by an independent outside audit firm acceptable to the OCC; (vi) revise and implement the Bank s policies or programs concerning overdrafts, insider lending compliance, and various credit related matters; and (vii) correct certain violation of laws or regulations. The Bank has also agreed to the OCC establishing higher minimum capital ratios for the Bank, specifically that the Bank would achieve by May 31, 2011, and thereafter maintain, a Leverage Capital Ratio of not less than 9.0% and a Total Risk-Based Capital Ratio of not less than 12.0%. The Bank met the required ratios as of May 31, 2011 and as of September 30, 2011 the Bank s Leverage Capital Ratio was 9.83% and its Total Risk-Based Capital Ratio was 16.16%, both in excess of the higher minimum capital ratios applicable to the Bank referenced above. On July 21, 2011, Chino Commercial Bancorp (the Company ) entered into a memorandum of understanding ( MOU ) with the Federal Reserve Bank of San Francisco (the FRB ). The MOU is an informal administrative agreement pursuant to which Chino Commercial Bancorp has agreed, among other things, to (i) take steps to ensure that the Bank complies with the Bank s Agreement; (ii) refrain from paying or receiving cash dividends, or increasing or guaranteeing debt, without prior FRB approval; and (iii) obtain non-objection from the FRB before adding any individual to the Board or employing any senior executive officer. The Boards of Directors and management of the Bank and the Company are in the process of taking all necessary actions to comply with the various provisions of the Agreement and the MOU. The Formal Agreement, the MOU, and material actions taken to date to comply with both are described in more detail under REGULATORY MATTERS. Mandatorily Convertible Notes to Directors. On September 16, 2011 the Company issued mandatorily convertible notes to certain directors in the aggregate principal amount of $65,000 in order to enable the Company to meet its cash flow needs for operating expenses pending the conclusion of the rights portion of the offering without requiring the Bank to issue dividends. The notes are interest-free and are intended to be converted into shares of common stock in this offering on a shareholder subscription rights basis to each of the directors involved in the transaction, for an aggregate purchase of 6,500 shares (including bonus shares). If for any reason the rights portion of the offering is not completed by January 31, 2012, the notes will instead be converted into shares of common stock in a private placement to those same individuals, at the market value of the shares to be determined by the Board of Directors at the time of the conversion in accordance with applicable legal and regulatory requirements. It is currently anticipated that we will have a partial closing of the rights offering immediately prior to year-end and that the notes will be converted as described above at that time. Our Focus and Strategic Plan Chino Commercial Bank is a community-oriented bank focused on small businesses and business owners. We have a history of providing services to the escrow and real estate industries. This specialty has allowed us to accumulate a large percentage of non-interest bearing demand accounts, and thus to enjoy a lower cost of funds than our peer group. Because of our relatively small size, however, our non-interest expenses have been relatively high in relation to total assets. The Bank s relatively low cost of funds, coupled with higher than average level of fee income derived from serving small business customers, allowed the Bank to achieve profitability relatively quickly after opening, and to achieve sustained profitability for each fiscal year beginning in 2002. For the quarter ended September 30, 2011 we posted income of $120,113. For the nine months ended September 30, 2011 we posted net income of $273,474. Despite the Bank s relatively small size, it has historically been quite profitable. That profitability was lower during the fiscal years 2008, 2009 and 2010 as economic conditions affecting real estate and small business required the Bank to make significant provisions to the ALLL. With the recent downturn in the economy, the nominal deposits of the escrow companies and real estate brokers has diminished significantly, leading to reduced overall deposits during 2007 and 2008. However, during 2009 we enjoyed significant increases in deposits and loans with relatively little marketing effort and without having to raise our average cost of funds, due in part to the closing of a number of local banks and the weakness of other competing banks in the marketplace. Similarly, deposits increased by $10.5 million or 11.4% to $103.0 million in 2010. Beginning in the first quarter of 2011, management reduced interest rates paid on deposits, which reduced total deposits by $8.1 million or 7.8% in the nine months ending September 2011, in order to reduce the level of interest-bearing deposits and enhance the Bank s regulatory capital ratios pending the conclusion of this offering. In April 2010 we opened our newest branch in Rancho Cucamonga to further our strategic plan of expanding our geographic footprint through the establishment of new branches in strategic locations. We believe it is prudent at this time to increase our capital in order to comply with regulatory requirements and to provide an additional capital cushion to support future growth, although we are currently well capitalized at both the bank and holding company levels. Our business strategy over the next several years will be to continue to solidify market share with moderate growth in order to achieve improved efficiency through economies of scale. Though the last three years have been difficult for many small business operators, we are projecting a gradual trend of improvement as economic conditions stabilize. Our Mission Since inception, our mission has been to be a respected and stable provider of financial services to the Chino Valley and surrounding communities. Our primary objective as a community bank is to serve the financial needs of small businesses and individuals, while remaining focused on three primary principals of safety, efficiency and shareholder value. As an organization, we strive to achieve and maintain an operating performance that places our bank in the top 10% of its peer group, and to create a foundation for the community by providing a safe, stable and healthy environment for our customers, employees and shareholders alike. This Offering Securities Offered Up to 224,494 shares4 of common stock on a best efforts basis and transferable subscription rights to shareholders of record as of 5:00 p.m., Pacific Time, on November 18, 2011. All 224,494 shares being offered are subject to shareholder subscription rights, which include both basic subscription rights and over-subscription privileges to purchase shares for $10.50 per share with certain bonus shares attached as discussed below. After the holders of subscription rights have exercised such rights, any remaining shares will be offered on a non-rights basis to other interested investors at the same purchase price of $10.50 per share but without any bonus shares attached. Offering Price Per Share $10.50 per share. Persons exercising shareholder subscription rights (both basic subscription rights and over-subscription privileges) will also receive bonus shares equal to five percent (5%) of the number of shares purchased pursuant to such rights, for no additional consideration. Basic Subscription Rights The basic subscription rights will entitle you to purchase three shares of our common stock for every ten shares you owned as of the record date, at a subscription price of $10.50 per share, and to receive bonus shares equal to five percent (5%) of the number of shares purchased pursuant to such rights, for no additional consideration; however, fractional shares resulting from the exercise of the basic subscription rights will be eliminated by rounding down to the nearest whole share. You must own at least ten shares as of the record date to be eligible to participate in the rights offering. Over-subscription Privilege We do not expect all of the basic subscription rights to be exercised. If you fully exercise your basic subscription rights, the oversubscription privilege entitles you to subscribe for additional shares of our common stock unclaimed by other holders of rights in this offering at the same subscription price of $10.50 per share, and to receive bonus shares equal to five percent (5%) of the number of shares purchased pursuant to such rights, for no additional consideration. If an insufficient number of shares is available to fully satisfy all over-subscription requests, the available shares will be allocated on a discretionary basis, after giving consideration to both the number of shares each rights holder subscribed for under their basic subscription rights and the number of shares requested through the exercise of his or her over-subscription privilege. Record Date for Subscription Rights 5:00, Pacific Time on November 18, 2011 _____________________ 4 Plus up to approximately 11, 224 bonus shares as discussed herein. Minimum Investment None Common Stock Outstanding As of September 30, 2011 we had 748,314 shares of common stock outstanding. Assuming the sale of all shares offered in the offering, we would have approximately 984,032 shares outstanding upon completion of the offering if all shares were sold on a rights basis including bonus shares, and 972,808 shares outstanding if all shares were sold on a non-rights basis without bonus shares attached. OTC Bulletin Board Symbol CCBC Plan of Distribution We are offering the shares on a best efforts basis through our directors and officers, who will not receive any discounts or commissions for selling such shares. However, we may retain the services of a broker or placement agent to assist us on a best efforts basis with the non-rights portion of the offering if circumstances warrant. The shares are being offered first to existing shareholders on a subscription rights basis, and then, to the extent available, to other interested investors on a non-rights basis. Participation of Directors and Executive Officers Our executive officers and directors have committed to purchase 6,500 shares in the offering through the conversion of certain mandatorily convertible notes issued in September 2011. In addition, it is possible that such individuals may purchase additional shares in their discretion, but they have made no commitments to do so. Our board of directors is not making a recommendation regarding your exercise of the subscription rights or purchase of shares in the offering. You should make your decision to invest based on your assessment of our business and the offering. Please see RISK FACTORS beginning on page 19 for a discussion of some of the risks involved in investing in our common stock. How to Subscribe To subscribe for shares of our common stock, complete the appropriate form of subscription agreement accompanying this prospectus (depending on whether or not you are a shareholder) and deliver it to us on or before the applicable expiration date, together with full payment for all shares subscribed for by certified check, bank check, personal check, wire transfer or money order payable to the order of Chino Commercial Bancorp Stock Offering Account. Once you subscribe, your subscription is irrevocable. Use of Proceeds We intend to use the net proceeds from this offering to increase our capital and for general corporate purposes, including enabling our subsidiary, Chino Commercial Bank, N.A. (the Bank ), to continue to meet the applicable minimum capital requirements which the Bank has agreed to the OCC establishing, and enabling us to service our debt obligations and pay other operating expenses while certain regulatory agreements are in effect, without receiving dividends from the Bank. See REGULATORY MATTERS. Expiration Dates Subscription rights granted to existing shareholders will expire, if not exercised, by 5:00 p.m., Pacific Time, on January 20, 2012; and the offering in its entirety will expire at 5:00 p.m., Pacific Time, on February 29, 2012; unless this offering is terminated earlier or either date is extended without notice to subscribers. Dividends We have not historically paid any cash dividends to our shareholders. Our only source of income for cash dividends is dividends paid by Chino Commercial Bank to us. We intend to continue our current policy of retaining earnings to increase our net worth and reserves and accordingly do not anticipate paying any cash dividends for the foreseeable future. We are currently required to obtain regulatory approvals prior to paying any dividends, or to receiving dividends from our subsidiary bank. See MARKET INFORMATION AND DIVIDEND POLICY AND RELATED MATTERS Dividends and REGULATORY MATTERS. Best Efforts Offering There is no minimum number of shares that must be sold in order to close this offering and accept your subscription. Risk Factors An investment in our common stock involves certain risks. You should carefully consider the risks described under Risk Factors beginning on page 19 of this prospectus and in Item 1A Risk Factors included in our Annual Report on Form 10-K for the year ended December 31, 2010, as amended, as well as other information included or incorporated by reference in this prospectus, including our financial statements and notes thereto, before making an investment decision. 1 Net loans represent total loans less the allowance for loan losses and unearned loan fees. (Table and footnotes continued on following page.) 1 Asset quality ratios are end of period ratios. Performance ratios are based on average daily balances during the periods indicated. 2 Net interest spread represents the difference between the weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities. 3 Net interest margin represents net interest income as a percent of interest-bearing assets. 4 Core efficiency ratio represents non-interest expense as a percent of net interest income plus core non-interest income. Core non-interest income excludes gains on the sale of investment securities and gains on sales of foreclosed assets. 5 For definitions and further information relating to regulatory capital requirements, see Regulation and Supervision Capital Adequacy Requirements in Item 1 of our Form 10-K Annual Report for the year ended December 31, 2010, as amended, which is incorporated herein by reference. RISK FACTORS You should carefully consider the following risk factors and all other information contained in this prospectus before subscribing for shares of our common stock. Investing in our common stock involves risks. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties not presently known to us or that we currently believe are immaterial also may impair our business. If any of the events described in the following risk factors occur, our business, results of operations and financial condition could be materially adversely affected. In addition, the trading price of our common stock could decline due to any of the events described in these risk factors. Risks Related to Our Company and the Banking Business The Bank has entered into a Formal Agreement with the OCC, and the Company has entered into an MOU with the FRB, and both entities may be subject to future additional regulatory restrictions and enforcement actions if they fail to comply with such regulatory agreements or if their financial condition should further deteriorate. As discussed below under REGULATORY MATTERS the Bank and the Company have recently entered into a Formal Agreement and an MOU, respectively, with their respective regulatory agencies to facilitate improvement in their financial condition, and while the Bank and the Company have taken various actions to comply with these agreements, they have not yet achieved full compliance. Under federal and state laws and regulations pertaining to the safety and soundness of insured depository institutions, the regulatory agencies have the authority to compel or restrict certain actions if the Bank s capital should fall below adequate capital standards as a result of operating losses, or if its regulators otherwise determine that it has insufficient capital or is otherwise operating in an unsafe and unsound manner. The corrective actions may include, but are not limited to, requiring the Company or the Bank to enter into formal enforcement orders, including written agreements or consents or cease and desist orders, or more drastic measures should circumstances warrant. In light of the current challenging operating environment, along with our elevated level of nonperforming and adversely classified assets, we are subject to increased regulatory scrutiny as a result of the potential risk of loss in our loan portfolio in the form of the regulatory agreements described above. If we fail to comply with the terms of such agreements or if our business or financial condition worsens, future corrective actions could require us to limit our lending activities and reduce our levels of certain categories of loans and classified or nonperforming assets within specified timeframes, which might prevent us from maximizing the price which might otherwise be received for any underlying properties. In addition, future corrective action could require us to, among other things, increase our allowance for loan losses, further increase our capital ratios, or enter into a strategic transaction, whether by merger or otherwise, with a third party. In addition, the OCC has the power to deem the Bank only adequately capitalized even though its capital ratios meet the well capitalized standard. In such event, the Bank would be prohibited from using brokered deposits as defined by applicable regulations. While the Bank has never used deposits obtained from brokers, such a restriction would mean that the rates the Bank could pay on deposits would be limited to market rates as determined by the FDIC, potentially adversely affecting our liquidity. The terms of any such corrective action could have a material adverse effect on our business, our financial condition and the value of our common stock. Our business has been and may continue to be adversely affected by volatile conditions in the financial markets and unfavorable economic conditions generally. From December 2007 through June 2009, the U.S. economy was in recession, and the recovery since that time has been sluggish. Business activity across a wide range of industries and regions in the U.S. was greatly reduced. The financial markets and the financial services industry in particular suffered unprecedented disruption, causing a number of institutions to fail or to require government intervention to avoid failure. As a result of these financial and economic crises, many lending institutions, including our company, have experienced declines in the performance of their loans. Our total nonperforming assets increased to $4.8 million or 8.4% of total loans and other real estate owned (OREO) at September 30, 2011, compared to $4.7 million or 7.7% at December 31, 2010 and $1.5 million or 2.5% at December 31, 2009. Nonperforming loans increased to $4.4 million at September 30, 2011 compared to $4.2 million at December 31, 2010, and $1.5 million at December 31, 2009. OREO decreased to $439,000 at September 30, 2011 from $517,000 at December 31, 2010, but increased from $24,861 at December 31, 2009. The Company posted net income of $120,113 for the third quarter of 2011 and $273,474 for the nine months ended September 30, 2011. Though Management is optimistic that the Company will perform profitably in the future, there can be no assurance that losses will not occur. The California economy, and economic conditions in the Inland Empire of Southern California where a majority of our assets and deposits are generated, have been particularly hard hit, and the economic decline has been a major factor leading to the significant increase in the our nonperforming assets and loan charge-offs. Overall, during the past three years, the general business environment and local market conditions have had an adverse effect on our business, and there can be no assurance that the environment will improve in the near term. In recent years, the Inland Empire s unemployment rate has been substantially higher than that for the entire state, reaching an all-time high of 15.1% in July 2010 compared to California s unemployment rate at that time of 12.4%. As of July 2011 both rates had come down slightly, with the Inland Empire at 14.7%, and the state-wide unemployment rate at 12.0%. Although there are indications of improving economic conditions nationally, certain sectors, such as real estate, remain weak and unemployment remains high, especially in our local markets. The state government, most local governments, and many businesses are still in serious difficulty due to lower consumer spending and the lack of liquidity in the credit markets. In addition, the values of the real estate collateral supporting many commercial loans and home mortgages have declined and may continue to decline. Further negative market developments also may continue to adversely affect consumer confidence levels and payment patterns, which could cause delinquencies and default rates to remain at high levels or even increase. If business and economic conditions do not improve generally or in the principal markets in which we do business, the prolonged economic weakness could have one or more of the following adverse effects on our business: a decrease in the demand for loans or other products and services offered by us; a decrease in the value of our loans or other assets secured by residential or commercial real estate; a decrease in deposit balances due to overall reductions in the accounts of customers; an impairment of our investment securities; and an increase in the number of borrowers who become delinquent, file for protection under bankruptcy laws or default on their loans or other obligations to us, which in turn could result in a higher level of nonperforming assets, net charge-offs and provision for loan losses, which would reduce our earnings. Concentrations of real estate loans could subject us to increased risks in the event of a prolonged real estate recession or natural disaster. At September 30, 2011, $48.9 million or 85.9% of our loan portfolio consisted of real estate loans, most of which are secured by real property in California. Of this amount, $44.8 million represented loans secured by commercial real estate, $2.7 million represented loans secured by single family residences, and $1.4 million represented loans secured by residential income property. Total nonperforming assets increased to $4.8 million at September 30, 2011, compared to $4.7 million at December 31, 2010. Nonperforming loans increased to $4.4 million at September 30, 2011 compared to $4.2 million at December 31, 2010. 67.9% of nonperforming loans at September 30, 2011 were real estate loans, and the remainder were commercial loans. OREO decreased from $517,000 at December 31, 2010 to $439,000 at September 30, 2011. Nonperforming assets represented 8.4% and 7.7% of total loans and other real estate owned at September 30, 2011 and December 31, 2010, respectively. The Inland Empire residential real estate market experienced continued declining prices and increasing foreclosures during 2009 and 2010. If residential real estate values slide further, and/or if this weakness further impacts commercial real estate, our nonperforming assets could increase from current levels. Such an increase could have a material adverse effect on our financial condition and results of operations, by reducing our income, increasing our expenses, and leaving less cash available for lending and other activities. As noted above, the primary collateral for many of our loans consists of commercial real estate properties, and continued deterioration in the real estate market in the areas we serve would likely reduce the value of the collateral value for many of our loans and could negatively impact the repayment ability of many of our borrowers. It might also reduce further the amount of loans we make to businesses in the construction and real estate industry, which could negatively impact our organic growth prospects. Similarly, the occurrence of a natural disaster like those California has experienced in the past, including earthquakes, brush fires, and flooding, could impair the value of the collateral we hold for real estate secured loans and negatively impact our results of operations. In addition, banking regulators now give commercial real estate or CRE loans extremely close scrutiny, due to risks relating to the cyclical nature of the real estate market and the related risks for lenders with high concentrations of such loans. The regulators have required banks with relatively high levels of CRE loans to implement enhanced underwriting standards, internal controls, risk management policies and portfolio stress testing, which has resulted in higher allowances for possible loan losses. Expectations for higher capital levels have also materialized, and the Bank is subject to higher than standard capital requirements. See REGULATORY MATTERS. We may experience loan losses in excess of our allowance for loan and lease losses. We endeavor to limit the risk that borrowers might fail to repay; nevertheless, losses can and do occur. We create an allowance for estimated loan losses in our accounting records, based on estimates of the following: historical experience with our loans; evaluation of economic conditions; regular reviews of the quality mix and size of the overall loan portfolio; a detailed cash flow analysis for nonperforming loans; regular reviews of delinquencies; and the quality of the collateral underlying our loans. We maintain our allowance for loan and lease losses at a level that we believe is adequate to absorb specifically identified probable losses as well as any other losses inherent in our loan portfolio at a given date. While we strive to carefully monitor credit quality and to identify loans that may become nonperforming, at any time there are loans in the portfolio that could result in losses, but that have not been identified as nonperforming or potential problem loans. We cannot be sure that we will be able to identify deteriorating loans before they become nonperforming assets, or that we will be able to limit losses on those loans that have been identified. Changes in economic, operating and other conditions, including changes in interest rates, deteriorating values in underlying collateral (most of which consists of real estate), and the financial condition of borrowers, which are beyond our control, may cause our estimate of probable losses or actual loan losses to exceed our current allowance. In addition, the OCC, as part of its supervisory function, periodically reviews our allowance for loan losses. The OCC may require us to increase our provision for loan losses or to recognize further losses, based on its judgment, which may be different from that of our management. Any increase in the allowance required by the OCC could reduce our earnings. Our use of appraisals in deciding whether to make a loan secured by real property does not ensure the value of the real property collateral. In considering whether to make a loan secured by real property, we generally require an appraisal of the property. However, an appraisal is only an estimate of the value of the property at the time the appraisal is made, and an error in fact or judgment could adversely affect the reliability of an appraisal. In addition, events occurring after the initial appraisal may cause the value of the real estate to decrease. As a result of any of these factors the value of collateral backing a loan may be less than supposed, and if a default occurs we may not recover the outstanding balance of the loan. Our expenses have increased and are likely to continue to increase as a result of higher FDIC insurance premiums. The FDIC, absent extraordinary circumstances, must establish and implement a plan to restore the deposit insurance reserve ratio to 1.35% of estimated insured deposits or the comparable percentage of the assessment base at any time the reserve ratio falls below 1.35%. Recent bank failures have depleted the deposit insurance fund ( DIF ) balance, which has been in a negative position since the end of 2009, and the FDIC currently has until September 30, 2020 to bring the reserve ratio back to the statutory minimum. The FDIC has implemented a restoration plan that adopted a new assessment base and established new assessment rates starting with the second quarter of 2011. The FDIC also imposed a special assessment in 2009 and required the prepayment of three years of FDIC insurance premiums at the end of 2009. The prepayments were designed to help address liquidity issues created by potential timing differences between the collection of premiums and charges against the DIF, but it is generally expected that assessment rates will remain relatively high in the near term due to the significant cost of bank failures and the relatively large number of troubled banks. In addition, as with many institutions, our FDIC deposit insurance premiums have increased due to the relative condition of the Bank, and it is currently anticipated that the Bank s FDIC deposit insurance premiums will be substantially higher in 2011 than they were in 2010. Further significant premium increases or special assessments could have a material adverse effect on our financial condition and results of operations. Our business has been, and may continue to be, affected by a significant concentration of deposits within one industry, and a significant portion of such deposits are controlled by related parties. As of September 30, 2011 and December 31, 2010, deposits from escrow companies represented 13.3% and 7.9% of our total deposits, respectively. Four escrow companies accounted for 10.2% of total deposits at September 30, 2011. Further, approximately 57.1% of all deposits from escrow companies at September 30, 2011, representing 7.6% of total deposits at that date, were from escrow companies affiliated with certain of our directors. Since 2007, the escrow industry has suffered a downturn due to a decrease in purchases and sales of real property, and it is anticipated that the difficulties in the real estate industry may continue for some time. Historically, escrow deposits had comprised very high percentage of our deposits, and management has made a deliberate effort to diversify the deposit base and grow deposits from other industries since 2005. At December 31, 2006, escrow deposits comprised 38.3% of our then total deposits of $79.5 million. Due in large part to the decline in escrow deposits, the Bank s total deposits decreased to $70.4 million as of December 31, 2007, of which 20.7% were escrow deposits. Since that time, other deposits have increased substantially, so that by year-end 2010, total deposits were $103.0 million, of which only 7.9% were escrow deposits. From year-end 2010 to September 30, 2011, total deposits have decreased to $94.9 million for the reasons discussed previously, while escrow deposits have increased from $8.1 to $12.7 million. As a result, the percentage of escrow deposits has increased from 7.9% at year-end 2010, to 13.3% at September 30, 2011. It cannot be predicted with any degree of accuracy whether the totals from September 30, 2011 will again decrease, or if so to what extent. A further reduction in escrow deposits could have an adverse effect on our financial condition and earnings, although the decrease in the percentage of escrow deposits as a percentage of the total, together with our strong liquidity position and low loan-to-deposit ratio, has reduced this future risk to a considerable extent. We may not be able to continue to attract and retain banking customers at current levels, and our efforts to compete may reduce our profitability. Competition in the banking industry in the markets we serve may limit our ability to continue to attract and retain banking customers. The banking business in our current and intended future market areas is highly competitive with respect to virtually all products and services. In California generally, and in our service areas specifically, branches of major banks dominate the commercial banking industry. Such banks have substantially greater lending limits than we have, offer certain services we cannot offer directly, and often operate with economies of scale that result in lower operating costs than ours on a per loan or per asset basis. We also compete with numerous financial and quasi-financial institutions for deposits and loans, including providers of financial services over the Internet. New technology and other changes are allowing parties to effectuate financial transactions that previously required the involvement of banks. For example, consumers can maintain funds that would have historically been held as bank deposits in brokerage accounts or mutual funds. Consumers can also complete transactions such as paying bills and/or transferring funds directly without the assistance of banks. The process of eliminating banks as intermediaries, known as disintermediation, could result in the loss of fee income, as well as the loss of customer deposits and the related income generated from those deposits. The loss of these revenue streams and the lower cost deposits as a source of funds could have a material adverse effect on our financial condition and results of operations. In addition, with the increase in bank failures, customers are increasingly concerned about the extent to which their deposits are insured by the FDIC. Customers may withdraw deposits in an effort to ensure that the amount they have on deposit with their bank is fully insured. Decreases in deposits may adversely affect our funding costs and net income. Ultimately, competition can and does increase our cost of funds, reduce loan yields, and drive down our net interest margin, thereby reducing profitability. It can also make it more difficult for us to continue to increase the size of our loan portfolio and deposit base, and could cause us to rely more heavily on wholesale borrowings, which are generally more expensive than deposits, as a source of funds in the future. If we are not able to successfully keep pace with technological changes affecting the industry, our business could be hurt. The financial services industry is constantly undergoing technological change with the frequent introduction of new technology-driven products and services. The effective use of technology increases efficiency and enables financial institutions to better service clients and reduce costs. Our future success depends, in part, upon our ability to address the needs of our clients by using technology to provide products and services that will satisfy client demands, as well as create additional efficiencies within our operations. Some of our competitors have substantially greater resources to invest in technological improvements. We may not be able to effectively implement new technology-driven products and services or be successful in marketing these products and services to our clients. Failure to successfully keep pace with technological change in the financial services industry could have a material adverse impact on our business and, in turn, on our financial condition and results of operations. Our operations could be adversely impacted if our third-party service providers experience difficulty. We depend on a number of relationships with third-party service providers, including core systems processing and web hosting. These providers are well established vendors that provide these services to a significant number of financial institutions. If these third-party service providers experience difficulty or terminate their services and we are unable to replace them with other providers, our operations could be interrupted which would adversely impact our business. If our information systems were to experience a system failure or a breach in security, our business and reputation could suffer. We rely heavily on communications and information systems to conduct our business. The computer systems and network infrastructure we use could be vulnerable to unforeseen problems. Our operations are dependent upon our ability to protect our computer equipment against damage from fire, power loss, telecommunications failure or a similar catastrophic event. In addition, we must be able to protect our computer systems and network infrastructure against physical damage, security breaches and service disruption caused by the Internet or other users. Such computer break-ins and other disruptions would jeopardize the security of information stored in and transmitted through our computer systems and network infrastructure. We have protective systems in place to prevent or limit the effect of the failure, interruption or security breach of our information systems and with the help of third-party service providers, will continue to implement security technology and monitor and update operational procedures to prevent such damage. However, if such failures, interruptions or security breaches were to occur, they could result in damage to our reputation, a loss of customers, increased regulatory scrutiny, or possible exposure to financial liability, any of which could have a material adverse effect on our financial condition and results of operations. We are subject to a variety of operational risks, including reputational risk, legal risk and compliance risk, and the risk of fraud or theft by employees or outsiders, which may adversely affect our business and results of operations. We are exposed to many types of operational risks, including reputational risk, legal and compliance risk, the risk of fraud or theft by employees or outsiders, and unauthorized transactions by employees or operational errors, including clerical or record-keeping errors or those resulting from faulty or disabled computer or telecommunications systems. If personal, non-public, confidential or proprietary information of customers in our possession were to be mishandled or misused, we could suffer significant regulatory consequences, reputational damage and financial loss. Such mishandling or misuse could occur, for example, if information were erroneously provided to parties who are not permitted to have the information, either by fault of our systems, employees, or counterparties, or where such information is intercepted or otherwise inappropriately taken by third parties. Because the nature of the financial services business involves a high volume of transactions, certain errors may be repeated or compounded before they are discovered and successfully rectified. Our necessary dependence upon automated systems to record and process transactions may further increase the risk that technical flaws or employee tampering or manipulation of those systems could result in losses that are difficult to detect. We also may be subject to disruptions of our operating systems arising from events that are wholly or partially beyond our control (for example, computer viruses or electrical or telecommunications outages, or natural disasters, disease pandemics or other damage to property or physical assets) which may give rise to disruption of service to customers and to financial loss or liability. We are further exposed to the risk that our external vendors may be unable to fulfill their contractual obligations (or will be subject to the same risk of fraud or operational errors by their respective employees as we are) and to the risk that we (or our vendors ) business continuity and data security systems prove to be inadequate. The occurrence of any of these risks could result in a diminished ability to operate our business (for example, by requiring us to expend significant resources to correct the defect), as well as potential liability to clients, reputational damage and regulatory intervention, which could adversely affect our business, financial condition and results of operations, perhaps materially. Recently enacted and potential further financial regulatory reforms could have a significant impact on our business, financial condition and results of operations. The Dodd-Frank Wall Street Reform and Consumer Protection Act was enacted in July 2010. Dodd-Frank is expected to have a broad impact on the financial services industry, including significant regulatory and compliance changes. Many of the requirements called for in Dodd-Frank will be implemented over time and most will be subject to implementing regulations over the course of several years. Given the uncertainty associated with the manner in which the provisions of Dodd-Frank will be implemented by the various regulatory agencies and through regulations, the full extent of the impact these requirements will have on our operations is unclear. The changes resulting from Dodd-Frank may impact the profitability of business activities, require changes to certain business practices, impose more stringent capital, liquidity and leverage requirements or otherwise adversely affect our business. In particular, the potential impact of Dodd-Frank on our operations and activities, both currently and prospectively, include, among others: a reduction in the ability to generate or originate revenue-producing assets as a result of compliance with heightened capital standards; increased cost of operations due to greater regulatory oversight, supervision and examination of banks and bank holding companies, and higher deposit insurance premiums; the limitation on the ability to raise new capital through the use of trust preferred securities, as any new issuances of these securities are not includible as Tier 1 capital; a potential reduction in fee income due to limits on interchange fees applicable to larger institutions which could effectively reduce the fees we can charge; and the limitation on the ability to expand consumer product and service offerings due to anticipated stricter consumer protection laws and regulations. Further, we may be required to invest significant management attention and resources to evaluate and make any changes necessary to comply with new statutory and regulatory requirements under the Dodd-Frank Act, which may negatively impact results of operations and financial condition. Additionally, we cannot predict whether there will be additional proposed laws or reforms that would affect the U.S. financial system or financial institutions, whether or when such changes may be adopted, how such changes may be interpreted and enforced or how such changes may affect us. However, the costs of complying with any additional laws or regulations could have a material adverse effect on our financial condition and results of operations. The recent repeal of the prohibition on payment of interest on business demand deposits could increase our interest expense. Beginning July 21, 2011, financial institutions can commence to offer interest on business demand deposits, as the Dodd-Frank Act repealed federal prohibitions against paying interest on demand deposits. We do not know how competing financial institutions will address this issue, but if the Bank were to offer interest on demand deposits it could negatively impact our net interest income. A substantial portion of our non-interest income has historically come from overdraft fees, and regulatory oversight in this area may substantially decrease our income from such fees. In November 2010, the FDIC final supervisory guidance with respect to automated overdraft protection programs. This guidance, as well as additional proposals under consideration, could limit our flexibility with regard to allowing and charging for consumer overdrafts and may materially reduce our non-interest income in the future, thus adversely affecting our results of operations. Our overdraft policies are also subject to the provisions of our Formal Agreement with the OCC, which could further limit such flexibility. Changes in interest rates could adversely affect our profitability, business and prospects, especially if rates fall. Banking companies earnings depend largely on the relationship between the cost of funds, primarily deposits and borrowings, and the yield on earning assets, such as loans and investment securities. This relationship, known as the interest rate spread, is subject to fluctuation and is affected by the monetary policies of the FRB, the international interest rate environment, as well as by economic, regulatory and competitive factors which influence interest rates, the volume and mix of interest earning assets and interest bearing liabilities, and the level of nonperforming assets. Many of these factors are beyond our control. Fluctuations in interest rates affect the demand of customers for our products and services. We are subject to interest rate risk to the degree that our interest bearing liabilities reprice or mature more slowly or more rapidly or on a different basis than our interest earning assets. The continued historically low rate environment over the last three years has had a negative effect on our net interest income. The Bank manages its interest rate risk through the composition of its loans and deposits, balanced by its relatively large securities portfolio. Given our current volume and mix of interest bearing liabilities and interest earning assets, our interest rate spread could be expected to increase during times of rising interest rates and, conversely, to decline during times of falling interest rates. Therefore, significant fluctuations in interest rates may have an adverse or a positive effect on our results of operations. In addition, fluctuations in interest rates affect the demand of customers for products and services. For example, rising interest rates generally are associated with a lower volume of loan originations while lower interest rates are usually associated with increased loan originations. Conversely, in rising interest rate environments loan repayment rates generally decline and in a falling interest rate environment loan repayment rates generally increase. In addition, an increase in the general level of interest rates may adversely affect the ability of certain borrowers to pay the interest on and principal of their obligations. Interest rates also affect how much money we can lend. When rates rise, the cost of borrowing increases. Accordingly, changes in market interest rates could materially and adversely affect our net interest spread, asset quality, loan origination volume, business, financial condition, results of operations, and cash flows. We depend on our executive officers and key personnel to implement our business strategy and could be harmed by the loss of their services. We believe that our continued growth and success depends in large part upon the skills of our management team and other key personnel. The competition for qualified personnel in the financial services industry is intense, and the loss of key personnel or an inability to continue to attract, retain or motivate key personnel could adversely affect our business. If we are not able to retain our existing key personnel or attract additional qualified personnel, our business operations would be hurt. Only our Chief Executive Officer, who has been with the Company and the Bank since inception, has an employment agreement. We are exposed to risk of environmental liabilities with respect to properties to which we obtain title. Approximately 85.9% of our loan portfolio at September 30, 2011 was secured by real estate. In the normal course of business, we may foreclose and take title to real estate, and could be subject to environmental liabilities with respect to these properties. We may be held liable to a governmental entity or to third parties for property damage, personal injury, investigation and clean-up costs incurred by these parties in connection with environmental contamination, or may be required to investigate or clean up hazardous or toxic substances, or chemical releases at a property. The costs associated with investigation or remediation activities could be substantial. In addition, if we are the owner or former owner of a contaminated site, we may be subject to common law claims by third parties based on damages and costs resulting from environmental contamination emanating from the property. These costs and claims could adversely affect our business and prospects. Risks Related to This Offering and Our Common Stock We are selling our securities on a best efforts basis and there is no minimum aggregate offering amount. The shares are being offered on a best efforts basis. There is no requirement that we sell any particular number of shares. If we sell less than the full amount offered, the lesser amount sold would not necessarily help us fully accomplish our goals. See TERMS OF THE OFFERING and USE OF PROCEEDS. As the offering is not underwritten, no underwriter has conducted an independent review to verify the things we say in this prospectus. Our offering is not underwritten. Thus, there has not been an independent due diligence review of matters covered by this prospectus, such as might be conducted by an underwriter had one been affiliated with this offering. The offering price of our stock has been determined independently by us and should not be considered as an indication of our present or future value. The offering price of our common stock has been determined by our board of directors based on our general evaluation of our business and prospects and the current trading market for our common stock. However, we have not conducted a detailed marketing or feasibility study covering the pricing and terms of this offering, nor have we sought an independent third party valuation of our common stock. You should not consider the subscription price for the shares as an indication of our present or future value. Trading in our common stock has been very limited and if you invest you may have difficulty selling your shares in the future at the times and in the amounts you might want. While our common stock, including the common stock you purchase in this offering, is quoted on the OTC Bulletin Board (symbol CCBC ), our stock is not listed on any stock exchange, including the National Association of Securities Dealers Automated Quotation System ( NASDAQ ). There are a few securities brokers who are involved in trading our common stock; however, trading in our common stock has been very limited and there can be no assurance that a more active trading market will develop in the foreseeable future. Accordingly, the common stock may be an illiquid investment and you may have difficulty selling your shares of common stock at the times and in the amounts you desire. Since we ceased repurchasing shares under our repurchase program which expired in February 2011 the market for the shares has become significantly more limited and the price has declined. In addition, a proposal is pending before Congress which would make it significantly easier for the Company to de-register its stock with the SEC, and thus to eliminate the ongoing expense of its reporting obligations under the Exchange Act. If this proposal is adopted and the Company elects to cease its reporting under the Exchange Act, this action could further limit the trading market for the common stock. The price of our common stock may fluctuate significantly, and this may make it difficult for you to sell shares of common stock at times or at prices you find attractive. The trading price of our common stock may fluctuate widely as a result of a number of factors, many of which are outside our control. In addition, the stock market is subject to fluctuations in share prices and trading volumes that affect the market prices of the shares of many companies. These broad market fluctuations could adversely affect the market price of our common stock. Among the factors that could affect our common stock price in the future are: actual or anticipated quarterly fluctuations in our operating results and financial condition; changes in revenue or earnings estimates or publication of research reports and recommendations by financial analysts; further regulatory action against us; speculation in the press or investment community; strategic actions by us or our competitors, such as acquisitions or restructurings; actions by shareholders; fluctuations in the stock price, trading volumes, and operating results of our competitors; general market conditions and, in particular, market conditions for the financial services industry; proposed or adopted regulatory changes or developments; anticipated or pending investigations, proceedings, or litigation that involve or affect us; and domestic and international economic factors unrelated to our performance. The stock market and, in particular, the market for financial institution stocks, has experienced significant volatility over the past several years. As a result, the market price of our common stock may be volatile. In addition, the trading volume in our common stock may fluctuate more than usual and cause significant price variations to occur. The trading price of the shares of our common stock also depends on many other factors which may change from time to time, including, without limitation, our financial condition, performance, creditworthiness and prospects, future sales of our equity or equity related securities, and other factors identified elsewhere in this prospectus. The capital and credit markets have been experiencing volatility and disruption for several years, at times reaching unprecedented levels. In some cases, the markets have produced downward pressure on stock prices and credit availability for certain issuers without regard to those issuers underlying financial strength. We do not expect to pay cash dividends in the foreseeable future. We presently intend to continue to follow our existing policy of retaining earnings, if any, for the purpose of increasing our net worth and reserves. We are also required under the terms of our MOU with the FRB to obtain regulatory approval prior to paying any dividends. In addition, as discussed in the next following risk factor, our ability to pay cash dividends to our shareholders is extremely dependent on the payment of dividends to us by our banking subsidiary, and such dividends are currently subject to severe restrictions. Moreover, as we have elected to defer the payment of interest on our subordinated debt pending the conclusion of at least the rights portion of the offering, we are currently prohibited from paying dividends on our common stock until such interest payments have been brought current. We rely heavily on the payment of dividends from our subsidiary, Chino Commercial Bank, and such dividends are subject to regulatory requirements and approvals. We are a legal entity separate and distinct from our banking subsidiary. Substantially all of our revenue and cash flow, including funds available for the payment of dividends and other operating expenses, is dependent on the Bank s ability to pay dividends to us, as we have no other independent source of significant income. However, as a result of the Bank s Formal Agreement with the OCC and the Company s MOU with the FRB, the Bank must obtain non-objection from the OCC, and the Company must obtain prior approval from the FRB, in order for the Bank to pay cash dividends to the Company. In addition, as a general matter, the payment of dividends by the Bank is affected by the requirement to maintain adequate capital pursuant to the capital adequacy guidelines issued by the OCC. All banks and bank holding companies are required to maintain a minimum ratio of qualifying total capital to total risk-weighted assets of 8%, at least one-half of which must be in the form of Tier 1 capital, and a ratio of Tier 1 capital to average adjusted assets of 4%. If (i) any of these required ratios are increased; (ii) the total of risk-weighted assets of the Bank increases significantly; and/or (iii) the Bank s income declines significantly, the Bank s Board of Directors may decide or be required to retain a greater portion of the Bank s earnings to achieve and maintain the required capital or asset ratios. This will reduce the amount of funds available for the payment of dividends by the Bank to us. In addition, as discussed in the preceding paragraph, any dividends to be paid from the Bank to us will require the prior approval or non-objection of both the FRB and the OCC. The Bank has also agreed to the OCC establishing higher minimum capital ratios for the Bank, specifically a Leverage Capital Ratio of not less than 9.0% and a Total Risk-Based Capital Ratio of not less than 12.0%. It is not anticipated that regulatory approvals or non-objections to the payment of any dividends will be granted unless the Bank s capital levels are comfortably in excess of the above ratios. As a result of these restrictions, we have elected to temporarily defer our payments of interest on our subordinated debt until the conclusion of at least the rights portion of the offering, and have, with the approval of the FRB, issued convertible notes to certain directors to facilitate our cash flow needs for operating expenses during this period without the need to obtain dividends from the Bank. See SUMMARY Recent Developments Mandatorily Convertible Notes to Directors. The Bank s ability to pay dividends to us is also limited by the national banking laws. Further, whether dividends are paid and their frequency and amount will also depend on the Bank s financial condition and performance, and the discretion of the Bank s Board of Directors. We may pursue additional capital in the future, which may not be available on acceptable terms or at all, could dilute the holders of our outstanding common stock, and may adversely affect the market price of our common stock. In the current economic environment, we believe it is prudent to consider alternatives for raising capital when opportunities to raise capital at relatively attractive prices present themselves, in order to further strengthen our capital and better position ourselves to take advantage of opportunities that may arise in the future. Our ability to raise additional capital, if needed, will depend on, among other things, conditions in the capital markets at the time, which are outside of our control, and our financial performance. We cannot provide any assurance that such capital will be available to us on acceptable terms or at all. Any such capital raising alternatives could dilute the holders of our outstanding common stock, and may adversely affect the market price of our common stock and our performance measures such as earnings per share. 1 If all shares offered were purchased on a rights basis as described herein, the total number of shares issued would be approximately 235,718 due to the issuance of bonus shares. The actual number of shares issued would actually be slightly lower than this figure due to the fact that each shareholder's bonus shares will be rounded down to the nearest whole number. 1 This figure does not include bonus shares. The number of shares for which each shareholder is entitled to subscribe by virtue of these subscription rights, along with the aggregate price required for full exercise of these subscription rights, are set forth in the shareholder subscription rights agreement accompanying this prospectus. If any shareholder loses or misplaces his or her shareholder subscription rights agreement, the number of shares for which each shareholder is entitled to subscribe can be calculated by dividing by ten and multiplying by three the number of shares owned of record by such shareholder as of November 18, 2011. If the resulting number contains a fraction, the fraction should be rounded down to the nearest whole number. Shareholders may also obtain information concerning the number of shares constituting their subscription rights entitlement by contacting Trish Bowman, Shareholder Relations, at (909) 204-7300 or trishbowman@chinocommercialbank.com; or Sandra F. Pender, Chief Financial Officer, at (909) 393 8880 or spender@chinocommercialbank.com. While the subscription rights given to shareholders have been made transferable or assignable, they may be transferred or assigned to California residents only. In addition, we will not be involved in assisting shareholders in soliciting or locating transferees of such subscription rights. Subscription rights have been made transferable only as an accommodation to our shareholders. The method of transferring subscription rights is described in the instructions to the shareholder subscription rights agreement. Distribution to Non-Shareholders The balance of shares offered hereby which are not subscribed for on a subscription rights basis by January 20, 2012 (unless extended) will be available to other interested investors on a non-rights basis at a purchase price of $10.50 per share without entitlement to any bonus shares. However, it is not possible to determine as of the date of this prospectus the exact number of shares which will be available on this basis. We intend to allocate such shares primarily to our existing and potential customers and members of the communities we serve, including persons who are in business or reside in Chino, Ontario and Rancho Cucamonga, California. However, we reserve the right to sell such shares in any manner as we, in our sole discretion, deem appropriate and we may reject all or any part of any non-rights subscription. Subscription Procedure For Existing Certificated Shareholders If you wish to exercise your subscription rights in this offering, and hold your shares in certificate form, you must complete the following steps before January 20, 2012: Complete and sign the shareholder subscription rights agreement which accompanies this prospectus; Make full payment of the entire purchase price for the shares subscribed for in U.S. currency by certified check, bank check, personal check or money order payable to Chino Commercial Bancorp Stock Offering Account. You may also wire transfer the funds as set forth below. Deliver the shareholder subscription rights agreement, together with the payment described above, to Chino Commercial Bancorp at the following address: Chino Commercial Bancorp 14245 Pipeline Avenue Chino, California 91710 Attention: Trish Bowman If you wish to wire transfer your funds, you should deliver your shareholder subscription rights agreement as set forth above and wire transfer your funds to the Chino Commercial Bancorp Stock Offering Account, ABA No. 122243062, Account No. 1900166, Attention: Trish Bowman. The number of shares covered by each shareholder's subscription rights and the aggregate purchase price for the full exercise of such subscription rights are set forth on each shareholder's subscription rights agreement. To exercise your subscription rights, your completed agreement and payment must be received by us by January 20, 2012, unless such date is extended. If you wish to subscribe for additional shares pursuant to your oversubscription privilege, or if you should miss the deadline for exercising subscription rights and wish to purchase shares in the non-rights portion of the offering, please so indicate on your subscription rights agreement. Any subscriptions for shares which do not involve the exercise of subscription rights must be received by February 29, 2012, unless such date is extended. Important: The full subscription price for the shares must be remitted with the shareholder subscription rights agreement in order to be valid. Failure to include the full purchase price shall give us the right to reject the subscription. If we do not receive your shareholder subscription rights agreement and payment in full by 5:00 p.m., Pacific Time, on January 20, 2012, your subscription rights in this offering will be waived, unless such date is extended. However, we will consider any subscriptions received after that date on a non-rights basis, i.e., without entitlement to any bonus shares. The subscription price will be deemed to have been received by us only upon (i) clearance of any uncertified check; (ii) receipt by us of any certified check or cashier s check or of any postal, telegraphic or express money order; or (iii) receipt of collected funds in the stock offering account designated above. If paying by uncertified personal check, please be aware that funds paid in this manner may take at least five business days to clear. Accordingly, if you wish to pay the subscription price by means of uncertified personal check, we urge you to send in your subscription materials sufficiently in advance of January 20, 2012 to ensure that such payment is received and clears by that date. We also encourage you to consider paying by means of certified or cashier s check, money order or wire transfer of funds. If you have questions as to how to complete the shareholder subscription rights agreement, please contact Trish Bowman, Shareholder Relations, at (909) 204-7300 or trishbowman@chinocommercialbank.com; or Sandra F. Pender, Chief Financial Officer, at (909) 393 8880 or spender@chinocommercialbank.com. For Existing Street Name Shareholders If you do not hold your shares in certificate form, but hold them instead through a custodian bank, broker, dealer or other nominee, then your nominee is the record holder of the shares you own. If you are not contacted by your nominee, you should contact your nominee as soon as possible. Your nominee must exercise the subscription rights on your behalf for the shares of common stock you wish to purchase. You will not receive a shareholder subscription rights agreement. Please follow the instructions of your nominee. Your nominee may establish a deadline that may be before the January 20, 2012 expiration date that we have established for the rights offering. For Non-Rights Subscribers If you wish to subscribe to purchase shares of our common stock in this offering on a non-rights basis, you must complete the same steps as described above under Subscription Procedure For Existing Shareholders except using the subscription agreement designed for non-rights subscribers rather than a shareholder subscription rights agreement, and you must do so before February 29, 2012 rather than January 20, 2012. If you have questions as to how to complete the subscription agreement, please contact Trish Bowman, Shareholder Relations, at (909) 204-7300 or trishbowman@chinocommercialbank.com; or Sandra F. Pender, Chief Financial Officer, at (909) 393 8880 or spender@chinocommercialbank.com. Expiration Dates The subscription rights granted to shareholders of record as of November 18, 2011 will expire if not validly exercised by 5:00 p.m., Pacific Time, on January 20, 2012, unless extended. We will accept subscriptions on a non-rights basis until 5:00 p.m., Pacific Time on February 29, 2012, unless extended, or if we decide to close the offering prior to that date, which we may do without further notice to you. While potential investors may subscribe for shares in the non-rights portion of the offering during the rights offering period, we can only hold, but not accept, subscriptions pending the conclusion of the rights portion of the offering, as we will not know until that time how many shares, if any, will be available in the non-rights portion of the offering. If you have subscribed on a non-rights basis during the rights period, we will let you know as soon as practicable after the conclusion of the rights offering whether your non-rights subscription has been accepted. We may also extend either or both expiration dates without notice to subscribers. Any such extension shall not affect the rights of those who have already subscribed. Closings and Issuance of Shares The rights portion of the offering will close on the January 20, 2012 rights expiration date, which date may be extended. The offering in its entirety will close on the February 29, 2012 offering expiration date, but this date may also be extended. In addition, we reserve the right to have multiple closings of the either or both portions of the offering should we determine this to be advisable in our sole discretion. It is currently anticipated that we will have the first partial closing immediately prior to year-end in order that the funds received to that date can be reflected as capital in our audited financial statements for the fiscal year ending December 31, 2011. If you currently hold your stock in certificate form, our transfer agent will mail you a stock certificate as soon as practicable after the close of the applicable portion of the offering during which you subscribed. If your shares as of November 18, 2011 were held by a custodian bank, broker, dealer or other nominee, you will not receive stock certificates for your new shares. Instead, your nominee will be credited with the shares of common stock you purchase, according to the same timeframe as described above with respect to stock certificates. Determination of the Offering Price Prior to this offering there has been a very limited trading market in our common stock. See MARKET INFORMATION AND DIVIDEND POLICY AND RELATED MATTERS Trading History. We determined the offering price after analyzing and taking into consideration several factors including, but not limited to, our current financial condition, recent trading prices of our common stock, book value per share, management s analysis of our growth potential, the prices of shares of common stock of similarly situated independent banks, and our market position in the geographical areas in which we operate. The offering price will not necessarily reflect the market price of our common stock after this offering. 1 This table assumes that all shares sold will be sold pursuant to the exercise of shareholder subscription rights at $10.50 per share, so that in addition to the 224,494 shares being offered hereby, the Company would issue bonus shares amounting to an additional 5% of the amount of such shares (11,224 additional shares), for a total of 235,718 shares. If all shares were purchased by non-rights subscribers, the total number of shares would be 224,494. The total net proceeds would not be affected. This table also excludes 13,268 shares of common stock issuable upon exercise of outstanding options at an average exercise price of $10.25 per share. 2 Actual book value per share equals total stockholders equity of $7,298,096, divided by 748,314 shares issued and outstanding at September 30, 2011. Book value per share as adjusted equals total stockholders equity of $9,539,508 (assuming net proceeds of this offering of $2,241,412), divided by 984,032 shares (assuming issuance and sale of 224,494 shares plus 11,224 bonus shares issued to shareholders exercising subscription rights). 3 For definitions and further information relating to these capital ratios, see Regulation and Supervision Capital Adequacy Requirements in Item 1 of our Form 10-K Annual Report for the year ended December 31, 2010, as amended, which is incorporated herein by reference. MARKET INFORMATION AND DIVIDEND POLICY AND RELATED MATTERS Trading History Our common stock is traded on the OTC Bulletin Board under the symbol CCBC. Our common stock, including the common stock you purchase in this offering, will continue to be quoted on the OTCBB, but will not be listed on any exchange, including NASDAQ, following this offering. To date, there has been a very limited market for our common stock, and although our stock is not subject to any specific restrictions on transfer, there can be no assurance that a more active trading market will develop in the future, or if developed, that it will be maintained. Management is aware of the following securities dealers which make a market in our common stock: Crowell, Weedon & Co., Big Bear Lake, California; and Wedbush Morgan Securities, Portland, Oregon. The information in the following table indicates the high and low bid and asked quotations and approximate volume of trading for our common stock for each quarterly period since January 1, 2009, and is based upon information provided by the securities dealers listed above. These quotations reflect inter-dealer prices, without retail mark-up, mark-down, or commission, and do not reflect the actual transactions and do not include nominal amounts traded directly by shareholders or through dealers other than the securities dealers listed above. Trades in Our Common Stock Approximate Calendar Quarter Ended High Low Volume September 30, 2011 11.99 10.00 12,964 June 30, 2011 11.55 8.10 44,450 March 31, 2011 13.25 10.30 16,434 December 31, 2010 14.50 13.00 5,117 September 30, 2010 15.25 13.30 10,407 June 30, 2010 16.00 15.30 7,618 March 31, 2010 17.00 14.50 10,213 December 31, 2009 17.00 13.90 4,452 September 30, 2009 16.40 12.50 4,469 June 30, 2009 15.00 10.05 12,924 March 31, 2009 10.50 8.25 20,849 The bid and asked quotations on November 17, 2011 were $8.25 and $11.98, respectively. Holders As of September 30, 2011 there were approximately 572 shareholders of our common stock, including approximately 386 registered holders, and approximately 186 beneficial owners whose shares were held in street name. Dividends As a bank holding company which currently has no significant assets other than its equity interest in the Bank, our ability to pay dividends primarily depends upon the dividends we receive from the Bank. The Bank s dividend practice, like our dividend practice, will depend upon its earnings, financial position, current and anticipated cash requirements and other factors deemed relevant by the Bank s board of directors at that time. In addition, the Bank has entered into a Formal Agreement with the OCC, and the Company has entered into an MOU with the FRB, pursuant to which both the Bank and the Company must obtain prior regulatory approval or non-objection to pay dividends. See REGULATORY MATTERS below. Moreover, during any period in which we have deferred payment of interest otherwise due and payable on our subordinated debt securities, we may not pay any dividends or make any distributions with respect to our capital stock. See Note 22 to the consolidated financial statements contained in Item 8 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2010, as amended, which is incorporated herein by reference. We have elected to defer payments of interest on our subordinated debt securities pending the conclusion of at least the rights portion of the offering, beginning with the payment which was due on September 15, 2011. Shareholders are entitled to receive dividends only when and if declared by our Board of Directors. Prior to the holding company reorganization effective July 1, 2006, Chino Commercial Bank had not paid any cash dividends. We have not paid any cash dividends since July 1, 2006, and we do not intend to pay any cash dividends in the foreseeable future. In addition, as long as the MOU with the FRB remains in effect, we may not pay dividends to our shareholders, or receive dividends from the Bank, without the prior approval of the FRB. To the extent that we receive cash dividends from the Bank, we presently use such funds primarily to service the subordinated debt related to our trust preferred securities (see Note 22 to the consolidated financial statements referenced in the preceding paragraph), as well as to pay our operating expenses. No assurance can be given that our earnings will permit the payment of dividends of any kind in the future. The Bank s ability to pay cash dividends to us is also subject to certain legal limitations under federal laws and regulations. No national bank may, pursuant to 12 U.S.C. Section 56, pay dividends from its capital; all dividends must be paid out of net profits then on hand, after deducting for expenses including losses and bad debts. The payment of dividends out of net profits of a national bank is further limited by 12 U.S.C. Section 60(a) which prohibits a bank from declaring a dividend on its shares of common stock until the surplus fund equals the amount of capital stock, or if the surplus fund does not equal the amount of capital stock, until one-tenth of the Bank's net profits of the preceding half-year in the case of quarterly or semiannual dividends, or the preceding two consecutive half-year periods are transferred to the surplus fund before each dividend is declared. Pursuant to 12 U.S.C. Section 60(b), the approval of the OCC shall be required if the total of all dividends declared by the Bank in any calendar year shall exceed the total of its net profits for that year combined with its net profits for the two preceding years, less any required transfers to surplus or a fund for the retirement of any preferred stock. The OCC has adopted guidelines, which set forth factors which are to be considered by a national bank in determining the payment of dividends. A national bank, in assessing the payment of dividends, is to evaluate the bank s capital position, its maintenance of an adequate allowance for loan losses, and the need to review or develop a comprehensive capital plan, complete with financial projections, budgets and dividend guidelines. Therefore, the payment of dividends by Chino Commercial Bank is also governed by its ability to maintain minimum required capital levels and an adequate allowance for loan and lease losses. Additionally, pursuant to 12 U.S.C. Section 1818(b), the OCC may prohibit the payment of any dividend which would constitute an unsafe and unsound banking practice. The Bank is also subject to higher than normal capital requirements and, under the terms of its Formal Agreement with the OCC, must receive the prior non-objection of the OCC to pay any dividends. Our ability to pay dividends is also limited by state corporation law. The California General Corporation Law allows a California corporation to pay dividends if the company s retained earnings equal at least the amount of the proposed dividend. If such corporation does not have sufficient retained earnings available for the proposed dividend, it may still pay a dividend to its shareholders if immediately after the dividend the sum of the company s assets (exclusive of goodwill and deferred charges) would be at least equal to 125% of its liabilities (not including deferred taxes, deferred income and other deferred liabilities) and the current assets of the company would be at least equal to its current liabilities, or, if the average of its earnings before taxes on income and before interest expense for the two preceding fiscal years was less than the average of its interest expense for the two preceding fiscal years, at least equal to 125% of its current liabilities. In addition, as noted above, during any period in which we have deferred payment of interest otherwise due and payable on our subordinated debt securities, we may not pay any dividends or make any distributions with respect to our capital stock, and we have elected to defer such payments pending the conclusion of at least the rights portion of the offering, beginning with the payment which was due on September 15, 2011. Stock Repurchases In October 2006, the Board of Directors approved a stock repurchase program for a period of up to 12 months pursuant to which the Company could purchase up to $3.0 million in its common stock in open market or privately negotiated transactions. The Board of Directors subsequently extended the program on multiple occasions. The Board also authorized an additional $100,000, $200,000, $200,000 and $400,000 for stock repurchases under the plan in October 2007, February 2009, February 2010, and May 2010, respectively. The repurchase program expired in February 2011, and the Board does not anticipate adopting a new program at this time. Any new repurchase program would require the prior approval of the FRB pursuant to the Company s MOU. See REGULATORY MATTERS. Information concerning stock repurchases in 2010 is contained in our Form 10-K for the fiscal year ended December 31, 2010, as amended, and in quarterly reports on Form 10-Q filed during 2010. Equity Compensation Plan Information The following table provides information as of December 31, 2010, with respect to options outstanding and available under our 2000 Stock Option Plan, which is our only equity compensation plan other than an employee benefit plan meeting the qualification requirements of Section 401(a) of the Internal Revenue Code: Plan Category Number of Securities to be Issued Upon Exercise of Outstanding Options Weighted-Average Exercise Price of Outstanding Options Number of Securities Remaining Available for Future Issuance Equity compensation plans approved by security holders 13,628 $ 10.41 0 USE OF PROCEEDS The net proceeds to us from the sale of the common stock offered in the offering will be approximately $2,241,412, net of offering expenses, assuming the sale of all shares offered hereby. The actual net proceeds to be raised in the offering will depend upon the number of shares sold in the offering and the actual amount of offering expenses incurred, which may differ from the foregoing estimate. We intend to use the net proceeds from this offering for general and corporate working capital purposes, including enabling our subsidiary, Chino Commercial Bank, N.A., to continue to meet the applicable minimum capital requirements which the Bank has agreed to the OCC establishing, and enabling us to service our debt obligations and pay other operating expenses while certain regulatory agreements are in effect, without receiving dividends from the Bank (see REGULATORY MATTERS ). Such purposes may also include funding for loans and to support future growth. Future growth is expected to occur by establishing new branch offices and increasing loans and deposits at existing branches. The amount and timing of the use of proceeds from this offering will depend on our capital needs and local loan demand. No assurance can be given that any new branches will be established in the future or, if established, that the resulting impact on our financial condition will be favorable. PLAN OF DISTRIBUTION We are offering these shares on a best efforts basis through our directors and officers, who will not be entitled to receive any discounts or commissions for selling any shares, but may be reimbursed for any reasonable out-of-pocket expenses incurred in connection with the offering, if any. We do not expect, however, that any such expenses will be significant. The offering is not underwritten and we do not presently intend to engage an underwriter or placement agent in connection with this offering. However, we may retain the services of a broker or placement agent to assist us on a best efforts basis with the non-rights portion of the offering if circumstances warrant. If we do so, we do not expect such broker or agent to be obligated to sell or to purchase any of the shares, and we would expect to pay such firm, as compensation for its services on completion of the offering, a placement fee of 5% of the dollar amount of shares purchased by investors introduced by such firm, plus reasonable out-of-pocket expenses. REGULATORY MATTERS On April 12, 2011, the Bank entered into a formal written agreement (the Agreement ) with the OCC, the Bank s primary regulator. The Agreement will remain in effect and enforceable until it is modified, waived or terminated in writing by the OCC. Entry into the Formal Agreement does not change the Bank s well-capitalized status. The Bank s Board of Directors (the Bank Board ) and its management have already taken numerous actions to comply with the Agreement, and will continue to take such further actions as are required to achieve full compliance. Due to the nature of many provisions in the Agreement and the process involved in implementing corrective actions, particularly with regard to revising policies and procedures and obtaining supervisory non-objection to such revised documents, full compliance has not yet been achieved as many items are still in process. The Bank Board and management believe that the Bank has taken all actions to date which are required by the Agreement, and they remain committed to working in cooperation with the OCC to achieve full compliance pursuant to the process specified in the Agreement. The following discussion summarizes each provision of the Formal Agreement and the current status of the Bank s compliance with respect to each such provision. The Agreement requires the Bank, by various specified dates, to: establish a Compliance Committee of the Board of Directors to provide oversight of the Bank s execution of its responsibilities under the Agreement. Status: The Compliance Committee has been formed, holds regular meetings, records minutes and provides oversight of an organized plan for compliance, but full compliance cannot be technically achieved until the Bank is in full compliance with every element of the entire Agreement. add a new independent director with banking experience, or similar accounting or regulatory experience, to the Bank Board. Status: The Bank Board formed a Search Committee which has identified an individual with auditing and accounting experience who is willing to serve on the Board of Directors. Management expects to submit the required documentation to the OCC concerning this individual in the immediate future. The Bank Board believes that this individual is qualified and expects to receive supervisory non-disapproval, at which point this individual will be appointed as a new director. adopt, implement and adhere to a rolling three year strategic plan and capital program, including objectives, projections and implementation strategies for the Bank s overall risk profile, earnings performance, and various balance sheet items, as well as intended product line development and market segments. Status: The Bank timely submitted its Capital and Strategic Plan to the OCC and was advised that certain additional modifications were needed to achieve full compliance. The plan was revised to include such modifications, was recently resubmitted to the OCC, and is currently under review. only declare dividends when the Bank is in compliance with the capital plan and has received prior supervisory non-objection from the OCC. Status: The Bank has not declared any dividends since the Agreement has been in effect and will not do so without complying with the above requirements. obtain a review of insider lending compliance by an independent outside audit firm acceptable to the OCC. Status: The Bank has submitted proposals by qualified auditors to the OCC but has not yet received supervisory non-disapproval to enable commencement of the audit due to requested modifications of the proposals by the OCC. The Bank expects that the most recently submitted proposal should receive supervisory non-disapproval, at which time the audit will commence.
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001368192_china_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001368192_china_prospectus_summary.txt
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+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001368195_hellenic_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001368195_hellenic_prospectus_summary.txt
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+PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001368765_umami_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001368765_umami_prospectus_summary.txt
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. You should read the entire prospectus carefully, including, the section entitled "Risk Factors" before deciding to invest in our common stock. Umami Sustainable Seafood Inc. is referred to throughout this prospectus as "Umami," the Company , "we" or "us." General Umami is one of the leaders in the Northern and Pacific Bluefin Tuna industry with growth founded on sustainable management of resources and economically sound practices. The Company was formed by a team of individuals within the Bluefin Tuna industry who have been working on ensuring the long term sustainability of Bluefin Tuna. Our strategy is based on consolidation within the sector to leverage scientific process and research knowledge through economies of scale. While our current core business is focused on raising Bluefin Tuna to a marketable size, we are actively working on creating a self-sustaining farm environment where the tuna spawn and the resultant eggs are hatched and grown to full size. Umami operates through its wholly owned subsidiaries, Kali Tuna d.o.o. (Kali Tuna), located in Croatia, and Baja Aqua Farms S.A. de C.V (Baja) located in Mexico. Recent Developments Share Exchange Agreement On June 30, 2010, the Company (then known under the name Lions Gate Lighting Corp.) completed a share exchange with Atlantis Group HF, an Icelandic company and the sole indirect shareholder of Kali Tuna ( Atlantis ), pursuant to which the Company purchased from Atlantis all issued and outstanding shares of Bluefin Acquisition Group Inc., a New York company and wholly owned subsidiary of Atlantis that was created for the specific purpose of holding the Kali Tuna shares, in consideration for the issuance to Atlantis of 30,000,000 shares of common stock of the Company (the Share Exchange ). As a result, Kali Tuna became the Company s indirect wholly owned subsidiary. Baja Acquisition On July 20, 2010, we entered into a Stock Purchase Agreement with Corposa, S.A. de C.V. ( Corposa ), Holshyrna ehf, ( Holshyrna ) and certain other parties, providing for the sale from Corposa and Holshyrna of 33% of the equity of Baja Aqua Farms, S.A. de C.V., a Mexican corporation ( Baja ) and its affiliate Oceanic Enterprises, Inc., a California corporation ( Oceanic ). We also acquired the right to purchase all remaining Baja and Oceanic shares. On November 30, 2010, we completed the acquisition of Baja and Oceanic. As a result, Baja became our 99.98% owned subsidiary and Oceanic became our wholly owned subsidiary. The total purchase price for the acquisition of Baja and Oceanic was $32,651,000 including 10,000,000 shares of Company common stock valued at $12,050,000. Our principal executive office is located at 1230 Columbia Street, Suite 1100, San Diego, CA 92101 and our telephone number at that location is (619) 544-9177. Our website address is www.umamiseafood.com. CALCULATION OF REGISTRATION FEE Title of Each Class of Securities to be Registered Amount To Be Registered Proposed Maximum Offering Price Per Share (1) Proposed Maximum Aggregate Offering Price Amount of Registration Fee Common Stock, par value $0.001 20,546,066 $ 3.00 $ 61,638,198 $ 7,156 Common Stock, par value $0.001 (2) 3,393,399 $ 3.00 $ 10,180,197 $ 393 Common Stock, par value $0.001 (3) 50,000 $ 3.00 $ 150,000 $ 17 Total 23,989,465 $ 71,968,395 $ 8,355.53 (1) Estimated solely for purposes of calculating the registration fee pursuant to Rule 457(c) under the Securities Act of 1933, as amended. (2) Represents shares issuable upon exercise of warrants. (3) Represents shares issuable upon exercise of options.. The registrant hereby amends this registration statement on such date or date(s) as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the Commission acting pursuant to said Section 8(a) may determine. * Based on the current issued and outstanding number of shares of 59,412,066 as of May 23, 2011. Assumes issuance of all (i) 3,393,399 shares upon exercise of warrants issued to investors and a placement agent, and (ii) 50,000 shares upon exercise of options held by one of our executive officers. The information in this prospectus is not complete and may be changed. The securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. PROSPECTUS Subject to Completion, Dated June 1, 2011 UMAMI SUSTAINABLE SEAFOOD INC. 23,989,465 Shares of Common Stock This prospectus relates to the resale by the selling stockholders of up to 23,989,465 shares of our common stock. The total number of shares sold herewith consists of the following shares held by or to be issued to the selling stockholders: (i) 20,546,066 shares, (ii) 3,393,399 shares to be issued upon exercise of warrants and (iii) 50,000 shares issuable upon exercise of options. We are not selling any shares of common stock in this offering and therefore will not receive any proceeds from this offering. We will, however, receive proceeds from the cash exercise, if any, of warrants to purchase an aggregate of 3,393,399 of common stock and options to purchase an aggregate of 50,000 shares of common stock. All costs associated with this registration will be borne by us. The selling stockholders may sell their shares in public or private transactions, at prevailing market prices or at privately negotiated prices. We will not receive any proceeds from the sale of the shares of common stock by the selling stockholders. Our common stock is currently traded on the OTC Bulletin Board under the symbol UMAM. On May 25, 2011, the closing price for our common stock on the OTC Bulletin Board was $3.00 per share. INVESTING IN THESE SECURITIES INVOLVES SIGNIFICANT RISKS. SEE "RISK FACTORS" BEGINNING ON PAGE 3. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. The date of this Prospectus is ___________, 2011
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001368960_china_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001368960_china_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..ac1a04819f2102af5bab8bd36ed1d92ab3d0f48b
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+PROSPECTUS SUMMARY This summary highlights selected information contained elsewhere in this Prospectus. This summary does not contain all the information that you should consider before investing in the common stock of China Wood, Inc. (referred to herein as the Company, CNWD, we, our, and us ), formerly known as Timberjack Sporting Supplies, Inc. You should carefully read the entire Prospectus, including Risk Factors, Management s Discussion and Analysis of Financial Condition and Results of Operations and the financial statements before making an investment decision. In this prospectus, there may be references made to registered capital, capital contributions, or limited liability companies. These references refer to China Wood s subsidiaries which are incorporated in Hong Kong, the British Virgin Island or are incorporated under the laws of the People s Republic of China, which we refer to as China or PRC herein. Companies registered in these jurisdictions are not measured in terms of shares owned but in terms of the amount of capital that has been or will be contributed to a company by a particular shareholder or all shareholders. The portion of a limited liability company s total capital contributed by a particular shareholder represents that shareholder s ownership of the company and the total amount of capital contributed by all shareholders is the company s total equity. Capital contributions are made to a company by deposits into a dedicated account in the company s name, which the company may access in order to meet its financial needs. When a company s accountant certifies to PRC authorities that a capital contribution has been made and the company has received the necessary government permission to increase its contributed capital, the capital contribution is registered with regulatory authorities and becomes a part of the company s registered capital . These references are being made in connection with our subsidiaries located in those jurisdictions. Business Overview Prior to the share exchange transaction described below, we were a development stage shell company intending to commence business operations. We were incorporated in the State of Nevada on September 8, 2005. Prior to the share exchange transaction, we had not generated any revenue and accumulated losses of $401,255 for the period from inception through June 30, 2010. On September 30, 2010, we completed the acquisition of Chine Victory Profit Limited, which (together with its subsidiaries) is engaged in the production of radiata pine plywood and eucalyptus plywood products in China ( Chine Victory ), by means of a share exchange. Simultaneously with the acquisition, we completed a $5,344,975 private placement of our securities to accredited investors at $4.00 per Unit, with each Unit consisting of one share of Series A Convertible Preferred Stock and one warrant to purchase 0.5 shares of common stock with an exercise price of $4.80 per share. On November 16, 2010, we changed our name from Timberjack Sporting Supplies, Inc. to China Wood, Inc. to better reflect our business plan.
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001369774_shiner_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001369774_shiner_prospectus_summary.txt
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+PROSPECTUS SUMMARY This summary highlights selected information contained elsewhere in this prospectus and does not contain all of the information you should consider in making your investment decision. Before investing in the securities offered hereby, you should read the entire prospectus, including our financial statements and related notes included in this prospectus and the documents incorporated by reference herein, including the information set forth under the headings Risk Factors and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in this document and/or the documents incorporated herein by reference. References in this prospectus and/or the documents incorporated herein by reference to the Company, we, our, and us refer to Shiner International, Inc. Our Company Overview We are a Nevada corporation engaged in the packaging and anti-counterfeit plastic film business in the People's Republic of China ("China") through our operating subsidiaries. We were incorporated on November 12, 2003 in Nevada. Since July 23, 2007, our principal place of business has been in China. As a result of a share exchange transaction (discussed below), we changed our name to Shiner International, Inc. on July 24, 2007. Our principal executive offices are located at 19th Floor, Didu Building, Pearl River Plaza, No. 2 North Longkun Road, Haikou, Hainan Province, China 570125. Our telephone number is +86-898-68581104. Our website is http://www.shinerinc.com. Our primary business consists of the research and development ( R&D ), manufacture and distribution of technology driven advanced packaging film products in two business segments flexible packaging material and advanced film. Our flexible packaging material segment includes coated film, tobacco film and color printed products while our advanced film segment currently includes high-tech anti-counterfeit laser holographic film. We anticipate that this segment will grow to encompass other products created for specialty niche purposes and developed using our proprietary material science technologies and intellectual property. For 2010, sales of our flexible packaging materials accounted for 74.6% of our revenue and sales of our advanced film accounted for 25.4%. All of our operations are based in China and each of our subsidiaries was formed under the laws of China. We currently conduct our business through Hainan Shiner Industrial Co., Ltd. ( Shiner Industrial ), which was incorporated on May 21, 2003 and is headquartered in Haikou, Hainan Province, and Zhuhai Huanuo Packaging Material Co., Ltd. ( Zhuhai ), which was incorporated on December 25, 2006 and is headquartered in Zhuhai, Guangdong Province. Shiner Industrial and Zhuhai currently produce all of our flexible packaging material and specialty films. Our color printing operation is carried out by Shiner Industrial. We were incorporated in Nevada on November 12, 2003 as Cartan Holdings Inc. We were initially formed as an exploration stage company involved in the search for mineral deposits. At that time we owned a 100% undivided right, title and interest in and to the mineral property known as the Cartan mineral claim. Our interest in the property consisted of the right to explore for and remove minerals from the property. Our common stock is currently traded on the Nasdaq Capital Market under the symbol "BEST." On September 1, 2011, we received a letter from Nasdaq indicating that we had failed to maintain a minimum closing bid price of $1.00 over the then preceding 30 consecutive trading days for our common stock as required by Nasdaq Listing Rule 5550(a)(2) (the "Bid Price Rule"), and therefore, we were not in compliance with the Bid Price Rule as of September 1, 2011. The letter also disclosed that in the event that we do not regain compliance with the Bid Price Rule by February 28, 2012, we may be eligible for additional time. We would be required to meet certain continued listing requirements and the initial listing criteria for the Nasdaq Capital Market except for the bid price requirement and will need to provide written notice of our intention to cure our deficiency during the second compliance period. If we meet these criteria, Nasdaq Staff will notify us that we have been granted an additional 180 day compliance period. If we are not eligible for an additional compliance period, Nasdaq will provide us with written notification that our common stock will be delisted. At that time, we can appeal Nasdaq s determination to delist our common stock to a Nasdaq Hearings Panel. The information in this prospectus is not complete and may be changed. The Selling Stockholders may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. PRELIMINARY PROSPECTUS; SUBJECT TO COMPLETION; ___________ ___, 2011 Shiner International, Inc. 3,130,000 Shares of Common Stock This prospectus covers the offer and resale, from time to time, of up to 3,130,000 shares of our common stock, par value $0.001 per share, by the selling stockholders named in this prospectus in the section entitled Selling Stockholders, including their pledgees, assignees and successors-in-interest, whom we collectively refer to in this document as the Selling Stockholders. We completed a private placement offering in December 2010 pursuant to which we issued to the Selling Stockholders an aggregate of (i) 2,608,336 shares of common stock and (ii) warrants to purchase up to an aggregate of 521,664 shares of common stock. The common stock being offered in this prospectus may include shares issued pursuant to the exercise of the warrants. We are not selling any shares of our common stock in this offering and will not receive any proceeds from this offering. We may receive proceeds on exercise of outstanding warrants for shares of common stock covered by this prospectus if the warrants are exercised for cash. The selling stockholders may offer the shares covered by this prospectus at fixed prices, at prevailing market prices at the time of sale, at varying prices or negotiated prices, in negotiated transactions, or in trading markets for our common stock. We will bear all costs associated with this registration. Our common stock is currently traded on the Nasdaq Capital Market under the symbol "BEST." On November 7, 2011, the closing price for our common stock was $0.70 per share. This investment involves risk. For a discussion of the material risks that you should consider, see Risk Factors beginning on page 14 of our Annual Report on Form 10-K for the year ended December 31, 2010 (the 2010 Annual Report ), which 2010 Annual Report is incorporated by reference in this prospectus. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The date of this Prospectus is __________, 2011 On July 23, 2007, we entered into a Share Exchange Agreement and Plan of Reorganization with Sino Palace Holdings Limited., a corporation formed under the laws of the British Virgin Islands ( Sino Palace ). Pursuant to the share exchange agreement, we acquired from Sino Palace all of the issued and outstanding capital stock of each of Shiner Industrial and Shiny-day, Hainan Hi-Tech and Zhuhai in exchange for the issuance of an aggregate of 16,500,000 shares of our common stock to the shareholders of Sino Palace. Shiner Industrial, Hainan Shiny-day Color Printing Packaging Co., Ltd. ( Shiny-day ), Hainan Modern Hi-Tech Industrial Co., Ltd. ( Hainan Hi-Tech ) and Zhuhai are each incorporated in the PRC. After giving effect to the completion of the reverse acquisition, we directly owned the equity interests in Shiner Industrial, Shiny-day, Hainan Hi-Tech and Zhuhai, and continued conducting our operations through these entities as our operating subsidiaries. The Cartan mineral claim expired on December 15, 2007. In late 2009, in an effort to improve efficiencies, reduce expenses and take advantage of favorable tax treatment, we consolidated the operations that were previously carried on by three of our subsidiaries - Shiner Industrial, Shiny-day and Hainan Hi-Tech into Shiner International. Shiny-day and Hainan Hi-Tech are currently inactive subsidiaries of the Company. On September 20, 2010, we commenced operations of Shanghai Juneng Functional Film Company, Ltd., a majority-owned subsidiary organized under the laws of China ( Shanghai Juneng ). We own 70% of Shanghai Juneng and Shanghai Shifu Film Material, Co., Ltd. ( Shanghai Shifu ) owns the remaining 30%. The general manager of Shanghai Juneng reports directly to our Chief Executive Officer. Shanghai Juneng is focused on pursuing sales opportunities among the domestic food safety packaging markets and targets China's leading food producers. We are a principal manufacturer of flexible packaging and advanced film products, selling to customers throughout China, Asia, Australasia, Europe, the Middle East and North America. Our products are sold to companies in the following industries: food, tobacco, chemical, agribusiness, medical, pharmaceutical, personal care, electronics, automotive, construction, graphics, music and video publishing and other consumer goods. The Ministry of Science and Technology of China has certified Shiner Industrial, one of our subsidiaries, as a Nationally-Focused Advanced High Technology Enterprise under the State Torch Program, which promotes the development and application of science- and technology-focused businesses in China. We hold 16 patents and have 10 patent applications pending that relate to certain of our products and manufacturing processes that have been issued by the State Intellectual Property Office of China. Although our patents and processes provide us with a competitive advantage, the loss of any single patent would not have a material adverse effect on our business as a whole. Our current production capacity consists of: ten flexible packaging material production lines with an overall capacity of more than 25,000 metric tons per year and four advanced film lines with a total capacity of 2,500 metric tons a year. The Offering Common stock offered by selling stockholders 3,130,000 shares, including up to 521,664 shares of common stock issuable upon the exercise of warrants at an initial exercise price of $1.70 per share. Common stock outstanding and to be outstanding after the offering 27,541,491 shares are currently outstanding. Assuming the exercise of all of the warrants issued in the private placement at the initial exercise price, 28,063,155 shares would be outstanding. TABLE OF CONTENTS ABOUT THIS PROSPECTUS 1 PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001369786_sagent_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001369786_sagent_prospectus_summary.txt
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+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001372041_paetec_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001372041_paetec_prospectus_summary.txt
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+prospectus, and the terms of the offering. We caution you, however, that the summary does not contain all of the information that may be important to you. You should read the entire prospectus before deciding whether to invest in our warrants or common stock. You also should consider the additional information contained in our SEC reports and in the other documents considered a part of this prospectus. For a description of these reports and documents, and information about where you can find them, see Where You Can Find More Information. Unless we indicate otherwise or the context otherwise requires, references in this prospectus to we, us, our and PAETEC mean PAETEC Holding Corp. and its consolidated subsidiaries as of the date of the applicable reference. Our Company PAETEC is a competitive broadband communications services and solutions provider guided by the principle that delivering superior customer service is the key to competing successfully with other communications services providers. PAETEC s primary business is providing business end-user customers in metropolitan areas with a package of integrated broadband communications services that encompasses data services, including Internet access services and virtual private network services, and voice services, including local telephone services and domestic and international long distance services. As of March 31, 2011, PAETEC provided services for over 54,000 business customers in a service area encompassing 86 of the country s top 100 metropolitan statistical areas. PAETEC Holding Corp., which was incorporated in Delaware in August 2006, is a holding company that conducts its operations through wholly-owned subsidiaries. The mailing address of PAETEC Holding Corp. s principal executive offices is One PAETEC Plaza, 600 Willowbrook Office Park, Fairport, New York 14450, and its telephone number is (585) 340-2500. We maintain a corporate Internet web site at www.paetec.com. Our web site is not a part of this prospectus and is included as an inactive textual reference only. This Offering Warrants Warrants issuable to select independent sales agents under the PAETEC Holding Corp. 2011 Agent Incentive Plan, or 2011 agent plan, to purchase up to 600,000 shares of common stock. Common stock Up to 600,000 shares of common stock issuable upon the exercise of warrants to be issued under our 2011 agent plan. Up to 570,000 shares of common stock issuable upon the exercise of warrants outstanding under the PAETEC Holding Corp. 2009 Agent Incentive Plan, or 2009 agent plan. Up to 243,433 shares of common stock issuable upon the exercise of warrants outstanding under the PaeTec Communications, Inc. Agent Incentive Plan, or 1999 agent plan. Warrant exercise terms and procedures See Questions and Answers About Exercise of Your Warrants in this summary below for information about the terms on which, and Table of Contents CALCULATION OF REGISTRATION FEE Title of each class of securities to be registered Amount to be registered Proposed maximum offering price per share(1) Proposed maximum aggregate offering price(1) Amount of registration fee Warrants to purchase Common Stock $0.01 par value (2) (3) Common Stock, $0.01 par value 600,000(4)(5) $3.83(6) $2,298,000(6) $267 Common Stock, $0.01 par value 570,000(7)(8) $2.89(9) $1,647,300(9) $192 Common Stock, $0.01 par value 243,443(10)(11) $4.01(12) $ 976,207(12) $114 Total $4,921,507 $573(13) (1) Estimated solely for the purpose of calculating the registration fee. (2) This registration statement covers such maximum number of warrants issuable under the PAETEC Holding Corp. 2011 Agent Incentive Plan (the 2011 Agent Plan ) as may be issued from time to time for the purchase of up to 600,000 shares of common stock, par value $0.01 per share, of the registrant (the Common Stock ) pursuant to the 2011 Agent Plan. In addition, pursuant to Rule 416 under the Securities Act of 1933 (the Securities Act ), this registration statement covers, in addition to such number of warrants, an indeterminate number of warrants which, by reason of changes in the capitalization of the registrant and other events specified in the 2011 Agent Plan and such warrants, may become issuable for no additional consideration. (3) Pursuant to Rule 457(g) under the Securities Act, no separate registration fee is payable with respect to the warrants, which are being registered on the same registration statement as the Common Stock offered pursuant thereto. (4) These shares of Common Stock are issuable upon the exercise of the warrants available for issuance under the 2011 Agent Plan and registered hereby. (5) Pursuant to Rule 416 under the Securities Act, this registration statement covers, in addition to the number of shares of Common Stock shown in the table above and issuable upon the exercise of 2011 Agent Plan warrants, an indeterminate number of shares of Common Stock which, by reason of changes in the capitalization of the registrant and other events specified in the 2011 Agent Plan and such warrants, may become issuable for no additional consideration. (6) Calculated in accordance with Rule 457(g) under the Securities Act, solely for the purpose of computing the registration fee. (7) These shares of Common Stock are issuable upon the exercise of the warrants outstanding under the PAETEC Holding Corp. 2009 Agent Incentive Plan (the 2009 Agent Plan ) as of the date of this registration statement. (8) Pursuant to Rule 416 under the Securities Act, this registration statement covers, in addition to the number of shares of Common Stock shown in the table above and issuable upon the exercise of the 2009 Agent Plan warrants, an indeterminate number of shares of Common Stock which, by reason of changes in the capitalization of the registrant and other events specified in the 2009 Agent Plan and such warrants, may become issuable for no additional consideration. (9) Calculated in accordance with Rule 457(g) under the Securities Act, based on the exercise price of $2.89 per share of Common Stock at which any of the 2009 Agent Plan warrants may be exercised, solely for the purpose of computing the registration fee. (10) These shares of Common Stock are issuable upon the exercise of the warrants outstanding under the PaeTec Communications, Inc. Agent Incentive Plan (the 1999 Agent Plan ) as of the date of this registration statement. (11) Pursuant to Rule 416 under the Securities Act, this registration statement covers, in addition to the number of shares of Common Stock shown in the table above and issuable upon the exercise of the 1999 Agent Plan warrants, an indeterminate number of shares of Common Stock which, by reason of changes in the capitalization of the registrant and other events specified in the 1999 Agent Plan and such warrants, may become issuable for no additional consideration. (12) Calculated in accordance with Rule 457(g) under the Securities Act, based on the highest price at which any of the 1999 Agent Plan warrants may be exercised ($4.01), solely for the purpose of computing the registration fee. (13) Previously paid. Filing fees of $74 previously were paid with respect to the 570,000 unsold shares of Common Stock that were registered pursuant to the registration statement on Form S-3 (File No. 333-159344) initially filed by the registrant on May 19, 2009 and that are issuable upon the exercise of the 2009 Agent Plan warrants. Pursuant to Rule 457(p) under the Securities Act, these previously paid fees were offset against the registration fee paid by the registrant on May 23, 2011 with respect to this registration statement. The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. Table of Contents the manner in which, you may exercise your warrants under the 2011 agent plan, the 2009 agent plan or the 1999 agent plan. Use of proceeds We will receive proceeds from payments in cash of the exercise price of any warrants. We intend to use the net proceeds of such exercises for working capital and other general corporate purposes.
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001373485_cross_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001373485_cross_prospectus_summary.txt
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+PROSPECTUS SUMMARY This summary highlights selected information more fully described elsewhere in this prospectus. You should read the following summary together with the entire prospectus, including the more detailed information regarding us and the common stock being sold in this offering, and our financial statements and notes thereto appearing elsewhere in this prospectus. You should carefully consider, among other things, the matters discussed in the section entitled Risk Factors beginning on page 2 before deciding to invest in our common stock. Unless otherwise stated or the context requires otherwise, references in this prospectus to we, our, us or the Company refer to Cross Border Resources, Inc. and its subsidiaries. Overview of the Company Cross Border Resources, Inc. is an oil and gas exploration company with its headquarters in San Antonio, Texas, resulting from the business combination of Doral Energy Corp ( Doral ) and Pure Gas Partners II, L.P. ( Pure L.P. ), effective January 3, 2011. The business combination of Doral and Pure L.P. was completed by the transfer of all of Pure L.P. s oil and gas assets and liabilities to its wholly owned subsidiary, Pure Energy Group, Inc. ( Pure Sub ), and the subsequent merger (the Pure Merger ) of Pure Sub with a wholly owned subsidiary of Doral incorporated for the purpose of completing the Pure Merger. The Company currently owns over 800,000 gross (approximately 300,000 net) mineral and lease acres within the state of New Mexico. Over 31,000 of these net acres exist within the Permian Basin. Unlike many exploration and production organizations, 99% of our acreage consists of either owned mineral rights or leases held by production. Current development of the Company s acreage is focused on our prospective Bone Spring acreage located in the heart of the 1st and 2nd Bone Spring play. This play encompasses approximately 4,390 square miles across both New Mexico and Texas. The Company currently owns varying, non-operated working interest in both Eddy and Lea counties, New Mexico, in conjunction with our working interest partners who include Cimarex, Apache, and Mewbourne, all of whom having significant footprints within this play. Additional development is currently underway on our Abo, Yeso, and San Andres acreage with our other working interest partners, Concho Resources and Cimarex. The Company currently has drilling inventory across these formations with varying non-operated working interests ranging from 3% to 90%. The Company s principal executive offices are located at 22610 US Highway 281 N., Suite 218, San Antonio, TX 78258, and our telephone number is (210) 226-6700. Our website address is http://www.xbres.com. The information on, or that can be accessed through, our website is not part of this prospectus. The Offering Common stock offered by the selling stockholders Up to 7,209,375 shares of our common stock issued or issuable upon the exercise of outstanding warrants. Use of Proceeds Selling stockholders will receive the proceeds from the sale of common stock covered by this prospectus. We will not receive any proceeds from the sale of the shares of common stock covered by this prospectus. We will receive proceeds from any cash exercise of the warrants whose underlying shares of common stock are covered by this prospectus. We intend to use proceeds from the cash exercise of the warrants, if any, for general working capital. CALCULATION OF REGISTRATION FEE Title of Each Class of Securities to be Registered Amount to be Registered (1) Proposed Maximum Offering Price Per Share (2) Proposed Maximum Aggregate Offering Price (2) Amount of Registration Fee Common Stock, $0.001 par value per share 7,209,375 shares $ 1.97 $ 14,202,469 $ 1,649 (1) Pursuant to Rule 416 under the Securities Act of 1933, as amended, the number of shares of common stock registered hereby includes such indeterminate number of additional shares of common stock as may become issuable as a result of stock splits, stock dividends or similar transactions. (2) Estimated solely for the purposes of calculating the registration fee pursuant to Rule 457(c) under the Securities Act of 1933, as amended, based upon the average high and low prices of the common stock on July 19, 2011, as reported on the OTCQX. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. As of June 30, 2011, we had 16,151,946 shares of common stock outstanding, warrants outstanding to purchase an aggregate of 3,603,125 shares of common stock, and options to directors, officers and employees outstanding to purchase an aggregate of 1,352,500 shares of common stock.
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001373690_indigenous_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001373690_indigenous_prospectus_summary.txt
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+PROSPECTUS SUMMARY This Prospectus, and any supplement to this Prospectus include "forward-looking statements". To the extent that the information presented in this Prospectus discusses financial projections, information or expectations about our business plans, results of operations, products or markets, or otherwise makes statements about future events, such statements are forward-looking. Such forward-looking statements can be identified by the use of words such as "intends", "anticipates", "believes", "estimates", "projects", "forecasts", "expects", "plans" and "proposes". Although we believe that the expectations reflected in these forward-looking statements are based on reasonable assumptions, there are a number of risks and uncertainties that could cause actual results to differ materially from such forward-looking statements. These include, among others, the cautionary statements in the "Risk Factors" section beginning on page 9 of this Prospectus and the "Management's Discussion and Analysis of Financial Position and Results of Operations" section elsewhere in this Prospectus. OUR BUSINESS We were incorporated under the laws of the State of Nevada on July 20, 2006 under the name "Zebra Resources Incorporated (aka "Zebra Resources Inc."). Since our inception, we have been an exploration stage company engaged in the acquisition, exploration and development of mineral properties. Effective March 17, 2010, we changed our name from Zebra Resources Incorporated. to American Paramount Gold Corp. On July 28, 2010 we obtained an extra-provincial license to carry on business in the Province of Ontario, Canada. Our Ontario Corporation Number is 1827852. Our principal executive offices are located at 130 King St. West, Suite 3670, Toronto Ontario, Canada, M5X 1A9. Our telephone number is (416) 214-5640. Our fiscal year end is August 31. On April 16, 2010, we entered into an option agreement to acquire a 100% long-term lease interest in 189 unpatented mining claims situated in the Walker Lane Structural Belt in Nye County, Nevada (the "Cap Gold Project"). The 189 claims making up the Cap Gold Project form a contiguous block of approximately 3,960 acres (1,602 hectares). We paid $125,000 to secure the option, giving us the right to acquire a 100% long-term lease interest in the Cap Gold Project. To exercise the option we must: (i) make ongoing yearly advance production royalty cash payments during the term of the agreement of $125,000 in years two (2) through five (5), $150,000 in years six (6) through twelve (12), $200,000 in years 13 through 20 and $300,000 in years 21 through 30; (ii) incur expenditures on exploration of the Cap Gold Project of not less than an aggregate of $1,250,000 over five (5) years; and (iii) make production royalty payments from production from the property after the advance production royalty cash payments described above have been repaid to our company from production from the property. At our company's election, the production royalty may be calculated either on a sliding scale or on a fixed production royalty basis, and must range from 1% to a maximum of 3%. As a result of our acquisition of the option in respect of the Cap Gold Project, we ceased to be a shell company. Our current operational focus is to conduct exploration activities on the Cap Gold Project and to complete the terms of the Cap Gold option agreement. Since we are an exploration stage company, there is no assurance that a commercially viable mineral reserve exists on any of our current or future properties. To date, we do not know if an economically viable mineral reserve exists on our property and there is no assurance that we will discover one. Even if we do eventually discover a mineral reserve on our property, there can be no assurance that we will be able to develop our property into a producing mine and extract those resources. Both mineral exploration and development involve a high degree of risk and few properties which are explored are ultimately developed into producing mines. THE OFFERING The 5,550,000 shares of our common stock being registered by this Prospectus represent approximately 8.67% of our issued and outstanding common stock as of February 1, 2011. Securities Offered: 5,550,000 shares of common stock offered by 6 selling security holders. Initial Offering Price: The selling security holders will sell at prevailing market prices or privately negotiated prices. Minimum Number of Securities to be Sold in this Offering: None Securities Issued and As of February 1, 2011 we had 64,000,000 issued to be Issued: and outstanding shares of our common stock, and 5,400,000 outstanding and vested options with each option to purchase one share of our common stock at a price of $0.68 per share. Of the outstanding options 400,000 are exercisable until October 6, 2012, and 5,000,000 are exercisable until October 6, 2015. On December 17, 2010, we entered into a convertible loan agreement with Monaco Capital Inc., wherein Monaco Capital Inc. has agreed to loan our company up to $5,000,000. The convertible loan agreement replaced the original agreement with Monaco Capital Inc., dated April 22, 2010 and provided that the principal of $500,933 advanced under it, along with $20,664 in unpaid, accrued interest, to and including December 17, 2010, be treated as if issued under the terms of the new agreement. The loan is unsecured and bears interest at the rate of 10% per annum payable on the due date. The loan is convertible into securities of the Company at a conversion price calculated as the mean volume weighted average price for the Company's common stock during the ten (10) trading day period ending on the latest complete trading day prior to the conversion date. The principal amount of the loan and accrued interest is due and payable one year from the advancement date. We may at any time during the term of the loan prepay any sum up to the full amount of the loan and accrued interest then outstanding for an additional 10% of such amount. We have no other issued and outstanding convertible securities. All of the common stock to be sold under this Prospectus will be sold by existing stockholders. Our common stock is quoted on the OTC Bulletin Board under the symbol APGA. The trading of securities on the OTC Bulletin Board is often sporadic and investors may have difficulty buying and selling or obtaining market quotations, which may have a depressive effect on the market price for our common stock. Proceeds: We will not receive any proceeds from the sale of our common stock by the selling security holders. FINANCIAL SUMMARY INFORMATION All references to currency in this Prospectus are to U.S. Dollars, unless otherwise noted. The following table sets forth selected financial information, which should be read in conjunction with the information set forth in the "Management's Discussion and Analysis of Financial Position and Results of Operations" section and the accompanying financial statements and related notes included elsewhere in this Prospectus. INCOME STATEMENT DATA <TABLE> <CAPTION> From Inception Three Months From Inception (July 20, 2006) to Ended Year Ended Year Ended (July 20, 2006) to November 30, November 30, August 31, August 31, August 31, August 31, August 31, 2010 2010 2010 2009 2008 2007 2010 ---------- ---------- ---------- ---------- ---------- ---------- ---------- <S> <C> <C> <C> <C> <C> <C> <C> Revenues -- -- -- -- -- -- -- Operating Expenses 3,460,771 2,714,713 674,503 17,820 20,102 15,058 746,058 Other Expenses 28,570 13,781 14,789 -- -- -- 14,789 Net Loss 3,489,341 2,728,494 689,292 17,820 20,102 15,058 760,847 Net Loss Per Share -- 0.04 0.01 0.00 0.00 0.00 -- BALANCE SHEET DATA Three Months Ended November 30, August 31, August 31, August 31, August 31, 2010 2010 2009 2008 2007 ---------- ---------- ---------- ---------- ---------- ($) ($) ($) ($) ($) Working Capital (Deficiency) (552,704) (307,203) 8,445 26,265 46,367 Total Assets 193,975 221,258 9,095 28,241 56,367 Total Current Assets 47,779 72,869 9,095 28,241 56,367 Total Liabilities 600,483 380,072 650 1,976 10,000 Total Current Liabilities 600,483 380,072 650 1,976 10,000 </TABLE>
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001375151_zogenix_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001375151_zogenix_prospectus_summary.txt
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+PROSPECTUS SUMMARY This summary does not contain all of the information you should consider before buying shares of our common stock. You should read the entire prospectus carefully, especially the Risk Factors section and our financial statements and the related notes appearing at the end of this prospectus, before deciding to invest in shares of our common stock. Unless the context requires otherwise, references in this prospectus to Zogenix, we, us and our refer to Zogenix, Inc., including its consolidated subsidiary, Zogenix Europe Limited. Overview We are a pharmaceutical company commercializing and developing products for the treatment of central nervous system disorders and pain. Our first commercial product, Sumavel DosePro (sumatriptan injection) Needle-free Delivery System, was launched in January 2010. Sumavel DosePro offers fast-acting, easy-to-use, needle-free subcutaneous administration of sumatriptan for the acute treatment of migraine and cluster headache in a pre-filled, single-use delivery system. Sumavel DosePro is the first drug product approved by the U.S. Food and Drug Administration, or FDA, that allows for the needle-free, subcutaneous delivery of medication. Our lead product candidate, Zohydro, is a novel, oral, single-entity extended-release formulation of hydrocodone currently in Phase 3 development for the treatment of moderate to severe chronic pain in patients requiring around-the-clock opioid therapy. We reported positive top-line results from our pivotal Phase 3 efficacy trial for Zohydro in August 2011 and expect to submit a New Drug Application, or NDA, with the FDA by early 2012. Sumavel DosePro and Zohydro each has the potential to address significant unmet medical needs and become important and widely-used additions to the treatment options available to patients and physicians in the United States multi-billion dollar migraine and chronic pain markets, respectively. Sumavel DosePro may serve as a treatment alternative to oral and nasal triptans and may offer simple, convenient administration when compared to traditional, needle-based sumatriptan injection. According to its Prescribing Information, Sumavel DosePro can provide onset of migraine pain relief in as little as ten minutes for some patients. As a result, we believe that Sumavel DosePro has the potential to be prescribed by a broad physician audience, especially for difficult to treat migraine episodes. Migraine is a syndrome that affects approximately 30 million people in the United States, according to a 2010 National Headache Foundation press release. Triptans are the class of drugs most often prescribed for treating migraines. In the United States in the 12 months ended December 2010, triptans generated sales of approximately $3.5 billion and sumatriptan, including branded and generic forms, represented the largest market share of the seven approved triptans, with sales of approximately $2.1 billion, according to Wolters Kluwer Pharma Solutions (Source PHAST Institution/Retail). We launched the commercial sale of Sumavel DosePro in the United States in January 2010 with our co-promotion partner, Astellas Pharma US, Inc., or Astellas. Our sales and marketing organization is comprised of approximately 100 professionals. Our field sales force of approximately 80 representatives promotes Sumavel DosePro primarily to neurologists and other prescribers of migraine medications, including headache clinics and headache specialists. To build upon our success in growing Sumavel DosePro prescriptions, we have initiated activities to expand our field sales force in the United States to approximately 95 sales representatives by the end of the third quarter of 2011. Our promotional efforts are complemented by our collaboration with Astellas and approximately 400 of its sales representatives, who are promoting Sumavel DosePro primarily to primary care physicians, OB/GYNs, emergency medicine physicians and urologists in the United States. We also have entered into a partnership for Sumavel DosePro with Desitin Arzneimittel GmbH to accelerate development and regulatory approvals in Europe and further enhance the global commercial potential of Sumavel DosePro. Table of Contents We launched our first product, Sumavel DosePro , using our proprietary DosePro technology in January 2010. Table of Contents Sumavel DosePro has demonstrated significant quarterly growth in total prescriptions since its launch in January 2010. For the six months ended June 30, 2011, we recognized $16.2 million in net product revenue from sales of Sumavel DosePro, represented by more than 32,000 aggregate dispensed prescriptions (Source PHAST Retail, January 2011 June 2011). Sumavel DosePro continues to add new and repeat prescribers in both the neurology and primary care settings. The product is also gaining use from a range of patient segments, including new triptan users, patients being converted to the product from other migraine drugs and patients who have been prescribed Sumavel DosePro and also have other triptan prescriptions. This experience is consistent with our belief that many patients will selectively use Sumavel DosePro for their more challenging migraine episodes, while continuing to use oral triptans to treat their less severe migraine episodes. Through our ongoing efforts with the largest commercial health plans, Sumavel DosePro is achieving broad coverage in the United States, with a reimbursement claims approval rate of approximately 80% since launch through June 2011 (Source Dynamic Claims January 2010 June 2011). Our lead product candidate, Zohydro, is a novel, oral, single-entity extended-release formulation of hydrocodone currently in Phase 3 development for the treatment of moderate to severe chronic pain in patients requiring around-the-clock opioid therapy. Zohydro utilizes Elan Pharma International Limited s, or Elan s, proprietary Spheroidal Oral Drug Absorption System, or SODAS Technology, which serves to enhance the release profile of hydrocodone to provide consistent 12-hour pain relief relative to existing immediate-release combination formulations. Most marketed hydrocodone products contain the analgesic combination ingredient acetaminophen, which if taken in high quantities over time can cause liver toxicity. In June 2009, the FDA organized a joint advisory committee meeting that highlighted the public health problem of liver injury related to the use of acetaminophen in both over-the-counter and prescription products. Zohydro, if approved, may represent the first available extended-release version of hydrocodone and also the first hydrocodone product that is not combined with another analgesic. As a result, we believe Zohydro could generate sales from both patients who are using immediate-release opioid products on a chronic basis and patients already using extended-release opioids. We initiated the Phase 3 clinical development program for Zohydro in March 2010 and reported positive top-line results from our pivotal Phase 3 efficacy trial in August 2011. The trial successfully met its primary efficacy endpoint in demonstrating a significant difference (p=0.008) between the mean changes in daily pain intensity Numeric Rating Scale (NRS) scores between Zohydro and placebo groups. We expect to submit an NDA with the FDA by early 2012. We in-licensed exclusive U.S. rights to Zohydro from Elan in 2007. The American Pain Society estimated in 1999 that 9% of the U.S. adult population suffers from moderate to severe non-cancer related chronic pain. Chronic pain can be treated with both immediate-release and extended-release opioids. We define our target market for Zohydro as prescription, non-injectable codeine-based and extended-release morphine-based pain products. This market generated U.S. sales of approximately $13.5 billion for the year ended December 2010, based on average wholesale price, on approximately 206 million prescriptions. During the same period, existing hydrocodone products, the most commonly prescribed pharmaceutical products in the United States, generated $3.2 billion in sales on approximately 128 million prescriptions. (Source PHAST Retail). We believe Zohydro has the potential to be an important therapeutic alternative to existing hydrocodone products, including the branded product Vicodin and its generic equivalents. We are also developing Relday, a proprietary, long-acting injectable formulation of risperidone using Durect Corporation s SABER controlled-release formulation technology in combination with our DosePro needle-free, subcutaneous drug delivery system through a July 2011 development and license agreement with Durect. Risperidone is used to treat the symptoms of schizophrenia and bipolar disorder in adults and teenagers 13 years of age and older. If successfully developed and approved, we believe Relday may be the first once-monthly, subcutaneous antipsychotic product available in a needle-free delivery system. The existing long-acting injectable risperidone product achieved global net sales of $1.5 billion in 2010, according to industry reports, and requires twice monthly, 2 mL intramuscular injections with a 21 gauge or larger needle. We believe the combination of our DosePro technology with Durect s SABER controlled-release technology will allow Relday Table of Contents to be delivered subcutaneously without a needle on a once-monthly basis with a simplified dosing regimen, improved pharmacokinetic profile and significant reduction in injection volume versus currently marketed long-acting injectable antipsychotics. Based upon these characteristics, Relday may provide an important alternative to currently marketed long-acting injectable antipsychotics as well as a new long-acting treatment option for patients that currently use daily oral antipsychotic products. We intend to initiate clinical studies for Relday in patients with schizophrenia in early 2012 following the filing of an investigational new drug application. Our DosePro technology is a novel, patent-protected, needle-free drug delivery system designed for self-administration of a pre-filled, single dose of liquid drug. We believe the FDA s approval of Sumavel DosePro represents an important validation of the technology. Results from our pre-clinical and clinical studies demonstrate that DosePro can be used successfully with small molecules and biological products, including protein therapeutics and monoclonal antibodies. We are building our internal product pipeline by investigating proven drugs that can be paired with DosePro to enhance their benefits and commercial attractiveness, such as with Relday. In addition to Relday, we are also evaluating the market potential, formulation requirements and clinical development pathway of an additional central nervous system, or CNS, compound that could be paired with DosePro to enhance its commercial attractiveness. We are also seeking to capitalize on our DosePro technology by out-licensing it to potential partners enabling them to enhance, differentiate or extend the life cycle of their proprietary injectable products. We acquired the DosePro technology and related intellectual property from Aradigm Corporation in August 2006. Our management team has a proven clinical, regulatory, business development and commercialization track record at Zogenix and prior organizations, as well as significant expertise in CNS disorders and pain. Since our inception in 2006, our management team has successfully acquired, developed, obtained regulatory approval for and launched the commercial sale of Sumavel DosePro and completed a significant primary care co-promotion agreement in the United States and secured a European partnership for the product. We also completed in-licensing transactions for Zohydro and Relday and initiated Phase 3 development for Zohydro. Investment Highlights We believe we are differentiated by the unique characteristics of our marketed product, Sumavel DosePro, and our lead product candidate, Zohydro, each of which addresses large market opportunities, as well as our established commercial infrastructure, our innovative technology and the depth of experience of our management team. The following represents the key attributes that help differentiate our company: Fully-integrated pharmaceutical company with established commercial infrastructure. Sumavel DosePro, a differentiated entrant in the migraine market that has demonstrated significant quarterly growth in total prescriptions since its launch. Zohydro, a novel, extended-release chronic pain therapy with positive top-line pivotal Phase 3 efficacy trial results and anticipated NDA submission by early 2012. Validated, proprietary DosePro technology with broad range of potential applications, including our newest product candidate, Relday, a proprietary, long-acting injectable formulation of risperidone. Experienced management team with unique commercial and development expertise, including CNS sales and marketing experience. Table of Contents Our Strategy Our core strategy is to commercialize and develop differentiated CNS and pain therapeutics that can address significant unmet medical needs and overcome limitations of existing products. Key elements of our strategy include: Increasing sales and continuing to drive patient and physician adoption of Sumavel DosePro in the United States. Developing and commercializing Zohydro for the treatment of moderate to severe chronic pain. Expanding our product pipeline in CNS disorders and/or pain, including through the development of our newest product candidate, Relday. Obtaining regulatory approvals for Sumavel DosePro outside of the United States. Out-licensing our proprietary DosePro technology. Securing rights to complementary products and product candidates that address CNS disorders and/or pain. Our Risks Our business and our ability to execute our business strategy are subject to a number of risks that you should be aware of before you decide to buy our common stock. In particular, you should consider the following risks, which are discussed more fully in
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001375200_nupathe_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001375200_nupathe_prospectus_summary.txt
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+PROSPECTUS SUMMARY The following summary provides an overview of certain information about our company and the offering and may not contain all the information that may be important to you. This summary is qualified in its entirety by and should be read together with the information contained in, or incorporated by reference into, other parts of this prospectus. You should carefully read this entire prospectus, including the "Risk Factors" section, and the information incorporated by reference into this prospectus, before making a decision about whether to invest in our securities. Company Overview We are a specialty pharmaceutical company focused on the development and commercialization of branded therapeutics for diseases of the central nervous system, including neurological and psychiatric disorders. Our most advanced product candidate, NP101 (also known as Zelrix), is a single-use, transdermal system applied as a patch to the upper arm or thigh for the treatment of acute migraine. NP101 incorporates our proprietary SmartRelief technology. SmartRelief uses a mild electrical current to actively deliver sumatriptan through the skin in a process called iontophoresis. We submitted a New Drug Application, or NDA, for NP101 to the United States Food and Drug Administration, or FDA, in October 2010. The NDA is supported by Phase III clinical data in which NP101 was evaluated in 796 patients with 9,234 NP101 patch applications. The Prescription Drug User Fee Act date, or PDUFA date, for our NDA is August 29, 2011. The PDUFA date is the target date for the FDA to complete its review of the NDA. If approved, NP101 will be the first transdermal patch for the treatment of migraine. Subject to the approval of our NDA, we plan to build our own specialty sales force in the U.S. to launch NP101. Migraine is a debilitating neurological disease that affects approximately 31 million people in the U.S. In 2010, according to IMS Health Inc., or IMS, a leading provider of pharmaceutical industry market data, U.S. sales of prescription products for migraine exceeded $1.7 billion, over 97% of which were for a class of medication called triptans. Sumatriptan, the active ingredient in NP101, is the most prescribed triptan and is currently available in oral, nasal and injectable formulations. In a majority of their migraines, many patients suffer from one or more significant gastrointestinal problems, which include nausea, vomiting and a compromised ability to digest, known as decreased gastric motility. Nausea and vomiting impede the use of oral medications, while reduced gastric motility can result in low and inconsistent absorption of oral medications which we believe may cause migraine patients, or migraineurs, to fail to respond consistently to such medications. The American Academy of Neurology, or AAN, guidelines recommend a non-oral route of administration for migraineurs who experience nausea or vomiting as significant migraine symptoms. Despite this recommendation and the prevalence of nausea and vomiting, IMS reported that non-oral formulations comprised only 4% of triptan units sold in the U.S. in 2010. We believe the frequency of adverse events associated with non-oral migraine treatments, such as nasal and injectable formulations, contributes to the low adoption rate of these medications. We believe NP101 will be an attractive treatment option for migraineurs who suffer from nausea or vomiting with migraine and for those who experience inconsistent relief or adverse events from their current treatment. We also have two other proprietary product candidates in preclinical development that address large market opportunities, NP201 for the continuous symptomatic treatment of Parkinson's disease, which we intend to partner for further development, and NP202 for the long-term treatment of schizophrenia and bipolar disorder. FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Table of Contents Risks Associated with Our Business Our business is subject to a number of risks of which you should be aware before making an investment decision. These risks are described in more detail in the "Risk Factors" section of this prospectus immediately following this prospectus summary. These risks include the following: We have not received, and we may not receive, marketing approval for, or commercial revenues from, NP101 or any other product candidate; The commercial success of NP101 and any other product candidate that we develop, if approved, will depend upon significant market acceptance among physicians and patients and the availability of adequate reimbursement from third party payors; If we are unable to establish effective marketing and sales capabilities or enter into agreements with third parties to perform these functions, we will not be able to commercialize NP101 or any other product candidate that we develop, if approved; We have incurred significant operating losses since inception and anticipate that we will incur losses for the foreseeable future. If we fail to obtain additional financing, we may not be able to complete development of and commercialize NP101 or any other product candidates; and We use third parties to manufacture all of our product candidates, including NP101, which increases the risk that we may not be able to obtain sufficient commercial and clinical supplies of our product candidates at acceptable costs. Our Corporate Information We were incorporated under the laws of the State of Delaware in January 2005. Our principal executive offices are located at 227 Washington Street, Suite 200, Conshohocken, Pennsylvania 19428 and our telephone number is (484) 567-0130. Our website address is www.nupathe.com. We have included our website address in this prospectus solely as an inactive textual reference. The information contained on, or that can be accessed through, our website is not part of this prospectus. In this prospectus, unless otherwise stated or the context otherwise indicates, references to "NuPathe," "the Company," "we," "us," "our" and similar references refer to NuPathe Inc. The name NuPathe is our registered trademark. Zelrix , SmartRelief and LAD are our trademarks. All other trademarks, trade names and service marks appearing in this prospectus are the property of their respective owners. NUPATHE INC. (Exact name of registrant as specified in its charter) (1)The number of shares of our common stock outstanding as of July 15, 2011 is 14,581,580, and excludes: 1,497,878 shares of common stock issuable upon the exercise of options outstanding as of July 15, 2011 at a weighted average exercise price of $4.52 per share; 200,268 shares of common stock issuable upon the exercise of warrants outstanding as of July 15, 2011 at a weighted average exercise price of $7.60 per share; 641,640 additional shares of common stock available for future issuance as of July 15, 2011 under our Amended and Restated 2010 Omnibus Incentive Compensation Plan, or our 2010 Plan; and 187,150 shares of common stock available for future issuance as of July 15, 2011 under our 2010 Employee Stock Purchase Plan Unless otherwise indicated, all information in this prospectus assumes no exercise of the outstanding options or the warrants described above. On August 2, 2011, we entered into a common stock purchase agreement (referred to in this prospectus as the "Purchase Agreement"), with Aspire Capital Fund, LLC, an Illinois limited liability company (referred to in this prospectus as "Aspire Capital" or the "selling stockholder"), which provides that, upon the terms and subject to the conditions and limitations set forth therein, Aspire Delaware (State or other jurisdiction of incorporation or organization) 2834 (Primary Standard Industrial Classification Code Number) 20-2218246 (I.R.S. Employer Identification Number) 227 Washington Street, Suite 200 Conshohocken, Pennsylvania 19428 (484) 567-0130 (Address, including zip code and telephone number, including area code, of registrant's principal executive offices) Table of Contents Capital is committed to purchase up to an aggregate of $30.0 million of our shares of common stock over the approximately 24-month term of the Purchase Agreement. In consideration for entering into the Purchase Agreement, concurrently with the execution of the Purchase Agreement, we issued to Aspire Capital 84,866 shares of our common stock, which we refer to as the Commitment Shares, as a commitment fee. Upon execution of the Purchase Agreement, we sold to Aspire Capital 70,721 shares of common stock, which we refer to as the Initial Purchase Shares. Concurrently with entering into the Purchase Agreement, we also entered into a registration rights agreement with Aspire Capital, which we refer to as the Registration Rights Agreement, in which we agreed to file one or more registration statements, including the registration statement of which this prospectus is a part, as permissible and necessary to register under the Securities Act of 1933, as amended, or the Securities Act, the sale of the shares of our common stock that have been and may be issued to Aspire Capital under the Purchase Agreement. As of July 15, 2011, there were 14,581,580 shares of our common stock outstanding. If all of the 2,901,734 shares of our common stock offered hereby were issued and outstanding as of the date hereof, such shares would represent approximately 17% of the total common stock outstanding as of the date hereof. The number of shares of our common stock ultimately offered for sale by Aspire Capital is dependent upon the number of shares purchased by Aspire Capital under the Purchase Agreement. Pursuant to the Purchase Agreement and the Registration Rights Agreement, we are registering under the Securities Act 2,901,734 shares of our common stock, which includes the Commitment Shares and the Initial Purchase Shares that have already been issued to Aspire Capital and 2,746,147 shares of common stock which we may issue to Aspire Capital after this registration statement is declared effective under the Securities Act. All 2,901,734 shares of common stock are being offered pursuant to this prospectus. Under the Purchase Agreement, we have the right but not the obligation to sell more than the 2,901,734 shares of common stock offered in this prospectus to Aspire Capital. If we elect to sell more than the 2,901,734 shares of common stock offered hereby, we must first obtain the approval of our stockholders to do so and register under the Securities Act the sale of any additional shares we may elect to sell to Aspire Capital before we can put such additional shares to Aspire Capital under the Purchase Agreement. After the U.S. Securities and Exchange Commission (the "SEC") has declared effective the registration statement of which this prospectus is a part, on any trading day on which the closing sale price of our common stock is not less than $4.00, or the Floor Price, we have the right, in our sole discretion, to present Aspire Capital with a purchase notice (each, a "Purchase Notice"), directing Aspire Capital (as principal) to purchase up to 100,000 shares of our common stock per trading day, provided that the aggregate price of such purchase shall not exceed $500,000 per trading day, up to $30.0 million of our common stock in the aggregate at a per share price (the "Purchase Price") calculated by reference to the prevailing market price of our common stock (as more specifically described below). In addition, on any date on which we submit a Purchase Notice to Aspire Capital in an amount equal to the lesser of (i) 100,000 shares and (ii) the number of shares with an aggregate purchase price of $500,000, we also have the right, in our sole discretion, to present Aspire Capital with a volume-weighted average price purchase notice (each, a "VWAP Purchase Notice") directing Aspire Capital to purchase an amount of stock equal to up to 30% of the aggregate shares of the Company's common stock traded on The NASDAQ Global Market on the next trading day (the "VWAP Purchase Date"), subject to a maximum number of shares we may determine (the "VWAP Purchase Share Volume Maximum") and a minimum trading price (the "VWAP Minimum Price Threshold") (as more specifically described below). The purchase price per Purchase Share pursuant to such VWAP Purchase Notice (the "VWAP Purchase Price") is calculated by reference to the prevailing market price of our common stock (as more specifically described below). Jane H. Hollingsworth Chief Executive Officer NuPathe Inc. 227 Washington Street, Suite 200 Conshohocken, Pennsylvania 19428 (484) 567-0130 (Name, address, including zip code and telephone number, including area code, of agent for service) Table of Contents The Purchase Agreement provides that the Company and Aspire Capital shall not effect any sales under the Purchase Agreement on any purchase date where the closing sale price of our common stock is less than the Floor Price. This Floor Price and the respective prices and share numbers in the preceding paragraphs shall be appropriately adjusted for any reorganization, recapitalization, non-cash dividend, stock split, reverse stock split or other similar transaction. There are no trading volume requirements or restrictions under the Purchase Agreement, and we will control the timing and amount of any sales of our common stock to Aspire Capital. Aspire Capital has no right to require any sales by us, but is obligated to make purchases from us as we direct in accordance with the Purchase Agreement. There are no limitations on use of proceeds, financial or business covenants, restrictions on future fundings, rights of first refusal, participation rights, penalties or liquidated damages in the Purchase Agreement. The Purchase Agreement may be terminated by us at any time, at our discretion, without any penalty or cost to us. Copies to: Michael F. Marino, Esq. Vice President and General Counsel NuPathe Inc. 227 Washington Street, Suite 200 Conshohocken, Pennsylvania 19428 (484) 567-0130 Michael N. Peterson, Esq. Morgan, Lewis & Bockius LLP 1701 Market Street Philadelphia, Pennsylvania 19103 (215) 963-5000 Table of Contents
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001377720_cyberdefen_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001377720_cyberdefen_prospectus_summary.txt
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+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001381578_alliance_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001381578_alliance_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..a695b05a116cab7fa7417f6aa2915a8df529fad0
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+Prospectus Summary This summary highlights material information about us and this offering, but does not contain all of the information that you should consider before investing in our Notes. The following summary is qualified in its entirety by the more detailed information and our consolidated financial statements and the accompanying notes included elsewhere or incorporated by reference into this prospectus. You should read this entire prospectus and the information incorporated by reference herein carefully, including the Risk Factors included and incorporated by reference in this prospectus and our consolidated financial statements and the accompanying notes incorporated by reference into this prospectus, before investing. This prospectus and the documents incorporated by reference include forward-looking statements that involve risks and uncertainties. See Cautionary Note Regarding Forward-Looking Statements. Unless otherwise specified or the context requires otherwise, the terms U.S. Concrete, the Company, we, us, our, or USCR, refer to U.S. Concrete, Inc. and its subsidiaries. Selling noteholders refers to the selling noteholders named in the section of this prospectus entitled Selling Noteholders and certain of their transferees after the date of this prospectus. Our Company We are a major producer of ready-mixed concrete, precast concrete products and concrete-related products in select markets in the United States. We operate our business through our ready-mixed concrete and concrete-related products segment and our precast concrete products segment. We are a leading producer of ready-mixed concrete or precast concrete products in substantially all the markets in which we have operations. Ready-mixed and precast concrete products are important building materials that are used in a vast majority of commercial, residential and public works construction projects. All of our operations are in (and all of our sales are made within) the United States. We operate principally in Texas, California and New Jersey/New York, with those markets representing approximately 36%, 25%, and 19%, respectively, of our consolidated revenues from continuing operations for the year ended December 31, 2010. According to publicly available industry information, those states represented an aggregate of 28% of the consumption of ready-mixed concrete in the United States in 2010 (Texas, 13.1%; California, 9.3%; and New Jersey/New York, 5.4%). Our consolidated revenues from continuing operations for the year ended December 31, 2010 were $455.7 million, of which we derived approximately 87.7% from our ready-mixed concrete and concrete-related products segment and 12.3% from our precast concrete products segment. As of August 31, 2011, we had 102 fixed and 11 portable ready-mixed concrete plants, seven precast concrete plants and seven aggregates facilities. During 2010, these plants and facilities produced approximately 3.8 million cubic yards of ready-mixed concrete and 3.1 million tons of aggregates. We lease two of the seven aggregates facilities to third parties and retain a royalty on production from those facilities. Our ready-mixed concrete and concrete-related products segment engages principally in the formulation, preparation and delivery of ready-mixed concrete to the job sites of our customers. We also provide services intended to reduce our customers overall construction costs by lowering the installed, or in-place, cost of concrete. These services include the formulation of mixtures for specific design uses, on-site and lab-based product quality control, and customized delivery programs to meet our customers needs. Our marketing efforts primarily target concrete sub-contractors, general contractors, governmental agencies, property owners and developers and home builders whose focus extends beyond the price of ready-mixed concrete to product quality, on-time delivery and reduction of in-place costs. We generally do not provide paving or other finishing services, which construction contractors or subcontractors typically perform. To a lesser extent, this segment is also engaged in the mining and sale of aggregates and the resale of building materials, primarily to our ready-mixed concrete customers. These businesses are generally complementary to our ready-mixed concrete operations and provide us opportunities to cross-sell various products in markets where we sell both ready-mixed concrete and concrete-related products. We provide our ready-mixed concrete and concrete-related products from our continuing operations in north and west Texas, northern California, New Jersey, New York, Washington, D.C. and Oklahoma. Our precast concrete products segment produces precast concrete products at seven plants in three states, with five plants in California, one in Arizona and one in Pennsylvania. Our customers choose precast technology for a variety of architectural applications, including free-standing walls used for landscaping, soundproofing and security walls, panels used to clad a building fa ade and storm water drainage. Our operations also specialize in a variety of finished products, among which are utility vaults, manholes, catch basins, highway barriers, curb inlets, pre-stressed bridge girders, concrete piles and custom-designed architectural products. For a description of our business, financial condition, results of operations and other important information regarding the Company and our consolidated financial statements and the accompanying notes, we refer you to our filings with the Securities and Table of Contents Primary State or Other Standard I.R.S. Jurisdiction of Industrial Employer Incorporation or Classification Identification Name Organization Code Number Number Superior Concrete Materials, Inc. District of Columbia 3272 52-1046503 Titan Concrete Industries, Inc. Delaware 3272 76-0616374 USC Atlantic, Inc. Delaware 3272 20-4166002 USC Management Co., LLC Delaware 3272 27-1015638 USC Payroll, Inc. Delaware 3272 76-0630665 USC Technologies, Inc. Delaware 3272 20-4166055 U.S. Concrete On-Site, Inc. Delaware 3272 76-0630662 U.S. Concrete Texas Holdings, Inc. Delaware 3272 20-4166120 The address of each of the additional registrants is c/o U.S. Concrete, Inc., 2925 Briarpark, Suite 1050, Houston, Texas 77042. TABLE OF CONTENTS Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001381579_kurtz_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001381579_kurtz_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..a695b05a116cab7fa7417f6aa2915a8df529fad0
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+Prospectus Summary This summary highlights material information about us and this offering, but does not contain all of the information that you should consider before investing in our Notes. The following summary is qualified in its entirety by the more detailed information and our consolidated financial statements and the accompanying notes included elsewhere or incorporated by reference into this prospectus. You should read this entire prospectus and the information incorporated by reference herein carefully, including the Risk Factors included and incorporated by reference in this prospectus and our consolidated financial statements and the accompanying notes incorporated by reference into this prospectus, before investing. This prospectus and the documents incorporated by reference include forward-looking statements that involve risks and uncertainties. See Cautionary Note Regarding Forward-Looking Statements. Unless otherwise specified or the context requires otherwise, the terms U.S. Concrete, the Company, we, us, our, or USCR, refer to U.S. Concrete, Inc. and its subsidiaries. Selling noteholders refers to the selling noteholders named in the section of this prospectus entitled Selling Noteholders and certain of their transferees after the date of this prospectus. Our Company We are a major producer of ready-mixed concrete, precast concrete products and concrete-related products in select markets in the United States. We operate our business through our ready-mixed concrete and concrete-related products segment and our precast concrete products segment. We are a leading producer of ready-mixed concrete or precast concrete products in substantially all the markets in which we have operations. Ready-mixed and precast concrete products are important building materials that are used in a vast majority of commercial, residential and public works construction projects. All of our operations are in (and all of our sales are made within) the United States. We operate principally in Texas, California and New Jersey/New York, with those markets representing approximately 36%, 25%, and 19%, respectively, of our consolidated revenues from continuing operations for the year ended December 31, 2010. According to publicly available industry information, those states represented an aggregate of 28% of the consumption of ready-mixed concrete in the United States in 2010 (Texas, 13.1%; California, 9.3%; and New Jersey/New York, 5.4%). Our consolidated revenues from continuing operations for the year ended December 31, 2010 were $455.7 million, of which we derived approximately 87.7% from our ready-mixed concrete and concrete-related products segment and 12.3% from our precast concrete products segment. As of August 31, 2011, we had 102 fixed and 11 portable ready-mixed concrete plants, seven precast concrete plants and seven aggregates facilities. During 2010, these plants and facilities produced approximately 3.8 million cubic yards of ready-mixed concrete and 3.1 million tons of aggregates. We lease two of the seven aggregates facilities to third parties and retain a royalty on production from those facilities. Our ready-mixed concrete and concrete-related products segment engages principally in the formulation, preparation and delivery of ready-mixed concrete to the job sites of our customers. We also provide services intended to reduce our customers overall construction costs by lowering the installed, or in-place, cost of concrete. These services include the formulation of mixtures for specific design uses, on-site and lab-based product quality control, and customized delivery programs to meet our customers needs. Our marketing efforts primarily target concrete sub-contractors, general contractors, governmental agencies, property owners and developers and home builders whose focus extends beyond the price of ready-mixed concrete to product quality, on-time delivery and reduction of in-place costs. We generally do not provide paving or other finishing services, which construction contractors or subcontractors typically perform. To a lesser extent, this segment is also engaged in the mining and sale of aggregates and the resale of building materials, primarily to our ready-mixed concrete customers. These businesses are generally complementary to our ready-mixed concrete operations and provide us opportunities to cross-sell various products in markets where we sell both ready-mixed concrete and concrete-related products. We provide our ready-mixed concrete and concrete-related products from our continuing operations in north and west Texas, northern California, New Jersey, New York, Washington, D.C. and Oklahoma. Our precast concrete products segment produces precast concrete products at seven plants in three states, with five plants in California, one in Arizona and one in Pennsylvania. Our customers choose precast technology for a variety of architectural applications, including free-standing walls used for landscaping, soundproofing and security walls, panels used to clad a building fa ade and storm water drainage. Our operations also specialize in a variety of finished products, among which are utility vaults, manholes, catch basins, highway barriers, curb inlets, pre-stressed bridge girders, concrete piles and custom-designed architectural products. For a description of our business, financial condition, results of operations and other important information regarding the Company and our consolidated financial statements and the accompanying notes, we refer you to our filings with the Securities and Table of Contents Primary State or Other Standard I.R.S. Jurisdiction of Industrial Employer Incorporation or Classification Identification Name Organization Code Number Number Superior Concrete Materials, Inc. District of Columbia 3272 52-1046503 Titan Concrete Industries, Inc. Delaware 3272 76-0616374 USC Atlantic, Inc. Delaware 3272 20-4166002 USC Management Co., LLC Delaware 3272 27-1015638 USC Payroll, Inc. Delaware 3272 76-0630665 USC Technologies, Inc. Delaware 3272 20-4166055 U.S. Concrete On-Site, Inc. Delaware 3272 76-0630662 U.S. Concrete Texas Holdings, Inc. Delaware 3272 20-4166120 The address of each of the additional registrants is c/o U.S. Concrete, Inc., 2925 Briarpark, Suite 1050, Houston, Texas 77042. TABLE OF CONTENTS Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001381581_concrete_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001381581_concrete_prospectus_summary.txt
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+++ b/parsed_sections/prospectus_summary/2011/CIK0001381581_concrete_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary This summary highlights material information about us and this offering, but does not contain all of the information that you should consider before investing in our Notes. The following summary is qualified in its entirety by the more detailed information and our consolidated financial statements and the accompanying notes included elsewhere or incorporated by reference into this prospectus. You should read this entire prospectus and the information incorporated by reference herein carefully, including the Risk Factors included and incorporated by reference in this prospectus and our consolidated financial statements and the accompanying notes incorporated by reference into this prospectus, before investing. This prospectus and the documents incorporated by reference include forward-looking statements that involve risks and uncertainties. See Cautionary Note Regarding Forward-Looking Statements. Unless otherwise specified or the context requires otherwise, the terms U.S. Concrete, the Company, we, us, our, or USCR, refer to U.S. Concrete, Inc. and its subsidiaries. Selling noteholders refers to the selling noteholders named in the section of this prospectus entitled Selling Noteholders and certain of their transferees after the date of this prospectus. Our Company We are a major producer of ready-mixed concrete, precast concrete products and concrete-related products in select markets in the United States. We operate our business through our ready-mixed concrete and concrete-related products segment and our precast concrete products segment. We are a leading producer of ready-mixed concrete or precast concrete products in substantially all the markets in which we have operations. Ready-mixed and precast concrete products are important building materials that are used in a vast majority of commercial, residential and public works construction projects. All of our operations are in (and all of our sales are made within) the United States. We operate principally in Texas, California and New Jersey/New York, with those markets representing approximately 36%, 25%, and 19%, respectively, of our consolidated revenues from continuing operations for the year ended December 31, 2010. According to publicly available industry information, those states represented an aggregate of 28% of the consumption of ready-mixed concrete in the United States in 2010 (Texas, 13.1%; California, 9.3%; and New Jersey/New York, 5.4%). Our consolidated revenues from continuing operations for the year ended December 31, 2010 were $455.7 million, of which we derived approximately 87.7% from our ready-mixed concrete and concrete-related products segment and 12.3% from our precast concrete products segment. As of August 31, 2011, we had 102 fixed and 11 portable ready-mixed concrete plants, seven precast concrete plants and seven aggregates facilities. During 2010, these plants and facilities produced approximately 3.8 million cubic yards of ready-mixed concrete and 3.1 million tons of aggregates. We lease two of the seven aggregates facilities to third parties and retain a royalty on production from those facilities. Our ready-mixed concrete and concrete-related products segment engages principally in the formulation, preparation and delivery of ready-mixed concrete to the job sites of our customers. We also provide services intended to reduce our customers overall construction costs by lowering the installed, or in-place, cost of concrete. These services include the formulation of mixtures for specific design uses, on-site and lab-based product quality control, and customized delivery programs to meet our customers needs. Our marketing efforts primarily target concrete sub-contractors, general contractors, governmental agencies, property owners and developers and home builders whose focus extends beyond the price of ready-mixed concrete to product quality, on-time delivery and reduction of in-place costs. We generally do not provide paving or other finishing services, which construction contractors or subcontractors typically perform. To a lesser extent, this segment is also engaged in the mining and sale of aggregates and the resale of building materials, primarily to our ready-mixed concrete customers. These businesses are generally complementary to our ready-mixed concrete operations and provide us opportunities to cross-sell various products in markets where we sell both ready-mixed concrete and concrete-related products. We provide our ready-mixed concrete and concrete-related products from our continuing operations in north and west Texas, northern California, New Jersey, New York, Washington, D.C. and Oklahoma. Our precast concrete products segment produces precast concrete products at seven plants in three states, with five plants in California, one in Arizona and one in Pennsylvania. Our customers choose precast technology for a variety of architectural applications, including free-standing walls used for landscaping, soundproofing and security walls, panels used to clad a building fa ade and storm water drainage. Our operations also specialize in a variety of finished products, among which are utility vaults, manholes, catch basins, highway barriers, curb inlets, pre-stressed bridge girders, concrete piles and custom-designed architectural products. For a description of our business, financial condition, results of operations and other important information regarding the Company and our consolidated financial statements and the accompanying notes, we refer you to our filings with the Securities and Table of Contents Primary State or Other Standard I.R.S. Jurisdiction of Industrial Employer Incorporation or Classification Identification Name Organization Code Number Number Superior Concrete Materials, Inc. District of Columbia 3272 52-1046503 Titan Concrete Industries, Inc. Delaware 3272 76-0616374 USC Atlantic, Inc. Delaware 3272 20-4166002 USC Management Co., LLC Delaware 3272 27-1015638 USC Payroll, Inc. Delaware 3272 76-0630665 USC Technologies, Inc. Delaware 3272 20-4166055 U.S. Concrete On-Site, Inc. Delaware 3272 76-0630662 U.S. Concrete Texas Holdings, Inc. Delaware 3272 20-4166120 The address of each of the additional registrants is c/o U.S. Concrete, Inc., 2925 Briarpark, Suite 1050, Houston, Texas 77042. TABLE OF CONTENTS Prospectus Summary 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/CIK0001381582_concrete_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001381582_concrete_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a695b05a116cab7fa7417f6aa2915a8df529fad0
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001381582_concrete_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary This summary highlights material information about us and this offering, but does not contain all of the information that you should consider before investing in our Notes. The following summary is qualified in its entirety by the more detailed information and our consolidated financial statements and the accompanying notes included elsewhere or incorporated by reference into this prospectus. You should read this entire prospectus and the information incorporated by reference herein carefully, including the Risk Factors included and incorporated by reference in this prospectus and our consolidated financial statements and the accompanying notes incorporated by reference into this prospectus, before investing. This prospectus and the documents incorporated by reference include forward-looking statements that involve risks and uncertainties. See Cautionary Note Regarding Forward-Looking Statements. Unless otherwise specified or the context requires otherwise, the terms U.S. Concrete, the Company, we, us, our, or USCR, refer to U.S. Concrete, Inc. and its subsidiaries. Selling noteholders refers to the selling noteholders named in the section of this prospectus entitled Selling Noteholders and certain of their transferees after the date of this prospectus. Our Company We are a major producer of ready-mixed concrete, precast concrete products and concrete-related products in select markets in the United States. We operate our business through our ready-mixed concrete and concrete-related products segment and our precast concrete products segment. We are a leading producer of ready-mixed concrete or precast concrete products in substantially all the markets in which we have operations. Ready-mixed and precast concrete products are important building materials that are used in a vast majority of commercial, residential and public works construction projects. All of our operations are in (and all of our sales are made within) the United States. We operate principally in Texas, California and New Jersey/New York, with those markets representing approximately 36%, 25%, and 19%, respectively, of our consolidated revenues from continuing operations for the year ended December 31, 2010. According to publicly available industry information, those states represented an aggregate of 28% of the consumption of ready-mixed concrete in the United States in 2010 (Texas, 13.1%; California, 9.3%; and New Jersey/New York, 5.4%). Our consolidated revenues from continuing operations for the year ended December 31, 2010 were $455.7 million, of which we derived approximately 87.7% from our ready-mixed concrete and concrete-related products segment and 12.3% from our precast concrete products segment. As of August 31, 2011, we had 102 fixed and 11 portable ready-mixed concrete plants, seven precast concrete plants and seven aggregates facilities. During 2010, these plants and facilities produced approximately 3.8 million cubic yards of ready-mixed concrete and 3.1 million tons of aggregates. We lease two of the seven aggregates facilities to third parties and retain a royalty on production from those facilities. Our ready-mixed concrete and concrete-related products segment engages principally in the formulation, preparation and delivery of ready-mixed concrete to the job sites of our customers. We also provide services intended to reduce our customers overall construction costs by lowering the installed, or in-place, cost of concrete. These services include the formulation of mixtures for specific design uses, on-site and lab-based product quality control, and customized delivery programs to meet our customers needs. Our marketing efforts primarily target concrete sub-contractors, general contractors, governmental agencies, property owners and developers and home builders whose focus extends beyond the price of ready-mixed concrete to product quality, on-time delivery and reduction of in-place costs. We generally do not provide paving or other finishing services, which construction contractors or subcontractors typically perform. To a lesser extent, this segment is also engaged in the mining and sale of aggregates and the resale of building materials, primarily to our ready-mixed concrete customers. These businesses are generally complementary to our ready-mixed concrete operations and provide us opportunities to cross-sell various products in markets where we sell both ready-mixed concrete and concrete-related products. We provide our ready-mixed concrete and concrete-related products from our continuing operations in north and west Texas, northern California, New Jersey, New York, Washington, D.C. and Oklahoma. Our precast concrete products segment produces precast concrete products at seven plants in three states, with five plants in California, one in Arizona and one in Pennsylvania. Our customers choose precast technology for a variety of architectural applications, including free-standing walls used for landscaping, soundproofing and security walls, panels used to clad a building fa ade and storm water drainage. Our operations also specialize in a variety of finished products, among which are utility vaults, manholes, catch basins, highway barriers, curb inlets, pre-stressed bridge girders, concrete piles and custom-designed architectural products. For a description of our business, financial condition, results of operations and other important information regarding the Company and our consolidated financial statements and the accompanying notes, we refer you to our filings with the Securities and Table of Contents Primary State or Other Standard I.R.S. Jurisdiction of Industrial Employer Incorporation or Classification Identification Name Organization Code Number Number Superior Concrete Materials, Inc. District of Columbia 3272 52-1046503 Titan Concrete Industries, Inc. Delaware 3272 76-0616374 USC Atlantic, Inc. Delaware 3272 20-4166002 USC Management Co., LLC Delaware 3272 27-1015638 USC Payroll, Inc. Delaware 3272 76-0630665 USC Technologies, Inc. Delaware 3272 20-4166055 U.S. Concrete On-Site, Inc. Delaware 3272 76-0630662 U.S. Concrete Texas Holdings, Inc. Delaware 3272 20-4166120 The address of each of the additional registrants is c/o U.S. Concrete, Inc., 2925 Briarpark, Suite 1050, Houston, Texas 77042. TABLE OF CONTENTS Prospectus Summary 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/CIK0001381583_u-s_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001381583_u-s_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a695b05a116cab7fa7417f6aa2915a8df529fad0
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001381583_u-s_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary This summary highlights material information about us and this offering, but does not contain all of the information that you should consider before investing in our Notes. The following summary is qualified in its entirety by the more detailed information and our consolidated financial statements and the accompanying notes included elsewhere or incorporated by reference into this prospectus. You should read this entire prospectus and the information incorporated by reference herein carefully, including the Risk Factors included and incorporated by reference in this prospectus and our consolidated financial statements and the accompanying notes incorporated by reference into this prospectus, before investing. This prospectus and the documents incorporated by reference include forward-looking statements that involve risks and uncertainties. See Cautionary Note Regarding Forward-Looking Statements. Unless otherwise specified or the context requires otherwise, the terms U.S. Concrete, the Company, we, us, our, or USCR, refer to U.S. Concrete, Inc. and its subsidiaries. Selling noteholders refers to the selling noteholders named in the section of this prospectus entitled Selling Noteholders and certain of their transferees after the date of this prospectus. Our Company We are a major producer of ready-mixed concrete, precast concrete products and concrete-related products in select markets in the United States. We operate our business through our ready-mixed concrete and concrete-related products segment and our precast concrete products segment. We are a leading producer of ready-mixed concrete or precast concrete products in substantially all the markets in which we have operations. Ready-mixed and precast concrete products are important building materials that are used in a vast majority of commercial, residential and public works construction projects. All of our operations are in (and all of our sales are made within) the United States. We operate principally in Texas, California and New Jersey/New York, with those markets representing approximately 36%, 25%, and 19%, respectively, of our consolidated revenues from continuing operations for the year ended December 31, 2010. According to publicly available industry information, those states represented an aggregate of 28% of the consumption of ready-mixed concrete in the United States in 2010 (Texas, 13.1%; California, 9.3%; and New Jersey/New York, 5.4%). Our consolidated revenues from continuing operations for the year ended December 31, 2010 were $455.7 million, of which we derived approximately 87.7% from our ready-mixed concrete and concrete-related products segment and 12.3% from our precast concrete products segment. As of August 31, 2011, we had 102 fixed and 11 portable ready-mixed concrete plants, seven precast concrete plants and seven aggregates facilities. During 2010, these plants and facilities produced approximately 3.8 million cubic yards of ready-mixed concrete and 3.1 million tons of aggregates. We lease two of the seven aggregates facilities to third parties and retain a royalty on production from those facilities. Our ready-mixed concrete and concrete-related products segment engages principally in the formulation, preparation and delivery of ready-mixed concrete to the job sites of our customers. We also provide services intended to reduce our customers overall construction costs by lowering the installed, or in-place, cost of concrete. These services include the formulation of mixtures for specific design uses, on-site and lab-based product quality control, and customized delivery programs to meet our customers needs. Our marketing efforts primarily target concrete sub-contractors, general contractors, governmental agencies, property owners and developers and home builders whose focus extends beyond the price of ready-mixed concrete to product quality, on-time delivery and reduction of in-place costs. We generally do not provide paving or other finishing services, which construction contractors or subcontractors typically perform. To a lesser extent, this segment is also engaged in the mining and sale of aggregates and the resale of building materials, primarily to our ready-mixed concrete customers. These businesses are generally complementary to our ready-mixed concrete operations and provide us opportunities to cross-sell various products in markets where we sell both ready-mixed concrete and concrete-related products. We provide our ready-mixed concrete and concrete-related products from our continuing operations in north and west Texas, northern California, New Jersey, New York, Washington, D.C. and Oklahoma. Our precast concrete products segment produces precast concrete products at seven plants in three states, with five plants in California, one in Arizona and one in Pennsylvania. Our customers choose precast technology for a variety of architectural applications, including free-standing walls used for landscaping, soundproofing and security walls, panels used to clad a building fa ade and storm water drainage. Our operations also specialize in a variety of finished products, among which are utility vaults, manholes, catch basins, highway barriers, curb inlets, pre-stressed bridge girders, concrete piles and custom-designed architectural products. For a description of our business, financial condition, results of operations and other important information regarding the Company and our consolidated financial statements and the accompanying notes, we refer you to our filings with the Securities and Table of Contents Primary State or Other Standard I.R.S. Jurisdiction of Industrial Employer Incorporation or Classification Identification Name Organization Code Number Number Superior Concrete Materials, Inc. District of Columbia 3272 52-1046503 Titan Concrete Industries, Inc. Delaware 3272 76-0616374 USC Atlantic, Inc. Delaware 3272 20-4166002 USC Management Co., LLC Delaware 3272 27-1015638 USC Payroll, Inc. Delaware 3272 76-0630665 USC Technologies, Inc. Delaware 3272 20-4166055 U.S. Concrete On-Site, Inc. Delaware 3272 76-0630662 U.S. Concrete Texas Holdings, Inc. Delaware 3272 20-4166120 The address of each of the additional registrants is c/o U.S. Concrete, Inc., 2925 Briarpark, Suite 1050, Houston, Texas 77042. TABLE OF CONTENTS Prospectus Summary 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/CIK0001381586_usc_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001381586_usc_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a695b05a116cab7fa7417f6aa2915a8df529fad0
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001381586_usc_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary This summary highlights material information about us and this offering, but does not contain all of the information that you should consider before investing in our Notes. The following summary is qualified in its entirety by the more detailed information and our consolidated financial statements and the accompanying notes included elsewhere or incorporated by reference into this prospectus. You should read this entire prospectus and the information incorporated by reference herein carefully, including the Risk Factors included and incorporated by reference in this prospectus and our consolidated financial statements and the accompanying notes incorporated by reference into this prospectus, before investing. This prospectus and the documents incorporated by reference include forward-looking statements that involve risks and uncertainties. See Cautionary Note Regarding Forward-Looking Statements. Unless otherwise specified or the context requires otherwise, the terms U.S. Concrete, the Company, we, us, our, or USCR, refer to U.S. Concrete, Inc. and its subsidiaries. Selling noteholders refers to the selling noteholders named in the section of this prospectus entitled Selling Noteholders and certain of their transferees after the date of this prospectus. Our Company We are a major producer of ready-mixed concrete, precast concrete products and concrete-related products in select markets in the United States. We operate our business through our ready-mixed concrete and concrete-related products segment and our precast concrete products segment. We are a leading producer of ready-mixed concrete or precast concrete products in substantially all the markets in which we have operations. Ready-mixed and precast concrete products are important building materials that are used in a vast majority of commercial, residential and public works construction projects. All of our operations are in (and all of our sales are made within) the United States. We operate principally in Texas, California and New Jersey/New York, with those markets representing approximately 36%, 25%, and 19%, respectively, of our consolidated revenues from continuing operations for the year ended December 31, 2010. According to publicly available industry information, those states represented an aggregate of 28% of the consumption of ready-mixed concrete in the United States in 2010 (Texas, 13.1%; California, 9.3%; and New Jersey/New York, 5.4%). Our consolidated revenues from continuing operations for the year ended December 31, 2010 were $455.7 million, of which we derived approximately 87.7% from our ready-mixed concrete and concrete-related products segment and 12.3% from our precast concrete products segment. As of August 31, 2011, we had 102 fixed and 11 portable ready-mixed concrete plants, seven precast concrete plants and seven aggregates facilities. During 2010, these plants and facilities produced approximately 3.8 million cubic yards of ready-mixed concrete and 3.1 million tons of aggregates. We lease two of the seven aggregates facilities to third parties and retain a royalty on production from those facilities. Our ready-mixed concrete and concrete-related products segment engages principally in the formulation, preparation and delivery of ready-mixed concrete to the job sites of our customers. We also provide services intended to reduce our customers overall construction costs by lowering the installed, or in-place, cost of concrete. These services include the formulation of mixtures for specific design uses, on-site and lab-based product quality control, and customized delivery programs to meet our customers needs. Our marketing efforts primarily target concrete sub-contractors, general contractors, governmental agencies, property owners and developers and home builders whose focus extends beyond the price of ready-mixed concrete to product quality, on-time delivery and reduction of in-place costs. We generally do not provide paving or other finishing services, which construction contractors or subcontractors typically perform. To a lesser extent, this segment is also engaged in the mining and sale of aggregates and the resale of building materials, primarily to our ready-mixed concrete customers. These businesses are generally complementary to our ready-mixed concrete operations and provide us opportunities to cross-sell various products in markets where we sell both ready-mixed concrete and concrete-related products. We provide our ready-mixed concrete and concrete-related products from our continuing operations in north and west Texas, northern California, New Jersey, New York, Washington, D.C. and Oklahoma. Our precast concrete products segment produces precast concrete products at seven plants in three states, with five plants in California, one in Arizona and one in Pennsylvania. Our customers choose precast technology for a variety of architectural applications, including free-standing walls used for landscaping, soundproofing and security walls, panels used to clad a building fa ade and storm water drainage. Our operations also specialize in a variety of finished products, among which are utility vaults, manholes, catch basins, highway barriers, curb inlets, pre-stressed bridge girders, concrete piles and custom-designed architectural products. For a description of our business, financial condition, results of operations and other important information regarding the Company and our consolidated financial statements and the accompanying notes, we refer you to our filings with the Securities and Table of Contents Primary State or Other Standard I.R.S. Jurisdiction of Industrial Employer Incorporation or Classification Identification Name Organization Code Number Number Superior Concrete Materials, Inc. District of Columbia 3272 52-1046503 Titan Concrete Industries, Inc. Delaware 3272 76-0616374 USC Atlantic, Inc. Delaware 3272 20-4166002 USC Management Co., LLC Delaware 3272 27-1015638 USC Payroll, Inc. Delaware 3272 76-0630665 USC Technologies, Inc. Delaware 3272 20-4166055 U.S. Concrete On-Site, Inc. Delaware 3272 76-0630662 U.S. Concrete Texas Holdings, Inc. Delaware 3272 20-4166120 The address of each of the additional registrants is c/o U.S. Concrete, Inc., 2925 Briarpark, Suite 1050, Houston, Texas 77042. TABLE OF CONTENTS Prospectus Summary 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/CIK0001381587_us_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001381587_us_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a695b05a116cab7fa7417f6aa2915a8df529fad0
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001381587_us_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary This summary highlights material information about us and this offering, but does not contain all of the information that you should consider before investing in our Notes. The following summary is qualified in its entirety by the more detailed information and our consolidated financial statements and the accompanying notes included elsewhere or incorporated by reference into this prospectus. You should read this entire prospectus and the information incorporated by reference herein carefully, including the Risk Factors included and incorporated by reference in this prospectus and our consolidated financial statements and the accompanying notes incorporated by reference into this prospectus, before investing. This prospectus and the documents incorporated by reference include forward-looking statements that involve risks and uncertainties. See Cautionary Note Regarding Forward-Looking Statements. Unless otherwise specified or the context requires otherwise, the terms U.S. Concrete, the Company, we, us, our, or USCR, refer to U.S. Concrete, Inc. and its subsidiaries. Selling noteholders refers to the selling noteholders named in the section of this prospectus entitled Selling Noteholders and certain of their transferees after the date of this prospectus. Our Company We are a major producer of ready-mixed concrete, precast concrete products and concrete-related products in select markets in the United States. We operate our business through our ready-mixed concrete and concrete-related products segment and our precast concrete products segment. We are a leading producer of ready-mixed concrete or precast concrete products in substantially all the markets in which we have operations. Ready-mixed and precast concrete products are important building materials that are used in a vast majority of commercial, residential and public works construction projects. All of our operations are in (and all of our sales are made within) the United States. We operate principally in Texas, California and New Jersey/New York, with those markets representing approximately 36%, 25%, and 19%, respectively, of our consolidated revenues from continuing operations for the year ended December 31, 2010. According to publicly available industry information, those states represented an aggregate of 28% of the consumption of ready-mixed concrete in the United States in 2010 (Texas, 13.1%; California, 9.3%; and New Jersey/New York, 5.4%). Our consolidated revenues from continuing operations for the year ended December 31, 2010 were $455.7 million, of which we derived approximately 87.7% from our ready-mixed concrete and concrete-related products segment and 12.3% from our precast concrete products segment. As of August 31, 2011, we had 102 fixed and 11 portable ready-mixed concrete plants, seven precast concrete plants and seven aggregates facilities. During 2010, these plants and facilities produced approximately 3.8 million cubic yards of ready-mixed concrete and 3.1 million tons of aggregates. We lease two of the seven aggregates facilities to third parties and retain a royalty on production from those facilities. Our ready-mixed concrete and concrete-related products segment engages principally in the formulation, preparation and delivery of ready-mixed concrete to the job sites of our customers. We also provide services intended to reduce our customers overall construction costs by lowering the installed, or in-place, cost of concrete. These services include the formulation of mixtures for specific design uses, on-site and lab-based product quality control, and customized delivery programs to meet our customers needs. Our marketing efforts primarily target concrete sub-contractors, general contractors, governmental agencies, property owners and developers and home builders whose focus extends beyond the price of ready-mixed concrete to product quality, on-time delivery and reduction of in-place costs. We generally do not provide paving or other finishing services, which construction contractors or subcontractors typically perform. To a lesser extent, this segment is also engaged in the mining and sale of aggregates and the resale of building materials, primarily to our ready-mixed concrete customers. These businesses are generally complementary to our ready-mixed concrete operations and provide us opportunities to cross-sell various products in markets where we sell both ready-mixed concrete and concrete-related products. We provide our ready-mixed concrete and concrete-related products from our continuing operations in north and west Texas, northern California, New Jersey, New York, Washington, D.C. and Oklahoma. Our precast concrete products segment produces precast concrete products at seven plants in three states, with five plants in California, one in Arizona and one in Pennsylvania. Our customers choose precast technology for a variety of architectural applications, including free-standing walls used for landscaping, soundproofing and security walls, panels used to clad a building fa ade and storm water drainage. Our operations also specialize in a variety of finished products, among which are utility vaults, manholes, catch basins, highway barriers, curb inlets, pre-stressed bridge girders, concrete piles and custom-designed architectural products. For a description of our business, financial condition, results of operations and other important information regarding the Company and our consolidated financial statements and the accompanying notes, we refer you to our filings with the Securities and Table of Contents Primary State or Other Standard I.R.S. Jurisdiction of Industrial Employer Incorporation or Classification Identification Name Organization Code Number Number Superior Concrete Materials, Inc. District of Columbia 3272 52-1046503 Titan Concrete Industries, Inc. Delaware 3272 76-0616374 USC Atlantic, Inc. Delaware 3272 20-4166002 USC Management Co., LLC Delaware 3272 27-1015638 USC Payroll, Inc. Delaware 3272 76-0630665 USC Technologies, Inc. Delaware 3272 20-4166055 U.S. Concrete On-Site, Inc. Delaware 3272 76-0630662 U.S. Concrete Texas Holdings, Inc. Delaware 3272 20-4166120 The address of each of the additional registrants is c/o U.S. Concrete, Inc., 2925 Briarpark, Suite 1050, Houston, Texas 77042. TABLE OF CONTENTS Prospectus Summary 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/CIK0001381591_redi-mix_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001381591_redi-mix_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a695b05a116cab7fa7417f6aa2915a8df529fad0
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001381591_redi-mix_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary This summary highlights material information about us and this offering, but does not contain all of the information that you should consider before investing in our Notes. The following summary is qualified in its entirety by the more detailed information and our consolidated financial statements and the accompanying notes included elsewhere or incorporated by reference into this prospectus. You should read this entire prospectus and the information incorporated by reference herein carefully, including the Risk Factors included and incorporated by reference in this prospectus and our consolidated financial statements and the accompanying notes incorporated by reference into this prospectus, before investing. This prospectus and the documents incorporated by reference include forward-looking statements that involve risks and uncertainties. See Cautionary Note Regarding Forward-Looking Statements. Unless otherwise specified or the context requires otherwise, the terms U.S. Concrete, the Company, we, us, our, or USCR, refer to U.S. Concrete, Inc. and its subsidiaries. Selling noteholders refers to the selling noteholders named in the section of this prospectus entitled Selling Noteholders and certain of their transferees after the date of this prospectus. Our Company We are a major producer of ready-mixed concrete, precast concrete products and concrete-related products in select markets in the United States. We operate our business through our ready-mixed concrete and concrete-related products segment and our precast concrete products segment. We are a leading producer of ready-mixed concrete or precast concrete products in substantially all the markets in which we have operations. Ready-mixed and precast concrete products are important building materials that are used in a vast majority of commercial, residential and public works construction projects. All of our operations are in (and all of our sales are made within) the United States. We operate principally in Texas, California and New Jersey/New York, with those markets representing approximately 36%, 25%, and 19%, respectively, of our consolidated revenues from continuing operations for the year ended December 31, 2010. According to publicly available industry information, those states represented an aggregate of 28% of the consumption of ready-mixed concrete in the United States in 2010 (Texas, 13.1%; California, 9.3%; and New Jersey/New York, 5.4%). Our consolidated revenues from continuing operations for the year ended December 31, 2010 were $455.7 million, of which we derived approximately 87.7% from our ready-mixed concrete and concrete-related products segment and 12.3% from our precast concrete products segment. As of August 31, 2011, we had 102 fixed and 11 portable ready-mixed concrete plants, seven precast concrete plants and seven aggregates facilities. During 2010, these plants and facilities produced approximately 3.8 million cubic yards of ready-mixed concrete and 3.1 million tons of aggregates. We lease two of the seven aggregates facilities to third parties and retain a royalty on production from those facilities. Our ready-mixed concrete and concrete-related products segment engages principally in the formulation, preparation and delivery of ready-mixed concrete to the job sites of our customers. We also provide services intended to reduce our customers overall construction costs by lowering the installed, or in-place, cost of concrete. These services include the formulation of mixtures for specific design uses, on-site and lab-based product quality control, and customized delivery programs to meet our customers needs. Our marketing efforts primarily target concrete sub-contractors, general contractors, governmental agencies, property owners and developers and home builders whose focus extends beyond the price of ready-mixed concrete to product quality, on-time delivery and reduction of in-place costs. We generally do not provide paving or other finishing services, which construction contractors or subcontractors typically perform. To a lesser extent, this segment is also engaged in the mining and sale of aggregates and the resale of building materials, primarily to our ready-mixed concrete customers. These businesses are generally complementary to our ready-mixed concrete operations and provide us opportunities to cross-sell various products in markets where we sell both ready-mixed concrete and concrete-related products. We provide our ready-mixed concrete and concrete-related products from our continuing operations in north and west Texas, northern California, New Jersey, New York, Washington, D.C. and Oklahoma. Our precast concrete products segment produces precast concrete products at seven plants in three states, with five plants in California, one in Arizona and one in Pennsylvania. Our customers choose precast technology for a variety of architectural applications, including free-standing walls used for landscaping, soundproofing and security walls, panels used to clad a building fa ade and storm water drainage. Our operations also specialize in a variety of finished products, among which are utility vaults, manholes, catch basins, highway barriers, curb inlets, pre-stressed bridge girders, concrete piles and custom-designed architectural products. For a description of our business, financial condition, results of operations and other important information regarding the Company and our consolidated financial statements and the accompanying notes, we refer you to our filings with the Securities and Table of Contents Primary State or Other Standard I.R.S. Jurisdiction of Industrial Employer Incorporation or Classification Identification Name Organization Code Number Number Superior Concrete Materials, Inc. District of Columbia 3272 52-1046503 Titan Concrete Industries, Inc. Delaware 3272 76-0616374 USC Atlantic, Inc. Delaware 3272 20-4166002 USC Management Co., LLC Delaware 3272 27-1015638 USC Payroll, Inc. Delaware 3272 76-0630665 USC Technologies, Inc. Delaware 3272 20-4166055 U.S. Concrete On-Site, Inc. Delaware 3272 76-0630662 U.S. Concrete Texas Holdings, Inc. Delaware 3272 20-4166120 The address of each of the additional registrants is c/o U.S. Concrete, Inc., 2925 Briarpark, Suite 1050, Houston, Texas 77042. TABLE OF CONTENTS Prospectus Summary 1
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+Prospectus Summary This summary highlights material information about us and this offering, but does not contain all of the information that you should consider before investing in our Notes. The following summary is qualified in its entirety by the more detailed information and our consolidated financial statements and the accompanying notes included elsewhere or incorporated by reference into this prospectus. You should read this entire prospectus and the information incorporated by reference herein carefully, including the Risk Factors included and incorporated by reference in this prospectus and our consolidated financial statements and the accompanying notes incorporated by reference into this prospectus, before investing. This prospectus and the documents incorporated by reference include forward-looking statements that involve risks and uncertainties. See Cautionary Note Regarding Forward-Looking Statements. Unless otherwise specified or the context requires otherwise, the terms U.S. Concrete, the Company, we, us, our, or USCR, refer to U.S. Concrete, Inc. and its subsidiaries. Selling noteholders refers to the selling noteholders named in the section of this prospectus entitled Selling Noteholders and certain of their transferees after the date of this prospectus. Our Company We are a major producer of ready-mixed concrete, precast concrete products and concrete-related products in select markets in the United States. We operate our business through our ready-mixed concrete and concrete-related products segment and our precast concrete products segment. We are a leading producer of ready-mixed concrete or precast concrete products in substantially all the markets in which we have operations. Ready-mixed and precast concrete products are important building materials that are used in a vast majority of commercial, residential and public works construction projects. All of our operations are in (and all of our sales are made within) the United States. We operate principally in Texas, California and New Jersey/New York, with those markets representing approximately 36%, 25%, and 19%, respectively, of our consolidated revenues from continuing operations for the year ended December 31, 2010. According to publicly available industry information, those states represented an aggregate of 28% of the consumption of ready-mixed concrete in the United States in 2010 (Texas, 13.1%; California, 9.3%; and New Jersey/New York, 5.4%). Our consolidated revenues from continuing operations for the year ended December 31, 2010 were $455.7 million, of which we derived approximately 87.7% from our ready-mixed concrete and concrete-related products segment and 12.3% from our precast concrete products segment. As of August 31, 2011, we had 102 fixed and 11 portable ready-mixed concrete plants, seven precast concrete plants and seven aggregates facilities. During 2010, these plants and facilities produced approximately 3.8 million cubic yards of ready-mixed concrete and 3.1 million tons of aggregates. We lease two of the seven aggregates facilities to third parties and retain a royalty on production from those facilities. Our ready-mixed concrete and concrete-related products segment engages principally in the formulation, preparation and delivery of ready-mixed concrete to the job sites of our customers. We also provide services intended to reduce our customers overall construction costs by lowering the installed, or in-place, cost of concrete. These services include the formulation of mixtures for specific design uses, on-site and lab-based product quality control, and customized delivery programs to meet our customers needs. Our marketing efforts primarily target concrete sub-contractors, general contractors, governmental agencies, property owners and developers and home builders whose focus extends beyond the price of ready-mixed concrete to product quality, on-time delivery and reduction of in-place costs. We generally do not provide paving or other finishing services, which construction contractors or subcontractors typically perform. To a lesser extent, this segment is also engaged in the mining and sale of aggregates and the resale of building materials, primarily to our ready-mixed concrete customers. These businesses are generally complementary to our ready-mixed concrete operations and provide us opportunities to cross-sell various products in markets where we sell both ready-mixed concrete and concrete-related products. We provide our ready-mixed concrete and concrete-related products from our continuing operations in north and west Texas, northern California, New Jersey, New York, Washington, D.C. and Oklahoma. Our precast concrete products segment produces precast concrete products at seven plants in three states, with five plants in California, one in Arizona and one in Pennsylvania. Our customers choose precast technology for a variety of architectural applications, including free-standing walls used for landscaping, soundproofing and security walls, panels used to clad a building fa ade and storm water drainage. Our operations also specialize in a variety of finished products, among which are utility vaults, manholes, catch basins, highway barriers, curb inlets, pre-stressed bridge girders, concrete piles and custom-designed architectural products. For a description of our business, financial condition, results of operations and other important information regarding the Company and our consolidated financial statements and the accompanying notes, we refer you to our filings with the Securities and Table of Contents Primary State or Other Standard I.R.S. Jurisdiction of Industrial Employer Incorporation or Classification Identification Name Organization Code Number Number Superior Concrete Materials, Inc. District of Columbia 3272 52-1046503 Titan Concrete Industries, Inc. Delaware 3272 76-0616374 USC Atlantic, Inc. Delaware 3272 20-4166002 USC Management Co., LLC Delaware 3272 27-1015638 USC Payroll, Inc. Delaware 3272 76-0630665 USC Technologies, Inc. Delaware 3272 20-4166055 U.S. Concrete On-Site, Inc. Delaware 3272 76-0630662 U.S. Concrete Texas Holdings, Inc. Delaware 3272 20-4166120 The address of each of the additional registrants is c/o U.S. Concrete, Inc., 2925 Briarpark, Suite 1050, Houston, Texas 77042. TABLE OF CONTENTS Prospectus Summary 1
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+PROSPECTUS SUMMARY The following summary highlights selected information contained in this prospectus. This summary does not contain all the information you should consider before investing in the securities. Before making an investment decision, you should read the entire prospectus carefully, including the risk factors section, the financial statements and the notes to the financial statements. In this prospectus, unless otherwise specified, all monetary amounts are in U.S. dollars. All renminbi, or RMB, amounts have been translated into U.S. dollars at the June 30, 2011 noon buying rate in the City of New York for cable transfers of RMB as certified for customs purposes by the Federal Reserve Bank of New York, being $1.00 = RMB6.5465. Except where the context otherwise requires and for the purposes of this prospectus only: We, us, our company, our, and Compass refer to the combined business of Tsingda eEDU Corporation and its consolidated subsidiaries and affiliates, but do not include the shareholders of Tsingda eEDU Corporation; Tsingda Technology refers to Tsing Da Century Education Technology Co. Ltd., a British Virgin Islands business company, which is our direct, wholly-owned subsidiary; Tsingda Management refers to Beijing Tsingda Century Management Consulting Ltd., a wholly foreign owned enterprise incorporated under the laws of the PRC, which is our indirect, wholly-owned subsidiary; Tsingda Education refers to Beijing Tsingda Century Investment Consultant of Education Co. Ltd., our contractually controlled affiliate and the PRC operating company; Tsingda Network refers to Beijing Tsingda Century Network Technology Co. Ltd., a wholly owned subsidiary of Tsingda Education; China, Chinese and PRC, refer to the People s Republic of China; Renminbi and RMB refer to the legal currency of China; and U.S. dollars, dollars and $ refer to the legal currency of the United States. We effected a consolidation of every three shares of our authorized share capital into 1 share on November 15, 2010. Unless otherwise stated, all share and per share amounts in this prospectus have been adjusted to reflect post consolidation amounts. Our Company Business Overview We are an online provider of supplementary educational services in China. All of our courses are broadcast online, and are consumed either in private or at one of our learning centers. As of June 30, 2011, there were 2,496 Tsingda Learning Centers across China, which includes 32 Company-owned learning centers and 2,464 franchised learning centers. Since most of our learning centers are franchised locations, we generate most of our revenues through franchise licensing fees and sales of e-cards by franchisees to students, which are pre-paid credit cards used by our students to purchase our individual courses. Our franchisees pay an initial franchise licensing fee of between $7,000 and $10,000 per location depending on franchise territory, and thereafter, franchisees pay an annual management fee equal to 10% of their initial franchise licensing fee. A franchisee receives e-cards from the Company with a face value equal to five times the amount of franchise and management fees paid. Our franchisees also have the option to purchase additional e-cards at the same 80% discount. Franchisees earn revenues from the sale of e-cards to students at face value. In other words, for every dollar spent by our students, our franchisees receive eighty cents. With respect to the remaining twenty cents, the Company splits this on a 40%-60% basis with teachers in connection with real-time courses and on a 90%-10% basis with teachers in connection with pre-recorded courses. Factoring in the discount taken by our franchisees and revenue splitting with our teachers, the Company earns 18% of revenues generated from sales of e-cards used for pre-recorded courses and 8% of revenues generated from sales of e-cards used for real-time courses. Each e-card has a specific serial number, and our IT server tracks the opening and usage of these cards in real time. We use this information in order to accurately allocate revenues among teachers. The accompanying notes are an integrated part of these consolidated financial statements Our online educational services consist of pre-recorded courses and a web based platform called the Tsingda Virtual Internet Classroom where students and teachers can interact remotely in either a one-on-one or classroom setting. As of June 30, 2011, we had a total of 7,993,458 registered and 1,563,384 active students. Of these students 7,466,321 students are registered and 1,461,587 are active through our learning centers, and 527,137 students are registered and 101,797 are active through our Tsingda Virtual Internet Classroom. We classify students who have provided us with their personal information as registered. Registered students who have purchased an e-card or are using an e-card to purchase our courses are classified as active. Students who have purchased an e-card and have not used an e-card for more than one year are de-classified from active status and classified as registered. In November 2010 we began offering live courses through our company-owned learning centers which are all located in Beijing. Depending on the initial response to these live courses, we may consider expanding our live course offerings to Company-owned learning centers in other first-tier cities. We do not intend to offer live courses through our franchise-owned learning centers, nor do we intend that any of our Company-owned learning centers will become solely dedicated to live course offerings. Live courses are taught on either a one-to-one basis or with up to 10 students. As with all of our course offerings, students purchase live courses by purchasing e-cards. Students can choose any combination of live, online or pre-recorded courses for all of their education needs. We charge more for live courses than for online or pre-recorded courses. During the six months ended June 30, 2011, revenue generated from providing live courses was less than 3% of our total revenues. For the six months ended June 30, 2011, we generated $17,090,536 in gross revenues, which represents an 80.53% increase from gross revenues of $9,467,108 for the comparable period in 2010. Our pre-tax net income for the six month period ended June 30, 2011was $3.41 million, which represents a 52.78% decrease from pre-tax net income of $5.21 million for the comparable period in 2010.. On September 16, 2010, we completed a unit financing with certain accredited investors pursuant to which we received total gross proceeds of $9.6 million. Each unit consisted of one ordinary share and a stock purchase warrant to purchase 35% of the number of Ordinary Shares purchased in the financing. The warrant exercise price is $2.08 per share, subject to adjustment, and the warrant term is five (5) years. On November 15, 2010, we held a special meeting of our shareholders ( Special Meeting ) at our principal offices in Beijing, China. At the Special Meeting, shareholders approved two proposals (i) to change the corporate name from Compass Acquisition Corporation to Tsingda eEDU Corporation and (ii) to affect a three-for-one (3 to 1) consolidation of the Company s issued and outstanding Ordinary Shares and to increase the amount of the Company s authorized Ordinary Shares from 39,062,500 Ordinary Shares to 100,000,000 Ordinary Shares. The name change of the Company to Tsingda eEDU Corporation and the three-for-one consolidation and increase in the Company s authorized share capital was effective immediately following shareholder approval. On July 12, 2011, we entered into a securities purchase agreement with AMI Corporation, as the investor, in connection with a private placement of 3,000,000 Ordinary Shares at a price of $4.56 per share. On July 21, 2011, we closed an initial $5,000,000 tranche and on August 23, 2011, we received the balance of $8,680,000, for total proceeds of $13,680,000. Under the terms of our agreement with AMI we are obligated, by July 12, 2012, to have our Ordinary Shares listed for trading on the NASDAQ Global Select Market, NASDAQ Global Market or New York Stock Exchange. Subject to our obtaining such listing, AMI has agreed not to sell any of the 3,000,000 shares for six months and limit to 600,000, the number of shares it will sell during the next succeeding six months. Under the securities purchase agreement with AMI, the Company agreed to file an initial registration statement to register the Ordinary Shares for resale in a registration statement with the Securities and Exchange Commission within 45 days from the initial closing, and to make such registration statement effective within 180 days from the initial closing. The filing of the registration statement of which this prospectus is a part is intended to satisfy our obligations under the securities purchase agreement. On August 21, 2011, our Board of Directors approved a stock repurchase transaction in the amount of $6,187,500 to repurchase 1,875,000 of the Company s issued and outstanding ordinary shares from Zhong Hui Rong (Fujian) Fund Ltd. The repurchase occured in a privately negotiated transaction, as there currently is no public trading market for the Company s ordinary shares. In connection with the repurchase of such shares, Zhong Hui Rong (Fujian) Fund Ltd. agreed to cancel 656,250 warrants held by Zhong Hui Rong (Fujian) Fund Ltd. The Industry The People s Republic of China (PRC) represents approximately one quarter of the global population. According to information published by the PRC government, our target population market as of June 30, 2011 is approximately 360 million individuals. The group is comprised of: infants and children below school age (6) - 160 million; primary school students - 110 million; junior high school students - 60 million; and senior high school students 30 million. Organizational History We were organized under the laws of the Cayman Islands on September 27, 2006. Tsingda Technology was organized under the laws of British Virgin Islands on December 11, 2009. Tsingda Management was organized under the laws of the PRC on November 26, 2007. Tsingda Education was organized under the laws of the PRC on October 23, 2003. Tsingda Network was organized under the laws of the PRC on February 14, 2004. The accompanying notes are an integrated part of these consolidated financial statements On April 22, 2010, Tsingda Century Training School ( Tsingda School ) was incorporated in Beijing, as a wholly owned subsidiary of Tsingda Education. The Company, through its subsidiary Tsingda School, acquired a license from the PRC government to issue course completion certificates to students. These certificates are not equivalency degrees, but rather these certificates acknowledge that a student has passed a particular course offered by Tsingda. On May 24, 2010, we acquired Tsingda Technology. The transaction was treated for accounting purposes as a capital transaction and recapitalization by Tsingda Technology, the accounting acquirer, and as a re-organization by Compass, the accounting acquiree. Compass (now Tsingda eEdu Corporation) is the legal acquirer and Tsingda Technology the legal acquiree. Tsingda Technology owns 100% of the issued and outstanding capital stock of Tsingda Management. On April 26, 2010, Tsingda Management entered into a series of contractual agreements with Tsingda Education, and its shareholders, in which Tsingda Management assumed management of the business activities of Tsingda Education. Namely, these contractual agreements consist of: (i) a consulting services agreement, (ii) an operating agreement, (iii) an equity pledge agreement, (iv) a voting rights proxy agreement, and (v) an option agreement. We rely on these agreements to, among other things, generate all our revenues, control the business activities of Tsingda Education, appoint all of its executives, senior management and the members of its board of directors, and at our option, purchase all the outstanding equity of Tsingda Education. If one or more of these contractual agreements are terminated or ruled unenforcable, we could lose control of Tsingda Education, which will materially and adversely affect our revenues and future growth prospects. See Risk Factors beginning on Page 8. The Wholly-Foreign Owned Enterprise Law (1986), as amended, and The Wholly-Foreign Owned Enterprise Law Implementing Rules (1990), as amended and the Company Law of the PRC (2006), contain the principal regulations governing dividend distributions by wholly foreign owned enterprises. Under these regulations, wholly foreign owned enterprises may pay dividends only out of their accumulated profits, if any, determined in accordance with PRC accounting standards and regulations. Additionally, such companies are required to set aside a certain amount of their accumulated profits each year, if any, to fund certain reserve funds. These reserves are not distributable as cash dividends except in the event of liquidation and cannot be used for working capital purposes. The PRC central government also imposes controls on the conversion of RMB into foreign currencies and the remittance of currencies out of the PRC. We may experience difficulties in completing the administrative procedures necessary to obtain and remit foreign currency for the payment of dividends from the Company s profits. Furthermore, if our subsidiaries or affiliates in China incur debt on their own in the future, the instruments governing the debt may restrict its ability to pay dividends or make other payments. If we or our subsidiaries are unable to receive all of the revenues from our operations through these contractual or dividend arrangements, we may be unable to pay dividends on our Ordinary Shares. The risks described above and other risks in connection with an investment in our securities are found in the Risk Factors section beginning on page 8. You should carefully read and consider the information in the Risk Factors section before making an investment in our securities. Corporate Structure Our organization structure is depicted below: TSINGDA EEDU CORPORATION Notes to the Consolidated Financial Statements June 31, 2011 (Unaudited) NOTE 1- ORGANIZATION AND BUSINESS OPERATIONS Tsingda Century Investment Consultant of Education Co., Ltd. ( Tsingda Century ) was incorporated on October 23, 2003, in Beijing, the People s Republic of China (the PRC ). Beijing Tsingda Century Network Technology Co., Ltd. ( Tsingda Network ), the wholly owned subsidiary of Tsingda Century was incorporated in the PRC on February 14, 2004. Tsingda Century and its subsidiary provide high quality offline and online educational services for students ranging from six to eighteen years of age in the PRC. Tsingda eEDU Corporation ( Tsingda eEDU or the Company , formerly Compass Acquisition Corporation ) was incorporated in the Cayman Islands on September 27, 2006. The Company was originally organized as a blank check company to investigate and acquire a target company or business seeking the advantages of being a publicly held corporation. Tsing Da Century Education Technology Co., Ltd. ( Tsingda Technology ) was incorporated on December 11, 2009, in the British Virgin Islands, to serve as the intermediate holding company. Tsingda Century Beijing Management Consulting Co., Ltd. ( Tsingda Management ) was incorporated on November 26, 2007 and was serving as the wholly owned foreign enterprise ( WOFE ) of Tsingda Technology. On April 22, 2010, Tsingda Century Training School ( Tsingda School ) was incorporated in Beijing, the PRC, and it is a wholly owned subsidiary of Tsingda Century. As part of the restructuring, on April 26, 2010, Tsingda Management entered into a series of agreements with Tsingda Century and its shareholders, including an Operating Agreement, Proxy Agreement, Consulting Services Agreement, Equity Pledge Agreement and Option Agreement, which entitled Tsingda Management to receive substantially all of the economic benefits of Tsingda Century in consideration for consulting services provided by Tsingda Management to Tsingda Century. An Option Agreement allows Tsingda Management to acquire the shares of Tsingda Century when permitted by the PRC laws. The Proxy Agreement provides Tsingda Management with the voting rights of Tsingda Century s shareholder and Equity Pledge Agreement pledges the shares in Tsingda Century to Tsingda Management without transferring legal ownership in Tsingda Century to Tsingda Management. Under the Consulting Services Agreement, Tsingda Management is the exclusive service provider, to Tsingda Century, for services, including general business operation, human resources, business development and Tsingda Century is obligated to make regular payments for such services provided. Under the Operating Agreement, Tsingda Century shall not conduct any transactions which may materially affect the assets, obligations, rights or the operations, without the written consent of Tsingda Management and Tsingda Century accepted Tsingda Management s corporate policy provide by Tsingda Management in connection with Tsingda Century s daily operations, financial management and the employment and dismissal of Tsingda Century s employees. Through those agreements, Tsingda Management has the power to direct the activities that most significantly impact the economic performance of Tsingda Century and Tsingda Century became a variable interest entity ( VIE ) and is included in the consolidated group. As all of the companies are under common control, this structure has been accounted for as a reorganization of entities under common control and the financial statements have been prepared as if the reorganization had occurred retroactively. On May 24, 2010, the Company and its controlling shareholders entered into a share exchange agreement (the Agreement) with Tsingda Technology and all of the shareholders of Tsingda Technology. Under the Agreement, the Company acquired 100% of the outstanding equity interests of Tsingda Technology in exchange for 244,022.78 preferred shares of the Company. Each such share of preferred stock was convertible into 100 ordinary shares of the Company at such time as the number of authorized ordinary shares is increased. The transaction was closed in May 2010 and was accounted for as a reverse merger with a shell company and a recapitalization of Tsingda Technology. Tsingda eEDU Corporation is the accounting acquiree. Tsingda Technology is the accounting acquirer and the surviving entity. The corporate structure of the Company is as follows:
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+PROSPECTUS SUMMARY This summary highlights certain information described in greater detail elsewhere in this prospectus. Before deciding to invest in our common stock you should read the entire prospectus carefully, including Risk Factors, our consolidated financial statements and related notes, and Management s Discussion and Analysis of Financial Condition and Results of Operations, in each case appearing elsewhere in this prospectus. References in this prospectus to we , us , our and Company refer to Game Trading Technologies, Inc., unless the context requires otherwise. Business Overview We are a leading provider of comprehensive trading solutions for video game retailers, publishers, rental companies, charities and consumers. Through our trading platform, we provide customers with value-added services including valuation, procurement, refurbishment, merchandising and distribution of pre-owned video games and related products. We offer these value-added services and customized solutions to leading specialty, mass, convenience, rental and online retailers, as well as directly to consumers through our website, www.gamersfactory.com. Our services allow retailers, including Wal-Mart, Best Buy and Toys R Us to better serve those customers who are seeking to monetize their existing video game collections, as well as those looking to purchase pre-owned video games and related products. We believe we are the largest trading solutions provider and distributor of pre-owned video games and related products to retailers in North America, and the only company to offer a comprehensive set of solutions to the pre-owned video game industry. We entered the video game wholesale and trading business in 2003 to meet the growing demand from retailers for high quality pre-owned video games. In response to this demand, we developed a proprietary algorithm and database, GFI GameBook, to categorize and efficiently value pre-owned video games. GFI GameBook provides daily price quotes for all pre-owned video games and related entertainment products released for use on North American game consoles. Retailers utilize GFI GameBook to determine daily market prices to facilitate the purchase of pre-owned video games from their customers in order to drive traffic and incremental storewide sales. Our primary source of revenue is from the sale of pre-owned video games. We generate our supply of pre-owned video games and related products through four primary channels: trade-in, off-rental, consumer returns and closeout & overstock programs. Our multiple product sourcing channels enable us to acquire new releases, greatest hits and classic titles across all video game platforms. Once we source product, we categorize and, when needed, refurbish the video games at our facility in Hunt Valley, Maryland. We have the ability to refurbish video games for use on all major platforms including Nintendo, Sony and Microsoft. We then re-merchandise and distribute these products to various leading retailers as well as online directly to consumers. By utilizing GFI GameBook and leveraging our national customer reach, we have the ability to tailor the distribution and replenishment of video game products to maximize our operating performance. For the fiscal year ended December 31, 2009, we recorded revenue of $36.7 million as compared to $17.1 million for the fiscal year ended December 31, 2008, representing a growth rate of 114.3%. For the nine months ended September 30, 2010, we reported revenues of $27.1 million as compared to revenues of $27.9 million for the nine months ended September 30, 2009, representing a decrease of 2.6%. Industry Overview According to information published by NPD Group in May 2009, a leading market research firm specializing in consumer and retail sales information, nearly two out of every three Americans have played a video game in the past six months. Including the widely-used Sony PlayStation 2 and handheld devices such as the Nintendo DS, DS Lite, DSi and Sony PSP, we estimate a current total of more than 150 million consoles Table of Contents Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of large accelerated filer, accelerated filer, and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company Title of each class of securities to be registered Amount to be registered Proposed maximum offering price per security Proposed maximum aggregate offering price Amount of registration fee Units, each consisting of one share of common stock, $0.0001 par value, and 0.5 warrants to purchase common stock (1)(2) 2,300,000 units $5.00 $11,500,000.00 $1,335.11 Common Stock, $0.0001 par value, included in the Units (2) 2,300,000 shares (3) Warrants included in the Units(2) 1,150,000 warrants (3) Shares of common stock underlying the warrants included in the Units (1)(2) 1,150,000 shares $5.50 $6,325,000.00 $734.33 Common Stock, $0.0001 par value (4)(5)(8) 1,337,500 $6.00 $8,025,000.00 $931.70 Common Stock, $0.0001 par value (4)(6)(8) 1,923,750 $6.00 $11,542,500.00 $1,340.08 Common Stock, $0.0001 par value (4)(7) 508,750 $6.00 $3,052,500.00 $354.40 Total $40,445,000.00 $4,695.66 (9) (1) Estimated solely for the purpose of calculating the amount of the registration fee pursuant to Rule 457(o) of the Securities Act of 1933, as amended. (2) Represents 2,300,000 shares of the Registrant s common stock and warrants to purchase 1,150,000 shares of common stock being offered pursuant to the Registrant s public offering, including 300,000 shares of common stock and warrants to purchase 150,000 shares of common stock that may be sold pursuant to the exercise of a 30-day option granted by the Registrant to the underwriters to cover over-allotments, if any. (3) No fee pursuant to Rule 457(g) under the Securities Act of 1933, as amended. (4) Estimated solely for purposes of calculating the registration fee pursuant to Rule 457(c) of the Securities Act of 1933, as amended, based on the average of the high and low prices of the common stock of the Registrant as reported on the OTC Bulletin Board on February 8, 2011 and assumes a one for two reverse stock split to be effective on or prior to the effective date of the registration statement. (5) Represents shares of the Registrant s common stock being registered for resale that are issuable to the selling stockholders named in the selling stockholders prospectus or a prospectus supplement thereto upon conversion of outstanding shares of series A convertible preferred stock. (6) Represents shares of the Registrant s common stock being registered for resale that are issuable to the selling stockholders named in the selling stockholders prospectus or a prospectus supplement thereto upon exercise of outstanding warrants to purchase shares of common stock. (7) Represents shares of the Registrant s common stock being registered for resale that are held by the selling stockholders named in the selling stockholders prospectus or a prospectus supplement thereto. (8) Pursuant to Rule 416 under the Securities Act of 1933, as amended, this Registration Statement shall be deemed to cover the additional securities (i) to be offered or issued in connection with any provision of any securities purported to be registered hereby to be offered pursuant to terms which provide for a change in the amount of securities being offered or issued to prevent dilution resulting from stock splits, stock dividends, or similar transactions and (ii) of the same class as the securities covered by this Registration Statement issued or issuable prior to completion of the distribution of the securities covered by this Registration Statement as a result of a split of, or a stock dividend on, the registered securities. (9) Previously paid. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall hereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. Table of Contents owned by U.S. households. The video game industry achieved $19.7 billion in sales for 2009 according to NPD, with $10.5 billion coming from software and the remainder in hardware and accessories. Based on revised estimates announced by NPD in June 2010, total software sales alone in 2009 exceeded $15.0 billion when factoring in estimates for used games, rentals, subscriptions, digital full game downloads, downloadable content, and mobile game apps. In 2009, we estimate there were more than 1,000 new video game titles released for sale across all current generation consoles. Since 2000, we believe there have been more than 8,000 different titles released across all consoles. Today, we believe that U.S. consumers possess approximately 3.4 billion units of pre-owned video game products that are suitable for trading. While new video game sales in the United States are concentrated in the hands of four national retailers, pre-owned video game sales are more heavily concentrated in the hands of one market leader, GameStop Corp. ( GameStop ). Despite the concentrated nature of the pre-owned video game market in the United States, we believe that the number of pre-owned video games sold by GameStop represents only a small fraction of the pre-owned video games that could potentially be traded-in due to the large, yet underpenetrated, nature of the pre-owned video game market. We believe that many large video game and non-video game retailers are currently evaluating methods of entering the pre-owned video game market. Several challenges exist in successfully competing in this market, which include, among others: Supply. Currently, the demand from traditional retailers for pre-owned video games outpaces their ability to aggregate supply of the games, either directly from their customers or through other procurement channels. As consumers become more aware of the residual value of pre-owned video games, we believe they will become more active traders of their pre-owned video game collections. Pricing. The value of a pre-owned video game can change very rapidly, based on a variety of factors. Since valuing pre-owned video games is outside the core expertise of most traditional retailers, they often undervalue trade-ins, which discourages consumers from monetizing their collections. Merchandising. Given the reliance on consumers to trade-in games from their existing collections to create supply in the pre-owned market, it is difficult for retailers to plan their pre-owned merchandising strategies in the same manner they plan their new game merchandising strategies. Refurbishment. Oftentimes, video games that are traded-in are in need of refurbishment, ranging from a light buffing of the disc to a complete resurfacing. Most traditional retailers lack this capability, limiting their ability to monetize damaged, but still repairable, pre-owned video games. Repackaging. Many pre-owned video games are returned by consumers with the original packaging either damaged or missing. In order for these games to be effectively merchandised and resold, their packaging needs to be cleaned, repaired or entirely replaced. Our Solution Our platform provides our customers with an end-to-end solution including the valuation, procurement, refurbishment, merchandising and distribution of pre-owned video games and related products. Our services include, among other things: Product Valuation and Services GFI GameBook. GFI GameBook provides daily price quotes for all pre-owned video games and related entertainment products released for use on North American game consoles. Our proprietary game trading database provides up-to-date pricing, which allows us to efficiently value product. Table of Contents EXPLANATORY NOTE This Registration Statement contains two forms of prospectuses: one to be used in connection with a public offering of up to 2,300,000 units, each unit consisting of one share of our common stock and 0.5 warrants to purchase our common stock (the Prospectus ) and one to be used in connection with the potential resale by certain selling stockholders of an aggregate of 3,770,000 shares of our common stock (the Selling Securityholder Prospectus ), consisting of (i) 1,337,500 shares of our common stock issuable upon conversion of our series A convertible preferred stock held by certain of the selling stockholders, (ii) 1,923,750 shares of our common stock issuable upon exercise of outstanding warrants held by certain of the selling stockholders and (iii) 508,750 shares of our common stock held by certain of the selling stockholders. The Prospectus and Selling Securityholder Prospectus will be identical in all respects except for the alternate pages for the Selling Securityholder Prospectus included herein which are labeled Alternate Page for Selling Securityholder Prospectus. The Selling Securityholder Prospectus is substantively identical to the Prospectus, except for the following principal points: they contain different outside and inside front covers; they contain different Offering sections in the Prospectus Summary section on page 7; they contain different Use of Proceeds sections on page 27; the Capitalization and Dilution sections are deleted from the Selling Securityholder Prospectus on page 28 and page 30, respectively; a Selling Securityholder section is included in the Selling Securityholder Prospectus beginning on page 64; the Underwriting section from the Prospectus on page 69 is deleted from the Selling Securityholder Prospectus and a Plan of Distribution is inserted in its place; and the Legal Matters section in the Selling Securityholder Prospectus on page 69 deletes the reference to counsel for the underwriters; The Company has included in this Registration Statement, after the financial statements, a set of alternate pages to reflect the foregoing differences of the Selling Securityholder Prospectus as compared to the Prospectus. Table of Contents Store-based Solution. We provide retailers with access to a turn-key software application, which allows retailers to operate a game trading business, regardless of the capabilities of their internal systems. Customized Services. In addition to our in-store solution, we offer our trading customers the ability to receive daily valuation data feeds customized to meet their specifications for use in their own trading operations. Provider of e-Commerce and Interactive Marketing Services. We also offer website development and maintenance, providing retailers with an online channel to value and accept trade-ins of pre-owned video games. Product Procurement We source product through four primary channels: trade-in, off-rental, consumer returns, and closeout & overstock programs: Trade-In Programs. We purchase pre-owned video games and related products from participating retailers. Participating retailers purchase pre-owned products, both in their retail stores and via their websites, and utilize our GFI GameBook to value these products. They purchase these trade-in products for either cash or store-credit, which we then repurchase from the retailer. Some of our retail trade-in partners include Wal-Mart, Best Buy and Toys R Us. We also purchase pre-owned video games and related products directly from consumers through our website, www.gamersfactory.com, where consumers receive price quotes for their pre-owned merchandise, send the product directly to us, and receive payment from us once their products are received. Off-Rental Programs. We source pre-owned video games from companies who offer video game rental programs. As these companies refresh their rental game inventory primarily with new releases, we purchase these off-rental video games. As a result, video game rental companies can efficiently monetize their off-rental inventory, while providing us with a supply of newer releases. Primary sources for these off-rental products include GameFly and Redbox. Consumer Return Programs. Consumers return video games to retailers for a variety of reasons, and the retailer is often unable to restock these video games and sell them as new. We purchase these returned games from select national retailers. Closeout & Overstock Programs. From time to time, we purchase new video games from retailers, distributors and publishers who have excess new game inventory that needs to be liquidated. We in-turn sell these new video games as pre-owned video games. Many publishers and distributors look to work with us due to our ability to distribute these excess games through a variety of channels. Product Refurbishment A portion of the pre-owned video games that we source are in need of refurbishment before it can be sold. Our refurbishment process adds value by improving the games physical quality, extending its life and verifying its functionality. Once refurbished, we may shrink-wrap and/or label the video games according to specifications set by our retail customers. Historically, we have been able to repair approximately 97% of all acquired products; the approximately 3% of remaining products are outsourced or sold to refurbishment companies that have more extensive repair capabilities. Product Distribution We sell our video games and related products through three primary channels: retail ready, consumer direct and bulk. Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED FEBRUARY 9, 2011 Preliminary Prospectus 2,000,000 Units Game Trading Technologies, Inc. We are offering 2,000,000 units, each unit consisting of one share of our common stock and 0.5 warrants to purchase common stock at an exercise price per whole share equal to 110% of the offering price of the units offered by this prospectus. No fractional warrants will be issued. The units will separate immediately and the common stock and warrants will be issued separately. There will be no market for the units or the warrants. Our common stock is currently quoted on the OTC Bulletin Board, under the symbol GMTD.OB. As of February 8, 2011, the last reported sale price of our common stock was $3.00, which giving effect to a one for two reverse stock split of our common stock to be effected prior to or upon the effective date of our registration statement, equates to $6.00. However, in this prospectus, we assume that the price per unit in this offering, on a post-split basis, will be in the range of $4.00 to $5.00, and we have used the midpoint of such range ($4.50) for the assumptions set forth herein. Following the stock split, our common stock may not trade at a price consistent with such reverse split. Investing in our units involves a high degree of risk. See Risk Factors beginning on page 10 of this prospectus. Price to Public Underwriting Discounts and Commissions (1) Proceeds to Company Per unit $ $ $ Total $ $ $ (1) Includes a non-accountable expense allowance of 1.5% of the gross proceeds, or $ per unit ($ in total) and an expense allowance of up to $225,000 for fees and expenses (including the fees and expenses of counsel to the underwriter but excluding any blue sky fees and expenses), payable to the underwriters. See Underwriting. We have granted the underwriters a 30-day option to purchase up to an additional 300,000 units at the public offering price, less the underwriting discounts and commissions, to cover over-allotments. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The underwriters expect to deliver the units to purchasers on or about , 2011. Roth Capital Partners Maxim Group LLC Prospectus dated , 2011. Table of Contents Retail Ready. Retail ready sales consist of pre-owned video games and related products sold to third party specialty, mass and convenience store retailers. In some instances, these retailers already sell new video games and use our services to help supply and merchandise dedicated pre-owned video game sections in their stores. Other retailers do not offer new video games, but utilize our solutions to sell pre-owned video games. Our retail customers include GameStop, Wal-Mart, Best Buy, Toys R Us, 7-Eleven and others. Consumer Direct. We sell pre-owned video games and related products directly to consumers through our proprietary channel, www.gamersfactory.com, which allows consumers to browse and purchase from our wide assortment of pre-owned video games and related products. We also sell pre-owned video games and related products directly to consumers through third party websites such as www.ebay.com and www.amazon.com. Bulk. We provide as-is games and related products to video game retailers who possess their own refurbishment and store distribution capabilities. Our bulk sales help us efficiently manage our inventory position and working capital requirements by selling games in as-is condition, thereby eliminating refurbishment and accelerating the sales cycle. Growth Strategy Our objective is to enhance our position as the leading provider of comprehensive trading solutions for the pre-owned video game market. Key elements of our growth strategy include: Capitalizing on the Large and Growing Market for Pre-Owned Games. Significant unmet demand exists from consumers seeking to purchase high quality pre-owned video games. We estimate that U.S. consumers possess more than 3.4 billion units of pre-owned video game products that are suitable for trading. We believe video game retailers are currently selling significantly more games than are being traded-in by consumers, which implies that the supply of pre-owned video games is growing. Utilizing GFI GameBook, we enable leading specialty, mass, convenience and online retailers, such as Best Buy and Toys R Us, to accurately value and categorize pre-owned video games from consumers looking to monetize their existing video game collection. Our platform solution helps create a more consistent supply of pre-owned video games to sell through our various distribution channels. Promoting the Concept of Game Trading to Casual Gamers. Over the past several years, game trading has become widely accepted within the core gamer market. These consumers understand that significant residual value exists in their video games after they have either beaten the game or lost interest in playing it further. Although casual gamers represent a large and growing portion of the overall market, they have yet to adopt game trading in the same manner as core gamers. By partnering with large, national retailers to promote the concept of game trading to casual gamers, we believe we can increase the awareness of game trading among casual gamers and by doing so, increase the overall size of the market as well as our market share in pre-owned video games. Becoming the Foremost Buyer of Trade-in Video Games. Historically, our primary source of supply has been closeout and overstock programs and consumer returns. We believe the supply from retail trade-in and off-rental programs represents a much larger opportunity to acquire and ultimately resell higher margin products. As a result of our ability to accurately and competitively price products, we have become the pre-owned video game buyer of choice for many large retailers. Expanding our Direct-To-Consumer Business. Our website, www.gamersfactory.com allows customers to trade-in and purchase pre-owned video games directly with us. Historically, we have not devoted a meaningful amount of our time to growing our direct-to-consumer business. We believe that there is a significant growth opportunity in the direct-to-consumer market, and we intend to allocate resources to expand our direct-to-consumer business in the future. Table of Contents Pre-Owned Video Game Ecosystem Suppliers Best Buy Walmart Save money. Live better.SM TOYS R US GF GAMEFLY redbox TARGET BLOCKBUSTER Proprietary GTTI Platform 1 Sourcing Trade-ins, returns, off-rental and closeouts (Powered by GFI GameBook) 2 Inventory Control Tracked by item, location and condition 3 Certification Certified Pre-Owned reconditioning 4 Distribution Retail and online channel partners, and bulk wholesale 5 Sales GTTI Game Trading Technologies Inc. To consumers through channels or directly Customers GameStop BEST BUY Walmart Save money. Live better.SM TOYS R US 7ELEVEN amazon.com ebay The World s Online MarketplaceTM Table of Contents Evaluating International Expansion Opportunities. Many of our large participating retailers maintain a strong presence outside of the United States. We believe that as the concept of game trading becomes more widely accepted, there will be a significant opportunity for our products and services to be offered through our participating retailers locations as well as new retailers in other developed countries. We have, and will continue, to evaluate opportunities outside of the United States that we view as accretive to our core business. Developing and Monetizing Complementary Products and Services. Our principals have an extensive operating history within the video game industry. We intend to leverage their experience and relationships in the industry to further develop products and services that are complementary to our core business. We are currently evaluating an opportunity to develop video game accessories under an exclusive license from a highly recognized developer of consumer electronic accessories, which would be sold primarily through our existing national retailer customer base. Recent Developments The following is an estimate of our selected preliminary unaudited financial results for the fiscal year ended December 31, 2010. These results are subject to the completion of our normal quarter-end closing procedures and review by our independent registered public accounting firm in accordance with Statement of Auditing Standards No. 100, which provides guidance on performing reviews of interim financial information. As a result, our preliminary unaudited financial results set forth below may be subject to change. For additional information regarding the various risks and uncertainties inherent in estimates of this type, see Forward-Looking Statements. We estimate that we will generate total revenues ranging from approximately $33.2 million to $34.0 million for the fiscal year ended December 31, 2010. We estimate we will have a net loss ranging from approximately $4.25 million to $4.75 million for the fiscal year ended December 31, 2010. Our estimated net loss for the fiscal year ended December 31, 2010 includes estimated non-cash charges of stock based compensation of approximately $3.0 million to $3.5 million. Although full results for our fiscal year ended December 31, 2010 are not yet available, based upon the information available to us and except as otherwise described in the prospectus, we do not anticipate that our results for the fiscal year will be adversely impacted, in the aggregate, by any material or unusual adverse events. However, our actual results may differ from our current estimates. We cannot assure you that our results for this period will be indicative of our results for future annual or quarterly periods. Please refer to Management s Discussion and Analysis of Financial Condition and Results of Operations included elsewhere in this prospectus for information regarding trends and other factors that may influence our results of operations. Proposed Changes to Our Capital Structure Reverse Stock Split We will effect a reverse stock split of our shares of common stock of 1-for-2 prior to, or upon, effectiveness of the registration statement of which this prospectus forms a part. No fractional shares will be issued in connection with the reverse stock split and all such fractional interests will be rounded up to the nearest whole number of shares of common stock. The conversion and/or exercise prices of our issued and outstanding convertible securities, including shares of our series A convertible preferred stock, stock options and warrants, will be adjusted accordingly. All information presented in this prospectus assumes a 1-for-2 reverse stock split of our outstanding shares of common stock, and unless otherwise indicated, all such amounts and corresponding conversion price and/or exercise price data set forth in this prospectus have been adjusted to give effect to the assumed reverse stock split. Table of Contents TABLE OF CONTENTS Page Prospectus Summary 1
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+Nevada s control share law may have the effect of discouraging takeovers of the company. In addition to the control share law, Nevada has a business combination law which prohibits combinations under certain circumstances between Nevada corporations that have 200 or more stockholders of record and interested stockholders for three years after the interested stockholder first becomes an interested stockholder, unless the combination or the transaction by which the person first became an interested stockholder is approved by the corporation s board of directors before the person first became an interested stockholder. Combinations with interested stockholders occurring more than three years after the person first became an interested stockholder must meet certain specified conditions. For purposes of Nevada law, an interested stockholder is any person who is (i) the beneficial owner, directly or indirectly, of ten percent or more of the voting power of the outstanding voting shares of the corporation, or (ii) an affiliate or associate of the corporation and at any time within the three previous years was the beneficial owner, directly or indirectly, of ten percent or more of the voting power of the then outstanding shares of the corporation. The term combination is broadly defined and includes, among other things, mergers, consolidations, sales of assets, liquidations, dissolutions, recapitalizations and reclassifications of securities. The effect of Nevada s business combination law is to potentially discourage parties interested in taking control of the company from doing so if they cannot obtain the approval of our board of directors. Transfer Agent The transfer agent and registrar for our common stock is Transhare Corporation, 4626 South Broadway, Englewood, CO 80113, toll free phone (888) 662-1113, e-mail info@transhare.com. PLAN OF DISTRIBUTION We are registering for resale by the selling stockholders and certain transferees 58,754,079 shares of common stock, of which 50,000,000 shares are issued and outstanding and up to 8,754,079 shares are issuable upon exercise of warrants. We will not receive any of the proceeds from the sale by the selling stockholders of the shares of common stock, although we may receive up to $3,506,576 upon the exercise of all of the warrants by the selling stockholders for cash. We will bear all fees and expenses incident to our obligation to register the shares of common stock. If the shares of common stock are sold through broker-dealers or agents, the selling stockholder will be responsible for any compensation to such broker-dealers or agents. The selling stockholders may pledge or grant a security interest in some or all of the shares of common stock owned by them and, if they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell the shares of common stock from time to tie pursuant to this prospectus. The selling stockholders also may transfer and donate the shares of common stock in other circumstances, in which case the transferees, donees, pledgees or other successors in interest will be the selling beneficial owners for purposes of this prospectus. The selling stockholders will sell their shares of common stock subject to the following: all of a portion of the shares of common stock beneficially owned by the selling stockholders or their perspective pledgees, donees, transferees or successors in interest, may be sold on the OTC Bulletin Board market, any national securities exchange or quotation service on which the shares of our common stock may be listed or quoted at the time of sale, in the over-the counter market, in privately negotiated transactions, through the writing of options, whether such options are listed on an options exchange or otherwise, short sales or in a combination of such transactions; each sale may be made at market prices prevailing at the time of such sale, at negotiated prices, at fixed prices or at varying prices determined at the time of sale; some or all of the shares of common stock may be sold through one or more broker-dealers or agents and may involve crosses, block transactions or hedging transactions. The selling stockholders may enter into hedging transactions with broker-dealers or agents, which may in turn engage in short sales of the common stock in the course of hedging in positions they assume. The selling stockholders may also sell shares of common stock short and deliver shares of common stock to close out short positions or loan or pledge shares of common stock to broker-dealers or agents that in turn may sell such shares; and in connection with such sales through one or more broker-dealers or agents, such broker-dealers or agents may receive compensation in the form of discounts, concessions or commissions from the selling stockholders and may receive commissions from the purchasers of the shares of common stock for whom they act as broker-dealer or agent or to whom they sell as principal (which discounts, concessions or commissions as to particular broker-dealers or agents may be in excess of those customary in the types of transaction involved). Any broker-dealer or agent participating in any such sale may be deemed to be an underwriter within the meaning of the Securities Act and will be required to deliver a copy of this prospectus to any person who purchases any shares of common stock from or through such broker-dealer or agent. We have been advised that, as of the date hereof, none of the selling stockholders have made any arrangements with any broker-dealer or agent for the sale of their shares of common stock. The selling stockholder and any broker-dealer participating in the distribution of the shares of common stock may be deemed to be underwriters within the meaning of the Securities Act, and any profits realized by the selling stockholders and any commissions paid, or any discounts or concessions allowed to any such broker-dealer may be deemed to be underwriting commissions or discounts under the Securities Act. In addition, any shares of common stock covered by this prospectus which qualify for sale pursuant to Rule 144 may be sold under Rule 144 rather than pursuant to this prospectus. A selling stockholder may also transfer, devise or gift the shares of common stock by other means not covered in this prospectus in which case the transferee, devisee or giftee will be the selling stockholder under this prospectus. If required at the time a particular offering of the shares of common stock is made, a prospectus supplement or, if appropriate, a post-effective amendment to the registration statements of which this prospectus is a part, will be distributed which will set forth the aggregate amount of shares of common stock being offered and the terms of the offering, including the name or names of any broker-dealers or agents, any discounts, commissions or concessions allowed or reallowed or paid to broker-dealers. Under the securities laws of some states, the shares of common stock may be sold in such states only through registered or licensed brokers or dealers. In addition, in some states the shares of common stock may not be sold unless such shares have been registered or qualified for sale in such state or an exemption from registration or qualification is available and is complied with. There can be no assurance that any selling stockholder will sell any or all of the shares of common stock registered pursuant to the registration statement of which this prospectus forms a part. The selling stockholders and any other person participating in such distribution will be subject to applicable provisions of the Exchange Act and the rules and regulations thereunder, including, without limitation, Regulation M under the Exchange Act, which may limit the timing of purchases and sales of any of the securities by the selling stockholders and any other participating person. Regulation M may also restrict the ability of any person engaged in the distribution of the securities to engage in market-making activities with respect to the securities. All of the foregoing may affect the marketability of the securities and the ability of any person or entity to engage in market-making activities with respect to the securities. The selling stockholders will pay all underwriting discounts and selling commissions and expenses, brokerage fees and transfer taxes, as well as the fees and disbursements of counsel to and
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus and in the documents incorporated by reference in this prospectus. Before deciding whether to purchase shares of our common stock, you should read the following summary together with the more detailed information appearing in this prospectus and the documents incorporated by reference herein, including the information herein under the headings Risk Factors and the information incorporated by reference herein including Selected Consolidated Financial Data , Management s Discussion and Analysis of Financial Condition and Results of Operations , Business , our consolidated financial statements and related notes, and our condensed consolidated financial statements and related notes included in the documents incorporated by reference herein. Unless the context otherwise requires, the terms Fusion-io , the company , we , us and our in this prospectus and in the documents incorporated by reference herein refer to Fusion-io, Inc., and its subsidiaries. Our fiscal year end is June 30 and our fiscal quarters end on September 30, December 31, March 31, and June 30. FUSION-IO, INC. Our Company We have pioneered a next generation storage memory platform for data decentralization. Our platform significantly improves the processing capabilities within a datacenter by relocating process-critical, or active , data from centralized storage to the server where it is being processed, a methodology we refer to as data decentralization. Our integrated hardware and software solutions leverage non-volatile memory to significantly increase datacenter efficiency and offer enterprise grade performance, reliability, availability and manageability. We sell our solutions through our global direct sales force, original equipment manufacturers, or OEMs, including Dell, HP and IBM, and other channel partners. Our data decentralization platform can transform legacy architectures into next generation datacenters and allows enterprises to consolidate or significantly reduce complex and expensive high performance storage, high performance networking, and memory-rich servers. Our platform enables enterprises to increase the utilization, performance and efficiency of their datacenter resources and to extract greater value from their information assets. Many users of our platform have reported achieving greater than 10 times the application throughput per server through increased server utilization, resulting in reductions to ongoing facility, energy and cooling expenses. Industry Background Enterprises are increasingly dependent on their ability to rapidly extract value from their information assets. At the same time, enterprises are facing multiple challenges associated with managing their information assets. These challenges include: the exponential growth in data; increasing demand for frequent access to this data from the growing number of Internet-connected devices; and growing demand by users for faster and more relevant information. Enterprises are deploying increasing amounts of datacenter infrastructure in an attempt to address these challenges, which, in turn, is creating pressure on their budgets and administrative resources. Legacy datacenter architectures using centralized storage cannot effectively supply the increasingly large quantities of process-critical data quickly enough to fully utilize the processing capacity of today s servers, creating what we refer to as the data supply problem. This problem results in an increasing number of underutilized servers. While processing performance has doubled approximately every 18 months, the performance of the storage infrastructure has not kept pace, and this increasing gap between processing and storage performance is amplifying the data supply problem. Table of Contents The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. Subject to Completion. November 16, 2011. 8,843,739 Shares Common Stock Fusion-io is offering 3,000,000 shares of its common stock and the selling stockholders are offering 5,843,739 shares of common stock in this offering. Fusion-io will not receive any of the proceeds from the sale of the shares being sold by the selling stockholders. The common stock of Fusion-io is listed on the New York Stock Exchange under the symbol FIO . On November 15, 2011, the last reported sale price of our common stock on the New York Stock Exchange was $38.10 per share. See Risk Factors on page 7 to read about factors you should consider before buying shares of our common stock. Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense. Per Share Total Offering price $ $ Underwriting discounts and commissions $ $ Proceeds, before expenses, to Fusion-io $ $ Proceeds, before expenses, to the selling stockholders $ $ To the extent that the underwriters sell more than 8,843,739 shares of common stock, the underwriters have the option to purchase up to an additional 1,326,560 shares from the selling stockholders identified in this prospectus at the offering price less the underwriting discount. Fusion-io will not receive any of the proceeds from the sale of the shares being sold by the selling stockholders. The underwriters expect to deliver the shares against payment in New York, New York on , 2011. Goldman, Sachs & Co. Morgan Stanley J.P. Morgan Credit Suisse Prospectus dated , 2011 Table of Contents Traditional approaches that attempt to address the growing data supply problem are inadequate. These approaches include: deploying higher performance storage and networking; deploying memory-rich servers; scaling out datacenters; tuning and redesigning applications; utilizing cloud-based services; and deploying virtual servers. Our Solution Our purpose-built storage memory platform integrates our industry standard server-based hardware with our virtualization software, and incorporates our automated data-tiering and platform management software. Our ioMemory hardware uses non-volatile memory to create a high capacity memory tier with fast access rates in a small form factor. Our virtual storage layer, or VSL, software virtualizes the ioMemory hardware and allows the decentralization of active data from centralized storage systems into the server. Our directCache software provides automated data-tiering, which accelerates access to active data from centralized storage. We believe our recent acquisition of IO Turbine, Inc. will enable us to provide virtualization software solutions to accelerate adoption of our platform into the virtualized server and desktop markets. Our ioSphere management software centrally configures, monitors and manages all of our distributed ioMemory hardware and software. Our data decentralization platform enables enterprises to: Manage Growth in Quantity of Data By transforming commodity non-volatile memory into a high capacity storage memory tier in the server and leveraging our automated data-tiering software, we enable enterprises to more efficiently manage the exponential growth in data; Manage Increasing Frequency of Access to Data By providing memory-like performance and allowing multiple processor cores to access active data simultaneously, our platform allows enterprises to handle hundreds of thousands of data requests per second; and Improve Response Times, Relevancy, and Value from Data By allowing enterprises to rapidly access more data, perform deeper analytics and produce more relevant responses, our platform helps enterprises extract greater value from their information assets. Our data decentralization solution also enables enterprises to: Reduce Total Cost of Ownership and Environmental Impact Our platform enables customers to reduce their datacenter infrastructure footprint, administrative expenses and energy consumption related to power and cooling; Unlock the Potential of Virtualization Our platform enables more virtual servers and desktops to be deployed per physical server without experiencing the performance issues caused by data supply constraints; and Enhance the Performance of Cloud and SaaS Providers Our platform allows cloud service providers and software-as-a-service vendors to significantly enhance the performance of the services they offer and improve their underlying cost structures. Our Strategy Our objective is to expand our position as the leading provider of storage memory platforms for data decentralization. The principal elements of our strategy include: leverage our first-to-market and leading position in data decentralization; continue our focus on platform solutions; extend our platform differentiation through software innovation; develop and maintain direct customer engagement; Table of Contents TABLE OF CONTENTS Prospectus Page Prospectus Summary 1
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+This summary highlights information contained elsewhere in this prospectus, but it does not contain all of the information that you may consider important in making your investment decision. Therefore, you should read the entire prospectus carefully, including, in particular, Risk Factors beginning on page 16 of this prospectus, Management s Discussion and Analysis of Financial Condition and Results of Operations beginning on page 42 of this prospectus and the financial statements and related notes included elsewhere in this prospectus. In this prospectus, the Company, Latrobe, we, us and our refer to Latrobe Specialty Metals, Inc., a Delaware corporation and the issuer of the common stock offered hereby, and its consolidated subsidiaries, including Latrobe Specialty Metals Company. Our Company We are one of the largest manufacturers and a global distributor of high-performance specialty metals and alloys. We serve a diversified group of end markets, including the commercial aerospace, defense, oil and gas exploration and production, power generation and industrial markets. We develop, produce and market over 350 grades of specialty metals and alloys that are used in demanding applications such as the manufacture of: (i) landing gear, helicopter shafts, jet engine fasteners and jet engine bearings for the commercial aerospace and defense markets; (ii) downhole logging tools, completion tubes and valves for the oil and gas exploration and production market; (iii) turbine bolts, shafts, pins and blades for the power generation market; and (iv) metal cutting, punching, sawing and stamping dies for the industrial market. To meet the exacting requirements of our customers, we produce materials that possess specific metallurgical properties, including high-strength, corrosion resistance, hardness, fatigue resistance, fracture toughness and temperature resistance. We are able to produce these advanced materials as a result of the highly specialized equipment we have installed at our facilities, the talented team of metallurgists and engineers that we employ and the knowledge we have gained from decades of manufacturing specialty metals. We have been in continuous operation since 1913 and have manufactured specialty metals for the commercial aerospace and defense industries for over 50 years. We were acquired by our current stockholders in December 2006 from The Timken Company ( Timken ), which had owned our Company since 1975. Since our acquisition from Timken, we have implemented a strategy to increase our production of higher value-added specialty metals and to target underserved end markets and customers that require difficult-to-produce grades of metals. As part of this strategy, we have invested approximately $60 million in state-of-the-art equipment and facilities to, among other things, increase our vacuum induction melting ( VIM ) furnace capacity by approximately 200% and to increase the number of our vacuum arc remelting ( VAR ) furnaces by approximately 30%. This new equipment was placed into service in September 2008 on schedule and on budget, and received subsequent certifications in 2009. This increased capacity provides the basis for our aggressive expansion into new products, such as nickel-based super alloys, and new end markets, such as oil and gas exploration and production and power generation. We have received a wide assortment of critical end-user qualifications and certifications on this new equipment that are required to generate commercial sales. We operate through two segments: Manufacturing and Distribution. We conduct our manufacturing activities at facilities in Latrobe, Pennsylvania; Franklin, Pennsylvania; and Wauseon, Ohio. We also operate warehouse facilities in Germany and the United Kingdom to fulfill the needs of our Manufacturing customers. The centerpiece of our Manufacturing facilities are two of the largest operating VIM furnaces in the world and 17 VAR furnaces, including four of the largest in the world. Our Manufacturing facilities also include equipment and other assets used for primary melting, forging, rolling, finishing and metallurgical testing, all of which allow us to meet the specific needs of our customers. For the fiscal year ended September 30, 2010, our Manufacturing segment accounted for approximately 64% of our net sales and 79% of our operating income. Table of Contents The information in this prospectus is not complete and may be changed. We and the selling stockholders may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED MAY 24, 2011 Shares Latrobe Specialty Metals, Inc. Common Stock This is the initial public offering of our common stock. We are selling shares of common stock. Prior to this offering, there has been no public market for our common stock. The initial public offering price of our common stock is expected to be between $ and $ per share. We intend to apply to list our common stock on the New York Stock Exchange under the symbol LAT. The underwriters have a 30-day option to purchase on a pro rata basis up to an aggregate of additional shares from the selling stockholders to cover over-allotments of shares. We will not receive any proceeds from the sale of shares of common stock by the selling stockholders. Investing in our common stock involves risks. See Risk Factors beginning on page 16. Price to Public Underwriting Discounts and Commissions Proceeds to Latrobe Specialty Metals, Inc. (Before expenses) Proceeds to Selling Stockholders (assuming full exercise of the over-allotment option) (Before expenses) Per Share $ $ $ $ Total $ $ $ $ Delivery of the shares of our common stock will be made on or about , 2011. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. Credit Suisse FBR Capital Markets Jefferies KeyBanc Capital Markets Cowen and Company The date of this prospectus is , 2011 Table of Contents Our Distribution segment globally sources and distributes corrosion resistant steels, tool steels and powder metals for a wide range of industries. We are a leading distributor of tool steels in North America, and we operate eight service centers that are strategically located in the United States and Canada to fulfill the needs of our Distribution customers. We believe our Distribution segment is differentiated from its competitors by the breadth and depth of our value-added machining services. Over 70% of the products we distribute undergo a value-added process such as cutting, milling, grinding, precision straightening, center-less grinding to exact tolerances or computer numerical control ( CNC ) machining to meet our customers specific requirements. Like our Manufacturing segment, our Distribution segment continually targets opportunities to distribute and process higher value-added metals to new end markets and new customers. An example of our implementation of this strategy was our 2010 agreement with Crucible Industries to become its exclusive North American distributor for the majority of its Crucible Particle Metallurgy or Powder Metal ( CPM ) branded products. These products are used by a large base of industrial, medical and aerospace companies in attractive, growing applications, and CPM is one of the most well-respected brands in the powder metal market. In addition, in September 2008, we acquired Specialty Steel Supply, Inc. ( Specialty Steel Supply ), a Houston, Texas-based distributor of nickel-based super alloys and high-end corrosion resistant alloys, to gain entry into the oil and gas exploration and production market. For the fiscal year ended September 30, 2010, our Distribution segment accounted for 36% of our net sales and 21% of our operating income. Our direct customers, which typically include forgers, machine shops and distributors, further process the specialty metals and alloys that we manufacture for ultimate use by a variety of original equipment manufacturers ( OEMs ) and end users. Direct Manufacturing customers include Canton Drop Forge, Firth Rixson Limited, SIFCO Industries, Inc., Specialty Ring Products, Inc. and Wyman-Gordon Company. The end users of the specialty metals and alloys that we manufacture include the U.S. Army Aviation and Missile Command ( AMCOM ), Airbus S.A.S. ( Airbus ), Augusta Engine Parts Inc., Bell Helicopter Textron Inc., The Boeing Company ( Boeing ), Caterpillar Inc., Central Wire, FAG Kugelfischer Georg Schaefer AG, General Electric Company, Halliburton Company ( Halliburton ), Kennametal Inc., Lockheed Martin Corporation, National Oilwell Varco, Inc. ( National Oilwell Varco ), Newell Rubbermaid Inc., Rolls-Royce Plc, Schlumberger Ltd., SKF Group, Snecma S.A. and United Technologies Corporation. The end users of the specialty metals and alloys sold through our Distribution segment include Alcoa Inc., Cummins Inc., Eaton Corporation, General Dynamics Corporation, GKN plc, Halliburton, Timken and Weatherford International Ltd. The specialty metals industry is undergoing a period of significant growth since its downturn in 2008 and 2009, driven by an improved outlook for manufacturing globally and higher growth forecasts in various end markets in which specialty metals are used, most notably commercial aerospace, oil and gas exploration and production and power generation. For the fiscal year ended September 30, 2010, we generated net sales of $309.2 million, a 6.9% increase over net sales of $289.2 million for the fiscal year ended September 30, 2009. For the fiscal year ended September 30, 2010, we generated net income of $7.3 million versus a net loss of $14.8 million for the fiscal year ended September 30, 2009. For the fiscal year ended September 30, 2010, we generated Adjusted EBITDA of $32.9 million versus Adjusted EBITDA of $15.2 million for the fiscal year ended September 30, 2009. See footnote 4 of Summary Historical Consolidated Financial and Other Data for the definition of Adjusted EBITDA and a reconciliation of Adjusted EBITDA to net income. For the six month period ended March 31, 2011, net sales, net income and Adjusted EBITDA were $202.7 million, $10.4 million and $27.4 million, respectively, compared to net sales, net loss and Adjusted EBITDA of $132.9 million, $(3.6) million and $5.6 million, respectively, for the six month period ended March 31, 2010. As of March 31, 2011, our order backlog was approximately $181.8 million, a 98% increase compared to our backlog of $91.7 million as of March 31, 2010. See Business Backlog for a description of how we calculate backlog. Table of Contents Table of Contents Our Markets We expect to continue to increase revenue and earnings by targeting high-margin end markets with attractive growth characteristics, including the commercial aerospace, defense, oil and gas exploration and production, power generation and industrial markets. For the fiscal year ended September 30, 2010, 52% of net sales for our Manufacturing segment was derived from the commercial aerospace industry, which encompasses both the construction of new aircraft and the manufacture of replacement parts that are utilized in routine maintenance. Currently, the global commercial aerospace market is expanding due to increased passenger travel worldwide (as measured by revenue passenger kilometers ( RPKs )) and a surge in aircraft orders from carriers in high-growth regions such as Brazil, Russia, India and China as well as in the Middle East. Furthermore, recent high oil prices, and consequently high jet fuel prices, have created incentives for airlines, primarily in the United States and Western Europe, to replace their aging fleets with new, more fuel-efficient aircraft. These conditions have resulted in a significant order backlog stretching to 2017 for aircraft manufacturers such as Airbus and Boeing and have prompted both airplane manufacturers to announce several production rate increases that are planned for 2011, 2012 and 2013. Each aircraft that is placed into service adds to a steady order stream for replacement parts due to regular wear and tear, creating a recurring revenue stream for us. We believe that demand for our products from the defense industry will remain steady with ongoing military operations in harsh physical environments throughout the world accelerating the maintenance and replacement of military stock. The specialty metals that we produce are used, among other things, in the manufacture of military helicopters, armored vehicles, missile casings and gun barrels. We believe that the specialty metals that we manufacture are critical to the readiness of the U.S. military and the safety of our nation and that we are a key member of the supply chain to the U.S. Department of Defense ( DoD ). In September 2008, we signed a Strategic Buffer Contract with the DoD to ensure that specific grades and quantities of metal are available to meet the military s surge and sustainment requirements, and in December 2008 and August 2010, we executed agreements with the DoD that provided for us to receive up to $25.7 million to invest in our facilities to increase production capacity. While some defense industry experts are projecting decreases in the annual U.S. defense budget in 2012 and beyond, we believe the segment of the defense industry that we serve will be less affected due to the U.S. military s need to restock after a decade of fighting in harsh physical environments. For the fiscal year ended September 30, 2010, 15% of net sales for our Manufacturing segment were derived from the defense industry. Oil and gas exploration and production is a high-margin end market with strong demand characteristics that we have recently targeted as part of our growth strategy. The recent increase in oil prices combined with important technological advances in horizontal drilling and hydraulic fracturing have led to a sharp increase in North American drilling activity as measured by rig counts. According to data from Baker Hughes Incorporated ( Baker Hughes ), North American rig counts have increased from 916 rigs as of July 27, 2009 to 1,830 rigs as of April 29, 2011, an increase of 99% in less than two years, with horizontal drilling rigs accounting for nearly 60% of the rig count, up from just 7% as recently as 2003. Other trends affecting the oil and gas exploration and production market are: (i) increased drilling activity in harsher and more remote environments; (ii) a steady increase in well depths; (iii) more prevalent use of hydraulic fracturing techniques; and (iv) an increase in lateral drilling per well. We expect these trends to result in higher demand for, and increased consumption of, specialty metals such as those that we manufacture and distribute. To support our entry into this end market, (i) we have hired experienced metallurgists to enable us to manufacture new grades of materials such as nickel-based super alloys, an example of which is a grade known as 718 that is used in downhole drilling tools and blow out preventors; (ii) we have hired sales professionals to cultivate or deepen relationships with oil field services companies, particularly in Houston, Texas; and (iii) we acquired a Houston, Texas-based distributor, Specialty Steel Supply, in September 2008 to fulfill and process customer orders. To date, we believe this strategy has been Table of Contents successful. For the fiscal year ended September 30, 2010, 7% of net sales for our Manufacturing segment were derived from the oil and gas industry versus 3% of net sales for our Manufacturing segment for the fiscal year ended September 30, 2007. Beginning in late 2007, we also expanded into the power generation market by developing relationships with key power generation parts makers, forgers and OEMs, including GE Energy and Grupo Frisa, S.A. de C.V. ( Grupo Frisa ) of Mexico. We believe our entry into this market has been well-received by customers due to our status as a U.S. domestic producer of specialty metals, our ample VIM and VAR production capacity and our proven quality systems. We believe our power generation customers value the rigor of our commercial aerospace processes and choose to do business with us because they would like that same rigor applied to the specialty metals that we manufacture for them. Over the last three years, we have been awarded many end-user and customer qualifications for power generation products, such as turbine blade materials, pins, shaft, veins and critical high-temperature, high-strength bolting materials. We believe we have two competitive advantages versus our peers in serving the power generation end market. First, we believe that having our own, captive distribution network enables us to more effectively service these customers. Second, we believe our wide product portfolio, which encompasses several specialty metals, differentiates us from our peers. Our portfolio of specialty metals includes iron-based remelted alloys for pins, specialty niche stainless remelt materials for bolts and blades and nickel-based super alloys for the high-temperature sections of steam and gas turbines. By comparison, most of our peers only focus on a subset of these materials. Business Strengths We believe that we have the following competitive strengths: Extensive Product Portfolio Serving Attractive End Markets. We are one of the largest manufacturers of specialty metals and alloys, producing over 350 grades of metals that are used in healthy, growing end markets such as commercial aerospace and defense, oil and gas exploration and production and power generation. We have been a supplier to the commercial aerospace industry over the last 50 years and have a leading market position supplying mission critical specialty metals for the defense industry. We have recently expanded our market position in other attractive, high-margin end markets such as oil and gas exploration and production and power generation. Strong Competitive Position and High Barriers to Entry. Many of our customers, OEMs and other end users in the markets we serve require us to complete rigorous qualification processes. These qualification processes are expensive both for the end user and the company seeking qualification. They often require two to three years to complete, and they require a high degree of metallurgical and technical expertise. We believe these qualifications cannot be achieved easily by new market entrants, leading to high barriers to entry. For example, we are one of only three globally qualified producers of specialty metal for the Airbus A380 landing gear. We are also the only qualified supplier of specialty metals for the solid rocket boosters used by NASA. Additionally, we have undergone numerous certification processes to be eligible to supply metals for mission critical parts to the commercial aerospace and defense markets, including ISO 9001:2000, AS9100 and the National Aerospace and Defense Contractors Accreditation Program ( NADCAP ). We also benefit from the fact that the United States military, an important end user of our specialty metals, is required by statute to maintain a preferential supplier policy for domestic manufacturers, which enhances our position with the U.S. military relative to foreign competitors. Value-Added Production Process. We own and operate state-of-the-art manufacturing assets that enable us to produce high value-added specialty metals and alloys. From June 2007 to March 2010, we invested approximately $60 million into our Latrobe and Franklin, Pennsylvania facilities to increase the production capacity for our highest margin products, to expand our market share, to shorten our lead times to customers and to enable us to manufacture new, difficult-to-produce materials such as nickel-based super alloys that earn attractive profit margins. Our new VIM furnace was placed into service in Table of Contents September 2008 on schedule and on budget and received the rigorous, critical end-user qualifications in 2009 that are necessary for manufacturing commercial aerospace, oil and gas exploration and production and power generation specialty metal grades. This additional capacity provides the basis for our future growth. Critical Technical Expertise. Our manufacturing assets are complemented by a staff of well-trained, talented and experienced engineers and metallurgists. Our engineering and metallurgical expertise enables us to design and manufacture specialty metals and alloys that meet or exceed our customers needs for quality, consistency and process control. Since our materials are often used in applications with no tolerance for failure, a key requirement of our customers and the end markets they serve is our ability to document each detail of our manufacturing process to demonstrate conformity to standards. These process controls are not replicated easily by new market entrants. As a result, we believe we are recognized among our customers for our ability to consistently meet or exceed their technical specifications and those of the end users in the markets we serve. Diversified Customer Base with Long-Standing Relationships. We believe that the high quality of our products, our high level of customer service and our ability to serve as a one-stop supplier for a wide range of products and value-added services enables us to achieve a high rate of customer retention and to win new business. We have long-standing relationships with many of our customers and have supplied our top ten Manufacturing customers (based on net sales for the last twelve months ended March 31, 2011) for over 25 years on average. We have a diversified customer base and no significant revenue concentration with any one customer. In the aggregate, our top ten customers accounted for approximately 18% of our net sales for the last twelve months ended March 31, 2011, and none of our customers accounted for more than 3.5% of our net sales during that period. Strong Distribution and Value-Added Services Capabilities. Through our Distribution segment, we distribute corrosion resistant steels, tool steels and powder metals and we provide rapid, on-time delivery, excellent customer service and a wide product selection. We also provide value-added processing services including cutting, grinding and CNC machining to meet our customers specific requirements. We believe we derive competitive benefits from our participation in both the manufacturing and distribution of specialty metals and alloys. Our manufacturing capability gives us the flexibility to source specialty metals and alloys either internally or from our broad range of global suppliers, depending on availability, and thus to adjust our mix of distribution products. In addition, the ability to source products from our Manufacturing segment allows our Distribution segment to offer our customers shorter lead times and to ensure adequate inventory levels. Similar to our efforts in our Manufacturing segment, we constantly strive to improve our product mix by distributing and processing higher value-added products. Seasoned Management Team and Experienced Workforce. We are led by an experienced management team whose members have an average tenure of over 15 years in the specialty metals manufacturing industry. Our senior management team has extensive experience in managing capital expenditure projects on time and on budget and was responsible for Latrobe winning the 2010 American Metal Market Steel Excellence Award for Best Operational Improvement related to the capacity expansion of our Manufacturing operations. Our current management team is largely responsible for leading our strategic transformation since 2007. Furthermore, their efforts during the economic downturn positioned us to increase market share, to profit from the current favorable market conditions and to increase operating efficiency through the implementation of continuous process improvement programs. Our workforce numbered approximately 800 employees as of March 31, 2011. We are able to attract and retain qualified employees due to our reputation in the marketplace, our good standing within the communities in which we operate, our ability to continue to operate through economic cycles and the emphasis we place upon operating safety. Table of Contents Business Strategy We intend to expand our business and to increase stockholder value by pursuing the following strategies: Strengthen Our Existing Position in Commercial Aerospace and Defense. To strengthen our leading position within the commercial aerospace and defense industries, we intend to meet the needs of our customers by reducing lead times and supplying metals for innovative applications. We are leveraging the installation of the largest VIM capacity in North America by introducing high technology alloys that support the commercial aerospace and defense industries. These nickel-based super alloys are difficult to produce and are characterized by their high-temperature and high-strength attributes resulting from the manufacturing process path they follow. Our ability to produce these metals in large, 30-ton batch sizes allows greater responsiveness to customer needs by producing larger quantities of material with more reliable lead times. Comparatively, our competitors typically melt in batch sizes of 20 tons or less. Expand to New, High-Margin Markets Through New Product Development. We plan to continue Latrobe s long history of manufacturing innovation and to enhance our product mix by manufacturing new, complex and higher value-added specialty metals that fulfill our customers needs. The key aspects of this strategy include identifying new customers that are underserved, addressing end markets with attractive long-term growth dynamics and developing the required metallurgical expertise. Target markets for our product development portfolio are global oil and gas exploration and production, power generation and precision cutting applications. Since 2007, we have formed new relationships with Grupo Frisa, National Oilwell Varco, Halliburton and GE Energy, enabling us to increase significantly our exposure to these target markets. We believe the rapid industry acceptance of our recent entry into the nickel-based super alloy business demonstrates our ability to introduce new products successfully. These new metals address the most demanding applications, such as for downhole production tools in oil and gas, land-based gas turbine blades and shaft materials for power generation and commercial aerospace components. These new materials are designed to meet the needs of the largest OEMs such as GE Energy, Siemens, Airbus, Boeing, Commercial Aircraft Corporation of China, Ltd. ( COMAC ), Firth Rixson Limited and Timken Aerospace, and they demonstrate Latrobe s commitment and ability to continue to expand its product offerings. Extend Participation in Global Markets. From 1995 to 2004, commercial aircraft orders from emerging markets rarely exceeded 50 planes and generally (with a few exceptions) accounted for 5% or less of Boeing s total annual orders. However, beginning in 2005, demand from emerging market economies increased significantly, representing aircraft orders of roughly 200 planes or more and between 15% to 25% share of total global aircraft orders from Airbus and Boeing, before falling in 2008 and 2009. In 2010, emerging market demand returned to roughly 150 planes and 25% of total global aircraft orders from Airbus and Boeing. As a result of this increased demand, commercial aerospace production has begun to expand to developing nations. In anticipation of this shift, we made an initial investment in China and have begun to develop deeper customer relationships in Asia. For example, we have recently expanded our China and Asia platforms by winning key approvals for China s COMAC C919 single aisle aircraft that enable us to supply its specialty metals. Additionally, we have extended our global reach by competing in the South Korean helicopter and fighter jet markets. During the current fiscal year, we are scheduled to open a Chinese service center that will enable us to supply existing and new aerospace customers more effectively. We are also evaluating additional global investments in Asia that would increase our service capabilities. Continue to Expand Critical Technical Expertise and Technology. We are expanding capacity and improving operating efficiencies through ongoing staff development and capital investments in our manufacturing facilities and equipment. To augment our metallurgical and operating expertise, we have increased the number of our metallurgists by 15% and our engineers by 14% since the prior calendar year. Table of Contents Since March 2007, we have increased the number of our metallurgists by 43% in conjunction with our expansion of manufacturing capacity and our business development initiatives. This has enabled us to broaden our product offerings, such as nickel-based super alloys, and to selectively forward integrate with products such as edgewire, a highly technical product used in the manufacture of industrial bandsaws. Although a substantial portion of our new production capacity will be utilized to meet the needs of current customers for our existing products, a meaningful amount of this new capacity will be available to develop and manufacture new products for new customers. As demonstrated by our recent installation of new VIM and VAR capacity, we intend to anticipate the needs of our customers by implementing new technology and capacity enhancement projects ahead of our peers. Maintain Financial Strength. Upon completion of this offering and the resulting reduction of our debt, we will have $ million of debt and a financial leverage ratio of less than x, as measured by debt divided by $ million of EBITDA for the trailing twelve month period ended March 31, 2011. Additionally, upon completion of this offering, we will have $ million of excess availability under our senior secured revolving credit facility. We believe that having a strong balance sheet will give us a favorable position versus our competition, enable us to remain strong financially throughout business cycles and permit us to pursue acquisitions and fund capital expenditures that may enhance our strategic position within the industry.
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001396710_ac_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001396710_ac_prospectus_summary.txt
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+PROSPECTUS SUMMARY 1
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+PROSPECTUS SUMMARY 1
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+PROSPECTUS SUMMARY 1
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+PROSPECTUS SUMMARY 1
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+PROSPECTUS SUMMARY 1
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+PROSPECTUS SUMMARY 1
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+PROSPECTUS SUMMARY 1
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+PROSPECTUS SUMMARY 1
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+PROSPECTUS SUMMARY 1
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+PROSPECTUS SUMMARY 1
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+PROSPECTUS SUMMARY 1
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+PROSPECTUS SUMMARY 1
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+PROSPECTUS SUMMARY 1
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+PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001397958_compass_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001397958_compass_prospectus_summary.txt
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+PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001398026_techniscan_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001398026_techniscan_prospectus_summary.txt
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. This summary does not contain all of the information you should consider before buying our securities. You should read the entire prospectus carefully, especially the risks described under "Risk Factors" and the financial statements and related notes, before deciding to invest in shares of our common stock. Unless otherwise indicated, all share amounts and prices in the registration statement of which this prospectus is a part reflect the 1-for-4 reverse common stock split that became effective June 28, 2010. Corporate Overview/History TechniScan, Inc. ("we," "us," the "Company" and "TechniScan") was incorporated under the name Castillo, Inc. pursuant to the laws of the State of Nevada on February 2, 2007, and changed our state of incorporation from the State of Nevada to the State of Delaware on October 8, 2009. Until the Merger (described below), we had no substantial business operations and no revenues. On October 9, 2009, TechniScan, Inc, a Utah corporation ("TechniScan Utah") was first merged into our wholly owned subsidiary, and then immediately merged into us (collectively referred to as the "Merger"). Pursuant to the Merger, we succeeded to the business of TechniScan Utah as our sole line of business and changed our name to "TechniScan, Inc." In this prospectus, unless the context specifies otherwise, all references to "we," "us," the "Company" and "TechniScan" refer to the business of TechniScan Utah prior to the Merger and TechniScan, Inc., a Delaware corporation, after the Merger. In addition, unless the context specifies otherwise, all references to "stockholder" or "shares of common stock" refer to ownership of shares of the combined company following the Merger. Company Overview We are a medical device company engaged in the research, development, and commercialization of an ultrasound breast imaging system. We developed a unique ultrasound technology platform, known as the Warm Bath Ultrasound imaging system ("WBU"), which utilizes computational software to produce high resolution images and unique information about the bulk properties of tissues in the breast. WBU is a flexible, automated breast imaging system that produces images using both reflection and transmission properties of ultrasound. The images produced by WBU are unique, three-dimensional, whole breast images and are expected to provide radiologists, surgeons and oncologists with an effective imaging tool for managing diagnostic imaging of the breast. The WBU system produces three unique images based on both traditional B-mode (reflective) and transmission ultrasound. Traditional reflection ultrasound images are created from the reflected sound waves and transmission ultrasound images are created using the data that are generated as the sound waves travel through the breast tissue. In particular, WBU uses proprietary, patented software methodologies that utilize the mathematics of inverse scattering to produce transmission images of the speed and attenuation of sound through the breast. The WBU imaging platform also incorporates a three-dimensional version of B-mode ultrasound (or reflective ultrasound). The reflection images are refraction corrected by utilizing the transmission data the speed of sound traveling through human breast tissue. We believe that the unique combination of these refraction corrected reflection images into a three-dimensional volume will provide physicians with a new way of viewing and interpreting ultrasound images, especially when combined with the quantitative information about the bulk tissue properties of the breast provided by the numerical transmission data. We are developing support for clinical users of the WBU system through the TechniScan Imaging Network ("TIN"), which is a suite of tools and applications designed to enhance the value and capabilities of the system. We believe that TIN will offer a reliable and secure method of providing physicians, administrators, payers and patients with timely access to their diagnostic studies and reports, while ensuring that all data is disclosed only to those with permission to access it. TIN is expected to Amendment No. 4 to FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Table of Contents optimize the use of diagnostic information by healthcare providers by providing a common platform to store, archive, correlate, analyze and/or collaborate about cases, giving the physician ultimate control of the diagnostic process. We believe that TIN will also allow healthcare professionals a flexible, fully customizable, environment in which they can develop and store their own data or access anonymized data from other related images. We have not yet begun selling our product or services commercially. We plan to enter markets in both the United States and Europe during 2012. We anticipate installing initial WBU systems on a subscription basis in the United States beginning the first half of 2012, with commercial release of the WBU and TIN in the second half of 2012. We expect that the WBU system will be marketed as a B-mode (i.e. handheld) and automated reflection tomography ultrasonic system for imaging of a patient's whole breast. We plan to commercialize our products to aid in the detection of breast cancer and to further expand our services in the same market. We believe that our technology provides a painless and efficient imaging method, that does not require breast compression or ionizing radiation. The procedure also provides unique information which may help radiologists differentiate cancerous from benign and normal tissues. We plan to enter our product into the breast cancer screening and detection market as a diagnostic device that would initially be used by radiologists, physicians, hospitals and screening centers as an adjunct to mammography to provide them with additional information that may influence decisions relating to the need for further invasive or surgical testing, examination, and/or treatment for lesions or tumors. We expect that TIN will provide us with a recurring revenue stream, allowing us to charge for system use in the United States on a subscription basis. We also plan to sell TIN as a subscription service in Europe through a third-party sales channel. TIN is being developed as an "open ended development system" that allows users, researchers, and other software developers to integrate their own applications through our network, providing us with significant development resources and continuing access to new applications. It is designed to allow them to archive and retrieve, compare images to other similar data sets, store their own images and diagnostic notes, collaborate with others, and correlate information with diagnostic results and outcomes. Our technology was developed through years of research supported, in part, by federal research grants and private and government research contracts. To date, our revenues have been from government grants that supported research and development of the WBU system and from the shipment of two prototype systems to Esaote S.p.A. ("Esaote"), an Italian medical equipment manufacturer, and also a stockholder of ours. Pursuant to United States Food and Drug Administration ("FDA") regulations, we must obtain either a 510(k) clearance or pre-marketing approval ("PMA") prior to marketing our products in the United States. The WBU system will only be cleared for marketing in the United States upon receipt of a letter from the FDA which finds the WBU system to be substantially equivalent ("SE"), or upon PMA. We intend to submit a 510(k) or PMA application to the FDA during the first quarter of 2012, for both the reflection and transmission elements of the WBU system. The clinical work to establish and support the clinical utility of the system is already underway at three luminary breast screening facilities: the Mayo Clinic Breast Center in Rochester Minnesota, the University of California Moores Cancer Center in La Jolla, California, and the University of Freiburg Women's Center in Freiburg Germany. We anticipate that the FDA will issue a final ruling on our application for the WBU system sometime in the first half of 2012, although there can be no assurance of the timing of this ruling. In order to sell products within the European Union ("EU"), companies are required to achieve compliance with the European Union Medical Device Directive and affix a "CE" mark on their products to demonstrate such compliance. The "CE" mark is a mandatory conforming mark on many products marketed in the EU. It certifies that a product has met EU consumer safety, health and/or environmental requirements. We have performed compliance testing for CE mark certification. Based TECHNISCAN, INC. (Exact name of registrant as specified in its charter) Delaware (State or other jurisdiction of incorporation or organization) 3841 (Primary Standard Industrial Classification Code Number) 27-1093363 (I.R.S. Employer Identification Number) 3216 South Highland Drive Salt Lake City, Utah 84106 (801) 521-0444 (Address and telephone number of registrant's principal executive offices) David C. Robinson Chief Executive Officer 3216 South Highland Drive Salt Lake City, Utah 84106 (801) 521-0444 (Name, address and telephone number of agent for service) With a copy to: Jeffery A. Bahnsen, Esq. Greenberg Traurig, P.A. 5100 Town Center Circle, Suite 400 Boca Raton, Florida 33486 Tel: (561) 955-7650; Fax: (561) 367-6250 Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one): Large Accelerated Filer Accelerated Filer Non-accelerated Filer Smaller Reporting Company CALCULATION OF REGISTRATION FEE The total number of shares of common stock registered is 21,141,542. The registration fee for 21,141,542 shares was paid with the initial filing of the registration statement and prior amendments. This Registration Statement shall also cover any additional shares of our common stock which may become issuable by reason of any stock dividend, stock split, recapitalization or other similar adjustments. The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the commission, acting pursuant to said section 8(a), may determine. Table of Contents on our compliance testing, two modifications need to be made to bring the WBU system into compliance. We anticipate that those modifications will be completed during the second half of 2011. Since inception, we have incurred net operating losses. As of September 30, 2010, we had an accumulated deficit of approximately $30.0 million, negative working capital of $5.3 million and minimal revenues. Losses have principally occurred as a result of the substantial resources required for research and development and clinical trials required to develop the WBU system for FDA approval and market launch. Losses have also been incurred from general and administrative expenses associated with our operations. We expect operating losses to continue, mainly due to the anticipated expenses associated with the regulatory approval process and proposed commercialization of our technology, research and development. We will also need to increase our selling and marketing activities and general and administration expenses to market and sell the WBU system in the United States and overseas after approval is obtained. Our continuing losses, among other things, have caused our independent registered public accounting firm to add an explanatory paragraph to its audit report on our 2009 and 2008 financial statements indicating that there is substantial doubt about our ability to continue as a going concern. Although we are focused on our research, development, and commercialization of the WBU system, there can be no reasonable assurances that such efforts will result in the establishment of predictable and scalable sources of revenue. Our Market Opportunity We believe that the key to success in this targeted market is insurance/Medicare reimbursement which, because of the way the WBU system produces images (i.e., computed tomography ("CT")), we project to be significantly higher than traditional ultrasound. Currently, CT is reimbursed at a higher rate than ultrasound and there is expected to be additional reimbursement for image reconstruction that is not available for traditional ultrasound. We expect the synergy of ease of use and higher reimbursement will help physicians see immediate benefits, both for patient care and financially, for incorporating the WBU system into their practices. We expect to pursue marketing strategies aimed at both the general consumer and the clinical marketplace that are focused on the enhanced diagnostic capabilities of the WBU system. We intend to provide our product offerings to screening centers and hospitals, radiologists and physicians and technical personnel within the United States and Europe. We expect to do this by deploying systems to clinical sites supported by key opinion leaders and leveraging the clinical results, images and luminary testimonials to educate our target market and customer base about the scanner and patient benefits, using an aggressive marketing campaign via presentations, hands-on workshops, professional society meetings, publications and targeted advertising. Our future success will be driven primarily by our ability to attract new customers, develop sustainable revenues and to continue to develop our product. We expect to have an initial phase clinical release of the current prototype WBU system and a pre-commercial release phase during the first half of 2012 and the final commercial release phase in the second half of 2012, pending FDA approval. Despite the massive attention given to cancer prevention and treatment, the American Cancer Society projects that in 2009, 254,650 women will be diagnosed with invasive and in situ (early stage) breast cancer, and breast cancer will claim the lives of 40,170 women. The American Cancer Society further estimates that one out of every eight women will develop breast cancer at some point during her life time and one in every 42 women who turn 50 today will have a diagnosis of breast cancer before she turns 60. We believe that high visibility media coverage combined with effective public education and a continued focus on women's health issues in the medical community have resulted in a rapidly growing market for breast cancer screening. The breast cancer detection and diagnostic technologies market (including mammography, MRI, and ultrasound, as well as genetic testing and Table of Contents EXPLANATORY NOTE We, TechniScan, Inc., are filing this Amendment No. 4 to our Registration Statement on Form S-1 originally filed on May 28, 2010, and amended on July 29, 2010, August 30, 2010 and September 8, 2010 (Registration No. 333-167213) to include our unaudited financial statements and related notes to the financial statements for the quarter ended September 30, 2010, update disclosures where necessary to reflect new business information, and eliminate the public offering prospectus. On January 11, 2011, we entered into an equity purchase agreement with Southridge Partners II, LP ("Southridge"), pursuant to which Southridge committed to purchase up to $10,000,000 of our common stock over a two-year period, as and when we determine appropriate in accordance with the terms and conditions of the equity purchase agreement. Based on the private offering of our common stock to Southridge, we are no longer pursuing a public offering of our securities. We are not, however, changing the amount of securities we are registering. Instead, we are registering for resale those shares of common stock purchased by Southridge pursuant to the equity purchase agreement. Table of Contents minimally invasive breast biopsy) totaled approximately $1.5 billion in the United States in 2008, and is expected to grow at a compound annual rate of 5% over the next five years according to Medtech Insight. According to the Center for Disease Control National Health Interview Survey in 2005, the percentage of women age 40 and older who reported having a mammogram within the two years prior to the study rose from 29% in 1987 to just over 65% in 2005. We believe that this trend will result in significant continued growth in the diagnostic imaging market segment. With a well-identified customer base made up of centers licensed by the FDA under the Mammography Quality Standards Act ("MQSA") and the leading cancer research and teaching facilities, we plan to build a core sales team as a direct sales force to market the WBU system. We expect to focus on geographic regions based upon "buying power index" of the best opportunities for sale. We partnered with Esaote to provide exclusive marketing and sales of the WBU system in Europe. We plan to use Esaote's existing sales force to introduce the WBU system within the EU. Similar to the United States market strategy, the European market introduction strategy will focus on geographic areas with a higher than average use of ultrasound for breast cancer screening and diagnosis. Our United States and European market entry strategies will be driven by seeking to attain four primary goals: Achieving clinical acceptance from the medical community by gaining support from leaders in breast cancer imaging and leveraging their support in a broader education program that will promote the benefits of the WBU system; Creating public awareness of the benefits of the WBU system through regular submission of peer-reviewed publications; Demonstrating the economic benefits of increased reimbursement and practice efficiencies of the WBU system through tracking reimbursement and effectiveness at test centers and research facilities where WBU systems are in regular use; and Reducing the barriers of adoption by providing financing methods and services to support rapid adoption and use of the WBU system. This strategy involves placement of systems using a "subscription" model wherein the physician leases the equipment for a "buy in" amount and then pays us a pre-specified fee for each scan conducted. Our Strengths Our proprietary, patented, computational software is the key component of the WBU system, which we believe makes it different from, and better than, current ultrasound technology. The software relies on complex algorithms to calculate the actual speed and attenuation of sound at each point in the breast. We believe the complexity of the algorithms, especially the algorithm for inverse scattering, creates a significant barrier to entry for potential competitors. We are not aware of any competitor capable of solving the wave propagation inverse scattering problem efficiently and accurately enough to be medically valuable. During the breast cancer screening and diagnosis process, ultrasound is currently used as an adjunct to mammography. In its currently used form, reflection ultrasound is highly dependent on the skill of a trained operator, it has poor spatial resolution and it does not show how much of the breast has been imaged. We believe that the WBU system will be sensitive enough to detect most breast cancers in the early stages of development. Additionally, because of the unique information about bulk tissue properties contained in the WBU system's speed and attenuation of sound images we expect to be able to provide radiologists with information that will allow them to more clearly distinguish between cancerous and benign or normal tissues, thereby significantly reducing the rate of unnecessary biopsies. Table of Contents The information in this prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission becomes effective. This prospectus is not an offer to sell these securities and it is not soliciting offers to buy these securities in any state where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED JANUARY 18, 2011 PRELIMINARY PROSPECTUS This prospectus relates to the resale by the selling stockholders of up to 21,141,542 shares of our common stock. The selling stockholders may sell common stock from time to time in the principal market on which the stock is traded at the prevailing market price or in negotiated transactions. We will not receive any proceeds from the resale of shares of our common stock offered by the selling stockholders. We will, however, receive proceeds from sales of our common stock to one of the selling stockholders, Southridge Partners II, L.P. ("Southridge"), pursuant to an equity purchase agreement we entered into with Southridge on January 11, 2011 ("Equity Purchase Agreement"). Pursuant to the Equity Purchase Agreement, Southridge is committed to purchase up to $10,000,000 of our common stock over a two-year period, as and when we determine appropriate in accordance with the terms and conditions of the Equity Purchase Agreement. Southridge will pay us a per share price equal to 94% of the average of the lowest three daily volume weighted average prices of our common stock reported by Bloomberg Finance, LP during the five consecutive trading day period commencing on the date we deliver Southridge a put notice. Southridge is an "underwriter" within the meaning of the Securities Act in connection with the resale of our common stock acquired under the Equity Purchase Agreement. The other selling stockholders named herein may also be deemed underwriters in connection with their resale of shares of our common stock. Our common stock is quoted on the Over-the-Counter Bulletin Board, or the OTC Bulletin Board, under the symbol "TSNI.OB." On January 14, 2011, the last sale price of our common stock as reported on the OTC Bulletin Board was $0.22. All share amounts and prices reflect the 1-for-4 reverse common stock split that became effective June 28, 2010. The purchase of the securities involves a high degree of risk. See section entitled "Risk Factors" beginning on page 10. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of anyone's investment in these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The date of this prospectus is 2011 Table of Contents We believe that images produced by the WBU system possess important advantages over traditional ultrasound methods including: standardized, high-quality images that are generated independent of operator skill; images that are accurately registered in three-dimensional format; images that are of high spatial resolution and low noise that allow for accurate localization of lesions and calculation of mass size; and images that show either coronal slice of the total breast or a complete three-dimensional representation of the section imaged, rather than a small "flashlight view" of the breast as shown by traditional ultrasound. Since the technology is relatively operator-independent, the cost of implementation is low and it does not expose patients to ionizing radiation or discomfort. We also expect that radiologists could be able to monitor changes in breast tissue over a period of time in the same individual. We also expect to be able to pinpoint the exact location of a tumor for biopsy. We believe that present ultrasound technology has a limited field of view. It displays only a small portion of the breast at one time. Our technology is designed to image the entire breast at one time, with uniform spatial resolution throughout the breast. Our Strategy Our regulatory strategy includes: Obtaining marketing clearance of WBU through the FDA's 510(k) program. Delivery of a WBU system that meets European mandatory CE Mark requirements, to Esaote for manufacture by the first half of 2012. As a CE Approved Manufacturer, Esaote will seek to ensure that the system meets regulatory requirements in the countries covered by our distribution agreement with Esaote. Our clinical testing strategy includes the following: We expect to determine the inter-reader variability and performance of the WBU system using a well-controlled, blinded review process. We expect to develop a pilot study to address inter-reader variability and expected improvement over handheld ultrasound in order to determine the number of readers and cases necessary to conduct a larger pivotal trial that will address the regulatory question of substantial equivalence. We believe that currently available clinical data will be sufficient for the pilot study; however, we will require a blinded and well-controlled analysis of these cases by several radiologist reviewers. We anticipate the pilot study, including case validation, and design of a larger pivotal trial, based on the result of the pilot study, to be completed during the second quarter of 2011. We expect to submit to the FDA our pivotal trial protocol as part of a pre-IDE meeting package in anticipation of obtaining agreement from the FDA regarding the design, statistical plan including number of readers/cases, and whether the endpoints are consistent with the proposed indications and intended use of the WBU system, which should provide guidance on the type of submission required. We anticipate using the pivotal trial results, which we anticipate to begin in the second quarter of 2011, to submit a complete 510(k) or PMA application. We believe that current clinical sites are expected to yield sufficient data for the 510(k) application. Table of Contents We expect that current clinical sites in the United States will begin clinical evaluation of the next generation of the WBU system, including specific evaluation of speed and attenuation as diagnostic measures, as well as system enhancements such as larger receiver arrays for improved transmission imaging. We expect that clinical sites in Europe will be supported by Esaote to assist them in developing a market introduction strategy and clinical utility statements based on clinical data from their target markets. We also plan to develop a strong brand for the WBU system. Our objectives for creating the brand for the WBU system are to: identify, in a unique way, both the imaging and subscription services platforms; confirm our credibility to both consumers and physicians; connect target prospects emotionally to the product and the positive messages about dignified breast cancer detection; motivate the buyer both clinical and consumer (patient); and create user loyalty. Equity Purchase Agreement On January 11, 2011, we entered into the Equity Purchase Agreement with Southridge, one of the selling stockholders, pursuant to which we may, from time to time over a two-year period, issue and sell to Southridge up to $10,000,000 of our common stock. We issued Southridge 150,000 shares of our common stock as additional consideration for entering into the Equity Purchase Agreement with us. These shares are not included in this prospectus. We have no obligation to sell any shares of our common stock to Southridge under the Equity Purchase Agreement. Any shares of our common stock we do sell under the Equity Purchase Agreement will be covered by a prospectus supplement specifying, among other things, the number of shares sold and the price per share. There is no limit on the number of times or how frequently we may sell shares of our common stock to Southridge under the Equity Purchase Agreement. Certain Risk Factors Investing in our securities involves substantial risk, as discussed more fully in "Risk Factors" on page 10. You should carefully consider all the information in this prospectus prior to investing in our securities. These risks and uncertainties include, but are not limited to, the following (without limitation or any specific order): our ability to market, commercialize and achieve market acceptance of our products or any product candidates that we are developing or may develop in the future, and the acceptance of those products; our reliance on a single product; our ability to obtain regulatory approval for our products, to comply with ongoing regulation of our products and to comply with industry standards in regulatory compliance matters; the effect of Medicare and other third-party insurance programs and insurance reimbursement programs on the pricing or relative attractiveness of our system by regulating the levels of reimbursement; Table of Contents our estimates regarding anticipated operating losses, future revenue, expenses, capital requirements, liquidity and our need to raise additional financing and our ability to control our costs and achieve profitability; our management team's ability to accommodate expected growth and manage a larger organization; our ability to protect our intellectual property, and to not infringe upon the intellectual property of third parties; because our common stock is a "penny stock," it may be more difficult for investors to sell shares of our common stock, and the market price of our common stock may be adversely affected; our ability to conclude that we have effective disclosure controls and procedures; and our ability to comply with corporate governance programs and with changing regulations concerning corporate governance and public disclosure. Corporate Information Our principal offices are located at 3216 South Highland Drive, Salt Lake City, Utah 84106 and our telephone number is (801) 521-0444. Our primary website is www.tsni.com. The information contained in, or that can be accessed through, our website is not part of this prospectus. (1)Does not include 3,692,948 shares of our common stock issuable upon the exercise of outstanding options, with a weighted average price of $1.34 per share. Does not include 1,158,439 and 2,089,566 shares of our common stock issuable upon conversion of our outstanding convertible notes and exercise of our outstanding warrants, respectively. See "Description of Securities" beginning on page 73. Table of Contents SUMMARY FINANCIAL DATA The following table sets forth selected financial information, which should be read in conjunction with the information set forth in the "Management's Discussion and Analysis of Financial Position and Results of Operations" section and the accompanying financial statements and related notes included elsewhere in this prospectus. For the Period From January 1, 2002 (inception of development stage) Through September 30, 2010 Years Ended December 31, Three Months Ended September 30, 2010 Nine Months Ended September 30, 2010 2009 2008 Statement of Operations Data: Total revenues $ 6,764 $ 101,105 $ 981,091 $ 773,061 $ 3,386,569 Operating expenses 1,075,542 3,901,646 4,412,629 5,036,782 31,588,144 Loss from operations (1,068,778 ) (3,800,541 ) (3,431,538 ) (4,263,721 ) (28,201,575 ) Interest, net (1,695,947 ) (2,989,233 ) (4,866 ) 17,642 (3,389,135 ) Gain on derivatives, net 2,168,687 2,015,612 2,015,612 Other 2,461 2,461 Net loss $ (596,038 ) $ (4,774,162 ) $ (3,436,404 ) $ (4,243,618 ) $ (29,572,637 ) Net loss per common share basic and diluted $ (0.03 ) $ (0.23 ) $ (0.30 ) $ (0.53 ) Weighted average common shares outstanding basic and diluted 20,724,444 20,724,444 11,516,242 8,052,022 September 30, 2010 December 31, 2009 Balance Sheet Data: Cash and cash equivalents $ 47,868 $ 232,706 Total assets 1,206,831 1,149,210 Total current liabilities 5,812,555 1,403,005 Total liabilities 5,957,004 1,792,335 Accumulated deficit during development stage (29,572,637 ) (24,798,475 ) Total stockholders' deficit (4,750,173 ) (643,125 ) Table of Contents RISK FACTORS An investment in our securities involves a high degree of risk. You should consider carefully the following risk factors, in addition to the other information contained in this prospectus and the documents incorporated by reference into this prospectus, before purchasing any securities in this offering. Risks Related to the Company, Industry and Financial Results We are a development stage company and have generated minimal revenues since inception. We have not generated significant revenues to date from our proposed business or operations. To date, our revenues have been from government grants and other research partners. Moreover, we may not be able to generate either revenues or profits in the foreseeable future. Our success is dependent upon the successful development and marketing of the WBU system. Unanticipated problems, expenses and delays are frequently encountered in establishing a new business and in developing new technology. These include, but are not limited to, competition, the need to develop and gain clinical acceptance of the WBU system, the need to develop research facilities, the need for market expertise, the need to employ capable management, and setbacks in development of new technology, market acceptance and sales and marketing activities. We will have to overcome the barriers of costly equipment and no established distribution relationships or experience. The failure to meet any of these conditions will have a material adverse affect on us and may force us to cease our proposed operations, and could even prevent us from ever selling a WBU system. No assurance is or can be given that we can or ever will operate profitably. We expect to continue to incur significant operating losses, which creates substantial doubt about our viability as a going concern entity. Due to our lack of revenues, and lack of operations, there is substantial doubt as to our ability to continue operating as a going concern. We have not yet established adequate sources of operating revenue and have incurred net operating losses since our inception. As of September 30, 2010, we had an accumulated deficit of $30.0 million, negative working capital of $5.3 million and minimal revenues. Our losses have resulted principally from expenses incurred in research and development and clinical trials and from general and administrative expenses associated with our operations. We expect operating losses to continue, mainly due to the anticipated expenses associated with the pre-market approval process and proposed commercialization of our technology, research and development and marketing activities and administration costs. Our continuing losses, among other things, have caused our independent registered public accounting firm to add an explanatory paragraph to its audit report on our 2009 and 2008 financial statements indicating that there is substantial doubt about our ability to continue as a going concern. Although we are focused on our research, development, and commercialization of the WBU system, there can be no reasonable assurance that such efforts will result in the establishment of predictable and scalable sources of revenue. We are subject to government regulation and failure to obtain and maintain required regulatory approvals would severely limit our ability to sell our products. We are subject to regulation by the FDA and other federal and state regulatory agencies. Pursuant to FDA regulations, we must obtain either a 510(k) clearance or PMA prior to marketing our products in the United States. If we do not obtain such clearance or PMA, we will not be able to implement our current business plan, and may be unable to generate any revenues. We are also subject to foreign regulations and are dependent upon the receipt of various types of approvals from certain foreign government agencies prior to the sale of products in those countries. The clearance and approval process for both the FDA and foreign regulatory authorities can be costly, time consuming and uncertain. There can be no assurance that we will receive these clearances, or that we will have Table of Contents sufficient resources to commence or complete the regulatory approval process. Delays in obtaining such clearances or PMAs or changes in existing requirements could have a material adverse effect on our business and operations. Even if we do obtain regulatory approval of a product, that approval may be subject to limitations on the indicated uses for which it may be marketed. Even after granting regulatory approval, the FDA and regulatory agencies in other countries continue to review and inspect marketed products, manufacturers and manufacturing facilities, which may create additional regulatory burdens. Later discovery of previously unknown problems with a product, manufacturer or facility, may result in restrictions on the product or manufacturer, including a withdrawal of the product from the market. Our inability to complete our clinical testing and product development activities would severely limit our ability to operate or finance operations. In order to commercialize our products, we must complete substantial clinical trials, and obtain sufficient safety and efficacy results to support required registration approval and market acceptance. We may not be able to successfully complete the development of our products, or successfully market our technologies or products. We may encounter problems and delays relating to research and development, regulatory approval and intellectual property rights of our technologies and products. Our research and development programs may not be successful, and our technologies and products may not identify tumor or lesions and may not facilitate the identification of breast cancer with the expected result. Our technologies and products may not prove to be safe and efficacious in clinical trials, and we may not obtain the requisite regulatory approvals for our technologies or product candidates. If any of these events occur, we may not have adequate resources to continue operations for the period required to resolve the issues delaying commercialization and we may not be able to raise capital to finance our continued operations during the period required for resolution of the issues. We must successfully complete our clinical trials to be able to market certain of our products. We have been testing the WBU system on human subjects since April 2002, and have conducted more than 800 subject scans to date. These tests have focused on system reliability, algorithm development, image reproducibility, and clinical utility. While the data from this testing has been promising, there is not enough information to make statistically significant statements about our product or its diagnostic capabilities. We face additional challenges in attempting to develop the WBU system, including, but not limited to development of reliable testing protocols for future multi-center testing and gaining scientific and clinical acceptance of the WBU system. We must successfully overcome these challenges to prove the technology and move beyond the final stages of development to a commercially viable product. If we are unable to overcome these or other difficulties, it is highly unlikely that we can or ever will be profitable. Even if we obtain regulatory approvals to sell our products, lack of commercial acceptance could impair our business. Even if we obtain all required regulatory approvals, we cannot be certain that our products and processes will be accepted in the marketplace at a level that would allow us to operate profitably. Our products may be unable to achieve commercial acceptance for a number of reasons, such as the availability of alternatives that are less expensive, more effective, or easier to use; the perception of a low cost-benefit ratio for the product amongst our market, including screening centers, hospitals, radiologists and physicians; or an inadequate level of product support. Our technologies or product candidates may not be employed in all potential applications being investigated, and any reduction in applications would limit the market acceptance of our technologies and product candidates, and our potential revenues. Table of Contents The market for our products will be heavily dependent on third-party reimbursement policies. In the United States, suppliers of health care products and services are greatly affected by Medicare, Medicaid, and other government insurance programs, as well as by private insurance reimbursement programs. Third-party payors (Medicare, Medicaid, private health insurance companies and other organizations) may affect the pricing or relative attractiveness of our system by regulating the coverage or level of reimbursement provided by such payors to the physicians and clinics utilizing the WBU system. If examinations utilizing the WBU system are not reimbursed under these programs, or are not adequately reimbursed, our ability to sell the system may be materially adversely affected. There can be no assurance that third-party payors will provide reimbursement for use of our system. In international markets, reimbursement by third-party medical insurance providers, including governmental insurers and independent providers, varies from country to country. In certain countries, our ability to achieve significant market penetration may depend upon the availability of third-party governmental reimbursement. Certain foreign governments may not give a reimbursement code for our device. Government health authorities, especially in the countries where most of the reimbursements flow through government agencies, may not provide us with a reimbursement code, which is required for claiming the cost for the use of our technology and products from government agencies. If we are unable to obtain such reimbursement codes in major markets, marketability of our technology and products may be severely restricted, which could negatively impact our results of operations and our stock price. We face competition in the medical technology field and if we do not keep pace with our competitors and with technological and market changes, we may not be able to successfully compete. The medical device industry generally, and the cancer diagnostic imaging segments in particular, are characterized by rapidly evolving technology and intense competition. Other companies in the medical device industry may be developing, or could in the future attempt to develop, products that are competitive with the WBU system. The market in which we intend to participate is highly competitive. Many of the companies in the cancer diagnostic and screening markets have substantially greater technological, financial, research and development, regulatory, manufacturing, human and marketing resources, and experience than we do. Our competitors may succeed in developing or marketing technologies and products that are more effective or less costly than ours, or that would render our technology and products obsolete or noncompetitive. We may not be able to compete against such competitors and potential competitors in terms of manufacturing, marketing, and sales. If we are unable to compete successfully, it could have a negative impact on our results of operations and our stock price. Potential product liability claims could affect our earnings and financial condition. The nature of our business exposes us to risk for product liability claims, which are inherent in the testing, manufacturing and marketing of cancer detection products. Significant litigation, not involving us, has occurred in the past based on allegations of false negative diagnoses of cancer or allegations of malpractice by physicians or those using our system. Accordingly, there can be no assurance that we can avoid significant product liability exposure. We currently maintain product liability insurance coverage for up to $1 million in aggregate claims. There is substantial doubt that product liability insurance will cover all liabilities should we face significant claims. A successful products liability claim brought against us could have a material adverse affect on our business, operating results and financial condition. Should we be unable to maintain adequate product liability insurance, our ability to market our products will be significantly impaired. Any losses we may suffer for future claims or a voluntary or involuntary recall of our products and the damage that any product liability litigation or voluntary or Table of Contents involuntary recall may do to the reputation or marketability of our products would have a material adverse affect on our business, operating results, financial condition and stock price. We are currently dependent on a single product. Besides government grants, our sole source of revenues for the foreseeable future is expected to come from sale of the WBU system, its supporting TIN system and the technology behind the WBU system. Our operations may be adversely affected by economic, regulatory or similar problems or events that may apply only to us, only to medical devices of the type similar to the WBU system or only within a particular market area in which the WBU system is sold. The adverse effect of any such problems or events could be more easily absorbed in an investment in a more diversified business or one that operates in a different industry. Our product is new and unproven. The science and technology of medical products, including ultrasound equipment, is rapidly evolving. The WBU system may require significant further research, development, testing, and regulatory clearances and is subject to the risk of failure inherent in the development of products based on innovative technologies. These risks include the possibility that the WBU system will prove to be ineffective or unsafe, or otherwise fail to receive necessary regulatory clearances; that the WBU system, if effective, may prove uneconomical to market; that third parties hold proprietary rights that preclude us from marketing the WBU system; or that third parties market superior or equivalent products. Accordingly, we are unable to predict whether our research and development activities will result in a commercially viable product. Further, due to the extended testing and regulatory review process required before marketing clearance can be obtained for the WBU system, we cannot predict with certainty when or if we will be able to sell the system. There is also no guarantee that we will be able to develop and sell other products based upon the technology behind the system. Methods for the detection of cancer are subject to rapid technological innovation and there can be no assurance that future technical changes will not render the WBU system obsolete. There can be no assurance that the development of new types of diagnostic medical equipment or technology will not have a material adverse effect on our business, financial condition, results of operations or stock price. We have modified our business model. We have recently made modifications to our business model. In the past, our business model was based upon a "build and sell" model where customers pay an upfront fee to purchase hardware and software that we have developed and distributed. Under this build and sell model, the customer bears the risks of putting the capital equipment into profitable use. We recently decided to modify our business model by incorporating a new reading service, whereby third-party readers would be contracted to provide remote image reading, data, and related services over the Internet and developing a financing model based on providing ancillary services to physicians, who would pay a fee per scan with contracted minimum requirements. We expect to be devoting significant resources toward developing strategies for implementing the reading service. It is uncertain whether these market penetration strategies will prove successful. The fee per service model places us in a situation where we share some of the business risk with the customer. We will attempt to negate as much of that risk as possible through contracting arrangements, but ultimately, we will assume some additional risk. The risk may not be offset through increased sales and revenue. Table of Contents
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001398605_madison_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001398605_madison_prospectus_summary.txt
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+PROSPECTUS SUMMARY You should rely only upon the information contained in this prospectus. We have not, and the selling stock holders have not, authorized anyone to provide you with information which is different from that contained in this prospectus. The selling stock holders are offering to sell shares of common stock and seeking offers to buy shares of common stock only in jurisdictions where offers and sales are permitted. The information in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of our common stock. SUMMARY INFORMATION AND RISK FACTORS. The following summary contains basic information about our company and this offering. It does not contain all of the information which is important to you in making an investment decision. You should read this prospectus summary together with the entire prospectus, including the more detailed information in our financial statements and accompanying notes appearing elsewhere in this prospectus. Unless otherwise indicated, all information contained in this prospectus relating to our shares of common stock is based upon information as of July 15, 2011 .
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001398740_ncop-ix_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001398740_ncop-ix_prospectus_summary.txt
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+PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001398741_assetcare_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001398741_assetcare_prospectus_summary.txt
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+PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001401680_cornerston_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001401680_cornerston_prospectus_summary.txt
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus and does not contain all of the information that you should consider in making your investment decision. Before investing in our common stock, you should carefully read this entire prospectus, including our consolidated financial statements and the related notes included elsewhere in this prospectus and the information set forth under the headings Risk Factors and Management s Discussion and Analysis of Financial Condition and Results of Operations. Unless the context requires otherwise, the terms Cornerstone OnDemand, we, company, us and our refer to Cornerstone OnDemand, Inc. and its wholly owned subsidiaries taken as a whole. Cornerstone OnDemand, Inc. Overview Cornerstone OnDemand is a leading global provider of a comprehensive learning and talent management solution delivered as software-as-a-service. We enable organizations to meet the challenges they face in empowering their people and maximizing the productivity of their human capital. We currently empower over 5.22 million users across 179 countries and 25 languages. Our solution consists of five integrated platforms for learning management, enterprise social networking, performance management, succession planning and extended enterprise. Our clients use our solution to develop employees throughout their careers, engage all employees effectively, improve business execution, cultivate future leaders and integrate with their external networks of customers, vendors and distributors. Our over 560 clients include multi-national corporations, large domestic enterprises, mid-market companies, state and local public sector organizations, higher education institutions and non-profit entities, such as Barclays Bank PLC, BJC HealthCare, Flextronics International USA, Inc., Kelly Services, Inc., Liberty Mutual Insurance Company, Pearson, Inc., Starwood Hotels & Resorts Worldwide, Inc., State of Nebraska, Teach for America and Virgin Media Limited. We support multiple client deployments of over 150,000 users, including one client with over 700,000 users. We sell our solution domestically and internationally through both direct and indirect channels, including direct sales teams in North America and Europe, a global distributor agreement with ADP, and other distributor relationships with payroll, consulting and human resource services companies. We generate most of our revenue from sales of our solution pursuant to multi-year subscription agreements, which typically have terms of three years. We also generate revenue from consulting services for configuration, integration and training, as well as from providing third-party e-learning content. We have grown our business each of the last 10 years. Since 2002, we have averaged a 95% annual dollar retention rate. Our bookings grew from $24.9 million in 2008 to $34.5 million in 2009 to $60.9 million in 2010, and from $9.2 million in the first three months of 2010 to $14.3 million in the first three months of 2011. Since 2001, our contracted business with existing clients has increased each year. Our net revenue grew from $19.6 million in 2008 to $29.3 million in 2009 to $43.7 million in 2010, and from $9.7 million in the first three months of 2010 to $15.7 million in the first three months of 2011. Our gross revenue was $46.6 million in 2010, before a $2.9 million reduction of revenue related to a non-cash charge for a common stock warrant. There were no reductions of revenue in any other period presented. We will record a non-cash reduction to revenue of $2.5 million for the three months ended June 30, 2011 relating to the issuance of an additional warrant. Table of Contents The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. PROSPECTUS Subject to Completion. Dated July 20, 2011 Shares Cornerstone OnDemand, Inc. Common Stock Cornerstone OnDemand, Inc. is offering of the shares to be sold in the offering. The selling stockholders identified in this prospectus, which include certain of our executive officers and directors and entities affiliated with members of our board of directors, are offering an additional shares. Cornerstone OnDemand, Inc. will not receive any of the proceeds from the sale of the shares being sold by the selling stockholders. Our common stock is quoted on the NASDAQ Global Market under the symbol CSOD. The last reported sale price of the common stock on , 2011 was $ per share. See Risk Factors on page 9 to read about factors you should consider before buying shares of the common stock. Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense. Per Share Total Initial price to public $ $ Underwriting discount $ $ Proceeds, before expenses, to Cornerstone OnDemand, Inc. $ $ Proceeds, before expenses, to the selling stockholders $ $ To the extent that the underwriters sell more than shares of common stock, the underwriters have the option to purchase up to an additional shares from the selling stockholders at the initial price to public less the underwriting discount. The underwriters expect to deliver the shares against payment in New York, New York on or about , 2011. Goldman, Sachs & Co. Barclays Capital William Blair & Company Pacific Crest Securities Piper Jaffray Needham & Company, LLC JMP Securities Prospectus dated , 2011. Table of Contents See Management s Discussion and Analysis of Financial Condition and Results of Operations Financial Metrics for more information about annual dollar retention rates and bookings, and Management s Discussion and Analysis of Financial Condition and Results of Operations Critical Accounting Policies and Estimates Offsets to Revenue for additional information about common stock warrants that are accounted for as reductions of revenue. The Market Based on the U.S. Bureau of Labor Statistics data as of December 2010, total compensation paid to the United States civilian workforce of approximately 154 million people exceeded $9.1 trillion in 2010. Given the significance of these costs, organizations have sought to maximize the return on their investments in human capital. We believe the major challenges that organizations face in empowering their people and maximizing the productivity of their internal and external human capital are developing talent, engaging employees, improving business execution, building a leadership pipeline and integrating with their extended enterprise of customers, vendors and distributors. To deal with these challenges, organizations have deployed a variety of solutions, including written tracking systems and software-based solutions. International Data Corporation, or IDC, estimates that total spending on software for workforce, e-learning, e-recruiting, intelligent compensation and performance management was $3.6 billion in 2009.1 Historically, many of these software solutions have been human resource applications running on hardware located on organizations premises. However, we believe that just as organizations have increasingly chosen software-as-a-service, or SaaS, solutions for business applications such as sales force management, they will also increasingly adopt SaaS learning and talent management solutions. According to IDC, the overall SaaS market totaled $13.1 billion in revenue in 2009, representing 5.7% of worldwide software spending across all primary markets, and is expected to grow to $32.4 billion by 2013, representing 13.4% of worldwide software spending across all primary markets.2 Many existing learning and talent management solutions suffer from shortcomings such as narrow functionality, limited configurability, difficulty of use, inability to scale and high costs of deployment, maintenance and upgrades. As a result, we believe a market opportunity exists for a comprehensive, integrated solution that helps organizations manage all aspects of their internal and external human capital and link talent management to their business strategy. The Cornerstone OnDemand Answer We deliver a comprehensive SaaS solution that consists of five integrated platforms for learning management, enterprise social networking, performance management, succession planning and extended enterprise. We offer a number of cross-platform tools for talent management analytics and reporting, employee profile management, employee on-boarding and e-learning content aggregation and delivery. We also provide consulting services for configuration, integration and training for our solution. We believe that our solution delivers the following benefits: Comprehensive Functionality. We offer five integrated platforms that address all stages of the employee lifecycle and can be used to manage processes that span multiple learning and talent management functions. 1 IDC, Worldwide HCM Applications 2008 Vendor Shares: Analysis of 25 Vendors in Core HR, eLearning, eRecruiting, Intelligent Compensation, Performance Management, and Workforce Management, Doc.#221284, Dec 2009. 2 IDC, Worldwide Software as a Service 2010-2014 Forecast: Software Will Never Be the Same, Doc.#223628, Jun 2010. Table of Contents TABLE OF CONTENTS Page Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001403720_airtouch_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001403720_airtouch_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..e0eb133adad5aa10289392e6480798c929fb76a0
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+PROSPECTUS SUMMARY The following summary highlights information contained elsewhere in this prospectus. This summary may not contain all of the information that may be important to you. You should read this entire prospectus carefully, including the sections entitled Risk Factors and Management s Discussion and Analysis of Financial Condition and Results of Operations and our historical financial statements and related notes included elsewhere in this prospectus. In this prospectus, unless the context provides otherwise, the terms the Company, we, us, and our refer to AirTouch Communications, Inc. and its subsidiaries (including AirTouch, Inc.). Overview We are a technology firm, located in Newport Beach, CA, that develops and markets communication devices capable of amplifying the wireless signal. We design these devices based on our patented technology to be a core enabling technology platform that will be capable of converging other services and applications for the home and office. We currently offer our DM1000 (cell@home) product through various channels, including several of the major U.S. carriers, and are working to bring our higher performance, lower cost next generation HomeConnex series of products, UFO series of products and Focal Point to the global market. For the nine months ended September 30, 2011 , and 2010 we had net revenue of $477,217 and $142,844 , and incurred net losses of $6,569,793 and $2,743,200 , respectively. For the years ended December 31, 2010 and 2009, we had net revenue of $160,441 and $147,661, and incurred net losses of $4,850,375 and $1,025,951, respectively. Our History The Company was incorporated as a Delaware corporation with the name International Vineyard, Inc. on April 2, 2007 for the purpose of developing a wholesale and distribution business that specializes in providing French and California sourced wines to the Chinese market. The Company has exited the wine business and is now exclusively designing and developing wireless communications devices. On February 3, 2011, we amended and restated our certificate of incorporation in order to, among other things, change our name to Waxess Holdings, Inc. and increase our authorized capital stock to 125,000,000 shares of which 100,000,000 are designated as common stock and 25,000,000 are designated as blank check preferred stock. On July 21, 2011, we amended our certificate of incorporation to change our name to AirTouch Communications, Inc. On February 4, 2011, we entered into an Agreement of Merger and Plan of Reorganization (the Merger Agreement ) with AirTouch, Inc., formerly known as Waxess USA, Inc., a privately held California corporation, and Waxess Acquisition Corp., our newly formed, wholly-owned Delaware subsidiary. Upon closing of the transaction contemplated under the Merger Agreement (the Merger ), Waxess Acquisition Corp. merged with and into AirTouch, Inc., and AirTouch, Inc., as the surviving corporation, became a wholly-owned subsidiary of the Company. We intend to carry on the business of AirTouch, Inc. as our sole line of business. Recent Developments Between March 15, 2010 and February 1, 2011, AirTouch, Inc. entered into Secured Convertible Note and Securities Purchase Agreements with certain accredited investors pursuant to which AirTouch, Inc. sold to the investors secured convertible promissory notes (the Bridge Notes ) in the aggregate principal amount of $3,410,000 and warrants (the Bridge Warrants ) to purchase an aggregate of 3,360,000 shares of common stock. Between February 17, 2011 and April 15, 2011, the Company entered into Purchase Agreements with additional investors pursuant to which the Company sold to the investors Bridge Notes in the aggregate principal amount of $1,907,500 and Bridge Warrants to purchase an aggregate of 1,907,500 shares of the Company s common stock. Collectively, AirTouch, Inc. and the Company sold an aggregate of $5,317,500 principal amount of Bridge Notes and detachable Bridge Warrants to purchase an aggregate of 5,267,500 shares of common stock. The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and we are not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED NOVEMBER 29, 2011 PRELIMINARY PROSPECTUS 20,417,754 Shares AirTouch Communications, Inc. Common Stock This prospectus relates to the sale by the selling stockholders identified in this prospectus of up to 20,417,754 shares of our common stock. All of these shares of our common stock are being offered for resale by the selling stockholders. The prices at which the selling stockholders may sell shares will be determined by the prevailing market price for the shares or in negotiated transactions. We will not receive any proceeds from the sale of these shares by the selling stockholders. We will bear all costs relating to the registration of these shares of our common stock, other than any selling stockholders legal or accounting costs or commissions. Our common stock is quoted on the Over-the-Counter Bulletin Board under the symbol ATCH.OB . The last reported sale price of our common stock as reported by the OTC Bulletin Board on November 23, 2011 , was $2.75 per share. Investing in our common stock is highly speculative and involves a high degree of risk. You should carefully consider the risks and uncertainties described under the heading Risk Factors beginning on page 6 of this prospectus before making a decision to purchase our common stock. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense. The date of this prospectus is _____, 2011 On April 28, 2011, investors holding an aggregate of $5,217,500 principal amount of Bridge Notes converted such Bridge Notes into an aggregate of 2,753,214 Units offered by the Company in a private placement (the Private Placement ), with each Unit consisting of one share of the Company s common stock and one two-year warrant to purchase an additional share of the Company s common stock at an exercise price of $3.00. In connection with the conversion of the Bridge Notes, an aggregate of $288,928 of accrued interest representing 144,464 Units included above was also converted into the Private Placement. In connection with the consummation of the Private Placement, the Bridge Warrants held by the investors were converted into three year warrants to purchase an aggregate of 5,267,500 shares of the Company s common stock at an exercise price of $2.00 per share (the Replacement Warrants ). In July and August of 2011, an aggregate of 1,745,723 warrants originally issued in the Private Placement, 3,222,500 Replacement Warrants and 3,735,888 warrants issued to other shareholders were exchanged for an aggregate of 1,958,779 shares of common stock (the Warrant Exchange Shares ) (including 1,532,049 Warrant Exchange Shares issued in exchange for warrants originally issued in the Private Placement and Replacement Warrants). On July 11, 2011, July 29, 2011, August 5, 2011, and August 15, 2011 we entered into subscription agreements (the Subscription Agreements ) with certain investors whereby we sold an aggregate of 480 Units, with each Unit consisting of 12,500 shares of the Company s common stock and one two-year warrant to purchase 12,500 additional shares of common stock at an exercise price of $3.00 per share for a per Unit purchase price of $25,000 and aggregate gross proceeds of $12,000,000. In connection with this offering we paid aggregate placement agent fees consisting of $1,319,470 and issued three-year warrants to purchase a number of Units equal to 9% of the 480 Units sold in the offering, with the same terms as the warrants issued to the investors (the Placement Agent Warrants ). With respect to the warrants issued to investors in the Private Placement, the warrants issued to investors pursuant to the Subscription Agreements, the Replacement Warrants, and the Placement Agent Warrants, (i) if at any time after 12 months from the date of issuance of the warrant there is no effective registration statement registering the resale of the Common Stock underlying the warrants, the warrants may, during such period, be exercised on a cashless basis, (ii) during the period beginning on the original date of issuance of the warrant and ending on the earlier to occur of (a) the first anniversary date of the original issuance date and (b) the date there is an effective registration statement on file with the SEC covering the resale of all of the common stock underlying the warrants, the Company issues or sells any shares of Common Stock or securities convertible into common stock (other than an Exempt Issuance , as defined in the warrant) for consideration less than a price equal to the exercise price of the warrant (the New Issuance Price ), then the exercise price of the warrant shall be reduced to an amount equal to New Issuance Price multiplied by 1.5, and (iii) the warrant may be redeemed, at the option of the Company, at a price of $0.001 per share of shares underlying such warrant ( Redemption Price ), upon not less than 10 days prior written notice ( Redemption Period ) to the holder notifying the holder of the Company s intent to exercise such right and setting forth a time and date for such redemption; provided, however, that no such redemption may occur unless (a) the Company s common stock has had a per share closing sales price of at least $5.00 for twenty consecutive trading days and (b) at the date of the redemption notice and during the entire Redemption Period there is an effective registration statement covering the resale of the shares of common stock underlying the warrant. The securities sold in the Private Placement and pursuant to the Subscription Agreements were not registered under the Securities Act, or the securities laws of any state, and were offered and sold in reliance on the exemption from registration afforded by Section 4(2) and Regulation D (Rule 506) under the Securities Act and corresponding provisions of state securities laws, which exempt transactions by an issuer not involving any public offering. THE OFFERING Common stock offered by selling stockholders This prospectus relates to the sale by certain selling stockholders of 20,417,754 shares of our common stock consisting of: 2,753,214 shares of our common stock issued to investors in the Private Placement; 1,007,491 shares of our common stock underlying warrants issued to investors in the Private Placement; 2,045,000 shares of our common stock underlying Replacement Warrants; 6,000,000 shares of our common stock issued to investors pursuant to the Subscription Agreements; 6,000,000 shares of our common stock underlying the warrants issued to investors pursuant to the Subscription Agreements; 540,000 shares of our common stock underlying the Placement Agent Warrants; 540,000 shares of our common stock underlying the warrants underlying the Placement Agent Warrants; and 1,532,049 Warrant Exchange Shares Offering price Market price or privately negotiated prices. Common stock outstanding before the offering 19,379,569 (1) Common stock outstanding after the offering 29,512,060 (assuming the exercise of all the warrants the underlying shares of which are included in this prospectus) Use of proceeds We will not receive any proceeds from the sale of the common stock by the selling stockholders. OTC Symbol ATCH.OB Risk Factors You should carefully consider the information set forth in this prospectus and, in particular, the specific factors set forth in the Risk Factors section beginning on page 6 of this prospectus before deciding whether or not to invest in our common stock. (1) Represents the number of shares of our common stock issued and outstanding as of November 15, 2011.
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001404280_steele_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001404280_steele_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..c4f963faad809983cf11c9eb9209483caf3b906f
--- /dev/null
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@@ -0,0 +1 @@
+PROSPECTUS SUMMARY The following summary is qualified in its entirety by the information contained elsewhere in this prospectus. You should read the entire prospectus, including Risk Factors and the financial statements before making an investment decision. Issuer: Steele Resources Corporation 3081 Alhambra Drive, Suite 208 Cameron Park, CA 95682 (530) 672-6225 Website: www.steeleresources.com Description of Business: Steele Resources Corporation (formerly Steele Recording Corporation) was founded in the State of Nevada on February 12, 2007. From inception until June 17, 2010 SRC was deemed a shell company having only minimal operations involving musical recordings. As a result of a Reorganization effective on June 17, 2010, SRC acquired Steele Resources, Inc. ( SRI ) which operates in the precious metals mining industry initially focusing on exploration properties located in the States of Nevada and Montana. The services include exploration drilling, preparation of feasibility studies and, if warranted, on-site construction and project engineering to establish a producing mine project. The Offering: This offering relates to the sale of up to 4,550,000 shares of common stock being offered on behalf of the Selling Stockholders. The Selling Stockholders and the number of shares that may be sold by each are set forth beginning on page 55 of this Prospectus. Securities Offered: 4,550,000 shares of our $0.001 par value Common Stock. A description of our Common Stock is set forth on page 54 of this Prospectus. Term of Offering: This offering will terminate upon the first to occur of the following: (i) all offered shares are sold pursuant to this Prospectus; (ii) SRC deems it advisable to terminate use of this Prospectus; or (iii) three years from the effective date. Manner of Sale: The shares of our Common Stock being offered for resale by Selling Stockholders will be sold from time to time by the Selling Stockholders in open market or negotiated transactions at prices determined from time to time by the Selling Stockholders. A description of the manner in which sales may be made is set forth in this Prospectus beginning on page 56 of this Prospectus. Public Trading Market for Securities Offered: Our common stock is currently listed for trading on the OTCBB Bulletin Board and quoted on the OTCQB under the symbol SELR . Common Stock Outstanding Prior to the Offering: 33,877,778 shares After the Offering (assuming the sale of all Shares offered): 37,877,778 shares
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001406251_western_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001406251_western_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..9da9c2a3536720d0467f3cd1bf4d4b83445531c3
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001406251_western_prospectus_summary.txt
@@ -0,0 +1 @@
+S-1/A 1 y87961a3sv1za.htm FORM S-1 > | S-1/A Table of Contents As filed with the Securities and Exchange Commission on April 20, 2011 Registration No. 333-170862 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Amendment No. 3 to Form S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 WESTERN LIBERTY BANCORP (Exact name of registrant as specified in its charter) Delaware 6022 26-0469120 (State or other jurisdiction of incorporation) (Primary Standard Industrial Classification Code Number) (I.R.S. Employer Identification Number) 8363 W. Sunset Road, Suite 350 Las Vegas, Nevada 89113 (702) 966-7400 (Address, including zip code, and telephone number, including area code, of registrant s principal executive offices) George A. Rosenbaum, Jr., Chief Financial Officer Western Liberty Bancorp 8363 W. Sunset Road, Suite 350 Las Vegas, Nevada 89113 (702) 966-7400 (Name, address, including zip code, and telephone number, including area code, of agent for service) Copy to: Jeffrey A. Horwitz, Esq. Frank J. Lopez, Esq. Proskauer Rose, LLP Eleven Times Square New York, New York 10036 (212) 969-3000 (212) 969-2900 Approximate date of commencement of the proposed sale of the securities to the public: As soon as practicable after this registration statement becomes effective. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box: If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company (Do not check if a smaller reporting company) The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until this Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to Section 8(a), may determine. Table of Contents SUMMARY This summary highlights selected information from this prospectus. It may not contain all of the information that is important to you. You are urged to carefully read the entire prospectus and the other documents referred to in this prospectus because the information in this section does not provide all the information that might be important to you with respect to purchasing our Common Stock. See the section entitled Where You Can Find More Information on page 145. Western Liberty Bancorp WLBC became a bank holding company on October 28, 2010 with consummation of the Acquisition. Although WLBC s goal in 2007, when it was established as a special purpose acquisition company, was to identify for acquisition domestic and international operating companies engaged in the consumer products and services business, by the spring of 2009, WLBC determined that the banking industry had become an attractive investment opportunity, particularly the community banking industry in Nevada. In October of 2009, WLBC changed its name to Western Liberty Bancorp and eliminated the special purpose acquisition company features of its governing documents. In October 2009, WLBC also began in earnest the process that concluded on October 28, 2010 with the Acquisition. WLBC s sole subsidiary is Service1st, and it currently conducts no business activities other than acting as the holding company of Service1st. Service1st Bank of Nevada Established on January 16, 2007, Service1st is a community bank, providing a full range of banking and related services to locally owned businesses, professional firms, real estate developers and investors, local non-profit organizations, high net worth individuals, and other customers in the greater Las Vegas area. Banking services provided include basic commercial and consumer depository services, commercial working capital and equipment loans, commercial real estate (both owner and non-owner occupied) loans, construction loans, and unsecured personal and business loans. Service1st relies primarily on locally generated deposits to fund its lending activities. Substantially all of our business is generated in the Nevada market. The Acquisition On October 28, 2010, WLBC consummated the Acquisition pursuant to a Merger Agreement (the Merger Agreement ), dated as of November 6, 2009, as amended by a First Amendment to the Merger Agreement, dated as of June 21, 2010 ( Amendment No. 1 and, together with the Merger Agreement, the Amended Merger Agreement ), each among WL-S1 Interim Bank, a Nevada corporation and wholly-owned subsidiary of WLBC ( Acquisition Sub ), Service1st and Curtis W. Anderson, as representative of the former stockholders of Service1st. Pursuant to the Amended Merger Agreement, Acquisition Sub merged with and into Service1st, with Service1st being the surviving entity and becoming WLBC s wholly-owned subsidiary. WLBC previously received the requisite approvals of certain bank regulatory authorities to complete the Acquisition to become a bank holding company. The former stockholders of Service1st received approximately 2,282,668 shares of common stock, par value $0.0001 of WLBC ( Common Stock ) (net of the exercise of dissenter s rights with respect to 88,054 shares) in exchange for all of the outstanding capital stock of Service1st (the Base Acquisition Consideration ). In addition, the holders of Service1st s outstanding options and warrants now hold options and warrants of similar tenor to purchase up to 289,781 shares of Common Stock. In addition to the Base Acquisition Consideration, each of the former stockholders of Service1st may be entitled to receive additional consideration (the Contingent Acquisition Consideration ), payable in Common Stock, if at any time within the first two years after the consummation of the Acquisition, the closing price per share of the Common Stock exceeds $12.75 for 30 consecutive days. The Contingent Acquisition Consideration is equal to 20% of the tangible book value of Service1st at August 31, 2010 (or approximately $4.4 million). The total number of shares of our common stock issuable to the former Service1st stockholders would be determined by dividing the Contingent Acquisition Consideration by the average of the daily closing Table of Contents The information in this prospectus is not complete and may be changed. Neither we nor the selling security holders may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED APRIL 20, 2011 PROSPECTUS FOR UP TO 1,264,848 SHARES OF COMMON STOCK This prospectus relates to the resale of up to 1,264,848 shares of Western Liberty Bancorp s ( WLBC, the Company, we, us, or our ) common stock, par value $0.0001 per share ( Common Stock ) by certain selling security holders. 368,306 shares of Common Stock issued in a private placement concurrent with our initial public offering (the Private Shares ). 503,708 shares of Common Stock issued upon exercise of warrants of WLBC that were either (i) issued in a private placement concurrent with our initial public offering or (ii) exchanged for shares of Common Stock issued in a private placement in accordance with Section 3(a)(9) of the Securities Act of 1933, as amended (the Securities Act ), and pursuant to privately negotiated agreements (the Private Warrants ). The Private Warrants were automatically exercised into one thirty-second of one share of Common Stock on October 28, 2010, in connection with our acquisition (the Acquisition ) of Service1st Bank of Nevada, a Nevada-chartered non-member bank ( Service1st ), in accordance with the terms of that certain Second Amended and Restated Warrant Agreement, dated September 27, 2010, between WLBC and Continental Stock Transfer Trust Company, as warrant agent (the Amended Warrant Agreement ). No cash consideration was paid by the holders of Private Warrants in connection with such exercise. 150,000 shares of Common Stock issued by us to certain current and former members of our board of directors (the Board ) in connection with the Acquisition. 42,834 shares of Common Stock issuable upon exercise of warrants of Service1st (the Service1st Warrants ) that were converted into warrants of similar tenor to purchase approximately 47.6 shares of Common Stock per Service1st Warrant in connection with the Acquisition at a price of $21.01 per share of Common Stock. We will receive the proceeds from the exercise of the Service1st Warrants, but not from the sale of any of the aforementioned shares of Common Stock. In addition, this prospectus relates to the issuance by us of 200,000 shares of Common Stock underlying restricted stock units ( Restricted Stock Units ) granted by us to certain of our current and former directors, officers and consultants in connection with the Acquisition. Each Restricted Stock Unit is immediately and fully vested and shall be settled for one share of Common Stock on the earlier to occur of (i) a change of control of WLBC and (ii) October 28, 2013. Such shares of Common Stock, when issued by us, are also being registered for resale by the selling security holders pursuant to this prospectus. This prospectus provides you with detailed information about WLBC, Service1st and other matters. You are encouraged to read carefully the entire document. IN PARTICULAR, YOU SHOULD CAREFULLY CONSIDER THE
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001408358_green_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001408358_green_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001408358_green_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001409253_north_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001409253_north_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..2df2e9a63734f4be4402634f4eeb8b74666c5c32
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001409253_north_prospectus_summary.txt
@@ -0,0 +1,143 @@
+PROSPECTUS SUMMARY
+
+ 
+
+Item 3. Summary Information, Risk Factors and Ratio of Earnings to Fixed Charges.
+
+This summary highlights certain information contained elsewhere in this prospectus. You should read the following summary together with the more detailed information regarding NEW FOUND SHRIMP, INC. ( Us, We, Our, NFS, the Company, or the Corporation ) and our financial statements and the related notes appearing elsewhere in this prospectus.
+
+ The Company
+
+Our Business
+
+New Found Shrimp (hereinafter NFS or New Found Shrimp ) is a development stage company incorporated in the State of Indiana in April of 2007. We were formed to provide consultation to the aquatic farming industry. NFS will provide consolidation opportunities for on-going and start up aquatic farming operations. The aquatic farming industry is subject to constant change due to market trends, thereby making it an extremely competitive. The aquatic farming industry is complex. NFS s approach assists aquatic farming operations with the organizational structure, customer service and marketing aspects of their business, allowing our customers to focus on the business aspects of operation of the farming. By using the services provided by NFS, our clients are free to focus on compliance with regulations within their industry, and to complete their primary business goal, which is to raise and produce aquatic farm produce (fish, shrimp, etc.) We are a development stage company with minimal revenues and limited operations and our auditor has expressed substantial doubt about our ability to continue as a going concern. The Company has no present plans to be acquired or to merge with another company nor does the company, nor any of its shareholders, have plans to enter into a change of control or similar transaction.
+
+ 
+
+ 
+
+Nearly all of the shrimp consumed today are shipped frozen. Shrimp are typically frozen from six to twenty-four months before consumption. Our consultation model is designed which provides for fresh shrimp throughout the year. We have a unique opportunity to assist aquatic farmers create a niche market of always fresh, never frozen shrimp. The ability to grow shrimp locally, year round allows us to provide consultation to our clients in this high-end product to specialty grocery stores and upscale restaurants throughout the world. The growth period of the shrimp from post larva to market size is twenty-four weeks. The proposed product is free of all pollutants and is fed only all natural feeds.
+
+We have a very specific business plan that focuses on two aspects of the consulting business: Initial startup development and Customer Service/Marketing. Assisting aquatic farm owners to build strong relationships with their customers will allow our client companies to add business through repeat business and recommendations.
+
+Our programs are tailored to meet the needs and requests of our clients. We assist our clients increase their customer base by assisting them to strengthen their customer service. 
+
+We will provide methods for customized marketing, based upon client preference, which may include any or all of the following:
+
+ 
+
+Direct mail;
+
+ 
+
+ 
+
+ 
+
+Telemarketing;
+
+ 
+
+ 
+
+ 
+
+Internet promotions;
+
+ 
+
+ 
+
+ 
+
+Seminars and Special Events; and
+
+ 
+
+ 
+
+ 
+
+Advertising.
+
+We have begun to generate revenues from our consulting services. We currently charge a flat rate fee for our consulting services on a quarterly basis. The rate charged for our services will be dependent upon the level of consulting services the client company is interested in utilizing and the complexity of the client company business. NFS consulting fees will be negotiated and established based upon factors such as the level of services requested by the client. To date, we have only one client; New Opportunity Business Solutions, Inc and we intend to continue marketing our services with the intention of generating revenue for the company. A copy of the Consulting Agreement is filed as an exhibit to the registration statement.
+
+The material terms of this Consulting Agreement are that the Company is to consult with the management of aquatic Farming operations. For these services the company is being paid $2,000. The contract is written for 1 year and due to expire on May 1, 2012.
+
+Thus far we have marketed our services primarily to independent aquatic farmers and other market participants located in the Midwest of the United States of America (the U.S. ). NFS has been doing business since inception April 2007. Originally formed to do any 
+
+5
+
+and all legal business, the intent of the corporation was to specialize in consultation with and for aquatic farming operators. The President has been involved in the company since inception and is the founder. We focus on geographic areas, products and price points where we believe there are significant demand for our services and the potential for attractive returns to our company and investors. We do not consider our company to be a blank check company as such term is defined in Securities and Exchange Commission Rule 419, however we are a development stage company with minimal revenues and limited operations and our auditor has expressed substantial doubt about our ability to continue as a going concern. We have no intention to engage in a reverse merger or acquisition with any unidentified company or companies or other entity. 
+
+ 12 Month Growth Strategy and Milestones
+
+While a strategic and wisely executed marketing campaign is key to expanding our customer base; providing new, cutting-edge, innovative ideas will ensure a solid operation built for long-term success. Our Plan of Operation for the next twelve months is to raise capital to continue to expand our operations. Although we are not presently engaged in any capital raising activities, we anticipate that we may engage in one or more private offering of our company s securities after the completion of this offering. We would most likely rely upon the transaction exemptions from registration provided by Regulation D, Rule 506 or conduct a private offering under Section 4(2) of the Securities Act of 1933. 
+
+Note: The Company planned the milestones based on months following this registration statement becoming effective
+
+0-3 Months
+
+-Continue current consulting project for New Opportunity Business Solutions, Inc.
+
+-Create contact plan for current operational farms
+
+-Explore online marketing options
+
+-Interview producing aquatic farmers
+
+4-6 Months
+
+-Begin development of Online Marketing Website
+
+-Hire photographer and determine farm operations to use for literature
+
+-Continue design literature explaining our services
+
+-Negotiate for online merchant account
+
+7-9 Months
+
+-Finish Website 
+
+-Add content to website 
+
+10-12 Months
+
+-Analyze online marketing and make necessary changes for increased exposure
+
+-Prepare for year 2 marketing 
+
+We believe that our business plan, growth strategy and conduct to date evinces significant, bona fide business operations and a scenario that is wholly inapposite to any attempt to create the mere appearance of a specific business plan and effort to avoid the application of Rule 419. 
+
+We are focusing on markets that have generally been characterized as a result of strong aquatic farming interest and operations. Our general business strategy is to market our services to markets primarily in the Midwest, where most aquatic farms are located. Our strategically located sale efforts are well positioned to benefit from the continuing need for our services. We recognize that current market conditions are extremely challenging. Accordingly, we have adapted our business plan and strategy with the goal of protecting liquidity, enhancing our balance sheet and positioning our Company for future growth when market conditions improve. In connection with this strategy, we have adopted a conservative approach and our principal business strategy is to utilize our sales expertise to: 
+
+ 
+
+sell consulting services throughout the Midwest;
+
+ 
+
+provide consistently reliable high-quality service;
+
+ 
+
+aggressively manage operating costs to maintain and improve operating margins;
+
+ 
+
+expand business by improving, enhancing and expanding sales, gaining new customers;
+
+ 
+
+pursue complementary bolt on growth opportunities having acceptable risks and returns; and
+
+ 
+
+generate consistent revenue, operating margins, earnings and cash flows
+
+ 
+
+6
+
+The following sections present an overview of our business segment, including information regarding the principal business and competitive strengths. Our results of operations and financial condition are subject to a variety of risks. For information regarding our key
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001409432_national_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001409432_national_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..4bdca57c7e1d9f9827664e4ecd5db78616ad96da
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001409432_national_prospectus_summary.txt
@@ -0,0 +1 @@
+Silver Summit Geology The Silver Summit Project area lies along a fault zone which has Triassic Excelsior Formation to the south against Cretaceous granite to the north. Although alteration and mineralization appears to be primarily skarn-type (most likely related to some phase of the major intrusive that comprises the surrounding Wassuk Range) most of the major contacts noted during field reconnaissance are faults. Mineralization Black Butte Project Mineralization No historical data was found for the Black Butte Project area. There are at least four adits that collar on the vein and drive along the strike. These adits appear to be interconnected by raises and winzes. The lowermost adit (near samples LBR-14 and 21) has power and lights behind a locked door which services the seismograph equipment located within. The mineralization is a quartz vein zone trending northeast-southwest and exposed at the surface for approximately 800 feet in a series of adits and prospect pits. To the northeast the vein appears to go under alluvial cover. Going to the southwest along the strike of the vein the hill becomes higher and beyond the last exposed part of the vein strong, pervasive zones of iron oxidation are much more prominent as well as a zone of carbonate alteration (calcite veining). These alteration zones are typical of the uppermost extent of the alteration associated with an epithermal quartz vein system. The vein zone is poly-phase, with multiple bands of silica that are sulfide bearing. The vein zone is from two to ten feet wide; within the wider parts of the zone there are distinct anastomosing quartz veins separated by orange and brown clay/gouge (frontispiece-note pencil for scale). Sulfides of iron, copper, lead, and silver were obvious on some of the dumps. Gold values along the vein are anomalous (2.59, 3.4, and 6.22 ppm gold) to strongly anomalous (46.7 ppm gold). The 46.7 ppm gold (1.36 opt) sample was a 10 inch channel sample across the quartz vein. Most of the higher grade gold values appear to be in the quartz; however the clay/gouge within the vein zone between the quartz does also carry some lesser gold values. Silver values along the vein are also highly anomalous (316, 403, 630, 684 ppm silver) (Figure 13). The silver is highly correlative to the gold. Overall the system appears to be silver dominant with silver to gold ratio equal to 43:1. Lead, copper, and zinc values are also anomalous; as might be expected in a silver dominated epithermal vein system (Table 2). Black Butte Rock Geochemical Summary Gold ppm Silver ppm Lead ppm Copper ppm Zinc ppm High 46.7 (1.36 opt) 684 (19.94 opt) 43,000 (4.3%) 9,590 2,120 Low 0.098 3.3 31 177 170 Average 5.525 (0.161 opt) 204.4 9,529 1,916 707 No. Samples 11 11 11 11 11 Table 2: Black Butte Geochemical Summary Table You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with information different from that contained in this prospectus. The selling shareholders are offering to sell, and seeking offers to buy, their common shares, only in jurisdictions where offers and sales are permitted. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of our common shares. The date of this prospectus is June10, 2011 The following table of contents has been designed to help you find important information contained in this prospectus. We encourage you to read the entire prospectus. Price Per Share: The Selling Shareholders may sell all or a portion of their shares through public or private transactions at prevailing market prices or at privately negotiated prices. Maximum and Minimum Number of Securities to be Sold in this Offering: No minimum. The Selling Shareholders may sell up to 7,263,214 shares of our common stock. Securities Issued and to be Issued: As of June 24, 2011 we had 74,153,214 shares of our common stock, 675,000 shares of our preferred stock and one warrant exercisable for 356,154 shares of our common stock issued and outstanding. Our common stock is quoted on the OTC Bulletin Board under the symbol LUCB.OB . Trading of securities on the OTC Bulletin Board is often sporadic and investors may have difficulty buying and selling or obtaining market quotations, which may have a depressive effect on the market price for our common stock. Proceeds: We will not receive any proceeds from the sale of our common stock by the Selling Shareholders. UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001411494_apollo_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001411494_apollo_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..3ecbf4fb801c79fa8a7fb07240d3b4725b4ebbc2
--- /dev/null
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@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. This summary sets forth the material terms of this offering, but does not contain all of the information that you should consider before investing in our Class A shares. You should read the entire prospectus carefully, including the section entitled Risk Factors, our financial statements and the related notes and management s discussion and analysis thereof included elsewhere in this prospectus, before making an investment decision to purchase our Class A shares.
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001412067_cascadian_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001412067_cascadian_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001412067_cascadian_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001412212_itrackr_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001412212_itrackr_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..679b608c53e43ef7da995cf86cb49c2cbfe2a203
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001412212_itrackr_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights selected information more fully described elsewhere in this prospectus. You should read the following summary together with the entire prospectus, including the more detailed information regarding us and the common stock being sold in this offering and our financial statements and the related notes appearing elsewhere in this prospectus. You should carefully consider, among other things, the matters discussed in the section entitled Risk Factors beginning on page 2 before deciding to invest in our common stock. Unless otherwise stated or the context requires otherwise, references in this prospectus to we, our, us, Must Haves iTrackr or the Company refer to iTrackr Systems, Inc., and its subsidiary. Corporate History We were incorporated in the State of Wyoming on May 10, 2006 to develop, market and commercialize a product and inventory search application through a social networking site designed to leverage the best of Internet and mobile technologies. On November 27, 2007 we adopted Articles of Merger to merge iTrackr, the Wyoming corporation with and into iTrackr, Inc., a Florida corporation. On December 10, 2009, we entered into a Plan of Merger with Must Haves, Inc. which closed on January 12, 2010 pursuant to which (i) we received an aggregate of 17,875,695 shares, or 93.5% of Must Haves, Inc. common stock, and (ii) Must Haves, Inc. assumed 6,555,000 options and warrants of iTrackr, which are exercisable at prices from $0.01 to $0.40. On March 9, 2010, we amended our Articles of Incorporation with the State of Florida to change our name to iTrackr Systems, Inc., which more appropriately reflects the nature of our underlying business. On February 5, 2010, we issued a warrant to an accredited investor to purchase up to 1,000,000 shares of our common stock at a purchase price of $0.40, in exchange for $50,000 used towards expenses related to the filing of this registration statement and general operating expenses. Overview We are an emerging ecommerce software and services company. In 2006, we began development of an online search application for retailers and consumers and launched www.iTrackr.com, a social networking website designed to enable consumers the ability to search for products and services at brick-and-mortar retail stores on location-based, and inventory-available basis, within their geographic communities. In 2009, we acquired online customer support software from ChatStat, which enables us to provide retailers with a support and sales tool for agents with the goal of increasing transactional business. We serve customers primarily in North America in a variety of industries with a particular emphasis on ecommerce markets. For the six months ended June 30 , 2011 and the years ended December 31, 2010 and 2009, the Company had a net loss of $ 256,738 , $1,002,638 and $924,442, respectively. From inception to June 30 , 2011, we have incurred an accumulated deficit of $ 4,351,830 . As a result, our auditor has issued an uncertainty paragraph about our ability to continue as a going concern in their 2010 and 2009 audit report stating the Company has suffered recurring losses and has yet to generate an internal cash flow that raises substantial doubt about our ability to continue as a going concern. Our principal executive offices are located at 1191 E. Newport Center Drive, Suite PH-D, Deerfield Beach, FL 33442, and our telephone number is (561) 962-4111. Our website address is http://www.iTrackr.com. Information on or accessed through our website is not incorporated into this prospectus and is not a part of this prospectus. Recent Developments On July 12, 2011, the Company acquired 100% of the issued and outstanding membership interests of RespondQ, LLC, a Florida limited liability company from Idamia, LLC, a Florida limited liability corporation and Iselsa II, LLC, a Delaware limited liability corporation. The purchase price for the Units was an aggregate of five million (5,000,000) shares of restricted common stock of the Company and promissory notes in the aggregate principal amount of $100,000. Iselsa owns 70% of the Units and Idamia owns 30% of the Units being sold. The Promissory Notes bear interest at 10% per annum and all principal and interest is due and payable on October 6, 2011. Upon an occurrence of an Event of Default, the Promissory Notes are convertible into to shares of the Company s common stock at $0.10 per share unless the Company between issuance date of the Promissory Note and its maturity date shall have sold its capital stock in a financing in which the Company has received gross proceeds of an excess of $1,000,000 at a differing price. The Subsequent Financing shall exclude certain permitted issuances. The owner of Idamia, LLC is Radosveta Rizzo. Ms. Rizzo is the wife of the Company s Chief Executive Officer. The Offering Common Stock offered by selling shareholders: 19,629,893 shares of common stock, consisting of 9,215,054 (1) shares issued upon debt conversion, 4,207,500 shares underlying options and warrants, 6,010,984 related to shares issued for services rendered, and 196,355 shares purchased for cash. Common Stock outstanding prior to Offering: 20,319,997 Common Stock outstanding after this Offering: 24,527,497 (2) Use of Proceeds: We will not receive any proceeds from the sale of shares in this offering by the selling stockholders. However, we will receive proceeds from the exercise of the options and warrants if the options and warrants are exercised for cash
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001413507_src_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001413507_src_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..734c28ae81e7b39f1afc6a8050fb9da36cd7e308
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001413507_src_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY Synergy Resources Corporation ("we" or the "Company" or "Synergy") is the entity that resulted from a business combination between Brishlin Resources, Inc., a public company, ("predecessor Brishlin") and Synergy Resources Corporation, a private company, ("predecessor Synergy"). We were incorporated in Colorado in May 2005 and are involved in oil and gas exploration and development. Our website is: www.synergyresourcescorporation.com. Our offices are located at 20203 Highway 60, Platteville, CO 80651. Our office telephone number is (970) 737-1073 and our fax number is (970) 737-1045. See the "Glossary" section of this prospectus for the definition of terms pertaining to the oil and gas industry which are used in this prospectus. The Offering During December 2010 and January 2011, we sold 9,000,000 shares of our common stock to a group of private investors at a price of $2.00 per share. By means of this prospectus a number of our shareholders are offering to sell up to 9,000,000 shares of our common stock. See the section of this prospectus entitled "Selling Shareholders" for more information. As of September 15, 2011, we had 36,098,212 outstanding shares of common stock. The number of our outstanding shares does not include shares issuable upon the exercise of outstanding warrants or the exercise of options granted to our officers, directors and employees. See the section of this prospectus captioned "Comparative Share Data" for more information. The purchase of the securities offered by this prospectus involves a high degree of risk. Risk factors include our short operating history, losses since we were incorporated, and the possible need for us to sell shares of our common stock to raise capital. See "Risk Factors" section of this prospectus below for additional Risk Factors. Forward-Looking Statements This prospectus contains or incorporates by reference "forward-looking statements," as that term is used in federal securities laws, concerning our financial condition, results of operations and business. These statements include, among others: o statements concerning the benefits that we expect will result from our business activities and results of exploration that we contemplate or have completed, such as increased revenues; and o statements of our expectations, beliefs, future plans and strategies, anticipated developments and other matters that are not historical facts. You can find many of these statements by looking for words such as "believes," "expects," "anticipates," "estimates" or similar expressions used in this prospectus. These forward-looking statements are subject to numerous assumptions, risks and uncertainties that may cause our actual results to be materially different from any future results expressed or implied in those statements. Because the statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied. We caution you not to put undue reliance on these statements, which speak only as of the date of this prospectus. Further, the information contained in this prospectus, or incorporated herein by reference, is a statement of our present intention and is based on present facts and assumptions, and may change at any time.
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001415336_zeltiq_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001415336_zeltiq_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001415336_zeltiq_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001415592_china_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001415592_china_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..32d84426bd45f1b365b02ffb69762f3ba59b3a63
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001415592_china_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary contains basic information about us and this offering. The reader should read the entire prospectus carefully, especially the risks of investing in our common stock discussed under Risk Factors. Some of the statements contained in this prospectus, including statements under Summary and Risk Factors as well as those noted in the documents incorporated herein by reference, are forward-looking statements and may involve a number of risks and uncertainties. We note that our actual results and future events may differ significantly based upon a number of factors. The reader should not put undue reliance on the forward-looking statements in this document, which speak only as of the date on the cover of this prospectus. Business China Redstone Group, Inc. (the Company ), through our operating entity, Chongqing Foguang Tourism Development (Group) Co., Ltd. ( Foguang ), is a private provider of cemetery products and services in Chongqing, People s Republic of China ( PRC or China ). Foguang is primarily focused on developing cemeteries and selling cemetery plots, although it also provides park and garden development and construction services. Foguang s first cemetery development project is the Qinglongshan Cemetery ( Guiyuan I ), located in Fulin District of Chongqing on approximately 66,660 square meters of land. All cemetery plots in Guiyuan I had been sold out since 2006, at an average price of RMB 30,000 ($4,450) per plot. Foguang is currently developing the Guiyuan Cemetery ( Guiyuan II ), its second cemetery project in Changshou. Guiyuan II, in development since 2005, occupies a cemetery use land with an area of over 667,000 square meters, of which approximately 100,000 square meters have been developed to date. Of the undeveloped portion of Guiyuan II, approximately 54,000 square meters will be developed as housing, parking and office space in the future. In addition, the Chongqing municipal government has committed to enable Foguang to secure the land use rights to approximately 1,194,804 square meters of land surrounding Longqiao Lake, which portions of Guiyuan II overlook. However, as of the date of this prospectus, Foguang has yet to officially receive such land use rights. Based on comparable land use rights granted by the government to others, Foguang estimates that its payment obligations may be between $2.25 million to $2.7 million for the land use rights. However, such obligations should not impact Foguang s ongoing liquidity because it has sufficient cash flow from its operations for the estimated payment obligations. Foguang is planning to develop this land as a memorial park, with mausoleums and temples, to complement and enhance Guiyuan II (the Longqiao Lake Project ). Foguang also intends to cultivate and produce flower seedlings around the Longqiao Lake area as part of this project. Some of the seedlings will be used for the development of Guiyuan II, and the remaining seedlings will be sold either to the Changshou district government for urban landscaping or to outside parties for profit. In 2011, Foguang originally had plans to develop tourism, leisure, entertainment, dining accommodation, transportation and other comprehensive services and facilities in a project known as the Liang Jiang Yu Project. Foguang entered into the contract for tourism development with Chongqing Bo Gao Tourism Company ( Bo Gao ) pursuant to the Tourism Development Contract dated February 27, 2009 and a Supplemental Contract dated April 13, 2009 (collectively, Tourism Development Contract ). The scope of the project contemplated the construction of 10 to 20 entertainment boats, a welcome center, a large sailboat and nine docks. The total price of this project was $64,000,000. Foguang made a total prepayment of $8,682,600. As of December 31, 2010, Foguang made a decision to terminate this project entirely in order to focus on its cemetery operations. Foguang is currently taking bids for the project and initial findings show that it should be able to recover the full costs incurred to date. Foguang will have no liability in this project going forward, and we expect full refund of our payment of $8,682,600 in 2011. Foguang plans to take advantage of the agreement with the municipal government to secure the land use rights around the Longqiao Lake to develop its property designated as cemetery real estate. Foguang s primary focus will be to finish the development of Guiyuan II. By the end of fiscal year 2011, the first phase of land acquisition and the construction of the cemetery and supporting facilities within the acquired land should be completed. After the completion of Guiyuan II, Foguang s focus will be the development of the Longqiao Lake Project. Foguang decided that it would not be in its best interest to continue with the construction of boats, hotels and other entertainment projects under the Liang Jiang Yu Project. Foguang wanted to make the best use of its time and assets to focus on developing Guiyuan II and the Longqiao Lake Project. History and Corporate Structure The Company was incorporated in Delaware on July 10, 2007, originally under the name Artistry Publications, Inc. for the purpose of entering the photography industry and establishing a large scale photography publishing business focused on American History. The Company s plan was to develop a successful photo journal publishing company by depicting history and producing excellent affordable artwork in practical items to entertain and educate. On February 12, 2010, the Company entered into a share exchange agreement ( Share Exchange Agreement ) under which it issued 8,800,000 shares of its common stock, par value $0.001, to the shareholders of Gold Industry Limited ( Gold Industry ), a Cayman Island company, in exchange for all the issued and outstanding shares of Gold Industry (the Share Exchange ). As a result of the Share Exchange, Gold Industry became the Company s wholly-owned subsidiary, and Gold Industry shareholders acquired a majority of the Company s issued and outstanding stock. Concurrent with the Share Exchange, Mr. Yiyou Ran (the managing director of Gold Industry, and all of its operating subsidiaries, Mr. Ran ) was appointed the Chief Executive Officer of the Company. As a result, the Share Exchange has been accounted for as a reverse acquisition using the purchase method of accounting, whereby Gold Industry is deemed to be the accounting acquirer (legal acquire) and the Company to be the accounting acquire (legal acquirer). The financial statements before the date of Share Exchange are those of Gold Industry, with the results of the Company being consolidated from the date of Share Exchange. The equity section and earnings per share have been retroactively restated to reflect the reverse acquisition and no goodwill has been recorded. All of our business operations are carried out by Foguang, which the Company controls through contractual arrangements that Chongqing Ran Ji Industrial Co., Ltd. ( Ran Ji ), a company wholly-owned by Gold Holy Industry Limited ( Gold Holy ), entered into with Foguang and its owners. Gold Holy is wholly-owned by Gold Industry. Through these contractual arrangements, the Company has the ability to substantially influence Foguang s daily operations and financial affairs, appoint its senior executives and approve all matters requiring shareholder approval. As a result of these contractual arrangements, which enable the Company to control Foguang and to receive through Ran Ji all of Foguang s net income, the Company is considered the primary beneficiary of Foguang. Accordingly, the Company consolidates Foguang s results, assets and liabilities in its financial statements. Other than the Company s interests in the contractual arrangements, neither the Company, Gold Industry, Gold Holy and Ranji own any equity interests in Foguang. Instead, such equity interests are owned by Jianquan Chen (27.9%), Yang Chen (24.36%), Yiyou Ran (24%), Chaoyang Fu (16.74%) and Mingsheng Liu (7%). Mr. Jianquan Chen and Mr. Yiyou Ran were both appointed to our board of directors in connection with the Share Exchange, with Mr. Ran as chairman of the board of directors. Mr. Ran was additionally appointed as our chief executive officer. Mr. Ran and Mr. Chen are also shareholders and directors of Holy Golden Industry Limited, which owned approximately 56.4% of our issued and outstanding common stock as of the date of this prospectus. (1) Includes 771,239 shares of our common stock issuable upon exercise of outstanding common stock purchase warrants. (2) Represents the number of shares of our common stock outstanding as of May 6, 2011 and excludes 771,239 shares of our common stock issuable upon exercise of our outstanding common stock purchase warrants. Although we have been advised by our PRC counsel that current PRC law does not restrict or prohibit foreign investment in domestic companies engaging in cemetery business such as Foguang, governmental approvals are required before we (or our subsidiaries) can acquire Foguang s equity interests or assets. Thus, we have elected to control Foguang and its operations, and to receive the economic benefits from such operations, through contractual arrangements, thereby avoiding the necessity of obtaining governmental approvals. However, Chinese laws and regulations concerning the validity of the contractual arrangements is uncertain, as many of these laws and regulations are relatively new and may be subject to change, and their official interpretation and enforcement by the Chinese government involves substantial uncertainty. Additionally, the contractual arrangements may not be as effective in providing control over Foguang as direct ownership. Due to such uncertainty, the Company may take such additional steps in the future as may be permitted by the then applicable laws and regulations in China to further strengthen its control over or toward actual ownership of Foguang or its assets or business operations, which could include direct ownership of selected assets. Because the Company relies on Foguang for its revenue, any termination of or disruption to the contractual arrangements would detrimentally affect its business and financial condition. On April 6, 2010, the Company changed its name from Artistry Publications, Inc. to China Redstone Group, Inc. to better reflect its business directions. Financing Transaction In February 2010, we completed a financing transaction with 24 institutional and/or accredited investors (collectively the Purchasers ) pursuant to which we sold $4,599,415 of units of our equity securities to the Purchasers in a private placement (the Financing ). Each unit is comprised of 100,000 shares of our common stock, par value $0.001 per share (the Common Stock ), at a per share purchase price of $3.28 per share, and warrants to purchase up to 50,000 shares of Common Stock. At the closing of the Transaction on February 23, 2010, we issued 1,402,262 shares of Common Stock and four-year warrants to purchase 701,126 shares of Common Stock (the Warrants ). In addition, we issued warrants to purchase up to 70,113 shares of common stock to our placement agent and its assignees for the Financing. Financial Results For the three months ended December 31, 2010 and 2009, we had approximately $12.1 million and $11.4 million in sales, respectively, and approximately $5.0 million and $4.2 million in net income, respectively. For the nine months ended December 31, 2010 and 2009, we had approximately $35.8 million and $26.5 million in sales, respectively, and approximately $14.5 million and $10 million in net income, respectively. For the fiscal years ended March 31, 2010 and 2009, we had approximately $36.5 million and $18.31 million in sales, respectively, and approximately $12.3 million and $5.50 million in net income, respectively. Our consolidated financial statements for such periods are included in this prospectus. Historical results are not necessarily indicative of the results that may be expected for any future period. When you read the included historical financial data, it is important that you read along with it the appropriate historical consolidated financial statements and related notes and Management s Discussion and Analysis of Financial Condition and Results of Operations included elsewhere in this prospectus. The Offering Common stock offered by the selling stockholders: 2,173,501 shares (1) Common stock outstanding: 12,672,262 shares (2) Use of proceeds: We will not receive any proceeds from the sales by the selling stockholders. We may receive proceeds from any exercise of outstanding warrants. The selling shareholders may exercise the warrants on a cashless basis if the shares of common stock underlying the warrants are not then registered pursuant to an effective registration statement. In the event the selling shareholders exercise the Warrants on a cashless basis, then we will not receive any proceeds.
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001415599_southern_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001415599_southern_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..508855cf4e810bded989b44d2bbf2a4ee8291b34
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001415599_southern_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. This summary does not contain all of the information you should consider before investing in our securities. You should read the entire prospectus, including the Risk Factors and the consolidated financial statements and the related notes, before making an investment decision. Business Overview We breed, raise and sell live hogs in the People s Republic of China, which we refer to as China or the PRC. We operate our business through our subsidiaries, which operate 24 breeding farms with a current annual production capacity of approximately 220,000 live hogs . Our annual production capacity is the number of hogs that we can deliver to the market annually, assuming the pigs stay healthy, the sows breeding pattern is consistent with our past experience, we can provide the necessary feed and epidemic prevention and we can efficiently and timely deliver the hogs to market. Our headquarters is located in southeast China in Yingtan City, Jiangxi Province. Our hog breeding farms are located throughout Yujiang County. We control each phase of pre-slaughter pork production in the following manner: We breed and raise breeding sows on our own facilities. We breed the sows piglets and raise the piglets until they are marketable as hogs. When the piglets mature, we sell the mature hogs. Feed is the most significant cost of operating our hog farm. Our hog farms purchase feed products and raw materials such as corn and soybeans from several feed suppliers under short-term contracts. The typical breeding cycle for pigs is approximately five months, and a breeding pig can give birth 2.2 times a year on average. A breeding pig can bear 10-12 piglets every five months, and breed for four years. We sell hogs to trading agencies mainly in the Chinese cities of Shenzhen and Shanghai and in Jiangxi Province. Our largest customer is Shenzhen Dexing Food Development Co., Ltd., or Shenzhen Dexing, a government affiliated trading company, which accounted for approximately 54% of our sales in the three months ended December 31, 2010, approximately 70% of our sales for the year ended September 30, 2010 and approximately 75% of our sales for the year ended September 30, 2009. We have tw o contracts with Shenzhen Dexing. One of these contracts, which has a three-year term commencing March 24, 2009, provides for us to sell to Shenzhen Dexing 50,000 hogs per months for a total of 600,000 hogs per year. Another contract provides for Shenzhen Dexing to purchase 50 0,000 hogs from us during the one-year period commencing September 1 , 2010. We had a third contract, for the one-year period commencing February 1, 2010, which expired on January 31, 2011 . Although the contracts provide for the delivery of a specified number of hogs, the agreements also provide that each shipment s delivery date and quantity are subject to further agreement. These subsequent agreements have not been reduced to writing, but Shenzhen Dexing is aware of our capacity and has accepted our delivery quantities and schedule. The delivery quantity and schedule is wholly dependent upon the breeding schedule and maturity of the hogs. Shenzhen Dexing has accepted delivery of all hogs that we have provided to date, although we have not exceeded the number of hogs set forth in the contracts. These contracts effectively cap the aggregate annual delivery to 600,000 and 500 ,000 hogs, respectively. The agreements do not provide for any remedy if we are not able to deliver the full number of hogs per year. Rather, the contact covering the annual purchase of 600,000 hogs has a performance bonus of RMB 10 or $1. 52 . per hog if we sell the full 600,000 hogs per year. Since we did not reach this target number, we have not received any bonus. We do not anticipate that we will reach this target number during the current fiscal year. In April 2008, Shenzhen Agriculture Bureau awarded us an Agriculture Production Base for Shenzhen City, China from April 2008 to April 2011. Under the terms of this award, Shenzhen Dexing is to purchase from us up to a total of 83,000 hogs during the period from April 2008 to April 2011. In addition, Shenzhen Pindexian Food Co., Ltd., a government-affiliated trading company, is to purchase up to 50,000 hogs from us from April 2008 to April 2011. We sold to Shenzhen Dexing approximately 24,800 - hogs during the three months ended December 31, 2010, approximately 147,000 hogs during year ended September 30, 20 1 0 and approximately 120,000 hogs during the year ended September 30, 20 09 . Through Dec ember 3 1 , 2010, we sold approximately 10,000 hogs to Shenzhen Pindexian pursuant to the contract covering the period from April 2008 to April 2011. We determine under which contract we sell hogs to Shenzhen Dexing based on the market price of hogs at the time of sale. We have serial one-year contracts which provide price protection, and, to the extent that the market price is less than the contract price, we sell pursuant to these contracts. Under the price protection provisions of the contract covering the year commencing September 1, 2010, we may not sell hogs at prices which are less than RMB 12.6 (approximately $ 1.91 ) or more than RMB 16.6 (approximately $ 2.52) per kilo gram. The three-year contract commencing March 24, 2009 , provide s for the price to be determined by the parties but shall not be less RMB 10.6 (approximately $1.61) per kilogram. If the market price were greater than RMB 1 6 .6 (approximately $2. 5 2) per kilogram, we would sell the hogs pursuant to the three-year cont r act, which does not have a ceiling. In selling to Shenzhen Dexing, we do not specify pursuant to which contract the hogs are sold. These amounts in dollars reflect the current exchange rate; however, the exchange rate used in our financial statements will reflect the applicable exchange rate for that period. See Our Business Sales and Marketing on page 44 for more information. Market Summary According to the US Department of Agriculture report entitled 2010 Trade Forecast Revision: Pork Higher; Beef and Broiler Meat Stable, China is the world s largest pork producer, accounting for nearly half of the world s total production. The estimated world production of pork for 2010 was projected at 109 million metric tons. For 2010, according to the National Bureau of Statistics of China, China produce d approximately 50 .7 million metric tons of pork. See http://www.stats.gov.cn/english/newsandcomingevents/t20110120_402699463.htm. Table Of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION DATED FEBRUARY 7, 2011 Common Shares SOUTHERN CHINA LIVESTOCK, INC. Table Of Contents We believe that hog production in the PRC is dominated by backyard farms (those that sell 1 to 50 hogs annually) and small farms (those that sell less than 500 hogs annually), and that large farms account (those that sell more than 50,00 0 hogs annually) for a smaller percentage of the hog production. Until 2009, a growing middle class in China with more disposable income had resulted in an increase in the market for pork, which was accompanied by an increase in prices for pork as well as live hogs. According to Business Monitor International, China s pork producers suffered during the first half of 2009 from a combination of the effects of the general economic downturn, which affected China as well as the rest of the world, combined with a weak demand, oversupply of pork and the psychological effects of the H1N1 influenza virus, known as the swine flu. Since the start of the second half of 2009, however, a rapid rise in pork prices has re-energized the industry. The recovery reflects government intervention to buy frozen pork supplies to help support prices and, at times, reductions in supply of pigs in China. Since June 2009, the market price for live hogs increased to a 24-month high in November and December 2010 and has remained relatively stable since that time. Competitive Advantages We breed our own piglets. We have long-term relationships with government-affiliated trading companies in the cities of Shenzhen and Shanghai and in Jiangxi Province, which accounted for more than 90% of our sales for the three months ended December 31, 2010, 94% for the year ended September 31, 2010 and 98% for the year ended September 30, 2009, thus virtually eliminating marketing, selling and receivables costs. As our hogs mature, we sell them as live hogs ready for slaughter. Most of our senior managers have more than ten years of experience in the hog breeding industry, and our chairman also chairs Jiangxi Province Yingtan City Pig Breeding Association. Additionally, because our location is in a relatively rural area of a province which has a surplus of labor, we believe that we are able to obtain lower than average cost of labor compared to other parts of China. We also believe that we incur higher than industry average medical expenses for pigs as a result of our efforts to reduce the risk of epidemics. We have not experienced any animal outbreaks in the last ten years. Future Plans Growth via increase our inventory of sows and hogs: In April 2010, we began to increase our pig inventory through the purchase of sows and hogs from local pig farmers. Through September 30, 2010, we purchased approximately 2,400 sows and approximately 21,000 hogs. We intend to continue to increase our inventory of pigs using the net proceeds of this offering. Our goal is to purchase approximately 77,300 pigs, of which we anticipate approximately 7,300 will be breeding sows and approximately 7 0,000 will be hogs that will cost us in the range of $20 million, on which we expect to make down payments of approximately $10 million. We believe that we will be able to purchase the pigs on reasonable terms from local pig farmers. Growth via organic fertilizer business: The generation of organic waste is a major problem that all large animal farm operators all over the world have to manage. We plan to take advantage of our rural location and the fact that we are surrounded by rice and vegetable farms by processing our organic waste and selling it as organic fertilizer. Organic fertilizers made from livestock manure are commonly used in China. They are environmentally friendly products, are fully exempt from value added tax, or VAT, and are exempt from enterprise income tax, or EIT, for the first three years. As of December 31, 2010 , the principal type of organic fertilizer we plan to produce was sold in the range of approximately $ 120-$135 per ton. We plan to allocate a portion of the proceeds from our public offering to begin development of an organic fertilizer line of business. We plan to spend approximately $2. 3 million to build an organic fertilizer line following the completion of the offering. We will not commence our efforts with respect to the fertilizer business until we receive the funding either from the public offering or from another financing source. The organic fertilizer will be primarily made from pig waste. We anticipate that it will take about six months to build such production line and that it would become operational within three months thereafter. Our planned annual production capacity of this production line is approximately 40,000 tons of organic fertilizer. With the anticipated increase in our pig inventory, and with our advantageous location in a southern province with many farmlands, we believe that we can develop a profitable fertilizer business. This is the initial public offering of our common stock. We are a reporting company under Section 13 of the Securities Exchange Act of 1934, as amended. Our common stock is not currently listed or quoted for trading on any national securities exchange or national quotation system. We have applied to list our common stock on the NASDAQ Capital Market under the symbol SCLI and our application is currently under review. We are offering all of the shares of common stock offered by this prospectus. We expect that the public offering price of our common stock will be between $ and $ per share. Investing in our common stock involves a high degree of risk. Before buying any shares, you should carefully read the discussion of material risks of investing in our common stock in Risk Factors beginning on page 13 of this prospectus. Neither the U.S. Securities and Exchange Commission nor any state securities commission has approved or disapproved of anyone s investment in these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. Per Share Total Public offering price $ $ Underwriting discounts and commissions (1) $ $ Proceeds, before expenses, to us $ $ ______________ (1) The underwriters will receive compensation in addition to the discounts and commissions as set forth under Underwriting. The underwriters have a 45-day option to purchase up to additional shares of common stock from us solely to cover over-allotments, if any. If the underwriter exercises this option in full, the total underwriting discounts and commissions will be $ , and our total proceeds, before expenses, will be $ . The underwriters are offering the common stock as set forth under Underwriting. Delivery of the shares will be made on or about , 2011. Rodman & Renshaw, LLC Newbridge Securities Corporation The date of this prospectus is: , 201 1 Table Of Contents Risk Factors Our ability to successfully operate our business and achieve our goals and strategies is subject to numerous risks as discussed more fully in the section titled Risk Factors, beginning on page 13, including for example: Cyclical fluctuations in our sales, as well as fluctuations in the market and market price for hogs and feed, which will affect our quarterly results; The price of pork is subject to significant fluctuations, and government programs in the PRC to stabilize pork prices may not continue; Our current management has no experience managing and operating a public company and relies in many instances on the professional experience and advice of third parties including our consultants, attorneys and accountants; We depend on one major customer, the loss of or significant reduction in sales to which could materially adversely affect our ability to operate profitably; We depend on one major feed supplier, the loss of which could materially adversely affect our operations and s ales ; The loss of any key employee, including members of our senior management team, and our inability to attract highly skilled personnel with sufficient experience in our industry could harm our business; A more widespread outbreak of the H1N1 virus, avian influenza or a renewed outbreak of SARS or any other widespread public health problem in the PRC, where all of our operations are conducted, could have an adverse effect on our operations; In order to raise sufficient funds to implement our business plan and expand our operations, we may require additional funds, which may not be available to us, and we may have to issue additional securities at prices which may result in substantial dilution to our stockholders; and The recent nature and implementation methods of many PRC laws applicable to us create an uncertain environment for business operations and they could have a negative effect on us; Currency conversion and exchange rate volatility could adversely affect our financial condition; An active trading market for our shares may never develop. Any of the above risks could materially and adversely affect our business, financial position and results of operations. An investment in our securities involves risks. You should read and consider the information set forth in Risk Factors and all other information set forth in this prospectus before investing in our securities. Corporate History and Organizational Structure We are a Delaware corporation, incorporated under the name Expedite 4 Inc., on September 27, 2007 with the objective of acquiring an operating company pursuant to a reverse acquisition. On July 9, 2010, we changed our corporate name to Southern China Livestock, Inc. On March 29, 2010, we, then known as Expedite 4 Inc., acquired Southern China Livestock International, Inc., or SCLI, in a reverse acquisition transaction pursuant to a share exchange agreement, or the Exchange Agreement, in which we acquired 100% of the issued and outstanding shares of SCLI in exchange for 5,623,578 shares or 99.97% of our common stock issued and outstanding after the closing of the share exchange transaction, thereby making SCLI our wholly owned subsidiary. Pursuant to the terms of the Exchange Agreement, the person who was then our sole stockholder cancelled a total of 98,500 shares of common stock. Following the completion of the transactions contemplated by the Exchange Agreement, there were 5,625,078 shares of common stock issued and outstanding, of which 5,623,578 were owned by the former shareholders of SCLI. For financial reporting purposes, these transactions have been classified as a recapitalization of SCLI and the historical financial statements of SCLI are reported as the company s historical financial statements. Table Of Contents Table Of Contents On July 25, 2008, Mayson International Services Limited, or Mayson International, was incorporated in the British Virgin Islands as a limited liability company and Mayson Enterprises Services Limited, or Mayson Enterprises, was incorporated in the British Virgin Islands as the wholly-owned subsidiary of Mayson International. Mayson Holdings Limited, or Mayson Holdings, was incorporated on July 14, 2008 under the laws of Hong Kong Special Administrative Region of the PRC and became the wholly owned subsidiary of Mayson Enterprises. Beijing Huaxin Tianying Livestock Technology Co., Ltd., or Beijing Huaxin, was incorporated on September 9, 2008 as a limited liability company under PRC law. All of the equity of Beijing Huaxin is held by Mayson Holdings. In November 2008, all of the equity interests in Jiangxi Yingtan Huaxin Livestock Co., Ltd., or Jiangxi Huaxin, were owned by the former Jiangxi Huaxin shareholders. Jiangxi Huaxin was established in 2005, as a result of the combination of several hog farms, which commenced operations between 1995 and 2005. But for the restrictions under the laws of the PRC, they would have exchanged their equity interest in Jiangxi Huaxin for a modest cash payment and an aggregate of 4,386,438 shares of the Company s common stock in a single transaction, which would have been completed at the time of the reverse merger. In order to comply with Chinese law, the transaction was structured to provide for an initial good faith deposit of $17,500 with the remaining shares to be issued in the future. The $17,500 down payment was negotiated by the parties, with the recognition that the most significant portion of the consideration was the equity to be issued pursuant to the option agreements. The first step in the transaction was the November 2008 transfer, pursuant to an agreement dated November 3, 2008, of the Jiangxi Huaxin stock to Beijing Huaxin, which was wholly-owned, through subsidiaries, by Mayson International, of which Liqiang Song was the principal shareholder. At the time of the transfer, Mayson International paid a $17,500 cash down payment for 99% of the equity interest of Jiangxi Huaxin. It was understood by all parties that the $17,500 payment did not constitute the full payment for the shares of Jiangxi Huaxin, and that the equity portion would be paid later in a manner that complied with the laws of the PRC. SCLI was formed in July 2009 to acquire the stock of Mayson international from Mayson International s shareholders. SCLI acquired Mayson International in exchange for SCLI shares, which were issued to the Mayson International shareholders. Mr. Song, who was the principal shareholder of Mayson International, became the principal shareholder of SCLI. As a result of the reverse acquisition, SCLI s principal business was the raising and sale of hogs through Jiangxi Huaxin. Although Jiangxi Huaxin had continued to develop its business subsequent to November 2008, SCLI s business was largely the same business that the former Jiangxi Huaxin shareholders transferred in November 2008. The equity portion of the consideration was to be issued in the future after a reverse merger company was selected and the terms of the reverse merger were determined. Once the capital structure of the reverse merger company, Expedite 4 Inc., which is now known as Southern China Livestock, Inc., was determined, it was then possible to provide for the equity component of the consideration. Pursuant to the Exchange Agreement, Mr. Song and his designees received 90% of the shares issued in the reverse acquisition, or 5,061,220 shares of our common stock, of which 4,386,438 shares were allocated to the former Jiangxi Huaxin shareholders and their designees subject to the option agreements. Based upon the agreement of the parties, which was an oral agreement that was never reduced to writing until the option was granted, the former shareholders of Jiangxi Huaxin were to receive approximately 78% of the outstanding shares of the reverse merger entity prior to any financing, which was 4,386,438 shares. The rights of the Jiangxi Huaxin shareholders are set forth in the restated option agreement. But for the restrictions under Chinese law, the former Jiangxi Huaxin shareholders would have received 4,386,438 shares at the closing of the reverse acquisition. Since these shares could not be issued to the former Jiangxi Huaxin shareholders, the former Jiangxi Huaxin shareholders received options to purchase the shares for nominal consideration from Mr. Song. No additional consideration was paid for the 1% that was transferred in January 2010. The modest cash consideration of $17,500 and the option to purchase 4,386,438 shares represented the total consideration for 100% of the equity of Jiangxi Huaxin. Under the laws of the PRC, the former shareholders of Jiangxi Huaxin were not permitted to acquire shares of our common stock directly in the reverse acquisition. They are, however, permitted to receive shares upon exercise of options. Currently, PRC law requires registration with, and approval from, the State Administration of Foreign Exchange, which is known as SAFE , and the approval of the Ministry of Commerce, which is known as MOFCOM, on direct or indirect offshore investment activities by PRC resident individuals. The SAFE regulations require PRC resident individuals to register with the relevant SAFE branch before establishing or acquiring control over an offshore special purpose company, known as SPC. SPCs are formed for the purpose of engaging in an equity financing outside of the PRC, with the investment proceeds directed to the SPC s operating subsidiary in the PRC originally controlled by the PRC residents. This is a very long process with no assurance that registration or approval will be granted. Accordingly, the PRC residents obtained only the right to purchase an interest in the SPC from the non-PRC owners over a period of time according to the restated option agreements, rather than acquiring a controlling equity interest in the SPC directly, and are subject to the subsequent completion of relevant PRC foreign exchange formalities. As filed with the Securities and Exchange Commission on February 7 , 201 1 Registration No. 333-167173 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 PRE-EFFECTIVE AMENDMENT NO. 7 TO FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 SOUTHERN CHINA LIVESTOCK, INC. (Exact name of registrant as specified in its charter) Delaware 0200 N/A (State or other jurisdiction of incorporation) (Primary Standard Industrial Classification Code Number) (I.R.S. Employer Identification No.) 88 Guihuayuan, Guanjingcheng Yujiang, Yingtan City, Jiangxi Province 335200 People s Republic of China +86 (701) 568-0890 (Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant s Principal Executive Offices) Corporation Service Company 2711 Centerville Road, Suite 300 Wilmington, DE 19808 (302) 636-5401 (Name, address, including zip code, and telephone number, including area code, of agent for service) Copies to: Yvan-Claude Pierre, Esq. William Haddad, Esq. Andrew D. Ledbetter, Esq. DLA Piper LLP (US) 1251 Avenue of the Americas New York, NY 10020 Telephone: (212) 335-4500 Fax: (917) 778-8670 Gregg E. Jaclin, Esq. Eric M. Stein, Esq. Yarona Y. Liang, Esq. Anslow + Jaclin, LLP 195 Route 9 South, Suite 204 Manalapan, New Jersey 07726 Tel: (732) 409-1212 Fax: (732) 577-1188 Mitchell S. Nussbaum, Esq. Norwood P. Beveridge, Jr. Daniel L. Reichman Loeb & Loeb, LLP 345 Park Avenue New York, New York 10154 Tel: (212) 407-4159 Fax: (212) 504-3013 Approximate date of commencement of proposed sale to public: As soon as practicable after this Registration Statement becomes effective. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box: x If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer , accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. Large accelerated filer o Accelerated filer o Non-accelerated filer o Smaller reporting company Table Of Contents The restated option agreements have a nominal price of $0.01 per share, which is the economic equivalent of ownership. The options have certain conditions in order to comply with PRC law. The sole purpose of the options is to provide the former Jiangxi Huaxin shareholders with the equity consideration that they would have received if they had exchanged their Jiangxi Huaxin shares directly. Mr. Song understood that he received the 4,386,438 shares on behalf of the former Jiangxi Huaxin shareholders and that they held the underlying economic interest in the shares since Mr. Song had no independent economic interest in the shares and Mr. Song granted the option holders the voting rights with respect to those shares. See Certain Relationships and Related Transactions, beginning on page 54. On June 9, 2010, we incorporated Jiangxi Southern China Livestock Technology Limited, or SCLI-Jiangxi, as a wholly foreign owned company in China. See Corporate History and Structure Background and History on page 36 for more information. The following chart reflects our organizational structure with respect to our active subsidiaries as of the date of this prospectus. Corporate Information The address of our principal executive office is at 88 Guihuayuan, Guanjingcheng, Yujiang, Yingtan City, Jiangxi Province, People s Republic of China, and our telephone number is +86 (701) 568-0890. Our corporate website is www.southernchinalivestock.com. Any information contained on our website or any other website does not constitute a part of this prospectus. Table Of Contents The Offering Common stock we are offering shares (1) Common stock outstanding before the offering 7,144,071 shares Common stock outstanding after the offering shares (2) Offering price $ to $ per share (estimate) Use of proceeds We intend to use the net proceeds of this offering to increase our inventory of sows and hogs, to begin development of an organic fertilizer business and for working capital and other general corporate purposes, including capital expenditures. See Use of Proceeds on page 25 for more information on the use of proceeds. Risk factors Investing in these securities involves a high degree of risk. As an investor , you should be able to bear a complete loss of your investment. You should carefully consider the information set forth in the Risk Factors section beginning on page 13. Listing We have applied to list our common stock on the NASDAQ Capital Market under the symbol SCLI and our application is currently under review. (1) Excludes (i) up to additional shares that we may sell to the underwriters solely to cover over-allotments, if any. We are also concurrently registering for resale under a separate prospectus up to (ii) 2,383,145 shares of common stock held by the selling stockholders named under such prospectus (including 852,061 shares that have been or may be acquired upon the exercise of warrants that have been previously issued to selling stockholders named in such prospectus). None of these securities are being offered by us and we will not receive any proceeds from the sale of these shares. (2) Based on (i) 7,144,071 shares of common stock issued and outstanding as of the date of this prospectus, and (ii) shares of common stock issued in the public offering (excluding up to additional shares that we may sell to the underwriters solely to cover over-allotments, if any). Table Of Contents
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+PROSPECTUS SUMMARY The following summary highlights selected information contained in this prospectus. This summary does not contain all the information you should consider before investing in the securities. Before making an investment decision, you should read the entire prospectus carefully, including the "Risk Factors" section, the Financial Statements and the Notes to the Financial Statements. Our Company As a result of our merger with NuGen Mobility, Inc. in January 2010, we are, through our NuGen subsidiary, engaged in the development, design, and marketing of a technology related to creating a permanent magnet electrical motor systems. Our revenue is derived primarily from contract research and development engineering services. Our technology relates to specialty electric drive engines and related components. This technology is currently being sold directly to original equipment manufacturers ( OEMs ) pursuant to technical assistance agreements. The agreements generally provide for us to engineer our technology to run in various platforms (e.g. vehicles, electric generators and motors) and to be adapted to a customer s particular application. We offer these services from our facility located in Virginia, to customers that require high-efficiency, reliable, compact permanent magnet electrical motor systems, controllers, vehicle interface modules (including energy storage, management and monitoring systems) and related software. Our technology is used primarily to convert electrical power into mechanical power so that mechanical power can be used to propel a vehicle or run a generator and may be used in markets ranging from electric/hybrid electric vehicles to materials handling equipment, distributive power, ground support equipment, motion control, and military systems. For the year ended September 30, 2010, sales to two customers, both based in India, accounted for more than 75% of our revenues and for the years ended September 30, 2009 and 2008, one customer, which is located in India, accounted for 84% of our revenues. Although we continue to deal with such customer, one of these agreements expired in September 2010. As reflected in our financial statements for the fiscal years ended September 30, 2010 and 2009, we had negative cash flows from operations of $1,492,451. We have not yet established an ongoing source of revenues sufficient to cover our operating costs to allow us to continue as a going concern. Furthermore, we anticipate generating losses for at least the next 12 months. These factors raise substantial doubt that we will be able to continue operations as a going concern. Our independent auditors included an explanatory paragraph in their report for the fiscal years ended September 30, 2010 and 2009 on the accompanying financial statements regarding concerns about our ability to continue as a going concern. Our financial statements contain additional note disclosures describing the circumstances that lead to this disclosure by our independent auditors. Our offices are located at 44645 Guilford Drive, Suite 201, Ashburn, Virginia and our telephone number is (703) 858-0036. Corporate Information We were incorporated as a Delaware corporation on September 27, 2007 under the name Expedite 1, Inc. and on February 11, 2008, pursuant to a change of control, changed our name to InovaChem, Inc. Prior to our acquisition of Nugen Mobility, Inc., InovaChem was an early development stage company with no revenues and no business operations. It was anticipated that InovaChem would develop a strategic plan to reduce certain food, pharmaceutical and other products costs by utilizing new technologies. Due to the uncertainty of the state of the economy, InovaChem was unable to pursue this opportunity and had conducted virtually no business other than organizational matters, and filings of periodic reports with the SEC. InovaChem abandoned this strategic plan and sought to acquire an operating company. NuGen Mobility, Inc was organized as a Delaware corporation on September 8, 2006 for the purpose of engaging in research, development and manufacture of permanent magnet electrical motor systems and related electric controls. In August 2007, NuGen acquired substantially all of the assets, and certain liabilities of New Generation Motors, a Delaware corporation ( New Generation Motors ), related to its business of designing, manufacturing, marketing and licensing axial flux and other electric motors. On January 29, 2010, InovaChem completed the acquisition of NuGen Mobility, Inc ( NuGen or NuGen Mobility ), through a reverse subsidiary merger (the Merger ) pursuant to which NuGen became InovaChem s wholly-owned subsidiary. As a result of the Merger, we intend to carry on NuGen s business as our sole line of business and will no longer be in the previous business of attempting to utilize new technologies to reduce certain food, pharmaceutical and other products costs. On February 26, 2010, our board of directors and stockholders approved an amendment to the Company s Certificate of Incorporation changing the Company s name from InovaChem, Inc. to NuGen Holdings, Inc. The Certificate of Amendment to the Certificate of Incorporation became effective on March 4, 2010. The Merger resulted in a change in control of our company and also a change in some of the members of our management team. Our fiscal year remained September 30. The Merger is being accounted for as a reverse acquisition and recapitalization. NuGen is the acquirer for accounting purposes and NuGen Holdings, formerly known as InovaChem, is the acquiree. Accordingly, NuGen s historical financial statements for periods prior to the acquisition become those of the acquirer retroactively restated for the equivalent number of shares received in the Merger. The accumulated deficit of NuGen is carried forward after the acquisition. Operations prior to the Merger are those of NuGen. Earnings per share for the period prior to the Merger are restated to reflect the equivalent number of shares outstanding. When we acquired the assets of New Generation Motors, we agreed to assume certain loans of New Generation Motors under the condition that such loans would be converted to conditional grants by New Generation Motors lender, ICICI. However, New Generation Motors did not obtain a signed contractual agreement from such lender. When our subsidiary NuGen Mobility closed on the Asset Purchase Agreement and acquired substantially all of the assets of New Generation Motors, we agreed to assume New Generation Motor s commitment to reimburse a conditional grant of $700,000 that it had received from ICICI. We do not have a written assignment from ICICI regarding the assumption of this commitment. This conditional grant is only required to be paid back once Bajaj begins paying licensing fees on the technology mentioned above. If we had been assigned this agreement we would then be obligated to pay ICICI a royalty on the licensing fees received from Bajaj agreement until $1,400,000 is repaid based upon a schedule in the agreement. Since the dates provided for in the schedule to the agreement have passed, the agreement provides that if the actual sales deviate substantially, the royalty schedule will have to be changed. As of the date of this filing Bajaj has not performed on its agreement, therefore no licensing fees have been earned/paid and no licensing fee royalties have been earned/paid by Bajaj to our subsidiary company NuGen Mobility. Consequently, no payments are owed or have been paid to ICICI with respect to this $700,000 conditional grant. ICICI also provided a loan of $500,000 to New Generation Motors in March of 2003 to help finance New Generation Motors support of the Bajaj program. NuGen Mobility assumed this $500,000 liability on the condition that the loan is converted to a conditional grant (similar to the conditional grant executed by New Generation Motors and ICICI in 2001). In 2006, both New Generation Motors and ICICI agreed to convert this $500,000 loan to a conditional grant under the same terms and conditions as the previous 2001 agreement. However, we currently do not have a signed document reflecting this 2006 agreement. We are in discussions with ICICI to execute this document. There can be no assurances that our discussions will result in such conditional grant agreement. Currently, no demand has been made to NuGen Mobility for payment; accordingly, we do not reflect this as a liability on our balance sheet but rather we include it under Commitments and Contingencies in our financial statement footnotes. As of the date of this filing, Bajaj has not performed on its agreement, therefore no licensing fees have been earned/paid and no licensing fee royalties have been earned/paid by Bajaj to our subsidiary company NuGen Mobility. Consequently, no payments are owed or have been paid to ICICI with respect to this $500,000 conditional grant. We do not have express consent from Bajaj Auto Ltd. to the assignment of its license agreement with New Generation Motors to us. New Generation Motors had a master license agreement with Bajaj Auto Ltd. pursuant to which Bajaj was granted certain manufacturing and distribution rights. We do not have Bajaj Auto s consent to the assignment from New Generation Motors to us of such license agreement. Without a contractual written agreement with Bajaj regarding our assignment of the license agreement, there can be no assurances that we can benefit from or receive any payments under the agreement. We cannot determine with certainty the scope of New Generation Motors liabilities under the $500,000 ICICI Conditional Grant agreement and consequently we cannot determine with certainty the scope of the liabilities that Nugen Mobility agreed to assume pursuant to the $500,000 ICICI conditional grant agreement. When our subsidiary NuGen Mobility closed on the Asset Purchase Agreement and acquired substantially all of the assets of New Generation Motors, we agreed to assume certain liabilities of New Generation Motors to ICICI in a conditional grant format . In particular, ICICI provided a loan of $500,000 to New Generation Motors in March of 2003 to help finance New Generation Motors support to the Bajaj program. In connection with the Asset Purchase Agreement, NuGen Mobility agreed to assume this $500,000 liability on the condition that the loan was converted to a conditional grant (similar to the conditional grant executed by New Generation Motors and ICICI in 2001). We currently do not have a signed document reflecting the conversion of this loan to a conditional grant format. We are in discussions with ICICI execute said document. There can be no assurances that our discussions will result in a conditional grant agreement. It is possible that ICICI may change their opinion of converting said liability from a loan to a conditional grant as previously agreed with New Generation Motors in 2006 and may attempt to apply the original terms and conditions of the $500,000 loan to New Generation Motors to NuGen Mobility. The original terms and conditions as stated in the original loan are payment of principal in the amount of $500,000 with an APR of 7% per annum and a 10% penalty for late payments. Currently, NuGen is in discussions with ICICI to facilitate and execute the appropriate and mutually agreed upon documentation regarding this particularly liability. No demand for payment has been made to NuGen Mobility and no funds have been earned or received from Bajaj or GEF as referred to in the original Loan. Accordingly, we do not reflect this as a liability on our balance sheet but rather we include it under Commitments and Contingencies in our financial statement footnotes as would be required based on the Asset Purchase Agreement between New Generation Motors and NuGen Mobility. Provisions of the conditional grant agreement may impose restrictions on us. Although we do not have a written assignment from ICICI regarding our assumption of the $700,000 conditional grant agreement, certain terms of the agreement would prohibit us from taking on new projects or expansion in excess of $200,000 without the consent of ICICI. If the agreement was deemed to be assigned to us and we could not obtain ICICI s consent, we may be bound by these provisions which could limit our operations. As we have a limited history, it may be unable to accurately predict our future operating expenses, which could cause us to experience cash shortfalls in future periods. We have a limited history with regard to expenses and may be unable to accurately forecast our cash needs for the pre-operating months. There can be no assurance we will raise sufficient capital to carry out our business plan. If we are unable to adequately protect our intellectual property, our business prospects may be harmed. Our long-term success largely depends on our ability to market our technology. In order to legally protect our technology we must: CALCULATION OF REGISTRATION FEE Title of each class of securities to be registered Amount to be registered (1) Proposed maximum offering price per share Proposed maximum aggregate offering price Amount of registration fee (3) Common Stock, par value $.001 14,748,340 $ 1.00 (2) $ 14,748,340 $ 1,712.28 Total 14,748,340 $ 1.00 $ 14,748,340 $ 1,712.28 (1) Represents shares of common stock that may be sold by the selling stockholders. In the event of a stock split, stock dividend or similar transaction involving our shares of common stock, the number of shares registered shall automatically be increased to cover the additional shares of common stock issuable pursuant to Rule 416 under the Securities Act of 1933, as amended. (2) The offering price has been estimated solely for the purpose of computing the amount of the registration fee in accordance with Rule 457(o). Our common stock is not traded and any national exchange and in accordance with Rule 457, the offering price was determined by us arbitrarily based on the price shares were sold to the selling security holders in private placement transactions plus an increase due to the fact that the shares are being registered and will be liquid. The selling shareholders may sell shares of our common stock at a fixed price of $1.00 per share until our shares are quoted on the OTC Bulletin Board and thereafter at prevailing market prices or privately negotiated prices. There can be no assurance that a market maker will agree to file the necessary documents with the Financial Industry Regulatory Authority ( FINRA ), which operates the OTC Electronic Bulletin Board, nor can there be any assurance that such an application for quotation will be approved. We have agreed to bear the expenses relating to the registration of the shares for the selling security holders. We will not receive proceeds from the sale of shares from the selling shareholders. (3) Fee previously paid. THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE. The Offering Shares of common stock being registered 14,748,340 Total shares of common stock outstanding as of the date of this prospectus 56,966,564 (1) Total proceeds raised by us from the disposition of the common stock by the selling security holders or their transferees We will receive no proceeds from the disposition of already outstanding shares of common stock by the selling security holders or their transferees. Market for our common stock There has been no market for our securities. Our common stock is not traded on any exchange or on the over-the-counter market. After the effective date of the registration statement relating to this prospectus, we hope to have a market maker file an application with the FINRA for our common stock to eligible for trading on the Over The Counter Bulletin Board. We do not yet have a market maker who has agreed to file such application. There is no assurance that a trading market will develop, or, if developed, that it will be sustained. Consequently, a purchaser of our common stock may find it difficult to resell the securities offered herein should the purchaser desire to do so when eligible for public resale. (1) Does not give effect to options to acquire up to 2,606,250 shares of common stock, options to acquire up to 4,666,667 shares of Class A preferred stock, 1,627,779 shares issuable upon the conversion of Series B preferred stock and 325,556 shares of common stock issuable upon the exercise of outstanding warrants.
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+PROSPECTUS SUMMARY This summary highlights material information contained elsewhere in this prospectus and does not contain all of the information that you should consider in making an investment decision. We urge you to read this entire prospectus carefully, including the Risk Factors section and our financial statements and related notes appearing elsewhere in this prospectus, before making an investment decision. Unless otherwise expressly provided herein, all share and per share numbers set forth herein relating to our common stock (i) assume no exercise of (a) any warrants and/or options, (b) the representative s options and/or (c) the underwriters over-allotment option, and (ii) reflect (a) a 15 for 1 forward stock split of our common stock on December 3, 2009, (b) a 1 for 2 reverse stock split of our common stock, which became effective on August 3, 2010, and (c) a 1 for 1.5 reverse stock split of our common stock, which became effective on January 18, 2011. Currency, exchange rate, and China and other references Unless otherwise noted, all currency figures in this filing are in U.S. dollars. References to "yuan" or "RMB" are to the Chinese yuan, which is also known as the RMB. According to the currency exchange website www.xe.com, on March 16, 2011, $1.00 was equivalent to 0.15207 yuan. References to PRC are to the People s Republic of China. Unless otherwise specified or required by context, references to we, our and us refer collectively to (i) China Shandong Industries, Inc., and our subsidiaries, Tianwei International Development Corporation, an Oregon corporation and Shandong Caopu Arts & Crafts Co., Ltd, a wholly foreign-owned enterprise organized under the laws of the PRC. Specific discussions or comments relating only to China Shandong Industries, Inc. will reference China Shandong Industries and those relating only to Shandong Caopu Arts & Crafts Co., Ltd will reference Shandong. References to Shandong s registered capital are to the equity of Shandong, which under PRC law is measured not in terms of shares owned but in terms of the amount of capital that has been contributed to a company by a particular shareholder or all shareholders. The portion of a limited liability company s total capital contributed by a particular shareholder represents that shareholder s ownership of us, and the total amount of capital contributed by all shareholders is our total equity. Capital contributions are made to us by deposits into a dedicated account in our name, which we may access in order to meet our financial needs. When our accountant certifies to PRC authorities that a capital contribution has been made and we have received the necessary government permission to increase its contributed capital, the capital contribution is registered with regulatory authorities and becomes a part of our registered capital. Our Business We are a designer and contract manufacturer of household furniture in the PRC. We produce a variety of indoor and outdoor residential furniture and wicker products that are sold and exported to more than 30 countries. Our products are sold through well known domestic and international retailers such as Trade Point A/S Direct Container, Zara-Home, Habitat UK Ltd., ABM Group Inc., and Fuji Boeki Co. Ltd. We believe that the product depth and extensive style selections we offer allows us to be a strong resource for global furniture, retail chains and retailers in the discounted price range. Our products are divided into 3 categories based upon their features and producing methods, which are (i) furniture products, (ii) straw-wicker products, and (iii) wooden crafts products. Our furniture products are primary indoor furniture products made of poplar and paulownia, including chairs, barstools, tables, bookcases, cabinets, lamps and similar items. Calculation of Registration Fee Title of each class of securities to be registered Proposed maximum aggregate offering price Amount of registration fee Common stock, par value $0.0001 per share $ 34,500,000 (1) $ 2,975.05 Representative s options to purchase common stock (2) 100 (2) .01 Common stock underlying representative s options (3) 1,875,000 (2) 161.69 Total Registration Fee $ 3,136.75 (4) Following are pictures of our sample furniture products: Our Straw and wicker products are weaved and interlaced by hand into various products with different sizes and shapes, such as wicker basket, straw drawers. Straw and wicker products are cheaper to produce than wooden crafts products and furniture products because the price of the raw material used in such products is less expensive and more common in PRC households. (1) Estimated solely for the purpose of calculating the amount of the registration in accordance with Rule 457(o) under the Securities Act of 1933, as amended. Includes an estimated $4,500,000 proposed maximum aggregate offering price from the sale of shares of common stock which may be issued pursuant to the exercise of a 45-day option granted by the registrant to the underwriters to cover over-allotments, if any. (2) Pursuant to Rule 416 under the Securities Act of 1933, as amended, there are also being registered an indeterminable number of shares of our common stock as may be issued to prevent dilution as a result of stock splits, stock dividends or similar transactions. (3) The Registrant will sell to the representative of the underwriters, for $100, options to purchase a number of shares of common stock that is equal to 5% the aggregate number of shares sold in this offering excluding the over-allotment option. The options will be exercisable at a per share exercise price equal to 125% of the public offering price. As estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(g) under the Securities Act, the proposed maximum aggregate offering price of the representative s options is $1,875,000, which is equal to 125% of $1,500,000 (5% of $30,000,000). In accordance with Rule 457(g) under the Securities Act, because the shares of the Registrant s common stock underlying the representative s options are registered hereby, no separate registration fee is required with respect to the options registered hereby. (4) Previously paid The Registrant amends this registration statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this registration statement shall hereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, or until the registration statement shall become effective on such date as the Commission, acting pursuant to Section 8(a), may determine. The following are the pictures of certain of our straw-wicker products: Wooden crafts products mainly refers to decorations and accessories, knick-knacks and ornamental objects made of poplar wood in a semi-manual and semi-mechanical way. Such products include photo frames, gift boxes, bottle boxes, jewelry boxes, and bird nests, which can be used for decoration or as functional products in houses, offices and public places. The following are pictures of certain of our wooden crafts product: Our operations are conducted in the PRC through our subsidiary, Shandong, through which we manufacture over 20,000 products. We focus on providing high quality products at competitive prices. For the calendar year ended December 31, 2010, approximately 4.2% of our revenues were generated from products sold in the PRC and 95.8% of our revenues were generated from products sold in countries and places such as Denmark, the United States, Germany, the United Kingdom, Spain, Italy, Sweden, Canada and Taiwan. Our products are sold through well known retailers such as Trade Point A/S Direct Container, Zara-Home, Habitat UK Ltd., ABM Group Inc., and Fuji Boeki Co. Ltd. We believe that our products offer competitive prices and high quality. The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION. DATED MARCH 16, 2011. __________ Shares of Common Stock For the 2010 fiscal year, we generated sales and net income of $83,934,050 and $14,157,889, respectively, and for the 2009 fiscal year, we generated sales and net income of $69,435,044 and $12,021,155, respectively. For the 2010 fiscal year, sales of our wood furniture products, straw-wicker products and handicraft products accounted for approximately $47.1 million, $35.4 million and $1.5 million, respectively, or 56.1%, 42.2% and 1.7% of our revenues, and for the 2009 fiscal year, approximately $37.1 million, $31.2 million and $1.1 million, respectively. For the 2010 fiscal year, sales and net income were approximately $47.1 million and $8.79 million, respectively, from our furniture products, approximately $35.4 million and $5.15 million, respectively, from our straw wicker products and approximately $1.5 million and $0.21 million, respectively from our crafts products. For the 2009 fiscal year, sales and net income were approximately $37.1 million and $6.7 million, respectively, from our furniture products, approximately $31.2 million and $5.1 million, respectively, from our straw and wicker products, and $1.1 million and $0.2 million, respectively, from our crafts products. As of December 31, 2010, we had total assets of $62,388,487, available cash and cash equivalents of $2,863,692 and approximately 1500 full time employees. Our operating facilities consist of 19 plants located in our Caopu Industrial Park, which includes our existing 4 industrial parks in Cao County, Shandong Province, PRC. Our existing industrial parks have a total area of approximately 163,000 square meters, of which 71,708.4 square meters consist of buildings that house our production lines, warehouses, executive offices and related business facilities. In December 2006, we were granted a free land use right for an additional 98,435.32 square meters by the PRC local government, upon which we intend to build our fifth industrial park. As of December 31, 2010, we have land use rights for a total of 261,124.14 square meters. During the 2010 fiscal year, we produced 3,045,377 units of wooden furniture, 3,361,928 units of straw-wicker products and 128,777 units of wooden-craft products. We believe, based on our management s experience, that we currently can only fulfill approximately 60% to 70% of order requests from our customers for our wooden furniture products. We believe that the completion of our new production facility will enable us to fulfill a greater percentage of order requests from our customers. Because straw, wicker and handicraft products are relatively easy to produce, and do not require a significant investment in technology or equipment, we do not produce such products in our manufacturing facilities. Instead, we employ local people to manufacture such products in their homes in Cao County, Shandong Province, PRC. Our four existing industrial parks are engaged in producing wood furniture and consist of 19 plants, all of which produce a full line of residential furniture products, including kitchen furniture, office furniture, living room furniture, outdoor furniture and general living furniture. In order to respond quickly to customer orders, we have designed our facilities and developed manufacturing practices that allow us to be highly flexible so that certain of our plants can be used to produce several types of furniture. Concentration on Furniture Industry Based upon our experience as furniture makers and sellers both domestically and internationally as well as the Shandong Caopu Arts & Crafts Co., Ltd Poplar Furniture & Paint Line Expansion Projects Feasibility Study Report, a report issued by China Shandong Province Engineering Consultation Institute in March 2009 (the Shandong Report ), we believe that the demand for furniture has been growing steadily worldwide. We believe that historically western countries have accounted for the majority of world furniture production and consumption. However, we believe that the global furniture industry is undergoing a substantial transformation, where developing countries, such as China, are playing an increasingly important role in wood furniture production and consumption. As a result, although our straw, wicker and handicraft products have been and continue to be an integral part of our overall business, we intend to focus and devote a substantial part of our resources to expand our wood furniture business. Our Competitive Advantages We believe that we are one of the large-scale producers and manufacturers of furniture and craft products in China because we (i) have more than $20 million in production facilities and equipment in 19 plants within a total area of approximately 163,000 square meters, (ii) have generated an average of $57 million in revenues during the past 3 years, and (iii) produce more than 20,000 types of products. We believe we have the following competitive advantages over our competitors: We believe our brand name CAOPU is well-known among oversea retailers and wholesalers, such as Zara-Home, Habitat UK Ltd., ABM Group Inc., and IKEA; We believe that we are becoming more well known among overseas retailers and wholesalers for our poplar and paulownia wood products; We are offering __________ shares of our common stock. Our common stock is currently quoted on the OTC Bulletin Board under the symbol CSNH. We intend to apply for listing of our common stock on the NASDAQ Capital Market under the symbol CPGY. The last reported market price of our shares of common stock on March 16, 2011, was $3.00. If the application is not approved, we will not complete this offering. Our research and development ( R&D ) team has 24 employees, each of whom has over 4 years of experience in furniture and craft production; We have what we believe to be a strong technological team in product improvement; We have developed products based on traditional folk art in Cao County; We believe that our raw materials costs are lower than our competitors because our production facility is located in an area that has an abundance of fast-growing trees that we use in manufacturing our products; and Over the past ten years, we have developed long-term customer cooperative relationships with a number of well known companies, such as Zara-Home, Habitat UK Ltd., ABM Group Inc., and IKEA. Our Strengths We believe we have the following strengths in our own manufacturing, distribution and brand recognition: 1. Our revenues and net income have increased substantially over the past 2 years. Specifically, we generated revenues of $83,934,050 and $69,435,044 for the twelve months ended December 31, 2010 and 2009, respectively, and achieved net income of $14,157,889 and $12,021,155 for the twelve months ended December 31, 2010 and 2009, respectively. 2. We commit ourselves to improve our production techniques and have flexibility in producing more customer-oriented and/or market-oriented products. 3. We believe our management team and products have established a good reputation among domestic and multinational retailers around the world, such as Zara-Home, ABM Group Inc., Habitat UK Ltd. and Fuji Boeki Co., Ltd. 4. We have a reliable supplier network for low-cost raw materials from or outside Cao County. 5. We impose rigorous quality control standards for our products, not only complying with various national quality standards but also special quality requirements demanded by our clients. 6. We have an experienced and committed management team, whose in-depth knowledge of the furniture business enabled our revenue to increase the last two fiscal years. 7. The natural raw material resource in Cao County and comparatively cheap labor costs make our products competitive in the international furniture market. Our Weaknesses/Challenges Need to increase our production capacity Most of our current production equipment and facilities were purchased 4-5 years ago and we believe are not sufficiently up to date to optimally allow us to meet customer demand for our products, which we believe reduces our overall product output and revenues. In addition, due to the age of certain of our current production machines, we cannot produce certain products that new machines would allow us to produce. As a result, our production capacity limits our ability to accept certain overseas orders. Lack of customer name brand to end customers We are an original equipment manufacturer ( OEM ) for North American and European manufacturers. Currently, we receive orders and sell our products directly to retailers and wholesalers, who then resell our manufactured products to end users using the brand name of such retailers and wholesalers. Because we have not established our own name brand, end users do not recognize or seek out our products, which prevents us from selling our products under our own brand name. Absence of our own sales and distribution channels We market and distribute our products mainly to retailers and wholesalers instead of consumers and we have not set up our own sales and distribution channels. Therefore, our sales are partially dependent on the sales, sales efforts and distribution channels of retailers and wholesalers who sell our products. Generally, this subjects our revenues to factors under the control of our retailers and wholesalers such as the quality of their showrooms, the quality and budget for marketing and advertising of such products and the availability of space in their showrooms and stores to show our products. Investing in our securities involves a high degree of risk. See Risk Factors beginning on page 10 of this prospectus for a discussion of information that should be considered in connection with an investment in our securities. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. Per share Total Public offering price $ $ Underwriting discounts and commissions (1) $ $ Proceeds to us, before expenses $ $ Our Proposed Growth Strategy Based upon the historical growing demand for our wood furniture products and the changing dynamics of the wood furniture industry, we believe we have a unique opportunity to substantially increase our revenues, net income and gross margins by not only expanding the capacity of our existing wood furniture production business but also producing additional types of wood furniture products for which we believe there is a large and increasing international demand. We seek to increase our revenues by taking advantage of the increasing demand for wood furniture worldwide. To attempt to capitalize on such perceived opportunity, we have developed a five-pronged plan that consisting of the following elements: (i) Increasing our production capacity to meet increasing demands by developing a new manufacturing line; (ii) Developing new and higher end wood furniture products by developing new manufacturing lines in the future; (iii) Strengthening our R&D to better able us to produce our products quicker and more efficiently; (iv) Strengthening and developing stronger relationship with our current and potential new clients in foreign countries; and (v) Expanding the market for our goods in China. Office Location Our executive offices are located at No. 2888 Qinghe Road, Development Zone Cao County, Shandong province, 274400 PRC, and our telephone number is (86) 530-3432696. Our websites are www.caopu.cn and www.shandongindustries.com. Information on our website or any other website is not a part of this prospectus. Corporate History and Organizational Structure We are a holding company and all of our active business operations are conducted by our indirect, operating subsidiary, Shandong. We were incorporated in February 2007 in Delaware under the name Mobile Presence Technologies, Inc. to develop and provide software and services to enhance the use of cellular phones and other hand held communication devices. In November 2009, we acquired all of the issued and outstanding capital stock of Tianwei International Development Corporation, which we refer to as Tianwei. Tianwei was incorporated under the laws of Oregon on January 13, 2009 and is the owner of all of the issued and outstanding capital stock of Shandong. Shandong was organized under the laws of the PRC in August 2000 under the name Heze Caopu Arts & Crafts Co., Ltd. In November 2000, it changed its name to Shandong Caopu Arts & Crafts. Co., Ltd. In April 2008, Shandong has registered capital of $7.8 million, 96.79% of which was owned by Shandong Cao County Changsheng Arts & Crafts Co., Ltd. and the remaining 3.21% was owned by Japan Fit Co., Ltd. In January 2009, Tianwei acquired Japan Fit s 3.21% interest in Shandong and in July 2009, Tianwei acquired Shandong Cao County Changsheng Arts & Crafts Co., Ltd. s 96.79% interest in Shandong. As a result, Tianwei became the sole owner of Shandong and we became the 100% owner of Tianwei. In addition, as a result of its new ownership structure, Shandong became a Wholly Foreign Owned Enterprise or WFOE under PRC law. On December 3, 2009, we filed a certificate of amendment to our certificate of incorporation changing our name to China Shandong Industries, Inc. to better align our name with our business, increasing our authorized shares of common stock to 100,000,000 and effectuating a 15 for 1 forward split of our common stock. On August 3, 2010, we effectuated a 1-for-2 reverse stock split of our common stock. On January 18, 2011, we effectuated a 1 for 1.5 reverse stock split of our shares of common stock. (1) See Underwriting for a description of compensation payable to the underwriters. We have paid the representative of the underwriters a $25,000 advance upon the execution of an engagement letter with it. The representative will also be entitled to a non-accountable expense allowance equal to 1% of the public offering price and will receive options to purchase 5% of the aggregate number of shares of our common stock sold in this offering. In addition, we have granted a 45 day option to the underwriters to purchase up to an additional ___________ shares of common stock from us on the same terms as set forth above. If the underwriters exercise their right to purchase all of such additional shares of common stock, such shares will be purchased at the public offering price less the underwriting discount. The shares issuable upon exercise of the underwriter option are identical to those offered by this prospectus and have been registered under the registration statement of which this prospectus forms a part. The underwriters expect to deliver the shares of common stock to the purchasers on or about March__, 2011 Rodman & Renshaw, LLC Chardan Capital Markets, LLC The date of this prospectus is _________, 2011. The following chart reflects our organizational structure as of the date of this prospectus: Company Structure The following chart reflects our organizational structure upon the closing of this public offering: (1) CAOPU Enterprise Limited, a BVI entity ( CAOPU ), owns approximately 86.0% of our issued and outstanding common stock. Mr. Jinliang Li, our Chairman, Chief Executive Officer and controlling shareholder, owns all of the issued and outstanding capital stock of CAOPU. Of the shares owned by CAOPU, shares representing approximately 51% of our issued and outstanding shares are held for the benefit of Mr. Li and shares representing approximately 35% of our issued and outstanding shares are held for the benefit of nine other minority shareholders (none of whom owns more than 4.4% of our issued and outstanding shares individually). The shares held by CAOPU for the benefit of Mr. Li and the minority shareholders are held pursuant to the terms of agreements between CAOPU and each such shareholder, a form of which is attached as an exhibit to this registration statement. Pursuant to the terms of such agreements, CAOPU will continue to hold such shares for the benefit of such shareholders for a period of 15 months after we complete the public offering of our securities, unless such time period is extended. Although Mr. Li has no pecuniary interest in the shares held by CAOPU for the benefit of the nine minority shareholders, by reason of his sole ownership of CAOPU, Mr. Li has sole voting and dispositive power over such shares of our common stock. (2) None of the other shareholders has more than 5% shares of our restricted common stock. TABLE OF CONTENTS Page Prospectus Summary 1
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+PROSPECTUS SUMMARY This summary highlights selected information contained elsewhere in this prospectus. This summary does not contain all the information that you should consider before investing in the common stock. You should carefully read the entire prospectus, including Risk Factors , Management s Discussion and Analysis of Financial Condition and Results of Operations and the Financial Statements, before making an investment decision. In this Prospectus, the terms NXT Nutritionals, Company, we, us and our refer to NXT Nutritionals Holdings, Inc. OVERVIEW We were originally incorporated in the state of Delaware on April 25, 2006 to search for available properties in north central British Columbia. On February 12, 2009, we entered into a share exchange agreement (the Share Exchange Agreement ) with NXT Nutritionals, Inc. ( NXT Nutritionals ) and the shareholders of NXT Nutritionals (the NXT Shareholders ), pursuant to which, we acquired all of the issued and outstanding common stock of NXT Nutritionals from the NXT Shareholders. As a result of the closing of the Share Exchange, NXT Nutritionals became our wholly-owned subsidiary. Operating through NXT Nutritionals, we are engaged in developing and marketing of a proprietary, patent-pending, all natural, healthy sweetener sold under the brand name SUSTA and other food and beverage products. SUSTA is being sold as a stand-alone product and it is the common ingredient for all of our products. We also market and sell Healthy Dairy which is enhanced by the revolutionary taste and nutritious ingredients contained in SUSTA . We have shifted our focus on sales of Healthy Dairy products from grocery chains to the food service category because our management believes this change in our business model will make us profitable in the future. Our mission is to provide consumers with unique, healthy, delicious products that promote a healthier lifestyle and combat obesity and diabetes. Our initial focus will be to bring SUSTA to the retail marketplace nationwide, expand the Healthy Diary product line from the east coast to nationwide reach, and eventually to expand the Healthy Dairy to include product lines such as cup yogurt and ice cream. SUSTA Natural Sweetener SUSTA is an all natural, healthy sweetener that has minimal calories and low glycemic index. It is a proprietary blend of inulin fiber, fructose, botanical extracts, natural flavors, vitamins, minerals, and probiotics that is patented in New Zealand and is patent-pending in the U.S. and Canada. Table of Contents On March 24, 2009, we issued 250,000 shares of common stock to consultants for services rendered, having a fair value of $312,500 ($1.25/share), based upon the quoted closing trading price. We also granted 250,000, 5 year stock purchase warrants, to purchase shares of the Common Stock at an exercise price of $0.60. On March 24, 2009, we issued 175,000 shares of common stock to consultants to settle accounts payable from 2008 totaling $70,250 and an additional $148,455 for services rendered in 2009. The stock issuance has a fair value of $218,705 ($1.25/share), based upon the quoted closing trading price. On March 24, 2009, we issued 100,000 shares of common stock to consultants for services rendered, having a fair value of $125,000 ($1.25/share), based upon the quoted closing trading price. On February 12, 2009, we issued 650,000 shares of common stock to members of our board of directors and outside consultants for services rendered, having a fair value of $6,500 ($0.01/share), based upon the value of the services rendered to the private company prior to the reverse acquisition. Item 16.Exhibits and Financial Statement Schedules. EXHIBIT NUMBER DESCRIPTION 2.1 Share Exchange Agreement dated February 12, 2009 by and among NXT Nutritionals Holdings, Inc. , NXT Nutritionals, Inc. and the shareholders of NXT Nutritionals, Inc. (1) 3.1 Articles of Incorporation (7) 3.2 By-Laws (5) 5.1 Opinion of Anslow & Jaclin, LLP 10.1 Employment Agreement by and between NXT Nutritionals Holdings, Inc. and Francis McCarthy (1) 10.2 Employment Agreement by and between NXT Nutritionals Holdings. Inc. and David Briones ( 2 ) 10.3 Employment Agreement by and between NXT Nutritionals Holdings, Inc. and Mark Giresi (9) 10.4 Lock-Up Agreement with Management Shareholders (1) 10.5 Licensing Agreement by and between NXT Nutritionals Holdings, Inc, and Mine O Mine, Inc. dated November 30, 2009 (3) 10.6 Endorsement Agreement by and between NXT Nutritionals Holdings, Inc, and Eddie George dated March 3, 2010. (7) 10.7 Securities Purchase Agreement dated February 26, 2010 (4) 10.8 Security Agreement dated February 26, 2010 (4) 10.9 Subsidiaries Guarantee Agreement dated February 26, 2010 (4) 10.10 Registration Rights Agreement dated February 26, 2010 (4) 10.11 Form of Debenture (6) 10.12 Form of Series A Warrant (6) 10.13 Form of Series B Warrant(6) 10.14 Endorsement Agreement by and between NXT Nutritionals Holdings, Inc. and Blair Underwood dated April 22, 2009. (7) 10.15 Director Agreement by and between NXT Nutritionals Holdings, Inc. and David Deno dated August 30, 2009. (8) 10.16 Director Agreement by and between NXT Nutritionals Holdings, Inc. and Ann McBrien dated October 19, 2009. (8) 10.17 Director Agreement between NXT Nutritionals Holdings, Inc. and Dr. Paul S. Auerbach dated June 30, 2009. (8) 10.18 Modification and Amendment Agreement by and among NXT Nutritional Holdings, Inc. and Purchasers identified on the signature page thereto, dated September 1, 2010. (10) 10.19 Endorsement and Service Agreement by and between NXT Nutritional Holdings, Inc. and Dara Torres, dated September 21, 2010 (11) 10.20 Consulting Agreement by and between NXT Nutritionals Holdings, Inc., and Richard Kozlenko dated June 1, 2010 (12) 10.21 Employment Agreement by and between NXT Nutritionals Holdings, Inc., and Richard M. Jordan dated January 1, 2010. (12) 10.22 Bartolomei Pucciarelli Services Agreement 23.1 Consent of Auditor 23.2 Legal Opinion (filed as Exhibit 5.1) 24.1 Power of Attorney (Included in the signature page of this Registration Statement) (1) Included as exhibits to the current report on Form 8-K filed on January 27, 2010 and incorporated herein by reference. (2) Included as exhibit to the current report on Form 8-K filed on February 12, 2009 and incorporated herein by reference. (3) Included as exhibit to the registration statement on Form S-8 filed on December 1, 2009 and incorporated herein by reference. (4) Included as exhibits to the current report on Form 8-K filed on March 1, 2010 and incorporated herein by reference. (5) Included as exhibit to the registration statement on Form SB-2 filed on November 27, 2007 and incorporated herein by reference. (6) Included as exhibits to the current report on Form 8-K filed on September 2, 2009 and incorporated herein by reference. (7) Included as exhibits to Amendment No. 1 to the registration statement on Form S-1 filed on June 17, 2010 and incorporated herein by reference. (8) Included as exhibits to Amendment No.2 to the registration statement on Form S-1 filed on August 4, 2010. (9) Included as exhibit to current report on Form 8-K filed on January 27, 2010 and incorporated herein by reference. (10) Included as exhibit to current report on Form 8-K filed on September 2, 2010 and incorporated herein by reference. (11) Included as exhibit to current report on Form 8-K filed on September 22, 2010 and incorporated herein by reference. (12) Included as exhibit to current report on Form S-1 filed on December 30, 2010 and incorporated herein by reference. On 12/30/10 was filed S-1. On 2/2/11 was filed S-1/A. Item 17.Undertakings. (A) The undersigned Registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement to: Table of Contents SUSTA is used in coffees, teas, other beverages, cereals, foods and any other foods that require a sweetener. SUSTA is targeted at individuals craving sweeteners but not the calories from sugar, and is a better choice than sugar for people with diabetes because it has approximately one-half gram per serving of fructose and a glycemic index that is one-third of regular sugar. Not only does SUSTA sweeten the taste of food without all of the side effects of sugars or chemicals, it also contains healthy probiotics. We will market SUSTA in three primary categories: SUSTATM as a table top sweetener alternative to sugar and other sweeteners, SUSTATM as an ingredient used in beverages, cereals, baked goods, dairy products, candy and chewing gum, and NXT/SUSTATM branded products including Healthy Dairy and other SUSTA branded products to be launched by the Company. Brand awareness of SUSTA will be driven by our aggressive marketing campaign and our trial program. Healthy Dairy Yogurt Smoothies We have developed a line of SUSTA -enhanced, non-fat reduced-calorie yogurt smoothies which are marketed as Healthy Dairy . Healthy Dairy which combines appealing packaging, the health benefits of SUSTATM, and great taste, is offered in 5 different flavors: strawberry, peach, mixed berry, tropical fruit, and strawberry-banana. Healthy Dairy contains cultured pasteurized skim milk, real fruit, pure cane sugar, soluble fiber, tapioca starch, natural flavors, phytosterols (plant sterols), SUSTA , antioxidant botanicals, and many beneficial vitamins totaling 170 calories per 10-ounce bottle. Healthy Dairy contains SUSTA and important nutrients that promote health and wellness with outstanding taste and sweetness with significantly fewer calories than our key competitors. We developed a 7-ounce version of our Healthy Dairy Yogurt Smoothie line, as well as a line of 4-ounce yogurt cups branded under the Healthy Dairy trademark. These products and the 10 ounce Healthy Dairy smoothies are no longer going to be marketed and sold to the grocery channel. Healthy Dairy is being marketed and sold to the food service channel including but not limited to college campuses, the U.S. Military, airlines, elementary schools, and restaurants. Our management believes this change in our business model will make us profitable in the future. Table of Contents Private Offerings On August 27, 2009, we completed a private offering of an aggregate subscription amount of $3,173,000 through the issuance of investment units to certain accredited investors. Each investment unit had a purchase price of $50,000 and consisted of (i) a three year convertible debenture (the Debentures ) in the amount of sixty five thousand dollars ($65,000) convertible into shares of our common stock at a conversion price of $0.40 per share, (ii) five year Series A warrants to purchase 100% of the common stock underlying the Debenture at an exercise price of $.40 per share (the Series A Warrants ), and (iii) five year Series B warrants to purchase 100% of the common stock underlying the Debenture at an exercise price of $0.60 per share (the Series B Warrants ). On February 26, 2010, we closed on a private placement offering by raising total gross proceeds of $5,667,743, through the sale of (i) 0% Original Issue Discount Senior Secured Convertible Notes (the Notes ) convertible into shares of our common stock at a conversion price of $1.00 per share, and (ii) a number of five-year warrants (the Series C Warrants ) exercisable into a number of shares of common stock equal to 100% of the number of common shares underlying the Notes at an exercise price of $1.25 per share to certain accredited investors. The principal amount of each Note is 115% of the subscription proceeds received. In connection with the closing of the private placement offering, we also entered into a registration rights agreement with the investors (the Registration Rights Agreement ), pursuant to which, we agreed to register 100% of the common shares underlying the Notes and Warrants (the Registrable Securities ) on a Form S-1 (the Registration Statement ) to be filed with the Securities and Exchange Commission (the SEC ) within thirty (30) calendar days after the Closing Date (the Filing Date ) and use our best efforts to have it declared effective within 180 calendar days after the Closing Date (the Effectiveness Date ). In the event that the total number of the Registrable Securities exceeds the limitation imposed by the SEC staff under Rule 415, the number of Registrable Securities to be registered will be reduced first by the common shares underlying the Warrants. Subject to the terms of the Registration Rights Agreement, upon the occurrence of any event that shall incur liquidated damages (the Event ), including, but not limited to, that the initial Registration Statement is not filed prior to the Filing Date, we fail to file a pre-effective amendment and otherwise respond in writing to SEC comments on the Registration Statement within thirty (30) calendar days upon receipt of such comments, and the initial Registration Statement including the Registrable Securities permitted by Rule 415 is not declared effective by the Effectiveness Date, (A) we shall pay to each Investor an amount in cash, as partial liquidated damages, equal to 0.5% of the aggregate purchase price paid by each Investor on each Event Date defined in the Registration Rights Agreement (the Event Date ), and (B) on each monthly anniversary of the Event Date until the Event is cured, we shall pay to each Investor an amount in cash, equal to 1.0% of the aggregate purchase price paid by such Investor, subject to the maximum amount of 6.0% of the aggregate subscription amount paid by such investors in the private placement offering. On September 1, 2010, we entered into a modification and amendment agreement (the Modification Agreement ) with purchasers (the Purchasers ) holding approximately 87% of the aggregate number of (1) the Notes, (2) the Series C Warrants and (3) the shares of common stock underlying the Notes and the Series C Warrants, pursuant to which the commencement of monthly redemption date of the Notes is extended to December 1, 2010 and the holders of the Notes and the Series C Warrants, we may now pay the monthly redemption of the Notes in common stock even if the monthly redemption price described in the Notes is less than $0.40. In addition, pursuant to the Amendment, the conversion price of the Notes and the exercise price of the Series C Warrants are both reduced to $0.40 per share. On December 6, 2010, we entered into a second modification and amendment agreement (the Second Modification Agreement ) with the Purchasers (the Purchasers ) holding approximately 91% of the aggregate number of (1) the Notes, (2) Series C warrants and (3) the shares of common stock underlying the Notes and the Series C Warrants. Pursuant to the Amendment, the commencement of monthly redemption date of the Notes is extended to September 1, 2011, the maturity date of the Notes is extended to December 31, 2011 and the original issue discount is amended such that the principal amount equals each investor s subscription amount multiplied by 1.60. In addition the conversion price can be adjusted on the following events: (i) First Quarter 2011 Form 10-Q. If the Company s filing of its March 31, 2011 Form 10-Q with the Securities and Exchange Commission does not disclose revenue of at least $5 million for the first three months of 2011, then the Conversion Price of the Notes will decrease by $.03 on the fifth (5th) trading day after the Company files its March 31, 2011 Form 10-Q. Notwithstanding the foregoing, if, during the five (5) trading days following the filing of the March 31, 2011 Form 10-Q, the average closing bid price is $.60 or better, the aggregate trading volume of Company common stock is at least 1.5 million shares and all of the shares underlying the Notes may be sold pursuant to an effective registration statement or Rule 144 (and the Company is then in compliance with the current public information required under Rule 144), then no adjustment to the Conversion Price will be made hereunder. (ii) Second Quarter 2011 Form 10-Q. If the Company s filing of its June 30, 2011 Form 10-Q with the Securities and Exchange Commission does not disclose revenue of at least $8 million for the first six months of 2011, then the Conversion Price of the Notes will be adjusted to equal the lesser of (i) the then effective Conversion Price and (ii) ninety (90%) percent of the average closing bid price during the five (5) trading days following the filing of the June 30, 2011 Form 10-Q, such adjustment, if any, to occur on the fifth (5th) trading day following the Company s filing of its June 30, 2011 Form 10-Q. Notwithstanding the foregoing, if, during the five (5) trading days following the filing of the June 30, 2011 Form 10-Q, the average closing bid price is $.60 or better, the aggregate trading volume of Company common stock is at least 1.5 million shares and all of the shares underlying the Notes may be sold pursuant to an effective registration statement or Rule 144 (and the Company is then in compliance with the current public information required under Rule 144), then no adjustment to the Conversion Price will be made hereunder. Where You Can Find Us Our principal executive office is located at 933 E. Columbus Avenue, Suite C, Springfield, MA 01105. Our telephone number is (413) 553-9300. Our internet address is http://www.nxtnutritionals.com/. Table of Contents CALCULATION OF REGISTRATION FEE Title of Each Class Of Securities to be Registered Amount to be Registered (1) Proposed Maximum Aggregate Offering Price per share Proposed Maximum Aggregate Offering Price Amount of Registration fee (3) Common Stock, $0.001 par value per share, issuable upon conversion of senior secured convertible notes 22,332,572 $ 0.40 (2) $ 8,933,028.80 $ 1,037.12 Common Stock, $0.001 par value per share, issuable upon exercise of the Series C warrants 6,517,904 $ 0.40 (2) $ 2,607,161.60 $ 302.69 TOTAL 28,850,476 $ 11,540,190.40 $ 1,339.81 (1) This Registration Statement covers the resale by our selling shareholders of (1) up to 22, 332,572 shares of common stock issuable upon conversion of the principal amount of the 0% original issue discount senior secured convertible notes (the Notes ) at a conversion price of $0.40 per share, and (2) up to 6,517,904 shares of common stock issuable upon exercise of outstanding Series C warrants (the Series C Warrants ) at an exercise price of $0.40 per share, that were issued in connection with the private placement closed on February 26, 2010. In accordance with Rule 416(a), the Registrant is also registering hereunder an indeterminate number of additional shares of Common Stock that shall be issuable pursuant to Rule 416 to prevent dilution resulting from stock splits, stock dividends or similar transactions. (2) Calculated pursuant to Rule 457 (g). (3) Previously paid THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SUCH SECTION 8(a), MAY DETERMINE. Table of Contents The Offering Common stock offered by selling security holders 28,850,476 shares of common stock. This includes (i) 22,332,572 shares of common stock issuable upon conversion of the principal amount of the Notes, and (ii) 6,517,904 shares of common stock issuable upon exercise of the Series C Warrants Common stock outstanding before the offering 49,402,068 common shares as of February 10 , 2011. Common stock outstanding after the offering 78,252,544 shares. Terms of the Offering The selling security holders will determine when and how they will sell the common stock offered in this prospectus. Termination of the Offering The offering will conclude upon the earliest of (i) such time as all of the common stock has been sold pursuant to the registration statement or (ii) such time as all of the common stock becomes eligible for resale without volume limitations pursuant to Rule 144 under the Securities Act of 1933, as amended (the Securities Act ), or any other rule of similar effect. Use of proceeds We are not selling any shares of the common stock covered by this prospectus, and, as a result, will not receive any proceeds from this offering. We may, however, receive proceeds in the event that some or all of the Warrants held by the selling security holders are exercised for cash. The proceeds from the exercise of such Warrants, if any, will be used for working capital and other general corporate purposes. OTCBB Trading Symbol NXTH. OB Risk Factors The common stock offered hereby involves a high degree of risk and should not be purchased by investors who cannot afford the loss of their entire investment. See Risk Factors beginning on page 5.
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+Prospectus Summary 1 Risk Factors 13 Special Note Regarding Forward-Looking Statements 32 Market, Industry and Other Data 33 Use of Proceeds 34 Dividend Policy 34 Capitalization 35 Dilution 39 Selected Consolidated Financial Data 42 Management s Discussion and Analysis of Financial Condition and Results of Operations 44 Industry 67 Business 76 Management 93 Executive Compensation 102 Certain Relationships and Related Person Transactions 118 Principal Stockholders 121 Description of Capital Stock 125 Shares Eligible for Future Sale 131 Material United States Federal Income Tax Consequences 133 Underwriting 138 Notice to Canadian Residents 142 Legal Matters 144 Experts 144 Where You Can Find More Information 144 Index to Consolidated Financial Statements F-1 EX-23.1 EX-99.1 You should rely only on the information contained in this prospectus. We and the underwriters have not authorized anyone to provide you with information different from that contained in this prospectus. We are offering to sell, and seeking offers to buy, shares of Class A common stock only in jurisdictions where offers and sales are permitted. The information contained in this prospectus is accurate only as of the date on the front cover of this prospectus, or such other dates as are stated in this prospectus, regardless of the time of delivery of this prospectus or of any sale of our Class A common stock. Table of Contents PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. You should read the following summary together with the more detailed information appearing in this prospectus, including Risk Factors, Selected Consolidated Financial Data, Management s Discussion and Analysis of Financial Condition and Results of Operations, Business and our consolidated financial statements and related notes before deciding whether to purchase shares of our Class A common stock. Unless the context otherwise requires, the terms KiOR, the Company, we, us and our in this prospectus refer to KiOR, Inc. and its subsidiaries. Overview We are a next-generation renewable fuels company. Our mission is to produce renewable fuels in a profitable yet sustainable manner. We strive to achieve net environmental and social benefits by achieving a negative carbon footprint, responsibly managing our land use and water resources, and preserving our forests and food sources, while promoting energy independence, job creation and community investment. Our strategy is generally predicated on feedstock sources consisting of unirrigated crops that can be harvested on a sustainable basis on non-food or degraded lands in rural areas where our investment will result in welcomed new jobs and economic revitalization. We have developed a proprietary technology platform to convert low-cost, abundant and sustainable non-food biomass into hydrocarbon-based oil. We process our renewable crude oil using standard refinery equipment into gasoline and diesel blendstocks that can be transported using the existing fuels distribution system for use in vehicles on the road today. According to a February 2011 analysis performed by TIAX LLC, a leading technology processing and commercialization company, using data we provided, gasoline and diesel blendstocks produced from our proprietary biomass fluid catalytic cracking, or BFCC, process in our planned commercial production facilities are projected to reduce direct lifecycle greenhouse gas emissions by over 80% compared to the petroleum-based fuels they displace. We are fundamentally different from traditional oil and biofuels companies. Unlike traditional oil companies, we generate hydrocarbons from renewable sources rather than depleting fossil fuel reserves. At the same time, we differ from most traditional biofuels companies because our end products are fungible gasoline and diesel blendstocks rather than alcohols or fatty acid methyl esters, or FAME, such as ethanol or biodiesel. As compared to ethanol, the energy density of one gallon of our renewable blendstocks equates to 1.7 gallons of ethanol equivalent. While we are a development stage company that has not generated any revenue and has experienced net losses since inception, through our proprietary technology platform, we expect to provide new domestic sources of liquid transportation fuels sustainably using a variety of renewable natural resources to help further energy independence and reduce greenhouse gas emissions. Based on the technological and operational milestones we have achieved to date, we believe that when we are able to commence commercial production at our planned first standard commercial production facility, primarily using Southern Yellow Pine whole tree chips, we will be able to produce gasoline and diesel blendstocks without government subsidies on a cost-competitive basis with petroleum-based blendstocks produced from various crude oil resources on- and offshore worldwide at current pricing. Our proprietary catalyst systems, reactor design and refining processes have achieved yields of renewable fuel products of approximately 67 gallons per bone dry ton of biomass, or BDT, in our demonstration unit that we believe would allow us to produce gasoline and diesel blendstocks today at a per-unit unsubsidized production cost below $1.80 per gallon, if produced in a standard commercial production facility with a feedstock processing capacity of 1,500 BDT per day. This unsubsidized production cost equates to less than $550 per metric ton, $0.50 per liter and $1.10 per gallon of ethanol equivalent. This per-unit cost assumes a price of $72.30 per BDT for Southern Yellow Pine clean chip mill chips and anticipated operating expenses at the increased scale and excludes cost of financing and facility depreciation. Over time, we expect to improve our overall process yield by enhancing our technology and to significantly reduce our feedstock costs by using lower grade chips, logging residues, branches and bark and lower our operating expenses through various initiatives. For the month of May 2011, the average U.S. Gulf Coast spot prices for conventional gasoline and ultra-low sulfur Table of Contents The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED JUNE 22, 2011 10,000,000 Shares Class A Common Stock Prior to this offering, there has been no public market for KiOR, Inc. Class A common stock. We anticipate that the initial public offering price will be between $19.00 and $21.00 per share. Our Class A common stock has been approved for listing on The Nasdaq Global Select Market under the symbol KIOR. Upon completion of this offering, we will have two classes of authorized common stock: Class A common stock and Class B common stock. The rights of the holders of our Class A common stock and our Class B common stock are identical, except with respect to voting and conversion. Each share of our Class A common stock is entitled to one vote per share and will not convert into any other shares of our capital stock. Each share of our Class B common stock is entitled to 10 votes per share and will convert into one share of our Class A common stock upon the occurrence of specified events. Please read Description of Capital Stock Common Stock Conversion. Entities affiliated with Khosla Ventures and Artis Capital Management, L.P., two of our principal stockholders, have indicated an interest in purchasing shares of our Class A common stock in this offering at the initial public offering price up to an aggregate of 3,500,000 shares. Because this indication of interest is not a binding agreement or commitment to purchase, these existing investors may elect not to purchase shares in this offering. The underwriters will receive the same discount from any shares of our Class A common stock purchased by these existing investors as they will from any other shares of our Class A common stock sold to the public in this offering. Entities affiliated with Khosla Ventures will, following the completion of this offering and assuming the purchase of 3,500,000 shares of our Class A common stock that may be acquired by them in this offering, own shares of our Class A common stock and Class B common stock representing approximately 72% of the combined voting power of our outstanding common stock. Khosla Ventures II, L.P. has agreed not to sell any of the 46,259,738 shares of our common stock that it beneficially owns, representing approximately 47% of our outstanding common stock immediately prior to this offering, for a period of 360 days after the date of this prospectus. We are selling 10,000,000 shares of our Class A common stock through the underwriters. The underwriters have an option to purchase a maximum of 1,500,000 additional shares to cover over-allotments of shares, if any. Investing in our Class A common stock involves risks. Please read Risk Factors on page 13. Underwriting Price to Discounts and Proceeds to Public Commissions KiOR Per Share $ $ $ Total $ $ $ Delivery of the shares of Class A common stock will be made on or about , 2011. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. Credit Suisse UBS Investment Bank Goldman, Sachs Co. Piper Jaffray Citi Deutsche Bank Securities The date of this prospectus is , 2011. Table of Contents diesel were $3.024 and $3.001 per gallon, respectively. For the month of May 2011, market prices for corn ethanol, biodiesel and sugarcane ethanol were $2.587, $5.148 and $3.889 per gallon, respectively. We believe that the solution to the world s growing transportation fuel demands must be: Real. Our technology produces high-quality hydrocarbon blendstocks that we believe will drop in to the existing transportation fuels infrastructure for use in vehicles on the road today. Our fuels are not ethanol or FAME diesel. Unlike ethanol, which is generally subject to a 10% to 15% blend wall, we believe that our gasoline and diesel blendstocks can be used as components in formulating a variety of fuel products meeting specifications of ASTM International for finished gasoline and diesel derived from petroleum-based blendstocks. Renewable. Our proprietary technology platform allows us to convert a variety of low-cost, abundant and sustainable non-food biomass, including woody biomass, such as whole tree chips, logging residues, branches and bark, agricultural residues, such as sugarcane bagasse, and energy crops, such as switchgrass and miscanthus, into renewable transportation fuels that we believe will help to satisfy mandates under the Renewable Fuel Standard program, or RFS2. Rural. We plan to locate our commercial production facilities in rural areas near sources of low-cost, abundant and sustainable non-food biomass, which we believe will help revitalize rural communities impacted by closed paper mills. Repeatable. We plan to employ a copy exact modular design for our standard commercial production facilities that can be replicated in numerous locations with abundant and sustainable non-food feedstock in the southeastern United States and beyond, which we believe will help us reduce our capital costs. After we commercialize our technology, our repeatable renewable crude oil production process will effectively eliminate the exploration risk experienced by traditional exploration and production companies. We expect that our renewable fuels will offer several environmental benefits compared to traditional petroleum-based fuels. According to a February 2011 analysis performed by TIAX LLC using data we provided, gasoline and diesel blendstocks produced from our proprietary BFCC process in our planned commercial production facilities are projected to reduce direct lifecycle greenhouse gas emissions by over 80% compared to the fuels they displace. In addition, we are designing our planned standard commercial production facilities to meet the criteria for minor sources under the Clean Air Act. Under RFS2, a renewable fuel must reduce direct lifecycle greenhouse gas emissions by at least 20%, an advanced biofuel must reduce lifecycle greenhouse gas emissions by at least 50%, a biomass-based diesel must reduce lifecycle greenhouse gas emissions by at least 50% and a cellulosic biofuel must reduce lifecycle greenhouse gas emissions by at least 60%. Under the Argonne National Laboratory s Greenhouse Gases, Regulated Emissions and Energy Use in Transportation, or GREET, model, the estimated default reductions in direct lifecycle greenhouse gas emissions of certain renewable fuels and the projected reductions in direct lifecycle greenhouse gas emissions of our renewable gasoline and diesel blendstocks are as follows: Renewable Fuel Category % Lifecycle GHG Reduction Corn ethanol (renewable fuel) 25 % Sugarcane ethanol (advanced biofuel) 71 % Biodiesel (biomass-based diesel) 76 % KiOR gasoline blendstocks (cellulosic biofuel) 82 % KiOR diesel blendstocks (cellulosic diesel) 83 % Our Technology We have developed a process that converts cellulosic biomass into a renewable crude oil that can be refined in a conventional hydrotreater into light refined products, such as gasoline and diesel blendstocks. Our biomass-to-renewable fuel technology platform combines our proprietary catalyst systems with well-established fluid catalytic cracking, or FCC, processes that have been used in crude oil refineries to produce Table of Contents Table of Contents gasoline for over 60 years. Our BFCC process operates at moderate temperatures and pressures to convert biomass in a matter of seconds into the renewable crude oil that we process using standard refining equipment into our gasoline and diesel blendstocks. As of June 9, 2011, we had 70 pending original patent application families containing over 2,000 pending claims. Our Facilities After an initial research and development effort, we successfully converted biomass into a renewable crude oil in a laboratory program that validated the technical feasibility of our BFCC process. Building on the success of this program, we constructed a pilot unit outside of Houston, Texas to continue developing and validating our technology. This pilot unit has amassed over 9,000 hours of operation and evaluated more than 250 catalyst systems. We subsequently commenced operation of a larger demonstration unit also outside of Houston that is designed to process 10 BDT per day and represents a 400-times scale-up from our pilot unit. Our demonstration unit has amassed over 3,000 hours of operation and produced over 32,000 gallons of our renewable crude oil. We commenced construction of our initial-scale commercial production facility in Columbus, Mississippi in the first quarter of 2011, which we are financing with a combination of existing cash on hand, including $55 million of proceeds from the April 2011 sale of our Series C convertible preferred stock to existing investors, and a $75 million interest-free loan from the Mississippi Development Authority. We estimate that the total cost to construct this facility, including a hydrotreater, and place it into service will be approximately $190 million, with an estimated 15% to 20% of these costs attributable to the hydrotreater. We engaged KBR, Inc., a global engineering, construction and services company, to conduct the engineering, design and construction of this initial-scale commercial production facility. We are designing this facility to process 500 BDT per day, representing an additional 50-times scale-up from our demonstration unit. Going forward, we intend to construct our larger standard commercial production facilities beginning in the third quarter of 2012 with our first planned facility in Newton, Mississippi. These facilities are being designed to process approximately 1,500 BDT of feedstock per day, approximately three times the size of our Columbus facility, in order to take advantage of economies of scale. Moreover, these standard commercial production facilities are being designed to utilize a centralized hydrotreating facility rather than dedicated, standalone hydrotreaters such as the one being constructed at our Columbus facility. Our two-train centralized hydrotreaters will be constructed in phases, with each train expected to support up to two standard commercial production facilities. By employing larger plant designs and shared hydrotreating facilities, we expect to be able to more effectively allocate our fixed costs and stage our capital program to reduce the capital intensity of our commercial expansion. By staging the expansion of our standard commercial facilities in discrete facility-by-facility projects that are independently viable, we believe that we will have flexibility to plan our growth in response to capital availability and market conditions. In selecting sites for our facilities, we plan to consider the carbon emissions, land use, air pollution and water impact of our facilities. Our Feedstock Strategy Our technology platform is feedstock flexible and has been successfully tested on a variety of biomass. We have selected Southern Yellow Pine whole tree chips as our primary feedstock because of its abundant, sustainable supply and its generally stable pricing history. This non-food feedstock has a low cost relative to traditional renewable feedstocks and a long lifecycle that we believe significantly dampens price volatility compared to seasonal feedstocks that depend more on weather and other short-term supply and demand dynamics. Based on data from the USDA Forest Service from 2005 to 2008, there was an estimated 18% surplus of softwood in the South, over 95% of which is Southern Yellow Pine. This surplus represents an excess supply of nearly 60,000 BDT per day, which we believe far exceeds what is necessary to execute our initial commercialization plan. Each of our planned standard commercial production facilities is expected to use 1,500 BDT per day, or approximately 500,000 BDT per year. We plan to reduce our feedstock costs by increasing the use of lower grade woody biomass, such as logging residues, branches and bark, at our commercial production facilities. Over time, we also plan to Table of Contents In March 2010, we issued a warrant to purchase 16,998 shares of our Series B preferred stock at an exercise price of $2.491 per share to Silicon Valley Bank in connection with a $1 million equipment loan. In April 2010, we issued a warrant to purchase 30,600 shares of our Series B preferred stock at an exercise price of $4.902 per share to Lighthouse Capital Partners VI, L.P. in connection with the December 2008 $5 million equipment loan. In July 2010, we issued three warrants to purchase an aggregate of 157,424 shares of our Class A common stock at an exercise price of $0.09 per share to consultants for services rendered to us. One of these warrants covering 10,000 shares of our Class A common stock was exercised in March 2011 for net proceeds received by us of $900. In June 2011, we issued warrants to purchase an aggregate of 10,198 shares of our Series C preferred stock at an exercise price of $4.902 per share to Lighthouse Capital Partners VI, L.P. in connection with an amendment to the December 2008 $5 million equipment loan. In June 2011, we issue warrant to purchase an aggregate of 50,996 shares of our Series C preferred stock at an exercise price of $4.902 per share to Lighthouse Capital Partners VI, L.P. (35,698 shares) and Leader Lending, LLC (15,298 shares) in connection with an amendment to a $7 million business loan. (d)Options under Amended and Restated 2007 Stock Option/Stock Issuance Plan As of March 31, 2011, we have issued 15,091,334 shares of our Class A common stock and Class B common stock to employees, directors and consultants issuable upon the exercise of options to purchase under our amended and restated 2007 Stock Option/Stock Issuance Plan, with exercise prices ranging from $0.08375 to $1.98 per share. None of the foregoing transactions involved any underwriters, underwriting discounts or commissions, or any public offering, and the registrant believes the transactions were exempt from the registration requirements of the Securities Act of 1933 in reliance on Section 4(2) thereof, and the rules and regulations promulgated thereunder, or Rule 701 thereunder, as transactions by an issuer not involving a public offering or transactions pursuant to compensatory benefit plans and contracts relating to compensation as provided under such Rule 701. The recipients of securities in such transactions represented their intention to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof, and appropriate legends were affixed to the share certificates and instruments issued in such transactions. All recipients of securities described in paragraphs (a), (b) and (c) above were accredited or sophisticated and either received adequate information about the registrant or had access, through their relationships with the registrant, to such information. Item 16. Exhibits and financial statement schedules (a)The following exhibits are filed herewith: Previously Filed Filed Number Exhibit Form File No. Filing Date Exhibit Herewith 1 .1 Form of Underwriting Agreement. S-1 333-173440 May 18, 2011 1 .1 3 .1 Amended and Restated Certificate of Incorporation, as currently in effect. S-1 333-173440 June 10, 2011 3 .1 3 .2 Amended and Restated Bylaws, as currently in effect. S-1 333-173440 May 18, 2011 3 .2 3 .3 Form of Amended and Restated Certificate of Incorporation, to be in effect upon completion of this offering. S-1 333-173440 May 18, 2011 3 .3 3 .4 Form of Amended and Restated Bylaws, to be in effect upon completion of this offering. S-1 333-173440 May 18, 2011 Table of Contents Table of Contents explore co-feeding other types of renewable cellulosic biomass, including other woody biomass, such as poplar and eucalyptus tree chips, agricultural residues, such as sugarcane bagasse, and energy crops, such as sorghum, switchgrass and miscanthus. Ideal crops vary by region and climate. For example, certain energy crops like sorghum are more appropriate in drier regions with low rainfall, while others like miscanthus are higher yielding but also require more rain and may be sensitive to cold; however, both offer significant opportunities for per-acre yield improvements. Over time, we expect to investigate a variety of feedstock opportunities in other parts of the United States and in Canada, Brazil and other international locations. We currently intend to emphasize non-food, rain-fed feedstocks to minimize the environmental impact and water use from irrigation. We generally expect the feedstocks we use to be grown on land that is not in use for food production. In the long term, we believe that crops will be developed for marginal or degraded lands that can no longer be used for economic food production. We believe millions of acres of agricultural lands previously used for food production have been degraded. In addition, a U.S. Department of Energy, or DOE, study in 2005 estimated that in the United States alone, almost a billion tons of unutilized biomass may be available. Eventually, we expect that our technology s ability to accept mixed feedstocks will allow feedstock producers to increase biodiversity in cultivating biomass. We believe that our feedstock flexibility will allow us to expand the geographic scope of our business both domestically and internationally, identify locations with proximity to multiple feedstocks and use the most cost-effective feedstock or combination of feedstocks at a given location. Initially, we expect to investigate many site opportunities in the United States focusing on the locations of numerous paper mills that have closed in the United States over the past 20 years. We recently entered into a feedstock supply agreement with Catchlight Energy, LLC, or Catchlight, for all of the supply of pulpwood, whole tree chips and forest residuals for our initial-scale commercial production facility. Subject to the terms and conditions of the agreement, Catchlight has agreed to supply all of the specified feedstock for the facility. Our Distribution Plan We believe that we will be able to sell the output from our planned commercial production facilities to a range of potential customers, including refiners, terminal and rack owners and fleet users. Unlike ethanol, which is generally subject to a 10% to 15% blend wall, we believe that our gasoline and diesel blendstocks can be used as components in formulating a variety of fuel products meeting specifications of ASTM International for finished gasoline and diesel derived from petroleum-based blendstocks. We currently are performing motor vehicle fuel tests as we seek to register our gasoline and diesel blendstocks with the U.S. Environmental Protection Agency, or EPA. We also intend to seek certification of our blendstocks for use in jet fuel. We recently entered into agreements with Hunt Refining Company, or Hunt, Catchlight and FedEx Corporate Services, Inc., or FedEx, for the purchase of blendstocks to be produced from our initial-scale commercial production facility. We are also in negotiations with these companies and additional prospective customers for the purchase of blendstocks to be produced from our planned standard commercial production facilities. Production and sale of our fuel products pursuant to our agreements with Hunt, Catchlight and FedEx and our other potential customer relationships will depend on the satisfaction of contract-specific conditions, including establishing product specifications and satisfying commercial and production requirements. Our Market The global transportation fuels market represents one of the world s largest markets at over $2 trillion. According to the U.S. Energy Information Administration, or EIA, for 2009, there was a 138 billion gallon market for gasoline and a 49 billion gallon market for diesel in the United States alone. Over time, we expect to compete in the broader market for crude oil. We also expect our products to have drop in compatibility with traditional hydrocarbons, unlike conventional biofuels such as FAME diesel, corn ethanol and sugarcane ethanol. Table of Contents EXHIBIT INDEX Previously Filed Filed Number Exhibit Form File No. Filing Date Exhibit Herewith 1 .1 Form of Underwriting Agreement. S-1 333-173440 May 18, 2011 1 .1 3 .1 Amended and Restated Certificate of Incorporation, as currently in effect. S-1 333-173440 June 10, 2011 3 .1 3 .2 Amended and Restated Bylaws, as currently in effect. S-1 333-173440 May 18, 2011 3 .2 3 .3 Form of Amended and Restated Certificate of Incorporation, to be in effect upon completion of this offering. S-1 333-173440 May 18, 2011 3 .3 3 .4 Form of Amended and Restated Bylaws, to be in effect upon completion of this offering. S-1 333-173440 May 18, 2011 3 .4 4 .1 Specimen Stock Certificate representing Class A common stock. S-1 333-173440 June 10, 2011 4 .1 4 .2 Amended and Restated Investors Rights Agreement dated April 21, 2011, among the Registrant and the Registrant s securityholders listed therein. S-1 333-173440 May 18, 2011 4 .2 4 .3 Preferred Stock Purchase Warrant issued December 30, 2008 by KiOR, Inc. to Lighthouse Capital Partners VI, L.P. S-1 333-173440 April 11, 2011 4 .4 4 .4 Preferred Stock Purchase Warrant issued January 27, 2010 by KiOR, Inc. to Lighthouse Capital Partners VI, L.P. S-1 333-173440 April 11, 2011 4 .5 4 .5 Preferred Stock Purchase Warrant issued January 27, 2010 by KiOR, Inc. to Leader Equity LLC. S-1 333-173440 April 11, 2011 4 .6 4 .6 Warrant to Purchase Stock issued March 17, 2010, by KiOR, Inc. to Silicon Valley Bank. S-1 333-173440 April 11, 2011 4 .7 4 .7 Form of Class A Common Stock Purchase Warrant issued July 28, 2010. S-1 333-173440 May 18, 2011 4 .7 4 .8 Loan and Security Agreement No. 1451, dated as of December 30, 2008, between KiOR, Inc. and Lighthouse Capital Partners VI, L.P. (the Loan 1451 ). S-1 333-173440 June 1, 2011 4 .8 4 .9 Amendment No. 1, dated as of February 28, 2011, to Loan 1451. S-1 333-173440 June 1, 2011 4 .9 4 .10 Amendment No. 2, dated as of April 12, 2011, to Loan 1451. S-1 333-173440 May 18, 2011 4 .10 4 .11 Loan and Security Agreement No. 1452, dated as of January 27, 2010, between KiOR, Inc. and Lighthouse Capital Partners VI, L.P., as Agent (the Loan 1452 ). S-1 333-173440 June 1, 2011 4 .11 4 .12 Amendment No. 1, dated as of June 30, 2010, to Loan 1452. S-1 333-173440 May 18, 2011 4 .12 4 .13 Amendment No. 2, dated as of February 28, 2011, to Loan 1452. S-1 333-173440 June 1, 2011 4 .13 4 .14 Amendment No. 3, dated as of April 12, 2011, to Loan 1452. S-1 333-173440 May 18, 2011 Table of Contents Table of Contents Although we expect that our blendstocks will be marketable into the global transportation fuels market, their renewable nature also allows us to benefit from government programs and incentives. In 2007, the Energy Independence and Security Act, or EISA, was adopted to move the United States toward greater energy independence and security and to increase the production of clean renewable fuels domestically. EISA updated the Renewable Fuel Standard program to require the use of cellulosic biofuel, a renewable fuel derived from renewable cellulosic biomass that produces at least 60% lower lifecycle greenhouse gas emissions compared to a 2005 baseline. We believe that our gasoline and diesel blendstocks will qualify as cellulosic biofuel under RFS2, which will provide an opportunity to obtain premium pricing for our renewable blendstocks. We expect that this designation will make our blendstocks attractive to fuel producers because our blendstocks can be used to satisfy specific volume requirements for cellulosic biofuel, as well as the volume requirements for both advanced biofuel and renewable fuel under RFS2. This provides cellulosic biofuel producers like our company an opportunity to compete with producers of advanced biofuel and other renewable fuels, but not vice versa. Accordingly, the potential size of the mandated market for cellulosic biofuel in 2022 under RFS2 encompasses the 36.0 billion gallon mandate for all renewable fuels, which includes the 21.0 billion gallon mandate for advanced biofuel, which also includes the 16.0 billion gallon mandate for cellulosic biofuel. Under the EISA mandates, by 2022 renewable fuels are expected not only to make up an increasing percentage of liquid transportation fuels in the United States, but also are expected to contribute to an approximately 15% reduction in net imports of crude oil from 2009 levels. At May 2011 per gallon market prices of $2.587 for ethanol as renewable fuel pricing, $3.889 for sugarcane ethanol as advanced biofuel pricing, $5.148 for biodiesel as biomass-based diesel pricing and $1.130 cellulosic waiver as the premium to advanced biofuels, the 36.0 billion gallon RFS2 mandated market for 2022 would be worth approximately $138 billion. Additional renewable fuel mandates exist in Europe and other countries with varying mandates and volume requirements for premium renewable fuels. Our Competitive Strengths We believe that our business benefits from a number of competitive strengths, including the following: Our renewable fuel products are hydrocarbons compatible with the existing transportation fuels infrastructure. Unlike other renewable fuels such as ethanol or biodiesel, our gasoline and diesel blendstocks are compatible hydrocarbons that can drop in to the existing petroleum-based transportation fuels infrastructure interchangeably with their petroleum-based counterparts to produce various fuel products. In addition, due to the higher energy content of our gasoline and diesel blendstocks, we believe that our transportation fuels will sell at a premium to ethanol. Currently, we expect to compete in the mandated renewable fuels market against corn ethanol, sugarcane ethanol and biodiesel, as well as in the general market for gasoline and diesel fuels. We combine proprietary technology with well-established FCC and other refining processes. We have developed a technology platform that uses our proprietary catalyst systems, process design and know-how, while leveraging well-established FCC and other refining processes, to convert a variety of cellulosic biomass into high-quality gasoline and diesel blendstocks. As of June 9, 2011, we had 70 pending original patent application families containing over 2,000 pending claims. Our BFCC process provides product flexibility and higher yields of more valuable products. Our BFCC process affords us flexibility to tailor our blendstock product spectrum to attain higher overall product yields, as well as higher proportions of valuable transportation fuels. Our realized yield of gasoline and diesel blendstocks from our renewable crude oil is approximately 90%, which is higher than the yields that are typically attained when refining petroleum-based crude oil. Our technology is feedstock flexible, and we have identified low-cost, abundant and sustainable feedstock. Our technology platform is feedstock flexible and has been successfully tested on a variety of biomass. We believe that our feedstock flexibility will allow us to use the most cost-effective feedstock or combination of feedstocks at a given location. We have selected Southern Yellow Pine whole tree chips as our primary feedstock because of their abundant, sustainable supply and generally Table of Contents Previously Filed Filed Number Exhibit Form File No. Filing Date Exhibit Herewith 4 .1 Specimen Stock Certificate representing Class A common stock. S-1 333-173440 June 10, 2011 4 .1 4 .2 Amended and Restated Investors Rights Agreement dated April 21, 2011, among the Registrant and the Registrant s securityholders listed therein. S-1 333-173440 May 18, 2011 4 .2 4 .3 Preferred Stock Purchase Warrant issued December 30, 2008 by KiOR, Inc. to Lighthouse Capital Partners VI, L.P. S-1 333-173440 April 11, 2011 4 .4 4 .4 Preferred Stock Purchase Warrant issued January 27, 2010 by KiOR, Inc. to Lighthouse Capital Partners VI, L.P. S-1 333-173440 April 11, 2011 4 .5 4 .5 Preferred Stock Purchase Warrant issued January 27, 2010 by KiOR, Inc. to Leader Equity LLC. S-1 333-173440 April 11, 2011 4 .6 4 .6 Warrant to Purchase Stock issued March 17, 2010, by KiOR, Inc. to Silicon Valley Bank. S-1 333-173440 April 11, 2011 4 .7 4 .7 Form of Class A Common Stock Purchase Warrant issued July 28, 2010. S-1 333-173440 May 18, 2011 4 .7 4 .8 Loan and Security Agreement No. 1451, dated as of December 30, 2008, between KiOR, Inc. and Lighthouse Capital Partners VI, L.P. (the Loan 1451 ). S-1 333-173440 June 1, 2011 4 .8 4 .9 Amendment No. 1, dated as of February 28, 2011, to Loan 1451. S-1 333-173440 June 1, 2011 4 .9 4 .10 Amendment No. 2, dated as of April 12, 2011, to Loan 1451. S-1 333-173440 May 18, 2011 4 .10 4 .11 Loan and Security Agreement No. 1452, dated as of January 27, 2010, between KiOR, Inc. and Lighthouse Capital Partners VI, L.P., as Agent (the Loan 1452 ). S-1 333-173440 June 1, 2011 4 .11 4 .12 Amendment No. 1, dated as of June 30, 2010, to Loan 1452. S-1 333-173440 May 18, 2011 4 .12 4 .13 Amendment No. 2, dated as of February 28, 2011, to Loan 1452. S-1 333-173440 June 1, 2011 4 .13 4 .14 Amendment No. 3, dated as of April 12, 2011, to Loan 1452. S-1 333-173440 May 18, 2011 4 .14 4 .15 Preferred Stock Purchase Warrant issued June 6, 2011 to Lighthouse Capital Partners VI, L.P. S-1 333-173440 June 10, 2011 4 .15 4 .16 Preferred Stock Purchase Warrant issued June 6, 2011 to Lighthouse Capital Partners VI, L.P. S-1 333-173440 June 10, 2011 4 .16 4 .17 Preferred Stock Purchase Warrant issued June 6, 2011 to Leader Lending, LLC. S-1 333-173440 June 10, 2011 4 .17 5 .1 Opinion of Baker Botts L.L.P. S-1 333-173440 June 21, 2011 Table of Contents stable pricing history. We expect that our ability to use logging residues, branches and bark will enable us to lower our feedstock costs. We have secured or identified strategic locations for our commercial production facilities. The site for our initial-scale commercial production facility and the sites that we have identified for our next four planned standard commercial production facilities are situated in the Southeast near abundant Southern Yellow Pine feedstock and a number of potential significant customers and have access to rail, pipelines (including the Colonial pipeline, which transports approximately 100 million gallons of fuels per day to the Northeast), inland and gulf waterways and other transportation channels. We believe that former workers dislodged by the closings of paper mills in the Southeast could provide an available skilled labor force for us. We believe that we have a better use for woodchip feedstock. Based on current prices, and if we meet our target production cost metrics, and if competition for feedstock develops in a region, we believe that we may be able to afford higher prices for feedstock than paper mills. We have an experienced management team. Our executive officers and senior operational managers have extensive experience in research and development, new product development, capital project execution, feedstock procurement, plant operations and technology commercialization across the catalyst, refining, chemicals and forest products industries. Our Strategy Our mission is to leverage our proprietary technology platform to provide gasoline and diesel blendstocks at prices that are competitive with petroleum-based transportation fuels. Key elements of our strategy include the following: We have adopted a build, own and operate strategy. We plan to build, own and operate our commercial production facilities in the United States. We began constructing our 500 BDT per day initial-scale commercial production facility in Columbus, Mississippi in the first quarter of 2011, with production expected to begin in the second half of 2012. We intend to construct our 1,500 BDT per day standard commercial production facilities, beginning in the third quarter of 2012 with our first planned facility in Newton, Mississippi. We plan to deploy BFCC facilities using copy exact principles. We plan to employ a modular design that can be replicated for our subsequent standard commercial production facilities. Utilizing learning from our initial commercial production facilities, we plan to deploy a copy exact strategy of standardized modular 1,500 BDT per day designs to reduce our capital costs, implement best practices, reduce operating costs, increase personnel flexibility and facilitate fast deployment of new production facilities. We also expect to develop a remote electronic facilities management control center in Houston, Texas. We believe that commercially available feedstock sources exist to support significant expansion opportunities in biomass-rich regions in the United States and globally. At a later date, we may consider larger or smaller standardized facility sizes to optimize the scale for local feedstock availability and transportation costs. We plan to expand our base of prospective customers. We believe that we will be able to sell our renewable hydrocarbon-based products to a variety of potential customers, including independent refiners, integrated oil companies, distributors of finished products, such as terminal or rack owners, and end users of petroleum products, such as transportation companies, fleets or petrochemical operators. We also intend to seek certification of our blendstocks for use in jet fuel. We intend to maximize our feedstock flexibility and reduce costs. Our technology platform has been successfully tested on a variety of biomass. We plan to reduce our feedstock costs by increasing our use of lower grade woody biomass, such as logging residues, branches and bark, at our planned commercial production facilities. Longer term, we believe that the flexibility of our proprietary catalyst systems will enable us to co-feed many of our plants with a variety of other types of renewable cellulosic biomass, Table of Contents including other woody biomass, such as poplar and eucalyptus tree chips, agricultural residues, such as sugarcane bagasse, and energy crops, such as sorghum, switchgrass and miscanthus. We intend to leverage our technology and expertise to increase our yields and the efficiency of our process. We have focused on enhancing our proprietary technology and processes through each stage of development. This effort focuses on continuously improving our proprietary catalyst systems, optimizing the reactor design and operating conditions and enhancing our renewable crude oil processing technology. We have increased our overall process yield of biomass to renewable fuel from approximately 17 gallons per BDT to approximately 67 gallons per BDT. Our research and development efforts are focused on increasing this yield to approximately 92 gallons per BDT. We believe that we will be able to compete with petroleum-based transportation fuels. Although we benefit from mandated policies such as RFS2, we expect that our standard commercial production facilities will be able to produce our gasoline and diesel blendstocks on a cost-competitive basis with existing petroleum-based counterparts without government subsidies at current pricing. We also expect to be able to compete in non-mandated international transportation fuels markets, as well as mandated international transportation fuels markets, such as the European biodiesel market, that have historically commanded higher prices per gallon. We plan to expand internationally through a variety of structures. Over time, we intend to expand internationally through direct operations and joint venture structures. We are actively exploring opportunities to expand internationally in countries with abundant, sustainable, non-food feedstocks available at costs lower than or competitive with domestic feedstocks. In March 2011, we hired a President of International with executive experience in international operations to lead our global expansion efforts. We plan to drive brand loyalty for KiOR. We plan to capitalize on the increasing global trend in green awareness to differentiate our renewable transportation fuels from petroleum-based alternatives. In the long term, we believe that we will have a substantial marketing opportunity with a variety of large, fuel-intensive prospective customers seeking sustainable, renewable transportation fuel options. Risks Affecting Us Our business is subject to a number of risks and uncertainties that you should understand before making an investment decision. These risks are discussed more fully in the section entitled
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+PROSPECTUS SUMMARY This summary provides an overview of certain information contained elsewhere in this Prospectus and does not contain all of the information that you should consider or that may be important to you. Before making an investment decision, you should read the entire Prospectus carefully, including the Risk Factors section and the financial statements and the notes to the financial statements. In this Prospectus, the terms DNA, the Company, we, us and our refer to DNA Brands, Inc., unless otherwise specified herein. Overview DNA Brands, Inc. (hereinafter referred to as us, our, we, the Company or DNA ) was incorporated in the State of Colorado on May 23, 2007 under the name Famous Products, Inc. Prior to July 6, 2010 we were a holding company operating as a promotion and advertising company. Our current business commenced in May 2006 in the State of Florida under the name Grass Roots Beverage Company, Inc. ( Grass Roots ). Initial operations of Grass Roots included development of our energy drinks, sampling and other marketing efforts and initial distribution in the State of Florida. Effective July 6, 2010, we executed agreements to acquire all of the assets, liabilities and contract rights of DNA Beverage Corporation of Boca Raton, Florida ( DNA Beverage ), including 100% of the common stock of DNA Beverage s wholly owned subsidiary Grass Roots Beverage Company, Inc. ( Grass Roots ) in exchange for the issuance of 31,250,000 shares of our common stock. We were classified as a shell company prior to the aforesaid transaction. As part of the terms of these transactions: we amended our Articles of Incorporation to change our name to DNA Brands, Inc. and our authorized capital to 100,000,000 shares of Common Stock and 10,000,000 shares of Preferred stock. A relevant Information Statement regarding this action was not filed or disseminated to our shareholders of record on the date this action occurred. As a result, it is possible that we, along with our former and current officers and directors may have potential liability for non-compliance under the laws of the State of Colorado as well as federal securities laws. We believe that any such potential liability would not be considered material; our former President agreed to voluntarily return 19,274,400 common shares to us; our former Board of Directors approved a spin-off of our wholly owned subsidiary company, Fancy Face Promotions, Inc., a Colorado corporation. The terms of this spin-off provide for a dividend to be issued to our shareholders of one share of common stock for every share that our shareholders owned as of June 30, 2010, the record date of the dividend. our former officers and directors resigned their positions with us and were replaced by the former management team of DNA Beverage. Mr. Darren Marks, became a director and our President and CEO, and Mr. Melvin Leiner, became a director and our Executive Vice President, Secretary and COO/CFO. See MANAGEMENT. The issuance of the 31,250,000 shares represented approximately 94.6% of our outstanding shares at the time of issuance. We incurred net losses of ($7,468,422) and ($3,918,721), respectively, during the years ending December 31, 2010 and 2009. For the six month period ended June 30, 2011, we incurred a net loss of $(2,179,801), or $(0.06) per share, as compared to a net loss of $(4,034,661), or $(0.20) per share during the corresponding period of the prior year. Based upon our current business plan, our ability to begin to generate profits from operations is dependent upon our obtaining additional financing and there can be no assurances that we will ever establish profitable operations. See RISK FACTORS and MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. Our principal offices are located at 506 NW 77th Street, Boca Raton, Florida, 33487, telephone (954) 970-3826. Our website is www.dnabrandsusa.com. About The Offering Common Stock to be Offered by Selling Shareholders Between February and May 2011, we sold 4,427,000 shares of our Series A preferred stock to a group of private investors at a price of $0.25 per shares. Each Series A preferred share, at the option of the holder, could at any time be converted into one share of our common stock. As of September 15, 2011 all Series A preferred shares had been converted into shares of our common stock. By means of this prospectus, a number of our shareholders are offering to sell up to 4,427,000 shares of our common stock which they received upon the conversion of the Series A preferred shares. Shares outstanding 38,259,882 Use of Proceeds We will not receive any proceeds from the sale of the Common Stock by the Selling Shareholders. Risk Factors See the discussion under the caption RISK FACTORS and other information in this Prospectus for a discussion of factors you should carefully consider before deciding to invest in our Common Stock. _________________________ Selected Financial Data The following summary of our financial information at December 31, 2010 and 2009, and for the years ended December 31, 2010 and 2009, has been derived from, and should be read in conjunction with, our audited financial statements included elsewhere in this Prospectus. The summary of our financial information as at June 30, 2011 and for the six month periods ended June 30, 2011 and 2010 has been derived from, and should be read in conjunction with, our unaudited interim financial statements also included elsewhere in this Prospectus. Statement of Operations: Six Months Ended June 30, Year Ended December 31, 2011 2010 2010 2009 Revenues $ 688,078 $ 774,794 $ 1,168,461 $ 667,276 Total operating expenses $ 2,390,784 $ 4,042,155 $ 7,651,728 $ 3,627,903 (Loss) from operations $ (2,145,410 ) $ (3,920,037 ) $ (7,352,341 ) $ (3,428,747 ) Other (expense) $ (34,391 ) $ (114,624 ) $ (116,081 ) $ (489,974 ) Net (loss) $ (2,179,801 ) $ (4,034,661 ) $ (7,468,422 ) $ (3,918,721 ) Net (loss) per share (basic and fully diluted) $ (0.06 ) $ (0.20 ) $ (0.28 ) $ (0.26 ) Weighted average common shares outstanding 35,579,650 20,445,406 26,729,555 15,366,097 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 AMENDMENT NO. 2 TO FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 DNA BRANDS, INC. (Exact name of registrant as specified in its charter) Colorado 5149 26-0394476 (State or other jurisdiction of Incorporation or organization) (Primary Standard Industrial Classification Code Number) (I.R.S. Employer Identification No.) 506 NW 77th Street Boca Raton, Florida, 33487 (954) 978-8401 (Address, including zip code, and telephone number, including area code, of registrant s principal executive offices) Darren Marks Chief Executive Officer DNA BRANDS, INC. 506 NW 77th Street Boca Raton, Florida, 33487 (Name, address, including zip code, and telephone number, including area code, of agent for service) Copies to: William T. Hart, Esq. Hart & Trinen, LLP 1624 Washington St. Denver, CO 80203 Tel: (303) 839-0061 As soon as practicable after the effective date of this Registration Statement (Approximate date of commencement of proposed sale to the public) If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box: If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: o If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o Balance Sheet: June 30, 2011 December 31, 2010 December 31, 2009 Cash $ 5,669 $ 74,604 $ 11,392 Current assets $ 581,559 $ 438,824 $ 298,860 Total assets $ 621,705 $ 493,105 $ 340,888 Current liabilities $ 2,743,185 $ 2,951,266 $ 2,766,431 Total liabilities $ 3,251,660 $ 2,954,443 $ 3,381,113 Total stockholders deficit $ (2,629,955 ) $ (2,461,338 ) $ (3,040,225 )
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+PROSPECTUS SUMMARY The following summary highlights material information contained in this prospectus. This summary does not contain all of the information you should consider before investing in the securities. Before making an investment decision, you should read the entire prospectus carefully, including the risk factors section, the financial statements and the notes to the financial statements. You should also review the other available information referred to in the section entitled Where you can find more information in this prospectus and any amendment or supplement hereto. Corporate History We were incorporated in the State of Nevada on August 3, 2007 under the name Medzed, Inc. We were originally established for the purpose of becoming a third party reseller of medical office business solutions. However, due to poor performance related to the sales of the medical office business solutions, we believe as of September 30, 2008, the Company became a shell company, as that term is defined in Rule 12b-2 of the Securities Exchange Act of 1934. The Company is not a blank check company and does not have any plans to engage in a merger or acquisition with any entity. Section (a)(2) of Rule 419 under the Securities Act of 1933, as amended, defines a blank check company as a company that is issuing penny stocks and that is "a development stage company that has no specific business plan or purpose or has indicated that its business plan is to engage in a merger or acquisition with an unidentified company or companies, or other entity or person." Though the Company is a development stage company, per Rule 1-02(h), the Company is not a blank check company as we have a specific business plan and we remain in our start-up phase of operations. The Company s business plan relates specifically to the continued exploration of mineral claims (see Description of Business herein). We will continue to seek out and attempt to identify, evaluate, and qualify potential mineral claims. We will use the proceeds generated from this offering to commence our plans of operations to conduct mineral exploration activities on our currently staked mining claims to assess whether they contain mineral reserves capable of extraction. In addition, the Company s business plan does not include any potential merger or acquisition with an unidentified company, entity or person. For each of these reasons, the Company is not a blank check company subject to the provisions of Rule 419. On December 3, 2009, Dan MacLean ( Mr. MacLean ), the Chief Executive Officer/President, Chief Financial Officer/Treasurer, Secretary and Director of the Company, resigned from all positions with the Company and, as his final act as the sole member of the Company s Board of Directors, Mr. MacLean appointed Ms. Gloria Ramirez-Martinez as the Company s Chief Executive Officer/President, Chief Financial Officer/Treasurer, Secretary and Director. Ms. Ramirez-Martinez accepted such appointments. From the time that the Company was considered a shell company until the time that we ceased being a shell company, we had focused our efforts on developing a new business, merging with, or acquiring an operating company with operating history and assets. During this time, we evaluated possible acquisitions, while keeping current with our reporting obligations with the SEC as a publicly reporting company. We decided to enter the mining business because we were seeking out viable and feasible options to create value for our shareholders. After conducting independent research on the feasibility of discovering and exploiting commercially recoverable amounts of ore, we determined that staking and exploring potential mineral claims could be an excellent long term investment strategy that could potentially lead to lucrative business opportunities; therefore, we did not explore any alternate business plans. Accordingly, we refocused the Company's business direction to include a new business plan based on the exploration of mineral claims. To reflect the Company s new focus, on August 19, 2010, we filed an amendment to our Articles of Incorporation with the Nevada Secretary of State changing our name to First Resources Corp. Accordingly, on July 27, 2010 we staked four mining claims, the MDZ Lode Claims, on mineral properties in the Oatman mining district in Mohave County, Arizona (collectively referred to hereinafter as the "Claims"). Our Claims are staked in a north-south direction and each claim is approximately 1500 feet in length, by 600 feet in width, and collectively comprising approximately 82 acres of land. Since that date, our operations have been primarily limited to organizing and restructuring our Company to include a new business plan based on the exploration of our newly acquired mineral claims. We are now an exploration stage corporation engaged in the search of mineral deposits or reserves, which are not in either the development or production stage. We are considered an exploration or exploratory stage company because we are involved in the examination and investigation of land that we believe may contain valuable minerals, for the purpose of discovering viable deposits or reserves of gold, silver and other minerals, which are not in either the development or production stage. To date, our operations have been primarily limited to organizing and restructuring the Company. On July 27, 2010 we staked four mining claims, the MDZ Lode Claims (collectively referred to hereinafter as the Claims ), in Mohave County, Arizona. A lode mining claim is one that contains gold or other metallic minerals embedded deep within the veins of other rocks, and so requires a more complicated mining process. The expenditures to be made by us on our exploration program may not result in the discovery of commercially exploitable reserves of valuable minerals. The probability of a mineral claim ever having commercially exploitable reserves is extremely remote, and in all probability our mineral claims may not contain any reserves. If we are unable to find reserves of valuable minerals or if we cannot remove the minerals because we either do not have the capital to do so, or because it is not economically feasible to do so, then we will cease operations relating to the Claims and we will attempt to seek out alternate claims. In the event that we cease operations relating to the Claims, any funds received under this offering will be used to pay expenses related to this offering as well as working capital expenses including any expenses relating to the acquisition of any additional claims. We anticipate that any additional funding that we require will be in the form of equity financing from the sale of our Common Stock. However, there is no assurance that we will be able to raise sufficient funding from the sale of our Common Stock. The risky nature of this enterprise and lack of tangible assets places debt financing beyond the credit-worthiness required by most banks or typical investors of corporate debt until such time as an economically viable mine can be demonstrated. We do not have any arrangements in place for any future equity financing. If we are unable to secure additional funding, we will cease or suspend operations. We have no plans, arrangements or contingencies in place in the event that we cease operations. If we discontinue our exploration of our currently staked claims, we may seek to acquire other natural resource exploration properties. Any such acquisition(s) will involve due diligence costs in addition to the acquisition cost. We will also have an ongoing obligation to maintain our periodic filings with the appropriate regulatory authorities, which will involve legal and accounting costs. In the event that our available capital is insufficient to acquire an alternative resource property and sustain minimum operations, we will need to secure additional funding or else we will be compelled to discontinue our business. We are presently in the exploration stage of our business and have not commenced planned principal operations. We can provide no assurance that we will discover commercially exploitable levels of mineral resources on our properties, or if such deposits are discovered, that we will enter into further substantial exploration programs. To date, we have not earned any revenues and have incurred a net loss of $1,246,808 in the year ended December 31, 2010 and a net loss of $19,409 for the year ended December 31, 2009. We do not anticipate earning revenues until such time as we enter into commercial production of our mineral properties. These factors raise substantial doubt about the Company s ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish its plan of operations described herein and eventually attain profitable operations. The Company believes that it needs to raise a minimum of $178,000 from the proceeds of this offering to initiate its current plan of operations and cover its offering expenses; however, if the Company raises $242,500 or more it would be able to initiate its plan of operations to the fullest potential. If the Company were to initiate its plan of operations to the fullest potential, it would have the greatest likelihood of discovering and/or extracting any ore found on the claims. More specifically, the greater amount of proceeds available to the Company for its exploration program will have the following impact on the Company s ability to achieve operations: (i) the more extensive testing we can complete during Phase I of our plan of operations; (ii) the more holes we can drill during Phase III, or our core sampling phase of our plan of operations; and (iii) the greater likelihood we can proceed with analyzing the core samples, and potentially extracting any mineralized material, if found on the claims. For a detailed breakdown of how the Company intends to utilize proceeds generated from this offering please see the section entitled "Use of Proceeds" on Page 15 of the prospectus. Plan of Operations Our exploration target is to find commercially viable deposits of miscellaneous ores on our MDZ mining claims. We must conduct exploration to determine what amount of minerals, if any, exist on our properties and if any minerals which are found can be economically extracted and profitably processed. We will seek out experienced consultants to assist in the exploration programs. We will engage contractors to carry out our exploration programs under Ms. Ramirez-Martinez s supervision. We plan to engage project geologists, geochemical sampling crews and drilling companies as contractors, depending on the specific exploration program of the claims. The claims we have staked are located on undeveloped raw land. Exploration and surveying has not been initiated and will not be initiated until we raise additional money since we do not have sufficient funds to initiate and/or complete exploration at this time. After that has occurred we have to determine if it is economically feasible to remove the mineralized material. Our success depends upon finding mineralized material, which is a mineralized body that has been delineated by appropriate spaced drilling or underground sampling to support sufficient tonnage and average grade of metals to justify removal. Economically feasible would mean that the costs associated with the removal of the mineralized material will not exceed the price at which we can sell the mineralized material. Our mineral claims are in the early stages of exploration, wherein we have not yet begun any testing on the land itself, and presently are not known to contain quantities of economically feasible resources. On September 10, 2010, the Company entered into a Consulting Agreement (the Consulting Agreement ) with Mr. Steven Radvak ( Mr. Radvak ) to serve as a consultant to the Company. Pursuant to the terms and conditions of the Consulting Agreement, Mr. Radvak shall serve as the Company s Vice President of Exploration for an initial term of one year. In exchange, Mr. Radvak shall receive a one-time fully-paid issuance of one hundred thousand (100,000) shares of the Company s common stock. Mr. Radvak is considered a consultant functioning as an independent contractor and is neither an executive officer nor an employee of the Company. In this capacity, Mr. Radvak's duties shall include providing general assistance to the Company in developing its current plan of operations, as it relates to property acquisition and exploration, and performance of such other duties and responsibilities as may be reasonably required from time-to-time by the Board of Directors. We do not claim to have any minerals or reserves whatsoever at this time on any of the claims. If we do not find mineralized material or if we cannot remove mineralized material, either because we do not have the money to do so, or because it is not economically feasible to do so, then we will cease operations. Over the next 12 months, we intend to carry out the following actions, as a preliminary exploration program: 1. We intend to formulate an exploration plan, which will be based on a combination of radiometric surveys, outcrop mapping, and environmental considerations (anticipated costs of approximately $66,000); 2. Acquire such data sets, public or private, as may be available in our areas of interest (anticipated costs determined approximately $37,000 59,500); 3. Focus on subsurface exploration by initiating a drilling program to relatively deep targets in unexplored channel environments (anticipated costs of approximately $40,500 - $82,500); 4. As appropriate, enter into joint ventures with other companies exploring the same sedimentary environments in the region (This activity should be at no cost to the Company) Our sole officer and director has only recently become interested in natural resource exploration and does not have any professional training or technical credentials in the exploration or operation of mines. Therefore, we intend to retain qualified persons on a contract basis to perform exploration of the claims as needed. We do not have any verbal or written agreement regarding the retention of any qualified engineer or geologist for our exploration program. We will hire a professional geologist to outline a work program on the Claim(s) and would assist in the preparation and execution of the exploration program, but we have not discussed any terms of such an arrangement. We currently have no employees other than our sole officer/director, who will only be devoting approximately twenty hours per week, to our operations. We do not intend to hire any employees for the next twelve months unless and until we have proven mineral reserves. We currently have one consultant, Mr. Radvak, who will perform duties and responsibilities as may be reasonably required from time-to-time by the Board of Directors. SUMMARY OF THIS OFFERING The Issuer First Resources Corp. Securities being offered Up to 10,000,000 shares of Common Stock, our Common Stock is described in further detail in the section of this prospectus titled DESCRIPTION OF SECURITIES Common Stock.
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+PROSPECTUS SUMMARY Because this is only a summary, it does not contain all of the information that may be important to you. You should carefully read the more detailed information contained in this prospectus, including our financial statements and related notes. Our business involves significant risks. You should carefully consider the information under the heading Risk Factors beginning on page 11. As used in this prospectus, unless otherwise indicated, the terms we, our, us, Company and Wesen refer to China Wesen Recycling Technology, Inc., a Delaware corporation, formerly known as SRKP 23, Inc. ( SRKP 23 ). We conduct our business through our subsidiaries, which include our wholly-owned subsidiary, Weixin International Co., Limited, a company organized under the laws of the British Virgin Islands ( Weixin BVI ), Wei Xin Holding Group Limited, a company organized under the laws of Hong Kong and a wholly-owned subsidiary of Weixin BVI ( Weixin HK ), Gangzhou Kelida Intelligent Equipment Co., Ltd., a company organized under the laws of the People s Republic of China and a wholly-owned subsidiary of Weixin HK ( Kelida ), and Zhaoqing Hua Su Plastic Trading Company ( Hua Su ), Zhaoqing Chuang Yi Resources Recycle Co., Ltd. ( Chuang Yi ), Zhaoqing Xin Ye Plastic Co., Ltd. ( Xin Ye ), and Zhaoqing Li Jun Craftwork Co., Ltd. ( Li Jun ), each a company organized under the laws of the People s Republic of China and a wholly-owned subsidiary of Kelida. The selling stockholders refers, collectively, to the selling stockholders named in this prospectus under the heading Beneficial Ownership of Certain Beneficial Owners, Management, and Selling Stockholders who have agreed to sell to the Underwriters up to 70% of the Over-allotment Shares sold in this offering, if any. China or PRC refers to the People s Republic of China. RMB or Renminbi refers to the legal currency of China and $ or U.S. Dollars refers to the legal currency of the United States. Overview We recycle engineering plastics from complex waste streams and end-of-life plastic-rich durable goods such as computer and business equipment, household appliances, house wares, toys and many other sources. We produce plastic grains and compounds which are sold to original equipment manufacturers of consumer products and plastic injection molders which produce new consumer products using recycled material. We specialize in the production of high-density polyethylene, or HDPE, low-density polyethylene, or LDPE, acrylonitrile-butadiene-styrene, or ABS, and polystyrene, or PS. In addition, we offer a line of household and construction products which we manufacture with our own recycled plastic compounds. Our plastic grains are sold to trading companies and wholesalers, as well as customers in industries such as architecture industrial equipment and engineering production, chemical and petrochemical manufacturing. In addition, a substantial portion of our revenue is currently derived form the resale of recycled plastic materials, including HDPE, LDPE, ABS and PS material, which we cannot currently recycle due to our current recycling capabilities. Our Strategy Our goal is to become a leading provider of plastic grains and compounds and proprietary products manufactured from such material in China. We intend to achieve this goal by implementing the following strategies: Maximize our existing resources to increase our profitability We plan to use our expertise in plastics recycling and in the production of products produced from our recycled plastic material to further increase our profitability. Our plan is to actively capitalize on market opportunities by: expanding our sale force by recruiting experienced and knowledgeable sales personnel to reach new customers; strengthening relationships with our existing clients to increase the rate of purchase of existing products; and exploring new opportunities for expanding our product offerings to new and existing clients. Please read this prospectus carefully. It describes our business, our financial condition and results of operations. We have prepared this prospectus so that you will have the information necessary to make an informed investment decision. You should rely only on information contained in this prospectus. We have not authorized any other person to provide you with different information. This prospectus is not an offer to sell, nor is it seeking an offer to buy, these securities in any state where the offer or sale is not permitted. The information in this prospectus is complete and accurate as of the date on the front cover, but the information may have changed since that date. Expand output capacity In November 2009, we began construction of a new facility in Gangzhou on land for which we have obtained land use rights. This new facility will primarily act as a research and development center for our company, and will include a materials laboratory, an advanced tool shop for researching various end-user products, a showroom and our new principal corporate offices. The new facility will allow us to improve our corporate image and increase our ability to develop high-end plastic compounds and new end-user products, and will lessen our dependence on sales of raw materials for profitability. Focus on improved efficiencies We will continue to focus on efforts on improving the overall efficiency of system operations and the operational performance of our main production plants through additional engineering improvements, additional automation and modernization of the production process and reducing non-scheduled shut-downs of equipment. At the same time, we intend to balance these efforts with additional focus on production safety, environmental protection, occupational health, energy conservation and emissions reduction, striving to comply with the requirements for the development of a low-carbon, green economy with recyclable materials. Strengthen relationships with suppliers and focus on reducing commodity costs The purchase of raw material is fundamental to the recycling business. In order to cut costs and increase profit margins, we focus on developing relationships with new suppliers and increasing amount of raw material purchased directly from overseas recyclers, as opposed to purchasing from domestic wholesalers or intermediaries. We continue to work on obtaining more favorable terms and discounts by strengthening our relationship with suppliers and placing more bulk orders. We also continue to monitor commodity costs and work with our suppliers and customers to manage changes in commodity costs. Expand our line of proprietary products manufactured with our recycled plastic We intend to expand our product offerings into higher end technology oriented products such as railroad crossties. We intend to leverage the engineering and production capabilities of our experienced management team to develop new high margin product offerings to further boost our revenues and profitability. We believe that our expansion into these new product offerings will continue to differentiate us from our competition and will strengthen our competitiveness in the plastic recycling industry. Additionally, the increase in our production and sale of end products will lessen our dependency on sales of raw materials for our revenues. Sales of proprietary higher end products yield higher revenues than sales of raw materials, which is key to increasing our profitability. Pursue acquisitions to broaden our product offerings and production capability The plastic recycling market in China remains highly fragmented, and the majority of recycling companies are regionally focused with relatively few attaining national scale. We will consider strategic acquisitions that will provide us with a broader range of service offerings and access to new markets. When evaluating potential acquisition targets, we will consider factors such as market position, growth potential and earnings prospects and strength and experience of management. Our business is subject to a number of risks and uncertainties, including risks related to our ability to develop new products utilizing our recycled plastic products, our dependence on a limited number of suppliers for a majority of our raw materials, our ability to enter into relationships directly with suppliers to obtain raw materials; our ability to secure plastic waste raw materials at competitive prices, our reliance on a limited number of customers for our net sales and PRC regulations regarding the recycled plastics industry. Investors should carefully consider these risks and all of the risks discussed in Risk Factors beginning on page 12 of this prospectus before investing in our securities. UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Recent Events Share Exchange On November 12, 2010,we entered into a Share Exchange Agreement (the Exchange Agreement ) with Weixin BVI, Weixin HK, Kelida, Hua Su, Chuang Yi, Xin Ye, Li Jun, and all of the shareholders of Weixin BVI (collectively, the Weixin Shareholders ). Pursuant to the Exchange Agreement, we agreed to issue an aggregate of 7,865,556 shares of our common stock, $0.0001 par value per share (the Common Stock ) to the Weixin Shareholders in exchange for all of the issued and outstanding securities of Weixin BVI (the Share Exchange ). The Share Exchange closed on November 23, 2010 and Weixin BVI became our wholly-owned subsidiary. We changed our name to China Wesen Recycling Technology, Inc. on November 24, 2010. Upon the closing of the Share Exchange, we issued an aggregate of 7,865,556 shares of our Common Stock to the Weixin Shareholders in exchange for all of the issued and outstanding securities of Weixin BVI. Prior to the closing of the Share Exchange and the initial closing of the Private Placement, as described below, our stockholders prior to the completion of the Share Exchange (the SRKP 23 Stockholders ) canceled an aggregate of 6,679,899 shares held by them such that there were 1,907,455 shares of Common Stock outstanding immediately prior to the Share Exchange. The SRKP 23 Stockholders also canceled warrants to purchase an aggregate of 7,804,803 shares of Common Stock such that the SRKP 23 Stockholders held warrants to purchase an aggregate of 782,545 shares of Common Stock immediately prior to the Share Exchange. Each warrant is entitled to purchase one share of our Common Stock at $0.0001 per share and expires five years from the closing of the Share Exchange. The stockholders did not receive any consideration for the cancellation of the shares and warrants. The cancellation of the shares and warrants was accounted for as a contribution to capital. Immediately after the closing of the Share Exchange and the final closing of the Private Placement, we had 12,230,178 shares of common stock, no shares of preferred stock, no options, and warrants to purchase 782,545 shares of Common Stock issued and outstanding. The number of shares and warrants cancelled was determined based on negotiations with the security holders of SRKP 23 and Wexin BVI. The number of shares and warrants cancelled by SRKP 23 was not pro rata, but based on negotiations between the security holders and SRKP 23. As indicated in the Exchange Agreement, the parties to the transaction acknowledged that a conflict of interest existed with respect to the negotiations for the terms of the Share Exchange due to, among other factors, the fact that WestPark Capital, Inc. ( WestPark Capital ) was advising Wexin BVI in the transaction. As further discussed below in Recent Events Private Placement, certain of the controlling stockholders and control persons of WestPark Capital were also, prior to the completion of the Share Exchange, controlling stockholders and control persons of SRKP 23. Under these circumstances, the shareholders of Wexin BVI and the stockholders of SRKP 23 negotiated an estimated value of Wexin BVI and its subsidiaries, an estimated value of the shell company (based on similar recent transactions by WestPark Capital involving similar public shells), and the mutually desired capitalization of the company resulting from the Share Exchange. With respect to the determination of the amounts of shares and warrants cancelled, the value of the shell company was derived primarily from its utility as a public company platform, including its good corporate standing and its timely public reporting status, which we believe allowed us to raise capital at an appropriate price per share and subsequently list our stock on a national securities exchange. We believe that investors may have been unwilling to invest in our company in the Private Placement (as that term is defined below) on acceptable terms, if at all, in the absence of an investment in a public reporting vehicle and thus required us to effect the Share Exchange as a condition to the Private Placement. We did not consider registering our own securities directly as a viable option for accessing the public markets. We felt that private financing absent a reverse merger was not immediately available to us and we chose the structure offered by WestPark Capital as the best option to becoming publicly listed on a national securities exchange. The services provided by WestPark Capital were not a consideration in determining this aspect of the transaction. Under these circumstances and based on these factors, the shareholders of Weixin BVI and the stockholders of SRKP 23 agreed upon the amount of shares and warrants to be cancelled. Further to such negotiations, we paid a $140,000 success fee to WestPark Capital, Inc for services provided in connection with the Share Exchange, including coordinating the share exchange transaction process, interacting with the principals of the shell corporation and negotiating the definitive purchase agreement for the shell, conducting a financial analysis of Weixin BVI, conducting due diligence on Weixin BVI and its subsidiaries and managing the interrelationship of legal and accounting activities. All of the fees due to WestPark Capital in connection with the Share Exchange have been paid as of the date of this prospectus. Based on an estimated per share offering price of $3.50, the 1,907,455 shares retained by the SRKP 23 stockholders had an implied monetary value of approximately $6.7 million. Assuming exercise of the 782,545 warrants also retained by the SRKP 23 stockholders, 2,690,000 shares would have been retained by the SRKP 25 stockholders with an implied monetary value of approximately $9.4 million. The implied monetary value of the retained shares was calculated based on an estimated $3.50 per share offering price, without regard to liquidity, marketability, or legal or resale restrictions; accordingly, such amounts should not be considered as an indication of the fair value of the retained shares. The transactions contemplated by the Exchange Agreement, as amended, were intended to be a tax-free contribution and/or reorganization pursuant to the provisions of Sections 351 and/or 368(a) of the Internal Revenue Code of 1986, as amended. Private Placement On November 23, 2010 and December 16, 2010, we consummated the initial and final closings of a private placement of shares of the Company s Common Stock (the Private Placement ). Pursuant to subscription agreements entered into with the investors, we sold an aggregate of 2,457,167 shares of Common Stock at $2.25 per share, for gross proceeds of approximately $5.5 million in the Private Placement. The purpose of the Private Placement was to increase our working capital and the net proceeds from the Private Placement will be used to expand business operations, including developing direct sources and dealerships, increasing production capacity, making permitted acquisitions, purchasing manufacturing equipment, and for general corporate purposes. In connection with the Private Placement, we agreed to pay WestPark Capital, the placement agent for the Private Placement, commission equal to 10.0% with a non-accountable fee of 4.0% of the gross proceeds from the Private Placement, for an aggregate fee of approximately $774,008. We agreed to file a registration statement covering the common stock sold in the Private Placement within 30 days of the closing of the Private Placement pursuant to the subscription agreement entered into with each investor and to cause such registration statement to be declared effective by the SEC no later than 150 days from the date of filing or 180 days from the date of filing if the registration statement is subject to a full review by the SEC. Each investor in the Private Placement entered into lock-up agreements pursuant to which they agreed that (i) if the proposed public offering that we expect to conduct is for $5 million or more, then they would not be able to sell or transfer their shares until at least six (6) months after the date on which the Company s common stock becomes listed or quoted on either the New York Stock Exchange, the NYSE Amex, the NASDAQ Global Market, the NASDAQ Capital Market or the OTC Bulletin Board (the Listing Date ), and (ii) if the offering is for less than $5 million, then one-tenth of their shares would be released from the lock-up restrictions ninety (90) days after the Listing Date and there would be a pro rata release of the shares thereafter every 30 days over the following nine months. WestPark Capital, in its discretion, may also release some or all the shares from the lock-up restrictions earlier. We currently intend this offering to be in an amount less than $5 million. However, there can be no assurance of the actual size of this offering. Pursuant to the Placement Agency Agreement, we entered into a lock-up agreement pursuant to which we agreed that we will not, directly or indirectly, indirectly, (a) offer, pledge, sell, offer to sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend or otherwise transfer or dispose of any shares of our Common Stock or any securities convertible into, or exercisable or exchangeable for, shares of Common Stock, or (b) enter into any swap or other agreement that transfers, in whole or in part, any of the economic consequences of ownership of shares of Common Stock or such other securities convertible into, or exercisable or exchangeable for, shares of Common Stock, other than repurchases at cost or without cost pursuant to the terms of our option and restricted stock purchase agreements, for a period beginning from the Listing Date and continuing to and including the date eighteen (18) months after the Listing Date, without the prior written consent of WestPark Capital; provided, however, that we may, without the prior written consent of WestPark Capital, issue equity awards to our employees pursuant to equity incentive plans approved by our the board of directors and stockholders (provided that such grants do not exceed 7% of the outstanding shares, which includes the issuance of the shares issued in connection with the Private Placement). Some of the controlling stockholders and control persons of WestPark Capital were also, prior to the completion of the Share Exchange, controlling stockholders and control persons of the Company, including Richard Rappaport, who is the Chief Executive Officer of WestPark Capital and was the President and a significant stockholder of the Company prior to the Share Exchange, and Anthony C. Pintsopoulos, who is the President and Treasurer of WestPark Capital and was one of the Company s controlling stockholders and an officer and director prior to the Share Exchange. Mr. Rappaport is the sole owner of the membership interests in the parent company of WestPark Capital. Each of Messrs. Rappaport and Pintsopoulos resigned from all of their executive and director positions with the Company upon the closing of the Share Exchange. Certain Relationships and Related Transactions The table below identifies all the benefits that WestPark Capital and its affiliates have received and will receive in connection with the Share Exchange, the Private Placement and this offering. $ Other Share Exchange 164,000 (1) Registration rights for an aggregate of 1,428,691 shares and 586,129 shares underlying warrants (2) (3) Retained Shares and Warrants 2,014,820 (4) Private Placement 814,108 (5) Public Offering [______ ](6) Warrants to purchase 120,000 shares of common stock at an exercise price of $4.20 per share Total [______ ] (1) Includes a success fee of $140,000 paid to WestPark Capital for services provided in connection with the Share Exchange. Also includes $24,000 for consulting fees paid to WestPark by the Company for five months of consulting services provided to the Company by WestPark. (2) Pursuant to a Registration Rights Agreement executed in connection with the closing of the Share Exchange, affiliates of WestPark Capital received registration rights for an aggregate of 1,428,691 shares and 586,129 shares underlying warrants. We agreed to include such shares in a subsequent registration statement to be filed on or before the 10th after the end of the six-month period that immediately followed the date on which we filed the registration statement of which this prospectus is a part. The shareholders of Weixin immediately prior to the date of the Share Exchange holding an aggregate of 7,865,556 shares of our common stock have agreed with the Underwriter not to directly or indirectly sell, offer, contract or grant any option to sell, pledge, transfer (excluding intra-family transfers, transfers to a trust for estate planning purposes or to beneficiaries of officers, directors and shareholders upon their death), or otherwise dispose of or enter into any transaction which may result in the disposition of any shares of our common stock or securities convertible into, exchangeable or exercisable for any shares of our common stock, without the prior written consent of the Underwriter, for a period of 24 months after the date of this prospectus. (3) Based on an estimated per share offering price of $3.50, the 1,428,691 shares retained by SRKP 23 stockholders who are affiliates of WestPark Capital have an implied monetary value of approximately $5.0 million. Assuming the exercise of the 586,129 warrants also retained by the SRKP 23 stockholders who are affiliates of WestPark Capital, 2,014,820 shares would have been retained by such stockholders with an implied monetary value of approximately $7.1 million. The implied monetary value of the retained shares was calculated based on an estimated $3.50 per share offering price, without regard to liquidity, marketability, the likelihood of this offering being consummated, or legal or resale restrictions; accordingly, such amounts should not be considered an indication of the fair value of the retained shares. (4) Represents the implied aggregate monetary value of 1,428,691 shares and 586,129 shares underlying warrants, assuming the exercise of warrants retained by WestPark Capital and its affiliates. The implied monetary value of the retained shares was calculated based on an estimated $3.50 per share offering price of the common shares to be sold in this offering, without regard to liquidity, marketability or legal or sale restrictions; accordingly, such amount should not be considered as an indication of the fair value of the retained shares and warrants. (5) Represents commissions of $552,963, a non-accountable expense allowance of $221,145, and a reimbursement of WestPark Capital s fees for legal counsel of $40,000. (6) Represents underwriting discounts and commissions of $[__], plus a non-accountable fee of $[_____] and a reimbursement of $[_____] for WestPark Capital s legal fees. Corporate Information We were incorporated in the State of Delaware on October 11, 2007 and were originally organized as a blank check shell company to investigate and acquire a target company or business seeking the perceived advantages of being a publicly held corporation.On November 23, 2010, we (i) closed a share exchange transaction, described below, pursuant to which we became the 100% parent of Weixin BVI and (ii) assumed the operations of Weixin BVI and its subsidiaries, including Weixin HK, Kelida, Hua Su, Chuang Yi, Xin Ye and Li Jun. We changed our name from SRKP 23, Inc. to China Wesen Recycling Technology, Inc. on November 24, 2010. Our principal executive offices and corporate offices are located at Room 405, Floor 4, North Tower, 9 Shen Zhou Road, Guangzhou High-tech Industrial Development Zone, Guangzhou, People s Republic of China. Our telephone number is 86 (20) 32290314. We are a reporting company under Section 13 of the Securities Exchange Act of 1934, as amended. Our shares of common stock are not currently listed or quoted for trading on any national securities exchange or national quotation system. We intend to apply for the listing of our common stock on either the NASDAQ Global Market or the NYSE Amex. Copies to Thomas J. Poletti, Esq. Melissa A. Brown, Esq. K&L Gates LLP 10100 Santa Monica Blvd., 7th Floor Los Angeles, CA 90067 Telephone (310) 552-5000 Facsimile (310) 552-5001 V. Joseph Stubbs, Esq. Scott Galer, Esq. Stubbs Alderton & Markiles, LLP 15260 Ventura Boulevard, 20th Floor Sherman Oaks, California 91403 Telephone (818) 444-4500 Facsimile (818) 444-4520 Corporate Structure The corporate structure of the Company is illustrated as follows: Weixin BVI is a holding company that was incorporated on December 3, 2009 under the laws of the British Virgin Islands by Hongbing Wan. Hongbing Wan was the sole shareholder of Weixin BVI upon its incorporation. On August 9, 2010, Hongbing Wan transferred 100% of the outstanding shares of Weixin BVI to Hongyu Zhang pursuant to an instrument of transfer for consideration of $1.00. On October 28, 2010, Hongyu Zhang transferred 100% of the shares of Weixin BVI to Wesen Environmental Technology Limited pursuant to an instrument of transfer for consideration of $1.00. On November 8, 2010, Weixin BVI issued additional shares to the Weixin Shareholders pursuant to share subscription applications for consideration of $1.00 per share. Weixin HK is a liability company incorporated on December 30, 2005 under the laws of Hong Kong by Hongbing Wan. Weixin HK is a window for the group to handle business outside China, including dealing with overseas customers and occasionally, suppliers. Weixin HK sells metal parts for various home products, including door hardware and lock parts, to overseas clients. On August 10, 2010, Weixin BVI acquired all the shares of Weixin HK from Weixin HK s sole shareholder, Hongbing Wan, for consideration of 10,000 Hong Kong Dollars pursuant to an instrument of transfer, sold note and bought note. Kelida is located in Guangzhou, Guangdong Province, PRC and was incorporated under the laws of the PRC on September 29, 2009 by Weixin HK. Since its inception, Kelida has not conducted any business except for the acquisition of a land use right from Guangzhou government. Eventually Kelida will be a research and development center of the Company. Approximate Date of Proposed Sale to the Public: From time to time after the effective date of this Registration Statement If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box.R If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company R Zhaoqing Hua Su Plastic Trading Company ( Hua Su ), Zhaoqing Chuang Yi Resources Recycle Co., Ltd. ( Chuang Yi ), Zhaoqing Xin Ye Plastic Co., Ltd. ( Xin Ye ), and Zhaoqing Li Jun Craftwork Co., Ltd. ( Li Jun ) are each located in Zhaoqing City, Guangdong Province, PRC. Hua Su was incorporated under the laws of the PRC on July 20, 2006 with a registered capital of RMB 500,000. The original registered shareholders of Hua Su were Luo Jianhua (holding 75% of the registered capital) and He Jixiong (holding 25% of the registered capital). The registered capital of Hua Su was later increased to RMB 1,000,000. Each of Chuang Yi, Xin Ye, and Li Jun were incorporated under the laws of the PRC on September 27, 2007 with registered capital of RMB 1,000,000. The original registered shareholders of Chuang Yi were Peng Zhizhong and He Jixiong, with each holding 50% of the registered capital. The original registered shareholders of Xin Ye were Luo Zeming and Lu Jianzhong, with each holding 50% of the registered capital. The original registered shareholders of Li Jun were Chen Wenqing, holding 60% of the registered capital, and Qiu Yuji, holding 40% of the registered capital. Hongbing Wan was the actual investor of the registered capital of each of Hua Su, Chuang Yi, Xin Ye and Li Jun. Upon the establishment date of each of the companies, Hongbing Wan entered into entrustment agreements with each of the original registered shareholders of each of Hua Su, Chuang Yi, Xin Ye and Li Jun, pursuant to which Hongbing Wan entrusted each of the original registered shareholders to hold the shares on his behalf without paying any entrustment fees. Under the entrustment agreements, Hongbing Wan entrusted each registered shareholder of Hua Su, Chuang Yi, Xin Ye, and Li Jun with all of the shareholders rights prescribed under the PRC Company Law and the articles of Articles of Association, including, to be registered as the registered shareholders of each respective company, to act on behalf of Hongbing Wan as the shareholders of Hua Su, Chuang Yi, Xin Ye, and Li Jun, and to attend the shareholders meeting and to collect dividends on behalf of Hongbing Wan. Hongbing Wan under the agreements had the right to require each registered shareholder to transfer his shareholdings to Hongbing Wan or any party designed by Hongbing Wan and no registered shareholder could transfer his shareholdings in Hua Su, Chuang Yi, Xin Ye, and Li Jun without Hongbing Wan s prior written consent. On November 16, 2009, each registered shareholder of Hua Su, Chuang Yi, Xin Ye, and Li Jun transferred his shares of each company to Kelida pursuant to equity transfer agreements for consideration equal to the percentage of the registered capital that each registered shareholder owned. Each of Hua Su, Chuang Yi, Xin Ye, and Li Jun completed the required registration procedures to register Kelida as its sole shareholder with the competent authority on February 1, 2010. CALCULATION OF REGISTRATION FEE Proposed Proposed Maximum Maximum Amount of Title of Each Class of Amount To Be Offering Price Aggregate Registration Securities To Be Registered Registered (1) Per Share Offering Price Fee Common Stock, $0.0001 par value per share 1,380,000 (2) $ 4.00 (2) $ 5,520,000 (2) $ 640.87 Common Stock, $0.0001 par value per share 2,457,167 (3) $ 4.00 (4) $ 9,828,668 (4) $ 1,141.11 Underwriter s Warrants to Purchase Common Stock 120,000 (5) N/A N/A N/A (6) Common Stock Underlying Underwriter s Warrants, $0.0001 par value per share 120,000 (7) $ 4.80 $ 576,000 (10) $ 66.87 (10) Total Registration Fee $ 1,848.85 (11) (1) In accordance with Rule 416(a), the Registrant is also registering hereunder an indeterminate number of additional shares of Common Stock that shall be issuable pursuant to Rule 416 to prevent dilution resulting from stock splits, stock dividends or similar transactions. (2) The registration fee for securities to be offered by the Registrant is based on an estimate of the Proposed Maximum Aggregate Offering Price of the securities, and such estimate is solely for the purpose of calculating the registration fee pursuant to Rule 457(o). Includes shares which the underwriters have the option to purchase to cover over-allotments, if any. (3) This Registration Statement also covers the resale under a separate resale prospectus (the Resale Prospectus ) by selling stockholders of the Registrant of up to 2,457,167 shares of Common Stock previously issued to the selling stockholders as named in the Resale Prospectus. (4) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457. (5) Represents the maximum number of warrants to purchase the Registrant s common stock to be issued to the underwriter in connection with the public offering. (6) In accordance with Rule 457(g) under the Securities Act, because the shares of the Registrant s common stock underlying the underwriter s warrants are registered hereby, no separate registration fee is required with respect to the warrants registered hereby. (7) Represents the maximum number of shares of the Registrant s common stock issuable upon exercise of the underwriter s warrants. (8) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(g) under the Securities Act, based on an exercise price of $4.80 per share. (9) Paid herewith. (1) Excludes (i) up to 120,000 shares of common stock underlying warrants to be received by to Underwriter in this offering, and (ii) 2,457,167 shares of our common stock held by the selling stockholders that are concurrently being registered with this offering for resale by such selling stockholder under a separate prospectus, and (iii) the 54,000 shares of our common stock that we may issue upon the Underwriter s over-allotment option exercise. The exercise of the Underwriter s over-allotment option to purchase the 126,000 shares from selling stockholders named in this prospectus to cover over-allotments, if any, will not affect the number of shares outstanding after this offering. (2) Based on 12,230,178 shares of common stock issued and outstanding as of the date of this prospectus and 1,200,000 shares of common stock issued in the public offering. Excludes (i) the Underwriter s warrants to purchase a number of shares equal to 10% of the shares of common stock sold in this offering excluding the shares sold in the over-allotment option, and (ii) 782,545 shares of common stock underlying warrants that are exercisable at $0.0001. Excludes the 54,000 shares of our common stock that we may issue upon the Underwriter s over-allotment option exercise and is not affected by the 126,000 shares that the Underwriter may purchase from selling stockholders named in this prospectus. (1) Based on 13,430,178 shares of common stock issued and outstanding as of the date of this prospectus, and excludes (i) 1,200,000 shares of common stock being registered for issuance in a public offering, (ii) the underwriter s warrants to purchase up to 120,000 shares of common stock, and (iii) 782,545 shares of common stock that are issuable upon the exercise of outstanding warrants, exercisable at $0.0001 per share. The Selling Stockholders have entered into lock-up agreements pursuant to which they agreed that (i) if the Company s proposed public offering is for $10 million or more, then the investors would not be able to sell or transfer their shares until at least six months after the public offering s completion, and (ii) if the offering is for less than $10 million, then one-tenth of their shares would be released from the lock-up restrictions ninety days after the offering and there would be a pro rata release of the shares thereafter every 30 days over the following nine months. WestPark Capital, Inc., the placement agent in the private placement in which the Selling Stockholders acquired their shares and an underwriter to the public offering, in its discretion, may also release some or all the shares from the lock-up restrictions earlier. We currently expect the public offering to be in an amount less than $10 million. There can be no assurance on the size of the public offering. The Registrant amends this registration statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this registration statement shall hereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, or until the registration statement shall become effective on such date as the Commission, acting pursuant to Section 8(a), may determine.
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+PROSPECTUS SUMMARY The following summary highlights selected information contained in this prospectus. This summary does not contain all the information you should consider before investing in the securities. Before making an investment decision, you should read the entire prospectus carefully, including the information set forth under the headings Risk Factors and Management s Discussion and Analysis of Financial Condition and Results of Operations, and the financial statements and the notes to the financial statements included in this prospectus. As used throughout this prospectus, the terms ALSO , Company , we, us, or our refer to Absolute Life Solutions, Inc., a Nevada corporation, together with its subsidiaries. Our History We were incorporated under the name of Shimmer Gold, Inc. on September 7, 2006 in the State of Nevada. In January 2010, we discontinued our business operations and transferred those operations and the assets relating thereto to Shawn Balaghi, our former president and director. In January 2010, our then existing shareholders sold 99% of their issued and outstanding common stock to YSY Enterprises, Inc. In May 2010, YSY Enterprises, Inc. sold its ownership interest to our current shareholders, including our former President and Chief Executive Officer. Subsequently, a majority of our shareholders approved an amendment to our Articles of Incorporation changing our name to Absolute Life Solutions, Inc. On May 24, 2010, the board of directors and stockholders approved a 10-for-1 forward stock split (the Stock Split ). Pursuant to the Stock Split, every one (1) share of issued and outstanding common stock was reclassified into 10 whole post-split shares of common stock. Simultaneous with the Stock Split, we changed our name to Absolute Life Solutions, Inc. We changed our trading symbol to ALSO.OB. We are now a specialty financial services company engaged in the purchase of life settlements. Since June 1, 2010, our primary operations consist of the business and operations of a specialty financial services company primarily engaged in the acquisition of life settlement transactions. Therefore, we are disclosing information about the life settlement business, financial condition, and management in this Prospectus. In this Prospectus, references to the Company refer to the Company as currently constituted. Our Company We are engaged in the emerging secondary market for life insurance policies. We acquire life insurance policies that are sold at a discount to the face value of the insurance benefit. Once we purchase a policy, we continue paying the policy premiums in order to ultimately collect the face value of the insurance benefit. We generally hold the individual policies to maturity in order to ultimately collect the policy s face value upon the insured s mortality. Our strategy is to continue to build a diversified and profitable portfolio of policies. Life insurance companies earn substantial revenue windfalls due to the lapse and surrender behavior of individuals owning insurance policies. These revenue windfalls have enabled life insurance companies to issue policies with reduced premiums. These two business practices create a profit opportunity for participants in the life insurance secondary market. The profit opportunity is the difference, or spread, between (i) the cost of purchasing and maintaining a life insurance policy over the insured s lifetime; and (ii) the policy s benefit that will paid upon the insured s mortality. The secondary market for life insurance policies has also been driven by the creation of life insurance policy pricing tools and actuarial modeling techniques developed by investors. According to the American Council of Life Insurers Fact Book 2010 (ACLI), individuals owned over $10.3 trillion in face value of life insurance policies in the United States in 2009. This figure includes all types of policies, including term and permanent insurance known as whole life, universal life, variable life, and variable universal life. The secondary market for life insurance has developed around individuals aged 65 years or older owning either permanent insurance or term insurance convertible into permanent insurance. According to the ACLI, the average annual lapse rate and surrender rate of life insurance policies for the ten years ended 2009 was 7.3%, or over $750 billion in face value of policy benefits annually. Owners of life insurance policies generally surrender the policies or allow them to lapse for a variety of reasons, including: (i) unrealistic original earnings assumptions made when the policy was purchased, combined with higher premium payments later in the term of the policy than initially forecasted; (ii) increasing premium payment obligations as the insured ages; (iii) changes in financial status or outlook which cause the insured to no longer require life insurance; (iv) other financial needs that make the insurance unaffordable; or (v) a desire to maximize the policy s investment value. The market opportunity for selling and purchasing life insurance policies in the secondary market is relatively new. According to Conning Research & Consulting, the secondary market for life insurance policies grew from $2 billion in 2002 to over $11 billion in face value of life insurance policy benefits being purchased in 2008. To participate in the market opportunity, we have spent resources: (i) developing a robust operational platform and systems for purchasing and servicing life insurance policies; (ii) obtaining support services from reputable suppliers to enable us to purchase life insurance in the secondary market; and (iii) recruiting and developing a professional management team. As of May 31, 2011, we have acquired 55 policies with a face value of $346,476,150. One policy with a face value of $2,500,000 matured resulting in net income of $2,237,500. One policy with a face value of $8,700,000 was sold, pursuant to a reverse repurchase agreement, resulting in net income of $32,000. We generally purchase life insurance policies through secondary market transactions,directly from the policy owner who originally purchased the life insurance in the primary market. We purchase policies in the secondary market through licensed providers who assist policy owners in accessing the secondary market. Before we purchase a life insurance policy, we conduct a rigorous underwriting review that includes obtaining two life expectancy estimates on each insured from third party medical actuarial firms. We base our life expectancy estimates on the average of those two estimates. The policies we purchase are universal life insurance policies issued by rated life insurance companies. The price we are willing to pay for the policy in the secondary market is primarily a function of: (i) the policy s face value; (ii) the expected actuarial mortality of the insured; (iii) the premiums expected to be paid over the life of the insured; and (iv) market competition from other purchasers. We seek to earn profits by purchasing policies at discounts to the face value of the insurance benefit. The discounts at which we purchase are expected to exceed the costs necessary to pay premiums and financing and servicing costs through the date of the insured s mortality. We rely on the actuarial life expectancy assumptions provided to us by third-party medical actuary underwriters to estimate the expected mortality of the insured. We seek to finance our life insurance policy purchases and payment of premiums and financing costs, until we receive policy benefits, through the sale of the debentures and the use of our revolving line of credit. In the past, we have also relied on the sale of subsidiary secured notes. We believe that our business model provides significant advantages to potential investors. First, our earnings from life insurance policies are non-correlated to traditional external market influences such as real estate, equity markets, fixed income markets, currency, and commodities. Second, life insurance policy benefits are the most senior in rank within an insurance company s capital structure, senior even to secured debt holders, with some amounts further protected under state guaranteed funds (typically limited to $200,000). Third, our assets provide diversification from many other investment opportunities. Our objective is to earn returns from the life insurance policies we purchase in the secondary market which are greater than the costs necessary to purchase and finance those policies to their maturity. We expect to accomplish our objective by: purchasing life insurance policies with expected internal rates of returns in excess of our cost of capital; paying the premiums and costs associated with the life insurance policy until the insured s mortality; obtaining a large and diverse portfolio to mitigate actuarial risk; obtaining diversified funding sources to reduce our overall cost of financing; maintaining rigorous portfolio monitoring and servicing. We have built our business with what we believe to be the following competitive strengths: Industry Experience: Our experience within the marketplace has allowed us to evaluate over 3000 life insurance policies for possible purchase, thereby gaining a deep understanding of the issues involved when purchasing life insurance policies in the secondary market. Our experience gives us the confidence in building a portfolio of life insurance policies that will perform to our expectations. Operational Platform: We have built an operational platform and systems for efficiently tracking, processing, and servicing life insurance policies that we believe provide competitive advantages when purchasing policies in the secondary marketplace, and servicing the policies once acquired. Origination and Underwriting Practices: We purchase life insurance policies that meet published guidelines on what policies would be accepted in a rated securitization. We purchase only permanent life insurance policies we consider to be non-contestable and that meet stringent underwriting criteria and reviews. Life Expectancy Methodology: We rely on at least two life expectancy reports from independent third-party medical actuary underwriting firms such as 21st Services, AVS Underwriting, Fasano Associates, and ISC Services to develop our life expectancy estimate. Pricing Software and Methodology: We use actuarial pricing methodologies and software tools that are built and supported by leading independent actuarial service firms such as Milliman USA and Modeling Actuarial Pricing Systems, Inc. ( MAPS ) for calculating our expected returns. On the other hand, our business involves a number of challenges and risks described in more detail elsewhere in this prospectus, including the following: Relatively New Market. The purchase and ownership of life insurance policies acquired in the secondary market is a relatively new and evolving market. Our ability to profit in the life settlement market depends on the continued development of the secondary market for life insurance, including the solvency of life insurance companies to pay the face value of the life insurance benefits and other factors beyond our control. Assumptions About Valuation of Our Assets. The valuation of our insurance policies, which are the principal assets on our balance sheet, requires us to make material assumptions that may ultimately prove to be incorrect. These assumptions include actuarial life expectancies, which may not prove to be accurate. Ability to Expand Our Portfolio. Our business model relies on achieving actual results that are in line with the results we expect to attain from our investments in life insurance policy assets. In this regard, we believe that the larger portfolio we own, the greater likelihood we will achieve our expected results. Although we plan to expand on the number of life insurance policies we own using either debt financing raised from institutional investors or proceeds raised from the exercise price of our warrants that may be exercised by the applicable selling shareholders in this offering, we may be unable to meet this goal. Risk of Investment in Life Insurance Policies. Our investments in life insurance policies have inherent risks, including fraud and legal challenges to the validity of the policies, as well as the possibility of misleading information provided by the seller of the policy. Effects of Regulation. Our business is subject to state regulation, and changes in state laws and regulations governing our business, or changes in the interpretation of such laws and regulations, could negatively affect our business. Commencing in July 2010, we entered into Securities Purchase Agreements (the Securities Purchase Agreement ) with certain purchasers pursuant to which we have sold to date an aggregate of (i) 47,950 shares of our Series A 12.5% Convertible Preferred Stock (the Series A Preferred Stock ), which shares of Series A Preferred Stock have a stated value of $1,000 per share and are convertible into shares of our Common Stock at an initial conversion price of $1.00 per share, (ii) 2,850 shares of our Series B 12.5% Convertible Preferred Stock (the Series B Preferred Stock ), which shares of Series B Preferred Stock have a stated value of $1,000 per share and are convertible into shares of our Common Stock at an initial conversion price of $1.00 per share, and (iii) warrants to purchase an aggregate of 51,242,500 shares of common stock (the Investor Warrants ), 25,400,000 of which are exercisable at an initial exercise price of $2.00 per share and 25,842,500 of which are exercisable at an initial exercise price of $4.00 per share, which Investor Warrants expire five (5) years after issuance. To date, we have received aggregate gross cash proceeds of $50,800,000 from these transactions (the Private Placements ). In connection with the establishment of the Series B Preferred Stock, which is subordinate to the Series A Preferred Stock in respect of liquidation and redemption, the holders of 6,000 shares of Series A Preferred Stock agreed to exchange their Series A Preferred Stock for Series B Preferred Stock. Each exchanging Series A holder received an additional 50 Warrants exercisable at $4.00 for each share of Preferred Stock so exchanged. (See Management s Discussion and Analysis of Financial Condition and Results of Operations.) In connection with the issuance of the Series A Preferred Stock and the Series B Preferred Stock, we entered into Registration Rights Agreements with the purchasers, pursuant to which we agreed to use our best efforts to register the shares of common stock underlying the Preferred Stock. As at August 31, 2011, there were issued and outstanding securities of the Company on a fully diluted basis as follows: 85,424,597 shares of our common stock held by the present stockholders; 41,950,000 shares of our common stock reserved for issuance on conversion of our outstanding Series A Preferred Stock; 8,850,000 shares of our common stock reserved for issuance on conversion of our outstanding Series B Preferred Stock; 22,394,590 shares of common stock issued or issuable as dividends on our outstanding Series A Preferred Stock and Series B Preferred Stock through June 30, 2014; 51,242,500 shares of our common stock reserved for issuance under our Investor Warrants; 10,000,000 shares of our common stock reserved under our equity incentive plan, of which 1,000,000 shares have been issued to date; and 6,000,000 shares of our common stock reserved for issuance under Consulting Agreements. Corporate Information Our executive office is located at 45 Broadway, 6th Floor, New York, New York 10006. Our telephone number 212 201 4070 and our website is www.absolutels.com. THE OFFERING Common stock outstanding before the offering 85,424,597 shares Common stock offered by selling stockholders Up to 124,437,090 shares of common stock held by the selling stockholders or in respect of underlying securities held by the selling stockholders. Common stock to be outstanding after the offering Up to 206,517,097 shares, assuming full exercise of the warrants and issuance of all dividends in common stock. OTCBB Symbol ALSO.OB Use of proceeds We will not receive any proceeds from the sale of the common stock offered hereby. However, we may receive up to a maximum of approximately $154,170,000 of proceeds from the exercise of the warrants held by certain selling stockholders, which proceeds we would expect to use for general working capital. No assurances can be given, however, that all or any portion of such warrants will ever be exercised. Risk factors: You should carefully consider the information set forth in this prospectus and, in particular, the specific factors set forth in the Risk Factors section beginning on page 9 of this prospectus before deciding whether or not to invest in shares of our common stock.
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+PROSPECTUS SUMMARY This summary highlights material information contained elsewhere in this prospectus and does not contain all of the information that you should consider in making an investment decision. We urge you to read this entire prospectus carefully, including the Risk Factors section and condensed consolidated financial statements and related notes appearing elsewhere in this prospectus, before making an investment decision. Unless the context provides otherwise, all references in this prospectus to IASO, we, us, our, or similar terms, refer to IASO Pharma Inc. IASO Pharma Inc. Overview We are a biopharmaceutical company focused on acquiring, developing and commercializing drugs for the treatment and prevention of infectious diseases and other serious illnesses. To date, we have obtained exclusive rights in the United States, the European Union and certain other territories to develop and commercialize candidates for the treatment of bacterial and fungal infections , and a ll of our assets have been licensed from other companies. Our most advanced product candidate, PB-101 (zabofloxacin), is in a Phase 2 clinical trial in the United States for the treatment of community-acquired pneumonia, or CAP. We licensed PB-101 from Dong Wha Pharmaceutical Ind. Co., a Seoul, Korea-based, pharmaceutical company, referred to herein as Dong Wha. We initiated the Phase 2 clinical trial in the United States for the CAP indication in March 2010 . The most frequent use of antibiotics in the community/outpatient setting is for respiratory tract infections, which include CAP, Acute Bacterial Exacerbation of Chronic Bronchitis (ABECB), and Acute Bacterial Sinusitis (ABS). Treatment of these respiratory infections has been hindered by the increasing prevalence of drug resistant and multi-drug resistant bacterial strains, particularly Streptococcus pneumoniae, the most common cause of such infections. Although there are many biopharmaceutical companies that are focused on developing new antibiotics for the treatment of infections contracted in the hospital setting, few are actively developing new antibiotics to meet the needs of physicians in the treatment of infections contracted in the community setting, such as community-acquired pneumonia. These physicians have a need for new antibiotics that will effectively treat the bacteria causing respiratory infections, are well tolerated and safe, and have a dosing regimen which is convenient for the patient. We believe that PB-101 will meet these needs. In the antifungal market, we have in-licensed PB-200a, which we believe may target two of the most common fungus strains, Candida and Aspergillus. The systemic antifungal drugs currently available all have inherent limitations, including lack of oral availability, renal toxicity, hepatotoxicity, and drug-drug interactions. We expect the number of systemic fungal infections to increase as the population ages and the number of immune-compromised patients increases. Because of these limitations and market dynamics, there is a need for new antifungal compounds. Our Market Opportunity Community-acquired pneumonia, or CAP, is a common respiratory tract infection associated with significant morbidity and mortality. According to a January 2002 article published in the Journal of Respiratory Diseases, it is estimated that approximately 5.6 million persons develop CAP annually in the United States and, according to the Centers for Disease Control, CAP results in 1.2 million hospitalizations and over 55,000 deaths per year. The National Center for Health Statistics reports that influenza and pneumonia is the eighth most common cause of death in the U.S., and the seventh most common cause of death in those over the age of 65. According to the Infectious Diseases Society of America, S. pneumoniae is the most common identifiable etiologic cause of pneumonia, is responsible for approximately two-thirds of all bacteremic pneumonias, and is the most frequent cause of death from CAP. An analysis conducted by investigators from the Mayo Clinic and Case Western Reserve, and published in Clinical Infectious Diseases, determined that the rate of mortality for patients with penicillin resistant strains of S. pneumoniae was 30% higher than in patients with penicillin susceptible strains. Over the years, the incidence of antibiotic-resistant strains of S. pneumoniae have increased, including strains resistant to currently available quinolone antibiotics, and these resistant strains have been encountered in both community and hospital settings. The practice guidelines of the American Thoracic Society and the Infectious Diseases Society of America recommend the use of respiratory quinolone antibiotics as empiric drugs of choice for outpatients with PB-101 84 % 86 % 99 % 100 % 91 % PB-200a 16 % 14 % 1 % * 8 % PB-201 * * * * Table of Contents co-morbidities and hospitalized patients outside of the intensive care unit. Quinolones have been marketed since 1986 and have become standard therapies for many infections, including urinary tract and respiratory tract infections . According to IMS Health, worldwide sales in 2009 of the two leading respiratory quinolones, levofloxacin (Levaquin , Ortho-McNeil-Janssen) and moxifloxacin (Avelox , Bayer), combined were over $4.6 billion. In our pre-clinical studies, PB-101 (zabofloxacin) has demonstrated microbiologic activity against strains of S. pneumoniae that was eight times greater than both Levaquin and Avelox . PB-101 ( Zabofloxacin ) Our lead product candidate, PB-101, is a fluoroquinolone antibiotic that in preclinical studies exhibited greater in vitro microbiological activity against S. pneumoniae (including strains resistant to other antibiotics) and those pathogens responsible for most community-acquired respiratory tract infections, when compared to currently approved quinolone antibiotics. Under our license agreement with Dong Wha, we hold development and commercialization rights for PB-101 in all countries of the world other than Australia, New Zealand, India, Japan, Korea, China, Taiwan, Singapore, Indonesia, Thailand, Malaysia, Vietnam and Hong Kong. We plan to develop PB-101 for the treatment of community-acquired respiratory tract infections, including CAP. Three Phase 1 studies have been completed with PB-101, and these studies suggest that the drug appears to be well tolerated and safe at the dosing regimens being utilized in our current Phase 2 clinical trial. In December 2009, we completed a Phase 1 QT trial for PB-101 in which electrocardiograms (ECGs) did not demonstrate adverse effects on the cardiovascular systems of the subjects enrolled in the study , a limiting factor in the use of Levaquin . Our current Phase 2 clinical trial in the United States for the CAP indication, which we initiated in March 2010, is a three arm study that is designed to enroll 180 clinically evaluable patients with a documented bacterial etiology into one of three treatment groups, two of which will receive dosing regimens of PB-101 and the other group will receive a dosing regimen of a standard comparative control antibiotic. Dong Wha is also conducting a study of zabofloxacin for the treatment of CAP in South Korea, and we expect that the top line results from that study will be available in the first quarter of 2012. Our development plan for PB-101 (zabobfloxacin) over the next 12 to 18 months is to: Complete the current Phase 2 clinical trial for the treatment of CAP ; and Complete one Phase 1 study of an intravenous formulation of PB-101 . Phase 3 trials for PB-101 will be required to obtain regulatory approvals for the treatment in the United States and European Union , as well as in certain emerging markets . The proceeds from this offering will allow us to complete our Phase 2 CAP study and the Phase 1 study of an intravenous formulation of PB-101 within the above timelines. We will require additional funds following the completion of this offering in order to continue development of PB-101 through Phase 3 clinical trials for CAP and other indications. Our Business Strategy Our strategy is to in-license and develop promising innovative compounds and technologies to meet the challenges inherent in the treatment and prevention of infectious diseases and other serious illnesses . We will seek to license additional therapeutic product candidates while simultaneously developing our existing product pipeline. Our strategy reduces risk by licensing product candidates or technologies that already have been tested for safety and biological activity in animals and/or humans by third party drug discovery research companies and academic institutions, providing an initial indication of the drug s safety and biological activity before committing capital to the drug s development. We do not conduct any drug discovery activities. We use third parties to conduct a large portion of our preclinical and clinical studies and we intend to continue to do so in the near term. We use contract research organizations and research institutions to conduct most of our preclinical research and studies and we use medical institutions, clinical investigators and clinical research organizations to assist us in conducting our clinical trials. We use these third parties to assist us with such tasks as data management, statistical analysis and evaluation. However, our study design work and regulatory filing preparation is performed primarily by our internal personnel although we engage consultants to ensure that our studies are compatible with expected regulatory requirements and our filings are made in accordance with applicable regulations. In addition, we intend to carry out clinical trial supervision on our own, Stock Options 9/27/2007 2 ( 5 ) 45,600.00 56,640.00 42,430.00 ( 5 ) 11,040.00 2/21/2008 1 ( 6 ) 45,600.00 34,080.00 22,560.00 ( 6 ) Warrants 9/27/2007 6 ( 7 ) 45,600.00 56,640.00 42,430.00 ( 7 ) 11,040.00 12/14/2007 9 ( 8 ) 48,000.00 43,680.00 32,110.00 ( 8 ) 1/15/2009 23 ( 9 ) 48,000.00 45,120.00 35,620.00 ( 9 ) N/A 6/24/2009 1 ( 10 ) 48,000.00 44,640.00 35,230.00 ( 10 ) N/A 2/09/2010 (1 1 ) (1 1 ) 25,920.00 18,720.00 N/A 3/01/2010 (1 1 ) (1 1 ) 25,920.00 19,250.00 (10) N/A 5/26/2010 Matthew A. Wikler James Rock Mark W. Lotz (1) (a) (b) (c) Equity compensation plans approved by security holders 2 $ 45 , 60 0 1,49 9 , 998 Equity compensation plans not approved by security holders Total Common Stock 3/21/2007 93 (3) $ 48.00 $ 48.00 $ 4/16/2007 (3) 48.00 48.00 Stock Options 9/27/2007 2 45,600.00 56,640.00 11,040.00 2/21/2008 1 (4) 45,600.00 34,080.00 Warrants 9/27/2007 6 45,600.00 56,640.00 11,040.00 12/14/2007 9 (5) 48,000.00 (5) 43,680.00 N/A 1/15/2009 23 (6) 48,000.00 (6) 45,120.00 N/A 6/24/2009 1 (6) 48,000.00 (6) 44,640.00 N/A 2/09/2010 (7) (7) 25,920.00 N/A 3/01/2010 (7) (7) 28,320.00 N/A 5/26/2010 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 Table of Contents as is the case with our Phase 2 CAP trial, but we may engage clinical research organizations to act as an intermediary between us and certain trial sites under certain circumstances, particularly for foreign trial sites. Our strategy includes opportunistically entering into collaborations with larger pharmaceutical companies. While we believe we can successfully develop a product candidate to commercialization, we may selectively enter into development collaborations for certain of our product candidates depending on the estimated cost , timeline of development and attractiveness of the collaboration to us . We may also enter into marketing or commercialization collaborations for any product candidates which may receive regulatory approval. In addition to our development strategy described above, in order to enhance our future growth we expect to be opportunistic and pursue complementary or strategic acquisitions, licenses and investments. Our management team has significant experience in identifying, executing and integrating these transactions. We expect to use selected acquisitions, licenses and investments to continue to drive our growth, including: Products and technologies. We intend to pursue product and technology acquisitions and licenses that will complement our existing business and provide new product and market opportunities, improve our growth, leverage our existing assets, and contribute to our own organic growth; Investments. We may make investments in biopharmaceutical companies that we perceive to have valuable proprietary technology and significant potential to create value for IASO as a shareholder. We will require substantial additional funds following the completion of this offering in order to successfully carry out our business strategy . Risks Associated With Our Business In executing our business strategy, we face significant risks and uncertainties, as more fully described in the section entitled Risk Factors. These risks include, among others, the incurrence of substantial and increasing net losses for the foreseeable future because we have no products approved for commercial sale and we have not generated any product revenue to date, and we need to obtain substantial additional funding for product development. We incurred a net loss of approximately $200,000 for the period from inception (October 5, 2006) to December 31, 2006, and net losses of approximately $5.6 million, $5.2 million , $ 4.5 million and $ 9.0 million for the years ended December 31, 2007, 2008 , 2009 and 2010 , respectively, for a total net loss of approximately $ 24.5 million for the period from inception (October 5, 2006) to December 31, 2010 . We also incurred a net loss of approximately $ 2.0 million for the three months ended March 31, 2011. As of March 31, 2011 , we had an accumulated deficit of approximately $ 26.5 million. In addition, to receive regulatory approval for the commercial sale of PB-101 or any other product candidates, we must conduct extensive preclinical testing and adequate and well-controlled clinical trials to demonstrate safety and efficacy in humans. If the clinical trial of PB-101 discussed herein does not produce results necessary to support regulatory approval, we will be unable to commercialize such product . Moreover, we are currently controlled by our Executive Chairman-elect, Michael S. Weiss, who beneficially owns 950,000 restricted shares of common stock, representing virtually all of our outstanding common stock as of June 20, 2011. Following the completion of this offering and the conversion of the Rights Offering Notes (as defined under Management s Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources Rights Offering Notes ) in connection therewith, our executive officers, directors and principal stockholders and their affiliates, will beneficially own approximately % of our outstanding common stock, assuming such persons do not purchase any shares in this offering, allowing them to exert significant influence regarding all matters submitted to our stockholders for approval. We also face various risks related to our dependence on third parties, including our reliance on third parties to conduct our preclinical and clinical studies and to formulate and manufacture our product candidates. If these third parties do not successfully carry out their duties to us or fail to comply with regulatory requirements or meet expected deadlines, our preclinical development activities or clinical trials may be extended, delayed, suspended or terminated, and we may not be able to obtain regulatory approval for our product candidates. This could delay the commercialization of our product candidates or result in higher costs or deprive us of potential product revenues. In addition, if we or our collaborators are unable to manufacture our products in sufficient quantities or are unable to obtain regulatory approvals for a manufacturing facility, we may be significantly delayed in our efforts to obtain FDA approval for our products. Also, if we are not able to develop collaborative Table of Contents marketing relationships with licensees or partners, or create an effective sales, marketing, and distribution capability, we may be unable to market our products successfully. Company Information We were organized as a Delaware corporation on October 5, 2006 under the name Pacific Beach Biosciences, Inc. and we changed our corporate name to IASO Pharma Inc. on April 12, 2010. Our principal executive offices are located at 12707 High Bluff Drive, Suite 200, San Diego, California 92130. Our telephone number is (858) 350-4312. Our website address is www.IASOPharma.com. The information on, or accessible through, our website is not part of this prospectus. IASO Pharma Inc. (Exact Name of Registrant as Specified in Its Charter) Delaware 2834 20-5686081 (State or Other Jurisdiction of Incorporation or Organization) (Primary Standard Industrial Classification Code Number) (I.R.S. Employer Identification Number) 12707 High Bluff Drive Suite 200 San Diego, California 92130 (858) 350-4312 (Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant s Principal Executive Offices) Table of Contents The Offering Securities offered by us shares of common stock. Common stock to be outstanding after this offering shares. Over-allotment option We granted the underwriters the right to purchase up to additional shares of common stock from us at the public offering price, less the underwriting discount, within 45 days from the date of this prospectus to cover over-allotments, if any. Use of proceeds We estimate that our net proceeds from this offering, without exercise of the over-allotment option, will be approximately $ million. We intend to use these proceeds to further our clinical development of PB-101, repay the $325,000 outstanding under the IDB Bank line of credit and for working capital and other general corporate purposes. See Use of Proceeds on page 2 6 for more information. Market for our common stock We applied for listing our common stock on NYSE Amex under the symbol IASO .
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+PROSPECTUS SUMMARY This summary highlights selected information contained elsewhere in this prospectus. This summary does not contain all the information that you should consider before deciding to invest in our common stock. You should read the entire prospectus carefully, including
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+PROSPECTUS SUMMARY Because this is only a summary, it does not contain all of the information that may be important to you. You should carefully read the more detailed information contained in this prospectus, including our financial statements and related notes. Our business involves significant risks. You should carefully consider the information under the heading Risk Factors beginning on page 14. In addition, except as otherwise specified, all information in this prospectus and all share and per share information has been adjusted to reflect a reverse stock split that was effected on January 14, 2011 in which every 3.4482759 shares of our common stock was converted into 1 share of our common stock. As used in this prospectus, unless otherwise indicated, the terms we, our, us, Company and China Media refer to China Century Dragon Media, Inc., a Delaware corporation, formerly known as SRKP 25, Inc. ( SRKP 25 ). We conduct our business through Beijing CD Media Advertisement Co., Ltd., a company incorporated under the laws of the People s Republic of China, ( CD Media Beijing ), an entity controlled by our wholly-owned subsidiary, Huizhou CD Media Co., Ltd., a company incorporated under the laws of the People s Republic of China ( CD Media Huizhou ) through a series of contractual arrangements. China or PRC refers to the People s Republic of China. RMB or Renminbi refers to the legal currency of China and $ or U.S. Dollars refers to the legal currency of the United States. Company Overview We are a television advertising company in China that primarily offers blocks of advertising time on certain channels on China Central Television ( CCTV ). We purchase advertising time on certain of the nationally broadcast television channels of CCTV, the state television broadcaster of the PRC and China s largest television network, which we repackage and sell to our customers. We assist our customers in identifying the most appropriate advertising time slots for their television commercials based on the customer s advertising goals and in developing a cost-effective advertising program to maximize their return on their advertising investment. Our goal is to become a leading provider of integrated advertising services in China. We intend to achieve this goal by implementing the following strategies: Maximize our existing resources to increase our profitability. We plan to increase our profitability by (1) expanding our sale force; and (2) strengthening relationships with our existing clients to increase the rate of contract renewals. Expand our purchases of advertising time on CCTV. We intend to increase our purchases of advertising time aired on CCTV to help our clients reach a diverse audience. We also intend to increase our purchase of advertising directly from CCTV which we believe will provide access to a wider variety of advertising opportunities and more favorable pricing terms for our purchase of advertising time than we receive from third-party agencies. We have little experience in purchasing advertising time directly from CCTV and have no specific plans to increase our purchases of advertising time directly from CCTV in the near future. The purchase of advertising time directly from CCTV involves a number of challenges. While there are no restrictions or rules promulgated by CCTV that regulate a company s ability to purchase advertising time directly from CCTV, the majority of the available commercial time offered by CCTV is in large blocks, which will require a large capital commitment for us to acquire directly from CCTV. Additionally, if we purchase this time in large blocks, we could be subject to additional risk as it may be difficult for us to resell such a large amount of advertising time. Develop regional television advertising opportunities. We currently only purchase advertising time aired on CCTV. We intend to build relationships with providers of advertising time aired on certain highly rated regional television networks. We believe that our purchase of advertising time aired on regional networks will allow us to offer our clients new ways to reach their target audience and allow us to expand our client base to advertisers who desire a more targeted marketing strategy. We have no experience in purchasing regional television advertising time and may not be successful in doing so. While we have initiated contact with certain regional television companies to explore the opportunity of entering into arrangements with them to obtain advertising time on their networks, we have not entered into any agreements with any regional television network and have no specific plans to purchase any advertising time from any regional television networks. Expand into new advertising platforms. We intend to expand our media resources in new advertising media platforms, including the Internet, radio, mobile devices and indoor or outdoor flat panel displays. We believe that our expansion into new media platforms will enable us to offer added value to our clients by providing them with an avenue to reach consumers and will strengthen our competitiveness in the advertising industry. We have no experience in any of these media platforms and may not be successful in expanding into these areas. We currently have no specific plans to enter into new advertising platforms in the near future. CALCULATION OF REGISTRATION FEE Proposed Proposed Maximum Maximum Amount of Title of Each Class of Amount To Be Offering Price Aggregate Registration Securities To Be Registered Registered (1) Per Share Offering Price Fee Common Stock, $0.0001 par value per share 1,610,000 (2) $ 7.00 (2) $ 11,270,000 (2) $ 1029.80 (3) Common Stock, $0.0001 par value per share 1,034,403 (4) $ 7.00 (5) $ 7,240,821 (5) $ 590.02 (6) Underwriters Warrants to Purchase Common Stock 70,000 (7) N/A N/A N/A (8) Common Stock Underlying Underwriters Warrants, $0.0001 par value per share 70,000 (9) $ 8.40 (10) $ 588,000 (10) $ 53.72 (11) Total Registration Fee $ 1,673.55 (12) (1) In accordance with Rule 416(a), the Registrant is also registering hereunder an indeterminate number of additional shares of Common Stock that shall be issuable pursuant to Rule 416 to prevent dilution resulting from stock splits, stock dividends or similar transactions. (2) The registration fee for securities to be offered by the Registrant is based on an estimate of the Proposed Maximum Aggregate Offering Price of the securities, and such estimate is solely for the purpose of calculating the registration fee pursuant to Rule 457(o). Includes shares that the Underwriters have the option to purchase from the Registrant to cover over-allotments, if any. (3) The Registrant previously paid registration fees of $655.96 for 1,150,000 shares at a proposed maximum offering price of $8.00 registered at a registration fee rate of $71.30 per million. Also includes registration fees of $373.84 for the registration of 460,000 shares of common stock at a proposed maximum offering price of $7.00 per share at a registration fee rate of $116.10 per million. (4) This Registration Statement also covers the resale under a separate resale prospectus (the Resale Prospectus ) by selling stockholders of the Registrant of up to 1,034,403 shares of Common Stock previously issued to the selling stockholders as named in the Resale Prospectus. (5) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457. (6) The registrant previously paid registration fees of $590.02 for these shares based on a proposed maximum offering price of $8.00 per share at a registration fee of $71.30 per million. (7) Represents the maximum number of warrants, each of which will be exercisable at a percentage of the per share offering price, to purchase the Registrant s common stock to be issued to the Underwriters in connection with the public offering. (8) In accordance with Rule 457(g) under the Securities Act, because the shares of the Registrant s common stock underlying the Underwriters warrants are registered hereby, no separate registration fee is required with respect to the warrants registered hereby. (9) Represents the maximum number of shares of the Registrant s common stock issuable upon exercise of the Underwriters warrants. (10) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(g) under the Securities Act, based on an estimated maximum exercise price of $8.40 per share, or 120% of the maximum offering price. (11) Includes previously paid registration fees of $34.22 for 50,000 shares at a proposed maximum offering price of $9.60 per share registered at a registration fee rate of $71.30 per million and registration fees of $11.98 for the registration of 20,000 shares at a proposed maximum offering price of $8.40 per share at a registration fee rate of $116.10 per million. (12) Previously paid. Pursue acquisitions to broaden our service offerings and advertising platforms. We will consider strategic acquisitions that will provide us with a broader range of service offerings and access to new markets and new advertising media platforms. We currently have no plans to pursue any acquisitions. Our business is subject to a number of risks and uncertainties, including risks related to our dependence on CCTV and our ability to continue obtaining advertising time slots on CCTV; the continued strength of CCTV s market position; CCTV s continued use of third party agencies to sell advertising time; our dependence on a limited number of suppliers for our advertising time; our lack of long-term contracts with our customers; our ability to adapt to changing advertising trends and preferences of advertisers, television channels and viewers; our corporate structure based on contractual arrangements with CD Media Beijing; our limited ability to adjust the fees we charge for our services; and PRC regulations regarding the advertising industry and advertising content in the PRC. Investors should carefully consider these risks and all of the risks discussed in Risk Factors beginning on page 14 of this prospectus before investing in our securities. Corporate Information We were incorporated in the State of Delaware on December 17, 2007. We were originally organized as a blank check shell company to investigate and acquire a target company or business seeking the perceived advantages of being a publicly held corporation. On April 30, 2010, we (i) closed a share exchange transaction, described below, pursuant to which we became the 100% parent of CD Media (Holding) Co., Limited, a British Virgin Islands corporation ( CD Media BVI ), (ii) assumed the operations of CD Media BVI and its subsidiaries, including CD Media Huizhou, and (iii) changed our name from SRKP 25, Inc. to China Century Dragon Media, Inc. CD Media Huizhou controls CD Media Beijing through contractual arrangements. While CD Media Huizhou has no direct equity ownership in CD Media Beijing, through the contractual agreements CD Media Huizhou receives the economic benefits of CD Media Beijing s operations. Our principal executive offices and corporate offices are located at Room 801, No. 7, Wenchanger Road, Jiangbei, Huizhou City, Guangdong Province, China. Our telephone number is 0086-0752-3138789. We are a reporting company under Section 13 of the Securities Exchange Act of 1934, as amended (the Exchange Act ). Our shares of common stock are not currently listed or quoted for trading on any national securities exchange or national quotation system. NYSE Amex has approved the listing of our common stock under the ticker symbol CDM , subject to official notice of issuance and our being in compliance with all applicable listing standards on the date it begins trading. Recent Events Reverse Stock Split On October 27, 2010, our Board of Directors and stockholders approved an amendment to our Certificate of Incorporation to effect a 1-for-3.4482759 reverse stock split of all of our issued and outstanding shares of common stock (the Reverse Stock Split ). On January 14, 2011, we filed the amendment to the Certificate of Incorporation with the Secretary of the State of Delaware. The par value and number of authorized shares of our common stock remained unchanged. All references to number of shares and per share amounts included in this prospectus give effect to the Reverse Stock Split. The number of shares and per share amounts included in the consolidated financial statements and the accompanying notes, starting on page F-1, have been adjusted to reflect the Reverse Stock Split retroactively. Unless otherwise indicated, all outstanding shares and earnings per share information contained in this prospectus give effect to the Reverse Stock Split. Share Exchange Effective as of March 31, 2010, we entered into a share exchange agreement with CD Media BVI, CD Media Huizhou, CD Media Beijing and the shareholders of CD Media BVI. Effective as of April 23, 2010, the parties to the share exchange agreement entered into an amended and restated share exchange agreement (the Exchange Agreement ). Pursuant to the Exchange Agreement, we agreed to issue an aggregate of 5,539,000 shares of our common stock in exchange for all of the issued and outstanding securities of CD Media BVI (the Share Exchange ). On April 30, 2010, the Share Exchange closed and CD Media BVI became our wholly-owned subsidiary and we immediately changed our name from SRKP 25, Inc. to China Century Dragon Media, Inc. We issued a total of 5,519,135 shares of common stock to the shareholders of CD Media BVI and 19,865 shares to Richever Limited, their designee and in exchange for all of the issued and outstanding shares of CD Media BVI. Richever Limited is an unaffiliated third party who was not a shareholder of CD Media BVI prior to the Share Exchange. The shareholders issued such shares to Richever Limited to satisfy an obligation owed to a partner of its PRC legal counsel, Han Kun Law Offices ( Han Kun ), who had personally paid an amount owed by the Company to Han Kun for legal services. The Registrant amends this registration statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this registration statement shall hereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, or until the registration statement shall become effective on such date as the Commission, acting pursuant to Section 8(a), may determine. Prior to the closing of the Share Exchange and the Private Placement, as described below, our stockholders canceled an aggregate of 1,290,615 shares held by them such that there were 767,345 shares of common stock outstanding immediately prior to the Share Exchange. Our stockholders also canceled warrants to purchase an aggregate of 1,646,349 shares of common stock such that the stockholders held warrants to purchase an aggregate of 411,611 shares of common stock immediately prior to the Share Exchange. Each warrant is entitled to purchase one share of our common stock at $0.000344 per share and expires five years from the closing of the Share Exchange. Immediately after the closing of the Share Exchange and closing of the Private Placement, we had 7,340,748 outstanding shares of common stock, no shares of Preferred Stock, no options, and warrants to purchase 411,611 shares of common stock. The stockholders did not receive any consideration for the cancellation of the shares and warrants. The cancellation of the shares and warrants was accounted for as a contribution to capital. The number of shares and warrants cancelled was determined based on negotiations with the security holders of SRKP 25 and CD Media BVI. The number of shares and warrants cancelled by SRKP 25 was not pro rata, but based on negotiations between the security holders and SRKP 25. As indicated in the Share Exchange Agreement, the parties to the transaction acknowledged that a conflict of interest existed with respect to the negotiations for the terms of the Share Exchange due to, among other factors, the fact that WestPark Capital, Inc. ( WestPark Capital ) was advising CD Media BVI in the transaction. As further discussed below in Recent Events Private Placement, certain of the controlling stockholders and control persons of WestPark Capital were also, prior to the completion of the Share Exchange, controlling stockholders and control persons of SRKP 25. Under these circumstances, the shareholders of CD Media BVI and the stockholders of SRKP 25 negotiated an estimated value of CD Media BVI and its subsidiaries, an estimated value of the shell company (based on similar recent transactions by WestPark Capital involving similar public shells), and the mutually desired capitalization of the company resulting from the Share Exchange. With respect to the determination of the amounts of shares and warrants cancelled, the value of the shell company was derived primarily from its utility as a public company platform, including its good corporate standing and its timely public reporting status, which we believe allowed us to raise capital at an appropriate price per share and subsequently list our stock on a national securities exchange. We believe that investors may have been unwilling to invest in our company in the Private Placement (as that term is defined below) on acceptable terms, if at all, in the absence of an investment in a public reporting vehicle and thus required us to effect the Share Exchange as a condition to the Private Placement. We did not consider registering our own securities directly as a viable option for accessing the public markets. We felt that private financing absent a reverse merger was not immediately available to us and we chose the structure offered by WestPark as the best option to becoming publicly listed on a national securities exchange. The services provided by WestPark Capital were not a consideration in determining this aspect of the transaction. Under these circumstances and based on these factors, the shareholders of CD Media BVI and the stockholders of SRKP 25 agreed upon the amount of shares and warrants to be cancelled. Further to such negotiations, we paid a $215,750 success fee to WestPark Capital for services provided in connection with the Share Exchange, including coordinating the share exchange transaction process, interacting with principals of the shell corporation and negotiating the definitive purchase agreement for the shell, conducting a financial analysis of CD Media BVI, conducting due diligence on CD Media BVI and its subsidiaries and managing the interrelationships of legal and accounting activities. All of the fees due to WestPark Capital in connection with the Share Exchange have been paid as of the date of this prospectus. Based on an estimated per share offering price of $5.25, the 767,345 shares retained by the SRKP 25 stockholders had an implied monetary value of approximately $4.0 million. Assuming exercise of the 411,611 warrants also retained by the SRKP 25 stockholders, 1,178,956 shares would have been retained by the SRKP 25 stockholders with an implied monetary value of approximately $6.2 million. The implied monetary value of the retained shares was calculated based on an estimated $5.25 per share offering price, without regard to liquidity, marketability, or legal or resale restrictions; accordingly, such amounts should not be considered as an indication of the fair value of the retained shares. The transactions contemplated by the Exchange Agreement, as amended, were intended to be a tax-free contribution and/or reorganization pursuant to the provisions of Sections 351 and/or 368(a) of the Internal Revenue Code of 1986, as amended. Private Placement On April 30, 2010, concurrently with the closing of the Share Exchange, we closed a private placement of shares of common stock (the Private Placement ). Pursuant to subscription agreements entered into with the investors, we sold an aggregate of 1,034,403 shares of common stock at $5.17 per share, for gross proceeds of approximately $5.35 million. We paid WestPark Capital a commission equal to 10.0% with a non-accountable fee of 4.0% of the gross proceeds from the Private Placement. We also agreed to retain WestPark Capital for a period of five months following the closing of the Private Placement to provide us with financial consulting services for which we paid WestPark Capital $4,000 per month. Out of the proceeds of the Private Placement, we paid $300,000 to Keen Dragon Group Limited, a third party unaffiliated with CD Media BVI, the Company, or WestPark Capital ( Keen Dragon ) for services as an advisor to the Company. Keen Dragon conducts advisory services exclusively for Chinese companies and is paid directly by such Chinese companies. It provides on-the-ground support that WestPark Capital cannot provide for Chinese entities seeking to access the U.S. capital markets, employs only Mandarin speakers and helps bridge the cultural gap for many Chinese entities in the same type of deals. WestPark Capital does not pay Keen Dragon referral fees or other consideration for providing services to the Company. There neither are nor were any arrangements between WestPark Capital and Keen Dragon regarding their representation of, or services provided to, the Company. We conducted the Private Placement in order to raise money for working capital and to pay for anticipated expenses to be incurred in connection with the public offering contemplated by this offering. We agreed to file a registration statement covering the common stock sold in the Private Placement within 30 days of the closing of the Private Placement pursuant to the subscription agreement entered into with each investor and to cause such registration statement to be declared effective by the SEC no later than 150 days from the date of filing or 180 days from the date of filing if the registration statement is subject to a full review by the SEC. We filed the registration statement on May 14, 2010. Each of the investors in the Private Placement also entered into a lock-up agreement pursuant to which they agreed that (i) if the proposed public offering that we expect to conduct is for $10 million or more, then the investors would not be able to sell or transfer their shares until at least six months after the public offering s completion, and (ii) if the offering is for less than $10 million, then one-tenth of their shares would be released from the lock-up restrictions ninety days after the offering and there would be a pro rata release of the shares thereafter every 30 days over the following nine months. WestPark Capital, Inc. may release some or all of the shares from the lock-up restrictions earlier, however, any such early release shall be made pro rata with respect to all investors shares acquired in the Private Placement. We currently intend this offering to be in an amount less than $10 million. However, there can be no assurance of the actual size of this offering. Each of the stockholders and warrantholders of SRKP 25 prior to the completion of the Share Exchange (the Existing Securityholders ) will enter into an amended and restated lock-up agreement pursuant to which they will agree that they will not be able to sell or transfer their shares until at least six months after the public offering s completion. The Underwriters may release some or all the shares from the lock-up restrictions earlier. Some of the controlling stockholders and control persons of WestPark Capital were also, prior to the completion of the Share Exchange, controlling stockholders and control persons of SRKP 25, Inc., our predecessor, including Richard Rappaport, who is the Chief Executive Officer of the WestPark Capital and was the President and a significant stockholder of SRKP 25, Inc. prior to the Share Exchange, and Anthony C. Pintsopoulos, who is the President and Treasurer of WestPark Capital and was one of the controlling stockholders and an officer and director of SRKP 25, Inc. prior to the Share Exchange. Mr. Rappaport is the sole owner of the membership interests in the parent of WestPark Capital. Kevin DePrimio, Robert Schultz and Jason Stern, each employees of WestPark Capital, were also stockholders of SRKP 25, Inc. and are also our stockholders. Each of Messrs. Rappaport and Pintsopoulos resigned from all of their executive and director positions with the Company upon the closing of the Share Exchange. Mr. Rappaport beneficially owns approximately 11.5% of our outstanding shares as of the date of this prospectus, and Messrs. Rappaport, Pintsopoulos, DePrimio, Schultz and Stern collectively beneficially own approximately 13.2% of our outstanding shares as of the date of this prospectus. Certain Relationships and Related Transactions The table below identifies all the benefits that WestPark Capital and its affiliates have received and will receive in connection with the Share Exchange, the Private Placement and this offering. $ Other Share Exchange 235,750 (1) Registration rights for an aggregate of 650,941 shares and 366,034 shares underlying warrants (2) (3) Retained Shares and Warrants 5,339,119 (4) Private Placement 789,039 (5) Public Offering [______] (6) Warrants to purchase 70,000 shares of common stock at an exercise price of $6.30 per share Total [______] (1) Includes a success fee of $215,750 paid to WestPark Capital for services provided in connection with the Share Exchange and $20,000 for consulting fees paid to WestPark by the Company for five months of consulting services provided to the Company by WestPark. (2) Pursuant to a Registration Rights Agreement executed in connection with the closing of the Share Exchange, affiliates of WestPark Capital received registration rights for an aggregate of 650,941 shares and 366,034 shares underlying warrants. We originally agreed to include such shares in a subsequent registration statement that was to be filed on or before November 24, 2010 (the Required Filing Date ), which is 10 days after the end of the six-month period that immediately followed the date on which we filed the registration statement of which this prospectus is a part. We have not yet filed the subsequent registration statement to cover these shares and have agreed with the other parties to the Registration Rights Agreement to extend the Required Filing Date such that we will file the registration statement covering these shares as soon as practicable after this offering. The shareholders of CD Media BVI immediately prior to the date of the Share Exchange and their designee holding an aggregate of 5,539,000 shares of our common stock have agreed with the Underwriters not to directly or indirectly sell, offer, contract or grant any option to sell, pledge, transfer (excluding intra-family transfers, transfers to a trust for estate planning purposes or to beneficiaries of officers, directors and shareholders upon their death), or otherwise dispose of or enter into any transaction which may result in the disposition of any shares of our common stock or securities convertible into, exchangeable or exercisable for any shares of our common stock, without the prior written consent of the Underwriters, for a period of 24 months after the date of this prospectus. (3) Based on an estimated per share offering price of $5.25, the 650,941 shares retained by SRKP 25 stockholders who are affiliates of WestPark Capital have an implied monetary value of approximately $3.4 million. Assuming the exercise of the 366,034 warrants also retained by the SRKP 25 stockholders who are affiliates of WestPark Capital, 1,016,975 shares would have been retained by such stockholders with an implied monetary value of approximately $5.3 million. The implied monetary value of the retained shares was calculated based on an estimated $5.25 per share offering price, without regard to liquidity, marketability, the likelihood of this offering being consummated, or legal or resale restrictions; accordingly, such amounts should not be considered an indication of the fair value of the retained shares. (4) Represents the implied aggregate monetary value of 650,941 shares and 366,034 shares underlying warrants, assuming the exercise of warrants retained by WestPark Capital and its affiliates. The implied monetary value of the retained shares was calculated based on a $5.25 per share offering price of the common shares to be sold in this offering, without regard to liquidity, marketability or legal or sale restrictions; accordingly, such amount should not be considered as an indication of the fair value of the retained shares and warrants. (5) Represents commissions of $535,028, a non-accountable expense allowance of $214,011, and a reimbursement of WestPark Capital s fees for legal counsel of $40,000. (6) Represents underwriting discounts and commissions of $[__], plus a non-accountable fee of $[_____] and a reimbursement of $40,000 for WestPark Capital s legal fees. EXPLANATORY NOTE This Registration Statement contains two prospectuses, as set forth below. Public Offering Prospectus. A prospectus to be used for the public offering by the Registrant (the Public Offering Prospectus ) of up to 1,400,000 shares of the Registrant s common stock (in addition to 210,000 shares that may be sold upon exercise of the Underwriters over-allotment option, if any) through the Underwriters named on the cover page of the Public Offering Prospectus. We are also registering the warrants and shares of common stock underlying the warrants to be received by the Underwriters in this offering. Resale Prospectus. A prospectus to be used for the resale by selling stockholders of up to 1,034,403 shares of the Registrant s common stock (the Resale Prospectus ). The Resale Prospectus is substantively identical to the Public Offering Prospectus, except for the following principal points: they contain different outside front covers; they contain different Offering sections in the Prospectus Summary section beginning on page 3; they contain different Use of Proceeds sections on page 39; the Capitalization and Dilution sections on pages 41 and 41, respectively, of the Public Offering Prospectus are deleted from the Resale Prospectus; a Selling Stockholder section is included in the Resale Prospectus beginning on page 88A; references in the Public Offering Prospectus to the Resale Prospectus will be deleted from the Resale Prospectus; the Underwriting section from the Public Offering Prospectus on page 88 is deleted from the Resale Prospectus and a Plan of Distribution is inserted in its place; the Legal Matters section in the Resale Prospectus on page 91 deletes the reference to counsel for the Underwriters; and the outside back cover of the Public Offering Prospectus is deleted from the Resale Prospectus. The Registrant has included in this Registration Statement, after the financial statements, a set of alternate pages to reflect the foregoing differences of the Resale Prospectus as compared to the Public Offering Prospectus. In addition, except as otherwise specified, all information in the Public Offering Prospectus and Resale Prospectus, including share and per share information, has been adjusted to reflect a reverse stock split that the Registrant effected on January 14, 2011 pursuant to which every 3.4482759 shares of the Registrant s common stock were converted into 1 share of the Registrant s common stock Corporate Structure The corporate structure of the Company is illustrated as follows: Our subsidiary, CD Media (HK) Limited ( CD Media HK ), is a holding company with no operations at this time. Its operations are not subject to PRC laws and regulations. Contractual Arrangements PRC laws, rules and regulations impose special requirements on foreign investors having ownership of PRC companies providing advertising services in the PRC. In order to invest in the advertising industry in the PRC, a foreign investor must have at least two years of direct operations in the advertising industry outside the PRC. We are a Delaware corporation and have not had any direct operations in the advertising industry outside of China. Therefore, we are unable to own a direct interest in a company providing advertising services in the PRC. Our PRC subsidiary, CD Media Huizhou, is a wholly foreign-owned enterprise (a WFOE ). The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission becomes effective. This prospectus is not an offer to sell these securities and we are not soliciting offers to buy these securities in any state where the offer or sale is not permitted. Pursuant to the Exclusive Business Cooperation Agreement (as described below) between CD Media Huizhou, CD Media Beijing and each of the shareholders of CD Media Beijing, CD Media Huizhou provides technical and consulting services to CD Media Beijing. Technical and consulting services is a general description of the various services provided by CD Media Huizhou to CD Media Beijing, and include providing cultural consulting to and designing enterprise images for CD Media Beijing. CD Media Huizhou received a business license on November 2, 2009 which permits it to design, handle (as agent) and organize cultural communications (excluding news releases and making advertisements), to provide cultural consulting services and to design images for enterprises. The license does not allow it to provide advertising services, the approval authority of which business is with the competent administration of industry and commerce. The scope of CD Media Huizhou s business license is extensive enough in its language to cover any necessary services to be provided by CD Media Huizhou to CD Media Beijing under the Exclusive Business Cooperation Agreement, and CD Media Huizhou does not need any special administrative pre-approvals for it to engage in such activities, as long as it does not directly engage in advertising business which is not stated in its business license. Due to the PRC regulations on foreign ownership of PRC companies engaged in the Chinese advertising industry, we cannot directly operate our advertising business through CD Media Huizhou. Therefore, we operate our advertising operations through contractual arrangements with CD Media Beijing. On July 29, 2010, HuiHua Li, HaiMing Fu and ZhiFeng Yan (collectively, the Beijing Shareholders ) executed several share transfer agreements and acquired an aggregate of 100% of the equity interest of CD Media Beijing from the former shareholders of CD Media Beijing, Wen Xu, Yongxia Cheng and Hongbo Zheng (collectively, the Former Shareholders ). Beijing Shareholders equity interest in CD Media Beijing was later registered with the local competent authority on August 6, 2010. HuiHua Li is the Chairman of the Board of the Company; HaiMing Fu is the Chief Executive Officer of the Company; and ZhiFeng Yan is a director of the Company. The Former Shareholders are each relatives of the original shareholders of CD Media Beijing, ZhiFeng Yan, Tianyi Wang and HaiMing Fu, and were chosen to comply with the Company s corporate structure requirements and regulations promulgated by the PRC State Administration of Foreign Exchange ( SAFE ). The Former Shareholders transferred the equity interest of CD Media Beijing to the Beijing Shareholders to align the equity ownership of CD Media Beijing with the management of the Company and to ensure compliance by the shareholders of CD Media Beijing with the contractual arrangements described below. Each of the Beijing Shareholders entered into a series of contractual arrangements that provide us with effective control over the operations of CD Media Beijing and of the related economic benefits of CD Media Beijing in consideration for the services provided by CD Media Huizhou. We intend to continue our business operations in China upon the expiration of these contractual arrangements by renewing them or entering into new contractual arrangements if the then current PRC law does not allow us to directly operate advertising businesses in China. We believe that, under these contractual arrangements, we have sufficient control over CD Media Beijing to renew or enter into new contractual arrangements prior to the expiration of the current arrangements on terms that would enable us to continue to operate our business in China after the expiration of the current arrangements. Exclusive Business Cooperation Agreement. Pursuant to the exclusive business cooperation agreement entered into on March 30, 2010 between CD Media Huizhou and CD Media Beijing, CD Media Huizhou provides technical and consulting services related to the business operations of CD Media Beijing. As consideration for such services, CD Media Beijing has agreed to pay an annual service fee to CD Media Huizhou in an amount equal to a certain percentage (the Rate of Service ) of its income for such year. The parties will agree on the Rate of Service after further negotiations, which may be adjusted from time to time. The term of this agreement is 10 years from the date thereof. CD Media Beijing may terminate the agreement upon CD Media Huizhou s gross negligence or commission of a fraudulent act against CD Media Beijing. CD Media Huizhou may terminate the agreement at any time upon giving 30 days prior written notice to CD Media Beijing. The annual service fee and Rate of Service has not yet been determined because (1) such fee is calculated based on the audited annual income of CD Media Beijing, which can only be determined after the completion of the annual audit of CD Media Beijing; and (2) it allows CD Media Huizhou and CD Media Beijing to adjust the amount of funds distributed from CD Media Beijing to CD Media Huizhou from time to time based on the operational results of and financial needs of CD Media Beijing and CD Media Huizhou. The parties will determine the amount of the service fee annually based on the a variety of factors, including CD Media Beijing s net profits and CD Media Beijing s working capital needs. The fee will also be structured to assure that CD Media Beijing complies with PRC Corporate Law, which requires a company organized in the PRC to set aside at least 10.0% of its after-tax net profits based on PRC accounting standards each year to its statutory reserves until the accumulative amount of such reserves reaches 50.0% of its registered capital. Because each of the shareholders of CD Media Beijing has provided a power of attorney (as described below) in which he/she provides CD Media Huizhou the power to act as his/her exclusive agent with respect to all matters related to his/her ownership of the equity interest in CD Media Beijing, CD Media Huizhou alone may decide whether to defer payment of the annual service fee. Exclusive Option Agreement. CD Media Huizhou entered into option agreements on July 30, 2010 with each of the Beijing Shareholders, as well as CD Media Beijing itself, pursuant to which CD Media Huizhou has an exclusive option to purchase, or to designate another qualified person to purchase, to the extent permitted by PRC law and foreign investment policies, part or all of the equity interests in CD Media Beijing owned by each of the Beijing Shareholders. To the extent permitted by the PRC laws, the purchase price for the entire equity interest shall equal the actual capital contributions paid into the registered capital of CD Media Beijing by each of the Beijing Shareholders. Each of the exclusive option agreements has a 10 year term. Power of Attorney. Each of the Beijing Shareholders signed a power of attorney dated July 30, 2010 providing CD Media Huizhou the power to act as his/her exclusive agent with respect to all matters related to his/her ownership of the ownership interest in CD Media Beijing, including without limitation to: 1) attend the shareholders meetings of CD Media Beijing; 2) exercise all the shareholder's rights and shareholder's voting rights, including the sale, transfer, pledge or disposition of such shareholder s shareholding in part or in whole; and 3) designate and appoint on behalf of such shareholders the legal representative, the executive director and/or director, supervisor, the chief executive officer and other senior management members of CD Media Beijing. Equity Interest Pledge Agreement. Pursuant to equity pledge agreements dated July 30, 2010, each of the Beijing Shareholders pledged his/her equity interest in CD Media Beijing to CD Media Huizhou to secure CD Media Beijing s obligations under the exclusive business cooperation agreement as described above. In addition, the Beijing Shareholders agreed not to transfer, sell, pledge, dispose of or create any encumbrance on any equity interests in CD Media Beijing that would affect CD Media Huizhou s interests. The equity pledge agreement will expire when CD Media Beijing fully performs its obligations under the exclusive business cooperation agreement described above. We registered the equity pledges with the Mentougou Branch of Beijing Administration of Industry and Commerce on August 19, 2010. In the opinion of Han Kun Law Offices, our PRC legal counsel: the ownership structure of CD Media Beijing and CD Media Huizhou complies with current PRC laws, rules and regulations; each agreement under our contractual arrangements with CD Media Beijing and its shareholders is valid and binding on all parties to these arrangements, and do not violate current PRC laws, rules or regulations; and the business operations of CD Media Huizhou and CD Media Beijing comply with current PRC laws, rules and regulations. Our PRC legal counsel has, however, advised us that the PRC regulatory authorities may take a view that is contrary to the above opinions of our PRC legal counsel because contracts governed by PRC law are interpreted using a substance-over-form principle which prohibits such parties from using their contractual arrangements in legal form to violate the compulsory rules of PRC laws and regulations or to cover up any illegal purpose. Although none of the agreements comprising the contractual arrangements described above does by itself violate PRC laws and regulations, the PRC regulatory authorities may, by taking them as a whole, view the structure established by the contractual arrangements as done to avoid the application of certain restrictions or requirements on foreign investment in the PRC advertising industry and determine such structure to be in violation of the substance-over-form principle. However, our PRC counsel believes that the uncertainty surrounding its opinions and the likelihood that the PRC regulatory authorities would view the contractual arrangements as violating the substance-over-form principle is low due to (i) the fact that many other comparable companies have used similar contractual arrangements to establish a similar corporate structure for the successful registration of their securities with the SEC and listing of their securities on a U.S national securities exchange and (ii) the lack of practical procedures and standards of penalties or sanctions for the competent PRC authorities to take against the Company by challenging the legal basis of the contractual arrangements based on the substance-over-form principle. Additionally, due to the vagueness and uncertainty surrounding PRC laws and regulations, the PRC authorities may issue new rules and regulations that could be applied retroactively and may overturn our PRC legal counsel s opinion. Neither we nor our PRC legal counsel can predict whether and when PRC government authorities will issue any such new rules and regulations. 1,400,000 Shares China Century Dragon Media, Inc. Common Stock If the PRC government determines that the above-described agreements that establish the structure for operating our PRC advertising businesses do not comply with applicable restrictions on foreign investment in the advertising industry, we could be subject to severe penalties including being prohibited from continuing operation. If CD Media Beijing or the Beijing Shareholders fail to perform their obligations under these contractual arrangements, we would not be able to continue our business operations in China or to derive economic benefits from operations of CD Media Beijing and may incur substantial costs to enforce such agreements and rely on legal remedies under PRC law, including seeking specific performance or injunctive relief, and claiming damage. For further information on the risks related to our contractual arrangement, see Risk Factors. See Risk Factors Risks Related to Our Corporate Structure. This is a public offering of our common stock. We are a reporting company under Section 13 of the Securities Exchange Act of 1934, as amended. Our shares of common stock are not currently listed or quoted for trading on any national securities exchange or national quotation system. NYSE Amex has approved the listing of our common stock under the ticker symbol CDM , subject to official notice of issuance and our being in compliance with all applicable listing standards on the date it begins trading. We are offering all of the 1,400,000 shares of our common stock offered by this prospectus. We expect that the public offering price of our common stock will be $5.25 per share. Investing in our common stock involves a high degree of risk. Before buying any shares, you should carefully read the discussion of material risks of investing in our common stock in Risk Factors beginning on page 14 of this prospectus. Neither the U.S. Securities and Exchange Commission nor any state securities commission has approved or disapproved of anyone s investment in these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. Per Share Total Public offering price $ [___ ] $ [___ ] Underwriting discounts and commissions $ [___ ] $ [___ ] Proceeds, before expenses, to China Century Dragon Media, Inc. $ [___ ] $ [___ ] The Underwriters have a 45-day option to purchase up to 210,000 additional shares of common stock at the public offering price solely to cover over-allotments, if any, if the Underwriters sell more than 1,400,000 shares of common stock in this offering (the Over-allotment Shares ). If the Underwriters exercise this option in full, the total underwriting discounts and commissions will be $[__], and total proceeds, before expenses, will be $[__]. We have agreed to pay the Underwriters an aggregate non-accountable expense allowance of 2.5% of the gross proceeds of this offering or $[__], based on a public offering price of $[__] per share. The Underwriters will also receive warrants to purchase a number of shares equal to 5% of the shares of our common stock sold in connection with this offering, or 70,000 shares, exercisable at a per share price equal to 120% of the offering price of this offering. The Underwriters are offering the common stock as set forth under Underwriting. Delivery of the shares will be made on or about [__________], 2011. WestPark Capital, Inc. I-Bankers Securities, Inc. Joseph Gunnar & Co., LLC The Date of this Prospectus is ____________________, 2011 The Offering Common stock we are offering 1,400,000 shares (1) Common stock included in Underwriters option to purchase shares from us to cover over-allotments, if any 210,000 shares Common stock outstanding after the offering 8,740,748 shares (2) Offering price $5.25 per share (estimate) Use of proceeds We intend to use approximately one-fifth of the net proceeds from this offering to invest in our present advertising business to obtain more advertising time, two-fifths of the net proceeds of this offering to obtain advertising time and cooperation rights on regional television stations; and two fifths of the proceeds for general corporate purposes. See Use of Proceeds on page 39 for more information on the use of proceeds. Conflicts of interest Affiliates of WestPark Capital beneficially own approximately 13.2% of our company and, therefore, WestPark Capital has a conflict of interest under FINRA Rule 2720. Accordingly, this offering is being conducted in accordance with FINRA Rule 2720, which requires that a qualified independent underwriter as defined in FINRA Rule 2720 participate in the preparation of the registration statement and prospectus and exercise its usual standards of due diligence in respect thereto. Joseph Gunnar & Co., LLC is assuming the responsibilities of acting as the qualified independent underwriter in the offering. See Underwriting Conflicts of Interest on page 90 for more information. Risk factors Investing in these securities involves a high degree of risk. As an investor you should be able to bear a complete loss of your investment. You should carefully consider the information set forth in the Risk Factors section beginning on page 14. Proposed symbol NYSE Amex has approved the listing of our common stock under the ticker symbol CDM , subject to official notice of issuance and our being in compliance with all applicable listing standards on the date it begins trading. Concurrent resale registration Upon the effectiveness of the Registration Statement of which this prospectus forms a part, 1,034,403 shares of our common stock will be registered for resale by the holders of such shares. None of these securities are being offered by us and we will not receive any proceeds from the sale of these shares. For additional information, see above under Prospectus Summary Recent Events. ____________________ (1) Excludes (i) up to 70,000 shares of common stock underlying warrants to be received by the Underwriters in this offering, and (ii) 1,034,403 shares of our common stock held by the selling stockholders that are concurrently being registered with this offering for resale by such selling stockholders under a separate prospectus, and (iii) the 210,000 shares of our common stock that we may issue upon the Underwriters over-allotment option exercise. (2) Based on 7,340,748 shares of common stock issued and outstanding as of the date of this prospectus and (ii) 1,400,000 shares of common stock issued in the public offering. Excludes (i) the Underwriters warrants to purchase a number of shares equal to 5% of the shares of common stock sold in this offering excluding the shares sold in the over-allotment option, and (ii) 411,611 shares of common stock underlying warrants that are exercisable at $0.000344. Excludes the 210,000 shares of our common stock that we may issue upon the Underwriters over-allotment option exercise. (1) Based on 7,340,748 shares of common stock issued and outstanding as of the date of this prospectus, and excludes (i) 1,400,000 shares of common stock being registered for issuance in a public offering, (ii) the underwriters warrants to purchase up to 70,000 shares of common stock, and (iii) 411,611 shares of common stock that are issuable upon the exercise of outstanding warrants, exercisable at $0.000344 per share. The Selling Stockholders have agreed not to sell any of these shares until [_______], 2011, which is six months after closing of the public offering that we conducted on [_______], 2011. WestPark Capital, Inc., the placement agent in the private placement in which the Selling Stockholders acquired their shares and an underwriter to the public offering, in its discretion, may also release some or all the shares from the lock-up restrictions earlier. [INSIDE FRONT COVER]
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001423542_skullcandy_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001423542_skullcandy_prospectus_summary.txt
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@@ -0,0 +1 @@
+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001424844_southwest_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001424844_southwest_prospectus_summary.txt
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+The items in the following summary are described in more detail later in this Prospectus. You should carefully read the more detailed information in this Prospectus, especially the risks of investing in our Notes discussed under Risk Factors, as well as the financial statements and the related notes included elsewhere in this Prospectus. All references in this Prospectus to we, us, our and Company refer to Southwest Iowa Renewable Energy, LLC, unless the context requires otherwise. We report our financial information on the basis of a September 30 fiscal year end. The Company We are an Iowa limited liability company formed in 2005 to construct and operate a 110 million gallon per year capacity ethanol plant. We began producing ethanol in February, 2009 and sell our ethanol, modified wet distillers grains with solubles ( WDGS ) and corn syrup in the continental United States. We sell our dried distillers grains with solubles ( DDGS and collectively with WDGS, Distillers Grains ) in the continental United States, Mexico, and the Pacific Rim. Our plant was constructed by ICM, Inc. ( ICM ). Our production facility (the Facility ) is located in Pottawattamie County in southwestern Iowa. While we operate in an extremely competitive business which is presently facing challenging commodity price pressures, we believe that we possess certain characteristics which separate us from our competition. First, our Facility is one of only 14 ethanol plants in the United States which utilizes steam for its primary energy source. The vast majority of ethanol plants in the United States use natural gas to produce ethanol and dry distillers grains, which requires them to pay more for their chief energy input, while at the same time increasing their exposure to the volatile natural gas markets. Our Facility s usage of steam as its chief energy input reduces both our exposure to energy input market volatility and our operating costs. Second, we have partnered with significant participants in the ethanol and grain businesses ICM and Bunge North America, Inc. (a wholly-owned subsidiary of Bunge Limited, a publicly-traded, global agribusiness company) ( Bunge ), both of whom hold a significant amount of our equity. We believe these partnerships make us more competitive by providing us with critical support and services in the areas of risk management, quality control, experienced commodity trading, and experience in the implementation of the latest technologies. Purpose of the Offering We have an outstanding Negotiable Subordinated Term Loan Note in favor of ICM (the ICM Note ) which had a principal balance of $ 10,902,885 on Septemb e r 30, 2011. The ICM Note is convertible at ICM s option into Series C Units at $3,000 per unit, and also requires us to pay ICM 24% of the proceeds we receive from any debt or equity issuance (which includes the Notes issued hereby) in satisfaction of the principal outstanding under the ICM Note. We have an outstanding Subordinated Term Loan Note (the Holdings Note, together with the ICM Note, the Convertible Debt ) in favor of Bunge N.A. Holdings, Inc. ( Holdings, together with ICM, the Lenders ), a Bunge affiliate, which had a principal balance of $31,663,730 as of September 30, 2011. The Holdings Note is convertible at Holdings option into Series U Units at a conversion price of $3,000 per unit, and also requires us to pay Holdings 76% of the proceeds we receive from any debt or equity issuance (which includes the Notes issued hereby) in satisfaction of the principal outstanding under the Holdings Note. The Notes are convertible into our Series A Units at the same conversion ratio at which the Lenders are entitled to convert the Convertible Debt into Units. We wish to offer our existing Members and other investors the opportunity to reduce the Convertible Debt with the proceeds from the sale of the Notes issued in this offering, as well as the opportunity to limit any dilution they may experience should the Lenders convert any of the Convertible Debt to equity in the Company. Under the Convertible Debt, 24% and 76% of the proceeds from this offering must be used to repay principal of the ICM Note and the Holdings Note, respectively. We anticipate issuing $10,000,000 in principal amount of Notes in this offering, but are registering $14,251,000 of Notes to account for additional $2,794,944 in Note principal we intend to make interest payments in-kind ("PIK"), based on an assumed 7.9 3 % interest rate, as well as for additional in-kind interest . Therefore, if $10,000,000 of Notes are sold in this offering and we incur estimated offering costs of $225,000, approximately $2,346,000 and $7,429,000 would be used to reduce the ICM Note and the Holdings Note, respectively. If we issue additional Notes or are required to pay more interest than we estimate, we may need to register the sale of additional Notes and Series A Units under a separate registration statement. We plan on using the net proceeds of this offering to repay a portion of the Convertible Debt, though depending on the market price for corn and other factors impacting our liquidity, our Board may determine to utilize the proceeds (or a portion thereof) for general working capital purposes. That usage would require waivers from the Lenders under the Convertible Debt, and we have not sought any waiver to date nor do we have any plans to do so at this time. While using the offering proceeds for working capital could enhance our ability to manage corn prices which have been trending higher, it would result in us having a higher amount of subordinated debt than if we repaid the Convertible Debt with the proceeds. See Use of Proceeds and Management Discussion and Analysis of Financial Condition Overview, Status and Recent Developments, below.
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001425173_novagen_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001425173_novagen_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..3ca5a7e3312c75bd837baff544b79aaf965cf87a
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+++ b/parsed_sections/prospectus_summary/2011/CIK0001425173_novagen_prospectus_summary.txt
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+PROSPECTUS SUMMARY The following summary is not complete and does not contain all of the information that may be important to prospective investors. Each prospective investor is urged to read this prospectus in its entirety before making an investment decision to purchase our common stock. As used in this prospectus, unless the context otherwise requires, "the Company", "we", "us", "our" or "Novagen" refers to Novagen Solar Inc. "SEC" refers to the Securities Exchange Commission. "Securities Act" refers to the Securities Act of 1933, as amended. "Exchange Act" refers to the Securities Exchange Act of 1934, as amended. "NRS" refer to the Nevada Revised Statutes, as amended. OUR BUSINESS Novagen Solar Inc. (formerly Pickford Minerals Inc.) is a development stage company engaged in the marketing, sale, design and installation of solar energy plants across North America, with an emphasis on turnkey commercial power systems, brownfield revitalization, land reclamation and off-grid community developments. Our business is in the early stages of development. Our currently available capital and cash flows from operations are insufficient to execute our business plan and fund business operations long enough to become cash flow positive or to achieve profitability. Our auditors have expressed substantial doubt about our ability to continue as a going concern. If we cannot continue as a going concern, then investors may lose all of their investment. Our ultimate success will depend upon our ability to raise capital. We will be required to pursue sources of additional capital through various means, including joint venture projects and debt or equity financings. Future financings through equity investments are likely to be dilutive to existing stockholders. Also, the terms of securities we may issue in future capital transactions may be more favorable for our new investors. Newly issued securities may include preferences, superior voting rights, and the issuance of warrants or other derivative securities, which may have additional dilutive effects. Further, we may incur substantial costs in pursuing future capital and financing, including investment banking fees, legal fees, accounting fees, printing and distribution expenses and other costs. Our ability to obtain needed financing may be impaired by such factors as the capital markets, both generally and specifically in the renewable energy industry, and the fact that we have not been profitable, which could impact the availability or cost of future financings. If the amount of capital we are able to raise from financing activities, together with our revenue from operations, is not sufficient to satisfy our capital needs, even to the extent that we reduce our operations accordingly, we may be required to cease operations. There is no assurance that we will be able to obtain financing on terms satisfactory to use, or at all. We do not have any arrangements in place for any future financing. If we are unable to secure additional funding, we may cease or suspend operations. We have no plans, arrangements or contingencies in place in the event that we cease operations. We currently have no employees other than our sole officer and director, who devotes five hours per week to our operations. Please carefully read both this prospectus and any prospectus supplement together with the additional information described below under the section entitled "Available Information". Our principal executive offices are located at 3044 Bloor Street West, Suite 1440, Toronto, ON M8X 2Y8. Our telephone number is (647) 628.5375. Our facsimile number is (647) 439-3785. THE OFFERING -------------------------------------------------------------------------------- Number of shares offered Up to 22,564,600 common shares by selling stockholder: Number of shares outstanding 43,675,900 common shares as of the date of this prospectus: Offering prices: Determined at the time of sale by the selling stockholders Use of proceeds: We will not receive any proceeds from the sale of the common stock Pink OTC Markets OTCQB symbol NOVZ -------------------------------------------------------------------------------- SUMMARY OF SELECTED FINANCIAL DATA We are a development stage company. From the date of our inception on June 22, 2005 we have not generated any revenue or earnings from operations. As of September 30, 2010 our financial data is as follows: -------------------------------------------------------------------------------- As at or for the period from June 22, 2005 (inception) to September 30, 2010 -------------------------------------------------------------------------------- Operations Data Revenue: $ 0 Net Loss: 484,701 Balance Sheet Data Total Assets: 21,655 Total Liabilities: 4,054 Net Tangible Book Value: 17,601 Net Tangible Book Value Per Share: (0.00) --------------------------------------------------------------------------------
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001426568_vendum_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001426568_vendum_prospectus_summary.txt
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus; it does not contain all of the information you should consider before investing in our common stock. You should read the entire prospectus before making an investment decision. Throughout this prospectus, the terms we, us, our, and our company refer to Vendum Batteries, Inc., a Nevada corporation. Company Overview We were incorporated under the name Wishart Enterprises Limited in December 2006. On May 3, 2010, we entered into a share exchange (the Share Exchange ) with Vendum Batteries Limited ( VDL ) whereby we acquired all of the issued and outstanding common stock of VDL and it became our wholly owned subsidiary. We changed our name to Vendum Batteries Inc. and our line of business from the health related business to the development of an environmentally friendly new cellulose-based power source. In connection with the Share Exchange we engaged in a 5 for 1 forward-split our common stock. VDL was incorporated in the United Kingdom in November 2009 and in January 2010 it acquired a patent for the development of a non-toxic paper battery technology that does not use any rare earth metals or toxic metals and instead uses carbon nanotube electrode technology. We are currently developing new intellectual property that is based upon the patented technology that VDL acquired. We are currently in the pre-production stage and do not have any products as we have not yet completed development of the technology or a prototype. We do not intend to produce the batteries ourselves, instead we intend to license the technology or know how that we develop to third parties who will then develop and commercialize the batteries based upon our licensed technology. The sole shareholder of VDL was Fraser Cottington, our sole director and officer, who has prior business experience in the management information systems industry, has only been involved with the battery industry for the past 21 months, and has no prior experience managing public companies. Our Business We are working on developing a non-toxic , Carbon Nanotube ( CNT ) based light-weight, rechargeable battery that we intend to market to various industries. We are currently in the pre-production stage and do not have any products as we have not yet completed development of the technology or a prototype. However, with the assistance of outside advisors, which include individuals at Surrey & Oxford Universities (with whom we do not have any written agreements other than confidentiality agreements), we have written research and development project documentation upon which we have based the development of our technology . This proprietary battery is being designed to be entirely biodegradable, since it will be primarily composed of cellulose and will not use any of the toxic elements used in traditional batteries, such as mercury, lead, chromium, or cadmium. We intend to seek global patent protection of our proprietary battery in Europe and North America and use the Priority Date in any other country we wish to file. Upon the completion of the development of the prototype, which is expected to be in early 2012, we intend to perfect prototypes and provide proof of concept that the technology can be cost effectively mass produced. We do not intend to produce the batteries ourselves, instead we intend to license the technology or know how that we develop to third parties who will then develop and commercialize the batteries based upon our licensed technology. We are seeking to offer our know how as services to create collaborative partnerships with third parties, such as original equipment manufacturers (OEMs) to either further develop solutions, or create new materials and production processes. We hope to develop a non-toxic energy storage source that will be capable of providing higher power output for much longer periods of time than current batteries. However, there is no guarantee that we will be able to develop a battery utilizing CNT and cellulose technology that will be capable of providing higher output for longer periods of time than current batteries. We believe that the batteries using our technology will have the potential to be small, flexible and light-weight, and eventually may also be utilized in human implant technology, such as in pacemakers and cochlear implants. Our primary focus today is seeking to develop batteries that can be used to power greeting cards, audio books, intelligent packaging and eventually mobile phones, PDA s, iPods, music players, games consoles and laptops . If perfected as a hybrid battery and supercapacitor our technology could be used in CCTV cameras, roadwork lighting and signs. After we have established our primary focus, we intend to market our paper based lightweight batteries to the automotive and aeronautical industries. During 2012 , we intend to engage in additional research and development to ascertain the thermal conductive and field emission display properties of CNT based composite materials that have been observed by other scientists and university studies in an effort to create materials for insulation, heat capture and even energy generation. Based on this research , thermal conductive properties of cellulose and CNT materials may offer new ways for us to develop smart materials that can use body moisture and movement to both generate and store energy, but also capture body heat and release it when required. For 2012, we hope to be able to diversify our business into the development and licensing of technology that can be used with cellulose paper based electronic display materials, for smart packaging, or for paper based sensors for various industries, including the healthcare industry. We intend to grow our Intellectual Property (IP) portfolio as quickly as funding will allow, but also foresee opportunities to make share exchange acquisitions, by selling or licensing our know how to co-develop new materials with under performing companies within the CNT industry and assist them in creating new IP to attract new investment. In an effort to diversify our business and not be dependent upon one single technology, we will seek in part to acquire companies providing different ways to produce and develop the technologies that deliver both a super capacitor and a battery using CNT technologies, as well as those companies and individuals that can provide technical expertise in further researching alternative Nano wire types and the use of polymers. We will also look at printed battery technology, which is already produced by one of our competitors, as it looks as if it may become one of the simplest and cost effective CNT battery types to mass produce. Finally, we will attempt to locate a company that is both proficient at producing CNT s and providing competitors with electronics quality CNT s, so that we can minimize the need for raw CNT producers and associated costs to transport them to the battery production facility. During the year ended December 31, 2010 we incurred a loss of ($635,376). For the six months ended June 30 , 2011 we incurred a loss of ($274,436) and at June 30 , 2011 we had a working capital deficit of ($503,532). To date we have not generated any revenue and have incurred significant operating losses since our inception, resulting in a deficit accumulated of $933,777 at June 30 , 2011 and $659,341 at December 31, 2010. The opinion of our independent registered accounting firm for the fiscal year ended December 31, 2010 and December 31, 2009 is qualified subject to substantial doubt as to our ability as a going concern. Our current burn rate is $26,000 per month and we anticipate that we will need a minimum of $500,000 to accomplish our business goals. We have insufficient cash to operate our business at the current level for the next twelve months and insufficient cash to achieve our business goals. As of September 30, 2011 we have notes in the aggregate principal amount of $175,500 outstanding. Of such amount, a note in the principal amount of $25,000 was due in September 2011 and is currently in default, a note in the principal amount of $50,000 was due July 27, 2011 and is currently in default and a note in the principal amount of $7,000 was due in April 2011 and is currently in default. We do not have the funds to repay the notes. The success of our business plan is contingent upon us obtaining additional financing. We intend to fund operations through debt and/or equity financing arrangements such as our $5,000,000 Equity Line; however it is doubtful that we will be able to use the full Equity Line due to the conditions to its use, and there can be no assurance that we will meet the conditions necessary to be able to use the Equity Line, which include having two members of our board of directors who are independent. Other than the Equity Line, we do not have any formal commitments or arrangements for the sales of stock or the advancement or loan of funds at this time. There can be no assurance that any additional financing will be available to us on acceptable terms, or at all. Our principal executive offices are located at 400 Thames Valley Park Drive, Reading, Berkshire, England RG6 1PT and our telephone number is +44 118 380 0895. Table of Contents The Offering Common stock that may be offered by selling stockholders 80,000,000 shares, representing approximately 14% of our common stock to be outstanding after issuance of shares that may be offered by selling shareholder. If we were to be able to put all $5,000,000 worth of common stock to the selling stockholder, based upon the price of the last reported trade on October 5, 2011, which was $.03, we would issue an additional 166,000,000 shares of common stock to the selling stockholder. Common stock currently outstanding 506,720,121 shares Common stock to be outstanding after issuance of shares that may be offered by selling shareholders 585,499,965 shares Total proceeds raised by offering We will not receive any proceeds from the resale or other disposition of the shares covered by this prospectus by any selling shareholder. We will receive proceeds from the sale of shares to Centurion. Centurion has committed to purchase up to $5,000,000 worth of shares of our common stock over a period of time terminating upon 36 months from the date of the Investment Agreement (the Equity Line ). The Company will be entitled to put to Centurion on each put date such number of shares of common stock as equals up to $250,000 or such lesser amount as is specified by us provided that the number of shares sold in each put shall not exceed a share volume limitation equal to the lesser of: (i) 1.5 million shares; (ii) 17.5% of the aggregate trading volume, excluding any block trades that exceed 50,000 shares of common stock, of the common stock traded on our primary exchange during any pricing period for such put excluding any days where the lowest intra-day trade price is less than the trigger price (which is the greater of: (a) the floor price plus a fixed discount of $.01; (b) the floor price if any set by us divided by 0.96; or (c) $.01, the greater of all three clauses being referred to as the Trigger Price ); (iii) an aggregate of $5,000,000 worth of common stock when combined with the put shares sold in all prior puts; or (iv) such number of put shares that, when added to the number of shares of our common stock then beneficially owned by Centurion, would exceed 9.9% of the number of shares of our common stock outstanding. The offering price of the securities to Centurion will equal the lesser of: (i) 96% of the of the average of the three lowest daily volume weighted average prices, or VWAPs, (such average, being referred to as the Market Price ) of our common stock during the fifteen trading day period beginning on the trading day immediately following the date Centurion receives our put notice; or (ii) the Market Price for such put, less $.01, but shall in no event be less than the Company Designated Minimum Put Share Price for such put, if applicable.
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001426874_kaibo_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001426874_kaibo_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad
--- /dev/null
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@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001427714_chile_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001427714_chile_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a9c637c098a9c7eec1746dede470ebf0ca73b0e5
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001427714_chile_prospectus_summary.txt
@@ -0,0 +1 @@
+detail later in this prospectus. This summary provides an overview of selected information and does not contain all the information you should consider. Therefore, you should also read the more detailed information set out in this prospectus, including the financial statements, the notes thereto and matters
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001429664_whiteglove_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001429664_whiteglove_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001429664_whiteglove_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001430682_rongfu_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001430682_rongfu_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..4944a3082c68b971eaa8604319480afe9396aac4
--- /dev/null
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@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. This summary does not contain all of the information you should consider before investing in our common stock. You should read this entire prospectus carefully, especially the Risk Factors section beginning on page 9 and our consolidated financial statements and the related notes appearing at the end of this prospectus, before making an investment decision. Unless the context otherwise requires, The "Company", "we," "us," and "our," refer to (i) Rongfu Aquaculture, Inc. ( Rongfu ), (iii) Flourishing Blessing (Hong Kong) Co., Ltd. ( Flourishing HK ) and (iv) Guangzhou Flourishing Blessing Heng Seng Agriculture Technology Limited (the WOFE or Guangzhou Flourishing ). Certain references to ownership and other rights of the Company in this prospectus include the rights of Foshan Nanhai Ke Da Heng Sheng Aquatic Co., Ltd. and Hainan Ke Da Heng Sheng Acquit Germchit Co., Ltd. which we are attributing to the Company by virtue of the Contractual Agreements described below. All information contained herein for the fiscal year ended December 31, 2010 and at December 31, 2010 is unaudited. Our Business Through our subsidiaries and the Contractual Agreements described below, we are engaged in commercial freshwater aquaculture in the People s Republic of China (the PRC ). Aquaculture is the cultivation or farming of fish under controlled conditions (as contrasted with the harvesting of fish in the wild). We cultivate fish in fresh water (not marine (salt water) or brackish environments), sell fish and fish fry (juvenile fish) and also act as a dealer of freshwater fish (generating trading profits from the purchase of fish from third party farmers and the immediate re-sale of such fish to wholesalers and processors). During the fiscal year ended December 31, 2010 ( fiscal 2010 ) we sold more than 38,000 tons of adult fish to frozen fish processors and wholesalers in Guangdong Province and Hainan Province, PRC and we sold approximately 370 million fry to distributors, which in turn sold such fry to other farmers to cultivate. Our Industry Aquaculture is the science, art, or practice of cultivating and harvesting aquatic organisms, including fish, mollusks, crustaceans, aquatic plants, and algae such as seaweed. Operating in marine, brackish, and freshwater environments, aquaculture provides food for people and in smaller amounts supplies fish for stocking lakes, bait for fishing, and live specimens for home aquariums. According to a recent study by the World Food and Agriculture Organization ( FAO ) published on March 2, 2009, world fisheries production reached a new high of 143.6 million metric tons in 2006, including farmed and ocean caught product. The contribution of aquaculture to the world fisheries production in 2006 was 51.7 million tons of fish, which was 36 percent of world fisheries production in 2006, up from 3.6 percent in 1970. Global aquaculture accounted for 6 percent of the fish available for human consumption in 1970. In 2006 global aquaculture accounted for 47 percent of the fish available for human consumption according to the FAO. The FAO report also describes that over half of the global aquaculture in 2006 was freshwater finfish. Based on the FAO s projections, it is estimated that in order to maintain the current level of per capita consumption, global aquaculture production will need to reach in excess of 80 million tons of fish by 2050. Also according to the FAO, in 2006 China contributed approximately 67% of the total quantity and 49% of the total value of worldwide aquaculture production. In China, approximately 90% of fish production comes from aquaculture. China s aquatic production for 2009 is forecast to have reached 49.5 metric tons ( MMT ), an increase of approximately two percent from the estimated 48.6 MMT of production in 2008. Inland aquaculture is very important part of China fishery industry. Freshwater aquaculture is carried out in fish ponds, lakes, reservoirs, canals, pens, cages, and paddy fields. Freshwater aquaculture production is dominated by finfish, particularly silver, grass and other carps. Pond culture is the most important source of inland aquaculture, with an estimated share of 73.9% in 1996. More than 4.5 million Chinese farmers are engaged in aquaculture, more than the rest of the world combined. In 2005, according to the American Tilapia Association ( ATA ), tilapia production worldwide was second in volume to carp, and it is projected by the ATA that tilapia will become the most important aquaculture crop in the 21st century. Commercial production of tilapia has become popular in many countries around the world. Touted as the new white fish to replace the depleted ocean stocks of cod, pollock, and hake, world tilapia production continues to rise and at least 100 countries currently raise tilapia, with the PRC being the largest producer. The American Tilapia Association further reports that world production of tilapia products reached approximately 2.5 million metric tons in 2007, of which China produced the dominant share of 45.0 percent. Our Principal Competitive Strengths We believe we have the following principal competitive strengths: Quality Products. We produce fish products and have developed a farming system that avoids the use of potentially toxic chemicals, drugs, pesticide residues, veterinary drug residues, heavy metals, pollutants and other substances. We believe that we fully comply with the Law of PRC on the Prevention and Control of Water Pollution. Our fish are raised in ponds of pure rain water collected for aquaculture. We use high quality fish food to comply with the safety rules and regulations in the PRC. Vertically Integrated Operations. Vertical integration of our operations allows us to control and monitor quality, as well as reduce costs. Through our cooperative arrangements with local farmers, we train them to our production methods, while monitoring constantly the quality of production until harvest. Environmental and Quality Assurances. We have adopted and implemented stringent quality control measures and procedures throughout the production process, in order to comply with the various environmental and quality standards. In order to supply to food processing companies, we have complied with the Food Safety Law of the PRC, which became effective on June 1, 2009. We use advanced technologies in our farming, feed formulation and processing operations. We have adopted modern and environmentally friendly and responsible technology in our growing process of fishes. Strategic Location in Guangdong Province, PRC. Our processing facilities are geographically well-positioned in Guangdong Province to leverage favorable climatic conditions, abundant water supply, a pristine environment and a readily available source of labor for our processing plant. Furthermore, our logistics center is conveniently located near the farmers from whom we obtain our supply of fish and it is also in close proximity to our new cooperative fish farms. Competitive Cost Structure. We benefit from competitive cost structures due to the lower labor costs in China and the streamline of the supply chain transactions to increase the logistics efficiencies. We also believe that we are able to trim our operating costs by procurement of fry and fish food at relatively low cost and deployment of advanced methods for cultivation. Experienced Management The senior management has extensive experience in fish farming in Guangdong Province in China. Mr. Chen Zhisheng, our Chairman, has over 30 years experience in the field of aquaculture. He also serves as the Chairman of Foshan Nanhai Aquaculture Association and we believe that he has great influence in the development of the industry in Guangdong Province. The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting offers to buy these securities in any state where the offer is not permitted. SUBJECT TO COMPLETION, DATED FEBRUARY 23, 2011 PRELIMINARY PROSPECTUS 7,940,370 Shares Rongfu Aquaculture, Inc. Common Stock This prospectus relates to the resale by the Selling Stockholders of up to 7,940,370 shares of our Common Stock, $.001 par value ( Common Stock ), including an aggregate of 1,044,081 shares issued to certain Selling Stockholders pursuant to or in connection with a Share Exchange Agreement dated as of March 29, 2010 (the Share Exchange Agreement ) and an aggregate of 6,896,289 shares of our Common Stock issuable to the Selling Stockholders upon conversion of shares of our Series A Preferred Stock and exercise of warrants to purchase our Common Stock issued in a private placement (the Private Placement ) pursuant to a Series A Preferred Stock Purchase Agreement dated as of March 29, 2010 (the Purchase Agreement ). All of the shares of Common Stock issued to the Selling Stockholders may be sold by the Selling Stockholders. It is anticipated that the Selling Stockholders will sell these shares of Common Stock from time to time in one or more transactions, in negotiated transactions or otherwise, at prevailing market prices or at prices otherwise negotiated (see Plan of Distribution beginning on page 76. We will not receive any proceeds from the sales by the Selling Stockholders. Under the terms of the warrants, cashless exercise is permitted in certain circumstances. We will not receive any proceeds from any cashless exercise of the warrants, but would receive the exercise price of warrants exercised on a cash basis. We will pay all of the registration expenses incurred in connection with this offering, but the Selling Stockholders will pay any selling commissions, brokerage fees and related expenses. There is a limited market in our Common Stock. The shares are being offered by the Selling Stockholders in anticipation of the continued development of a secondary trading market in our Common Stock. We cannot give you any assurance that an active trading market in our Common Stock will develop, or if an active market does develop, that it will continue. Our Common Stock is listed on the OTC Bulletin Board and trades under the symbol RNFU.OB. On December 7, 2010, the date of the last reported trade of our Common Stock, the closing sale price of our Common Stock was $4.00 per share. Investing in our Common Stock involves risks. See Risk Factors on page 9. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The date of this prospectus is ______, 2011 Our Growth Strategies Domestic Sales and Marketing Efforts. The recent establishment of our sales office in Hangzhou on May 2010 will help us further roll out our products outside of Guangdong Province. Following the opening of our logistics center in May 2010, we can explore new sales networks for other regions to meet customer needs and thus advance our new branding and marketing initiative around our Ke Da Heng Sheng brand of our adult fish and fish fry products. Strong Research and Development Team. We have an established and strong research and development team to enhance our growing technology and have close cooperation with leading research institutes with the aim to develop new strains of fish. We plan to add more breeding types of fish to meet the demand of farmers and to deliver all-season fry (fry that are raised and grown all year long) to smooth out our production cycle and enable us to minimize price fluctuations and generate more consistent revenue throughout the year. Expansion of Cooperative Farming. We plan to expand our cooperative farming arrangements to increase the availability of our products to meet anticipated growth in demand. Expansion of Production Facilities. We plan to expand our production facilities to satisfy the anticipated growing demand for our products. Our Corporate Structure Our current structure is set forth in the diagram below: Company Information Our principal executive offices are located at Dongdu Room 321, No. 475 Huanshidong Road, Guangzhou City, PRC 510075, and our telephone number is 011-86-20-8762-1778. THE OFFERING On March 29, 2010 the Company entered into and consummated the Share Exchange Agreement with certain of the Selling Stockholders. Pursuant to or in connection with the Share Exchange Agreement, the Company issued to certain of the Selling Stockholders an aggregate of 1,044,081 shares of common stock of Rongfu Aquaculture, Inc. On March 29, 2010 the Company also entered into and consummated the Purchase Agreement with certain of the Selling Stockholders, pursuant to which the Company issued to those Selling Stockholders in exchange for an aggregate cash payment of approximately $7,700,000 (a) an aggregate of 2,768,721 shares of its Series A Preferred Stock, (b) five-year Series A Warrants to purchase an aggregate of 1,730,451 shares of its Common Stock for $3.47 per share and (c) five-year Series B Warrants to purchase an aggregate of 1,730,451 shares of its Common Stock for $4.17 per share. In connection with the consummation of the Purchase Agreement and the Share Exchange Agreement the Company also issued to certain of the Selling Stockholders (d) five-year Series C Warrants to purchase an aggregate of 333,333 shares of its Common Stock for $2.44 per share and (e) five-year Series D warrants to purchase an aggregate of 333,333 shares of its Common Stock for $2.93 per share. This prospectus relates to the resale of the 7,940,370 shares of our Common Stock issued to the Selling Stockholders and issuable to the Selling Stockholders upon conversion of the Series A Preferred Stock and exercise of all of the warrants referred to in the preceding paragraph. Issuer Rongfu Aquaculture, Inc. Common Stock outstanding prior to the Offering 21,286,789 shares Common Stock offered by the Selling Stockholders 7,940,370 shares Total shares of Common Stock to be outstanding after the Offering assuming conversion of all Series A Preferred Stock and exercise of all outstanding warrants 28,183,078 shares Use of Proceeds We will not receive any proceeds from the sale of the shares of Common Stock. Our OTC Bulletin Board Trading Symbol RNFU.OB
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001430975_continenta_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001430975_continenta_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..fcede921904ef9232dd3ba98cbd29c1c15bc970c
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@@ -0,0 +1 @@
+PROSPECTUS SUMMARY The following summary highlights information contained elsewhere in this prospectus. This summary may not contain all of the information that may be important to you. You should read this entire prospectus carefully, including the sections entitled Risk Factors and Management s Discussion and Analysis of Financial Condition and Results of Operations and our historical financial statements and related notes included elsewhere in this prospectus. In this prospectus, unless the context provides otherwise, the terms the Company, we, us, and our refer to American Energy Fields, Inc., and its wholly-owned subsidiary, Green Energy Fields, Inc. Overview We are primarily engaged in the acquisition and exploration of properties that may contain uranium mineralization in the United States. Our target properties are those that have been the subject of historical exploration. We have acquired State Leases and Federal unpatented mining claims in the state of California for the purpose of exploration and potential development of uranium minerals on a total of approximately 5,500 acres. We plan to review opportunities to acquire additional mineral properties with current or historic uranium mineralization with meaningful exploration potential. Our properties do not have any reserves. We plan to conduct exploration programs on these properties with the objective of ascertaining whether any of our properties contain economic concentrations of uranium that are prospective for mining. We have not generated any revenues from our mining exploration to date. Our History We were incorporated as Sienna Resources, Inc. in the State of Delaware on November 12, 2008. On December 21, 2009 we (1) declared a stock dividend of 11.2 shares of Common stock for every one share of Common stock then outstanding, and (2) amended and restated our articles of incorporation in order to, among other things: (a) change our name to American Energy Fields, Inc. and (b) increase the number of authorized shares of capital stock from 80,000,000 shares to 225,000,000 shares, divided into two classes: 200,000,000 shares of common stock, par value $.0001 per share, and 25,000,000 shares of blank check preferred stock, par value $.0001 per share. On December 24, 2009, we entered into a Share Exchange Agreement (the Exchange Agreement ) with Green Energy Fields, Inc., a privately-held Nevada corporation ( Green Energy ), and the shareholders of Green Energy. Upon closing of the transaction contemplated under the Exchange Agreement (the Exchange ), on December 24, 2009, the shareholders of Green Energy transferred all of the issued and outstanding capital stock of Green Energy to the Company in exchange for shares of common stock of the Company. Such Exchange caused Green Energy to become a wholly-owned subsidiary of the Company. Pursuant to the terms and conditions of the Exchange Agreement: At the closing of the Exchange, each share of Green Energy s common stock issued and outstanding immediately prior to the closing of the Exchange was exchanged for the right to receive one share of our common stock. Accordingly, an aggregate of 28,788,252 shares of our common stock were issued to the shareholders of Green Energy. Following the closing of the Exchange, we issued an aggregate of 9,300,000 shares of our common stock and two-year warrants to purchase an additional 4,650,000 shares of common stock exercisable at $0.40 per share, in a private placement to 16 investors for $1,395,000. Immediately following the foregoing, under an Agreement of Conveyance, Transfer and Assignment of Assets and Assumption of Obligations, we transferred all of our pre-Exchange assets and liabilities to our wholly-owned subsidiary, Sienna Resources Holdings, Inc. Thereafter pursuant to a stock purchase agreement, transferred all of the outstanding capital stock of Sienna Resources Holdings, Inc. to Julie Carter in exchange for the cancellation of 15,250,000 shares of our common stock that she owned. Between December 3, 2010 and March 4, 2011, the Company entered into subscription agreements with certain investors whereby it sold an aggregate of 36,140,763 units with each unit consisting of one share of the Company s common stock, par value $0.0001 per share and one five year warrant to purchase one additional share of Common Stock at an exercise price of $0.50 per share for a per unit purchase price of $0.50 and an aggregate purchase price of $18,070,381.50 (the Private Placement ). In connection with the Private Placement, the Company issued warrants to the placement agents to purchase an aggregate of 7,167,986 shares of the Company s common stock, on the same terms as the warrants issued to the investors. The 36,140,763 shares of our common stock underlying the units and the 36,140,763 shares of common stock underlying the warrants and the 7,167,986 shares of common stock underlying the warrants issued to placement agents in connection with the Private Placement were not registered under the Securities Act of 1933, as amended (the Securities Act ), in reliance upon an exemption from registration provided by Section 4(2) under the Securities Act and Regulation D or Rule 903 of Regulation S promulgated thereunder. These securities may not be transferred or sold absent registration under the Securities Act or an applicable exemption therefrom. The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and we are not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED May 12, 2011 PRELIMINARY PROSPECTUS 79,449,512 Shares American Energy Fields, Inc. Common stock This prospectus relates to the sale by the selling stockholders identified in this prospectus of up to 79,449,512 shares of our Common stock, which includes 36,140,763 shares of Common stock issuable upon exercise of warrants. All of these shares of our Common stock are being offered for resale by the selling stockholders. The prices at which the selling stockholders may sell shares will be determined by the prevailing market price for the shares or in negotiated transactions. We will not receive any proceeds from the sale of these shares by the selling stockholders. We will bear all costs relating to the registration of these shares of our Common stock, other than any selling stockholders legal or accounting costs or commissions. Our Common stock is quoted on the regulated quotation service of the OTC Bulletin Board under the symbol AEFI . The last reported sale price of our Common stock as reported by the OTC Bulletin Board on May 11, 2011, was $0.40 per share. Investing in our Common stock is highly speculative and involves a high degree of risk. You should carefully consider the risks and uncertainties described under the heading Risk Factors beginning on page 6 of this prospectus before making a decision to purchase our Common stock. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense. The date of this prospectus is __________, 2011 THE OFFERING Common stock offered by selling stockholders This prospectus relates to the sale by certain selling stockholders of 79,449,512 shares of our Common stock consisting of: (i) 36,140,763 shares of our Common stock issued to investors in the Private Placement; and (ii) 36,140,763 shares of Common stock underlying the Warrants issued to investors in the Private Placement. (iii) 7,167,986 shares of Common stock underlying the warrants issued to placement agents in the Private Placement. Offering price Market price or privately negotiated prices. Common stock outstanding before and after the offering 94,119,018 shares (1) Use of proceeds We will not receive any proceeds from the sale of the Common stock by the selling stockholders. OTC Symbol AEFI. Risk Factors You should carefully consider the information set forth in this prospectus and, in particular, the specific factors set forth in the Risk Factors section beginning on page 6 of this prospectus before deciding whether or not to invest in our Common stock. _______________________________________ (1) Represents the number of shares of our Common stock outstanding as of May 12, 2011. Excludes (i) 3,100,000 shares of our Common stock issuable upon exercise of options granted or reserved under the 2010 Equity Incentive Plan; and (ii) 47,958,749 shares of our Common stock issuable upon exercise of outstanding warrants.
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/CIK0001431655_coast-to_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001431655_coast-to_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001431655_coast-to_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/CIK0001431656_greystone_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001431656_greystone_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001431656_greystone_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/CIK0001431657_old-osi_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001431657_old-osi_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001431657_old-osi_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/CIK0001431658_osi_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001431658_osi_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001431658_osi_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/CIK0001431659_osi_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001431659_osi_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001431659_osi_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/CIK0001431660_osi-spe_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001431660_osi-spe_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001431660_osi-spe_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/CIK0001431662_outsourcin_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001431662_outsourcin_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001431662_outsourcin_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/CIK0001431663_pacific_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001431663_pacific_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001431663_pacific_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/CIK0001431664_pae_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001431664_pae_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001431664_pae_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/CIK0001431668_union_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001431668_union_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001431668_union_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/CIK0001431669_union_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001431669_union_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001431669_union_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/CIK0001431670_university_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001431670_university_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001431670_university_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/CIK0001431671_credit_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001431671_credit_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001431671_credit_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/CIK0001431672_systems_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001431672_systems_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001431672_systems_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/CIK0001431673_tempest_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001431673_tempest_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001431673_tempest_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/CIK0001431674_ncop-x-llc_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001431674_ncop-x-llc_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001431674_ncop-x-llc_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/CIK0001432150_gigpeak_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001432150_gigpeak_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001432150_gigpeak_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/CIK0001433995_currencysh_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001433995_currencysh_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..7ea650b3d82b5990b0077c8603f68a81765bc63e
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001433995_currencysh_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary This is a summary of the prospectus. You should read the entire prospectus, including Risk Factors beginning on page 8 and the information incorporated by reference in this prospectus, before making an investment decision about the Shares. See Glossary of Terms beginning on page 12 for a description of certain terms used in this prospectus. TRUST STRUCTURE The Trust is a grantor trust formed under the laws of the State of New York pursuant to the Depositary Trust Agreement. The Trust holds Russian Rubles and from time to time issues Baskets in exchange for deposits of Russian Rubles and distributes Russian Rubles in connection with redemptions of Baskets. The investment objective of the Trust is for the Shares to reflect the market value of the Russian Ruble. Earning income for Shareholders is not the objective of the Trust. Whether investors earn income primarily depends on the relative value of the Russian Ruble and the USD. If the Russian Ruble appreciates relative to the USD and a Shareholder sells Shares, the Shareholder will earn income. If the Russian Ruble depreciates relative to the USD and a Shareholder sells Shares, the Shareholder will incur a loss. The Sponsor believes that, for many investors, the Shares represent a cost-effective investment in Russian Rubles. The Shares represent units of fractional undivided beneficial interest in, and ownership of, the Trust. The Shares are listed and trade on NYSE Arca under the symbol FXRU. The Shares may also trade in other markets, but the Sponsor has not sought to have the Shares listed by any other market. The Sponsor, Rydex Specialized Products LLC d/b/a Rydex Investments, a Delaware limited liability company, established the Trust and is responsible for registering the Shares. The Sponsor generally oversees the performance of the Trustee and the Trust s principal service providers, but does not exercise day-to-day oversight over the Trustee or the Trust s service providers. The Sponsor may remove the Trustee if any of various events occur. See Description of the Depositary Trust Agreement The Trustee Resignation, discharge or removal of trustee; successor trustees for more information. The Sponsor maintains a public website on behalf of the Trust containing information about the Trust and the Shares. The internet address of the Trust s website is www.currencyshares.com. This internet address is provided here only as a convenience to you; the information contained on or connected to the Trust s website is not considered part of this prospectus. The general role and responsibilities of the Sponsor are discussed further under The Sponsor. The Trustee is The Bank of New York Mellon, a banking corporation formed under the laws of the State of New York with trust powers. The Trustee is generally responsible for the day-to-day administration of the Trust. This includes calculating the NAV of the Trust and the NAV per Share each business day, paying the Trust s expenses (which are accrued daily but paid monthly), including withdrawing the Trust s Russian Rubles, if needed, receiving and processing orders from Authorized Participants to create and redeem Baskets and coordinating the processing of such orders with the Depository and DTC. The general role, responsibilities and regulation of the Trustee are further described under The Trustee. The Depository is JPMorgan Chase Bank, N.A., London Branch. The Depository and the Trustee have elected the laws of England to govern the Deposit Account Agreement between them. The Depository accepts Russian Rubles deposited with it by Authorized Participants in connection with the creation of Baskets. The Depository facilitates the transfer of Russian Rubles into and out of the Trust through the two deposit accounts maintained with it by the Trust. The Depository may pay interest on the primary deposit account but not on the secondary deposit account. Interest on the primary deposit account, if any, accrues daily and is paid monthly. The material terms of the Depositary Trust Agreement are discussed in greater detail in Description of the Depositary Trust Agreement. The general role, responsibilities and regulation of the Depository and the two deposit accounts are further described under The Depository and Description of the Deposit Account Agreement. Detailed descriptions of certain specific rights and duties of the Trustee and the Depository are set forth under Description of the Shares, Description of the Depositary Trust Agreement and Description of the Deposit Account Agreement. Table of Contents PART II INFORMATION NOT REQUIRED IN PROSPECTUS Item 13. Other Expenses of Issuance and Distribution. The expenses incurred in connection with the issuance and distribution of the securities being registered are as set forth below. Other than the Securities and Exchange Commission filing fee, all fees and expenses are estimated. Securities and Exchange Commission filing fee $ 0 Legal fees and expenses(1) $ 15,000 Accounting fees and expenses $ 2,000 Total expenses $ 17,000 (1) Excludes the additional fee of Foley & Lardner LLP based on the NAV of the Trust. Item 14. Indemnification of Directors and Officers. The Sponsor is a limited liability company formed as such under Delaware law. Section 18-108 of the Delaware Limited Liability Company Act provides that a limited liability company may indemnify and hold harmless any members, managers or other persons against any and all claims and demands whatsoever, subject to any standards and restrictions set forth in the limited liability company agreement of the limited liability company. Section 18 of the Sponsor s Limited Liability Company Agreement provides that, to the fullest extent permitted by applicable law, a member or officer of the Sponsor will be entitled to indemnification from the Sponsor for any loss, damage or claim incurred by the member or officer for any act or omission performed or omitted by the member or officer in good faith on behalf of the Sponsor and in a manner reasonably believed to be within the scope of the authority conferred on the member or officer by the Sponsor s Limited Liability Company Agreement; provided, however, that no member or officer will be entitled to be indemnified if the loss, damage or claim was due to the member s or officer s fraud or willful misconduct. A member s or officer s reasonably incurred costs and expenses in defending pending or threatened actions, suits or proceedings will be paid in advance by the Sponsor if the member or officer provides an undertaking to repay the amounts advanced if it is ultimately determined that the member or officer is not entitled to be indemnified by the Sponsor. The indemnity and the advance of expenses are limited to the Sponsor s assets, and no member of the Sponsor will have personal liability for such indemnity. Section 7.1(d) of the Depositary Trust Agreement provides that the Sponsor and its directors, Shareholders, officers, employees, affiliates and subsidiaries will be indemnified from the Trust and held harmless against any loss, liability or expense incurred by an indemnified party without (1) negligence, bad faith, willful misconduct or willful malfeasance on the part of the indemnified party arising out of or in connection with the performance of its obligations under the Depositary Trust Agreement or any actions taken in accordance with the provisions of the Depositary Trust Agreement or (2) the indemnified party s reckless disregard of its obligations and duties under the Depositary Trust Agreement. The indemnity will include payment from the Trust of the indemnified party s costs and expenses of defending itself against any claim or liability based on its capacity as Sponsor under the Depositary Trust Agreement. Item 15. Recent Sales of Unregistered Securities. Not applicable. Item 16. Exhibits and Financial Statement Schedules. (a) Exhibits Exhibit Number Document Description 3.1 Certificate of Formation of Rydex Specialized Products LLC, incorporated herein by reference to Exhibit 3.1 to the Registration Statement on Form S-1 (File No. 333-150687) filed by the Trust on May 7, 2008. 3.2 Limited Liability Company Agreement of Rydex Specialized Products, LLC, incorporated herein by reference to Exhibit 3.2 filed with the Registration Statement on Form S-1 (File No. 333-150687) filed by the Trust on May 7, 2008. 4.1 Depositary Trust Agreement dated as of August 7, 2008 among Rydex Specialized Products LLC, The Bank of New York Mellon, all registered owners and beneficial owners of Russian Ruble Shares issued thereunder and all depositors, incorporated herein by reference to Exhibit 4.1 to the Annual Report on Form 10-K/A filed by the Trust on March 10, 2011. 4.2 Participant Agreement dated as of March 25, 2010 among Knight Clearing Services, LLC, The Bank of New York Mellon, and Rydex Specialized Products LLC (together with Schedule pursuant to Instruction 2 to Item 601 of Regulation S-K), incorporated herein by reference to Exhibit 4.2 to the Annual Report on Form 10-K/A filed by the Trust on March 10, 2011. 4.3 Amendment to Participant Agreements dated as of December 9, 2010 between The Bank of New York Mellon, the trusts set forth on Schedule A thereto and Rydex Specialized Products LLC., incorporated herein by reference to Exhibit 4.3 to the Annual Report on Form 10-K/A filed by the Trust on March 10, 2011. 4.4 Amendment to Participant Agreements dated as of January 15, 2011 between The Bank of New York Mellon, the trusts set forth on Schedule A thereto and Rydex Specialized Products LLC, incorporated herein by reference to Exhibit 4.4 to the Annual Report on Form 10-K/A filed by the Trust on March 10, 2011. 5.1 Opinion of Foley & Lardner LLP as to legality. 8.1 Opinion of Foley & Lardner LLP as to tax matters. 10.1 Deposit Account Agreement dated as of August 7, 2008 between The Bank of New York Mellon and the London Branch of JPMorgan Chase Bank, N.A. incorporated herein by reference to Exhibit 10.1 to the Annual Report on Form 10-K/A filed by the Trust on March 10, 2011. 10.2 Sublicense Agreement dated as of August 28, 2008 between PADCO Advisors II, Inc. and Rydex Specialized Products LLC, incorporated herein by reference to Exhibit 10.2 to the Annual Report on Form 10-K/A filed by the Trust on March 10, 2011. 23.1 Consent of PricewaterhouseCoopers LLP. 23.2 Consent of Ernst & Young LLP. 23.3 Consents of Foley & Lardner LLP (included in Exhibits 5.1 and 8.1). 24.1 Power of Attorney (included on the signature page to this registration statement as filed with the Commission on August 12, 2011).* * Previously filed (b) Financial Statement Schedules Not applicable. Item 17. Undertakings. The undersigned registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: Table of Contents The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and the Sponsor and the Trust are not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. Preliminary Prospectus Subject to Completion September 30, 2011 25,200,000 Shares Russian Ruble Shares The CurrencyShares Russian Ruble Trust (Trust) issues Russian Ruble Shares (Shares) that represent units of fractional undivided beneficial interest in, and ownership of, the Trust. Rydex Specialized Products LLC, d/b/a Rydex Investments, is the sponsor of the Trust (Sponsor) and may be deemed the issuer of the Shares pursuant to Section 2(a)(4) of the Securities Act of 1933, as amended (the Securities Act). The Bank of New York Mellon is the trustee of the Trust (Trustee), JPMorgan Chase Bank, N.A., London Branch, is the depository for the Trust (Depository), and Rydex Distributors, LLC is the distributor for the Trust (Distributor). The Trust intends to issue additional Shares on a continuous basis through the Trustee. The Shares may be purchased from the Trust only in one or more blocks of 50,000 Shares, as described in Creation and Redemption of Shares. A block of 50,000 Shares is called a Basket. The Trust issues Shares in Baskets on a continuous basis to certain authorized participants (Authorized Participants) as described in Plan of Distribution. Each Basket, when created, is offered and sold to an Authorized Participant at a price in Russian Rubles equal to the net asset value (NAV) of 50,000 Shares on the day that the order to create the Basket is accepted by the Trustee. The Shares are offered and sold to the public by Authorized Participants at varying prices in U.S. Dollars (USD) determined by reference to, among other things, the market price of the Russian Ruble and the trading price of the Shares on NYSE Arca, Inc. (NYSE Arca) at the time of each sale. Authorized Participants will not receive from the Trust, the Sponsor or any of their affiliates, any fee or other compensation in connection with the sale of Shares. Authorized Participants may receive commissions or fees from investors who purchase Shares through their commission- or fee-based brokerage accounts. The Shares are listed and trade on NYSE Arca under the symbol FXRU. The Shares may also trade in other markets, but the Sponsor has not sought to have the Shares listed by any other market. Investing in the Shares involves significant risks. See Risk Factors, starting on page 8. Neither the Securities and Exchange Commission (SEC) nor any state securities commission has approved or disapproved of the securities offered in this prospectus, or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The Shares are neither interests in nor obligations of the Sponsor, the Trustee, the Depository or the Distributor. Neither the Shares nor the Trust s two deposit accounts maintained at the Depository and the Russian Rubles deposited in them are deposits insured against loss by the Federal Deposit Insurance Corporation (FDIC), any other federal agency of the United States or the Financial Services Compensation Scheme of England. The date of this prospectus is , 2011. Table of Contents The Distributor, Rydex Distributors, LLC, is a limited liability company formed under the laws of the State of Kansas. The Distributor assists the Sponsor in marketing the Shares. Specifically, the Distributor prepares marketing materials regarding the Shares, including the content of the Trust s website, executes the marketing plan for the Trust and provides strategic and tactical research on the foreign exchange markets, in each case in compliance with applicable laws and regulations. The Distributor and the Sponsor are affiliates of one another. There is no written agreement between them, and no compensation is paid by the Sponsor to the Distributor in connection with services performed by the Distributor for the Trust. See The Distributor for more information. INVESTMENT ATTRIBUTES OF THE TRUST The investment objective of the Trust is for the Shares to reflect the market value of the Russian Ruble. The Shares are intended to provide institutional and retail investors with a simple, cost-effective means of gaining investment benefits similar to those of holding Russian Rubles. The costs of purchasing Shares should not exceed the costs associated with purchasing any other publicly-traded equity securities. The Shares are an investment that is: Easily Accessible. Investors are able to access the market for Russian Rubles through a traditional brokerage account. The Shares are bought and sold on NYSE Arca like any other exchange-listed security. Exchange-Traded. Because they are traded on NYSE Arca, the Shares will provide investors with an efficient means of implementing investment tactics and strategies that involve Russian Rubles. NYSE Arca-listed securities are eligible for margin accounts. Accordingly, investors are able to purchase and hold Shares with borrowed money to the extent permitted by law. Transparent. The Shares are backed by the assets of the Trust, which does not hold or use derivative products. The value of the holdings of the Trust is reported on the Trust s website, www.currencyshares.com, every business day. Investing in the Shares will not insulate the investor from price volatility or other risks. Over time, the Trustee has withdrawn Russian Rubles from the Trust to pay expenses, reducing the amount of Russian Rubles represented by each Share and potentially causing tax implications for certain Shareholders. See Risk Factors and The Depository. On the date of this prospectus, one Share represents 999.8643 Russian Rubles. See Creation and Redemption of Shares. PRINCIPAL OFFICES The principal offices of the Sponsor, the Trust and the Distributor are the offices of Rydex Investments at 805 King Farm Boulevard, Suite 600, Rockville, Maryland 20850. The telephone number of Rydex Investments at that address is (800) 820-0888. Neither the Sponsor, the Trust nor the Distributor own or lease any other real estate. The Trustee has a trust office at 2 Hanson Place, Brooklyn, New York 11217. The Depository is located at 125 London Wall, London, EC2Y 5AJ, United Kingdom. Table of Contents This prospectus contains information you should consider when making an investment decision about the Shares. You may rely on the information contained in this prospectus or incorporated by reference in this prospectus. The Trust and the Sponsor have not authorized any person to provide you with different information and, if anyone provides you with different or inconsistent information, you should not rely on it. This prospectus is not an offer to sell the Shares in any jurisdiction where the offer or sale of the Shares is not permitted. The Shares are not registered for public sale in any jurisdiction other than the United States. Table of Contents Prospectus Summary 1
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+Prospectus Summary This is a summary of the prospectus. You should read the entire prospectus, including Risk Factors beginning on page 8 and the information incorporated by reference in this prospectus, before making an investment decision about the Shares. See Glossary of Terms beginning on page 12 for a description of certain terms used in this prospectus. TRUST STRUCTURE The Trust is a grantor trust formed under the laws of the State of New York pursuant to the Depositary Trust Agreement. The Trust holds South African Rand and is expected from time to time to issue Baskets in exchange for deposits of South African Rand and to distribute South African Rand in connection with redemptions of Baskets. The investment objective of the Trust is for the Shares to reflect the price in USD of the South African Rand. Earning income for Shareholders is not the objective of the Trust. Whether investors earn income primarily depends on the relative value of the South African Rand and the USD. If the South African Rand appreciates relative to the USD and a Shareholder sells Shares, the Shareholder will earn income. If the South African Rand depreciates relative to the USD and a Shareholder sells Shares, the Shareholder will incur a loss. The Sponsor believes that, for many investors, the Shares represent a cost-effective investment in South African Rand. The Shares represent units of fractional undivided beneficial interest in, and ownership of, the Trust. The Sponsor intends to apply to NYSE Arca to have the Shares listed and traded on NYSE Arca under the symbol FXSA. The Shares may also trade in other markets, but the Sponsor has not sought to have the Shares listed by any other market. The Sponsor, Rydex Specialized Products LLC d/b/a Rydex Investments, a Delaware limited liability company, established the Trust and is responsible for registering the Shares. The Sponsor generally oversees the performance of the Trustee and the Trust s principal service providers, but does not exercise day-to-day oversight over the Trustee or the Trust s service providers. The Sponsor may remove the Trustee if any of various events occur. See Description of the Depositary Trust Agreement The Trustee Resignation, discharge or removal of trustee; successor trustees for more information. The Sponsor maintains a public website on behalf of the Trust containing information about the Trust and the Shares. The internet address of the Trust s website is www.currencyshares.com. This internet address is provided here only as a convenience to you; the information contained on or connected to the Trust s website is not considered part of this prospectus. The general role and responsibilities of the Sponsor are discussed further under The Sponsor. The Trustee is The Bank of New York Mellon, a banking corporation formed under the laws of the State of New York with trust powers. The Trustee is generally responsible for the day-to-day administration of the Trust. This includes calculating the NAV of the Trust and the NAV per Share each business day, paying the Trust s expenses (which are accrued daily but paid monthly), including withdrawing the Trust s South African Rand, if needed, receiving and processing orders from Authorized Participants to create and redeem Baskets and coordinating the processing of such orders with the Depository and DTC. The general role, responsibilities and regulation of the Trustee are further described under The Trustee. The Depository is JPMorgan Chase Bank, N.A., London Branch. The Depository and the Trustee have elected the laws of England to govern the Deposit Account Agreement between them. The Depository accepts South African Rand deposited with it by Authorized Participants in connection with the creation of Baskets. The Depository facilitates the transfer of South African Rand into and out of the Trust through the two deposit accounts maintained with it by the Trust. The Depository may pay interest on the primary deposit account but not on the secondary deposit account. Interest on the primary deposit account, if any, accrues daily and is paid monthly. The material terms of the Depositary Trust Agreement are discussed in greater detail in Description of the Depositary Trust Agreement. The general role, responsibilities and regulation of the Depository and the two deposit accounts are further described under The Depository and Description of the Deposit Account Agreement. Detailed descriptions of certain specific rights and duties of the Trustee and the Depository are set forth under Description of the Shares, Description of the Depositary Trust Agreement and Description of the Deposit Account Agreement. PART II INFORMATION NOT REQUIRED IN PROSPECTUS Item 13. Other Expenses of Issuance and Distribution. The expenses incurred in connection with the issuance and distribution of the securities being registered are as set forth below. Other than the Securities and Exchange Commission filing fee, all fees and expenses are estimated. Securities and Exchange Commission filing fee $ 0 Legal fees and expenses(1) $ 15,000 Accounting fees and expenses $ 2,000 Total expenses $ 17,000 (1) Excludes the additional fee of Foley & Lardner LLP based on the NAV of the Trust. Item 14. Indemnification of Directors and Officers. The Sponsor is a limited liability company formed as such under Delaware law. Section 18-108 of the Delaware Limited Liability Company Act provides that a limited liability company may indemnify and hold harmless any members, managers or other persons against any and all claims and demands whatsoever, subject to any standards and restrictions set forth in the limited liability company agreement of the limited liability company. Section 18 of the Sponsor s Limited Liability Company Agreement provides that, to the fullest extent permitted by applicable law, a member or officer of the Sponsor will be entitled to indemnification from the Sponsor for any loss, damage or claim incurred by the member or officer for any act or omission performed or omitted by the member or officer in good faith on behalf of the Sponsor and in a manner reasonably believed to be within the scope of the authority conferred on the member or officer by the Sponsor s Limited Liability Company Agreement; provided, however, that no member or officer will be entitled to be indemnified if the loss, damage or claim was due to the member s or officer s fraud or willful misconduct. A member s or officer s reasonably incurred costs and expenses in defending pending or threatened actions, suits or proceedings will be paid in advance by the Sponsor if the member or officer provides an undertaking to repay the amounts advanced if it is ultimately determined that the member or officer is not entitled to be indemnified by the Sponsor. The indemnity and the advance of expenses are limited to the Sponsor s assets, and no member of the Sponsor will have personal liability for such indemnity. Section 7.1(d) of the Depositary Trust Agreement provides that the Sponsor and its directors, Shareholders, officers, employees, affiliates and subsidiaries will be indemnified from the Trust and held harmless against any loss, liability or expense incurred by an indemnified party without (1) negligence, bad faith, willful misconduct or willful malfeasance on the part of the indemnified party arising out of or in connection with the performance of its obligations under the Depositary Trust Agreement or any actions taken in accordance with the provisions of the Depositary Trust Agreement or (2) the indemnified party s reckless disregard of its obligations and duties under the Depositary Trust Agreement. The indemnity will include payment from the Trust of the indemnified party s costs and expenses of defending itself against any claim or liability based on its capacity as Sponsor under the Depositary Trust Agreement. Item 15. Recent Sales of Unregistered Securities. Not applicable. Item 16. Exhibits and Financial Statement Schedules. (a) Exhibits Exhibit Number Document Description 3.1 Certificate of Formation of Rydex Specialized Products LLC, incorporated herein by reference to Exhibit 3.1 to the Registration Statement on Form S-1 (File No. 333-150685) filed by the Trust on May 7, 2008. 3.2 Limited Liability Company Agreement of Rydex Specialized Products, LLC, incorporated herein by reference to Exhibit 3.2 to the Registration Statement on Form S-1 (File No. 333-150685) filed by the Trust on May 7, 2008. 4.1 Depositary Trust Agreement dated as of August 7, 2008 among Rydex Specialized Products LLC, The Bank of New York Mellon, all registered owners and beneficial owners of South African Rand Shares issued thereunder and all depositors, incorporated herein by reference to Exhibit 4.1 to the Annual Report on Form 10-K/A filed by the Trust on March 10, 2011. 4.2 Form of Participant Agreement, incorporated herein by reference to Exhibit 4.2 to the Registration Statement on Form S-1 (File No. 333-150685) filed by the Trust on May 7, 2008. 5.1 Opinion of Foley & Lardner LLP as to legality. 8.1 Opinion of Foley & Lardner LLP as to tax matters. 10.1 Deposit Account Agreement dated as of August 7, 2008 between The Bank of New York Mellon and the London Branch of JPMorgan Chase Bank, N.A. incorporated herein by reference to Exhibit 10.1 to the Annual Report on Form 10-K/A filed by the Trust on March 10, 2011. 10.2 Sublicense Agreement dated as of August 28, 2008 between PADCO Advisors II, Inc. and Rydex Specialized Products LLC, incorporated herein by reference to Exhibit 10.2 to the Annual Report on Form 10-K/A filed by the Trust on March 10, 2011. 23.1 Consent of PricewaterhouseCoopers LLP. 23.2 Consent of Ernst & Young LLP. 23.3 Consents of Foley & Lardner LLP (included in Exhibits 5.1 and 8.1). 24.1 Power of Attorney (included on the signature page to this registration statement as filed with the Commission on August 12, 2011).* * Previously filed (b) Financial Statement Schedules Not applicable. Item 17. Undertakings. The undersigned registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and the Sponsor and the Trust are not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. Preliminary Prospectus Subject to Completion September 30, 2011 10,150,000 Shares South African Rand Shares The CurrencyShares South African Rand Trust (Trust) issues South African Rand Shares (Shares) that represent units of fractional undivided beneficial interest in, and ownership of, the Trust. Rydex Specialized Products LLC, d/b/a Rydex Investments, is the sponsor of the Trust (Sponsor) and may be deemed the issuer of the Shares pursuant to Section 2(a)(4) of the Securities Act of 1933, as amended (the Securities Act). The Bank of New York Mellon is the trustee of the Trust (Trustee), JPMorgan Chase Bank, N.A., London Branch, is the depository for the Trust (Depository), and Rydex Distributors, LLC is the distributor for the Trust (Distributor). The Trust intends to issue additional Shares on a continuous basis through the Trustee. The Shares may be purchased from the Trust only in one or more blocks of 50,000 Shares, as described in Creation and Redemption of Shares. A block of 50,000 Shares is called a Basket. The Trust issues Shares in Baskets on a continuous basis to certain authorized participants (Authorized Participants) as described in Plan of Distribution. Each Basket, when created, is offered and sold to an Authorized Participant at a price in South African Rand equal to the net asset value (NAV) of 50,000 Shares on the day that the order to create the Basket is accepted by the Trustee. It is expected that the Shares will be offered and sold to the public by Authorized Participants at varying prices in U.S. Dollars (USD) to be determined by reference to, among other things, the market price of the South African Rand and the trading price of the Shares on NYSE Arca, Inc. (NYSE Arca) at the time of each sale. Authorized Participants will not receive from the Trust, the Sponsor or any of their affiliates, any fee or other compensation in connection with the sale of Shares. Authorized Participants may receive commissions or fees from investors who purchase Shares through their commission- or fee-based brokerage accounts. The Sponsor intends to apply to NYSE Arca to have the Shares listed and traded on NYSE Arca under the symbol FXSA. The Shares may also trade in other markets, but the Sponsor has not sought to have the Shares listed by any other market. Investing in the Shares involves significant risks. See Risk Factors, starting on page 8. Neither the Securities and Exchange Commission (SEC) nor any state securities commission has approved or disapproved of the securities offered in this prospectus, or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The Shares are neither interests in nor obligations of the Sponsor, the Trustee, the Depository or the Distributor. Neither the Shares nor the Trust s two deposit accounts maintained at the Depository and the South African Rand deposited in them are deposits insured against loss by the Federal Deposit Insurance Corporation (FDIC), any other federal agency of the United States or the Financial Services Compensation Scheme of England. In order to provide liquidity for the Shares at the commencement of trading, the Initial Purchaser, [ ] will deposit [ ] South African Rand in the primary deposit account of the Trust and the Trustee will instruct DTC to record, and DTC will record, [ ] Baskets totaling [ ] Shares (constituting 1,000 South African Rand per Share) as owned by the Initial Purchaser. The Initial Purchaser intends to offer to the public these [ ] Shares at a per-Share offering price that will vary depending on, among other factors, the price of the Shares on NYSE Arca at the time of the offer. Shares offered by the Initial Purchaser at different times may have different offering prices. The Initial Purchaser will not receive from the Trust, the Sponsor, the Distributor or any of their affiliates any fee or other compensation in connection with the sale of the Shares. The date of this prospectus is , 2011. The Distributor, Rydex Distributors, LLC, is a limited liability company formed under the laws of the State of Kansas. The Distributor assists the Sponsor in marketing the Shares. Specifically, the Distributor will develop a marketing plan for the Trust, prepare marketing materials regarding the Shares, including the content of the Trust s website, execute the marketing plan for the Trust and provide strategic and tactical research on the foreign exchange markets, in each case in compliance with applicable laws and regulations. The Distributor and the Sponsor are affiliates of one another. There is no written agreement between them, and no compensation is paid by the Sponsor to the Distributor in connection with services performed by the Distributor for the Trust. See The Distributor for more information. INVESTMENT ATTRIBUTES OF THE TRUST The investment objective of the Trust is for the Shares to reflect the price in USD of the South African Rand. The Shares are intended to provide institutional and retail investors with a simple, cost-effective means of gaining investment benefits similar to those of holding South African Rand. The costs of purchasing Shares should not exceed the costs associated with purchasing any other publicly-traded equity securities. The Shares are an investment that is: Easily Accessible. Investors will be able to access the market for South African Rand through a traditional brokerage account. When admitted to trading, the Shares will be bought and sold on NYSE Arca like any other exchange-listed security. Exchange-Traded. Because they will be traded on NYSE Arca, the Shares will provide investors with an efficient means of implementing investment tactics and strategies that involve South African Rand. NYSE Arca-listed securities are eligible for margin accounts. Accordingly, investors will be able to purchase and hold Shares with borrowed money to the extent permitted by law. Transparent. The Shares will be backed by the assets of the Trust, which will not hold or use derivative products. The value of the holdings of the Trust will be reported on the Trust s website, www.currencyshares.com, every business day. Investing in the Shares will not insulate the investor from price volatility or other risks. Further, the ratio of South African Rand to Shares may decrease due to withdrawals made to pay Trust expenses in the event that the interest income of the Trust is not sufficient to cover the entirety of the Trust expenses. See Risk Factors and The Depository. PRINCIPAL OFFICES The principal offices of the Sponsor, the Trust and the Distributor are the offices of Rydex Investments at 805 King Farm Boulevard, Suite 600, Rockville, Maryland 20850. The telephone number of Rydex Investments at that address is (800) 820-0888. Neither the Sponsor, the Trust nor the Distributor own or lease any other real estate. The Trustee has a trust office at 2 Hanson Place, Brooklyn, New York 11217. The Depository is located at 125 London Wall, London, EC2Y 5AJ, United Kingdom. This prospectus contains information you should consider when making an investment decision about the Shares. You may rely on the information contained in this prospectus or incorporated by reference in this prospectus. The Trust and the Sponsor have not authorized any person to provide you with different information and, if anyone provides you with different or inconsistent information, you should not rely on it. This prospectus is not an offer to sell the Shares in any jurisdiction where the offer or sale of the Shares is not permitted. The Shares are not registered for public sale in any jurisdiction other than the United States. Table of Contents Prospectus Summary 1
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+S-1 1 a59666sv1.htm FORM S-1 sv1 Table of Contents As filed with the Securities and Exchange Commission on June , 2011 Registration No. 333- UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 T3 Motion, Inc. (Exact Name of Registrant as Specified in Charter) Delaware 3690 20-4987549 (State or other jurisdiction of incorporation or organization) (Primary Standard Industrial Classification Code Number) (I.R.S. Employer Identification No.) T3 Motion, Inc. 2990 Airway Avenue, Building A Costa Mesa, CA 92626 (714) 619-3600 (Address, including zip code, and telephone number, including area code, of registrant s principal executive offices) Ki Nam, Chief Executive Officer T3 Motion, Inc. 2990 Airway Avenue, Building A Costa Mesa, CA 92626 (714) 619-3600 (Name, address, including zip code, and telephone number, including area code, of Agent for Service) Copies to: Kevin K. Leung, Esq. Ryan S. Hong, Esq. LKP Global Law LLP 1901 Avenue of the Stars, Suite 480 Los Angeles, California 90067 (310) 424-1890 Approximate date of commencement of proposed sale to the public: From time to time after the effective date of this Registration Statement. If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registrations statement number of the earlier effective registration statement for the same offering. If this Form is a registration statement pursuant to General Instruction I.D. or a post-effective amendment thereto that shall become effective upon filing with the Commission pursuant to Rule 462(e) under the Securities Act, check the following box. If this Form is a post-effective amendment to a registration statement pursuant to General Instruction I.D. filed to register additional securities or additional classes of securities pursuant to Rule 413(b) under the Securities Act, check the following box. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company (Do not check if a smaller reporting company) CALCULATION OF REGISTRATION FEE Proposed Maximum Proposed Maximum Amount of Title of Each Class of Amount to be Offering Price per Aggregate Registration Securities to be Registered Registered(1) Share Offering Price Fee Common Stock, $0.001 par value 4,643,706 $ 4.35 (2) $ 20,200,104 $ 2,345.23 Class H warrants to purchase common stock(4) 1,771,128 (5 ) Class I warrants to purchase common stock(4) 1,771,128 (5 ) Common Stock, $0.001 par value (issuable upon exercise of Class H warrants) 1,771,128 $ 3.00 (3) $ 5,313,384 $ 616.88 Common Stock, $0.001 par value (issuable upon exercise of Class I warrants) 1,771,128 $ 3.50 (3) $ 6,198,948 $ 719.70 Common Stock, $0.001 par value (issuable upon exercise of $5.00 Class G warrants) 831,373 $ 5.00 (3) $ 4,156,865 $ 485,61 Common Stock, $0.001 par value (issuable upon exercise of $7.00 Class G warrants) 198,764 $ 7.00 (3) $ 1,391,348 $ 161.54 Common Stock, $0.001 par value (issuable upon exercise of $15.40 warrants) 12,000 $ 15.40 (3) $ 184,800 $ 21.46 Common Stock, $0.001 par value (issuable upon exercise of $16.50 warrants) 27,478 $ 16.50 (3) $ 453,387 $ 52.64 Total 9,255,577 $ 37,898,836 $ 4,403.06 (1) Pursuant to Rule 416 under the Securities Act of 1933 (the Securities Act ), the registrant is also registering hereunder an indeterminate number of shares of common stock issuable as a result of stock splits, stock dividends, recapitalizations or similar events. (2) Estimated solely for the purpose of computing the amount of the registration fee pursuant to Rule 457(c) under the Securities Act on the basis of the average of the high price of $4.50 and the low price of $4.20 on the NYSE Amex on June 1, 2011. (3) Estimated solely for the purpose of computing the amount of the registration fee pursuant to Rule 457(g) under the Securities Act. (4) Pursuant to Rule 416 under the Securities Act, this registration statement shall be deemed to cover such additional securities as may be issued to prevent dilution resulting from stock splits, stock dividends or similar transactions as a result of the anti-dilution provisions contained in the Class H warrants and Class I warrants (i) to be offered or issued in connection with any provision of any securities purported to be registered hereby to be offered pursuant to terms which provide for a change in the amount of securities being offered or issued to prevent dilution resulting from stock splits, stock dividends, or similar transactions and (ii) of the same class as the securities covered by this registration statement issued or issuable prior to completion of the distribution of the securities covered by this registration statement as a result of a split of, or a stock dividend on, the registered securities. (5) No separate registration fee required pursuant to Rule 457(g) under the Securities Act. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act or until this Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine. Table of Contents SUMMARY This summary contains basic information about us and this offering. You should read the entire prospectus carefully, including the Risk Factors section and the documents incorporated by reference into this prospectus, including our consolidated financial statements and the related notes included in those documents before making an investment decision. Some of the statements contained in this prospectus and the documents incorporated herein by reference are forward-looking statements and may involve a number of risks and uncertainties. Our actual results and future events may differ significantly from these predictions based upon factors, including, but not limited to, those set forth below in the section entitled Risk Factors . You should not put undue reliance on the forward-looking statements in this document, which speak only as of the date on the cover of this prospectus. In this prospectus, we refer to T3 Motion, Inc. and its subsidiary as we, our, or T3, or the Company. We refer to our subsidiary as Subsidiary. Our Company T3 Motion designs, manufactures and markets personal mobility vehicles powered by electric motors. Our initial product is the T3 Series, which is a three wheel, electric stand-up vehicle ( ESV ) powered by a quiet, zero-gas emission electric motor that is designed specifically for public and private security personnel. Substantially all of our revenues to date have been derived from sales and maintenance of the T3 Series ESVs and related accessories. T3 Series ESV The T3 Series is a three-wheel, front wheel drive, stand-up, electric personal mobility vehicle with a zero-gas emission electric motor. The T3 Series has hydraulic disk brakes on both rear wheels that are matched with 17-inch low profile motorcycle tires for long tread wear and demanding performance. The vehicle is equipped with an LCD control panel display and utilizes high intensity LED lighting for its vertically adjustable headlights and taillights. It also features emergency lights, as well as a siren on the law enforcement model. The T3 Series enables the operator to respond rapidly to calls with low physical exertion. The nine-inch elevated riding platform allows 360 degrees visibility, while the ergonomic riding position reduces fatigue. The T3 Series zero degree turning radius makes it highly maneuverable. The T3 Series comes standard with a lockable storage compartment for equipment and supplies. The T3 Series has replaceable power modules that allow continuous vehicle operation without downtime required for recharging. The T3 Series also offers a variety of battery technology options in its power modules. The power modules and charger can be sold separately from the vehicle to serve as replacement parts. T3i Series ESV We leveraged the modularity of the T3 Series vehicle to enter the international market with the T3i Series, which is a version of the professional T3 Series designed to comply with various international compliance standards. The T3i Series features integrated LED headlights, brake lights, running lights, and emergency lights. CT Series Micro Car The CT Series Micro Car is a low speed four-wheel electric car. The CT Series offers a variety of battery technology options with varying range options. The CT Series has lighting, siren and PA system options and is manufactured by CT T Co., Ltd., a Korean electric vehicle manufacturer ( CT T ). The CT Series is considered both a low speed vehicle and a neighborhood electric vehicle. Pursuant to our distribution agreement with CT T, dated November 24, 2008, we have the exclusive license to market and sell the CT Series Micro Car in North America for all law enforcement, government and military markets and in all of the United States for government, law enforcement and security markets. The initial term of the distribution agreement expires in November 2011, but this agreement automatically renews for additional one-year periods unless it is terminated by either party by providing written notice to the other party at least 90 days prior to the end of any term. Table of Contents (Subject To Completion, Dated June , 2011) PROSPECTUS T3 Motion, Inc. 1,771,128 Class H Warrants 1,771,128 Class I Warrants 9,255,577 shares of Common Stock This prospectus covers the resale by the selling stockholders of (i) 1,771,128 shares of our common stock, 1,771,128 Class H warrants and 1,771,128 Class I warrants comprising units issued upon conversion of certain debt; (ii) 3,542,256 shares of common stock underlying such Class H and Class I warrants; and (iii) 3,942,193 additional shares of common stock, including shares underlying other outstanding warrants. Each Class H warrant entitles the holder to purchase one share of our common stock at an exercise price of $3.00 at any time between August 19, 2011 and May 13, 2013. Each Class I warrant entitles the holder to purchase one share of our common stock at an exercise price of $3.50 at any time between August 19, 2011 and May 13, 2016. The selling stockholders will sell their securities in accordance with the Plan of Distribution set forth in this prospectus. We will not receive any of the proceeds from the sale of the warrants or shares offered for sale by the selling stockholders. To the extent that warrants are exercised for cash, if at all, we will receive the exercise price. The selling stockholders will bear all commissions and discounts, if any, attributable to the sales of securities. We will bear all costs, expenses and fees in connection with the registration of the securities. Our common stock is quoted on the NYSE Amex, LLC under the symbol TTTM. On June 2, 2011, the closing sale price of our common stock on the NYSE Amex, LLC was $4.21 per share. Investing in our securities involves significant risks. You should invest in our securities only if you can afford to lose your entire investment. For a discussion of some of the risks involved, see Risk Factors beginning on page 5 of this prospectus. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The date of this prospectus is , 2011. Table of Contents We plan to leverage the branding of the T3 Series to market the CT Series Micro Car using our existing sales channels in the law enforcement and private security sectors. Electric/Hybrid Vehicle The Electric/Hybrid Vehicle is our newest product that is currently in development. The Electric/Hybrid Vehicle is a plug-in hybrid vehicle that is expected to be introduced in late 2011. The proprietary rear-wheel design features a patent-pending, single wide stance wheel with two high performance rear tires sharing the one rear wheel. Due to its three-wheel design, the Electric/Hybrid Vehicle is classified as a motorcycle. Corporate Information Our corporate offices are located at 2990 Airway Avenue, Building A, Costa Mesa, California 92626 and our telephone number is (714) 619-3600. Our website is www.T3motion.com. You should not consider the information contained on, or accessible through, our website to be part of this prospectus or in deciding whether to purchase our securities. Table of Contents THE OFFERING Securities offered by selling stockholders: Common stock(1) 9,255,577 shares Class H warrants 1,771,128 warrants Class I warrants 1,771,128 warrants Securities outstanding as of June 1, 2011: Common stock: 12,880,978 shares Class H warrants 4,942,557 warrants Class I warrants 4,942,557 warrants Common stock outstanding after the offering (assuming full exercise of all warrants for cash): 23,835,707 shares Use of proceeds: We will not receive any of the proceeds from the sale of the shares by the selling stockholders. However, to the extent that the Warrants are exercised for cash, we will receive proceeds from any exercise of the Warrants up to an aggregate of approximately $38.3 million. We intend to use any proceeds received from the exercise of the Warrants for working capital and other general corporate purposes. AMEX symbols: Common Stock TTTM Class H warrants TTTM.Z Class I warrants TTTM.W Risk factors: The securities offered by this prospectus are speculative and involve a high degree of risk and investors purchasing securities should not purchase the securities unless they can afford the loss of their entire investment. See Risk Factors beginning on page 6 of this prospectus. (1) Includes (i) 3,542,256 shares issuable upon exercise of the Class H and the Class I warrants and (ii) 1,069,615 shares issuable upon exercise of certain other outstanding warrants (collectively, the Warrants ). Table of Contents Summary Consolidated Financial Information The summary consolidated financial information set forth below is derived from our consolidated financial statements. The consolidated statement of operations data for the years ended December 31, 2010 and 2009 are derived from our audited consolidated financial statements included elsewhere in this prospectus. The consolidated statement of operations data for the years ended December 31, 2008 and 2007 are derived from our audited consolidated financial statements not included in this prospectus. The selected consolidated balance sheet data as of December 31, 2010 and 2009 are derived from our audited consolidated financial statements included elsewhere in this prospectus. The selected consolidated balance sheet data as of December 31, 2008 is derived from our audited consolidated financial statements not included in this prospectus. The consolidated balance sheet data as of March 31, 2011 is derived from our unaudited condensed consolidated financial statements included elsewhere in this prospectus. The consolidated statement of operations data for the three months ended March 31, 2011 and 2010 are derived from our unaudited condensed consolidated financial statements included elsewhere in this prospectus. This information should be read in conjunction with our historical consolidated financial statements, the notes thereto, and with Management s Discussion and Analysis of Financial Condition and Results of Operations. Historical results are not necessarily indicative of the results that may be expected for any future period. The summary financial information is not intended to replace our consolidated financial statements and accompanying notes thereto. Consolidated Statement of Operations Data: Three Months Ended March 31, (unaudited) Years Ended December 31, 2011 2010 2010 2009 2008 2007 Net revenues $ 996,562 $ 1,149,426 $ 4,682,908 $ 4,644,022 $ 7,589,265 $ 1,822,269 Gross profit (loss) 39,630 21,977 170,411 (344,096 ) (1,703,611 ) (2,106,256 ) Total operaing expenses 1,367,207 1,777,573 7,009,514 8,449,934 9,917,111 6,422,705 Loss from operations (1,327,577 ) (1,755,596 ) (6,839,103 ) (8,794,030 ) (11,620,722 ) (8,528,961 ) Net loss $ (640,585 ) $ (1,681,739 ) $ (8,327,887 ) $ (6,698,893 ) $ (12,297,797 ) $ (8,577,232 ) Consolidated Balance Sheet Data: March 31, (unaudited) December 31, 2011 2010 2009 2008 Cash and cash equivalents, including restricted cash $ 154,070 $ 133,861 $ 2,580,798 $ 1,682,741 Total assets 3,705,707 3,579,916 6,059,321 7,904,188 Total liabilities 19,833,102 19,259,648 15,703,734 7,188,313 Total stockholders equity (deficit) (16,127,395 ) (15,679,732 ) (9,644,413 ) 715,875 Going Concern and Cash Requirements The Company s consolidated financial statements have been prepared using the accrual method of accounting in accordance with accounting principles generally accepted in the United States of America ( GAAP ) and have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities in the normal course of business. The Company has sustained operating losses since its inception (March 16, 2006) and has used substantial amounts of working capital in its operations. Further, at December 31, 2010, the Company had an accumulated deficit of $(45,120,210), a working capital deficit of $(15,057,791) and cash and cash equivalents (including restricted cash) of $133,861. Additionally, the Company used cash in operations of $(5,185,067) during the year ended December 31, 2010. At March 31, 2011, the Company had an accumulated deficit of $(46,625,595), a working capital deficit of $(16,545,239) and cash and cash equivalents (including restricted cash) of $154,070. Additionally, the Company used cash in operations of $(803,136) for the three months Table of Contents ended March 31, 2011. These factors raise substantial doubt about the Company s ability to continue as a going concern for a reasonable period of time. Management has been and plans to continue to implement its cost reduction strategy for material, production and service costs. Until management achieves its cost reduction strategy and is able to generate sales to realize the benefits of the strategy, and sufficiently increases cash flow from operations, the Company will require additional capital to meet working capital requirements, debt service, research and development, capital requirements and compliance requirements. On May 19, 2011, the Company completed a public offering of its securities. Management has been implementing cost reduction strategies and believes that its cash from operations, together with the net proceeds of the offering, will be sufficient to allow the Company to continue as a going concern through at least December 31, 2011. As such, the consolidated financial statements included elsewhere herein do not include any adjustments that might result in the event the Company is unable to continue as a going concern. The Company anticipates that it will pursue raising additional debt or equity financing to fund its new product development and expansion plans. The Company cannot make any assurances that management s cost reduction strategies will be effective or that any additional financing will be completed on a timely basis, on acceptable terms or at all. Management s inability to successfully implement its cost reduction strategies or to complete any other financing will adversely impact the Company s ability to continue as a going concern. Table of Contents RISK FACTORS You should carefully consider the risks described below before making an investment decision. Our business could be harmed by any of these risks. The trading price of our common stock could decline due to any of these risks, and you may lose all or part of your investment. In assessing these risks, you should also refer to the other information contained in this prospectus, including our consolidated financial statements and related notes. Risks Related to Our Company and Our Industry We have a history of losses and we expect to continue to have additional net losses in the near future, which could cause the value of our securities to decline and may even cause our business to fail. We have generated net losses since our inception in March 2006. Our net loss for the three months ended March 31, 2011 was approximately $(641,000). Our net losses for the years ended December 31, 2010, 2009, 2008 and 2007 were approximately $(8.3 million), $(6.7 million), $(12.3 million) and $(8.6 million), respectively. A large portion of our expenses are fixed, and accordingly, we will need to significantly increase our sales in order to achieve profitability. We anticipate that we will continue to generate losses in the near future, and the rate at which we will incur losses could continue or even increase in future periods from current levels as a result of any of the following: We may be unable to increase sales sufficiently to recognize economies of scale; We may be unable to successfully expand into other private security markets or achieve broad brand recognition for our products; We may be unable to reduce our costs or experience unanticipated costs or expenses in connection with our current development, marketing and manufacturing plans; We may encounter technological challenges in connection with the development, introduction or manufacturing of enhancements to our existing vehicles or in the addition of new products; and We may be unable to obtain sufficient components or materials used in our products due to capital constraints, which could adversely effect our sales, our reputation and credibility. To date, we have financed our operations primarily through equity and debt financing. Because we anticipate additional net losses in the near future, we believe we will likely require additional financings subsequent to the May public offering. Our ability to arrange future financing from third parties will depend upon our perceived performance and market conditions as well as the ability to obtain the consent from at least our 67% in interest of certain major investors that acquired our Class H and Class I warrants in connection with our recent public offering. Our inability to raise additional working capital on a timely basis, on acceptable terms or at all would negatively impact our business and operations, which could cause the price of our common stock to decline. It could also lead to the reduction or suspension of our operations and ultimately force us to go out of business. If we are unable to continue as a going concern, our securities will have little or no value. The report of our independent registered public accounting firm that accompanies our audited consolidated financial statements for the years ended December 31, 2010 and 2009 contains a going concern qualification in which such firm expressed substantial doubt about our ability to continue as a going concern. In addition to our history of losses, our accumulated deficit as of March 31, 2011, December 31, 2010 and 2009 was approximately $(46.6 million), $(45.1 million) and $ (33.1 million), respectively. At March 31, 2011 and December 31, 2010, we had a working capital deficit of $(16.5 million) and $(15.1 million), respectively, and cash and cash equivalents (including restricted cash) of $154,070 and $133,861, respectively. While management plans to continue to implement a cost reduction strategy and is seeking to increase our cash flow from operations, we cannot assure you that we will be successful in this regard. Since inception, we have used cash in excess of operating revenues. Until management achieves its cost reduction strategy and is able to generate significantly higher sales to realize the benefits of the strategy, and significantly increase our cash flow from operations, we may require additional capital to meet our working capital requirements, achieve our expansion Table of Contents plans and fund our research and development. We plan to continue to raise additional equity or debt financing to meet our working capital requirements, including the use of $9.6 million in net proceeds generated from our recently closed public offering. If we fail as a going concern, our shares of common stock will hold little or no value. Our business depends substantially on the continuing efforts of our executive officers, and our ability to maintain a skilled labor force, and our business may be severely disrupted if we lose their services. Our future success depends substantially on the continued services of our executive officers, especially Ki Nam, our Chief Executive Officer and the Chairman of our Board of Directors, who has significantly contributed to the design and manufacturing of substantially all of our products and Kelly Anderson, our Chief Financial Officer. We do not maintain key man life insurance on any of our executive officers. If one or more of our executive officers are unable or unwilling to continue in their present positions, we may not be able to replace them readily, if at all. Therefore, our business may be severely disrupted, and we may incur additional expenses to recruit and retain new officers. In addition, if any of our executives joins a competitor or forms a competing company, we may lose some of our customers. Our future growth is dependent upon the public s willingness to accept electric vehicles. Our future growth is largely dependent upon the adoption by the public of, and we are subject to an elevated risk of any reduced demand for, alternative fuel vehicles in general and electric vehicles in particular. If the market for electric vehicles does not develop as we expect or develops more slowly than we expect, our business, prospects, financial condition and operating results will be harmed. The market for electric vehicles is relatively new, rapidly evolving, characterized by rapidly changing technologies, price competition, additional competitors, evolving government regulation and industry standards, frequent new vehicle announcements and changing consumer demands and behaviors. Factors that may influence the adoption of electric vehicles, include: perceptions about electric vehicle quality, safety (in particular with respect to lithium-ion battery packs), design, performance and cost, especially if adverse events or accidents occur that are linked to the quality or safety of electric vehicles; perceptions about vehicle safety in general, and in particular safety issues that may be attributed to the use of advanced technology; the range over which electric vehicles may be driven on a single battery charge; the decline of an electric vehicle s range resulting from deterioration over time in the battery s ability to hold a charge; improvements in the fuel economy of the internal combustion engine; volatility in the cost of oil and gasoline; access to charging stations, standardization of electric vehicle charging systems and consumers perceptions about convenience and cost to charge an electric vehicle; concerns that extreme temperatures, cold or hot, could reduce the performance of the electric vehicle or life of the batteries included in such vehicles; the availability of tax and other governmental incentives to purchase and operate electric vehicles or future regulation requiring increased use of nonpolluting vehicles; and macroeconomic factors. Additionally, we may become subject to regulations that may require us to alter the design of our vehicles, which could negatively impact the public s interest in our vehicles or increase the cost to manufacture such vehicles. The influence of any of the factors described above may cause current or potential customers not to purchase our electric vehicles, which would materially adversely affect our business, operating results, financial condition and prospects. Table of Contents We may become subject to product liability claims, which could harm our financial condition and liquidity if we are not able to successfully defend or insure against such claims. The motor vehicle industry in general has historically been subject to a large number of product liability claims in recent years due to the nature of personal injuries that can result from accidents or malfunctions. We face an inherent risk of exposure to claims in the event people fail to use our vehicles for their intended purposes or if owners fail to use or care for them properly. These accidents can also occur as a result of user error or inadequate training, through no fault of the manufacturer of the vehicle. A successful product liability claim against us could require us to pay a substantial monetary award. We maintain product liability insurance for all our vehicles with annual limits of approximately $2.0 million on a claims made basis, but we cannot assure that our insurance will be sufficient to cover all potential product liability claims. Any lawsuit seeking significant monetary damages either in excess of our coverage, or outside of our coverage, may have a material adverse effect on our business and financial condition. We may not be able to secure additional product liability insurance coverage on commercially acceptable terms or at reasonable costs when needed, particularly if we do face liability for our products and are forced to make a claim under our policy. In addition, a product liability claim could generate substantial negative publicity about our vehicles and business, and inhibit or prevent commercialization of other future vehicles, which would have a material adverse effect on our brand, business, prospects, financial condition and operating results. While our products are tested for quality, our products nevertheless may fail to meet customer expectations from time-to-time. Also, not all defects are immediately detectible. Failures could result from faulty design or problems in manufacturing. In either case, we could incur significant costs to repair and/or replace defective products under warranty. Liability claims could require us to spend significant time and money in litigation and pay significant damages. As a result, any of these claims, whether or not valid or successfully prosecuted, could have a substantial, adverse effect on our business and financial results. In addition, although we currently have product liability insurance, the amount of damages awarded against us in such a lawsuit may exceed the policy limits of such insurance. Further, in some cases, product redesigns and/or rework may be required to correct a defect and such occurrences could adversely impact future business with affected customers. Our business, financial condition, results of operations and liquidity could be materially and adversely affected by any unexpected significant warranty costs. If our suppliers fail to consistently provide high quality parts and components or fail to comply with applicable laws and regulations, our brand image could be harmed due to negative publicity. We rely on independent suppliers to source most of our T3 Series products and to conduct most of the manufacturing process for our products. We have to rely on our suppliers to continue to provide the highest quality electric vehicles and operate with integrity. Because we do not control the operations of our suppliers, we cannot guarantee their compliance with ethical business practices, such as environmental responsibility, fair wage practices, and compliance with child labor laws, among others. A lack of demonstrated compliance could lead us to seek alternative suppliers, which could increase our costs and result in delayed delivery of our products, product shortages or other disruptions of our operations. If our suppliers do not comply with laws or fail to control the quality of products supplied, it could result in negative publicity for us and diminish our brand. If the purchasers of our vehicles customize our vehicles or change the charging infrastructure with aftermarket products, the vehicle may not operate properly, which could adversely impact our reputation and harm our business. Purchasers of our vehicles may seek to modify their existing vehicles, which could adversely impact the performance of the vehicles and could compromise vehicle safety systems. Also, if customers customize their vehicles with after-market parts or change the charging infrastructure, such parts may compromise driver safety. We have not tested, nor do we endorse such changes or parts. Such unauthorized modifications could reduce the safety of our vehicles and any injuries resulting from such modifications could result in adverse publicity, which would negatively affect our brand and harm our business, prospects, financial condition and operating results. Table of Contents Adverse conditions in the global economy and disruption in financial markets could impair our revenues. As widely reported, financial markets in the United States, Europe, the Middle East, Latin America and Asia have been experiencing extreme disruption in recent months, including, among other things, extreme volatility in security prices, severely diminished liquidity and credit availability, rating downgrades of certain investments and declining valuations of others. These conditions have already impaired our ability to access credit markets and finance operations. There can be no assurance that there will not be a further deterioration in financial markets and confidence in major economies. We have been, and may continue to be, impacted by these economic developments, both domestically and globally. We believe that the current tightening of credit in financial markets has adversely affected the ability of our customers and suppliers to obtain financing for significant purchases and operations, and could result in a decrease in orders for our products and services. Similarly, the downturn has resulted in budgetary constraints and delays in government funding, which we believe has also adversely affected the ability of certain law enforcement agencies and police departments to fund additional capital equipment purchases. These economic conditions may negatively impact us as some of our customers defer purchasing decisions, thereby lengthening our sales cycles. Our customers ability to pay for our products and services may also be impaired, which may lead to an increase in our allowance for doubtful accounts and write-offs of accounts receivable. Our net revenues for the three months ended March 31, 2011 decreased approximately $153,000 from the comparable period in 2010. Our net revenues in fiscal year 2010 were relatively flat as compared to 2009. Net revenues in 2009 decreased $2.9 million from 2008 due in part to many of the foregoing factors, which factors may continue to affect our revenues and operating results in future periods. Our markets are highly competitive, and if we are unable to compete effectively, or demonstrate a perceived advantage for our products over traditional means of transportation, our business will be adversely affected. We compete with other manufacturers of electric vehicles, as well as other traditional modes of transportation, such as bicycles, cars and motorcycles. The industries in which we operate include competitors who are larger, better financed and better known than we are and may compete more effectively than we can. In order to stay competitive in our industry, we must keep pace with changing technologies and customer preferences. If we are unable to differentiate our products from those of our competitors, our revenues may decline. In addition, our competitors have established relationships among themselves or with third parties to increase their ability to address customer needs. As a result, new competitors or alliances among competitors may emerge and compete more effectively than we can. Our failure to further refine our technology and develop and introduce new personal mobility products could render our products uncompetitive or obsolete, and reduce our sales and market share. The personal mobility industry is characterized by rapid increases in the diversity and complexity of technologies, products and services. We will need to invest significant financial resources in research and development to keep pace with technological advances in the personal mobility industry, evolving industry standards and changing customer requirements. However, research and development activities are inherently uncertain, and we might encounter practical difficulties in commercializing our research results or gaining broad market acceptance for our products. Our significant expenditures on research and development may not reap corresponding benefits. A variety of competing personal mobility technologies that other companies may develop could prove to be more cost-effective and have better performance than our products. Therefore, our development efforts may be rendered obsolete by the technological advances of others. Our failure to further refine our technology and develop and introduce new personal mobility products could render our products uncompetitive or obsolete, and result in a decline in our market share and revenue. Table of Contents We face risks associated with the marketing, distribution and sale of our personal mobility products internationally, and if we are unable to effectively manage these risks, they could impair our ability to expand our business abroad. We have expanded our marketing, distribution, and sales efforts to include the Middle East, Canada, Mexico, South Africa, South America and Europe. As a result, we are exposed to a number of risks, including: fluctuations in currency exchange rates; difficulty in engaging and retaining distributors who are knowledgeable about and, can function effectively in, overseas markets; increased costs associated with maintaining marketing efforts in various countries; difficulty and cost relating to compliance with the different commercial and legal requirements of the overseas markets in which we offer our products; and inability to obtain, maintain or enforce intellectual property rights. Our prospects for sales growth and profitability will be adversely affected if we have product replacement issues, or if we otherwise fail to maintain product quality and product performance at an acceptable cost. We will be able to expand our net sales and to achieve, sustain and enhance profitable operations only if we succeed in maintaining the quality and performance of our products. If we should not be able to produce high-quality products at standard manufacturing rates and yields, unit costs may be higher. In recent periods, we have occasionally had to replace components of existing products. For instance, we are voluntarily replacing external chargers due to the fact that the chargers could fail over time. This may adversely affect our reputation with potential customers. We have increased our warranty reserve accordingly. Because the establishment of reserves is an inherently uncertain process involving estimates of the number of future claims and the cost to settle claims, our ultimate losses may exceed our warranty reserve. Future increases to the warranty reserve would have an adverse effect on our profitability in the periods in which we make such increases. Additional product replacement issues could materially affect our business as it could increase cost of sales as a result of increased warranty service costs, reduce customer confidence on our products, reduce sales revenue, or increase product liability claims. The failure to achieve acceptable manufacturing yields could adversely affect our business. We may have difficulty achieving acceptable yields in the manufacture of our products which could lead to higher costs, a loss of customers or delay in market acceptance of our products. Slight impurities or defects can cause significant difficulties, particularly in connection with the production of a new product, the adoption of a new manufacturing process or any expansion of our manufacturing capacity and related transitions. Yields below our target levels can negatively impact our gross profit. From time to time we engage in related party transactions. There are no assurances that these transactions are fair to our company. From time to time we enter into transactions with related parties which include the purchase from or sale to of products and services from related parties, and advancing these related parties significant sums as prepayments for future goods or services and for working capital requirements, among other transactions, including advances from related parties. Our Audit Committee is responsible for reviewing our related party transactions. Notwithstanding these policies, we cannot assure you that in every instance the terms of the transactions with these various related parties are on terms as fair as we might receive from or extend to third parties. In addition, related party transactions in general have a higher potential for conflicts of interest than third-party transactions, could result in significant losses to our company and may impair investor confidence, which could adversely affect our business and our stock price. Table of Contents We are dependent on a few single sourced third party manufacturers. Any interruption in our relationships with these parties may adversely affect our business. Most components used in our products are purchased from outside sources. Certain components are purchased from single sourced suppliers. These single source suppliers provide components used on our products and include domestic suppliers such as American Made, Performance Composites, Imperial Electric and Santa Fe Mold. These suppliers provide the frame, fiberglass body, electric motor, and various small plastic parts, respectively. The failure of any such supplier to meet its commitment on schedule could have a material adverse effect on our business, operating results, financial condition or prospects. If a sole-source supplier were to go out of business or otherwise become unable to meet its supply commitments, the process of locating and qualifying alternate sources could require up to several months, during which time our production could be delayed. Such delays could have a material adverse effect on our business, operating results, financial condition or prospects. For instance, our revenues for the six months ended December 31, 2010 and three months ended March 31, 2011 were adversely affected by vendor supply issues, which we believe was due to reduced vendor staffing and their inability to respond to our orders coupled with our inadequate cash flow which resulted in certain vendors requiring terms to be cash in advance. Our dependence on third party suppliers for key components of our devices could delay shipment of our products and reduce our sales. We depend on certain domestic and foreign suppliers for the delivery of components used in the assembly of our products. Our reliance on third-party suppliers creates risks related to our potential inability to obtain an adequate supply of components or subassemblies and reduced control over pricing and timing of delivery of components and sub-assemblies. Specifically, we depend on suppliers of batteries and battery components and other miscellaneous customer parts for our products. We also do not have long-term agreements with any of our suppliers and there is no guarantee that supply will not be interrupted. Any interruption of supply for any material components of our products could significantly delay the shipment of our products and have a material adverse effect on our revenues, profitability and financial condition. Many of our customers have fluctuating budgets, which may cause substantial fluctuations in our results of operations. Customers for our products include, and may include in the future, federal, state, municipal, foreign and military, law enforcement and other governmental agencies. Government tax revenues and budgetary constraints, which fluctuate from time to time, can affect budgetary allocations for these customers. Many domestic and foreign government agencies have in the past experienced budget deficits that have led to decreased spending in defense, law enforcement and other military and security areas. Our results of operations may be subject to substantial period-to-period fluctuations because of these and other factors affecting military, law enforcement and other governmental spending. A reduction of funding for federal, state, municipal, foreign and other governmental agencies could have a material adverse effect on sales of our products and our business, financial condition, results of operations and liquidity. Our resources may be insufficient to manage the demands imposed by our growth. We have rapidly expanded our operations, and this growth has placed significant demands on our management, administrative, operating and financial resources. The continued growth of our customer base and the geographic markets served can be expected to continue to place a significant strain on our resources. In addition, we cannot easily identify and hire personnel qualified both in the provision and marketing of our products. Our future performance and profitability will depend in large part on our ability to attract and retain additional management and other key personnel, and our ability to implement successful enhancements to our management, marketing and sales team and technology personnel. Our success is dependent on protecting our intellectual property rights. We rely on a combination of patent, copyright, trademark and trade secret protections to protect our proprietary technology. Our success will, in part, depend on our ability to obtain trademarks and patents. We license one patent Table of Contents and hold three trademarks registered with the United States Patent and Trademark Office and have five patent applications filed. We cannot assure you that these trademarks and patents will not be challenged, invalidated, or circumvented, or that the rights granted under those registrations will provide competitive advantages to us. We also rely on trade secrets and new technologies to maintain our competitive position, but we cannot be certain that others will not gain access to these trade secrets. Others may independently develop substantially equivalent proprietary information and techniques or otherwise gain access to our trade secrets. We may be exposed to liability for infringing intellectual property rights of other companies. Our success will, in part, depend on our ability to operate without infringing on the proprietary rights of others. Although we have conducted searches and are not aware of any patents and trademarks which our products or their use might infringe, we cannot be certain that infringement has not or will not occur. We could incur substantial costs, in addition to the great amount of time lost, in defending any patent or trademark infringement suits or in asserting any patent or trademark rights, in a suit with another party. Our officers and directors own a substantial portion of our outstanding common stock, which will enable them to influence many significant corporate actions and in certain circumstances may prevent a change in control that would otherwise be beneficial to our stockholders. At June 6, 2011, our directors and executive officers controlled at least 61.0% of our outstanding shares of common stock that are entitled to vote on all corporate actions. In particular, our controlling stockholder, Chairman and Chief Executive Officer, Ki Nam, together with his children, owns 29.3% of the outstanding shares of common stock and Vision Opportunity Master Fund, Ltd. and Vision Capital Advantage Fund (collectively, Vision ) owns 31.7%. Vision and Mr. Nam were also among the major investors that, as part of our recent public offering, were granted certain contractual rights regarding dilutive financings and certain change of control transactions, and together with their common stock holdings, could have a substantial impact on matters requiring the vote of the stockholders, including the election of our directors and most of our corporate actions. This control could delay, defer, or prevent others from initiating a potential merger, takeover, or other change in our control, even if these actions would benefit our stockholders and us. This control could adversely affect the voting and other rights of our other stockholders and could depress the market price of our common stock. Risks Relating Ownership of Our Securities If a significant public market for our common stock develops, we expect to experience volatility in the price of our common stock. This may result in substantial losses to investors if they are unable to sell their shares at or above their purchase price. If a significant public market for our common stock develops, we expect the market price of our common stock to fluctuate substantially for the foreseeable future, primarily due to a number of factors, including: our status as a company with a limited operating history and limited revenues to date, which may make risk-averse investors more inclined to sell their shares on the market more quickly and at greater discounts than would be the case with the shares of a seasoned issuer in the event of negative news or lack of progress; announcements of technological innovations or new products by us or our competitors; the timing and development of our products; general and industry-specific economic conditions; actual or anticipated fluctuations in our operating results; liquidity; actions by our stockholders; changes in our cash flow from operations or earning estimates; changes in market valuations of similar companies; Table of Contents our capital commitments; and the loss of any of our key management personnel. In addition, the financial markets have experienced extreme price and volume fluctuations. The market prices of the securities of technology companies, particularly companies like ours without consistent revenues and earnings, have been highly volatile and may continue to be highly volatile in the future, some of which may be unrelated to the operating performance of particular companies. The sale or attempted sale of a large amount of common stock into the market may also have a significant impact on the trading price of our common stock. Many of these factors are beyond our control and may decrease the market price of our common stock, regardless of our operating performance. In the past, securities class action litigation has often been brought against companies that experience volatility in the market price of their securities. Whether or not meritorious, litigation brought against us could result in substantial costs, divert management s attention and resources and harm our financial condition and results of operations. We do not anticipate paying any cash dividends in the foreseeable future, which may reduce your return on an investment in our common stock. We plan to use all of our earnings; to the extent we have earnings, to fund our operations. We do not plan to pay any cash dividends in the foreseeable future. We cannot guarantee that we will, at any time, generate sufficient surplus cash that would be available for distribution as a dividend to the holders of our common stock. Therefore, any return on your investment would derive from an increase in the price of our stock, which may or may not occur. Substantial future sales of our common stock in the public market may depress our stock price. As of June 8, 2011, 12,880,978 shares of common stock, warrants for the purchase of 4,942,557, 4,942,557, 831,373, 198,764, 12,000 and 27,478 shares of common stock at an exercise price of $3.00, $3.50, $5.00, $7.00, $15.40 and $16.50 per share, respectively, are outstanding. In addition, we intend to file a registration statement on Form S-8 under the Securities Act of 1933, as amended, to register approximately 1,017,000 shares of our common stock underlying options granted or to be granted to our officers, directors, employees and consultants. These shares, if issued in accordance with these plans, will be eligible for immediate sale in the public market, subject to volume limitations. As of May 31, 2011, there were 966,350 options outstanding, of which 330,808 were vested. If our stockholders sell substantial amounts of common stock in the public market, or the market perceives that such sales may occur, the market price of our common stock could fall. The sale of a large number of shares could impair our ability to raise needed capital by depressing the price at which we could sell our common stock. We may raise additional capital through a securities offering that could dilute your ownership interest and voting rights. Our certificate of incorporation currently authorizes our board of directors to issue up to 150,000,000 shares of common stock and 20,000,000 shares of preferred stock. Our board of directors is entitled to issue shares of preferred stock with rights, preferences and privileges that are senior to our common stock. The power of the board of directors to issue additional securities is generally not subject to stockholder approval. We require substantial working capital to fund our business. If we raise additional funds through the issuance of equity, equity-related or convertible debt securities, these securities may have rights, preferences or privileges senior to those of the holders of our common stock. The issuance of additional common stock or securities convertible into common stock by our board of directors will also have the effect of diluting the proportionate equity interest and voting power of holders of our common stock. Furthermore, these financings may require the consent of a supermajority in interest of certain major purchasers of our recent Class H and Class I warrants. If we are unable to obtain such consent, we may be unable to obtain such financing and our ability to operate our business will be adversely affected. Table of Contents Our incorporation documents and Delaware law may inhibit a takeover that stockholders consider favorable and could also limit the market price of your stock, which may inhibit an attempt by our stockholders to change our direction or management. Our certificate of incorporation and bylaws contain provisions that could delay or prevent a change in control of our company. Some of these provisions: authorize our board of directors to determine the rights, preferences, privileges and restrictions granted to, or imposed upon, the preferred stock and to fix the number of shares constituting any series and the designation of such series without further action by our stockholders; prohibit stockholders holding less than 25% of the outstanding voting shares from calling special meetings; and establish advance notice requirements for submitting nominations for election to the board of directors and for proposing matters that can be acted upon by stockholders at a meeting. In addition, we are governed by the provisions of Section 203 of Delaware General Corporate Law. These provisions may prohibit large stockholders, in particular those owning 15% or more of our outstanding voting stock, from merging or combining with us, which may prevent or frustrate any attempt by our stockholders to change our management or the direction in which we are heading. These and other provisions in our amended and restated certificate of incorporation and bylaws and under Delaware law could reduce the price that investors might be willing to pay for shares of our common stock in the future and result in the market price being lower than it would be without these provisions. Furthermore, certain mergers where stockholders may receive cash or non-publicly traded securities require the consent of a supermajority in interest of certain major purchasers of our recent Class H and Class I warrants. If we are unable to obtain such consent, we may be unable to obtain consummate mergers or sales of our company that may be favorable to stockholders. Such provisions could also deter potential buyers from initiating an offer. We are responsible for the indemnification of our officers and directors, which could result in substantial expenditures. Our Bylaws provide for the indemnification of our directors, officers, employees, and agents, under certain circumstances, against attorney s fees and other expenses incurred by them in any litigation to which they become a party arising from their association with or activities on behalf of our company. This indemnification policy could result in substantial expenditures, which we may be unable to recoup. Our shares of common stock may be thinly traded, so you may be unable to sell at or near ask prices or at all if you need to sell your shares to raise money or otherwise desire to liquidate your shares. We cannot predict the extent to which an active public market for our common stock will develop or be sustained. Our common stock is listed on the NYSE Amex, LLC, ( AMEX ), but, we cannot assure that you will obtain sufficient liquidity in your holdings of our common stock. This situation may be attributable to a number of factors, including the fact that we are a small company which is relatively unknown to stock analysts, stock brokers, institutional investors and others in the investment community that generate or influence sales volume, and that even if we came to the attention of such persons, they tend to be risk averse and would be reluctant to follow an unproven company such as ours or purchase or recommend the purchase of our shares until such time as we became more seasoned and viable. As a consequence, there may be periods of several days, weeks or months when trading activity in our shares is minimal or non- existent, as compared to a seasoned issuer which has a large and steady volume of trading activity that will generally support continuous sales without an adverse effect on share price. We cannot give you any assurance that a broader or more active public trading market for our common stock will develop or be sustained, or that current trading levels will be sustained or not diminish. Table of Contents Our operating results may fluctuate significantly, and these fluctuations may cause our common stock price to fall. Our quarterly operating results may fluctuate significantly in the future due to a variety of factors that could affect our revenues or our expenses in any particular quarter. You should not rely on quarter-to-quarter comparisons of our results of operations as an indication of future performance. Factors that may affect our quarterly results include: market acceptance of our products and those of our competitors; our ability to attract and retain key personnel; development of new designs and technologies; and our ability to manage our anticipated growth and expansion. Shares eligible for future sale may adversely affect the market. From time to time after the date of this prospectus, certain of our stockholders may be eligible to sell all or some of their shares of our common stock by means of ordinary brokerage transactions in the open market pursuant to Rule 144, promulgated under the Securities Act, subject to certain limitations. In general, pursuant to amended Rule 144, non-affiliate stockholders may sell freely after six months subject only to the current public information requirement (which disappears after one year). There are no shares of our common stock held by non-affiliates that will become 144 eligible within three months after the date of this prospectus. Affiliates may sell after six months subject to the Rule 144 volume, manner of sale (for equity securities), current public information and notice requirements. Any substantial sale of our Common Stock pursuant to Rule 144 may have a material adverse effect on the market price of our Common Stock. There is no guarantee that our securities will remain listed on AMEX. Our common stock is listed on AMEX. Such listing, however, is not guaranteed. If we do not meet AMEX continued listing requirements, our common stock could be delisted. Therefore, it may be difficult to sell your shares of common stock if you desire to need to sell them. Our underwriters from the recent public offering of our securities are not obligated to make a market in our securities, and even after making a market, can discontinue market making at any time without notice. Neither we nor the underwriters can provide any assurance that an active or liquid trading market in our securities will develop or, if developed, that the market will continue. Our liquidity of our common stock and market capitalization could be adversely affected by the recent reverse stock split. We recently consummated a 1-for-10 reverse stock split on May 16, 2011. The reverse stock split may be viewed negatively by the market and, consequently, can lead to a decrease in our price per share and overall market capitalization. If the per share market price does not increase proportionately as a result of the reverse stock split, then our value as measured by our market capitalization will be reduced, perhaps significantly. Table of Contents CAUTIONARY LANGUAGE REGARDING FORWARD-LOOKING STATEMENTS AND INDUSTRY DATA This Prospectus contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 that are based on current information and expectations, and involve risks and uncertainties, many of which are beyond the Company s control. The Company s actual results could differ materially and adversely from those anticipated in such forward-looking statements as a result of certain factors, including those factors, in the Risk Factors section and elsewhere in this prospectus, among other factors. All statements, other than statements of historical facts, included in this prospectus regarding the Company s growth strategy, expansion and development plans, future operations, financial position, estimated revenue or losses, projected costs, prospects and plans and objectives of management are forward-looking statements. When used in this prospectus, the words will, may, should, could, believe, anticipate, intend, estimate, expect, project, plan and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. All forward-looking statements speak only as of the date of this prospectus. The Company undertakes no obligation to update any forward-looking statements or other information contained herein, unless otherwise required by law. Potential investors should not place undue reliance on these forward-looking statements. The Company cannot guarantee future results or that its plans, intentions or expectations will be achieved. The Company discloses important factors that could cause the Company s actual results to differ materially from its expectations under Risk Factors and elsewhere in this prospectus. These cautionary statements qualify all forward-looking statements attributable to the Company or persons acting on its behalf. See Risk Factors for a more detailed discussion of uncertainties and risks that may have an impact on future results. The market data included in this prospectus concerning our business and markets, is estimated and based on data available from independent market research firms, industry trade associations or other publicly available information. Table of Contents USE OF PROCEEDS We will not receive any proceeds from the sale of the shares by the selling stockholders. All proceeds from the sale of the shares offered under this prospectus will be for the account of the selling stockholders, as described below in the sections entitled Selling Stockholders and Plan of Distribution. The selling stockholders are not obligated to exercise their warrants and we cannot predict whether holders will choose to exercise all or any of their warrants or if they will do so for cash or on a cashless basis. In the event that all of the warrants are exercised for cash, we will receive gross proceeds of approximately $38.3 million. With the exception of any brokerage fees and commission which are the obligation of the selling stockholders, we are responsible for the fees, costs and expenses of this offering which are estimated to be $100,000, inclusive of our legal and accounting fees, printing costs and filing and other miscellaneous fees and expenses. Table of Contents DIVIDEND POLICY We have never declared or paid any cash dividends on our common stock. We currently intend to retain all future earnings for the operation and expansion of our business and, therefore, we do not anticipate declaring or paying cash dividends in the foreseeable future. In addition, we are subject to several covenants under our debt arrangements that place restrictions on our ability to pay dividends. Other than such restrictions, the payment of dividends will be at the discretion of our Board of Directors and will depend on our results of operations, capital requirements, financial condition, prospects, contractual arrangements, any limitations on payment of dividends present in our current and future debt agreements, and other factors that our Board of Directors may deem relevant. PRICE RANGE OF COMMON STOCK Market Information Since May 16, 2011, our common stock has been listed on the AMEX under the symbol, TTTM. Prior to that time, our common stock was listed on the OTC Bulletin Board under the symbol TMMM since December 6, 2009. Prior to December 6, 2009, there was no public market for our common stock. The following table sets forth the range of high and low sales prices per share as reported on the AMEX or OTC Bulletin Board for the periods indicated. All prices assume the one-for-10 reverse stock split which took place on May 16, 2011. High Low 2011 First Quarter $ 4.00 $ 3.00 Second Quarter (through June 8, 2011) $ 9.80 $ 3.10 2010 Fourth Quarter $ 7.00 $ 3.00 Third Quarter $ 10.10 $ 2.70 Second Quarter $ 10.00 $ 2.50 First Quarter $ 20.00 $ 8.90 2009 Fourth Quarter (from December 6, 2009) $ 20.00 $ 12.50 SELLING STOCKHOLDERS We are registering for resale shares of common stock that we issued upon conversion of preferred stock, units of common stock and warrants that were issued upon the conversion of certain debentures, and shares of common stock underlying these and other outstanding warrants. We are registering the securities to permit the selling stockholders and their pledgees, donees, transferees and other successors-in-interest that receive their shares from a selling stockholder as a gift, partnership distribution or other non-sale related transfer after the date of this prospectus to resell the securities when and as they deem appropriate in the manner described in the Plan of Distribution. The selling stockholders have not had any material relationship with us within the past three years, other than the ownership of the securities registered hereby and unless otherwise indicated by footnote. The following table sets forth: the name of the selling stockholders, the number of shares of our common stock and/or warrants that the selling stockholders beneficially owned prior to the offering for resale of the securities under this prospectus, the maximum number of shares of our common stock and/or warrants that may be offered for resale for the account of the selling stockholders under this prospectus, and Table of Contents the number and percentage of shares of our common stock to be beneficially owned by the selling stockholders after the offering of the shares (assuming all of the offered shares are sold by the selling stockholders). Beneficially Percentage of Owned Shares to be Warrants Outstanding Shares Sold to be Sold Beneficially Before in the in the Owned After Selling Security Holder Offering Offering offering Offering Vision Opportunity Master Fund, Ltd.(1) 5,791,232 (2) 5,277,610 (2) 1,138,885 Class H warrants 1,138,885 Class I warrants 38.2 % Vision Capital Advantage Fund, L.P.(1) 568,960 479,222 4.4 % Ki Nam(3) 5,269,058 (4) 2,363,536 (4) 632,243 Class H warrants 632,243 Class I warrants 36.4 % Roger Andrews Living Trust(5) 17,990 (6) 17,990 * Randy Andrews Living Trust(7) 17,990 (8) 17,990 * Ty Richmond 11,244 (9) 11,244 * Suzanne Murphy Trust(10) 56,217 (11) 56,217 * Gordon Gray Trust(12) 56,217 (13) 56,217 * Total Force International(14) 800,000 (15) 400,000 6.0 % Sean Gwak Investment(16) 359,787 (17) 359,787 2.8 % EmberClear Corporation(18) 382,399 (19) 198,764 2.9 % Global Capital(20) 12,000 (21) 12,000 * Kanatsiz Communications, Inc.(22) 5,000 (23) 5,000 * * Less than 1%. (1) Vision Opportunity Master Fund, Ltd. (the VOMF ) and Vision Capital Advantage Fund, L.P. ( VCAF ) are the direct owners of the subject securities. VCAF GP, LLC (the General Partner ) serves as general partner of VCAF; the Managing Member of the General Partner is Adam Benowitz. Vision Capital Advisors, LLC (the Investment Manager ) serves as investment manager to VOMF and VCAF. Adam Benowitz is the Managing Member of the Investment Manager. Robert Thomson currently serves as VOMF s and VCAF s representative on our board of directors. VOMF, VCAF, the Investment Manager, the General Partner, Mr. Benowitz and Mr. Thomson and any affiliate (the Vision Entities ) disclaims beneficial ownership of all securities reported herein, except to the extent of their pecuniary interest therein, if any, and this report shall not be deemed an admission that such Vision Entities are the beneficial owner of the shares for purposes of Section 16 of the Exchange Act or for any other purpose. (2) Includes 2,277,770 shares issuable upon exercise of VOMF s Class H and Class I warrants. (3) This number includes 2,715,523 shares of common stock comprised of 876,199 shares of common stock, registered in this prospectus, warrants to purchase 1,487,336 shares of common stock held by The Nam Family Trust Dated 02/17/07, Ki Nam and Yeong Hee Nam as Trustees. This number also includes 90,000 shares of common stock held by Justin Nam, who is the son of this stockholder. Further, this number does not include 90,000 shares of common stock held by Michelle Nam, who is the daughter of this stockholder. (4) Includes 1,264,486 shares issuable upon exercise of The Nam Family Trust s Class H and Class I warrants. (5) The natural person with voting and disposition rights on behalf of the Roger Andrews Living Trust is Roger Andrews. (6) Includes 8,000 shares issuable upon exercise of the Roger Andrews Living Trust s outstanding warrants. (7) The natural person with voting and disposition rights on behalf of the Randy Andrews Living Trust is Randy Andrews. (8) Includes 8,000 shares issuable upon exercise of the Randy Andrews Living Trust s outstanding warrants. (9) Includes 5,000 shares issuable upon exercise of Ty Richmond s outstanding warrants. Table of Contents (10) The natural person with voting and disposition rights on behalf of the Suzanne Murphy Living Trust is Suzanne Murphy. (11) Includes 25,000 shares issuable upon exercise of the Suzanne Murphy Trust s outstanding warrants. (12) The natural person with voting and disposition rights on behalf of the Gordon Gray Living Trust is Gordon Gray. (13) Includes 25,000 shares issuable upon exercise of the Gordon Gray Trust s outstanding warrants. (14) The natural person with voting and disposition rights on behalf of Total Force International is Sam Lee. (15) Includes 400,000 shares issuable upon exercise of Total Force International s outstanding warrants. (16) The natural person with voting and disposition rights on behalf of the Sean Gwak is Sean Gwak. (17) Includes 160,000 shares issuable upon exercise of Sean Gwak Investment s outstanding warrants. (18) The natural person with voting and disposition rights on behalf of EmberClear Corporation is David Anderson. (19) Includes 198,764 shares issuable upon exercise of EmberClear Corporation s outstanding warrants. (20) The natural person with voting and disposition rights on behalf of Global Capital is George Logan. (21) Includes 12,000 shares issuable upon exercise of Global Capital s outstanding warrants. (22) The natural person with voting and disposition rights on behalf of Kanatsiz Communications, Inc. is Sinan Kanatsiz. (23) Includes 5,000 shares issuable upon exercise of Kanatsiz Communications, Inc. s outstanding warrants. Table of Contents PLAN OF DISTRIBUTION We are required to pay certain fees and expenses that we incur incident to the registration of the securities for resale. As used in this prospectus, selling stockholders includes the selling stockholders named in the table above and pledgees, donees, transferees or other successors-in-interest selling shares received from a named selling stockholder as a gift, partnership distribution or other non-sale-related transfer after the date of this prospectus. The selling stockholders may, from time to time, sell any or all of their securities on the AMEX or any other market on which the price of our shares of common stock are quoted or any other stock exchange, market or trading facility on which the shares are traded or in private transactions. These sales may be at fixed or negotiated prices. The selling stockholders will act independently of us in making decisions with respect to the timing, manner and size of each sale. A selling stockholder may use any one or more of the following methods when selling securities: ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers; block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction; purchases by a broker-dealer as principal and resale by the broker-dealer for its account; an exchange distribution in accordance with the rules of the applicable exchange; privately negotiated transactions; settlement of short sales entered into after the effective date of the registration statement of which this prospectus is a part; broker-dealers may agree with the selling stockholders to sell a specified number of such shares at a stipulated price per share; a combination of any such methods of sale; through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise; or any other method permitted pursuant to applicable law. Broker-dealers engaged by the selling stockholders may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the selling stockholders (or, if any broker-dealer acts as agent for the purchaser of shares, from the purchaser) in amounts to be negotiated, but, except as set forth in a supplement to this prospectus, in the case of an agency transaction not in excess of a customary brokerage commission in compliance with FINRA Rule 2440; and in the case of a principal transaction a markup or markdown in compliance with FINRA IM-2440. In connection with the sale of the common stock or interests therein, the selling stockholders may enter into hedging transactions with broker-dealers or other financial institutions, which may in turn engage in short sales of the common stock in the course of hedging the positions they assume. The selling stockholders may also sell shares of the common stock short and deliver these securities to close out their short positions, or loan or pledge the common stock to broker-dealers that in turn may sell these securities. The selling stockholders may also enter into option or other transactions with broker-dealers or other financial institutions or the creation of one or more derivative securities which require the delivery to such broker-dealer or other financial institution of shares offered by this prospectus, which shares such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction). The selling stockholders and any broker dealers or agents that are involved in selling the shares may be deemed to be underwriters within the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker dealers or agents and any profit on the resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. Each selling stockholder has informed us that it does not have any written or oral agreement or understanding, directly or indirectly, with any person to distribute the common stock. In no event shall any broker-dealer receive fees, commissions and markups which, in the aggregate, would exceed eight percent (8.0%). Table of Contents Because selling stockholders may be deemed to be underwriters within the meaning of the Securities Act, they will be subject to the prospectus delivery requirements of the Securities Act. In addition, any securities covered by this prospectus which qualify for sale pursuant to Rule 144 under the Securities Act may be sold under Rule 144 rather than under this prospectus. There is no underwriter or coordinating broker acting in connection with the proposed sale of the resale shares by the selling stockholders. The shares will be sold only through registered or licensed brokers or dealers if required under applicable state securities laws. In addition, in certain states, the resale shares may not be sold unless they have been registered or qualified for sale in the applicable state or an exemption from the registration or qualification requirement is available and is complied with. Under applicable rules and regulations under the Securities Exchange Act of 1934, as amended (the Exchange Act ), any person engaged in the distribution of the resale shares may not simultaneously engage in market making activities with respect to the common stock for the applicable restricted period, as defined in Regulation M, prior to the commencement of the distribution. In addition, the selling stockholders will be subject to applicable provisions of the Exchange Act and the rules and regulations thereunder, including Regulation M, which may limit the timing of purchases and sales of shares of the common stock by the selling stockholders or any other person. We will make copies of this prospectus available to the selling stockholders and have informed them of the need to deliver a copy of this prospectus to each purchaser at or prior to the time of the sale (including by compliance with Rule 172 under the Securities Act). We have agreed to indemnify certain selling stockholders against certain losses, claims, damages and liabilities, including liabilities under the Securities Act. Table of Contents BUSINESS Overview T3 Motion designs, manufactures and markets personal mobility vehicles powered by electric motors. Our initial product is the T3 Series, which is a three wheel, electric stand-up vehicle ( ESV ) powered by a quiet, zero-gas emission electric motor that is designed specifically for public and private security personnel. Substantially all of our revenues to date have been derived from sales of the T3 Series ESVs and related accessories. The T3 Series has received recognition for its iconic design, including the Innovation Award for Best Vehicle at the 2007 International Association of Chiefs of Police ( IACP ) Convention and the Spark Award in the Vehicle Mobility category at the 2007 International Spark Design Awards. The T3 Series has been featured on television and print media being deployed by professionals in law enforcement and the private security industry due to its innovative design and convenient access. The elevated nine inch raised platform provides the officer with a command presence, allowing the public to be aware of the officer s presence, while providing the officer with a better vantage point to evaluate any situation. By using a T3 Series ESV, an officer can effectively patrol a larger area than on foot or riding a bicycle, and enables the officer to safely and quickly maneuver in crowded pedestrian areas or other areas where cars and other standard modes of transportation cannot access easily, if at all. The T3 Series also improves the officer s approachability with the public as a result of its design and open platform that allow the officer to interact with pedestrians more easily than is possible while patrolling by automobile, motorcycle or horseback. We were incorporated in Delaware in 2006 and introduced our first T3 Series vehicles in early 2007. We currently sell our products in the U.S. directly and through distributors, and also market our T3i Series ESV (the international version of our T3 Series) in the Middle East, Mexico, Canada, Asia, South Africa, South America and Europe. Market and Industry Overview Personal transportation vehicles in the United States have become a necessity with law enforcement and government agencies, university campuses, airports, shopping malls, events/promotions, military/government, and industrial areas. Personal transportation vehicles provide officers improved response times to areas that were previously unavailable to automated transportation. The security market has experienced a growing need for rapid response along with the need to control costs. Similar needs exist in the international market. Adding to the substantial market for security in the post-9/11 world, increasing awareness of global warming is creating a rapidly growing market for clean technologies. As a zero-gas emissions electric vehicle, the T3 Series is positioned to take advantage of this trend. In the U.S., the increase in homeland security spending since 9/11 has been substantial. The Department of Homeland Security Grant Program has awarded $1.7 billion to municipalities for equipment acquisition and emergency preparedness in 2009. We have an opportunity to capture a portion of this market created by police department purchases of police cars, associated upgrades, bicycles and other security equipment purchased with funds from the U.S. Department of Homeland Security (DHS). Below is the list of specific markets that we believe will continue to experience growth and we intend to serve. Law Enforcement. As police and sheriff s departments nationwide continue to search for cost-effective patrol solutions, T3 Motion will continue to provide solutions to this market. According to the U.S. Bureau of Justice, as of 2007, there were 1,017,984 full-time state and local law enforcement personnel. This is a decrease of 5.5% from 2004. College and University Campuses. According to the U.S. Department of Education 2007-2008, there were more than 4,200 higher education institutions in the United States. High Schools. According to the National Center for Educational Statistics, in 2008, there are over 20,620 public high schools in the U.S. According to the 2004 National School Resource Officers Survey, school crimes, violence and safety offenses remain significant issues affecting our education system. Table of Contents Military and Government Agencies. According to the Department of Defense, there were approximately 5,300 military bases and/or military warehouses globally in 2007, which includes Army, Navy, Air Force, USMC and WHS institutions. The Department of Defense also managed over 577,000 physical plants worldwide located on over 32 million acres in the U.S. and 39 foreign countries as of 2007. At least 1,000 are believed to be bases and or military installations, of which 823 are located worldwide that the U.S. operates or controls. With total military personnel deployed in the U.S. and U.S. overseas territories estimated to be over 1.4 million as of 2007, the need to provide security and other activities, including the need to move people within large areas is significant. The T3 Series is currently patrolling high-profile government facilities and military bases such as Andrews Air Force Base and the Smithsonian Institution. Airports. According to the U.S. Department of Transportation, in 2008 there were 19,930 airports in the U.S. Of these, there were 5,202 public use airports, 14,451 private use airports and 550 certified airports (Certified airports serve air-carriers operations with aircraft seating more than 30 passengers). Port Security. In the post-9/11 era, according to DHS, February 2006 press release, funding for port security has increased more than 700%. DHS spent over $1.6 billion in 2005 for port security. Additionally, in 2009, an additional $150 million of funding was approved by the DHS. Private Security Companies. According to the National Association of Security Companies (NASCO) 2006 Private Security Fact Sheet, private security contracting is an approximately $13 billion industry in the U.S. with 11,000 to 15,000 companies employing 1.2 million contract security officers. Contract security officers are increasingly protecting military bases and installations across the country and around the world, and are required to be first responders to any incident. The President s National Strategy for Homeland Security estimates that these private security officers protect 85% of the country s infrastructure, which, according to the NASCO, makes private security companies a top funding priority for the federal government. Manufacturing and Industrial Firms. According to the 2007 U.S. Census Bureau report there are 293,919 manufacturing establishments in the U.S. that have more than 13.3 million employees. Shopping Malls and Parking Patrol. According to the CoStar National Research Bureau Shopping Center Database and Statistical Model 2005, there are approximately 48,000 shopping malls in the U.S. covering more than six billion square feet of space. The malls are patrolled by private security companies. In addition to malls, there are numerous parking structures throughout the U.S. that are regularly patrolled. We believe we have the opportunity to provide a unique security solution for these markets. The T3 Series and the T3i Series meet the patrol needs of officers with the added benefit of reducing costs of operation. The T3 Series and T3i Series cost less than 10 cents a day to charge and allow the officer to patrol a larger area than if they were walking. Our Operations Our principal executive offices and operations facility is located in Costa Mesa, California. Our main corporate headquarters facility located at 2990 Airway Avenue, Building A is a leased 34,000 square foot facility that is home to the executive staff and sales staff and is our main operational and manufacturing location. The facility is equipped with multiple production lines capable of producing up to 750 T3 vehicles per month. Located directly across the street at 2975 Airway is our 14,000 square feet warehouse and R D center that is fully equipped with all of the necessary machines and equipment needed to design and build development products. Our manufacturing activities largely consist of final assembly, testing and quality assurance. We manufacture our T3 Series at our headquarters. Our raw materials are sourced from various suppliers, both domestic and international. Currently, our electronics and wire harness assembly manufacturing, embedded digital processing application development and electronics hardware and software development occur at our headquarters and operations center. Final assembly, testing, warehousing, quality control and shipping take place at our U.S. operations center. Our sales and marketing operations are located at our headquarters. We have agreements with numerous distributors and manufacturing representative companies giving the distributors and manufacturers representatives Table of Contents the exclusive rights to sell the T3 Series and CT Micro Car in specified geographic regions. Each agreement has a 30 day cancellation clause. The T3 Motion, Inc. Product Line T3 Series and T3i Series ESVs The T3 Series and the T3i Series (the version with the headset, power modules and batteries designed for international use and compliance with international standards) are a three-wheel, front wheel drive, stand-up, electric personal mobility vehicles with a zero-gas emission electric motor. They have hydraulic disk brakes on both rear wheels that are matched with 17-inch low profile motorcycle tires for long treadwear and demanding performance. The vehicles are equipped with an LCD control panel display and utilizes high intensity LED lighting for its vertically adjustable headlights and taillights. It also features emergency lights, as well as a siren on the law enforcement model. The T3 Series and T3i Series enable the operator to respond rapidly to calls with low physical exertion. The nine-inch elevated riding platform allows 360 degrees visibility while the ergonomic riding position reduces fatigue. The zero degree turning radius makes it highly maneuverable. The T3 Series and T3i Series come standard with a lockable storage compartment for equipment and supplies. Power Modules The T3 Series and T3i Series have replaceable power modules that allow continuous vehicle operation without downtime required for charging. The T3 Series and T3i Series offer a variety of battery technology options in its power modules. The power modules and charger can be sold separately as replacement parts. Accessories Each T3 Series and T3i Series have the following accessory options: Each T3 Series and T3i Series features reversible rear tires which enables customers to determine whether to set up their T3 or T3i Series in a wide stance (36 wide) or a narrow stance (32 wide), depending on their needs. The side-mount External Storage Pack allows the operator to carry additional items on the vehicle. The front-mount external storage case enables the T3 Series and T3i Series to distribute parcels, documents, and cargo in indoor and outdoor narrow space environments. The Sun Shade provides the operator protection from elements like the sun or rain. The front and rear turn indicator system is available for international deployments and domestic up-fitting opportunities. The on-board video camera system and digital video recorder is available for patrol tracking and incident response data. Additional accessories include an external shotgun mount, a fitted vehicle cover, a parcel delivery trailer, and a multi-function trailer option. We plan to continue to design and field test accessories as demand or needs arise. Camera System We offer multiple CCTV and camera systems including the 360-IP DN Camera, a stand-alone 360-degree camera and DVR, the Motiontrak, black-box in car video and data recording system integrated with Google maps and the TVS-4050WK, a fully wireless IP four-camera system targeted at facilities, warehouse, business districts, and campuses. They also offer the option of GPS positioning, real-time surveillance or DVR recording options. CT Series Micro Car The CT Micro Car, is a low-speed four-wheel electric car. Leveraging the market and brand of the T3 Series, we intend to market the CT Series using our existing sales channels in the law enforcement and private security, Table of Contents sectors. The CT Series offers a variety of battery technology options with varying range options. The CT Series has lighting, siren and PA system options. Our exclusive distribution agreement with manufacturing partner, CT T dated November 24, 2008, provides us with the exclusive territories of North America for all law enforcement, government, military and security markets and the exclusive markets of all U.S. government law-enforcement and security markets. The initial term of the distribution agreement expires in November 2011, but automatically renews for additional one year terms unless we or CT T give 90 days written notice prior to the end of any term. Electric/Hybrid Vehicle The Electric/Hybrid Vehicle is the newest product in development. The Electric/Hybrid Vehicle is a plug-in hybrid. The proprietary rear-wheel design features a patent-pending single, wide-stance wheel with two high-performance tires sharing one rear wheel. Due to its three-wheel design, the Electric/Hybrid Vehicle is classified as a motorcycle. The Electric/Hybrid Vehicle is expected to be released for the market in late 2011. Future Products We plan to introduce a series of product variants based on the initial T3 Series, the T3i Series and CT Series vehicles and the modularity of the sub-systems we have created. While both the initial T3 Series, T3i Series and the CT Series vehicles are targeted at law enforcement, security and enterprise markets, we intend to expand our base of T3 Series, T3i Series and CT Series vehicle variants by utilizing the modularity of the sub-systems to configure vehicles for specific market uses such as delivery services, personnel transport and personal mobility. As with all new development and products, we cannot guarantee that the products will make it to market and if they are released to market, whether they will be successful. Revenue from Products The following table presents the sales of our products, identified both by revenue amount and percentage of total revenues, for the three months ended March 31, 2011 and 2010 and the years ended December 31, 2010 and 2009. Three Months Ended March 31, Year Ended December 31, 2011 2010 2010 2009 Percentage Percentage Percentage Percentage Net of Net Net of Net Net of Net Net of Net Product Revenues Revenues Revenues Revenues Revenues Revenues Revenues Revenues T3 Series Domestic $ 723,383 73 % $ 1,066,579 93 % $ 3,842,030 82 % $ 3,654,290 78.7 % T3 Series International 273,179 27 % 61,697 5 % 840,878 18 963,911 20.8 CT Series Domestic 21,150 2 % 25,821 0.5 $ 996,562 100 % $ 1,149,426 100 % $ 4,682,908 100 % $ 4,644,022 100 % Research and Development We emphasize on product research and development ( R D ). For the three months ended March 31, 2011 and 2010 and the years ended December 31, 2010 and 2009, we spent $233,912, $320,506, $1,602,961 and $1,395,309, respectively, on R D for development of products such as the CT-Series, the Electric/Hybrid Vehicle and to ensure that the T3 Series and T3i Series personal mobility vehicles are properly designed to be more effective and useful tools for the public safety and private security market. In addition, we will continue to refine and optimize all aspects of the vehicle design to maintain the high standards of vehicle performance, cost effectiveness and to continue to meet the needs of our customers. Table of Contents Growth Strategies Our mission is to become the leader in clean energy, personal, professional mobility electric stand-up vehicles, and to continue providing products that are economical, functional, safe, dependable and meet the needs of the professional end user. We plan to pursue the following growth strategies in pursuit of our mission: Capitalize on broader private security opportunities. Our initial focus on the law enforcement market has increased the demand for the T3 Series and T3i Series ESV from other security markets, which may hold equal, if not greater, potential for our products. We plan to focus our marketing efforts to pursue the sale of our products into private security markets, which could include corporate campuses, manufacturing facilities, government facilities, military bases, shopping malls, airports and events/promotions. Increase our branding in law enforcement. We intend to continue to build on our reputation within the law enforcement community and plan to pursue additional branding activities in this regard. We believe that maintaining a strong brand within the law enforcement community will facilitate our expansion into other private security markets. Pursue international expansion. We believe the international markets represent a significant opportunity to expand our current sales. We plan to continue to expand our presence in our existing international markets, and to pursue adding new distributors to increase our sales in Asia and Europe. Expand the T3 Series product line to address broader markets. We believe the modularity of our sub-systems may be used to configure additional vehicles that address the personal transportation and personal mobility requirements in existing and new markets. We plan to evaluate the expansion of our product line to leverage our technologies for additional commercial markets such as for delivery services, property management, utility and maintenance providers, in addition to any other private venue requiring security. Leverage our brand into the consumer market. As we gain additional brand name recognition, we plan to leverage our brand to enter the consumer market for personal transportation. We are currently working on the development of the Electric/Hybrid Vehicle to address the consumer markets and plan to evaluate the expansion of our product line for other consumer applications. Marketing and Distribution We market and sell our products through our direct sales force located at our headquarters in Costa Mesa, California. We have agreements with numerous domestic and international distributors and manufacturer s representatives, adding substantially to our direct sales force. We plan to continue to expand our international sales by engaging additional distributors in new and existing markets, particularly in Asia and Europe. Our standard distribution agreements provide for the right to distribute our vehicle and accessories within defined geographic locations and defined markets. Our distribution agreements allow the distributor to purchase our products at set prices, however, generally there is no requirement that the distributors meet a minimum order quantity. Our distribution agreements usually can be cancelled by either party upon 30 days prior written notice. We value our customer input as we are a customer-driven company. We generally follow a fundamental approach using the following core customer interests: We evaluate the available budget from the customer, building the value of the product rather than price. Return on Investment (ROI). Our products have demonstrated significant operational savings over gas powered vehicles and allow the end user greater mobility and work efficiencies. We strive to maintain a manufacturing process that generally holds lead times to approximately a 4 to 6 week timeframe. We have an in-field swappable power system that enables our clients to operate vehicles without downtime for charging. The sustainable engineering and design was specifically tailored for the professional end user in law enforcement and private security. Table of Contents Our vehicle has demonstrated that the iconic look and command presence has a crime deterrent ability. The T3 Series and T3i Series ESVs allow the user greater mobility to maneuver through crowds and tight areas than other vehicles such as motorcycles, effectively increasing the patrol area and granting the user job efficiencies. Sources and Availability of Raw Materials; Principal Suppliers Currently, over 70% of our T3 Series suppliers are local suppliers who provide products and services to low volume early stage development companies. As the vehicle design has become stable and sales volumes have increased, we have begun our transition to incorporate a global supply chain. We have made significant progress in establishing relationships with suppliers who service volume production stage companies. In addition, we plan to invest in production tooling that will yield consistent high quality and lower cost parts designed to our specifications. We plan to implement our multi-source supply chain strategy in working directly with established factories within the automotive and motorcycle industry. The supply chain could include materials sourcing and subassembly operations from sources in China, South Korea and Mexico. These components will be shipped to our operations facility in Costa Mesa, California for final assembly, test, inspection, and shipments to our customers. We plan to continue to expand this multiple source supplier base to allow us to utilize both current U.S. based suppliers and newly acquired global suppliers to reduce the risks of our existing single sourced components and reduce product costs. We do not manufacture the CT Micro Car. Fully-built versions are delivered to us from the developer and manufacturer, CT T, a Korean electric car manufacturer. We outfit the CT Micro Car with our power management and battery technologies. Operating and Manufacturing Strategy Our management and engineering teams have experience working with off-shore manufacturers and believe there are advantages of partnering with reputable off-shore suppliers to access reliable manufacturing practices at lower labor cost. Our staff continuously seeks out new qualified suppliers and we evaluate suppliers for the maximum benefit that can be realized. We generally seek suppliers and manufacturers with a well established history of supplying quality products within their respective industries, a trained and experienced technical work force, state of the art facilities and knowledge of all aspects of supply chain management, operational execution, global logistics and reverse logistics. Competition We currently compete with other providers of personal mobility vehicle including, without limitation, Segway, California Motors-Ride Vehicles and Gorilla Vehicles, but also compete with other forms of transportation such as bicycles, horses and standard police cars. Some of our competitors are larger than we are and may have significantly greater name recognition and financial, sales and marketing, technical, manufacturing and other resources. These competitors may also be able to respond rapidly to new or emerging technologies and changes in customer requirements or devote greater resources to the development, promotion and sale of their products. Our competitors may enter our existing or future markets with products that may provide additional features or that may be introduced earlier than our products. We attempt to differentiate ourselves from our competitors by working to provide superior customer service and developing products with appealing functions targeted to our core markets of professional end users in law enforcement, private security, and government. Table of Contents Intellectual Properties and Licenses The following table describes the intellectual property owned by the Company: Type Name Issued by Description Trademark United State Patent and Trademark Office Logo, brand name used on our products Trademark United State Patent and Trademark Office Logo, brand name used on our products Trademark ENABLING PERSONAL MOBILITY United State Patent and Trademark Office Logo, brand name used on our products We also have a patent license agreement from Evolutionary Electric Vehicles to us granting a perpetual, fully paid, transferable exclusive license to make, have made, use, improve and sell an over 10 Horsepower Brushless DC Motor for Traction (US Patent #4,882,524) with respect to products in the world. This patent covers a motor technology that we plan on fully developing and using in our products. Currently, we do not use the motors covered by this patent; however, this patented technology will be utilized in future motors that we intend to use on future products. It is still too early in the developmental phase to determine when the motor technology and products will be available for the market. On March 21, 2008, we filed a United States Patent Application for Batteries and Battery Monitoring and Charging System. The intellectual property covered in this multi-claim patent is our proprietary power management system that is currently used on all T3 Series products. On September 17, 2008, we filed a United States Patent Application for the Battery Powered Vehicle Control Systems and Methods. The intellectual property covered in this multi-claim patent is our proprietary control system that is currently used on all T3 Series products. On July 27, 2009, we filed a United States Patent Application for Dual Tires on a Single Wheel (Provisional). The intellectual property covered in this patent offers enhanced stability, reduces rolling and aerodynamic resistance and increases rider safety. On September 30, 2009, we filed a United States Patent Application for Vehicle Hood, Fenders, and Bumper (Design). Our unique design showcases custom built parts that are task specific and visually appealing. On December 7, 2009, we filed a United States Patent Application for Rechargeable Battery Systems and Methods (Provisional). The claim covers a battery charging management system that we will deploy in our electric CT-Series and GT3 vehicle in the future. While utilizing modular technology was already used in the T3 Series vehicle , this new battery and charger system will provide more efficiency and no downtime. We cannot assure you that any patents will be issued, or even if issued, that they will provide adequate protection for the Company s intellectual property. Government Approvals and Regulation On September 17, 2008, T3 Motion completed and passed its third party lab testing to obtain its CE certification for the T3i Series product, battery, and charging system. CE is the governing regulatory body and standard for electrical products meant to be exported to the European Union, Africa, Australia, the Middle East and other foreign countries. The T3i Series product has passed EMC testing for EN6100-6-1 and EN61000-6-3. Batteries and chargers were found to be technically compliant with the EN55022, EN61000-3-2, EN61000-3-3, and EN55024 requirements. Table of Contents In 2009, the Electric Vehicle 3-Wheel and Charger has passed EMC testing for EN60950-1:2006 (Information Technology Equipment Safety Standards) as well as EN6100-6-1 and EN61000-6-3 (European Standards). On July 28, 2009, we received our GSA license number, GS-07F-0403V. Customers Our marketing focus includes customers that have large areas to patrol such as law enforcement, airports, hospitals, universities, security companies, property management companies, shopping malls or large corporate campuses. As of March 31, 2011, one customer accounted for approximately 39% of total accounts receivable. At December 31, 2010 and 2009, two customers accounted for approximately 51% and 36% of total accounts receivable, respectively. Two customers accounted for approximately 29% and one customer accounted for approximately 12% of net revenues for the three months ended March 31, 2011 and 2010, respectively. One customer and no single customer accounted for more than 10% of our net revenues for the years ended December 31, 2010 and 2009, respectively. Principal Executive Offices Our principal executive office is located at 2990 Airway Avenue, Building A, Costa Mesa, California 92626 and our telephone number is (714) 619-3600. Our website is www.T3motion.com. You should not consider the information contained on, or accessible through, our website to be part of this prospectus or in deciding whether to purchase our securities. LEGAL PROCEEDINGS With the exception of the following, we know of no material, existing or pending legal proceedings against us, nor are we involved as a plaintiff in any material proceeding or pending litigation. We are also unaware of any proceedings in which any of our directors, officers, or affiliates, or any registered or beneficial holder of more than 5% of our voting securities, or any associate of such persons, is an adverse party or has a material interest adverse to our Company. Preproduction Plastics, Inc. v. T3 Motion., Inc. Ki Nam and Jason Kim (Orange County Superior Court Case No. 30.2009-00125358): On June 30, 2009, Preproduction Plastics, Inc. ( Plaintiff ) filed suit in Orange County Superior Court, alleging causes of actions against T3 Motion, Inc., Ki Nam, the Company s CEO, and Jason Kim, the Company s former COO (collectively the Defendants ) for breach of contract, conspiracy, fraud and common counts, arising out of a purchase order allegedly executed between Plaintiff and the Company. On August 24, 2009, Defendants filed a Demurrer to the Complaint. Prior to the hearing on the Demurrer, Plaintiff filed a First Amended Complaint against Defendants for breach of contract, fraud and common counts, seeking compensatory damages of $470,599, attorney s fees, punitive damages, interest and costs. On October 27, 2009, Defendants filed a Demurrer, challenging various causes of action in the First Amended Complaint. The Court denied the Demurrer on December 4, 2009. On December 21, 2009, Defendants filed an answer to the First Amended Complaint, and trial was set for July 30, 2010. On or about July 29, 2010, the case was settled in its entirety. The Company agreed to pay compensatory damages, attorneys fees and costs totaling $493,468, through monthly payments of $50,000, with 6% interest accruing from the date of the settlement. Periodic payments are expected to be made through May 2011. The first payment of $50,000 was made on August 3, 2010 and subsequent principal payments totaling $200,000 were made by the Company through December 31, 2010. The Company recorded the entire settlement amount of $493,468 as a note payable, $470,599 as a deposit on fixed assets and the remaining $22,869 as a charge to legal expense. At December 31, 2010, the remaining settlement amount of $243,468 is recorded as a note payable in the accompanying consolidated balance sheet. The Company has recorded accrued interest of $4,126 at December 31, 2010. Commencing January 1, 2011, the Company has failed to make the scheduled payments required by the July 29, 2010 settlement agreement and stipulation for entry of judgment. The Plaintiff then filed a motion for entry of judgment pursuant to the terms of the July 29, 2010 settlement agreement, and stipulation for entry of judgment, which if granted, would cause the acceleration of all amounts owed under the settlement agreement. While the motion has been pending, the Company has made principal payments totaling $150,000. This motion is now scheduled to be heard on June 16, 2011. Table of Contents MANAGEMENT The following table sets forth the names and ages of all of our directors and executive officers as of December 31, 2010. Also provided herein are a brief description of the business experience during the past five years of each director, executive officer and significant employee during the past five years and an indication of directorships held by each director in other companies subject to the reporting requirements under the Federal securities laws. All of the directors will serve until the next annual meeting of stockholders and until their successors are elected and qualified, or until their earlier death, retirement, resignation or removal. Name Age Positions Held: Ki Nam 51 Chief Executive Officer and Chairman Kelly J. Anderson 43 Executive Vice President, Chief Financial Officer and President Noel Chewrobrier 46 Vice President International Sales Dave Fusco 60 Vice President Domestic Sales David Snowden 66 Director Steven Healy 50 Director Mary S. Schott 50 Director Rob Thomson 34 Director Biographical Information Ki Nam, Chief Executive Officer has served as Chief Executive Officer of T3 Motion since March 16, 2006. Mr. Nam founded Paradigm Wireless Company in 1999, a supplier of quality wireless equipment to the telecom industry, and Aircept founded in 2000, a leading developer, manufacturer, and service provider in the Global Positioning System (GPS) marketplace. In 2001, Mr. Nam founded Evolutionary Electric Vehicles (EEV) to provide high performance motor-controller packages to the emerging hybrid and electric vehicle market. Prior to founding his own companies, Mr. Nam co-founded Powerwave Technologies, Inc., a publicly-held company, where he held the position of Executive Vice President, Business Development. We believe Mr. Nam is qualified to serve as a director as a result of his insight, detailed understanding of electric vehicles and our technologies, and information related to the Company s strategy, operations, and business. As founder of T3 Motion, his vision and know-how have been instrumental in the development of our products and business. His prior experience as the Chief Executive Officer of EEV and his experience at Powerwave Technologies, Inc. also have afforded him with strong leadership skills and a broad technology background. Kelly J. Anderson, has been the President since April 2010 and Executive Vice President, Chief Financial Officer since March 2008 and served as a director of the Company from January 2009 until January 2010. From 2006 until 2008, Ms. Anderson was Vice President at Experian, a leading credit report agency. From 2004 until 2006, Ms. Anderson was Chief Accounting Officer for TripleNet Properties, G REIT, Inc., T REIT, Inc., NNN 2002 Value Fund, LLC, and Chief Financial Officer of NNN 2003 Value Fund, LLC and A REIT, Inc., all of which were real estate investment funds managed by TripleNet Properties. From 1996 to 2004, Ms. Anderson held senior financial positions with The First American Corp., a Fortune 500 title insurance company. Noel Chewrobrier has been Vice President of International sales, since 2007. Over the past 15 years Noel has held various senior executive sales management positions at various technology companies located in the UK and in the U.S., at the following companies: Tecan UK and USA (Executive Vice President from 1995 to 2004, and President from 2004 to 2007); Homark Ltd. (Global Sales Manager from 1989 to 1995); and Fast Moving Consumer Goods (Sales and Marketing Regional Manager from 1986 to 1995). David Fusco, was named Vice President, Domestic Sales, on October 1, 2010. Over the past 25 years David has held senior executive sales management positions at Texas Instruments, Compaq Computer, and Hewlett-Packard. From 2006 to October 2010, David founded Andal Holdings, LLC, and provided sales and management consulting services to a variety of companies. David holds a B.S. degree from Miami University in Oxford, OH. Table of Contents David Snowden, has served as a director of the Company since 2007, Mr. Snowden has been the Chief of Police of Beverly Hills for the past seven years. He has over 40 years of professional experience including holding positions as Chief of Police for Beverly Hills (current), Costa Mesa (1986-2003), and Baldwin Park (1980-1986). Chief Snowden has held numerous Presidential positions including Police Chief s Department of the League of Cities (1993), Orange County Chief s and Sheriff s Association (1990) and was Chairman of the Airbourne Law Enforcement. Chief Snowden was inducted to the Costa Mesa Hall of Fame in 2003 and was voted top 103 most influential persons on the Orange Coast for 12 years. We believe Mr. Snowden is suited to serve as a director of T3 Motion due to his deep experience in and understanding of the law enforcement industry, and his contacts within that industry. Mr. Snowden s experience and background with police departments and municipalities has enabled the Board and the Company to better understand the needs and interests of some of our primary clients. Steven Healy, has served as a director of the Company since 2007, Mr. Healy has been the Director of Public Safety at Princeton University since 2003, and was the President of the International Association of Campus Law Enforcement Administrators (IACLEA) until June 2007. He has served as a member of the IACLEA Government Relations Committee for the past 10 years and is active with issues regarding the Clery Act. Chief Healy was recently appointed by the governor of New Jersey to serve on the state s Campus Security Task Force. Prior to his position at Princeton University, Mr. Healy was the Chief of Police at Wellesley College in Wellesley, MA. He also served as Director of Operations at the Department of Public Safety at Syracuse University. During his tenure at Wellesley College, Chief Healy was the IACLEA North Atlantic Regional Director and President of the Massachusetts Association of Campus Law Enforcement Administrators. We believe Mr. Healy is suited to serve as a director of T3 Motion due to his experience in private security markets, and in particular with campus security issues, as well as his understanding of law enforcement, in general. Mary S. Schott, has served as a director of the Company since 2009, has over 25 years experience in the accounting finance functions with extensive experience in finance and accounting compliance and systems including Sox applications. Ms. Schott has been the Chief Financial Officer of San Manuel Band of Serrano Mission Indians since 2008. A CPA and MBA, Ms. Schott served as Chief Accounting Officer of First American Title Insurance Company, a division of First American Corporation for three years and held various finance and accounting functions for the previous 17 years at First American. Ms. Schott was the President and Treasurer of the First American Credit Union for eight years. We believe Ms. Schott is qualified to serve as a director due to her experience as a Chief Financial Officer of a public company and as a CPA and MBA, as well as her ability to understand any technical financial issues that may be raised by our independent registered public accounting firm from time to time. Ms. Schott has extensive knowledge and background relating to accounting and financial reporting rules and regulations, as well as internal controls and business processes. Rob Thomson, has served as a director of the Company since 2010, Mr. Thomson has been a Director at Vision Capital Advisors, LLC since 2007, a New York based private equity manager, where he oversees the firm s growth equity investments in consumer retail, industrials, and homeland defense and security companies. Vision Capital Advisors LLC is the manager of two funds that hold debt and equity securities of the Registrant Vision Opportunity Master Fund, Ltd. and Vision Capital Advantage Funds LP. At Vision, Mr. Thomson manages investment opportunities for the funds and works closely with its portfolio companies in executing their growth plans. He currently sits on the Board of Directors for Juma Technology Corp., a converged network integrator and software developer based in New York that trades on the OTC Bulletin Board and Microblend Technologies, Inc., a private company that is a developer of automatic paint creation systems for retailers. From 2005 to 2007, Mr. Thomson was the Managing Director of The Arkin Group, LLC in charge of operations, financial management and growth strategies for this international business intelligence firm. Mr. Thomson has an MBA from the Harvard Business School and a B.A. degree from Haverford College. He has studied Chinese language and history at Nankai University in China and Tunghai University in Taiwan. Mr. Thomson is also a term member at the Council on Foreign Relations. We believe Mr. Thomson is qualified to serve on our board as a result of his broad experience advising other emerging growth companies and experience with other companies in our target markets. Mr. Thomson also has a deep understanding of capital markets, mergers and acquisitions, business restructuring, business development, as well as fundraising and investment strategies. Table of Contents Code of Conduct and Ethics We have adopted a Code of Conduct and Ethics that applies to all directors, officers, and employees, including our Chief Executive Officer and Chief Financial Officer, and members of the board of directors. Our Code of Conduct and Ethics will be available on our website at www.t3motion.com. A copy of our code of conduct and ethics will also be provided to any person without charge, upon written request sent to us at our offices located at 2990 Airway Avenue, Building A, Costa Mesa, California 92626. Material Changes to the Procedures by which Security Holders May Recommend Nominees to the Board of Directors There have been no material changes to the procedures by which security holders may recommend nominees to the Board of Directors. Director Independence Our common stock, units, Class H warrants and Class I warrants are listed on the AMEX. Under the rules of the AMEX, independent directors must comprise a majority of a listed company s board of directors within a specified period of the closing of its initial listing in the AMEX. In addition, the rules of AMEX require that, subject to specified exceptions, each member of a listed company s audit, compensation, and nominating and corporate governance committees be independent. Audit committee members must also satisfy the independence criteria set forth in Rule 10A-3 under the Exchange Act. The Board has concluded that Ms. Schott, Mr. Snowden and Mr. Healy each qualify as independent directors under both the listing standards of the AMEX and Rule 10A-3 under the Exchange Act. Board Committees Our Board has an audit committee, a compensation committee and a nominating committee, each of which has the composition and the responsibilities described below. Audit Committee. Our audit committee oversees our corporate accounting and financial reporting process and assists the Board in monitoring our financial systems and our legal and regulatory compliance. Our audit committee is authorized to, among other things, to assist the Board s oversight of the following: the integrity of our financial statements; our compliance with legal and regulatory requirements; the qualification and independence of our independent auditors; and the performance of the Company s auditor qualifications and the work of our independent auditors. Our audit committee currently consists of Mary Schott (Chairperson) and Dave Snowden. Compensation Committee. Our compensation committee oversees, and makes recommendations to the Board regarding the annual salaries and other compensation of the Company s executive officers, the Company s general employee compensation and the Company s other compensation policies and practices. The compensation committee is also responsible for administering the Company s 2007 Plan and 2010 Plan. Our compensation committee currently consists of Mary Schott (Chairperson) and Steven Healy. Nominating Committee. Our nominating committee assists the Board in reviewing and recommending nominees for election as directors, as well as establishing procedures to address stockholder proposals and the structure of the board and its committees. The members of our nominating committee are Dave Snowden (Chairman) and Steven Healy. Our board of directors may from time to time establish other committees. Director Compensation The Company pays each of its outside directors a $20,000 cash retainer for the director s participation on the Board and its committees. The Board pays no additional fees for attending meetings or telephone conferences. The Table of Contents following table sets forth information concerning compensation paid or accrued for services rendered to us by members of our board of directors for 2010. Fees Earned or Option Paid in Cash ($) Awards ($)(1) Total ($) Ki Nam(2) $ $ $ Steven Healy 20,000 18,390 38,390 David Snowden 20,000 18,390 38,390 Mary S. Schott 20,000 18,390 38,390 Robert Thomson (3) 18,390 (4) 18,390 (1) Amounts represent the aggregate grant date fair value of the stock or option award calculated in accordance with Financial Accounting Standards Board ( FASB ) Accounting Standards Codification ( ASC ) Topic 718, Stock Compensation, as amended, without regard to estimated forfeitures, or, with respect to re-priced options. See Note 11 of the notes to our audited consolidated financial statements for a discussion of valuation assumptions made in determining the grant date fair value and compensation expense of our stock options. (2) Mr. Nam does not receive compensation for serving as a director of the Company. His compensation for serving as an officer of the Company is reflected in the table titled Summary Compensation Table. (3) Mr. Thomson has waived his annual cash retainer Board fee for 2010. (4) Such options will be assigned to Vision Capital Advisors or its affiliates. Executive Compensation The following summary compensation table indicates the cash and non-cash compensation earned during the years ended December 31, 2010 and 2009 by our Chief Executive Officer (principal executive officer), (i) our Chief Financial Officer (principal accounting officer), (ii) our two most highly compensated executive officers other than our CEO and CFO who were serving as executive officers at the end of our last completed fiscal year, whose total compensation exceeded $100,000 in 2010, and (iii) up to two additional individuals for whom disclosure would have been provided but for the fact that the individual was not serving as an executive officer at the end of our last completed fiscal year, whose total compensation exceeded $100,000 during such fiscal year ends. Executive Compensation Summary Compensation Table Stock Option All Other Salary Bonus Awards Awards Compensation Total Name and Principal Position Year ($)(1) ($) ($) ($)(1) ($)(2) ($) Ki Nam, 2010 $ 190,000 $ 114,900 $ 304,900 Chief Executive Officer 2009 150,000 150,000 and Chairman(2) Kelly J. Anderson, 2010 187,962 229,800 417,762 Executive Vice President, 2009 175,000 175,000 President and Chief Financial Officer (1) The amounts shown in this column represent the dollar amount recognized for financial statement reporting purposes for the years ended December 31, 2010 and 2009 with respect to stock options granted, as determined pursuant to the accounting standards. The option awards fair values for 2010 was $3.80 per share. There were no grant awards during 2009. (2) Pursuant to Mr. Nam s employment agreement, his annual salary is $190,000, commencing January 1, 2010. Mr. Nam has elected to defer payment of his increase until the completion of the Company s next round of financing, which may include this offering. Table of Contents Employment Agreements Ki Nam The Company entered into a written employment agreement with Mr. Ki Nam on August 13, 2010 in which it agreed to employ Mr. Nam during the term hereof as its Chief Executive Officer. The initial term of Mr. Nam s employment expires on December 30, 2011, but the agreement automatically renews, annually, upon the terms and conditions set forth in this agreement unless terminated by either party by giving written notice 60 days prior to the expiration of the then term. For the period of one year commencing on January 1, 2010, the Company shall pay Mr. Nam a base salary of $190,000 per annum. During his employment and any renewal or extension period thereafter, Mr. Nam shall be entitled to receive, on March 15 of each calendar year, an annual bonus based upon an approved budget by the Company s board of directors and/or its compensation committee. If the Board determines that the Company does not have sufficient cash available to make the above described cash obligations, the Board may, in its discretion, make such payments in stock, but at no time shall the cash payment due under the cash obligation fall below one third of the payment obligation. Mr. Nam shall be eligible to participate in any compensation plan or program (401(k) plan and stock option plan) maintained by the Company in which other executives or employees of the Company participate, on similar terms. The Company shall provide to Mr. Nam and his family, during the employment with coverage under all employee medical, dental and vision benefit programs, plans or practices adopted by the Company and made available to all employees of the Company. Mr. Nam shall be entitled to four weeks paid vacation in each calendar year (but no more than ten consecutive business days at any given time). The Company may terminate Mr. Nam s employment at any time for any reason. If Mr. Nam s employment is terminated by the Company other than for Cause (as defined in such agreement), Mr. Nam shall receive a severance payment equal to twelve months base salary and twelve months benefits, and any earned and/or accrued bonus, as in effect immediately prior to such termination, payable in accordance with the ordinary payroll practices of the Company, but not less frequently than semi-monthly following such termination of employment. In the event that Mr. Nam s employment is terminated (i) by the Company for Cause; (ii) by Mr. Nam on a voluntary basis; (iii) as a result of Mr. Nam s permanent disability; or (iv) by Mr. Nam s death, he or his estate shall only be entitled to receive base salary and bonuses already earned and accrued through the last day of his employment. In the event of termination by Mr. Nam s death or permanent disability, all such benefits identified under the employment agreement shall be maintained and in effect for twelve (12) additional months by the Company. Any and all such unvested benefits (i.e. 401(k), restricted stock or stock options) shall immediately vest. If Mr. Nam s employment with the Company is terminated by the Company (other than upon the expiration of the Employment terms, for Cause, or by reason of disability, or upon Mr. Nam s death) at any time within ninety (90) days before, or within twelve (12) months after, a Change in Control of the Company (as defined in such agreement), or if Mr. Nam s employment with the Company is terminated by him for good reason (as defined in such agreement) within six (6) months after a Change in Control, or if Mr. Nam s employment with the Company is terminated by Mr. Nam for any reason, including without Good Reason, during the period commencing six (6) months after a Change in Control and ending twelve (12) months after a Change in Control, then the Company shall pay to Mr. Nam: (i) any accrued, unpaid base salary payable as in effect on the date of termination, (ii) any unreimbursed business expenses and (iii) a severance benefit, in a lump sum cash payment, in an amount equal to: (A) Mr. Nam s annual rate of base salary, as in effect as of the date of termination, plus Mr. Nam s target bonus for the fiscal year of the Company in which the date of termination occurs. In the event Mr. Nam is entitled to the severance benefits, each stock option exercisable for shares of Company common stock granted under the Company s stock incentive plan that is held by Mr. Nam, if then outstanding, shall become immediately vested and exercisable with respect to all of the shares of Company common stock subject thereto on the date of termination and shall be exercisable in accordance with the provisions of the Company s stock incentive plan and option agreement pursuant to which such option was granted. In addition, in the event Mr. Nam is entitled to severance benefits, a restricted stock award and restricted shares of the Company common stock granted under the Company s stock incentive plan that is held by Mr. Nam that is subject to a forfeiture, reacquisition or Table of Contents repurchase option held by the Company shall become fully vested, nonforfeitable and no longer subject to reacquisition or repurchase by the Company or other restrictions on the date of termination. Mr. Nam shall not, without the prior written consent of the Company, use or make accessible to any other person, any confidential information pertaining to the business or affairs of the Company, except (i) while employed by the Company, in the business of and for the benefit of the Company, or (ii) when required to do so by applicable law. Mr. Nam has also agreed for the two years following his termination of employment, he and his affiliates will not directly or indirectly, through any others person, (i) employ, solicit or induce any individual who is, or was at any time during the one (1) year period prior to the termination date, an employee or consultant of the Company, (ii) cause such individual to terminate or refrain from renewing or extending his or his employment by or consulting relationship with the Company, or (iii) cause such individual to become employed by or enter into a consulting relationship with the Company and its affiliates or any other individual, person or entity. Mr. Nam and his affiliates also shall not solicit, persuade or induce any customer to terminate, reduce or refrain from renewing or extending its contractual or other relationship with the Company in regard to the purchase of products or services, performed, manufactured, marketed or sold by the Company or any other person. Mr. Nam and his affiliates shall not solicit, persuade or induce any supplier to terminate, reduce or refrain from renewing or extending his, his or its contractual or other relationship with the Company. During the term of his employment, Mr. Nam shall not engage or assist others to engage in a competing business. Kelly Anderson The Company entered into a written employment agreement with Kelly Anderson, on April 17, 2010. The term of this agreement continues until December 30, 2011 but it automatically renews for an additional one year period unless either the Company or Ms. Anderson give the other party written notice of at least 60 days prior to the expiration of the then term. Pursuant to this agreement, Ms. Anderson s base salary for the first year of the agreement is $190,000 per year, and she is eligible to receive an annual bonus based upon an approved budget and other requirements as established from time to time by the Company s Board of Directors and/or its Compensation Committee. If the Board determines that the Company does not have sufficient cash available to make the foregoing cash obligations, the Board may, in its discretion, make such payments in stock, but at no time shall the cash payment due under the cash obligation fall below one third of the foregoing payment obligation to Ms. Anderson. While the Company may terminate Ms. Anderson s employment at any time for any reason, if Company terminates her employment for other than for Cause (as defined in such agreement), she shall receive (a) a severance payment equal to six (6) months of her then Base Salary; (b) continuation of her insurance benefits for six (6) months following her termination; and (c) any earned and/or accrued bonus, as in effect immediately prior to such termination, payable in accordance with the ordinary payroll practices of the Company, but not less frequently than semi-monthly following such termination of employment. In the event (i) the Company terminates Ms. Anderson s employment for Cause (as defined in the agreement), (ii) she voluntarily resigns from the Company; or (iii) her termination is as a result of her Permanent Disability (as defined in the agreement);or (iv) her termination is due to her death, then Ms. Anderson or her estate shall only be entitled to receive any base salary or bonus earned and accrued through the date of her termination of employment. Notwithstanding the foregoing, in the event her termination is due to her death or Permanent Disability, her salary and benefits will also continue for six months after her termination, and any of her unvested benefits (i.e. 401(k), restricted stock or stock options) shall immediately vest upon her termination. If (a) Ms. Anderson s employment with the Company is terminated by the Company (other than upon the expiration of her employment term under the agreements, for Cause, or by reason of a Permanent Disability, or upon Executive s death)at any time within ninety (90) days before, or within twelve (12) months after, a Change in Control (as defined in the agreement), or (b) if she resigns for Good Reason (as defined in the agreement) within six (6) months after a Change in Control, or (c) her employment with the Company is terminated by Ms. Anderson for any reason, including without Good Reason, during the period commencing six (6) months after a Change in Control and ending twelve (12) months after a Change in Control, then the Company shall be required to pay to Table of Contents Ms. Anderson the following benefits: (i) any accrued, unpaid base salary payable as in effect on her termination date; (ii) any unreimbursed business expenses; and (iii) a severance benefit, in a lump sum cash payment, in an amount equal to: (i) her annual base salary then in effect, plus her Target Bonus (as defined in the agreement) for the fiscal year of the Company during which her termination occurs. In the event Ms. Anderson is entitled to the severance benefits under her employment agreement, all of her outstanding stock options granted under the Company s stock incentive plan shall immediately vest and become exercisable and any restricted stock award and restricted shares of the Company common stock granted to Ms. Anderson under the Company s stock incentive plan that is subject to a forfeiture, reacquisition or repurchase option held by the Company shall become fully vested, nonforfeitable and no longer subject to reacquisition or repurchase by the Company or other restrictions as of her termination date. Following her termination of employment, Ms. Anderson shall continue to be subject to certain confidentiality obligations and is also subject to certain nonsolicitation obligations contained in the agreement for two years following her termination concerning certain of the Company s current and prior employees and consultants. Other than such arrangements described above, we have no other formal employment agreements with any of our executive officers, nor any compensatory plans or arrangements resulting from the resignation, retirement or any other termination of any of our executive officers, from a change-in-control, or from a change in any executive officer s responsibilities following a change-in-control. The following table summarizes the amount of our executive officers equity-based compensation outstanding at the fiscal year ended December 31, 2010: OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END Option Awards Stock Awards Equity Equity Incentive Incentive Plan Awards: Plan Awards: Market or Market Number of Payout Value Number of Number of Number of Value of Unearned of Unearned Securities Securities Shares Shares or Shares, Units Shares, Units Underlying Underlying or Units of Units of or Other or Other Unexercised Unexercised Option Option Stock that Stock that Rights that Rights that Options (#) Options (#) Exercise Expiration Have Not Have Not Have Not Have Not Name Exercisable Unexercisable Price ($) Date Vested (#) Vested ($) Vested (#) Vested ($) Ki Nam 30,000 $ 5.00 7/21/2020 100,000 7.70 12/10/2017 Kelly J. Anderson 60,000 5.00 7/21/2020 13,750 6,250 6.00 3/17/2018 10,417 9,583 5.00 11/13/2018 Option Exercises and Stock Vested The following table sets forth certain information regarding exercises of stock options and stock vested held by the executive officers during the year ended December 31, 2010: Option Exercises and Stock Vested Option Awards Stock Awards Number of Shares Number of Shares Acquired Value Realized Acquired Value Realized on Exercise on Exercise on Vesting on Vesting Name (#) ($) (#) ($) Ki Nam $ $ Kelly J. Anderson Table of Contents SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth information as to each person who is known to us to be the beneficial owner of more than 5% of our outstanding common stock and as to the security and percentage ownership of each executive officer and director of the Company and all officers and directors of the Company as a group as of June 2, 2011. We have determined beneficial ownership in accordance with the rules of the Securities and Exchange Commission. Except as otherwise indicated, we believe that the beneficial owners listed below, based on the information furnished by these owners, have sole investment and voting power with respect to the securities indicated as beneficially owned by them, subject to applicable community property laws. Unless otherwise indicated, the address of each beneficial owner listed below is 2990 Airway Ave., Building A., Costa Mesa, California 92626. Number of Percentage of Shares of Shares of Common Stock Common Stock Beneficially Beneficially Name of Beneficial Owner and Address Owned(1)(2) Owned Executive Officers and/or Directors: Ki Nam 5,269,058(3 ) 36.4 % Kelly Anderson 28,333(4 ) * David Snowden 10,000(5 ) * Steven Healy 10,000(6 ) * Mary S. Schott 10,000(7 ) * Robert Thomson 6,360,192(8 ) 41.9 % 5% Stockholders: Vision Opportunity Master Fund, Ltd. 5,791,232(9 ) 38.2 % Total Force International Limited 800,000(10 ) 6.0 % Vision Capital Advantage Fund 568,960(11 ) 4.5 % All Executive Officers and Directors as a Group (7 persons) 11,687,583(12 ) 69.5 % * Holders hold less than 1%. (1) Under Rule 13d-3, a beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has or shares: (i) voting power, which includes the power to vote, or to direct the voting of shares; and (ii) investment power, which includes the power to dispose or direct the disposition of shares. Certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of the shares). In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire the shares (for example, upon exercise of an option) within 60 days of the date as of which the information is provided. In computing the percentage ownership of any person, the amount of shares outstanding is deemed to include the amount of shares beneficially owned by such person (and only such person) by reason of these acquisition rights. As a result, the percentage of outstanding shares of any person as shown in this table does not necessarily reflect the person s actual ownership or voting power with respect to the number of shares of common stock actually outstanding. (2) As of June 2, 2011, there were 12,880,977 shares of common stock issued and outstanding; (3) This number includes 3,681,722 shares of common stock, warrants to purchase 1,487,336 shares of common stock held by The Nam Family Trust Dated 02/17/07, Ki Nam and Yeong Hee Nam as Trustees. This number also includes 90,000 shares of common stock held by Justin Nam, who is the son of this stockholder. Further, this number does not include 90,000 shares of common stock held by Michelle Nam, who is the daughter of this stockholder. This amount includes 100,000 shares subject to an option to purchase common stock. Thus, the percentage of common stock beneficially owned by Mr. Nam is based on a total of 14,468,313 shares of common stock. Table of Contents (4) This number includes options to purchase 28,333 shares of common stock held by Ms. Anderson. Thus, the percentage of common stock beneficially owned by Ms. Anderson is based on a total of 12,909,310 shares of common stock. (5) This number includes options to purchase 10,000 shares of common stock held by Mr. Snowden. Thus the percentage of common stock beneficially owned by Mr. Snowden is based on a total of 12,890,977 shares of common stock. (6) This number includes options to purchase 10,000 shares of common stock held by Mr. Healy. Thus the percentage of common stock beneficially owned by Mr. Healy is based on a total of 12,890,977 shares of common stock. (7) This number includes options to purchase 10,000 shares of common stock held by Ms. Schott. Thus the percentage of common stock beneficially owned by Ms. Schott is based on a total of 12,890,977 shares of common stock. (8) Robert Thomson has been designated by VOMF to our board of directors. The reported securities are owned directly by VOMF and its affiliate VCAF, and Mr. Thomson has no direct interest in these shares. VOMF and VCAF are the direct owners of the subject securities. The General Partner serves as general partner of VCAF; the Managing Member of the General Partner is Adam Benowitz. The Investment Manager serves as investment manager to VOMF and VCAF. Adam Benowitz is the Managing Member of the Investment Manager. Robert Thomson currently serves as VOMF s and VCAF s representative on our board of directors; VOMF and VCAF may be deemed a director by virtue of their right to appoint a director. The 598,360 shares listed represent the 509,764 and 88,597 common shares held by VOMF and VCAF, respectively, as well as (all figures given in the aggregate) the options to purchase up to 5,000 shares of our common stock, 3,479,061 shares of common stock registered in this offering and warrants to purchase 2,277,770 shares of common stock, in accordance with terms in this prospectus. Thus, the percentage of common stock beneficially owned by Robert Thomson is based on a total of 15,163,747 shares of common stock. (9) The reported securities are owned directly by VOMF include 509,764 common shares, as well as (all figures given in the aggregate) the options to purchase up to 3,859 shares of the Company s common stock and 2,999,840 shares of our common stock and warrants to purchase 2,277,770 shares of common stock, registered in this prospectus,. Thus, the percentage of common stock beneficially owned by Vision Opportunity Master Fund is based on a total of 15,162,606 shares of common stock. (10) This number includes 400,000 shares of common stock and warrants to purchase 400,000 shares of common stock held by Total Force International Limited. Thus the percentage of common stock beneficially owned by Total Force is based on a total of 13,280,977 shares of common stock. (11) The reported securities are owned directly by VCAF include, 88,597 common shares, as well as (all figures given in the aggregate) the 479,222 shares of our common stock registered in this offering and options to purchase 1,141 shares of our common stock. Thus, the percentage of common stock beneficially owned by VCAF is based on a total of 12,882,118 shares of common stock. (12) This number includes 3,403,883 shares of common stock, 4,355,260 shares of common stock registered in this prospectus, warrants to purchase 3,765,106 shares of common stock, and options to purchase 163,333 shares of common stock held by the executive officers and directors. Thus, the percentage of common stock beneficially owned by the executive officers and directors is based on a total of 16,809,416 shares of common stock. Table of Contents EQUITY COMPENSATION PLAN INFORMATION The following table sets forth, as of December 31, 2010, certain information related to our compensation plans under which shares of our common stock are authorized for issuance. Number of Securities Remaining Available for Future Issuance Number of Securities to be Weighted-Average Under Equity Issued Upon Exercise of Exercise Price of Compensation Plans Outstanding Options, Outstanding Options, (Excluding Securities Warrants and Rights Warrants and Rights Reflected in Column (a)) Plan Category (a) (b) (c) Equity compensation plans approved by stockholders 649,090 $ 5.70 372,050 Equity compensation plans not approved by stockholders 1,069,615 $ 7.30 Total 1,718,705 372,050 2007 Stock Option/Stock Issuance Plan The 2007 Stock Option/Stock Issuance Plan (the 2007 Plan ) became effective on August 2007, the effective date the Board of Directors of T3 Motion approved the 2007 Plan. The maximum number of shares of common stock that may be issued over the term of the 2007 Plan is 745,000 shares. Awards under the 2007 Plan may be granted to any of the T3 Motion s employees, non-employee directors of T3 Motion or any of its parents or subsidiaries, and consultants and other independent advisors who provide services to T3 Motion or any of its parents or subsidiaries. Awards may consist of stock options (both incentive stock options and non-statutory stock options) and stock awards. An incentive stock option may be granted under the 2007 Plan only to a person who, at the time of the grant, is an employee of T3 Motion or a parent or subsidiary of T3 Motion. The 2007 Plan was administered by T3 Motion s Board of Directors, with full power to authorize the issuance of shares of the T3 Motion s common stock and to grant options to purchase shares of T3 Motion s common stock. The administrator has the power to determine the terms of the awards, including the exercise price, the number of shares subject to each award, and the exercisability of the awards. Any or all administrative functions, however, may be delegated by the Board to a committee of the Board. The 2007 Plan provides that in the event of a merger of T3 Motion with or into another corporation or of a change in control of T3 Motion, including the sale of all or substantially all of T3 Motion s assets, and certain other events, the Board of Directors may, in its discretion, provide for the assumption or substitution of, or adjustment to, each outstanding award and accelerate the vesting of options. The 2007 Plan will terminate on the earlier of (i) May 15, 2017, or (ii) the date on which all 745,000 shares available for issuance under the 2007 Plan is issued, or (iii) the termination of all outstanding options in connection with a merger with or into another corporation or a change in control of T3 Motion. No further options may be granted under the 2007 Plan. As of December 31, 2010, there were outstanding options to purchase 366,140 shares of our common stock under the 2007 Plan. The Board of Directors may generally amend or terminate the 2007 Plan as determined to be advisable. No such amendment or modification, however, may adversely affect the rights and obligations with respect to options or unvested stock issuances at the time outstanding under the 2007 Plan unless the optionee or the participant consents to such amendment or modification. Also, certain amendments may require shareholder approval pursuant to applicable laws and regulations. Table of Contents 2010 Stock Option/Stock Issuance Plan The 2010 Stock Option/Stock Issuance Plan (the 2010 Plan ) became effective in January 2010, and was approved by the Company s stockholders in June 2010. The maximum number of shares of common stock that may be issued over the term of the 2010 Plan is 650,000 shares. Awards under the 2010 Plan may be granted to any of the employees and non-employee directors of the Company or any of its parents or subsidiaries, as well as any consultants and other independent advisors who provide services to the Company or any of its parents or subsidiaries. Awards may consist of stock options (both incentive stock options and non-statutory stock options) and stock awards. An incentive stock option may be granted under the 2010 Plan only to a person who, at the time of the grant, is an employee of the Company or its parent or subsidiary. The 2010 Plan is administered by the Company s Board of Directors; however, the Board may delegate such authority to a committee ( Committee ) appointed by the Board. The plan administrator may authorize the issuance of shares of the common stock and to grant options to purchase shares of common stock. The plan administrator has the power to determine the terms of the awards, including the exercise price, the number of shares subject to each award, and the exercisability of the awards. The 2010 Plan provides that in the event of a merger of the Company with or into another corporation or of a change in control of the Company, including the sale of all or substantially all of the Company s assets, and certain other events, the Board of Directors may, in its discretion, provide for the assumption or substitution of, or adjustment to, each outstanding award and accelerate the vesting of options. The 2010 Plan will terminate on the earlier of (i) January 26, 2020, (ii) the date on which all 650,000 shares available for issuance under the Option Plan is issued, or (iii) the termination of all outstanding options in connection with a merger with or into another corporation or a change in control of the Company. The Board of Directors may generally amend or terminate the 2010 Plan as determined to be advisable. No such amendment or modification, however, may adversely affect the rights and obligations with respect to options or unvested stock issuances at the time outstanding under the 2010 Plan unless the optionee or the participant consents to such amendment or modification. Also, certain amendments may require stockholder approval pursuant to applicable laws and regulations. As of December 31, 2010, there were outstanding options to purchase 282,950 shares of our common stock under the 2010 Plan. Warrants From time to time, we issue warrants to purchase shares of the Company s common stock to investors, note holders and to non-employees for services rendered or to be rendered in the future. Such warrants are issued outside of the 2010 Plan and the 2007 Plan. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Transactions with Related Parties The following reflects the related party transactions that exceeds the lesser of (i) $120,000 or (ii) one percent of the average of our total assets at year end for the last two completed fiscal years. Accounts Receivable As of March 31, 2011 and December 31, 2010 and 2009, the Company has receivables of $35,571, $35,722 and $28,902, respectively, due from Graphion Technology USA LLC ( Graphion ) related to consulting services rendered and/or fixed assets sold to Graphion. During 2010, the Company sold fixed assets to Graphion for a purchase price of $6,820, and there was no gain or loss recorded on the sale of the fixed assets. Graphion is wholly Table of Contents owned by Mr. Nam, the Company s Chief Executive Officer. The amounts due are non-interest bearing and are due upon demand. As of March 31, 2011, December 31, 2010 and 2009, there were outstanding related party receivables of $1,849, $0 and $6,756, respectively, which primarily relate to receivables due from Mr. Nam, which represents the rental obligation of Mr. Nam for his month-to-month lease of excess warehouse space at the Company s facility in Costa Mesa, CA. Fixed Assets On December 20, 2010, the Company purchased a vehicle from Mr. Nam for $7,000 cash to be used for sales and service. The purchase price was $7,000 and was determined to be the estimated fair value of the vehicle at the time of the purchase. Related Party Payables From time to time, the Company purchases batteries and outsources research and development from Graphion. During the three months ended March 31, 2011 and 2010, the Company purchased no services nor parts from Graphion. During the years ended December 31, 2010 and 2009, the Company purchased $151,973 of research and development services, and $622,589 of parts, respectively, from Graphion and had an outstanding accounts payable balance of $51,973, $51,973 and $104,931 owed to Graphion at March 31, 2011 and December 31, 2010 and 2009, respectively. Accrued Salary As of March 31, 2011 and December 31, 2010, the Company owed Mr. Nam $50,431 and $40,000, respectively, of salary pursuant to his employment agreement which is included in accrued expenses. Mr. Nam has elected to defer payment of this amount until the next round of funding is received by the Company. Intangible Assets On March 31, 2008, the Company entered into a purchase agreement with Immersive, one of the Company s stockholders, for a GeoImmersive License Agreement, pursuant to which Immersive granted the Company the right to resell data in the Immersive mapping database. The Company paid Immersive $1,000,000 for the license. On March 16, 2009, the Company revised the terms of the agreement to revise the start of the two year license to begin upon the completion and approval of the post-production data. The revision includes automatic one-year renewals unless either party cancels within 60 days of the end of the contract. Upon the execution of the revision, the Company ceased amortizing the license and tested annually for impairment until the post-production of the data is complete. At December 31, 2009, management performed its annual review to assess potential impairment and deemed the intangible asset to be fully impaired, as management decided to allocate the resources required to map the data elsewhere. As a result, the remaining value of $625,000 was fully amortized as of December 31, 2009. Notes Payable Immersive Note On December 31, 2007, the Company issued a 12% secured promissory note in the principal amount of $2,000,000 to Immersive. On March 31, 2008, the Company repaid $1,000,000 of the principal amount. The note was originally due December 31, 2008 and was subsequently amended so that it is secured by all of the Company s assets. In connection with the issuance of the promissory note, the Company issued a warrant to Immersive for the purchase of 69,764 shares of the Company s common stock at an exercise price of $10.80 per share. The warrants are immediately exercisable. The Company recorded a debt discount of $485,897 related to the fair value of the warrants, which was calculated using the Black-Scholes Merton option pricing model. The debt discount was amortized to interest expense over the original term of the promissory note. Table of Contents First Amendment to Immersive Note On December 19, 2008, the Company amended the terms of the promissory note with Immersive to, among other things, extend the maturity date of the outstanding balance of $1,000,000 from December 31, 2008 to March 31, 2010 and give Immersive the option to convert the promissory note during the pendency and prior to the closing of an equity offering into units of the Company s securities at an original conversion price of $16.50 per unit. Each unit consists of one share of the Company s common stock and a warrant to purchase a share of the Company s common stock at $20.00 per share. In the event the Company issues common stock or common stock equivalents for cash consideration in a subsequent financing at an effective price per share less than the original conversion price, the conversion price will reset. The amended terms of the note resulted in terms that were substantially different from the terms of the original note. As a result, the modification was treated as an extinguishment of debt during the year ended December 31, 2008. There was no gain or loss recognized in connection with the extinguishment. At the date of the amendment, the Company did not record the value of the conversion feature as the conversion option is contingent on a future event. In December 2009, the Company issued 2,000,000 shares of its Series A convertible preferred stock ( Preferred Stock ) in connection with an equity offering. As a result of the December 2009 equity offering, the Company recorded the estimated fair value of the conversion feature of $1,802 as a debt discount and amortized such amount to interest expense through the maturity of the note on March 31, 2010. The Company recorded the corresponding amount as a derivative liability and any change in fair value of the conversion feature was recorded through earnings. As consideration for extending the terms of the promissory note in December 2008, the Company agreed to issue warrants to Immersive for the purchase of up to 25,000 shares of the Company s common stock at an exercise price of $20.00 per share, subject to adjustment. For every three months that the promissory note is outstanding, the Company issued Immersive a warrant to purchase 5,000 shares of the Company s common stock. During the year ended December 31, 2009, the Company issued warrants to Immersive to purchase 20,000 shares of the Company s common stock. The Company recorded a debt discount of $139,778 based on the estimated fair value of the warrants issued during the year ended December 31, 2009. As a result of the December 2009 equity offering, the exercise price of the warrants was adjusted to $5.00 per share. During the year ended December 31, 2010, the Company issued the remaining 5,000 warrants under the note. The Company recorded an additional debt discount of $15,274 based on the estimated fair value of the 5,000 warrants issued during the year ended December 31, 2010. During the years ended December 31, 2010 and 2009, the Company amortized $56,539 and $99,043, respectively, of the debt discounts to interest expense. As of March 31, 2010, prior to the second amendment to the Immersive note (see below), the debt discounts were fully amortized to interest expense. Second Amendment to Immersive Note On March 31, 2010, Immersive agreed to extend the note to April 30, 2010. As consideration for extending the note, the Company agreed to exchange Immersive s Class A warrants to purchase up to 69,764 shares of the Company s common stock at an exercise price of $10.80 per share and its Class D warrants to purchase up to 25,000 shares of the Company s common stock at an adjusted exercise price of $7.00 per share, for Class G warrants to purchase up to 69,764 shares and 25,000 shares of the Company s common stock, respectively, each with an exercise price of $7.00 per share. The Company recorded a debt discount and derivative liability of $1,898 based on the incremental increase in the estimated fair value of the re-pricing of the 25,000 warrants. The Company recorded an additional debt discount and derivative liability in the amount of $216,811 based on the estimated fair value of the 69,764 warrants issued. The total debt discount was amortized in April 2010. The amended terms did not result in terms that were substantially different from the terms of the original note. Therefore, there was no extinguishment of debt as a result of the second amendment. The note and accrued interest were not repaid in full by April 30, 2010. As a result, per the agreement, the maturity date was extended to March 31, 2011 and the Company issued Class G warrants to purchase up to 104,000 shares of the Company s common stock at an exercise price of $7.00 per share. The interest rate which compounds annually, was also amended to 15.0%. The Company recorded interest expense of $140,000 and $120,000, related to the stated rate of interest during the years ended December 31, 2010 and 2009, respectively, and Table of Contents had accrued interest of $110,000 and $0 at December 31, 2010 and 2009, respectively. The terms of the Class G warrants issued to Immersive are substantially similar to prior Class G warrants issued by the Company. The Company recorded a debt discount of $329,120 related to the fair value of the warrants issued. Amortization of this debt discount was $220,241 for the year ended December 31, 2010, resulting in an unamortized debt discount balance of $108,879 at December 31, 2010. Third Amendment to Immersive Note On March 31, 2011, Immersive agreed to extend the note to April 30, 2011. As consideration for extending the note, the Company agreed to increase the interest rate to 19% per annum compounded annually commencing on April 1, 2011. Fourth Amendment to Immersive Note On May 4, 2011, Immersive agreed to extend the note to May 20, 2011. All terms of the note remain the same. On May 19, 2011, the Company paid the note in its entirety including all accrued interest. Vision Opportunity Master Fund, Ltd. Bridge Financing December 30, 2008 10% Convertible Debenture On December 30, 2008, the Company sold $2.2 million in debentures and issued Class D warrants through a private placement to Vision Opportunity Master Fund, Ltd. ( Vision ) pursuant to a Securities Purchase Agreement. In connection with this financing, the Company recorded a debt discount of $607,819 related to the BCF of the debenture and a debt discount of $607,819 related to the relative fair value of the Class D warrants. The debt discount for the Class D warrants was calculated using the Black-Scholes-Merton option pricing model. The BCF and warrants were amortized to interest expense over the one-year life of the note. As a result of the adoption of a new accounting pronouncement on January 1, 2009, the Company recorded an additional debt discount of $859,955 which was amortized through maturity of the debentures. On December 30, 2009, pursuant to the Exchange Agreement (see below), the Company issued to Vision and Vision Capital Advantage Fund, L.P. ( VCAF and, together with Vision, the Vision Parties ), shares of Preferred Stock in exchange for the delivery and cancellation of these debentures and accrued interest. May 28, 2009 10% Convertible Debenture On May 28, 2009, the Company issued to Vision, 10% Debentures with an aggregate principal value of $600,000. Additionally, Vision received Class E common stock purchase warrants, ( Class E Warrants ) to purchase up to an aggregate 30,000 shares of the Company s common stock at an exercise price of $12.00 per share. In connection with this financing, the Company recorded a debt discount of $291,327 related to the conversion feature of the debenture and a debt discount of $201,222 related to the estimated fair value of the Class E Warrants. The debt discount for the Class E Warrants was calculated using the Black-Scholes-Merton option pricing model. The conversion feature and warrants were amortized to interest expense through the date of exchange of these debentures (see below). As noted below, these 10% Debentures were cancelled in connection with the December 30, 2009 financing with Vision. Additionally, the Class E Warrants were exchanged for shares of Preferred Stock in connection with the December 30, 2009 financing with Vision (see below). December 30, 2009 10% Convertible Debenture On December 30, 2009, the Company sold $3,500,000 in debentures and warrants to Vision through a private placement pursuant to a Securities Purchase Agreement (the Purchase Agreement ). The Company issued to Vision, 10% secured convertible debentures ( Debentures ), with an aggregate principal value of $3,500,000. The Debentures accrue interest on the unpaid principal balance at a rate equal to 10% per annum. The maturity date of the Debentures was December 30, 2010 (see below). At any time after the 240th calendar day following the issue date, the Debentures are convertible into units of Company securities at a conversion price of $10.00 per Table of Contents unit, subject to adjustment. Each unit consists of one share of the Company s Preferred Stock and a warrant to purchase one share of the common stock. As a result of the 240th day passing, the Company recorded an additional debt discount and corresponding derivative liability in the amount of $275,676 during the year ended December 31, 2010. The Company may redeem the Debentures in whole or part at any time after June 30, 2010 for cash in an amount equal to 120% of the principal amount plus accrued and unpaid interest and certain other amounts due in respect of the Debenture. Interest on the Debentures is payable in cash on the maturity date or, if sooner, upon conversion or redemption of the Debentures. In the event of default under the terms of the Debentures, the interest rate increases to 15% per annum. The Company recorded interest expense of $350,000 and $959, related to the stated rate of interest, for the years ended December 31, 2010 and 2009, respectively, and had accrued interest of $350,959 and $959 as of December 31, 2010 and 2009, respectively. The Purchase Agreement provides that during the 18 months following December 30, 2009, if the Company or its wholly owned subsidiary, T3 Motion, Ltd., a company incorporated under the laws of the United Kingdom (the Subsidiary ), issue common stock, common stock equivalents for cash consideration, indebtedness, or a combination of such securities in a subsequent financing (the Subsequent Financing ), Vision may participate in such Subsequent Financing in up to an amount equal to Vision s then percentage ownership of the Company s common stock. The Purchase Agreement also provides that from December 30, 2009 to the date that the Debentures are no longer outstanding, if the Company effects a Subsequent Financing, Vision may elect, in its sole discretion, to exchange some or all of the Debentures then held by Vision for any securities issued in a Subsequent Financing on a $1.00 for $1.00 basis (the Exchange ); provided, however, that the securities issued in a Subsequent Financing will be irrevocably convertible, exercisable, exchangeable, or resettable (or any other similar feature) based on the price equal to the lesser of (i) the conversion price, exercise price, exchange price, or reset price (or such similar price) in such Subsequent Financing and (ii) $10.00 per share of common stock. Vision is obligated to elect the Exchange on a $0.90 per $1.00 basis (not a $1.00 for $1.00 basis) if certain conditions regarding the Subsequent Financing and other matters are met. Also pursuant to the Purchase Agreement, Vision received Class G common stock purchase warrants (the Class G Warrants ). Pursuant to the terms of the Class G Warrants, Vision is entitled to purchase up to an aggregate of 350,000 shares of the Company s common stock at an exercise price of $7.00 per share, subject to adjustment. The Class G Warrants have a term of five years after the issue date of December 30, 2009. The Subsidiary entered into a subsidiary guarantee ( Subsidiary Guarantee ) for Vision s benefit to guarantee to Vision T3 Motion s obligations due under the Debentures. T3 Motion and the Subsidiary also entered into a security agreement ( Security Agreement ) with Vision, under which it and the Subsidiary granted to Vision a security interest in certain of our and the Subsidiary s property to secure the prompt payment, performance, and discharge in full of all obligations under the Debentures and the Subsidiary Guarantee. December 30, 2009 Exchange Agreement On December 30, 2009, the Company also entered into a securities exchange agreement (the Exchange Agreement ) with the Vision Parties. Pursuant to the Exchange Agreement, the Company issued to the Vision Parties an aggregate of 9,370,698 shares of Preferred Stock. 3,055,000 shares of Preferred Stock were issued in exchange for the delivery and cancellation of 10% Secured Convertible Debentures previously issued by the Company to the Vision Parties in the principal amount of $2,200,000 (issued December 30, 2008) and $600,000 (issued May 28, 2009) plus accrued interest of $255,000 (in conjunction with the issuance of Preferred Stock, the Company issued Class F warrants to purchase 611,000 shares of common stock at $7.00 per share); 2,263,750 shares of Preferred Stock were issued in exchange for the delivery and cancellation of all Class A, B, C, D, E and F warrants (which were exercisable for an aggregate of 1,097,277 shares) previously issued by the Company to the Vision Parties valued at $1,155,390, (the Company recorded a gain of $45,835 related to the exchange of the warrants for Preferred Stock); and 4,051,948 shares of Preferred Stock were issued to satisfy the Company s obligation to issue equity to the Vision Parties pursuant to a securities purchase agreement dated March 24, 2008 and amended on May 28, 2009. Table of Contents Under the Exchange Agreement, Ki Nam, the Chief Executive Officer and Chairman of the board of directors of the Company, also agreed to convert a promissory note plus the accrued interest, previously issued to him by the Company into 976,865 shares of Preferred Stock and Class G Warrants to purchase up to 195,373 shares of common stock (which warrants have the same terms as the Class G Warrants issued to Vision pursuant to the Purchase Agreement). The Company, Mr. Nam and the Vision Parties also entered into a stockholders agreement, whereby Mr. Nam agreed to vote, in the election of members of the Company s board of directors, all of his voting shares of the Company in favor of (i) two nominees of the Vision Parties so long as their ownership of common stock of the Company is 22% or more or (ii) one nominee of the Vision Parties so long as their ownership of common stock of the Company is 12% or more. Amendment of December 30, 2009 10% Convertible Debenture On December 31, 2010, the Company and The Vision Parties amended the Debenture to extend the maturity date from December 31, 2010 to March 31, 2011. All other provisions of the Debenture remained unchanged. The amended terms of the Debenture did not result in terms that were substantially different from the terms of the original Debenture, therefore there was no extinguishment of debt. December 31, 2010 Exchange Agreement On December 31, 2010, the Company entered into a securities exchange agreement with Vision pursuant to which the Company exchanged 350,000 Class G Warrants into 210,000 shares of the Company s common stock. On the date of the exchange, the warrants were classified as derivative liabilities and had an estimated fair value of $1,208,478 and the shares of the Company s common stock were valued at the fair market price of $4.00 per share for a total value of $840,000, resulting in a gain on the transaction of $368,478, which was recorded in other income. Debt Discounts and Amortization The debt discount recorded on the December 30, 2009 Debentures was allocated between the warrants and conversion feature in the amount of $1,077,652 and $1,549,481, respectively. In addition, the Company recorded an additional debt discount during the year ended December 31, 2010 of $275,676 (see above). The debt discounts were amortized through the original maturity of the Debentures of December 30, 2010. During the years ended December 31, 2010 and 2009, the Company amortized $2,897,574 and $5,235, respectively, of the debt discounts to interest expense. During the year ended December 31, 2009, the Company amortized $2,565,906 of interest expense related to debt discounts on different notes to Vision that were ultimately exchanged for shares of the Company s Preferred Stock on December 30, 2009 (see above). Warrant Repricing The Company executed agreements with the Class G Warrant holders, including the Vision Entities, to reduce the exercise price of their warrants from $7.00 per share to $5.00 per share. In exchange for such lower exercise price, the warrant holders agreed to remove price-based, anti-dilution protection from their warrants. Preferred Stock Conversion On May 19, 2011 the Vision Entities converted all their Series A convertible preferred stock into common stock in connection with the closing of the May public offering. Table of Contents Debenture Amendment and Conversion Agreement On March 31, 2011, the Company entered into a Debenture Amendment and Conversion Agreement (the Debenture Agreement ) with Vision to further amend the 10% Senior Secured Convertible Debenture issued to Vision in a private placement ( Debenture ) on December 30, 2009. The Agreement was the second amendment to the Debenture, following the first amendment on December 31, 2010 to extend the maturity date from December 31, 2010 to March 31, 2011. Under the Debenture Agreement, the maturity date of the Debenture was further extended from March 31, 2011 to June 30, 2011. In addition, the conversion provisions of the Debenture were deleted in their entirety and restated. According to the amended conversion provisions, at the closing of the offering pursuant to this prospectus the Company will issue to Vision, units, each comprised of one share of the Company s common stock, par value $0.001 per share, one warrant substantially identical to the Class H Warrants and one warrant substantially identical to the Class I Warrants, in consideration for the cancellation of $3,500,000 principal amount of the Debenture and accrued interest thereon. The number of units will equal the total amount of principal and interest accrued through the date of the closing divided by the conversion price; provided, however, that the Company will pay cash in lieu of any factional units that would otherwise be issuable upon the conversion. The conversion is conditioned on, among other things, the execution of a registration rights agreement between the parties in which the Company would agree to register Vision s units and securities underlying the Units and that the public offering contemplated by this prospectus shall have been declared effective and that such Units shall be trading on the NYSE Amex, LLC. On May 2, 2011 the parties amended and restated the Debenture Agreement to provide an additional condition to the conversion, that Vision will be entitled to the registered contractual rights offered under this prospectus by entering into a contractual arrangement with the Company regarding dilutive financings and certain change of control transactions as a $500,000 Investor. On May 9, 2011 the parties again restated the Debenture Agreement to provide that the deletion of the current conversion provisions of the Debenture would not take effect until the closing of the offering. On May 19, 2011, Vision converted its note plus accrued interest into 1,138,885 shares of common stock and 1,138,885 Class H warrants and 1,138,885 Class I warrants. Ki Nam Note 2011 Note In April 2011, Ki Nam, our Chairman and Chief Executive Officer, advanced $300,000 to the Company in exchange for debt securities to be negotiated with the Company ( 2011 Note ). We agreed with Mr. Nam that the 2011 Note would accrue interest at 12% per annum and would mature in one year. Interest payments would be due monthly. We intend to grant up to 300,000 five-year warrants to purchase common stock at $3.50 per share. 2010 Note On February 24, 2011, the Company entered into a loan agreement with Ki Nam, its chairman and CEO, for previous advances to the Company ( 2010 Note ). The agreement allows Mr. Nam to advance up to $2.5 million for operating requirements. The note bears interest at 10% per annum. The note is due on March 31, 2012 and allows for an automatic one year extension. During the year ended December 31, 2010, Mr. Nam advanced $1,511,000 to the Company to be used for operating requirements. During October 2010, the Company repaid $390,000 of the advances, leaving a balance of $1,121,000 outstanding as of December 31, 2010. The Company recorded interest expense of $23,756 for the year ended December 31, 2010 and had accrued interest of $23,756 as of December 31, 2010. Since December 31, 2010, the Company has borrowed an additional $1,000,000 under this note. On May 19, 2011 the Company issued to Mr. Nam, units, each comprised of one share of the Company s common stock, par value $0.001 per share, one warrant substantially identical to the Class H Warrants and one warrant substantially identical to the Class I Warrants, in consideration for the cancellation of all principal amount of the 2010 Note and accrued interest thereon. The number of units will equal the total amount of principal and interest accrued through May 19, 2011 divided by $3.50; provided, however, that the Company will pay cash in lieu of any fractional units that would otherwise be issuable upon the conversion. Table of Contents In addition, Mr. Nam entered into a contractual arrangement with the Company regarding approved rights relating to dilutive financings and certain change of control transactions as other major investors in the recently closed public offering. On May 19, 2011, Mr. Nam converted his note plus all accrued interest into 632,243 shares of common stock, 632,243 Class H warrants and 632,243 Class I warrants. 2009 Note On March 30, 2009, the Company entered into a loan agreement with Ki Nam, its chairman and CEO, whereby, Mr. Nam agreed to advance the Company up to $1,000,000, including $498,528 that had already been advanced by Mr. Nam for operating capital requirements through December 31, 2008. The line of credit was to remain open until the Company raised $10.0 million in equity. The note bore interest at 10% per annum. In the event the Company received (i) $10,000,000 or more in private placement financing or (ii) $15,000,000 or more in equity financing at any time after the date of the loan, the note was to become immediately due and payable. In connection with the loan agreement, the Company agreed to issue warrants to Mr. Nam for the purchase of up to 30,303 shares of the Company s common stock, $0.001 par value per share, at an exercise price of $20.00 per share, subject to adjustment. The total number of warrants to be issued was dependent on the final amount of the loan. During the year ended December 31, 2009, the Company was advanced $414,963, including accrued interest, under the loan agreement. During the year ended December 31, 2009, 27,477 warrants were issued to Mr. Nam pursuant to the terms of the loan agreement. The Company recorded a debt discount of $246,228 related to the estimated fair value of warrants, which was to be amortized as interest expense over the term of the loan agreement. The loan was convertible during the pendency of any current open equity financing round at $16.50 per share, subject to adjustment. Upon conversion, Mr. Nam was to receive additional warrants for the purchase of up to 60,606 shares of the Company s common stock at $20.00 per share. In December 2009, the Company issued 2,000,000 shares of its Preferred Stock in connection with an equity offering. As a result of the December 2009 equity offering, the Company recorded the estimated fair value of the conversion feature of $443 as a debt discount, which was to be amortized to interest expense over the remaining term of the loan agreement. The Company recorded the corresponding amount as a derivative liability and any change in fair value of the conversion feature was to be recorded through earnings at each reporting date. The change in fair value of the conversion feature was not significant for the period ended December 31, 2009. On December 30, 2009, the Company entered into a Securities Exchange Agreement (the Exchange Agreement ) with Mr. Nam. Under the Exchange Agreement, Mr. Nam agreed to convert the balance of the promissory note, including accrued interest, of $976,865 into 976,865 shares of the Company s Preferred Stock and warrants to purchase up to 195,373 shares of the Company s common stock, exercisable at $7.00 per share, subject to adjustment. The ability for Mr. Nam to receive additional warrants for up to 60,606 shares of common stock was cancelled. In connection with the Exchange Agreement, the Company agreed to convert Mr. Nam s outstanding debt balance of $976,865 at $5.00 per share, which was below the adjusted conversion price pursuant to the terms of the loan agreement. Pursuant to the conversion terms of the loan agreement, Mr. Nam would have received only 31,310 shares of stock. As a result, the Company issued Mr. Nam 663,767 additional shares of the Company s Preferred Stock in connection with his debt conversion. As a result of the Exchange Agreement, the entire debt discount amounting to $246,671 was amortized to interest expense. In addition, as the Company issued shares to Mr. Nam in excess of the number of shares pursuant to the terms of the loan agreement, the Company recorded the fair value of the 663,767 additional shares of Preferred Stock issued as a loss on debt extinguishment. The amount recorded of $663,767 was included in other expense in the accompanying consolidated statement of operations for the year ended December 31, 2009. Lock-Up Agreement In connection with the Vision financing, Ki Nam, our Chief Executive Officer and Chairman of the board of directors of the Company, agreed not to transfer, sell, assign, pledge, hypothecate, give, create a security interest in or lien on, place in trust (voting trust or otherwise), or in any other way encumber or dispose of, directly or indirectly Table of Contents and whether or not voluntarily, without express prior written consent of Vision, any of our common stock equivalents of the Company until August 27, 2010; provided, however, that commencing on August 27, 2010, he may sell up to 1/24th of the shares of common stock of the Company in each calendar month through February 28, 2011. Debt and Preferred Stock Conversion; Registration Rights; On May 19, 2001, Mr. Nam converted the 2010 Note plus accrued interest into shares of common stock and Class H and Class I warrants. The terms of the conversion were substantially similar to the terms of Vision s convertible debentures. Mr. Nam also converted all his (or his affiliated trust s) preferred stock into common stock. The Company entered into a registration rights agreement with Mr. Nam to register the shares underlying the convertible notes plus shares underlying the Class H and I warrants. Alfonso Cordero and Mercy Cordero Note On January 14, 2011, the Company delivered a 10% unsecured promissory note (the Note ) in the principal amount of $1,000,000 that matures on October 1, 2013 to Alfonso G. Cordero and Mercy B. Cordero, Trustees of the Cordero Charitable Remainder Trust ( Noteholder ) for amounts previously loaned to the Company in October 2010. The Note was dated as of September 30, 2010. Interest payments of $8,333 are due on the first day of each calendar month commencing November 1, 2010 and continuing each month thereafter. The Noteholder has agreed to waive payment obligations from November 1, 2010 through April 15, 2011. The Company is in negotiations to obtain additional waivers and anticipates the receipt of such waivers. The Company recorded interest expense and accrued interest of $24,777 as of and for the year ended December 31, 2010. The Company may prepay the Note, but must prepay in full only. The Company will be in default under the Note upon: (1) failure to timely make payments due under the Note; and (2) failure to perform other agreements under the Note within 10 days of request from the Noteholder. Upon such event of default, the Noteholder may declare the Note immediately due and payable. The applicable interest rate will be upon default will be increased to 15% or the maximum rate allowed by law. The Noteholder has waived any and all defaults under the Note at December 31, 2010 and through April 15, 2011. On May 19, 2011, all outstanding interest was paid and the Company is current with all terms of the Note. MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis of our results of operations for the three months ended March 31, 2011 and 2010 and the years ended December 31, 2010 and 2009 and financial condition as of March 31, 2011 and December 31, 2010 and 2009, should be read in conjunction with our consolidated financial statements and the notes to those consolidated financial statements that are included elsewhere in this prospectus. All statements, other than statements of historical facts, included in this prospectus are forward-looking statements. When used in this prospectus, the words may, will, should, would, anticipate, estimate, possible, expect, plan, project, continuing, ongoing, could, believe, predict, potential, intend, and similar expressions are intended to identify forward-looking statements. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected. These risks and uncertainties include, but are not limited to, availability of additional equity or debt financing, changes in sales or industry trends, competition, retention of senior management and other key personnel, availability of materials or components, ability to make continued product innovations, casualty or work stoppages at the Company s facilities, adverse results of lawsuits against the Company and currency exchange rates. Forward-looking statements are based on assumptions and assessments made by the Company s management in light of their experience and their perception of historical trends, current conditions, expected future developments and other factors they believe to be appropriate. Readers of this prospectus are cautioned not to place undue reliance on these forward-looking statements, as there can be no assurance that these forward-looking statements will prove to be accurate and speak only as of the date hereof. Management undertakes no obligation to publically release any revisions to these forward-looking statements that may reflect events or circumstances after the date hereof or to Table of Contents reflect the occurrence of unanticipated events. This cautionary statement is applicable to all forward-looking statements contained in this prospectus. Overview T3 Motion, Inc. (the Company , we or us ) was organized on March 16, 2006, under the laws of the state of Delaware. We develop and manufacture the T3 Series which are electric three-wheel stand-up vehicles that are directly targeted to the public safety and private security markets. T3 Series have been designed to tackle a host of daily professional functions, from community policing to patrolling of airports, military bases, campuses, malls, public event venues and other high-density areas. We continue to design and introduce products based on modularity of the sub systems we have created. In September 2009, we launched our second product, the CT Micro Car . The Micro Car is another product line to sell to our potential and existing customers. In June 2010, we introduced the GT3, a plug-in hybrid consumer vehicle. Going Concern The Company s condensed consolidated financial statements have been prepared using the accrual method of accounting in accordance with GAAP and have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities in the normal course of business. The Company has incurred significant operating losses and has used substantial amounts of working capital in its operations since its inception (March 16, 2006). Further, at March 31, 2011, the Company had an accumulated deficit of $(46,625,595), a working capital deficit of $(16,545,239) and cash and cash equivalents (including restricted cash) of $154,070. Additionally, the Company used cash in operations of $(803,136) for the three months ended March 31, 2011. These factors raise substantial doubt about the Company s ability to continue as a going concern for a reasonable period of time. On May 19, 2011, the Company completed a public offering of its securities generating $11.1 million in gross proceeds (see below). In addition to this financing, management has been implementing cost reduction strategies for material, production and service costs and believes that its cash from operations, together with the net proceeds of the offering, will be sufficient to allow the Company to continue as a going concern through at least December 31, 2011. Public Offering of the Company s Equity Securities On May 16, 2011, the Company announced that it had raised $11.1 million in a public offering of its securities. The offering closed on May 19, 2011, and the Company received net proceeds of $9,678,903 after deducting commissions and offering expenses. The transaction resulted in the issuance of 3,171,429 units of the Company s securities. Each unit consists of one share of the Company s common stock, one Class H warrant and one Class I warrant. Each warrant grants the holder the right to purchase one share of the Company s common stock. In connection with the offering, the Company effected a one-for-10 reverse stock split of its common stock, which allowed it to meet the minimum share price requirement of the AMEX. The Company has offered contractual rights to investors that either purchase $500,000 or more of our units in the offering or are converting at least $500,000 of existing securities into substantially identical units. We entered into agreements with such investors that grant them approval rights to certain change of control transactions. Such agreements also granted them approval rights, subject to certain exceptions, to financings at a per share purchase price below the exercise price of their warrants. Debt and Preferred Stock Conversion into Common Stock and Common Stock Equivalent Securities. In connection with the AMEX listing and the public offering, Vision Opportunity Master Fund, Ltd. and Vision Capital Advantage Fund (collectively Vision ); and Ki Nam, our Chief Executive Officer, converted their $3.5 million and $2.1 million debentures plus accrued interest, respectively, into 1,138,885 and 632,243 unregistered units. As with the publicly offered units, each unregistered unit consisted of one share of common stock, one Class H warrant and one Class I warrant. The shares, warrants and warrant shares underlying these units are included in this registration statement. Table of Contents In connection with the AMEX listing, the Company s preferred stockholders converted all outstanding Series A Convertible Preferred Stock into 2,872,578 shares of the Company s common stock. Included in the conversion of the Series A Convertible Preferred Stock are shares held by Vision and Mr. Nam of 9,370,698 and 976,865, respectively, which are convertible into 2,340,176 and 243,956 shares of common stock, respectively. These shares of common stock are included in this registration statement. 1-for-10 Reverse Stock Split The Company effected a one-for-10 reverse stock split of its common stock after the effectiveness of the registration statement and prior to the closing of the May public offering. All information included in this registration statement has been retroactively adjusted to reflect the effect of the reverse stock split. Lock Up Agreement On May 16, 2011, Vision and Ki Nam entered into lock-up agreements pursuant to which such parties have agreed not to sell any shares of our common stock for 12 months, subject to exceptions. Critical Accounting Policies and Estimates Our management s discussion and analysis of our financial condition and results of operations are based on our unaudited condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America ( GAAP ). The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements as well as the reported net sales and expenses during the reporting periods. On an ongoing basis, we evaluate our estimates and assumptions. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. A summary of these policies can be found in the Management s Discussion and Analysis section of the Company s Annual Report on Form 10-K for the year ended December 31, 2010. The following is an update to the critical accounting policies and estimates. Concentrations of Credit Risk Cash and Cash Equivalents The Company maintains its non-interest bearing transactional cash accounts at financial institutions for which the Federal Deposit Insurance Corporation ( FDIC ) provides unlimited insurance coverage through December 31, 2012. For interest bearing cash accounts, from time to time, balances exceed the amount insured by the FDIC. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk related to these deposits. At March 31, 2011 and December 31, 2010, the Company did not have cash deposits in excess of the FDIC limit. The Company considers cash equivalents to be all short-term investments that have an initial maturity of 90 days or less and are not restricted. The Company invests its cash in short-term money market accounts. Restricted Cash Under a credit card processing agreement with a financial institution, the Company is required to maintain a security deposit as collateral. The amount of the deposit is at the discretion of the financial institution and as of March 31, 2011 and December 31, 2010, was $10,000. Table of Contents Accounts Receivable The Company performs periodic evaluations of its customers and maintains allowances for potential credit losses as deemed necessary. The Company generally does not require collateral to secure accounts receivable. The Company estimates credit losses based on management s evaluation of historical bad debts, customer concentrations, customer credit-worthiness, current economic trends and changes in customer payment patterns when evaluating the adequacy of its allowance for doubtful accounts. At March 31, 2011 and December 31, 2010 and 2009, the Company had an allowance for doubtful accounts of $47,626, $50,000 and $37,000, respectively. Although the Company expects to collect amounts due, actual collections may differ from the estimated amounts. As of March 31, 2011 and December 31, 2010 and 2009, one, two and two customers accounted for approximately 39%, 51% and 36% of total accounts receivable, respectively. Two customers accounted for approximately 29% and one customer accounted for approximately 12% of net revenues for the three months ended March 31, 2011 and 2010, respectively. One customer and no single customer accounted for more than 10% of net revenues for the years ended December 31, 2010 and 2009, respectively. Accounts Payable As of March 31, 2011 and December 31, 2010 and 2009, three, one and no vendors accounted for approximately 31%, 10% and more that 10% of total accounts payable, respectively. Two vendors accounted for approximately 51% and 22% of purchases for the three months ended March 31, 2011 and 2010, respectively. Two vendors and no single vendor each accounted for more than 10% of purchases for the years ended December 31, 2010 and 2009, respectively. Fair Value of Financial Instruments The Company s financial instruments consist of cash and cash equivalents, restricted cash, accounts receivable, related party receivables, accounts payable, accrued expenses, related party payables, note payable, related party notes payable and derivative liabilities. The carrying value for all such instruments except related party notes payable and derivative liabilities approximates fair value due to the short-term nature of the instruments. The Company cannot determine the fair value of its related party notes payable due to the related party nature and because instruments similar to the notes payable could not be found. The Company s derivative liabilities are recorded at fair value. The Company determines the fair value of its financial instruments based on a three-level hierarchy for fair value measurements under which these assets and liabilities must be grouped, based on significant levels of observable or unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company s market assumptions. This hierarchy requires the use of observable market data when available. These two types of inputs have created the following fair-value hierarchy: Level 1 Valuations based on unadjusted quoted market prices in active markets for identical securities. Currently, the Company does not have any items classified as Level 1. Level 2 Valuations based on observable inputs (other than Level 1 prices), such as quoted prices for similar assets at the measurement date; quoted prices in markets that are not active; or other inputs that are observable, either directly or indirectly. Currently the Company does not have any items classified as Level 2. Level 3 Valuations based on inputs that are unobservable and significant to the overall fair value measurement, and involve management judgment. The Company used the Black-Scholes-Merton option pricing model to determine the fair value of the financial instruments. If the inputs used to measure fair value fall in different levels of the fair value hierarchy, a financial security s hierarchy level is based upon the lowest level of input that is significant to the fair value measurement. Table of Contents Revenue Recognition The Company recognizes revenues when there is persuasive evidence of an arrangement, product delivery and acceptance have occurred, the sales price is fixed or determinable and collectibility of the resulting receivable is reasonably assured. For all sales, the Company uses a binding purchase order as evidence of an arrangement. Delivery occurs when goods are shipped to customers. The Company ships with either FOB Shipping Point or Destination terms. Shipping documents are used to verify delivery and customer acceptance. For FOB Destination, the Company records revenue when proof of delivery is confirmed by the shipping company. The Company assesses whether the sales price is fixed or determinable based on the payment terms associated with the transaction and whether the sales price is subject to refund. The Company offers a standard product warranty to its customers for defects in materials and workmanship for a period of one year or 2,500 miles, whichever comes first, and has no other post-shipment obligations. The Company assesses collectibility based on the creditworthiness of the customer as determined by evaluations and the customer s payment history. All amounts billed to customers related to shipping and handling are classified as net revenues, while all costs incurred by the Company for shipping and handling are classified as cost of revenues. The Company does not enter into contracts that require fixed pricing beyond the term of the purchase order. All sales via distributor agreements are accompanied by a purchase order. Further, the Company does not allow returns of unsold items. The Company has executed various distribution agreements whereby the distributors agreed to purchase T3 Series packages (one T3 Series, two power modules, and one charger per package). The terms of the agreements require minimum re-order amounts for the vehicles to be sold through the distributors in specified geographic regions. Under the terms of the agreements, the distributor takes ownership of the vehicles and the Company deems the items sold at delivery to the distributor. Business Segments The Company currently only has one reportable business segment due to the fact that the Company derives its revenue primarily from one product. The CT Micro Car is not included in a separate business segment due to nominal net revenues during the three months ended March 31, 2011. The revenue from domestic sales and, international sales are shown below: Three Months Ended March 31, Year Ended December 31, 2011 2010 2010 2009 Percentage Percentage Percentage Percentage Net of Net Net of Net Net of Net Net of Net Product Revenues Revenues Revenues Revenues Revenues Revenues Revenues Revenues T3 Series Domestic $ 723,383 73 % $ 1,066,579 93 % $ 3,842,030 82 % $ 3,654,290 78.7 % T3 Series International 273,179 27 % 61,697 5 % 840,878 18 963,911 20.8 CT Series Domestic 21,150 2 % 25,821 0.5 $ 996,562 100 % $ 1,149,426 100 % $ 4,682,908 100 % $ 4,644,022 100 % Derivative Liabilities The Company recognizes the accounting standard that provides guidance for determining whether an equity-linked financial instrument, or embedded feature, is indexed to an entity s own stock. The standard applies to any freestanding financial instruments or embedded features that have the characteristics of a derivative, and to any freestanding financial instruments that are potentially settled in an entity s own common stock. During the three months ended March 31, 2011 and 2010, the Company recorded additional debt discount and derivative liabilities of $0 and $15,274, respectively, related to related party notes payable. During 2010 and 2009, the Company issued 231,000 and 595,373, respectively, of warrants related to the issuance of preferred stock. The Company estimated the fair value of the warrants of $716,236 and $1,740,578 at the Table of Contents dates of issuance and recorded a derivative liability. The change in fair value of the derivative is recorded through earnings at each reporting date. During 2010 and 2009, the Company recorded a discount on the issuance of preferred stock and derivative liability of $685,124 and $7,314,273, respectively, related to the anti-dilution provision of the preferred stock issued. The discount is recorded as a deemed dividend with a reduction to retained earnings during the 24-month period that the anti-dilution provision is outstanding. The change in fair value of the derivative is recorded through earnings at each reporting date. For the three months ended March 31, 2011 and 2010 and the years ended December 31, 2010 and 2009, the amortization of the discounts related to the Preferred Stock anti-dilution provision and warrants issued was $864,800, $1,672,882,$3,730,150 and $6,116, respectively, which was recorded as a deemed dividend. On March 22, 2010, one of the Company s preferred shareholders exercised their option to convert their 2,000,000 preferred shares into 400,000 shares of common stock. As a result of the conversion, the Company reclassified the balance of the derivative liability of $1,121,965 to additional paid-in capital and the balance of the discount of $1,099,742, as a deemed dividend. As of March 31, 2011 and December 31, 2010, the unamortized discount related to the conversion feature of the Preferred Stock was $3,398,268 and $4,263,068, respectively. Loss Per Share Basic loss per share is computed by dividing loss applicable to common stockholders by the weighted average number of common shares assumed to be outstanding during the period of computation. Diluted loss per share is computed similar to basic loss per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential shares had been issued and if the additional common shares were dilutive. Options, warrants and shares associated with the conversion of debt and preferred stock to purchase approximately 5.8 million, 4.9 million, 5.8 million and 5.1 million shares of common stock were outstanding at March 31, 2011 and 2010 and December 31, 2010 and 2009, respectively, but were excluded from the computation of diluted earnings per share due to the net losses for the periods. Three Months Ended March 31, Years Ended December 31, 2011 2010 2010 2009 (Unaudited) Net loss $ (640,585 ) $ (1,681,739 ) $ (8,327,887 ) $ (6,698,893 ) Deemed dividend to preferred stockholders (864,800 ) (1,672,882 ) (3,730,149 ) (6,116 ) Net loss attributable to common stockholders $ (1,505,385 ) $ (3,354,621 ) $ (12,058,036 ) $ (6,705,009 ) Weighted average number of common shares outstanding: Basic and diluted 5,065,847 4,505,096 4,768,979 4,444,504 Net loss per share: Basic and diluted $ (0.30 ) $ (0.74 ) $ (2.53 ) $ (1.51 ) Commitments and Contingencies Preproduction Plastics, Inc. v. T3 Motion., Inc. Ki Nam and Jason Kim (Orange County Superior Court Case No. 30.2009-00125358): On June 30, 2009, Preproduction Plastics, Inc. ( Plaintiff ) filed suit in Orange County Superior Court, alleging causes of actions against T3 Motion, Inc., Ki Nam, the Company s CEO, and Jason Kim, the Company s former COO (collectively the Defendants ) for breach of contract, conspiracy, fraud and common counts, arising out of a purchase order allegedly executed between Plaintiff and the Company. On August 24, 2009, Defendants filed a Demurrer to the Complaint. Prior to the hearing on the Demurrer, Plaintiff filed a First Amended Complaint against Defendants for breach of contract, fraud and common counts, seeking compensatory damages of $470,599, attorney s fees, punitive damages, interest and costs. On October 27, 2009, Defendants filed a Demurrer, Table of Contents challenging various causes of action in the First Amended Complaint. The Court denied the Demurrer on December 4, 2009. On December 21, 2009, Defendants filed an answer to the First Amended Complaint, and trial was set for July 30, 2010. On or about July 29, 2010, the case was settled in its entirety. The Company agreed to pay compensatory damages, attorneys fees and costs totaling $493,468, through monthly payments of $50,000, with 6% interest accruing from the date of the settlement. Periodic payments are expected to be made through May 2011. The first payment of $50,000 was made on August 3, 2010 and subsequent principal payments totaling $200,000 were made by the Company through December 31, 2010. Company recorded the entire settlement amount of $493,468 as a note payable, $470,599 as a deposit on fixed assets and the remaining $22,869 as a charge to legal expense. At December 31, 2010, the remaining settlement amount of $243,468 is recorded as a note payable in the accompanying condensed consolidated balance sheet. The Company has recorded accrued interest of $8,040 and $4,126 at March 31, 2011 and December 31, 2010, respectively. Commencing January 1, 2011, the Company has failed to make the scheduled payments required by the July 29, 2010 settlement agreement and stipulation for entry of judgment. The Plaintiff then filed a motion for entry of judgment pursuant to the terms of the July 29, 2010 settlement agreement and stipulation for entry of judgment, which if granted, would cause the acceleration of all amounts owed under the settlement agreement. While the motion has been pending, the Company has made principal payments totaling $150,000. This motion is now scheduled to be heard on June 16, 2011. In the ordinary course of business, the Company may face various claims brought by third parties in addition to the claim described above and may from time to time, make claims or take legal actions to assert the Company s rights, including intellectual property rights as well as claims relating to employment and the safety or efficacy of the Company s products. Any of these claims could subject us to costly litigation and, while the Company generally believes that it has adequate insurance to cover many different types of liabilities, the insurance carriers may deny coverage or the policy limits may be inadequate to fully satisfy any damage awards or settlements. If this were to happen, the payment of such awards could have a material adverse effect on the consolidated operations, cash flows and financial position. Additionally, any such claims, whether or not successful, could damage the Company s reputation and business. Management believes the outcome of currently pending claims and lawsuits will not likely have a material effect on the consolidated operations or financial position. Recent Events Ki Nam Advances In April 2011, Mr. Nam advanced $300,000 to the Company in exchange for debt securities to be negotiated with the Company . We agreed with Mr. Nam that the 2011 Note would accrue interest at 12% per annum and would mature in one year. Interest payments would be due monthly but would not commence until June 1, 2011. We intend to grant up to 300,000 five-year warrants to purchase common stock at $3.50 per share. In May 2011, Mr. Nam advanced the Company $100,000 for general operating purposes. On June 1, 2011, the Company repaid the advance. Fourth Amendment to Immersive Note; Repayment On April 30, 2011, Immersive agreed to extend the note to May 20, 2011. All other terms of the note remained the same. On May 20, 2011, the Company paid Immersive the balance of $1,121,861, including all accrued interest due under the note. Public Offering of the Company s Equity Securities On May 16, 2011, the Company announced that it had raised $11.1 million in a public offering of its securities. The offering closed on May 19, 2011, and the Company received net proceeds of $9,678,903 after deducting commissions and offering expenses. The transaction resulted in the issuance of 3,171,429 units of the Company s securities. Each unit consists of one share of the Company s common stock, one Class H warrant and one Class I warrant. Each warrant grants the Table of Contents holder the right to purchase one share of the Company s common stock. In connection with the offering, the Company effected a one-for-10 reverse stock split of its common stock, which allowed it to meet the minimum share price requirement of the AMEX. The Company has offered contractual rights to investors that either purchase $500,000 or more of our units in the offering or are converting at least $500,000 of existing securities into substantially identical units. We entered into agreements with such investors that grant them approval rights to certain change of control transactions. Such agreements also granted them approval rights, subject to certain exceptions, to financings at a per share purchase price below the exercise price of their warrants. Debt and Preferred Stock Conversion into Common Stock and Common Stock Equivalent Securities. On May 19, 2011, Vision Opportunity Master Fund, Ltd. and Vision Capital Advantage Fund (collectively Vision ); and Ki Nam, our Chief Executive Officer, converted their $3.5 million and $2.1 million debentures plus accrued interest, respectively, into 1,138,885 and 632,243 unregistered units. As with the publicly offered units, each unregistered unit consisted of one share of common stock, one Class H warrant and one Class I warrant. The shares, warrants and warrant shares underlying these units are included in this registration statement. On May 19, 2011, the Company s preferred stockholders converted all outstanding Series A Convertible Preferred Stock into 2,872,574 shares of the Company s common stock. Included in the conversion of the Series A Convertible Preferred Stock are shares held by Vision and Mr. Nam of 9,370,698 and 976,865, respectively, which are convertible into 2,340,176 and 243,956 shares of common stock, respectively. These shares of common stock are included in this registration statement. 1-for-10 Reverse Stock Split On May 16, 2011, the Company effected a one-for-10 reverse stock split of its common stock after the effectiveness of the registration statement and prior to the closing of the May Public Offering. All information included in this registration statement has been retroactively adjusted to reflect the effect of the reverse stock split. Lock Up Agreement On May 16, 2011, Vision and Ki Nam entered into lock-up agreements pursuant to which such parties have agreed not to sell any shares of our common stock for 12 months, subject to exceptions. Amendment to Certain Class G Warrants During May 2011, the Company entered into agreements with certain Class G warrant holders to waive the price-based, anti-dilution protection provisions and fix the exercise price per share of the Common Stock under the Warrant to $5.00. Table of Contents Results of Operations Comparison of the three month periods ended March 31, 2011 and March 31, 2010 The following table sets forth the results of our operations for the three months ended March 31, 2011 and 2010 (unaudited): Three Months Ended March 31, 2011 2010 Net revenues $ 996,562 $ 1,149,426 Cost of net revenues 956,932 1,127,449 Gross profit 39,630 21,977 Operating Expenses: Sales and marketing 311,750 427,654 Research and development 233,912 320,506 General and administrative 821,545 1,029,413 Total operating expenses 1,367,207 1,777,573 Loss from operations (1,327,577 ) (1,755,596 ) Other income (expense), net: Interest income 43 903 Other income, net 991,694 755,555 Interest expense (303,945 ) (681,801 ) Total other income (expense), net 687,792 74,657 Loss before provision for income tax (639,785 ) (1,680,939 ) Provision for income tax 800 800 Net loss (640,585 ) (1,681,739 ) Deemed dividend to preferred stockholders (864,800 ) (1,672,882 ) Net loss attributable to common stockholders $ (1,505,385 ) $ (3,354,621 ) Other comprehensive income (loss): Foreign currency translation income 205 Comprehensive loss $ (640,585 ) $ (1,681,534 ) Net loss per share: Basic and diluted $ (0.30 ) $ (0.74 ) Weighted average number of common shares outstanding: Basic and diluted 5,065,847 4,505,096 Net revenues. Net revenues are primarily from sales of the T3 Series, T3i Series, power modules, chargers, related accessories and service. Net revenues decreased ($152,864), or (13.3%), to $996,562 for the three months ended March 31, 2011 compared to the same period of the prior year. The decrease was primarily due to certain of our customers deferring purchasing decisions, thereby lengthening our sales cycles, as well as vendor supply issues resulting in orders placed by customers not being shipped during the quarter coupled with our short supply of cash to adequately purchase parts in a timely and cost-effective manner to meet our orders. The delays in our parts due to our increased vendor lead times along with our inadequate cash position, has resulted in an increased backlog. To date, we have not received any cancelled orders. The decreases were offset in part by expansion into new markets, increase in orders placed due to the slight economic recovery, achieving a higher average selling price per unit and an increase in service and parts revenue. We anticipate that the net proceeds from our offering will reduce our delays and also allow us to place orders with our vendors in accordance with their current lead times. This should return our Table of Contents lead times back to our standard of approximately 4-6 weeks. Our backlog at March 31, 2011 was approximately $2.9 million. Cost of net revenues. Cost of net revenues consisted of materials, labor to produce vehicles and accessories, warranty and service costs and applicable overhead allocations. Cost of net revenues decreased ($170,517), or (15.1%), to $956,932 for the three months ended March 31, 2011 compared to the same period of the prior year. This decrease in cost of net revenues is primarily attributable to management s cost reduction strategy. The decrease was offset in part by increased shipping costs due to our cash position and the inability to purchase product at the appropriate lead times to prevent overnight or air freight charges, thereby increasing our costs. Gross profit. Management has continued to source lower product costs, increase production efficiencies and experienced lower warranty costs, offset in part by cash constraints resulting in increased shipping costs, and vendor supply issues, resulting in gross profit of $39,630 for the three months ended March 31, 2011, compared to a gross profit of $21,977 for the same period of the prior year and. Management has and will continue to evaluate the processes and materials to reduce the costs of net revenues over the next periods. Gross profit margin was 4.0% and 1.9% for the three months ended March 31, 2011 and 2010, respectively. Sales and marketing. Sales and marketing decreased by ($115,904), or (27.1%), to $311,750 for the three months ended March 31, 2011, compared to the same period of the prior year. The decrease in sales and marketing expense was attributable to a reduction in salaries and commissions due to restructuring of commission plans and decreases in trade show and travel expenses. Research and development. Research and development costs include development expenses such as salaries, consultant fees, cost of supplies and materials for samples and prototypes, as well as outside services costs. Research and development expense decreased by ($86,594), or (27.0%), to $233,912 for the three months ended March 31, 2011 compared to the same period of the prior year. The decrease was largely in part due to a reduction in salaries and employee costs as well as a reduction in material costs due to the completion of the electric/hybrid vehicle prototype during 2011. General and administrative. General and administrative expenses decreased by ($207,868), or (20.2%), to $821,545, for the three months ended March 31, 2011 compared to the same period of the prior year. The decrease was due to a decrease in stock compensation expenses and a decrease in compliance expenses. Other income (expense), net. Other income, net increased by $613,135, or 821.3%, to $687,792 for the three months ended March 31, 2011 compared to the prior year. The increase was primarily due to the change in the fair value of the derivative liabilities and a decrease in amortization of debt discounts when compared to the same period of the prior year. Deemed dividend. Deemed dividend decreased by ($808,082), or (48.3%), to $864,800 for the three months ended March 31, 2011 compared to the same period of the prior year. The deemed dividend is the result of the amortization of the discount on the Series A convertible preferred stock. The decrease was primarily attributable to the conversion of 2,000,000 preferred shares into 400,000 shares of common stock resulting in additional deemed dividend of $1,099,742 during the three months ended March 31, 2010. Net loss attributable to common stockholders. Net loss attributable to common stockholders for the three months ended March 31, 2011, was ($1,505,385), or ($0.30) per basic and diluted share compared to a loss of ($3,354,621), or ($0.74) per basic and diluted share, for the same period of the prior year. Table of Contents Comparison of the fiscal years ended December 31, 2010 and December 31, 2009 The following table sets forth the results of our operations for the years ended December 31, 2010 and 2009: For the Years Ended December 31, 2010 2009 Net revenues $ 4,682,908 $ 4,644,022 Cost of net revenues 4,512,497 4,988,118 Gross profit (loss) 170,411 (344,096 ) Operating expenses: Sales and marketing 1,826,736 1,927,824 Research and development 1,602,961 1,395,309 General and administrative 3,579,817 5,126,801 Total operating expenses 7,009,514 8,449,934 Loss from operations (6,839,103 ) (8,794,030 ) Other income (expense), net: Interest income 1,321 2,510 Other income, net 2,487,310 5,565,869 Interest expense (3,976,615 ) (3,472,442 ) Total other income (expense), net (1,487,984 ) 2,095,937 Loss before provision for income taxes (8,327,087 ) (6,698,093 ) Provision for income tax 800 800 Net loss (8,327,887 ) (6,698,893 ) Deemed divided to preferred stockholders (3,730,149 ) (6,116 ) Net loss attributable to common stockholders $ (12,058,036 ) $ (6,705,009 ) Other comprehensive income (loss): Foreign currency translation income (loss) 344 (632 ) Comprehensive loss $ (8,327,543 ) $ (6,699,525 ) Net loss attributable to common stockholders per share: Basic and diluted $ (2.53 ) $ (1.51 ) Weighted average number of common shares outstanding: Basic and diluted 4,768,799 4,444,504 Net Revenues. Net revenues are primarily from sales of the T3 Series, T3i Series, power modules, chargers, related accessories and service. Net revenues increased $38,886, or 0.8%, to $4,682,908 for the year ended December 31, 2010, compared to the same period of the prior year. The increase was primarily due the expansion into new markets, increase in orders placed due to the slight economic recovery, achieving a higher average selling price per unit and an increase in service and parts revenue. These increases were offset in part by certain of our customers deferring purchasing decisions, thereby lengthening our sales cycles, as well as vendor supply issues resulting in orders placed by customers not being shipped during the last half of the year coupled with our short supply of cash to adequately purchase parts in a timely and cost-effective manner to meet our orders. The delays in our parts due to our increased vendor lead times along with our inadequate cash position, has resulted in an increased backlog. To date, we have not experienced cancelled orders. We anticipate that the proceeds from the offering will reduce our delays and also allow us to place orders with our vendors in accordance with their current lead times, therefore should return our lead times back to our standard of approximately 4-6 weeks. Our backlog at December 31, 2010 was approximately $2.2 million. Table of Contents Cost of net revenues. Cost of net revenues primarily consisted of materials, labor to produce vehicles and accessories, warranty and service costs and applicable overhead allocations. Cost of net revenues decreased $(475,621), or (9.5%), to $4,512,497 for the year ended December 31, 2010, compared to the prior year. This decrease in cost of revenues is attributable to management s cost reduction strategy and lower warranty cost experience due to increase in product reliability. The decrease was offset in part by increased shipping costs due to our cash position and the inability to purchase product at the appropriate lead times to prevent overnight or air freight charges, thereby increasing our costs. The decrease in cost of revenues was also offset by the addition of $65,000 to inventory reserve for the year ended December 31, 2010. Gross profit (loss). During 2010, management has continued to source lower product costs, increase production efficiencies and experienced lower warranty costs, offset in part by cash constraints resulting in increased shipping costs, inventory reserve and vendor supply issues, resulting in gross profit of $170,411, compared to a gross loss of $(344,096) for the prior year. Management has and will continue to evaluate the processes and materials to reduce the costs of revenue over the next year. Gross profit (loss) margin was 3.6% and (7.4%), respectively, for the years ended December 31, 2010 and 2009. Sales and marketing. Sales and marketing decreased by $(101,088), or (5.2%), to $1,826,736 for the year ended December 31, 2010, compared to the prior year. The decrease in sales and marketing expense is attributable to a reduction in salaries and commissions due to restructuring of commission plans and decreases in trade show and travel expenses. Research and development. Research and development costs generally consist of development expenses such as salaries, consultant fees, cost of supplies and materials for samples and prototypes, as well as outside services costs. Research and development expense increased by $207,652, or 14.9%, to $1,602,961 for the year ended December 31, 2010, compared to the prior year. The increase was primarily attributable to the costs associated to build the electric/hybrid vehicle prototype. General and administrative. General and administrative expenses decreased $(1,546,984), or (30.2%), to $3,579,817, for the year ended December 31, 2010 compared to the prior year. The decrease was primarily due to decreases in salaries, legal expenses, stock compensation expenses and accounting compliance costs. Other income (expense), net. Other income (expense ), net decreased $(3,583,921) to ($1,487,984) for the year ended December 31, 2010 primarily due to the change in the fair value of the derivative liabilities and the amortization of debt discount when compared to the prior year. Deemed dividend. During 2010, as a result of the issuance of Series A convertible preferred stock, we recorded a deemed dividend related to the amortization of discounts on the preferred stock of $3,730,149 for the year ended December 31, 2010 compared to $6,116 for the prior year. Net loss attributable to common stockholders. Net loss attributable to common stockholders for the year ended December 31, 2010, was $(12,058,036), or $(2.53) per basic and diluted share compared to $(6,705,009), or $(1.51) per basic and diluted share, for the prior year. LIQUIDITY AND CAPITAL RESOURCES Our principal capital requirements are to fund our working capital requirements, invest in research and development and capital equipment, to make debt service payments and the continued costs of public company filing requirements. We have historically funded our operations through debt and equity financings, raising $1,000,000 and $1,155,000 for the three months ended March 31, 2011 and 2010, respectively. We will continue to raise equity and/or secure additional debt to meet our working capital requirements. For the year ended December 31, 2010, our independent registered public accounting firm noted in its report that we have incurred losses from operations and have an accumulated deficit and working capital deficit of approximately $(45.1) million and $(15.1) million, respectively, as of December 31, 2010, which raises substantial doubt about our ability to continue as a going concern. Management believes that cash from operations, together with the net proceeds of the recent public offering of approximately $9.6 million, should be sufficient to allow the Company to continue as a going concern through at least December 31, 2011; however, the Company cannot assure you of this and may require additional debt or equity Table of Contents financing in the future to maintain operations. The Company also anticipates that it will pursue raising additional debt or equity financing to fund its new product development and expansion plans. We cannot assure you that such financing will be available on a timely basis, or acceptable terms or at all. During 2011, the Company has received proceeds from related-party loans of approximately $1.0 million, repaid the outstanding balance of the $1.0 million related to the note to Immersive Media Corp. ( Immersive ) and converted the outstanding balance of the $3.5 million related to the note with Vision into equity securities. In light of these plans, management is confident in the Company s ability to continue as a going concern. These condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Until management achieves our cost reduction strategy and is able to generate sales to realize the benefits of the strategy and sufficiently increases cash flow from operations, we will require additional capital to meet our working capital requirements, debt service, research and development, capital requirements and compliance requirements. We will continue to raise additional equity and/or financing to meet our working capital requirements. Our principal sources of liquidity are cash and receivables. As of March 31, 2011, cash and cash equivalents were $154,070 or 4.2% of total assets compared to $133,861, or 3.7% of total assets as of December 31, 2010. Cash Flows For the three months ended March 31, 2011 and 2010 Net cash used in operating activities for the three months ended March 31, 2011 and 2010 were $803,136 and $2,521,337, respectively. Net cash flows used were primarily due to a net loss of $640,585, net non-cash reconciling items of $575,393 and an increase in prepaid expenses of $148,677. Net cash flows used were offset in part by decreases in accounts receivable and inventories of $26,659 and $168,389, respectively, and increases in accounts payable and accrued expenses of $367,005. For the three months ended March 31, 2010, cash flows used in operating activities related primarily to the net loss of $1,681,739, offset by net non-cash reconciling items of $198,655. Net cash flows used were due in part by increases in accounts receivable, inventories, and other current assets of $189,477, $119,741 and $391,490, respectively, and decreases in accounts payable and related party payables of $232,665 and $104,931, respectively. Net cash used in investing activities of $1,849 for the three months ended March 31, 2011 related to loans to related parties of $1,849. Net cash used in investing activities of $26,778 for the three months ended March 31, 2010 related primarily to purchases of property and equipment of $26,646 and loans to related parties of $1,607, offset by repayment of loans to related parties of $1,475. Net cash provided by financing activities was $825,194 for the three months ended March 31, 2011. For the three months ended March 31, 2011, cash flows provided by financing activities related to proceeds from the related party notes payable of $1,000,000, offset by repayments of the note payable due to PPI for $150,000 and payment of deferred offering costs of $24,806. For the three months ended March 31, 2010, net cash flows provided by financing activities related to proceeds from the sale of preferred stock of $1,155,000, offset by a common stock rescission of $250,000. For the Years Ended December 31, 2010 and 2009 Net cash flows used in operating activities for the years ended December 31, 2010 and 2009 were $(5,185,067), and $(5,356,937), respectively. For the year ended December 31, 2010, cash flows used in operating activities related primarily to the net loss of $(8,327,887), offset by net non-cash reconciling items of $2,245,845. Further contributing to the decrease were increases in prepaid expenses and other current assets, restricted cash and related party payables of $(89,470), $(10,000) and $(52,958), respectively. Net cash flows used were offset in part by decreases in accounts receivable, inventories, and deposits and increases in accounts payable of $139,400, $104,670, $31,888, and $773,445, respectively. Table of Contents For the year ended December 31, 2009, cash flows used in operating activities related primarily to the net loss of $(6,698,893), offset by net non-cash reconciling items of $295,988 and a decrease in accounts payable of $(719,720) . Net cash flows used were offset in part by decreases in accounts receivable, inventories, prepaid expenses and other current assets of $689,343, $645,254, and $450,798, respectively. Net cash used in investing activities was $(48,214) and $(38,450) for the years ended December 31, 2010 and 2009, respectively. For the year ended December 31, 2010, cash flows used in investing activities related primarily to purchases of property and equipment of $(62,469). For the year ended December 31, 2009, cash flows used in investing activities related primarily to purchases of property and equipment of $(36,040). Net cash provided by financing activities was $2,776,000 and $6,294,076 for the years ended December 31, 2010 and 2009, respectively. For the year ended December 31, 2010, cash flows provided by financing activities related primarily to proceeds received from related party notes of $2,511,000, proceeds from the sale of stock of $1,155,000, offset in part by repayment of notes payable, rescission of common stock and repayment of loans/advances from related parties of $250,000, $250,000 and $390,000, respectively. For the year ended December 31, 2009, cash flows provided by financing activities related primarily to proceeds received from related party notes of $4,514,963, proceeds from the sale of stock of $1,978,942, offset in part by repayment of notes payable of $199,829. Off-Balance Sheet Arrangements We have not entered into any other financial guarantees or other commitments to guarantee the payment obligations of any third parties. We have not entered into any derivative contracts that are indexed to our shares and classified as stockholder s equity that are not reflected in our financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. We do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or research and development services with us. Warrants From time to time, we issue warrants to purchase shares of the Company s common stock to investor, note holders and to non-employees for services rendered or to be rendered in the future. Warrants issued in conjunction with equity, are recorded to equity as exercised. The following table is the warrants issued and outstanding as of March 31, 2011: Warrants Exercisable Exercise Price Expiration 12,000 $15.40 3/31/2013 27,478 $16.50 12/29/2014 195,373 $7.00* 12/29/2014 400,000 $7.00* 12/30/2014 160,000 $7.00* 2/2/2015 71,000 $7.00* 3/22/2015 94,764 $7.00* 3/31/2015 104,000 $7.00 4/30/2015 5,000 $7.00 8/25/2015 * Amendment to Certain Class G Warrants During May 2011, the Company entered into agreements with certain Class G warrant holders to waive the price-based, anti-dilution protection provisions and fix the exercise price per share of the Common Stock under the Warrant to $5.00. Table of Contents The exercise price and the number of shares issuable upon exercise of the warrants will be adjusted upon the occurrence of certain events, including reclassifications, reorganizations or combinations of the common stock. At all times that the warrants are outstanding, we will authorize and reserve at least that number of shares of common stock equal to the number of shares of common stock issuable upon exercise of all outstanding warrants. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE There were no changes in or disagreements with our accountants on accounting and financial disclosure during the last three fiscal years or the interim period from January 1, 2011 through the date of this prospectus. DESCRIPTION OF PROPERTY Offices and Facilities Our main office and manufacturing facility is located in Costa Mesa, California. The table below provides a general description of our properties: Location Principal Activities Area (Sq. Meters) Lease Expiration Date 2990 Airway Ave., Costa Mesa, California 92626 Main office and manufacturing facility 33,520 August 31, 2012 2975 Airway Ave., Costa Mesa, California 92626 Research and development, warehouse, and service facility 14,000 December 31, 2010(1) (1) While the original term of this lease expired in December 2010, the Company is currently leasing this facility on a month-to-month basis. The Company leases two facilities in Costa Mesa, California under non-cancelable operating lease agreements that expired in 2010 but were extended on a month-to-month basis and will expire in 2012. These leases require monthly lease payments of approximately $9,000 and $25,000 per month. Lease expense for the facilities was approximately $384,000 and $448,000 for the years ended December 31, 2010 and 2009, respectively. Future minimum annual payments under these non-cancelable operating leases are as follows: Years Ending December 31, Total 2011 305,000 2012 209,000 $ 514,000 DESCRIPTION OF SECURITIES Equity Securities On November 11, 2009, the Company filed an amendment to its certificate of incorporation that increased its authorized number of shares of capital stock to 170,000,000, including 150,000,000 shares of common stock and 20,000,000 shares of preferred stock. Preferred Stock On August 25, 2009, the Company s Board of Directors authorized 20,000,000 shares of preferred stock. On November 11, 2009, the Company filed a Certificate of Designation of its Series A convertible preferred stock ( Series A Preferred ). Except as otherwise provided in the Series A Certificate or by law, each holder of shares of Table of Contents Series A Preferred shall have no voting rights. As long as any shares of Series A Preferred are outstanding, however, the Company shall not, without the affirmative vote of the holders of a majority of the then outstanding shares of the Series A Preferred, (a) alter or change adversely the powers, preferences, or rights given to the Series A Preferred or alter or amend the Series A Certificate, (b) authorize or create any class of stock ranking as to dividends, redemption or distribution of assets upon a liquidation senior to or otherwise pari passu with the Series A Preferred, (c) amend its certificate of incorporation or other charter documents in any manner that adversely affects any rights of the holders of Series A Preferred, (d) increase the number of authorized shares of Series A Preferred, or (e) enter into any agreement with respect to any of the foregoing. Each share of Series A Preferred is convertible at any time and from time to time after the issue date at the holder s option into shares of the Company s common stock (subject to beneficial ownership limitations as set forth in Section 6(d) of the Series A Certificate; provided however these limitations will be deleted immediately prior to the closing of this offering) determined by dividing the Stated Value of such share of Series A Preferred by the Conversion Price (each as defined below). Each share of Series A Preferred shall have a Stated Value equal to $0.50. The Conversion Price for the Series A Preferred shall equal $5.00, subject to adjustment as provided in the Series A Certificate. Holders of our Series A Preferred are restricted from converting their shares of Series A Preferred to common stock if the number of shares of Common Stock to be issued pursuant to such conversion would cause the number of shares of common stock beneficially owned by such holder, together with its affiliates, at such time to exceed 9.99% of the then issued and outstanding shares of Common Stock; provided, however, that such holder may waive this limitation upon 61 days notice to the Company. The Company has not received any such notice. However, the Company expects to remove this provision from the Certificate of Incorporation prior to the closing of this offering. There are no redemption rights. The Conversion Price shall be proportionately reduced for a stock dividend, stock split, subdivision, combination or similar arrangements. The Conversion Price will also be reduced for any sale of common stock (or options, warrants or convertible debt or other derivative securities) at a purchase price per share less than the Conversion Price, subject to certain excepted issuances. The Conversion Price will be reduced to such purchase price if such issuance occurs within the first 12 months of the original issuance date. The Conversion Price will be reduced to a price derived using a weighted-average formula if the issuance occurs after the first 12 months but before the 24 month anniversary of the original issuance date. If, at any time while the Series A Preferred is outstanding, (A) the Company effects any merger or consolidation of the Company with or into another person, (B) the Company effects any sale of all or substantially all of its assets in one transaction or a series of related transactions, (C) any tender offer or exchange offer (whether by the Company or another person) is completed pursuant to which holders of common stock are permitted to tender or exchange their shares for other securities, cash or property, or (D) the Company effects any reclassification of the common stock or any compulsory share exchange pursuant to which the common stock is effectively converted into or exchanged for other securities, cash or property (in any such case, a Fundamental Transaction ), then, upon any subsequent conversion of Series A Preferred, the holders shall have the right to receive, for each Conversion Share (as defined in Section 1 of the Series A Certificate) that would have been issuable upon such conversion immediately prior to the occurrence of such Fundamental Transaction, the same kind and amount of securities, cash or property as it would have been entitled to receive upon the occurrence of such Fundamental Transaction if it had been, immediately prior to such Fundamental Transaction, the holder of one share of common stock As of June 8, 2011, all shares of Series A preferred stock have been converted into shares of common stock. Our board of directors is authorized by our Certificate of Incorporation to establish classes or series of preferred stock and fix the designation, powers, preferences and rights of the shares of each such class or series and the qualifications, limitations or restrictions thereof without any further vote or action by our stockholders. Any shares of preferred stock so issued would have priority over our common stock with respect to dividend or liquidation rights. Any future issuance of preferred stock may have the effect of delaying, deferring or preventing a change in our control without further action by our stockholders and may adversely affect the voting and other rights Table of Contents of the holders of our common stock. At present, we have no plans to issue any additional shares of preferred stock or to adopt any new series, preferences or other classification of preferred stock. The issuance of shares of preferred stock, or the issuance of rights to purchase such shares, could be used to discourage an unsolicited acquisition proposal. For instance, the issuance of a series of preferred stock might impede a business combination by including class voting rights that would enable a holder to block such a transaction. In addition, under certain circumstances, the issuance of preferred stock could adversely affect the voting power of holders of our common stock. Although our board of directors is required to make any determination to issue preferred stock based on its judgment as to the best interests of our stockholders, our board could act in a manner that would discourage an acquisition attempt or other transaction that some, or a majority, of our stockholders might believe to be in their best interests or in which such stockholders might receive a premium for their stock over the then market price of such stock. Our board presently does not intend to seek stockholder approval prior to the issuance of currently authorized stock, unless otherwise required by law or applicable stock exchange rules. Common Stock As of June 2, 2011, there were issued and outstanding, 12,880,978 shares of common stock. The holders of common stock are entitled to one vote per share on all matters to be voted upon by the stockholders. The holders of common stock are entitled to receive any dividends that may be declared from time to time by the Board of Directors out of funds legally available for that purpose. The declaration of any future cash dividend will be at the discretion of the Company s Board of Directors and will depend upon the Company s earnings, if any, capital requirements and financial position, general economic conditions, and other pertinent conditions. In the event of our liquidation, dissolution or winding up, the holders of common stock are entitled to share in all assets remaining after payment of liabilities. The holders of common stock do not have cumulative voting rights, which mean that the holders of more than fifty percent of the shares of common stock voting for election of directors may elect all the directors if they choose to do so. In this event, the holders of the remaining shares aggregating less than fifty percent will not be able to elect directors. The common stock has no preemptive or conversion rights or other subscription rights. Warrants Class H Warrants Each Class H warrant entitles the holder to purchase one share of our common stock at a price of $3.00 per share, subject to adjustment as discussed below, at any time. The Class H warrants will expire on May 13, 2013 at 5:00 p.m., New York City time. The Class H warrants are redeemable. The Class H warrants can not be exercised until three months after issuance. The Class H warrants were issued in registered form under a warrant agreement between Securities Transfer Corporation, as warrant agent, and us. You should review a copy of the warrant agreement, which has been filed as an exhibit to the registration statement on Form S-1 (File No. 333-171163), for a complete description of the terms and conditions applicable to the Class H warrants. The exercise price and number of shares of common stock issuable on exercise of the Class H warrants may be adjusted in certain circumstances including in the event of a stock dividend, or our recapitalization, reorganization, merger or consolidation. However, the Class H warrants will not be adjusted for issuances of common stock, preferred stock or other securities at a price below their respective exercise prices. The Class H warrants may be exercised upon surrender of the warrant certificate on or prior to the expiration date at the offices of the warrant agent, with the exercise form on the reverse side of the warrant certificate completed and executed as indicated, accompanied by full payment of the exercise price, by certified check payable to us, for the number of Class H warrants being exercised. The Class H warrantholders do not have the rights or privileges of holders of common stock and any voting rights until they exercise their Class H warrants and receive shares of common stock. After the issuance of shares of common stock upon exercise of the Class H warrants, each holder will be entitled to one vote for each share held of record on all matters to be voted on by stockholders. Table of Contents If at the time of exercise of a Class H warrant, no prospectus relating to the common stock issuable upon exercise of the Class H warrants is current and the common stock has not been registered or qualified or deemed to be exempt under the securities laws of the state of residence of the holder of the Class H warrants, the Class H Warrants will instead only be exercisable on a net or cashless basis. We will use our reasonable efforts to maintain a current prospectus relating to common stock issuable upon exercise of the Class H warrants until the expiration of the Class H warrants. However, we cannot assure you that we will be able to do so. We may redeem the outstanding Class H warrants: (a) in whole or not in part, (b) at a price of $0.01 at any time after the warrants become exercisable, (c) upon a minimum 30 days prior written notice of redemption, and (d) if and only if, the reported last sale price of our common stock equals or exceeds $6.00 per share for any 20 consecutive trading days within a 30 trading day period ending on the third business day prior to the 30-day notice of redemption to warrant holders. No fractional shares will be issued upon exercise of the Class H warrants. However, we will pay to the Class H warrantholder, in lieu of the issuance of any fractional share that is otherwise issuable to the Class H warrantholder, an amount in cash based on the market value of the common stock on the last trading day prior to the exercise date. Class I Warrants Each Class I warrant entitles the holder to purchase one share of our common stock at a price of $3.50 per share, subject to adjustment as discussed below. The Class I warrants can not be exercised until three months after issuance. The Class I warrants will expire on May 13, 2016 at 5:00 p.m., New York City time. The Class I warrants were issued in registered form under a warrant agreement between Securities Transfer Corporation, as warrant agent, and us. You should review a copy of the warrant agreement, which has been filed as an exhibit to the registration statement on Form S-1 (File No. 333-171163), for a complete description of the terms and conditions applicable to the Class I warrants. The exercise price and number of shares of common stock issuable on exercise of the Class I warrants may be adjusted in certain circumstances including in the event of a stock dividend, or our recapitalization, reorganization, merger or consolidation. However, the Class I warrants will not be adjusted for issuances of common stock, preferred stock or other securities at a price below their respective exercise prices. The Class I warrants may be exercised upon surrender of the warrant certificate on or prior to the expiration date at the offices of the warrant agent, with the exercise form on the reverse side of the warrant certificate completed and executed as indicated, accompanied by full payment of the exercise price, by certified check payable to us, for the number of Class I warrants being exercised. The Class I warrantholders do not have the rights or privileges of holders of common stock and any voting rights until they exercise their Class I warrants and receive shares of common stock. After the issuance of shares of common stock upon exercise of the Class I warrants, each holder will be entitled to one vote for each share held of record on all matters to be voted on by stockholders. If at the time of exercise of a Class I warrant, no registration statement relating to the common stock issuable upon exercise of the Class I warrants is effective and the common stock has not been registered or qualified or deemed to be exempt under the securities laws of the state of residence of the holder of the Class I warrants, the Class I Warrants will instead only be exercisable on a net or cashless basis. We will use our reasonable efforts to maintain an effective registration statement relating to common stock issuable upon exercise of the Class I warrants until the expiration of the Class I warrants. However, we cannot assure you that we will be able to do so. No fractional shares will be issued upon exercise of the Class I warrants. However, we will pay to the Class I warrantholder, in lieu of the issuance of any fractional share that is otherwise issuable to the Class I warrantholder, an amount in cash based on the market value of the common stock on the last trading day prior to the exercise date. Other Warrants As of June 2, 2011, there were outstanding warrants to purchase 12,000 shares of our common stock at an exercise price of $15.40 per share. The warrants are immediately exercisable. The warrants expire on March 31, 2013. There were 24,477 warrants exercisable at the exercise price of $16.50 per share that expire through Table of Contents December 29, 2014. There were 195,373 warrants exercisable at the exercise price of $5.00 per share that expire on December 29, 2014. There were 400,000 warrants exercisable at the exercise price of $5.00 per share that expire on December 30, 2014. There were 160,000 warrants exercisable at the exercise price of $5.00 per share that expire on February 2, 2015. There were 94,764 warrants exercisable at the exercise price of $7.00 per share that expire on March 31, 2015. There were 71,000 warrants exercisable at the exercise price of $5.00 per share that expire on March 22, 2015. There were 104,000 warrants exercisable at the exercise price of $7.00 per share that expire on April 30, 2015. There were 5,000 warrants exercisable at the exercise price of $7.00 per share that expire on August 25, 2015. The exercise price and the number of shares issuable upon exercise of the warrants will be adjusted upon the occurrence of certain events, including reclassifications, reorganizations or combinations of the common stock. At all times that the warrants are outstanding, we will authorize and reserve at least that number of shares of common stock equal to the number of shares of common stock issuable upon exercise of all outstanding warrants. Contractual Rights Agreements In connection with our recent public offering, we entered into contractual rights agreements with certain investors who purchased at least $500,000 of units as well as certain insiders who converted their debt into units in a simultaneous private placement (collectively, $500,000 Investors ), pursuant to which and subject to certain exceptions, we may not sell or issue any common stock or common stock equivalents at a per share price lower than the exercise price of the Class H or Class I warrants unless we obtain prior written consent from such $500,000 Investors (and permitted assigns) that hold at least 67% of all Class H and Class I warrants originally acquired by the $500,000 Investors ( 67% Eligible Warrant Interest Investors ). These agreements also restrict us from engaging in certain types of change of control transactions in which our common stock is exchanged for all cash or non-publicly traded securities unless we obtain prior written consent from at least 67% Eligible Warrant Interest Investors. The $500,000 Investors may assign their rights under these agreements in whole, but not in part, to a purchaser of their Class H or Class I warrants. An agreement terminates with respect to any $500,000 Investor upon the earlier of the date that Class H and Class I warrants are no longer outstanding or at such time that such investor no longer holds Class H or Class I warrants. INTERESTS OF NAMED EXPERTS AND COUNSEL The consolidated financial statements for the years ended December 31, 2010 and 2009 included in this prospectus have been audited by KMJ Corbin Company LLP, an independent registered public accounting firm, as stated in their report (which report expresses an unqualified opinion and includes an explanatory paragraph relating to the substantial doubt about the Company s ability to continue as a going concern) appearing elsewhere herein and are included in reliance upon such report given upon the authority of that firm as experts in auditing and accounting. The validity of the securities to be sold under this prospectus will be passed upon for us by LKP Global Law, LLP. WHERE YOU CAN FIND MORE INFORMATION We have filed with the SEC a registration statement on Form S-1 under the Securities Act with respect to the securities being offered in this offering. This prospectus does not contain all of the information set forth in the registration statement and the exhibits and schedules filed as part of the registration statement. For further information with respect to us and our common stock, we refer you to the registration statement and the exhibits and schedules filed as a part of the registration statement. Statements contained in this prospectus concerning the contents of any contract or any other document are not necessarily complete. If a contract or document has been filed as an exhibit to the registration statement, we refer you to the copy of the contract or document that has been filed. Each statement in this prospectus relating to a contract or document filed as an exhibit is qualified in all Table of Contents respects by the filed exhibit. In addition, we are required to file annual reports on Form 10-K, quarterly reports on Form 10-Q, and other information with the SEC. The reports and other information we file with the SEC can be read and copied at the SEC s Public Reference Room at 100 F. Street, N.E. Washington D.C. 20549. Copies of these materials can be obtained at prescribed rates from the Public Reference Section of the SEC at the principal offices of the SEC, 100 F. Street, N.E. Washington D.C. 20549. You may obtain information regarding the operation of the public reference room by calling 1(800) SEC-0330. The SEC also maintains a website (http://www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES We have adopted provisions in our certificate of incorporation that limit the liability of our directors for monetary damages for breach of their fiduciary duty as directors, except for liability that cannot be eliminated under the Delaware General Corporation Law. Delaware law provides that directors of a company will not be personally liable for monetary damages for breach of their fiduciary duty as directors, except for liabilities: for any breach of their duty of loyalty to us or our stockholders; for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law; for unlawful payment of dividend or unlawful stock repurchase or redemption, as provided under Section 174 of the Delaware General Corporation Law; or for any transaction from which the director derived an improper personal benefit. In addition, our bylaws provide for the indemnification of officers, directors and third parties acting on our behalf, to the fullest extent permitted by Delaware General Corporation Law, if our board of directors authorizes the proceeding for which such person is seeking indemnification (other than proceedings that are brought to enforce the indemnification provisions pursuant to the bylaws). We maintain directors and officers liability insurance. These indemnification provisions may be sufficiently broad to permit indemnification of the registrant s executive officers and directors for liabilities (including reimbursement of expenses incurred) arising under the Securities Act of 1933. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to our directors, officers and controlling persons pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. No pending material litigation or proceeding involving our directors, executive officers, employees or other agents as to which indemnification is being sought exists, and we are not aware of any pending or threatened material litigation that may result in claims for indemnification by any of our directors or executive officers. Table of Contents T3 MOTION, INC. PROSPECTUS 1,771,128 Class H Warrants 1,771,128 Class I Warrants 9,255,577 Shares of Common Stock , 2011 YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS OR A PROSPECTUS SUPPLEMENT TO MAKE YOUR INVESTMENT DECISION. NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND IF MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN GIVEN OR AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES OFFERED BY THIS PROSPECTUS OR AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY THE SECURITIES IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION. YOU SHOULD NOT ASSUME THAT THE INFORMATION IN THIS PROSPECTUS OR THE PROSPECTUS SUPPLEMENT IS ACCURATE AS OF ANY DATE OTHER THAN THE DATE ON THE FRONT OF THE DOCUMENT, REGARDLESS OF THE TIME OF DELIVERY OF PROSPECTUS OR ANY SALE OF THE SHARES. Table of Contents PART II INFORMATION NOT REQUIRED IN PROSPECTUS Item 13. Other Expenses of Issuance and Distribution The following table sets forth the fees and expenses in connection with the issuance and distribution of the securities being registered hereunder. Except for the SEC registration fee, all amounts are estimates. Type Amount SEC Filing Fee 2,795.54 Blue Sky Fees and Expenses 1,000.00 * Legal Fees 65,000.00 * Accounting Fees and Expenses 15,000.00 * Miscellaneous 15,000.00 * Total 100,000 * * Estimate Item 14. Indemnification of Directors and Officers Section 145 of the Delaware General Corporation Law authorizes a court to award, or a corporation s board of directors to grant, indemnity to officers, directors and other corporate agents in terms sufficiently broad to permit such indemnification under certain circumstances and subject to certain limitations. The registrant s certificate of incorporation includes a provision that eliminates the personal liability of its directors for monetary damages for breach of their fiduciary duty as directors. In addition, the registrant s bylaws provide for the indemnification of officers, directors and third parties acting on our behalf, to the fullest extent permitted by Delaware General Corporation Law, if our board of directors authorizes the proceeding for which such person is seeking indemnification (other than proceedings that are brought to enforce the indemnification provisions pursuant to the bylaws). The registrant maintains director and officer liability insurance. These indemnification provisions may be sufficiently broad to permit indemnification of the registrant s executive officers and directors for liabilities (including reimbursement of expenses incurred) arising under the Securities Act of 1933. Item 15. Recent Sales of Unregistered Securities. All common share and per common share information assumes a one-for-10 reverse stock split of our common stock. In December 2007, we completed an offering of our common stock to Immersive Media Corp. We issued 185,185 shares of our common stock for cash at $16.20 per share for an aggregate price of $3,000,000. We also issued 12% promissory notes in the principal amount of $2,000,000 and warrants to purchase 69,764 shares at $10.81 per share in exchange for $2,000,000. This January 2008 transaction (a) involved no general solicitation, and (b) involved only accredited purchasers. Thus, we believe that the offering was exempt from registration under Regulation D, Rule 505 of the Securities Act of 1933 ( Securities Act ), as amended. In March 2008, we completed an offering of our common stock to one shareholder. We issued 389,610 shares of our common stock and warrants to purchase 129,870, 129,870, and 129,870 shares of common stock at an exercise price of $10.80, $17.70 and $20.00 per share, respectively, for cash at an aggregate price of $3,000,000. This March 2008 transaction (a) involved no general solicitation, and (b) involved
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+MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION The following discussion and analysis of our financial condition and results of our operations should be read in conjunction with the financial statements and the notes thereto of Curaxis Pharmaceutical Corporation which appear elsewhere in this prospectus. The results shown herein are not necessarily indicative of the results to be expected for any future periods. Forward Looking Statements We are including the following cautionary statement in this registration statement for any forward-looking statements made by, or on behalf of, our Company. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance and underlying assumptions and other statements which are other than statements of historical facts. Certain statements contained herein are forward-looking statements and accordingly involve risks and uncertainties which could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements. Forward-looking statements, which involve assumptions and describe our future plans, strategies, and expectations, are generally identifiable by use of the words may, will, should, expect, anticipate, estimate, believe, intend, or project or the negative of these words or other variations on these words or comparable terminology. Our expectations, beliefs and projections are expressed in good faith and are believed by us to have a reasonable basis, including without limitation, management s examination of historical operating trends, data contained in our records and other data available from third parties, but there can be no assurance that management s expectation, beliefs or projections will result or be achieved or accomplished. Actual events or results may differ materially from those discussed in forward-looking statements as a result of various factors, including, without limitation, the risks outlined under
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+PROSPECTUS SUMMARY This summary highlights some information from this prospectus, and it may not contain all the information important to making an investment decision. A potential investor should read the following summary together with the more detailed information regarding the Company and the Units being sold in this offering, including Risk Factors and the financial statements and related notes, included elsewhere in this prospectus. History and Development of the Company Adelman Enterprises, Inc. (the Company ) was incorporated in Delaware in March 2006 as Hightower Acquisition Corporation, a Delaware corporation ( Hightower ). In April 2010, in connection with a change of control of Hightower, the Company changed its name to Adelman Enterprises, Inc. It also changed majority shareholder control and elected new officers and directors. The Company is a development stage company intended to create a diversified global media and technology company. The Company is developing a 24/7 global social community and broadcast television network focusing on the themes of health, wellness, positivity and philanthropy, while fully integrating an interactive online social interface. At the core of this network is an immersive social community that unites advertisers, consumers and non-profits around the world. Market Opportunity Anthus, LLC, a Delaware limited liability company ( Anthus ), is a sole subsidiary of the Company. Anthus was acquired by the Company in April 2011. Anthus is a development-stage company incorporated in Delaware in June 2009, and was formerly owned by Charles Adelman, president of Anthus and President/CEO of the Company. Anthus is developing the Anthus Channel, a 24/7 global social community and broadcast television network focused on health, wellness, positivity and philanthropy. An important feature of the network will be an advanced online social networking system that will create a bridge for advertisers to connect directly to their target audience, providing a link between broadcast, mobile and web. The business plan for Anthus has been developed as have the budgets and programming outlines. The initial revenues for Anthus are being generated through advertising and partnerships on their flagship social community site. Once the full broadcast channel is launched, revenues will be generated through advertising, international syndication and intelligent product placement. The Company believes that the Anthus Channel will offer brands and consumers a unique opportunity through its anticipated global reach, content, and social networking components. The Anthus Channel will be shown on three platforms simultaneously, providing viewers with three different means to view a program: tuning in on television, visiting www.anthus.com, or mobile devices. This reach across interwoven terrestrial, online, mobile devices and social networking platforms will enable advertisers to sell their products and services throughout the world across multiple platforms in real time. With major advances in technology and content distribution, Anthus can expand well beyond a typical broadcast network by utilizing alternative distribution platforms like gaming consoles, which have over 75 million consoles just in North America alone. This allows for a much wider distribution reach without the cost of that a typical broadcast network would incur. The Company has developed a model for advertising that it believes will make Anthus profitable by recognizing the desire of advertisers to reach all of these platforms simultaneously, as well as target a growing audience in the health, wellness and positivity markets. Presently, the cost of an ad shown on a television is separated from the opportunity to reach that audience online. Anthus will provide, all at the same cost, advertising in traditional broadcast, online, and mobile platforms. The Company and Anthus have had discussions with a technology company to jointly develop and deploy an advanced radio frequency motion capture system that would enable Anthus, and its advertisers, to not only track products in real-time, but be able to replace products virtually based on demographic or psychographic data. Since this technology is still in its research and development stage, Anthus would be the trial party, and would be required to test the initial systems on Anthus shows and through the immersive social community, and there is no guarantee that the technology or the applications would work, or would perform as needed, and no guarantee that Anthus could deploy such technology or applications cost effectively. These securities involve a high degree of risk. See RISK FACTORS contained in this prospectus beginning on page 10. Adelman Enterprises Inc. 798 Moorpark Avenue Moorpark, California 93021 818-436-0410 www.adelmanenterprises.com Further, the Company anticipates that Anthus will tap into the growing desire for companies to show their concern with social consciousness. Advertisers are recognizing that they can engage in cause marketing, which links a product with a social cause, charity, or philanthropy. Anthus will provide a ready-made platform to highlight companies looking to showcase their social consciousness. The Company believes that it is strategically positioned to benefit from the intersection of three key business forces: globalization, which has resulted in a newfound awareness of interdependence and connectedness both on and off-line; technology, in the form of social networking across real-time location-based mobile platforms; and the rise of a collective social consciousness that is compelling companies and consumers to play a more purposeful role in the restoration of both the global community and the lives of others. The content for the Anthus Channel will be owned and produced in-house by Anthus, LLC. The Company anticipates that the Anthus Channel will begin with ten shows that will be produced with current content contributors and advertising partners like Dole Foods. As revenues increase, production will ramp up to 40 original television shows that will be created in-house in order to control costs and maintain integrity of programming. By owning its content, Anthus will be able to add value to advertisers by placing them seamlessly into the content of the shows. Anthus is currently working with both advertisers and advertising agencies throughout the world to license both the advertising space throughout the social community and the traditional commercial advertisements. The Company anticipates that Anthus will create a marketable long-term asset in the form of this online social interactive content and television program content that can be resold and syndicated to other platforms and channels in the future as a supplemental revenue stream. Anthus currently uses independently contracted production crews to shoot content for both AnthusSocial (www.anthus.com) as well as for content partners. The Company has already launched AnthusSocial, the online community where the initial programming can be distributed and monetized. Outlines and budgets have been created for all currently anticipated programs, creating a timeline that produces the more cost effective programming to start. The anticipated schedule of the programs has been completed, and the broadcast of the channel on satellite, cable, and broadband will be negotiated once distributors have viewed the programs and committed to broadcast them. With the changing landscape of distribution within the broadcast industry, Anthus is in a position to begin broadcasting well before it has secured a standard broadcast carriage deal with one of the major providers. Multiple gaming platforms, as well as online television distribution will be available prior to the network launch. In order for the channel to be distributed on the major broadcast platforms, the Company must negotiate a carriage agreement with traditional television cable and satellite providers. Several broadcast channels have had public disputes with major carriers because they have wanted cable carriers to pay a licensing fee to the channel in order to carry their programming. In light of these challenges, Anthus has developed a plan to avoid such disputes and ensure quick carriage deals, by budgeting a certain portion of the revenue of the network to pay to be shown on the cable providers. This ensures that if for some reason a cable provider will not pay Anthus a licensing fee to be in its lineup, Anthus can pay the provider to ensure a good channel placement. On May 2, 2010, Anthus and RRsat Global Communications Network Ltd. ( RRsat ) executed an agreement appointing RRsat to act as its exclusive agent for the coordination, arrangement and facilitation of the distribution of the Anthus Channel and/or its programming by distributors operating throughout the world except for North America. Distributor is defined as the owner and/or operator of one or more cable television networks, satellite platforms, IPTV or broadband services, Mobile TV, streaming services or any other services utilizing any known or future technologies for the distribution of television or video programming. Pursuant to the agreement, RRsat will perform the following services: (i) Identify distributors that may distribute the Anthus Channel and/or its programming; (ii) Promote the Anthus Channel and/or its programming to selected distributors with the goal of enticing them to carry the Anthus Channel; (iii) Arrange meetings between the Anthus Channel representatives and distributors; (iv) Assist in the negotiations between the Anthus Channel and the distributors; (v) Act as point of contact with the distributors; and (vi) Collect subscriber reports of total numbers of subscribers from the distributors with which the Channel has entered into agreements. RRsat is entitled to a commission at a rate of 20% of all international revenues received by Anthus from any Distributor in the territory, defined as anywhere outside of the United States, for the distribution of the Anthus Channel and any individual Anthus Channel shows sold by RRsat to a Distributor. The Company believes that Anthus provides the same motivating factors for investors and shareholders as it does for corporate brands and viewers: the ability to do well by doing good, to connect and grow through networks, to operate profitably and meaningfully - not only because it is admirable, but because it is smart business. Risks and Uncertainties Facing The Company As a development stage company, the Company has limited operating history and has experienced losses since its inception. The Company s independent auditors have issued a report questioning the Company s ability to continue as a going concern. That is, the Company needs to create a source of revenue or locate additional financing in order to continue its developmental plans. That and other risk factors are discussed in the Risk Factors section of this prospectus, which begins on page 5. Trading Market Currently, there is no trading market for the securities of the Company. The Company intends to initially apply for admission to listing of its securities on the OTC Bulletin Board as soon as possible, which may be while this offering is still in process. If it fails to meet the qualifications for listing, the Company will apply for quotation of its securities on the Pink Sheets. There can be no assurance that the Company will qualify for listing of its securities. See Risk Factors and Description of Securities for additional information. The Offering A minimum of 800,000 Units must be sold by the Company before the offering can close. The Company may have additional closings thereafter from time to time during the offering period. The maximum number of Units that can be sold pursuant to the terms of this offering is 1,200,000. The offering will terminate 180 days from the date of this prospectus unless earlier fully subscribed or terminated by the Company. Common stock outstanding before the offering: 15,665,100 Percentage owned by affiliated persons before the offering: 92.3% (1) Maximum number of Units offered by the Company: 1,200,000 Units Common stock outstanding after the offering if maximum number sold: 20,815,100 (2) Percentage owned by affiliated persons if all shares sold: 71% (3) Offering price: $2.50 per Unit Proceeds to the Company: $9,303,500 (2) (1) Based upon 11.2 million shares owned by Charles Adelman, 1.7 million shares owned by Douglas Ridley, 1.2 million shares owned by Daniel Kass, 100,000 shares owned by Keith Walley, 52,400 shares owned by Robert Denton and 200,000 shares owned by Craig Shoemaker. Total of 14,452,400 shares owned by affiliated persons. (2) Assumes the sale of the maximum number of Units and the exercise of all warrants included in the Units, and the exercise of existing warrants by affiliated parties. (3) The Company will also attempt to locate broker dealers or selling agents to participate in the sale of the Units. In such cases, the Company will pay customary selling commissions and expenses of such sales which would reduce the proceeds to the Company. All funds received before the initial closing of the offering will be held in a non interest bearing escrow pursuant to an escrow agreement with Rabobank, an independent third party. If the minimum offering amount is not met, all funds will be promptly returned to the investors. Funds received after the initial closing will be immediately available to the Company. Once the initial minimum offering amount is met and the initial closing occurs, then there is no fixed amount or number of Units that must be reached or sold before the next closing can occur.
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001437822_eternity_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001437822_eternity_prospectus_summary.txt
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@@ -0,0 +1 @@
+Prospectus Summary This Prospectus, and any supplement to this Prospectus include forward-looking statements . To the extent that the information presented in this Prospectus discusses financial projections, information or expectations about our business plans, results of operations, products or markets, or otherwise makes statements about future events, such statements are forward-looking. Such forward-looking statements can be identified by the use of words such as intends , anticipates , believes , estimates , projects , forecasts , expects , plans and proposes . Although we believe that the expectations reflected in these forward-looking statements are based on reasonable assumptions, there are a number of risks and uncertainties that could cause actual results to differ materially from such forward-looking statements. These include, among others, the cautionary statements in the Risk Factors section beginning on page 8 of this Prospectus and the Management's Discussion and Analysis of Financial Position and Results of Operations section elsewhere in this Prospectus. Our Business We are a medical device company that, subject to government approval, plans to distribute in-home medical diagnostic kits throughout Canada. Our products differ from other current offerings by allowing ordinary people to perform diagnostic testing on themselves with a high degree of accuracy and without the need for the use of professionals such as nurses and technicians. Our ability to offer any test kits to potential retail customers is dependent on obtaining the required regulatory approvals. Since we have not yet been granted such approvals, we cannot currently offer any products. On March 11, 2010 we entered into a License Agreement with Valimedix Limited, a United Kingdom corporation ( Valimedix ), pursuant to which we were granted the right to market and distribute 15 unique self diagnostic products developed by Valimedix on an exclusive basis in Canada, and a on a non-exclusive basis in the United States. We also have the right to market the products with Valimedix SELFCheck trademark. As consideration, we paid Valimedix a onetime fee of $10,000 and agreed to a three percent royalty on net revenues from the sales of Valimedix products. The term of the agreement is for 20 years and may be renewed for an additional 10 years if we meet specified sales targets. During the 20 year term of this agreement we are required to purchase a minimum of $1,000,000 worth of products from Valimedix. A full copy of this agreement is filed as Exhibit 10.1 to this Registration Statement on Form S-1. We have no operating history, no customers and no revenues. We have only recently begun operations with completion of a reverse merger with Eternity Healthcare Inc., a British Columbia company, and now our wholly owned subsidiary. Our cash position, as of March 29, 2011, was approximately $34,000. Given our anticipated expenses of approximately $40,000 a month, our present capital is not sufficient to fund our operations for one month. We are not a blank check company. Rule 419 of Regulation C under the Securities Act of 1933 defines a blank check company as a (i) development stage company that has no specific business plan or purpose or has indicated that its business plan is to engage in a merger or acquisition with an unidentified company or companies, or other entity or person, and (ii) is issuing a penny stock. Accordingly, we do not believe that our Company may be classified as a blank check company because we intend to engage in a specific business plan and do not intend to engage in any merger or acquisition with an unidentified company or other entity. Over the next 12 months, we plan to obtain regulatory approvals for the products mentioned in this Prospectus and enter into distribution agreements with various retailers. We plan to expand our website to include the option to purchase our products online. We anticipate producing promotional materials and advertising in medical journals as well as consumer magazines. In order to carry out these plans, we anticipate hiring a marketing manager, a quality control manager and 3 people for packaging and shipping. However, as provided in more detail elsewhere in this Prospectus, we will require approximately $500,000 in order to achieve these objectives and there can be no assurance that we will be able to raise the required funds. Our ability to offer the currently available test kits to potential retail customers is dependent on obtaining the required regulatory approvals. We believe we will need approximately $100,000 to undergo the regulatory review process for at least some of our products. Our ability to offer the estimated additional 15 kits in 2011 and 2012 is entirely dependent on our ability to raise the required $500,000 in order to secure government approval and develop a distribution network for our products. However, even if we are able to raise the required funds, there can be no assurance that we will be able to government approval and develop a distribution network for our products. Once we secure the required funds and are able to obtain governmental approval for our currently available products, and develop a distribution network, we believe we will be able to enter into additional distribution agreements with identified European developers of test kits. The Offering The 18,484,995 shares of our common stock being registered by this Prospectus represent approximately 29% of our issued and outstanding common stock as of November 22, 2011. Securities Offered: 18,484,995 shares of common stock offered by 26 selling security holders, including a total of 7,310,005 shares held by Francine and Hassan Salari, our directors and officer. Initial Offering Price: The $0.01 per share initial offering price of our common stock was determined by our Board of Directors based on several factors, including our capital structure and the most recent issuance price of 3,000,000 shares of our common stock at $0.01 per share on June 14, 2010. The selling security holders will sell at an initial price of $0.01 per share until a market develops for our common stock on the OTC Bulletin Board and thereafter at prevailing market prices or privately negotiated prices. However, there can be no assurance that a market for our common stock will ever develop on the OTC Bulletin Board. Minimum Number of Securities to be Sold in this Offering: None Securities Issued and to be Issued: As of November 22, 2011 we had 63,575,000 issued and outstanding shares of our common stock, and no issued and outstanding convertible securities. All of the common stock to be registered under this Prospectus will be registered by existing stockholders. Even though our stock is quoted on the OTC Bulletin Board, there is no established market for the common stock being registered. The trading of securities on the OTC Bulletin Board is often sporadic and investors may have difficulty buying and selling or obtaining market quotations, which may have a depressive effect on the market price for our common stock. Proceeds: We will not receive any proceeds from the sale of our common stock by the selling security holders. Financial Summary Information All references to currency in this Prospectus are to U.S. Dollars, unless otherwise noted. The following table sets forth selected financial information, which should be read in conjunction with the information set forth in the "Management s Discussion and Analysis of Financial Position and Results of Operations" section and the accompanying financial statements and related notes included elsewhere in this Prospectus. Consolidated Statement of Expenses Data Three month period ended July 31, 2011 (unaudited) ($) Three month period ended July 31, 2010 (unaudited) ($) Year Ended April 30, 2011 ($) Period from inception on December 10, 2009 to April 30, 2011 ($) Revenues - - - - Expenses 14,983 976 101,221 130,986 Net Loss 14,983 976 101,221 130,986 Net Loss per share 0.000 0.000 0.001 0.002 Consolidated Balance Sheet Data July 31, 2011 (unaudited) ($) April 30, 2011 ($) April 30, 2010 ($) Working Capital (Deficiency) (179,400 ) (151,502 ) (30,299 ) Total Assets 67,115 59,247 5,341 Total Liabilities 245,940 210,102 35,640
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001439158_hawker_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001439158_hawker_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001439158_hawker_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001439636_baeta-corp_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001439636_baeta-corp_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..7798f33a0fbeab4e9a30078e44371f00c1731b57
--- /dev/null
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@@ -0,0 +1 @@
+Sub-Total: 1,600,000 shares of Common Stock underlying Options outstanding after this issuance. Through year end 2009, Mr. Jeff Burkland had received additional stock options with immediate vesting rights exercisable for 31,125 shares of common stock at a purchase price of $0.50 per share pursuant to his employment agreement attached to this registration statement as Exhibit 10.9.1, The stock options (see Exhibit 10.9.2) were granted to Mr. Burkland pursuant to the 2009 Stock Option Plan in consideration for his continued service as the Company s Chief Financial Officer, and the Company relied upon the exemption from registration requirements of the Securities Act of 1933, as amended, provided under Section 4(2) promulgated thereunder as the grant of such options did not involve a public offering of securities. Total: 1,631,125 shares of Common Stock underlying Options outstanding after this issuance. Through fiscal year end 2010, Mr. Jeff Burkland has received additional stock options with immediate vesting rights exercisable for 60,300 shares of common stock at a purchase price of $0.50 per share pursuant to his employment agreement. The stock options were granted to Mr. Burkland pursuant to the 2009 Stock Option Plan in consideration for his continued service as the Company s Chief Financial Officer, and the Company relied upon the exemption from registration requirements of the Securities Act of 1933, as amended, provided under Section 4(2) promulgated thereunder as the grant of such options did not involve a public offering of securities. Sub-Total: 1,691,425 shares of Common Stock underlying Options outstanding after this issuance. On March 1, 2011, the Company granted stock options to Dr. Michael Semenovski. The stock option agreement is exercisable for 50,000 shares of the Company s common stock for a purchase price of $0.50 per share. The stock options were granted to Dr. Semenovski pursuant to the 2009 Stock Option Plan in consideration for his service as the Company s Chief Medical Officer, and the Company relied upon the exemption from registration requirements of the Securities Act of 1933, as amended, provided under Section 4(2) promulgated thereunder as the grant of such options did not involve a public offering of securities. Total: 1,741,425 shares of Common Stock underlying Options outstanding after this issuance, and as of the date of this Registration Statement. Employment Agreements We currently have employment agreements with all of our Named Executive Officers and Directors. These agreements are attached to this registration statement as Exhibits. Summary of Significant Terms of Employment Agreements: Leonid Pushkantser Term: Commencing on June 1, 2009 and ending on June 1, 2014. Position/Services: To serve as the Chief Executive Officer of the Company, and will perform the duties commensurate with such position with a standard of care and diligence that are required persons in similarly situated positions. Executive will devote the proper attention and energies on a full-time basis to the above duties, and Executive will not, during the term of this Agreement, actively engage in any other for profit business activity, except Executive may, so long as such activities do not impair Executive's performance of his duties under this Agreement, (a) serve as a director of up to two entities other than the Company so long as each company is not in any way, either directly or indirectly, a competitor of Company or otherwise detrimental to Company s well-being, as determined by the Company s President in his sole discretion, and (b) write, teach and publish articles and books. (Exact name of registrant as specified in its charter) New Jersey Balance Sheet Summary: At December 31, 2010** At December 31, 2009 (Taken from the Unaudited Financial Statements*) (Taken from the Audited Financial Statements*) Balance Sheet Cash and Cash Equivalents $ 16,600 $ 3,189 Total Assets $ 341,483 $ 232,037 Total Liabilities $ 1,052,684 $ 610,366 Total Stockholders Deficit $ (711,201 ) $ (378,328 ) * The auditors did not audit the contents of this table. ** Our audited financial statements for the fiscal year ended December 31, 2010 will be available on March 31, 2011, and will be made available to the public by way of our Annual Report on Form 10-K dated March 31, 2011. Statement of Operations Summary: For the Fiscal Quarter Ended December 31, 2010** For the Fiscal Year Ended December 31, 2009 For the Period August 14, 2007 (Inception) to December 31, 2010 (Taken from the Unaudited Financial Statements*) (Taken from the Audited Financial Statements*) (Unaudited) Statement of Operations: Revenue 47 $ 9,003 $ 9,121 Net Loss $ (572,647 ) $ (802,649 ) $ (2,766,078 ) Net Loss Per Share of Common Stock , basic and diluted (0.02 ) $ (0.04 ) * The auditors did not audit the contents of this table. ** Our audited financial statements for the fiscal year ended December 31, 2010 will be available on March 31, 2011, and will be made available to the public by way of our Annual Report on Form 10-K dated March 31, 2011. Going Concern In our auditor s report included in their audited financial statements for fiscal year ended December 31, 2009, WT Uniack & Co. has expressed substantial doubt as to our ability to continue as a going concern. We believe they will issue a similar Going Concern opinion in their audit for the fiscal year ended December 31, 2010, scheduled to be released on or about March 31, 2011 with the release of our Annual Report on Form 10-K, to be filed with the US Securities and Exchange Commission. SUBJECT TO COMPLETION, DATED MARCH 8, 2011 The information in this prospectus is not complete and may be changed. Our Officers and Directors may not sell these securities to the public until the Registration Statement filed with the United States Securities and Exchange Commission is declared effective. This Prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. PROSPECTUS 6,000,000 Shares of Common Stock BAETA CORP, INC. $1.10 per Share This prospectus relates to the issuance from time to time of 6,000,000 shares of common stock, par value $0.0001 of BAETA Corp., a New Jersey corporation ( BAETA or the Company ). The Company is offering 6,000,000 shares on self-underwritten, best-efforts basis directly through the sales efforts of our Officers and Directors. The shares will be offered at a price anticipated to be $1.10 per share, for a period of 180 days from the date of this prospectus, unless extended for an additional 90 days at the discretion of our directors. No commission or other compensation related to the sale of the shares will be paid to any of our officers or directors for their sales efforts. The intended methods of communication include, without limitation, telephone, and personal contact. The total amount of shares of common stock which may be sold pursuant to this prospectus would constitute approximately 20% of our issued and outstanding common stock as of March 8, 2011, if all of the shares had been sold by as of the date of this registration statement. For more information, see the section titled Plan of Distribution and Use of Proceeds herein. There are no underwriting agreements in place to sell any of the stock being registered through this prospectus. We have agreed to pay all the costs and expenses of this registration. Our common stock is quoted on the Over-the-Counter Bulletin Board ( OTCBB ) under the symbol BAEA and currently trades with low and sporadic volume. This fact, in addition to other stated risks disclosed throughout this registration statement should be considered before making an investment in our Company. We may amend or supplement this prospectus from time to time by filing amendments or supplements as required. You should read the entire prospectus and any amendments or supplements carefully before you make your investment decision. THESE SECURITIES ARE SPECULATIVE AND INVOLVE A HIGH DEGREE OF RISK AND SHOULD BE CONSIDERED ONLY BY PERSONS WHO CAN AFFORD THE LOSS OF THEIR ENTIRE INVESTMENT. PLEASE REFER TO RISK FACTORS BEGINNING ON PAGE 6. THE SECURITIES AND EXCHANGE COMMISSION AND STATE SECURITIES REGULATORS HAVE NOT APPROVED OR DISAPPROVED OF THESE SECURITIES, OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. The date of this preliminary prospectus is _________, 2011 AVAILABLE INFORMATION Upon the effectiveness of the Company s registration statement on Form S-1, of which this prospectus is a part, with the Securities and Exchange Commission ( SEC ), the Company will be subject to the reporting and information requirements of the Securities Exchange Act of 1934, as amended (the Exchange Act ), and will therefore be required to file annual and quarterly reports and other reports and statements with the SEC. Such reports and statements will be available free of charge on the SEC s website, www.sec.gov. DIVIDEND POLICY We have never paid or declared dividends on our securities. The payment of cash dividends, if any, in the future is within the discretion of our Board and will depend upon our earnings, our capital requirements, financial condition and other relevant factors. We intend, for the foreseeable future, to retain future earnings for use in our business. PRINCIPAL EXECUTIVE OFFICES Our principal executive offices are located at 1 Bridge Plaza, 2nd Floor, Suite 275, Fort Lee, NJ 07024. Our telephone number is (201) 471-0988. (Primary Standard Industrial Classification Code Number) 26-0722186 TABLE OF CONTENTS Item Page Summary 1
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001441567_mmodal-inc_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001441567_mmodal-inc_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..770b6a3c2b968427821718a1c443a006238af486
--- /dev/null
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@@ -0,0 +1 @@
+Prospectus Summary This summary highlights certain information contained elsewhere in this prospectus and may not contain all of the information you should consider before investing in our shares. You should read this summary together with the entire prospectus, including the information presented under the heading Risk Factors, the consolidated financial statements and related notes and the unaudited pro forma condensed combined financial information and related notes appearing elsewhere in this prospectus. Except where the context otherwise requires, or where otherwise indicated, references in this prospectus to we, us, or our are to MedQuist Holdings Inc. (formerly CBaySystems Holdings Limited) and its subsidiaries, references to MedQuist Inc. are to MedQuist Inc. and its subsidiaries and references to Spheris are to Spheris Inc. and its subsidiaries for the period prior to April 22, 2010 and to the business we acquired from Spheris Inc. for the period after such date. For purposes of our consolidated financial statements and references to us contained therein, we have not reflected our anticipated name change to MedQuist Holdings Inc. Overview We are a leading provider of integrated clinical documentation solutions for the U.S. healthcare system. Our end-to-end solutions convert physicians dictation of patient interactions, or the physician narrative, into a high quality and customized electronic record. These solutions integrate technologies and services for voice capture and transmission, automated speech recognition, or ASR, medical transcription and editing, workflow automation, and document management and distribution to deliver a complete managed service for our customers. Our solutions enable hospitals, clinics, and physician practices to improve the quality of clinical data as well as accelerate and automate the documentation process, and we believe our solutions improve physician productivity and satisfaction, enhance revenue cycle performance, and facilitate the adoption and use of electronic health records. We are the largest provider by revenue of clinical documentation solutions based on the physician narrative in the United States. During the three months ended September 30, 2010, we processed, on an annualized run rate basis, more than 3.4 billion lines of clinical documentation on our platform. The significant majority of lines we process are edited or transcribed by our approximately 14,000 MTs and MEs. Of this volume, for the three months ended September 30, 2010, 67% was processed using ASR technology and 42% was produced offshore. Our size allows us to handle the clinical documentation requirements of many of the largest and most complex healthcare delivery networks in the United States, provides us with economies of scale, and enables us to devote significantly more resources to enhancing our solutions through research and development than most of our competitors. We serve more than 2,400 hospitals, clinics, and physician practices throughout the United States, including 40% of hospitals with more than 500 licensed beds. As of September 30, 2010, the average tenure of our top 50 customers was over five years, and approximately 98% of our revenue was from recurring services. Insights gained from our broad, long-standing customer relationships allow us to optimize our integrated solutions, and we believe that this positions us for future growth as we target new customers. We have realized significant increases in both revenue and profitability as the result of two large acquisitions, MedQuist Inc., in which we acquired a majority interest in August 2008, and Spheris, which we acquired in April 2010. From 2007 to 2009, our net revenues increased from $57.7 million to $371.8 million. Over this same period, our Adjusted EBITDA, which is a non-GAAP financial measure, increased from $0.7 million to $59.7 million, and our Adjusted EBITDA margins expanded from 1.1% to 16.1%. For a reconciliation of our net income (loss) attributable to MedQuist Holdings Inc. to Adjusted EBITDA, see Summary Historical and Unaudited Pro Forma Consolidated Financial Data. Table of Contents The information in this prospectus is not complete and may be changed. We and the selling stockholders may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any jurisdiction where such offer or sale is not permitted. SUBJECT TO COMPLETION, DATED FEBRUARY 3, 2011 PRELIMINARY PROSPECTUS 7,826,549 Shares MEDQUIST HOLDINGS INC. (formerly CBaySystems Holdings Limited) Common Stock This is the initial public offering of our shares in the United States. We are offering 3,500,000 shares of our common stock, and the selling stockholders named in this prospectus are offering 4,326,549 shares of our common stock. We will not receive any proceeds from the sale of the shares by the selling stockholders. We expect that the initial public offering price will be between $10.00 and $12.00 per share. We have applied to list our shares on The NASDAQ Global Market under the symbol MEDH. Our shares were formerly listed on the Alternative Investment Market of the London Stock Exchange, or AIM. However, we have delisted from AIM and January 27, 2011 was the last day on which our shares traded on AIM. The closing price of our shares on AIM on December 24, 2010, the date on which we announced our intention to delist, was 6.08, equivalent to $9.36 per share based on the Federal Reserve noon buying rate of $1.54 to 1.00 in effect on December 24, 2010. See Market Price Information for Our Shares herein. Investing in our shares involves significant risks. See
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001442596_youku_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001442596_youku_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..f3f54ba4a9ca34f0c813c73f95c46aad24d41d15
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001442596_youku_prospectus_summary.txt
@@ -0,0 +1 @@
+This summary highlights information contained elsewhere in this prospectus and does not contain all of the information that you should consider in making your investment decision. Before investing in the ADSs, you should carefully read this entire prospectus, including our financial statements and related notes included in this prospectus and the information set forth under the headings
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001442741_xenith_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001442741_xenith_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001442741_xenith_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001444177_greenhouse_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001444177_greenhouse_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..3f63b67c4e068327d3a90bdda3e1d8e57a82b0f3
--- /dev/null
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+Prospectus Summary This summary highlights information about our Company and this offering contained elsewhere in this prospectus and is qualified in its entirety by the more detailed information and financial statements included elsewhere in this prospectus. You should read this entire prospectus carefully, including Risk Factors, Management s Discussion and Analysis of Financial Condition and Results of Operations and our financial statements and related notes included elsewhere in this prospectus, before making an investment decision. In this prospectus, unless otherwise specified or the context otherwise requires, the terms we, us, our, the Company, or ours refer to GreenHouse Holdings, Inc., Inc. and its consolidated subsidiaries. About GreenHouse Holdings, Inc. GreenHouse is a provider of energy efficiency and sustainable facilities solutions. The Company designs, engineers and installs products and technologies that enable our clients to reduce their energy costs and carbon footprint. We have two business segments, Energy Efficiency Solutions ("EES") and Sustainable Facilities Solutions ("SFS"). We serve residential, industrial, commercial, government and military markets in the United States and abroad. The Energy Efficiency Solutions division offers our clients a full range of services to address their energy efficiency needs based on our ability to identify and deliver significant return on our clients investments, improve the quality of their physical workspaces, maximize their operational savings and reduce their maintenance costs. Specifically, the EES division provides the following services: Energy Efficiency and Demand Response Solutions. Facility Retrofitting. Renewable Energy and Cogeneration. The Sustainable Facilities Solutions division develops, designs and constructs rapidly deployable, sustainable facilities primarily for use by the United States military and for disaster relief and security organizations in austere regions. Major customers for these products include the U.S. Department of Defense and local law enforcement. Corporate Information Our executive offices are located at 5171 Santa Fe Street, Suite I, San Diego, California, 92109, and our telephone number is 858-273-2626. Our Internet address is www.greenhouseintl.com. The information on our website is not incorporated by reference into this prospectus, and you should not consider it part of this prospectus. CALCULATION OF REGISTRATION FEE Title of Each Class of Securities to be Registered Amount to be Registered Proposed Maximum Offering Price Per Share (1) Proposed Maximum Aggregate Offering Price (2) Amount of Registration Fee Common Stock, $0.001 par value per share, underlying Series A Preferred Stock (3) $ $ $ Common Stock, $0.001 par value per share, issuable upon exercise of warrants [Placement Agent Discounts and Commissions] TOTAL $ $ 28,000,000 $ 3,250,80 (1) Pursuant to Rule 416 promulgated under the Securities Act of 1933, as amended, there are also registered hereunder such indeterminate number of additional shares as may be issued to the selling stockholders to prevent dilution resulting from stock splits, stock dividends or similar transactions. (2) Estimated solely for purposes of calculating the registration fee. The registration fee is calculated pursuant to Rule 457(c). Our common stock is quoted under the symbol GRHU.OB on the Over-the-Counter Bulletin Board ( OTCBB ). As of February 11, 2011, the last reported bid price was $2.80 per share and the last reported asked price was $2.80 per share. The average of the bid and asked prices as of such date was $2.80 per share. Accordingly, the registration fee is $3,250.80 based on $2.80 per share. (3) Consists of ________ shares of common stock issuable upon conversion of the Series A Preferred Stock and ____ shares of common stock issuable upon exercise of the warrants, assuming sale of all the units. The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act, or until this registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine. The date of this prospectus is ___________ ___, 2011. Table of Contents
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+PROSPECTUS SUMMARY 1
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. This summary does not contain all of the information you should consider before investing in our securities. You should read the entire prospectus, including Risk Factors and the consolidated financial statements and the related notes before making an investment decision. Our business involves significant risks. You should carefully consider the information under the heading Risk Factors beginning on page 6. We, us, our Company, our, Green Solutions and the Company refers to the consolidated business of Green Solutions China, Inc. (formerly known as China Green, Inc.), a Delaware corporation, and its subsidiaries. We conduct our business through our wholly-owned subsidiaries, Glorious Pie Limited ( Glorious Pie ), a British Virgin Island corporation, and Earn Bright Development Limited ( Earn Bright ), a Hong Kong corporation. China or PRC refers to the People s Republic of China. RMB or Renminbi refers to the legal currency of China and $ or USD refers to the legal currency of the United States. Business Overview Operating through Glorious Pie, our British Virgin Islands subsidiary incorporated on June 12, 2006, and Earn Bright, our Hong Kong operating subsidiary incorporated on December 17, 2008, we engage in providing eco-friendly project consulting services. On November 29, 2010, we filed amended Articles of Incorporation with the state of Delaware to change our name from China Green, Inc. to Green Solutions China, Inc. We are currently focused on the areas of eco-friendly property consulting and eco-friendly construction projects. Our services can be applied to development or reconstruction projects in social facilities, parks, outdoor public areas, corporate buildings, hotels, and commercial and residential properties. Our mission is to create an eco-friendly environment that can benefit both humans and nature. We actively seek for opportunities to apply ecological engineering (eco-engineering) concepts, the integration of ecological and engineering applications, in design, monitoring and construction of ecosystems, to integrate human society with the natural environment. We advise our clients on overall project planning, selection and supervision of external consultants, and coordination of labor services and materials supplies. As such, we currently focus our business in two related business segments: (i) Greenery Construction Consulting, and (ii) Eco-friendly Property Consulting and Development. Our target clients include landscaping contractors and property owners or operators who seek to construct or develop eco-friendly establishments. As an eco-friendly project consulting company, the key to our future growth and success will be our ability to procure more profitable projects and build upon our reputation. We are focused on deepening our existing relationships as well as, building new relationships to expand our project channels. We integrate our understanding in the dynamics of the local industries with our financial capital to formulate strategic ways to procure new consulting and management services contracts. Our capability to build professional project teams, to provide quality advice, and execute project plans is important to us. We maintain a broad network of contacts of external consultants, labor service subcontractors and materials suppliers which serves as a platform for us to build project teams based on the required knowledge and expertise. We continue to identify and develop new relationships with different professionals and experts to optimize our platform. Currently, our main source of revenue is generated through contracts in Greenery Construction Consulting with government landscaping contractors. We generate net income from the difference between the consulting fees paid to us by the government contractors and our total subcontracting costs. Our subcontracting costs are typically paid to subcontracted consultants, labor service subcontractors and materials suppliers. We also generate revenues from three eco-friendly hotels in our Eco-friendly Property Consulting and Development segment. We have entered into separate revenue-sharing contracts with each of these hotels, which includes providing consulting services and investments of eco-friendly designs and practices for these hotels. We have invested in these properties by purchasing certain property, plant and equipment needed to convert the hotels into eco-friendly properties. The nature of these investments is to introduce eco-friendly designs and changes to the hotels as well as improve the look and feel to attract or retain customers. If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act of 1933, please check the following box and list the Securities Act registration Statement number of the earlier effective registration statement for the same offering. o If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act of 1933, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act of 1933, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. Large accelerated filer o Accelerated filer o Non-accelerated filer o Smaller reporting company x Corporate Structure Our corporate structure is illustrated as follows: Our Services Greenery Construction Consulting Our Greenery Construction Consulting business has mainly been focused on large-scale outdoor PRC government projects such as public infrastructure and social facilities development; however we have been engaged to conduct private real estate development projects in the past. We develop budgetary plans for each project and arrange for and subcontract the necessary technical and labor services needed to execute our plan, including horticultural planning and design, concept applications, selection and provision of agriculture, performance targeting and benchmarking, plantation management and quality control. We have developed strategic relationships with nine government landscaping contractors to procure landscaping construction projects from the government. Our management continuously communicates with the contractors to obtain up-to-date information regarding government projects. We perform preliminary screening on available opportunities and select projects for further investigation. We analyze these selected project opportunities with external consultants to develop preliminary project plans. Such external consultants involved in the planning stage would likely be retained by us upon being notified by our governmental subcontractors that they have been selected by the government to complete the project bid. Our preliminary project plans generally include design concept illustrations, timing and schedules, labor and materials requirements and budget estimates. We are required to provide funding and preliminary project plans to the government landscaping contractors to enter into the government project bidding sessions to bid for the selected projects. We are not required to engage any subcontractors until the government landscaping contractors confirm that they have successfully bid on the rights to run the project for the government. We enter into project consulting contracts with the government landscaping contractors once a successful bid is confirmed and subsequently engage a team of external consultants and labor service subcontractors to execute the project. Since the inception of our business in June 2006, we have developed solid relationships with a broad network of government landscaping contractors, external consultants, labor service subcontractors and materials suppliers. Prior to inception of every project, we conduct in-depth meetings with external consultants and subcontractors to ensure thorough understanding of all project details and requirements. Upon entering into contracts, we serve as a liaison between the governmental contractors, the external consultants, and the labor service subcontractors through to completion of the projects. Upon completion, we conduct thorough reviews with our clients to ensure client satisfaction. We have adopted the straight-line method of accounting. As such, we account for all of the expenses we can reasonably estimate and expect to incur on each project at the project s inception. As actual expenses are incurred, corresponding revenue is ratably recognized. Our agreements are governed by the laws of Hong Kong or Macau. We have managed many notable public and private landscaping projects in Dongguan, Guangdong Province, China s third largest exporting city and one of the fastest growing regions in China. Such projects include Dongguan s Songshan Lakes Science & Technology Industrial Park, a province-level development zone for new and high-tech industries. Please refer to page 25 of the Registration Statement for further details regarding our recent project in the Dongguan, Guangdong Province . Our services have been extended to other locations in the Guangdong province, such as Guangzhou city. Greenery Maintenance Consulting We offer greenery maintenance consulting services to the same group of government contractors for greenery construction consulting as for greenery maintenance projects. We work with external consultants to conduct site reviews and develop maintenance plans with our clients who outline all assessment criteria and performance targets. The external consultant acts as the site supervisor and we select subcontractors to execute the maintenance work. We engage subcontractors to conduct periodic performance and quality assessments to ensure the sites are maintained appropriately. The maintenance plans typically included soil quality analysis and renovation, root evaluation, plantation disease and strength analysis, pruning, pest control, weed control, floral treatments, earth surface treatment and restoration, maintenance and reconstruction of structural elements. In addition to working with subcontractors who perform maintenance on existing elements, our management works with external consultants who recommend structural upgrades and development ideas to our clients. UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Amendment No. 7 To FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 GREEN SOLUTIONS CHINA, INC. f/k/a CHINA GREEN, INC. (Exact name of registrant as specified in its charter) Delaware 700 75-3269182 (State or other jurisdiction of incorporation or organization) (Primary Standard Classification Code) (IRS Employer Identification No.) Room 3601, the Centre, Queen s Road no.99 Central, Hong Kong Tel. No.: (852) 3691-8831 (Address and telephone number of registrant s principal executive offices) VCorp Services, LLC 1811 Silverside Road Wilmington, Delaware 19810 Tel. No.: 888-528-2677 (Name, address, including zip code, and telephone number, including area code, of agent for service) Copies of communications to: Richard I. Anslow, Esq. Gregg E. Jaclin, Esq. Eric M. Stein, Esq. Joy Z. Hui, Esq. Anslow & Jaclin, LLP 195 Route 9 South, 2nd Floor Manalapan, NJ 07726 Tel. No.: (732) 409-1212 Fax No.: (732) 577-1188 Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box: x CALCULATION OF REGISTRATION FEE Title of Each Class Of Securities to be Registered Amount to be Registered (1) Proposed Maximum Aggregate Offering Price per share Proposed Maximum Aggregate Offering Price Amount of Registration fee Common Stock, $0.00001 par value per share 1,018,500 ( 1 ) $ 3.00 (2) $ 3,055,500 (2) $ 354.74 Total Registration Fees $ 354.74 ( 3 ) (1) This amended registration statement covers the resale by certain selling stockholders of the Registrant of up to 1,018,500 shares of common stock, of which (i) 159,750 shares were issued to investors in the Registrant s private placement in reliance upon Regulation S under the Securities Act of 1933, as amended (the Securities Act ), that closed on August 13, 2009 (the Regulation S Private Placement ) (but excluding the 6,250 shares of common stock purchased in the Regulation S Private Placement by Mr. Wei Guo Wang, who subsequent to the closing of the Regulation S Private Placement, became our Chief Financial Officer), (ii) a total of 818,750 shares issued to six individuals and entities as compensation for corporate or business consulting services, and (iii) a total of 40,000 shares issued as partial compensation for legal services. (2)
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001445229_fuer_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001445229_fuer_prospectus_summary.txt
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+PROSPECTUS SUMMARY This summary highlights the information contained elsewhere in this prospectus and does not contain all of the information you should consider in making your investment decision. You should read this summary together with the more detailed information, including our consolidated financial statements and the related notes, elsewhere in this prospectus. You should carefully consider, among other things, the matters discussed in Risk Factors beginning on page 11.. In addition, some of the statements made in this prospectus discuss future events and developments, including our future strategy and our ability to generate revenue, income and cash flow. These forward-looking statements involve risks and uncertainties which could cause actual results to differ materially from those contemplated in these forward-looking statements. See Cautionary Note Regarding Forward-Looking Statements. The terms "we", "us", "our", mean Fuer International Inc. and its consolidated subsidiaries. Our Business We (formerly Forex365 Inc,) was incorporated under the laws of the State of Nevada on February 8, 1984. On June 16, 2010 we entered into a share exchange agreement with China Golden Holdings, Ltd.( China Golden ), and became its sole shareholder. On July 9, 2010, the Board of Directors of Forex365, Inc. approved to change the name of the Company to Fuer International Inc. As used in this Annual Report, we , us , our or the Company refers to Fuer International Inc. and its consolidated subsidiaries, unless the context otherwise requires. China Golden Holdings ( China Golden ), incorporated in British Virgin Island on November 30, 2009, conduct its business through Qiqihar Deli Enterprise Management Consulting Co., Ltd., a wholly foreign owned enterprise incorporated on February 10, 2010 in Qiqihar, Heilongjiang Province, People s Republic of China ( WFOE or Deli ),. Through a series of contractual agreements ( Contractual Agreements ) entered into on March 25, 2010, Qiqihar Fuer Agronomy Inc. ( Qiqihar Fuer ), as discussed below, was accounted for as a variable interest entity of the Company. Qiqihar Fuer, established in 2003, is a leading manufacturer and supplier of seeds and fertilizer products in the northeastern China. Fuer has a diverse product selection of seeds, humic fertilizers and plant regulator products. The Company has a sales network which covers key provinces, cities, counties and towns across the region. As of March 31, 2011, the Company had 443 employees, among which 18 are research and technical staffs and 75 are with the sales team and 233 temporary workers. The Company produces seeds under contracts with local farmers or state owned farm. We have two fertilizer production lines, with an annual production capacity of 50,000 tons in total. We distribute our product under registered trademark of Fuer , which is permitted to be applicable to agriculture materials, and is valid until November 13, 2020. The Company achieved sales increase of 49.32% for the three months ended March 31, 2011 as compared with the three months ended March 31, 2010, and an annual sales increase of 40.67% in the year ended December 31, 2010, as compared to the year ended December 31, 2009. The Company is seeking future growth by introducing advanced and improved seeds and fertilizer product for different climates in Northeastern China, and expansion of its network of branded retail stores. For the three months ended March 31, For the Years Ended December 31, 2011 2010 2010 2009 (Unaudited) (Unaudited) (Audited) (Audited) ($ in thousands) ($ in thousands) Summary of Historical Income Sales $ 22,857 $ 15,307 $ 22,744 $ 16,168 Gross profit 8,431 6,317 $ 9,419 $ 6,699 Net income 5,833 4,761 $ 5,339 $ 2,938 Highlight Features Leading seeds provider in the northeastern China On March 14, 2011, Fuer was ranked the 31st of the top Chinese seed providers by the Ministry of Agriculture of People s Republic of China (the PRC ). Since its establishment in 2003, Fuer has been providing quality seeds and fertilizers to the local farmers, and has great brand awareness in northeastern China, which is one of the most important grain production bases in China. Diversification in product portfolio - The Company maintains great competitiveness due to its diversified product portfolio among corn, rice and soybean, as well as fertilizers. In the northeastern China, climates are different from region to region and year to year in terms of temperature. The Company provides seed products which can adapt to all different major weather conditions in the region, and therefore is well positioned to deal with climate changes. Production of certain crops among our farmer customers fluctuates greatly from year to year. Our well built product portfolio enabled us to maintain stable profitability through the past years. Furthermore, our fertilizer products enhance our profitability after the selling season of seed products which effectively reduces the concentration risk within our product portfolio which is due to changes in weather condition and planting preference. The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine. Diversified sales channels - The Company was the first seed provider to launch its branded stores in northeastern China. As of March 31, 2011 we have opened 5 directly owned retail sales stores and over 234 branded retail stores. The new sales channel is expected to strengthen our sales network and boost our profitability. With the help of our branded stores, we are able to provide better sales services and launch targeted marketing campaigns. Strong growth potential in China s agriculture market Pursuant to the statistics of the Food and Agriculture Organization of the United Nations ( FAO ), China s seed market ranked 2nd in the world, immediately following the United States. In terms of quantity, seeds consumption in China ranks the 1st worldwide. The underlying reason is the low seeds price, and the farmers tradition to use harvest crops as seeds for the next cultivation period, which reduced the consumption of commercial seed products. The seeds used by farmers are generally inferior to hybrid seeds from providers, as features of the hybrid seeds tend to degenerate over the generations and may become unprofitable to grow. We believe it is a great opportunity to enhance profitability by providing quality seeds, and consistent introduction of improved seed varieties. Abundant acquisition opportunities in the industry - At present, there are over 9,000 licensed seed companies and over 10,000 providers of fertilizers, pesticides, germicides and herbicides in China. Among these enterprises, however, there are less than 100 state owned large companies and regional leading companies, such as Fuer, that has registered capital of over $4.3 million. The small companies control certain of the regional markets and a few of the regional product patents. As the PRC government encourages the consolidation of the industry, there are great opportunities for us to expand our sales and product lines by acquiring quality companies in target regions. Recent Development: On June 9, 2010, our Articles of Incorporation were amended to effect a 1 for 64 reverse stock split and so that the authorized shares of common stock shall remain at 200,000,000 and the authorized shares of blank check preferred stock shall remain at 10,000,000 with a par value of $.001 per share. We effected the amendments in connection with the consummation of the transactions contemplated by that certain Share Exchange Agreement pursuant to which the Registrant acquired all of the issued and outstanding shares of stock of China Golden Holdings, Ltd. On June 16, 2010, Forex365, Inc. (the Company ), a company incorporated in Nevada, entered into a Share Exchange Agreement (the Exchange Agreement ) with China Golden Holdings, Ltd., a company organized under the laws of the British Virgin Islands ( China Golden ), the shareholders of China Golden (the Shareholders ), who together owned shares constituting 100% of the issued and outstanding common shares of China Golden (the China Golden Shares ). Pursuant to the terms of the Exchange Agreement, the Shareholders transferred to the Company all of the China Golden Shares in exchange for the issuance of 11,550,392 shares (the Shares ) of our common stock (the Share Exchange ). As a result of the Share Exchange, China Golden became our wholly-owned subsidiary and the Shareholders acquired approximately 96.47% of our issued and outstanding stock. On June 17, 2010, the Company entered into a securities purchase agreement (the Purchase Agreement ) with Allied Merit International Investment Inc. (the Investor ) for the sale of an aggregate of 1,018,868 common shares (the Investor Shares ), and warrants to purchase 873,315 common shares of the Company, for aggregate gross proceeds equal to $2,500,000 (the Offering ). The warrants are exercisable at $2.58 per common share, have a three year life time and a cashless exercise feature. In connection with the Offering, the Company also entered into a registration rights agreement (the Registration Rights Agreement ) with the Investor, in which we agreed to file a registration statement (the Registration Statement ) with the Securities and Exchange Commission (the SEC ) within 60 calendar days of the Closing Date of the Offering to register for resale the Investor Shares and the shares underlying the warrants, which is then prolonged to 150 calendar days of the Closing Date. The investors issued a written waiver of the registration right on November 15, 2010. As of June 15, 2011, The warrant do not have intrinsic value. On March 21, 2011, our Board of Directors ( the Board ) voted unanimously to appoint Chen, Huabang, age 47, and Mr Li, Zeyu as independent directors of the Company, effective immediately, to serve until its next annual meeting of shareholders. The Board has determined that Mr. Chen and Mr Li are independent directors within the meaning set forth in the applicable rules, as currently in effect. Both Mr. Chen and Mr Li is entitled to $20,000, plus reimbursement for all reasonable travel and other out-of-pocket expenses incurred in connection with his services as a director of the Company in 2011. See Item 10 Directors, Executive Officers and Corporate Governance . Recent Operational Achievements In March, 2010 we launched chain store program to solidity its control of distribution channel, enhance brand awareness. The Company believes this program will strengthen our sales network and boost our revenue and profitability. With the help of our branded stores, we are able to provide better sales services and launch more accurate marketing campaigns. As of May 31, 2011, the Company have established 5 direct owned stores and 234 branded stores. On March 30, 2010, the Company entered into two agreements with unrelated individuals to lease farm land of 9.33 acres for five years, and have established its research field for hybrids of field crops and vegetable and fruits. With this step, we expect to build a research platform to develop field crops of high yields, high resistance, and high production stability. The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and is not an offer to buy these securities in any state where the offer or sale is not permitted. PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION, DATED _________, 2011 PROSPECTUS 2,155,134 Shares Fuer International Inc Fuer have determined to expand upstream into raw seeds breeding for improving its product quality, and profitability. On April 2, 2010, the Company entered into an agreement with a certain farm to lease farm land of 100 hectares for 20 years, On December 10, 2010, the Company further entered into two agreements with certain farms to lease farm land of 1,000 hectares from for 12 years. We expect to gather cultivation experience for preparation for production of high end seeds that are developed by genetic modification, and other state of art approaches. On October 25, 2010, we were selected as one of the "Top Enterprises for China's Seed Industry" on October 25, 2010 by the China National Seed Association. Fuer International ranked 31st among all 54 selected companies and 2nd among all selected companies located in Heilongjiang Province. The result of the selection was published on the website of the Ministry of Agriculture of the People's Republic of China On December 2, 2010, we were awarded "the Best Enterprise Award" at the Third National Humic Acid Industry Award Assembly for the "Black Gold Cup" Selection in Beijing. Fuer won the award for the second time since 2007. The "Black Gold Cup" Award, which is granted by the China Humic Acid Industry Association every two years, represents the highest honor in China's humic acid industry. This award represents great market recognition of our humic fertilizer products. We will continuously endeavor to expand our humic fertilizer business as a major supplement to our operation, and provide our customers with more tailored product for specific crops and soil conditions. During 2010 and the first month of 2011, our new corn varieties, Fudan No V, VI, and VII, were approved and registered in Heilongjiang and Inner Mongilia. During field tests, the new crop varieties are prove to have higher yield than peers, including ZD958, one of the most popular corn variety in the northern part of China, We believe the new product will strengthen our market position in southern part of Heilongjiang, and provinces of Jilin, Inner Mongolia and Liaoning.. Corporate Structure The following diagram illustrates our corporate structure as of the date of this prospectus: Description of the Contractual Agreements: Exclusive Business Cooperation Agreement. Pursuant to the exclusive business cooperation agreement between Deli and Fuer, Deli has the exclusive right to provide to Fuer general business operation services, including nomination of Fuer s senior management Under this agreement, Deli owns the intellectual property rights developed or discovered through research and development, in the course of providing the Services, or derived from the provision of the Services. Fuer shall pay consulting service fees in Renminbi ( RMB ) to Deli that is equal to all of Fuer s profits as defined in the Equity Pledge Agreement. The Agreement is valid for 10 years and can be extended solely with Deli s discretion. Qiqihar Fuer and Deli have entered into an supplemental agreement to the Exclusive Business Cooperation Agreement, Under which Fuer shall pay (i) a $100,000 annual service fee to Deli, and (ii) a floating fee which is determined by all net profits gained by Fuer during each fiscal year minus the service fee. Payment of the service fee is due on demand. Equity Pledge Agreement. Pursuant to the Equity Pledge Agreement, Fuer s Shareholders pledged all of their equity interests in Fuer to Deli to guarantee Fuer s performance of its obligations under the consulting services agreement. If Fuer or Fuer s Shareholders breach their respective contractual obligations, Deli, as pledgee, will be entitled to certain rights, including the right to sell the pledged equity interests. Fuer s Shareholders also agreed that upon occurrence of any event of default, Deli shall be granted an exclusive, irrevocable power of attorney to take actions in the place and stead of the Fuer s Shareholders to carry out the security provisions of the equity pledge agreement and take any action and execute any instrument that Deli may deem necessary or advisable to accomplish the purposes of the equity pledge agreement. Fuer s Shareholders agreed not to dispose of the pledged equity interests or take any actions that would undermine Deli s interest. The equity pledge agreement will expire unless all payments due under the Exclusive Business Cooperation Agreement have been fulfilled. Exclusive Option Agreement. Pursuant to the Exclusive Option Agreement, Fuer s Shareholders irrevocably granted Deli, or its designated person, an exclusive option to purchase, to the extent permitted under PRC law, all or part of the equity interests in Fuer for the cost of the initial contributions to the registered capital of Fuer or the minimum amount of consideration permitted by applicable PRC law. Deli or its designated person has sole discretion to decide when to exercise the option, whether in part or in full. The term of this agreement shall last for 10 years, and shall be renewed at Deli s election, unless terminated in accordance with this agreement. Loan Agreement. Under the Loan Agreement, the shareholders of Qiqihar Fuer shall borrow RMB 10,000,000 from Deli, only for purpose of increasing the paid-in capital of Qiqihar Fuer. In addition, shareholders of Qiqihar Fuer agree to (1) enter into the aforementioned contractual agreements with Deli; (2) appoint directors as nominated by Deli; (3) keep the value of its assets. Also included in this agreement, unless consented by Deli, Qiqihar Fuer should not: (1) purchase and dispose of any assets; enter into any material agreements with any third party within its operating activities; (3) declare any dividends to its shareholders. Corporate Information Our principal executive office is located at North Neiwei Road, Fulaerji District, Qiqihar, Heiloingjiang, China 161041. Our telephone number at that address is 86-452-6919150. Our website address is www.fuer.com.cn. The information on our website is not a part of this prospectus. Our agent for service of process in the United States is CSC Services of Nevada, Inc., 2215-B Renaissance Drive, Las Vegas, NV 89119. Risks and Challenges We are subject to a number of risks related to our business, the industries in which we operate, the PRC, the ownership of our common stock and this Offering, which you should be aware of before you buy our common stock. The risks are discussed more fully in the section entitled Risk Factors following this prospectus summary. OFFERING SUMMARY Common stock offered by the selling stockholders Up to 2,155,134 shares Use of Proceeds Proceeds from the sale of common stock covered by this prospectus will be received by the selling stockholders. We will not receive any proceeds from the sale of the shares of common stock covered by this prospectus. OTC Bulletin Board symbol for our Common Stock FRXT As of March 31, 2011, we had 12,958,031 shares of common stock outstanding, 873,315 shares of common stock issuable upon the exercise of warrants outstanding and no shares of common stock available for future issuance under our Stock Option Plan. No shares underlying the warrants was registered un this S-1. We are contractually obligated to pay all expenses of registration incurred in connection with this offering, except any underwriting discounts and commissions and expenses incurred by the selling stockholders for brokerage, accounting, tax or legal services or any other expenses incurred by the selling stockholders in disposing of the shares. SUMMARY FINANCIAL INFORMATION The table below presents our historical selected consolidated financial data for the three months ended March 31, 2011 and 2010, derived from our unaudited consolidated financial statements included elsewhere in this prospectus, and for the two years ended December 31, 2010 and 2009, derived from our audited consolidated financial statements included elsewhere in this prospectus. Historical results are not necessarily indicative of the results that may be expected for any future period. When you read this historical selected financial data, it is important that you read along with it the appropriate historical consolidated financial statements and related notes and Management's Discussion and Analysis of Financial Condition and Results of Operations included elsewhere in this prospectus. For the three months ended March 31, For the Years Ended December 31, 2011 2010 2010 2009 (Unaudited) (Unaudited) (Audited) (Audited) ($ in thousands) ($ in thousands) Statements of Operations Data Sales $ 22,857 $ 15,307 $ 22,744 $ 16,168 Cost of goods sold 14,426 8,991 13,325 9,469 Gross profit 8,431 6,317 9,419 6,699 Operating and administrative expenses: Sales and marketing 1,006 440 1,705 1,346 General and administrative 492 285 1,717 1,342 Income from operations 6,933 5,591 5,997 4,011 Other income (expenses), net (5 ) 10 (90 ) (78 ) Income before income tax 6,928 5,601 5,907 3,933 Income tax expenses 1,093 840 577 995 Net income $ 5,835 $ 4,761 $ 5,330 $ 2,938 March 31, 2011 December 31, 2010 (Unaudited) (Audited) ($ in thousands) Balance Sheet Data: Cash and Restricted Cash $ 9,552 $ 2,455 Working Capital $ 17,069 $ 11,348 Total Assets $ 35,201 $ 25,976 Total Liabilities $ 8,456 $ 4,936
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001446727_monterey_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001446727_monterey_prospectus_summary.txt
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+PROSPECTUS SUMMARY This summary provides an overview of certain information contained elsewhere in this Prospectus and does not contain all of the information that you should consider or that may be important to you. Before making an investment decision, you should read the entire Prospectus carefully, including the section entitled Risk Factors, the financial statements and the notes to the financial statements. In this Prospectus, the terms Bloggerwave, the Company, our Company, we, us and our refer to Bloggerwave, Inc. and our operating subsidiary. Our Company Bloggerwave helps its corporate clients harness the power of the Internet by leveraging the power and credibility of blogs to promote products and services. We believe that savvy consumers are increasingly distrustful of traditional modes of advertising, and are turning in ever-growing numbers to the Internet to seek unbiased opinions for product and service reviews. Because blogs are seen as independent, a blog review is not perceived as blatant advertising, but as an unbiased opinion from a trusted and credible blogger with a loyal, regular following. In this marketing environment, where consumers increasingly turn to each other for advice and recommendations for new products, we believe that tapping into the millions of independent bloggers worldwide is the next step for any company seeking to reach its targeted market. Bloggerwave s innovative business model connects corporate clients directly with thousands of pre-approved bloggers around the globe, giving the bloggers the opportunity to write about and review such company s specific products or services. We believe that a blog about a company increases its Internet buzz, credibility, site hits, ranking on search engines and ultimately, its bottom line. Company History We were incorporated in the State of Nevada on December 21, 2006 under the name Elevated Concepts, Inc. From inception through September 9, 2009, our business model was to export and sell green, eco-friendly, biodegradable, non-toxic household products and building materials used in housing construction and home renovation from North American manufacturers to the emerging markets of Russia, Ukraine and other Eastern European countries. We planned to start with sale and distribution of construction and household materials that would be used in green development projects in the suburban areas surrounding Moscow, Russia. On September 9, 2009, we entered into an Agreement and Plan of Merger (the Merger Agreement ) with Bloggerwave APS, a company incorporated under the laws of Denmark ( APS ). Pursuant to the terms and conditions of the Merger Agreement, we issued, in exchange for all of the issued and outstanding shares of APS, (i) an aggregate of 5,000,000 shares of our common stock to the shareholders of APS (the APS Shareholders ) on the basis of 50,000 restricted shares of the Company for each one share held of record by the APS Shareholders and (ii) 3,000,000 shares of our common stock to the management of APS ( APS Management ). Further, we changed our name to Bloggerwave, Inc. by filing a Certificate of Amendment (the Amendment ) to our Articles of Incorporation with the Secretary of State of the State of Nevada on November 19, 2009. The Amendment also increased the number of our authorized shares of common stock from 75,000,000 to 200,000,000. Following the closing of the Merger Agreement, APS became the Company s wholly owned operating subsidiary. Recent Developments On December 13, 2010, we entered into a Reserve Equity Financing Agreement (the Equity Financing Agreement ) with AGS Capital Group, LLC ( AGS ), pursuant to which we may, from time to time, issue and sell to AGS up to five million dollars ($5,000,000) of our common stock. Further, as additional consideration for AGS entering into the Equity Financing Agreement, we issued to AGS, upon execution of the Equity Financing Agreement, 5,988,000 shares of our common stock, which equals five percent of AGS commitment amount. This registration statement includes 5,988,000 of the total Commitment Shares. CALCULATION OF REGISTRATION FEE Title of Each Class Of Securities to be Registered Amount to be Registered Proposed Maximum Aggregate Offering Price per share Proposed Maximum Aggregate Offering Price Amount of Registration fee Common Stock, $0.001 par value per share, issuable pursuant to the Reserve Equity Financing Agreement 21,199,500 (1) $ 0.015 (3) $ 317,992.50 (4) $ 36.92 Common Stock, $0.001 par value per share, issued upon execution of the Reserve Equity Financing Agreement 5,988,000 (2) $ $0.015 (3) $ 89,820 $ 10.43 Total 27,187,500 $ $0.015 (3) $ 407,812.50 $ 47.35 (1) We are registering 21,199,500 shares of our common stock, par value $.001 per share (the Put Shares ), which will be put to AGS Capital Group, LLC ( AGS ) pursuant to the Reserve Equity Financing Agreement (the Equity Financing Agreement ), dated December 13, 2010 between AGS and the registrant. The Equity Financing Agreement will be effective upon the date (the Effective Date ) that the Securities and Exchange Commission (the SEC ) declares effective this registration statement. (2) We are also registering 5,988,000 shares of our common stock (the Commitment Shares ) that we issued to AGS upon execution of the Equity Financing Agreement as additional consideration for entering into the Equity Financing Agreement. (3) Estimated solely for the purpose of computing the amount of the registration fee in accordance with Rule 457(c) of the Securities Act on the basis of the average of the high and low bid prices of common stock of the registrant as reported on the Over-the-Counter Bulletin Board (the OTCBB ) on February 7, 2011. (4) This amount represents the maximum aggregate value of common stock which may be put to AGS by the registrant pursuant to the terms and conditions of the Equity Financing Agreement between AGS and the registrant. THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE. The Offering This offering relates to the sale of up to 27,187,500 shares of our common stock by AGS, of which (i) up to 21,199,500 will be put (the Put Shares ) to AGS pursuant to the Equity Financing Agreement and (ii) 5,988,000 (the Commitment Shares ) were issued to AGS as additional consideration for executing the Equity Financing Agreement. Assuming the sale of all of the shares being registered in this registration statement, such shares would constitute approximately 20% of the Company s outstanding common stock. Securities Offered Common Stock to be offered by selling stockholder AGS: Up to 27,187,500 shares of the Company s common stock, par value $.001 per share Common stock outstanding prior to this offering: 135,625,000 shares as of February 9, 2011 Common stock to be outstanding after giving effect to the issuance of up to 27,187,500 shares under the Equity Financing Agreement: 162,812,500 shares of the Company s common stock Use of Proceeds: We will not receive any proceeds from the sale of the shares of common stock offered by AGS. However, we will receive proceeds from the sale of our common stock under the Equity Financing Agreement, which we will use for working capital or general corporate purposes, including for a new version of our software and the payment of the fees and commissions incurred from entering into and consummating the transactions contemplated by the Equity Financing Agreement. See Use of Proceeds. Risk Factors: This investment involves a high degree of risk. See Risk Factors for a discussion of factors that you should consider carefully before making an investment decision. Symbol on the Over-the-Counter Bulletin Board: BLGW.OB You should read the
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001448500_china_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001448500_china_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
--- /dev/null
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@@ -0,0 +1 @@
+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001449654_alon_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001449654_alon_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..aed6ead71bdc8b0a1816a8e07fdffad3af25aca7
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+Prospectus Summary 1 Risk Factors 12 Forward-Looking Statements 28 Use of Proceeds 29 Dividend Policy 29 Capitalization 30 Dilution 32 Selected Historical Combined Financial and Operating Data 34 Unaudited Pro Forma Condensed Combined Financial Data 38 Management s Discussion and Analysis of Financial Condition and Results of Operations 40 Business 59 Management 71 Executive Compensation 75 Certain Relationships and Related Party Transactions 84 Principal and Selling Stockholders 91 Corporate Reorganization Transactions 95 Description of Capital Stock 97 Shares Eligible for Future Sale 100 Material U.S. Federal Tax Consequences to Non-U.S. Holders of Common Stock 102 Underwriting 105 International Selling Restrictions 108 Legal Matters 111 Experts 111 Where You Can Find More Information 111 Index to Financial Statements F-1 EX-10.12 EX-10.13 EX-10.18 EX-23.1 You should rely only on the information contained in this document or to which we have referred you. We have not authorized anyone to provide you with information that is different. This document may only be used where it is legal to sell these securities. The information in this document may only be accurate on the date of this document. Dealer Prospectus Delivery Obligation Until , 2011 (25 days after the commencement of the offering), all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealer s obligation to deliver a prospectus when acting as an underwriter and with respect to unsold allotments or subscriptions. Table of Contents PROSPECTUS SUMMARY This summary highlights significant aspects of our business and this offering that appear later in this prospectus, but it does not contain all of the information that you should consider before making your investment decision. You should read this entire prospectus carefully, including the risks discussed under
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001450015_china_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001450015_china_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..c5112b25cc30b9c6208e15039355fb3b5c8d4534
--- /dev/null
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@@ -0,0 +1 @@
+PROSPECTUS SUMMARY THIS SUMMARY HIGHLIGHTS SELECTED INFORMATION AND DOES NOT CONTAIN ALL THE INFORMATION THAT MAY BE IMPORTANT TO YOU. YOU SHOULD CAREFULLY READ THIS PROSPECTUS, ANY RELATED PROSPECTUS SUPPLEMENT AND THE DOCUMENTS WE HAVE REFERRED YOU TO IN WHERE YOU CAN FIND MORE INFORMATION ON PAGE 41 BEFORE MAKING AN INVESTMENT IN OUR COMMON STOCK, INCLUDING THE RISK FACTORS SECTION BEGINNING ON PAGE 9. As used in this Prospectus, unless the context requires or is otherwise indicated, the terms we, us, our, the Registrant, the Company, our company and similar expressions include the following entities (as defined below): (i) China Global Media, Inc., formerly known as TK Star Design, Inc., a Nevada corporation ( Company ), which is a publicly traded company; (ii) Phoenix International (China) Limited, a company organized under the laws of Hong Kong and a wholly-owned subsidiary of Company ( Phoenix International ); (iii) Hunan Beiwei International Media Consulting Co., Ltd, a limited liability company organized under the laws of the People s Republic of China and a wholly-owned subsidiary of Phoenix International ( Hunan Beiwei ); (iv) Changsha North Latitude 30 Cultural Communications Co., Ltd., a limited liability company organized under the laws of the People s Republic of China and an affiliated entity of Hunan Beiwei through contractual arrangements ( North Latitude ); (v) Changsha Beichen Cultural Communications Co., Ltd., a limited liability company organized under the laws of the People s Republic of China and an affiliated entity of Hunan Beiwei through contractual arrangements ( Beichen ); (vi) Changsha Zhongte Trade Advertising Co., Ltd., a limited liability company organized under the laws of the People s Republic of China and an affiliated entity of Hunan Beiwei through contractual arrangements ( Zhongte ) China or PRC refers to the People s Republic of China, excluding Hong Kong, Macau and Taiwan. RMB or Renminbi refers to the legal currency of China and $ or U.S. Dollars refers to the legal currency of the United States. We make no representation that the RMB or U.S. Dollar amounts referred to in this Prospectus could have been or could be converted into U.S. Dollars or RMB, as the case may be, at any particular rate or at all. GAAP unless otherwise indicated refers to accounting principles generally accepted in the United States. OUR COMPANY China Global Media, Inc. was founded as an unincorporated business entity in 1980 and became a corporation under the name TK Star Design, Inc. under the laws of the State of Nevada on November 3, 2008. We changed our name to China Global Media, Inc. on December 13, 2011. We mainly engage in the business of advertisement and brand name development in China, especially in Hunan Province and other southern Chinese provinces. Our business operations are carried out through our variable interest entities North Latitude, Beichen and Zhongte. Each of the North Latitude, Beichen and Zhongte has its own focus area: North Latitude and Beichen are both specialized in advertisement and brand name development for automobile industry while North Latitude focuses on organizing the auto exhibitions and product promotional events and Beichen focuses on the advertisement coverage on regular media such as TV channels, radio and newspaper. Zhongte focuses on advertisement of other industries, especially food and textile industries. Our principal office is located at 25th and 26th floors of Wanxiang Enterprise Building, No.70 Station North, Changsha, Hunan, China. Our telephone number is +86-731-89970899 THE OFFERING This prospectus relates to the resale of up to 4,305,000 shares of Common Stock, par value $0.001 per share ( Shares ) of China Global Media, Inc., a Nevada corporation, that may be sold from time to time by Selling Stockholders. The shares of Common Stock offered under this prospectus includes (i) 615,000 shares currently issued and outstanding; (ii) 1,230,000 shares issuable upon exercise of 1,230,000 Series A Warrants; (iii) 1,230,000 shares issuable upon exercise of 1,230,000 Series B Warrants; (iv) 615,000 shares issuable upon exercise of 615,000 Series C Warrants, and (v) 615,000 shares issuable upon exercise of 615,000 Series D Warrants. The Shares were issued to the Selling Stockholders in private placement transactions which were exempt from the registration and prospectus delivery requirements of the Securities Act of 1933, as amended. Common Stock outstanding prior to offering 47,485,700 Total shares of Common Stock offered by Selling Stockholders (assuming full exercise of the Warrants) 4,305,000 Common Stock to be outstanding after the offering (assuming full exercise of the Warrants) 51,175,700 Use of proceeds of sale We will not receive any of the proceeds from the sale of the shares of Common Stock by the Selling Stockholders. However, to the extent that the Warrants are exercised for cash, we will receive proceeds from any exercise of the Warrants. We intend to use any proceeds received from the exercise of the Warrants, for working capital and other general corporate purposes. Risk Factors See Risk Factors beginning on page 9 and other information included in this prospectus for a discussion of factors you should consider before deciding to invest in shares of our Common Stock.
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001451514_minerco_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001451514_minerco_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..d201375ec5a19500a485e71c32f4bfc121787300
--- /dev/null
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@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus; it does not contain all of the information you should consider before investing in our common stock. You should read the entire prospectus before making an investment decision. Throughout this prospectus, the terms Minerco , we, us, our, and our company refer to Minerco Resources, Inc., a Nevada corporation. Company Overview We have only recently begun operations and to date have relied upon the sale of our securities to fund our limited operations. Minerco Resources, Inc. was incorporated as a Nevada company on June 21, 2007 and our only subsidiary is Minerco Honduras S.A. We were engaged in the acquisition of interests and leases in oil and natural gas properties from our inception in June 2007 through May 27, 2010. In May 2010 we changed the focus of our business to the development, production and provision of clean, renewable energy solutions in Central America. We currently have an interest in two Hydro-Electric Projects and one Wind project in various parts of Honduras. Both of our Hydro-Electric projects are classified as as run-of-the-river projects (not conventional retention dams). Our Chiligatoro Hydro-Electric Project is in the permitting stage of development and our Iscan Hydro-Electric Project is currently in the feasibility stage of development.. To date, we have not completed construction of any of the projects and therefore we have not received any revenue from any of the projects. There can be no assurance given that these projects will be completed in a timely manner, if at all. We will require additional funds to complete these projects, estimated at $200,000 in the aggregate. Additionally, even if we complete construction of the projects, there is no guarantee that they will be successfully used to create electricity or that will generate a consistent revenue stream for us. The feasibility stage of development is the stage of development where the preliminary permits are obtained, measurement of the water flow for hydro-electric projects or wind and weather patterns for wind projects are observed, and final project size are determined. We have not generated any revenue since inception and during the twelve months ended July 31, 2011, we had an accumulated deficit of $1,315,972, a stockholder s deficit of $50,412 and a net loss of $1,079,916. There is substantial doubt regarding our ability to continue as a going concern. Our operations are dependent upon our ability to obtain necessary financing and our ability to limit our negative cash flow and/or attain profitable operations. As such, the report of our independent certified auditor for the year ended July 31, 2011 is qualified subject to substantial doubt as to our ability to continue as a going concern. On March 30, 2010, we effected a 6 for 1 forward stock split, increasing the issued and outstanding shares of common stock from 55,257,500 to 331,545,000 shares. All share amounts throughout this Annual Report have been retroactively adjusted for all periods to reflect this stock split. The Offering Common stock that may be offered by selling stockholder 144,500,000 shares which shares will represent approximately 20% of our outstanding shares after the issuance of the shares being registered hereunder upon conversion of certain notes and based upon our outstanding shares on the date hereof Common stock currently outstanding 719,861,026 shares Total proceeds raised by offering We will not receive any proceeds from the resale of the shares of common stock offered by the selling stockholder.
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001451951_friendfind_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001451951_friendfind_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..70c3038c5cc00a545169ebbf4e144f9207388da4
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001451951_friendfind_prospectus_summary.txt
@@ -0,0 +1 @@
+consolidated financial statements included elsewhere in this prospectus. This summary may not contain all of the information that may be important to you. You should carefully read this entire prospectus, including the section entitled Risk Factors and our consolidated financial statements and notes to those statements. As used in this prospectus, unless the context otherwise requires, all references to we, us, our, our company or the company refer to FriendFinder Networks Inc. and, where appropriate, our consolidated direct and indirect subsidiaries, except where it is clear that the terms mean only FriendFinder Networks Inc. The term INI refers to our subsidiary and co-issuer of the Registrable Notes, Interactive Network, Inc. References to our common stock refer only to our voting common stock and except as otherwise noted, such references do not include our Series B common stock or our preferred common stock. Except where we state otherwise, the information presented in this prospectus reflects (i) the amendment and restatement of our bylaws, effective upon the consummation of our initial public offering on May 16, 2011, and (ii) the amendment and restatement of our articles of incorporation, which became effective on January 25, 2010. About Our Company FriendFinder Networks Inc. is a leading internet and technology company providing services in the rapidly expanding markets of social networking and web-based video sharing. Our business consists of creating and operating technology platforms which run several of the most heavily visited websites in the world. Through our extensive network of more than 44,000 websites, since our inception, we have built a base of more than 484 million registrants and more than 320 million members in more than 200 countries. We are able to create and maintain, in a cost-effective manner, websites intended to appeal to users of diverse cultures and interest groups. In December 2010, we had more than 196 million unique visitors to our network of websites, according to comScore. We offer our members a wide variety of online services so that they can interact with each other and access the content available on our websites. Our most heavily visited websites include AdultFriendFinder.com, Amigos.com, AsiaFriendFinder.com, Cams.com, FriendFinder.com, BigChurch.com and SeniorFriendFinder.com. For the nine months ended September 30, 2011, we had net revenue, income from operations and net losses of $249.6 million, $52.4 million and $(20.9) million, respectively. For the year ended December 31, 2010, we had net revenue, income from operations and net losses of $346.0 million, $71.1 million and ($43.2) million, respectively. Our revenues to date have been primarily derived from online subscription and paid-usage for our products and services. These products and services are delivered primarily through two highly scalable revenue-generating technology platforms: Social Networking. Approximately 69% of our total net revenues for the nine months ended September 30, 2011 and 70% of our total net revenues for the year ended December 31, 2010 were generated through our targeted social networking technology platform. Our social networking technology platform provides users who register or purchase subscriptions to one or more of our websites with the ability to communicate and to establish new connections with other users via our personal chat rooms, instant messaging and e-mail applications and to create, post and view content of interest. We have been able to rapidly create and seamlessly maintain multiple websites tailored to specific categories or genres and designed to cater to targeted audiences with mutual interests. We believe that our ability to create and operate a diverse network of specific interest websites with unique, user-generated content in a cost-effective manner is a significant competitive differentiator that allows us to implement a subscription-fee based revenue model while many other popular social networking websites rely primarily upon free-access, advertising-based revenue models. Live Interactive Video. Approximately 24% of our total net revenues for the nine months ended September 30, 2011 and 22% of our total net revenues for the year ended December 31, 2010 were generated through our live interactive video technology platform. Our live interactive video technology platform is a live video broadcast platform that enables models to broadcast from independent studios throughout the world and interact with our users via instant messaging and video. We believe our live interactive video platform provides a unique offering including bi-directional and omni-directional video and interactive features that allow models to communicate with and attract users through a variety of mediums including blogs, newsletters and video. In addition, we believe the reliability of our live interactive video technology platform, which had approximately 99.1% uptime during 2010, is a key factor allowing us to maintain a large base of users. In addition to our revenue-generating technology platforms, we have invested significant time and resources into developing our back-end marketing, analytics and billing technologies, which are a key contributor to the success of our business. We have developed proprietary systems to allow our marketing affiliates to maximize their revenue for our mutual benefit. These systems include proprietary white-labeling solutions, in which we provide back-end technology solutions to permit affiliates and marketing partners to deliver our products and services while maintaining the affiliate s and marketing partner s own branding and style, self-optimizing ad spots, and a robust banner optimization engine that automatically chooses the best possible site and banner to promote in a given ad spot. Our marketing technology has also enabled the creation and continued growth of our network of more than 280,000 affiliates, which we believe is one of the largest of its kind in the world and a significant barrier to entry to potential and existing competitors. Similarly, our proprietary analytics technology provides us with an advantage relative to less sophisticated competitors by enabling us to estimate future revenue based on short-term response to our advertising campaigns, as well as providing for analysis of key data and metrics in order to optimize our marketing spend and maximize the revenues our websites generate. Our robust billing platform allows our customers to pay using many of the widely-adopted methods of e-commerce, both domestically as well as internationally. We categorize our users into five categories: visitors, registrants, members, subscribers and paid users. Visitors. Visitors are users who visit our websites but do not necessarily register. We believe we achieve large numbers of unique visitors because of our focus on continuously enhancing the user experience and expanding the breadth of our services. We had more than 196 million unique worldwide visitors in the month of December 2010, representing a growth of more than 300% from our approximately 46.9 million unique worldwide visitors in January 2009, according to comScore. Registrants. Registrants are visitors who complete a free registration form on one of our websites by giving basic identification information and submitting their e-mail address. For the nine months ended September 30, 2011, we averaged more than 6.4 million new registrations on our websites each month. For the year ended December 31, 2010, we averaged more than 6.4 million new registrations on our websites each month. Some of our registrants are also members, as described below. Members. Members are registrants who log into one of our websites and make use of our free products and services. For the nine months ended September 30, 2011, we averaged more than 4.0 million new members on our websites each month. For the year ended December 31, 2010, we averaged more than 3.9 million new members on our websites each month. Subscribers. Subscribers are members who purchase daily, three-day, weekly, monthly, quarterly, annual or lifetime subscriptions for one or more of our websites. Subscribers have full access to our websites and may access special features. For the nine months ended September 30, 2011, we had a monthly average of approximately 950 thousand and for the year ended December 31, 2010, we had a monthly average of approximately 1 million paying subscribers. Paid Users. Paid users are members who purchase products or services on a pay-by-usage basis. For the nine months ended September 30, 2011, we averaged approximately 2.9 million purchased minutes by paid users each month. For the year ended December 31, 2010, we averaged approximately 3.0 million purchased minutes by paid users each month. We focus on the following key business metrics to evaluate the effectiveness of our operating strategies. Average Revenue per Subscriber. We calculate average revenue per subscriber, or ARPU, by dividing net revenue for the period by the average number of subscribers in the period and by the number of months in the period. As such, our ARPU is a monthly calculation. For the nine months ended September 30, 2011, our average monthly revenue per subscriber was $20.22. For the year ended December 31, 2010, our average monthly revenue per subscriber was $20.49. Churn. Churn is calculated by dividing terminations of subscriptions during the period by the total number of subscribers at the beginning of that period. Our average monthly churn rate, which measures the rate UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 of loss of subscribers, for the nine months ended September 30, 2011 was 16.3% per month. Our average monthly churn rate for the year ended December 31, 2010 was 16.1% per month. Cost Per Gross Addition. Cost per gross addition, or CPGA, is calculated by adding affiliate commission expense plus ad buy expenses and dividing by new subscribers during the measurement period. Our CPGA for the nine months ended September 30, 2011 was $42.76. Our CPGA for the year ended December 31, 2010 was $47.25. Average Lifetime Net Revenue Per Subscriber. Average Lifetime Net Revenue Per Subscriber is calculated by multiplying the average lifetime (in months) of a subscriber by ARPU for the measurement period and then subtracting the CPGA for the measurement period. Our Average Lifetime Net Revenue Per Subscriber for the nine months ended September 30, 2011 was $81.06. Our Average Lifetime Net Revenue Per Subscriber for the year ended December 31, 2010 was $80.17. While we monitor many statistics in the overall management of our business, we believe that Average Lifetime Net Revenue Per Subscriber and the number of subscribers are particularly helpful metrics for gaining a meaningful understanding of our business as they provide an indication of total revenue and profit generated from our base of subscribers inclusive of affiliate commissions and advertising costs required to generate new subscriptions. In addition to our social networks and live interactive video platforms, we also offer professionally-generated content through our premium content technology platform and our non-internet entertainment business. Through websites such as Penthouse.com and HotBox.com, our subscribers and paid users have access to our collection of more than 15,000 hours of professional video, which includes our library of more than 800 standard and high-definition full-length feature films and one million professionally produced images. We began shooting all of our content in 3D in September 2010. Additionally, subscribers have access to editorial content, chat rooms and other interactive features. In addition to our online products and services, we also have a non-technology legacy entertainment business, in which we produce and distribute original pictorial and video content via traditional distribution channels including licensing and retail DVD channels, and license the globally-recognized Penthouse brand to a variety of consumer product companies and entertainment venues and public branded men s lifestyle magazines. Our Competitive Strengths We believe that we have the following competitive strengths that we can leverage to implement our strategy: Proprietary and Scalable Technology Platform. Our robust, proprietary and highly scalable technology platform supports our social networking, live interactive video and premium content websites. We are able to use our customized back-end interface to quickly and affordably generate new websites, launch new features and target new audiences at a relatively low incremental cost. We believe that our ability to create new websites and provide new features is crucial to cost-effectively maintaining our relationships with existing users and attracting new users. Paid Subscriber-Based Model. We operate social networking websites that allow our members to make connections with other members with whom they share common interests. Our paid subscriber-based model of social networking websites is distinctly different from the business models of other free social networking websites whose users access the websites to remain connected to their pre-existing friends and interest groups. Large and Diverse User Base. We operate some of the most heavily visited social networking websites in the world, currently adding on average more than 6.4 million new registrants and more than 4.0 million new members each month. Our websites are designed to appeal to individuals with a diversity of interests and backgrounds. We believe potential members are attracted to the opportunity to interact with other individuals by having access to our large, diverse user base. Large and Difficult to Replicate Affiliate Network and Significant Marketing Spend. Our marketing affiliates are companies that market our services on their websites, allowing us to market our brand beyond our established user base. As of September 30, 2011 and December 31, 2010, we had more than 280,000 participants in our marketing affiliate program from which we derive a substantial portion of our new members and approximately 46% of our net revenues for the nine months ended September 30, 2011 and 45% of our net revenues for the year ended December 31, 2010. We believe that the difficulty in building an affiliate network of this large size, together with our combined affiliate and advertising spend for the nine months ended September 30, 2011 and the year ended December 31, 2010 of $64.5 million and $103.5 million, respectively, presents a significant barrier to entry for potential competitors. Our Strategy Our goal is to enhance revenue opportunities while improving our profitability. We plan to achieve these goals using the following strategies: Convert Visitors, Registrants and Members into Subscribers or Paid Users. We continually seek to convert visitors, registrants and members into subscribers or paid users. We do this by constantly evaluating, adding and enhancing features on our websites to improve our users experience. Create Additional Websites and Diversify Offerings. We are constantly seeking to identify groups of sufficient size who share a common interest in order to create a website intended to appeal to their interests. Our extensive user database serves as an existing source of potential members and subscribers for new websites we create. Expand into and Monetize Current Foreign Markets. In 2010, nearly 71% of our members were outside the United States, but non-U.S. users accounted for less than half of our total net revenues. We seek to expand in selected geographic markets, including Southeast Europe, South America and Asia. Pursue Targeted Acquisitions. We intend to expand our business by acquiring and integrating additional social networking websites, technology platforms, owners, creators and distributors of content and payment processing and advertising businesses. Our management team possesses significant mergers and acquisitions and integration expertise and regularly screens the marketplace for strategic acquisition opportunities. Generate Online Advertising Revenue. To date, online advertising revenue has represented less than 0.1% of our net revenue, averaging approximately $8,000 per month in the nine months ended September 30, 2011 and $9,000 per month for the year ended December 31, 2010. With continued worldwide growth in this advertising segment, we see this as a significant growth opportunity. We believe that our broad and diverse user base represents a valuable asset that will provide opportunities for us to offer targeted online advertising to specific demographic groups. We intend to focus our advertising efforts on our general audience social networking websites and maintain our subscription-based model for our adult social networking websites. Our New Financing On October 27, 2010, we issued new debt to repay our then existing debt, which we refer to as the New Financing. We, along with our wholly-owned subsidiary Interactive Network, Inc., or INI, co-issued $305.0 million principal amount of the Senior Secured Notes, $13.8 million of the Cash Pay Notes, and $232.5 million of the Non-Cash Pay Notes. Our Initial Public Offering On May 16, 2011, we issued 5,000,000 shares of common stock at a price of $10.00 per share and completed our initial public offering (the IPO ). We raised gross proceeds of $50.0 million, less underwriting fees and commissions of 7.25% of the gross proceeds, or $3.6 million, and incurred other offering expenses of $2.9 million to be paid from the proceeds of the offering, resulting in $43.5 million of net proceeds. In addition, we had incurred and paid as of December 31, 2010, $13.3 million of offering costs, which were included in deferred offering costs in the accompanying balance sheet at December 31, 2010 and written off by a charge to capital in excess of par value in the quarter ended June 30, 2011. On May 19, 2011, we redeemed $37.8 million of our Senior Secured Notes and $1.7 million of our Cash Pay Notes for a total of $39.5 million principal amount of New Financing redeemed from the net proceeds of our IPO and incurred a loss on extinguishment of debt estimated to be approximately $7.3 million. As of September 30, 2011, the outstanding principal amounts of the Senior Secured Notes, Cash Pay Notes and Non-Cash Pay Notes were $235.3 million, $10.6 million and $250.9 million, respectively. Recent Developments In July 2011, we acquired, through one of our subsidiaries, PerfectMatch.com, an online relationship service helping adults seeking successful, lasting connections. We paid approximately $2.5 million in cash and stock to acquire the assets of the website. PerfectMatch.com uses the Duet Total Compatibility System, a system which analyzes the whole person to find friends, taking into account each member s personality, values and ideals, life and love-style preferences to identify and find the person right for them. The acquisition of this website and related assets adds to our portfolio of general audience social networking websites. In September 2011, we acquired, through one of our subsidiaries, BDM Global Ventures Ltd., the company which owns the operations of JigoCity. The acquisition was completed pursuant to an Agreement and Plan of Merger entered into on September 7, 2011 among us, JGC Holdings Limited, our wholly-owned subsidiary, BDM Global Ventures Limited, which we refer to as BDM, Global Investment Ventures LLC and Anthony R. Bobulinski, which we refer to as the Merger Agreement. Under the terms of the Merger Agreement, the shareholders of BDM, in exchange for their outstanding shares and options in BDM and its subsidiaries, received merger consideration consisting of 1,555,555, shares of our common stock, 500,000 of which will be held in escrow until no later than December 31, 2012, and warrants exercisable into 6,436,851 shares of our common stock with exercise prices ranging from $5-$18 per share with an expiration date of December 31, 2021. Pursuant to an equity put agreement we entered into, the shareholders of BDM have the option to sell all of the shares of our common stock and warrants issued as merger consideration back to us in exchange for the return of 70% of the equity in BDM if the volume-weighted average price of our common stock fails to equal or exceed $12.00 per share during any 10 trading day period principally between the closing date and the later of June 30, 2014 and the date upon which our current indentures are fully discharged, or if an indenture modification is made, as defined in the equity put agreement, the later of June 30, 2014 and the date the indenture modification takes place (the later date hereinafter referred to as the Vesting Date ). The equity put agreement provides that the put right shall become exercisable at the sole discretion of the shareholders appointed representative during the period commencing on the Vesting Date and expiring sixty (60) days thereafter. Additionally, if the shareholders of BDM exercise the put right, we have the right to pay them in our common stock and/or cash, having a combined value as of the later of the above dates equal to the product of (i) 2,209,414 shares of common stock (subject to dilutive adjustment) and (ii) the difference between the highest 10 day volume-weighted average price attained by our common stock during such period and $12.00, in which case the put right terminates. Pursuant to a registration rights agreement, we also granted demand registration rights under certain circumstances, with respect to the shares of our common stock and warrants issued as merger consideration. JigoCity is a global social commerce organization committed to providing members with high quality daily deals that are relevant to their individual lifestyles. The acquisition of JigoCity adds to our portfolio a social commerce company and what we believe will be an additional avenue to monetize our foreign markets. Our Corporate Information Our executive offices are located at 6800 Broken Sound Parkway, Suite 200, Boca Raton, Florida 33487 and our telephone number is (561) 912-7000. Our website address is www.ffn.com. The information contained in, or accessible through, our website is not part of this prospectus. 6800 Broken Sound Parkway, Suite 200 Boca Raton, Florida 33487 (561) 912-7000 (Address, including zip code, and telephone number, including area code, of registrant s principal executive offices)
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+PROSPECTUS SUMMARY The following summary highlights selected information contained in this prospectus. This summary does not contain all the information you should consider before investing in the shares of our common stock. Before making any investment decision, you should read the entire prospectus carefully, including the Risk Factors section, the financial statements and the notes to the financial statements. Our Business We are a development-stage biopharmaceutical company focused on the discovery, development and commercialization of novel therapies for treating cancer-related diseases. Our research and development activities build upon the research of Professor Abraham Hochberg of the Hebrew University of Jerusalem, who isolated the human H19 gene and determined that it is expressed in over forty different forms of cancer, including superficial bladder carcinoma, and pancreatic and ovarian cancer, while laying dormant and non-expressed in non-cancerous cells. Professor Hochberg s research discovered that the H19 gene is significantly expressed in cancerous cells of between 70% and 84% of adult cancer patients, varying between cancer types. Research has also demonstrated that the H19 gene plays a significant role in the tumor development process by enabling tumor cells to survive under stress conditions, such as low serum and low oxygen levels, that are typical conditions of the environment in which cancerous cells develop. This survival supports the growth of the tumor and the development of metastases. We completed a Phase I/IIa trial of our drug-candidate, BC-819, designed for use in patients suffering from bladder carcinoma that have failed standard treatment. The Phase I/IIa trial resulted in no severe adverse side effects directly attributable to the tested therapy. In March 2008, we began FDA-approved Phase IIb trials for this therapy. In addition, pursuant to an IND application to the FDA from December 2008, we commenced treating patients in Israel in May 2009 for a Phase I/IIa trial, also using BC-819, designed to treat ovarian cancer. In addition, pursuant to an IND application to the FDA from December 2008, we commenced a Phase I/IIa trial for this therapy, also using BC-819, designed to treat pancreatic cancer, in 2009 , and completed treatment of the last patient in the trial in October, 2010 . Our Goal Our goal is to become a leader in the development and commercialization of research and therapeutic product-candidates and other applications utilizing target genes such as H19 and IGF2. Our key strategies to achieve this goal are as follows: Build and Maintain a Versatile and Effective Intellectual Property Portfolio. We intend to develop an effective intellectual property portfolio that will support our efforts in developing and commercializing gene-based therapeutic product-candidates and in taking advantage of new opportunities that may materialize in this developing field. Our patent strategy is to continue to seek intellectual property rights coverage for our prototype drug BC-819 and for all of our molecules and to file patent applications claiming composition-of-matter and method-of-use on individual molecules of commercial interest. Pursue Therapeutic Product Opportunities. We intend to utilize our target gene-based discoveries, know-how and expertise to develop drugs that selectively compromise and kill forms of cancer that express target genes. Leverage Our Intellectual Property Position, Expertise and Knowledge of Target Genes to Continue to Establish Strategic Collaborations. We intend to enter into strategic collaborations for the funding, development and commercialization of therapeutic products utilizing the H19 and IGF2 target genes. Risks Related to Our Business We are a development stage company and, as such, our success is subject to the performance and efficacy of the experimental product-candidates we are developing and our ability to secure adequate financing on favorable terms. There are several risk factors to consider when deciding whether to make an investment in our common stock, including risk factors related to our operations in Israel and the complexity of the regulatory process to which the approval of our therapies are subject, that are explained in detail in this prospectus under the heading Risk Factors . Some of the most significant risks related to our business and to owning our common stock include the following: The information in this prospectus is not complete and may be changed. The company may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION, DATED MARCH 31, 2011 BIOCANCELL THERAPEUTICS INC. 10,936,747 Shares of Common Stock This prospectus relates to the resale of up to 10,936,747 shares of our common stock by the selling securityholders named in this prospectus, including 10,872,808 shares of our common stock that may be acquired upon exercise of warrants or conversion of convertible debentures offered to the selling securityholders in July 2008 . The named selling securityholders may offer shares of our common stock through public or private transactions, at the price of $0.57 which was determined by the price shares were traded on the Tel Aviv Stock Exchange and is a fixed price at which the selling securityholders may sell their shares until our common stock is quoted on the OTC Bulletin Board, at which time the shares may be sold at prevailing market prices or at privately negotiated prices directly or through agents or broker-dealers acting as principal or agent, or in a distribution by underwriters. We will not receive any proceeds from the sales of these shares by the named selling securityholders. However, upon the exercise of the warrants by payment of cash, if so elected by the warrant holder, we will receive the exercise price of the warrants, which is initially $0.716 per share. Any commissions or other fees payable to broker-dealers or otherwise in connection with any sale of the securities will be paid by the named selling securityholders or other party selling the securities. If the named selling securityholders use agents, underwriters or dealers to sell the offered securities, we will name them and describe their compensation in a supplement to this prospectus. Currently, there is no public market for our common stock in the United States, and no assurances can be given that a public market will develop or, if developed, that it will be sustained. Our common stock is listed on the Tel Aviv Stock Exchange, or TASE, and trades under the symbol BICL . On March 30, 2011 , the closing price of one share of our common stock was NIS 2.603 . The shares of our common stock which are being offered for resale under this prospectus are currently registered for trading on the TASE, but may only be traded on the TASE after the effective time of the registration statement of which this prospectus is a part. Investing in our common stock involves a high degree of risk. Before buying any shares, you should review the discussion of risk factors with respect to our common stock under the heading Risk Factors beginning on page 5 of this prospectus. You should read this prospectus and any prospectus supplement carefully before you decide to invest. You should not assume that the information in this prospectus is accurate as of any date other than the date on the front of this document. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. The date of this prospectus is , 201 1 . The approach that we have adopted to discover and develop prospective therapeutic products is new and may never lead to marketable products. We will require substantial additional funds to complete our research and development activities and, if additional funds are not available, we may need to significantly scale back or cease our operations. Any prospective therapeutic products that we may develop will be required to undergo a time-consuming, costly and burdensome pre-market approval process, and we may be unable to obtain regulatory approval for any of our prospective therapeutic products. Even if we receive regulatory approval to market our prospective therapeutic products, the market may not be receptive to our prospective therapeutic products upon their commercial introduction which will prevent us from becoming profitable. If we fail to comply with our obligations under our license with Yissum or other licenses or related agreements that we are a party to and that we may enter into in the future, we could lose license rights that may be necessary for developing our target gene-based therapeutic product-candidates. Risks related to our operations in Israel, including due to political and economic conditions as well as certain Israeli legislation and regulation to which we are subject. If our common stock is accepted for quotation on the OTC Bulletin Board, it may be thinly traded, so you may be unable to sell at or near ask prices or at all if you need to sell your shares to raise money or otherwise desire to liquidate your shares. The application of the penny stock rules to our common stock could limit the trading and liquidity of the common stock, adversely affect the market price of our common stock and increase your transaction costs to sell those shares. Corporate Information We were incorporated as DBT Biopharmaceuticals Inc. in Delaware on July 26, 2004 and changed our name to BioCancell Therapeutics Inc. on February 25, 2005. We conduct our business and operations through our wholly owned subsidiary, BioCancell Therapeutics Israel Ltd., incorporated in Israel on October 18, 2004. Our principal executive office is located at Beck Science Center, 8 Hartom St, Har Hotzvim, Jerusalem 97775 Israel. Our telephone number is 972-2-548-6555. On August 17, 2006, we listed our common stock on the TASE as a part of our initial public offering. Shares of our common stock trade on the TASE under the symbol BICL . Our website is located at www.biocancell.com. The information found on, or accessible through, our website is not part of, or incorporated by reference into, this prospectus. In this prospectus, the terms BioCancell, Company, we, us and our each refer to BioCancell Therapeutics, Inc. and its wholly owned subsidiary, BioCancell Therapeutics Israel Ltd. TABLE OF CONTENTS PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001452763_encore_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001452763_encore_prospectus_summary.txt
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+PROSPECTUS SUMMARY The following summary highlights information contained elsewhere in this prospectus. It may not contain all the information that may be important to you. You should read this entire prospectus carefully, including the sections entitled Risk Factors and Management s Discussion and Analysis or Plan of Operation, and our historical financial statements and related notes included elsewhere in this prospectus. In this prospectus, unless the context requires otherwise, references to the Company, Encore, we, our and us, refer to Encore Brands, Inc., a Nevada corporation together with its subsidiaries. Company History We were incorporated under the laws of the State of Nevada on September 16, 2008. We have had limited business operations and we currently have had limited revenue and no significant assets. We have never declared bankruptcy, have never been in receivership, and have never been involved in any legal action or proceedings. Business Overview We have a basic permit issued by the Department of Treasury s Alcohol and Tobacco and Trade Bureau ( TTB ) to conduct business as a wholesaler and importer of alcoholic beverages. As such, we are engaged in the sale of distilled spirits to distributors of alcoholic beverages in the U.S. who sell to liquor stores, grocery stores, bars and restaurants, including those states that use a control board for distribution. With a marketing focus, experience and industry relationships we plan to use our capital to build our own or acquire brands, increase distribution and drive sales. By leveraging traditional distribution channels with effective sale and marketing techniques management expects to experience growth without being dependent on one brand to succeed. This will also make us more valuable to distributors and not dependent on one contract manufacturer to provide products. For our first brand, we have entered into a license agreement with Encore Brands LLC, pursuant to which Encore Brands has the limited exclusive right to sell, distribute and market Ecstasy Brand Liqueur in the United States of America and Canada, one of the world s first premium enhanced spirits. The concept behind Ecstasy Liqueur is a combination of flavored liqueur and energy drink which is a growing taste preference among drinkers. The combination produced is a 70-proof clear spirit with pomegranate and citrus flavors, column distilled four times from winter white wheat and yellow corn. Exotic herbs, which are the energy-stimulating ingredients, are ginseng, guarana, taurine, and caffeine. Ecstasy is produced in such a way that it can be consumed straight up or be mixed with other ingredients as cocktails. On June 16, 2010 we entered into a non-binding Letter of Intent ( LOI ) with KSB, LLC to design and develop products under the Zephyr Gin ( Zephyr ) labels, to provide marketing and sales in the US and the World. Zephyr is a premium gin brand in the US and UK with limited distribution and a demographic profile in line with the brand strategy of our initial product, Ecstasy Liqueur. The concept behind Zephyr Gin is an update to the old, stodgy gin image, with the design of a new gin that will appeal to the next generation of drinkers. Everything about it is new, beginning with its contemporary bottle design and two distinct flavors, including the 88 proof reserve with unique elderflower botanicals for the traditionalist and the 70 proof blue tinted elderberry flavor for the more adventurous. To date, we have not received any revenues from the sale of either Ecstasy Liqueur, Zephyr Gin, or Worldwide Beverage s products. However, we have received a formal Purchase Order from India s Acme Spiritz for 430 cases of Ecstasy Brand Liqueur (40 1000ml, 360 750ml, 10 375ml and 20 50ml). Additionally, we have acted as a consultant and broker for the sales and marketing of Zehyr Gin, including services for the placement of 2,000 cases of Zephyr into Sabemos, a national beverage broker, for which we received compensation in the amount of $20,000. Since we now have our TTB basic permit, we will begin to sell both of these brands as we become TTB compliant in each state. On January 10, 2011, we entered into a Design & Development Agreement (the " Agreement"), between Cervecceria Mexicana, S. de R.I. de C.V., a corporation formed under the laws of the Republic of Mexico ( Cermex ), pursuant to which we and Cermex agreed to form a joint venture to design and develop a series of branded beers. Cermex agreed to provide the resources and assistance in the design and development of two private label beers a year and we agreed to manage sales, promotional activities, etc. as the owner of any registered trademarks developed and in the brokering of any of Cermex s existing labels. The Agreement may be terminated by either party for any reason whatsoever with a 60-day prior written notice. The term of the agreement is for 3-years. In consideration for Cermex s services under the Agreement, we issued Cermex 3,000,000 shares of the Company s common stock. Shortly after inception, we filed a registration statement on Form S-1 pursuant to which we registered 20,000,000 shares of our common stock to be sold by us to qualified investors at $0.45 per share (the Financing ). In the Financing, we sold an aggregate total of 20,666 shares ( Shares ) to 34 subscribers at a price of $0.45 per share for total consideration of $9,300 and issued 468,889 restricted shares to 18 consultants for services rendered in separate unregistered transactions. The issuance of these shares were primarily attributable to professional, legal and audit fees related to our public offering and ongoing compliance with our obligations under federal securities laws. The proceeds from our public offering were used to pay for start-up costs and the related fees associated with registering our securities, our ongoing compliance requirement under federal securities laws and to apply for various licenses and permits with governmental agencies related to our future operations. Our principal executive offices are located at 2215-B Renaissance Drive, Las Vegas, NV 89119 and our telephone number is (310) 699-9937. We maintain a website at www.encorebrands.com which contains a description of our company, but such website is not part of this prospectus. Please note that you should not view such website as part of this prospectus and should not rely on such website in making a decision to invest in our common stock. If this Form is a post-effective amendment filed pursuant to Rule 462 (c) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier registration statement for the same offering: [ ] If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier registration statement for the same offering: [ ] Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of large accelerated filer, accelerated filer, and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [ ] Smaller reporting company [X] CALCULATION OF REGISTRATION FEE PROPOSED PROPOSED AMOUNT TO MAXIMUM MAXIMUM TITLE OF EACH CLASS OF BE OFFERING AGGREGATE AMOUNT OF SECURITITES TO BE REGISTERED PRICE PER OFFERING REGISTRATION REGISTERED (1) SHARE PRICE FEE Common stock, par value $0.001 per share (2) 20,000,000 $ 0.45 (3) $ 9,000,000.00 $ 641.70 Common stock, par value $0.001 per share (4) 487,555 $ 0.60 (5) $ 292,533.00 $ 20.86 Total 20,487,555 $ 9,292,533.00 $ 662.56(6) (1) In the event of a stock split, stock dividend, or similar transaction involving the common stock, the number of shares registered shall automatically be increased to cover the additional shares of common stock issuable pursuant to Rule 416. (2) Represents shares of the Registrant s common stock being offered pursuant to the Registrant s public offering. (3) Estimated solely for the purpose of calculating the amount of the registration fee pursuant to Rule 457(o) of the Securities Act of 1933, as amended. (4) Represents shares of the Registrant s common stock being registered for resale that are issuable to the selling stockholders named in the prospectus or a prospectus supplement thereto. (5) Estimated solely for purposes of calculating the registration fee pursuant to Rule 457(c) of the Securities Act of 1933, as amended, based on the average high and low prices of the common stock of the Registrant as reported on the OTC Bulletin Board on June 11, 2010. (6) Pursuant to Rule 457(p) under the Securities Act of 1933, as amended, the Registrant hereby offsets the registration fee required in connection with this Registration Statement by $364.54 previously paid by the registrant with respect to unsold securities previously registered with the Securities and Exchange Commission on October 6, 2009 pursuant to the Registration Statement on Form S-1 (Registration No. 333-156612) (the Prior Registration Statement ). Pursuant to Rule 457(p) under the Securities Act of 1933, as amended, such unutilized filing fee may be applied to the filing fee payable pursuant to this Registration Statement and be available to be utilized to offset the filing fee due for this Registration Statement until five years from the initial filing date of the Prior Registration Statement. Accordingly, $298.02 was previously paid. THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THERAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE. The Offering Securities Being Offered: 20,000,000 shares of common stock, par value $0.001 per share. Offering Price per Share: $0.45 Offering Period: The shares are being offered for a period not to exceed 180 days. Common stock offered by the selling stockholders: 487,555 Proceeds to Our Company: $0 if no shares are sold, $2,250,000 if 25% of the maximum number of shares are sold, $4,500,000 if 50% of the maximum number of shares are sold, $6,750,000 if 75% of the maximum number of shares are sold, $9,000,000 if the maximum number of shares are sold. Use of Proceeds*: General working capital purposes. We will not receive any proceeds from sales by the selling stockholders. Number of Shares Outstanding Before the Offering: 19,214,555 as of February 28, 2011. Stock Symbol: ENCB Number of Shares Outstanding After the Offering*: 15,989,555, if no shares are sold, 20,989,555 if 25% of the maximum number of shares are sold, 25,989,555 if 50% of the maximum number of shares are sold, 30,989,555 if 75% of the maximum number of shares are sold, 35,989,555 if 100% of the maximum number of shares are sold.
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001455206_rvue_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001455206_rvue_prospectus_summary.txt
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+PROSPECTUS SUMMARY The following summary highlights information contained elsewhere in this prospectus. This summary may not contain all of the information that may be important to you. You should read this entire prospectus carefully, including the sections entitled Risk Factors and Management s Discussion and Analysis of Financial Condition and Results of Operations and our historical financial statements and related notes included elsewhere in this prospectus. In this prospectus, unless the context provides otherwise, the terms the Company, we, us, and our refer to rVue Holdings, Inc., and its wholly-owned subsidiary, rVue, Inc. Overview We are an advertising technology company and operate rVue, a demand-side platform ( DSP ) for planning, buying and managing Digital Place-Based Networks and Digital Billboards and Signage (collectively Digital Out-of-Home or DOOH ) advertising. We provide an online, internet based DSP that connects advertisers and/or advertising agencies with third party DOOH media or networks, that allows the advertiser to create a targeted advertising campaign and media plan, and negotiate that media plan simultaneously with all the third-party networks selected. Through our newly created managed services division, we will execute complete campaigns on behalf of advertising clients or their agencies. Our History We were incorporated as Rivulet International, Inc. in the State of Nevada on November 12, 2008. On March 29, 2010 we (1) declared a stock dividend of 11.25490196078 shares of common stock for every one share of common stock then outstanding, and (2) amended and restated our articles of incorporation in order to, among other things: (a) change our name to rVue Holdings, Inc., and (b) increase the number of authorized shares of capital stock from 75,000,000 shares to 150,000,000 shares, divided into two classes: 140,000,000 shares of common stock, par value $.001 per share, and 10,000,000 shares of blank check preferred stock, par value $.001 per share. On May 13, 2010, we acquired all of the issued and outstanding capital stock and the business of rVue, Inc., a Delaware corporation ("rVue Inc.") from Argo Digital Solutions, Inc., a Delaware corporation ("Argo"), as well as any and all assets related to the rVue business held by Argo, for 12,500,000 shares of our common stock, pursuant to an asset purchase agreement, dated as of May 13, 2010 (the "Asset Purchase Agreement"), by and between Argo, rVue, Inc. and the Company (the Transaction ). Prior to May 13, 2010, the Company was a shell company in the development stage, had no revenue, and its efforts were devoted to entering the automobile export business. During late March 2010, we were approached by representatives of Argo and rVue to consider a transaction and on May 13, 2010 we agreed to acquire the assets of rVue, as described below. Thereafter, we determined to continue the business of rVue as our sole business and terminated our efforts to enter the automobile export business by selling such business to our controlling stockholder. Current management was not involved in the evaluation and decision by the prior controlling shareholders, officers and directors to participate in the Asset Purchase and to change the Company s line of business and capitalization, but current management believes that the acquisition and change in the line of business was desirable as a means to pursue a business with what it believes are greater prospects. The Transaction was completed on May 13, 2010, and rVue, Inc. became a wholly-owned subsidiary of the Company. The Transaction was accounted for as a reverse recapitalization of rVue, Inc. For accounting and financial reporting purposes, rVue, Inc. is the acquiror and the Company is the acquired company. The Company succeeded to the business of rVue, Inc., and following the completion of the Transaction and a private placement (the Private Placement ), transferred all of its pre-merger assets to certain of its pre-Transaction stockholders in exchange for the cancellation of 36,764,706 shares of our common stock. Consequently, the assets and liabilities and the operations that are reflected in the historical financial statements of the Company prior to the closing of the Transaction are those of rVue, Inc., and the consolidated financial statements after completion of the purchase and closing include the assets and liabilities of the Company and rVue, Inc., historical operations of rVue, Inc. and operations of the Company from the closing date of the Transaction. rVue, Inc. s historical operations began on September 15, 2009, when Argo contributed certain assets and liabilities to rVue in order to enable rVue's management team to focus on developing the rVue business operations and attract capital investment in the rVue business. Following the closing of the Transaction, we issued (a) 32 Units in a Private Placement, each unit consisting of 125,000 shares of our common stock for $25,000 per unit ("Unit"), for an aggregate purchase price of $800,000, and (b) 800,000 shares of our common stock to investor relations professionals for services to be rendered. On August 17, 2010, we sold an additional 250,000 shares of our common stock in the Private Placement to an investor in consideration for $50,000. On September 10, 2010, we sold an additional 3,000,000 shares of our common stock in the Private Placement to two institutional investors in consideration for $600,000 before placement agent fees of $48,000 payable in cash, and 500,000 shares of our common stock. In March 2010 and April 2010, rVue, Inc. entered into a series of bridge loans in the aggregate amount of $205,000 (the Bridge Notes ). On May 13, 2010 all of the Bridge Notes were converted into an aggregate of 1,348,730 shares of our common stock as part of the closing of the Private Placement at a rate equal to 130 percent of the price of the common stock sold in the Private Placement. The 12,500,000 shares of our common stock issued to Argo in connection with the Transaction, the 7,250,000 shares of our common stock issued in the Private Placement, the 800,000 shares of our common stock issued to investor relations professionals, the 1,348,730 shares of our common stock issued upon conversion of the Bridge Notes, and the 500,000 shares of our common stock issued to the placement agent in the Private Placement were not registered under the Securities Act of 1933, as amended (the Securities Act ), in reliance upon an exemption from registration provided by Section 4(2) under the Securities Act and Regulation D promulgated thereunder. These securities may not be transferred or sold absent registration under the Securities Act or an applicable exemption therefrom. Upon the closing of the Transaction: (i) Vladimir Vysochin resigned as our sole director and an officer, (ii) Mark Tolstoi resigned as our secretary, and (iii) a new board of directors and new officers were appointed. The new board of directors consisted of Jason Kates, Richard Sullivan and Robert Chimbel. On August 27, 2010, holders of a two-thirds majority of our then outstanding shares of common stock removed Richard Sullivan from his position as a director. On December 21, 2010, Michael Mullarkey and Patrick O Donnell were appointed to our board. The 12,500,000 shares of our common stock Argo received from the Company in the Transaction, and any shares received by Jason Kates, Richard Sullivan or David Loppert after the closing of the Transaction, will be subject to lock-up agreements with the Company. The lock-up agreements provide that the holder may not sell or transfer any of their shares for the earlier of (1) a period of 12 months following the final closing of the Private Placement (which occurred on September 10, 2010), and (2) until such time as Paradox Capital Partners LLC has consented. On December 21, 2010, we sold 8,624,995 shares of our common stock and issued warrants to acquire 8,624,995 shares of our common stock in a new private placement at an exercise price of $1.00 per share (the December 2010 Private Placement ), to eleven individuals and seven institutional investors (collectively, the Investors ) in consideration for $2,587,500, before placement agent fees of $27,500 payable to RAMPartners SA in connection with an investment by three Investors. The shares of common stock were issued to the Investors without registration in reliance upon the exemption provided by Section 4(2) of the Securities Act of 1933, as amended, as a transaction by the Company not involving any public offering, and Rule 506 promulgated thereunder. We are using the proceeds for general working capital. All of the shares issued in the December 2010 Private Placement are subject to a registration rights agreement under which we are obligated to seek registration of such shares by June 18, 2011. All of such shares are being registered pursuant to a registration statement of which this prospectus forms a part. (1) Represents the number of shares of our common stock outstanding as of May 20, 2011. Excludes (i) 3,750,000 shares of our common stock issuable upon exercise of options granted or reserved under the 2010 Equity Incentive Plan; and (ii) 8,624,995 shares of our common stock issuable upon exercise of outstanding warrants. (2) Includes 8,624,995 shares of our common stock issuable upon the exercise of outstanding warrants, which shares are offered for sale in this prospectus. Excludes 3,750,000 shares of our common stock issuable upon exercise of options granted or reserved under the 2010 Equity Incentive Plan. The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and we are not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION, DATED MAY 25, 2011 17,249,990 Shares rVue Holdings, Inc. Common Stock This prospectus relates to the sale by the selling stockholders identified in this prospectus of up to 17,249,990 shares of our common stock, consisting of (i) 8,624,995 shares of our common stock issued in connection with a private placement we consummated in December 2010; and (ii) 8,624,995 shares of our common stock issuable upon the conversion of warrants issued in connection with the December 2010 private placement. All of these shares of our common stock are being offered for resale by the selling stockholders. The prices at which the selling stockholders may sell shares will be determined by the prevailing market price for the shares or in negotiated transactions. We will not receive any proceeds from the sale of these shares by the selling stockholders. We will bear all costs relating to the registration of these shares of our common stock, other than any selling stockholders legal or accounting costs or commissions. Our common stock is quoted on the regulated quotation service of the OTC Bulletin Board under the symbol RVUE . The last reported sale price of our common stock as reported by the OTC Bulletin Board on May 20, 2011, was $.38 per share. Investing in our common stock is highly speculative and involves a high degree of risk. You should carefully consider the risks and uncertainties described under the heading Risk Factors beginning on page 6 of this prospectus before making a decision to purchase our common stock. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense. The date of this prospectus is , 2011
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001456090_game-plan_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001456090_game-plan_prospectus_summary.txt
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+S-1/A 1 gameplan_s1a10-021111.htm FORM S-1 AMENDMENT gameplan_s1a10-021111.htm AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 11 , 2011 File No. 333-160730 UNITED STATES SECURITIES AND EXCHANGE COMMISSION 100 F. Street NE WASHINGTON, D.C., 20549 AMENDMENT NO. 10 TO FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 GAME PLAN HOLDINGS, INC. (Exact name of Registrants specified in its charter) Nevada 7371 20-0209899 (State or other jurisdiction of incorporation or organization) (Primary Standard Industrial Classification Code Number) (I.R.S. Employer Identification Number) 1712 Ravanusa Drive Henderson, NV 89052 (702) 951-1385 (Address, including zip code, and telephone number, including area code, registrants principal executive offices) Copies to: Lawrence Horwitz, Esq. Horwitz, Cron & Armstrong, LLP 26475 Rancho Parkway South Lake Forest, CA 92630 Office: (949) 450- 6540 Fax: (949) 540-6578 If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box: x If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act Registration Statement number of the earlier effective Registration Statement for the same offering. o If this Form is post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective Registration Statement for the same offering. o If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act Registration Statement number of the earlier effective Registration Statement for the same offering. o Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. Large accelerated filer o Accelerated filer o Non-accelerated filer o Smaller reporting company x TABLE OF CONTENTS Page Summary 1
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001456137_wonder_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001456137_wonder_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..1a58e1a5f916c6a84796f30dc73bf37c4725363c
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@@ -0,0 +1 @@
+Prospectus Summary This summary highlights information contained elsewhere in this prospectus. Because it is a summary, it may not contain all of the information that is important to you. Accordingly, you are urged to carefully review this prospectus in its entirety, including the risks of investing in our securities discussed under the caption Risk Factors and the financial statements before making an investment decision. Except as otherwise specifically noted, all references in this prospectus to the Company, we, us and our refer to Wonder International Education & Investment Group Corporation, an Arizona corporation. Summary Information about Wonder International Education & Investment Group Corporation Wonder International Education & Investment Group Corporation ( US Wonder ) is a US holding company, incorporated in Arizona on April 21, 2008. On November 1, 2010, US Wonder acquired all of the outstanding capital stock of Anhui Lang Wen Tian Cheng Consulting & Management Co., Ltd. ( WFOE ), a Chinese company pursuant to the terms of an agreement (Attached hereto as Exhibit 10.11), such that WFOE became a wholly-owned subsidiary of US Wonder on that date. On November 3, 2010, WFOE entered into a series of agreements with China Wonder Education and Management Company, Ltd ( China Wonder ) including a Voting Right Proxy Agreement, Option Agreement, Equity Pledge Agreement, Consulting Services Agreement and Operating Agreement (collectively, the VIE Agreements ), China Wonder wholly owns seven separate vocational training schools in seven provinces in China. These schools are non-governmental vocational education institutions in China. Wonder s core business is to provide IT education. Wonder's seven (7) vocational schools are in the following provinces of China: Anhui, Jiangsu, Zhejiang, Fujian, Henan, Hubei and Liaoning. Through our ownership of WFOE, we control China Wonder and the schools and have the ability to control any income produced by China Wonder. All dividends and other distributions declared payable on Wonder s equity interests in WFOE in Renminbi may, under the current laws and regulations of the PRC be payable in foreign currency and may be freely be transferred out of the PRC. Our business office is located at 8040 E. Morgan Trail, #18, Scottsdale, AZ 85258. Our fiscal year end is December 31. As of November, 2010, we had raised $ 0 through the sale of common stock. As indicated in our audited financial statements, at December 31, 2009 there was $ 925,011 of unrestricted cash, and outstanding liabilities of $16,588,529 for expenses related to the operations of our wholly owned subsidiaries. In the fiscal year ended December 31, 2009, we had a gross profit of $5,946,523 and a net income of $2,597,003. This summary provides an overview of selected information contained in this prospectus. It does not contain all the information you should consider before making a decision to purchase the shares we are offering. You should very carefully and thoroughly read the more detailed information in this prospectus and review our financial statements. The Offering: Securities Being Offered: Up to 899,875 shares of common stock. Offering Price: The shareholder will be distributing 899,875 of its shares to its shareholders of record and will not sell any of its shares in the open market until the one year restriction is lifted. Terms of the Offering The shareholder will distribute all 899,875 shares to its shareholders through a dividend. These shares will be issued on a pro-rata basis to all of those shareholders. The shares distributed via dividend will be restricted against resale for a period of one year. Securities Issued and to be Issued: A total of 20,000,000 shares of our common stock have been issued. All of the common stock being registered under this prospectus will be distributed as dividend to the selling shareholder's shareholders for no consideration. Use of Proceeds: We will not receive any proceeds from the dividend of the common stock shares to the Eastbridge shareholders. Risk Factors For a discussion of some of the risks you should consider before purchasing shares of our common stock, you are urged to carefully review and consider the section entitled Risk Factors beginning on page 3 of this prospectus.
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001456983_sev-inc_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001456983_sev-inc_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..22ed2b16f5647d59e6da9689a747ffd7dbf3d176
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+PROSPECTUS SUMMARY The following summary highlights material information found in more detail elsewhere in the Prospectus. It does not contain all of the information you should consider. As such, before you decide to buy our common stock, in addition to the following summary, we urge you to carefully read the entire Prospectus, especially the risks of investing in our common stock as discussed under "Risk Factors." In this Prospectus, the terms "we," "us," "our," "Company," and "SEV" refer to SEV, Inc., a Nevada corporation. "Common Stock" refers to the Common Stock, par value $0.001 per share, of SEV, Inc. Additionally, unless otherwise stated all amounts listed herein are in United States dollars. We are a development stage company, operating under the business name of Solar Energy Ventures in New York and Texas. We plan to provide services in South Texas, Vermont, Connecticut, the New York suburban markets and Northern New Jersey. We plan to provide full-service design consulting, construction management and general contracting services and support for the design and installation of large and small solar panel arrays on commercial buildings. In April 2010, we received our first commission to design and install, through local, licensed subcontractors, a 12.24 kilowatt ( KW ) BIPV (building integrated photo voltaic) roof mounted solar panel system on a 10,000 square foot ( SF ) medical office building in the City of Schertz, Texas, a city of approximately 31,000, six miles northeast of San Antonio, Texas, for Northeast OB/GYN Associates, LLP ( NE OB/GYN ). The solar system designed by SEV is expected to generate gross revenues of approximately $86,060 to the Company, with net revenues to SEV after the purchase and installation of equipment of approximately $14,177. We invoiced the customer for $80,360 in early June 2010, and received a partial payment of approximately $12,900 on June 23, 1010, although for accounting purposes, we were unable to book the revenue during our fiscal year or during the three months ended January 31, 2011. Work began on the installation in late July 2010, after the Company received the materials from its supplier. The Company further subcontracted with a third party to physically install the 12.24 BIPV system on NE OB/GYN s roof for a proposed price of approximately $25,000, half of which was paid by September 2010. In late October 2010, when the third party's work appeared to be approximately 60% complete, the third party failed to show up at the job site and the installation was delayed. On November 9, 2010, the Company sent written notice of termination to the third party and demanded a refund of its deposit, based on an inspection by the Company. In December 2010, the Company sub-contracted with a separate company to complete the installation and the installation was subsequently completed, the system was certified and came online in February 2011. The BIPV system we installed is the first commercial installation of solar panels for power generation in Schertz, Texas and the first BIPV installation in Guadalupe County, Texas, an area with a population in excess of 110,000. Moving forward the Company plans to submit additional proposals and work to complete the BIPV installation described above. Our principal executive offices are located at 5 Blind Brook Lane, Rye, New York 10580; our telephone number is (914) 967-0960 and our fax number is (210) 549-2230. As a result of accounting requirements, and despite the fact that we began an $86,000 installation in July 2010 and completed the project in February 2011, we have had to account for our revenues relating to the BIPV installation during the three months ended April 30, 2011, which financial statements are not included herein. As a result, we had no revenues from our inception in May 2008 through January 31, 2011, had a working capital deficit of $59,158 as of January 31, 2011, had a net loss of $49,305 for the year ended July 31, 2010, and had a net loss of $6,979 for the six months ended January 31, 2011. We had a deficit accumulated during the development stage of $79,512 as of January 31, 2011. We have budgeted the need for approximately $100,000 of additional funding during the next 12 months to continue our business operations, pay costs and expenses associated with our filing requirements with the Securities and Exchange Commission (assuming the Registration Statement, of which this Prospectus is a part is declared effective) and conduct our business activities as planned, and such funding may not be able to be raised on favorable terms, if at all. We believe we can continue our operations for approximately the next 12 months if no additional financing is raised, with funds advanced to us by our officers, Directors and significant shareholders pursuant to their Line of Credits, as described below. If we are unable to raise adequate working capital for the remainder of fiscal 2011 and throughout 2012, we will be restricted in the implementation of our development plan. If this were to happen, the value of our securities would diminish and we may be forced to change our business plan for fiscal 2011 or 2012, which would result in the value of our securities declining in value and/or becoming worthless. If we raise an adequate amount of working capital to implement our business plan, we anticipate incurring net losses until we obtain a sufficient number of customers to support our expenses and start up costs, if ever. The shares of common stock offered herein represent 172,250 shares sold by the Company to 27 private investors in a private placement from October 2008 to March 2009, at $0.08 per share, pursuant to an exemption from registration provided by Rule 506 of the Securities Act of 1933, as amended (the Act ) and an aggregate of 175,000 shares of common stock issued to six consultants of the Company in July 2008, in consideration for services rendered, which shares were issued pursuant to an exemption from registration provided by Section 4(2) of the Act. We have achieved significant losses since inception, and have been issued a going concern opinion by our auditors. We rely upon the sale of our securities to fund operations or interim loans from our shareholders; however, there can be no assurance that either of these sources of financing will be available in the near future, if at all. The following summary is qualified in its entirety by the detailed information appearing elsewhere in this Prospectus. The securities offered hereby are speculative and involve a high degree of risk. See "Risk Factors." SUMMARY OF THE OFFERING: Common Stock Offered: 347,250 shares by selling stockholders Common Stock Outstanding Before The Offering: 2,447,250 shares Common Stock Outstanding After The Offering: 2,447,250 shares Use Of Proceeds: We will not receive any proceeds from the shares offered by the selling stockholders in this Offering. Offering Price: The Offering price of the shares has been arbitrarily determined by us based on estimates of the price that purchasers of speculative securities, such as the shares, will be willing to pay considering the nature and capital structure of our Company, the experience of our officers and Directors and the market conditions for the sale of equity securities in similar companies. The Offering price of the shares bears no relationship to the assets, earnings or book value of us, or any other objective standard of value. We believe that no shares will be sold by the selling shareholders prior to us becoming a publicly-traded company, at which time the selling shareholders will sell shares based on the market price of such shares. We are not selling any shares of our common stock, and are only registering the re-sale of shares of common stock previously sold by us. No Market: No assurance is provided that a market will be created for our securities in the future, or at all. If in the future a market does exist for our securities, it is likely to be highly illiquid and sporadic. Need for Additional Financing: We had generated no revenues as of January 31, 2011; however we anticipate booking revenues associated with our first installation project of approximately $74,223 during the three months ended April 30, 2011), had a working capital deficit of $59,158 as of January 31, 2011, had a net loss of $49,305 for the year ended July 31, 2010, and had a net loss of $6,979 for the six months ended January 31, 2011. We had a deficit accumulated during the development stage of $79,512 as of January 31, 2011. We have budgeted the need for approximately $100,000 of additional funding during the next 12 months to continue our business operations, pay costs and expenses associated with our filing requirements with the Securities and Exchange Commission (assuming the Registration Statement, of which this Prospectus is a part is declared effective) and conduct our business activities as planned, and such funding may not be able to be raised on favorable terms, if at all. We believe we can continue our operations for approximately the next 12 months if no additional financing is raised, with funds advanced to us by our officers, Directors and significant shareholders pursuant to their Line of Credits, as described below. If we are unable to raise adequate working capital for the remainder of fiscal 2011 and throughout 2012, we will be restricted in the implementation of our development plan. Even assuming we raise the additional capital we require to continue our business operations, we will require substantial fees and expenses associated with this Offering, and we anticipate incurring net losses for the foreseeable future. Going Concern: Because of our need for additional funding (as described above), as well as other factors, our independent accountants have issued a going concern opinion as described in greater detail in our audited financial statements filed herewith. Address: 5 Blind Brook Lane, Rye, New York 10580 Telephone Number: (914) 967-0960
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001463243_wise_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001463243_wise_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..116dd5632a6135d5ca3cb74906849129c3d9788f
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@@ -0,0 +1 @@
+SUMMARY OF PROSPECTUS You should read the following summary together with the more detailed business information, financial statements and related notes that appear elsewhere in this prospectus. In this prospectus, unless the context otherwise denotes, references to we, us, our and Company refer to Wise Sales, Inc.
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001463471_mission_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001463471_mission_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001463471_mission_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001467917_union_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001467917_union_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001467917_union_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001471256_cullen_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001471256_cullen_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..50316aa5119819bdeed4a87a0c00ddd844939ad9
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+PROSPECTUS SUMMARY This summary highlights key information contained elsewhere in this prospectus and is qualified in its entirety by the more detailed information and financial statements that follow. It may not contain all of the information that is important to you. You should read the entire prospectus, including Risk Factors, our financial statements and the related notes thereto, and the other documents to which this prospectus refers, before making an investment decision. In this prospectus, the terms the Company, we, our and us refer to Cullen Agricultural Holding Corp. and, where the context requires, its subsidiaries. Our Company We are a development stage company. We conduct our operations through our wholly-owned subsidiary, Cullen Agritech. Cullen Agritech conducts its operations primarily through its wholly-owned subsidiary, Natural Dairy Inc. ( Natural Dairy ). To date, we have not generated any revenue and will not do so until we have sufficient funds to implement our business plan described in the section entitled Business. Since October 22, 2009, our activities have been primarily focused on raising capital to fund our business plan. Our principal focus is to use our intellectual property in forage and animal sciences to improve agricultural yields. The Company was formed to develop, adapt and implement grazing-based farming systems in regions of the world where the geophysical and climatic conditions are suitable for a pasture-based model. While the potential for the pasture or grazing model is significant in many of the world s developed and developing economies, the systems are highly specific and require significant adaptation and modification to be successful. We have identified the global dairy industry as a primary opportunity in which our systems can be applied to improve yields on land and drive cost-base efficiencies. We believe that cost savings of up to 40-50% are achievable in the long term. Further, we believe the high cost structure, which is employed by over 95% of milk producers in the U.S. and supported by government subsidies, will help to maintain a floor to milk prices in the U.S. and provide us with long term margin protection. By having direct access to a domestic market, we believe our business plan provides a unique opportunity to invest directly into food production while limiting earnings volatility linked to foreign exchange exposure, typically associated with returns from commodity production in exporting countries, such as New Zealand. In addition, we believe the potential opportunity to vertically integrate, while maintaining control of the supply chain, provides a further opportunity to reduce volatility and maximize profitability. We have been in the process of attempting to obtain land development financing backed by the property we own and operate to support our working capital needs and implement our business plan. However, due to the recent performance of similar types of farming operations in the region, as well as the general economic downturn, financial institutions have been unwilling to provide such financing. As a result, we have been unable to obtain the necessary funding to support the implementation of our business plan at this time. Accordingly, we are in the process of exploring all financing and strategic alternatives available to us, including the possibility of disposing of or leasing additional portions of our land in order to continue to support our working capital needs and retire certain of our outstanding debt to reduce our interest obligations. During 2010, we entered into contracts with unrelated third parties for the sale of approximately 2,000 acres or approximately 56% of the land we originally purchased. A third party is also obligated to purchase approximately 500 acres by September 1, 2011. As of March 24, 2011, we owned approximately 1,150 acres of land not under contract to sell. We continue to explore the possibility of disposing of the remaining 1,150 acres we own and not under contract to sell. We are currently in various stages of negotiations with potential buyers for some or all of our remaining land, although we have not finalized any agreements and have not accepted any offers that we have received at this time. There is no assurance that we will be successful in disposing of any of our remaining land. Additionally, we have reduced salaries paid to our employees and curtailed operations in order to reduce operating expenses. We will also look to explore alternative opportunities available to us unrelated to forage and animal sciences and farming systems which makes up our current business plan in an effort to maximize shareholder value. To this end, we have had preliminary discussions with potential merger candidates wishing to become publicly traded. However, such discussions are only preliminary and no formal terms have been discussed or agreed to. There is no assurance that we will be successful in such efforts. If we are unable to secure additional financing or find another alternative, we will not have sufficient capital to implement our business plan and may be forced to suspend all operations until such time as capital or another alternative is available to us. Registration No. 333-170165 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Until such time where we can dispose of the remaining land we currently own or raise adequate financing to deploy our pasture based dairy and beef business plan, we have begun to utilize our pasture and general farming expertise to conduct various farming activities on the land. We are also considering utilizing a portion of the land for the production of pasture-finished beef products. Grass-fed beef has been proven to be better for your health, better for the environment and promotes improved animal ethics. As a result, there is a rapidly growing market for grass-fed beef products in the U.S., which at the retail levels can sell for a 50-100% premium over grain-fed beef. We believe the existing supply-chain infrastructure would provide us with immediate access to sell into the grass-fed market. We were incorporated in Delaware on August 27, 2009. Our executive offices are located at 1431 N. Jones Plantation Road, Millen, Georgia 30442 and our telephone number at that location is (706) 621-6737. Background of the Offering We were formed as a wholly-owned subsidiary of Triplecrown, a blank check company, in order to allow Triplecrown to complete a business combination with Cullen Agritech, as contemplated by the Agreement and Plan of Reorganization (the Merger Agreement ), dated as of September 4, 2009, as amended, among Triplecrown, us, CAT Merger Sub, Inc. ( Merger Sub ), Cullen Agritech and Cullen Holdings. Merger Sub was a wholly-owned subsidiary of ours formed for the purpose of effectuating the business combination. At the time, Cullen Agritech was a newly formed company committed to the development and commercialization of advanced agricultural technologies and Cullen Holdings, an entity controlled by Eric J. Watson, was the owner of all of the equity interests of Cullen Agritech. On October 22, 2009, the transactions contemplated by the Merger Agreement were consummated. Triplecrown merged with and into the Company, with the Company surviving, and Merger Sub merged with and into Cullen Agritech, with Cullen Agritech surviving as a wholly owned subsidiary of the Company (the Merger ). In connection with the Merger, we issued 15,881,148 shares of our common stock (the merger shares) to Cullen Holdings in exchange for all of the equity interests of Cullen Agritech. In addition, the outstanding shares of Triplecrown common stock and outstanding warrants to purchase shares of Triplecrown common stock were automatically converted on a one-to-one basis into shares of our common stock and warrants to purchase shares of our common stock. Thus, we became a public holding company and Cullen Agritech became our operating subsidiary. AMENDMENT NO. 3 TO FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 CULLEN AGRICULTURAL HOLDING CORP. (Exact name of registrant as specified in its charter) Delaware 2020 27-0863248 (State or Other Jurisdiction of Incorporation or Organization) (Primary Standard Industrial Classification Code Number) (I.R.S. Employer Identification No.) 1431 N. Jones Plantation Road Millen, Georgia 30442 (706) 621-6737 Eric J. Watson, Chief Executive Officer Cullen Agricultural Holding Corp. 1431 N. Jones Plantation Road Millen, Georgia 30442 (706) 621-6737 (Address, including zip code, and telephone number, including area code, of each registrant s principal executive offices) (Name, address, including zip code, and telephone number, including area code, of agent for service) Copies to: David Alan Miller, Esq. Graubard Miller The Chrysler Building 405 Lexington Avenue New York, New York 10174 Telephone: (212) 818-8800 Fax: (212) 818-8881 Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement. If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, as amended (the Securities Act ), check the following box. x If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this form is a post effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. In connection with its formation, Triplecrown issued 13,800,000 units to the Triplecrown Founders for an aggregate purchase price of $25,000. Each unit consisted of one share of common stock and one warrant to purchase one share of common stock. Simultaneously with its initial public offering ( IPO ), Triplecrown sold an additional 5,000,000 warrants to purchase common stock to the Triplecrown Sponsors for an aggregate purchase price of $5,000,000. As mentioned above, in connection with the Merger, the outstanding shares of Triplecrown common stock and outstanding warrants to purchase shares of Triplecrown common stock were automatically converted on a one-to-one basis into shares of our common stock and warrants to purchase our common stock. However, in accordance with the Merger Agreement, the Triplecrown Founders surrendered for cancellation 11,380,000 of the shares they received upon the conversion. Accordingly, immediately after the closing of the Merger, the Triplecrown Founders held 2,420,000 shares of our common stock (the founders shares) and 13,800,000 warrants to purchase shares of our common stock (the founders warrants) and the Triplecrown Sponsors held an additional 5,000,000 warrants to purchase shares of our common stock (the sponsors warrants). The selling stockholders identified in this prospectus are offering the merger shares, the founders shares, the founders warrants (and the shares underlying such warrants) and the sponsors warrants (and the shares underlying such warrants) for resale pursuant to this prospectus. We also completed a private placement of 300,000 shares of our common stock in October 2010 raising gross proceeds of $600,000. Those shares are being offered for resale pursuant to this prospectus. If this form is a post effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company x (Do not check if a smaller reporting company) CALCULATION OF REGISTRATION FEE Title of each class of securities being registered Amounts being registered(1) Proposed maximum offering price per unit(2) Proposed maximum aggregate offering price Amount of registration fee Common Stock, par value $0.0001 per share, issued in business combination(3) 15,881,148 $ 0.25 $ 3,970,287.00 $ 283.08 Common Stock held by founders of predecessor(4) 2,420,000 $ 0.25 $ 605,000.00 $ 43.14 Common Stock held by certain selling shareholders(5) 300,000 $ 0.25 $ 75,000.00 $ 5.35 Warrants, each to purchase one share of common stock, held by founders of predecessor(6) 13,800,000 $ 0.07 $ 966,000.00 $ 68.87 Common Stock underlying warrants held by founders of predecessor(7) 13,800,000 $ 0.25 $ 3,450,000.00 $ 245.99 Common Stock underlying warrants held by founders of predecessor(8) 13,800,000 $ 0.25 $ (7) Warrants, each to purchase one share of common stock, held by sponsors of predecessor s initial public offering(9) 5,000,000 $ 0.07 $ 350,000.00 $ 24.95 Common Stock underlying warrants held by sponsors of predecessor s initial public offering(10) 5,000,000 $ 0.25 $ 1,250,000.00 $ 89.13 Common Stock underlying warrants held by sponsors of predecessor s initial public offering(11) 5,000,000 $ 0.25 $ (10) Total $ 10,666,287.00 $ 760.51 (12) (1) Pursuant to Rule 415 of the Securities Act of 1933, as amended, or the Securities Act, this registration statement also registers such additional shares of common stock of the Registrant as may hereafter be offered or issued to prevent dilution resulting from stock splits, stock dividends, recapitalizations or other capital adjustments. (2) Based upon the last sale price of the common stock and warrants, as reported on the OTC Bulletin Board on October 21, 2010, in accordance with Rule 457(c) promulgated under the Securities Act of 1933, as amended. (3) Represents shares of our common stock issued to the former holder of the equity interests of Cullen Agricultural Technologies Inc. ( Cullen Agritech ) in connection with the business combination between our company, Triplecrown Acquisition Corp. ( Triplecrown ) and Cullen Agritech. 1 Assumes the issuance of 13,800,000 shares of common stock upon exercise of the founders warrants and 5,000,000 shares of common stock upon exercise of the sponsors warrants. (4) Represents shares of Triplecrown common stock that were issued to Triplecrown s founders in connection with Triplecrown s formation and were automatically converted into shares of our common stock in connection with the business combination. (5) Represents shares of common stock held by one entity that purchased such stock in a private placement in October 2010. (6) Represents warrants to purchase Triplecrown common stock that were issued to Triplecrown s founders in connection with Triplecrown s formation and were automatically converted into warrants to purchase our common stock in connection with the business combination ( Founders Warrants ). (7) Represents shares of common stock underlying the Founders Warrants. (8) Represents the issuance of shares of common stock underlying the warrants described in footnote 6 above to the extent the warrants are transferred prior to exercise. The filing fee is included in the filing fee for the shares of common stock underlying the warrants described in footnote 6 above. (9) Represents warrants to purchase Triplecrown common stock that were purchased by the sponsors of Triplecrown s initial public offering simultaneously with the initial public offering and were automatically converted into warrants to purchase our common stock in connection with the business combination ( Sponsors Warrants ). (10) Represents shares of common stock underlying the Sponsors Warrants. (11) Represents the issuance of shares of common stock underlying the warrants described in footnote 9 above to the extent the warrants are transferred prior to exercise. The filing fee is included in the filing fee for the shares of common stock underlying the warrants described in footnote 9 above. (12) The filing fee has been previously paid. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001471271_firemans_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001471271_firemans_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..2a7230e7ca53d37314d70f6862e845ae8455302b
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@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary contains a brief overview of the key aspects of the offering. You should read the entire prospectus carefully, including our financial statements and related notes, and especially the risks described under Risk Factors beginning on page 6. All references to we , us , our , Company , or similar terms used in this prospectus refer to Firemans Contractors, Inc. Unless otherwise indicated, the term fiscal year refers to our fiscal year ending June 30. Unless otherwise indicated, the term common stock refers to shares of the Company s common stock. Corporate Background and Business Overview Firemans Contractors, Inc. is a development stage company, which was incorporated in the State of Nevada on August 21, 2009. We maintain our statutory registered agent's office at 50 West Liberty Street Suite 800. Reno, NV 89501. Our business office is located at: 8200 Northeast Parkway, Suite 103, North Richland Hills, TX 76180. Our telephone number is 1-800-475-1479. Firemans Contractors is a full service painting company, offering residential, commercial and industrial parking lot striping, and parking lot maintenance services. Our vision is to develop a franchise system based upon the Company s current business model, offering painting services in the residential and commercial markets throughout the United States. At this stage in our development, there can be no assurance that we will be successful in generating revenues from the sale of our products and services. From August 21, 2009 (inception) to December 31, 2010, we have generated revenues of $593,821. With assets of $210,833 as of December 31, 2010, and we have incurred accumulated net losses of $467,482. Based on our financial history since inception, our independent auditor has expressed doubt as to our ability to continue as a going concern. Since our incorporation, we have not made any significant purchases or sale of assets, nor have we been involved in any mergers, acquisitions or consolidations. We have never declared bankruptcy, have never been in receivership, and have never been involved in any legal action or proceedings. We have four (4) executive officers who also serve as four (4) of our five (5) directors. None of our officers live in Nevada. Summary of the Offering Shares of common stock being offered by us: 20,000,000 shares of our common stock. Offering price: $0.05 per share of common stock. Number of shares outstanding before the offering: 60,180,000 Number of shares outstanding after the offering, if all the shares are sold: 80,180,000 Use of Proceeds: Working capital, debt pay-off, general corporate expenses. See Use of Proceeds on page 11. The offering is not subject to the sale of a minimum number of securities. There are no escrow arrangements for investor funds, and we can use investor funds immediately. Offering Period: The offering shall terminate on the earlier of (i) 180 days after the effectiveness of the registration statement (ii) when the offering is fully subscribed for.
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001471302_kemiao_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001471302_kemiao_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..18b96fd9611709a08cf60e23d286fff6b208b424
--- /dev/null
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@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights selected information contained elsewhere in this prospectus. This summary does not contain all the information that you should consider before investing in the common stock. You should carefully read the entire prospectus, including Risk Factors , Management s Discussion and Analysis of Financial Condition and Results of Operations and the Consolidated Financial Statements, before making an investment decision. Business Overview AIVtech International Group Co. ( we, us, our, AIVtech, or the Company ) was incorporated pursuant to the laws of Nevada on December 18, 2007 under the name of Ecochild Inc. On May 12, 2010, pursuant to a share exchange agreement (the Exchange Agreement ), we completed the acquisition of AIVtech Holding (Hong Kong) Limited ( AIVtech-HK ). AIVtech-HK is a holding company incorporated under the laws of Hong Kong on November 4, 2005 with subsidiaries engaged in manufacturing casual furniture audio series, multimedia speakers, and LED. Shenzhen AIV Electronics Company Limited ( AIVtech-Shenzhen ) was incorporated on October 26, 2004 under the laws of the People s Republic of China, which we refer to as China or the PRC. Dongguan AIV Electronics Company Limited ( AIVtech-Dongguan ) was incorporated on December 25, 2009 under the laws of the PRC. AIVtech, through AIVtech-Shenzhen and AIVtech-Dongguan, engages in the business of designing, manufacturing and selling electronic furniture, digital/ multimedia speakers, and LCD/LED television under its own products brand AIV, which stands for Audio and Interactive Video. Besides its own AIV brand, AIVtech also specializes in both Original Equipment Manufacturing ( OEM ) and Original Design Manufacturing ( ODM ) services. We integrate two traditional industries, which are electronics industry and furniture industry, into a new industry electronic furniture industry. We generate revenues mainly from the sales of electronic furniture and digital/multimedia speakers. The production of LCD/LED television started in late April 2010. Our net sales revenues for the year ended December 31, 2010 was approximately $68.3 million, representing a 77.6% growth from the year ended December 31, 2009 with net sales revenues of approximately $38.5 million. Our net income for the year ended December 31, 2010 was approximately $11.3 million, an increase of 52%, comparing to our net income of approximately $7.5 million for the year ended December 31, 2009. On December 29, 2010, we entered into a subscription agreement with certain accredited investors for the issuance and sale in a private placement of investment units, each unit consisting of one share of the Company s common stock, $.001 par value per share and a warrant to purchase one-tenth of a share of common stock, for aggregate gross proceeds of $7,540,000. The purchase price per unit was $3.00. In the aggregate, we issued to the investors a total of 2,513,334 shares of common stock and five-year Investor Warrants to purchase up to an additional 251,334 shares of common stock at an exercise price of $4.00. We also paid to the placement agent a fee of $150,800 and issued to the Placement Agent a five-year Placement Agent Warrant to purchase a total of 50,267 shares of common stock at an exercise price of $4.00 per share. On March 30, 2011, our subsidiary AIVtech-Shenzhen incorporated Henan AIVtech Technology Company, Ltd., or AIVtech-Henan, as a limited liability company in China, with a registered capital of RMB 50 million, or approximately $7.6 million. As of March 31, 2011, a total capital contribution of RMB 10 million, or approximately $1.5 million, was contributed to AIVtech-Henan, of which RMB 6 million was contributed by AIVtech-Shenzhen and RMB 4 million was contributed by Mr. Jinlin Guo, our chief executive officer and chairman of the board of directors. As of September 30, 2010, we paid RMB 30 million to local government as land use right deposit. AIVtech-Henan currently has no operations but will start to construct a manufacturing plant in Henan province once local government approves the land use right, which is expected by the end of December 2011. On May 10, 2011, we entered into an agreement with the former shareholders of our wholly-owned subsidiary AIVtech-HK, pursuant to which extends the due date of an aggregate cash payment of $3,948,125 from May 12, 2011 to May 12, 2012. The amount was owed to these former shareholders in the form of a promissory note dated May 12, 2010. Effective May 16, 2011, our ticker symbol as quoted on the OTC Bulletin Board was changed from ECOH to AIVI. Risk Factors Our ability to successfully operate our business and achieve our goals and strategies is subject to numerous risks as discussed more fully in the section titled Risk Factors, beginning on page 3, including for example: The effects of the recent global economic slowdown may continue to have a negative impact on our business, results of operations or financial condition; Our results of operations are cyclical and could be adversely affected by fluctuations in the raw material; Our management has limited experience in managing and operating a public company. Any failure to comply or adequately comply with federal securities laws, rules or regulations could subject us to fines or regulatory actions, which may materially adversely affect our business, results of operations and financial condition; Our business could be materially adversely affected if we are unable to respond to rapid technological change and improve our products and services; Exchange rate volatility could adversely affect our financial condition; If we need additional capital to fund our growing operations, we may not be able to obtain sufficient capital and may be forced to limit the scope of our operations; Our ability to compete could be jeopardized if we are unable to protect our intellectual property rights or if we are sued for intellectual property infringement; and Our failure to comply with increasingly stringent environmental regulations and related litigation could result in significant penalties, damages and adverse publicity for our business. Any of the above risks could materially and adversely affect our business, financial position and results of operations. An investment in our securities involves risks. You should read and consider the information set forth in Risk Factors and all other information set forth in this prospectus before investing in our securities. Where You Can Find Us Our principal executive office is located at 1305 East, Hightech Plaza, Phase 2, Tian an Cyber Park, Futian District, Shenzhen City, Guangdong Province, China. Our telephone number is +86 (139) 2349-3889. Our corporate website is www.aivtechgroup.com. Information contained on, or accessed through our website is not intended to constitute and shall not be deemed to constitute part of this prospectus.
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001471487_medisafe_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001471487_medisafe_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..8a6167471d533abffe1d2e25339f70057ab913ee
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001471487_medisafe_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus; it does not contain all of the information you should consider before investing in our common stock. You should read the entire prospectus before making an investment decision. Throughout this prospectus, the terms we, us, our, and our company and Medisafe refer to Medisafe 1 Technologies Corp., a Delaware corporation. Company Overview We were incorporated in Delaware on July 9, 2009 and are a development stage company. We are a developmental stage company and have only recently commenced operations. To date, we have not generated any revenue. Our principal business to date has been the acquisition of the Patent (as defined below) and the development of a prototype. The cornerstone of our business plan is our Patent. On July 15, 2009, we entered into an exclusive worldwide patent sale agreement (the "Patent Transfer and Sale Agreement") with Yisrael Elhadad and Yisrael Gottlieb, pursuant to which we purchased Patent Number: 7,347,841 (the Patent ) for a technology for a medical assembly and a protector, or locking mechanism, that is intended to ensure that no substances can be released from the hypodermic needle without positive pre-matching between the substance and the specific patient. The Patent was acquired by us in exchange for the payment to Yisrael Elhadad and Yisrael Gottlieb (our director and chief financial officer) of One Hundred Thousand United States Dollars (US $100,000). Our principal business to date has been the acquisition of the Patent and the development of a prototype. The Medisafe technology has the potential to be adopted as a standard in all major markets, making a decisive contribution towards the elimination of errors from injectable medication. Our invention, based on the Patent, is a medical assembly which may effectively prevent unauthorized administration of a drug or medicinal substance by hypodermic needle. It accomplishes this by taking a medical assembly and incorporating a locking mechanism that is intended to ensure the substance cannot be released from the hypodermic needle without positive pre-matching between the substance and the specific patient, identified by bar-coding or other identification technology. Since some human interaction will be required in the labeling, administering, and using the intended device, Medisafe cannot entirely remove the risk of human error. It is expected that the system can be applied not only to hypodermic needles, but also to any assembly for storing any kind of medicine. We have developed a fully operational prototype with PIA Electronics Ltd. ( PIA Electronics ) and have agreed to pay PIA Electronics a commission based upon sales revenue in the amount of ten percent (10%) of all future royalties from the sale and / or licensing of a product which is based on the working prototype manufactured by PIA Electronics. To date, no products encompassing the patented technology have been sold. Our independent accountants in their audit report for the financial statements for the years ended December 31, 2010 and 2009 have expressed substantial doubt about our ability to continue as a going concern. To date we have generated no revenue and for the quarter ended March 31, 2011 and the year ended December 31, 2010 we had a net loss of $177,189. and $264,735, respectively. As of March 31, 2011 we had accumulated losses and an accumulated deficit of $562,038. Continued operations are dependent on our ability to complete equity or debt financing activities or to generate profitable operations. Such capital formation activities may not be available or may not be available on reasonable terms. Our financial statements do not include any adjustments that may result from the outcome of this uncertainty. We believe that if we do not raise additional funds, we may have to suspend or cease operations within twelve months. Therefore, we may be unable to continue operations in the future as a going concern. If we cannot continue as a viable entity, our stockholders may lose some or all of their investment in the Company. Our executive office is located at 5A Hataltan Street, Jerusalem, Israel 96926. Our telephone number is 972-77-3318877. Our common stock is quoted on the OTC Bulletin Board under the symbol MFTH On September 20, 2010, the Company implemented a 5 for 1 forward stock split, increasing the issued and outstanding shares of common stock from 10,000,000 to 50,0000. The accompanying financial statements and related notes thereto have been adjusted accordingly to reflect this forward stock split. THE INFORMATION CONTAINED IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THESE SECURITIES MAY NOT BE SOLD UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS DECLARED EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED. SUBJECT TO COMPLETION, DATED JULY 1 , 2011 PRELIMINARY PROSPECTUS MEDISAFE 1 TECHNOLOGIES CORP. 8,000,000 Shares of Common Stock This prospectus relates to the offer and resale of up to 8,000,000 shares of our common stock, par value $0.0001 per share, by the selling stockholders. Of such shares, 4,983,441 represent shares that Centurion Private Equity, LLC ( Centurion ) has agreed to purchase if put to it by the Company pursuant to the terms of the investment agreement we entered into with Centurion on April 13, 2011, subject to volume limitations and other limitations in the Investment Agreement, 1,016,559 shares were issued to Centurion in consideration for the preparation of the documents for its investment and as a commitment fee and 2,000,000 shares represent shares being registered by the other selling shareholder. Subject to the terms and conditions of the investment agreement, which we refer to in this prospectus as the Investment Agreement, we have the right to put, or sell, up to $5 million in shares of our common stock to Centurion. This arrangement is sometimes referred to as an Equity Line. For more information on the selling stockholders, please see the section of this prospectus entitled Selling Security Holders beginning on page 22. We will not receive any proceeds from the resale of these shares of common stock offered by Centurion or our other selling stockholder. We will, however, receive proceeds from the sale of shares directly to Centurion pursuant to the Equity Line. When we put an amount of shares to Centurion, the per share purchase price that Centurion will pay to us in respect of such put will be determined in accordance with a formula set forth in the Investment Agreement. There will be no underwriter s discounts or commissions so we will receive all of the proceeds of our sale to Centurion. Generally, in respect of each put, Centurion will pay us a per share purchase price equal to the lesser of (i) ninety-five percent (95%) of the average of the three lowest daily volume weighted average prices, or VWAPs, of our common stock during the fifteen trading day period beginning on the trading day immediately following the date Centurion receives our put notice or (ii) the Market Price for such put, minus the Fixed Discount Amount (as defined below), but shall in no event be less than the Company Designated Minimum Put Share Price for such put, if applicable. For purposes hereof, the Fixed Discount Amount shall mean $.01. Centurion will sell our shares at prevailing market prices or privately negotiated prices. Centurion is an underwriter within the meaning of the Securities Act of 1933, as amended (the Securities Act ), in connection with the resale of our common stock under the Equity Line. For more information, please see the section of this prospectus titled Plan of Distribution beginning on page 23. Our common stock became eligible for trading on the OTC Bulletin Board in June 2010. Our common stock is eligible for quotation on the OTC Bulletin Board under the symbol MFTH . The closing price of our stock on May 4, 2011 was $.09. You should understand the risks associated with investing in our common stock. Before making an investment, read the Risk Factors, which begin on page 2 of this prospectus. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The date of this prospectus is July __ , 2011 The Offering Common stock that may be offered by selling stockholders 8,000,000 shares Common stock currently outstanding 56,903,309 shares Total proceeds raised by offering We will not receive any proceeds from the resale or other disposition of the shares covered by this prospectus by any selling shareholder. We will receive proceeds from the sale of shares to Centurion. Centurion has committed to purchase up to $5,000,000 worth of our common stock over a period of time terminating on the earlier of: (i) 24 months from the effective date of this registration statement; or (ii) 30 months from the date of the Investment Agreement (the Equity Line ). The Company will be entitled to put to Centurion on each put date such number of shares of common stock as equals up to $500,000 or such lesser amount as is specified by the Company provided that the number of shares sold in each put shall not exceed a share volume limitation equal to the lesser of: (i) 1,500,000 shares; or (ii) 15% of the aggregate trading volume of the common stock traded on our primary exchange during any pricing period for such put excluding any days where the lowest intra-day trade price is less than the trigger price (which is the greater of: (i) the floor price plus a fixed discount of the lesser of $.01, subject to adjustment in certain circumstances, or $.01; (ii) the floor price if any set by us divided by 0.95; or (iii) $.01, the greater of all three clauses being referred to as the Trigger Price ). The offering price of the securities to Centurion will equal the lesser of: (i) 95% of the of the average of the three lowest daily volume weighted average prices, or VWAPs, (such average, being referred to as the Market Price ) of our common stock during the fifteen trading day period beginning on the trading day immediately following the date Centurion receives our put notice; or (ii) the Market Price for such put, less the Fixed Discount Amount, but shall in no event be less than the Company Designated Minimum Put Share Price for such put, if applicable. For purposes hereof, the Fixed Discount Amount shall mean $.01.
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001472223_efih_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001472223_efih_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001472223_efih_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001472277_kun-de_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001472277_kun-de_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..78a9a59d89235083523ab616e8b7859a9069a54e
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001472277_kun-de_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This Prospectus, and any supplement to this Prospectus include forward-looking statements . To the extent that the information presented in this Prospectus discusses financial projections, information or expectations about our business plans, results of operations, products or markets, or otherwise makes statements about future events, such statements are forward-looking. Such forward-looking statements can be identified by the use of words such as intends , anticipates , believes , estimates , projects , forecasts , expects , plans and proposes . Although we believe that the expectations reflected in these forward-looking statements are based on reasonable assumptions, there are a number of risks and uncertainties that could cause actual results to differ materially from such forward-looking statements. These include, among others, the cautionary statements in the Risk Factors section beginning on Page 10 of this Prospectus and the Management's Discussion and Analysis of Financial Position and Results of Operations section elsewhere in this Prospectus. This summary only highlights selected information contained in greater detail elsewhere in this Prospectus. This summary may not contain all of the information that you should consider before investing in our common stock. You should carefully read the entire Prospectus, including "Risk Factors" beginning on Page 10, and the consolidated financial statements, before making an investment decision All dollar amounts refer to US dollars unless otherwise indicated. Our Business We were incorporated in the State of Delaware on December 4, 2008. We are a development stage company in the business of luggage wrap. Luggage wrap is a product that is applied to checked luggage in a retail kiosk with the passenger present. Our product is a plastic covering applied by a machine. We intend to offer our luggage wrap product to passengers at pre check-in areas of airports. As of the date of this filing, we have not entered into a license agreement with any airport that would allow us to offer our luggage wrap product on airport premises. We continue to actively promote our luggage wrap services to carriers, airport management and other parties operating within the Vancouver International Airport, which we have identified as a target location to begin our operations. To that end, on July 18, 2011 we entered into a Share Purchase and Exchange Agreement with CDS Contact Delivery Services Ltd. d.b.a. Priority Baggage ( Priority Baggage ), a British Columbia corporation, and Neil Saunders Holdings Inc. (the Selling Shareholder ), the sole shareholder of Priority Baggage. Priority Baggage is a private company that operates a comprehensive storefront baggage service in Vancouver, British Columbia, Canada, including baggage handling, pick-up and drop-off services, shipping, storage, and wrapping. The company s operations are based in the Vancouver International Airport and it is currently the sole operator licensed to wrap baggage there. If we are successful in completing the transaction, Priority Baggage will become our wholly owned subsidiary and we will have acquired a licensed operation from which to offer our services in the Vancouver International Airport. Pursuant to the agreement, we have agreed to pay $675,000 and to issue 1,250,000 common shares in our capital stock to the Selling Shareholder in exchange for all the issued and outstanding shares of Priority Baggage. The 1,250,000 common shares will have a deemed value of $0.30 per share, bringing the aggregate value of the consideration payable to $1,050,000. Closing of the transaction is scheduled to take place by September 16, 2011 and is Table of Contents subject to a number of conditions, including the production of satisfactory financial information by Priority Baggage and the satisfactory completion of due diligence by the parties. However, we do not currently have sufficient capital to close the transaction, and must raise approximately $675,000 by September 16, 2011 in order to do so. There is no guarantee that we will be successful in this regard. If we are unsuccessful in our acquisition of Priority Baggage, we will continue to seek the right from the Vancouver Airport Authority to establish a new baggage wrap concession at the Vancouver International Airport; however, there is no guarantee that we will obtain the right to do business there. To date, we have engaged an independent contractor, James Westmacott, to negotiate with the Vancouver Airport Authority on our behalf, however we have not been successful. We also intend to investigate the possibility of offering our services at the Seattle-Tacoma International Airport, Toronto International Airport, Los Angeles International Airport, O Hare (Chicago) International Airport, Hartsfield (Atlanta) International Airport, and San Francisco International Airport. We believe that any of these facilities would provide a suitable alternative or complimentary location to the Vancouver International Airport as a base from which to provide our services. With respect to the supply of our product, we have established relationship with Satel-95 Ltd., a bag wrap equipment manufacturer located in Sofia, Bulgaria. We have a non-binding understanding with Satel-95 whereby Satel-95 will provide us with the machines and related equipment to apply our luggage wrap material in consideration of 50% of the net operating profit from our luggage wrap business. In the event that we are unable to enter into a binding agreement with Satel-95 that reflects our current non-binding understanding, we intend to purchase similar machinery and equipment from other manufacturers to operate our luggage wrap business, or to manufacture our own equipment under our license agreement with Secure Luggage Systems described below. On November 7, 2010, we entered into an exclusive five year license agreement with Secure Luggage Systems Inc., a corporation based in Alberta, Canada, which was then controlled by our President, Chief Executive Officer and Director Donald G. Bauer. Mr. Bauer surrendered his securities of Secure Luggage Systems on April 28, 2011. The agreement gives us the exclusive right for a term of five years to sell, market and manufacture Secure Luggage Systems patented baggage wrapping system which conveys checked luggage from entrance to exit while applying a single layer of shrink plastic around the luggage. Our earnings from these activities will be subject to a royalty fee of ten percent (10%) of gross revenue and 10% of manufacturing costs incurred by us. We purchased the license for an aggregate fee of $500,000 consisting of $30,000 cash and 1,175,000 common shares of our company valued at $470,000 or $.40 per share. The agreement will renew automatically for an additional five years provided we are not in default on completion of the initial term. To date we have not taken any initiatives to manufacture any products under our license from Secure Luggage Systems. Our challenge for the twelve months beginning January1, 2011 is to obtain sufficient financing to close our proposed transaction with Priority Baggage, and to otherwise finance the marketing and sales of our luggage wrap products and services, whether under our arrangement with Satel-95 or under our license agreement with Secure Luggage Systems. We are a development stage company with no established source of revenue. As of June, 2011 we had a working capital deficit of $125,287 and had incurred a net loss of $606,734 since our inception on December 4, 2008, including $217,859 incurred during the fiscal year ended December 31, 2010 and $237,119 incurred Table of Contents during the six months ended June 30, 2011. We may incur significant additional losses and are entirely dependent on our ability to raise capital from shareholders, or to obtain advances or loans from related parties in order to sustain our operations. As a result, there is a substantial doubt that we will be able to continue as a going concern. We estimate that we will require approximately $2.1 million in order to execute our business plan during the 12 month period beginning January 1, 2010. Based on our net loss of $237,119 incurred during the six month period ended June 30, 2011, our monthly burn rate is approximately $39,500 per month. As at June 30, 2011 we had cash on hand of $1,468, which would not allow us to sustain our operations through July 31, 2011 based on our current monthly burn rate and current rate of activity. Accordingly, we anticipate that we will be required to significantly reduce our business activities until we are able to secure additional financing. In this regard, we estimate that we will require approximately $10,000 per month to sustain nominal operations going forward. To date, we have depended entirely on the sale of our securities and on advances or loans from related parties in order to sustain our operations. However, we do not currently have any arrangements in place to obtain additional financing of this kind and there is no guarantee that we will succeed in obtaining additional financing of any kind. The Offering The 3,170,000 shares of our common stock being registered by this Prospectus for the Selling Shareholders represent approximately 15% of our issued and outstanding common stock as of August 18 , 2011. We are also offering 7,000,000 shares of our common stock in a direct offering. If we sell all 7,000,000 shares, they will account for approximately 28% of our issued and outstanding common shares after the close of the offering. Table of Contents Securities Offered: 10,170,000 shares of our common stock of which 3,170,000 are being offered by the Selling Shareholders, including 120,000 shares held by Chenergy Services Inc., a company controlled by our Chief Financial Officer, Cherry Cai and 7,000,000 are being offered by us in a direct offering. Price Per Share: We are offering the 7,000,000 shares of our common stock at a price of $0.30 per share. The Selling Shareholders may sell all or a portion of their shares through public or private transactions at an initial price of $0.30 per share and then at prevailing market prices or at privately negotiated prices Maximum and Minimum Number of Securities to be Sold in this Offering: No minimum. The Selling Shareholders may sell up to 3,170,000 shares of our common stock and we are offering a maximum of 7,000,000 shares of our common stock. Securities Issued and to be Issued: As of August 18 , 2011 we had 20,647,000 issued and outstanding shares of our common stock, and no issued and outstanding convertible securities. Our stock is currently quoted on the OTC Bulletin Board under the symbol SCLG ; however, as of August 18, 2011, there has been only one trade of our stock and we cannot provide any assurance that a market for our stock will ever develop. Proceeds: We will not receive any proceeds from the sale of our common stock by the Selling Shareholders. If we sell all of the 7,000,000 shares we are offering, we will receive proceeds of $2,100,000 minus $40,000 in offering expenses. Terms of the Offering This is a BEST EFFORTS OFFERING. This is a no minimum offering. Accordingly, as shares are sold we will use the money raised for our business. Each individual subscriber must purchase a minimum of 5,000 shares. We cannot be certain that we will be able to sell enough shares to sufficiently fund our operations. Plan of Distribution This is a direct public offering, with no commitment by anyone to purchase any shares. Our shares in this offering will be offered and sold through Mr. Donald Bauer, our director and officer. Table of Contents SUMMARY OF FINANCIAL DATA The following table sets forth selected financial information, which should be read in conjunction with the information set forth in the "Management s Discussion and Analysis of Financial Position and Results of Operations" section and the accompanying financial statements and related notes included elsewhere in this Prospectus. Six months ended June 30, 2011 ($) (unaudited) Year ended December 31, 2010 ($) Period from beginning of development stage on December 4, 2008 to June 30, 2011 ($) (unaudited) Revenues - - - Expenses 237,119 217,130 605,589 Net Profit (Loss) (237,119 ) (217,859 ) (606,734 ) Net Profit (Loss) per share (0.01 ) (0.01 ) As at June 30, 2011 ($) (unaudited) As at December 31, 2010 ($) As at December 31, 2009 ($) Working Capital (Deficiency) (125,287 ) (20,001 ) (12,871 ) Total Assets 288,346 72,979 19,470 Total Liabilities 157,466 62,798 32,341 Table of Contents
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001475363_atlas_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001475363_atlas_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..a695b05a116cab7fa7417f6aa2915a8df529fad0
--- /dev/null
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@@ -0,0 +1 @@
+Prospectus Summary This summary highlights material information about us and this offering, but does not contain all of the information that you should consider before investing in our Notes. The following summary is qualified in its entirety by the more detailed information and our consolidated financial statements and the accompanying notes included elsewhere or incorporated by reference into this prospectus. You should read this entire prospectus and the information incorporated by reference herein carefully, including the Risk Factors included and incorporated by reference in this prospectus and our consolidated financial statements and the accompanying notes incorporated by reference into this prospectus, before investing. This prospectus and the documents incorporated by reference include forward-looking statements that involve risks and uncertainties. See Cautionary Note Regarding Forward-Looking Statements. Unless otherwise specified or the context requires otherwise, the terms U.S. Concrete, the Company, we, us, our, or USCR, refer to U.S. Concrete, Inc. and its subsidiaries. Selling noteholders refers to the selling noteholders named in the section of this prospectus entitled Selling Noteholders and certain of their transferees after the date of this prospectus. Our Company We are a major producer of ready-mixed concrete, precast concrete products and concrete-related products in select markets in the United States. We operate our business through our ready-mixed concrete and concrete-related products segment and our precast concrete products segment. We are a leading producer of ready-mixed concrete or precast concrete products in substantially all the markets in which we have operations. Ready-mixed and precast concrete products are important building materials that are used in a vast majority of commercial, residential and public works construction projects. All of our operations are in (and all of our sales are made within) the United States. We operate principally in Texas, California and New Jersey/New York, with those markets representing approximately 36%, 25%, and 19%, respectively, of our consolidated revenues from continuing operations for the year ended December 31, 2010. According to publicly available industry information, those states represented an aggregate of 28% of the consumption of ready-mixed concrete in the United States in 2010 (Texas, 13.1%; California, 9.3%; and New Jersey/New York, 5.4%). Our consolidated revenues from continuing operations for the year ended December 31, 2010 were $455.7 million, of which we derived approximately 87.7% from our ready-mixed concrete and concrete-related products segment and 12.3% from our precast concrete products segment. As of August 31, 2011, we had 102 fixed and 11 portable ready-mixed concrete plants, seven precast concrete plants and seven aggregates facilities. During 2010, these plants and facilities produced approximately 3.8 million cubic yards of ready-mixed concrete and 3.1 million tons of aggregates. We lease two of the seven aggregates facilities to third parties and retain a royalty on production from those facilities. Our ready-mixed concrete and concrete-related products segment engages principally in the formulation, preparation and delivery of ready-mixed concrete to the job sites of our customers. We also provide services intended to reduce our customers overall construction costs by lowering the installed, or in-place, cost of concrete. These services include the formulation of mixtures for specific design uses, on-site and lab-based product quality control, and customized delivery programs to meet our customers needs. Our marketing efforts primarily target concrete sub-contractors, general contractors, governmental agencies, property owners and developers and home builders whose focus extends beyond the price of ready-mixed concrete to product quality, on-time delivery and reduction of in-place costs. We generally do not provide paving or other finishing services, which construction contractors or subcontractors typically perform. To a lesser extent, this segment is also engaged in the mining and sale of aggregates and the resale of building materials, primarily to our ready-mixed concrete customers. These businesses are generally complementary to our ready-mixed concrete operations and provide us opportunities to cross-sell various products in markets where we sell both ready-mixed concrete and concrete-related products. We provide our ready-mixed concrete and concrete-related products from our continuing operations in north and west Texas, northern California, New Jersey, New York, Washington, D.C. and Oklahoma. Our precast concrete products segment produces precast concrete products at seven plants in three states, with five plants in California, one in Arizona and one in Pennsylvania. Our customers choose precast technology for a variety of architectural applications, including free-standing walls used for landscaping, soundproofing and security walls, panels used to clad a building fa ade and storm water drainage. Our operations also specialize in a variety of finished products, among which are utility vaults, manholes, catch basins, highway barriers, curb inlets, pre-stressed bridge girders, concrete piles and custom-designed architectural products. For a description of our business, financial condition, results of operations and other important information regarding the Company and our consolidated financial statements and the accompanying notes, we refer you to our filings with the Securities and Table of Contents Primary State or Other Standard I.R.S. Jurisdiction of Industrial Employer Incorporation or Classification Identification Name Organization Code Number Number Superior Concrete Materials, Inc. District of Columbia 3272 52-1046503 Titan Concrete Industries, Inc. Delaware 3272 76-0616374 USC Atlantic, Inc. Delaware 3272 20-4166002 USC Management Co., LLC Delaware 3272 27-1015638 USC Payroll, Inc. Delaware 3272 76-0630665 USC Technologies, Inc. Delaware 3272 20-4166055 U.S. Concrete On-Site, Inc. Delaware 3272 76-0630662 U.S. Concrete Texas Holdings, Inc. Delaware 3272 20-4166120 The address of each of the additional registrants is c/o U.S. Concrete, Inc., 2925 Briarpark, Suite 1050, Houston, Texas 77042. TABLE OF CONTENTS Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001475364_beall_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001475364_beall_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a695b05a116cab7fa7417f6aa2915a8df529fad0
--- /dev/null
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@@ -0,0 +1 @@
+Prospectus Summary This summary highlights material information about us and this offering, but does not contain all of the information that you should consider before investing in our Notes. The following summary is qualified in its entirety by the more detailed information and our consolidated financial statements and the accompanying notes included elsewhere or incorporated by reference into this prospectus. You should read this entire prospectus and the information incorporated by reference herein carefully, including the Risk Factors included and incorporated by reference in this prospectus and our consolidated financial statements and the accompanying notes incorporated by reference into this prospectus, before investing. This prospectus and the documents incorporated by reference include forward-looking statements that involve risks and uncertainties. See Cautionary Note Regarding Forward-Looking Statements. Unless otherwise specified or the context requires otherwise, the terms U.S. Concrete, the Company, we, us, our, or USCR, refer to U.S. Concrete, Inc. and its subsidiaries. Selling noteholders refers to the selling noteholders named in the section of this prospectus entitled Selling Noteholders and certain of their transferees after the date of this prospectus. Our Company We are a major producer of ready-mixed concrete, precast concrete products and concrete-related products in select markets in the United States. We operate our business through our ready-mixed concrete and concrete-related products segment and our precast concrete products segment. We are a leading producer of ready-mixed concrete or precast concrete products in substantially all the markets in which we have operations. Ready-mixed and precast concrete products are important building materials that are used in a vast majority of commercial, residential and public works construction projects. All of our operations are in (and all of our sales are made within) the United States. We operate principally in Texas, California and New Jersey/New York, with those markets representing approximately 36%, 25%, and 19%, respectively, of our consolidated revenues from continuing operations for the year ended December 31, 2010. According to publicly available industry information, those states represented an aggregate of 28% of the consumption of ready-mixed concrete in the United States in 2010 (Texas, 13.1%; California, 9.3%; and New Jersey/New York, 5.4%). Our consolidated revenues from continuing operations for the year ended December 31, 2010 were $455.7 million, of which we derived approximately 87.7% from our ready-mixed concrete and concrete-related products segment and 12.3% from our precast concrete products segment. As of August 31, 2011, we had 102 fixed and 11 portable ready-mixed concrete plants, seven precast concrete plants and seven aggregates facilities. During 2010, these plants and facilities produced approximately 3.8 million cubic yards of ready-mixed concrete and 3.1 million tons of aggregates. We lease two of the seven aggregates facilities to third parties and retain a royalty on production from those facilities. Our ready-mixed concrete and concrete-related products segment engages principally in the formulation, preparation and delivery of ready-mixed concrete to the job sites of our customers. We also provide services intended to reduce our customers overall construction costs by lowering the installed, or in-place, cost of concrete. These services include the formulation of mixtures for specific design uses, on-site and lab-based product quality control, and customized delivery programs to meet our customers needs. Our marketing efforts primarily target concrete sub-contractors, general contractors, governmental agencies, property owners and developers and home builders whose focus extends beyond the price of ready-mixed concrete to product quality, on-time delivery and reduction of in-place costs. We generally do not provide paving or other finishing services, which construction contractors or subcontractors typically perform. To a lesser extent, this segment is also engaged in the mining and sale of aggregates and the resale of building materials, primarily to our ready-mixed concrete customers. These businesses are generally complementary to our ready-mixed concrete operations and provide us opportunities to cross-sell various products in markets where we sell both ready-mixed concrete and concrete-related products. We provide our ready-mixed concrete and concrete-related products from our continuing operations in north and west Texas, northern California, New Jersey, New York, Washington, D.C. and Oklahoma. Our precast concrete products segment produces precast concrete products at seven plants in three states, with five plants in California, one in Arizona and one in Pennsylvania. Our customers choose precast technology for a variety of architectural applications, including free-standing walls used for landscaping, soundproofing and security walls, panels used to clad a building fa ade and storm water drainage. Our operations also specialize in a variety of finished products, among which are utility vaults, manholes, catch basins, highway barriers, curb inlets, pre-stressed bridge girders, concrete piles and custom-designed architectural products. For a description of our business, financial condition, results of operations and other important information regarding the Company and our consolidated financial statements and the accompanying notes, we refer you to our filings with the Securities and Table of Contents Primary State or Other Standard I.R.S. Jurisdiction of Industrial Employer Incorporation or Classification Identification Name Organization Code Number Number Superior Concrete Materials, Inc. District of Columbia 3272 52-1046503 Titan Concrete Industries, Inc. Delaware 3272 76-0616374 USC Atlantic, Inc. Delaware 3272 20-4166002 USC Management Co., LLC Delaware 3272 27-1015638 USC Payroll, Inc. Delaware 3272 76-0630665 USC Technologies, Inc. Delaware 3272 20-4166055 U.S. Concrete On-Site, Inc. Delaware 3272 76-0630662 U.S. Concrete Texas Holdings, Inc. Delaware 3272 20-4166120 The address of each of the additional registrants is c/o U.S. Concrete, Inc., 2925 Briarpark, Suite 1050, Houston, Texas 77042. TABLE OF CONTENTS Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001475367_breckenrid_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001475367_breckenrid_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a695b05a116cab7fa7417f6aa2915a8df529fad0
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001475367_breckenrid_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary This summary highlights material information about us and this offering, but does not contain all of the information that you should consider before investing in our Notes. The following summary is qualified in its entirety by the more detailed information and our consolidated financial statements and the accompanying notes included elsewhere or incorporated by reference into this prospectus. You should read this entire prospectus and the information incorporated by reference herein carefully, including the Risk Factors included and incorporated by reference in this prospectus and our consolidated financial statements and the accompanying notes incorporated by reference into this prospectus, before investing. This prospectus and the documents incorporated by reference include forward-looking statements that involve risks and uncertainties. See Cautionary Note Regarding Forward-Looking Statements. Unless otherwise specified or the context requires otherwise, the terms U.S. Concrete, the Company, we, us, our, or USCR, refer to U.S. Concrete, Inc. and its subsidiaries. Selling noteholders refers to the selling noteholders named in the section of this prospectus entitled Selling Noteholders and certain of their transferees after the date of this prospectus. Our Company We are a major producer of ready-mixed concrete, precast concrete products and concrete-related products in select markets in the United States. We operate our business through our ready-mixed concrete and concrete-related products segment and our precast concrete products segment. We are a leading producer of ready-mixed concrete or precast concrete products in substantially all the markets in which we have operations. Ready-mixed and precast concrete products are important building materials that are used in a vast majority of commercial, residential and public works construction projects. All of our operations are in (and all of our sales are made within) the United States. We operate principally in Texas, California and New Jersey/New York, with those markets representing approximately 36%, 25%, and 19%, respectively, of our consolidated revenues from continuing operations for the year ended December 31, 2010. According to publicly available industry information, those states represented an aggregate of 28% of the consumption of ready-mixed concrete in the United States in 2010 (Texas, 13.1%; California, 9.3%; and New Jersey/New York, 5.4%). Our consolidated revenues from continuing operations for the year ended December 31, 2010 were $455.7 million, of which we derived approximately 87.7% from our ready-mixed concrete and concrete-related products segment and 12.3% from our precast concrete products segment. As of August 31, 2011, we had 102 fixed and 11 portable ready-mixed concrete plants, seven precast concrete plants and seven aggregates facilities. During 2010, these plants and facilities produced approximately 3.8 million cubic yards of ready-mixed concrete and 3.1 million tons of aggregates. We lease two of the seven aggregates facilities to third parties and retain a royalty on production from those facilities. Our ready-mixed concrete and concrete-related products segment engages principally in the formulation, preparation and delivery of ready-mixed concrete to the job sites of our customers. We also provide services intended to reduce our customers overall construction costs by lowering the installed, or in-place, cost of concrete. These services include the formulation of mixtures for specific design uses, on-site and lab-based product quality control, and customized delivery programs to meet our customers needs. Our marketing efforts primarily target concrete sub-contractors, general contractors, governmental agencies, property owners and developers and home builders whose focus extends beyond the price of ready-mixed concrete to product quality, on-time delivery and reduction of in-place costs. We generally do not provide paving or other finishing services, which construction contractors or subcontractors typically perform. To a lesser extent, this segment is also engaged in the mining and sale of aggregates and the resale of building materials, primarily to our ready-mixed concrete customers. These businesses are generally complementary to our ready-mixed concrete operations and provide us opportunities to cross-sell various products in markets where we sell both ready-mixed concrete and concrete-related products. We provide our ready-mixed concrete and concrete-related products from our continuing operations in north and west Texas, northern California, New Jersey, New York, Washington, D.C. and Oklahoma. Our precast concrete products segment produces precast concrete products at seven plants in three states, with five plants in California, one in Arizona and one in Pennsylvania. Our customers choose precast technology for a variety of architectural applications, including free-standing walls used for landscaping, soundproofing and security walls, panels used to clad a building fa ade and storm water drainage. Our operations also specialize in a variety of finished products, among which are utility vaults, manholes, catch basins, highway barriers, curb inlets, pre-stressed bridge girders, concrete piles and custom-designed architectural products. For a description of our business, financial condition, results of operations and other important information regarding the Company and our consolidated financial statements and the accompanying notes, we refer you to our filings with the Securities and Table of Contents Primary State or Other Standard I.R.S. Jurisdiction of Industrial Employer Incorporation or Classification Identification Name Organization Code Number Number Superior Concrete Materials, Inc. District of Columbia 3272 52-1046503 Titan Concrete Industries, Inc. Delaware 3272 76-0616374 USC Atlantic, Inc. Delaware 3272 20-4166002 USC Management Co., LLC Delaware 3272 27-1015638 USC Payroll, Inc. Delaware 3272 76-0630665 USC Technologies, Inc. Delaware 3272 20-4166055 U.S. Concrete On-Site, Inc. Delaware 3272 76-0630662 U.S. Concrete Texas Holdings, Inc. Delaware 3272 20-4166120 The address of each of the additional registrants is c/o U.S. Concrete, Inc., 2925 Briarpark, Suite 1050, Houston, Texas 77042. TABLE OF CONTENTS Prospectus Summary 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/CIK0001475371_concrete_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001475371_concrete_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a695b05a116cab7fa7417f6aa2915a8df529fad0
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001475371_concrete_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary This summary highlights material information about us and this offering, but does not contain all of the information that you should consider before investing in our Notes. The following summary is qualified in its entirety by the more detailed information and our consolidated financial statements and the accompanying notes included elsewhere or incorporated by reference into this prospectus. You should read this entire prospectus and the information incorporated by reference herein carefully, including the Risk Factors included and incorporated by reference in this prospectus and our consolidated financial statements and the accompanying notes incorporated by reference into this prospectus, before investing. This prospectus and the documents incorporated by reference include forward-looking statements that involve risks and uncertainties. See Cautionary Note Regarding Forward-Looking Statements. Unless otherwise specified or the context requires otherwise, the terms U.S. Concrete, the Company, we, us, our, or USCR, refer to U.S. Concrete, Inc. and its subsidiaries. Selling noteholders refers to the selling noteholders named in the section of this prospectus entitled Selling Noteholders and certain of their transferees after the date of this prospectus. Our Company We are a major producer of ready-mixed concrete, precast concrete products and concrete-related products in select markets in the United States. We operate our business through our ready-mixed concrete and concrete-related products segment and our precast concrete products segment. We are a leading producer of ready-mixed concrete or precast concrete products in substantially all the markets in which we have operations. Ready-mixed and precast concrete products are important building materials that are used in a vast majority of commercial, residential and public works construction projects. All of our operations are in (and all of our sales are made within) the United States. We operate principally in Texas, California and New Jersey/New York, with those markets representing approximately 36%, 25%, and 19%, respectively, of our consolidated revenues from continuing operations for the year ended December 31, 2010. According to publicly available industry information, those states represented an aggregate of 28% of the consumption of ready-mixed concrete in the United States in 2010 (Texas, 13.1%; California, 9.3%; and New Jersey/New York, 5.4%). Our consolidated revenues from continuing operations for the year ended December 31, 2010 were $455.7 million, of which we derived approximately 87.7% from our ready-mixed concrete and concrete-related products segment and 12.3% from our precast concrete products segment. As of August 31, 2011, we had 102 fixed and 11 portable ready-mixed concrete plants, seven precast concrete plants and seven aggregates facilities. During 2010, these plants and facilities produced approximately 3.8 million cubic yards of ready-mixed concrete and 3.1 million tons of aggregates. We lease two of the seven aggregates facilities to third parties and retain a royalty on production from those facilities. Our ready-mixed concrete and concrete-related products segment engages principally in the formulation, preparation and delivery of ready-mixed concrete to the job sites of our customers. We also provide services intended to reduce our customers overall construction costs by lowering the installed, or in-place, cost of concrete. These services include the formulation of mixtures for specific design uses, on-site and lab-based product quality control, and customized delivery programs to meet our customers needs. Our marketing efforts primarily target concrete sub-contractors, general contractors, governmental agencies, property owners and developers and home builders whose focus extends beyond the price of ready-mixed concrete to product quality, on-time delivery and reduction of in-place costs. We generally do not provide paving or other finishing services, which construction contractors or subcontractors typically perform. To a lesser extent, this segment is also engaged in the mining and sale of aggregates and the resale of building materials, primarily to our ready-mixed concrete customers. These businesses are generally complementary to our ready-mixed concrete operations and provide us opportunities to cross-sell various products in markets where we sell both ready-mixed concrete and concrete-related products. We provide our ready-mixed concrete and concrete-related products from our continuing operations in north and west Texas, northern California, New Jersey, New York, Washington, D.C. and Oklahoma. Our precast concrete products segment produces precast concrete products at seven plants in three states, with five plants in California, one in Arizona and one in Pennsylvania. Our customers choose precast technology for a variety of architectural applications, including free-standing walls used for landscaping, soundproofing and security walls, panels used to clad a building fa ade and storm water drainage. Our operations also specialize in a variety of finished products, among which are utility vaults, manholes, catch basins, highway barriers, curb inlets, pre-stressed bridge girders, concrete piles and custom-designed architectural products. For a description of our business, financial condition, results of operations and other important information regarding the Company and our consolidated financial statements and the accompanying notes, we refer you to our filings with the Securities and Table of Contents Primary State or Other Standard I.R.S. Jurisdiction of Industrial Employer Incorporation or Classification Identification Name Organization Code Number Number Superior Concrete Materials, Inc. District of Columbia 3272 52-1046503 Titan Concrete Industries, Inc. Delaware 3272 76-0616374 USC Atlantic, Inc. Delaware 3272 20-4166002 USC Management Co., LLC Delaware 3272 27-1015638 USC Payroll, Inc. Delaware 3272 76-0630665 USC Technologies, Inc. Delaware 3272 20-4166055 U.S. Concrete On-Site, Inc. Delaware 3272 76-0630662 U.S. Concrete Texas Holdings, Inc. Delaware 3272 20-4166120 The address of each of the additional registrants is c/o U.S. Concrete, Inc., 2925 Briarpark, Suite 1050, Houston, Texas 77042. TABLE OF CONTENTS Prospectus Summary 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/CIK0001475372_concrete_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001475372_concrete_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a695b05a116cab7fa7417f6aa2915a8df529fad0
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001475372_concrete_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary This summary highlights material information about us and this offering, but does not contain all of the information that you should consider before investing in our Notes. The following summary is qualified in its entirety by the more detailed information and our consolidated financial statements and the accompanying notes included elsewhere or incorporated by reference into this prospectus. You should read this entire prospectus and the information incorporated by reference herein carefully, including the Risk Factors included and incorporated by reference in this prospectus and our consolidated financial statements and the accompanying notes incorporated by reference into this prospectus, before investing. This prospectus and the documents incorporated by reference include forward-looking statements that involve risks and uncertainties. See Cautionary Note Regarding Forward-Looking Statements. Unless otherwise specified or the context requires otherwise, the terms U.S. Concrete, the Company, we, us, our, or USCR, refer to U.S. Concrete, Inc. and its subsidiaries. Selling noteholders refers to the selling noteholders named in the section of this prospectus entitled Selling Noteholders and certain of their transferees after the date of this prospectus. Our Company We are a major producer of ready-mixed concrete, precast concrete products and concrete-related products in select markets in the United States. We operate our business through our ready-mixed concrete and concrete-related products segment and our precast concrete products segment. We are a leading producer of ready-mixed concrete or precast concrete products in substantially all the markets in which we have operations. Ready-mixed and precast concrete products are important building materials that are used in a vast majority of commercial, residential and public works construction projects. All of our operations are in (and all of our sales are made within) the United States. We operate principally in Texas, California and New Jersey/New York, with those markets representing approximately 36%, 25%, and 19%, respectively, of our consolidated revenues from continuing operations for the year ended December 31, 2010. According to publicly available industry information, those states represented an aggregate of 28% of the consumption of ready-mixed concrete in the United States in 2010 (Texas, 13.1%; California, 9.3%; and New Jersey/New York, 5.4%). Our consolidated revenues from continuing operations for the year ended December 31, 2010 were $455.7 million, of which we derived approximately 87.7% from our ready-mixed concrete and concrete-related products segment and 12.3% from our precast concrete products segment. As of August 31, 2011, we had 102 fixed and 11 portable ready-mixed concrete plants, seven precast concrete plants and seven aggregates facilities. During 2010, these plants and facilities produced approximately 3.8 million cubic yards of ready-mixed concrete and 3.1 million tons of aggregates. We lease two of the seven aggregates facilities to third parties and retain a royalty on production from those facilities. Our ready-mixed concrete and concrete-related products segment engages principally in the formulation, preparation and delivery of ready-mixed concrete to the job sites of our customers. We also provide services intended to reduce our customers overall construction costs by lowering the installed, or in-place, cost of concrete. These services include the formulation of mixtures for specific design uses, on-site and lab-based product quality control, and customized delivery programs to meet our customers needs. Our marketing efforts primarily target concrete sub-contractors, general contractors, governmental agencies, property owners and developers and home builders whose focus extends beyond the price of ready-mixed concrete to product quality, on-time delivery and reduction of in-place costs. We generally do not provide paving or other finishing services, which construction contractors or subcontractors typically perform. To a lesser extent, this segment is also engaged in the mining and sale of aggregates and the resale of building materials, primarily to our ready-mixed concrete customers. These businesses are generally complementary to our ready-mixed concrete operations and provide us opportunities to cross-sell various products in markets where we sell both ready-mixed concrete and concrete-related products. We provide our ready-mixed concrete and concrete-related products from our continuing operations in north and west Texas, northern California, New Jersey, New York, Washington, D.C. and Oklahoma. Our precast concrete products segment produces precast concrete products at seven plants in three states, with five plants in California, one in Arizona and one in Pennsylvania. Our customers choose precast technology for a variety of architectural applications, including free-standing walls used for landscaping, soundproofing and security walls, panels used to clad a building fa ade and storm water drainage. Our operations also specialize in a variety of finished products, among which are utility vaults, manholes, catch basins, highway barriers, curb inlets, pre-stressed bridge girders, concrete piles and custom-designed architectural products. For a description of our business, financial condition, results of operations and other important information regarding the Company and our consolidated financial statements and the accompanying notes, we refer you to our filings with the Securities and Table of Contents Primary State or Other Standard I.R.S. Jurisdiction of Industrial Employer Incorporation or Classification Identification Name Organization Code Number Number Superior Concrete Materials, Inc. District of Columbia 3272 52-1046503 Titan Concrete Industries, Inc. Delaware 3272 76-0616374 USC Atlantic, Inc. Delaware 3272 20-4166002 USC Management Co., LLC Delaware 3272 27-1015638 USC Payroll, Inc. Delaware 3272 76-0630665 USC Technologies, Inc. Delaware 3272 20-4166055 U.S. Concrete On-Site, Inc. Delaware 3272 76-0630662 U.S. Concrete Texas Holdings, Inc. Delaware 3272 20-4166120 The address of each of the additional registrants is c/o U.S. Concrete, Inc., 2925 Briarpark, Suite 1050, Houston, Texas 77042. TABLE OF CONTENTS Prospectus Summary 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/CIK0001475375_usc-nycon_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001475375_usc-nycon_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a695b05a116cab7fa7417f6aa2915a8df529fad0
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001475375_usc-nycon_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary This summary highlights material information about us and this offering, but does not contain all of the information that you should consider before investing in our Notes. The following summary is qualified in its entirety by the more detailed information and our consolidated financial statements and the accompanying notes included elsewhere or incorporated by reference into this prospectus. You should read this entire prospectus and the information incorporated by reference herein carefully, including the Risk Factors included and incorporated by reference in this prospectus and our consolidated financial statements and the accompanying notes incorporated by reference into this prospectus, before investing. This prospectus and the documents incorporated by reference include forward-looking statements that involve risks and uncertainties. See Cautionary Note Regarding Forward-Looking Statements. Unless otherwise specified or the context requires otherwise, the terms U.S. Concrete, the Company, we, us, our, or USCR, refer to U.S. Concrete, Inc. and its subsidiaries. Selling noteholders refers to the selling noteholders named in the section of this prospectus entitled Selling Noteholders and certain of their transferees after the date of this prospectus. Our Company We are a major producer of ready-mixed concrete, precast concrete products and concrete-related products in select markets in the United States. We operate our business through our ready-mixed concrete and concrete-related products segment and our precast concrete products segment. We are a leading producer of ready-mixed concrete or precast concrete products in substantially all the markets in which we have operations. Ready-mixed and precast concrete products are important building materials that are used in a vast majority of commercial, residential and public works construction projects. All of our operations are in (and all of our sales are made within) the United States. We operate principally in Texas, California and New Jersey/New York, with those markets representing approximately 36%, 25%, and 19%, respectively, of our consolidated revenues from continuing operations for the year ended December 31, 2010. According to publicly available industry information, those states represented an aggregate of 28% of the consumption of ready-mixed concrete in the United States in 2010 (Texas, 13.1%; California, 9.3%; and New Jersey/New York, 5.4%). Our consolidated revenues from continuing operations for the year ended December 31, 2010 were $455.7 million, of which we derived approximately 87.7% from our ready-mixed concrete and concrete-related products segment and 12.3% from our precast concrete products segment. As of August 31, 2011, we had 102 fixed and 11 portable ready-mixed concrete plants, seven precast concrete plants and seven aggregates facilities. During 2010, these plants and facilities produced approximately 3.8 million cubic yards of ready-mixed concrete and 3.1 million tons of aggregates. We lease two of the seven aggregates facilities to third parties and retain a royalty on production from those facilities. Our ready-mixed concrete and concrete-related products segment engages principally in the formulation, preparation and delivery of ready-mixed concrete to the job sites of our customers. We also provide services intended to reduce our customers overall construction costs by lowering the installed, or in-place, cost of concrete. These services include the formulation of mixtures for specific design uses, on-site and lab-based product quality control, and customized delivery programs to meet our customers needs. Our marketing efforts primarily target concrete sub-contractors, general contractors, governmental agencies, property owners and developers and home builders whose focus extends beyond the price of ready-mixed concrete to product quality, on-time delivery and reduction of in-place costs. We generally do not provide paving or other finishing services, which construction contractors or subcontractors typically perform. To a lesser extent, this segment is also engaged in the mining and sale of aggregates and the resale of building materials, primarily to our ready-mixed concrete customers. These businesses are generally complementary to our ready-mixed concrete operations and provide us opportunities to cross-sell various products in markets where we sell both ready-mixed concrete and concrete-related products. We provide our ready-mixed concrete and concrete-related products from our continuing operations in north and west Texas, northern California, New Jersey, New York, Washington, D.C. and Oklahoma. Our precast concrete products segment produces precast concrete products at seven plants in three states, with five plants in California, one in Arizona and one in Pennsylvania. Our customers choose precast technology for a variety of architectural applications, including free-standing walls used for landscaping, soundproofing and security walls, panels used to clad a building fa ade and storm water drainage. Our operations also specialize in a variety of finished products, among which are utility vaults, manholes, catch basins, highway barriers, curb inlets, pre-stressed bridge girders, concrete piles and custom-designed architectural products. For a description of our business, financial condition, results of operations and other important information regarding the Company and our consolidated financial statements and the accompanying notes, we refer you to our filings with the Securities and Table of Contents Primary State or Other Standard I.R.S. Jurisdiction of Industrial Employer Incorporation or Classification Identification Name Organization Code Number Number Superior Concrete Materials, Inc. District of Columbia 3272 52-1046503 Titan Concrete Industries, Inc. Delaware 3272 76-0616374 USC Atlantic, Inc. Delaware 3272 20-4166002 USC Management Co., LLC Delaware 3272 27-1015638 USC Payroll, Inc. Delaware 3272 76-0630665 USC Technologies, Inc. Delaware 3272 20-4166055 U.S. Concrete On-Site, Inc. Delaware 3272 76-0630662 U.S. Concrete Texas Holdings, Inc. Delaware 3272 20-4166120 The address of each of the additional registrants is c/o U.S. Concrete, Inc., 2925 Briarpark, Suite 1050, Houston, Texas 77042. TABLE OF CONTENTS Prospectus Summary 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/CIK0001475378_master_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001475378_master_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a695b05a116cab7fa7417f6aa2915a8df529fad0
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001475378_master_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary This summary highlights material information about us and this offering, but does not contain all of the information that you should consider before investing in our Notes. The following summary is qualified in its entirety by the more detailed information and our consolidated financial statements and the accompanying notes included elsewhere or incorporated by reference into this prospectus. You should read this entire prospectus and the information incorporated by reference herein carefully, including the Risk Factors included and incorporated by reference in this prospectus and our consolidated financial statements and the accompanying notes incorporated by reference into this prospectus, before investing. This prospectus and the documents incorporated by reference include forward-looking statements that involve risks and uncertainties. See Cautionary Note Regarding Forward-Looking Statements. Unless otherwise specified or the context requires otherwise, the terms U.S. Concrete, the Company, we, us, our, or USCR, refer to U.S. Concrete, Inc. and its subsidiaries. Selling noteholders refers to the selling noteholders named in the section of this prospectus entitled Selling Noteholders and certain of their transferees after the date of this prospectus. Our Company We are a major producer of ready-mixed concrete, precast concrete products and concrete-related products in select markets in the United States. We operate our business through our ready-mixed concrete and concrete-related products segment and our precast concrete products segment. We are a leading producer of ready-mixed concrete or precast concrete products in substantially all the markets in which we have operations. Ready-mixed and precast concrete products are important building materials that are used in a vast majority of commercial, residential and public works construction projects. All of our operations are in (and all of our sales are made within) the United States. We operate principally in Texas, California and New Jersey/New York, with those markets representing approximately 36%, 25%, and 19%, respectively, of our consolidated revenues from continuing operations for the year ended December 31, 2010. According to publicly available industry information, those states represented an aggregate of 28% of the consumption of ready-mixed concrete in the United States in 2010 (Texas, 13.1%; California, 9.3%; and New Jersey/New York, 5.4%). Our consolidated revenues from continuing operations for the year ended December 31, 2010 were $455.7 million, of which we derived approximately 87.7% from our ready-mixed concrete and concrete-related products segment and 12.3% from our precast concrete products segment. As of August 31, 2011, we had 102 fixed and 11 portable ready-mixed concrete plants, seven precast concrete plants and seven aggregates facilities. During 2010, these plants and facilities produced approximately 3.8 million cubic yards of ready-mixed concrete and 3.1 million tons of aggregates. We lease two of the seven aggregates facilities to third parties and retain a royalty on production from those facilities. Our ready-mixed concrete and concrete-related products segment engages principally in the formulation, preparation and delivery of ready-mixed concrete to the job sites of our customers. We also provide services intended to reduce our customers overall construction costs by lowering the installed, or in-place, cost of concrete. These services include the formulation of mixtures for specific design uses, on-site and lab-based product quality control, and customized delivery programs to meet our customers needs. Our marketing efforts primarily target concrete sub-contractors, general contractors, governmental agencies, property owners and developers and home builders whose focus extends beyond the price of ready-mixed concrete to product quality, on-time delivery and reduction of in-place costs. We generally do not provide paving or other finishing services, which construction contractors or subcontractors typically perform. To a lesser extent, this segment is also engaged in the mining and sale of aggregates and the resale of building materials, primarily to our ready-mixed concrete customers. These businesses are generally complementary to our ready-mixed concrete operations and provide us opportunities to cross-sell various products in markets where we sell both ready-mixed concrete and concrete-related products. We provide our ready-mixed concrete and concrete-related products from our continuing operations in north and west Texas, northern California, New Jersey, New York, Washington, D.C. and Oklahoma. Our precast concrete products segment produces precast concrete products at seven plants in three states, with five plants in California, one in Arizona and one in Pennsylvania. Our customers choose precast technology for a variety of architectural applications, including free-standing walls used for landscaping, soundproofing and security walls, panels used to clad a building fa ade and storm water drainage. Our operations also specialize in a variety of finished products, among which are utility vaults, manholes, catch basins, highway barriers, curb inlets, pre-stressed bridge girders, concrete piles and custom-designed architectural products. For a description of our business, financial condition, results of operations and other important information regarding the Company and our consolidated financial statements and the accompanying notes, we refer you to our filings with the Securities and Table of Contents Primary State or Other Standard I.R.S. Jurisdiction of Industrial Employer Incorporation or Classification Identification Name Organization Code Number Number Superior Concrete Materials, Inc. District of Columbia 3272 52-1046503 Titan Concrete Industries, Inc. Delaware 3272 76-0616374 USC Atlantic, Inc. Delaware 3272 20-4166002 USC Management Co., LLC Delaware 3272 27-1015638 USC Payroll, Inc. Delaware 3272 76-0630665 USC Technologies, Inc. Delaware 3272 20-4166055 U.S. Concrete On-Site, Inc. Delaware 3272 76-0630662 U.S. Concrete Texas Holdings, Inc. Delaware 3272 20-4166120 The address of each of the additional registrants is c/o U.S. Concrete, Inc., 2925 Briarpark, Suite 1050, Houston, Texas 77042. TABLE OF CONTENTS Prospectus Summary 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/CIK0001475379_usc_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001475379_usc_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a695b05a116cab7fa7417f6aa2915a8df529fad0
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001475379_usc_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary This summary highlights material information about us and this offering, but does not contain all of the information that you should consider before investing in our Notes. The following summary is qualified in its entirety by the more detailed information and our consolidated financial statements and the accompanying notes included elsewhere or incorporated by reference into this prospectus. You should read this entire prospectus and the information incorporated by reference herein carefully, including the Risk Factors included and incorporated by reference in this prospectus and our consolidated financial statements and the accompanying notes incorporated by reference into this prospectus, before investing. This prospectus and the documents incorporated by reference include forward-looking statements that involve risks and uncertainties. See Cautionary Note Regarding Forward-Looking Statements. Unless otherwise specified or the context requires otherwise, the terms U.S. Concrete, the Company, we, us, our, or USCR, refer to U.S. Concrete, Inc. and its subsidiaries. Selling noteholders refers to the selling noteholders named in the section of this prospectus entitled Selling Noteholders and certain of their transferees after the date of this prospectus. Our Company We are a major producer of ready-mixed concrete, precast concrete products and concrete-related products in select markets in the United States. We operate our business through our ready-mixed concrete and concrete-related products segment and our precast concrete products segment. We are a leading producer of ready-mixed concrete or precast concrete products in substantially all the markets in which we have operations. Ready-mixed and precast concrete products are important building materials that are used in a vast majority of commercial, residential and public works construction projects. All of our operations are in (and all of our sales are made within) the United States. We operate principally in Texas, California and New Jersey/New York, with those markets representing approximately 36%, 25%, and 19%, respectively, of our consolidated revenues from continuing operations for the year ended December 31, 2010. According to publicly available industry information, those states represented an aggregate of 28% of the consumption of ready-mixed concrete in the United States in 2010 (Texas, 13.1%; California, 9.3%; and New Jersey/New York, 5.4%). Our consolidated revenues from continuing operations for the year ended December 31, 2010 were $455.7 million, of which we derived approximately 87.7% from our ready-mixed concrete and concrete-related products segment and 12.3% from our precast concrete products segment. As of August 31, 2011, we had 102 fixed and 11 portable ready-mixed concrete plants, seven precast concrete plants and seven aggregates facilities. During 2010, these plants and facilities produced approximately 3.8 million cubic yards of ready-mixed concrete and 3.1 million tons of aggregates. We lease two of the seven aggregates facilities to third parties and retain a royalty on production from those facilities. Our ready-mixed concrete and concrete-related products segment engages principally in the formulation, preparation and delivery of ready-mixed concrete to the job sites of our customers. We also provide services intended to reduce our customers overall construction costs by lowering the installed, or in-place, cost of concrete. These services include the formulation of mixtures for specific design uses, on-site and lab-based product quality control, and customized delivery programs to meet our customers needs. Our marketing efforts primarily target concrete sub-contractors, general contractors, governmental agencies, property owners and developers and home builders whose focus extends beyond the price of ready-mixed concrete to product quality, on-time delivery and reduction of in-place costs. We generally do not provide paving or other finishing services, which construction contractors or subcontractors typically perform. To a lesser extent, this segment is also engaged in the mining and sale of aggregates and the resale of building materials, primarily to our ready-mixed concrete customers. These businesses are generally complementary to our ready-mixed concrete operations and provide us opportunities to cross-sell various products in markets where we sell both ready-mixed concrete and concrete-related products. We provide our ready-mixed concrete and concrete-related products from our continuing operations in north and west Texas, northern California, New Jersey, New York, Washington, D.C. and Oklahoma. Our precast concrete products segment produces precast concrete products at seven plants in three states, with five plants in California, one in Arizona and one in Pennsylvania. Our customers choose precast technology for a variety of architectural applications, including free-standing walls used for landscaping, soundproofing and security walls, panels used to clad a building fa ade and storm water drainage. Our operations also specialize in a variety of finished products, among which are utility vaults, manholes, catch basins, highway barriers, curb inlets, pre-stressed bridge girders, concrete piles and custom-designed architectural products. For a description of our business, financial condition, results of operations and other important information regarding the Company and our consolidated financial statements and the accompanying notes, we refer you to our filings with the Securities and Table of Contents Primary State or Other Standard I.R.S. Jurisdiction of Industrial Employer Incorporation or Classification Identification Name Organization Code Number Number Superior Concrete Materials, Inc. District of Columbia 3272 52-1046503 Titan Concrete Industries, Inc. Delaware 3272 76-0616374 USC Atlantic, Inc. Delaware 3272 20-4166002 USC Management Co., LLC Delaware 3272 27-1015638 USC Payroll, Inc. Delaware 3272 76-0630665 USC Technologies, Inc. Delaware 3272 20-4166055 U.S. Concrete On-Site, Inc. Delaware 3272 76-0630662 U.S. Concrete Texas Holdings, Inc. Delaware 3272 20-4166120 The address of each of the additional registrants is c/o U.S. Concrete, Inc., 2925 Briarpark, Suite 1050, Houston, Texas 77042. TABLE OF CONTENTS Prospectus Summary 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/CIK0001475380_pebble_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001475380_pebble_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a695b05a116cab7fa7417f6aa2915a8df529fad0
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001475380_pebble_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary This summary highlights material information about us and this offering, but does not contain all of the information that you should consider before investing in our Notes. The following summary is qualified in its entirety by the more detailed information and our consolidated financial statements and the accompanying notes included elsewhere or incorporated by reference into this prospectus. You should read this entire prospectus and the information incorporated by reference herein carefully, including the Risk Factors included and incorporated by reference in this prospectus and our consolidated financial statements and the accompanying notes incorporated by reference into this prospectus, before investing. This prospectus and the documents incorporated by reference include forward-looking statements that involve risks and uncertainties. See Cautionary Note Regarding Forward-Looking Statements. Unless otherwise specified or the context requires otherwise, the terms U.S. Concrete, the Company, we, us, our, or USCR, refer to U.S. Concrete, Inc. and its subsidiaries. Selling noteholders refers to the selling noteholders named in the section of this prospectus entitled Selling Noteholders and certain of their transferees after the date of this prospectus. Our Company We are a major producer of ready-mixed concrete, precast concrete products and concrete-related products in select markets in the United States. We operate our business through our ready-mixed concrete and concrete-related products segment and our precast concrete products segment. We are a leading producer of ready-mixed concrete or precast concrete products in substantially all the markets in which we have operations. Ready-mixed and precast concrete products are important building materials that are used in a vast majority of commercial, residential and public works construction projects. All of our operations are in (and all of our sales are made within) the United States. We operate principally in Texas, California and New Jersey/New York, with those markets representing approximately 36%, 25%, and 19%, respectively, of our consolidated revenues from continuing operations for the year ended December 31, 2010. According to publicly available industry information, those states represented an aggregate of 28% of the consumption of ready-mixed concrete in the United States in 2010 (Texas, 13.1%; California, 9.3%; and New Jersey/New York, 5.4%). Our consolidated revenues from continuing operations for the year ended December 31, 2010 were $455.7 million, of which we derived approximately 87.7% from our ready-mixed concrete and concrete-related products segment and 12.3% from our precast concrete products segment. As of August 31, 2011, we had 102 fixed and 11 portable ready-mixed concrete plants, seven precast concrete plants and seven aggregates facilities. During 2010, these plants and facilities produced approximately 3.8 million cubic yards of ready-mixed concrete and 3.1 million tons of aggregates. We lease two of the seven aggregates facilities to third parties and retain a royalty on production from those facilities. Our ready-mixed concrete and concrete-related products segment engages principally in the formulation, preparation and delivery of ready-mixed concrete to the job sites of our customers. We also provide services intended to reduce our customers overall construction costs by lowering the installed, or in-place, cost of concrete. These services include the formulation of mixtures for specific design uses, on-site and lab-based product quality control, and customized delivery programs to meet our customers needs. Our marketing efforts primarily target concrete sub-contractors, general contractors, governmental agencies, property owners and developers and home builders whose focus extends beyond the price of ready-mixed concrete to product quality, on-time delivery and reduction of in-place costs. We generally do not provide paving or other finishing services, which construction contractors or subcontractors typically perform. To a lesser extent, this segment is also engaged in the mining and sale of aggregates and the resale of building materials, primarily to our ready-mixed concrete customers. These businesses are generally complementary to our ready-mixed concrete operations and provide us opportunities to cross-sell various products in markets where we sell both ready-mixed concrete and concrete-related products. We provide our ready-mixed concrete and concrete-related products from our continuing operations in north and west Texas, northern California, New Jersey, New York, Washington, D.C. and Oklahoma. Our precast concrete products segment produces precast concrete products at seven plants in three states, with five plants in California, one in Arizona and one in Pennsylvania. Our customers choose precast technology for a variety of architectural applications, including free-standing walls used for landscaping, soundproofing and security walls, panels used to clad a building fa ade and storm water drainage. Our operations also specialize in a variety of finished products, among which are utility vaults, manholes, catch basins, highway barriers, curb inlets, pre-stressed bridge girders, concrete piles and custom-designed architectural products. For a description of our business, financial condition, results of operations and other important information regarding the Company and our consolidated financial statements and the accompanying notes, we refer you to our filings with the Securities and Table of Contents Primary State or Other Standard I.R.S. Jurisdiction of Industrial Employer Incorporation or Classification Identification Name Organization Code Number Number Superior Concrete Materials, Inc. District of Columbia 3272 52-1046503 Titan Concrete Industries, Inc. Delaware 3272 76-0616374 USC Atlantic, Inc. Delaware 3272 20-4166002 USC Management Co., LLC Delaware 3272 27-1015638 USC Payroll, Inc. Delaware 3272 76-0630665 USC Technologies, Inc. Delaware 3272 20-4166055 U.S. Concrete On-Site, Inc. Delaware 3272 76-0630662 U.S. Concrete Texas Holdings, Inc. Delaware 3272 20-4166120 The address of each of the additional registrants is c/o U.S. Concrete, Inc., 2925 Briarpark, Suite 1050, Houston, Texas 77042. TABLE OF CONTENTS Prospectus Summary 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/CIK0001475382_mg-llc_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001475382_mg-llc_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a695b05a116cab7fa7417f6aa2915a8df529fad0
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001475382_mg-llc_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary This summary highlights material information about us and this offering, but does not contain all of the information that you should consider before investing in our Notes. The following summary is qualified in its entirety by the more detailed information and our consolidated financial statements and the accompanying notes included elsewhere or incorporated by reference into this prospectus. You should read this entire prospectus and the information incorporated by reference herein carefully, including the Risk Factors included and incorporated by reference in this prospectus and our consolidated financial statements and the accompanying notes incorporated by reference into this prospectus, before investing. This prospectus and the documents incorporated by reference include forward-looking statements that involve risks and uncertainties. See Cautionary Note Regarding Forward-Looking Statements. Unless otherwise specified or the context requires otherwise, the terms U.S. Concrete, the Company, we, us, our, or USCR, refer to U.S. Concrete, Inc. and its subsidiaries. Selling noteholders refers to the selling noteholders named in the section of this prospectus entitled Selling Noteholders and certain of their transferees after the date of this prospectus. Our Company We are a major producer of ready-mixed concrete, precast concrete products and concrete-related products in select markets in the United States. We operate our business through our ready-mixed concrete and concrete-related products segment and our precast concrete products segment. We are a leading producer of ready-mixed concrete or precast concrete products in substantially all the markets in which we have operations. Ready-mixed and precast concrete products are important building materials that are used in a vast majority of commercial, residential and public works construction projects. All of our operations are in (and all of our sales are made within) the United States. We operate principally in Texas, California and New Jersey/New York, with those markets representing approximately 36%, 25%, and 19%, respectively, of our consolidated revenues from continuing operations for the year ended December 31, 2010. According to publicly available industry information, those states represented an aggregate of 28% of the consumption of ready-mixed concrete in the United States in 2010 (Texas, 13.1%; California, 9.3%; and New Jersey/New York, 5.4%). Our consolidated revenues from continuing operations for the year ended December 31, 2010 were $455.7 million, of which we derived approximately 87.7% from our ready-mixed concrete and concrete-related products segment and 12.3% from our precast concrete products segment. As of August 31, 2011, we had 102 fixed and 11 portable ready-mixed concrete plants, seven precast concrete plants and seven aggregates facilities. During 2010, these plants and facilities produced approximately 3.8 million cubic yards of ready-mixed concrete and 3.1 million tons of aggregates. We lease two of the seven aggregates facilities to third parties and retain a royalty on production from those facilities. Our ready-mixed concrete and concrete-related products segment engages principally in the formulation, preparation and delivery of ready-mixed concrete to the job sites of our customers. We also provide services intended to reduce our customers overall construction costs by lowering the installed, or in-place, cost of concrete. These services include the formulation of mixtures for specific design uses, on-site and lab-based product quality control, and customized delivery programs to meet our customers needs. Our marketing efforts primarily target concrete sub-contractors, general contractors, governmental agencies, property owners and developers and home builders whose focus extends beyond the price of ready-mixed concrete to product quality, on-time delivery and reduction of in-place costs. We generally do not provide paving or other finishing services, which construction contractors or subcontractors typically perform. To a lesser extent, this segment is also engaged in the mining and sale of aggregates and the resale of building materials, primarily to our ready-mixed concrete customers. These businesses are generally complementary to our ready-mixed concrete operations and provide us opportunities to cross-sell various products in markets where we sell both ready-mixed concrete and concrete-related products. We provide our ready-mixed concrete and concrete-related products from our continuing operations in north and west Texas, northern California, New Jersey, New York, Washington, D.C. and Oklahoma. Our precast concrete products segment produces precast concrete products at seven plants in three states, with five plants in California, one in Arizona and one in Pennsylvania. Our customers choose precast technology for a variety of architectural applications, including free-standing walls used for landscaping, soundproofing and security walls, panels used to clad a building fa ade and storm water drainage. Our operations also specialize in a variety of finished products, among which are utility vaults, manholes, catch basins, highway barriers, curb inlets, pre-stressed bridge girders, concrete piles and custom-designed architectural products. For a description of our business, financial condition, results of operations and other important information regarding the Company and our consolidated financial statements and the accompanying notes, we refer you to our filings with the Securities and Table of Contents Primary State or Other Standard I.R.S. Jurisdiction of Industrial Employer Incorporation or Classification Identification Name Organization Code Number Number Superior Concrete Materials, Inc. District of Columbia 3272 52-1046503 Titan Concrete Industries, Inc. Delaware 3272 76-0616374 USC Atlantic, Inc. Delaware 3272 20-4166002 USC Management Co., LLC Delaware 3272 27-1015638 USC Payroll, Inc. Delaware 3272 76-0630665 USC Technologies, Inc. Delaware 3272 20-4166055 U.S. Concrete On-Site, Inc. Delaware 3272 76-0630662 U.S. Concrete Texas Holdings, Inc. Delaware 3272 20-4166120 The address of each of the additional registrants is c/o U.S. Concrete, Inc., 2925 Briarpark, Suite 1050, Houston, Texas 77042. TABLE OF CONTENTS Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001475385_master_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001475385_master_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a695b05a116cab7fa7417f6aa2915a8df529fad0
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001475385_master_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary This summary highlights material information about us and this offering, but does not contain all of the information that you should consider before investing in our Notes. The following summary is qualified in its entirety by the more detailed information and our consolidated financial statements and the accompanying notes included elsewhere or incorporated by reference into this prospectus. You should read this entire prospectus and the information incorporated by reference herein carefully, including the Risk Factors included and incorporated by reference in this prospectus and our consolidated financial statements and the accompanying notes incorporated by reference into this prospectus, before investing. This prospectus and the documents incorporated by reference include forward-looking statements that involve risks and uncertainties. See Cautionary Note Regarding Forward-Looking Statements. Unless otherwise specified or the context requires otherwise, the terms U.S. Concrete, the Company, we, us, our, or USCR, refer to U.S. Concrete, Inc. and its subsidiaries. Selling noteholders refers to the selling noteholders named in the section of this prospectus entitled Selling Noteholders and certain of their transferees after the date of this prospectus. Our Company We are a major producer of ready-mixed concrete, precast concrete products and concrete-related products in select markets in the United States. We operate our business through our ready-mixed concrete and concrete-related products segment and our precast concrete products segment. We are a leading producer of ready-mixed concrete or precast concrete products in substantially all the markets in which we have operations. Ready-mixed and precast concrete products are important building materials that are used in a vast majority of commercial, residential and public works construction projects. All of our operations are in (and all of our sales are made within) the United States. We operate principally in Texas, California and New Jersey/New York, with those markets representing approximately 36%, 25%, and 19%, respectively, of our consolidated revenues from continuing operations for the year ended December 31, 2010. According to publicly available industry information, those states represented an aggregate of 28% of the consumption of ready-mixed concrete in the United States in 2010 (Texas, 13.1%; California, 9.3%; and New Jersey/New York, 5.4%). Our consolidated revenues from continuing operations for the year ended December 31, 2010 were $455.7 million, of which we derived approximately 87.7% from our ready-mixed concrete and concrete-related products segment and 12.3% from our precast concrete products segment. As of August 31, 2011, we had 102 fixed and 11 portable ready-mixed concrete plants, seven precast concrete plants and seven aggregates facilities. During 2010, these plants and facilities produced approximately 3.8 million cubic yards of ready-mixed concrete and 3.1 million tons of aggregates. We lease two of the seven aggregates facilities to third parties and retain a royalty on production from those facilities. Our ready-mixed concrete and concrete-related products segment engages principally in the formulation, preparation and delivery of ready-mixed concrete to the job sites of our customers. We also provide services intended to reduce our customers overall construction costs by lowering the installed, or in-place, cost of concrete. These services include the formulation of mixtures for specific design uses, on-site and lab-based product quality control, and customized delivery programs to meet our customers needs. Our marketing efforts primarily target concrete sub-contractors, general contractors, governmental agencies, property owners and developers and home builders whose focus extends beyond the price of ready-mixed concrete to product quality, on-time delivery and reduction of in-place costs. We generally do not provide paving or other finishing services, which construction contractors or subcontractors typically perform. To a lesser extent, this segment is also engaged in the mining and sale of aggregates and the resale of building materials, primarily to our ready-mixed concrete customers. These businesses are generally complementary to our ready-mixed concrete operations and provide us opportunities to cross-sell various products in markets where we sell both ready-mixed concrete and concrete-related products. We provide our ready-mixed concrete and concrete-related products from our continuing operations in north and west Texas, northern California, New Jersey, New York, Washington, D.C. and Oklahoma. Our precast concrete products segment produces precast concrete products at seven plants in three states, with five plants in California, one in Arizona and one in Pennsylvania. Our customers choose precast technology for a variety of architectural applications, including free-standing walls used for landscaping, soundproofing and security walls, panels used to clad a building fa ade and storm water drainage. Our operations also specialize in a variety of finished products, among which are utility vaults, manholes, catch basins, highway barriers, curb inlets, pre-stressed bridge girders, concrete piles and custom-designed architectural products. For a description of our business, financial condition, results of operations and other important information regarding the Company and our consolidated financial statements and the accompanying notes, we refer you to our filings with the Securities and Table of Contents Primary State or Other Standard I.R.S. Jurisdiction of Industrial Employer Incorporation or Classification Identification Name Organization Code Number Number Superior Concrete Materials, Inc. District of Columbia 3272 52-1046503 Titan Concrete Industries, Inc. Delaware 3272 76-0616374 USC Atlantic, Inc. Delaware 3272 20-4166002 USC Management Co., LLC Delaware 3272 27-1015638 USC Payroll, Inc. Delaware 3272 76-0630665 USC Technologies, Inc. Delaware 3272 20-4166055 U.S. Concrete On-Site, Inc. Delaware 3272 76-0630662 U.S. Concrete Texas Holdings, Inc. Delaware 3272 20-4166120 The address of each of the additional registrants is c/o U.S. Concrete, Inc., 2925 Briarpark, Suite 1050, Houston, Texas 77042. TABLE OF CONTENTS Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001475386_ingram_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001475386_ingram_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a695b05a116cab7fa7417f6aa2915a8df529fad0
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001475386_ingram_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary This summary highlights material information about us and this offering, but does not contain all of the information that you should consider before investing in our Notes. The following summary is qualified in its entirety by the more detailed information and our consolidated financial statements and the accompanying notes included elsewhere or incorporated by reference into this prospectus. You should read this entire prospectus and the information incorporated by reference herein carefully, including the Risk Factors included and incorporated by reference in this prospectus and our consolidated financial statements and the accompanying notes incorporated by reference into this prospectus, before investing. This prospectus and the documents incorporated by reference include forward-looking statements that involve risks and uncertainties. See Cautionary Note Regarding Forward-Looking Statements. Unless otherwise specified or the context requires otherwise, the terms U.S. Concrete, the Company, we, us, our, or USCR, refer to U.S. Concrete, Inc. and its subsidiaries. Selling noteholders refers to the selling noteholders named in the section of this prospectus entitled Selling Noteholders and certain of their transferees after the date of this prospectus. Our Company We are a major producer of ready-mixed concrete, precast concrete products and concrete-related products in select markets in the United States. We operate our business through our ready-mixed concrete and concrete-related products segment and our precast concrete products segment. We are a leading producer of ready-mixed concrete or precast concrete products in substantially all the markets in which we have operations. Ready-mixed and precast concrete products are important building materials that are used in a vast majority of commercial, residential and public works construction projects. All of our operations are in (and all of our sales are made within) the United States. We operate principally in Texas, California and New Jersey/New York, with those markets representing approximately 36%, 25%, and 19%, respectively, of our consolidated revenues from continuing operations for the year ended December 31, 2010. According to publicly available industry information, those states represented an aggregate of 28% of the consumption of ready-mixed concrete in the United States in 2010 (Texas, 13.1%; California, 9.3%; and New Jersey/New York, 5.4%). Our consolidated revenues from continuing operations for the year ended December 31, 2010 were $455.7 million, of which we derived approximately 87.7% from our ready-mixed concrete and concrete-related products segment and 12.3% from our precast concrete products segment. As of August 31, 2011, we had 102 fixed and 11 portable ready-mixed concrete plants, seven precast concrete plants and seven aggregates facilities. During 2010, these plants and facilities produced approximately 3.8 million cubic yards of ready-mixed concrete and 3.1 million tons of aggregates. We lease two of the seven aggregates facilities to third parties and retain a royalty on production from those facilities. Our ready-mixed concrete and concrete-related products segment engages principally in the formulation, preparation and delivery of ready-mixed concrete to the job sites of our customers. We also provide services intended to reduce our customers overall construction costs by lowering the installed, or in-place, cost of concrete. These services include the formulation of mixtures for specific design uses, on-site and lab-based product quality control, and customized delivery programs to meet our customers needs. Our marketing efforts primarily target concrete sub-contractors, general contractors, governmental agencies, property owners and developers and home builders whose focus extends beyond the price of ready-mixed concrete to product quality, on-time delivery and reduction of in-place costs. We generally do not provide paving or other finishing services, which construction contractors or subcontractors typically perform. To a lesser extent, this segment is also engaged in the mining and sale of aggregates and the resale of building materials, primarily to our ready-mixed concrete customers. These businesses are generally complementary to our ready-mixed concrete operations and provide us opportunities to cross-sell various products in markets where we sell both ready-mixed concrete and concrete-related products. We provide our ready-mixed concrete and concrete-related products from our continuing operations in north and west Texas, northern California, New Jersey, New York, Washington, D.C. and Oklahoma. Our precast concrete products segment produces precast concrete products at seven plants in three states, with five plants in California, one in Arizona and one in Pennsylvania. Our customers choose precast technology for a variety of architectural applications, including free-standing walls used for landscaping, soundproofing and security walls, panels used to clad a building fa ade and storm water drainage. Our operations also specialize in a variety of finished products, among which are utility vaults, manholes, catch basins, highway barriers, curb inlets, pre-stressed bridge girders, concrete piles and custom-designed architectural products. For a description of our business, financial condition, results of operations and other important information regarding the Company and our consolidated financial statements and the accompanying notes, we refer you to our filings with the Securities and Table of Contents Primary State or Other Standard I.R.S. Jurisdiction of Industrial Employer Incorporation or Classification Identification Name Organization Code Number Number Superior Concrete Materials, Inc. District of Columbia 3272 52-1046503 Titan Concrete Industries, Inc. Delaware 3272 76-0616374 USC Atlantic, Inc. Delaware 3272 20-4166002 USC Management Co., LLC Delaware 3272 27-1015638 USC Payroll, Inc. Delaware 3272 76-0630665 USC Technologies, Inc. Delaware 3272 20-4166055 U.S. Concrete On-Site, Inc. Delaware 3272 76-0630662 U.S. Concrete Texas Holdings, Inc. Delaware 3272 20-4166120 The address of each of the additional registrants is c/o U.S. Concrete, Inc., 2925 Briarpark, Suite 1050, Houston, Texas 77042. TABLE OF CONTENTS Prospectus Summary 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/CIK0001475387_concrete_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001475387_concrete_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a695b05a116cab7fa7417f6aa2915a8df529fad0
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001475387_concrete_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary This summary highlights material information about us and this offering, but does not contain all of the information that you should consider before investing in our Notes. The following summary is qualified in its entirety by the more detailed information and our consolidated financial statements and the accompanying notes included elsewhere or incorporated by reference into this prospectus. You should read this entire prospectus and the information incorporated by reference herein carefully, including the Risk Factors included and incorporated by reference in this prospectus and our consolidated financial statements and the accompanying notes incorporated by reference into this prospectus, before investing. This prospectus and the documents incorporated by reference include forward-looking statements that involve risks and uncertainties. See Cautionary Note Regarding Forward-Looking Statements. Unless otherwise specified or the context requires otherwise, the terms U.S. Concrete, the Company, we, us, our, or USCR, refer to U.S. Concrete, Inc. and its subsidiaries. Selling noteholders refers to the selling noteholders named in the section of this prospectus entitled Selling Noteholders and certain of their transferees after the date of this prospectus. Our Company We are a major producer of ready-mixed concrete, precast concrete products and concrete-related products in select markets in the United States. We operate our business through our ready-mixed concrete and concrete-related products segment and our precast concrete products segment. We are a leading producer of ready-mixed concrete or precast concrete products in substantially all the markets in which we have operations. Ready-mixed and precast concrete products are important building materials that are used in a vast majority of commercial, residential and public works construction projects. All of our operations are in (and all of our sales are made within) the United States. We operate principally in Texas, California and New Jersey/New York, with those markets representing approximately 36%, 25%, and 19%, respectively, of our consolidated revenues from continuing operations for the year ended December 31, 2010. According to publicly available industry information, those states represented an aggregate of 28% of the consumption of ready-mixed concrete in the United States in 2010 (Texas, 13.1%; California, 9.3%; and New Jersey/New York, 5.4%). Our consolidated revenues from continuing operations for the year ended December 31, 2010 were $455.7 million, of which we derived approximately 87.7% from our ready-mixed concrete and concrete-related products segment and 12.3% from our precast concrete products segment. As of August 31, 2011, we had 102 fixed and 11 portable ready-mixed concrete plants, seven precast concrete plants and seven aggregates facilities. During 2010, these plants and facilities produced approximately 3.8 million cubic yards of ready-mixed concrete and 3.1 million tons of aggregates. We lease two of the seven aggregates facilities to third parties and retain a royalty on production from those facilities. Our ready-mixed concrete and concrete-related products segment engages principally in the formulation, preparation and delivery of ready-mixed concrete to the job sites of our customers. We also provide services intended to reduce our customers overall construction costs by lowering the installed, or in-place, cost of concrete. These services include the formulation of mixtures for specific design uses, on-site and lab-based product quality control, and customized delivery programs to meet our customers needs. Our marketing efforts primarily target concrete sub-contractors, general contractors, governmental agencies, property owners and developers and home builders whose focus extends beyond the price of ready-mixed concrete to product quality, on-time delivery and reduction of in-place costs. We generally do not provide paving or other finishing services, which construction contractors or subcontractors typically perform. To a lesser extent, this segment is also engaged in the mining and sale of aggregates and the resale of building materials, primarily to our ready-mixed concrete customers. These businesses are generally complementary to our ready-mixed concrete operations and provide us opportunities to cross-sell various products in markets where we sell both ready-mixed concrete and concrete-related products. We provide our ready-mixed concrete and concrete-related products from our continuing operations in north and west Texas, northern California, New Jersey, New York, Washington, D.C. and Oklahoma. Our precast concrete products segment produces precast concrete products at seven plants in three states, with five plants in California, one in Arizona and one in Pennsylvania. Our customers choose precast technology for a variety of architectural applications, including free-standing walls used for landscaping, soundproofing and security walls, panels used to clad a building fa ade and storm water drainage. Our operations also specialize in a variety of finished products, among which are utility vaults, manholes, catch basins, highway barriers, curb inlets, pre-stressed bridge girders, concrete piles and custom-designed architectural products. For a description of our business, financial condition, results of operations and other important information regarding the Company and our consolidated financial statements and the accompanying notes, we refer you to our filings with the Securities and Table of Contents Primary State or Other Standard I.R.S. Jurisdiction of Industrial Employer Incorporation or Classification Identification Name Organization Code Number Number Superior Concrete Materials, Inc. District of Columbia 3272 52-1046503 Titan Concrete Industries, Inc. Delaware 3272 76-0616374 USC Atlantic, Inc. Delaware 3272 20-4166002 USC Management Co., LLC Delaware 3272 27-1015638 USC Payroll, Inc. Delaware 3272 76-0630665 USC Technologies, Inc. Delaware 3272 20-4166055 U.S. Concrete On-Site, Inc. Delaware 3272 76-0630662 U.S. Concrete Texas Holdings, Inc. Delaware 3272 20-4166120 The address of each of the additional registrants is c/o U.S. Concrete, Inc., 2925 Briarpark, Suite 1050, Houston, Texas 77042. TABLE OF CONTENTS Prospectus Summary 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/CIK0001475848_circle_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001475848_circle_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..2d4061cba2eb5cf6cd2afeab5df1c1e89d1ca527
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001475848_circle_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY The following Prospectus Summary summarizes material information about us and this offering. You should carefully read the entire prospectus, including the sections entitled Risk Factors and Management s Discussion and Analysis of Financial Condition and Results of Operations, along with the consolidated financial statements and the notes relating to those statements, included elsewhere in this prospectus before deciding to invest in our common stock. Our Company Circle Bancorp is a holding company incorporated under the laws of the State of California. Circle Bank, a wholly-owned subsidiary of the Company, is an industrial bank headquartered in Novato, California. We conduct substantially all of our business through Circle Bank. The Federal Deposit Insurance Corporation ( FDIC ) insures the Bank s deposits up to the maximum legal limit. The Bank provides a broad range of financial products and services throughout the San Francisco Bay Area from five (5) full service branch offices located in San Rafael, Novato, Petaluma, Santa Rosa, and San Francisco, California and a sixth branch currently under construction in Corte Madera, California. At September 30, 2010, on a consolidated basis, our total assets were $ 317 million, loans were $ 244 million and deposits were $ 235 million (based on unaudited financial information). The Company was incorporated in 1989 as New West Bancshares, Inc., the holding company of the Bank, then operating under the name New West Thrift and Loan as an industrial loan corporation. The Bank changed its name to Novato Community Bank in 1998 and became an industrial bank in 2000. The Bank changed its name to Circle Bank in 2003. The Company changed its name to Circle Bancorp in 2008. On February 19, 2009, the Bank received approval from the California Department of Financial Institutions ( DFI ) to convert from a California state chartered industrial bank to a California state chartered commercial bank. On March 10, 2010, the Company applied for approval from the Federal Reserve Board of Governors to convert to a registered bank holding company. It is anticipated that the Bank will consummate its conversion to a commercial bank immediately after Circle Bancorp receives regulatory approval to become a registered bank holding company under the Bank Holding Company Act of 1956, as amended. See Supervision and Regulation and Description of Capital Stock California and Federal Banking Law herein. In the event Circle Bancorp is not approved to become a registered bank holding company, we will not convert Circle Bank to a commercial bank and Circle Bank will remain a California state-chartered industrial bank. Our principal office is located at 1400 Grant Avenue, Novato, California 94945 and our telephone number is (415) 898-5400. (1) Includes up to 568,270 shares of common stock that may be offered by the selling shareholder in this offering. Any shares not offered by the selling shareholder will increase the number of shares offered by the registrant up to a maximum of 2,860,000 shares offered by the registrant. (2) Estimated solely for the purpose of determining the amount of the registration fee in accordance with Rule 457(o) under the Securities Act of 1933, as amended. Our Values & Beliefs We believe in providing our customers with innovative products and services to promote our mutual financial success, economic growth and job creation in the communities which we serve. We value the quality and variety of financial services that we offer to our customers. We believe in promoting relationships that are based on honesty and trust. We value and promote open and truthful communications. We believe in teamwork. We value a highly-skilled, professional and diverse workforce. We believe in our ability to deliver quality services with integrity and professionalism. We value and actively support the communities we serve. We believe in operating within all banking regulations and in a safe and sound manner. We value our shareholders and are dedicated to providing them with superior returns. Our Business and Strategy We serve consumers and businesses in Marin, Sonoma and San Francisco Counties. Circle Bank, the wholly-owned subsidiary of Circle Bancorp, is a regional community bank which serves consumers and businesses in Marin, Sonoma and San Francisco Counties. Circle Bank provides a high-touch client experience, that is friendly, responsive and respectful to attract clients and their families. The Bank provides a full complement of loan and deposit products to its clients. We seek out the unmet needs of our communities and create products and programs to meet those needs. Circle Bank distinguishes itself by seeking out unmet needs of its communities and creating products and programs to meet those needs, thereby attracting credit worthy borrowers that we might otherwise not have been able to reach. A prime example of such an offering is the Fractional (individual) Tenants-in-Common ( FTIC ) loan, now a very popular loan to finance entry-level residential real estate in San Francisco CA. Circle Bank was pivotal in the creation and standardization of the FTIC loan in late 2005. Circle Bank obtained the title insurer whose title endorsement caused the FTIC loan to be offered by Circle Bank and other financial institutions. Circle Bank was one of the leaders in developing the FTIC market. In 2006, in order to rebalance its loan portfolio and mitigate the risks of concentrations in commercial and multifamily real estate, Circle Bank severely cut back its lending in commercial, mixed use and multifamily real estate, in favor of building its FTIC loan portfolio. The FTIC product enabled Circle Bank to reach a new consumer market and to diversify the risk in its loan portfolio. Management believes that this decision contributed to reducing the impact of the recent recession and subsequent banking crisis on the Company. As of December 31, 2010, Circle Bank had $72.2 million in FTIC loans representing 29.0% of its loan portfolio as of that date. Beginning in 2009 and through 2010, the Bank has ceased lending on additional tenant in common properties. Currently tenant in common loan activity is limited to financing the sale of existing FTIC loans to new buyers, financing FTIC loans for completed units that were previously categorized as TIC Conversion loans, and modifying TIC loans based on the needs and qualifications of the borrowers. From time to time the Bank will reduce the rate of existing FTIC and joint and several TIC loans at the request of the borrower, assuming the borrower qualifies for such rate modification and that the new rate is no lower than the current prevailing market rate. There are risks associated with FTIC loans. For example, a general economic downturn resulting in increased unemployment may make it more difficult for the holders of FTIC loans to repay their loans. In addition, there are political risks that tenant rights groups will object to conversion of rental properties to tenant in common units or there could be legal challenges to the agreements creating the property rights securing FTIC loans or to the structure of the FTIC loans themselves. In order to mitigate some of these risks, Circle Bank obtains a title policy in order to insure the Bank s right to a specific unit securing each FTIC loan. We are benefitting from opportunities that have been created by the current economic environment. Although there can be no assurances that our growth and expansion plans will be successful, we have already positioned ourselves for growth and expansion in this chaotic banking environment by recruiting experienced and well-seasoned senior management (see Management ), who are seeking a growth-oriented financial institution in a contracting banking world. Circle Bank also has gained what we believe to be desirable branch locations convenient for existing and prospective clients of the Bank, located in business centers and/or on corners in downtown corridors - for its organic branch roll-out that heretofore would have been offered to larger, regional or national banks. Today, there are unmet needs in all areas of lending because banks are unwilling or unable to lend, as reported by local news media and/or statements from local bank CEOs as well as stipulated in many of the regulatory consent orders issued by federal bank regulators. While other banks are building their loan resolution staffing, Circle Bank has been building its capacity to scale in loans and deposits to meet client demand. The muddled state of the financial services industry in general, the FDIC assisted sales of local community bank competitors and the deteriorating condition of several other local and regional competitors present additional opportunities for the Company to gain market share. Weakened financial institutions are curtailing lending or selling loans as a means of preserving capital and protecting liquidity. Many of their credit-worthy clients have experienced the frustration of having lines of credit frozen or called and have had service interruptions due to staff reductions and changes at the troubled institutions. Community bank business and deposit customers are seeing their banks being absorbed by large regional and national firms and their own personal bankers flee. The relationship gone, there is little reason for these customers to stay put. This represents a core deposit opportunity for Circle Bank, which is expanding into their neighborhoods. Additionally the poor financial performance of many remaining community banks leaves them little option for survival, making a merger or sale prior to a possible FDIC resolution a reasonable alternative. The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this registration statement shall become effective on such date as the Commission acting pursuant to said Section 8(a), may determine. There are numerous uncertainties and risks that may make it difficult for us to execute our growth and expansion plans and we cannot assure you that we will be successful in executing any part of our strategy. In addition to other uncertainties and risks associated with our growth and expansion plans, we may encounter competition from other financial institutions and other entities having similar business strategies and investment objective that may have more relevant experience, greater financial resources and more personnel than we do. In addition, expanding the Bank through targeted acquisitions will be subject to regulatory approval, and there can be no assurance that we will be successful in obtaining such approval. Further, we may become subject to regulatory actions any of which could restrict our ability to acquire banks or other assets. Although we believe there are numerous potential targets for FDIC-assisted and unassisted acquisitions, we have not selected any other particular targets to acquire at this time, and there can be no assurance that we will be successful in identifying appropriate targets. Moreover, we do not know the terms of any such future acquisitions or whether we will be able to make acquisitions on terms that are acceptable to us. Management is moving forward on its business and development plan that is expanding its reach and positioning the Company to gain share in the communities that it serves. Since the Company s loan problems have been manageable thus far, management has been free to map out a plan to continue to build a branch footprint along U.S. Highway 101 corridor north and south (see Branch Map page 3) and around the San Francisco Bay area, including the East Bay. Although no assurances can be given that our branching plans will be fully implemented, it is our goal to have at least 20 branches strategically located to reach our target market within the nine San Francisco Bay Area counties over the next 24 to 36 months. Management is working to accomplish this expansion through de novo activities, branch purchases, and bank acquisitions which are not assisted by the FDIC, focusing on small de novo banks that were unable to gain critical mass before the economic downturn. Currently, Circle Bank has branches in Santa Rosa, Petaluma, Novato, San Rafael, Corte Madera (opening in March 2011) and in Noe Valley in San Francisco, adjacent to the new Whole Foods Market in that neighborhood. As discussed above, expanding the Bank s branching network through de novo activities, branch purchases and branch acquisitions involves various risks and uncertainties, including competition from other financial institutions, the failure to obtain regulatory approvals, if required, the lack of acquisitions targets, and/or the unacceptability of the terms of such acquisitions to us. Further, in the event that the Company is not approved to become a bank holding company, the Bank will not be converted to a commercial bank which could negatively affect its ability to implement its business strategy to grow through acquisitions, its ability to attract deposits, particularly lower cost deposits and its ability to establish additional branches. We are committed to a gender balanced and diverse Board of Directors, management team, and workforce. Our Board of Directors and management team is gender balanced and we are a women-owned financial institution, as specified in the Community Reinvestment Act. This gives us a competitive advantage by enabling us to recruit management and attract customers from a more diverse base than our non gender-balanced peers. There are also certain elements of the Community Reinvestment Act that are beneficial to women-owned financial institutions, as we are able to participate in the U.S. Department of Energy s Bank Deposit Financial Assistance Program. We have taken steps to enhance current operations in preparation for expansion. In the past twenty-four months Management has taken the following steps to strength the Company s current operations: The Bank is requiring core deposits, where allowable, on all new extensions of credit. Management has strengthened branch sales leadership. As a result, the Bank s noninterest-bearing deposits increased 95.3 % from $ 16.1 million to $ 31.5 million, and from 8.8 % of deposits to 13.4 % of deposits, from September 30, 2009 to September 30, 2010. Cash management products such as remote deposit capture and online cash management have been launched and offered to existing and new business clients to streamline their operations, improve their profitability and give them greater convenience. Two de novo branches have been opened or are under construction to extend the Company s reach into central Marin County and the Noe Valley neighborhood in San Francisco. An SBA department has been developed and Circle Bank has achieved Preferred Lender status. Management has filed an application with the appropriate regulatory agencies to convert the Bank s charter from a state chartered industrial bank to a state charted commercial bank, which we believe will make the Bank more competitive and better able to serve its customer base. In the event that the Company is not approved to become a bank holding company then the Bank will not be converted to a commercial bank which may negatively impact our business strategy. The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED FEBRUARY 28, 2011. PRELIMINARY PROSPECTUS Circle Bancorp Minimum 1,905,000 - Maximum 2,860,000 Shares of Common Stock $10.50 Per Share We have focused on offering SBA programs to meet the borrowing needs of local businesses to help them reposition their balance sheets and mitigate loan risk to the Company through the SBA guarantees. Circle Bank has Preferred Lender status, which enables it to approve SBA loans for its clients before submitting the loans to the SBA. The leader of the SBA division is a veteran of the financial services industry with more than 20 years experience in management and lending positions with banks and financial services firms in the San Francisco Bay Area specializing in small business lending. Circle Bank employs SBA programs to meet the needs of entrepreneurs that are seeking assistance through the current difficult economy allowing them to term out their existing lines of credit and restructure their balance sheets, and capital for growth. It is the intention of Circle Bank to retain the SBA loans in its loan portfolio. We have continued to be a cash flow lender in offering extensions of credit to our customers. Circle Bank continues to be a cash flow lender that incorporates into its lending decision the customer s global financial ability (borrower liquidity from all sources, including wages, rental income, interest and dividends) and the intention of our customers to repay their loans. Whatever the use of funds, Circle Bank seeks to have its loans secured by real estate or certificates of deposits and personally guaranteed by all borrowers. Circle Bank has been successful lending on small local commercial, mixed use and multifamily properties and managing its risk in those areas. The Board of Directors and management have experience in real estate development, construction, financing, sales and leasing, much of it in the San Francisco Bay Area. Both the Board of Directors and management have demonstrated the entrepreneurial will and skill to develop programs that may not otherwise be offered by other banks, for borrowers that have good global cash flow (liquidity from all sources, including wages, rental income, interest and dividends). We have grown and remained profitable throughout the economic recession. Unlike many of our competitors and throughout the recent banking meltdown, we have grown over 50% from $204.7 million in assets at December 31, 2006 to $ 316.7 million in assets as of September 30, 2010, while maintaining stronger asset quality and lower delinquencies than the majority of our local peer group. We reported net income of $ 1.033 million for the nine months ended September 30, 2010 (unaudited). This compares to income of $ 1.010 million for the nine months ended September 30, 2009, an increase of 2.3 %. Net income for the year ended December 31, 2009 was $1,602,000, as compared to net income of $1,744,000 for the year ended December 31, 2008. We have been consistently profitable throughout the past 13 years. Management s plans for additional growth, coupled with its desire to continue to take advantage of strategic opportunities created by the current economic and banking environment, prompted our Board of Directors to authorize this offering. Assuming the full amount of the offering is sold and assuming the selling shareholder opts to participate fully in the offering, we plan to invest approximately $10,905,839 if we sell the minimum amount or approximately $19,612,575 if we sell the maximum amount, of the net proceeds from this offering in the Bank in order to implement our plans and to provide capital reserves to support the Bank. If selling shareholder opts not to participate in the offering, we plan to invest approximately $16,392,364 if we sell the minimum amount or approximately $25,219,714 if we sell the maximum amount, of the net proceeds from this offering in the Bank. Our Management Team Our experienced management team consists of the following individuals: Kit M. Cole, age 69, serves as the Chairman and Chief Executive Officer of the Company and as Chairman Emeritus and director of the Bank. Ms. Cole has over 30 years of experience in both the banking and financial services industries. In 1996 Ms. Cole led a group of private investors to recapitalize Circle Bancorp, effecting a change of control at that time. Ms. Cole has served as a director and Chairman Emeritus of Circle Bancorp and Circle Bank since 1999. She served as Chairman/CEO of Circle Bancorp from November 2008 until October 9, 2009 and again from November 5, 2009 until the present. Ms. Cole was the founder and Chairman/CEO of Epic Bancorp (subsequently re-named Tamalpais Bancorp) and Tamalpais Bank from its inception through 2005, when she became Executive Chairman of Epic Bancorp. Ms. Cole took a leave for medical reasons effective April 2007 and ultimately retired from Epic Bancorp in November 2007. During the entire last 14 years of Ms. Cole s tenure as the CEO of Epic Bancorp and Tamalpais Bank, Tamalpais Bank incurred no loan losses. In early 2010, Tamalpais Bank failed and was put into receivership by the FDIC due, in large part, to the losses in its loan portfolio from loans that were booked after Ms. Cole retired. Ms. Cole was the principal organizer and first Chairman of New Horizons Savings in 1981, which was sold to Luther Burbank in 1996. In 1997 Ms. Cole was inducted into the Marin County Women s Hall of Fame. Ms. Cole has a Masters in Business Administration from University of California, Berkeley. Kimberly Kaselionis, age 49, serves as the Chairman and Chief Executive Officer of the Company from 1996 until November 2008 and then again from October 9, 2009 until November 5, 2009. She has served as Chairman/CEO of Circle Bank since 1996 and as a director of the Company since November 2008. Ms. Kaselionis has been a member of the Board of Directors of Circle Bancorp and Circle Bank since 1991. In late 2009, Ms. Kaselionis was named one of only three California community bank CEOs to sit on America s Community Bankers Council. She was also named a Northern California finalist in the Entrepreneur of the Year Award sponsored by Ernst & Young during that year. Ms. Kaselionis was chosen as one of the North Bay Business Journals Women in Business Leader, Innovators and Visionaries in 2007. She has served on many community non-profit boards including the Sutter-Marin Hospital Board. Ms. Kaselionis was the 2009 President of the Novato Chamber of Commerce. Ms. Kaselionis has a Bachelor of Science degree in accounting from California State University, East Bay and a Masters in Business Administration from University of Phoenix. This is an initial public offering of our shares of common stock. We are offering a minimum of 1,905,000 and a maximum of 2,860,000 shares in this offering, provided, however, that the selling shareholder identified in this prospectus has the option to offer up to 568,270 shares in this offering by providing written notice to the Company within 5 days of receiving written notice that the offering has commenced and indicating therein the precise number of shares that the selling shareholder would like to offer in this offering, up to 568,270 shares. If the selling shareholder participates in this offering, any shares offered by the selling shareholder would reduce the number of shares offered by the Company. Assuming the selling shareholder opts to participate fully in this offering and offers to sell all 568,270 shares, the minimum amount and the maximum amount offered by the Company would be reduced to 1,336,730 and 2,291,730 shares, respectively. We will not receive any of the proceeds from the sale of the shares being offered by the selling shareholder. The shares offered hereby will be offered and sold by our directors and executive officers who will not be paid any commissions or compensations for their selling efforts, other than as described herein. In addition, we may engage brokers and/or dealers to serve as placement agents to assist us in the offer of the shares of our common stock. This offering is being made on a best efforts, minimum-maximum basis, with a minimum gross offering amount of $20,002,500 and a maximum gross offering amount of $30,030,000. If the minimum gross offering amount is raised and the selling shareholder sells all 568,270 shares for a gross amount of $5,996,835, we will sell 1,336,730 shares for a gross amount of $14,035,665 before offering expenses and placement agent fees. If the maximum gross offering amount is raised and the selling shareholder sells all 568,270 shares for a gross amount of $5,996,835, we will sell 2,291,730 shares for a gross amount of $24,063,165 before offering expenses and placement agent fees. If the selling shareholder does not participate at all in this offering, we will sell 1,905,000 shares for a gross amount of $20,002,500 if the minimum offering amount is raised or 2,860,000 shares for a gross amount of $30,003,000 if the maximum offering amount is raised, before offering expenses and placement agent fees. There can be no assurance that any or all of the shares being offered by us or by the selling shareholder will be sold; provided, however, we will not close this offering if less than the minimum is sold. Prior to this offering there has been no public market for our common stock as our selling shareholder owns 98.86% of our outstanding shares of common stock. We intend to apply to list the common stock on the Nasdaq Capital Markets as soon as practicable following the close of this offering. Our proposed Nasdaq listing, however, is not guaranteed and there is no assurance that our securities will ever trade on any exchange. In addition, Howe Barnes Hoefer & Arnett, Inc. has informally agreed to sponsor the listing of the Company s shares on the Over-the-Counter Bulletin Board upon completion of this offering. If the selling shareholder participates fully in this offering and sells a maximum of 568,270 shares, it is anticipated that the selling shareholder s ownership interest will be diluted to between 22.86% and 16.51%, depending on the minimum and maximum offering, respectively. If the selling shareholder does not participate in the offering at all, it is anticipated that the selling shareholder s ownership interest will be diluted to between 37.21% and 28.35%, depending on the minimum and maximum offering, respectively. However, the individual limited partners may purchase shares in this offering in such amounts so as to maintain or increase their ownership percentage in the Company s common stock. Investing in our common stock involves risks. See Risk Factors beginning on page [__] to read about the factors you should consider before buying our common stock. Per Share Minimum Offering Maximum Offering Minimum Offering Maximum Offering Public offering price $ 10.50 $ 10.50 $ 20,002,500 $ 30,030,000 Placement agent fees $ 0.65 $ 0.50 $ 1,240,150 $ 1,440,300 Proceeds to us if no selling shareholder participation(1) 9.85 10.00 $ 18,762,350 $ 28,589,700 Proceeds to us if selling shareholder participates(1)(2): Proceeds to us $ 9.85 $ 10.00 $ 13,165,457 $ 22,909,047 Proceeds to selling shareholder $ 9.85 $ 10.00 $ 5,596,893 $ 5,680,653 Patrick McCarty, age 61, is the Chief Credit Officer of Circle Bank. During his tenure at the Bank, Mr. McCarty has served as Chief Lending Officer and Senior Vice President of Circle Bank since 2003. He oversees all aspects of the Bank s credit functions, including loan servicing, underwriting, policies and personnel. Mr. McCarty has 35 years of bank experience managing loan portfolios in all types of credit markets at five different financial institutions ranging from multi-bank holding companies to small community banks. He was appointed to the board of the Affordable Housing Consortium of Sonoma County in 2005. From 1992 to 2002, Mr. McCarty served as the President and Chief Credit Officer of Premier Funding Group, a private banking company in Arlington, Texas that was formed to acquire and work out assets from the Resolution Trust Corporation and FDIC. In that role, Mr. McCarty s duties included managing all aspects of the company s financial and credit functions. From 1988 to 1992, Mr. McCarty was the Chief Financial Officer of First Savings Bank in Arlington, Texas. He is a graduate of Texas A & M University with a Bachelor of Arts degree in finance. Michael Moulton, age 49, joined Circle Bank as the Chief Financial Officer and Senior Vice President in September 2009. Mr. Moulton has 23 years of industry experience in accounting, investment management, financial planning and analysis, SEC reporting, investor relations, and secondary market activities. Prior to joining Circle Bank, Mr. Moulton was the Chief Financial Officer of Tamalpais Bancorp and Tamalpais Bank. He played key roles in public and private placements of debt and equity securities including private placements of trust preferred securities. He joined Tamalpais Bank in 1994 as Vice President, Controller and was named Chief Financial Officer of Tamalpais Bank in 1998, Chief Financial Officer of Tamalpais Bancorp in 2003, and Chief Financial Officer of Tamalpais Wealth Advisors in 2005. Prior to 1994, Mr. Moulton served in various accounting and financial and managerial capacities at San Francisco Federal Savings and Loan and two other financial institutions. Mr. Moulton has a Bachelor of Science from California State University, East Bay. Chris Lee, age 44, joined the Bank in August 2010 as SVP, Chief Loan Officer. He is a long time San Francisco resident and has been in the commercial banking field for over 15 years. His banking career began with Sumitomo Bank as an account officer trainee, where he completed a year long credit boot camp that focused on all aspects of commercial lending, including borrowing needs, operating cycle, cash flow analysis, industry/business risk, and asset base lending. After several years at Sumitomo, Mr. Lee joined United Commercial Bank as a credit manager, overseeing that bank s commercial real estate underwriting and loan funding. Over his ten and a half years tenure at United Commercial Bank he held various roles, including credit administrator duty and was responsible for approving or recommending real estate, construction, C&I, small business, and SBA credits. During his last four years at United Commercial Bank, Mr. Lee served as the director of the commercial real estate division, consisting of eight regional offices in San Francisco, Los Angeles, New York, Boston, Atlanta, Houston and Seattle. Alan Gaul, age 45, joined the Bank in July 2010 as SVP of Marketing and is a veteran senior manager with a combination of marketing project management business development and IT experience. Mr. Gaul s marketing experience includes: marketing communications, strategic marketing development including website and content development, e-mail marketing and hands-on involvement and execution of collateral development. His relevant IT experience is in the areas of Website, CRM, loan origination and automated underwriting systems delivery. Known for being a brand evangelist, Mr. Gaul couples his marketing and IT skills to create online platforms as a gateway for doing business on the internet. Erick Kostuchek, age 40, joined Circle Bank in June 2009 as SVP of Branch Sales and Administration. He has been a banker since 1992, with experience in branch sales strategies, operations, and bi-coastal banking. Mr. Kostuchek s 17 year career history includes progressive senior leadership roles with Bay Area banks such as Bank of America, Citi National Bank, and First National Bank of Northern California. In 2001, Mr. Kostuchek s career brought him to the New York metropolitan area, where he was the Regional Director for the most affluent market in Wachovia Bank s service area, Bergen County, NJ. Mr. Kostuchek also served as the company media representative in the Hispanic markets. In 2004, Mr. Kostuchek joined Sovereign Bank as the Market Manager for the Manhattan market, with particular focus on active de-novo expansion. Mr. Kostuchek s community involvement includes past treasurer and vice president of the Mission Merchants Association in Daly City, the Children s Aid Society Advisory Board and the YMCA youth basketball program. Michael Rice, age 49, joined Circle Bank in 2009 as SVP of Business Lending. He is a veteran of the financial services industry with more than 20 years in senior management and lending positions with banks and financial services firms in the San Francisco Bay Area, specializing in small business lending and lease financing. Mr. Rice has long been active in community organizations, serving on the boards of the San Rafael Chamber of Commerce, the San Rafael Rotary Club, and the Area Government Guaranteed Lenders Association. He is a graduate of the University of California, Santa Barbara. Eileen Graham, age 59, joined the Company in July 2009 as SVP of Human Resources and is a veteran senior manager with over 25 years of human resource management experience, spanning over many sectors of organizations, large and small, public and private, global and domestic. She has lead human resources for Hasbro Toys, SPG Solar, Vacuum Coating Technologies, Ebara Technologies, and has also consulted for Disney and for the City of Napa. Ms. Graham graduated from the University of Kansas with a double major in education and psychology and attended the University of Florida for post-graduate studies in Psychology and is certified as a Senior Professional HR. She serves on several boards including Employers Advisory Council and the Northern California HR Association. Juanna Collin, age 51, will join Circle Bank in 2011 as the SVP of Operations. Ms. Collin is a 25 year banking veteran in systems, operations and compliance. Over the last ten years she has served as a consultant for a wide range of community banks including OneCalifornia Bank, New Resource Bank, Mission National Bank, Bank of Alameda as well as Circle Bank. Prior to becoming a consultant, Ms. Collin was the SVP of Operations and Technology at the Commercial Bank of San Francisco. She has consulted on a number of projects including core banking data processing systems, electronic banking systems, compliance and risk management programs, and procedure writing. Ms. Collin s areas of expertise are strategic planning, project management, maximizing operational efficiencies, personnel development and risk management. Her work includes de-novo bank core systems selection and integration management, strategic development of fully integrated consumer loan origination and documentation systems for the under banked market place. She also serves as a committee member for Circle Bank s Technology management and was instrumental in the selection and strategic direction of the Bank s core data processing systems. Certain Material Interests of Insiders Certain of the Company s insiders have a material interest in the close of this offering. Specifically, pursuant to the terms of her January 27, 2011 employment agreement, Kit M. Cole (our Chairman and Chief Executive Officer) will receive a $250,000 cash bonus and will be granted 15,000 warrants exercisable at $10.50 per share at the close of this offering. In addition, all unvested warrants previously granted to Ms. Cole, 16,667 warrants in total, will vest at the close of the offering. The Company will recognize a compensation expense of $18,000 relating to the vesting of the 16,667 warrants and the issuance of the 15,000 new warrants. Please see Executive Compensation Employment Arrangements for Kit M. Cole, herein for more information. In addition, Ms. Cole and Kimberly Kaselionis (a member of our Board of Directors and Chairman and Chief Executive Officer of the Bank) own 61.5% and 12.5%, respectively, of Cole Financial Ventures, Inc., the general partner of SCP, the selling shareholder. Upon completion of this offering and assuming SCP participates and sells 568.270 shares of common stock, Cole Financial Ventures, Inc., will receive a profit distribution relating to these shares in the approximate amount of $200,000. Please see Use of Proceeds, herein for more information. Furthermore, upon the successful conclusion of this offering, even at the minimum level, the ownership interest of SCP in the Company will be substantially diluted. If SCP does not participate as a selling shareholder, SCP s ownership interest will be diluted to between 37.21% and 28.35%, depending on the minimum and maximum offering, respectively. However, if SCP participates fully in this offering and sells a maximum of 568,270 shares, SCP s ownership interest will be diluted to between 22.86% and 16.51%, depending on the minimum and maximum offering, respectively. Therefore, based on cumulative voting principles, upon the close of this offering, SCP would only be able to elect a minority of the Company s directors if it were able to elect any at all and, as a result, may not be able to effectuate changes to the Company s senior management, including but not limited to replacing Ms. Cole, Ms. Kaselionis and Michael Moulton as the Company s Chief Executive Officer and President, the Bank s Chief Executive Officer and President and the Company s and the Bank s Chief Financial Officer, respectively. Accordingly, these individuals have a material interest in the close of the offering. Please see the risk factor entitled Some of the limited partners of our controlling shareholder are attempting to effectuate a management change to implement their own business plan and, if successful, this offering will be terminated for more information. Risk Factors We face risks in operating our business, including risks that may prevent us from achieving our business objectives or that may materially and adversely affect our business, financial condition and operating results. You should carefully consider these risks, including the risks discussed in the section entitled Risk Factors beginning on page [__] and the other information included in this prospectus before deciding whether to invest in our common stock. In particular, please see the risk factor entitled Some of the limited partners of our controlling shareholder are attempting to effectuate a management change to implement their own business plan and, if successful, this offering will be terminated for more information regarding SCP. The Offering Shares Currently Outstanding 1,149,640 shares. Common Stock Offered By the Company A minimum of 1,905,000 and a maximum of 2,860,000 shares, provided, however, that the selling shareholder may offer up to 568,270 shares in this offering in which case, the shares offered by the Company would be reduced to a minimum of 1,336,730 shares and a maximum of 2,291,730 shares. By the Selling Shareholder The selling shareholder is Shoreline Capital Partners, L.P. (sometimes referred to herein as either the principal shareholder, the selling shareholder or SCP ). The selling shareholder has the option to sell up to 568,270 shares. Any shares not offered for sale by the selling shareholder will increase the number shares the Company may offer and sell in this offering up to a minimum of 1,905,000 and a maximum of 2,860,000 shares. Total A minimum of 1,905,000 shares and a maximum of 2,860,000 shares. Minimum Subscription 500 shares. Minimum Offering by the Company $20,002,500 in gross proceeds on the sale of a minimum of 1,905,000 shares total; provided, however, that if the selling shareholder opts to offer and sell all 568,270 shares, gross proceeds to the Company will be reduced to $14,035,665 on the sale of a minimum of 1,336,730 shares total. Maximum Offering by the Company $30,003,000 in gross proceeds on the sale of a maximum of 2,860,000 shares total; provided, however, that if the selling shareholder opts to offer and sell all 568,270 shares, gross proceeds to the Company will be reduced to $24,063,165 on the sale of a maximum of 2,291,730 shares total. Offering by the Selling Shareholder $5,966,835 in gross proceeds to the selling shareholder, or 568,270 shares total. The selling shareholder may opt to offer any number of shares up to a maximum of 568,270 shares. Closing of the Offering The offering will terminate upon the earlier of: (i) at our discretion, at any time after the minimum offering is sold; or (ii) March 15, 2011, unless extended in the sole discretion of our Board to a date not later than May 31, 2011. Common Stock to be Outstanding After this Offering 3,054,640 shares if the minimum number of shares are sold or 4,009,640 shares if the maximum number of shares are sold; provided, however, that if the selling shareholder opts to sell all 568,270 shares offered by it, the shares of common stock outstanding after this offering will be 2,486,370 shares if the minimum number of shares are sold or 3,441,370 shares if the maximum number of shares are sold. Use of Proceeds Proceeds we receive from the offering of shares by us are to be used to support continued operations of the Company and the Bank, with most of the proceeds being invested in the Bank to provide additional capital to support the Bank s capital ratios and to support the Bank s anticipated growth. At the minimum offering amount, we anticipate raising $12.9 or $18.4 million, depending on whether or not the selling shareholder participates in this offering, net of fees and expenses. Of this amount, $2.0 million would be retained by the Company to augment its capital position and to provide a reserve for operating expenses and dividends. The remaining $ 10.9 million or $16.4 million, as applicable, would be infused in the Bank to enhance the Bank s capital to support organic growth and acquisitions. At the maximum offering amount, we anticipate raising $22.6 million or $28.2 million, depending on whether or not the selling shareholder participates in this offering, net of fees and expenses. Of this amount, $3.0 million would be retained by the Company and the remaining $19.6 or $25.2 million, as applicable, would be infused as capital for the Bank. See Use of Proceeds herein. Our Board has indicated that it intends to declare and pay a dividend on our issued and outstanding common stock in an amount equal to the Company s earnings from January 1, 2011 through the close of the offering. The dividend will be paid on the shares then currently outstanding and will not be paid on any shares purchased in this offering. We anticipate that the aggregate amount of this dividend will be approximately $240,000. Selling Shareholder We will not receive any proceeds from the selling shareholder. The selling shareholder is Shoreline Capital Partners, L.P., a California limited partnership, which owns 1,136,541 shares or 98.86% of the issued and outstanding shares of the Company s common stock as of September 30, 2010 and is our controlling or principal shareholder. Cole Financial Ventures, Inc. ( CFV ) is the general partner of SCP and Kit M. Cole (our Chairman and Chief Executive Officer) and Kimberly Kaselionis (a member of our Board of Directors and Chairman and Chief Executive Officer of the Bank) own 61.5% and 12.5%, respectively, of CFV. As the general partner, CFV has the exclusive discretion to manage and control the business of SCP and has the full authority to bind SCP. CFV has no direct ownership in Circle Bancorp. Ms. Cole and Ms. Kaselionis do not own any Circle Bancorp shares directly and have ownership only indirectly through options or warrants. Upon completion of this offering, if SCP participates in this offering, CFV will receive a profit distribution relating to the shares of common stock sold in the approximate amount of $200,000. Further, upon dissolution of SCP, SCP will be required to liquidate its investment and distribute the net proceeds to its partners. CFV has committed to use a portion of its anticipated share, approximately $800,000, to purchase shares of the Company s common stock. In addition to SCP, there are three other shareholders of the Company. The three other shareholders own the remaining 13,099 shares (or 1.14%) of the issued and outstanding common stock as of September 30, 2010 and are not selling shareholders in this offering. If the principal shareholder participates fully in this offering and sells a maximum of 568,270 shares, it is anticipated that the principal shareholder s ownership interest will be diluted to between 22.86% and 16.51%, depending on the minimum and maximum offering, respectively. If the principal shareholder does not participate in the offering at all, it is anticipated that the principal shareholder s ownership interest will be diluted to between 37.21% and 28.35%, depending on the minimum and maximum offering, respectively. However, the individual limited partners may purchase shares in this offering in such amounts so as to maintain or increase their ownership percentage in the Company s common stock. The partnership agreement of the selling shareholder will expire on December 31, 2011, if not terminated earlier, at which time the shares held by the controlling shareholder will be distributed to its partners in proportion to their partnership interests, and each partner will, by virtue of the distribution, become shareholders of the Company in his, her or its own right. Please see the risk factor entitled Some of the limited partners of our controlling shareholder are attempting to effectuate a management change to implement their own business plan and, if successful, this offering will be terminated for more information regarding SCP. Dividends Our Board has approved and declared a dividend of $0.32 per share on the 1,149,640 shares of our common stock issued and outstanding as of January 31, 2011, or a dividend in the aggregate amount of approximately $367,885, payable on February 2, 2011. This dividend is consistent with those paid to the shareholders over the prior four years. In addition, our Board has indicated that it intends to declare and pay another dividend on our issued and outstanding common stock in an amount equal to the Company s earnings from January 1, 2011 through the close of the offering. The dividend will be paid on the shares then currently outstanding and will not be paid on any shares purchased in this offering. We anticipate that the aggregate amount of this dividend will be approximately $240,000. Dividends on the common stock will be payable when, as and if authorized and declared by our Board of Directors out of legally available funds, subject to the prior payment of dividends on our preferred stock. We first issued our preferred stock in December 2009 and have begun paying dividends in the 4th quarter of 2009 on that class of securities. See Trading History and Dividends herein. Investment Risk Factors Prospective investors should carefully consider the information contained in Risk Factors beginning on page [__] and other information included in this prospectus before investing in our common stock. Proposed Symbol for Trading on the Nasdaq Capital Markets CIRB Except as otherwise indicated, all information in this prospectus: assumes an offering price of $10.50 per share; excludes 13,566 shares of common stock reserved for future grants under our Directors Non-Qualified Stock Option Plan; and excludes 34,764 shares of common stock reserved for future grants under our Employee Incentive Stock Option and Stock Appreciation Rights Plan. Additional Information About Us Circle Bancorp and Circle Bank headquarters are located at 1400 Grant Avenue, Novato, California, 94945. Our telephone number is (415) 898-5400. Any questions regarding this offering should be directed to: Circle Bancorp 1400 Grant Avenue Novato, California 94945 Attn: Kit M. Cole, Chairman and Chief Executive Officer Tel: (415) 898-5400 Fax: (415) 898-3742 Circle Bank 1400 Grant Avenue Novato, California 94945 Attn: Kimberly Kaselionis, Chairman and Chief Executive Officer Tel: (415) 898-5400 Fax: (415) 898-3742 Our website is: www.circlebank.com The information contained on our website is not a part of this prospectus and should not be relied upon in determining whether to make an investment in our common stock.
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus or incorporated herein by reference. This summary is not complete and does not contain all of the information that you should consider before deciding to invest in our common stock, $.001 par value ( Common Stock ). We urge you to read this entire prospectus carefully, including the Risk Factors section. In this prospectus, unless the context indicates otherwise, the terms NYTEX Company, we, its, us, and our refer to NYTEX Energy Holdings, Inc., a Delaware corporation, and its subsidiaries. Our Company Our principal offices are located at 12222 Merit Drive, Suite 1850, Dallas, Texas 75251; telephone (972) 770-4700. Our businesses are organized into two operating segments, conducted through our two primary subsidiaries: Fluid Drilling Services This segment conducted by our wholly owned subsidiary, Francis Drilling Fluids, Ltd. ( FDF ) (through our subsidiary NYTEX FDF Acquisition, Inc. ( Acquisition Inc. )), consists of full service drilling, completion, and specialized fluids, dry drilling and completion products, technical services, industrial cleaning services and equipment rental for the oil gas industry. Since the acquisition of FDF ( FDF Acquisition ), this segment represents substantially all of our revenues from operations. Oil and Gas Operations This segment conducted by our wholly owned subsidiary, NYTEX Petroleum, Inc. ( NYTEX Petroleum ), represents our oil and gas business. Prior to the FDF Acquisition, this segment generated virtually all of our revenues from operations. The Offering The selling security holders ( Selling Security Holders ) identified in this prospectus may sell up to 9,663,333 shares of our Common Stock, which includes: (i) 1,433,333 shares of Common Stock issuable upon conversion of 12% convertible debentures ( Debentures ), (ii) 430,000 shares of Common Stock issuable upon the exercise of warrants issued in conjunction with the Debentures with an exercise price of $2.00 per share ( Debenture Warrants ), (iii) 6,000,000 shares of Common Stock issuable upon conversion of our Series A preferred stock, $.001 par value ( Series A Preferred Stock ), and (iv) 1,800,000 shares of Common Stock issuable upon the exercise of warrants issued in conjunction with the Series A Preferred Stock, with an exercise price of $2.00 per share ( Series A Warrants ). The Selling Security Holders may offer all or part of their shares of Common Stock for resale from time to time through public or private transactions, at either prevailing market prices or at privately negotiated prices. We will not receive any of the proceeds from the sale of those shares of Common Stock being offered by the Selling Security Holders except the proceeds, if any, from the exercise of the Debenture Warrants and the Series A Warrants held by the Selling Security Holders, which could total $4,460,000 and are payable to us. Table of Contents RISK FACTORS An investment in our Common Stock involves a high degree of risk. Before making an investment decision, you should carefully consider all of the risks described or incorporated by reference in this prospectus. If any of the risks discussed in this prospectus actually occur, our business, financial condition and results of operations could be materially and adversely affected. If this were to happen the value of our Common Stock could decline significantly and you may lose all or a part of your investment. RISK FACTORS RELATING TO OUR OPERATIONS We are in default under our senior debt facility and our mezzanine debt agreement. If we are unable to reach an agreement with these lenders to resolve the defaults, these lenders can exercise remedies which ultimately could require us to curtail or cease our operations. On April 13, 2011, we received a letter from PNC Bank, National Association ( PNC ), as lender, notifying us of the occurrence and continued existence of certain events of default under our senior debt facility, in particular, breach of a fixed charge coverage ratio and breach of our reporting requirements. We are currently in negotiations with PNC to obtain a waiver of the defaults. However, there are no assurances that we will be successful in our negotiations with PNC. Because we are in default under the senior debt facility, PNC may at any time exercise any of its remedies under the facility, which include acceleration of the amounts owed, which we may not have the ability to pay. If the debt is accelerated and we are unable to pay, we could experience materially higher interest expenses, and PNC could seek to satisfy the debt by foreclosing on its liens on some or all of our assets, which are security under the facility, or could pursue other legal action. Substantially all of FDF s personal property is security under the facility, as is our administrative offices in Crowley, LA. Any such action may require us to curtail or cease our operations. On April 14, 2011 we received a letter from WayPoint Nytex, LLC ( WayPoint ), as mezzanine lender, stating we are in default of the Preferred Stock and Warrant Purchase Agreement among us, Acquisition Inc. and WayPoint ( WayPoint Purchase Agreement ), for defaults similar to the PNC defaults plus our failure to pay dividends when due and, therefore, that WayPoint now has the right to exercise the Control Warrant, as described on page 8. If WayPoint exercises the Control Warrant, it would own 51% of our outstanding Common Stock. We are currently in negotiations with WayPoint to obtain a waiver and modify the WayPoint Purchase Agreement. However, there are no assurances that we will be successful in our negotiations with WayPoint. In addition to being in default under the WayPoint Purchase Agreement, on May 4, 2011, WayPoint provided us with formal written notice ( Put Notice ) of its election to cause us to repurchase all securities that WayPoint acquired in connection with the WayPoint Purchase Agreement for an aggregate purchase price of $30,000,000 within five business days following the date of the Put Notice. These securities are enumerated more fully described under (i) the Risk Factor entitled Exercise of the WayPoint Control Warrant would result in a change in control, on page 8 herein, (ii) the Risk Factor entitled The WayPoint Warrants possess full anti-dilution provisions, and may result in a duplication of dilution, and (iii) Transactions with Related Parties and Control Persons. We did not and do not have the funds available to repurchase these securities, but continue to negotiate with WayPoint to remedy the defaults and resolve WayPoint s demands in the Put Notice. However, there are no assurances that we will be successful in these negotiations, and WayPoint has reserved all other rights, remedies, actions and powers to which it may be entitled. As a result, WayPoint may seek certain remedies afforded to it under the WayPoint Purchase Agreement including the exercise of its Purchaser and Control Warrants, which would provide WayPoint with ownership of a majority of our outstanding Common Stock, and thereby give WayPoint significant control over our board of directors and operations. Alternatively, WayPoint could initiate collection efforts regarding our failure to pay dividends and repurchase the securities. Table of Contents By virtue of having the right, and having exercised the right, to designate a majority of the board of directors of our subsidiary, Acquisition Inc., WayPoint may be deemed to have control over Acquisition Inc. and its subsidiaries, including FDF, our significant operating subsidiary. WayPoint also holds the sole outstanding share of our Series B Preferred Stock, entitling it to increase the size of our board of directors and to designate a majority of our board. While members of a board of directors owe fiduciary duties to all stockholders, WayPoint has interests that are in addition to, or different from the interests of our stockholders generally and that create potential conflicts of interest. In exchange for WayPoint s $20 million investment that was used to finance our acquisition of FDF, our newly created subsidiary Acquisition Inc. issued WayPoint 20,750 shares of Senior Series A Redeemable Preferred Stock. Acquisition Inc. is the sole owner of Francis Oaks, LLC, which in turn wholly owns FDF. As long as any such shares are outstanding, the holders of such shares, voting as a single class, are entitled to elect two members to the board of Acquisition Inc. Upon the occurrence of a default, as defined in the WayPoint Purchase Agreement, and as more fully described under the Risk Factor entitled Exercise of the WayPoint Control Warrant would result in a change of control, on page 8 herein, that remains uncured for 75 days, the holders of a majority of shares of Senior Series A Redeemable Preferred Stock may increase the number of directors constituting the board of directors of Acquisition Inc. up to that number that would give such holders control of a majority of the board, and to designate such additional directors. On May 9, 2011, WayPoint notified Acquisition Inc. that, because of the continuing occurrences of default, it elected to increase the board from four members to five, and designated Mr. J.J. Schickel, Jr. to fill this newly created vacancy. Mr. Schickel served in this capacity until May 20, 2011, when WayPoint replaced Mr. Schickel with Mr. Lee Buchwald. As of June 30, 2011, the board of Acquisition Inc. included Michael Galvis, Kenneth K. Conte, John Henry Moulton (a WayPoint designee), Thomas Drechsler (a WayPoint designee) and Mr. Buchwald (a WayPoint designee). For more information about Mr. Moulton and Mr. Drechsler, see Transactions with Related Persons and Certain Control Persons , on page 50 herein. While members of a board of directors owe fiduciary duties to all stockholders, WayPoint has interests that are in addition to, or different from the interests of our stockholders generally and that create potential conflicts of interest. The newly-constituted board of Acquisition, Inc. has taken action to change the officers and directors of some of our subsidiaries. On May 10, 2011, the board of Acquisition Inc. voted to remove Michael Galvis as president and Kenneth Conte as chief financial officer, treasurer and secretary of both Oaks and FDF and replace them with Mike Francis as president and Jude Gregory as chief financial officer, treasurer and secretary. Also on May 10, 2011, the board of Acquisition Inc. voted to remove all directors and managers, as applicable, of Oaks and FDF, and replace them with Messrs. Moulton, Drechsler, Galvis, Schickel and Conte as the sole directors and managers, as applicable. Mr. Schickel served in this capacity until May 20, 2011, when WayPoint replaced Mr. Schickel with Mr. Lee Buchwald. As holder of our one outstanding shares of Series B Preferred Stock, and because of the continued breaches under the WayPoint Purchase Agreement, WayPoint has the right to increase size of our board of directors up to that number that would give WayPoint the right to appoint a majority of our board, and to designate such additional directors. While initially WayPoint appointed two directors to our board, they subsequently resigned. As of the date of this prospectus, WayPoint has no designees serving on our board of directors. Our independent auditors have expressed doubt about our ability to continue our activities as a going concern, which may hinder our ability to obtain future financing. The continuation of our business is dependent upon us resolving the defaults under our loan agreements, raising additional financial support, and maintaining profitable operations. The issuance of additional equity securities by us could result in a substantial dilution in the equity interests of our current stockholders. If we should fail to continue as a going concern, you may lose all or a part of the value of your entire investment in us. Due to the uncertainty of our ability to meet our current operating expenses and the defaults under our loan agreements noted above, in their report on the annual financial statements for the years ended December 31, 2010 and 2009, our independent auditors included an explanatory paragraph regarding the doubt about our ability to continue as a going concern. Table of Contents Our continuation as a going concern is dependent upon our attaining and maintaining profitable operations, resolving the defaults under certain of our loan agreements, and raising additional capital. The financial statements do not include any adjustment relating to the recovery and classification of recorded asset amounts or the amount and classification of liabilities that might be necessary should our company discontinue operations. Our indebtedness and other payment obligations could restrict our operations and make us more vulnerable to adverse economic conditions. We now have, and expect to continue to have, a significant amount of indebtedness. Our outstanding indebtedness consists of a senior credit facility, the Debentures, and dividends payable on our Series A Preferred Stock and on the Senior Series A Redeemable Preferred Stock of Acquisition Inc., which are described in Liquidity and Capital Resources on page 35 of this prospectus. As of June 30, 2011, we owed $17,939,025 under our senior credit facility, $2,035,000 under the Debentures and dividends of $1,218,485 on the Senior Series A Redeemable Preferred Stock of Acquisition Inc. and $223,245 on our Series A Preferred Stock. Additionally, the election of WayPoint to exercise its put right requires that we repurchase their securities for $30 million. We do not have the funds available to satisfy these obligations. Our current and future indebtedness could have important consequences. For example, those levels of indebtedness and obligations could: impair our ability to make investments and obtain additional financing for working capital, capital expenditures, acquisitions or other general corporate purposes; limit our ability to use operating cash flow in other areas of our business because we must dedicate a substantial portion of these funds to make payments on our indebtedness and obligations; and make us more vulnerable to a downturn in our business, our industry or the economy in general as a substantial portion of our operating cash flow will be required to make payments. We also have other put or redemption obligations that may restrict the funds that we can devote to operations. The holder of the Senior Series A Redeemable Preferred Stock has the right to have Acquisition Inc. redeem such shares after the third anniversary of issuance thereof at a redemption price equal to 104% of the Stated Amount, and at a redemption price equal to 103% of the Stated Amount 48 months after the date of issuance thereof to May 23, 2016, together, in either case, with all dividends, declared and unpaid thereon through the redemption date. After the earliest to occur of (a) a Change of Control, (b) an occurrence of a Default that remains uncured for seventy-five days; provided, however, that payment to the holders of the Senior Series A Redeemable Preferred Stock of all amounts owing to them as a result of a Default shall be considered a cure of a Default, and (c) May 23, 2016, Acquisition Inc. is required to redeem the Senior Series A Redeemable Preferred Stock at 100% of the Stated Amount, together with all accrued and unpaid dividends thereon as of the redemption date. If Acquisition Inc. is required to redeem these shares, and we or it does not have available funds, we may have to curtail or cease operations. We need additional capital, and the sale of additional shares or other equity securities could result in additional dilution to our stockholders. We cannot be certain that our existing sources of cash will be adequate to meet our liquidity requirements including cash requirements that may be due under either the Senior Facility, our Preferred Stock, or the WayPoint Purchase Agreement. However, management has implemented plans to improve liquidity through slowing or stopping certain planned capital expenditures, through the sale of selected assets deemed unnecessary to our business, and improvements to results from operations. If our resources are insufficient to satisfy our cash requirements, we may seek to sell additional equity or debt securities or obtain an additional credit facility. We cannot assure you that any additional equity sales or financing will be available in amounts or on terms acceptable to us, if at all. The sale of additional equity securities could result in additional dilution to our stockholders and result in a significant reduction of your percentage interest in us. The incurrence of Table of Contents additional indebtedness would result in increased debt service obligations and could result in additional operating and financing covenants that would further restrict our operations. There can be no assurance that we will be successful with our plans or that our results of operations will materially improve in either the short-term or long-term and accordingly, we may be unable to meet our obligations as they become due. Our business depends on domestic spending by the oil and gas industry, and this spending and our business have been, and may continue to be, adversely affected by industry and financial market conditions that are beyond our control. We depend on our customers willingness to make operating and capital expenditures to explore for, develop and produce oil and gas in the United States. Customers expectations of lower market prices for oil and gas, as well as the availability of capital for operating and capital expenditures, may cause them to curtail spending, thereby reducing demand for our services and equipment. Industry conditions are influenced by numerous factors over which we have no control, such as the supply of and demand for oil and gas, domestic and worldwide economic conditions, political instability in oil and gas producing countries and merger and divestiture activity among oil and gas producers. The volatility of the oil and gas industry and the consequent impact on exploration and production activity could adversely impact the level of drilling and workover activity by some of our customers. This reduction may cause a decline in the demand for our services or adversely affect the price of our services. Reduced discovery rates of new oil and gas reserves in our market areas also may have a negative long-term impact on our business, even in an environment of stronger oil and gas prices, to the extent existing production is not replaced and the number of producing wells for us to service declines. In addition, recent market conditions and the existence of excess equipment have resulted in lower utilization rates. The deterioration in the global economic environment since 2008 has caused the oilfield services industry to cycle into a downturn, and the rate at which it may continue to improve, or return to former levels, is uncertain. Those adverse changes in capital markets and declines in prices for oil and gas caused many oil and gas producers to announce reductions in capital budgets for future periods. In the last part of 2008, oil and gas prices declined rapidly, resulting in decreased drilling activities. During the second half of 2009, oil prices began to increase and remained relatively stable through the latter half of 2010 and into 2011, which has resulted in increases in drilling activities, and have been increasingly expanding in the oil-driven markets. However, natural gas prices continued to decline significantly through most of 2009 and remained depressed throughout 2010 and into 2011, which resulted in decreased activity in the natural gas-driven markets. Limitations on the availability of capital, or higher costs of capital, for financing expenditures have caused and may continue to cause these and other oil and gas producers to make additional reductions to capital budgets in the future even if commodity prices increase from current levels. These cuts in spending may curtail drilling programs as well as discretionary spending on well services, which could result in a reduction in the demand for our services, the rates we can charge and our utilization. In addition, certain of our customers could become unable to pay their suppliers, including us. As a result of these conditions, our customers spending patterns have become increasingly unpredictable, making it difficult for us to predict our future operating results. Additionally, any of these conditions or events could adversely affect our operating results. If oil and gas prices remain volatile, or decline, the demand for our services could be adversely affected. The demand for our services is primarily determined by current and anticipated oil and gas prices and the related general production spending and level of drilling activity in the areas in which we have operations. Volatility or weakness in oil and gas prices (or the perception that oil and gas prices will decrease) affects the spending patterns of our customers and may result in the drilling of fewer new wells or lower production spending on existing wells. This, in turn, could result in lower demand for our services and may cause lower rates and lower utilization of our well service equipment. Continued volatility in oil and gas prices or a reduction in drilling activities could materially and adversely affect the demand for our services and our results of operations. Table of Contents Competition within the well services industry may adversely affect our ability to market our services. The well services industry is highly competitive and fragmented and includes numerous small companies capable of competing effectively in our markets on a local basis, as well as several large companies that possess substantially greater financial and other resources than we do. Our larger competitors greater resources could allow those competitors to compete more effectively than we can. The amount of equipment available currently exceeds demand, which has resulted in active price competition. Many contracts are awarded on a bid basis, which may further increase competition based primarily on price. We depend on several significant customers, and a loss of one or more significant customers could adversely affect our results of operations. Our customers consist primarily of major and independent oil and gas companies. During 2010, our top five customers accounted for 41% of our revenues. The loss of any one of our largest customers or a sustained decrease in demand by any of such customers could result in a substantial loss of revenues and could have a material adverse effect on our results of operations. We may not be able to grow successfully through future acquisitions or successfully manage future growth, and we may not be able to effectively integrate the businesses we do acquire. Our business strategy includes growth through the acquisitions of other businesses. We may not be able to continue to identify attractive acquisition opportunities or successfully acquire identified targets. Furthermore, competition for acquisition opportunities may escalate, increasing our cost of making further acquisitions or causing us to refrain from making additional acquisitions. This strategy may require external financing, which we may not be able to secure at all, or on favorable conditions, and which are governed by and subject to restrictive covenants under our existing financial obligations including with WayPoint and PNC. In addition, we may not be successful in integrating our current or future acquisitions into our existing operations, which may result in unforeseen operational difficulties or diminished financial performance or require a disproportionate amount of our management s attention. Even if we are successful in integrating our current or future acquisitions into our existing operations, we may not derive the benefits, such as operational or administrative synergies, that we expected from such acquisitions, which may result in the commitment of our capital resources without the expected returns on such capital. Our industry has experienced a high rate of employee turnover. Any difficulty we experience replacing or adding personnel could adversely affect our business. We may not be able to find enough skilled labor to meet our needs, which could limit our growth. Our business activity historically decreases or increases with the price of oil and gas. We may have problems finding enough skilled and unskilled laborers in the future if the demand for our services increases. If we are not able to increase our service rates sufficiently to compensate for wage rate increases, we may not be able to hire and retain the necessary skilled labor to perform our services. Other factors may also inhibit our ability to find enough workers to meet our employment needs. Our services require skilled workers who can perform physically demanding work. As a result of our industry volatility and the demanding nature of the work, workers may choose to pursue employment in fields that offer a more desirable work environment at wage rates that are competitive with ours. We believe that our success is dependent upon our ability to continue to employ and retain skilled technical personnel. Our inability to employ or retain skilled technical personnel may adversely affect our ability to complete our ongoing projects or engage new business in the future, which generally could have a material adverse effect on our operations. Table of Contents Our success depends on key members of our management, the loss of any of whom could disrupt our business operations. We depend to a large extent on the services of some of our executive officers. The loss of the services of Michael K. Galvis, our President and Chief Executive Officer, Kenneth K. Conte, our Executive Vice President and Chief Financial Officer, and Michael G. Francis, President and Chief Executive Officer of FDF, Jude Gregory, Chief Financial Officer of FDF, or other key personnel could disrupt our operations. Although we have entered into employment agreements with the executives mentioned above, and certain other executive officers that contain, among other provisions, non-compete agreements, we may not be able to retain the executives past the terms of their employment agreements or enforce the non-compete provisions in the employment agreements. Our operations are subject to inherent risks, some of which are beyond our control. These risks may be self-insured, or may not be fully covered under our insurance policies. Our operations are subject to hazards inherent in the oil and gas industry, such as, but not limited to, accidents, blowouts, explosions, craterings, fires and oil spills. These conditions can cause: personal injury or loss of life; damage to or destruction of property and equipment (including the collateral securing our indebtedness) and the environment; suspension of our operations; and lost profits. The occurrence of a significant event or adverse claim in excess of the insurance coverage that we maintain or that is not covered by insurance could have a material adverse effect on our financial condition and results of operations. In addition, claims for loss of oil and gas production and damage to formations can occur in the well services industry. Litigation arising from a catastrophic occurrence at a location where our equipment and services are being used may result in our being named as a defendant in lawsuits asserting large claims. We maintain insurance coverage that we believe to be customary in the industry against these hazards including marine and non-marine property and casualty, workers compensation, water pollution/environmental, and liability insurance. Our policy limits for these policies range up to $10,000,000 per occurrence with deductibles ranging up to $25,000. Regarding our water pollution/environmental insurance coverage, our policy limits range up to $5,000,000 with a $2,500 deductible. However, we do not have insurance against all foreseeable risks, either because insurance is not available or because of the high premium costs. As such, not all of our property is insured. We maintain accruals in our consolidated balance sheets related to self-insurance retentions by using third-party data and historical claims history. The occurrence of an event not fully insured against, or the failure of an insurer to meet its insurance obligations, could result in substantial losses. In addition, we may not be able to maintain adequate insurance in the future at rates we consider reasonable. Insurance may not be available to cover any or all of the risks to which we are subject, or, even if available, it may be inadequate, or insurance premiums or other costs could rise significantly in the future so as to make such insurance prohibitively expensive. It is likely that, in the future our insurance renewals, our premiums and deductibles will be higher, and certain insurance coverage either will be unavailable or considerably more expensive than it has been in the recent past. In addition, our insurance is subject to coverage limits, and some policies exclude coverage for damages resulting from environmental contamination. Our insurance program is administered by an officer of the Company, is reviewed not less than annually with our insurance brokers and underwriters, and is reviewed by our Board of Directors on an annual basis. Table of Contents We are subject to federal, state and local regulations regarding issues of health, safety and protection of the environment. Under these regulations, we may become liable for penalties, damages or costs of remediation. Any changes in these laws and government regulations could increase our costs of doing business. Our operations are subject to federal, state and local laws and regulations relating to protection of natural resources and the environment, health and safety, waste management, and transportation of waste and other materials. Our fluid services segment includes disposal operations into injection wells that pose some risks of environmental liability, including leakage from the wells to surface or subsurface soils, surface water or groundwater. Liability under these laws and regulations could result in cancellation of well operations, fines and penalties, expenditures for remediation, and liability for property damage and personal injuries. Sanctions for noncompliance with applicable environmental laws and regulations also may include assessment of administrative, civil and criminal penalties, revocation of permits and issuance of corrective action orders. RISK FACTORS RELATING TO AN INVESTMENT IN OUR SECURITIES The WayPoint Warrants possess full anti-dilution provisions, and may result in a duplication of dilution. The warrant we issued to WayPoint in connection with the financing of the FDF Acquisition to purchase up to 35% of the outstanding shares of our Common Stock ( Purchaser Warrant ) provides anti-dilution protection so that the number of shares that may be purchased pursuant to the Purchaser Warrant, each at $0.01 per share, shall be equal to 35% of the then outstanding shares of our Common Stock on a fully-diluted basis, as measured at the time of full exercise of the Purchaser Warrant. WayPoint also holds an additional warrant ( Control Warrant and collectively with the Purchaser Warrant, the WayPoint Warrants ) to purchase a sufficient number of shares of our Common Stock so that, measured at the time of exercise, the number of shares of Common Stock issued or issuable pursuant to the WayPoint Warrants represents 51% of our outstanding Common Stock on a fully-diluted basis. The exercise price of both WayPoint Warrants is $0.01 per share. The Control Warrant is exercisable only if certain default conditions exist. Because of these anti-dilution provisions, each time we issue additional shares of its Common Stock, for whatever reason, the number of shares of Common Stock issuable upon exercise of the WayPoint Warrants automatically increases. In the event one or both of the WayPoint Warrants is exercised, it will substantially dilute the ownership interests of all other holders of our Common Stock, from both a voting and economic perspective. As discussed above, as of the date of this prospectus, the Control Warrant is exercisable. The Control Warrant may also become exercisable after the Purchaser Warrant has been fully exercised and WayPoint has disposed of all shares of Common Stock acquired pursuant to that warrant. Based on the current number of shares outstanding, the Purchaser Warrant could be exercised for approximately 14,000,000 shares of Common Stock. Assuming that the Control Warrant becomes exercisable and all of the shares acquired upon exercise of the Purchaser Warrant are disposed of by the holder before the Control Warrant is exercised, the Control Warrant would be exercisable for 51% of our Common Stock, which currently would result in the issuance of approximately an additional 41,850,000 shares of Common Stock to WayPoint and result in the total number of shares of Common Stock outstanding exceeding 80,000,000 shares. Thus, the Purchaser Warrant and the Control Warrant could result in duplicative dilution. Exercise of the WayPoint Control Warrant would result in a change in control. The Control Warrant becomes exercisable at an exercise price of $0.01 per share, upon the earliest to occur of (i) the occurrence of a Default (defined below) that remains uncured for seventy-five days; provided, that payment to the holders of Senior Series A Redeemable Preferred Stock of our subsidiary Acquisition Inc. of all amounts owing to them as a result of a Default shall be considered a cure of a Default; (ii) the date on which a Change of Control (defined below) occurs, if Acquisition Inc. is not able to redeem all of the Senior Series A Redeemable Preferred Stock in accordance with its terms; (iii) seventy-five days after the date on which the third Default has occurred within a consecutive twelve-month period; and (iv) May 23, 2016, if Acquisition Inc. is not able to redeem all of the Senior Series A Redeemable Preferred Stock in accordance with its terms (the Default Conditions ). The term Default includes 14 categories of events, which are Table of Contents listed in Section 11.1 of the WayPoint Purchase Agreement and which list includes, among other events, (i) the failure of Acquisition Inc. to timely make a redemption payment to holders of the Senior Series A Redeemable Preferred Stock, (ii) the failure of Acquisition Inc. to timely make a dividend payment to holders of the Senior Series A Redeemable Preferred Stock, (iii) our failure or the failure of Acquisition Inc. to perform covenants in the WayPoint Purchase Agreement, (iv) our failure to meet a fixed-charge coverage ratio, leverage ratio or minimum EBITDA test in the WayPoint Purchase Agreement; (v) we or any of our subsidiaries becomes in default on other indebtedness, individually or in the aggregate, in excess of $250,000; (vi) we, Acquisition Inc., Francis Oaks, LLC, FDF or any FDF subsidiary (the Francis Group ) becomes subject to bankruptcy or receivership proceedings, (vii) a judgment or judgments is entered against is entered against us, Acquisition Inc. or Francis Group in excess of $1,000,000, and such judgment is not satisfied; (viii) we, Acquisition Inc. or Francis Group breaches a representation or warranty in the WayPoint Purchase Agreement or the documents related thereto; (ix) a Change of Control occurs; and (x) certain liabilities in excess of $250,000 arise under ERISA. Change of Control means (i) a sale of shares of our stock, Acquisition Inc. or Francis Group, or a merger involving any of them, as a result of which holders of the voting capital stock of the applicable entity immediately prior to such transaction do not hold at least 50% of the voting power of the applicable entity or the resulting or surviving entity or the acquiring entity; (ii) a disposition of all or substantially all of our assets, Acquisition Inc. or Francis Group; (iii) a voluntary or involuntary liquidation, dissolution or winding up by us, Acquisition Inc. or Francis Group; (iv) either Michael K. Galvis or Michael G. Francis shall sell at least five percent (5%) of our equity held by them immediately prior to such sale; (v) Michael K. Galvis ceases to be our Chief Executive Officer and is not replaced by a candidate suitable to WayPoint within 30 days or any such replacement Chief Executive Officer ceases to be our Chief Executive Officer and is not replaced by a candidate suitable to WayPoint within 30 days; or (vi) Michael G. Francis ceases to be the Chief Executive Officer of FDF and is not replaced by a candidate suitable to WayPoint within 30 days or any such replacement Chief Executive Officer ceases to be the Chief Executive Officer of the FDF and is not replaced by a candidate suitable to WayPoint within 30 days. As stated in more detail above, certain of the Default Conditions have occurred, and the Control Warrant is, as of the date of this prospectus, exercisable. The issuance of shares of Common Stock upon conversion of the Debentures and Series A Preferred Stock, as well as upon exercise of outstanding warrants may cause immediate and substantial dilution to our existing stockholders. If the market price per share of our Common Stock at the time of conversion of our Convertible Debentures or Series A Preferred Stock and exercise of any warrants, options, or any other convertible securities is in excess of the various conversion or exercise prices of these derivative securities, conversion or exercise of these derivative securities would have a dilutive effect on our Common Stock. As of June 30, 2011, we had (i) outstanding Convertible Debentures which are convertible into an aggregate of 1,356,667 shares of our Common Stock at a conversion price of $1.50 per share, (ii) 6,000,000 shares of Series A Preferred Stock which are convertible into an aggregate of 6,000,000 shares of our Common Stock at $1.00 per share, (iii) warrants to purchase 2,230,000 shares of our Common Stock at an exercise price of $2.00 per share of our Common Stock and (iv) outstanding 9% convertible debentures issued by NYTEX Petroleum which are convertible into an aggregate 586,506 shares of Common Stock at a conversion price of $2.00 per share (the NYTEX Petroleum Convertible Debentures ). Further, any additional financing that we secure may require the granting of rights, preferences or privileges senior to those of our Common Stock, which may result in additional dilution of the existing ownership interests of our Common Stockholders. We are required to register various securities with the SEC under agreements with certain of our security holders and may be subject to certain monetary penalties if we do not do so. This prospectus relates to our obligation to file a registration statement with the SEC registering for sale 9,663,333 shares of Common Stock issuable upon conversion of (i) the Debentures and (ii) Series A Preferred Stock, and upon exercise of both the Debenture Warrants and Series A Warrants. Pursuant to a registration rights agreement with the holders of the securities, we were required to file the registration statement on or before 60 days of the final closing of the Series A Preferred Stock offering, which was April 11, 2011. The Table of Contents holders of Series A Preferred Stock may demand a penalty equal to two percent of the amount of their investment, or $120,000, for each month after that date that the registration statement was not filed. We filed a Form S-1 registration statement, of which this prospectus is a part, on April 15, 2011. Additionally, since the SEC did not declare the registration statement effective within 120 days of the final closing of the Series A Preferred Stock offering, which was June 10, 2011, we face an additional penalty if demanded by the holders equal to two percent of the amount of their investment, or $120,000, for each month while not effective. After this registration statement becomes effective, we may be required to file a registration statement with the SEC registering for sale those shares of Common Stock held by Diana Francis that were issued to her in the FDF Acquisition. If such shares held by Diana Francis are eligible to be resold in reliance on Rule 144 of the Act, our registration requirements with respect to her shares will lapse. After November 23, 2011, but only upon request, we are obligated to file a registration statement with the SEC registering for sale the shares of Common Stock that may be issued upon exercise of the WayPoint Warrants. After such time, WayPoint is also entitled to piggyback registration rights, if we register other securities with the SEC. If we are required to file a registration statement registering securities for resale by WayPoint and the registration statement is not timely filed, does not become effective within a certain time period, or ceases to be available for sales thereunder for certain time periods, then we must pay WayPoint an amount in cash equal to one percent (1%) of the value of WayPoint s securities on the date of such event and each monthly anniversary thereof until cured, subject to a cap of ten percent (10%) of the value of WayPoint s registrable securities. The terms of our indebtedness to PNC and our transaction with WayPoint restrict our operations. We need consent from PNC and WayPoint to engage in certain activities, including, but not limited to, incurring further indebtedness, granting any liens on our assets, disposing of our assets, entering into mergers, or conducting acquisitions. If appropriate consents cannot be obtained from PNC and WayPoint, we may not be able to pursue capital-raising transactions or acquisitions that we believe are in our best interests and those of our stockholders. We are subject to the reporting requirements of federal securities laws, compliance with which is expensive. We are a public reporting company in the U.S. and, accordingly, subject to the information and reporting requirements of the Exchange Act and other federal securities laws, and the compliance obligations of the Sarbanes-Oxley Act of 2002. The costs of preparing and filing annual and quarterly reports, proxy statements and other information with the SEC and furnishing audited reports to stockholders will cause our expenses to be higher than they would be if we were a privately held company. Our compliance with the Sarbanes Oxley Act and SEC rules concerning internal controls will be time consuming, difficult, and costly. As a reporting company, it will be time consuming, difficult and costly for us to develop and implement the internal controls and reporting procedures required by the Sarbanes-Oxley Act. We will need to hire additional financial reporting, internal control, and other finance staff in order to develop and implement appropriate internal controls and reporting procedures. If we are unable to comply with the Sarbanes-Oxley Act s requirements regarding internal controls, we may not be able to obtain the independent accountant certifications that Sarbanes-Oxley Act requires publicly traded companies to obtain. If we fail to maintain the adequacy of our internal controls, our ability to provide accurate financial statements and comply with the requirements of the Sarbanes-Oxley Act could be impaired, which could cause the market price of our Common Stock to decrease substantially. We have committed limited personnel and resources to the development of the external reporting and compliance obligations that are required of a public company. We have taken measures to address and improve our financial reporting and compliance capabilities and we are in the process of instituting changes to satisfy Table of Contents EXHIBIT INDEX Exhibit Document 2 .1 Membership Interests Purchase Agreement by and among NYTEX Energy Holdings, Inc. (the Company ), Francis Drilling Fluids, Ltd., Francis Oaks, L.L.C. and the Members of Francis Oaks, L.L.C. dated November 23, 2010 (filed as Exhibit 10.1 to the Company s Form 8-K filed November 30, 2010 and incorporated herein by reference) 3 .1 Certificate of Incorporation of the Company, as amended (filed as Exhibit 3.1 to the Company s Form 10-12G/A filed August 12, 2010 and incorporated herein by reference) 3 .2 Bylaws of the Company, as amended (filed as Exhibit 3.2 to the Company s Form 10-12G/A filed August 12, 2010 and incorporated herein by reference) 4 .1 Form of stock certificate for shares of Common Stock of the Company (filed as Exhibit 4.1 to the Registrant s Amendment No. 1 to Form S-1 filed August 13, 2011 and incorporated herein by reference) 4 .2 Form of stock certificate for Series A Preferred Stock of the Company (filed as Exhibit 4.2 to the Registrant s Amendment No. 1 to Form S-1 filed August 13, 2011 and incorporated herein by reference) 4 .3 Form of stock certificate for Series B Preferred Stock of the Company (filed as Exhibit 4.3 to the Registrant s Amendment No. 1 to Form S-1 filed August 13, 2011 and incorporated herein by reference) 4 .4 Form of purchaser warrant (filed as Exhibit 10.7 to the Company s Form 8-K filed November 30, 2010 and incorporated herein by reference) 4 .5 Form of control warrant (filed as Exhibit 10.7 to the Company s Form 8-K filed November 30, 2010 and incorporated herein by reference) 4 .6 Form of Registration Rights Agreement between WayPoint Nytex, LLC and the Company dated November 23, 2010 (filed as Exhibit 10.8 to the Company s Form 8-K filed November 30, 2010 and incorporated herein by reference) 4 .7 Form of warrant issued in connection with the issuance of Series A Preferred Stock dated November 23, 2010 (filed as Exhibit 4.7 to the Registrant s Amendment No. 1 to Form S-1 filed August 13, 2011 and incorporated herein by reference) 4 .8 Form of warrant issued in connection with the issuance of 12% Convertible Debentures of the Company dated November 23, 2010 (filed as Exhibit 10.2 to the Company s Form 8-K filed November 10, 2010 and incorporated herein by reference) 4 .9 Form of Registration Rights Agreement between the Company and the holders of Series A Preferred Stock dated November 23, 2010 (filed as Exhibit 4.9 to the Registrant s Amendment No. 1 to Form S-1 filed August 13, 2011 and incorporated herein by reference) 4 .10 Form of Registration Rights Agreement between the Company and the holders of the Debentures dated August 13, 2010 (filed as Exhibit 10.4 to the Company s Form 8-K filed November 10, 2010 and incorporated herein by reference) 4 .11 Certificate of Designation in respect of Series A Convertible Preferred Stock of the Company dated November 19, 2010 (filed as Exhibit 4.11 to the Registrant s Amendment No. 1 to Form S-1 filed August 13, 2011 and incorporated herein by reference) 4 .12 Certificate of Designation in respect of Series B Preferred Stock of the Company (filed as Exhibit 10.10 to the Company s Form 8-K filed November 30, 2010 and incorporated herein by reference) 4 .13 Amended and Restated Certificate of Designation in respect of Senior Series A Redeemable Preferred Stock of NYTEX FDF Acquisition Inc. (filed as Exhibit 10.9 to the Company s Form 8-K filed November 30, 2010 and incorporated herein by reference) 5 .1 Legal Opinion of Strasburger Price, LLP filed herewith Table of Contents Exhibit Document 10 .2 Preferred Stock and Warrant Purchase Agreement among the Company, NYTEX FDF Acquisition, Inc. and WayPoint NYTEX, LLC, dated November 23, 2010 (filed as Exhibit 10.6 to the Company s Form 8-K filed November 30, 2010 and incorporated herein by reference) 10 .3 Placement Agency Agreement between the Company and National Securities Corporation, dated October 8, 2010. (filed as Exhibit 10.3 to the Company s Form 10-K filed April 15, 2011 and incorporated herein by reference) 10 .4 Form of Securities Purchase Agreement between the Company and holders of 12% Convertible Debentures dated October 12, 2010 (filed as Exhibit 10.3 to the Company s Form 8-K filed November 10, 2010 and incorporated herein by reference) 10 .5 Form of 12% Convertible Debenture issued by the Company to holders thereof dated October 12, 2010 (filed as Exhibit 10.3 to the Company s Form 8-K filed November 10, 2010 and incorporated herein by reference) 10 .6 Lease with Capital One Bank, N.A., Account Number 3109321057 (filed as Exhibit 10.4 to the Company s Form 10-K filed April 15, 2011 and incorporated herein by reference) 10 .7 Lease with Capital One Bank, N.A., Account Number 3109321058 (filed as Exhibit 10.5 to the Company s Form 10-K filed April 15, 2011 and incorporated herein by reference) 10 .8 Lease with Capital One Bank, N.A., Account Number 3109321059 (filed as Exhibit 10.6 to the Company s Form 10-K filed April 15, 2011 and incorporated herein by reference) 10 .9 Lease with Capital One Bank, N.A., Account Number 3109321061 (filed as Exhibit 10.7 to the Company s Form 10-K filed April 15, 2011 and incorporated herein by reference) 10 .10 Lease with Capital One Bank, N.A., Account Number 3109321063 (filed as Exhibit 10.8 to the Company s Form 10-K filed April 15, 2011 and incorporated herein by reference) 10 .11 Lease with PACCAR Financial Services, LLC, Account Number 900-651-600-00006063374 (filed as Exhibit 10.9 to the Company s Form 10-K filed April 15, 2011 and incorporated herein by reference) 10 .12 Lease with PACCAR Financial Services, LLC, Account Number 900-651-600-00006068985 (filed as Exhibit 10.10 to the Company s Form 10-K filed April 15, 2011 and incorporated herein by reference) 10 .13 Lease with PACCAR Financial Services, LLC, Account Number 900-681-600-00006070502 (filed as Exhibit 10.11 to the Company s Form 10-K filed April 15, 2011 and incorporated herein by reference) 10 .14 Employment Agreement between the Company and Michael K. Galvis, dated April 28, 2009 (filed as Exhibit 10.1 to the Company s Form 10-12G/A filed August 12, 2010 and incorporated herein by reference) 10 .15 Employment Agreement between Francis Drilling Fluids, Ltd. and Michael K. Galvis, dated November 23, 2010 (filed as Exhibit 10.13 to the Company s Form 10-K filed April 15, 2011 and incorporated herein by reference) 10 .16 Employment Agreement between the Company and Kenneth K. Conte, dated June 1, 2010 (filed as Exhibit 10.1 to the Company s Form 8-K filed on October 8, 2010 and incorporated herein by reference) 10 .17 Employment Agreement between the Company and Georgianna Hanes, dated April 28, 2009 (filed as Exhibit 10.2 to the Company s Form 10-12G/A filed August 12, 2010 and incorporated herein by reference) 10 .18 Employment Agreement between the Company and William G. Brehmer, dated April 28, 2009 (filed as Exhibit 10.3 to the Company s Form 10-12G/A filed August 12, 2010 and incorporated herein by reference) 10 .19 Employment Agreement between Francis Drilling Fluids, Ltd. and Michael G. Francis, dated November 23, 2010 (filed as Exhibit 10.3 to the Company s Form 8-K filed November 30, 2010 and incorporated herein by reference) Table of Contents our obligations in connection with being a public company, when and as such requirements become applicable to us. We plan to obtain additional financial and accounting resources to support and enhance our ability to meet the requirements of being a public company. We will need to continue to improve our financial and managerial controls, reporting systems and procedures, and documentation thereof. If our financial and managerial controls, reporting systems, or procedures fail, we may not be able to provide accurate financial statements on a timely basis or comply with the Sarbanes-Oxley Act as it applies to us. Any failure of our internal controls or our ability to provide accurate financial statements could cause the trading price of our Common Stock to decline substantially. Our stock price may be volatile, which may result in losses to our stockholders. Domestic and international stock markets often experience significant price and volume fluctuations especially in times of economic uncertainty. In particular, the market prices of companies quoted on the Over-The-Counter Bulletin Board, where our shares of Common Stock are quoted, generally have been very volatile and have experienced sharp share-price and trading-volume changes. The public trading price of our Common Stock is likely to be volatile and could fluctuate widely in response to the following factors, some of which are beyond our control: variations in our operating results; changes in expectations of our future financial performance, including financial estimates by securities analysts and investors; changes in operating and stock price performance of other companies in our industry; WayPoint s exercise of the Purchase Warrant or the Control Warrant; additions or departures of key personnel; future sales of our Common Stock; and general economic and political conditions. The market price for our Common Stock may be particularly volatile given our status as a smaller reporting company with a presumably small and thinly-traded float. You may be unable to sell your Common Stock at or above your purchase price if at all, which may result in substantial losses to you. The market for our Common Stock may be characterized by significant price volatility when compared to seasoned issuers, and we expect that our share price will be more volatile than a seasoned issuer for the indefinite future. The potential volatility in our share price is attributable to a number of factors. As noted above, our Common Stock may be sporadically and/or thinly traded. As a consequence of this lack of liquidity, the trading of relatively small quantities of shares by our stockholders may disproportionately influence the price of those shares in either direction. The price for our shares could, for example, decline precipitously in the event that a large number of our common shares are sold on the market without commensurate demand, as compared to a seasoned issuer that could better absorb those sales without adverse impact on its share price. Our Common Stock has only recently begun trading. We expect our Common Stock to be thinly-traded. You may be unable to sell at or near ask prices or at all if you need to sell your shares to raise money or otherwise desire to liquidate such shares. We cannot predict the extent to which an active public trading market for our Common Stock will develop or be sustained due to a number of factors, including the fact that we are a smaller reporting company that is relatively unknown to stock analysts, stock brokers, institutional investors, and others in the investment community that generate or influence sales volume. Even if we come to the attention of such persons, they tend to be risk-averse and would be reluctant to follow an unproven company as currently constituted such as ours or purchase or recommend the purchase of our shares until such time as we became more seasoned and viable. As a consequence, there may be periods of several days or more when trading activity in our Common Table of Contents Stock is minimal or non-existent, as compared to a seasoned issuer which has a large and steady volume of trading activity that will generally support continuous sales without an adverse effect on share price. We cannot give you any assurance that a broader or more active public trading market for our Common Stock will develop or be sustained, or that current trading levels will be sustained. Our Common Stock may be subject to penny stock rules, which may make it more difficult for our stockholders to sell their Common Stock. Broker-dealer practices in connection with transactions in penny stocks are regulated by certain penny stock rules adopted by the Securities and Exchange Commission. Penny stocks generally are equity securities with a price of less than $5.00 per share. The penny stock rules require a broker-dealer, prior to a purchase or sale of a penny stock not otherwise exempt from the rules, to deliver to the customer a standardized risk disclosure document that provides information about penny stocks and the risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, and monthly account statements showing the market value of each penny stock held in the customer s account. In addition, the penny stock rules generally require that prior to a transaction in a penny stock, the broker-dealer make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser s written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for a stock that becomes subject to the penny stock rules. We do not anticipate paying any dividends. We presently do not anticipate that we will pay any dividends on any of our Common Stock in the foreseeable future. The payment of dividends on our Common Stock, if any, would be contingent upon our revenues, earnings, capital requirements, and our general financial condition. We will pay dividends on our Common Stock only if and when declared by our board of directors. The ability of our board of directors to declare a dividend is subject to restrictions imposed by Delaware law and under our financing arrangements, including our Series A and Series B Preferred Stock. Additionally, we may not pay a dividend on our Common Stock until we are current in dividends payable on our Series A Preferred Stock, as discussed more fully above under the Risk Factor, Our indebtedness and other payment obligations could restrict our operations and make us more vulnerable to adverse economic conditions. In determining whether to declare dividends, our board of directors will consider these restrictions as well as our financial condition, results of operations, working capital requirements, future prospects and other factors it considers relevant. We have a substantial number of authorized common shares available for future issuance that could cause dilution of our stockholders interest and adversely impact the rights of holders of our Common Stock. We have a total of 200,000,000 shares of Common Stock authorized for issuance. As of June 30, 2011, we had 173,637,501 shares of Common Stock available for issuance. We have reserved 1,356,667 shares for conversion of our Debentures, 6,000,000 shares for conversion of our Series A Preferred Stock and 2,230,000 shares for issuance upon the exercise of outstanding warrants held by the Selling Security Holders. We have also reserved 400,000 shares of Common Stock in connection with stock grants to our employees and those of FDF. Additionally, our wholly-owned subsidiary NYTEX Petroleum, has issued debentures convertible into 586,506 shares of our Common Stock if fully converted. We may seek financing that could result in the issuance of additional shares of our capital stock and/or rights to acquire additional shares of our capital stock. We may also make acquisitions that result in issuances of additional shares of our capital stock. Furthermore, the book value per share of our Common Stock may be reduced. The addition of a substantial number of shares of our Common Stock into the market or by the registration of any of our other securities under the Securities Act may significantly and negatively affect the prevailing market price for our Common Stock. The future sales of shares of our Common Stock issuable upon the exercise of outstanding warrants and options may have a depressive effect on the market price of our Table of Contents Common Stock, as such warrants and options are likely to be exercised only at a time when the price of our Common Stock is greater than the exercise price. OTHER
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+PROSPECTUS SUMMARY This summary highlights selected information contained elsewhere in this prospectus. This summary does not contain all the information that you should consider before investing in the common stock. You should carefully read the entire prospectus, including Risk Factors , Management s Discussion and Analysis of Financial Condition and Results of Operations and the Financial Statements, before making an investment decision . About Our Company We were incorporated under the laws of the State of Nevada on July 6, 2009. Our principal business is management and ownership of branded restaurants. On July 6, 2009 we issued 9,000,000 shares of par value $.001 common stock to Seenu Kasturi, our CEO, pursuant to an exemption from registration set forth in Section 4(2) of the Securities Act of 1933. The shares were issued in exchange for services rendered to us. On June 6, 2010, Seenu Kasturi purchased 100,000 common shares in conjunction with our Regulation D Rule 506 private offering completed on June 28, 2010. On July 14, 2010 we purchased 100% of the outstanding shares of HNI, LLC ( HNI ) f/k/a Hardees of New Iberia, Inc. In consideration for these shares, the Company signed a promissory note (attached hereto as Exhibit 10.1), in the amount of $100,000, which will bear interest at 5% and is payable in 20 quarterly installments of $2,382 commencing October 15, 2010 with a balloon payment of $74,557 due immediately after the 20th payment. The acquisition was treated as a purchase and HNI became a wholly owned subsidiary of the Company. On September 3, 2010 the Company paid a $100,000 deposit on behalf of Hardees Real Estate of New Iberia, LLC , owned by our Chief Executive Officer ( CEO ), Seenu Kasturi. The deposit was paid in connection with the acquisition of land and a building which is used by Hardees of New Iberia, Inc. In connection with this deposit, Mr. Kasturi signed a promissory note for the full amount of the deposit, which will bear interest at 6%, and stipulates that all principal and interest is due to the Company on July 15, 2011. Such promissory note is attached hereto as Exhibit 10.2. In connection with this transaction, Hardees of New Iberia, Inc. signed a 5 year lease with Seenu Kasturi , for the use of the land and the building, which is Hardees Real Estate of Louisiana, Inc., 101 East Admiral Doyle Drive, New Iberia, LA 70560. The lease calls for rent payments of $1,000 per month through July 14, 2015. Such lease is attached hereto as Exhibit 10.3. We anticipate that depending on market conditions and our plan of operations, we may incur operating losses in the foreseeable future. Therefore, our auditors have raised substantial doubt about our ability to continue as a going concern. Where You Can Find Us Our principal executive offices are located at 3909 I Ambassador Caffery Parkway, Lafayette, Louisiana 70503 and our telephone number is (337) 981-1447. Our website is www.bluevictoryholdings.com. Terms of the Offering The selling shareholders named in this prospectus are offering all of the shares of common stock offered through this prospectus. The 1,000,000 shares of our common stock can be sold by selling security holders at a fixed price of $1.00 per share until our shares are quoted on the OTC Bulletin Board and thereafter at prevailing market prices or privately negotiated prices. The selling stockholders are selling shares of common stock covered by this prospectus for their own account. We will not receive any of the proceeds from the resale of these shares. The offering price of $1.00 was determined by the price the shares were sold to our shareholders in a private placement memorandum and is a fixed price at which the selling security holders may sell their shares until our common stock is quoted on the OTC Bulletin Board, at which time the shares may be sold at prevailing market prices or privately negotiated prices. There can be no assurance that a market maker will agree to file the necessary documents with FINRA, which operates the OTC Electronic Bulletin Board, nor can there be any assurance that such an application for quotation will be approved. We have agreed to bear the expenses relating to the registration of the shares for the selling security holders. SUMMARY FINANCIAL DATA The following summary financial data should be read in conjunction with Management s Discussion and Analysis, Plan of Operation and the Financial Statements and Notes thereto, included elsewhere in this prospectus. The statement of operations and balance sheet data for the six month period ended December 31, 2010 is derived from our unaudited financial statements. The statement of operations and balance sheet data for the period from July 6, 2009 to June 30, 2009 is derived from our audited financial statements. For the Six Months ended December 31, 2010 (Unaudited) For the Period July 6, 2009 to June 30, 2009 STATEMENT OF OPERATIONS Revenues $ 590,138 $ - Food Paper and Beverage 163,077 - Restaurant Operating Expense 228,431 - Cost of Real Estate Sold 179,807 - General and Administrative Expenses 36,717 22,356 Professional Fees 48,949 10,175 Total Operating Expenses 668,779 32,531 Loss from Operations (78,641 ) (32,531 ) Other Income 1,588 - Net Interest Income 13,788 12,107 Net Income (Loss) $ (63,265 ) $ (20,424 ) As of December 31, 2010 (Unaudited) As of June 30, 2010 BALANCE SHEET DATA Cash $ 452,826 $ 361,993 Total Assets 1,479,742 904,074 Total Liabilities 515,140 830 Stockholders Equity $ 964,602 $ 903,224 SECURITIES AND EXCHANGE COMMISSION ================================== AMENDMENT NO. 2 TO FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ================================== Blue Victory Holdings, Inc. (Exact Name of Small Business Issuer in its Charter) Delaware 6531 27-0499633 (State of Incorporation) (Primary Standard Classification Code) (IRS Employer ID No.) BLUE VICTORY HOLDINGS, INC. 4400 Ambassador Caffery Parkway, Suite A Box 347 Lafayette, Louisiana 70508 (337) 981-1447 Address and Telephone Number of Registrant s Principal Executive Offices and Principal Place of Business) BLUE VICTORY HOLDINGS, INC. 3909 I Ambassador Caffery Parkway Lafayette, Louisiana 70508 (337) 981-1447 (Name, Address and Telephone Number of Agent for Service) Copies of communications to: GREGG E. JACLIN, ESQ. CHRISTINE MELILLI, ESQ., CPA ANSLOW & JACLIN, LLP 195 Route 9 South, Suite204 Manalapan, NJ 07726 TELEPHONE NO.: (732) 409-1212 FACSIMILE NO.: (732) 577-1188 Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. x If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act of 1933, please check the following box and list the Securities Act registration Statement number of the earlier effective registration If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act of 1933, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act of 1933, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. o RISK FACTORS An investment in our common stock involves a high degree of risk. You should carefully consider the risks described below and the other information in this prospectus before investing in our common stock. If any of the following risks occur, our business, operating results and financial condition could be seriously harmed. Please note that throughout this prospectus, the words we , our or us refer to the Company and not to the selling stockholders. WE HAVE A LIMITED OPERATING HISTORY THAT YOU CAN USE TO EVALUATE US, AND THE LIKELIHOOD OF OUR SUCCESS MUST BE CONSIDERED IN LIGHT OF THE EXPENSES, DIFFICULTIES, COMPLICATIONS AND DELAYS FREQUENTLY ENCOUNTERED BY A SMALL DEVELOPING COMPANY. Blue Victory Holdings, Inc. is a Nevada Corporation founded on July 6, 2009. We have no significant financial resources and no revenues to date. The likelihood of our success must be considered in light of the expenses, difficulties, complications and delays frequently encountered by a small developing company starting a new business enterprise and the highly competitive environment in which we will operate. Such expenses include, but are not limited to, accounting and legal fees which must be incurred in order to become a publicly traded company. Further we anticipate potential difficulties, complications, and delays with regard to our pursuit in securing financing necessary for us to acquire additional restaurant locations. Since we have a limited operating history, we cannot assure you that our business will be profitable or that we will ever generate sufficient revenues to meet our expenses and support our anticipated activities. OUR AUDITOR HAS EXPRESSED SUBSTANTIAL DOUBT AS TO OUR ABILITY TO CONTINUE AS A GOING CONCERN. Based on our financial history since inception, our auditor has expressed substantial doubt as to our ability to continue as a going concern. If we cannot obtain sufficient funding, we may have to delay the implementation of our business strategy. WE WILL REQUIRE FINANCING TO ACHIEVE OUR CURRENT BUSINESS STRATEGY AND OUR INABILITY TO OBTAIN SUCH FINANCING COULD PROHIBIT US FROM EXECUTING OUR BUSINESS PLAN AND CAUSE US TO SLOW DOWN OUR EXPANSION OF OPERATIONS. We will need to raise additional funds through public or private debt or sale of equity to execute our plan of operations. We intend to open and acquire operating restaurants. As such, we will need to borrow money from lending institutions so that we can acquire or build restaurants. We anticipate a need of approximately $5 million to complete the acquisition of the 9-store KFC package of which we have made an offer to purchase. No assurance can be given that such funds will be available or, if available, will be on commercially reasonable terms satisfactory to us. There can be no assurance that we will be able to obtain financing if and when it is needed on terms we deem acceptable. If we are unable to obtain financing on reasonable terms, we could be forced to delay or scale back our plans for expansion. In addition, such inability to obtain financing on reasonable terms could have a material adverse effect on our business, operating results, or financial condition. OUR FUTURE SUCCESS IS DEPENDENT, IN PART, ON THE PERFORMANCE AND CONTINUED SERVICES OF SEENU KASTURI. YANNICK BASTIEN, AND OWEN THOMPSON. WITHOUT EACH OF THEIR CONTINUED SERVICE, WE MAY BE FORCED TO INTERRUPT OR EVENTUALLY CEASE OUR OPERATIONS. We are presently dependent to a great extent upon the experience, abilities and continued services of Seenu Kasturi, our President and Chief Executive Officer, Yannick Bastien, our director of operations, and Owen Thompson, our director of restaurant operations. We currently do not have employment agreements with any of these employees. The loss of any one of their services could have a material adverse effect on our business, financial condition or results of operation. SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS The information contained in this report, including in the documents incorporated by reference into this report, includes some statement that are not purely historical and that are forward-looking statements. Such forward-looking statements include, but are not limited to, statements regarding our and their management s expectations, hopes, beliefs, intentions or strategies regarding the future, including our financial condition, results of operations, and the expected impact of the Share Exchange on the parties individual and combined financial performance. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words anticipates, believes, continue, could, estimates, expects, intends, may, might, plans, possible, potential, predicts, projects, seeks, should, would and similar expressions, or the negatives of such terms, may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. The forward-looking statements contained in this report are based on current expectations and beliefs concerning future developments and the potential effects on the parties and the transaction. There can be no assurance that future developments actually affecting us will be those anticipated. These that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements, including the following forward-looking statements involve a number of risks, uncertainties (some of which are beyond the parties control) or other assumptions. CALCULATION OF REGISTRATION FEE Title of Each Class Of Securities to be Registered Amount to be Registered Proposed Maximum Aggregate Offering Price per share Proposed Maximum Aggregate Offering Price Amount of Registration fee Common Stock, par value $0.001 1,000,000 $ 1.00 $ 1,000,000 $ 71.30 The offering price has been estimated solely for the purpose of computing the amount of the registration fee in accordance with Rule 457(o). Our common stock is not traded on any national exchange and in accordance with Rule 457; the offering price was determined by the price shares were sold to our shareholders in a private placement memorandum. The price of $1.00 is a fixed price at which the selling security holders may sell their shares until our common stock is quoted on the OTC Bulletin Board at which time the shares may be sold at prevailing market prices or privately negotiated prices. There can be no assurance that a market maker will agree to file the necessary documents with the Financial Industry Regulatory Authority, which operates the OTC Electronic Bulletin Board, nor can there be any assurance that such an application for quotation will be approved. PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION DATED MAY , 2011 The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with section 8(a) of the securities act of 1933 or until the registration statement shall become effective on such date as the commission, acting pursuant to said section 8(a), may determine. THE OFFERING PRICE OF THE SHARES WAS DETERMINED BY THE PRICE SHARES WERE SOLD TO OUR SHAREHOLDERS IN OUR PRIVATE PLACEMENT COMPLETED ON JUNE 28, 2010 , AND THEREFORE SHOULD NOT BE USED AS AN INDICATOR OF THE FUTURE MARKET PRICE OF THE SECURITIES. Since our shares are not listed or quoted on any exchange or quotation system, the offering price of $1.00 per share for the shares of common stock is based upon the price of the shares sold to our shareholders in our private placement completed on June 28, 2010 . The offering price bears no relationship to the book value, assets or earnings of our company or any other recognized criteria of value. The offering price should not be regarded as an indicator of the future market price of the securities. THERE IS NO ASSURANCE OF A PUBLIC MARKET OR THAT THE COMMON STOCK WILL EVER TRADE ON A RECOGNIZED EXCHANGE. THEREFORE, YOU MAY BE UNABLE TO LIQUIDATE YOUR INVESTMENT IN OUR STOCK. There is no established public trading market for our common stock. Our shares are not and have not been listed or quoted on any exchange or quotation system. There can be no assurance that a market maker will agree to file the necessary documents with FINRA, which operates the OTC Electronic Bulletin Board, nor can there be any assurance that such an application for quotation will be approved or that a regular trading market will develop or that if developed, will be sustained. In the absence of a trading market, an investor may be unable to liquidate their investment. OUR COMMON STOCK IS CONSIDERED A PENNY STOCK, WHICH IS SUBJECT TO RESTRICTIONS ON MARKETABILITY, SO YOU MAY NOT BE ABLE TO SELL YOUR SHARES. If our common stock becomes tradable in the secondary market, we will be subject to the penny stock rules adopted by the Securities and Exchange Commission that require brokers to provide extensive disclosure to their customers prior to executing trades in penny stocks. These disclosure requirements may cause a reduction in the trading activity of our common stock, which in all likelihood would make it difficult for our shareholders to sell their securities. Penny stocks generally are equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on the NASDAQ system). Penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document that provides information about penny stocks and the risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, and monthly account statements showing the market value of each penny stock held in the customer s account. The broker-dealer must also make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser s written agreement to the transaction. These requirements may have the effect of reducing the level of trading activity, if any, in the secondary market for a security that becomes subject to the penny stock rules. The additional burdens imposed upon broker-dealers by such requirements may discourage broker-dealers from effecting transactions in our securities, which could severely limit their market price and liquidity of our securities. These requirements may restrict the ability of broker-dealers to sell our common stock and may affect your ability to resell our common stock. OUR ABILITY TO BECOMEA RELEVANT AND TRUSTED BRAND AND TO INCREASE SALES DEPENDS LARGELY ON HOW WELL WE EXECUTE OUR MARKETING PLAN. Our ability to anticipate and respond effectively to trends or other factors that affect the fast food segment and our competitive position in the fast food market, such as spending patterns, demographic changes, trends in food preparation, consumer preferences, all of which can drive popular perceptions of our business is contingent upon our ability to properly manage and market our business. If we are unable to generate the revenue necessary for our business to be profitable, we will not be able execute our marketing plan of opening additional Hardees locations. Our inability to open additional locations could have a material adverse effect on our business, financial condition or results of operation. OUR ABILITY TO ACHIEVE SUSTAINED HIGH SERVICE LEVELS DEPENDS UPON OUR ABILITY TO PROPERLY MANAGE AND MOVIVATE OUR RESTAURANT PERSONNEL. Our ability to drive restaurant improvements and achieve sustained high service levels so as to improve consumer perceptions of our ability to provide quality food served in clean and friendly environments is contingent upon our ability to properly manage and motivate our restaurant personnel. Our inability to properly manage and motivate our restaurant personnel could have a material adverse effect on our business, financial condition or results of operation. WE ENGAGE IN RELATED PARTY TRANSACTIONS WITH OUR CEO WHICH COULD RESULT IN CONFLICTS OF INTEREST BETWEEN OUR CEO AND SHAREHOLDERS OF THE COMPANY We have entered into various related party transactions with our CEO, Seenu Kasturi. In his role as CEO and Director, Seenu Kasturi has fiduciary duties to the shareholders of the Company, requiring him to make decisions that are in the best interests of the shareholders. Engaging in related party transactions could result in conflicts of interest and may cause harm to our shareholders. WE ENTERED INTO A RELATED PARTY TRANSACTION WITH K&L INVESTMENTS, A COMPANY OWNED BY OUR CEO, SEENU KASTURI, WHEREBYE WE PURCHASED CONTRACT RIGHTS FROM K&L. On March 31, 2010, the Company purchased contract rights from K&L Investment Realty, LLC, a company owned by our CEO. Although the contract calls for full recourse should the contract holder default on payment for the full outstanding balance and any accrued interest due as of the date of the default, it is possible that our CEO may not hold K&L accountable for the full amount due pursuant to the terms of the agreement in the event of default due to his conflict in interest as the owner of K&L and CEO of the Company. We rely on the monthly payments from the contract rights we purchased from K&L. Loss of this monthly income would have a material adverse effect on our financial condition and results of operation. The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale of these securities is not permitted. Subject to Completion, Dated May , 2011 1,000,000 SHARES OF BLUE VICTORY HOLDINGS, INC. COMMON STOCK The selling shareholders named in this prospectus are offering all of the shares of common stock offered through this prospectus. Our common stock is presently not traded on any market or securities exchange. The 1,000,000 shares of our common stock can be sold by selling security holders at a fixed price of $1.00 per share until our shares are quoted on the OTC Bulletin Board and thereafter at prevailing market prices or privately negotiated prices. There can be no assurance that a market maker will agree to file the necessary documents with The Financial Industry Regulatory Authority ( FINRA ), which operates the OTC Electronic Bulletin Board, nor can there be any assurance that such an application for quotation will be approved. We have agreed to bear the expenses relating to the registration of the shares for the selling security holders. THE PURCHASE OF THE SECURITIES OFFERED THROUGH THIS PROSPECTUS INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD CAREFULLY CONSIDER THE FACTORS DESCRIBED UNDER THE HEADING RISK FACTORS BEGINNING ON PAGE 3. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. The Date of This Prospectus Is: May , 2011 USE OF PROCEEDS The selling stockholders are selling shares of common stock covered by this prospectus for their own account. We will not receive any of the proceeds from the resale of these shares. We have agreed to bear the expenses relating to the registration of the shares for the selling security holders. DETERMINATION OF OFFERING PRICE Since our shares are not listed or quoted on any exchange or quotation system, was determined by the price shares were sold to our shareholders in our private placement which was completed on June 28, 2010 pursuant to an exemption under Rule 506 of Regulation D. The offering price of the shares of our common stock has been determined arbitrarily by us and does not necessarily bear any relationship to our book value, assets, past operating results, financial condition or any other established criteria of value. The facts considered in determining the offering price were our financial condition and prospects, our limited operating history and the general condition of the securities market. Although our common stock is not listed on a public exchange, we will be filing to obtain a listing on the Over The Counter Bulletin Board (OTCBB) concurrently with the filing of this prospectus. In order to be quoted on the Bulletin Board, a market maker must file an application on our behalf in order to make a market for our common stock. There can be no assurance that a market maker will agree to file the necessary documents with FINRA, which operates the OTC Electronic Bulletin Board, nor can there be any assurance that such an application for quotation will be approved. In addition, there is no assurance that our common stock will trade at market prices in excess of the initial public offering price as prices for the common stock in any public market which may develop will be determined in the marketplace and may be influenced by many factors, including the depth and liquidity. DILUTION The common stock to be sold by the selling shareholders is common stock that is currently issued. Accordingly, there will be no dilution to our existing shareholders. SELLING SHAREHOLDERS The shares being offered for resale by the selling stockholders consist of the following: (i) 1,000,000 shares of our common stock held by 50 shareholders which were sold in our Regulation D Rule 506 offering completed on June 28, 2010; (ii) 10,000 shares of our common stock held by 1 shareholder which were issued on July 6, 2009 in exchange for legal services and qualified for exemption under Section 4(2) of the Securities Act of 1933 since the issuance shares by us did not involve a public offering as defined in Section 4(2) due to the insubstantial number of persons involved in the deal, size of the offering, manner of the offering and number of shares offered. The following table sets forth the name of the selling stockholders, the number of shares of common stock beneficially owned by each of the selling stockholders as of November 4, 2010 and the number of shares of common stock being offered by the selling stockholders. The shares being offered hereby are being registered to permit public secondary trading, and the selling stockholders may offer all or part of the shares for resale from time to time. However, the selling stockholders are under no obligation to sell all or any portion of such shares nor are the selling stockholders obligated to sell any shares immediately upon effectiveness of this prospectus. All information with respect to share ownership has been furnished by the selling stockholders. Name of selling stockholder Shares of common stock owned prior to offering Shares of common stock to be sold Shares of common stock owned after offering Percent of common stock owned after offering (1) 51 Anslow & Jaclin 10,000 10,000 0 0% 1 Reynaud, Roderick 1,000 1,000 0 0% 2 Granger, Kenneth 1,000 1,000 0 0% 3 Granger, James 5,000 5,000 0 0% 4 Pandya, Ketan 50,000 50,000 0 0% 5 Broussard, Brett 1,000 1,000 0 0% 6 Pandya, Bipin 50,000 50,000 0 0% 7 Peters, Stephen 5,000 5,000 0 0% 8 Bhougaraju, Kesava K/Shymala 5,000 5,000 0 0% 9 Rao, Shridhar 5,000 5,000 0 0% 10 Kiesler, James 50,000 50,000 0 0% 11 Blasi, Candance 15,000 15,000 0 0% 12 Flanders, Rowena 25,000 25,000 0 0% 13 Leopold, William 50,000 50,000 0 0% 14 Jaikishen, Suryakalan 25,000 25,000 0 0% 15 Bhat, Shyla 8,000 8,000 0 0% 16 Bourgeois, Cynthia 50,000 50,000 0 0% 17 Sharma, Neeraj 25,000 25,000 0 0% 18 Kasturi, Savitha (2) 2,500 2,500 0 0% 19 Alexander, Fred (3) 1,000 1,000 0 0% 20 Bastien, Yannick (4) 1,000 1,000 0 0% 21 Evans, James 2,500 2,500 0 0% 22 Shukla, Dev 1,000 1,000 0 0% 23 Soucie, Michelle 1,000 1,000 0 0% 24 Lewis, Shelly 2,500 2,500 0 0% 25 Richard, Mark 1,000 1,000 0 0% 26 Akkaraju, Vidyadhar/Parvathi 100,000 100,000 0 0% 27 Akkaraju, Nikhil 1,000 1,000 0 0% 28 Kasturi, Lakshmi (5) 1,000 1,000 0 0% 29 Kasturi, Minakshi (6) 1,000 1,000 0 0% 30 Boone, Brandy 1,000 1,000 0 0% 31 Hilliard, Karen 50,000 50,000 0 0% 32 Etier, Brian 5,000 5,000 0 0% 33 Bernard, Brenda 1,000 1,000 0 0% 34 Anderson, Christine 1,000 1,000 0 0% 35 Ghirardi, Ronald 1,000 1,000 0 0% 36 Williams, Stacy 1,000 1,000 0 0% 37 Jacobs, Amy 1,000 1,000 0 0% 38 Jacobs, Russell 1,000 1,000 0 0% 39 Lewis, Simeon 1,000 1,000 0 0% 40 Peters, Linda 1,000 1,000 0 0% 41 Mitchell, David 10,000 10,000 0 0% 42 Bilakanti, Srinivas 5,000 5,000 0 0% 43 Islam, Mohammed 25,000 25,000 0 0% 44 Chikeral, Amil 5,000 5,000 0 0% 45 Kasturi, Seenu & Divya (7) 9,100,000 100,000 9,000,000 90% 46 Peters, Marck 65,000 65,000 0 0% 47 Thompson, Owen (8) 2,500 2,500 0 0% 48 Thanki, Lalit 25,000 25,000 0 0% 49 Allenan, Kim 2,000 2,000 0 0% 50 Stewart, Robert 200,000 200,000 0 0% (1) Based on 10,000,000 outstanding Common Shares at May 9 , 2011 (2) Savitha Kasturi is the sister-in-law of Seenu Kasturi, our CEO and Director. (3) Fred Alexander is our Vice-President of Business Development. (4) Yannick Bastien is our Chief Financial Officer and Principal Accounting Officer. (5) Lakshmi Kasturi is the mother of Seenu Kasturi, our CEO and Director. (6) Minakshi Kastuir is the sister of Seenu Kasturi, our CEO and Director. (7) Seenu Kasturi is our Chief Executive Officer and Director. (8) Owen Thompson is our Vice-President of Restaurant Operations. To our knowledge, except for Seenu Kasturi, Fred Alexander, Yannick Bastein, and Owen Thompson , as disclosed above, none of the selling shareholders or their beneficial owners: has had a material relationship with us other than as a shareholder at any time within the past three years; or has ever been one of our officers or directors or an officer or director of our predecessors or affiliates are broker-dealers or affiliated with broker-dealers. PLAN OF DISTRIBUTION The selling security holders may sell some or all of their shares at a fixed price of $1.00 per share until our shares are quoted on the OTC Bulletin Board and thereafter at prevailing market prices or privately negotiated prices. Prior to being quoted on the OTCBB, shareholders may sell their shares in private transactions to other individuals. Although our common stock is not listed on a public exchange, we will be filing to obtain a listing on the Over the Counter Bulletin Board (OTCBB) concurrently with the filing of this prospectus. In order to be quoted on the Bulletin Board, a market maker must file an application on our behalf in order to make a market for our common stock. There can be no assurance that a market maker will agree to file the necessary documents with FINRA, which operates the OTC Electronic Bulletin Board, nor can there be any assurance that such an application for quotation will be approved. There can be no assurance that a market maker will agree to file the necessary documents with FINRA, which operates the OTC Electronic Bulletin Board, nor can there be any assurance that such an application for quotation will be approved. However, sales by selling security holder must be made at the fixed price of $1.00 until a market develops for the stock. Once a market has been developed for our common stock, the shares may be sold or distributed from time to time by the selling stockholders directly to one or more purchasers or through brokers or dealers who act solely as agents, at market prices prevailing at the time of sale, at prices related to such prevailing market prices, at negotiated prices or at fixed prices, which may be changed. The distribution of the shares may be effected in one or more of the following methods: O ordinary brokers transactions, which may include long or short sales, O transactions involving cross or block trades on any securities or market where our common stock is trading, market where our common stock is trading, O through direct sales to purchasers or sales effected through agents, O through transactions in options, swaps or other derivatives (whether exchange listed of otherwise), or exchange listed or otherwise), or O any combination of the foregoing. In addition, the selling stockholders may enter into hedging transactions with broker-dealers who may engage in short sales, if short sales were permitted, of shares in the course of hedging the positions they assume with the selling stockholders. The selling stockholders may also enter into option or other transactions with broker-dealers that require the delivery by such broker-dealers of the shares, which shares may be resold thereafter pursuant to this prospectus. Brokers, dealers, or agents participating in the distribution of the shares may receive compensation in the form of discounts, concessions or commissions from the selling stockholders and/or the purchasers of shares for whom such broker-dealers may act as agent or to whom they may sell as principal, or both (which compensation as to a particular broker-dealer may be in excess of customary commissions). Neither the selling stockholders nor we can presently estimate the amount of such compensation. We know of no existing arrangements between the selling stockholders and any other stockholder, broker, dealer or agent relating to the sale or distribution of the shares. We will not receive any proceeds from the sale of the shares of the selling security holders pursuant to this prospectus. We have agreed to bear the expenses of the registration of the shares, including legal and accounting fees, and such expenses are estimated to be approximately $20,000. Notwithstanding anything set forth herein, no FINRA member will charge commissions that exceed 8% of the total proceeds of the offering. DESCRIPTION OF SECURITIES General Our authorized capital stock consists of 100,000,000 shares of common stock, $0.001 par value per share and 10,000,000 shares of preferred stock, $0.001 par value per share. There are no provisions in our charter or by-laws that would delay, defer or prevent a change in our control. Common Stock We are authorized to issue 100,000,000 shares of common stock, $0.001 par value per share. Currently we have 10,000,000 common shares issued and outstanding. The holders of our common stock have equal ratable rights to dividends from funds legally available if and when declared by our board of directors and are entitled to share ratably in all of our assets available for distribution to holders of common stock upon liquidation, dissolution or winding up of our affairs. Our common stock does not provide the right to a preemptive, subscription or conversion rights and there are no redemption or sinking fund provisions or rights. Our common stock holders are entitled to one non-cumulative vote per share on all matters on which shareholders may vote. We have received an opinion of our counsel (attached hereto as Exhibit 5.1) stating that all shares of common stock now outstanding are fully paid for and non-assessable and all shares of common stock which are the subject of this offering are fully paid and non-assessable. We refer you to our Articles of Incorporation, Bylaws and the applicable statutes of the state of Delaware for a more complete description of the rights and liabilities of holders of our securities. All material terms of our common stock have been addressed in this section. Holders of shares of our common stock do not have cumulative voting rights, which means that the holders of more than 50% of the outstanding shares, voting for the election of directors, can elect all of the directors to be elected, if they so choose, and, in that event, the holders of the remaining shares will not be able to elect any of our directors. Preferred Stock We are authorized to issue 10,000,000 shares of preferred stock and currently have no shares issued and outstanding. Dividends We have not paid any cash dividends to shareholders. The declaration of any future cash dividends is at the discretion of our board of directors and depends upon our earnings, if any, our capital requirements and financial position, our general economic conditions, and other pertinent conditions. It is our present intention not to pay any cash dividends in the foreseeable future, but rather to reinvest earnings, if any, in our business operations. Warrants There are no outstanding warrants to purchase our securities. Options There are no options to purchase our securities outstanding. INTERESTS OF NAMED EXPERTS AND COUNSEL The validity of the common stock offered by this prospectus will be passed upon for us by Anslow & Jaclin, LLP, Manalapan, New Jersey. No expert or counsel named in this prospectus as having prepared or certified any part of this prospectus or having given an opinion upon the validity of the securities being registered or upon other legal matters in connection with the registration or offering of the common stock was employed on a contingency basis, or had, or is to receive, in connection with the offering, a substantial interest, direct or indirect, in the registrant or any of its parents or subsidiaries. Nor was any such person connected with the registrant or any of its parents or subsidiaries as a promoter, managing or principal underwriter, voting trustee, director, officer, or employee. We issued 10,000 shares of our common stock on July 6, 2009 to Anslow & Jaclin as partial compensation for legal services rendered. The financial statements included in this prospectus and the registration statement have been audited by Webb & Company, P.A. to the extent and for the periods set forth in their report appearing elsewhere herein and in the registration statement, and are included in reliance upon such report given upon the authority of said firm as experts in auditing and accounting. Item 11. Information with Respect to the Registrant. Organization Within Last Five Years Description of Business General We were incorporated under the laws of the State of Nevada on July 6, 2009. Our principal business is management and ownership of branded restaurants or other business opportunities that we believe will create shareholder value. Our current operations include opening, managing, rehabilitating, buying and disposing of restaurants. Our main focus is to buy or build franchised restaurants like Hardees, KFC and Taco Bell. HNI was initially opened around 1960 and was named Burger Chef, then in 1974, it became Mr. Cook Restaurant and in 1993 became Hardees. It has been in continuous operation for nearly 50 years and owned and operated by the same family. Blue Victory acquired it in July, 2010 and plans to continue operations in much the same manner. We have hired a new store manager, David Zeller, and a Vice-President of Restaurant Operations, Owen Thompson, to assist in expanding the concept, as well as, facilitate new acquisitions. On July 14, 2010 we purchased 100% of the outstanding shares of HNI. In consideration for these shares, the Company signed a promissory note (attached hereto as Exhibit 10.1), in the amount of $100,000, which will bear interest at 5% and is payable in 20 quarterly installments of $2,382 commencing October 15, 2010 in 20 payments of $2,382 with a balloon payment of $74,557 due immediately after the 20th payment. The acquisition was treated as a purchase and has become a wholly owned subsidiary of the Company. HNI operates Hardees which is a fast food service restaurant whose hours of operation are 6:00 a.m. until 10:00 p.m., Sunday thru Thursday. Friday and Saturday hours of operation are 6:00 a.m. thru midnight. Breakfast service begins at 6:00 a.m., with made from scratch biscuits. Also served during breakfast hours are biscuit sandwiches with egg, bacon or sausage and cheese, as well as, pancakes and cinnamon rolls with coffee and orange juice. Lunch and dinner service begins at 10:30 a.m., with items such as , 1/3 and lb Angus hamburgers, grilled or fried chicken sandwiches with french fries, onion rings and soft drinks. Also offered are made to order chocolate, vanilla or strawberry shakes, malts and ice cream. All menu items are made fresh when ordered and served to the customer within three minutes. There are currently 20 employees that work in three shifts. Our Store Manager is David Zeller and our Vice-President of Restaurant Operations is Owen Thompson. We closely adhere to the operating standards set forth by Hardees Corporate and strive to present the very best product to our customers with each order. On September 3, 2010, the Company paid a $100,000 deposit on behalf of Hardees Real Estate of New Iberia, LLC, owned by our Chief Executive Officer ( CEO ), Seenu Kasturi. The deposit was paid in connection with the acquisition of land and a building which is used by Hardees of New Iberia, Inc. We provided the funding for this transaction on behalf of Hardees Real Estate of New Iberia, LLC because Hardees Real Estate of New Iberia, LLC lacked sufficient cash needed to acquire the land and building. We do not expect this arrangement to serve as a model for our future arrangements. In connection with this deposit, Mr. Seenu Kasturi signed a promissory note for the full amount of the deposit, which will bear interest at 6%, and stipulates that all principal and interest is due to the Company on July 15, 2011. Such promissory note is attached hereto as Exhibit 10.2. In connection with this transaction, Hardees of New Iberia, Inc., signed a 5-year lease with Mr. Seenu Kasturi for the use of the land and the building, which is Hardees Real Estate of Louisiana, Inc., 101 East Admiral Doyle Drive, New Iberia, LA 70560. The lease calls for rent payments of $1,000 per month through July 14, 2015. Such lease is attached hereto as Exhibit 10.3. On March 15, 2011 , the Company purchased 13 shares of Charlotte Star, LLC for $390,000. The 13 units represent 32.5% of the outstanding shares. Charlotte Star has a total of 40 shares outstanding. Those shares were sold to raise capital to lend to Star Brands which owns and operates 5 KFC, 3 KFC/Taco Bell, and 1KFC/Long John Silvers restaurants in North Carolina. The Company will account for the transaction under the equity method of accounting. We currently have bought and sold one single family residence and have purchased one that has been sold to our CEO, Seenu Kasturi. The address for the one that was bought and sold is 129 Mimosa Drive, Lafayette, LA 70503 and the other property at 413 Quail Drive, Lafayette, LA 70508 is the one sold to our CEO. We were considering an acquisition of a 114-unit multi-family apartment complex located at 102 Van Buren Drive, Lafayette, LA 70501. However, we are no longer pursuing the acquisition of the 114 unit multifamily apartment complex since we ve used our liquid capital to invest in the restaurants in Charlotte, NC. Each of these single family residents were acquired with the intention of refurbishing and reselling them. They were acquired because we had liquid capital in a checking account earning no interest. We felt, these two properties needed very little rehab work and had the potential to sell quickly and generate a profit. The property at 129 Mimosa Drive, was acquired at a price of $68,000 and was resold to an unrelated party at a price of $81,300. (See attached the property closing statements attached hereto as Exhibits 10.6 and 10.7, respectively). The second house at 413 Quail Drive was acquired for $110,000. While in the process of renovating the house, we identified an opportunity to acquire nine restaurant franchises located in Charlotte, NC. Therefore, our CEO acquired it for $130,000, generating a $20,000 profit for the Company. (See attached the Property Closing Statement between Julia Frances Bingham and Blue Victory Holdings, Inc. and Act of Cash Sale between the Company and Seenu Kasturi attached hereto as Exhibits 10.8 and 10.9, respectively). Business Model Each and all Hardees locations opened or operated in Louisiana will be set up to be owned, managed and operated by HNI, a Limited Liability Corporation which is a wholly owned subsidiary of the Company. At present time, the company owns and operates a Hardee s location and has invested in Charlotte Star, LLC which provided part of the financing required to acquire the nine restaurants in Charlotte, NC. Our business model is to primarily invest in recognized restaurant brands and when we cannot find a suitable investment and have capital on hand, we look for investments associated with real estate that can provide either a quick resale, an ongoing return that is higher than market rates, or dependable rental income. We expect these transactions to be a very small portion if any going forward since we are having a better visibility in finding suitable restaurant acquisitions. Competition Hardees is a concept with hundreds of locations and has proven to work in many market types. While we are in a highly competitive market, we believe our potential risks are low. We believe that, with the quality food of the Hardees brand, and with clean physical plants and outstanding customer service, we will be successful with the brand. While we are confident that Hardees will be received well in the market, there are no guarantees. Certainly, we will need a strong marketing campaign and excellent operations to help bring brand recognition and market awareness to an acceptable level. We feel confident that, over time, this will be gained by executing our marketing strategy and experience with brand development in this market. We have obtained a 5-year license (franchise) to operate Hardees through HNI and have the rights to open a second location in Lafayette, LA, which is about 20 miles away. Such franchise agreement is attached hereto as Exhibit 10.5. Currently for the Hardees location, we consider our Demographic Market Area (DMA) to be a 50-mile radius of Lafayette, LA. Our competitive position is to provide made-to-order food in a clean, comfortable, friendly atmosphere to our customers at a great value. Being local operators also enables us to network the market and be directly involved within the community. The brands that we would consider acquiring all have hundreds of locations, if not thousands, and have proven to be successful over many decades. Although there are no guarantees, having multiple locations with engaged owners and management would diversify our risk and give us the best chance to succeed even if there are other quick service restaurants ( QSR ) in the immediate vicinity. We compete directly with other nationally known franchise restaurant locations. McDonalds and Sonic have the highest volume, but also spend the most locally on advertising. All of the McDonalds have been scraped and rebuilt over the last few years and Sonic continues to retrofit locations though they have not all been completed. Wendy s, Burger King, and Whataburger have old physical plants, but they are well maintained. Marketing Plan The proposed development area for the Hardees restaurant brand is the Lafayette, Louisiana demographic marketing area. On June 28, 2010, we received approval from Hardees Corporate Headquarters ( Corporate ) to operate two locations, including the New Iberia location, already purchased. The second location is going to be in Lafayette, LA. We have not identified a specific location as of yet. This second location has to be completely constructed as a new facility. Currently, we are focused on our location in New Iberia and its operations. Once we reach a level of consistency within the operations, we will begin working on the second location. In the next five years, we hope to have six units operating. If we are able to achieve our goal of six units and those units operate at or exceed forecasted amounts, we plan to seek approval from Corporate to open units in Baton Rouge and Lake Charles. Tactics for Increasing Guest Count: New Customer & Frequency Brand development is key in a pioneer market. It will include our operations, advertising, and promotional campaigns. Local store marketing will be critical to our success and we have years of experience, including but not limited to, participating in the restaurant industry from April, 1983 throughout 1999 in various positions. These positions included serving as entry level staff through the ranks of management with successful operations of multiple locations throughout south Louisiana. We plan to execute our Hardees business plan with precision and display fresh, inviting point of purchase materials. Marketing to local businesses, schools, organizations and the surrounding areas, as well as community involvement, will be a top priority. Additional promotions with radio and cable will result in affordable exposure as we build the brand. Real Estate Transactions If and when we reinvest in real estate, we leverage our network of brokers and agents whom we have personal relationships with to market properties in a manner that would be attractive to investors/buyers because we leave some built in equity on a refurbished product. If we are to rent properties that we acquire, we would rent to stable, responsible, long term tenants that we acquire through referrals after a background check. In order to retain them for long periods of time, we rent slightly below market value. This enables us to effectively resale property quickly or rent and creates a steady income stream without having to spend money on repairs and releasing rental property. As of May , 2011, we have 20 employees. Sales Strategy In order to increase new customer trial and frequency, we will participate in television advertising promotions based on financial ability. In addition, we will utilize radio and print when appropriate to support marketing campaigns, and monthly Free Standing Inserts ( FSI ) in newspapers as a way to advertise. We will use strategic bounce back offers to aid in increasing frequency to other day parts. This may be achieved through using bag stuffers, receipt footers or printed on the rear of receipt paper. In addition, we plan to appeal to the employees of local businesses by engaging in ad mailings and providing free food samples to those local businesses. DESCRIPTION OF PROPERTY Our business office is located at 3909 I Ambassador Caffery ParkwayLafayette, Louisiana 70503 and our telephone number is (337) 981-1447. LEGAL PROCEEDINGS There are no legal proceedings pending or threatened against us. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS There is presently no public market for our shares of common stock. We anticipate applying for trading of our common stock on the Over the Counter Bulletin Board upon the effectiveness of the registration statement of which this prospectus forms apart. However, we can provide no assurance that our shares of common stock will be traded on the Bulletin Board or, if traded, that a public market will materialize. Holders of Our Common Stock As of the date of this registration statement, we had 51 shareholders of our common stock. Rule 144 Shares As of the date of this registration statement, we do not have any shares of our common stock that are currently available for sale to the public in accordance with the volume and trading limitations of Rule 144. Stock Option Grants To date, we have not granted any stock options. Registration Rights We have not granted registration rights to the selling shareholders or to any other persons. AVAILABLE INFORMATION We have filed with the SEC a registration statement on Form S-1 under the Securities Act with respect to the common stock offered hereby. This prospectus, which constitutes part of the registration statement, does not contain all of the information set forth in the registration statement and the exhibits and schedule thereto, certain parts of which are omitted in accordance with the rules and regulations of the SEC. For further information regarding our common stock and our company, please review the registration statement, including exhibits, schedules and reports filed as a part thereof. Statements in this prospectus as to the contents of any contract or other document filed as an exhibit to the registration statement, set forth the material terms of such contract or other document but are not necessarily complete, and in each instance reference is made to the copy of such document filed as an exhibit to the registration statement, each such statement being qualified in all respects by such reference. We are also subject to the informational requirements of the Exchange Act which requires us to file reports, proxy statements and other information with the SEC. Such reports, proxy statements and other information along with the registration statement, including the exhibits and schedules thereto, may be inspected at public reference facilities of the SEC at 100 F Street N.E , Washington D.C. 20549. Copies of such material can be obtained from the Public Reference Section of the SEC at prescribed rates. You may call the SEC at 1-800-SEC-0330 for further information on the operation of the public reference room. Because we file documents electronically with the SEC, you may also obtain this information by visiting the SEC s Internet website at http://www.sec.gov. MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion should be read in conjunction with our consolidated financial statements and related notes included elsewhere in this prospectus. This prospectus contains forward-looking statements. The words anticipated, believe, expect, plan, intend, seek, estimate, project, could, may, and similar expressions are intended to identify forward-looking statements. These statements include, among others, information regarding future operations, future capital expenditures, and future net cash flow. Such statements reflect our management s current views with respect to future events and financial performance and involve risks and uncertainties, including, without limitation, general economic and business conditions, changes in foreign, political, social, and economic conditions, regulatory initiatives and compliance with governmental regulations, the ability to achieve further market penetration and additional customers, and various other matters, many of which are beyond our control. Should one or more of these risks or uncertainties occur, or should underlying assumptions prove to be incorrect, actual results may vary materially and adversely from those anticipated, believed, estimated or otherwise indicated. Consequently, all of the forward-looking statements made in this prospectus are qualified by these cautionary statements and there can be no assurance of the actual results or developments. Overview We were incorporated under the laws of the State of Nevada on July 6, 2009. Our principal business is management and ownership of real estate properties and restaurants. Our current operations include developing the business plan and raising capital. We expect our future operations will include developing, acquiring, managing and growing branded restaurants. We may periodically invest in other endeavors, but our primary focus will be to operate branded restaurants. Currently, we operate a Hardees location in New Iberia, LA. The store is open seven days per week throughout the year, except on major holidays. We currently have a staff of 20 employees. We intend to improve operations by having a clean location, quick service and great food. Over the next twelve months, we do not foresee a need for additional capital. The day to day operations generate adequate cash flow to cover expenses. We anticipate upgrading certain aspects of the store during the next several months. Planned improvements over the next six months include repairing driveways, including landscaping, painting the location and the purchasing of equipment. We believe that the overall cost of these upgrades will be approximately $5,000 per month and $70,000 in the aggregate. Since the store is open and generating revenue we do not need additional funding. On July 14, 2010 we purchased 100% of the outstanding shares of HNI, LLC (f/k/a Hardees of New Iberia, Inc.). In consideration for these shares, the Company signed a promissory note (attached hereto as Exhibit 10.1), in the amount of $100,000, which will bear interest at 5% and is payable in 20 quarterly installments of $2,382 commencing October 15, 2010 with a balloon payment of $74,557 due immediately after the 20th payment. The acquisition will be treated as a purchase and will become a wholly owned subsidiary of the Company. On September 3, 2010 the Company paid a $100,000 deposit on behalf of a company owned by our Chief Executive Officer ( CEO ), Seenu Kasturi. The deposit was paid in connection with the acquisition of land and a building which is used by Hardees of New Iberia, Inc. In connection with this deposit, the related party signed a promissory note for the full amount of the deposit, which will bear interest at 6%, and stipulates that all principal and interest is due to the Company on July 15, 2011. Such promissory note is attached hereto as Exhibit 10.2. In connection with this transaction, Hardees of New Iberia, Inc. signed a 5 year lease with the same related party, for the use of the land and the building. The lease calls for rent payments of $1,000 per month through July 14, 2015. Such lease is attached hereto as Exhibit 10.3. On March 15, 2011 , the Company purchased 13 units of Charlotte Star, LLC for $390,000. The 13 units represent 32.5% of the outstanding units. Charlotte Star owns and operates 9 Kentuckey Fried Chicken resturants in the Charlotte, North Carolina area. The Company will account for the transaction under the equity method of accounting. As we continue to grow our investments in restaurant locations, our investments in rental real estate properties will decrease and our rental income as a percentage of our total revenue will decline. The sale of real estate will also reduce the real estate segment as a percentage of our total assets going forward. We do not anticipate rental real estate to play a significant role in our business operations, nor be a large percentage of total assets of the Company. In the near term, we do not anticipate acquiring significant rental real estate other than an owner occupied building if our restaurant operations require it. Results of Operations For the Period from July 6, 2009 (Inception) to June 30, 2010 The following tables set forth key components of our results of operations for the periods indicated, in U.S. dollars, and key components of our revenue for the period indicated, in dollars. For the Period from July 6, 2009 (Inception) to June 30, 2010 $ Revenue - Cost of services - Gross profit - General and administrative expenses (22,356 ) Professional Fees (10,175 ) Interest Income 12,107 Income before taxation (20,424 ) Income tax - Net income/(loss) (20,424 ) On March 31, 2010, the Company purchased contract rights from a related party. In consideration for an investment of $522,829, the Company has the rights to receive 50 payments of $5,591 per month including interest of 8%. At the end of the payment term, the Company will receive a onetime lump sum payment of $398,400. The contract calls for full recourse should the contract holder default on payment. As of June 30, 2010, $26,200 is recorded in current assets and the remaining balance is recorded as a long term receivable. In addition, we generated interest income equal to $12,107 for that same period in conjunction with the notes receivable. General and Administrative Expenses. We incurred general and administrative expenses of $22,356 for the period ended June 30, 2010. Our general and administrative expenses are comprised of office expenses, attorney s fees for the preparation of documents in relation to the purchase of two notes receivable, technology costs, and other independent contractors. Professional Fees. We incurred professional fees equal to $10,175 for the period ended June 30, 2010. Such fees were attributable to the hiring of our accountant, Berman and Company, our independent auditors, Webb and Company P.A., and other necessary services such as website design and hosting. Results of Operations For the Six Months ended December 31, 2010 The following tables set forth key components of our results of operations for the periods indicated, in U.S. dollars, and key components of our revenue for the period indicated, in dollars. For the Six Months ended December 31, 2010 (Unaudited) $ Revenue 590,138 Cost of real estate sold 179,807 Food paper and beverage 163,077 Restaurant operating expenses 228,431 Professional Fees 48,949 General and administrative expenses 36,717 Other Income 1,588 Net Interest Income 13,788 Loss before taxation (63,265 ) Income tax - Net income/(loss) (63,265 ) Revenue. We generated revenue of $590,138 for the six month period ended December 31, 2010 from primarily three sources. First, we had sales equal to $394,483 from the operations of our Hardees location in New Iberia, La. Second, we generated $191,455 from the sale of a single family residence that was acquired with the intent to renovate and resell. The short term investment was made to generate a return instead of having our cash sit idle in a non-interest bearing checking account. Although we do not anticipate further acquisitions of real estate for the purposes of renovating and reselling, we may explore such opportunities if we are not able to open a second Hardees location in the near future. Third, we received rental income equal to $4,200 from the single family residence we purchased prior to us renovating and reselling the property. Net Interest Income. First,we received payments that were due on a note receivable that we purchased from a related party. This note receivable was purchased in order to invest some our capital raised rather than having the funds remain idle in a non-interest bearing checking account. The recourse note had an APR of 8%. Payments including any late fees have been collected on a quarterly basis and amount to $6,151.20 per month. General and Administrative Expenses. We incurred general and administrative expenses of $36,717 for the six month period ended December 31, 2010. Our general and administrative expenses are comprised of office expenses, advertising expenses, and operating expenses. Professional Fees. We incurred professional fees equal to $48,949 for the six month period ended December 31, 2010. Such fees were attributable to ourfiling of the S-1 and audit and review services for the six months ended. Plan of Operations Our business model consists of earning revenues from the ownership and operations of restaurant franchises as well as rental properties. Our business model is based on the concept of looking for the best rate of return that we can obtain with manageable levels of leverage. We also plan to bring expertise and only pursue business interests that we have a background in or are able to hire managers and supervisors with extensive background in the lines of business that we are pursuing. Our directors have experience in real estate operations, renovations and remodeling restaurant operations and general human resources and administrative duties. Biographies for each of our directors can be found below. Our specific plan of operations includes operating our Hardee s restaurant on an ongoing basis providing administrative support to the restaurants and looking for other potential acquisition targets. Some of our specific short term milestones include operating the Hardees location in New Iberia and generating at least $750,000 in gross revenue in the first full year of operations. Further, we are aiming to open 2 more Hardee s locations by the end of 2013 and generate overall revenue of more than $2.75 million amongst the three locations. In addition, we expect to generate more than $250,000 in the 1st full year of providing management services to the 9 operating restaurants we invested in in Charlotte, NC. Our goal over the next 3 years is to continue to invest in and acquire restaurants using capital generated through Hardees. Our goal over a 5 year period is to grow in size to more than 5 Hardees restaurants with gross revenues totaling $5,000,000 and to invest in other brands to grow our management fees and profit sharing revenues to over one million dollars. We have not yet identified any potential lenders to provide us with such long term financing. Thus far, we have only invested or participated in deals where we already have the capital required. Our proposal to purchase the 13 Burger King units was not accepted, therefore we structured the 9 KFC restaurant acquisitions via Charlotte Star raising capital and lending the capital to Star Brands. Star Brands in turn used the capital as a down payment and got the remainder of the funds necessary as a loan from Regions Bank. As the company grows and establishes its own credit worthiness, we will be able to leverage our contacts to borrow capital to acquire branded restaurants. Until then, it will be necessary for our CEO to guarantee any loans personally and on occasion lend money to the company. Almost all of our offers have at least one or more of the following contingencies: inspection, appraisal, franchise or approval, financing and/or seller financing. We only use earnest money deposits and has an inspection period in which we can walk away from any deal for any reason whatsoever and the earnest money is returned to us. The earnest money is never placed with the seller but rather with a title agency or an attorney s trust account. In addition to the aforementioned revenue goals, our ongoing internal administrative goals include integrating payroll, benefits, banking, reconciliation of food orders and accounting. Management fees generated cover the cost of the new hires as well as the office expenses. Profits are paid when available on a quarterly basis to Charlotte Star and are then forwarded to the Company pro-rata in accordance with its ownership interest. (See attached the Management Agreement between the Company and Star Brands, LLC attached hereto as Exhibit 10.10). We anticipate profit sharing to begin at the end of the third quarter. There are no limitations to use of leverage as long as we maintain at least a 10% to 20% equity position in the deals that we accumulate. We plan to grow by pioneering the Hardees brand in Louisiana, as well as, acquiring other brands that are not being managed properly. We also plan to take advantage of the current Real estate market by acquiring properties with above normal net operating income or are being mismanaged and need renovations. We also may sell properties from time to time to generate liquidity to trade up in property size or the number of restaurants. Revenue Model We expect to earn revenues from ongoing operations of real estate acquisitions and restaurant operations and acquisitions. Sales and Growth Assumptions We plan to generate revenue in year one by operating our Hardees location in New Iberia, La, looking for and opening other Hardees locations, by making offers, acquiring and operating other restaurants. Our goal was to reach over $50,000 dollars in revenue within the first month of operations, which was August of 2010, and we succeeded in meeting that goal. We anticipate that by acquiring Hardees in New Iberia we will meet our revenue goals in the short term. We also anticipate that by continuing to make offers and working to build new restaurants we will reach our immediate goals. The goals and benchmarks set by us are our own ideals. They are not based on any extensive research or industry comparatives. Within four months we anticipate having other offers out to be considered by other national restaurant brands to expand our presence in the restaurant field. We are also considering buying additional rental properties and maybe selling some properties depending on our needs for capital and the current marketplace. Specifically, we extended offers to acquire 13 Burger King restaurants and 9 Kentucky Fried Chicken restaurants. Our offer to acquire the 13 Burger King restaurants was not accepted however, we were successful in acquiring 9 Kentucky Fried Chicken locations. We have applied the same business model to each of the Kentucky Fried Chicken locations as we have to the Hardees locations. That is, each branded restaurant franchise will be owned by the Company. The short-term goals that we have set and achieved include: (i) acquiring the Hardees of New Iberia restaurant location, and (ii) hiring a manger at the Hardees of New Iberia restaurant location, In addition, we have set short-term goals which are continuously being worked towards. These include: (i) cleaning up the Hardees New Iberia restaurant, (ii) improving the operational effectiveness of the Hardees New Iberia restaurant, (iii) serving our customers the highest quality product, and (iv) reducing service times. Standards regarding service time, food costs, pricing, and forms of advertising are established by the franchisor. We strive to meet our customers needs while adhering to our franchise policies and aggressively competing. Our desire was to acquire a restaurant that would already be open and operating. We also wanted this restaurant to have gross sales of over $500,000 on an annual basis. Hardees of New Iberia meets this objective. Capital Resources and Liquidity As of December 31, 2010 we had $452,826 in cash, which is unrestricted an available for short term demands. Revenue from operations of the Hardees locations, payments from notes receivable are sufficient to sustain operations on an ongoing basis over the next 12 months. We do not intend to issue additional equity or incur any debt obligations within the next 12 months unless we complete the site selection process for a 2nd Hardees location and receive Hardees corporate approval to move forward in opening the 2nd location. We anticipate that depending on market conditions and our plan of operations, we may incur operating losses in the foreseeable future. Therefore, our auditors have raised substantial doubt about our ability to continue as a going concern. The following table sets forth a summary of our cash flows for the periods indicated: For the Six Month Period ended December 31, 2010 (Unaudited) Net Cash used in Operating Activities (1,671 ) Net Cash used in Investment Activities (72,741 ) Net Cash provided by Financing Activities 165,245 Net Increase in Cash and Cash Equivalents 90,833 Cash, Beginning of Period 361,993 Cash, End of Period $ 452,826 For the Six Month period ended December 31, 2010. Net cash used in operating activities was $1,671 for the six month period ended December 31, 2010. The decrease in cash used can be attributed to an increase in accrued expenses. Net cash used in investment activities was $72,741 for the six month period ended December 31, 2010. The cash used in investing was mostly due to the purchase of fixed assets related to Hardees of $105,823 less repayments of $33,081 of notes receivable from related parties. We used cash to purchase the two notes discussed in the Interest Income description above. Net cash provided by financing activities amounted to $165,245 for the six month period ended December 31, 2010. The increase in cash from financing was related to the collection of $100,000 of stock subscriptions receivable and $130,578 of proceeds from the issuance of a note payable to a related party, less $80,000 from the collection of notes payable from related parties. On March 15, 2011 , the Company purchased 13 units of Charlotte Star, LLC for $390,000. The 13 units represent 32.5% of the outstanding units. Charlotte Star owns and operates 9 Kentuckey Fried Chicken resturants in the Charlotte, North Carolina area. The Company will account for the transaction under the equity method of accounting. During March, 2011,the company used $390,000 of its cash to purchase this investment. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE There have been no changes in or disagreements with accountants on accounting or financial disclosure matters. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS Our executive officers and their respective ages as of May 9, 2011 are as follows: NAME AGE POSITION Seenu Kasturi 41 President, Chief Executive Officer, Chairman of the Board of Directors Fred Alexander 64 Vice-President of Business Development Yannick Bastien 37 Chief Financial Officer, Principal Accounting Officer Owen P. Thompson 44 Vice-President of Restaurant Operations Set forth below is a brief description of the background and business experience of our executive officers for the past five years. Seenu Kasturi, age 41, President, Chief Executive Officer , Chairman of the Board Seenu Kasturi graduated from the Andhra University, Visakhapatnam, India with a Bachelor of Arts Degree in 1994. In 2000, Mr. Kasturi became a registered representative with the SEC. In that same year, Mr. Kasturi obtained licenses in both life and health insurances for the states of Louisiana and Florida. Mr. Kasturi maintained all of his licenses and has remained current with all continuing education requirements. In 2003, Mr. Kasturi started K & L Investment Realty with the intention of creating a principal business of management and ownership of real estate and restaurant properties. K&L Investment Realty s operations are run by its wholly-owned managing member, Mr. Kasturi. In October, 2007, Mr. Kasturi received his Certified Financial Planner (CFP) designation and has maintained his license by attending the required insurance and financial planning classes. Upon completion of Series 7 licensing, Seenu joined American Express Financial Advisors in Lafayette, Louisiana where he started a successful financial planning business and currently serves as an independent contractor. He has expanded the firm to locations in Orlando, Palm Coast, and Baton Rouge. The combined value of the portfolios currently being managed is $150,000,000, subject to market trends. Mr. Kasturi has a full background in financial planning, portfolio management, insurance, asset management/ evaluation, business acquisitions/ sales, real estate acquisitions, finance, and restaurant management. Mr. Kasturi will serve as the CEO and will select investments and direct funding for all investments. All officers of the Company will report to Mr. Kasturi. Fred Alexander, age 64 Vice-President of Business Development In 1972, Mr. Alexander was licensed as a real estate broker, and is required to take eight hours of continuing education annually to maintain his license. Fred joined E. W. Wynne, Inc., in 1976, as a Broker/Manager. E. W. Wynne, Inc., a real estate sales company, was transformed into W. A. Associates, Inc. in 1980, and became a very successful real estate development and construction company, which Fred co-owned. With changing market conditions in Louisiana, Fred developed new companies, beginning in 2001, i.e., Southern Real Estate, LLP, American Phoenix, LLC and Quantum Leap, LLC, that were more geared to the acquisition, refurbishment and management of distressed properties. In 2003, Fred began doing consulting work for Mr. Kasturi, as an independent contractor. His duties included finding and evaluating properties to fit Mr. Kasturi's investment profile, drafting the purchase agreements to acquire properties and helping to procure financing for properties to be purchased. Mr. Alexander was invited by Mr. Kasturi to join Blue Victory Holdings, as its Vice-President of Business Development on July 15, 2010. Mr. Alexander brings to the company a strong background in structuring companies and partnerships; project planning; project site selection; the property acquisition process; packaging proposals; working with municipal authorities and committees; and in negotiating and reviewing contracts with lenders, engineering & architectural firms. Mr. Alexander will work with Yannick Bastien and Owen Thompson on restaurant projects along with his current responsibilities at Blue Victory, and will report directly to Seenu Kasturi. Yannick Bastien, age 37- Chief Financial Officer, Principal Accounting Officer Mr. Bastien attended University of Central Florida ("UCF"), Orlando from 1994-1997 where he majored in Microbiology and minored in Mathematics. While at UCF, Mr. Bastien was heavily involved in the stock market and investment, and ultimately left the university to begin a financial planning and real estate investment business, which was American Express Financial Advisors and subsequently became Ameriprise Financial. Mr. Bastien built a solid financial planning business over a ten-year period beginning in 1998 while also investing in and managing various construction projects. In 2007, at Mr. Kasturi s request, Mr. Bastien left the financial planning business to assist Mr. Kasturi with a HUD project at K & L Investment Realty, LLC. Since then, Mr. Bastien has successfully remodeled and refurbished several apartment communities, owned by Mr. Kasturi, some of which are HUD Properties. In addition, Mr. Bastien has promulgated an extremely successful apartment management system, and has integrated that system, with a high level of success at all of the company owned properties. Mr. Bastien was appointed Vice-President of Operations at Blue Victory Holdings, Inc. at its inception. Mr. Bastien s proven ability to manage construction and real estate projects by meeting timelines and budgets will be an asset for us in remodeling, retrofitting and new construction. Mr. Bastien is the construction coordinator and works with Fred Alexander and Owen Thompson on restaurant projects. In addition, Mr. Bastien assists Mr. Kasturi with performing the accounting functions necessary at Blue Victory. Mr. Bastien reports directly to Seenu Kasturi. Owen P. Thompson, age 44 Vice-President of Restaurant Operations Mr. Thompson attended the University of Southwestern Louisiana School of Business from 1985 to 1988. Since 2000, Mr. Thompson has worked with the Krystal Company Operations Department as a District Supervisor over Louisiana and East Texas Operations. Owen Thompson will serve as our Director of Restaurant Operations and Supervisor until we have enough units to justify bringing one on. He reports directly to Seenu Kasturi. Term of Office Our officers are appointed by our board of directors and hold office until removed by the board. Committees of the Board of Directors There are no current plans to form an audit, nominating or compensation committee. The only member of our Board of Directors, is our Chairman, Seenu Kasturi. We will consider adding members to our Board of Directors upon the effectiveness of the Registration Statement and will form the necessary committees as recommended by the Board of Directors. EXECUTIVE COMPENSATION Summary Compensation Table; Compensation of Executive Officers The following summary compensation table sets forth all compensation awarded to, earned by, or paid to the named executive officers paid by us during the period ended December 31 , 2010 in all capacities for the accounts of our executives, including the Chief Executive Officer (CEO). SUMMARY COMPENSATION TABLE Name and Principal Position Year Salary ($) Bonus ($) Stock Awards ($) Option Awards ($) Non-Equity Incentive Plan Compensation ($) Non-Qualified Deferred Compensation Earnings ($) All Other Compensation ($) Totals ($) Seenu Kasturi, Chief Executive Officer 2010 $ 0 0 0 0 0 0 0 $ 0 Fred Alexander, Vice-President of Business Development 2010 $ 0 0 0 0 0 0 0 $ 0 Yannick Bastien, Chief Financial Officer 2010 $ 0 0 0 0 0 0 0 $ 0 Owen P. Thompson, Vice-President of Restaurant Operations 2010 $ 0 0 0 0 0 0 0 $ 0 Option Grants Table. There were no individual grants of stock options to purchase our common stock made to the executive officer named in the Summary Compensation Table through May 9 , 2011. Aggregated Option Exercises and Fiscal Year-End Option Value Table. There were no stock options exercised during period ending June 30, 2010 by the executive officer named in the Summary Compensation Table. Long-Term Incentive Plan ( LTIP ) Awards Table. There were no awards made to a named executive officer in the last completed fiscal year under any LTIP Employment Agreements We currently do not have any employment agreements with any of our employees. TABLE OF CONTENTS PAGE Prospectus Summary 1
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+Prospectus Summary This summary contains basic information about us and the offering. Because it is a summary, it does not contain all the information that you should consider before investing. You should read the entire prospectus carefully, including the risk factors and our financial statements and the related notes to those statements included in this prospectus. Except as otherwise required by the context, references in this prospectus to we, our, us, West-Core Drilling, and WCD refer to West-Core Drilling Inc. West-Core Drilling Inc. (the Company or WCD ) is a development stage company incorporated in the State of Nevada in April, 2008. The Company looks to capitalize on the experience of Mr. Travis Stephenson, its sole officer and director , in the surface and underground core drilling industries in order to provide various drilling services to gold, copper, iron, and oil mining companies. Since our inception on April 21, 2008 through December 31, 2008, we have not generated any revenues and have incurred a net loss of ($400) and a net loss of ($13,115) for the period ended June 30 , 2011. Until June 1, 2009, our only business activity was the formation of our corporate entity and development of our business plan. We anticipate the commencement of generating revenues in the next twelve months, of which we can provide no assurance. The capital raised in this offering has been budgeted to cover the costs associated with purchasing new drills for diamond core drilling, beginning to operate our company, basic website development and covering various filing fees and transfer agent fees. We believe that sales generated in the next twelve months will be sufficient to support the limited costs associated with our initial ongoing operations. There can be no assurance that the actual expenses incurred will not materially exceed our estimates or that cash flows from sales will be adequate to maintain our business. As a result, our independent auditors have expressed substantial doubt about our ability to continue as a going concern in the independent auditors report to the financial statements included in the registration statement. West-Core Drilling intends to use the proceeds from this Offering to develop their core drilling services. The Company will search out projects related to their business. The Company will attempt to bid on projects at a cost effective and profitable price. If awarded projects, the Company would need two drills to complete the projects. The Company currently does not anticipate being awarded any particular projects but hopes to bid on projects in Nevada and Canada. Currently, a related Company, West-Core Drilling, LLC, ( WCDLLC ) owns two drills that would be appropriate for the projects. The Company may use the proceeds as a down payment to purchase the drills from WCDLLC. WCDLLC would finance the balance. For the twelve months after completing this first offering, West-core plans to purchase a drill to put to work and make the company profitable. The Company would then seek to secure financing to execute on the buyout of West-core Drilling, LLC and consolidate operations under West-core Drilling, Inc. As of the date of this prospectus we have one officer and director , who we anticipate devoting only a small portion of his time to the company going. Additionally, even with the sale of securities offered herein, we will not have the financial resources needed to hire additional employees or meaningfully expand our business. We anticipate operating losses for at least the next 12 months. Even if we sell all the securities offered, the majority of the proceeds of the offering will be spent for corporate expenses and additional website development. Investors should realize that following this offering we will be required to raise additional capital to cover the costs associated with our plans of operation. West-Core Drilling s address and phone number is: West-Core Drilling Inc. 561b West Main, Elko, Nevada, 89801 (775) 753-1036 The Offering Common Stock Offered for Sale Up to a maximum of 1,500,000 shares. Price to the Public $0.30 per share in cash. Use of Proceeds Primarily for The purchase of a drill Number of Shares Outstanding Prior to the Offering 9,000,000 Number of Shares Outstanding After the Offering 9,150,000 if 10% of offering sold. 9,375,000 if 25% of offering sold. 9,750,000 if 50% of offering sold. 10,000,000 if 75% of offering sold. 10,500,000 if 100% of offering sold. Plan of Distribution This is a direct public offering, with no commitment by anyone to purchase any shares. Our shares will be offered and sold by our officer. There is no share minimum investment required from individual investors. Terms of the Offering This is a BEST EFFORTS OFFERING. This is a no minimum offering. Accordingly, as shares are sold, we will use the money raised for our business. The offering will remain open until 365 days from the commencement of the offering upon effectiveness of this S-1, which may be extended for an additional 180 days at the discretion of the board of directors. We cannot be certain that we will be able to sell enough shares to fund our operations appropriately. (1) Management may not, and will not purchase any shares in this offering.
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+PROSPECTUS SUMMARY The following summary highlights material information found in more detail elsewhere in the Prospectus. It does not contain all of the information you should consider. As such, before you decide to buy our common stock, in addition to the following summary, we urge you to carefully read the entire Prospectus, especially the risks of investing in our common stock as discussed under "Risk Factors." In this Prospectus, the terms "we," "us," "our," "Company," "VIM," and "VIM Beverage" refer to VIM Beverage, Inc., a Nevada corporation, "Common Stock" refers to the Common Stock, par value $0.001 per share, of VIM Beverage, Inc. The Company was incorporated in Nevada on March 31, 2008. Our mailing address is 1301 Bank of America Tower, Suite 1132, 12 Harcourt Road, Central Hong Kong, our telephone number is 852 2115 9628. We are a start-up company, which has no operations to date, other than in connection with our formation, which intends to manufacture and formulate for sale bottled water, vitamin enhanced flavored water, and a unique concentrated energy water. Our business concept blends health nutrition, lifestyle, and water, in one complete package with unique design and marketing elements. We hope to gather our water, which will be the basis of all of our products, from a glacial source. To date, we have no formal agreement to extract water from this source. We also plan on having extremely low total dissolved solids in our water products and will endeavor to provide a smooth flavor and taste throughout our product line. There can be no assurance we will achieve such a product line. We believe our product line will be a great tasting and unique alternative to sugar-laden sodas and fruit juices. We have budgeted the need for approximately $426,800 of additional funding during the next twelve months to commence our business operations and produce our initial product line as planned, which amount includes marketing expenses of up to $200,000, none of which funds we have raised to date. We do not currently have any formal commitments or identified sources of additional capital from third parties or from our officers, Directors or majority shareholders other than the Line of Credit, which we anticipate being sufficient to pay our filing obligations and expenses for approximately the next 12 months, but will not be sufficient for us to begin our business plan or produce any products. We can provide no assurance that if we require additional financing, it will be available on favorable terms, if at all. If we are not able to raise the capital necessary to continue our business operations, we may be forced to abandon or curtail our business plan and/or suspend our business activities. The following summary is qualified in its entirety by the detailed information appearing elsewhere in this Prospectus. The securities offered hereby are speculative and involve a high degree of risk. See "Risk Factors." SUMMARY OF THE OFFERING: Common Stock Offered: 595,000 shares by selling stockholders Common Stock Outstanding Before The Offering: 5,595,000 shares Common Stock Outstanding After The Offering: 5,595,000 shares Use Of Proceeds: We will not receive any proceeds from the shares offered by the selling stockholders in this offering. Offering Price: The offering price of the shares has been arbitrarily determined by us based on estimates of the price that purchasers of speculative securities, such as the shares, will be willing to pay considering the nature and capital structure of our Company, the experience of our officers and Directors and the market conditions for the sale of equity securities in similar companies. The offering price of the shares bears no relationship to the assets, earnings or book value of us, or any other objective standard of value. We believe that no shares will be sold by the selling shareholders prior to us becoming a publicly-traded company, at which time the selling shareholders will sell shares based on the market price of such shares. We are not selling any shares of our common stock, and are only registering the re-sale of shares of common stock previously sold by us. No Market: No assurance is provided that a market will be created for our securities in the future, or at all. If in the future a market does exist for our securities, it is likely to be highly illiquid and sporadic. Need for AdditionalFinancing: We have generated no revenues to date and anticipate the need for approximately $426,800 of additional funding to commence our business plan as planned for the next 12 months, which includes up to approximately $200,000 in marketing expenses, of which there can be no assurance will be raised. We plan to utilize funds available under a $50,000 line of credit with Aaron Suen, our Chief Executive Officer and Director, of which $10,000 has been borrowed to date, to pay our reporting and operations expenses for the next approximately 12 months, provided that the amount available under such line of credit will not be sufficient for us to continue our business plan. If we are unable to raise the additional funding, the value of our securities, if any, would likely become worthless and we may be forced to abandon our business plan. Even assuming we raise the additional capital we require to commence our business operations, we will require substantial fees and expenses associated with this offering, and we anticipate incurring net losses for the foreseeable future. Address: 1301 Bank of America Tower, Suite 1132 12 Harcourt Road, Central Hong Kong Telephone Number: +852 2115 9628
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001478493_greencell_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001478493_greencell_prospectus_summary.txt
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+PROSPECTUS SUMMARY This summary only highlights selected information contained in greater detail elsewhere in this Prospectus. This summary may not contain all the information that you should consider before investing in our common stock. You should read the entire Prospectus, including Risk Factors beginning on page 6, and the financial information beginning on page F-1, before making an investment decision. GreenCell, Incorporated is referred to herein as we , us or our . Corporate Information We were incorporated in Florida on December 7, 2009, at which time we commenced operations. Our address is 1 Keuka Business Park, Penn Yan, New York and our telephone number is (315) 694-7134 Our Business We are in the business of developing products for the transportation and appliance gas ignition markets. Our emphasis now and since our inception is our igniter for the home heating, i.e. a home oil or gas furnace, and the appliance gas ignition market, i.e. stove tops and gas hot water tanks; thereafter we plan to develop products primarily for the automobile industry. Our gas ignition and automobile products will use our ceramic fiber matrix composite ( UltraTemp Composite or Ceramic Composite ) and UltraTemp process used to make that composite as licensed to us by our co-founder, SenCer, Inc. ( SenCer ), a New York based technology firm. Traditional ceramic device manufacturing combines dense ceramic layers, which are not always thermally or mechanically stable. The UltraTemp process involves a proprietary chemical process that quickly allows a near net shape forming of a semi-dense ceramic fiber/matrix composite. Several new variants of the process (UltraTemp-A and UltraTemp-C) have been created for electronic device manufacturing and the technology has been transferred to us for completion of device design and marketing. The fiber matrix composite is used as a base thermal and mechanical structure. Operating layers have been developed for and to match the UltraTemp substrate. These layers are typically conductive anode (an anode of a device is the terminal where current flows in from outside) and cathode (a cathode is an electrode through which electric current flows into a device) layers coupled with ion conducting electrolyte (electronically conductive) layers. The UltraTemp process allows for an extreme bonding between layers, which we believe has the potential to provide more robust performance at a lower cost then the current ceramic market. This method can be used to create many different layered devices. Most such devices have conducting and sensing layers to provide sensing and power conductive properties. (See Product Diagram). As such, UltraTemp is our core technology and proprietary process to produce our ceramic fiber/matrix composite that is used to bond metal and ceramic layers or devices to be fabricated. We intend to use our licensed technology for the igniter, brake pads and high temperature oxygen sensors, and fuel cells. For example, with a ceramic igniter, the igniter device uses a single conductive layer to heat the composite to high temperature for gas ignition. Additionally, with more complex devices such as fuel cells or oxygen sensors, we plan to use the UltraTemp process to create multiple conductive and electrolyte layers in which the active layers are well bonded to our ceramic fiber/matrix composite. The UltraTemp process is important because it impacts upon the relative cost, strength, longevity and efficiencies of such products. In addition, we believe our near net shaping process has the potential for a low cost method of making simple or complex shapes without expensive diamond machining requirements. We are attempting through our UltraTemp process and ceramic composites to create gas ignition and automobile products that are less costly, energy efficient, and capable of rapid and flexible development; however, we face significant developmental risks, including intense competition, especially from Japanese technical ceramic firms, lack of financial resources, the absence of patent protection and reliance upon the intellectual properties of other companies with whom we may co-develop products. We also have the proprietary rights to UltraTemp A and C, which are specific chemistries made from the UltraTemp process, that are targeted to device manufacturing , such as the igniter we are developing and plan to have our patent attorneys conduct a review to determinate their patentability. In the event that we apply our UltraTemp-A or UltraTemp-C to devices that we intend to develop, we will either: (a) fully develop such planned future products or (b) through co-development agreements , we will combine our UltraTemp-A and UltraTemp-C proprietary ceramic fiber/matrix composite with the intellectual properties of other companies to manufacture complete devices. For example, with our planned future fuel cell product we may use the UltraTemp process and UltraTemp-A and UltraTemp-C composite materials to provide a pre-packaged fuel cell stack and sell that technology into existing fuel cell applications. In those instances, where we combine our technologies with others, we may seek joint patents and/or joint marketing agreements. In the period between July 2010-September 2010, we completed the proof of concept or early stage prototype and full prototype for our first intended product, an igniter for the home heating appliance market. The proof of concept (early stage development) encompasses the stability of UltraTemp and the electrical conductor. The prototype encompasses a 12 volt igniter fabricated to a specific shape design and packaging. The igniter market is using a 12, 24 and 120 volt version. Our original prototype was a 12 volt igniter as directed from an initial potential OEM customer. Discussions with a second potential OEM customer generated a quotation for a 120 volt igniter with specific design specifications. This igniter is currently in design. The 12 volt igniter continues to be tested with positive results since it has exceeded the steady state test of 31 days, a CSA regulated requirement (as detailed on page 30), with testing exceeding more than 60 days and zero degradation of voltage and electrical current. The final CSA test required a 200,000 cycle test, which we originally estimated would be conducted in February 2011; however, our estimate now is that the final CSA test will be conducted in approximately June 2011, since such final test should be conducted shortly before production. This estimate is contingent upon receiving final design approval and a production order from an OEM. Primary pre-prototype and final prototype work was completed on the 12 and 24-volt igniters. The initial working 12 volt igniter was completed in October of 2010. The 120 volt igniter represents the majority of potential market share and we have turned our attention to a completion of that design. The material aspects for the 120 volt igniter are complete for the proof of concept and full prototype and we are currently completing a 120 volt UltraTemp igniter to a specific shape and voltage requirement as requested by a potential OEM customer according to their specifications. During the pre-prototype phase, we completed the material aspects of the igniter concept, namely the chemical, density, thermal expansion and electrical properties were developed into a working igniter system. The voltage requirement relates to the resistivity or conductivity of the ink in relation to the required voltage. We only learned in October 2010 that our first possible order for 300,000 units would include a 120 Volt requirement, not an 80 volt requirement as had been originally requested. We have never initiated any work pertaining to an 80-volt igniter and we no longer consider the 80 volt igniter to be a future technology. Our final requirement for a 120-volt production igniter is to adjust the pattern and/or resistivity of the ink to achieve 120 Volts in accordance with an acceptable size and shape that will meet the OEM requirements should we complete an agreement or obtain an acceptable order from the OEM. The material aspects are complete and all that remains is a designed pattern to achieve 120 Volts. Apart from core materials development pertaining to our future planned oxygen sensor, fuel cell and brake pads, we have not conducted any development for these planned future products. As provided for in more detail in our Business Section beginning on page 22, we plan to develop these products throughout 2011 and 2012. We are an early stage development business with no revenue generating operations and do not expect to generate revenues, if ever, until the fourth quarter of 2011. In order to commence revenue generating operations, we need to complete development and begin marketing and selling our future first-generation igniter product. PRODUCT DESCRIPTIONS OF FUTURE PRODUCTS There is currently no market for our common stock. We were founded by the following companies upon whose advice, technology and services our business relies on: General Automotive Company (hereafter referred to as General Automotive ) A Securities and Exchange Commission ( SEC ) reporting company incorporated in Nevada and located in Orlando, Florida, which is a domestic and international distributor of original equipment aftermarket automotive parts and related automotive products at multiple distribution levels. General Automotive has agreed to provide us with its marketing expertise and services; and SenCer A privately held technology firm incorporated in New York and located in Penn Yan, New York that has developed the original UltraTemp process. SenCer has the exclusive proprietary rights to 50 chemical variants of the UltraTemp technology and has 14 years of development and sales in early direct UltraTemp applications and equipment containing UltraTemp. SenCer is currently bringing to market a line of high temperature furnaces lined with UltraTemp. The original research was part of a grant from the New York State Energy Research and Development Agency (NYSERDA). UltraTemp-C and UltraTemp-A are very recent variants of UltraTemp developed for GreenCell, to produce a range of electronic sensors and devices. SenCer has agreed to provide us with the technological assistance to develop all of our future automotive related products employing the UltraTemp-C and UltraTemp-A technology and to develop specified devices and components for use in the igniter, oxygen sensor, and fuel cell and brake pad product areas. Our co-founders each own 10,750,000 shares of our common stock. Our founders are under no obligation to invest in, lend to, or support our operations from a financial perspective or guarantee or debt. Table of Contents The Offering Selling shareholders are offering up to 1,105,000 shares of our common stock. The selling shareholders will offer their shares at $0.25 per share until our shares are quoted on the OTC Bulletin Board and thereafter at prevailing market prices or privately negotiated prices. There is no assurance that: our securities will ever become qualified for quotation on the OTC Bulletin Board; or that the selling shareholders will sell their shares; or that a market for our shares will develop even if our shares are quoted on the OTC Bulletin Board. To be quoted on the OTC Bulletin Board, a market maker must file an application on our behalf to make a market for our common stock. The absence of a public market for our common stock may make it difficult for you to sell your shares of our common stock. Our shares will be penny stocks as that term is generally defined in the Securities Exchange Act of 1934 and will be subject to rules that impose sales practice and disclosure requirements on broker-dealers who engage in certain transactions involving a penny stock. Because of these regulations, broker-dealers may encounter difficulties in their attempt to sell shares of our common stock, which may negatively affect the ability of selling shareholders or other holders to sell their shares in the secondary market and/or reduce the trading activity level of our shares in the secondary market. These additional sales practice and disclosure requirements could impede the sale of our securities with a corresponding decrease in our securities price, if our securities become quoted on the OTC Bulletin Board. Therefore, our shareholders will, in all likelihood, find it difficult to sell their securities. Financial Summary Because this is only a financial summary, it does not contain all the financial information that may be important to you. Therefore, you should carefully read all the information in this Prospectus, including the financial statements and their explanatory notes beginning on page F-1 before making an investment decision. Statement of Operations Data For the Three Months Ended December 31, 2010 For the Nine Months Ended December 31, 2010 For the Period December 7, 2009 (Inception) to December 31, 2010 Revenue from operations $ $ $ Total costs and expenses $ 75,266 $ 249,508 $ 664,429 Net loss for the period $ (75,266 ) $ (249,508 ) $ (664,429 ) Net loss per weighted share, basic and fully diluted $ (0.00 ) $ (0.01 ) $ (0.02 ) Weighted average shares outstanding, basic and fully diluted $ 29,710,000 $ 29,710,000 $ 28,726,748 Table of Contents Balance Sheet Data As of December 31, 2010 Current assets $ 10,528 Working capital $ (163,929 ) Total assets $ 31,028 Total liabilities $ 174,457 Total stockholders equity (deficit) $ (143,429 ) Use of Proceeds We will incur all costs associated with this registration and Prospectus. We will not receive any of the proceeds from the sale of the shares of our common stock being offered by the Selling shareholders. Description of our Common Stock Our authorized capital stock consists of 100,000,000 shares of common stock, each with a par value of $0.01. We have no preferred shares authorized or issued. As of the date of this Prospectus, there are 29,710,000 shares of our common stock issued and outstanding. For further information regarding our common stock, please refer to Description of Securities beginning on page 20. Table of Contents
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001479194_crown_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001479194_crown_prospectus_summary.txt
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+PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001479382_shenzhen_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001479382_shenzhen_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..100ceda55f41aced17bad0d791e065f7ae4dc4f6
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+PROSPECTUS SUMMARY The following summary highlights material information found in more detail elsewhere in the Prospectus. It does not contain all of the information you should consider. As such, before you decide to buy our common stock, in addition to the following summary, we urge you to carefully read the entire Prospectus, especially the risks of investing in our common stock as discussed under "Risk Factors." In this Prospectus, the terms "we," "us," "our," "Company," Dimus Partners and "Dimus" refer to Dimus Partners, Inc., a Nevada corporation. "Common Stock" refers to the common stock, par value $0.001 per share, of Dimus Partners, Inc. Dimus Partners, Inc. was incorporated in the state of Nevada on April 18, 2008. The Company s wholly-owned subsidiary, Dimus Partners, LLC, ( DPLLC ) was incorporated as a Texas limited liability company on May 24, 2007. On April 29, 2008, the Company entered into an Exchange Agreement with DPLLC, whereby the then members of DPLLC, Nathan Pettus and James Patton, our current Directors, exchanged 100% of the outstanding membership interests of DPLLC for 2,000,000 post Forward Split shares of the common stock of the Company. Upon completion of the Exchange Agreement, DPLLC became a wholly-owned subsidiary of the Company. On or around October 14, 2008, we affected a two for one (2:1) forward stock split of our outstanding shares of common stock (the Forward Split ). The Forward Split is retroactively reflected throughout this Prospectus. Dimus Partners is a strategic, financial and operational consulting company, which plans to consult with clients in an effort to generate additional revenues for such clients, by lowering overhead expenses and/or increasing the clients marketing efforts. The Company has developed a contingent fee based methodology for billing business consulting known as The Dimus Advantage (described in greater detail below under Description of Business ). We plan to focus on small to mid-sized companies and believe there are significant growth opportunities in mid-market companies whose day-to-day operations have not benefited from dedicated strategic, financial or operational support systems. In our management s experience, these companies share many of the same problems found in Fortune 500 corporations, but lack the human and capital resources needed to take advantage of the business-improving principles consulting can provide. Our business is targeted at these small to mid-sized companies which we believe cannot afford traditional business consulting fees. We also plan to help clients discover and create operational efficiencies by building software and eventually by working to create pre-packaged software products, funding and software creation permitting. All of our ideas and recommendations will focus on the objective of improving the bottom-line profit results of our future customers. Further, our compensation will be contingent upon the improvement of our customer s current financial position. To date we have had only limited operations. We do not currently have any paying clients, nor have we ever had any paying clients. We have however, previously consulted with a limited number of clients for free in return for such clients providing us references and in an effort to gain experience. Additionally, we have had ongoing discussions with certain custom home builders, which have not generated any revenues, but which we believe have provided us much needed experience and word of mouth regarding our services. We have not generated any revenues to date, had negative working capital of $66,579, a deficit accumulated during the development stage of $91,306, and cash on hand of $91 as of October 31, 2010, and have budgeted the need for approximately $500,000 of additional funding during the next 12 months to expand our operations as planned, which funding may not be able to be raised on favorable terms, if at all. In November 2010, our President and Director, James Patton provided us a $50,000 Revolving Line of Credit (the Line of Credit ). We plan to use the Line of Credit (as described in greater detail below under Recent Events ) to fund our working capital expenditures in the near term. There are no assurances that the Company will be able to either (1) achieve a level of revenues adequate to generate sufficient cash flow from operations; or (2) obtain additional financing through either private placement, public offerings and/or bank financing necessary to support the Company s working capital requirements after the Line of Credit is extinguished. To the extent that funds provided from the Line of Credit and/or generated from any private placements, public offerings and/or bank financing are insufficient to support the Company s working capital requirements, the Company will have to raise additional working capital from additional financing. No assurance can be given that additional financing will be available, or if available, will be on terms acceptable to the Company. If adequate working capital is not available, the Company may not renew or continue its operations. These factors among others indicate that we may be unable to continue as a going concern, particularly in the event that we cannot obtain additional financing and/or attain profitable operations, and as such, our auditor has added a going concern footnote to our audited financial statements included herein. We believe we can continue our operations for approximately the next twelve (12) months if no additional financing is raised, with funds provided under the Line of Credit, and providing that we continue our operations as they are currently conducted, on a limited basis, without expanding or incurring any additional expenses. If we are unable to raise adequate working capital for fiscal 2011, we will be restricted in the implementation of our business plan and ability to expand our operations. If this were to happen, the value of our securities would diminish and we may be forced to change our business plan for fiscal 2011, which would result in the value of our securities declining in value and/or becoming worthless. If we raise an adequate amount of working capital to implement our business plan, we anticipate incurring net losses until a sufficient client base can be established. A current Prospectus must be in effect at the time of the sale of the shares of common stock discussed above. The selling stockholders will be responsible for any commissions or discounts due to brokers or dealers. We will pay all of the other offering expenses. Each selling stockholder or dealer selling the common stock is required to deliver a current Prospectus upon the sale. In addition, for the purposes of the Securities Act of 1933, as amended, selling stockholders may be deemed underwriters. The following summary is qualified in its entirety by the detailed information appearing elsewhere in this Prospectus. The securities offered hereby are speculative and involve a high degree of risk. See "Risk Factors." SUMMARY OF THE OFFERING: Common Stock Offered: 166,649 shares by selling stockholders Common Stock Outstanding Before The Offering: 4,366,649 shares Common Stock Outstanding After The Offering: 4,366,649 shares Use Of Proceeds: We will not receive any proceeds from the shares offered by the selling stockholders in this offering. Offering Price: The offering price of the shares has been arbitrarily determined by us based on estimates of the price that purchasers of speculative securities, such as the shares, will be willing to pay considering the nature and capital structure of our Company, the experience of our officers and Directors and the market conditions for the sale of equity securities in similar companies. The offering price of the shares bears no relationship to the assets, earnings or book value of us, or any other objective standard of value. We believe that no shares will be sold by the selling shareholders prior to us becoming a publicly-traded company, at which time the selling shareholders will sell shares based on the market price of such shares. We are not selling any shares of our common stock, and are only registering the re-sale of shares of common stock previously sold by us. No Market: There is currently no market for our securities and no market for our securities may exist in the future, or at all. If in the future a market does exist for our securities, it is likely to be highly illiquid and sporadic. Need for Additional Financing: We have not generated revenues to date and anticipate the need for approximately $500,000 of additional funding during the next 12 months to expand our operations as planned, and such funding may not be able to be raised on favorable terms, if at all. We believe we can continue our operations for approximately the next twelve (12) months if no additional financing is raised, with funds provided under the Line of Credit, provided that we will not have sufficient funds to expand or grow our operations as planned. If we are unable to raise the additional funding, the value of our securities, if any, would likely become worthless and we may be forced to abandon our business plan. Even assuming we raise the additional capital we require to continue our business operations, we will require substantial fees and expenses associated with this offering, and we anticipate incurring net losses for the foreseeable future. Address: 1403 West Sixth Street Austin, Texas 78703 Telephone Number: (888) 413-4687
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001479587_flex_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001479587_flex_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..14cb24be080e41aeeba2c5ab3248d8bfce3d39ae
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@@ -0,0 +1 @@
+SUMMARY OF OUR OFFERING OUR BUSINESS We were incorporated on October 27, 2009. We are a development stage company. We do not have any revenues or operations, and we have minimal assets and have incurred losses since inception. We intend to create a web portal system which will collect and disseminate tracking information on goods and services provided to the general public. We have no revenues, have achieved losses since inception, have no operations, have been issued a going concern opinion and rely upon the sale of our securities to fund operations. Should we require additional funding, we will borrow from our sole officer and director. Our sole officer and director has not set limitations or terms on the lending amount that may occur in the future. Any lending provided by our sole officer and director will be legally documented for future repayments. Our administrative office is located at Room 1707, C, 17th Floor CTS Center 219 Zhong Shan Wu Road, Guangzhou, China and our telephone number is 86-13808821282. Our registered statutory office is located at 375 N Stephanie St. Ste 1411, Henderson, Nevada. Other than our offices mentioned, we hold no other principal plants or physical properties. Mr. Lu has arranged for our company to conduct operations at this office free of rent. This office space is not Mr. Lu's employer's place of business, and is provided by Mr. Lu's business associate. Furthermore, there are no terms or conditions to occupy this office space to conduct our operations. Our fiscal year end is December 31. Management or affiliates thereof will not purchase shares in this offering in order to reach the minimum. THE OFFERING Following is a brief summary of this offering: Securities being offered A minimum of 1,000,000 shares of common stock and a maximum of 2,000,000 shares of common stock, par value $0.001. Offering price per share $0.01 Offering period Our shares are being offered for a period not to exceed 270 days. Net proceeds to us Approximately $5,000 assuming the minimum numbers of shares are sold. Approximately $15,000 assuming the maximum number of shares is sold. Use of proceeds We will use the proceeds to pay for offering expenses, the implementation of our business plan, and for working capital. Number of shares outstanding before the offering 4,000,000 Number of shares outstanding after the offering if all of the shares are sold 6,000,000
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001479920_tbs_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001479920_tbs_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..8e67706372e4ce9e79f3a18c8937fa0140401b88
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@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus and does not contain all of the information that you should consider in making your investment decision. Before investing in our securities, you should carefully read this entire prospectus, including our consolidated financial statements and the related notes and the information set forth under the heading "Risk Factors" included in this prospectus. You also should carefully read "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2010, and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2011, both of which are incorporated by reference into this prospectus. Overview We are an ocean transportation services company, originating in 1993, that offers worldwide shipping solutions to a diverse client base of industrial shippers. We operate liner, parcel and bulk services supported by a fleet of multipurpose tweendeckers and handysize/handymax bulk carriers. The flexibility of our fleet allows us to carry a wide range of cargo, including industrial goods, project cargo, steel products, metal concentrates, fertilizer, salt, sugar, grain, aggregates and general cargo, which cannot be carried efficiently by container or large dry bulk carriers. Over the past 18 years, we have developed our business model around key trade routes between Latin America and Japan, South Korea and China, as well as ports in North America, Africa, the Caribbean and the Middle East. We differentiate ourselves from our competitors by offering our Five Star Service: ocean transportation, projects, operations, port services and strategic planning. We target niche markets, which include trade routes, ports and cargoes not efficiently served by container and large dry bulk vessel operators. In order to effectively serve these markets, we offer regularly scheduled voyages using our fleet of multipurpose tweendeckers and handysize/handymax dry bulk carriers. Tweendeck vessels are differentiated by their retractable decks that can create separate holds, facilitating the transportation of non-containerized cargoes. Our vessels are able to navigate and service many ports with restrictions on vessel size and transport a wide variety of cargo that cannot be carried efficiently by container or large dry bulk carriers. Our Brazilian joint venture, Log-Star, obtained an operational license in Brazil to provide domestic shipping services. This Brazilian flagged shipping company will concentrate on the movement of breakbulk, bulk parcels, heavy-lift, general and project cargoes along Brazil's coastline and Amazon River basin. Our current controlled fleet consists of a total of 51 vessels, including 49 ships that we own and two that we charter-in with an option to purchase, aggregating approximately 1.5 million deadweight tons ("dwt"). The fleet consists of 29 multipurpose tweendeckers and 22 handysize and handymax bulk carriers. In addition to the 51 vessels, we have chartered-in three ships through Log-Star, for three years; as of March 31, 2011. We also expect to take delivery of a newbuild vessel, the Maya Princess, during the second quarter of 2011. Recent Developments Starting in late May 2010, the Baltic Dry Index, which measures the demand for shipping capacity versus the supply of dry bulk carriers, started to decline dramatically from a high of 4,209 on May 26, 2010 to a recent low of 1,043 on February 4, 2011. Although the Baltic Dry Index has recovered slightly since February 4, 2011, it has remained at historically low levels, peaking at 1,585 on March 28, 2011 and declining to 1,250 on April 26, 2011, and freight rates in the ocean shipping industry consequently have remained weak. Our management believes that there are many reasons for continued weakness in freight rates, including the large amount of additional tonnage from recent newbuilds in all vessel sizes as well as natural occurrences that significantly depressed the amount of available cargoes, such as the extended heat wave in the grain growing regions of Russia and Ukraine and the recent devastating Table of Contents floods in Australia and Brazil. As a direct result of this imbalance of supply and demand, freight rates across the ocean shipping industry have declined dramatically as owners and charterers compete for cargoes. The reduction in our freight rates in this market environment directly and adversely affected our revenues and cash flows and caused us to enter into negotiations with our lenders to seek modification of certain financial covenants in our various credit facilities. With the consent of our lenders, in September 2010 we ceased paying installments of principal due on indebtedness. Our lenders agreed not to take any action as a result while we collectively sought to negotiate new terms of our existing debt. Effective January 28, 2011, we and our lenders agreed on a restructuring of our debt repayment schedules and modifications of the covenants under our credit facilities, and our lenders agreed to waive any existing defaults under those agreements. In connection with the restructuring of debt facilities consummated in January 2011, we incurred bank fees and third party costs totaling approximately $6.6 million. Third party costs of approximately $3.3 million were recognized as an expense and reflected in the consolidated income statement during the fourth quarter of 2010. Bank fees of approximately $3.3 million will be added to the existing unamortized balance of deferred financing costs and amortized over the terms of the new arrangements. As a result of the extinguishment of the BOA Revolving Credit Facility, $1.1 million of unamortized deferred financing costs previously incurred were charged to consolidated income during the first quarter of 2011. See "Description of Indebtedness" for additional information about the terms of our amended credit facilities. Our lenders, as a condition to restructuring our credit facilities, have required three significant shareholders who also are key members of our management to agree to provide up to $10.0 million of new equity in the form of preference shares. In partial satisfaction of this requirement, on January 28, 2011, these significant shareholders purchased an aggregate of 30,000 of our Series B Preference Shares at $100 per share directly from us in a private placement. In addition, they agreed to purchase an additional aggregate of 70,000 of our preference shares at $100 per share directly from us in one or more private placements or as standby purchasers in this rights offering. See "Description of the Rights Offering Commitments of the Significant Shareholders." The continuing imbalance of supply and demand, and the consequent weakness in the charter and freight rates that we are able to obtain, would have caused us to fail to comply with certain financial covenants in our credit facilities, even as modified in January 2011. As a result, we and our lenders entered into further amendments to our credit facilities in April 2011. Unless the Baltic Dry Index, and the charter and freight rates that we are able to obtain, strengthen significantly in the near future, however, it is likely that we will fail to comply with certain of our financial covenants as modified in April 2011. These modified covenants require us to make sizable principal payments on our outstanding indebtedness each quarter commencing June 30, 2011 and to continue to maintain minimum liquidity of $10 million through December 31, 2011 and $15 million thereafter. Unless the Baltic Dry Index, and the charter and freight rates that we are able to obtain, strengthen significantly in the near future, we will need to raise sufficient proceeds from this rights offering and in possible future equity financing transactions to enable us to make the principal repayments due September 30, 2011 and to comply with the minimum liquidity covenant. Our modified minimum consolidated interest charges coverage ratio and our modified maximum consolidated leverage ratio will be computed on the basis of the trailing four quarters before each computation date. Since the results of our recent and current quarters reflect the continuing weakness in charter and freight rates, it is likely that we will fail to comply with those covenants after December 31, 2011. Block A1 EastPoint Business Park Fairview, Dublin 3, Ireland +(353) 1 2400 222 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) Table of Contents Failure to raise additional equity capital or to obtain significantly higher charter and freight rates to enable us to meet our coverage and leverage ratios as discussed above, would have a material adverse effect on our financial condition and liquidity and continues to raise substantial doubt about our ability to continue as a going concern. Our lenders have agreed to enter into further good faith discussions, if necessary, with respect to any appropriate changes to these covenants for the periods after 2011. We cannot assure you that these conversations would result in amendments or waivers necessary to ensure continued compliance with our various covenants. TBS International plc TBS International plc is an Irish public limited company. Its registered and principal office is located at Block A1 EastPoint Business Park, Fairview, Dublin 3, Ireland, and its telephone number at that address is +353 1 2400 222. References herein to the "company," "we," "our" and "us" refer to the operations of TBS International plc and its consolidated subsidiaries, and references herein to "International" refer only to TBS International plc. Joseph E. Royce c/o TBS Shipping Services, Inc. 612 East Grassy Sprain Road Yonkers, New York 10710 (914) 961-1000 (Name, address, including zip code, and telephone number, including area code, of agent for service) Table of Contents THE RIGHTS OFFERING Issuer TBS International plc Subscription Rights We are distributing to our ordinary shareholders as of 5:00 p.m., New York City time, on May 7, 2011, at no charge, one non-transferable right for each ordinary share they held on the record date. As of the record date for the rights offering, 18,018,169 of our Class A ordinary shares and 13,200,305 of our Class B ordinary shares were outstanding and eligible to receive the subscription rights. Each 100 rights entitles the holder to purchase one of our Series A Preference Shares at a subscription price of $100. We will issue rights to purchase up to 312,184 Series A Preference Shares in the rights offering. Restructuring of Credit Facilities; Private Placement; Standby Purchase Agreement As a condition to the restructuring of our credit facilities, three significant shareholders who also are key members of our management agreed on January 25, 2011 to provide $10.0 million of new equity in the form of preference shares and deposited funds in an escrow account to facilitate satisfaction of this obligation. In partial satisfaction of this obligation, on January 28, 2011, these significant shareholders purchased an aggregate of 30,000 of our Series B Preference Shares at $100 per share directly from us in a private placement. If our board of directors determines that we need additional liquidity prior to the closing of the rights offering, the board of directors may withdraw up to $7.0 million from the escrow account in exchange for issuing, in one or more private placements, Series B Preference Shares to the significant shareholders at a price of $100 per share. The significant shareholders also have agreed to act as standby purchasers for the rights offering. Pursuant to this standby commitment, the significant shareholders are obligated to purchase an additional aggregate of 70,000 Series A Preference Shares at $100 per share, from us if subscription rights for the exercise of such number of Series A Preference Shares remain unexercised upon the expiration of the rights offering. Because each significant shareholder has agreed not to exercise the subscription rights issued with respect to ordinary shares beneficially owned by him, subscription rights for more than 70,000 Series A Preference Shares will expire without being exercised and will be purchased by the significant shareholders as standby purchasers. This obligation to act as standby purchasers of our Series A Preference Shares will be reduced to the extent that we issue Series B Preference Shares to the significant shareholders as a result of liquidity withdrawals. Copies to: Steven R. Finley Andrew L. Fabens Gibson, Dunn & Crutcher LLP 200 Park Avenue New York, NY 10166 Tel: (212) 351-4000 Fax: (212) 351-4035 Table of Contents Record Date 5:00 p.m., New York City time, on May 7, 2011, which was the date used to determine the shareholders entitled to receive rights. Expiration Time The rights expire, if not previously exercised, at 5:00 p.m., New York City time, on [ ], 2011, unless the exercise period is extended by us. We currently do not intend to extend the exercise period. Dilutive Effect of Rights Offering If you do not exercise your right, your beneficial ownership will decrease. If not all of the rights covered by this prospectus are exercised, the beneficial ownership percentage of the significant shareholders may increase. See "Principal Shareholders Effects of Private Placement on the Significant Shareholders' Securities and Ownership." Transferability of Rights The rights are not transferable and may not be sold by their holders. No Fractional Shares We will not issue any fractional Series A Preference Shares upon the exercise of the subscription rights and, therefore, you will need to hold at least 100 subscription rights in order to be eligible to subscribe for any Series A Preference Shares at $100 per share. For example, a holder of fewer than 100 ordinary shares will not be able to exercise subscription rights to acquire any Series A Preference Shares, and a holder of 150 ordinary shares will only be able to exercise subscription rights for one Series A Preference Share. Holders will not receive any cash value for unexercised subscription rights. Procedure for Exercise You may exercise your rights by properly completing and signing your rights certificate and delivering it to American Stock Transfer & Trust Company, which is acting as the rights agent for the rights offering. The rights agent will not accept a facsimile transmission of your completed rights certificate. This delivery must be accompanied by full payment of the subscription price for each Series A Preference Share you wish to purchase. We recommend that you send it by insured overnight courier that provides delivery tracking or by registered mail with return receipt requested. See "Description of the Rights Offering Summary of Procedures to Follow." Approximate date of commencement of proposed sale to the public: As soon as practicable after this registration statement becomes effective. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. Large accelerated filer Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission acting pursuant to such Section 8(a) may determine. Table of Contents Exercise by Beneficial Holders If you hold our ordinary shares through a broker, bank or other nominee, you will need to have your broker, bank or other nominee act for you if you wish to exercise your rights. If you wish to exercise your rights, you should complete and return to your broker, bank or other nominee the form entitled "Beneficial Owner Election Form" or a similar form provided to you by such broker, bank or other nominee prior to 5:00 p.m., New York City time, on the last business day prior to the Expiration Time, which will be [ ], 2011, unless the rights offering is extended. You should receive this form from your broker, bank or other nominee with the other rights offering materials. See "Description of the Rights Offering Information for Beneficial Holders and Brokers, Banks and Other Nominees." Issuance, Delivery and Form If you properly exercise your rights, you will be deemed to own Series A Preference Shares immediately after the expiration of the rights offering. Shareholders who own ordinary shares in book-entry form through the Depositary Trust Company, or DTC, will receive beneficial ownership of their subscription rights in accordance with DTC's procedures. All other shareholders will receive subscription rights in certificated form. We have the discretion to delay distribution of any Series A Preference Shares you may elect to purchase by exercise of the rights if necessary to comply with securities laws. No interest will be paid to you on the funds you deposit with the rights agent. No Guaranteed Delivery Holders will not be entitled to provide a notice of guaranteed delivery if they are unable to exercise their subscription rights prior to the Expiration Time or are unable to provide payment to the rights agent by the Expiration Time. Revocation of Exercise of Rights; Revocation Deadline Your exercise of rights may be validly withdrawn at any time prior to the deadline for revocation, but not thereafter, subject to applicable law. The deadline for revocation is 5:00 p.m., New York City time, on the business day prior to the Expiration Time. Following the revocation deadline, your exercise of rights may not be revoked in whole or in part for any reason, including a decline in our ordinary share price, even if we have not already issued the shares to you. For a revocation to be effective, a written or facsimile transmission notice of revocation must be received by the rights agent prior to the deadline for revocation at its address set forth under "Description of the Rights Offering Summary of Procedures to Follow Revocation of Exercise." No Recommendation Neither we nor our board of directors has made any recommendation as to whether you should exercise your rights. You should make those decisions based upon your own assessment of your best interests. Table of Contents The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. PROSPECTUS (Subject to Completion) Issued May 10, 2011 Non-transferable Rights Offering to Purchase Up to 312,184 Series A Preference Shares Convertible into Class A ordinary shares Series A Preference Shares Class A Ordinary Shares TBS International plc Table of Contents Listing of our Class A ordinary shares Our Class A ordinary shares are listed on the Nasdaq Global Select Market under the symbol "TBSI." On May 9, 2011, the closing price for our Class A ordinary shares was $1.71 per share. Termination of Rights Offering We have no intention of terminating the rights offering, but we have reserved the right to terminate the rights offering prior to the scheduled expiration of the rights offering. If the rights offering is terminated, the rights agent will return as soon as practicable all subscription payments, without interest. See "Description of the Rights Offering Modification and Cancellation of the Rights Offering Cancellation of the Rights Offering." Material U.S. Federal and Ireland Income Tax Consequences of Rights Offering You should refer to "Material U.S. Federal and Ireland Income Tax Considerations" for a discussion of certain tax considerations of the rights offering. In addition, you should consult your own tax advisor as to the tax consequences to you of the receipt, exercise or expiration of the subscription rights in light of your particular circumstances. Rights Agent and Information Agent We have appointed American Stock Transfer & Trust Company to act as the rights agent and Phoenix Advisory Partners to act as the information agent for the rights offering. Governing Law The rights will be governed by the laws of the State of New York. Risk Factors Exercise of the subscription rights, like any investment in our securities, involves a high degree of risk, including risks related to the shipping industry and economic conditions, our business and operations and the rights offering. You should read "Risk Factors" beginning on page 19 and the other Risk Factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2010, and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2011, both of which are incorporated by reference, before you exercise your rights. We are distributing to eligible holders of our Class A and Class B ordinary shares one non-transferable subscription right to subscribe for our Series A Preference Shares for each ordinary share held at 5:00 p.m., New York City time, on May 7, 2011, the record date for the rights offering. Each 100 subscription rights entitle a holder to subscribe for one Series A Preference Share at a subscription price of $100 per Series A Preference Share. Each Series A Preference Share initially will be convertible into 50.0 Class A ordinary shares, subject to adjustments to reflect semiannual increases in liquidation value and stock splits and reclassifications. As of the record date for the rights offering, 18,018,169 of our Class A ordinary shares and 13,200,305 of our Class B ordinary shares were outstanding. Holders of these shares on the record date are eligible to receive the subscription rights. We will not issue any fractional Series A Preference Shares upon the exercise of these subscription rights, and therefore you will need to hold at least 100 subscription rights in order to be eligible to subscribe, on a pro rata basis, for our new Series A Preference Shares. We intend to commence this rights offering on or shortly after [ ], 2011. We are conducting this rights offering in connection with the restructuring of our various credit facilities. See "Prospectus Summary Recent Developments." As a condition to the restructuring of our credit facilities, our lenders have required three significant shareholders who also are key members of our management to agree to provide up to $10.0 million of new equity in the form of preference shares. In partial satisfaction of this requirement, on January 28, 2011, these significant shareholders purchased an aggregate of 30,000 of our Series B Preference Shares at $100 per share directly from us in a private placement. In addition, they agreed to purchase an additional aggregate of 70,000 of our preference shares at $100 per share directly from us. See "Description of the Rights Offering Commitments of the Significant Shareholders." The aggregate purchase price of Series A Preference Shares offered in this rights offering would be $18.8 million if all eligible rights were exercised. "Eligible rights" are the subscription rights held by shareholders other than the significant shareholders, who have agreed that they will not exercise their rights, but instead will act as standby purchasers and purchase up to 70,000 Series A Preference Shares upon completion of this rights offering. As a result, the minimum amount that we will raise from the sale of preference shares to the significant shareholders will be $10.0 million (which includes $3.0 million of preference shares sold to the significant shareholders in January 2011), and the maximum amount that we would raise from all holders, including the significant shareholders in the private placements or upon standby purchases, if all eligible rights were exercised, would be $28.8 million. The subscription rights will expire if they are not exercised by 5:00 p.m., New York City time, on [ ], 2011, the Expiration Time for this rights offering. We reserve the right, in our sole discretion, to cancel, extend or otherwise amend the terms of this rights offering for any reason prior to the Expiration Time. We have agreed with our lenders that we will complete this rights offering by July 27, 2011 and, in the event that we extend the rights offering, we do not expect to extend the rights offering beyond that date. Subscription rights that are not exercised by the Expiration Time of this rights offering will expire and will have no value. You should carefully consider whether or not to exercise your subscription rights before the Expiration Time for this rights offering, and in doing so you should consider all of the information about us and this rights offering contained or incorporated by reference in this prospectus, including the risk factors set forth and incorporated herein. The rights offering will dilute the ownership interest and voting power of the ordinary shares owned by shareholders who do not fully exercise their subscription rights. Shareholders who do not fully exercise their subscription rights should expect, upon completion of the rights offering, to own a smaller proportional interest of our ordinary shares than before the rights offering. Our Class A ordinary shares are quoted on the Nasdaq Global Select Market under the symbol "TBSI." The closing price of our Class A ordinary shares on May 9, 2011, as reported by Nasdaq, was $1.71 per share. We have not listed, and do not expect to list for trading, the subscription rights or our Class B ordinary shares, Series A Preference Shares or Series B Preference Shares. Table of Contents THE PREFERENCE SHARES Preference Shares Holders of subscription rights will be able to exercise their subscription rights to acquire Series A Preference Shares. The Series A Preference Shares will be identical in all respects to the Series B Preference Shares purchased by our significant shareholders, except that the Series A Preference Shares will be convertible only into Class A ordinary shares at an initial conversion rate of 50 Class A ordinary shares per Series A Preference Share and the Series B Preference Shares will be convertible only into Class B ordinary shares at an initial conversion rate of 25.0 Class B ordinary shares per Series B Preference Share. The holders of Class A ordinary shares may convert their Class A ordinary shares into Class B ordinary shares, and the holders of Class B ordinary shares may convert their Class B ordinary shares into Class A ordinary shares, at any time. Ranking Preference shares will rank senior to all ordinary shares and junior to our existing and future debt obligations. Subscription Price and Initial Liquidation Preference $100 per Series A Preference Share, which is the price at which our significant shareholders agreed on January 25, 2011 to purchase preference shares. Optional Conversion by Holder; Limitations on Conversion Preference shares will be convertible, at the option of the holder, into ordinary shares at the applicable conversion rate, except that a holder may not convert if, as a result of the conversion: International would become a controlled foreign corporation under the Internal Revenue Code; or the converting holder (together with any other person who is "acting in concert" with the converting holder within the meaning of the Irish Takeover Rules) would hold 30% or more of the voting rights in International or would be required to make a mandatory bid under Rule 9 of the Irish Takeover Rules. See "Description of Preference Shares Series A and Series B Preference Shares Conversion at Option of the Holders." Exercising the rights you receive in this offering and acquiring our Series A Preference Shares or Class A ordinary shares involves risks. See "Risk Factors" beginning on page 19. Table of Contents Accrual of Liquidation Preference; Increase in Ordinary Shares Issuable upon Conversion From the date of issuance through December 31, 2014, the liquidation preference applicable to each preference share will increase at a rate of 6.0% per year, compounded semiannually on June 30 and December 31 of each year. As a result, the number of Class A ordinary shares issuable upon conversion of each preference share will increase. See " Conversion Rate" below for more information. Dividends after December 31, 2014 The preference shares will not accrue dividends through December 31, 2014. Beginning January 1, 2015, cash dividends will accrue at a rate of 6.0% of the liquidation preference per year, payable semiannually in arrears. If we fail to pay dividends in cash, the dividends would accumulate as unpaid dividends and, in the event of insolvency, would be added to the liquidation preference. Conversion Rate The initial conversion rate will be 50 Class A ordinary shares per Series A Preference Share. The conversion rate will be subject to limited anti-dilution adjustments for stock splits and reclassifications affecting our ordinary shares. In addition, the number of ordinary shares issuable upon conversion of a holder's preference shares will increase because the liquidation preference will increase semiannually from the date of issuance through December 31, 2014. For example, assuming the Series A Preference Shares are issued on May 31, 2011 and no stock splits or reclassifications affect our Class A ordinary shares, 100 Series A Preference Shares: initially would have a liquidation preference of $100.00 per share and be convertible into 5,000 Class A ordinary shares; beginning June 30, 2011, would have a liquidation preference of $100.50 per share and be convertible into 5,025 Class A ordinary shares; and beginning December 31, 2011, would have a liquidation preference of $103.515 per share and be convertible into 5,175 Class A ordinary shares; and beginning December 31, 2014, would have a liquidation preference of $123.6023 per share and be convertible into 6,180 Class A ordinary shares. See "Description of Preference Shares Series A and Series B Preference Shares Conversion Rate Adjustments." Redemption Subject to the availability of distributable reserves, at our option, we may redeem the Series A Preference Shares, in whole or in part, on or after December 31, 2014 at a redemption price equal to the then-applicable liquidation preference, plus accrued and unpaid dividends. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The securities are not being offered in any jurisdiction where the offer is not permitted. May [ ], 2011 (1)Unless the offering is extended or materially amended. (2)Participating rights holders must, by the Expiration Time, deliver an executed subscription certificate, payment for shares and other documentation as described in "Description of the Rights Offering." Table of Contents Description of Exhibit Exhibit Number Exhibit Description Form File No. Filing Date Exhibit Number Filed Herewith 10.118 Sixth Amendatory Agreement, dated as of April 15, 2011, among Bedford Maritime Corp., Brighton Maritime Corp., Hari Maritime Corp., Prospect Navigation Corp., Hancock Navigation Corp., Columbus Maritime Corp., Whitehall Marine Transport Corp., TBS International Limited, TBS Holdings Limited, TBS International Public Limited Company, DVB Group Merchant Bank (Asia) Ltd., DVB Bank SE, The Governor and Company of the Bank of Ireland and Natixis. 10-Q 001-34599 5/10/11 10.13 10.119 Sixth Amendment to Loan Agreement, dated April 15, 2011, by and among Amoros Maritime Corp., Lancaster Maritime Corp., Chatham Maritime Corp., Sherwood Shipping Corp., TBS International Limited, TBS Holdings Limited, TBS International Public Limited Company and AIG Commercial Equipment Finance, Inc. 10-Q 001-34599 5/10/11 10.14 10.120 Supplemental Agreement, dated April 15, 2011, among Claremont Shipping Corp., Yorkshire Shipping Corp., TBS International Limited, TBS International Public Limited Company and Credit Suisse AG. 10-Q 001-34599 5/10/11 10.15 10.121 Supplemental Agreement No. 2, dated April 15, 2011, among Grainger Maritime Corp., TBS International Limited, TBS Worldwide Services, Inc., TBS Holdings Limited, TBS International Public Limited Company and Joh. Berenberg, Gossler & Co. KG. 10-Q 001-34599 5/10/11 10.16 10.121 Form of Restricted Share Award 10-Q 001-34599 5/10/11 10.17 12.1 Calculation of Ratio of Earnings to Fixed Charges X 21.1 Subsidiaries of the Registrant 10-K 001-34599 3/16/11 22.1 23.1 Consent of PricewaterhouseCoopers LLP X 23.2 Consent of Arthur Cox (included in Exhibit 5.1) X 23.3 Consent of Gibson, Dunn & Crutcher LLP (included in Exhibit 5.2) Table of Contents EXHIBIT INDEX Description of Exhibit Exhibit Number Exhibit Description Form File No. Filing Date Exhibit Number Filed Herewith 5.1 Opinion of Arthur Cox X 5.2 Opinion of Gibson, Dunn & Crutcher LLP X 12.1 Calculation of Ratio of Earnings to Fixed Charges X 23.1 Consent of PricewaterhouseCoopers LLP Table of Contents QUESTIONS AND ANSWERS ABOUT THE RIGHTS OFFERING What is a rights offering, and what is being offered in this rights offering? A rights offering is a distribution of subscription rights on a pro rata basis to all existing ordinary shareholders of a company. We will distribute to holders of our Class A and Class B ordinary shares as of 5:00 p.m., New York City time, on May 7, 2011, the rights offering record date, at no charge, non-transferable subscription rights to purchase our Series A Preference Shares. If you were a holder of our Class A or Class B ordinary shares at 5:00 p.m., New York City time, on the record date, you will receive one subscription right for each ordinary share you owned at that time. Each 100 subscription rights entitles the holder to purchase one Series A Preference Share. We will not issue fractional preference shares upon the exercise of these subscription rights. Shareholders who own ordinary shares in book-entry form through DTC will receive beneficial ownership of their subscription rights in accordance with DTC's procedures. All other shareholders will receive subscription rights in certificated form. Why are we conducting the rights offering, and how will we use the proceeds? Effective January 28, 2011, we and our lenders agreed to amend our credit facilities, and our lenders agreed to waive certain events of default and to modify the principal repayment schedules of those facilities. As a condition to these changes, our lenders required three significant shareholders who also are key members of our management to agree to provide up to $10.0 million of new equity in the form of preference shares. Our board of directors determined that all holders of our ordinary shares should have the opportunity to purchase Series A Preference Shares on the same terms as the significant shareholders and concluded that a rights offering provided the best means of providing that opportunity to all holders. We plan to use the proceeds of this offering for general corporate purposes. See "Use of Proceeds" for more information. What are the subscription rights? You will receive one non-transferable subscription right for each Class A or Class B ordinary share that you owned as of 5:00 p.m., New York City time, on May 7, 2011, the rights offering record date. Each 100 subscription rights entitles the holder to purchase one of our Series A Preference Shares for $100. Am I required to exercise the rights I receive in this rights offering? No. You may exercise any number of your subscription rights in an integral multiple of 100, or you may choose not to exercise any subscription rights. However, if you choose not to fully exercise your subscription rights, and assuming that the preference shares are converted into ordinary shares, the fully-diluted percentage of our ordinary shares owned by other holders will increase and the relative fully-diluted percentage of our ordinary shares that you own will decrease. As a result, your voting and other rights may be diluted. In addition, your voting and other rights could be further diluted with each semiannual increase in the liquidation preference of the preference shares, again assuming that the preference shares are converted into ordinary shares. See "Description of Preference Shares Series A and Series B Preference Shares Conversion Rate Adjustments." Will fractional Series A Preference Shares be issued? No. We will not issue fractional shares or cash in lieu of fractional Series A Preference Shares. A holder of fewer than 100 ordinary shares as of the rights offering record date will not be able to exercise those subscription rights to purchase any Series A Preference Shares, and a holder of 150 ordinary shares will only be able to exercise their subscription rights to purchase one Series A Preference Share. Table of Contents How many Class A ordinary shares will I be entitled to receive upon conversion of Series A Preference Shares purchased in the rights offering? The initial conversion rate will be 50 Class A ordinary shares per Series A Preference Share surrendered for conversion. This conversion rate will be subject to limited anti-dilution adjustments for stock splits and reclassifications affecting our Class A ordinary shares. In addition, the liquidation preference applicable to each Series A Preference Share will increase at a rate of 6.0% per year, compounded semiannually on June 30 and December 31 of each year from the date of issuance through December 31, 2014. As a result, the number of Class A ordinary shares issuable upon conversion of each Series A Preference Share will increase. For example, assuming no stock splits or reclassifications affect our ordinary shares, 100 Series A Preference Shares issued on May 31, 2011: initially would have a liquidation preference of $100.00 per share and be convertible into 5,000 Class A ordinary shares; beginning June 30, 2011, would have a liquidation preference of $100.50 per share and be convertible into 5,025 Class A ordinary shares; and beginning December 31, 2011, would have a liquidation preference of $103.515 per share and be convertible into 5,175 Class A ordinary shares; and beginning December 31, 2014, would have a liquidation preference of $123.6023 per share and be convertible into 6,180 Class A ordinary shares. See "Description of Preference Shares Series A and Series B Preference Shares Conversion Rate Adjustments." Will we pay dividends on the Series A Preference Shares? The Series A Preference Shares will not accrue dividends through December 31, 2014, although the liquidation preference will increase as discussed immediately above. Beginning January 1, 2015, cash dividends will accrue at a rate of 6.0% of the liquidation preference per year, payable semiannually in arrears. If we fail to pay dividends in cash, the dividends would accumulate as unpaid dividends and, in the event of insolvency, would be added to the liquidation preference but would not increase the number of Class A ordinary shares issuable upon conversion of the preference shares. What are some factors our board of directors considered in authorizing this rights offering? In authorizing this rights offering, our board of directors considered the requirements set by the lenders under our various credit facilities that we raise at least $10 million of additional equity, that the significant shareholders personally provide at least $3 million of that amount and that the significant shareholders commit to fund up to the full $10 million within six months of the restructuring of those credit facilities. Our board of directors determined that fulfillment of our obligation to raise additional equity capital would be best accomplished by a private placement of preference shares, which could be consummated expeditiously, followed as closely as possible by a rights offering to all our shareholders that would provide them the opportunity to purchase preference shares on the same terms as the significant shareholders. The board of directors considered a number of factors in favor of this rights offering, including the following: our lenders' willingness to amend our credit facilities and waive our defaults under those facilities if we raise additional equity capital; Table of Contents our board of directors' view that this rights offering would potentially enhance our liquidity and provide financing for our operations; and the fact that this rights offering would enable all of our shareholders to participate in a material portion of the transaction and mitigate the dilution they might otherwise experience from the equity capital required by our lenders. Our board of directors also considered the following factors adverse to this rights offering: the fact that shareholders who do not exercise their subscription rights in full may be substantially diluted after completion of this rights offering; and the fees and expenses to be incurred by us in connection with this rights offering. How was the subscription price of $100 per share and the initial conversion price of $2.00 determined? In determining the subscription price for the rights and the initial conversion price of the preference shares, our board of directors considered, among other things, the number of preference shares and ordinary shares authorized by our Memorandum and Articles of Association, the number of preference shares that could be issued in the rights offering and in the private placement to our significant shareholders, the number of ordinary shares that could be issued upon conversion of the preference shares and historical and current trading prices of our ordinary shares. The last trading price for our Class A ordinary shares on January 25, 2011, the day on which our board of directors initially approved the rights offering and determined the subscription price and the initial conversion premium, was $3.50 per share. Since the initial approval of this rights offering by our board of directors, the market price of our Class A ordinary shares has declined from $3.50 per share to 1.71 on May 9, 2011. Our board of directors has concluded that it would be desirable to increase the initial conversion rate for the Series A Preference Shares from the initial level of 25.0 Class A ordinary shares per preference share set in January 2011 to a rate that reflects current market prices in order to increase the likelihood of a successful rights offering. Consistent with that determination, the board has concluded that the significant shareholders should be permitted to satisfy their remaining $7 million purchase obligation with Series A Preference Shares, with the increased conversion rate, rather than Series B Preference Shares, which continue to be convertible at the original conversion rate of 25.0 Class A ordinary shares per preference share. We did not seek or obtain any opinion of financial advisors or investment bankers in establishing the subscription price or the conversion rate. Neither the subscription price per preference share nor the initial conversion rate of the preference shares is intended to bear any relationship to the book value of our assets or our past operations, cash flows, losses, financial condition, net worth or any other established criteria used to value securities. You should not consider the subscription price or the initial conversion rate to be an indication of the fair value of the Class A ordinary shares or the Series A Preference Shares. Does exercising my subscription rights involve risks? Yes. The exercise of your subscription rights involves risks. By exercising your subscription rights you are purchasing our Series A Preference Shares. The purchase of Series A Preference Shares should be considered as carefully as you would consider other equity investments. Among other things, you should carefully consider the risks described under the heading "Risk Factors" in this prospectus and the documents incorporated by reference into this prospectus. Table of Contents Has our board of directors made a recommendation to our shareholders regarding the exercise of the subscription rights? No. Our board of directors is making no recommendation regarding your exercise of the subscription rights. Shareholders who exercise their subscription rights risk loss of all or a portion of their investment. We cannot assure you that the value of our Series A Preference Shares will be above the subscription price, that anyone purchasing shares at the subscription price will be able to sell those shares in the future at the same price or a higher price or that the conversion price of the Series A Preference Shares at any time will be equal to or lower than the market price of our Class A ordinary shares. You are urged to make your decision based on your own assessment of our business and the rights offering. Please see the risks described under the heading "Risk Factors" in this prospectus and the documents incorporated by reference into this prospectus for a discussion of some of the risks involved in investing in our preference shares and ordinary shares. Are we requiring a minimum subscription to complete the rights offering? No, the rights offering is not conditioned upon the exercise of any minimum number of subscription rights. Who are the significant shareholders? We refer to Joseph E. Royce (our Chief Executive Officer, Chairman of our Board of Directors and President), Gregg L. McNelis (our Chief Operating Officer, Director and Senior Executive Vice President) and Lawrence A. Blatte (our Senior Executive Vice President) as the significant shareholders. Mr. Royce, Mr. McNelis and Mr. Blatte each beneficially own a substantial number of our ordinary shares. See "Principal Shareholders Security Ownership of Directors and Management." Our lenders, as a condition to the restructuring of our credit facilities, have required the significant shareholders to agree to provide up to $10.0 million of new equity in the form of preference shares. In partial satisfaction of this requirement, on January 28, 2011, the significant shareholders purchased an aggregate of 30,000 of our Series B Preference Shares at $100 per share in a private placement. In addition, the significant shareholders have agreed to purchase an additional aggregate of 70,000 of our Series A Preference Shares at $100 per share directly from us, but such obligations will be reduced to the extent described under " How does the commitment of the significant shareholders work?" How does the commitment of the significant shareholders work? The significant shareholders have agreed to purchase an aggregate of 70,000 preference shares at a price of $100 per share. The amount of this commitment would be reduced to the extent the significant shareholders acquire additional Series B Preference Shares at the request of our board of directors prior to the completion of the rights offering. In connection with the significant shareholders' commitments, each of them has agreed not to exercise the subscription rights issued with respect to ordinary shares beneficially owned by him. See "Description of the Rights Offering Commitments of the Significant Shareholders." How will the rights offering affect the significant shareholders' ownership of our ordinary shares? If all of the subscription rights covered by this prospectus were exercised, each significant shareholder's beneficial ownership percentage would decrease. If none of the subscription rights were exercised, the significant shareholders would own an aggregate of 100,000 preference shares, and as a result, the beneficial ownership percentage of Mr. Royce, Mr. McNelis and Mr. Blatte would increase. See "Principal Shareholders Effects of Private Placement on the Significant Shareholders' Securities and Ownership." Table of Contents May I transfer my rights? No. The rights are not transferable and may not be sold by their holders. Can this rights offering be cancelled, extended or amended? Yes. We reserve the right, in our sole discretion, to cancel, extend or otherwise amend the terms of this rights offering for any reason prior to the Expiration Time. However, we have agreed with our lenders that we will complete this rights offering by July 27, 2011 and, in the event that we extend the rights offering, we do not expect to extend the rights offering beyond that date. We will notify you of any cancellation, extension or amendment by issuing a press release no later than 9:00 a.m., New York City time, on the next business day after the most recently announced Expiration Time. In the event of a material amendment to the terms of this rights offering, we will distribute an amended prospectus to shareholders of record, extend the expiration of this rights offering and offer all holders who have exercised their subscription rights a period of time to revoke their previously exercised subscription rights. If you revoke your previously exercised subscription rights under such circumstances, the rights agent will refund to you any payments you have made, without interest, as soon as practicable. If this rights offering is not completed, will my subscription payment be refunded to me? Yes. The rights agent will hold all funds it receives in a segregated bank account until completion of this rights offering. If this rights offering is cancelled or is not completed for any reason, the rights agent will return all subscription payments, without interest, as soon as practicable. If you own shares in "street name," it may take longer for you to receive payment because the rights agent will return payments through the record holder of the shares. How soon must I act to exercise my subscription rights? Your subscription rights may be exercised at any time during the subscription period, which commences on [ ], 2011, and continues through the Expiration Time. If you elect to exercise any subscription rights, the rights agent must actually receive all required documents and payments from you or your broker and your payment must clear prior to 5:00 p.m., New York City time, on the Expiration Time. Although we have the option of extending the Expiration Time for the subscription period at our sole discretion, we currently do not intend to do so. How do I exercise my subscription rights? What forms and payment are required to purchase the Series A Preference Shares? You may exercise your subscription rights by delivering the following to the rights agent, at or prior to the Expiration Time: your properly completed and executed subscription rights certificate with any required signature guarantees or other supplemental documentation; and payment of your full subscription price for each share subscribed for under your subscription rights. If you send your rights certificate by mail, we recommend that you use an insured overnight courier that provides delivery tracking or registered mail, with return receipt requested. We will not be obligated to honor your exercise of subscription rights if the rights agent does not receive the documents and payment relating to your exercise before the rights offering expires, regardless of when you transmitted the documents and payment. If your ordinary shares are currently held by a broker, bank or other nominee, please see below. Table of Contents If you do not indicate the number of subscription rights being exercised or do not deliver full payment of the aggregate subscription price for the number of subscription rights that you indicate are being exercised, then we may deem you to have exercised the maximum number of subscription rights that may be exercised with the aggregate subscription price payment you tendered to the rights agent. If your aggregate subscription price payment is greater than the amount you owe for your subscription, we or the rights agent will return the excess amount to you by mail, without interest, as soon as practicable after the expiration of the rights offering. What should I do if I want to participate in this rights offering, but my ordinary shares are held in the name of my broker, bank or other nominee? If you hold your ordinary shares through a broker, bank or other nominee, then your broker, bank or other nominee is the record holder of the shares you own. The record holder must exercise the subscription rights on your behalf for the Series A Preference Shares you wish to purchase. If you wish to participate in this rights offering and purchase Series A Preference Shares, please promptly contact the record holder of your ordinary shares. We will ask your broker, bank, or other nominee to notify you of this rights offering. In addition to any other procedures your broker, bank or other nominee may require, you should complete and return to your record holder the form entitled "Beneficial Owner Election Form" or a similar form provided to you by the record holder such that it will be received by the Beneficial Holder Election Deadline. You should receive this form from your record holder with the other rights offering materials. You should contact your broker, bank or other nominee if you do not receive this form but you believe you are entitled to participate in this rights offering. We are not responsible if you do not receive the form from your broker, bank or nominee or if you receive it without sufficient time to respond. In addition, your broker, bank or other nominee may permit you to participate in this rights offering and purchase our Series A Preference Shares through an Internet website that it maintains and through which you may access your account. How may I pay the subscription price, and where do I send my completed subscription rights certificate and payment? Your payment of the subscription price must be made in U.S. dollars for the full number of Series A Preference Shares you wish to acquire by: wire transfer of immediately available funds to the subscription account maintained by the rights agent at JPMorgan Chase Bank, 55 Water Street, New York, New York 10005, ABA #021000021, Account #530-354624 American Stock Transfer FBO TBS International plc, with reference to the rights holder's name; uncertified, certified or cashier's check or bank draft drawn upon a U.S. bank and payable to "American Stock Transfer & Trust Company, LLC (as rights agent for TBS International plc)"; or U.S. postal money order payable to "American Stock Transfer & Trust Company, LLC (as rights agent for TBS International plc)". Table of Contents American Stock Transfer & Trust Company is acting as the rights agent for this rights offering under an agreement with us. All subscription rights certificates, payments of the subscription price and nominee holder certifications, to the extent applicable to your exercise of subscription rights, must be delivered to American Stock Transfer & Trust Company as follows: By hand or courier: American Stock Transfer & Trust Company, LLC Operations Center Attn: Reorganization Department 6201 15th Avenue Brooklyn, New York 11219 By mail: American Stock Transfer & Trust Company, LLC Operations Center Attn: Reorganization Department P.O. Box 2042 New York, New York 10272 You should direct any questions or requests for assistance concerning the method of subscribing for the Series A Preference Shares or for additional copies of this prospectus to the rights agent. After I exercise my subscription rights, can I change my mind? Yes, your exercise of rights may be validly withdrawn at any time prior to the deadline for revocation, but not thereafter, subject to applicable law. The deadline for revocation is 5:00 p.m., New York City time, on the business day prior to the Expiration Time. Following the revocation deadline, your exercise of rights may not be revoked in whole or in part for any reason, including a decline in our ordinary share price, even if we have not already issued the shares to you. For a revocation to be effective, a written notice of revocation from the record holder must be received by the rights agent prior to the deadline for revocation at its address set forth under "Description of the Rights Offering Summary of Procedures to Follow Revocation of Exercise." What fees or charges apply if I exercise my subscription rights? We are not charging any fees or sales commissions to issue subscription rights to you or to issue Series A Preference Shares to you if you exercise your subscription rights. If you exercise your subscription rights through a broker or other record holder of your shares, you are responsible for paying any fees they may charge. How will I receive my subscription rights? Shareholders who own ordinary shares in book-entry form through DTC will receive beneficial ownership of their subscription rights in accordance with DTC's procedures. All other shareholders will receive subscription rights in certificated form. When will I receive my new Series A Preference Shares? If you validly exercise your subscription rights in accordance with the procedures set forth under "Description of the Rights Offering Summary of Procedures to Follow" and the Subscription Rights Instructions provided to you, we will, as soon as practicable after the expiration of the rights offering, issue to you the Series A Preference Shares for which you have validly subscribed. When issued, the Series A Preference Shares will be registered in the name of the subscription rights holder of record. Table of Contents What are the U.S. federal income tax consequences of exercising my subscription rights? A U.S. holder, as defined in "Material U.S. Federal and Ireland Income Tax Considerations," should not recognize income, gain or loss for U.S. federal income tax purposes upon the receipt and exercise of the subscription rights. See "Material U.S. Federal and Ireland Income Tax Considerations" for further discussion. You should consult your own tax advisors concerning the U.S. federal income tax consequences of the receipt, exercise and expiration of the subscription rights in light of your own particular circumstances and any consequences arising under the laws of any state, local or non-U.S. taxing jurisdiction. How many preference and ordinary shares will be outstanding after this rights offering? Assuming the significant shareholders do not exercise the rights beneficially owned by them, all other rights issued in the rights offering are exercised and the significant shareholders fulfill their standby purchase commitment to purchase 70,000 preference shares upon completion of the rights offering, we will have a maximum of 288,112 preference shares outstanding, of which 100,000 would be preference shares issued to the significant shareholders in the private placements and the remainder would be Series A Preference Shares issued in this offering. Each Series A Preference Share initially is convertible into 50.0 Class A ordinary shares, and each Series B Preference Share initially is convertible into 25.0 ordinary shares. From the date the preference shares are issued through December 31, 2014, this number of conversion shares will increase upon each semiannual increase in the liquidation preference. See "Description of Preference Shares Series A and Series B Preference Shares Liquidation Rights." Whom should I contact if I have more questions? If you have more questions about this rights offering or need additional copies of the rights offering documents, please contact the information agent, Phoenix Advisory Partners, at (877) 478-5038. For a complete description of the rights offering, see "Description of the Rights Offering." Table of Contents RISK FACTORS You should carefully consider the following risk factors and other information included in or incorporated by reference into this prospectus before you decide to purchase our securities. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties not currently known to us or that we currently deem immaterial also may adversely affect us. If any of the following risks occur, our business, financial condition, operating results and cash flows could be materially adversely affected. Risks Related to the Shipping Industry and Economic Conditions We have recently experienced severe and rapid declines in industry conditions that have required us to restructure our outstanding indebtedness. Starting in late May 2010, the Baltic Dry Index, which measures the demand for shipping capacity versus the supply of dry bulk carriers, started to decline dramatically from a high of 4,209 on May 26, 2010 to a recent low of 1,043 on February 4, 2011. Although the Baltic Dry Index has recovered slightly since February 4, 2011, it has remained at historically low levels, peaking at 1,585 on March 28, 2011 and declining to 1,250 on April 26, 2011, and freight rates in the ocean shipping industry consequently have remained weak. Our management believes that there are many reasons for this continued weakness in freight rates, including the large amount of additional tonnage from recent newbuilds in all vessel sizes as well as natural occurrences that significantly depressed the amount of available cargoes, such as the harsh summer in the grain growing regions of Russia and Ukraine and the recent devastating floods in Australia and Brazil. As a direct result of this imbalance of supply and demand, freight rates across the ocean shipping industry in all vessel sizes have declined dramatically as owners and charterers compete for cargoes. The reduction in our freight rates in this market environment has directly and adversely affected our revenues and cash flows and caused us to enter into negotiations with our lenders to seek modifications of certain financial covenants in our credit facilities. With the consent of our lenders, in September 2010, we ceased paying installments of principal due on our indebtedness. Our lenders agreed not to take any action as a result while we collectively sought to negotiate new terms of our existing debt. Effective January 28, 2011, we and our lenders agreed on a restructuring of our debt repayment schedules and modifications of the covenants under our credit facilities, and our lenders agreed to waive any existing defaults under those agreements. Our lenders, as a condition to the restructuring of our credit facilities, required three significant shareholders who also are key members of our management to agree to provide up to $10.0 million of new equity in the form of preference shares. The continuing imbalance of supply and demand, and the consequent weakness in the charter and freight rates that we are able to obtain, would have caused us to fail to comply with certain financial covenants in our credit facilities, even as modified in January 2011. As a result, we and our lenders entered into further amendments to our credit facilities in April 2011. Unless the Baltic Dry Index, and the charter and freight rates that we are able to obtain, strengthen significantly in the near future, however, it is likely that we will fail to comply with certain of our financial covenants as modified in April 2011. These modified covenants require us to make sizable principal repayments on our outstanding indebtedness each quarter commencing June 30, 2011 and to continue to maintain minimum liquidity of $10 million through December 31, 2011 and $15 million thereafter. Unless the Baltic Dry Index, and the charter and freight rates that we are able to obtain, strengthen significantly in the near future, we will need to raise sufficient proceeds from this rights offering and in possible future equity financing transactions to enable us to make the principal repayments due September 30, 2011 and to comply with the minimum liquidity covenant. Table of Contents Our modified minimum consolidated interest charges coverage ratio and our modified maximum consolidated leverage ratio will be computed on the basis of the training four quarters before each computation date. Since the results of our recent and current quarters reflect the continuing weakness in charter and freight rates, it is likely that we will fail to comply with those covenants after December 31, 2011. Failure to raise additional equity capital prior to September 30, 2011, or to obtain significantly higher charter and freight rates to enable us to meet our coverage and leverage ratios as discussed above, would have a material adverse effect on our financial condition and liquidity, continues to raise substantial doubt about our ability to continue as a going concern and would require us to enter into further negotiations with out lenders at that time. In addition, we filed for bankruptcy in 2000. Our ability to generate net income is influenced by a number of factors that are difficult to predict, including changes in global and regional economic conditions and international trade. For example, the losses and bankruptcy in 2000 were attributable in part to the acute decline in the Asian and South American economies in 1998 and 1999. We cannot assure you that similar declines will not occur in the future. The effects of the recent earthquake and tsunami that affected Japan and subsequent aftershocks may materially and adversely affect our results of operations. A significant portion of our Pacific Service serves Japan, a key import and export market for global shipping generally. Approximately 17.2% of our revenue in 2010 was generated by freight originating from Japan, and we generated significant additional revenue from other countries exporting to Japan. On March 11, 2011, Japan experienced a severe earthquake, followed by deadly tsunamis, that severely crippled a key nuclear plant and led to the release of dangerous levels of radiation. These events devastated large parts of Japan and have effectively shut down significant elements of Japan's economy. In addition, the reported radiation leaks have raised concerns globally that cargoes shipped from Japan, and vessels that loaded cargo in Japan, could be contaminated by radiation. The degree to which these events will disrupt the Japanese and global economies remains uncertain at this time, but it seems likely that the volume of imports to and exports from Japan may decline significantly in the immediate future, which would materially decrease the demand for shipping services to and from Japan, global freight rates and our results of operations. We and the shipping industry experience very high volatility in revenues and costs. Due to fluctuations in the level and pattern of global economic activity and oil prices, as well as heavy competition, the shipping industry historically has experienced very high volatility in freight rates and costs. Fluctuations in freight rates affect our revenues, vessel charter rates and vessel values, and we experience fluctuations in our costs resulting from changes in the cost of fuel oil, crew expenses, port charges and currency exchange rates. In addition, increasing regulation of the sulfur content of fuel oil has caused and in the future may cause increases in our fuel costs. Changes in marine regulatory regimes in the ports at which our vessels call also may increase our costs. Shipping revenue is influenced by a number of factors that are difficult to predict with certainty, including global and regional economic conditions, developments in international trade, changes in seaborne and other transportation patterns, the effects of global climate change on developing economies and agricultural production, weather patterns, port congestion, canal closures, political developments, armed conflicts, acts of terrorism, embargoes and strikes. Demand for our transportation services is influenced by the demand for the goods shipped, including steel products, agricultural commodities, metal concentrates and aggregates, which in turn is affected by general economic conditions, commodity prices and competition. Steel products, metal concentrates, aggregates and agricultural commodities accounted for approximately 34.6%, 15.1%, 14.8%, and 9.0%, respectively, of our total voyage revenues in the year ended December 31, 2010. The Table of Contents softened demand for these products and commodities from 2008 through 2010 translated into a decreased demand for shipping. Declines in worldwide economic conditions could result in reduced demand for steel products, metal concentrates and aggregates, which could adversely affect our results of operations. Significant recent additions to the fleets of many ocean shipping companies have contributed to an excess supply of dry bulk vessels in all classes and resulted in heavy pressure on freight rates. The worldwide supply of shipping capacity is influenced by the number of newbuilding deliveries, the scrapping of older vessels, vessel casualties and the number of vessels that are out of service. As the global economy expanded in the years leading up to 2008, many ocean shipping companies placed orders for significant additions to their fleets. Many of these new vessels began operating just as the credit crisis and global economic slowdown began. As owners and operators struggled to find cargoes for these new vessels at a time when letters of credit and other financing arrangements that underpin the global economy disappeared, freight rates dropped precipitously. Although the global economy has recovered from the end of 2008 and the beginning of 2009, the oversupply of vessels has continued to depress freight rates. We cannot assure you that the industry as a whole will take action to reduce the supply of vessels or that freight rates will recover at any time in the foreseeable future. Adverse weather conditions have significantly decreased the volume of many dry bulk cargoes. As the global economy improved in 2010, unusually adverse weather conditions such as the extended heat wave in the grain growing regions of Russia and Ukraine and recent devastating floods in Australia and Brazil significantly reduced the quantity of cargoes that traditionally are shipped by dry bulk carriers. The impact of these reductions in supply of cargoes, coupled with the increase in capacity resulting from the influx of newbuild vessels, materially and adversely affected freight rates as ship owners and operators competed for available cargo. We cannot assure you that this imbalance of supply and demand will not continue for an extended period. High or volatile oil prices could adversely affect the global economy and our results of operations, and we may be unable to pass along increased fuel costs to our customers. Rising or prolonged volatility in oil prices could weaken the global economy, which would significantly reduce the demand for ocean freight and increase our fuel costs. A significant reduction in the demand for ocean freight would have a material and adverse impact on our revenues, results of operations and financial condition. Oil prices recently have spiked as a result of turmoil in certain key oil producing nations in the Middle East and North Africa. We may be unable to pass along increased fuel costs to our customers, which would adversely affect our results of operations. We are particularly affected by rising fuel prices because a majority of our revenue is derived from freight voyages for which we bear the fuel expense, in contrast to charters, for which the charterer bears the fuel expense. Fuel expense represented approximately 50% and 48% of our voyage expense for the three months ended March 31, 2011 and the year ended December 31, 2010, respectively. Rising inflation in China could result in decreased demand for shipping services and further declines in shipping rates. The inflation rate in China increased in 2010 and is expected to continue to rise in 2011, which may increase the cost of raw materials and finished goods exported from China. Increases in the cost of Chinese goods may reduce the global demand for Chinese goods and the volume of cargoes shipped from China, which could materially decrease the worldwide demand for shipping services, and may result in further declines in shipping rates and adversely affect our results of operations and cash flows. Table of Contents Governing Law The preference shares will be governed by the laws of Ireland. Voting Rights Preference shares will carry no voting rights, except as to adverse changes to the terms of the preference shares or to our Memorandum and Articles of Association or as otherwise required by law. Use of Proceeds The net proceeds from our sale of the preference shares will be used for general corporate purposes. General corporate purposes may include repayment of debt, acquisitions, additions to working capital, capital expenditures, investments in our subsidiaries and joint ventures and payment of existing obligations to acquire newbuild vessels. Transferability of Preference Shares We do not intend to list the preference shares on any securities exchange, and we cannot assure you that you will be able at any time to sell your preference shares. Table of Contents Risks Related to Our Business and Operations Our business depends to a significant degree on the stability and continued growth of the Asian and Latin American economies. Growth in the shipping industry in recent years has been attributable, to a significant degree, to the rapid growth of the Chinese economy. Economic growth in China caused unprecedented demand for raw materials from Latin America, including iron ore, bauxite, soybeans, timber, zinc, manganese and copper. These raw materials generally are transported by ocean freight. The growth of the Chinese economy stimulated growth in other Asian economies as well. Any pronounced slowdown or decline in the Chinese economy could be expected to have significant adverse effects on the economies of Latin American and Asian countries and on the demand for our services and could be expected to result in declines in freight rates and the value of our vessels. We expect that a significant decline in the Asian and Latin American economies would have a materially adverse effect on our results of operations. Certain of our vessel expenses are primarily inelastic, and any unexpected decrease in revenue would harm our results. Generally, vessel expenses, such as fuel, lube oil, crew wages, insurance, bunkers, stores, repairs and maintenance, do not vary significantly with freight rates or the amount of cargo carried. As a result, a change in the number of tons of cargo carried or a decrease in freight rates would have a disproportionate effect on our results of operations and cash flows. Any pronounced slowdown or decline in demand for shipping may require us to run voyages at less than full capacity in an effort to maintain all of our shipping routes. Our inability to fully book a ship would reduce revenue for a voyage, while the vessel and voyage costs would remain fairly constant. We do not have long-term contracts with our customers and, if we are unable to fully book our vessels, we may operate voyages at a loss. Accordingly, our profitability and liquidity would be adversely affected. A significant number of our vessels will exceed their estimated economic useful life during the next three years. We estimate that the economic useful life of most multipurpose tweendeckers and handysize/handymax bulk carriers is approximately 30 years, depending on market conditions, the type of cargo being carried and the level of maintenance. We expect that 17 vessels out of our controlled fleet of 49 vessels at December 31, 2010, will reach 30 years old on or before December 31, 2014 three vessels in 2012, three vessels in 2013 and 11 vessels in 2014. If we are unable to use these vessels profitably or replace these vessels after they exceed their estimated economic useful lives, our results of operations and cash flows may be materially adversely affected. As our fleet ages, the risks associated with older vessels could adversely affect our operations. In general, the costs to maintain an ocean-going vessel in good operating condition increase with the age of the vessel. As of December 31, 2010, the average age of the 49 vessels in our owned fleet was 21.8 years. Some of our dry bulk carriers are used to transport products such as coal, salt or fertilizer that may damage our vessels and reduce their useful lives, if we do not follow specified maintenance and cleaning routines. Older vessels may develop unexpected mechanical and operational problems despite adherence to regular survey schedules and proper maintenance. Due to improvements in engine technology, older vessels typically are less fuel-efficient than more recently constructed vessels. Cargo insurance rates increase with the age of a vessel. Governmental regulations and safety or other equipment standards related to the age of vessels may require expenditures for alterations or the addition of new equipment, to our vessels and may restrict the type of activities in which our vessels may engage. We cannot assure you that we will be able to operate our vessels profitably during the remainder of their projected useful lives or that we will be able to sell them profitably when we can no longer utilize them in our fleet. Except as otherwise indicated, all information in this prospectus excludes 3.1 million shares reserved for issuance as of the date of this prospectus pursuant to future grants of awards under the TBS International Amended and Restated 2005 Equity Incentive Plan.
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+S-1/A You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or any sale of our common stock. Our business, financial condition, results of operations and prospects may have changed since that date. Information contained on our website is not part of this prospectus. SUMMARY This is only a summary and does not contain all the information that you should consider before investing in our common stock. You should read the entire prospectus, including Risk Factors and our consolidated financial statements and related notes appearing elsewhere in this prospectus, before deciding to invest in our common stock. Unless we indicate otherwise, the number of shares as well as all per share and financial information in this prospectus: assumes an offering price of $3.00 per unit; and does not give effect to the use of proceeds of the Offering. CITIZENS BANCORP We are the bank holding company for Citizens Bank of Northern California (also referred to as Citizens Bank or Bank ), a California chartered bank. At December 31, 2010, we had total assets of $329.0 million, total net loans held for investment of $246.4 million, total deposits of $275.0 million and shareholders equity of $3.7 million. Citizens Bancorp (also referred to as Company ) was organized as a California corporation and incorporated on February 19, 2003. Effective as of June 1, 2003, Citizens Bancorp became a bank holding company by acquiring all of the outstanding common stock of the Bank. At this time, Citizens Bancorp functions primarily as the holder of all of Citizens Bank common stock. It may, in the future, acquire or form additional subsidiaries, including other banks to the extent permitted by law, although Citizens Bancorp has no plans to do so in the immediate future. Citizens Bancorp does not own or lease any property and has no paid employees; however, it shares the facilities and employees of Citizens Bank. The principal office of Citizens Bancorp is 208 Providence Mine Rd., Suite 122, Nevada City, California 95959, and the telephone number is (530) 478-6000. Our common stock is traded on the Over-the-Counter Bulletin Board ( OTCBB ) under the symbol CZNB . CITIZENS BANK Citizens Bank was formed in 1994 and headquartered in Nevada City, California. Citizens Bank has six branches in communities in Nevada County, including Nevada City, Penn Valley, Lake of the Pines, Truckee, and two branches in Grass Valley. In addition the Bank has one branch in Placer County in the city of Auburn. We are the only community bank headquartered in Nevada County, California. We deliver a complete array of commercial bank products and services with an emphasis on customer relationships and personalized service. Citizens Bank provides community banking services in its market areas offering a wide variety of deposit products, commercial, residential and consumer loans and other traditional banking products and services that are designed to meet the needs of small and middle market businesses and individuals. As a full service community bank, Citizens Bank seeks to differentiate itself from its competitors through superior personal service, responsiveness and local decision-making. Our customers are generally small- to medium-sized businesses (generally representing businesses with less than $25 million in annual revenues) that require highly personalized commercial banking products and services that we deliver in our relationship banking style. We believe that our customers prefer locally owned and managed banking institutions that provide responsive, personalized service and customized products. In 2009, for the 11th year in a row, the quality of our service was voted Best in Nevada County by the readers of The Union newspaper. A substantial portion of our business is with customers who have long-standing relationships with our officers or directors or who have been referred to us by existing customers. The Bank s solid core banking operation is driven by a strong net interest margin that ranks in the top quartile of banks both in the State and nationally. Since its inception, the Bank has built a loyal customer base and continues to increase its market share. In addition, we have a dedicated board of directors and management team, who are committed to enhancing shareholder value and continuing to provide a positive customer experience. Our Board members have businesses located in Nevada County. Our committed employees strive to make a real difference in the community and currently volunteer in 81 local organizations, sit on 31 boards of directors and contribute to 66 organizations. The Bank s headquarters is located at our Nevada City branch at 305 Railroad Avenue, Nevada City, California 95959 and our telephone number is (530) 478-6000. The Bank s Operations Center is located at 208 Providence Mine Road, Suite 122, Nevada City, California 95959. We maintain a website at www.citizensbanknc.com. None of the information on such website is deemed to be incorporated herein. EVENTS OF 2008, 2009 AND 2010 In 2008 and 2009 and the first nine months of 2010, we suffered losses of $10.7 million, $13.5 million and $4.5 million, respectively. We also lost $1.3 million for the three months ended December 31, 2010. These losses were primarily the result of: a major economic recession in our market area, California and the nation which resulted in decreasing real estate values and significant unemployment; a concentration in land and construction loans; a circumvention of certain policies and procedures within the loan administration function, see Risk Factors Risks Related to Our Business and Market ; and the need for a valuation reserve on our deferred tax assets. The confluence of these circumstances led us to a restatement of our 2008 financial statements after an examination by the California Department of Financial Institutions ( DFI ) in May of 2009 and a significant change in our senior management team. In 2009, because of the accumulative deficit position of the Company, a valuation allowance of $9.3 million was recorded against all of the Company s net deferred tax assets. During the nine months ended September 30, 2010, the Bank continued to be proactive in identifying problem loans, quantifying impairment if any, and developing resolution plans suitable for each, which required a comprehensive loan-by-loan review. Since December 31, 2009, the Bank has experienced significant material deterioration with certain large credit relations contained in its loan portfolio. In the second quarter of 2010, the Bank completed a review of all nonresidential real estate loans and all commercial loans with a balance of $250,000 or greater, which included obtaining and reviewing updated financial statements, rent rolls and tax returns as appropriate. In addition, a physical site inspection was completed on all collateral for nonresidential real estate loans at that time. As result of the continued increase in vacancy rates noted during the review and continuing decline in commercial real estate values in our market area, a $6,900,000 provision for loan losses was recognized during the three months ended June 30, 2010. This increase in the provision along with other factors resulted in a net loss of $4,527,000 for the nine months ended September 30, 2010. Our capital has been significantly reduced as a result of the losses in 2008, 2009 and 2010. We must now recapitalize the Company and the Bank. As a result of the deterioration we have experienced in the loan portfolio, non-performing assets, which include nonaccrual loans, loans past due 90 days and still accruing, and other real estate owned totaled $42,162,000 as of September 30, 2010. Reducing the level of non-performing assets will take a significant effort and will continue through 2011 and beyond. We have dedicated additional resources and will continue our proactive approach to managing our non-performing assets with aggressive loan resolution strategies and loan sales, as appropriate. We expect that many of these assets will eventually require foreclosure and subsequent sale by the Bank. This will prove to be a detriment to our earnings since we will not be earning any interest on the non-performing asset, will also have the cost of carrying the property while awaiting sale, and may experience further losses if the value of such property declines. As a result of the continued deterioration in asset quality, earnings and capital our sources of available liquidity have declined. The Bank was prohibited from renewing or obtaining brokered deposits and as of September 30, 2010, there were no brokered deposits outstanding. As of September 30, 2010, the Company did not have available credit on its unsecured lines of credit with its correspondent banks but had $267,000 and $2,020,000 available on its lines of credit with the Federal Home Loan Bank and Federal Reserve Bank, respectively. In order to preserve UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 * Ms. Boley was recently married and has changed her name from Trevena to Boley. subsidiaries of Wachovia Corporation and Wachovia Bank, N.A., and Assistant General Counsel with Wachovia Corporation and Wells Fargo & Co. He also was a partner at the law firm of Weintraub, Genshlea & Chediak. MANAGEMENT RESPONSES Under Mr. Gall s leadership, the reconstituted executive management team and the Board of Directors have taken a number of proactive steps to stabilize the Bank and reduce losses. These steps have included: completing a comprehensive review of the loan portfolio; reorganizing the credit administration and underwriting functions, including internal control enhancement; hiring a number of new senior officers; increasing equity capital by almost $1.7 million through the private placement of Company common stock; planning a reduction in assets of approximately $30 million in 2010 in order to reduce balance sheet risk and support regulatory capital ratios; assigning Mr. Campbell as Chief Risk Officer and Mr. Behn as Senior Credit Administrator; maintaining a net interest margin within the 90th percentile of all insured commercial banks with assets between $300 million and $1.0 billion; changing the funding mix by reducing brokered deposits and focusing on building core deposits; becoming more efficient by centralizing operations and reducing non-interest expense; and initiating an SBA department to diversify the loan portfolio, reduce risk and generate fee income MAJOR CHALLENGES Despite the foregoing efforts and accomplishments, the Board of Directors and management are faced with several major challenges in the short run in attempting to overcome the events of 2008, 2009 and 2010. These major challenges include: Recapitalization Our capital has been significantly reduced as a result of the losses in 2008 and 2009 and a $5.8 million loss for 2010. We must now recapitalize the Company and the Bank. We entered into an agreement with our regulators to raise the Bank s leverage capital ratio to 9% by the middle of July 2010. Although we have not met this deadline, we are continuing our efforts to raise the capital needed to reach the capital ratio required in the agreement. As of December 31, 2010, we needed to achieve a combination of new equity capital and earnings of approximately $12.0 million in order to satisfy the capital requirement. See Consent Order and Written Agreement. To achieve such a ratio, we must: increase the Bank s capital through a combination of new equity capital and its earnings; minimize future losses from the $34.8 million in non-performing loans we had at December 31, 2010 or from other assets; and/or reduce assets from the amount at year end 2010. If we do not achieve all these goals, we will not be able to satisfy the capital requirement of the consent order which would have a material adverse effect on the Company and the Bank and the value of your investment and our ability to continue as a going concern. These effects could include additional regulatory enforcement actions including the imposition of civil monetary penalties against the Company, the Bank or both, the termination of insurance of the Bank s deposits by the FDIC or the closing of the Bank with the imposition of a conservator or receiver. See Supervision and Regulation Capital Standards, Supervision and Regulation Prompt Corrective Action and Other Enforcement Mechanisms, and Risk Factors Risks Related to the Offering. CITIZENS BANCORP (exact name of registrant as specified in its charter) California 6022 01-0775317 (State or other jurisdiction of incorporation or organization) (Primary Standard Industrial Classification Code) (I.R.S. Employer Identification No.) 208 Providence Mine Road Suite 122 Nevada City, California 95959 (530) 478-6000 (Address, including zip code and telephone number, including area code, of registrant s principal and executive offices) Gary D. Gall Citizens Bancorp President and Chief Executive Officer 208 Providence Mine Road Suite 122 Nevada City, California 95959 (530) 478-6000 (Name, address, including zip code, and telephone number, including area code, of agent for service) For the Offering to be successful, it is anticipated that there will need to be one or more large purchasers of the units. Any such large purchaser(s) will have significant influence over the outcome of all matters submitted to the Company s shareholders for approval after the Offering, including the election of directors and other corporate actions. While management has had preliminary discussions with several new potentially large investors who, individually or in the aggregate, could acquire voting control of the Company, no agreements have yet been finalized relating to such sales of the units. However, management believes, that without being able to attract new, potentially large investors, the Bank will be unable to satisfy the capital requirements of the consent order. We view satisfying the capital requirements of the consent order as only the first step in our recapitalization. We anticipate that further capital will be necessary in order to (i) execute our growth strategy once our financial position improves and (ii) keep us in compliance with the Order. The economic recession has provided a number of opportunities for expansion for a well-capitalized institution which is in satisfactory regulatory condition. See Use of Proceeds. Consent Order and Written Agreement The DFI completed its regularly scheduled examination of the Bank in May, 2009. As a result of such examination, effective February 11, 2010, the Bank entered into a stipulation and consent to issuance of a consent order (the Order ) by the FDIC and DFI. The Order requires the Bank to: Maintain acceptable Executive Management and provide Executive Management with written authority to implement the provisions of the Consent Order and obtain written approval from the regulators to appoint new individuals to the Bank s Board or to Executive Management. Within 150 days of the effective date of the Order and thereafter, achieve and maintain tangible shareholder s equity to total tangible assets, and Tier 1 capital to total assets, equal to or greater than 9% (the Capital Requirement ). Develop, adopt and implement a Capital Plan setting forth specific actions that the Bank will take to satisfy the Capital Requirement; Within 30 days from the effective date of the Order, eliminate from the books, all assets classified Loss in the Report of Examination dated May 18, 2009 ( Report ) by charge-off or collection. Within 90 days from the effective date of the Order, reduce assets classified as Doubtful and Substandard in the Report to not more than 75% of capital and reserves. Within 180 days from the effective date of the Order, reduce assets classified as Doubtful and Substandard in the Report to not more than 50% of capital and reserves. Within 270 days from the effective date of the Order, reduce assets classified as Doubtful and Substandard in the Report to not more than 25% of capital and reserves. Within 60 days from the effective date of the Order, develop a written asset disposition plan for each classified asset greater than $500,000; plans shall be reviewed and approved by the Board. During the life of the Order, maintain an adequate allowance. In addition, revise methodology for determining the adequacy of the allowance in accordance with the Report. Board shall review the adequacy of the allowance at least quarterly and results of the review shall be reflected in the meeting minutes. Within 60 days from the effective date of the Order, revise, adopt and implement improved written lending policies that address deficiencies identified in the Report. Within 60 days from the effective date of the Order, develop and implement appropriate policies and procedures re: appraisals and evaluations. Within 60 days from the effective date of the Order, revise and implement policies and procedures for monitoring and reporting asset concentrations. Copies to: John F. Stuart, Esq. Stuart Moore 641 Higuera Street Suite 302 San Luis Obispo, CA 93401 (805) 545-8590 (805) 545-8599 facsimile Effective February 11, 2010, do not extend any credit to any borrower who has loans, in whole or in part, that have been charged off or are classified Loss and remain uncollected. Within 60 days from the effective date of the Order, formulate and implement a written plan and comprehensive budget for all categories of income and expense and submit to DFI & FDIC for review and opportunity to comment. During the life of the order, do not establish any new branches or other office without prior written consent of the DFI & FDIC. Within 90 days of the effective date of the Order, adopt and implement a written Contingency Liquidity Policy. During the life of the Order, no distributions to shareholders may be made without prior written approval of DFI and FDIC. During the life of the Order, the Bank is to comply with the provisions of the FDIC Rules & Regulations regarding brokered deposits. Within 60 days from the effective date of the Order, correct all violations of consumer laws in the Compliance Report dated May 4, 2009, and adopt and implement policies, procedures & controls to prevent their recurrence. Within 60 days from the effective date of the Order, increase oversight of the Compliance function, dedicate additional resources as needed, and provide monthly reports to senior executive officers and the Board. Within 60 days from the effective date of the Order, evaluate and enhance the compliance training program. Within 60 days from the effective date of the Order, adopt and implement internal controls to ensure consistency between system specs and loan documents with particular focus on improving compliance monitoring of flood insurance requirements. Within 60 days from the effective date of the Order, improve compliance audit procedures to address scope and frequency of such audits. Within 30 days after the end of the first quarter following the effective date of the Order, and within 30 days after the end of each quarter thereafter, provide written progress reports to DFI & FDIC. During the life of the Consent Order, notify DFI & FDIC in advance of making any public announcement regarding the financial condition of the Bank, Executive Management or the Board. During the life of the Consent Order and in the future, comply with all laws and regulations. During the life of the Order, do not amend or rescind any approved plans, policies, procedures or programs without prior written approval of the DFI and FDIC. The Order will remain effective until amended, suspended or terminated by the FDIC and DFI. The Bank and its management have already undertaken multiple initiatives to comply with the terms of the Order, and will diligently continue such effort during the life of the Order. On February 22, 2010 the Company entered into an agreement with the Federal Reserve Board (the Federal Reserve Agreement ) to maintain the financial soundness of the Company so that the Company may serve as a source of strength to the Bank. In the Federal Reserve Agreement, the Company agreed that: The Board of Directors of the Company shall take appropriate steps to ensure that the Bank complies with the Order entered into with the FDIC and the DFI.; The Company shall not declare or pay any dividends nor make any distribution of interest, principal, or other sums on subordinated debentures or trust preferred securities without the prior written approval of the Federal Reserve Board; Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement. The Company and its nonbank subsidiaries, if any, shall not, directly or indirectly incur, increase or guarantee any debt, nor shall the Company directly or indirectly, purchase or redeem any shares of its stock without the prior approval of the Federal Reserve Board; The Company shall comply with certain notice provisions under the applicable federal rules and regulations to notify the Federal Reserve Board in appointing any new director or senior executive officer, or changing the responsibilities of any senior executive officer so that the officer would assume a different senior executive officer position; The Company shall comply with restrictions on indemnification and severance payments pursuant to the applicable federal laws and regulations; Within 30 days after the end of each calendar quarter following the date of the Federal Reserve Agreement, the Board of Directors shall submit to the Federal Reserve Board written progress reports detailing the form and manner of all actions taken to secure compliance with the provisions of the Agreement and the result thereof, applicable financial data of the Company, and changes in shareholders equity. The Federal Reserve Agreement will remain effective and enforceable until stayed, modified, terminated, or suspended in writing by the Federal Reserve Board. The Company and its management have already undertaken multiple initiatives to comply with the terms of the Federal Reserve Agreement, and will diligently continue such effort during the life of the Agreement. See Business for more information regarding the steps we are taking to comply with the Order and the Federal Reserve Agreement. The foregoing descriptions of the Order and the Federal Reserve Agreement are summaries and do not purport to be a complete description of all of the terms of such documents, and are qualified in their entirety by reference to the Order and the Federal Reserve Agreement. The Order and the Federal Reserve Agreement are attached as exhibits to the registration statement of which this prospectus is a part. Strengthen the Balance Sheet Non-performing assets, which include nonaccrual loans, loans past due 90 days and still accruing, and other real estate owned totaled $45.1 million as of December 31, 2010. Reducing the level of non-performing assets will take a significant effort and will continue through 2011 and beyond. We have dedicated additional resources and will continue our proactive approach to managing our non-performing assets with aggressive loan resolution strategies and loan sales, as appropriate. We expect that many of these assets will eventually require foreclosure and subsequent sale by the Bank. This will prove to be a detriment to our earnings since we will not be earning any interest on the non-performing asset, will also have the cost of carrying the property while awaiting sale, and may experience further losses if the value of such property declines, as discussed below. We have completed reappraisals of the real property securing our non-performing and impaired loans and have marked these assets to their lower market values less costs to sell which contributed to our losses in 2008 2009 and 2010. While we believe that our current loan loss reserve is adequate to absorb future losses based on these reappraisals, any further deterioration in real property values will lead to further losses and a decrease in capital. The Company and the Bank believe that the regulators may take further enforcement action including the possible modification of the Order. Due to the level of the Bank s total risk-based capital the Federal Deposit Insurance Corporation ( FDIC ) has placed the following requirements, limitations and/or restrictions on the Bank: No capital distributions or payment of management fees. Submission of a capital restoration plan ( CRP ) that is acceptable to the FDIC. Close monitoring by the FDIC of the Bank s condition and compliance with the approved CRP as well as limitations and/or restrictions set forth in this paragraph. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. [X] If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. Large accelerated filer [ ] Accelerated Filer [ ] Non-accelerated filer [ ] (Do not check if a smaller reporting company) Smaller reporting company [X] Restricting growth of the Bank average total assets during any calendar quarter to not more than its average total assets during the preceding calendar quarter unless the FDIC has accepted the CRP and the increase is consistent with the CRP and the Bank s ratio of tangible equity to assets increases at a rate during the calendar quarter sufficient to enable the Bank to reach an acceptable capital level within a reasonable time. The FDIC s prior approval must be obtained for the acquisition of any company or branch, the establishment of any branch, or the engagement in new line of business. If the FDIC does not approve the CRP, the Bank fails to submit a CRP or the Bank fails to implement the CRP in any material respect, then the Bank will be subject to the additional prompt corrective action provisions applicable to significantly undercapitalized banks until such time that a new CRP is approved. Achievement of the CRP depends on future events and circumstances, the outcome of which cannot be assured. In the fourth quarter of 2010, the Bank submitted its CRP to the regulators. As of December 31, 2010, the Bank needed a combination of new equity capital and earnings of approximately $12 million in order to satisfy the Capital Requirements of the Consent Order. While the Bank has not been able to meet this goal, the Company is continuing its efforts to raise the capital needed to reach the Consent Order s Capital Requirements. To meet the Capital Requirements, the Company and/or Bank must: increase the Company s and Bank s capital through a combination of new equity capital and the Bank s earnings; and minimize future losses from the $34.8 million in non-performing loans and $10.3 million in other real estate assets the Bank had at December 31, 2010. If both these goals are not achieved, the Bank will not be able to meet and then maintain compliance with the Capital Requirements of the Consent Order, which would have a material adverse effect on the Company and the Bank and the value of your investment and the Company s and Bank s ability to continue as going concerns. Satisfying the Capital Requirements of the Consent Order is only the first step in Company s recapitalization plan. The economic recession has provided a number of opportunities for expansion for a well-capitalized institution that is in satisfactory regulatory condition. It is anticipated that further capital will be necessary in order to (i) execute a growth strategy once the Bank s financial position improves; and (ii) keep the Bank in compliance with the requirements of the Consent Order. Return to Profitability It is essential that we return to profitability to support our long term growth in assets and shareholder value. If we are able to successfully manage our problem assets, management believes that there are several significant earnings drivers which will lead to sustained earnings growth and profitability. These drivers include: a strong net interest margin of 4.54% for the nine months ended September 30, 2010 driven by our low cost of funds; approximately $9.3 million in deferred tax assets to shelter future income from taxes, subject to certain limitations; the opening of our SBA department to generate small business government guaranteed loans which can be retained for earnings or, when eligible, sold in the secondary market for a premium with the possibility of service fee income; and an increase in operating efficiencies and cost reduction measures which should favorably impact non-interest expense. The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. OUR BUSINESS STRATEGY Our long-term business strategy is to provide comprehensive banking and related services to small- to medium-sized businesses and their employees. The key elements of our strategy are as follows: Maintain our emphasis on business banking Our focus on providing comprehensive banking services to small- to medium-sized businesses continues to help us grow our core non-interest bearing deposit base and maintain our strong net interest margin. Increase market share Because Citizens Bank is the only community bank headquartered in Nevada County, we believe that there is significant potential to increase business with current customers, to attract new customers in our existing markets, and to position ourselves to enter new markets. Quality service, which is an integral part of our culture, and doing business locally, are reasons that the Bank s customers prefer our locally-based organization. Use technology to expand customer base While our strategy continues to emphasize superior personal service, we also take advantage of user-friendly technology-based systems to attract customers who may prefer to interact with their financial institution electronically. We offer technology-based services including voice response banking, debit cards, online banking, bill pay and cash management, remote deposit capture, ATMs and an internet website. We believe the availability of both traditional banking services and electronic banking services enhance our ability to attract a broader range of customers. Maintain and recruit highly competent personnel We have developed a strong corporate culture that has allowed us to recruit and retain some of the best bankers in the Northern California market. We are committed to attracting, developing and retaining people who are significantly knowledgeable about the banking industry and passionate about the communities which we serve. Our compensation and benefits program is competitive. The individuals who comprise our executive management team have an average of thirty-four years of banking industry experience, and our business development and service personnel are well-respected, as well as, very involved in our communities. OTHER RECENT DEVELOPMENTS 2009 Private Placement On December 28, 2009, the Company completed a private placement whereby the Company raised $1,559,034 in connection with the sale of 394,109 shares of common stock at the price of $4.00 per share. Among the total shares sold, 46% or 181,609 shares were purchased by certain of Company s directors, officers and their family members, 22% or 87,500 shares purchased by its former directors, and 32% or 125,000 shares purchased by two other outside investors. In addition, in April 2010, as a continuation of the private placement, we received an additional $100,000. Increase in Authorized Shares At the Company s Annual Shareholder Meeting on May 18, 2010, a proposal was approved to amend the Company s Articles of Incorporation to increase the authorized shares of common and preferred stock from 5 million and 2.5 million shares, respectively, to 20 million and 5 million shares, respectively. The increase in the number of common shares is necessary to provide sufficient shares for the Offering and other capital raisings as well as maintain the number of authorized and unissued shares allocated to the 1995 stock option plan and the 2006 stock plan (collectively stock plans ). Events Subsequent to September 30, 2010 Unaudited Interim Financial Statements The Company has evaluated the effects of subsequent events that have occurred subsequent to September 30, 2010 and through January 31, 2011. In the first quarter of 2011, the Company is closing its mortgage broker services and the related broker fee income is not expected to continue; however, salaries and other related expenses will (1) The Order entered into by the Bank in February 2010, requires the Bank to maintain a Tier 1 capital to average assets (Leverage) ratio equal to or greater than 9% by July 2010. The Bank was unable to meet the deadline to increase the leverage ratio to 9%. The Company s recurring losses have resulted in significant deterioration to shareholders equity and regulatory capital. These recurring losses raise concern about the Company s ability to continue as a going concern. Management is actively pursuing new ventures to increase revenues. In addition, the Company is currently seeking additional sources of capital, including the Offering. The Company is dependent upon its ability to secure sufficient equity and there are no assurances that the Company will be successful. The following table shows certain preliminary unaudited consolidated financial information at or for the year ended December 31, 2010: (Dollars in thousands, except per share data) Operations Data: Net interest income $ 14,268 Provision for credit losses 10,250 Non-interest income 2,555 Non-interest expense 12,432 Loss before income tax (5,859 ) Income tax Net loss (5,859 ) Discount accretion on preferred stock (104 ) Net loss applicable to common shareholders $ (5,963 ) Loss per share basic $ (2.56 ) Loss per share diluted $ (2.56 ) Book value per common share $ (2.95 ) Balance Sheet Data: Assets $ 329,010 Loans 263,447 Allowance for credit losses (15,238 ) Loans, net 248,209 Deposits 274,988 Junior subordinated debentures 15,465 Preferred stock 10,577 Common stock & accumulated deficit (6,886 ) Total shareholders equity 3,691 Financial Ratios: Return on average equity (89.24 %) Return on average assets (1.74 %) Efficiency ratio 73.90 % Net interest margin 4.58 % Loans to deposits 95.80 % Net charge-offs to average loans 3.27 % Non-performing loans to total loans 13.21 % Allowance for credit losses to non-performing loans 43.77 % Allowance for credit losses to total loans 5.78 % Average equity to average assets 1.95 % Consolidated Capital Ratios: Leverage capital ratio 1.4 % Total risk-based capital ratio 8.3 % Tier 1 risk-based capital ratio 1.8 % Bank-only Capital Ratios: Leverage capital ratio 5.4 % Total risk-based capital ratio 8.1 % Tier 1 risk-based capital ratio 6.8 % SUBJECT TO COMPLETION, DATED February 11, 2011 PRELIMINARY PROSPECTUS 10,000,000 Units Each Unit Consisting of One (1) Share of Common Stock And Two (2) Warrants $3.00 Per Unit Citizens Bancorp is offering up to 10,000,000 units at a price of $3.00 per unit (the Offering ), with each unit consisting of one (1) share of common stock and two (2) warrants (all warrants collectively, the 2011 Warrants ), each warrant to purchase one (1) share of our common stock, as more fully described herein. The 2011 Warrants will not be exercisable for a period of one year after issuance. We are offering the units on a best efforts basis, without any involvement of underwriters or broker-dealers. There is a minimum investment requirement of $6,000 to participate in the Offering. We will receive all of the net proceeds from the sale of these units. Our common stock is not listed on any national securities exchange. Our common stock is quoted on the Over the Counter Bulletin Board ( OTCBB ) under the symbol CZNB but is infrequently traded. The last reported sale price of our common stock was $1.60 per share on February 10, 2011. We do not intend to have the 2011 Warrants listed on any national securities exchange, nor do we intend to facilitate the quotation of the 2011 Warrants on the OTCBB, or any other securities quotation system. The Company currently does not have enough shares of common stock authorized to accomodate the exercise of all the 2011 Warrants and must seek shareholder approval to increase the authorized shares of common stock. See Risk Factors. Subscription funds will be held in a separate third party escrow and will be promptly returned to investors without interest if the net proceeds held in escrow at the termination date, June 30, 2011, are not sufficient to bring the Company s subsidiary bank into substantial compliance with the capital conditions of an existing regulatory order. As of January 31, 2011, the amount of such minimum net proceeds is estimated to be $10.75 million; however, such amount will increase or decrease depending upon the Company s net income or loss and total assets before the termination date. See Summary The Offering, Summary Consent Order and Written Agreement, Use of Proceeds and The Offering. Investing in our securities involves risks. See Risk Factors beginning on page 15 for a discussion of factors you should consider before buying our securities. You should not purchase these units if you cannot afford the loss of your investment. The securities offered hereby are not savings accounts, deposits or other obligations of our bank subsidiary and are not insured by the Federal Deposit Insurance Corporation or any other government agency. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. We reserve the right to withdraw, cancel or modify this Offering and reject subscriptions in whole or in part. It is expected that delivery of the units will be made in Nevada City, California no later than July 15, 2011. The date of this prospectus is February 14, 2011. The information contained in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and we are not soliciting offers to buy these securities in any jurisdiction where the offer or sale is not permitted. THE OFFERING Securities Offered 10,000,000 units, with each unit consisting of one (1) share of common stock and two (2) 2011 Warrants. If all 10,000,000 units are sold, the gross proceeds would be $30,000,000 million assuming no 2011 Warrants are exercised, and $100,000,000 million assuming 20,000,000 2011 Warrants are issued, and all such 2011 Warrants are exercised. Price per Unit $3.00 Minimum Investment $6,000 Description of the 2011 Warrants The exercise price of each 2011 Warrant is $5.00. The 2011 Warrants are transferable separately from our common stock, and 50% of the warrants issued to each investor will be exercisable for a period of 3 years from the date of issuance and 50% will be exercisable for a period of 7 years from the date of issuance. The 2011 Warrants will not be exercisable for a period of one year after the date of issuance. The Company currently does not have enough shares of common stock authorized to accomodate the exercise of all the 2011 Warrants and must seek shareholder approval to increase the authorized shares of common stock. See Risk Factors. Termination date June 30, 2011, subject to extension Escrow Subscription funds will be held in a separate escrow account by Pacific Coast Bankers Bank and will only be released to the Company on the termination date if new equity capital and earnings combined would result in the Bank being in substantial compliance with the Capital Requirement of the Order. As of January 31, 2011, the amount of such minimum net proceeds is estimated to be $10.75 million; however, such amount will increase or decrease depending upon the Company s net income or loss and total assets before the termination date. If the gross proceeds are less than necessary to satisfy this requirement, subscription funds will be returned to subscribers promptly after the termination date without interest. Use of proceeds We intend to use a portion of the proceeds from the sale of the units to contribute to the Bank as additional capital in order to support its regulatory capital ratios. See Consent Order and Written Agreement. Any remaining proceeds will also be used to reduce non-performing assets, attempt to negotiate the repayment of the outstanding preferred stock at a discount and execute a growth strategy that includes the acquisition of other community banks. See Use of Proceeds. Common Stock Outstanding As of the date of this Prospectus, we have 2,335,090 shares of common stock outstanding. If all units are sold, we will have 12,335,090 shares outstanding, excluding the shares issuable upon exercise of the 2011 Warrants and any outstanding stock options. The number of shares of our common stock that will be outstanding after this Offering includes the 2,335,090 shares outstanding as of December 31, 2010, but excludes 639,357 shares of common stock reserved for issuance under our stock option plans of which 44,750 shares were subject to outstanding options at December 31, 2010. TABLE OF CONTENTS Page Unaudited Operations Data: Net interest income $ 10,626 $ 10,942 $ 15,122 $ 15,100 $ 14,294 $ 13,582 $ 11,297 Provision for credit losses 7,900 3,900 11,115 23,900 945 560 845 Non-interest income 1,720 1,716 5,112 2,140 2,206 1,668 1,295 Non-interest expense 8,895 11,099 15,691 11,653 11,242 9,632 7,629 (Loss) income before income tax (4,449 ) (2,341 ) (6,572 ) (18,313 ) 4,313 5,058 4,117 Income tax (benefit) (946 ) 6,568 (7,662 ) 1,728 2,024 1,647 Net (loss) income (4,449 ) (1,395 ) (13,140 ) (10,651 ) 2,585 3,034 2,470 Dividends/discount accretion on preferred stock (78 ) (302 ) (328 ) Net (loss) income applicable to common shareholders ($4,527 ) ($1,697 ) ($13,468 ) ($10,651 ) $ 2,585 $ 3,034 $ 2,470 Share Data (retroactively adjusted for 5% stock dividends paid in June 2008, 2007 and 2006): (Loss) earnings per share basic ($1.95 ) ($0.89 ) ($7.01 ) ($5.56 ) $ 1.35 $ 1.60 $ 1.34 (Loss) earnings per share diluted ($1.95 ) ($0.89 ) ($7.01 ) ($5.56 ) $ 1.32 $ 1.57 $ 1.30 Book value per common share ($2.32 ) $ 4.83 ($0.42 ) $ 5.70 $ 11.28 $ 9.87 $ 8.19 Balance Sheet Data: Assets $ 357,493 $ 387,298 $ 371,058 $ 363,274 $ 328,433 $ 280,393 $ 226,995 Loans 281,375 302,529 304,739 312,374 305,135 259,381 206,659 Allowance for credit losses (14,486 ) (14,466 ) (14,387 ) (12,406 ) (3,919 ) (3,374 ) (2,825 ) Loans, net 266,889 288,063 290,352 299,968 301,216 256,007 203,834 Deposits 283,030 318,739 302,631 299,758 274,255 243,237 189,626 Junior subordinated debentures 15,465 15,465 15,465 15,465 15,465 15,465 9,279 Preferred stock 10,551 10,446 10,473 10,369 Common stock & (accumulated deficit) retained earnings (5,413 ) 9,245 (968 ) 10,927 21,572 18,864 15,376 Total shareholders equity 5,138 19,692 9,505 21,296 21,572 18,864 15,376 Unaudited Financial Ratios: Return on average equity (81.37 %) (11.44 %) (72.71 %) (50.82 %) 12.77 % 17.67 % 16.51 % Return on average assets (1.76 %) (0.60 %) (3.58 %) (3.04 %) 0.86 % 1.18 % 1.11 % Efficiency ratio 72.05 % 87.68 % 77.55 % 67.60 % 68.14 % 63.16 % 60.59 % Net interest margin 4.54 % 4.35 % 4.51 % 4.61 % 5.05 % 5.62 % 5.07 % Loans to deposits 99.42 % 94.91 % 100.70 % 104.21 % 111.26 % 106.64 % 108.98 % Net charge-offs to average loans 3.56 % 0.79 % 2.94 % 4.87 % 0.14 % 0.01 % 0.00 % Non-performing loans to total loans 12.59 % 11.70 % 8.95 % 8.92 % 3.10 % 0.00 % 0.00 % Allowance for credit losses to non-performing loans 40.88 % 40.87 % 52.74 % 44.55 % 41.74 % N/A N/A Allowance for credit losses to total loans 5.15 % 4.78 % 4.72 % 3.97 % 1.28 % 1.30 % 1.37 % Average equity to average assets 1.50 % 5.07 % 4.92 % 5.98 % 6.70 % 6.65 % 6.71 % Consolidated Capital Ratios: Leverage capital ratio 2.0 % 4.5 % 3.3 % 5.5 % 8.9 % 9.0 % 9.4 % Total risk-based capital ratio 8.5 % 10.2 % 9.2 % 10.2 % 12.0 % 12.6 % 11.5 % Tier 1 risk-based capital ratio 2.4 % 5.4 % 4.1 % 5.9 % 8.5 % 8.4 % 8.6 % Bank-only Capital Ratios: Leverage capital ratio 5.7 % 6.1 % 6.1 % 7.8 % 11.1 % 11.6 % 10.8 % Total risk-based capital ratio 8.3 % 8.9 % 8.9 % 9.7 % 11.7 % 12.1 % 11.2 % Tier 1 risk-based capital ratio 7.0 % 7.6 % 7.7 % 8.4 % 10.5 % 10.9 % 9.9 % RISK FACTORS An investment in our common stock is subject to various risks. Before making a decision about your investment, you should carefully consider the risks and uncertainties described below together with all of the other information included in this document. The risks and uncertainties described below are not the only ones facing our business. Additional risks and uncertainties that management is not aware of or focused on or that management currently deems immaterial may also impair our business operations. This document is qualified in its entirety by these risk factors. If any of the following risks actually occur, our financial condition and results of operations could be materially and adversely affected. If this were to happen, the value of our common stock could decline significantly, and you could lose all or part of the value of your investment. Risks Related to the Offering Current shareholders will experience substantial voting dilution as a result of the Offering. After the closing of the Offering, not taking into account any exercise of the 2011 Warrants and assuming that none of our current shareholders purchase any units in the Offering, the purchasers in the Offering will own 10,000,000 shares of our common stock (81% of the total number of shares of common stock to be outstanding) and our current shareholders will own 2,335,090 shares of our common stock (19% of the total number of shares of our common stock to be outstanding). Accordingly, our current shareholders will experience significant dilution of voting power. The exercise of the 2011 Warrants acquired in the Offering will further dilute the voting power of our current shareholders. Following the Offering, we expect one or more new shareholders will control a substantial portion of the outstanding voting equity interest in the Company and shall be able to significantly influence actions requiring shareholder vote. For the Offering to be successful, it is anticipated that there will need to be one or more large purchasers of the units. Any such large purchaser(s) will have significant influence over the outcome of all matters submitted to the Company s shareholders for approval after the Offering, including the election of directors and other corporate actions. In addition, such influence could have the effect of discouraging others from attempting to purchase the Company, take the Company over, and/or reducing the market price offered for the Company s common stock. While management has had preliminary discussions with several new potentially large investors who, individually or in the aggregate, could acquire voting control of the Company, no agreements have yet been finalized relating to such sales of the units. However, management believes, that without being able to attract new, potentially large investors, the Bank will be unable to satisfy the Capital Requirements of the Order. We are required to maintain capital to meet regulatory requirements in the Order, and if we fail to meet and maintain those capital requirements, whether due to losses, an inability to raise sufficient capital in the Offering or otherwise, our financial condition, liquidity and results of operations, as well as your investment, would be adversely affected. We were required by our regulators to raise the Bank s leverage capital ratio to 9% by the middle of July 2010 in order to comply with the Order. We were unable to achieve the capital ratio prior to the deadline. To achieve such a ratio, we must (i) increase the Bank s capital through a combination of new equity capital and earnings, (ii) continue to reduce assets, and (iii) minimize further losses from the $34.8 million in non-performing loans we had at December 31, 2010 or from other assets. If we fail to achieve these goals, we will not be able to satisfy the Capital Requirement of the Order and this would have a material adverse effect on the Company and the Bank, including but not limited to additional regulatory enforcement actions such as, the imposition of civil monetary penalties against the Company, the Bank or both, the termination of insurance of the Bank s deposits by the FDIC or the closing of the Bank with the imposition of a conservator or receiver. Even if we satisfy the Capital Requirement of the Order, we will pursue various alternatives for additional capital in the future, which could dilute the holders of our outstanding common stock and may adversely affect the market price of our common stock. In the current economic environment and with the need to recapitalize the Company beyond the amounts of new capital necessary to satisfy the Capital Requirement of the Order, we are constantly reviewing alternatives for raising capital in order to try to assure compliance with the Order, further strengthen our capital and better position us to take advantage of opportunities that may arise in the future. Such alternatives may include issuance and sale of additional common or preferred stock, additional trust preferred securities, or borrowings by us, with proceeds contributed to the Bank. Any such capital raising alternatives could dilute the holders of our outstanding common stock, including purchasers in this Offering, and may adversely affect the market price of our common stock. Our current plans to further recapitalize the Company are discussed at Summary Major Challenges Recapitalization. The market price of our common stock after the Offering is uncertain. The market price of our common stock on or after consummation of the Offering may not approximate the prices prior to the Offering. Stock price changes, whether before or after the Offering, may result from a variety of factors, including general market and economic conditions, changes in the respective businesses, operations and prospects and regulatory considerations. Historically, only a limited market has existed for our common stock and the Offering may not substantially enhance the depth of such market, nor do we expect any significant market to develop for the 2011 Warrants. Our common stock has been traded infrequently in the over-the-counter market and our trading volume has been very small. The limited trading market for our common stock can cause fluctuations in the market value of our common stock to be exaggerated, leading to price volatility in excess of that which would occur in a more active trading of our common stock. The Offering may not improve the level of trading or the depth of the market of our common stock. We also do not expect a market to develop for the 2011 Warrants, which may impact your ability to sell any 2011 Warrants that you receive in the Offering. Purchasers in this Offering will suffer substantial dilution since the offering price per unit exceeds the book value per common share. The book value of shareholders equity attributable to common shareholders as of December 31, 2010 was a negative $6.9 million, or negative $2.95 per common share. The book value per share of our common stock as of December 31, 2010, adjusted to give pro forma effect to the issuance of the maximum shares in the Offering would be approximately $1.86. Consequently, purchasers in the Offering will experience $1.14 per share dilution relative to the $3.00 per unit offering price. The Company currently does not have enough shares of common stock authorized to accommodate the exercise of all of the 2011 Warrants and must seek shareholder approval to increase the authorized shares of common stock. The number of shares of common stock authorized is currently insufficient to accommodate the exercise of all the 2011 Warrants. The Company will seek shareholder approval to increase the number of shares of common stock authorized at the next shareholder meeting in 2011. The purchasers in this Offering will be eligible to vote at any such shareholder meeting and it is anticipated that they will support any such measure to increase the number of authorized shares of common stock. If the shareholders fail to approve a measure to increase the total number of shares of common stock authorized, prior to the expiration of the one year holding period on all 2011 Warrants, the 2011 Warrants will not be fully exercisable. In such event, the Company will continue to seek shareholder approval of an increase in the number of authorized common stock on at least a yearly basis until the approval is obtained. Assuming full issuance of 10,000,000 shares of common stock in this Offering, the Company will have approximately 7 million shares of authorized but unissued common stock. As such, there will be a short-fall of approximately 13,000,000 shares to satisfy the exercise of the 2011 Warrants. The common stock underlying the 2011 Warrants is not currently registered with the SEC The shares of common stock underlying the 2011 Warrants are not currently registered with the SEC. Upon shareholder approval of a sufficient number of shares of common stock to accommodate the exercise of all of the 2011 Warrants, the Company intends to file a separate registration statement registering the shares of common stock underlying the 2011 Warrants. The subscription price was determined arbitrarily. The price per unit was arbitrarily determined by the board of directors. In determining the per unit price, the board of directors did consider the market price of our common stock, its book value, our losses, the long term prospects of the Company, the pricing of other offerings by financial institutions seeking capital and other factors. The board did not assign any relative or specific weights to the foregoing factors. Risks Relating to Economic Conditions and Governmental Response Efforts The recession and changes in domestic and foreign financial markets have adversely affected our industry and may have a material negative impact on our results of operations and financial condition. Economic indices have shown that since the fourth quarter of 2007, the United States economy was in a recession. This has been reflected in significant business failures and job losses. Further, dramatic declines in the housing market, with decreasing home prices and increasing delinquencies and foreclosures, have negatively impacted the credit performance of mortgage and construction loans and resulted in significant write-downs of assets by many financial institutions. General downward economic trends, reduced availability of commercial credit and increased unemployment, have negatively impacted the performance of commercial and consumer credit, resulting in additional write-downs. Concerns over the stability of the financial markets and the economy have resulted in decreased lending by financial institutions to their customers and to each other. This market turmoil and tightening of credit has led to increased commercial and consumer delinquencies, lack of customer confidence, increased market volatility and widespread reduction in general business activity. Financial institutions have experienced decreased access to deposits and borrowings. The resulting economic pressure on consumers and businesses and the lack of confidence in the financial markets has adversely affected, and may continue to adversely affect, our business, financial condition, results of operations and stock price. We do not expect that the difficult conditions in the financial markets and in our own local market are likely to improve in the near future. A continuing of these conditions would exacerbate the adverse effects of these difficult market conditions on us and others in the financial institutions industry. Recent and future legislation and regulatory initiatives to address current market and economic conditions may not achieve their intended objectives, including stabilizing the U.S. banking system or reviving the overall economy, which could adversely affect our business, financial condition, results of operations, and access to capital. Recent and future legislative and regulatory initiatives to address current market and economic conditions, such as the Emergency Economic Stabilization Act of 2008 ( EESA ), or the American Recovery and Reinvestment Act of 2009 ( ARRA), may not achieve their intended objectives, including stabilizing the U.S. banking system or reviving the overall economy. EESA was enacted in October 2008 to restore confidence and stabilize the volatility in the U.S. banking system and to encourage financial institutions to increase their lending to customers and to each other. The United States Department of the Treasury ( Treasury ) and banking regulators have implemented, and likely will continue to implement, various other programs under this legislation to address capital and liquidity issues in the banking system, including the Troubled Asset Relief Program ( TARP ), President Obama s Financial Stability Plan announced in February 2009, the ARRA and the FDIC s Temporary Liquidity Guaranty Program ( TLGP ). The actual impact that any of the recent, or future, legislative and regulatory initiatives will have on the financial markets and the overall economy cannot be accurately predicted. Any failure of these initiatives to help stabilize or improve the financial markets and the economy, and a continuation or worsening of current financial capital in August 2009, we began deferring TARP dividend payments and in July 2010, we began deferring interest payments on trust preferred securities. Our ability to raise additional liquidity through deposit campaigns and interest deposits is subject to pricing limitations. STRENGTHS Since 1995, we have served a key role in funding the economic engine in the markets we serve, working hand-in-hand to support local businesses. We have a strong branch system that has continued to grow our customer base. Despite the losses in 2008, 2009 and the first nine months of 2010, which resulted from significant provisions for credit losses and expenses/losses related to other real estate owned ( OREO ), the Company has significant core operating strengths, including a strong net interest margin and a very loyal customer base. We have continuously maintained a net interest margin that is among the top quartile of banks both in California and nationally. Our net interest margin was 4.54%, 4.51% and 4.61% for the nine months ended September 30, 2010 and the years ended December 31, 2009 and 2008, respectively. We feel that these core strengths are an important measure as they show the effects of the Company s core operations and do not change significantly as a result of outside economic influences. We believe that with an improved economy, we will record significantly smaller provisions for credit losses and will have significantly reduced OREO expenses. We have a well-seasoned management team, with over 130 years of experience combined, who have the skills needed to return the Company to profitability. OUR MANAGEMENT TEAM The Board of Directors during 2009 replaced two executive officers and added a Chief Risk Officer. This newly assembled, experienced group of executives are charged with leading the Company and the Bank back to profitability. The executive management team consists of the following individuals: Gary D. Gall joined the organization as our President and Chief Executive Officer and Director in July 2009. Prior to that, between August 2008 and August 2009, he was Chairman of the Board for Sierra Vista Bank, Folsom, CA and between 1993 and 2006, was President and Chief Executive Officer for Western Sierra Bancorp, Cameron Park, CA. Prior to that, he was President and Chief Executive Officer of Delta National Bank in Manteca for six years. Mr. Gall s 36 year banking career has been devoted to community banking and the long sustaining value it brings to local businesses, individuals and the community. During his tenure at Western Sierra, he led a dedicated team that grew assets from $50 million with four branches to over $1.2 billion and 31 branches within a multi-bank holding company environment. Under his leadership, the bank successfully negotiated and completed the merger/acquisition of six other community banks between 1999 and 2005. Western Sierra, who joined NASDAQ in 1999, was also recognized nationally for performing in the top 5% of community banks in 2004. Susann C. Boley* has served as our Executive Vice President and Chief Financial Officer since 2002. Ms. Boley s 41 year career includes positions most recently as Vice President for Boston Private Bank & Trust company and preceding that, as Senior Vice President and Chief Financial Officer for Bank of Los Altos. Michael A. Behn has served as our Senior Vice President/Chief Information Officer since 2004. In addition, in 2009 he was named an Executive Vice President, Chief Information Officer and the Bank s Senior Credit Administrator. Mr. Behn s 30 year career includes positions with Bank of America, United California Bank/First Interstate Bank of California, Manufacturers Bank and City National Bank. Phillip J. Campbell joined the organization as our Executive Vice President/General Counsel and Chief Risk Officer in August 2009. Mr. Campbell s 30 year career has focused on financial institutions. His career includes his former role between 2002 and 2009 as Chief Counsel for the Wachovia Small Business Capital market and economic conditions could materially and adversely affect our business, financial condition, results of operations, access to credit or the trading price of our common stock. Additional requirements under our regulatory framework, especially those imposed under ARRA, EESA or other legislation intended to strengthen the U.S. financial system, could adversely affect us. Recent government efforts to strengthen the U.S. financial system, including the implementation of ARRA, EESA, the TLGP and special assessments imposed by the FDIC, subject participants to additional regulatory fees and requirements, including corporate governance requirements, executive compensation restrictions, restrictions on declaring or paying dividends, restrictions on share repurchases, limits on executive compensation tax deductions and prohibitions against golden parachute payments. These requirements, and any other requirements that may be subsequently imposed, including those recently proposed by the Obama Administration, may have a material and adverse effect on our business, financial condition, and results of operations. We are subject to various regulatory requirements and are subject to regulatory restrictions and enforcement actions that limit our business practices and may negatively impact our results of operation and financial condition. In light of the current challenging operating environment, along with our elevated level of non-performing assets, delinquencies, and adversely classified assets, we are subject to increased regulatory scrutiny and enforcement actions. Such enforcement actions place limitations on our business and may adversely affect our ability to implement our business plans. See Business Consent Order and Written Agreement FDIC deposit insurance assessments will increase substantially, which will adversely affect our net earnings. FDIC deposit insurance expense for the year ended December 31, 2009 was approximately $1.1 million. Our estimated assessment for the year ended December 31, 2010 is $1.2 million. Increases in our FDIC premium add to our cost of operations and accordingly, adversely affect our results of operations. In the quarter ended June 30, 2009, the Bank, along with all other FDIC insured banks, was charged a special assessment as part of the FDIC s efforts to replenish the deposit insurance fund. The Bank s special assessment was $177,000. Additionally, the FDIC is permitted to impose additional special assessments if necessary to maintain public confidence in federal deposit insurance or as a result of deterioration in the deposit insurance fund reserve ratio due to institution failures. Any additional special assessment imposed by the FDIC will further decrease our earnings. Risks Related to Our Business and Market A continued deterioration in economic conditions and a slow down in growth generally could adversely affect our business, financial condition, results of operations and prospects. Such deterioration could result in a variety of adverse consequences to us, including the following: Loan delinquencies may increase, which may cause us to increase loan loss provisions, and also result in a reduction in net interest income and our earnings as well as weaken our balance sheet; Problem assets and foreclosures may increase, which could result in higher operating expenses, and increases in our loan loss provisions; Demand for our products and services may decline including specifically, the demand for loans, which would cause our revenues, which include net interest income and noninterest income, to decline; and Collateral for loans may decline in value, reducing a customer s borrowing power, and reducing the value of assets and collateral associated with our loans. As a result of the ongoing deterioration in economic conditions, since December 31, 2009, the Bank has seen both an increase in the number of borrowers experiencing difficulties and a decrease in the appraisal values of the underlying collateral. Recent levels of market volatility were unprecedented and we cannot predict whether or not they will return. The capital and credit markets have been experiencing volatility and disruption for more than two years. In some cases, the markets have produced downward pressure on stock prices and credit availability for certain issuers without regard to those issuer s underlying financial strength. This downward pressure on stock prices and reduced availability of capital has adversely impacted our ability to obtain the working capital we need at appropriate pricing to operate most effectively without unacceptable dilution to shareholders. If recent levels of market disruption and volatility continue or worsen, we may experience an adverse effect, which may be material, on our ability to access capital and on our business, financial condition and results of operations. The unseasoned nature of a large portion of our loan portfolio may result in changes in estimating collectability, which may lead to additional provisions or charge-offs and an adverse impact to our profits. Our loan portfolio has increased approximately $100 million from the end of 2005 to the end of 2009. Accordingly, many of the loans in our portfolio are unseasoned. These loans also have not been subjected to declining and unfavorable economic conditions. As a result, it may be difficult to predict the future performance of these loans. These loans may have delinquencies or charge-off levels above our historical experience which could adversely effect our future performance. Non-performing assets take significant time to resolve and adversely affect our results of operations and financial condition. At December 31, 2009 and December 31, 2010 our non-performing loans (which consist of nonaccrual loans and accruing loans 90 days or more past due) were $27.3 million and $34.8 million, respectively, constituting 9.0% and 13.2% of the loan portfolio, respectively. At December 31, 2009 and December 31, 2010, our non-performing assets (which include foreclosed real estate), totaling $31.9 million and $45.1 million respectively, were 8.6% and 13.7% of total assets, respectively. Non-performing assets adversely affect our net income in various ways. Until economic and market conditions improve, we expect to continue to incur additional losses relating to an increase in non-performing loans. We do not record interest income on nonaccrual loans or other real estate owned, thereby adversely affecting our income, and increasing our loan administration costs. When we take collateral through foreclosures and similar proceedings, we are required to mark the related loan to the then fair market value of the collateral, which may result in a loss. These loans and other real estate owned also increase our risk profile and the capital levels determined by regulators to be appropriate in light of such risks. While we have tried to reduce our problem assets through workouts, restructurings and otherwise, decreases in the value of these assets, or the underlying collateral, or in these borrowers performance or financial conditions, whether or not due to economic and market conditions beyond our control, could adversely affect our business, results of operations and financial condition. In addition, the resolution of non-performing assets requires significant commitments of time from management and our directors, which can be detrimental to the performance of their other responsibilities. We may experience further increases in non-performing loans in the future. Our allowance for credit losses may not be adequate to cover actual losses. A significant source of risk arises from the possibility that losses could be sustained because borrowers, guarantors, and related parties may fail to perform in accordance with the terms of their loans. The underwriting and credit monitoring policies and procedures that we have adopted to address this risk may not prevent unexpected losses that could have a material adverse effect on our business, financial condition, results of operations and cash flows. Unexpected losses may arise from a wide variety of specific or systemic factors, many of which are beyond our ability to predict, influence, or control. Like all financial institutions, we maintain an allowance for credit losses to provide for loan defaults and non-performance. The allowance is funded from a provision for credit losses which is a charge to our statement of operations. The provisions charged to our income for the years ended December 31, 2009 and 2008 were $11.1 million and $23.9 million, respectively, which was the primary cause of our losses of $13.1 million and $10.7 million, respectively, for those periods. Our allowance as of the years ended December 31, 2009 and 2008 was $14.4 million and $12.4 million, respectively. For the nine months ended September 30, 2010, the provision was $7.9 million and as of September 30, 2010, our allowance was $14.5 million. Additionally for the three months ended December 31, 2010, the provision was $2.35 million and the balance in our allowance increased to $15.2 million. Our allowance for credit losses may not be adequate to cover actual loan losses, and future provisions for credit losses could materially and adversely affect our business, financial condition, results of operations and cash flows. The allowance for credit losses reflects our estimate of the probable losses in our loan portfolio at the relevant balance sheet date. Our allowance for credit losses is based on prior experience, as well as an evaluation of the known risks in the current portfolio, composition and growth of the loan portfolio and economic factors. The determination of an appropriate level of the allowance for credit losses is an inherently difficult process and is based on numerous assumptions. The amount of future losses is susceptible to changes in economic, operating and other conditions, including changes in interest rates, that may be beyond our control and these losses may exceed current estimates. The process we use to estimate losses inherent in our credit exposure requires difficult, subjective and complex judgments, including forecasts of economic conditions and how these economic conditions might impair the ability of our borrowers to repay their loans. The level of uncertainty concerning current economic conditions may adversely affect the accuracy of our estimates, which may, in turn, impact the reliability of the allowance for loan losses. While we believe that our allowance for credit losses is adequate to cover current losses, we may need to increase the allowance for credit losses further or the regulators may require us to increase this allowance in future periods. Either of these occurrences could materially adversely affect our business, financial condition, results of operations and cash flows. The types of loans in our portfolio have a higher degree of risk than other loans and a further downturn in our real estate markets could, therefore, hurt our business. A continuing downturn in our real estate markets could hurt our business because many of our loans are secured by real estate. Real estate values and real estate markets are generally affected by changes in national, regional or local economic conditions, fluctuations in interest rates and the availability of loans to potential purchasers, changes in tax laws and other governmental statutes, regulations and policies and acts of nature. As real estate prices continue to decline, the value of real estate collateral securing our loans is reduced. Our ability to recover on defaulted loans by foreclosing and selling the real estate collateral would then be diminished and we would be more likely to suffer losses on defaulted loans. As of December 31, 2009, approximately 84% of the book value of our loan portfolio consisted of loans collateralized by various types of real estate. Most of our real property collateral is located in California and more specifically, Nevada and Placer counties. If there is a continuing, significant decline in real estate values, especially in California, the collateral for our loans will provide less security. Real estate values could be affected by, among other things, earthquakes and natural disasters particular to California. Any such downturn could have a material adverse effect on our business, financial condition, results of operations and cash flows. We do not engage in subprime or Alt-A lending. We have a concentration in loans secured by commercial real estate. We have a high concentration in commercial real estate loans. Commercial real estate loans, as defined by final guidance issued by bank regulators, are defined as construction, land development, other land loans, loans secured by multifamily (5 or more) residential properties, and loans secured by non-farm nonresidential properties. Following this definition, at December 31, 2009 and September 30, 2010, approximately 52.8% and 56.1%, respectively, of our loan portfolio can be classified as commercial real estate lending. Commercial real estate loans generally involve a higher degree of credit risk than residential mortgage lending due, among other things, to the large amounts loaned to individual borrowers. In addition, unlike residential mortgage loans, commercial real estate loans generally depend on the cash flow from the property to service the debt. Cash flow may be significantly affected by general economic conditions. Losses incurred on loans to a small number of borrowers could have a material adverse impact on our income and financial condition. Also, many of our commercial real estate borrowers have more than one loan outstanding. Consequently, an adverse development with respect to one loan or one credit relationship can expose us to a significantly greater risk of loss compared to an adverse development with respect to a one- to four-family residential mortgage loan. Additionally, federal banking regulators recently issued final guidance regarding commercial real estate lending. This guidance suggests that institutions that are potentially exposed to significant commercial real estate concentration risk will be subject to increased regulatory scrutiny. Institutions that have experienced rapid growth in commercial real estate lending, have notable exposure to a specific type of commercial real estate lending, or are approaching or exceed certain supervisory criteria that measure an institution s commercial real estate portfolio against its capital levels, may be subject to such increased regulatory scrutiny. Our commercial real estate portfolio may be viewed as falling within one or more of the foregoing categories, and, accordingly, we may become subject to increased regulatory scrutiny because of our commercial real estate portfolio. If it is determined by our regulator that we have an undue concentration in commercial real estate lending, we may be required to maintain increased levels of capital and/or be required to reduce our concentration in commercial real estate loans. Failure to successfully execute our strategy may adversely affect our performance. Our financial performance and profitability depends on our ability to execute a long-term growth strategy. Continued growth, however, may present operating and other problems that could adversely affect our business, financial condition and results of operations. We may not be able to execute a long-term growth strategy successfully or maintain the level of profitability that we have historically experienced during growth cycles. Factors that may adversely affect our ability to attain our long-term financial performance goals include those stated elsewhere in this section, as well as: Inability to control non-interest expense, including, but not limited to, rising employee, regulatory compliance, and legal costs and other professional fees; Inability to increase non-interest income; Inability to expand our market share in our existing markets; and Inability to effectively manage and mitigate credit risk. Our internal operations are subject to a number of risks. We are subject to certain operations risks, including, but not limited to, data processing system failures and errors, customer or employee fraud and catastrophic failures resulting from terrorist acts or natural disasters. We maintain a system of internal controls to mitigate against such occurrences and maintain insurance coverage for such risks that are insurable, but should such an event occur that is not prevented or detected by our internal controls or is uninsured or in excess of applicable insurance limits, it could have a significant adverse impact on our business, financial condition or results of operations. Information Systems We rely heavily on communications and information systems to conduct our business. Many of these systems are provided by third parties. Any failure, interruption or breach in security of these systems could result in failures or disruptions in our customer relationship management, general ledger, deposit, loan and other systems. While we have policies and procedures designed to prevent or limit the effect of the failure, interruption or security breach of our information systems, interruptions or security breaches may still occur and, if they do occur, they may not be adequately addressed. The occurrence of any failures, interruptions or security breaches of our information systems could damage our reputation, result in a loss of customer business, subject us to additional regulatory scrutiny, or expose us to civil litigation and possible financial liability, any of which could have a material adverse effect on our financial condition and results of operations. If any of our third-party service providers experience financial, operational or technological difficulties, or if there is any other disruption in our relationships with them, we may be required to locate alternative sources of such services, and we cannot assure you that we could negotiate terms that are as favorable to us, or could obtain services with similar functionality as found in the existing systems utilized by the Bank without the need to expend substantial resources, if at all. Technological Advances The financial services industry is continually undergoing rapid technological change with frequent introductions of new technology-driven products and services. Technological innovation continues to contribute to greater competition in domestic and international financial services markets as technological advances enable more companies to provide financial services. The effective use of technology increases efficiency and enables financial institutions to better serve customers and to reduce costs. Our future success depends, in part, upon our ability to address the needs of our customers by using technology to provide products and services that will satisfy customer demands, as well as to create additional efficiencies in our operations. Many of our competitors have substantially greater resources to invest in technological improvements. We may not be able to effectively implement new technology-driven products and services or be successful in marketing these products and services to our customers. Failure to successfully keep pace with technological change affecting the financial services industry could have a material adverse impact on our business and, in turn, our financial condition and results of operations. Severe Weather, Natural Disasters, Acts of War or Terrorism and Other External Events Severe weather, natural disasters, acts of war or terrorism and other adverse external events could have a significant impact on our ability to conduct business. Such events could affect the stability of our deposit base, impair the ability of borrowers to repay outstanding loans, impair the value of collateral securing loans, cause significant property damage, result in loss of revenue and/or cause us to incur additional expenses. For example, Northern California is subject to earthquakes. Many of our borrowers could suffer uninsured property damage, experience interruption of their business or lose their jobs after a major disaster. Those borrowers might not be able to repay their loans, and the collateral for loans could decline significantly in value. Operations in our market could be disrupted by both the evacuation of large portions of the population as well as damage and/or lack of access to our banking and operation facilities. Although management has established disaster recovery policies and procedures, the occurrence of any such event could have a material adverse effect on our business, which, in turn, could have a material adverse effect on our financial condition and results of operations. We depend on cash dividends from our subsidiary bank to meet our cash obligations and a failure to receive them could impair our ability to fulfill our obligations As a holding company, dividends from our subsidiary bank provide a substantial portion of our cash flow used to service the payments on our preferred stock and our trust preferred securities and other obligations, including cash dividends, if any, to shareholders of common stock. Various statutory provisions restrict the amount of dividends our subsidiary bank can pay to us without regulatory approval and the Bank is currently unable to pay us dividends at the present time. We have a limited service area. This lack of geographic diversification increases our risk profile. Our operations are located principally in Nevada County and the greater Auburn area in Placer County, California. As a result of this geographic concentration, our results depend largely upon economic and business conditions in this area. Deterioration in economic and business conditions in our service area could have a material adverse impact on the quality of our loan portfolio and the demand for our products and services, which in turn may have a material adverse effect on our results of operations. Our ability to access markets for funding and acquire and retain customers could be adversely affected by the deterioration of other financial institutions or the financial service industry s reputation. Reputation risk is the risk to liquidity, earnings and capital arising from negative publicity regarding the financial services industry. The financial services industry continues to be featured in negative headlines about the global and national credit crisis and the resulting stabilization legislation enacted by the U.S. federal government. These reports can be damaging to the industry s image and potentially erode consumer confidence in insured financial institutions, such as the Bank. In addition, our ability to engage in routine funding and other transactions could be adversely affected by the actions and commercial soundness of other financial institutions. Financial services institutions are interrelated as a result of trading, clearing, counterparty or other relationships. As a result, defaults by, or even rumors or questions about, one or more financial services institutions, or the financial services industry generally, have led to market-wide liquidity problems, losses of depositor, creditor and counterparty confidence and could lead to losses or defaults by us or by other institutions. We could experience increases in deposits and assets as a direct or indirect result of other banks difficulties or failure, which would increase the capital we need to support such growth or we could experience severe and unexpected decreases in deposits which could adversely impact our liquidity, heighten regulatory concern or endanger our continuing existence. (Dollars in thousands) Interest income: Loans $ (430 ) $ (2,156 ) $ (2,586 ) Investment securities available-for- sale 15 (15 ) Federal funds sold (14 ) (103 ) (117 ) Interest bearing deposits with other banks 228 (206 ) 22 Total interest income (201 ) (2,480 ) (2,681 ) Interest expense: Interest bearing demand 1 (2 ) (1 ) Money market (34 ) (665 ) (699 ) Savings 18 (23 ) (5 ) Time certificates of deposit 291 (1,810 ) (1,519 ) Borrowings 179 (199 ) (20 ) Junior subordinated debentures (459 ) (459 ) Total interest expense 455 (3,158 ) (2,703 ) Net interest income $ (656 ) $ 678 $ We are dependent on key personnel and the loss of one or more of those key personnel may materially and adversely affect our prospects. Competition for qualified employees and personnel in the banking industry is intense and there are a limited number of qualified persons with knowledge of and experience in the California community banking industry. The process of recruiting personnel with the combination of skills and attributes required to carry out our strategies will often be lengthy. Our success depends to a significant degree upon our ability to attract and retain qualified management, loan and deposit origination, administrative, marketing and technical personnel and upon the continued contributions of our management and personnel. The impact of TARP and related acts on executive and incentive compensation may also make it far more difficult to attract and retain key personnel. Our success will be highly dependent on retaining the current executive management team who will work directly with the employees to implement the strategic direction of our Board of Directors. We believe this management team, who has worked in the banking industry for a number of years, is integral to implementing our business strategy. The loss of the services of any one of them could have a material adverse effect on our business, financial condition, results of operations and cash flows. Our business is subject to interest rate risk and variations in interest rates may negatively affect our financial performance. Changes in the interest rate environment may reduce our net interest income. A substantial portion of the Bank s income will be derived from the differential or spread between the interest earned on loans, securities and other interest-earning assets, and interest paid on deposits, borrowings and other interest-bearing liabilities. Because of the differences in the maturities and repricing characteristics of interest-earning assets and interest-bearing liabilities, we anticipate that changes in interest rates will not produce equivalent changes in interest income earned on interest-earning assets and interest paid on interest-bearing liabilities. Accordingly, fluctuations in interest rates could adversely affect our interest rate spread and, in turn, our profitability. In addition, loan volumes are affected by market interest rates on loans; rising interest rates generally are associated with a lower volume of loan originations while lower interest rates are usually associated with higher loan originations. Conversely, in rising interest rate environments, loan repayment rates will decline and in falling interest rate environments, loan repayment rates will increase. We cannot assure you that we can minimize our interest rate risk. In addition, an increase in the general level of interest rates may adversely affect the ability of certain borrowers to pay the interest on and principal of their obligations. Interest rates will also affect how much money we can lend. When interest rates rise, the cost of borrowing will increase. Accordingly, changes in levels of market interest rates could materially and adversely affect our net interest spread, asset quality, loan and deposit origination volume, business, financial condition, results of operations and cash flows. We will face strong competition from financial service companies and other companies that offer banking services which could hurt our business. We conduct our banking operations largely in portions of Nevada County and the greater Auburn area in Placer County, California. Increased competition in our markets may result in reduced loans and deposits. Ultimately, we may not be able to compete successfully against current and future competitors. Many competitors offer the banking services that we offer in our service areas. These competitors include national banks, regional banks and other community banks. We will also face competition from many other types of financial institutions, including savings and loan associations, finance companies, brokerage firms, insurance companies, credit unions, mortgage banks and other financial intermediaries. In particular, our competitors may have greater resources that may afford them a marketplace advantage by enabling them to maintain numerous locations and mount extensive promotional and advertising campaigns. Additionally, banks and other financial institutions with larger capitalization and financial intermediaries not subject to bank regulatory restrictions may have larger lending limits which would allow them to serve the credit needs of larger customers. Areas of competition include interest rates for loans and deposits, efforts to obtain loan and deposit customers and a range in quality of products and services provided, including new technology-driven products and services. We also face competition from out-of-market financial intermediaries that have opened loan production offices or that solicit deposits in our market areas. If we are unable to attract and retain banking customers, we may be unable to achieve appropriate loan growth and level of deposits and our business, financial condition, results of operations and cash flows. If we cannot attract deposits, our growth may be inhibited. Our ability to increase our assets in the long-term depends in large part on our ability to attract additional deposits at competitive rates. We intend to seek additional deposits by offering deposit products that are competitive with those offered by other financial institutions in our markets and by establishing personal relationships with our customers. Our efforts may not be successful. Our inability to attract additional deposits at competitive rates could have a material adverse effect on our business, financial condition, results of operations and cash flows. Liquidity risk could impair our ability to fund operations and jeopardize our financial condition. Liquidity is essential to our business. An inability to raise funds through deposits, borrowings, the sale of loans and other sources could have a material adverse effect on our liquidity. Our access to funding sources in amounts adequate to finance our activities could be impaired by factors that affect us specifically or the financial services industry in general. Factors that could detrimentally impact our access to liquidity sources include a decrease in the level of our business activity due to a market downturn or adverse regulatory action against us, such as the Order. Our ability to acquire deposits or borrow could also be impaired by factors that are not specific to us, such as a severe disruption of the financial markets or negative views and expectations about the prospects for the financial services industry as a whole as the recent turmoil faced by banking organizations in the domestic and worldwide credit markets deteriorates. We will be exposed to risk of environmental liabilities with respect to properties to which we take title. In the course of our business, we may foreclose and take title to real estate, and could be subject to environmental liabilities with respect to these properties. We may be held liable to a governmental entity or to third parties for property damage, personal injury, investigation and clean-up costs incurred by these parties in connection with environmental contamination, or may be required to investigate or clean up hazardous or toxic substances, or chemical releases at a property. The costs associated with investigation or remediation activities could be substantial. In addition, if we are the owner or former owner of a contaminated site, we may be subject to common law claims by third parties based on damages and costs resulting from environmental contamination emanating from the property. If we become subject to significant environmental liabilities, our business, financial condition, results of operations and cash flows may be materially and adversely affected. If we fail to maintain an effective system of internal and disclosure controls, we may not be able to accurately report our financial results or prevent fraud. As a result, shareholders could lose confidence in our financial reporting, which would harm our business. During a mandatory two week vacation, as required by the Bank s internal policies, of an employee in the second quarter of 2009, management identified and addressed the circumvention of certain policies and procedures by that employee within the Company s lending operations that had occurred during the latter part of 2008. This circumvention of policies and procedures related to unauthorized extensions of credit, inappropriate transactions on customers accounts and the withholding of critical financial information from the Board of Directors, executive management and external independent auditors. As a result, the employee was terminated, changes to management in the loan department were subsequently made, including the appointment of a new Senior Credit Administrator and Note Department Manager, and additional controls were designed and implemented to prevent it from occurring in the future. Such controls include, but are not limited to, quarterly certifications by department managers surrounding internal controls, Audit Committee inquiries of management, and additional training and monitoring. Subsequently, an external auditor was engaged to review and test the controls in lending operations. In addition, both internal and independent reviews of the Company s loan portfolio were conducted and it was determined that an additional provision for loan losses of $16 million, including loan charge-offs of approximately $10.8 million, should be reflected as part of the December 31, 2008 consolidated financial statements. The after tax effect of these adjustments was to increase the previously reported net loss for the year ended December 31, 2008 by approximately $9.6 million. Effective internal and disclosure controls are necessary for us to provide reliable financial reports and effectively prevent fraud. If we cannot provide reliable financial reports or prevent fraud, our reputation and operating results would be harmed. As part of our ongoing monitoring of internal controls, we may discover material weaknesses or significant deficiencies in our internal control as defined under standards adopted by the American Institute of Certified Public Accountants ( AICPA ), that require remediation. Under the AICPA standards, a material weakness is a significant deficiency or combination of significant deficiencies that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected. A significant deficiency is a control deficiency or combination of control deficiencies, that is less severe than a material weakness, yet important enough to merit attention by those responsible for oversight of a company s financial reporting. As a result of weaknesses that may be identified in our internal controls, we may also identify certain deficiencies in some of our disclosure controls and procedures that we believe require remediation. If we discover weaknesses, we will make efforts to improve our internal and disclosure controls. However, these efforts may not be successful. Any failure to maintain effective controls or timely place into effect any necessary improvement of our internal and disclosure controls could harm operating results or cause us to fail to meet our reporting obligations. Ineffective internal and disclosure controls could also cause investors to lose confidence in our reported financial information. These circumstances could make it difficult or impossible for us to raise additional capital. The restrictions on executive compensation that apply to the Company as a result of participation in TARP restrict our business. As a result of the Company s participation in the Capital Purchase Program ( CPP ), the Company is subject to the executive compensation restrictions applicable to CPP participants. These restrictions are mandated by way of EESA and the ARRA. As such, the Company must comply with many executive compensation and corporate governance restrictions including, but not limited to the following requirements: (i) ensuring that incentive compensation for senior executives does not encourage unnecessary and excessive risks that threaten the value of the financial institution; (ii) requiring the clawback of any bonus or incentive compensation paid to a senior executive based on statements of earnings, gains or other criteria that are later proven to be materially inaccurate; (iii) prohibiting making golden parachute payments to senior executives; and (iv) agreeing not to deduct for tax purposes, executive compensation in excess of $500,000 for each senior executive. The Company will also be subject to any changes in the executive compensation restrictions placed on CPP participants. Such restrictions and any future restrictions on executive compensation, which may be adopted, could adversely affect our ability to hire and retain senior executive officers. Risks Related to an Investment in Our Shares Historically, we have not paid dividends on our common stock and under California law we are currently ineligible to pay dividends. We intend to follow a policy of retaining earnings, if any, for the purpose of increasing our capital and supporting further growth. It is not anticipated that we will pay cash dividends on our common stock anytime in the foreseeable future. Finally, all dividends are declared and paid at the discretion of our Board of Directors and are dependent upon our liquidity, financial condition, results of operations, capital requirements and such other factors as our Board of Directors may deem relevant. Currently, we are ineligible to pay dividends under California law. Our TARP preferred securities have a priority right to payment of dividends and the failure to resume paying dividends on the TARP preferred securities may adversely affect us. On December 23, 2008, we completed a transaction with the Treasury under TARP, or the TARP Transaction. In the TARP Transaction, we sold 10,400 shares of our Fixed Rate Cumulative Perpetual Preferred Stock, Series A to Treasury, which bears an initial dividend rate of 5% increasing to 9% after five years. In addition, Treasury received a warrant for the purchase of 520 shares of our Fixed Rate Cumulative Perpetual Preferred Stock, Series B, which bears a dividend rate of 9%. The warrant was immediately exercised. The preferred securities issued in the TARP Transaction have a priority right to dividends and payment over our common stock. Any new dividends that we pay will also require the approval of the Treasury. The dividends declared and the accretion on our outstanding preferred securities will reduce the net income available to common also decrease by a similar amount as a result of this closure. The following information is presented to provide additional information about significant changes to loans and the allowance for credit losses, other real estate owned and shareholders equity and regulatory capital for the three month period ended December 31, 2010: Loans and the Allowance for Credit Losses Changes in the allowance for credit losses for the three months ended December 31, 2010 were as follows (dollars in thousands): Balance, October 1, 2010 $ 14,486 Provision charged to operations 2,350 Net losses charged to allowance (1,598 ) Balance, December 31, 2010 $ 15,238 The recorded investment in loans that were considered to be impaired was approximately $66.7 million and $66.7 million at December 31, 2010 and September 30, 2010, respectively. The related allowance for credit losses for impaired loans was approximately $8.2 million and $5.9 million at December 31, 2010 and September 30, 2010, respectively. At December 31, 2010 and September 30, 2010, non-performing loans totaled $34.8 million and $35.4 million, respectively. Other Real Estate The Company s investment in other real estate holdings, all of which were related to real estate acquired in full or partial settlement of loan obligations, was $10.3 million, net of a valuation allowance of $2.6 million at December 31, 2010, compared to $6.7 million, net of a valuation allowance of $2.1 million at September 30, 2010. Shareholders Equity and Regulatory Capital Shareholders equity at December 31, 2010 decreased to $3.7 million from $5.1 million at September, 2010 primarily due to a net loss of $1.4 million for the three months ended December 31, 2010. The primary contributor to the Company s loss for the three months ended December 31, 2010 was a $2.35 million addition to the allowance for credit losses. The regulatory capital guidelines as well as the actual capital ratios for the Company and the Bank as of December 31, 2010 are as follows: CITIZENS BANCORP AND SUBSIDIARIES stockholders and our earnings per common share. Our outstanding preferred securities will also receive preferential treatment in the event of our liquidation, dissolution or winding-up. Our ability to repurchase shares of our common stock is also restricted by the TARP Transaction. In order to conserve capital, we deferred our fifth consecutive dividend payment on the TARP preferred securities in August 2010 and are likely to be unable to make such quarterly payments for the foreseeable future. Until we pay all accrued and unpaid dividends current, we will not be able to declare or pay dividends on our common stock or repurchase shares of such stock. Additionally, if we defer an aggregate of six quarterly dividend payments, whether or not consecutive, the holder of the TARP preferred securities will have the right to elect two new directors to our Board of Directors. Our trust preferred securities have a priority right to payment of dividends and the failure to resume paying interest on our trust preferred securities may adversely affect us. Historically, we have supported our growth through the issuance of trust preferred securities. Trust preferred securities have a priority right to distributions and payment over our common stock. At December 31, 2009, we had trust preferred securities and related debt totaling approximately $15.5 million. We began deferring interest payments on our trust preferred securities in July 2010. Through December 2010, we have deferred $226,000 of interest. Until we pay all currently due and deferred interest payments, we will not be able to declare or pay dividends on our common stock. Finally, all dividends are declared and paid at the discretion of our Board of Directors and are dependent upon our liquidity, financial condition, results of operations, capital requirements, requirements of the Order and Federal Reserve Agreement and such other factors as our Board of Directors may deem relevant. The value of our tax loss carry forward may be reduced. At December 31, 2009, we had approximately $22.5 million in tax loss carry-forwards which are available to offset taxes on future profits. It is probable that a change in control for purposes of the Internal Revenue Code will occur due to this Offering. In such event, the value of the tax losses as an offset to taxes on future profits will be significantly reduced. CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS The Company believes that some of the information in this prospectus constitutes forward-looking statements. Forward-looking statements are based on management s current expectations regarding economic, legislative, and regulatory issues that may impact our earnings in future periods. These statements may include statements regarding projected performance for periods following the completion of this Offering. They often include the words believe, expect, intend, estimate or words of similar meaning, or future or conditional verbs such as will, would, should, could or may. Similarly, statements that describe our future financial condition, results of operations, objectives, strategies, plans, goals or future performance and business are also forward-looking statements. These forward-looking statements involve known and unknown risks, uncertainties and other factors, including, but not limited to, those described in the Risk Factors and Management s Discussion and Analysis of Financial Condition and Results of Operations sections and other parts of this prospectus that could cause our actual results to differ materially from those anticipated in these forward-looking statements. The following factors, among others, could cause our financial performance to differ materially from our goals, objectives, intentions, expectations and other forward-looking statements: changes in general economic conditions, either nationally or locally in the Nevada County area or other areas in which we conduct or will conduct our business; the persistence of the ongoing economic crisis; inflation, interest rate, market and monetary fluctuations; real estate values and competition; changes in consumer spending habits and savings habits; increases in competitive pressures among financial institutions and businesses offering similar products and services; CITIZENS BANK higher defaults on our loan portfolio than we expect; changes in management s estimate of the adequacy of the allowance for credit losses; lower net income from operations; loss of more business or customers than we expect, or operating costs higher than we expect; ability to successfully grow our business in our market area; legislative or regulatory changes or changes in accounting principles, policies or guidelines; technological changes; and regulatory or judicial proceedings. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this prospectus. If one or more of the factors affecting our forward-looking information and statements proves incorrect, then our actual results, performance or achievements could differ materially from those expressed in, or implied by, forward-looking information and statements contained in this prospectus. Therefore, we caution you not to place undue reliance on our forward-looking information and statements. You should read this prospectus completely and with the understanding that our actual future results, levels of activity, performance and achievements may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements. We do not undertake any obligation to release publicly our revisions to such forward-looking statements to reflect events or circumstances after the date of this prospectus. USE OF PROCEEDS This prospectus relates to units being offered by us in the Offering, including the shares of common stock and 2011 Warrants that make up the units. The maximum net proceeds from the sale of units are expected to be up to $30,000,000 million before deducting our estimated offering expenses. However, the net proceeds could be considerably less but the amount of new equity capital and earnings that we achieve must not be less than the amount that would result in the Bank being in substantial compliance with the Capital Requirement of the Order or we will not close the Offering. As of January 31, 2011, the amount of such minimum net proceeds is estimated to be $10.75 million; however, such amount will increase or decrease depending upon the Company s net income or loss and total assets before the termination date. We plan to use the net proceeds from this Offering to support our capital ratios. The capital raised in this Offering will be needed in order for us to return to well capitalized status under the bank regulatory capital ratio guidelines and the Order to which we are subject. See Summary Consent Order and Written Agreement. The proceeds contributed to the Bank will be used for general banking purposes including the making of loans and the purchase of investments. Accordingly, our management will retain broad discretion in the allocation of the net proceeds of this Offering. Any remaining proceeds beyond those necessary to satisfy the Capital Requirement of the Order will be used to: support further our capital ratios if we reduce non-performing assets by their sale at a discount, attempt to negotiate the repayment of the outstanding preferred stock at a discount, and execute a growth strategy that includes the acquisition of other community banks. There is no specific allocation of any remaining proceeds among these alternative uses. While there have been preliminary discussions with interested parties concerning the sale of non-performing assets at a discount, the repayment of our preferred stock at a discount and a roll-up strategy of other financial institutions, there are no agreements relating to such matters. No assurance can be given that any of these strategies can be accomplished on terms acceptable to the Company. Minimum Regulatory Requirement Equity compensation plans approved by security holders 67,082 $13.43 594,607 Equity compensation plans not approved by security holders Total 67,082 $13.43 594,607 Actual Capital Ratio (Dollars in thousands, except share and per share amounts) Indebtedness: Borrowings $ 30,567 $ 30,567 Junior subordinated debentures 15,465 15,465 Shareholders Equity: Serial preferred stock 2,500,000 shares authorized Series A preferred stock; 10,400 shares outstanding 10,057 10,057 Series B preferred stock; 520 shares outstanding 520 520 Common stock no par value; 20,000,000 shares authorized, 2,335,090 shares outstanding, actual; 12,335,090 shares outstanding, pro forma 16,040 45,896 Accumulated deficit (22,885 ) (22,885 ) Accumulated other comprehensive loss, net of taxes (41 ) (41 ) Total shareholders equity 3,691 33,547 Total capitalization $ 49,723 $ 79,579 Citizens Bancorp Capital Ratios: Leverage capital ratio 1.4 % 13.1 % Tier 1 risk-based capital ratio 1.8 % 16.6 % Total risk-based capital ratio 8.3 % 19.3 % Citizens Bank of Northern California Capital Ratios: Leverage capital ratio 5.4 % 11.3 % Tier 1 risk-based capital ratio 6.8 % 14.2 % Total risk-based capital ratio 8.1 % 15.6 % Book value per common share $ (2.95 ) $ 1.86 Minimum Regulatory Requirement (1) The number of shares purchased and average price per share for existing shareholders have been adjusted for 5% stock dividends paid in 2005, 2006, 2007 and 2008. Minimum Regulatory Requirement for Well Capitalized Institution MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS You should read the following discussion and analysis of our financial condition and results of operations together with
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+Prospectus Summary This summary highlights certain information contained elsewhere in this prospectus. This summary does not contain all of the information you should consider before investing in our common stock. You should carefully read the entire prospectus, including the section entitled Risk Factors and our financial statements and related notes, before you decide whether to invest in our common stock. If you invest in our common stock, you are assuming a high degree of risk. See the section entitled Risk Factors. References to our, our company, us, or the Company refer to Xtreme Oil & Gas, Inc. and its subsidiaries, unless the context indicates otherwise. About Us In October 2006, Emerald Energy Partners LLC purchased a 22.275% interest in two contiguous oil and gas properties in Brown County Texas, the West Thrifty Unit and the Quita Field. In December 2006, Xtreme Technologies, Inc. acquired Emerald Energy Partners, LLC and changed its name to Xtreme Oil & Gas, Inc. Xtreme Technologies, Inc. was incorporated in Washington in 2003 and focused on telecommunications technologies. By early 2006 that business ceased operations and had no assets, becoming a shell company at that time. Immediately prior to its acquisition of Emerald Energy Partners, LLC, Xtreme Technologies, Inc. affected a one for 500 reverse stock split leaving 185,516 shares outstanding. Xtreme Technologies, Inc. acquired Emerald Energy Partners, LLC for 7,960,000 shares of Common Stock. The acquisition of Emerald Energy Partners, LLC is treated for accounting purposes as an acquisition of Xtreme Technologies, Inc. by Emerald Energy Partners and a re-capitalization of the limited liability company. With the acquisition of Emerald Energy Partners LLC, we began to acquire and to develop additional oil and gas properties. In 2007 we sold our interest in the West Thrifty and Quita fields for interests in other fields in Texas, ultimately reacquiring in February 2008 a 100% working interest in the West Thrifty and Quita, a 65% net revenue interest after granting an overriding royalty of 2.5% to each of two of our executives including Mr. McAndrew, 2.5% of which has since been reacquired by the Company. In 2008, we developed two prospects, one of which we subsequently sold and another we farmed out to a third party. In 2009 we began drilling on our Lionheart prospect and initiated our plan to develop a salt water disposal well in Oklahoma. In March 2009, we reincorporated through a merger in Nevada, a merger that was ratified in December 2009 by 73.9% of the holders of common stock, an action we believed appropriate to approve the measure. Management sought the approval of the merger by at least two-thirds of the holders of common stock. See Description of Securities. In May 2010 we sold our interest, approximately 50.78%, in Small Cap Strategies, Inc., a corporation whose common stock is registered under Section 12 of the Securities Exchange Act of 1934. The purchaser, Bryce Knight, a principal in that company, exchanged 1,160,000 shares of our stock owned by the purchaser for our interest. In addition, we agreed to pay purchaser an additional $35,000 worth of accounts payable. Mr. Knight was never an officer, director, employee or principle of Xtreme Oil & Gas. The terms of the sales were negotiated during April 2010 by telephone and email exchange between Mr. Knight and Mr. DeVito and were approved by our Board of Directors in May 2010. We had acquired Small Strategies, Inc. in July 2008. Our Approach to the Business We believe there are opportunities to acquire properties that formerly produced oil and gas or are now operating under marginal circumstances and can be redeveloped for profitable operation using newer production techniques. These opportunities are primarily the result of neglect or abandonment of oil and gas producing properties owned by persons lacking the capital and other resources necessary to bring the properties back into production and develop recoverable hydrocarbons that remain. When we identify such a prospect we determine whether there is reason to believe the prospect has remaining hydrocarbons yet to be produced, determine a value for the prospect, and, if warranted under all the circumstances, pursue acquisition of the prospect. About this Offering This prospectus relates to the resale of up to 2,750,000 shares of common stock. THE OFFERING Common stock offered by selling stockholders: 2,750,000 shares of common stock which would represent approximately 5.9% of our outstanding common stock. Common stock presently outstanding 44, 500,831 Common stock to be outstanding prior to effective date 44, 500,831 Common stock to be outstanding after the offering: Up to 44, 500,831 shares of common stock. Use of proceeds: We will not receive any proceeds from the sale of the shares by selling stockholders.
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001481441_ironplanet_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001481441_ironplanet_prospectus_summary.txt
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+PROSPECTUS SUMMARY The following summary highlights information contained elsewhere in this prospectus. It does not contain all of the information that may be important to your investment decision. Before deciding whether to buy shares of our common stock, you should read this summary and the more detailed information in this prospectus, including the sections captioned Risk Factors and Management s Discussion and Analysis of Financial Condition and Results of Operations and our consolidated financial statements and related notes. Overview We are a leading online marketplace for used heavy equipment. We believe that the online channel is increasingly becoming a preferred method for buying and selling used heavy equipment, and our long-term goal is to be the leading global marketplace for used heavy equipment and other capital assets. Our exclusively online model allows us to match supply and demand globally for used heavy equipment, while achieving greater reach, price performance and efficiency relative to the fragmented network of brokers, dealers and physical auction houses that have traditionally served this market. In 2010, our online marketplace connected over 2,300 unique sellers to over 8,600 unique buyers, from among 15,600 unique bidders located across 112 countries, who bought approximately 32,800 individual pieces of equipment. As a marketplace, our customers are both sellers and buyers of used heavy equipment. Sellers and buyers include a broad mix of equipment owners ranging from large multi-national corporations to sole proprietors. These include original equipment manufacturers, or OEMs, re-marketing and finance organizations, construction and contracting companies, equipment rental companies, equipment dealers and farming and mining companies. Today, equipment sold through our marketplace is used primarily in the construction, mining and agriculture industries. For sellers, our solutions are designed to maximize price performance, minimize time requirements and reduce sales-related expenses as compared to traditional methods. For buyers, we believe that our marketplace increases selection and market transparency, while reducing the time and investment required to search for, identify, evaluate and procure equipment. A key element of our online marketplace is our proprietary inspection and report process, which we refer to as our IronClad Assurance. Our IronClad Assurance provides buyers with confidence and trust in the condition of the equipment listed in our marketplace. To increase supply in our marketplace, we employ a direct salesforce to assist existing and prospective equipment sellers. To increase demand in our marketplace, we use our technology along with our marketplace operations group to attract buyers to our online marketplace, stimulate bidding activity and assist them in their buying process. We generate revenue principally from sellers through commissions, as well as listing and inspection fees. We also generate revenue from buyers through transaction fees. Our revenue is dependent on the total gross merchandise volume, or GMV, of equipment sold through our marketplace. Over the last five years, our GMV has grown from $163 million in 2006 to $494 million in 2010. Our revenue has increased from $14.9 million in 2006 to $58.6 million in 2010. Industry Background The market for heavy equipment is large, established and global. Demand for heavy equipment is driven by worldwide economic development, government spending on infrastructure, and a continual need by equipment operators to replace and upgrade their equipment. This equipment is used in key sectors of the economy, such as the construction, mining and agriculture industries. Heavy equipment assets generally have long useful lives, driven by manufacturing durability, generally limited product changes and broad industry application. This longevity and durability gives rise to a large global stock of functional used equipment. According to research we commissioned by Manfredi Associates, a market research firm that specializes in the heavy equipment industry, the average value of the worldwide fleet of used heavy equipment was estimated to be more than $500 billion between 2006 and 2008, of which over $100 billion was resold annually. The market for secondary sales of heavy equipment has been characterized by disparate sellers and buyers and, as a result, local brokers and OEM-branded dealers have controlled much of the market historically. While these businesses serve a necessary function, their limited geographic footprint, narrow service offering and lack of scale and transparency create inefficiencies for both sellers and buyers. Table of Contents The information in this prospectus is not complete and may be changed. We and the selling stockholders may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED JULY 20, 2011 Preliminary Prospectus shares Common Stock This is the initial public offering of shares of common stock of IronPlanet, Inc. Prior to this offering, there has been no public market for our common stock. We are offering shares, and the selling stockholders identified in this prospectus, are offering shares of our common stock. We will not receive any proceeds from the sale of shares of common stock by the selling stockholders. The initial public offering price is expected to be between $ and $ per share. We have applied to list our common stock on The NASDAQ Global Market under the symbol IRON. Investing in our common stock involves a high degree of risk. See Risk Factors beginning on page 9. Per share Total Initial public offering price $ $ Underwriting discounts and commissions $ $ Proceeds to IronPlanet, before expenses $ $ Proceeds to the selling stockholders, before expenses $ $ To the extent the underwriters sell more than shares of common stock, we and the selling stockholders have granted the underwriters an option to purchase up to additional shares of common stock, at the initial public offering price less the underwriting discounts and commissions, to cover overallotments. The underwriters can exercise this option at any time within 30 days of this prospectus. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The underwriters expect to deliver the shares of common stock to purchasers on , 2011. J.P. Morgan Deutsche Bank Securities Piper Jaffray Baird Pacific Crest Securities , 2011 Table of Contents The development of the Internet and e-commerce has given rise to the online marketplace as a more efficient channel for buying and selling used heavy equipment. The online channel matches supply with demand across geographies, reduces the time and costs for sellers and buyers to transact and avoids the limitations of physical proximity. We believe that the online channel will become the preferred platform for buying and selling used heavy equipment throughout the world. Market Opportunity Sellers and buyers of used heavy equipment are burdened with significant challenges and inefficiencies using traditional channels. We believe that there is a significant opportunity for an online marketplace for used heavy equipment that better matches supply and demand, and reduces the cost, time and friction associated with buying and selling equipment. To be successful, a company with this model must ensure the integrity of its marketplace and build trust on the part of both sellers and buyers as to the accuracy, legitimacy and certainty of transactions. Moreover, the marketplace must provide sufficient liquidity to ensure enough demand for sellers and supply for buyers. Our Solution Our online marketplace is designed to meet the needs of used heavy equipment sellers and buyers globally. We believe that our online marketplace solutions and processes offer distinct benefits to both sellers and buyers of used heavy equipment, providing substantial advantages compared to traditional used heavy equipment sales channels. Key advantages of our online model include the following. Key Benefits for Sellers Global Reach. We provide sellers access to our global pool of active buyers, increasing marketplace transparency, liquidity and price realization. During 2010, our North American Featured Marketplace events, which are scheduled public online auction events typically held once a week, attracted on average more than 700 unique bidders based in 30 countries. Flexible, Turn-Key Solutions. We provide sellers the flexibility to choose from a number of marketplace solutions, which enables sellers to choose the format that best suits their business, liquidity and inventory needs. Continuous Market Access. We provide sellers with regular market access regardless of where their equipment is located. Our Featured Marketplace is held typically once a week and our Daily Marketplace operates 365 days a year. Cost Efficiency. Our field-based sales and inspections teams help limit the time and resources required of sellers to prepare items for sale. Our process also allows sellers to avoid unnecessary sales-related transportation and make-ready costs. Transaction Speed and Certainty. We have designed our marketplace offering to minimize the end-to-end sales process time. In particular, our online solution eliminates the need for sellers to transport equipment to physical sites for sale, and our field inspection reports and our IronClad Assurance reduce the time buyers require to evaluate equipment. Key Benefits for Buyers Broad Selection. We provide buyers with a broad selection of equipment across multiple geographies, industries, manufacturers, price points and equipment condition. During 2010, our North American Featured Marketplace events on average included over 650 items across a range of industrial uses, price points, OEM brands and product quality parameters. Quality Assurance. We have created a proprietary inspection process to provide buyers with confidence in the condition of the equipment listed in our marketplace. Buyers can access and evaluate our detailed inspection reports online, and our IronClad Assurance instills trust in the accuracy of these inspection reports. Table of Contents Iron PLANET GLOBAL MARKETPLACE FOR USED EQUIPMENT CREATING CREAT BUYING AND CELLING OPPORTUNITIES CONTRACTORS CONSTRUCTION COMPANIES INDUSTRIAL PRODUCERS DEALERS BROKERS FINANCIAL INSTITUTIONS ORIGINAL MANUFACTURERS RENTAL COMPANIES IRONPLANET.COM MCCANIN. IRON PLANET S-1 Grahics Front Cover Table of Contents Convenience. Buyers are able to search, identify, evaluate and procure equipment at any time through our convenient, user friendly website. Our model is designed to minimize the need for involvement throughout the process, as well as reduce the total time necessary to successfully procure equipment. Cost-Efficient Process. We enable buyers to search, identify, evaluate and bid for equipment online, reducing costs required to search for and bid on equipment located in physically disparate locations. Market Fairness and Transparency. We enforce strict rules among sellers and buyers that provide for open and transparent bidding activity. We believe that these rules encourage buyers to participate with greater confidence in the process. IronPlanet Competitive Advantages We believe that our business model provides us a number of competitive advantages that enhance our ability to continue to grow our business and expand our profitability, including our: scale, network effect and marketplace liquidity; proprietary inspection process and IronClad Assurance; capital-efficient business model; direct relationships with sellers; and portable and flexible business model. Our Strategy We seek to become the leading platform for buying and selling used heavy equipment by expanding our market coverage and offering a superior service. Key elements of our strategy include the following: increase penetration in our key North American market; integrate into the business processes of large, regular sellers; continue our expansion into international markets; strengthen our brand and enhance the user experience; invest in technology and infrastructure to improve services and operating efficiency; and add new asset categories to our marketplace. Risks Associated with our Business Our business, financial and operating performance and growth prospects are subject to a number of risks, which you should understand before making an investment decision. These risks are discussed more fully in the section entitled Risk Factors following this prospectus summary. These risks include, among others: our ability to increase the supply of and demand for used heavy equipment for sale in our marketplace; volatility in our annual and quarterly results of operations; a decline in the construction and heavy equipment industries; competition, particularly from larger, established companies with greater financial resources and name recognition; risks associated with international operations and emerging markets; our performance on guarantee and purchase arrangements; our ability to retain our high volume sellers; our ability to grow, integrate, manage and retain our salesforce and inspection services personnel; and TABLE OF CONTENTS Page Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001482361_stratex_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001482361_stratex_prospectus_summary.txt
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+PROSPECTUS SUMMARY This summary highlights selected information contained elsewhere in this prospectus. This summary does not contain all the information that you should consider before investing in the common stock. You should carefully read the entire prospectus, including Risk Factors , Management s Discussion and Analysis of Financial Condition and Results of Operations and the Consolidated Financial Statements, before making an investment decision . Please note that throughout this prospectus, the words PMB , we , our or us refer to the Company not to the selling stockholders. ABOUT OUR COMPANY The Company was incorporated in the state of Colorado as Ross Investments, Inc. ("Ross" or the "Company") on January 6, 1989. On December 15, 2008, Ross completed a merger with Poway Muffler and Brake, Inc. a California corporation ("PMB-CA"), with Ross as the surviving corporation (the "Merger"). Simultaneous with the closing of the Merger, Ross Investments, Inc. amended its Articles of Incorporation to change its name to Poway Muffler and Brake, Inc. Until the Merger with PMB-CA, the Company did not have any business operations, and was essentially dormant during 2007 and 2008. As a result of the Merger, Poway Muffler and Brake, Inc. (hereinafter "PMB" or the "Company) now operates a retail automotive repair facility in San Diego County, California which offers a comprehensive array of automotive repair and maintenance services. The Company specializes in front-end alignments, brake system, steering, suspension, exhaust, and general engine repair and replacement services. Based on our financial history since inception, our auditor has expressed substantial doubt as to our ability to continue as a going concern. As reflected in the accompanying financial statements, the Company had accumulated expenses of $33,842, a net loss before taxes and net cash used in operations of $(5,383) and $(5,316) for the six months ended June 30, 2010, respectively. These conditions raise substantial doubt about our ability to continue as a going concern. WHERE YOU CAN FIND US Our principal executive office location and mailing address is 13933 Poway Rd., Poway, CA 92064. The corporate telephone number is (858) 748-2994. TERMS OF THE OFFERING The selling shareholders named in this prospectus are offering all of the shares of common stock offered through this prospectus. The selling stockholders are selling shares of common stock covered by this prospectus for their own account. We will not receive any of the proceeds from the sale of these shares. The offering price of $1.10 was determined by the price shares were sold to our shareholders in a private placement memorandum of $1.00, which we completed on July 31, 2000, plus $0.10 and is a fixed price at which the selling security holders may sell their shares until our common stock is quoted on the OTC Bulletin Board, at which time the shares may be sold at prevailing market prices or privately negotiated prices. There can be no assurance that a market maker will agree to file the necessary documents with FINRA, which operates the OTC Electronic Bulletin Board, nor can there be any assurance that such an application for quotation will be approved. We have agreed to bear the expenses relating to the registration of the shares for the selling security holders. There is no assurance that an active trading market for our shares will develop, or, if developed, that it will be sustained. In the absence of a trading market or an active trading market, investors may be unable to liquidate their investment or make any profit from the investment. UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C.20549 FORM S-1/A - AMENDMENT NO. 8 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 POWAY MUFFLER AND BRAKE, INC. _______________________________________ (Exact name of registrant as specified in its charter) Colorado ____________________________________________ (State or other jurisdiction of incorporation or organization) 5 ____________________________________________ (Primary Standard Industrial Classification Code Number) 94-3364776 _______________________________ (I.R.S. Employer Identification Number) Poway Muffler and Brake, Inc. 13933 Poway Road Poway, CA 92064 (858) 748-2994 ________________________________________________________________________________________ (Address, including zip code, and telephone number, including area code, of registrant s principal executive offices) Allan Ligi 13933 Poway Road Poway, CA 92064 (858) 748-2994 _____________________________________________________________________________ (Name, address, including zip code, and telephone number, including area code, of agent for service) Copies of communications to: Karen A. Batcher, Esq. Synergen Law Group, APC 819 Anchorage Place, Suite 28 Chula Vista, CA 91914 Tel. 619.475.7882 Fax: 619.512.5184 As soon as practicable after this Registration Statement becomes effective. __________________________________________________________ (Approximate date of commencement of proposed sale to the public) If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box: x If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o Table of Contents
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001482605_plycrete_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001482605_plycrete_prospectus_summary.txt
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+Prospectus Summary Our Business: We were incorporated in Nevada on August 21, 2007. Our principal business address is 1777, Cedar, Mascouche (Queb c), J7L 1W6. Our telephone number is (450) 477-8161. We are a development stage company and a wholesaler of modular residential and commercial units and homes to be assembled and totally composed of a new composite plysheets concrete material, known as Plycrete. Plycrete is a reinforced multilayer cementious structure to produce building panels with quick assembly features and improved joint sealing. We believe that we will need to raise a total of $150,000 to pay the costs of this offering and conduct our proposed business activities. Summary financial information: The summary financial information set forth below is derived from the more detailed financial statements appearing elsewhere in this Form S-1. We have prepared our financial statements contained in this Form S-1 in accordance with accounting principles generally accepted in the United States. All information should be considered in conjunction with our financial statements and the notes contained elsewhere in this Form S-1. Income Statement For the three months ended October 31, 2010 For the year ended July 31, 2010 For the year ended July 31, 2009 $ $ $ Revenue 0 0 0 Total Operating Expenses 11,377 49,077 79,105 Net Income (Loss) (12,079) (51,332) (80,430) Net Income (Loss) Per Share (0.00) (0.00) (0.01) Balance Sheet October 31, 2010 July 31, 2010 July 31, 2009 $ $ $ Total Assets 76,001 78,528 92,036 Total Liabilities 97,743 88,191 51,325 Stockholders' Equity (Deficit) (21,742) (9,663) 40,711 Number of shares being offered: We are offering for sale 2,500,000 shares of our common stock. We will sell the shares we are registering only to those individuals who have received a copy of the prospectus. Number of shares outstanding after the offering: 10,450,000 shares of our common stock are currently issued and outstanding. After the offering, there may be up to 12,950,000 shares of our common stock issued and outstanding if all of the offered shares are sold. Estimated use of proceeds: We will receive $750,000 if all of the offered shares are sold and $375,000 if half the offered shares are sold. If all of the offered shares are purchased, we intend to use the proceeds for rent/office expenses, computer equipment, website development expenses, wages for employees/contractors, marketing expenses, working capital and offering expenses. This is a best efforts offering with no minimum offering amount. There is no guarantee that we will even raise enough funds to cover the expenses of this offering.
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001483058_china_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001483058_china_prospectus_summary.txt
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+This summary provides a brief overview of selected information from this prospectus and the documents incorporated by reference into this prospectus and does not contain all of the information you should consider in making your investment decision. This summary may not contain all of the information that may be important to you. Please carefully read the entire prospectus, including the information under the heading Risk Factors and our financial statements and the related notes incorporated by reference into this prospectus, before making an investment decision. Overview We were incorporated in the State of Nevada on January 29, 2010 as AJ Acquisition V, Inc. Since inception, we have been engaged in organizational efforts and obtaining initial financing. Our initial business purpose was to seek the acquisition of or merger with, an existing company. On November 8, 2010 we filed an amendment to our articles of incorporation to change our name to China Aluminum Foil, Inc., and on November 8, 2010 we entered into, and closed, a share exchange agreement with Lucky Express, now our wholly owned subsidiary. Prior to the share exchange with Lucky Express, we were a shell company with no business operations. Current Business Upon acquiring Lucky Express pursuant to the share exchange, we adopted the business of Lucky Express. We are mainly engaged in the development, production and distribution of various aluminum foils to domestic and overseas markets. Our aluminum foil products can be widely used in multiple industries for different purposes. Currently a majority of our products are used for household daily consumption and container production. However, we intend to expand into other high potential business segments, such as cigarette packaging, pharmaceutical packaging and electronic components. We have one production line with an annual capacity of approximately 20,000 metric tons. We plan to build or rent another production line to expand our capacity. Due to long-term efforts to streamline production process and reduce wastage and pollution during production, we were recognized as one of the High Tech New Star Enterprises in Henan province. We are also recognized for our strong R&D capabilities in the aluminum foil industry in central China. Principal Products Aluminum foil is a paper-thin sheet of rolled aluminum that can be torn easily and used to wrap and store food, in art, decoration, insulation and in heat exchangers. Because aluminum foil is paper-thin, the foil is extremely pliable and can be bent or wrapped around objects with ease. In North America, aluminum foil is sometimes alternatively called al-foil or alu-foil. We develop and manufacture various types of aluminum foils. The production of aluminum foil involves a complex production process and requires advanced technology and equipment. The principal products made by the Company range from 0.005mm to 0.08mm in thickness. We purchase raw aluminum with thickness of 0.3mm and produce different types of aluminum foil by rolling process. Currently our products mainly fall into two product segments: aluminum foil used by households for daily consumption and aluminum foil used for the production of containers such as meal boxes, cake cups, as well as many other applications. Our Strengths: Superior Quality of Aluminum Foil The quality of our products has consistently been rated the highest among aluminum foil customers in China. Our product aluminum foil is manufactured using our licensed patented manufacturing technology, which was awarded Scientific Advancement Awards by Zhengzhou Municipal Government in 2007 and obtained official recognition by Henghan Province Scientific Technological Result in 2006. The licensed patented manufacturing technology enables us to produce aluminum foil of superior quality, in term of strength and price competitiveness, than our competitors. Moreover, we are one of the few manufacturers in China who can manufacture aluminum foil with a thickness of 0.005mm or less. Unless the context otherwise requires, the terms we, us, our, China Aluminum, and the Company refer to China Aluminum Foil, Inc., a Nevada corporation, and its consolidated subsidiaries. References to dollars and $ are to United States dollars. Any logos or trademarks mentioned in this prospectus are the property of their respective owners. You may rely only on the information contained in this prospectus. We have not authorized anyone to provide information or to make representations not contained in this prospectus. This prospectus is neither an offer to sell nor a solicitation of an offer to buy any securities other than those registered by this prospectus, nor is it an offer to sell or a solicitation of an offer to buy securities where an offer or solicitation would be unlawful. Neither the delivery of this prospectus, nor any sale made under this prospectus, means that the information contained in this prospectus is correct as of any time after the date of this prospectus. Large and Diverse Customer Base Across Several Markets and Industries Our products are in demand in a broad range of markets and industries. We believe this insulates us from any concentration risk or dependence on a certain industry. A downturn in one industry may be made up for by increased demand in another industry which purchases our products. We sell our products to various industries, including, the appliance, manufacturing, telecommunications, food packaging industries. Our Cost Structure is Lower than the Average Cost Structure of our Competitors Our location, method of manufacture and our transportation costs allow us to maintain a cost structure that is lower than the average cost structure of our competitors. All of our manufacturing equipment is made in China with close collaboration with the equipment supplier which allows us to manufacture our products at a low cost. In addition, we are located in Zhengzhou, Henan Province, China which has one of the largest bauxite ore reserves in China, allowing us to transport products and supplies cost efficiently. We transport materials and products directly from the production facilities of a nearby company which allows us to limit our transportation costs. Proven Track Record of Growth We have had very strong annual growth of 158.8% through our first two years of operation and production of aluminum foil. We have a strategic plan which we believe will allow us to continue this growth by expanding our production capacity and introducing higher margin products. Superior Technology and a Highly Efficient Manufacturing Process We have superior technology due to a license agreement which allows us to license 9 patents from an affiliate of ours. We have developed a highly efficient manufacturing process through close collaboration with our equipment supplier pursuant to which we have been able to lower our costs and improve our yields. An Experienced and Dedicated Management Team Our management team members have an average of greater than 20 years of experience in the aluminum industry, and our management team has more than 100 years of experience in the aluminum industry. Growth Strategy: We intend to pursue the following strategies to achieve our goal: Continue to Increase Our Production Capacity We will continue to expand into new production lines and increase our production capacity of ultra-thin aluminum foil which is used in pharmaceutical and electronic industries. We have leased a 1600mm cold-rolling production line, which is being implemented into our production process in phases. We expect this will increase capacity by approximately 15,000 metric tons, or 75% more than our 2010 capacity, by the end of 2011, when the 1600mm cold-rolling production line is scheduled to be operating at full capacity. Further Increase our Market Share and Economies of Scale We will expand our market share and customer base by expanding and improving our product quality and lowering production and sales cost which will allow us to increasingly capitalize on economies of scale. As filed with the Securities and Exchange Commission on October 12 , 2011 Registration No. 333-172944 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 AMENDMENT NO. 3 TO FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 China Aluminum Foil, Inc. (Exact name of registrant as specified in its charter) Nevada 000-3350 27-1805188 (State or other jurisdiction of incorporation or organization) (Primary Standard Industrial Classification Code Number) (I.R.S. Employer Identification No.) Building No. 35, No. 1 Cui Zhu Street, High-tech Development Area, Zhengzhou City, Henan Province, China (86) 371-67539696 (Address, including zip code, and telephone number, including area code, of registrant s principal executive offices) CSC Services of Nevada, Inc. 2215 B. Renaissance Drive Las Vegas, NV 89119 (800)927-9800 (Name, address, including zip code, and telephone number, including area code, of agent for service) It is respectfully requested that the Securities and Exchange Commission send copies of all notices, orders and communications to: William N. Haddad Reed Smith LLP 599 Lexington Avenue New York, NY 10022 Approximate date of commencement of proposed sale to public: as soon as practicable after this Registration Statement is declared effective. If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. x If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier registration statement for the same offering. o Introduce New Products with Higher Margins We plan to begin production of aluminum foil products used in pharmaceutical packaging and electronic components since such products have much higher margins and offer significant growth opportunities. Expand our Product Offerings in Emerging Markets We intend to increase revenues by exporting our products to emerging markets including but not limited to Southeast Asia, Africa and Latin America. Continue to Enhance Manufacturing Efficiencies We will focus our research and development on advanced processing techniques to develop more sophisticated products that command higher margins, and we will continue to improve margins through increased efficiencies in our production process. Our Corporate Information We were incorporated in the State of Nevada on January 29, 2010 as AJ Acquisition V, Inc. Since inception we have been engaged in organizational efforts and obtaining initial financing. Our business purpose was to seek the acquisition of or merger with, an existing company. On November 8, 2010 we filed an amendment to our articles of incorporation to change our name to China Aluminum Foil, Inc., and on November 8, 2010 we entered into, and closed, a share exchange agreement with Lucky Express, now our wholly owned subsidiary. Our principal offices are located at Building No.35, No.1 Cui Zhu Street, High-tech Development Area, Zhengzhou City, Henan Province, China. Our telephone number is (86) 371-67539696. Our fiscal year end is June 30. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier registration statement for the same offering. o Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer o Accelerated filer o Non-accelerated filer o Smaller reporting company x (Do not check if a smaller reporting company) CALCULATION OF REGISTRATION FEE Title of Each Class of Securities to be Registered Amount to be Registered Proposed Maximum Offering Price per Security(1) Proposed Maximum Aggregate Offering Price(1) Amount of Registration Fee Common Stock 3,333,002 Shares $ 2.00 $ 6,665,946 $ 773.92 Total $ 6,665,946 $ 773.92 (1) Estimated solely for the purpose of calculating the registration fee. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to Section 8(a), may determine.
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001483496_red_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001483496_red_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001483496_red_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001483510_exp-oldco_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001483510_exp-oldco_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001483510_exp-oldco_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001484042_weikang_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001484042_weikang_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..6230b949e61e5e820228f5f346baee5050d4dd0c
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001484042_weikang_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY The following summary highlights selected information contained in this prospectus. This summary does not contain all the information you should consider before investing in the securities. Before making an investment decision, you should read the entire prospectus carefully, including the "
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001484427_telx_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001484427_telx_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..377fcb9ac2a3bf82754fe6c93b940a1f4f1776c5
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+PROSPECTUS SUMMARY This summary highlights certain information contained elsewhere in this prospectus. This summary does not contain all of the information you should consider before investing in our common stock. You should carefully read the entire prospectus, including the section entitled Risk Factors and our financial statements and related notes, before you decide whether to invest in our common stock. If you invest in our common stock, you are assuming a high degree of risk. See the section entitled Risk Factors. References to we, our, our company, us, the company, Telx or The Telx Group, Inc. refer to The Telx Group, Inc. and its consolidated subsidiaries. References to GI Partners Funds refer to GI Partners Fund II, L.P. and GI Partners Side Fund II, L.P., collectively and references to GI Partners refer to the entities that control or manage the GI Partners Funds. Unless otherwise indicated, industry data are derived from publicly available sources, which we have not independently verified. Business Overview Telx is a leading provider of network neutral, global interconnection and colocation solutions in the United States. Our interconnection and colocation offerings enable customers to seamlessly connect to hundreds of diverse communications networks and other enterprises. Additionally, we provide a secure and reliable environment to house customers mission-critical equipment and time sensitive data. We believe that our 15 facilities, located in nine tier-1 markets, are some of the most strategically positioned datacenters in the United States. These facilities are located at the primary intersections of multiple, major international and domestic fiber routes where we believe Internet and private network traffic is most concentrated and interconnection demand is highest. We believe that our average of 37 physical interconnections per customer as of March 31, 2011 gives us greater physical interconnection density than our competitors. Over the last three years, we have grown our revenues from $50.8 million in 2007 to $130.2 million in 2010, representing a compound annual growth rate of 37%, and our net losses have decreased from $36.4 million to $0.3 million over the same period. For the three months ended March 31, 2011, we had revenues of $37.8 million and a net loss of $4.8 million. As a network neutral provider, we are an unbiased intermediary that provides the necessary interconnection products and related services that facilitate the exchange of communications network traffic between our customers. Customers within a Telx facility are able to connect to any other customer within the facility, including up to 300 service providers, depending on the facility. These interconnections effectively allow a customer to replace their existing and more expensive network alternatives. Through these interconnections, our facilities host diverse and densely populated ecosystems of communications service providers, enterprises, online media, video and content providers, and other entities. We view an ecosystem as a set of related businesses and organizations that use our facilities to exchange information with each other. For example, a financial ecosystem can consist of financial exchanges, financial clients and information exchanges that exchange large volumes of real-time financial market data. Our customers benefit from greater choice of networks, reduced network costs, improved capital budget efficiency, improved performance and access to revenue opportunities with accelerated time to market. Table of Contents The information in this preliminary prospectus is not complete and may be changed. We and the selling stockholders may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED JUNE 7, 2011 Shares Common Stock This is the initial public offering of shares of common stock of The Telx Group, Inc. We are selling shares of our common stock and the selling stockholders are selling shares of our common stock. We will not receive any of the proceeds from the shares of common stock sold by the selling stockholders. Prior to this offering, there has been no public market for our common stock. The initial public offering price of our common stock is expected to be between $ and $ per share. We have applied to list our common stock on The Nasdaq Global Market under the symbol TELX. See the section entitled Risk Factors beginning on page 10 to read about factors you should consider before buying shares of our common stock. Per Share Total Initial public offering price Underwriting discounts and commissions Proceeds, before expenses, to the company Proceeds, before expenses, to the selling stockholders The underwriters have an option to purchase a maximum of additional shares of our common stock from us and/or the selling stockholders at the initial public offering price less the underwriting discounts and commissions. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The underwriters expect to deliver the shares against payment in New York, New York on , 2011. Goldman, Sachs & Co. Deutsche Bank Securities RBC Capital Markets Oppenheimer & Co. Piper Jaffray SunTrust Robinson Humphrey The date of this prospectus is , 2011. Table of Contents With 914 customers and 34,083 total physical interconnections within our facilities as of March 31, 2011, our interconnection-centric model targets customers that value the interconnection density in our secure and reliable environments. The table below is a representative list of those customers: Communications Service Providers Enterprises/Institutions Online Media, Video and Content Providers Government / Cloud / SaaS / Other AT&T Clearwire Cogent Equinix Level 3 Communications Qwest Reliance Globalcom Sprint Tata Telecom Telecom Italia Verizon ACTIV Financial Systems Emory University Hewlett Packard International Securities Exchange (ISE) University of Florida CBS Justin TV JahJah Viacom Yahoo! iland Internet Solutions NASA (via Arcata Associates) DediPower Managed Hosting SoftLayer Technologies We evaluate market leadership based on publicly available information for physical interconnections per customer and our experience in the industry. Based on this framework, we believe that our average of 37 physical interconnections per customer as of March 31, 2011 makes us a leading network neutral, global interconnection and colocation solutions provider in the United States. We believe that the interconnection density within our facilities can create a network effect that increases the value proposition of our products and related services. Because each additional customer added to a facility can connect to all of the other customers already in that facility, with the addition of each new customer, the potential number of interconnections in our facilities increases. We believe that this enhances our ability to both retain existing customers and attract new customers. Our 15 interconnection and colocation facilities are located in the New York Metropolitan area, the San Francisco Bay area, Los Angeles, Dallas, Chicago, Atlanta, Phoenix, Charlotte and Miami. The global Internet datacenter market is estimated to grow at a compound annual growth rate of approximately 19% from $13.2 billion in 2010 to $22.4 billion in 2013 according to Tier1 Research s Multi-Tenant Datacenter Global Markets Overview 2011 report. Increasing demand for our network neutral interconnection and colocation products and related services is being driven by powerful trends, including favorable datacenter supply and demand dynamics, continued growth in Internet traffic, increasing enterprise adoption of datacenter outsourcing and network based applications, continued adoption of Ethernet technologies, continued growth of Internet video, emerging computing technologies such as cloud computing, increasing demand for proximity hosting and low latency (or low time delay) networking, and increasing datacenter power and cooling requirements. Our business is characterized by significant monthly recurring revenue, low churn (or loss of revenue), and a predictable cost structure. We generate revenue by charging our customers a recurring monthly fee for our interconnection and colocation products and related services, a one-time fee for the installation of related colocation and interconnection products, and an hourly or a subscription fee for technical support services. The combination of our recurring revenues, representing approximately 96% of our total revenue for the three months ended March 31, 2011, and our low churn provides us significant visibility into our revenue generating capabilities for the coming years. We believe our high interconnection density demonstrates an interconnection-centric business model that differentiates us from our competition. It improves our ability to maximize revenues and profitability relative to other predominately colocation-centric providers that do not have a similar level of interconnection density within a comparable physical footprint. Additionally, our interconnection-centric model improves our profitability and capital efficiency because we can add a significant number of interconnections between existing customers within our facilities without leasing additional space or incurring significant additional costs. Table of Contents Exhibit Number Title 10.20 **+ First Amendment to Master Meet-Me-Room Lease between telx Dallas, LLC and Digital Bryan Street Partnership, L.P., dated June 29, 2007 10.21 **+ Second Amendment to Master Meet-Me-Room Lease between telx Dallas, LLC and Digital Bryan Street Partnership, L.P., dated August 3, 2007 10.22 **+ Third Amendment to Master Meet-Me-Room Lease between telx Dallas, LLC and Digital Bryan Street Partnership, L.P. dated March 31, 2008 10.23 ** Amended and Restated Loan Agreement, dated August 10, 2007, between Colo Properties Atlanta, LLC and UBS Real Estate Securities Inc. 10.24 ** First Amendment to Amended and Restated Loan Agreement, dated December 19, 2007, between Colo Properties Atlanta, LLC and UBS Real Estate Securities Inc. 10.25 ** Amended and Restated Mezzanine A Loan Agreement, dated August 10, 2007, between CP Atlanta, LLC and UBS Real Estate Securities Inc. 10.26 ** First Amendment to Amended and Restated Mezzanine A Loan Agreement, dated December 19, 2007, between CP Atlanta, LLC and UBS Real Estate Securities Inc. 10.27 ** Mezzanine B Loan Agreement, dated August 10, 2007, between CP Atlanta II, LLC and UBS Real Estate Securities Inc. 10.28 ** Loan Extension Agreement, dated March 9, 2009, between Colo Properties Atlanta, LLC and Wells Fargo Bank, N.A., as Trustee 10.29 ** Amended and Restated Loan and Security Agreement, dated March 31, 2009, among Telx New York 111 8th, telx New York, LLC, telx New York Management, LLC and telx New York Holdings, LLC, as the Borrowers, the institutions party thereto from time to time as Lenders, Royal Bank of Canada, as the Syndicating Agent and CIT Lending Services Corporation, as the Agent 10.30 ** First Amendment to Amended and Restated Loan and Security Agreement, dated June 11, 2009, among Telx New York 111 8th, telx New York, LLC, telx New York Management, LLC and telx New York Holdings, LLC, as the Borrowers, the institutions party thereto from time to time as Lenders, Royal Bank of Canada, as the Syndicating Agent and CIT Lending Services Corporation, as the Agent 10.31 ** Second Amendment to Amended and Restated Loan and Security Agreement, dated September 1, 2009, among Telx New York 111 8th, telx New York, LLC, telx New York Management, LLC and telx New York Holdings, LLC, as the Borrowers, the institutions party thereto from time to time as Lenders, Royal Bank of Canada, as the Syndicating Agent and CIT Lending Services Corporation, as the Agent 10.32 ** Third Amendment to Amended and Restated Loan and Security Agreement, dated October 9, 2009, among Telx New York 111 8th, telx New York, LLC, telx New York Management, LLC and telx New York Holdings, LLC, as the Borrowers, the institutions party thereto from time to time as Lenders, Royal Bank of Canada, as the Syndicating Agent and CIT Lending Services Corporation, as the Agent 10.33 ** Employment Agreement, dated January 1, 2011, between The Telx Group, Inc. and Eric Shepcaro 10.34 ** Employment Agreement, dated January 1, 2011, between The Telx Group, Inc. and Christopher W. Downie 10.35 ** Employment Agreement, dated September 20, 2006, between The Telx Group, Inc. and J. Todd Raymond 10.36 ** Employment Agreement, dated January 1, 2011, between The Telx Group, Inc. and William Kolman 10.37 ** Employment Agreement, dated January 1, 2011, between The Telx Group, Inc. and Michael Terlizzi Table of Contents Table of Contents Our revenue growth since 2007 is primarily the result of organic growth, consisting of increasing amounts of our products and related services provided to existing and new customers. From December 31, 2007 to December 31, 2010, we grew our customer base from 495 to 884 customers representing a 21% compound annual growth rate and our total physical interconnections increased from 19,692 to 32,882 representing a 19% compound annual growth rate. Over the same period, to meet our customers increasing demand for our products and related services, we expanded our facility footprint from 370,543 gross square feet to 604,368 gross square feet representing a compound annual growth rate of 18%. At March 31, 2011, our customer base had increased to 914, total physical interconnections had increased to 34,083 and our facility footprint had increased to 626,105 square feet. The growth in our facility footprint was accomplished through the addition of three new facilities and the expansion of our existing space within our other facilities. We believe that our existing customer base, products and services will continue to grow, which will enhance the ecosystems within our facilities and in turn support our ability to attract new customers. Our Competitive Strengths Customers typically use our products and related services because we provide them with a level of interconnection access, quality of service, reliability and flexibility that is difficult to replicate independently or with another interconnection and colocation provider. We believe that our key competitive strengths, which are described below, position us well to take advantage of the favorable trends in our industry. Strategically Focused Footprint. Our 15 facilities in nine tier-1 markets across the United States are located at the primary intersections of multiple, major international and domestic fiber routes where we believe Internet and private network traffic is most concentrated and interconnection demand is highest. Industry Leader in Physical Interconnections. As of March 31, 2011, we facilitated a total of 34,083 physical interconnections between our customers, which represent an average of 37 physical interconnections per customer. This allows our customers to achieve the seamless exchange of information across hundreds of communications service providers, enterprises, online media, video and content providers, government agencies, cloud computing providers and Software as a Service (SaaS) providers. We believe that our average of 37 physical interconnections per customer as of March 31, 2011, represents greater physical interconnection density than our peers in the United States. Network Neutral Business Model. We do not own or operate our own network. The ecosystems in our facilities provide our customers with the flexibility to optimize their connection partners based on their individual application and connectivity requirements. We believe this optionality provides for increased operational efficiency and reduced cost for the customer. High Barriers to Entry. We believe our interconnection-centric model has high barriers to entry primarily resulting from the difficulty in replicating the ecosystems that exist within our facilities and the resulting network effect that exists among our customers. Significant time and resources are required to develop these ecosystems. In addition, we believe that the buildings in which we operate are already the primary landing points and crossroads for global fiber networks and the ability to replicate this network proximity would be difficult and cost prohibitive. While significant barriers to entry exist, we believe that our experience, relationships with a critical mass of communities of interest and leading communications service providers, reputable brand, associated track record and proven business model enable us to pursue expansion opportunities more effectively than potential competitors. Exclusive Operator of Interconnection Areas within 10 Digital Realty Trust Wholesale Datacenter Buildings. Our relationship with Digital Realty Trust, Inc., or Digital Realty Trust, one of the leading datacenter real estate investment trusts, generally provides us with the exclusive ability to operate the interconnection areas in 10 tier-1 wholesale datacenter buildings across the United States. Table of Contents Exhibit Number Title 10.38** The Telx Group, Inc. 2007 Employee Stock Plan 10.39** Form of Incentive Stock Option Agreement under the 2007 Employee Stock Plan 10.40** Form of Non-Qualified Stock Option Agreement under the 2007 Employee Stock Plan 10.41** The Telx Group, Inc. 2010 Stock Incentive Plan 10.42.a** Form of Stock Option Award Agreement under the 2010 Stock Incentive Plan 10.42.b** Form of Stock Option Award Agreement under the 2010 Stock Incentive Plan 10.43.a** Form of Restricted Stock Unit Award Agreement under the 2010 Stock Incentive Plan 10.43.b** Form of Restricted Stock Unit Award Agreement under the 2010 Stock Incentive Plan 10.44** Non-Employee Director Compensation Policy (as amended) 10.45** Loan Cancellation and Release Agreement, dated as of March 2, 2010, by and between The Telx Group, Inc. and J. Todd Raymond 10.46** Loan Cancellation and Release Agreement, dated as of March 2, 2010, by and between The Telx Group, Inc. and Michael Terlizzi 10.47** Loan Cancellation and Release Agreement, dated as of March 2, 2010, by and between The Telx Group, Inc. and Christopher Downie 10.48** Loan Cancellation and Release Agreement, dated as of March 2, 2010, by and between The Telx Group, Inc. and William Kolman 10.49** Loan Cancellation and Release Agreement, dated as of March 2, 2010, by and between The Telx Group, Inc. and Eric Shepcaro 10.50**+ Third Amendment of Lease between Telx New York 111 8th, LLC and 111 Chelsea Commerce LP, dated March 1, 2010 10.51** Fourth Amendment of Lease between Telx New York 111 8th, LLC and 111 Chelsea Commerce LP, dated March 1, 2010 10.52** Credit and Guarantee Agreement, dated as of June 17, 2010, by and among The Telx Group, Inc., as Borrower, certain of its subsidiaries, as Subsidiary Guarantors, Goldman Sachs Lending Partners LLC, as Administrative Agent and Collateral Agent, Goldman Sachs Lending Partners LLC and Deutsche Bank Securities Inc., as Arrangers, Goldman Sachs Lending Partners LLC, Deutsche Bank Securities Inc., RBC Capital Markets Corporation and Suntrust Robinson Humphrey, Inc., as Joint Bookrunners and Syndication Agents, and ING Capital, LLC as Documentation Agent 10.53** Pledge and Security Agreement, dated as of June 17, 2010, by and among the grantors party thereto and Goldman Sachs Lending Partners LLC, as Collateral Agent 10.54** Employment Agreement, dated August 23, 2010, between The Telx Group, Inc. and Clayton Mynard 10.55** Employment Agreement, dated March 1, 2010, between The Telx Group, Inc. and Bradley Hokamp 10.56**+ Colocation Agreement, dated as of September 27, 2010, between Digital Chelsea, LLC and Telx New York 111 8th, LLC 10.57** Incentive Agreement, dated March 15, 2011, between The Telx Group, Inc. and Eric Shepcaro 10.58** Incentive Agreement, dated March 15, 2011, between The Telx Group, Inc. and Christopher Downie 10.59** Incentive Agreement, dated March 16, 2011, between The Telx Group, Inc. and Michael Terlizzi 10.60** Incentive Agreement, dated March 16, 2011, between The Telx Group, Inc. and William Kolman 10.61** Amendment, Waiver and Incremental Term Loan Agreement, dated as of March 18, 2011, by and among The Telx Group, Inc., Goldman Sachs Lending Partners LLC, as Administrative Agent and Collateral Agent, and the lenders party thereto 10.62**+ Master Datacenter Lease between Digital Bryan Street Partnership, L.P. and telx Dallas, LLC, dated March 31, 2011 Table of Contents TABLE OF CONTENTS Page Prospectus Summary 1
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+Prospectus summary This summary highlights information contained elsewhere in this prospectus and does not contain all of the information you should consider in making your investment decision. You should read this summary together with the more detailed information, including our financial statements and the related notes, appearing elsewhere in this prospectus. In particular, you should carefully consider the matters discussed in Risk factors before making an investment decision. We are a development stage company with a history of losses. We have generated minimal revenues and have had limited sales. OVERVIEW We are an industrial biotechnology company focused on becoming a low-cost producer of biobased chemicals. We have designed a process that uses proprietary microorganisms, which we call biocatalysts, to convert a variety of sugars into chemical precursors, called intermediates. We plan to sell those biobased intermediates into the large and growing petrochemicals industry. Petrochemical companies manufacture and sell a broad range of chemicals used to make thousands of industrial and consumer products. Historically, these chemicals have been sourced from oil, natural gas and coal. These sources, or feedstocks, are extremely rich in carbon-based molecules, called organic molecules. Organic molecules will readily react with other organic or inorganic chemicals, and by controlling these reactions, industrial chemists can convert organic intermediates into thousands of different chemicals with specific properties tailored to commercial applications. In recent years, however, the petrochemicals industry has become increasingly challenged by a variety of factors, including the rising and volatile prices of fossil-fuels, increasing regulation of the sourcing and processing of fossil fuel based feedstock and concerns over depleting supplies of fossil fuels. One solution to these challenges is to use industrial sugars to produce biobased chemicals. We have developed a proprietary technology platform that we believe will enable us to manufacture biobased chemical intermediates to replace petroleum-based chemicals in the same applications using a broad range of renewable feedstocks, rather than petroleum-based feedstocks. Through a process known as directed evolution, we adapt microorganisms to convert sugars into organic chemical intermediates with greater productivity and yield compared to other known bioproduction processes. We believe that we can produce our target chemical intermediates at an average of half the cost of traditional petrochemical intermediates at a wide range of oil and industrial sugar prices without relying on government subsidies. We are using our technology to produce, at competitive costs, biobased chemical intermediates using commercial-scale unit operations and multiple feedstocks. Our technology combines proprietary microorganisms, or biocatalysts, and a fermentation process capable of using a variety of renewable feedstocks to create biobased chemical intermediates. We have successfully produced several of these intermediates at laboratory and pilot scale and have commercialized our first product, lactic acid, through a licensee. We are preparing to commercialize our second product, succinic acid. We refer to succinic acid produced using our bioproduction processes as biosuccinic acid. Our biosuccinic acid is chemically identical to succinic acid produced from petrochemicals. We plan to market our biobased chemical intermediates for use in chemical reaction processes requiring the same or similar intermediates as an input. We refer to this as a drop in product. We also plan to market our products to replace different chemicals in various manufacturing processes. Replacing a different chemical input is possible by adjusting the chemical reaction process and either ending up with a functionally similar or the same end product. We believe that our market opportunities include biosuccinic acid (a $7.5 billion market at current market prices), fumaric acid (a $1.7 billion market at current market prices), acrylic acid (a $14.5 billion market at current market prices) and lactic acid (forecast to eventually become a multi-billion pound market). We believe that our technology can efficiently produce biobased chemicals at high yields while consuming less feedstock by using an anaerobic process (that is, a reaction process that does not require oxygen) that consumes, rather than produces, carbon dioxide, resulting in a reduced carbon footprint and higher yield of the target product. Based on current commercial-scale costs and using 95 Dextrose, a widely Table of Contents Conventions that apply to this prospectus Unless the context otherwise requires, in this prospectus: the company, we, us and our refer to Myriant Corporation and its subsidiaries, or its predecessor prior to July 16, 2009, as the context requires. CBOT refers to the Chicago Board of Trade. EIA refers to the U.S. Energy Information Association. USDA refers to U.S. Department of Agriculture. DOE refers to U.S. Department of Energy. Certain market data presented in this prospectus have been derived from the most recent available data published by government agencies and commodities exchanges, as well as private sector organizations. These agencies, exchanges and organizations include those listed above as well as leading chemical industry consulting firms. Certain target market size information presented in this prospectus has been calculated by us (as further described below) based on such data. Unless otherwise indicated, market data included in this prospectus were derived as discussed below. None of these entities has endorsed or otherwise passed upon the computations, accuracy or presentations of data calculated on the basis of data published by these entities. In addition, you should read our cautionary statement in the section entitled Special note regarding forward-looking statements. With respect to our calculation of product market volumes and market sizes contained in this prospectus: product market volumes are provided solely to show the magnitude of the potential markets for biobased chemical intermediates and the products derived from them. They are not intended to be projections of our biochemical production volumes or sales; target market sizes are calculated based on estimated product market volumes consumed within the petrochemicals industry multiplied by current market prices; and volume data with respect to target market sizes are derived from data included in various industry publications, surveys and forecasts. We have converted these sizes into volumes of biochemical equivalent as follows: we calculate the size of the biochemicals markets by substituting volumes of biochemical equivalent to the volume of products currently used to serve these markets; and for consistency in measurement, where necessary, we convert market sizes into pounds. Table of Contents available industrial sugar, as a feedstock, we estimate that the production process for our biosuccinic acid, will be cost-competitive with petroleum-based processes down to $45 per barrel of oil. Furthermore, our biocatalysts can consume sugars from a variety of sources, including glucose from corn and grain sorghum, sucrose from sugarcane, cellulosic feedstocks from waste biomass, and glycerol. Cellulosic feedstocks are non-food based feedstocks derived from agricultural, forestry and other types of organic wastes. In terms of their chemical composition, cellulosic feedstocks are a mixture of polymers, or chains, of sugars with five or six carbon atoms per sugar molecule. Xylose is an example of a five-carbon sugar. Glucose is an example of a six-carbon sugar. Our biocatalysts can consume both five-carbon sugars and six-carbon sugars derived from cellulosic feedstocks, which we believe will lower the cost of feedstocks when they become more widely available. This is because cellulosic feedstocks tend to be much cheaper than food-based feedstocks, resulting in lower overall product manufacturing cost. We plan to use the lowest cost regional feedstocks or a combination of low-cost feedstocks in our manufacturing plants. We have entered into or intend to enter into strategic relationships with international companies to accelerate the global commercialization of our products and development of our biochemical production capabilities. For example, we have signed a non-binding memorandum of understanding to enter into a joint development agreement with Johnson Matthey PLC s subsidiary, Davy Process Technology Limited, or Davy, a developer and licensor of advanced process technologies used to produce petrochemicals. Under that agreement, upon successful completion of testing and engineering using our biosuccinic acid, Davy would guarantee the use of our biosuccinic acid in plants using the Davy process to manufacture butanediol, a widely used petrochemical. Davy believes that its butanediol process accounts for approximately 1.2 billion pounds or 27% of total global capacity, and 50% of plant capacity installed since 1992. We have also signed exclusive alliance agreements with ThyssenKrupp s subsidiary Uhde GmbH, or Uhde, a chemical plant engineering company, and its U.S. subsidiary, under which Uhde will integrate our fermentation and its separation technology in biochemical manufacturing plants and guarantee the performance of those plants to facilitate access to project finance. In addition, through PTT Chemical International Private Limited, or CH Inter, a subsidiary of PTT Chemical Public Company Limited, or PTTCH, a Thailand-based petrochemical producer, we can access a breadth of commercial and technical expertise and extensive knowledge and infrastructure in Asian markets. In January 2006, we granted Purac Biochem BV, or Purac, a wholly-owned subsidiary of CSM N.V., an exclusive, worldwide and royalty-bearing license to use our technology to produce, market and sell D( ) lactic acid, as well as its derivatives and by-products. Purac has been using our technology to produce D( ) lactic acid at commercial scale since 2008. We are currently building a 30 million pound biosuccinic acid plant in Lake Providence, Louisiana, or the Louisiana Plant, which we expect will begin commercial operations during the first quarter of 2013. We are funding the construction of the Louisiana Plant in part with a $50 million cost-sharing award from the U.S. Department of Energy, or the DOE. We intend to expand the annual production capacity of this plant to approximately 170 million pounds by the end of the first quarter of 2014. We are also negotiating a letter of intent with Uhde for an industrial biochemical facility for the production of biosuccinic acid at the Infraleuna Chemical Site in Leuna, Germany. The plant, which we expect would commence operations in the first half of 2012, would utilize our technologies to produce biosuccinic acid and ammonium sulfate in accordance with our product specifications. The plant would be owned and operated by Uhde and we would purchase the biosuccinic acid and ammonium sulfate produced by Uhde in accordance with our specifications. We have also signed a memorandum of understanding with China National BlueStar (Group) Co. Ltd., or BlueStar, to develop a proposal for a jointly-owned 220 million pound biosuccinic acid plant in Nanjing, China, the biosuccinic acid requirements of which would be exclusively supplied by the Company. BlueStar is currently producing BDO utilizing a process licensed from Davy. We have already produced 24 metric tons of biosuccinic acid in support of internal and customer/vendor sampling and testing programs. We scaled up these quantities from an initial fermentation vessel size of five liters to 50,000 liters from January 2008 to February 2011 at various locations. The commercial scale-up of the Louisiana Plant represents a two-fold scale-up of the fermentation already commercialized by Purac in the production of our biobased D( ) lactic acid. We have contracts committing customers to buy 100% of their You should rely only on the information contained in this prospectus. We and the underwriters have not authorized anyone to provide you with information different from that contained in this prospectus. We are offering to sell, and seeking offers to buy, shares of common stock only in jurisdictions where offers and sales are permitted. The information contained in this prospectus is accurate only as of the date on the front cover of this prospectus, or such other dates as are stated in this prospectus, regardless of the time of delivery of this prospectus or of any sale of our common stock. TABLE OF CONTENTS Page CONVENTIONS THAT APPLY TO THIS PROSPECTUS ii PROSPECTUS SUMMARY 1
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+Prospectus Summary 1 Risk Factors 12 Special Note Regarding Forward-Looking Statements and Other Information 28 Use of Proceeds 30 Dividend Policy 31 Capitalization 32 Dilution 33 Exchange Rate Information 34 Enforceability of Civil Liabilities 35 Selected Historical Consolidated Financial Data 36 Management s Discussion and Analysis of Financial Condition and Results of Operations 38 Corporate Structure and Organization 58 Business 63 PRC Government Regulations 79 Management 82 Beneficial Ownership 88 Certain Relationships and Related Party Transactions 89 Description of Share Capital 91 Shares Eligible for Future Sale 98 Taxation 99 Underwriting 104 Other Expenses of Issuance and Distribution 112 Legal Matters 113 Experts 114 Where You Can Find Additional Information 115 Index to Consolidated Financial Statements F-1 __________________________ You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with any information or to make any representations about us, the securities being offered pursuant to this prospectus or any other matter discussed in this prospectus, other than the information and representations contained in this prospectus. If any other information or representation is given or made, such information or representation may not be relied upon as having been authorized by us. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of our ordinary shares. Neither the delivery of this prospectus nor any distribution of securities in accordance with this prospectus shall, under any circumstances, imply that there has been no change in our affairs since the date of this prospectus. This prospectus will be updated and made available for delivery to the extent required by the federal securities laws. PROSPECTUS SUMMARY This summary highlights information contained in other parts of this prospectus. Because it is a summary, it does not contain all of the information that you should consider before investing in our ordinary shares. You should carefully read the entire prospectus and the registration statement of which this prospectus forms a part in their entirety, including the section captioned Risk Factors and the more detailed information in our consolidated financial statements and related notes appearing elsewhere in this prospectus, beginning on page F-1. Overview We are a fine jewelry retailer headquartered in Taiyuan City, Shanxi Province, PRC. We believe that we are the leading fine jewelry retailer in Shanxi Province, China, as measured by sales volume, as our sales volume was ranked number one in Shanxi Province in 2008 and 2009 by the Shanxi Jewelry and Gems Trade Association. We also believe that our CC brand is one of the leading fine jewelry brands in Shanxi Province, China, as measured by name recognition, as our CC brand was named a famous brand in the China jewelry industry by the Gems and Jewelry Trade Association of China in each of the last three years. As of October 31, 2010, we operated an aggregate of 56 fine jewelry stores and counters, which we refer to, collectively, as boutiques, and two clothing boutiques, located throughout the PRC, including several major cities in the PRC. Specifically, we operated the following boutiques as of October 31, 2010: twenty-four jewelry boutiques for our own CC brand; twenty-two jewelry boutiques for our own FENIX brand; nine jewelry boutiques for the Chow Tai Fook brand; one jewelry boutique for the Chaumet brand; and two clothing boutiques for the Calvin Klein brand. Currently, the majority of our boutiques are located in northern China. The remaining boutiques are located in other regions in China. We intend to expand our industry position in the fine jewelry market in China by strengthening our presence in northern China and continuing to expand from northern China into other regions in China. As a fine jeweler, most of our jewelry is constructed of gold, 18 karat gold or platinum, many of which hold precious gemstones such as diamonds, jade and emerald. We place a significant emphasis on quality craftsmanship and novel, distinctive designs. We employ six full-time designers who are responsible for designing approximately 15% of our CC and FENIX jewelry products in the aggregate. The remaining 85% are designed by diamond, gold, platinum and precious stone jewelry manufacturers. These designs are made exclusively for us, although some of the manufacturers own the intellectual property rights to these outsourced designs. All of our products are manufactured by third party suppliers. Our Growth Strategy Our goal is to become one of the dominant fine jewelry retailers in China. The principal components of the business strategy we implemented to attempt to attain our goal include the following: expanding the coverage of our retail network; enhancing brand awareness; and CONVENTIONS USED IN THIS PROSPECTUS Unless otherwise indicated or the context clearly implies otherwise, references to we, us, our, the Company and CC Jewelry refer to CC Jewelry Co., Ltd., formerly known as Super Champ Group Limited, or Super Champ, a company organized in the British Virgin Islands, and its subsidiaries, subsequent to the business combination referred to below. The business combination refers to the share exchange between Super Champ and the shareholders of Square C Commerce Company Ltd., or Square C, resulting in the acquisition of all of the outstanding securities of Square C by Super Champ, which was consummated on September 10, 2010. In addition, unless the context otherwise requires, in this prospectus: shares or ordinary shares refers to our ordinary shares, par value $0.01 per share; China or PRC refers to the People s Republic of China, excluding the Hong Kong Special Administrative Region, the Macau Special Administrative Region and Taiwan; RMB or Renminbi refers to Renminbi yuan, the legal currency of China; and $ , US$ or U.S. dollars refers to the legal currency of the United States. For convenience, certain amounts in Renminbi have been converted to U.S. dollars at an exchange rate in effect at the date of the related financial statements or the related event. Assets and liabilities are translated at the exchange rate as of the balance sheet date. Income and expenditures are translated at the average exchange rate of the relevant period. distributing additional high-end fine jewelry brands. Competitive Advantages Our management believes that the following competitive strengths differentiate us from our competitors, and our management believes that these strengths are the key factors to our success: We are taking advantage of industry trends. We believe that we are a leading fine jewelry retailer in northern China and we intend to continue to expand. We have rigorous quality control standards. We have an experienced management team. We believe that our jewelry has achieved brand recognition in large part because of our emphasis on quality craftsmanship and novel, distinctive designs. We have a sales channel advantage. Our Risks and Challenges We believe that the following are the most significant risks and uncertainties that may materially adversely affect our business, financial condition, results of operations and prospects: Our operations are cash intensive, and our business could be adversely affected if we fail to maintain sufficient levels of liquidity and working capital. Restrictions on our use of funds provided by Chinese banks or our inability to pay off our short-term loans upon maturity could harm our business. Our ability to maintain or increase our revenue could be harmed if we are unable to strengthen and maintain our brand image. Because our sales and profitability fluctuate on a seasonal basis, our results of operations may fluctuate from quarter to quarter, and the failure to generate revenue during holiday or festival seasons could have a material adverse effect on our business and profitability. Our retail expansion strategy depends on our ability to open and operate new counters and stores each year, which could strain our resources and cause the performance of our existing operations to suffer. A significant portion of our revenue is dependent on sales made in our boutiques in the Hua Yu department store, and a substantial reduction of sales at this location could significantly impact our operating results. We are subject to risks and uncertainties such as labor disputes, inclement weather, natural disasters, and general economic and political conditions that might affect our ability to procure high quality merchandise. Our inability to manage our growth may have a material adverse effect on our business, results of operations and financial condition. UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 __________________________ Amendment No. 1 to FORM F-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 __________________________ CC JEWELRY CO., LTD. (Exact name of Registrant as specified in its charter) British Virgin Islands 3911 Not Applicable (State or other jurisdiction of incorporation or organization) (Primary standard industrial classification code number) (I.R.S. Employer Identification Number) 186 Pingyang Road 6th Floor, Taiyuan City, Shanxi, 030006 People s Republic of China +0351-5602855 (Address, including zip code, and telephone number, including area code, of Registrant s principal executive offices) CT Corporation System 111 Eighth Avenue New York, New York 10011 (212) 894-8940 (Name, address, including zip code, and telephone number, including area code, of agent for service) Christopher S. Auguste Bill Huo Ari Edelman Kramer Levin Naftalis & Frankel LLP 1177 Avenue of the Americas New York, NY 10036 Tel: (212) 715-9100 Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective. If any of the securities being registered on this Form are being offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. CALCULATION OF REGISTRATION FEE Title of Each Class of Securities to be Registered Proposed Maximum Aggregate Offering Price(1) Amount of Registration Fee Ordinary Shares, par value $0.01 per share $ 20,000,000 $ 1,426.00 (2) (1) Estimated solely for the purposes of determining the registration fee pursuant to Rule 457(o) promulgated under the Securities Act. (2) Previously paid. __________________________ The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission acting pursuant to said Section 8(a), may determine. Jewelry purchases are discretionary, may be particularly affected by adverse trends in the general economy, and an economic decline may make it more difficult to generate revenue. Competition in the jewelry industry could cause us to lose market share, thereby materially and adversely affecting our business, results of operations and financial condition. Adverse changes in the economy of China may affect our business. Volatile gold prices can cause significant fluctuations in our operating results. Our revenues and operating income could decrease if gold or precious stone prices decline or if we are unable to pass price increases on to our customers. One shareholder will own a large percentage of our outstanding ordinary shares after this offering and could significantly influence the outcome of our corporate matters. See
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+TABLE OF CONTENTS gain from such transfer. Because Circular 698 has a short history, there is uncertainty as to its application. We (or a non-resident investor) may become at risk of being taxed under Circular 698 and may be required to expend valuable resources to comply with Circular 698 or to establish that we (or such non-resident investor) should not be taxed under Circular 698, which could have a material adverse effect on our financial condition and results of operations (or such non-resident investor s investment in us). If any PRC tax applies to a non-resident investor, the non-resident investor may be entitled to a reduced rate of PRC tax under an applicable income tax treaty and/or a deduction for such PRC tax against such investor s domestic taxable income or a foreign tax credit in respect of such PRC tax against such investor s domestic income tax liability (subject to applicable conditions and limitations). Investors should consult their own tax advisors regarding the applicability of any such taxes, the effects of any applicable income tax treaties, and any available deductions or foreign tax credits. For a further discussion of these issues, see the section of this prospectus captioned Material PRC Income Tax Considerations below. Restrictions under PRC law on our PRC subsidiaries' ability to make dividends and other distributions could materially and adversely affect our ability to grow, make investments or acquisitions that could benefit our business, pay dividends to you, and otherwise fund and conduct our businesses. Substantially all of our revenues are earned by our PRC subsidiaries, Trunkbow Shenzhen and Trunkbow Shangdong. However, PRC regulations restrict the ability of our PRC subsidiaries to make dividends and other payments to their offshore parent company. PRC legal restrictions permit payments of dividend by our PRC subsidiaries only out of their accumulated after-tax profits, if any, determined in accordance with PRC accounting standards and regulations. Our PRC subsidiaries are also required under PRC laws and regulations to allocate at least 10% of our annual after-tax profits determined in accordance with PRC GAAP to a statutory general reserve fund until the amounts in said fund reaches 50% of our registered capital. Allocations to these statutory reserve funds can only be used for specific purposes and are not transferable to us in the form of loans, advances or cash dividends. Any limitations on the ability of our PRC subsidiaries to transfer funds to us could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our business, pay dividends and otherwise fund and conduct our business. SAFE regulations may limit our ability to finance our PRC subsidiaries effectively and affect the value of your investment and may make it more difficult for us to pursue growth through acquisition. If we finance our PRC subsidiaries through additional capital contributions, the Ministry of Commerce in China or its local counterpart must approve the amount of these capital contributions. On August 29, 2008, SAFE promulgated Circular 142, a notice regulating the conversion by a foreign-invested company of foreign currency into Renminbi by restricting how the converted Renminbi may be used. The notice requires that Renminbi converted from the foreign currency-denominated capital of a foreign-invested company may only be used for purposes within the business scope approved by the applicable governmental authority and may not be used for equity investments in the PRC unless otherwise provided by laws and regulations. In addition, SAFE strengthened its oversight of the flow and use of Renminbi funds converted from the foreign currency denominated capital of a foreign-invested company. The use of such Renminbi may not be changed without approval from SAFE, and may not be used to repay Renminbi loans if the proceeds of such loans have not yet been used for purposes within the company s approved business scope. Violations of Circular 142 may result in severe penalties, including substantial fines as set forth in the Foreign Exchange Administration Regulations. We cannot assure you that we will be able to complete the necessary government registrations or obtain the necessary government approvals on a timely basis, if at all, with respect to the use and conversion of the foreign currencies provided by us to our PRC subsidiaries by mean of loans or capital contributions in the future. If we fail to complete such registrations or obtain such approvals, our PRC subsidiaries ability to use and convert such foreign currencies into Renminbi may be negatively affected, in particular in our future equity investments in the PRC, which could adversely and materially affect our ability to fund and expand our business. TABLE OF CONTENTS Failure to comply with PRC regulations regarding the registration requirements for employee stock ownership plans or share option plans may subject the PRC plan participants or us to fines and other legal or administrative sanctions. In the future, we may choose to adopt an employee incentive option plan. Under applicable PRC regulations, all foreign exchange matters relating to employee stock ownership plans, share option plans or similar plans in which PRC citizens participate require approval from SAFE or its authorized local branch. In addition, PRC citizens who are granted share options, shares or other equity interests by an offshore listed company are required, through a PRC agent or PRC subsidiary of the offshore listed company, to register with SAFE and complete certain other procedures. We will become an offshore listed company upon the completion of this offering and may in the future adopt an employee incentive option plan. In such case, we and our PRC employees who are granted share options or shares will be subject to, and intend to comply with, these regulations. If we or our PRC employees fail to comply with these regulations after we become an offshore listed company, we or our Chinese employees may face sanctions imposed by SAFE or other PRC government authorities, including restrictions on foreign currency conversions and additional capital contributions to our PRC subsidiaries. We face uncertainty with respect to indirect transfers of equity interests in PRC resident enterprises by their non-PRC holding companies. Pursuant to the Notice on Strengthening Administration of Enterprise Income Tax for Share Transfers by Non-PRC Resident Enterprises, or SAT Circular 698, issued by the State Administration of Taxation on December 10, 2009 with retroactive effect from January 1, 2008, where a non-resident enterprise transfers the equity interests of a PRC resident enterprise indirectly via disposing of the equity interests of an overseas holding company, or an Indirect Transfer, and such overseas holding company is located in a tax jurisdiction that: (i) has an effective tax rate less than 12.5% or (ii) does not tax foreign income of its residents, the foreign investor shall report to the competent tax authority of the PRC resident enterprise this Indirect Transfer. Using a substance over form principle, the PRC tax authority may disregard the existence of the overseas holding company if it lacks a reasonable commercial purpose and was established for the purpose of avoiding PRC tax. As a result, gains derived from such Indirect Transfer may be subject to PRC withholding tax at a rate of up to 10%. SAT Circular 698 also provides that, where a non-PRC resident enterprise transfers its equity interests in a PRC resident enterprise to its related parties at a price lower than the fair market value, the relevant tax authority has the power to make a reasonable adjustment to the taxable income of the transaction. There is uncertainty as to the application of SAT Circular 698. For example, while the term Indirect Transfer is not clearly defined, it is understood that the relevant PRC tax authorities have jurisdiction regarding requests for information over a wide range of foreign entities having no direct contact with China. Moreover, the relevant authority has not yet promulgated any formal provisions or formally declared or stated how to calculate the effective tax rates in foreign tax jurisdictions, and the process and format of the reporting of an Indirect Transfer to the competent tax authority of the relevant PRC resident enterprise. In addition, there are not any formal declarations with regard to how to determine whether a foreign investor has adopted an abusive arrangement in order to avoid PRC tax. As a result, we may become at risk of being taxed under SAT Circular 698 and we may be required to expend valuable resources to comply with SAT Circular 698 or to establish that we should not be taxed under SAT Circular 698, which may have a material adverse effect on our financial condition and results of operations. The approval of the China Securities Regulatory Commission may be required in connection with this offering under a regulation adopted in August 2006, and, if required, we cannot predict whether we will be able to obtain such approval. In 2006, six PRC regulatory agencies jointly adopted the Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, or the M&A Rule. This rule requires that, if an overseas company established or controlled by PRC domestic companies or citizens intends to acquire equity interests or assets of any other PRC domestic company affiliated with the PRC domestic companies or citizens, such acquisition must be submitted to the Ministry of Commerce for approval. In addition, this regulation requires that an overseas company controlled directly or indirectly by PRC companies or citizens and holding equity interests of PRC domestic companies needs to obtain the approval of the China Securities Regulatory Commission, or TABLE OF CONTENTS CSRC, prior to listing its securities on an overseas stock exchange. On September 21, 2006, the CSRC, published a notice on its official website specifying the documents and materials required to be submitted by overseas special purpose companies seeking CSRC s approval of their overseas listings. While the application of the M&A Rule remains unclear, based on their understanding of current PRC laws, regulations, and the notice published on September 21, 2006, our PRC counsel, Han Kun Law Offices, has advised us that, since our subsidiaries were established by means of direct investment rather than by merger or acquisition of the equity interest or assets of any domestic company as defined under the M&A Rules, and no provision in the M&A Rules classifies our contractual arrangements with Trunkbow Technologies as a type of acquisition transaction falling under the M&A Rules, we are not required to submit an application to the Ministry of Commerce or the CSRC for its approval for our contractual control on Trunkbow Technologies and the listing and trading of our common stock on a US national securities exchange. However, the Ministry of Commerce and the CSRC may hold a different view from our PRC counsel. If the CSRC or another PRC regulatory agency subsequently determines that the approvals from the Ministry of Commerce and/or CSRC were required our contractual control over Trunkbow Technologies and for this offering, we may need to apply for a remedial approval from the CSRC and may be subject to certain administrative punishments or other sanctions from PRC regulatory agencies. The regulatory agencies may impose fines and penalties on our operations in the PRC, limit our operating privileges in the PRC, delay or restrict the repatriation of our foreign currency in our offshore bank accounts into the PRC, or take other actions that could materially and adversely affect our business, financial condition, results of operations, reputation and prospects, as well as the trading price of our common stock. Also, if the Ministry of Commerce or CSRC later requires that we obtain its approval, we may be unable to obtain a waiver of such approval requirements, if and when procedures are established to obtain such a waiver. Any uncertainties or negative publicity regarding these approval requirements could materially and adversely affect the trading price of our common stock. The M&A Rule sets forth complex procedures for acquisitions conducted by foreign investors that could make it more difficult to pursue acquisitions. The M&A Rule sets forth complex procedures and requirements that could make merger and acquisition activities by foreign investors more time-consuming and complex, including requirements in some instances that the Ministry of Commerce be notified in advance of any change-of-control transaction in which a foreign investor takes control of a PRC domestic enterprise. Complying with the requirements of the M&A Rule to complete such transactions could be time-consuming, and any required approval processes, including obtaining approval from the Ministry of Commerce, may delay or inhibit our ability to complete such transactions, which could affect our ability to expand our business or maintain our market share. RISKS RELATED TO THE SECURITIES A large number of shares may be sold in the market immediately prior to or following this offering pursuant to the concurrent offering of up to 16,128,581 shares by our selling stockholders by means of a separate resale prospectus, which may depress the market price of our common stock, and could have an adverse effect on our ability to raise capital in future transactions or the terms of which we may be able to use our shares of common stock for corporate purposes. In addition, the sale of shares by the selling stockholders prior to the sale of shares in this offering might offer potential investors an opportunity to purchase shares from the selling stockholders at a lower price than the price per share in this offering, which may make it more difficult for us to complete this offering. A large number of shares may be sold in the market immediately prior to or following this offering pursuant to the concurrent offering of up to 16,128,581 shares by our selling stockholders by means of a separate resale prospectus, which may depress the market price of our common stock. Sales of a substantial number of shares of our common stock in the public market immediately prior to or following this offering could cause the market price of our common stock to decline. If there are more shares of common stock offered for sale than buyers are willing to purchase, then the market price of our common stock may decline to a market price at which buyers are willing to purchase the offered shares of common stock and sellers remain willing to sell the shares. The large number of shares being offered in the concurrent offering by our TABLE OF CONTENTS selling stockholders could also have an adverse effect on our ability to raise capital in future transactions or the terms of which we may be able to use our shares of common stock for corporate purposes due to the overhang effect such shares would have. Although our current intention is to permit the commencement of the secondary offering by our selling stockholders only after the marketing period regarding our offering has been completed and we believe that the execution of a firm commitment underwriting agreement with the representative of the underwriters is imminent (and the lockups described herein regarding approximately 6.6 million shares of our outstanding shares have been delivered by the holders thereof), depending upon market conditions and our obligations to the selling stockholders, it may become necessary to postpone the primary offering and commence the offering by our selling stockholders notwithstanding that we have not secured a firm commitment underwriting or obtained the relevant lockup agreements to permit the orderly marketing of our offering. The sale of shares by the selling stockholders prior to the sale of shares in this offering (including pursuant to any such postponement) might offer potential investors an opportunity to purchase shares from the selling stockholders at a lower price than the price per share in this offering, which may make it more difficult for us to complete this offering. All of the shares sold by us in this offering and in the concurrent offering of up to 16,128,581 shares by our selling stockholders (including the shares of common stock underlying warrants currently held by such selling stockholders), will be freely tradable without restriction or further registration under the Securities Act of 1933, as amended, although approximately 6.6 million of such shares may be subject to the lockup agreements in favor of the representative of the underwriters. Until February 2010 we were a shell company and as such, we may have material liabilities of which we are not aware. We were incorporated as a shell company with nominal assets under the name Bay Peak 5 Acquisition Corp. ( BP5 ). Immediately prior to the closing of the Share Exchange in February 2010, we conducted a due diligence review of BP5 s financial condition and legal status. Notwithstanding such review, BP5 may have material liabilities that we have not yet discovered. Further, although the Share Exchange Agreement contains customary representations and warranties from BP5 concerning its assets, liabilities, financial condition and affairs, we may have limited or no recourse against former owners or principals of BP5 in the event
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001486787_elite_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001486787_elite_prospectus_summary.txt
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@@ -0,0 +1,187 @@
+PROSPECTUS SUMMARY
+
+The following summary highlights selected information contained in this prospectus. This summary does not contain all the information you should consider before investing in the securities. Before making an investment decision, you should read the entire prospectus carefully, including the Risk Factors section, the financial statements, and the notes to the financial statements.
+
+The Company
+
+We were formed in Delaware in 2009. We provide strategic management and marketing consulting services to small to medium-sized enterprises in the Pearl River Delta region in China. In September 2011, we changed our name from China Transportation Acquisition Corp. to Elite Talent Consulting Corp. to better reflect our business. 
+
+The Offering
+
+We are registering 504,250 shares of our common stock for sale by the selling stockholders identified in the section of this prospectus entitled Selling Stockholders. Information regarding our common stock is included in the section of this prospectus entitled Description of Securities. 
+
+General Information
+
+Our principal executive offices are located at 9 Division Street, Apt. 201, New York, New York, and our telephone number is (646) 386-2351. 
+
+7
+
+RISK FACTORS
+
+The reader should carefully consider the risks described below together with all of the other information included in this prospectus. The statements contained in or incorporated into this prospectus that are not historic facts are forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in or implied by forward-looking statements. If any of the following risks actually occurs, our business, financial condition, or results of operations could be harmed. In that case, the trading price of our common stock could decline, and an investor in our securities may lose all or part of their investment.
+
+RISKS RELATED TO OUR BUSINESS
+
+We have a limited operating history.
+
+We have a limited operating history and limited revenues or earnings from operations since inception, and there is a risk that we will be unable to continue as a going concern and sustain business operations or consummate a business combination. We have no assets or significant financial resources. We will, in all likelihood, sustain operating expenses without corresponding revenues, at least until consummating a merger or other business combination with a private company. This may result in our incurring a net operating loss that will increase unless we sustain profitable operations or consummate a business combination with a profitable business. We cannot assure you that we can consummate a business combination, or that our operations will be profitable.
+
+There may be conflicts of interest between our management and the non-management stockholders of the Company.
+
+Currently, the principal of our majority stockholder is also our sole officer and director. If shares of our common stock are held or controlled by management, conflicts of interest create the risk that management may have an incentive to act adversely to the interests of the stockholders of the Company. A conflict of interest may arise between our management s personal pecuniary interest and its fiduciary duty to our stockholders. For example, we have not received payment for the shares of common stock issued to our majority stockholder, and there are no assurances that we will ever receive payment. The non-payment of the shares constitutes a breach of the purchase agreement pursuant to which the shares were issued. It is unlikely that we will seek to enforce the terms of the purchase agreement given that our sole officer and director is a principal of our majority stockholder. As a result of the non-payment for the issued shares, the Company had no working capital prior to beginning our consulting business and relied on third party advances to cover the expenses incurred related to our formation, the filing of a registration statement on Form 10 and all amendments thereto, and other reporting obligations pursuant to the Exchange Act.
+
+We are likely to incur losses.
+
+We have incurred a loss since inception of $36,850, and there can be no assurances that we will ever be profitable. 
+
+8
+
+We face a number of risks associated with potential acquisitions, including the possibility that we may incur substantial debt that could adversely affect our financial condition.
+
+Although we recently changed our business purpose and have begun operations, we may complete a merger or other business combination with an operating business. Such combination will be accompanied by risks commonly encountered in acquisitions, including, but not limited to, difficulties in integrating the operations, technologies, products, and personnel of the acquired companies and insufficient revenues to offset increased expenses associated with acquisitions. Failure to manage and successfully integrate acquisitions we make could harm our business, our strategy, and our operating results in a material way. Additionally, completing a business combination is likely to increase our expenses, and it is possible that we may incur substantial debt in order to complete a business combination, which could adversely affect our financial condition. Incurring a substantial amount of debt may require us to use a significant portion of our cash flow to pay principal and interest on the debt, which will reduce the amount available to fund working capital, capital expenditures, and other general purposes. Any indebtedness may negatively impact our ability to operate our business and limit our ability to borrow additional funds by increasing our borrowing costs, and impact the terms, conditions, and restrictions contained in possible future debt agreements, including the addition of more restrictive covenants; impact our flexibility in planning for and reacting to changes in our business as covenants and restrictions contained in possible future debt arrangements may require that we meet certain financial tests and place restrictions on the incurrence of additional indebtedness and place us at a disadvantage compared to similar companies in our industry that have less debt.
+
+There is competition for those private companies suitable for a merger transaction of the type contemplated by management.
+
+The Company is in a highly competitive market for a small number of business opportunities that could reduce the likelihood of consummating a successful business combination. We are and may continue to be an insignificant participant in the business of seeking mergers with, joint ventures with, and acquisitions of small private and public entities. A large number of established and well-financed entities, including small public companies and venture capital firms, are active in mergers and acquisitions of companies that may be desirable target candidates for us. Nearly all these entities have significantly greater financial resources, technical expertise, and managerial capabilities than we do; consequently, we will be at a competitive disadvantage in identifying possible business opportunities and successfully completing a business combination. These competitive factors may reduce the likelihood of our identifying and consummating a successful business combination.
+
+We are no longer a blank check company, but there are relatively low barriers to becoming a blank check company or shell company, thereby increasing the competitive market for a small number of business opportunities.
+
+We are an operating company as of September 2011. While we are no longer a blank check company, because of our limited operations and as we seek additional operational opportunities or pursue acquisitions or merger, we will likely be competing with blank check companies and shell companies. There are relatively low barriers to becoming a blank check company or shell company. A newly incorporated company with a single stockholder and sole officer and director may become a blank check company or shell company by voluntarily subjecting itself to the reporting requirements of the SEC by filing and seeking effectiveness of a Form 10 with the SEC, thereby registering its common stock pursuant to Section 12(g) of the Exchange Act with the SEC. The registration statement is automatically deemed effective 60 days after filing the Form 10 with the SEC, even if outstanding comments from the SEC remain. The relative ease and low cost with which a company can become a blank check or shell company can increase the already highly competitive market for a limited number of businesses that will consummate a successful business combination.
+
+9
+
+Future success with a business combination is highly dependent on the ability of management to locate and attract a suitable acquisition.
+
+The nature of our operations is highly speculative, and there is a consequent risk of loss of an investment in the Company. The success of any business combination will depend to a great extent on the operations, financial condition, and management of the identified business opportunity. While management may seek business combination(s) with entities having established operating histories, we cannot provide any assurance that we will be successful in locating candidates meeting that criterion. In the event we complete a business combination, the success of our operations may be dependent upon management of the successor firm or venture partner firm and numerous other factors beyond our control.
+
+Management devotes a limited amount of time to our affairs, which may adversely impact our ability to successfully begin operations or identify a suitable acquisition candidate.
+
+While conducting consulting operations, management devotes very limited time to the business and intends to devote limited time while seeking a business combination. Our sole officer has not entered into a written employment agreement with us and is not expected to do so in the foreseeable future. This limited commitment may adversely impact our ability to begin successful operations or identify and consummate a successful business combination.
+
+There can be no assurance that the Company will successfully build its consulting business or consummate a business combination.
+
+We can give no assurances that we will successfully conclude a business combination. The Company has begun a consulting business and may seek a target company not limited to any location or industry. We cannot guarantee that we will be successful in our consulting operations or negotiate a business combination with an entity on favorable terms. We have no arrangement, agreement, or understanding with respect to engaging in a merger with, joint venture with or acquisition of, a private or public entity. Although our management will endeavor to evaluate the risks inherent in a new business or a particular target business, we cannot assure that we will properly ascertain or assess all significant risk factors.
+
+Reporting requirements under the Exchange Act and compliance with the Sarbanes-Oxley Act of 2002, including establishing and maintaining acceptable internal controls over financial reporting, are costly.
+
+The Company has no revenue to date and likely will have limited revenues for the foreseeable future, and the rules and regulations pursuant to the Exchange Act require a public company to provide periodic reports that will require that the Company engage legal, accounting, and auditing services. The engagement of such services can be costly, and the Company is likely to incur losses that may adversely affect the Company s ability to continue as a going concern. Additionally, the Sarbanes-Oxley Act of 2002 requires that the Company establish and maintain adequate internal controls and procedures over financial reporting. The costs of complying with the Sarbanes-Oxley Act of 2002 and the limited time that management devotes to the Company may make it difficult for the Company to continue to maintain adequate internal controls over financial reporting. In the event the Company fails to maintain an effective system of internal controls or discover material weaknesses in our internal controls, we may not be able to produce reliable financial reports or report fraud, which may harm our financial condition and result in loss of investor confidence and a decline in our share price.
+
+The time and cost of preparing a private company to become a public reporting company may preclude us from entering into a merger or acquisition with the most attractive private companies.
+
+Target companies that fail to comply with SEC reporting requirements may delay or preclude any acquisition. Sections 13 and 15(d) of the Exchange Act require reporting companies to provide certain information about significant acquisitions, including certified financial statements for the company acquired, covering one, two, or three years, depending on the relative size of the acquisition. The time and additional costs that may be incurred by some target entities to prepare these statements may significantly delay or essentially preclude consummation of any acquisition. Otherwise suitable acquisition prospects that do not have or are unable to obtain the required audited statements may be inappropriate for acquisition so long as the reporting requirements of the Exchange Act are applicable.
+
+10
+
+The Company may be subject to further government regulation that would adversely affect our operations.
+
+Although we will be subject to the reporting requirements under the Exchange Act, management believes we are not be subject to regulation under the Investment Company Act of 1940, as amended (the Investment Company Act ), since we are not engaged in the business of investing or trading in securities. If we engage in business combinations or other operations that result in our holding passive investment interests in a number of entities, we could be subject to regulation under the Investment Company Act. If so, we would be required to register as an investment company and could be expected to incur significant registration and compliance costs. We have obtained no formal determination from the SEC as to our status under the Investment Company Act and, consequently, violation of the Investment Company Act could subject us to material adverse consequences.
+
+The Company may be subject to certain tax consequences in our business, which may increase our cost of doing business.
+
+We may not be able to structure any acquisition to result in tax-free treatment for the companies or their stockholders, which could deter third parties from entering into certain business combinations with us or result in being taxed on consideration received in a transaction. We intend to structure any business combination so as to minimize the U.S. federal and state tax consequences to both us and the target entity; however, we cannot guarantee that any business combination will meet the statutory requirements of a tax-free reorganization or that the parties will obtain the intended tax-free treatment upon a transfer of stock or assets. A non-qualifying reorganization could result in the imposition of both federal and state taxes that may have an adverse effect on both parties to the transaction.
+
+The Company has conducted no market research or identification of business opportunities, which may affect our ability to successfully identify a business to merge with or acquire.
+
+The Company has not conducted market research concerning prospective business opportunities, nor have others made the results of such market research available to the Company. Therefore, we have no assurances that market demand exists for the business that we decide to begin or a merger or acquisition. Our management has not identified any specific business combination or other transactions for formal evaluation by us, such that it may be expected that any such target business or transaction will present such a level of risk that conventional private or public offerings of securities or conventional bank financing will not be available. There is no assurance that we will be able to acquire a business opportunity on terms favorable to us. Decisions as to which business opportunity to participate in will be unilaterally made by our management, which may act without the consent, vote, or approval of our stockholders.
+
+Because we may seek to complete a business combination through a reverse merger, following such a transaction we may not be able to attract the attention of major brokerage firms.
+
+ 
+
+Additional risks may exist since we may assist a privately held business to become public through a reverse merger. Securities analysts of major brokerage firms may not provide coverage of our Company since there is no incentive to brokerage firms to recommend the purchase of our Common Stock. No assurance can be given that brokerage firms will want to conduct any secondary offerings on behalf of our post-merger company in the future.
+
+We face intense competition for contracts among providers of consulting services to companies in the Pearl River Delta region of the PRC. 
+
+We operate in a global marketplace in which competition among providers of management and marketing consulting services is vigorous, including in our area of focus, which is small to medium-sized enterprises located in the Pearl River Delta region of the PRC. Some of our competitors possess greater financial, marketing, sales resources, and larger geographic scope in certain parts of the world than we do, which, in turn, provides them with additional leverage in the competition for contracts. Some of our competitors have more significant operations than we do in lower cost countries that can serve as a platform from which to provide services worldwide on terms that may be more favorable. Increased competition among consulting services firms often results in corresponding pressure on prices. There can be no assurance that we will succeed in providing competitively priced services at levels of service and quality that will enable us to capture, maintain, and grow our market share. 
+
+11
+
+We will depend on the availability and retention of qualified marketing professionals to grow our consulting business.
+
+Currently, our sole officer is our only employee. Thus, we rely heavily on our sole officer for our business. It will be important that we successfully attract and retain highly qualified staff in order to expand our consulting business. If we are unable to attract and retain qualified and dedicated professionals to ensure that we have staff in sufficient numbers and with the appropriate training and expertise required to serve the needs of our clients, we may have to rely on subcontractors or transfers of staff to fill resulting gaps or lose potential clients. This may result in lost revenue or increased costs, thereby putting pressure on our earnings. 
+
+We face a client concentration risk. 
+
+We derive all of our revenue from the services we provide to one client, and we expect that this will continue for the foreseeable future. In the event that our sole client were to limit, reduce, or eliminate the services we provide to them, we might be unable to recover the lost revenue with work from new clients, and our business, prospects, financial condition, and operating results could be materially and adversely affected. 
+
+ 
+
+Our sole client could terminate our services before the agreed upon expiration date. 
+
+By providing 30 days prior written notice, our sole client could elect to terminate the contract before its agreed expiration date, which would result in a reduction of our earnings and cash flow and may impact the value of our backlog. In a case of early termination, we may not be able to recover capitalized contract costs, and we may not be able to eliminate ongoing costs incurred to support the contract. 
+
+RISKS RELATED TO DOING BUSINESS IN CHINA
+
+Adverse changes in economic and political policies of the Chinese government could have a material adverse effect on the overall economic growth of China, which could adversely affect our business.
+
+All of our business operations are currently conducted in China, under the jurisdiction of the Chinese government. Accordingly, our results of operations, financial condition, and prospects are subject to a significant degree to economic, political, and legal developments in China. China s economy differs from the economies of most developed countries in many respects, including with respect to the amount of government involvement, level of development, growth rate and control of foreign exchange, and allocation of resources. While the Chinese economy has experienced significant growth in the past 20 years, growth has been uneven across different regions and among various economic sectors of China. The Chinese government has implemented various measures to encourage economic development and guide the allocation of resources. Some of these measures benefit the overall Chinese economy, but may also have a negative effect on us. For example, our financial condition and results of operations may be adversely affected by government control over capital investments or changes in tax regulations that are applicable to us. Since early 2004, the Chinese government has implemented certain measures to control the pace of economic growth. Such measures may cause a decrease in the level of economic activity in China, which in turn could adversely affect our results of operations and financial condition.
+
+We foresee that any assets acquired in the future will be located overseas, and stockholders may not receive distributions that they would otherwise be entitled to if we were declared bankrupt or insolvent. 
+
+We currently have no assets, but if we do acquire assets in the future, we foresee that they will be in China. In that case, they may be outside of the jurisdiction of U.S. courts to administer if we are the subject of an insolvency or bankruptcy proceeding. As a result, if we declared bankruptcy or insolvency, our stockholders may not receive the distributions on liquidation that they would otherwise be entitled to if our assets were to be located within the U.S., under U.S. bankruptcy laws.
+
+12
+
+You may face difficulties in protecting your interests, and your ability to protect your rights through the U.S. federal courts may be limited, because we conduct our operations in China and our sole officer and director resides outside the United States.
+
+Although we are incorporated in Delaware, our business operations are conducted in China. Our sole officer and director resides in China and some or all of his assets are located outside of the United States. As a result, it may be difficult or impossible for you to bring an action against us or against our sole officer and director in China in the event that you believe that your rights have been infringed under the securities laws or otherwise. Even if you are successful in bringing an action of this kind, Chinese laws may render you unable to enforce a judgment against our assets or the assets of our sole officer and director.
+
+As a result of all of the above, our stockholders may have more difficulty in protecting their interests through actions against our management, director, or major stockholders than would stockholders of a corporation doing business entirely within the United States.
+
+RISKS RELATED TO OUR STOCKHOLDERS AND OUR SHARES OF COMMON STOCK
+
+Our stockholders may have a minority interest in the Company following any business combination.
+
+If we enter into a business combination with a company with a value in excess of the value of our Company, and issue shares of our common stock to the stockholders of such company as consideration for merging with us, our stockholders will likely own less than 50% of the Company after the business combination. The stockholders of the acquired company would therefore be able to control the election of our board of directors and control our Company.
+
+Our common stock is not currently traded or quoted by a bulletin board, and an active public market for our common stock may not develop or be sustained.
+
+Our common stock is not currently traded on any national securities exchange, nor is it quoted by any over-the-counter bulletin board. We do, however, plan on having our common stock quoted on the Over-the-Counter Bulletin Board ( OTCBB ) on or around the time this Form S-1 is declared effective by the SEC. We cannot predict the extent to which an active public market for our common stock will develop or be sustained. Our common stock may be thinly traded on the OTCBB, meaning that the number of persons interested in purchasing our common stock at or near bid prices at any given time may be relatively small or nonexistent. This situation may be attributable to a number of factors, including the fact that we are a small company that is relatively unknown to stock analysts, stock brokers, institutional investors, and others in the investment community that generate or influence sales volume, and that even if we came to the attention of such persons, they tend to be risk-adverse and would be reluctant to follow an unproven company such as ours or purchase or recommend the purchase of our shares until such time as we become more seasoned and viable. As a consequence, there may be periods of several days or more when trading activity in our shares is minimal or non-existent, as compared to a seasoned issuer that has a large and steady volume of trading activity that will generally support continuous sales without an adverse effect on our stock price. We cannot provide assurances that a broad or active public trading market for our common stock will develop or be sustained. 
+
+If a public market for our common stock develops, we expect to experience volatility in the price of our common stock. This may result in substantial losses to investors if they are unable to sell their shares at or above their purchase price. 
+
+ 
+
+We hope to be approved for quotation by the OTCBB on or around the time this Form S-1 is declared effective by the SEC. Even if a public market for our common stock develops, we expect the market price of our common stock to fluctuate substantially for the indefinite future due to a number of factors, including general and industry-specific economic conditions and our status as a company with a limited operating history and no revenue to date, which may make risk-averse investors more inclined to sell their shares on the market more quickly and at greater discounts than would be the case with the shares of a seasoned issuer in the event of negative news or lack of progress. Many of these factors are beyond our control and may decrease the market price of our common stock, regardless of our operating performance. In the past, securities class action litigation has often been brought against companies that experience volatility in the market price of their securities. Whether or not meritorious, litigation brought against us could result in substantial costs, divert management s attention and resources, and harm our financial condition and results of operations.
+
+13
+
+It is likely that our common stock will be considered penny stock, which may make it more difficult for investors to sell their shares due to suitability requirements.
+
+If our common stock is approved for quotation by the OTCBB, it be deemed to be penny stock as that term is defined under the Exchange Act. Penny stocks generally are equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system). Penny stock rules impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and accredited investors. The term accredited investor refers generally to institutions with assets in excess of $5,000,000 or individuals with a net worth (excluding the net equity in their primary residence) in excess of $1,000,000 or an annual income exceeding $200,000 or $300,000 jointly with their spouse.
+
+The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized disclosure document in a form prepared by the SEC, which provides information about penny stocks and the nature and level of risks in the penny stock market. Moreover, broker-dealers are required to determine whether an investment in a penny stock is a suitable investment for a prospective investor. A broker-dealer must receive a written agreement to the transaction from the investor setting forth the identity and quantity of the penny stock to be purchased. These requirements may reduce the potential market for our common stock by reducing the number of potential investors. This may make it more difficult for investors in our common stock to sell shares to third parties or to otherwise dispose of them. This could cause our stock price to decline.
+
+We are controlled by our management.
+
+An affiliate of our management currently beneficially owns a majority of our issued and outstanding common stock. Consequently, management has the ability to influence control of the operations of the Company and, acting together, will have the ability to influence or control substantially all matters submitted to stockholders for approval, including:
+
+- Election of our board of directors;
+
+- Removal of directors;
+
+- Amendment to the Company s certificate of incorporation or bylaws; and
+
+- Adoption of measures that could delay or prevent a change in control or impede a merger, takeover or other business combination.
+
+This concentration of ownership by itself may have the effect of impeding a merger, consolidation, takeover or other business consolidation, or discouraging a potential acquirer from making a tender offer for the common stock.
+
+We have never paid dividends on our common stock.
+
+We have never paid dividends on our common stock and do not presently intend to pay any dividends in the foreseeable future. We anticipate that any funds available for payment of dividends will be re-invested into the Company to further its business strategy.
+
+14
+
+The Company expects to issue more shares in any merger or acquisition, which will result in substantial dilution.
+
+Our Certificate of Incorporation authorizes the issuance of a maximum of 100,000,000 shares of common stock and a maximum of 10,000,000 shares of preferred stock, par value $0.0001 per share. Any merger or acquisition effected by us may result in the issuance of additional securities without stockholder approval and may result in substantial dilution in the percentage of our common stock held by our then existing stockholders. Moreover, the common stock issued in any such merger or acquisition transaction may be valued on an arbitrary or non-arm s-length basis by our management, resulting in an additional reduction in the percentage of common stock held by our then existing stockholders. Our Board of Directors has the power to issue any or all of such authorized but unissued shares without stockholder approval. To the extent that additional shares of common stock or preferred stock are issued in connection with a business combination or otherwise, dilution to the interests of our stockholders will occur and the rights of the holders of common stock might be materially adversely affected.
+
+ 
+
+Our majority stockholder has the ability to authorize a transaction causing the Company to repurchase its shares of common stock.
+
+The principal of our majority stockholder currently serves as the sole officer and director of the Company and therefore has the ability to authorize a transaction in which the Company sells securities to a third party, in order to provide an interest in the Company to third parties, with the proceeds of such sale(s) being utilized by the Company to repurchase shares of common stock held by our majority stockholder. As a result of such transaction(s), our management, stockholder(s), and Board of Directors may change. Such a transaction may not require a stockholder vote. Currently, a majority of our outstanding common stock is held by an affiliate of our sole officer and director, and to the extent that our majority stockholder retains control of the outstanding shares of the Company, our majority stockholder has the authority to authorize the transaction. The repurchase price paid for such shares is unknown unless and until such a transaction and its terms have been identified and agreed to.
+
+We may issue preferred stock.
+
+Our Certificate of Incorporation authorizes the issuance of up to 10,000,000 shares of preferred stock with designations, rights, and preferences determined from time to time by the Board of Directors. Accordingly, our Board of Directors is empowered, without stockholder approval, to issue preferred stock with dividend, liquidation, conversion, voting, or other rights that could adversely affect the voting power or other rights of the holders of the common stock. In the event of issuance, the preferred stock could be utilized, under certain circumstances, as a method of discouraging, delaying, or preventing a change in control of the Company. Although we have no present intention to issue any shares of our authorized preferred stock, there can be no assurance that we will not do so in the future.
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/CIK0001486993_total_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001486993_total_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001486993_total_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/CIK0001486995_ncop-xi_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001486995_ncop-xi_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001486995_ncop-xi_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/CIK0001487371_genmark_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001487371_genmark_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001487371_genmark_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/CIK0001488075_intralinks_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001488075_intralinks_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001488075_intralinks_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/CIK0001488859_china_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001488859_china_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..ad833c1056ddd3d17f45328fc2ac1708b9995c63
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001488859_china_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY Because this is only a summary, it does not contain all of the information that may be important to you. You should carefully read the more detailed information contained in this prospectus, including our financial statements and related notes. Our business involves significant risks. You should carefully consider the information under the heading Risk Factors beginning on page 5. Overview China eMedia Holdings Corp. is a Delaware corporation formed in June 2009 and is headquartered in the People s Republic of China (the PRC ). We are a development-stage company that provides e commerce business solutions and internet marketing solutions to small to mid-size enterprises ( SMEs ) within the PRC. The Company is attempting to establish a critical bridge between the growing PRC market and other global economies around the world. Through our ChinaCNTV Business Community Network, represented by SmartCNTV.com, and hosted on ChinaCNTV.com, we will provide a multi media platform for SME members to promote their businesses and to assist other entrepreneurs, businessmen and investors to market their products in the PRC. Through SmartCNTV.com, we provide a platform for SMEs in China to market their products and services to users of the SmartCNTV.com website by providing online advertising tools and facilitating information exchange among SMEs and customers. We allow SMEs to run their commercial websites through our SmartCNTV.com platform with full capabilities for ordering, payment processing, and business referrals, and provide the ability for SMEs to obtain advertising revenues on their websites by enabling Google-administered advertisements on their websites. We plan to market a number of internet related services through our exclusive license agreement with ChinaCNTV.com and build a trained and organized network of marketers with exemplified strength in the PRC. The services we intend to provide will enhance the marketing and selling aspects of the SMEs websites by helping SMEs perform online advertising and marketing services by themselves. The Company s products contain several features and resources, from resources helpful in launching a new business to policies and research analyses conducted regarding entrepreneurship, which assist entrepreneurs, business advisors, business policy makers, academics and investors through each stage of the entrepreneurial process. The Company does not perform online marketing or advertising for SMEs, but rather provides tools which enhance SMEs ability to perform online advertising and marketing for themselves. The Company collaborates with several business entities, namely China CNTV.com, which is a media driven website governed jointly by the Chinese National Cultural Research Bureau and the China Art and Culture Promotion Bureau. Since inception, we have achieved several milestones to form a firm foundation for the Company to go forward, including: The execution of a Purchase Agreement with China CNTV.com to purchase an exclusive right to construct and operate the only commercial channel at ChinaCNTV.com. Development of our media website, SmartCNTV.com. Development of our eShopping Mall ( eMall ). The execution of a Letter of Intent to establish our first Regional Dealership in Shan Dong Province, PRC. The Company s principle executive offices are located at Suite 2302, Seaview Commercial Building, 21 Connaught Road West, Sheung Wan, Hong Kong Peoples Republic of China and the Company s telephone number at that address is 852-90099119. Risk Factors We face risks in operating our business. We are a development-stage company with no operating history and may have difficulties implementing our business plan. While we have developed our basic e-commerce and internet marketing solution package, we have not yet formally launched our business model in the PRC and therefore, we have received no revenue to date and will require additional capital in order to continue operating and become profitable. Before we can launch our business model, we must first establish a sustainable support network of regional dealerships in the PRC. The regional dealerships will have trained resellers, which will market our products to end users. The regional dealerships will also be in charge of integrating the payment systems for online payments, building dedicated servers to run our systems, and providing technical and sales support to end users. We anticipate this network of regional dealerships will be established by the fourth calendar quarter of 2011 and that our business model will launch concurrently. You should carefully consider these risks before investing in our common stock. For a description of the risks affecting our business or an investment in our common stock, please see the section entitled Risk Factors. Number of Shares Being Offered This prospectus covers the resale by the selling security holders named in this prospectus of up to 6,794,612 shares of our common stock. The selling security holders will sell their shares of our common stock at a fixed price of $0.03 per share until our common stock is quoted on the OTC Bulletin Board, or listed for trading or quoted on any other public market, and thereafter at prevailing market prices or privately negotiated prices. Our common stock is presently not traded on any market or securities exchange and we have not applied for listing or quotation on any public market. Further, there is no assurance that our common stock will ever trade on any market or securities exchange. Please see the Plan of Distribution section on page 15 of this prospectus for a detailed explanation of how the common shares may be sold. Number of Shares Outstanding There were 37,326,760 shares of our common stock issued and outstanding as of June 30, 2011.
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/CIK0001489137_molycorp_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001489137_molycorp_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001489137_molycorp_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/CIK0001490224_sabre_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001490224_sabre_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001490224_sabre_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/CIK0001490321_south_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001490321_south_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..34d54f6799716f11013961c3f1ab71177637ef3e
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001490321_south_prospectus_summary.txt
@@ -0,0 +1 @@
+The following summary highlights selected information contained in this prospectus. This summary does not contain all of the information that you should consider before investing in our Common Stock. You should read the entire prospectus carefully, especially the Risk Factors section and the consolidated financial statements and the accompanying notes included in this prospectus. Our Company South Valley Bancorp, Inc. is a bank holding company headquartered in Klamath Falls, Oregon. As of June 30, 2011, we had consolidated assets of $859.5 million, deposits of $755.3 million and net loans of $605.3 million. Our wholly owned bank subsidiary, South Valley Bank & Trust, has grown to become the sixth largest bank in Oregon of all banks headquartered in Oregon (excluding banks with out-of-state holding companies). In addition, as of June 30, 2011, the Bank s trust department had $164.8 million of assets under administration and our broker-dealer and investment adviser subsidiary, South Valley Wealth Management, had $305.2 million of assets under administration. We deliver a wide range of community banking, trust and wealth management products and services to our clients and strive to provide exceptional, personalized service. We believe our locally managed and community-focused way of doing business attracts clients and helps us build shareholder value. Our clients include businesses, individuals, not-for-profit organizations and municipalities that participate in a wide range of industries, including agriculture, education, health care, manufacturing, real estate and transportation. The Bank operates 24 full-service community banking offices across four regions in Oregon: Klamath/Lake, Central Oregon, Rogue and Three Rivers. Each of our regions has between five and eight branches. One branch in each region serves as the regional headquarters. The following table illustrates our branch system by region and indicates the location of our regional headquarters. Regions Counties Number of branches Regional headquarters Klamath/Lake Klamath 5 Klamath Falls Lake 1 Central Oregon Crook 1 Deschutes 5 Bend Jefferson 1 Klamath 1 Rogue Jackson 5 Medford Three Rivers Josephine 5 Grants Pass In addition, South Valley Wealth Management provides wealth management services through one office in each of our four regions. Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the Registration Statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and we are not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED SEPTEMBER 27, 2011 Preliminary Prospectus Shares South Valley Bancorp, Inc. Common Stock This is the initial public offering of shares of Common Stock of South Valley Bancorp, Inc. No public market for our Common Stock currently exists. We are offering shares of our Common Stock. The selling shareholders are offering shares of our Common Stock. We will not receive any proceeds from the sale of shares of Common Stock by the selling shareholders. We expect the initial public offering price to be between $ and $ per share. We have applied to list our Common Stock on The NASDAQ Capital Market under the symbol SVBT. The shares of our Common Stock are not savings accounts, deposits or other obligations of any bank or savings institution, are not insured by the Federal Deposit Insurance Corporation ( FDIC ) or any other governmental agency, and are subject to investment risks, including possible loss of the entire amount invested. Investing in our Common Stock involves risks. See Risk Factors beginning on page 15 to read about factors you should consider before buying our Common Stock. Neither the Securities and Exchange Commission ( SEC ) nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. Per Share Total Initial public offering price $ $ Underwriting discounts and commissions(1) $ $ Proceeds to South Valley Bancorp, Inc. (before expenses) $ $ Proceeds to the selling shareholders (before expenses) $ $ (1) See Underwriting for more information on underwriter compensation. We and the selling shareholders have granted the underwriters an option to purchase, on the same terms and conditions as set forth above, up to an additional shares of Common Stock to cover over-allotments, if any. The underwriters may exercise this option at any time within 30 days of the date of this prospectus. The underwriters expect to deliver the Common Stock, in book-entry form only, through the facilities of The Depository Trust Company, against payment on or about , 2011. D.A. Davidson & Co. The date of this prospectus is , 2011. Table of Contents About this prospectus You should rely only on the information contained in this prospectus or in any free writing prospectus we may authorize to be delivered to you. We, the selling shareholders and the underwriters have not authorized anyone to provide you with different or additional information. If anyone provides you with different or inconsistent information, you should not rely on it. We and the selling shareholders are offering to sell and seeking offers to buy shares of Holding Company common stock, which we refer to in this prospectus as our Common Stock, only in jurisdictions where offers and sales are permitted. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or any sale of our Common Stock. Our business, financial condition and results of operations may have changed since that date. Unless otherwise indicated or the context requires, all information in this prospectus: assumes that the underwriters option is not exercised; and assumes an initial offering price of $ per share (the midpoint of the estimated initial public offering price set forth on the cover page of this prospectus). When we refer to we, our, us or the Company in this prospectus, we mean South Valley Bancorp, Inc. and our consolidated subsidiaries, including our wholly owned subsidiaries, South Valley Bank & Trust and Elliott-Ledgerwood & Company doing business as South Valley Wealth Management, unless the context indicates that we refer only to the parent company, South Valley Bancorp, Inc. When we refer to the Bank in this prospectus, we mean South Valley Bank & Trust. When we refer to the Holding Company in this prospectus, we mean South Valley Bancorp, Inc. When we refer to the Board in this prospectus, we mean the Holding Company s board of directors. Your Business First is our registered trademark in the United States. Other trademarks and trade names referred to in this prospectus are the property of their respective owners. Cautionary note regarding forward-looking statements This prospectus contains forward-looking statements, which are based on assumptions and estimates and describe our plans, strategies, and prospects, and can generally be identified by the use of words such as may, could, expect, intend, plan, seek, anticipate, believe, estimate, predict, potential, continue, likely, will, would, should and variations of these terms and similar expressions, or the negative of these terms or similar expressions. Forward-looking statements are subject to significant known and unknown risks that are difficult to predict and could be affected by many other factors. Therefore, our actual results, performance or achievements may differ materially from those expressed in or implied by these forward-looking statements. Factors that may cause actual results to differ materially from current expectations are described in the section entitled Risk Factors, and include, without limitation: our ability to attract new deposits and loans; demand for financial services in our regions; our focus on local small and medium sized businesses; Table of Contents Our founding principles and growth In 1977, our founders organized the Bank on the principles of providing personalized, business-banking services to the local community, being an active participant in our community, understanding our clients and their business priorities and supporting local decision-making. Since our transition to a bank holding company structure in 1998, we have grown organically and through acquisitions and strategic hiring. The following is a list of important milestones in the development of our operations and geographic presence: 1999 acquired Washington Mutual s trust division 2001 acquired our broker-dealer subsidiary from Elliott-Ledgerwood, today known as South Valley Wealth Management 2001 hired a team of 8 commercial bankers in the Rogue region 2004 hired a team of 11 commercial bankers in the Central Oregon region and added our first branch in Bend, Oregon 2005 completed Bank rebranding and adopted Your Business First client service standard 2005 to 2008 expanded branch network with 10 new locations and established nationwide ATM access for our clients 2010 hired an additional team of 10 commercial bankers in the Central Oregon region 2010 entered the Three Rivers region through an FDIC-assisted acquisition of Home Valley Bank, which included five branch locations and loss-sharing agreements on substantially all acquired loans and foreclosed real estate Our competitive strengths We believe our competitive strengths include the following: Experienced and locally connected management. Since our inception, our success has been built on a combination of strong leadership and local banking relationships. Our experienced management team contributes to our strong presence within the communities of our four regions through active leadership and a variety of other local connections. The following table presents the average years of industry experience of our management team, collectively representing over 370 years of banking experience, mostly in Oregon: Management level Number of persons Average years of industry experience Average years at the bank Executive management team 3 32 19 Senior vice presidents 4 30 11 Regional credit administrators 4 24 5 Regional branch administrators 4 13 6 Diverse loan portfolio. Our loan portfolio is diverse in terms of type of client, loan product and industry. Our three largest loan segment concentrations (as a percentage of total non-acquired loans as of June 30, 2011) include: owner and non-owner occupied commercial Table of Contents Table of Contents competitive market pricing factors; deterioration or delayed recovery in economic conditions that could result in decreased asset quality and increased loan losses; time, effort and expense associated with resolving non-performing assets; risks associated with concentrations in real estate related loans, including changes in the prices, values and sales volumes of commercial and residential real estate; market interest rate volatility; stability of funding sources and continued availability of borrowings; changes in regulatory requirements or the results of regulatory examinations; our dependence on our management team and ability to recruit and retain key qualified personnel; regulatory requirements to maintain minimum capital levels; our ability to raise capital on reasonable terms; inability to find suitable expansion opportunities; risks related to assets acquired from other organizations, including exposure to unrecoverable losses on acquired loans and provisions of our loss-sharing agreements with the FDIC; risks related to the continued integration of new personnel and acquired businesses; regulatory limits on the Bank s ability to pay dividends to the Holding Company and regulatory limits on the Holding Company s ability to repurchase its outstanding shares of capital stock or to pay dividends to its shareholders; and the impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act ) and related regulations on our business and competitiveness. These factors and the other risk factors described in this prospectus are not necessarily all of the important factors that could cause our actual results to differ materially from those expressed in or implied by any of the forward-looking statements in this prospectus. Other unknown factors also could harm our results. All forward-looking statements attributable to us or persons acting on our behalf, or the selling shareholders, are expressly qualified in their entirety by the cautionary statements set forth in this prospectus. Forward-looking statements speak only as of the date they are made and we do not undertake or assume any obligation to update publicly any of these statements to reflect actual results, new information or future events, changes in assumptions or changes in other factors affecting forward-looking statements, except to the extent required by applicable laws. If we update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements. Table of Contents real estate of 36.4%, commercial and industrial of 26.3% and agriculture of 11.6%. Since December 31, 2009, the Bank s non-acquired loan portfolio has consistently remained at or below the supervisory criteria for commercial real estate and construction loans as a percentage of the Bank s capital. Effective credit risk management. We have developed prudent credit standards and disciplined underwriting practices that, combined with our understanding of our regions and our clients, enable us to manage credit risk effectively. As of June 30, 2011, our ratio of non-acquired non-accrual loans to total loans was 1.73%, while SNL Financial LC reported that the SNL Peer Group (banks headquartered in Oregon and Washington, excluding banks with holding companies headquartered outside Oregon or Washington) average ratio of non-accrual loans to total loans was 4.00%. Strong net interest margin. Over numerous economic cycles, our stable deposit base has provided us with a relatively low cost of funds, an advantage that we believe may become more pronounced if interest rates rise significantly. We fund our lending activities and other assets principally through deposits from clients who in many cases have had long-term relationships with the Bank. We generally do not use brokered deposits and do not rely on wholesale funding sources. As of June 30, 2011, our total deposits were $755.3 million, of which 77.5% were core deposits (i.e., total deposits excluding time deposits in excess of $100,000). The following table compares the Bank s yield on earning assets, cost of interest-bearing liabilities, and net interest margin for the quarter ended June 30, 2011 to averages for the SNL Peer Group, each as reported by SNL Financial LC for the same period: Bank SNL Peer Group average Yield on earning assets 5.31% 5.09% Cost of interest-bearing liabilities 0.96% 1.14% Net interest margin (fully taxable equivalent) 4.51% 4.19% Market leader with community focus. We have established and maintain many valuable long-term client relationships in our four regions. We have focused on banking in smaller communities where we believe our founding principles and community banking platform can be successful. Based on the FDIC s Deposit Market Share Report as of June 30, 2010, and after giving effect to the FDIC-assisted acquisition of Home Valley Bank, we were ranked first in deposit market share in two of our four regions Klamath/Lake and Three Rivers. Community banking model with branch-level accountability. We emphasize local authority, accountability and responsibility to develop and retain high-quality client relationships. Our regional and branch managers have authority, within company-wide guidelines, to advertise locally, make loan underwriting and pricing decisions and manage client relationships. This approach permits local managers to appropriately tailor loan products and pricing to specific client needs and local market conditions. Each branch is accountable through monthly reporting and regularly scheduled leadership meetings. We support our regional and branch managers with centralized operations technology, advertising and marketing resources, management tools, and significant investment in our branches. We believe that our community banking model and infrastructure investments provide us the capacity to further grow our business. Table of Contents Industry and market data This prospectus includes statistical and other industry and market data and forecasts that we obtained from industry and government publications, research, studies and surveys. These sources include, among others, publications and data compiled by the Board of Governors of the Federal Reserve System, or Federal Reserve, the FDIC, the Bureau of Labor Statistics and SNL Financial LC., a third party subscription service. Third party publications, surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable, but there is no assurance as to the accuracy or completeness of included information. The Company has not commissioned, nor is it affiliated with, any of the sources cited in this prospectus. When we refer to the SNL Peer Group in this prospectus, we mean a peer group reported by SNL Financial LC consisting of banks headquartered in Oregon or Washington, excluding banks with holding companies headquartered outside Oregon or Washington. We believe that this information (including the industry and government publications, research, studies and surveys) is reliable. We have not independently verified any of the data from third party sources nor have we ascertained the underlying economic assumptions relied upon therein. Forecasts, assumptions and estimates are forward-looking statements and involve
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+This summary highlights information contained elsewhere in this prospectus and in the documents incorporated herein by reference. You should read the entire prospectus and the other documents incorporated herein by reference, as described under "Where You Can Find More Information," before investing in our common units. The information presented in this prospectus assumes that the underwriters' option to purchase additional common units is not exercised unless otherwise noted. You should read "Risk Factors" beginning on page 21 and the other risk factors incorporated herein by reference for information about important risks that you should consider before buying our common units. Unless the context clearly indicates otherwise, references in this prospectus to "Rhino Predecessor," "we," "our," "us" or similar terms when used with respect to periods prior to October 5, 2010, the closing date of the initial public offering of Rhino Resource Partners LP ("IPO") and the date on which the ownership interests of Rhino Energy LLC were contributed to Rhino Resource Partners LP refer to Rhino Energy LLC and its subsidiaries. When used with respect to periods on or after October 5, 2010, those terms refer to Rhino Resource Partners LP and its subsidiaries, except that, unless otherwise specified, references to our proven and probable reserves, non-reserve coal deposits and coal production do not include the reserves and deposits owned by or the production of Rhino Eastern LLC, a joint venture in which we have a 51% membership interest and for which we serve as manager, which is referred to in this prospectus as the "joint venture" or "Rhino Eastern." References to our "general partner" refer to Rhino GP LLC, the general partner of Rhino Resource Partners LP. References in this prospectus to "Wexford" refer to Wexford Capital LP, our sponsor, and its affiliates and principals. References to "Elk Horn" refer to The Elk Horn Company LLC and the "Elk Horn Acquisition" refer to our acquisition of Elk Horn on June 10, 2011. We include a glossary of some of the terms used in this prospectus as Appendix A. Rhino Resource Partners LP We are a growth-oriented Delaware limited partnership formed to control and operate coal properties and invest in other natural resource assets. We produce, process and sell high quality coal of various steam and metallurgical grades. We market our steam coal primarily to electric utility companies as fuel for their steam-powered generators. Customers for our metallurgical coal are primarily steel and coke producers who use our coal to produce coke, which is used as a raw material in the steel manufacturing process. In addition to operating coal properties, we manage and lease coal properties and collect royalties from such management and leasing activities. Our primary business objective is to make quarterly cash distributions to our unitholders at our minimum quarterly distribution and, over time, increase our quarterly cash distributions. For the three months ended March 31, 2011, we declared and paid to our common unitholders a distribution of $0.455 per common unit, or $1.82 per common unit on an annualized basis, which represents a 2.2% increase over our minimum quarterly distribution of $0.445 per unit, or $1.78 per unit on an annualized basis. For the year ended December 31, 2010, we generated revenues of approximately $305.6 million and net income of approximately $41.1 million. Excluding results from the joint venture, for the year ended December 31, 2010, we produced approximately 4.0 million tons of coal, purchased approximately 0.3 million tons of coal and sold approximately 4.3 million tons of coal. Additionally, the joint venture produced and sold approximately 0.3 million tons of premium mid-vol metallurgical coal for the year ended December 31, 2010. For the three months Amendment No. 1 to FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Table of Contents ended March 31, 2011, we generated revenues of approximately $82.8 million and net income of approximately $6.1 million. Excluding results from the joint venture, for the three months ended March 31, 2011, we produced approximately 1.2 million tons of coal and sold approximately 1.1 million tons of coal. Additionally, the joint venture produced and sold approximately 0.1 million tons of premium mid-vol metallurgical coal for the three months ended March 31, 2011. Our Properties We have a geographically diverse asset base with coal reserves located in Central Appalachia, Northern Appalachia, the Illinois Basin and the Western Bituminous region. As of December 31, 2010, we controlled an estimated 309.0 million tons of proven and probable coal reserves, consisting of an estimated 297.0 million tons of steam coal and an estimated 12.0 million tons of metallurgical coal. In addition, as of December 31, 2010, we controlled an estimated 271.8 million tons of non-reserve coal deposits. As of December 31, 2010, the joint venture controlled an estimated 22.2 million tons of proven and probable coal reserves at the Rhino Eastern mining complex located in Central Appalachia, consisting entirely of premium mid-vol and low-vol metallurgical coal, and an estimated 34.3 million tons of non-reserve coal deposits. As of March 31, 2011, we operated eleven mines, including six underground and five surface mines, located in Kentucky, Ohio, West Virginia and Utah. In addition, our joint venture operates one underground mine in West Virginia. During 2010, we operated one underground mine in Colorado, but we temporarily idled this mine at year end. Our Castle Valley mining complex in Utah began production in January 2011. The number of mines that we operate may vary from time to time depending on a number of factors, including the existing demand for and price of coal, depletion of economically recoverable reserves and availability of experienced labor. Rhino Resource Partners LP (Exact Name of Registrant as Specified in Its Charter) Delaware (State or Other Jurisdiction of Incorporation or Organization) 1221 (Primary Standard Industrial Classification Code Number) 27-2377517 (I.R.S. Employer Identification Number) 424 Lewis Hargett Circle, Suite 250 Lexington, Kentucky 40503 (859) 389-6500 (Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant's Principal Executive Offices) David G. Zatezalo 424 Lewis Hargett Circle, Suite 250 Lexington, Kentucky 40503 (859) 389-6500 (Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent for Service) (1)NS = Norfolk Southern Railroad; CSX = CSX Railroad; OHC = Ohio Central Railroad; WLE = Wheeling & Lake Erie Railroad. (2)Numbers indicate the number of active mines. U = underground; S = surface. (3)Total production based on actual amounts and not rounded amounts shown in this table. (4)Includes only a loadout facility. (5)Includes only a preparation plant. (6)The Castle Valley mine began production in January 2011, while the McClane Canyon mine was temporarily idled as of December 31, 2010. (7)Owned by a joint venture in which we have a 51% membership interest and for which we serve as manager. Amounts shown include 100% of the production. The Rocklick preparation plant is owned and operated by our joint venture partner with whom the joint venture has a transloading agreement for use of the facility. Copies to: Mike Rosenwasser Brenda K. Lenahan Vinson & Elkins L.L.P. 666 Fifth Avenue, 26th Floor New York, New York 10103 Tel: (212) 237-0000 Fax: (212) 237-0100 Charles E. Carpenter Sean T. Wheeler Latham & Watkins LLP 885 Third Avenue New York, New York 10022 Tel: (212) 906-1200 Fax: (212) 751-4864 Table of Contents Recent Developments Elk Horn. On June 10, 2011, we completed the acquisition of Elk Horn for approximately $119.5 million, subject to a working capital adjustment. We funded the purchase price with borrowings under our credit agreement. In connection with the acquisition, we exercised our option to increase the amount available to borrow under our credit agreement by $50.0 million to $250.0 million. The acquisition was made pursuant to an agreement of merger, whereby a wholly owned subsidiary of ours merged with and into Elk Horn, with Elk Horn surviving as a wholly owned subsidiary of ours. Elk Horn, whose predecessors date back to 1915, is a coal leasing company that owns or controls coal reserves and non-reserve coal deposits and surface acreage in eastern Kentucky. In connection with the acquisition, management of Elk Horn provided us with their estimate of Elk Horn's proven and probable coal reserves and non-reserve coal deposits. As of December 31, 2010, Elk Horn's management estimated that Elk Horn owned or controlled approximately 128 million tons of proven and probable coal reserves and 157 million tons of non-reserve coal deposits, which span approximately 156,000 acres, plus up to 14,000 acres of overlaying surface, across six counties in eastern Kentucky: Floyd, Johnson, Knott, Letcher, Magoffin and Pike. The Elk Horn coal is considered to be high quality coal. A portion of the Elk Horn coal is expected to meet the standards for pulverized coal injection ("PCI") and the steam coal is generally high Btu with mid sulfur content. For more information on the Elk Horn Acquisition and the risks relating thereto, please read "Elk Horn Acquisition" and "Risk Factors Risks Related to the Elk Horn Acquisition". Metallurgical Coal Properties. In June 2011, we acquired approximately 32,600 acres and associated surface rights in Randolph and Upshur Counties, West Virginia for approximately $7.5 million. These development stage properties are unpermitted and contain no infrastructure. We plan to fully explore these properties and intend to prove up additional mineable underground metallurgical coal reserves and eventually commence production. Utica Shale Oil & Gas Leases. We and an affiliate of Wexford Capital are participating with Gulfport Energy, a publicly traded company, in the acquisition of a portfolio of oil and gas leases in the Utica Shale in northeast Ohio. A separate affiliate of Wexford Capital owned approximately 18% of the common stock of Gulfport Energy as of March 30, 2011. In the first half of 2011, we purchased approximately a $7.0 million interest in a portfolio of leases and expect to participate in additional acquisitions of leases for an aggregate amount not to exceed $20.0 million. Drilling is expected to begin on these properties in late 2011. We expect our share of drilling costs will be approximately equal to the amount of our investment in the underlying leases and future drilling cost will be funded through a portion of the cash flow generated by such leases. We expect royalty revenues to be generated from these mineral rights in future periods. This is an early stage investment and subject to significant risks and uncertainties. Cana Woodford Oil & Gas Mineral Rights. In the first quarter of 2011, we acquired certain oil and gas mineral rights in the Cana Woodford region of western Oklahoma for approximately $3.0 million. In addition, in the second quarter of 2011, we purchased additional oil and gas mineral rights in the Cana Woodford region for approximately $1.3 million. Cana Woodford is a liquids rich gas play which is being actively permitted and drilled. These mineral rights represent a perpetual ownership in minerals with no future cash expenditures, and will produce monthly revenue based on production. Third parties are actively drilling in the Cana Woodford region and we expect that the interests will generate royalty revenue in early 2012. Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective. Table of Contents Business Strategy Our principal business strategy is to safely, efficiently and profitably produce, sell and lease both steam and metallurgical coal from our diverse asset base in order to maintain and, over time, increase our quarterly cash distributions. In addition, we intend to expand our operations through strategic acquisitions, including the acquisition of stable, cash generating natural resource assets. Our plan for executing our principal business strategy includes the following key components: Maintain safe coal mining operations and environmental stewardship. We are highly focused on the safety of our coal operations and work diligently to meet or exceed all safety and environmental regulations required by state and federal laws. Our non-fatal days lost incidence rate was 33.2% below the industry average for the year ended December 31, 2010. Non-fatal days lost incidence rate is an industry standard used to describe occupational injuries that result in loss of one or more days from an employee's scheduled work. Our non-fatal days lost time incidence rate for all operations for the year ended December 31, 2010 was 1.53 as compared to the preliminary national average of 2.29 for the year ended December 31, 2010, as reported by MSHA. In addition, for the year ended December 31, 2010 our average MSHA violations per inspection day was 0.70 as compared to the preliminary full year 2010 national average of 0.80 violations per inspection day, 12.5% below the 2010 national average. We believe our ability to minimize lost-time injuries and environmental and mine health and safety violations will increase our operating efficiency and maintain strong employee morale. Grow and diversify our portfolio of natural resource assets. We intend to continue to build our existing asset base through acquisitions that will be accretive to our cash available for distribution per unit and, through us and our sponsor, to evaluate and potentially acquire additional coal and other natural resource assets. We believe that the addition of other natural resource assets will diversify our revenues and provide sources of cash flow that can be used to prudently grow our quarterly distributions per unit. For example, our recent acquisition of Elk Horn adds a significant source of cash flow from the leasing of coal reserves, and we believe that our acquisitions in the Utica Shale and Cana Woodford will provide income associated with the future production of oil and natural gas in these regions. Grow operating cash flow by increasing our coal production and amount of coal under lease to third parties. We have the ability and plan to increase coal production from a significant portfolio of low cost growth projects. In addition, we have substantial coal reserves that we intend to develop or lease to increase our revenues and operating cash flow. Capitalize on the strong demand for metallurgical coal. We believe that long-term demand for metallurgical coal will continue to remain strong. Historically, metallurgical coal has sold at a premium to steam coal. In addition, a robust export market exists for metallurgical coal driven primarily by Asian demand. We have significant metallurgical coal production capability relative to our current production, which we intend to maximize during this period of high demand. Control the costs of our operations and optimize operational flexibility. We intend to control our costs through efficient mining methods and operations, attention to safety and reclamation costs and prudent business decisions. We have the operational flexibility to increase or decrease production as market conditions warrant, while If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. Large accelerated filer Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company Table of Contents maintaining our minimum quarterly distribution. This operational flexibility also preserves our assets so that we may realize higher prices on our mined coal depending on market conditions. Reduce exposure to commodity price risk through committed sales. Depending on market conditions, we may enter into both short-term and long-term supply contracts for our steam coal. Our long-term supply contracts increase the stability of our operating cash flows and mitigate the effects of coal price volatility. To the extent practicable, we will also enter into medium- and long-term supply contracts for our metallurgical coal; however, recently, this market has primarily been contracted on a shorter term basis. Manage financial and legacy liabilities to maintain financial flexibility. We believe that our conservative fiscal policies of maintaining low levels of financial leverage and minimizing legacy liabilities have enabled us to maintain and grow our business during difficult economic conditions. We expect that our financial flexibility will allow us to make opportunistic acquisitions, as well as capital expenditures to execute our planned development of existing assets, and maintain and grow our cash available for distribution. Please read "Cash Distribution Policy and Restrictions on Distributions." Competitive Strengths We believe the following competitive strengths will enable us to successfully execute our business strategy: Geographically diverse reserves with both underground and surface mining operations. We have geographically diverse operations which give us exposure to several U.S. coal basins. Our coal reserves are located in Central Appalachia, Northern Appalachia, the Illinois Basin and the Western Bituminous region. We currently operate eleven mines, including six underground and five surface mines, located in Kentucky, Ohio, Utah and West Virginia. In addition, our joint venture currently operates one underground mine in West Virginia. We believe that the geographic diversity of our reserve base allows us to sell various types of coal over a broad range of customers. This mitigates the risks over time associated with the possibility of new regulations that could negatively affect the profitability of our mining operations disproportionately among coal basins. Our geographic diversity is further enhanced by our strategic mix of underground and surface mining operations and our coal leasing business. Assigned reserve base with an approximate 29-year reserve life. As of December 31, 2010, an estimated 117.0 million tons of our proven and probable coal reserves are assigned reserves, meaning that they have the infrastructure necessary for mining. Based on our 2010 total production of approximately 4.0 million tons of coal, these assigned reserves currently have an approximate 29 year reserve life. Depending on market conditions, we have the ability and plan to grow production with minimal capital expenditures on our assigned reserves and enter into leases with third parties in order to increase operating cash flow. Attractive mix of steam and metallurgical coal mines and reserves. We have a portfolio that consists of both steam coal and metallurgical coal. We believe that our current steam coal production, along with associated supply contracts and long-lived reserves, provide us with a base cash flow to support our minimum quarterly distribution, and that our and the joint venture's metallurgical coal production provides additional coverage. Over time we have increased our production and expanded our reserves of metallurgical coal, The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine. Table of Contents which commands premium pricing to steam coal. We believe that the long-term global demand outlook for both steel and metallurgical coal is favorable. Attractive blend of short-term and longer-term sales commitments. As of July 7, 2011, we had sales commitments for approximately 51% of our estimated coal production (including purchased coal to supplement our production and excluding results from the joint venture) for the year ending December 31, 2012. We believe our short-term and longer-term sales commitments generate stable and consistent cash flows, and our and the joint venture's uncommitted coal production provides upside potential in the event that coal prices continue to increase. Extensive portfolio of near-term and long-term growth projects. We currently have low cost near-term growth projects under development or evaluation, which we believe will be accretive to our cash available for distribution upon completion. For example, we are building a preparation plant at our Tug River complex in Central Appalachia serviced by the Norfolk Southern Railroad, which we believe will enable us to increase our metallurgical and steam production and lower our costs. Our Rhino Eastern expansion project will result in increased metallurgical production from two mines. In the aggregate, we estimate that our current growth projects at Tug River and Rhino Eastern will increase our metallurgical coal production by approximately 1.1 million tons. Over the longer term, we plan to enter into sales contracts with third parties to develop production at our Taylorville field in Illinois, which has an estimated 109.5 million tons of proven and probable coal reserves. Proven track record of successful acquisitions. Since our predecessor's formation in 2003, we have completed numerous coal asset acquisitions with a total purchase price of approximately $350.3 million, including the Elk Horn Acquisition. Through these acquisitions and coal lease transactions we have significantly increased our proven and probable coal reserves and non-reserve coal deposits. These acquisitions have consisted of high quality coal reserves and union-free operations with limited reclamation and legacy liabilities. We believe that we have a disciplined acquisition strategy focused on selected assets at attractive valuations, while limiting to the extent possible the assumption of debt and reclamation and employee-related liabilities. Strong credit profile. As a result of our prudent acquisition strategy and conservative financial management, we believe that our capital structure provides us significant financial flexibility to pursue our strategic goals, including (1) pursuing acquisitions, (2) investing in our existing operations and (3) managing our operations through periods of difficult coal market conditions. We believe that compared to other publicly traded U.S. coal producers, we will have relatively low levels of outstanding debt, reclamation liabilities and postretirement employee obligations after this offering. Extensive industry experience of our senior management team and key operational employees. The members of our senior management team have, on average, 28 years of experience in the coal industry and have a demonstrated track record of acquiring, building and operating coal businesses profitably and safely throughout the United States. Relationship with our sponsor, Wexford Capital LP. Our relationship with our sponsor, Wexford Capital LP ("Wexford Capital"), provides us with significant potential long-term growth opportunities through the development and acquisition of additional natural resource assets. Wexford Capital has experience and relationships in the energy industry The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission becomes effective. This preliminary prospectus is not an offer to sell these securities and we are not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. Subject to Completion, dated July 8, 2011 PROSPECTUS 2,500,000 Common Units Representing Limited Partner Interests Table of Contents with investments in coal, oil and gas exploration and production assets, energy services and related sectors. Although it has no obligation to do so, Wexford Capital intends to complement our efforts of identifying and adding natural resource assets that will increase our distributable cash flow per unit over time. For example, Wexford Capital's knowledge of the Utica Shale and Cana Woodford regions enabled us to evaluate and acquire leases and mineral rights in those areas. Wexford Capital also identified and played an integral role in underwriting the closing of the Elk Horn Acquisition. Although Wexford Capital has no obligation to pursue acquisitions on our behalf, we believe that their activity and experience in the energy sector provides us a valuable resource for identifying, evaluating, and completing acquisitions. In addition, through its control of our general partner, Wexford provides vital services to us in a number of other areas, including with respect to the development of budgets and mine plans, capital allocation and internal growth decisions, capital-raising transactions, sales growth and development matters and long-range planning and business development.
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+PROSPECTUS SUMMARY This summary highlights selected information contained elsewhere in this prospectus and does not contain all of the information that is important to you in making your investment decision. You should carefully read the entire prospectus, including the section entitled Risk Factors, the financial statements and any free writing prospectus before making an investment decision. This registration statement, including the exhibits and schedules thereto, contains additional relevant information about us and our capital stock. With respect to the statements contained in this prospectus regarding the contents of any agreement or any other document, in each instance, the statement is qualified in all respects by the complete text of the agreement or document, a copy of which has been filed or incorporated by reference as an exhibit to the registration statement. About TD Gallery, Inc. We are a nascent start-up with a novel concept to become a web site and forum for advertising of trust deeds secured with real property in the continental United States, and provide a service that we believe at present has no competition. Our forum which we refer to as the Trust Deed Gallery (TD Gallery), or gallery, will enable trust deed holders to market their deeds, and pay a monthly membership fee for same and a transaction fee on any exchange, sale or refinancing. In addition, if the trust deed holder, or holder, or new holder desires to have TD Gallery manage the collection of proceeds from exchange or sale of the trust deeds, we will be paid a monthly management fee. We are a California corporation and were established on March 29, 2010. Our principal executive offices are located at 433 N. Camden Drive, Suite 600, Beverly Hills, California 90210. Our telephone number is (310)279-5282. Our website can be accessed at www.trustdeedgallery.com Corporate Information Our executive offices are located at 433 N. Camden Drive, Suite 600, Beverly Hills, California 90210 and our telephone number is (310)279-5282. We were incorporated in California on March 29, 2010. Additional information about us is available on our website at www.trustdeedgallery.com. The information contained on or that may be obtained from our website is not, and shall not be deemed to be, a part of this prospectus. Risk Factors An investment in our common stock involves a high degree of risk. You should carefully consider the risks described under Risk Factors beginning on page 9 of this prospectus, as well as other information included in this prospectus, including our financial statements and the notes thereto, before making an investment decision. The Offering The following summary contains basic information about the offering and our common stock and is not intended to be complete. It does not contain all the information that is important to you. For a more complete understanding of our common stock, please refer to the section of this prospectus entitled Description of Capital Stock. Issuer TD Gallery, Inc., a California corporation. Common stock offered by us 5,000,000 shares of common stock, par value $0.001 per share. Common stock outstanding after 6,473,369 shares of common stock. this offering. Use of Proceeds We intend to use the net proceeds from the sale of our common stock in this offering for working capital and general corporate purposes. RISK FACTORS We are subject to various risks that may materially harm our business, financial condition and results of operations and an investment in our common stock involves a high degree of risk. In evaluating an investment in shares of our common stock, you should carefully consider the risks described below, together with the other information included in this prospectus. The risks described below are the material risks we face. If any of the events described in the following risk factors actually occurs, or if additional risks and uncertainties not presently known to us or that we currently deem immaterial materialize, then our business, results of operations and financial condition could be materially adversely affected. In that event, you may lose all or part of your investment in our shares. The risks discussed below include forward-looking statements, and our actual results may differ substantially from those discussed in these forward-looking statements. Risks Related to Our Business Our independent registered public accounting firm has issued an unqualified opinion with an explanatory paragraph to the effect that there is substantial doubt about our ability to continue as a going concern. Our independent registered public accounting firm has issued an unqualified opinion with an explanatory paragraph to the effect that there is substantial doubt about our ability to continue as a going concern. This unqualified opinion with an explanatory paragraph could have a material adverse effect on our business, financial condition, results of operations and cash flows. See Management s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources and Note 2 to our financial statements for the period from March 29, 2010 (inception) through September 30, 2010, included elsewhere in this prospectus. We have no committed sources of capital and do not know whether financing will be available when needed on terms that are acceptable, if at all. This going concern statement from our independent registered public accounting firm may discourage some investors from purchasing our stock or providing alternative capital financing. The failure to satisfy our capital requirements will adversely affect our business, financial condition, results of operations and prospects. Unless we raise funds, we will not have sufficient funds to commence operations. Even if we take these actions, they may be insufficient, particularly if our costs are higher than projected or unforeseen expenses arise. We are a company with no operating history and our future profitability is uncertain. We are a company with no operating history and no revenues to date. We expect to expend significant resources on start-up costs, marketing, and investing in real estate debt. We are attempting to obtain the necessary working capital for operations, but we may not be able to obtain financing in a sufficient amount or at all. We have not yet demonstrated our ability to generate revenue, and we may never be able to produce material revenues or operate on a profitable basis. Our planned TD Gallery may never generate revenues. As a result, we have incurred losses since our inception and expect to experience operating losses and negative cash flow for the foreseeable future. Our brand name and business concept may not be recognized in our marketplace, so our results of operations and financial condition may suffer. Our brand name and business concept is new and unproven. Essentially, we will solicit noteholders to market their trust deeds through TD Gallery. The noteholders will pay a monthly fee to belong to a showcase that will market the notes to other parties, potential investors, and we will attempt, if possible, to negotiate new terms on certain loans, and marry investors to noteholders, while servicing the investors in their dealings with the lending institutions. There are a myriad of ways we will generate revenue from the membership dealings on a monthly basis, to fees charged should refinancing or note acquisition be successful. But our entire business concept is based on volume, and the need to have a large number of notes available for display, trade, and solicitation to investors. Without the volume, needed to attract investors and generate the monthly revenue through membership, our results of operations and financial condition will suffer. Thus, if we are unable to effectively develop and timely promote our brand and TD Gallery and establish a leading position in our marketplace, our business could fail. The loss of the services of our key management or the failure to attract additional key management could adversely affect our ability to operate our business. A loss of one or more of our current officers could severely and negatively impact our business. Specifically, the loss of services of George Ivakhnik, CEO and President, Talwinder Rana, Chief Operating Officer, Garron Robinsons, Executive Vice President, or, all of whom have an employment agreements with us, could significantly harm our business. We are highly dependent upon the services of our executive officers and their contacts in the industry. We have no present intention of obtaining key-man life insurance on any of our executive officers or management. Additionally, competition for highly skilled technical, managerial and other personnel is intense. As our business develops, we might not be able to attract, hire, train, retain and motivate the highly skilled managers and employees we need to be successful. If we fail to attract and retain the necessary managerial personnel, our business will suffer and might fail Risks Related to the Ownership of Our Stock There is no active trading market for our common stock and if a market for our common stock does not develop, our investors will be unable to sell their shares. There is currently no active trading market for our common stock and such a market may not develop or be sustained. We currently plan to have our common stock quoted on the OTC Bulletin Board. In order to do this, a market maker must file a Form 15c-211 to allow the market maker to make a market in shares of our common stock. At the date hereof, we are not aware that any market maker has any such intention. We cannot provide our investors with any assurance that our common stock will be quoted on the OTC Bulletin Board or, if quoted, that a public market will materialize. Further, the OTC Bulletin Board is not a listing service or exchange, but is instead a dealer quotation service for subscribing members. If our common stock is not quoted on the OTC Bulletin Board or if a public market for our common stock does not develop, then investors may not be able to resell the shares of our common stock that they have purchased and may lose all of their investment. If we establish a trading market for our common stock, the market price of our common stock may be significantly affected by factors such as actual or anticipated fluctuations in our operating results, general market conditions and other factors. In addition, the stock market has from time to time experience significant price and volume fluctuations that have particular affected the market prices of the shares of developmental stage companies, which may adversely affect the market price of our common stock in a material manner. We will likely conduct further offerings of our equity securities in the future, in which case your proportionate interest may become diluted. Since our inception, we have relied on such sales of our common stock to fund our operations. We will likely be required to conduct additional equity offerings in the future to finance our current business or to finance subsequent businesses that we decide to undertake. If common stock is issued in return for additional funds, the price per share could be lower than that paid by our current stockholders. We anticipate continuing to rely on equity sales of our common stock in order to fund our business operations. If we issue additional stock, your percentage interest in us could become diluted. Because Our Common Stock Is Deemed A Low-Priced Penny Stock, An Investment In Our Common Stock Should Be Considered High Risk And Subject To Marketability Restrictions. Since our common stock is a penny stock, as defined in Rule 3a51-1 under the Securities Exchange Act, it will be more difficult for investors to liquidate their investment even if and when a market develops for the common stock. Until the trading price of the common stock rises above $5.00 per share, if ever, trading in the common stock is subject to the penny stock rules of the Securities Exchange Act specified in rules 15g-1 through 15g-10. Those rules require broker-dealers, before effecting transactions in any penny stock, to: Deliver to the customer, and obtain a written receipt for, a disclosure document; Disclose certain price information about the stock; Disclose the amount of compensation received by the broker-dealer or any associated person of the broker-dealer; Send monthly statements to customers with market and price information about the penny stock; and In some circumstances, approve the purchaser s account under certain standards and deliver written statements to the customer with information specified in the rules. Consequently, the penny stock rules may restrict the ability or willingness of broker-dealers to sell the common stock and may affect the ability of holders to sell their common stock in the secondary market and the price at which such holders can sell any such securities. These additional procedures could also limit our ability to raise additional capital in the future. The Financial Industry Regulatory Authority sales practice requirements may also limit a stockholder s ability to buy and sell our stock. In addition to the penny stock rules described above, the Financial Industry Regulatory Authority, which we refer to as FINRA, has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer s financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. The FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock and have an adverse effect on the market for shares of our common stock. If we are dissolved, it is unlikely that there will be sufficient assets remaining to distribute to the shareholders. In the event of our dissolution, any proceeds realized from the liquidation of our assets will be distributed to the shareholders only after all claims of our creditors are satisfied. In that case, the ability of purchasers of the offered shares to recover any portion of his or her purchase price for the offered shares will depend on the amount of funds realized and the claims to be satisfied there from. Since we are a development-stage company, we do not anticipate paying dividends in the foreseeable future. We do not anticipate paying dividends on either our common stock or preferred stock in the foreseeable future, but plan rather to retain earnings, if any, for the operation, growth and expansion of our business. There is control of the company by existing stock holders. TD GALLERY, INC.'s founders will own 95%, of the capital stock of TD GALLERY, INC. following the Offering. Consequently, although investors who purchase Stock will have contributed a significant portion of TD GALLERY, INC.'s capital, control of TD GALLERY, INC. will reside with, and TD GALLERY, INC.'s operations will continue to be dramatically influenced by its founders and insiders. The share price was arbitrarily determined. The per share purchase price for the shares price hereby bears no relationship to established criteria (such as book value per share, a multiple of earnings or revenue, or any other criteria) and was arbitrarily determined. In addition, TD GALLERY, INC. has not obtained, and will not obtain, any opinion of an investment banker or advisor as to the fairness of per share purchase price of the Stock. There is no established business. The Company has no substantial business background, and is in need of capital to start operation. Significant capital and time has been expended to prepare this project, but income at projected levels is not yet achieved nor specific start-up capital. The Company does not have substantial income. This offering is structured to maximize corporate potential, with risks. The investment is through use of stock. Investment will be through use of Stock. Essentially, the transaction is structured so as to return capital through Stock, and offer potential high return by dividend. But, there are no guaranties the Company will generate sufficient revenue to pay dividends, let alone appreciate in value to the point a stock sale will eventually make sense. Corporate assets are not always liquid in nature and a default could lead to a fairly long time period between lapse of payment and recoupment of investment, even presuming, as is the case, the good faith of the management. Liquidity will always be targeted to business needs, so one could find a Company cash-poor, unable to pay on-going dividends. There is importance of the initial proceeds from the venture. The funds from the sale of the stock will have a critical effect on the future success of the Company, and place TD GALLERY, INC. s operations into business. The Company will use the proceeds as in the Business Summary, and these proceeds are crucial to TD Gallery, Inc. and profit structure. Even with full capitalization, it is possible the Company may not be adequately capitalized, or may need to borrow elsewhere, putting major restrictions on future cash flow. In this regard, this offering is structured with the hope for singular funding to be raised. All risks are minimized, but not extinguished, with maximum funding raised. There is a lack of history of paying distributions. TD GALLERY, INC. has no history of paying distributions. Yet the investment desires dividend distributions on substantial profits earned. All payment presumes substantial after-tax income from TD GALLERY, INC. from completion of this offering. Failure to so perform could leave the stockholders in jeopardy, as to payments, and return of capital. The other stockholders will be disclosed. The Company will, upon the request of any investor, provide to such investor a list of the names and addresses of the other purchasers of Stock. There is no assurance on return on investment. No assurance can be given that a purchaser of Stock will realize a return on his investment or that he will not lose his investment. Investment in the Company involves a substantial degree of risk and, therefore, each prospective investor should read this offering Memorandum and all Exhibits hereto carefully and should consult with his own personal attorney, tax consultant, accountant or business advisor prior to making any investment decision. There is limited liquidity for the Shares. There is no public trading market for the Shares, and the Company do not currently intend to list the Shares on a securities exchange or automated quotation system in the near future. If you are able to sell the securities, you may have to sell them at a significant discount. The Company has an immediate need for the proceeds from this offering to be utilized in the real estate operations. If only limited proceeds are generated through the sale of the Shares, the Company may not be able to meet its anticipated working capital needs. Accordingly, early investors will be at greater risk since the Company will have less working capital available to finance operations. The current conditions in the U.S. economy and turmoil in the credit markets could limit demand for the residential properties and affect the overall availability and cost of credit. With respect to the Company, currently these conditions have not impaired the ability to access credit markets and finance the operations, however, the impact of the current crisis on the ability to obtain financing in the future and the costs of terms of the same, is unclear. No assurances can be given that the effects of the current crisis will not have a material adverse effect on the business, financial condition and results of operations or those of the tenants or co-investment partners. Most properties will be in Los Angeles located in Southern California, making the Company more vulnerable to certain adverse events than if the Company owned a more diverse portfolio of properties. The internal management controls this Company. It currently has the ability to effectively vote approximately 95% of the outstanding voting securities, and assuming the issuance of all Shares in this offering, including through the dividend reinvestment plan, will have the ability to effectively vote approximately 95% of the outstanding voting securities. The interests of Mr. Ivakhnik may conflict with the interests of the other shareholders and Mr. Ivakhnik could cause the Company to take actions that the other shareholders may not support. Other Risk Factors Risks Related to this Offering The Company may change the investment and operational policies without stockholder consent. Except for changes to the investment objectives and investment restrictions contained in the charter, which requires stockholder consent to amend, the Company may change the investment and operational policies, including the policies with respect to investments, acquisitions, growth, operations, indebtedness, capitalization and distributions, at any time without the consent of the stockholders, which could result in the making investments that are different from, and possibly riskier than, the types of investments described in this prospectus. A change in the investment strategy may, among other things, increase the exposure to interest rate risk, default risk and residential real estate market fluctuations, all of which could materially affect the ability to achieve the investment objectives. Valuations and appraisals of Company trust deed acquisitions will be estimates of fair value and may not necessarily correspond to realizable value. If the Company is unable to raise substantial funds in this offering, the Company will be limited in the number and type of investments it may make which could negatively impact the investment. This offering is being made on a best efforts basis, whereby the Company is only required to use its best efforts to sell Shares and the Company has no firm commitment or obligation to purchase any of the Shares. As a result, the amount of proceeds the Company raises in this offering may be less than the amount he Company would need to achieve a broadly diversified portfolio. Its inability to raise substantial funds would increase its fixed operating expenses as a percentage of gross income, and the financial condition and ability to make distributions could be adversely affected. Additionally, if the Company is unable to raise substantial funds, it will make fewer investments resulting in less diversification in terms of the number of investments owned, the geographic regions in which the property investments are located and the types of investments that the Company makes. In that case, the likelihood that any single investment s performance would adversely affect the profitability will increase. OUR COMPLIANCE WITH ENVIRONMENTAL PROTECTION LAWS We are not aware of any current federal, state or local environmental compliance regulations that have a material effect on our business activities. We have not expended material amounts to comply with any environmental protection statutes and do not anticipate having to do so in the foreseeable future. PROPERTIES Our main corporate office is located at 433 N. Camden Drive, Suite 600, Beverly Hills, California 90210. We currently lease approximately 1,500 square feet of space at this property. LEGAL PROCEEDINGS We may from time to time be involved in litigation relating to claims arising out of our ordinary course of business. Our management does not believes that there are any claims or actions pending or threatened against us, the ultimate disposition of which would have a material impact on our financial position, results of operations or cash flows. MARKET FOR AND DIVIDENDS ON REGISTRANT S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS No Public Market for Common Stock There is presently no public market for our Common Stock. We intend to request a registered broker-dealer to apply to have our common stock listed on the OTC Bulletin Board upon the effectiveness of the registration statement of which this prospectus forms a part. However, we can provide no assurance that our shares will be traded on the OTC Bulletin Board or, if traded, that a public market will materialize. We will register 25,000,000 shares. MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements and related notes appearing elsewhere in this prospectus. Updated financial statements are not included in this Form S-1/A. In addition to historical information, this discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors, including, but not limited, to those set forth under Risk Factors and elsewhere in this prospectus. The Company name is TD GALLERY, INC., a corporation marketing, sale and exchange of Trust Deeds for residential and business real estate. All potential income will flow through this Company. The Company will control all negotiations and all revenues. The investors will share in these revenues, as they are received through the venue of dividends, predicated on investment. CORPORATE STRUCTURE The capitalization commences with 100% ownership of common stock by the present insiders, who are George Ivakhnik, Tal Rana, Garron Robinson plus sale to the public of approximately 5% of our outstanding shares. Assuming the maximum is sold in varying amounts. The investors will hold common stock as is noted of 5% of corporate ownership, or 5,000,000 shares. Presently the Company will issue 5,000,000 shares of common stock. LEGAL FORM OF BUSINESS The legal form of business is a C corporation that is newly formed for the business venture herein.
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+PROSPECTUS SUMMARY Before making an investment decision, you should read the entire prospectus carefully, including Risk Factors and our consolidated financial statements, including the notes to the financial statements appearing elsewhere in this prospectus. As used throughout this prospectus, the terms we, us, and our and words of like import refer to China Equity Platform Holding Group Limited and its direct and indirect subsidiaries but do not include the selling shareholders. Certain Other Terms Used in This Prospectus Currency, exchange rate, and China and other references Unless otherwise noted, all currency figures in this filing are in U.S. dollars. References to "yuan" or "RMB" are to the Chinese yuan, which is also known as the Renminbi. According to the currency exchange website www.oanda.com, on September 19, 2011, $1.00 was equivalent to 6.3435 yuan. References to PRC are to the People s Republic of China. Unless otherwise specified or required by context, references to we, the Company , our and us refer collectively to (i) China Equity Platform Holding Group Limited and (ii) the subsidiaries of China Equity Platform Holding Group Limited, namely Chinae.com Technology (Shenzhen) Co., Ltd ( ( ) ), Chinae.com Investment Consultant (Shenzhen) Co., Ltd ( ( ) ), Chinae.com E-Commerce Co., Ltd ( ), Shenzhen United Property And Share Rights Exchange ( ), and Chinae.com Focus Advertising Co., Ltd ( ). References to registered capital are to the equity of each of the PRC-registered subsidiaries, which under PRC law is measured not in terms of shares owned but in terms of the amount of capital that has been contributed to a company by a particular shareholder or all shareholders. The portion of a limited liability company s total capital contributed by a particular shareholder represents that shareholder s ownership of the company, and the total amount of capital contributed by all shareholders is the company s total equity. Capital contributions are made to a company by deposits into a dedicated account in the company s name, which the company may access in order to meet its financial needs. When a company s accountant certifies to PRC authorities that a capital contribution has been made and the company has received the necessary government permission to increase its contributed capital, the capital contribution is registered with regulatory authorities and becomes a part of the company s registered capital. THE COMPANY Overview of Our Business We are, through our subsidiaries, a high-tech financial services provider based in the People s Republic of China ( China or the PRC ). We bridge the Chinese and international capital markets by investing technology and capital into regional private equity institutions. We have a nationwide equity service platform that provides both online and offline financial services. We also provide business consulting and project management services for PRC companies seeking capital funds. Presently there are over 230 private equity exchanges in the PRC. Generally, the over-the-counter equity market quotation, or OTC for short, refers to securities trading quotation display services for primarily stocks of high-tech companies and high-growth companies and delisted corporate stocks to display quotation out of stock exchanges. As a result of contrasting economic system and development, China's OTC equity market quotation system is a comparatively comprehensive one and the term generally refers to quotation services where unlisted stocks or equities are display other than in Shanghai Stock Exchange and Shenzhen Stock Exchange. China's OTC equity market primarily includes the Property Rights Exchange Market, Stock Transfer Systems and Stock Equity Exchange Market (Source: http://www.zero2ipo.com.cn/en/n/2009-2-24/2009224132931.shtml). However only 65 of them have been approved to participate in the privatization of state assets and only approximately 10% of the transactions at these quotation systems involves foreigners and all the quotation systems are loosely connected. At this time the various equity exchanges quotation services in the PRC work, for the most part, independently of one another, which we believe is very inefficient. We believe that we will be, through our software technology, able to provide an equity exchange quotation service platform that we hope will bridge all these regional exchanges quotation systems in one cohesive network. Additionally, we hope that our platform will also enable the flow of information regarding rights transfers and payments among the different exchanges, including Shenzhen United Property And Share Rights Exchange (formerly known as Shenzhen International Hi-Tech Equity Exchange), an exchange quotation system in which we have an indirect equity stake in. We are currently in the process of updating our software. We expect to introduce our software towards the end of 2011. After we finish our software update, we intend to apply for a software patent with the relevant PRC authorities. Although we currently expect that our software update will be completed during 2011, we can provide no assurance that this will occur or if it does occur, that our patent application will be approved. In addition, we cannot provide any assurance that our updated software will gain market acceptance. Our goal is to be the most heavily displayed equity exchange quotation platform for non-listed quality assets in the PRC and the largest source of information about such assets through our internet portal, www.chinae.com. In addition to our plans to implement an equity service platform as described above, we also provide consulting services to small to medium sized enterprises ( SMEs ). We assist SMEs in streamlining their operations, reduce costs and improve management and we draw revenue in the form of consulting fees. We have received approximately US$1,400,000 in revenue in relation to consulting services provided to customers last year. Our major customers include New Horizon Capital Advisors Ltd, Pacific Success Holdings Limited, ShenZhen INTER-JOY LOTTO Information Technology Co., Ltd., ShenZhen Lorenzo Industry Development Co., Ltd., and Shenzhen Venture Capital Association. Finally, we provided consulting services and advice to SMEs. These services may include but not limit to networking, managing relationship, setting policy and procedure, selecting strategy, controlling projects, analyzing international business environment, bookkeeping, outsourcing, refining operation and planning and executing financial re-structuring, etc. We seek to understand our clients capital needs and assist them in meeting them by means of introducing them to sources of funds e.g. investment banks and individual investors. The financing may be in the form of a bridge loan or private investment in public equity ( PIPE ). We have received US$1,547,893 in 2011 for services rendered to Shenzhen Tech and Ecology and Environment Co., Ltd. We have signed approximately 12 contracts in 2010and 16 contracts in 2009 in relation to our services acting as a fund-raising agency. Generally, we receive 3-6% of the actual amount involved in the transactions as commission for our services provided. We were incorporated on March 5, 2008 under the laws of the British Virgins Islands. Our Company was formed as the result of a joint venture agreement (the JV Agreement ) entered into by and between Uni Core Holdings Corporation (formerly known as Intermost Corporation ) ( Uni Core ) and certain investors (the Investors ). Pursuant to the JV Agreement, Uni Core and the Investors agreed to form a new holding company named China Equity Platform Holding Group Limited into which certain former subsidiaries of Uni Core would be contributed in exchange for shares of common stock of the newly formed entity. The intention of Uni Core and the Investors was seek quotation of our Company on the OTC Bulletin Board. Uni Core, which is quoted on the OTC Bulletin Board under the symbol UCHC (formerly traded as IMOT ) received 60,000,000 shares of our common stock pursuant to the JV Agreement, which as of September 16, 2011 amounts to 53.42% of our outstanding common stock. As of September 16, 2011, Uni Core is our single largest shareholder. We intend to begin discussions with various market makers in order to arrange for an application to be made with respect to our common stock to be approved for quotation on the OTC Bulletin Board upon the effectiveness of this prospectus. Organization Structure The following chart shows the organizational structure of our Company and its principal operating subsidiaries, including joint venture ownerships. The location of the headquarters of each company is indicated in parentheses under the company s name ( BVI for the British Virgin Islands and PRC for the People s Republic of China) Corporate Information Our principal offices are located at Room 1506-1509, Rongchao Landmark, 4028 Jintian Road, Futian District, Shenzhen, People s Republic of China (518026), and our telephone number is 86-755-82210238 and 86-755-82577718. We are incorporated under the laws of the British Virgin Islands. Further information on the Company is also available on our website at http://www.chinae.com. Unless specifically provided herein, we do not intend for the information on our website to be incorporated by reference in this prospectus. SUMMARY FINANCIAL INFORMATION You should read the following summary financial data in conjunction with our consolidated financial statements and the related notes, "Selected Consolidated Financial Data" on page 22, and our Management s Discussion & Analysis of Financial Condition and Results of Operations on page 24 . Our financial statements are reported in United States Dollars and presented in accordance with United States generally accepted accounting principles. The financial reports for the year ended March 31, 2011, 2010 and 2009 have been audited by Albert Wong & Co., Certified Public Accountants. Year Ended March 31, 2009 2010 2011 Consolidated Income Statement Revenue 1,482 71,810 1,547,893 Cost of Revenue (6,678 ) (64,342 ) (605,860 ) Gross Profits(Loss) (5,196 ) 7,468 ) 942,033 Expenses (1,195,026 ) (857,336 ) (1,005,965 ) Interest (net of interest expenses) (241 ) 517 ) 1,262 Other Income 145 326,524 426,936 Operating from continue operation before income tax (1,200,318 ) (522,827 ) 364,26 Income tax - - - Net Income/loss (1,200,318 ) (522,827 ) 364,264 Earnings Per Share Basic (0.0120 ) (0.0050 ) 0.0032 Earnings Per Share Diluted (0.0120 ) (0.0050 ) 0.0032 Weighted Average Number of basic shares outstanding 100,000,000 103,645,274 112,315,000 Weighted Avenue Number of dilute shares outstanding 100,000,000 103,645,274 112,315,000 As of March, 31 2009 2010 2011 Consolidated Balance Sheet Data Cash 96,834 312,896 793,617 Current assets 845,359 751,280 730,440 Other assets 186,293 60,234 62,123 Total assets 1,128,486 1,124,410 1,586,180 Total current liabilities 258,516 250,413 229,475 Total shareholders equity 869,970 873,997 1,356,705 Total liabilities and shareholders equity 1,128,486 1,124,410 1,586,180 THE OFFERING In making your decision on whether to invest in our securities, you should take into account the backgrounds of the members of our management team. You should also carefully consider the risks set forth under Risk Factors beginning on page 10 of this Prospectus. This prospectus relates to the 50,840,000 shares of common stock of China Equity Platform Holding Group Limited. Common Shares outstanding prior to offering 112,315,000 Common Shares offered by Company 0 Total Common Shares offered by selling shareholders 50,840,000 Common Shares to be outstanding after the offering 112,315,000 Use of Proceeds We will not receive any of the proceeds of sale of the shares of common stock by the selling shareholders. The offering price of the shares has been arbitrarily determined by us based on the last private placement of Common Shares to 13 individual shareholders December 2, 2009. Selling shareholders may sell Common Shares at this set price of $0.05 per share until such time as our shares are quoted on the OTC Bulletin Board, and then thereafter, at prevailing market prices or privately negotiated prices. The offering price of the shares bears no relationship to the assets, earnings or book value of us, or any other objective standard of value. We believe that no shares will be sold by any of the selling shareholders prior to our becoming a publicly traded company, at which time the selling shareholders will sell shares based on the market price of such shares. We are not selling any shares of our common stock, and are only registering the re-sale of Common Shares previously sold by us.
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001491501_tms_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001491501_tms_prospectus_summary.txt
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+Prospectus Summary 1
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+Prospectus Summary 1
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+PROSPECTUS SUMMARY
+
+You should read the entire prospectus carefully, including the more detailed information regarding VR Holdings, Inc., the risks of purchasing our common stock discussed under Risk Factors, and our financial statements and the accompanying notes. Throughout this prospectus references to VR Holdings, we, us and our refer to VR Holdings, Inc., a Delaware corporation, unless otherwise specified or the context otherwise requires.
+
+The Company
+
+VR Holdings, Inc., a Delaware corporation, was incorporated in 1998 to be the parent company of MML, Inc., a Maryland corporation, the parent company of Alleco, Inc., a Maryland corporation, Allegheny Pepsi Cola Bottling Company, a Maryland corporation, Transcolor Corp., a Maryland corporation and its subsidiary Valley Rivet Company, Inc., an Illinois corporation, entities owned by MML, Inc. which was in turn controlled by Morton M. Lapides, Sr. and his family. In November of 1998, Valley Rivet Company was transferred from being a subsidiary of MML, Inc. to being a direct subsidiary of VR Holdings. VR Holdings itself has never had any operations or employees but has acted as a holding company only. As of the date of this prospectus, Alleco, Inc., Allegheny Pepsi Cola Bottling Company, Transcolor Corp., Valley Rivet Company, Inc., and MML, Inc. (collectively, the VR Holdings Subsidiaries ) are no longer active. Mr. Lapides, along with his wife are the controlling stockholders of Deohge Corp., a Maryland corporation, which is the controlling stockholder of VR Holdings. See Principal Stockholders. 
+
+Due to a series of events involving alleged illegal practices by various lenders and other parties, VR Holdings lost control of the VR Holdings Subsidiaries and the loss of an estimated $1.6 billion associated with their operations. As a result, it was decided by the stockholders of VR Holdings to reorganize VR Holdings, change our business plan, and file a law suit against various lenders and related parties to recover the damages allegedly caused by the alleged illegal activities. See The Cancer Foundation, Inc. v. Cerberus Capital Management, LP, more fully discussed in Business Legal Proceedings. If we are successful in our litigation effort in The Cancer Foundation, Inc. v. Cerberus Capital Management, LP going forward our business is expected to consist of a strategy to provide our stockholders with an attractive level of capital growth through investing directly and indirectly in litigation and arbitration cases, claims and disputes. See Business - Financing Litigation. 
+
+Currently, the primary function of VR Holdings is to pursue the litigation of The Cancer Foundation v. Cerberus Capital Management, LP and secondarily will be to invest directly and indirectly in litigation and arbitration cases, claims and disputes. We hope to provide the capital for our intended business plan through the proceeds which we may receive in The Cancer Foundation, Inc. v. Cerberus Capital Management, LP litigation described in this prospectus. However, if we are not successful in that litigation, we still intend to pursue our business plan, and if necessary raise whatever funds we may need by means of a debt or equity offering. It should be clearly understood that we will not be able to commence our proposed business, unless and until we are successful in The Cancer Foundation, Inc. v. Cerberus Capital Management, LP litigation, or we raise additional funds by means of a debt or equity offering. We will explore whatever capital-raising steps which seem most likely to produce the capital we need to finance our litigation and to fund our proposed business going forward. We have not yet made any decision on what capital-raising steps we might take, but expect to make that decision once we know the outcome of The Cancer Foundation, Inc. v. Cerberus Capital Management, LP litigation. 
+
+Additionally, the primary purpose of the offering is to have claimants of certain debt, as described in this prospectus, exchange their claims for shares in VR Holdings, allow a market to be established for the shares of VR Holdings, and create liquidity for these claimants. One of the effects of the exchange of claims with the claimants is to extinguish any claim against Mr. Lapides for which he has been held personally liable in Cause No. 98-6-5483-JS, In re Transcolor Corporation, Debtor, National City Bank of Minneapolis, Plaintiff vs. Morton M. Lapides, Sr., et al., Defendants, in the United States Bankruptcy Court for the District of Maryland. In the Maryland litigation, Mr. Lapides was found to be personably liable for $7,000,000, plus interest. The secondary purpose of this prospectus is to register shares of VR Holdings which have been issued to certain individuals and other parties as gifts and for services rendered or to be rendered. See Management s Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources and Selling Stockholders. 
+
+1
+
+If we are not successful in our litigation in The Cancer Foundation, Inc. v. Cerberus Capital Management, LPI, the amount owed by Mr. Lapides will not be paid by VR Holdings. As stated below, VR Holdings does not have any legal obligation to offer any of its shares to any of the below described claimants, but we wish to do so to resolve potential claims against us so that we can move forward with the expectation that our past liabilities, both asserted and unasserted, have been extinguished. However, management does not believe that VR Holdings has any liability for the sums owed by Mr. Lapides. 
+
+As we are committed to the continued development and growth of our business, we will need to engage specialized key personnel, such as underwriters and legal personnel, to assess risks of investing in lawsuits and to assist VR Holdings in the execution of our business model, inasmuch as John E. Baker, our chief executive officer, does not possess the requisite level of expertise to perform such functions. Further, Mr. Baker will not devote his entire working efforts to our business, since he is currently employed as chief financial officer and treasurer of Inware Technologies, Inc. It is possible that we will not be able to locate and hire such specialized personnel on acceptable terms.
+
+There are a number of risks associated with an investment in VR Holdings going forward, many of which are discussed in the sections Risk Factors and Business, and elsewhere in this prospectus. Any potential investor should be particularly mindful that we have a limited operating history on which to evaluate our business and that a comparison of our results of operations from period to period is not necessarily meaningful. Further, our results of operations for any period are not necessarily indicative of our future performance.
+
+For the fiscal year ended September 30, 2010, we generated no revenues and incurred a net loss of $322,046. As a result, our auditors in their report on our financials for the fiscal year ended September 30, 2010, have expressed substantial doubt about our ability to continue as a going concern. If we are unable to successfully execute our marketing plans with limited resources, we will not be able to generate enough revenue to achieve and maintain profitability or to continue our operations.
+
+Our principal executive offices are located at 1615 Chester Road, Chester, Maryland 21619, telephone and telecopier number (443) 519-0129, and email cfausa100@aol.com. As of the date of this prospectus, we do not have a website, although, we do expect have one soon. Once our website is established, the information contained in our website shall not constitute part of this prospectus.
+
+The Offering
+
+In the fall of 1998, MML, Inc. was the parent of all of the other VR Holdings Subsidiaries, other than Valley Rivet Company, Inc. which was contemplating an acquisition and financing related thereto. Our bank requested restructuring whereby a new parent would own Valley Rivet and MML, Inc, directly, which in turn would own Transcolor and its subsidiaries and Alleco. As a result, VR Holdings became the parent of the VR Holdings Subsidiaries in November 1998, with the same owners that owned MML, Inc. prior to the restructuring.
+
+The $1.6 billion in claims stated above are claims of MML, Inc., its subsidiaries, and Valley Rivet Company as they existed before the restructuring. Included, as subsidiaries of MML, Inc., are Transcolor Corp., Alleco, Inc., and Allegheny Pepsi Cola Bottling Company. There are approximately 2,500 claimants in the total claim of $1.6 billion, approximately 2,000 of which are Senior Note holders of Alleco, Inc./Transcolor Corp., who are represented by Marshall & Ilsley Trust Co., the Indenture Trustee in The Cancer Foundation, Inc. v. Cerberus Capital Management, LP, more fully discussed in Business Legal Proceedings, and approximately 500 who are general creditors and investors of Valley Rivet Company and Transcolor Corp. VR Holdings is not legally responsible for any of the claims of MML, Inc., its subsidiaries, or Valley Rivet Company, but the board of directors of VR Holdings, in an effort to recoup its damages and those of all prior subsidiaries, has reorganized VR Holdings, and in order to ensure that some, if not all, potential claims are resolved is offering to exchange the claims of the claimants of MML, Inc., its subsidiaries, and Valley Rivet Company for shares in VR Holdings on the basis that one share of our common stock will be exchanged for each $4.47 of claim.
+
+2
+
+ 
+
+ 
+
+The following organization chart is provided to assist the reader:
+
+VR Holdings, Inc.
+
+Organizational Chart
+
+ 
+
+ 
+
+3
+
+ 
+
+Valley Rivet Company, Inc. In 1998, this company, a manufacturer of rivets was transferred from the ownership of Transcolor Corp, which was a subsidiary of MML,Inc., to the newly formed VR Holdings, Inc. A bank that was considering financing an acquisition for Valley Rivet had requested this change as a condition of the financing agreement. In 2002, this company entered into a voluntary bankruptcy proceeding, a trustee was appointed by the bankruptcy court, and all operating assets were liquidated by the trustee to pay outstanding liabilities. Any remaining liabilities were discharged by the court. Valley Rivet retained a claim relating to the Winterland Concession Company financing transaction which resulted in The Cancer Foundation, Inc. v Cerberus Capital Management, LP litigation. The Valley Rivet corporate charter was allowed to lapse after it assigned the above claim to its parent, VR Holdings, Inc. This entity is no longer active.
+
+Allegheny Pepsi Cola Bottling Company. This corporation was sold to PepsiCo for cash by its parent, Allegheny Beverage Corporation, in 1985. Allegheny Beverage Corporation subsequently changed its name to Alleco, Inc.
+
+Transcolor Corp. In 1996, Transcolor Corp. sold its inventory to Winterland Concessions Company for cash, and leased all other assets to Winterland for $14 million, payable annually at the rate of $1.4 million per year. Winterland filed for bankruptcy and ceased making lease payments to Transcolor causing Transcolor to be forced into bankruptcy. The bankruptcy process was abandoned by the trustee, and Transcolor was left with no assets and substantial liabilities. These liabilities have been incorporated as part of the claims against Cerberus Capital Management, LP including the publicly held Senior Notes. These Senior Notes are no longer an outstanding obligation and not collectible, due to the statute of limitations. All claims were assigned to Transcolor s parent, VR Holdings, Inc., and Transcolor s charter was allowed to lapse.
+
+Alleco, Inc. Formerly Allegheny Beverage Corporation was owned by its parent, MML, Inc. and the . assets and liabilities of Alleco, Inc., as well as other assets and liabilities of MML, Inc. were transferred from MML, Inc. to its new parent, VR Holdings, Inc., but MML, Inc. did not merge with VR Holdings, Inc. The Alleco, Inc charter was allowed to lapse after all related claims associated with what would become the Cerberus Capital Management, LP ligation were assigned to VR Holdings, Inc.
+
+MML, Inc. This corporation was the holding company for Valley Rivet Company, Inc., Allegheny Pepsi Cola Bottling Company, Inc., Transcolor Corp., Winterland Concessions Company, and Alleco, Inc., and MML, Inc. was owned by the family of Morton M. Lapides, Sr. When VR Holdings, Inc. was formed in 1998, all assets, liabilities, and claims of MML,Inc. were assigned to VR Holdings, Inc., the major claim being associated with The Cancer Foundation, Inc. v Cerberus Capital Management, LP litigation. MML, Inc. s charter is still viable, and its main activity is the above litigation.
+
+Winterland Concessions Company. Purchased by MML, Inc. in 1996, and this acquisition was financed by Cerberus, et al. The company was taken over by the Cerberus group when Winterland did not repay the acquisition loan as specified in the loan agreements. A second agreement was reached between the lending group and the company which gave the lending group an 80 percent ownership with a one year buy-back option for MML, Inc. provided the remaining balance of the acquisition loan was paid to the Cerberus lending group. During this year, the Cerberus lending group caused Winterland to file for bankruptcy. At this point, MML, Inc. lost all control and all ownership in Winterland Concessions Company, and ultimately, The Cancer Foundation, Inc. v. Cerberus Capital Management, LP ligation was filed against the Cerberus lending group for the damages caused by their taking control of Winterland.
+
+ 
+
+4
+
+ 
+
+VR Holdings, Inc. This holding company was formed in 1998 at the request of a potential lending bank, to have a structure where Valley Rivet would be owned directly by the holding company and all other entities would be owned by MML, Inc., allowing MML, Inc. to assign all assets and liabilities to VR Holdings, Inc. VR Holdings, Inc. has not been involved in any bankruptcy proceedings.
+
+MML, Inc. is a plaintiff in an Illinois State court suit, see The Cancer Foundation, Inc. v. Cerberus Capital Management, LP, more fully discussed in "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Business - Legal Proceedings," and if successful, although not legally liable, plans to distribute on a percentage basis the proceeds from this suit to all claimants including its parent, VR Holdings. The claimants accepting this exchange will have their claims transferred to VR Holdings. However, this suit was dismissed and the dismissal was affirmed by the U.S. Court of Appeals for the Seventh Circuit. On April 17, 2009, a suit was filed in the State of Illinois by The Cancer Foundation, Inc. against Cerberus Capital Management, L.P., and this suit was dismissed and a motion for reconsideration was denied. This suit is now being appealed in the Illinois Court of appeals. If the appeal is not successful, there will be no recovery of damages and no proceeds will be available for distribution to the claimants. MML, Inc., Morton M. Lapides, Sr. and Transcolor were also plaintiffs in the federal and state lawsuits. We voluntarily agreed to dismiss The Cancer Foundation and Transcolor as plaintiffs because they lacked standing.
+
+The defendants filed a motion to dismiss the state court action on August 3, 2009. The plaintiffs filed an opposition brief on November 13, 2009. The defendants filed their reply on December 4, 2009. Oral argument was held on January 22, 2010. At the conclusion of argument, Judge Allen S. Goldberg dismissed the complaint on the grounds of res judicata. The plaintiffs filed a motion for reconsideration in which they argued that Judge Goldberg misapplied the doctrine of res judicata that the complaint should be reinstated and the case allowed to proceed. The defendants opposition brief was filed on April 12, 2010 and the plaintiff s reply was filed on May 10, 2010. Oral argument on the motion for reconsideration was held on June 1, 2010, at which time Judge Goldberg denied the motion. The plaintiffs have appealed Judge Goldberg s dismissal to the Illinois Court of Appeals. Plaintiffs filed their brief on November 5, 2010. The defendants have 35 days to file their opposition brief and we have 14 days to file a reply brief. We have requested oral argument, but it will be up to the Court of Appeals to decide whether or not to grant oral argument. The defendants filed their opposition to our opening brief and a cross-appeal seeking to overturn Judge Goldberg's denial of their motion for attorneys' fees. We filed our reply brief and opposition to the defendants' cross-appeal for attorneys' fees on January 14, 2011. The defendants' reply on their cross-appeal for attorneys' fees has been filed. The Illinois Court of Appeals will now decide whether to grant the request made by both sides for oral argument.
+
+On March 16, 2011, the Appellate Court of Illinois, First Judicial District, issued an order stating that this case appears to have far more significant connections with California, New York and Maryland than it has with Illinois. The court directed the plaintiffs to show cause why this court should not dismiss the case under the doctrine of forum non conveniens. The court ordered the plaintiffs to file their brief by April 6, 2011. The defendants had until April 27, 2011, to file their opposition and the plaintiffs have until May 11, 2011, to file their reply. The plaintiffs filed their brief on April 6, 2011, as ordered by the court, and are waiting to receive defendants' opposition, which was filed on April 27, 2011. The plaintiffs will file their reply on May 11, 2011. If the appeal is denied, the plaintiffs will seek leave to appeal to the Illinois Supreme Court. It is within the discretion of the Illinois Supreme Court to decide whether or not to grant the petition for leave to appeal. If the appeal is denied, then the Illinois litigation against the defendants will be over. 
+
+However, on March 11, 2011, VR Holdings, Inc. filed a suit in Queen Anne s County, Maryland, case number 17-C-11-016063, against Marshall & Ilsley Trust Company and Venable L.L.P. for alleged civil conspiracy beginning in 1998 and continuing through November 2010, at which time the alleged conspirator abandoned their efforts. Marshall & Ilsley allegedly participated with the two lenders to Winterland. The civil conspiracy expanded to damages through additional causes being tortious aiding and abetting, breach of fiduciary duty, negligence, intentional misrepresentation, and negligent misrepresentation, resulting in damages to VR Holding s subsidiaries and approximately 2,500 parties in the amount of $1.6 billion plus punitive damages and legal fees. 
+
+ Our attorneys in the Marshall & Ilsley and Venable litigation are Frame & Frame, Robert B. Morris, and Barry L. Dahne, one of the trustees of The Cancer Foundation, and one of our major stockholders. In consideration for their services to date and to be rendered, we have issued 7,000,000 shares of our common stock to each of Frame & Frame, and Messrs. Morris and Dahne. We have agreed to register the 7,000,000 of such shares issued to Frame & Frame and Mr. Morris, and 5,000,000 of such shares issued to Mr. Dahne by means of the registration statement of which this prospectus is a part, and each of Frame & Frame, and Messrs. Morris and Dahne are listed as selling stockholders in this prospectus. Frame & Frame, and Messrs. Morris and Dahne will cover all costs of the litigation.
+
+If the Marshall & Ilsley and Venable litigation is successful, we will use the proceeds from any recovery to fund our proposed operations as disclosed in our business plan. See "Business."
+
+If The Cancer Foundation, Inc. v. Cerberus Capital Management, LP litigation and the Marshall & Ilsley and Venable litigation are unsuccessful, we will have to raise funds in some manner to be determined at a later time, in order to continue our business plan, or revise the proposed business model as it now stands. 
+
+If a claimant does not accept the exchange of our shares for his or her claim and we are subsequently successful in receiving funds from our claim in The Cancer Foundation, Inc. v. Cerberus Capital Management, LP, any such claimant will receive a prorata portion of any such funds received by VR Holdings regardless of his or her refusal to accept our shares. In which event, any such funds paid to a claimant would not be available for use in our proposed business going forward.
+
+Valley Rivet Company filed a voluntary bankruptcy proceeding in 2002, with the result being that VR Holdings did not retain any of the assets of Valley Rivet Company. However, VR Holdings did retain the assets of MML, Inc. which had a substantial claim resulting from the Winterland transaction. See Business Legal Proceedings. 
+
+The registration of the issuance of 5,644,346 shares of our common stock to various claimants by means of this prospectus is meant to be in exchange for the claims against VR Holdings or the VR Holdings Subsidiaries by their various creditors, all of whom are referred to as the claimants in this prospectus. See Business Legal Proceedings and the discussion in this section and the below referenced Schedules attached to this prospectus.
+
+The calculation of shares proposed to be issued to the claimants is based upon the original amount owed or due certain parties plus interest accrued at a cumulative annual rate of six percent through December 31, 2007. The resulting total due was then divided by $4.47 to determine the actual number of shares to be issued. The value of $4.47 per share was based upon the total estimated claim of VR Holdings which is composed of lost income of VR Holdings and the VR Holdings Subsidiaries, liabilities of VR Holdings at the date of bankruptcy or ceasing of operations, as the case may be, and other related costs such as legal expenses plus an interest assumption. Before any shares of our common stock are issued to a claimant by means of this prospectus, as described below, the claimant must accept the shares in complete settlement and release of all claims against VR Holdings and Morton M. Lapides, Sr. 
+
+ 
+
+5
+
+The offer to the claimants will be made directly by our president, John E. Baker to the general creditors and investors of Valley Rivet Company and Transcolor Corp. and Marshall & Ilsley Trust Co., the Indenture Trustee, for the Senior Note Holders of Transcolor Corp./Alleco, Inc. In the course of the litigation, there had been an indication that some of the claimants might be interested in accepting shares of our common stock in exchange for their claims. However, before the date of this prospectus, no offer has been made to any claimant and none of our shares were issued to any claimant. As of the date of this prospectus, we are unable to determine how many of the claimants are likely to accept our offer, inasmuch as we cannot make a formal offer until after the effective date of this prospectus. We will issue shares to the claimants who accept our settlement offer, even if all of the claimants do not accept. There will be no compensation paid to Mr. Baker in connection with the offering of our shares.
+
+As stated above, VR Holdings does not have any legal obligation to offer any of its shares to any of the below described claimants. However, we wish to do so to resolve potential claims against us so that we can move forward with the expectation that our past liabilities, both asserted and unasserted, have been extinguished. 
+
+The projected distribution of the 5,644,346 shares to the accepting claimants would be as follows:
+
+ 
+
+Up to 2,471,440 shares to be offered and issued to the Senior Note holders of Alleco/Transcolor through their Indenture Trustee at the exchange rate of one share of the common stock of VR Holdings for each $4.47 of claim. The claims of Mr. and Mrs. Lapides, Sr. were assigned to VR Holdings on July 25, 2006 in exchange for 4,608,409 shares of our common stock. Subsequently, Mr. Morton M. Lapides, Sr. assigned all of his interest in the shares to Mrs. Lapides. See The Cancer Foundation, Inc. v. Cerberus Capital Management, LP, more fully discussed in Business Legal Proceedings. 
+
+ 
+
+Up to 1,659,395 shares to be offered and issued to the creditors of Valley Rivet Company, Inc. at the exchange rate of one share of common stock of VR Holdings, Inc. for each $4.47 of claim, as shown on Schedule A to this prospectus. Valley Rivet Company was previously a subsidiary of VR Holdings.
+
+ 
+
+Up to 777,725 shares to be offered and issued to the creditors of Transcolor Corp. at the exchange rate of one share of common stock of VR Holdings, Inc. for each $4.47 of claim as described in The Cancer Foundation, Inc. v. Cerberus Capital Management, LP pending in the Circuit Court of Cook County, Illinois under Cause No. 09 L 004607 more fully described in Business Legal Proceedings. The creditors are shown on Schedule B to this prospectus.
+
+ 
+
+Up to 735,786 shares to be offered and issued to investors, lenders, and other claimants for funds advanced to Transcolor Corp. at the exchange rate of one share of common stock of VR Holdings, Inc. for each $4.47 of claim as shown on Schedule C to this prospectus.
+
+ 
+
+6
+
+ 
+
+Schedules A and B show how the original creditor claim was adjusted for an interest adjustment as were all claims in determining the total claim at December 31, 2007 and that the exchange rate of $4.47 was used to determine the number of shares that would be issued to each claimant should the claimant desire to exchange its claim for shares in VR Holdings, Inc. The $4.47 exchange rate was the same rate used to convert all claims to shares in VR Holdings.
+
+The shares of our common stock offered to the claimants by means of this prospectus will be sold on a best efforts basis by John E. Baker, our president, who is not a licensed broker-dealer. Mr. Baker will not be paid any commission with respect to the sale of any shares sold by means of this offering to the claimants. Likewise, there will be no commissions paid by us in connection with any sales by our selling stockholder as described in this prospectus. There will be no refunds. See Plan of Distribution. 
+
+The offering to the claimants will be until December 31, 2011, and may be extended for an additional period up to March 31, 2011, if we choose to do so. There will be no escrow account. Upon the acceptance of shares of our common stock in exchange for a claim, each claimant will be required to execute and deliver to us a Settlement and Release Agreement which provides, in part as follows:
+
+ 
+
+Each claimant agrees to accept shares of our common stock in full and final payment of all sums owing to the clamant by VR Holdings and Morton M. Lapides, Sr.
+
+ 
+
+Upon delivery of the shares of our common stock, the claimant without any further action shall be deemed to have released and forever discharged VR Holdings and Mr. Lapides, their assigns, predecessors, successors, joint venturers, personal representatives, stockholders, officers, directors, employees, underwriters, attorneys, and trustees, and any other person at interest therewith, from and against any and all claims of any nature whatsoever occurring before the execution of the agreement, except for claims involving claims under federal or state securities laws.
+
+ 
+
+Each claimant acknowledges and agrees that upon the delivery of the shares of our common stock, the release and discharge set forth above is a general release. The claimant further acknowledges that it is giving up a legal claim or judgment against VR Holdings and Mr. Lapides in exchange for shares in a shell company (as defined by the regulations of the Securities and Exchange Commission) with no trading market and that the claimant will become a common stockholder of VR Holdings with only residual rights in VR Holdings.
+
+ 
+
+7
+
+The following chart is provided to assist the reader:
+
+ VR Holdings, Inc.
+
+ 
+
+ Claim Chart 
+
+ 
+
+ 
+
+ 
+
+ Total shares 
+
+ Asset exchanged 
+
+ Legal rights of 
+
+ Mr. M. Lapidis's
+
+ 
+
+Description of Claimant
+
+ offered in exchange
+
+ for shares
+
+ claimants
+
+ liability
+
+ Consideration
+
+ 
+
+(1)
+
+ (2)
+
+ 
+
+ 
+
+Senior Note Holders
+
+ 2,471,440
+
+ (3)
+
+ (6)
+
+ (7)
+
+ (9)
+
+ 
+
+ 
+
+Creditors of Valley
+
+ 
+
+Rivet Company
+
+ 1,659,395
+
+ (4)
+
+ (6)
+
+ (8)
+
+ (10)
+
+ 
+
+ 
+
+Creditor of Transcolor
+
+ 
+
+corp.
+
+ 777,725
+
+ (4)
+
+ (6)
+
+ (8)
+
+ (10)
+
+ 
+
+ 
+
+Investors, lenders, and 
+
+ 
+
+other claimants of 
+
+ 
+
+Transcolor Corp. 
+
+ 735,786
+
+ (5)
+
+ (6)
+
+ (8)
+
+ (10)
+
+ 
+
+ 
+
+ 
+
+Total shares offered
+
+ 5,644,346
+
+ 
+
+ 
+
+ 
+
+(1) See Schedules A, B and C for a detail listing of clamant and the related calculation of shares to be offered. 
+
+ 
+
+(2) The number of common shares that are to be offered to each class of claimant.
+
+ 
+
+(3) Senior Note(s) outstanding at the date operations were terminated plus an interest accrual through December 31, 2007. 
+
+ 
+
+(4) Outstanding credit balance at the date operations were terminated plus an interest accrual through December 31, 2007.
+
+ 
+
+(5) Outstanding balance of investment(s) or loans at the date operations were terminated plus an interest accrual through December 31, 2007.
+
+(6) Either through bankruptcy or the stature of limitations, claimants do not have any legal rights or claims against VR Holdings, Inc.
+
+ 
+
+ but the Board of VR Holdings, Inc. has decided to offer shares of common stock of the company in exchange for these prior claims.
+
+ 
+
+(7) There is a judgment against Mr. Morton Lapides, SR. for $7,000,000 for these Senior Notes. Since Mr. Lapides has no attachable assets, 
+
+ 
+
+ this judgment can not be enforced.
+
+ 
+
+(8) Mr. Morton Lapides, SR. in not responsible for these debts, and no other party is responsible for these debts.
+
+ 
+
+(9) In the case of the Senior Notes, the claimant will forfeit any claim that they might have against VR Holding, Inc. and/or MR. Morton Lapides, SR.
+
+(10) The claimant will forfeit any claim that they might have against VR Holdings, Inc. 
+
+ 
+
+ 
+
+8
+
+ 
+
+A copy of the Settlement and Release Agreement is attached as Schedule D to this prospectus and as an exhibit to the registration statement with respect to this prospectus.
+
+Inasmuch as VR Holdings, Inc. is a "shell company" as defined by Rule 12b-2 promulgated under the Exchange Act, the securities sold in this offering to the claimants can only be resold through registration under the Securities Act, Section 4(1) of the Securities Act, if available, for non-affiliates, or by meeting the conditions of Rule 144(i) promulgated under the Securities Act.
+
+We will bear all expenses in connection with the registration of all of the shares of our common stock covered by this prospectus.
+
+In addition, we are registering for resale, 72,253,252
+shares of our common stock held by 36 selling stockholders. See Selling Stockholders. The selling stockholder may sell all or a portion of these shares through registration under the Securities Act, Section 4(1) of the Securities Act, if available, for non-affiliates, or by meeting the conditions of Rule 144(i) promulgated under the Securities Act, from time to time in market transactions through any market on which our common stock is then traded, in negotiated transactions or otherwise, at a price of $0.10 per share share for the duration of the offering pursuant to this prospectus. For additional information on the methods of sale, you should refer to the section in this prospectus entitled "Plan of Distribution."
+
+The shares of our common stock are not currently listed for sale on any exchange, although we do plan to attempt to have our shares quoted for sale on the Pink Sheets or the OTC Bulletin Board after the effective date of this prospectus.
+
+There is no minimum number of shares which must be issued to the claimants. Therefore, the claimants will not know how many of our shares will ultimately be issued. If only a few of the claimants accept our shares, they may end up holding shares in a company that does not have enough funding to ensure that its operations may continue or with no market value for its shares. Although VR Holdings has no legal obligation to the claimants, our ability to continue operations depends to a large degree on the success of our litigation efforts, since we are not planning on raising any funds by means of this offering or any other fund raising activities. If we are not successful in our litigation efforts, we will be required to raise additional capital or our proposed business will most likely fail. At the present time, we have no plans to raise any capital through debt or equity offerings. See Business Legal Proceedings. 
+
+Common stock offered
+
+Up to 77,897,598 shares.
+
+Common stock to be outstanding 
+
+after this offering
+
+446,562,689 shares.
+
+Use of proceeds
+
+We will not receive any proceeds from the issuance of our common stock to the claimants or the sale of shares of the selling stockholders. See Use of Proceeds of this prospectus.
+
+Trading symbol
+
+The shares of our common stock are not currently listed for sale on any exchange. We plan to attempt to have our shares quoted for sale on the Pink Sheets or OTC Bulletin Board after the effective date of this prospectus.
+
+Risk factors
+
+An investment in our common stock involves a high degree of risk. See Risk Factors. 
+
+9
+
+RISK FACTORS
+
+This investment has a high degree of risk. Before you invest you should carefully consider the risks and uncertainties described below and the other information in this prospectus. If any of the following risks actually occur, our business, operating results and financial condition could be harmed and the value of our stock could go down. This means you could lose all or a part of your investment.
+
+Risks Relating to Our Business
+
+We are a holding company of several affiliated companies, with no operating businesses.
+
+We have no recent operating history upon which you can evaluate our business and prospects. You must consider the risks and uncertainties frequently encountered by companies whose business deals with litigation. If we are unsuccessful in addressing these risks and uncertainties, our business, results of operations and financial condition will be materially and adversely affected. 
+
+Our auditors have stated we may not be able to stay in business.
+
+Our auditors have issued a going concern opinion, which means that there is doubt that we can continue as an ongoing business for the next 12 months. Unless we can raise additional capital, we may not be able to achieve our objectives and may have to suspend or cease operations. See Management s Discussion and Analysis of Financial Condition and Results of Operations. 
+
+Our future revenues are unpredictable and our quarterly operating results may fluctuate significantly.
+
+Although we were incorporated in 1998, we have no recent operating history, and have no recent revenue to date. We cannot forecast with any degree of certainty whether any of our proposed litigation services will ever generate revenue or the amount of revenue to be generated. In addition, we cannot predict the consistency of our quarterly operating results. We are currently involved in one lawsuit more fully described in Business - Legal Proceedings. If we are successful in the litigation, we plan on utilizing the proceeds to be received to fund our operations. If we are not successful in the litigation, or if we receive only a minimal amount, we will not have sufficient money to fund our proposed operations. In such event, we will have to raise capital either through equity or debt offerings. As of the date of this prospectus, we must raise at least $100,000 through our litigation efforts, equity or debt offerings to fund our operations for the next 12 months. However, at this time, we have no present plans to raise any capital through any equity or debt offerings.
+
+Factors which may cause our operating results to fluctuate significantly from quarter to quarter include:
+
+ 
+
+Our ability to be successful in litigation in which we might invest; and
+
+ 
+
+Unanticipated delays or cost increases.
+
+We need to hire specialized personnel.
+
+Although we are committed to the continued development and growth of our business, we will need to engage specialized key personnel, such as underwriters and legal personnel, to assess risks of investing in lawsuits and to assist VR Holdings in the execution of our business model, inasmuch as John E. Baker, our chief executive officer, does not possess the requisite level of expertise to perform such functions. Further, Mr. Baker will not devote his entire working efforts to our business, since he is currently employed as chief financial officer and treasurer of Inware Technologies, Inc. It is possible that we will not be able to locate and hire such specialized personnel on acceptable terms.
+
+10
+
+ 
+
+We may have difficulty in attracting and retaining management and outside independent members to our board of directors as a result of their concerns relating to their increased personal exposure to lawsuits and stockholder claims by virtue of holding these positions in a publicly held company, if we should become a publicly held company.
+
+We anticipate that our shares of common stock will become publicly traded on either the Pink Sheets or on the Over-the Counter Bulletin Board (the OTCBB ) discussed below. The directors and management of publicly traded corporations are increasingly concerned with the extent of their personal exposure to lawsuits and stockholder claims, as well as governmental and creditor claims which may be made against them, particularly in view of recent changes in securities laws imposing additional duties, obligations and liabilities on management and directors. Due to these perceived risks, directors and management are also becoming increasingly concerned with the availability of directors and officers liability insurance to pay on a timely basis the costs incurred in defending such claims. We currently do not carry limited directors and officers liability insurance. Directors and officers liability insurance has recently become much more expensive and difficult to obtain. If we are unable to provide directors and officers liability insurance at affordable rates or at all, it may become increasingly more difficult to attract and retain qualified outside directors to serve on our board of directors.
+
+Risks Relating to Our Proposed Business of Financing Litigation
+
+Reliance on lawyers.
+
+VR Holdings is reliant on the ability of the lawyers representing the plaintiffs in investment cases to prosecute claims with due skill and care. If they fail to do this, it is likely to have a material adverse affect on the value of VR Holdings investment. While we will analyze and evaluate the experience and track record of the lawyers involved, the outcome of a case may not be in line with the plaintiffs lawyers assessment of the case.
+
+In the case of direct investments, VR Holdings will often have limited or no rights to control or influence the management, prosecution or settlement of a case. In the case of indirect investments through loans to law firms, we will not have any rights to control the prosecution, disposition or settlement of the particular case. This is because such control could be seen to interfere with the attorney-client relationship between the plaintiff and the litigating attorney and may result in a court voiding VR Holdings investment for reasons of public policy, or may result in a determination that VR Holdings investment is unenforceable against the plaintiff.
+
+Concentration of risk.
+
+Although we cannot make an investment in a single claim in excess of $1,000,000 without our full board s prior approval, certain investments may represent a significant proportion of VR Holdings total assets. As a result, the impact on VR Holdings performance and the potential returns to investors will be more adversely affected if any one of those investments were to perform badly than would be the case if VR Holdings portfolio of investments were more diversified.
+
+Professional negligence of law firms.
+
+The law firms with which VR Holdings enters into a loan relationship will be required to maintain professional negligence insurance of a minimum standard. However, such insurance will not cover liability for acts or omissions that do not constitute professional negligence under the terms of the applicable policy. Moreover, if the advice given by a law firm in connection with a co-counsel investment is found to be negligent, the insurance coverage might not be sufficient to cover the relevant firm s loss. This may adversely affect the law firm s ability to continue its operations, including its active participation in existing investments or co-counsel arrangements. As a result, certain investments by VR Holdings may need to be liquidated, and perhaps at a loss.
+
+11
+
+Legal professional conflicts.
+
+Lawyers have a primary duty to the courts and a secondary duty to their clients. In the case of loans to law firms, these duties including the attendant responsibilities such as independent judgment, client confidentiality, and the rules relating to legal professional privilege are paramount given the nature of the business of law firms as a legal practice. Any law firms to whom VR Holdings makes a loan, with respect to all legal professional representations, owe overriding duties of independent judgment to their clients. There could be circumstances in which the lawyers of a law firm are required to act in accordance with these duties, which may be contrary to other responsibilities to VR Holdings or inconsistent with VR Holdings investment strategy.
+
+Key personnel.
+
+Our future financial success depends to a large degree upon the personal efforts of our key personnel. In our formative period, John E. Baker, our chief executive officer, president, and chief financial officer, will play the major role in securing the services of those persons who can develop our business strategy and technology upon receipt of sufficient funds to pay for such services either from success in VR Holdings litigation efforts or through receipt of funds from borrowing or sales of common stock. While we intend to employ additional management and marketing personnel in order to minimize the critical dependency upon any one person, there can be no assurance that we will be successful in attracting and retaining the persons needed. We do not have an employment contract with Mr. Baker, who will devote only a limited amount of time to our affairs, since he has a full-time job as chief financial officer and treasurer of Inware Technologies, Inc.
+
+Adequacy of working capital.
+
+We hope to generate sufficient capital to fund our business plan through a successful resolution of the litigation in which we are currently involved. See Management s Discussion and Analysis of Financial Condition and Results of Operations Financing Activities, and Business - Legal Proceedings. However, if our litigation efforts are unsuccessful or do not generate sufficient cash to fund our anticipated operations, we still intend to proceed with our proposed business plan and we will try to raise what we feel is sufficient working capital for our current business plan, by means of a private placement or registered public offering of our shares. If we are not able to raise additional capital through the sale of our shares or if we are unsuccessful in our litigation efforts, we would not be able to continue and our business would fail. At the present time, we do not have any plans to raise capital through equity or debt offerings.
+
+Our financial results may be affected by factors outside of our control.
+
+Our future operating results may vary significantly from quarter to quarter due to a variety of factors, many of which are outside our control. Our anticipated expense levels are based, in part, on our estimates of future revenues and may vary from projections. We may be unable to adjust spending rapidly enough to compensate for any unexpected revenues shortfall. Accordingly, any significant shortfall in revenues in relation to our planned expenditures would materially adversely affect our business, operating results, and financial condition.
+
+We cannot predict with certainty our success in litigation. Further, we believe that period-to-period comparisons of our operating results are not necessarily a meaningful indication of future performance.
+
+Paucity of U.S. case law.
+
+The paucity of U.S. case law addressing the legality of investing in and assigning federally- registered intellectual property claims leaves considerable uncertainty as to the propriety of such investments in United States jurisdictions. Certain U.S. courts have voided investments in cases involving federally-registered intellectual property claims as champertous. Accordingly, there is a risk that a U.S. court could find VR Holdings investment in any federally-registered intellectual property claims (or any other claims) champertous and render void the investment.
+
+12
+
+ 
+
+Inability to locate investments.
+
+If we are successful in our litigation effort in The Cancer Foundation, Inc. v. Cerberus Capital Management, LP, more fully discussed in Business Legal Proceedings, the success of VR Holdings will be dependent upon, inter alia, our identification, making, and management of, and realization on, suitable investments in litigation and arbitration cases. As at the date of this prospectus, we have not identified a sufficient number of claims in which to invest any of our proposed capital which we may receive from our litigation efforts, and we may not be able to identify, in a timely fashion or at all, a sufficient number of suitable investments in claims that meet the diversification and underwriting requirements of VR Holdings and that are in jurisdictions where such investments are permitted.
+
+Initial and/or future investments may be delayed or made at a relatively slow rate because among other things:
+
+ 
+
+We intend to conduct due diligence prior to making an investment; 
+
+ 
+
+We may conduct extensive negotiations in order to facilitate an investment;
+
+ 
+
+Attractive investments may not be identified or available at the rate currently anticipated by us due to competition from other investors or other factors; and
+
+ 
+
+Only investments in jurisdictions where VR Holdings receives a reasoned legal opinion to the effect that such an investment will not breach laws or professional ethics rules, will be considered.
+
+It may, therefore, take a significant amount of time to invest VR Holdings capital fully and a significant proportion of our capital may not be invested in investments for an indefinite period. There is no obligation on VR Holdings to invest any of our capital within a certain time period.
+
+Our business model depends upon referral relationships.
+
+Our investment strategy means that we will rely to a very significant extent on maintaining active communication with legal professionals in order to provide us with opportunities for investment. If VR Holdings fails to maintain relationships with key legal professionals or such professionals perceive VR Holdings proposed investment may make the particular claim susceptible to challenge or VR Holdings fails to establish strong referral relationships with other sources of investment opportunities, we will not be able to grow our portfolio and achieve our investment objective. In addition, persons with whom we may form relationships will not be obliged to provide VR Holdings with investment opportunities and, therefore, it is possible we will not be able to locate investments.
+
+The cases in which VR Holdings may invest may not be successful.
+
+The cases in which VR Holdings may invest, either directly or through loans to law firms, may not be successful or pay the returns targeted by us. If any of the cases, claims or disputes in which we might invest, either directly or through loans to law firms, are unsuccessful or produce investment returns below those expected by us, the market price of our shares could be materially adversely affected.
+
+VR Holdings could be liable for the defendant s costs and fees in a loser pays system. 
+
+In the event an investment is made by VR Holdings in a claim pending in a jurisdiction with a loser pays system, VR Holdings could be liable for the defendant s costs and fees in the relevant case. Even though VR Holdings is likely to seek to purchase insurance against this event, we may not be able to locate such insurance on a commercially acceptable basis, or at all, or if purchased, in an amount adequate to cover costs assessed, which could result in a loss to VR Holdings. In the United States, costs are sometimes awarded against a loser in litigation; therefore, similar losses based on adverse costs awards could also result from investments here. There are also laws in the U.S. which create liability for plaintiffs who are determined by a court to have brought litigation that is frivolous or groundless. Although VR Holdings plans to avoid investments in frivolous or groundless cases, VR Holdings could be subject to losses if such a case (involving a direct investment or a loan by VR Holdings) were determined by a court of competent jurisdiction to have been brought or supported by VR Holdings.
+
+13
+
+ 
+
+Underwriting errors.
+
+We may fail to correctly apply underwriting criteria applied to an investment, or may fail to account for a material risk factor to which an investment is subject. The cases in which VR Holdings may directly invest or finance through loans may be unsuccessful, take considerable time (whether because of appeals or otherwise) or result in a distribution of cash, new security or other assets, the value of which may be less than the investment to be made by VR Holdings. It may not be possible to dispose of any such security or other asset received for legal or professional ethics reasons. VR Holdings may incur additional costs in effecting a disposal of any such security or other assets. Each of these matters could have a material adverse impact on the anticipated value of such investment.
+
+Legislative actions are likely to impact our future financial position and results of operations.
+
+We are currently a privately-held company. However, we intend to file a Form 211 promulgated pursuant to the Securities Exchange Act of 1934, as amended (the Exchange Act ) to allow us to have our shares of common stock to be traded on the OTCBB and the Pink Sheets. As of the date of this prospectus, we have not received authorization for the trading of our shares.
+
+The Pink Sheets is an electronic quotation system operated by Pink OTC Markets that displays quotes from broker-dealers for many over-the-counter (OTC) securities. These securities tend to be inactively traded stocks, including penny stocks and those with a narrow geographic interest. Market makers and other brokers can use Pink Quote to publish their bid and ask quotation prices. The term Pink Sheets is also used to refer to a market tier within the current Pink Quote system. The Pink Sheets is not a stock exchange. To be quoted in the Pink Sheets, companies do not need to fulfill any requirements (e.g., filing financial statements with the Securities and Exchange Commission). With the exception of foreign issuers, mostly represented by ADRs, the companies quoted in the Pink Sheets tend to be closely held, extremely small, thinly traded, or bankrupt. Most do not meet the minimum U.S. listing requirements for trading on a stock exchange such as the New York Stock Exchange. Many of these companies do not file periodic reports or audited financial statements with the SEC, making it very difficult for investors to find reliable, unbiased information about those companies. For these reasons, companies listed on Pink Sheets are the most risky investments and potential investors should heavily research the companies in which they plan to invest.
+
+By means of a registration statement included with this prospectus which is filed with the SEC, we will seek to issue shares of our common stock to various creditors of VR Holdings. See Prospectus Summary The Offering and Plan of Distribution. Upon the effectiveness of the registration statement, we will be subject to the Exchange Act, and the reporting and regulatory requirements of the Exchange Act, including the Sarbanes-Oxley Act of 2002 and other rule changes as well as proposed legislative initiatives which will increase our general and administrative costs as we will have to incur increased legal and accounting fees to comply with such rule changes. For example, in being a public company, we will be required to file periodic reports with the SEC as required by the Exchange Act, such as 8-Ks, 10-Qs, 10-Ks, and proxy statements. In addition, we also must have audited financial statements included in our annual reports of 10-Ks every year, with reviews by an auditor of our quarterly statements on 10-Q. Our attorneys will be involved in the preparation of all of the periodic reports required by the Exchange Act.
+
+14
+
+Risks Relating to Our Current Business of Pursuing Litigation
+
+Legal proceedings.
+
+We, through our subsidiaries, are involved in one lawsuit, styled The Cancer Foundation, Inc. v. Cerberus Capital Management, LP. All claims held by Mr. and Mrs. Morton M. Lapides, Sr. discussed below have been assigned to VR Holdings. It is our plan to use the proceeds received by us as a result of the below described litigation to fund our business plan going forward. If we are unsuccessful in the litigation or do not receive sufficient funds, we will be forced to sell additional equity to raise the capital we need to fund our anticipated operations. If we are not successful in raising any needed capital, our business plan will fail. At the present time, we have not yet made any decision on what capital-raising steps we might take, but expect to make that decision once we know the outcome of The Cancer Foundation, Inc. v. Cerberus Capital Management, LP litigation.
+
+As stated elsewhere in this prospectus, we will offer shares of our common stock to various claimants in exchange for their claims against VR Holdings and Morton M. Lapides, Sr. However, if a claimant does not accept the exchange of our shares for his claim and we are subsequently successful in receiving funds from our claim in The Cancer Foundation, Inc. v. Cerberus Capital Management, LP, any such claimant will receive a pro rata portion of any such funds received by VR Holdings regardless of his refusal to accept our shares. Any such funds paid to a claimant would not be available for use in our proposed business going forward.
+
+We may not be successful in our current litigation.
+
+On July 23, 2007, The Cancer Foundation, Inc. filed a suit in the United States District Court for the Northern District of Illinois against Cerberus Capital Management, L.P. Cerberus Capital Management, L.P., the lending group of VR Holdings, Inc. This suit was dismissed and the dismissal was affirmed by the U.S. Court of Appeals for the Seventh Circuit. On April 17, 2009, a suit was filed in the State of Illinois by The Cancer Foundation, Inc. against Cerberus Capital Management, L.P., and this suit was dismissed and a motion for reconsideration was denied. This suit is now being appealed in the Illinois Court of appeals. MML, Inc., Morton M. Lapides, Sr., and Transcolor Corporation were also plaintiffs in the federal and state lawsuits. We voluntarily agreed to dismiss The Cancer Foundation and Transcolor as plaintiffs because they lacked standing. For additional information see Legal Proceedings. See Business Legal Proceedings. 
+
+The defendants filed a motion to dismiss the state court action on August 3, 2009. The plaintiffs filed an opposition brief on November 13, 2009. The defendants filed their reply on December 4, 2009. Oral argument was held on January 22, 2010. At the conclusion of argument, Judge Allen S. Goldberg dismissed the complaint on the grounds of res judicata. The plaintiffs filed a motion for reconsideration in which they argued that Judge Goldberg misapplied the doctrine of res judicata that the complaint should be reinstated and the case allowed to proceed. The defendants opposition brief was filed on April 12, 2010 and the plaintiff s reply was filed on May 10, 2010. Oral argument on the motion for reconsideration was held on June 1, 2010, at which time Judge Goldberg denied the motion. The plaintiffs have appealed Judge Goldberg s dismissal to the Illinois Court of Appeals. Plaintiffs filed their brief on November 5, 2010. The defendants have 35 days to file their opposition brief and we have 14 days to file a reply brief. We have requested oral argument, but it will be up to the Court of Appeals to decide whether or not to grant oral argument. The defendants filed their opposition to our opening brief and a cross-appeal seeking to overturn Judge Goldberg's denial of their motion for attorneys' fees. We filed our reply brief and opposition to the defendants' cross-appeal for attorneys' fees on January 14, 2011. The defendants' reply on their cross-appeal for attorneys' fees has been filed. The Illinois Court of Appeals will now decide whether to grant the request made by both sides for oral argument.
+
+On March 16, 2011, the Appellate Court of Illinois, First Judicial District, issued an order stating that this case appears to have far more significant connections with California, New York and Maryland than it has with Illinois. The court directed the plaintiffs to show cause why this court should not dismiss the case under the doctrine of forum non conveniens. The court ordered the plaintiffs to file their brief by April 6, 2011. The defendants had until April 27, 2011, to file their opposition and the plaintiffs have until May 11, 2011, to file their reply. The plaintiffs filed their brief on April 6, 2011, as ordered by the court, and are waiting to receive defendants' opposition, which was filed on April 27, 2011. The plaintiffs will file their reply on May 11, 2011. If the appeal is denied, the plaintiffs will seek leave to appeal to the Illinois Supreme Court. It is within the discretion of the Illinois Supreme Court to decide whether or not to grant the petition for leave to appeal. If the appeal is denied, then the Illinois litigation against the defendants will be over.
+
+However,on March 11, 2011, VR Holdings, Inc. filed a suit in Queen Anne s County, Maryland, case number 17-C-11-016063, against Marshall & Ilsley Trust Company and Venable L.L.P. for alleged civil conspiracy beginning in 1998 and continuing through November 2010, at which time the alleged conspirator abandoned their efforts. Marshall & Ilsley allegedly participated with the two lenders to Winterland. The civil conspiracy expanded to damages through additional causes being tortious aiding and abetting, breach of fiduciary duty, negligence, intentional misrepresentation, and negligent misrepresentation, resulting in damages to VR Holding s subsidiaries and approximately 2,500 parties in the amount of $1.6 billion plus punitive damages and legal fees. 
+
+ Our attorneys in the Marshall & Ilsley and Venable litigation are Frame & Frame, Robert B. Morris, and Barry L. Dahne, one of the trustees of The Cancer Foundation, and one of our major stockholders. In consideration for their services to date and to be rendered, we have issued 7,000,000 shares of our common stock to each of Frame & Frame, and Messrs. Morris and Dahne. We have agreed to register the 7,000,000 of such shares issued to Frame & Frame and Mr. Morris, and 5,000,000 of such shares issued to Mr. Dahne by means of the registration statement of which this prospectus is a part, and each of Frame & Frame, and Messrs. Morris and Dahne are listed as selling stockholders in this prospectus. Frame & Frame, and Messrs. Morris and Dahne will cover all costs of the litigation.
+
+If the Marshall & Ilsley and Venable litigation is successful, we will use the proceeds from any recovery to fund our proposed operations as disclosed in our business plan. See "Business."
+
+If The Cancer Foundation, Inc. v. Cerberus Capital Management, LP litigation and the Marshall & Ilsley and Venable litigation are unsuccessful, we will have to raise funds in some manner to be determined at a later time, in order to continue our business plan, or revise the proposed business model as it now stands.
+
+ It should be clearly understood that we will not be able to commence our proposed business, unless and until we are successful in The Cancer Foundation, Inc. v. Cerberus Capital Management, LP litigation and/or the Marshall & Ilsley and Venable litigation, or we raise additional funds by means of a debt or equity offering. We will explore whatever capital-raising steps which seem most likely to produce the capital we need to finance our litigation and to fund our proposed business going forward. We have not yet made any decision on what capital-raising steps we might take, but expect to make that decision once we know the outcome of The Cancer Foundation, Inc. v. Cerberus Capital Management, LP litigation and/or the Marshall & Ilsley and Venable litigation. If we are not successful in our litigation efforts or cannot raise needed funds, our proposed business will most likely fail. See Business Legal Proceedings. 
+
+Legal rights or benefits of claimants.
+
+The claimants who exchange their claims for shares in VR Holdings would be giving up a legal claim against VR Holdings and Mr. Lapides, Sr. for shares in a shell company with no trading market, and the claimants would become common stockholders of VR Holdings with only residual rights in VR Holdings.
+
+15
+
+Risks Relating to Our Stock
+
+Deohge Corp. owns approximately 75.0 percent of our common stock. This concentration of ownership could discourage or prevent a potential takeover of VR Holdings that might otherwise result in your receiving a premium over the market price for your common stock.
+
+Deohge Corp., owned and controlled by the family of Mr. Morton M. Lapides, Sr., owns 314,681,091 shares of our common stock, which represent approximately 75.0 percent of our issued and outstanding common stock as of the date of this prospectus. The result of the ownership of our common stock by Deohge Corp. is that it has voting control on all matters submitted to our stockholders for approval and is able to control our management and affairs, including extraordinary transactions such as mergers and other changes of corporate control, and going private transactions. Additionally, this concentration of voting power could discourage or prevent a potential takeover of VR Holdings that might otherwise result in your receiving a premium over the market price for your common stock.
+
+If we become a publicly traded company, in the event that your shares become free-trading, our common stock will most likely be thinly traded, so you may be unable to sell at or near ask prices or at all if you need to sell your shares to raise money or otherwise desire to liquidate your shares.
+
+If our shares become publicly traded, our common stock will be sporadically or thinly-traded on the Pink Sheets, and possibly on the OTCBB, meaning that the number of persons interested in purchasing our common stock at or near ask prices at any given time may be relatively small or nonexistent. This situation will be attributable to a number of factors, including the fact that we are a small company which will be relatively unknown to stock analysts, stock brokers, institutional investors and others in the investment community that generate or influence sales volume, and that even if we came to the attention of such persons, they tend to be risk-averse and would be reluctant to follow an unproven company such as ours or purchase or recommend the purchase of our shares until such time as we became more seasoned and viable.
+
+As a consequence, there may be periods of several days or more when trading activity in our shares is minimal or non-existent, as compared to a mature issuer which has a large and steady volume of trading activity that will generally support continuous sales without an adverse effect on share price. It is possible that a broader or more active public trading market for our common stock will not develop or be sustained, or that trading levels will not continue.
+
+Even if our shares become publicly traded, your shares may not be free-trading. 
+
+Investors should understand that their shares of our common stock will not become free-trading merely because VR Holdings is a publicly-traded company. In order for the shares to become free-trading, the shares must be registered, or entitled to an exemption from registration under applicable law. See Shares Eligible for Future Sale. 
+
+If our shares become publicly traded, the market price for our common stock will most likely be particularly volatile given our status as a relatively unknown company with a small and thinly traded public float, limited operating history and lack of net revenues which could lead to wide fluctuations in our share price. The price at which you purchase our common stock may not be indicative of the price that will prevail in the trading market.
+
+If our shares become publicly traded, the market for our common stock will most likely be characterized by significant price volatility when compared to seasoned issuers, and we expect that our share price will continue to be more volatile than a seasoned issuer for the indefinite future. As a consequence of this lack of liquidity, the trading of relatively small quantities of shares by our stockholders may disproportionately influence the price of those shares in either direction. The price for our shares could, for example, decline precipitously in the event that a large number of shares of our common stock are sold on the market without commensurate demand, as compared to a seasoned issuer which could better absorb those sales without adverse impact on its share price.
+
+16
+
+ 
+
+Secondly, we will most likely be a speculative or risky investment due to our dependence on success of our litigation and the litigation in which we invest. As a consequence of this enhanced risk, more risk-adverse investors may, under the fear of losing all or most of their investment in the event of negative news or lack of progress, be more inclined to sell their shares on the market more quickly and at greater discounts than would be the case with the stock of a seasoned issuer.
+
+You may be unable to sell your common stock at or above your purchase price, which may result in substantial losses to you.
+
+If our shares become publicly traded, the following factors may add to the volatility in the price of our common stock: actual or anticipated variations in our quarterly or annual operating results; government regulations, announcements of significant acquisitions, strategic partnerships or joint ventures; our capital commitments; and additions or departures of our key personnel. Many of these factors are beyond our control and may decrease the market price of our common stock, regardless of our operating performance. We cannot make any predictions or projections as to what the prevailing market price for our common stock will be at any time, including as to whether our common stock will sustain the current market price, or as to what effect the sale of shares or the availability of common stock for sale at any time will have on the prevailing market price.
+
+If our shares become publicly traded, volatility in our common stock price may subject VR Holdings to securities inquiries.
+
+If our shares become publicly traded, the market for our common stock will most likely be characterized by significant price volatility when compared to seasoned issuers, and we expect that our share price would be more volatile than a seasoned issuer for the indefinite future. In the past, plaintiffs have often initiated securities class action litigation against a company following periods of volatility in the market price of its securities. We may in the future be the target of similar litigation. Securities litigation could result in substantial costs and liabilities and could divert management s attention and resources.
+
+We may need to raise additional capital. If we are unable to raise necessary additional capital, our business may fail or our operating results and our stock price may be materially adversely affected.
+
+Because we are a newly operational company, we need to secure adequate funding. We hope to be able to fund our operations in part if our current ligation is successful. See Business - Legal Proceedings. If our litigation is not successful, we will need to raise the necessary capital through equity or debt offerings, which may reduce the value of our outstanding securities. We may be unable to secure additional financing on favorable terms or at all. At this time, we have no plans to raise and additional capital through equity or debt offerings.
+
+Selling additional stock, either privately or publicly, would dilute the equity interests of our stockholders. If we borrow more money, we will have to pay interest and may also have to agree to restrictions that limit our operating flexibility. If we are unable to obtain adequate financing, we may have to curtail our litigation and our business would fail.
+
+Our issuance of additional common stock in exchange for services or to repay debt would dilute your proportionate ownership and voting rights and could have a negative impact on the market price of our common stock.
+
+Our board of directors may generally issue shares of common stock to pay for debt or services, without further approval by our stockholders based upon such factors as our board of directors may deem relevant at that time. It is likely that we will issue additional securities to pay for services and reduce debt in the future. It is possible that we will issue additional shares of common stock under circumstances we may deem appropriate at the time.
+
+17
+
+ 
+
+The elimination of monetary liability against our directors, officers and employees under our certificate of incorporation and the existence of indemnification rights for our directors, officers and employees may result in substantial expenditures by VR Holdings and may discourage lawsuits against our directors, officers and employees.
+
+Our certificate of incorporation contains provisions which eliminate the liability of our directors for monetary damages to VR Holdings and our stockholders. Our bylaws also require us to indemnify our officers and directors. We may also have contractual indemnification obligations under our agreements with our directors, officers and employees. The foregoing indemnification obligations could result in VR Holdings incurring substantial expenditures to cover the cost of settlement or damage awards against directors, officers and employees, which we may be unable to recoup. These provisions and resultant costs may also discourage VR Holdings from bringing a lawsuit against directors, officers and employees for breaches of their fiduciary duties, and may similarly discourage the filing of derivative litigation by our stockholders against our directors, officers and employees even though such actions, if successful, might otherwise benefit VR Holdings and our stockholders.
+
+Absence of dividends.
+
+We have never paid or declared any dividends on our common stock. Likewise, we do not anticipate paying, in the near future, dividends or distributions on our common stock or our common stock to be sold in this offering. Any future dividends will be declared at the discretion of our board of directors and will depend, among other things, on our earnings, our financial requirements for future operations and growth, and other facts as we may then deem appropriate.
+
+Our directors have the right to authorize the issuance of additional shares of our common stock.
+
+Our directors, within the limitations and restrictions contained in our certificate of incorporation and without further action by our stockholders, have the authority to issue shares of common stock from time to time. Should we issue additional shares of our common stock at a later time, each investor s ownership interest in our stock would be proportionally reduced. No investor will have any preemptive right to acquire additional shares of our common stock, or any of our other securities.
+
+If our shares become publicly traded and our shares are traded on the Pink Sheets or OTCBB, and we fail to remain current in our reporting requirements, we could be removed from the OTCBB, which would limit the ability of broker-dealers to sell our securities and the ability of stockholders to sell their securities in the secondary market.
+
+Companies trading on the OTC Bulletin Board and some trading on the Pink Sheets must be reporting issuers under Section 12 of the Exchange Act, and must be current in their reports under Section 13 of the Exchange Act, in order to maintain price quotation privileges on the Pink Sheets and OTC Bulletin Board. If our shares become publicly traded and our shares are traded on the OTC Bulletin Board, and we fail to remain current in our reporting requirements, we could be removed from the OTC Bulletin Board. As a result, the market liquidity for our securities could be adversely affected by limiting the ability of broker-dealers to sell our securities and the ability of stockholders to sell their securities in the secondary market.
+
+18
+
+If our shares become publicly traded, our common stock will most likely be subject to the penny stock rules of the Securities and Exchange Commission, and the trading market in our common stock will be limited, which would make transactions in our stock cumbersome and may reduce the investment value of our stock.
+
+If our shares become publicly traded, our shares of common stock will most likely be penny stocks because they most likely will not be registered on a national securities exchange or listed on an automated quotation system sponsored by a registered national securities association, pursuant to Rule 3a51-1(a) under the Exchange Act. For any transaction involving a penny stock, unless exempt, the rules require:
+
+ 
+
+That a broker or dealer approve a person s account for transactions in penny stocks; and
+
+ 
+
+That the broker or dealer receives from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased.
+
+The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the Securities and Exchange Commission relating to the penny stock market, which, in highlight form:
+
+ 
+
+Sets forth the basis on which the broker or dealer made the suitability determination; and
+
+ 
+
+That the broker or dealer received a signed, written agreement from the investor prior to the transaction.
+
+Generally, brokers may be less willing to execute transactions in securities subject to the penny stock rules. This may make it more difficult for investors to dispose of our common stock and cause a decline in the market value of our stock.
+
+Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.
+
+The market for penny stocks has suffered in recent years from patterns of fraud and abuse.
+
+Stockholders should be aware that, according to SEC Release No. 34-29093, the market for penny stocks has suffered in recent years from patterns of fraud and abuse. Such patterns include:
+
+ 
+
+Control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer;
+
+ 
+
+Manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases;
+
+ 
+
+Boiler room practices involving high-pressure sales tactics and unrealistic price projections by inexperienced salespersons;
+
+ 
+
+Excessive and undisclosed bid-ask differential and markups by selling broker-dealers; and
+
+ 
+
+The wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the resulting inevitable collapse of those prices and with consequential investor losses.
+
+19
+
+Our management is aware of the abuses that have occurred historically in the penny stock market. Although we do not expect to be in a position to dictate the behavior of the market or of broker-dealers who participate in the market, if our shares become publicly traded, management will strive within the confines of practical limitations to prevent the described patterns from being established with respect to our securities. The occurrence of these patterns or practices could increase the volatility of our share price.
+
+VR Holdings is classified as a shell company under the Exchange Act.
+
+VR Holdings is a shell company as defined by Rule 12b-2 promulgated under the Exchange Act. Accordingly, the securities sold in this offering to the claimants or those securities sold by any selling stockholder can only be resold through registration under the Securities Act, Section 4(1) of the Securities Act, if available, for non-affiliates, or by meeting the conditions of Rule 144(i) promulgated under the Securities Act.
+
+A shell company means a registrant, other than an asset-backed issuer, that has:
+
+ 
+
+No or nominal operations; and
+
+ 
+
+Either, (i) no or nominal assets; (ii) assets consisting solely of cash and cash equivalents; or (iii) assets consisting of any amount of cash and cash equivalents and nominal other assets.
+
+The provisions of Rule 144(i) providing for the six month holding period are not available for the resale of securities initially issued by a shell company. 
+
+Notwithstanding paragraph (i)(1) of Rule 144, if the issuer of the securities previously had been an issuer described in paragraph (i)(1)(i) but has ceased to be an issuer described in paragraph (i)(1)(i); is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act; has filed all reports and other materials required to be filed by Section 13 or 15(d) of the Exchange Act, as applicable, during the preceding 12 months (or for such shorter period that the issuer was required to file such reports and materials), other than Form 8-K reports, and has filed current Form 10 information with the SEC reflecting its status as an entity that is no longer an issuer described in paragraph (i)(1)(i), then those securities may be sold subject to the requirements of Rule 144 after one year has elapsed from the date that the issuer filed Form 10 information with the SEC.
+
+The term Form 10 information means the information that is required by SEC Form 10, to register under the Exchange Act each class of securities being sold under Rule 144. The Form 10 information is deemed filed when the initial filing is made with the SEC.
+
+In order for Rule 144 to be available, VR Holdings must have certain information publicly available. We plan to publish information necessary to permit transfer of shares of our common stock in accordance with Rule 144 of the Securities Act, inasmuch as we have filed the registration statement with respect to this prospectus.
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001492261_elster_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001492261_elster_prospectus_summary.txt
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+PROSPECTUS SUMMARY This summary highlights selected information contained in greater detail elsewhere in this prospectus. This summary may not contain all of the information that you should consider before investing in our ADSs. You should carefully read the entire prospectus, including Risk Factors and the financial statements, before making an investment decision. We are one of the world s largest providers of gas, electricity and water meters and related communications, networking and software solutions. Our products and solutions are used to accurately and reliably measure gas, electricity and water consumption as well as enable energy efficiency and conservation. We believe that we have one of the most extensive installed meter bases in the world, with more than 200 million meters deployed over the course of the last ten years. We sell our products and solutions in more than 130 countries for use in a variety of settings. L.E.K. Consulting GmbH, or L.E.K., estimates that in 2009 we had the largest global market share by revenues in the gas meter market, were one of the three largest water meter providers in the world by revenues and had the third largest share by revenues in the electricity meter market. We attribute these leading positions to the quality, breadth and flexibility of our portfolio of products and solutions. Demand for our products and solutions is driven by natural replacement cycles, urbanization, increased meter penetration and infrastructure developments. We believe that these trends, along with the movement towards energy conservation and the promotion of cleaner fuels and technologies, will continue to play an important role in our future growth. While we expect manual-read meters to remain an important part of our industry, in recent years, issues including energy and natural resource scarcity, shortcomings in grid reliability and concerns about global climate change, among others, have moved to the forefront of the agendas of governments and utilities. We believe that these and other imperatives, taken together, are driving the adoption of the Smart Grid. The term Smart Grid is commonly used to refer to any gas, electricity or water network that allows utilities to measure and control production, transmission and distribution more efficiently through the use of communications technology. The Smart Grid can also enable consumers to monitor and manage their gas, electric and water consumption more efficiently and frequently and, in some cases, in near real time. We believe that the Smart Grid will continue to evolve and deliver substantial economic and societal benefits to utilities and consumers. We refer to meters that are equipped with communications capabilities, communications networks and related software solutions as Smart Grid solutions. We believe that the meter is the gateway to the Smart Grid through which utilities and consumers are able to effectively measure, monitor and control the distribution of gas, electricity and water. In our view, it is difficult to quantify or otherwise measure with certainty the proliferation of Smart Grids around the world, due largely to the early stage of the development of the market and the different rates of adoption from one market to the next. However, we believe that there is a significant growth opportunity for our industry in the coming years. Many of our own customers have indicated to us that they intend to upgrade their infrastructure to incorporate Smart Grid solutions and many governments around the world are promoting regulatory initiatives that support Smart Grid adoption. We believe our industry experience, despite the risk of increased competition from traditional metering companies as well as new entrants from outside the metering business, positions us well to capitalize on this emerging opportunity. We define our Smart Offerings to include our automated meter reading, or AMR, advanced metering infrastructure, or AMI, and Smart Grid solutions and individual products, components and services for use in the Smart Grid. In each of the last two years, our Smart Offerings accounted for approximately 26% of our revenues compared to 19% of our revenues in 2008. AMI is a technology that allows two-way communication between the meter and the utility or other parties, while AMR typically enables one-way communication of periodic consumption data from the meter to the utility. Our product portfolio includes EnergyAxis, our comprehensive portfolio of Smart Grid solutions, which can be customized by incorporating meters, meter and network communications technologies, meter Table of Contents PART I INFORMATION REQUIRED IN PROSPECTUS Table of Contents data management software and advanced applications that help customers to cost-effectively generate, deliver and manage gas, electricity and water. Our customers are utilities, distributors and industrial companies and buy our manual read meters, Smart Offerings and other products for use in the following settings: Residential settings, which include dwellings and elements of local gas, electricity and water distribution networks; Commercial settings, which include retail facilities, offices and light industrial facilities; Industrial settings, which comprise general industry and public infrastructure; Transmission and distribution settings, which include the facilities and networks that utilities rely on to transport gas, electricity and water from their points of generation or extraction to consumers and to manage their flows along the way. Due to the similarities among many of the products and services we offer for use in commercial, industrial, transmission and distribution settings, we refer internally to these settings collectively as C I and the products and services we offer for use in these settings as our C I products and services. We also sell process-heating equipment and heat control systems for boilers, which we refer to as our gas utilization products. Our customers for our utilization products are industrial concerns, furnace builders and boiler manufacturers. We divide our operations into three business segments: gas, electricity and water. Our Strengths We believe that we are well positioned to maintain and expand our strong market positions in the gas, electricity and water markets and to benefit from the expected industry growth that will arise from the trend towards Smart Grid installations. In particular, we believe that the following key strengths will enable us to achieve these goals: We are a leading global provider of gas, electricity and water meters and metering solutions. We are one of the world s largest providers of meters and metering solutions to utilities. We believe our large installed base and strong customer relationships provide us with significant opportunities to benefit from regular meter replacement and upgrade cycles. We are a leading enabler of Smart Grid solutions, which are already proven at scale in complex environments and across diverse utility settings. As of December 31, 2010, we have delivered over twelve million of our two-way communication endpoints for metering applications. This total includes over 5.1 million AMI smart meters deployed in over 85 EnergyAxis systems worldwide, including what we believe to be one of the world s largest AMI networks, located in Ontario, Canada. This network, which consists of approximately 1.7 million endpoints, supports time of use pricing for the AMI network operator s 1.7 million residential and C I customers. We believe that these extensive deployments demonstrate our systems market readiness in terms of performance, reliability, flexibility, and scalability. We maintain strong customer relationships worldwide that provide us with diverse opportunities for global growth and competitive advantage. Our customers operate in more than 130 countries and include many of the world s largest gas, electricity and water utilities. Given the importance of the meter to the Smart Grid, we believe that our industry experience of almost 175 years, coupled with our ability to innovate, positions us well to benefit from the developing market, even as existing and new competitors seek to gain market share. Table of Contents The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell, nor does it seek an offer to buy, these securities in any jurisdiction where the offer or sale is not permitted. Subject to Completion, dated April 4, 2011 ELSTER GROUP SE 16,000,000 American Depositary Shares Representing 4,000,000 Ordinary Shares This is a secondary public offering by Rembrandt Holdings S.A., which we refer to as Rembrandt, or the selling shareholder, of 16,000,000 American Depositary Shares, or ADSs, of Elster Group SE, a European public limited liability company (Societas Europaea, or SE) with its registered office in the Federal Republic of Germany. Each ADS represents one-fourth of an ordinary share, nominal value 1.00 per share. Rembrandt is offering these ADSs to the public in the United States and to institutional investors outside the United States. We will not receive any proceeds from any of the sales described in this prospectus. Our ADSs are listed on the New York Stock Exchange, or NYSE, under the symbol ELT. On April 1, 2011, the closing sale price of our ADSs was $16.30 per ADS. See Risk Factors beginning on page 14 to read about factors you should consider before buying ADSs. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. Per ADS Total Public offering price $ $ Underwriting discount(1) $ $ Proceeds, before expenses, to Rembrandt $ $ (1) See Underwriting for a description of additional compensation payable to the underwriters. To the extent that the underwriters sell more than 16,000,000 ADSs, the underwriters have the option to purchase up to an additional 2,400,000 ADSs from Rembrandt at the public offering price, less the underwriting discount. The underwriters expect to deliver the ADSs against payment in New York, New York on or about , 2011. Deutsche Bank Securities Goldman, Sachs Co. J.P. Morgan Baird Canaccord Genuity Piper Jaffray Stephens Inc. The date of this prospectus is , 2011. Table of Contents We have a capable and experienced global management team. Our managers have been instrumental in establishing our business strategy and securing our leading positions in our industry. We believe that our management s in-depth understanding of our industry and our customers needs is a result of many years of combined industry experience across the metering and many other markets. Our Strategy Our mission is to support energy and natural resource conservation with a comprehensive portfolio of innovative and trusted metering and technology solutions that help gas, electricity and water utilities around the world to improve efficiency through accurate measurement of consumption and deployment of Smart Grid solutions that create value for utilities, consumers and shareholders. Key elements of our strategy to deliver on that mission include: Continue to build upon our global leadership. As a global leader in metering, we intend to take advantage of the significant opportunities in the gas, electricity and water utility markets that we believe will arise to provide Smart Grid solutions and of the substantial organic growth that we anticipate will occur over the coming years. Capitalize on the expected ongoing growth in metering and related infrastructure in gas, electricity and water. We believe that we are well positioned to take advantage of the expansion of natural gas infrastructure and the increase in gas meter penetration worldwide as well as opportunities we perceive in onshore gas investment, including industrial gas flow control equipment. We intend to take advantage of potential future opportunities for expansion where water meter penetration rates remain low, and of similar opportunities for growth in the electricity market given electrification trends in developing countries. Build on our history of innovation and engineering expertise. We intend to continue the focus of our research and development organization on providing innovative metering and Smart Grid solutions across our business. Use our understanding of evolving customer business models and deploy our key account management teams to capture Smart Grid solutions opportunities. We intend to further strengthen our account management teams further to leverage and broaden our customer relationships to deliver metering and Smart Grid solutions and to further increase the percentage of our revenues from Smart Offerings. Focus on operational efficiency to drive consistent competitive advantage. We believe that our strong focus on operational efficiency has provided us with a scalable business platform. We plan to further develop our mixed production model to efficiently manage the significant volatility in volumes and delivery requirements often associated with large Smart Grid installations. Our Recent Results and Financial Position In the year ended December 31, 2010, we had revenues of $1,759.3 million and net income of $92.0 million. Our gas segment is our largest segment, accounting for 53.5% of our revenues in 2010. We rely on our Senior Facilities Agreement as our main source of financing. As of December 31, 2010, $822.3 million in aggregate principal amount was outstanding under the Senior Facilities Agreement, with no principal amounts due in 2011. The next payment is due on September 30, 2012. However, since all of our outstanding debt under the Senior Facilities Agreement is scheduled to mature by 2014, we are currently engaged in advanced negotiations with several banks regarding alternatives for the refinancing of our existing indebtedness. Table of Contents Table of Contents Our Risks and Challenges Our business is subject to many material risks and challenges that we describe in Risk Factors and elsewhere in this prospectus. If any of these risks materialize or we are unable to overcome these challenges, we may fail to achieve our strategic goals, and our business, financial condition or results of operations could suffer. Our key risks and challenges include the following: Negative worldwide economic conditions and ongoing instability in the worldwide financial markets. Our results may be affected by the difficult economic environment, as the pace of new construction and infrastructure investment has slowed. Ongoing instability in the worldwide financial markets may reduce our or our customers access to financing or reduce their ability to purchase from us. Changes or delays in governmental regulations and initiatives. Our industry depends substantially on regulation. It is possible that governments may delay initiatives that encourage the development of Smart Grid infrastructure. Some of our utility customers, while awaiting clarity on the laws and regulations and the timing of the receipt of stimulus funds, have been deferring their upgrades of installed meter bases that will be part of their response to Smart Grid-related regulation. Our reliance on third parties to supply raw materials and components used in our business and to manufacture a substantial portion of the components we use in our products. We rely on third-party suppliers to provide us with components and raw materials and thus are subject to delivery delays and volatility in the prices of components and raw materials. Our third-party manufacturers likewise may fail to deliver quality products (particularly electronics) in a timely manner, especially as demand for them increases in connection with the ongoing economic recovery. The transition to more advanced technology in the industry, including increasing competition from industries we previously viewed as distinct from ours. Our results and future revenues may be affected by the changing demands for advanced meters and Smart Grid solutions. We may fail to design solutions and products that meet the demands of our customers, and our competitive position may suffer as a result. New players from high technology industries may enter the market and work individually or together with our existing competitors to develop superior products. We have global operations, which expose us to various risks. We are exposed to economic, political and other risks and uncertainties due to our global operations. We do business and borrow funds in a number of currencies, which exposes us to fluctuations in exchange rates and may affect our results of operations. In addition, we sell some products in countries that are subject to sanctions in the European Union and the United States, which may have a negative effect on our reputation and the price of our ADSs. Our shareholder structure following the offering could increase the likelihood that we must repay our credit facility. Following the offering, our shareholders Rembrandt and Management KG will continue to hold a majority of our shares and will be able to exercise a direct or controlling influence on us. Under our current Senior Facilities Agreement, if Rembrandt and the Management KG together cease to beneficially own at least 30.1% of our equity share capital, or if any holder or group of holders beneficially owns more than Rembrandt and the Management KG in the aggregate, we may be required to repay all amounts outstanding under our Senior Facilities Agreement, which may have an adverse effect on our financial position. We expect that the Management KG, which currently holds a 5.5% equity interest in our company, will be dissolved by the completion of this offering or shortly thereafter and the shares in our company now owned by the Management KG will be distributed to the limited partners of the Management KG. Table of Contents You should refer to the section entitled Risk Factors beginning on page 14 for a more complete discussion of these and a number of other risks and challenges. Company Information We were registered in the commercial register of the local court (Amtsgericht) of Essen on February 23, 2010 under number HRB 22030. Our principal executive offices are located at Frankenstrasse 362, 45133 Essen, Germany, and our telephone number is +49 201 54 58 0. Our website is www.elster.com. This website address is included in this prospectus as an inactive textual reference only. The information and other content appearing on our website are not part of this prospectus. Our agent for service of process in the United States is John D. Bluth, Elster Solutions, LLC, 208 South Rogers Lane, Raleigh, NC 27610. Table of Contents In this prospectus, references to: we, us, our company, our group and Elster refer to Elster Group SE (formerly known as Elster Group S.A.) and, unless the context otherwise requires, to our subsidiaries; Rembrandt refers to Rembrandt Holdings S.A., a Luxembourg stock corporation, the selling shareholder in this offering; and Management KG refers to Nachtwache Metering Management Verm gensverwaltungs GmbH Co. KG, a limited partnership organized under German law. Table of Contents The Offering Total Number of ADSs Being Offered: Rembrandt is offering 16,000,000 ADSs representing 4,000,000 ordinary shares. Public Offering Price: The public offering price is $ per ADS. American Depositary Shares: The underwriters will deliver our shares in the form of ADSs. Each ADS, which may be evidenced by an American Depositary Receipt, or ADR, represents an ownership interest in one-fourth of one of our ordinary shares. As an ADS holder, we will not treat you as one of our shareholders. The depositary, Deutsche Bank Trust Company Americas, will be the holder of the ordinary shares underlying your ADSs. You will have ADS holder rights as provided in the deposit agreement. Under the deposit agreement, you may only vote the ordinary shares underlying your ADSs if we ask the depositary to request voting instructions from you. The depositary will pay you the cash dividends or other distributions, if any, it receives on shares after deducting its fees and expenses and applicable withholding taxes. You may need to pay a fee for certain services, as provided in the deposit agreement. You are entitled to the delivery of shares underlying your ADSs upon the surrender of such ADSs at the depositary s office, the payment of applicable fees and expenses and the satisfaction of applicable conditions set forth in the deposit agreement. To better understand the terms of the ADSs, you should carefully read the section in this prospectus entitled Description of American Depositary Shares. We also encourage you to read the deposit agreement, the form of which is incorporated by reference as an exhibit to the registration statement of which this prospectus forms a part. Depositary: Deutsche Bank Trust Company Americas. Custodian: Deutsche Bank AG, Frankfurt Branch. Over-Allotment Option: Rembrandt has granted the underwriters an option, exercisable for 30 days from the date of this prospectus, to purchase up to 2,400,000 additional ADSs from Rembrandt at the public offering price, less underwriting discount, solely to cover over- Table of Contents allotments. See Underwriting. Unless otherwise indicated, all information in this prospectus assumes the over-allotment option has not been exercised. Shares Outstanding Before and After the Offering: 28,220,041 ordinary shares. Upon completion of this offering, Rembrandt will hold a 63.8% equity interest in our company and the Management KG, which is affiliated with Rembrandt, will hold a 5.5% equity interest in our company assuming the underwriters do not exercise their overallotment option. We expect that the Management KG, which Rembrandt created in November 2006 as a measure to align interests among our key management personnel, Rembrandt and our company, will be dissolved by the completion of this offering or shortly thereafter and the shares in our company now owned by the Management KG will be distributed to the limited partners of the Management KG. Rembrandt has advised us that it does not anticipate owning a majority of our shares over the long term. Although we expect that at some point Rembrandt will cease to be a major shareholder in our company, for so long as Rembrandt continues to own a significant percentage of our shares, its equity shareholding gives it the power to control actions that require shareholder approval, including the election of members on our Administrative Board. See Risk Factors Risks Related to the Offering and Our Shareholder Structure. Use of Proceeds: We will not receive any proceeds from any part of this offering. Lock-Up: We, Rembrandt, certain members of our senior management and the Management KG (but only prior to its dissolution) have agreed that, subject to customary exceptions, for a period of 90 days from the effective date of the registration statement of which this prospectus forms a part, we and they will not, without the prior written consent of each of Deutsche Bank Securities Inc., Goldman Sachs International and J.P. Morgan Securities LLC, dispose of any of our shares or ADSs or securities which are convertible or exchangeable into these securities. Deutsche Bank Securities Inc., Goldman Sachs International and Table of Contents J.P. Morgan Securities LLC in their sole discretion may release any of the securities subject to these lock-up agreements at any time without notice. The release of any lock-up will be considered on a case-by-case basis. Dividend Policy: We have not declared any cash dividends on our ordinary shares and have no present intention to pay dividends in the foreseeable future. See Dividend Policy for a discussion of the factors that will affect the determination by our Administrative Board to recommend dividends, as well as other matters concerning our dividend policy.
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001492325_hecate_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001492325_hecate_prospectus_summary.txt
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@@ -0,0 +1 @@
+PROSPECTUS SUMMARY About our Company We are a mining exploration and development company. We have an option to acquire a 100% interest in a group of mineral claims known as the Copper Lake Property near Babine Lake, Topely Landing in the Omineca Mining Distrct of British Columbia, Canada. We intend to conduct exploration work on the property in order to ascertain whether it possesses economic quantities of copper. We are a company without revenues or operations and have minimal assets and have incurred losses since inception. Our principal executive office is located at 7582 Las Vegas Blvd. South, Las Vegas, NV 89123. Our telephone number is (702) 516-7156 and our registered agent for service of process is Aspen Asset Management Services, LLC, located at 6623 Las Vegas Blvd South, Suite 255, Las Vegas, Nevada 89119. Our fiscal year end is December 31. Terms of the offering Following is a brief summary of this offering: Securities being offered by selling shareholders 9,000,000 shares of common stock, Offering price per share $ 0.01 Net proceeds to us None Number of shares outstanding before the offering 19,000,000 Number of shares outstanding after the offering if all of the shares are sold 19,000,000 Summary financial data The following financial information summarizes the more complete historical financial information at the end of this prospectus. As of June 30, 2011 (unaudited) Balance Sheet Total Assets $ 47,892 Total Liabilities $ 6,852 Stockholders Equity $ 41,040 Period from March 1, 2010 (inception) to June 30, 2011 (unaudited) Income Statement Revenue $ -- Total Expenses $ 56,702 Net Loss $ 56,702
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001492658_wright_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001492658_wright_prospectus_summary.txt
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+S-1/A 1 a2201760zs-1a.htm S-1/A Table of Contents As filed with the Securities and Exchange Commission on February 2, 2011 Registration No. 333-167370 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 You should rely only on the information contained in this prospectus and any free writing prospectus we may specifically authorize to be delivered or made available to you. We have not authorized anyone to provide you with information different from that contained in this prospectus. We are offering to sell, and seeking offers to buy, ordinary shares only in jurisdictions where offers and sales are permitted. We have not taken any action to permit a public offering of the ordinary shares outside the United States or to permit the possession or distribution of this prospectus outside the United States. Persons outside the United States who come into possession of this prospectus must inform themselves about and observe any restrictions relating to the offering of the ordinary shares and the distribution of the prospectus outside the United States. AMENDMENT NO. 12 TO FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Table of Contents Table of Contents As a result of the foregoing actions, we believe our addressable worldwide market opportunity has increased from approximately $2 billion in 2006 to approximately $7 billion in 2009. We believe we are differentiated by our full portfolio of upper and lower extremity products, our dedicated extremity-focused sales organization and our strategic focus on extremities. We further believe that we are well-positioned to benefit from the opportunities in the extremity products marketplace as we are already among the global leaders in the shoulder and ankle joint replacement markets with the #2 market position worldwide for sales of shoulder joint replacement products and the #1 market position in the United States in foot and ankle joint replacement systems in 2009 as measured by revenue. We more recently have expanded our technology base and product offering to include: new joint replacement products based on new materials; improved trauma products based on innovative designs; and proprietary orthobiologic materials for soft tissue repair. In the United States, which is the largest orthopaedic market, we believe that our single, "specialists serving specialists" distribution channel is strategically aligned with what we believe is an ongoing trend in orthopaedics for surgeons to specialize in certain parts of the anatomy or certain types of procedures. Our principal products are organized in four major categories: upper extremity joints and trauma, lower extremity joints and trauma, sports medicine and orthobiologics, and large joints and other. Our upper extremity products include joint replacement and bone fixation devices for the shoulder, hand, wrist and elbow. Our lower extremity products include joint replacement and bone fixation devices for the foot and ankle. Our sports medicine and orthobiologics product category includes products used across several anatomic sites to mechanically repair tissue-to-tissue or tissue-to-bone injuries, in the case of sports medicine, or to support or induce remodeling and regeneration of tendons, ligaments, bone and cartilage, in the case of orthobiologics. Our large joints and other products include hip and knee joint replacement implants and ancillary products. Innovations in the orthopaedic industry have typically consisted of evolutions of product design in implant fixation, joint mechanics, and instruments and modifications of existing metal or plastic-based device designs rather than new products based on combinations of new designs and new materials. In contrast, the growth of our target markets has been driven by the development of products that respond to the particular mechanics of small joints and the importance of soft tissue to small joint stability and function. We are committed to the development of new designs utilizing both conventional materials and new tissue-friendly biomaterials that we expect will create new markets. We believe that we are a leader in researching and incorporating some of these new technologies across multiple product platforms. In the United States, we sell products from our upper extremity joints and trauma, lower extremity joints and trauma, and sports medicine and orthobiologics product categories; we do not actively market large joints in the United States nor do we currently have plans to do so. While we market our products to extremity specialists, our revenue is generated from sales to healthcare institutions and distributors. We sell through a single sales channel consisting of a network of independent commission-based sales agencies. Internationally, where the trend among surgeons toward specialization is not as advanced as in the United States, we sell our full product portfolio, including upper extremity joints and trauma, lower extremity joints and trauma, sports medicine and orthobiologics and large joints. We utilize several distribution approaches depending on the individual market requirements, including direct sales organizations in the largest European markets and independent distributors for most other international markets. In 2009, we generated revenue of $201.5 million, 56% of which was in the United States and 44% of which was international. TORNIER N.V. (Exact name of Registrant as specified in its charter) The Netherlands (State or other jurisdiction of incorporation or organization) 3842 (Primary Standard Industrial Classification Code Number) 98-0509600 (I.R.S. Employer Identification Number) Fred Roeskestraat 123 1076 EE Amsterdam The Netherlands (+ 31) 20 675 4002 (Address, including zip code and telephone number, including area code, of Registrant's principal executive offices) Fred. Roeskestraat 123 1076 EE Amsterdam The Netherlands (+ 31) 20 675 4002 (Name, address, including zip code and telephone number, including area code, of agent for service) Table of Contents Our Business Strategies Our goal is to strengthen our leadership position serving extremity specialists. The key elements of our strategy include: Leveraging our "specialists serving specialists" strategy: We believe our focus on and dedication to extremity specialists enables us to better understand and address the clinical needs of these surgeons. We believe that extremity specialists, who have emerged as a significant constituency in orthopaedics only in the last 10 to 15 years, have been underserved in terms of new technology and also inefficiently served by the current marketplace. We offer a comprehensive portfolio of extremity products, and also serve our customers through a sales channel that is dedicated to extremities, which we believe provides us with a significant competitive advantage because our sales agencies and their representatives have both the knowledge and desire to comprehensively meet the needs of extremity specialists and their patients, without competing priorities. Advancing scientific and clinical education: We believe our specialty focus, commitment to product innovation and culture of scientific advancement attract both thought leaders and up-and-coming surgeon specialists who share these values. We actively involve these specialists in the development of world-class training and education programs and encourage ongoing scientific study of our products. Specific initiatives include the Tornier Master's Courses in shoulder and ankle joint replacement, The Fellows and Chief Residents Courses and a number of clinical concepts courses. We also maintain a registry that many of our customers utilize to study and report on the outcomes of procedures in which our extremity products have been used. We believe our commitment to science and education also enables us to reach surgeons early in their careers and provide them access to a level of training in extremities that we believe is not easily accessible through traditional orthopaedic training. Introducing new products and technologies to address more of our extremity specialists' clinical needs: Our goal is to continue to introduce new technologies for extremity joints that improve patient outcomes and thereby continue to expand our market opportunity and share. Our efforts have been focused on joint replacement, as well as sports medicine and orthobiologics, given the importance of these product categories to extremity surgeons. Since our acquisition by the Investor Group, we have significantly increased our investment in research and development to accelerate the pace of new product introduction. During 2009, we invested $18.1 million in research and development and introduced 18 new products, and in 2008, we invested $20.6 million and introduced nine new products, up from only $13.3 million and four new products in 2007. We have also been active in gaining access to new technologies through external partnerships, licensing agreements and acquisitions. We believe that our reputation for effective collaboration with industry thought leaders as well as our track record of effective new product development and introductions will allow us to continue to gain access to new ideas and technologies early in their development. Expanding our international business: We face a wide range of market dynamics that require our distribution channels to address both our local market positions and local market requirements. One is focused on products for upper extremities and the other on hip and knee replacements and products for lower extremities. In other European markets, we utilize a combination of direct and distributor strategies that have evolved to support our expanding extremity business and also to support our knee and hip market positions. In large international markets where the extremity market segment is relatively underdeveloped, such as Japan and China, the same sales channel sells our hip and knee product portfolios and extremity joint products, which provides these sales channels sufficient product breadth and economic scale. We plan on expanding our international business by continuing to adapt our distribution channels to the unique characteristics of individual markets. Copies to: Cristopher Greer, Esq. Willkie Farr & Gallagher LLP 787 Seventh Avenue New York, New York 10019 (212) 728-8000 Charles Ruck, Esq. Shayne Kennedy, Esq. Latham & Watkins LLP 650 Town Center Drive, 20th Floor Costa Mesa, CA 92626 (714) 540-1235 Table of Contents Achieving and improving our profitability through operating leverage: With the additional capital resources brought by the Investor Group, we have made significant investments over the last several years in our research and development, sales and marketing, and manufacturing operations to build what we believe is a world-class organization capable of driving sustainable global growth. For example, we grew our research and development organization from approximately 20 employees as of December 31, 2006, to 80 employees as of October 3, 2010. We created a new global sales and marketing leadership team by integrating key personnel from acquired organizations and recruiting additional experienced medical device sales and marketing professionals. We also expanded our manufacturing capacity with two new plants in Ireland and France. With these organizational and infrastructure investments in place, we believe we have the infrastructure to support our growth for the foreseeable future. As a result, we believe we can increase revenue and ultimately achieve and improve profitability. Risk Factors Investing in our company entails a high degree of risk, as more fully described in the "Risk Factors" section of this prospectus. You should carefully consider such risks before deciding to invest in our ordinary shares. Our principal risks include: we have a history of operating losses and negative cash flow; if we do not successfully develop and market new products and technologies and implement our business strategy, our business and results of operations will be adversely affected; we rely on our independent sales agencies and their representatives to market and sell our products; we may be unable to compete successfully against our existing or future competitors; we derive a significant portion of our sales from operations in international markets that are subject to political, economic and social instability; if we fail to maintain regulatory approvals and clearances, or are unable to obtain, or experience significant delays in obtaining, FDA clearances or approvals for our future products or product enhancements, our ability to commercially distribute and market these products could suffer; and your rights as a holder of ordinary shares will be governed by Dutch law and will differ from the rights of shareholders under U.S. law. Corporate Information Our principal executive offices are located at Fred Roeskestraat 123, 1076 EE Amsterdam, The Netherlands. Our telephone number at this address is (+ 31) 20 577 1177. Our agent for service of process in the United States is CT Corporation, 1209 Orange St., Wilmington, DE 19801. Our website is located at www.tornier.com. The information contained on our website is not a part of this prospectus. This prospectus contains references to our trademarks Aequalis , AffinitiTM, AscendTM, Biofiber , CoverLocTM, FuturaTM, Insite , IntrafocalTM, HLS Kneetec , Latitude , LineaTM, Meije Duo , NexFixTM, Noetos , OceaneTM, Osteocure , Piton , Pleos , RFSTM, Salto , Salto Talaris , StayfuseTM and TornierTM among others. All other trademarks or trade names referred to in this prospectus are the property of their respective owners. Table of Contents paid by July 2011, are not currently calculable, but are expected to be determined by the board during the first quarter of 2011. Performance targets(1) Payout Weight (% of payment tied to performance of this metric) Modified metrics(2) Threshold Target/max.(3) Threshold (% of base salary) Target/max. (% of base salary) Modified Revenue 25 % $203.2 million $239.0 million 0.25 % 4 % Modified EBITDA(4) 25 % $16.7 million $19.7 million 0.25 % 4 % Modified Revenue/(Net Value of Implants and Instruments)(5) 25 % .91 1.97 0.25 % 4 % On-time Delivery to Market of New Products(6) 25 % n/a n/a 0.25 % Approximate date of commencement of proposed sale to the public: as soon as practicable after the effective date of this registration statement. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act, check the following box. If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b2 of the Exchange Act. Large accelerated filer Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company Table of Contents
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+PROSPECTUS SUMMARY 1
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+The following is only a summary of portions of this Prospectus. You should carefully read the entire Prospectus before investing in any Fund s shares. The definition of certain capitalized terms may be found in the Glossary of Certain Terms in Appendix A appearing before the back cover of this Prospectus.
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+SUMMARY The following summary is not complete and does not contain all of the information that may be important to you. You should read the entire prospectus before making an investment decision to purchase our Common Stock. General Information about the Company On-Air Impact, Inc. (the Company or On-Air Impact ) was incorporated in the State of Nevada on May 26, 2010. On-Air Impact is a development stage company whose goal is to be engaged by sports and entertainment companies for consulting and analytical services. To date, we do not have any clients or revenue. Media, Advertisers, and Agency Need For decades, advertisers, sponsors and media/sponsorship agencies have relied on Nielsen Media Research to provide a ratings system which measures television viewership. This rating system, in turn, is used by broadcasters and advertisers to negotiate the cost of a 30-second commercial spot. Henceforth, the negotiations are relatively simple, as both parties have agreed upon a universal system of measurement and pricing. With the increase in available alternate forms of brand messaging (more cable networks, growth of digital), there is more competition for advertising and sponsorship dollars. In response, media groups are offering in-program added value branding opportunities to entice investment dollars. The concept of added value is that the customer gains some additional marketing advantage without having to pay for it - or pay very little, compared with its value to the customer. A logo might be the up on the screen/TV as a sponsor of networks bottom-line (scores/updates) once during a telecast. Unlike the widely adopted Nielsen ratings system for the 30-second unit, there is currently not an effective way to measure these newly created, on-air added value assets. Our Business Model Our business model includes the following: First, to commission a consumer research project to an outside research firm. The goal of the study will be to quantify the value of a 30-second commercial spot. We do not currently have any agreements with any third party research firm at this point in time. Second, to develop custom software by an outside programmer. This software will focus on assigning values to advertisements duration, size, screen positioning, broadcast timing, occlusion (when a message/logo is obstructed or blocked) and clutter (the large volume of advertising messages that the average consumer is exposed to on a daily basis). We do not currently have any agreements with any third party programmer at this point in time. Third, to work with a website developer to complete the process from server hosting to creation of an end user web interface. This final process starts when our client inputs various brand exposure marketing tools (e.g., signage, patches on driver s uniforms the case of NASCAR races, commercials, etc.) into web program. From there, their data is computed through a grading system which assigns an effectiveness ranking based on a range of monetary value based on our research market study. We do not currently have any agreements with any third party website developer at this point in time. Our intended clients can be broken-down into four categories: Sports Teams (e.g., professional baseball, basketball and football teams) and Events (e.g., baseball, basketball and footballs games), Media Rights Holders (e.g., ESPN, Fox NY Sports, Network Cable), Sponsorship and Event Agencies (e.g., Advertising Agencies) and Consumer Brands (e.g., Visa, FedEx). To date, we have not initiated any discussions with any intended clients. (2) That for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (4) That for the purpose of determining liability under the Securities Act of 1933 (the Act ) to any purchaser, if the registrant is subject to Rule 430C under the Act, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference in the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract or sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use. (5) That for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities, the undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser: (i) Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424; (ii) Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant; (iii) The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and (iv) Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser. (d) Insofar as indemnification for liabilities arising under the Securities Act of 1933 (the Act ) may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. PROSPECTUS Organizational History; Capitalization We were incorporated in State of Nevada on May 26, 2010. There are currently an aggregate of 5,000,000 shares of the Company s Common Stock issued and outstanding. The Company is authorized to issue one hundred ten million (110,000,000) shares of capital stock, one hundred million (100,000,000) shares of which are designated as Common Stock, and ten million (10,000,000) shares of which are designated as preferred stock, $0.0001 par value, which can be designated by the Board of Directors in one or more classes with voting powers, full or limited, or no voting powers, and such designations, preferences, limitations or restrictions without stockholder approval. Summary Financial Information The table below summarizes the unaudited interim financial statements of On-Air Impact, Inc. for the period May 26, 2010 (inception) to November 30, 2010: Balance Sheet Summary: At November 30, 2010 Balance Sheet (Unaudited) Cash and Cash Equivalents $ 1,938 Total Assets $ 1,938 Total Liabilities $ 2,766 Total Stockholders Equity (Deficit) $ (828 ) Statement of Operations Summary: For the Six Months Ended November 30, 2010 Statement of Operations: (Unaudited) Revenue $ 0 Net Loss $ (5,828 ) Net Loss Per Share of Common Stock , basic and diluted Nil Important Information No Required Minimum Amount of Shares that must be sold There is no required minimum amount of Shares that must be sold in this offering. As a result, potential investors will not know how many Shares will ultimately be sold and the amount of proceeds the Company will receive from the offering. If the Company sells only a few Shares, potential investors may end up holding shares in a company that: hasn t received enough proceeds from the offering to begin/sustain operations; and has no market for its shares. SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Red Bank, State of New Jersey, on February 8, 2011. ON-AIR IMPACT, INC. By: /s/ DOROTHY WHITEHOUSE Dorothy Whitehouse Chief Executive Officer and Chairman (Principal Executive Officer, Principal Financial and Accounting Officer) Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated. Signature Title Date /s/ DOROTHY WHITEHOUSE February 8, 2011 Dorothy Whitehouse Chief Executive Officer, President and Director (Principal Executive Officer, Principal Financial Officer, and Principal Accounting Officer) /s/ EDWARD WHITEHOUSE February 8, 2011 Edward Whitehouse Secretary, Treasurer and Director ON-AIR IMPACT, INC. 2,000,000 SHARES COMMON STOCK $0.10 per Share This should be considered a substantial risk of investment, taken together with the
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+S-1/A 1 ds1a.htm PRE-EFFECTIVE AMENDMENT NO. 4 TO FORM S-1 Pre-effective amendment No. 4 to Form S-1 Table of Contents As filed with the Securities and Exchange Commission on May 4, 2011 Registration No. 333-167482 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 Pre-Effective Amendment No. 4 to the FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Naugatuck Valley Financial Corporation and Naugatuck Valley Savings and Loan Employee Savings Plan (Exact name of registrant as specified in its charter) Maryland 6035 01-0969655 (State or other jurisdiction of incorporation or organization) (Primary Standard Industrial Classification Code Number) (IRS Employer Identification No.) 333 Church Street Naugatuck, Connecticut 06770 (203) 720-5000 (Address, including zip code, and telephone number, including area code, of registrant s principal executive offices) John C. Roman President and Chief Executive Officer Naugatuck Valley Financial Corporation 333 Church Street Naugatuck, Connecticut 06770 (203) 720-5000 (Name, address, including zip code, and telephone number, including area code, of agent for service) Copies to: Paul M. Aguggia, Esquire Victor L. Cangelosi, Esquire Sean P. Kehoe, Esquire Kilpatrick Townsend & Stockton LLP 607 14th Street, NW, Suite 900 Washington, DC 20005 (202) 508-5800 Kent Krudys, Esquire Robert I. Lipsher, Esquire Luse Gorman Pomerenk & Schick, P.C. 5335 Wisconsin Avenue, NW, Suite 400 Washington, DC 20016 (202) 274-2000 Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Table of Contents Summary This summary highlights material information from this document and may not contain all the information that is important to you. To understand the conversion and offering fully, you should read this entire document carefully. Our Company Naugatuck Valley Financial Corporation. Naugatuck Valley Financial Corporation is, and New Naugatuck Valley Financial Corporation following the completion of the conversion and offering will be, the unitary savings and loan holding company for Naugatuck Valley Savings and Loan, a federally chartered savings bank. Our common stock is traded on the NASDAQ Global Market under the symbol NVSL. At December 31, 2010, Naugatuck Valley Financial had consolidated total assets of $568.3 million, total net loans of $473.5 million, total deposits of $405.9 million and total stockholders equity of $52.3 million. As of the date of this prospectus, Naugatuck Valley Financial had 7,018,823 shares of common stock outstanding, of which 2,836,416 shares of common stock were owned by public shareholders. For a description of important provisions in New Naugatuck Valley Financial s articles of incorporation and bylaws, see Restrictions on Acquisition of New Naugatuck Valley Financial. Naugatuck Valley Mutual Holding Company. Naugatuck Valley Mutual Holding Company is the federally chartered mutual holding company of Naugatuck Valley Financial Corporation. Naugatuck Valley Mutual Holding Company s sole business activity is the ownership of 4,182,407 shares of common stock of Naugatuck Valley Financial or 59.6% of the common stock outstanding as of the date of this prospectus. After completion of the conversion, Naugatuck Valley Mutual Holding Company will cease to exist. Naugatuck Valley Savings and Loan. Naugatuck Valley Savings and Loan is headquartered in Naugatuck, Connecticut and has served customers in Connecticut since 1922. In addition to our main office, we operate nine branch offices in the Greater Naugatuck Valley which we consider our market area. The Greater Naugatuck Valley encompasses the communities in the central and lower Naugatuck Valley regions in New Haven and Fairfield Counties. At December 31, 2010, Naugatuck Valley Savings and Loan exceeded all regulatory capital requirements and was not a participant in any of the U.S. Treasury s capital raising programs for financial institutions. Our principal executive offices are located at 333 Church Street, Naugatuck, Connecticut 06770 and our telephone number is (203) 720-5000. Our website address is www.nvsl.com. Information on our website should not be considered a part of this prospectus. Our Market Area We are headquartered in Naugatuck, Connecticut, which is located in southwestern Connecticut approximately six miles south of Waterbury and 26 miles north of Bridgeport. Connecticut is one of the most attractive banking markets in the United States with a total population of approximately 3.5 million, the highest per capita income of $36,065 in the United States and a median household income of $70,340 as of June 30, 2010, ranking second in the United States and well above the U.S. median household income of $54,442, according to SNL Financial. In addition to our main office, we operate nine branch offices in the greater Naugatuck Valley market which we consider our market area. The greater Naugatuck Valley market encompasses the communities in the central and lower Naugatuck Valley regions in New Haven County, where our main office and eight of our branch offices are located, and Fairfield County, where one of our branch offices is located. The economy in our market area is primarily oriented to the service, retail, construction, and Table of Contents Questions and Answers You should read this document for more information about the conversion and offering. The plan of conversion described in this document has been conditionally approved by the Office of Thrift Supervision. The Proxy Vote Q: What am I being asked to approve? A: Naugatuck Valley Financial shareholders as of May 3, 2011 are asked to vote on the plan of conversion. Under the plan of conversion, Naugatuck Valley Savings and Loan will convert from the mutual holding company form of organization to the stock holding company form, and as part of such conversion, New Naugatuck Valley Financial will offer for sale, in the form of shares of its common stock, Naugatuck Valley Mutual Holding Company s 59.6% ownership interest in Naugatuck Valley Financial. In addition to the shares of common stock to be issued to those who purchase shares in the offering, public shareholders of Naugatuck Valley Financial as of the completion of the conversion and offering will receive shares of New Naugatuck Valley Financial common stock in exchange for their existing shares of Naugatuck Valley Financial common stock. The exchange will be based on an exchange ratio that will result in Naugatuck Valley Financial s existing public shareholders owning approximately the same percentage of New Naugatuck Valley Financial common stock as they owned of Naugatuck Valley Financial immediately before the completion of the conversion and offering. Shareholders also are asked to vote on the following informational proposals with respect to the articles of incorporation of New Naugatuck Valley Financial: Approval of a provision in New Naugatuck Valley Financial s articles of incorporation requiring a super-majority vote to approve certain amendments to New Naugatuck Valley Financial s articles of incorporation; and Approval of a provision in New Naugatuck Valley Financial s articles of incorporation to limit the voting rights of shares beneficially owned in excess of 10% of New Naugatuck Valley Financial s outstanding voting stock. The provisions of New Naugatuck Valley Financial s articles of incorporation, which are summarized as informational proposals were approved as part of the process in which the board of directors of Naugatuck Valley Financial approved the plan of conversion. These proposals are informational in nature only, because the Office of Thrift Supervision s regulations governing mutual-to-stock conversions do not provide for votes on matters other than the plan of conversion. While we are asking you to vote with respect to each of the informational proposals listed above, the proposed provisions for which an informational vote is requested will become effective if shareholders approve the plan of conversion, regardless of whether shareholders vote to approve either or both of the informational proposals. The provisions of New Naugatuck Valley Financial s articles of incorporation which are summarized as informational proposals may have the effect of deterring or rendering more difficult attempts by third parties to obtain control of New Naugatuck Valley Financial, if such attempts are not approved by the board of directors, or may make the removal of the board of directors or management, or the appointment of new directors, more difficult. In addition, shareholders will vote on the election of directors, the ratification of the appointment of independent auditors, and a proposal to adjourn the annual meeting, if necessary, to solicit additional proxies if there are not sufficient votes at the time of the annual meeting to approve the plan of conversion. YOUR VOTE IS IMPORTANT. WE CANNOT COMPLETE THE CONVERSION AND OFFERING UNLESS THE PLAN OF CONVERSION RECEIVES THE AFFIRMATIVE VOTE OF A MAJORITY OF SHARES HELD BY OUR PUBLIC SHAREHOLDERS. Table of Contents Summary This summary highlights material information from this document and may not contain all the information that is important to you. To understand the conversion and offering fully, you should read this entire document carefully. Annual Meeting of Shareholders Date, Time and Place; Record Date The annual meeting of Naugatuck Valley Financial shareholders is scheduled to be held at , , , Connecticut at p.m., Eastern time, on , 2011. Only Naugatuck Valley Financial shareholders of record as of the close of business on May 3, 2011 are entitled to notice of, and to vote at, the annual meeting of shareholders and any adjournments or postponements of the meeting. Purpose of the Meeting Shareholders will be voting on the following proposals at the annual meeting: 1. Approval of the plan of conversion; 2. The following informational proposals: 2a Approval of a provision in new Naugatuck Valley Financial s articles of incorporation requiring a super-majority vote to approve certain amendments to new Naugatuck Valley Financial s articles of incorporation; and 2b Approval of a provision in new Naugatuck Valley Financial s articles of incorporation to limit the voting rights of shares beneficially owned in excess of 10% of new Naugatuck Valley Financial s outstanding voting stock; 3. The election of three directors for terms of three years each; 4. The ratification of the appointment of Whittlesey & Hadley, P.C. as independent registered public accountants for the fiscal year ending December 31, 2011; and 5. The approval of the adjournment of the annual meeting, if necessary, to solicit additional proxies in the event that there are not sufficient votes at the time of the annual meeting to approve the plan of conversion. The provisions of New Naugatuck Valley Financial s articles of incorporation which are summarized as informational proposals 2a and 2b were approved as part of the process in which the board of directors of Naugatuck Valley Financial approved the plan of conversion. These proposals are informational in nature only, because the Office of Thrift Supervision s regulations governing mutual-to-stock conversions do not provide for votes on matters other than the plan of conversion. While we are asking you to vote with respect to each of the informational proposals listed above, the proposed provisions for which an informational vote is requested will become effective if shareholders approve the plan of conversion, regardless of whether shareholders vote to approve either or both of the informational proposals. The provisions of New Naugatuck Valley Financial s articles of incorporation which are summarized as informational proposals may have the effect of deterring or rendering more difficult attempts by third parties to obtain control of New Naugatuck Valley Financial, if such attempts are not approved by the board of directors, or may make the removal of the board of directors or management, or the appointment of new directors, more difficult. Vote Required Proposal 1: Approval of the Plan of Conversion. Approval of the plan of conversion requires the affirmative vote of holders of at least two-thirds of the outstanding shares of Naugatuck Valley Financial, Table of Contents TABLE OF CONTENTS Page THE OFFERING 1 Securities Offered 1 Election to Purchase Shares of New Naugatuck Valley Financial Common Stock in Stock Offering 1 Value of Participation Interests 2 Method of Directing Investment 2 Time for Directing Investment 2 Irrevocability of Investment Direction 3 Purchase Price of New Naugatuck Valley Financial Common Stock 3 Nature of a Participant s Interest in New Naugatuck Valley Financial Common Stock 3 Voting and Tender Rights of New Naugatuck Valley Financial Common Stock 3 DESCRIPTION OF THE 401(k) PLAN 5 Introduction 5 Eligibility and Participation 5 Contributions Under the 401(k) Plan 5 Limitations on Contributions 5 401(k) Plan Investments 7 Benefits Under the 401(k) Plan 9 Withdrawals and Distributions from the 401(k) Plan 9 ADMINISTRATION OF THE 401(k) PLAN 11 Trustee 11 Reports to 401(k) Plan Participants 11 Plan Administrator 11 Amendment and Termination 11 Merger, Consolidation or Transfer 11 Federal Income Tax Consequences 11 Restrictions on Resale 12 SEC Reporting and Short-Swing Profit Liability 13 LEGAL OPINION 14 Table of Contents THE OFFERING Securities Offered The securities offered in connection with this prospectus supplement are participation interests in the 401(k) Plan. New Naugatuck Valley Financial is offering common stock in connection with the conversion of Naugatuck Valley Savings and Loan from the mutual holding company form of organization to the stock form. At a purchase price of $8.00 per share, the 401(k) Plan trustee may acquire up to 476,125 shares of New Naugatuck Valley Financial common stock in the stock offering. Certain subscription rights and purchase limitations also govern your investment in New Naugatuck Valley Financial common stock in connection with the subscription offering. See The Conversion and Offering Subscription Offering and Subscription Rights and Limitations on Purchases of Shares in the prospectus attached to this prospectus supplement for further discussion of these subscription rights and purchase limitations. Common stock not purchased in the subscription offering may be offered for sale in a community offering with preference first given to residents of Fairfield and New Haven Counties, Connecticut and then to public shareholders of Naugatuck Valley Financial as of May 3, 2011. The shares of Naugatuck Valley Financial common stock currently held in the 401(k) Plan will automatically be exchanged for shares of New Naugatuck Valley Financial Corporation, pursuant to an exchange ratio as more fully described in the prospectus attached to this prospectus supplement. See The Conversion and Offering Share Exchange Ratio for Current Shareholders. Any new shares you purchase in the stock offering will be added to the shares that you receive in the exchange described above. All of these shares of common stock will be maintained in the Naugatuck Valley Financial Stock Fund. This prospectus supplement contains information regarding the 401(k) Plan. The attached prospectus contains information regarding the stock offering and the financial condition, results of operations and business of Naugatuck Valley Financial. The address of the principal executive office of Naugatuck Valley Savings and Loan is 333 Church Street, Naugatuck, Connecticut 06770. The telephone number of Naugatuck Valley Savings and Loan is (203) 720-5000. Election to Purchase Shares of New Naugatuck Valley Financial Common Stock in Stock Offering You may direct the 401(k) Plan trustee to liquidate up to 100% of your 401(k) Plan account balance, excluding your current investment in the Naugatuck Valley Financial Stock Fund, and use those funds to subscribe for New Naugatuck Valley Financial common stock offered for sale in connection with the stock offering. All 401(k) plan participants are eligible to direct the 401(k) Plan trustee to subscribe for shares of New Naugatuck Valley Financial common stock in the stock offering. However, all participant directions are subject to subscription rights, purchase priorities and purchase limitations. If you are eligible to purchase shares in the subscription offering, your order will be filled in the following order of priority: 1. Persons with an aggregate of $50 or more on deposit at Naugatuck Valley Savings and Loan as of the close of business on December 31, 2008. 2. Persons with an aggregate of $50 or more on deposit at Naugatuck Valley Savings and Loan as of the close of business on March 31, 2011 who are not eligible in category 1 above. 3. Naugatuck Valley Savings and Loan s depositors as of the close of business on May 3, 2011, who are not eligible in categories 1 or 3 above. If you fall into subscription offering categories (1), (2) or (3), you have subscription rights to purchase New Naugatuck Valley Financial common stock in the subscription offering and you may use funds in the 401(k) Plan to purchase the shares. Please complete the blue Investment Form included with this prospectus supplement to facilitate your purchase. Table of Contents If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. Large accelerated filer Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company Calculation of Registration Fee Title of each class of securities to be registered Amount to be registered Proposed maximum offering price per unit Proposed maximum Aggregate offering price(1) Amount of Registration fee Common Stock $0.01 par value 8,600,138 $8.00 $68,801,104 $516(2) Participation Interests(3) $3,809,000 (1) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o) under the Securities Act. (2) A registration fee of $5,389 was previously paid upon the initial filing of the Form S-1 on June 11, 2010 and an additional registration fee of $164 was previously paid in connection with the filing of the Pre-Effective Amendment No. 3, filed on March 14, 2011, based on the registration of 176,284 additional shares of Common Stock. An additional registration fee of $516 is being paid herewith in connection with the registration of an additional 554,847 shares of Common Stock. (3) The securities of Naugatuck Valley Financial Corporation to be purchased by the Naugatuck Valley Savings and Loan Employees Savings Plan are included in the common stock being registered. Pursuant to Rule 457(h)(2) of the Securities Act of 1933, as amended, no separate fee is required for the participation interests. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to Section 8(a), may determine. Table of Contents manufacturing industries. The median household and per capita income in New Haven County trailed slightly the comparable figures for Connecticut as a whole, while the median household and per capita income in Fairfield County exceeded the comparable figures for Connecticut. Our Business We operate as a community bank. Our primary business lines involve generating funds from deposits or borrowings and investing such funds in loans and investment securities. We currently operate ten retail banking locations in the greater Naugatuck Valley market. Our primary lines of business are: Retail Lending. We offer a variety of one- to four-family residential mortgage loans, home equity loans and consumer loans through our branch network. Retail loans constituted 53.1% of our total loan portfolio at December 31, 2010. Commercial and Construction Lending. We offer multi-family and commercial real estate loans and commercial business loans for property owners and businesses in our market area. We also offer residential construction loans to individuals to finance the construction of residential dwellings for personal use and commercial construction loans for commercial development projects, including condominiums, apartment buildings, and single family subdivisions as well as office buildings, retail and other income producing properties. Commercial and construction loans constituted 46.9% of our total loan portfolio at December 31, 2010. Deposit Products and Services. We offer a full range of traditional deposit products for consumers and businesses, such as NOW accounts, checking accounts, money market accounts, regular savings accounts, club savings accounts, certificate accounts, health savings accounts and various retirement accounts. These products can have additional features such as direct deposit, ATM and check card services, overdraft protection, telephone and Internet banking, and remote electronic deposits, thereby providing our customers multiple channels to access their accounts. Our Business Strategy The following are the key elements of our business strategy: Maintaining capital at well capitalized levels. Our policy has always been to protect the safety and soundness of Naugatuck Valley Savings and Loan through conservative credit and operational risk management, balance sheet strength, and safe and sound operations. As a result, our capital ratios are in excess of the well capitalized standards set by the Office of Thrift Supervision. Although our asset size has grown significantly since our initial public offering in 2004 we have maintained well capitalized levels of regulatory capital through additions to capital from profits as well as through an effective dividend policy that balances capital adequacy with shareholder returns. Improvement of asset quality. Although we have sought to maintain our asset quality at high levels by applying what we consider to be conservative underwriting standards, our non-performing assets increased from $2.7 million, or 0.5% of total assets, at December 31, 2008 to $6.1 million, or 1.1% of total assets, as of December 31, 2009 to $18.3 million, or 3.22 % of total assets, at December 31, 2010. This increase was due to the effects of weakened economic conditions on our borrowers. Management works closely with the asset quality committee of the board of directors to resolve nonperforming assets in a manner most advantageous to Naugatuck Valley Financial. To address increased problem assets, we have placed more attention and resources on loan workouts and, in certain cases, have modified loans with delinquent borrowers. Loan workouts and modifications are handled either by the collections department (in the case of home mortgages or home equity loans) or by the Table of Contents Q: What is the conversion and related stock offering? A: Naugatuck Valley Savings and Loan is converting from a partially-public mutual holding company structure to a fully-public stock holding company ownership structure. Currently, Naugatuck Valley Mutual Holding Company owns 59.6% of Naugatuck Valley Financial s common stock. The remaining 40.4% of Naugatuck Valley Financial s common stock is owned by public shareholders. As a result of the conversion, New Naugatuck Valley Financial will become the parent of Naugatuck Valley Savings and Loan. Shares of common stock of New Naugatuck Valley Financial, representing the 59.6% ownership interest of Naugatuck Valley Mutual Holding Company in Naugatuck Valley Financial, are being offered for sale to eligible depositors of Naugatuck Valley Savings and Loan and, possibly, to the public. At the completion of the conversion and offering, public shareholders of Naugatuck Valley Financial will exchange their shares of Naugatuck Valley Financial common stock for shares of common stock of New Naugatuck Valley Financial. After the conversion and offering are completed, Naugatuck Valley Savings and Loan will be a wholly-owned subsidiary of New Naugatuck Valley Financial, and 100% of the common stock of New Naugatuck Valley Financial will be owned by public shareholders. Our organization will have completed the transition from partial to fully-public ownership. As a result of the conversion and offering, Naugatuck Valley Financial and Naugatuck Valley Mutual Holding Company will cease to exist. See Proposal 1 Approval of the Plan of Conversion for more information about the conversion and offering. Q: What are reasons for the conversion and offering? A: The primary reasons for the conversion and offering are to increase capital to support our growth, create a more liquid and active market than currently exists for Naugatuck Valley Financial common stock, structure our business in a form that will provide improved access to capital markets and facilitate acquisitions of other financial institutions and eliminate any regulatory uncertainty associated with dividend waivers by our mutual holding company. Q: Why should I vote? A: You are not required to vote, but your vote is very important. In order for us to implement the plan of conversion, we must receive the affirmative vote of (1) the holders of at least two-thirds of the outstanding shares of Naugatuck Valley Financial common stock entitled to vote at the annual meeting, including shares held by Naugatuck Valley Mutual Holding Company and (2) the holders of a majority of the outstanding shares of Naugatuck Valley Financial common stock entitled to vote at the annual meeting, excluding shares held by Naugatuck Valley Mutual Holding Company. Your board of directors recommends that you vote FOR the plan of conversion. Q: What happens if I don t vote? A: Your prompt vote is very important. Not voting will have the same effect as voting Against the plan of conversion. Without sufficient favorable votes FOR the plan of conversion, we cannot complete the conversion and offering. Q: How do I vote? A: You should mark your vote, sign your proxy card and return it in the enclosed pre-paid envelope. Alternatively, you may vote by telephone or via the Internet, by following instructions on your proxy card. PLEASE VOTE PROMPTLY. NOT VOTING HAS THE SAME EFFECT AS VOTING AGAINST THE PLAN OF CONVERSION. Table of Contents including shares held by Naugatuck Valley Mutual Holding Company, and a majority of the votes eligible to be cast by shareholders of Naugatuck Valley Financial, excluding shares held by Naugatuck Valley Mutual Holding Company. Informational Proposals 2a and 2b. While we are asking you to vote with respect to each of the informational proposals listed above, the proposed provisions for which an informational vote is requested will become effective if shareholders approve the plan of conversion, regardless of whether shareholders vote to approve either or both of the informational proposals. Proposal 3: Election of Directors. Directors are elected by a plurality of the votes cast at the annual meeting. This means that the nominees receiving the greatest number of votes will be elected. Proposal 4: Ratification of Auditor. Ratification of the selection of Whittlesey & Hadley, P.C. as our independent registered public accounting firm for 2011 requires the affirmative vote of a majority of the shares represented at the annual meeting and entitled to vote. Proposal 5: Approval of the adjournment of the annual meeting. We must obtain the affirmative vote of the majority of the shares represented at the annual meeting and entitled to vote to adjourn the annual meeting, if necessary, to solicit additional proxies in the event that there are not sufficient votes at the time of the annual meeting to approve the proposal to approve the plan of conversion. As of the record date, there were shares of Naugatuck Valley Financial common stock outstanding, of which Naugatuck Valley Mutual Holding Company owned 4,182,407, or 59.6%. The directors and executive officers of Naugatuck Valley Financial (and their affiliates), as a group, beneficially owned shares of Naugatuck Valley Financial common stock, representing % of the outstanding shares of Naugatuck Valley Financial common stock and % of the shares held by persons other than Naugatuck Valley Mutual Holding Company as of such date. Naugatuck Valley Mutual Holding Company and our directors and executive officers intend to vote their shares in favor of each of the proposals set forth in this proxy statement/prospectus. Our Company Naugatuck Valley Financial is, and New Naugatuck Valley Financial following the completion of the conversion and offering will be, the unitary savings and loan holding company for Naugatuck Valley Savings and Loan, a federally chartered savings bank. Naugatuck Valley Savings and Loan is headquartered in Naugatuck, Connecticut and has served customers in Connecticut since 1922. In addition to our main office, we operate nine branch offices in the Greater Naugatuck Valley which we consider our market area. Naugatuck Valley Financial s common stock is traded on the Nasdaq Global Market under the symbol NVSL. At December 31, 2010, Naugatuck Valley Financial had consolidated total assets of $568.3 million, total net loans of $473.6 million, total deposits of $405.9 million and total shareholders equity of $52.3 million. At December 31, 2010, Naugatuck Valley Savings and Loan exceeded all regulatory capital requirements and was not a participant in any of the U.S. Treasury s capital raising programs for financial institutions. Naugatuck Valley Financial s principal executive offices are located at 333 Church Street, Naugatuck, Connecticut 06770 and its telephone number is (203) 720-5000. Naugatuck Valley Financial s website address is www.nvsl.com. Information on this website should not be considered a part of this proxy statement/prospectus. Table of Contents The limitations on the total amount of New Naugatuck Valley Financial common stock that you may purchase in the stock offering, as described in the prospectus (see The Conversion and Offering Limitations on Purchases of Shares ) will be calculated based on the aggregate amount that you subscribed for: (1) through your 401(k) Plan account by placing an order with the 401(k) Plan trustee using the blue Investment Form; and (2) through your sources of funds outside of the 401(k) Plan by placing an order in the stock offering using a Stock Order Form. Whether you place an order through the 401(k) Plan, outside the plan or both, the number of shares of New Naugatuck Valley Financial common stock, if any, that you receive will be determined based on the total orders, your purchase priority and the allocation priorities set forth in the prospectus. Orders placed in the subscription offering will be filled before community offering orders. If, as a result of the calculation, you are allocated insufficient shares to fill all of your orders, available shares will be allocated as described in The Conversion and Offering Subscription Offering and Subscription Rights and Community Offering in the prospectus. Available shares will be allocated between your 401(k) Plan order and your order outside of the 401(k) Plan. If you so elect, the shares of Naugatuck Valley Financial common stock you were unable to subscribe for through the 401(k) Plan will be purchased by the Plan trustee on the open market immediately following the completion of the stock offering. If you elect to direct the Plan trustee to purchase shares in the open market, you will not be able to direct the Plan trustee as to the timing or price to be paid for the common stock. The Plan trustee has sole discretion regarding the manner in which it will fill open market purchases. Value of Participation Interests As of March 1, 2011, the market value of the 401(k) Plan assets (less those assets already invested in Naugatuck Valley Financial common stock) equaled approximately $3,809,000. The plan administrator has informed each participant of the value of his or her beneficial interest in the 401(k) Plan. The value of 401(k) Plan assets represents past contributions made to the 401(k) Plan on your behalf, plus or minus earnings or losses on the contributions, less previous withdrawals and loans. Participants will be able to use up to 100% of their 401(k) Plan account balances (which are not already invested in Naugatuck Valley Financial common stock) to purchase shares in the stock offering through the Naugatuck Valley Financial Stock Fund. Method of Directing Investment To facilitate your investment in the New Naugatuck Valley Financial Stock Fund in connection with the stock offering, you must complete, sign and submit the blue form included with this prospectus supplement (the Investment Form ). The Investment Form will require you to direct the 401(k) Plan trustee to liquidate a percentage of your beneficial interest in the assets of the 401(k) Plan to the Naugatuck Valley Financial Stock Fund (in multiples of not less than 1%) and invest the funds in the New Naugatuck Valley Financial Stock Fund. The amount of funds generated from the liquidation of your investments and invested in the stock offering must be divisible by $8.00, the per share price for the common stock offered for sale in the stock offering. If you do not wish to invest in the New Naugatuck Valley Financial Stock Fund at this time, you do not need to take any action.The minimum investment in the Naugatuck Valley Financial Stock Fund during the stock offering is $200 and the maximum investment is $500,000, for orders placed through the 401(k) Plan, combined with orders placed outside the 401(k) Plan. Time for Directing Investment Your Investment Form must be received by Kathy McPadden in the Human Resources Department by 12:00 noon on , 2011. Current Naugatuck Valley Savings and Loan employees should return their forms through inter-office mail. Former Naugatuck Valley Savings and Loan employees should return their forms using the business reply envelope that has been provided. Once your Investment Form is submitted, your election to invest in the offering is irrevocable. If you have any questions regarding the Naugatuck Valley Financial Stock Fund or completing the Investment Form, please contact at ( ) . Table of Contents PROSPECTUS (Proposed holding company for Naugatuck Valley Savings and Loan) Up to 4,456,250 Shares of Common Stock (Subject to increase to 5,124,688 shares) Naugatuck Valley Financial Corporation, a newly formed Maryland corporation (referred to as New Naugatuck Valley Financial in this prospectus), is offering common stock for sale in connection with the conversion of Naugatuck Valley Savings and Loan from the mutual holding company form to the stock form of organization. We are offering up to 4,456,250 shares of common stock for sale on a best efforts basis, subject to certain conditions. We must sell a minimum of 3,293,750 shares to complete the offering. Purchasers will not pay a commission to purchase shares of common stock in the offering. The amount of capital being raised is based on an independent appraisal of New Naugatuck Valley Financial. Most of the terms of this offering are required by regulations of the Office of Thrift Supervision. If, as a result of regulatory considerations, demand for the shares or changes in financial market conditions, the independent appraiser determines that our market value has increased, we may sell up to 5,124,688 shares without giving you further notice or the opportunity to change or cancel your order. The shares we are offering represent the 59.6% ownership interest in Naugatuck Valley Financial Corporation, a federal corporation, now owned by Naugatuck Valley Mutual Holding Company. The remaining 40.4% interest in Naugatuck Valley Financial currently owned by the public will be exchanged for shares of common stock of New Naugatuck Valley Financial. Each share of Naugatuck Valley Financial owned by the public will be exchanged for between 0.7875 and 1.0655 shares of common stock of New Naugatuck Valley Financial (subject to increase to 1.2253 shares if we sell 5,124,688 shares in the offering) so that Naugatuck Valley Financial s existing public shareholders will own approximately the same percentage of New Naugatuck Valley Financial common stock as they owned of Naugatuck Valley Financial s common stock immediately before the conversion without giving effect to cash paid in lieu of issuing fractional shares or shares that existing shareholders may purchase in the offering. The present Naugatuck Valley Financial and Naugatuck Valley Mutual Holding Company will cease to exist upon completion of the conversion and offering. Naugatuck Valley Financial s common stock is currently listed on the Nasdaq Global Market under the symbol NVSL. We expect that New Naugatuck Valley Financial s common stock will trade on the Nasdaq Global Market under the trading symbol NVSLD for a period of 20 trading days after the completion of the offering. Thereafter, the trading symbol will be NVSL. We are offering the shares of common stock in a subscription offering to eligible depositors of Naugatuck Valley Savings and Loan. Shares of common stock not purchased in the subscription offering may be offered for sale in a community offering, with a first preference given to residents of Fairfield and New Haven Counties, Connecticut and a second preference given to existing public shareholders of Naugatuck Valley Financial. We also may offer for sale shares of common stock not purchased in the subscription offering or community offering through a syndicated community offering managed by Stifel, Nicolaus & Company, Incorporated. We retain the right to accept or reject, in part or in whole, any order received in the community offering or the syndicated community offering. Stifel, Nicolaus & Company, Incorporated is not required to purchase any shares of common stock that are being offered for sale. The minimum order is 25 shares. The subscription offering will end at 2:00 p.m., Eastern Time, on [DATE1], 2011. We expect that the community offering, if held, will terminate at the same time, although it may continue until [DATE2], 2011 without notice to you, or longer if the Office of Thrift Supervision approves a later date. No single extension may exceed 90 days and the offering must be completed by [DATE3], 2013. Once submitted, orders are irrevocable unless the offering is terminated or is extended beyond [DATE2], 2011, or the number of shares of common stock to be sold is increased to more than 5,124,688 shares or decreased to less than 3,293,750 shares. If we receive regulatory approval to extend the offering beyond [DATE2], 2011, all subscribers will be notified and given the opportunity to confirm, change or cancel their orders. If you do not respond to this notice, we will promptly return your funds with interest calculated at Naugatuck Valley Savings and Loan s passbook savings rate or cancel your deposit account withdrawal authorization. If we intend to sell fewer than 3,293,750 shares or more than 5,124,688 shares, we will promptly return all funds and set a new offering range. All subscribers will be notified and given the opportunity to place a new order. Funds received before the completion of the offering will be held in a segregated account at Naugatuck Valley Savings and Loan and will earn interest at Naugatuck Valley Savings and Loan s passbook savings rate, which is currently 0.10% per annum. This investment involves a degree of risk, including the possible loss of principal. Please read Risk Factors beginning on page 21. OFFERING SUMMARY Price Per Share: $8.00 Minimum Midpoint Maximum Maximum, as adjusted Number of shares 3,293,750 3,875,000 4,456,250 5,124,688 Gross offering proceeds $ 26,350,000 $ 31,000,000 $ 35,650,000 $ 40,997,504 Estimated offering expenses, excluding selling agent fees and expenses $ 1,200,000 $ 1,200,000 $ 1,200,000 $ 1,200,000 Estimated selling agent fees and expenses (1)(2) $ 1,207,000 $ 1,367,000 $ 1,526,000 $ 1,710,000 Estimated net proceeds $ 23,943,000 $ 28,433,000 $ 32,924,000 $ 38,087,504 Estimated net proceeds per share $ 7.27 $ 7.34 $ 7.39 $ 7.43 (1) Includes: (i) selling commissions payable by us to Stifel, Nicolaus & Company, Incorporated in connection with the subscription and community offerings equal to 1% of the aggregate amount of common stock in the subscription and community offerings (net of insider purchases and shares purchased by our employee stock ownership plan) or approximately $175,000 at the maximum, as adjusted, of the offering, assuming that 50.0% of the offering is sold in the subscription and community offerings; (ii) fees and selling commissions payable by us to Stifel, Nicolaus & Company, Incorporated and any other broker-dealer participating in the syndicated offering equal to 6.0% of the aggregate amount of common stock sold in the syndicated community offering, or approximately $1.2 million at the maximum, as adjusted, of the offering, assuming that 50.0% of the offering is sold by a syndicate of broker-dealers in a syndicated community offering; and (iii) other expenses of the offering payable to Stifel, Nicolaus & Company, Incorporated as selling agent estimated to be $305,000. For information regarding compensation to be received by Stifel, Nicolaus & Company, Incorporated and other broker-dealers that may participate in the syndicated community offering, including the assumptions regarding the number of shares that may be sold in the subscription and community offerings and the syndicated community offering to determine the estimated offering expenses, see Pro Forma Data and The Conversion and Offering Marketing Arrangements. (2) If all shares of common stock are sold in the syndicated community offering, the maximum selling agent fees and expenses would be $1.9 million at the minimum, $2.2 million at the midpoint, $2.4 million at the maximum, and $2.8 million at the maximum, as adjusted. These securities are not deposits or savings accounts and are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Neither the Securities and Exchange Commission, the Office of Thrift Supervision nor any state securities regulator has approved or disapproved of these securities or determined if this prospectus is accurate or complete. Any representation to the contrary is a criminal offense. Stifel Nicolaus Weisel For assistance, please contact the Stock Information Center, toll-free, at 1-(877) 821-5783. The date of this prospectus is [ ], 2011 Table of Contents commercial workout department (in the case of commercial loans). Delinquent or otherwise nonperforming mortgage loan and home equity loan customers are asked to provide updated financial information and the reasons for their inability to pay or comply with the contractual terms of the loans. Once we have received this information, we obtain updated credit reports, appraisals and title searches. We then develop and pursue a workout strategy. One of our loan officers who has significant loan workout experience has been given primary responsibility for problem commercial loan workouts, although the specific modifications are handled by individual officers or by a commercial loan workout officer. We attribute our low level of net-charge-offs to these workout efforts. Net charge-offs were 0.20% of average loans outstanding for the year ended December 31, 2010. We have tightened underwriting standards by applying more stringent loan-to-value ratio requirements and debt- service coverage ratio requirements. In May 2010 we increased minimum debt-service coverage ratios on owner occupied commercial real estate loans from 1.20x to 1.25x, on non-owner occupied commercial real estate loans from 1.20x to 1.35x and on commercial business lines and loans from 1.20x to 1.35x. In addition, at that time we decreased minimum loan-to-value ratio requirements for owner occupied commercial real estate loans from 80% to 75% and for non-owner occupied commercial real estate loans from 75% to 70%. Furthermore, we are contacting delinquent borrowers earlier on in the delinquency stage in order to increase the probability of successful workout efforts. In addition, since May 2010 we have been limiting the number of new loans granted to non-customers. We also currently do not consider new loan participations with other financial institutions. Finally, we annually engage an outside loan review firm to perform a thorough review of our loan portfolio. This review involves analyzing all large borrowing relationships, delinquency trends, and loan collateral valuation in order to identify impaired loans. Expanding secondary mortgage market capabilities. During 2009, we began to pursue a significant initiative to develop a secondary mortgage operation. We invested in personnel and systems to increase our ability to sell residential mortgages in the secondary market with the goals of increasing fee income and reducing interest rate risk through the sale of conforming long-term fixed-rate residential mortgages. With our systems in place, we have recently hired experienced loan production professionals in order to increase production. Since implementing this initiative, a significant percentage of all one-to four-family residential conforming loans we originate have been sold in the secondary market on a servicing retained basis. Such loans are primarily sold to Freddie Mac. To date, all loans sold have been without recourse. We utilize the proceeds from these sales primarily to meet liquidity needs. The volume of loans sold totaled $37.0 million for the year ended December 31, 2010. We intend to continue to originate loans for sale in the secondary market to grow our servicing portfolio and generate additional noninterest income. Maintaining multiple sources of liquidity and focusing on core deposits. During the current period of slow economic growth we recognize the importance of maintaining multiple sources of liquidity. Our primary source of liquidity is local deposits for which we compete aggressively with competitive rates and superior levels of customer service. We also utilize borrowings from both the Federal Home Loan Bank of Boston and our correspondent bank and we are in process of establishing a liquidity line with the Federal Reserve. In addition, we occasionally sell investments to meet liquidity needs. We also have the ability to sell a portion of our residential mortgage portfolio in the secondary market to meet liquidity needs. Our portfolio of fixed-rate residential mortgage loans provides predictable cash flows and is a consistent source of liquidity. Furthermore, we intend to continue to focus on building our deposit base with lower cost core deposits, which we define as all deposits other than jumbo certificates of deposit (those with principal balances over $100,000). At December 31, 2010, we had approximately $50.0 million of above market, promotional rate certificates of deposit scheduled to mature between May 1, 2011 and August 31, 2011. These promotions were offered in all of our offices in conjunction with the opening of our Heritage Village branch office. Based upon historical Table of Contents Q: If my shares are held in street name, will my broker automatically vote on my behalf? A: No. Your broker will not be able to vote your shares without instructions from you. You should instruct your broker to vote your shares, using the directions that your broker provides to you. Q: What if I do not give voting instructions to my broker? A: Your vote is important. If you do not instruct your broker to vote your shares, the unvoted proxy will have the same effect as a vote against the plan of conversion. The Share Exchange Q: I currently own shares of Naugatuck Valley Financial common stock. What will happen to my shares as a result of the conversion? A: At the completion of the conversion, your shares of Naugatuck Valley Financial common stock will be canceled and exchanged for shares of common stock of New Naugatuck Valley Financial. The number of shares you will receive will be based on an exchange ratio, determined as of the completion of the conversion and offering, that is intended to result in Naugatuck Valley Financial s existing public shareholders owning the same percentage interest of New Naugatuck Valley Financial common stock as they currently own of Naugatuck Valley Financial common stock, before giving effect to cash paid in lieu of issuing fractional shares or shares that existing shareholders may purchase in the offering. Q: Does the exchange ratio depend on the market price of Naugatuck Valley Financial common stock? A: No, the exchange ratio will not be based on the market price of Naugatuck Valley Financial common stock. Therefore, changes in the price of Naugatuck Valley Financial common stock between now and the completion of the conversion and offering will not effect the calculation of the exchange ratio. Q: How will the actual exchange ratio be determined? A: Because the purpose of the exchange ratio is to maintain the ownership percentage of the existing public shareholders of Naugatuck Valley Financial, the actual exchange ratio will depend on the number of shares of New Naugatuck Valley Financial s common stock sold in the offering and, therefore, cannot be determined until the completion of the conversion and offering. Q: How many shares will I receive in the exchange? A: You will receive between 0.7367 and 0.9967 (subject to increase to 1.1462) shares of New Naugatuck Valley Financial common stock for each share of Naugatuck Valley Financial common stock you own on the date of the completion of the conversion and offering. For example, if you own 100 shares of Naugatuck Valley Financial common stock, and the exchange ratio is 0.8667 (at the midpoint of the offering range), you will receive 86 shares of New Naugatuck Valley Financial common stock and $5.36 in cash, the value of the fractional share, based on the $8.00 per share purchase price in the offering. Shareholders who hold shares in street name at a brokerage firm or are held in book-entry form by our transfer agent will receive these funds in their accounts. Shareholders who hold stock certificates will receive a check in the mail. Q. Why did the board of directors base the exchange ratio on an $8.00 per share stock price? A. In adopting the plan of conversion, the board of directors focused on the value of the shares to be received in the exchange in comparison to the market price of Naugatuck Valley Financial common stock. Because Naugatuck Valley Financial common stock has been trading below $10.00 per share since 2008, the board of directors concluded that an offering price of $8.00 is consistent with the historical trading range of our stock. Table of Contents The Conversion Description of the Conversion [Same as Prospectus] Reasons for the Conversion and Offering [Same as Prospectus] Conditions to Completing the Conversion and Offering [Same as Prospectus] The Exchange of Existing Shares of Naugatuck Valley Financial Common Stock [Same as Prospectus] Ownership of New Naugatuck Valley Financial after Completion of the Conversion and Offering [Same as Prospectus] Effect of the Conversion on Shareholders of Naugatuck Valley Financial The following table compares historical information for Naugatuck Valley Financial with similar information on a pro forma and per equivalent New Naugatuck Valley Financial share basis. The information listed as per equivalent Naugatuck Valley Financial share was obtained by multiplying the pro forma amounts by the exchange ratio indicated in the table. Naugatuck Valley Financial Historical Pro Forma Exchange Ratio Per Equivalent New Naugatuck Valley Financial Share Book value per share at December 31, 2010: Sale of 3,081,250 $ 10.11 $ 13.98 0.7367 $ 10.30 Sale of 3,625,000 8.59 12.51 0.8667 10.84 Sale of 4,168,750 7.46 11.41 0.9967 11.37 Sale of 4,794,063 6.50 10.48 1.1462 12.01 Earnings per share for the year ended December 31, 2010: Sale of 3,081,250 $ 0.29 $ 0.27 0.7367 $ 0.20 Sale of 3,625,000 0.25 0.23 0.8667 0.20 Sale of 4,168,750 0.21 0.19 0.9967 0.19 Sale of 4,794,063 0.19 0.17 1.1462 0.19 Price per share (1): Sale of 3,081,250 $ 8.99 $ 8.00 0.7367 $ 5.89 Sale of 3,625,000 8.99 8.00 0.8667 6.93 Sale of 4,168,750 8.99 8.00 0.9967 7.97 Sale of 4,794,063 8.99 8.00 1.1462 9.17 (1) At February 4, 2011, which was the date of the appraisal. How We Determined the Offering Range and Exchange Ratio [Same as Prospectus] Possible Change in Offering Range [Same as Prospectus] Table of Contents Questions about the stock offering or about the prospectus should be directed to the Stock Information Center, toll-free at 1-(877) 821-5783. The Stock Information Center is open 10:00 a.m. to 4:00 p.m. Monday through Friday. It is closed on weekends and bank holidays. Irrevocability of Investment Direction Once you have submitted your Investment Form to Kathy McPadden, you cannot change your direction to transfer amounts credited to your account in the 401(k) Plan to the Naugatuck Valley Financial Stock Fund. Following the closing of the stock offering and the initial purchase of shares in the Naugatuck Valley Financial Stock Fund, you may change your investment directions in accordance with the terms of the 401(k) Plan. Purchase Price of New Naugatuck Valley Financial common stock The 401(k) Plan trustee will pay $8.00 per share for shares of New Naugatuck Valley Financial common stock, which is the same price as all other persons who purchase shares of New Naugatuck Valley Financial common stock in the stock offering. If there is not enough common stock available in the stock offering to fill all subscriptions, the common stock will be allocated as described in The Conversion and Offering Subscription Offering and Subscription Rights and the 401(k) Plan trustee may not be able to purchase all of the common stock you requested. If you elect, the Plan trustee will purchase shares on your behalf after the completion of the stock offering in the open market, to fulfill the shares remaining from your initial request. If you elect to direct the Plan trustee to purchase shares in the open market you will not be able to direct the 401(k) Plan trustee as to the timing or price to be paid for the common stock. The Plan trustee has sole discretion regarding the manner in which it will fill open market purchases. The Plan trustee may make such purchases at prices higher or lower than the $8.00 offering price and, therefore, you may receive more or less shares than initially requested. Your election to direct the 401(k) Plan trustee to make an open market purchase after the close of the stock offering is irrevocable. Nature of a Participant s Interest in New Naugatuck Valley Financial common stock The 401(k) Plan trustee will hold Naugatuck Valley Financial common stock in the name of the 401(k) Plan. The trustee will credit shares of Naugatuck Valley Financial common stock acquired at your direction to your account under the 401(k) Plan. Therefore, the investment designations of other 401(k) Plan participants will not affect earnings on your 401(k) Plan account. Voting and Tender Rights of New Naugatuck Valley Financial common stock The Plan trustee generally will exercise voting and tender rights attributable to all Naugatuck Valley Financial common stock held by the Naugatuck Valley Financial Stock Fund as directed by participants with interests in the Naugatuck Valley Financial Stock Fund. With respect to each matter as to which holders of Naugatuck Valley Financial common stock have a right to vote, you will have voting instruction rights that reflect your proportionate interest in the Naugatuck Valley Financial Stock Fund. The number of shares of Naugatuck Valley Financial common stock held in the Naugatuck Valley Financial Stock Fund voted for and against each matter will be proportionate to the number of voting instruction rights exercised. If there is a tender offer for New Naugatuck Valley Financial common stock, the 401(k) Plan allots each participant a number of tender instruction rights reflecting the participant s proportionate interest in the Naugatuck Valley Financial Stock Fund. The percentage of shares of New Naugatuck Valley Financial common stock held in the Naugatuck Valley Financial Stock Fund that will be tendered will be the same as the percentage of the total number of tender instruction rights exercised in favor of the tender offer. The remaining shares of Naugatuck Valley Financial common stock held in the New Naugatuck Valley Financial Stock Fund will not be tendered. The 401(k) Plan provides that participants will exercise their voting instruction rights and tender instruction rights on a confidential basis. Table of Contents Table of Contents experience, we expect that a substantial portion of these funds will either be rolled into new lower rate certificates of deposit or deposited into money market and other short term deposits. We expect that this will decrease our funding costs. Improving our efficiency ratio. We monitor our efficiency ratio closely and strive to improve it through expense control and increases in noninterest income and in net interest income. For the year ended December 31, 2010, our efficiency ratio was 73.67%, as compared to 78.43% for the year ended December 31, 2009. Our largest non-interest expense is compensation. We work to limit growth of compensation expense by controlling increases in the number of employees to those needed to support our operations and by maximizing the use of technology to increase efficiency. We work to increase non-interest income by charging competitive fees for services related to deposit and loan accounts as well as by earning yield spread premiums on the sale of residential mortgage production in the secondary market. Our wealth management unit also contributes to our noninterest income. We work to increase our net interest income by optimizing loan pricing and though the growth of low cost core deposits. Maintaining a well diversified loan portfolio. Our strategy has been to develop a well-diversified loan portfolio. At December 31, 2006, approximately 28.6% of our loan portfolio were commercial loans, consisting primarily of multi-family and commercial real estate, commercial business and construction loans, and 71.4% were retail loans consisting of residential mortgage, home equity loans and lines of credit and other consumer loans. At December 31, 2010, 46.9% of our loan portfolio were commercial loans, while approximately 53.1% were retail loans. This growth has led to a significant concentration of commercial loans in our loan portfolio, with commercial loans constituting 444.3% of Naugatuck Valley Savings and Loan s risked-based capital at December 31, 2010. Although commercial loans have a higher risk of default and loss than owner-occupied single-family residential mortgage loans, commercial loans also tend to have higher yields which provide us with the opportunity for increased income. Commercial loans also have shorter terms to maturity or adjustable interest rates which is beneficial for interest rate risk management. Our efforts to diversify our loan portfolio has produced what we believe to be a diversified loan mix that balances credit risk, interest rate risk and earnings potential. At December 31, 2010, our construction loan portfolio, commercial real estate and multi-family loan portfolio, and commercial business loan portfolio amounted to 60.8%, 315.2% and 68.3% of Naugatuck Valley Savings and Loan s risked-based capital at that date, respectively. We intend to control our commercial loan growth in order to maintain these percentages at approximately the same levels. See also Risk Factors Risks Related to Our Business Our portfolio of loans with a higher risk of loss have increased recently and may increase further as a result of our continued origination of commercial loans, and Risks Related to Our Business Our strategy of controlling commercial loan growth may have a negative effect on our earnings. Managing interest rate risk. We seek to maintain manageable levels of interest rate risk by originating for portfolio adjustable rate commercial loans, by building core deposits which are less susceptible to interest rate changes and by borrowing long-term from the Federal Home Loan Bank of Boston in the prevailing low interest rate environment. We maintain moderate interest rate sensitivity as modeled by the Office of Thrift Supervision. In addition, we utilize the services of an independent third party to model our interest rate risk on a quarterly basis. Expanding our franchise and geographical footprint through acquisition opportunities and the opening of additional branch offices. In 2000, our branch network consisted of three locations. During the past ten years we have expanded our franchise by opening seven de novo branches so that we now operate ten full service branch locations in the greater Naugatuck Valley area. Although we currently do not have any specific plans for acquisitions or to open additional branch offices, we intend to continue to pursue such opportunities to expand our franchise and footprint in future years. Table of Contents Q. Why does the board of directors support the conversion if the value of the shares to be received in the exchange might be less than the current market value of Naugatuck Valley Financial common stock? A. Over the 30 trading days before , 2011, which is the date on which the board of directors last amended the plan of conversion, the price of Naugatuck Valley Financial common stock traded between $ and $ . Based on the offering price of $8.00 per share and the exchange ratio, the value of the shares to be received in exchange for each share of Naugatuck Valley Financial common stock would range from $ to $ . In adopting the plan of conversion, the board of directors focused on our prospects for generating shareholder value and on the price of our stock relative to our peers. For the reasons described above, the board of directors concluded that converting to the stock holding company form would provide the best opportunity to generate shareholder value. The board of directors also considered that compared to the peer group used in the independent appraisal of our common stock, our common stock would be priced at a discount of % to the peer group on a price-to-book basis and at a discount of % to the peer group on a price-to-tangible book basis, which could make our stock an attractive investment. Q: Should I submit my stock certificates now? A: No. If you hold a stock certificate for Naugatuck Valley Financial common stock, instructions for exchanging your certificate will be sent to you after completion of the conversion and offering. Until you submit the transmittal form and certificate, you will not receive your new certificate and check for cash in lieu of fractional shares, if any. If your shares are held in street name at a brokerage firm, the share exchange will occur automatically upon completion of the conversion and offering, without any action on your part. Please do not send in your stock certificate until you receive a transmittal form and instructions. The Stock Offering Q: May I place an order to purchase shares in the offering, in addition to the shares that I will receive in the exchange? A: Eligible depositors of Naugatuck Valley Savings and Loan have priority subscription rights allowing them to purchase common stock in the subscription offering. Shares not purchased in the subscription offering may be made available for sale in a community offering. Naugatuck Valley Financial shareholders have a preference in the community offering after orders submitted by residents of our communities. If you would like to receive a prospectus and stock order form, please call our Stock Information Center toll-free at 1-(877) 821-5783 from 10:00 a.m. to 4:00 p.m., Eastern time, Monday through Friday. The Stock Information Center will be closed weekends and bank holidays. Stock order forms, along with full payment, must be received (not postmarked) no later than 2:00 p.m., Eastern time on , 2011. Other Questions? For answers to questions about the conversion or voting, please read this proxy statement/prospectus. Questions about voting may be directed to our proxy information agent, Phoenix Advisory Partners LLC, by calling toll-free 1-(800) 576-4314, Monday through Friday, from 9:00 a.m. to 5:00 p.m., Eastern time. For answers to questions about the stock offering, you may call our Stock Information Center, toll-free, at 1-(877) 821-5783 from 10:00 a.m. to 4:00 p.m. Eastern time, Monday through Friday. A copy of the plan of conversion is available from Naugatuck Valley Savings and Loan upon written request to the Corporate Secretary and is available for inspection at the offices of Naugatuck Valley Savings and Loan and at the Office of Thrift Supervision. Table of Contents How We Intend to Use the Proceeds of the Offering [Same as Prospectus] Benefits of the Conversion to Management [Same as Prospectus] Purchases by Directors and Executive Officers [Same as Prospectus] Market for New Naugatuck Valley Financial s Common Stock [Same as Prospectus] Naugatuck Valley Financial s Dividend Policy [Same as Prospectus] Dissenters Rights Shareholders of Naugatuck Valley Financial do not have dissenters rights in connection with the conversion and offering. Differences in Shareholder Rights As a result of the conversion, shareholders of Naugatuck Valley Financial will become shareholders of New Naugatuck Valley Financial. The rights of shareholders of New Naugatuck Valley Financial will be less than the rights shareholders currently have. The decrease in shareholder rights results from differences between the articles of incorporation and bylaws of New Naugatuck Valley Financial and the charter and bylaws of Naugatuck Valley Financial and from distinctions between Maryland and federal law. The differences in shareholder rights under the articles of incorporation and bylaws of New Naugatuck Valley Financial are not mandated by Maryland law but have been chosen by management as being in the best interests of the corporation and all of its shareholders. However, the provisions in New Naugatuck Valley Financial s articles of incorporation and bylaws may make it more difficult to pursue a takeover attempt that management opposes. These provisions will also make the removal of the board of directors or management, or the appointment of new directors, more difficult. The differences in shareholder rights include the following: supermajority voting requirements for certain business combinations and changes to some provisions of the articles of incorporation and bylaws; limitation on the right to vote shares; a majority of shareholders required to call annual meetings of shareholders; and greater lead time required for shareholders to submit business proposals or director nominations. Tax Consequences [Same as Prospectus] Questions Questions about voting may be directed to our proxy information agent, Phoenix Advisory Partners LLC, at 1-(800) 576-4314. Table of Contents Future Direction to Purchase common stock You will be able to invest in the Naugatuck Valley Financial Stock Fund after the stock offering by accessing your account via the internet and directing the trustee to invest your future contributions or your account balance in the 401(k) Plan into the Naugatuck Valley Financial Stock Fund. After the stock offering, to the extent that shares of common stock are available, the trustee of the 401(k) Plan will acquire common stock of Naugatuck Valley Financial Corporation at your election in open market transactions at the prevailing price. Special restrictions may apply to transfers directed to and from the Naugatuck Valley Financial Stock Fund by the participants who are subject to the provisions of Section 16(b) of the Securities Exchange Act of 1934, as amended, relating to the purchase and sale of securities by officers, directors and principal shareholders of Naugatuck Valley Financial Corporation. In addition, if you are an officer of Naugatuck Valley Financial Savings and Loan that is restricted by the Office of Thrift Supervision from selling shares acquired in the stock offering for one year, the shares you purchased in the stock offering will not be tradable for one year. However, any stock units that you held in the Naugatuck Valley Financial Stock Fund prior to the stock offering are freely tradable and not subject to this one-year trading restriction. Table of Contents Growing our business within our current market area. Our officers, employees and directors work as a team to help grow our business by providing superior customer service and offering personalized banking services at competitive prices. Recently, we have appointed Ambassadors at each of our branch offices. Ambassadors are influential members of the communities we serve. Our branch office staff is committed to working with their Ambassadors to build upon existing customer relationships and to attract new ones. Description of the Conversion (page ) In 2004, Naugatuck Valley Savings and Loan reorganized into the mutual holding company structure. As a part of that reorganization, we formed Naugatuck Valley Financial as the mid-tier holding company for Naugatuck Valley Savings and Loan and sold a minority interest in Naugatuck Valley Financial common stock to our depositors and our employee stock ownership plan in a subscription offering. The majority of Naugatuck Valley Financial s shares were issued to Naugatuck Valley Mutual Holding Company. As a mutual holding company, Naugatuck Valley Mutual Holding Company does not have any shareholders, does not hold any significant assets other than the common stock of Naugatuck Valley Financial, and does not engage in any significant business activity. Our current ownership structure is as follows: * The Naugatuck Valley Savings and Loan Foundation owns approximately 1.8% of the current outstanding shares of Naugatuck Valley Financial common stock. The second-step conversion process that we are now undertaking involves a series of transactions by which we will convert our organization from the partially public mutual holding company form to the fully public stock holding company structure. In the stock holding company structure, all of Naugatuck Valley Savings and Loan s common stock will be owned by New Naugatuck Valley Financial, and all of New Naugatuck Valley Financial s common stock will be owned by the public. We are conducting the conversion and offering under the terms of our plan of conversion and reorganization (which is referred to as the plan of conversion ). Upon completion of the conversion and offering, the present Naugatuck Valley Financial and Naugatuck Valley Mutual Holding Company will cease to exist. As part of the conversion, we are offering for sale common stock representing the 59.6% ownership interest of Naugatuck Valley Financial that is currently held by Naugatuck Valley Mutual Holding Company. At the conclusion of the conversion and offering, existing public shareholders of Naugatuck Valley Financial will receive shares of common stock in New Naugatuck Valley Financial in exchange for their existing shares of common stock of Naugatuck Valley Financial, based upon an exchange ratio ranging from 0.7367 to 1.1462. The actual exchange ratio will be determined at the conclusion of the conversion and the offering based on the total number of shares sold in the offering, and is intended to result in Naugatuck Valley Financial s existing public shareholders owning the same 40.4% interest of New Naugatuck Valley Financial common stock as they Table of Contents
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001494599_zheng-hui_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001494599_zheng-hui_prospectus_summary.txt
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+PROSPECTUS SUMMARY 1
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+PROSPECTUS SUMMARY This summary highlights some information from this prospectus, and it may not contain all of the information that is important to you. You should read the following summary together with the more detailed information regarding our company and the common stock being sold in this offering, including Risk Factors and our consolidated financial statements and related notes, included elsewhere in, or incorporated by reference into, this prospectus. ABOUT OUR COMPANY Except as otherwise indicated by the context, references in this report to "EETC" "we," "us," or "our," "Successor" and the "Company" are references to the combined business of Energy Edge Technologies Corporation and its wholly-owned subsidiaries. Overview Energy Edge Technologies Corporation ( EETC ) was founded in 2004 as a New Jersey corporation by Robert Holdsworth. EETC has grown over the past seven years, through energy efficiency and conservation projects for a variety of customers including municipalities, breweries, pharmaceuticals, restaurants, food processing, manufacturing, printing, leisure, hospitals, office buildings, etc. EETC projects are suitable and applicable for any type of customer whose energy bill exceeds $10,000 monthly. Company Information Energy Edge Technologies Corporation ( EETC ) is an energy engineering and services company that specializes in providing companies, institutions and government entities with turnkey, whole facility solutions that reduce energy costs and increase the efficiency of existing and new buildings. EETC utilizes independently contracted professionals, industrial and electrical engineers, Leadership in Energy and Environmental Design ( LEED ) accredited professionals and business entrepreneurs. EETC offers a whole facility solution that covers gas and electrical energy consumption. Most competitors offer solutions that are one dimensional and single focused, such as simply lighting, HVAC or refrigeration individually. EETC delivers a solution that combines multiple approaches and technologies to increase the efficiency of the diverse and various electrical and gas consuming loads across a facility. Most importantly, EETC s approach provides its customers with bottom line cost reduction and project pay back typically under 36 months, although this can vary depending on the customer s needs Lastly, EETC reduces the financial risk for its customers by backing projects with reimbursement contingency insurance underwritten by Lloyds of London. The Lloyds of London backed policy ensures that every penny invested by the customer is returned within the prescribed payback period through energy cost reduction. If any shortfall occurs the policy covers the customer for the difference. The Lloyds of London insurance policy is a $1,500,000 reimbursement contingency insurance policy that backs the guaranteed energy savings and project payback and return on investment for our customers. The effective date of this policy is May 26, 2010. The policy period is from May 26th 2010 to May 26th 2011. Any losses occurring on new and existing contracts reported during this time frame will be covered by Lloyds of London. The policy requires ongoing measurement and verification of energy reduction results and savings as well as notification if targets are not being met. If a shortfall were to occur in the projected savings for a customer, Lloyds of London would make up 90% of the difference, and Energy Edge would make up the remaining 10% of the difference. To date we have had no claims filed. Use of Certain Defined Terms and Treatment of Stock Split Except as otherwise indicated by the context, references in this report to: "EETC" "we," "us," or "our," "Successor" and the "Company" are references to the combined business of Energy Edge Technologies Corporation and its wholly-owned subsidiaries. Securities Act are references to the Securities Act of 1933, as amended and references to Exchange Act are references to the Securities Exchange Act of 1934, as amended Primary Offering refers to the Newly Issued Common Stock to be registered in this prospectus. Secondary Offering refers to the Common Stock Issued and Outstanding to be registered as part of this prospectus by certain Selling Security Holders. Selling Security Holders refers to the existing holders of the securities. IEEE refers to the Institute of Electrical and Electronics Engineers, which is an association dedicated to advancing technological innovation for the benefit of humanity. DOE refers to the United States Department of Energy. USGBC refers to the U.S. Green Building Council, which is a non-profit organization that focuses on cost-efficient and energy-saving green buildings. Therm consumption is another term for British Thermal Unit (BTU), which is a measurement of natural gas used or consumed. UL Listed or Underwriters Laboratory Listed means that certain technologies are tested on electrical components and equipment. CSA Approved or Canada Standards Association is similar to the Underwriters Laboratory but testing is even more stringent and CSA Approval is required by law in Canada. LEED or Leadership in Energy and Environmental Design is an internationally recognized green building certification system, which provides third-party verification that a building or community was designed an d built using strategies aimed at improving performance across metrics such as energy savings, water efficiency and CO2 emissions reduction. SUMMARY OF THE OFFERINGS Summary of the Primary Offering Maximum Minimum Newly Issued Common Stock to be registered as part of a Primary Offering 20,000,000 shares of common stock 5,000,000 shares of common stock Minimum Purchase Requirement Per Investor NONE NONE Offering Price: $0.20 $0.20 Common Stock Issued and Outstanding to be registered as part of a Secondary Offering by Selling Security Holders: 17,506,825 Shares of common stock 17,506,825 shares of common stock Offering Price: $0.10 $0.10 Number of Shares Issued and Outstanding before the offering: 49,006,825 49,006,825 Number of Shares Issued and Outstanding after the offering, if all the shares are sold: 69,006,825 54,006,825 Estimated Total Proceeds: $4,000,000 $1,000,000 Offering Expenses: $78,344.64 $78,344.64 Net Proceeds after Offering Expenses: $3,921,655.36 $921,655.36 Use of Proceeds: Increase revenues, increase sales force, marketing, advertising and publicity, salaries, consulting fees, initiate promotion to vendors to engage in contracts and initiating the process of taking the company public via OTCBB and for other general administrative expenses. In the event that we sell less than the maximum shares in this offering, our priorities for use of the proceeds are as follows: Filing of the Registration Statement and associated fees with the filing of the Registration Statement and becoming a publicly traded company Hiring of new employees See Use of Proceeds on page 13. See Use of Proceeds on page 13. Subscriptions: Subscriptions are to be made payable to: Energy Edge Technologies Corporation, 1200 Route 22 East, Suite 2000, Bridgewater, NJ 08807 Subscriptions are to be made payable to: Energy Edge Technologies Corporation, 1200 Route 22 East, Suite 200, Bridgewater,, NJ 08807 Summary of the Secondary Offering There are 3,000,000 shares of common stock being registered for sale at a price of $0.10 per share by Robert Holdsworth, our sole officer and director, and 14,506,825 shares of common stock being registered for sale at a price of $0.10 per share by other certain existing holders of the securities, referred to as Selling Security Holders throughout this document as part of the Secondary Offering . The Company will not receive any of the proceeds from the sale of shares being sold by the Selling Security Holders. The Selling Security Holders shares offered by this Prospectus may be sold from time to time by the Selling Security Holders at a price of $0.10 per share until such time as the Company s shares are listed on the OTC Bulletin Board or a national exchange and thereafter at prevailing market prices or at privately negotiated prices, in one or more transactions that may take place on the over-the-counter market including ordinary broker's transactions, privately-negotiated transactions or through sales to one or more dealers for resale of such. Usual and customary or specifically negotiated brokerage fees or commissions may be paid by the Selling Security Holders in connection with such sales. Where You Can Find Us Our corporate headquarters are located at 1200 Route 22 East, Suite 2000, Bridgewater, New Jersey 08807. Our telephone number is 1-888-729-5722 x 100
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001496129_ads_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001496129_ads_prospectus_summary.txt
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+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001496139_car_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001496139_car_prospectus_summary.txt
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+++ b/parsed_sections/prospectus_summary/2011/CIK0001496139_car_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary The following summary highlights selected information contained in this prospectus. This summary does not contain all the information that may be important to you. You should read the more detailed information contained in this prospectus, including but not limited to, the Risk Factors beginning on page 6. References to "we," "us," "our," "Delaine," or the "Company" refers to Delaine Corporation unless the context indicates another meaning. Our Company Delaine Corporation was incorporated in the State of Nevada, United States of America, on June 23, 2010. Its fiscal year end is June 30. Our principal executive offices are located at 361 N Dalton Avenue, Albany, IN 47320, and our telephone number is (765) 896-8758. We are not a blank check company, and have no intentions of entering into any business combination. We are a marketing company focused primarily in the field of contractor and homeowner tools. Our objective is to market cost effective tools to provide solutions for everyday problems encountered by homeowners as well as maintenance and construction professionals. Our initial product line comprises name brand and generic homeowner, contractor and shop tools and accessories. We commenced operations in November, 2010, as an internet based seller of new tools and related products, manufactured by third party companies, directly to the public. Currently, we sell products through our website: Delainecorp.com as well as on eBay s online auction site. Profits from our sales are currently not sufficient to sustain operations. We also intend to develop and manufacture our own proprietary products, and to wholesale our proprietary products to resellers, as well as directly to the public. We are currently working on the development of one proprietary product, a lighted ratcheting wrench, which is in the development stage. Development of the lighted ratcheting wrench has been limited to initial amateur drawings, and filing of a patent application: development of a working prototype has not yet begun. As of June 30, 2011, we have generated $5,414 in revenues; and have incurred $7,278 in losses since our inception on June 23, 2010. We rely upon the sale of our securities and loans from our officers and directors to fund operations. We do not expect to generate sufficient revenue to sustain our intended operations during the next twelve months. Consequently, we will continue to depend on additional financing in order to maintain our operations and continue with our corporate activities. Based on these uncertainties, our independent auditors included additional comments in their report on our financial statements for the period ended June 30, 2011 and the period from inception (June 23, 2010) to June 30, 2011, indicating substantial doubt about our ability to continue as a going concern. Our financial statements contain additional note disclosures describing the circumstances that led to the going concern disclosure by our independent auditors. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. This Offering and any investment in our common stock involve a high degree of risk. If we are unable to generate significant revenue, we may be obliged to cease business operations due to lack of funds. We face many challenges to continue operations, including our lack of operating history, lack of revenues to date, and the losses we have incurred to date. The Offering Following is a brief summary of this offering: Securities being offered Up to 6,000,000 shares of common stock are offered by the Company, par value $0.001 Minimum There is no minimum to this Offering Offering price per share $0.01 per share Offering period The shares are being offered for a period not to exceed 180 days Net proceeds to us Approximately $48,000 assuming the entire 6,000,000 shares are sold. Use of proceeds We will use the proceeds to fund the development of proprietary products, to pursue protection of our intellectual property and to pay for offering expenses. Number of shares outstanding before the offering 5,050,000 Number of shares outstanding after the offering if all of the shares are sold 11,050,000 Summary of Financial Information The following summary financial information for the periods stated summarizes certain information from our financial statements included elsewhere in this prospectus. You should read this information in conjunction with Management s Discussion and Analysis of Financial Condition and Results of Operations and the financial statements and the related notes thereto included elsewhere in this prospectus. Balance Sheet As of June 30, 2011 Total Assets $ 10,182 Total Liabilities $ 15,960 Stockholder s Deficit $ (5,788 ) Operating Data June 23, 2010 (inception) to June 30, 2011 Revenue $ 5,414 Net Loss $ (7,278 ) Net Loss Per Share $ (.00 ) As shown in the financial statements accompanying this prospectus, the Company has earned $5,414 in revenues as of June 30, 2011, and has incurred only losses since its inception. The Company has had limited operations and has been issued a going concern opinion from our auditors based upon the Company s reliance upon the sale of our common stock as the main source of funds for our operations.
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/CIK0001496171_amc_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001496171_amc_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..1f77ba5a887ea8e143ebad213eb2a7b18f667636
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001496171_amc_prospectus_summary.txt
@@ -0,0 +1 @@
+S-1/A 1 a2203993zs-1a.htm S-1/A Table of Contents As filed with the Securities and Exchange Commission on June 24, 2011 Registration No. 333-173042 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 TABLE OF CONTENTS Market and Industry Information ii Special Note Regarding Forward-Looking Statements ii Summary 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/CIK0001496819_dmh_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001496819_dmh_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..0a0b1826f34b7dc8965cc04b0cc97c618ff3a534
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001496819_dmh_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY The following summary highlights material information contained in this prospectus. This summary does not contain all of the information you should consider before investing in the securities. Before making an investment decision, you should read the entire prospectus carefully, including the risk factors section, the financial statements and the notes to the financial statements. You should also review the other available information referred to in the section entitled Where You Can Find More Information in this prospectus and any amendment or supplement hereto. Unless otherwise indicated, the terms the Company, DMH International, DMH, we, us, and our refer and relate to DMH International, Inc. The Company Overview DMH International, Inc. ( DMH ) was incorporated in the state of Nevada on June 2, 2010. On June 7, 2010, the Company entered into an Assignment Agreement (the "Acquisition") with Dale Mas, Inc. ("Dale Mas"), a Texas corporation, whereby the Company acquired 100% of the issued and outstanding shares of Dale Mas in exchange for 5,000,000 shares of the Company's common stock which was issued to our founder Mr. Jon Marc Garcia as the sole-shareholder of Dale Mas. Subsequent to the Acquisition, the sole shareholder of Dale Mas, currently our sole officer and director, owned 100% of the issued and outstanding common shares of the Company. The acquisition of Dale Mas by the Company was accounted for as a reorganization of entities under common control, wherein DMH International Inc. and Dale Mas were under common control on the acquisition date. The assets, liabilities, and operations of the acquired entity, Dale Mas, have been brought forward at their carrying value and the financial statements include the operations of the Company and Dale Mas from their respective inception dates. Our current focus is on creating specialty t-shirts and other casual and active clothing geared toward the Hispanic community. We plan to develop, brand and market an entire apparel line named Dale Mas . The English translation of the Spanish words dale mas is give more . Our founder, Mr. Jon-Marc Garcia, owns a registered trademark for Dale Mas, which we plan to be the backbone of our initial product line. The Dale Mas meaning will be consistently communicated through all aspects of our products and business. We intend to market Dale Mas merchandise to a broad range of customers with varying ages and income levels. We have created our first two designs and have had the prototypes manufactured and we are currently evaluating both the design and materials used for the products. The prototypes we have designed include a simple fashion t-shirt and a casual short sleeve button-up, a full description of our current products can be found herein. Although we have had the first designs manufactured, we have not reported any sales at this time. Our goal is to become a designer and retailer of casual apparel and to maintain a high level of quality among our products. Dale Mas intends to source high quality natural fabrics from around the world and use distinctive trim details and specialized washes to achieve a unique style and comfort in its products. We intend to develop a web site, www.dale-mas.com , to market and deliver our products to anyone with an internet connection and a shipping address. At present, our market territory will be primarily local, as we will be soliciting individual customers and businesses through word-of-mouth and using our founder's extensive background in the local Austin, Texas business community. We will continue to develop our local market with targeted phone calls and in-person visits to selected businesses. Through this offering we hope to raise the funds needed to initiate a full public relations campaign. We are currently a development stage company and to date we have recorded no revenue. Since inception, our operations have mainly consisted of the organization of our business and the formulation of a strong business model based upon the market of the brand Dale Mas. To date, we have incorporated both DMH International, Inc. and Dale Mas; purchased a website domain, which we will use to brand our apparel; and we have also begun initial product tests and development. Our initial operations have been funded by a $75,000 promissory note. Accordingly, our independent registered public accountant has issued a comment regarding our ability to continue as a going concern (please refer to the footnotes to the financial statements). We anticipate based on our current cash and working capital and our planned expenses that we will be able to continue our plan of operations for the next 6 to 8 months without additional financing. Once additional financing is needed, we anticipate that it will be in the form of debt financing from our friends and family or from our existing business acquaintances; however, we cannot be certain on the availability of such funds since we have not received any firm commitments or indications of interest from our friends, family members, or business acquaintances regarding potential investments in our Company. If we do not obtain additional financing when needed, we will be forced to scale back our plan of operations and our business activities. Our sole officer and director does not have any professional training or technical credentials in the marketing or distribution of casual active wear apparel. Therefore, we may need to retain qualified consultants on a contract basis to perform the marketing and sale of the product line as needed. As of the date of this prospectus, we do not have any verbal or written agreement regarding the retention of any qualified consultants or public relations firms for our marketing and sales program. For a further discussion of our plan of operations and growth strategy see the below section entitled Description of Our Business . SUMMARY OF THIS OFFERING The Issuer DMH International, Inc. Securities being offered Up to 4,000,000 shares of Common Stock, our Common Stock is described in further detail in the section of this prospectus titled DESCRIPTION OF SECURITIES Common Stock. Offering Type
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/CIK0001497046_swingplane_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001497046_swingplane_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..2823967ee6c3def49c723b4d3bb0f8042e1a12da
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001497046_swingplane_prospectus_summary.txt
@@ -0,0 +1,331 @@
+Prospectus Summary.
+
+This summary highlights certain information contained elsewhere in this prospectus. You should read the following summary together with the more detailed information regarding Swingplane Ventures, Inc. ( Us, We, Our, Swingplane, Swingplane Ventures, the Company, or the Corporation ) and our financial statements and the related notes appearing elsewhere in this prospectus.
+
+The Company
+
+Our Business
+
+Swingplane Ventures, Inc. was incorporated in the State of Nevada on June 24th, 2010. Swingplane Ventures, Inc. is a development stage company with a principal business objective of selling men's and women's golf apparel. The Company plans to have its initial clothing line consist of shirts, pants, and skirts designed specifically for younger golfers. We plan to stay on the cutting edge of the constantly changing golf apparel market and our goal is to create a quality reputation within the youthful golfing community and golf garment marketplace. Swingplane Ventures conducted research on various marketing venues and plans to sell our initial line of clothing through our own online retail website. 
+
+Swingplane Ventures, Inc. is a development stage company that has not commenced its planned principal operations. Swingplane Ventures, Inc. operations to date have been devoted primarily to start-up and development activities. Our President, Matt Diehl, has performed all of the development activities to date, which include the following: 
+
+1. Formation of the Company;
+
+2. Development of the Swingplane Ventures, Inc. business plan;
+
+3. Initiated various garment designs and reviewed the use of different material for construction of our proposed product lines;
+
+4. Conducted research on three major marketing channels/strategies including smaller retail golf shops, major retail outlets, and online sales;
+
+5. Formulated product development and marketing strategies for product lines to include:
+
+ - Tailored style golf shirts for younger men and women
+
+ - Tailored style golf pants for younger men and women
+
+6. Secured web site domain www.swingplaneventures.com;
+
+7. Conducted research on men and women golfer demographics.
+
+Swingplane Ventures, Inc. is attempting to become operational and anticipates sales to begin during the third quarter of operations following the completion of our offering. In order to generate revenues, Swingplane Ventures, Inc. must address the following areas:
+
+1. Finalize and implement our marketing plan: In order to effectively penetrate our targeted market, Swingplane Ventures will use a marketing plan that includes a high-end website Our long term marketing goal is to also approach targeted golf pro shops and retail outlets, and target specific distribution channels using independent representatives. Long term, independent commissioned sales representatives will work as middlemen between Swingplane Ventures and the retailers. Their responsibilities would include approaching any/all appropriate retailers, work trade shows and employ creative marketing techniques to attract golf and/or sports-oriented retailers and shops. This long term marketing plan is entirely dependent on future financing and thus may not occur. The Company currently does not have any engagements, agreements, or contracts with independent commissioned sales representatives.
+
+2. Tailor our website: Swingplane Ventures has secured the web domain located at www.swingplaneventures.com. The site is currently under construction and we plan to incorporate this site with strategic vertical market ecommerce retailers. We have budgeted the necessary funding to develop a quality site.
+
+3. Constantly monitor our market: We plan to constantly monitor our target market and adapt to consumers needs, wants and desires. To be successful we plan to evolve and diversify our product lines to satisfy the consumer.
+
+4. Run our Company ethically and responsibly. Conduct our business and ourselves ethically and responsibly.
+
+ 
+
+Our Statement of Organization:
+
+We were incorporated in Nevada on June 24, 2010, as Swingplane Ventures, Inc. Our principal executive offices are located at 220 Summit Blvd. #402, Broomfield, CO 80021. Our phone number is (303) 803-0063.
+
+The Offering
+
+ 
+
+The following is a brief summary of this offering. Please see the Plan of Distribution section for a more detailed description of the terms of the offering.
+
+5
+
+Link to Table of Contents
+
+Number of Shares Being Offered:
+
+The Company is offering 3,500,000 shares of common stock, par value $0.001 
+
+Offering Price per share
+
+$0.01
+
+Offering Period:
+
+The shares are being offered for a period not to exceed 180 days. In the event we do not sell all of the shares before the expiration date of the offering, all funds raised will be promptly returned from the escrow account and returned to the investors, without interest or deduction.
+
+Escrow Account:
+
+The subscription proceeds from the sale of the shares in this offering will be payable to Law Office of Clifford J. Hunt, P.A. Trust Account IOTA and will be deposited in a non-interest bearing law office trust bank account until all offering proceeds are raised. All subscription agreements and checks should be delivered to Law Office of Clifford J. Hunt P.A. Failure to do so will result in checks being returned to the investor who submitted the check. Swingplane Ventures, Inc. escrow agent, Law Office of Clifford J. Hunt, P.A., acts as legal counsel for Swingplane Ventures, Inc. and is therefore not an independent third party.
+
+Net Proceeds to Company:
+
+$35,000
+
+Use of Proceeds:
+
+We intend to use the proceeds to expand our business operations.
+
+Number of Shares Outstanding Before the Offering:
+
+10,000,000 common shares
+
+Number of Shares Outstanding After the Offering:
+
+13,500,000 common shares 
+
+The offering price of the common stock bears no relationship to any objective criterion of value and has been arbitrarily determined. The price does not bear any relationship to Swingplane Ventures, Inc. assets, book value, historical earnings, or net worth.
+
+Swingplane Ventures, Inc. will apply the proceeds from the offering to pay for accounting fees, legal and professional fees, equipment, office supplies, salaries/contractors, sales and marketing, and general working capital.
+
+The Company has not presently secured an independent stock transfer agent. Swingplane Ventures, Inc. has identified several agents to retain that will facilitate the processing of the certificates upon closing of the offering. 
+
+The purchase of the common stock in this offering involves a high degree of risk. The common stock offered in this prospectus is for investment purposes only and currently no market for Swingplane Ventures, Inc. common stock exists. Please refer to the sections herein titled Risk Factors and Dilution before making an investment in this stock.
+
+SUMMARY FINANCIAL INFORMATION
+
+The following table sets forth summary financial data derived from Swingplane Ventures, Inc. financial statements. The accompanying notes are an integral part of these financial statements and should be read in conjunction with financial statements, related notes and other financial information included in this prospectus.
+
+SWINGPLANE VENTURES, INC. 
+
+(A Development Stage Company)
+
+Statement of Operations
+
+For the period from inception (June 24, 2010) to March 31, 2011
+
+ 
+ 
+ 
+ 
+
+ 
+ 
+ 
+ 
+
+ 
+ 
+ 
+ 
+
+Revenues
+
+ 
+$
+
+-
+
+ 
+ 
+ 
+ 
+
+Operating expenses
+
+ 
+ 
+ 
+
+General and administrative
+
+ 
+ 
+11,252
+
+ 
+ 
+ 
+ 
+
+(Loss) from operations
+
+ 
+ 
+(11,252)
+
+ 
+ 
+ 
+ 
+
+Other income (expense)
+
+ 
+ 
+ 
+
+Interest income
+
+ 
+ 
+-
+
+Interest expense
+
+ 
+ 
+-
+
+Loss before income taxes
+
+ 
+ 
+(11,252)
+
+ 
+ 
+ 
+ 
+
+Income tax benefit (provision)
+
+ 
+ 
+-
+
+Net Loss
+
+ 
+$
+
+(11,252)
+
+ 
+ 
+ 
+ 
+
+Basic and diluted loss per common share
+
+ 
+$
+
+0.00
+
+ 
+ 
+ 
+ 
+
+Basic and diluted weighted average common shares outstanding
+
+ 
+ 
+10,000,000
+
+The accompanying notes are an integral part of the financial statements.
+
+6
+
+Link to Table of Contents
+
+RISK FACTORS
+
+Before you invest in our common stock, you should be aware that there are risks, as described below. You should carefully consider these risk factors together with all of the other information included in this prospectus before you decide to purchase shares of our common stock. Any of the following risks could adversely affect our business, financial conditions and results of operations.
+
+Risks Related To the Company
+
+(1)Our Auditor Has Expressed Substantial Doubt About Our Ability To Continue As A Going Concern.
+
+These financial statements included with this registration statement have been prepared on a going concern basis. We may not be able to generate profitable operations in the future and/or obtain the necessary financing to meet our obligations and repay liabilities arising from normal business operations when they come due. The outcome of these matters cannot be predicted with any certainty at this time. These factors raise substantial doubt that we will be able to continue as a going concern. Management plans to continue to provide for its capital needs through related party advances. Our financial statements do not include any adjustments to the amounts and classification of assets and liabilities that may be necessary should the Company be unable to continue as a going concern.
+
+(2) The Company s Needs Could Exceed The Amount Of Time Or Level Of Experience That Our Sole Officer And Director May Have. 
+
+Our business plan does not provide for the hiring of any additional employees until sales will support the expense, which is estimated to be the third quarter of operations. Until that time, the responsibility of developing the company's business, the offering and selling of the shares through this prospectus and fulfilling the reporting requirements of a public company all fall upon Matt Diehl. While Mr. Diehl has business experience including management and accounting, he does not have extensive experience in a public company setting, including serving as a principal accounting officer or principal financial officer. Nor does Mr. Diehl have any experience running an apparel company. Mr. Diehl has retail and sales experience in apparel prior to five years ago and is an avid fashion enthusiast, but he has never been an officer or director of an apparel company. 
+
+Mr. Diehl spends at least ten (10) hours per week on the Company s needs, or about twenty-five (25) percent of his time. Mr. Diehl also sits on the board of one public company, TapSlide, Inc. ( TapSlide ), and has his own private consulting business as well (AppVineyard, LLC) that compete for his time. We have not formulated a plan to resolve any possible conflict of interest with his other business activities. In the event he is unable to fulfill any aspect of his duties to the Company we may experience a shortfall or complete lack of sales resulting in little or no profits and eventual closure of the business. On August 3, 2010, Mr. Diehl agreed to become President, Officer, and Director for PaperFree Medical Solutions, Inc. ( PaperFree ) in an interim capacity to provide assistance in corporate compliance and manage the corporation until a more suitable candidate for Officer and Director could be found to move that company forward. At the time Mr. Diehl accepted the officer and director positions with PaperFree, the Company was delinquent in its periodic report filings with the SEC. On November 16, 2010, Mr. Diehl resigned from PaperFree Medical Solutions. Neither a Form 15 nor any delinquent periodic reports were filed during his tenure with PaperFree. TapSlide also is delinquent in its periodic filings with the SEC. Although TapSlide is endeavoring to bring its periodic filings current, it remains delinquent and there is no assurance that such filings will ever be brought current. Accordingly, our sole officer and director has been unable to cause two separate entities with reporting responsibilities under the Securities Exchange Act the 1934 (the Exchange Act ) to file required reports in a timely manner. There can be no assurances that Mr. Diehl will be able to cause our Company to comply with subsequent periodic report filing deadlines in the event our registration statement is declared effective. The failure of the Company to comply with the periodic reporting requirements under the Exchange Act could ultimately result in the revocation of any effective registration by the Commission. 
+
+(3) Since We Are A Development Stage Company, The Company Has Generated No Revenues And Does Not Have An Operating History. 
+
+The Company was incorporated on June 24, 2010; we have not yet commenced our business operations; and we have not yet realized any revenues. We have no operating history upon which an evaluation of our future prospects can be made. Based upon current plans, we expect to incur operating losses in future periods as we incurred significant expenses associated with the initial startup of our business. Further, we cannot guarantee that we will be successful in realizing revenues or in achieving or sustaining positive cash flow at any time in the future. Any such failure could result in the possible closure of our business or force us to seek additional capital through loans or additional sales of our equity securities to continue business operations, which would dilute the value of any shares you purchase in this offering. 
+
+ (4) We Don t Have Any Substantial Assets And Are Totally Dependent Upon The Proceeds Of This Offering To Fully Fund Our Business. If We Do Not Sell The Shares In This Offering We Will Have To Seek Alternative Financing To Complete Our Business Plans Or Abandon Them.
+
+Swingplane Ventures, Inc. has limited capital resources. To date, the Company has funded its operations from limited funding and has not generated any cash from operations to be profitable. Unless Swingplane Ventures, Inc. begins to generate sufficient revenues to finance operations as a going concern, Swingplane Ventures, Inc. may experience liquidity and solvency problems. Such liquidity and solvency problems may force Swingplane Ventures, Inc. to cease operations if additional financing is not available. No known alternative resources of funds are available to Swingplane Ventures, Inc. in the event it does not have adequate proceeds from this offering. However, Swingplane Ventures, Inc. believes that the net proceeds of the Offering will be sufficient to satisfy the start-up and operating requirements for the next twelve months. 
+
+ (5) We Cannot Predict When Or If We Will Produce Revenues, Which Could Result In A Total Loss Of Your Investment If We Are Unsuccessful In Our Business Plans.
+
+We have not sold any clothing to date and have not yet generated any revenues from operations. In order for us to continue with our plans and open our business, we must raise our initial capital through this offering. The timing of the completion of the milestones needed to commence operations and generate revenues is contingent on the success of this offering. There can be no assurance that we will generate revenues or that revenues will be sufficient to maintain our business. As a result, you could lose all of your investment if you decide to purchase shares in this offering and we are not successful in our proposed business plans. 
+
+7
+
+Link to Table of Contents
+
+ (6) Our Continued Operations Depend On The Public s Acceptance Of Our Product Lines. If The Public Doesn t Find Our Clothing Desirable And Suitable For Purchase And We Cannot Establish A Customer Base, We May Not Be Able To Generate Any Revenues, Which Would Result In A Failure Of Our Business And A Loss Of Any Investment You Make In Our Shares.
+
+The ability to develop clothing lines that the market finds desirable and willing to purchase is critically important to our success. We cannot be certain that garments and clothing lines we offer will be appealing to the market and as a result there may not be any demand and our sales could be limited and we may never realize any revenues. In addition, there are no assurances that if we alter, or develop new garments or lines of clothing in the future that the markets demand for these will develop and this could adversely affect our business and any possible revenues. 
+
+ (7) We Are Dependent On The Services Of A Certain Key Employee And The Loss Of His Services Could Harm Our Business.
+
+Our success largely depends on the continuing services of our Chairman and Chief Executive Officer, Matt Diehl. His past experience to lead and nurture small and start-up companies makes the Company dependent on his abilities. Our continued success also depends on our ability to attract and retain qualified personnel. We believe that Mr. Diehl possesses valuable industry and business development knowledge, experience and leadership abilities that would be difficult in the short term to replicate. The loss of him as a key employee could harm our operations, business plans and cash flows.
+
+(8) The Clothing Industry Is Highly Competitive. If We Cannot Develop And Market Desirable Clothing Lines That The Public Is Willing To Purchase, We Will Not Be Able To Compete Successfully. Our Business May Be Adversely Affected And We May Not Be Able To Generate Any Revenues.
+
+Swingplane Ventures, Inc. has many potential competitors in the clothing industry. We consider the competition is competent, experienced, and they have greater financial and marketing resources than we do at the present. Our ability to compete effectively may be adversely affected by the ability of these competitors to devote greater resources to the development, sales, and marketing of their products than are available to us. 
+
+Some of the Company s competitors also offer a wider range of clothing lines; have greater name recognition and more extensive customer bases than the Company. These competitors may be able to respond more quickly to new or changing opportunities, fashions and customer desires, undertake more extensive promotional activities, offer terms that are more attractive to customers and adopt more aggressive pricing policies than the Company. Moreover, current and potential competitors have established or may establish cooperative relationships among themselves or with third parties to enhance their visibility. The Company expects that new competitors or alliances among competitors have the potential to emerge and may acquire significant market share. Competition by existing and future competitors could result in an inability to secure adequate market share sufficient to support Swingplane Ventures s endeavors. Swingplane Ventures cannot be assured that it will be able to compete successfully against present or future competitors or that the competitive pressure it may face will not force it to cease operations. As a result, you may never be able to liquidate or sell any shares you purchase in this offering. 
+
+(9) Our Growth May Require Additional Capital, Which May Not Be Available.
+
+Swingplane Ventures, Inc. has limited capital resources. Unless Swingplane Ventures, Inc. begins to generate sufficient revenues to finance operations as a going concern, Swingplane Ventures, Inc. may experience liquidity and solvency problems. Such liquidity and solvency problems may force Swingplane Ventures, Inc. to cease operations if additional financing is not available. No known alternative resources of funds are available to Swingplane Ventures, Inc. the event it does not have adequate proceeds from this offering. However, Swingplane Ventures, Inc. believes that the net proceeds of the Offering will be sufficient to satisfy the start-up and operating requirements for the next twelve months. 
+
+ Risks Related To This Offering
+
+(10)We Are Selling This Offering Without An Underwriter And May Be Unable To Sell Any Shares. Unless We Are Successful In Selling The Minimum Of The Shares And Receiving The Proceeds From This Offering, We May Have To Seek Alternative Financing To Implement Our Business Plans And You Would Receive A Return Of Your Entire Investment.
+
+This offering is self-underwritten, that is, we are not going to engage the services of an underwriter to sell the shares; we intend to sell them through our officer and director, who will receive no commissions. He will offer the shares to friends, relatives, acquaintances and business associates; however, there is no guarantee that he will be able to sell any of the shares. In the event we do not sell all of 
+
+8
+
+Link to Table of Contents
+
+the shares before the expiration date of the offering, all funds raised will be promptly returned to the investors, without interest or deduction. 
+
+(11) Due To The Lack Of A Trading Market For Our Securities, You May Have Difficulty Selling Any Shares You Purchase In This Offering.
+
+There is presently no demand for our common stock and no public market exists for the shares being offered in this prospectus. We plan to contact a market maker immediately following the effectiveness of this Registration Statement and apply to have the shares quoted on the OTC Electronic Bulletin Board (OTCBB). The OTCBB is a regulated quotation service that displays real-time quotes, last sale prices and volume information in over-the-counter (OTC) securities. The OTCBB is not an issuer listing service, market or exchange. Although the OTCBB does not have any listing requirements per se, to be eligible for quotation on the OTCBB, issuers must remain current in their filings with the SEC or applicable regulatory authority. Market Makers are not permitted to begin quotation of a security whose issuer does not meet this filing requirement. Securities already quoted on the OTCBB that become delinquent in their required filings will be removed following a 30 or 60 day grace period if they do not make their required filing during that time. We cannot guarantee that our application will be accepted or approved and our stock listed and quoted for sale. As of the date of this filing, there have been no discussions or understandings between Swingplane Ventures, Inc. or anyone acting on our behalf with any market maker regarding participation in a future trading market for our securities. If no market is ever developed for our common stock, it will be difficult for you to sell any shares you purchase in this offering. In such a case, you may find that you are unable to achieve any benefit from your investment or liquidate your shares without considerable delay, if at all. In addition, if we fail to have our common stock quoted on a public trading market, your common stock will not have a quantifiable value and it may be difficult, if not impossible, to ever resell your shares, resulting in an inability to realize any value from your investment. 
+
+ (12) Investors In This Offering Will Bear A Substantial Risk Of Loss Due To Immediate And Substantial Dilution.
+
+The principal shareholder of Swingplane Ventures, Inc. is Matt Diehl who also serves as its Director, President, Secretary, and Treasurer. Mr. Diehl acquired 10,000,000 restricted shares of Swingplane Ventures, Inc. common stock at a price per share of $0.001 for a $10,000 equity investment. Upon the sale of the common stock offered hereby, the investors in this offering will experience an immediate and substantial dilution. Therefore, the investors in this offering will bear a substantial portion of the risk of loss. Additional sales of Swingplane Ventures, Inc. common stock in the future could result in further dilution. Please refer to the section titled Dilution herein. 
+
+ (13) Purchasers In This Offering Will Have Limited Control Over Decision Making Because Matt Diehl, Swingplane Ventures, Inc. s Officer, Director, And Shareholder Controls All Of Swingplane Ventures, Inc. Issued And Outstanding Common Stock.
+
+Presently, Matt Diehl, Swingplane Ventures Inc. s Director, President, Secretary, and Treasurer beneficially owns 100% of the outstanding common stock. Because of such ownership, investors in this offering will have limited control over matters requiring approval by Swingplane Ventures, Inc. security holders, including the election of directors. Mr. Diehl would retain 74.1% ownership in Swingplane Ventures, Inc. common stock assuming the maximum offering is attained. Such concentrated control may also make it difficult for Swingplane Ventures, Inc. stockholders to receive a premium for their shares of Swingplane Ventures, Inc. common stock in the event Swingplane Ventures, Inc. enters into transactions, which require stockholder approval. In addition, certain provisions of Nevada law could have the effect of making it more difficult or more expensive for a third party to acquire, or of discouraging a third party from attempting to acquire, control of Swingplane Ventures Inc. For example, Nevada law provides that not less than two-thirds vote of the stockholders is required to remove a director for cause, which could make it more difficult for a third party to gain control of the Board of Directors. This concentration of ownership limits the power to exercise control by the minority shareholders. 
+
+(14) We Will Incur Ongoing Costs And Expenses For SEC Reporting And Compliance. Without Revenue We May Not Be Able To Remain In Compliance, Making It Difficult For Investors To Sell Their Shares, If At All.
+
+Our business plan allows for the estimated $5,500 cost of this Registration Statement to be paid from our cash on hand. We plan to contact a market maker immediately following the effectiveness of this Registration Statement and apply to have the shares quoted on the OTC Electronic Bulletin Board. To be eligible for quotation on the OTCBB, issuers must remain current in their filings with the SEC. Market Makers are not permitted to begin quotation of a security whose issuer does not meet this filing requirement. Securities already quoted on the OTCBB that become delinquent in their required filings will be removed following a 30 or 60 day grace period if they do not make their required filing during that time. In order for us to remain in compliance we will require future revenues to cover the cost of these filings, which could comprise a substantial portion of our available cash resources. If we are unable to generate sufficient revenues to remain in compliance it may be difficult for you to resell any shares you may purchase, if at all. 
+
+9
+
+Link to Table of Contents
+
+ (15) There Has Been No Independent Valuation of the Stock, Which Means That the Stock May Be Worth Less Than the Purchase Price.
+
+The per share purchase price has been arbitrarily determined by us without independent valuation of the shares. The price per share in the recent sale of our stock to our founder, Matthew R. Diehl was at par value ($0.001), was not based on perceived market value, book value, or other established criteria and bears no relationship the price per share in this offering. We did not obtain an independent appraisal opinion on the valuation of the shares. Accordingly, the shares may have a value significantly less than the offering price and the shares may never obtain a value equal to or greater than the offering price.
+
+(16) Our CEO, Mr. Diehl, is currently a director and officer of one delinquent public company, and has previously been an officer and director of another delinquent public company.
+
+Mr. Diehl is COO and a director for TapSlide, Inc., which is currently delinquent in its reporting obligations. TapSlide is working to become current as soon as possible. Additionally, Swingplane Ventures and TapSlide both have corporate addresses listed as Mr. Diehl s residence. In effort to keep costs as low as possible for both companies, Mr. Diehl provides his home office on a rent free basis to both companies for their executive offices. Furthermore, Mr. Diehl became an officer and director on an interim basis for PaperFree Medical Solutions, Inc., a delinquent public company, from August 3, 2010 to November 16, 2010 in order to assist in the search for an officer and director more qualified than Mr. Diehl to move that company forward. During his time with PaperFree Medical Solutions, no Form 15 nor any other delinquent periodic report were filed. Mr. Diehl no longer spends any of his time on PaperFree Medical Solutions, Inc. It is the responsibility of the delinquent public company, PaperFree Medical Solutions, to file a Form 8-K reflecting the resignation of Mr. Diehl effective November 16, 2010. Regardless, it should be noted that Mr. Diehl has been a director and officer for two delinquent reporting public companies and hence there can be no assurances that Swingplane Ventures will remain current in its filings under his management. The failure of the Company to comply with the periodic reporting requirements under the Exchange Act could ultimately result in the revocation of any effective registration by the Commission.
+
+(17) Our CEO, Mr. Diehl, has no experience as an officer or director of an apparel business and may not be able implement our business plan or generate any revenue from sales of our products.
+
+Mr. Diehl does not have experience running an apparel company and has never been an officer or director of an apparel company. Accordingly, Mr. Diehl may not be able to implement our plan or generate any revenue from the sale of our intended products. There can be no assurance that we will be able to attract and hire officers or directors with experience in the apparel industry to implement the business plan in the event that Mr. Diehl is otherwise successful in doing so.
+
+(18) We may not be able to implement our business plan with the stated amount and use of proceeds and may be required to raise additional capital which may not be available for a developmental company.
+
+The use of proceeds section contained herein represents our stated allocation of the net proceeds from this offering based upon the current state of our business operations, current plans, and the current economic and industry conditions. We will not have any discretion to spend the proceeds in any manner inconsistent with the stated allocation of proceeds in the use of proceeds table contained herein. The amounts and timing of our actual expenditures will depend on numerous factors, including the status of our development efforts, sales and marketing activities, the amount of cash generated or used by our operations, our competition and the other factors described in this Risk Factors section. In the event that we experience negative results from our sales and marketing efforts, we may determine that we are in need of more working capital in order to implement the growth strategy and milestones set forth herein. There are no assurances that we will be able to raise additional capital from any institution or individual investors.
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001497251_ezy-cloud_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001497251_ezy-cloud_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..92f4d97bc302dd282e9f1aa61d9dac78263526ff
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@@ -0,0 +1 @@
+PROSPECTUS SUMMARY ------------------ The following summary highlights key aspects contained in this prospectus. Before making an investment decision, you should read the entire prospectus carefully, including the "Risk Factors" section, the financial statements and the notes to the financial statements. The holders of Jagged Peak common stock will receive one share of AcroBoo, Inc. Class A Common Stock for every ten shares of Jagged Peak common stock that they hold. Following the Distribution, Jagged Peak will not own any shares of AcroBoo, Inc. Jagged Peak and AcroBoo will be independent companies. AcroBoo intend to become an on-line retailer that purchases products and sells them on-line. AcroBoo differs from its parent, where AcroBoo plans to take actual possession of its products, as compared to Jagged Peak, who acts as a distribution agent for its customers. Corporate Background -------------------- The Company was organized June 14, 2010 (Date of Inception) under the laws of the State of Nevada, as AcroBoo, Inc. ("AcroBoo"). The Company was incorporated as a subsidiary of Jagged Peak, Inc. ("Jagged Peak"), a Nevada corporation. SUMMARY OF DISTRIBUTION ----------------------- The board of directors of Jagged Peak approved, subject to the effectiveness of a registration with the U. S. Securities and Exchange Commission, a spin-off to Company shareholders on one-for-ten basis for every share of Jagged Peak common stock, par value $0.001 owned. The AcroBoo stock dividend will be based on 16,020,961 shares of Jagged Peak common stock issued and outstanding as of the record date. The shares of AcroBoo, Inc. are owned by Jagged Peak, who will distribute the AcroBoo, Inc. shares once the Form S-1 is effective with the U. S. Securities and Exchange Commission. The shares will be distributed by Pacific Stock Transfer Co., Las Vegas, Nevada, which acts as our transfer agent. After the Distribution, AcroBoo will have one officer and director who is also an officer and director of Jagged Peak. AcroBoo will continue to be controlled and majority owned by the persons who control and majority own the stock of Jagged Peak. Jagged Peak, itself, the Company, will have no ownership in AcroBoo. Jagged Peak will retain no ownership in AcroBoo, Inc. following the spin-off. Further, AcroBoo, Inc. will no longer be a subsidiary of Jagged Peak.
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001497316_american_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001497316_american_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..827977e7ffda8c085be563f255e8f28c86c93eae
--- /dev/null
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@@ -0,0 +1 @@
+Dividend Policy The payment by us of dividends, if any, in the future rests within the discretion of our Board of Directors and will depend, among other things, upon our earnings, capital requirements and financial condition, as well as other relevant factors. We have not paid any dividends since our inception and we do not intend to pay any cash dividends in the foreseeable future, but intends to retain all earnings, if any, for use in our business. Transfer Agent The Company has not hired a Transfer Agent yet and the Company is acting as its own transfer Agent until one is hired. INTERESTS OF NAMED EXPERTS AND COUNSEL No expert or counsel named in this prospectus as having prepared or certified any part of this prospectus or having given an opinion upon the validity of the securities being registered or upon other legal matters in connection with the registration or offering of the common stock was employed on a contingency basis, or had, or is to receive, in connection with the offering, a substantial interest, direct or indirect, in the registrant or any of its parents or subsidiaries. Nor was any such person connected with the registrant or any of its parents or subsidiaries as a promoter, managing or principal underwriter, voting trustee, director, officer, or employee. The financial statements included in this prospectus and the registration statement have been audited by De Joya Griffith & Company, LLC, 2580 Anthem Village Drive, Henderson, Nevada 89052, to the extent and for the periods set forth in their report appearing elsewhere herein and in the registration statement. The financial statements are included in reliance on such report given upon the authority of said firm as experts in auditing and accounting. Law Offices of Thomas E. Puzzo, PLLC, 4216 NE 70TH Street, Seattle, Washington 98115, our independent legal counsel, has provided an opinion on the validity of our common stock. DESCRIPTION OF BUSINESS Summary On June 1, 2010, Mr. Fabio Alexandre Narita, president and sole director, incorporated the Company in the State of Nevada and established a fiscal year end of June 30. Green & Quality Home Life is planning to enter into the home automation industry. We are living in a time when environmental awareness is more widespread than ever, a concern of individuals, companies and governments all over the planet. It brings to everyone the responsibility and also the power to help to preserve natural resources and ultimately all kind of lives. One way individuals can contribute to the environment is managing how their houses interact with it. The concept of a green home helps to bring some answers and solutions to handle with this matter. Home automation technology could be a solution to individuals contribute with the planet and, at the same time, increase their quality of life and safety in their homes. The declining cost and complexity of the technology involved in home automation make it more viable and affordable than ever to more people. Green & Quality Home Life feels that this is a profitable market with great opportunities to sell home automation products and services, as can be seen below in the section Market Opportunity . Green & Quality Home Life s vision: Quality of life is all about balance between human beings and nature and it is achieved via applying technology and environment knowledge. Green & Quality Home Life s mission: to contribute to make a world a better place to live by developing solutions to increase the human beings quality of life and by developing and preserving the nature. Green & Quality Home Life intends to offer a portfolio of products and services to provide solutions for every family to automate domestic activities, with the purpose of making them less time consuming, easy to manage and leveraging the quality of life of every member of a family. Our intention is to develop products and services that may contribute to preserve the nature, using the technology to better manage energy, water, wastes, heating, ventilation and air conditioning (HVAC) and our knowledge to design a green project to our customer s house. Some examples of what we expecting to develop in our solutions: HVAC Management: controlling heating, ventilation and air conditioning in order to have the temperature desired at minimum energy consumption. Security Management: via audio and visual monitoring, access control. Domestic task automation: automatic pet food feeder, electric timer candles, ceiling fan, towel warmer in the bathroom, heater on the roof against snow accumulation are some solutions to help automating nowadays domestic tasks. Other examples: in the yard it can be installed sprinklers for irrigation that turn on only when it is not raining; vacuum cleaner and grass cutter domestic robots will be an option too; with a remote control (voice operated remote control) it will be able to adjust temperatures, prepare the bath from the bed or by cell phone even away from home. Energy saving management: monitoring all the other systems consumptions, including lighting and domestic task systems. If we succeed in developing all these features, we feel that both environmental and financial benefits could be achieved by our solutions, such as: Lowering maintaining costs and increasing asset value. Reducing of the consumption of energy and water. Protecting natural resources by using recycled material and lowering the usage of no renewable resources. Reducing harmful greenhouse gas emissions. Qualifying for tax rebates, zoning allowances, and other incentives in hundreds of cities. Demonstrating a person's commitment to environmental stewardship and social responsibility. Our business office is located at Rua Rondinha, 92, apto. 134, Sao Paulo, SP, 04140-010, Brazil; our telephone number is (775) 321-8289. Our United States and registered statutory office is located at 112 North Curry Street, Carson City, Nevada, 89703, telephone number (775) 882-1013. The Company has not yet implemented its business model and to date has generated no revenues. GREEN & QUALITY HOME LIFE has no plans to change its business activities or to combine with another business and is not aware of any circumstances or events that might cause this plan to change. As of the date of this prospectus, the Company is still focusing on the raising of funds to implement the proposed Business Plan described herein. Ultimately, we expect to sell all the shares by the end of this offer (90 days from the effective date of thisRegistration Statement), and raise the expected $90,000. We believe that we will be able to generate revenue in about 18 months after we start our proposed plan of operation, granted that we have raised enough funds to do so. For full information on the different scenarios of the use of funds raised and the steps and timelines of our operations, see Use of Proceeds on page 21 and Plan of Operation on page 50 .
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001497572_nano-labs_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001497572_nano-labs_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..b7df6201eee17ab4f85b6358c8f8ac6c7e50bded
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001497572_nano-labs_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY Colorado Ceramic Tile, Inc. was incorporated in Colorado in March 1995. We sell tile, marble and stone for residential and commercial projects. Our offices and showroom are located at 4151 E. County Line Rd., Centennial, CO 80122. Our telephone number is (303) 721-9198 and our fax number is (303) 721-9572. We lease our 3,600 square foot showroom and 2,700 square foot warehouse on a month-to-month basis for $4,500 per month. As of the date of this prospectus we had one showroom. We plan on opening new showrooms in in the Colorado cities of Fort Collins, Boulder, Castle Rock, Parker and Colorado Springs. We also plan on expanding our product line to include sinks, bath tubs, and other kitchen and bath appliances. We estimate that the cost of opening, stocking and operating each new showroom for one year will be approximately $150,000 (approximately $750,000 for all five showrooms). If sufficient capital is abailable we expect that we will be able to open a new showroom once every twelve months. Since the expansion of our business will depend on our ability to raise additional capital, we cannot predict if or when we will be able to open any new showrooms or expand our product line. See the "Business" section of this prospectus for more information. The Offering Between June 2010 and December 2010, we sold 4,125,000 shares of common stock to a group of private investors. The shares were sold at a price of $0.02 per share. By means of this prospectus, the investors who purchased our common stock in 2010 are offering to sell their shares. See the section of this prospectus entitled "Selling Shareholders" for more information. Since any shares purchased from the selling shareholders will be free trading, the existence of free trading shares will permit an application to be filed for the quotation of our common stock on the OTC Bulletin Board. Although as of the date of this prospectus, no application had been made to have our common stock quoted on the OTC Bulletin Board, and although we cannot guarantee that our common stock will be quoted on the OTC Bulletin Board, we believe that, after the normal review process, our common stock will be quoted on the OTC Bulletin Board. Once our common stock is quoted, we believe it will be easier to raise capital since most investors prefer to invest in companies that have a public market. The purchase of the securities offered by this prospectus involves a high degree of risk. Risk factors include the lack of any relevant operating history, losses since we were incorporated, the possible need for us to sell shares of our common stock to raise capital and our auditors, in their report on our June 30, 2010 financial statements, expressed substantial doubt as to our ability to continue in business. See the "Risk Factors" section of this prospectus below for additional Risk Factors. COLORADO CERAMIC TILE, INC. STATEMENTS OF STOCKHOLDERS' EQUITY <TABLE> <S> <C> <C> <C> <C> <C> Common Stock Amount Paid in Retained Stockholders' Shares(1) $0.001 Capital Earnings Equity ---------- -------- ------- ---------- ------------- Balances at June 30, 2008 4,000,000 $ 4,000 $34,124 $ (96,428) $ (58,304) Net income (loss) for the year (197,172) (197,172) ---------- -------- ------- ---------- ------------- Balances at June 30, 2009 4,000,000 $ 4,000 $34,124 $ (293,600) $(255,476) Net income (loss) for the year (68,718) (68,718) ---------- -------- ------- ---------- ------------- Balances at June 30, 2010 4,000,000 $ 4,000 $34,124 $ (362,318) $(324,194) Stock issued for cash 4,125,000 4,125 78,375 82,500 ---------- -------- ------- ------------- Net income (loss) for the period (92,603) (92,603) ---------- -------- ------- ---------- ------------- Balances at December 31, 2010 - Unaudited 8,125,000 $ 8,125 $112,499 $ (454,921) $(334,297) ========= ======== ======== =========== ============= </TABLE> (1) As restated for a 6,757 for 1 forward stock split on May 17, 2010 The accompanying notes are an integral part of the financial statements. SIGNATURES Pursuant to the requirements of the Securities Act of l933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the Denver, Colorado on the 18th day of March, 2011. COLORADO CERAMIC TILE, INC. By: /s/ Sandie Venezia ------------------------------------- Sandie Venezia, President and Principal Executive Officer In accordance with the requirements of the Securities Act of l933, this registration statement has been signed by the following persons in the capacities and on the dates indicated: Signature Title Date --------- ----- ---- /s/ Sandie Venezia ---------------------- Principal Executive, March 18, 2011 Sandie Venezia Financial and Accounting Officer and a Director /s/ Mark Rodenbeck ---------------------- Director March 18, 2011 Mark Rodenbeck Forward-Looking Statements This prospectus contains or incorporates by reference forward-looking statements, concerning our financial condition, results of operations and business. These statements include, among others: o statements concerning the benefits that we expect will result from the business activities that we contemplate; and o statements of our expectations, beliefs, future plans and strategies, anticipated developments and other matters that are not historical facts. You can find many of these statements by looking for words such as "believes", "expects", "anticipates", "estimates" or similar expressions used in this prospectus. These forward-looking statements are subject to numerous assumptions, risks and uncertainties that may cause our actual results to be materially different from any future results expressed or implied in those statements. Because the statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied. We caution you not to put undue reliance on these statements, which speak only as of the date of this prospectus. To the extent, the information contained in this prospectus, changes in any material respect, we will amend this prospectus.
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001497595_tai-shan_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001497595_tai-shan_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..3692550e1fc45254d0ba2fc600a20f0f9d6b9844
--- /dev/null
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@@ -0,0 +1 @@
+Prospectus Summary This summary highlights information that we present more fully in the rest of this prospectus. This summary does not contain all of the information you should consider before buying common shares in this offering. This summary contains forward-looking statements that involve risks and uncertainties, such as statements about our plans, objectives, expectations, assumptions or future events. In some cases, you can identify forward-looking statements by terminology such as anticipate, estimate, plan, project, continuing, ongoing, expect, we believe, we intend, may, should, will, could, and similar expressions denoting uncertainty or an action that may, will or is expected to occur in the future. These statements involve estimates, assumptions, known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from any future results, performances or achievements expressed or implied by the forward-looking statements. You should read the entire prospectus carefully, including the Risk Factors section and the financial statements and the notes to those statements. Our Company We believe we are a leading call center business process outsourcing ( BPO ) service provider in China. BPO services are designed to allow businesses to achieve various operational benefits, such as cost savings, better quality services, and the ability to focus on core competence. Our call centers are currently equipped with 3,300 seats in Shandong Province, Jiangsu Province and Chongqing City. Our business focuses on the complex, voice-based segment of customer care services, including: customer relationship management; technical support; sales; customer retention; marketing surveys; and research. We believe we are the largest provider of BPO Services to the telecommunications industry in China, as we hold major contracts with many of the largest companies in that sector and have been recognized by the Chinese Ministry of Industry and Information Technology ( MIIT ) as China s Best Inbound Outsourcing Contract Center of the Year for 2009. We recently opened call centers in Chongqing City and Jiangsu Province. Once these facilities are fully operational, our total capacity will increase to 6,000 seats. We expect the two new call centers to be fully operational around November 2011. Our largest customers are the major telecommunications carriers in China and their provincial subsidiaries, such as China Mobile Communications Corporation ( China Mobile ) and China Telecommunications Corporation ( China Telecom ). In addition to answering inbound calls, our company also makes outbound cold callings to help China Mobile and China Telecom promote wireless value-added service ( WVAS ) products, such as weather, health, education and farming related WVAS products to targeted China Mobile and China Telecom subscribers. We operate our business through contractual arrangements between WFOE, our wholly-owned subsidiary, and Taiying, a company we control through contractual arrangements. We believe Taiying and its subsidiaries strategic locations in Shandong Province, Jiangsu Province, Hebei Province, and Chongqing City and our investment in technology and human resources position us well to reach our goals. Corporate Information Our principal executive office is located at 1366 Zhongtianmen Dajie, High-tech Zone, Taian City, Shandong Province, China 271000. Our telephone number is (+86) 538 605 2010. Our facsimile number is (+86) 538 605 0018. We do not maintain a corporate website at this time. Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state or other jurisdiction where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED JANUARY 18, 2011 Tai Shan Communications, Inc. Minimum Offering: 1,666,667 Common Shares Maximum Offering: 2,000,000 Common Shares This is the initial public offering of Tai Shan Communications, Inc., a British Virgin Islands limited company. We are offering a minimum of 1,666,667 and a maximum of 2,000,000 of our common shares. None of our officers, directors or affiliates may purchase shares in this offering. We expect that the offering price will be between $5.50 and $6.50 per common share. No public market currently exists for our common shares. We have applied for approval for quotation on the NASDAQ Capital Market under the symbol TAIS for the common shares we are offering. We believe that upon the completion of the offering contemplated by this prospectus, we will meet the standards for listing on the NASDAQ Capital Market. Investing in these common shares involves significant risks. See Risk Factors beginning on page 11 of this prospectus. Per Common Share Minimum Offering Maximum Offering Public offering price $ 6.00 $ 10,000,002 $ 12,000,000 Placement discount $ 0.42 $ 700,000 $ 840,000 Proceeds to us, before expenses $ 5.58 $ 9,300,002 $ 11,160,000 We expect our total cash expenses for this offering to be approximately $525,000, exclusive of the above commissions. In addition, we will pay our placement agent a non-accountable expense allowance of 1% of the offering, or up to $100,000 (minimum offering, exclusive of any shares registered under Rule 462(b)) or $120,000 (maximum offering). The placement agent must sell the minimum number of securities offered (1,666,667 common shares) if any are sold. The placement agent is only required to use its best efforts to sell the maximum number of securities offered (2,000,000 common shares). The offering will terminate upon the earlier of: (i) a date mutually acceptable to us and our placement agent after which the minimum offering is sold or (ii) March 7, 2011. Until we sell at least 1,666,667 common shares, all investor funds will be held in an escrow account at SunTrust Bank, Richmond, Virginia. If we do not sell at least 1,666,667 shares by March 7, 2011, all funds will be promptly returned to investors (within one business day) without interest or deduction. If we complete this offering, net proceeds will be delivered to our company on the closing date. We will not be able to use such proceeds in China, however, until we complete certain remittance procedures in China. If we complete this offering, then on the closing date, we will issue common shares to investors in the offering. These securities have not been approved or disapproved by the Securities and Exchange Commission or any state securities commission nor has the Securities and Exchange Commission or any state securities commission passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense. Anderson & Strudwick, Incorporated Prospectus dated , 2010 Table of Contents Industry and Market Background China s Call Center BPO Market According to International Data Corp. ( IDC ), China s contact center outsourcing (CCO) services market enjoyed a 15.1% year-over-year growth, from US$605.2 million in 2008 to US$696.4 million in 2009, despite the effect of global economic downtown. Looking forward, IDC forecasts that China s CCO services market will increase, with a 2009-2014 compound annual growth rate (CAGR) of 21.3%. Also, intensifying competition will push vendors to pay more attention to business development and profits, according to IDC. This, in turn, could facilitate the rapid increase in demand for CCO services sales and marketing offerings. CTI Forum, a China call center industry monitoring firm, reported that in 2006, there were over 2.9 million call center seats in the U.S., and such call centers employed approximately 7.5 million people, or about 3% of the U.S. population. CTI Forum also reported that as of December 31, 2008, there were only approximately 396,000 call center seats in China. According to CTI Forum: By 2011, the outsourced China call center market is expected reach $1.75 billion, a compound annual growth rate of 20% over the last four years. By 2011, the number of outsourced call center seats in China will increase to 56,000, a compound annual growth rate of 12% over the last four years. China s economic growth has resulted in a growing consumer population, and we believe that Chinese consumers will continue to develop needs that can be more efficiently serviced and supported through BPO services. The call center BPO services of the Operating Businesses are non-core outsourcing processes, or BPO services that Taiying s customers may not view as critical to their operations and are outsourced to us. By providing these services for our customers, we aid them in streamlining their business operations. The Operating Businesses customers transfer the complete responsibility of their BPO functions to the Operating Businesses, and the Operating Businesses are responsible for maintaining service quality standards. Telecommunications Market According to MIIT, in 2009, the number of China s mobile phone subscribers increased by 17% to 747 million while the number of China s fixed-line phone subscribers decreased by 8% to 314 million. Additionally, in 2009, the number of broadband access subscribers in China increased by 24% to 103 million. According to the China Internet Network Information Center ( CINIC ), the number of Internet users in China increased 29% to 384 million in 2009. Table of Contents TABLE OF CONTENTS Prospectus Summary 1
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+PROSPECTUS SUMMARY This summary highlights information that we present more fully in the rest of this prospectus. This summary does not contain all of the information you should consider before buying ordinary shares in this offering. This summary contains forward-looking statements that involve risks and uncertainties, such as statements about our plans, objectives, expectations, assumptions or future events. In some cases, you can identify forward-looking statements by terminology such as anticipate , estimate , plan , project , continuing , ongoing , expect , we believe , we intend , may , should , will , could , and similar expressions denoting uncertainty or an action that may, will or is expected to occur in the future. These statements involve estimates, assumptions, known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from any future results, performances or achievements expressed or implied by the forward-looking statements. You should read the entire prospectus carefully, including the Risk Factors section and the financial statements and the notes to those statements. Our Company Through its contractually controlled subsidiaries, Fujian Province Baisha Fire Control Industrial Trading Co., Ltd. ( Baisha Fujian ) and Fujian Fulian Machinery Co., Ltd. ( Fulian Machinery ), China Yuan Hong Fire Control Group Holdings Ltd, a Cayman Islands company (when referring solely to our Cayman Islands listing company Yuan Hong ), operates a fire safety products company in the People s Republic of China (including, for the purposes of this prospectus only, the Macau, Taiwan and Hong Kong China or PRC ), providing one-stop fire safety solutions from design, production, sale and installation of fire protection products and systems to after-sales maintenance of common and patented fire extinguishing systems. We manufacture over forty different fire safety products which are primarily divided among four categories: (1) gaseous fire protection systems and products, (2) fire protection doors and windows, (3) fire hydrant systems and products and (4) traditional fire protection products and systems such as fire hydrants, fire hoses and fire-fighting lances. We market our products to commercial, industrial and residential users. We distribute our fire safety products in twenty-one (21) provinces, direct-controlled municipalities and autonomous regions of mainland China. Our customers include Chinese railway operators, financial institutions, telecom companies, residential and commercial building owners and electricity plants. We have provided fire safety products and services for more than 4,000 key projects across China. Our company as has been designated an authorized manufacturer of special locomotive fire facilities by CSR Qishuyan Locomotive Co., Ltd., an affiliate of China South Locomotive & Rolling Stock Corporation Limited, one of the two locomotive manufacturing companies in China, which allows us to sell our products to CSR Qishuyan Locomotive Co., Ltd for installation in its locomotives. In 2010, our Company was recognized as one of the Top Ten Chinese Fire Protection Brands by HC International. Our Yuan Hong trademark is recognized as a China Well-Known Trademark. Trademarks in China may be identified as well-known by the Trademark Office of the SAIC or the People s Court. Our Yuan Hong trademark was recognized as a China Well-Known Trademark by Changde Intermediate People s Court. Five elements are considered during the accreditation process: public awareness, duration of use, extent of publicity efforts, previous records of protection as a well-known trademark, and other relevant factors. China s membership in the Paris Convention for the Protection of Industrial Property since 1984 gives special legal protection to well-known trademarks, both domestically and internationally. There are several key additional protections for well-known trademarks, such as cross-class protection, protection against bad faith registration, protection against registration for domain name or company name by other entities. We are the first High - and New -Technology Enterprise in the fire safety products industry of Fujian Province, a recognition awarded jointly by Fujian Provincial Department of Science and Technology, Fujian Provincial Department of Finance, Fujian Provincial Government, State Administration of Taxation and Fujian Provincial Taxation Bureau, pursuant to the Regulations Regarding High - and New - Technology Enterprise Designation promulgated by the Department of Technology, the Department of Treasury and the State Administration of Taxation in April 2008. Through the High - and New -Technology Enterprise, award, the Chinese government aims to promote science and technology and economic development through industrial innovations. This award comes with strict qualification requirements, including the award recipient s ownership of intellectual property used in its core technology, a set percentage of the award recipient s employees having received a college education, a set percentage of the award recipient s annual net income must be earmarked for research and development, a set percentage of the award recipient s revenues must be derived from high-tech products and services, among others. High - and New - Technology Enterprises regularly receive preferential treatments in the areas of taxation, human resources and funding, among others, from the various levels of the government. See Risk Factor - Our business benefits from certain government incentives for a discussion of the effects and extent of such preferential tax treatment. Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED FEBRUARY 22, 2011 China Yuan Hong Fire Control Group Holdings Ltd Minimum Offering: 2,000,000 Ordinary Shares Maximum Offering: 2,500,000 Ordinary Shares This is the initial public offering of China Yuan Hong Fire Control Group Holdings Ltd, a Cayman Islands limited company. We are offering a minimum 2,000,000 and a maximum of 2,500,000 of our ordinary shares. None of our officers, directors or affiliates may purchase shares in this offering. We expect that the offering price will be between $5.50 and $6.50 per ordinary share. No public market currently exists for our ordinary shares. We have applied for approval for listing on the NASDAQ Capital Market under the symbol CNYH for the ordinary shares we are offering. We will not complete this offering unless our application to list on the NASDAQ Capital Market is approved. We believe that upon the completion of the offering contemplated by this prospectus, we will meet the standards for listing on the NASDAQ Capital Market. Investing in these ordinary shares involves significant risks. See Risk Factors beginning on page 9 of this prospectus. Per Ordinary Share Minimum Offering Maximum Offering Public offering price $ 6.00 $ 12,000,000 $ 15,000,000 Placement discount (1) $ 0.42 $ 840,000 $ 1,050,000 Proceeds to us, before expenses $ 5.58 $ 11,160,000 $ 13,950,000 (1) The placement discount will be 7% of the public offering price per ordinary share and does not reflect additional compensation to the placement agent in the form of a 0.75% non-accountable expense allowance See Placement Commissions and Discounts. We expect our total cash expenses for this offering to be approximately $600,000, exclusive of the above expenses. In addition, we will pay our placement agent a non-accountable expense allowance of 0.75% of the offering, or up to $90,000 (minimum offering) or $112,500 (maximum offering), exclusive of any shares registered under Rule 462(b). The placement agent must sell the minimum number of securities offered (2,000,000 ordinary shares) if any are sold. The placement agent is only required to use its best efforts to sell the maximum number of securities offered (2,500,000 ordinary shares). The offering will terminate upon the earlier of (i) a date mutually acceptable to us and our placement agent after which the minimum offering is sold or (ii) March 31, 2011. Until we sell at least 2,000,000 ordinary shares, all investor funds will be held in an escrow account at SunTrust Bank, Richmond, Virginia. If we do not sell at least 2,000,000 shares by March 31, 2011, all funds will be promptly returned to investors (within one business day) without interest or deduction. If we complete this offering, net proceeds will be delivered to our company on the closing date. We will not be able to use such proceeds in China, however, until we complete certain remittance procedures in China. If we complete this offering, then on the closing date, we will issue ordinary shares to investors in the offering. These securities have not been approved or disapproved by the Securities and Exchange Commission or any state securities commission nor has the Securities and Exchange Commission or any state securities commission passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense. Prospectus dated February , 2011 Table of Contents Baisha Fujian has also been designated as the site for Quanzhou City Automatic Fire Extinguishing System Engineering and Technology Research Center. The criteria for such designation includes the following: technological advantage in the field, strong sustainable growth, sound organizational structure and internal controls, superior facilities and team of talents, and recognition by the government for breakthrough technology with the capacity to transform such technology into industrial products. The designation as a Research Center indicates that our company has a strong presence in the fire protection industry in both scientific research and economic growth. Corporate Information Our principal executive office is located at Baisha Meilin Industrial Area, Nan an City, Fujian Province 362300, People s Republic of China. Our telephone number is +86 (595) 86278200 and our fax number is +86 (595) 86288675. The address of our company s website is www.baishafire.com. Information contained on the website is not a part of this prospectus. Except where the context otherwise requires and for the purpose of this prospectus only, the terms we, us, and our refer to Yuan Hong, and, in the context of describing our operations and consolidated financial information, also includes Yuanhong HK and Yuan Hong s contractually controlled subsidiaries, WFOE, Baisha Fujian and Fulian Machinery. Because we control Baisha Fujian by virtue of our ownership of WFOE and WFOE s contractual right to control the day-to-day operations and corporate activities of Baisha Fujian, we believe it would be misleading in most cases to discuss the business decisions of Baisha Fujian as though Baisha Fujian were at arm s-length from our company. Industry and Market Background The Chinese fire safety products industry is divided into three major segments: residential, commercial and industrial. According to the Market Research Report on Gas Aerosol Fire Extinguishing System published by HC International (the Market Research Report ), there are over 3,000 fire protection product manufacturing companies in China. The Market Research Report and the Research and Analysis Report on Domestic Fire Protection Industry in 2008 published by HC International (the 2008 Industry Report ) report that in 2008 the sales volume of fire safety products in China reached approximately 46 billion (approximately $6,875,420,372 based upon an exchange rate of 6.6905 to US$1.00) and the average annual sales growth rate, which over the past five years has been 17%, is expected to grow at a rate of 15% to 20% over the next few years. The fire safety products industry in China is relatively fragmented with many suppliers. According to the 2008 Industry Report, only 5% of the Chinese fire safety products companies achieved annual sales exceeding 50 million (approximately $7,473,283 based upon an exchange rate of 6.6905 to US$1.00) and 72% have annual sales below 10 million (approximately $1,494,657 based upon an exchange rate of 6.6905 to US$1.00). Until recently, the small-scale fire production companies played a dominant role in the industry. Our Geographic Market In addition to our sales center in our headquarters located in Nan an City, Fujian Province, we have established nine sales agencies and more than fifty distributors in twenty-one provinces, direct-controlled municipalities and autonomous regions of mainland China. Competitive Strengths We believe the following strengths differentiate us from our competitors in our market in China: We are dedicated to research and technology to improve and maintain our industry position. We are dedicated to providing top quality products and excellent customer service. We have developed a strong brand reputation. With a nationwide sales network, our company has built a solid client base. Table of Contents Our Strategies We are committed to be a leader in the Chinese fire safety industry. We intend to achieve this goal by implementing the following strategies: We plan to develop new products and expand our products portfolio. We plan to develop new regional markets. We plan to expand new industry markets. We plan to expand fire engineering services. We plan to target the international fire safety products market. We plan to engage in mergers and acquisitions to grow our business where appropriate. Our Challenges and Risks We believe our primary challenges are: We must continue to develop, introduce and market our fire safety protection products. We must actively recruit, train and retain skilled technical personnel. We face significant competition from existing competitors and new market entrants. We must protect our trade secrets and other valuable intellectual property. We are subject to fluctuations in the prices of raw materials. The costs associated with such growth are difficult to quantify, but could be significant. We may be unable to respond to the rapid technological change of our industry. If we are successful in obtaining rapid market growth of our products and services, we will be required to deliver large volumes of quality products and services to customers on a timely basis at a reasonable cost to those customers. Meeting any such increased demands will require us to (a) expand our manufacturing facilities, (b) increase our access to raw materials, (c) increase the size of our work force and (d) expand our quality control capabilities and increase the scale upon which we provide our products and services. Such demands would require more capital and working capital than we currently have available and we maybe unable to meet the needs of our customers. We rely principally on dividends paid by our PRC operating subsidiary, Baisha Fujian and our PRC affiliate, Yuanhong Fire Technology (HK) Limited (Yuanhong HK), to fund cash and financing requirements, and there are PRC laws restricting the ability of these entities from paying dividends or making other distributions to us. Our Corporate Structure Overview We are a holding company incorporated in the Cayman Islands on April 26, 2010 under the name China Yuan Hong Fire Control Group Holdings Ltd, a Cayman Islands company ( Yuan Hong ). We own all of the outstanding capital stock of Yuanhong HK, our wholly owned Hong Kong subsidiary. Yuanhong HK, in turn, owns all of the outstanding capital stock of Beijing Yuanhong Dingsheng Fire Control Technology Co., Ltd. ( WFOE ), a Chinese company wholly owned by Yuanhong HK. Yuanhong HK and WFOE have entered into control agreements with Baisha Fujian and all of the shareholders of Baisha Fujian, which agreements allow WFOE to control Baisha Fujian. Through our ownership of Yuanhong HK, Yuanhong HK s ownership of WFOE and WFOE s agreements with Baisha Fujian, we control Baisha Fujian. On December 10, 2009, Baisha Fujian acquired all of the outstanding capital stock of Fulian Machinery to utilize its manufacturing facility and land use rights. Fulian Machinery did not have any business operations prior to December 10, 2009. Corporate History Baisha Fujian Baisha Fujian was organized by Zhuge Zhuang, our President, Chief Executive Officer and Chairman of the Board, as a limited liability company on March 25, 2003 with a registered capital of 10,000,000 (approximately $1,494,657 based upon an exchange rate of 6.6905 to US$1.00). Since its founding, Baisha Fujian has developed and sold fire safety products in China. As Baisha Fujian has continued to grow, it has increased its registered capital to 50,000,000 (approximately $7,473,283, based upon an exchange rate of 6.6905 to US$1.00). Reorganization - Corporate History Yuan Hong, Yuanhong HK and WFOE In anticipation of a U.S. listing of securities, Yuan Hong, Yuanhong HK and WFOE were all founded by the controlling shareholders of Baisha Fujian and our company was reorganized as follows: Yuan Hong was incorporated in the Cayman Islands on April 26, 2010 as a limited liability company. Table of Contents Yuanhong HK, was incorporated in Hong Kong on August 27, 2008 as a limited liability company. On May 13, 2010, the shareholders of Yuanhong HK transferred their shares in Yuanhong HK to Yuan Hong and, as a result, Yuanhong HK became a wholly owned subsidiary of Yuan Hong. Other than the equity interest in Yuanhong HK, Yuan Hong does not own any assets or conduct any operations. WFOE was incorporated on June 24, 2010, as a foreign investment enterprise, wholly owned by Yuanhong HK. Effective July 1, 2010, Yuanhong HK, WFOE, Baisha Fujian and each of the shareholders of Baisha Fujian entered into a series of contractual agreements, namely the Exclusive Technical Consulting and Service Agreement, Exclusive Equity Purchase Agreements, the Equity Pledge Agreements and the Powers of Attorney, governing the relationship among WFOE, Baisha Fujian, and all shareholders of Baisha Fujian. See Prospectus Summary - Our Corporate Structure - Control Agreements and Our Corporate Structure - Contractual Arrangements with Baisha Fujian, Baisha Fujian s Shareholders, WFOE and Yuanhong HK. In consideration for entering into such contractual agreements, entities that are controlled by the shareholders of Baisha Fujian received shares in Yuan Hong such that each such entity s equity percentage in Yuan Hong became the same as its respective controlling shareholders equity percentage in Baisha Fujian. Fulian Machinery On December 10, 2009, Baisha Fujian acquired all of the outstanding capital stock of Fulian Machinery to utilize its manufacturing facility and land use rights. Fulian Machinery did not have any business operations prior to December 10, 2009. Control Agreements We conduct our business in China through our subsidiary, WFOE. WFOE, in turn, conducts it business through Baisha Fujian. WFOE and Baisha Fujian operate in connection with a series of Control Agreements, rather than through an equity ownership relationship. See Risk Factors- The PRC government may determine that the Control Agreements are not in compliance with applicable PRC laws, rules and regulations. Chinese laws and regulations currently do not prohibit or restrict foreign ownership in fire protection businesses. However, on July 1, 2010, to protect the Company s shareholders from possible future foreign ownership restrictions, (i) Baisha Fujian and WFOE entered into an Exclusive Technical Consulting and Service Agreement, (ii) WFOE and all of the shareholders of Baisha Fujian entered into Equity Interest Pledge Agreements, (iii) Yuanhong HK, Baisha Fujian and all of the shareholders of Baisha Fujian entered into an Exclusive Equity Interest Purchase Agreement and (iv) all of the shareholders of Baisha Fujian executed a Power of Attorney in favor of Yuanhong HK (the agreements set forth in the foregoing items (i) through (iv) are, collectively, the Control Agreements ). The Control Agreements were entered into as part of the reorganization that resulted in Yuanhong HK and WFOE becoming wholly owned subsidiaries of Yuan Hong. Such reorganization also caused the entities controlled by the shareholders of Baisha Fujian to own 100% of the shares of Yuan Hong, and each such entity s equity percentage in Yuan Hong became the same as its respective controlling shareholders equity percentage in Baisha Fujian. For a more detailed description of these contractual arrangements, see Our Corporate Structure Contractual Arrangements with Baisha Fujian, Baisha Fujian s Shareholders and WFOE. If Chinese laws and regulations are enacted that prohibit or restrict foreign ownership in fire protection businesses, Yuanhong HK (i) might not be permitted to exercise its exclusive equity purchase right under the Exclusive Equity Interest Purchase Agreement or (ii) might have to postpone the purchase of the shares in Baisha Fujian, which we believe will not materially effect our control over Baisha Fujian under the Control Agreements. If the Control Agreements were determined to violate any PRC laws or regulations enacted in the future that would restrict foreign ownership of fire protection businesses, the relevant PRC regulatory authorities would be likely to have broad discretion regarding actions that could be taken as a result of such non-compliance. Any of these actions could adversely affect our ability to manage, operate and gain the financial benefits of Baisha Fujian, which would have a material adverse impact on our business, financial condition and results of operations. See Risk Factors-Risks Related to Our Corporate Structure-The PRC government may determine that the Control Agreements are not in compliance with applicable PRC laws, rules and regulations. Through the Control Agreements, we can substantially direct Baisha Fujian s daily operations and financial affairs, appoint its senior executives and approve all matters requiring shareholder approval. As a result of the Control Agreements, which enable us to control Baisha Fujian and cause WFOE to absorb 100% of the expected losses and gains of Baisha Fujian, we are considered the primary beneficiary of Baisha Fujian. Accordingly, we Table of Contents consolidate Baisha Fujian s operating results, assets and liabilities in our financial statements. For a description of these contractual arrangements, see Our Corporate Structure - Contractual Arrangements with Baisha Fujian, Baisha Fujian s Shareholders, WFOE and Yuanhong HK. Our current corporate structure is as follows: PRE-OFFERING OWNERSHIP (1) Mr. Zhuge Zhuang owns such shares through Wealth Harmony Company (2) Mr. Daqi Zhuang owns such shares through Essential World Limited Company (3) Mr. Dali Zhuang owns such shares through Effort Progress Limited (4) Ms. Dasi Zhuang owns such shares through Ever Blink Company Limited POST-OFFERING OWNERSHIP (1) Mr. Zhuge Zhuang owns such shares through Wealth Harmony Company (2) Mr. Daqi Zhuang owns such shares through Essential World Limited Company (3) Mr. Dali Zhuang owns such shares through Effort Progress Limited (4) Ms. Dasi Zhuang owns such shares through Ever Blink Company Limited Table of Contents Placement We have engaged to conduct this offering on a best efforts, minimum/maximum basis. The offering is being made without a firm commitment by the placement agent, which has no obligation or commitment to purchase any of our ordinary shares, $0.0000066 par value (hereinafter shares or ordinary shares ). Our placement agent is required to use only its best efforts to sell the securities offered. The offering will terminate upon the earlier of: (i) a date mutually acceptable to us and our placement agent after which at least 2,000,000 ordinary shares are sold or (ii) March 31, 2011. Until we sell at least 2,000,000 ordinary shares, all investor funds will be held in an escrow account at SunTrust Bank, Richmond Virginia. If we do not sell at least 2,000,000 ordinary shares by March 31, 2011 all funds will be promptly returned to investors (within one business day) without interest or deduction. If we complete this offering, net proceeds will be delivered to our company on the closing date. We will not be able to use such proceeds in China, however, until we complete certain remittance procedures in China, which may take as long as six months in the ordinary course. None of our officers, directors or affiliates may purchase shares in this offering. If we complete this offering, then on the closing date, we will issue shares to investors. Unless otherwise indicated, all information in this prospectus assumes (i) a 151,733.34-for-1 split of our ordinary shares that occurred on , 2011, (ii) no person will exercise any outstanding options and (iii) the sale of 2,500,000 ordinary shares, the maximum shares offer dint his offering. The Offering Shares Offered: Minimum: 2,000,000 ordinary shares Maximum: 2,500,000 ordinary shares (unless otherwise noted, this prospectus assumes the sale of 2,500,000 ordinary shares) Shares Outstanding Before Offering: 15,173,334 ordinary shares Shares to be Outstanding after Offering: Minimum: 17,173,334 ordinary shares Maximum: 17,673,334 ordinary shares Assumed Offering Price per Share: $6.00 (the mid-point of the price range set forth on the cover page of this prospectus) Gross Proceeds: Minimum: $12,000,000 Maximum: $15,000,000 Proposed NASDAQ Capital Market Symbol: CNYH (CUSIP No. G21156 107) Transfer Agent: Computershare Trust Company, N.A. 250 Royall Street, Canton, Massachusetts 02021
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+PROSPECTUS SUMMARY The following summary highlights some of the information in this Prospectus. It may not contain all of the information that is important to you. To understand this offering fully, you should read the entire Prospectus carefully, including the risk factors and our financial statements and the notes accompanying the financial statements appearing elsewhere in this Prospectus. THE COMPANY Where You Can Find Us Our principal executive offices are located at 101 East 52nd Street, 10th Floor, New York, NY 10022. Our telephone number is (212) 319-1754. We have acquired the domain rights to www.edutoons4kids.com . Corporate Background We were incorporated in the state of Delaware on April 28, 2010, under the name EDUtoons, Inc. Our business purpose is to provide reinforcement in children s programming by producing one-minute, three-minute and five-minute educational cartoons, which are intended to serve as both an educational tool and counter-balance to the, at times, violent and age-inappropriate nature of cartoons and programming directed at children. We will seek to provide a useful educational format for school children and intend to market the cartoon segments to television programmers, as well as to educational institutions in order to enable teachers to expose their students to a new learning format while keeping it fun at the same time. As of the date hereof, we have only conducted initial research into the competitive conditions in the industry in which we operate. We are a development stage company that has not generated any revenue and has had limited operations to date. From April 28, 2010 (inception) to December 31, 2010, we have incurred accumulated net losses of $31,788. As of December 31, 2010, we had total assets of $25,886 which consisted of $4,241 in cash and $21,645 in deferred registration costs, and total liabilities of $5,174 and accumulated net losses of $31,788. At the present time, we do not incur any fixed monthly expenses other than the legal and accounting costs related to the filing of this Registration Statement. However, we do anticipate beginning to incur approximately $24,000 in expenses during the three months immediately following the closing of this offering in order to accomplish the initial stages of our business plan, such as costs related to the development and production of an initial set of cartoons and for costs related to the marketing of such initial set of cartoons. During the 12 months following the closing of the offering, and assuming we are able to sell all of the shares offered under this offering, we anticipate incurring costs of approximately $95,000 in order to fully implement our business plan, which amount includes the $24,000 to be incurred during the four months following the closing of the offering. At the present time, we do not anticipate earning significant revenues until after the 12 months following the closing of the offering, however, no assurance can be given that we will be able to earn any revenues during such time as anticipated. (Please see the Use of Proceeds section beginning on page 10 hereof.) REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 EDUTOONS, INC. (Exact Name of Registrant as Specified in our Charter) Delaware 4841 27-2701563 (State or other jurisdiction of incorporation or organization) (Primary Standard Industrial Classification Code Number) (I.R.S. Employer I.D No.) EDUtoons, Inc. 101 East 52nd Street, 10th Floor New York, NY 10022 Tel: (212) 319-1754 (Name, address, Including Zip Code and Telephone Number, Including Area Code, of Agent for Service) Copies to: Gersten Savage LLP Arthur S. Marcus, Esq. Cheryll J. Calaguio, Esq. 600 Lexington Avenue, 9th Floor New York, NY 10022-6018 Tel: (212) 752-9700 Fax: (212) 980-5192 Approximate date of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one): Large Accelerated Filer Accelerated Filer Non-accelerated Filer (Do not check if a smaller reporting company) Smaller reporting company CALCULATION OF REGISTRATION FEE Amount to be Registered Proposed Maximum Offering Price per Share(1) Proposed Maximum Aggregate Offering Amount of Registration Fee(2) Common stock of the registrant, par value $.001 per share 3,000,000 $ 0.05 $ 150,000 $ 10.70 Total 3,000,000 $ 0.05 $ 150,000 $ 10.70 (1) This price was arbitrarily determined by us. (2) Estimated solely for the purpose of calculating the registration fee under Rule 457(o) of the Securities Act as defined below. The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 (the Securities Act ) or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to Section 8(a), may determine. You should rely only on the information contained in this Prospectus and the information we have referred you to. We have not authorized any person to provide you with any information about this offering, EDUtoons, Inc., or the Shares offered hereby that is different from the information included in this prospectus. If anyone provides you with different information, you should not rely on it. The date of this prospectus is April ____, 2011 We anticipate that unless we obtain additional capital in the near future, we will be unable to execute on our business plan. Based on our financial history since inception, our independent auditor has expressed substantial doubt as to our ability to continue as a going concern. In addition, we have not identified or approached any market makers that may assist us in applying for the quotation of our common stock on a national stock exchange or association, or inter-dealer quotation system. We are unable to estimate when we expect to undertake this endeavor or whether we will be successful. In the absence of listing, no market will be available for investors in our common stock in which they can sell the Shares. We cannot guarantee that a meaningful trading market will develop or that we will be able to get the Shares listed for trading. THE OFFERING Securities Being Offered Up to 3,000,000 shares of common stock. Initial Offering Price The purchase price for the Shares is $0.05 per share. This price was determined arbitrarily by us. Terms of the Offering The Company s director and officers will sell the Shares beginning on such date as the registration statement filed with the Securities and Exchange Commission is declared effective. Termination of the Offering This offering will terminate when all of the 3,000,000 shares of common stock have been sold, or ninety (90) days after the registration statement is declared effective by the Securities and Exchange Commission. EDUtoons shall have the right to extend the offering, in its sole discretion, for an additional period of ninety (90) days.
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001498059_dugu_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001498059_dugu_prospectus_summary.txt
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this Prospectus and may not contain all of the information you should consider before investing in the Shares. You are urged to read this Prospectus in its entirety, including the information under Risk Factors , Management s Discussion and Analysis of Financial Condition and Results of Operations and the Financial Statements, before making an investment decision. In this prospectus, Dugu, the Company, we, us, and our, refer to Dugu Resources, Inc., unless the context otherwise requires. Unless otherwise indicated, the term fiscal year refers to our fiscal year ending June 30, 2010. Unless otherwise indicated, the term common stock refers to shares of the Company s common stock. All dollar amounts are reported in U.S. dollars (USD) unless specifically stated in Canadian dollars (Cdn). For all dollar amounts reported in Cdn, we provide the USD equivalents based on an exchange rate of .9538 as of July 21, 2010. Overview This Prospectus relates to the offering of shares by the Company on a self-underwritten basis. The Company proposes to raise $30,000 (the Offering Amount ) through the sale of 3,000,000 shares of the common stock of the Company (each a Share and collectively the Shares ) at the price of $0.01 per Share (the Offering ) as more fully described in the Plan of Distribution . No arrangements have been made to place funds into escrow or any similar account. Upon receipt, offering proceeds will be deposited into our operating account and used to conduct our business and operations. Investors should be aware that our independent auditors have issued an audit opinion which includes a statement expressing substantial doubt as to our ability to continue as a going concern. This means that our auditors believe there is substantial doubt that we can continue as an on-going business for the next 12 months. Our auditor's opinion is based on our suffering initial losses, having limited operations, and having limited working capital. Our only other sources for cash at this time are investments by others in our Company or loans or capital advances by our sole officer and director. We need to raise approximately $25,000 to begin the first phase of exploration. Our sole officer and director has made an unenforceable verbal commitment to loan or advance capital to us up to a maximum of $10,000. We would need to raise additional funds to proceed beyond phase one exploration. See Risk Factors beginning on page 7. Potential investors should be aware that our President, Mr. Dingsdale, an officer and director of the Company, presently owns 4,200,000 shares of common stock, which would represent 58.3% of the issued and outstanding common shares of the Company if all our offered shares are sold. All of these shares held by Mr. Dingsdale are restricted shares. All 4,200,000 shares of common stock were purchased at a price of $0.005 per share representing a total cost of $21,000. The Company Dugu Resources, Inc. was incorporated under the laws of the state of Nevada on February 2, 2010. The Company s principal offices are located at 117 Queen Street, Cobourg, Ontario, Canada K9A 1N1. Our telephone number there is (905) 377-0989. Our fax number is (905) 377-0989 and our email address is zdingsdale@sympatico.ca The Company is a mining exploration stage company engaged in the acquisition and exploration of mineral properties. The Company has staked a claim called Dugu 1 Claim covering 168.12 hectares (415 acres) located in the New Westminster, Similkameen Mining Division of British Columbia, Canada. This property consists of one claim held by Steve Smith (the Trustee ) under Declaration of Trust dated February 11, 2010 in favor of the Company and is located about 140 km east of Vancouver and 23 km east-northeast of Hope, south central British Columbia. The Dugu 1 claim consists of one mineral claim and the property covers the Blackjack Project. We refer to this claim as the Property or the Claim throughout this Prospectus. We staked the Claim for the cost of $90. We have not yet commenced any exploration activities on the Claim other than completing a technical report at a cost of $3,150. We have not generated revenue from mining operations. We received our initial funding of $21,000 through the private sale of common stock to our sole officer and director who purchased 4,200,000 shares of our common stock at $0.005 per share. Our financial statements from inception (February 2, 2010) through September 30, 2010 report a net loss of $20,184. Our independent auditor has issued an audit opinion which includes a statement expressing substantial doubt as to our ability to continue as a going concern. The Property may not contain any mineral reserves and funds that we spend on exploration may be lost. Even if we complete our current exploration program and are successful in identifying a mineral deposit, we will be required to raise additional and substantial funds to bring our Claim to production. Mr. Dingsdale, our sole officer and director, has not personally visited the Property but is relying upon his experience in the mining industry and his discussions with the geologist and the geologist s recommendations based upon his expertise and experience in mining operations in Western Canada. The Terms of the Offering Securities Being Offered The Company is offering for sale up to 3,000,000 shares of common stock. Offering Price The Offering Price is $0.01 per Share. The Offering Price was determined arbitrarily by the Company. Terms of the Offering The Shares will be sold through the efforts of our sole officer and director beginning on the date this registration statement is declared effective (the Effective Date ) by the SEC. Offering Period The Shares may be sold following the Effective Date of the Company s Registration Statement. The Offering will commence promptly after the date of this prospectus and close no later than 180 days from the date of this prospectus. We may, in our sole and absolute discretion, terminate the Offering at any time for any reason whatsoever. Minimum Number of Shares to be Sold in the Offering None
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+PROSPECTUS SUMMARY This summary highlights selected information contained elsewhere in this prospectus. This summary does not contain all the information that you should consider before investing in the common stock. You should carefully read the entire prospectus, including Risk Factors , Management s Discussion and Analysis of Financial Condition and Results of Operations and the Financial Statements, before making an investment decision. In this Prospectus, the terms Company, we, us and our refer to Hunt for Travel, Inc. Overview We were incorporated in the State of Nevada on December 15, 2009 as Hunt for Travel, Inc. We are a development stage company that plans to design and market enrichment and affinity travel excursions throughout the world for U.S. travelers who seek unique opportunities and experiences. Enrichment and affinity travel sometimes is referred to as destination travel includes trips to destinations that provide dancing (Argentine Tango, Samba, Paso Doble), food (hands-on and/or demonstrations), wine (tasting or making), sports (volleyball, softball, handball), exotic-out-of-the-way locales, family reunions and destination weddings. We plan to act as a travel consultant that advises clients, primarily in the Research Triangle area of North Carolina, by planning excursions, assisting with bookings and identifying group traveling packages that may be of interest to our clients. In addition, we plan to occasionally guide specialty enrichment or adventure tours, leading groups on destination excursions that include a focus on the types of activities listed previously such as food and cooking, wine tasting or physical activities such as biking. These travel experiences are to be designed to challenge client travelers physically, spiritually and intellectually. Our specific services include investigating/researching specific companies providing services/destinations that clients are interested in - or suggest alternatives. We will also investigate/research countries/areas where travel/service is desired. Our target market includes: Up-scale, well-educated, professionals, affluent travelers Up-scale, well-educated, young professionals Up-scale, well-educated, affluent retired (or semi-retired) travelers Religious organizations in local area We do not consider our self a blank check company. For the period from December 15, 2009 (inception) to the year ended June 30, 2010, we had $475 in revenue. Operating Expenses from inception to June 30, 2010 totaled $35,354 resulting in a net loss of ($34,895). We had $144,260 in total assets as of June 30, 2010. Additionally, our independent auditor s report expresses substantial doubt about our ability to continue as a going concern. For the six month period ended December, 2010, we had $350 in revenue. Operating Expenses for the six month period ended December 31, 2010 totaled $60,905 resulting in a net loss of ($60,555). We had $89,979 in total assets as of December 31, 2010. Additionally, our independent auditor s expresses substantial doubt about our ability to continue as a going concern. We will receive no proceeds from this offering. We have no current plans for financing. The company currently has $89,779 of cash on hand and has a burn rate of approximately $10,000 a month. At the current rate the company has sufficient cash to last for 8 months. The company estimates that it will require approximately $36,000 to complete the plan of operation. All of our revenues were generated from one customer. Where You Can Find Us Our principal executive office is located at 90122 Hoey Road Chapel Hill, North Carolina, 27517. Our telephone number is (919)-889-9461. The Offering Common stock offered by selling security holders 1,887,500 shares of common stock. This number represents 27.4% of our current outstanding common stock (1). Common stock outstanding before the offering 6,887,500 Common stock outstanding after the offering 6,887,500 common shares as of March 17 , 2011. Terms of the Offering The selling security holders will determine when and how they will sell the common stock offered in this prospectus. Termination of the Offering The offering will conclude upon the earliest of (i) such time as all of the common stock has been sold pursuant to the registration statement or (ii) such time as all of the common stock becomes eligible for resale without volume limitations pursuant to Rule 144 under the Securities Act, or any other rule of similar effect. Use of proceeds We are not selling any shares of the common stock covered by this prospectus. Risk Factors The Common Stock offered hereby involves a high degree of risk and should not be purchased by investors who cannot afford the loss of their entire investment. See Risk Factors beginning on page 4. (1) Based on 6,887,500 shares of common stock outstanding as of March 17 , 2011. Summary of Consolidated Financial Information The following summary financial data should be read in conjunction with Management s Discussion and Analysis, Plan of Operation and the Financial Statements and Notes thereto, included elsewhere in this prospectus. The statement of operations and balance sheet data from inception December 15, 2009 through June 30, 2010 are derived from our audited financial statements. The statement of operations and balance sheet data from July 1, 2010 through December 31, 2010 are derived from our unaudited financial statements. The data set forth below should be read in conjunction with Management s Discussion and Analysis of Financial Condition and Results of Operations, our financial statements and the related notes included in this prospectus. For the Period from Inception (December 15, 2009) through December 31, 2010 (unaudited) For the Period from Inception (December 15, 2009) Through June 30, 2010 STATEMENT OF OPERATIONS Revenues $ 825 $ 475 Professional Fees 86,577 31,755 General and Administrative Expenses 9,682 3,599 Other Expense (16 ) 16 Total Expenses 96,275 35,370 Net Loss $ (95,450 ) $ (34,895 ) As of December 30, 2010 (unaudited) As of June 30, 2010 BALANCE SHEET DATA Cash $ 89,779 $ 143,033 Total Assets 89,979 144,260 Total Liabilities 6,104 2,855 Stockholders Equity $ 83,875 $ 144,260 RISK FACTORS The shares of our common stock being offered for resale by the selling security holders are highly speculative in nature, involve a high degree of risk and should be purchased only by persons who can afford to lose the entire amount invested in the common stock. Before purchasing any of the shares of common stock, you should carefully consider the following factors relating to our business and prospects. If any of the following risks actually occurs, our business, financial condition or operating results could be materially adversely affected. In such case, you may lose all or part of your investment. You should carefully consider the risks described below and the other information in this process before investing in our common stock. Risks Related to Our Business OUR AUDITOR HAS EXPRESSED SUBSTANTIAL DOUBT AS TO OUR ABILITY TO CONTINUE AS A GOING CONCERN. Based on our financial history since inception, our auditor has expressed substantial doubt as to our ability to continue as a going concern. We are a development stage company that has generated minimal revenue. We have used cash in operations of ($83,746) from inception and has a net loss since inception of ($95,450). This raises substantial doubt about our ability to continue as a going concern. WE HAVE LIMITED OPERATING HISTORY AND FACE MANY OF THE RISKS AND DIFFICULTIES FREQUENTLY ENCOUNTERED BY DEVELOPMENT STAGE COMPANY. We are a development stage company, and to date, our development efforts have been focused primarily on the development and marketing of our business model. We have limited operating history for investors to evaluate the potential of our business development. We have not built our customer base and our brand name. In addition, we also face many of the risks and difficulties inherent in gaining market share as a new company: Develop an effective business plan; Meet customer standards; Attain customer loyalty; Develop and upgrade our service; Our future will depend on our ability to bring our service to the market place, which requires careful planning without incurring unnecessary cost and expense. IF WE ARE NOT ABLE TO LOCATE TRAVELERS WILLING TO PAY FOR TRAVEL SERVICES WE MAY HAVE TO CEASE OPERATIONS. The Company s principal business strategy is to design and market enrichment travel excursions, sometimes also referred to as adventure travel excursions. The travel industry in general is ruled by lowest price. The Company hopes to reach travelers who are willing and able to pay for expert travel design services and it may be difficult to find these travelers in numbers large enough to make the business model work for profitability. If we are unable to locate travelers willing to pay for travel services we may not be able to continue our business operations. UNCERTAINTY AND ADVERSE CHANGES IN THE GENERAL ECONOMIC CONDITIONS OF MARKETS IN WHICH WE PARTICIPATE MAY NEGATIVELY AFFECT OUR BUSINESS. Current and future conditions in the economy have an inherent degree of uncertainty. It is even more difficult to estimate growth or contraction in various parts, sectors and regions of the economy, including the markets in which we participate. As a result, it is difficult to estimate the level of growth or contraction for the economy as a whole. Adverse changes may occur as a result of soft global economic conditions, rising oil prices, wavering consumer confidence, unemployment, declines in stock markets, contraction of credit availability, or other factors affecting economic conditions in general. These changes may negatively affect our sales or increase our exposure to losses. OUR SOLE OFFICER HAS THE ABILITY TO DETERMINE HER SALARY AND PERQUISITES WHICH MAYCAUSE OF TO HAVE A LACK OF FUNDS AVAILABLE FOR NET INCOME. Because our sole officer has the discretion to determine her salary and perquisites we may have no net income. If our sole officer determines her salary that is at a level above our potential earnings the company may not have funds available. Our sole officer has sole discretion over the determination of her salary. CALCULATION OF REGISTRATION FEE Title of Each Class Of Securities to be Registered Amount to be Registered Proposed Maximum Aggregate Offering Price per share Proposed Maximum Aggregate Offering Price Amount of Registration fee Common Stock, $0.0001 par value per share 1,887,500 $ 0.15 $ 283,125 $ 20.19 (1) This Registration Statement covers the resale by our selling shareholders of up to 1,887,500 shares of common stock previously issued to such selling shareholders. (2) The offering price has been estimated solely for the purpose of computing the amount of the registration fee in accordance with Rule 457(o). Our common stock is not traded on any national exchange and in accordance with Rule 457; the offering price was determined by the price of the shares that were sold to our shareholders in a private placement memorandum. The price of $0.15 is a fixed price at which the selling security holders may sell their shares until our common stock is quoted on the OTCBB at which time the shares may be sold at prevailing market prices or privately negotiated prices. There can be no assurance that a market maker will agree to file the necessary documents with the Financial Industry Regulatory Authority, which operates the OTC Bulletin Board, nor can there be any assurance that such an application for quotation will be approved. THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SUCH SECTION 8(a), MAY DETERMINE. OUR PRINCIPAL STOCKHOLDER HAS SIGNIFICANT VOTING POWER AND MAY TAKE ACTIONS THAT MAY NOT BE IN THE BEST INTEREST OF ALL OTHER STOCKHOLDERS Our sole officer and director controls approximately 72.59% of our current outstanding shares of voting common stock. He may be able to exert significant control over our management and affairs requiring stockholder approval, including approval of significant corporate transactions. This concentration of ownership may expedite approvals of company decisions, or have the effect of delaying or preventing a change in control or be in the best interests of all our stockholders. AS A SMALLER TRAVEL COMPANY WITH REPORTING OBLIGATIONS WE MAY BE AT A COMPETITIVE DISADVANTAGE TO OTHER TRAVEL COMPANIES. Because the travel market is competitive, driven in part by costs and consists of mostly non-public reporting companies we may be at a competitive disadvantage because of our reporting obligations. We face additional expenses, which a private travel company does not such as PCAOB auditor fees, Edgar filing fees and legal fee fees related to our SEC reporting obligations. Other non-public travel company s do not incur these costs; we are at a competitive disadvantage to our competitors because of this. OUR SOLE OFFICER AND DIRECTOR CURRENTLY WORKS AS A PART-TIME TRAVEL AGENT WHICH MAY POTENTIALLY LEAD TO A CONFLICT OF INTEREST. Our sole officer and director currently serves as a part time travel agent at Traveling of Chapel Hill, this may lead to a conflict of interest which may lead to a loss of business opportunities. If our sole officer/director current part-time employment may divert potential clients and business opportunities for the Company to her current employer, this may have an adverse consequence on our potential revenues. Our sole officer and director may be unable to spend adequate time developing the Company s business because of her current part time employment. WE MAY INCUR SIGNIFICANT COSTS TO BE A PUBLIC COMPANY TO ENSURE COMPLIANCE WITH U.S. CORPORATE GOVERNANCE AND ACCOUNTING REQUIREMENTS AND WE MAY NOT BE ABLE TO ABSORB SUCH COSTS. We may incur significant costs associated with our public company reporting requirements, costs associated with newly applicable corporate governance requirements, including requirements under the Sarbanes-Oxley Act of 2002 and other rules implemented by the Securities and Exchange Commission. We expect all of these applicable rules and regulations to significantly increase our legal and financial compliance costs and to make some activities more time consuming and costly. We also expect that these applicable rules and regulations may make it more difficult and more expensive for us to obtain director and officer liability insurance and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a result, it may be more difficult for us to attract and retain qualified individuals to serve on our board of directors or as executive officers. We are currently evaluating and monitoring developments with respect to these newly applicable rules, and we cannot predict or estimate the amount of additional costs we may incur or the timing of such costs. In addition, we may not be able to absorb these costs of being a public company which will negatively affect our business operations. BECAUSE OUR SOLE OFFICER AND DIRECTOR OCCUPIES ALL CORPORATE POSITIONS IT MAY BE IMPOSSIBLE TO HAVE ADEQUATE INTERNAL CONTROLS. Our sole officer faces inherent limitations over the implementation of internal controls for financial reporting which may not prevent or detect misstatements. Our sole officer will be unable to segregate duties or properly control every aspect of the Company s operation. This may lead to a system of internal controls that is ineffective. THE LACK OF PUBLIC COMPANY EXPERIENCE OF OUR MANAGEMENT TEAM COULD ADVERSELY IMPACT OUR ABILITY TO COMPLY WITH THE REPORTING REQUIREMENTS OF U.S. SECURITIES LAWS. Our management team lacks public company experience, which could impair our ability to comply with legal and regulatory requirements such as those imposed by Sarbanes-Oxley Act of 2002. Our senior management has never had responsibility for managing a publicly traded company. Such responsibilities include complying with federal securities laws and making required disclosures on a timely basis. Our senior management may not be able to implement programs and policies in an effective and timely manner that adequately respond to such increased legal, regulatory compliance and reporting requirements, including the establishing and maintaining internal controls over financial reporting. Any such deficiencies, weaknesses or lack of compliance could have a materially adverse effect on our ability to comply with the reporting requirements of the Securities Exchange Act of 1934 which is necessary to maintain our public company status. If we were to fail to fulfill those obligations, our ability to continue as a U.S. public company would be in jeopardy in which event you could lose your entire investment in our company. Risk Related To Our Capital Stock WE MAY NEVER PAY ANY DIVIDENDS TO SHAREHOLDERS. We have never declared or paid any cash dividends or distributions on our capital stock. We currently intend to retain our future earnings, if any, to support operations and to finance expansion and therefore we do not anticipate paying any cash dividends on our common stock in the foreseeable future. The declaration, payment and amount of any future dividends will be made at the discretion of the board of directors, and will depend upon, among other things, the results of our operations, cash flows and financial condition, operating and capital requirements, and other factors as the board of directors considers relevant. There is no assurance that future dividends will be paid, and, if dividends are paid, there is no assurance with respect to the amount of any such dividend. The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the U.S. Securities and Exchange Commission ( SEC ) is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. PRELIMINARY PROSPECTUS Subject to completion, dated March__, 2011 Hunt for Travel, Inc. 1,887,500 SHARES OF COMMON STOCK The selling security holders named in this prospectus are offering all of the shares of common stock offered through this prospectus. We will not receive any proceeds from the sale of the common stock covered by this prospectus. The selling shareholders will receive $0.15 per share or an aggregate of $283,125 if all of the shares are sold. Our common stock is presently not traded on any market or securities exchange. The selling security holders have not engaged any underwriter in connection with the sale of their shares of common stock. Common stock being registered in this registration statement may be sold by selling security holders at a fixed price of $0.15 per share until our common stock is quoted on the OTC Bulletin Board ( OTCBB ) and thereafter at a prevailing market prices or privately negotiated prices or in transactions that are not in the public market. There can be no assurance that a market maker will agree to file the necessary documents with the Financial Industry Regulatory Authority ( FINRA ), which operates the OTCBB, nor can there be any assurance that such an application for quotation will be approved. We have agreed to bear the expenses relating to the registration of the shares of the selling security holders. Investing in our common stock involves a high degree of risk. See Risk Factors beginning on page 3 to read about factors you should consider before buying shares of our common stock. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. The Date of This Prospectus is: _______, 2011 OUR ARTICLES OF INCORPORATION PROVIDE FOR INDEMNIFICATION OF OFFICERS AND DIRECTORS AT OUR EXPENSE AND LIMIT THEIR LIABILITY WHICH MAY RESULT IN A MAJOR COST TO US AND HURT THE INTERESTS OF OUR SHAREHOLDERS BECAUSE CORPORATE RESOURCES MAY BE EXPENDED FOR THE BENEFIT OF OFFICERS AND/OR DIRECTORS. Our articles of incorporation and applicable Nevada law provide for the indemnification of our directors, officers, employees, and agents, under certain circumstances, against attorney s fees and other expenses incurred by them in any litigation to which they become a party arising from their association with or activities on our behalf. We will also bear the expenses of such litigation for any of our directors, officers, employees, or agents, upon such person s written promise to repay us if it is ultimately determined that any such person shall not have been entitled to indemnification. This indemnification policy could result in substantial expenditures by us which we will be unable to recoup. We have been advised that, in the opinion of the SEC, indemnification for liabilities arising under federal securities laws is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification for liabilities arising under federal securities laws, other than the payment by us of expenses incurred or paid by a director, officer or controlling person in the successful defense of any action, suit or proceeding, is asserted by a director, officer or controlling person in connection with the securities being registered, we will (unless in the opinion of our counsel, the matter has been settled by controlling precedent) submit to a court of appropriate jurisdiction, the question whether indemnification by us is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. The legal process relating to this matter if it were to occur is likely to be very costly and may result in us receiving negative publicity, either of which factors is likely to materially reduce the market and price for our shares, if such a market ever develops. THE OFFERING PRICE OF THE COMMON STOCK WAS DETERMINED BASED ON THE PRICE OF OUR PRIVATE OFFERING PLUS AN INCREASE OF $0.05, AND THEREFORE SHOULD NOT BE USED AS AN INDICATOR OF THE FUTURE MARKET PRICE OF THE SECURITIES. THEREFORE, THE OFFERING PRICE BEARS NO RELATIONSHIP TO OUR ACTUAL VALUE, AND MAY MAKE OUR SHARES DIFFICULT TO SELL. Since our shares are not listed or quoted on any exchange or quotation system, the offering price of $0.15 per share for the shares of common stock was determined based on the price of our private offering plus an increase of $0.05. The facts considered in determining the offering price were our financial condition and prospects, our limited operating history and the general condition of the securities market. The offering price bears no relationship to the book value, assets or earnings of our company or any other recognized criteria of value. The offering price should not be regarded as an indicator of the future market price of the securities. YOU WILL EXPERIENCE DILUTION OF YOUR OWNERSHIP INTEREST BECAUSE OF THE FUTURE ISSUANCE OF ADDITIONAL SHARES OF OUR COMMON STOCK AND OUR PREFERRED STOCK. In the future, we may issue our authorized but previously unissued equity securities, resulting in the dilution of the ownership interests of our present stockholders. We are currently authorized to issue an aggregate of 105,000,000 shares of capital stock consisting of 100,000,000 shares of common stock, par value $0.0001 per share, and 5,000,000 shares of preferred stock, par value $0.0001 per share. We may also issue additional shares of our common stock or other securities that are convertible into or exercisable for common stock in connection with hiring or retaining employees or consultants, future acquisitions, future sales of our securities for capital raising purposes, or for other business purposes. The future issuance of any such additional shares of our common stock or other securities may create downward pressure on the trading price of our common stock. There can be no assurance that we will not be required to issue additional shares, warrants or other convertible securities in the future in conjunction with hiring or retaining employees or consultants, future acquisitions, future sales of our securities for capital raising purposes or for other business purposes, including at a price (or exercise prices) below the price at which shares of our common stock are currently quoted on the OTCBB. OUR COMMON STOCK IS CONSIDERED A PENNY STOCK, WHICH MAY BE SUBJECT TO RESTRICTIONS ON MARKETABILITY, SO YOU MAY NOT BE ABLE TO SELL YOUR SHARES. If our common stock becomes tradable in the secondary market, we will be subject to the penny stock rules adopted by the Securities and Exchange Commission that require brokers to provide extensive disclosure to their customers prior to executing trades in penny stocks. These disclosure requirements may cause a reduction in the trading activity of our common stock, which in all likelihood would make it difficult for our shareholders to sell their securities. Penny stocks generally are equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on the NASDAQ system). Penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document that provides information about penny stocks and the risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, and monthly account statements showing the market value of each penny stock held in the customer s account. The broker-dealer must also make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser s written agreement to the transaction. These requirements may have the effect of reducing the level of trading activity, if any, in the secondary market for a security that becomes subject to the penny stock rules. The additional burdens imposed upon broker-dealers by such requirements may discourage broker-dealers from effecting transactions in our securities, which could severely limit the market price and liquidity of our securities. These requirements may restrict the ability of broker-dealers to sell our common stock and may affect your ability to resell our common stock. THERE IS NO ASSURANCE OF A PUBLIC MARKET OR THAT OUR COMMON STOCK WILL EVER TRADE ON A RECOGNIZED EXCHANGE. THEREFORE, YOU MAY BE UNABLE TO LIQUIDATE YOUR INVESTMENT IN OUR STOCK. There is no established public trading market for our common stock. Our shares have not been listed or quoted on any exchange or quotation system. There can be no assurance that a market maker will agree to file the necessary documents with FINRA, which operates the OTCBB, nor can there be any assurance that such an application for quotation will be approved or that a regular trading market will develop or that if developed, will be sustained. In the absence of a trading market, an investor may be unable to liquidate their investment. Item 4. Use of Proceeds We will not receive any proceeds from the sale of common stock by the selling security holders. All of the net proceeds from the sale of our common stock will go to the selling security holders as described below in the sections entitled Selling Security Holders and Plan of Distribution . We have agreed to bear the expenses relating to the registration of the common stock for the selling security holders. Item 5. Determination of Offering Price Since our common stock is not listed or quoted on any exchange or quotation system, the offering price of the shares of common stock was determined by the price of the common stock that was sold to our security holders pursuant to an exemption under Section 4(2) of the Securities Act of 1933 and Rule 506 of Regulation D promulgated under the Securities Act of 1933 plus an increase of $0.05. The offering price of the shares of our common stock does not necessarily bear any relationship to our book value, assets, past operating results, financial condition or any other established criteria of value. The facts considered in determining the offering price were our financial condition and prospects, our limited operating history and the general condition of the securities market. Although our common stock is not listed on a public exchange, we will be filing to obtain a listing on the OTCBB concurrently with the filing of this prospectus. In order to be quoted on the OTCBB, a market maker must file an application on our behalf in order to make a market for our common stock. There can be no assurance that a market maker will agree to file the necessary documents with FINRA, which operates the OTC Bulletin Board, nor can there be any assurance that such an application for quotation will be approved. In addition, there is no assurance that our common stock will trade at market prices in excess of the initial offering price as prices for the common stock in any public market which may develop will be determined in the marketplace and may be influenced by many factors, including the depth and liquidity. Item 6. Dilution The common stock to be sold by the selling shareholders are provided in the Selling Security Holders section is common stock that is currently issued. Accordingly, there will be no dilution to our existing shareholders. Item 7. Selling Security Holders The common shares being offered for resale by the selling security holders consist of the 1,887,500 shares of our common stock held by each of the selling stockholders as of March 17 , 2011. Such shareholders include the holders of the 1,887,500 shares sold in our private offering pursuant to Regulation D Rule 506 completed in September 2010 at an offering price of $0.10. The following table sets forth the name of the selling security holders, the number of shares of common stock beneficially owned by each of the selling stockholders as of March 17 , 2011 and the number of shares of common stock being offered by the selling stockholders. The shares being offered hereby are being registered to permit public secondary trading, and the selling stockholders may offer all or part of the shares for resale from time to time. However, the selling stockholders are under no obligation to sell all or any portion of such shares nor are the selling stockholders obligated to sell any shares immediately upon effectiveness of this prospectus. All information with respect to share ownership has been furnished by the selling stockholders. Name Shares Beneficially Owned Prior To Offering Shares to be Offered Amount Beneficially Owned After Offering Percent Beneficially Owned After Offering Christopher Baumgartner* 50,000 50,000 0 0% Stephanie Baumgartner* 50,000 50,000 0 0% Barden Culbreth 50,000 50,000 0 0% David Daniel 50,000 50,000 0 0% Lynn Daniel 50,000 50,000 0 0% Elizabeth Floyd 50,000 50,000 0 0% Phyllis Fuller 30,000 30,000 0 0% Rodney A. Garnas 50,000 50,000 0 0% Kenneth Gignac 15,000 15,000 0 0% Gerald Golt 40,000 40,000 0 0% Linda A. Hales 50,000 50,000 0 0% Stephen M. Hales 50,000 50,000 0 0% Monique Halpin-Poirier* 50,000 50,000 0 0% Pamela G. Hanlin 50,000 50,000 0 0% Patrick Harris 50,000 50,000 0 0% Celia Linderman* 50,000 50,000 0 0% John Linderman* 50,000 50,000 0 0% Samuel M. Longiotti 50,000 50,000 0 0% Karen Malinofski 50,000 50,000 0 0% Matthew Musselwhite 50,000 50,000 0 0% Damon Nahas 50,000 50,000 0 0% James M. O Connell 50,000 50,000 0 0% Daniel Poirier* 50,000 50,000 0 0% Nathan E. Queen 10,000 10,000 0 0% Samantha Regner 50,000 50,000 0 0% Jack Saum 250,000 250,000 0 0% John Saum 150,000 150,000 0 0% Craig E. Smith 50,000 50,000 0 0% Kelli H. Smith 50,000 50,000 0 0% Lori A. Wallace 50,000 50,000 0 0% Don Walston 50,000 50,000 0 0% Lawther Whitehead 20,000 20,000 0 0% Benjamin Nelson Yeager 50,000 50,000 0 0% Sharon Zimmerman 50,000 50,000 0 0% Kinjel Desai 2,500 2,500 0 0% Deborah Lovig 2,500 2,500 0 0% Rachel Searles 10,000 10,000 0 0% Roya Monajem 2,500 2,500 0 0% Amy Weiss 2,500 2,500 0 0% Gary W. Willard 2,500 2,500 0 0% * Christopher and Stephanie Baumgartner are married and have beneficial and dispositive control over the common shares owned by each other. * Daniel Poirier and Monique Halpin-Poirier are married and have beneficial and dispositive control over the common shares owned by each other. * John Linderman and Celia Linderman are married and have beneficial and dispositive control over the common shares owned by each other. There are no agreements between the company and any selling shareholder pursuant to which the shares subject to this registration statement were issued. To our knowledge, none of the selling shareholders or their beneficial owners: - has had a material relationship with us other than as a shareholder at any time within the past three years; or - has ever been one of our officers or directors or an officer or director of our predecessors or affiliates; or - are broker-dealers or affiliated with broker-dealers. Plan of Distribution The selling security holders may sell some or all of their shares at a fixed price of $0.15 per share until our shares are quoted on the OTCBB and thereafter at prevailing market prices or privately negotiated prices. Prior to being quoted on the OTC Bulletin Board, shareholders may sell their shares in private transactions to other individuals. Although our common stock is not listed on a public exchange, we will be filing to obtain a listing on the OTCBB concurrently with the filing of this prospectus. In order to be quoted on the OTC Bulletin Board, a market maker must file an application on our behalf in order to make a market for our common stock. There can be no assurance that a market maker will agree to file the necessary documents with FINRA, which operates the OTC Bulletin Board, nor can there be any assurance that such an application for quotation will be approved. However, sales by selling security holder must be made at the fixed price of $0.15 until a market develops for the stock. Once a market has developed for our common stock, the shares may be sold or distributed from time to time by the selling stockholders, who may be deemed to be underwriters, directly to one or more purchasers or through brokers or dealers who act solely as agents, at market prices prevailing at the time of sale, at prices related to such prevailing market prices, at negotiated prices or at fixed prices, which may be changed. The distribution of the shares may be effected in one or more of the following methods: ordinary brokers transactions, which may include long or short sales; transactions involving cross or block trades on any securities or market where our common stock is trading, market where our common stock is trading; through direct sales to purchasers or sales effected through agents; through transactions in options, swaps or other derivatives (whether exchange listed or otherwise); or any combination of the foregoing; In addition, the selling stockholders may enter into hedging transactions with broker-dealers who may engage in short sales, if short sales were permitted, of shares in the course of hedging the positions they assume with the selling stockholders. The selling stockholders may also enter into option or other transactions with broker-dealers that require the delivery by such broker-dealers of the shares, which shares may be resold thereafter pursuant to this prospectus. To our best knowledge, none of the selling security holders are broker-dealers or affiliates of broker dealers. We will advise the selling security holders that the anti-manipulation rules of Regulation M under the Exchange Act may apply to sales of shares in the market and to the activities of the selling security holders and their affiliates. In addition, we will make copies of this prospectus (as it may be supplemented or amended from time to time) available to the selling security holders for the purpose of satisfying the prospectus delivery requirements of the Securities Act. The selling security holders may indemnify any broker-dealer that participates in transactions involving the sale of the shares against certain liabilities, including liabilities arising under the Securities Act. Brokers, dealers, or agents participating in the distribution of the shares may receive compensation in the form of discounts, concessions or commissions from the selling stockholders and/or the purchasers of shares for whom such broker-dealers may act as agent or to whom they may sell as principal, or both (which compensation as to a particular broker-dealer may be in excess of customary commissions). Neither the selling stockholders nor we can presently estimate the amount of such compensation. We know of no existing arrangements between the selling stockholders and any other stockholder, broker, dealer or agent relating to the sale or distribution of the shares. We will not receive any proceeds from the sale of the shares of the selling security holders pursuant to this prospectus. We have agreed to bear the expenses of the registration of the shares, including legal and accounting fees, and such expenses are estimated to be approximately $40,000. Notwithstanding anything set forth herein, no FINRA member will charge commissions that exceed 8% of the total proceeds of the offering. Description of Securities to be Registered General We are authorized to issue an aggregate number of 105,000,000 shares of capital stock, of which 100,000,000 shares are common stock, $0.0001 par value per share, and there are 5,000,000 preferred shares, $0.0001 par value per share authorized. Common Stock We are authorized to issue 100,000,000 shares of common stock, $0.0001 par value per share. Currently we have 6,887,500 shares of common stock issued and outstanding. Each share of common stock shall have one (1) vote per share for all purpose. Our common stock does not provide a preemptive, subscription or conversion rights and there are no redemption or sinking fund provisions or rights. Our common stock holders are not entitled to cumulative voting for election of Board of Directors. Preferred Stock We are authorized to issue 5,000,000 shares of preferred stock, $0.0001 par value per share. Currently we have no shares of preferred stock issued and outstanding. Dividends We have not paid any cash dividends to our shareholders. The declaration of any future cash dividends is at the discretion of our board of directors and depends upon our earnings, if any, our capital requirements and financial position, our general economic conditions, and other pertinent conditions. It is our present intention not to pay any cash dividends in the foreseeable future, but rather to reinvest earnings, if any, in our business operations. Warrants There are no outstanding warrants to purchase our securities. Options There are no outstanding options to purchase our securities. Transfer Agent and Registrar Currently we do not have a stock transfer agent. We intend to engage a transfer agent in the near future. Interests of Named Experts and Counsel No expert or counsel named in this prospectus as having prepared or certified any part of this prospectus or having given an opinion upon the validity of the securities being registered or upon other legal matters in connection with the registration or offering of the common stock was employed on a contingency basis, or had, or is to receive, in connection with the offering, a substantial interest, direct or indirect, in the registrant or any of its parents or subsidiaries. Nor was any such person connected with the registrant or any of its parents or subsidiaries as a promoter, managing or principal underwriter, voting trustee, director, officer, or employee. Anslow & Jaclin, LLP located at 195 Route 9 South, Suite 204, Manalapan, NJ 07726 will pass on the validity of the common stock being offered pursuant to this registration statement. The financial statements included in this prospectus and the registration statement have been audited by Webb & Company, P.A. to the extent and for the periods set forth in their report appearing elsewhere herein and in the registration statement, and are included in reliance upon such report given upon the authority of said firm as experts in auditing and accounting. Information about the Registrant DESCRIPTION OF BUSINESS Hunt for Travel, Inc. was incorporated on December 15, 2009 to design and market travel excursions featuring entertainment, adventure, intellectual stimulation and access to experts on topics related to the destinations they visit. This segment of the travel industry is referred to as enrichment or adventure travel. The Company will not voluntarily send an annual report to shareholders. The Company will file reports with the Securities and Exchange Commission and the public may read a copy of any materials we file with the Commission. You may obtain copies of these reports directly from us or from the SEC at the SEC s Public Reference Room at 100 F. Street, N.E. Washington, D.C. 20549, and you may obtain information about obtaining access to the Reference Room by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains information for electronic filers at its website http://www.sec.gov. Our business strategy is to generate revenue through typical travel industry commissions and mark-ups as well as consulting fees for customized trip and excursion planning. In addition, we intend to generate revenue through subscription fees to our monthly email newsletters, which can offer recommendations to travelers who wish to design and book their own enrichment trips. We plan to market our services and newsletters to high-income individuals and affinity groups, such as country club members, private schools, alumni groups and wealth management organizations at banks and investment firms. The company is seeking lists to be used for contacting this audience. It is anticipated to cost minimal money, less than $5,000 for these lists. To reach a critical mass of high-income travelers, we plan to utilize social media that relies on referrals such as Twitter, Facebook and Linked In. In addition, we may choose to place banner ads on web sites that reach these groups or send emails to individuals who have opted-in to receive emails from these affinity groups. The company is currently seeking and advisor to assist with the social media marketing. The estimated cost for the media consultant is $1000 based on 4 hours at $250 per hour the company hopes to have this marketing strategy operational in the first quarter of 2011. We plan to launch a web site www.hunt4travel.com to promote our enrichment offerings and we may develop a free subscription email newsletter that can be marketed through the web site and various social media vehicles. The newsletter can offer travel tips, consultation on enrichment opportunities and discounted pricing to subscribers. Subscribers may be charged a fee for access to information beyond the regular newsletter: a Second Page of the newsletter that offers special offerings, in-depth guides to certain destinations or tips for optimizing or extending trips. ================================== Amendment No. 7 to FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ================================== Hunt for Travel, Inc. (Exact Name of Registrant in its Charter) Nevada 7200 27-1497347 (State or other Jurisdiction of Incorporation) (Primary Standard Industrial Classification Code) (IRS Employer Identification No.) Hunt for Travel, Inc. 90122 Hoey Road Chapel Hill, North Carolina 27517 Tel.: (919)-889-9461 (Address and Telephone Number of Registrant s Principal Executive Offices and Principal Place of Business) CSC Services of Nevada 502 East John Street Carson City, Nevada 89706 (Name, Address and Telephone Number of Agent for Service) Copies of communications to: Gregg E. Jaclin, Esq. Anslow & Jaclin, LLP 195 Route 9 South, Suite204 Manalapan, NJ 07726 Tel. No.: (732) 409-1212 Fax No.: (732) 577-1188 If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box: x If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b 2 of the Exchange Act. Large accelerated filer o Accelerated filer o Non-accelerated filer o Smaller reporting company Business Development The Company seeks to develop mutually beneficial business relationships with tour operators and other enrichment travel consultants and begin offering programs for sale to U.S. travelers. The Company plans to launch a web site to begin marketing its services online. The company anticipates the cost of the website to be less than $10,000 and hopes to have it operational within 60 days of the effectiveness of this registration statement. However this date will in great part be determined by when the company has secured the services of the social media consultant. The company plans to have these parts of the marketing effort completed in the first quarter of 2011. The company estimates that it will cost approximately $2,500 to create the online newsletter and hopes to have that operational within 60 days of the effectiveness of this registration statement. However this will also be tied closely to the rest of the social media marketing strategy and thus looking for a roll out in the first quarter of 2011. The company also expects to spend some money cultivating relationships which means meeting with and talking with as many tour operators as is possible to see who has the offerings appropriate for the companies clientele (we currently have 4 clients) and the operators who can be trusted to deliver what they promise; and seeking marketing venues such as wedding shows but expects to spend no more than $10,000 for this work. The company plans to cultivate customers through a variety of methods. The company will attend wedding shows, cruise shows both locally and regionally. This activity should cost about $2,000. Additionally the company will seek out travel blogs to dialogue with which should cost nothing and will seek paid and free advertising in the Chapel Hill Magazine, 15-501 Magazine and Our State Magazine. The company anticipates spending no more than $5,000 for the advertising. The company feels like these marketing and advertising efforts can be accomplished for minimal investment possibly $7,000. The company is planning to initiate most of the marketing efforts within 60 days of the effectiveness of this registration statement. Our initial work thus far includes establishing relationships and validity for the company with the key industry organizations which was completed over the last 10 months. They include Gaining membership in valid travel-related organizations o CLIA (Cruise Lines International Association, Inc.) membership ($320/yr) Continue to gain travel knowledge and be up to date on information o StarService (agent-only hotel and destination service) ($250/yr) o TravelWeekly (provides travel professionals with a necessary global perspective through in-depth coverage of every business sector, including airline, car rental, cruise, destination, hotel and tour operator as well as technology, economic and governmental issues.) o Recommend Magazine (trade magazine that focuses on worldwide destinations and the travel products within them providing themed issues and hands-on reviews of hotels, destinations and tours, etc.) o As owner operator we spent many hours linking to websites catering to travel information and special rates/fares. Most of this is at no cost other than the time of the president. We provide specific services such as investigating/researching specific companies providing services/destinations clients are interested in - or suggest alternatives. We likewise investigate/research countries/areas where travel/service is desired. We provide advice regarding safety, insurance, medical needs, passport/visa requirements, alternative sites/companies, better pricing, and different routing to save money. We will make actual travel arrangements as well as provide quotes for travel insurance and apply for visas for clients who wish to purchase these services. Our planned services will be world-wide with commissions approximating 8-10% of total package price. As of April 1, 2011 we will be charging 10%. The company will charge minimal commissions in the early stages while the company is finalizing its full offerings through travel partners and while the marketing effort is getting up and going. We currently charge a commission of approximately fifty dollars for each airline ticket issued we currently receive no commissions from travel operators. The size of commissions will also be determined in large part by the tour operators who will charge varying fees depending on the destination, size group, complexity etc. The operators fees will determine what the company can charge in addition. As of April 1, 2011 we will begin to charge a 10% commission on all bookings (other than airline tickets) that do not pay us a commission directly. We anticipate receiving $2,500 from companies that will be paying us directly; this anticipates selling two cruises and one tour in the next six months. There is no guarantee that we will be able to sell two cruises and one tour in the next six months. Costs of designing and guiding trips will depend on the destination, air/land arrangements, local guides/services. For example: to estimate the costs of a hands-on cooking trip to Italy vs. a hands-on helping trip to a Ghana village for health assistance. We are currently drafting a monthly email newsletter the cost of which is in design and implementation. We expect the cost of production and distribution to be minimal. Our website www.hunt4travel.com is currently under construction and as discussed above will be operational within 60 days of the effectiveness of this registration statement. The company is still exploring the cost and value added benefit of on line banner advertisements but as discussed above this will be part of the social media effort that the company is seeking an advisor to assist with. This effort will be underway within 60 days of the effectiveness of this registration statement. Target Market Our target market at present is: Up-scale, well-educated, professionals, well-heeled travelers Up-scale, well-educated, young professionals Up-scale, well-educated, well-heeled retired (or semi-retired) travelers Religious organizations in local area The greatest difficulty the company expects to have trying to market to high income individuals via social media and banner advertisements is the amount of time these demographic groups spend on the internet and the intense competition for their attention. Nonetheless the company thinks there is an opportunity to reach this clientele. Additionally, the company has retained the consulting services of Europa Capital to assist in the administrative logistics of taking the Company through the Registration process with the SEC. Europa also provides support to the company in working with legal and audit issues that may arise as the company moves through the Registration and Finra process. Marketing and Sales Our initial marketing efforts will be geared to drive prospective clients to our web site. We plan to use social media vehicles such as Twitter and Facebook to generate awareness of our web site. We expect to engage prospective clients through promoting our website and responding to requests for information on prospective excursions, special travel consultations and general information inquiries. In addition, we plan to begin making personal contact with a number of affinity groups located in the Research Triangle Area of North Carolina to create a broader awareness of our travel services and offerings. Eventually, we expect to use broader based email marketing to generate a much larger number of sales leads that will be followed up with a personal exchange, via email or telephone. Our marketing efforts will be targeted to prospective clients in the Research Triangle Area of North Carolina. We plan to become personally acquainted with tour operators who offer a wide variety of adventure or special interest packages, including such providers as Backroads, a biking and multi-sport specialty excursion provider based in Berkeley, CA, and Travel Dynamics, an enrichment cruise operator based in New York. It is our belief that promoting these tours and excursions, with a high-degree of confidence, will help Hunt For Travel more quickly build confidence and achieve success with early clients. Competition We face competition from many individuals and companies that also develop and market enrichment travel excursions. We believe that most large travel agencies place some focus on the adventure and enrichment travel segment. In addition, we believe that the travel industry is generally driven by lowest cost. However, we believe that successful travel consultants protect and increase their revenue opportunity by providing increased value to travelers. We believe that travel consultants who demonstrate that they can consistently provide extra value for their clients are more likely to benefit from repeat and referral business to maintain and increase their business revenues. In the US, there are four types of agencies: Mega, Intermediate-Small, Independent and Airline based American Express & the American Automobile Association (AAA) are examples of mega. Intermediate-Small locally or regionally owned agencies Independent: Usually cater to a special or niche market Airline & other types of travel consolidators are high volume sales companies that specialize in selling to very specific markets (i.e., air-consolidators) Additionally there are travel and comparison websites. In North Carolina there are 1,051 Travel Agencies that reflect all three kinds. There are 118 agencies within a 100 mile radius of Chapel Hill and specifically 98 in Raleigh and 10 in Chapel Hill. Our competitive position begins with our sole officer and directors 22+ years of travel consultant experience; managing an agency; mega-sized insurance business travel planner and leisure travel professional. We believe our sole officer and director having spent many years doing business in the greater Chapel Hill area provides us with a strong competitive advantage as an independent travel company. Employees As of March 17 , 2011, we have one (1) full time employee who works approximately 30 hours per week on Company matters. We plan to employ more qualified employees in the near future. DESCRIPTION OF PROPERTY Our principal executive office is located at 90122 Hoey Road Chapel Hill, North Carolina, 27517. Our telephone number is (919)-889-9461. Office space is provided by Carolyn Hunter at no cost. LEGAL PROCEEDINGS From time to time, we may become involved in various lawsuits and legal proceedings, which arise, in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. We are currently not aware of any such legal proceedings or claims that we believe will have a material adverse effect on our business, financial condition or operating results. Pursuant to Item 401 (f) of Regulation S-K there are no events that occurred during the past ten (10) years that are material to an evaluation of the ability or integrity of any director, person nominated to become a director or executive officer of the registrant: No petition under the Federal bankruptcy laws or any state insolvency law was filed by or against, or a receiver, fiscal agent or similar officer was appointed by a court for the business or property of such person, or any partnership in which he was a general partner at or within two years before the time of such filing, or any corporation or business association of which he was an executive officer at or within two years before the time of such filing; Such person has not been convicted in a criminal proceeding and is not named subject of a pending criminal proceeding Such person was not the subject of any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from, or otherwise limiting, the following activities: o Acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the Commodity Futures Trading Commission, or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity; o Engaging in any type of business practice; or o Engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of Federal or State securities laws or Federal commodities laws; Such person was not the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any Federal or State authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any activity described in Regulation S-K, Item 401 paragraph (f)(3)(i) entitled Involvement in Certain Legal Proceedings , or to be associated with persons engaged in any such activity; Such person was not found by a court of competent jurisdiction in a civil action or by the Commission to have violated any Federal or State securities law, and the judgment in such civil action or finding by the Commission has not been subsequently reversed, suspended, or vacated; Such person was not found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any Federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated; Such person was not the subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of: o Any Federal or State securities or commodities law or regulation; or o Any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or o Any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or Such person was not the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS There is presently no public market for our shares of common stock. We anticipate applying for quoting of our common stock on the OTCBB upon the effectiveness of the registration statement of which this prospectus forms apart. However, we can provide no assurance that our shares of common stock will be quoted on the OTCBB or, if quoted, that a public market will materialize. If our common stock becomes tradable in the secondary market, we will be subject to the penny stock rules adopted by the Securities and Exchange Commission that require brokers to provide extensive disclosure to their customers prior to executing trades in penny stocks. These disclosure requirements may cause a reduction in the trading activity of our common stock, which in all likelihood would make it difficult for our shareholders to sell their securities. Penny stocks generally are equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on the NASDAQ system). Penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document that provides information about penny stocks and the risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, and monthly account statements showing the market value of each penny stock held in the customer s account. The broker-dealer must also make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser s written agreement to the transaction. These requirements may have the effect of reducing the level of trading activity, if any, in the secondary market for a security that becomes subject to the penny stock rules. The additional burdens imposed upon broker-dealers by such requirements may discourage broker-dealers from effecting transactions in our securities, which could severely limit the market price and liquidity of our securities. These requirements may restrict the ability of broker-dealers to sell our common stock and may affect your ability to resell our common stock. Holders of Capital Stock As of March 17 , 2011 we have 41 holders of our common stock. Rule 144 Shares As of the date of this registration statement, we do not have any shares of our common stock that are currently available for sale to the public in accordance with the volume and trading limitations (applicable only to affiliates) of Rule 144. In general, under Rule 144 as currently in effect, a person who has beneficially owned shares of a company s Common Stock for at least one year is entitled to sell within any three month period a number of shares that does not exceed 1% of the number of shares of the company s Common Stock then outstanding which, in our case, would equal approximately 68,650 shares of our Common Stock as of the date of this prospectus. Sales under Rule 144 are also subject to manner of sale provisions and notice requirements and to the availability of current public information about the company. Under Rule 144(k), a person who is not one of the company s affiliates at any time during the three months preceding a sale, and who has beneficially owned the shares proposed to be sold for at least one year, is entitled to sell shares without complying with the manner of sale, public information, volume limitation or notice provisions of Rule 144. Stock Option Grants We do not have any stock option plans. Registration Rights We have not granted registration rights to the selling shareholders or to any other persons. MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULT OF OPERATIONS The following plan of operation provides information which management believes is relevant to an assessment and understanding of our results of operations and financial condition. The discussion should be read along with our financial statements and notes thereto. This section includes a number of forward-looking statements that reflect our current views with respect to future events and financial performance. Forward-looking statements are often identified by words like believe, expect, estimate, anticipate, intend, project and similar expressions, or words which, by their nature, refer to future events. You should not place undue certainty on these forward-looking statements. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our predictions. Limited Operating History We have generated no independent financial history and have not previously demonstrated that we will be able to expand our business. Our business is subject to risks inherent in growing an enterprise, including limited capital resources and possible rejection of our business model and/or sales methods. For the Six Months Ended December 31, 2010 Results of Operations For the period ended December 31, 2010, we had $350 in revenue. Operating Expenses for the period ended December 31, 2010 totaled $60,905 resulting in a net loss of ($60,555). Expenses for the period ended December 31, 2010 consisted of $54,822 in professional fees and $6,083 for General and administrative. Capital Resources and Liquidity As of December 31, 2010 we had $89,779 cash on hand. Carolyn Hunter will be the only employee and sole officer and director initially as the company seeks to generate revenue and will not be taking a salary from the company for the foreseeable future. On February 8, 2010, the Company entered into a consulting agreement to receive administrative and other miscellaneous services. The Company is required to pay $5,000 a month. The agreement is to remain in effect unless either party desired to cancel the agreement. Revenue targets The company anticipates generating revenues of $1,000 to $5,000 in the early stages of the company providing travel consulting to friends and family and charging minimal commissions while the marketing of core services is finalized. Core services The company provides specific services such as investigating/researching specific companies providing services/destinations clients are interested in - or suggest alternatives. The company will investigate/research countries/areas where travel/service is desired. Based upon the above, we believe that we have enough cash to support our daily operations while we are attempting to commence operations and produce revenues. However, if we are unable to satisfy our cash requirements we may be unable to proceed with our plan of operations. We do not anticipate the purchase or sale of any significant equipment. We also do not expect any significant additions to the number of employees. The foregoing represents our best estimate of our cash needs based on current planning and business conditions. In the event we are not successful in reaching our initial revenue targets, additional funds may be required, and we may not be able to proceed with our business plan for the development and marketing of our core services. Should this occur, we will suspend or cease operations. We anticipate that depending on market conditions and our plan of operations, we may incur operating losses in the foreseeable future. Therefore, our auditors have raised substantial doubt about our ability to continue as a going concern. Our liquidity may be negatively impacted by the significant costs associated with our public company reporting requirements, costs associated with newly applicable corporate governance requirements, including requirements under the Sarbanes-Oxley Act of 2002 and other rules implemented by the Securities and Exchange Commission. We expect all of these applicable rules and regulations to significantly increase our legal and financial compliance costs and to make some activities more time consuming and costly. For the Year Ended June 30, 2010 Results of Operations For the period from December 15, 2009 (inception) to the year ended June 30, 2010, we had $475 in revenue. Operating Expenses from inception to June 30, 2010 totaled $35,370 resulting in a net loss of ($34,895). Expenses from inception consisted of $31,755 in professional fees and $3,599 for General and administrative expenses and $16 in other expenses. Capital Resources and Liquidity As of June 30, 2010 we had $143,033 cash on hand. Carolyn Hunter will be the only employee and sole officer and director initially as the company seeks to generate revenue and will not be taking a salary from the company for the foreseeable future. On February 8, 2010, the Company entered into a consulting agreement to receive administrative and other miscellaneous services. The Company is required to pay $5,000 a month. The agreement is to remain in effect unless either party desired to cancel the agreement. Revenue targets The company anticipates generating revenues of $1,000 to $5,000 in the early stages of the company providing travel consulting to friends and family and charging minimal commissions while the marketing of core services is finalized. Core services The company provides specific services such as investigating/researching specific companies providing services/destinations clients are interested in - or suggest alternatives. The company will investigate/research countries/areas where travel/service is desired. Based upon the above, we believe that we have enough cash to support our daily operations while we are attempting to commence operations and produce revenues. However, if we are unable to satisfy our cash requirements we may be unable to proceed with our plan of operations. We do not anticipate the purchase or sale of any significant equipment. We also do not expect any significant additions to the number of employees. The foregoing represents our best estimate of our cash needs based on current planning and business conditions. In the event we are not successful in reaching our initial revenue targets, additional funds may be required, and we may not be able to proceed with our business plan for the development and marketing of our core services. Should this occur, we will suspend or cease operations. We anticipate that depending on market conditions and our plan of operations, we may incur operating losses in the foreseeable future. Therefore, our auditors have raised substantial doubt about our ability to continue as a going concern. Our liquidity may be negatively impacted by the significant costs associated with our public company reporting requirements, costs associated with newly applicable corporate governance requirements, including requirements under the Sarbanes-Oxley Act of 2002 and other rules implemented by the Securities and Exchange Commission. We expect all of these applicable rules and regulations to significantly increase our legal and financial compliance costs and to make some activities more time consuming and costly. Off-Balance Sheet Arrangements We have no off-balance sheet arrangements. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE There have been no changes in or disagreements with accountants on accounting or financial disclosure matters. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS The following table sets forth the name and age of our sole officer and director as of March 17 , 2011. Our Executive officer is elected annually by our Board of Director. Our executive officer holds office until she resigns, is removed by the Board, or her successor is elected and qualified. Name Age Position Carolyn Hunter 67 President, Chief Financial Officer, Secretary, Treasurer and Director Set forth below is a brief description of the background and business experience of our executive officers and directors for the past five years. Carolyn Hunter, President, Chief Financial Officer, Secretary, Treasurer and Director, Age 67, Carolyn Hunter has over twenty two (22) years experience working in the travel services industry. From November 1988 to September 1991, Carolyn Hunter began her career as a travel consultant with Sanditz Travel, formerly known as All Points Travel located in Simsbury, Connecticut. Her responsibilities included providing customers with professional and expert advice regarding the sale of travel related products and services to customers, on behalf of suppliers, such as airlines, car rentals, cruise lines, hotels, railways, sightseeing tours and package holidays. From January 1998 through December 1998, Ms. Hunter worked for WorldTek Travel as a corporate travel manager. Her responsibilities in this capacity included managing and supervising the agency s sales department. From March 2000 to present, Ms. Hunter has worked as a travel agent on a part-time basis for Traveling of Chapel Hill, North Carolina, formerly known as Circle Travel where she is responsible for consulting potential customers with their travel plans. In December of 1994, Ms. Hunter obtained a Certified Travel Consultant degree. Additionally, from 1961 through 1965, Ms. Hunter obtained a Bachelor of Arts degree from Baker University located in Baldwin, Kansas. Term of Office Our directors are appointed for a one-year term to hold office until the next annual general meeting of our shareholders or until removed from office in accordance with our bylaws. Our officers are appointed by our board of directors and hold office until removed by the board EXECUTIVE COMPENSATION The following summary compensation table sets forth all compensation awarded to, earned by, or paid to the named executive officers paid by us from December 15, 2009 (inception) to the period ended June 30, 2010. SUMMARY COMPENSATION TABLE Name and Principal Position Year Salary ($) Bonus ($) Stock Awards ($) Option Awards ($) Non-Equity Incentive Plan Compensation ($) Non-Qualified Deferred Compensation Earnings ($) All Other Compensation ($) Totals ($) Carolyn Hunter, President, Chief Financial Officer, 2009 $ 0 0 $ 400* 0 0 0 0 $ 400** Treasurer, Secretary, Director 2010 $ 0 0 0 0 0 0 0 0 *On December 19, 2009, the Company issued 5,000,000 shares of common stock at par value $0.0001 per share having a fair value of $500.00 to its founder in exchange for $100 cash and founder services provided in connection with the formation and administration of the Company with a fair value of $400. The shares were issued for services and are not stock options and therefore there is no black-scholes assumption. ** The valuation of the stock awards issued to Ms. Hunter was based on the assumptions in Note 2(c) of the Company s June 30, 2010 financial statements. TABLE OF CONTENTS PAGE Prospectus Summary 1
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+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001498210_rjd-green_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001498210_rjd-green_prospectus_summary.txt
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+Prospectus Summary This summary contains basic information about us and the offering. Because it is a summary, it does not contain all the information that you should consider before investing. You should read the entire prospectus carefully, including the risk factors and our financial statements and the related notes to those statements included in this prospectus. Except as otherwise required by the context, references in this prospectus to we, our, us, RJD Green, and RJD refer to RJD Green, Inc. RJD Green, Inc. is a development stage company incorporated in the State of Nevada in September of 2009. RJD Green s address and phone number is: RJD Green Inc. 1560-1 Newbury Rd. #514 Newbury Park, CA 91324 818-428-1300 telephone Operating History RJD Green was founded in 2009 by Robert Kepe who has extensive experience in the real estate field. The purpose of the company is currently working on developing their website at http://rjdgreen.com/ so that consumers, builders, and contractors can find sources of sustainable building contractors, materials, and other green product providers. To date, we have purchased the domain name, researched competition, researched potential advertisers/interested parties, and developed our business plan. We have not engaged a developer, but have independently developed an out of public view site to launch as a preliminary step. As we gain more traction, contacts, and become more influentially, we will most likely develop a site that moves away from one type of platform (currently, Wordpress) to a more complex, robust platform that will be able to handle the growth of our operations. Company Assets RJD s principal assets ( Assets ) consisted of cash totaling $1,048 as of May 31, 2011. Company Cash Flow The Company has cash assets derived from a private placement of its stock. Assuming the Company does not generate any income from its website. For the period from its inception through the period ending December 31, 2010 and for the nine months ended May 31, 2011 the Company had Gross Revenues of $0. From inception to the period ending May 31, 2011, the Company had Total Operating Expenses of $57,465, Net Loss of $57,465, Total Current Assets of $1,048, Total Assets of $1,048, Total Current Liabilities of $10,013, and Total Stockholders Equity (Deficit) of ($8,965). Future Assets and Growth In the future, the Company hopes to develop our database of contacts and potential advertisers. The Company also hopes to expand its mailing list of potential visitors. The Company will entice visitors to rjdgreen.com by offering free educational information on green building supplies, resources, and trends. They will offer this education through articles, presentations, andvideos. The Company has not yet developed any content. Currently, the Company s plan is to develop the content in house until they need additional sources of content. It may be that the Company will not produce enough content in a timely manner to keep website visitors interested or returning to the site. If Robert Kepe is unable to dedicate time to this effort, then progress may be stagnated. Furthermore, an increase in capital may increase our ability to launch our site and to increase the amount of content on our site, possibly resulting in greater traffic. The Company s site is not yet developed and they hope to have it developed in the near future. They currently have a site on the backend, out of public view. The Company hopes to launch a preliminary site sometime this year with some resources and information for the green building consumer/user.We hope to generate limited future income from our website. However, we cannot provide absolute assurances or estimates of these revenues. The Company had Net Loss of $57,465 for the period ended May 31, 2011. The Company anticipates it may operate at a deficit for its next fiscal year and may expend most of its available capital. The Company s cash on hand is, primarily, budgeted to cover the anticipated costs to complete, deliver and market our website and operating the businesses going forward including costs for legal, accounting and Transfer Agent services. We believe that the Company will have sufficient capital to operate its businesses over the next twelve (12) months. There can be no assurances, however, that actual expenses incurred will not materially exceed our estimates or that cash flows from our existing assets will be adequate to maintain our businesses. The internet marketing business is an extremely competitive industry dominated by several very large, fully integrated internet marketing companies. We hope to differentiate ourselves by being in the niche, green building materials market. Our business model is predicated on the assumption that we can generate multiple revenue streams from various advertising services on our site in the future and for the future. The Company may lose money in its first, full year of operation and it shall require raising additional capital to develop its services. The Company currently has one manager, Robert Kepe and no employees. Terms of the Offering The selling shareholders named in this prospectus are offering all of the shares of common stock offered through this prospectus. The selling stockholders are selling shares of common stock covered by this prospectus for their own account. We will not receive any of the proceeds from the resale of these shares. The offering price of $0.15 was determined by the price shares were sold to our shareholders in a private placement memorandum plus an increase based on the fact the shares will be liquid and registered. $0.15 is a fixed price at which the selling security holders may sell their shares until our common stock is quoted on the OTC Bulletin Board or another Exchange, at which time the shares may be sold at prevailing market prices or privately negotiated prices. There can be no assurance that a market maker will agree to file the necessary documents with FINRA, which operates the OTC Electronic Bulletin Board, nor can there be any assurance that such an application for quotation will be approved. We have agreed to bear the expenses relating to the registration of the shares for the selling security holders. [THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001498522_eyes-on_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001498522_eyes-on_prospectus_summary.txt
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+PROSPECTUS SUMMARY This summary highlights certain information contained elsewhere in this Prospectus. This summary does not contain all of the information that you should consider before investing in our Common Stock. You should carefully read the entire Prospectus, including the section entitled "Risk Factors" and our financial statements and related notes, before you decide whether to invest in our Common Stock. If you invest in our Common Stock, you are assuming a high degree of risk. See the section entitled "Risk Factors." References to "Eyes on the Go," "our," "our Company," "us," or "the Company" refer to Eyes on the Go, Inc. and its subsidiary, EOTG, unless the context indicates otherwise. Except where the context otherwise requires, "EOTG" refers to our wholly owned subsidiary, Eyes Enterprises, Inc., a Delaware corporation, as it existed prior to the merger described below, under its former name, "Eyes on the Go, Inc." and "Enterprises" refers to EOTG as it has existed from and after that merger. Overview We design, implement and provide services for the remote real-time monitoring of, and the control of equipment and devices located at, businesses and other facilities via computers, wireless handheld devices and television equipment using the internet, through our website, www.eyesonthego.com, or our customers internal communications. Users of our services can view monitored facilities from video cameras, as well as receive temperature and other data, can remotely control devices, such as thermostats, lights and locks, and can receive email based alerts of door entries and other events with video clips and of equipment failures and deviations from temperature and other parameters. Our system can also store images and data for review. We market directly with our own sales force using leads that are generated internally and by third parties and support the design and manage the implementation, customization and maintenance of our services with our back office customer support staff. We rely on third parties for the equipment necessary to render our services and for installation, monitoring and maintenance services. We market primarily to business owners and managers in the hospitality industry. We commenced operations in August 2010 and have only 14 customers. The address of the Company is 60 Broadway, PH 12 Brooklyn, NY 11211; its telephone number is (888) 666-3597. Our History Prior to the Merger We were incorporated in Delaware on March 5, 2008, for the purpose of acquiring Mutual Exchange International, Inc., a Florida corporation ("Mutual"). Mutual was incorporated on July 16, 1990, in the State of Florida as All-Pro Marketing, Inc. On March 10, 1998, it changed its name to All-Pro Sports Marketing, Inc. and on June 12, 1998, it again changed its name to Mutual Exchange International, Inc. On January 2, 2007, the Circuit Court of the Eleventh Circuit in and for Dade County, Florida, appointed a receiver over the business of Mutual (Case No. 06-25824 CA 23) and on January 2, 2007, that court issued an order approving the issuance of 100 million shares of the voting preferred stock of Mutual (the "Voting Preferred Stock") to Mark Rentschler to compensate him for services theretofore rendered to Mutual. Shortly thereafter, he was elected as Mutual s president, secretary and sole director. In 2007 Mark E. Astrom became the controlling stockholder of Mutual through his indirect ownership of the Voting Preferred Stock, which a corporation of which he was the sole stockholder acquired from Mr. Rentschler. Upon the acquisition of the Voting Preferred Stock, Mr. Astrom became Mutual s President and sole director and remained as such until Mutual was merged with and into the Company in 2008. In 2008, Mr. Astrom acquired 320 million shares of Mutual s common stock for $36,000. On March 13, 2008, Mutual merged with and into the Company. In connection with the merger, one share of the common stock of the Company was issued for each 10 shares of Mutual s common stock and the Voting Preferred Stock was exchanged for 5 million shares of the Company s Series C Preferred Stock (the "Series C Preferred Stock"). Upon the consummation of this merger, Mr. Astrom became our sole director and president. He remained our president, sole director and controlling stockholder, until, contemporaneously with the merger described below, two additional directors were added to our board of directors, Mr. Astrom ceased to be our president and he reduced his holdings in the Company to 5,000 shares of Common Stock. In November 2009, the Company and Mr. Astrom entered into an employment agreement (the "Employment Agreement"), which terminated effective November 30, 2010, under which 500 million shares of Common Stock paid as compensation for his services were issued at his direction to a corporation of which he was the sole stockholder. For a description of this employment agreement and transactions involving these shares, see "Directors, Executive Officers and Control Persons – Related Party Transactions – Employment Agreement" on page 37. Effective November 4, 2009, we implemented a 1-for-20 reverse split of our common stock and on November 25, 2009, the Series C Preferred Stock was exchanged for 1 share of our Series A Preferred Stock (the "Series A Preferred Stock"), which had 75% of the voting power of the Company. This share of Series A Preferred Stock has been returned to the Company and cancelled (see "Directors, Executive Officers and Control Persons – Related Party Transactions – Exchange Transaction" on page 38). For a description of the Series A Preferred Stock and Series C Preferred Stock, see "Description of Securities – Series A Preferred Stock" on page 22. During 2009 and 2010, we took preliminary measures towards establishing a business in the areas of DNA imaging and commercial printing. The printing line of business was to be operated both independently and as a symbiotic component of the DNA imaging business. We established a business plan and took steps towards developing both lines of business, one of which was the acquisition of a plan for the development of the printing line of business from Spaceport, a California business trust ("Spaceport"), in which Mr. Astrom held a controlling interest. In November 2010, after we concluded that we would not be able to establish either line of business, we abandoned the business plan. From that time until May 1, 2011, we conducted no business and were a "shell company," as that term is defined in Rule 405 under the Securities Act. For further information respecting transactions between Mark E. Astrom and the Company and between Spaceport and the Company, see "Directors, Executive Officers and Control Persons – Related Party Transactions" on page 37. Effective February 2, 2010, we implemented a 1-for-500 reverse stock split (the "Reverse Split") of our issued and outstanding common stock (with no change to the amount of our authorized common stock or the par value). As a result of the Reverse Split, the number of our issued and outstanding shares of common stock was reduced to 1,960,210. Immediately following the Reverse Split, we issued 499 million shares of Common Stock to Mark E. Astrom, pursuant to the provisions of the Employment Agreement, which required us to protect the shares of common stock that had been issued to under that agreement from reduction by virtue of the Reverse Split. See "Directors, Executive Officers and Control Persons – Related Party Transactions – Employment Agreement" on page 37. The Merger As of May 1, 2011, we entered into a Plan and Agreement of Merger by and among ourselves, Eyes Enterprises, Inc., a Delaware corporation and our wholly owned subsidiary, and EOTG, under which Enterprises was merged with and into EOTG, with EOTG being the surviving corporation. As incidents of this merger, we changed our corporate name to "Eyes on the Go, Inc." and EOTG changed its corporate name to "Eyes Enterprises, Inc." As a result of the Merger, we are no longer considered a shell company. In connection with the Merger, we issued 360,600,000 shares of Common Stock to the holders of the common stock of EOTG and Mark E. Astrom transferred 500,008,000 shares of Common Stock owned by him to said holders, ratably in accordance with their respective interests in EOTG. As a result of the Merger, Christopher Carey and Mary Weaver Carey, his wife, who are officers and directors of the Company, Blazej Kesy, who is a director of the Company and an officer of Enterprises and Christopher Carey, Jr., who is the son of Mr. Carey and Ms. Carey, became our controlling stockholders. Also in connection with the Merger: We completed a private placement with four investors (the "Private Placement") of 92,500,000 shares of Common Stock for proceeds of $152,991 in cash and payment for services under Securities Purchase Agreements. We also entered into Registration Rights Agreements with these investors, under which we were obligated to file the registration statement under the Securities Act of which this Prospectus forms a part covering the shares issued in the Private Placement (the "Registration Statement") and are obligated to use our best efforts to cause the Registration Statement to be declared effective under the Securities Act as promptly as possible. We issued 55,000,000 shares of Common Stock to Fritz-MacDonald Capital, LLC ("Fritz"), and its designee. On January 23, 2010, EOTG executed and delivered an asset purchase agreement with Fritz, whereby it acquired all of the rights to the name "Eyes on the Go"; a related web site, domain and URL; all assets represented in the pilot site; and all marketing and sales materials (the "Purchased Assets"). EOTG was then contemplating the Merger and agreed with Fritz that it would obtain a covenant of the Company in the Merger Agreement to issue and deliver to Fritz and/or its designees 55 million shares of Common Stock and to agree to register these shares under the Securities Act. The Merger Agreement contained a covenant to this effect, and accordingly, after the consummation of the Merger, 50,000,000 shares of Common Stock were issued to Fritz and 5,000,000 shares of Common Stock were issue to its designee. The Company also entered into Registration Rights Agreements with Fritz and its designee, in substantially the same form as were entered into with respect to the Private Placement. In connection with the purchase, Fritz was granted a security interest in the Purchased Assets until such time as the Common Stock is so registered, after which all liens or claims on the Purchased Assets will be released. Mark E. Astrom, who was then our president and sole director, entered into an Exchange Agreement with us, under which one share of our Series A Preferred Stock and $288,706 of our indebtedness to him was exchanged for a secured promissory note of the Company, dated May 1, 2011, payable to him in the principal amount of $473,933.65 and bearing interest at the rate of 0.55% per annum. The promissory note is due May 1, 2012, is subject to acceleration in the event of certain events of default and contains a covenant under which we are required to prevent Enterprises from granting liens upon its property, except for purchase money security interests. On August 15, 2011, the promissory note was amended to reduce its principal amount to $185,227.00, including the effect of a payment of $97,943. For further information, see "Directors, Executive Officers and Control Persons – Related Party Transactions – Exchange Agreement" on page 38. On May 10, 2011, we filed with the Secretary of State of the State of Delaware (i) a Certificate of Merger Consummating the Merger and (ii) a Certificate of Amendment to our Certificate of Incorporation changing our name from "Avenue Exchange Corp." to "Eyes on the Go, Inc." As a result of the Merger, our business is now that of designing, implementing and providing services for the remote real-time monitoring of, and the control of equipment and devices located at, businesses and other facilities via computers, wireless handheld devices and television equipment using the internet, through our website, www.eyesonthego.com, or internal communications and we have ceased to be a "shell company," as that term is defined in Rule 405 under the Securities Act. For more detailed information as to our business, see "Description of Business," which begins on page 23. Our Common Stock is quoted on Pink Sheets under the symbol "AXCG.PK." The information contained in this Prospectus, together with the additional information contained in the registration statement of which this Prospectus forms a part, is intended to be "Form 10 Information," as that term is defined in Rule 144 under the Securities Act.
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001498576_chinacache_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001498576_chinacache_prospectus_summary.txt
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+This summary highlights information contained elsewhere in this prospectus and does not contain all of the information that you should consider in making your investment decision. Before investing in the ADSs, you should carefully read this entire prospectus, including our financial statements and related notes included in this prospectus and the information set forth under the headings "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations." In addition, we commissioned iResearch Consulting Group, or iResearch, a market research firm, to prepare a report for the purpose of providing various industry and other information and illustrating our position in the content and application delivery services market in China. Information from the report prepared by iResearch, or the iResearch Report, appears in "Summary," "Industry Background," "Business" and other sections of this prospectus. We have taken such care as we consider reasonable in the reproduction and extraction of information from the iResearch Report and other third-party sources. Our Business We are the leading provider of Internet content and application delivery services in China, accounting for 53% market share in terms of revenues in 2009, according to iResearch. We provide a portfolio of services and solutions to businesses, government agencies and other enterprises to enhance the reliability and scalability of their online services and applications and improve end-user experience. Our nationwide service platform, which consists of our network, servers and intelligent software, is designed to handle planned and unplanned peaks without significant upfront and ongoing capital outlay and other investments on the part of our customers. We began providing content and application delivery services in China in 2000 and were the first company that is not a telecommunications carrier to obtain from the Ministry of Industry and Information Technology of China, or MIIT, formerly known as Ministry of Information Industry, a nationwide operating permit to provide content and application delivery services. As an early mover, we have expanded our business alongside the growth of the Internet in China and have acquired extensive local knowledge about the Internet infrastructure and telecommunications environment in China. Substantially all of our business operations are conducted in China and substantially all of our revenues are derived from sales in China. Building on our knowledge and experience, we have developed a portfolio of services and solutions designed to address complex and unique issues arising from China's Internet infrastructure and a wide range of turnkey solutions to meet customer- and industry-specific needs. As a carrier-neutral service provider, our network in China is interconnected with networks operated by all telecommunications carriers, major non-carriers and local Internet service providers in China. We deploy servers and nodes across networks throughout China and we use a private transmission backbone that connects our nodes and data centers, thereby optimizing our content and applications delivery performance and reliability. With servers widely deployed at strategic locations, we are able to provide services throughout China. Our wide range of services make us a top choice for customers requiring content and application delivery services to different regions in China. We believe that our robust nationwide service platform, which is the result of our significant investments in capital, time and human resources, is not easy to replicate and provides us with a competitive advantage. We have successfully established a strong brand and a reputation for the quality and cost effectiveness of our services, as evidenced by the numerous recognitions and awards we have received, including the "Chinese High-Growth and High-Tech Companies with the Best Investment Values" award granted by the China International Finance Forum in 2009 and the "China Internet Industry Innovator 50" award by the Internet Society of China in 2005. Our brand and reputation are significant assets in a relatively young industry where most of our potential customers are new to the content and FORM F-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Table of Contents application delivery services market and are strongly influenced by their peers' experience in selecting reliable service providers. We devote our market-oriented research and development efforts to focus on bringing innovative services and solutions to the market quickly. We currently have 9 patents, 21 patent applications and 14 software copyright registrations, all in China and related to different aspects of the content and application delivery technologies. We have established a joint laboratory with Tsinghua University to undertake leading edge research in content and application delivery technologies. We intend to expand our research and development efforts and offer innovative services and solutions to maintain our market leadership and meet the evolving needs of customers. We derive substantially all of our revenues from the sale of content and application delivery services. The number of our active customers has grown over the years, increasing from 129 as of December 31, 2007 to 454 as of September 30, 2010. We define active customers as those from whom we generated revenues within 30 days before the applicable period end. Our net revenues were RMB161.0 million, RMB291.4 million and RMB272.4 million (US$39.9 million) in 2007, 2008 and 2009, respectively. We incurred net losses of RMB87.9 million, RMB151.8 million and RMB39.2 million (US$5.7 million), respectively, in the same periods. Our net revenues for the nine months ended September 30, 2010 were RMB279.4 million (US$41.8 million), and we incurred a net loss of RMB61.9 million (US$9.3 million) for the same period. Our Industry According to Frost & Sullivan, a market research firm, the global content and application delivery services market is steadily growing and is expected to continue to grow in the coming years, primarily driven by increasing broadband penetration and the growing amount of content delivered over the Internet. Revenues from the global content and application delivery services market are estimated to be approximately US$1.3 billion in 2009, representing a compound annual growth rate, or CAGR, of 36.3% from 2007. Frost & Sullivan expects that the market will grow to US$2.8 billion in 2012, representing a CAGR of 28.3% from 2009. The content and application delivery services market in China began to develop in 2000 and has grown rapidly over the past ten years. According to iResearch, revenues from the content and application delivery services market in China were estimated to be approximately RMB501.0 million (US$73.4 million) in 2009, representing a CAGR of 58.3% from 2007, and are estimated to grow to RMB3.6 billion (US$520 million) in 2014, representing a CAGR of 48.2% from 2009, a much higher rate than the expected growth of the global market. Multinational companies currently do not have a significant presence in the content and application delivery services market in China, in part due to the regulatory barriers in China's telecommunications industry. We believe that the following factors have contributed, and are expected to continue to contribute, to the growth of the content and application delivery services market in China: increasing Internet usage and broadband penetration in China; growth of rich media content; growth of mobile Internet and mobile data services; growth of online game industry; growth of online advertising and e-commerce; growth of Software-as-a-Service and cloud computing; and increasing need for networks with greater interconnectivity and efficiency. ChinaCache International Holdings Ltd. (Exact name of Registrant as specified in its charter) Not Applicable (Translation of Registrant's name into English) Cayman Islands (State or other jurisdiction of incorporation or organization) 7389 (Primary Standard Industrial Classification Code Number) Not Applicable (I.R.S. Employer Identification Number) 6/F, Block A, Galaxy Plaza No. 10 Jiuxianqiao Road Middle, Chaoyang District Beijing, 100015 People's Republic of China (86 10) 6437 3399 (Address, including zip code, and telephone number, including area code, of Registrant's principal executive offices) Table of Contents Our Competitive Strengths and Strategies We believe that the following strengths contribute to our success in the content and application delivery services market in China and differentiate us from our competitors: leading position and strong brand in China; wide geographic coverage in China; diversified customer base including market leaders in a variety of industries; extensive local knowledge and expertise in developing customized turnkey solutions; strong research and development capabilities and proprietary technologies; and experienced management team with strong execution capability. Our goal is to strengthen our position as China's leading content and application delivery service provider by leveraging our nationwide platform and our wide range of services and solutions that are specifically and uniquely designed for China's Internet infrastructure and telecommunications industry. We intend to achieve our goal by pursuing the following strategies: further expand and diversify our customer base and retain existing customers; expand and enhance our service and solution offerings; continue to improve our operating efficiency; continue to focus on market-oriented research and development efforts; and establish new and expand existing strategic relationships and selectively pursue acquisitions. Our Challenges We expect to face risks and uncertainties, including those relating to the following: our ability to achieve and sustain profitability in the future; the growth of the content and application delivery services market and the continuing market acceptance of content and application delivery services in China; our ability to sell our services at competitive prices; our ability to control costs and expenses, especially bandwidth costs; our ability to offer content and application delivery services that can successfully compete against our competitors and our customers' in-house solutions; our dependence on telecommunications carriers and other third-party providers for bandwidth, network access, optical fiber cable and other communications capacity; our ability to attract new customers and retain existing customers; our ability to develop and introduce innovative services and products that meet or exceed our customers' expectations, and to adopt new technologies important to our business; our ability to manage future growth effectively; and the regulatory environment in China relevant to our business. See
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/CIK0001499027_wildcap_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001499027_wildcap_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..f784ead60690fcb86843978e02d87a6410a039be
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001499027_wildcap_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY The following summary is qualified in its entirety by detailed information appearing elsewhere in this prospectus. Each prospective investor is urged to read this prospectus in its entirety. The Company. Wildcap Energy Storage Devices, Inc. was incorporated June 18, 2007 in the State of Nevada. On July 29, 2010, the name of the company was changed to Wildcap Energy Inc. Wildcap Energy is a development stage company with its principal activity being to commercialize an innovative technology that was developed at the University of Arizona that deals with vertical axis wind turbines. From the date of incorporation through January 10, 2010, the date that an option agreement with the Board of Regents of the University of Arizona was signed, Wildcap Energy s business activities were focused on negotiating a license agreement with the University of Arizona. Wildcap Energy was granted an initial option for a three-month period of time. The final option period ended on January 7, 2011. On March 2, 2011, a license agreement between Wildcap Energy and the University became effective. Key provisions of the license agreement are outlined below. On March 1, 2010, Wildcap Energy entered into a three year Venture Acceleration Agreement with SUTIMCo, Inc., a wholly owned subsidiary of Select University Technologies which is the general partner of SUTI Holdings, LP (94.07% owner of Wildcap Energy, Inc.), to provide needed personnel and services to start developing the technology. Key provisions of the Venture Acceleration Agreement are explained below. Wildcap Energy s net loss for the years ended June 30, 2010 and June 30, 2009 were $118,209 and $0, respectively, and $1,918,735 and $100,000 for the nine months ended March 31, 2011 and March 31, 2010, respectively. As of March 31, 2011, Wildcap Energy had total current assets of $16,848 and total current liabilities of $500,792, resulting in a working capital deficit of $483,944. The company s cash balance as of June 30, 2011 totaled $688. The company s current working capital is not sufficient to enable us to implement its business plan described in this prospectus. For these and other reasons, the company s independent auditor has raised substantial doubt about our ability to continue as a going concern. On March 1, 2010, the company entered into a three-year Venture Acceleration Agreement with SUTIMCo, Inc., a Nevada corporation, pursuant to which SUTIMCo agreed to provide a variety of services and benefits to the company, including managerial services, which management of the company deem critical to move the company toward commercialization of the technology embodied in a license agreement and revenue. SUTIMCo fees include: A one-time initial fee of $100,000 was paid with the execution of the Venture Acceleration Agreement. Wildcap Energy paid the $100,000 out of the monies raised in the private placement that concluded just prior to filing the initial Form S-1 registration statement in August 2010. During the three-year term of this agreement that commenced on March 1, 2010, an annual fee in the amount of $930,000 (payable in monthly installments of $77,500) was owed. Due to the operational needs of Wildcap Energy during the time period between March 1, 2010 and September 1, 2010, SUTIMCo was relieved of its obligations to provide any of the personnel called for in the business plan because SUTIMCo could not provide personnel that could perform the services needed by Wildcap Energy during the time period between March 1, 2010 and September 1, 2010. On June 2, 2010, Wildcap Energy and SUTIMCo executed an Addendum to the Venture Acceleration Agreement whereby the SUTIMCo monthly management fee was delayed from March 1, 2010 until September 1, 2010 or upon funding, whichever occurred first. The monthly fee of $77,500 commenced on September 1, 2010. The monthly fees have been accrued since September 1, 2010; however none of the monthly fees have been paid by Wildcap Energy. The monthly services and the one time initial fee are allocated equally among research and development, manufacturing, sales and marketing, and administrative categories. The SUTIMCo personnel, effective September 1, 2010, commenced working on: (a) negotiating the license agreement with the University of Arizona; (b)establishment of financial and operational controls in order to effectively monitor and report Wildcap Energy s business activities; and (c) the evaluation of various business entities that could be used by Wildcap Energy in the development and manufacture of the vertical axis wind turbine. Wildcap Energy and the University of Arizona entered into an option agreement which granted the company, during the option period (under the terms and conditions of the option agreement), an option to commercialize a vertical axis wind turbine, incorporating active flow controls. Vertical axis wind turbine designs have had limited commercial success, despite the advantage that they can collect wind from all directions. Vertical axis wind turbine design s ability to function well at low heights is particularly important when considering the cost of the high tower necessary for a horizontal axis wind turbine. On the other hand, vertical axis wind turbines have a low rotor height which reduces rotor wind speed. Additionally, vertical axis wind turbines have longer blade length, about twice the length of horizontal axis wind turbines. To the best of the company s knowledge, there are no commercially available vertical axis wind turbines that incorporate active flow technologies. The executed license is substantially consistent with the license agreement term sheet and form of license agreement attached to the Option Agreement Attachments A and B . The key provisions of the license agreement that became effective on March 2, 2011 are as follows: The University of Arizona grants to Wildcap Energy the worldwide right to exploit all of the University s technical information and know-how relating to the licensed technology, within the onshore field of electricity generation by wind turbines on an exclusive basis and within the onshore field of electricity generation by wind turbines on a non-exclusive basis. The foregoing grant of rights includes the right to exploit the University s patent rights in the licensed technology wherever these rights may exist throughout the world [meaning wherever patent applications have been filed and are pending and wherever patents have issued and remain in force ]. To the extent not otherwise obligated to any third parties, the University of Arizona also grants to Wildcap Energy an option on any future University inventions relating to vertical axis wind turbines which are made with five years following the effective date of the license agreement, provided at least one inventor of the subject invention is also an inventor of a previous invention disclosed in a patent application included in the patent rights licensed to Wildcap Energy under the agreement. The option is exercisable during the ninety-day period immediately following Wildcap Energy s receipt of a written invention disclosure notice. The University of Arizona also grants to Wildcap Energy the right to issue to third parties sublicenses in the onshore field of electricity generation by wind turbines. In Sections 2.1 and 2.2 of the license agreement, Wildcap Energy has a non-exclusive right to exploit the patent rights and technology for the offshore generation of electricity by wind turbines. To the maximum extent permitted under applicable law, the University of Arizona has granted Wildcap the right to bring suit in its own name and at its own expense to enforce and if necessary defend the licensed patent rights, provided, however, that if the University of Arizona agrees to bear one half of the legal expense related thereto, the University of Arizona will be entitled to one half of the recoveries obtained in any such suit. The University of Arizona retains all other rights in the patents and technical information not expressly granted under the license. Wildcap Energy agrees to sponsor research at the University of Arizona to further develop and test the practical application of the patent rights . While the scope of the research projects has yet to be defined, the research is expected to focus exclusively on one or more aspects of a vertical axis wind turbine with sweeping jets embedded in the air foils. There are two phases to the project. Wildcap Energy issued to the University of Arizona a common stock purchase warrant to purchase 1,179,799 shares of Wildcap Energy common stock. The exercise price for the warrant is $0.125 per share. Wildcap Energy agrees to pay a one-time non-cancellable license fee of $10,000. Wildcap Energy has paid this license fee to the University of Arizona. Royalties, payable to the University of Arizona, are due on or about February 15th of each calendar year, are to be computed by Wildcap Energy based on the following: * 1% of net sales covered by a pending patent application; * 3% of net sales covered by an issued patent; and * 20% of sublicensing consideration received by Wildcap Energy Additionally, Wildcap Energy agrees that, regardless of any earned royalties and/or sublicensing consideration, the minimum annual consideration payable to the University shall be equal to $10,000 for the period between January 1, 2013 and December 31, 2013; $15,000 for the period between January 1, 2014 and December 31, 2014; $20,000 for the period between January 1, 2015 and December 31, 2015; $25,000 for the period between January 1, 2016 and December 31, 2016; $37,500 for the period between January 1, 2017 and December 31, 2017; and $50,000 per year from January 1, 2018 and for each year thereafter. Wildcap Energy agrees to reimburse the University for all patent costs incurred prior to the execution of the license relating to the licensed technology and all patent costs incurred after the execution of the license relating to the licensed technology during the term of the license. Wildcap Energy, Inc. paid the patent costs incurred prior to the execution of the license that relate to the licensed technology ($13,780) to the University. In the event of the assignment of the license agreement to an unaffiliated third party (or other transfer by Wildcap Energy) that is not due to either a merger or an acquisition, then Wildcap Energy agrees to pay the University the greater of $100,000 or an amount equivalent to 5% of the total transaction value. This license agreement will remain in full force and effect until the last-to-expire patent rights, unless terminated earlier according to the provisions of the license agreement. Patent rights are presently limited to a single patent application in the U.S. and Canada; no patents have been granted to date. The vertical axis wind turbine is smaller and produces less power than the horizontal axis wind turbine. One target market for Wildcap Energy would be end-users interested in the generation of electricity for their own use. These would include ranches, farms, small industrial complexes and small municipalities. The primary motivations would be the potential cost savings in producing their own electricity and overcoming the difficulty in getting grid power to their location. Active flow control studies the separation of the flow from the surface of aerodynamic bodies and the possible solutions to reduce or control it. The word active indicates that to control the flow an external source of energy is applied. Active flow control is usually based on suction or blowing devices that modify the pressure and the velocity fields and energize depleted layers of fluid to enhance reattachment or avoid separation or that delay turbulent transition in order to reduce skin friction. The University of Arizona has a pending patent application relating to this technology, which was developed by Professor Israel Wygnanski. While there is always a standard clause in all of the University of Arizona s option agreements related to the rights of the U.S. government to a royalty free right to use the technology which resulted from government sponsored research, Wildcap Energy determined that the standard government use provision is not applicable with regard to the licensed technology. The reason being that the technology licensed from the University of Arizona did not result from research sponsored by the U.S. Government and that the U.S. government only has a royalty free right related to technology that the U. S. government funded. The ultimate applicability of the University of Arizona s standard government royalty free use provision is determined by the University of Arizona. Notwithstanding any such determination, the U.S. government has the right to contest any such determinations made by the University of Arizona or by Wildcap Energy. The option agreement became effective as of January 8, 2010. The initial option period was from January 8, 2010 to April 7, 2010. The University of Arizona offered three consecutive option periods; each option period was for a three-month period. The final option period ended on January 7, 2011. A license agreement was signed on March 2, 2011 and is attached as an exhibit to the S-1. The following diagram shows the relationship of the various parties discussed below, including Wildcap Energy: Wildcap Energy has its principal offices located at 2961 West MacArthur Boulevard, Suite 214, Santa Ana, California 92704. The telephone number for the company is: (949) 955-2721. The Offering. Common stock offered by selling stockholders Up to 680,000 shares. Common stock to be outstanding before and after the offering 10,630,000. Use of proceeds Wildcap Energy will not receive any proceeds from the sale of the common stock hereunder. This prospectus relates to the resale of up to 680,000 shares of Wildcap Energy common stock by selling stockholders of the company. State securities laws regulate the sale of securities in each state in which a selling stockholder is resident. Wildcap Energy believes that there are exemptions from registration for the sale of shares of common stock by the selling stockholders, and future holders (including those who purchase shares from the selling stockholders), on an unsolicited basis through broker/dealers. Therefore, it is not Wildcap Energy s present intention to apply to have its securities registered in any state. However, if any of these states takes the position that such exemption from registration is not available for such sales, then those selling stockholders and future holders would not be able to sell their shares of common stock without additional registration requirements being met by the company. In such event, this could affect the price of the company s common stock since there would be fewer shares available for sale on the open market.
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/CIK0001499197_powder_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001499197_powder_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..d6486f2716572e43dce7e3ab20d38f5c72ef3b85
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001499197_powder_prospectus_summary.txt
@@ -0,0 +1,883 @@
+PROSPECTUS SUMMARY
+
+Item 3. Summary Information, Risk Factors and Ratio of Earnings to Fixed Charges.
+
+This summary highlights certain information contained elsewhere in this prospectus. You should read the following summary together with the more detailed information regarding Titan Holding Group, Inc. ( Us, We, Our, THG, the Company, or the Corporation ) and our financial statements and the related notes appearing elsewhere in this prospectus.
+
+The Company
+
+Our Business
+
+Titan Holding Group specializes in marketing KC 9000 which specifically demonstrates the ability to effectively reduce the viscosity of crude oil classified as heavy oil, (i.e. API gravity of less than 22) and reduces the amounts of water and solids from the crude oil prior to transportation to a refinery. We are a development stage company with minimal revenues and limited operations and our auditor has expressed substantial doubt about our ability to continue as a going concern. We have no intention to engage in a reverse merger or acquisition with any unidentified company or companies or other entity.
+
+We have a very specific business plan that is focused around the marketing and sale, both domestically and internationally, of a proprietary technology known as KC 9000 , a crude oil treatment product. KC 9000 is owned by Freedom Energy Holdings, Inc. ( Freedom Energy ) (FDMF), f/k/a Freedom Financial Holdings, Inc. (CIK 0001386044), a Maryland corporation that is currently non-reporting and quoted on the Pink Sheets. Freedom Energy was formed in July 2005 and was also in the mortgage industry until December 2009 when it ceased all mortgage activity to focus on the development of its only product KC 9000 . 
+
+Freedom Energy acquired the rights to KC 9000 in November 2008 and immediately began to develop a marketing strategy. In early 2009, a strategic relationship was established between Freedom Energy and Harcros Chemical, Kansas City, Kansas to manufacture the KC 9000 . Per the verbal agreement, Harcros agreed to manufacture the amount of KC 9000 requested on a just in time basis. Neither Freedom Energy nor Harcros Chemical maintains an inventory for immediate delivery. Historically, Harcros has required a two week lead time to produce the requested amount. All orders have been and are still processed by Freedom Energy directly with Harcros and then dropped shipped per instructions.
+
+Freedom Energy Holdings, Inc. is focused on the exploitation of KC 9000 which is its only product. Freedom Energy describes KC 9000 as "The World's Answer to Heavy Oil" KC-9000 is a Micro-Emulsion developed to assist in the recovery and extraction of Heavy based hydrocarbons that are saturated with high metals and paraffin content. Extensive field and lab tests have proven KC 9000 to be effective at permanently reducing the viscosity of Heavy Oil at ambient temperatures. 
+
+Tests performed by Freedom Energy have shown that the KC 9000 Micro Emulsion acts in a two phase process. The unique chemical properties of the KC 9000 emulsifiers allow KC 9000 to fully integrate with the target subject material. Once allowed to remain dormant without any agitation, a de-emulsifying phase automatically takes place allowing the contaminants to drop to the bottom and the good oil to flow to the top of the containment tank. KC 9000 is a stable emulsion that is not effected by external forces, which renders it safe for the end user.
+
+There are several variations of the base KC 9000 formula that permits KC 9000 to be applicable with the most viscous crude oils being produced today. KC 9000 has shown to permanently change oil viscosity therefore increasing the API gravity by removing most solids and heavy metals typically found in Heavy Oil and tank bottoms. KC 9000 is a new Heavy Oil technology for use in oil storage tank cleaning processes. By injecting KC 9000 directly into the tank port holes, the tank bottoms, with agitation, emulsifies into an easily extractable slurry, thus eliminating the much of the extensive labor time and costs. In most tank cleaning practices, physical entry into the storage tanks (cutting large holes in the sides) with small bulldozer type units creates a very time consuming and labor intensive process and liability.
+
+Our director/shareholder, Brian Kistler, is CEO and a director of Freedom Energy and one of its many shareholders. Mr. Kistler, while marketing licensing agreements for KC 9000 for Freedom Energy Holdings, also markets KC 9000 for us to the end user. Titan Holding Group is currently the primary sales representative for Freedom Energy Holdings, Inc. and has produced the only KC 9000 sales for Freedom Energy Holdings, Inc. By the agreement all sales and licensing of KC 9000 will be channeled through Titan Holding so there is no conflict of interest of Mr. Kistler to either Freedom Energy or Titan Holding. As disclosed in Section 2.3 of the Sales Representative Agreement, Freedom Energy reverses the right to cancel said agreement at any time without notice to Titan Holding.
+
+5
+
+Link to Table of Contents
+
+To date, we have only chosen to market KC 9000 , a proprietary product owned by Freedom Energy Holdings, Inc. Our company is an authorized seller of KC 9000 by agreement (the Sales Representative Agreement ) and we intend to continue marketing the product with the intention of generating revenue for the company. A copy of the Sales Representative Agreement is filed as an exhibit to the registration statement of which our prospectus form a part KC 9000 is a proprietary blend of ingredients that has been shown to be very effective in the areas in which we are focusing, including reduction of viscosity of Heavy oil and the reduction of water and solids from the crude oil prior to transport. The material terms of this Sales Representative Agreement are as follows:
+
+1. Direct Sale from Freedom Energy Holdings, Inc f/k/a Freedom Financial Holdings Inc. to third party Customer.
+
+Ten percent (10%) of gross sales revenues from KC 9000 received by Freedom Energy from each specific customer per transaction for the life of the account. Until such gross revenues reach $50,000 per month Titan Holding will receive 100% of the profit over and above the manufacturing costs plus shipping payable on receipt of payment from customer.
+
+2. Joint Ventures Between FEI and other sales representative
+
+In the case of joint ventures between Freedom Energy and another third party intermediary formed to exploit KC 9000 in representatives territories 10% of the total Joint Venture sales of KC 9000 or its intellectual property, payable on receipt of payment from customer
+
+3. Licensing of KC 9000 to another entity
+
+For the sale of rights to KC 9000 under license for customer s own use or resale and similar licensing arrangements in Titan s territories, 10% of lump sum and 10% of continuing royalties for the life of the licensing agreement.
+
+4. Payment: Commissions become payable on receipt of payment to Company from customer.
+
+Thus far we have marketed primarily to independent producers, refiners of petroleum products and other market participants located in the Midwest of the United States of America (the U.S. ).THG has been doing business since inception October 9, 2009. Originally formed to do any and all legal business, the intent of the corporation was to specialize in commercial marketing and sales activities of KC 9000 primarily to independent producers, refiners of petroleum products and other market participants. The market we serve, which begins at the point of oil production and extends to the point of distribution to the customer, is commonly referred to as the midstream market. The President has been involved in the company since inception and is the founder. We focus on geographic areas, products and price points where we believe there are significant demand for new crude oil treatment products and the potential for attractive returns to our company and investors. We currently are selling products primarily in Kansas. We do not consider our company to be a blank check company as such term is defined in Securities and Exchange Commission Rule 419, however we are a development stage company with minimal revenues and limited operations and our auditor has expressed substantial doubt about our ability to continue as a going concern. We have no intention to engage in a reverse merger or acquisition with any unidentified company or companies or other entity. However, our business plan does contemplate attempted growth through the acquisition of chemical companies that would complement our business plan. THG anticipates growth through the consolidation of small and mid-sized chemical distributors. Our management has designed an aggressive but straightforward strategy to transition THG to a full service chemical distributor with minimal risk to the existing operation.
+
+We believe that our conduct to date evinces significant, bona fide business operations and a scenario that is wholly inapposite to any attempt to create the mere appearance of a specific business plan and effort to avoid the application of Rule 419. 
+
+We are focusing on markets that have generally been characterized as a result of strong crude oil production by independent oil production companies. Much of the oil production generated by these independent oil producers involves older oil fields that historically has been owned by the major oil companies and have produced a great deal of crude oil, but production has been abandoned or sold by the major oil companies in the United States as daily production of barrels of oil dropped. Kansas has been one of the states that have experienced a steady growth in oil production from such oil fields and is the present focus of our marketing efforts. The U.S. Department of Energy divides the continental U.S. into five geographic regions called Petroleum Administration for Defense Districts, or PADDs. PADD II is the Midwest region of the U.S. PADD II is the second largest PADD in terms of refinery production. As a result of the flow of petroleum products across and throughout the Midwest region, we believe PADD II is an important crude oil production, logistics, and refining center.
+
+6
+
+Link to Table of Contents
+
+Our general business strategy is to market such petroleum treatment products to markets primarily in the Midwest, ensuring that our customers have consistent access to petroleum treatment products. Our strategically located sale efforts are well positioned to benefit from the continuing need for petroleum treatment products from areas of supply to areas of demand. We recognize that current market conditions are extremely challenging. Accordingly, we have adapted our business plan and strategy with the goal of protecting liquidity, enhancing our balance sheet and positioning our Company for future growth when market conditions improve. In connection with this strategy, we have adopted a conservative approach and our principal business strategy is to utilize our sales expertise to: 
+
+ 
+
+sell petroleum treatment products throughout the Midwest;
+
+ 
+
+provide consistently reliable high-quality products;
+
+ 
+
+aggressively manage operating costs to maintain and improve operating margins;
+
+ 
+
+expand business by improving, enhancing and expanding sales, gaining new customers;
+
+ 
+
+pursue complementary bolt on growth opportunities having acceptable risks and returns; and
+
+ 
+
+generate consistent revenue, operating margins, earnings and cash flows.
+
+In furtherance of this business plan, our company has incurred expenses associated with shipping KC 9000 to Kuwait for demonstration to the Kuwaiti royal family and Kuwait Oil Company (KOC) as well as Kuwait National Petroleum Company (KNPC), the oil companies controlled by the Kuwaiti royal family. Our CEO has traveled to Kuwait and provided a demonstration of KC 9000 to the Kuwaiti royal family and the aforementioned oil companies. Additional international demonstrations of the KC 9000 product have been conducted by our CEO for Saudi Aramco in Saudi Arabia, and for private business entities in Dubai, United Arab Emirates, Budapest, Hungary and Vancouver, Canada. Our CEO has also conducted domestic demonstrations of the KC 9000 product in Texas, Kansas, California, Oklahoma, Colorado, Kentucky and Indiana. Pursuant to an invitation from British Petroleum officials, Our CEO conducted a demonstration of the KC 9000 product in New Orleans, Louisiana in response to the April 2010 Gulf of Mexico oil spill disaster. As a result of the demonstrations, we, along with Freedom Energy Holdings, Inc., submitted proposals to Plaquemines Parrish, Louisiana officials to assist with the cleanup of the marsh grasses affected by the oil spill. We are awaiting further notification if our assistance will be requested. To date, there have not been any sales consummated from any of the aforementioned demonstrations.
+
+Additionally, our company has conducted testing at Blackstone Labs, in Fort Wayne, Indiana for the purpose of measuring the effectiveness of a variety of crude oil treatment products on crude oil. The purpose of the tests was to determine how well the various products performed at different temperatures and dosages in lowering viscosity of heavy crude oil from the United States, Canada, Mexico, Kuwait and Venezuela. This activity was specifically intended to facilitate further development of KC 9000 and to generate additional revenues from sales. Our company is an authorized seller of KC 9000 and we intend to continue marketing the product with the intention of generating revenue for the company. Notwithstanding our authorization to sell KC 9000 , we are able to offer crude oil treatment products made available by other non- related companies. To date, we have only chosen to market KC 9000 , and currently do not have any other selling agreements with any other company.
+
+The following sections present an overview of our business segment, including information regarding the principal business and competitive strengths. Our results of operations and financial condition are subject to a variety of risks. For information regarding our key risk factors, see Risk Factors. 
+
+We conduct crude oil treatment marketing in Kansas to third party oil producers. Our business consists of one operation from the corporate headquarters. Our revenue is generated from sales of KC 9000 .
+
+Our Statement of Organization:
+
+We were incorporated in Florida on October 9, 2009, as Freedom Formulations, LLC. On July 20, 2010 the State of Florida accepted our Certificate of Conversion to convert the company from a Limited Liability Company to a Florida Profit Corporation. Our principal executive offices are located at 531 Airport North Office Park, Fort Wayne, Indiana 46825. Our phone number is (260) 490-9990.
+
+The Sales Representative Agreement entered into with Freedom Energy Holdings, Inc f/k/a Freedom Financial Holdings, Inc in October 2009 was not assigned, but continued to be in effect as written by operation of law even though our corporate structure and 
+
+7
+
+Link to Table of Contents
+
+name was changed in July 2010 from Freedom Formulations, LLC (a Florida limited liability company) to Titan Holding Group, Inc., a Florida corporation.
+
+The Offering
+
+Number of Shares Being Offered:
+
+The selling security holders may sell up to 4,000,000 shares of common stock at $.01 per share. Affiliated persons are not offering any shares. Issuance of these shares to the selling security holders was exempt from the registration and prospectus delivery requirements of the Securities Act of 1933, as amended. Non-affiliated selling security holders will sell at the fixed price. Selling shareholders are underwriters as defined under the Securities Act of 1933.
+
+Number of Shares Outstanding After the Offering:
+
+10,000,000 shares of our common stock are issued and outstanding. We have no other securities issued.
+
+Selected Financial Data - Annual:
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+ 
+ 
+Nine Months ending September 30,
+
+ 
+ 
+October 9, 2009 (inception)
+
+December 31,
+
+ 
+ 
+ 
+ 
+
+ 
+ 
+ 
+ 
+ 
+
+2010
+
+ 
+ 
+ 
+
+2009
+
+ 
+ 
+ 
+
+change
+
+Current assets
+
+ 
+ 
+$
+
+541 
+
+ 
+ 
+$
+
+ 1,439
+
+ 
+ 
+$
+
+(898)
+
+Total Assets
+
+ 
+ 
+ 
+ 541
+
+ 
+ 
+ 
+ 1,439
+
+ 
+ 
+$
+
+(898)
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+Total current liabilities
+
+ 
+ 
+ 
+26,315 
+
+ 
+ 
+ 
+--- 
+
+ 
+ 
+$
+
+26,315
+
+Total stockholders' equity (deficit)
+
+ 
+ 
+ 
+1
+
+ 
+ 
+ 
+1
+
+ 
+ 
+$
+
+---
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+Working Capital
+
+ 
+ 
+ 
+(25,774)
+
+ 
+ 
+ 
+ 1,439
+
+ 
+ 
+$
+
+(27,213)
+
+Net Cash (Used) Provided by Operating Activities
+
+502
+
+ 
+ 
+ 
+---
+
+ 
+ 
+$
+
+502
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+Years Ended December 31,
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+ 
+ 
+ 
+Nine Months ending
+
+September 30, 2010
+
+ 
+
+ 
+ 
+October 9, 2009 (inception)
+
+December 31, 2009
+
+ 
+
+ 
+ 
+
+change
+
+Statement of Operations
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+Revenues
+
+ 
+ 
+$
+
+1,095 
+
+ 
+ 
+$
+
+9,276 
+
+ 
+ 
+$
+
+(8,181)
+
+ 
+Operating expenses:
+
+ 
+ 
+ 
+28,347 
+
+ 
+ 
+ 
+7,838
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+ 
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+$
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+20,509 
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+Net income (loss)
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+$
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+(27,252)
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+ 
+ 
+$
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+1,438
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+ 
+ 
+$
+
+(28,690)
+
+8
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+Link to Table of Contents
+
+RISK FACTORS
+
+Before you invest in our common stock, you should be aware that there are risks, as described below. You should carefully consider these risk factors together with all of the other information included in this prospectus before you decide to purchase shares of our common stock. Any of the following risks could adversely affect our business, financial conditions and results of operations.
+
+Risks Related To the Company
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+(1) Our Auditor Has Expressed Substantial Doubt About Our Ability To Continue As A Going Concern.
+
+These financial statements included with this registration statement have been prepared on a going concern basis. We have a working capital deficiency of $25,774, and has accumulated deficit of $25,814 since inception as of September 30, 2010. We may not be able to generate profitable operations in the future and/or obtain the necessary financing to meet our obligations and repay liabilities arising from normal business operations when they come due. The outcome of these matters cannot be predicted with any certainty at this time. These factors raise substantial doubt that we will be able to continue as a going concern. The Company to date has funded its initial operations through loans from director in the amount of $26,315 Management plans to continue to provide for its capital needs by the issuance of common stock and related party advances. Our financial statements do not include any adjustments to the amounts and classification of assets and liabilities that may be necessary should the Company be unable to continue as a going concern.
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+(2) Our access to credit markets may be limited, which may adversely impact our liquidity. 
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+We may require additional capital from outside sources from time to time. Our ability to arrange financing, and the cost of such capital, is dependent on numerous factors, including: 
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+general economic, business and financial conditions; 
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+credit availability from banks and other financial institutions; 
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+investor confidence in us; 
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+our levels of indebtedness; 
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+competitive, legislative and regulatory matters; 
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+cash flows; and 
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+provisions of tax and securities laws that may impact raising capital 
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+In addition, volatility in the capital markets may adversely affect our ability to access any available borrowing capacity under our revolving credit facility. 
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+ (3) Our operating results and financial condition may be adversely affected by unfavorable general economic conditions. 
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+Unfavorable economic conditions worldwide contribute to slowdowns. If global economic conditions or economic conditions in the U.S. remain uncertain or persist, spread or deteriorate further, we may experience material adverse impacts on our results of operations, cash flows and financial condition. 
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+(4) Our profitability depends on the demand for the products we sell in the markets we serve. 
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+Any sustained reduction in demand for petroleum products in markets served by our midstream assets could result in a significant reduction in the volume of products that we sell, thereby adversely affecting our results of operations, cash flows and financial condition. Factors that could lead to a reduction in demand include: 
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+an increase in the price of products; 
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+higher taxes, including federal excise taxes, crude oil severance taxes or sales taxes or other governmental or regulatory actions that increase, directly or indirectly; 
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+adverse economic conditions which result in lower spending by consumers and businesses on products we sell; 
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+higher fuel taxes or other governmental or regulatory actions that increase the cost of the products we handle; 
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+effects of weather, natural phenomena, terrorism, war, or other similar acts; 
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+an increase in fuel economy, whether as a result of a shift by consumers to more fuel efficient vehicles, technological advances by manufacturers or federal or state regulations; 
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+decisions by our customers or suppliers to use alternate service providers for a portion or all of their needs, operate in different markets not served by us, reduce operations or cease operations entirely; and 
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+Link to Table of Contents
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+an increase in the use of alternative fuel sources such as ethanol, biodiesel, fuel cells, solar and wind power 
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+(5) Because of the natural decline in production from existing wells in our areas of operation, our success depends on our ability to obtain new sources of business, which is dependent on factors beyond our control. Any decrease in the volumes of these products that we are focused on could adversely affect our business and operating results. 
+
+The volumes that support our business are dependent on the level of production from wells connected to our geographical focus, the production from which may be less than we expect as a result of a natural decline of producing wells over time and the shut-in of wells for economic or other reasons. As a result, our cash flows associated with these operations will also decline over time. In order to maintain or increase demand levels on our sales efforts, we must obtain new sources of product sales. The primary factors affecting our ability to obtain increased sales include the level of successful drilling activity near our geographical focus. 
+
+We have no control over the level of oil production in our areas of operation, the amount of oil producing wells in our area or the rate at which production from a well decline. In addition, we have no control over producers or their drilling or production decisions, which are affected by, among other things, the availability and cost of capital, prevailing and projected energy prices, demand for petroleum products, levels of reserves, geological considerations, environmental or other governmental regulations, the availability of drilling permits, the availability of drilling rigs, and other drilling, production and development costs. 
+
+Fluctuations in energy prices can also greatly affect the development of new petroleum product reserves and, to a lesser extent, production from existing wells. In general terms, energy prices fluctuate in response to changes in supply and demand, market uncertainty and a variety of additional factors that are beyond our control. Declines in energy prices could have a negative impact on exploration, development and production activity and, if sustained, could lead to a material decrease in such activity. Sustained reductions in exploration or production activity in our areas of operation would lead to reduced utilization of our gathering and treating assets. Because of these factors, even if new reserves are known to exist in areas served by our assets, producers may choose not to develop those reserves. If reductions in drilling activity result in our inability to maintain levels of demand for our products, it could have a material adverse effect on our business, results of operations and financial condition. 
+
+(6) Our establishment of new areas may not result in the anticipated revenue increases and is subject to unanticipated regulatory, environmental, political, legal and economic risks which could adversely affect our business. 
+
+One of the ways we intend to grow our business is through the establishment of new sales areas. The additions or modifications to our existing business and of new areas involves numerous regulatory, environmental, political and legal uncertainties beyond our control and may require the expenditure of significant amounts of capital. If we undertake such projects, they may not be completed on schedule or at the budgeted cost, or at all. Moreover, our revenue may not increase immediately upon the expenditure of funds on a particular project. For instance, if we expand into a new geographical area, the expansion may occur over an extended period of time and we will not receive any material increases in revenue until the project is completed. Moreover, we may construct facilities to capture anticipated future growth in production in a region in which such growth does not materialize. To the extent we rely on estimates of future production in our decision to expand, such estimates may prove to be inaccurate because of numerous uncertainties inherent in estimating quantities of future production. As a result, new areas may not be able to attract enough demand to achieve our expected investment return which could adversely affect our results of operations, cash flows and financial condition. 
+
+(7) We may be unable to generate sufficient or positive cash flows from the purchase, transportation, storage, distribution and sale of products to adequately support our financial or operational results. 
+
+Our marketing results depend upon our ability to generate sufficient or positive cash flows from the purchase, sale and cost to carry of products. Our cash flows are affected by many factors beyond our control, including: 
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+availability of parties willing to enter into purchase and sale transactions with us; 
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+increases in operational or capital costs; 
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+the availability of petroleum products to us; 
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+upward or downward movement and volatility in the price of petroleum products due to any reason, as well as basis differentials; 
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+availability of funds from our operations and credit facilities to support marketing and trading activities; 
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+availability of counterparties willing to offer credit to us; 
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+reductions in demand for, and supply of, petroleum products for any reason; 
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+10
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+timing differences between effecting buy, sell and other risk management transactions; and 
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+technical and structural changes in petroleum product markets
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+(8) We operate in a highly competitive business environment, and competitive pressures could adversely affect our business. 
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+We compete with similar enterprises in our areas of operation. Some of our competitors are large petroleum companies that have greater financial resources and access to supplies of petroleum products than we do. Our competitors may expand or construct sales systems and associated infrastructure that would create additional competition for the services we provide to our customers. Our ability to renew or replace existing contracts with our customers at rates sufficient to maintain current revenue and cash flows could be adversely affected by the activities of our competitors and our customers. Uncertainty and possible adverse publicity may make us more susceptible to the loss of customers to our competitors. All of these competitive pressures could have a material adverse effect on our business, results of operations and financial condition. 
+
+(9) Because our financial statements reflect results from inception, financial information in our current and future financial statements will not be comparable to prior periods. 
+
+The Company prepares its financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP"), which require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
+
+(10) We have minimal revenues and limited operating history
+
+We are a development stage company with minimal revenues and limited operations and our auditor has expressed substantial doubt about our ability to continue as a going concern. Our record of minimal revenues and a limited operating history pose specific risks that may adversely affect our business or an investment in our common stock. There can be no assurances that we will generate sufficient revenue from future operations to implement our business plan or otherwise allow management to continue to devote any time to our business operations.
+
+(11) Adverse developments in our existing areas of operation could adversely impact our results of operations, cash flows and financial condition. 
+
+Our operations are focused on treating petroleum products utilizing our sales efforts which are principally located in the Midwest supply region of the U.S. As a result, our results of operations, cash flows and financial condition depend upon the demand for our products in these regions. Due to our current lack of broad diversification in industry type and geographic location, adverse developments in our current segment of the midstream industry, or our existing areas of operation, could have a significantly greater impact on our results of operations, cash flows and financial condition than if our operations were more diversified. 
+
+(12) As a public company, we will be subject to additional financial and other reporting and corporate governance requirements that may be difficult for us to satisfy will raise our costs and may divert resources and management attention from operating our business. 
+
+We have historically operated as a private company. Following the effectiveness of this registration statement, we will need to file with the SEC annual and quarterly information and other reports that are specified in the Securities Exchange Act of 1934, as amended (the Exchange Act ), and SEC regulations. Thus, we will need to ensure that we have the ability to prepare, on a timely basis, financial statements that comply with SEC reporting requirements. We will also become subject to other reporting and corporate governance requirements, including the listing standards of the national securities exchange upon which we list our Class A Common Stock, and the provisions of the Sarbanes-Oxley Act of 2002 (the Sarbanes-Oxley Act ), and the regulations promulgated thereunder, which will impose significant new compliance obligations upon us. As a public company, we will be required, among other things, to: 
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+prepare and distribute reports and other stockholder communications in compliance with our obligations under the federal securities laws and the applicable national securities exchange listing rules; 
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+define and expand the roles and the duties of our Board of Directors and its committees; 
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+institute more comprehensive compliance, investor relations and internal audit functions; 
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+evaluate and maintain our system of internal control over financial reporting, and report on management s assessment thereof, in compliance with the requirements of Section 404 of the Sarbanes-Oxley Act and related rules and regulations of the SEC; and 
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+involve and retain outside legal counsel and accountants in connection with the activities listed above
+
+11
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+Link to Table of Contents
+
+The adequacy of our internal control over financial reporting must be assessed by management for each year commencing with the year ending December 31, 2010. Our internal control over financial reporting may not currently meet the standards required by Section 404 of the Sarbanes-Oxley Act. We will incur additional costs in order to improve our internal control over financial reporting and comply with Section 404, including increased auditing and legal fees and costs associated with hiring additional accounting and administrative staff. Ultimately, our efforts may not be adequate to comply with the requirements of Section 404. If we are unable to implement and maintain adequate internal control over financial reporting or otherwise to comply with Section 404, we may be unable to report financial information on a timely basis, may suffer adverse regulatory consequences, may have violations of the applicable national securities exchange listing rules and may breach covenants under our credit facilities. There could also be a negative reaction in the financial markets due to a loss of investor confidence in us and the reliability of our financial statements. 
+
+The changes necessitated by becoming a public company will require a significant commitment of additional resources and management oversight that will increase our costs and might place a strain on our systems and resources. As a result, our management s attention might be diverted from other business concerns. In addition, we might not be successful in implementing and maintaining controls and procedures that comply with these requirements. If we fail to maintain an effective internal control environment or to comply with the numerous legal and regulatory requirements imposed on public companies, we could make material errors in, and be required to restate, our financial statements. Any such restatement could result in a loss of public confidence in the reliability of our financial statements and sanctions imposed on us by the SEC. 
+
+(13) We are exposed to the creditworthiness and performance of our customers, suppliers and transactional counterparties, and any material nonpayment or nonperformance by one or more of these parties could adversely affect our financial and operational results. 
+
+There can be no assurance we have adequately assessed the creditworthiness of each of our existing or future customers, suppliers or transactional counterparties or that there will not be a rapid or unanticipated deterioration in their creditworthiness, which may have an adverse impact on our financial condition and results of operations. Nor is there certainty that our counterparties will perform or adhere to existing or future contractual arrangements. 
+
+We manage our exposure to credit risk through credit analysis and credit monitoring procedures and policies, including credit support requirements for customers and counterparties to which we extend no or limited unsecured credit, such as letters of credit, prepayments, and guarantees. However, these procedures and policies cannot fully eliminate counterparty credit risks, and to the extent our procedures and policies prove to be inadequate, our financial and operational results may be negatively impacted. 
+
+ (14) We Are Dependent On The Services Of A Certain Key Employee And The Loss Of His Services Could Harm Our Business.
+
+Our success largely depends on the continuing services of our Chairman and Chief Executive Officer, Brian Kistler. Our continued success also depends on our ability to attract and retain qualified personnel. We believe that Mr. Kistler possesses valuable industry knowledge, experience and leadership abilities that would be difficult in the short term to replicate. The loss of him as a key employee could harm our operations, business plans and cash flows. Mr. Kistler has agreed to dedicate approximately 10 hours per week to the development of our business. This limited amount of time that Mr. Kistler is able to devote to the development of our business on a weekly basis may inhibit our ability to generate sufficient revenue to maintain our business as a going concern.
+
+Risks Related To This Offering
+
+(15) There Is No Public Market for Our Shares, and We Do Not Know If One Will Develop Due to the Limited Demand for Stocks In the Business Services We Offer.
+
+Purchasers of these shares are at risk of no liquidity for their investment. Prior to this offering, there has been no established trading market for our securities, and we do not know that a regular trading market for the securities will develop. Due to the limited services we offer, we anticipate that demand for our shares will not be very high. If a trading market does develop for the securities offered hereby, we do not know if it will be sustained. We plan to apply to have our stock quoted on the over-the-counter ( OTC ) Electronic Bulletin Board. Such application will be filed with the Financial Industry Regulatory Authority ( FINRA ). We must obtain the services of a FINRA approved broker-dealer/market maker to file an application for our company and we do not know if such market maker will be to obtain a listing or if an established market for our common stock will be developed.
+
+(16) Because it May Be Difficult to Effect a Change in Control of Titan Holding Group, Inc. Without Current Management Consent, Management May Be Entrenched Even Though Stockholders May Believe Other Management May Be Better. 
+
+Brian Kistler, President and Director, currently holds approximately 6,000,000 shares of our outstanding voting stock, of which no shares are being registered in this offering. In addition, there are approximately 1,300,000 shares owned by relatives of Mr. Kistler. If 
+
+12
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+Link to Table of Contents
+
+Mr. Kistler and his relatives choose to keep all of their stock (that is, they sell none of their stock during this offering), Mr. Kistler and his family could retain their status as controlling security holders. Such concentration of ownership may have the effect of delaying, deferring or preventing a change in control of the Company and entrenching current management even though stockholders may believe other management may be better. Mr. Kistler has the ability to control the outcome on all matters requiring stockholder approval, including the election and removal of directors; any merger, consolidation or sale of all or substantially all of our assets; and the ability to control our management and affairs.
+
+(17) The Possible Sale of Shares of Common Stock by Our Selling Security Holders May Have a Significant Adverse Effect on the Market Price of Our Common Stock Should a Market Develop.
+
+The 4,000,000 shares of common stock owned by the selling security holders will be registered with the U.S. Securities Exchange Commission. The security holders may sell some or all of their shares immediately after they are registered. In the event that the security holders sell some or all of their shares, the price of our common stock could decrease significantly.
+
+Our ability to raise additional capital through the sale of our stock in a private placement may be harmed by these competing re-sales of our common stock by the selling security holders. Potential investors may not be interested in purchasing shares of our common stock if the selling security holders are selling their shares of common stock. The selling of stock by the security holders could be interpreted by potential investors as a lack of confidence in us and our ability to develop a stable market for our stock. The price of our common stock could fall if the selling security holders sell substantial amounts of our common stock. These sales may make it more difficult for us to sell equity or equity-related securities in the future at a time and price that we deem appropriate because the selling security holders may offer to sell their shares of common stock to potential investors for less than we do.
+
+(18) Our Lack of Business Diversification Could Result in the Devaluation of Our Stock if our Revenues From Our Primary Products Decrease.
+
+We expect our business to solely consist of the sale of KC 9000 . We do not have any other lines of business or other sources of revenue if we are unable to compete effectively in the marketplace. This lack of business diversification could cause you to lose all or some of your investment if we are unable to generate additional revenues since we do not expect to have any other lines of business or alternative revenue sources.
+
+ (19) There Has Been No Independent Valuation of the Stock, Which Means That the Stock May Be Worth Less Than the Purchase Price.
+
+The per share purchase price has been determined by us without independent valuation of the shares. We established the offering price based on our recent sale of stock at par value, not based on perceived market value, book value, or other established criteria. We did not obtain an independent appraisal opinion on the valuation of the shares. The shares may have a value significantly less than the offering price and the shares may never obtain a value equal to or greater than the offering price.
+
+(20) Investors May Never Receive Cash Distributions Which Could Result in an Investor Receiving Little or No Return on His or Her Investment.
+
+Distributions are payable at the sole discretion of our board of directors. We do not know the amount of cash that we will generate, if any, once we have more productive operations. Cash distributions are not assured, and we may never be in a position to make distributions.
+
+ (21) The Penny Stock Rules Could Restrict the Ability of Broker-Dealers to Sell Our Shares Having a Negative Effect on Our Offering.
+
+The SEC has adopted penny stock regulations which apply to securities traded over-the-counter. These regulations generally define penny stock to be any equity security that has a market price of less then $5.00 per share or an equity security of an issuer with net tangible assets of less than $5,000,000 as indicated in audited financial statements, if the corporation has been in continuous operations for less than three years. Subject to certain limited exceptions, the rules for any transaction involving a penny stock require the delivery, prior to the transaction, of a risk disclosure document prepared by the SEC that contains certain information describing the nature and level of risk associated with investments in the penny stock market. The broker-dealer also must disclose the commissions payable to both the broker-dealer and the registered representative and current quotations for the securities. Monthly account statements must be sent by the broker-dealer disclosing the estimated market value of each penny stock held in the account or indicating that the estimated market value cannot be determined because of the unavailability of firm quotes. In addition, the rules impose additional sales practice requirements on broker-dealers who sell such securities to persons other than established customers and institutional accredited investors (generally institutions with assets in excess of $5,000,000). These practices require that, prior to the purchase, the broker-dealer determined that transactions in penny stocks were suitable for the purchaser and obtained the purchaser s written consent to the transaction. If a market for our common stock does develop and our shares trade below $5.00 per 
+
+13
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+Link to Table of Contents
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+share, it will be a penny stock. Consequently, the penny stock rules will likely restrict the ability of broker-dealers to sell our shares and will likely affect the ability of purchasers in the offering to sell our shares in the secondary market. Trading in our common stock will be subject to the penny stock rules. Due to the thinly traded market of these shares investors are at a much higher risk to lose all or part of their investment. Not only are these shares thinly traded but they are subject to higher fluctuations in price due to the instability of earnings of these smaller companies. As a result of the lack of a highly traded market in our shares investors are at risk of a lack of brokers who may be willing to trade in these shares.
+
+ Other Provincial Regulatory Agencies 
+
+(22) If Our customers are found in violation of the Environmental, Health and Safety Regulation it could negatively impact our sales if our customer s oil production is interrupted
+
+General 
+
+Our customers operations are subject to varying degrees of stringent and complex laws and regulations by multiple levels of government relating to the production, transportation, storage, processing, release and disposal of petroleum based products and other materials or otherwise relating to protection of the environment. Our company is not currently directly subject to such regulations.
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/CIK0001499252_84_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001499252_84_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..15f2a752db30d3fc74b47c6ae30ae736841008e8
--- /dev/null
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@@ -0,0 +1 @@
+PROSPECTUS SUMMARY (All dollar [$] amounts shown in thousands, except amounts describing proceeds from this offering) This summary highlights selected information most of which was not otherwise addressed in the Questions and Answers section of this prospectus. For more information about us, you should carefully read the entire prospectus, including the section entitled Risk Factors, the consolidated financial statements and other financial data, any related prospectus supplement and the documents we have referred you to in Where You Can Find More Information on page 78. There will be no trading market for the Notes, so you will not be able to use the money you invest until the maturity or other repayment of the Note. Your right to be repaid prior to maturity is at our sole discretion, except upon your death.
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/CIK0001499426_precis_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001499426_precis_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..211cc60f45c6347ecb322ff2bc76de44deb4d067
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+PROSPECTUS SUMMARY AND RISK FACTORS You should read the following summary together with the entire prospectus, including the more detailed information in our financial statements and related notes appearing elsewhere in this prospectus. You should carefully consider the matters discussed in Risk Factors beginning on page 7. Summary of the Company Precis Health, Inc. is a company dedicated to make healthcare more affordable through a range of discount medical savings programs. Discount medical plans are not health insurance, but rather discount programs that provide members with access to discounts off the normal retail price from participating providers. We have the ability to offer savings on healthcare services throughout the United States, except Vermont and Washington, D.C, to persons who are uninsured, under-insured, or have elected to purchase only high deductible or limited benefit medical insurance policies. As of the date of this prospectus, our efforts have been primarily focused on opportunities in Arkansas, Missouri, Oklahoma and Texas, and we currently have no specific plans to expand outside of this region. Through our Fitz Card , we offer members typical savings of 10% to 60% on health care costs for their entire family. Our discount medical program accesses healthcare providers and provider networks to provide medical services at a discount to plan members. The actual discount realized is significantly dependent upon the specific medical service provider participating in our proposed program and the individual treatment or services to be provided. We are not an insurance company and all medical costs are borne by the individual member at the time of receiving medical care. Plan members are obligated to pay for all healthcare services, but will receive a discount from those healthcare providers who have contracted with the discount plan organization. We have no long-term agreements with any customers and have no guaranteed revenue streams. Additionally, we cannot guarantee that we will grow our business or that we will be able to realize any sales. We are development stage company incorporated in the State of Oklahoma on August 12, 2009. We have not generated any revenues since our inception. On March 2, 2010, we entered into a Sales and Services Agreement with New Benefits, Ltd., a Discount Medical Plan Organization with a network of healthcare service providers. We paid to New Benefits a one-time set-up fee of $2,500, which is refundable to us if we enroll at least 2,500 members within the first 12 months of the Agreement. However, if we are unable to enroll 2,500 members by March 2, 1011, we will forfeit the entire $2,500 set-up fee. As a result of this Agreement, we have the ability to resell the discount healthcare and consumer benefits of New Benefits throughout the United States, with the exception of Vermont, Washington, D.C. and Puerto Rico. At this time, however, we are only marketing our discount medical healthcare program in Oklahoma, Texas, Arkansas and Missouri, and have not conducted any marketing or sales activities or pursued any sales leads outside of our immediate geographic region. The Agreement is in effect for a period of one year and will automatically renew for subsequent one year periods unless and until terminated by us or New Benefits for any reason, at any time, with 30 days notice and without cause or remediation. We have no other agreements in place to replace or cover the loss of our Agreement with New Benefits. We are substantially dependent upon our Agreement with New Benefits to provide the services associated with the Fitz Card. The cessation of, or material change in, such Agreement, or a disruption of our members access to New Benefits network of PPOs could affect our ability to service and retain our members. Since our inception through September 30, 2010, we have not generated any revenues and have incurred a net loss of $(72,051). Total cash on hand as of September 30, 2010, was $0. We are conducting an offering of our common stock, registered hereby, to raise capital with which we plan to allocate toward business development, sales and marketing expenses and working capital, as well as the costs associated with this offering. Even if we are able to raise the full amount of proceeds sought in this public offering, we will require substantial additional funds to fully realize our business objective of expanding our operations throughout the United States. In the event we are unable to raise any funds in this offering, we may be forced to delay, curtail, or eliminate certain aspects of our plan of operation, such as being unable to implement our marketing programs, an inability to build sales and support infrastructure, and decreased geographic expansion capability. For additional information concerning our plan of operation, please refer to page 47. However, we believe that our lack of significant operating history and uncertainty regarding our ability to generate significant revenues are material concerns. Additionally, there can be no assurance that the actual expenses incurred will not materially exceed our estimates or that cash flows from operating activities will be adequate to maintain our business. As a result, our independent auditors have expressed substantial doubt about our ability to continue as a going concern in the independent auditors report to the financial statements included in this registration statement. New Developments[1] In March of 2010, the Health Care and Education Reconciliation Act of 2010 and Patient Protection and Affordable Care Act were signed into law. The law include numerous health-related provisions to take effect over a four-year period, including prohibiting health insurers from denying coverage or refusing claims based on pre-existing conditions, expanding Medicaid eligibility, subsidizing insurance premiums, providing incentives for businesses to provide health care benefits, establishing health insurance exchanges, and support for medical research. The costs of these provisions are offset by a variety of taxes, such as taxes on indoor tanning and certain medical devices (excluding eyeglasses, contact lenses, hearing aids, and any other medical device which is determined to be of a type generally purchased by the general public at retail for individual use), and offset by cost savings such as improved fairness in the Medicare Advantage program relative to traditional Medicare. There is also a tax penalty for citizens, who do not obtain health insurance. The law stipulates that, effective by January 1, 2014, an annual penalty of $95, or up to 1% of income, whichever is greater, will be imposed on individuals who do not secure insurance. The penalty will rise to $695, or 2.5% of income, by 2016. This is an individual limit; families have a limit of $2,085. Exemptions to the fine in cases of financial hardship or religious beliefs are permitted. Effective by January 1, 2014, the acts impose a $2,000 per employee tax penalty on employers with more than 50 employees who do not offer health insurance to their full-time workers. Organizations with fewer than 50 employees are exempt from having to provide insurance to their employees. Therefore, these persons are likely to require some form of medical coverage to avoid the tax penalties proposed to be imposed in 2014. We are unable to accurately speculate the potential impact of the healthcare act. However, we believe that our services fill a void that currently exists and will continue to exist through at least December 31, 2013. Additionally, it is the understanding of management that, as currently written in the healthcare act, the various state groups ( exchanges ) mandated thereunder will be required to have two components: (1) DMPO discounted savings plan and (2) traditional insurance coverage. Resultantly, we believe the mandate will create the opportunity for us to partner with the state exchanges, positively impacting our operations. However, we contend that, as of the date of this prospectus, no rules or regulations in support of the healthcare act have yet been written and would not be effective until 2014 and we are unable to speculate whether the aforementioned provisions will actually be implemented. As of the date of passage of the Act, approximately 36 states were considering taking legal action to challenge the Act, claiming that fining individuals for failing to buy insurance is not within the scope of Congress's taxing powers. On March 22, 2010, Attorneys General of eleven states announced their intentions to sue the federal government, citing the bill as a violation of state sovereignty and saying Congress has no authority to require individuals to purchase health insurance. Less than an hour after the bill was signed into law on March 23, 2010, thirteen states (Florida, Alabama, Colorado, Idaho, Louisiana, Michigan, Nebraska, Pennsylvania, South Carolina, South Dakota, Texas, Utah, and Washington) filed a lawsuit in U.S. District Court in Pensacola challenging the bill. Subsequently, five additional states (Arizona, Indiana, Mississippi, Nevada and North Dakota) joined in Florida's suit, bringing the number of states participating to eighteen. In a press release, the Attorneys General indicated their primary basis for the challenge was a violation of state sovereignty. Their release stated, "The Constitution nowhere authorizes the United States to mandate, either directly or under threat of penalty, that all citizens and legal residents have qualifying health care coverage," and that the law puts an unfair financial burden on state governments. The lawsuit states the following legal rationale: Regulation of non-economic activity under the Commerce Clause is possible only through the Necessary and Proper Clause. The Necessary and Proper Clause confers supplemental authority only when the means adopted to accomplish an enumerated power are 'appropriate', are 'plainly adapted to that end', and are 'consistent with the letter and spirit of the constitution.' Requiring citizen-to-citizen subsidy or redistribution is contrary to the foundational assumptions of the constitutional compact. The State of Virginia filed a separate suit based on a conflict between the Act and a recently enacted state law. Other states were either expected to join the multi-state lawsuit or are considering filing additional independent suits. Members of several state legislatures are attempting to counteract and prevent elements of the bill within their states. Legislators in 29 states have introduced measures to amend their constitutions to nullify portions of the health care reform law. Thirteen state statutes have been introduced to prohibit portions of the law; two states have already enacted statutory bans. Six legislatures had attempts to enact bans, but the measures were unsuccessful. In August 2010, a ballot initiative passed overwhelmingly in Missouri that would exempt the state from some provisions of the bill. [Endnote 1: http://en.wikipedia.org/wiki/Patient_Protection_and_Affordable_Care_Act] As of the date of this prospectus, Precis Health, Inc. has 4,020,000 shares of $0.001 par value common stock issued and outstanding. Our principal office is located at: 2500 S. McGee Dr., Ste. 145 Norman, OK 73072 Telephone: (405) 360-5047 Facsimile: (405) 360-5354 Our fiscal year end is December 31. Offering by Precis Health, Inc. Precis Health, Inc. is offering, on a best-efforts, self-underwritten basis, up to a maximum of 1,500,000 shares of our common stock at a price of $0.50 per share to the public. There is no minimum purchase requirement for prospective stockholders and there is no minimum number of shares that must be sold by us for the offering to proceed. All funds received from purchasers will be directly and immediately available to us. The proceeds from the sale of the shares by the Issuer in this offering will be payable to Precis Health, Inc. All subscription agreements and checks are irrevocable and should be delivered directly to Precis Health, Inc. Failure to do so will result in checks being returned to the investor who submitted the check. The offering shall terminate on the earlier of (i) the date when the sale of all 1,500,000 shares is completed or (ii) 365 days from the effective date of this prospectus, subject to the filing of post-effective amendments, thereafter deregistering any shares of such 1,500,000 shares remaining unsold to the public. We will deliver stock certificates attributable to shares of common stock purchased directly to the purchasers within 30 days after the close of the offering. The offering price of the common stock has been arbitrarily determined and bears no relationship to any objective criterion of value. The price does not bear any relationship to our assets, book value, historical earnings or net worth. We will apply the proceeds from the offering to pay for sales and marketing programs, office expenses, fees associated with being a public reporting company, various infrastructure costs and general working capital. The purchase of the common stock in this offering involves a high degree of risk. The common stock offered in this prospectus is for investment purposes only and currently no market for our common stock exists. Please refer to "Risk Factors" on page 7 and "Dilution" on page 13 before making an investment in our stock. Our Transfer Agent is expected to be Empire Stock Transfer, Inc., 1859 Whitney Mesa Dr., Henderson, NV 89014, Phone: (702) 818-5898. Summary Financial Information The summary financial data are derived from the historical financial statements of Precis Health, Inc. This summary financial data should be read in conjunction with "Management's Discussion and Plan of Operations" as well as the historical financial statements and the related notes thereto, included elsewhere in this prospectus. Balance Sheet Data September 30, 2010 December 31, 2009 ASSETS Total assets $ - $ 1,100 LIABILITIES AND STOCKHOLDERS DEFICIT Liabilities Bank overdraft $ 603 $ - Accounts payable 978 - Accounts payable related party 46,120 - Notes payable related party 10,350 - Total liabilities 58,051 - Stockholders deficit Common stock 4,020 4,000 Additional paid-in capital 9,980 - Subscriptions receivable - (2,750 ) Deficit accumulated during development stage (72,051 ) (150 ) Total stockholders equity (58,051 ) 1,100 Total liabilities and stockholders deficit $ - $ 1,100 Statements of Operations Data For the For the Inception three months nine months (August 12, 2009) Ended Ended To September 30, 2010 September 30, 2010 September 30, 2010 Revenue $ - $ - $ - Expenses: General and administrative 3,388 8,119 8,269 Professional fees 9,659 13,482 13,482 Professional fees related party 24,000 50,300 50,300 Total expenses 37,047 71,901 72,051 Net (loss) $ (37,047 ) $ (71,901 ) $ (72,051 ) Net income (loss) per share $ (0.01 ) $ (0.02 ) Risk Factors Investment in the securities offered hereby involves certain risks and is suitable only for investors of substantial financial means. Prospective investors should carefully consider the following risk factors in addition to the other information contained in this prospectus, before making an investment decision concerning the common stock. Investors may lose their entire investment if we fail to implement our business plan. Precis Health, Inc. was formed in August 2009. We are an early stage company without guaranteed or recurring streams of revenues. Our prospects must therefore be considered in light of the risks, uncertainties, expenses and difficulties frequently encountered by companies in their early stages of development. These risks include, without limitation, the absence of ongoing revenue streams, a competitive market environment and lack of brand recognition. We cannot guarantee that we will be successful in establishing our discount medical plan. If we fail to implement and create a base of operations for our health program, we may be forced to cease operations, in which case investors may lose their entire investment. If we are unable to continue as a going concern, investors may face a complete loss of their investment. As of the date of this Prospectus, we have had only limited start-up operations, have no material operating history and no source of revenues. Taking these facts into account, our independent registered public accounting firm has expressed substantial doubt about our ability to continue as a going concern in the independent registered public accounting firm s report to the financial statements included in the registration statement, of which this prospectus is a part. If our business fails, investors may face a complete loss of their investment. We are significantly dependent upon the proceeds expected to be raised in this offering. We have limited capital resources and have incurred operating losses since our inception. Our operations have historically been financed through sales of our equity and debt securities. Our position is tenuous and we are significantly dependent upon this offering to provide us with sufficient capital to implement our business plan and sustain our operations for the next at least 12 months. In the event we are unable to raise any funds in this offering or if our cost of doing business is substantially higher than we anticipate, we may be forced to delay, curtail or eliminate certain aspects of our plan of operation, such as being unable to implement our marketing programs, an inability to build sales and support infrastructure, and decreased geographic expansion capability, or possibly go out of business. Furthermore, even if we are able to raise the full amount of proceeds sought in this public offering, we will require substantial additional funds to fully realize our business objective of expanding our operations throughout the United States. A possibility of such outcome presents a risk of complete loss of investment in our common stock. Additionally, even if we are able to raise the full amount of proceeds sought in this public offering, we will require substantial additional funds to fully realize our business objective of expanding our operations throughout the United States. The market for discount medical programs is highly competitive, and we are in an unfavorable competitive position. Our management believes we compete, in general, with numerous, more established companies providing discount medical service plans. These competitors include companies that offer healthcare products and services through membership programs such that we are proposing to provide, as well as insurance companies, preferred provider organization networks and other organizations that offer benefit programs to their customers. All of our competitors are significantly larger and have substantially greater financial, technical, marketing and other resources and significantly greater name recognition. In addition, many of our competitors have well-established, long-term relationships with their clients and network of providers. There is no assurance that there will not be future competition from other companies that could potentially enter the market and try to emulate our business model. Increased competition may result in price reductions, reduced gross margins, and loss of market share, any of which could adversely affect our business, financial condition and results of operations. There can be no assurance that we will be able to compete successfully against present or future competitors or that competitive pressures will not force us to cease our operations. We may be unable to generate sales without sales, marketing or distribution capabilities. We have not commenced our planned discount medical plan business and do not have any sales, marketing or distribution capabilities. We cannot guarantee that we will be able to develop a sales and marketing plan or to develop a sufficient medical care provider network to attract customers. In the event we are unable to successfully implement these objectives, we may be unable to generate sales and operate as a going concern. The loss of any providers in our proposed discount healthcare programs may weaken our business results. Since we expect many of our discount plan members to be self-insured and solely responsible for payment for healthcare services received, failure to pay or late payments by members may negatively affect our relationship with the healthcare providers in our network. Consequently, our relationships with such providers may be adversely affected by events beyond our control, including departures of key personnel and alterations in professional relationships and members failures to pay for services received. The loss of a preferred provider organization within a geographic market area may not be replaced on a timely basis, if at all, and may have a material adverse effect on our business, financial condition and results of operations. We rely heavily on our agreement with New Benefits, Ltd. to be able to provide the services underlying our Fitz Card program and the loss of, or a change in, this arrangement will have a material adverse effect on our business. New Benefits, Ltd. is the sole Discount Medical Plan Organization through whom we access the Preferred Provider Organizations network of healthcare providers. Our Agreement with New Benefits can be cancelled at any time with 30 days notice and without cause or remediation. We have no other agreements in place to replace or cover the loss of our Agreement with New Benefits. The loss of, or material change in, our arrangement with New Benefits, or a disruption of our members access to New Benefits PPOs could affect our ability to service and retain our members and could, therefore, adversely affect our business. Government regulation and related private party litigation may adversely impact our results of operations. Several states have enacted laws and regulations that govern discount medical program organizations. The laws vary in scope, ranging from registration to a comprehensive licensing process with oversight over all aspects of the program, including the manner by which discount medical programs are sold, the price at which they are sold, the relationship of the DMPO licenses or registrations. We will be required to hold these licenses in every jurisdiction we do business where such a license or registration is required to be held. We are a development stage company recently formed and we do not know the full extent of how these regulations will affect our business or whether or not we will be able to acquire or maintain all necessary licenses. Our need to comply with these regulations may adversely affect or limit our future operations. The cost of complying with these laws and regulations will likely have a material adverse effect on our financial position. We market memberships in associations that have been formed to provide various consumer benefits to their members. These associations may include in their benefit packages insurance products that are issued under group or blanket policies covering the association s members. Most states allow these memberships to be sold under certain circumstances without a licensed insurance agent making each sale. If a state were to determine that our sales of these memberships do not comply with their regulations, our ability to continue selling such memberships would be affected and we might be subject to fines and penalties and may have to issue refunds or provide restitution to the associations and their members. Precis Health, Inc. may lose its top management without employment agreements. Our operations depend substantially on the skills and experience of our officers and sole director, namely Paul A. Kruger, our CEO and sole director, Janet W. Kruger, our President, and Terri S. Metzger, our Corporate Secretary. Although we plan to have non-salaried personnel work for us on a per-project basis, as necessary, we have no other full- or part-time employees besides these three individuals. Furthermore, we do not maintain key man life insurance on any of our officers or sole director. Without employment contracts, we may lose one or more of our officers and sole director to other pursuits without a sufficient warning and, consequently, go out of business. Our officers and sole director may become involved in other business opportunities and may face a conflict in selecting between our company and their other business interests. We have not formulated a policy for the resolution of such conflicts. The loss of any or all of our officers and sole director to other pursuits without a sufficient warning we may, consequently, go out of business. Failure by us to respond to changes in client demands could result in lack of sales revenues and may force us out of business. The market for our proposed discount medical program is characterized by rapidly changing healthcare issues, evolving industry developments and changing customer needs. Our future success will depend on our ability to enhance our current services, establish and expand our provider network, advertise and market our services and respond to emerging industry trends, developments and other changes on a timely and cost effective basis. We may not be successful in anticipating or responding to these developments on a timely basis, and our offerings may not be successful in the marketplace. There can be no assurance that we will be successful in enhancing our existing service offerings on a timely basis or that any new enhancements will achieve market acceptance. If we fail to anticipate or respond adequately to changes in customer preferences, these events could have a material adverse affect on our business, financial condition and results of operation. Our internal controls may be inadequate, which could cause our financial reporting to be unreliable and lead to misinformation being disseminated to the public. Our management is responsible for establishing and maintaining adequate internal control over financial reporting. As defined in Exchange Act Rule 13a-15(f), internal control over financial reporting is a process designed by, or under the supervision of, the principal executive and principal financial officer and effected by the board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that: (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company s assets that could have a material effect on the financial statements. We have not undertaken an evaluation of our internal controls; however, our internal controls may be inadequate or ineffective, which could cause our financial reporting to be unreliable. Investors will have limited control over decision-making because our officers and sole director control the majority of our issued and outstanding common stock. Janet W. Kruger and Terri S. Metzger, both of whom are executive officers of Precis Health, Inc., collectively beneficially own approximately 49.8% of our issued and outstanding common stock. As a result of such ownership, investors in this offering will have limited control over matters requiring approval by our security holders, including the election of directors. In the event the maximum offering is attained, our officers and directors will continue to own approximately 36.2% of our outstanding common stock. Such concentrated control may also make it difficult for our stockholders to receive a premium for their shares of our common stock in the event we enter into transactions which require stockholder approval. In addition, certain provisions of Oklahoma law could have the effect of making it more difficult or more expensive for a third party to acquire, or of discouraging a third party from attempting to acquire, control of us. For example, Oklahoma law provides that not less than two-thirds vote of the stockholders is required to remove a director, which could make it more difficult for a third party to gain control of our Board of Directors. This concentration of ownership limits the power to exercise control by the minority shareholders. Investors in this offering will bear a substantial risk of loss due to immediate and substantial dilution Our four founding shareholders each acquired 1,000,000 shares of our common stock, at a price per share of $0.001, for an aggregate issuance of 4,000,000 shares. Upon the sale of the common stock offered hereby, the investors in this offering will pay a price per share that substantially exceeds the value of our assets after subtracting liabilities and will experience an immediate and substantial dilution. Therefore, the investors in this offering will bear a substantial portion of the risk of loss. Additional sales of our common stock in the future could result in further dilution. Please refer to Dilution on page 13. You may not be able to sell your shares in our company because there is no public market for our stock. There is no public market for our common stock. In the absence of being listed on a stock exchange or trading platform, no market is available for investors in our common stock to sell their shares. We cannot guarantee that a meaningful trading market will develop. If our stock ever becomes tradable, of which we cannot guarantee success, the trading price of our common stock could be subject to wide fluctuations in response to various events or factors, many of which are beyond our control. In addition, the stock market may experience extreme price and volume fluctuations, which, without a direct relationship to the operating performance, may affect the market price of our stock. Investors may have difficulty liquidating their investment because our stock will be subject to penny stock regulation. The SEC has adopted rules that regulate broker/dealer practices in connection with transactions in penny stocks. Penny stocks generally are equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on the Nasdaq system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange system). The penny stock rules require a broker/dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document prepared by the SEC that provides information about penny stocks and the nature and level of risks in the penny stock market. The broker/dealer also must provide the customer with bid and offer quotations for the penny stock, the compensation of the broker/dealer, and its salesperson in the transaction, and monthly account statements showing the market value of each penny stock held in the customer's account. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from such rules, the broker/dealer must make a special written determination that a penny stock is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in any secondary market for a stock that becomes subject to the penny stock rules, and accordingly, customers in Company securities may find it difficult to sell their securities, if at all. All of our issued and outstanding common shares are restricted under Rule 144 of the Securities Act, as amended. When the restriction on any or all of these shares is lifted, and the shares are sold in the open market, the price of our common stock could be adversely affected. All of the presently issued and outstanding shares of common stock, aggregating 4,020,000 shares of common stock, are restricted securities as defined under Rule 144 promulgated under the Securities Act and may only be sold pursuant to an effective registration statement or an exemption from registration, if available. Rule 144, as amended, is an exemption that generally provides that a person who has satisfied a six month holding period for such restricted securities may sell, within any three month period (provided we are current in our reporting obligations under the Exchange Act) subject to certain manner of resale provisions, an amount of restricted securities which does not exceed the greater of 1% of a company s outstanding common stock or the average weekly trading volume in such securities during the four calendar weeks prior to such sale. Sales of shares by our shareholders, whether pursuant to Rule 144 or otherwise, may have an immediate negative effect upon the price of our common stock in any market that might develop. Investors may be unable to sell their shares without complying with Blue Sky regulations. Each state has its own securities laws, also known as blue sky laws, which, in part, regulates both the offer and sale of securities. In most instances, offers or sales of a security must be registered or exempt from registration under these blue sky laws of the state or states in which the security is offered and sold. The laws and filing or notification requirements tend to vary between and among states. Sales by the selling shareholders may occur in Oklahoma. Apart from the State of Oklahoma, we have not made any determinations as to where such resale transactions may or may not occur. Resale transactions in any State except Oklahoma require proper diligence on the part of the investor. Investors should consult an attorney or a licensed investment professional prior to delving into blue sky laws. Failure to comply with applicable securities regulations may lead to fines or imprisonment. Our common stock may not be transferable without meeting securities registration requirements or exemption therefrom. We have not registered our securities in any jurisdiction and have not identified any exemptions from registration. As a result, investors in our common stock may have difficulty selling their shares unless they are able to register their shares or find an exemption therefrom. Furthermore, broker-dealers may be unwilling or unable to act on behalf of investors in our common stock unless or until the shares are registered, or an applicable exemption from registration is identified, in certain states in which our common stock may be offered or sold. Future issuances of our preferred stock could dilute the voting and other rights of holders of our common stock. Our Board of Directors has the authority to issue shares of preferred stock in any series and may establish, from time to time, various designations, powers, preferences and rights of the shares of each such series of preferred stock. Any issuances of preferred stock would have priority over the common stock with respect to dividend or liquidation rights. Any future issuance of preferred stock may have the effect of delaying, deferring or preventing a change in control of our Company and may adversely affect the voting and other rights of the holders of common stock. We have not paid any cash dividends and do not intend to pay any cash dividends for the foreseeable future. We have never declared or paid any cash dividends on our common stock. For the foreseeable future, we intend to reinvest any earnings in the development and expansion of our business, and do not anticipate paying any cash dividends on our common stock. Any future determination to pay dividends will be at the discretion of the Board of Directors and will be dependent upon then existing conditions, including our financial condition and results of operations, capital requirements, contractual restrictions, business prospects and other factors that the board of directors considers relevant. Therefore, there can be no assurance that any dividends on the common stock will ever be paid. Special note regarding forward-looking statements This prospectus contains forward-looking statements about our business, financial condition and prospects that reflect our management s assumptions and beliefs based on information currently available. We can give no assurance that the expectations indicated by such forward-looking statements will be realized. If any of our assumptions should prove incorrect, or if any of the risks and uncertainties underlying such expectations should materialize, our actual results may differ materially from those indicated by the forward-looking statements. The key factors that are not within our control and that may have a direct bearing on operating results include, but are not limited to, acceptance of our proposed services and the products we expect to market, our ability to establish a customer base, managements ability to raise capital in the future, the retention of key employees and changes in the regulation of our industry. There may be other risks and circumstances that management may be unable to predict. When used in this prospectus, words such as, believes, expects, intends, plans, anticipates, estimates and similar expressions are intended to identify and qualify forward-looking statements, although there may be certain forward-looking statements not accompanied by such expressions.
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+PROSPECTUS SUMMARY As used in this prospectus, references to the Company, we, our, us, or Tundra refer to Tundra Gold Corp., unless the context otherwise indicates. The following summary highlights selected information contained in this prospectus. Before making an investment decision, you should read the entire prospectus carefully, including the Risk Factors section, the financial statements and the notes to the financial statements. Corporate Background Tundra Gold Corp. was incorporated under the laws of the State of Nevada on September 16, 2009 under the name Titan Gold Corp. On February 25, 2010, the Company amended its articles of incorporation to change its name from Titan Gold Corp to Tundra Gold Corp. Tundra is an exploration-stage company as defined by the U.S. Securities and Exchange Commission ( SEC ) and we are in the business of exploring and if warranted, advancing certain unpatented mineral properties to the discovery point where we believe maximum shareholder returns can be realized. Our primary focus is in the gold sector and our only mineral property at this time consists of 5 unpatented claims located in Marietta, Mineral County, Nevada (the Marietta ). We are dependent upon making a gold deposit discovery at Marietta for the furtherance of the Company. Should we be able to make an economic find at Marietta, we would then be solely dependent upon the Marietta mining operation for our revenue and profits, if any. The Marietta claims presently do not have any mineral resources or reserves. There is no mining plant or equipment located within the property boundaries. Currently, there is no power supply to the mineral claims. The probability that ore reserves that meet SEC guidelines will be discovered on an individual hard rock prospect at Marietta is undeterminable at this time. A great deal of work is required on the Marietta property before a determination as to the economic and legal feasibility of a mining venture on it can be made. MinQuest has provided a work plan for the first year that will include scanning all currently available data, georeferencing all maps in order to digitize drill hole locations, geology and geochemistry. A spread sheet of drill hole information will be compiled from the known historical drilling. There is no assurance that a commercially viable deposit will be proven through the exploration efforts by us at Marietta. We cannot assure you that funds expended on our Marietta property or other properties that we may acquire in the future will be successful in leading to the delineation of ore reserves that meet the criteria established under SEC mining industry reporting guidelines. Approximate date of commencement of proposed sale to the public: From time to time after the effective date of this registration statement. If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, please check the following box: [x] If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer, and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one) Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company x Strategy Our primary focus in the natural resource sector is gold. Though it is possible to take a resource property that hosts a viable ore deposit into mining production, the costs and time frame for doing so are considerable, and the subsequent return on investment for our shareholders would be very long term indeed. We therefore anticipate optioning or selling any ore bodies that we may discover to a major mining company. Acquisition of Interest On May 18, 2010 the Company executed a property lease agreement with MinQuest, Inc. ( MinQuest ) whereby the Company leased certain unpatented mineral claims from MinQuest collectively referred to as the Marietta (the Marietta ). The lease agreement is for a period of 20 years with annual lease payments of $5,000 due on May 15 of each year. There are no minimum annual exploration expenditures required under the agreement. Description and location of the Marietta The Marietta is located in Mineral County, Nevada, 120 km north of Tonopah and currently consists of 5 unpatented claims. Exploration History of the Marietta Exploration history includes some small unrecorded production from the property that likely occurred between the early 1900 s and 1940 s. Modern exploration was confined to work conducted by American Gold Resources (AGR) from 1989 to 1992. AGR completed a total of 59 drill holes testing the above referenced resource area. Of this amount, 33 holes were drilled on 50 feet centers while the remaining holes were drilled on 200 feet centers. Drilling to a depth of 350 feet has defined a mineralized zone that is mostly hosted within a graben of calcareous sandstone with quartz veins. Further work is needed to determine the strike and extent and depth of the mineralization. Geology of the Marietta The Marietta is located within the Walker Lane trend. The Walker Lane is a linear north-northwest trending depression extending some 800 km (500 miles) north from the Garlock Fault-Las Vegas area to south-central Oregon. Within it are Walker, Goose, and Pyramid Lakes. This trough is part of the Walker Lane Fault Zone, a major tectonic system that includes Owens and Death Valleys and several prominent faults, and is the site of many contemporary earthquakes. Located at the juncture of two contrasting tectonic styles, the Sierra Nevada and the Basin and Range, the Walker Lane region is deforming in a complex way by both extensional and transcurrent (sliding) fault movements. Calculation of Registration Fee Title of Class of Securities to be Registered Amount to be Registered Proposed Maximum Aggregate Price Per Share Proposed Maximum Aggregate Offering Price Amount of Registration Fee Common Stock, $0.0001 per share(1) 4,740,000 $0.10(2) $474,000 $33.80(3) Total 4,740,000 $0.102) $474,000 $33.80(3) (1) Represents common shares currently outstanding to be sold by the selling security holders. (2) The offering price has been estimated solely for the purpose of computing the amount of the registration fee in accordance with Rule 457(o). Our common stock is not traded and any national exchange and in accordance with Rule 457, the offering price was determined by the price shares were sold to the selling security holders in private placement transactions. The selling shareholders may sell shares of our common stock at a fixed price of $0.10 per share until our shares are quoted on the OTC Bulletin Board and thereafter at prevailing market prices or privately negotiated prices. The fixed price of $0.10 has been determined as the selling price based upon the original purchase price paid by the selling security holders of $0.01 per share for 3,500,000 common shares and $0.05 per share for 1,240,000 common shares plus an increase based on the fact the shares will be liquid and registered. There can be no assurance that a market maker will agree to file the necessary documents with the Financial Industry Regulatory Authority ( FINRA ), which operates the OTC Electronic Bulletin Board, nor can there be any assurance that such an application for quotation will be approved. We have agreed to bear the expenses relating to the registration of the shares for the selling security holders. In the event of a stock split, stock dividend or similar transaction involving our common stock, the number of shares registered shall automatically be increased to cover the additional shares of common stock issuable pursuant to Rule 416 under the Securities Act of 1933, as amended. (3) Previously paid. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED. PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION DATED ______ __, 2010 The Walker Lane shear zone straddles the border between Nevada and California and has a long history of exploration and mining, dating back to the discovery of the famous Comstock Lode in the late 1850s. The Walker Lane is notable for its numerous occurrences of volcanic-hosted epithermal gold and silver deposits. The project area covers sheared and brecciated silciclastic rocks of the Triassic Excelsior Formation intruded by a porphyryitic quartz-monzonite of Laramide age. The mineralized zone is mostly hosted within a graben of calcareous sandstone with quartz veins. Current State of Exploration The Marietta claims presently do not have any mineral resources or reserves. There is no mining plant or equipment located within the property boundaries. Currently, there is no power supply to the mineral claims. Geological Exploration Program The Company is in the process of compiling all historic drilling and sampling results. These results will be evaluated to determine if one or more precious metals may exist within the property boundaries. Our planned program includes compilation of all activities to the present with the goal of producing an outline of mineralized areas that will guide further exploration drilling. However, this program is exploratory in nature and no minable reserves may ever be found. Intellectual Property Rights We do not have any intellectual property rights. Competition The mineral exploration industry is intensely competitive, highly fragmented and subject to rapid change. We may be unable to compete successfully with our existing competitors or with any new competitors. We compete with many exploration companies which have significantly greater personnel, financial, managerial, and technical resources than we do. This competition from other companies with greater resources and reputations may result in our failure to maintain or expand our business. TUNDRA GOLD CORP. 4,740,000 Shares of Common Stock This prospectus relates to the resale of 4,740,000 shares of common stock, par value $0.0001, of Tundra Gold Corp., which are issued and outstanding and held by persons who are stockholders of Tundra Gold Corp. Our common stock is presently not traded on any market or securities exchange. The shares of our common stock can be sold by selling security holders at a fixed price of $0.10 per share until our shares are quoted on the OTC Bulletin Board and thereafter at prevailing market prices or privately negotiated prices. The fixed price of $0.10 has been determined as the selling price based upon the original purchase price paid by the selling shareholders of $0.01 per share for 3,500,000 of the shares and $0.05 per share for 1,240,000 of the shares, plus an increase based on the fact the shares will be liquid and registered. As a result of our business activities, the subscription price paid by investors in the second private placement was higher than in the first. After the effective date of the registration statement relating to this prospectus, we hope to have a market maker file an application with FINRA, for our common stock to be eligible for trading on the Over the Counter Bulletin Board. We do not yet have a market maker who has agreed to file such application. Investing in our securities involves significant risks. See Risk Factors beginning on page 3. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. The information in this prospectus is not complete and may be changed. This prospectus is included in the registration statement that was filed by us with the Securities and Exchange Commission. The selling security holders may not sell these securities until the registration statement becomes effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. The date of this prospectus is __________, 2010 Government Regulations Mineral resource exploration, production and related operations are subject to extensive rules and regulations of federal, state and local agencies. We may be required to obtain work permits, post bonds and perform remediation work for any physical disturbance to the land in order to comply with these laws. While our planned exploration program budgets for regulatory compliance, there is a risk that new regulations could increase our costs of doing business and prevent us from carrying out exploration program. Failure to comply with these rules and regulations can result in substantial penalties. Our cost of doing business may be affected by the regulatory burden on the mineral industry. We believe that compliance with the laws will not adversely affect our business operations Employees We currently have no employees. Property The Company currently maintains its executive offices on a shared basis at 200 S. Virginia, 8th Floor, Reno, Nevada, 89501. We have a one year lease that commenced March 1, 2010 at a rate of $169 per month. See Acquisition of Interest above. The Offering Securities offered: 4,740,000 shares of common stock Offering price: The selling security holders will be offering their shares of common stock at a price of $0.10 per share, which includes an increase from their purchase price based on the fact the shares will be liquid and registered. This is a fixed price at which the selling security holders may sell their shares until our common stock is quoted on the OTC Bulletin Board, at which time the shares may be sold at prevailing market prices or privately negotiated prices. Shares outstanding prior to offering: 24,740,000 shares of common stock. Table of Contents Page Prospectus Summary 1
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+PROSPECTUS SUMMARY This summary highlights selected information contained in greater detail elsewhere in this prospectus. This summary may not contain all of the information that you should consider before investing in our ADSs. You should carefully read the entire prospectus, including "Risk Factors" and the financial statements and related notes appearing elsewhere in this prospectus, before making an investment decision. Our Business We are the leading national provider of tutoring services for primary and secondary school students in China with a focus on offering personalized tutoring services. We are the largest provider of primary and secondary school tutoring services in China in terms of revenue for the year of 2009, according to International Data Corporation, or IDC, an independent market research firm. According to a 2010 market research report issued by IDC, or the IDC report, in 2009, our market share was the largest among primary and secondary school tutoring service providers in China, accounting for approximately 0.42% of the highly fragmented market, in which the top five players by revenue held an aggregate of 1.6% market share. We believe our leadership position and the fragmentation of the market provide us with significant growth opportunities. According to the IDC report, we operate the largest tutoring service network in terms of number of cities covered as of June 30, 2010. Since opening our first learning center in 2004, we have organically built an extensive tutoring service network comprised of 218 learning centers and over 10,100 full-time service professionals, serving customers located in 54 economically developed cities across 27 of China's 31 provinces and municipalities as of March 31, 2011. We have established "Xueda" as a leading brand in China's tutoring sector. According to the IDC report, "Xueda" is one of only a few nationwide, highly-recognized Chinese education brands. In 2010, we were named an "Education Institution with A Top National Brand" by Tencent.com, one of the largest and most used Internet service providers in China. In 2011, Sina.com, one of the most visited Internet portals in China, named us one of the "2010 A-List After-School Education Institutions". We believe our strong brand helps us reach a broad customer base and has contributed to our rapid growth. As a pioneer in providing personalized tutoring services in China, we strive to help students improve their academic performance and reach their potential by building on their strengths, filling in knowledge gaps, inspiring interest in learning, cultivating good study habits and fostering self-confidence. We have developed and implemented a results-oriented, student-centric service delivery model. Compared to the conventional, class-based tutoring, our service model features personalized tutoring services tailored to each of our students' needs and preferences and delivered by a dedicated team of full-time service professionals primarily through one-on-one tutoring. As such, we believe we are a provider of premium tutoring services. By helping students improve academic performance and become motivated and well-rounded learners, we have won the trust of tens of thousands of students and parents, which has in turn helped us further enhance our brand awareness and customer loyalty. As a result of our strong brand and effective service model, our business has experienced rapid growth. Service Network. We expanded our tutoring service network from 108 learning centers in 28 cities in 2008 to 131 learning centers in 33 cities in 2009 and 207 learning centers in 53 cities in 2010. As of March 31, 2011, we operated 218 learning centers in 54 cities, including some of China's most economically developed cities such as Beijing, Guangzhou, Shanghai, Tianjin, Shenzhen, Chongqing, Nanjing and Wuhan. FORM F-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Table of Contents Students Served. We increased the number of students served each year from approximately 27,100 in 2008, to approximately 54,100 in 2009 and approximately 89,000 in 2010. In the three months ended March 31, 2011, we served approximately 56,700 students, compared to approximately 36,700 for the same period in 2010. Course Hours Delivered. We increased the course hours delivered each year from approximately 1.8 million hours in 2008, to approximately 3.9 million hours in 2009, and to approximately 7.0 million course hours in 2010. For the three months ended March 31, 2011, we delivered approximately 2.2 million course hours, compared to approximately 1.5 million hours for the same period in 2010. Financial Performance. Our net revenue increased significantly from $4.4 million in 2007 to $34.1 million, $77.2 million and $154.1 million in 2008, 2009 and 2010, respectively, representing a CAGR of 227%. From the three months ended March 31, 2010 to the three months ended March 31, 2011, our net revenue increased from $30.9 million to $50.8 million. We recorded annual net losses of $6.0 million, $12.5 million and $1.6 million in 2007, 2008 and 2009, respectively. We generated net income of $10.3 million in 2010. For the three months ended March 31, 2011, we generated net income of $5.9 million, compared to net income of $3.4 million for the three months ended March 31, 2010. We conduct our tutoring business through our variable interest entity, or VIE, and its subsidiaries and schools located in 54 cities in China as of March 31, 2011. Although we do not hold any equity interest in our VIE, we exercise effective control over and receive substantially all of the economic benefits from our VIE and its subsidiaries and schools through a series of contractual arrangements with our VIE and its shareholders. Our Industry China's private educational services market is large and growing as a result of strong economic growth, an increasingly large and affluent urban population, cultural emphasis on the importance of education and positive correlation between higher education and higher income. Education needs in China have historically been met by a public school system run by the Ministry of Education, or the MOE. The quality of schools and teachers in public school system varies widely, and teachers are often over-worked due to the typically large class size. According to the MOE, the average class size of urban primary and secondary schools in China in 2008 was approximately 50 students per class. These issues have led to a strong demand for supplementary educational service in China. However, supply of supplementary educational service is limited by certain government regulations restricting public school teachers from providing paid after-school tutoring services, and also by the fact that parents are often not well suited to tutor their children due to changing curriculum and their own work schedule. Given the high demand for supplementary educational services and a lack of viable alternatives to tutoring, there is a vibrant market for tutoring services. According to the IDC report, spending for tutoring services at the primary and secondary school levels will increase significantly from RMB131.9 billion ($20.1 billion) in 2009 to RMB220.6 billion ($33.7 billion) in 2014, representing a CAGR of 10.8%. The tutoring services market can be segmented into two subsectors according to teaching models: class-based tutoring and personalized tutoring. According to the IDC report, total spending in the personalized tutoring subsector for primary and secondary school students were RMB38.6 billion ($5.9 billion) for 2009, which is expected to grow to RMB71.9 billion ($11.0 billion) in 2014, at a CAGR of 13.3%, compared to the projected CAGR of 9.8% for the class-based tutoring subsector during the same period. Table of Contents Our Competitive Strengths We believe the following competitive strengths have contributed to, and continue to reinforce, our leadership position in China's tutoring services sector and will continue to drive our future growth: Differentiated, personalized service model; Extensive nationwide learning center network; Leading national brand; Scalable operating platform; Expertise in building and managing a large full-time service team; and Experienced and professional management team. Our Growth Strategies Our goal is to further strengthen our leadership position in China's primary and secondary school tutoring sector, and continue to expand our market share in the highly fragmented private educational services market in China. We intend to leverage our established leading market position and strong brand in pursuing the following strategies: Further improve existing learning centers' performance; Increase market penetration and continue geographical expansion; Continue to develop and diversify service offerings; Continue to optimize operating platform; and Selectively pursue strategic alliances and complementary acquisitions. Our Challenges Our business and successful execution of our strategies are subject to certain challenges, risks and uncertainties related to our business and our industry, regulation of our business and corporate structure and doing business in China. The challenges, risks and uncertainties we face include, but are not limited to: our ability to continue to attract and retain students and service professionals; our ability to achieve and maintain profitability, especially in light of our past net losses; our ability to manage our business expansion and increasingly complicated operations and achieve or maintain economies of scale; our ability to protect and enhance our brand; our ability to compete effectively in the marketplace; our ability to enhance our services and adequately and promptly respond to changes in curriculum, testing materials and standards and admission standards, in China; our control of substantially all of our operations in China being achieved through contractual arrangements rather than equity ownership; the possibility that some of our learning centers may be deemed by government authorities to operate beyond their authorized business scope; and A-4 Xibahe Beili Chaoyang District Beijing 100028 People's Republic of China Telephone: (8610) 6427-8899 (Address and Telephone Number, Including Area Code, of Registrant's Principal Executive Offices) Table of Contents our ability to fund our expansion due to restrictions and requirements on currency transfer, currency conversion, and loans and direct investments by offshore holding companies under PRC laws and regulations. We also face other challenges, risks and uncertainties that may materially affect our business, financial conditions, results of operations and prospects. You should consider the risks discussed in "Risk Factors" and elsewhere in this prospectus before investing in our ADSs. Law Debenture Corporate Services Inc. 400 Madison Avenue, 4th Floor New York, New York 10017, United States (212) 750-6474 (Name, Address and Telephone Number, Including Area Code, of Agent for Service) Table of Contents Our History and Corporate Structure We commenced our business in September 2001 to initially operate an online tutoring portal. From 2004 to 2006, we started developing our personalized service model, based on which we delivered personalized tutoring services and established learning centers in Beijing and a number of other pilot cities in China. Building on our success in these cities, from 2007 and 2008, we expanded our tutoring service network to more than 100 learning centers in 28 cities in China. Since 2009, we have devoted significant resources to improving our operating platform and technology infrastructure and developing new services and products while continuing to expand into new geographic locations. To facilitate raising equity capital from investors outside of China, we set up a holding company structure by establishing our current Cayman Islands holding company, Xueda Education Group, in 2009. The following diagram illustrates our corporate structure as of the date of this prospectus. Currently, we conduct all of our operations in China through Xuecheng Century, our PRC subsidiary, as well as through a series of contractual arrangements with Xueda Information, our VIE, and its shareholders. Our tutoring business is directly operated by and, as a result, all of our revenue is generated from Xueda Information and its subsidiaries, in which we do not hold any equity interest. Our contractual arrangements with Xueda Information and its shareholders enable us to: exercise effective control over Xueda Information and its subsidiaries; receive substantially all of the economic benefits from Xueda Information and its subsidiaries in consideration for the services provided by Xuecheng Century; and Copies to: Leiming Chen Simpson Thacher & Bartlett LLP 35th Floor, ICBC Tower 3 Garden Road Central, Hong Kong (852) 2514-7600 Howard Zhang Davis Polk & Wardwell LLP 26/F, Twin Towers (West) B12 Jian Guo Men Wai Avenue, Chaoyang District Beijing 100022, China (8610) 8567-5000 Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. CALCULATION OF REGISTRATION FEE Title of Each Class of Securities to be Registered(1) Proposed Maximum Aggregate Offering Price(2)(3) Amount of Registration Fee Ordinary shares, par value $0.0001 per share $80,000,000 $9,288 (1)American depositary shares, or ADSs, evidenced by American depositary receipts issuable upon deposit of the ordinary shares registered hereby will be registered under a separate registration statement on Form F-6 (File No. 333-169976). Each ADS represents two ordinary shares. (2)Includes (a) ordinary shares represented by ADSs that may be purchased by the underwriters pursuant to their over-allotment option and (b) all ordinary shares represented by ADSs initially offered and sold outside the United States that may be resold from time to time in the United States either as part of the distribution or within 40 days after the later of the effective date of this registration statement and the date the securities are first bona fide offered to the public. (3)Estimated solely for the purpose of computing the amount of the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended. The registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to such Section 8(a), may determine. Table of Contents have an exclusive and irrevocable right to purchase all or part of the equity interests in Xueda Information at a time we determine suitable after considering all relevant factors, including the needs of our business operations and the regulatory environment. See "Our History and Corporate Structure" for more information on the operations of our corporate entities. Outstanding equity interests in Xueda Information are held by Rubin Li, Xin Jin, Jinbo Yao, Changyong Zhu, Qiang Deng, Yafei Wang, Chaoming Chai, Junbo Song and Junhong Piao. Each of these individuals except for Junhong Piao is also a beneficial owner of our shares. Each of Messrs Li and Yao and Ms. Wang is a director of our company; Mr. Jin is a director and an officer of our company and Mr. Deng is an officer of our company. However, as many of these individual shareholders are participating in this offering by selling a portion of our shares they own, these individual shareholders' aggregate interest in our company will decrease. See "Risk Factors Risks Related to Regulation of Our Business and Our Corporate Structure Certain shareholders of our VIE may have potential conflict of interest with us, which may harm our business and financial condition". Our business operations were conducted by Xueda Technology and its learning centers until November 2009, when Xueda Information and its subsidiaries began to assume substantially all of Xueda Technology's business, assets and personnel. For the historical periods in which Xueda Technology and its learning centers provided tutoring services, they were reflected in the description of our business and their results of operations and financial position were consolidated in our historical financial statements. Although Xueda Technology and the legal entities through which the businesses of its learning centers were conducted have ceased to enter into any new business, do not currently have any operations and are in the process of dissolution and deregistration, their business, assets and personnel have been completely transferred to and assumed by Xueda Information, and the relevant physical facilities continue to operate under Xueda Information with the same infrastructure, resources and geographical coverage as before. As a result, the dissolution of the legal entities through which the businesses of these learning centers were conducted does not reduce the number of our learning centers, and we do not anticipate that the dissolution and deregistration of Xueda Technology and the legal entities through which the businesses of its learning centers were conducted will have any significant effect on our business, results of operations and financial condition. As of the date of this prospectus, our PRC subsidiary has not paid any dividend to us. Although we believe our PRC subsidiary has the ability to pay dividends to us, we do not expect dividends from our PRC subsidiary in the near future because we plan to have our PRC subsidiary retain all its accumulated profits for its own business operation and expansion. In addition, as the result of the restrictions under PRC law on our PRC subsidiary's ability to make dividend payments and other distributions to us, not all funds of our PRC subsidiary are available to us and our access to such funds is restricted. See "Risk Factors Risk Factors Relating to Doing Business in China Restrictions under PRC law on our PRC subsidiary's ability to make dividend payments and other distributions could materially and adversely affect our ability to make investments or acquisitions, pay dividends or other distributions to you, and otherwise fund and conduct our other businesses". Our Corporate Information Our principal offices are located at A-4 Xibahe Beili, Chaoyang District, Beijing 100028, People's Republic of China. Our telephone number at this address is (8610) 6427-8899 and our fax number is (8610) 6427-8899. Our registered office in the Cayman Islands is at Scotia Centre, 4th Floor, P.O. Box 2804, George Town, Grand Cayman, Cayman Islands KY1-1112. Our web site is Table of Contents www.21edu.com. The information contained on our web site does not constitute a part of this prospectus. Investor inquiries should be directed to us at the address and telephone number of our principal offices set forth above. Our agent for service of process in the United States is Law Debenture Corporate Services Inc., located at 400 Madison Avenue, New York, New York 10017. Conventions That Apply to This Prospectus Unless we indicate otherwise and for the purpose of this prospectus only: "we", "us", "our company" and "our" refer to Xueda Education Group and its subsidiaries, and in the context of describing our operations and consolidated financial data, also to our VIE and its subsidiaries; "VIE" refers to Xueda Information, our variable interest entity, which is a domestic PRC company in which we do not have any equity interest but whose historical financial results have been consolidated in our financial statements in accordance with U.S. GAAP; "ADSs" refers to our American depositary shares, each of which represents ordinary shares; "China" or "PRC" refers to the People's Republic of China, excluding, for the purpose of this prospectus only, Taiwan, Hong Kong and Macau; "provinces and municipalities" refers to provinces, autonomous regions and municipalities directly administered by the PRC central government; there are a total of 31 provinces, autonomous regions and municipalities directly administered by the PRC central government. "RMB" or "Renminbi" refers to the legal currency of China; "$", "dollars" or "U.S. dollars" refers to the legal currency of the United States; and "shares" or "ordinary shares" refers to our ordinary shares, par value $0.0001 per share; "Series A1 preferred shares" refers to our Series A1 convertible redeemable preferred shares, par value $0.0001 per share, and "Series A2 preferred shares" refers to our Series A2 convertible redeemable preferred shares, par value $0.0001 per share. Series A1 preferred shares and Series A2 preferred shares have been converted into our ordinary shares upon completion of our initial public offering. Unless specifically indicated otherwise or unless the context otherwise requires, all references to our ordinary shares exclude ordinary shares issuable upon the exercise of outstanding options with respect to our ordinary shares under our share incentive plan. Our reporting currency is the U.S. dollar. In addition, this prospectus also contains translations of certain foreign currency amounts into U.S. dollars for the convenience of the reader. Unless otherwise stated, all translations of Renminbi into U.S. dollars were made at RMB6.5483 to $1.00, the noon buying rate on March 31, 2011 as set forth in the weekly H.10 statistical release of the U.S. Federal Reserve Board. We make no representation that the Renminbi or U.S. dollar amounts referred to in this prospectus could have been or could be converted into U.S. dollars or Renminbi, as the case may be, at any particular rate or at all. On May 20, 2011, the noon buying rate was RMB6.4917 to $1.00. The selling shareholders identified in this prospectus, including certain of our directors and executive officers who are beneficial owners of our ordinary shares, are offering an aggregate of American depositary shares, or ADSs. Each ADS represents two ordinary shares, par value $0.0001 per share. We will not receive any proceeds from the ADSs sold by the selling shareholders. Our ADSs are listed on the New York Stock Exchange, or the NYSE, under the symbol "XUE". On May 24, 2011, the closing price of our ADSs on the NYSE was $10.52 per ADS. Investing in our ADSs involves a high degree of risk. See "Risk Factors" beginning on page 12. Table of Contents THE OFFERING Price per ADS $ ADSs Offered by the Selling Shareholders ADSs Over-Allotment Option The selling shareholders have granted to the underwriters an option, exercisable for 30 days from the date of this prospectus, to purchase up to additional ADSs at the public offering price, less underwriting discounts and commissions, solely for the purpose of covering over-allotments. The ADSs Each ADS represents two ordinary shares. The ADSs will be evidenced by ADRs. The depositary will be the holder of the ordinary shares underlying the ADSs and you will have the rights of an ADR holder as provided in the deposit agreement dated November 5, 2010 among us, the depositary and holders and beneficial owners of ADSs from time to time. Subject to the terms of the deposit agreement, you may surrender your ADSs to the depositary to withdraw the ordinary shares underlying your ADSs. The depositary will charge you a fee for such an exchange. We may amend or terminate the deposit agreement for any reason without your consent. Any amendment that imposes or increases fees or charges or which materially prejudices any substantial existing right you have as an ADS holder will not become effective as to outstanding ADSs until 30 days after notice of the amendment is given to ADS holders. If an amendment becomes effective, you will be bound by the deposit agreement as amended if you continue to hold your ADSs. To better understand the terms of the ADSs, you should carefully read the section in this prospectus entitled "Description of American Depositary Shares". We also encourage you to read the deposit agreement, which is an exhibit to the registration statement that includes this prospectus. ADSs Outstanding Immediately After This Offering ADSs (or ADSs if the underwriters exercise in full the over-allotment option). Ordinary Shares Outstanding Immediately After This Offering ordinary shares Use of Proceeds We will not receive any proceeds from this offering. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. Table of Contents
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+PROSPECTUS SUMMARY Who we are - Bella Petrella s Holdings, Inc., incorporated in Florida on July 28, 2009 Securities offered - 3,826,150 shares of common stock Securities offered by - Selling stockholders Price range - Between $1.74 and $2.65, inclusive Our business Sale of pasta sauces, pizza sauces and salsas to distributors and retailers. Copacker of our products Stello Foods of Punxsutawney, Pennsylvania manufactures all of our products for us using our recipes and labeling. We do not have a contract with Stello Foods who may either accept or reject our purchase orders. Stello Foods has never rejected a purchase order from us. Distributor of our products Ferraro Foods of Piscataway, New Jersey is the only distributor who wholesales our products to its customers, including the largest user of our products, Famous Famiglia Pizzerias. We do not have a contract with Ferraro Foods and we may either accept or reject Ferraro Foods purchase orders. We have never rejected a purchase order from Ferraro Foods. Financial data May 31, 2010 November 30 , 2010 (Restated) (unaudited) Total Assets $ 73,262 $ 30,929 Total Liabilities $ 26,654 $ 76,888 Stockholders' Equity (Deficit) $ 46,608 $ (46,859 ) Revenues $ 60,006 60,181 Net Loss $ 173,252 $ 488,756 Basic and diluted loss per share $ 0.02 $ 0.03 - 4 -
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+Table of Contents Summary Laredo Resources Corp. We were incorporated on August 17, 2010, under the laws of the state of Nevada. We are in the business of mineral exploration. On November 30, 2010, our wholly owned subsidiary, LRE Exploration LLC, a Nevada limited liability company, ( LRE ) entered into a Property Option Agreement (the Property Option Agreement ) with Arbutus Minerals LLC ( Arbutus ) to acquire an option to purchase a 100% interest in the 20 ABR mineral claims (the ABR Claims ). Under the terms of the Property Option Agreement between Arbutus and LRE, we acquired an option to acquire a 100% interest in the mineral rights for the ABR Claims currently held by Arbutus for an initial payment of $10,000. Arbutus holds only the mineral rights to the ABR Claims as the ABR Claims are on Bureau of Land Management managed land. Thus, we do not have the right to purchase the real property rights for the land underlying the ABR Claims. In order to exercise the option, we must pay the following monies to Arbutus and make the following expenditures on the ABR Claims by the following dates: Payments to Arbutus o $10,000 on or before November 30, 2011; o $20,000 on or before November 30, 2012; and o $50,000 on or before November 30, 2013. Exploration Expenditures o $15,000 in aggregate exploration expenditures prior to November 30, 2012; o $65,000 in aggregate exploration expenditures prior to November 30, 2013; and o $215,000 in aggregate exploration expenditures prior to November 30, 2014. We will either satisfy the payment terms of the Property Option Agreement in the time frame provided, thereby resulting in us exercising this option or we will fail to satisfy the payment terms and be in default of the Property Option Agreement. If we are in default of the Property Option Agreement, Arbutus can terminate the Property Option Agreement if we fail to cure any default within 45 days after the receipt of notice of default. Our option will expire if we are in default of the Property Option Agreement and fail to cure any default within 45 days after the receipt of notice of default. Additionally, and notwithstanding the foregoing, if we fail to perform condition precedent to exercise the option, Arbutus shall be entitled to terminate the Property Option Agreement. The ABR Claims are located approximately 15 miles northwest of the community of Elko in the northeastern portion of the State of Nevada on Bureau of Land Management managed land. The ABR claims are about 413 acres of lode claims consisting of 20 en bloc unpatented mineral claims. Each claim is approximately 1500 feet by 600 feet. The existence of commercially exploitable mineral deposits in the ABR Claims is unknown at the present time and we will not be able to ascertain such information until we receive and evaluate the results of our planned exploration program. Prior to acquiring the option to acquire the ABR Claims, we retained the services of Mr. Carl von Einsiedel, an independent consulting geologist who holds the degree of Bachelor of Science in Geology. Mr. von Einsiedel prepared a geological report for us on the mineral exploration potential of the ABR Claims. Included in this report is a recommended exploration program. Phase I of the exploration program will be conducted over a one year period and has a budget of $15,000. We do not currently possess sufficient capital to fully fund Phase I. Therefore our plan is to continue to raise additional monies in order to be able to fully fund Phase I. We believe that is preferable to possess capital sufficient to complete Phase I prior to initiating it. We are hopeful that we will be able to raise an amount of capital during our first full fiscal year (September 1, 2010 to August 31, 2011) that will allow us to fully fund Phase I and undertake that Phase during the end of our first full fiscal year or the beginning of the second full fiscal year. We currently do not have any arrangements for financing and we may not be able to obtain financing when required. Obtaining additional financing would be subject to a number of factors, including the market prices for mined minerals and the costs of exploring for or commercial production of these materials. These factors may make the timing, amount, terms or conditions of additional financing unavailable to us. We will make the decision to proceed with any further programs based upon our consulting geologist s review of the results and recommendations. If we do decide to proceed with Phase II, then it would commence in the late summer or early fall of 2012 and should completed in late summer or early fall of 2013. In order to complete Phase II we will need to raise additional capital. In order to maintain our rights under our Property Option Agreement, we will be required to make the contractual payments detailed above regardless of whether we proceed with Phases II and III of our planned exploration program. Table of Contents We intend to conduct mineral exploration activities on the ABR Claims in order to assess whether the claims possess commercially exploitable mineral deposits. Our exploration program is designed to explore for commercially viable deposits of gold, silver, lead, zinc, copper, tungsten and barite. The mineral exploration program, consisting of surface reconnaissance, and geological mapping and sampling, is oriented toward defining drill targets on mineralized zones within the ABR Claims. Mineral exploration is essentially a research activity that does not produce a product. Successful exploration often results in increased project value that can be realized through the optioning or selling of the claimed site to larger companies. We have not conducted any mining or exploration, aside from the aforementioned geological report on the ABR Claims. We are an exploration stage company, no proven commercial reserves have been identified on the ABR Claims and there is no assurance that a commercially viable mineral deposit currently exists on the ABR Claims. Ms. Ruth Cruz Santos, our president and director, does not have any training as a geologist or an engineer. As a result, our management may lack certain skills that are advantageous in managing an exploration company. In addition, neither Ms. Santos, nor our consulting geologist, Mr. von Einsiedel, has visited the property. As a result, we face an enhanced risk that, upon physical examination of the ABR Claims property, no commercially viable deposits of minerals will be located. Currently, we are uncertain of the number of mineral exploration phases we will conduct before we are able to determine whether there are commercially viable minerals present on the ABR Claims. Further phases beyond the current exploration program will be dependent upon a number of factors such as our consulting geologist recommendations and our available funds. Since we are in the exploration stage of our business plan, we have not earned any revenues from our planned operations. As of February 28, 2011, we had $7,132 in current assets. As of February 28, 2011 our current liabilities amounted to $5,247. Accordingly, our working capital position as of February 28, 2011, was $1,885. Since our inception through February 28, 2011, we have incurred a net loss of $41,541. We attribute our net loss to having no revenues to offset our expenses, which have consisted primarily of the professional fees related to the creation and operation of our business and filing of this registration statement. Over the course of the current fiscal year, we anticipate spending approximately $30,000 on administrative expenses, including fees payable in connection with the filing of this registration statement and complying with reporting obligations. We believe that we have sufficient funds on hand to cover all of our anticipated administrative expenses for the remainder of our first full fiscal year (September 1, 2010 to August 31, 2011), but not sufficient capital to fully fund Phase I. Thus, during our first full fiscal year (September 1, 2010 to August 31, 2011) we will focus on raising capital sufficient to fully fund Phase I. If successful, then we intend to initiate Phase I during the end of our first full fiscal year or the beginning of the second full fiscal year. In the event the results of our initial exploration program prove not to be sufficiently positive to proceed with further exploration on the ABR claims, we intend to seek out and acquire interests in additional mineral exploration properties which, in the opinion of our consulting geologist, offer attractive mineral exploration opportunities. Presently, we have not given any consideration to the acquisition of other exploration properties because we have not yet commenced our initial exploration program and have not received any results. Our fiscal year end is August 31.We were incorporated on August 17, 2010, under the laws of the state of Nevada. Our principal offices are located at Hero de Nacarozi #10, PO Box 177, C.P. 63732, Bucerias, Nayarit, Mexico. Our mailing address is 50 West Liberty Street, Suite 880, Reno, Nevada, and our telephone number is 775-636-6937 OR 52-329-298-3649. We are currently considered a shell company within the meaning of Rule 12b-2 under the Exchange Act, in that we currently have nominal operations and nominal assets other than cash. Accordingly, the ability of holders of our common stock to re-sell their shares may be limited by applicable regulations. Specifically, the securities sold through this offering can only be resold through registration under the Securities Act of 1933, pursuant to Section 4(1) of the Securities Act, or by meeting the conditions of Rule 144(i) under the Securities Act. Table of Contents The Offering Securities Being Offered Up to 628,000 shares of our common stock. Offering Price and Alternative Plan of Distribution The offering price of the common stock is $0.008 per share. Minimum Number of Shares To Be Sold in This Offering None Securities Issued and to be Issued 3,570,000 shares of our common stock are issued and outstanding as of the date of this prospectus. All of the common stock to be sold under this prospectus will be sold by existing shareholders. There will be no increase in our issued and outstanding shares as a result of this offering. Use of Proceeds We will not receive any proceeds from the sale of the common stock by the selling shareholders. Summary Financial Information Balance Sheet Data February 28, 2011 (unaudited) August 31, 2010 (audited) Cash $ 7,132 $ 27,400 Total Assets $ 17,132 $ 27,400 Liabilities $ 30,247 $ 6,740 Total Stockholder s Equity (Deficit) $ 13,115 $ 20,660 Statement of Operations For the Quarter Ended February 28, 2011 (unaudited) From Inception on August 17, 2010 to February 28, 2011 (unaudited) Revenue $ - $ - Net Loss $ 22,196 $ 41,541 Table of Contents
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+Prospectus Summary This summary highlights selected information appearing elsewhere in this prospectus. This summary may not contain all of the information you should consider before investing in our common stock. You should carefully read this entire prospectus, including "Risk Factors" and the financial statements and the related notes appearing elsewhere in this prospectus, before making an investment decision. Unless otherwise indicated herein, the terms "we," "our," "us" or "the Company" refer to Bruker Energy & Supercon Technologies, Inc. and its subsidiaries. Bruker Energy & Supercon Technologies We are a superconducting technology and enabling tools company. We develop and provide materials and devices for growing markets in renewable energy, energy infrastructure, healthcare and "big science" research. We integrate our broad technology platform and existing product portfolio and applications know-how in superconductivity with advanced design and manufacturing capabilities to provide our customers with innovative, value-added products. Based on our industry knowledge and our analysis of publicly available information regarding our competitors, as well as input we receive from our customers and suppliers, we believe we are among the market leaders in our established markets and that we are well positioned for commercial opportunities in our target growth markets. Superconducting materials carry very high electrical current with minimal resistive loss, offering significant advantages over conventional conductors of similar size. Superconductors make possible a large variety of existing and emerging novel magnet types, as well as electrical devices with unique capabilities, that often are smaller, lighter and more efficient than devices based on conventional conductors. For the year ended December 31, 2010, we generated $90.5 million in revenue, compared to $60.1 million in the year ended December 31, 2009. As of December 31, 2010, our backlog was $157.6 million, compared to $88.9 million as of December 31, 2009. Our results of operations have been positively impacted by our acquisition of the research instruments business of ACCEL Instruments GmbH from Varian Medical Systems, Inc. in April 2009, or the ACCEL acquisition. We have experienced substantial bookings growth in this business since its acquisition, and it has contributed significantly to the increase in our revenue and backlog. Demand for our other core products has also seen rapid organic growth since the beginning of the second half of 2009, primarily as a result of higher end-market demand for medical magnetic resonance imaging and life science research tools that incorporate our products, as well as due to rapid growth in orders from "big science" research. We anticipate continued growth in our healthcare and "big science" research end markets. We expect that our future revenue growth will be accelerated further by an increasing global emphasis on energy efficiency, the smart grid and renewable energy, for which we are developing superconductivity-enabled tools. We are a subsidiary, and presently a separate reporting segment, of Bruker Corporation (NASDAQ: BRKR), or Bruker, a global provider of high-performance scientific instruments that targets a different and diverse array of customers in life science, pharmaceutical, biotechnology and molecular diagnostics research, as well as in materials and chemical analysis in various academic, industrial, clinical research and applied markets. Bruker will be our controlling stockholder after this offering. Our Products We believe we have the broadest portfolio of commercial materials and devices based on superconductivity available in the market today, as well as a diverse portfolio of products under development for emerging applications in high-growth segments of the renewable energy and energy infrastructure markets. AMENDMENT NO. 5 to FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Table of Contents Special Cautionary Note Regarding Forward-Looking Statements This prospectus contains forward-looking statements. All statements other than statements of historical facts contained in this prospectus, including statements regarding our future results of operations and financial position, business strategy and plans and objectives of management for future operations, are forward-looking statements. In many cases, you can identify forward-looking statements by terms such as "may," "will," "should," "expect," "plan," "anticipate," "could," "intend," "target," "project," "contemplate," "believe," "estimate," "predict," "potential," "continue" or other similar words. These forward-looking statements are predictions, not guarantees. These statements relate to future events or our future financial performance and involve known and unknown risks, uncertainties and other important factors that may cause our actual results, levels of activity, performance or achievements to materially differ from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. We have described in the "Risk Factors" section and elsewhere in this prospectus what we consider to be the principal risks and uncertainties that we believe could cause actual results to differ from these forward-looking statements. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, you should not rely on these forward-looking statements as guarantees of future events. The forward-looking statements in this prospectus represent our views as of the date of this prospectus. We anticipate that subsequent events and developments may cause our views to change. However, while we may elect to update these forward-looking statements at some point in the future, we have no current intention of doing so except to the extent required by applicable law. You should, therefore, not rely on these forward-looking statements as representing our views as of any date subsequent to the date of this prospectus. This prospectus also contains estimates and other statistical data made by independent parties and by us relating to market size and growth and other data about our industry. This data involves a number of assumptions and limitations, and you are cautioned not to give undue weight to such estimates. We believe the statistical and other industry data generated by independent parties are reasonable, but we have not independently verified the accuracy and completeness of such information. In addition, certain statements in this prospectus regarding the renewable energy and energy infrastructure markets and our position relative to our competitors are not based on published statistical data or information obtained by independent third parties. Rather, such information and statements reflect our management's best estimates based upon information obtained from trade and industry organizations and associations and other participants in the superconductor industry. While we believe our internal estimates to be reasonable, they have not been verified by independent sources. Table of Contents Current Product Portfolio We design, manufacture and market superconducting materials, primarily metallic low temperature superconductors, or LTS, for use in magnetic resonance imaging, or MRI, nuclear magnetic resonance, or NMR, fusion energy research and other applications. For the year ended December 31, 2010, we produced over 30,000 miles of LTS wire for customers that included GE Healthcare, Siemens Medical, Philips Medical, Bruker and Agilent Technologies, formerly Varian, Inc. We also develop, manufacture and market ceramic high temperature superconductors, or HTS, primarily for fusion energy research applications. Additionally, we offer non-superconducting Cuponal materials and wires, based on co-extruded copper and aluminum, used in the power and transport industries. We develop, manufacture and market devices based primarily on superconductivity. These devices are complex tools with applications primarily in "big science" research areas such as particle physics, materials and surface science, structural analysis and fusion energy, and include superconducting magnets and radio frequency, or RF, accelerator cavities and modules, power couplers and linear accelerators. We also manufacture and sell non-superconducting high technology tools, such as X-ray beamlines and synchrotron, cyclotron, and laboratory instrumentation, principally to customers engaged in "big science" research projects, as well as to customers in the medical industry. Products under Development The need to decrease dependence on fossil fuels and reduce the carbon footprint has led to strong public and private initiatives to increase the use of renewable energies and develop energy-efficient technologies. We are currently developing second generation, or 2G, HTS and new superconductivity-enabled devices that we believe have significant commercial potential and long-term growth prospects in the areas of renewable energy and energy infrastructure. Products under development include: superconducting crystal growth magnets, or CGM, for fabrication of silicon ingots used in the solar and semiconductor industries; inductive superconducting fault current limiters, or iSFCL, for energy infrastructure applications, including the smart grid; and 2G HTS materials and coils for compact high-power wind turbine generators and other applications. Our Markets Our products and products under development target four primary markets that we believe offer significant sales growth opportunities: renewable energy, energy infrastructure, medical imaging and life science analytics, and "big science" research. We believe we have a significant commercial footprint in the medical imaging and life science analytics and "big science" research markets based on our industry knowledge and our analysis of market information from our customers and suppliers and of publicly available information regarding our competitors. We are also developing products for commercial applications in the renewable energy and energy infrastructure markets. Our Established Commercial Markets Medical Imaging and Life Science Analytics. We sell our LTS to major manufacturers of MRI systems and NMR instruments. The large and growing end-user markets for our customers' systems and instruments include hospitals and radiology clinics engaged in clinical diagnostics, as well as customers in pharmaceuticals, biotechnology, molecular diagnostics research and materials and chemicals analysis. LTS products are critical to the operation of MRI systems and NMR instruments and can represent a significant portion of the equipment's total cost. We sell our LTS to Siemens Medical, GE Healthcare and Philips Medical, the three largest manufacturers of MRI systems, and to Bruker and Agilent Table of Contents Technologies, the two largest manufacturers of NMR instruments. For the year ended December 31, 2010, our sales into the medical imaging and life science analytics markets represented approximately $52 million, or 57%, of our total revenue. "Big Science" Research. We sell a wide range of superconductors, magnets, accelerators, and beamline technology, as well as other specialized research instrumentation devices, to private, university and government research organizations worldwide. For example, we received a $36 million, three-year LTS supply contract for the International Thermonuclear Experimental Reactor (ITER) project in December 2009. Our device customers include a globally diverse group of institutions involved in "big science" research. For example, we have sold RF accelerator cavities to Deutsches Elektronen-Synchrotron, or DESY; power couplers to the Centre National de la Recherche Scientifique, or CNRS; an electron injection linear accelerator to Brookhaven National Laboratory; RF accelerator cavities to Thomas Jefferson National Accelerator Facility, or Jefferson Labs; superconducting magnets to the Center for European Nuclear Research, or CERN; and synchrotron instrumentation to SLAC National Accelerator Laboratory operated by Stanford University. The fulfillment of these kinds of large orders typically spans several years. For the year ended December 31, 2010, our sales into the "big science" research market represented approximately $31 million, or 34%, of our total revenue. Our Target Markets for New Product Applications Renewable Energy. We are developing superconductors and devices for applications in solar and wind power generation. These products are designed to increase efficiency and lower the cost of producing electricity through these sources. Silicon wafers used for high-efficiency photovoltaic cells are produced from monocrystalline, or single crystal, silicon ingots. The purity of these ingots influences the efficiency with which solar cells convert sunlight into electricity. We are developing a specialized magnet designed to help reduce impurities in silicon ingots during the crystal growth process. We believe that our CGM, used in conjunction with conventional monocrystalline growth equipment in the solar industry, could yield an increase in electric power production of five percent. We expect that this performance enhancement would be an attractive value proposition in the end market for photovoltaic cells. We are working with PVA TePla AG, a major international producer of conventional crystal growth equipment, to develop and commercialize products utilizing our CGM. We are also developing 2G HTS specifically for use in wind turbine generators and other applications such as motors and generators for ships. Superconducting generators produce the same amount of power as conventional generators, with approximately half the weight and size and improved efficiency. We believe that lightweight and compact generators would enable wind turbines that are easier and less costly to transport and install. This could be a critical advantage, particularly for offshore wind farms, which we expect will require turbines with significantly higher power-generating capacity. We have developed our first generation, or 1G, HTS optimized for use in generators and motors in partnership with Siemens AG, or Siemens, a large producer of industrial motors and generators. Siemens is presently completing its third prototype based on our HTS. The second prototype, a 4 megawatt HTS marine power generator, achieved its design specifications, including requirements for long-term reliability and improved energy efficiency. We are also working with Oswald Elektromotoren, or Oswald, a German manufacturer of compact, high-torque motors and generators, in an informal collaboration to adapt our 2G HTS technology to their large wind turbine generator designs. Energy Infrastructure. We are currently developing our iSFCL for the energy infrastructure market. Fault current limiters are devices that protect electrical equipment from damaging power surges caused by fault currents that may arise from short circuits, power generation disturbances or lightning strikes. There are currently two main types of conventional, or non-superconducting, fault protection devices, both of which have significant disadvantages. The first type are fault current interrupters, which interrupt the flow of electricity in the event of a power surge, typically requiring replacement or Thomas M. Rosa Senior Vice President and Chief Financial Officer Bruker Energy & Supercon Technologies, Inc. 40 Manning Road Billerica, MA 01821 (978) 901-7550 (Name, address, including zip code, and telephone number, including area code, of agent for service) Table of Contents resetting of the protection device to restore normal grid operation. The second type are reactors, which allow uninterrupted flow of electricity but cause significant ongoing power losses. To address these limitations, superconducting fault current limiters, or SFCL, are being developed. Unlike conventional devices, SFCL are energy-efficient and also have the advantage of not interrupting the flow of electricity in the grid following a transitory fault current, ensuring continuity and making the grid more stable. We are currently developing our inductive SFCL in an informal collaboration with Areva Transmission & Distribution, or Areva T&D. Our Competitive Strengths Broad Product Portfolio and Technology Expertise. We believe the breadth of our product portfolio and technology expertise provides us with the following advantages: Ability to design products to best meet customer needs. We leverage our core expertise in superconductivity with our in-house technology platforms to offer our customers powerful, innovative and custom superconductors and superconductivity-enabled devices tailored to their specific needs for existing and emerging commercial applications. Our in-house technology platforms include materials solutions, coil and magnet concepts, cryogenics and highly-specialized design and manufacturing capabilities. Our technology development, design and product engineering is supported by 58 employees, 18 of whom have Ph.D.s. We believe that the combination of our core expertise and diverse technology platforms provides us with a significant advantage over our competitors in developing and commercializing innovative new products. Ability to reduce product costs. We believe we have access to a larger portfolio of in-house technology platforms than any of our competitors. By controlling the development, design and production process from wire to device, we can shorten lead times and increase production quality. Our vertical integration further reduces our design and manufacturing costs. We believe these factors are an advantage as we develop products for emerging applications in renewable energy and energy infrastructure, the successful commercialization and broad acceptance of which will require both high quality and cost-effectiveness. Reduced volatility relative to more narrowly-focused competitors. Many of our competitors focus on a single or a few specific markets, products or technologies and are therefore more exposed to technology risk, sector trends and market dynamics. While our products are primarily based on our core expertise in superconductivity, we target multiple, diverse, growing and largely independent markets. We believe that the diversity of our product portfolio reduces volatility that arises from developments in any single market or related to any single product or technology. Established Manufacturing Platform and Know-How. We believe our experience and expertise in manufacturing superconductors provides us with the following advantages: Robust quality control and delivery performance. Our customers are highly sensitive to product quality and performance due to the high-cost and high-performance nature of their products or experiments that incorporate our technology. We believe we and our predecessors have built a strong reputation among our customers and partners over our more than 40 years of supplying superconducting materials and devices with high standards of quality and delivery performance. For example, operations in our Hanau and Bergisch Gladbach manufacturing facilities are ISO 9001 certified. The ISO 9001 certification indicates that these facilities have established quality management systems that demonstrate the ability to consistently provide a product that meets customer requirements. Through application of these systems, we have been able to maintain processes that ensure customer satisfaction and, as a result, have built a strong reputation based on product quality and delivery performance. In addition, we employ skilled quality control professionals who oversee all aspects of our design and manufacturing operations Table of Contents The compensation committee, in consultation with our Chief Executive Officer, will review these target levels annually and will make such adjustments as the compensation committee determines are appropriate. To date, we have not utilized the services of a compensation consultant and have not engaged in any company-specific benchmarking when making general or individual compensation determinations. We do, however, refer to certain publicly available general industry information for purposes of assessing the reasonableness and competitiveness of the initial range of overall compensation for our named executive officers. We also rely on the industry knowledge of our directors and our senior management in evaluating the competitiveness of compensation provided to our executive officers relative to compensation earned by executive officers with similar responsibilities at companies with revenue or other operating characteristics similar to ours. Elements of Executive Compensation Executive compensation is comprised of cash compensation in the form of annual base salary and annual incentive bonus awards, as well as long-term incentive compensation in the form of stock option grants. We believe that offering a combination of these elements allows us to meet each of the key objectives of our compensation philosophy. We also provide our executive officers with certain other benefits and perquisites that are discussed below under " Other Compensation." Base Salary Base salary represents payment to the executive officer for a satisfactory level of individual performance. The base salaries of our executive officers are determined at the time of hire, promotion or change in responsibilities, and are generally reviewed annually by the compensation committee. The amount of each executive officer's base salary, which is not "at risk," reflects our views as to the individual executive officer's past experience, knowledge, skills and expertise, scope of anticipated responsibilities and potential to add value through performance, as well as competitive industry salary practices. Base salaries are set at levels that the compensation committee believes will allow us to attract and retain qualified executives who will support our ability to deliver on our business goals. Increases to base salaries may be awarded to reward superior individual job performance, upon changes in an individual's responsibilities or position or to maintain the competitiveness of an executive officer's compensation package. The table below sets forth the annual base salary for fiscal 2010 and fiscal 2011 for each of our named executive officers, expressed in local currency and U.S. dollar equivalents: Named Executive Officer Fiscal 2010 Base Salary (Local Currency) Fiscal 2010 Base Salary ($)(1) Fiscal 2011 Base Salary (Local Currency) Fiscal 2011 Base Salary ($)(1) Fiscal 2011 Increase as a Percent of Fiscal 2010 Salary Burkhard Prause 150,000 $ 198,707 167,500 $ 221,890 12 % Thomas M. Rosa $ 195,000 $ 195,000 $ 205,000 $ 205,000 5 % Klaus Schlenga 130,000 $ 172,213 144,000 $ 190,759 11 % Hans-Udo Klein 125,000 $ 165,589 130,000 $ 172,213 Copies to: Richard M. Stein, Esq. Nixon Peabody LLP 100 Summer Street Boston, Massachusetts 02110-2131 (617) 345-1000 Donald J. Murray, Esq. Dewey & LeBoeuf LLP 1301 Avenue of the Americas New York, New York 10019-6092 (212) 259-8000 Approximate date of commencement of proposed sale to the public: as soon as practicable after this Registration Statement is declared effective. If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of earlier effective registration statement for the same offering. If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration number of the earlier effective registration statement for the same offering. If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the earlier registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. Large accelerated filer Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this registration statement shall become effective on such date as the Commission, acting pursuant to Section 8(a), may determine. Table of Contents and monitor and update the quality control systems at our various manufacturing facilities. We believe our system of quality assurance and control during manufacturing provides us with an advantage in predicting and containing costs as well as assuring our current and potential customers of product reliability, both as to our existing products and our new products. Experience in scaling specialized manufacturing processes and generating high yields. We believe we will be able to cost-efficiently bring new products under development into commercial production based on our experience in manufacturing superconducting materials and devices. Within our established product portfolio we have historically achieved high product yields at high volumes, while also ensuring product quality. For example, during the five years ended December 31, 2010 we delivered over 100,000 miles of LTS wire, consistently achieving yields of over 95%. Further, between 2002 and 2005, we delivered 400 superconducting magnets for the CERN Large Hadron Collider without any unit failure at, or rejection by, the customer. We believe we will be able to leverage our experience as we scale manufacturing of our products under development for the renewable energy and energy infrastructure markets. Strong Relationships with Leading Companies and Organizations in Our Target Markets. We work closely with industry or technology leaders in our target markets. These commercial collaborations help us advance our product development efforts and provide us greater insight into end-customer needs. These relationships also can reduce product development risks and associated costs, shorten our time to commercialization and provide us with access to broader markets for our products. We currently are working with, among other industry leaders, Siemens Medical, GE Healthcare and Philips Medical for the medical products market and PVA TePla on CGM development. We also have informal collaborations with Areva T&D for energy infrastructure and Oswald for HTS generators and motors. Our Strategy We intend to enhance our position as a global technology leader in high-performance superconductivity-enabled materials and devices. Our strategies to achieve this objective are: Leverage our technology expertise to introduce new products into high growth markets. We continuously evaluate market developments to identify applications for new and expanded uses of superconductor technologies. Based on our experience in our established markets and our relationships with innovators and market leaders in our target growth markets, we believe we are well positioned to leverage our technology expertise to introduce new products. We believe superconductivity as a technology is now sufficiently mature to be able to address large new markets with new materials and devices. In addition to our established role in existing markets in healthcare and "big science" research, we are targeting high-growth market segments in renewable energy and energy infrastructure markets, where superconducting technologies have not traditionally played a role. We believe there is potential for superconducting technologies to improve efficiency and reliability in solar power, wind power and the smart grid and we are developing our CGM, iSFCL and 2G HTS products to capitalize on these opportunities. We also see opportunities for superconductivity to reduce costs in other industrial markets, such as semiconductor fabrication and metals processing. Strategically time the deployment of our resources. The opportunities we have identified will require substantial investment and engineering resources as each approaches commercialization. We believe that we have identified specific near-and medium-term applications in the renewable energy and energy infrastructure markets, and that we are well positioned to deliver superconductivity-based solutions to these markets. We believe our timed and disciplined approach to product introductions focuses our development and engineering resources while controlling costs. In addition, we believe we can leverage the Table of Contents The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and we are not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. Subject to Completion, dated April 8, 2011 Preliminary Prospectus Shares Common Stock This is the initial public offering of shares of our common stock and no public market currently exists for our shares. We are offering shares of our common stock. We expect the initial public offering price of our common stock to be between $ and $ per share. We have applied to list our common stock on the NASDAQ Global Market under the symbol "ESCT." Bruker Corporation, which we refer to in this prospectus as Bruker, owns all of our currently outstanding common stock, and following this offering, will continue to be our controlling stockholder. Table of Contents knowledge we gain from each product we develop and commercialize to further reduce lead times and costs associated with successive product launches. Pursue strategic alliances and acquisitions that expand our market presence and enhance our position as a technology leader and innovator. We intend to continue to leverage our relationships with key industry and academic partners to identify, develop and commercialize new products and emerging applications. For example, we are working closely with Areva T&D, a leader in power equipment and infrastructure, in an informal collaboration to develop and commercialize our iSFCL product for energy infrastructure applications. We are also working with PVA TePla to develop and commercialize superconducting magnets for crystal pulling in the photovoltaic industry. During 2009, we entered into a collaboration with the University of Houston for research in the area of high temperature superconductivity. Similarly, we have agreements with Bruker BioSpin for the development and supply of high-performance LTS and HTS for high field NMR magnets. We may also enter into additional strategic collaborations and make acquisitions in order to maintain and advance our position as a leader in the field of superconducting technologies. Our Relationship with Bruker All of our common stock is currently owned by Bruker. Since our inception, we have operated as a subsidiary of Bruker and a member of the Bruker family of companies. Following this offering, Bruker will continue to own a majority of our outstanding shares of common stock and consequently will be our controlling stockholder. As a member of the Bruker family of companies, we have obtained a variety of services and resources from Bruker and its other subsidiaries. These include tax, accounting, treasury, legal and human resources services. We have entered into a sharing agreement providing for the continuation of these services, insofar as we do not currently have the infrastructure to provide these services. We intend to gradually build our infrastructure to add these capabilities so that our dependence on Bruker will diminish over time. Additionally, Bruker purchases a significant portion of our products, especially LTS and HTS materials, to make magnets that are components of Bruker's products. Sales to Bruker affiliates were $10.6 million in the year ended December 31, 2010, representing 12% of our total revenue, and $8.4 million in the year ended December 31, 2009, representing 14% of our total revenue. In the ordinary course of business, Bruker and its subsidiaries have extended loans to us to help us finance our business and growth needs. As of December 31, 2010, notes payable to Bruker and its affiliates totaled $38.7 million, including a note payable to Bruker in the outstanding principal amount of $24.6 million and a note payable to Bruker BioSpin Corporation in the outstanding principal amount of $14.1 million. We are obligated, 60 days after the completion of this offering, to repay the full amount outstanding on our note payable to Bruker and $3.0 million of the amount outstanding on our note payable to Bruker BioSpin Corporation. We will be obligated to repay the remaining outstanding balance of our loan from Bruker BioSpin Corporation on the fifth anniversary of the closing of this offering. For more information regarding our past and anticipated future commercial relationship with Bruker, see "Relationship with Bruker and Other Related Person Transactions." Risks of Investing in Our Common Stock Investing in our common stock involves significant risks. You should carefully consider the risks described in "Risk Factors" before making a decision to invest in our common stock. If any of these risks actually occurs, our business, financial condition and results of operations would likely be materially adversely affected. In such case, the trading price of our common stock would likely decline, Investing in our common stock involves risks. See "Risk Factors" beginning on page 11 of this prospectus. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense. Per Share Total Public offering price $ $ Underwriting discounts and commissions $ $ Proceeds, before expenses, to us $ $ We have granted the underwriters a 30-day option to purchase up to an additional shares of common stock from us to cover over-allotments, if any. If the underwriters exercise the option in full, the total underwriting discounts and commissions payable by us will be $ , and the total proceeds to us, before expenses, will be $ . The underwriters are offering the common stock as set forth under "Underwriting." Delivery of the shares of our common stock will be made on or about , 2011. Jefferies Needham & Company, LLC Gleacher & Company The date of this prospectus is , 2011. Table of Contents and you may lose all or part of your investment. Below is a summary of what we consider to be the principal risks we face. We have a history of losses, and we may be unable to achieve or sustain profitability. We are targeting high-growth markets that are still developing, and we cannot assure you that these markets will ever fully develop. We cannot assure you that the products we are developing for high-growth markets will be developed on time or at all, or that they will ever be widely adopted. The commercial use of HTS devices as well as funding of our research and development efforts for these devices depends on government policies and regulations that promote energy-efficient technologies, without which commercial markets for our products may not develop. We currently rely on a small number of customers for a significant portion of our revenue, and the loss of any of these customers could materially harm our business. We are dependent on ATI Wah Chang for our supply of high-quality niobium titanium used in our LTS products, and we also work with a limited number of other key providers. If these suppliers raise prices or curtail supply, our operating results could be adversely affected. Our current products face and our products under development will face intense competition, which could limit our ability to acquire or retain customers. The MRI industry, a significant marketplace for our products, is subject to cyclicality and regulation which could have a material adverse effect on our sales. We may acquire additional complementary businesses or technologies, which may require us to incur substantial costs for which we may never realize the anticipated benefits. Third parties have or may acquire patents that may cover the materials, processes and technologies we use or may use in the future to manufacture our HTS products, and our success may depend on our ability to license such patents or other proprietary rights. Our patents may not provide meaningful protection for our technology, which could result in us losing some or all of our market position. International sales and operations are and will remain subject to a number of additional risks not typically present in U.S. operations. Our operating results may fluctuate and any failure to meet financial expectations may disappoint securities analysts or investors and result in a decline in our common stock price. Company Information We were incorporated in Delaware in April 2008. Operating and financial information in this prospectus as of and for periods prior to April 2008 are based on the combined operations of our predecessor entities. Our principal executive offices are located at 40 Manning Road, Billerica, Massachusetts 01821, and our telephone number is (978) 901-7550. Information about us is available at www.bruker-est.com. The information contained on our website or that can be accessed through our website is not part of this prospectus, and you should not rely on any such information in deciding whether to purchase our common stock. Table of Contents You should rely only on the information contained in this prospectus and any free writing prospectus prepared by us or on our behalf. Neither we nor the underwriters have authorized any other person to provide you with different information. We are not, and the underwriters are not, making an offer to sell our common stock in any jurisdiction in which the offer or sale is not permitted. The information contained in this prospectus or any free writing prospectus is accurate only as of its date, regardless of the time of delivery of this prospectus or any free writing prospectus or of any sale of the common stock. Table of Contents
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/CIK0001500122_noble_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001500122_noble_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..15c382509ad5281589e06dbde96d797436c0545e
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001500122_noble_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary The following summary highlights selected material information contained in this prospectus. This summary does not contain all the information you should consider before investing in the securities. Before making an investment decision, you should read the entire prospectus carefully, including the "Risk Factors" section, the financial statements, and the notes to the financial statements.
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/CIK0001500123_item-9_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001500123_item-9_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..1dce21f4a1a08a3f5e4a2a27416f73b1193902ba
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001500123_item-9_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary 4
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/CIK0001500304_greentech_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001500304_greentech_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..e3b8671df4c6305f6e3e1179e068ce222f5c2ad7
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001500304_greentech_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY AS USED IN THIS PROSPECTUS, UNLESS THE CONTEXT OTHERWISE REQUIRES, "WE," "US," "OUR," "THE COMPANY" AND "GTI" REFERS TO GREENTECH TRANSPORTATION INDUSTRIES INC. THE FOLLOWING SUMMARY IS NOT COMPLETE AND DOES NOT CONTAIN ALL OF THE INFORMATION THAT MAY BE IMPORTANT TO YOU. YOU SHOULD READ THE ENTIRE PROSPECTUS BEFORE MAKING AN INVESTMENT DECISION TO PURCHASE OUR COMMON STOCK. GENERAL INFORMATION ABOUT OUR COMPANY Greentech Transportation Industries Inc. ("GTI") was incorporated in the State of Nevada on June 25, 2010. Our proposed business is a distribution channel for reputable Chinese bus manufacturers for the sale of their hybrid, electric, alternative fuel heavy duty transit buses, luxury motor coaches and tour buses into the Americas, initially Latin America and later, after assisting them with obtaining required certifications, the U.S. and Canadian marketplace. Our choice of the Chinese companies would be based in large part on their history of previous international relationships and a quality product that will meet U.S. standards. Our business plan is based in part on our ability to negotiate distribution agreements with Chinese bus manufacturers. We currently have no such agreements and do not anticipate entering into any such agreements until we complete this offering. We intend to use the net proceeds from this offering to develop our business operations. (See "Business of the Company" and "Use of Proceeds".) We are a development stage company with no revenues or operating history. The principal executive offices are located at 7000 Merrill Avenue, Suite 31, Chino, CA 91710. The telephone number is (909) 614-7007. We received our initial funding of $20,000 through the sale of common stock to Ian B. McAvoy, an officer and director who purchased 20,000,000 shares of our common stock at $0.001 per share on June 25, 2010. Our financial statements from inception (June 25, 2010) through October 31, 2010 report no revenues and a net loss of $13,138. Our independent auditor has issued an audit opinion for GTI which includes a statement expressing substantial doubt as to our ability to continue as a going concern. There is no current public market for our securities. As our stock is not publicly traded, investors should be aware they probably will be unable to sell their shares and their investment in our securities is not liquid. THE OFFERING The Issuer: Greentech Transportation Industries Inc. Securities Being Offered: 10,000,000 shares of common stock. Price per Share: $0.01 Offering Period: The shares are offered for a period not to exceed 180 days, unless extended by our board of directors for an additional 90 days. Net Proceeds: $100,000 Securities Issued and Outstanding: 20,000,000 shares of common stock were issued and outstanding as of the date of this prospectus. Registration Costs: We estimate our total offering registration costs to be $6,000.
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/CIK0001500689_china_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001500689_china_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001500689_china_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/CIK0001500759_beall_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001500759_beall_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a695b05a116cab7fa7417f6aa2915a8df529fad0
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001500759_beall_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary This summary highlights material information about us and this offering, but does not contain all of the information that you should consider before investing in our Notes. The following summary is qualified in its entirety by the more detailed information and our consolidated financial statements and the accompanying notes included elsewhere or incorporated by reference into this prospectus. You should read this entire prospectus and the information incorporated by reference herein carefully, including the Risk Factors included and incorporated by reference in this prospectus and our consolidated financial statements and the accompanying notes incorporated by reference into this prospectus, before investing. This prospectus and the documents incorporated by reference include forward-looking statements that involve risks and uncertainties. See Cautionary Note Regarding Forward-Looking Statements. Unless otherwise specified or the context requires otherwise, the terms U.S. Concrete, the Company, we, us, our, or USCR, refer to U.S. Concrete, Inc. and its subsidiaries. Selling noteholders refers to the selling noteholders named in the section of this prospectus entitled Selling Noteholders and certain of their transferees after the date of this prospectus. Our Company We are a major producer of ready-mixed concrete, precast concrete products and concrete-related products in select markets in the United States. We operate our business through our ready-mixed concrete and concrete-related products segment and our precast concrete products segment. We are a leading producer of ready-mixed concrete or precast concrete products in substantially all the markets in which we have operations. Ready-mixed and precast concrete products are important building materials that are used in a vast majority of commercial, residential and public works construction projects. All of our operations are in (and all of our sales are made within) the United States. We operate principally in Texas, California and New Jersey/New York, with those markets representing approximately 36%, 25%, and 19%, respectively, of our consolidated revenues from continuing operations for the year ended December 31, 2010. According to publicly available industry information, those states represented an aggregate of 28% of the consumption of ready-mixed concrete in the United States in 2010 (Texas, 13.1%; California, 9.3%; and New Jersey/New York, 5.4%). Our consolidated revenues from continuing operations for the year ended December 31, 2010 were $455.7 million, of which we derived approximately 87.7% from our ready-mixed concrete and concrete-related products segment and 12.3% from our precast concrete products segment. As of August 31, 2011, we had 102 fixed and 11 portable ready-mixed concrete plants, seven precast concrete plants and seven aggregates facilities. During 2010, these plants and facilities produced approximately 3.8 million cubic yards of ready-mixed concrete and 3.1 million tons of aggregates. We lease two of the seven aggregates facilities to third parties and retain a royalty on production from those facilities. Our ready-mixed concrete and concrete-related products segment engages principally in the formulation, preparation and delivery of ready-mixed concrete to the job sites of our customers. We also provide services intended to reduce our customers overall construction costs by lowering the installed, or in-place, cost of concrete. These services include the formulation of mixtures for specific design uses, on-site and lab-based product quality control, and customized delivery programs to meet our customers needs. Our marketing efforts primarily target concrete sub-contractors, general contractors, governmental agencies, property owners and developers and home builders whose focus extends beyond the price of ready-mixed concrete to product quality, on-time delivery and reduction of in-place costs. We generally do not provide paving or other finishing services, which construction contractors or subcontractors typically perform. To a lesser extent, this segment is also engaged in the mining and sale of aggregates and the resale of building materials, primarily to our ready-mixed concrete customers. These businesses are generally complementary to our ready-mixed concrete operations and provide us opportunities to cross-sell various products in markets where we sell both ready-mixed concrete and concrete-related products. We provide our ready-mixed concrete and concrete-related products from our continuing operations in north and west Texas, northern California, New Jersey, New York, Washington, D.C. and Oklahoma. Our precast concrete products segment produces precast concrete products at seven plants in three states, with five plants in California, one in Arizona and one in Pennsylvania. Our customers choose precast technology for a variety of architectural applications, including free-standing walls used for landscaping, soundproofing and security walls, panels used to clad a building fa ade and storm water drainage. Our operations also specialize in a variety of finished products, among which are utility vaults, manholes, catch basins, highway barriers, curb inlets, pre-stressed bridge girders, concrete piles and custom-designed architectural products. For a description of our business, financial condition, results of operations and other important information regarding the Company and our consolidated financial statements and the accompanying notes, we refer you to our filings with the Securities and Table of Contents Primary State or Other Standard I.R.S. Jurisdiction of Industrial Employer Incorporation or Classification Identification Name Organization Code Number Number Superior Concrete Materials, Inc. District of Columbia 3272 52-1046503 Titan Concrete Industries, Inc. Delaware 3272 76-0616374 USC Atlantic, Inc. Delaware 3272 20-4166002 USC Management Co., LLC Delaware 3272 27-1015638 USC Payroll, Inc. Delaware 3272 76-0630665 USC Technologies, Inc. Delaware 3272 20-4166055 U.S. Concrete On-Site, Inc. Delaware 3272 76-0630662 U.S. Concrete Texas Holdings, Inc. Delaware 3272 20-4166120 The address of each of the additional registrants is c/o U.S. Concrete, Inc., 2925 Briarpark, Suite 1050, Houston, Texas 77042. TABLE OF CONTENTS Prospectus Summary 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/CIK0001500761_usc_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001500761_usc_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a695b05a116cab7fa7417f6aa2915a8df529fad0
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001500761_usc_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary This summary highlights material information about us and this offering, but does not contain all of the information that you should consider before investing in our Notes. The following summary is qualified in its entirety by the more detailed information and our consolidated financial statements and the accompanying notes included elsewhere or incorporated by reference into this prospectus. You should read this entire prospectus and the information incorporated by reference herein carefully, including the Risk Factors included and incorporated by reference in this prospectus and our consolidated financial statements and the accompanying notes incorporated by reference into this prospectus, before investing. This prospectus and the documents incorporated by reference include forward-looking statements that involve risks and uncertainties. See Cautionary Note Regarding Forward-Looking Statements. Unless otherwise specified or the context requires otherwise, the terms U.S. Concrete, the Company, we, us, our, or USCR, refer to U.S. Concrete, Inc. and its subsidiaries. Selling noteholders refers to the selling noteholders named in the section of this prospectus entitled Selling Noteholders and certain of their transferees after the date of this prospectus. Our Company We are a major producer of ready-mixed concrete, precast concrete products and concrete-related products in select markets in the United States. We operate our business through our ready-mixed concrete and concrete-related products segment and our precast concrete products segment. We are a leading producer of ready-mixed concrete or precast concrete products in substantially all the markets in which we have operations. Ready-mixed and precast concrete products are important building materials that are used in a vast majority of commercial, residential and public works construction projects. All of our operations are in (and all of our sales are made within) the United States. We operate principally in Texas, California and New Jersey/New York, with those markets representing approximately 36%, 25%, and 19%, respectively, of our consolidated revenues from continuing operations for the year ended December 31, 2010. According to publicly available industry information, those states represented an aggregate of 28% of the consumption of ready-mixed concrete in the United States in 2010 (Texas, 13.1%; California, 9.3%; and New Jersey/New York, 5.4%). Our consolidated revenues from continuing operations for the year ended December 31, 2010 were $455.7 million, of which we derived approximately 87.7% from our ready-mixed concrete and concrete-related products segment and 12.3% from our precast concrete products segment. As of August 31, 2011, we had 102 fixed and 11 portable ready-mixed concrete plants, seven precast concrete plants and seven aggregates facilities. During 2010, these plants and facilities produced approximately 3.8 million cubic yards of ready-mixed concrete and 3.1 million tons of aggregates. We lease two of the seven aggregates facilities to third parties and retain a royalty on production from those facilities. Our ready-mixed concrete and concrete-related products segment engages principally in the formulation, preparation and delivery of ready-mixed concrete to the job sites of our customers. We also provide services intended to reduce our customers overall construction costs by lowering the installed, or in-place, cost of concrete. These services include the formulation of mixtures for specific design uses, on-site and lab-based product quality control, and customized delivery programs to meet our customers needs. Our marketing efforts primarily target concrete sub-contractors, general contractors, governmental agencies, property owners and developers and home builders whose focus extends beyond the price of ready-mixed concrete to product quality, on-time delivery and reduction of in-place costs. We generally do not provide paving or other finishing services, which construction contractors or subcontractors typically perform. To a lesser extent, this segment is also engaged in the mining and sale of aggregates and the resale of building materials, primarily to our ready-mixed concrete customers. These businesses are generally complementary to our ready-mixed concrete operations and provide us opportunities to cross-sell various products in markets where we sell both ready-mixed concrete and concrete-related products. We provide our ready-mixed concrete and concrete-related products from our continuing operations in north and west Texas, northern California, New Jersey, New York, Washington, D.C. and Oklahoma. Our precast concrete products segment produces precast concrete products at seven plants in three states, with five plants in California, one in Arizona and one in Pennsylvania. Our customers choose precast technology for a variety of architectural applications, including free-standing walls used for landscaping, soundproofing and security walls, panels used to clad a building fa ade and storm water drainage. Our operations also specialize in a variety of finished products, among which are utility vaults, manholes, catch basins, highway barriers, curb inlets, pre-stressed bridge girders, concrete piles and custom-designed architectural products. For a description of our business, financial condition, results of operations and other important information regarding the Company and our consolidated financial statements and the accompanying notes, we refer you to our filings with the Securities and Table of Contents Primary State or Other Standard I.R.S. Jurisdiction of Industrial Employer Incorporation or Classification Identification Name Organization Code Number Number Superior Concrete Materials, Inc. District of Columbia 3272 52-1046503 Titan Concrete Industries, Inc. Delaware 3272 76-0616374 USC Atlantic, Inc. Delaware 3272 20-4166002 USC Management Co., LLC Delaware 3272 27-1015638 USC Payroll, Inc. Delaware 3272 76-0630665 USC Technologies, Inc. Delaware 3272 20-4166055 U.S. Concrete On-Site, Inc. Delaware 3272 76-0630662 U.S. Concrete Texas Holdings, Inc. Delaware 3272 20-4166120 The address of each of the additional registrants is c/o U.S. Concrete, Inc., 2925 Briarpark, Suite 1050, Houston, Texas 77042. TABLE OF CONTENTS Prospectus Summary 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/CIK0001500762_redi-mix_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001500762_redi-mix_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a695b05a116cab7fa7417f6aa2915a8df529fad0
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001500762_redi-mix_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary This summary highlights material information about us and this offering, but does not contain all of the information that you should consider before investing in our Notes. The following summary is qualified in its entirety by the more detailed information and our consolidated financial statements and the accompanying notes included elsewhere or incorporated by reference into this prospectus. You should read this entire prospectus and the information incorporated by reference herein carefully, including the Risk Factors included and incorporated by reference in this prospectus and our consolidated financial statements and the accompanying notes incorporated by reference into this prospectus, before investing. This prospectus and the documents incorporated by reference include forward-looking statements that involve risks and uncertainties. See Cautionary Note Regarding Forward-Looking Statements. Unless otherwise specified or the context requires otherwise, the terms U.S. Concrete, the Company, we, us, our, or USCR, refer to U.S. Concrete, Inc. and its subsidiaries. Selling noteholders refers to the selling noteholders named in the section of this prospectus entitled Selling Noteholders and certain of their transferees after the date of this prospectus. Our Company We are a major producer of ready-mixed concrete, precast concrete products and concrete-related products in select markets in the United States. We operate our business through our ready-mixed concrete and concrete-related products segment and our precast concrete products segment. We are a leading producer of ready-mixed concrete or precast concrete products in substantially all the markets in which we have operations. Ready-mixed and precast concrete products are important building materials that are used in a vast majority of commercial, residential and public works construction projects. All of our operations are in (and all of our sales are made within) the United States. We operate principally in Texas, California and New Jersey/New York, with those markets representing approximately 36%, 25%, and 19%, respectively, of our consolidated revenues from continuing operations for the year ended December 31, 2010. According to publicly available industry information, those states represented an aggregate of 28% of the consumption of ready-mixed concrete in the United States in 2010 (Texas, 13.1%; California, 9.3%; and New Jersey/New York, 5.4%). Our consolidated revenues from continuing operations for the year ended December 31, 2010 were $455.7 million, of which we derived approximately 87.7% from our ready-mixed concrete and concrete-related products segment and 12.3% from our precast concrete products segment. As of August 31, 2011, we had 102 fixed and 11 portable ready-mixed concrete plants, seven precast concrete plants and seven aggregates facilities. During 2010, these plants and facilities produced approximately 3.8 million cubic yards of ready-mixed concrete and 3.1 million tons of aggregates. We lease two of the seven aggregates facilities to third parties and retain a royalty on production from those facilities. Our ready-mixed concrete and concrete-related products segment engages principally in the formulation, preparation and delivery of ready-mixed concrete to the job sites of our customers. We also provide services intended to reduce our customers overall construction costs by lowering the installed, or in-place, cost of concrete. These services include the formulation of mixtures for specific design uses, on-site and lab-based product quality control, and customized delivery programs to meet our customers needs. Our marketing efforts primarily target concrete sub-contractors, general contractors, governmental agencies, property owners and developers and home builders whose focus extends beyond the price of ready-mixed concrete to product quality, on-time delivery and reduction of in-place costs. We generally do not provide paving or other finishing services, which construction contractors or subcontractors typically perform. To a lesser extent, this segment is also engaged in the mining and sale of aggregates and the resale of building materials, primarily to our ready-mixed concrete customers. These businesses are generally complementary to our ready-mixed concrete operations and provide us opportunities to cross-sell various products in markets where we sell both ready-mixed concrete and concrete-related products. We provide our ready-mixed concrete and concrete-related products from our continuing operations in north and west Texas, northern California, New Jersey, New York, Washington, D.C. and Oklahoma. Our precast concrete products segment produces precast concrete products at seven plants in three states, with five plants in California, one in Arizona and one in Pennsylvania. Our customers choose precast technology for a variety of architectural applications, including free-standing walls used for landscaping, soundproofing and security walls, panels used to clad a building fa ade and storm water drainage. Our operations also specialize in a variety of finished products, among which are utility vaults, manholes, catch basins, highway barriers, curb inlets, pre-stressed bridge girders, concrete piles and custom-designed architectural products. For a description of our business, financial condition, results of operations and other important information regarding the Company and our consolidated financial statements and the accompanying notes, we refer you to our filings with the Securities and Table of Contents Primary State or Other Standard I.R.S. Jurisdiction of Industrial Employer Incorporation or Classification Identification Name Organization Code Number Number Superior Concrete Materials, Inc. District of Columbia 3272 52-1046503 Titan Concrete Industries, Inc. Delaware 3272 76-0616374 USC Atlantic, Inc. Delaware 3272 20-4166002 USC Management Co., LLC Delaware 3272 27-1015638 USC Payroll, Inc. Delaware 3272 76-0630665 USC Technologies, Inc. Delaware 3272 20-4166055 U.S. Concrete On-Site, Inc. Delaware 3272 76-0630662 U.S. Concrete Texas Holdings, Inc. Delaware 3272 20-4166120 The address of each of the additional registrants is c/o U.S. Concrete, Inc., 2925 Briarpark, Suite 1050, Houston, Texas 77042. TABLE OF CONTENTS Prospectus Summary 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/CIK0001501176_zuoan_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001501176_zuoan_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..80951216d7ac4617ba1c9777e5cfab6ebc3593a3
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001501176_zuoan_prospectus_summary.txt
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+PROSPECTUS SUMMARY This summary highlights selected information appearing elsewhere in this prospectus. This summary may not contain all of the information you should consider before investing in our ADSs. You should carefully read this prospectus, including our financial statements and related notes appearing elsewhere in this prospectus, and the registration statement of which this prospectus is a part in their entirety before investing in our ADSs, especially the risks of investing in our ADSs, which we discuss under "Risk Factors." This prospectus contains statistical data extracted from two reports which we commissioned Frost & Sullivan, an independent market research firm, to prepare for the purpose of providing information on China's menswear market. The reports, publicly issued in March 2010 and in August 2010, are entitled "China Menswear Market Study, 2009" and "China Consumers' Environmental Protection Awareness Survey, 2010," respectively, and are referred to as the Frost & Sullivan Report and Frost & Sullivan Survey, respectively, in this prospectus. "We," "us," "our company," "our" and "Zuoan" refer to Zuoan Fashion Limited, a Cayman Islands company, and its predecessor entities and subsidiaries. Overview We are a leading design-driven fashion casual menswear company in China. According to the Frost & Sullivan Report, sales of our "Zuoan" branded products ranked second in China's fashion casual menswear market, with a 5.4% market share, in terms of retail sales in 2009. Our products are designed in-house and sold under our Zuoan brand, which means "left bank" in Chinese, referring to the Left Bank district of Paris and embodying our design philosophy of "fashionable elegance." We offer a wide range of products, including men's casual apparel, footwear and lifestyle accessories, primarily targeting urban males between the ages of 20 and 40 who prefer stylish clothing that represents a sophisticated lifestyle. Our design team is led by Mr. James Jinshan Hong, or Mr. James Hong, our chairman and chief executive officer. Mr. James Hong is recognized as one of China's top designers with more than 15 years of industry experience. He was nominated one of the "Top Three Fashion Designers" by the China Fashion Association in November 2009 and one of "China's Top 10 Fashion Designers" by the China Fashion Association for two consecutive years in 2006 and 2007. Our marketing strategy focuses on promoting an overall brand image that embodies a lifestyle of "fashionable elegance," rather than individual products. Unlike many of our competitors, we do not rely on large-scale, blanket television advertising, but instead adopt a targeted multi-channel marketing strategy through our sponsorship of selective public events and activities, participation in major fashion shows and exhibitions and national advertising through television, internet, billboards, magazines and newspapers. We outsource the production of most of our products to selected contract manufacturers. For our most exclusive and fashion-forward products, we produce them in our own secure production facility in Jinjiang City, Fujian Province to retain maximum control over quality and prevent unauthorized disclosure of our new collection before its scheduled release. We sell our products through an extensive distribution network covering 27 of China's 32 provinces and centrally administered municipalities, as well as through our direct stores. Our products are primarily sold to customers through retail stores operated by our distributors and their sub-distributors. As of September 30, 2010, we appointed 10 distributors which, directly or through their sub-distributors, operated 1,044 retail stores across China. All of the retail stores are operated under our Zuoan brand and are required to sell only our products. As part of our expansion strategy, in April 2009, we started building up our direct stores in selected cities where we already have an established presence and believe that there is potential for additional growth. As of September 30, 2010, we had 31 direct stores in seven provinces and centrally administered municipalities in China. To further promote our brand and improve the performance of Zuoan retail stores, since early 2010 we have adopted a strategy of opening flagship stores, both distributor-operated and directly AMENDMENT NO. 5 TO FORM F-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Table of Contents operated, at prime locations in major cities in China. These flagship stores are significantly larger than most of our existing stores and sell the complete line of our collections. Our distributors have opened seven flagship stores in Henan, Jiangxi, Jilin and Liaoning Provinces. In line with our flagship store strategy, in January 2011, we transferred all of our direct stores, which were located in department stores or shopping malls, to our distributors and intend to open our new directly operated flagship stores at prime commercial areas. Our business has grown rapidly in recent years. Our revenues increased from RMB434.5 million in 2007 to RMB598.3 million in 2008 and RMB693.1 million (US$103.6 million) in 2009, representing a CAGR of 26.3% from 2007 to 2009. Our profit after taxation increased from RMB91.4 million in 2007 to RMB132.7 million in 2008 and RMB153.9 million (US$23.0 million) in 2009, representing a CAGR of 29.8% from 2007 to 2009. For the nine months ended September 30, 2010, we achieved revenues of RMB613.9 million (US$91.8 million) and profit after taxation of RMB127.7 million (US$19.1 million) compared to revenues of RMB489.7 million and profit after taxation of RMB115.4 million for the nine months ended September 30, 2009. Industry Background China is one of the largest and fastest-growing menswear markets in the world, driven primarily by a rapidly growing economy and increasing disposable income of consumers. According to the Frost & Sullivan Report, total retail sales of menswear in China increased from RMB147.2 billion in 2004 to RMB300.3 billion (US$44.9 billion) in 2009 and are estimated to reach RMB627.1 billion in 2014, representing a 10-year CAGR of 15.8%. Along with increased purchasing power, male consumers in China are becoming more conscious of and sensitive to the branding, design and quality of menswear. As a result, fashion casual menswear, a sub-sector of casual menswear, has become increasingly popular in China because it caters to consumers who desire variety and fashion that highlight an individual's personality while participating in recreational, social or leisure activities. According to the Frost & Sullivan Report, total retail sales of fashion casual menswear in China grew from RMB13.9 billion in 2004 to RMB36.8 billion (US$5.5 billion) in 2009. Frost & Sullivan estimates that total retail sales of fashion casual menswear will grow to RMB111.9 billion by 2014, representing a 10-year CAGR of 23.2%, and account for 40.7% of the casual menswear market in China. The fashion casual menswear market in China is relatively fragmented, with more than 500 fashion casual menswear providers, according to the Frost & Sullivan Report. Among them, only a small number of providers have in-house design capabilities that enable them to provide branded fashion casual menswear products and to retain leading market positions. Our Competitive Strengths We believe that the following strengths differentiate us from our competitors: Strong focus on design and product innovation; Established and leading designer brand for fashion casual menswear in China; Creative multi-channel brand marketing strategies; Extensive and well-managed nationwide distribution network; and Socially conscious corporate culture supported by experienced management team. Zuoan Fashion Limited (Exact Name of Registrant as Specified in Its Charter) Not Applicable (Translation of Registrant's name into English) Cayman Islands (State or Other Jurisdiction of Incorporation or Organization) 2320 (Primary Standard Industrial Classification Code Number) Not Applicable (I.R.S. Employer Identification Number) Rooms 213 to 215, Block 8 No. 1150 Luochuan Middle Road Shanghai 200072, China (86) 21-5653-5557 (Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant's Principal Executive Offices) Table of Contents Our Strategies We intend to further strengthen our position as a leading fashion casual menswear brand in China by pursuing the following strategies: Open additional retail and flagship stores across China; Continue to raise the profile of our Zuoan brand through enhanced advertising and promotional activities; Expand and build upon our design and product development capabilities; and Expand and diversify our product offerings. Summary of Risk Factors Investing in our ADSs involves a high degree of risk. You should consider carefully the risks and uncertainties summarized below, the risks described under "Risk Factors," beginning on page 9, and the other information contained in this prospectus before you decide whether to purchase our ADSs. Our dependence on our Zuoan brand and our ability to promote our brand based on consumer preference or demand; Our reliance on a small number of distributors for the sale of our products and independent third-party contract manufacturers for the production of a significant portion of our products; Our control over the ultimate retail sales by our distributors and exposure to the credit risks of our distributors; Competition in the fashion casual menswear industry; Our compliance with a complex set of laws, rules and regulations governing our business in China; and Our ability to manage our growth effectively and efficiently. Corporate Structure and History We commenced our garment manufacturing operations in June 1999. Our Zuoan trademark was originally registered in 2001 by Fujian Aidu Industry and Trading Co., Ltd., a company wholly owned by the family of Mr. James Hong, our founder. In April 2002, Zuoan Dress Co., Ltd., Shishi, or Shishi Zuoan, was incorporated and commenced operations as a foreign-invested enterprise. The then sole shareholder of Shishi Zuoan was Ms. Siu Fong Or, wife of Mr. James Hong and a Hong Kong resident. Shishi Zuoan subsequently migrated to our current business as a designer and seller of fashion casual menswear. In February 2008, we set up a holding company structure by establishing Fast Boost Holdings Limited, or Fast Boost, in the British Virgin Islands. Fast Boost established a wholly owned subsidiary, Champion Goal Holdings Limited, or Champion Goal, in July 2008 in Hong Kong. Champion Goal then acquired all the equity interests in Shishi Zuoan in September 2008. We incorporated Zuoan Fashion Limited, or Zuoan Cayman, in connection with this offering in August 2010. On October 5, 2010, Fast Boost became the wholly owned subsidiary of Zuoan Cayman through a share exchange through which Zuoan Cayman acquired all of the issued and outstanding shares of Fast Boost, and issued ordinary shares to the shareholders of Fast Boost. Upon completion of the share exchange, Zuoan Cayman became our ultimate holding company. Name of Agent for Service CT Corporation System 111 Eighth Avenue, 13th Floor New York, New York 10011 (212) 604-1666 (Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent for Service) Table of Contents In August 2010, Shishi Zuoan incorporated a wholly owned subsidiary, Shanghai Mingfu Fashion Limited, or Shanghai Mingfu, in Shanghai. After its incorporation, we relocated our headquarters and design and product development team to Shanghai. The following diagram illustrates our corporate structure, the place of formation and the ownership interests of our subsidiaries as of the date of this prospectus: Corporate Information Our principal executive offices are located at Rooms 213 to 215, Block 8, No. 1150 Luochuan Middle Road, Shanghai, China. Our telephone number at this address is +86 21-5653-5557. Our registered office in the Cayman Islands is located at the offices of Cricket Square, Hutchins Drive, P.O. Box 2681, Grand Cayman, KY1-1111, Cayman Islands. Our agent for service of process in the United States is CT Corporation System, located at 111 Eighth Avenue, 13th Floor, New York, New York 10011. Investors should contact us for any inquiries through the address and telephone number of our principal executive offices. Our website is http://www.zuoancn.com. The information contained on our website does not constitute a part of this prospectus. Copies to: James C. Lin, Esq. Davis Polk & Wardwell LLP c/o 18th Floor, The Hong Kong Club Building 3A Chater Road Hong Kong (852) 2533-3300 David Roberts, Esq. O'Melveny & Myers LLP 37/F, Yin Tai Centre Office Tower No. 2 Jianguomenwai Avenue, Chaoyang District Beijing 100022, China (86) 10-6563-4200 Table of Contents
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+F-1/A TABLE OF CONTENTS SUMMARY 1 RISK FACTORS 14 SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS 35 USE OF PROCEEDS 36 DIVIDEND POLICY 36 CAPITALIZATION 37 DILUTION 38 EXCHANGE RATE INFORMATION 39 ENFORCEABILITY OF CIVIL LIABILITIES 40 OUR HISTORY AND CORPORATE STRUCTURE 41 OUR RELATIONSHIP WITH AGFEED INDUSTRIES 44 SELECTED CONSOLIDATED FINANCIAL DATA 47 UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS 51 MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 58 BUSINESS 70 REGULATIONS 78 MANAGEMENT 86 PRINCIPAL SHAREHOLDER 91 RELATED PARTY TRANSACTIONS 93 DESCRIPTION OF SHARE CAPITAL 95 DESCRIPTION OF AMERICAN DEPOSITARY SHARES 103 SHARES ELIGIBLE FOR FUTURE SALE 110 TAXATION 112 UNDERWRITING 123 EXPENSES RELATING TO THIS OFFERING 130 LEGAL MATTERS 130 EXPERTS 130 WHERE YOU CAN FIND ADDITIONAL INFORMATION 130 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS F-1 You should rely only on the information contained in this prospectus. Neither we nor the underwriter have authorized any other person to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. Neither we nor the underwriter are making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted. You should assume that the information appearing in this prospectus is accurate as of the date on the front cover of this prospectus. Our business, financial condition, results of operation and prospects may have changed since that date. We have not taken any action to permit a public offering of our ADSs outside the United States or to permit the possession or distribution of this prospectus or any filed free writing prospectus outside the United States. Persons outside the United States who come into possession of this prospectus or any filed free writing prospectus must inform themselves about and observe any restrictions relating to the offering of our ADSs and the distribution of this prospectus or any filed free writing prospectus outside of the United States. SUMMARY We recommend that you read the following summary together with the entire prospectus, including the more detailed information regarding us, the securities being sold in this offering, and our financial statements and related notes appearing elsewhere in this prospectus. Overview We are a British Virgin Islands business company formed to operate the animal nutrition business of AgFeed Industries in the People s Republic of China ( China ) through various operating subsidiaries. On October 1, 2010, we completed the acquisition of the animal nutrition business of AgFeed Industries. Our animal nutrition business consists of the research and development, manufacture, marketing and sale of additive premix ( premix ), concentrates and complete feed for use in the domestic animal husbandry markets, primarily for hog production in China. We have been in the premix feed business since 1995 and now operate five premix feed manufacturing facilities located in the provinces of Jiangxi, Guangxi, Shandong and Hainan and the municipality of Shanghai. We are aggressively expanding our concentrates and complete feed lines to meet the growing demand of commercial producers as they modernize their production technology and focus on the requirements of the food safety laws. Core Strategy Our core strategy focuses on the manufacture and delivery of high quality, safe animal nutrition products in response to the food safety laws of China enacted in 2009. Our strategy is further defined by the requirement to improve feed utilization in the swine industry to significantly reduce the use of feedstuffs. We accomplish this through our research and development activities, the manufacture of our products and close relationships with our distributor network and large commercial customers. As an extension of this strategy, our business plan outlines an expansion into the rapidly growing complete feed market and working with partners to develop a regional bulk feed delivery system for the swine industry. Market Dynamics We expect that the animal nutrition business in China will experience significant consolidation going forward due to the convergence of government policies and natural market forces. Opportunities for us to expand, including through acquisitions, are increasing as the animal feed production industry evolves from traditional processes to modern, industrial scale enterprises capable of supplying high quality, safe products in complete formulations. The need for industrial scale agricultural enterprises is driven by the urbanization of China and the need to feed this growing population safely, which cannot be done from traditional backyard farms. This will lead to a much smaller number of larger integrated market participants. Scale will become increasingly important in the feed business in order to meet the needs of a likewise evolving customer base. Business We manufacture, distribute, market and sell three main product lines - premix, concentrates and complete feed for use in all stages of a pig s life. We conduct these operations through our subsidiaries, Shandong AgFeed Agribusiness Co., Ltd. ( Shandong Feed ), Hainan HopeJia Feed Co., Ltd. ( HopeJia ), Nanchang AgFeed Animal Feed Co., Ltd. ( Nanchang Feed ), Shanghai AgFeed Animal Feed Co., Ltd. ( Shanghai Feed ), and Nanning AgFeed Animal Feed Co., Ltd. ( Nanning Feed ) (collectively, our feed operating companies). Our feed operating companies operate manufacturing facilities in the provinces of Jiangxi, Guangxi, Shandong and Hainan and the municipality of Shanghai, primarily serving the hog industry. We also provide educational, technical and veterinary support to our customers and distributor base. UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 The Ministry of Agriculture of China has granted one of our feed operating companies a Green Certification status for certain premix products. We sell these products under the brand label BEST. This certification indicates that these products are safe, environmentally friendly, and can effectively promote the healthy growth of pigs. According to current government regulations, the government will only accredit pork as green if it is produced using government certified green feed. Having certain of our feed certified as green requires us to adhere to strict manufacturing controls and procedures with respect to its production. This green certification permits hog farms to produce hogs that result in high quality green pork products. It is also an incentive for other commercial hog farms to enter into purchase contracts with respect to our BEST branded feed. Our total feed output in 2009 was approximately 115,000 metric tons (73,000 metric tons in 2008), consisting of 32,000 metric tons of premix, 22,000 metric tons of concentrates and 61,000 metric tons of complete feed. Our 2009 output represents a 57% increase over our 2008 feed output. Our 2009 revenues grew to $76 million from $58 million in 2008, with revenues from our affiliated hog farms accounting for $12 million and $6 million, respectively. The Market The feed industry in China, initially developed during the 1980s, was transformed by the adoption of feed and feed additives regulations in the early 1990s. These regulations emphasized labeling standards for the different grades of product. These standards assisted in regulating the feed industry s expansion and aimed to eliminate substandard products and fraudulent labeling. A safe, highly efficient feed company producing high quality animal nutrition products is the foundation for the development of a sustainable animal breeding industry. In 2009, the new food safety law strengthened the government s supervisory powers, unified food safety standards, changed the licensing system, and increased liabilities for non-compliance. In its Research Report on Chinese Feed Industry, 2009-2010, China Research and Intelligence reported that China s feed manufacturing industry is second only to that of the United States in volume and is expected to surpass the United States in total feed production within 5 years. Further, the report states the feed industry grew from 96 million metric tons in 2004 to 140 million metric tons in 2009 or from $36 billion to $58 billion. Specific to the hog feed component, the report predicts the market will grow from $22.2 billion in 2010 to $30.7 billion in 2014, an increase of 38%. Sales and Marketing We sell our products directly to 795 large commercial hog farms. Additionally, we work with independently owned and operated feed distribution chain stores that distribute our premix feed products throughout China. As of June 30, 2010, we had a distributor base of 1,940, comprised of 1,314 exclusive feed distribution chain stores and 626 non-exclusive distributors. Competitive Advantages We believe the following competitive advantages will contribute to our success and differentiate us from our competitors: quality and breadth of product offerings, including certain green certified feed; providing feed solutions for all phases of a pig s life; ability to access a broad and large customer base in Southeastern China, a significant hog production area, through a dedicated and experienced sales force and an established distribution channel, which includes 795 commercial farms, 626 non-exclusive distributors, and 1,314 exclusive feed distribution chain stores; research and development capabilities which allow us to address issues associated with food safety as well as explore new market opportunities; providing strategic technical support to our customers and distributor base; and a management team with extensive experience in the feed industry both in China and abroad. Pre-Effective Amendment No. 1 to FORM F-1 REGISTRATION STATEMENT Under the Securities Act of 1933 Our History and Corporate Structure Our animal nutrition business was started by AgFeed Industries, Inc., our ultimate parent, in 1995 and is operated through various indirect subsidiaries. As part of the corporate reorganization of AgFeed Industries, we were incorporated in the British Virgin Islands on August 20, 2010 as an indirect wholly owned subsidiary of AgFeed Industries, Inc. to be the holding company for the animal nutrition business. On May 24, 2010, AgFeed Industries, Inc. ( AgFeed BVI ), a British Virgin Islands business company and wholly owned subsidiary of AgFeed Industries, Inc., contributed 100% of the issued and outstanding shares of Shandong Feed to AgFeed Animal Nutrition Inc. ( AANI ), a British Virgin Islands business company and wholly owned subsidiary of AgFeed BVI. Between July 2010 and November 2010, AgFeed BVI invested a total of approximately RMB 93.5 million (US $13.7 million) in AANI, which was treated as additional paid-in capital. Concurrently, AANI contributed approximately RMB 93.5 million (US $13.7 million) to Shandong Feed. Shandong Feed used the proceeds to capitalize each of its direct subsidiaries, Nanchang Feed, Shanghai Feed and Nanning Feed and to purchase 100% of the issued and outstanding shares of HopeJia from Nanchang Best Animal Husbandry Co., Ltd. ( Nanchang Best ), a subsidiary of AgFeed BVI. The remainder of the funds were used to purchase substantially all of the assets related to the animal nutrition business of AgFeed Industries from Nanchang Best, Shanghai Best Animal Husbandry Co., Ltd. ( Shanghai Best ), and Guangxi Huijie Sci & Tech Feed Co., Ltd. ( Guangxi Huijie ), each of which are subsidiaries of AgFeed BVI. The acquisition of HopeJia from Nanchang Best was effective July 7, 2010 with the initial purchase price payment made on July 21, 2010. The acquisition of the remaining assets related to the animal nutrition business other than certain real estate assets by Shandong Feed and its subsidiaries was effective following receipt of certain regulatory approvals, which we received between late September 2010 and October 1, 2010. On February 1, 2011, AgFeed BVI will contribute 100% of the issued and outstanding shares of AANI to us. Following the contribution of AANI by AgFeed BVI to us, we will conduct our animal nutrition business through AANI and its direct and indirect subsidiaries. Following this contribution, we will effect a 16,000,000:1 stock split. After giving effect to the stock split, we will have no shares of Class A ordinary shares outstanding and 16,000,000 Class B ordinary shares outstanding, all of which are owned by AgFeed BVI. After the reverse stock split, we will authorize grants of 1,735,000 restricted Class A ordinary shares to certain of our directors, officers, employees, director nominees and consultants. Prior to our acquisition of AANI, we were a newly formed company with no operations or assets, and all of our outstanding Class B ordinary shares were owned and held by AgFeed BVI. The following diagram illustrates our corporate structure as of the date of this prospectus.(1) AGFEED ANIMAL NUTRITION HOLDINGS, INC. (Exact Name of Registrant as Specified in its Charter) Our Relationship with AgFeed Industries Prior to the reorganization of AgFeed Industries, AgFeed Industries, Inc., a Nevada corporation and our parent company, through its various subsidiaries, operated our animal nutrition business. AgFeed Industries began reporting results of its animal nutrition operations as a separate business segment for the three months ended September 30, 2009. References in this prospectus to the operations of our business, financial condition, and results of operations with respect to periods prior to September 30, 2009 are to AgFeed Industries animal nutrition business unit. Prior to this offering, AgFeed Industries has provided us with tax, accounting, treasury, legal and human resources services, and had also provided us with the services of a number of its executives and employees. All of our current executive officers and most of our current employees formerly were employees of AgFeed Industries. Upon the completion of this offering, AgFeed Industries will continue to be our controlling shareholder, owning % of the combined total of our outstanding Class A and Class B ordinary shares, representing % of the voting rights of the combined total of our outstanding Class A and Class B ordinary shares due to the proportionately greater voting rights of the Class B ordinary shares it holds, which are entitled to 4 votes on matters subject to shareholders vote (as compared with one vote for Class A ordinary shares) or, assuming the underwriter exercises in full its over-allotment option to purchase additional ADSs, % of our combined total outstanding Class A and Class B ordinary shares, representing % of the combined total voting rights of our outstanding Class A and Class B ordinary shares. However, AgFeed Industries is not subject to any contractual obligation to maintain its share ownership other than the 365-day lock-up period as described in Underwriting. British Virgin Islands 2040 Not Applicable (State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer Incorporation or Organization) Classification Code Number) Identification No.) Suite A1001-1002, Tower 16 Hengmao International Center Nanchang City, Jiangxi Province 330003, People s Republic of China (86) 791-6669090 (Address, including zip code, and telephone number, including area code, of Registrant s principal executive office) Upon completion of the reorganization, which occurred on October 1, 2010, our subsidiaries had entered into agreements with AgFeed Industries with respect to various ongoing relationships between the two corporate groups, including a Master Separation Agreement, an Administrative Services Agreement, a Non-Compete Agreement, a supply agreement and trademark license agreements. These agreements contain provisions, among others, relating to (i) the transfer of substantially all of the assets related to the animal nutrition business from AgFeed Industries to us, (ii) cross-indemnification of liabilities arising from breaches of the Master Separation Agreement or any related intercompany agreement, (iii) our engagement of AgFeed Industries to provide certain services that are critical to our business, including accounting and financial reporting, human resources administration, information technology maintenance and administration, and legal and compliance administration commencing upon the completion of the reorganization of AgFeed Industries, (iv) limitations on AgFeed Industries from competing with us in the animal nutrition business for a three-year period commencing on August 1, 2010 with certain exceptions, (v) our engagement by AgFeed Industries to provide its Chinese hog production operations with their animal feed needs on market terms for a three-year period commencing on August 1, 2010 and (vi) the license to use certain trademarks owned by AgFeed Industries. We will also enter into sublease arrangements, upon the completion of the reorganization, with AgFeed Industries for our facilities in the provinces of Jiangxi and Guangxi. For additional details see Our Relationship with AgFeed Industries. We believe that we will realize benefits from our carve-out from AgFeed Industries, including: A sharper strategic focus. By having our own board of directors and management team, we expect to be able to make more focused strategic decisions and be in a better position to take advantage of strategic opportunities in the hog feed industry. Better incentives for employees and greater accountability. We will seek to motivate and retain our employees through the implementation of incentive compensation programs tied to the market performance of our ADSs and the financial results of our company. Direct access to capital markets. As a separate, stand-alone company, we will have capital planning flexibility with direct access to the debt and equity capital markets and the opportunity to grow through acquisitions by using our shares as consideration. Our Corporate Information Our principal executive offices are located at Suite A1001-1002, Tower 16, Hengmao International Center, Nanchang City, Jiangxi Province 330003, People s Republic of China. Our telephone number at this address is (86) 791-6669090. Our website address is http://www.agfeednutrition.com. The information on our website does not Form part of this prospectus. Our registered office in the British Virgin Islands is located at the offices of Walkers Corporate Services (BVI) Limited, Walkers Chambers, P.O. Box 92, Road Town, Tortola VG1110, British Virgin Islands. Our agent for service of process in the United States is Corporation Service Company, 2711 Centerville Road, Suite 400, Wilmington, Delaware 19808. Conventions that Apply to this Prospectus Unless otherwise indicated, information in this prospectus assumes that the underwriter has not exercised its over-allotment option to purchase up to additional ADSs from us and assumes that there has been no vesting of awards of restricted Class A ordinary shares granted to our directors, executive officers, employees and consultants. This prospectus contains translations of certain Renminbi, or RMB, the legal currency of China, amounts into U.S. dollars at the rate of RMB 6.6905 to $1.00, the noon buying rate in effect on September 30, 2010, in New York City, New York. We make no representation that the Renminbi or U.S. dollar amounts referred to in this prospectus could have been or can be converted into U.S. dollars or Renminbi, as the case may be, at any particular rate or at all. On January 14, 2011, the noon buying rate was RMB 6.5876 to $1.00. As used in this prospectus, Holdings refers to AgFeed Animal Nutrition Holdings, Inc., a British Virgin Islands business company, and unless the context requires otherwise, includes its direct and indirect subsidiaries; AANI refers to AgFeed Animal Nutrition Inc., a British Virgin Islands business company and a wholly owned subsidiary of Holdings; China or PRC refers to the People s Republic of China, and for the purpose of this prospectus, excludes Hong Kong, Macau and Taiwan; AgFeed Industries, Inc. refers to AgFeed Industries, Inc., a Nevada corporation, our ultimate parent and controlling shareholder, whose shares of common stock are listed on the NASDAQ Global Select Market under the symbol FEED ; AgFeed Industries refers to AgFeed Industries, Inc. and its subsidiaries and, unless the context requires otherwise, excludes Holdings and its direct and indirect subsidiaries; ADSs refers to our American depositary shares, each of which represents Class A ordinary shares; shares or ordinary shares refers to our Class A ordinary shares, par value $0.0001 per share, and our Class B ordinary shares, par value $0.0001 per share; and we, us, our company and our refer to AgFeed Animal Nutrition Holdings, Inc., and unless the context requires otherwise, includes its direct and indirect subsidiaries; when required by the context, references to we, us, our company and our include the animal nutrition business operations of AgFeed Industries for periods prior to the completion of the reorganization of AgFeed Industries. Unless indicated otherwise, the information included in this prospectus regarding our outstanding Class A and Class B ordinary shares gives effect to the following as if they all had occurred as of June 30, 2010: (i) our formation on August 20, 2010; (ii) the contribution of AANI to us, which is expected to occur on February 1, 2011; (iii) the 16,000,000:1 stock split we will effect following the contribution of AANI to us on February 1, 2011; and (iv) the authorization of grants of 1,735,000 restricted Class A ordinary shares to certain of our executive officers, directors, employees, director nominees and consultants following the above-referenced stock split. Copies to: David W. Swartz, Esq. Mitchell Nussbaum, Esq. Sunjeet S. Gill, Esq. Giovanni Caruso, Esq. Stevens & Lee, P.C. Loeb & Loeb LLP 111 North Sixth Street 345 Park Avenue Reading, Pennsylvania 19601 New York, New York 10154 (610) 478-2000 (212) 407-4000 Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. References in this prospectus to the operation of our business, financial condition and results of operations with respect to the period from January 1, 2007 to the present are to AgFeed Industries animal nutrition business operations as conducted by AgFeed Industries subsidiaries. References in this prospectus to the operations of our business, financial condition and results of operations with respect to periods following the completion of the reorganization of AgFeed Industries will be to our operations as a stand-alone company. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If delivery of the prospectus is expect to be made pursuant to Rule 434, check the following box. The Offering Offering price We currently estimate that the initial public offering price will be between $ and $ per ADS. ADSs offered by us ADSs. ADSs outstanding immediately after the offering ADSs (or ADSs, if the underwriter exercises in full its over-allotment option to purchase additional ADSs). Class A ordinary shares outstanding immediately after the offering Class A ordinary shares (or Class A ordinary shares, if the underwriter exercises in full its over-allotment option to purchase additional ADSs). Class B ordinary shares outstanding immediately after the offering 16,000,000 Class B ordinary shares. Ordinary shares Our share capital consists of Class A and Class B ordinary shares. Holders of Class A ordinary shares and Class B ordinary shares have the same rights except for voting and conversion rights. Each Class A ordinary share is entitled to one vote on all matters subject to shareholders vote, and each Class B ordinary share is entitled to 4 votes on all matters subject to shareholders vote. Each Class B ordinary share is convertible into one Class A ordinary share at any time by the holder thereof. Class A ordinary shares are not convertible into Class B ordinary shares under any circumstances. The ADSs Each ADS represents Class A ordinary shares, par value $0.001 per share. The ADSs may be evidenced by American depositary receipts, or ADRs. The depositary will be the holder of the ordinary shares underlying the ADSs and you will have the rights of an ADS holder as provided in the deposit agreement among us, the depositary and holders and beneficial owners of ADSs from time to time. You may surrender your ADSs to the depositary to withdraw the Class A ordinary shares underlying your ADSs. The depositary will charge you a fee for that surrender. We may amend or terminate the deposit agreement for any reason without your consent. Any amendment which imposes or increases fees or charges or which materially prejudices any substantial existing rights you have as an ADS holder will not become effective as to outstanding ADSs until 30 days after notice of the amendment is given to the ADS holders. If an amendment becomes effective, you will be bound by the deposit agreement, as amended, if you continue to hold your ADSs. CALCULATION OF REGISTRATION FEE Title of each class of securities to be registered Proposed maximum aggregate offering price(1) Amount of registration fee Class A ordinary shares, par value $0.0001 per share (2) (3) $ 25,000,000 $ 1,782.50 (4) Warrants to purchase Class A ordinary shares, par value $0.0001 per share $ 1,562,500 $ 181.41 Class A ordinary shares, par value $0.0001 per share, underlying the Warrants (5) (1) Estimated solely for the purpose of determining the amount of registration fee in accordance with Rule 457(a) and Rule 457(o) under the Securities Act of 1933, as amended. (2) Includes Class A ordinary shares that may be purchased by the underwriter to cover over-allotments, if any. Also includes Class A ordinary shares initially offered and sold outside the United States either as part of its distribution or within 45 days after the later of the effective date of this registration statement and the date the shares are first bona fide offered to the public. These Class A ordinary shares are not being registered for the purpose of sales outside the United States. (3) American depositary shares issuable upon deposit of the Class A ordinary shares registered hereby will be registered under a separate registration statement on Form F-6 (Registration No. 333- ). Each American depositary share represents Class A ordinary shares. (4) Previously paid. (5) No fee pursuant to Rule 457(g) under the Securities Act of 1933, as amended. To better understand the terms of the ADSs, you should carefully read the Section in this prospectus entitled Description of American Depositary Shares. We also encourage you to read the deposit agreement, which is an exhibit to the registration statement that includes this prospectus. Use of proceeds The net proceeds to us from this offering are expected to be approximately $ million, assuming an initial public offering price per ADS of $ , which is the mid-point of the estimated public offering price range. The primary purposes of this offering are to create a public market for our ADSs for the benefit of all shareholders, retain talented employees by providing them with equity incentives and obtain additional capital. We intend to use the net proceeds from this offering for general corporate purposes, including capital expenditures and funding possible future acquisitions. Over-allotment option We granted to the underwriter an over-allotment option, exercisable within 45 days from the date of this prospectus, to purchase up to an additional ADSs. Lock-up We and all of our directors, executive officers and existing shareholders have agreed with the underwriter, subject to certain exceptions, not to sell, transfer or dispose of, directly or indirectly, any of our Class A ordinary shares, ADSs representing our Class A ordinary shares or securities convertible into or exercisable or exchangeable for our Class A ordinary shares for a period of 365 days following the date of this prospectus. See Underwriting for additional information. Risk factors Investing in our ADSs involves risk. We urge you to carefully read the section entitled Risk Factors beginning on page 14 of this prospectus and all information included in this prospectus in its entirety before you decide whether to invest in our ADSs. NASDAQ symbol Listing We intend to apply to have our ADSs listed on the NASDAQ Global Select Market under the symbol on or promptly after the date of this prospectus. We cannot assure you that our ADSs will be or will continue to be listed on the NASDAQ Global Select Market. Depositary The Bank of New York Mellon The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to such Section 8(a), may determine. Summary Consolidated Financial and Operating Data The following summary consolidated financial information for the periods and as of the dates indicated should be read in conjunction with our Management s Discussion and Analysis of Financial Condition and Results of Operations, our Unaudited Pro Forma Consolidated Financial Statements and our consolidated financial statements and related notes, each of which are included elsewhere in this prospectus. The summary consolidated financial data presented below as of December 31, 2009 and 2008 and for the years ended December 31, 2009, 2008 and 2007 are derived from our audited consolidated financial statements included elsewhere in this prospectus. Our audited consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States, or U.S. GAAP, and were audited by Goldman Kurland Mohidin LLP, an independent registered public accounting firm. The report of Goldman Kurland Mohidin LLP on those consolidated financial statements is included elsewhere in this prospectus. The summary consolidated financial data as of December 31, 2006 and 2005 and for the years ended December 31, 2006 and 2005 were prepared on the same basis as our audited consolidated financial statements. Further, the summary consolidated financial data presented below as of and for the nine months ended September 30, 2010 and 2009 was derived from our unaudited interim consolidated financial statements included elsewhere in this prospectus. We have prepared the unaudited consolidated financial statements on the same basis as our audited consolidated financial statements. The unaudited consolidated financial statements include all adjustments, consisting only of normal and recurring adjustments that we consider necessary for a fair presentation of our financial position and operating results for the periods presented. Our animal nutrition business is operated by AgFeed Industries through its various subsidiaries. AgFeed Industries began reporting results of its animal nutrition operations as a separate business segment during the three months ended September 30, 2009. Pursuant to the reorganization of AgFeed Industries, we will assume substantially all of the assets and certain of the liabilities related the animal nutrition business of AgFeed Industries. The reorganization will be accounted for using the historical cost basis for the assets and liabilities transferred to us since all of the entities involved in the reorganization are under the common control of AgFeed Industries. For the period from January 1, 2007 to the present, our consolidated financial statements were prepared by combining the assets, liabilities, revenues, expenses and cash flows of the entities that were directly engaged in the animal nutrition business. Our statements of operations and comprehensive income for periods prior to the completion of the reorganization include all the historical costs related to the animal nutrition business segment and an allocation of certain general corporate expenses of AgFeed Industries. These general corporate expenses primarily relate to corporate employee compensation costs, professional service fees and other expenses arising from the provisions of certain corporate functions, including finance, legal, technology, investment and executive management. We allocated these expenses based on estimates that our management believes are a reasonable reflection of the utilization of services provided to, or benefits received by, us. The unaudited pro forma financial data presented below for the nine months ended September 30, 2010 and 2009 and the years ended December 31, 2009, 2008 and 2007 gives pro forma effect to our formation and the reorganization (other than the transfer of the land use rights for, and the buildings at, the facilities in Jiangxi and Nanning provinces) effective January 1 for each period while the unaudited pro forma financial data presented below as of September 30, 2010, September 30, 2009, December 31, 2009, December 31, 2008 and December 31, 2007 gives pro forma effect to our formation and the reorganization (including the transfer of the land use rights for, and the buildings at, the facilities in Jiangxi and Nanning provinces) effective the date of such balance sheet data. For more information regarding the assets and liabilities of AgFeed Industries to be assumed by us, see Unaudited Pro Forma Consolidated Financial Statements and accompanying notes below. For more information regarding the costs to be incurred by us following the completion of the reorganization in connection with our operations, see Management s Discussion and Analysis of Financial Condition and Results of Operations Our Agreements with AgFeed Industries below. For periods following the completion of the reorganization and the contribution of AANI to us, our consolidated financial statements will consist of the financial statements of Holdings, including its direct and indirect subsidiaries, as a stand-alone company. Our management believes that the assumptions underlying our consolidated financial statements and the allocations included are reasonable. Our consolidated financial statements for the years ended December 31, 2009, 2008 and 2007, however, may not be reflective of our results of operations, financial position and cash flows had we been operated as a stand-alone company during those periods. Our historical results for any prior periods are not necessarily indicative of results to be expected for any future period. In addition, our unaudited results for the nine months ended September 30, 2010 may not be indicative of our results for the full year ending December 31, 2010. All dollar amounts in the following tables are in thousands. The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION, DATED , 2011 AgFeed Animal Nutrition Holdings, Inc. American Depositary Shares Representing Class A Ordinary Shares Summary Consolidated Financial and Operating Data Historical side-by-side with Pro Forma For the nine months ended September 30, (in thousands) 2010 2009 Historical Pro Forma Historical Pro Forma Consolidated Operating Results Net revenues $ 85,261 $ 85,261 $ 46,605 $ 46,605 $ Gross profit 14,064 14,064 9,552 9,552 Income from operations 7,003 6,567 4,575 4,139 Net earnings 5,573 4,909 4,032 3,479 Other Data Cash generated (used) by operating activities, net of related parties $ (2,845 ) $ Not Presented $ 304 $ Not Presented $ Cash generated (used) by investing activities (796 ) - (139 ) - Cash generated (used) by financing activities (318 ) 7,082 3,381 6,383 Depreciation 307 307 214 214 Intangible amortization expense 102 49 13 8 Capital expenditures 796 - 139 - Foreign currency translation gain (loss) 724 724 (6 ) (6 ) Historical side-by-side with Pro Forma For the year ended December 31, (in thousands) 2009 2008 2007 Historical Pro Forma Historical Pro Forma Historical Pro Forma Consolidated Operating Results Net revenues 75,990 $ 75,990 $ 57,959 $ 57,959 $ 36,310 $ 36,310 Gross profit 14,270 14,270 13,764 13,764 10,376 10,376 Income from operations 7,121 6,540 7,118 6,536 6,512 5,931 Net earnings 6,204 5,474 6,027 5,288 6,798 6,080 Other Data Cash generated (used) by operating activities, net of related parties 4,984 $ Not Presented $ 6,491 $ Not Presented $ 2,487 $ Not Presented Cash generated (used) by investing activities (265 ) - (858 ) - (336 ) - Cash generated (used) by financing activities 3,381 8,200 644 8,044 3,282 10,682 Depreciation 299 299 204 204 110 110 Intangible amortization expense 26 12 63 39 13 13 Capital expenditures 265 - 858 - 336 - Foreign currency translation gain (loss) (5 ) (5 ) 1,023 1,023 630 630 As of September 30, As of December 31, Consolidated Balance Sheet Data 2010 2009 2008 Historical Pro Forma Historical Pro Forma Historical Pro Forma Feed mill production assets Inventory $ 7,963 $ 7,963 $ 4,190 $ 4,190 $ 3,262 3,262 Property and equipment and Construction in Process 4,361 4,361 3,787 3,787 3,821 3,821 Intangible assets 3,385 3,331 3,419 3,302 3,445 3,342 Other assets 200 200 212 212 200 200 Total feed mill production assets 15,910 15,856 11,607 11,490 10,728 10,626 Total Assets $ 52,476 $ 20,569 $ 46,056 $ 19,264 $ 34,090 16,771 Note: See Unaudited Pro Forma Consolidated Financial Statements. This is the initial public offering of American depositary shares, or ADSs, of AgFeed Animal Nutrition Holdings, Inc. We are offering of our ADSs. Each ADS represents Class A ordinary shares. Our share capital consists of Class A and Class B ordinary shares. Holders of Class A ordinary shares and Class B ordinary shares have the same rights except for voting and conversion rights. Each Class A ordinary share is entitled to one vote per share, and each Class B ordinary share is entitled to 4 votes per share and is convertible at any time at the election of the holder into one Class A ordinary share. Class A ordinary shares are not convertible into Class B ordinary shares under any circumstances. AgFeed Industries, Inc. holds all of our outstanding Class B ordinary shares through a wholly owned subsidiary. Assuming the underwriter does not exercise its over-allotment option to purchase additional ADSs, upon completion of this offering, AgFeed Industries, Inc. will hold 16,000,000 Class B ordinary shares, or % of the combined total of our outstanding Class A and Class B ordinary shares (representing % of the total voting rights) in our company. Our dual-class ordinary share structure involves certain risks. See the relevant risk factors on pages 17 and 22 of this prospectus for a detailed discussion of such risks. Prior to this offering, there has been no public market for our ADSs or Class A ordinary shares. We anticipate that the initial public offering price of our ADSs will be between $ and $ per ADS. We intend to apply to have our ADSs listed on the NASDAQ Global Select Market under the symbol on or promptly after the date of this prospectus. We cannot assure you that our ADSs will be or will continue to be listed on the NASDAQ Global Select Market. Investing in our ADSs involves risks. See Risk Factors beginning on page 11 of this prospectus for a discussion of information that should be considered in connection with an investment in our ADSs. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. Per ADS Total Initial public offering price $ Underwriting discounts and commissions (1) $ Proceeds, before expenses, to us $ (1) Rodman & Renshaw, LLC will also receive warrants to purchase up to Class A ordinary shares, with an exercise price of $ per Class A ordinary share (125% of the public offering price), exercisable beginning on the first anniversary of the closing date, with an expiration date of , 201 (the five year anniversary of the effective date of the Registration Statement that this prospectus is a part of). In addition, we have agreed to reimburse the underwriter for certain of its expenses as described under Underwriting in this prospectus. Summary Consolidated Financial and Operating Data Five Year Historical View For the year ended December 31, (in thousands) 2009 2008 2007 2006 2005 Historical Historical Historical Historical Historical Consolidated Operating Results Net revenues $ 75,990 $ 57,959 $ 36,310 $ 8,595 $ 7,612 Gross profit 14,270 13,764 10,376 3,149 2,273 Income from operations 7,121 7,118 6,512 1,034 881 Net earnings 6,204 6,027 6,798 1,175 561 Other Data Cash generated (used) by operating activities, net of related parties $ 4,984 $ 6,491 $ 2,487 $ 750 $ 668 Cash generated (used) by investing activities (265 ) (858 ) (336 ) (994 ) (130 ) Cash generated (used) by financing activities 3,381 644 3,282 1,514 (644 ) Depreciation 299 204 110 100 79 Intangible amortization 26 63 13 5 4 Capital expenditures 265 858 336 994 130 Foreign currency translation gain (loss) (5 ) 1,023 630 84 32 As of December 31, 2009 2008 2007 2006 2005 Consolidated Balance Sheet Data Feed mill production assets Inventory $ 4,190 $ 3,262 $ 1,707 $ 803 $ 13 Property and equipment and Construction in Process 3,787 3,821 1,460 1,391 745 Intangible assets 3,419 3,445 838 539 76 Other assets 212 200 - - - Total feed mill production assets $ 11,607 $ 10,728 $ 4,004 $ 2,733 $ 834 Total Assets $ 46,056 $ 34,090 $ 19,122 $ 7,266 $ 3,104 The underwriter expects to deliver the ADSs to purchasers in New York, New York on or about , 2011. Rodman & Renshaw, LLC The date of this prospectus is , 2011. RISK FACTORS Investment in our ADSs involves significant risks. You should carefully consider the risks described below before you decide to buy our ADSs. If any of the possible adverse events discussed below actually occurs, our business, prospects, financial condition and results of operations could be materially and adversely affected, the trading price of our ADSs could decline and you could lose all or part of your investment. Risks Related to Our Business and Our Industry Our success depends on our management team and other key personnel, the loss of any of whom could disrupt our business operations. Our future success will depend in substantial part on the continued service of our senior management and other key personnel. The loss of the services of one or more of our key personnel could impede implementation and execution of our business strategy and result in the failure to reach our goals. We do not carry key person life insurance for any of our officers or employees. Our future success will also depend on the continued ability to attract, retain and motivate highly qualified personnel in the diverse areas required for continuing our operations. The rapid growth of the economy in the PRC has caused intense competition for qualified personnel. We cannot assure you that we will be able to retain our key personnel or that we will be able to attract, train or retain qualified personnel in the future. We are a major purchaser of many commodities that we use for raw materials and packaging, and price changes for the commodities we depend on may adversely affect our profitability. We enter into contracts for the purchase of raw materials at fixed prices, which are designed to protect us against raw material price increases during their term. However, when necessary, we attempt to recover our commodity cost increases by increasing prices, promoting a higher-margin product mix and creating additional operating efficiencies. Nevertheless, the raw materials used in our feed business are largely commodities that experience price fluctuations caused by conditions beyond our control, including changes in governmental agricultural programs. Commodity price changes may result in unexpected increases in raw material and packaging costs, and we may be unable to increase our prices to offset these increased costs without suffering reduced volume, revenue and income. Any substantial fluctuation in the prices of raw materials, if not offset by increases in our sales prices, could adversely affect our profitability. Outbreaks of livestock disease can adversely affect sales of our products. Outbreaks of livestock diseases can significantly affect demand for our feed products. An outbreak of disease could result in governmental restrictions on the sale of livestock products to or from customers, or require our customers to destroy their herds. This could result in the cancellation of orders of feed products by our customers and create adverse publicity that may have a material adverse effect on the agricultural products industry and our ability to market our products successfully. We face risks associated with currency exchange rate fluctuations; any adverse fluctuation may adversely affect our reported results. All of our revenues are denominated in Renminbi. Conducting business in currencies other than US dollars subjects us to fluctuations in currency exchange rates that could have a negative impact on our reported results. If the exchange rate of the Renminbi is affected by lowering its value as against the US dollar, our reported profitability when stated in US dollars will decrease. Historically, we have not engaged in exchange rate-hedging activities and have no current intention of doing so. We cannot be certain that our feed product innovations and marketing successes will continue. We believe that our past performance has been based on, and our future success will depend upon, in part, our ability to continue to improve our existing feed products through product innovation and to develop, market and produce new feed products. We cannot assure you that we will be successful in introducing, marketing and producing any new feed products or feed product innovations, or that we will develop and introduce in a timely manner innovations to our existing feed products which satisfy customer needs or achieve market acceptance. Our failure to develop new feed products and introduce them successfully and in a timely manner could harm our ability to grow our business and could have a material adverse effect on our business, results of operations and financial condition. We may not be able to reach our revenue and net income targets due to unpredictable market conditions. The primary end-user customers of our feed products are commercial hog farms and individual farmers. Although hog prices in the PRC are currently at year-to-date highs, hog prices declined during the first six months of 2010 as a result of flooding in China which substantially decreased demand for pork products. However, the recent price-spike is attributable to a reduced supply of hogs as a result of disease caused by such catastrophic flooding. In addition, the price for corn, an important element in feed, has been volatile. A combination of lower hog sale prices and higher feed costs could constrain demand for our feed products and impact our profitability. Our products and processes can expose us to product liability claims. Product liability claims or product recalls can adversely affect our business reputation and expose us to increased scrutiny by local, provincial, and central governmental regulators. The packaging, marketing and distribution of agricultural feed products entail an inherent risk of product liability and product recall and the resultant adverse publicity. We may be subject to significant liability if the consumption of any of our products causes injury, illness or death of livestock, other animals or humans. We cannot assure you that consumption of our products will not cause a health-related illness in the future, or that we will not be subject to claims or lawsuits relating to such matters. We could be required to recall certain of our feed products in the event of misbranding, contamination or damage to the products or their improper storage and handling. In addition to the risks of product liability or product recall due to deficiencies caused by our production or processing operations, we may encounter the same risks if any third party tampers with our feed products. We cannot assure you that we will not be required to perform product recalls, or that product liability claims will not be asserted against us in the future. Any claims that may be made may create adverse publicity that would have a material adverse effect on our ability to market our feed products successfully or on our business, reputation, prospects, financial condition and results of operations. While we have never been required to recall any of our feed products, a widespread product recall could result in changes to one or more of our business processes, product shortages, loss of customer confidence in our food or other adverse effects on our business. If we are required to defend against a product liability claim, whether or not we are found liable under the claim, we could incur substantial costs, our reputation could suffer and our customers might substantially reduce their existing or future orders from us. A successful product liability claim in excess of our insurance coverage could have a material adverse effect on us and could prevent us from obtaining adequate product liability insurance in the future on commercially reasonable terms. Even if a product liability claim is unsuccessful or is not fully pursued, the negative publicity surrounding any assertions that our products caused personal injury or illness could adversely affect our reputation with customers and our corporate and brand image. Unlike most food processing companies in the United States, but in line with industry practice in the PRC, we do not maintain product liability insurance. Furthermore, the products manufactured from hogs that consume our products could potentially suffer from product tampering, contamination or degeneration or be mislabeled or otherwise damaged. Under certain circumstances, we may be required to recall products. Even if a situation does not necessitate a product recall, we cannot assure you that product liability claims will not be asserted against us as a result. A product liability judgment against us or a product recall could have a material adverse effect on our revenues, profitability and business reputation. We may not be able to obtain regulatory approvals for our feed products. The manufacture and sale of agricultural products in the PRC is regulated by the central government and the local provincial governments. The uncertain legal environment in the PRC and within our industry may make us vulnerable to local government agencies or other parties who wish to renegotiate the terms and conditions of, or terminate their agreements or other understandings with us. We require various licenses and permits to operate our business, and the loss of or failure to renew any or all of those licenses and permits could require us to suspend some or all of our production or distribution operations. In accordance with the laws and regulations of the PRC, we are required to maintain various licenses and permits in order to operate our feed business, including, without limitation, a License for Feed Production Enterprise for feed production, a License for Feed Additives Production for additive production, a License for Additive Premix Feed Production for additive premix feed production, and a Product Approval Number Certificate for Additive premix Feed for each type of additive premix feed. We are required to comply with applicable hygiene and food safety standards in relation to our feed production processes. Our premises and transportation vehicles are subject to regular inspections by the regulatory authorities for compliance with applicable regulations. Failure to pass these inspections, or the loss of or failure to renew our licenses and permits, could require us to temporarily or permanently suspend some or all of our feed production or distribution operations, which could disrupt our operations and adversely affect our revenues and profitability. We face significant competition in the sales of our agricultural feed products. Competition in the agricultural feed industry, especially with companies with greater resources, may make us unable to compete successfully in these industries, which could adversely affect our business. In general, the competitive factors in the agricultural feed industry in the PRC include: price; product quality; brand identification; breadth of product line; and customer service. To the extent that our products and services do not exhibit these qualities, our ability to compete will be hindered. Concerns with the safety and quality of agricultural feed products could cause customers to avoid our products. We could be adversely affected if customers of our feed products lose confidence in the safety and quality of various feed products. Consumers in the PRC are increasingly conscious of food safety and nutrition. Adverse publicity about these types of concerns, such as the recent publicity concerning the use of the substance melamine in milk and infant formula, may discourage our customers from buying our products or cause production and delivery disruptions. Any negative change in customer perceptions about the safety and quality of our feed products could adversely affect our business and financial condition. We may not be able to adequately protect and maintain our intellectual property. Our success will depend on our ability to continue to develop and market formulas for premix, concentrates and complete feed products. We currently have not applied for patents for our products or formulas, as our management believes an application for such patents would result in public knowledge of our proprietary technology and formulas. Since we do not have patent protection for our technology or formulas, we may not be able to protect our rights to this intellectual property if our competitors discover or illegally obtain this technology or formulas. Our inability to protect our rights to this intellectual property may adversely affect our ability to prevent competitors from using our products and developments. Some of our significant customer and supplier contracts are short-term. Some of our feed customers and suppliers operate through purchase orders or short-term contracts. Although we have long-term business relationships with many of our feed customers and suppliers and alternative sources of supply for key items, we cannot be sure that any of these customers or suppliers will continue to do business with us on the same basis. Additionally, although we will try to renew these contracts as they expire, there can be no assurance that these customers or suppliers will renew these contracts on terms that are favorable to us, if at all. The termination of or modification to any number of these contracts may adversely affect our business and prospects, including our financial performance and results of operations. Our product, trademark and brand names may be subject to counterfeiting and/or imitation, which could have an adverse impact upon our reputation and brand image, as well as lead to higher administrative costs. We regard brand positioning as one of our core competitive advantages, and intend to position our brands to create the perception and image of health, nutrition, freshness and quality in the minds of our customers. There have been frequent occurrences of counterfeiting and imitation of products in the PRC in the past. We cannot guarantee that counterfeiting or imitation of our products will not occur in the future or that we will be able to detect it and deal with it effectively. Any occurrence of counterfeiting or imitation could impact negatively upon our corporate and brand image, particularly if the counterfeit or imitation products cause sickness, injury or death to consumers. In addition, counterfeit or imitation products could result in a reduction in our market share, a loss of revenues or an increase in our administrative expenses in respect of detection or prosecution. Our acquisition strategy involves a number of risks. Even when an acquisition is completed, we may have integration issues that may not produce results as positive as management may have projected. AgFeed Industries made a number of acquisitions since entering the hog feed business in 1995. However, we have no experience in growth through acquisition. Although no acquisition is currently contemplated, we intend to grow through additional acquisitions in the future. Acquisitions involve a number of special risks, including: failure of the acquired business to achieve expected results; failure to successfully integrate the acquired business; diversion of management s attention; failure to retain key personnel of the acquired business; additional financing, if necessary and available, could increase leverage, dilute equity, or both; the potential negative effect on our financial statements from the increase in goodwill and other intangibles; and the high cost and expenses of completing acquisitions and risks associated with unanticipated events or liabilities. These risks could have a material adverse effect on our business, results of operations and financial condition. In addition, our ability to further expand our operations through acquisitions may depend on our ability to obtain sufficient working capital, either through cash flows generated through operations or financing activities or both. We may not be able to obtain any additional financing on terms that are acceptable to us, or at all. Additionally, we expect to face increased competition for acquisition candidates. We cannot guarantee that we will be able to identify, acquire, or manage profitably additional businesses. In future acquisitions, we also could incur additional indebtedness or pay consideration in excess of fair value, which could have a material adverse effect on our business, results of operations and financial condition. In addition, we may inadvertently assume unknown liabilities in acquisitions that we complete. Assumption of unknown liabilities in acquisitions may harm our financial condition and operating results. Acquisitions may be structured in such a manner that would result in the assumption of unknown liabilities not disclosed by the seller or uncovered during pre-acquisition due diligence. These obligations and liabilities could harm our financial condition and operating results. Our future financial results will depend upon our ability to successfully integrate the acquired businesses. We may also face pressure to adequately conduct our ongoing operations while working toward the integration of these businesses. We may not be able to complete the integration of acquired businesses as we expect or without disrupting other areas of our business that could have a negative effect on our future financial results. Our business may be adversely affected by the slowdown of China s economy. We rely on the spending of our customers and distributors for our revenues, which may in turn depend on the level of disposable income, perceived future earnings capability and willingness to spend by pork consumers in China. Specifically, China s economy experienced a slowdown after the second quarter of 2008, when the quarterly growth rate of China s gross domestic product reached 10.1%. In the first quarter of 2009, the growth rate of China s gross domestic product decreased to 6.2%. A number of factors have contributed to this slowdown, including appreciation of the Renminbi, which has adversely affected China s exports, and tightening macroeconomic measures and monetary policies adopted by the Chinese government aimed at preventing overheating of China s economy and controlling China s high level of inflation. The slowdown has been further exacerbated by the recent global economic downturn, which in recent months has resulted in extreme volatility and dislocation of the global capital and credit markets. It is uncertain how long the challenging global economic conditions in the financial services and credit markets will continue and how much of an adverse impact it will have on the Chinese economy. In response to the challenging global economic conditions, in September 2008, the Chinese government began to loosen economic measures and monetary policies by reducing interest rates and decreasing the statutory reserve rates for its banks. On November 5, 2008, the State Council of China announced an economic stimulus plan in the amount of $585 billion to stimulate economic growth and bolster domestic demand. We cannot assure you that the economic stimulus plan or various macroeconomic measures and monetary policies adopted by the Chinese government to guide economic growth and the allocation of resources will be effective in sustaining the growth of the Chinese economy. The slowdown of China s economy could lead to lower pork consumption in China, because consumption for pork is dependent on strong general economic activities and conditions. Lower pork consumption may decrease demand for animal feed, which could decrease demand for our products and adversely and materially affect our business, results of operations and financial condition. Risks Related to Our Structure and Regulations We may rely principally on dividends and other distributions on equity paid by our PRC subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of our PRC subsidiaries to pay dividends to us could have a material adverse effect on our ability to conduct our business. We are a holding company, and we may rely principally on dividends and other distributions on equity paid by our PRC subsidiaries, for our cash and financing requirements, including the funds necessary to pay dividends and other cash distributions to our shareholders and service any debt we may incur. If any of our PRC subsidiaries incurs debt on its own behalf in the future, the instruments governing the debt may restrict its ability to pay dividends or make other distributions to us. In addition, the PRC tax authorities may require us to adjust our taxable income under the contractual arrangements with our subsidiaries in a manner that would materially and adversely affect its ability to pay dividends and other distributions to us. Under PRC laws and regulations, our wholly foreign-owned subsidiaries may pay dividends only out of its accumulated profits as determined in accordance with PRC accounting standards and regulations. In addition, a wholly foreign-owned enterprise is required to set aside at least 10% of its accumulated after-tax profits each year, if any, to fund certain statutory reserve funds, until the aggregate amount of such a fund reaches 50% of its registered capital. At its discretion, it may allocate a portion of its after-tax profits based on PRC accounting standards to staff welfare and bonus funds. These reserve funds and staff welfare and bonus funds are not distributable as cash dividends. Any limitation on the ability of our subsidiaries to pay dividends or make other distributions to us could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our business, pay dividends, or otherwise fund and conduct our business. PRC regulation of loans to and direct investment in PRC entities by offshore holding companies and governmental control of currency conversion may delay or prevent us from using the proceeds of this offering to make loans to our PRC subsidiaries or to make additional capital contributions to our PRC subsidiaries, which could materially and adversely affect our liquidity and our ability to fund and expand our business. We are an offshore holding company conducting our operations in China through our PRC subsidiaries. We may make loans to our PRC subsidiaries, or we may make additional capital contributions to our PRC subsidiaries. Any loans to our PRC subsidiaries, which are treated as a foreign-invested enterprise under PRC law, are subject to PRC regulations and foreign exchange loan registrations, which for example, cannot exceed statutory limits and must be registered with the local counterpart of the State Administration of Foreign Exchange ( SAFE ). We may also decide to finance our PRC subsidiaries by means of capital contributions. These capital contributions must be approved by the PRC Ministry of Commerce or its local counterpart. Due to the restrictions imposed on loans in foreign currencies extended to any PRC domestic companies, we are not likely to make such loans to our PRC subsidiaries. On August 29, 2008, SAFE promulgated the Circular on the Relevant Operating Issues Concerning the Improvement of the Administration of the Payment and Settlement of Foreign Currency Capital of Foreign Invested Enterprises, or SAFE Circular 142, regulating the conversion by a foreign-invested enterprise of foreign currency registered capital into RMB by restricting how the converted RMB may be used. SAFE Circular 142 provides that the RMB capital converted from foreign currency registered capital of a foreign-invested enterprise may only be used for purposes within the business scope approved by the applicable governmental authority and may not be used for equity investments within the PRC. In addition, SAFE strengthened its oversight of the flow and use of the RMB capital converted from foreign currency registered capital of a foreign-invested company. The use of such RMB capital may not be altered without SAFE s approval, and such RMB capital may not in any case be used to repay RMB loans if the proceeds of such loans have not been used. Violations of SAFE Circular 142 could result in severe monetary or other penalties. In light of the various requirements imposed by PRC regulations on loans to and direct investment in PRC entities by offshore holding companies, including SAFE Circular 142, we cannot assure you that we will be able to complete the necessary government registrations or obtain the necessary government approvals on a timely basis, if at all, with respect to future loans by us to our PRC subsidiary or any variable interest entities or with respect to future capital contributions by us to our PRC subsidiary. If we fail to complete such registrations or obtain such approvals, our ability to use the proceeds we expect to receive from this offering and to capitalize or otherwise fund our PRC operations may be negatively affected, which could materially and adversely affect our liquidity and our ability to fund and expand our business. Contractual arrangements we have entered into among our PRC subsidiaries may be subject to scrutiny by the PRC tax authorities, and these authorities may determine that we or our PRC subsidiaries owe additional taxes, which could substantially reduce our consolidated net income and the value of your investment. Under applicable PRC laws, and regulations, arrangements and transactions among related parties may be subject to audit or challenge by the PRC tax authorities. We could face material and adverse tax consequences if the PRC tax authorities determine that the contractual arrangements among our subsidiaries in China, and any of their respective shareholders were not entered into on an arm s-length basis or resulted in an impermissible reduction in taxes under applicable PRC laws, rules and regulations, and adjust their income in the Form of a transfer pricing adjustment. A transfer pricing adjustment could, among other things, result in a reduction of, for PRC tax purposes, expense deductions recorded by our subsidiaries, which could in turn increase their respective tax liabilities. In addition, the PRC tax authorities may impose punitive interest on our subsidiaries for the adjusted but unpaid taxes at the rate of 5% over the basic RMB lending rate published by the People s Bank of China for a period according to the applicable regulations. Our consolidated net income could be materially and adversely affected if our subsidiaries tax liabilities increase or if they are required to pay punitive interest. Risks Related to Our Carve-out from AgFeed Industries and Our Continued Relationship with AgFeed Industries If the Chinese government finds that the structure for operating our Chinese businesses does not comply with Chinese governmental restrictions on foreign investment, or if these regulations or the interpretation of existing regulations change in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations. All of our operations will be conducted through our subsidiaries in China. In the opinion of QZ & WD (Jiang Xi) Law Firm, our PRC legal counsel, (i) the ownership structure of our operations and our Chinese operating subsidiaries are in compliance with existing PRC laws and regulations, (ii) the contractual arrangements between us and/or our Chinese operating subsidiaries, on the one hand, and AgFeed Industries and/or its subsidiaries, on the other hand, are valid, binding and enforceable, and will not result in any violation of PRC laws or regulations currently in effect and (iii) the business operations of our company and our Chinese subsidiaries, as described in this prospectus, are in compliance with existing PRC laws and regulations in all material respects. There are, however, substantial uncertainties regarding the interpretation and application of current or future PRC law and regulations. Accordingly, we cannot assure you that the PRC regulatory authorities will not ultimately take a view contrary to that of QZ & WD (Jiang Xi) Law Firm. If we, our subsidiaries, or our corporate structure is found to be in violation of any existing or future PRC laws or regulations (for example, if we are deemed to be holding equity interests in an entity in which direct foreign ownership is restricted), the relevant PRC regulatory authorities, including the administration of industry and commerce, the administration of foreign exchange and relevant agencies of the Ministry of Commerce, would have broad discretion in dealing with such violations, including: revoking our PRC operating subsidiaries business and operating licenses; confiscating income and taking other regulatory enforcement actions, including levying fines, that could be harmful to our business; requiring us to restructure our corporate structure or operations; restricting or prohibiting our use of proceeds from our financings to finance our business and operations in China; imposing conditions or requirements with which we or our subsidiaries may not be able to comply; or forcing us to relinquish our interests in our subsidiaries. The imposition of any of these penalties could result in a material and adverse effect on our ability to conduct our business and cause the market price of our ADSs to decline. We have no experience operating as a separate, stand-alone company. AgFeed Animal Nutrition Holdings, Inc. was formed on August 20, 2010 as an indirect subsidiary of AgFeed Industries, Inc. to hold and operate the animal nutrition business of AgFeed Industries. Pursuant to its reorganization, AgFeed Industries will transfer substantially all of its assets and certain of its liabilities relating to its animal nutrition business to us. Although we had been operating as a separate business segment within AgFeed Industries prior to the carve-out, we have had no experience in conducting our operations on a separate, stand-alone basis. Our senior management has not previously worked together to manage a separate, stand-alone company. We may encounter operational, administrative and strategic difficulties as we adjust to operating as a separate, stand-alone company, which may cause us to react slower than our competitors to industry changes, may divert our management s attention from running our business or may otherwise harm our operations. In addition, since we are becoming a public company, our management team will need to develop the expertise necessary to comply with the numerous regulatory and other requirements applicable to separate, stand-alone public companies, including requirements relating to corporate governance, listing standards and securities and investor relations issues. While we were a business unit within AgFeed Industries, we were indirectly subject to requirements to maintain an effective internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act of 2002. However, as a separate, stand-alone public company, our management will have to evaluate our internal control system independently with new thresholds of materiality, and to implement necessary changes to our internal control system. We cannot guarantee that we will be able to do so in a timely and effective manner. (1) For risks relating to our current corporate structure, see Risk Factors Risks Related to Our Structure and Regulations. Because we have not operated as a separate, stand-alone entity in the past, we may find that we need to acquire assets in addition to those contributed to us in connection with our carve-out. We may fail to acquire assets that prove to be important to our operations or we may not be able to integrate all of our assets. Our ability to operate our business effectively may suffer if we do not, quickly and cost-effectively, establish our own financial, administrative and other support functions in order to operate as a separate, stand-alone company. Historically, we have relied on financial, administrative and other resources of AgFeed Industries to operate our business. As a separate, stand-alone public company, we will need to create our own financial, administrative and other support systems or contract with third parties to replace AgFeed Industries systems, as well as the independent internal controls required by the Sarbanes-Oxley Act of 2002. Any failure or significant disruption to our own financial or administrative systems could have an adverse impact on our business operations, such as paying our suppliers and employees, executing foreign currency transactions or performing other administrative services, on a timely basis. Our financial information included in this prospectus may not be representative of our results as a separate, stand-alone company. The consolidated financial statements included in this prospectus were prepared on a carve-out basis. We made numerous estimates, assumptions and allocations in our financial information because AgFeed Industries did not account for us, and we did not operate, as a separate, stand-alone company for any period prior to the completion of the reorganization of AgFeed Industries. Prior to AgFeed Industries transfer of the completion of the reorganization of AgFeed Industries, its animal nutrition business operations to our PRC subsidiaries, the operations of our animal nutrition business were carried out by various companies owned or controlled by AgFeed Industries. For periods both before and after the completion of the reorganization of AgFeed Industries, our consolidated financial statements include the assets, liabilities, revenues, expenses and changes in shareholders equity and cash flows that were directly attributable to our animal nutrition business whether held or incurred by AgFeed Industries or by Holdings or AANI. In cases involving assets not specifically identifiable to any particular operation of AgFeed Industries, only those assets transferred or expected to be transferred to us are included in our consolidated balance sheets for periods beginning after the completion of the reorganization of AgFeed Industries. Only limited liabilities related to the animal nutrition business operations of AgFeed Industries will be transferred to us. With respect to costs of operations of the animal nutrition business, an allocation of certain general corporate expenses of AgFeed Industries which are not directly related to the animal nutrition operations and an allocation of certain other expenses provided by AgFeed Industries to Holdings or AANI were also included. These allocations are based on a variety of factors depending upon the nature of the expenses being allocated, including revenue and the number of employees. Although our management believes that the assumptions underlying our financial statements and the above allocations are reasonable, our financial statements may not necessarily reflect our results of operations, financial position and cash flows as if we had operated as a separate, stand-alone company during the periods presented. See Our Relationship with AgFeed Industries for our arrangements with AgFeed Industries and Management s Discussion and Analysis of Financial Condition and Results of Operations, Selected Consolidated Financial and Operating Data and the notes to our consolidated financial statements included elsewhere in this prospectus for our historical cost allocation. In addition, in preparation for becoming a separate, stand-alone company, we will look to establish our own financial, administrative and other support systems or contract with third parties to replace AgFeed Industries systems, the cost of which could be significantly different from the cost allocation with AgFeed Industries for the same services. Therefore, you should not view our historical results as indicators of our future performance. We may not be able to continue to receive the same level of support from AgFeed Industries and may not be successful in maintaining, preserving or growing our brand identity. Although upon completion of the reorganization, which occurred in October 2010, we have entered into an Administrative Services Agreement, supply agreement, trademark license agreements and other related agreements with AgFeed Industries, we cannot assure you we will continue to receive the same level of support from AgFeed Industries after we become a separate, stand-alone company. In addition, as an entity that is newly separated from AgFeed Industries, AANI or Holdings as a brand name does not have the same level of recognition as AgFeed Industries in China s animal nutrition business even though there will be no change in the product and trade names used. As a result, the acceptance of our animal nutrition products may decline as a result of lack of brand recognition. Additionally, our current customers, suppliers, and partners may react negatively to our carve-out from AgFeed Industries. We will need to expend significant time, effort and resources to continue to maintain and preserve our brand name in the marketplace and our own independent identity. This effort may not be successful, which could materially and adversely affect our business. The Non-Compete Agreement with AgFeed Industries, our parent, contains certain exceptions and may not be effective in preventing AgFeed Industries from engaging in certain transactions that directly or indirectly may compete with (or be perceived to be in competition with) our animal nutrition business. In connection with the reorganization, we entered into a Non-Compete Agreement with AgFeed Industries, Inc., our parent, pursuant to which AgFeed Industries has agreed, for a period of three years commencing on August 1, 2010, not to engage, and to cause each other member of AgFeed Industries not to engage, directly or indirectly, in the animal nutrition business anywhere in China. This agreement is subject to important exceptions, namely, (1) certain of AgFeed Industries subsidiaries may continue to maintain land use rights for certain real estate upon which our operations in Jiangxi and Nanning provinces are located but only to the extent necessary in order to facilitate the transfer of certain manufacturing operations and real estate to us following the reorganization, and (2) AgFeed Industries may acquire equity interests in a company that does not have more than 25.0% of its gross revenues (based on the latest annual audited financial statements of such company) attributable to the animal nutrition business in China. In addition, the agreement permits AgFeed Industries to acquire or invest in any third party engaging in the animal nutrition business in China if, after using its reasonable best efforts to make such investment opportunity available to us as required under the agreement, we do not pursue such opportunity; provided that AgFeed Industries equity interest in such third party shall not exceed 50%. Because of the exceptions to the agreement described above, we cannot assure you that the Non-Compete Agreement will be effective in preventing AgFeed Industries from engaging in certain conduct or transactions that directly or indirectly may compete with (or be perceived to be in competition with) our business. Even if there is no actual direct or indirect competition to our business, the perception by investors or securities analysts of possible competition from AgFeed Industries could adversely affect our business prospects and the price of our ADSs. Nor can we assure you that AgFeed Industries will not breach the Non-Compete Agreement. Although non-compete agreements are generally enforceable under PRC law, PRC legal practice regarding the enforceability of such agreements is not as well-developed as those in countries such as the United States. Thus, if we were required to enforce our rights under the Non-Compete Agreement, we cannot assure you that a PRC court would enforce such rights. Even if such rights are enforced, we may not receive adequate remedies from courts in China or elsewhere. In addition, AgFeed Industries may not extend or renew the Non-Compete Agreement and may decide to compete with us upon expiration of the agreement. AgFeed Industries will control the outcome of shareholder actions in our company. Upon completion of this offering, AgFeed Industries will hold % of the combined total of our outstanding Class A and Class B ordinary shares, and will control % of the combined total voting power of our outstanding Class A and Class B ordinary shares. AgFeed Industries has advised us that it does not anticipate disposing of its voting control in us in the near future. AgFeed Industries voting power gives it the power to control actions that require shareholder approval under British Virgin Islands law, our memorandum and articles of association and NASDAQ requirements, including the election and removal of any member of our board of directors, significant mergers and acquisitions and other business combinations, changes to our memorandum and articles of association, the number of shares available for issuance under share incentive plans, and the issuance of significant amounts of our Class A and Class B ordinary shares in private placements. AgFeed Industries voting control may cause transactions to occur that might not be beneficial to you as a holder of our ADSs, and may prevent transactions that would be beneficial to you. For example, AgFeed Industries voting control may prevent a transaction involving a change of control of us, including transactions in which you as a holder of our ADSs might otherwise receive a premium for your securities over the then-current market price. In addition, if AgFeed Industries were to convert its Class B ordinary shares to Class A ordinary shares, it is not prohibited from selling a controlling interest in us to a third party and may do so without your approval and without providing for a purchase of your ADSs. If AgFeed Industries is acquired or otherwise undergoes a change of control, any acquiror or successor will be entitled to exercise the voting control and contractual rights of AgFeed Industries with respect to Holdings, and may do so in a manner that could vary significantly from that of AgFeed Industries. The allocation of assets and liabilities between AgFeed Industries and our company may not reflect the allocation that would have been reached by two unaffiliated parties. Moreover, so long as AgFeed Industries continues to control us, we may not be able to bring a legal claim against AgFeed Industries in the event of contractual breach, notwithstanding our contractual rights under the agreements described above and other inter-company agreements entered into from time to time. We may have conflicts of interest with AgFeed Industries and, because of AgFeed Industries controlling ownership interest in our company, may not be able to resolve such conflicts on favorable terms for us. Conflicts of interest may arise between AgFeed Industries and us in a number of areas relating to our past and ongoing relationships. Potential conflicts of interest that we have identified include the following: Indemnification arrangements with AgFeed Industries. We have agreed to indemnify AgFeed Industries with respect to lawsuits and other matters relating to our animal nutrition business, including operations of that business when it was a business unit of AgFeed Industries prior to the carve-out transactions. These indemnification arrangements could result in our having interests that are adverse to those of AgFeed Industries, for example different interests with respect to settlement arrangements in a litigation matter. In addition, under these arrangements, we agreed to reimburse AgFeed Industries for liabilities incurred (including legal defense costs) in connection with litigation, while AgFeed Industries will be the party prosecuting or defending the litigation. Noncompete with AgFeed Industries. AgFeed Industries has agreed not to compete with us in the animal nutrition business in China for a three-year period commencing on August 1, 2010, subject to certain exceptions that may present conflicts of interests. See Risks Related to Our Carve-Out from AgFeed Industries and Our Continued Relationship with AgFeed Industries The Non-Compete Agreement with AgFeed Industries, our parent, contains certain exceptions and may not be effective in preventing AgFeed Industries from engaging in certain transactions that directly or indirectly may compete with (or be perceived to be in competition with) our animal nutrition business. Our board members or executive officers may have conflicts of interest. Mr. Junhong Xiong, who will be our Chairman of the Board and Treasurer , is also serving as AgFeed Industries chief executive officer and as a member of its board of directors. Mr. Gerald Daignault, who will be our President and Chief Executive Officer, and a director, is also the current chief operating officer of AgFeed Industries. Mr. Edward Pazdro, who will be our Chief Financial Officer, is currently also serving as the chief financial officer of AgFeed Industries. Ms. Summer Xie, who will be our Corporate Secretary, is currently also serving as a corporate communications officer of AgFeed Industries. Each of our executive officers and certain of our board members also own shares, restricted stock and/or options in AgFeed Industries. AgFeed Industries may continue to grant incentive share compensation to our board members and executive officers from time to time. These relationships could create, or appear to create, conflicts of interest when these persons are faced with decisions with potentially different implications for AgFeed Industries and us. Sale of shares in our company. AgFeed Industries may decide to sell all or a portion of our shares that it holds to a third party, including to one of our competitors, thereby giving that third party substantial influence over our business and our affairs. Such a sale could be contrary to the interests of certain of our shareholders, including our employees or our public shareholders. Allocation of business opportunities. Business opportunities may arise that both we and AgFeed Industries find attractive, and which would complement our respective businesses. Although AgFeed Industries has agreed in the Non-Compete Agreement with us not to acquire equity interests in third-party Chinese animal nutrition businesses without first using its reasonable best efforts to make such investment opportunities available to us, subject to certain limited exceptions, we may not be able to pursue the business opportunities effectively if AgFeed Industries decides to take advantage of such opportunities itself notwithstanding such agreement. Developing business relationships with AgFeed Industries competitors. So long as AgFeed Industries remains as our controlling shareholder, we may be limited in our ability to do business with its competitors, such as other hog production businesses in China. This may limit the effectiveness of our business plan for the best interest of our company and our other shareholders. Although our company is a separate, stand-alone entity, we expect to operate, for as long as AgFeed Industries is our controlling shareholder, as a part of AgFeed Industries. AgFeed Industries may from time to time make strategic decisions that it believes are in the best interests of its business as a whole, including our company. These decisions may be different from the decisions that we would have made on our own. AgFeed Industries decisions with respect to us or our business may be resolved in ways that favor AgFeed Industries and therefore AgFeed Industries own shareholders, which may not coincide with the interests of our other shareholders. We may not be able to resolve any potential conflicts, and, even if we do so, the resolution may be less favorable to us than if we were dealing with an unaffiliated shareholder. Even if both parties seek to transact business on terms intended to approximate those that could have been achieved among unaffiliated parties, this may not succeed in practice. Risks Related to Doing Business in China We are subject to economic and political risks in China over which we have little or no control, and may be unable to alter our business practice in time to avoid the possibility of reduced revenues. All of our business is conducted in China. Doing business outside the United States, and particularly in China, subjects us to various risks and uncertainties, including changing economic and political conditions, major work stoppages, exchange rate controls, currency fluctuations, armed conflicts and unexpected changes in United States and foreign laws relating to tariffs, trade restrictions, transportation regulations, foreign investments and taxation. We have no control over most of these risks and may be unable to anticipate changes in international economic and political conditions. Therefore, we may be unable to alter our business practice in time to avoid the possibility of reduced revenues. China s economic policies could affect our business. All of our assets are located in China and all of our revenue is derived from our operations in China. Accordingly, our results of operations and prospects are subject, to a significant extent, to the economic, political and legal developments in China. While China s economy has experienced significant growth in the past twenty years, such growth has been uneven, both geographically and among various sectors of the economy. The Chinese government has implemented various measures to encourage economic growth and guide the allocation of resources. Some of these measures benefit the overall economy of the PRC, but they may also have a negative effect on us. For example, our operating results and financial condition may be adversely affected by the government control over capital investments or changes in tax regulations. The economy of the PRC has been changing from a planned economy to a more market-oriented economy. In recent years, the Chinese government has implemented measures emphasizing the utilization of market forces for economic reform and the reduction of state ownership of productive assets, and the establishment of corporate governance in business enterprises. However, a substantial portion of productive assets in the PRC are still owned by the Chinese government. In addition, the Chinese government continues to play a significant role in regulating industry development by imposing industrial policies. It also exercises significant control over the PRC s economic growth through the allocation of resources, the control of payment of foreign currency-denominated obligations, the setting of monetary policy and the provision of preferential treatment to particular industries or companies. We may have difficulty establishing adequate management, legal and financial controls in China. China historically has not adopted a Western style of management, financial reporting concepts and practices, modern banking, computer or other control systems. We may have difficulty in hiring and retaining a sufficient number of qualified employees to work in China. As a result of these factors, we may experience difficulty in establishing management, legal and financial controls, and instituting business practices that meet Western standards. We may also experience difficulty in collecting financial data and preparing financial statements, books of account and corporate records. As we have limited business insurance coverage in China, any loss which we suffer may not be insured or may be insured to only a limited extent. The insurance industry in China is still in an early stage of development and insurance companies located in China offer limited business insurance products. In the event of damage or loss to our properties, our insurance may not provide adequate coverage in the event of loss or damage to our property. If relations between the United States and China worsen, investors may be unwilling to hold or buy our ADSs and the market price of our ADSs may decrease. At various times during recent years, the United States and China have had significant disagreements over political and economic issues. Controversies may arise in the future between these two countries. Any political or trade controversies between the United States and China, whether or not directly related to our business, could reduce the price of our ADSs. The nature and application of many laws of China create an uncertain environment for business operations, and they could have a negative effect on us. The legal system in China is a civil law system. Unlike the common law system, the civil law system is based on written statutes where decided legal cases have little value as precedents. In 1979, China began to promulgate a comprehensive system of laws and has since introduced many laws and regulations to provide general guidance on economic and business practices in China and to regulate foreign investment. Progress has been made in the promulgation of laws and regulations dealing with economic matters such as corporate organization and governance, foreign investment, commerce, taxation and trade. The promulgation of new laws, changes of existing laws and the abrogation of local regulations by national laws could cause a decline in the price of our ADSs. In addition, as these laws, regulations and legal requirements are relatively recent, their interpretation and enforcement involve significant uncertainty. Limitations on the ability of our operating subsidiaries to make payments to us could have a material adverse effect on our ability to conduct our business and fund our operations We are a holding company and conduct all of our business through our operating subsidiaries in China. We will of necessity rely on dividends paid by our direct or indirect subsidiaries for our cash needs, including the funds necessary to pay dividends and other cash distributions to our shareholders, to service any debt we may incur and to pay our operating expenses. The payment of dividends by entities organized in China is subject to limitations. In particular, regulations in China currently permit payment of dividends only out of accumulated profits as determined in accordance with Chinese accounting standards and regulations. Each of our Chinese subsidiaries is also required to set aside at least 10% of its respective after-tax profit based on Chinese accounting standards each year to its general reserves until the accumulative amount of such reserves reaches 50% of their registered capital. These reserves are not distributable as cash dividends. In addition, each is required to allocate a portion of its after-tax profit to its staff welfare and bonus fund at the discretion of its board of directors. Moreover, if our subsidiaries incur debt on their own behalf in the future, the instruments governing the debt may restrict their ability to pay dividends or make other distributions to us. Any limitation on the ability of our subsidiaries to distribute dividends and other distributions to us could materially and adversely limit our ability to make investments or acquisitions that could be beneficial to our businesses, pay dividends or otherwise fund and conduct our business. Recent Chinese regulations relating to the establishment of offshore special purpose companies by Chinese residents and registration requirements for employee stock ownership plans or share option plans may subject our China resident shareholders to personal liability and limit our ability to acquire Chinese companies or to inject capital into our operating subsidiaries in China, limit our subsidiaries ability to distribute profits to us, or otherwise materially and adversely affect us. SAFE issued a public notice in October 2005, requiring PRC residents, including both legal persons and natural persons, to register with the competent local SAFE branch before establishing or controlling any company outside of China, referred to as an offshore special purpose company, for the purpose of acquiring any assets of or equity interest in PRC companies and raising funds from overseas. In addition, any PRC resident that is the shareholder of an offshore special purpose company is required to amend his or her SAFE registration with the local SAFE branch, with respect to that offshore special purpose company in connection with any increase or decrease of capital, transfer of shares, merger, division, equity investment or creation of any security interest over any assets located in China. Failure to comply with the above SAFE registration requirements could result in liabilities under PRC laws for evasion of foreign exchange restrictions. Some of our PRC resident beneficial owners have not registered with the local SAFE branch as required under SAFE regulations. The failure of future beneficial owners of our company who are PRC residents to comply with the registration procedures set forth in the SAFE regulations or the failure of our beneficial owners to amend their SAFE registrations in a timely fashion pursuant to the SAFE regulations may subject such beneficial owners to fines and legal sanctions and may also limit our ability to contribute capital to our PRC subsidiary, limit the ability of our PRC subsidiary to distribute dividends to our company or otherwise materially and adversely affect our business. Under the applicable PRC regulations, PRC citizens who participate in an employee stock ownership plan or a stock option plan in an overseas publicly-listed company are required to register with the SAFE and complete certain other procedures. On March 28, 2007, SAFE released detailed registration procedures for employee stock ownership plans or share option plans to be established by overseas listed companies and for individual plan participants. We and our PRC citizen employees who participate in an employee stock ownership plan or a stock option plan will be subject to these regulations when our company becomes a publicly-listed company in the United States. Any failure to comply with the relevant registration procedures may affect the effectiveness of our employee stock ownership plans or share option plans and subject the plan participants, the companies offering the plans or the relevant intermediaries, as the case may be, to penalties under PRC foreign exchange regime. These penalties may subject us to fines and legal sanctions, prevent us from being able to make distributions or pay dividends, as a result of which our business operations and our ability to distribute profits to you could be materially and adversely affected. In addition, the National Development and Reform Commission ( NRC ) promulgated a Rule in October 2004, or the NRC Rule, which requires NRC approvals for overseas investment projects of resource development or overseas investment projects using large amount of foreign exchange made by PRC entities. The NRC Rule also provides that approval procedures for such overseas investment projects of PRC individuals must be implemented with reference to this rule. However, there exist extensive uncertainties in terms of interpretation of the NRC Rule with respect to its application to a PRC individual s overseas investment, and in practice, we are not aware of any precedents that a PRC individual s overseas investment has been approved by the NRC or challenged by the NRC based on the absence of NRC approval. Our current beneficial owners who are PRC individuals did not apply for NRC approval for investment in us. We cannot predict how and to what extent this will affect our business operations or future strategy. For example, the failure of our shareholders who are PRC individuals to comply with the NRC Rule may subject these persons or our PRC subsidiaries to certain liabilities under PRC laws, which could adversely affect our business. Restrictions on currency exchange may limit our ability to utilize our revenues effectively. The Chinese government imposes controls on the convertibility of RMB into foreign currencies and, in certain cases, the remittance of currency out of China. We receive all of our revenues in RMB. Under our current structure, our income is primarily derived from dividend payments from our sole subsidiary. Shortages in the availability of foreign currency may restrict the ability of our subsidiary to remit sufficient foreign currency to pay dividends or other payments to us, or otherwise satisfy any foreign currency denominated obligations that they may subsequently incur. Under existing PRC foreign exchange regulations, payments of current account items, including profit distributions, interest payments and expenditures from trade-related transactions, can be made in foreign currencies without prior approval from SAFE by complying with certain procedural requirements. However, approval from appropriate government authorities is required where RMB are to be converted into foreign currency and remitted out of China to pay capital expenses such as the repayment of bank loans denominated in foreign currencies. The Chinese government may also, at its discretion, restrict access in the future to foreign currencies for current account transactions. Since our revenues are denominated in RMBs, any existing and future restrictions on currency exchange may limit our ability to utilize revenues to fund business activities outside of China that require foreign currencies. Future inflation in China may inhibit our ability to conduct business in China. In recent years, the Chinese economy has experienced periods of rapid expansion and highly fluctuating rates of inflation. During the past ten years, the rate of inflation in China has been as high as 5.9% and as low as -0.8%. These factors have led to the adoption by the Chinese government, from time to time, of various corrective measures designed to restrict the availability of credit or regulate growth and contain inflation. High inflation may in the future cause the Chinese government to impose controls on credit and/or prices, or to take other action, which could inhibit economic activity in China, and thereby harm the market for our products and our company. Fluctuations in exchange rates could adversely affect our business and the value of our securities. Because our business transactions are denominated in RMB and our funding and results of operations will be denominated in USD, fluctuations in exchange rates between USD and RMB will affect our balance sheet and financial results. Since July 2005, the RMB is no longer solely pegged to the USD but instead is pegged against a basket of currencies as a whole in order to keep a more stable exchange rate for international trading. With the very strong economic growth in China in the last few years, the RMB is facing very high pressure to appreciate against USD. Such pressure could result more fluctuations in exchange rates and in turn our business would be suffered from higher exchange rate risk. There are very limited hedging tools available in China to hedge our exposure in exchange rate fluctuations. The hedging tools that are available are also ineffective in the sense that these hedges cannot be freely preformed in the PRC financial market, and more important, the frequent changes in PRC exchange control regulations would limit our hedging ability for the RMB. We may be required to obtain prior approval of the China Securities Regulatory Commission, or CCRC, of the listing and trading of our ADSs on the NASDAQ Global Select Market. On August 8, 2006, six PRC regulatory authorities, including the Ministry of Commerce, the State Assets Supervision and Administration Commission, the State Administration for Taxation ( SAT ), the State Administration for Industry and Commerce, the CCRC and the SAFE, jointly issued the Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, or the New M&A Rules, which became effective on September 8, 2006 and was amended on June 22, 2009. This regulation, among other things, includes provisions that purport to require that an offshore special purpose vehicle formed for purposes of overseas listing of equity interests in PRC companies and controlled directly or indirectly by PRC companies or individuals obtain the approval of the CCRC prior to the listing and trading of such special purpose vehicle s securities on an overseas stock exchange. On September 21, 2006, the CCRC published on its official website procedures regarding its approval of overseas listings by special purpose vehicles. The CCRC approval procedures require the filing of a number of documents with the CCRC and it would take several months to complete the approval process. The application of this new PRC regulation remains unclear. Our PRC legal counsel, QZ & WD (Jiang Xi) Law Firm is of the opinion that prior CCRC approval for this offering is not required because Holdings was incorporated by a foreign owned enterprise, and there was no acquisition of the equity or assets of a PRC domestic company as such term is defined under the New M&A Rules. As a result we did not seek prior CCRC approval for this offering. However, we cannot assure you that the relevant PRC government authorities, including the CCRC, will reach the same conclusion as our PRC legal counsel. If the CCRC or other relevant PRC government authorities subsequently determine that prior CCRC approval is required, we may face regulatory actions or other sanctions from the CCRC or other PRC regulatory authorities. These regulatory authorities may impose fines and penalties on our operations in the PRC, limit our operating privileges in the PRC, delay or restrict the repatriation of the proceeds from this offering into the PRC, or take other actions that could have a material adverse effect on our business, as well as the trading price of our ADSs. The CCRC or other PRC regulatory authorities may also take actions requiring us, or making it advisable for us, to halt this offering before settlement and delivery of the ADSs offered by this prospectus. Consequently, if you engage in market trading or other activities in anticipation of and prior to settlement and delivery, you do so at the risk that settlement and delivery may not occur. We are subject to a variety of environmental laws and regulations related to our manufacturing operations. Our failure to comply with environmental laws and regulations may have a material adverse effect on our business and results of operations. We are subject to various environmental laws and regulations that require us to obtain environmental permits for our feed manufacturing operations. If we do not receive the renewed permit or we fail to comply with the provisions of the renewed permit, we could be subject to fines, criminal charges or other sanctions by regulators, including the suspension or termination of our manufacturing operations. We cannot assure you that at all times we will be in compliance with environmental laws and regulations or our environmental permits or that we will not be required to expend significant funds to comply with, or discharge liabilities arising under, environmental laws, regulations and permits. Under the PRC EIT Law, we and/or AANI may be classified as a resident enterprise of the PRC. Such classification could result in PRC tax consequences to us, AANI and/or our non-PRC resident shareholders. On March 16, 2007, the National People s Congress approved and promulgated a new tax law, the PRC Enterprise Income Tax Law, or EIT Law, which took effect on January 1, 2008. Under the EIT Law, enterprises are classified as resident enterprises and non-resident enterprises. An enterprise established outside of the PRC with de facto management bodies within the PRC is considered a resident enterprise, meaning that it can be treated in a manner similar to an enterprise organized under the laws of the PRC for PRC enterprise income tax purposes. The implementing rules of the EIT Law define de facto management bodies as a managing body that in practice exercises substantial and overall management and control over the production and operations, personnel, accounting, and properties of the enterprise; however, it remains unclear whether the PRC tax authorities would deem our managing body as being located within the PRC. Due to the short history of the EIT Law and lack of applicable legal precedents, the PRC tax authorities determine the PRC tax resident treatment of a foreign (non-PRC) company on a case-by-case basis. If the PRC tax authorities determine that we are or AANI is a resident enterprise for PRC enterprise income tax purposes, a number of PRC tax consequences could follow. First, we and/or AANI may be subject to the enterprise income tax at a rate of 25% on our and/or Ajani s worldwide taxable income, as well as PRC enterprise income tax reporting obligations. Second, under the EIT Law and its implementing rules, dividends paid between qualified resident enterprises are exempt from enterprise income tax. As a result, if we and AANI are each treated as a qualified resident enterprise, all dividends from Shandong Feed to us (through AANI) should be exempt from PRC enterprise income tax. Finally, if we are determined to be a resident enterprise under the EIT Law, this could result in (i) a 10% PRC tax being imposed on dividends we pay to our investors that are not tax residents of the PRC ( non-resident investors ) and that are enterprises (but not individuals) and gains derived by them from transferring our ordinary shares and/or ADSs, if such income or gain is considered PRC-sourced income by the relevant PRC tax authorities and (ii) a potential 20% PRC tax being imposed on dividends we pay to our non-resident investors who are individuals and gains derived by them from transferring our ordinary shares and/or ADSs, if such income or gain is considered PRC-sourced income by the relevant PRC tax authorities. In such event, we may be required to withhold the applicable PRC income tax on any dividends paid to our non-resident investors. Our non-resident investors also may be responsible for paying the applicable PRC tax on any gain realized from the sale or transfer of our ordinary shares and/or ADSs in certain circumstances. We would not, however, have an obligation to withhold PRC tax with respect to such gain under the PRC tax laws. Moreover, SAT released Circular Guoshuihan No. 698 ( Circular 698 ) on December 10, 2009 that reinforces the taxation of certain equity transfers by non-resident investors through overseas holding vehicles. Circular 698 addresses indirect equity transfers as well as other issues. Circular 698 is retroactively effective from January 1, 2008. According to Circular 698, where a non-resident investor that indirectly holds an equity interest in a PRC resident enterprise through a non-PRC offshore holding company indirectly transfers an equity interest in the PRC resident enterprise by selling an equity interest in the offshore holding company, and the latter is located in a country or jurisdiction where the actual tax burden is less than 12.5% or where the offshore income of its residents is not taxable, the non-resident investor is required to provide the PRC tax authority in charge of that PRC resident enterprise with certain relevant information within 30 days of the execution of the equity transfer agreement. The tax authorities in charge will evaluate the offshore transaction for tax purposes. In the event that the tax authorities determine that such transfer is abusing forms of business organization and a reasonable commercial purpose for the offshore holding company other than the avoidance of PRC income tax liability is lacking, the PRC tax authorities will have the power to re-assess the nature of the equity transfer under the doctrine of substance over form. If SAT s challenge of a transfer is successful, it may deny the existence of the offshore holding company that is used for tax planning purposes and subject the non-resident investor to PRC tax on the capital gain from such transfer. Since Circular 698 has a short history, there is uncertainty as to its application. We (or a non-resident investor) may become at risk of being taxed under Circular 698 and may be required to expend valuable resources to comply with Circular 698 or to establish that we (or such non-resident investor) should not be taxed under Circular 698, which could have a material adverse effect on our financial condition and results of operations (or such non-resident investor s investment in us). If any PRC tax applies to a non-resident investor, the non-resident investor may be entitled to a reduced rate of PRC tax under an applicable income tax treaty and/or a deduction for such PRC tax against such investor s domestic taxable income or a foreign tax credit in respect of such PRC tax against such investor s domestic income tax liability (subject to applicable conditions and limitations). Investors should consult their own tax advisors regarding the applicability of any such taxes, the effects of any applicable income tax treaties, and any available deductions or foreign tax credits. For a further discussion of these issues, see the Section entitled Taxation PRC Taxation. Risks Related to Our ADSs We are a British Virgin Islands business company and, because judicial precedent regarding the rights of shareholders is more limited under British Virgin Islands law than that under U.S. law, our shareholders may have less protection for their shareholder rights than they would under U.S. law. Our corporate affairs are governed by our memorandum and articles of association, the BVI Business Companies Act, 2004 and the common law of the British Virgin Islands. The rights of shareholders to take action against our directors, actions by minority shareholders and the fiduciary responsibilities of our directors to us under British Virgin Islands law are to a large extent governed by the common law of the British Virgin Islands. The common law of the British Virgin Islands is derived in part from comparatively limited judicial precedent in the British Virgin Islands as well as from English common law, which has persuasive, but not binding, authority on a court in the British Virgin Islands. The rights of our shareholders and the fiduciary responsibilities of our directors under British Virgin Islands law are not as clearly established as they would be under statutes or judicial precedent in some jurisdictions in the United States. In particular, the British Virgin Islands has a less developed body of securities laws. You may have difficulty enforcing judgments obtained against us. We are a British Virgin Islands business company and all of our assets are located outside of the United States. Substantially all of our current operations are conducted in the PRC. In addition, a majority of our directors and executive officers are nationals and residents of countries other than the United States. A substantial portion of the assets of these persons are located outside the United States. As a result, it may be difficult for you to effect service of process within the United States upon these persons. It may also be difficult for you to enforce in British Virgin Islands courts or PRC courts judgments obtained in U.S. courts based on the civil liability provisions of the U.S. federal securities laws against us and our officers and directors, most of whom are not residents in the United States and the substantial majority of whose assets are located outside of the United States. In addition, there is uncertainty as to whether the courts of the British Virgin Islands or the PRC would recognize or enforce judgments. See Enforceability of Civil Liabilities. We will be a controlled company within the meaning of the NASDAQ Stock Market Rules and, as a result, will rely on exemptions from certain corporate governance requirements that provide protection to shareholders of other companies. After the completion of this offering, AgFeed Industries will own more than 50% of the combined total voting power of our outstanding Class A and Class B ordinary shares, and we will be a controlled company under the NASDAQ Stock Market Rules. We intend to rely on certain exemptions that are available to controlled companies from NASDAQ corporate governance requirements, including the requirements: that a majority of our board of directors consist of independent directors; that we have a corporate governance and nominating committee that is composed entirely of independent directors with a written charter addressing the committee s purpose and responsibilities; that we have a compensation committee that is composed entirely of independent directors with a written charter addressing the committee s purpose and responsibilities; and for an annual performance evaluation of the nominating and governance committee and compensation committee. We are not required to and will not voluntarily meet these requirements. As a result of our use of the controlled company exemptions, you will not have the same protection afforded to shareholders of companies that are subject to all of NASDAQ s corporate governance requirements. The market price for our ADSs may be subject to wide fluctuations and our securities may trade below the initial public offering price. The initial public offering price of our ADSs will be determined by negotiations between AgFeed Industries, us and the underwriter, based on numerous factors we discuss under Underwriting. This price may not be indicative of the market price of our ADSs after this offering. We cannot assure you that you will be able to resell your ADSs at or above the initial public offering price or our net asset value. The securities of a number of Chinese companies and companies with substantial operations in China have also experienced wide fluctuations subsequent to their initial public offerings, including trading at prices substantially below the initial public offering prices. Among the factors that could affect the price of our ADSs are
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001501467_primus_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001501467_primus_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..df678ce4dc8ca77ba79c622288ce31072e054914
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001501467_primus_prospectus_summary.txt
@@ -0,0 +1,502 @@
+PROSPECTUS SUMMARY 
+ 1 
+
+ 
+ Business Overview 
+ 1 
+
+ 
+ Our Proposed
+ Products and Business Plan 
+ 1 
+
+ 
+ Licensed Technology
+ 2
+
+ 
+ Our Strategy
+ 2
+
+ 
+ Risks Associated With Our
+ Business 
+ 2 
+
+ 
+ Company
+ Information 
+ 3 
+
+ 
+ The Offering 
+ 3 
+
+ 
+ 
+ 
+
+ 
+ RISK FACTORS 
+ 6
+
+ 
+ Risks Related to
+ Our Financial Condition 
+ 6
+
+ 
+ Risks Related to Our Intellectual
+ Property and Technology
+ 7
+
+ 
+ Risks Related to our Business
+ and Product Line 
+ 10 
+
+ 
+ Risks Related to
+ the Industry in Which We Will Compete 
+ 12 
+
+ 
+ Risks Related to this Offering and
+ the Ownership of Our Securities
+ 
+ 14
+
+ 
+ 
+ 
+
+ 
+ CAUTIONARY NOTE REGARDING
+ FORWARD-LOOKING STATEMENTS 
+ 18 
+
+ 
+ 
+ 
+
+ 
+ USE OF PROCEEDS 
+ 19 
+
+ 
+ 
+ 
+
+ 
+ CAPITALIZATION 
+ 20 
+
+ 
+ 
+ 
+
+ 
+ DILUTION 
+ 21 
+
+ 
+ 
+ 
+
+ 
+ DIVIDEND POLICY 
+ 22 
+
+ 
+ 
+ 
+
+ 
+ DETERMINATION OF OFFERING PRICE 
+ 22 
+
+ 
+ 
+ 
+
+ 
+ SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY
+ COMPENSATION PLANS
+ 
+ 23
+
+ 
+ 
+ 
+
+ 
+ MANAGEMENT S DISCUSSION AND ANALYSIS
+ OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 
+ 23 
+
+ 
+ Overview 
+ 23 
+
+ 
+ Revenue 
+ 24 
+
+ 
+ Results of Operations
+ 24
+
+ 
+ Liquidity and Capital Resources
+ 24
+
+ 
+ Off-Balance Sheet Arrangements
+ 24
+
+ 
+ 
+ 
+
+ 
+ BUSINESS 
+ 25 
+
+ 
+ Company Overview 
+ 25 
+
+ 
+ The Market for
+ Our Products 
+ 26 
+
+ 
+ Our Product Candidates 
+ 27 
+
+ 
+ Business
+ Strategy 
+ 28 
+
+ 
+ Customers 
+ 28 
+
+ 
+ Manufacturing
+ and Distribution 
+ 28 
+
+ 
+ Sales and Marketing 
+ 28 
+
+ 
+ Research and
+ Development 
+ 29 
+
+ 
+ Intellectual Property 
+ 29 
+
+ 
+ Government
+ Regulation 
+ 29 
+
+ 
+ Competition 
+ 30 
+
+ 
+ Material
+ Agreements 
+ 30 
+
+ 
+ Properties and Facilities 
+ 32 
+
+ 
+ Insurance 
+ 32 
+
+ 
+ Employees 
+ 32 
+
+ 
+ Legal
+ Proceedings 
+ 32 
+
+ 
+ 
+ 
+
+ 
+ MANAGEMENT 
+ 33
+
+ 
+ Board Composition and Election
+ of Directors 
+ 35 
+
+ 
+ Board Committees
+ 
+ 36
+
+ 
+ Code of Business Conduct and
+ Ethics 
+ 38 
+
+ 
+ 
+ 
+
+ 
+ EXECUTIVE COMPENSATION 
+ 38 
+
+ 
+ Compensation
+ Policies 
+ 38 
+
+ 
+ 2010 Summary Compensation Table 
+ 39
+
+ 
+ Employment
+ Agreements 
+ 39 
+
+- i -
+
+ 
+ Potential
+ Payments upon Termination of Employment 
+ 40 
+
+ 
+ 2011 Equity Incentive Plan 
+ 41 
+
+ 
+ 2010 Director
+ Compensation
+ 
+ 42
+
+ 
+ 
+ 
+
+ 
+ SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
+ AND MANAGEMENT 
+ 42 
+
+ 
+ 
+ 
+
+ 
+ TRANSACTIONS WITH RELATED PERSONS AND CONTROL
+ PERSONS 
+ 44 
+
+ 
+ 
+ Consulting Agreement with Dana Holdings, LLC
+ 44 
+
+ 
+ Bridge Loan Agreements
+ 44 
+
+ 
+ Dana
+ Holdings Advance
+ 45 
+
+ 
+ 
+ 
+
+ 
+ DESCRIPTION OF CAPITAL STOCK 
+ 46 
+
+ 
+ General 
+ 46 
+
+ 
+ Units 
+ 46 
+
+ 
+ Common Stock 
+ 46 
+
+ 
+ Warrants to be
+ Issued as Part of the Units 
+ 46 
+
+ 
+ Representative's Warrants 
+ 47 
+
+ 
+ Preferred Stock
+ 
+ 48 
+
+ 
+ Bridge Notes 
+ 48 
+
+ 
+ 
+ Convertible Notes
+ 
+ 48
+
+ 
+ Anti-Takeover Effects
+ of Delaware Law and Certain Provisions of our Amended and Restated
+ Certificate of 
+ 48
+
+ 
+ Transfer Agent
+ 
+ 49 
+
+ 
+ Listing 
+ 50 
+
+ 
+ 
+ 
+
+ 
+ SHARES ELIGIBLE FOR FUTURE SALE 
+ 50 
+
+ 
+ Sales of
+ Restricted Shares 
+ 50 
+
+ 
+ Rule 144 
+ 50 
+
+ 
+ Lock-up
+ Agreements 
+ 51 
+
+ 
+ Form S-8 Registration Statement
+ 
+ 51 
+
+ 
+ 
+ 
+
+ 
+ UNDERWRITING 
+ 52 
+
+ 
+ Commissions and
+ Expenses 
+ 52 
+
+ 
+ Over-Allotment Option 
+ 53 
+
+ 
+ Representative s
+ Warrant 
+ 53 
+
+ 
+ Lock-Up Agreements 
+ 53 
+
+ 
+ Other Terms 
+ 54 
+
+ 
+ Indemnification 
+ 54 
+
+ 
+ Electronic
+ Delivery 
+ 54 
+
+ 
+ Pricing of this Offering 
+ 54 
+
+ 
+ Stabilization
+
+ 55 
+
+ 
+ Foreign Regulatory Restrictions
+ on Purchase of Units 
+ 56 
+
+ 
+ 
+ 
+
+ 
+ LEGAL MATTERS 
+ 56 
+
+ 
+ 
+ 
+
+ 
+ EXPERTS
+ 56
+
+ 
+ 
+ 
+
+ 
+ ADDITIONAL INFORMATION 
+ 56 
+
+ 
+ 
+ 
+
+ 
+ FINANCIAL STATEMENTS 
+ F-1 
+
+ 
+- ii -
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/CIK0001501489_af-ocean_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001501489_af-ocean_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..9c2f7c3d31f3cc5ce549b8c90faed22139665377
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001501489_af-ocean_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights certain information contained elsewhere in this prospectus. You should read the following summary together with the more detailed information regarding Dinello Restaurant Ventures, Inc. ( Us, We, Our, "Dinello s, the Company, or "the Corporation") and our financial statements and the related notes appearing elsewhere in this prospectus. The Corporation Our Business Since inception on April 2, 2003, Dinello Restaurant Ventures, Inc. has engaged in the operation of a pizza, pasta and grinder sandwich restaurant. Dinello Restaurant Ventures, Inc. will continue to rely on its experience to try to be competitive in the marketing of its specialty pizzas and sandwiches. We believe that because we use fresh and not frozen pizza dough, vegetables and non-blended cheese that we have a quality product. This is only our belief and is not supported by any scientific or taste study to prove this belief. To support our belief, our restaurant will continue to employ the use of in-house development of new recipes for pizzas, pasta and sandwiches. Due to the closure of several pizza stores in our market area, we believe we can increase our market share; however, there is no guarantee we will be able to do so. By analyzing the advertising of the three major chains, Pizza Hut, Domino s and Papa John s which market low price specials, we know that a low price advertising campaign for us will not be successful because we do not have the large advertising budget of the big chain stores. We believe that by concentrating our efforts on the quality of our products while providing for cost effectiveness we can grow and expand our store s business; however, again, there is no guarantee that we will be successful at achieving growth and expansion at our store. Caramello s Pizzeria is our sole location and our efforts at expansion are focused solely on gaining additional dine-in, delivery and carry-out business at this location. While our key employee has over ten (10) years experience in this area of business, we are at a disadvantage with our large competitors. Our competitors have the benefit of more years experience in operations and a larger capital base, while our business has fewer years in operation and a smaller capital base. Our lack of experience coupled with our minimal capital base makes any investment in our Company a high risk. We do compete with many national pizza chain stores such as Domino s; Papa John s; Little Caesars and Pizza Hut. These firms have the experienced personnel, years in business, capitalization, and a reputation that make it difficult for us to compete. As a result of such competition, we will concentrate our efforts on trying to more fully develop the dine-in, delivery and carry-out business for our store in our immediate five (5) mile population base by offering what we believe are better pizza, pasta and sandwiches. Our State of Organization We were incorporated in Florida on April 2, 2003. Our principal address is 2701 4th Street North, Units 102/103, St. Petersburg, Florida, 33704. Our phone number is (727) 896-3278. 1 Link to Table of Contents Link to Financial Statements The Offering Number of Shares Being Offered We are offering to sell up to 421,225 shares of common stock at the fixed price of $0.10 per share for the duration of the offering or until such time as the stock is listed on the OTCBB or other exchange at which time the selling security holders may then sell at the prevailing market price or at privately negotiated prices. Number of Shares Outstanding After the Offering 3,238,078 shares of our common stock are issued and outstanding. We have no other securities issued. Use of proceeds We will not receive any of the proceeds from the sale of shares of common stock by the selling security holders. Plan of Distribution The Offering is made by the selling security holders named in this Prospectus to the extent they sell shares. We may or may not seek quotation of our common stock on the Over-the-Counter-Bulletin-Board ( OTCBB ). Management has made no decision as to whether to seek a listing and will not do so until such time as it can properly make a decision based on the value to the shareholders of such a listing. No assurance can be given that our common stock will be approved for quotation on the OTCBB even if we make application to the OTCBB. Selling security holders, as underwriters, must sell their shares at $.10 per share for the duration of this offering or until the stock is listed on the OTCBB or other exchange and then they may sell their shares at prevailing market prices or at privately negotiated prices.
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/CIK0001501652_s-e-asia_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001501652_s-e-asia_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001501652_s-e-asia_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/CIK0001501732_internal_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001501732_internal_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001501732_internal_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/CIK0001501862_empire_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001501862_empire_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a0481b09aa0f81dbdd9d6c1492d0cfd74e5051fc
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001501862_empire_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY Our Business Empire Global Gaming, Inc. was organized on May 11, 2010 in order to acquire certain U.S Patent license agreements pertaining to roulette and actively engage in the gaming business worldwide. Empire Global Gaming, Inc, is controlled by two individuals who devote approximately 25 hours per week each of their time to the business of Empire Global Gaming, Inc. There can be no assurance that Empire Global Gaming, Inc. s Common Stock will ever develop a market. We have not generated any revenues since inception and have accumulated a deficit of $128,423. We must raise at least $100,000 in the next two to twelve months in order to defray operating costs, otherwise we may temporarily or permanently have to cease operations. Prior to this offering, the Company had no monthly cash burn rate or operating expenses. However, as of the date of this Prospectus, we commenced a monthly burn rate of $10,000 consisting of Legal & Accounting ($4,000), General and Administrative Expenses ($4,800) and Website promotion ($1,200). Management recently re-evaluated the Company s ongoing expenses and set $10,000 as an acceptable, prudent burn rate going forward from the date of this prospectus. Our balance sheet indicates, on December 31, 2010, we had $64,294 in cash. After paying the accounts payable of $18,717 and underwriting costs of $22,150, the Company has $23,427 cash on hand. This amount is sufficient to cover our cash requirements for two months from the date of this Prospectus. Therefore, taking into account cash on hand, we will need to raise an additional $100,000 from the offering to cover the entire first year of expenses of operation ( burn rate ). In order to meet our monthly burn rate we must raise a minimum of $10,000 per month from the sale of stock from the offering. In the Use of Proceeds and Plan of Operations-In General sections of this Prospectus, we attempt to explain our Plans of Operations and alternative plans at different funding thresholds. Those thresholds are: 1.. If we sell less than $100,000 of the Offering; If we do not raise at least $10,000 per month, starting two months after the date of the Prospectus, we will run out of money and will have to cease operations. 2. If we sell less than 10% of the Offering: If we do not sell 10% of this offering then we will not have enough funds to file with the State of New Jersey Gaming Control Board to obtain licensing of our patented roulette games and we will have to attempt to borrow money from third parties and continue to try to sell stock to investors until the Company is out of funds at which time the Company will cease operations. We have no alternative plan of operation below the 10% funding threshold and if we do not sell 10% of this offering then we will not have enough funds to file with the State of New Jersey. We will then have to attempt to borrow money from third parties and continue to try to sell stock to investors until the Company is out of funds at which time the Company will cease operations. 3. If we sell 10% of the Offering ($227,850 net of expenses of offering of $22,150): If the Company raises at least 10% of this public offering we will be able to pursue our business plan on a limited basis. If only 10% of this offering is sold, Management will be required to implement an emergency minimal burn rate of $2,000 per month by cutting monthly overhead to only general and administrative expenses ($500), legal and accounting ($1,000) and website promotion ($500). The Company then intends to file an application to obtain permits that will allow the playing of its roulette games in the State of New Jersey. We will only seek approval from the New Jersey Gaming Control Board if and when we raise at least 10% of this offering. 4. If we sell 25% of the Offering ($602,850 net of expenses of offering of $22,150): In the event that the Company sells at least 25% of its public offering, then the Company would file for permits with the Nevada Gaming Control Board as well as the State of New Jersey Gaming Control Board. At this level of funding we will not have enough money to pay for advertising of our games and products. The Company owns exclusive rights through an exclusive license agreement to four U.S. Patents related to roulette that cover fourteen different roulette games via an Exclusive License Agreement granted by the President, Chief Executive Officer and Director of EGGI, Mr. Nicholas Sorge Sr., to manufacture, market, sell, distribute and sublicense these patented roulette games. The Company expects to license these games for royalties to casinos throughout the world after obtaining approval from the appropriate regulatory agency in each state or country, as is applicable, thereby building residual income for its shareholders. The Exclusive License Agreement enables EGGI to contract with casinos for the use of its patented games and receive monthly royalty payments. Upon obtaining gaming control board approval, Mr. Sorge, on behalf of the Company, will personally contact representatives of the various casinos, located in the jurisdiction where the approval has been obtained, to discuss and demonstrate the licensed roulette games. Management is of the opinion that they will be successful in obtaining contracts to pay royalties for the use of the permitted roulette games because Management believes it can demonstrate that the permitted roulette games are fairer to both the gambling patron and the casino. Management will attempt to negotiate royalty contracts with various casinos which will provide among other things, terms of month to month, two years or as long as five year terms. Royalty payments ranging from $200 to $500 per month per table and certain other usual and customary contractual provisions as the attorneys for the Company will determine. However, Management may not be successful in being able to negotiate royalty agreements with a term of between two and five years. It may be that casinos may only desire to enter into royalty agreements with the Company that are on a month to month basis which would mean that the contracts could be terminated on a month s notice and could result in a loss of revenue if the month to month contracts are terminated by the casinos as compared with contracts that have terms of between two and five years. Although EGGI expects to contract with each of the casinos in Atlantic City, we may not be able to enter into contracts with any or all of them. The Company intends to sell and distribute its products directly and in particular will enter into royalty agreements directly with casinos for royalty payments for the use of the patented roulette games. However, the casinos may purchase equipment with the new roulette game attributes and the table felt with the new number configurations from their own sources. The Company does not intend at this time to manufacture any equipment or products. Management of the Company, through inquiries made to various casinos and casino equipment manufacturers, believes that the usual and customary monthly rental rates for various casino games and equipment range from $200 to $500 per month per table. Management has concluded, based on such inquiries, that the Company will be able to obtain a minimum royalty payment from each casino of $200 per roulette table per month. Patent royalty payments differ from equipment rental rates. EGGI is unable to obtain any existing data on royalty payments. The Company believes, because it can find no casino royalty payment data, that rental market rates represent a reasonable basis for expected royalty payments. However, the Company may be unable to achieve royalty rates of from $200 to $500 per month, in which case the Company would receive less revenue from the royalty agreements than what is anticipated. Assuming that a $200 royalty payment made to the Company per month per table, 15% ($30) will be paid by the Company to the patent owner, Nicholas Sorge, Sr. and the Company will retain 85% ($170). For example, Atlantic City has approximately 13 casinos that have an average of 10 roulette games each. Upon New Jersey Gaming Board approval, EGGI expects to contract with each of those casinos and collect royalty payments on 130 roulette games of $22,100 per month or annual income of $265,200. We expect to contract with these 13 casinos because management believes that the roulette games, which are the subject of the Exclusive License Agreement, are statistically fairer than existing roulette games. However, we may not be able to enter into contracts with any or all of them. Management believes the fairness of the games will be validated by the New Jersey Gaming Control Board upon their review and approval and the public will be made aware by advertising by the Company once licensing has been obtained. However, the Company may not be able to demonstrate that the games are fairer to the satisfaction of any or all of the casinos and therefore the Company may not be able to enter into royalty agreements for its roulette games. The Company expects to be able to obtain royalty payments for its roulette games in the State of Nevada, after regulatory approval is obtained from the Nevada Gaming Control Board. There are about 28 other states in the United States that permit the playing of roulette in casinos located within their respective jurisdictions. Table of Contents Calculation of Registration Fee Title of each class of securities to be registered Number to be registered (1) Proposed maximum offering price per unit Proposed maximum aggregate offering price(2) Amount of registration fee(3) Common Stock, par value $0.001 10,000,000 $ 0.25 per share $ 2,500,000 $ 178.25 TOTAL 10,000,000 $ 2,500,000 (1) This registration statement covers the sale by the Company of up to an aggregate of 10,000,000 shares of Empire Global Gaming, Inc. Common Stock. (2) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. Table of Contents Upon completion of its public offering, the Company intends to make application with the various prominent gaming control boards in the United States to obtain approval of the Company's licensed roulette games. In order to accomplish the approval of the roulette games that the Company has licensed, the Company intends to first file an application to obtain permits that will allow the playing of its roulette games in the State of New Jersey. After permits are obtained in the State of New Jersey, the Company will seek to obtain permits in Nevada and thereafter in other jurisdictions. While applying for the permit in New Jersey, EGGI will attempt to generate e-commerce sales profits. There can be no assurance that e-commerce sales profits will be obtained. The Company has taken certain steps to become fully e-commerce operational while awaiting Gaming Board approvals. Management has established a merchant account for its web business with Wells Fargo Bank and has officially opened its website for business. EGGI is now actively engaged in selling the products listed in the Company s 20 page catalog of Class II and Class III gaming items consisting of approximately 195 products on its website. Sales to date have been minimal. Gaming items being sold range from $0.25 to $5,700 and consist of roulette wheels, roulette tables, poker products, including chips, tables and various other gambling products. EGGI s customers are casinos, party rental companies and public gaming enthusiasts. The primary marketing targets are the casinos and party companies. EGGI has developed its own e-mail list of thousands of targeted customers that will be e-mailed at different intervals, calling attention to our website and special offers. Our webmaster has arranged priority search engine positioning to attract the public buyers. EGGI expects e-commerce sales profits will offset its current burn rate by June, 2011. EGGI s website is located at: www.empireglobalgaminginc.com. Although management is optimistic that e-commerce sales will be sufficient to cover the burn rate, it is very possible that the Company will be unable to achieve this level of sales as quickly as expected. Our auditors have issued a going concern opinion. Corporate Information Our principal executive offices are located at 555 Woodside Ave, Bellport, New York 11713. Our telephone number is 877-643-3200. The Offering Common Stock Offered Up to 10,000,000 shares @ $0.25 per share Common Stock Outstanding after the Offering 60,000,000 shares (1) Use of Proceeds Working Capital Symbol None Risk Factors The Shares of Common Stock offered involves a high degree of risk and immediate substantial dilution. See "Risk Factors" Term of offering Until March 1, 2012 No Symbol for Common Stock There is no trading market for our Common Stock. We intend to apply for a quotation on the Over-the-Counter Bulletin Board. We will require the assistance of a FINRA Member market- maker to apply for quotation but there is no guarantee that a market-maker will agree to assist us. (1) Figures are based on the current outstanding shares of 50,000,000. Table of Contents PROSPECTUS EMPIRE GLOBAL GAMING, INC. 555 Woodside Ave, Bellport New York 11713 10,000,000 Common Shares We have no public market for our Common Stock Investing in our Common Stock involves risks which are described in the Risk Factors section beginning on page 6 of this prospectus. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. Up to 10,000,000 of the shares of Common Stock offered are being sold by Empire Global Gaming, Inc. There is no minimum purchase requirement and no escrow, and the proceeds may be used by Empire Global Gaming, Inc. in its discretion. There is no established public market for Empire Global Gaming, Inc. s Common Stock, and the offering price has been arbitrarily determined. Empire Global Gaming, Inc. s Common Stock is not currently listed or quoted on any quotation service. There can be no assurance that Empire Global Gaming, Inc. s Common Stock will ever be quoted on any quotation service or that any market for Empire Global Gaming, Inc. s stock will ever develop. This offering is self-underwritten, meaning the shares will be sold by Empire Global Gaming, Inc. s officers and directors, without the use of an underwriter on a best efforts basis. Price to the public Underwriting Discounts and Commissions (2) Proceeds to the Company (1) Per Share $ 0.25 $ 0.00 $ 0.25 Total $ 2,500,000 $ 0.00 $ 2,500,000 (1) Before deducting expenses payable by Empire Global Gaming, Inc., estimated at approximately $22,150. This offering is self-underwritten, so Empire Global Gaming, Inc. is not obligated to pay commissions or fees on the sales of any of the shares. This offering is for up to 10,000,000 common shares. There is no minimum contingency, and the proceeds may be used in Empire Global Gaming, Inc. s discretion. This prospectus will not be used before the effective date of the registration statement. This offering will end on or before March 1, 2012 and there will be no extension of the offering period. (2) The shares of Common Stock are being offered by through its officers and directors, subject to prior sale, when, as, and if delivered to and accepted by Empire Global Gaming, Inc. and subject to the approval of certain legal matters by counsel and certain other conditions. Empire Global Gaming, Inc. reserves the right to withdraw, cancel or modify the offering and to reject any order in whole or in part The date of this prospectus is April 20, 2011 Table of Contents Summary Financial Data (Unaudited) The following summary financial data should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the Financial Statements, including Notes, included elsewhere in this Prospectus. The statement of operations data for the period inception to December 31, 2010 and the balance sheet data at December 31, 2010 come from Empire Global Gaming, Inc s, Financial Statements included elsewhere in this Prospectus. These statements include all adjustments that Empire Global Gaming, Inc. considers necessary for a fair presentation of the financial position and results of operations at that date and for such periods. The operating results for the period from inception (May 11, 2010) ending, December 31, 2010 do not necessarily indicate the results to be expected for the full year or for any future period. Summary Financial Information (Unaudited) Balance Sheet Information December 31, 2010 Current Assets $ 64,294 Fixed Assets/Property - Total Assets 64,294 Current Liabilities 18,717 Total Liabilities 18,717 Accumulated Deficit (128,423 ) Total Stockholders Equity 45,577 (Unaudited) Since Inception (May 11, 2010) and For the Period Ended Statements of Operations Information December 31, 2010 Total sales revenues $ -0- General and administrative expenses 128,423 Interest expense -0- Net (Loss) (128,423 ) Net Loss Per Share (0.00 ) Weighted Average Shares Outstanding 49,805,701 References in this prospectus to Empire Global Gaming, EGGI, we, us, and our refer to Empire Global Gaming, Inc.
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001501958_china_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001501958_china_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..f59c9e90fb2f452408b51b3262f7a3a63c9bbac3
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001501958_china_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary 5
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001502391_sea-tiger_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001502391_sea-tiger_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..77d55298d9e411a6755a0662898247ded577d3ad
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001502391_sea-tiger_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY The following summary highlights selected information contained in this prospectus. This summary does not contain all the information you should consider before investing in the securities. Before making an investment decision, you should read the entire prospectus carefully, including the "RISK FACTORS" section. About Us SEA-Tiger, Inc. (the Company ) is the parent company of Infotel Technologies (PTE) Ltd. ( Infotel ), a Singapore-based information technology company formed in 1984. We sell a range of information technology related products and services to government and commercial customers, specializing in the installation, customization and maintenance of communication hardware and software. From 2002 until the acquisition of Infotel in February 2010 the Company was not engaged in any active business. We had net revenue of $455,288 and $400,255 for the three months ended March 31, 2011 and 2010, respectively, and net loss of $133,654 and $122,702, for the three months ended March 31, 2011 and 2010, respectively. We had net revenue of $1,047,247 and $2,047,023 for the years ended December 31, 2010 and 2009, respectively, and net income (loss) of ($712,434) and $71,038 for the years ended December 31, 2010 and 2009, respectively. Our website address is www.infotel.com.sg/. Our website and the information contained on our website are not incorporated into this prospectus or the registration statement of which it forms a part. Further, our references to the URLs for our website are intended to be inactive textual references only. Our principal executive offices are located at 2520 South Third Street, #206, Louisville, KY 40208. Our telephone number is 502-636-2807. Recent Developments On February 11, 2010, pursuant to a stock purchase agreement between the Company and NewMarket Technology, Inc. ( NewMarket ), the Company acquired from NewMarket all of the outstanding capital of Infotel, such that Infotel became a wholly-owned subsidiary of the Company, and the Company issued to NewMarket 2,000 shares of Series B Preferred Stock. As the holder of the Series B Preferred Stock, NewMarket owns 51% of the voting power of the Company s shareholders. At the time of the recapitalization, the Company was not engaged in any active business, such that the business of Infotel became the business of the Company. References in this prospectus, and the registration statement of which it forms a part, to we, us, our and similar words refer to the Company and its wholly-owned subsidiary, Infotel, unless the context indicates otherwise, and, prior to the effectiveness of the reverse acquisition, these terms refer to Infotel. References to TuneIn relate to the Company prior to the reverse acquisition. In connection with the recapitalization, on March 15, 2010, the Company amended its certificate of incorporation to (i) change its name to SEA -Tiger, Inc., (ii) increase its authorized number of shares of Common Stock from 200,000,000 to 2,500,000,000, and (iii) effect a 1-for 10 reverse split of its Common Stock. All share amounts in this prospectus and the registration statement of which it forms a part have been retroactively adjusted for the reverse split unless otherwise indicated. About This Offering This prospectus relates to a total of 1,399,978 shares of Common Stock of SEA-Tiger, Inc., offered by the selling stockholders. As of July 22, 2011 , there are 5,189,401 shares of Common Stock issued and outstanding. Estimated use of proceeds We will not receive any of the proceeds resulting from the sale of the shares held by the selling stockholders.
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001502555_golden_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001502555_golden_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..9508e7f226eb9723322343208c80a1652d21000d
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001502555_golden_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary This Prospectus, and any supplement to this Prospectus include forward-looking statements . To the extent that the information presented in this Prospectus discusses financial projections, information or expectations about our business plans, results of operations, products or markets, or otherwise makes statements about future events, such statements are forward-looking. Such forward-looking statements can be identified by the use of words such as intends , anticipates , believes , estimates , projects , forecasts , expects , plans and proposes . Although we believe that the expectations reflected in these forward-looking statements are based on reasonable assumptions, there are a number of risks and uncertainties that could cause actual results to differ materially from such forward-looking statements.
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001502638_pixtel_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001502638_pixtel_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..bde3846324d2447893b3d8b47be364a4887c7956
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001502638_pixtel_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights some information from this prospectus, and it may not contain all the information important to making an investment decision. A potential investor should read the following summary together with the more detailed information regarding the Company and the common stock being sold in this offering, including Risk Factors and the financial statements and related notes, included elsewhere in this prospectus. The Company History The Company is a development stage company planning to market and distribute entertainment, computing and communications products. The Company was incorporated in the State of Delaware in July 2010 and was formerly known as Alderwood Acquisition Corporation ( Alderwood ). On July 13, 2011, Alderwood changed its name to SGreenTech Group Limited. Thereafter, on October 7, 2011, Sgreentech Holdings Limited, a company formed under the laws of Hong Kong, China ( SGreenTech Hong Kong ), was acquired by the Company in a stock-for-stock transaction (the Acquisition ). SGreenTech Hong Kong was formed in March 2011 in Hong Kong, China and had limited operations until the time of its acquisition by the Company. Prior to the Acquisition, Alderwood had no ongoing business or operations and was established for the purpose of completing a business combination with a target company, such as SGreenTech Hong Kong. The Company is located at Room 1, 13/F, Hung Tai Industrial Building, 37 Hung To Road, Kwun Tong, Kowloon, Hong Kong. The Company s main phone number is +852 275 55022. Business The Company will be a marketer and distributor of entertainment, computing and communications products. Currently, the Company plans to market and distribute television sets, including LCD television sets and monitors across the world. The Company has obtained the right to assemble television sets for distribution and sale. Such assembly will be conducted through contract manufacturers in China. The Company also anticipates that it will enter the smartphone and tablet computing markets. The Company considers one of its major objectives to be the identification and fulfillment of unique market niches in consumer electronics. Based on this market assessment, the Company seeks to secure the use of technology of established brands through technology licenses, whereby the Company will arrange for manufacturing and development of products. The Company plans to employ contract manufacturers to build products. The Company plans to focus its attention on its core competencies of marketing, outsourced management and distributor development. Accordingly, the Company plans to maintain a lean organization and use outsourced relationships and strategic partnerships to a great degree. For example, in addition to using contract manufacturers to build and assemble products, the Company will also develop sub-distributor relationships whereby these sub-distributors will distribute products on behalf of the Company. Similarly, the Company plans to build strategic relationships with customer service and technical support organizations that will assist the Company in providing quality service and support to end customers. Specifically, the Company plans to first commence its business by targeting the marketing and sales of LCD televisions sets and monitors to second-tier cities in China, Eastern Europe, Russia, Mexico and the southwestern region of the United States. The Company s objective is to offer each of these regions an internationally-branded, high-quality television set or monitor for a cost-effective rate. The television sets and monitors will be sold by the Company to distributors who will then in turn resell such products in the marketplace. Risks and Uncertainties facing the Company As a development stage company, the Company has no operating history and has continuously experienced losses since its inception. The Company needs to create a source of revenue or locate additional financing in order to continue its developmental plans. As a development stage company, management of the Company has no prior experience in building and marketing products similar to that of the Company and in marketing and distributing such products on a broad scale. One of the biggest challenges facing the Company is identifying and targeting effective sales, marketing and distribution strategies. As a developing company, the Company is in the process of identifying and targeting potential distributors and marketers of its products in order to reach the intended end users for the products. To reach potential end customers, the Company will need to have an effective sales, marketing and distribution strategy. Due to financial constraints, the Company has to date conducted limited advertising and marketing to reach end customers. If the Company were unable to develop strong and reliable sources of potential end users and a means to efficiently reach buyers and customers for its products, it is unlikely that the Company could develop its operations to return revenue sufficient to further develop its business plan. Moreover, the above assumes that the Company s products are met with customer satisfaction in the marketplace and exhibit steady adoption of products amongst the potential customer base, neither of which is currently known or guaranteed. The Company s independent auditors have issued a report raising a substantial doubt about the Company s ability to continue as a going concern. Trading Market Currently, there is no trading market for the securities of the Company. The Company intends to initially apply for admission to quotation of its securities on the OTC Bulletin Board as soon as possible, which may be while this offering is still in process. There can be no assurance that the Company will qualify for quotation of its securities on the OTC Bulletin Board. See RISK FACTORS and DESCRIPTION OF SECURITIES . The Offering This prospectus relates to the offer and sale by certain shareholders of the Company of up to 1,200,000 Shares (the Selling Shareholder Shares ). The Selling Shareholders will offer and sell Shares at a price of $3.00 per share, or at prevailing market or privately negotiated prices, including (without limitation) in one or more transactions that may take place by ordinary broker's transactions, privately-negotiated transactions or through sales to one or more dealers for resale. . Common stock outstanding before the offering 35,392,308 (1) Common stock for sale by selling shareholders 1,200,000 Common stock outstanding after the offering 35,392,308 Offering Price $ 3.00 per share Proceeds to the Company $ 0 (1) Based on number of shares outstanding as of the date of this prospectus. Any and all funds received at any time in the offering will be immediately available to the selling shareholders. Funds will not be held in an escrow account. The Company will not receive any proceeds from any sale of the Shares. Concurrent with, or after the effectiveness of, this offering, the Company plans to complete a separate public offering of securities in order to receive capital for the Company s growth and operations. Summary Financial Information The statements of operations data for the period from March 29, 2011 (inception) to May 31, 2011 and the balance sheet data at May 31, 2011 are derived from SGreenTech Hong Kong s audited financial statements and related notes thereto included elsewhere in this prospectus. As the Company had no operations or specific business plan until the acquisition, the information presented below is with respect to SGreenTech Hong Kong, which was acquired by the Company in October 2011. Period ended May 31, 2011 Statement of operations data Revenue $ 0 Net loss $ (10,460 ) Net loss per share, basic and diluted (10,460 ) Weighted average number of shares outstanding, basic and diluted 1 At May 31, 2011 Balance sheet data Related party receivable $ 56,907 Prepaid expenses $ 40,000 Total assets $ 96,907 Total liabilities $ 107,367 Total stockholders deficit $ (10,460 )
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001502772_blue_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001502772_blue_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..9508e7f226eb9723322343208c80a1652d21000d
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001502772_blue_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary This Prospectus, and any supplement to this Prospectus include forward-looking statements . To the extent that the information presented in this Prospectus discusses financial projections, information or expectations about our business plans, results of operations, products or markets, or otherwise makes statements about future events, such statements are forward-looking. Such forward-looking statements can be identified by the use of words such as intends , anticipates , believes , estimates , projects , forecasts , expects , plans and proposes . Although we believe that the expectations reflected in these forward-looking statements are based on reasonable assumptions, there are a number of risks and uncertainties that could cause actual results to differ materially from such forward-looking statements.
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/CIK0001502774_rio-bravo_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001502774_rio-bravo_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a01eeadef5e8c07bd525a89b455c77dcd04870bd
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001502774_rio-bravo_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary Before making an investment decision, you should read the entire prospectus carefully, including the Risk Factors section, the financial statements, and the notes to the financial statements. We were incorporated on June 9, 2010, under the laws of the State of Nevada, and operate a wine bottle distribution business. To date, we our business operations have been limited to primarily, the development of a business plan, the completion of private placements for the offer and sale of our common stock for aggregate proceeds of $45,500, discussing the supply of wines bottles with potential customers, and the signing of a Letter of Intent with our potential customer, Khan Krum Winery, a private Bulgarian company producing wine. The value of an executed letter of intent is approximately $4,000-$4,800 per year. The letter of intent is a document that only expresses a stated intent for future negotiation. Currently we are in the process of negotiation of a definitive legally binding agreement with Khan Krum Winery. On November 25, 2010 a Bottle Supply Agreement was signed with Hangzhou Yangcheng Company, Ltd., a Chinese bottle producer. We are a development stage company and cannot state with certainty whether we will achieve profitability. We do not have revenues, have minimal assets and have incurred losses since inception. Our auditors have issued a going concern opinion. This means that there is substantial doubt that we can continue as an ongoing business for the next twelve months. We are not raising any money in this offering. We do not have sufficient cash or cash equivalents to continue our operations and will need to obtain additional financing to operate our business for the next twelve months. Additional financing, whether through public or private equity or debt financing, arrangements with the security holder or other sources to fund operations, may not be available, or if available, may be on terms unacceptable to us. We intend to seek funding from the additional sale of our common stock or from advances from our officer and sole director Ms. Mariya Kokho. At the present time, we have not received any confirmation from any party of their willingness to loan or invest funds to the company. Our principal office is located at Kl. Ohridski Str, 27A, Burgas, Bulgaria 8000, and our telephone number is (702)-9972116. The Offering: Securities Being Offered The selling shareholders are hereby offering op to 675,000 shares of common stock. Offering Price The selling shareholders will sell our shares at a fixed price of $0.05 per share until our shares are quoted on the OTC Bulletin Board, if our shares of common stock are ever quoted on the OTC Bulletin Board, and thereafter at prevailing market prices or privately negotiated prices. Terms of the Offering The selling shareholders will determine when and how they will sell the common stock offered in this prospectus. Termination of the Offering The offering will conclude when all of the 675,000 shares of common stock have been sold, the shares no longer need to be registered to be sold due to the operation of Rule 144 or we decide at any time to terminate the registration of the shares at our sole discretion. In any event, the offering shall be terminated no later than two years from the effective date of this registration statement. Shares outstanding prior to offering 675,000 shares of common stock Shares outstanding after offering 675,000 Use of Proceeds We will not receive any proceeds from the sale of the common stock by the selling shareholders. Market for the common stock There is no market for our shares of common stock. Our common stock is not traded on any exchange or on the Over-the-Counter market. As of February 23, 2011 we have engaged a market makers, Spartan Securities Group, Ltd. to file an application with FINRA for our common stock to become eligible for trading on the Over-the-Counter Bulletin Board. There is no assurance that a trading market will develop or, if developed, that it will be sustained. Consequently, a purchaser of our common stock may find it difficult to resell the securities offered herein should the purchaser desire to do so. Summary Financial Information The tables and information below are derived from our financial statements for the period from June 9, 2010 (Inception) to December 31, 2010. Our working capital as of December 31 , 2010 was $ 14,046 . As of December 31 , 2010 ( Unaudited ) Balance Sheet Total Assets $ 14,046 Total Liabilities $ 349 Stockholders Equity $ 13,697 Period from June 9, 2010 (date of inception) to December 31 , 2010 ( Unaudited ) Income Statement Revenue $ - Total Expenses $ 9,053 Net Loss $ ( 9,053 )
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001502916_sodastream_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001502916_sodastream_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..6fd1b31a26ec10bc1fd1e216e073634da63e7929
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001502916_sodastream_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus summary 1
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001502952_broadcast_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001502952_broadcast_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..c30b4919b9644796955b56f2a4cb5422f3979f8c
--- /dev/null
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+PROSPECTUS SUMMARY This summary highlights selected information contained elsewhere in this prospectus. This summary does not contain all the information that you should consider before investing in the common stock. You should carefully read the entire prospectus, including Risk Factors , Management s Discussion and Analysis of Financial Condition and Results of Operations and the Financial Statements, before making an investment decision. In this Prospectus, the terms Company, we, us and our refer to Movie Trailer Galaxy, Inc. Overview We were incorporated in the State of Nevada on April 27, 2010 as Movie Trailer Galaxy, Inc. and are based in Studio City, California. We are a development stage company and have not commenced operations. We are proceeding with our business plan by providing moviegoers with a comprehensive portal to preview the latest movie information. We have begun taking certain steps in furtherance of our business plan by constructing and updating our website. Our website, www.movietrailergalaxy.com, serves as a movie blog which displays the latest movies, trailers and box office information. The website will be fully automated, gathering information from official movie website sources such as the Internet Movie Database ( IMDB ), Yahoo Movies and Youtube. We have received a going concern opinion from our auditor. We anticipate that we will be able to generate revenue through website advertisements via the use of Google Adsense, as well as through Amazon banner advertisements, which will provide for payments on a per click basis. We do not consider our self a blank check company and we do not have any plan, arrangement, or understanding to engage in a merger or acquisition with any other entity. We do not consider ourselves a blank check company, as we have a specific business plan and have moved forward with our business operations. Specifically we, while in the development stage, are proceeding with our business plan by constructing and implementing an automated website. We have taken certain steps in furtherance of this business plan including establishing the website and programming. In the first quarter of 2011, we anticipate beginning marketing activities for our automated website, in an attempt to rouse support for our website. Thereafter, we anticipate launching our fully automated website in March 2011. Beginning in June 2011, we plan to integrate our Amazon and Google accounts and ads. Finally, from August until the end of 2011 we hope to generate revenues. Where You Can Find Us Our principal executive office is located at 11022 Aqua Vista Street, Suite 10, Studio City, CA 91602 and our telephone number is (310) 746-6464. Terms of the Offering The selling shareholders named in this prospectus are offering all of the shares of common stock offered through this prospectus. The selling stockholders are selling shares of common stock covered by this prospectus for their own account. We will not receive any of the proceeds from the resale of these shares. The offering price of $0.05 was determined by the price shares were sold to our shareholders in a private placement memorandum and is a fixed price at which the selling security holders may sell their shares until our common stock is quoted on the OTC Bulletin Board, at which time the shares may be sold at prevailing market prices or privately negotiated prices. There can be no assurance that a market maker will agree to file the necessary documents with FINRA, which operates the OTC Electronic Bulletin Board, nor can there be any assurance that such an application for quotation will be approved. We have agreed to bear the expenses relating to the registration of the shares for the selling security holders. Summary of Consolidated Financial Information The following summary financial data should be read in conjunction with Management s Discussion and Analysis, Plan of Operation and the Financial Statements and Notes thereto, included elsewhere in this prospectus. The statement of operations and balance sheet data from April 27, 2010 (inception) through November 30, 2010 are derived from our unaudited financial statements. The data set forth below should be read in conjunction with Management s Discussion and Analysis of Financial Condition and Results of Operations, our financial statements and the related notes included in this prospectus. For the Period from Inception through November 30, 2010 STATEMENT OF OPERATIONS Revenues - Professional Fees $ 11,025.00 General and Administrative Expenses $ 1,770.00 Total Operating Expenses $ 12,795.00 Net Loss $ 12,795.00 As of November 30, 2010 BALANCE SHEET DATA Cash $ 32,420.00 Total Assets $ 32,420.00 Total Liabilities 2,775.00 Stockholders Equity $ 29,645.00 RISK FACTORS The shares of our common stock being offered for resale by the selling security holders are highly speculative in nature, involve a high degree of risk and should be purchased only by persons who can afford to lose the entire amount invested in the common stock. Before purchasing any of the shares of common stock, you should carefully consider the following factors relating to our business and prospects. If any of the following risks actually occurs, our business, financial condition or operating results could be materially adversely affected. In such case, you may lose all or part of your investment. You should carefully consider the risks described below and the other information in this process before investing in our common stock. Risks Related to Our Business OUR AUDITOR HAS EXPRESSED SUBSTANTIAL DOUBT AS TO OUR ABILITY TO CONTINUE AS A GOING CONCERN. Based on our financial history since inception, our auditor has expressed substantial doubt as to our ability to continue as a going concern. We are a development stage company that has generated little to no revenue. Specifically the Company, while in the development stage, is proceeding with its business plan by constructing, updating and modifying its portal website for the movie community. If we cannot obtain sufficient funding, we may have to delay or cease the implementation of our business strategy. WE HAVE LIMITED OPERATING HISTORY AND FACE MANY OF THE RISKS AND DIFFICULTIES FREQUENTLY ENCOUNTERED BY DEVELOPMENT STAGE COMPANY. We are a development stage company, and to date, our development efforts have been focused primarily on the development and marketing of our business model. We have limited operating history for investors to evaluate the potential of our business development. We have not built our customer base and our brand name. In addition, we also face many of the risks and difficulties inherent in gaining market share as a new company: Develop an effective business plan; Meet customer standards; Attain customer loyalty; Develop and upgrade our service Our future will depend on our ability to bring our service to the market place, which requires careful planning of providing a portal that meets industry standards without incurring unnecessary cost and expense. WE NEED ADDITIONAL CAPITAL TO DEVELOP OUR BUSINESS. IF WE FAIL TO OBTAIN ADDITIONAL CAPITAL WE MAY NOT BE ABLE TO IMPLEMENT OUR BUSINESS PLAN. The development of our services will require the commitment of substantial resources to implement our business plan. Currently, we have no established bank-financing arrangements. Therefore, it is likely that we will need to seek additional financing through subsequent future private offering of our equity securities, or through strategic partnerships and other arrangements with corporate partners. Currently we plan for additional $36,000 financing for the next 12 months. Our expenses are at a minimum and therefore most of the capitals raised will be invested in marketing. We cannot give you any assurance that any additional financing will be available to us, or if available, will be on terms favorable to us. The sale of additional equity securities will result in dilution to our stockholders. The occurrence of indebtedness would result in increased debt service obligations and could require us to agree to operating and financing covenants that would restrict our operations. If adequate additional financing is not available on acceptable terms, we may not be able to implement our business development plan or continue our business operations. CALCULATION OF REGISTRATION FEE Title of Each Class Of Securities to be Registered Amount to be Registered Proposed Maximum Aggregate Offering Price per share Proposed Maximum Aggregate Offering Price Amount of Registration fee Common Stock, $0.0001 par value per share 280,985 $ 0.05 $ 14,049.25 $ 1.63 (1) This Registration Statement covers the resale by our selling shareholders of up to 280,985 shares of common stock previously issued to such selling shareholders. (2) The offering price has been estimated solely for the purpose of computing the amount of the registration fee in accordance with Rule 457(o). Our common stock is not traded on any national exchange and in accordance with Rule 457; the offering price was determined by the price of the shares that were sold to our shareholders in a private placement memorandum. The price of $0.05 is a fixed price at which the selling security holders may sell their shares until our common stock is quoted on the OTCBB at which time the shares may be sold at prevailing market prices or privately negotiated prices. There can be no assurance that a market maker will agree to file the necessary documents with the Financial Industry Regulatory Authority, which operates the OTC Bulletin Board, nor can there be any assurance that such an application for quotation will be approved. THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SUCH SECTION 8(a), MAY DETERMINE. OUR PRINCIPAL STOCKHOLDER HAS SIGNIFICANT VOTING POWER AND MAY TAKE ACTIONS THAT MAY NOT BE IN THE BEST INTEREST OF ALL OTHER STOCKHOLDERS Our sole officer and director controls approximately 63.99% of our current outstanding shares of voting common stock. She may be able to exert significant control over our management and affairs requiring stockholder approval, including approval of significant corporate transactions. This concentration of ownership may expedite approvals of company decisions, or have the effect of delaying or preventing a change in control or be in the best interests of all our stockholders. WE MAY ENCOUNTER SUBSTANTIAL COMPETITION IN OUR BUSINESS AND OUR FAILURE TO COMPETE EFFECTIVELY MAY ADVERSELY AFFECT OUR ABILITY TO GENERATE REVENUE. We believe that existing and new competitors will continue to improve their services and to introduce new services with competitive price and performance characteristics. We expect that we will be required to continue to invest in upgrading our website to compete effectively in our markets. Our competitors could develop a more efficient product or undertake more aggressive and costly marketing campaigns than ours, which may adversely affect our marketing strategies and could have a material adverse effect on our business, results of operations and financial condition. Furthermore, our more established competitors, who provide similar services, currently compete for the same pool of customers as well as compete for prospective advertisers. These competitors may make it difficult to attract customers as well as obtain revenue streams from advertising businesses. WE MAY INCUR SIGNIFICANT COSTS TO BE A PUBLIC COMPANY TO ENSURE COMPLIANCE WITH U.S. CORPORATE GOVERNANCE AND ACCOUNTING REQUIREMENTS AND WE MAY NOT BE ABLE TO ABSORB SUCH COSTS. We may incur significant costs associated with our public company reporting requirements, costs associated with newly applicable corporate governance requirements, including requirements under the Sarbanes-Oxley Act of 2002 and other rules implemented by the Securities and Exchange Commission. We expect all of these applicable rules and regulations to significantly increase our legal and financial compliance costs and to make some activities more time consuming and costly. We also expect that these applicable rules and regulations may make it more difficult and more expensive for us to obtain director and officer liability insurance and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a result, it may be more difficult for us to attract and retain qualified individuals to serve on our board of directors or as executive officers. We are currently evaluating and monitoring developments with respect to these newly applicable rules, and we cannot predict or estimate the amount of additional costs we may incur or the timing of such costs. In addition, we may not be able to absorb these costs of being a public company which will negatively affect our business operations. THE LACK OF PUBLIC COMPANY EXPERIENCE OF OUR MANAGEMENT TEAM COULD ADVERSELY IMPACT OUR ABILITY TO COMPLY WITH THE REPORTING REQUIREMENTS OF U.S. SECURITIES LAWS. Our Chief Executive Officer ( CEO ) lacks public company experience, which could impair our ability to comply with legal and regulatory requirements such as those imposed by Sarbanes-Oxley Act of 2002. Our CEO has never been responsible for managing a publicly traded company. Such responsibilities include complying with federal securities laws and making required disclosures on a timely basis. Our senior management may not be able to implement programs and policies in an effective and timely manner that adequately respond to such increased legal, regulatory compliance and reporting requirements, including establishing and maintaining internal controls over financial reporting. Any such deficiencies, weaknesses or lack of compliance could have a materially adverse effect on our ability to comply with the reporting requirements of the Securities Exchange Act of 1934 which is necessary to maintain our public company status. If we were to fail to fulfill those obligations, our ability to continue as a U.S. public company would be in jeopardy in which event you could lose your entire investment in our company. OUR FUTURE SUCCESS IS DEPENDENT, IN PART, ON THE PERFORMANCE AND CONTINUED SERVICE OF STEPHANIE WYSS. WITHOUT HER CONTINUED SERVICE, WE MAY BE FORCED TO INTERRUPT OR EVENTUALLY CEASE OUR OPERATIONS We are presently dependent to a great extent upon the experience, abilities and continued services of Stephanie Wyss, our President and Chief Executive Officer. We currently have an employment agreement with Ms. Wyss which expires on August 31, 2013. The loss of her services could have a material adverse effect on our business, financial condition or results of operation. Risk Related To Our Capital Stock WE MAY NEVER PAY ANY DIVIDENDS TO SHAREHOLDERS. We have never declared or paid any cash dividends or distributions on our capital stock. We currently intend to retain our future earnings, if any, to support operations and to finance expansion and therefore we do not anticipate paying any cash dividends on our common stock in the foreseeable future. The declaration, payment and amount of any future dividends will be made at the discretion of the board of directors, and will depend upon, among other things, the results of our operations, cash flows and financial condition, operating and capital requirements, and other factors as the board of directors considers relevant. There is no assurance that future dividends will be paid, and, if dividends are paid, there is no assurance with respect to the amount of any such dividend. PRELIMINARY PROSPECTUS Subject to completion, dated March 18, 2011 Movie Trailer Galaxy, Inc. 280,985 SHARES OF COMMON STOCK The selling security holders named in this prospectus are offering all of the shares of common stock offered through this prospectus. We will not receive any proceeds from the sale of the common stock covered by this prospectus. Our common stock is presently not traded on any market or securities exchange. The selling security holders have not engaged any underwriter in connection with the sale of their shares of common stock. Common stock being registered in this registration statement may be sold by selling security holders at a fixed price of $0.05 per share until our common stock is quoted on the OTC Bulletin Board ( OTCBB ) and thereafter at a prevailing market prices or privately negotiated prices or in transactions that are not in the public market. There can be no assurance that a market maker will agree to file the necessary documents with the Financial Industry Regulatory Authority ( FINRA ), which operates the OTCBB, nor can there be any assurance that such an application for quotation will be approved. We have agreed to bear the expenses relating to the registration of the shares of the selling security holders. Investing in our common stock involves a high degree of risk. See Risk Factors beginning on page 7 to read about factors you should consider before buying shares of our common stock. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the U.S. Securities and Exchange Commission ( SEC ) is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. The Date of This Prospectus is: March 18, 2011 OUR ARTICLES OF INCORPORATION PROVIDE FOR INDEMNIFICATION OF OFFICERS AND DIRECTORS AT OUR EXPENSE AND LIMIT THEIR LIABILITY WHICH MAY RESULT IN A MAJOR COST TO US AND HURT THE INTERESTS OF OUR SHAREHOLDERS BECAUSE CORPORATE RESOURCES MAY BE EXPENDED FOR THE BENEFIT OF OFFICERS AND/OR DIRECTORS. Our articles of incorporation and applicable Nevada law provide for the indemnification of our directors, officers, employees, and agents, under certain circumstances, against attorney s fees and other expenses incurred by them in any litigation to which they become a party arising from their association with or activities on our behalf. We will also bear the expenses of such litigation for any of our directors, officers, employees, or agents, upon such person s written promise to repay us if it is ultimately determined that any such person shall not have been entitled to indemnification. This indemnification policy could result in substantial expenditures by us which we will be unable to recoup. We have been advised that, in the opinion of the SEC, indemnification for liabilities arising under federal securities laws is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification for liabilities arising under federal securities laws, other than the payment by us of expenses incurred or paid by a director, officer or controlling person in the successful defense of any action, suit or proceeding, is asserted by a director, officer or controlling person in connection with the securities being registered, we will (unless in the opinion of our counsel, the matter has been settled by controlling precedent) submit to a court of appropriate jurisdiction, the question whether indemnification by us is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. The legal process relating to this matter if it were to occur is likely to be very costly and may result in us receiving negative publicity, either of which factors is likely to materially reduce the market and price for our shares, if such a market ever develops. THE OFFERING PRICE OF THE COMMON STOCK WAS DETERMINED BASED ON THE PRICE OF OUR PRIVATE OFFERING, AND THEREFORE SHOULD NOT BE USED AS AN INDICATOR OF THE FUTURE MARKET PRICE OF THE SECURITIES. THEREFORE, THE OFFERING PRICE BEARS NO RELATIONSHIP TO OUR ACTUAL VALUE, AND MAY MAKE OUR SHARES DIFFICULT TO SELL. Since our shares are not listed or quoted on any exchange or quotation system, the offering price of $0.05 per share for the shares of common stock was determined based on the price of our private offering. The facts considered in determining the offering price were our financial condition and prospects, our limited operating history and the general condition of the securities market. The offering price bears no relationship to the book value, assets or earnings of our company or any other recognized criteria of value. The offering price should not be regarded as an indicator of the future market price of the securities. YOU WILL EXPERIENCE DILUTION OF YOUR OWNERSHIP INTEREST BECAUSE OF THE FUTURE ISSUANCE OF ADDITIONAL SHARES OF OUR COMMON STOCK AND OUR PREFERRED STOCK. In the future, we may issue our authorized but previously unissued equity securities, resulting in the dilution of the ownership interests of our present stockholders. We are currently authorized to issue an aggregate of 510,000,000 shares of capital stock consisting of 500,000,000 shares of common stock, par value $0.0001 per share, and 10,000,000 shares of preferred stock, par value $0.0001 per share. We may also issue additional shares of our common stock or other securities that are convertible into or exercisable for common stock in connection with hiring or retaining employees or consultants, future acquisitions, future sales of our securities for capital raising purposes, or for other business purposes. The future issuance of any such additional shares of our common stock or other securities may create downward pressure on the trading price of our common stock. There can be no assurance that we will not be required to issue additional shares, warrants or other convertible securities in the future in conjunction with hiring or retaining employees or consultants, future acquisitions, future sales of our securities for capital raising purposes or for other business purposes, including at a price (or exercise prices) below the price at which shares of our common stock are currently quoted on the OTCBB. OUR COMMON STOCK IS CONSIDERED A PENNY STOCK, WHICH MAY BE SUBJECT TO RESTRICTIONS ON MARKETABILITY, SO YOU MAY NOT BE ABLE TO SELL YOUR SHARES. If our common stock becomes quoted in the secondary market, we will be subject to the penny stock rules adopted by the Securities and Exchange Commission that require brokers to provide extensive disclosure to their customers prior to executing trades in penny stocks. These disclosure requirements may cause a reduction in the trading activity of our common stock, which in all likelihood would make it difficult for our shareholders to sell their securities. Penny stocks generally are equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on the NASDAQ system). Penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document that provides information about penny stocks and the risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, and monthly account statements showing the market value of each penny stock held in the customer s account. The broker-dealer must also make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser s written agreement to the transaction. These requirements may have the effect of reducing the level of trading activity, if any, in the secondary market for a security that becomes subject to the penny stock rules. The additional burdens imposed upon broker-dealers by such requirements may discourage broker-dealers from effecting transactions in our securities, which could severely limit the market price and liquidity of our securities. These requirements may restrict the ability of broker-dealers to sell our common stock and may affect your ability to resell our common stock. THERE IS NO ASSURANCE OF A PUBLIC MARKET OR THAT OUR COMMON STOCK WILL EVER TRADE ON A RECOGNIZED EXCHANGE. THEREFORE, YOU MAY BE UNABLE TO LIQUIDATE YOUR INVESTMENT IN OUR STOCK. There is no established public trading market for our common stock. Our shares have not been listed or quoted on any exchange or quotation system. There can be no assurance that a market maker will agree to file the necessary documents with FINRA, which operates the OTCBB, nor can there be any assurance that such an application for quotation will be approved or that a regular trading market will develop or that if developed, will be sustained. In the absence of a trading market, an investor may be unable to liquidate their investment. SOME OF THE SELLING SHAREHOLDERS IN THIS OFFERING ARE FREQUENT SELLING SHAREHOLDERS IN OTHER INITIAL PUBLIC OFFERINGS FOR COMPANIES THAT HAVE NOT COMMENCED OPERATIONS OR BEGUN TO REALIZE REVENUES FROM THEIR OPERATIONS. Some of the shareholders selling their shares in this offering have previously sold their shares in other initial public offerings, where those companies had not commenced operations, are in the same stage of their business plan since inception, and have not begun to realize revenues from their operations. Such companies include Ciglarette, Inc., Resume in Minutes, Inc. and Rapid Holdings, Inc. These facts suggest that our business may be commensurate in scope with the uncertainty ordinarily associated with a blank check company. SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS The information contained in this report, including in the documents incorporated by reference into this report, includes some statement that are not purely historical and that are forward-looking statements. Such forward-looking statements include, but are not limited to, statements regarding our and their management s expectations, hopes, beliefs, intentions or strategies regarding the future, including our financial condition, results of operations, and the expected impact of the Share Exchange on the parties individual and combined financial performance. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words anticipates, believes, continue, could, estimates, expects, intends, may, might, plans, possible, potential, predicts, projects, seeks, should, would and similar expressions, or the negatives of such terms, may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. The forward-looking statements contained in this report are based on current expectations and beliefs concerning future developments and the potential effects on the parties and the transaction. There can be no assurance that future developments actually affecting us will be those anticipated. These that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements, including the following forward-looking statements involve a number of risks, uncertainties (some of which are beyond the parties control) or other assumptions. Item 4. Use of Proceeds We will not receive any proceeds from the sale of common stock by the selling security holders. All of the net proceeds from the sale of our common stock will go to the selling security holders as described below in the sections entitled Selling Security Holders and Plan of Distribution . We have agreed to bear the expenses relating to the registration of the common stock for the selling security holders. Item 5. Determination of Offering Price Since our common stock is not listed or quoted on any exchange or quotation system, the offering price of the shares of common stock was determined by the price of the common stock that was sold to our security holders pursuant to an exemption under Section 4(2) of the Securities Act of 1933 and Rule 506 of Regulation D promulgated under the Securities Act of 1933. The offering price of the shares of our common stock does not necessarily bear any relationship to our book value, assets, past operating results, financial condition or any other established criteria of value. The facts considered in determining the offering price were our financial condition and prospects, our limited operating history and the general condition of the securities market. Although our common stock is not listed on a public exchange, we will be filing to obtain a listing on the OTCBB concurrently with the filing of this prospectus. In order to be quoted on the OTCBB, a market maker must file an application on our behalf in order to make a market for our common stock. There can be no assurance that a market maker will agree to file the necessary documents with FINRA, which operates the OTC Bulletin Board, nor can there be any assurance that such an application for quotation will be approved. In addition, there is no assurance that our common stock will trade at market prices in excess of the initial offering price as prices for the common stock in any public market which may develop will be determined in the marketplace and may be influenced by many factors, including the depth and liquidity. Item 6. Dilution The common stock to be sold by the selling shareholders are provided in the Selling Security Holders section is common stock that is currently issued. Accordingly, there will be no dilution to our existing shareholders. Item 7. Selling Security Holders The common shares being offered for resale by the selling security holders consist of the 280,985 shares of our common stock held by 40 shareholders. Such shareholders include the holders of the 280,985 shares sold in our private offering pursuant to Regulation D Rule 506 completed in September 2010 at an offering price of $0.05. The following table sets forth the name of the selling security holders, the number of shares of common stock beneficially owned by each of the selling stockholders as of March 18, 2011 and the number of shares of common stock being offered by the selling stockholders. The shares being offered hereby are being registered to permit public secondary trading, and the selling stockholders may offer all or part of the shares for resale from time to time. However, the selling stockholders are under no obligation to sell all or any portion of such shares nor are the selling stockholders obligated to sell any shares immediately upon effectiveness of this prospectus. All information with respect to share ownership has been furnished by the selling stockholders. Name Shares Beneficially Owned Prior To Offering Shares to be Offered Amount Beneficially Owned After Offering Percent Beneficially Owned After Offering * James M. Miranda 22,000 7,326 14,674 .63% Mathew Fiddler 19,000 6,327 12,673 .54% Schuyer Royal 17,000 5,661 11,339 .48% Kevin Gutierrez 16,000 5,328 10,672 .46% Sergio Rivas 20,000 6,660 13,340 .57% Trevor Waring 22,000 7,326 14,674 .63% Ruben Dominguez 24,000 7,992 16,008 .68% Kevin Lagunas 19,000 6,327 12,673 .54% Jigar Thakarar 16,000 5,328 10,672 .46% Derek Crandall 18,000 5,994 12,006 .51% Justin Kornmann 20,000 6,660 13,340 .57% Chris Gugino 18,000 5,994 12,006 .51% Cristobal Curiel 17,000 5,661 11,339 .48% Francisco Soria 18,000 5,994 12,006 .51% David Soria 19,600 6,527 13,073 .56% Flor Hernandez 25,000 8,325 16,675 .71% Wesley Johnson 26,000 8,658 17,342 .74% Efren Barron 14,000 4,662 9,338 .40% Joon Ho Han 18,600 6,194 12,406 .53% Luke Kurzon 26,000 8,658 17,342 .74% Kathleen Quinn 25,400 8,458 16,942 .72% Brenan Day 20,000 6,660 13,340 .57% Brian Nabbie 24,000 7,992 16,008 .68% Mark Farraj 24,000 7,992 16,008 .68% Chelsea Saccio 32,000 10,656 21,344 .91% Yuhsiang Tsai 20,000 6,660 13,340 .57% Jaime Farraj 28,000 9,324 18,676 .80% Joey Munoz 12,400 4,129 8,271 .35% Nahla Farraj 20,000 6,660 13,340 .57% Angelina Mendez 28,600 9,524 19,076 .81% Rodolfo Cruz 20,000 6,660 13,340 .57% Isabel Ochoa 17,000 5,661 11,339 .48% Ernesto Riegos 28,000 9,324 18,676 .80% Ziapone Luckette 18,000 5,994 12,006 .51% Mark Gallandt 20,800 6,926 13,874 .59% Sandra T. Richlin 24,000 7,992 16,008 .68% Celina Moore 26,000 8,658 17,342 .74% Jose Tamayo 20,000 6,660 13,340 .57% Alicia Rey 19,000 6,327 12,673 .54% Milton Ipina 21,400 7,126 14,274 .61% * - Based on 2,343,800 shares outstanding at March 18, 2011. There are no agreements between the company and any selling shareholder pursuant to which the shares subject to this registration statement were issued. To our knowledge, none of the selling shareholders or their beneficial owners: - has had a material relationship with us other than as a shareholder at any time within the past three years; or - has ever been one of our officers or directors or an officer or director of our predecessors or affiliates - are broker-dealers or affiliated with broker-dealers. Item 8. Plan of Distribution The selling security holders may sell some or all of their shares at a fixed price of $0.05 per share until our shares are quoted on the OTCBB and thereafter at prevailing market prices or privately negotiated prices. Prior to being quoted on the OTC Bulletin Board, shareholders may sell their shares in private transactions to other individuals. Although our common stock is not listed on a public exchange, we will be filing to obtain a listing on the OTCBB concurrently with the filing of this prospectus. In order to be quoted on the OTC Bulletin Board, a market maker must file an application on our behalf in order to make a market for our common stock. There can be no assurance that a market maker will agree to file the necessary documents with FINRA, which operates the OTC Bulletin Board, nor can there be any assurance that such an application for quotation will be approved. However, sales by selling security holder must be made at the fixed price of $0.05 until a market develops for the stock. Once a market has developed for our common stock, the shares may be sold or distributed from time to time by the selling stockholders, who may be deemed to be underwriters, directly to one or more purchasers or through brokers or dealers who act solely as agents, at market prices prevailing at the time of sale, at prices related to such prevailing market prices, at negotiated prices or at fixed prices, which may be changed. The distribution of the shares may be effected in one or more of the following methods: ordinary brokers transactions, which may include long or short sales; transactions involving cross or block trades on any securities or market where our common stock is trading, market where our common stock is trading; through direct sales to purchasers or sales effected through agents; through transactions in options, swaps or other derivatives (whether exchange listed or otherwise); or any combination of the foregoing; In addition, the selling stockholders may enter into hedging transactions with broker-dealers who may engage in short sales, if short sales were permitted, of shares in the course of hedging the positions they assume with the selling stockholders. The selling stockholders may also enter into option or other transactions with broker-dealers that require the delivery by such broker-dealers of the shares, which shares may be resold thereafter pursuant to this prospectus. To our best knowledge, none of the selling security holders are broker-dealers or affiliates of broker dealers. We will advise the selling security holders that the anti-manipulation rules of Regulation M under the Exchange Act may apply to sales of shares in the market and to the activities of the selling security holders and their affiliates. In addition, we will make copies of this prospectus (as it may be supplemented or amended from time to time) available to the selling security holders for the purpose of satisfying the prospectus delivery requirements of the Securities Act. The selling security holders may indemnify any broker-dealer that participates in transactions involving the sale of the shares against certain liabilities, including liabilities arising under the Securities Act. Brokers, dealers, or agents participating in the distribution of the shares may receive compensation in the form of discounts, concessions or commissions from the selling stockholders and/or the purchasers of shares for whom such broker-dealers may act as agent or to whom they may sell as principal, or both (which compensation as to a particular broker-dealer may be in excess of customary commissions). Neither the selling stockholders nor we can presently estimate the amount of such compensation. We know of no existing arrangements between the selling stockholders and any other stockholder, broker, dealer or agent relating to the sale or distribution of the shares. We will not receive any proceeds from the sale of the shares of the selling security holders pursuant to this prospectus. We have agreed to bear the expenses of the registration of the shares, including legal and accounting fees, and such expenses are estimated to be approximately $20,000.00 Notwithstanding anything set forth herein, no FINRA member will charge commissions that exceed 8% of the total proceeds of the offering. Item 9. Description of Securities to be Registered General We are authorized to issue an aggregate number of 510,000,000 shares of capital stock, of which 500,000,000 shares are common stock, $0.0001 par value per share, and there are 10,000,000 preferred shares, $0.0001 par value per share authorized. Common Stock We are authorized to issue 500,000,000 shares of common stock, $0.0001 par value per share. Currently we have 2,343,800 shares of common stock issued and outstanding. Each share of common stock shall have one (1) vote per share for all purpose. Our common stock does not provide a preemptive, subscription or conversion rights and there are no redemption or sinking fund provisions or rights. Our common stock holders are not entitled to cumulative voting for election of Board of Directors. Preferred Stock We are authorized to issue 10,000,000 shares of preferred stock, $0.0001 par value per share. Currently we have no shares of preferred stock issued and outstanding. Dividends We have not paid any cash dividends to our shareholders. The declaration of any future cash dividends is at the discretion of our board of directors and depends upon our earnings, if any, our capital requirements and financial position, our general economic conditions, and other pertinent conditions. It is our present intention not to pay any cash dividends in the foreseeable future, but rather to reinvest earnings, if any, in our business operations. Warrants There are no outstanding warrants to purchase our securities. Options There are no outstanding options to purchase our securities. Transfer Agent and Registrar Currently we do not have a stock transfer agent. Item 10. Interests of Named Experts and Counsel The validity of the common stock offered by this prospectus will be passed upon for us by Anslow & Jaclin, LLP, Manalapan, New Jersey. No expert or counsel named in this prospectus as having prepared or certified any part of this prospectus or having given an opinion upon the validity of the securities being registered or upon other legal matters in connection with the registration or offering of the common stock was employed on a contingency basis, or had, or is to receive, in connection with the offering, a substantial interest, direct or indirect, in the registrant or any of its parents or subsidiaries. Nor was any such person connected with the registrant or any of its parents or subsidiaries as a promoter, managing or principal underwriter, voting trustee, director, officer, or employee. The financial statements included in this prospectus and the registration statement have been audited by Li & Company, PC to the extent and for the periods set forth in their report appearing elsewhere herein and in the registration statement, and are included in reliance upon such report given upon the authority of said firm as experts in auditing and accounting. Anslow & Jaclin, LLP, 195 Route 9 South, Suite 204, Manalapan, New Jersey 07726, telephone (732) 409-1212 has acted as our legal counsel. As filed with the Securities and Exchange Commission on March 18, 2011 Registration No. 333-169970 ================================== AMENDMENT NO. 5 TO FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ================================== Movie Trailer Galaxy, Inc. (Exact Name of Registrant in its Charter) Nevada 32-0309203 (State or other Jurisdiction of Incorporation) (Primary Standard Industrial Classification Code) (IRS Employer Identification No.) Movie Trailer Galaxy, Inc. 11022 Aqua Vista Street, Suite 10 Studio City, CA 91602 Tel.: (310) 746-6464 (Address and Telephone Number of Registrant s Principal Executive Offices and Principal Place of Business) CSC Services of Nevada 502 East John Street Carson City, Nevada 89706 (866) 411-2002 (Name, Address and Telephone Number of Agent for Service) Copies of communications to: Gregg E. Jaclin, Esq. Anslow & Jaclin, LLP 195 Route 9 South, Suite204 Manalapan, NJ 07726 Tel. No.: (732) 409-1212 Fax No.: (732) 577-1188 Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. x If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act of 1933, please check the following box and list the Securities Act registration Statement number of the earlier effective registration statement for the same offering. o If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act of 1933, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.o If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act of 1933, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.o If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. o Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. Large accelerated filer o Accelerated filer o Non-accelerated filer o Smaller reporting company Item 11. Information about the Registrant DESCRIPTION OF BUSINESS Overview We were incorporated in the State of Nevada on April 27, 2010 as Movie Trailer Galaxy, Inc. and are based in Studio City, California. We are proceeding with our business plan by providing moviegoers with a comprehensive portal to preview the latest movie information. We have begun taking certain steps in furtherance of our business plan by constructing and updating our website. Specifically we, while in the development stage, are proceeding with our business plan by constructing and implementing an automated website. We have taken certain steps in furtherance of this business plan including establishing the website and programming. In the first quarter of 2011, we anticipate beginning marketing activities for our automated website, in an attempt to rouse support for our website. Thereafter, we anticipate launching our fully automated website in March 2011. Beginning in June 2011, we plan to integrate our Amazon and Google accounts and ads. Finally, from August until the end of 2011 we hope to generate revenues. Our website, www.movietrailergalaxy.com, serves as a movie blog which displays the latest movies, trailers and box office information. The website is not yet fully automated. When the website is fully automated, it will gather information from official movie website sources such as the Internet Movie Database ( IMDB ), Yahoo Movies and Youtube. Business Strategy and Objectives Our blog is powered by a growing web portal resource for movie information communications enthusiasts based on the development of new movies to online technology. We plan to provide up-to-date information for movie lovers and access to related products through our website, MovieTrailerGalaxy.com. Our mission is to become the movie lover s online hub in the global market. We intend to spread our reach throughout the global world as we empower the movie enthusiast s culture. At Movie Trailer Galaxy, Inc., we intend to strive to give the Movie Enthusiast s community a way to support each other and benefit from one another. We have objectives in order to fulfill our desire to participate and achieve an ever-growing market share of the exciting industry that it is entering. These key objectives include: 1. Establishing ourselves throughout the Global world as the movie lover s online hub of choice, and penetrate the market in the business of providing education, information, and networking ability from the Web Portal. 2. Utilize creative, first-class public relations, advertising, and marketing to raise public awareness of the site. 3. Develop management capabilities to ensure a strong foundation for participation in a rapidly growing company. Our Operating Strategy Our website is being programmed to display the latest movies, trailers and box office information. The website will be fully automated and will not require user interaction for maintenance. We will achieve the automated update process by implementing custom made scripts that will gather information from official movie sources like IMDB, Yahoo Movies and YouTube. The update script will run every day and should not affect the site s availability during the process, as we expect it to takes about 10-20 seconds to complete. Information such as posters, trailer links and movie information, will be stored in the internal database. The links for the movie trailers will be stored in the database and the actual trailers will stream directly from the source in the form of links. This process is similar to what bloggers do to get their content. Bloggers find information on the internet from various sources, and if it contains video, they can simply embed it in their blogs or link directly to it. Our website links to the actual movie trailers hosted at IMDB, Yahoo or YouTube using a light box or iframe that elegantly displays the trailers without the user having to leave our site. Linking the trailers saves money on hosting expenses, as video streaming requires costly high-capacity servers. Our website can be hosted in a shared hosting environment, which typically costs approximately $10-$25 per month. The website includes a 600+ movie database, the automation script, the domain name, an on-line function which allows the user to add, edit, and delete individual movies and the information. There is no guarantee that anyone will visit the site. Our initial focus is to provide movie trailers of the latest movies, and then branch into foreign movies as well. We feel there is a market for previewing all movie trailers on one site. We believe the world of video communications enthusiasts comprises a lot of people, from amateurs, to expert professionals. We believe that a website which provides such resources is likely to become a popular online destination point for consumers in the global market. Competition The industry we intend to compete in is the Movie Trailer industry. We have competition from various other websites that offer similar services such as themovieblog.com, moviesblog.mtv.com, and ugo.com/movies. We intend to compete with other movie trailer websites by implementing our marketing plan. Marketing Plan and Overview MovieTrailerGalaxy.com has a comprehensive marketing plan which includes online and industry magazine advertising, search engine articles, radio spots, podcasts, and press pieces. In addition, we will advertise to our customers through video email and video cell phone transmissions. We expect that our current customers will recommend and refer us to other target users. We have chosen this strategy because we believe it represents the most efficient correlation of costs, communication to our target market, and brand recognition. We intend to promote our business operations through a comprehensive marketing plan including search engine optimization ( SEO ), online advertising, viral marketing, social networking, blogs, various industry magazines, search engine articles, radio spots, podcasts, press pieces, and pieces in interest-specific magazines. In addition, we plan to emphasize spreading important messages through video email and video cell phone transmissions to users. We have chosen this strategy because it represents the most efficient correlation of costs, communication to our target market, and brand recognition. We intend to continue to monitor how this translates to sales and will be open to experimenting with alternative opportunities for increasing sales. We also place a great emphasis on our ability to generate good word-of-mouth business among our target users. We believe our primary role in the marketplace is being a provider of a preferred Movie Lovers Online Destination. We want our target users to think about us whenever they think about new movie releases or finding great deals in the industry. We want them to choose to visit with us because it will facilitate their deal-making and love of movies in exciting ways. Our management believes very strongly in finding the most cost-effective ways to market and promote the Company. We will base our promotion strategy on a combination of online marketing strategies. We will utilize internet presence in conjunction with search engine methodology, and good word-of-mouth advertising. We will emphasize video email and cell phone transmissions of important messages to users. The company also places great emphasis on the training of key personnel and employees such that they represent a continual promotion opportunity for the company. We expect our single greatest promotional tool will be the good will and positive word-of-mouth advertising we generate among our individual users and our businesses. Our promotion strategy is based in serving our target users. Search Engine Optimization Our website is already optimized for search engines (SEO). This helps search engines like Google, Yahoo, and Bing to properly index our site. We anticipate that after we start marketing our site we will see noticeable increases and decreases in our website traffic daily. We believe this is typical in the marketing phase. Once our site is fully automated, we will concentrate on the marketing of the website. Our Pricing Strategy We seek a balance between quality of offering, price, and the value that may be derived from the competition. We believe we offer the best balance of these aspects in the minds of our target users. Our pricing strategy is linked to our value proposition and our sales, and marketing strategies highlight this connection in ways that are easy for target users to understand. Ultimately, our goal is for our target users equate MovieTrailerGalaxy.com with great value. Promotion Strategy Our management believes strongly in finding the most cost-effective ways to market and promote the offerings. We will base our promotion strategy on a combination of online marketing strategies. We will utilize internet presence in conjunction with search engine methodology, and word-of-mouth advertising. We will emphasize video email and cell phone transmissions of important messages to users. Our single greatest promotional tool will be the goodwill and positive word-of-mouth advertising we generate among our individual users and our businesses. Our promotion strategy is based in serving our target users. We believe that if we make sure that our target users are fulfilled and satisfied with their purchase, then every marketing or sales program we utilize will resonate with our ethic of service. Sales Strategy We have one channel of sales: online. We intend to grow our sales force to meet our sales and revenue goals. Our web portal will be our critical sales channel for our Company. We plan to view our sales strategy as being partially fulfilled through the implementation of our marketing plan, which includes print ads, and internet advertising. We will consider i.) our key personnel, and ii.) our existing clientele, to be the most important assets of our sales strategy. Revenue In order to generate revenue, we have established accounts with Google Adsense and an Amazon Store. Google Adsense ads pay on a per click basis. We plan to link our Google Adsense and Amazon Store accounts to our website beginning in June 2011 in order to generate revenues from these ads, however we have not done so yet. When the Google Adsense and Amazon Store accounts are linked to our website, every time a user enters our website, Google will display relevant ads to the user and if the user clicks the ad, we will get paid a percentage of what Google charges to the advertiser. The movie entertainment niche has high-paying keywords on the Google Adsense network. We expect to see individual clicks paying more than one dollar in this niche. Top advertisers include movie rental services and TV providers such as Netflix, Blockbuster, DirecTV, Dish Network, individual Movie studios and many more. All the ads displayed by Google are fetched automatically and displayed in our website. All we need is a Google Adsense account. The Amazon store runs on autopilot also, and pays us a flat commission on every item purchased by our visitors. We also plan to display Amazon banners throughout the whole website. We intend to have an Amazon affiliate account. Furthermore, our ad system is scalable such that we can virtually integrate any kind of ad, lead, or CAP network into the site. We can also sell banner ads privately or adapt any other type of monetization method. The website is already optimized for search engines (SEO). This helps search engines like Google, Yahoo, Bing, etc. to properly index our site as we start creating back links and submitting our site to various directories. After we start marketing our site and creating back links, we will start seeing traffic spikes go up and down every day. This is very normal in the marketing phase and every site will experience the so called Google dance after it starts to take off. The site will get traffic even if it is not marketed at all, as new movies and more content get added weekly; this is one of the many advantages of the Word press platform, Google likes its structure and will keep indexing the new content. We plan to offer Trailers of Foreign Movies as well, and targeting International markets such as Bollywood in India, the largest movie industry in the world. We also plan to offer Movie News, and interactive functionality with other social networks (such as Facebook and MySpace) with certain unique movie-related abilities for advertising. Employees As of March 18, 2011, we have no full time employees. Our President and sole officer and director spends approximately 20 hours per week on Company matters. We plan to employ more qualified employees in the near future. DESCRIPTION OF PROPERTY Our principal executive office is located at 11022 Aqua Vista Street, Suite 10, Studio City, CA 91602. Our telephone number is (310) 746-6464. Office space is provided by Stephanie Wyss at no cost. LEGAL PROCEEDINGS From time to time, we may become involved in various lawsuits and legal proceedings, which arise, in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. We are currently not aware of any such legal proceedings or claims that we believe will have a material adverse effect on our business, financial condition or operating results. Pursuant to Item 401 (f) of Regulation S-K there are no events that occurred during the past ten (10) years that are material to an evaluation of the ability or integrity of any director, person nominated to become a director or executive officer of the registrant: No petition under the Federal bankruptcy laws or any state insolvency law was filed by or against, or a receiver, fiscal agent or similar officer was appointed by a court for the business or property of such person, or any partnership in which he was a general partner at or within two years before the time of such filing, or any corporation or business association of which he was an executive officer at or within two years before the time of such filing; o The registrant has not been convicted in a criminal proceeding and is not named subject of a pending criminal proceeding Such registrant was not the subject of any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from, or otherwise limiting, the following activities: o o Acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the Commodity Futures Trading Commission, or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity; o Engaging in any type of business practice; or o Engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of Federal or State securities laws or Federal commodities laws; Such registrant was not the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any Federal or State authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any activity described in Regulation S-K, Item 401 paragraph (f)(3)(i) entitled Involvement in Certain Legal Proceedings , or to be associated with persons engaged in any such activity; Such registrant was not found by a court of competent jurisdiction in a civil action or by the Commission to have violated any Federal or State securities law, and the judgment in such civil action or finding by the Commission has not been subsequently reversed, suspended, or vacated; o Such registrant was not found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any Federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated; Such registrant was not the subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of: o Any Federal or State securities or commodities law or regulation; or o Any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or o Any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or Such registrant was not the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS There is presently no public market for our shares of common stock. We anticipate applying for quoting of our common stock on the OTCBB upon the effectiveness of the registration statement of which this prospectus forms apart. However, we can provide no assurance that our shares of common stock will be quoted on the OTCBB or, if quoted, that a public market will materialize. Holders of Capital Stock As of March 18, 2011 we have 41 holders of our common stock. Rule 144 Shares As of the date of this registration statement, we do not have any shares of our common stock that are currently available for sale to the public in accordance with the volume and trading limitations of Rule 144. Stock Option Grants We do not have any stock option plans. Registration Rights We have not granted registration rights to the selling shareholders or to any other persons. MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULT OF OPERATIONS The following provides information which management believes is relevant to an assessment and understanding of our results of operations and financial condition. The discussion should be read along with our financial statements and notes thereto. This section includes a number of forward-looking statements that reflect our current views with respect to future events and financial performance. Forward-looking statements are often identified by words like believe, expect, estimate, anticipate, intend, project and similar expressions, or words which, by their nature, refer to future events. You should not place undue certainty on these forward-looking statements. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our predictions. We were incorporated in the State of Nevada on April 27, 2010 as Movie Trailer Galaxy, Inc. and are based in Studio City, California. We are a development stage company. Specifically, while in the development stage, we are proceeding with our business plan by providing moviegoers with a comprehensive portal to preview the latest movie information. We have begun taking certain steps in furtherance of our business plan by constructing and updating our website. Our website, www.movietrailergalaxy.com, serves as a movie blog which displays the latest movies, trailers and box office information. The website will be fully automated, gathering information from official movie website sources such as the Internet Movie Database ( IMDB ), Yahoo Movies and Youtube. The "automated" portion of the website will work much like a highly modified blog, which is built on the Wordpress platform. The website will link to the actual movie trailers hosted at IMDB, Yahoo, or YouTube using a "light box" or "iframe" which then displays the trailers without the user leaving the site. We have received a going concern opinion from our auditor. Relationships Some of our shareholders are also shareholders of other companies which are recently filed registration statements to go public. These other companies are Ciglarette, Inc., Resume In Minutes, Inc., and Rapid Holdings, Inc. Please note that these shareholders were identified by the CEO s of each of the respective companies. However, there are certain shareholders that are shareholders of more than one of these entities because their relationships do exist amongst the CEOs of the aforementioned companies. Our CEO, Ms. Stephanie Wyss is a Los Angeles resident and is friends with Mr. Anthony Barron, CEO of Rapid Holdings, Inc. as well as Grace Rahman, wife of Lisan Rahman, CEO of Ciglarette, Inc. Based on these relationships, Ms. Wyss has collaborated and shared information with these individuals from time to time. In fact they intend to share email marketing lists to cross promote each other's products and services. Ms. Novaira Haider, CEO of Resume In Minutes, Inc., and Mr. Lisan Rahman are close family friends who have known each other for over 25 years. They often collaborate and assist each others projects. Mr. Rahman is friends with Anthony Barron. Currently, Mr. Barron is working on a Network Marketing program for Ciglarette, Inc. to launch the Ciglarette Ecig Brand in California and Internationally thru Network Marketing. Mr. Barron has helped design the website of Cig;ar te, Inc. and has assisted in drafting the compensation plan for the Network Marketing launch. Mr. Barron is going to be the CEO of a newly formed company, which will handle California and International sales, called Ciglarette International. Mr. Barron also assisted Ciglarette Inc in getting the company a Merchant Account with Bank of America Merchant Account Services. Business Strategy and Objectives Our blog is powered by a growing web portal resource for movie information communications enthusiasts based on the development of new movies to online technology. We plan to provide up-to-date information for movie lovers and access to related products through our website, MovieTrailerGalaxy.com. Our mission is to become the movie lover s online hub in the global market. We intend to spread our reach throughout the global world as we empower the movie enthusiast s culture. At Movie Trailer Galaxy, Inc., we intend to strive to give the Movie Enthusiast s community a way to support each other and benefit from one another. We have objectives in order to fulfill our desire to participate and achieve an ever-growing market share of the exciting industry that it is entering. These key objectives include: 1. Establishing ourselves throughout the Global world as the movie lover s online hub of choice, and penetrate the market in the business of providing education, information, and networking ability from the Web Portal. 2. Utilize creative, first-class public relations, advertising, and marketing to raise public awareness of the site. 3. Develop management capabilities to ensure a strong foundation for participation in a rapidly growing company. Our Operating Strategy Our website is programmed to display the latest movies, trailers and box office information. When the website is fully automated, it will not require user interaction for maintenance. The automated update process will be possible due to custom made scripts that gather information from official movie sources like IMDB, Yahoo Movies and YouTube. The update script will run every day and will not affect the site s availability during the process, as we expect it to take about 10-20 seconds to complete. Information such as posters, trailer links and movie information, is then stored into the internal database. The links for the movie trailers are stored in the database and the actual trailers are streamed directly from the source in the form of links. This process is similar to what bloggers do to get their content. Bloggers find information on the internet from various sources, and if it contains video, they can simply embed it in their blogs or link directly to it. Our website links to the actual movie trailers hosted at IMDB, Yahoo or YouTube using a light box or iframe that elegantly displays the trailers without the user having to leave our site. Linking the trailers saves money on hosting expenses, as video streaming requires costly high-capacity servers. Our website can be hosted in a shared hosting environment, which typically costs approximately $10-$25 per month. The website includes a 600+ movie database, the automation script, the domain name, an on-line function which allows the user to add, edit, and delete individual movies and the information. We believe the world of video communications enthusiasts comprises a lot of people, from amateurs, to expert professionals. We believe that a website which provides such resources is likely to become a popular online destination point for consumers in the global market. Business Timeline In this section we outline important timelines for development in Year 1 for the three months preceding launch. We will be concerned with preparing the following for launch: Timeline Business Start-up: Legal procedures filing papers of incorporation Month 1 (Completed) $ 1,200 Getting all necessary licenses and permits Month 1 (Completed) Website development: finalize branding Month 2 - Month 3 (Completed) $ 5,000 Establishing Key People and Points of Contact Month 1 - Month 2 (Completed) Purchase of materials: Office hardware, software Month 1 - Month 2 (Completed) $ 2,000 Start date for marketing activities First quarter of 2011 $ 25,000 Opening date for business May 2011 Limited Operating History We have not yet commenced operations. We have generated no independent financial history and have not previously demonstrated that we will be able to expand our business. Our business is subject to risks inherent in growing an enterprise, including limited capital resources and possible rejection of our business model and/or sales methods. For the period from April 27, 2010 (inception) through August 31, 2010, we had $0 in revenue. Our total operating expenses from inception through August 31, 2010 totaled $544.00 resulting in a net loss of $544.00. Expenses from inception consisted of $350.00 in professional fees and $194.00 for General and administrative expenses. Capital Resources and Liquidity As of November 30, 2010 we have $32,420.00 cash on hand. Stephanie Wyss will be the only employee initially as the company seeks contracts and the cost to support Ms. Wyss will be minimal. Ms. Wyss did not begin taking a salary from the company until September 2010. As of September 2010, Ms Wyss is entitled to $500 per month in compensation. The Company also anticipates its estimated costs in the next twelve month period to include legal and accounting services ($20,000), marketing costs ($25,000), hosting costs ($1,200), costs associated with website improvement and maintenance ($5,000) and salary for Stephanie Wyss ($6,000). Based upon the above, we believe that we have enough cash to support our daily operations while we are attempting to commence operations and produce revenues. However, if we are unable to satisfy our cash requirements we may be unable to proceed with our plan of operations. We do not anticipate the purchase or sale of any significant equipment. We also do not expect any significant additions to the number of employees. The foregoing represents our best estimate of our cash needs based on current planning and business conditions. In the event we are not successful in reaching our initial revenue targets, additional funds may be required, and we may not be able to proceed with our business plan for the development and marketing of our core services. Should this occur, we will suspend or cease operations. We do not have any immediate plans to raise capital. We will attempt to reduce its costs and, if necessary, we will attempt to go to family and friends on a best-efforts basis only to raise any additional capital. We anticipate that depending on market conditions and our plan of operations, we may incur operating losses in the foreseeable future. Therefore, our auditors have raised substantial doubt about our ability to continue as a going concern. Our liquidity may be negatively impacted by the significant costs associated with our public company reporting requirements, costs associated with newly applicable corporate governance requirements, including requirements under the Sarbanes-Oxley Act of 2002 and other rules implemented by the Securities and Exchange Commission. We expect all of these applicable rules and regulations to significantly increase our legal and financial compliance costs and to make some activities more time consuming and costly. Off-Balance Sheet Arrangements We have no off-balance sheet arrangements. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE There have been no changes in or disagreements with accountants on accounting or financial disclosure matters. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS The following table sets forth the name and age of our sole officer and director as of March 18, 2011. Our Executive officer is elected annually by our Board of Director. Our executive officer holds office until she resigns, are removed by the Board, or her successor is elected and qualified. Name Age Position Stephanie Wyss 30 President, Chief Financial Officer, Secretary, Treasurer and Director Set forth below is a brief description of the background and business experience of our executive officers and directors for the past five years. Stephanie Wyss, President, Chief Financial Officer, Secretary, Treasurer and Director, Age 30, From February 2004 through September 2007 Ms. Wyss served as the Assistant to Production Finance for Vivendi Universal and Living Element Pictures, both of which are movie producing companies located in Los Angeles, California where her responsibilities included working with Executive Producers and corporate investors to create films and commercials. From March 2004 through August 2009, Ms. Wyss served as the Special Event Merchandiser for Michele Diamond Watch Company, Burberry, and Armani, all of which are luxury apparel and accessories producers, as part of the Fossil Campaign where she promoted and sustained vendor commercial activity. From October 2006 through October 2008, Ms. Wyss served as the Executive Assistant to Jay Odell, Chief Executive Officer of Solutions Films, a movie producing company located in Los Angeles, California. Her responsibilities in this capacity included business plan execution, legal documentation completion and international meeting coordination regarding film finance. From October 2007 through October 2010, Ms. Wyss worked in Print Media for the Beverly Hills Times of Los Angeles, California, a local newspaper agency, where she was the contributing writer for Word Around Town, Culinary Division . From May 2003 through present Ms. Wyss served as an International Marketing Promoter for special events. Her clients include but are not limited to Mercedes Benz, Cartier, Nascar and Lexus. Stephanie Wyss attended the University of California Los Angeles where she received her associates degree in merchandising. Due to Ms. Wyss s extensive experience in marketing, merchandising, and sales we believe she is optimally suited to serve as our sole officer and director. Ms. Wyss does not have any direct experience in website marketing, development or sales. She has never acted as a promoter of any other company nor has she had a controlling interest in any other company. Term of Office Our directors are appointed for a one-year term to hold office until the next annual general meeting of our shareholders or until removed from office in accordance with our bylaws. Our officers are appointed by our board of directors and hold office until removed by the board EXECUTIVE COMPENSATION The following summary compensation table sets forth all compensation awarded to, earned by, or paid to the named executive officers paid by us for the period from April 27, 2010 (Inception) through August 31, 2010. SUMMARY COMPENSATION TABLE Name and Principal Position Year Salary ($) Bonus ($) Stock Awards ($) Option Awards ($) Non-Equity Incentive Plan Compensation ($) Non-Qualified Deferred Compensation Earnings ($) All Other Compensation ($) Totals ($) Stephanie Wyss, President, Chief Financial Officer, 2010** $ 0 0 0 0 0 0 $150.00* $ 150.00 Treasurer, Secretary, Director * 1,500,000 shares have been issued to our Chief Executive Officer at par value $0.0001 per share for compensation upon formation of the Company. The shares were issued for services and are not stock options and therefore there is no black- scholes assumption. ** An estimated amount of $500 per month will be paid to Ms. Wyss for the remaining months of 2010 beginning from September 1, 2010. Option Grants Table. There were no individual grants of stock options to purchase our common stock made to the executive officers named in the Summary Compensation Table for the period from inception through October 4, 2010. Aggregated Option Exercises and Fiscal Year-End Option Value Table. There were no stock options exercised since inception through October 4, 2010 by the executive officers named in the Summary Compensation Table. TABLE OF CONTENTS PAGE Prospectus Summary 1
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. This summary does not contain all of the information you should consider before investing in our common stock. You should read the entire prospectus carefully, especially the Risk Factors section and our financial statements and the related notes appearing at the end of this, before deciding to invest in our common stock. Our Company We are an online penny auction company that plans to capitalize on consumer demand from users who seek to bid on high end retail items at a fraction of their cost via a fun and exciting online experience. We believe that penny auctions are more entertaining than traditional online auctions such as eBay because penny auctions happen in a matter of minutes, instead of weeks or months. We anticipate that our penny auction websites will operate as fast-paced auction communities where consumers can bid on items in one-cent increments. In order to participate in our online penny auctions, each potential customer will be required to register as a member of one of our penny auction web sites, which will allow the customer access to all auction items up for bid on that site. Members will then be required to purchase bid packs in increments of 20, 50, 100, or more at purchases prices ranging from $0.50 to $1.00 per bid. Our website members will then be able to use the bids they purchase to participate in any of our available auctions. Once a member places a bid, the bid fee will not be returned to the member. Each bid raises the price of an item by $0.01. The auctions will be timed and a timer will display on the screen that will count down to zero so each bidder can see the time remaining to bid. Smaller items may only be ten-minute auctions while larger items may last as long as several hours. However, as a bid is placed on a particular item, we will add ten seconds to the clock to provide other bidders an opportunity to keep bidding on that item. An auction ends when the timer reaches zero. The last bidder to place a bid before the clock reaches zero wins the item and may then purchase the item at the closing price. Penny auction websites, such as the type we plan to offer, typically collect 150% or more of the value of a product because they keep the bid money that each bidder bids on a product. We believe that we have several competitive advantages in the online penny auction space. For example, we believe that we have the ability to penetrate the global marketplace with the 291 (penny auction) keyword, internet domains that we have secured as well as the numerous pennyauction.mobi domain names we have secured from all around the world. We also plan to employ new technologies and strategies in the penny auction marketplace which we believe will enhance our members experiences and set us apart from our competitors. Corporate Information Our executive offices are located at 7964 Arjons Drive, Suite H-206, San Diego, California 92126 and our telephone number is (866) 937-8057. Our Internet address is www.pennyauctionsolutions.com. We have not incorporated by reference into this prospectus the information included on or linked from our website and you should not consider it to be part of this prospectus. Please see the Risk Factors section commencing on page 5 for more information concerning the risks of investing in us. The Offering Common Stock Outstanding 24,165,000 shares Series A Preferred Stock Outstanding 4,000,000 shares Securities Offered Up to 251,200,000 shares of our common stock. Use of Proceeds Upon the effective date of this registration statement, Kodiak Capital will commit to purchase up to $25,000,000 worth of our common stock over a period of 36 months. All proceeds from the common stock will be used for advertising, sales and marketing expenses, salaries, website development, general and administrative expenses, and working capital. We will not receive any of the proceeds from the sale of our common stock by any selling stockholders. The information in this prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED FEBRUARY 3, 2011 Preliminary Prospectus 251,200,000 Shares PENNY AUCTION SOLUTIONS, INC. Common Stock Table of Contents Risk Factors An investment in our common stock involves a high degree of risk and could result in a loss of your entire investment. Please carefully consider the Risk Factors beginning on page 5 of this prospectus. Common Stock Outstanding after Offering Up to 274,165,000 shares of our common stock. Effective September 1, 2010, we entered into an investment agreement with Kodiak Capital Group, LLC pursuant to which Kodiak Capital has committed to purchase up to $25,000,000 of our common stock over a period of 36 months, after this registration statement has been declared effective by the Securities and Exchange Commission. For the purpose of determining the number of shares of common stock to be offered by this prospectus, we have assumed that we will issue not more than 250,000,000 shares of common stock pursuant to the exercise of our put right under the investment agreement. Should the price of our common stock decrease to a certain point, we may not be able to draw down on the entire dollar amount of the equity line of credit without filing either an amendment to this registration statement or a new registration statement for additional shares of common stock, and that registration statement would have to be declared effective prior to the issuance of any additional shares of common stock. The amount we are entitled to request from each purchase put will equal, at our election, either (1) $1,000,000 or (2) 200% of the average daily volume (U.S market only) of our common stock for the three trading days prior to the put notice, multiplied by the average of the three daily closing prices immediately preceding the put date at an offering price equal to 90% of the lowest closing highest posted bid price of our common stock during the five consecutive trading days immediately after the put date. The put date is the date that Kodiak Capital receives a put notice of draw down from us for a portion of the total commitment. There are put restrictions applied on days between the put date and the closing date with respect to that put. During this time, we will not be entitled to deliver another put notice. Kodiak Capital has contractually agreed to restrict its ability to purchase that number of shares of common stock such that its ownership at any one time shall not exceed 9.99% of the number of shares of common stock outstanding on the closing date, on an as converted basis, as determined in accordance with Rule 13d-1(j) of the Securities Exchange Act of 1934, as amended. Summary Historical Consolidated Financial Information The following tables summarize our selected historical consolidated financial data for the periods presented. The summary financial information set forth below should be read in conjunction with our financial statements and their related notes and Management s Discussion and Analysis of Financial Condition and Results of Operation included elsewhere in this prospectus. Three Months Ended November 30, 2010 (unaudited) August 25, 2010 (inception) to August 31, 2010 (Audited) Statement of Operations Data: Revenues $ - $ - Operating expenses 39,193 904 Net (loss) (39,557 ) (5,904 ) Per Share Data: Net (loss) $ (39,557 ) $ (5,904 ) Number of shares outstanding 100,904,000 99,960,000 Basic and diluted loss per share - - Weighted average shares outstanding 100,058,868 98,326,667 Balance Sheet Data: Cash $ 30,455 $ 100 Total assets 30,455 3,600 Total current liabilities 37,076 9,504 Accumulated deficit (45,461 ) (5,904 ) Total stockholders equity (deficit) $ (6,621 ) $ 3,600 This prospectus relates to the offering from time to time of up to 250,000,000 shares of the common stock of Penny Auction Solutions, Inc., a Nevada corporation, to and by Kodiak Capital Group, LLC, a Delaware limited liability company, and pursuant to a put right under an investment agreement, also referred to as an equity line of credit, that Penny Auction has entered into with Kodiak Capital. The investment agreement permits us to put up to $25,000,000 of shares of our common stock to Kodiak Capital. Pursuant to registration rights granted to Kodiak Capital, we are obligated to register the shares acquired by Kodiak Capital. This prospectus also relates to the resale of up to 1,200,000 shares of our common stock by other selling stockholders of Penny Auction. Penny Auction is not selling any shares of common stock in that resale offering. We, therefore, will not receive any proceeds from the sale of the shares by the selling stockholders. We will, however, receive proceeds from the sale of securities pursuant to our exercise of the put right. The selling stockholders may sell common stock from time to time in the principal market on which the stock will be traded at the prevailing market price or in negotiated transactions. The selling stockholders have informed us that they do not have any agreement or understanding, directly or indirectly, with any person to distribute their common stock. The selling stockholders may, however, be deemed underwriters of the shares of common stock that they are offering. Penny Auction will pay the expenses of registering these shares. Upon the effective date of this registration statement, Kodiak Capital will commit to purchase up to $25,000,000 worth of our common stock over a 36 month period. We will be entitled to put to Kodiak Capital such number of shares of common stock as equals, at our election, either (i) $1,000,000 or (2) up to 200% of the average daily volume (U.S. market only) multiplied by the three daily closing price immediately preceding the date that Kodiak Capital receives notice of our request to draw down on the credit line. The offering price of these securities will equal 90% of the lowest closing highest posted bid price of the common stock of Penny Auction during the five consecutive trading days immediately after the put date. There will be no underwriter discounts or commissions. Penny Auction s common stock is not registered under Section 12 of the Securities Exchange Act of 1934, as amended, and is not listed or traded on any trading market. Investing in our common stock involves a high degree of risk. You should carefully consider the Risk Factors beginning on page 5 before making a decision to purchase shares of our common stock. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. Table of Contents RISK FACTORS Any investment in our common stock involves a high degree of risk. You should consider carefully the risks described below, together with all of the other information contained in this prospectus, before you decide whether to purchase our common stock. If any of these actually occur, our business, financial condition or operating results could be adversely affected. The risks described below are not the only ones we face. Additional risks not currently known to us or that we currently do not deem material also may become important factors that may materially and adversely affect our business. The trading price of our common stock could decline due to any of these described or additional risks, and you could lose part or all of your investment. Risks Related to Our Business We have no operating history, which could make it difficult to accurately evaluate our business and prospects. We were recently formed and have not yet launched a penny auction website. Although management has been engaged in developing the business for approximately one year, management cannot assure at this time that we will operate profitably or that we will have adequate working capital to meet our obligations as they become due. Management believes that our success will depend in large part on the development of technology, word of mouth promotion of our brand, and active marketing efforts, but we cannot guarantee such success. We may not be able to cover our wholesale costs on each auction item and our financial results could suffer. If an insufficient number of bids are placed on an item to cover our wholesale costs, we will lose money on that particular item. While we believe that on a macro level the overall amount of bid packs purchased by our members will exceed our losses at any given time, this may not be true on a micro level with respect to particular items. Accordingly, we cannot assure that our overall business will be profitable. If we do not attract adequate traffic to our websites we will not generate enough revenue to become profitable. A primary risk to our business model is a lack of adequate traffic to our penny auction websites to generate sufficient participation in our auctions. Although we have designed our marketing strategy to utilize the marketing techniques and tools our research has found will best drive traffic to our websites, we cannot guarantee that our marketing efforts will be successful in attracting customers to our websites or that we will attract a sufficient number of customers to our websites so that we will generate enough revenue to become profitable. If our systems fail or are interrupted, our business and business reputation could be permanently harmed. We may experience system failures from time to time, and any interruption in the availability of our penny auction websites could reduce revenues and profits, harm future revenues and profits, and subject us to regulatory scrutiny. Any unscheduled interruption of access to our penny auction websites could result in an immediate, and possibly substantial, loss of revenues. Frequent or persistent interruptions in access to our penny auction websites could cause users or potential users to believe that our systems are unreliable, leading them to switch to competitors or to avoid our penny auction websites, and could permanently harm our reputation. Although we expect that our systems will be designed around industry-standard architectures to reduce downtime in the event of outages or catastrophic occurrences, they will remain vulnerable to damage or interruption from earthquakes, floods, fires, power loss, telecommunication failures, terrorist attacks, computer viruses, computer denial-of-service attacks, and similar events. We do not expect that our websites will be fully redundant and our disaster recovery planning may not be sufficient for all eventualities. Our systems will also be subject to break-ins, sabotage, and intentional acts of vandalism. Despite any precautions we may take, the occurrence of a natural disaster, a decision by any third-party hosting providers to close a facility we use without adequate notice for financial or other reasons, or other unanticipated problems at our hosting facilities could result in lengthy interruptions in our services. We do not plan to carry business interruption insurance sufficient to compensate us for losses that may result from interruptions in our service as a result of system failures. TABLE OF CONTENTS PROSPECTUS SUMMARY 3
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+PROSPECTUS SUMMARY The following summary highlights selected information contained in this prospectus. This summary does not contain all the information you should consider before investing in the securities. Before making an investment decision, you should read the entire prospectus carefully, including the Risk Factors section, the financial statements and the notes to the financial statements included elsewhere herein. Our Company Harmony Metals, Inc., a development stage company, is a designer and manufacturer of upscale jewelry and lifestyle accessories for both men and women. We were incorporated under the laws of the State of Florida on October 19, 2009. Our business strategy is to design and manufacture jewelry and lifestyle accessories based on original designs, which are inspired by nature and have an organic look and feel. We make jewelry from recycled materials, whenever possible, and use manufacturing processes and chemicals that minimize the impact on the environment. Mr. Patrick Allen Norton, our Chief Executive Officer, President and Lead Designer, utilizes his creative abilities and experience for the creation of our jewelry and lifestyle accessories along with the passion for detail that comes from his 22 years of experience in jewelry design. HARMONY METALS, INC. a Florida corporation HARMONY METALS DESIGNS, INC. a Florida corporation (100% Owned Subsidiary) For the period October 19, 2009, our inception, to September 30, 2010, we have generated revenues of $6,211 and have an accumulated deficit of $(4,819). Our independent auditors have raised substantial doubt as to our ability to continue as a going concern, as expressed in its opinion on our financial statements included in this prospectus. Our ability to continue as a going concern is dependent upon our ability to generate profitable operations in the future and/or obtain the necessary financing to meet our obligations and repay our liabilities as they arise. There can be no assurance that we will operate at a profit or such additional financing will be available, or if available, can be obtained on satisfactory terms. Our principal executive office and manufacturing space is located at 330 84th Street, No. 4, Miami, Florida 33141. Our telephone number is (786) 294-3362. - 2 - As filed with the Securities and Exchange Commission on January 19, 2011 Registration No. 333-170408 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _____________________________ AMENDMENT NO. 2 TO FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ___________________________ HARMONY METALS, INC. (Exact name of registrant as specified in its charter) ____________________________ FLORIDA (State or other jurisdiction of incorporation or organization) 5094 (Primary Standard Industrial Classification Code Number) 27-1230588 (I.R.S. Employer Identification No.) 330 84th Street, No. 4, Miami, Florida 33141 (786) 294-3362 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) ______________________________ Patrick A. Norton Chairman of the Board, President, Chief Executive Officer and Treasurer 330 84th Street, No. 4 Miami, Florida 33141 (786) 294-3362 (Name, address, including zip code, and telephone number including area code, of agent for service) ______________________________ With a copy to: Michael H. Hoffman, Esq. Law Offices of Michael H. Hoffman, P.A. 1521 Alton Road, No. 284 Miami, Florida 33139 Telephone: (786) 280-7575 and Facsimile (305) 865-3430 _____________________________ Approximate date of commencement of proposed sale to the public: From time to time after this Registration Statement is declared effective. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. Table of Contents If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of large accelerated filer, accelerated filer, and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer o Accelerated filer o Non-accelerated filer o Smaller reporting company x (Do not check if a smaller reporting company) The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, or until this registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine. - i - Table of Contents P R O S P E C T U S HARMONY METALS, INC. 50,000 SHARES OF SERIES A CONVERTIBLE PREFERRED STOCK PRICE PER SHARE: $10.00 TOTAL OFFERING: $500,000 The name of our company is Harmony Metals, Inc. and we were incorporated in the State of Florida on October 19, 2009. This is our initial public offering. Our securities are not listed on any national securities exchange or the Nasdaq Stock Market. We are offering a total of 50,000 shares of our Series A Convertible Preferred Stock, par value $.001 per share, in a direct public offering at a fixed price of $10 per share for the duration of the offering. One (1) share of Series A Convertible Preferred Stock may be converted into 290 shares of our common stock at any time. No additional payment is required in connection with such conversion. In the event that a dividend or distribution is declared by the Board of Directors on the Series A Convertible Preferred Stock, the terms of the Series A Convertible Preferred Stock do not require that a fixed amount be payable to such holders. In the event that we are liquidated, the holders of Series A Convertible Preferred Stock would be entitled to receive the amount of $10 per share plus any accumulated and unpaid dividends before any distribution is made to the holders of our common stock. This prospectus also relates to the offering of up to 14,500,000 shares of our common stock, par value $.001 per share, which may be issued upon the conversion of the Series A Convertible Preferred Stock. Our independent auditors have raised substantial doubt as to our ability to continue as a going concern, as expressed in its opinion on our financial statements included in this prospectus. This is a best efforts offering that will not utilize any underwriters or broker-dealers. The shares are being offered through our directors pursuant to an exemption as a broker/dealer under Rule 3a 4-1 of the Securities Exchange Act of 1934. There is no minimum number of shares of Series A Convertible Preferred Stock that are required to be sold in the offering. Proceeds from the sale of the shares, up to $500,000 if all the shares being offered are sold, may be used by us upon receipt. We will not be placing any of these funds in an escrow account, and, as a result, any creditors of the Company may be able to gain access to these funds. We are offering the shares from time to time on a continuous basis, but we may terminate the offering at any time. The purchase of the securities offered through this prospectus involves a high degree of risk. See Risk Factors beginning on page 6. Offering Price Per Share Offering Expenses(1) Proceeds to Our Company Per Share $ 10.00 $ 0.53 $ 9.47 Total $ 500,000 $ 26,320 $ 473,680 __________ (1) There are no underwriting discounts or commissions be paid in connection with this offering. Our directors will not receive any compensation for their role in offering or selling the shares in the offering. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. THE DATE OF THIS PROSPECTUS IS _________________. - ii - Table of Contents ABOUT THIS PROSPECTUS This prospectus is part of a registration statement that we filed with the Securities and Exchange Commission. The registration statement containing this prospectus, including the exhibits to the registration statement, also contains additional information about Harmony Metals, Inc. and the securities offered under this prospectus. That registration statement can be read at the Securities and Exchange Commission's website (located at www.sec.gov) or at the Securities and Exchange Commission s Public Reference Room mentioned under the heading Where You Can Find More Information of this prospectus. You should rely only on the information contained in this document or to which we have referred you. We have not authorized anyone to provide you with information that is different. This document may only be used where it is legal to sell these securities. The information in this document may only be accurate on the date of this document. Our business, financial condition or results of operations may have changed since that date. REFERENCES As used in this prospectus: (i) the terms we , us , our , and the Company mean Harmony Metals, Inc.; (ii) SEC refers to the Securities and Exchange Commission; (iii) Securities Act refers to the United States Securities Act of 1933, as amended; (iv) Exchange Act refers to the United States Securities Exchange Act of 1934, as amended; and (v) all dollar amounts refer to United States dollars unless otherwise indicated. _____________________ - 1 - Table of Contents PROSPECTUS SUMMARY The following summary highlights selected information contained in this prospectus. This summary does not contain all the information you should consider before investing in the securities. Before making an investment decision, you should read the entire prospectus carefully, including the Risk Factors section, the financial statements and the notes to the financial statements included elsewhere herein. Our Company Harmony Metals, Inc., a development stage company, is a designer and manufacturer of upscale jewelry and lifestyle accessories for both men and women. We were incorporated under the laws of the State of Florida on October 19, 2009. Our business strategy is to design and manufacture jewelry and lifestyle accessories based on original designs, which are inspired by nature and have an organic look and feel. We make jewelry from recycled materials, whenever possible, and use manufacturing processes and chemicals that minimize the impact on the environment. Mr. Patrick Allen Norton, our Chief Executive Officer, President and Lead Designer, utilizes his creative abilities and experience for the creation of our jewelry and lifestyle accessories along with the passion for detail that comes from his 22 years of experience in jewelry design. HARMONY METALS, INC. a Florida corporation HARMONY METALS DESIGNS, INC. a Florida corporation (100% Owned Subsidiary) For the period October 19, 2009, our inception, to September 30, 2010, we have generated revenues of $6,211 and have an accumulated deficit of $(4,819). Our independent auditors have raised substantial doubt as to our ability to continue as a going concern, as expressed in its opinion on our financial statements included in this prospectus. Our ability to continue as a going concern is dependent upon our ability to generate profitable operations in the future and/or obtain the necessary financing to meet our obligations and repay our liabilities as they arise. There can be no assurance that we will operate at a profit or such additional financing will be available, or if available, can be obtained on satisfactory terms. Our principal executive office and manufacturing space is located at 330 84th Street, No. 4, Miami, Florida 33141. Our telephone number is (786) 294-3362. - 2 - Table of Contents The Offering The Issuer: Harmony Metals, Inc. Securities Offered: 50,000 shares of Series A Convertible Preferred Stock, par value $.001 per share. We believe that an offering of Series A Convertible Preferred Stock is more attractive than an offering of Common Stock, because there are currently no shares of Series A Convertible Preferred Stock outstanding and such holders will be entitled to a $10 per share liquidation preference, plus all accumulated and unpaid dividends on those shares, before any distribution is made on our common stock. Offering price: A fixed price of $10.00 per share for the duration of the offering. Dividends: In the event that a dividend or distribution is declared by the Board of Directors on the Series A Convertible Preferred Stock, the terms of the Series A Convertible Preferred Stock do not require that a fixed amount be payable to such holders. Also, there is no preference associated with the issuance of dividends on the Series A Convertible Preferred Stock. In the event a dividend or distribution is declared on the common stock of the Company, in cash or other property (other than a dividend of our common stock), the holders of the Series A Convertible Preferred Stock will be entitled to receive the amount of cash or property equal to the cash or property which would be received by the holders of the number of shares of common stock into which such shares of Series A Convertible Preferred Stock could be converted immediately prior to such dividend or distribution. Optional Conversion: Each share of Series A Convertible Preferred Stock may be converted, at the option of the holder, into 290 shares of our common stock, subject to adjustment in a number of circumstances described under Description of Series A Convertible Preferred Stock. No additional payment is required in connection with such a conversion. Voting Rights: The holders of Series A Convertible Preferred Stock will vote, on an as converted basis, on the same matters as the holders of common stock and there is no limitation whatsoever on the voting rights associated with the Series A Convertible Preferred Stock. Material Difference Between Series A Convertible Preferred Stock and Common Stock The material differences between the Series A Convertible Preferred Stock and Common Stock are that holders of Series A Convertible Preferred Stock are entitled to receive (i) a liquidation Preference, as described above in Securities Offered , and (ii) payment of dividends, as a separate class, if declared, by the Board of Directors. The holders of common stock are not entitled to receive such liquidation preference or any dividends paid to the holders of Series A Convertible Preferred Stock. See Description of Capital Stock for more information. Common Stock Outstanding: Prior to Offering: 7,620,000 shares Assuming sale of all Series A Convertible Preferred Stock and conversion of such shares into shares of common stock: 22,120,000 shares - 3 - Table of Contents
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+PROSPECTUS SUMMARY This summary highlights selected information contained elsewhere in this prospectus. This summary does not contain all the information that you should consider before investing in the warrants. You should carefully read the entire prospectus, including Risk Factors, Management s Discussion and Analysis of Financial Condition and Results of Operations and the Financial Statements, before making an investment decision. In this Prospectus, the terms Alternative Energy and Environmental Solutions, Company, we, us and our refer to Alternative Energy and Environmental Solutions, Inc. Overview We are a development stage company incorporated on June 10, 2010 under the laws of the State of Nevada. To date, we have no operations or revenues. Our initial operations have included organization and incorporation, target market identification, marketing plans, and capital formation. A substantial portion of our activities to date have involved developing a business plan and establishing contacts and visibility in the marketplace. Our plan is to acquire and market an innovative new biotechnology that utilizes nutrient stimulants organic microbes to extract coal bed methane more efficiently in high-production as well as from low-producing, depleted and abandoned coalmines in the United States. Coal bed methane is a clean-burning natural gas used for heating in homes and is used to generate electricity. Activities during our development stage include developing the business plan and raising capital. We are based in Newtown, Pennsylvania. After acquiring a microbial biotechnology, we plan to license this patent-pending biotechnology to owners and operators of coal mines in the Power River Basin, which spans parts of Montana and Wyoming. Our estimates indicate that taking production from 20,000 wells, of 22,000 wells in production, that are generating about 50 mcf (1,000 cubic feet) of methane gas per day, we estimate production of 1 million mcf per day or 350 million mcf per year. At $4/mcf, yearly revenues could equal $1.4 billion and over 10 years could generate $14 billion. Because coal bed methane is a clean-burning natural gas, companies developing greater reserves contribute in a major way to the U.S. s drive for higher reliance on renewable and cleaner energy sources, and can possibly qualify for significant tax incentives to help fund operations. We have not yet acquired a microbial biotechnology. We will attempt to negotiate a purchase agreement for microbial biotechnology from Wytex Ventures once additional funding is raised. Our independent auditors have issued a going concern opinion that raises substantial doubt about our ability to continue as a going concern. As reflected in the financial statements in this prospectus, we are a development stage company with limited operations. We had a net loss of $212,440 since inception (June 10, 2010) through July 31, 2010. We incurred professional fees totaling $201,250 and general and administrative expenses of $11,190 for the same period, inception through July 31, 2010. Cash on hand as of July 31, 2010 was $495,536. Scott Williams, President, Chief Executive Officer, Director and Majority Shareholder Our President, CEO and Director, Scott Williams, is currently, and will remain after the offering, our majority shareholder. Private Offerings On July 31, 2010, we closed on a private placement which raised gross proceeds of $759,376 through the sale of 1,012,516 units (the Units ), each Unit consisting of 1 share of our common stock, $0.0001 par value (the Common Stock ), and a warrant to purchase 2 shares of our Common Stock exercisable at a price of $2.50 per warrant (the Warrants ), to certain accredited investors. The investors entered into a subscription agreement (the Subscription Agreement ) (see Exhibit 10.1), for the sale of our Common Stock. Pursuant to the terms of the Subscription Agreement, we offered the Units for sale at a purchase price of $0.75 per Unit. Each investor also received a five (5) year Warrant (see Exhibit 10.2), to purchase two (2) shares of Common Stock for every one (1) share of Common Stock which the investor purchased in this offering at an exercise price of $2.50 per share. Where You Can Find Us Our principal executive office is located at 159 North State Street, Newtown, PA 18940, and our telephone number is (215) 968-1600. The Offering Warrants offered by selling security holders 2,025,032 Warrants to purchase up to 2,025,032 shares of our Common Stock issuable upon exercise of the outstanding Warrants, exercisable at a price of $2.50 per Warrant that was issued in connection with the private placement that closed on July 31, 2010. These warrants are immediately callable by us if the our Common Stock trades for a period of 20 consecutive trading days at an average price of $3.00 per share or greater. Use of proceeds To the extent that the selling stockholders exercise in cash all of the Warrants at the exercise price of $2.50 per Warrant, we would receive $5,062,580 in the aggregate from such exercise. The proceeds from the cash exercise of such Warrants , if any, will be used by us for working capital and other general corporate purposes. Risk Factors The Warrants offered hereby involves a high degree of risk and should not be purchased by investors who cannot afford the loss of their entire investment. See Risk Factors beginning on page 7.
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001504251_ishares_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001504251_ishares_prospectus_summary.txt
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+PROSPECTUS SUMMARY 1
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+consolidated financial statements included elsewhere in this prospectus. This summary may not contain all of the information that may be important to you. You should carefully read this entire prospectus, including the section entitled Risk Factors and our consolidated financial statements and notes to those statements. As used in this prospectus, unless the context otherwise requires, all references to we, us, our, our company or the company refer to FriendFinder Networks Inc. and, where appropriate, our consolidated direct and indirect subsidiaries, except where it is clear that the terms mean only FriendFinder Networks Inc. The term INI refers to our subsidiary and co-issuer of the Registrable Notes, Interactive Network, Inc. References to our common stock refer only to our voting common stock and except as otherwise noted, such references do not include our Series B common stock or our preferred common stock. Except where we state otherwise, the information presented in this prospectus reflects (i) the amendment and restatement of our bylaws, effective upon the consummation of our initial public offering on May 16, 2011, and (ii) the amendment and restatement of our articles of incorporation, which became effective on January 25, 2010. About Our Company FriendFinder Networks Inc. is a leading internet and technology company providing services in the rapidly expanding markets of social networking and web-based video sharing. Our business consists of creating and operating technology platforms which run several of the most heavily visited websites in the world. Through our extensive network of more than 44,000 websites, since our inception, we have built a base of more than 484 million registrants and more than 320 million members in more than 200 countries. We are able to create and maintain, in a cost-effective manner, websites intended to appeal to users of diverse cultures and interest groups. In December 2010, we had more than 196 million unique visitors to our network of websites, according to comScore. We offer our members a wide variety of online services so that they can interact with each other and access the content available on our websites. Our most heavily visited websites include AdultFriendFinder.com, Amigos.com, AsiaFriendFinder.com, Cams.com, FriendFinder.com, BigChurch.com and SeniorFriendFinder.com. For the nine months ended September 30, 2011, we had net revenue, income from operations and net losses of $249.6 million, $52.4 million and $(20.9) million, respectively. For the year ended December 31, 2010, we had net revenue, income from operations and net losses of $346.0 million, $71.1 million and ($43.2) million, respectively. Our revenues to date have been primarily derived from online subscription and paid-usage for our products and services. These products and services are delivered primarily through two highly scalable revenue-generating technology platforms: Social Networking. Approximately 69% of our total net revenues for the nine months ended September 30, 2011 and 70% of our total net revenues for the year ended December 31, 2010 were generated through our targeted social networking technology platform. Our social networking technology platform provides users who register or purchase subscriptions to one or more of our websites with the ability to communicate and to establish new connections with other users via our personal chat rooms, instant messaging and e-mail applications and to create, post and view content of interest. We have been able to rapidly create and seamlessly maintain multiple websites tailored to specific categories or genres and designed to cater to targeted audiences with mutual interests. We believe that our ability to create and operate a diverse network of specific interest websites with unique, user-generated content in a cost-effective manner is a significant competitive differentiator that allows us to implement a subscription-fee based revenue model while many other popular social networking websites rely primarily upon free-access, advertising-based revenue models. Live Interactive Video. Approximately 24% of our total net revenues for the nine months ended September 30, 2011 and 22% of our total net revenues for the year ended December 31, 2010 were generated through our live interactive video technology platform. Our live interactive video technology platform is a live video broadcast platform that enables models to broadcast from independent studios throughout the world and interact with our users via instant messaging and video. We believe our live interactive video platform provides a unique offering including bi-directional and omni-directional video and interactive features that allow models to communicate with and attract users through a variety of mediums including blogs, newsletters and video. In addition, we believe the reliability of our live interactive video technology platform, which had approximately 99.1% uptime during 2010, is a key factor allowing us to maintain a large base of users. In addition to our revenue-generating technology platforms, we have invested significant time and resources into developing our back-end marketing, analytics and billing technologies, which are a key contributor to the success of our business. We have developed proprietary systems to allow our marketing affiliates to maximize their revenue for our mutual benefit. These systems include proprietary white-labeling solutions, in which we provide back-end technology solutions to permit affiliates and marketing partners to deliver our products and services while maintaining the affiliate s and marketing partner s own branding and style, self-optimizing ad spots, and a robust banner optimization engine that automatically chooses the best possible site and banner to promote in a given ad spot. Our marketing technology has also enabled the creation and continued growth of our network of more than 280,000 affiliates, which we believe is one of the largest of its kind in the world and a significant barrier to entry to potential and existing competitors. Similarly, our proprietary analytics technology provides us with an advantage relative to less sophisticated competitors by enabling us to estimate future revenue based on short-term response to our advertising campaigns, as well as providing for analysis of key data and metrics in order to optimize our marketing spend and maximize the revenues our websites generate. Our robust billing platform allows our customers to pay using many of the widely-adopted methods of e-commerce, both domestically as well as internationally. We categorize our users into five categories: visitors, registrants, members, subscribers and paid users. Visitors. Visitors are users who visit our websites but do not necessarily register. We believe we achieve large numbers of unique visitors because of our focus on continuously enhancing the user experience and expanding the breadth of our services. We had more than 196 million unique worldwide visitors in the month of December 2010, representing a growth of more than 300% from our approximately 46.9 million unique worldwide visitors in January 2009, according to comScore. Registrants. Registrants are visitors who complete a free registration form on one of our websites by giving basic identification information and submitting their e-mail address. For the nine months ended September 30, 2011, we averaged more than 6.4 million new registrations on our websites each month. For the year ended December 31, 2010, we averaged more than 6.4 million new registrations on our websites each month. Some of our registrants are also members, as described below. Members. Members are registrants who log into one of our websites and make use of our free products and services. For the nine months ended September 30, 2011, we averaged more than 4.0 million new members on our websites each month. For the year ended December 31, 2010, we averaged more than 3.9 million new members on our websites each month. Subscribers. Subscribers are members who purchase daily, three-day, weekly, monthly, quarterly, annual or lifetime subscriptions for one or more of our websites. Subscribers have full access to our websites and may access special features. For the nine months ended September 30, 2011, we had a monthly average of approximately 950 thousand and for the year ended December 31, 2010, we had a monthly average of approximately 1 million paying subscribers. Paid Users. Paid users are members who purchase products or services on a pay-by-usage basis. For the nine months ended September 30, 2011, we averaged approximately 2.9 million purchased minutes by paid users each month. For the year ended December 31, 2010, we averaged approximately 3.0 million purchased minutes by paid users each month. We focus on the following key business metrics to evaluate the effectiveness of our operating strategies. Average Revenue per Subscriber. We calculate average revenue per subscriber, or ARPU, by dividing net revenue for the period by the average number of subscribers in the period and by the number of months in the period. As such, our ARPU is a monthly calculation. For the nine months ended September 30, 2011, our average monthly revenue per subscriber was $20.22. For the year ended December 31, 2010, our average monthly revenue per subscriber was $20.49. Churn. Churn is calculated by dividing terminations of subscriptions during the period by the total number of subscribers at the beginning of that period. Our average monthly churn rate, which measures the rate UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 of loss of subscribers, for the nine months ended September 30, 2011 was 16.3% per month. Our average monthly churn rate for the year ended December 31, 2010 was 16.1% per month. Cost Per Gross Addition. Cost per gross addition, or CPGA, is calculated by adding affiliate commission expense plus ad buy expenses and dividing by new subscribers during the measurement period. Our CPGA for the nine months ended September 30, 2011 was $42.76. Our CPGA for the year ended December 31, 2010 was $47.25. Average Lifetime Net Revenue Per Subscriber. Average Lifetime Net Revenue Per Subscriber is calculated by multiplying the average lifetime (in months) of a subscriber by ARPU for the measurement period and then subtracting the CPGA for the measurement period. Our Average Lifetime Net Revenue Per Subscriber for the nine months ended September 30, 2011 was $81.06. Our Average Lifetime Net Revenue Per Subscriber for the year ended December 31, 2010 was $80.17. While we monitor many statistics in the overall management of our business, we believe that Average Lifetime Net Revenue Per Subscriber and the number of subscribers are particularly helpful metrics for gaining a meaningful understanding of our business as they provide an indication of total revenue and profit generated from our base of subscribers inclusive of affiliate commissions and advertising costs required to generate new subscriptions. In addition to our social networks and live interactive video platforms, we also offer professionally-generated content through our premium content technology platform and our non-internet entertainment business. Through websites such as Penthouse.com and HotBox.com, our subscribers and paid users have access to our collection of more than 15,000 hours of professional video, which includes our library of more than 800 standard and high-definition full-length feature films and one million professionally produced images. We began shooting all of our content in 3D in September 2010. Additionally, subscribers have access to editorial content, chat rooms and other interactive features. In addition to our online products and services, we also have a non-technology legacy entertainment business, in which we produce and distribute original pictorial and video content via traditional distribution channels including licensing and retail DVD channels, and license the globally-recognized Penthouse brand to a variety of consumer product companies and entertainment venues and public branded men s lifestyle magazines. Our Competitive Strengths We believe that we have the following competitive strengths that we can leverage to implement our strategy: Proprietary and Scalable Technology Platform. Our robust, proprietary and highly scalable technology platform supports our social networking, live interactive video and premium content websites. We are able to use our customized back-end interface to quickly and affordably generate new websites, launch new features and target new audiences at a relatively low incremental cost. We believe that our ability to create new websites and provide new features is crucial to cost-effectively maintaining our relationships with existing users and attracting new users. Paid Subscriber-Based Model. We operate social networking websites that allow our members to make connections with other members with whom they share common interests. Our paid subscriber-based model of social networking websites is distinctly different from the business models of other free social networking websites whose users access the websites to remain connected to their pre-existing friends and interest groups. Large and Diverse User Base. We operate some of the most heavily visited social networking websites in the world, currently adding on average more than 6.4 million new registrants and more than 4.0 million new members each month. Our websites are designed to appeal to individuals with a diversity of interests and backgrounds. We believe potential members are attracted to the opportunity to interact with other individuals by having access to our large, diverse user base. Large and Difficult to Replicate Affiliate Network and Significant Marketing Spend. Our marketing affiliates are companies that market our services on their websites, allowing us to market our brand beyond our established user base. As of September 30, 2011 and December 31, 2010, we had more than 280,000 participants in our marketing affiliate program from which we derive a substantial portion of our new members and approximately 46% of our net revenues for the nine months ended September 30, 2011 and 45% of our net revenues for the year ended December 31, 2010. We believe that the difficulty in building an affiliate network of this large size, together with our combined affiliate and advertising spend for the nine months ended September 30, 2011 and the year ended December 31, 2010 of $64.5 million and $103.5 million, respectively, presents a significant barrier to entry for potential competitors. Our Strategy Our goal is to enhance revenue opportunities while improving our profitability. We plan to achieve these goals using the following strategies: Convert Visitors, Registrants and Members into Subscribers or Paid Users. We continually seek to convert visitors, registrants and members into subscribers or paid users. We do this by constantly evaluating, adding and enhancing features on our websites to improve our users experience. Create Additional Websites and Diversify Offerings. We are constantly seeking to identify groups of sufficient size who share a common interest in order to create a website intended to appeal to their interests. Our extensive user database serves as an existing source of potential members and subscribers for new websites we create. Expand into and Monetize Current Foreign Markets. In 2010, nearly 71% of our members were outside the United States, but non-U.S. users accounted for less than half of our total net revenues. We seek to expand in selected geographic markets, including Southeast Europe, South America and Asia. Pursue Targeted Acquisitions. We intend to expand our business by acquiring and integrating additional social networking websites, technology platforms, owners, creators and distributors of content and payment processing and advertising businesses. Our management team possesses significant mergers and acquisitions and integration expertise and regularly screens the marketplace for strategic acquisition opportunities. Generate Online Advertising Revenue. To date, online advertising revenue has represented less than 0.1% of our net revenue, averaging approximately $8,000 per month in the nine months ended September 30, 2011 and $9,000 per month for the year ended December 31, 2010. With continued worldwide growth in this advertising segment, we see this as a significant growth opportunity. We believe that our broad and diverse user base represents a valuable asset that will provide opportunities for us to offer targeted online advertising to specific demographic groups. We intend to focus our advertising efforts on our general audience social networking websites and maintain our subscription-based model for our adult social networking websites. Our New Financing On October 27, 2010, we issued new debt to repay our then existing debt, which we refer to as the New Financing. We, along with our wholly-owned subsidiary Interactive Network, Inc., or INI, co-issued $305.0 million principal amount of the Senior Secured Notes, $13.8 million of the Cash Pay Notes, and $232.5 million of the Non-Cash Pay Notes. Our Initial Public Offering On May 16, 2011, we issued 5,000,000 shares of common stock at a price of $10.00 per share and completed our initial public offering (the IPO ). We raised gross proceeds of $50.0 million, less underwriting fees and commissions of 7.25% of the gross proceeds, or $3.6 million, and incurred other offering expenses of $2.9 million to be paid from the proceeds of the offering, resulting in $43.5 million of net proceeds. In addition, we had incurred and paid as of December 31, 2010, $13.3 million of offering costs, which were included in deferred offering costs in the accompanying balance sheet at December 31, 2010 and written off by a charge to capital in excess of par value in the quarter ended June 30, 2011. On May 19, 2011, we redeemed $37.8 million of our Senior Secured Notes and $1.7 million of our Cash Pay Notes for a total of $39.5 million principal amount of New Financing redeemed from the net proceeds of our IPO and incurred a loss on extinguishment of debt estimated to be approximately $7.3 million. As of September 30, 2011, the outstanding principal amounts of the Senior Secured Notes, Cash Pay Notes and Non-Cash Pay Notes were $235.3 million, $10.6 million and $250.9 million, respectively. Recent Developments In July 2011, we acquired, through one of our subsidiaries, PerfectMatch.com, an online relationship service helping adults seeking successful, lasting connections. We paid approximately $2.5 million in cash and stock to acquire the assets of the website. PerfectMatch.com uses the Duet Total Compatibility System, a system which analyzes the whole person to find friends, taking into account each member s personality, values and ideals, life and love-style preferences to identify and find the person right for them. The acquisition of this website and related assets adds to our portfolio of general audience social networking websites. In September 2011, we acquired, through one of our subsidiaries, BDM Global Ventures Ltd., the company which owns the operations of JigoCity. The acquisition was completed pursuant to an Agreement and Plan of Merger entered into on September 7, 2011 among us, JGC Holdings Limited, our wholly-owned subsidiary, BDM Global Ventures Limited, which we refer to as BDM, Global Investment Ventures LLC and Anthony R. Bobulinski, which we refer to as the Merger Agreement. Under the terms of the Merger Agreement, the shareholders of BDM, in exchange for their outstanding shares and options in BDM and its subsidiaries, received merger consideration consisting of 1,555,555, shares of our common stock, 500,000 of which will be held in escrow until no later than December 31, 2012, and warrants exercisable into 6,436,851 shares of our common stock with exercise prices ranging from $5-$18 per share with an expiration date of December 31, 2021. Pursuant to an equity put agreement we entered into, the shareholders of BDM have the option to sell all of the shares of our common stock and warrants issued as merger consideration back to us in exchange for the return of 70% of the equity in BDM if the volume-weighted average price of our common stock fails to equal or exceed $12.00 per share during any 10 trading day period principally between the closing date and the later of June 30, 2014 and the date upon which our current indentures are fully discharged, or if an indenture modification is made, as defined in the equity put agreement, the later of June 30, 2014 and the date the indenture modification takes place (the later date hereinafter referred to as the Vesting Date ). The equity put agreement provides that the put right shall become exercisable at the sole discretion of the shareholders appointed representative during the period commencing on the Vesting Date and expiring sixty (60) days thereafter. Additionally, if the shareholders of BDM exercise the put right, we have the right to pay them in our common stock and/or cash, having a combined value as of the later of the above dates equal to the product of (i) 2,209,414 shares of common stock (subject to dilutive adjustment) and (ii) the difference between the highest 10 day volume-weighted average price attained by our common stock during such period and $12.00, in which case the put right terminates. Pursuant to a registration rights agreement, we also granted demand registration rights under certain circumstances, with respect to the shares of our common stock and warrants issued as merger consideration. JigoCity is a global social commerce organization committed to providing members with high quality daily deals that are relevant to their individual lifestyles. The acquisition of JigoCity adds to our portfolio a social commerce company and what we believe will be an additional avenue to monetize our foreign markets. Our Corporate Information Our executive offices are located at 6800 Broken Sound Parkway, Suite 200, Boca Raton, Florida 33487 and our telephone number is (561) 912-7000. Our website address is www.ffn.com. The information contained in, or accessible through, our website is not part of this prospectus. 6800 Broken Sound Parkway, Suite 200 Boca Raton, Florida 33487 (561) 912-7000 (Address, including zip code, and telephone number, including area code, of registrant s principal executive offices)
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001504388_avante_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001504388_avante_prospectus_summary.txt
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+Table of Contents Summary We were incorporated as Avante Systems Inc. on August 12, 2010, in the State of Nevada for the purpose of developing, manufacturing, and selling a video camera integrated with a 3G mobile phone module specifically for use in schools, child/eldercare facilities, and residences in Asia. We are a development stage company and have not generated significant sales to date. As of January 31, 2011, we had $35,308 in current assets and no current liabilities. Accordingly, we had working capital of $ 35,308 as of January 31, 2011. Since our inception through January 31, 2011, we have incurred a net loss of $17,192. We do not have enough cash to enable us to implement our business plan as set forth in this prospectus. For these and other reasons, our independent auditors have raised substantial doubt about our ability to continue as a going concern. Accordingly, we will require additional financing. Our principal executive offices are located at 50 West Liberty Street, Suite 880, Reno, NV 89501. Our operations office is located at 695-24-05 Desa Kiara, Jalan Damasara, Kuala Lumpur, Malaysia. Our phone number is 86-075-2533705. Our fiscal year end is October 31. The Offering Securities Being Offered Up to 390,000 shares of our common stock. Offering Price The offering price of the common stock is $0.03 per share. Minimum Number of Shares To Be Sold in This Offering None Table of Contents Securities Issued and to be Issued 2,625,000 shares of our common stock are issued and outstanding as of the date of this prospectus. Our President and Director, Xu Hai Bo, and Director, Ran Hong Dan, own an aggregate of 48% of the common shares of our company and therefore has substantial control. All of the common stock to be sold under this prospectus will be sold by existing shareholders. There will be no increase in our issued and outstanding shares as a result of this offering. Use of Proceeds We will not receive any proceeds from the sale of the common stock by the selling shareholders. Reason for Registration We are paying the expenses of the offering because we seek to: (i) become a reporting company with the Commission under the Securities Exchange Act of 1934; and (ii) enable our common stock to be quoted on the FINRA over-the-counter bulletin board. We plan to file a Form 8-A registration statement with the Commission prior to the effectiveness of the Form S-1 registration statement. The filing of the Form 8-A registration statement will cause us to become a reporting company with the Commission under the 1934 Act concurrently with the effectiveness of the Form S-1 registration statement. We must be a reporting company under the 1934 Act in order that our common stock is eligible for trading on the FINRA over-the-counter bulletin board. We believe that the registration of the resale of shares on behalf of existing shareholders may facilitate the development of a public market in our common stock if our common stock is approved for trading on a recognized market for the trading of securities in the United States. We consider that the development of a public market for our common stock will make an investment in our common stock more attractive to future investors. We believe that obtaining reporting company status under the 1934 Act and trading on the OTCBB should increase our ability to raise these additional funds from investors. Summary Financial Information Balance Sheet Data October 31, 2010 January 31, 2011 Cash $ 33,308 $ 33,308 Total Assets $ 37,308 $ 35,308 Liabilities $ 0 $ 0 Total Stockholders Equity (Deficit) $ 37,308 $ 35,308 Statement of Operations Period from August 12, 2010 (Inception) to October 31, 2010 Three months ended January 31, 2011 Period from August 12, 2010 (Inception) to January 31, 2011 Revenue $ 0 0 0 Loss for the Period $ 15,192 2,000 17,192 Table of Contents
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001504414_castlerock_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001504414_castlerock_prospectus_summary.txt
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+PROSPECTUS SUMMARY This summary highlights information contained in greater detail elsewhere in this prospectus. It does not contain all of the information that may be important to you and your investment decision. You should carefully read this entire prospectus, including the matters set forth under "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements and related notes included elsewhere in this prospectus, before making an investment decision. Overview We are a national provider of electronic security alarm monitoring services, providing monitoring and maintenance of alarm systems to single-family residential and light commercial customers. We monitor signals from burglary, fire, medical and environmental alarm systems at our monitoring center in Arlington Heights, Illinois. Most of our monitoring services revenue and a large portion of the maintenance services we provide our customers are governed by multi-year contracts with automatic renewal provisions that provide us with recurring monthly revenue, or RMR. As of September 30, 2010, we monitor approximately 54,000 sites in 46 states, Canada and Puerto Rico. We operate in a U.S. security alarm industry with an estimated $45 billion of annual revenue in 2009, approximately one-third, or $16.3 billion, from the monitoring and servicing segment which has experienced an estimated compound annual growth rate of 7.2% over the past ten years. We believe we are positioned to capitalize on growth opportunities in this industry because: The highly fragmented nature of the industry creates significant opportunity for consolidation. Of the over 8,000 active security alarm companies, the vast majority are small local operations, with fewer than 100 estimated to have RMR of more than $200,000. Increasingly onerous licensing requirements and other factors, such as competitive sales and installation pricing and the relatively high fixed costs of operating a central monitoring facility, make it difficult for smaller companies to profitably expand. Following our reorganization, we believe that based on RMR we are among the 25 largest U.S. companies in our industry. We currently operate in 46 states, where we possess all required state and local jurisdiction licenses. Our existing, established, scalable infrastructure is capable of servicing several hundred thousand customers. Our experienced leadership team is headed by former ADT Security senior executives who have successfully executed business plans such as the one we have developed. We acquired most of our account portfolio from Alarm Funding, LLC, or Alarm Funding. We receive service fees from Security Funding, LLC, or Security Funding. Since neither Alarm Funding nor Security Funding has acquired accounts since 2008, the RMR from the account portfolio received from Alarm Funding and the Security Funding service fees have naturally declined and will continue to do so through account attrition, as described below. Furthermore, Security Funding intends to sell its account base, which may result in our loss of revenue related to servicing these accounts, which currently represents 10% of our revenue. Consequently, we plan to grow our business by driving RMR growth and profitability through the direct acquisition of accounts, leveraging our currently underutilized servicing platform and gaining additional operational efficiencies associated with higher geographic concentrations. Our telecommunications facilities can accommodate a significantly greater volume of alarm signals and AMENDMENT NO. 1 TO FORM S-1 REGISTRATION STATEMENT Under The Securities Act of 1933 Table of Contents inbound voice calls, and our monitoring center currently has unutilized work stations. As a result, we believe we can service several hundred thousand additional customers at nominal additional cost. Our business plan, which is similar to the strategy our executive management team has successfully executed in prior senior roles in our industry, encompasses: Strategic purchases of local or regional alarm companies (including their accounts), some of which may then become branch sales and installation offices for us; The establishment of company-owned branch sales, installation and service offices in markets where account densities warrant and where we have not yet acquired an operation thus creating (a) the internal sales capability to capture the full value associated with account re-signs, transfers, add-ons, upgrades and referrals (which our capital structure has heretofore hindered) and (b) greater efficiencies in field service through utilization of company-employed service technicians; and The introduction of a program to acquire accounts from a network of independent dealers who will regularly sell to us the monitoring contracts, or accounts, for customers to whom they have sold and installed alarm systems; We intend to use the net proceeds from this offering primarily to fund these acquisition activities, to the extent permitted by our secured credit facility. The terms of our secured credit facility place significant restrictions on our management's ability to use the proceeds of this offering to carry out our proposed business strategy. Six and one-half million dollars of the proceeds from this offering will be deposited in a restricted bank account which will be pledged as collateral for outstanding indebtedness under our secured credit facility. Amounts in this restricted bank account will not be available to us for any purpose. The remaining net proceeds of this offering will be deposited in a second bank account pledged as collateral under our secured credit facility, which will be available to us for such purposes as are permitted under our secured credit facility, including to acquire customer accounts, invest in infrastructure and technology, and as ordinary and customary working capital. The amount required to be deposited into the restricted account shall not exceed $6.5 million through May 31, 2011. Thereafter, if the value of the collateral pledged as security for our obligations under our secured credit facility declines, we will be required to deposit additional amounts into the restricted bank account in an amount equal to the difference between the outstanding principal amount under our secured credit facility and the value of such collateral, which could deplete all or a portion of the remaining net proceeds of this offering and limit our ability to execute our proposed business strategy. If we default under our secured credit facility, the secured lenders may demand payment in full of all amounts outstanding under the secured credit facility and all or a portion of such proceeds may be used to pay such outstanding amounts, either voluntarily by us or by the secured lenders enforcing their security interest in the cash held in such bank accounts. If this occurs, we may have insufficient cash to continue operations. The consolidated financial statements and summaries of financial data included in this prospectus reflect the operations of Alarm Funding from January 1, 2008 and of our wholly-owned subsidiary, CastleRock Security, Inc., since its inception in November 2008, a period of time in which no growth or account replacement activities were undertaken. As a result of our reorganization (see "Corporate History and Information"), prospectively our financial statements will reflect the results of operations of CastleRock Security Holdings, Inc. and its subsidiary, CastleRock Security, Inc. For the year ended December 31, 2009, our net loss was $26.1 million, although we generated earnings before interest, taxes, depreciation and amortization, or EBITDA (a non-GAAP measure) of $16.6 million on net revenue of $38.2 million. For the nine months ended September 30, 2010, our net loss was $ 22.5 million, although we generated EBITDA of $8.6 million on net revenue of CASTLEROCK SECURITY HOLDINGS, INC. (Exact name of Registrant as specified in its charter) Delaware (State or other jurisdiction of incorporation or organization) 7382 (Primary Standard Industrial Classification Code Number) 27-3640588 (I.R.S. Employer Identification Number) CastleRock Security Holdings, Inc. 2101 S. Arlington Heights Road, Suite 150 Arlington Heights, Illinois 60005 (847) 768-6300 (Address, including zip code, and telephone number, including area code, of Registrant's principal executive offices) Table of Contents
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001504463_geotag-inc_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001504463_geotag-inc_prospectus_summary.txt
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+PROSPECTUS SUMMARY This summary highlights certain information contained elsewhere in this prospectus. This summary does not contain all of the information you should consider before investing in our common stock. You should carefully read the entire prospectus, including Risk Factors and our financial statements and related notes, before you decide whether to invest in our common stock. Investing in our common stock involves risks. See Risk Factors. All dollar amounts referred to in this prospectus are in U.S. dollars unless otherwise indicated. Any discrepancies in the tables included herein between the amounts listed and the totals thereof are due to rounding. Unless otherwise indicated or unless the context otherwise requires, all references in this document to we, us, our, the Company and similar expressions are references to GEOTAG INC. Our Business We are a geo-location technology provider with headquarters in Plano, Texas. Our technology is based on fundamental technology described in U.S. Patent Number 5,930,474, which we own and refer to in this prospectus as the 474 Patent, entitled Internet Organizer for Accessing Geographically and Topically Based Information. This location-based technology, which we refer to in this prospectus as the GEOTAG Technology, is a spatial information management technology that makes possible a range of location-enabled online applications, and can be used by third-party, location-based applications and geography-reliant systems and infrastructures. Companies providing these online applications will be able to license the GEOTAG Technology from us in order to interactively and dynamically retrieve data from a database and associate retrieved data with a location. GEOTAG Technology, in brief, makes effective and efficient online geographic differentiation possible. We believe that geographic information is pervasive in today s information-centric environment and that the prevalence of business systems designed to exploit geography suggests the importance of spatial information management. The determination of location is, in our opinion, a fundamental requirement in many online activities, and is an increasingly attractive feature for a variety of recreational and business applications. Furthermore, determination of location is a common dimension of almost all business information and an important element for many business decisions. Integrating location into applications enables organizations to make better decisions, respond to customers more effectively, and reduce costs. For consumers, geographically served information is more useful, easier to access and timelier to act on. We believe that the more targeted data and information is the more relevant it is, and, in turn, it can be used more efficiently and cost effectively than broadly organized data and information. The patent application based on this technology was filed with the United States Patent and Trademark Office, or USPTO, on January 31, 1996, and the 474 Patent was subsequently issued on July 27, 1999. The GEOTAG business, including the 474 Patent and the GEOTAG trademark, was purchased by Ubixo Limited (formerly known as M2 Global Ltd.), an Antigua company and leading provider of software for electronic payment, in February 2009. In this prospectus, we refer to Ubixo Limited from time to time as Ubixo. Spin-Off from Ubixo Limited and Purchase of the 474 Patent On July 1, 2010, we were formed as a subsidiary of Ubixo. On July 12, 2010, we were spun off from Ubixo as a stand-alone, independent operating entity. The GEOTAG business was a non-core business for Ubixo, and thus Ubixo spun us off primarily to allow Ubixo management to focus on its core business lines, while giving us, as a separated entity, the ability to devote the attention necessary to maximize the value of the GEOTAG business for our stockholders. In connection with the spin-off, Ubixo transferred the GEOTAG business, including the 474 Patent and GEOTAG trademark, to us in exchange for our assumption of certain Ubixo Table of Contents EXPLANATORY NOTE This Registration Statement contains two prospectuses as set forth below: A prospectus, which we refer to from time to time as the Primary Offering Prospectus, to be used for the public offering by the Registrant of up to 287,500 shares of the Registrant s common stock, through the underwriter named on the cover page of the Primary Offering Prospectus on a firm commitment basis. A prospectus, which we refer to from time to time as the Resale Prospectus, to be used for the resale from time to time of up to 20,913,126 shares of the Registrant s common stock by certain selling stockholders of the Registrant. The Resale Prospectus is substantively identical to the Primary Offering Prospectus, except for the following principal differences: they contain different outside and inside front covers; they contain different Offering sections in the Prospectus Summary section; they contain different Use of Proceeds sections; the Capitalization and Dilution sections from the Primary Offering Prospectus are deleted from the Resale Prospectus; a Selling Stockholder section is included in the Resale Prospectus; the Underwriting section from the Primary Offering Prospectus is deleted from the Resale Prospectus and a Plan of Distribution is inserted in its place; and the outside back cover of the Primary Offering Prospectus is deleted from the Resale Prospectus. The Registrant has included in this Registration Statement, after the financial statements, a set of alternate pages to reflect the foregoing differences of the Resale Prospectus as compared to the Public Offering Prospectus. Table of Contents indebtedness and 132,756,448 shares of our common stock, which Ubixo subsequently distributed pro-rata to the shareholders of Ubixo as a dividend. Each shareholder of Ubixo received two of our shares for each share that they held in Ubixo. Ubixo had not generated any revenues from the 474 Patent prior to the spin-off. Industry and Market Opportunity We believe there are a number of licensing opportunities in the so called online yellow pages industry for our 474 Patent. Online yellow pages, also referred to as internet yellow pages, are online versions of traditional printed directories that offer listings based on a geographic area. A subset of the online yellow pages is known as a local search directory which provides content with the added ability to refine the search to find the needed service. Local search directories prioritize local businesses in its results rather than the results being dominated by regional or national companies. Certain providers of internet yellow pages offer online advertising. With more and more geographic data coming online through companies, organizations and consumers, we believe there is an increasing need for geographic data management. We also believe that the demand for online geo-location information will continue to grow. Simba Information, a media industry forecast and analysis firm, reports that internet yellow pages spending increased approximately 17.4% to $1.83 billion in 2009, accounting for 11.1% of total yellow pages market revenue (see Press Release, Simba Information, Online Yellow Pages Markets 2009-2010, December 4, 2009). Simba Information also projects that internet yellow pages revenue will increase to $3.06 billion by 2012, accounting for 20.1% of the total yellow pages market (see Press Release, Simba Information, Online Ad Sales Capture 20.1% of Yellow Pages Market by 2012, October 26, 2010). In addition, BIA/Kelsey, which advises companies in the local media space, forecasts that spending on online interactive media in the U.S. will grow from $15.2 billion in 2009 to $36.7 billion in 2014, representing a compound annual growth rate of 19.3% over the next four years (see Press Release, BIA/Kelsey, BIA/Kelsey Forecasts U.S. Local Advertising Revenues to Reach $144.9B in 2014, February 22, 2010). In addition to its potential growth, the local online ad market can also generate higher than average margins. BIA/Kelsey s research indicates that advertisers are willing to pay a premium for local online ads, anywhere from 20% to 100%, depending on the geography and vertical (see Online Article, eMarketer.com, Low Growth, High Value for Local Online Ads, October 20, 2009). In addition to licensing opportunities in the online yellow pages industry, we are also focused on licensing opportunities with companies whose websites contain a geography-specific locator function (also known as a product locator, dealer locator or store locator). The companies whose websites utilize this function span a variety of industrial sectors. This function allows visitors of a company s website to conveniently find the closest location at which they can buy the company s particular products or services. The locator function may be found on the websites of manufacturers, wholesalers, retailers, and service providers. While the focus of our patent enforcement and licensing strategy is currently on companies operating in the online yellow pages industry and companies whose websites contain a geography specific locator function, we expect that, with location-based information management capabilities commercially viable in a wide range of products and services, the market for our patented technology will expand into new industries. We are currently performing research to define these industries. Our goal is to take advantage of what we see as a trend towards geographically relevant information management and to expand our licensing business into potentially high-growth markets. Our objective is to be a leader in location-based services and information technology by actively developing and promoting license relationships in geo-location information technology market verticals. Our Strategy and Patent Licensing Business Model By virtue of our ownership of the 474 Patent, we consider ourselves an early entrant and leader in the development and commercialization of location-based technology. We intend to vigorously protect our patented Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell the securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. Subject to completion, dated January 31, 2011 PRELIMINARY PROSPECTUS 250,000 Shares Common Stock This is the initial public offering of shares of common stock, par value $0.01 per share, of GEOTAG INC. We are offering 250,000 shares of our common stock. Prior to this offering, there has been no public market for our common stock. The initial public offering price of our common stock will be $6.25 per share. We have applied to have our common stock approved for listing on The Nasdaq Global Market under the symbol GTG.
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@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary does not contain all of the information that is important to you. You should read the entire prospectus, including the Risk Factors and our consolidated financial statements and related notes appearing elsewhere in this prospectus before making an investment decision. Our Business Swisher Hygiene, Inc. provides essential hygiene and sanitation solutions to customers throughout much of North America and internationally through its global network of company owned operations, franchises and master licensees. These solutions include essential products and services that are designed to promote superior cleanliness and sanitation in commercial environments, while enhancing the safety, satisfaction and well-being of employees and patrons. These solutions are typically delivered by employees on a regularly scheduled basis and involve providing our customers with: (i) consumable products such as soap, paper, cleaning chemicals, detergents, and supplies, together with the rental and servicing of dish machines and other equipment for the dispensing of those products; (ii) the rental of facility service items requiring regular maintenance and cleaning, such as floor mats, mops, bar towels and linens; (iii) manual cleaning of their facilities; and (iv) solid waste collection services. We serve customers in a wide range of end-markets, with a particular emphasis on the foodservice, hospitality, retail, industrial, and healthcare industries. In addition our solid waste collection services provide services primarily to commercial and residential customers through contracts with municipalities or other agencies. Prospectively, we intend to grow in both existing and new geographic markets through a combination of organic and acquisition growth. However, we will continue to focus our investments towards those opportunities which will most benefit our core businesses, chemical and waste collection services. As of July 15, 2011, we have company owned operations and franchise operations located throughout the United States and Canada and have entered into 10 Master License Agreements covering the United Kingdom, Ireland, Portugal, the Netherlands, Singapore, the Philippines, Taiwan, Korea, Hong Kong/Macau/China, and Mexico. We are a Delaware corporation, originally organized in Canada in 1994. Our principal executive offices are located at 4725 Piedmont Row Drive, Suite 400, Charlotte, North Carolina, 28210. On November 1, 2010, Swisher Hygiene redomiciled to Delaware from Canada, where it had been a publicly-traded corporation, listed on the TSX under the name CoolBrands International Inc. ( CoolBrands ), and trading under the symbol COB. We refer to this event as the Redomestication. On November 2, 2010, one day after completion of the Redomestication, CoolBrands Nevada, Inc. ( CoolBrands Nevada ), a wholly-owned subsidiary of Swisher Hygiene, merged with and into Swisher International, with Swisher International continuing as the surviving corporation. We refer to this event as the Merger. CoolBrands was a Canadian company that historically focused on marketing and selling a broad range of ice creams and frozen snacks. Since the end of the 2005 financial year, subsidiaries of CoolBrands disposed of a majority of CoolBrands business operations. Since that time, CoolBrands principal operations consisted of the management of its cash resources and reviewing potential opportunities to invest such cash resources. CoolBrands held $61,850,226 in cash and cash equivalents as of the closing date of the Merger. In the Merger, the former stockholders of Swisher International received 57,789,630 shares of Swisher Hygiene common stock, representing, on a fully diluted basis, a 48% ownership interest in Swisher Hygiene at such time. The stockholders of CoolBrands retained 56,225,433 shares of Swisher Hygiene common stock, representing, on a fully diluted basis, a 52% ownership interest in Swisher Hygiene at such time. 55,789,632 of the shares issued to former shareholders of Swisher International are subject to lock-up agreements. As a result of the Merger, Swisher International became a wholly-owned subsidiary of Swisher Hygiene. Upon completion of the Merger and the Redomestication, Swisher Hygiene inherited the reporting issuer status of CoolBrands. Swisher Hygiene s shares of common stock began trading on the TSX under the symbol SWI on November 4, 2010. As CoolBrands was a reporting issuer (or equivalent) in each of the provinces of Canada, Swisher Hygiene became a reporting issuer in each of the provinces in Canada. On November 9, Table of Contents The information in this prospectus is not complete and may be changed. The selling stockholders may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION DATED AUGUST 5, 2011. 10,059,068 Shares SWISHER HYGIENE INC. The selling stockholders may offer and sell from time to time up to an aggregate of 10,059,068 shares of Swisher Hygiene Inc. common stock that they own. These shares include up to 201,925 shares issuable upon the conversion of outstanding promissory notes. For information concerning the selling stockholders and the manner in which they may offer and sell shares of our common stock, see Selling Stockholders and Plan of Distribution in this prospectus. We are not selling any securities under this prospectus and we will not receive any proceeds from the sale by the selling stockholders of their shares of common stock. Our common stock trades on the NASDAQ Global Market ( NASDAQ ) and the Toronto Stock Exchange ( TSX ). On August 4, 2011, the last reported sales price of our common stock on the NASDAQ was $3.96 per share. On August 4, 2011, the last reported sale price for our common stock on the TSX was $3.99 per share (in U.S. dollars). Investing in the shares involves risks. See Risk Factors, beginning on page 4. You should rely only on the information contained in this prospectus. We have not authorized any dealer, salesperson or other person to provide you with information concerning us, except for the information contained in this prospectus. The information contained in this prospectus is complete and accurate only as of the date on the front cover page of this prospectus, regardless of the time of delivery of this prospectus or the sale of any common stock. This prospectus is not an offer to sell these securities and we are not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The date of this prospectus is , 2011. Table of Contents 2010, we filed a Registration Statement on Form 10 (the Form 10 ) with the Securities Exchange Commission ( SEC ). The Form 10 was deemed effective on January 10, 2011, and since that date, we have been a U.S. reporting company, subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the Exchange Act ), and the rules and regulations thereunder. On February 2, 2011, we began trading on NASDAQ under the ticker symbol SWSH. Our common stock is currently listed on both the NASDAQ and TSX exchanges. All references in this registration statement to Swisher, Swisher Hygiene, the Company, we, us, and our refer to Swisher Hygiene Inc. and its consolidated subsidiaries, except where the discussion relates to times or matters occurring before the Merger, as defined below, in which case these words, as well as Swisher International, refer to Swisher International, Inc. and its consolidated subsidiaries. Table of Contents Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001504912_hengyi_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001504912_hengyi_prospectus_summary.txt
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@@ -0,0 +1,230 @@
+Summary
+ This summary highlights selected information contained elsewhere in this prospectus. This summary does not contain all the information that you should consider before investing in the common stock. You should carefully read the entire prospectus, including Risk Factors , Management s Discussion and Analysis of Financial Condition and Results of Operations and the Financial Statements, before making an investment decision. The terms "Lyons Liquors" "we," "us" and "our" as used in this prospectus refer to Lyons Liquors Inc.
+ We plan to enter the retail liquor industry, specifically we intend to own and operate a premier chain of retail liquor stores under the Lyons Liquors brand. We have not yet commenced operations and currently are in the process of developing our brand and determining the market for our services, developing a business marketing plan and capital formation. Our day to day operations consist or working on these to ensure effective, efficient and timely completion. Once we have raised sufficient capital we will begin our operations. However, there is no guarantee that we will be successful in raising the required capital. 
+ We are currently a development stage company which means that we dedicate a majority of our time towards activities required to keep developing our business plan. We are currently engaging in corporate compliance activities, brand development, capital formation and real estate outlook. Corporate Compliance activities include managing corporate minutes, supporting our attorneys with documentation required for public filings, supporting all accounting and audit document requirements, managing compliance issues and documentation support. Brand Development activities entail, marketing our brand with partners, developing a channel sales program or channel partner program, to participate with other industry leaders for branding opportunities. Currently we have yet to engage in any brand development agreements or partnerships with any such companies to promote our brand. We currently have not identified any partners for this specific purpose. As well as exploring opportunities that entail co-branding and marketing in advertising and trade show events. Capital Formation activities entail the proposed development of exploring the possibilities of how to raise capital to open our first store location. Syndicated opportunities, investment opportunities and exploring public market capital avenues. Real Estate outlook activities entail us scouting and reviewing possible store locations, demographic studies, research reports on localities, retail driven areas, exploring and discussing with commercial real estate brokers on possible opportunities for shuttered stores, new stores, new construction, and existing options. Specifically, we will partner with commercial real estate companies to assist in sourcing open store locations, new construction, auctioned sites, shuttered stores, and development opportunities with retail store developers. 
+ We will require additional financing outside of this offering to open a store or more than one store. At this time we do not have a timeline or have not identified such an event timeline as to when we will apply for licensure, commence operations as a single store or several stores. We have not identified a timeline as to when we anticipate signing our first lease to open our first store. The offering proceeds, even at 100%, will not be adequate to open any single store at this time and we will need to raise additional capital. There is no assurance that we can and will be successful in raising any additional capital or necessary capital to open a single store. At this time there is no specific timeline but we may engage in capital raising activities in 2011 for such specific purposes. If we are not able to obtain such funding, raise additional capital to meet the requirements of opening a storefront, then our business may fail due to a lack of funding to commence operations and thus investors could lose their entire investment if our business plan is unsuccessful.
+ We are a development stage company and to date we have received no revenues. We hope to recognize revenues after we open our first retail store. Our independent auditors have raised substantial doubts as to our ability to continue as a going concern without significant additional financing. Our management estimates that we will need to raise a minimum of $75,000 over the next twelve (12) months to commence and execute our business strategy, which includes the opening of our first retail store, which is currently under planning and development. We estimate that it will take a minimum of twelve (12) months to execute our development strategy. We are not a blank check company as defined by Rule 419 of the Act because we have a clear business objective of becoming an owner operator of retail liquor stores. At this time we have no plans, arrangements, commitments or understandings to engage in a merger or acquisition with another company. Our objective is to develop our business of becoming an owner operator of a chain of retail liquor stores. Our business may fail due to a lack of funding and thus investors could lose their entire investment.
+ The Offering: 
+ 
+ Securities Being Offered 
+ Up to 1,000,000 shares of common stock in a direct public offering, on a self-underwritten, best efforts basis, as well as 160,000 shares being offered by our selling shareholders. 
+
+ Offering Price 
+ The selling shareholders will sell our shares at a fixed price of $0.10 per share for the duration of the offering . We determined the offering price by considering the last sale price of our common stock to investors. In addition, we are offering up to 1,000,000 shares of our common stock, at a fixed price of $0.10 per share, in a direct public offering, with no minimum, on a self-underwritten, best efforts basis. 
+
+ Terms of the Offering 
+ The selling stockholders may offer their shares through public or private transactions, on or off OTCBB, at a fixed price of $0.10 per share. We will pay all expenses of registering the securities, estimated at approximately $25,000. In addition, we are offering up to 1,000,000 shares of our common stock, at a fixed price of $0.10 per share , in a direct public offering, with no minimum, on a self-underwritten, best efforts basis, which means that our officer and director will attempt to sell the shares, without any involvement of underwriters or broker-dealers . 
+
+ Termination of the Offering 
+ The offering will conclude when all of the 160,000 shares of common stock have been sold, the shares no longer need to be registered to be sold due to the operation of Rule 144 or we decide at any time to terminate the registration of the shares at our sole discretion. In any event, the offering shall be terminated no later than two years from the effective date of this registration statement. In addition, our primary offering will be open for a period of one hundred and eighty (180) days from the effective date of this prospectus, unless extended by our board of directors for an additional 90 days. 
+
+ Securities Issued And to be Issued 
+ 10,160,000 shares of our common stock are issued and outstanding as of the date of this prospectus. 160,000 shares will be sold by existing shareholders and 1,000,000 shares will be sold by us in a direct public offering, with no minimum, on a self-underwritten, best efforts basis, which means that our officer and director will attempt to sell the shares, without any involvement of underwriters or broker-dealers. 
+
+ Use of Proceeds 
+ We will not receive any proceeds from the sale of the common stock by the selling shareholders. However, we will receive proceeds from the shares of our common stock that we sell we sell pursuant to our Direct Public Offering. See Use of Proceeds. 
+
+ Market for the common stock
+ There is currently no public market for the shares of our common stock. There can be no assurance that a market maker will agree to file the necessary documents with FINRA to allow our shares of common stock to be quoted on the OTCBB, nor can there be any assurance that such an application for quotation will be approved if filed. FINRA operates the OTCBB. We have agreed to bear the expenses relating to the registration of the shares for the Selling Stockholders.
+
+ 
+ 
+ 
+ 5 
+ 
+
+ Summary Financial Information 
+ The following audited financial information summarizes the more complete historical financial information at the end of this prospectus.
+ 
+ 
+ March 31, 2011
+ (unaudited)
+ 
+ As of September 30, 2010
+ (Audited)
+
+ Balance Sheet 
+ 
+ 
+ 
+ 
+
+ Total Assets 
+ $
+ 11,304
+ $ 
+ 13,533
+
+ Total Liabilities 
+ $
+ 29,212
+ $ 
+ 17,212
+
+ Stockholders Deficit 
+ $
+ (17,908)
+ $ 
+ (3,679)
+
+ 
+ 
+ For the six months 
+ended March 31, 2011
+ (unaudited)
+ 
+ Period from December 17, 2009 
+ (date of inception) to
+ September 30, 2010 (Audited)
+
+ Income Statement 
+ 
+ 
+ 
+ 
+
+ Revenue 
+ $
+ -
+ $ 
+ -
+
+ Total Operating Expenses 
+ $
+ 14,229
+ $ 
+ 29,679
+
+ Net Loss 
+ $
+ (14,229)
+ $ 
+ (29,679)
+
+ 
+ 
+ Risk Factors 
+ 
+ In addition to the other information provided in this Prospectus, you should carefully consider the following risk factors in evaluating our business before purchasing any of our common stock. 
+ Our lack of operating history makes it difficult for us to evaluate our future business prospects and make decisions in implementing our business plan. You are unable to determine whether we will ever become profitable, which increases your investment risk.
+ We were incorporated on December 17, 2009. We have no operating history. Our business plan is speculative and unproven. There is no assurance that we will be successful in executing our business plan or that, even if we successfully implement our business plan, we will ever generate revenues or profits, which makes it difficult to evaluate our business. As a consequence, it is difficult, if not impossible, to forecast our future results based upon our historical data. Because of the uncertainties related to our lack of historical operations, we may be hindered in our ability to anticipate and timely adapt to increases or decreases in sales, revenues, or expenses. If we make poor operational decisions in implementing our business plan, we may never generate revenues or become profitable or incur losses, which may result in a decline in our stock price. 
+ There is substantial doubt about our ability to continue, as a going concern, as a result of our lack of revenues and financial resources, and if we are unable to generate significant revenue or secure financing, we may be required to cease or curtail our operations.
+ Our lack of operating history and financial resources raise substantial doubt about our ability to continue as a going concern. The financial statements do not include adjustments that might result from the outcome of this uncertainty, and if we are unable to generate significant revenue or secure financing, we may be required to cease or curtail our operations. If we do not or commence our operations, open retail stores, secure financing, and related activities or if we do not secure funding to implement our business plan, we estimate current available financial resources will sustain our operations only through the next few months, and then only if continued funding by the management of the company.
+ 
+ 
+ 6 
+ 
+
+ Because we will need additional capital to implement our business plan and may not be able to obtain sufficient capital, we may be forced to limit the scope of our operations, and our revenues may be reduced.
+ In connection with implementing our business plans, we will experience increased capital needs and accordingly, we may not have sufficient capital to fund our future operations without additional capital investments. Our capital needs will depend on numerous factors, including the following:
+ 
+ - our profitability;
+
+ 
+ - our ability to secure financing and acquire inventory and open new stores;
+
+ 
+ - the ability to generate revenues from the sale of product
+
+ 
+ - the ability to attract and retain customers.
+
+ We cannot assure you that we will be able to obtain capital in the future to meet our needs. We have no sources of financing identified. If we cannot obtain additional funding, we may be required to:
+ 
+ - limit our ability to implement our business plan;
+
+ 
+ - limit our marketing efforts; and
+
+ 
+ - decrease or eliminate capital expenditures. 
+
+ Even if we do find a source of additional capital, we may not be able to negotiate terms and conditions for receiving the additional capital that are acceptable to us. Any future capital investments could dilute or otherwise adversely affect the holdings or rights of our existing shareholders. In addition, new equity or convertible debt securities issued by us to obtain financing could have rights, preferences and privileges senior to our Common Stock. Any additional financing may not be available to us, or if available, may not be on terms favorable to us.
+ We Will Require Financing To Achieve Our Current Business Strategy And Our Inability To Obtain Such Financing Could Prohibit Us From Executing Our Business Plan And Cause Us To Slow Down Our Expansion or Cease Our Operations.
+ We will need to raise a minimum of $75,000 over the next twelve months through public or private debt or sale of equity to execute our business plan to become a revenue generating company. Such financing may not be available as needed. Even if such financing is available, it may be on terms that are materially adverse to your interests with respect to dilution of book value, dividend preferences, liquidation preferences or other terms. If we are unable to obtain this financing on reasonable terms, we would be unable to hire the additional employees needed to execute our business plan and we would be forced to delay or scale back our plans for expansion. This would delay our ability to get our operations to profitability and could force us to cease operations. In addition, such inability to obtain financing on reasonable terms could have a material adverse effect on our business, operating results or financial condition.
+ Moreover, in addition to monies needed to commence operations over the next twelve months, we anticipate requiring additional funds in order to execute any future plans for growth. No assurance can be given that such funds will be available or, if available, will be on commercially reasonable terms satisfactory to us. There can be no assurance that we will be able to obtain financing if or when it is needed on terms we deem acceptable.
+ 
+ 
+ 7 
+ 
+
+ We are Part of a highly competitive and Fragmented Liquor Industry. Individual states have different laws regulating liquor stores, complicating the ability to form national chains.
+ We will be competing directly with grocery stores, warehouse clubs, convenience stores and gas stations, and indirectly with restaurants, bars, and other establishments that serve alcohol. There are over 30,000 liquor stores making product pricing very competitive. Our profitability as a company will depend on effective marketing, diverse inventory and competitive pricing. There is no assurance that we will be able to price our product competitively, or have the purchasing power that large companies enjoy. The industry is very labor and capital intensive.
+ Liquor Store Sales Decrease Slightly.
+ Sales for beer, wine and liquor stores fell by 0.05 percent in June 2009 compared to June 2008. For the first six months of 2009, beer, wine and liquor stores have seen sales 2.3 percent higher than the same period the previous year. Alcohol sales were considered fairly recession resistant, but not anymore. Liquor stores are facing increasing competition from grocery stores and warehouse clubs. There can be no assurance that we will be able to compete against established brands, large independent liquor stores, large grocery chains and warehouse clubs.
+ Slow Market Growth.
+ The beverage market for beer is mature: per capita consumption of beer declined or was flat for most of the first decade of the 2000s. Decreased beer consumption offset increases in wine and liquor consumption as a whole. Annual beer consumption in 2007 rose nearly 0.5 percent to 21.8 gallons per capita, which brought it to the same level as in 1995. Public education on responsible drinking, stricter drunk driving laws, and programs targeting underage drinking all contribute to flat category consumption rates. There can be no assurance that our retail store sales will increase due to increased consumption.
+ Competition from Other Retailers.
+ Liquor stores face intense competition from grocery stores, warehouse clubs, convenience stores, gas stations, and (for some states) Internet retailers. While many alternative channels have limited alcoholic beverage selections, most offer either convenience or low pricing. Wal-Mart plans to quintuple alcohol sales to$5 billion between 2005 and 2010, primarily by pushing liquor. Many grocery stores and warehouse clubs are challenging liquor stores on selection by expanding liquor departments (sometimes just seasonally) and offering more products. Some alternative retailers are adding sommeliers to staff. There can be no assurance that we will not be affected by the Wal-Mart effect. There can be no assurance that we can adequately compete against such large liquor chains, grocery chains and warehouse clubs on price, value, purchasing power and customer service. As such this could delay, postpone, shutter or end our expansion plans. This could also cause us to close store locations which could drastically decrease revenues and profits. This could also mean we may have to cease operations and you could lose your investment.
+ Complying with Government Regulations.
+ Federal, state and local governments heavily regulate the alcoholic beverage industry. Multiple restrictions limit operations, and changing regulations can greatly affect business. Noncompliance, especially violations concerning underage purchases, can result in costly fines and temporary closure. In the worst case, liquor stores in general can lose their license, resulting in permanent closure. There can be no assurances that we will not encounter compliance issues with state or local governments in the regions we plan to operate or open stores. Government regulation can as such cause us to cease our operations. If we cannot operate profitably, we may have to suspend or cease our operations.
+ Dependence on Consumer Spending and Customers.
+ Consumer spending and a healthy economy drive sales of alcohol, especially high-end products. During the last and current recession, sales growth in liquor stores slowed while per capita consumption remained constant, reflecting consumers' increased price consciousness. Consumers are more likely to shop sales or trade down from premium products during tough economic times. Our success depends on our ability to attract customers on cost-effective terms. If we are unsuccessful at attracting a sufficient number of clients, our ability to get repeat customers and our financial condition will be harmed.
+ 
+ 
+ 8 
+ 
+
+ High Excise Taxes.
+ State and federal excise taxes add incremental cost above wholesale prices, affecting liquor stores' margins and pricing. Taxes make up a large percentage of the retail price for alcohol, and many state governments raise excise taxes to cover budget shortfalls. Excise taxes differ by beverage, and are generally higher for liquor versus wine and beer. Therefore this could have a material adverse effect on our business, operating results or financial condition.
+ Seasonal Sales.
+ Weak seasonal sales can detrimentally affect our entire fiscal year. Consumption of wine and liquor increases during the winter holiday, when consumers tend to entertain more. Consumption of beer peaks during the summer, and during key events like the Super Bowl. Alternative retailers aggressively promote alcohol during key selling periods to capitalize on increased demand. There can be no assurances that our promotions would be a success thus negatively affecting our seasonal sales. This could have a material adverse effect on our company and our financial condition.
+ Direct to Consumer Internet Wine Sales Bypassing Liquor Store Retailers.
+ As more states allow Internet sales of wine, more consumers can buy wine directly from manufacturers, bypassing retailers. There can be no assurances that our customers will buy direct bypassing our stores therefore we would have declining revenues and profit. This could have a material adverse effect on our business, operating results or financial condition.
+ We Face Intense Competition And Our Inability To Successfully Compete With Our Competitors Will Have A Material Adverse Effect On Our Results Of Operation. 
+ The retail liquor industry is highly competitive. Many of our competitors have longer operating histories, greater brand recognition, broader service lines and greater financial resources and advertising budgets than we do. Many of our competitors have access to financing, volume purchasing deals and alliances. We intend to rely solely on concepts developed by Ms. Shefali Vibhakar, our CEO and director. There can be no assurance that we will build a strong proven brand or high volume store that will be available to support the products we will offer or allow us to seek expansion. There can be no assurance that we will be able to compete effectively in this marketplace.
+ Our lack of an established brand name and relative lack of resources could negatively impact our ability to effectively compete in the retail liquor industry, which could reduce the value of your investment.
+ We do not have an established brand name or reputation in the business of retail liquor store industry. We also have a relative lack of resources to conduct our business operations. Thus, we may have difficulty effectively competing with companies that have greater name recognition and financial resources than we do. Our inability to promote and/or protect our brand name may have an adverse effect on our ability to compete effectively in the market.
+ Because Our Auditors Have Issued A Going Concern Opinion, There Is Substantial Uncertainty We Will Continue Operations In Which Case You Could Lose Your Investment. 
+ Our auditors have issued a going concern opinion. This means that there is substantial doubt that we can continue as an ongoing business for the next twelve months. The financial statements do not include any adjustments that might result from the uncertainty about our ability to continue in business. As such we may have to cease operations and you could lose your investment.
+ If We Do Not Make A Profit, We May Have To Suspend Or Cease Operations. 
+ Because we are small and do not have much capital, we must limit our marketing to the existing business relationships of our CEO, Ms. Shefali Vibhakar. Because we will be limiting our marketing activities, we may not be able to attract enough vendors and customers to operate profitably. If we cannot operate profitably, we may have to suspend or cease our operations.
+ 
+ 
+ 9 
+ 
+
+ We Are Dependent On Our CEO, Ms. Shefali Vibhakar, To Guide Our Initial Operations and Implement Our Plan Of Operations. If We Lose Such Services We Will Have To Change Our Business Plan/Direction or Cease Operations. 
+ Our success will depend on the ability and resources of our CEO & President. If we lose the services of our CEO, we will be forced to either change our business plan and direction or cease operations. We have no written employment agreement with our CEO. We have not obtained any key man life insurance relating to our CEO. If we lose such services, we may not be able to hire and retain another CEO with comparable experience. As a result, the loss of Ms. Shefali Vibhakar s services could reduce our revenues. We have no written employment agreement or covenant not to compete with Ms. Shefali Vibhakar.
+ Our CEO, Ms. Shefali Vibhakar, has no experience in the Retail Beverage Industry and has limited business experience.
+ Our success will have an even greater degree of difficulty due to the fact our CEO has no previous experience in this industry. She will be gaining experience as we move forward, but has no previous experience from which to draw on past knowledge from. She also has limited business experience, and since our success depends greatly on the ability of our CEO & President, this could have an adverse effect on our Company.
+ Because insiders control our activities, they may cause us to act in a manner that is most beneficial to them and not to outside shareholders, which could cause us not to take actions that outside investors might view favorably. 
+ Our executive officers, directors and holders of 5% or more of our outstanding Common Stock beneficially own approximately 85% of our outstanding Common Stock. As a result, they effectively control all matters requiring director and stockholder approval; including the election of directors and the approval of significant corporate transactions, such as mergers and related party transactions. These insiders also have the ability to delay or perhaps even block, by their ownership of our stock, an unsolicited tender offer. This concentration of ownership could have the effect of delaying, deterring or preventing a change in control of our company that you might view favorably. 
+ 
+ Risks Relating To Our Common Stock 
+ 
+ The Offering Price Of The Shares Was Based On Our Last Sale Price of Our Common Stock to Investors, and Therefore Should Not Be Used As An Indicator Of The Future Market Price Of Our Shares. Since the Offering Price Bears No Relationship To The Actual Value Of The Company, It May Make Our Shares Difficult To Sell. 
+ Since our shares are not listed or quoted on any exchange or quotation system, the offering price of $0.10 per share for the shares was based on our last sale price of our common stock to investors. We did not consider our financial condition and prospects, our limited operating history or the general condition of the securities market when we determined our offering price. The offering price bears no relationship to the book value, assets or earnings of our company or any other recognized criteria of value. The offering price should not be regarded as an indicator of the future market price of the securities. 
+ Because There Is No Public Trading Market For Our Common Stock, You May Not Be Able To Resell Your Stock. 
+ There is currently no public trading market for our common stock. Therefore there is no central place, such as a stock exchange or electronic trading system, to resell your shares. If you do want to resell your shares, you will have to locate a buyer and negotiate your own sale in compliance with applicable federal and state securities laws. 
+ There Is No Assurance Of A Public Market Or That Our Common Stock Will Ever Trade On A Recognized Exchange or Quotation System. Therefore, You May Be Unable To Liquidate Your Investment In Our Stock. 
+ There is no established public trading market for our common stock. Our shares are not and have not been listed or quoted on any exchange or quotation system. There can be no assurance that a market maker will agree to file the necessary documents with FINRA, which operates the OTCBB, to create such listing or quotation, nor can there be any assurance that such an application would be approved if filed, or that a regular trading market will develop or that if developed, will be sustained. In the absence of a trading market, an investor may be unable to liquidate their investment.
+ If our common stock is quoted on the OTC Bulletin Board which may have an unfavorable impact on our stock price and liquidity.
+ We anticipate that our common stock will be quoted on the OTC Bulletin Board. The OTC Bulletin Board is a significantly more limited market than the New York Stock Exchange or NASDAQ system. The quotation of our shares on the OTC Bulletin Board may result in a less liquid market available for existing and potential stockholders to trade shares of our common stock, could depress the trading price of our common stock and could have a long-term adverse impact on our ability to raise capital in the future.
+ 
+ 
+ 10 
+ 
+
+ We may be subject to penny stock regulations and restrictions and you may have difficulty selling shares of our common stock.
+ The SEC has adopted regulations which generally define so-called penny stocks to be an equity security that has a market price less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exemptions. If our common stock becomes a penny stock, we may become subject to Rule 15g-9 under the Exchange Act, or the Penny Stock Rule. This rule imposes additional sales practice requirements on broker-dealers that sell such securities to persons other than established customers and accredited investors (generally, individuals with a net worth in excess of $1,000,000 or annual incomes exceeding $200,000, or $300,000 together with their spouses). For transactions covered by Rule 15g-9, a broker-dealer must make a special suitability determination for the purchaser and have received the purchaser s written consent to the transaction prior to sale. As a result, this rule may affect the ability of broker-dealers to sell our securities and may affect the ability of purchasers to sell any of our securities in the secondary market.
+ For any transaction involving a penny stock, unless exempt, the rules require delivery, prior to any transaction in a penny stock, of a disclosure schedule prepared by the SEC relating to the penny stock market. Disclosure is also required to be made about sales commissions payable to both the broker-dealer and the registered representative and current quotations for the securities. Finally, monthly statements are required to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stock.
+ There can be no assurance that our common stock will qualify for exemption from the Penny Stock Rule. In any event, even if our common stock were exempt from the Penny Stock Rule, we would remain subject to Section 15(b)(6) of the Exchange Act, which gives the SEC the authority to restrict any person from participating in a distribution of penny stock, if the SEC finds that such a restriction would be in the public interest.
+ FINRA Sales Practice Requirements May Limit A Stockholder's Ability To Buy And Sell Our Stock. 
+ FINRA has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer's financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may have the effect of reducing the level of trading activity and liquidity of our common stock. Further, many brokers charge higher transactional fees for penny stock transactions. As a result, fewer broker-dealers may be willing to make a market in our common stock, reducing a stockholder's ability to resell shares of our common stock.
+ Because we do not have an audit or compensation committee, shareholders will have to rely on the board of directors, which is not independent, to perform these functions. 
+ We do not have an audit or compensation committee comprised of independent directors. Indeed, we do not have any audit or compensation committee. These functions are performed by the board of directors as a whole. The sole member of the board of directors is not independent. Thus, there is a potential conflict in that board members who are management will participate in discussions concerning management compensation and audit issues that may affect management decisions. 
+ Our management has limited experience in managing the day to day operations of a public company and, as a result, we may incur additional expenses associated with the management of our company.
+ CEO Shefali Vibhakar is responsible for our operations and SEC reporting. The requirements of operating as a small public company are new to the management team and the employees as a whole. This will require us to obtain outside assistance from legal, accounting, investor relations or other professionals that could be more costly than planned. We may also be required to hire additional staff to comply with additional SEC reporting requirements and compliance under the Sarbanes-Oxley Act of 2002. Our failure to comply with reporting requirements and other provisions of securities laws could negatively affect our stock price and adversely affect our results of operations, cash flow and financial condition.
+ 
+ 
+ 11 
+ 
+
+ Although we believe that we currently have adequate internal control over financial reporting, we are exposed to risks from recent legislation requiring companies to evaluate internal control over financial reporting.
+ Section 404 of the Sarbanes-Oxley Act of 2002 ("Section 404") requires our management to report on the operating effectiveness of the Company's Internal Controls over financial reporting for the year ended September 30, 2010 and the period ended March 31, 2011 . We must establish an ongoing program to perform the system and process evaluation and testing necessary to comply with these requirements. We expect that the cost of this program will require us to incur expenses and to devote resources to Section 404 compliance on an ongoing basis.
+ It is difficult for us to predict how long it will take to complete Management's assessment of the effectiveness of our internal control over financial reporting for each year and to remediate any deficiencies in our internal control over financial reporting. As a result, we may not be able to complete the assessment and process on a timely basis. In the event that our Chief Executive Officer, Chief Financial Officer or independent registered public accounting firm determine that our internal control over financial reporting is not effective as defined under Section 404, we cannot predict how regulators will react or how the market prices of our shares will be affected.
+ 
+ Forward Looking Statements.
+ 
+ Some of the statements in this Prospectus are
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/CIK0001505124_berkshire_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001505124_berkshire_prospectus_summary.txt
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@@ -0,0 +1,1345 @@
+Summary Financial Information 
+
+The tables and information below are derived from our audited financial statements for the period from Inception (June 2, 2010) to November 30, 2010. Our working capital as at November 30, 2010 was $22,980.
+
+ 
+
+As of 
+
+November 30,2010
+
+(Audited)
+
+Balance Sheet 
+
+ 
+ 
+ 
+
+Total Assets 
+
+ 
+
+$
+
+ 23,254
+
+Total Liabilities 
+
+ 
+
+$
+
+ 274
+
+Stockholders Equity 
+
+ 
+
+$
+
+ 22,980
+
+ 
+
+Period from Inception (June 2, 2010) to
+
+November 30, 2010 (Audited)
+
+Income Statement 
+
+ 
+ 
+ 
+
+Revenue 
+
+ 
+
+$
+
+ -
+
+Total Expenses 
+
+ 
+
+$
+
+ 620
+
+Net Loss 
+
+ 
+
+$
+
+(620)
+
+Risk Factors related to our Business and Industry
+
+An investment in our common stock involves a high degree of risk. You should carefully consider the risks described below and the other information in this prospectus before investing in our common stock. If any of the following risks occur, our business, operating results and financial condition could be seriously harmed. We do not currently have a trading price for our common stock. If and when our common stock become eligible for trading on the Over-the-Counter Bulletin Board, the trading price could decline due to any of these risks, and you may lose all or part of your investment. 
+
+BECAUSE OUR AUDITORS HAVE ISSUED A GOING CONCERN OPINION, THERE IS SUBSTANTIAL UNCERTAINTY THAT WE WILL CONTINUE OPERATIONS IN WHICH CASE YOU COULD LOSE YOUR INVESTMENT.
+
+Our auditors have issued a going concern opinion. This means that there is substantial doubt that we can continue as an ongoing business for the next twelve months. The financial statements do not include any adjustments that might result from the uncertainty about our ability to continue in business. As such we may have to cease operations and you could lose your investment.
+
+7 | Page
+
+IF WE DO NOT OBTAIN ADDITIONAL FINANCING, OUR BUSINESS WILL FAIL.
+
+While on November 30, 2010, we had cash on hand of $23,254 we have accumulated a deficit of $620 in business development and administrative expenses. Our current cash reserves are not sufficient to meet our obligations for the next twelve-month period. We anticipate that the minimum additional capital necessary to fund our planned operations for the 12-month period will be approximately $5,800 and will be needed for general administrative expenses, business development, marketing costs, support materials and costs associated with being a publicly reporting company. We have not generated any revenue from operations to date. In order to expand our business operations, we anticipate that we will have to raise additional funding. If we are not able to raise the capital necessary to fund our business expansion objectives, we may have to delay the implementation of our business plan.
+
+We do not currently have any arrangements for financing. Obtaining additional funding will be subject to a number of factors, including general market conditions, investor acceptance of our business plan and initial results from our business operations. These factors may impact the timing, amount, terms or conditions of additional financing available to us. 
+
+We are not raising any money in this offering. The most likely source of future funds available to us is through the sale of additional shares of common stock or advances from our sole director.
+
+There is no assurance that any additional financing will be available or if available, on terms that will be acceptable to us. Failure to raise additional financing will cause us to go out of business. If this happens, you could lose all or part of your investment.
+
+WE HAVE A VERY LIMITED HISTORY OF OPERATIONS AND THERE IS NO ASSURANCE OUR FUTURE OPERATIONS WILL RESULT IN REVENUES OR PROFITABILITY. IF WE CANNOT GENERATE SUFFICIENT REVENUES TO OPERATE PROFITABLY, WE MAY SUSPEND OR CEASE OPERATIONS.
+
+We were incorporated on June 2, 2010, and our net loss since inception is $620, of which $376 is for bank charges, $60 for telephone charges and $184 is for miscellaneous charges. We have a very limited history of operations upon which an evaluation of our future success or failure can be made.
+
+To date, our business development activities have consisted solely of negotiating and executing a consulting agreement with Ogrodnictwo Piotr Walkowiak, a private Polish company. Potential investors should be aware of the difficulties normally encountered by development stage companies and the high rate of failure of such enterprises. 
+
+In addition, there is no guarantee that we will be able to expand our business operations. Even if we expand our operations, at present, we do not know precisely when this will occur.
+
+We cannot guarantee that we will be successful in generating revenues and profit in the future. Failure to generate revenues and profit will cause us to suspend or cease operations. If this happens, you could lose all or part of your investment.
+
+ 
+
+8 | Page
+
+WE FACE STRONG COMPETITION FROM LARGER AND WELL ESTABLISHED COMPANIES, WHICH COULD HARM OUR BUSINESS AND ABILITY TO OPERATE PROFITABLY.
+
+Our industry is competitive. There are many businesses specializing in consulting of commercial cultivation of white mushrooms in Poland and Europe and our services are not unique to their services. Even though the industry is highly fragmented, it has a number of large and well established companies, which are profitable and have developed a brand name. Aggressive marketing tactics implemented by our competitors could impact our limited financial resources and adversely affect our ability to compete in our market.
+
+WE CURRENTLY HAVE IDENTIFIED ONLY ONE POTENTIAL CUSTOMER. IF WE DO NOT ATTRACT NEW CUSTOMERS, WE WILL NOT MAKE A PROFIT, WHICH ULTIMATELY WILL RESULT IN A CESSATION OF OPERATIONS. 
+
+We currently have identified only one potential customer to use our service , a Poland based commercial mushroom cultivation company Ogrodnictwo Piotr Walkowiak . We have not identified any other customers and we cannot guarantee we ever will have any other customers. Even if we obtain new customers, there is no guarantee that we will generate a profit. If we cannot generate a profit, we will have to suspend or cease operations. 
+
+THE CONSULTING INDUSTRY OF COMMERCIAL WHITE MUSHROOM GROWERS MIGHT BE AFFECTED BY GENERAL ECONOMIC DECLINE AND THIS COULD ADVERSELY AFFECT OUR OPERATING RESULTS AND COULD LEAD TO LOWER REVENUES THAN EXPECTED.
+
+The consulting industry of commercial white mushrooms (agaricus bisporus) growers might be affected by general economic decline. We expect that this could adversely affect our operating results and could lead to lower revenues than expected if economic situation does not change for better.
+
+IF WE ARE UNABLE TO BUILD AND MAINTAIN OUR BRAND IMAGE AND CORPORATE REPUTATION, OUR BUSINESS MAY SUFFER. 
+
+We are a new company, having been formed and commenced operations only in 2010. Our success depends on our ability to build and maintain the brand image for our services. We cannot assure you, however, that any additional expenditure on advertising and marketing will have the desired impact on our services brand image and on customer preferences. Our relationships with all of our customers will be new and may be terminated at any time. We need to maintain and expand our relationships with potential users of our services and effectively manage these relationships. If we fail to successfully manage our relationships with our customers, to build and maintain our brand image and corporate reputation our business may suffer.
+
+PRICE COMPETITION COULD NEGATIVELY AFFECT OUR GROSS MARGINS.
+
+Price competition could negatively affect our operating results. To respond to competitive pricing pressures, we will have to offer our services at lower prices in order to retain or gain market share and customers. If our competitors offer discounts on certain services in the future, we will need to lower prices to match the competition, which could adversely affect our gross margins and operating results. 
+
+9 | Page
+
+BECAUSE OUR SOLE OFFICER AND DIRECTOR HAS OTHER BUSINESS INTERESTS, HE MAY NOT BE ABLE OR WILLING TO DEVOTE A SUFFICIENT AMOUNT OF TIME TO OUR BUSINESS OPERATIONS, CAUSING OUR BUSINESS TO FAIL. 
+
+Our sole officer sole director, Mr. Ireneusz Antoni Nawrot, will only be devoting limited time to our operations. Mr. Nawrot intends to devote approximately 30% (15 hours a week) of his business time to our affairs. Because our sole officer and director will only be devoting limited time to our operations, our operations may be sporadic and occur at times which are convenient to him. As a result, our operations may be periodically interrupted or suspended which could result in a lack of revenues and a possible cessation of operations. It is possible that the demands on Mr. Nawrot from his other obligations could increase with the result that he would no longer be able to devote sufficient time to the management of our business. In addition, Mr. Nawrot may not possess sufficient time for our business if the demands of managing our business increase substantially beyond current levels. And finally, we have not adopted a policy that expressly prohibits our sole officer and director Mr. Nawrot from having a direct or indirect financial interest in potential future opportunity or from engaging in business activities of the types conducted by us. As a result, in the future our sole officer and director Mr. Nawrot may favor his own interests over our interests and those of our shareholders, which could have a material adverse effect on our business and results of operations. 
+
+IF MR. NAWROT, OUR SOLE OFFICER AND DIRECTOR, SHOULD RESIGN OR DIE, WE WILL NOT HAVE AN OFFICER OR A DIRECTOR. THIS COULD RESULT IN OUR OPERATIONS SUSPENDING, AND YOU COULD LOSE YOUR INVESTMENT.
+
+We extremely depend on the services of our sole officer and director, Mr. Nawrot, for the future success of our business. The loss of the services of Mr. Nawrot could have an adverse effect on our business, financial condition and results of operations. If he should resign or die we will not have a chief executive officer. If that should occur, until we find another person to act as our chief executive officer, our operations could be suspended. In that event it is possible you could lose your entire investment.
+
+10 | Page
+
+BECAUSE OUR SOLE OFFICER AND DIRECTOR OWNS 66.52% OF OUR ISSUED AND OUTSTANDING COMMON STOCK, HE COULD MAKE AND CONTROL CORPORATE DECISIONS THAT MAY BE DISADVANTAGEOUS TO MINORITY SHAREHOLDERS.
+
+Our sole officer and director, Mr. Ireneusz Antoni Nawrot, owns approximately 66.52% of issued and outstanding shares of our common stock. Accordingly, he will be able to determine the outcome of all corporate transactions or other matters that require shareholder approval, including but not limited to, the election of directors, mergers, consolidations, and the sale of all or substantially all of our assets. He will also have the power to prevent or cause a change in control. The interests of our sole officer and director may differ from the interests of the other stockholders and thus result in corporate decisions that are disadvantageous to other shareholders.
+
+BECAUSE MR. NAWROT, OUR SOLE OFFICER AND DIRECTOR, IS NOT A RESIDENT OF THE UNITED STATES IT MAY BE DIFFICULT TO ENFORCE ANY LIABILITIES AGAINST HIM.
+
+Accordingly, if an event occurs that gives rise to any liability, shareholders would likely have difficulty in enforcing such liabilities because Mr. Ireneusz Antoni Nawrot, our sole officer and director resides outside the United States. If a shareholder desired to sue, the shareholder would have to serve a summons and complaint. Even if personal service is accomplished and a judgment is entered against a person, the shareholder would then have to locate assets of that person, and register the judgment in the foreign jurisdiction where assets are located.
+
+BECAUSE THE COMPANY S HEADQUARTERS ARE LOCATED OUTSIDE THE UNITED STATES, U.S. INVESTORS MAY EXPERIENCE DIFFICULTIES IN ATTEMPTING TO AFFECT SERVICE OF PROCESS AND TO ENFORCE JUDGMENT BASED UPON U.S. FEDERAL SECURITIES LAWS AGAINST THE COMPANY AND ITS NON U.S. RESIDENT OFFICER AND DIRECTOR.
+
+While we are organized under the laws of State of Nevada, our sole officer and director is a non-U.S. resident and our headquarters are located outside the United States. Consequently, it may be difficult for investors to affect service of process in the United States and to enforce in the United States judgments obtained in United States courts based on the civil liability provisions of the United States securities laws. Since all our assets will be located in Poland it may be difficult or impossible for U.S. investors to collect a judgment against us. As well, any judgment obtained in the United States against us may not be enforceable in the United States.
+
+WE DO NOT EXPECT TO PAY DIVIDENDS IN THE FORESEEABLE FUTURE.
+
+We have never paid any dividends on our common stock. We do not expect to pay cash dividends on our common stock at any time in the foreseeable future. The future payment of dividends directly depends upon our future earnings, capital requirements, financial requirements and other factors that our board of directors will consider. Since we do not anticipate paying cash dividends on our common stock, a return on your investment, if any, will depend solely on an increase, if any, in the market value of our common stock.
+
+ANY ADDITIONAL FUNDING WE ARRANGE THROUGH THE SALE OF OUR COMMON STOCK WILL RESULT IN DILUTION TO EXISTING SHAREHOLDERS.
+
+We must raise additional capital in order for our business plan to succeed. We are not raising any money in this offering. Our most likely source of additional capital will be through the sale of additional shares of common stock. Such stock issuances will cause stockholders' interests in our company to be diluted. Such dilution will negatively affect the value of investors shares.
+
+11 | Page
+
+THERE IS NO CURRENT TRADING MARKET FOR OUR SECURITIES, AND IF A MARKET FOR OUR COMMON STOCK DOES NOT DEVELOP, SHAREHOLDERS MAY BE UNABLE TO SELL THEIR SHARES. 
+
+There is currently no market for our common stock and we can provide no assurance that a market will develop. We plan to apply for quotation of our common stock on the Over-The-Counter Bulletin Board upon the effectiveness of this Registration Statement, of which this prospectus forms a part. However, we can provide investors with no assurance that our shares will be traded on the Over-The-Counter Bulletin Board or, if traded, that a public market will materialize. If no market is ever developed for our shares, it will be difficult for shareholders to sell their stock. In such a case, shareholders may find that they are unable to achieve benefits from their investment.
+
+OUR SHARES OF COMMON STOCK ARE SUBJECT TO THE PENNY STOCK RULES OF THE SECURITIES AND EXCHANGE COMMISSION AND THE TRADING MARKET IN OUR SECURITIES WILL BE LIMITED, WHICH WILL MAKE TRANSACTIONS IN OUR STOCK CUMBERSOME AND MAY REDUCE THE VALUE OF AN INVESTMENT IN OUR STOCK.
+
+The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in "penny stocks. Penny stocks generally are equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system). Penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from those rules, to deliver a standardized risk disclosure document prepared by the SEC, which specifies information about penny stocks and the nature and significance of risks of the penny stock market. A broker-dealer must also provide the customer with bid and offer quotations for the penny stock, the compensation of the broker-dealer, and sales person in the transaction, and monthly account statements indicating the market value of each penny stock held in the customer's account. In addition, the penny stock rules require that, prior to a transaction in a penny stock not otherwise exempt from those rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction. These disclosure requirements may have the effect of reducing the trading activity in the secondary market for stock that becomes subject to those penny stock rules. If a trading market for our common stock develops, our common stock will probably become subject to the penny stock rules, and shareholders may have difficulty in selling their shares.
+
+IF OUR SHARES OF COMMON STOCK COMMENCE TRADING ON THE OTC BULLETIN BOARD, THE TRADING PRICE MAY FLUCTUATE SIGNIFICANTLY AND STOCKHOLDERS MAY HAVE DIFFICULTY RESELLING THEIR SHARES.
+
+ As of the date of this Registration Statement, our common stock does not yet trade on the Over-The-Counter Bulletin Board. If our shares of common stock commence trading on the Bulletin Board, there is a volatility associated with Bulletin Board securities in general and the value of your investment could decline due to the impact of any of the following factors upon the market price of our common stock: (i) disappointing results from our development efforts; (ii) failure to meet our revenue or profit goals or operating budget; (iii) decline in demand for our common stock; (iv) downward revisions in securities analysts' estimates or changes in general market conditions; (v) technological innovations by competitors or in competing technologies; (vi) lack of funding generated for operations; (vii) investor perception of our industry or our prospects; and (viii) general economic trends.
+
+As of March 11, 2011 we engaged a market maker, Spartan Securities, Ltd
+
+. There is no current trading market for our securities and if a trading market does not develop, purchasers of our securities may have difficulty selling their shares. In addition, stock markets have experienced price and volume fluctuations and the market prices of securities have been highly volatile. These fluctuations are often unrelated to operating performance and may adversely affect the market price of our common stock. As a result, investors may be unable to sell their shares at a fair price and you may lose all or part of your investment.
+
+WE HAVE NO EXPERIENCE AS A PUBLIC COMPANY.
+
+We have never operated as a public company. We have no experience in complying with the various rules and regulations, which are required of a public company. As a result, we may not be able to operate successfully as a public company, even if our operations are successful. We plan to comply with all of the various rules and regulations, which are required of a public company. However, if we cannot operate successfully as a public company, your investment may be adversely affected. Our inability to operate as a public company could be the basis of your losing your entire investment in us.
+
+12 | Page
+
+Use of Proceeds
+
+We will not receive any proceeds from the sale of the common stock offered through this prospectus by the selling shareholders. 
+
+Determination of Offering Price 
+
+The selling shareholders will sell our shares at $0.05 per share until our shares are quoted on the Over-The-Counter Bulletin Board, and thereafter at prevailing market prices or privately negotiated prices. We determined this offering price arbitrarily, by adding a $0.03 premium to the last sale price of our common stock to investors. This offering is priced at the time of the commencement of the offering and must remain offered at such price during the entire duration of the offering until and unless the security is subsequently listed on an exchange or is listed by a market maker on the Over-The-Counter Bulletin Board. Currently the company is not so listed and there is no assurance that the stock will ever be so listed. 
+
+Dilution
+
+The common stock to be sold by the selling shareholders is common stock that is currently issued and outstanding. Accordingly, there will be no dilution to our existing shareholders. 
+
+Selling Shareholders 
+
+The selling shareholders named in this prospectus are offering all of the 1,510,000 shares of common stock offered through this prospectus. These shares were acquired from us in private placements that were exempt from registration under Regulation S promulgated pursuant to the Securities Act of 1933. All shares were acquired in an offering made outside of the United States solely to non-U.S. persons, with no directed selling efforts in the United States and where offering restrictions were implemented. 
+
+The shares include the following: 
+
+1. 960,000 shares of our common stock that the selling shareholders acquired from us in a private offering that was exempt from registration under Regulation S of the Securities Act of 1933, as amended, which offering closed on September 10, 2010; 
+
+2. 550,000 shares of our common stock that the selling shareholders acquired from us in a private offering that was exempt from registration under Regulation S of the Securities Act of 1933, as amended, which offering closed on November 18, 2010;
+
+The following table provides as of the date of this prospectus, information regarding the beneficial ownership of our common stock held by each of the selling shareholders, including: 
+
+1. the number of shares owned by each prior to this offering;
+
+2. the total number of shares that are to be offered for each;
+
+3. the total number of shares that will be owned by each upon completion of the offering; and
+
+4. the percentage owned by each upon completion of the offering.
+
+13 | Page
+
+Name Of Selling Shareholder
+
+Shares Owned Prior To This Offering
+
+Total Number Of Shares To Be Offered For Selling Shareholders Account
+
+Total Shares to Be Owned Upon Completion Of This Offering
+
+Percentage of Shares owned Upon Completion of This Offering
+
+Wojciech Jozef Antonkiewicz 
+
+80,000
+
+80,000
+
+-0-
+
+-0-
+
+Kinga Teresa Czepanis
+
+80,000
+
+80,000
+
+-0-
+
+-0-
+
+Tomasz Iwaszczyszyn
+
+80,000
+
+80,000
+
+-0-
+
+-0-
+
+Dorota Diana Kozuszek 
+
+80,000
+
+80,000
+
+-0-
+
+-0-
+
+Tomasz Krzysztof Szklany
+
+80,000
+
+80,000
+
+-0-
+
+-0-
+
+Przemyslaw Grabek 
+
+80,000
+
+80,000
+
+-0-
+
+-0-
+
+Olga Aleksandra Lipowska 
+
+80,000
+
+80,000
+
+-0-
+
+-0-
+
+Adam Krzysztof Baczmanski 
+
+80,000
+
+80,000
+
+-0-
+
+-0-
+
+Dawid Adrian Druzkowski 
+
+80,000
+
+80,000
+
+-0-
+
+-0-
+
+Patrycja Danuta Baczmanska 
+
+80,000
+
+80,000
+
+-0-
+
+-0-
+
+Damian Przemyslaw Serwaczak 
+
+80,000
+
+80,000
+
+-0-
+
+-0-
+
+Adrian Dawid Kurek 
+
+80,000
+
+80,000
+
+-0-
+
+-0-
+
+Wojciech Nawrot (1)
+
+50,000
+
+50,000
+
+-0-
+
+-0-
+
+Marianna Nawrot (2)
+
+50,000
+
+50,000
+
+-0-
+
+-0-
+
+Pawel Sitkowski 
+
+50,000
+
+50,000
+
+-0-
+
+-0-
+
+Szymon Krajewski 
+
+50,000
+
+50,000
+
+-0-
+
+-0-
+
+Mariusz Chorazy 
+
+25,000
+
+25,000
+
+-0-
+
+-0-
+
+Marek Ryszard Jurkitewicz 
+
+25,000
+
+25,000
+
+-0-
+
+-0-
+
+Dawid Nawrot (3)
+
+50,000
+
+50,000
+
+-0-
+
+-0-
+
+Tadeusz Szymon Prokopiuk 
+
+25,000
+
+25,000
+
+-0-
+
+-0-
+
+Daniel Stanislaw Frysny 
+
+25,000
+
+25,000
+
+-0-
+
+-0-
+
+Miroslaw Wawryniuk 
+
+25,000
+
+25,000
+
+-0-
+
+-0-
+
+Marian Franciszek Prokopiuk 
+
+25,000
+
+25,000
+
+-0-
+
+-0-
+
+Mariusz Tadeusz Modrzewski 
+
+25,000
+
+25,000
+
+-0-
+
+-0-
+
+Wojciech Dudziak 
+
+50,000
+
+50,000
+
+-0-
+
+-0-
+
+Emil Karol Krajewski 
+
+25,000
+
+25,000
+
+-0-
+
+-0-
+
+Witold Przemyslaw Glinka
+
+25,000
+
+25,000
+
+-0-
+
+-0-
+
+Pawel Nowak 
+
+25,000
+
+25,000
+
+-0-
+
+-0-
+
+Total number of shares 
+
+1,510,000
+
+1,510,000
+
+-0-
+
+-0-
+
+(1)Brother of our sole officer and director Ireneusz Antoni Nawrot.
+
+(2)Mother of our sole officer and director Ireneusz Antoni Nawrot. 
+
+(3)Son of our sole officer and director Ireneusz Antoni Nawrot.
+
+Besides the above, there are no relationships between our selling shareholders and our sole officer and director.
+
+14 | Page
+
+The named party beneficially owns and has sole voting and investment power over all shares or rights to these shares. The numbers in this table assume that none of the selling shareholders sells shares of common stock not being offered in this prospectus or purchases additional shares of common stock, and assumes that all shares offered are sold. The percentages are based on 4,510,000 shares of common stock issued and outstanding on the date of this prospectus. 
+
+Other than disclosed above, none of the selling shareholders: 
+
+1. has had a material relationship with us other than as a shareholder at any time within the past three years; 
+
+2. has ever been one of our officers or directors;
+
+3. is a broker-dealer; or a broker-dealer affiliate.
+
+Plan of Distribution 
+
+The selling shareholders may sell some or all of their common stock in one or more transactions, including block transactions. There are no arrangements, agreements or understandings with respect to the sale of these securities. 
+
+The selling shareholders will sell our shares at $0.05 per share until our shares are quoted on the Over-The-Counter Bulletin Board, and thereafter at prevailing market prices or privately negotiated prices. We determined this offering price arbitrarily by adding a $0.03 premium to the last sale price of our common stock to investors. This offering is priced at the time of the commencement of the offering and must remain offered at such price during the entire duration of the offering until and unless the security is subsequently listed on an exchange or is listed by a market maker on the Over-The-Counter Bulletin Board. Currently the company is not so listed and there is no assurance that the stock will ever be so listed.
+
+The shares may also be sold in compliance with the Securities and Exchange Commission's Rule 144, when eligible.
+
+If applicable, the selling shareholders may distribute shares to one or more of their partners who are unaffiliated with us. Such partners may, in turn, distribute such shares as described above. If these shares being registered for resale are transferred from the named selling shareholders and the new shareholders wish to rely on the prospectus to resell these shares, then we must first file a prospectus supplement naming these individuals as selling shareholders and providing the information required concerning the identity of each selling shareholder and he or her relationship to us. There is no agreement or understanding between the selling shareholders and any partners with respect to the distribution of the shares being registered for resale pursuant to this registration statement. 
+
+We can provide no assurance that all or any of the common stock offered will be sold by the selling shareholders. 
+
+We are bearing all costs relating to the registration of the common stock. The selling shareholders, however, will pay any commissions or other fees payable to brokers or dealers in connection with any sale of the common stock. 
+
+15 | Page
+
+The selling shareholders must comply with the requirements of the Securities Act of 1933 and the Securities Exchange Act of 1934 in the offer and sale of the common stock. In particular, during such times as the selling shareholders may be deemed to be engaged in a distribution of the common stock, and therefore be considered to be an underwriter, they must comply with applicable law and may, among other things: 
+
+ 
+
+1.
+
+Not engage in any stabilization activities in connection with our common stock;
+
+ 
+
+ 
+ 
+
+ 
+
+2.
+
+Furnish each broker or dealer through which common stock may be offered, such copies of this prospectus, as amended from time to time, as may be required by such broker or dealer; and
+
+ 
+
+ 
+ 
+
+ 
+
+3.
+
+Not bid for or purchase any of our securities or attempt to induce any person to purchase any of our securities other than as permitted under the Securities Exchange Act.
+
+The Securities and Exchange Commission (the Commission ) has also adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system). 
+
+The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from those rules to deliver a standardized risk disclosure document prepared by the Commission, which contains: 
+
+- a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading;
+
+- a description of the broker's or dealer's duties to the customer and of the rights and remedies available to the customer with respect to a violation of such duties or other requirements;
+
+- a brief, clear, narrative description of a dealer market, including "bid" and "ask" prices for penny stocks and the significance of the spread between the bid and ask price;
+
+- a toll-free telephone number for inquiries on disciplinary actions;
+
+- a definition of significant terms in the disclosure document or in the conduct of trading penny stocks; and
+
+- such other information and is in such form (including language, type, size, and format) as the Commission shall require by rule or regulation.
+
+The broker-dealer also must provide, prior to effecting any transaction in a penny stock, the customer with: 
+
+- bid and offer quotations for the penny stock;
+
+- the compensation of the broker-dealer and its salesperson in the transaction;
+
+- the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock; and
+
+- monthly account statements showing the market value of each penny stock held in the customer's account.
+
+In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those rules; the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written acknowledgment of the receipt of a risk disclosure statement, a written agreement to transactions involving penny stocks, and a signed and dated copy of a written suitability statement. These disclosure requirements will have the effect of reducing the trading activity in the secondary market for our stock because it will be subject to these penny stock rules. Therefore, stockholders may have difficulty selling those securities. 
+
+16 | Page
+
+Description of Securities 
+
+General 
+
+Our authorized capital stock consists of 75,000,000 shares of common stock at a par value of $0.001 per share. 
+
+Common Stock 
+
+As of March 11, 2011 there are 4,510,000 shares of our common stock issued and outstanding, held by 29 stockholders of record.
+
+Holders of our common stock are entitled to one vote for each share on all matters submitted to a stockholder vote. Holders of common stock do not have cumulative voting rights. Therefore, holders of a majority of the shares of common stock voting for the election of directors can elect all of the directors. Holders of our common stock representing a majority of the voting power of our capital stock issued, outstanding and entitled to vote, represented in person or by proxy, are necessary to constitute a quorum at any meeting of our stockholders. A vote by the holders of a majority of our outstanding shares is required to effectuate certain fundamental corporate changes such as liquidation, merger or an amendment to our articles of incorporation. 
+
+Holders of common stock are entitled to share in all dividends that the board of directors, in its discretion, declares from legally available funds. In the event of liquidation, dissolution or winding up, each outstanding share entitles its holder to participate pro rata in all assets that remain after payment of liabilities and after providing for each class of stock, if any, having preference over the common stock. Holders of our common stock have no pre-emptive rights, no conversion rights and there are no redemption provisions applicable to our common stock. 
+
+Preferred Stock
+
+We do not have an authorized class of preferred stock. 
+
+Dividend Policy 
+
+We have never declared or paid any cash dividends on our common stock. We currently intend to retain future earnings, if any, to finance the expansion of our business. As a result, we do not anticipate paying any cash dividends in the foreseeable future. 
+
+Share Purchase Warrants 
+
+We have not issued and do not have any outstanding warrants to purchase shares of our common stock. 
+
+Options 
+
+We have not issued and do not have any outstanding options to purchase shares of our common stock. 
+
+17 | Page
+
+Other Convertible Securities 
+
+We have not issued and do not have any outstanding securities convertible into shares of our common stock or any rights convertible or exchangeable into shares of our common stock. 
+
+Interests of Named Experts and Counsel 
+
+No expert or counsel named in this prospectus as having prepared or certified any part of this prospectus or having given an opinion upon the validity of the securities being registered or upon other legal matters in connection with the registration or offering of the common stock was employed on a contingency basis, or had, or is to receive, in connection with the offering, an interest, direct or indirect, in the registrant or any of its parents or subsidiaries. Nor was any such person connected with the registrant or any of its parents or subsidiaries as a promoter, managing or principal underwriter, voting trustee, director, officer, or employee. 
+
+Dean Law Corp. has provided an opinion on the validity of our common stock.
+
+The financial statements included in this prospectus and the registration statement have been audited by De Joya Griffith and Company, LLC to the extent and for the periods set forth in their report appearing elsewhere in this document and in the registration statement filed with the SEC, and are included in reliance upon such report given upon the authority of said firm as experts in auditing and accounting.
+
+Description of Business
+
+Overview 
+
+We were incorporated in the State of Nevada on June 2, 2010. To date, our business operations have been limited to primarily, the development of a business plan and the signing of the service agreement with Ogrodnictwo Piotr Walkowiak , a private Polish company, specializing in white mushroom growing. There is no any relationship between the company Ogrodnictwo Piotr Walkowiak we signed the service agreement with and our officer, director or affiliates. As of
+
+March 11
+
+, 2011, we have not provided any consulting services pursuant to the agreement. We plan to operate a consulting business in commercial cultivation of white mushrooms (agaricus bisporus), including but not limited to consulting in process engineering, improvement of production methods, fruiting techniques, spore measurements, mushroom quality, packaging, changes in growing on different strains or developing more adequate harvesting methods, quality of raw materials, recipe, homogeneity, logistics, the process of composting and hygiene and instructing and training of staff in Poland. We plan to expand our services to European and North American market in the future if we have the available resources and growth to warrant it. We are a development stage company and there is no guarantee that we will be able to expand our business, given the lack of revenues and operations to date. We have minimal assets and have incurred losses since inception. Our plan of operation is forward-looking. It is likely that we will not be able to achieve profitability and might need to cease operations due to the lack of funding. We maintain our statutory registered agent's office at 375 North Stephanie Street, Suite 1411, Henderson, Nevada 89014-8909. Our business office is located at 68A Nowe Tloki Street, Wolsztyn, Poland 64-200. Our telephone number is +48-717106630; our fax number is 48-717243634.
+
+Commercial production of white mushrooms (agaricus bisporus) is both an art and a science with many complex and distinct stages. Mushrooms are one of the most difficult commodities to grow. Intensive labor is required to produce a consistent, high-quality crop. While white mushrooms have been grown in unused coal and limestone mines, old breweries, basements of apartment houses, natural and man-made caves, rhubarb sheds, and many other unusual structures, successful commercial mushroom growing requires special farms that are highly technical operations, complete with extensive computerized systems to monitor each point in production. 
+
+18 | Page
+
+The overall white mushroom production cycle consists of Phase I and Phase II composting, spawning, spawn colonization (Phase III), casing, case run, pinning and finally harvesting. The specific criteria (temperature set points, carbon dioxide concentrations and so forth) involved in each stage will change depending on different mushroom crops and different mushroom growers, but the basic concepts and methods of mushroom production remain constant.
+
+Because of the fact that the margin between cost price and retail price is not very significant it is very important for a grower to get the maximum yield with the highest quality. We can offer advice to commercial growers on how to achieve these goals by helping them to improve their production methods, strains, fruiting techniques, mushroom quality and packaging. We can also help with changing growing schedules, changes in growing on different strains or developing more adequate harvesting methods. The frequency of the visits can vary from several times per week to once a month, depending on the problems of the farm.
+
+Consulting Services
+
+Our consulting services for commercial growers of white mushrooms (agaricus bisporus) will include: 
+
+- Consulting in process engineering 
+
+- Quality control 
+
+- Optimizing compost quality 
+
+- Hygiene check 
+
+- Spore measurement
+
+- Improvement of production methods
+
+- Improvement of fruiting techniques
+
+- Improvement of mushroom quality
+
+- Instructing and training of staff
+
+Our specific areas of services will include the following: 
+
+1.For clients existing cultivation facilities:
+
+- Review of the current cultivation process used by client. 
+
+- Prepare a written recommendation for improvement of production methods that are appropriate for existing facility. Special consideration will be given to selecting fruiting techniques, spore measurements, mushroom quality, evaluating changes in growing different strains and sanitation. Upon client s approval to provide necessarily instructing and training of staff. 
+
+- Upon revision of contracts with current raw material suppliers and compost suppliers prepare a written recommendation regarding cost effective possibilities of contracting new suppliers and specific terms and conditions that should be included in new contracts and agreements.
+
+- Review of the harvesting method, packaging and storing of the product.
+
+- Prepare a written recommendation for improvement of harvesting, packaging and storing of the product.
+
+- After revising current contracts with product distributors prepare a written recommendation regarding marketing strategies, new distributor s networks and logistic solutions.
+
+2.For clients future cultivation facilities:
+
+- Review client s project program, plans, drawings and other materials.
+
+- Prepare a written recommendation for a modern growing system. Special consideration will be given to possibilities of shortening production cycle, optimizing shelving systems, and humidification and temperature control systems, modern sanitation techniques.
+
+3.On-Call service:
+
+1. Give verbal or written recommendations or instructions via phone, mail or email regarding any client s questions that are not mentioned above, but are related to mushroom cultivation process (as an example instructions in case of pathogen infection or pest infestation).
+
+Clients
+
+Our president and director, Ireneusz Antony Nawrot will market our product and negotiate with potential customers. We intend to develop and maintain a database of potential customers who may want to use our services. We will follow up with these clients periodically and offer them free presentations and special discounts from time to time. Our methods of communication will include: phone calls, email and regular mail. We plan to attend trade shows in our industry to showcase our services with a view to find new customers. We will ask our satisfied customers for referrals. 
+
+We will market and advertise our service on our web site by showing its advantages over similar services offered by other companies. We intend to attract traffic to our website by a variety of online marketing tactics such as registering with top search engines using selected key words (meta tags) and utilizing link and banner exchange options. We intend to promote our website by displaying it on our promotion materials. The company s website has not been developed at this time. We intend to begin developing our website by August of 2011, assuming available resources and company s growth as planned.
+
+19 | Page
+
+We expect that our potential clients will consist of the following:
+
+1. Small and medium size commercial mushroom growers in Poland;
+
+2. Small and mid-sized mushroom growers in Europe, including but not limited to the Netherlands, Belgium, Germany and France. This option would be available to us only in the future, assuming available resources and growth to warrant it; and
+
+3. Small and mid-sized mushroom growers in the North America. This option would be available to us only in the future, assuming available resources and growth to warrant it. Currently this option is questionable, given the lack of revenues and operations to date. 
+
+History of White Mushrooms (Agaricus Bisporus)
+
+Hippocrates first mentioned mushrooms when he wrote about their medicinal value in 400 B.C. The first mention of mushroom cultivation, distinct from a chance appearance in the field, was in l652. Unfortunately, they were described as excellent for making into compresses for ripening boils but not as good to eat. 
+
+The earliest description of the commercial cultivation of white mushroom (agaricus bisporus) was made by French botanist Joseph Pitton de Tournefort in 1707. In 1731, Miller introduced to England the French method for the cultivation of mushrooms when he described it in his Gardener Dictionary. The first record of year-round commercial production was in l780 when a French gardener began to cultivate mushrooms in the underground quarries near Paris. 
+
+In 1894, the French Constantin and Matruchot were able to achieve a controlled germination of spores from mushroom tissue and spores. This mycelium, known as 'pure culture', was then inoculated in sterilized horse manure, which acted as carrier and nutrient base. Subsequently, this substance was bottled and left to settle until the mycelium spread and colonized the sterilized horse manure. Later, growers bought this substance, in theory free of disease. The final product (planting material) sold to growers was mushroom spawn. The process in which growers planted the spawn in compost and left it to colonize this compost was called spawning. Laboratory operators could achieve a superior spawn quality by selecting spores from the best quality mushrooms. Since sterilized horse manure was the initial carrier of the mushroom mycelium, the first varieties of commercial spawn were called manure spawn. 
+
+Constantin and Matruchot managed to keep their method secret until 1902, when Ferguson, an American, published a description of the conditions in which a controlled germination of spores and the growth of mycelium could be achieved. This meant the end of the monopoly of the Institute Pasteur of France as the leading institution in the spawn world market. 
+
+In 1903, Louis F. Lambert, an immigrant from Belgium, created the Lambert's pure culture spawn in his laboratory of St. Paul, Minnesota. Until then, US growers had been importing from England compost bricks inoculated with a mixture of mushroom strains. By 1907, Lambert's American Spawn Company was marketing at least seven different pure strains of mushrooms to growers around the US. 
+
+In 1932, James W. Sinden, then head of the Pennsylvania State University's mushroom research program, patented grain spawn. The carriers of mycelium were, in this case, grains. By the 1970s grain spawn had completely displaced manure spawn in most countries. 
+
+At present, rye and millet are the most common grains used to carry mycelium, but wheat and sorghum have been used.
+
+The current variety of white mushrooms, commonly found in supermarket shelves world-wide, comes from a single cluster of white mushrooms that an American grower named Downing, from Pennsylvania, found in a bed of brown mushrooms in his farm in 1926. Until then all mushrooms had been brown. (1)
+
+(1) http://www.themushroompeople.com/showArticle.asp?id=1770
+
+Today white mushroom (agaricus bisporus) is cultivated in at least 70 countries around the world. Global production in the early 1990s was reported to be more than 1.5 billion kg, worth more than US$ 2 billion. (2)
+
+(2) http://en.wikipedia.org/wiki/Agaricus_bisporus
+
+20 | Page
+
+Description of White Mushrooms (Agaricus Bisporus) 
+
+Today, there are more than 100,000 types of mushrooms in the world. They differ in appearance, habitat and physiological functions. Mushrooms do not contain chlorophyll; hence they are unable to synthesize organic substances from the inorganic matter on their own. The basis of a mushroom s vegetative body is mycelium or spawn which is composed of branching fibers the hyphae. Out of the wide variety of mushrooms, the kind used mostly for commercial cultivation is the white mushroom (agaricus bisporus). This mushroom became a true crop. It is cultivated in many countries of the world. An excellent taste, economy and abundant fruiting are the basic qualities which became the reason for cultivating these mushrooms.
+
+Among English speakers, Agaricus bisporus is known by many names. A young specimen with a closed cap and either pale white or light brown flesh is known as a button mushroom or white mushroom. When the flesh darkens, the immature mushroom is variously marketed as a crimini mushroom, baby portobello, baby bella, mini bella, portabellini, Roman mushroom, Italian mushroom or brown mushroom. At this stage of maturation, the cap may also begin to open slightly. In maturity, it is called a portobello. The French name is champignon de Paris ("Paris mushroom").
+
+Below is nutritional data for white mushroom:
+
+Agaricus bisporus, raw
+
+Nutritional value per 100 g (3.5 oz)
+
+Energy
+
+94 kJ (22 kcal)
+
+Carbohydrates
+
+3.28 g
+
+Sugars
+
+1.65 g
+
+Dietary fiber
+
+1.0 g
+
+Fat
+
+0.34 g
+
+Protein
+
+3.09 g
+
+Water
+
+92.43 g
+
+Thiamine (Vit. B1)
+
+0.081 mg (6%)
+
+Riboflavin (Vit. B2)
+
+0.402 mg (27%)
+
+Niacin (Vit. B3)
+
+3.607 mg (24%)
+
+Pantothenic acid (B5)
+
+1.497 mg (30%)
+
+Vitamin C
+
+2.1 mg (4%)
+
+Iron
+
+0.50 mg (4%)
+
+Percentages are relative to US recommendations for adults.
+
+Source: USDA Nutrient database
+
+Process of Commercial Mushroom Growing
+
+Growing mushrooms is a waste-recycling activity. Mushroom farms benefit the environment by using many tons of mulch hay, straw-bedded horse manure and poultry manure. These products are considered agricultural waste products and would not have a home if it were not for commercial mushroom production. 
+
+21 | Page
+
+The specific criteria (temperature set points, carbon dioxide concentrations and so forth) involved in each stage will change depending on different mushroom crops and different mushroom growers, but the basic concepts and methods of mushroom production remain constant.
+
+The overall cultivation cycle of white mushroom consists of the following stages:
+
+Composting
+
+Composting is artificially accelerated decomposition of organic matter by a mixed microbial population in a moist warm aerobic environment. The aim of composting is to produce a medium which is selective for white mushroom (agaricus bisporus) growth. Composting is a compromise of producing a nutritional base for mushrooms and yet at the same time a substrate which will not support other fungal competitors. The basic ingredients of compost are: straw, which supplies cellulose, hemicellulose and lignin and poultry litter, which supplies nitrogen, essential elements, vitamins and carbohydrates.
+
+There are two phases in compost production: Phase 1 and Phase 2
+
+Phase 1
+
+The raw materials - wheat straw, poultry litter, gypsum and water are mixed and blended together and put into windrows. The windrows are turned every 2-4 days to ensure thorough mixing and to achieve an aerobic environment in the compost, these windows are maintained for 7-14 days and temperatures can reach 167 F (75 C). During this time the mix begins to decompose and the complex fractions are converted into elements the fungi will eventually use.
+
+Phase 2
+
+The compost is moved into controlled environmental chambers for the pasteurization stage, there is no turning during this phase. The phase can be split into two sections: peak heating and conditioning of compost, which are vital for disease control. Temperatures are run at 140 F (60 C) for 8 hours to kill off harmful organisms. 
+
+Once ready, the compost is packed and delivered to the mushroom growers. Below is a brief description of typical white mushroom growing cycle used by the commercial growers:
+
+One Week:
+
+1.Filling
+
+ Growers receive compost in 18-20 ton loads; in 900-1000 bags; each bag is 20 kg (44lbs).
+
+ Compost-filled bags are set out in rows in mushroom growing tunnels.
+
+2.Running
+
+ Temperature should be maintained at 77 F (25 C), relative humidity 84-86 percent and CO2 levels raised to 5000 ppm to allow mycelium (mushroom fungus) to grow within the compost.
+
+22 | Page
+
+Two Weeks
+
+ 3.Casing
+
+ After 14-21 days the casing layer (a mixture of lime and peat) is added to a depth of 2 inches to the top of the bags.
+
+ Mycelium grows through the casing in 10 days.
+
+4.Breaking
+
+ Three to four weeks after receiving compost, breaking occurs (cool fresh air replaces the humid warm air) and growth changes from vegetative to fruiting.
+
+ Pin initiation occurs the small mushrooms of the first flush.
+
+Three Weeks
+
+5.Mushroom Harvesting
+
+ The firstflush is harvested one week later over a period of 3-4 days.
+
+ Bags are watered, the environment in the growing tunnel is set for re-pinning and a second flush appears and is harvested. Flushes appear at approximately 7 day intervals until 4 flushes are harvested.
+
+Four Weeks
+
+6.Empty
+
+ The growing tunnel is emptied and the spent mushroom compost removed.
+
+ House is cleaned and disinfected for a new crop.
+
+ Each growing tunnel is cropped 4 times per year producing approximately 9,000 lbs. mushrooms from 1000 bags per crop. Yield is approximately 500 lbs. mushrooms per ton of compost.
+
+Our failure to maintain a competitive position within the market could have a material adverse effect on our business, financial condition and results of operations. At this time, our principal method of competition will be through personal contact with potential clients.
+
+ 
+
+Competition
+
+Our competitors will include Polish companies providing consulting businesses in commercial cultivation of white mushrooms (agaricus bisporus) in Poland. We will not be differentiating ourselves from the foregoing, but merely competing with them. The commercial mushroom consulting industry is extremely fragmented and competitive, and may be difficult to penetrate. Our competitive position within the industry is negligible in light of the fact that we have not started our operations. Older, well-established companies, companies with substantial customer bases, longer operating histories and better financial positions currently attract customers. Since we have not started operations, we cannot compete with them on the basis of reputation. We do expect to compete with them on the basis of the quality of the consulting services that we intend to provide. There can be no assurance that we can maintain a competitive position against current or future competitors, particularly those with greater financial, client database, marketing, service, technical and other resources. Our failure to maintain a competitive position within the market could have a material adverse effect on our business, financial condition and results of operations. At this time, our principal method of competition will be through personal contact with potential clients. 
+
+Some of the additional competitive factors that may affect our business are as follows:
+
+1. Number of Competitors Increase: other companies may follow our business model of offering consulting services to commercial mushroom growers in Poland and Europe, which will reduce our competitive edge;
+
+2. Price: Our competitors may be offering similar service at a lower price forcing us to lower our prices as well and possibly offer our service at loss; 
+
+23 | Page
+
+ Revenues
+
+The company s revenues will be what we charge our clients for our consulting services. 
+
+Please note that below numbers are estimated in nature and are meant to show the capacity of the company without hiring additional employees and not a guarantee of future revenues.
+
+Estimated Prices for our consulting services are:
+
+- Initial Meeting with Client - free of charge;
+
+- Consulting Fee, small commercial white mushroom (agaricus bisporus) producers in Poland and Europe - varies depending on length of the project and scope of work involved, starting from USD 50.
+
+- Consulting Fee, mid-sized commercial white mushroom (agaricus bisporus) producers in Poland and Europe - varies depending on length of the project and scope of work involved, starting from USD 75.
+
+Invoicing will be on a monthly basis, beginning after we have completed our first four weeks of service. Indigo International, Corp. shall have discretion in selecting the dates and times it performs consulting services throughout the month giving due regard to the needs of the client s business. All actual reasonable and necessary expenditures, which are directly related to the consulting services, are to be reimbursed by the clients.
+
+We cannot guarantee that we will be able to find successful contracts with the potential customers in need of mushroom cultivation consulting service in Poland and Europe, in which case our business may fail and we will have to cease our operations.
+
+Agreement
+
+On September 27, 2010 a Service Agreement was signed with Ogrodnictwo Piotr Walkowiak, a Poland based company.
+
+The agreement with Ogrodnictwo Piotr Walkowiak contains the following material terms:
+
+2. Term of Agreement/Termination: The term of this Agreement shall be for 12 months beginning from the Effective Date, unless terminated earlier as provided herein. CLIENT may terminate this Agreement for any reason upon twenty (20) days advance written notice to Consultant. Consultant may terminate this Agreement in the event that CLIENT commits a breach of its material obligations hereunder, upon twenty (20) days advance written notice and where CLIENT does not cure the breach.
+
+3. Payment: The CLIENT will pay to Indigo International, Corp. $75.00 per hour for services rendered to the CLIENT under the Agreement. CLIENT should be invoiced for consulting fees in an amount not to exceed $2,000 per month. Invoicing should be on a monthly basis, beginning after Indigo International, Corp. has completed his first four (4) weeks of service. Under no circumstances shall Indigo International, Corp. perform work having a value (based on the agreed upon per hour rate) in excess of the maximum permitted fee. Payment by CLIENT is due within thirty (30) days from receipt of an approved invoice. The CLIENT agrees to reimburse Indigo International, Corp. for all actual reasonable and necessary expenditures, which are directly related to the consulting services. These expenditures include, but are not limited to, expenses related to travel (i.e. airfare, hotel, temporary housing, meals, parking, mileage, etc.), telephone calls and postal expenditure. Expenses incurred by Indigo International, Corp. will be reimbursed by the CLIENT within 15 days of our proper written request for reimbursement.
+
+4. Invoices/Reporting: All invoices submitted to CLIENT by Consultant for payment must include a written, task based report detailing the services actually and reasonably provided by Consultant to CLIENT along with the time spent by Consultant performing the same. Consultant shall certify in writing that each such invoice is complete and accurate. Payment is contingent on provision of such invoices. Consultant shall provide technical reports in accordance with the Scope of Work attached as Exhibit A.
+
+Initially, our director Mr. Ireneusz Antoni Nawrot will work with the current consulting agreement. In the future we also expect Mr. Nawrot to work on potential consulting agreements with other Polish/European companies. However, since our sole officer and director, Mr. Ireneusz Antoni Nawrot, owns his own agricultural company Gospodarstwo Ogrodniczo Pieczarskie, specializing in commercial production of white mushrooms (Agaricus bisporus) in Poland, he will only be devoting limited time to our operations. Mr. Nawrot intends to devote approximately 30% (15 hours a week) of his business time to our affairs. Because our sole officer and director will only be devoting limited time to our operations, our operations may be sporadic and occur at times which are convenient to him. As a result, our operations may be periodically interrupted or suspended which could result in a lack of revenues and a possible cessation of operations. It is also possible that the demands on Mr. Nawrot from his own agricultural company Gospodarstwo Ogrodniczo Pieczarskie could increase with the result that he would no longer be able to devote sufficient time to the management of our business. In addition, Mr. Nawrot may not possess sufficient time for our business if the demands of managing our business increase substantially beyond current levels. And finally, we have not adopted a policy that expressly prohibits our sole officer and director Mr. Nawrot from having a direct or indirect financial interest in potential future opportunity or from engaging in business activities of the types conducted by us. As a result, in the future our sole officer and director Mr. Nawrot may favor his own interests over our interests and those of our shareholders, which could have a material adverse effect on our business and results of operations. 
+
+Since 1988 Gospodarstwo Ogrodniczo Pieczarskie , a Polish based company specializing in commercial production of white mushrooms (Agaricus bisporus) is the only company Mr. Nawrot has worked for; there are no other businesses Mr. Nawrot had been or is involved with.
+
+We cannot guarantee that we will be able to find successful contracts with Polish companies, in which case our business may fail and we will have to cease our operations.
+
+24 | Page
+
+Description of property 
+
+We do not have an ownership or leasehold interest in any property.
+
+Insurance
+
+We do not maintain any insurance and do not intend to maintain insurance in the future. Because we do not have any insurance, if we are made a party of a products liability action, we may not have sufficient funds to defend the litigation. If that occurs a judgment could be rendered against us that could cause us to cease operations. 
+
+Employees. Identification of Certain Significant Employees
+
+We are a development stage company and currently have no employees, other than our sole officer and director Mr. Ireneusz Antoni Nawrot. We intend to hire additional employees on an as needed basis. 
+
+Research and Development Expenditures 
+
+We have not incurred any other research or development expenditures since our incorporation. 
+
+Government Regulation
+
+We will be required to comply with all regulations, rules and directives of governmental authorities and agencies applicable to the consulting services for commercial mushroom growers in any jurisdiction which we would conduct activities. We do not believe that government regulation will have a material impact on the way we conduct our business.
+
+Subsidiaries 
+
+We do not have any subsidiaries.
+
+Patents and Trademarks 
+
+We do not own, either legally or beneficially, any patents or trademarks. 
+
+Offices
+
+Our office is currently located at 68A Nowe Tloki Street, Wolsztyn, Poland 64-200. Our telephone number is +48717106630; our fax number is +48717243634. This is the office of our Director, Mr. Ireneusz Antoni Nawrot. We do not pay any rent to Mr. Nawrot and there is no agreement to pay any rent in the future. Such costs are immaterial to the financial statements and, accordingly have not been reflected therein. Upon the completion of our offering, we do not intend to establish an office elsewhere.
+
+25 | Page
+
+Legal Proceedings 
+
+We are not currently a party to any legal proceedings. Our address for service of process in Nevada is 375 North Stephanie St, Suite 1411, Henderson, Nevada 89014-8909.
+
+Market for Common Equity and Related Stockholder Matters
+
+No Public Market for Common Stock 
+
+There is presently no public market for our common stock. We anticipate applying for trading of our common stock on the OTC Bulletin Board upon the effectiveness of the registration statement of which this prospectus forms a part. However, we can provide no assurance that our shares will be traded on the bulletin board or, if traded, that a public market will materialize.
+
+Stockholders of Our Common Shares
+
+As of the date of this registration statement we have 29 registered shareholders. 
+
+Rule 144 Shares 
+
+A total of 3,000,000 shares of our common stock are available for resale to the public in accordance with the volume and trading limitations of Rule 144. Pursuant to Rule 144, a person who has beneficially owned restricted shares of our common stock for at least six months is entitled to sell their securities provided that (i) such person is not deemed to have been one of our affiliates at the time of, or at any time during the three months preceding the sale and (ii) we are subject to the Securities Exchange Act of 1934 periodic reporting requirements for at least three months before the sale. 
+
+Persons who have beneficially owned restricted shares of our common stock for at least six months but who are our affiliates at the time of, or at any time during the three months preceding the sale, are subject to additional restrictions. Such person is entitled to sell within any three-month period only a number of securities that does not exceed the greater of either of the following: 
+
+ 
+ 
+ 
+
+ 
+
+ 
+
+1% of the total number of securities of the same class then outstanding, which will equal 45,100 shares as of the date of this prospectus; or 
+
+ 
+
+ 
+ 
+ 
+
+ 
+
+ 
+
+the average weekly trading volume of such securities during the four calendar weeks preceding the filing of a notice on Form 144 with respect to the sale; 
+
+ 
+
+provided, in each case that we are subject to the Exchange Act periodic reporting requirements for at least three months before the sale. 
+
+Such sales must also comply with the manner of sale and notice provisions of Rule 144. 
+
+As of the date of this prospectus, persons who are our affiliates hold all of the 3,000,000 shares that may be sold pursuant to Rule 144. 
+
+26 | Page
+
+Stock Option Grants 
+
+To date, we have not granted any stock options. 
+
+Registration Rights 
+
+We have not granted registration rights to the selling shareholders or to any other persons. 
+
+Dividends 
+
+There are no restrictions in our articles of incorporation or bylaws that prevent us from declaring dividends. The Nevada Revised Statutes, however, do prohibit us from declaring dividends where, after giving effect to the distribution of the dividend: 
+
+1. 
+
+we would not be able to pay our debts as they become due in the usual course of business; or
+
+ 
+
+ 
+
+2. 
+
+our total assets would be less than the sum of our total liabilities plus the amount that would be needed to satisfy the rights of shareholders who have preferential rights superior to those receiving the distribution.
+
+We have not declared any dividends, and we do not plan to declare any dividends in the foreseeable future. 
+
+Plan of Operation
+
+We are in the development stage of our business. As a development stage company, we have yet to earn revenue from operations. We may experience fluctuations in operating results in future periods due to a variety of factors, including our ability to obtain additional funding in a timely manner and on terms favorable to us, our ability to successfully develop our business model, the amount and timing of operating costs and capital expenditures relating to the expansion of our business, operations, infrastructure and the implementation of marketing programs, key agreements and strategic alliances, general economic conditions specific to our industry. To date, our business operations have been limited to primarily, the development of a business plan and the signing of the service agreement with Ogrodnictwo Piotr Walkowiak, a private Polish company, specializing in commercial white mushroom cultivation.
+
+Our auditors have issued a going concern opinion. This means that our auditors believe there is substantial doubt that we can continue as an on-going business for the next twelve months unless we obtain additional capital to pay our bills. This is because we have not generated any revenues and no revenues are anticipated until we implement our business plan and execute our first service agreement. We are not raising any money in this offering. Our only sources for cash at this time are investments by shareholders in our company and cash advances from our sole director Ireneusz Antoni Nawrot, though we do not have an agreement from Mr. Nawrot for such cash advances. 
+
+As of
+
+March 11
+
+, 2011 the aggregated amount of funds that Mr. Nawrot provided to Indigo International, Corp. is $274.00. The amount is due on demand, non-interest bearing and unsecured. Mr. Nawrot has informally agreed to advance funds to allow us to pay for incorporation fees. There is no contract in place or a written agreement securing this verbal agreement.
+
+There is no assurance that any additional financing will be available or if available, on terms that will be acceptable to us. Failure to raise additional financing will cause us to go out of business. If this happens, you could lose all or part of your investment.
+
+27 | Page
+
+We will not be conducting any product research or development. We do not expect to purchase or sell plant or significant equipment. Further we do not expect significant changes in the number of employees. Upon completion of our public offering, our specific goal is to profitably sell our services. 
+
+Our plan of operations is as follows:
+
+January - April, 2011: Negotiate service agreements with potential customers. Estimated amount of funds required: no material costs.
+
+Initially, our sole officer and director, Mr. Ireneusz Antoni Nawrot, will look for potential customers. As of
+
+March 11
+
+, 2011 Ogrodnictwo Piotr Walkowiak, is the only Polish company we have signed a service agreement with. 
+
+Even though the negotiation of additional service agreements with customers will be ongoing during the life of our operations, we cannot guarantee that we will be able to find successful agreements, in which case our business may fail and we will have to cease our operations. 
+
+Even if we are able to obtain sufficient number of service agreements at the end of the twelve month period, there is no guarantee that we will be able to attract and more importantly retain enough customers to justify our expenditures. If we are unable to generate a significant amount of revenue and to successfully protect ourselves against those risks, then it would materially affect our financial condition and our business could be harmed.
+
+We are not raising any money in this offering. Our only sources for cash at this time are investments by shareholders in our company and cash advances from our sole director Mr. Ireneusz Antoni Nawrot, though we do not have an agreement from Mr. Nawrot for such cash advances. There is no assurance that any additional financing will be available or if available, on terms that will be acceptable to us. Failure to raise additional financing will cause us to go out of business. If this happens, you could lose all or part of your investment.
+
+May-August, 2011: Commence Marketing Campaign. Estimated amount of funds required: $3,000
+
+We intend to use marketing strategies, such as web advertisements, direct mailing and phone calls to acquire potential customers. We also expect to get new clients from "word of mouth" advertising where our new clients will refer their colleagues to us. We will encourage such advertising by rewarding the person who referred new clients to us. The referral will be calculated as three per cent (3%) of the net value of services sold by the Company as a direct result of a referral upon successful execution of the service agreement.
+
+We also plan to attend shows and exhibitions in agricultural industry, which help mushroom producers, distributors, consultants and potential buyers come face to face and find new business opportunities and partners. We intend to spend about $3,000 on marketing efforts during the first year. Marketing is an ongoing matter that will continue during the life of our operations.
+
+August-November 2011: Develop Website. Estimated amount of funds required: $4,000 
+
+By August of 2011, assuming available resources and company growth as planned we intend to begin developing our website. Our director, Mr. Ireneusz Antoni Nawrot will be in charge of registering our web domain. Once we register our web domain, we plan to hire a web designer to help us design and develop our website. We do not have any written agreements with any web designers at the current time. The website development costs, including site design and implementation will be approximately $4,000. Updating and improving our website will continue throughout the lifetime of our operations.
+
+28 | Page
+
+November-January, 2011-2012: Set up Office. Estimated amount of funds required: $3,000
+
+By November of 2011, assuming available resources, we might plan to set up an office in Poland. We believe that it will cost approximately $3,000 to set up an office and obtain the necessary office equipment/furniture. 
+
+Office requirements:
+
+ Furnishings $ 1,200
+
+ Filing $ 800
+
+ Print/Scan/Fax $ 700
+
+ Phone $ 100
+
+ Miscellaneous $ 200
+
+Our sole officer and director Mr. Nawrot will handle our administrative duties.
+
+We therefore expect to incur the following costs in the next 12 months in connection with our business operations:
+
+Marketing costs
+
+$ 3,000
+
+Website development costs
+
+ 4,000
+
+Estimated cost of this offering
+
+ 12,005
+
+Office Set Up
+
+ 3,000
+
+Costs associated with being a publicly reporting company
+
+7,000
+
+Total
+
+ $29,005 
+
+Limited operating history; need for additional capital 
+
+There is no historical financial information about us upon which to base an evaluation of our performance. We are in start-up stage operations and have not generated any revenues. We cannot guarantee we will be successful in our business operations. Our business is subject to risks inherent in the establishment of a new business enterprise, including limited capital resources and possible cost overruns due to price and cost increases in services and products. 
+
+ Our current cash reserves are not sufficient to meet our obligations for the next twelve-month period. As a result, we will need to seek additional funding in the near future. 
+
+We anticipate that additional funding will be from the sale of additional common stock. We may seek to obtain short-term loans from our director as well, although no such arrangement has been made. At this time, we cannot provide investors with any assurance that we will be able to raise sufficient funding from the sale of our common stock or through a loan from our director to meet our obligations over the next twelve months. We do not have any arrangements in place for any future equity financing. If we are unable to raise the required financing, our operations could be materially adversely affected and we could be forced to cease operations.
+
+29 | Page
+
+Results of Operations for Period Ending September 30, 2010 
+
+We did not earn any revenues from our incorporation on June 2, 2010 to November 30, 2010. We incurred operating expenses in the amount of $620 for the period from our inception on June 2, 2010 to November 30, 2010. These operating expenses were comprised $376 for bank charges, $60 for the telephone charges and $184 for miscellaneous fees. As of
+
+March 11
+
+, 2011 we had cash of $
+
+5,024
+
+ in our bank accounts. However, we anticipate that we will incur substantial losses over the next 12 months.
+
+We have not attained profitable operations and are dependent upon obtaining financing to continue with our business plan. For these reasons, there is substantial doubt that we will be able to continue as a going concern.
+
+Changes In and Disagreements with Accountants 
+
+We have had no changes in or disagreements with our accountants. 
+
+Available Information
+
+We have filed a registration statement on Form S-1 under the Securities Act of 1933 with the Securities and Exchange Commission with respect to the shares of our common stock offered through this prospectus. This prospectus is filed as a part of that registration statement, but does not contain all of the information contained in the registration statement and exhibits. Statements made in the registration statement are summaries of the material terms of the referenced contracts, agreements or documents of the company. We refer you to our registration statement and each exhibit attached to it for a more detailed description of matters involving the company, and the statements we have made in this prospectus are qualified in their entirety by reference to these additional materials. You may inspect the registration statement, exhibits and schedules filed with the Securities and Exchange Commission at the Commission s principal office in Washington, D.C. Copies of all or any part of the registration statement may be obtained from the Public Reference Section of the Securities and Exchange Commission, 100 F Street NE, Washington, D.C. 20549. D.C. 20549. Please call the Commission at 1-800-SEC-0330 for further information on the operation of the public reference rooms.
+
+The Securities and Exchange Commission also maintains a web site at http://www.sec.gov that contains reports, proxy statements and information regarding registrants that file electronically with the Commission. Our registration statement and the referenced exhibits can also be found on this site. 
+
+Reports to Security Holders
+
+Upon effectiveness of this Prospectus, we will be subject to the reporting and other requirements of the Exchange Act. We will make available to our shareholders annual reports containing financial statements audited by our independent auditors and our quarterly reports containing unaudited financial statements for each of the first three quarters of each year; however, we will not send the annual report to our shareholders unless requested by an individual shareholder. 
+
+The public may read and copy any materials that we file with the SEC at the SEC's Public Reference Room at 100 F Street, NE, Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. The address of that site is www.sec.gov. 
+
+30 | Page
+
+Directors, Executive Officers, Promoters and Control Persons
+
+Our executive officer and director and his age as of the date of this prospectus is as follows:
+
+ 
+
+Director: 
+
+Name of Director 
+
+ 
+
+Age 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+Ireneusz Antoni Nawrot 
+
+ 
+
+49
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+Executive Officers: 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+Name of Officer 
+
+ 
+
+Age 
+
+ 
+
+Office 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+Ireneusz Antoni Nawrot 
+
+ 
+
+49
+
+ 
+
+President, Chief Executive Officer, Treasurer, Chief Financial Officer and Chief Accounting Officer, Secretary
+
+Biographical Information 
+
+Set forth below is a brief description of the background and business experience of our sole officer and director for the past five years. 
+
+Mr. Nawrot has acted as our sole President, Chief Executive Officer, Treasurer, Chief Financial Officer, Chief Accounting Officer, Secretary and sole member of our board of directors since our incorporation on June 2, 2010. Mr. Ireneusz Antoni Nawrot owns 66.52% of the outstanding shares of our common stock. 
+
+Mr. Nawrot obtained a Bachelor s degree in Agriculture from the Agricultural University of Poznan (August Cieszkowski Agricultural University of Poznan), located in Poland, in June 1981. After graduation Mr. Ireneusz Antoni Nawrot has been working for various agricultural companies in Poland and Europe, whose businesses were involved in the production, processing, marketing and use of foods, fibers and byproducts from plant crops. In 1988 Mr. Nawrot opened his own agricultural company Gospodarstwo Ogrodniczo Pieczarskie, specializing in commercial production of white mushrooms (Agaricus bisporus). Since 1988 Gospodarstwo Ogrodniczo Pieczarskie is the only company Mr. Nawrot has worked for. Mr. Nawrot s company Gospodarstwo Orgodniczo Pieczarskie is involved in the commercial production of mushrooms only; it is not a consulting company to the mushroom industry. Even though Mr. Nawrot has not provided consulting services to mushroom growers, his has over 22 years of experience in mushroom growing industry. His experience, qualifications and attributes have led to our conclusion that Mr. Ireneusz Antoni Nawrot should be serving as a member of our Board of Directors in light of our business and structure. Mr. Nawrot has not been a member of the board of directors of any corporations during the last five years. Mr. Nawrot intends to devote close to 30% (15 hours /week) of his time to planning and organizing activities of Indigo International, Corp.
+
+31 | Page
+
+During the past ten years, Mr. Nawrot has not been the subject to any of the following events:
+
+ 1. Any bankruptcy petition filed by or against any business of which Mr. Nawrot was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time.
+
+ 2. Any conviction in a criminal proceeding or being subject to a pending criminal proceeding.
+
+ 3. An order, judgment, or decree, not subsequently reversed, suspended or vacated, or any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting Mr. Nawrot s involvement in any type of business, securities or banking activities.
+
+ 4. Found by a court of competent jurisdiction (in a civil action), the Securities and Exchange Commission or the Commodity Future Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated.
+
+Term of Office 
+
+Our directors are appointed for a one-year term to hold office until the next annual general meeting of our shareholders or until removed from office in accordance with our bylaws. No term, however, has been accorded to Mr. Nawrot s term as a director.
+
+Significant Employees 
+
+We have no significant employees other than our officer and sole director. 
+
+Audit Committee Financial Expert
+
+We do not have an audit committee financial expert. We do not have an audit committee financial expert because we believe the cost related to retaining a financial expert at this time is prohibitive. Further, because we have no operations, at the present time, we believe the services of a financial expert are not warranted.
+
+Conflicts of Interest 
+
+Mr. Ireneusz Antoni Nawrot, our President will be devoting approximately 30% (15 hours/week) of his time to our operations. Because Mr. Nawrot will only be devoting limited time to our operations, our operations may be sporadic and occur at times which are convenient to him. As a result, operations may be periodically interrupted or suspended which could result in a lack of revenues and a cessation of operations.
+
+32 | Page
+
+Executive Compensation
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/CIK0001505409_sun_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001505409_sun_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001505409_sun_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/CIK0001505678_voc_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001505678_voc_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001505678_voc_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/CIK0001505823_franklin_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001505823_franklin_prospectus_summary.txt
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+S-1/A 1 ds1a.htm AMENDMENT NO. 2 TO FORM S-1 Amendment No. 2 to Form S-1 Table of Contents As filed with the Securities and Exchange Commission on February 9, 2011 Registration No. 333-171108 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 PRE-EFFECTIVE AMENDMENT NO. 2 TO FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Franklin Financial Corporation (Exact name of registrant as specified in its charter) Virginia 6035 27-4132729 State or other jurisdiction of incorporation or organization (Primary Standard Industrial Classification Code Number) (IRS Employer Identification Number) 4501 Cox Road Glen Allen, Virginia 23060 (804) 967-7000 (Address, including zip code, and telephone number, including area code, of registrant s principal executive offices) Richard T. Wheeler, Jr. Chairman, President and Chief Executive Officer Franklin Financial Corporation 4501 Cox Road Glen Allen, Virginia 23060 (804) 967-7000 (Name, address, including zip code, and telephone number, including area code, of agent for service) Copies to: Paul M. Aguggia, Esq. Christina M. Gattuso, Esq. Richard Schaberg, Esq. Kilpatrick Townsend & Stockton LLP Hogan Lovells US LLP 607 14th Street, NW, Suite 900 555 13th Street, NW Washington, DC 20005 Washington, DC 20004 (202) 508-5800 (202) 637-5600 Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act, check the following box: If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one) Large accelerated filer Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company Calculation of Registration Fee Title of each class of securities to be registered Amount to be registered Proposed maximum offering price per unit Proposed maximum Aggregate offering price(2) Amount of registration fee Common Stock, $0.01 par value 14,302,838 shares(1) $10.00 $143,028,380 (3) (1) Includes shares of common stock to be issued to The Franklin Federal Foundation, a private foundation. (2) Estimated solely for the purpose of calculating the registration fee pursuant to Regulation 457(o) under the Securities Act. (3) A registration fee of $10,198.00 was paid with the initial filing of the Form S-1 Registration Statement on December 10, 2010. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to Section 8(a), may determine. Table of Contents TABLE OF CONTENTS PAGE SUMMARY 1
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+Prospectus Summary 1
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+SUMMARY OF PROSPECTUS You should read the following summary together with the more detailed business information, financial statements and related notes that appear elsewhere in this prospectus. In this prospectus, unless the context otherwise denotes, references to we, us, our and Company refer to VB Clothing Inc. .
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+Prospectus Summary 1
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+Prospectus Summary 1 Risk Factors 15 Cautionary Note Regarding Forward-Looking Statements 28 Use of Proceeds 29 Dividend Policy 30 Capitalization 31 Dilution 32 Selected Consolidated Financial Data 33 Management s Discussion and Analysis of Financial Condition and Results of Operations 36 Business 54 Management 79 Executive Compensation and Other Information 83 Certain Relationships and Related Party Transactions 95 History and Reorganization 99 Principal and Selling Shareholders 100 Description of Capital Stock 102 Shares Eligible for Future Sale 106 Description of Certain Indebtedness 108 Material U.S. Federal Income Tax Considerations to Non-U.S. Holders 109 Underwriting 113 Legal Matters 120 Experts 120 Where You Can Find More Information 120 Index to Financial Statements F-1 EX-23.1 EX-99.1 We are responsible for the information contained in this prospectus and in any free writing prospectus we may authorize to be delivered to you. Neither we nor the underwriters have authorized anyone to provide you with additional or different information. We and the underwriters are offering to sell, and seeking offers to buy, these securities only in jurisdictions where offers and sales are permitted. The information in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or any sale of these securities. Dealer Prospectus Delivery Obligation Through and including , 2011 (25 days after the date of this prospectus), all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealer s obligation to deliver a prospectus when acting as an underwriter and with respect to unsold allotments or subscriptions. Industry and Market Data The market data and certain other statistical information used throughout this prospectus are based on independent industry publications, government publications or other published independent sources. Some data is also based on our good faith estimates. Although we believe these third-party sources are reliable and that the information is accurate and complete, we have not independently verified the information. Table of Contents PROSPECTUS SUMMARY This summary provides a brief overview of information contained elsewhere in this prospectus. Because it is abbreviated, this summary does not contain all the information that you should consider before investing in our common stock. You should read the entire prospectus carefully before making an investment decision, including the information presented under the headings Risk Factors, Cautionary Note Regarding Forward-Looking Statements and Management s Discussion and Analysis of Financial Condition and Results of Operations and the historical consolidated financial statements and related notes thereto included elsewhere in this prospectus. Unless otherwise indicated, information presented in this prospectus assumes that the underwriters option to purchase additional shares of our common stock is not exercised. As of the date of this prospectus, we conduct our business through Frac Tech Services, LLC, a Texas limited liability company, and its direct and indirect subsidiaries. Immediately prior to the consummation of this offering, we will consummate a reorganization pursuant to which (i) Frac Tech Holdings, LLC, a Texas limited liability company and the direct parent entity of Frac Tech Services, LLC, will merge with and into Frac Tech Services, LLC, and (ii) Frac Tech Services, LLC will then merge with and into its subsidiary Frac Tech Services, Inc., a Delaware corporation, which will survive the merger and issue the common stock being offered and sold in this offering. The historical financial information presented in this prospectus is the historical consolidated financial information of Frac Tech Holdings, LLC, giving effect to certain prior reorganization transactions pursuant to which that entity was established as the parent company of Frac Tech Services, LLC and its direct and indirect subsidiaries. See History and Reorganization . In this prospectus, unless the context otherwise requires, the terms Frac Tech, we, us, our or ours refer to Frac Tech Holdings, LLC and Frac Tech Services, LLC, together with their subsidiaries and predecessor entities before this reorganization, and to Frac Tech Services, Inc., together with its subsidiaries as of the completion of the reorganization and thereafter. See History and Reorganization . Our Company We are a leading independent provider of oil and natural gas well stimulation services with expertise in high-pressure hydraulic fracturing. Oil and natural gas exploration and production ( E P ) companies operating in the United States use our services primarily to enhance their recovery rates from wells drilled in shale and other unconventional reservoirs. Our operations are vertically integrated, which reduces our operating costs, increases our asset utilization, improves our supply chain flexibility and responsiveness and ultimately enhances our financial performance and ability to provide high quality customer service. We use proprietary designs to manufacture durable equipment that we believe gives us a competitive advantage in the most demanding applications. In response to the high demand for our hydraulic fracturing services, we expanded our business in 2007 and 2008 by acquiring raw sand reserves and commencing sand mining and processing operations, and we began our resin-coating sand operations in January 2009 and opened a second resin-coating sand operation in March 2011. These reserves and operations provide us with ready access to raw sand and resin-coated sand, the two principal proppants we use in our operations. Our revenues have grown from $214.4 million in 2006 to $1,286.6 million in 2010, a compound annual growth rate of 56.5%. We are benefitting from a number of positive industry developments, including a dramatic increase in the amount and efficiency of horizontal drilling activity, an increase in the number of hydraulic fracturing stages per well and an increase in drilling activity in oil- and liquids-rich shale formations. These trends, together with the E P industry s recovery from the downturn it experienced in 2008 and 2009, have led to increased asset utilization in our industry and a tight supply of fracturing fleets, proppants and other fracturing-related services and products. We also believe there is growing international interest in horizontal drilling and fracturing methods, and we intend to evaluate these opportunities as they arise. Our operations are focused primarily in unconventional oil and natural gas formations in the Haynesville Shale in northwestern Louisiana and east Texas, the Marcellus Shale in the Appalachian Basin in Pennsylvania and West Virginia, the Eagle Ford Shale in south Texas, and the Permian Basin in west Texas and southeastern New Mexico. We believe we have one of the largest market shares of any hydraulic fracturing service provider in the Haynesville Shale, in the Marcellus Shale and in the Eagle Ford Shale based on number of fleets. In Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED MARCH 31, 2011 Shares Frac Tech Services, Inc. Common Stock We are selling shares of common stock and the selling stockholders are selling shares of common stock. We will not receive any of the proceeds from the shares of common stock sold by the selling stockholders. Prior to this offering, there has been no public market for our common stock. The initial public offering price of the common stock is expected to be between $ and $ per share. We will apply to list our common stock on The New York Stock Exchange under the symbol FTS . The underwriters have an option to purchase a maximum of additional shares to cover over-allotments of shares. Investing in our common stock involves risks. See Risk Factors on page 15. Underwriting Price to Discounts and Proceeds to Proceeds to Selling Public Commissions Issuer Shareholders Per Share $ $ $ $ Total $ $ $ $ Delivery of the shares of common stock will be made on or about , 2011. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. Joint Book-Running Managers Credit Suisse BofA Merrill Lynch Citi Morgan Stanley RBC Capital Markets Senior Co-Managers Jefferies Johnson Rice Company L.L.C. Wells Fargo Securities Co-Managers Macquarie Capital Pritchard Capital Partners, LLC Raymond James Simmons Company International Stephens Inc. Tudor, Pickering, Holt Co. The date of this prospectus is , 2011. Table of Contents recent periods, we have obtained an increasing number of engagements in connection with oil-directed drilling, particularly in the Eagle Ford Shale and the Permian Basin. In the first quarter of 2011, we began serving customers in the Bakken Shale in North Dakota and Montana and in the Granite Wash formation in Oklahoma. Our engagements in these areas primarily relate to horizontal drilling for oil and other hydrocarbon liquids. We expect to deploy new fleets in additional regions with significant oil- and liquids-directed drilling activity in 2011, which may include the Niobrara Shale in Colorado, Wyoming and Nebraska, among others. The customers we currently serve are primarily large E P companies such as Petrohawk Energy Corporation, XTO Energy Inc. (which is a subsidiary of Exxon Mobil Corporation), Chesapeake Energy Corporation and Range Resources Corporation. We own and operate fleets of mobile hydraulic fracturing units and other auxiliary heavy equipment to perform fracturing services. Our hydraulic fracturing units consist primarily of a high pressure hydraulic pump, a diesel engine, a transmission and various hoses, valves, tanks and other supporting equipment that are typically mounted to a flat-bed trailer. The group of fracturing units, other equipment and vehicles necessary to perform a typical fracturing job is referred to as a fleet and the personnel assigned to each fleet are commonly referred to as a crew . In areas where we operate on a 24-hour-per-day basis, we typically staff two crews per fleet. We currently operate 25 hydraulic fracturing fleets with approximately 1,100,000 horsepower in the aggregate. We believe the vertical integration of our operations, which provides the ready availability of the equipment and products that are necessary to our business, provides us with a significant competitive advantage. We manufacture all the hydraulic fracturing units in our fleets as well as substantially all the high-pressure pumps used in our fracturing units. We own and operate sand mines, related processing facilities, resin-coating facilities and a distribution network that provide us with a reliable and low cost supply of raw and resin-coated sand. Our raw sand and resin-coating sand operations supplied approximately 65% and 49%, respectively, of the raw sand and resin-coated sand we used as proppants in our hydraulic fracturing operations during 2010. In addition, we formulate and blend some of the chemical compounds that we use in fracturing fluids at our chemical manufacturing facility and research and development laboratories. Our technical staff of engineers, chemists, technicians and a geologist support our operations by optimizing the design and delivery of our equipment, products and services and by continually seeking to improve the quality, durability and effectiveness of the solutions we provide to our customers. At full capacity, we are capable of producing up to 30 fracturing units, with an aggregate of approximately 75,000 horsepower, per month. To increase our fracturing units durability, reliability, and utilization, we manufacture a proprietary high pressure pump consisting of two key assemblies, a power end and a fluid end. Although the power end of our pumps may last several years, the fluid end, which is the part of the pump through which the fracturing fluid is expelled under high pressure, is a shorter-lasting consumable, often lasting less than one year. We currently have the capacity to manufacture up to 30 power ends and 130 fluid ends per month to equip new fracturing units and to replace the fluid ends on our existing fleets. We have processing plants at our two sand mines in Texas and Missouri and two additional sand processing plants in Wisconsin. We are currently capable of processing approximately 1.9 million tons per year of raw sand, which is the most common type of proppant we use in our fracturing operations. As of February 4, 2011, we had an estimated 367 million tons of sand reserves. See Business Sand Production and Distribution Sand Reserves . Our resin-coating facilities currently have the capacity to produce approximately 1.0 billion pounds of resin-coated sand annually. We intend to expand our raw sand and resin-coated sand production capacity over the next 12 months. See Business Sand Production and Distribution Sand Production . In addition to our mines and processing plants, we have eight sand distribution facilities in Texas, Louisiana and Pennsylvania, 110 bulk hauling trailers for highway transportation and approximately 1,500 leased rail cars, which enable us to deliver proppants to our fracturing jobs quickly and on short notice. Industry Overview The pressure pumping industry provides hydraulic fracturing and other well stimulation services to E P companies. Fracturing involves pumping a fluid down a well casing or tubing under high pressure to cause the Table of Contents Table of Contents underground formation to crack, allowing the oil or natural gas to flow more freely. A propping agent, or proppant, is suspended in the fracturing fluid and props open the cracks created by the fracturing process in the underground formation. Proppants generally consist of sand, resin-coated sand or ceramic particles. The total size of the hydraulic fracturing market, based on revenue, was estimated to be approximately $16.0 billion in 2008 and approximately $10.5 billion in 2009 based on data from a 2009 report by Spears Associates. The main factors influencing demand for fracturing services in North America are the level of horizontal drilling activity by E P companies and the fracturing requirements, including the number of fracturing stages and the volume of fluids, chemicals and proppant pumped per stage, in the respective resource plays. The hydraulic fracturing market is cyclical. During 2008 and 2009, market conditions affecting the E P industry, particularly depressed crude oil and natural gas prices, led to reduced activity, including horizontal drilling. These adverse conditions were the principal reason for the contraction in the size of the hydraulic fracturing market in 2009 noted above. Since late 2009, there has been a significant increase in both horizontal drilling activity and related fracturing requirements, which has increased the demand for our services. We believe the revenue generated in the hydraulic fracturing market in 2010 exceeded the revenue generated in 2008. Industry Trends Impacting Our Business Increase in Frac Stages Resulting from Horizontal Drilling Activity Advances in drilling and completion technologies including horizontal drilling and hydraulic fracturing have made the development of many unconventional resources such as oil and natural gas shale formations economically attractive. This has led to a dramatic increase in the development of oil- and natural gas-producing shale formations, or plays, in the United States. According to Baker Hughes, Inc., the North American horizontal rig count has risen from 335 at the beginning of 2007 to 995 at March 25, 2011. At the same time, the hydraulic fracturing industry is benefitting from drilling trends that are causing the number of fracturing stages to grow at a faster rate than the horizontal rig count. As E P companies have become more experienced at developing shale plays, the time required to drill wells has decreased, thus increasing the number of wells drilled per year and hence the number of fracturing stages demanded for a given rig count. At the same time, the length of well laterals is increasing and fracturing stages are being performed at closer intervals, which also is increasing the number of fracturing stages per well. These trends are providing significantly greater revenue opportunities for our services. Increased Service Intensity in More Demanding Shale Reservoirs Many of the new shales that have been discovered, such as the Haynesville and Eagle Ford Shales, are high pressure reservoirs that require an increasing number of fracturing stages and more technically sophisticated forms of proppant, such as resin-coated sand and ceramic proppants. The additional horizontal drilling activity, coupled with the demanding characteristics of unconventional reservoirs, has put increasing demands on hydraulic fracturing equipment. Moreover, individual fracturing stages have become more intensive, requiring more fluids, chemicals and proppant per stage. We focus on the most demanding reservoirs where we believe we have a competitive advantage due to the high performance and durability of our equipment and our ability, through our vertical integration, to support high asset utilization that results in more efficient operations. We believe that, within the industry, we manufacture and deploy one of the most durable fluid ends, which is the part of the high pressure pump that requires replacement most frequently. Increased Asset Utilization We are ultimately compensated based on the number of fracturing stages we complete. Historically, each of our fleets completed one fracturing stage per day, but our fleets now typically complete multiple stages per day, usually on the same well. In our highest activity regions, some of our fleets are operating on a 24-hour-per-day, seven-day-per-week basis with two crews rotating to increase asset efficiency. In addition, we are scheduling fracturing jobs that are geographically close to one another in order to increase our asset utilization. While increased asset utilization results in higher levels of stress on our equipment, we have increased our Table of Contents capacity to manufacture, maintain and repair fluid ends and other products, which has bolstered our repair and maintenance capability. Increased Drilling in Oil- and Liquids-Rich Formations There is increasing drilling activity in oil- and liquids-rich formations in the United States, such as the Eagle Ford, Bakken and Niobrara Shales and various plays in Oklahoma, including the Granite Wash. Although the E P industry is cyclical and oil prices have historically been volatile, we believe that many of the oil- and liquids-rich plays are economically attractive at oil prices substantially below the current prevailing oil price. We believe this should provide continued and growing opportunities for our services in the near term. Tight Supply of Hydraulic Fracturing Fleets, Proppants and Other Products Due to increased drilling in unconventional formations, the demand for well stimulation services and products has increased dramatically. Consequently, fracturing fleets, proppants, replacement and repair parts and other products became increasingly scarce during 2010, resulting in pricing increases. Based on current market conditions, we expect this trend to continue throughout 2011. We are well positioned to take advantage of the market scarcity due to our vertical integration strategy because we supply our own pumps and most of our proppant requirements and other equipment, and we manufacture and repair our fracturing units in-house. Growing International Interest in Hydraulic Fracturing There is growing international interest in the development of unconventional resources such as oil and natural gas shales. This interest has resulted in a number of recently completed joint ventures between major U.S. and international E P companies related to shale plays in the United States. We believe that these joint ventures, which generally require the international partner to commit to significant future capital expenditures, will provide additional demand for hydraulic fracturing services in the coming years. Additionally, we believe such joint ventures will continue to stimulate development of other oil and natural gas shales outside the United States. Competitive Strengths We believe that we have the following competitive strengths: Vertically Integrated Business Our vertical integration provides us with a number of competitive advantages. For example, the time between initial order and final delivery of a fracturing unit is significantly reduced as a result of our in-house manufacturing. Moreover, once our units are deployed, they are able to continue to operate with minimal delays for our customers, because our ability to quickly provide replacement fluid ends and other consumables reduces our maintenance turnaround time. Similarly, our raw sand and resin-coating operations provide a reliable source of proppant for our operations. Our sand distribution centers and our transportation infrastructure address the logistical challenges inherent in our business by allowing us to transport and deliver proppant and equipment quickly to our fracturing jobs on short notice. Because we produce most of the key equipment and products necessary for our operations, we are able to provide swift service while controlling costs. We estimate that our manufacturing costs per fracturing unit is approximately 30% less than we would pay to purchase a similar fracturing unit from outside suppliers and that our manufacturing cost per fluid end is approximately 30% less than we would pay to purchase a similar fluid end from outside suppliers. Similarly, we are able to produce proppants such as raw sand and resin-coated sand and to blend chemicals at lower cost than we would typically pay for such products from outside suppliers. As a result, our vertically integrated business improves our margins, reduces our maintenance capital expenditures and improves our equipment utilization. These factors enable us to provide superior service at competitive prices, thereby increasing customer satisfaction, strengthening our existing customer relationships and helping us to expand our customer base. Table of Contents High-Quality Fleet We maintain high-quality fleets of hydraulic fracturing units and related equipment. Our 25 fleets have approximately 1,100,000 horsepower in the aggregate and are strategically located throughout our principal markets. We believe our fleets are among the newest, most reliable and highest performing in the industry with the capability of meeting the most demanding pressure and flow rate requirements in the field. Our equipment s durability minimizes delays and reduces maintenance costs. Moreover, we maintain our high-quality fleets through our manufacturing and repair facilities and our maintenance and repair personnel who work out of our district offices, which allow us to service, repair and rebuild our equipment quickly and efficiently without incurring excessive costs. These factors increase utilization of our fleets and enhance customer satisfaction because of reduced down time and delays. Advanced Equipment and Products Our engineering team has enabled us to create what we believe to be one of the most technologically advanced and durable fleets of hydraulic pumps in the industry. We also have chemical blending and research and development facilities where our technical staff designs and improves upon the composition of the chemicals we add to hydraulic fracturing fluids based on specific customer needs and geological factors. For example, we recently filed a U.S. patent application for a new additive that uses nano particles to enhance the recovery of hydrocarbons from significantly depleted hydrocarbon formations. In addition, our technical staff has developed innovative techniques for completing and stimulating wells in unconventional formations that have helped establish us as a market leader in our industry. Highly Active Customer Base We have long-standing relationships with many of the leading oil and natural gas producers operating in the United States. Our largest customers include Petrohawk Energy Corporation, XTO Energy Inc., Chesapeake Energy Corporation and Range Resources Corporation. Since 2002, we have broadened our customer base as a result of our technical expertise, high-quality fracturing fleets and reputation for quality and customer service. Our strong customer relationships allow us significant revenue visibility in the near to intermediate term and facilitate our ability to opportunistically expand our business to provide services to our customers in multiple areas in which they have operations. In addition, we have exclusively dedicated a larger portion of our fleets to our largest customers pursuant to informal arrangements and long-term written agreements. Leading Market Share in Key Unconventional Resource Plays As a result of our focus on superior service and strong customer relationships, we believe we have one of the largest market shares of any hydraulic fracturing company in the Haynesville Shale, in the Marcellus Shale and in the Eagle Ford Shale based on number of fleets. In addition to our current leading positions, we have recently begun serving customers in the Bakken Shale and the Granite Wash formation, and we have plans to expand into other prolific unconventional resource plays, such as the Niobrara Shale, where significant demand exists for high-quality fracturing services. Our leading market positions in the most demanding shale plays create economies of scale that allow us to more efficiently deploy our crews and to increase our productivity, efficiency and performance. Incentivized Work Force The managers of our hydraulic fracturing crews are eligible to receive incentive pay per fracturing stage subject to satisfying quality and safety standards. In addition, all of our field employees are eligible to receive incentive pay based on satisfying safety standards. We believe that this incentive program enables us to achieve higher utilization, attract the most competent work force and motivate our employees to continually maintain quality and safety. The incentive pay available under this program may represent a significant supplement to the compensation earned by our fleet managers. Table of Contents Experienced Management Team We have an experienced management team that has built our business. Dan Wilks and Farris Wilks, our chief executive officer and chief operating officer, respectively, who founded our company in 2002, each has more than 25 years of oilfield business experience. We added Marc Rowland, former Chief Financial Officer of Chesapeake Energy Corporation, as our President and CFO effective November 1, 2010. Our Executive Vice President of Sales and Operations, Bill Barker, has over 26 years of oilfield business experience. The remainder of our management team is comprised of seasoned operating, marketing, financial and administrative executives, many of whom have prior experience at prominent oilfield service companies such as BJ Services Company, Halliburton Corporation and Schlumberger Limited. Our management team s extensive experience in and knowledge of the oilfield services industry strengthens our ability to compete and manage our business through industry cycles. Strategy We intend to build upon our competitive strengths to grow our business and increase our revenues and operating income. Our strategy to achieve these goals consists of (1) enhancing our vertical integration, (2) increasing our proppant production and distribution and our pump manufacturing capacity, (3) expanding our geographic footprint, (4) focusing on our operational efficiencies and (5) continuing to enhance our contract terms with customers. Enhance Vertical Integration We will continue to seek opportunities to further enhance our vertical integration by adding complementary service offerings to improve our customer service. Any new services that we may add will be focused primarily on improving the quality, reliability and deliverability of our existing service offerings. Increase Proppant Production and Distribution and Pump Manufacturing Capacity We intend to increase our raw sand production capacity by expanding our four existing processing plants in Texas, Missouri and Wisconsin, and we are seeking to open a third sand mine, as well as a new sand processing plant, in Illinois. In addition, we plan to more than double our resin-coated sand production capacity over the next few years, and we are enlarging our distribution network to support the expansion of our sand operations. We also intend to increase our high pressure pump manufacturing capacity by expanding our existing plants and adding new plants. Expand Geographic Footprint We will continue to expand our operations to regions containing unconventional formations that are likely to require multi-stage high-pressure hydraulic fracturing efforts. For example, we deployed two new fleets with approximately 80,000 horsepower to serve customers in the Eagle Ford Shale in south Texas in the second half of 2010, bringing our total horsepower in that region to approximately 188,000 horsepower. In the first quarter of 2011, we deployed one new fleet with approximately 47,500 horsepower to serve customers in the Granite Wash, an oil and natural gas formation in Oklahoma, and one new fleet with approximately 30,000 horsepower to serve customers in the Bakken Shale, an oil-rich formation in North Dakota and Montana. We intend to deploy two additional new fleets in the Bakken Shale in the second quarter. In addition, in response to strong demand for horizontal drilling in oil- and liquids-rich regions, we are contemplating the deployment of fleets to the Niobrara Shale in Colorado, Wyoming and Nebraska, among other areas. We expect to add a total of 16 new fleets, and additional fracturing units to some of our existing fleets, with an aggregate additional horsepower of approximately 662,000 by the end of 2011. Although we currently have no international operations, we will continue to evaluate those opportunities as they arise. Focus on Operational Efficiencies We intend to continue to focus on improving our operational efficiencies to increase our asset utilization and to improve our cost structure. We can quickly reposition our fleet into the most active and profitable markets as demand for hydraulic fracturing services changes in order to maintain fleet utilization, generate Table of Contents additional revenues and improve margins. In certain circumstances, we have deployed multiple crews for a single fleet to allow us to operate our fleets on a 24-hour-per-day, seven-day-per-week basis, and we will continue to look for opportunities to do so. We continue to strive to reduce equipment down time through the use of our regional maintenance centers. Continue to Enhance Contract Terms with Customers In response to increased demand and tight supply of fracturing fleets in some of our key markets, at the request of a number of our customers we dedicated one or more of our fleets exclusively to their operations at agreed prices. Recently, we have entered into written dedicated service agreements with customers. These agreements typically have 18-month to two-year terms and require customers to pay us a minimum daily rate or a minimum amount per quarter. Since October 2010 we have entered into eight of these written contracts with seven of our largest customers operating in the Haynesville, Marcellus and Eagle Ford Shales pursuant to which we have agreed to dedicate one or more fleets to their operations, either full time or for a specified portion of each month. Each of these contracts requires the customer to pay a substantial fee for early termination of the contract, and the prices we charge the customers are subject to increases based on increases in our costs, subject to certain limits. See Management s Discussion and Analysis of Financial Condition and Results of Operations How We Generate Our Revenues . Currently, eight of our 25 fleets are dedicated to customers under these written agreements. These agreements increase the predictability of our future revenues, improve our ability to deploy our fleets efficiently and enhance our customer relationships. We expect that a majority of the 16 new fleets we plan to deploy by the end of 2011 will eventually operate under written dedicated service agreements. Each of the remaining fleets will be dedicated to serving multiple customers on an as-available basis, allowing us to retain the flexibility to serve new customers and to redeploy our fleets to new regions as attractive opportunities arise. History and Reorganization Frac Tech Services, LLC was formed as a Texas limited partnership in August 2000, and we began providing hydraulic fracturing services to E P companies in 2002. Since then, we have undertaken several reorganization transactions as a result of which that company has been converted to a Texas limited liability company and all of the other entities through which we conduct business have become direct or indirect wholly owned subsidiaries of Frac Tech Services, LLC, and Frac Tech Holdings, LLC, a Texas limited liability company, was established as our direct parent entity. In connection with our private offering of $550.0 million aggregate principal amount of our 7.125% Senior Notes due 2018, which closed on November 12, 2010, we established Frac Tech Finance, Inc., a Delaware corporation, for the purpose of acting as co-issuer of those Senior Notes. Frac Tech Finance, Inc. subsequently changed its name to Frac Tech Services, Inc. Frac Tech Services, Inc. currently has no assets and no liabilities other than with respect to the Senior Notes. Immediately prior to consummation of our initial public offering of common stock pursuant to this prospectus, Frac Tech Holdings, LLC will be merged with and into Frac Tech Services, LLC, and Frac Tech Services, LLC will be merged with and into Frac Tech Services, Inc. As a result of those mergers, which we refer to collectively as our Reorganization, (i) Frac Tech Services, Inc. will survive as the parent company of all of our subsidiaries and will own the assets and conduct the business currently owned and conducted by Frac Tech Services, LLC; (ii) Frac Tech Services, Inc., will be the sole direct obligor under our Senior Notes; (iii) the current beneficial owners of our outstanding equity securities, as described under Principal and Selling Shareholders, including the selling shareholders, will receive shares of Frac Tech Services, Inc. common stock in exchange for their current membership interests in Frac Tech Holdings, LLC; and (iv) Frac Tech Services, Inc. will be the issuer of the common stock offered and sold in our initial public offering pursuant to this prospectus. Table of Contents The following chart sets forth a condensed summary of our organizational structure prior to this offering, and before giving effect to our Reorganization. (1) World Investment Group, LLC, a Delaware limited liability company, is owned by Dan Wilks, Farris Wilks and Bill Barker, each of whom is a director and executive officer of the issuer. See Management Directors and Executive Officers and Principal and Selling Shareholders . (2) Chesapeake Energy Corporation owns its interest in us through its wholly owned subsidiary, Chesapeake Operating, Inc., an Oklahoma corporation. See Principal and Selling Shareholders . (3) Some of our subsidiaries are owned by an intermediate holding company. All subsidiaries are directly or indirectly wholly owned by Frac Tech Services, Inc., after giving effect to our Reorganization. Chart excludes certain inactive subsidiaries. Table of Contents The following chart sets forth a condensed summary of our organizational structure after giving effect to our Reorganization and to the consummation of this offering, assuming no exercise of the underwriters over-allotment option. (1) World Investment Group, LLC, a Delaware limited liability company, is owned by Dan Wilks, Farris Wilks and Bill Barker, each of whom is a director and executive officer of the issuer. See Management Directors and Executive Officers and Principal and Selling Shareholders . (2) Chesapeake Energy Corporation owns its interest in us through its wholly owned subsidiary, Chesapeake Operating, Inc., an Oklahoma corporation. See Principal and Selling Shareholders . (3) Some of our subsidiaries are owned by an intermediate holding company. All subsidiaries are directly or indirectly wholly owned by Frac Tech Services, Inc., after giving effect to our Reorganization. Chart excludes certain inactive subsidiaries. Table of Contents Company Information Frac Tech Services, Inc., a Delaware corporation, will be the issuer of the shares of common stock being offered pursuant to this prospectus. Frac Tech Services, Inc., as successor to Frac Tech Holdings, LLC, a Texas limited liability company, and Frac Tech Services, LLC, a Texas limited liability company, pursuant to merger transactions to be consummated immediately prior to the closing of this offering, will conduct our business, directly and through its subsidiaries. See History and Reorganization . Our principal executive offices are located at 16858 Interstate Highway 20, Cisco, Texas 76437, and our telephone number at that address is (817) 850-1008. Our website address is http://www.fractech.net. However, information contained on our website is not incorporated by reference into this prospectus, and you should not consider the information contained on our website to be part of this prospectus. Table of Contents The Offering Common stock offered by Frac Tech Services, Inc. shares Common stock offered by selling shareholders shares Common stock outstanding after the offering shares(1) Over-allotment option Frac Tech Services, Inc. and the selling shareholders have granted the underwriters an option, exercisable for 30 days, to purchase up to an aggregate of additional shares of our common stock to cover over-allotments, if any. Directed share program We have reserved up to shares of the common stock offered by this prospectus for employees, directors and other persons associated with us who have expressed an interest in purchasing common stock in the offering. See Underwriting for more information. Use of proceeds We expect to receive approximately $ million of net proceeds from the sale of the common stock offered by us, based upon the assumed initial public offering price of $ per share (the midpoint of the price range set forth on the cover page of this prospectus), after deducting underwriting discounts and commissions and estimated offering expenses. Each $1.00 increase (decrease) in the public offering price would increase (decrease) our net proceeds by approximately $ million. We intend to use the net proceeds we receive from this offering to exercise our right under the indenture governing our 7.125% Senior Notes due 2018 to redeem up to $192.5 million in aggregate principal amount of Senior Notes, to fund capital expenditures and for general corporate purposes. See Use of Proceeds . We will not receive any of the net proceeds from the sale of the common stock offered by the selling shareholders. Dividend policy After this offering, we do not anticipate paying cash dividends on our common stock in the foreseeable future. See Dividend Policy . New York Stock Exchange symbol (reserved) FTS (1) The common stock that will be outstanding after the offering is based on the shares that will be outstanding immediately prior to the consummation of the offering, after giving effect to the merger transactions described under History and Reorganization, which we refer to as our Reorganization, and to the issuance of shares of common stock that we propose to issue in this offering, and does not include shares of common stock reserved for issuance under our Long-Term Incentive Plan, of which options to purchase shares are currently outstanding. Unless otherwise indicated, all information contained in this prospectus: Reflects the consummation of our Reorganization, as described under History and Reorganization, and the issuance of shares of common stock to the owners of the equity interests in our parent company, Frac Tech Holdings, LLC, in connection therewith; and Assumes that the underwriters over-allotment option granted by us and the selling shareholders for an aggregate of shares of common stock will not be exercised. Table of Contents Risk Factors An investment in our common stock involves significant risks. Before investing in our common stock, you should carefully consider all the information contained in this prospectus, including the information under the headings Risk Factors and Cautionary Note Regarding Forward-Looking Statements . Our business, financial condition and results of operations could be materially and adversely affected by many factors, including the following
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+S-1/A 1 v211420_s1a.htm Unassociated Document As filed with the Securities and Exchange Commission on February 14, 2011 Registration No. 333-170947 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Amendment No. 4 to Form S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 RLJ ACQUISITION, INC. (Exact name of registrant as specified in its charter) Nevada (State or other jurisdiction of incorporation or organization) 6770 (Primary Standard Industrial Classification Code Number) 27-3970903 (I.R.S. Employer Identification Number) 3 Bethesda Metro Center, Suite 1000 Bethesda, MD 20814 (301) 280-7737 (Address, including zip code, and telephone number, including area code, of registrant s principal executive offices) H. Van Sinclair c/o RLJ Acquisition, Inc. 3 Bethesda Metro Center, Suite 1000 Bethesda, MD 20814 (301) 280-7737 (Name, address, including zip code, and telephone number, including area code, of agent for service) Copies to: Alan I. Annex Jason Simon Greenberg Traurig, LLP MetLife Building 200 Park Avenue New York, New York 10166 (212) 801-9200 (212) 801-6400 Facsimile Thomas J. Ivey Gregg A. Noel Skadden, Arps, Slate, Meagher & Flom LLP 525 University Avenue, Suite 1100 Palo Alto, California 94301 (650) 470-4500 (650) 470-4570 Facsimile Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box. If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer o Accelerated filer o Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company o SUMMARY This summary only highlights the more detailed information appearing elsewhere in this prospectus. As this is a summary, it does not contain all of the information that you should consider in making an investment decision. You should read this entire prospectus carefully, including the information under Risk Factors and our financial statements and the related notes included elsewhere in this prospectus, before investing. References in this prospectus to we, us or our company refer to RLJ Acquisition, Inc. References in this prospectus to our public shares are to shares of our common stock sold as part of the units in this offering (whether they are purchased in this offering or thereafter in the open market) and references to public stockholders refer to the holders of our public shares, including our initial stockholders (as defined below) to the extent our initial stockholders purchase public shares, provided that each initial stockholder s status as a public stockholder shall only exist with respect to such public shares. References in this prospectus to our management or our management team refer to our officers and directors, references to our sponsor refer to RLJ SPAC Acquisition, LLC, a Delaware limited liability company, and references to our initial stockholders refer to our sponsor, William S. Cohen and Morris Goldfarb. Unless we tell you otherwise, the information in this prospectus assumes that the underwriters will not exercise their over-allotment option. General We are a newly organized blank check company formed under the corporate laws of the State of Nevada for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. We have not identified any acquisition target and we have not, nor has anyone on our behalf, initiated any substantive discussions with an entity that we will acquire in our initial business combination. We are not limited to a particular industry, geographic region or minimum transaction value for purposes of consummating an initial business combination, except that we will not, under our amended and restated articles of incorporation, be permitted to effect a business combination with another blank check company or a similar type of company with nominal operations. We will seek to capitalize on the significant investing experience of our management team, including Robert L. Johnson, our founder and chairman of the board. Mr. Johnson is the founder and chairman of The RLJ Companies which, together with Mr. Johnson, owns or holds interests in a diverse portfolio of companies primarily in the banking, private equity, real estate, hospitality, professional sports, film production, gaming and automobile dealership industries. Businesses within Mr. Johnson s and The RLJ Companies portfolio include: RLJ Development, LLC/RLJ Urban Lodging Funds, real estate enterprises that primarily own upscale select service hotels and one compact full service hotel in major markets in North America; RLJ Equity Partners, LLC, a private equity fund founded with The Carlyle Group that specializes in middle-market leveraged buy-outs, leveraged recapitalizations and growth equity; RolloverSystems, a financial services company that provides outsourced retirement plan rollover services for financial services institutions, plan sponsors and third party administrators; RLJ Western Asset Management, LLC, the only minority-owned entity designated by the U.S. Treasury Department as a pre-qualified fund manager to participate in the Public Private Investment Fund Program; RLJ-McLarty-Landers Automotive Holdings, LLC, which operates 35 automotive franchises and, with an affiliate, three Harley-Davidson motorcycle dealerships across the South Central, Southeast and Midwest regions of the United States; Bobcat Sports & Entertainment, which comprises the franchise and arena operations of the Charlotte Bobcats NBA professional basketball team; The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine. Caribbean CAGE, LLC, a gaming company that focuses on the installation, operation and management of video lottery terminals, linked gaming systems and game content throughout the Caribbean and Latin America; Our Stories Films, LLC, a film production studio that produces theatrical motion pictures that showcase the talents of African Americans on both sides of the camera and in the creative process; and The RLJ Kendeja Resort & Villas, a luxury resort hotel located on 13-acres of ocean front property overlooking the Atlantic Ocean outside of Monrovia, Liberia. The first real estate fund formed by RLJ Development, LLC/RLJ Urban Lodging Funds completed its initial closing in October 2004 and its final closing in April 2005, securing approximately $315 million in equity commitments from ten institutions. This fund deployed all of its capital within three years, acquiring 27 hotels from 22 different sellers, and the entire fund was sold in February 2008. Two additional funds were formed in March 2006 and July 2007, respectively. To date, these funds have acquired 132 properties from 21 different sellers. Since The RLJ Companies became a partner in RLJ-McLarty-Landers Automotive Holdings, LLC in 2007, that business has completed 12 acquisitions, growing its number of dealerships from seven to 19. Prior to forming The RLJ Companies , Mr. Johnson was founder and chairman of Black Entertainment Television, or BET, the nation s first and leading television network providing quality entertainment, music, news, sports and public affairs programming for the African American audience. Under Mr. Johnson s leadership, BET became the first African American-owned company publicly traded on the New York Stock Exchange. In 2001, Mr. Johnson sold BET to Viacom for approximately $3 billion and remained the Chief Executive Officer through 2006. Our independent directors, William S. Cohen, Mario Gabelli and Morris Goldfarb, also have significant business experience. Mr. Cohen has been Chairman and Chief Executive Officer of The Cohen Group, a business consulting firm, since January 2001, and prior to that served as the United States Secretary of Defense from January 1997 to 2001, as a United States Senator from 1979 to 1997, and as a member of the United States House of Representatives from 1973 to 1979. Mr. Gabelli has served as Chairman, Chief Executive Officer, Chief Investment Officer Value Portfolios and a director of GAMCO Investors, Inc. since November 1976. In connection with those responsibilities, he serves as director or trustee of registered investment companies managed by GAMCO and its affiliates. Mr. Gabelli has been a portfolio manager for Teton Advisors, Inc. since 1998 through the present, an asset management company which was spun-off from GAMCO in March 2009. Mr. Goldfarb serves as Chairman of the Board and Chief Executive Officer of G-III Apparel Group, Ltd. (Nasdaq: GIII), a designer, manufacturer, importer and marketer of apparel, handbags and luggage. Mr. Goldfarb has served as an executive officer and director of G-III and its predecessors since its formation in 1974. We anticipate acquiring 100% of the equity interest or assets of the target business or businesses in our initial business combination. We may, however, structure a business combination to acquire less than 100% of such interests or assets of the target business, and may consider select venture capital investment opportunities, but we will only consummate such a business combination if RLJ Acquisition, Inc. (or its stockholders if it is not the surviving corporation) will become the controlling stockholder of the target or is otherwise not required to register as an investment company under the Investment Company Act of 1940, as amended, or the Investment Company Act. We will not consider any transaction that does not meet such criteria. We have identified the following general criteria and guidelines that we believe are important in evaluating prospective target businesses. We will use these criteria and guidelines in evaluating acquisition opportunities. However, we may decide to enter into a business combination with a target business that does not meet these criteria and guidelines. Established Companies with Proven Track Records. We will seek to acquire established companies with sound historical financial performance. We will typically focus on companies with a history of strong operating and financial results. We do not intend to acquire start-up companies. Companies with Strong Free Cash Flow Characteristics. We will seek to acquire companies that have a history of strong, stable free cash flow generation (i.e. companies that typically generate cash in excess of that required to maintain or expand the business s asset base). We will focus on companies that have predictable, recurring revenue streams and an emphasis on low capital expenditure requirements. An example of such a company could be one that typically sells its inventory, is paid on time by its customers on a generally predictable basis and does not need to materially acquire or upgrade physical assets on a regular basis. The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED FEBRUARY 14, 2011 PRELIMINARY PROSPECTUS $125,000,000 RLJ Acquisition, Inc. 12,500,000 Units RLJ Acquisition, Inc. is a newly organized blank check company formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses, which we refer to throughout this prospectus as our initial business combination. We have not identified any acquisition target and we have not, nor has anyone on our behalf, initiated any substantive discussions with an entity that we will acquire in our initial business combination. We are not limited to a particular industry, geographic region or minimum transaction value for purposes of consummating an initial business combination. If we are unable to consummate a business combination within 21 months from the closing of this offering, we will be required, under our amended and restated articles of incorporation, to redeem 100% of the public shares at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest but net of franchise and income taxes payable (less up to $100,000 of such net interest to pay dissolution expenses), divided by the number of then outstanding public shares, subject to applicable law and as further described herein. This is an initial public offering of our securities. We are offering 12,500,000 units. Each unit has an offering price of $10.00 and consists of one share of our common stock and one warrant. Each warrant entitles the holder to purchase one share of our common stock at a price of $12.00, subject to adjustment as described in this prospectus. We have also granted the underwriters a 45-day option to purchase up to an additional 1,875,000 units to cover over-allotments, if any. Currently, there is no public market for our units, common stock or warrants. It is anticipated that our units will be quoted on the Over-the-Counter Bulletin Board quotation system, or the OTCBB, under the symbol on or promptly after the date of this prospectus. The common stock and warrants comprising the units will begin separate trading on the 52nd day following the date of this prospectus unless Lazard Capital Markets LLC informs us of its decision to allow earlier separate trading, subject to our filing a Current Report on Form 8-K with the Securities and Exchange Commission, or the SEC, containing an audited balance sheet reflecting our receipt of the gross proceeds of this offering and issuing a press release announcing when such separate trading will begin. Once the securities comprising the units begin separate trading, the common stock and warrants will be traded on the OTCBB under the symbols and , respectively. Investing in our securities involves a high degree of risk. See Risk Factors beginning on page 18 for a discussion of information that should be considered in connection with an investment in our securities. Neither the SEC nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. Per Unit Total Proceeds Public offering price $ 10.00 $ 125,000,000 Underwriting discounts and commissions(1) $ 0.50 $ 6,250,000 Proceeds, before expenses, to us $ 9.50 $ 118,750,000 (1) Includes $0.25 per unit, or approximately $3.1 million in the aggregate (approximately $3.6 million if the underwriters over-allotment option is exercised in full), payable to the underwriters for deferred underwriting commissions to be placed in the trust account described below. Such funds will be released to the underwriters only on completion of an initial business combination, as described in this prospectus. See also Underwriting beginning on page 108. Strong Competitive Industry Position. We will seek to acquire businesses that operate within industries that have strong fundamentals. The factors we will consider include growth prospects, competitive dynamics, level of consolidation, need for capital investment and barriers to entry. Within these industries, we will focus on companies that have a leading or niche market position. We will analyze the strengths and weaknesses of target businesses relative to their competitors, focusing on product quality, customer loyalty, cost impediments associated with customers switching to competitors, patent protection and brand positioning. We will seek to acquire businesses that demonstrate advantages when compared to their competitors, which may help to protect their market position and profitability and deliver strong free cash flow. Experienced Management Team. We will seek to acquire businesses that have strong, experienced management teams. We will focus on management teams with a proven track record of driving revenue growth, enhancing profitability and generating strong free cash flow. Diversified Customer and Supplier Base. We will seek to acquire businesses that have a diversified customer and supplier base. Companies with a diversified customer and supplier base are generally better able to endure economic downturns, industry consolidation, changing business preferences and other factors that may negatively impact their customers, suppliers and competitors. These criteria are not intended to be exhaustive. Any evaluation relating to the merits of a particular initial business combination may be based, to the extent relevant, on these general guidelines as well as other considerations, factors and criteria that our management may deem relevant. In the event that we decide to enter into a business combination with a target business that does not meet the above criteria and guidelines, we will disclose that the target business does not meet the above criteria in our stockholder communications related to our initial business combination, which, as discussed in this prospectus, would be in the form of tender offer or proxy solicitation materials, as applicable, that we would file with the Securities and Exchange Commission, or the SEC. We anticipate that target business candidates will be brought to our attention from various unaffiliated sources, including investment bankers, venture capital funds, private equity funds, leveraged buyout funds, management buyout funds and other members of the financial community. Target businesses may be brought to our attention by such unaffiliated sources as a result of being solicited by us through calls or mailings. These sources may also introduce us to target businesses in which they think we may be interested on an unsolicited basis, since many of these sources will have read this prospectus and know that we are seeking a business combination. Our officers and directors, as well as their affiliates, may also bring to our attention target business candidates that they become aware of through their business contacts as a result of formal or informal inquiries or discussions they may have, as well as by attending trade shows or conventions. In addition, we expect to receive a number of proprietary deal flow opportunities (i.e. opportunities that would not generally be offered publicly) as a result of the track record and business relationships of Mr. Johnson, our founder and chairman of the board. In evaluating a prospective target business, we expect to conduct an extensive due diligence review which will encompass, among other things, meetings with incumbent management and employees, document reviews, interviews of customers and suppliers, inspection of facilities, as well as review of financial and other information which will be made available to us. While we do not presently intend to pursue an initial business combination with a company that is affiliated with our sponsor, officers or directors, we are not prohibited from pursuing such a transaction. In the event we seek to complete an initial business combination with such a company, we, or a committee of our independent directors, would obtain an opinion from an independent investment banking firm that is a member of the Financial Industry Regulatory Authority, or FINRA, that such an initial business combination is fair to our company from a financial point of view. In order to minimize potential conflicts of interest that may arise from multiple corporate affiliations, each of our officers and Robert L. Johnson, the chairman of our board of directors, has agreed, pursuant to a written agreement with us, that until the earliest of our initial business combination, our liquidation or such time as he or she ceases to be an officer or director, to present to us for our consideration, prior to presentation to any other entity, any business opportunity with an enterprise value of $100 million or more, subject to any pre-existing fiduciary or contractual obligations he or she might have. As more fully discussed in Management Conflicts of Interest, if any of our officers or Mr. Johnson becomes aware of a business combination opportunity that falls within the line of business of any entity to which he or she has pre-existing fiduciary or contractual obligations, he or she may be required to present such business combination opportunity to such entity prior to presenting such business combination opportunity to us. All of our officers and Mr. Johnson currently have certain relevant fiduciary duties or contractual obligations that may take priority over their duties to us. In addition, our officers and Mr. Johnson have agreed not to participate in the formation of, or become an officer or director of, any other blank check company until we have entered into a definitive agreement regarding our initial business combination or we have failed to complete our initial business combination within 21 months from the closing of this offering. Our executive offices are located at 3 Bethesda Metro Center, Suite 1000, Bethesda, Maryland 20814, and our telephone number is (301) 280-7737. The Offering In making your decision on whether to invest in our securities, you should take into account not only the backgrounds of the members of our management team, but also the special risks we face as a blank check company and the fact that this offering is not being conducted in compliance with Rule 419 promulgated under the Securities Act of 1933, as amended, or the Securities Act. You will not be entitled to protections normally afforded to investors in Rule 419 blank check offerings. You should carefully consider these and the other risks set forth in the section below entitled Risk Factors beginning on page 18 of this prospectus. Securities offered 12,500,000 units, at $10.00 per unit, each unit consisting of: one share of common stock; and one warrant. Trading commencement and separation of common stock and warrants The units will begin trading on or promptly after the date of this prospectus. The common stock and warrants comprising the units will begin separate trading on the 52nd day following the date of this prospectus unless Lazard Capital Markets LLC informs us of its decision to allow earlier separate trading, subject to our having filed the Current Report on Form 8-K described below and having issued a press release announcing when such separate trading will begin. Separate trading of the common stock and warrants is prohibited until we have filed a Current Report on Form 8-K In no event will the common stock and warrants be traded separately until we have filed a Current Report on Form 8-K with the SEC containing an audited balance sheet reflecting our receipt of the gross proceeds of this offering. We will file the Current Report on Form 8-K upon the consummation of this offering, which is anticipated to take place three business days from the date of this prospectus. If the underwriters over-allotment option is exercised following the initial filing of such Current Report on Form 8-K, a second or amended Current Report on Form 8-K will be filed to provide updated financial information to reflect the exercise of the underwriters over-allotment option. Units: Number outstanding before this offering 0 Number outstanding after this offering 12,500,000 Common stock: Number outstanding before this offering 3,593,750(1)(2) Number outstanding after this offering 15,625,000(2)(3) (1) This number includes an aggregate of 468,750 founder shares held by our initial stockholders that are subject to forfeiture to the extent that the over-allotment option is not exercised by the underwriters. (2) This number includes a portion of the founder shares in an amount equal to 2.5% of our issued and outstanding shares immediately after this offering that will be subject to forfeiture by our initial stockholders in the event the last sales price of our stock does not equal or exceed $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for at least one period of 20 trading days within any 30-trading day period within 12 months following the closing of our initial business combination, and additional 2.5% of our issued and outstanding shares immediately after this offering that will be subject to forfeiture by our initial stockholders in the event the last sales price of our stock does not equal or exceed $13.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for at least one period of 20 trading days within any 30-trading day period between 12 and 24 months following the closing of our initial business combination. (3) Assumes no exercise of the underwriters over-allotment option and the resulting forfeiture of 468,750 founder shares. Warrants: Number of sponsor warrants to be sold simultaneously with the closing of this offering 6,166,667 Number of warrants to be outstanding after this offering and the private placement 18,666,667 Exercisability Each warrant offered in this offering is exercisable to purchase one share of our common stock. Exercise price $12.00 per share, subject to adjustments as described herein. Exercise period The warrants will become exercisable on the later of: 30 days after the completion of our initial business combination, or 12 months from the closing of this offering; provided in each case that we have an effective registration statement under the Securities Act covering the shares of common stock issuable upon exercise of the warrants and a current prospectus relating to them is available. We are not registering the shares of common stock issuable upon exercise of the warrants at this time. However, we have agreed to use our best efforts to file and have an effective registration statement covering the shares of common stock issuable upon exercise of the warrants and to maintain a current prospectus relating to those shares of common stock until the warrants expire or are redeemed. The warrants will expire at 5:00 p.m., New York time, five years after the completion of our initial business combination or earlier upon redemption or liquidation. On the exercise of any warrant, the warrant exercise price will be paid directly to us and not placed in the trust account. Redemption of warrants Once the warrants become exercisable, we may redeem the outstanding warrants (except as described below with respect to the sponsor warrants): in whole and not in part; at a price of $.01 per warrant; upon a minimum of 30 days prior written notice of redemption, which we refer to throughout this prospectus as the 30-day redemption period; and if, and only if, the last sales price of our common stock equals or exceeds $17.50 per share for any 20 trading days within the 30-trading day period ending on the third business day before we send the notice of redemption to the warrant holders. We will not redeem the warrants unless a registration statement covering the shares of common stock issuable upon exercise of the warrants is effective and a current prospectus relating to those shares of common stock is available throughout the 30-day redemption period. If we call the warrants for redemption as described above, our management will have the option to require all holders that wish to exercise warrants to do so on a cashless basis. In such event, each holder would pay the exercise price by surrendering the warrants for that number of shares of common stock equal to the quotient obtained by dividing (x) the product of the number of shares of common stock underlying the warrants, multiplied by the difference between the exercise price of the warrants and the fair market value (defined below) by (y) the fair market value. The fair market value shall mean the average last sales price of the common stock for the 10 trading days ending on the third trading day prior to the date on which the notice of redemption is sent to the holders of warrants. None of the sponsor warrants will be redeemable by us so long as they are held by our sponsor or its permitted transferees. OTCBB symbols Units: Common Stock: Warrants: Founder shares In November 2010, our initial stockholders purchased an aggregate of 3,593,750 shares for an aggregate purchase price of $25,000, or approximately $0.007 per share. The founder shares held by our initial stockholders include an aggregate of 468,750 shares subject to forfeiture to the extent that the underwriters over-allotment option is not exercised in full, so that our initial stockholders will collectively own 20% of our issued and outstanding shares after this offering (assuming none of our initial stockholders purchase units in this offering). In addition, a portion of the founder shares in an amount equal to 2.5% of our issued and outstanding shares immediately after this offering will be subject to forfeiture by our initial stockholders in the event the last sales price of our stock does not equal or exceed $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for at least one period of 20 trading days within any 30-trading day period within 12 months following the closing of our initial business combination. An additional 2.5% of our issued and outstanding shares immediately after this offering will be subject to forfeiture by our initial stockholders in the event the last sales price of our stock does not equal or exceed $13.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for at least one period of 20 trading days within any 30-trading day period between 12 and 24 months following the closing of our initial business combination. Sponsor warrants Our sponsor has committed, pursuant to a subscription agreement, to purchase 6,166,667 sponsor warrants, each exercisable to purchase one share of our common stock at $12.00 per share, at a price of $0.75 per warrant ($4,625,000 in the aggregate) in a private placement that will occur simultaneously with the closing of this offering. The purchase price of the sponsor warrants will be added to the proceeds from this offering to be held in the trust account. If we do not complete a business combination within 21 months from the closing of this offering, the proceeds of the sale of the sponsor warrants will be used to fund the redemption of our public shares pursuant to our amended and restated articles of incorporation (subject to the requirements of applicable law), and the sponsor warrants will expire worthless. Transfer restrictions on founder shares and sponsor warrants Pursuant to a letter agreement, our initial stockholders have agreed not to transfer, assign or sell any founder shares which are no longer subject to forfeiture until the earlier of: one year after the completion of our initial business combination (or earlier if, subsequent to our business combination, the last sales price of our common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for at least one period of 20 trading days within any 30-trading day period commencing at least 150 days after our initial business combination); and the date on which we consummate a subsequent liquidation, merger, stock exchange or other similar transaction that results in all of our stockholders having the right to exchange their shares of common stock for cash, securities or other property (except as described below under Principal Stockholders Transfers of Common Stock and Warrants by our Initial Stockholders ). The sponsor warrants (including the common stock issuable upon exercise of the sponsor warrants) will not be transferable, assignable or salable until 30 days after the completion of our initial business combination and they will be non-redeemable so long as they are held by the sponsor or its permitted transferees (except as described below under Principal Stockholders Transfers of Common Stock and Warrants by our Initial Stockholders ). If the sponsor warrants are held by holders other than the sponsor or its permitted transferees, the sponsor warrants will be redeemable by us and exercisable by the holders on the same basis as the warrants included in the units being sold in this offering. Founder shares which are subject to forfeiture will not be transferable except in certain limited circumstances. Proceeds to be held in trust account Approximately $124.4 million, or approximately $9.95 per unit of the proceeds of this offering and the proceeds of the private placement of the sponsor warrants (approximately $142.7 million, or approximately $9.92 per unit, if the underwriters over-allotment option is exercised in full) will be placed in a segregated trust account at J.P. Morgan Chase Bank, maintained by Continental Stock Transfer & Trust Company, as trustee. These proceeds include approximately $3.1 million (or approximately $3.6 million if the underwriters over-allotment option is exercised in full) in deferred underwriting commissions. An increase in the size of the offering will reduce the per-share amount payable to our public stockholders upon our liquidation or our stockholders exercise of their redemption rights because the portion of the trust account attributable to the sales proceeds of the sponsor warrants will be allocated pro rata among a greater number of public shares. Assuming a 20% increase in the size of this offering, the per-share redemption or liquidation amount could decrease by as much as approximately $0.03. If we elect to increase the initial amount held in the trust account from approximately $9.95 per unit, such increase would be funded by an increase in the amount of the deferral of the underwriting commissions payable in connection with this offering, an increase in the number of sponsor warrants to be purchased by our sponsor at a price of $0.75 per warrant and/or a reduction from the $1.0 million initially available to us for working capital that is not held in the trust account. Public stockholders would own a smaller percentage of our outstanding common stock on a fully diluted basis to the extent that our sponsor purchases additional warrants. Under our amended and restated articles of incorporation, except for a portion of the interest income that may be released to us to pay any income or franchise taxes and to fund our working capital requirements, and any amounts necessary to purchase up to 25% of our public shares, as discussed below, none of the funds held in the trust account will be released until the earlier of (i) the completion of our initial business combination and (ii) the redemption of 100% of our public shares if we are unable to consummate a business combination within 21 months from the closing of this offering (subject to the requirements of law). The proceeds deposited in the trust account could become subject to the claims of our creditors, if any, which could have priority over the claims of our public stockholders. None of the warrants may be exercised until 30 days after the consummation of our initial business combination and, thus, after the funds in the trust account have been disbursed. Accordingly, the warrant exercise price will be paid directly to us and not placed in the trust account. Anticipated expenses and funding sources Unless and until we complete our initial business combination, no proceeds held in the trust account, other than up to $2 million, subject to adjustment as described below, of the interest earned on the trust account (net of franchise and income taxes payable), and any amounts necessary to purchase up to 25% of our public shares will be available for our use, and we may pay our expenses only from: such interest; and the net proceeds of this offering not held in the trust account, which will be $1.0 million in working capital after the payment of approximately $1.1 million in expenses relating to this offering (excluding the underwriting discounts). In the event that our offering expenses (excluding the underwriting discounts) are in excess of approximately $1.1 million, we may fund such amounts out of the $1.0 million not to be held in the trust account. In such case, the amount not held in the trust account would be less than $1.0 million by a corresponding amount. Conversely, in the event that the offering expenses (excluding the underwriting discounts) are less than approximately $1.1 million, the $1.0 million not held in the trust account would increase by a corresponding amount. To the extent that the underwriters exercise their over-allotment option, the maximum amount of interest income we may withdraw from the trust account will proportionately increase. In addition, if the size of this offering is increased or decreased, it would result in a proportionate increase or decrease in the amount of interest we may withdraw from the trust account. In order to finance transaction costs in connection with an intended initial business combination, our sponsor or an affiliate of our sponsor or certain of our officers and directors may, but are not obligated to, loan us funds as may be required. If we consummate an initial business combination, we would repay such loaned amounts. In the event that the initial business combination does not close, we may use a portion of the working capital held outside the trust account to repay such loaned amounts but no proceeds from our trust account would be used for such repayment, other than the interest on such proceeds that may be released to us for working capital purposes. Such loans may be convertible into founders shares or warrants of the post business combination entity at a price of $0.75 per warrant at the option of the lender. The warrants would be identical to the sponsor warrants. None of the sponsor warrants, any shares of common stock issuable upon exercise thereof, or the founders shares will have recourse to the proceeds held in our trust account. The terms of such loans by our sponsor, an affiliate of our sponsor or certain of our officers and directors, if any, have not been determined and no written agreements exist with respect to such loans. Permitted purchases of shares if we hold a stockholder vote Unlike many blank check companies, if we seek stockholder approval of our initial business combination and we do not conduct redemptions pursuant to the tender offer rules in connection with our initial business combination, prior to the consummation of a business combination, there could be released to us from the trust account amounts necessary to purchase up to 25% of the shares sold in this offering (3,125,000 shares, or 3,593,750 shares if the underwriters over-allotment option is exercised in full). These purchases could occur at any time commencing after the filing of a preliminary proxy statement for our initial business combination and ending on the record date for the stockholder meeting to approve the initial business combination. These purchases may make it more likely that a business combination will be approved and decrease the ability of public stockholders to affect whether or not a particular business combination is completed. Purchases will be made only in open market transactions at times when we are not in possession of any material non-public information and may not be made during a restricted period under Regulation M under the Exchange Act. It is intended that purchases will comply with Rule 10b-18 under the Exchange Act, which provides a safe harbor for purchases made under certain conditions, including with respect to timing, pricing and volume of purchases. If the conditions of Rule 10b-18, as in effect at the time we wish to make such purchases, are not satisfied, it is likely that we will not make such purchases. Any purchases we make will be at prices (inclusive of commissions) not to exceed the per-share amount then held in the trust account (approximately $9.95 per share or approximately $9.92 per share if the underwriters over-allotment option is exercised in full). We can purchase any or all of the 3,125,000 shares (or 3,593,750 shares if the underwriters over-allotment option is exercised in full) we are entitled to purchase. It will be entirely in our discretion as to how many shares are purchased. Purchasing decisions will be made based on various factors, including the then-current market price of our common stock and the terms of the proposed initial business combination. All shares purchased by us will be immediately cancelled. Such open market purchases, if any, would be conducted by us to minimize any disparity between the then-current market price of our common stock and the per-share amount held in the trust account. A market price below the per-share trust amount could provide an incentive for purchasers to buy our shares after the filing of our preliminary proxy statement at a discount to the per-share amount held in the trust account for the sole purpose of voting against our initial business combination and exercising redemption rights for the full per-share amount held in the trust account. Such trading activity could enable such investors to block a business combination regardless of its merits by making it difficult to obtain the approval of such business combination by the vote of a majority of the outstanding shares of common stock voted. Private transactions if we hold a stockholder vote If we hold a stockholder vote to approve our initial business combination and we do not conduct redemptions pursuant to the tender offer rules in connection with our initial business combination, as described above, we may enter into privately negotiated transactions to purchase public shares from stockholders after consummation of the initial business combination with proceeds released to us from our trust account immediately following consummation of the initial business combination. Our sponsor, directors, officers, advisors or their affiliates may also purchase shares in privately negotiated transactions. Neither we nor our directors, officers, advisors or their affiliates will make any such purchases when we or they are in possession of any material non-public information not disclosed to the seller. In the event we are the buyer in the privately negotiated purchases, we could elect to use trust account proceeds to pay the purchase price in such transaction after the closing of our initial business combination. Although we do not currently anticipate paying any premium purchase price for such public shares, in the event we do, the payment of a premium may not be in the best interest of those stockholders not receiving any such additional consideration. In addition, the payment of a premium by us may not be in the best interest of the remaining stockholders, who will experience a reduction in book value per share compared to the value received by stockholders that have their shares purchased by us at a premium. Redemption rights for public stockholders upon consummation of our initial business combination Under our amended and restated articles of incorporation, we will provide our stockholders with the opportunity to redeem their public shares for cash equal to their pro rata share of the aggregate amount then on deposit in the trust account, less franchise and income taxes payable, upon the consummation of our initial business combination, subject to the limitations described herein. The amount in the trust account is initially anticipated to be approximately $9.95 per share (or approximately $9.92 per share if the underwriters over-allotment option is exercised in full), or approximately $0.05 less than the per-unit offering price of $10.00 (approximately $0.08 less if the underwriters over-allotment option is exercised in full). There will be no redemption rights upon the consummation of our initial business combination with respect to our warrants. Pursuant to a letter agreement, our initial stockholders have agreed to waive their redemption rights with respect to their founder and any public shares. The founder shares will be excluded from the pro rata calculation used to determine the per-share redemption price. Manner of conducting redemptions Unlike many blank check companies that hold stockholder votes and conduct proxy solicitations in conjunction with their business combinations and related redemptions of public shares for cash upon consummation of such initial business combinations even when a vote is not required by law, if a stockholder vote is not required by law and we do not decide to hold a stockholder vote for business or other legal reasons, we will, pursuant to our amended and restated certificate of incorporation: conduct the redemptions pursuant to Rule 13e-4 and Regulation 14E of the Exchange Act, which regulate issuer tender offers, and file tender offer documents with the SEC prior to consummating our initial business combination which contain substantially the same financial and other information about the initial business combination and the redemption rights as is required under Regulation 14A of the Exchange Act, which regulates the solicitation of proxies. In the event we conduct redemptions pursuant to the tender offer rules, our offer to redeem shall remain open for at least 20 business days, in accordance with Rule 14e-1(a) under the Exchange Act, and we will not be permitted to consummate our initial business combination until the expiration of the tender offer period. If, however, stockholder approval of the transaction is required by law, or we decide to obtain stockholder approval for business or other legal reasons, we will: conduct the redemptions in conjunction with a proxy solicitation pursuant to Regulation 14A of the Exchange Act, which regulates the solicitation of proxies, and not pursuant to the tender offer rules, and file proxy materials with the SEC. Our ability to consummate our initial business combination without conducting a stockholder vote in the event that a stockholder vote is not required by law may increase the likelihood that we will be able to complete our initial business combination and decrease the ability of public stockholders to affect whether or not a particular business combination is completed. If we seek stockholder approval, we will consummate our initial business combination only if a majority of the outstanding shares of common stock voted are voted in favor of the business combination. In such case, our initial stockholders have agreed to vote their founder shares in favor of our initial business combination. This may make it easier for a business combination to be approved by our stockholders. Each public stockholder may elect to redeem their public shares irrespective of whether they vote for or against the proposed transaction. Traditionally, blank check companies would not be able to consummate a business combination if the holders of the company s public shares voted against a proposed business combination and elected to redeem or convert more than a specified percentage of the shares sold in such company s initial public offering, which percentage threshold is typically between 19.99% and 39.99%. As a result, many blank check companies have been unable to complete business combinations because the number of shares voted by their public stockholders electing conversion exceeded the maximum conversion threshold pursuant to which such company could proceed with a business combination. Since we have no specified maximum redemption threshold, our structure is different in this respect from the structure that has been used by most blank check companies. The absence of a redemption threshold in this offering will make it easier for us to consummate our initial business combination even if a substantial majority of our stockholders do not agree. In no event, however, will we redeem our public shares in an amount that would cause our stockholders equity to be less than $5,000,001. If we enter into an acquisition agreement with a prospective target that requires as a closing condition to our initial business combination that we maintain a minimum net worth or certain amount of cash that is greater than $5,000,001, we will communicate the details of the closing condition to our public stockholders through our tender offer or proxy solicitation materials, as applicable. Our articles of incorporation require us to provide all of our stockholders with an opportunity to redeem all of their shares in connection with the consummation of any initial business combination. Consequently, if accepting all properly submitted redemption requests would cause our stockholders equity to be less than $5,000,001 or such greater amount necessary to satisfy a closing condition as described above, we would not proceed with such redemption and the related business combination and may instead search for an alternate business combination. We determined the $5,000,001 threshold in order to reduce the likelihood that we will become subject to the SEC s penny stock rules promulgated under the Exchange Act, which apply to transactions in securities of certain companies with stockholders equity of $5,000,000 or less and a market price per share of less than $5.00. 15% limitation on redemption rights if we hold a stockholder vote Unlike many other blank check companies, if we hold a stockholder vote to approve our initial business combination and we do not conduct redemptions pursuant to the tender offer rules in connection with our initial business combination, our amended and restated articles of incorporation provide that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a group (as defined under Section 13 of the Exchange Act), will be restricted from redeeming its shares with respect to more than an aggregate of 15% of the shares sold in this offering. We believe this restriction will discourage stockholders from accumulating large blocks of shares, and subsequent attempts by such holders to use their ability to redeem their shares as a means to force us or our management to purchase their shares at a significant premium to the then-current market price or on other undesirable terms. Absent this provision, a public stockholder holding more than an aggregate of 15% of the shares sold in this offering could threaten to exercise its redemption rights if such holder s shares are not purchased by us or our management at a premium to the then-current market price or on other undesirable terms. By limiting our stockholders ability to redeem no more than 15% of the shares sold in this offering, we believe we will limit the ability of a small group of stockholders to unreasonably attempt to block our ability to consummate a business combination, particularly in connection with a business combination with a target that requires as a closing condition that we have a minimum net worth or a certain amount of cash. However, we would not be restricting our stockholders ability to vote all of their shares for or against a business combination. Tendering stock certificates in connection with a tender offer or redemption rights We may require our public stockholders seeking to exercise their redemption rights, whether they are record holders or hold their shares in street name, to either tender their certificates to our transfer agent prior to the date set forth in the tender offer documents or proxy materials mailed to such holders, or up to two business days prior to the vote on the proposal to approve the business combination in the event we distribute proxy materials, or to deliver their shares to the transfer agent electronically using Depository Trust Company s DWAC (Deposit/Withdrawal At Custodian) System, at the holder s option. The tender offer or proxy materials, as applicable, that we will furnish to holders of our public shares in connection with our initial business combination will indicate whether we are requiring public stockholders to satisfy such delivery requirements. Accordingly, a public stockholder would have from the time we send out our tender offer materials until the close of the tender offer period, or up to two days prior to the vote on the business combination if we distribute proxy materials, as applicable, to tender its shares if it wishes to seek to exercise its redemption rights. If a stockholder s shares are held in street name, we expect to require that the stockholder instruct their account executive at the stockholder s bank or broker to withdraw the shares from the stockholder s account and request that a physical stock certificate be issued in the stockholder s name. There is a nominal cost associated with the above-referenced tendering process and the act of certificating the shares or delivering them through the DWAC System. The transfer agent will typically charge the tendering broker $35.00 and it would be up to the broker whether or not to pass this cost on to the redeeming holder. However, this fee would be incurred regardless of whether or not we require holders seeking to exercise redemption rights to tender their shares. The need to deliver shares is a requirement of exercising redemption rights regardless of the timing of when such delivery must be effectuated. This procedure is different from the procedures used by many blank check companies, and may increase the likelihood that we will be able to complete our initial business combination. Traditionally, in order to perfect redemption rights in connection with a blank check company s business combination, the company would distribute proxy materials for the stockholders vote on an initial business combination, and a holder could simply vote against a proposed business combination and check a box on the proxy card indicating such holder was seeking to exercise his redemption rights. After the business combination was approved, the company would contact such stockholder to arrange for him to deliver his certificate to verify ownership. As a result, the stockholder then had an option window after the consummation of the business combination during which he could monitor the price of the company s stock in the market. If the price rose above the redemption price, he could sell his shares in the open market before actually delivering his shares to the company for cancellation. As a result, the redemption rights, to which stockholders were aware they needed to commit before the stockholder meeting, would become a redemption right surviving past the consummation of the business combination until the redeeming holder delivered its certificate. The requirement for physical or electronic delivery prior to the meeting ensures that a redeeming holder s election to redeem is irrevocable once the business combination is approved. Redemption of public shares and distribution and liquidation if no initial business combination Our sponsor, officers and directors have agreed that we will have only 21 months from the closing of this offering to consummate our initial business combination. If we are unable to consummate a business combination within such 21-month period, we will be required, under our amended and restated articles of incorporation, to: cease all operations except for the purpose of winding up; as promptly as reasonably possible, redeem 100% of our public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest but net of franchise and income taxes payable and less up to $100,000 of such net interest that may be released to us from the trust account to pay dissolution expenses, divided by the number of then outstanding public shares, together with the contingent right to receive, following our dissolution, a pro rata share of the balance of our net assets that would otherwise be payable to holders of our common stock under Nevada law, if any; and as promptly as reasonably possible following such redemption, subject to the approval of our remaining shareholders and our board of directors, dissolve and liquidate; subject to the requirements of Nevada law to provide for claims of creditors and that a corporation not make a distribution to stockholders if, after giving effect to the distribution, either (i) the corporation would not be able to pay its debts as they become due in the usual course of business or (ii) the corporation s total assets would be less than the sum of its total liabilities plus the amount that would be needed, if the corporation were to be dissolved at the time of distribution, to satisfy the preferential rights upon dissolution of stockholders whose preferential rights are superior to those receiving the distribution. Although we do not currently intend to do so, we could seek stockholder approval to extend the 21-month time period if we have not consummated a business combination within that period. Under our amended and restated articles of incorporation, the approval of holders of at least 65% of our outstanding common stock would be required to extend that time period, and in no event may we extend that time period on more than one occasion, or by more than three months. There will be no redemption rights or liquidating distributions with respect to our warrants, which will expire worthless. Our initial stockholders have waived their redemption rights with respect to their founder shares if we fail to consummate an initial business combination within 21 months from the closing of this offering. However, if our initial stockholders, or any of our officers, directors or affiliates acquire public shares in or after this offering, they will be entitled to redemption rights with respect to such public shares if we fail to consummate a business combination within the required time period. The underwriters have agreed to waive their rights to their deferred underwriting commission held in the trust account in the event we do not consummate our initial business combination within 21 months from the closing of this offering, and in such event such amounts will be included with the funds held in the trust account that will be available for distribution to our public stockholders. Traditionally, many blank check companies have had between 24 and 36 months to complete their initial business combinations. The 21-month deadline for us to complete our initial business combination may decrease the likelihood that we will be able to complete our initial business combination compared to many blank check companies but should not impact the ability of our public stockholders to affect whether or not a particular business combination is completed. Determination of offering amount In determining the size of this offering, our management concluded, based on their collective experience, that an offering of this size, together with the proceeds of the sponsor warrants, would provide us with sufficient equity capital to execute our business plan. We believe that this amount of equity capital, plus our ability to finance an acquisition using stock or debt in addition to the cash held in the trust account, will give us substantial flexibility in selecting an acquisition target and structuring our initial business combination. This belief is not based on any research, analysis, evaluations, discussions, or compilations of information with respect to any particular investment or any such action undertaken in connection with our organization. We cannot assure you that our belief is correct, that we will be able to successfully identify acquisition candidates, or that we will be able to obtain any necessary financing. Risks We are a newly formed company that has conducted no operations and has generated no revenues. Until we complete our initial business combination, we will have no operations and will generate no operating revenues. In making your decision whether to invest in our securities, you should take into account not only the background of our management team, but also the special risks we face as a blank check company. These risks include, among others: We are a newly formed development stage company with no operating results, which means that stockholders will have no basis upon which to evaluate our ability to complete an initial business combination with one or more target businesses. We may not hold a stockholder vote before we consummate our initial business combination, which means that we may consummate our initial business combination even though a substantial number of our public stockholders do not support such a combination. If we are unable to complete our initial business combination within the prescribed time frame and are forced to cease operations and ultimately liquidate, the per-share liquidation amount received by stockholders may be less than $10.00 because of the expenses of this offering, our general and administrative expenses and the anticipated costs of seeking our initial business combination. This offering is not being conducted in compliance with Rule 419 (Offerings by Blank Check Companies) promulgated under the Securities Act and has certain terms and conditions that deviate from many blank check offerings, which means that stockholders will not be entitled to protections normally afforded to investors in Rule 419 blank check offerings or to investors in many other blank check companies. You should carefully consider these and the other risks set forth in the section entitled Risk Factors beginning on page 18 of this prospectus. For additional information concerning how Rule 419 blank check offerings differ from this offering, please see Proposed Business Comparison of This Offering to Those of Blank Check Companies Subject to Rule 419. For additional information concerning how many blank check offerings differ from this offering, please see Proposed Business Comparison of This Offering to Those of Many Blank Check Companies Not Subject to Rule 419.
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+Table of Contents Summary Northwest Resources, Inc. The Company We are a exploration stage mineral exploration company incorporated in Nevada on May 21, 2010. On June 22, 2010, we acquired a 100% ownership interest in the Check and Checkmate placer mining claim located in Plumas County, California. The Check and Checkmate claim is located on federal lands administered by the U.S. Forest Service and the Bureau of Land Management. Our ownership rights on the claim are limited to the exploration and extraction of mineral deposits subject to applicable regulations. The Check and Checkmate claim is roughly 70 acres in size and is located on Little Blackhawk Creek near Quincy, California. We have performed an initial reconnaissance sampling program on our mining claim. Our initial sampling program indicated the presence of gold in the sediments which were sampled, with the highest and coarsest populations of gold being located in samples from older mining excavations taken from at or near the bedrock. Based upon the results of our initial reconnaissance sampling program, our consulting geologist has recommended an additional program of bulk sampling from both stream sediments and waste piles from historical excavations, as well as geophysical investigations. Our planned additional exploration activities will be designed to explore for indications that the Check and Checkmate claim may contain commercially viable quantities of gold. We have not identified commercially exploitable reserves of gold or other precious metals on the Check and Checkmate claim to date. We are an exploration stage company and there is no assurance that commercially viable gold quantities exist on the Check and Checkmate mineral claim. Further exploration activities beyond our currently planned exploration program will be dependent upon a number of factors, including our consulting geologist s recommendations based upon the exploration program results, and our available funds. Since we are in the exploration stage of our business plan, we have not yet earned any revenues from our planned operations. As of November 30, 2010, we had $9,904 cash on hand and current liabilities in the amount of $8,146. Accordingly, our working capital position as of November 30, 2010 was $1,758. Since our inception through November 30, 2010, we have incurred a net loss of $11,742. We attribute our net loss to having no revenues to offset our expenses and the professional fees related to the creation and operation of our business. Our management estimates that, until such time that we are able to identify a commercially viable mineral deposit and to generate revenue from the extraction of gold on our mineral claims we will continue to experience negative cash flow. Our fiscal year end is November 30. Our principal offices are located at 1285 Baring Blvd., Sparks, Nevada 89434. Our phone number is (775) 771-3176. Table of Contents The Offering Securities Being Offered Up to 3,000,000 shares of our common stock. Offering Price The offering price of the common stock is $0.006 per share. There is no public market for our common stock. We cannot give any assurance that the shares offered will have a market value, or that they can be resold at the offered price if and when an active secondary market might develop, or that a public market for our securities may be sustained even if developed. The absence of a public market for our stock will make it difficult to sell your shares in our stock. Upon the effectiveness of the registration statement of which this prospectus is a part, we intend to apply through FINRA to the over-the-counter bulletin board, through a market maker that is a licensed broker dealer, to allow the trading of our common stock upon our becoming a reporting entity under the Securities Exchange Act of 1934. We currently have no market maker who is willing to list quotations for our stock. Further, even assuming we do locate such a market maker, it could take several months before the market maker s listing application for our shares is approved. Minimum Number of Shares To Be Sold in This Offering n/a Maximum Number of Shares To Be Sold in This Offering 3,000,000 Securities Issued and to be Issued 8,000,000 shares of our common stock are issued and outstanding as of the date of this prospectus. Our sole officer and director, Taylor Edgerton, owns an aggregate of 100% of the common shares of our company and therefore have substantial control. Upon the completion of this offering, our officers and directors will own an aggregate of approximately 72.73% of the issued and outstanding shares of our common stock if the maximum number of shares is sold. Number of Shares Outstanding After The Offering If All The Shares Are Sold 11,000,000 Use of Proceeds If we are successful at selling all the shares we are offering, our proceeds from this offering will be approximately $18,000. We intend to use these proceeds to execute our business plan. Offering Period The shares are being offered for a period up to 120 days after the date of this Prospectus, unless extended by us for an additional 90 days. Summary Financial Information Balance Sheet Data Fiscal Year Ended November 30, 2010 (derived from audited financial information) Cash $ 9,904 Total Assets $ 16,404 Liabilities $ 8,146 Total Stockholder s Equity $ 8,258 Statement of Operations May 21, 2010 (date of inception) to November 30, 2010 (derived from audited financial information) Revenue $ 0 Net Loss for Reporting Period $ 11,742 Table of Contents
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001507869_grand_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001507869_grand_prospectus_summary.txt
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+PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001507986_jetpay_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001507986_jetpay_prospectus_summary.txt
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+PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001508470_safecode_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001508470_safecode_prospectus_summary.txt
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+Prospectus Summary The following summary highlights selected material information contained in this prospectus. This summary does not contain all the information you should consider before investing in the securities. Before making an investment decision, you should read the entire prospectus carefully, including the "Risk Factors" section, the financial statements, and the notes to the financial statements.
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001508575_patriot_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001508575_patriot_prospectus_summary.txt
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+PROSPECTUS SUMMARY Our Business: We were incorporated in Nevada on July 16, 2009. Our principal business address is Suite 122, 155 Minories, London, U.K., EC3N 1AD. Our telephone number is (+44) 207-657-3220. We are a new exploration stage company and have produced no revenues since inception. Our business plan is to acquire interests in mineral properties for exploration, appraisal and development with the intent to bring the projects to feasibility at which time we will either contract out the operations or joint venture the project to qualified interested parties. We own two mining claims, Whale 1 and Whale 2 Lode Claims ( Whale Lode Mining Claims ). The Whale Lode Mining Claims are comprised of two located claims with an area of 40 acres located in the Goodsprings (Yellow Pine) Mining District in Clark County, Nevada. The Whale Lode Mining Claims are situated within the southwest corner of the State of Nevada. Summary financial information: The summary financial information set forth below is derived from the more detailed financial statements appearing elsewhere in this Form S-1. We have prepared our financial statements contained in this Form S-1 in accordance with accounting principles generally accepted in the United States. All information should be considered in conjunction with our financial statements and the notes contained elsewhere in this Form S-1. Income Statement For the Period from July 16, 2009(inception) September 30, 2010 For the Period from July 16, 2009 (inception) to June 30, 2010 $ $ Revenue 0 0 Total Operating Expenses 4,599 3,685 Net Income (Loss) (4,599 ) (3,685 ) Net Income (Loss) Per share (0.00 ) 0.00 Balance Sheet September 30, 2010 June 30, 2010 $ $ Total Assets 20,128 20,142 Total Liabilities 310 310 Stockholders' Equity (19,818 ) (19,832 ) Number of shares being offered: We are offering for sale 4,000,000 shares of our common stock. We will sell the shares we are registering only to those individuals who have received a copy of the prospectus. Number of shares outstanding after the offering: 2,000,000 shares of our common stock are currently issued and outstanding. After the offering, there may be up to 6,000,000 shares of our common stock issued and outstanding if all of the offered shares are sold. Estimated use of proceeds: We will receive $200,000 if all of the offered shares are sold and $100,000 if half the offered shares are sold. If all of the offered shares are purchased, we intend to use the proceeds for rent/office expenses, acquisition of working interests, working capital and offering expenses. This is a best efforts offering with no minimum offering amount. There is no guarantee that we will even raise enough funds to cover the expenses of this offering.
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001508606_china_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001508606_china_prospectus_summary.txt
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+PROSPECTUS SUMMARY The following summarizes information contained elsewhere in this prospectus and does not contain all of the information you should consider in making your investment decision. For a more complete understanding of this offering, we encourage you to read this entire prospectus. The following summary should be read in conjunction with the more detailed information and financial statements (including the related notes) appearing elsewhere in this prospectus. For a discussion of certain factors you should consider before deciding to invest in our shares, see Risk Factors. Overview We are a British Virgin Islands company formed to engage in the sunflower business in China, including the screening, test cultivation and sale of sunflower seeds for planting, and the production and sale of sunflower oil under the brand Westerner ( in Chinese). In addition, we conduct research on, and seek to develop, other high value-added sunflower related products. Our operating facility is located in Wuwei City, Gansu Province, China. Wuwei City is suitable for sunflower cultivation and growth due to its favorable climate and environmental conditions. More than 66 hectares of the land owned by third parties that we contract with for supplies as our plantation base has been certified as a Pollution-Free Place of Plantation by the Ministry of Agriculture of China in 2008. We believe we are among the leading companies in the sunflower industry in China. We promote green agriculture in Gansu Province. In 2004, we were granted the Provincial Leading Dragon Head Enterprise award by the provincial government of Gansu and the China Spark Program Model Enterprise award by the state government for our processing and development of high quality sunflower seeds. Provincial Leading Dragon Head Enterprise is an award issued to the leading enterprises in the province. The provincial government usually provides certain financial support or preferential policies to such enterprises. We received a total of RMB 260,000, or approximately $38,800, of government subsidies under this award in 2007. The China Spark Program is the first plan approved and implemented by the PRC government, which aims to promote economic development in rural areas of China by applying science and technology. We were granted this award due to our contribution to the local rural economy by introducing new types of seeds for plantation and new planting skills to local farmers. We did not receive any other benefits under this award. Our strong research and development capabilities, and our unique integrated business model, are among our competitive advantages and help us maintain high profit margins. We place great emphasis on product quality control, and our sunflower oil products are certified as Pollution-Free Product and Pollution-Free Place of Plantation by the Ministry of Agriculture of China. We are also one of the few companies in China whose sunflower seeds and sunflower oil products have been certified as EC Organic Product by ECOCERT, one of the largest organic certification institutes in the world. We generate revenues mostly from the sale of sunflower oil and sunflower seeds used for planting. We also generate revenues from auxiliary products, such as oil cake. In the past two years, we have experienced significant growth in revenue and profits. Our revenue grew from $11.48 million in the fiscal year 2008 to $17.21 million in the fiscal year 2009, representing an increase of 49.97%. Our net income grew from $2.45 million to $3.80 million during the same period, representing an increase of 55.21%. Our gross and net margins in the fiscal year 2009 were 30% and 22%, respectively, both representing a significant improvement over margins achieved during the fiscal year 2008. Our revenue grew from $11.86 million for the nine months ended September 30, 2009 to $20.04 million for the same period in 2010, representing an increase of 69.02%. Our net income grew from $2.82 million to $4.43 million during the same period, representing an increase of 57.04%. Our gross and net margins for the nine months ended September 30, 2010 were 30% and 22%, respectively. Our Industry and Market According to World: Sunflower and Products Supply and Distribution issued by the United States Department of Agriculture, global sunflower oil consumption increased from 7.5 million tons in 2001 to 10.96 million tons in 2010, while production increased from 7.44 million tons to 11.21 million tons over the same period. The consumption of sunflower oil in China, according to China Oilseeds and Products Supply and Distribution issued by the United States Department of Agriculture, increased from 0.33 million tons in 2006 to 0.43 million tons in 2009, a compound annual growth rate or CAGR of 9.5%. The consumption of sunflower oil in China has been growing at a faster pace than other vegetable oils; for comparison, the average CAGR of consumption of all vegetable oils from 2006 to 2009 was only 6.4%. Due to increasing demand, the import of sunflower oil in China also increased, from 0.09 million tons in 2006 to 0.17 million tons in 2009. Despite the growth of sunflower oil consumption in China, the per capita consumption remains low compared to other countries. According to United States Department of Agriculture, the per capita consumption of sunflower oil in China, India and the European Union in 2009 was 0.3 kilogram, 0.9 kilogram and 5.9 kilogram, respectively. In 2007, the State Council of China issued Guidance on Promoting Production and Development of Oil Plants, or the Guidance. The Guidance provided that the plantation area for oil plants was expected to increase by 6% and the output to increase by 14% in 2010 compared to 2006. Further, the per acre production amount was expected to increase by an additional 6% in 2010 compared to 2006, mainly due to new cultivation techniques and new types of seeds. The Guidance encouraged the plantation of special oil plants, such as sesame, flax, oil type sunflower, oil type tea, and olive, as well as the Company + Base + Farmers business model. According to the Food and Agriculture Organization of the United Nations, or the FAO, the plantation area for sunflowers in China was 1.03 million hectares in 2006, ranking sixth in the world. With the encouragement from the PRC government for oil type sunflower planting, we expect that sunflowers, especially the high-oil types, will be developed in more areas in China. Corporation Service Company 80 State Street Albany, NY 12207-2543 (518) 445-6500 (Name, address, including zip code, and telephone number, including area code, of agent for service) With the PRC government s support of oil-type sunflower plantation and an increasing demand for sunflower oil products in China, we expect that sunflower plantation will continue to grow in the future. Our Competitive Advantages We believe that the following strengths greatly assist our business: Our reputation as a sunflower oil producer and sunflower seed provider in China; Unique business model and established and secured raw-material sourcing network; Stringent quality control and state-of-the-art facilities; Highly recognized brand and company name; Strong research and development capabilities, as well as expertise in seed plantation technology; Sufficient and high quality raw material supply and low cost of procurement logistics; Experienced and dedicated management team; Long-term and strong relationships with sunflower oil distributors and seed providers; Government s support of the green industry; Sufficient local labor resources; and The natural health benefits of sunflower oil. Our Growth Strategies Specific elements of our growth strategies include: Expand production capacity and increase market penetration; Expand our current cooperative plantation base; Enhance and expand our marketing and distribution network; Develop international distribution channels to increase our export volume; Continue to develop market-accepted auxiliary sunflower seed products; Enhance brand image and recognition; and Improve our expertise and technical know-how. Risk Factors We face certain risks, challenges and uncertainties that may materially affect our business, financial condition, results of operations and prospects. The primary ones include: Our ability to effectively promote our brands, particularly our brand Westerner ( ); Our ability to develop new products or expand into new markets; Our ability to introduce sunflower seed varieties that meet the needs of the local farmers; Our ability to respond to competition; Our ability to retain key personnel and to attract qualified talents; and Our ability to manage the fluctuations in prices of raw materials and our products. You should consider the risks discussed in the Risk Factors section and elsewhere in this prospectus before investing in the ADSs. Corporate History and Structure We are a British Virgin Islands company and conduct substantially all of our business through our operating subsidiaries in China. We commenced operations in China in 2003 and established China Sunflower Group Limited as an offshore holding company in the British Virgin Islands on October 21, 2010. We own 100% of China Sunflower Industry Holdings Ltd., or China Sunflower-HK, a Hong Kong company, which is the parent company of Gansu Zhengnong Sunflower Industry Company Limited, or Zhengnong, a wholly foreign owned enterprise in China. On November 8, 2010, the shareholders of China Sunflower-HK exchanged all of their shares of China Sunflower-HK for the shares of China Sunflower. Copies to: Richard I. Anslow, Esq. Lawrence G. Nusbaum Eric M. Stein, Esq. Gusrae, Kaplan, Bruno & Nusbaum PLLC Yarona Y. Liang, Esq. 120 Wall Street, 11th Floor Anslow + Jaclin, LLP New York, New York 10005 195 Route 9 South, Suite 204 Tel: (212) 269-1400 Manalapan, New Jersey 07726 Fax: (212) 809-5449 Tel: (732) 409-1212 Fax: (732) 577-1188 Pursuant to a series of control agreements between Zhengnong and Gansu JOY Agricultural Technology Company, or JOY Technology, dated September 8, 2010, JOY Technology became a contractually-controlled subsidiary of Zhengnong. JOY Technology owns 99.42% of the shares of Gansu JOY Import and Export Trading Company, or JOY Trading. Following are summaries of material terms of those major contractual agreements: Agreements that Transfer Economic Benefits to Us Exclusive Technology Support and Services Agreement: Pursuant to the agreement, Zhengnong has the exclusive right to provide JOY Technology with technical support and services. In return, JOY Technology agreed to pay Zhengnong service fees determined at the sole discretion of Zhengnong. JOY Technology agreed not to seek or accept similar services from other providers unless prior written approval is obtained from Zhengnong. Zhengnong is entitled to have exclusive and proprietary rights and interests to any intellectual properties or technologies arising out of or created during the performance of this agreement. The term of this agreement is ten years, which may be extended subject to Zhengnong s prior written consent. Exclusive Business Cooperation Agreement: Pursuant to the agreement, Zhengnong agreed to provide JOY Technology with exclusive business support and technical and consulting services in return for annual service fees determined and paid at the sole discretion of Zhengnong. JOY Technology agreed not to seek or accept similar services from other providers unless prior written approval is obtained from Zhengnong. Zhengnong is entitled to have exclusive and proprietary rights and interests to any intellectual properties or technologies arising out of or created during the performance of this agreement. The term of this agreement is ten years, which may be extended subject to Zhengnong s prior written consent. Exclusive Option Agreements: Pursuant to these agreements, the shareholders irrevocably granted Zhengnong or its designated representative an exclusive option to purchase, to the extent permitted under PRC law, all or part of the equity interest in JOY Technology. The term of these agreements is ten years, which may be extended subject to Zhengnong s prior written consent. Contractual Agreements that Provide Effective Control over JOY Technology and its Subsidiary Loan Agreement. The Loan Agreement was signed between the principal shareholder of JOY Technology, Mr. Wei Mingguang, and Zhengnong. Pursuant to the agreement, Zhengnong provided an interest-free loan facility of RMB 10 million to Mr. Wei Mingguang for the purpose of providing capital to JOY Technology to develop its business. The term is eleven months, which may be extended subject to Zhengnong s prior written consent. The principal shareholder is obligated to repay the loans immediately upon the occurrence of certain events. The agreement contains a number of covenants that restrict the actions the principal shareholder can take or cause JOY Technology to take. Proxy agreements. Pursuant to the agreements, each of the three former shareholders of JOY Technology, Mr. Wei Mingguang, Mr. Liu Xinmin and Mr. Fu Denian, granted an irrevocable proxy to Zhengnong to exercise exclusive voting rights on their behalf on all matters requiring the approval of the shareholders of JOY Technology. Such proxy remains irrevocable and continuously valid from the date of execution of this agreement, so long as each remains a shareholder of JOY Technology. Equity Pledge Agreements. Pursuant to the agreements among Zhengnong, JOY Technology, Mr. Wei Mingguang, Mr. Liu Xinmin and Mr. Fu Denian, these three former shareholders pledged their equity interests in JOY Technology to Zhengnong to secure JOY Technology s obligations under the exclusive business cooperation agreement with Zhengnong and the loan agreement. For a more detailed description of these agreements, see Corporate History and Structure on page 50. The following diagram illustrates our corporate structure and the place of formation and affiliation of each of our subsidiaries and affiliates as of the date of this prospectus. Mr. Wei is the sole shareholder of Bright Joy Innovations Holdings Ltd. The other shareholders of China Sunflower, owns 29.85% of the total outstanding shares, include the other founders of our company as well as private investors and their affiliates. They were previously the shareholders of China Sunflower-HK and received the ordinary shares of China Sunflower, in the same relative ownership percentage as they hold in China Sunflower-HK prior to the November 2010 share exchange transaction. The other shareholders include: Riemann Investment Holdings Limited, a Samoa company which is jointly owned by Sixing Fu and Qianping Huang; Synergy Investment Group Ltd., a BVI company which is solely owed by Li Lu, a Canadian resident; United Decision Global Limited, a Samoa company which is solely owned by Yaxiang Xu, a Chinese resident; Siu Tan Wong , a Hong Kong resident; Mega Success Asia Pacific Investment Limited, an investment company incorporated in Hong Kong, which is jointly owned by two Hong Kong residents, Ying Ying CHAN and Ka Hang LOK; Run Cheng International Holdings Limited, a BVI company which is owned by Wensheng Guo, a Chinese Resident; and Jason Investment Holding Co., Ltd., a BVI company which is owned by Jianzhong Cai, a Chinese Resident. None of these other shareholders holds management position in China Sunflower or its subsidiaries. Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement. If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earliest effective registration statement for the same offering. Corporate Information Our principal executive offices are located at East City Industrial Development Zone, Minqin County, Wuwei City, Gansu Province, People s Republic of China 733300. Our telephone number at this address is + (86-935) 4124 -118. Our agent for service of process in the British Virgin Islands is NovaSage Incorporations (BVI) Limited with an address at Quastisky Building, P. O. Box 4389, Road Town, Tortola, British Virgin Islands. Our agent for service of process in the United States is Corporation Service Company with an address at 80 State Street, Albany, NY 12207-2543. Investors should contact us for any inquires through the address and telephone number of our principal executive office. Our principal website is www.joygs.com. The information contained on our website is not a part of this prospectus. Calculation of Registration Fee Title of each class of securities to be registered Proposed maximum aggregate offering price Amount of registration fee Ordinary shares, par value $0.01 per share $ 20,000,000 (1) $ 2,322.00 Underwriter s options to purchase ordinary shares (2) 3,000,000 (2) 348.30 Ordinary shares underlying underwriter s options (3) 1,000,000 (2) 116.10 Total Registration Fee $ 2786.40 (1) Estimated solely for the purpose of calculating the amount of the registration in accordance with Rule 457(o) under the Securities Act of 1933, as amended. Includes an estimated proposed maximum aggregate offering price from the sale of ordinary shares which may be issued pursuant to the exercise of a 45-day option granted by the registrant to the underwriters to cover over-allotments, if any. (2) Pursuant to Rule 416 under the Securities Act of 1933, as amended, there are also being registered an indeterminable number of our ordinary shares as may be issued to prevent dilution as a result of stock splits, stock dividends or similar transactions. (3) The underwriter will receive options to purchase a number of ADSs that is equal to 5% the aggregate number of ADSs sold in this offering excluding the over-allotment option. The options will be exercisable at a per ADS exercise price equal to 125% of the public offering price. As estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(g) under the Securities Act, the proposed maximum aggregate offering price of the underwriters options is $1,250,000, which is equal to 125% of $1,000,000 (5% of $20,000,000). In accordance with Rule 457(g) under the Securities Act, because the ordinary shares underlying the underwriters options are registered hereby, no separate registration fee is required with respect to the options registered hereby. The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine. Conventions that Apply to this Prospectus Unless otherwise indicated, information in this prospectus assumes that the underwriter has not exercised its over-allotment option to purchase up to additional ADSs from us. As used in this prospectus, we, us, our company, our and China Sunflower refers to China Sunflower Group Limited, a British Virgin Islands company, and unless the context requires otherwise, includes its direct and indirect subsidiaries; China or PRC refers to the People s Republic of China, excluding Hong Kong Special Administrative Region, Macau Special Administrative Region and Taiwan for the purpose of this prospectus; BVI refers to British Virgin Islands. ADSs refers to American depositary shares, each of which represents ordinary shares; shares or ordinary shares refers to our ordinary shares, par value $0.01 per share; RMB or renminbi is the lawful currency of the PRC; and fiscal 2009 and fiscal 2008 refer to our fiscal years ended December 31, 2009 and December 31, 2008, respectively. Unless otherwise indicated and except where the context otherwise suggests, our financial information presented in this prospectus, including our audited consolidated financial statements and related notes, has been prepared in accordance with U.S. Generally Accepted Accounting Principles ( U.S. GAAP ). For fiscal 2009 and fiscal 2008, our income statements were translated at a rate of RMB 6.6905 to $1.00. We make no representation that the Renminbi or U.S. dollar amounts referred to in this prospectus could have been or could be converted into U.S. dollars or Renminbi, as the case may be, at any particular rate or at all. See Risk Factors Risks Related to Doing Business in China Government control of currency may affect the value of your investment for discussions of the effects of currency control and fluctuating exchange rates on the value of the ADSs. Any discrepancies in any table between totals and sums of the amounts listed are due to rounding. The Offering Offering price We currently estimate that the initial public offering price will be between $ and $ per ADS. ADSs offered by us ADSs. ADSs outstanding immediately after the offering ADSs (or ADSs, if the underwriter exercises in full its over-allotment option to purchase additional ADSs). Ordinary shares outstanding immediately after the offering ordinary shares (or ordinary shares, if the underwriter exercises in full its over-allotment option to purchase additional ADSs). The ADSs Each ADS represents ordinary shares, par value $0.01 per share. The ADSs may be evidenced by American depositary receipts, or ADRs. The depositary will be the holder of the ordinary shares underlying the ADSs and you will have the rights of an ADS holder as provided in the deposit agreement among us, the depositary and holders and beneficial owners of ADSs from time to time. You may surrender your ADSs to the depositary to withdraw the ordinary shares underlying your ADSs. The depositary will charge you a fee for that surrender. We may amend or terminate the deposit agreement for any reason without your consent. Any amendment which imposes or increases fees or charges or which materially prejudices any substantial existing rights you have as an ADS holder will not become effective as to outstanding ADSs until 30 days after notice of the amendment is given to the ADS holders. If an amendment becomes effective, you will be bound by the deposit agreement, as amended, if you continue to hold your ADSs. The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. To better understand the terms of the ADSs, you should carefully read the section in this prospectus entitled Description of American Depositary Shares. We also encourage you to read the deposit agreement, which is an exhibit to the registration statement that includes this prospectus. Use of proceeds The net proceeds to us from this offering are expected to be approximately $ million, assuming an initial public offering price per ADS of $ , which is the mid-point of the estimated public offering price range. The primary purposes of this offering are to create a public market for the ADSs, retain talented employees by providing them with equity incentives and obtain additional capital. We intend to use the net proceeds from this offering for product development, production expansion, research and development, expansion of our distribution channels, increase in planation bases and other general corporate purposes. Over-allotment option We granted to the underwriter an over-allotment option, exercisable within 45 days from the date of this prospectus, to purchase up to additional ADSs. Lock-up We and all of our directors, executive officers and existing shareholders have agreed with the underwriter, subject to certain exceptions, not to sell, transfer or dispose of, directly or indirectly, any of our ordinary shares, ADSs representing our ordinary shares or securities convertible into or exercisable or exchangeable for our ordinary shares for a period of 180 days following the date of this prospectus. See Underwriting for additional information. Risk factors See Risk Factors and other information included in this prospectus for a discussion of factors you should carefully consider before deciding to invest in the ADSs. NASDAQ symbol JOYS Listing We intend to apply to have the ADSs listed on the NASDAQ Global Market under the symbol JOYS on or promptly after the date of this prospectus. We cannot assure you that the ADSs will be or will continue to be listed on the NASDAQ Global Market. Depositary The Bank of New York Mellon PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION, DATED MARCH 2 , 2011
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001508913_qihoo-360_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001508913_qihoo-360_prospectus_summary.txt
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+PROSPECTUS SUMMARY You should read the following summary together with the entire prospectus, including the more detailed information regarding us, the ADSs being sold in this offering and our consolidated financial statements and related notes appearing elsewhere in this prospectus. You should consider carefully, among other things, the matters discussed in the section entitled "Risk Factors." Unless otherwise indicated or the context otherwise requires, all references in this prospectus to "we," "us," "our," and "our company" are to Qihoo 360 Technology Co. Ltd., its subsidiaries and consolidated entities, collectively. "China" or "PRC" refers to the People's Republic of China, excluding Taiwan, Hong Kong and Macau; "shares" or "ordinary shares" refers to our ordinary shares, including Class A and Class B ordinary shares; "ADSs" refers to American depositary shares and every two ADSs represent three Class A ordinary shares; "Renminbi" or "RMB" refers to the legal currency of China; and "$" or "U.S. dollars" refers to the legal currency of the United States. We commissioned iResearch Consulting Group, or iResearch, and Horizon Research and Consulting Group, or Horizon, market research firms in China, to prepare reports for the purpose of providing various industry and other information and illustrating our position in the Internet and mobile security products and services market in China. Information from these reports appears in the "Prospectus Summary," "Industry," "Business" and other sections of this prospectus. Overview We are the No. 3 Internet company in China as measured by user base, according to a report we commissioned from iResearch. In January 2011, we had 339 million monthly active Internet users, representing a user penetration rate of 85.8% in China, according to iResearch. Recognizing security as a fundamental need of Internet and mobile users, we offer comprehensive high-quality Internet and mobile security products free of charge, providing users with secure access points to Internet activities. As a result, we have amassed a large and loyal user base, which we monetize primarily through offering online advertising and Internet value-added services. We are also the No. 1 provider of Internet and mobile security products in China as measured by user base, according to iReseach. In January 2011, we had 328 million monthly active Internet security product users, representing a user penetration rate of 83.9% in China, according to iResearch. Our core Internet and mobile security products include: 360 Safe Guard and 360 Anti-virus, the No. 1 and No. 2 Internet security products in China, with 301 million and 248 million monthly active users in January 2011, respectively, according to iResearch; 360 Mobile Safe, the No. 1 mobile security product in China, with a market share of 58.2% as measured by the number of active users in January 2011, according to iResearch. On top of our core layer of Internet and mobile security product offerings, we have further developed various platform products to meet a full spectrum of security related needs of Internet users and create trusted access points to Internet activities. Our platform products include: 360 Safe Browser, the No. 2 web browser in China, only after Microsoft Internet Explorer, with 172 million monthly active users and a user penetration rate of 44.1% in China in January 2011, according to iResearch; 360 Personal Start-up Page, the default homepage of 360 Safe Browser and a key access point to popular and preferred information and applications, with 98 million monthly active users in China in January 2011, according to iResearch; 360 Application Store, a key access point to securely obtain and manage software and applications; and 360 Safebox, a solution that protects users against thefts of personal account information. Amendment No. 3 to FORM F-1 REGISTRATION STATEMENT Under The Securities Act of 1933 Table of Contents Leveraging our large user base, we are developing open platforms on which third-party Internet product and service providers, such as web game developers, e-commerce websites and software and application developers, offer their products and services. These open platforms allow us to effectively monetize our large user base through revenue sharing arrangements with third parties. For example, our open platform for web games enables our users to access web games provided by over 30 web game developers using their 360 accounts, and our open platform for group-buy provides users with daily updated deal information from over 200 group-buy websites. Our open platforms enable our users to securely access a wide variety of products and services, which in turn enhances our users' experience and loyalty and further grows our user base. Our products and services are supported by our cloud-based security technology, which we believe is one of the most advanced and robust technologies in the Internet security industry. Our cloud-based security technology enables us to continuously update and enhance our capabilities to detect Internet security threats on a real-time basis. By utilizing this cloud architecture, we believe we are able to offer superior performance through reduced usage of user computing resources, particularly in comparison to traditional anti-virus software. As the effectiveness of our cloud-based security technology increases with the size of our user cloud, growth of our user base enhances our malware detection capabilities, which in turn helps us to attract even more users. We have been able to leverage our large user base and our strong brand recognition to grow our paying customer base. We generate revenues primarily through offering the following services: Online advertising. We offer advertising services by providing marketing opportunities on our websites and secure platform products to our advertising customers. We also offer search referral services to search engine companies. Internet value-added services. We offer web games developed by third parties, provide Internet security services such as remote technical support to paying customers and provide other Internet value-added services. We have grown significantly since we commenced operations in 2005. Our monthly active Internet users increased from 122 million in December 2008 to 231 million in December 2009 and 339 million in January 2011. Our revenue was $16.9 million, $32.3 million and $57.7 million, respectively, in 2008, 2009 and 2010, representing a CAGR of 84.8%. We first became profitable in 2009 and our net income increased by 102.7% from $4.2 million in 2009 to $8.5 million in 2010. Industry Background With rapidly increasing broadband penetration in China, Internet usage in China has been on the rise in recent years. According to iResearch, the number of Internet users in China grew from 137 million in 2006 to 457 million in 2010, representing a CAGR of 35.2%, and is expected to grow to 667 million in 2013. Users are also increasingly conducting Internet activities through mobile devices, including mobile-banking, mobile-commerce, mobile-gaming and mobile social networking, among others. According to iResearch, the number of mobile Internet users in China increased from 17 million in 2006 to 303 million in 2010, representing a CAGR of 105.3%, and is expected to grow further to reach 658 million by the end of 2013. Users' growing reliance on the Internet and the increasing exchange of personal information and virtual assets over the Internet through various devices have created strong incentives for hackers to develop malware to profit from exploiting these confidential data. According to iResearch, the largest number of malware samples collected by a single Internet security provider in China increased dramatically from approximately 538,000 in 2006 to over 650 million in 2010. This has led to a strong and growing adoption of Internet and mobile security solution in China. According to iResearch, the number of Internet security users in China reached 394 million in 2010, an increase from 89 million in Table of Contents 2006, representing a CAGR of 45.0%, and is expected to grow further to reach 559 million by 2013. The accumulated number of activated users of mobile security products is expected to grow from 27 million in 2009 to reach 254 million by 2012. The growing complexity of threats, and increasing focus on terminal-end processing performance, particularly for processor and power-constrained mobile devices, have resulted in an increasing demand among users for a pan-security solution covering system protection, privacy protection, and performance optimization across devices. Traditional anti-virus technologies are no longer sufficient in safeguarding users against the rapid proliferation and evolution of security threats, and cloud-based security technology has emerged as a superior Internet security solution. Strengths and Strategies We believe the following strengths have contributed to our success and differentiate us from our competitors: largest user base of Internet and mobile security products and services in China; innovative pan-security solutions creating secure Internet access points; strong monetization potential through open platforms; leading Internet and mobile security brand in China; leading cloud-based Internet technologies and strong R&D capabilities creating high entry barriers; and seasoned management team with extensive industry knowledge and proven execution capabilities. Our goal is to enhance our position as the largest Internet and mobile security product and service provider and a leading Internet company in China and ultimately become a leading Internet company globally. To achieve our goal, we intend to: continue to expand product and service offerings to grow user base and promote brand recognition and loyalty; further monetize our large user base through open platforms; continue to focus on R&D to enhance cloud-based Internet and mobile security technologies; capitalize on the fast growing mobile Internet market; selectively pursue international business expansion; and strengthen existing and build new strategic alliances and selectively pursue investments and acquisitions. Challenges and Risks The successful execution of our strategies is subject to certain challenges and risks that may materially affect us, including: our ability to continue to innovate and provide attractive products and services to attract and retain users; our ability to keep up with rapid changes in technologies and Internet-enabled devices; our ability to leverage our user base to attract customers for our revenue-generating services; our dependence on online advertising for a substantial portion of our revenues; and Block 1, Area D, Huitong Times Plaza No. 71 Jianguo Road, Chaoyang District Beijing 100025 People's Republic of China (86-10) 5878-1000 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) Table of Contents our ability to compete effectively. Please see "Risk Factors" and other information included in this prospectus for a detailed discussion of these challenges and risks. Corporate History and Structure In 2005, Mr. Xiangdong Qi, our director and president, founded our business, which originally focused on user generated content search and aggregation. Mr. Hongyi Zhou, our chairman and chief executive officer, joined us in August 2006, and together with Mr. Qi, reshaped our primary business. In July 2006, we launched 360 Safe Guard, our first Internet security product that protects users against malware, and entered the Internet security market. We were incorporated in the Cayman Islands as an exempted limited liability company on June 9, 2005. On December 31, 2010, we changed our name from Qihoo Technology Company Limited to Qihoo 360 Technology Co. Ltd., or Qihoo 360. We conduct our business operations in China through our wholly-owned subsidiaries and affiliated entities. We formed a wholly-owned subsidiary, Qizhi Software (Beijing) Co., Ltd., or Qizhi Software, one of our primary operating entities, in China in December 2005. In November 2010, we formed three Hong Kong subsidiaries that we expect to become intermediate holding companies for our operations in China: Qiji International Development Limited, or Qiji International, 360 International Development Co. Limited, or 360 International, and Qifei International Development Co. Limited, or Qifei International. Qiji International, 360 International and Qifei International are all wholly-owned by Qihoo 360. The following diagram illustrates our corporate structure as of the date of this prospectus: Corporation Service Company 1180 Avenue of the Americas, Suite 210 New York, New York 10036-8401 800-927-9800 (Name, address, including zip code, and telephone number, including area code, of agent for service) Table of Contents Corporate Information Our principal executive offices are located at Block 1, Area D, Huitong Times Plaza, No. 71 Jianguo Road, Chaoyang District, Beijing 100025, People's Republic of China. Our telephone number is +86 10 5878 1000 and our fax number is +86 10 5878 1001. Our registered address in the Cayman Islands is located at the offices of Maples Corporate Services Limited, PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands. Our agent for service of process in the United States is Corporation Service Company, 1180 Avenue of the Americas, Suite 210, New York, New York 10036-8401. Investors should contact us for any inquiries through the address and telephone number of our principal executive offices. Our corporate website address is www.360.cn. The information contained on our website is not a part of this prospectus. Copies to: David T. Zhang, Esq. Eugene Y. Lee, Esq. Latham & Watkins 41st Floor, One Exchange Square 8 Connaught Place, Central Hong Kong (852) 2522-7886 Leiming Chen, Esq. Simpson Thacher & Bartlett LLP ICBC Tower, 35/F 3 Garden Road, Central Hong Kong (852) 2514-7600 Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Table of Contents The Offering ADSs offered by us 12,110,800 ADSs. Concurrent Private Placement In conjunction with, and subject to, the closing of this offering, affiliates of certain of our existing shareholders, or the private placement investors, have agreed to purchase an aggregate $50 million of our Class A ordinary shares in the form of restricted ADSs at the initial public offering price for this offering for an aggregate of 6,521,739 Class A ordinary shares assuming an initial public offering price of $11.50 per ADS (the mid-point of the estimated range of the initial public offering price shown on the front cover of this prospectus). This investment is being made pursuant to an offer exempt from registration with the SEC pursuant to Regulation S and Section 4(2) of the Securities Act. See "Underwriting Concurrent Private Placement." ADSs outstanding immediately after this offering 12,110,800 ADSs, or 13,927,420 ADSs if the underwriters exercise their option to purchase additional ADSs in full, excluding 4,347,826 restricted ADSs sold in the concurrent private placement which will be subject to resale restrictions and will not be immediately fungible with the ADSs sold in this offering. Ordinary shares outstanding immediately after this offering After giving effect to the concurrent private placement, 174,562,695 ordinary shares (or 177,287,625 ordinary shares if the underwriters exercise their overallotment option in full), consisting of (i) 52,681,661 Class A ordinary shares (or 55,406,591 Class A ordinary shares if the underwriters exercise their over-allotment option in full), which includes 6,521,739 Class A ordinary shares issued in the form of restricted ADSs in connection with the concurrent private placement, and (ii) 121,881,034 Class B ordinary shares. Holders of Class A ordinary shares and Class B ordinary shares have the same rights except for voting and conversion rights. In respect of matters requiring shareholders' vote, each Class A ordinary share is entitled to one vote and each Class B ordinary share is entitled to five votes. Each Class B ordinary share is convertible into one Class A ordinary share at any time by the holder thereof. Class A ordinary shares are not convertible into Class B ordinary shares under any circumstances. Upon any sale, pledge, transfer, assignment or disposition of Class B ordinary shares by a holder thereof to any person or entity that is not an affiliate of such holder, such Class B ordinary shares shall be automatically and immediately converted into the equal number of Class A ordinary shares. ADSs Every two ADSs represent three Class A ordinary shares. The ADSs may be evidenced by American depositary receipts, or ADRs. CALCULATION OF REGISTRATION FEE Title of Each Class of Securities to be Registered(1)(2) Amount to be registered(1) Proposed maximum offering price per Class A ordinary share(3) Proposed Maximum Aggregate Offering Price Amount of Registration Fee(4) Class A ordinary shares, par value $0.001 per share 20,891,130 $8.33 $174,023,113 $20,204.08 (1)Includes (i) Class A ordinary shares initially offered and sold outside the United States that may be resold from time to time in the United States either as part of their distribution or within 40 days after the later of the effective date of this registration statement and the date the shares are first bona fide offered to the public and (ii) Class A ordinary shares that may be purchased by the underwriters pursuant to an option to purchase additional American depository shares. These Class A ordinary shares are not being registered for the purpose of sales outside of the United States. (2)American depositary shares evidenced by American depositary receipts issuable upon deposit of the Class A ordinary shares registered hereby will be registered under a separate registration statement on Form F-6 (Registration No. 333-172867). Every two American depositary shares represent three Class A ordinary shares. (3)Estimated solely for the purpose of calculating the amount of the registration fee pursuant to Rule 457(a) under the Securities Act of 1933. (4)Previously paid. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. Table of Contents The depositary will hold the Class A ordinary shares underlying the ADSs and you will have the rights of an ADS holder as provided in the deposit agreement among us, the depositary and holders of ADSs from time to time. You may surrender your ADSs to the depositary to withdraw the Class A ordinary shares underlying your ADSs. The depositary will charge you a fee for such an exchange. We may amend or terminate the deposit agreement for any reason without your consent. If an amendment becomes effective, you will be bound by the deposit agreement as amended if you continue to hold your ADSs. To better understand the terms of the ADSs, you should carefully read the section in this prospectus entitled "Description of American Depositary Shares." You should also read the deposit agreement, which is an exhibit to the registration statement that includes this prospectus. Use of proceeds We estimate that we will receive net proceeds of approximately $172.8 million from this offering and from our concurrent private placement (or $192.2 million if the underwriters exercise their option to purchase additional ADSs in full), after deducting underwriting discounts and commissions and estimated offering expenses payable by us and assuming an initial public offering price of $11.50 per ADS, the mid-point of the estimated range of the initial public offering price shown on the front cover of this prospectus. We intend to use the net proceeds from this offering for the following purposes: approximately $51.8 million for development of new Internet and mobile security products and services; approximately $51.8 million for enhancement of our research and development capability to further develop technologies; approximately $25.9 million for investment in and acquisition of technologies, products or businesses; and the balance for general corporate purposes. Proposed New York Stock Exchange Trading Symbol QIHU Depositary The Bank of New York Mellon Lock-up Each of our directors, executive officers, existing shareholders and private placement investors has agreed, subject to some exceptions, not to transfer or dispose of, directly or indirectly, any of our ordinary shares, in the form of ADSs or otherwise, or any securities convertible into or exchangeable or exercisable for our ordinary shares, in the form of ADSs or otherwise, for a period of 180 days after the date this prospectus. Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where such offer or sale is not permitted. SUBJECT TO COMPLETION PRELIMINARY PROSPECTUS DATED , 2011 PROSPECTUS 12,110,800 American Depositary Shares Qihoo 360 Technology Co. Ltd. Representing 18,166,200 Class A Ordinary Shares Table of Contents The number of ordinary shares outstanding after this offering: is based on 149,874,756 shares outstanding as of the date of this prospectus, assuming the conversion of all outstanding preferred shares into 78,314,016 ordinary shares upon the closing of this offering; and excludes 11,047,650 ordinary shares issuable upon the exercise of options to purchase ordinary shares outstanding as of the date of this prospectus with exercise prices ranging from $1.50 to $6.0 per share and a weighted average exercise price of $3.87 per share. Unless otherwise indicated, all information in this prospectus assumes no exercise by the underwriters of their option to purchase up to 2,724,930 Class A ordinary shares in the form of ADSs in this offering. This is our initial public offering. We are offering 12,110,800 American depositary shares, or ADSs. Every two ADSs represent three of our Class A ordinary shares. No public market currently exists for our ordinary shares or ADSs. We anticipate the initial public offering price of our ADSs to be between $10.50 and $12.50 per ADS. We have applied to list our ADSs on the New York Stock Exchange under the symbol "QIHU." Investing in our ADSs involves a high degree of risk. See "Risk Factors" beginning on page 12. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. Table of Contents SUMMARY CONSOLIDATED FINANCIAL INFORMATION AND OPERATING DATA You should read the summary consolidated financial information and other data in conjunction with our financial statements, the related notes and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included elsewhere in this prospectus. Our summary consolidated statement of operations data for the years ended December 31, 2008, 2009 and 2010 and summary consolidated balance sheet data as of December 31, 2009 and 2010 have been derived from our audited consolidated financial statements included elsewhere in this prospectus. The summary consolidated balance sheet data as of December 31, 2008 have been derived from our audited financial statements not included in this prospectus. Our consolidated financial statements have been prepared and presented in accordance with accounting principles generally accepted in the United States, or U.S. GAAP. Year Ended December 31, 2008 2009 2010 ($ in thousands, except share and per share data) Statement of Operations Data: Revenues: Internet services 5,795 16,010 53,790 Sales of third party anti-virus software 11,100 16,292 3,875 Total revenues 16,895 32,302 57,665 Cost of revenues: Internet services 1,147 1,790 5,566 Sales of third party anti-virus software 7,073 6,600 1,185 Total cost of revenues 8,220 8,390 6,751 Subsidy income 266 Operating expenses: Selling and marketing 2,732 6,256 12,603 General and administrative 1,645 2,531 5,051 Research and development 7,283 10,664 24,505 Total operating expenses 11,660 19,451 42,159 (Loss) income from operations (2,985 ) 4,461 9,021 Interest income 616 281 415 Interest expense (32 ) (169 ) (98 ) Other expense (164 ) (60 ) Exchange (loss) gain (360 ) 28 (267 ) (Loss) income before income tax benefit (expense) and loss from equity method investment (2,925 ) 4,601 9,011 Income tax benefit (expense) 179 (412 ) (463 ) Loss from equity method investment (57 ) Net (loss) income (2,746 ) 4,189 8,491 Less: Net loss attributable to noncontrolling interest 17 Net (loss) income attributable to Qihoo 360 Technology Co. Ltd. (2,746 ) 4,189 8,508 Per ADS Total Public Offering Price $ $ Underwriting Discounts and Commissions $ $ Proceeds, Before Expenses, to Us $ $ Table of Contents Year Ended December 31, 2008 2009 2010 ($ in thousands, except share and per share data) Accretion of Series A convertible participating redeemable preferred shares 815 815 815 Accretion of Series B convertible participating redeemable preferred shares 1,250 1,250 1,250 Accretion of Series C convertible participating redeemable preferred share 978 Net (loss) income attributable to ordinary shareholders of Qihoo 360 Technology Co. Ltd. (4,811 ) 2,124 5,465 Net (loss) income per ordinary share basic (0.07 ) 0.03 0.05 Net (loss) income per participating unvested share basic (0.07 ) 0.03 0.05 Net income per Series A convertible participating redeemable preferred share basic 0.02 0.03 0.06 Net income per Series B convertible participating redeemable preferred share basic 0.03 0.03 0.06 Net income per Series C convertible participating redeemable preferred share basic N/A N/A 0.13 Net (loss) income per ordinary share diluted (0.07 ) 0.03 0.05 Weighted average shares used in calculating net income per ordinary share basic 48,969,589 51,780,932 55,568,041 Weighted average shares used in calculating net income per participating unvested share basic 16,370,371 13,559,028 15,782,530 Weighted average shares used in calculating net income per Series A convertible participating redeemable preferred share basic 32,603,760 32,603,760 32,603,760 Weighted average shares used in calculating net income per Series B convertible participating redeemable preferred share basic 37,878,789 37,878,789 37,878,789 Weighted average shares used in calculating net income per Series C convertible participating redeemable preferred share basic 7,659,818 Weighted average shares used in calculating net income per ordinary share diluted 65,339,960 65,339,960 71,350,571 Share-based compensation expense included in: Selling and marketing 226 479 524 General and administrative 104 151 337 Research and development 923 1,294 3,145 Total 1,253 1,924 4,006 We have granted the underwriters a 30-day option to purchase up to 1,816,620 additional ADSs from us at the initial public offering price less the underwriting discounts and commissions. Upon the completion of this offering, 52,681,661 Class A ordinary shares and 121,881,034 Class B ordinary shares of our company will be issued and outstanding. Each Class A ordinary share will be entitled to one vote and each Class B ordinary share will be entitled to five votes on all matters subject to shareholder vote. Accordingly, holders of our Class A ordinary shares and Class B ordinary shares will hold 7.96% and 92.04% of our aggregate voting power, respectively. Delivery of our ADSs will be made on or about , 2011. (1)Pro forma as adjusted to give effect to: the automatic conversion of all of our outstanding Series A, Series B and Series C convertible participating redeemable preferred shares into 78,314,016 ordinary shares upon the closing of this offering; and the issuance and sale of 24,687,939 Class A ordinary shares in the form of ADSs by us in this offering and in our concurrent private placement at an assumed initial public offering price of $11.50 per ADS, the mid-point of the estimated range of the initial public offering price shown on the front cover of this prospectus, after deducting estimated underwriting discounts, commissions and estimated offering expenses payable by us. A $1.00 increase (decrease) in the assumed public offering price would increase (decrease) cash and cash equivalents, total assets and total equity by $11.3 million. The following table shows the monthly active users for our primary security products and platform products, both in an absolute number and as a percentage of the then total Internet users in China as reported by iResearch: Monthly Active Users of: December 2008 December 2009 January 2011 (in millions, except percentages) 360 Safe Guard 116 60.9 % 216 72.8 % 301 76.9 % 360 Anti-Virus 2 0.9 % 87 29.3 % 248 63.5 % 360 Safe Browser 18 9.4 % 106 35.8 % 172 44.1 % 360 security products 119 62.8 % 225 75.9 % 328 83.9 % UBS Investment Bank Citi Stifel Nicolaus Weisel Cowen and Company Table of Contents
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@@ -0,0 +1,897 @@
+SUMMARY COMPENSATION TABLE 
+
+ Name 
+and 
+Principal 
+Position
+ Year
+ Salary
+ FY 2010 
+ ($)
+ Bonus 
+($)
+ Stock 
+Awards 
+($)(1)
+ Option 
+Awards 
+($)(1)
+ Non-Equity 
+Incentive 
+Plan 
+Compensation 
+($)
+ Change in 
+Pension 
+Value and 
+Nonqualified 
+Deferred 
+Compensation 
+Earnings 
+($)
+ All 
+Other 
+Compens- 
+ation 
+($)
+ Total 
+($)
+
+ Pamela Dawn Tesluck
+President, CEO, 
+Secretary, Treasurer 
+and a director 
+ 2010
+ None
+ None
+ None
+ None
+ None
+ None
+ None
+ None
+
+ 
+
+ Stock Option Grants 
+ We have not granted any stock options to the executive officers since our inception. 
+ 
+ Consulting Agreements 
+ We do not have any employment or consulting agreement. 
+ 
+ Security Ownership of Certain Beneficial Owners and Management 
+ 
+ The following tables set forth the ownership, as of the date of this Prospectus, of our common stock by each person known by us to be the beneficial owner of more than 5% of our outstanding common stock, our directors, and our executive officers and directors as a group. To the best of our knowledge, the persons named have sole voting and investment power with respect to such shares, except as otherwise noted. There are not any pending or anticipated arrangements that may cause a change in control. 
+ The information presented below regarding beneficial ownership of our voting securities has been presented in accordance with the rules of the Securities and Exchange Commission and is not necessarily indicative of ownership for any other purpose. Under these rules, a person is deemed to be a "beneficial owner" of a security if that person has or shares the power to vote or direct the voting of the security or the power to dispose or direct the disposition of the security. A person is deemed to own beneficially any security as to which such person has the right to acquire sole or shared voting or investment power within 60 days through the conversion or exercise of any convertible security, warrant, option or other right. More than one person may be deemed to be a beneficial owner of the same securities. The percentage of beneficial ownership by any person as of a particular date is calculated by dividing the number of shares beneficially owned by such person, which includes the number of shares as to which such person has the right to acquire voting or investment power within 60 days, by the sum of the number of shares outstanding as of such date plus the number of shares as to which such person has the right to acquire voting or investment power within 60 days. Consequently, the denominator used for calculating such percentage may be different for each beneficial owner. Except as otherwise indicated below we believe that the beneficial owners of our common stock listed below have sole voting and investment power with respect to the shares shown. The mailing address for all persons is 593 Polson Avenue, Winnipeg, MB R2W 0P1.
+ 
+ 
+ 
+ 27
+ 
+
+ Shareholders
+ 
+ # of Shares
+ 
+ Percentage
+ 
+
+ Pamela Dawn Tesluck
+ 
+ 
+ 1,000,000
+ 
+ 
+ 74.1%
+ 
+
+ All directors and executive officers as a group [1 person]
+ 
+ 
+ 1,000,000
+ 
+ 
+ 74.1%
+ 
+
+ 
+ This table is based upon information derived from our stock records. The shareholder named in this table has sole or shared voting and investment power with respect to the shares indicated as beneficially owned. Applicable percentages are based upon 1,350,000 shares of common stock outstanding as of December 19, 2010. 
+ 
+ Certain Relationships and Related Transactions 
+ 
+ Upon formation, Ms. Tesluck, our founder and president received 1,000,000 million shares par value $.001 as the founding officer and executive of the company. Any infusions or loan advances to the company since inception by Pamela Dawn Tesluck are payable on demand and bear imputed interest at 8% per annum. 
+ The Company has received $63,924 as a loan from Ms. Tesluck. The loan is payable on demand and bear imputed interest of 8% per annum. 
+ Our executive offices are located at 593 Polson Avenue, Winnipeg, Manitoba, R2W 0P1, Canada. 
+ The Corporation may indemnify and advance litigation expenses to its directors, officers, employees and agents to the extent permitted by law, the Articles or these Bylaws, and shall indemnify and advance litigation expenses to its directors, officers, employees and agents to the extent required by law, the Articles or these Bylaws. The Corporation s obligations of indemnification, if any, shall be conditioned on the Corporation receiving prompt notice of the claim and the opportunity to settle and defend the claim. The Corporation may, to the extent permitted by law, purchase and maintain insurance on behalf of an individual who is or was a director, officer, employee or agent of the Corporation.
+ 
+ Disclosure of Commission Position of Indemnification for 
+Securities Act Liabilities 
+ 
+ Our sole officer and director is indemnified as provided by the Nevada Revised Statutes and our Bylaws. We have been advised that in the opinion of the Securities and Exchange Commission indemnification for liabilities arising under the Securities Act is against public policy as expressed in the Securities Act, and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities is asserted by one of our director, officer, or controlling person in connection with the securities being registered, we will, unless in the opinion of our legal counsel the matter has been settled by controlling precedent, submit the question of whether such indemnification is against public policy to court of appropriate jurisdiction. We will then be governed by the court's decision. 
+ 
+ 28 
+ 
+
+ 
+ Financial Statements
+INDEX TO FINANCIAL STATEMENTS
+September 30, 2010
+ 
+ 
+ 
+ Report of Independent Registered Public Accounting Firm
+ F-1
+
+ Balance Sheet
+ F-2
+
+ Statements of Operations
+ F-3
+
+ Statements of Stockholders Deficit
+ F-4
+
+ Statements of Cash Flows
+ F-5
+
+ Notes to the Financial Statements
+ F-6
+
+ 
+ 29 
+ 
+
+ 
+
+ REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
+ 
+ To the Board of Directors
+ Yukonic Minerals Corp.
+ (An Exploration Stage Company)
+ 
+ We have audited the accompanying balance sheet of Yukonic Minerals Corp. (An Exploration Stage Company) as of September 30, 2010, and the related statement of operations, stockholders' deficit and cash flows for the period from inception on May 26, 2010 through September 30, 2010. These financial statements are the responsibility of the Company s management. Our responsibility is to express an opinion on these financial statements based on our audits.
+ 
+ We conducted our audit in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company was not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
+ 
+ In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Yukonic Minerals Corp. (An Exploration Stage Company) as of September 30, 2010, and the related statement of operations, stockholders' deficit and cash flows for the period from inception on May 26, 2010 through September 30, 2010, in conformity with accounting principles generally accepted in the United States of America.
+ 
+ The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company has an accumulated deficit of $65,051, which raises substantial doubt about its ability to continue as a going concern. Management s plans concerning these matters are also described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
+ 
+ 
+ /s/ M & K CPAS, PLLC
+ 
+ 
+ www.mkacpas.com
+ Houston, Texas
+ December 20, 2010
+ 
+ F-1 
+ 
+
+ 
+
+ YUKONIC MINERALS CORP.
+ (An Exploration Stage Company)
+ BALANCE SHEET
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ September 30, 2010
+
+ ASSETS
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ CURRENT ASSETS
+ 
+ 
+ 
+ 
+ 
+
+ Cash
+ 
+ 
+ 
+ 
+ $
+ 17,457 
+
+ TOTAL CURRENT ASSETS
+ 
+ 
+ 
+ $
+ 17,457 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ TOTAL ASSETS
+ 
+ 
+ 
+ $
+ 17,457 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ LIABILITIES AND STOCKHOLDERS DEFICIT
+ 
+ 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ CURRENT LIABILITIES
+ 
+ 
+ 
+ 
+
+ Accounts payable and accrued liabilities
+ 
+ $
+ 32,155
+
+ Loans from related party
+ 
+ 
+ 
+ 45,224
+
+ TOTAL CURRENT LIABILITIES
+ 
+ 
+ $
+ 77,379
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ STOCKHOLDERS DEFICIT
+ 
+ 
+ 
+
+ Capital stock 
+ 
+ 
+ 
+ 
+ 
+
+ Authorized 
+ 
+ 
+ 
+ 
+ 
+
+ 75,000,000 shares of common stock, $0.001 par value,
+ 
+ 
+
+ Issued and outstanding 
+ 
+ 
+ 
+ 
+
+ 1,350,000 shares 
+ 
+ 
+ $
+ 1,350
+
+ Additional paid in capital
+ 
+ 
+ 
+ 3,779
+
+ Deficit accumulated during the exploration stage
+ 
+ (65,051)
+
+ TOTAL STOCKHOLDERS DEFICIT
+ 
+ 
+ 
+ 
+ 
+ $
+ (59,922)
+
+ TOTAL LIABILITIES AND STOCKHOLDERS DEFICIT
+ 
+ 
+ 
+ 
+ 
+ $
+ 17,457 
+
+ 
+ 
+ The accompanying notes are an integral part of these financial statements.
+ 
+ 
+ 
+ F-2
+ 
+
+ 
+
+ YUKONIC MINERALS CORP.
+ (An Exploration Stage Company)
+ STATEMENT OF OPERATIONS
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ Cumulative Results
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ From Inception
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ (May 26, 2010) To
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ September 30, 2010
+
+ REVENUE
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Revenues
+ 
+ 
+ 
+ 
+ 
+ $
+ - 
+
+ Total Revenues
+ 
+ 
+ 
+ 
+ $
+ - 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ EXPENSES
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Operating Expenses
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Office and general
+ 
+ 
+ 
+ 
+ $
+ 7,072
+
+ Professional fees
+ 
+ 
+ 
+ 
+ 
+ 42,155
+
+ Total Operating Expenses
+ 
+ 
+ 
+ 
+ 
+ 49,227
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Net Operating Loss
+ 
+ 
+ 
+ 
+ 
+ (49,227)
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Other income (expense)
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Loss on foreign currency exchange
+ 
+ 
+ 
+ 
+ 
+ (195)
+
+ Impairment
+ 
+ 
+ 
+ 
+ 
+ (15,000)
+
+ Imputed interest
+ 
+ 
+ 
+ 
+ 
+ (629)
+
+ Total other income (expense)
+ 
+ 
+ 
+ 
+ 
+ (15,824)
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Loss before provision for income taxes
+ 
+ 
+ 
+ 
+ 
+ (65,051)
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Provision for income taxes
+ 
+ 
+ 
+ 
+ 
+ -
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ NET LOSS
+ 
+ 
+ 
+ 
+ $
+ (65,051)
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ BASIC AND DILUTED LOSS PER COMMON SHARE
+ 
+ 
+ 
+ 
+ $
+ (0.08)
+
+ 
+ BASIC AND DILUTED WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 
+ 
+ 
+ 
+ 
+ $ 
+ 861,328
+
+ 
+ 
+ 
+
+ 
+ The accompanying notes are an integral part of these financial statements.
+ 
+ 
+ 
+ F-3
+ 
+
+ 
+
+ YUKONIC MINERALS CORP.
+ (An Exploration Stage Company)
+ STATEMENT OF STOCKHOLDERS' DEFICIT
+ From Inception (May 26, 2010) to September 30, 2010
+ 
+ Deficit
+ Common Stock
+ 
+ 
+ 
+ Accumulated
+ 
+ 
+
+ 
+ 
+ 
+ 
+ 
+ Additional
+ 
+ During The
+ 
+ 
+
+ 
+ 
+ 
+ Number of
+ 
+ 
+ 
+ Paid-in
+ 
+ Exploration
+ 
+ 
+
+ 
+ 
+ 
+ shares
+ 
+ Amount
+ 
+ Capital
+ 
+ Stage
+ 
+ Total
+
+ Balance at inception - May 26, 2010
+ - 
+ - 
+ - 
+ - 
+ - 
+
+ Common stock issued for cash at $0.001
+ per share on June 18, 2010
+ 1,000,000 
+ $
+ 1,000 
+ $
+ - 
+ $
+ - 
+ $
+ 1,000 
+
+ Common stock issued for cash at $0.01
+ per share on September 16, 2010
+ 350,000 
+ 350 
+ 3,150 
+ -
+ 3,500 
+
+ Imputed interest on related party loan
+ - 
+ - 
+ 629 
+ - 
+ 629 
+
+ Net loss for the period ended 
+ September 30, 2010
+ 
+ 
+ -
+ 
+ - 
+ 
+ - 
+ 
+ (65,051)
+ 
+ (65,051)
+
+ Balance, September 30, 2010
+ 
+ 1,350,000 
+ $
+ 1,350 
+ $
+ 3,779 
+ $
+ (65,051)
+ $
+ (59,922)
+
+ 
+ 
+ The accompanying notes are an integral part of these financial statements.
+ 
+ 
+ 
+ F-4
+ 
+
+ 
+
+ YUKONIC MINERALS CORP.
+ (An Exploration Stage Company)
+ STATEMENT OF CASH FLOWS
+ May 26, 2010
+
+ (Date Of Inception) To
+
+ 
+ 
+ 
+ 
+ 
+ 
+ September 30, 2010
+
+ OPERATING ACTIVITIES
+ Net loss
+ $
+ (65,051)
+
+ Adjustment to reconcile net loss to net cash
+ used in operating activities
+ 
+ Impairment of mineral rights acquisition
+ 
+ 15,000
+
+ 
+ Imputed interest
+ 
+ 629
+
+ 
+ Increase (decrease) in accrued expenses
+ 32,155 
+
+ NET CASH USED IN OPERATING ACTIVITIES
+ $
+ (17,267)
+
+ INVESTMENT ACTIVITIES
+ Mineral rights acquisition
+ (15,000)
+
+ NET CASH USED IN BY INVESTING ACTIVITIES
+ 
+ 
+
+ $
+ (15,000) 
+
+ FINANCING ACTIVITIES
+ Proceeds from sale of common stock
+ 4,500
+
+ 
+ Loan from related party
+ 
+ 
+ 45,224 
+
+ NET CASH PROVIDED BY FINANCING ACTIVITIES
+ 
+ 
+
+ $
+ 49,724
+
+ NET INCREASE (DECREASE) IN CASH
+ $
+ 17,457 
+
+ CASH, BEGINNING OF PERIOD
+ 
+ $
+ - 
+
+ CASH, END OF PERIOD
+ 
+ 
+ $
+ 17,457 
+
+ Supplemental cash flow information and noncash financing activities:
+
+ Cash paid for:
+ 
+ Interest
+ 
+ 
+ 
+ $
+ - 
+
+ 
+ Income taxes
+ 
+ 
+ $
+ - 
+
+ 
+ 
+ The accompanying notes are an integral part of these financial statements.
+ 
+ 
+ 
+ F-5
+ 
+
+ 
+
+ YUKONIC MINERALS CORP.
+ (An Exploration Stage Company)
+ NOTES TO THE FINANCIAL STATEMENTS
+ September 30, 2010
+
+ 
+ NOTE 1 NATURE OF OPERATIONS AND BASIS OF PRESENTATION
+ 
+ The Company was incorporated in the State of Nevada as a for-profit Company on May 26, 2010 and established a fiscal year end of September 30. The company is an exploration-stage company organized to exploit mineral deposits.
+ 
+ NOTE 2
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/CIK0001509273_c-j-old_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001509273_c-j-old_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001509273_c-j-old_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/CIK0001509291_task_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001509291_task_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..55c42a3b987f0a901f7dc6dbda8b8fb285cf97f7
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001509291_task_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY The following summary highlights material information found in more detail elsewhere in the Prospectus. It does not contain all of the information you should consider. As such, before you decide to buy our common stock, in addition to the following summary, we urge you to carefully read the entire Prospectus, especially the risks of investing in our common stock as discussed under "Risk Factors." In this Prospectus, the terms "we," "us," "our," "Company," Task Technologies and "Task" refer to Task Technologies, Inc., a Nevada corporation. "Common Stock" refers to the common stock, par value $0.001 per share, of Task Technologies, Inc. We are a Michigan based company established in 2006 to offer information technology ( IT ) consulting and placement services to the health insurance industry. We provide our consulting clients with expertise in database programming and management in the health insurance industry. These services help our clients manage and leverage the information that they must maintain in order to support their subscribers and to be in compliance with the appropriate government agencies and regulations. We also provide placement services to clients that need talented personnel with a specific skill set that we are able to find due to our level of involvement in the health insurance industry. As of the date of this Prospectus we were performing consulting, placement or other services for three clients, one in the healthcare industry, one in the educational insurance industry and one in the wireless IT industry. The Company also currently has Master Service Agreements with three other health care industry clients. Historically, the majority of our clients are and have been health insurance companies and we have historically focused the majority of our marketing efforts on the health care industry. Moving forward we plan to continue to direct our marketing efforts on the health care industry; provided that if requested, we will also provide services to non-health care related businesses (such as the services we currently provide for the education insurance industry client and wireless IT client, as described above) on a case-by-case basis. We believe that our business can grow in two ways. The first would be to enter into additional consulting and placement agreements with additional or existing clients. The second would be through acquisitions or mergers with other entities in our industry or other related industries which we believe will have a synergistic relationship with us, funding permitting; provided that we do not currently have any plans to enter into any such acquisitions or mergers at this time. We do not anticipate that any acquisitions or mergers we may enter into in the future would result in a change of control of the Company. We had a working capital deficit of $182,483 and a total accumulated deficit of $254,350 as of June 30, 2011, had net income of $46,557 for the six months ended June 30, 2011, a net loss of $300,324 for the year ended December 31, 2010 and a net loss of $18,522 for the year ended December 31, 2009. Furthermore, we believe that operating as a reporting company, which is our plan following the effectiveness of our Registration Statement, of which this Prospectus is a part, will cost us from $20,000 to $40,000 more per year in accounting, legal, managerial and filing expenses than we have historically spent. We have budgeted the need for approximately $50,000 of additional funding during the next 12 months to continue our business operations which does not include any funds which we would require to expand our operations as planned, and which amount does not include any funds to repay our currently outstanding promissory notes (as described in greater detail below under Liquidity and Capital Resources ). We plan to utilize funds available under a $500,000 line of credit with The Genesis Fund, Ltd. ( Genesis ), a subsidiary of VentureQuest Industries Corp. ( VentureQuest ), which is beneficially owned and controlled by Guy D. Roberts, our Chief Executive Officer, to supplement our revenues for the next approximately 12 months. As of June 30, 2011, the Company had borrowed a total of $66,000 under the Line of Credit and $434,000 was available to be borrowed. As of the date of this Prospectus $172,022 had been borrowed under the Line of Credit and a total of $327,978 remained available to be borrowed. If the amount available under our line of credit with Genesis is insufficient to support our operations, and we are unable to raise adequate working capital for the remainder of fiscal 2011 and beyond, we will continue to market our services as funding permits and will continue to actively seek out additional funding, but we may be restricted in the implementation of our business plan. Moving forward, we plan to seek out additional debt and/or equity financing; however, we do not currently have any specific plans to raise such additional financing at this time. The sale of additional equity securities, if undertaken by the Company and if accomplished, may result in dilution to our shareholders. We cannot assure you, however, that future financing will be available in amounts or on terms acceptable to us, or at all. Additionally, our common stock will be considered a penny stock , and subject to the requirements of Rule 15g-9, promulgated under the Securities Exchange Act of 1934, as amended. Penny stock is generally defined as any equity security not traded on an exchange or quoted on NASDAQ that has a market price of less than $5.00 per share. Under such rule, broker-dealers who recommend low-priced securities to persons other than established customers and accredited investors must satisfy special sales practice requirements, including a requirement that they make an individualized written suitability determination for the purchaser and receive the purchaser's consent prior to the transaction. The Securities Enforcement Remedies and Penny Stock Reform Act of 1990, also requires additional disclosure in connection with any trades involving a stock defined as a penny stock. The required penny stock disclosures include the required delivery, prior to any transaction, of a disclosure schedule explaining the penny stock market and the risks associated with it. Such requirements could severely limit the market liquidity of the securities and the ability of purchasers to sell their securities in the secondary market. In addition, various state securities laws impose restrictions on transferring "penny stocks" and as a result, investors in the common stock may have their ability to sell their shares of the common stock impaired. We were originally incorporated as a Michigan corporation in February 2006 and re-domiciled as a Nevada corporation in October 2008. Our mailing address is 1971 East Beltline Ave NE, Suite 217, Grand Rapids, MI, 49525, our telephone number is 888-969-8275, and our fax number is 616-829-5902. We maintain a website at www.task-technologies.net, which includes information we do not desire to be incorporated by reference herein. The following summary is qualified in its entirety by the detailed information appearing elsewhere in this Prospectus. The securities offered hereby are speculative and involve a high degree of risk. See "Risk Factors." As filed with the Securities and Exchange Commission on November 14, 2011 Registration No. 333-176248 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM S-1/A Amendment No. 1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 TASK TECHNOLOGIES, INC. (Name of registrant in its charter) Nevada 8742 20-4555920 (State or jurisdiction of incorporation or organization) (Primary Standard Industrial Classification Code Number) (IRS Employer Identification No.) 1971 East Beltline Ave NE, Suite 217 Grand Rapids, Michigan 49525 Phone: (888) 969-8275 (Address and telephone number of principal executive offices and principal place of business or intended principal place of business) Incorp. Services, Inc. 2360 Corporate Circle, Suite 400 Henderson, Nevada, 89074-7722 (702) 866-2500 (Name, address and telephone number of agent for service) Copies to: David M. Loev John S. Gillies The Loev Law Firm, PC The Loev Law Firm, PC 6300 West Loop South, Suite 280 & 6300 West Loop South, Suite 280 Bellaire, Texas 77401 Bellaire, Texas 77401 Phone: (713) 524-4110 Phone: (713) 524-4110 Fax: (713) 524-4122 Fax: (713) 456-7908 Approximate date of proposed sale to the public: as soon as practicable after the effective date of this Registration Statement. If any of the Securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. [X] If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of earlier effective registration statement for the same offering. [ ] SUMMARY OF THE OFFERING: Common Stock Offered: 700,750 shares by selling stockholders Common Stock Outstanding Before The Offering: 9,700,750 shares Common Stock Outstanding After The Offering: 9,700,750 shares Use Of Proceeds: We will not receive any proceeds from the shares offered by the selling stockholders in this Offering. Offering Price: The Offering price of the shares has been arbitrarily determined by us based on estimates of the price that purchasers of speculative securities, such as the shares, will be willing to pay considering the nature and capital structure of our Company, the experience of our officers and Directors and the market conditions for the sale of equity securities in similar companies. The Offering price of the shares bears no relationship to the assets, earnings or book value of us, or any other objective standard of value. We believe that no shares will be sold by the selling shareholders prior to us becoming a publicly-traded company, at which time the selling shareholders will sell shares based on the market price of such shares. We are not selling any shares of our common stock, and are only registering the re-sale of shares of common stock previously sold by us. No Market: No assurance is provided that a market will be created for our securities in the future, or at all. If in the future a market does exist for our securities, it is likely to be highly illiquid and sporadic. We intend to apply to the FINRA Over-The-Counter Bulletin Board, through a market maker that is a licensed broker dealer, to allow the trading of our common stock upon our becoming a reporting company. If our common stock becomes traded and a market for the stock develops, the actual price of stock will be determined by prevailing market prices at the time of sale or by private transactions negotiated by the selling shareholders. The offering price would thus be determined by market factors and the independent decisions of the selling shareholders. Need for Additional Financing: We had a working capital deficit of $182,483 and a total accumulated deficit of $254,350 as of June 30, 2011, had net income of $46,557 for the six months ended June 30, 2011, a net loss of $300,324 for the year ended December 31, 2010 and a net loss of $18,522 for the year ended December 31, 2009. Furthermore, we believe that operating as a reporting company, which is our plan following the effectiveness of our Registration Statement, of which this Prospectus is a part, will cost us from $20,000 to $40,000 more per year in accounting, legal, managerial and filing expenses than we have historically spent. We have budgeted the need for approximately $50,000 of additional funding during the next 12 months to continue our business operations which does not include any funds which we would require to expand our operations as planned, and which amount does not include any funds to repay our currently outstanding promissory notes (as described in greater detail below under Liquidity and Capital Resources ). We plan to utilize funds available under a $500,000 line of credit with Genesis (of which $434,000 was available as of June 30, 2011 and $327,978 was available as of the date of this Prospectus), a subsidiary of VentureQuest, which is beneficially owned and controlled by Guy D. Roberts, our Chief Executive Officer, to supplement our revenues for the next approximately 12 months. If the amount available under our line of credit with Genesis is insufficient to support our operations, and we are unable to raise the additional funding we require, the value of our securities, if any, would likely become worthless and we may be forced to abandon our business plan. Even assuming we raise the additional capital we require to continue our business operations, we will require substantial fees and expenses associated with this Offering, and we anticipate incurring net losses for the foreseeable future. Our need for additional funding is described in greater detail below under Liquidity and Capital Resources . Address: 1971 East Beltline Ave NE, Suite 217 Grand Rapids, Michigan 49525 Telephone Number: (888) 969-8275 If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [ ] Smaller reporting company CALCULATION OF REGISTRATION FEE Title of Each Class of Securities To be Registered Amount Being Registered Proposed Maximum Price Per Share(1) Proposed Maximum Aggregate Price(1) Amount of Registration Fee Common Stock 700,750 $0.20 $140,150.00 $16.28 Total 700,750 $0.20 $140,150.00 $16.28 (1) The offering price is the stated, fixed price of $0.20 per share until the securities are quoted on the OTC Bulletin Board for the purpose of calculating the registration fee pursuant to Rule 457. This amount is only for purposes of determining the registration fee, the actual amount received by a selling shareholder will be based upon fluctuating market prices once the securities are quoted on the OTC Bulletin Board. The Registrant hereby amends its Registration Statement, on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/CIK0001509432_rpx-corp_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001509432_rpx-corp_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..362df4a9a0ea60ccf4f4c8d5e409cb7055e5c14b
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001509432_rpx-corp_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights selected information contained elsewhere in this prospectus. Because this is only a summary, it does not contain all of the information you should consider before investing in our common stock. You should carefully read the entire prospectus, especially the risks set forth under the heading Risk Factors and our consolidated financial statements and related notes included elsewhere in this prospectus, before making an investment decision. References in this prospectus to RPX, our company, we, us and our refer to RPX Corporation and its consolidated subsidiaries during the periods presented unless the context requires otherwise. RPX Corporation Overview RPX helps companies reduce patent-related risk and expense. We provide a subscription-based patent risk management solution that facilitates more efficient exchanges of value between owners and users of patents compared to transactions driven by actual or threatened litigation. As of June 30, 2011, we had a client network of 96 members. The core of our solution is defensive patent aggregation, in which we acquire patents or licenses to patents, which we refer to collectively as patent assets, that are being or may be asserted against our current and prospective clients. We then license these patent assets to our clients to protect them from potential patent infringement assertions. We also provide our clients access to our proprietary patent market intelligence and data. As of June 30, 2011, we had deployed over $300 million to acquire patent assets. Our business model aligns our interests with those of our clients. We have not asserted and will not assert our patents, which enables us to develop strong and trusted relationships with our clients. Our clients include companies that design, make or sell technology-based products and services as well as companies that use technology in their businesses. We refer to these companies as operating companies. Our client network consists of companies of all sizes, including some of the world s most prominent companies, such as Cisco Systems, Inc., Google Inc., Nokia Corporation, Panasonic Corporation, Samsung Electronics Co., Ltd., SAP AG, Sharp Corporation, Sony Corporation and Verizon Communications Inc. Since our inception in July 2008, our revenue has grown rapidly, from $0.8 million in 2008 to $32.8 million in 2009, $94.9 million in 2010 and $73.2 million for the six months ended June 30, 2011. We attained profitability in 2009, our first full fiscal year of operations. Our net income increased from a net loss of $5.2 million in 2008 to net income of $1.9 million in 2009, $13.9 million in 2010 and $14.4 million for the six months ended June 30, 2011. The Market We refer to the market in which participants exchange value related to patents as the patent market. Today, patent litigation is a significant part of the patent market and is a multi-billion dollar industry. Based on our own analysis and data from independent third parties, we estimate that there were patent claims filed against more than 40,000 defendants, including companies that were sued more than one time, in the United States from 2005 through 2010. The costs to defend and resolve a patent litigation claim can vary widely. The costs can range from modest, such as $50,000 for nuisance suits, to substantial, such as tens of millions of dollars or more in the most complex cases. Based on these metrics, we estimate that litigation-related expenses in the patent market totaled tens of billions of dollars in the United States from 2005 to 2010. Table of Contents The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. Subject to Completion. Dated September 12, 2011. 5,000,000 Shares Common Stock RPX is offering 3,400,000 shares of its common stock and the selling stockholders, which include our Chief Executive Officer, Chief Operating Officer, President and Chief Financial Officer, are offering 1,600,000 shares of common stock. RPX will not receive any of the proceeds from the sale of shares by the selling stockholders. Our common stock is listed on The Nasdaq Global Market under the symbol RPXC. The last reported sale price of our common stock on September 9, 2011 was $22.12 per share. See Risk Factors on page 10 to read about factors you should consider before buying shares of the common stock. Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense. Per Share Total Public offering price $ $ Underwriting discounts and commissions $ $ Proceeds, before expenses, to RPX $ $ Proceeds, before expenses, to the selling stockholders $ $ To the extent that the underwriters sell more than 5,000,000 shares of common stock, the underwriters have the option to purchase up to an additional 750,000 shares from the selling stockholders at the public offering price less the underwriting discount. RPX will not receive any proceeds from any shares sold by the selling stockholders. The underwriters expect to deliver the shares against payment in New York, New York on , 2011. Goldman, Sachs & Co. Barclays Capital BofA Merrill Lynch Allen & Company LLC Baird Cowen and Company Lazard Capital Markets Prospectus dated , 2011. Table of Contents Patent litigation risk plagues operating companies of all sizes and has the potential to significantly disrupt business activities and distract from normal business operations. Both large and small companies can be affected by major verdicts or high settlement costs. Smaller companies may also find that the expense associated with defending against a patent assertion can have a significant adverse financial impact. We believe the extensive use of litigation and the threat of litigation prevents efficient transactions between the principal participants in the market: patent owners and operating companies. Several developments have led to an attractive environment for patent assertions. These developments include (i) the searchability of the entire United States patent database on the Internet, (ii) the ability to use the Internet to quickly identify products and services that potentially relate to patents, (iii) a proliferation and overlap of technology patents, (iv) the use of multiple technology components in a single product or service, (v) an increase in the number of businesses that make, use or sell products or services that utilize technology and (vi) the creation of a specialized appellate court for patent cases, providing for a more uniform application of patent law. These developments have caused significant capital to flow to entities specifically formed to acquire and monetize patent assets. Entities that do not create or sell products or services and exist to monetize patents through licensing and litigation are often referred to as non-practicing entities, or NPEs. NPEs have become a major factor in the patent market and an important source of liquidity for patent owners. We believe the annual costs incurred by operating companies to defend and resolve patent infringement cases initiated by NPEs are currently in the billions of dollars. Based on our internal analysis, we believe there were over 600 patent infringement cases filed by NPEs in 2010 against more than 4,000 defendants, which comprised over 2,000 unique companies, some of which were sued more than once. Most cases are resolved prior to trial but still result in significant defense and settlement costs. For cases that reached summary judgment or trial, a study of over 1,500 final decisions found that damages awarded to NPEs had a median value of $12.9 million during 2002-2009. NPE activity has heightened the need for operating companies to manage patent risk and expenses proactively. Currently, we believe operating companies have limited options to mitigate patent risk and expenses. The most common approaches include (i) acquiring licenses to relevant patents directly from patent owners, (ii) developing an internal patent-buying program or (iii) organizing a patent acquisition consortium. We believe that the approaches generally employed by operating companies are expensive, time consuming and difficult to implement effectively. As a result, we believe a significant market opportunity exists for a patent risk management solution that enables operating companies to effectively reduce their patent risks and expenses. Our Solution We have pioneered an approach to help operating companies mitigate and manage patent risk by serving as an intermediary through which they can participate more efficiently in the patent market. Operating companies that join our client network pay an annual subscription fee and gain access to the following benefits: Reduced Risk of Patent Litigation Clients reduce their exposure to patent litigation because we continuously assess patent assets available for sale and acquire many that are being or may be asserted against our clients or potential clients. Our clients have no litigation risk related to the patent assets that we own. Table of Contents TABLE OF CONTENTS Page PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001509696_great_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001509696_great_prospectus_summary.txt
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+PROSPECTUS SUMMARY This summary contains basic information about us and the offering. Because it is a summary, it does not contain all the information
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001509879_roi-land_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001509879_roi-land_prospectus_summary.txt
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+PROSPECTUS SUMMARY As used in this prospectus, references to the "Company," "we," "our", "us" or "Conex MD" refer to Conex MD, Inc., unless the context otherwise indicates. The following summary highlights selected information contained in this prospectus. Before making an investment decision, you should read the entire prospectus carefully, including the "Risk Factors" section, the financial statements, and the notes to the financial statements. OUR COMPANY Conex MD, Inc. was incorporated on December 13, 2007, under the laws of the State of Nevada. We are seeking to become a reporting issuer under the Securities Exchange Act of 1934, as amended, because we believe that this will provide us with greater access to capital, that we will become better known, and be able to obtain financing more easily in the future if investor interest in our business grows enough to sustain a secondary trading market in our securities. Additionally, we believe that being a reporting issuer increases our credibility and that we may be able to attract and retain more highly qualified personnel once we are not a shell company by potentially offering stock options, bonuses, or other incentives with a known market value. We are a development stage company formed for the purposes of provider of specialized healthcare staffing to small and medium sized businesses. We recruit healthcare professionals on assignments of varied duration and in permanent positions with clients in the United States. We raised an aggregate of $69,510 through private placements of our securities. Proceeds from these placements were used for working capital. We will experience substantial increases in our administrative costs after the effective date of this Prospectus. We anticipate spending an additional $33,050 on legal, accounting and filing fees over the next 12 months, including fees payable in connection with the filing of this registration statement, complying with reporting obligations. We may not raise sufficient funds to finance the anticipated services to meet out reporting obligations with the SEC. In order for us to remain in compliance we will require future revenues to cover the cost of these filings, which could comprise a substantial portion of our available cash resources. If we are unable to generate sufficient revenues to remain in compliance it may be difficult for you to resell any shares you may purchase, if at all. Our business offices are currently located at 33 Herzel St. Ra'anana Israel 43353. From inception until the date of this filing, we have not yet begun operations of our recruitment services. From our inception on December 13, 2007 to date, we have not generated any revenues, and our operations have been limited to organizational, start-up, and capital formation activities. Between February 2009 and June 2010, we were focused primarily on raising capital to execute our business plan, and on July 1, 2010 we closed a private placement of our common stock pursuant to which we sold 3,475,500 shares of our common stock for total proceeds of $69,510. We have two directors, Dr. Ely Steinberg and Dr. Jacob Bar-Ilan. Both Dr. Steinberg and Dr. Bar-Ilan reside in Israel. Though our officers and directors are practicing, licensed physicians, none of our officers or directors has any prior experience with owning or operating a medical staffing business. Additionally, none of our officer or directors has a college or university degree, or other educational background, in medical staffing or management. More specifically, each of our officers and directors lack technical training and experience with exploring for, starting, and/or operating a medical staffing business. We are registering the 3,475,500 shares of common stock held by selling stockholders pursuant to verbal representations to such stockholders that the Company would use its best efforts to register such shares for resale. We are a development stage company that has had limited operations to date. From December 13, 2007 (date of inception) to December 31, 2010, we have incurred accumulated net losses of $11,432. As of December 31, 2010, we had $58,579 in current assets and no current liabilities. Due to the uncertainty of our ability to meet our current operating and capital expenses, our independent auditors have included a going concern opinion in their report on our audited financial statements for the period ended December 31, 2010. The notes to our financial statements contain additional disclosure describing the circumstances leading to the issuance of a going concern opinion by our auditors. THE OFFERING Securities offered: The selling stockholders are offering hereby up to 3,475,500 shares of common stock. Offering price: The selling stockholders will offer and sell their shares of common stock at a fixed price of $0.10 for the duration of this offering, which will terminate 16 months from the effective date of this prospectus Shares outstanding prior to offering: 8,475,000 Shares outstanding after offering: 8,475,000 Market for the common shares: There is no public market for our shares. Our common stock is not traded on any exchange or on the over-the-counter market. After the effective date of the registration statement relating to this prospectus, we hope to have a market maker file an application with the Financial Industry Regulatory Authority ("FINRA") for our common stock to eligible for trading on the Over-the-Counter Bulletin Board. We do not yet have a market maker who has agreed to file such application. There is no assurance that a trading market will develop, or, if developed, that it will be sustained. Consequently, a purchaser of our common stock may find it difficult to resell the securities offered herein should the purchaser desire to do so when eligible for public resale. Use of proceeds: We will not receive any proceeds from the sale of shares by the selling stockholders SUMMARY FINANCIAL INFORMATION The tables and information below are derived from our audited financial statements for the period from December 13, 2007 (Inception) to December 31, 2010. Our working capital as at January 21, 2011 was $58,579. December 31, 2010 ($) --------------------- Financial Summary Cash and Deposits 58,579 Total Assets 58,579 Total Liabilities 0 Total Stockholder's Equity 58,579 Accumulated From December 13, 2007 (Inception) to December 31, 2010 ($) --------------------- Statement of Operations Total Expenses 11,432 Net Loss for the Period 11,432 Net Loss per Share --
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001510130_southern_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001510130_southern_prospectus_summary.txt
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+Table of Contents Summary Southern States Sign Co. We were incorporated on July 15, 2008, under the laws of the state of Nevada. We are in the business of developing and leasing advertising space on commercial billboards in Southern Nevada. We are a development stage company and have not generated any revenues to date. As of November 30, 2010, we had $18,120 in current assets and current liabilities in the amount of $15,817. Accordingly, we had working capital of $2,303 as of November 30, 2010. On January 13, 2011, we received additional capital in the form of a $30,000 cash loan advanced to us by our sole officer and director, David Ben Bassat. We believe that our current cash on hand will enable us to fund our planned expenses for our fiscal year beginning December 1, 2010. Our planned expenses for the current fiscal year will consist of legal, consulting, and technical expenses related to obtaining local regulatory approval for the erection of our first billboard in Las Vegas, Nevada, as well as accounting and legal expenses related to our becoming a publicly reporting company. Our management estimates that, until such time that we are able to erect our fist billboard and generate sales revenue sufficient to pay our ongoing and planned expenditures, we will experience negative cash flow in the approximate amount of $2,500 per month. This figure is a monthly average derived from the annual operating budget for our fiscal beginning December 1, 2010. In addition, we will require additional capital in the approximate amount of $90,000 in order to construct and erect our first billboard if and when local regulatory approval is obtained. Although the erection of our first billboard is currently planned for the early part of our fiscal year beginning December 1, 2011, we currently do not have any arrangements for financing and we may not be able to obtain financing when required. Investors should be aware that we will be subject to the Penny Stock rules adopted by the Securities and Exchange Commission, which regulate broker-dealer practices in connection with transactions in Penny Stocks. These regulations may have the effect of reducing the level of trading activity, if any, in the secondary market for our stock, and investors in our common stock may find it difficult to sell their shares. Please see the disclosures under Market For Common Equity And Related Stockholder Matters on Page 24 of this Prospectus for more information. We are not a blank check company and have no plans to engage in a merger or acquisition with any other company or other entity. Our address is 7231 S. Eastern Ave., Suite B-127, Las Vegas, Nevada 89119. Our phone number is (702) 496-5888. Our fiscal year end is November 30. The Offering Securities Being Offered Up to 3,000,000 shares of our common stock. Offering Price and Alternative Plan of Distribution The offering price of the common stock is $0.01 per share. We intend to apply to the FINRA over-the-counter bulletin board to allow the trading of our common stock upon our becoming a reporting entity under the Securities Exchange Act of 1934. If our common stock becomes so quoted and a market for the stock develops, the actual price of stock will be determined by prevailing market prices at the time of sale or by private transactions negotiated by the selling shareholders. The offering price would thus be determined by market factors and the independent decisions of the selling shareholders. There is no guarantee that a market maker will agree to file a 15c211 application on our behalf. If and when such an application is filed, there is no guarantee that we will be accepted for quotation on the OTCBB. Minimum Number of Shares To Be Sold in This Offering None Securities Issued and to be Issued 18,000,000 shares of our common stock are issued and outstanding as of the date of this prospectus. All of the common stock to be sold under this prospectus will be sold by existing shareholders. There will be no increase in our issued and outstanding shares as a result of this offering. Use of Proceeds We will not receive any proceeds from the sale of the common stock by the selling shareholders. Summary Financial Information Balance Sheet Data Fiscal Year Ended November 30, 2010 (derived from audited financial information) Fiscal Year Ended November 30, 2009 (derived from audited financial information) Quarter Ended February 28, 2011 (unaudited) Cash $ 18,120 $ 5,584 40,067 Total Assets $ 18,120 $ 5,584 40,067 Liabilities $ 15,817 $ 6,431 39,610 Total Stockholder s Equity (Deficit) $ 2,303 $ (847) 457 Statement of Operations Fiscal Year Ended November 30, 2010 (derived from audited financial information) Fiscal Year Ended November 30, 2009 (derived from audited financial information) From Inception on July 15, 2008 through February 28, 2011 ( unaudited ) Revenue $ 0 $ 0 $ 0 Net Loss for Reporting Period $ 9,850 $ 14,524 $ 59,543 Table of Contents
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001510775_biologix_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001510775_biologix_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..5d4d91d076382d7840bc30c805efec49002bd749
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+Table of Contents Summary We are engaged in the business of creating a pure, all natural personal care products line for women. The company has been developing its product line and is not a blank check company with the intention of entering into a business combination. We hope to complete the development of 5 initial products for launch in March of 2012. During this time, we will be testing and manufacturing small quantities of our products, designing and producing the related packaging materials and establishing on online store for product sales. More information on our plans to accomplish our business plan as set forth later on in this Prospectus. Our principal executive offices are located in 906 Thayer Drive, Gahanna, Ohio 43230, and our telephone number is 702-528-1806. We are a development stage company with limited operations and have not generated any sales to date. As of August 31, 2011, we had $3,489 in current assets and $21,633 in current liabilities. Accordingly, we had a working capital deficit of $18,144 as of August 31, 2011. Since our inception through August 31, 2011, we have incurred a net loss of $21,144. We do not have enough cash to enable us to implement our business plan as set forth in this prospectus. For these and other reasons, our independent auditors have raised substantial doubt about our ability to continue as a going concern. Accordingly, we will require additional financing. The Offering Securities Being Offered Up to 1,200,000 shares of our common stock, which includes all issued and outstanding shares with the exception of those held by our President and Director, Carolyne Johnson, who holds 5,000,000 shares of our common stock. Offering Price The offering price of the common stock is $0.01 per share for the duration of the offering. Securities Issued and to be Issued 8,000,000 shares of our common stock are issued and outstanding as of the date of this prospectus. Our President and Director, Carolyne Johnson, owns an aggregate of 5,000,000 shares of the common shares of our company (or 62.5%) and therefore has substantial control. All of the common stock to be sold under this prospectus will be sold by existing shareholders. There will be no increase in our issued and outstanding shares as a result of this offering. Use of Proceeds We will not receive any proceeds from the sale of the common stock by the selling shareholders. Summary Financial Information Balance Sheet Data As of February 28, 2011 As of August 31, 2011 Cash and Cash Equivalents $16,374 $3,489 Total Assets $18,874 $3,489 Liabilities $20,561 $21,633 Total Stockholders Equity (Deficit) $(1,687) $(18,144) Statement of Operations From inception on January 18, 2011 through February 28, 2011 For the Three Months Ended August 31, 2011 For the Six Months Ended August 31, 2011 From inception on January 18, 2011 through August 31, 2011 Revenue $0 $0 $0 $0 Net Income (Loss) $(4,687) $(9,640) $(16,457) $(21,144) Table of Contents
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001510871_china_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001510871_china_prospectus_summary.txt
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. This summary does not contain all of the information you should consider before investing in our common stock. You should read the entire prospectus, including Risk Factors and the consolidated financial statements and the related notes before making an investment decision. Contents from our website, www.chinaindustrialsteel.com,are not part of this prospectus. THE COMPANY Business Overview We are a holding company that, through our wholly-owned subsidiary Nuosen and our variable interest entity ( VIE ) Hongri Metallurgy, produces and sells steel plate, bar and billet in China. The Company currently operates four production lines with an aggregate production capacity of 2.3 million metric tons of steel per year from its headquarters on approximately 1,000 acres in Handan City in Hebei Province, PRC. We have a strategic relationship with Wu an Yuanbaoshan Industrial Group Co., Ltd. ( YBS Group ), a multi-industrial conglomerate, which, among other things, is engaged in the production of pig iron, cement, and the operation of a gas power plant. Under the laws of the PRC, certain restrictions are placed on round trip investments through an acquisition of a PRC entity by an offshore special purpose vehicle owned by one or more PRC residents as well as on foreign investment in iron and steel industry. To comply with these restrictions, on August 1, 2010, Northern Steel, through Nuosen, entered into a Entrusted Management Agreement, Exclusive Option Agreement, and a Covenant Letter (collectively, the Entrusted Agreements ) with Hongri Metallurgy and the shareholders of Hongri Metallurgy, Fakei Investment (Hongkong) Limited ( Fakei ) and YBS Group, (Fakei and YBS Group are collectively referred to as the Hongri Metallurgy Shareholders ). We issued 44,083,529 restricted shares of our common stock to Karen Prudente, a U.S. resident who entered into call option agreements (collectively, the Call Option Agreements ) respectively with the shareholders of YBS Group, for YBS Group entering into the Entrusted Agreements. In addition, we issued 17,493,463 restricted shares of our common stock to Fakei, for Fakei entering into the Entrusted Agreements. According to the Call Option Agreements, Karen Prudente would transfer all restricted shares of our common stock that she received to the shareholders of YBS Group subject to the terms and conditions thereunder and entrust the shareholders of YBS Group with her voting rights in the Company. These restricted shares issued to Karen Prudente and Fakei were issued in reliance upon the exemptions set forth in Section 4(2) of the Securities Act of 1933, as amended, on the basis that they were issued under circumstances not involving a public offering. As a result of the aforementioned transaction, the shareholders of YBS Group and Fakei obtained control of the Company. As filed with the Securities and Exchange Commission on September 22, 2011 Registration No. 333-172135 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Table of Contents We serve various industries and produce a variety of steel products, including billet, steel plate and steel bar. While the vast majority of our sales are made to distributors and traders, our products are typically used in ship building, construction, industrial manufacturing and infrastructure projects. Steel billet is also occasionally sold to end users to develop into plates and bars. Our principal executive offices are located at 110 Wall Street 11th Floor, New York, NY, 10005 and our U.S. telephone number is (646) 328-1502 and the telephone number at our production facility in the PRC is (86)-310-5919498. Corporate History We were incorporated in the State of Maryland on January 27, 2010. On February 5, 2010, we formed Northern Steel Inc., a Colorado corporation as our wholly-owned subsidiary. On July 15, 2010, Northern Steel formed Nuosen (Handan) Trading Co. Ltd. ( Nuosen ), a limited liability company organized under the laws of the PRC, as its wholly-owned subsidiary (commonly termed as WOFE under PRC law). Under the laws of the PRC, certain restrictions are placed on round trip investments through an acquisition of a PRC entity by an offshore special purpose vehicle owned by one or more PRC residents as well as on foreign investment in iron and steel industry. To comply with these restrictions, on August 1, 2010, Northern Steel, through Nuosen, entered into a Entrusted Management Agreement, Exclusive Option Agreement, and a Covenant Letter (collectively, the Entrusted Agreements ) with Hongri Metallurgy and the shareholders of Hongri Metallurgy, Fakei Investment (Hongkong) Limited ( Fakei ) and Hebei Wu an Yuanbaoshan Industry Group Co., Ltd. ( YBS Group ), (Fakei and YBS Group are collectively referred to as the Hongri Metallurgy Shareholders ). We issued 44,083,529 restricted shares of our common stock to Karen Prudente, a U.S. resident who entered into call option agreements (collectively, the Call Option Agreements ) respectively with the shareholders of YBS Group, for YBS Group entering into the Entrusted Agreements. In addition, we issued 17,493,463 restricted shares of our common stock to Fakei, for Fakei entering into the Entrusted Agreements. According to the Call Option Agreements, Karen Prudente would transfer all restricted shares of our common stock that she received to the shareholders of YBS Group subject to the terms and conditions thereunder and entrust the shareholders of YBS Group with her voting rights in the Company. Karen Prudente s role with respect to the restricted shares held by the shareholders of YBS Group is to manage the trust of the shareholders of YBS Group. While Ms. Prudente exercises sole voting power with respect to the shares held in the name of the shareholders of YBS Group, she disclaims beneficial ownership of such shares. These restricted shares issued to Karen Prudente and Fakei were issued in reliance upon the exemptions set forth in Section 4(2) of the Securities Act of 1933, as amended, on the basis that they were issued under circumstances not involving a public offering. As a result of the aforementioned transaction, the shareholders of YBS Group and Fakei obtained control of the Company. Generally, we provide Hongri Metallurgy with management services pursuant to the Entrusted Agreements, the material terms which are as follows: Entrusted Management Agreement pursuant to this agreement entered into by and among the Hongri Metallurgy Shareholders, Hongri Metallurgy, and Nuosen, the Hongri Metallurgy Shareholders and Hongri Metallurgy entrust the management of Hongri Metallurgy to Nuosen until (a) the winding up of Hongri Metallurgy, or (b) the date on which Nuosen acquires Hongri Metallurgy. During the term, Nuosen is fully and exclusively responsible for the management of Hongri Metallurgy. In consideration of such services, the Hongri Metallurgy Shareholders and Hongri Metallurgy will pay a fee to Nuosen as set forth in the agreement. The fee payable to Nuosen by Hongri Metallurgy shall be equal to the before-tax profit of Hongri Metallurgy since August 1, 2010, when such agreement became effective. However, the Company currently intends to either reinvest or retain all of the income granted by Hongri Metallurgy for strategic expansion purposes into the foreseeable future. Amendment No. 5 FORM S-1 Table of Contents Exclusive Option Agreement pursuant to this agreement entered into by and among Nuosen, the Hongri Metallurgy Shareholders, and Hongri Metallurgy, the Hongri Metallurgy Shareholders grant Nuosen an irrevocable exclusive purchase option to purchase all or part of the shares of Hongri Metallurgy, currently owned by any of the Hongri Metallurgy Shareholders. Further, Hongri Metallurgy grants Nuosen an irrevocable exclusive purchase option to purchase all or part of the assets and business of Hongri Metallurgy. Nuosen and the Hongri Metallurgy Shareholders will enter into relevant agreements regarding the price of acquisition based on the circumstances of the exercise of the option, and the consideration shall be refunded to Nuosen or Hongri Metallurgy at no consideration in an appropriate manner decided by Nuosen. Upon the exercise of the option, Nuosen will be subject to non-competition restrictions as set forth in the agreement. Covenant Letter pursuant to this letter, the Hongri Metallurgy Shareholders irrevocably covenant that without the prior written consent of Nuosen, the Hongri Metallurgy Shareholders would not transfer, pledge, or create any encumbrance in other way on all or part of the contribution and share equity of Hongri Metallurgy, or increase or decrease the registered capital of Hongri Metallurgy, or divide or merge the Company or conduct any other activity which would change the registered capital or shareholding structure of Hongri Metallurgy. Through the Entrusted Agreements, we have the ability to substantially influence Hongri Metallurgy s daily operations and financial affairs, appoint its senior executives and approve all matters requiring shareholder approval. As a result of the Entrusted Agreements, which enable us to control Hongri Metallurgy and operate our business in the PRC through Hongri Metallurgy, we are considered the primary beneficiary of Hongri Metallurgy. Although we have no equity ownership interest in Hongri Metallurgy, we are entitled to receive all the profits of Hongri Metallurgy, and we are obligated to pay its debts to the extent that Hongri Metallurgy does not have enough funds to repay such debts. As a result of the foregoing, we are required to consolidate the financial statements of Hongri Metallurgy under GAAP. Call Option Agreement Liu Shenghong, our Chairman of Board of Directors and one of the shareholders of YBS Group and other several the shareholders of YBS Group (each of them, a Purchaser ) have entered into call option agreements, dated as of August 10, 2010 (collectively, the Call Option Agreements ), with Karen Prudente, the nominee and trustee of YBS Group, pursuant to which they are entitled to purchase up to 100% of the issued and outstanding shares of Karen Prudente at a price of $0.0001 per 100 shares for a period of five years as outlined in the Call Option Agreements: the Option may be exercised, in whole or in part, in accordance with the following schedule: 34% of the Option Shares subject to the Option shall vest and become exercisable on January 1, 2012; 33% of the Option Shares subject to the Option shall vest and become exercisable on January 1, 2013 and 33% of the Option Shares subject to the Option shall vest and become exercisable on January 1, 2014. Corporate Structure The following diagram sets forth the current corporate structure of the Company: REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 CHINA INDUSTRIAL STEEL INC. (Exact name of registrant as specified in its charter) Maryland 3310 27-1847645 (State or other jurisdiction of incorporation or organization) (Primary Standard Industrial Classification Code Number) (I.R.S. Employer Identification Number) 110 Wall Street, 11th Floor New York, NY 10005 (646) 328 1502 (Address, including zip code, and telephone number, including area code, of registrant s principal executive offices) HIQ Maryland Corp. 715 St. Paul Street Baltimore, MD 21202 (410) 752-8030 (Name, address, including zip code, and telephone number, including area code, of agent for service) Copies to: Gregory Sichenzia, Esq. Benjamin Tan, Esq. Sichenzia Ross Friedman Ference LLP 61 Broadway, 32nd Floor New York, New York 10006 Telephone: (212) 930-9700 Table of Contents * Hebei Wu an Yuanbaoshan Industry Group Co., Ltd. and Fakei Investment (Hongkong) Limited own 44,083,529 and 17,493,463, respectively, of our shares. Summary Financial Information Total sales for the year ended December 31, 2010 were $573,666,684, an increase of $16,911,724, or 3%, compared to $556,754,960 in 2009. Among the increased revenues, approximately $108 million increase was due to the increase in sales price; $26 million increase was attributable to new products steel bars; offset by lower selling quantity due to various market conditions of approximately $115 million and a reduction of $2 million from sale of byproducts. Net income totaled $25,770,440 in 2010, a decrease of $32,390,537, or (56)%, compared to the net income of $58,160,977 in 2009. The decrease of net income was attributable primarily to the restriction of production due to energy-saving and emission-reduction control initiatives implemented by the PRC government and its related impact on sales volume together with the increased prices of raw materials which had a significant negative impact on the Company s gross profit rate and net income. Table of Contents Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. x If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act of 1933 registration statement number of the earlier effective registration statement for the same offering. o If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o Indicate by a check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check One): Large Accelerated Filer o Accelerated Filer o Non-accelerated Filer x Smaller Reporting Company o (Do not check if a smaller reporting company) Table of Contents THE OFFERING Offering By Selling Stockholders This prospectus relates to the sale by the selling stockholders identified in this prospectus of up to 2,580,022 shares of our common stock. The common stock has already been issued to the selling stockholders through a series of private placement transactions which closed in February 2011 that were exempt from the registration and prospectus delivery requirements of the Securities Act of 1933, as amended. No shares are being offered for sale by the Company. The Company China Industrial Steel Inc. Selling stockholders The selling stockholders named in this prospectus are existing stockholders of our Company who purchased shares of our Common Stock from us in the private placement transactions which closed in January 2011 and February 2011. The issuance of the shares by us to the selling stockholders was exempt from the registration requirements of the Securities Act of 1933, as amended, or the Securities Act. See Selling Stockholders. Capitalization Common Stock, par value $0.0001 per share 980,000,000 authorized 73,542,058 issued and outstanding as of February 7, 2011 10,000,000 shares of Series A Preferred Stock, $0.0001 par value, authorized, none of which are issued and outstanding as of February 7, 2011 10,000,000 shares of Blank Check Preferred Stock, $0.0001 par value, authorized, none of which are issued and outstanding as of February 7, 2011 Common stock outstanding prior to offering 73,542,058 Common stock offered by the Company 0 Common Stock to be outstanding after the offering 73,542,058 Total shares of common stock offered by selling stockholders 2,580,022 Common stock to be outstanding after the offering 73,542,058 Use of Proceeds We will not receive any of the proceeds from the sales of the shares by the selling stockholders.
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001510949_shenzhen_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001510949_shenzhen_prospectus_summary.txt
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@@ -0,0 +1 @@
+PROSPECTUS SUMMARY As used in this prospectus, references to the Company, we, our , us or Alliance Petroleum Corporation refer to Alliance Petroleum Corporation unless the context otherwise indicates. The following summary highlights selected information contained in this prospectus. Before making an investment decision, you should read the entire prospectus carefully, including the Risk Factors section, the financial statements, and the notes to the financial statements. Our Company Alliance Petroleum Corporation was incorporated on September 17, 2010, under the laws of the State of Nevada, for the purpose of conducting mineral exploration activities. We have no oil or gas reserves. We are currently in the exploration stage as an oil and gas exploration company and presently engaged in limited oil and gas activities in Saskatchewan, Canada. We and intend to commence operations in oil & gas exploration and production industry. We plan to develop properties and any other prospects that we may acquire an interest in and we do not currently offer any products or services for sale. During the exploration and drilling process, if we determine that there are commercial quantities of oil and natural gas on our properties, we plan to produce the oil and natural gas and sell it at the wellhead. To date, we have not realized any revenues from our operations. We have raised an aggregate of $17,607 through private placements of our securities. Proceeds from these placements were used for working capital. The $100,000 we plan to raise in this offering will not be applied to the exploration activities identified in our 12-month plan of operation on page 28. Our complete 12-month plan of operation for exploration contemplates exploration activities requiring funding of $471,500. Phase 1 of such plan contemplates that $25,750 be expended on the following items: (i) data collection ($6,500), (ii) initial ground geophysics ($15,000), field mapping ($1,500), report drafting ($1,000) and travel costs ($2,000). Phase 2 contemplates that funds of $112,500 be expended and Phase 3 contemplates that funds of $333,000 be expended. We plan to raise the additional funding for Phases 1 aad 2 by way of private debt or equity financing, but have not commenced any activities to raise such funds. We cannot provide any assurance that we will be able to raise sufficient funds to proceed with any work after the first two phases of the exploration program. We have only recently started operations in the oil & gas exploration and production industry in Saskatchewan, Canada. On January 14, 2011 we entered into a Lease Option Agreement, pursuant to which we have the right, until April 30, 2012, to exercise an option to enter into a separate contract, titled Petroleum Natural Gas Lease. Pursuant to the terms and conditions of the Lease Option Agreement, we paid US $10 on January 14, 2011, and US $4,000 on January 17, 2011, to the grantors of the option as consideration for the exercise right granted to us thereunder. We intend to exercise our rights under the Lease Option Agreement to enter into the Petroleum Natural Gas Lease. The Petroleum Natural Gas Lease requires that we pay US $24,000 in exchange for the right, for a term of 3 years, to explore for, and if warranted and feasible, commercialize mineralized materials covering approximately 320 acresof land located near Calder, Saskatchewan (the Property ), approximately 124 miles northeast of Regina, Saskatchewan. The other material terms and conditions of the Petroleum Natural Gas Lease provide that we pay a royalty of 16% to the lessor of the Property for any mineralized material produced, saved and sold by the Company. We intend to engage in drilling exploration activities at the Property. We require minimum funding of approximately $25,000 to conduct our proposed operations for a minimum period of one year. Such $25,000 would be raised in the offering by the Company and cover our costs to maintain minimal operations consisting of $16,000 in legal, accounting and audited fees, $1,000 in travel expenses, $5,000 in management salaries, $1,000 in consulting geologist fees, $1,000 in office supplies, stationery and telephone costs, and $1,000 for acquiring an option for a prospective new property. Even if we raise $100,000 from this offering, it will last one year, but we may need more funds to develop growth strategy and to continue maintaining a reporting status by being a reporting issuer under the Securities Exchange Act of 1934, as amended. Therefore, we will have to obtain financing to complete our twelve month business plan. We plan to raise the additional funding for our twelve month business plan by way of private debt or equity financing, but have not commenced any activities to raise such funds. We cannot provide any assurance that we will be able to raise sufficient funds to proceed with our twelve month business plan. In our first phase of planned exploration, we intend to conduct a seismic survey of the Property in the spring of 2012, which we expect will cost $15,000. If the seismic survey indicates that oil and gas deposits are present, we intend to proceed with Phase 2 of our exploration program, which would be to engage in exploratory drilling, which we expect to cost $240,000. Subject to the results of the seismic survey, we anticipate commencing with exploratory drilling in summer of 2012. We will require additional funding to proceed with exploratory drilling; we have no current plans on how to raise the additional funding. We cannot provide any assurance that we will be able to raise sufficient funds to proceed with the seismic surveying or the exploratory drilling. We are registering the 4,500,000 shares of common stock held by selling stockholders pursuant to verbal representations to such stockholders that the Company would use its best efforts to register such shares for resale. We will not receive any proceeds from the resale of the 4,500,000 shares of common stock by the selling stockholders. We intend to build our business through the acquisition of exploration and producing oil and natural gas wells, interests and leases. Our business strategy is to keep acquiring interests in exploration and producing oil and gas properties with steady income and upside exploration potential. As of the date of this prospectus, there is no public trading market for our common stock and no assurance that a trading market for our securities will ever develop. The Company s principal offices are located at 112 North Curry Street Carson City, Nevada 89703 and our telephone number is (775) 562-3311. The Company has decided that until it has the funds to have its own office, it will use the mail and office services offered by its registered agent and has paid for such services so that it would have a principal administrative office. Summary Financial Information The tables and information below are derived from our financial statements for the period from September 17, 2010 (Inception) to September 30, 2011. Our working capital deficit as at September 30, 2011 was $(8,747). September 30, 2011 ($) Financial Summary Cash and Deposits 10 Total Assets 4,010 Total Liabilities 8,757 Total Stockholder s Equity (Deficit) (4,747) Accumulated From September 17, 2010 (Inception) to September 30, 2011 ($) Statement of Operations Total Expenses 22,354 Net Loss for the Period (8,542) Net Loss per Share - The Offering Securities offered: We are offering up to 500,000 shares of our common stock. The selling stockholders are hereby offering up to 4,050,000 shares of our common stock. Offering price: The selling stockholders will offer and sell their shares of common stock at a fixed price of $0.20 per share until our shares are quoted on the OTC Bulletin Board, if our shares of common stock are ever quoted on the OTC Bulletin Board, and thereafter at prevailing market prices or privately negotiated prices. Shares outstanding prior to offering: 14,050,000 Shares outstanding after offering: 14,550,000 Market for the common shares: There is no public market for our shares. Our common stock is not traded on any exchange or on the over-the-counter market. After the effective date of the registration statement relating to this prospectus, we hope to have a market maker file an application with the Financial Industry Regulatory Authority ( FINRA ) for our common stock to eligible for trading on the Over The Counter Bulletin Board. We do not yet have a market maker who has agreed to file such application. There is no assurance that a trading market will develop, or, if developed, that it will be sustained. Consequently, a purchaser of our common stock may find it difficult to resell the securities offered herein should the purchaser desire to do so when eligible for public resale. Use of proceeds: We intend to use the net proceeds from the sale of our 500,000 shares (after deducting estimated offering expenses payable by us) for professional fees, general business development, administration expenses, option fees and geological survey fees. See Use of Proceeds on page 13 for more information on the use of proceeds. We will not receive any proceeds from the sale of shares of common stock by the selling stockholders who are simultaneously offering 4,050,000 shares of common stock under this prospectus. We will not receive any proceeds from the sale of shares by the selling stockholders.
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001511046_haiwang_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001511046_haiwang_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
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@@ -0,0 +1 @@
+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001511261_endeavor_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001511261_endeavor_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..1861b3e6a428a502ba81aaf5bb4e80eeb59d25a9
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+PROSPECTUS SUMMARY The following summary highlights selected information contained in this Prospectus. This summary does not contain all the information that may be important to you. You should read the more detailed information contained in this Prospectus, including but not limited to, the risk factors beginning on page 3. In addition, certain statements are forward-looking statements which involve risks and uncertainties. See Disclosure Regarding Forward-Looking Statements." References in this Prospectus to Finishing Touches Home Goods , Company , we , our , or us refer to Finishing Touches Home Goods Inc. and its subsidiary, on a consolidated basis, unless otherwise indicated or the context otherwise requires. OUR COMPANY Finishing Touches Home Goods Inc. was formed as a corporation pursuant to the laws of the State of Nevada on December 8, 2009. We are an integrated consulting firm that assists individuals, organizations, companies and government agencies in finding solutions to home and workplace-related barriers for seniors and people with disabilities as well as ergonomics consultancy. Our company is focused on providing services and products that make the end user s living conditions safer and more accessible and helps to create barrier-free homes and workplace environments. Finishing Touches Home Goods Inc. provides consulting services, including site audits and accessibility/ergonomic planning and development; installation and sales of accessibility, ergonomic and safety products, ergonomic consultancy for homes and businesses. To date, we have been focused on serving residential and commercial customers in Russia. On May 6, 2010 we have incorporated a wholly owned (ownership interest 100%) subsidiary Finishing Touches Home Goods Inc. (Canada) an Ontario, Canada, based company. Our consolidated financial statements include the accounts of our subsidiary. All significant intercompany balances and transactions have been eliminated on consolidation. Our gross revenue for the period from inception to December 8, 2009 through January 31, 2011 was $15,423. Our cumulative loss since inception is $24,389. We are a development stage company with limited revenues and no significant assets. The Company has funded its initial operations through the issuance of 9,000,000 shares of capital stock for net proceeds of $36,000 and revenue from consulting and renovation of $15,423 generated during the period from inception to January 31, 2011. Due to the uncertainty of our ability to generate sufficient revenues from our operating activities and/or to obtain the necessary financing to meet our obligations and repay our liabilities arising from normal business operations when they come due, in their report on our financial statements for the period from inception (December 8, 2009) to October 31, 2010, our registered independent auditors included additional comments indicating concerns about our ability to continue as a going concern. Our financial statements contain additional note disclosures describing the circumstances that led to this disclosure by our registered independent auditors. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. During the first quarter of our fiscal 2011, we entered into an Independent Contractor Agreement with Urban Bliss Solutions, a general contractor company operating on the Russian market whereby Finishing Touches Home Goods will provide consulting services to Urban Bliss Solutions with regards to accessibility and safety issues for new construction projects and renovations undertaken by Urban Bliss Solutions. The contract term is one year with a monthly fee of USD$4,000 payable To Finishing Touches Home Goods commencing on January 1, 2011. As of the date of this Offering we received $16,000 for consulting services from Urban Bliss Solutions. The initial term may be renewed for additional term(s) Renewal Terms of the same duration as the initial term by mutual written agreement of the parties hereto in advance of the expiration of the initial term or Renewal Term as the case may be. In the event of such Renewal Term, the terms of this Agreement and any written amendments thereto shall continue to apply. Additionally, subsequent to January 31, 2011, we have entered into an Independent Contractor Agreement with Haydon Development, a general contractor who operates in Novosibirsk, Russia, whereby we will provide consulting services to Haydon. The term of the contract is one year with a monthly fee of USD$4,500 payable to CALCULATION OF REGISTRATION FEE Proposed Maximum Proposed Maximum Class of Securities to be Amount to be Offering Price Aggregate Offering Amount of Registered Registered per Share (1) Price Registration Fee (2) Common Stock 3,000,000 $0.01 $30,000 $3.48 (1) Based on the last sales price on October 14, 2010 in private placement transactions. Our common stock is not traded on any national exchange and, in accordance with Rule 457, the offering price was determined by the price shares were sold to our shareholders in private placement transactions. The selling shareholders may sell shares of our common stock at a fixed price of $0.01 per share until our common stock is quoted on the OTC Bulletin Board and thereafter at prevailing market prices or privately negotiated prices. The fixed price of $0.01 has been determined as the selling price based upon the original purchase price paid by the selling shareholders of $0.01. A market maker must file an application on our behalf with the Financial Industry Regulatory Authority ( FINRA ) in order to make a market for our common stock. There can be no assurance that a market maker will agree to file the necessary documents with FINRA, nor can there be any assurance that such an application for quotation will be approved. (2) Estimated solely for the purpose of calculating the registration fee in accordance with Rule 457 under the Securities Act. _________________________________________________________________________________________ The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. _________________________________________________________________________________________ THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THE SELLING STOCKHOLDERS MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED. SUBJECT TO COMPLETION, DATED _______________ Finishing Touches Home Goods commencing on May 1, 2011. The initial term may be renewed for additional term(s) Renewal Terms of the same duration as the initial term by mutual written agreement of the parties hereto in advance of the expiration of the initial term or Renewal Term as the case may be. In the event of such Renewal Term, the terms of this Agreement and any written amendments thereto shall continue to apply. Taking into consideration the two contractual commitments with Urban Bliss Solutions and Haydon Development, as well as our on-going smaller projects, in the next twelve months we expect to generate revenues of approximately $120,000 from our business activities and spend approximately $15,000 on professional services, $60,000 on salaries $15,000 on marketing and advertising, $13,000 on hiring sales representatives and additional personnel, $7,000 on general and administrative expenses and $2,000 on staff professional development. Total expenditures, over the next 12 months are therefore expected to be in the range of $110,000, which includes expenses that we will incur with respect to our reporting and other obligations as a public company. To date, our cash flow requirements have been primarily met by equity financings. Management expects to keep operating costs to a minimum until cash is available through financing or operating activities. Management plans to continue to seek other sources of financing on favorable terms; however, there are no assurances that any such financing can be obtained on favorable terms, if at all. If we are unable to generate sufficient revenues or unable to obtain additional funds for our working capital needs, or our existing contracts are terminated by our customers we may need to cease or curtail operations. Furthermore, there is no assurance the net proceeds from any successful financing arrangement will be sufficient to cover cash requirements during the initial stages of the Company's operations. For these reasons, our independent registered auditors believe that there is substantial doubt that we will be able to continue as a going concern. Our principal offices are located at 3420 E. Shea Boulevard, Suite 200, Phoenix, Arizona 85028. Our telephone number is (480) 945-3449. The Offering The shares being offered for resale under this prospectus by the selling stockholders identified herein consist of 33.33% of the outstanding shares of our common stock. Securities Being Offered: Up to 3,000,000 shares of common stock. Offering Price: The selling shareholders will sell our shares at $0.01 per share until our shares are quoted on the OTC Bulletin Board, and thereafter at prevailing market prices or privately negotiated prices. There is no guarantee that our shares will be quoted for trading on the OTC Bulletin Board. We determined this offering price based upon the price of the last sale of our common stock to investors in private placement transactions. Terms of the Offering: The selling shareholders will determine when and how they will sell the common stock offered in this prospectus. Termination of the Offering: The offering will conclude when all of the 3,000,000 shares of common stock have been sold or we, in our sole discretion, decide to terminate the registration of the shares. We may decide to terminate the registration if it is no longer necessary due to the operation of the resale provisions of Rule 144. Securities Issued And to be Issued: 9,000,000 shares of our common stock are issued and outstanding as of the date of this prospectus. All of the common stock to be sold under this prospectus will be sold by existing shareholders. PROSPECTUS FINISHING TOUCHES HOME GOODS INC. 3,000,000 SHARES COMMON STOCK The selling shareholders named in this prospectus are offering all of the shares of common stock offered through this prospectus. Our common stock is presently not traded on any market or securities exchange. THE PURCHASE OF THE SECURITIES OFFERED THROUGH THIS PROSPECTUS INVOLVES A HIGH DEGREE OF RISK. SEE SECTION ENTITLED "RISK FACTORS" BEGINNING ON PAGE 3 The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. The selling shareholders will sell our shares at $0.01 per share until our shares are quoted on the OTC Bulletin Board, and thereafter at prevailing market prices or privately negotiated prices. We determined this offering price based upon the price of the last sale of our common stock to investors in private placement transactions. Our common stock is not quoted on any public market and, although we intend to apply to have our common stock quoted on the Over-The-Counter Bulletin Board ( OTCBB ) upon the effectiveness of the registration statement of which this prospectus is a part, we may not be successful in such application and our common stock may never trade in any market. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offence. The date of this Prospectus is: June 3, 2011 Use of Proceeds: We will not receive any proceeds from the sale of the common stock by the selling shareholders.
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001511357_gns-ii-u_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001511357_gns-ii-u_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001511357_gns-ii-u_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001511648_global_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001511648_global_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..28d6ee2b275fcc8fbeea777d2301c14d1a85beff
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@@ -0,0 +1 @@
+This summary only highlights the more detailed information appearing elsewhere in this prospectus. As this is a summary, it does not contain all of the information that you should consider in making an investment decision. You should read this entire prospectus carefully, including the information under Risk Factors and our financial statements and the related notes included elsewhere in this prospectus, before investing. References in this prospectus to we, us, company or our company refer to Global Cornerstone Holdings Limited. References in this prospectus to our public shares are to our ordinary shares sold as part of the units in this offering (whether they are purchased in this offering or thereafter in the open market) and references to public shareholders refer to the holders of our public shares, including our sponsor and management team to the extent our sponsor and/or members of our management team purchase public shares, provided that our sponsor s and each member of management s status as a public shareholder shall only exist with respect to such public shares. References in this prospectus to our management or our management team refer to our officers and directors, references to our sponsor refer to Global Cornerstone Holdings LLC, a Delaware limited liability company. References in this prospectus to the Companies Act means the BVI Business Companies Act, 2004 of the British Virgin Islands. References in this prospectus to the memorandum and articles of association means the company s memorandum and articles of association (as amended). Unless we tell you otherwise, the information in this prospectus assumes that the underwriters will not exercise their over-allotment option. All share and per share information in this prospectus gives retroactive effect to a 1.2439026-for-one forward share split effective as of March 9, 2011. Registered trademarks referred to in this prospectus are the property of their respective owners. General We are a newly organized blank check company incorporated as a British Virgin Islands business company with limited liability (meaning the public shareholders have no liability, as members of the Company, for the liabilities of the Company) and formed for the purpose of acquiring, engaging in share exchange, share reconstruction and amalgamation or contractual control arrangement with, purchasing all or substantially all of the assets of, or engaging in any other similar business combination with one or more businesses or assets, which we refer to throughout this prospectus as our initial business combination. We have not identified any acquisition target and we have not, nor has anyone on our behalf, initiated any discussions, research or other measures, directly or indirectly, with respect to identifying any acquisition target. We will seek to capitalize on the significant strength of our management team to identify, acquire and operate a business operating primarily in Asia, Europe or the United States, although we may pursue acquisition opportunities in other geographic regions. We believe that there are opportunities for acquiring operating businesses located in these regions due to the long term favorable economic growth and continuing improvements in the political and social conditions in many of the countries within these regions that encourage economic development and inter-region and international trade. There is no priority with respect to the countries we will focus on initially and we will use the same search process for each of the countries within these regions. While we have not established the factors we would consider in deciding to invest in a target business, we will seek to identify a target that we feel is likely to provide attractive risk-adjusted returns to our shareholders. We have not established specific timing, price or other criteria that would trigger our consideration of businesses outside of Asia, Europe or the United States, although we may focus on other geographic regions if we believe that those regions are better able to provide attractive risk-adjusted returns to our shareholders or if a specific opportunity was brought to our attention during our search for a target business. Also, while we may pursue an acquisition opportunity in any business industry or sector, we may initially consider those industries or sectors that complement our management team s background, such as media and publishing, information technology, industrial products, energy, financial services and retail and consumer products. Our Chief Executive Officer, President and Directors each have over 20 years of experience managing, advising, acquiring, financing and selling private and public companies in a variety of industries. We believe that our extensive contacts and sources, ranging from private and public company contacts, private equity funds, and investment bankers to attorneys, accountants and business brokers, will allow us to generate acquisition opportunities. Our executive officers and the majority of our directors were officers or directors of a blank check company, China Holdings Acquisition Corp., which we refer to as CHAC, which on November 21, 2007 TABLE OF CONTENTS The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED APRIL 14, 2011 P R E L I M I N A R Y P R O S P E C T U S $80,000,000 Global Cornerstone Holdings Limited 8,000,000 Units Global Cornerstone Holdings Limited is a newly organized blank check company incorporated as a British Virgin Islands business company and formed for the purpose of acquiring, engaging in share exchange, share reconstruction and amalgamation or contractual control arrangement with, purchasing all or substantially all of the assets of, or engaging in any other similar business combination with one or more businesses or assets, which we refer to throughout this prospectus as our initial business combination. We may enter into our initial business combination with a target regardless of its fair market value so long as we acquire a controlling interest in the target. Even though we will own a controlling interest in the target, our shareholders prior to the business combination may collectively own a minority interest in the target, depending on valuations ascribed to the target and us in the business combination transaction. We have not identified any acquisition target and we have not, nor has anyone on our behalf, initiated any discussions, research or other measures, directly or indirectly, with respect to identifying any acquisition target. This is an initial public offering of our securities. We are offering 8,000,000 units. Each unit has an offering price of $10.00 and consists of one ordinary share and one warrant. Each warrant entitles the holder to purchase one ordinary share at a price of $11.50, subject to adjustment as described in this prospectus. The warrants will become exercisable on the later of 30 days after the completion of our initial business combination or 12 months from the closing of this offering, and will expire five years after the completion of our initial business combination or earlier upon redemption or liquidation, as described in this prospectus. We have also granted the underwriters a 45-day option to purchase up to an additional 1,200,000 units to cover over-allotments, if any. We will provide our shareholders with the opportunity to redeem their ordinary shares upon the consummation of our initial business combination at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account described below, including interest but net of taxes payable, divided by the number of then outstanding ordinary shares that were sold as part of the units in this offering, which we refer to as our public shares, subject to the limitations described herein and any limitations (including but not limited to cash requirements) agreed to in connection with the negotiation of terms of a proposed business combination. We intend to consummate our initial business combination and conduct redemptions of ordinary shares for cash without a shareholder vote pursuant to the tender offer rules of the Securities and Exchange Commission, or the SEC and the terms of a proposed business combination. If, however, a shareholder vote is required by law, or we decide to hold a shareholder vote for business or other legal reasons, we will offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. In connection with the successful consummation of our business combination, we may redeem pursuant to a tender offer up to that number of ordinary shares that would permit us to maintain net tangible assets of $5,000,001. However, the redemption threshold may be further limited by the terms and conditions of a proposed business combination. For example, the proposed business combination may require: (i) cash consideration to be paid to the target or members of its management team, (ii) cash to be transferred to the target for working capital or other general corporate purposes or (iii) the allocation of cash to satisfy other conditions in accordance with the terms of the proposed business combination. In the event the aggregate cash consideration we would be required to pay for all shares that are validly tendered plus any amount required to satisfy cash conditions pursuant to the terms of the proposed business combination exceeds the aggregate amount of cash available to us, we will not consummate the business combination, and any shares tendered pursuant to the tender offer will be returned to the holders thereof following the expiration of the tender offer. If we seek shareholder approval of our initial business combination and we do not conduct redemptions in connection with our business combination pursuant to the tender offer rules, we are permitted to use funds from the trust account to purchase up to 15% of the shares sold in this offering. Purchases will be made only in open market transactions at prices not to exceed the per-share amount then held in the trust account to minimize any disparity between the then current market price and the per-share amount held in the trust account. In addition to purchases of public shares using amounts held in the trust account, we may enter into privately negotiated transactions to purchase public shares from shareholders following consummation of the initial business combination with proceeds released to us from the trust account. Our sponsor, directors, officers, advisors or their affiliates may also purchase shares in privately negotiated transactions either prior to or following the consummation of the business combination. The purpose of such purchases would be to increase the likelihood of obtaining shareholder approval of the business combination, to satisfy the redemption threshold or to satisfy a closing condition in an agreement with a target that requires us to have a minimum amount remaining in the trust account at the closing of the business combination, where it appears that such requirement would otherwise not be met. If we are unable to consummate a business combination within 21 months from the closing of this offering, we (i) will distribute the aggregate amount then on deposit in the trust account (less up to $100,000 of the net interest earned thereon to pay dissolution expenses), pro rata, to our public shareholders by way of redemption and (ii) intend to cease all operations except for the purposes of any winding up of our affairs, as further described herein. Members of our sponsor, Global Cornerstone Holdings LLC, have committed to purchase an aggregate of 3,000,000 warrants at a price of $1.00 per warrant ($3.0 million in the aggregate) in a private placement that will occur simultaneously with the consummation of this offering. We refer to these warrants throughout this prospectus as the sponsor warrants. Currently, there is no public market for our units, ordinary shares or warrants. It is anticipated that our units will be quoted on the Over-the-Counter Bulletin Board quotation system, or the OTCBB, under the symbol on or promptly after the date of this prospectus. The ordinary shares and warrants comprising the units will begin separate trading on the 52nd day following the date of this prospectus unless Citigroup Global Markets Inc. informs us of its decision to allow earlier separate trading, subject to our filing a Current Report on Form 8-K with the Securities and Exchange Commission, or SEC, containing an audited balance sheet reflecting our receipt of the gross proceeds of this offering and issuing a press release announcing when such separate trading will begin. Once the securities comprising the units begin separate trading, the ordinary shares and warrants will be traded on the OTCBB under the symbols and , respectively. Investing in our securities involves a high degree of risk. See Risk Factors beginning on page 23 for a discussion of information that should be considered in connection with an investment in our securities. Neither the SEC nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. This prospectus does not constitute, and there will not be, an offering of securities to the public in the British Virgin Islands. Per Unit Total Proceeds Public offering price $ 10.00 $ 80,000,000 Underwriting discounts and commissions(1) $ 0.55 $ 4,400,000 Proceeds, before expenses, to us $ 9.45 $ 75,600,000 (1) Includes $0.35 per unit, or approximately $2.8 million in the aggregate (approximately $3.22 million if the underwriters over-allotment option is exercised in full), payable to the underwriters for deferred underwriting commissions to be placed in the trust account described below. Such funds will be released to the underwriters only on completion of an initial business combination, as described in this prospectus. Of the proceeds we receive from this offering and the sale of the sponsor warrants described in this prospectus, approximately $80.0 million in the aggregate (approximately $10.00 per unit) or approximately $91.7 million if the underwriters over-allotment option is exercised in full (approximately $9.97 per unit), will be deposited into a U.S. trust account at Citibank, N.A. with Continental Stock Transfer & Trust Company acting as trustee. Except for a portion of the interest income earned on the trust account balance that may be released to us to pay any taxes payable on such interest and to fund our working capital requirements, and any amounts necessary to purchase up to 15% of our public shares if we seek shareholder approval of our business combination, each as described herein, our memorandum and articles of association provide that none of the funds held in trust will be released from the trust account except as described in this prospectus. The underwriters are offering the units on a firm commitment basis. The underwriters expect to deliver the units to purchasers on or about , 2011. Citi Deutsche Bank Securities Ladenburg Thalmann & Co. Inc. , 2011 TABLE OF CONTENTS conducted an initial public offering raising total proceeds of $128,000,000. Subsequently, on November 20, 2009 CHAC consummated a business combination with Jinjiang Hengda Ceramics Co., Limited, a leading manufacturer of ceramic tiles used for exterior siding, interior flooring, and design in residential and commercial buildings in China. The merged entity is now called China Ceramics Co., Ltd. and trades on the NASDAQ Global Market with the symbol CCCL. China Ceramics used the cash remaining from CHAC s trust post merger to acquire a new ceramic tile production facility in Gaoan, Jiangxi Province. China Ceramics completed a one share for four warrants tender offer on August 30, 2010. Approximately 80.9% of the outstanding warrants were exchanged for shares. On November 19, 2010, China Ceramics announced that it priced an underwritten public offering for an aggregate of approximately $26.0 million in gross proceeds. The majority of the proceeds of the offering are being used to significantly increase China Ceramic s manufacturing capacity. Our executive officers and a majority of our directors played a key role throughout the business combination transaction for CHAC including assisting in identifying numerous suitable acquisition candidates including the ultimate target, due diligence, structuring, negotiating and assisting in the proxy solicitation of stockholder approval for such acquisition. Other than founder shares and sponsor warrants they may have owned, no director or officer received any remuneration from CHAC other than Byron Sproule, our Chief Financial Officer and Executive Vice-President, who received consulting fees for services provided to CHAC in connection with its initial business combination and to China Ceramics Co., Limited following the consummation of the business combination. Our officers intend to dedicate the majority of their work activity to pursuing an acquisition target and consummating our initial business combination. We anticipate structuring a business combination to acquire 100% of the equity interest or assets of the target business or businesses. We may, however, structure a business combination to acquire less than 100% of such interests or assets of the target business, but we will only consummate such business combination if we will become the controlling shareholder of the target or are otherwise not required to register as an investment company under the Investment Company Act of 1940, as amended, or the Investment Company Act. We will not consider any transaction that does not meet such criteria. Even though we will own a controlling interest in the target, our shareholders prior to the business combination may collectively own a minority interest in the post business combination company, depending on valuations ascribed to the target and us in the business combination transaction. For example, we could pursue a transaction in which we issue a substantial number of new shares in exchange for all of the outstanding capital stock of a target. In this case, we would acquire a 100% controlling interest in the target. However, as a result of the issuance of a substantial number of new shares, our shareholders immediately prior to such transaction could own less than a majority of our outstanding shares subsequent to such transaction. Our management team will focus on creating shareholder value by leveraging its experience, among others, in the management, operation and financing of businesses to improve the efficiency of operations and implement strategies to grow revenue (either organically or through acquisitions). Consistent with this strategy, we have identified the following general criteria and guidelines that we believe are important in evaluating prospective target businesses. We will use these criteria and guidelines in evaluating acquisition opportunities, but we may decide to enter into a business combination with a target business that does not meet these criteria and guidelines. Middle-Market Growth Business. We will seek to acquire one or more growth businesses with an enterprise value ranging from $300 million to $500 million. We believe that our focus on businesses in this segment of the middle market will offer us a substantial number of potential business targets that we believe can benefit from improved operations and achieve and maintain significant revenue and earnings growth. Given the backgrounds and deal sourcing capabilities of our management team, we believe likely geographic locations of acquisition opportunities will be primarily in Asia, Europe, and the United States, although we may pursue acquisition opportunities in other geographic regions. The acquisition target could be part of a private equity portfolio, a family controlled private business or a division from a larger organization. We do not intend to acquire either a start-up company or a company with negative cash flow. Under our amended and restated memorandum and articles of association, we will not be permitted to effectuate our initial business combination with another blank check company or a similar company with nominal operations. TABLE OF CONTENTS Companies with Opportunity to Strengthen Management and Add Value. We will seek to acquire one or more businesses that provide a platform for us to develop the acquired business management team and leverage the experience of our officers, directors and sponsor investors. We believe that the operating expertise of our officers and directors is well suited to complement and, if required, replace the target s management team. However, the future role of our current officers and directors, if any, in the target business following a business combination cannot presently be stated with any certainty. Additionally, we cannot assure you that our officers and directors will have significant experience or knowledge relating to the operations of the particular target business. Our executive officers and the majority of our directors who were officers or directors of CHAC, did not continue as officers or directors following CHAC s business combination. Business with Revenue and Earnings Growth Potential. We will seek to acquire one or more businesses that have the potential for significant revenue and earnings growth through a combination of brand and new product development, increased production capacity, increased operating leverage, expense reduction and synergistic follow-on acquisitions. Companies with Potential for Positive Operating Cash Flow Generation. We will seek to acquire one or more businesses that have the potential to generate positive operating cash flow, as defined by generally accepted accounting principles in the United States. We will focus on one or more businesses that have predictable revenue streams and definable low working capital and capital expenditure requirements. We may also seek to prudently leverage this cash flow in order to enhance shareholder value. These criteria are not intended to be exhaustive. Any evaluation relating to the merits of a particular initial business combination may be based, to the extent relevant, on these general guidelines as well as other considerations, factors and criteria that our management may deem relevant. In the event that we decide to enter into a business combination with a target business that does not meet the above criteria and guidelines, we will disclose that the target business does not meet the above criteria in our shareholder communications related to our initial business combination, which, as discussed in this prospectus, would be in the form of tender offer documents or proxy solicitation materials that we would file with the Securities and Exchange Commission, or the SEC. Our management team has a broad range of global operational experience across a variety of sectors, including with Freedom Communications Holdings, Inc., a diversified media company with 82 newspapers, 8 broadcast TV stations and internet products, Hasbro, Inc., one of the largest toy manufacturers in the world, Apollo Investment Corporation, a leading financial services company, The Peterson Companies, a multi-platform marketing solutions company which became one of the largest publishers in the United States, Yellow Book, at the time a leading a source for finding local businesses and advertising, Chi-X Global Inc., a global exchange operator, Cicada Corporation, a leading provider of exchange and dealer information and trading technology in Europe and Asia, and Dow Jones Telerate, a global financial information publisher and distributor. Members of our management team have worked at leading investment banks where they advised clients on all aspects of mergers and acquisition transactions including due diligence, valuation and transaction structuring and negotiating. Additionally, our management team has extensive expertise in traditional private equity investing across a broad range of sectors including coal, wind, natural gas storage, oil and gas exploration, consumer products in the United States and Europe, industrial products in Spain and Italy and construction material in China. They have also taken a number of private companies public through the IPO process. Over the course of their careers, the members of our management team have developed a broad international network of contacts and corporate relationships that have served as an extremely useful source of investment opportunities. This network has been developed through our management team s: experience in sourcing, acquiring, operating, financing and selling businesses; reputation for integrity and fair dealing with sellers, financing sources and target management teams; membership in various industry associations around the world; extensive experience as advisors of transactions; and experience in executing transactions under varying economic and financial market conditions. TABLE OF CONTENTS This network has provided our management team with a flow of referrals that has resulted in numerous transactions. We believe that the network of contacts and relationships of our management team will provide us with an important source of investment opportunities. In addition, we anticipate that target business candidates will be brought to our attention from various unaffiliated sources, including investment market participants, private equity funds, accounting firms and large business enterprises. Certain members of the management team have spent the last few years working with Asia based businesses and have developed an extensive network of professional services contacts and business relationships in that region. Our management team has a broad range of experience leading public and private companies as well as acquiring businesses from a wide variety of sellers in different transaction structures, including, the acquisition of divisions from larger companies (acquisition of Ziff-Davis Publishing Inc. from Ziff Davis Inc., and Softbank); the acquisition of family-owned businesses (purchase of Petersen Publishing from its founder, Robert E. Petersen) and the roll-up of certain industries (buy-out of Yellow Book and subsequent acquisitions). In these transactions, Mr. Dunning, our Chief Executive Officer, also acted as chief executive officer of the acquiring companies and was typically involved in the structuring, negotiation and consummation of the transactions. Additionally, the operating expertise of our management team has enabled certain of our officers and directors to continue as management following certain combination transactions. In evaluating a prospective target business, we expect to conduct an extensive due diligence review which will encompass, among other things, meetings with incumbent management and employees, document reviews, interviews of customers and suppliers, inspection of facilities, as well as review of financial and other information which will be made available to us. We are not prohibited from pursuing an initial business combination with a company that is affiliated with our sponsor, officers or directors. In the event we seek to complete an initial business combination with such a company, we, or a committee of independent directors, would obtain an opinion from an independent investment banking firm which is a member of the Financial Industry Regulatory Authority, or FINRA, that such an initial business combination is fair to our shareholders from a financial point of view. Each of our officers has agreed that until the earliest of our initial business combination, our redemption of our public shares if we fail to complete our initial business combination within 21 months from the closing of this offering or such time as he ceases to be an officer, to present to us for our consideration, prior to presentation to any other entity, any business opportunity with an enterprise value of $100 million or more, subject to any pre-existing fiduciary or contractual obligations he might have. As more fully discussed in Management Conflicts of Interest, if any of our officers becomes aware of a business combination opportunity that falls within the line of business of any entity to which he has pre-existing fiduciary or contractual obligations, he may be required to present such business combination opportunity to such entity prior to presenting such business combination opportunity to us. Certain of our officers currently have certain relevant fiduciary duties or contractual obligations that may take priority over their duties to us. In addition, our officers have agreed not to participate in the formation of, or become an officer or director of, any other blank check company until we have entered into a definitive agreement regarding our initial business combination or we have failed to complete our initial business combination within 21 months from the closing of this offering. Our executive offices are located at 641 Lexington Avenue, 28th Floor, New York, New York 10022, and our telephone number is (212) 822-8165. TABLE OF CONTENTS The Offering In making your decision on whether to invest in our securities, you should take into account not only the backgrounds of the members of our management team, but also the special risks we face as a blank check company and the fact that this offering is not being conducted in compliance with Rule 419 promulgated under the Securities Act of 1933, as amended, or the Securities Act. You will not be entitled to protections normally afforded to investors in Rule 419 blank check offerings. You should carefully consider these and the other risks set forth in the section below entitled Risk Factors beginning on page 23 of this prospectus. Securities offered 8,000,000 units, at $10.00 per unit, each unit consisting of: one ordinary share; and one warrant. Proposed OTCBB symbols Units: Ordinary shares: Warrants: Trading commencement and separation of ordinary shares and warrants. The units will begin trading on or promptly after the date of this prospectus. The ordinary shares and warrants comprising the units will begin separate trading on the 52nd day following the date of this prospectus unless Citigroup Global Markets Inc. informs us of its decision to allow earlier separate trading, subject to our having filed the Current Report on Form 8-K described below and having issued a press release announcing when such separate trading will begin. Separate trading of the ordinary shares and warrants is prohibited until we have filed a Current Report on Form 8-K In no event will the ordinary shares and warrants be traded separately until we have filed a Current Report on Form 8-K with the SEC containing an audited balance sheet reflecting our receipt of the gross proceeds at the closing of this offering. We will file the Current Report on Form 8-K promptly after the closing of this offering, which is anticipated to take place three business days from the date of this prospectus. If the underwriters over-allotment option is exercised following the initial filing of such Current Report on Form 8-K, a second or amended Current Report on Form 8-K will be filed to provide updated financial information to reflect the exercise of the underwriters over-allotment option. Units: Number outstanding before this offering 0 Number outstanding after this offering 8,000,000 TABLE OF CONTENTS Ordinary shares: Number outstanding before this offering 2,019,512(1)(2) Number outstanding after this offering 9,756,098(2)(3) Warrants: Number of sponsor warrants to be sold simultaneously with closing of this offering 3,000,000 Number of warrants to be outstanding after this offering and the private placement 11,000,000 Exercisability Each warrant offered in this offering is exercisable to purchase one ordinary share. Exercise price $11.50 per share, subject to adjustments as described herein. Exercise period The warrants will become exercisable on the later of: 30 days after the completion of our initial business combination, or 12 months from the closing of this offering; provided in each case that we have an effective registration statement under the Securities Act covering the ordinary shares issuable upon exercise of the warrants and a current prospectus relating to them is available, and such shares are registered, qualified or exempt from registration under the securities laws of the state of residence of the holder. We are not registering the ordinary shares issuable upon exercise of the warrants at this time. However, we have agreed to use our best efforts to file and have an effective registration statement covering the ordinary shares issuable upon exercise of the warrants, to maintain a current prospectus relating to those ordinary shares until the warrants expire or are redeemed and to register the ordinary shares that are issuable upon exercise of the warrants under state blue sky laws, to the extent an exemption is not available. The warrants will expire at 5:00 p.m., New York time, five years after the completion of our initial business combination or earlier upon redemption or liquidation. On (1) This number includes an aggregate of 263,414 founder shares held by our sponsor that are subject to forfeiture to the extent that the over-allotment option is not exercised by the underwriters. (2) This number includes a portion of the founder shares in an amount equal to 4.0% of our issued and outstanding shares after this offering and the expiration of the underwriters over-allotment option that are subject to forfeiture by our sponsor in the event the last sales price of our stock does not equal or exceed $13.00 per share (as adjusted for stock splits, share dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period within four years following the closing of our initial business combination. (3) Assumes no exercise of the underwriters over-allotment option and the resulting forfeiture of 263,414 founder shares. TABLE OF CONTENTS the exercise of any warrant, the warrant exercise price will be paid directly to us and not placed in the trust account. Redemption of warrants Once the warrants become exercisable, we may redeem the outstanding warrants (except as described below with respect to the sponsor warrants): in whole and not in part; at a price of $0.01 per warrant; upon a minimum of 30 days prior written notice of redemption, or the 30-day redemption period; and if, and only if, the last sale price of our ordinary shares equals or exceeds $17.50 per share for any 20 trading days within a 30 trading day period ending on the third business day before we send the notice of redemption to the warrant holders. We will not redeem the warrants unless an effective registration statement covering the ordinary shares issuable upon exercise of the warrants is current and available throughout the 30-day redemption period. If we call the warrants for redemption as described above, our management will have the option to require all holders that wish to exercise warrants to do so on a cashless basis. In such event, each holder would pay the exercise price by surrendering the warrants for that number of ordinary shares equal to the quotient obtained by dividing (x) the product of the number of ordinary shares underlying the warrants, multiplied by the difference between the exercise price of the warrants and the fair market value (defined below) by (y) the fair market value. The fair market value shall mean the average reported last sale price of the ordinary shares for the 10 trading days ending on the third trading day prior to the date on which the notice of redemption is sent to the holders of warrants. Please see the section entitled Risk Factors We are not registering the ordinary shares issuable upon exercise of the warrants under the Securities Act or state securities laws at this time, and such registration may not be in place when an investor desires to exercise warrants, thus precluding such investor from being able to exercise its warrants and causing such warrants to expire worthless for additional information. None of the sponsor warrants will be redeemable by us so long as they are held by members of our sponsor or their permitted transferees. Founder shares In January 2011, our sponsor purchased an aggregate of 2,019,512 founder shares for an aggregate price of TABLE OF CONTENTS $25,000, or approximately $0.012 per share. The founder shares held by our sponsor include an aggregate of 263,414 shares subject to forfeiture to the extent that the underwriters over-allotment option is not exercised in full, so that our sponsor will collectively own 18.0% of our issued and outstanding shares after this offering (assuming they do not purchase any units in this offering and they are not required to forfeit their founder earn out shares, as described in this prospectus). In addition, the founder earn out shares (equal to 4.0% of our issued and outstanding shares after this offering and the expiration of the underwriters over-allotment option) will be subject to forfeiture by our sponsor in the event the last sales price of our stock does not equal or exceed $13.00 per share (as adjusted for share splits, share dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period within four years following the closing of our initial business combination (which we refer to as the founder earn out period). The founder shares are identical to the ordinary shares included in the units being sold in this offering, except that: the founder shares are subject to certain transfer restrictions, as described in more detail below, and our sponsor has agreed (i) to waive its redemption rights with respect to its founder shares and public shares in connection with the consummation of a business combination and (ii) to waive its redemption rights with respect to its founder shares if we fail to consummate a business combination within 21 months from the closing of this offering (although it will be entitled to redemption rights with respect to any public shares it holds if we fail to consummate a business combination within such time period). If we submit our initial business combination to our public shareholders for a vote, our sponsor has agreed to vote its founder shares and any public shares purchased during or after the offering in favor of our initial business combination. The Company and our directors and officers will not propose any amendment to our amended and restated memorandum and articles of association that would affect the substance or timing of the Company s obligation, as described in Regulation 23 of the amended and restated memorandum and articles of association, to redeem the public shares. Transfer restrictions on founder shares Our sponsor has agreed not to transfer, assign or sell any of its founder shares (except to permitted transferees, as TABLE OF CONTENTS described in this prospectus) until (i) one year after the completion of our initial business combination or earlier if, subsequent to our business combination, the last sales price of our ordinary shares equals or exceeds $12.00 per share (as adjusted for stock splits, share dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after our initial business combination, or (ii) the date on which we consummate a liquidation, share exchange, share reconstruction and amalgamation, contractual control arrangement, or other similar transaction after our initial business combination that results in all of our shareholders having the right to exchange their ordinary shares for cash, securities or other property (except as described below under Principal Shareholders Transfers of Ordinary shares and Warrants ). In addition, notwithstanding our sponsor s ability to transfer, assign or sell its founder shares to permitted transferees during the lock up periods described above, our sponsor has agreed not to transfer, assign or sell the founder earn out shares (whether to a permitted transferee or otherwise) before they are earned. Sponsor warrants Members of our sponsor have committed to purchase an aggregate of 3,000,000 sponsor warrants, each exercisable to purchase one ordinary share at $11.50 per share, at a price of $1.00 per warrant ($3.0 million in the aggregate) in a private placement that will occur simultaneously with the closing of this offering. The purchase price of the sponsor warrants will be added to the proceeds from this offering to be held in the trust account. If we do not complete a business combination within 21 months from the closing of this offering, the proceeds of the sale of the sponsor warrants will be used to fund the redemption of our public shares (subject to the requirements of applicable law), and the sponsor warrants will expire worthless. Transfer restrictions on sponsor warrants The sponsor warrants (including the ordinary shares issuable upon exercise of the sponsor warrants) will not be transferable, assignable or salable until 30 days after the completion of our initial business combination and they will be non-redeemable so long as they are held by members of our sponsor or their permitted transferees (except as described below under Principal Shareholders Transfers of Ordinary Shares and Warrants ). If the sponsor warrants are held by holders other than members of our sponsor or their permitted transferees, the sponsor warrants will be redeemable by us and exercisable by the holders on the same basis as the warrants included in the units being sold in this offering. Proceeds to be held in trust account $80.0 million, or approximately $10.00 per unit of the proceeds of this offering and the proceeds of the private placement of the sponsor warrants ($91.7 million, or TABLE OF CONTENTS approximately $9.97 per unit, if the underwriters over-allotment option is exercised in full) will be placed in a segregated U.S. trust account with Continental Stock Transfer & Trust Company acting as trustee. These proceeds include approximately $2.8 million (or approximately $3.22 million if the underwriters over-allotment option is exercised in full) in deferred underwriting commissions. We may increase the initial amount held in the trust account from approximately $10.00 per unit prior to the effectiveness of the registration statement of which this prospectus forms a part. In such case, the increase would be funded by an increase in the amount of the deferral of the underwriting commissions payable in connection with this offering, an increase in the number of sponsor warrants to be purchased by our sponsor at a price of $1.00 per warrant and/or a reduction from $650,000 of the amount initially available to us for working capital that is not held in the trust account. Public shareholders would own a smaller percentage of our outstanding ordinary shares on a fully diluted basis to the extent that our sponsor purchases additional warrants. Except for a portion of the interest income that may be released to us to pay any taxes and to fund our working capital requirements, and any amounts necessary to purchase up to 15% of our public shares if we seek shareholder approval of our business combination, as discussed below, none of the funds held in trust will be released from the trust account until the earlier of: (i) the consummation of a business combination within 21 months from the closing of this offering, (ii) a redemption to public shareholders prior to any voluntary winding-up in the event we do not consummate a business combination within the applicable period, or (iii) pursuant to any liquidation. The proceeds deposited in the trust account could become subject to the claims of our creditors, if any, which could have priority over the claims of our public shareholders. Anticipated expenses and funding sources Unless and until we complete our initial business combination, no proceeds held in the trust account, other than up to $0.8 million, subject to adjustment as described below, of the interest earned on the trust account (net of taxes payable), and any amounts necessary to purchase up to 15% of our public shares if we seek shareholder approval of our business combination, will be available for our use. Based upon the current interest rate environment, we expect the trust account to generate approximately $250,000 of interest over the next 21 months. We may pay our expenses only from: such interest; and TABLE OF CONTENTS the net proceeds of this offering not held in the trust account, which will be $650,000 in working capital after the payment of approximately $750,000 in expenses relating to this offering. If the underwriters exercise their over-allotment option or the size of this offering is increased, the maximum amount of interest income we may withdraw from the trust account will proportionately increase. In addition, if the size of this offering is decreased, the maximum amount of interest income we may withdraw from the trust account will proportionately decrease. Conditions to consummating our initial business combination There is no limitation on our ability to raise funds privately or through loans in connection with our initial business combination. Because, unlike many blank check companies, we do not have the limitation that a target business have a minimum fair market enterprise value equal to a specified percentage of the net assets held in the trust account at the time of our signing a definitive agreement in connection with our initial business combination, our management will have virtually unrestricted flexibility in identifying and selecting one or more prospective target businesses. We will consummate our initial business combination only if we will become the controlling shareholder of the target or are otherwise not required to register as an investment company under the Investment Company Act. Even though we will own a controlling interest in the target, our shareholders prior to the business combination may collectively own a minority interest in the post business combination company, depending on valuations ascribed to the target and us in the business combination transaction. For example, we could pursue a transaction in which we issue a substantial number of new shares in exchange for all of the outstanding capital stock of a target. In this case, we would acquire a 100% controlling interest in the target. However, as a result of the issuance of a substantial number of new shares, our shareholders immediately prior to such transaction could own less than a majority of our outstanding shares subsequent to such transaction. Permitted purchases of public shares by us prior to the consummation of our initial business combination using amounts held in the trust account Unlike many blank check companies, if we seek shareholder approval of our initial business combination and we do not conduct redemptions in connection with our business combination pursuant to the tender offer rules, prior to the consummation of a business combination, our memorandum and articles of association will permit the release to us from the trust account amounts necessary to purchase up to 15% of the shares TABLE OF CONTENTS sold in this offering (1,200,000 shares, or 1,380,000 shares if the underwriters over-allotment option is exercised in full) at any time commencing after the filing of a preliminary proxy statement for our initial business combination and ending on the date of the shareholder meeting to approve the initial business combination. Purchases will be made only in open market transactions at times when we are not in possession of any material non-public information and may not be made during a restricted period under Regulation M under the Exchange Act. It is intended that purchases will comply with Rule 10b-18 under the Exchange Act, which provides a safe harbor for purchases made under certain conditions, including with respect to timing, pricing and volume of purchases. If the conditions of Rule 10b-18, as in effect at the time we wish to make such purchases, are not satisfied, it is likely that we will not make such purchases. Any purchases we make will be at prices (inclusive of commissions) not to exceed the per-share amount then held in the trust account (approximately $10.00 per share or approximately $9.97 per share if the underwriters over-allotment option is exercised in full). We can purchase any or all of the 1,200,000 shares (or 1,380,000 shares if the underwriters over-allotment option is exercised in full) we are entitled to purchase. It will be entirely in our discretion as to how many shares are purchased. Purchasing decisions will be made based on various factors, including the then current market price of our ordinary shares and the terms of the proposed business combination. All shares purchased by us will be immediately cancelled. Such open market purchases, if any, would be conducted by us to minimize any disparity between the then current market price of our ordinary shares and the per-share amount held in the trust account. A market price below the per-share trust amount could provide an incentive for purchasers to buy our shares after the filing of our preliminary proxy statement at a discount to the per share amount held in the trust account for the sole purpose of voting against our initial business combination and exercising redemption rights for the full per-share amount held in the trust account. Such trading activity could enable such investors to block a business combination by making it difficult for us to obtain the approval of such business combination by the vote of a majority of our outstanding ordinary shares that are voted. Please see the section entitled Risk Factors Our purchase of ordinary shares in the open market may support the market price of the ordinary shares and/or warrants during the buyback period and, accordingly, the termination of the support provided by such purchases may materially adversely affect the market price of the units, ordinary shares and/or warrants for additional information. TABLE OF CONTENTS Other permitted purchases of public shares by us or our affiliates In addition to the permitted purchases of public shares by us prior to the consummation of the initial business combination using amounts held in the trust account, as described above, if we seek shareholder approval of our initial business combination and we do not conduct redemptions in connection with our business combination pursuant to the tender offer rules, we may enter into privately negotiated transactions to purchase public shares from shareholders following consummation of the initial business combination with proceeds released to us from the trust account immediately following consummation of the initial business combination. Our sponsor, directors, officers, advisors or their affiliates may also purchase shares in privately negotiated transactions either prior to or following the consummation of our initial business combination. Neither we nor our directors, officers, advisors or their affiliates will make any such purchases when we or they are in possession of any material nonpublic information not disclosed to the seller or during a restricted period under Regulation M under the Exchange Act. It is intended that any purchases made by us will comply with Rule 10b-18 under the Exchange Act, which provides a safe harbor for purchases made under certain conditions, including with respect to timing, pricing and volume of purchases. If the conditions of Rule 10b-18, as in effect at the time we wish to make such purchases, are not satisfied, it is likely that we will not make such purchases. Although neither we nor they currently anticipate paying any premium purchase price for such public shares, in the event we or they do, the payment of a premium may not be in the best interest of those shareholders not receiving any such additional consideration. In addition, the payment of a premium by us after the consummation of our initial business combination may not be in the best interest of the remaining shareholders who do not redeem their shares, because such shareholders will experience a reduction in book value per share compared to the value received by shareholders that have their shares purchased by us at a premium. Except for the limitations described above on use of trust proceeds released to us prior to consummating our initial business combination, there is no limit on the amount of shares that could be acquired by us or our affiliates, or the price we or they may pay, if we hold a shareholder vote. Please see the section entitled Risk Factors If we seek shareholder approval of our business combination, we, our sponsor, directors, officers, advisors and their affiliates may elect to purchase shares from shareholders, in which case we or they may influence a vote in favor of a proposed business combination that you do not support for additional information. TABLE OF CONTENTS Redemption rights for public shareholders upon consummation of our initial business combination We will provide our shareholders with the opportunity to redeem their ordinary shares upon the consummation of our initial business combination at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest but net of taxes payable, divided by the number of then outstanding public shares, subject to the limitations described herein. The amount in the trust account is initially anticipated to be approximately $10.00 per public share (or approximately $9.97 per public share if the underwriters over-allotment option is exercised in full), which is approximately equal to the per-unit offering price of $10.00 (approximately $0.03 less if the underwriters over-allotment option is exercised in full). There will be no redemption rights upon the consummation of our initial business combination with respect to our warrants. Our sponsor has agreed to waive its redemption rights with respect to its founder shares and any public shares it may hold in connection with the consummation of a business combination. Manner of conducting redemptions Unlike many blank check companies that hold shareholder votes and conduct proxy solicitations in conjunction with their business combinations and related redemptions of public shares for cash upon consummation of such initial business combinations even when a vote is not required by law, if a shareholder vote is not required by law and we do not decide to hold a shareholder vote for business or other legal reasons, we will, pursuant to our memorandum and articles of association: conduct the redemptions pursuant to Rule 13e-4 and Regulation 14E of the Exchange Act, which regulate issuer tender offers, and any limitations (including but not limited to cash requirements) agreed to in connection with the negotiation of terms of the proposed business combination, and file tender offer documents with the SEC prior to consummating our initial business combination which contain substantially the same financial and other information about the initial business combination and the redemption rights as is required under Regulation 14A of the Exchange Act, which regulates the solicitation of proxies. In the event we conduct redemptions pursuant to the tender offer rules, our offer to redeem shall remain open for at least 20 business days, in accordance with Rule 14e-1(a) under the Exchange Act, and we will not TABLE OF CONTENTS be permitted to consummate our initial business combination until the expiration of the tender offer period. If, however, shareholder approval of the transaction is required by law, or we decide to obtain shareholder approval for business or other legal reasons, we will: conduct the redemptions in conjunction with a proxy solicitation pursuant to Regulation 14A of the Exchange Act, which regulates the solicitation of proxies, and not pursuant to the tender offer rules, and file proxy materials with the SEC. If we seek shareholder approval, we will consummate our initial business combination only if a majority of the ordinary shares voted are voted in favor of the business combination. In such case, our sponsor has agreed to vote its founder shares and any public shares purchased during or after the offering in favor of our initial business combination. Each public shareholder may elect to redeem their public shares irrespective of whether they vote for or against the proposed transaction. Many blank check companies would not be able to consummate a business combination if the holders of the company s public shares voted against a proposed business combination and elected to redeem or convert more than a specified percentage of the shares sold in such company s initial public offering, which percentage threshold has typically been between 19.99% and 39.99%. As a result, many blank check companies have been unable to complete business combinations because the amount of shares voted by their public shareholders electing conversion exceeded the maximum conversion threshold pursuant to which such company could proceed with a business combination. Since we have no specified maximum redemption threshold contained in our memorandum and articles of association, our structure is different in this respect from the structure that has been used by many blank check companies. However, in no event will we redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001 and, in some cases, the terms of a proposed business combination will require our net tangible assets to be greater than $5,000,001. For example, the proposed business combination may require: (i) cash consideration to be paid to the target or members of its management team, (ii) cash to be transferred to the target for working capital or other general corporate purposes or (iii) the allocation of cash to satisfy other conditions in accordance with the terms of the proposed business combination. In the event the proposed business combination is not consummated, the tender offer will be TABLE OF CONTENTS withdrawn and no holders will be redeemed pursuant to the tender offer. In the event the aggregate cash consideration we would be required to pay for all shares that are validly tendered plus any amount required to satisfy cash conditions pursuant to the terms of the proposed business combination exceed the aggregate amount of cash available to us, we will not consummate the business combination, and any shares tendered pursuant to the tender offer will be returned to the holders thereof following the expiration of the tender offer. Limitation on redemption rights and voting rights of shareholders holding 10% or more of the shares sold in the offering if we hold a shareholder vote Notwithstanding the foregoing redemption rights, if we seek shareholder approval of our initial business combination and we do not conduct redemptions in connection with our business combination pursuant to the tender offer rules, our memorandum and articles of association provides that a public shareholder, together with any affiliate of such shareholder or any other person with whom such shareholder is acting in concert or as a group (as defined under Section 13 of the Exchange Act), will be restricted from redeeming its shares with respect to more than an aggregate of 10% of the shares sold in this offering. Moreover, any individual shareholder or group will also be restricted from voting public shares in excess of an aggregate of 10% of the public shares sold in this offering, and all additional such shares in excess of 10%, which we refer to as the Excess Shares , which would then be voted by our management in favor of all proposals submitted for consideration at such meeting and will not be redeemed for cash. We believe these restrictions will discourage shareholders from accumulating large blocks of shares, and subsequent attempts by such holders to use their ability to redeem or vote their shares as a means to force us or our management to purchase their shares at a significant premium to the then-current market price or on other undesirable terms. Absent these provisions, a public shareholder holding more than an aggregate of 10% of the shares sold in this offering could threaten to exercise its redemption rights or vote against a business combination if such holder s shares are not purchased by us or our management at a premium to the then-current market price or on other undesirable terms. By limiting our shareholders ability to redeem or vote no more than 10% of the shares sold in this offering, we believe we will limit the ability of a small group of shareholders to unreasonably attempt to block our ability to consummate a business combination, particularly in connection with a business combination with a target that requires as a closing condition that we have a minimum net worth or a certain amount of cash. TABLE OF CONTENTS Please see the section entitled Risk Factors Limitation on redemption rights upon consummation of a business combination and voting rights if we seek shareholder approval for additional information. Release of funds in trust account on closing of our initial business combination On the closing of our initial business combination, all amounts held in the trust account will be released to us. We will use these funds to pay amounts due to any public shareholders who exercise their redemption rights as described above under Redemption rights for public shareholders upon consummation of our initial business combination and to pay the underwriters their deferred underwriting commissions. Funds released from the trust account to us can be used to pay all or a portion of the purchase price of the business or businesses we acquire in our initial business combination. If our initial business combination is paid for using stock or debt securities, or not all of the funds released from the trust account are used for payment of the purchase price in connection with our business combination, we may apply the cash released to us from the trust account that is not applied to the purchase price for general corporate purposes, including for maintenance or expansion of operations of acquired businesses, the payment of principal or interest due on indebtedness incurred in consummating the initial business combination, to fund the purchase of other companies or for working capital. Redemption of public shares and distribution and liquidation if no initial business combination Our sponsor, officers and directors have agreed that we will have only 21 months from the closing of this offering to consummate our initial business combination. If we are unable to consummate a business combination within 21 months from the closing of this offering, we (i) will distribute the aggregate amount then on deposit in the trust account (less up to $100,000 of the net interest earned thereon to pay dissolution expenses), pro rata, to our public shareholders by way of redemption and (ii) intend to cease all operations except for the purposes of any winding up of our affairs, as further described herein. This redemption of public shareholders from the trust account shall be done automatically by function of our memorandum and articles of association and prior to any voluntary winding up. There will be no redemption rights or liquidating distributions with respect to our warrants, which will expire worthless if we fail to consummate a business combination within the applicable time period. Please see the section entitled Risk Factors If we are unable to complete our initial business combination within the prescribed time frame, our public shareholders may receive less than $10.00 per share on our redemption and our warrants will expire worthless for additional information. TABLE OF CONTENTS Although shareholders of a British Virgin Islands company generally have limited liability, in the event the company enters insolvent liquidation under British Virgin Islands law, there are very limited circumstances where prior payments made to shareholders or other parties may be deemed to be a voidable transaction for the purposes of the British Virgin Islands Insolvency Act, 2003 (the Insolvency Act ). A voidable transaction would be, for these purposes, payments made as unfair preferences or transactions at an undervalue . Where a payment was a risk of being a voidable transaction, a liquidator appointed over an insolvent company could apply to the British Virgin Islands courts for an order, inter alia, for the transaction to be set aside as a voidable transaction in whole or in part. We expect that in the event of a voluntary liquidation of the company, after payment of the liquidation costs and any sums then due to creditors, that the liquidator would distribute our assets to the public shareholders on a pari passu basis. Our sponsor has waived its redemption rights with respect to its founder shares if we fail to consummate an initial business combination within 21 months from the closing of this offering. However, if our sponsor, or any of our officers, directors or affiliates, acquire public shares in or after this offering, they will be entitled to redemption rights with respect to such public shares if we fail to consummate a business combination within the required time period. The underwriters have agreed to waive their rights to their deferred underwriting commission held in the trust account in the event we do not consummate a business combination within 21 months from the closing of this offering and, in such event, such amounts will be included with the funds held in the trust account that will be available to fund the redemption of our public shares. Messrs. Dunning, Hassenfeld and Smith have agreed that they will be liable to us, pro-rata on a 40%, 40% and 20% basis, respectively, if and to the extent any claims by a vendor for services rendered or products sold to us, or a prospective target business with which we have discussed entering into a transaction agreement, reduce the amounts in the trust account to below $10.00 per share except as to any claims by a third party who executed a waiver of any and all rights to seek access to the trust account and except as to any claims under our indemnity of the underwriters of this offering against certain liabilities, including liabilities under the Securities Act. Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party, Messrs. Dunning, Hassenfeld and Smith will not be responsible to the extent of any liability for such third party claims. Based TABLE OF CONTENTS on information we have obtained from such individuals, we currently believe that such persons are of substantial means and capable of funding a shortfall in our trust account, even though we have not asked them to reserve for such an eventuality. We have not determined the approximate dollar amount such individuals are capable of funding or independently verified whether such persons have sufficient funds to satisfy their indemnity obligations and, therefore, we cannot assure you that our existing shareholders will be able to satisfy those obligations. We believe the likelihood of our existing shareholders having to indemnify the trust account is limited because we will endeavor to have all vendors and prospective target businesses as well as other entities execute agreements with us waiving any right, title, interest or claim of any kind in or to monies held in the trust account. Limited payments to insiders There will be no finder s fees, reimbursements or cash payments made to our sponsor, officers, directors, or our or their affiliates for services rendered to us prior to or in connection with the consummation of our initial business combination, other than: Repayment of $150,000 of loans made to us by our sponsor, an affiliate of our sponsor, to cover offering-related and organizational expenses; A payment of an aggregate of $3,000 per month to Global Cornerstone Holdings LLC, our sponsor, for office space, secretarial and administrative services; Management fee to our sponsor, which will in turn be paid to our Chief Financial Officer and Executive Vice-President, Byron I. Sproule (a member of our sponsor), payable: (i) upon consummation of this offering, in an aggregate amount of approximately $35,000 and (ii) following the consummation of this offering, in the amount of approximately $17,000 per month until the earlier of (x) the closing of our initial business combination or (y) 21 months from the date of this prospectus. Reimbursement for any out-of-pocket expenses related to identifying, investigating and consummating an initial business combination, provided that no proceeds of this offering held in the trust account may be applied to the payment of such expenses prior to the consummation of a business combination, except to the extent paid out of up to $0.8 million (subject to adjustment as described herein) of interest earned on the trust account that may be released to us to fund working capital requirements; and TABLE OF CONTENTS Payment to our sponsor, which will in turn be paid to Byron I. Sproule, our Chief Financial Officer and Executive Vice-President, in an amount to be determined by the board of directors, but not to exceed $350,000 in connection with our initial business combination. The board of directors will determine whether to make a payment and the amount of such payment to be made to the sponsor in order to compensate Mr. Sproule, upon consummation of the business combination based on a number of factors, including but not limited to Mr. Sproule's participation in structuring such business combination and its complexity. This payment is in addition to the management fee paid to our sponsor to compensate Mr. Sproule for his day-to-day managerial responsibilities and is intended to serve as a bonus for his role in successfully consummating a business combination. Repayment of loans made by our sponsor or an affiliate of our sponsor or certain of our officers and directors to finance transaction costs in connection with an intended initial business combination, provided that if we do not consummate an initial business combination, we may use a portion of the working capital held outside the trust account to repay such loaned amounts but no proceeds from our trust account would be used for such repayment. The terms of such loans by our officers and directors, if any, have not been determined and no written agreements exist with respect to such loans. Our independent director will review on a quarterly basis all payments that were made to our sponsor, officers, directors or our or their affiliates. TABLE OF CONTENTS Risks We are a newly formed blank check company that has conducted no operations and has generated no revenues to date. Until we complete our initial business combination, we will have no operations and will generate no operating revenues. In making your decision whether to invest in our securities, you should take into account not only the background of our management team, but also the special risks we face as a blank check company. This offering is not being conducted in compliance with Rule 419 promulgated under the Securities Act and has certain terms and conditions that deviate from many blank check offerings. Accordingly, you will not be entitled to protections normally afforded to investors in Rule 419 blank check offerings or to investors in many other blank check companies. For additional information concerning how Rule 419 blank check offerings differ from this offering, please see Proposed Business Comparison of This Offering to Those of Blank Check Companies Subject to Rule 419. For additional information concerning how many blank check offerings differ from this offering, please see Proposed Business Comparison of This Offering to Those of Many Blank Check Companies Not Subject to Rule 419. You should carefully consider these and the other risks set forth in the section entitled Risk Factors beginning on page 23 of this prospectus. TABLE OF CONTENTS
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+S-1/A As filed with the Securities and Exchange Commission on November 8, 2011 Registration No. 333-176299 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ____________________________ AMENDMENT NO. 1 TO FORM S-1/A REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 KBS INTERNATIONAL HOLDINGS INC. (Exact name of registrant as specified in its charter) Nevada 5600 27-4707604 (State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer incorporation or organization) Classification Code Number) Identification No.) Xin Fengge Building Yupu Industrial Park Shishi City, Fujian Province 362700 People s Republic of China (86) 595 8889 6198 (Address, including zip code, and telephone number, including area code, of registrant s principal executive offices) ____________________________ Capitol Corporate Services, Inc. 800 Brazos, Suite 400 Austin, TX 78701 (800) 345-4647 Copies to: Thomas M. Shoesmith, Esq. Louis A. Bevilacqua, Esq. Joseph R. Tiano, Jr., Esq. Pillsbury Winthrop Shaw Pittman LLP 2475 Hanover Street Palo Alto, CA 94304-1114 (650) 233-4500 (Name, address, including zip code, and telephone number, including area code, of agent for service) ____________________________ Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. [X] At present, there is no uniform standard to categorize the different types and sizes of cities in China. In this prospectus, we refer to Beijing, Shanghai, Guangzhou and Shenzhen as tier one cities, which are the most populous, affluent and competitive cities in the country. Tier two cities are cities that generally meet the following criteria, excluding the four aforementioned tier one cities: Gross Domestic Product, or GDP, over RMB 200 billion (US 29 billion); GDP per capita over RMB 14,000 (US 2,050); Population with permanent residency in urban area over 1 million; and Urban area over 100 km2. Tier three and four cities are the cities that do not meet one or more criteria listed above. THE COMPANY Overview We are engaged in the design, manufacturing, marketing, distribution and sale of fashion sportswear in China, including apparel and accessories, which we market under the KBS brand. The KBS brand was developed in 2006. Our apparel products include cotton and down jackets, sweaters, shirts, T-shirts, jeans and trousers. Accessories include shoes, bags, socks and caps. In 2010, the suggested retail prices of our products ranged from RMB 50 to RMB 1,280 (approximately 7.50 to 192.50) for our apparel products and RMB 24 to RMB 468 (approximately 3.60 to 70.40) for our accessory products. Our products feature a unique and stylish design that is sportier than typical casual wear, but more fashionable than traditional sportswear, as well as quality fabrics and materials. Since 2006, we have launched 450 collections of new products each year with a different theme to highlight the current trends in sportswear for the season. Our marketing concept is "French origin, Korean design and made for Chinese." Our target customers are middle-class consumers in the 20-40 age range, primarily located in tier two and tier three cities in China. We have adopted "KBS" as a uniform brand name and image for all stores in our distribution network and on all products sold in those stores. We believe that the KBS brand has become a recognized brand name in the cities where our products are sold. We have established a nationwide distribution network covering 16 of China s 32 provinces and centrally administered municipalities. As of June 30, 2011, this network was comprised of 28 corporate stores owned and operated by us and 112 franchised stores operated by 24 third-party distributors or their sub-distributors. The number of stores has grown significantly in recent years, from 1 corporate store and 7 franchised stores as of December 31, 2006 to 24 corporate stores and 109 franchised stores as of December 31, 2010. In the years ended December 31, 2010 and 2009, sales through our corporate stores accounted for 5% and 28% of our revenues, respectively, and sales through distributors accounted for 90% and 71% of our revenues, respectively. We act as an original equipment manufacturer, or OEM, upon request. Income from such services accounted for 5% and 1% of revenue for the years ended December 31, 2010 and 2009, respectively. By the end of 2012, we plan to increase our corporate stores and franchised stores to 99 and 468, respectively. Our production facility is located in Taihu City in Anhui Province, China. Our facility has a production capacity of 2 million sportswear items per year. We obtained a one-year lease to this facility in January 2011 and it started production in March 2011, following its relocation from Shishi City, Fujian, China. Our new facility takes advantage of lower labor costs and a more stable labor supply. Prior to its relocation and from 2009, and following its relocation and resumption of operations in March 2011, our facility had operated at full capacity. Since our previous and current temporary production facilities were operating at full capacity, we outsourced approximately 30.9% and 16.2% in the years ended December 31, 2010 and 2009 and approximately 30.3% and 40.7% in the six months ended June 30, 2011 and 2010, respectively, of production of our products in terms of sales volume to PRC-based third party contract manufacturers. We have acquired land use rights to the land adjacent to our current facility consisting of 110,557 square meters to build a new facility, subject to approval for the transfer from the relevant government bureau. Once completed, total production capacity is expected to be 10 million sportswear items per year compared with our current capacity of 2 million per year. Due to the local government s need for additional time to conclude negotiations with local residents over appropriate resettlement terms, the timeline of the construction of the adjacent facility has been delayed. We intend to take measures to expedite the construction schedule, including extensions to our current rented facilities and hiring additional workers. Once the land resettlement issue has been resolved, we anticipate that construction of the adjacent facility may be completed in approximately 25 months. If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [ ] (Do not check if a smaller reporting company) Smaller reporting company [X] We have experienced rapid growth in recent years. For the years ended December 31, 2010 and 2009, we generated total net sales of 38.5 million and 28.2 million, respectively, and a net income of 12.2 million and 9.1 million, respectively. For the six months ended June 30, 2011 and 2010, we generated total net sales of 27.25 million and 16.04 million, respectively, and a net income of 8.17 million and 5.27 million, respectively. Our Competitive Strengths We believe that the following competitive strengths enable us to compete effectively in and capitalize on the growing sportswear industry in China: We are well positioned in the differentiated sportswear market There is a sizable market for our products We have a strong focus on design and product development We have a trademarked brand with a growing following in China We have an extensive and well-managed nationwide distribution network We have an experienced management team Our Growth Strategies We intend to further strengthen our market position in the sportswear market in China by implementing the following strategies: We plan to open additional stores across China We plan to establish additional marketing and branch offices We plan to continue to raise the profile of the KBS brand through enhanced advertising and promotional activities We plan to expand and build upon our design and product development capabilities We plan to expand our production capacity to expand and diversify our product offerings We plan to implement an enterprise resource planning, or ERP, system Our Corporate History and Structure We were organized under the laws of the State of Nevada on December 20, 2010 under the name Bay Peak 1 Opportunity Corp. From our inception until completion of the reverse acquisition of Hongri BVI discussed in more detail below, we were a shell company with no assets or operations, other than our search for a potential business to acquire. CALCULATION OF REGISTRATION FEE Title of each class of securities to be registered Amount to be registered (1)(3) Proposed maximum offering price per share (2) Proposed maximum aggregate offering price (2) Amount of registration fee Common stock, $0.0001 par value 3,667,988 $2.57 9,426,730 $1,089.78 (4) (1) In accordance with Rule 416(a), the Registrant is also registering hereunder an indeterminate number of shares that may be issued and resold resulting from stock splits, stock dividends or similar transactions. (2) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457 of the Securities Act of 1933, as amended, based on the last private sales price for shares of common stock of the Registrant as there is currently no public market price for the Registrant s common stock. Management considered the total number of shares outstanding post offering, estimated market capitalization, forward looking net income, the targeted price-to-earnings ratio and the effect of the current global economic crisis to determine the offering price per share. Accordingly, taking the foregoing factors into consideration, we arrived at the proposed offering price per share, which is the effective price per share paid by the investors in the Registrant s private placement. (3) Represents shares of the Registrant s common stock being registered for resale that have been issued to the selling stockholders named in this registration statement. (4) The filing fee was calculated by multiplying the increase of $3,112,198 ($9,426,730 minus $6,314,532) in the proposed maximum aggregate offering price by .00011460 for a registration fee increase of $356.66 to the initial registration fee amount for a total registration fee of $1,089.78. $733.12 was previously paid in connection with the initial filing of this registration statement. The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to such Section 8(a), may determine. On March 9, 2011, we completed a round of private equity investment and issued an aggregate of 49,665 shares of our common stock to a number of private investors. On March 31, 2011, we completed a share exchange with Hongri BVI and its shareholders, Mr. Sun Keung Chan and Ms. So Wa Cheung, whereby we acquired 100% of the issued shares of Hongri BVI in exchange for 15,936,820 shares of our common stock. We refer to this transaction as the reverse acquisition. Also on March 31, 2011, we completed a private placement of 2,457,016 shares of our common stock for an aggregate price of 6,304,977, representing 11.58% of our issued and outstanding capital stock on a fully-diluted basis. After the consummation of the share exchange and private placement, the shares of our common stock held by the former shareholders of Hongri BVI constituted 75.10% of our issued and outstanding capital stock on a fully-diluted basis. Hongri BVI became our wholly-owned subsidiary and Mr. Chan and Ms. Cheung, the former shareholders of Hongri BVI, became our controlling stockholders. In connection with the reverse acquisition, all of our directors and officers resigned from all of their positions, effective on March 11, 2011, with the exception of Mr. Cory Roberts, who remained as a member of our board of directors, and Mr. Keyan Yan, Mr. Stanley Wong and Ms. Bizhen Chen were appointed as members of our board of directors, effective on March 11, 2011. In addition, Mr. Yan was appointed as our Chief Executive Officer and Mr. Wong was appointed as our Chief Financial Officer, effective on March 11, 2011. For accounting purposes, the share exchange transaction with Hongri BVI was treated as a reverse acquisition, with Hongri BVI as the acquirer and KBS International as the acquired party. The transaction resulted in a change of control of our company. As a result of the reverse acquisition, we are now engaged in the design, development, manufacturing, marketing and sale of fashion sportswear in China. On May 25, 2011, we changed our name to KBS International Holdings Inc. to more accurately reflect our new business operations. Mr. Keyan Yan and Ms. Bizhen Chen established Hongri PRC on November 17, 2005 as a manufacturer and distributor of sports clothing. From 2006 to February 2011, Hongri PRC s revenues and operations were controlled through a "variable interest enterprise", or VIE, structure in which Hongri PRC was a VIE of Roller Rome, a BVI corporation established on March 28, 2006 by Ms. Bizhen Chen, a Chinese national, pursuant to a Technology Development Service Contract between Roller Rome and Hongri PRC, dated December 18, 2006, or the Technology Development Service Contract, and an agreement between Mr. Keyan Yan, Ms. Bizhen Chen and Roller Rome dated December 18, 2006, or the Repurchase Agreement. The VIE structure was terminated in February 2011, when the Company s control of Hongri PRC was changed to be a direct shareholding relationship, as described below. Hongri BVI was organized by Mr. Sun Keung Chan and Ms. So Wa Cheung, both of whom are Hong Kong residents, on July 8, 2008, as an offshore investment holding company on behalf of Mr. Keyan Yan, a PRC national. Mr. Yan entered into an option agreement with Mr. Chan and Ms. Cheung, dated November 16, 2009, or the Option Agreement, pursuant to which Mr. Yan was entitled to an exclusive right to purchase the 100% equity interest in Hongri BVI from Mr. Chan and Ms. Cheung at a cash consideration equivalent to the nominal value of the issued share capital of Hongri BVI. Hongri BVI acquired 100% of the equity interest of Roller Rome on January 4, 2010. Therefore, from January 2010 to February 2011, Hongri PRC may be considered to have been an indirect VIE of Hongri BVI through Hongri BVI s ownership of Roller Rome and through Roller Rome s contractual relationship with Hongri PRC, and Hongri BVI was able to consolidate the revenues of Hongri PRC into its financial statements. In order to rationalize our corporate structure, in February 2011, Hongri PRC was restructured as a wholly-owned subsidiary of Vast Billion, a Hong Kong company and a wholly-owned subsidiary of Hongri BVI, as described below. Therefore, the VIE structure was terminated in February 2011 because under PRC law, Vast Billion was permitted to be a direct equity owner of Hongri PRC at that point. Vast Billion was organized by Mr. Sun Keung Chan on November 25, 2010. On December 28, 2010, Vast Billion, Ms. Bizhen Chen and Mr. Keyan Yan entered into a share purchase agreement whereby Vast Billion acquired 100% of the equity of Hongri PRC from Ms. Chen and Mr. Yan. On February 15, 2011, Hongri PRC obtained the approval to become a PRC wholly-foreign-owned enterprise, or WFOE. In February 2011, Hongri BVI acquired from Mr. Chan 100% of the issued shares of Vast Billion. As a result, Hongri PRC became the indirect wholly-owned subsidiary of Hongri BVI. Since no Chinese nationals have stock ownership of either Hongri BVI or Vast Billion, we have not been required to obtain any regulatory approvals from the authorities in China with respect to our corporate structure other than the approval obtained on February 15, 2011. The information in this preliminary prospectus is not complete and may be changed. We may not sell these until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. PROSPECTUS Subject to completion, dated November 8, 2011 3,667,988 Shares Common Stock, $0.0001 par value ____________________________ This prospectus relates to 3,667,988 shares of common stock of KBS International Holdings Inc. that may be sold from time to time by the selling stockholders named in this prospectus. We will not receive any proceeds from the sales by the selling stockholders. Our common stock is not listed on any principal market, nor is it quoted on any securities quotation system. Therefore, there is no reported sales price per share of our common stock as of the date of this prospectus. We intend to apply to list our shares of common stock on a national stock exchange. The selling stockholders will sell our shares at prevailing market prices or at privately negotiated prices. Investing in our common stock involves a high degree of risk. See Risk Factors beginning on page 7 to read about factors you should consider before buying shares of our common stock. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The date of this Prospectus is , 2011. Mr. Keyan Yan entered into an Amended and Restated Option Agreement with Mr. Chan and Ms. Cheung, dated March 9, 2011, or the Amended and Restated Option Agreement, which amended and restated the Option Agreement. Pursuant to the Amended and Restated Option Agreement, Mr. Chan and Ms. Cheung granted an option to Mr. Yan to acquire all of the shares of our common stock that Mr. Chan acquired in connection with the reverse acquisition, for an aggregate exercise price of RMB 131,409 (approximately $20,000). Mr. Yan may exercise this option during the period commencing on the date which is 6 months after the date on which the first registration statement is filed by us under the Securities Act, and ending on the 5th anniversary thereof. France Cock, a Hong Kong corporation, was established on September 21, 2005 by Mr. Keyan Yan for the purpose of holding trademarks and patents. Hongri BVI acquired 100% equity interest of France Cock on January 4, 2010 at the then issued and paid up capital and it became a wholly-owned subsidiary of Hongri BVI. On March 16, 2011, Hongri PRC established a wholly owned subsidiary, Anhui Kai Xin, as a PRC company. Its registered capital is RMB 1 million and is fully paid. All of our business operations are conducted through our Chinese operating subsidiaries, Hongri PRC and Anhui Kai Xin. The chart below presents our corporate structure as of the date of this prospectus: Corporate Information The address of our principal executive office is Xin Fengge Building, Baogaiyupu Industrial District, Shishi City, Fujian Province 362700, People s Republic of China, and our telephone number is (86) 595 8889 6198. We maintain a website at www.kbschina.com. Information available on our website is not incorporated by reference in and is not deemed a part of this prospectus. THE OFFERING Common stock offered by selling stockholders 3,667,988 shares. This number represents 18.35% of our current outstanding common stock (based on 19,993,300 shares of common stock outstanding as of November 7, 2011) Common stock outstanding before the offering 19,993,300 shares. Common stock outstanding after the offering 19,993,300 shares. Proceeds to us We will not receive proceeds from the resale of shares by the selling stockholders. SUMMARY CONSOLIDATED FINANCIAL INFORMATION The following table summarizes selected financial data regarding our business and should be read in conjunction with our financial statements and related notes contained elsewhere in this prospectus and the information under Management s Discussion and Analysis of Financial Condition and Results of Operations. The selected consolidated statement of operations data for the years ended December 31, 2010 and 2009 and the selected balance sheet data as of December 31, 2010 are derived from the audited consolidated financial statements of Hongri BVI included elsewhere in this prospectus. The selected balance sheet data as of December 31, 2009 are derived from the unaudited consolidated financial statements of Hongri BVI not included in this prospectus. We derived our selected consolidated financial data as of June 30, 2011 and for the six months ended June 30, 2011 and 2010 from the unaudited consolidated financial statements of Hongri BVI included elsewhere in this prospectus, which include all adjustments, consisting of normal recurring adjustments, that our management considers necessary for a fair presentation of our financial position and results of operations as of the dates and for the periods presented. The audited consolidated financial statements of Hongri BVI for the fiscal years ended December 31, 2010 and 2009 and our unaudited consolidated financial statements for the six months ended June 30, 2011 and 2010 are prepared and presented in accordance with generally accepted accounting principles in the United States, or U.S. GAAP. The selected financial data information is only a summary and should be read in conjunction with the historical consolidated financial statements and related notes contained elsewhere herein. The financial statements contained elsewhere fully represent our financial condition and operations; however, they are not indicative of our future performance. Year Ended December Six Months Ended June 31, 30, 2010 2009 2011 2010 Statements of Operations Data (unaudited) (unaudited) Net sales $ 38,452,995 $ 28,195,458 $ 27,250,820 $ 16,037,260 Cost of sales (20,752,159 ) (15,666,468 ) (14,208,260 ) (8,857,895 ) Gross profit 17,700,836 12,528,990 13,042,560 7,179,365 Administrative expenses (1,796,229 ) (1,459,212 ) (1,201,879 ) (812,813 ) Selling expenses (2,460,414 ) (1,066,432 ) (2,958,309 ) (564,661 ) Research and development expenses (105 ) (10,020 ) (231 ) (105 ) Income from operations 13,444,088 9,993,326 8,882,141 5,801,786 Total other income 45,333 9,909 151,482 38,973 Income before income taxes 13,489,422 10,003,235 9,033,623 5,840,759 Provision for income taxes (1,331,448 ) (936,651 ) (868,300 ) (567,306 ) Net income $ 12,157,974 $ 9,066,584 $ 8,165,323 $ 5,273,453 Earnings per share - basic and diluted $ 0.76 $ 0.57 $ 0.45 $ 0.33 Weighted average shares outstanding - basic and diluted 15,936,820 15,936,820 18,166,577 15,936,820 PROSPECTUS SUMMARY The items in the following summary are described in more detail later in this prospectus. This summary provides an overview of selected information and does not contain all the information you should consider. Therefore, you should also read the
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+This summary only highlights the more detailed information appearing elsewhere in this prospectus. As this is a summary, it does not contain all of the information that you should consider in making an investment decision. You should read this entire prospectus carefully, including the information under Risk Factors and our financial statements and the related notes included elsewhere in this prospectus, before investing. Unless otherwise stated in this prospectus, references to: we, us, company or our company refer to Global Eagle Acquisition Corp.; public shares refer to shares of our common stock sold as part of the units in this offering (whether they are purchased in this offering or thereafter in the open market); public stockholders refer to the holders of our public shares, including our initial stockholders and management team to the extent our initial stockholders and/or members of our management team purchase public shares, provided that each initial stockholder s and member of management s status as a public stockholder shall only exist with respect to such public shares; our management or our management team refer to our officers and directors; our sponsor refer to Global Eagle Acquisition LLC, a Delaware limited liability company; our founder shares refer to shares of our common stock initially purchased by our sponsor in a private placement prior to this offering, and all information concerning the number of founder shares or information derived from the number of founder shares gives effect to a dividend of 302,979 shares of common stock issued to our sponsor subsequent to the initial purchase of common stock by our sponsor; and our initial stockholders refer to holders of our founder shares prior to this offering. Unless we tell you otherwise, the information in this prospectus assumes that the underwriters will not exercise their over-allotment option. General We are a newly organized blank check company formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses, which we refer to throughout this prospectus as our initial business combination. We have not identified any acquisition target and we have not, nor has anyone on our behalf, initiated any substantive discussions, directly or indirectly, with respect to identifying any acquisition target. We will seek to capitalize on the substantial deal sourcing, investing and operating expertise of our management team to indentify, acquire and operate media or entertainment businesses, including providers of content, with high growth potential in the United States or internationally, although we may pursue acquisition opportunities in other sectors. Our amended and restated certificate of incorporation prohibits us from effectuating a business combination with another blank check company or similar company with nominal operations. Our Management Team Our chairman and chief executive officer, Harry E. Sloan, our president, Jeff Sagansky, and other members of our management team have extensive operating and deal-making experience with prominent global media companies. Mr. Sloan was appointed chairman and chief executive officer of Metro-Goldwyn-Mayer Studios Inc., or MGM, by a consortium comprised of private equity investors, Comcast Corporation and Sony Corporation of America, one year after they agreed to acquire MGM through a leveraged buyout in September 2004. He served as chairman and chief executive officer from October 2005 to August 2009, and thereafter continued as non-executive chairman until January 2011. During his tenure, Mr. Sloan revived key MGM movie franchises, including James Bond, Rocky and The Pink Panther, restarted and rebuilt MGM s theatrical and television distribution and marketing units and launched numerous MGM television channels in the United States and TABLE OF CONTENTS The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED MAY 10, 2011 PRELIMINARY PROSPECTUS $175,000,000 GLOBAL EAGLE ACQUISITION CORP. 17,500,000 Units Global Eagle Acquisition Corp. is a newly organized blank check company formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses, which we refer to throughout this prospectus as our initial business combination. We have not identified any acquisition target and we have not, nor has anyone on our behalf, initiated any substantive discussions, directly or indirectly, with respect to identifying any acquisition target. We will provide our stockholders with the opportunity to redeem their shares of our common stock upon the completion of our initial business combination at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account described herein, including interest but net of franchise and income taxes payable, divided by the number of then outstanding shares of common stock that were sold as part of the units in this offering, which we refer to as our public shares, subject to the limitations described herein. If we do not complete a business combination within 21 months from the closing of this offering, we will redeem 100% of the public shares at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest but net of franchise and income taxes payable (less up to $100,000 of such net interest that may be released to us to pay dissolution expenses), divided by the number of then outstanding public shares, subject to applicable law and as further described herein. This is an initial public offering of our securities. We are offering 17,500,000 units. Each unit has an offering price of $10.00 and consists of one share of our common stock and one warrant. Each warrant entitles the holder to purchase one share of our common stock at a price of $11.50, subject to adjustment as described in this prospectus. The warrants will become exercisable on the later of 30 days after the completion of our initial business combination or 12 months from the closing of this offering, and will expire five years after the completion of our initial business combination or earlier upon redemption or liquidation, as described in this prospectus. We have also granted the underwriters a 45-day option to purchase up to an additional 2,625,000 units to cover over-allotments, if any. Currently, there is no public market for our units, common stock or warrants. Our units have been approved for listing on the Nasdaq Capital Market, or Nasdaq, under the symbol EAGLU on or promptly after the date of this prospectus, subject to official notice of issuance. The common stock and warrants comprising the units will begin separate trading on the 52nd day following the date of this prospectus unless Citigroup Global Markets Inc. informs us of its decision to allow earlier separate trading, subject to our filing a Current Report on Form 8-K with the Securities and Exchange Commission, or SEC, containing an audited balance sheet reflecting our receipt of the gross proceeds of this offering and issuing a press release announcing when such separate trading will begin. Once the securities comprising the units begin separate trading, we expect that the common stock and warrants will be listed on Nasdaq under the symbols EAGL and EAGLW, respectively. Investing in our securities involves a high degree of risk. See Risk Factors beginning on page 22 for a discussion of information that should be considered in connection with an investment in our securities. Neither the SEC nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. Per Unit Total Public offering price $ 10.00 $ 175,000,000 Underwriting discounts and commissions 1 $ 0.55 $ 9,625,000 Proceeds, before expenses, to us $ 9.45 $ 165,375,000 (1) Includes $0.35 per unit, or approximately $6,125,000 in the aggregate payable to the underwriters for deferred underwriting commissions to be placed in a trust account located in the United States as described herein. If the aggregate gross proceeds to us from this offering (including pursuant to the exercise of the underwriters overallotment option) exceed $200,000,000, the aggregate underwriting commissions will be increased to $0.60 per unit, or $12,075,000 in the aggregate assuming the underwriters over-allotment option is exercised in full, with $0.40 per unit, or $8,050,000 in the aggregate being deferred and placed into a trust account located in the United States. The deferred commissions will be released to the underwriters only on completion of an initial business combination, as described in this prospectus. See also Underwriting beginning on page 121. The underwriters are offering the units on a firm commitment basis. The underwriters expect to deliver the units to purchasers on or about , 2011. Sole Book-Running Manager Citi Deutsche Bank Securities Macquarie Capital , 2011 TABLE OF CONTENTS internationally. He currently is an outside consultant to MGM pursuant to a consulting agreement which expires in October 2011. Prior to MGM, Mr. Sloan founded and operated SBS Broadcasting, S.A., or SBS, serving as chairman and chief executive officer from 1990 until August 2001 and then executive chairman until October 2005. Beginning with a personal investment of approximately $5,000,000, Mr. Sloan transformed SBS, through a series of acquisitions and organic growth, into a leading pan-European broadcaster, with, as of 2005, 16 television stations, 21 premium pay channels and 11 radio networks, reaching 100 million people. Mr. Sloan oversaw the initial public offering of SBS in 1993 and its eventual sale to private investors in 2005 for $2.5 billion. Prior to founding SBS, Mr. Sloan served as co-chairman of New World Entertainment Ltd., or New World, an independent motion picture and television production company. Mr. Sloan led a group that originally purchased New World in 1983 for $2,000,000. Mr. Sloan extended the company s business into television production, ultimately growing New World into one of the largest producers of U.S. primetime television. Mr. Sloan led a number of transactions while at New World, including New World s initial public offering in 1985, its acquisition of Marvel Entertainment Group, Inc., in 1986, and New World s sale to private investors in 1989 for $260,000,000. Jeff Sagansky brings 30 years of senior-level media and entertainment industry management experience. Mr. Sagansky currently serves as co-founder and chairman of Winchester Capital Management LLC, a private motion picture and television finance company. Mr. Sagansky was formerly chief executive officer and then vice chairman of Paxson Communications Corporation, or Pax, from 1998 to 2003, where he launched the PAX TV program network in 1998. Under his leadership, PAX TV became a highly rated family-friendly television network with distribution growing from 60% of U.S. television households to almost 90% in only four years. In addition, Mr. Sagansky drove substantial improvement in the network s financial performance with compounded annual revenue growth of 24% and compounded annual gross income growth of 30% from 1998 to 2002. Prior to joining Pax, Mr. Sagansky was co-president of Sony Pictures Entertainment, or SPE, from 1996 to 1998 where he was responsible for SPE s strategic planning and worldwide television operations. While at SPE, he spearheaded SPE s acquisition, in partnership with Liberty Media Corporation and other investors, of Telemundo Network Group, LLC, or Telemundo. The transaction generated significant returns for SPE as Telemundo was sold to the National Broadcasting Company, Inc., for over six times its original investment less than three years later. Previously, as executive vice president of Sony Corporation of America, or SCA, Mr. Sagansky oversaw the 1997 merger of SCA s Loews Theaters unit with the Cineplex Odeon Corporation to create one of the world s largest movie theater companies, and the highly successful U.S. launch of the Sony Playstation video game console. Prior to joining SCA, Mr. Sagansky was president of CBS Entertainment from 1990 to 1994, where he engineered CBS s ratings rise from third to first place in eighteen months. Mr. Sagansky previously served as president of production and then president of TriStar Pictures, where he developed and oversaw production of a wide variety of successful films. Initial Business Combination Our initial business combination must occur with one or more target businesses that together have a fair market value of at least 80% of the assets held in the trust account (excluding the deferred underwriting commissions and taxes payable on the income earned on the trust account) at the time of the agreement to enter into the initial business combination. The fair market value of the target or targets will be determined by our board of directors based upon one or more standards generally accepted by the financial community, such as discounted cash flow valuation or value of comparable businesses. If our board is not able independently to determine the fair market value of the target business or businesses, we will obtain an opinion from an independent investment banking firm that is a member of the Financial Industry Regulatory Authority, or FINRA, with respect to the satisfaction of such criteria. We anticipate structuring a business combination to acquire 100% of the equity interests or assets of the target business or businesses. We may, however, structure a business combination to acquire less than 100% of such interests or assets of the target business, but we will only complete such business combination if we acquire 50% or more of the outstanding voting securities of the target or are otherwise not required to register as an investment company under the Investment Company Act of 1940, as amended, or the Investment Company Act. Even if we own 50% or more of the voting securities of the target, our stockholders prior to the business combination may collectively own a minority interest in the post business combination company, depending on valuations ascribed to the target and us in the business combination transaction. If we acquire TABLE OF CONTENTS less than 100% of the equity interests or assets of a target business or businesses, the portion of such business or businesses that we acquire is what will be valued for purposes of the 80% of net assets test. Our management team will focus on increasing stockholder value in our initial business combination. Consistent with this strategy, we have identified the following general guidelines that we believe are important in evaluating prospective target businesses. We will use these guidelines in evaluating acquisition opportunities, but we may decide to enter into a business combination with a target business that does not meet these guidelines. Media and Entertainment Industry Targets. We will seek to acquire one or more businesses involved in the media or entertainment industries, including providers of content. We believe our management s significant operating and deal-making experience and relationships with companies in this space will give us a number of competitive advantages and will present us with a substantial number of potential business targets. The factors we will consider include growth prospects, competitive dynamics, opportunities for consolidation, need for capital investment and barriers to entry. We will analyze the strengths and weaknesses of target businesses relative to their competitors. We will seek to acquire one or more businesses that demonstrate advantages when compared to their competitors, which may help to protect their market position and profitability. High-Growth Markets. We will seek out opportunities in faster-growing segments of developed markets and emerging international markets. Our management has extensive experience operating media businesses and leading transactions in international markets. We will focus on assets that currently are undervalued or inefficiently managed, which we believe may be more likely to exist internationally, where our management is well-positioned to unlock their value. Business with Revenue and Earnings Growth Potential. We will seek to acquire one or more businesses that have multiple, diverse potential drivers of revenue and earnings growth, including but not limited to a combination of development, production, digital and distribution capabilities. Companies with Potential for Strong Free Cash Flow Generation. We will seek to acquire one or more businesses that have the potential to generate strong and stable free cash flow. These general guidelines are not intended to be exhaustive. Any evaluation relating to the merits of a particular initial business combination may be based, to the extent relevant, on these general guidelines as well as other considerations, factors and criteria that our management may deem relevant. In addition, although we intend to focus on identifying business combination candidates in the media or entertainment sectors and we will not initially actively seek to identify business combination candidates in other sectors, we will consider a business combination outside of the media or entertainment industries if a business combination candidate is presented to us and we determine that such candidate offers an attractive investment opportunity for our company or we are unable to identify a suitable candidate in the media or entertainment industries after having expended a reasonable amount of time and effort in an attempt to do so. In evaluating a prospective target business, we expect to conduct an extensive due diligence review which will encompass, among other things, meetings with incumbent management and employees, document reviews, interviews of customers and suppliers, inspections of facilities, as well as review of financial and other information which will be made available to us. Sourcing of Potential Acquisition Targets Over the course of their careers, the members of our management team have developed a broad network of contacts and corporate relationships around the world. This network has been developed and strengthened through our management team sourcing, acquiring and financing businesses, the reputation of our management team for integrity and fair dealing with sellers, financing sources and target management teams and the experience of our management team in executing transactions under varying economic and financial market conditions. In addition, members of our management team have developed contacts from serving on the boards of directors of prominent media companies. For example, Mr. Sloan was appointed to serve on the board of Promotora de Informaciones, S.A., or PRISA, Spain s largest media conglomerate, after its 2010 business TABLE OF CONTENTS combination with Liberty Acquisition Corp. (which was a blank check company), and he has been a director of ZeniMax Media Inc., an independent producer of interactive gaming and web content, since 1999. Previously, Mr. Sloan held directorships at Lions Gate Entertainment Corp., an independent motion picture and television production company and ProSieben Sat.1 Media AG, a European media conglomerate which acquired SBS in 2007. Mr. Sagansky serves on the board of Scripps Networks Interactive, Inc., a publicly traded lifestyle media company. He previously served as non-executive chairman of the board of RHI Entertainment, Inc., a producer of original made-for-television movies and miniseries and also previously served on the boards of American Media Inc., an owner and operator of celebrity and health & fitness media publications, and Lions Gate Entertainment. In his capacity as an active private investor, Mr. Sagansky maintains board positions on a number of private media and entertainment companies. This network has provided our management team with a flow of referrals that has resulted in numerous transactions which were proprietary or where a limited group of investors were invited to participate in the sale process. We believe that the network of contacts and relationships of our management team will provide us with an important source of investment opportunities. In addition, we anticipate that target business candidates will be brought to our attention from various unaffiliated sources, including investment market participants, private equity funds and large business enterprises seeking to divest non-core assets or divisions. We are not prohibited from pursuing an initial business combination with an acquisition target that is affiliated with our sponsor, officers or directors or making the acquisition through a joint venture or other form of shared ownership with our sponsor, officers or directors. In the event we seek to complete an initial business combination with an acquisition target that is affiliated with our sponsor, officers or directors, we, or a committee of independent directors, would obtain an opinion from an independent investment banking firm that is a member of FINRA that such an initial business combination is fair to our company from a financial point of view. We are not required to obtain such an opinion in any other context. In order to minimize potential conflicts of interest that may arise from multiple corporate affiliations, each of our officers has agreed, pursuant to a written agreement with us, that until the earliest of our initial business combination, our redemption of 100% of our public shares if we do not complete our initial business combination within 21 months from the closing of this offering, or such time as he ceases to be an officer, to present to us for our consideration, prior to presentation to any other entity, any business combination opportunity with a target business having an enterprise value of $100,000,000 or more, subject to any pre-existing fiduciary or contractual obligations he might have currently or in the future in respect of the companies to which he currently has fiduciary duties or contractual obligations. As more fully discussed in Management Conflicts of Interest, if any of our officers becomes aware of a business combination opportunity that falls within the line of business of any entity to which he has pre-existing fiduciary or contractual obligations, he may be required to present such business combination opportunity to such entity prior to presenting such business combination opportunity to us. All of our officers currently have certain relevant fiduciary duties or contractual obligations that may take priority over their duties to us. In addition, our officers have agreed not to participate in the formation of, or become an officer or director of, any blank check company until we have entered into a definitive agreement regarding our initial business combination or we have failed to complete our initial business combination within the prescribed time frame. Executive Offices Our executive offices are located at 10900 Wilshire Blvd., Suite 1500, Los Angeles, CA, 90024, and our telephone number is (310) 209-7280. TABLE OF CONTENTS The Offering In making your decision on whether to invest in our securities, you should take into account not only the backgrounds of the members of our management team, but also the special risks we face as a blank check company and the fact that this offering is not being conducted in compliance with Rule 419 promulgated under the Securities Act of 1933, as amended, or the Securities Act. You will not be entitled to protections normally afforded to investors in Rule 419 blank check offerings. You should carefully consider these and the other risks set forth in the section below entitled Risk Factors beginning on page 22 of this prospectus. Securities offered 17,500,000 units, at $10.00 per unit, each unit consisting of: one share of common stock; and one warrant. Nasdaq symbols Units: EAGLU Common Stock: EAGL Warrants: EAGLW Trading commencement and separation of common stock and warrants The units will begin trading on or promptly after the date of this prospectus. The common stock and warrants comprising the units will begin separate trading on the 52nd day following the date of this prospectus unless Citigroup Global Markets Inc. informs us of its decision to allow earlier separate trading, subject to our having filed the Current Report on Form 8-K described below and having issued a press release announcing when such separate trading will begin. Separate trading of the common stock and warrants is prohibited until we have filed a Current Report on Form 8-K In no event will the common stock and warrants be traded separately until we have filed a Current Report on Form 8-K with the SEC containing an audited balance sheet reflecting our receipt of the gross proceeds at the closing of this offering. We will file the Current Report on Form 8-K promptly after the closing of this offering, which is anticipated to take place three business days from the date of this prospectus. If the underwriters over-allotment option is exercised following the initial filing of such Current Report on Form 8-K, a second or amended Current Report on Form 8-K will be filed to provide updated financial information to reflect the exercise of the underwriters over-allotment option. Units: Number outstanding before this offering 0 Number outstanding after this offering 17,500,000 Common stock: Number outstanding before this offering 4,417,683 1 2 Number outstanding after this offering 21,341,463 2 3 (1) This number includes an aggregate of 576,220 founder shares held by our initial stockholders that are subject to forfeiture to the extent that the over-allotment option is not exercised by the underwriters. TABLE OF CONTENTS (2) This number includes a portion of the founder shares, which we refer to as the founder earnout shares, in an amount equal to 4.0% of our issued and outstanding shares after this offering and the expiration of the underwriters over-allotment option that are subject to forfeiture by our initial stockholders on the third anniversary of the closing of our initial business combination unless following our initial business combination (i) the last sales price of our stock equals or exceeds $13.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period or (ii) we complete a liquidation, merger, stock exchange or other similar transaction that results in all of our stockholders having the right to exchange their shares of common stock for consideration in cash, securities or other property which equals or exceeds $13.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like). (3) Assumes no exercise of the underwriters over-allotment option and the resulting forfeiture of 576,220 founder shares. Warrants: Number of sponsor warrants to be sold in a private placement simultaneously with this offering 7,000,000 Number of warrants to be outstanding after this offering and the private placement 24,500,000 Exercisability Each warrant offered in this offering is exercisable to purchase one share of our common stock. Exercise price $11.50 per share, subject to adjustments as described herein. Exercise period The warrants will become exercisable on the later of: 30 days after the completion of our initial business combination, or 12 months from the closing of this offering; provided in each case that we have an effective registration statement under the Securities Act covering the shares of common stock issuable upon exercise of the warrants and a current prospectus relating to them is available (or we are required to permit holders to exercise their warrants on a cashless basis under the circumstances specified in the warrant agreement). We are not registering the shares of common stock issuable upon exercise of the warrants at this time. However, we have agreed to use our best efforts to file and have an effective registration statement covering the shares of common stock issuable upon exercise of the warrants, to maintain a current prospectus relating to those shares of common stock until the warrants expire or are redeemed. The warrants will expire at 5:00 p.m., New York time, five years after the completion of our initial business combination or earlier upon redemption or liquidation. On the exercise of any warrant, the warrant exercise price will be paid directly to us and not placed in the trust account. TABLE OF CONTENTS Redemption of warrants Once the warrants become exercisable, we may redeem the outstanding warrants (except as described below with respect to the sponsor warrants): in whole and not in part; at a price of $0.01 per warrant; upon a minimum of 30 days prior written notice of redemption, which we refer to as the 30-day redemption period; and if, and only if, the last sale price of our common stock equals or exceeds $17.50 per share for any 20 trading days within a 30 trading day period ending on the third trading day prior to the date on which we send the notice of redemption to the warrant holders. We will not redeem the warrants unless an effective registration statement under the Securities Act covering the shares of common stock issuable upon exercise of the warrants is effective and a current prospectus relating to those shares of common stock is available throughout the 30-day redemption period, except if the warrants may be exercised on a cashless basis and such cashless exercise is exempt from registration under the Securities Act. If and when the warrants become redeemable by us, we may exercise our redemption right even if we are unable to register or qualify the underlying securities for sale under all applicable state securities laws. If we call the warrants for redemption as described above, our management will have the option to require all holders that wish to exercise warrants to do so on a cashless basis. In such event, each holder would pay the exercise price by surrendering the warrants for that number of shares of common stock equal to the quotient obtained by dividing (x) the product of the number of shares of common stock underlying the warrants, multiplied by the difference between the exercise price of the warrants and the fair market value (defined below) by (y) the fair market value. The fair market value shall mean the average reported last sale price of the common stock for the 10 trading days ending on the third trading day prior to the date on which we send the notice of redemption to the warrant holders. None of the sponsor warrants will be redeemable by us so long as they are held by our sponsor or its permitted transferees. Founder shares In February 2011, our sponsor purchased an aggregate of 4,417,683 founder shares for an aggregate purchase price of $25,000, or approximately $0.01 per share. Subsequently, in March 2011, our sponsor transferred an aggregate of 44,176 founder shares to Dennis A. Miller TABLE OF CONTENTS and James M. McNamara, each of whom has agreed to serve on our board of directors upon the closing of this offering. The founder shares held by our initial stockholders include an aggregate of 576,220 shares subject to forfeiture to the extent that the underwriters over-allotment option is not exercised in full, so that our initial stockholders will collectively own 18.0% of our issued and outstanding shares after this offering (assuming they do not purchase any units in this offering and they are not required to forfeit their founder earnout shares, as described in this prospectus). In addition, the founder earnout shares (equal to 4.0% of our issued and outstanding shares after this offering and the expiration of the underwriters over-allotment option) will be subject to forfeiture by our initial stockholders on the third anniversary of the closing of our initial business combination unless following our initial business combination (i) the last sales price of our stock equals or exceeds $13.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period or (ii) we complete a liquidation, merger, stock exchange or other similar transaction that results in all of our stockholders having the right to exchange their shares of common stock for consideration in cash, securities or other property which equals or exceeds $13.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like). The founder shares are identical to the shares of common stock included in the units being sold in this offering, except that: the founder shares are subject to certain transfer restrictions, as described in more detail below, and our initial stockholders have agreed (i) to waive their redemption rights with respect to their founder shares and public shares in connection with the completion of a business combination and (ii) to waive their redemption rights with respect to their founder shares if we fail to complete a business combination within the prescribed time frame (although they will be entitled to redemption rights with respect to any public shares they hold if we fail to complete a business combination within the prescribed time frame). If we submit our initial business combination to our public stockholders for a vote, our initial stockholders have agreed to vote their founder shares in accordance with the majority of the votes cast by the public TABLE OF CONTENTS stockholders and to vote any public shares purchased during or after this offering in favor of our initial business combination. Sponsor warrants Our sponsor has committed, pursuant to a written agreement, to purchase an aggregate of 7,000,000 sponsor warrants, each exercisable to purchase one share of our common stock at $11.50 per share, at a price of $0.75 per warrant ($5,250,000 in the aggregate) in a private placement that will occur simultaneously with the closing of this offering. The purchase price of the sponsor warrants will be added to the proceeds from this offering to be held in the trust account. If we do not complete a business combination within the prescribed time frame, the proceeds of the sale of the sponsor warrants will used to fund the redemption of our public shares (subject to the requirements of applicable law), and the sponsor warrants will expire worthless. The sponsor warrants will be non-redeemable so long as they are held by our sponsor or its permitted transferees (except as described below under Principal Stockholders Transfers of Founder Shares and Sponsor Warrants ). If the sponsor warrants are held by holders other than our sponsor or its permitted transferees, the sponsor warrants will be redeemable by us and exercisable by the holders on the same basis as the warrants included in the units being sold in this offering. Escrow of founder shares and sponsor warrants On the date of this prospectus, the founder shares and sponsor warrants will be placed into a segregated escrow account maintained by American Stock Transfer & Trust Company, LLC acting as escrow agent. While in escrow, such securities will not be transferable, other than to permitted transferees as described below under Principal Stockholders Transfers of Founder Shares and Sponsor Warrants . The founder shares will be released from escrow on the earlier of (x) one year after the completion of our initial business combination or earlier if, subsequent to our business combination, the last sales price of our common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after our initial business combination, or (y) the date on which we complete a liquidation, merger, stock exchange or other similar transaction after our initial business combination that results in all of our stockholders having the right to exchange their shares of common stock for cash, securities or other property. Notwithstanding the foregoing, the founder earnout shares (equal to 4.0% of our issued and outstanding shares after TABLE OF CONTENTS this offering and the expiration of the underwriters over-allotment option) will not be released from escrow unless they no longer are subject to forfeiture, as described herein. The sponsor warrants will not be released from escrow until 30 days following the completion of our initial business combination. Proceeds to be held in trust account $175,000,000, or approximately $10.00 per unit of the proceeds of this offering and the proceeds of the private placement of the sponsor warrants ($200,725,000, or approximately $9.97 per unit, if the underwriters over-allotment option is exercised in full) will be placed in a segregated trust account located in the United States at Citibank, N.A. with American Stock Transfer & Trust Company, LLC acting as trustee. These proceeds include approximately $6,125,000 (or approximately $8,050,000 if the underwriters over-allotment option is exercised in full) in deferred underwriting commissions. If we increase the size of the offering, the per-share amount payable to our public stockholders if we fail to complete our initial business combination within the prescribed time frame (or if the public stockholders exercise their redemption rights in connection with the completion of our initial business combination) will be reduced because the portion of the trust account attributable to the sales proceeds of the sponsor warrants will be allocated pro rata among a greater number of public shares. Assuming a 15% increase in the size of this offering, the per-share redemption or liquidation amount could decrease by as much as approximately $0.03. We may increase the initial amount held in the trust account from approximately $10.00 per unit prior to the effectiveness of the registration statement of which this prospectus forms a part. In such case, the increase would be funded by an increase in the amount of the deferral of the underwriting commissions payable in connection with this offering, an increase in the number of sponsor warrants to be purchased by our sponsor at a price of $0.75 per warrant and/or a reduction from $1,000,000 of the amount initially available to us for working capital that is not held in the trust account. Public stockholders would own a smaller percentage of our outstanding common stock on a fully diluted basis to the extent that our sponsor purchases additional warrants. We do not intend to reduce the initial amount to be held in the trust account. Our amended and restated certificate of incorporation provides that, except for a portion of the interest income that may be released to us to pay any income or franchise taxes and to fund our working capital requirements, and any amounts necessary to purchase up to 50% of our TABLE OF CONTENTS public shares if we seek stockholder approval of our business combination, as discussed below, none of the funds held in the trust account will be released from the trust account until the earlier of (i) the completion of our initial business combination or (ii) the redemption of 100% of our public shares if we do not complete a business combination within the prescribed time frame (subject to the requirements of law). The proceeds deposited in the trust account could become subject to the claims of our creditors, if any, which could have priority over the claims of our public stockholders. Payment of expenses and funding sources Unless and until we complete our initial business combination, no proceeds held in the trust account, other than up to $1,750,000, subject to adjustment as described below, of the interest earned on the trust account (net of franchise and income taxes payable), and any amounts necessary to purchase up to 50% of our public shares if we seek stockholder approval of our business combination, will be available for our use, and we may pay our expenses only from: such interest; and the net proceeds of this offering not held in the trust account, which will be $1,000,000 in working capital after the payment of approximately $750,000 in expenses relating to this offering. If the underwriters exercise their over-allotment option or the size of this offering is increased, the maximum amount of interest income we may withdraw from the trust account will proportionately increase. In addition, if the size of this offering is decreased, the maximum amount of interest income we may withdraw from the trust account will proportionately decrease. Conditions to completing our initial business combination There is no limitation on our ability to raise funds privately or through loans in connection with our initial business combination. Our initial business combination must occur with one or more target businesses that together have a fair market value of at least 80% of our assets held in the trust account (excluding the deferred underwriting commissions and taxes payable on the income earned on the trust account) at the time of the agreement to enter into the initial business combination. The fair market value of the target or targets will be determined by our board of directors based upon one or more standards generally accepted by the financial community, such as discounted cash flow valuation or value of comparable businesses. If our board is not able independently to determine the fair market value of the target business or businesses, we will obtain an opinion from an independent investment banking firm that is a TABLE OF CONTENTS member of FINRA with respect to the satisfaction of such criteria. We will complete our initial business combination only if we acquire 50% or more of the outstanding voting securities of the target or are otherwise not required to register as an investment company under the Investment Company Act. Even if we own 50% or more of the voting securities of the target, our stockholders prior to the business combination may collectively own a minority interest in the post business combination company, depending on valuations ascribed to the target and us in the business combination transaction. If we acquire less than 100% of the equity interests or assets of a target business or businesses, the portion of such business or businesses that we acquire is what will be valued for purposes of the 80% of net assets test. Permitted purchases of public shares by us prior to the completion of our initial business combination using amounts held in the trust account Unlike many blank check companies, if we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our business combination pursuant to the tender offer rules, prior to the completion of a business combination, our amended and restated certificate of incorporation will permit the release to us from the trust account amounts necessary to purchase up to 50% of the shares sold in this offering (8,750,000 shares, or 10,062,500 shares if the underwriters over-allotment option is exercised in full) at any time commencing after the filing of a preliminary proxy statement for our initial business combination and ending on the date of the stockholder meeting to approve the initial business combination. Purchases will be made only in open market transactions at times when we are not in possession of any material non-public information and may not be made during a restricted period under Regulation M under the Securities Exchange Act of 1934, as amended, or the Exchange Act. It is intended that these purchases will comply with Rule 10b-18 under the Exchange Act, which provides a safe harbor for purchases made under certain conditions, including with respect to the manner of sale (sales are required to be effected through one broker on a single day, subject to certain exceptions), timing (purchases are subject to certain restrictions at the beginning and end of the trading session), pricing (the purchase price may not exceed the highest independent bid or the last independent transaction price, whichever is higher) and volume of purchases (the total volume of Rule 10b-18 purchases effected by us or any affiliated purchasers effected on any single day generally must not exceed 25% of the average daily trading volume of the shares). If the conditions of Rule 10b-18, as in effect at the time we wish to make such purchases, are not satisfied, we may still make such TABLE OF CONTENTS purchases provided such purchases do not violate the anti-manipulation provisions of Section 9(a)(2) of the Exchange Act or Rule 10b-5 promulgated under the Exchange Act. Any purchases we make will be at prices (inclusive of commissions) not to exceed the per-share amount then held in the trust account (approximately $10.00 per share or approximately $9.97 per share if the underwriters over-allotment option is exercised in full). Any difference between the prices we pay and the per-share amount then held in the trust account will remain in the trust account and will be available for distribution to our remaining public stockholders upon any subsequent redemption of our public shares. We can purchase any or all of the 8,750,000 shares (10,062,500 shares if the underwriters over-allotment option is exercised in full) that we are entitled to purchase. It will be entirely in our discretion as to how many shares are purchased. Purchasing decisions will be made based on various factors, including the then current market price of our common stock and the terms of the proposed business combination. All shares purchased by us will be immediately cancelled. Such open market purchases, if any, would be conducted by us to minimize any disparity between the then current market price of our common stock and the per-share amount held in the trust account. A market price below the per-share trust amount could provide an incentive for purchasers to buy our shares after the filing of our preliminary proxy statement at a discount to the per share amount held in the trust account for the sole purpose of voting against our initial business combination and exercising redemption rights for the full per-share amount held in the trust account. Such trading activity could enable such investors to block a business combination by making it difficult for us to obtain the approval of such business combination by the vote of a majority of our outstanding shares of common stock that are voted. Other permitted purchases of public shares by us or our affiliates In addition to the permitted purchases of public shares by us prior to the completion of the initial business combination using amounts held in the trust account, as described above, if we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our business combination pursuant to the tender offer rules, we may enter into privately negotiated transactions to purchase public shares from stockholders following completion of the initial business combination with proceeds released to us from the trust account immediately following completion of the initial business combination. Our sponsor, directors, officers, advisors or their affiliates may also purchase shares in privately negotiated transactions either prior to or following the completion of our initial business TABLE OF CONTENTS combination. However, neither we, nor our sponsor, directors or officers have any current commitments, plans or intentions to engage in such transactions or formulated any terms or conditions for any such transactions. If either we or they engage in such transactions, neither we nor they will make any such purchases when we or they are in possession of any material nonpublic information not disclosed to the seller or during a restricted period under Regulation M under the Exchange Act. Although neither we nor they currently anticipate paying any premium purchase price for such public shares, in the event we or they do, the payment of a premium may not be in the best interest of those stockholders not receiving any such additional consideration. In addition, the payment of a premium by us after the completion of our initial business combination may not be in the best interest of the remaining stockholders who do not redeem their shares, because such stockholders will experience a reduction in book value per share compared to the value received by stockholders that have their shares purchased by us at a premium. Nevertheless, because any payment of a premium by us will be made only from proceeds released to us from the trust account following completion of a business combination, no such payments will reduce the per share amounts available in the trust account for redemption in connection with the business combination. Except for the limitations described above on use of trust proceeds released to us prior to completing our initial business combination, there is no limit on the amount of shares that could be acquired by us or our affiliates, or the price we or they may pay, if we hold a stockholder vote. We do not currently anticipate that such purchases, if any, would constitute a tender offer subject to the tender offer rules under the Exchange Act or a going-private transaction subject to the going-private rules under the Exchange Act; however, if we determine at the time of any such purchases that the purchases are subject to such rules, we will comply with such rules. Redemption rights for public stockholders upon completion of our initial business combination We will provide our stockholders with the opportunity to redeem their shares of common stock upon the completion of our initial business combination at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest but net of franchise and income taxes payable, divided by the number of then outstanding public shares, subject to the limitations described herein. The amount in the trust account is initially anticipated to be approximately $10.00 per public share (or approximately $9.97 per public share if the underwriters over-allotment option is exercised in full), which is approximately equal to the per-unit offering price of $10.00 (approximately TABLE OF CONTENTS $9.97 if the underwriters over-allotment option is exercised in full). There will be no redemption rights upon the completion of our initial business combination with respect to our warrants. Our initial stockholders have agreed to waive their redemption rights with respect to their founder shares and any public shares they may hold in connection with the completion of a business combination. Manner of conducting redemptions Unlike many blank check companies that hold stockholder votes and conduct proxy solicitations in conjunction with their business combinations and related redemptions of public shares for cash upon completion of such initial business combinations even when a vote is not required by law, if a stockholder vote is not required by law and we do not decide to hold a stockholder vote for business or other legal reasons, we will, pursuant to our amended and restated certificate of incorporation: conduct the redemptions pursuant to Rule 13e-4 and Regulation 14E of the Exchange Act, which regulate issuer tender offers, and file tender offer documents with the SEC prior to completing our initial business combination which contain substantially the same financial and other information about the initial business combination and the redemption rights as is required under Regulation 14A of the Exchange Act, which regulates the solicitation of proxies. In the event we conduct redemptions pursuant to the tender offer rules, our offer to redeem will remain open for at least 20 business days, in accordance with Rule 14e-1(a) under the Exchange Act, and we will not be permitted to complete our initial business combination until the expiration of the tender offer period. In addition, the tender offer will be conditioned on public shareholders not tendering more than a specified number of public shares, which number will be based on the requirement that we may not redeem public shares in an amount that would cause our net tangible assets to be less than $5,000,001 (so that we are not subject to the SEC s penny stock rules) or any greater net tangible asset or cash requirement which may be contained in the agreement relating to our initial business combination. If public stockholders tender more shares than we have offered to purchase, we will withdraw the tender offer and not complete the initial business combination. If, however, stockholder approval of the transaction is required by law, or we decide to obtain stockholder approval for business or other legal reasons, we will, pursuant to our amended and restated certificate of incorporation: conduct the redemptions in conjunction with a TABLE OF CONTENTS proxy solicitation pursuant to Regulation 14A of the Exchange Act, which regulates the solicitation of proxies, and not pursuant to the tender offer rules, and file proxy materials with the SEC. If we seek stockholder approval, we will complete our initial business combination only if a majority of the outstanding shares of common stock voted are voted in favor of the business combination. In such case, our initial stockholders have agreed to vote their founder shares in accordance with the majority of the votes cast by the public stockholders and to vote any public shares purchased during or after the offering in favor of our initial business combination. Each public stockholder may elect to redeem their public shares irrespective of whether they vote for or against the proposed transaction. Many blank check companies would not be able to complete a business combination if the holders of the company s public shares voted against a proposed business combination and elected to redeem or convert more than a specified percentage of the shares sold in such company s initial public offering, which percentage threshold has typically been between 19.99% and 39.99%. As a result, many blank check companies have been unable to complete business combinations because the amount of shares voted by their public stockholders electing conversion exceeded the maximum conversion threshold pursuant to which such company could proceed with a business combination. Since we have no specified maximum redemption threshold contained in our amended and restated certificate of incorporation, our structure is different in this respect from the structure that has been used by many blank check companies. However, in no event will we redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001 (so that we are not subject to the SEC s penny stock rules). In such case, we would not proceed with the redemption of our public shares and the related initial business combination, and instead may search for an alternate initial business combination. Limitation on redemption rights of stockholders holding 10% or more of the shares sold in this offering if we hold stockholder vote Notwithstanding the foregoing redemption rights, if we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our business combination pursuant to the tender offer rules, our amended and restated certificate of incorporation provides that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a group (as defined under Section 13 of the Exchange TABLE OF CONTENTS Act), will be restricted from redeeming its shares with respect to more than an aggregate of 10% of the shares sold in this offering. We believe this restriction will discourage stockholders from accumulating large blocks of shares, and subsequent attempts by such holders to use their ability to redeem their shares as a means to force us or our management to purchase their shares at a significant premium to the then-current market price or on other undesirable terms. Absent this provision, a public stockholder holding more than an aggregate of 10% of the shares sold in this offering could threaten to exercise its redemption rights if such holder s shares are not purchased by us or our management at a premium to the then-current market price or on other undesirable terms. By limiting our stockholders ability to redeem no more than 10% of the shares sold in this offering, we believe we will limit the ability of a small group of stockholders to unreasonably attempt to block our ability to complete a business combination, particularly in connection with a business combination with a target that requires as a closing condition that we have a minimum net worth or a certain amount of cash. However, we would not be restricting our stockholders ability to vote all of their shares for or against a business combination. Release of funds in trust account on closing of our initial business combination On the closing of our initial business combination, all amounts held in the trust account will be released to us. We will use these funds to pay amounts due to any public stockholders who exercise their redemption rights as described above under Redemption rights for public stockholders upon completion of our initial business combination and to pay the underwriters their deferred underwriting commissions. Funds released from the trust account to us can be used to pay all or a portion of the purchase price of the business or businesses we acquire in our initial business combination. If our initial business combination is paid for using stock or debt securities, or not all of the funds released from the trust account are used for payment of the purchase price in connection with our business combination, we may apply the cash released to us from the trust account that is not applied to the purchase price for general corporate purposes, including for maintenance or expansion of operations of acquired businesses, the payment of principal or interest due on indebtedness incurred in completing the initial business combination, to fund the purchase of other companies or for working capital. Redemption of public shares and distribution and liquidation if no initial business combination Our sponsor, officers and directors have agreed that we will have only 21 months from the closing of this offering to complete our initial business combination. If we do not complete a business combination within such timeframe, TABLE OF CONTENTS we will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem 100% of the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest but net of franchise and income taxes payable (less up to $100,000 of such net interest that may be released to us to pay dissolution expenses), divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders rights as stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and subject to the requirement that any refund of income taxes that were paid from the trust account which is received after such redemption shall be distributed to the former public stockholders, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject in each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. There will be no redemption rights or liquidating distributions with respect to our warrants, which will expire worthless if we do not complete a business combination within the prescribed time frame. Our initial stockholders have waived their redemption rights with respect to their founder shares if we do not complete an initial business combination within the prescribed time frame. However, if our initial stockholders, or any of our officers, directors or affiliates, acquire public shares in or after this offering, they will be entitled to redemption rights with respect to such public shares if we do not complete a business combination within the required time period. The underwriters have agreed to waive their rights to their deferred underwriting commission held in the trust account in the event we do not complete a business combination within the prescribed time frame and, in such event, such amounts will be included with the funds held in the trust account that will be available to fund the redemption of our public shares. Our sponsor, officers, directors and director nominees have agreed that they will not propose any amendment to our amended and restated certificate of incorporation that would affect the substance or timing of our obligation to redeem 100% of our public shares if we do not complete a business combination with 21 months from the closing of this offering. If, nevertheless, such an amendment is approved by our stockholders, we will provide our public stockholders with the opportunity to redeem their shares of common stock upon such approval at a per-share price, payable in cash, equal to the aggregate amount then on TABLE OF CONTENTS deposit in the trust account, including interest but net of franchise and income taxes payable, divided by the number of then outstanding public shares. Limited payments to insiders There will be no finder s fees, reimbursements or cash payments made to our sponsor, officers, directors, or our or their affiliates, for services rendered to us prior to or in connection with the completion of our initial business combination, other than the following payments, none of which will be made from the proceeds of this offering held in the trust account prior to the completion of our initial business combination (except to the extent paid out of up to $1,750,000 subject to adjustment as described herein of interest earned on the trust account that may be released to us to fund working capital requirements): Repayment of loans of up to an aggregate of $200,000 made to us by our sponsor to cover offering-related and organizational expenses; A payment of an aggregate of $10,000 per month to Roscomare Ltd., an entity owned and controlled by Mr. Sloan, our chairman and chief executive officer, for office space, secretarial and administrative services; Consulting fees payable to our chief financial officer, James A. Graf, or an entity owned or controlled by Mr. Graf, of $15,000 per month for services prior to the closing of our initial business combination; Reimbursement for any out-of-pocket expenses related to identifying, investigating and completing an initial business combination; and Repayment of loans which may be made by our sponsor or an affiliate of our sponsor or certain of our officers and directors to finance transaction costs in connection with an intended initial business combination, the terms of which have not been determined nor have any written agreements been executed with respect thereto. Our audit committee will review on a quarterly basis all payments that were made to our sponsor, officers, directors or our or their affiliates. Audit Committee We have established and will maintain an audit committee which initially will be composed of a majority of independent directors and, within one year, will be composed entirely of independent directors to, among other things, monitor compliance with the terms described above and the other terms relating to this offering. If any noncompliance is identified, then the audit committee will be charged with the responsibility to immediately take all action necessary to rectify such noncompliance or otherwise to cause compliance with the terms of this TABLE OF CONTENTS offering. For more information, see the section entitled Management Committees of the Board of Directors Audit Committee. Risks We are a newly formed company that has conducted no operations and has generated no revenues. Until we complete our initial business combination, we will have no operations and will generate no operating revenues. In making your decision whether to invest in our securities, you should take into account not only the background of our management team, but also the special risks we face as a blank check company. This offering is not being conducted in compliance with Rule 419 promulgated under the Securities Act and has certain terms and conditions that deviate from many blank check offerings. Accordingly, you will not be entitled to protections normally afforded to investors in Rule 419 blank check offerings or to investors in many other blank check companies. For additional information concerning how Rule 419 blank check offerings differ from this offering, please see Proposed Business Comparison of This Offering to Those of Blank Check Companies Subject to Rule 419. For additional information concerning how many blank check offerings differ from this offering, please see Proposed Business Comparison of This Offering to Those of Many Blank Check Companies Not Subject to Rule 419. You should carefully consider these and the other risks set forth in the section entitled Risk Factors beginning on page 22 of this prospectus. TABLE OF CONTENTS
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001512164_windgate_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001512164_windgate_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..d117358e54d7edea87d0f3b021b510bb98c068a0
--- /dev/null
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@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights some information from this prospectus, and it may not contain all the information important to making an investment decision. A potential investor should read the following summary together with the more detailed information regarding the Company and the common stock being sold in this offering, including
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001512520_westpoint_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001512520_westpoint_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..cc028701801e093a6a3b27bec3e35cb54054dec3
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@@ -0,0 +1 @@
+PROSPECTUS SUMMARY In this prospectus, we, us and our each refers to WestPoint International, Inc., a Delaware corporation, and not to its current or future subsidiaries unless the context otherwise requires or as expressly stated. The Company Background WestPoint International, Inc. was incorporated in Delaware on February 25, 2005 as WS Textile Co., Inc. In July 2005, we amended our Certificate of Incorporation to change our name to WestPoint International, Inc. WestPoint International, Inc. was a wholly-owned subsidiary of Textile Holding LLC ( Textile Holding ) through August 8, 2005. Textile Holding is a wholly-owned subsidiary of IEH. Icahn Enterprises L.P. ( IEP ) owns a 99% limited partnership interest in IEH. As of September 30, 2010, affiliates of Carl C. Icahn beneficially owned an aggregate of approximately 92.6% of the outstanding depositary units representing IEP limited partner interests. Icahn Enterprises G.P. Inc. ( IGP ) owns a 1% general partner interest in IEH. IGP is a wholly owned subsidiary of Beckton Corp. All of the outstanding capital stock of Beckton Corp. is owned by Mr. Icahn. On August 8, 2005, we and our subsidiaries completed the purchase of substantially all the assets of WestPoint Stevens Inc. and three of its subsidiaries, WestPoint Stevens Inc. I, WestPoint Stevens Stores Inc. and J.P. Stevens Enterprises, Inc. (collectively, WestPoint Stevens ) pursuant to an Asset Purchase Agreement, dated as of June 23, 2005 (the Asset Purchase Agreement ). WestPoint Stevens Inc. and several of its subsidiaries, including the subsidiaries that are parties to the Asset Purchase Agreement and J.P. Stevens & Co., Inc., which is not a party to the Asset Purchase Agreement, had filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code on June 1, 2003. The United States Bankruptcy Court for the Southern District of New York approved the Asset Purchase Agreement and the sale of the assets pursuant to Section 363 of the United States Bankruptcy Code by order entered on July 8, 2005. Before the asset purchase transaction, we did not have any business operations. As a result of the sale, we own all of the purchased assets through WestPoint Home, Inc. ( WestPoint Home ), and our other indirect wholly-owned subsidiaries and WestPoint Home is the primary operating entity for our business. Pursuant to the terms of the Asset Purchase Agreement, WestPoint Home paid to WestPoint Stevens an aggregate of $92.5 million in cash and we assumed certain liabilities of WestPoint Stevens and its subsidiaries. In addition, in accordance with the Asset Purchase Agreement, the holders of WestPoint Stevens first lien debt received 10,500,000 shares of our Common Stock. As the holder of approximately 40% of WestPoint Stevens first lien debt, Aretex, LLC, an affiliate of IEP ( Aretex ), acquired the right to 4,198,804 shares of our Common Stock and 3,748,389 subscription rights, which it assigned to Textile Holding at closing under the Asset Purchase Agreement. Textile Holding purchased, for $187 million, 5,250,000 shares of our Common Stock which we expect will represent 17.5% of our outstanding Common Stock after exercise of all subscription rights issued pursuant to the Asset Purchase Agreement. Pursuant to the Asset Purchase Agreement, the holders of WestPoint Stevens first and second lien debt received rights to subscribe for an aggregate of 14,250,002 additional shares of our Common Stock, which would represent 47.5% of our outstanding Common Stock after exercise of all subscription rights issued pursuant to the Asset Purchase Agreement, for the exercise price of $8.772 per share and an aggregate exercise price of $125 million. On August 8, 2005, Textile Holding, as assignee of Aretex, exercised 100% of the subscription rights allocated to it, resulting in its acquisition of an additional 3,748,389 shares of our Common Stock. Pursuant to an order of the Bankruptcy Court entered on December 6, 2010, Aretex received 1,952,808 additional subscription rights, which have not been exercised. In addition, under our agreement with IEH, IEH has agreed to purchase at the exercise price, through a direct or indirect subsidiary, a number of shares of our Common Stock equal to the number of shares with respect to which subscription rights are not exercised. Under the terms of the agreement pursuant to which IEH acquired our Series A-2 Preferred Stock, IEH has the right to surrender shares of Series A-2 Preferred Stock, valued at their purchase price plus accrued and unpaid dividends thereon, in lieu of paying cash to purchase these shares of Common Stock. We have been advised that to the extent IEH is required to purchase shares equal to the number of shares with respect to which subscription rights are not exercised, IEH intends to surrender shares of Series A-2 Preferred Stock in lieu of paying cash TABLE OF CONTENTS to purchase the shares. As a result, IEH may acquire beneficial ownership of up to an additional 35% of our Common Stock at a cost of approximately $92 million (paid by surrender of shares of Series A-2 Preferred Stock) if no other holders of subscription rights exercise any of their subscription rights. We were defendants in two significant lawsuits. As discussed above, IEP had acquired ownership of a majority of the Common Stock through a July 2005 Sale Order entered by the United States Bankruptcy Court for the Southern District of New York. Under that Sale Order, we acquired substantially all of the assets of WestPoint Stevens, Inc. The losing bidders at the Bankruptcy Court auction that led to the Sale Order challenged the Sale Order. In November 2005, the United States District Court for the Southern District of New York modified portions of the Sale Order in a manner that could have reduced IEP s ownership of our stock below 50%. In its March 26, 2010 decision, the Second Circuit held that IEP is entitled to own a majority of our common stock, and thus have control of us. The Second Circuit ordered the Bankruptcy Court s Sale Order reinstated, to ensure that IEP s percentage ownership of the common stock will be at least 50.5%. The Second Circuit ordered the District Court to remand the matter back to the Bankruptcy Court for further proceedings consistent with its ruling, and the District Court has done so. The Bankruptcy Court entered an Order on December 6, 2010 implementing the Second Circuit s decision. As a result, after exercise of all subscription rights issued pursuant to the Asset Purchase Agreement and the completion of the subscription rights offering, IEP and its affiliates will beneficially own between 15,150,001 and 23,698,806 shares of our Common Stock, which we expect will represent between 50.5% and 79% of our outstanding Common Stock, depending upon the extent to which the other holders of subscription rights exercise their subscription rights. There was also a proceeding in Delaware Chancery Court, brought by the same losing bidders who are parties to the case decided by the Second Circuit. After the ruling by the Second Circuit, the plaintiffs filed a modified third amended complaint in the Delaware case. In that complaint, the plaintiffs pled claims for breach of fiduciary duty (and aiding and abetting such alleged breach) against IEP, Icahn Enterprises Holdings Limited Partnership, Carl C. Icahn and others, based on the Company s not having proceeded with a Registration Statement. Plaintiffs also asserted a contractual claim against the Company relating to the Registration Statement alleging that because the Company did not proceed with the Registration Statement, plaintiffs were unable to sell their securities in the Company, and sought to recover the diminution in the value of those securities. Plaintiffs also asserted a claim for unjust enrichment against all defendants, including the Company, Icahn Enterprises L.P, Icahn Enterprises Holdings Limited Partnership, Carl C. Icahn and others, based on claims that defendants were beneficiaries of a stay order improperly entered by the bankruptcy court. On November 3, 2010, the Chancery Court dismissed the modified third amended complaint in its entirety. Plaintiffs appealed to the Delaware Supreme Court. On January 31, 2011, the plaintiffs filed their opening brief on the appeal. Among other things, plaintiffs argue that the Chancery Court erred in vacating its earlier granting of summary judgment in plaintiffs favor on a claim for breach of contract that had been asserted in the second amended complaint and in dismissing plaintiffs amended claim for breach of contract asserted in the modified third amended complaint. Both of the contract claims sought an unspecified amount of damages based on our not having proceeded with the registration of our securities. Plaintiffs also argue that the Chancery Court should not have dismissed claims for breach of fiduciary duty asserted against certain of our officers, directors, and shareholders (but not against us), also based on not having proceeded with registration. Our brief, which was filed on March 2, 2011, argues that the judgment dismissing the complaint is correct and should be affirmed. Plaintiffs reply brief was filed on March 17, 2011. Oral argument has been scheduled for July 27, 2011. Business On August 8, 2005, we acquired substantially all of the assets and hired substantially all of the employees of WestPoint Stevens. We continued to serve substantially all the former customers of WestPoint Stevens using facilities formerly owned and operated by WestPoint Stevens. Our business consists of manufacturing, sourcing, distributing, marketing and selling home fashion consumer products. We market a broad range of manufactured and sourced bed, bath and basic bedding products. We make our products in a wide assortment of colors and patterns from a variety of fabrics, such as chambray, twill, sateen, flannel and linen and from a variety of fibers, such as cotton, synthetics and cotton blends. TABLE OF CONTENTS We operate in one business segment, the consumer home fashion business, as we have the same global supply chain management, distribution centers, sales force and customers for our bed and bath products and basic bedding products. Corporate Structure The following diagram sets forth our corporate structure as of the date of this prospectus: Executive Offices Our executive offices are located at 28 East 28 Street, New York, NY 10016. Our telephone number is (212) 930-2001. TABLE OF CONTENTS
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001512813_celpad-inc_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001512813_celpad-inc_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..040088db9ce920a93d769b32ada2fdb55e473333
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001512813_celpad-inc_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary provides an overview of selected information contained elsewhere in this prospectus. It does not contain all the information you should consider before making a decision to purchase the shares we are offering. You should very carefully and thoroughly read the following summary together with the more detailed information in this prospectus and review our financial statements and related notes that appear elsewhere in this prospectus. In this prospectus, unless the context otherwise denotes, references to we, us, our and Company refer to Celpad, Inc. ABOUT CELPAD, INC. We were incorporated in the State of Delaware as a for-profit company on February 9, 2010 originally under the name Idol Capital, Inc. and established a fiscal year end of December 31. On August 30, 2010, our incorporator amended our Certificate of Incorporation and changed our name to Celpad, Inc. Our principal office is located in Santa Monica, California. We were formed to design and sell battery charging devices for cell phones and other electronic devices that allow the devices to be charged wirelessly. We also design and sell wireless receivers to be used in charging devices on the products as well as related accessories such as cases. Our product are manufactured in China and sold through independent, third party distributors as well as online through our website. We issued 100,000 shares of our common stock to Gary L. Blum on August 30, 2010 in exchange for organizational services incurred since our incorporation and issued 500,000 to Donald P. Hateley in exchange for services rendered in our formation and organization. These services were valued at $100 and $500, respectively. Following the amendment to our Certificate of Incorporation, we issued 4,400,000 shares to various vendors in exchange for the reduction in accounts payables owed to them. On September 3, 2010, we issued 893,023 common shares valued at $0.01075 per share or $9,600 to a corporation for payments made on our behalf by a third party vendor. On September 15, 2010, we issued 2,790,698 common shares valued at $0.01075 per share or $30,000 to a corporation for payments made on our behalf to a third party vendor. On September 15, 2010, we issued 716,279 common shares valued at $0.01075 per share or $7,700 to a corporation for services rendered by the corporation related to our website and product design. Our business office is located at 201 Santa Monica Blvd. and our telephone number is (800) 742-9107, fax (310) 593-4095. Our United States and registered statutory office is located at 874 Walker Road, Suite C, Dover, DE 19904, and its telephone number is (877) 734-8300. Our URL address is www.celpad.com. Our administrative offices are provided rent-free by one of our shareholders. We are a development stage company that has not significantly commenced its planned principal operations and have limited financial resources. We have not established or attempted to establish a source of equity or debt financing. Our auditors indicated in their report on our financial statements (the Report ) that the Company has not generated profits to date and lacks the liquidity, which raises substantial doubt as to its ability to continue as a going concern. Our operations to date have been devoted primarily to start-up and development activities, which include: 1. Formation of the Company; 2. Development of our business plan; 3. Development of various product designs and review of the use of different materials for manufacturing our proposed Products; 4. Research on marketing channels/strategies including online sales, retail kiosks and independent, commissioned distributors; 5. Secured our website domain www.celpad.com and developed our online website; and 6. Research on wireless battery chargers and related accessories. We are attempting to become operational and anticipate sales to begin during the first quarter of 2011 after we showcased our products at the Consumer Electronics Show in Las Vegas, NV from January 6, 2011 through January 9, 2011. We anticipate that our principal source of revenue will be the sale of the following products: Wireless Charging Travel Pad that will retail for $49.95; Wireless Charging Pad Stand that will retail for $99.95 and charge 3 cell phones standing up; Wireless Charging Pad that will retail for 89.95 and contain 3 wireless charging stations with a universal charger receiver that will allow the cell phones to lie flat on the pad; Universal Charger Receiver with 10 tips that will work with a wide variety of portable electronic devices including, but not limited to, cell phones, music players, media players, Bluetooth headsets, tablet computers, e-readers, cameras, GPS devices, portable games and other electronic devices that will retail for $39.95; iPhone 3G and 4G wireless case with receiver in a variety of colors including, white, silver, red, pink, gray, blue, and black that will retail for $29.95; and a variety of USB tips from third party manufacturers including Sony, Samsung, Nokia, LG, Sony Ericsson, Nintendo, and Apple that will retail for $4.99. As of November 30, 2010, we have raised $43,000 through the conversion of accounts payables to our common stock. There is currently $2,400 of cash on hand in the corporate bank account. We currently have liabilities of $25,508. In addition, we anticipate incurring costs associated with this offering totaling approximately $6,800. As of the date of this prospectus, we have generated minimal revenues from our business operations. The following financial information summarizes the more complete historical financial information as indicated on the audited financial statements we are filing with this prospectus. We currently have one officer and director. This individual allocates time and personal resources to us on a part-time basis and devotes approximately 10 hours per week to us. As of the date of this Prospectus, we have 5,000,000 shares of $0.001 per value common stock issued and outstanding. THE OFFERING We are offering for sale a total of 1,000,000 shares of common stock at a fixed price of $0.02 per share. We must sell 1,000,000 shares at $0.02 per share for the offering to close. The offering is being conducted on a self-underwritten, best efforts basis, which means our president and chief executive officer, Mr. Blum, will attempt to sell the shares. This prospectus will permit our president and chief executive officer to sell the shares directly to the public, with no commission or other remuneration payable to him for any shares he may sell. Mr. Blum will sell the shares and intends to offer them to friends, family members and business acquaintances. In offering the securities on our behalf, he will rely on the safe harbor from broker-dealer registration set out in Rule 3a4-1 under the Securities and Exchange Act of 1934 (the "Exchange Act"). The intended methods of communication include, without limitations, telephone and personal contact. The proceeds from the sale of the shares in this offering will be payable to Hateley & Hampton, c/o Donald P. Hateley, Esq., - Escrow Account. Our escrow agent, Donald P. Hateley, acts as legal counsel for us and, therefore, may not be considered an independent third party. All subscription agreements and checks are irrevocable and should be delivered to Hateley & Hampton at the address provided on the Subscription Agreement. All subscription funds will be held in a noninterest-bearing account pending the completion of the offering. The offering will be completed 180 days from the effective date of this prospectus and will not be extended by our director. There is no minimum number of shares that must be sold to any investor but we must sell all 1,000,000 shares being offered to close the offering. All subscription agreements and checks for payment of shares are irrevocable. We will deliver stock certificates attributable to shares of common stock purchased directly to the purchasers within 90 days of the close of the offering or as soon thereafter as practicable. The following is a brief summary of this offering. Please see the Plan of Distribution section for a more detailed description of the terms of the offering. Securities being Offered: 1,000,000 shares of common stock, $0.001 per value. There is no minimum number of shares that must be sold by us to any one investor although we must sell all 1,000,000 shares being offered to close the offering. Offering Price per Share: $0.02 Offering Period: The offering will conclude when all 1,000,000 shares of common stock have been sold, or 180 days after this registration statement becomes effective with the Securities and Exchange Commission. Our director will not extend the offering beyond the 180 days. Escrow Account: The proceeds from the sale of the shares in this offering will be payable to Hateley & Hampton, c/o Donald P. Hateley, Escrow Agent f/b/o Celpad, Inc. and will be deposited in a non-interest/minimal interest bearing bank account until all offering proceeds are raised. All subscription agreements and checks are irrevocable and should be delivered to Hateley & Hampton. Failure to do so will result in checks being returned to the investor, who submitted the check. Our trust agent, Donald P. Hateley, Esq., acts as legal counsel for us and is therefore not an independent third party.
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001512890_excel-corp_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001512890_excel-corp_prospectus_summary.txt
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+PROSPECTUS SUMMARY The following summary highlights information contained elsewhere in this prospectus. This summary is not complete and does not contain all of the information that you should consider before investing in the securities being offered here. You should read the entire prospectus carefully, including the sections entitled Risk Factors, Management s Discussion and Analysis or Plan of Operation, as well as our historical and pro forma financial statements and related notes included elsewhere in this prospectus. Unless the context suggests otherwise, references in this prospectus to we, our, us and our company are to Excel Corporation, a Delaware company. Unless otherwise indicated, the information contained in this prospectus is as of the date of this Prospectus. Business Summary We were organized in 2010 and have not yet commenced commercial operations. We have generated no revenues since our formation. We are a licensing, company focused on bringing national and international brands to the retail marketplace. Our business strategy is to develop or acquire brands and to enter into strategic licenses and distribution agreements with partners who have the ability to develop, design, manufacture and distribute licensed products. While our Management has significant experience, primarily in apparel licensing ventures, we intend to seek licenses in a variety of industries. Our business strategy is to select the appropriate branded products for the market we are targeting and leverage the senior relationships of our management team to facilitate. Based upon the experience of our Management, we expect that our licenses will typically require our licensees to pay us royalties based upon net sales with guaranteed minimum royalties in the event that net sales do not reach specified targets. We further expect that any licenses we issue will require licensees to pay us certain minimum amounts for the advertising and marketing of the respective license brands. We intend to acquire, develop and license brands in a broad range of products categories. We also intend to acquire, develop and license select brands where the brand name can be leveraged into new categories. Our objective is to develop a diversified portfolio of iconic consumer brands by issuing licenses and then organically growing the existing portfolio, licensing new brands and entering into joint ventures or other partnerships with the goal of leveraging the experience of management in the license of branded merchandise. In June 2011, we organized a New York Limited Liability Company under the name V7 LLC together with Michael Vick, an NFL football player that is the current quarterback of the Philadelphia Eagles and his partner Brian Sher. V7 LLC holds a 25 year, exclusive, worldwide, royalty-free license from Michael Vick, to utilize and commercially exploit the name and mark V7 (excluding shoes). We own 30% of V7 LLC and act as its manager. The V7 license agreement can be terminated (a) by mutual agreement of the parties; (b) if V7 LLC files for bankruptcy; or (c) if V7 ceases operations or fails to commercially exploit the license for a period of more than ninety (90) days in any product category, the license can be terminated with respect to that category. V7 has agreed to use commercially reasonable efforts to exploit the license and it has the right to sublicense the V7 mark. We expect to begin development of this brand in the third or fourth quarter of 2011, although we cannot be sure that our estimated timeline is accurate. It is possible that development of the V7 brand will be delayed into 2012 or that we may not be successful developing V7 or any brands at all. We expect to utilize approximately $10,000 of the proceeds of this Offering to develop a Brand Book that can be sent to prospective licensees interested in the V7 Brand and approximately $340,000 of the proceeds to develop other brands that we intend to then license. The balance of the proceeds of this Offering ($50,000), is expected to be utilized for working capital and general corporate purposes. Our address is 1384 Broadway, 17th Floor, New York, New York 10018 and our telephone number is 212-391-1701. Our fiscal year end is December 31. Corporate History We were incorporated in Delaware on November 13, 2010 as Ruby Worldwide, Ltd. On November 30, 2010 we amended our Certificate of Incorporation to authorize the issuance of up to 200,000,000 shares of common stock, $.0001 par value and 10,000,000 shares of preferred stock, $.0001 par value. On January 19, 2011 we amended our Certificate of Incorporation to change our corporate name to Excel Corporation. Offering Summary Securities offered by us: 1,000,000 shares of common stock Offering price per share: The Offering price is $0.40 per share. The offering price of the common stock bears no relationship to any objective criterion of value and has been arbitrarily determined. The price does not bear any relationship to our assets, book value, historical earnings, or net worth. Proceeds to us: $400,000 Use of proceeds: Development, investigation, license and/or acquisition of potential brands, development of a Brand Book that can be sent to prospective licensees interested in the V7 Brand and working capital. Number of common shares outstanding before the offering: 29,486,000 Number of common shares outstanding after the offering: 30,486,000 Offering period: This offering shall begin upon the effectiveness of the registration statement of which this prospectus is a part and will terminate on the earlier of: (i) the date when the sale of all 1,000,000 shares is completed, or (ii) 90 days from the effective date of this document. If all of the shares offered are not sold prior to the termination of this offering, all subscriptions for shares will be returned to investors without interest and without deduction.
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001512927_china_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001512927_china_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..f4fd9c83492943afd891ee774f56e1b94e295d08
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@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights selected information contained elsewhere in this prospectus. This summary does not contain all the information that you should consider before investing in the common stock. You should carefully read the entire prospectus, including Risk Factors , Management s Discussion and Analysis of Financial Condition and Results of Operations and the Consolidated Financial Statements, before making an investment decision . THE COMPANY Company Structure China United Insurance Service, Inc. ( China United ) is a Delaware corporation organized on June 4, 2010 by Mao Yi Hsiao, a Taiwanese citizen, as a listing vehicle for ZLI Holdings Limited ( CU Hong Kong ) to be quoted on the OTCBB. CU Hong Kong, a wholly owned Hong Kong-based subsidiary of China United, was originally founded by China United, on July 12, 2010 under Hong Kong laws. Henan Law Anhou Insurance Agency Co., Ltd. ( Henan Anhou , formerly known as Zhengzhou Anhou Insurance Agency Co., Ltd.) was founded in Henan province of the People s Republic of China (the PRC ) on October 9, 2003. Henan Anhou, being our operating company in China, provides insurance agency services in the PRC. Henan Anhou s wholly owned subsidiary Sichuan Kangzhuang Insurance Agency Co., Ltd. ( Sichuan Kangzhuang ) was founded on September 4, 2006 in Sichuan province of the PRC, and it provides insurance agency services in the PRC. On August 23, 2010, at Sichuan Kangzhuang s general meeting of shareholders, its shareholders voted for transferring all of their equity interests in Sichuan Kangzhuang to Henan Anhou for RMB532,622 ($83,444). On September 6, 2010, the equity transfer agreements were signed between Henan Anhou and each shareholder of Sichuan Kangzhuang. Henan Anhou has complied with all of the applicable laws and regulations with respect to its holding 100% equity interests in Sichuan Kangzhuang. Jiangsu Law Insurance Broker Co., Ltd. ( Jiangsu Law together with Henan Anhou, Sichuang Kangzhuang, collectively, the Consolidated Affiliated Entities , each a Consolidated Affiliated Entity )) was founded on September 19, 2005 in Jiangsu Province of the PRC, and it provides insurance brokerage services in the PRC. On August 12, 2010, at Jiangsu Law s general meeting of shareholders, its shareholders voted for transferring all of their shareholding to Henan Anhou for RMB518,000 ($81,153). On September 28, 2010, the equity transfer agreements were signed between Henan Anhou and each individual shareholder of Jiangsu Law. Pursuant to Provisions on the Supervision and Administration of Insurance Brokerage Institutions, effective on October 1, 2009, if an insurance brokerage entity fails to bring its registered capital to no less than RMB10, 000,000 ($1,566,661) on or prior to October 1, 2012, the China Insurance Regulatory Commission or its local counterpart, as applicable, may determine not to extend the insurance brokerage license. To meet such minimum registered capital requirement, on February 11, 2011, Henan Anhou invested RMB4.82 million ($755,131) in Jiangsu Law to increase the registered capital to RMB10 million ($1,566,661). Henan Anhou has complied with all of the applicable laws and regulations with respect to its holding 100% equity interests in Jiangsu Law. On January 16, 2011, China United issued 20,000,000 shares of common stock, $0.00001 par value per share, to several non U.S. persons for their investment of $300,000 in cash in the Company s subsidiaries. The issuance was made pursuant to an exemption from registration contained in Regulation S under the Securities Act of 1933, as amended. The consideration was paid to the account of CU Hong Kong by May 6, 2011. Among which, $60,090 was contributed into the bank account of CU WFOE as registered capital on November 26, 2010, with the remaining $239,910 to be contributed into CU WFOE on or prior to October 20, 2012. On January 28, 2011, the Company increased the number of authorized shares from 30,000,000 shares of common stock to 100,000,000 shares of common stock and 10,000,000 shares of preferred stock. Due to PRC legal restrictions on foreign ownership and investment in insurance agency and brokerage businesses in China, especially those on qualifications as well as capital requirement of the investors, we operate our business primarily through our Consolidated Affiliated Entities in China. We do not hold equity interests in our Consolidated Affiliated Entities. However, through the VIE Agreements (as described in more detail below) with these Consolidated Affiliated Entities and their respective shareholders, we effectively control, and are able to derive substantially all of the economic benefits from, these Consolidated Affiliated Entities. Our Consolidated Affiliated Entities in China are variable interest entities through which all of our insurance services are operated. It is through the VIE Agreements that we have effective control of the Consolidated Affiliated Entities, which allows us to consolidate the financial results of the Consolidated Affiliated Entities in our financial statements. If the Consolidated Affiliated Entities and their shareholders fail to perform their obligations under the VIE Agreements, we could be limited in our ability to enforce the VIE Agreements that give us effective control. Furthermore, if we are unable to maintain effective control of our Consolidated Affiliated Entities, we would not be able to continue to consolidate the Consolidated Affiliated Entities financial results with our financial results. During each of the fiscal years ended June 30, 2010 and 2011, 100% of our revenues in our consolidated financial statements were derived from our Consolidated Affiliated Entities. For more information see Risk Factors-Risks Related to Our Corporate Structure. Unless context indicates otherwise, reference to the Company throughout this prospectus refers to China United and its subsidiaries. Reference to Henan Anhou refers to the combined operations of Henan Anhou and its subsidiaries. Lo Chung Mei President and Chief Executive Officer Building 4F, Hesheng Plaza No. 26 Yousheng S Rd. Jinshui District, Zhengzhou, Henan People s Republic of China +86371-63976529 (Name, address, including zip code, and telephone number, including area code, of agent for service) On January 17, 2011, CU WFOE and Henan Anhou and its shareholders entered into a series of agreements known as variable interest agreements (the VIE Agreements ) pursuant to which CU WFOE has executed effective control over Henan Anhou through these contractual arrangements. The VIE Agreements included: Copies to: Mark E. Crone The Crone Law Group 101 Montgomery Street, Suite 2650 San Francisco, CA 94104 (415) 955-8900 (415) 955-8910 FAX (1) An Exclusive Business Cooperation Agreement through which CU WFOE is appointed the exclusive services provider to provide Henan Anhou with complete technical support, business support and related consulting services (as described in the agreement) in exchange for 90% of the net profits (as defined in the agreement) of Henan Anhou. The agreement does not provide that CU WFOE is responsible for the debts of the Consolidated Affiliated Entities. The term of the Exclusive Business Cooperation Agreement began on January 17, 2011 and lasts ten years, unless earlier terminated as provide in the agreement. The term of the agreement may be extended at CU WFOE s discretion prior to the expiration thereof. CU WFOE may terminate the agreement at any time with 30 days written notice but Henan Anhou may only terminate the agreement if CU WFOE commits gross negligence or a fraudulent act against Henan Anhou; (2) a Power of Attorney under which the shareholders of Henan Anhou have vested their collective voting control over Henan Anhou to CU WFOE; (3) an Option Agreement under which the shareholders of Henan Anhou have granted to CU WFOE the irrevocable right and option to acquire all of their equity interests in Henan Anhou, subject to applicable PRC laws and regulations. The term of the Option Agreement began on January 17, 2011 and lasts ten years, but may be renewed at CU WFOE s election; and (4) a Share Pledge Agreement under which the owners of Henan Anhou have pledged all of their equity interests in Henan Anhou to CU WFOE to guarantee Henan Anhou s performance of its obligations under the Exclusive Business Cooperation Agreement. The foregoing description of the terms of the Exclusive Business Cooperation Agreement, the Power of Attorney, the Option Agreement and the Share Pledge Agreement is qualified in its entirety by reference to the provisions of the agreements filed as Exhibits 10.2 10.14 to this report, which are incorporated by reference herein. As a holding company with no business other than holding equity interest of our operating subsidiary, CU WFOE, we rely principally on dividends to be paid by CU WFOE. CU WFOE, being the exclusive service provider to Henan Anhou, relies on the service fees to which it is entitled from Henan Anhou. Pursuant to the Exclusive Cooperation Agreement between CU WFOE and Henan Anhou, CU WFOE has the right to collect 90% of the net profits of Henan Anhou. As Henan Anhou is still operating at a loss, Henan Anhou has not paid any service fees to CU WFOE yet and CU WFOE has not paid any dividend to us to date. We expect Henan Anhou to make a profit beginning in the fiscal year ending June 30, 2014, at which time it should start to pay service fees to CU WFOE, although there can be no assurance that Henan Anhou will become profitable by that time or ever. We will then determine whether such retained earnings shall be used for dividend distributions or reinvestment for business expansion. Our capability to receive dividends, convert them into U.S. dollars and make the repatriation out of China is subject to the applicable PRC restrictions on the payment of dividends by PRC companies, laws and regulations on foreign exchange and restrictions on foreign investment. For more information see Risk Factors-Risks Related to Doing Business in China-We rely principally on dividends and other distributions on equity paid by our subsidiary to fund any cash and financing requirements we may have, and any limitation on the ability of our subsidiary to make payments to us could have a material adverse effect on our ability to conduct our business. and Risk Factors-Risks Related to Doing Business in China-Governmental control of currency conversion may affect the value of your investment. Henan Anhou owns 100% equity interest in both Sichuan Kangzhuang and Jiangsu Law. The shareholders of Henan Anhou are Zhu Shuqin, Chen Yanxia, Fang Qunlei and Wei Qun. All of them are PRC citizens and none of them holds any shares in the Company. Pursuant to the VIE Agreements, CU WFOE becomes the primary beneficiary of Henan Anhou and only leaves Henan Anhou shareholders nominal value therein. Please refer to the chart below for detailed information on any of the Company s shareholders being a director or officer of the Company or our Consolidated Affiliated Entities. Name Position in the Company Position in the HK Company Position in CU WFOE Position in Henan Anhou Position in Jiangsu Law Mao Yi Hsiao Director General Manager and Chairman General Manager and Chairman Li Chwan Hau Director Li Fu Chang Director Executive Director Lo Chung Mei Chief Executive Officer General Manager Tsai Shiu Fang Chief Financial Officer Chief Financial Officer Hsieh Tung Chi Chief Operating Officer Division Chief of Management Chiang Te Yun Chief Technology Officer Manager See Related Party Transactions for further information on our contractual arrangements with these parties. Approximate Date of Commencement of Proposed Sale to the Public: from time to time after the effective date of this Registration Statement as determined by market conditions and other factors. The following flow chart illustrates our companies organizational structure: If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box: x If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company x (Do not check if a smaller reporting company) CALCULATION OF REGISTRATION FEE Title Of Each Class of Securities To be Registered Amount To Be Registered Proposed Maximum Offering Price Per Share Proposed Maximum Aggregate Offering Price Amount of Registration Fee Common Stock, par value $0.00001 1,000,000 $ 0.015 $ 15,000 $ 1.75 * * Previously paid The offering price has been estimated solely for the purpose of computing the amount of the registration fee in accordance with Rule 457(c). Our common stock is not traded on any national exchange and in accordance with Rule 457, the offering price was determined by the price of the shares that were recently sold to our shareholders. The price of $0.015 is a fixed price at which the selling security holders may sell their shares until our common stock is quoted on the OTC Bulletin Board at which time the shares may be sold at prevailing market prices or privately negotiated prices. The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with section 8(a) of the securities act of 1933 or until the registration statement shall become effective on such date as the commission, acting pursuant to said section 8(a), may determine. Our Business Our Consolidated Affiliated Entities, Henan Anhou together with its two subsidiaries, are fast-growing insurance intermediary companies operating in China, primarily focusing on sales of life, property and casualty insurance products underwritten by insurance companies as well as insurance brokerage services. Henan Anhou has targeted its distribution and service network in provinces with most population in China, such as Henan, Jiangsu and Sichuan. As of September 30, 2011, Henan Anhou has 1,016 sales professionals and 68 administrative staffs operating across 35 cities within these three provinces. Henan Anhou and Sichuan Kangzhuang provide insurance agency services and Jiangsu Law provides insurance brokerage services. Henan Anhou s headquarters are located in Henan, China, where we lease approximately 11,736 square feet (1092 square meters) of office space. Our subsidiaries and Consolidated Affiliated Entities in aggregate lease approximately 30,871 square feet (2,868 square meters) of office space. In fiscal year ending June 30, 2011, our total rental expenses were US$205,956 (RMB 1,363,634) . Our revenue for the fiscal years ended June 30, 2011 and 2010 were $2,740,519 and $1,341,509. Our net loss for the fiscal years ended June 30, 2011 and 2010 were $329,987 and $239,755, respectively. As of June 30, 2011, our current assets, total assets and current liabilities were $1,433,670, $1,771,432 and $982,772, respectively. As of June 30, 2011, the Company had an accumulated deficit of $1,815,504 and has incurred operating losses since inception. Impact of Applicable Chinese Laws and Regulations Because all of our sales are generated in China, our business operations are subject to applicable Chinese laws and regulations. The insurance industry in the PRC is highly regulated. China Insurance Regulatory Commission ( CIRC ) is the regulatory authority responsible for the supervision of the Chinese insurance industry. Insurance activities undertaken within the PRC are primarily governed by the Insurance Law and the related rules and regulations. We operate in compliance with various applicable laws and regulations include, but not limited to, labor and employment law, taxation, environmental laws and regulations, land use rights, property and other matters. We believe that our operations in China are in material compliance with all applicable legal and regulatory requirements. However, the central government or local governments and agencies of the jurisdictions where we operate our business may impose new, stricter regulations or interpretations of existing regulations that would require additional expenditures and efforts from us to ensure our compliance with such regulations or interpretations. For a detailed discussion of the material regulatory framework affecting the Company, please see the discussion under the heading Regulatory in the Business section of this prospectus. Since January 2008, China began to implement its new corporate tax rates according to which foreign-invested enterprises and domestic enterprises are subject to enterprise income tax at a uniform rate of 25%. CU WFOE is currently subject to a corporate tax rate of 25%. As a foreign invested enterprise and subject to applicable laws and regulations, CU WFOE is permitted to remit profits offshore and such remittance does not require any prior approval from the PRC State Administration of Foreign Exchange ( SAFE ). Pursuant to the applicable laws and regulations, a foreign invested enterprise, such as CU WFOE, cannot distribute dividends offshore if the losses of previous years have not been covered, but dividends that were not distributed in previous years may be distributed together with those of the current year. Repatriating registered capital offshore, however, is always forbidden during the term of business operation unless the relevant government authority has duly approved the reduction of the registered capital. Summary of the Offering The selling stockholders named in this prospectus are offering all of the shares of common stock offered through this prospectus. The selling stockholders are selling shares of common stock covered by this prospectus for their own account. We will not receive any of the proceeds from the sale of these shares. The offering price of $0.015 was determined by the price for certain shares were issued to our shareholders in a private placement issuance in exchange for $300,000 investment, which has been used for the contribution into the capital account of CU WFOE. The offering price of $0.015 is a fixed price at which the selling security holders may sell their shares until our common stock is quoted on the OTCBB, at which time the shares may be sold at prevailing market prices or privately negotiated prices. We have agreed to bear the expenses relating to the registration of the shares for the selling security holders. The offering will conclude upon the earliest of (i) such time as all of the common stock has been sold pursuant to the registration statement or (ii) such time as all of the common stock becomes eligible for resale without volume limitations pursuant to Rule 144 under the Securities Act. There is currently no public market for our securities and you may not be able to liquidate your investment since there is no assurance that a public market will develop for our common stock or that our common stock will ever be approved for trading on a recognized exchange. After this document is declared effective by the U.S. Securities and Exchange Commission, we intend to seek a market maker to apply for a quotation on the OTCBB in the United States. Our shares are not and have not been listed or quoted on any exchange or quotation system. We cannot assure you that a market maker will agree to file the necessary documents with the OTCBB, nor can there be any assurance that such an application for quotation will be approved or that a regular trading market will develop or that if developed, will be sustained. In the absence of a trading market, an investor may be unable to liquidate its investment. We intend to apply for quoting of our common stock on the OTCBB, which we estimate will cost around $210,000. The breakdown of such costs is estimated as following: Legal Counsel $ 100,000 Auditor $ 100,000 Other vendors $ 10,000 Total: $ 210,000 We estimate that to maintain a quoting status will cost us $100,000 to $200,000 annually which will include legal and auditing expenses. We will rely on professional services to carry out this plan, which includes, but is not limited to, a U.S. law firm with corporate and securities practice, a PCAOB registered auditor and consultants. We have engaged the Crone Law Group as our legal counsel. We have engaged Goldman Kurland Mohidin, LLP, as our independent auditor. To be quoted on the OTCBB, we must engage a market maker to file an application for a trading symbol on our behalf with the Financial Industry Regulatory Authority ( FINRA ). This process may take between three (3) to six (6) months. We plan to engage a market maker after our registration statement is declared effective by the U.S. Securities and Exchange Commission (the SEC ). The Common Stock offered hereby involves a high degree of risk and should not be purchased by investors who cannot afford the loss of their entire investments. See Risk Factors beginning on page 10. Where You Can Find Us We presently maintain our principal office at Building 4F, Hesheng Plaza No. 26 Yousheng S Rd, Jinshui District, Zhengzhou, Henan, People s Republic of China. Our telephone number is +86371-63976529. We maintain a website at www.anhou.com . SUMMARY OF FINANCIAL AND OPERATING INFORMATION The following selected consolidated financial data for the two years ended June 30, 2011 and 2010 and the consolidated balance sheet data as of June 30, 2011 and 2010 have been derived from our audited consolidated financial statements, which are included elsewhere in this prospectus. The selected consolidated financial data should be read in conjunction with our audited consolidated financial statements and related notes and Management s Discussion and Analysis of Financial Condition and Results of Operations included elsewhere in this prospectus. Our audited consolidated financial statements are prepared and presented in accordance with U.S. GAAP. The following selected pro forma consolidated statements of operations present the accounts of Henan Anhou, Sichuan Kangzhuang, Jiangsu Law, China United, CU Hong Kong and CU WOFE as if the acquisitions occurred and the VIE agreements were signed on July 1, 2010 and 2009, respectively. The fair values of the assets acquired and liabilities assumed at agreement dates are used for the purpose of purchase price allocation. The excess of the purchase price over the fair value of the net assets acquired for Sichuan Kangzhuang was recorded as goodwill, whereas the excess of the fair value of net assets acquired over the purchase price for Jiangsu Law was recorded as a gain on acquisition. Summary of Operations Year Ended June 30, 2011 Year Ended June 30, 2010 Three Months Ended September 30, 2011 Three Months Ended September 30, 2010 Revenues $ 2,740,519 $ 1,341,509 $ 660,262 $ 336,607 Net loss $ (329,987 ) $ (239,755 ) $ (294,405 ) $ 159,246 Net Income (loss) per common share (basic and diluted) $ (0.02 ) $ (0.01 ) $ (0.01 ) $ 0.01 Weighted average common shares outstanding, basic and diluted 20,000,000 20,000,000 20,000,000 20,000,000 Summary of Operations - Pro Forma Year Ended June 30, 2011 Year Ended June 30, 2010 Three Months Ended September 10, 2010 (Unaudited Pro Forma) (Unaudited Pro Forma) (Unaudited Pro Forma) Net revenue $ 2,968,482 $ 2,154,629 $ 541,311 Net loss $ (215,181 ) $ (150,738 ) $ (115,199 ) Net loss per common share (basic and diluted) $ (0.01 ) $ (0.01 ) $ (0.01 ) Weighted average common shares outstanding, basic and diluted 20,000,000 20,000,000 20,000,000 Statement of Financial Position As of June 30, 2011 As of June 30, 2010 As of September 30, 2011 Cash and cash equivalents $ 1,297,213 $ 17,071 $ 1,172,754 Total assets $ 1,771,432 $ 135,957 $ 1,649,015 Current Liabilities $ 982,772 $ 1,439,569 $ 1,149,329 Long-term Liabilities $ - $ - $ - Stockholders equity / (deficit) $ 788,660 $ (1,303,612 ) $ 499,686 We plan to pay the dividends only when our net income exceeds the total amount due and when the payment will not have a significant impact on our financial position. Our Delaware corporation, China United, has not declared any dividends since its inception on June 4, 2010.
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+ETFS Physical Aluminum [____] [____] ETFS Physical Copper [____] [____] ETFS Physical Lead [____] [____] ETFS Physical Nickel [____] [____] ETFS Physical Tin [____] [____] ETFS Physical Zinc [____] [____] ETFS Physical IM Basket [____] [____] The Trust, Sponsor, Trustee, and Metal Agent The Trust was formed as a Delaware statutory trust on February 15, 2011 and consists of the seven Funds identified on the cover of this Prospectus. The operations of the Trust are governed by Delaware state law and the terms of the Trust Agreement (the Trust Agreement ) * To be supplied by amendment (b) Financial Statement Schedules Not applicable. Item 17. Undertakings. The undersigned Registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (i) To include any prospectus required by section 10(a)(3) of the Securities Act of 1933; UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM S-1 (Amendment No.1) REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ETFS PHYSICAL BASE METALS TRUST Sponsored by ETF Securities USA LLC (Exact name of Registrant as specified in its charter) Delaware 6799 27-4998311 (State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer incorporation or organization) Classification Code Number) Identification No.) 48 Wall Street 11th Floor New York, NY 10005 (212) 918-4954 (Address, including zip code, and telephone number, including area code, of Registrant s principal executive offices) ETF Securities USA LLC Ordnance House 31 Pier Road St. Helier, Jersey JE48PW Channel Islands (Name, address, including zip code, and telephone number, including area code, of agent for service) Copies to: John McGuire, Esq. David Sirignano, Esq. Morgan, Lewis & Bockius LLP Morgan, Lewis & Bockius LLP 1111 Pennsylvania Avenue, NW 1111 Pennsylvania Avenue, NW Washington, DC 20004-2541 Washington, DC 20004-2541 Approximate date of commencement of proposed sale to the public: As soon as practicable after this registration statement becomes effective. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. x If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act of 1933, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act of 1933, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act of 1933, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer o Accelerated filer o Non-accelerated filer x Smaller reporting company o (Do not check if a smaller reporting company) entered into between the [_______________] (the Trustee ) and ETF Securities USA LLC (the Sponsor ). The material terms of the Trust are discussed in greater detail under the section Description of the Shares and the Trust Agreement. [__________] (the Metal Agent ) will facilitate the creation and redemption of each Fund s Creation Units (defined below) and provide certain other transactional and administrative services in connection with the ownership and holding of physical Metal as documented by Warrants and Warehouse Receipts. The Metal Agent also will serve as the Trust s custodian for Warehouse Receipts, if any. Warrants are documents that entitle the holder to a specific lot of Metal that has been deemed to meet certain specifications established by the London Metal Exchange (the LME ) and are the sole means by which an Authorized Participant delivers and receives Metal for purposes of effecting creations and redemptions of Creation Units. Warrants are issued by LME Warehouses that store such Metal in compliance with applicable LME rules, which require, among other things, that each Warrant is issued for the weight of a standard lot of each respective Metal (within a variation of plus or minus 2%). While each Fund will create and redeem Creation Units in exchange only for Metal represented by Warrants, each Fund may periodically take Metal represented by Warrants Off Warrant, which essentially replaces the Warrant with a Warehouse Receipt. For more information about Off Warrant Metal and the circumstances under which a Metal is taken Off Warrant, see RISK FACTORS Risks Related to the London Metal Exchange and Industrial Metals Market Storing Metals. A Warehouse Receipt is a document issued by an Approved Warehouse in the name of the Trust that evidences the Trust s title to a specified brand and a specified lot of Metal that is stored at a specified location and warehouse. Typically, Metal represented by Warehouse Receipts is not guaranteed to meet LME specifications; however, because each Fund will accept only Metal that meets LME specifications, a Fund s decision to take Metal Off Warrant will not affect the quality of the Metal held by the Fund whether represented by a Warrant or Warehouse Receipt. The Sponsor arranged for the creation and organization of the Trust and Funds, the registration of the Shares for their public offering in the United States, and the listing of the Shares on the Exchange. Pursuant to a Sponsor Agreement between the Trustee and the Sponsor (the Sponsor Agreement ), the Sponsor has agreed to provide or arrange for the provision of all management and administration services necessary to operate the Funds in exchange for a fee (the Sponsor s Fee as discussed below). The Trust has entered into a Metal Agent Agreement with the Metal Agent pursuant to which the Metal Agent will provide certain transactional, custody and administrative services with respect to each Fund s Metal, including maintaining Warehouse Receipts evidencing interests in the Metals owned by each Fund. The Metal Agent is appointed by the Sponsor on behalf of each Fund. The general role and responsibilities of the Metal Agent are further described in The Metal Agent and the Metal Agent Agreement. Because the holders of Shares are not parties to the Metal Agent Agreement, their claims against the Metal Agent may be limited. Fund Fees and Expenses The table below provides a hypothetical example of the fees and expenses a Shareholder in the ETFS Physical Copper Fund might bear during a three-year period. Although a Shareholder s costs may be higher or lower and will vary by Fund, based on the assumptions in the table below, a Shareholder s costs would be: Calculation of Registration Fee Title of Securities to be Registered Proposed Maximum Aggregate Offering Price Amount of Registration Fee(1) Year 1 Year 2 Year 3 Hypothetical copper price per ton $ XXXX $ XXXX $ XXXX Sponsor s Fee per annum X.XX % X.XX % X.XX % Storage Fee per annum* X.XX % X.XX % X.XX % Insurance Allowance per annum X.XX % X.XX % X.XX % Shares of Trust, beginning X,XXX.XX X,XXX.XX X,XXX.XX Tons of copper in Fund, beginning XX.XX XX.XX XX.XX Beginning NAV of the Fund $ XX,XXX.XX $ XX,XXX.XX $ XX,XXX.XX Amount of copper in tons to be delivered to cover the Sponsor s Fee X.XX X.XX X.XX Amount of copper in tons to be delivered to cover the Storage Fee X.XX X.XX X.XX Amount of copper in tons to be delivered to cover the Insurance Allowance X.XX X.XX X.XX Tons of copper in Fund, ending XX.XX XX.XX XX.XX Ending NAV of the Fund $ XX,XXX.XX $ XX,XXX.XX $ XX,XXX.XX Ending NAV per Share $ XX.XX $ XX.XX $ XX.XX * The Storage Fee will vary depending on the type of Metal represented by each Fund. For more information about Storage Fees, please see RISK FACTORS Risks Related to the Trust. Sponsor s Fee The Sponsor s Fee is calculated at an annualized rate equal to [_____]% of the net asset value ( NAV ) of the Trust paid monthly in arrears (the Sponsor s Fee ). Each Fund will be responsible for (and, therefore, the Shareholders will bear the burden of) its expenses not assumed by the Sponsor. These expenses include the Storage Fee, Sponsor s Fee, Insurance Allowance, and any non-recurring, extraordinary expenses. For more information about the functions of the Sponsor and Trustee, please see the sections entitled The Sponsor and The Trustee, respectively. For each Fund, the aggregate of the Storage Fee, Sponsor s Fee and insurance premium will be accrued daily in Metal weight, sold daily to the Metal Agent at [that day s] LME Cash Settlement Price for the respective Metal, and settled in Warrants evidencing an amount of Metal that is no greater than the monthly accrued Metal amount. The portion of the Sponsor s Fee accrued, but not amounting to the weight of a Warrant will be carried over to the next month s end. The Sponsor, from time to time, may waive all or a portion of the Sponsor s Fee at its discretion for stated periods of time. The Sponsor is under no obligation to continue a waiver after the end of such stated period, and, if such waiver is not continued, the Sponsor s Fee will thereafter be paid in full. Presently, the Sponsor does not intend to waive any portion of the Sponsor s Fee. The Trustee, generally at each month end, will deliver Metal, whose Metal weight is represented by one or more Warrants, as may be necessary to settle the sale of Metal to the Metal Agent in order to pay the Storage Fee, Sponsor s Fee and insurance premium. The Trustee, from time to time, will also sell Metal, whose Metal weight is represented by one or more Warrants, as may be necessary to permit payment in cash of other of the Trust s expenses not assumed by the Sponsor. The Trustee is authorized to sell Metal at such times and in amounts required to permit Aluminum $0.40 Copper $0.36 Lead $0.35 Nickel $0.45 Tin $0.42 Zinc $0.36 The Trustee, generally at each month end, will deliver Metal, whose metal weight is represented by one or more Warrants, as may be necessary to settle the sale of Metal to the Metal Agent in order to pay the Storage Fee. The Trustee is authorized to accrue Metal daily to permit such payments to be made as they become due, it being the intention to avoid or minimize the Fund s holdings of assets other than Metal. Accordingly, the amount of Metal to be sold will vary from time to time depending on the level of the Fund s expenses and the market price of each Metal. See Business of the Trust Trust Expenses for additional information. Each delivery or sale of each Metal by a Fund to pay the Storage Fee will be a taxable event to Shareholders. See United States Federal Tax Consequences Taxation of US Shareholders. ETFS Physical Aluminum [____] Shares ETFS Physical Copper [____] Shares ETFS Physical Lead [____] Shares ETFS Physical Aluminum [__ metric tons] ETFS Physical Copper [__ metric tons] ETFS Physical Lead [__ metric tons] ETFS Physical Nickel [__ metric tons] ETFS Physical Tin [__ metric tons] ETFS Physical Zinc [__ metric tons] ETFS Physical IM Basket [__ metric tons] The number of metric tons of Metal required to purchase a Creation Unit of a Fund or to be delivered upon the redemption of a Creation Unit will gradually decrease over time, due to the accrual of the Fund s expenses and the sale or delivery of the Fund s Metal to pay the Fund s expenses. See Business of the Trust Trust Expenses for additional information. Shares may be purchased and redeemed from the Funds only by Authorized Participants and only in Creation Units. A Fund will not issue fractional Creation Units. Authorized Participants will pay a Aluminum 12:55 13:00 Lead 12:45 12:50 Zinc 12:50 12:55 Copper 12:30 12:35 Tin 12:40 12:45 Nickel 13:00 13:05 ETFS Physical Aluminum $ 1,250,000 $ 145.13 ETFS Physical Copper $ 1,250,000 $ 145.13 ETFS Physical Lead $ 1,250,000 $ 145.13 ETFS Physical Nickel $ 1,250,000 $ 145.13 ETFS Physical Tin $ 1,250,000 $ 145.13 ETFS Physical Zinc $ 1,250,000 $ 145.13 ETFS Physical IM Basket $ 1,250,000 $ 145.13 TOTAL $ 8,750,000 $ 1,015.91 (1) The amount of the registration fees for the Shares of the ETFS Physical Aluminum Fund, ETFS Physical Copper Fund, ETFS Physical Lead Fund, ETFS Physical Nickel Fund, ETFS Physical Tin Fund, ETFS Physical Zinc Fund, and ETFS Physical IM Basket Fund are calculated in reliance upon Rule 457(o) under the Securities Act and using the proposed maximum aggregate offering price as described above. * Eastern Standard Time is Greenwich Mean Time ( GMT ) minus five hours subject to daylight savings time adjustments. See The Industrial Metals Market The Metals Market The London Metals Exchange ( LME ) for a description of the operation of the LME exchange pricing. The Trustee will determine the NAV of each Fund on each Business Day, as promptly as practicable after _____ Eastern Time. If no LME Cash Settlement Price is available on a particular day or has not been announced by _____ Eastern Time on a particular day, the next most recent LME Cash Settlement Price will be used to determine the NAV of each Fund, unless the Sponsor determines that such price is inappropriate to use as the basis for such determination. U.S. Federal Income Tax Considerations The Trust intends to take the position that each Fund is a grantor trust for United States federal income tax purposes. However, because of the absence of authority addressing the classification of an entity such as the Funds, the IRS or a court might not agree with the treatment of the Trust as a grantor trust, in which case each Fund would be treated as a partnership for U.S. federal income tax purposes. Assuming that each Fund will be treated as a grantor trust for U.S. federal income tax purposes, each Fund itself will not be subject to U.S. federal income tax and, instead, such Fund s income and expenses will flow through to its Shareholders. In other words, a Fund s Shareholders will be treated as if they owned a corresponding share of the Fund s assets, received a corresponding share of such Fund s income, and incurred a corresponding share of such Fund s expenses. The Trustee will report each Fund s income, gains, losses and deductions to the IRS on that basis. See United States Federal Income Tax Consequences and ERISA and Related Considerations. Limitation on Liability The Sponsor and Trustee: are only obligated to perform actions specifically set forth in the Trust Agreement without negligence or bad faith; are not liable for the exercise of discretion permitted under the Trust Agreement; and have no obligation to prosecute any lawsuit or other proceeding on behalf of the Shareholders or any other person. See Description of the Shares and the Trust Agreement for additional information. Termination Events The Trust Agreement may be terminated if: the Trustee is notified that the Shares are delisted from the Exchange and are not approved for listing on another national securities exchange within five Business Days of their delisting; The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with section 8(a) of the Securities Act or until this Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said section 8(a), may determine. holders of at least 75% of the outstanding Shares notify the trustee that they elect to terminate the Trust (in such case, the Trustee shall set a date on which the Trust will terminate and mail notice of that termination to Shareholders at least 30 days prior to the date set for termination); 60 days have elapsed since the Trustee notified the Sponsor of the Trustee s election to resign and a successor Trustee has not been appointed and accepted its appointment; the SEC determines that the Trust is an investment company under the Investment Company Act, and the Trustee has actual knowledge of that determination; the aggregate market capitalization of the Trust, based on the closing price for the Shares, was less than $350 million for five consecutive trading days and the Trustee receives, within six months from the last of those trading days, notice that the Sponsor has decided to terminate the Trust; the CFTC determines that the Funds are commodity pools under the CEA and the Trustee has actual knowledge of that determination; or the Trust fails to qualify for treatment, or ceases to be treated, as a grantor trust for United States federal income tax purposes and the Trustee receives notice that the Sponsor has determined that the termination of the trust is advisable. In the event of the termination of the Trust or a Fund, the Trustee will deliver Fund property upon surrender and cancellation of Shares and, ninety days after termination, may sell any remaining Fund property in a private or public sale, and hold the proceeds, uninvested and in a non-interest bearing account, for the benefit of the Shareholders who have not surrendered their Shares for cancellation. See Description of the Shares and the Trust Agreement Amendment and Termination. Principal Offices The principal office of the Trust is located at c/o ETF Securities USA LLC, 48 Wall Street, New York, New York 10005, and the telephone number is (212) 918-4954. The principal office of the Sponsor is located at Ordnance House, 31 Pier Road, St. Helier, Jersey JE48 PW, Channel Islands. The Trustee s principal place of business is located at [________]. The Metal Agent maintains its principal place of business at [_______].
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+PROSPECTUS SUMMARY To understand this offering fully, you should read the entire prospectus carefully, including the risk factors beginning on page 7 and the financial statements. Our Business: ------------ We are a development stage company. We intend to commence business operations by distributing an all-natural everyday custom tailored women's clothing products from England as well as making customer specified alterations for both men and women. We are not raising any money in this offering. We have not had any revenues or profits to date. We are not raising any money in this offering. We do not have sufficient cash and cash equivalents to execute our operations and will need to obtain $30,548 in additional financing to operate our business for the next twelve months. We will need approximately $30,548 in additional cash to implement our business plan. We intend to seek funding from additional sale of our common stock or from advances from our officer and director. If we are not able to raise sufficient funds to implement our business plan we will not be able to comply with our periodic reporting obligations or fund our operations and we will have to cease our operations. Our administrative office is located at 25B Hampstead Hill Gardens, London, UK, NW3 2PJ and our telephone number is +447738529207. Our fiscal year end is November 30. The Offering: ------------ Securities being offered by selling shareholders 2,360,000 shares of common stock Offering price per share $0.05 Net proceeds to us None Number of shares outstanding before the offering 5,860,000 Number of shares outstanding after the offering if all the shares are sold 5,860,000 <PAGE>7
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+S-1/A 1 ds1a.htm PRE-EFFECTIVE AMENDMENT NO. 2 TO FORM S-1 Pre-Effective Amendment No. 2 to Form S-1 Table of Contents As filed with the Securities and Exchange Commission on May 2, 2011 Registration No. 333-172659 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Pre-Effective Amendment No. 2 to the FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 STATE INVESTORS BANCORP, INC. AND STATE-INVESTORS BANK 401(k) PLAN (Exact name of registrant as specified in its articles of incorporation) Louisiana 6035 27-5301129 (State or other jurisdiction of incorporation or organization) (Primary Standard Industrial Classification Code Number) (I.R.S. Employer Identification No.) 1041 Veterans Boulevard Metairie, Louisiana 70005 (504) 834-9400 (Address, including zip code, and telephone number, including area code, of registrant s principal executive offices) Anthony S. Sciortino Chairman, President and Chief Executive Officer State Investors Bancorp, Inc. 1041 Veterans Boulevard Metairie, Louisiana 70005 (504) 834-9400 (Name, address, including zip code, and telephone number, including area code, of agent for service) Copies to: Raymond A. Tiernan, Esq. Eric M. Marion, Esq. Elias, Matz, Tiernan & Herrick L.L.P. 734 15th Street, N.W., 11th Floor Washington, D.C. 20005 202-347-0300 James C. Stewart, Esq. Malizia Spidi & Fisch, PC Suite 200 West 1227 25th Street, N.W. Washington, D.C. 20037 202-434-4660 Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective. If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of accelerated filer, large accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company CALCULATION OF REGISTRATION FEE Title of Each Class of Securities to be Registered Amount to be Registered Proposed Maximum Offering Price Per Unit Proposed Maximum Aggregate Offering Price Amount of Registration Fee Common Stock, $.01 par value per share 2,909,500 shares $10.00 $29,095,000 (1) $3,377.93 (3) Participation interests 380,361 interests(2) (1) Estimated solely for the purpose of calculating the registration fee. (2) Represents shares which may be purchased by participants in the State-Investors Bank 401(k) Plan. Pursuant to Rule 457(h) of the Securities Act, as amended, no separate fee is required for the participation interests, and the number of participation interests registered has been calculated on the basis of the maximum number of shares which could be purchased utilizing the assets of such plan. (3) Previously paid. The Registrant hereby amends this Registration Statement on such date as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that the Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission acting pursuant to said Section 8(a) may determine. Table of Contents SUMMARY This summary highlights material information from this document and may not contain all the information that is important to you. You should read this entire document carefully, including the sections entitled Risk Factors and The Conversion and Offering, before making a decision to invest in our common stock. In this prospectus, unless we specify otherwise, State Investors, we, us, and our refer to State Investors Bancorp, Inc., a Louisiana corporation. State-Investors Bank refers to State-Investors Bank, a federally chartered savings bank in its mutual form or in its stock form as the context requires. The Companies State Investors Bancorp, Inc. State Investors Bancorp is a Louisiana corporation recently formed for the purpose of implementing the conversion and offering described in this prospectus. Our principal activity after the conversion will be the ownership of all of the outstanding common stock of State-Investors Bank. This offering is being made by State Investors Bancorp. Our corporate office is located at 1041 Veterans Boulevard, Metairie, Louisiana 70005. State-Investors Bank. State-Investors Bank is a federally chartered mutual savings bank. State-Investors Bank was formed in 1894 as a Louisiana chartered mutual savings association, named Sixth District Building & Loan Association. Following a series of name changes, State Savings and Loan Association merged with Investors Homestead Association on December 31, 1980, and was renamed State-Investors Savings and Loan Association. State-Investors Savings and Loan Association converted to a federally chartered savings bank effective April 22, 1993, and changed its name to State-Investors Bank in 1997. State-Investors Bank is subject to regulation, supervision and examination by the Office of Thrift Supervision, as its chartering authority. The Office of the Comptroller of the Currency, which currently regulates national banks, will become State-Investors Bank s primary federal regulator after July 21, 2011, pursuant to recently-enacted legislation. State-Investors Bank s corporate office is located at 1041 Veterans Boulevard, Metairie, Louisiana 70005. Its telephone number at this address is (504) 832-9400. State-Investors Bank s website is www.stateinvestors.com. The information on our website is not a part of this prospectus. Our Business State-Investors Bank conducts its operations through its main office in Metairie, Louisiana, located in Jefferson Parish, and three branch offices located in Jefferson, St. Tammany and Orleans Parishes, Louisiana. Jefferson and St. Tammany Parishes are suburbs of New Orleans and Orleans Parish consists solely of the city of New Orleans. State-Investors Bank s principal business has been accepting deposits from the general public and using those deposits to make residential and commercial loans to individuals and businesses located primarily in the parishes in which we have branch offices which are a part of the seven parish New Orleans-Metairie-Kenner Metropolitan Statistical Area. State-Investors Bank operates as a traditional savings and loan association with a focus on one- to four-family residential loans in its primary market area. In February 2011, we opened our new home office which replaced our former main office at the same location in Metairie, Louisiana. At December 31, 2010, State-Investors Bank had total assets of $208.7 million, deposits of $159.1 million and total equity of $21.3 million, equal to 10.2% of total assets. Total loans, net, at December 31, 2010, amounted to $180.6 million, or 86.6% of total assets. In recent periods, we have originated primarily fixed-rate owner occupied one-to four-family residential loans of 15 to 20 year amortizations. State-Investors Bank s investment in securities consisted exclusively of government-guaranteed adjustable-rate mortgage-backed securities totaling $9.4 million at December 31, 2010. Following the conversion and offering, State-Investors Bank will be wholly-owned by State Investors Bancorp. State Investors Bancorp intends to contribute 50% of the net proceeds as equity capital to State-Investors Bank in exchange for the purchase of all of State-Investors Bank s capital stock and the remaining 50% of the net proceeds will be retained by State Investors Bancorp. Initially, State Investors Bancorp intends to use the net proceeds it retains to loan funds to the employee stock ownership plan to purchase 8.0% of the shares sold in the offering and will invest the remaining amount in a deposit account at State-Investors Bank. Under applicable regulations, State Investors Bancorp Table of Contents Page THE OFFERING S-1 Summary of the Conversion S-1 Securities Offered S-1 Election to Purchase Common Stock in the Offering; Priorities S-1 How to Use Plan Funds and Funds Held Outside the Plan to Invest in the Offering S-2 Deadline for Delivery of Election Forms S-2 Irrevocability of Election to Participate in the Offering S-2 Direction to Purchase Common Stock After the Offering S-2 Purchase Price of Common Stock S-2 Nature of a Participant s Interest in Common Stock S-3 DESCRIPTION OF THE PLAN S-3 Introduction S-3 Employee Retirement Income Security Act S-3 Reference to Full Text of Plan S-3 Eligibility and Participation S-4 Contributions Under the Plan S-4 Limitations on Contributions S-4 Loans S-5 Hardship Withdrawal S-5 In-Service Withdrawal S-6 Investment of Contributions S-6 Employer Stock S-6 Vesting S-7 Distribution Upon Retirement or Disability S-7 Distribution Upon Death S-7 Distribution Upon Termination of Employment S-7 Non-alienation of Benefits S-7 Reports to Plan Participants S-7 Plan Administration S-7 Amendment and Termination S-8 Merger, Consolidation or Transfer S-8 Federal Income Tax Consequences S-8 ERISA and Other Qualification S-9 Restrictions on Resale S-10 SEC Reporting and Short-Swing Profit Liability S-10 Financial Information Regarding Plan Assets S-10 LEGAL OPINION S-10 Annex A A-1 Annex B B-1 Table of Contents PROSPECTUS (Proposed Holding Company for State-Investors Bank) Up to 2,530,000 shares of Common Stock (Anticipated Maximum) This prospectus describes the initial public offering of shares of State Investors Bancorp, Inc., a company being formed in connection with the conversion of State-Investors Bank from the mutual to the stock form of organization. Upon completion of the conversion and offering, all of the common stock of State-Investors Bank will be owned by State Investors Bancorp, and all of the common stock of State Investors Bancorp will be owned by public shareholders. We are offering up to 2,530,000 shares of common stock for sale, at a price of $10.00 per share, on a priority basis to State-Investors Bank s depositors in a subscription offering. Shares of common stock not purchased in the subscription offering may be offered to the general public in a community offering which may begin during or immediately following the subscription offering. We expect that the common stock of State Investors Bancorp will be listed on the Nasdaq Capital Market under the symbol SIBC. Certain depositors of State-Investors Bank have priority rights to purchase shares of common stock in the subscription offering: Depositors with at least $50 on deposit at State-Investors Bank at the close of business on October 31, 2009; Depositors with at least $50 on deposit at State-Investors Bank at the close of business on March 31, 2011; and Depositors of State-Investors Bank at the close of business on [DATE1], 2011, and borrowers as of April 22, 1993, whose loans continued to be outstanding as of [DATE1], 2011. If you fit none of the categories above, but are interested in purchasing shares of our common stock: You may have an opportunity to purchase shares of common stock after priority orders are filled. We must sell a minimum of 1,870,000 shares to complete the offering. We may increase the maximum shares that we sell in the offering up to 2,909,500 shares without further notice to persons who have subscribed for shares, due to regulatory considerations, demand for the shares or changes in financial market conditions. The offering is expected to terminate at 12:00 noon, Central time, on [DATE2], 2011. We may extend this expiration date without notice to you until [DATE3], 2011. No single extension may exceed 90 days and the offering must be completed by [DATE4], 2013. The minimum number of shares you may purchase is 25 shares. The maximum number of shares that can be ordered through a single qualifying account in the offering is 30,000 shares. Orders are irrevocable after submission unless the offering is terminated or is extended beyond [DATE3], 2011 or the number of shares of common stock to be sold increases to more than 2,909,500 shares or decreases to less than 1,870,000 shares. If the offering is extended beyond [DATE3], 2011, subscribers will be notified and will have the right to confirm, modify or rescind their purchase orders, and funds will be returned promptly to subscribers who do not respond to this notice. Funds received prior to completion of the offering will be held in a segregated account at State-Investors Bank and will earn interest at our passbook savings rate. If we terminate the offering, or if we extend the offering beyond [DATE3], 2011 and you reduce or rescind your order, we will promptly return your funds without penalty, with interest at our passbook savings rate, and deposit withdrawal authorizations will be cancelled or reduced. Keefe, Bruyette & Woods will assist us in selling our shares of common stock on a best efforts basis, but is not required to purchase any of the common stock that is being offered. Our directors and executive officers, together with their associates, intend to purchase 230,000 shares of common stock in the offering, or 9.1% based on the maximum of the offering. These purchases will count towards the minimum purchases needed to complete the offering. This investment involves a degree of risk, including the possible loss of principal. Please read Risk Factors beginning on page 10. OFFERING SUMMARY Price per share: $10.00 Minimum Maximum Maximum, as Adjusted Number of shares 1,870,000 2,530,000 2,909,500 Gross offering proceeds $ 18,700,000 $ 25,300,000 $ 29,095,000 Estimated offering expenses (excluding selling agent fees)(1) $ 825,000 $ 825,000 $ 825,000 Selling agent fees and expenses(2) $ 187,550 $ 263,450 $ 307,093 Estimated net proceeds $ 17,687,450 $ 24,211,550 $ 27,962,907 Estimated net proceeds per share $ 9.46 $ 9.57 $ 9.61 (1) Includes reimbursable out-of-pocket expenses of our selling agent and conversion agent fees of $90,000 and $10,000, respectively. (2) Assumes all shares are sold in the subscription and community offering and no shares are sold in the syndicated community offering based on a success fee equal to 1.25% of shares sold, excluding shares purchased by our tax-qualified employee benefit plans and by our directors, officers and employees and their immediate families. If all shares are sold in a syndicated community offering, excluding shares purchased by our tax qualified stock benefit plans and by our insiders, the maximum selling agent fee would be $940,000 at the minimum, $1.1 million at the midpoint, $1.3 million at the maximum and $1.5 million at the maximum, as adjusted. For a description of the compensation to be paid to Keefe, Bruyette & Woods and other FINRA members in the event that shares are sold in a syndicated community offering, see The Conversion and Offering Plan of Distribution and Marketing Arrangements. These securities are not deposits or savings accounts and are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other governmental agency. Neither the Securities and Exchange Commission, the Office of Thrift Supervision nor any state securities regulator has approved or disapproved of these securities or determined if this prospectus is accurate or complete. Any representation to the contrary is a criminal offense. For assistance, please contact the stock information center at ( ) - . KEEFE, BRUYETTE & WOODS The date of this prospectus is , 2011 Table of Contents may, during the first year following the conversion, assuming shareholder approval, use a portion of the net proceeds it retains to fund the proposed recognition and retention plan. See How We Intend to Use the Proceeds from the Offering. In the future, the proceeds from the offering are expected to provide us with additional capital which we will use to expand our business activities, enhance our existing products and services and upgrade our technology infrastructure and marketing. We also may use a portion of the net proceeds received to purchase loans and loan participation interests outside of our local market area. We expect this will facilitate our loan growth and returns and, again, help to reduce the geographic concentration risk in our portfolio. See Reasons for the Conversion and Offering. Our Business Strategy Our business strategy is designed to operate and grow State-Investors Bank as a profitable community-oriented financial institution serving primarily individual customers and small- to medium-sized businesses in our market area. To implement this business strategy, we will strive to: maintain high levels of asset quality, primarily through our disciplined and conservative lending practices; grow our retail deposit accounts by focusing on the establishment of long-term customer relationships; target loan growth on residential and owner occupied commercial real estate loans while funding growth with core deposits; and capitalize on our senior management s knowledge of the local real estate market and meet the needs of local residents through a community-oriented approach to banking, which focuses on local decision-making and delivering a consistent and high quality level of professional service. Our business strategy is focused on prudent growth through our existing four branch offices. We recently completed constructing a new home office which replaced our former main office in February 2011. The approximately $3.7 million expense related to the new office is being recognized over 40 years. We have no current plans for additional growth through new branches or acquisitions but will consider opportunities if they present themselves. Reasons for the Conversion and Offering The conversion and offering are intended to provide an additional source of capital not currently available to State-Investors Bank. The stock savings bank form of organization is also a more common structure which may alleviate some of the uncertainties of the recently enacted financial regulatory legislation. The net proceeds raised in the offering will allow us to better serve the needs of our community by: increasing capital and capital ratios of State-Investors Bank to ensure its ability to meet regulatory capital requirements, which are likely to increase in the next several years, and prudently grow; enabling State-Investors Bank to increase lending limits and support the development of new products and services, although we do not anticipate significant changes in our lending practices; and establishing stock-based benefit plans to attract and retain qualified personnel. After considering the advantages and risks of the conversion and offering, the board of directors of State-Investors Bank approved the conversion and offering as being in the best interests of State-Investors Bank, its customers and members and the communities that it serves. Table of Contents Table of Contents The Conversion and Offering The mutual-to-stock conversion that State-Investors Bank is undertaking involves a series of transactions by which it will convert from the mutual form of organization to the public stock holding company form of organization. In connection with the conversion, State-Investors Bank will adopt a federal stock savings bank charter to authorize the issuance of shares of capital stock. After the conversion and offering are completed, all of State-Investors Bank s stock will be owned by State Investors Bancorp, and all of State Investors Bancorp s outstanding common stock will be owned by the public. The management and business operations of State-Investors Bank will continue after the conversion and offering. The following diagram shows our new ownership structure after completion of the conversion and offering. Terms of the Offering We are offering between 1,870,000 and 2,530,000 shares of common stock of State Investors Bancorp for sale at an offering price of $10.00 per share. The subscription offering is made to State-Investors Bank s eligible account holders, our employee stock ownership plan, supplemental eligible account holders and State-Investors Bank s voting members. Shares not purchased in the subscription offering may be made available to the public in a community offering, giving a preference to natural persons and trusts of natural persons who reside in Jefferson, Orleans and St. Tammany Parishes, Louisiana. Shares not purchased in the subscription offering or the community offering may be offered for sale through a syndicated community offering. The maximum number of shares that we sell in the offering may increase by up to 15%, to 2,909,500 shares, due to regulatory considerations, demand for the shares in the offering or changes in financial market conditions in general and with respect to financial institution stocks in particular. After submission, orders are irrevocable unless the offering is terminated or is extended beyond [DATE3], 2011 or the number of shares of common stock to be sold increases to more than 2,909,500 shares or decreases to less than 1,870,000 shares. If the offering is extended beyond [DATE3], 2011, subscribers will have the right to confirm, modify or rescind their purchase orders. All investors will pay $10.00 per share in the offering. No commission will be charged to purchase shares of common stock. Keefe, Bruyette & Woods, our selling agent in the offering, will use its best efforts to assist us in selling shares of our common stock, but is not obligated to purchase any shares of common stock in the offering. Purchases By Directors and Officers We expect our directors and executive officers, together with their associates, to subscribe for a total of 230,000 shares, which represents 12.3% and 9.1% of the total shares to be outstanding at the minimum and maximum, respectively, of the offering range. The purchase price paid by them will be the same $10.00 per share price paid by all other persons who purchase shares of common stock in the offering. See Proposed Purchases of Common Stock by Management. How We Determined the Offering Range and the $10.00 Price Per Share The amount of common stock we are offering in connection with the conversion is based on an independent appraisal of the estimated market value of State Investors Bancorp, assuming that the offering is completed. An Table of Contents appraisal firm experienced in appraisals of banks and financial institutions, RP Financial, LC., has estimated that in its opinion, as of February 25, 2011, this market value was $22.0 million. Pursuant to Office of Thrift Supervision regulations, this indicates an offering range from $18.7 million to $25.3 million. Based on this valuation and the $10.00 per share price, the number of shares of common stock being offered for sale by State Investors Bancorp will range from 1,870,000 shares to 2,530,000 shares. The $10.00 per share price was selected primarily because it is the price most commonly used in mutual-to-stock conversions of financial institutions. RP Financial, LC. s appraisal is based in part on our financial condition and results of operations, the effect of the additional capital raised by the sale of shares of common stock in the offering and an analysis of a peer group of ten publicly traded savings bank and thrift holding companies that RP Financial, LC. considered comparable to us. The independent appraisal will be updated prior to the completion of the conversion and offering. If the appraised value decreases below $18.7 million or increases above $29.1 million, subscribers may be resolicited with the approval of the Office of Thrift Supervision and be given the opportunity to change or cancel their orders. If you do not respond, we will cancel your stock order and return your subscription funds, with interest, and cancel any authorization to withdraw funds from your deposit accounts for the purchase of shares of common stock. For a more complete discussion of the amount of stock we are offering for sale and the independent appraisal, see The Conversion and Offering How We Determined the Price Per Share and the Offering Range. RP Financial relied primarily on a comparative market value methodology in determining the pro forma market value of our common stock. The following table presents a summary of selected pricing ratios for State Investors Bancorp, for the peer group and for all fully converted publicly traded savings banks. The figures for State Investors Bancorp are from RP Financial s appraisal report and they thus do not correspond exactly to the ratios presented in the Pro Forma Data section of this prospectus. Compared to the average pricing ratios of the peer group, State Investors Bancorp s pro forma pricing ratios at the maximum of the offering range indicate a premium of 114.8% on a price-to-earnings basis, discount of 19.9% on a price-to-book value basis and discount of 21.7% on a price-to-tangible book basis. Price-to-Earnings Multiple(1) Price-to-Book Value Ratio(2) Price-to-Tangible Book Value Ratio(2) State Investors Bancorp (pro forma): Midpoint 32.66 x 55.56 % 55.56 % Maximum 38.84 59.56 59.56 Maximum, as adjusted 46.41 63.57 63.57 Peer Group: Average 16.20 x 74.37 % 76.03 % Median 12.63 77.33 77.66 All fully-converted, publicly-traded savings banks: Average 18.08 x 82.02 % 90.28 % Median 17.80 82.66 86.05 (1) Ratios are based on earnings for twelve months ended December 31, 2010, and share prices as of February 25, 2011. (2) Ratios are based on book value as of December 31, 2010, and share prices as of February 25, 2011. RP Financial, LC. advised the board of directors that the appraisal was prepared in conformance with the regulatory appraisal methodology. That methodology requires a valuation based on an analysis of the trading prices of ten comparable public companies whose stocks have traded for at least one year prior to the valuation date, and as a result of this analysis, RP Financial, LC. determined that our pro forma price-to-earnings ratios were generally higher than the peer group companies and our pro forma price-to-book ratios were generally lower than the peer group companies. See The Conversion and Offering How We Determined the Price Per Share and the Offering Range. RP Financial, LC. also advised the board of directors that the aftermarket trading experience of thrift conversion offerings completed during the three-month period ended February 25, 2011 was considered in the appraisal as a Table of Contents general indicator of current market conditions, but was not relied upon as a primary valuation methodology. See The Conversion and Offering After-Market Performance Information. There were two standard mutual-to-stock conversion offerings completed during the three-month period ended February 25, 2011. After-Market Performance Information The following table provides information regarding the after-market stock price performance for all standard mutual-to-stock conversion transactions completed between January 1, 2010 and February 25, 2011. As part of its appraisal of our estimated pro forma market value, RP Financial, LC. considered the after market performance of mutual-to-stock conversions completed in the three months prior to February 25, 2011, which is the date of its appraisal report. RP Financial, LC. considered information regarding the new issue market for converting thrifts as part of its consideration of the market for thrift stocks. Price Performance from Initial Trading Date Company Name Ticker Symbol Conversion Date 1 Day 1 Week 1 Month Through 2/25/11 Nasdaq listed companies: Anchor Bancorp ANCB 01/26/11 % 0.3 % 4.5 % 4.5 % Wolverine Bancorp, Inc. WBKC 01/20/11 24.5 22.4 35.0 35.6 SP Bancorp, Inc. SPBC 11/01/10 (6.0 ) (6.6 ) (8.0 ) 3.0 Standard Financial Corp. STND 10/07/10 19.0 18.9 29.5 46.7 Peoples Federal Bancshares, Inc. PEOP 07/07/10 4.0 6.9 4.2 39.2 OBA Financial Services, Inc. OBAF 01/22/10 3.9 1.1 3.0 39.5 OmniAmerican Bancorp, Inc. OABC 01/21/10 18.5 13.2 9.9 56.4 Athens Bancshares, Inc. AFCB 01/07/10 16.0 13.9 10.6 35.1 OTC Bulletin Board quoted companies: Madison Bancorp, Inc. MDSN 10/07/10 25.0 25.0 25.0 10.0 Century Next Financial Corporation CTUY 10/01/10 25.0 15.0 10.0 23.0 United-American Savings Bank UASB 08/06/10 (5.0 ) 5.0 30.0 Fairmount Bancorp, Inc. FMTB 06/03/10 10.0 20.0 10.0 60.0 Harvard Illinois Bancorp, Inc. HARI 04/09/10 (1.0 ) (5.0 ) Versailles Financial Corp. VERF 01/13/10 75.0 1/1/10 2/25/11 Average for all companies 10.0 8.9 9.8 32.4 1/1/10 2/25/11 Median for all companies 7.0 10.1 7.5 35.4 There can be no assurance that our stock price will not trade below $10.00 per share, as has been the case for some mutual-to-stock conversions. Before you make an investment decision, we urge you to carefully read this prospectus, including, but not limited to, the section entitled Risk Factors beginning on page 10. Conditions to Completing the Conversion The conversion will be conducted in accordance with the terms of our plan of conversion. We cannot complete the conversion and offering unless: the plan of conversion is approved by the affirmative vote of at least a majority of the votes eligible to be cast by State-Investors Bank s voting members; we receive all regulatory approvals necessary to complete the mutual-to-stock conversion and the offering; and we sell at least the minimum number of shares of common stock offered. Regulatory approval for the conversion is contingent upon us obtaining the approval of State-Investors Bank s voting members for the plan of conversion and the successful completion of the offering. Benefits to Management and Potential Dilution to Shareholders Resulting From the Offering We intend to adopt an employee stock ownership plan, which will allocate shares of our common stock to eligible employees primarily based on their compensation. Our employee stock ownership plan will purchase a number of shares equal to 8.0% of the shares sold in the offering using funds borrowed from State Investors Bancorp. The loan from State Investors Bancorp to the employee stock ownership plan trust for the purchase of shares will have a term of 20 years. We will incur additional compensation expense as a result of the employee stock ownership plan s release of shares over the term of the loan. Table of Contents In addition, no earlier than six months after the conversion as required by applicable regulations, we intend to consider the implementation of a stock option plan and a recognition and retention plan. If the stock option plan and the recognition and retention plan are approved by shareholders and implemented within one year of the completion of the conversion and offering, the number of options granted or shares awarded may not exceed 10.0% and 4.0%, respectively, of the shares outstanding after the offering. The following table summarizes the stock benefits that our officers, directors and employees may receive following the offering, assuming that we initially implement a stock option plan, granting options to purchase 10.0% of the shares outstanding after the offering, and a recognition and retention plan, awarding shares of common stock equal to 4.0% of the shares outstanding after the offering, as permitted under applicable regulations. In the table below, it is assumed that, at the minimum and maximum of the offering range, a total of 1,870,000 and 2,530,000 shares, respectively, will be sold and outstanding after the offering. Plan Individuals Eligible to Receive Awards Number of Shares to be Granted or Purchased Dilution Resulting from Issuance of Shares Estimated Value of Grants(1) At Maximum of Offering Range As Percent of Shares Sold Employee Stock Ownership Plan Officers and employees 202,400 8.0 % % $ 2,024,000 Recognition and Retention Plan Directors, officers and employees 101,200 4.0 % 3.8 %(2) 1,012,000 Stock Option Plan Directors, officers and employees 253,000 10.0 % 9.1 % 880,440 (1) The actual value of the stock awards will be determined based on their fair value as of the date the grants are made. For purposes of this table, fair value is assumed to be the offering price of $10.00 per share. The fair value of stock options has been estimated at $3.48 per option using the Black-Scholes option pricing model with the following assumptions: a grant date share price and option exercise price of $10.00; dividend yield of zero; expected option life of 10 years; risk free interest rate of 3.30% (based on the 10-year U.S. Treasury rate); and a volatility rate of 16.16% based on an index of publicly-traded thrift institutions. The actual expense of the stock options will be determined by the grant date fair value of the options, which will depend on a number of factors, including the valuation assumptions used in the option pricing model ultimately adopted. (2) Assumes shares of common stock to be awarded under the recognition and retention plan are issued from authorized but unissued stock. It is our intention, however, to purchase shares of our common stock on the open market to fund the recognition and retention plan. Shareholders will experience a reduction or dilution in their ownership interest of approximately 12.3% if we use authorized but unissued shares to fund stock awards and stock option grants made under the recognition and retention plan and the stock option plan (or taken individually, 3.8% for the recognition and retention plan and 9.1% for the stock option plan). Such dilution will not occur if we determine to fund these stock benefit plans through open market purchases, as opposed to the issuance of authorized but unissued shares. Persons Who May Order Stock in the Offering We are offering shares of our common stock in what is called a subscription offering in the following order of priority: (1) Depositors with a minimum of $50 on deposit at State-Investors Bank at the close of business on October 31, 2009; (2) Our tax-qualified employee stock ownership plan; (3) Depositors with a minimum of $50 on deposit at State-Investors Bank at the close of business on March 31, 2011; and (4) Depositors of State-Investors Bank at the close of business on [DATE1], 2011, and borrowers as of April 22, 1993, whose loans continued to be outstanding as of [DATE1], 2011. If all shares are not subscribed for in the subscription offering, we may offer shares in a community offering. The community offering, if any, may commence during the subscription offering or just after the subscription offering concludes. If a community offering is conducted, shares will be offered with a preference given first to natural persons and trusts of natural persons who reside in Jefferson, Orleans and St. Tammany Parishes, Louisiana and then to members of the general public. We may also offer shares of common stock not purchased in the subscription offering or the community offering to the public through a syndicate of broker-dealers managed by Keefe, Bruyette & Woods, referred to as a syndicated community offering. We have the right to accept or reject orders received in the community offering and the syndicated community offering, at our sole discretion. Table of Contents If we receive subscriptions for more shares than are to be sold in this offering, we may be unable to fill or partially fill your order. In such an event, shares will be allocated under a formula outlined in the plan of conversion and as described in the section entitled The Conversion and Offering Subscription Offering and Subscription Rights. Limits on Your Purchase of Shares of Common Stock The minimum number of shares of common stock that you may purchase is 25 ($250). No individual or persons exercising subscription rights through a single qualifying deposit account held jointly may purchase more than 30,000 shares of common stock ($300,000). If any of the following persons purchase shares of common stock, their purchases when combined with your purchases cannot exceed 50,000 shares ($500,000): your spouse, or relatives of you or your spouse either living in your household or serving as a director or officer of State-Investors Bank; companies, trusts or other entities in which you are a trustee, have a substantial financial interest or hold a senior management position; or other persons who may be acting in concert with you. Unless we determine otherwise, persons having the same address and persons exercising subscription rights through bank accounts registered to the same address will be aggregated and subject to this overall purchase limitation. We have the right to determine, in our sole discretion, whether prospective purchasers are associates or acting in concert. Subject to the approval of the Office of Thrift Supervision, we may increase or decrease the purchase and ownership limitations at any time. For a detailed description of purchase limitations see The Conversion and Offering Limitations on Common Stock Purchases. How You May Purchase Shares of Common Stock If you want to place an order for shares of common stock in the subscription or community offering, you must complete and sign an original stock order form and submit it to us, together with full payment. We are not required to accept copies or facsimiles of stock order forms. The stock order form also includes an acknowledgement from you that, before purchasing shares of our common stock, you have received a copy of this prospectus and that you are aware of the risks involved in the investment, including those described under Risk Factors beginning at page 10. We must receive your stock order form before the end of the subscription offering or the end of the community offering. Once we receive your order, you cannot cancel or change it. You may pay for shares in the subscription offering or the community offering in the following ways: by personal check, bank check or money order made payable to State Investors Bancorp. Funds submitted by personal check must be available in your account when the stock order is received; or by authorizing us to withdraw funds from your deposit account(s) maintained at State-Investors Bank. On the stock order form, you may authorize withdrawal from all types of our savings accounts and certificate of deposit accounts, excluding individual retirement accounts. Checks and money orders received by State Investors Bancorp will be cashed immediately and placed in a segregated account at State-Investors Bank. We will pay interest on your funds submitted by check or money order at the rate we pay on our passbook savings accounts, from the date we receive your funds until the date the offering is completed or terminated. All funds authorized for withdrawal from deposit accounts must be available in the account when the stock order form is received. Funds will remain in the account and continue to earn interest at the applicable contract rate, and subscription funds will be withdrawn upon completion of the offering. A hold will be placed on those funds when your stock order is received, making the designated funds otherwise unavailable to you during the offering period. If, upon a withdrawal from a certificate account, the balance falls below the minimum balance requirement, the remaining funds will earn interest at our passbook savings rate. There will be no early withdrawal penalty for withdrawals from certificate of deposit accounts used to pay for stock. Federal law prohibits us from knowingly loaning funds to anyone for the purpose of purchasing shares in the offering, including funds drawn on a State-Investors Bank line of credit. Cash, wire transfers and third party checks may not be remitted. Table of Contents For a further discussion regarding the stock ordering procedures, see The Conversion and Offering Procedure for Purchasing Shares in the Subscription and Community Offerings. Using Individual Retirement Account Funds If you intend to use your individual retirement account funds to purchase shares in the offering, please contact the stock information center promptly at ( ) - , preferably at least two weeks before [DATE2], 2011. On your stock order form, you are not permitted to authorize direct withdrawal of funds from an individual retirement account. Please be aware that federal law requires that such funds first be transferred to a self-directed retirement account with an independent trustee such as a brokerage account. The transfer of such funds to a new trustee takes time. Because we do not control the policies and procedures of other trustees, we cannot guarantee that you will be able to use your individual retirement account funds to purchase shares of common stock in the offering. Your ability to use your individual retirement account funds will depend on timing constraints and, possibly, limitations imposed by the individual retirement account trustee. You May Not Sell or Transfer Your Subscription Rights Under federal law, you are not permitted to sell or transfer your subscription rights, and we will act to ensure that you do not do so. We will not accept any stock orders that we believe involve the transfer of subscription rights. We intend to pursue any and all legal and equitable remedies if we learn of the transfer of any subscription rights. For a further discussion of subscription rights, see The Conversion and Offering Subscription Offering and Subscription Rights. Deadline for Placing Orders of Common Stock If you wish to purchase shares of our common stock, a properly completed and signed original stock order form, together with payment for the shares, must be received (not postmarked) by State Investors Bancorp no later than 12:00 noon, Central time, on [DATE2], 2011. You may submit your order form in one of three ways: by mail using the order reply return envelope provided, by overnight courier to the address indicated on the stock order form or by bringing the stock order form and payment to our stock information center located at State-Investors Bank s main office, 1041 Veterans Boulevard, Metairie, Louisiana. Once submitted, your order is irrevocable unless the offering is terminated or extended or the number of shares to be issued increases to more than 2,909,500 shares or decreases to less than 1,870,000 shares. We may extend the [DATE2], 2011, expiration date, without notice to you, until [DATE3], 2011. If the offering is extended beyond [DATE3], 2011, or if the offering range is increased or decreased, we will be required to resolicit subscriptions before proceeding with the offering. In either of these cases, subscribers will have the right to confirm, modify or rescind their purchase orders. If we do not receive a response from you to any resolicitation, your order will be rescinded and all funds received will be returned promptly with interest, or withdrawal authorizations will be cancelled. All extensions, in the aggregate, may not last beyond [DATE4], 2013. Steps We May Take If We Do Not Receive Orders for the Minimum Number of Shares If we do not receive orders for at least 1,870,000 shares of common stock, we may take several steps in order to sell the minimum number of shares. Specifically, we may: increase the purchase limitations; and/or extend the community offering; and/or hold a syndicated community offering; and/or seek regulatory approval to extend the offering beyond [DATE3], 2011, provided that any such extension will require us to resolicit subscriptions as described above. If we fail to sell the minimum number of shares, we will return your funds to you with interest, or cancel your deposit account withdrawal authorization. Delivery of Stock Certificates Certificates representing shares of common stock sold in the offering will be mailed to the certificate registration address noted on the stock order form as soon as practicable following completion of the conversion and offering and Table of Contents receipt of all regulatory approvals. It is possible that, until certificates for the common stock are delivered to purchasers, purchasers might not be able to sell the shares of common stock which they ordered, even though the common stock will have begun trading. Market for Common Stock We expect that our common stock will be listed on the Nasdaq Capital Market under the symbol SIBC. Keefe, Bruyette & Woods currently intends to become a market maker in our common stock, but is under no obligation to continue to do so. After shares of the common stock begin trading, you may contact a firm that offers investment services in order to buy or sell shares. Our Dividend Policy We have not made a decision at this time whether to pay dividends, or if we do decide to pay dividends, at what rate. After the offering, we may consider a policy of paying cash dividends on the common stock of State Investors Bancorp. The payment of dividends is dependent on numerous factors, including but not limited to, our future operating results and financial performance, growth prospects, ongoing capital requirements, regulatory limitations and overall economic conditions. In addition, during the first three years after the conversion, no dividend will be declared or paid if it would be classified as a return of capital for federal income tax purposes. Tax Aspects As a general matter, the conversion and offering will not be a taxable transaction for purposes of federal or state income taxes to State Investors Bancorp, State-Investors Bank, or persons eligible to subscribe in the subscription offering. Elias, Matz, Tiernan & Herrick L.L.P., our special counsel, has issued an opinion to us to the effect that consummation of transactions contemplated by the conversion and offering qualifies as a tax-free transaction for federal income tax purposes and will not result in any adverse federal tax consequences to State Investors Bancorp, State-Investors Bank, or persons eligible to subscribe in the subscription offering. Sagona, Bourg, Lee, Matthew & Co., L.L.C., a certified public accounting firm, has issued an opinion to us to the effect that consummation of transactions contemplated by the conversion and offering will qualify as a tax-free transaction for Louisiana state income tax purposes and will not result in any adverse Louisiana state tax consequences to State Investors Bancorp, State-Investors Bank, or persons eligible to subscribe in the subscription offering. See The Conversion and Offering Material Federal and Louisiana Income Tax Consequences of the Conversion. Stock Information Center If you have any questions regarding the offering or the conversion, please visit our stock information center, located at our main office, 1041 Veterans Boulevard, Metairie, Louisiana. This location will accept stock order forms and proxy cards, and will have supplies of offering materials. The stock information center is open weekdays during the offering, except for bank holidays, on Mondays from 12:00 p.m. to 5:00 p.m., on Tuesdays through Thursdays from 9:00 a.m. to 5:00 p.m. and on Fridays from 9:00 a.m. to 12:00 p.m. Central time. You can reach the stock information center at ( ) - from 9:00 a.m. to 5:00 p.m. Central time, Monday through Friday, except bank holidays. To ensure that you receive a prospectus at least 48 hours before the offering deadline, we may not mail prospectuses any later than five days prior to the offering deadline or hand-deliver any prospectus later than two days prior to the offering deadline. Stock order forms may only be distributed with or preceded by a prospectus. We will make reasonable attempts to provide a prospectus and offering materials to holders of subscription rights. The subscription offering and all subscription rights are expected to expire at 12:00 noon, Central time, on [DATE2], 2011, regardless of whether we have been able to locate each person entitled to subscription rights. By signing the stock order form, you are acknowledging your receipt of a prospectus and your understanding that the shares are not a deposit or account and are not federally insured and are not guaranteed by State Investors Bancorp, State-Investors Bank, the Federal Deposit Insurance Corporation, or any other federal or state governmental agency. Table of Contents
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001514068_typhoon_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001514068_typhoon_prospectus_summary.txt
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+PROSPECTUS SUMMARY The following summary highlights material information contained in this prospectus. This summary does not contain all of the information you should consider before investing in the securities. Before making an investment decision, you should read the entire prospectus carefully, including the risk factors section, the financial statements and the notes to the financial statements. You should also review the other available information referred to in the section entitled Where You Can Find More Information in this prospectus and any amendment or supplement hereto. The Company Overview Typhoon Resources Corp. was incorporated in the state of Nevada on November 8, 2010. Headquartered in Victoria, British Columbia, we plan on becoming an Internet-based company specializing in showcasing coupons for small businesses. The Company was founded with the idea that in today s ever-changing economy consumers are more likely to use products when they have a coupon for that product. It is our mission to provide small businesses with a website wherein they can showcase coupons at a very low quarterly cost, while also providing viewers with a resource to easily save money in their respective geographic areas. Since inception, our operations have consisted of developing our business plan and establishing the organization and structure of our Company. We have spent the majority of our time researching our proposed business and refining our business model. During this early development stage, we have secured a design company to begin on the creation of our logo and branding. We have also secured our website, www.TyphoonCoupons.com , which we hope will eventually become a household name, and a valuable resource to viewers and clients. We believe that our success will depend on our ability to provide updated coupons to our viewers, and expand our clientele. We intend to expand our Company to include areas across the United States and Canada, and build a reputation as a leading coupon website. Initially, we intend to develop and launch our website and subsequently market our website to companies based in Los Angeles County. Even though our President and Company headquarters are located in Victoria, British Columbia, we do not foresee any significant difficulties launching our business since the Company s business consists of developing and operating a website, and such activities can occur remotely so long as the developers and operators of the website have internet access. Further, we intend to engage independent sales representatives in Los Angeles, California to solicit to small businesses and inform them of our website and subsequently the interested businesses can contact us through the website to become a client and begin using our services. Once we secure 1-3 independent sales representatives, we will begin accepting coupons from businesses, and inform the businesses of our proposed launch date. We plan to devote over 60% of our net proceeds to the marketing of our website in Los Angeles County. We believe that if we properly market our Company to Los Angeles County, the sheer size of that area will create national brand awareness, and ultimately make our growth throughout North America easier. We believe that our success will depend on our ability to promote our website and logo, as well as anticipate and respond to changing consumer demands. Our sole officer and director has only recently become interested in creating an Internet-based company, and does not have any professional training or technical credentials in the development of websites. Therefore, we intend to retain a qualified website developer on a contract basis to build the website that we envision. We do not have any verbal or written agreements regarding the retention of any qualified developer or public relations firms for our marketing and sales program. We are currently a development stage company and to date we have recorded no revenue. Accordingly, our independent registered public accountants have issued a comment regarding our ability to continue as a going concern (please refer to the footnotes to the financial statements). Until such time that we are able to establish a consistent flow of revenues from our operations sufficient to sustain our operations, Management intends to rely primarily upon debt financing as needed to supplement the cash flows generated by the sale of our services in order to allow the Company to continue to meet its obligations, including continuing to develop our initial business operation, and covering any such cost associated with being a fully reporting Company with the Securities and Exchange Commission ("SEC"), which we estimate to be around $10,000 for 12 months following this Offering. The Company has included such costs to become a publicly reporting company in its targeted expenses for working capital expenses and intends to seek out reasonable loans from friends, family and business acquaintances if it becomes necessary. At this point the Company has not received any firm commitments or indications from any family, friends or business acquaintances regarding any potential investment in the Company. Our current cash and working capital is not sufficient to cover our current estimated expenses of $45,000, which include those fees associated with obtaining a Notice of Effectiveness from the Commission for this registration statement. We hope that we will be able to secure additional financing, and complete this Offering within the next coming months. Upon obtaining a Notice of Effectiveness, we will conduct the Offering contemplated hereby, and anticipate raising sufficient capital from this Offering to initiate our business plan. To initiate the full extent of our business plan, additional funding will be needed for general administrative expenses, business development, marketing costs and support materials, which funding we anticipate coming from this Offering. We believe that the maximum amount of funds generated from the Offering will allow us to operate for up to twelve months after the completion of this Offering and during the execution of our business plan. Assuming we generate nominal or no revenues, even if the maximum amount of funds is raised under this Offering, we will still require additional financing to fund our operations past the twelve month period following the completion of this Offering. For a further discussion of our plan of operations, initial operations and our growth strategy see the below section entitled Description of Our Business . SUMMARY OF THIS OFFERING The Issuer Typhoon Resources Corp. Securities being offered Up to 3,500,000 shares of Common Stock, our Common Stock is described in further detail in the section of this prospectus titled DESCRIPTION OF SECURITIES Common Stock. Offering Type
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001514149_billet_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001514149_billet_prospectus_summary.txt
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+As used in this prospectus, unless the context otherwise requires, we , us , our or Billet Finder refers to Billet Finder Inc. All dollar amounts in this prospectus are in U.S. dollars unless otherwise stated. The following summary is not complete and does not contain all of the information that may be important to you. You should read the entire prospectus before making an investment decision to purchase our common shares. Billet Finder Inc. Billet Finder Inc. was incorporated in the State of Nevada as a development stage company to create and launch BilletFinder.com, a new website which will be designed to offer a new and innovative solution to the relatively unstructured and fragmented practice of billeting. Historically, billets normally referred to private dwellings to which a military soldiers were assigned living (sleeping) quarters. The actual term "billet" (from the French) was a note, commonly used in the 18th and early 19th centuries as a "billet of invitation", denoting an order issued to a soldier entitling him to quarters with a certain person. Today, the term billet often refers in a general sense to the voluntary provision of living quarters to visitors. Most often, billeting is done through various organizations as a means of reducing costs and living quarters are assigned in an organized fashion. In North America, billeting is most commonly used for room and board to school aged individuals engaged in sports teams or other types of clubs. Billet Finder will represent a first to market online clearing house of billeting information and resources, a central place where teams and clubs that either wish to travel to new places or wish to host other teams and clubs can find opportunities, meet others, and organize their events. There is now virtually no similar offering of its kind in the billeting sphere and BilletFinder.com will provide a single source of value-added content and features, from education and case studies to comprehensive listings, search capabilities, and provision of specialized template websites. We are still in our development stage and plan on commencing business operations in early 2012. The Billet Finder website has not yet been developed, substantial additional development work and funding will be required before the website can be operational. We have not earned any revenues to date. We do not anticipate earning revenues until such time as we have completed our website. As of March 31, 2011, we had $37,612 cash on hand and $1,032 liabilities. Accordingly our working capital position as of March 31, 2011 was $36,580. Since our inception through March 31, 2011, we have incurred a net loss of $13,670. We attribute our net loss to having no revenues to offset our expenses and the professional fees related to the creation and operation of our business. John Kinross-Kennedy, C.P.A., our independent auditor, has expressed substantial doubt about our ability to continue as a going concern given our lack of operating history and the fact to date have had no revenues. Our fiscal year ended is December 31. Table of Contents Indicate by check mark whether the registrant is a large accelerated filer, and accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer o Accelerated Filer o Non-accelerated filer o Smaller Reporting Company x CALCULATION OF REGISTRATION FEE TITLE OF EACH CLASS OF SECURITIES TO BE REGISTERED AMOUNT TO BE REGISTERED PROPOSED MAXIMUM OFFERING PRICE PER SHARE (1) PROPOSED MAXIMUM AGGREGATE OFFERING PRICE (1) AMOUNT OF REGISTRATION FEE (1) Common Stock 3,525,000 shares $0.01 $35,250 $4.09 (1) Estimated solely for the purpose of calculating the registration fee in accordance with Rule 457(a) under the Securities Act of 1933, as amended. THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE RERGISTRATION SHALL BECOME EFFECTIVE ON SUCH A DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(a), MAY DETERMINE. Table of Contents We were incorporated on July 21, 2010 under the laws of the State of Nevada. Our principal offices are located at 1894 Clarence Street, Sarnia, Ontario, Canada. Our telephone number is (519) 331-1103. The Offering Securities Being Offered Up to 3,525,000 shares of our common stock. Offering Price The offering price of the common stock is $0.01 per share. We intend to apply to the NASD Over-the-Counter Bulletin Board electronic quotation service to allow the trading of our common stock upon our becoming a reporting entity under the Securities Exchange Act of 1934. If our common stock becomes so traded and a market for the stock develops, the actual price of stock will be determined by prevailing market prices at the time of sale or by private transaction negotiated by the selling shareholders. The offering price would thus be determined by market factors and the independent decisions of the selling shareholders. Minimum Number of Shares None To Be Sold in This Offering Securities Issued and to be Issued 7,275,000 shares of our common stock are issued and outstanding as of the date of this prospectus. All of the common stock to be sold under this prospectus will be sold by existing shareholders and thus there will be no increase in our issued and outstanding shares as a result of this offering. The issuance to the selling shareholders was exempt due to the provisions of Regulation S. Use of Proceeds We will not receive any proceeds from the sale of the common stock by the selling shareholders. Summary Financial Information March 31, 2011 December 31, 2010 Balance Sheet Data (unaudited) (audited) Cash $ 37,612 $ 47,362 Total Current Assets $ 37,612 $ 47,362 Liabilities $ 1,032 $ 1,032 Total Stockholder s Equity $ 36,580 $ 46,330 Statement of Loss and Deficit For the From Inception Three Months Ended (July 21, 2010) to March 31, 2011 December 31, 2010 (unaudited) (audited) Revenue $ - $ - Net Loss for the Period $ 9,750 $ 3,920 Table of Contents
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001514418_integrated_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001514418_integrated_prospectus_summary.txt
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+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001514785_venta_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001514785_venta_prospectus_summary.txt
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+PROSPECTUS SUMMARY This summary highlights certain information contained elsewhere in this prospectus. You should read the entire prospectus carefully, including our financial statements and related notes, and especially the risks described under Risk Factors beginning on page 6. All references to we, us, our, Company or similar terms used in this prospectus refer to Venta Global, Inc. Unless otherwise indicated, the term fiscal year refers to our fiscal year ending November 30. Unless otherwise indicated, the term common stock refers to shares of the Company s common stock. Corporate Background and Business Overview Venta Global, Inc. was incorporated in the State of Nevada on February 6, 2009. We maintain our statutory registered agent's office at 50 West Liberty Street Suite 800. Reno, NV 89501. Our business office is located at: 7701 Sand Street, Fort Worth, TX 76118. Our telephone number is 1(888) 836-8208. Venta is a Motor Vehicle Distributor, licensed by the Texas Department of Motor Vehicles (license number 108123, expiring 05/31/2013). The Company satisfied all the state requirements to distribute the following brands: Nanjing, Tazzari, Foton. The Company is currently in the process of adding several other manufactures to the product line. The Company is a development stage company and has had limited operations to date. At this stage in our development, there can be no assurance that we will be successful in generating revenues from the sale of our products. From February 6, 2009 (inception) to May 31, 2011, we have generated revenues of $34,112, and incurred accumulated net losses of $456,695. As of May 31, 2011, we had assets of $33,570. Based on our financial history since inception, our independent auditors have expressed substantial doubt as to our ability to continue as a going concern. As of May 31, 2011, we had approximately $9,900 in cash. Our current monthly burn rate is approximately $7,000. We anticipate generating losses for the next 12 months. We currently have no formal commitments, but anticipate that we ll be able to cover expenses for the next few months with short-term advances from shareholders. We estimate that additional financing and capital of approximately $200,000 will be required to continue planned operations. Since our incorporation, we have not made any significant purchases or sales of assets, nor have we been involved in any mergers, acquisitions or consolidations. We have never declared bankruptcy, have never been in receivership, and have never been involved in any legal action or proceedings. We have four executive officers who also serve as directors. Summary of the Offering Shares of common stock being offered by us: 20,000,000 shares of our common stock. Offering price: $0.05 per share of common stock. Number of shares outstanding before the offering: 35,898,000 Number of shares outstanding after the offering, if all the shares are sold: 55,898,000 Aggregate market price of our common stock based on the offering price of $0.05 after the offering: $2,794,900 Use of Proceeds: Inventory purchase, working capital, general corporate expenses. See Use of Proceeds on page 13 . Offering Period: The offering shall terminate on the earlier of: (i) 180 days after the effectiveness of the registration statement; or (ii) when the offering is fully subscribed for. PROSPECTUS SUMMARY - continued
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001514888_experience_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001514888_experience_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..6189192e53af3008361981c09f70b750818083a0
--- /dev/null
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@@ -0,0 +1 @@
+Price per share The selling shareholders will sell their shares at a fixed price per share of $0.05 until our shares are quoted on the Over-the-Counter Bulletin Board and thereafter at prevailing market prices or in privately negotiated transactions. All of the shares being registered for sale by the Company will be sold at a fixed price per share of $0.05 for the duration of the offering. Securities Issued and 2,280,000 shares of common stock are issued and outstanding Outstanding before the Offering and 4,280,000 shares will be outstanding after the Offering, assuming all shares are sold. However, if only 50% or 25% of the shares being offered are sold, there will be 3,280,000 or 2,780,000 shares outstanding, respectively. Registration costs We estimate our total offering registration costs to be $13,000. If we experience a shortage of funds prior to funding, our directors have informally agreed to advance funds to allow us to pay for offering costs, filing fees, and correspondence with our shareholders; however, our directors have no formal commitment or legal obligation to advance or loan funds to the Company. Our officers, directors, control persons and/or affiliates do not intend to purchase any Shares in this Offering. If all the Shares in this Offering are sold, our executive officers and directors will own 46.7% of our common stock. However, if only 50% or 25% of the Shares in this Offering are sold, our executive officers and directors will own 61.0% or 71.9%, respectively. RISK FACTORS An investment in these securities involves a high degree of risk and is speculative in nature. In addition to the other information regarding the Company contained in this Prospectus, you should consider many important factors in determining whether to purchase Shares. Following are what we believe are material risks related to the Company and an investment in the Company. Investors are urged to perform their own due diligence, with the help of their investment, accounting, legal and/or other professionals and to make an independent decision regarding an investment in the Shares. RISKS ASSOCIATED WITH CLEAR SYSTEM RECYCLING, INC.: Our independent auditors have issued an audit opinion for Clear System Recycling, Inc. which includes a statement describing our going concern status. Our financial status creates a doubt whether we will continue as a going concern. As described in Note 5 of our accompanying financial statements, our auditors have issued a going concern opinion regarding the Company. This means there is substantial doubt we can continue as an ongoing business for the next twelve months. The financial statements do not include any adjustments that might result from the uncertainty regarding our ability to continue in business. As such we may have to cease operations and investors could lose part or all of their investment in the Company. CLEAR SYSTEM RECYCLING, INC. (A Development Stage Company) Statement of Operations From Inception on January 24, 2011 through March 31, 2011 REVENUES: $ - OPERATING EXPENSES: General and administrative 730 Professional fees 3,093 Total Operating Expenses 3,823 OTHER INCOME AND EXPENSE - NET LOSS APPLICABLE TO COMMON SHARES $ (3,823) Basic and Diluted Loss per Common Share $ 0.00 Weighted Average Number of Common Shares Outstanding 2,071,875 The accompanying notes are an integral part of these financial statements. We lack an operating history and have losses which we expect to continue into the future. There is no assurance our future operations will result in profitable revenues. If we cannot generate sufficient revenues to operate profitably, we may suspend or cease operations. We were incorporated on January 24, 2011, and we have not started our proposed business operations or realized any revenues. We have no operating history upon which an evaluation of our future success or failure can be made. Our net loss since inception to March 31, 2011, was $3,823, of which approximately $3,092 is for professional fees in connection with this Offering. Our ability to achieve and maintain profitability and positive cash flow is dependent upon: Completion of this Offering, Our ability to attract customers who will buy our services, Our ability to generate revenue through the sale of our services. Based upon current plans, we expect to incur operating losses in future periods because we will be incurring expenses and not generating revenues. We cannot guarantee that we will be successful in generating revenues in the future. In the event the Company is unable to generate revenues it may be required to seek additional funding. Such funding may not be available, or may not be available on terms which are beneficial and/or acceptable to the Company. In the event the Company cannot generate revenues and/or secure additional financing, the Company may be forced to cease operations and investors will likely lose some or all of their investment in the Company. We have no clients or customers and we cannot guarantee we will ever have any. Even if we obtain clients or customers, there is no assurance that we will make a profit. We have no clients or customers. We have not identified any clients or customers and we cannot guarantee we ever will have any. Even if we obtain clients or customers for our services, there is no guarantee that we will develop products and/or services that our clients/customers will want to purchase. If we are unable to attract enough customers/clients to purchase our services (and any products we may develop or sell) it will have a negative effect on our ability to generate sufficient revenue from which we can operate or expand our business. The lack of sufficient revenues will have a negative effect on the ability of the Company to continue operations and it could force the Company to cease operations. We do not have any additional source of funding for our business plans and may be unable to find any such funding if and when needed, resulting in the failure of our business. Other than the shares offered by this Prospectus, no other source of capital has been identified or sought. As a result we do not have an alternate source of funds should we fail to complete this Offering. If we do find an alternative source of capital, the terms and conditions of acquiring such capital may result in dilution and the resultant lessening of value of the shares of stockholders. If we are not successful in raising sufficient capital through this Offering, we will be faced with several options: CLEAR SYSTEM RECYCLING, INC. (A Development Stage Company) Statement of Changes in Stockholders Equity From Inception on January 24, 2011 through March 31, 2011 Common Shares Additional Paid-In Deficit Accumulated During the Exploration Total Stockholders Shares Amount Capital Stage Equity Balance- January 24, 2011 (Inception) - $ - $ - $ - $ -
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001515114_glorywin_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001515114_glorywin_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad
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@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001515353_nouveau_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001515353_nouveau_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..fa10bacdd7589274b3bf16c8e64227f81f9d0db0
--- /dev/null
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+The following summary highlights selected information contained in this prospectus. This summary does not contain all the information you should consider before investing in the securities. Before making an investment decision, you should read the entire prospectus carefully, including the "RISK FACTORS" section, the financial statements and the notes to the financial statements. As used throughout this prospectus, the terms "SaaSMAX", "Company", "we," "us," or "our" refer to SaaSMAX, Inc.. SaaSMAX, Inc. is a Nevada Corporation incorporated January 19, 2011, with its principal place of business in San Diego, California. SaaSMAX is a development stage company that is developing and launching an online business-to-business marketplace (the "SaaSMAX Marketplace") and channel management tools for the rapidly growing software-as-a-service ("SaaS") market. Software-as-a-Service, sometimes referred to as "on-demand software," is a software delivery model in which software is delivered over the Internet through a web browser. With SaaS Applications ("SaaS Apps"), software and data is hosted on virtual servers (often referred to as "in the cloud," or "cloud-based" or "cloud computing"). Cloud computing fundamentally changes the way business software applications are developed and deployed. SaaS App developers no longer need to create and manage their own infrastructure of servers, storage, network devices, operating system software and development tools in order to create a business application. Instead, the entire software infrastructure is managed by third parties who specialize in infrastructure management, and software developers simply use a remote management connection/console to access the development environment. SaaS App users can gain access to a multitude of business applications via an Internet browser or mobile device, and are able to take advantage of a robust, secure, scalable and highly available application at a relatively low cost, without the cost and complexity of managing the application. While practically every Internet service (such as a Web search engine or web-based Email) is driven by some underlying software, the terms "SaaS" or "SaaS Apps" are often used in the context of business software. Independent Software Vendors ("ISVs" or "App Vendors") of SaaS Apps or traditional software applications develop and sell software apps that run on one or more operating system platforms. The companies that make the operating platforms encourage and lend support to ISVs, often with special "business partner" programs. Some ISVs focus on a particular operating platform like Apple iPhone's iOS for which there are tens of thousands of ISV applications. Other ISVs specialize in a particular application area, such as customer relationship management or business intelligence, for example, and integrate with multiple platforms. The Company's aim is to become a channel program for SaaS, by offering a Marketplace for SaaS Apps and by facilitating, improving and increasing the Sales Value Chain for SaaS ISVs. The "Sales Value Chain" refers to the value-adding activities and the participants that are involved in selling a software product to an end-user. For example, a software application is typically developed and sold by an ISV. That ISV may offer to sell licenses for its software application directly to an end user, or it may contract with a wholesaler, distributor or retailer (collectively referred to herein as "Reseller") which then markets and resells that software application to end users. Moreover, when software applications require customization or user training before they are employed by the end user, ISV's will seek to partner with independent value-added resellers ("VARs"), service providers, solution providers, systems integrators or other types of consultants (collectively referred to in this Prospectus as "Solution Providers") who will provide those services to the end users. With traditional software, that requires installation on a personal computer, server or workstation, ISVs typically "package" their software on a disc and license or sell the software, on the disc, through the Sales Value Chain in order to reach end-users. The discs are therefore physically accountable for as product inventory and the end-user is responsible for setting up the software on the servers, network, and employee workstations and maintaining the servers, network and workstations. In many cases businesses do not have the expertise to install and maintain the software. In those cases, an end-user will typically hire a Solution Provider to install and/or manage the software for the end user. However, with SaaS Apps, there is no physical delivery of a software product, because a SaaS App is available and ready-to-use when it is activated on-line. As a result of this non-physical, direct-to-end-customer deployment method, the Solution Providers in the Sales Value Chain are potentially ignored during a sales transaction and, in those cases, may not be compensated by the SaaS App Vendor for referring the end-user. In traditional software sales, the Solution Provider usually has a pre-existing relationship with the end-user and is therefore the trusted advisor to the end-user for all software purchases. For SaaS App Vendors, we believe that the Sales Value Chain must also incorporate the Solution Providers for software purchases. We believe that when completed and implemented, the SaaSMAX Marketplace will provide a direct way for many SaaS App Vendors to reach or market their SaaS Apps to Solution Providers, and in addition, provide SaaS App Vendors with the tools to track sales and manage reseller programs for each Solution Provider interested in their SaaS App. Our SaaSMAX Marketplace is intended to be a "B2B" or "business to business" solution to be implemented between SaaS App Vendors and SaaS Solution Providers, which will enable SaaS App Vendors to market, promote and manage the sales and distribution of their SaaS App to participants in the Sales Value Chain and to business users around the world. SaaSMAX management believes that the SaaSMAX Marketplace will: Make it easier and more efficient for SaaS App Vendors to promote their SaaS Apps, sell licenses, find new customers, and build a channel of Solution Providers. Be the first SaaS marketplace that will enable SaaS App Vendors to sell, market, manage and monitor their sales and marketing efforts in real time across the SaaS Sales Value Chain. Be a valuable, efficient business and educational tool for SaaS Solution Providers, enabling them to thoroughly research each listed SaaS App and gain access to online demos, technical specifications, peer ratings, support, pricing, commission plans and much more. Make it easier for Solution Providers to find SaaS Apps for their customers and earn commissions from SaaS App Vendors for reselling or referring their SaaS Apps to end user customers. Include a Solution Provider Directory which will contain the business profiles of Solution Providers, enable end user businesses to identify and do business with Solution Providers, and enable SaaS App Vendors to network with Solution Providers. SaaSMAX intends to generate revenue from the following revenue streams: Annual Membership Fees from SaaS App Vendors who list their SaaS App on the SaaSMAX Marketplace. Annual Membership Fees from Solution Providers who want to resell SaaS Apps and also list their profile in the SaaSMAX Solution Provider Directory. Advertising and Marketing Fees from SaaS App Vendors who want to conduct premium marketing and/or advertising campaigns within the SaaSMAX Marketplace. Transaction fees based on a percentage of the revenue earned by SaaS App Vendors who sell and promote their SaaS App through the SaaSMAX Marketplace. Advertising and marketing fees from companies who want to advertise within the SaaSMAX Marketplace or on the SaaSMAX website. The first phase of software development efforts of the SaaSMAX Marketplace has commenced and the first test-phase release ("SaaSMAX Alpha,") is expected in the third quarter of 2011. During SaaSMAX Alpha, we will be adding a limited number of invitation-only SaaS Apps and Solution Providers to test the service. Also, during this time, we will be continuing our software development efforts. Once we believe that our platform is developed sufficiently to satisfy our potential customers' needs, we will commence a "SaaSMAX Beta" phase. During the Beta phase, our primary focus will be to recruit several dozen SaaS App vendors and several dozen Solution Providers to use our service. During the Beta phase we will; i)study the use of our service; ii) adjust the business pricing model, if necessary; iii) add features and functionality, if necessary; and, iv) plan and prepare marketing campaigns. Once management is satisfied with the results of the Beta Phase, we will commercially launch SaaSMAX. We intend to continually develop new features and functionality for the SaaSMAX Marketplace into the foreseeable future. We are a development stage business and have had no revenue since our formation. There can be no assurance that we will complete the development of the SaaSMAX Marketplace, and even if completed that the SaaSMAX Marketplace will generate any revenues. Further, there can further be no assurance that even if revenues are generated by the SaaSMAX Marketplace, that those revenues will be sufficient to enable the Company to maintain its operations. The Company will need to secure additional financing in the future to continue to develop the product, attract customers, and start generating revenues. There can be no assurance that the Company will be successful with any subsequent financings The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. Proceeds of $200,100 generated from the sale of 1,000,500 share of common stock provided sufficient cash balances to support the Company's operations and development of the SaaSMAX Marketplace through February 28, 2012. Accordingly, the Auditor's Report included in our audited financial statements at February 28, 2011 did not include language raising doubt about our ability to continue as a going concern. Between February 28, 2011 and June 30, 2011 we determined to add new features and functionality to the SaaSMAX Marketplace, which resulted in the need for additional expected development time and resources necessary to complete the SaaSMAX Marketplace. Our business plans estimate that we will need to raise additional capital to fund our operations after February 28, 2012 and there can be no assurance that we will be able to raise any or all of the capital required. However, without further funding, we anticipate running out of cash after May 1, 2012, and accordingly our current cash balances will not be sufficient to fund our operating expenses and the continued development of the SaaSMAX Marketplace after May 1, 2012. We have generated no revenues since our inception and have incurred a net loss of $71,222 and net cash used in operations of $65,083. Unless we begin generating revenues in the near future, we anticipate that we will continue to incur net losses in the near term, and we may never be able to achieve profitability. We expect to continue to incur losses for the foreseeable future. In order to achieve profitable operations we need to generate significant revenues from fees earned from the SaaSMAX Marketplace. We cannot be certain that our business strategies will be successful or that will we generate significant revenues and become profitable. Additionally, we will need to obtain additional public or private equity financings or debt financings in order to continue operations. Accordingly, language regarding the company's ability to continue as a going concern has been added to the June 30, 2011 unaudited financial statements included herein.
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001515708_macquarie_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001515708_macquarie_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..d1a7c41922a9dcb311f8c08cc35f7bca33b28b4f
--- /dev/null
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@@ -0,0 +1 @@
+PROSPECTUS SUMMARY The following is a summary of important information contained elsewhere in this prospectus. You should read the entire prospectus, including the section entitled Risk Factors, carefully before making a decision about investing in our shares. This summary does not contain all of the information that you may consider important in making your investment decision. Our Company We are a Delaware limited liability company formed on January 19, 2011. We will pool the capital you invest with capital contributed by other investors and borrowings to acquire a diversified portfolio of equipment and equipment leases. We may also make investments in other equipment related transactions which will allow us to directly or indirectly participate in the benefits and risks of equipment ownership or usage, such as trading transactions, residual value guarantees, forward purchase agreements, total lease return swaps, participation agreements, equipment purchase options and joint ventures. See Investment Objectives and Policies Types of Transactions and Transaction Strategies. The pooled capital contributions will also be used to pay fees and expenses associated with this offering and our operations and to fund a reserve. The majority of equipment that we purchase will be accompanied by a lease of that equipment to third parties, though we may also invest in other types of equipment related transactions. As of the date of this prospectus we have not yet identified any specific equipment investments. We are managed by Macquarie Asset Management Inc., a member of the Macquarie Group. Our operations will be divided into three separate phases: Offering Period: We will raise money from investors during this period, which we expect to last for up to two years from the date of this prospectus. We expect to invest most of the net proceeds from this offering during this period. Operating Period: We expect this period will last for five years from the end of the offering period. During this period, we will continue to reinvest the cash generated from our initial investments to the extent that cash is not needed for distributions to our members or expenses and reserves. Liquidation Period: This period is anticipated to last one year from the end of the operating period, but may last longer, as adverse market conditions for some kinds of equipment may exist and require a longer period to dispose of the equipment. The liquidation period can last no longer than 36 months from the end of the operating period. During this period we will dispose of the remainder of our portfolio. You should expect to hold your shares for at least eight years from the time you invest, though the actual duration of your investment will likely be longer. Each subscriber has the right to cancel his, her or its subscription before it has been accepted by our manager by providing written notice of the intent to cancel, in a form that is satisfactory to our manager and signed by each person that signed the subscription agreement as an investor, to 225 Franklin Street, 17th Floor, Suite 1700, Boston, Massachusetts 02110. After that time, unless otherwise approved by our manager in its sole discretion, an investment in our shares is irrevocable and investors will have no right to revoke their subscriptions prior to us achieving our minimum offering amount. Investment Objectives Our principal investment objectives are to: preserve, protect and return your invested capital; generate regular monthly cash distributions; reduce our overall risk through diversification of our portfolio; Table of Contents generate investment returns that are not correlated to returns from investments in listed stock and bond markets; grow your invested capital; and generate a favorable total return on your investment. There is no assurance, however, that we will be able to meet our investment objectives. Our Manager Our manager is Macquarie Asset Management Inc. Our investment decisions will be made by our manager s investment committee, which at the date of this prospectus is comprised of Messrs Fahy and Wilson, or by our manager s board of directors, which at the date of this prospectus is comprised of Messrs Fahy, O Neill and Pitts. See Management. The manager and the persons making our investment decisions can be contacted at: our manager s principal office at 225 Franklin St, 17th Floor, Suite 1700, Boston, Massachusetts, 02110; or our manager s telephone number, 866-965-7622. Our manager s website address is www.macquarie.com/mami. The information contained on our manager s website is not part of this prospectus. Our manager is a member of the Macquarie Group. The Macquarie Group is a diversified international provider of banking, financial, leasing, advisory and investment services. The parent entity of the Macquarie Group, Macquarie Group Limited, is listed on the Australian Stock Exchange. As of September 30, 2011, the Macquarie Group operated in more than 70 offices in 28 countries and had approximately 15,000 employees, over 3,700 of whom were located across 28 offices in North America. Our manager is operated by the Macquarie Group s equipment leasing group. It has operated leasing businesses since 1987, specializing in a range of equipment including ground transportation, aviation, technology, utility and other equipment. As of September 30, 2011, the Macquarie Group s leasing group had over $12 billion of equipment leases under management with 948 employees located in North America, Europe, Asia and Australia / New Zealand. These employees variously specialize in all aspects of equipment leasing operations, from transaction origination to asset management and equipment remarketing. Our manager is the sponsor of Fund One, an equipment leasing program which will be in its offering period until March 19, 2012. Our manager will provide or arrange all services necessary and desirable for our operations, including those relating to equipment acquisitions and disposals, lease management and administrative, reporting and regulatory services. We describe the background and experience of our manager s directors, as well as other executives within leasing businesses of our manager s affiliates who may provide advice and assistance to us, in Management. Also see Fiduciary Duties and Conflicts of Interest. In managing us, our manager will have access to the experienced leasing and other resources of the Macquarie Group. The relationship between our members and our manager is governed by our operating agreement, which is attached as Appendix A to this prospectus. You should be particularly aware that under our operating agreement you will have limited voting rights and our shares will not be freely transferable. Summary of Risk Factors An investment in our shares involves significant risks, including the following: All or a substantial portion of your distributions may be a return of capital and not a return on capital. Rates of distribution will not necessarily be indicative of our overall performance. Table of Contents This is a blind pool offering. We have not identified any specific investments as of the date of this prospectus. We cannot determine all of the potential risks associated with our portfolio at this time. Investments in our shares are effectively illiquid. There is no active trading market for our shares. You should be prepared to hold your shares for the duration of the fund. Our manager will manage our operations and may make decisions with which you do not agree or which do not achieve our business objectives. You will have limited voting rights and limited ability to remove our manager. Our manager will receive substantial fees from us which will reduce the cash available for distribution or investment. If a client is in default under a lease contract with us, we may incur losses. The future market value of our equipment may be lower than anticipated, resulting in a loss on our investment. There may be conflicts of interest between us and our manager and its affiliates, including: the receipt of fees and other compensation by our manager and its affiliates from us; our manager and its affiliates may compete with us; we may engage in related party transactions; our manager or its affiliates may purchase shares as an investor; our manager s decisions regarding the use of leverage and reserves will affect our cash distributions and our manager s compensation; we will rely on the employees of our manager s affiliates; the resolution of conflicts will be undertaken by employees of our manager s affiliates; no independent underwriter conducted due diligence with respect to this offering; we and our manager do not have an independent audit committee; we and our manager are not represented by separate counsel; and our manager will act as our tax matters partner. Our use of debt financing means our losses may be greater than if debt financing were not used. The equipment leasing industry is highly competitive, which may hinder our ability to source appropriate or attractive investments. There are material income tax risks associated with this offering. See Risk Factors. Investor Suitability You must meet our basic suitability requirements to invest in our shares. In general, you must either have: a net worth of at least $70,000 plus at least $70,000 of annual gross income, calculated exclusive of your home, home furnishings and automobiles; or a net worth of at least $250,000, calculated exclusive of your home, home furnishings and automobiles. In addition, you must meet certain state requirements. Basic suitability requirements vary from state to state. Table of Contents You should purchase our shares only if: you meet our basic suitability requirements; you are or will be in a financial position appropriate to enable you to realize to a significant extent the potential benefits described in this prospectus; you are able to bear the economic risk of the investment based on your overall financial situation and have a net worth sufficient to sustain those risks, including loss of investment and lack of liquidity for the life of the fund; you have an understanding of the fundamental risks of our business, the risk that you may lose your entire investment, the lack of liquidity of the shares, the restrictions on transferability of the shares, the background and qualifications of the manager, and the tax consequences of your investment; and your investment in us is otherwise suitable for you. See Who May Invest. Federal Income Tax Consequences This prospectus contains a discussion of material federal income tax issues that may impact you. We have obtained an opinion from our counsel, Baker, Donelson, Bearman, Caldwell & Berkowitz, a professional corporation, that we are classified as a partnership for federal income tax purposes and on a number of other matters. Counsel s opinion is based upon the facts described in this prospectus and upon additional facts that we provided to counsel about our operations. Any alteration of our activities from the description we gave to counsel may render the opinion unreliable. Furthermore, the opinion of counsel is based upon law as of the date of the opinion, which is subject to change either prospectively or retroactively. You should note that the tax opinion represents only our counsel s best legal judgment and has no binding effect or official status of any kind, on the IRS or otherwise; and neither we nor our counsel has requested a ruling from the IRS on any of the tax matters discussed in this prospectus. See Federal Income Tax Consequences. The Offering The information provided below, unless otherwise indicated, does not include any shares to be sold pursuant to our DRP. Offering A minimum of $1,200,000 in offering proceeds and a maximum of 20,000,000 shares. Our manager has determined that the minimum offering amount represents a level of subscription proceeds which will enable our portfolio to be sufficiently diversified. Our maximum offering amount has been determined by our manager with reference to the subscription proceeds it believes we may be able to raise over our offering period. Offering Price $10.00 per share, with the following exceptions: the offering price will be $9.30 per share sold to our manager or its affiliates or to a selling dealer or certain of their affiliates; and the offering price will be $9.00 per share sold pursuant to our DRP. Reduced selling commissions and volume discounts may also apply. Table of Contents See Plan of Distribution. The price of $10.00 per share has been determined by our manager by dividing our maximum offering amount of $200,000,000, excluding our DRP, by 20,000,000 shares, the maximum amount of shares that we are offering excluding our DRP. Minimum Investment The minimum number of shares you must purchase is 500. Escrow Your subscription monies will be deposited and held in an interest bearing escrow account at Wells Fargo Bank, National Association until: the minimum offering size of $1,200,000 has been achieved; or one year after the offering begins, whichever comes first. If we have not received the minimum offering amount by the date which is one year after the date of this prospectus, all of your funds will be returned to you with any interest earned and without deduction for any fees.
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001515718_vapor-hub_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001515718_vapor-hub_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..2398912c8047fbd770db97d62ef1f041d150a430
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+As filed with the Securities and Exchange Commission on July 7 , 2011 Registration Number: 333-173438 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form S-1/A (Amendment No. 3 ) REGISTRATION STATEMENT Under THE SECURITIES ACT OF 1933 DOGINN INC. (Exact Name of Registrant As Specified in its Charter) Nevada 7389 27-3191889 (State or other jurisdiction of incorporation or organization) (Primary Standard Industrial Classification Code Number) (I.R.S. Employer Identification No.) 1380 Lougar Ave Sarnia, Ontario, N7S 5N7, Canada (519) 381-7086 Nevada Agency and Trust Company 50 West Liberty Street, Suite 880 Reno, Nevada 89501 (775) 322-0626 (Address and telephone number of principal executive offices) Name, address and telephone of agent for service With copies to: Jody M. Walker Attorney At Law 7841 South Garfield Way Centennial, CO 80122 Tel: 303-850-7637 Fax: 303-482-2731 Approximate date of commencement of proposed sale to public: As soon as practical after the effective date of this Registration Statement. If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. x If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities At registration statement number of the earlier effective registration statement for the same offering. o If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. o Table of Contents SUMMARY To understand this offering fully, you should read the entire prospectus carefully, including the risk factors beginning on page 4 and the financial statements. DogInn Inc. We were incorporated on July 15, 2010 under the laws of the state of Nevada. Our principal offices are located at 1380 Lougar Ave, Sarnia, Ontario, Canada. Our telephone number is (519) 381-7086. We intend to become a resource for travelers seeking information and resources regarding pet friendly accommodation, services and products. We are still in our development stage and plan on commencing business operations on our website in spring 2012. The DogInn website has not yet been developed, and substantial additional development work and funding will be required before the website can be fully operational. The first phase of our plan of operations is the early stage development of the website that demonstrates the capabilities of the website, initial content development, and the development of a list of pet related service providers. Expenses related to phase one are expected to be less than $30,000 and we expect to have this stage of the websites development completed by September of 2011. If we are successful in the first phase the development of our website we will move on to the second phase of our plan of operations which is the full development of the website. The company currently does not have sufficient capital to proceed with the second phase of its plan of operations which is estimated at approximately $100,000 and expected to take approximately 6 months. We can provide no assurance that we will be successful in our planned development of our website. We have not earned any revenues to date. We do not anticipate earning revenues until we have completed our website and commenced marketing activities. As of March 31, 2011, we had $43,961 cash on hand and $2,889 in liabilities. Accordingly, our working capital position as of March 31, 2011 was $41,071. Since our inception through March 31, 2011, we have incurred a net loss of $6,476. Our net loss is due to lack of revenues to offset our expenses and the professional fees related to the creation and operation of our business. Our auditor has expressed substantial doubt about our ability to continue as a going concern given our lack of operating history and due to the fact that to date we have had no revenues. Our fiscal year ended is December 31. The Offering Securities Being Offered Up to 3,340,000 common shares. Sales by Selling Shareholders The sales price to the public is fixed at 0.01 per share. Sales at variable prices may commence following quotation of the securities on the OTC BB or listing on a national securities exchange. Table of Contents Indicate by check mark whether the registrant is a large accelerated filer, and accelerated filer, a non-accelerated filer, or a smaller reporting company. Large accelerated filer o Accelerated Filer o Non-accelerated filer o Smaller Reporting Company x CALCULATION OF REGISTRATION FEE TITLE OF EACH CLASS OF SECURITIES TO BE REGISTERED AMOUNT TO BE REGISTERED PROPOSED MAXIMUM OFFERING PRICE PER SHARE (1) PROPOSED MAXIMUM AGGREGATE OFFERING PRICE (1) AMOUNT OF REGISTRATION FEE (1) Common Stock(2) 3,340,000 shares $0.01 $33,400 $3.87 (1) Estimated solely for the purpose of calculating the registration fee in accordance with Rule 457(a) under the Securities Act of 1933, as amended. (2) Represents common stock being sold on behalf of selling shareholders. The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall hereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, or until the registration statement shall become effective on such date as the Commission, acting pursuant to Section 8(a), may determine. Table of Contents We are registering common shares on behalf of the selling shareholders in this prospectus. We will not receive any cash or other proceeds in connection with the subsequent sales. We are not selling any common shares on behalf of selling shareholders and have no control or affect on the selling shareholders. Securities Issued and to be Issued 8,998,776 shares of our common stock are issued and outstanding as of the date of this prospectus. All of the common stock to be sold under this prospectus will be sold by existing shareholders and thus there will be no increase in our issued and outstanding shares as a result of this offering. The issuance to the selling shareholders was exempt due to the provisions of Regulation S. Market for our common stock. Our common stock is presently not traded on any market or securities exchange and we have not applied for listing or quotation on any public market. We intend to have a market maker file an application for our common stock to be quoted on the OTC Bulletin Board and/or the OTCQB. However, we do not have a market maker that has agreed to file such application. If our securities are not quoted on the OTC Bulletin Board or the OTCQB, a security holder may find it more difficult to dispose of, or to obtain accurate quotations as to the market value of our securities. Use of Proceeds We will not receive any proceeds from the sale of the common stock by the selling shareholders. Summary Financial Information March 31, 2010 December 31, 2010 Balance Sheet Data (unaudited) (audited) Cash $ 43,961 $ 44,517 Total Current Assets $ - $ - Liabilities $ 2,889 $ 2,889 Total Stockholder s Equity $ 41,071 $ 41,628 Statement of Loss and Deficit For the From Inception three months ended (July 15, 2010) to March 31, 2011 March 31, 2011 (unaudited) (audited) Revenue $ - $ - Net Loss for the Period $ 557 $ 6,476 Table of Contents
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001515794_banco_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001515794_banco_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
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+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001516007_oiltanking_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001516007_oiltanking_prospectus_summary.txt
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+S-1/A 1 h80840a4sv1za.htm FORM S-1/A sv1za Table of Contents As filed with the Securities and Exchange Commission on July 5, 2011 Registration No. 333-173199 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Amendment No. 4 to Form S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Oiltanking Partners, L.P. (Exact Name of Registrant as Specified in Its Charter) Delaware 4610 45-0684578 (State or Other Jurisdiction of Incorporation or Organization) (Primary Standard Industrial Classification Code Number) (I.R.S. Employer Identification Number) 15631 Jacintoport Blvd. Houston, Texas 77015 (281) 457-7900 (Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant s Principal Executive Offices) Carlin G. Conner 15631 Jacintoport Blvd. Houston, Texas 77015 (281) 457-7900 (Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent for Service) Copies to: David Palmer Oelman Gillian A. Hobson G. Michael O Leary Gislar Donnenberg Vinson Elkins L.L.P. Andrews Kurth LLP 1001 Fannin Street, Suite 2500 600 Travis Street, Suite 4200 Houston, Texas 77002 Houston, Texas 77002 Tel: (713) 758-2222 Tel: (713) 220-4200 Fax: (713) 758-2346 Fax: (713) 220-4285 Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company (Do not check if a smaller reporting company) The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine. Table of Contents You should rely only on the information contained in this prospectus, any free writing prospectus prepared by or on behalf of us or any other information to which we have referred you in connection with this offering. We have not, and the underwriters have not, authorized anyone to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. We are not, and the underwriters are not, making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted. You should not assume that the information contained in this prospectus is accurate as of any date other than the date on the front of this prospectus. TABLE OF CONTENTS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001516079_us-china_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001516079_us-china_prospectus_summary.txt
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+PROSPECTUS SUMMARY This summary highlights selected information contained elsewhere in this Prospectus. This summary does not contain all the information that you should consider before investing in the Common Stock. You should carefully read the entire Prospectus, including "Risk Factors", "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the Financial Statements, before making an investment decision. In this Prospectus, the "Company," "we," "us," and "our" refer to Accend Media unless the context otherwise requires. The term "fiscal year" refers to our fiscal year ended February 28. Unless otherwise indicated the term "Common Stock" refers to shares of the Company's common stock.
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001516508_neutron_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001516508_neutron_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..d6489755e2800663f5d6e3cb339c9766139b16ab
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+PROSPECTUS SUMMARY The following summary highlights information contained elsewhere in this prospectus. Before deciding whether to buy shares of our common stock, you should read this summary and the more detailed information in this prospectus, including our consolidated financial statements and related notes and the discussion of the risks of investing in our common stock in the section entitled "Risk Factors" starting on page 8. On , 2011, we effected a 1-for- reverse stock split of our outstanding capital stock (the "Reverse Stock Split"). All share and per share amounts in this prospectus give effect to the Reverse Stock Split, unless otherwise noted. Our Company We began operations as an unincorporated entity on March 25, 2005 and were incorporated on March 29, 2005 under the laws of the State of Wyoming. On April 26, 2007, we transferred our state of domicile from Wyoming to Nevada. We were formed to capitalize on our management's extensive knowledge and experience in uranium exploration, development and production, as well as our geologic and engineering data bases covering several uranium districts that historically have been uranium producers. We are a natural resource company engaged in the acquisition and exploration of uranium properties in the United States. Our strategy is to acquire properties that (i) have undergone some degree of historical uranium exploration and on which uranium mineralized material, but not reserves, have been located, and (ii) are located in mineralized districts that have undergone some degree of historical uranium exploration and are thought to be prospective for further uranium exploration, but on which no uranium mineralized material has been located. We have acquired interests in 63,312 net acres of leased or staked mineral properties in New Mexico, South Dakota and Wyoming. We also hold residual mineral interests that we received in the disposition of properties in Arizona and South Dakota. These residual interests were received in consideration of the sale of our ownership interests in the properties and are primarily comprised of royalty interest, net proceeds interest and our ability to convert the royalty interest into a working interest in the properties. All of our mineral properties are exploration stage properties. Some of our mineral properties have been the subject of historical exploration and/or development, and in one case production, by other mining companies, that provides indications that further uranium exploration is warranted. Our view that these properties are prospective for mineral exploration is based on prior exploration and/or development conducted by other companies, management information and work product derived from various reports, maps, radiometric assay from down-hole radiometric logging, exploratory drill logs, state organization reports, consultants, geological study and other exploratory information. If we are able to locate economic uranium reserves that are commercially viable, we intend to develop the mine site, including mill facilities, and extract uranium for production. We are an exploration stage company and all of our projects are in the exploration stage and do not have any known proven or probable reserves in accordance with the definitions of reserves under Industry Guide 7 ("SEC Guide 7") issued by the Securities and Exchange Commission (the "SEC"). There can be no assurance that a commercially viable mineral deposit, or reserve, exists on any of our properties until appropriate exploratory work is completed and a comprehensive evaluation based on such work concludes legal and economic feasibility. Further exploration and permitting beyond the scope of our planned activities will be required before a final evaluation as to the economic and legal feasibility of mining of any of our properties is determined. There is no assurance that further exploration will result in a final evaluation that a commercially viable mineral deposit exists on any of Amendment No. 2 to Form S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Table of Contents Our business, financial conditions, results of operations and prospects may have changed since that date. We obtained the market, competitive position and similar data used throughout this prospectus from our own research and from surveys or studies conducted by third parties and industry or general publications. This market, competitive position and similar data include, among other things, statements regarding the global market for uranium and nuclear energy, uranium supply deficits, sources of uranium, and the historical and projected growth rate of our industry. While we believe that each of these surveys, studies and publications is reliable, we have not independently verified such data. Similarly, we believe our internal research is reliable, but it has not been verified by any independent sources. Through and including , 2011, all dealers that buy, sell or trade our common stock, whether or not participating in this offering, may be required to deliver a prospectus. This delivery requirement is in addition to the obligation of dealers to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions. Table of Contents our mineral properties. We will require additional financing in order to pursue full exploration and permitting of these properties. As of September 12, 2011, we had 59,632,712 shares of common stock outstanding. On that date, there were 196 holders of record. Corporate Information Our executive offices are located at 9000 E. Nichols Avenue, Suite 225, Englewood, Colorado 80112. Our telephone number is (303) 531-0470. We have a field office in Albuquerque, New Mexico. Employees We have 11 full-time and five part-time employees and have engaged geological and technical consultants for additional day-to-day services. Other services are provided by outsourcing consultants and special purpose contractors. Business and Growth Strategy We are an exploration stage company engaged in the exploration of uranium. We do not engage in any development activities at this time, but may engage in development activities should uranium reserves be located on any of our properties. Our primary focus is to advance our Cibola Project, as described below. Almost all of the proceeds from this offering that will be used for exploration, permitting, design and feasibility activities will be for the Cibola Project. The key elements of our business and growth strategy are as follows: Cibola Project. Based on historical exploration and development data, we believe our wholly-owned Cibola Project may have future uranium reserve potential. We have received the required exploration permits on our Juan Tafoya property and Cebolleta property (together our "Cibola Project") which will allow us to commence confirmation drilling programs to confirm the uranium mineralized material identified by previous operators. We have substantially completed resource modeling on each of the Juan Tafoya and Cebolleta properties, based on historical data we have in our possession. We have received an independent technical report completed in accordance with the provisions of National Instrument 43-101, Standards of Disclosure for Mineral Projects, of the Canadian Securities Administrators ("NI 43-101"), which is authored by G. S. Carter, P. Eng., a qualified person. With respect to the prospective mines on our Juan Tafoya and Cebolleta properties, we anticipate our operating activities over the next twelve months to consist of: (i) drilling to confirm the grades and quantity of previously identified uranium mineralized material and assess the viability of commercial mining; (ii) hydrological characterization, baseline studies and on-going environmental monitoring in support of mine permit applications; (iii) mine design and engineering; (iv) internal and third party feasibility studies; and (v) required regulatory permit applications preparation and filing. With respect to the prospective mill on the Cibola Project property, we anticipate our operating activities over the next twelve months to consist of: (i) drilling in support of hydrological characterization of mill and tailing impoundment studies; (ii) hydrological characterization and baseline studies in support of mill and tailing impoundment permit applications; (iii) mill and tailings impoundment design and engineering; (iv) internal and third party feasibility studies; and (v) required regulatory permit applications preparation and filing. Because of the long lead times for environmental permitting of mining operations in North America, we have commenced the permitting process with the U.S. Nuclear Regulatory Commission ("NRC") on our Cibola Project, primarily through initial planning sessions and agency site visits with the NRC and the collection of environmental baseline data. We believe that commencing the Table of Contents permitting process at this early stage will allow us to expeditiously commence development of our properties if we move to that stage. Ambrosia Lake Project. We have received the required exploration permit on our Elizabeth Target, included in the Ambrosia Lake Project, which will allow us to commence confirmation drilling programs to confirm the uranium mineralized material identified by previous operators. We believe our Elizabeth, Deep Rock, Mesa Redonda, West Endy and West Ranch targets represent long-term uranium reserve potential. We seek to complete the analysis and digitization of historic geologic data, mapping, and other geophysic and geologic activities on our Ambrosia Lake Project targets and to commence exploration permitting and exploration programs on selected targets. Edgemont Project, Copper Mountain Project and Other Wyoming Properties. We do not anticipate any significant exploration activities during the next twelve months on our other properties. We may seek to sell or enter into joint-venture arrangements on these properties with other exploration companies. Extensive Due Diligence of Properties. Our exploration activities are divided into phases dependent on the nature of historical exploration and development activities on the property. Our initial phase of exploration includes extensive due diligence and analysis of all historical exploration data available to us or in our possession. Furthermore, we probe existing and newly drilled holes with gamma probes with the goal of confirming historical drill results and planning for future development. We will proceed to our second phase if we are able to confirm historical data and drill results. Pursue Strategic Acquisitions of Exploration Stage Properties. We are also engaged in the continual review of opportunities to acquire properties in the exploration stage that are thought to contain uranium mineralization and have undergone some degree of historical exploration or development. Financing. Historically, we have financed our operations primarily by (i) private placements of convertible subordinated notes convertible for either (a) shares of our common stock, or (b) shares of our common stock and warrants to purchase additional shares of our common stock; (ii) private placement of shares of our common stock to certain individuals and institutional investors; and (iii) senior secured debt credit facilities. We will require additional funding to implement our business and growth strategy as our existing working capital is not expected to be adequate to fund our exploration and permitting-related operations over the twelve months immediately following this offering. We anticipate that we will need to raise approximately $41,250,000 to carry out our plan of operations for the twelve months immediately following this offering. Beyond the twelve months immediately following this offering, we will require additional financing in order to continue our plan of operations and meet our long-term operating requirements as we anticipate that we will not earn any revenues in the foreseeable future. We have no available lines of credit and we believe that debt financing will not be an alternative for funding our operations as we do not have tangible assets to secure any debt financing. Therefore, we anticipate that additional funding will be in the form of equity financing from the sale of our common stock or preferred stock. There can be no assurance that such financing will be available on terms favorable to us or at all. In the absence of such financing, we will not be able to continue exploration and begin development of our mineral properties and we may eventually be forced to abandon our properties and our plan of operations. Recent Events Our Board of Directors approved and our stockholders ratified the Reverse Stock Split on , 2011 and , 2011, respectively. The Reverse Stock Split was effected on , 2011 by the filing of a Certificate of Amendment to our Articles of Incorporation with the Secretary of State of the State of Nevada. Upon the effectiveness of the Reverse Stock Split, shares of our common stock, par 9000 E. Nichols Avenue, Suite 225 Englewood, Colorado 80112 (303) 531-0470 (Address, including zip code and telephone number, including area code, of registrant's principal executive offices) Table of Contents value $0.001, were converted and reclassified as one share of our common stock, par value $0.001 and our authorized common and preferred stock were correspondingly decreased, from 200,000,000 and 10,000,000 shares to and shares, respectively. Stockholders entitled to fractional shares as a result of the Reverse Stock Split will receive a cash payment for such fractional shares no later than , 2011 in lieu of receiving fractional shares. As a result of cashing out the fractional shares, shares of the Company's common stock have been eliminated. In addition, shares of common stock underlying outstanding stock options and warrants were proportionately reduced and the respective exercise prices were proportionately increased in accordance with the terms of the agreements governing such securities. Unless otherwise indicated, all references to numbers of shares, options and warrants and corresponding conversion prices and/or exercise prices and all per share data have been adjusted to give effect to the Reverse Stock Split. The Offering Common stock offered by us shares Common stock outstanding immediately after the offering shares Use of proceeds We expect the net proceeds to us from this offering (after deducting underwriting discounts and commissions payable to the underwriters and our estimated offering expenses) to be approximately $ ($ million if the underwriters exercise their over-allotment option in full). We intend to use the net proceeds (i) to discharge our senior indebtedness in the aggregate principal amount of $24,000,000 plus accrued interest; (ii) to finance our exploration and permitting activities, design and engineering activities and deposit confirmation drilling activities; and (iii) for general corporate purposes, including the possible acquisition of additional properties. Dividend policy The holders of our common stock are entitled to receive dividends, if any, as may be declared by our Board of Directors, in its discretion. We currently intend to retain any future earnings to fund the development and growth of our business. Therefore, we do not currently anticipate paying cash dividends.
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001516887_wellness_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001516887_wellness_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..50bf5f22eb2e8e92c79d2b6f1de1fc942c720b35
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+PROSPECTUS SUMMARY The following is only a summary of the information, financial statements and the notes included in this Prospectus. You should read the entire Prospectus carefully, including Risk Factors and our Financial Statements and the notes to the Financial Statements before making any investment decision. Unless the context indicates or suggests otherwise, the terms Company , we, our and us means Wellness Center USA, Inc. Principal Offices Our principal executive offices are located at 1014 E. Algonquin Road, Suite 111, Schaumburg, IL, 60173. Our telephone number is (847)-925-1885. Our Business Wellness Center USA, Inc. ( WCU or the "Company") was incorporated in the State of Nevada on June 30, 2010, engaged in the development of an internet online store business to market customized vitamins and other nutritional supplement solutions. Our intended products will be sold through our registered website www.aminofactory.com, presently under development. Our planned product line shall consist of Amino acid nutritional supplements and our target market will be the sports industry and the general health minded public. Our current product portfolio is available only to our initial Beta test clients consisting of five Amino acid formulas. Once our website is further developed, our product portfolio shall be expanded to include a wider range of Amino acid offerings, including customized formulas uniquely tailored to fit each and every individual s needs. A customer will start by logging into our aminofactory.com website and shall be able to select an Amino acid supplement and/or nutritious formula combination suitable to his/her needs. Once a suitable supplement solution has been chosen by the client, the order shall be automatically placed for processing in our supplier s factory. Product will be shipped directly by our supplier to the client, within seven business days. Our Amino acid based products will be produced by unaffiliated third party manufactures and/or product fulfilment suppliers, specializing in Amino acid production. We have currently established a non-binding and non-exclusive Value Added (VAD) relationship with one such producer and product fulfilment provider, the New Jersey based Protein Factory, to support our initial offering of five selected supplements, as described below in the products section. These five products which we plan to sell can be also provided to our competitors by Protein Factory or perhaps other manufacturers. However, as a VAD of Protein Factory, we are able to specifically select our product portfolio and market it through our website with our packaging and pricing; under the Protein Factory or our own aminofactory label. Following successful conclusion of our Beta trial, WCU will have the opportunity to execute a binding VAD agreement with Protein Factory. Further, in the near future, we plan to identify additional Amino acid suppliers to expand and diversify our product portfolio. We are a developmental stage Company with minimal revenues and a limited operating history. As of the date of this prospectus, we have had minimal revenues, have not begun operations and have $13,934 in cash as of June 30, 2011. As of the date of this prospectus, the Company s offering expenses of approximately $50,000 have been fully paid. For the interim period ended June 30, 2011, the Company received $62,600 in aggregate advances from its president and founder, for working capital purposes. Our Company has no employees at the present time. There will be no need for staffing until our website development is fully completed. Our website employs automation features capable of linking incoming client orders with our supplier s factory, for immediate processing and shipping directly to our client. All business functions are managed by our officer/director and founder, Andrew J. Kandalepas. He is responsible for developing and planning our business units, including product development, organizational structure, financing and administrational functions. His services shall be utilized until the company is financially capable to engage additional staffing. We do not expect to have significant revenues for about one year from this date because we still need to setup several operational and marketing functions. Such milestones include, Beta testing of our recently completed website - with possible further development, establishment of product vendor relationships, and our marketing plan development. Our marketing plan will be centered on our website and will involve various search engine placements. We intend to follow a step by step approach prior to creating any market exposure of our product line, ensuring first that our product thru-put is manageable and our order processing mechanisms sufficiently tested. We plan to achieve most of these objectives through our Beta testing phase. Beta testing is a pre-release trial phase conducted with clients outside the company who are willing to offer assistance in troubleshooting a product or process, prior to production release and real-world exposure. Our Beta testing phase will take place over a three-four month period. Its commencement begun on July 6, 2011 and shall continue until the earliest of October 30, 2011 or full completion of fifty (50) product orders. Upon completion of the test we will have collected valuable data regarding our website s functionality, including its transaction processing automation, its linking capabilities into our supplier s Customer Relationship Management (CRM) system, and its product shipping and delivery monitoring features. Further, throughout the Beta test period we shall be able to evaluate our supplier s performance relative to product integrity, on-time delivery, product support and customer satisfaction. There is no current public market for our securities. As our stock is not publicly traded, investors should be aware they probably will be unable to sell their shares and their investment in our securities is not liquid. Common Stock Outstanding and Related Stockholder Matters The Company was incorporated on June 30, 2010, at which time 3,665,000 shares of common stock were issued to Andrew J. Kandalepas, the Company s founder, President and CEO, at par value or $3,665, and an option to purchase 1,600,000 shares of common stock, with an exercise price of $0.01 per share as compensation. On November 10, 2010, the Company issued 2,557,500 shares of its common stock and warrants to purchase 1,600,000 shares of common stock, with an exercise price of $0.01 per share, expiring five (5) years from the date of issuance, for $2,557.50 in cash at a price of $ 0.001 per share. On November 30, 2010, the Company issued 7,982,500 shares of its common stock and warrants to purchase 4,718,334 shares of common stock, with an exercise price of $0.01 per share, expiring five (5) years from the date of issuance, for the total consideration of $7,982.50 in cash at a price of $ 0.001 per share. On November 30, 2010, the Company issued 375,000 shares of its common stock and warrants to purchase 375,000 shares of common stock, with an exercise price of $0.01 per share, expiring five (5) years from the date of issuance, valued at $375 for compensation at a price of $ 0.001 per share. On November 30, 2010, the Company issued 250,000 shares of its common stock to the Presidents Corporate Group (Consultants) pursuant to a consulting agreement, valued at $250 for professional services at a price of $ 0.001 per share. These shares were subsequently canceled when the consulting agreement was terminated on June 16, 2011. On November 30, 2010, the Company issued 200,000 shares of its common stock and options to purchase 200,000 shares of common stock, with an exercise price of $0.01 per share, expiring five (5) years from the date of issuance, valued at $200 at a price of $ 0.001 per share to the newly appointed members of the board of directors as compensation. On June 30, 2011, the Company issued 250,000 shares of its common stock to its two directors (125,000 each), at par value or $250, as compensation for professional services. The Offering Common stock offered by selling security holders 7,550,000 shares of common stock representing 50.2% percent of our current issued and outstanding shares of common stock (1). Common stock outstanding before the offering 15,030,000 common shares as of October 7, 2011. Common stock outstanding after the offering 15,030,000 shares. Terms of the Offering The selling security holders will offer the shares at $ 0.25 per share until a trading market for the shares develops, at which time the shares will be sold at market price. Termination of the Offering The offering will conclude upon the earliest of (i) such time as all of the common stock has been sold pursuant to the registration statement or (ii) such time as all of the common stock becomes eligible for resale without volume limitations pursuant to Rule 144 under the Securities Act, or any other rule of similar effect. Use of proceeds We are not selling any shares of the common stock covered by this prospectus. Risk Factors The Common Stock offered hereby involves a high degree of risk and should not be purchased by investors who cannot afford the loss of their entire investment. There is no historical financial information about us on which to base an evaluation of our performance. We are a developmental stage company and have not generated revenues from operations. We cannot guarantee we will be successful in our business operations. Our business is subject to risks inherent in the establishment of a new business enterprise, including limited capital resources, and possible cost overruns due to increases in the cost of services. To become profitable and competitive, we must receive additional capital. We have no assurance that future financing will materialize. If that financing is not available we may be unable to continue operations. While the Company is attempting to commence operations and generate revenues, the Company s cash position may not be significant enough to support the Company s daily operations. Management intends to raise additional funds by way of a public or private offering. Management believes that the actions presently being taken to further implement its business plan and generate revenues provide the opportunity for the Company to continue as a going concern. While the Company believes in the viability of its strategy to generate revenues and in its ability to raise additional funds, there can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent upon the Company s ability to further implement its business plan and generate revenues. As of June 30, 2011, our cash balance is $13,934. We believe that our cash balance in conjunction with additional capital raised, the Company shall be able to sufficiently fund our limited levels of operations until the end of our fiscal year, however no assurance can be given that additional capital can be raised during the period. We are a developmental stage company and have generated no revenue from inception to date. We expect to raise additional capital to have adequate funds available to pay for our minimum level of operations. Our auditor has issued a going concern opinion. This means that there is substantial doubt that we can continue as an on-going business for the next twelve months unless we obtain additional capital to pay our bills. This is because we have not generated revenues and no revenues are anticipated until we begin selling supplements. There is no assurance we will ever reach that stage. Our only officer at present is the president and founder of the Company. In the event of death or incapacitation of our sole executive officer, the company may not be able to survive the loss and will therefore cease to exist. (1) Based on 15,030,000 shares of common stock outstanding as of October 7, 2011.
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001517003_staffmark_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001517003_staffmark_prospectus_summary.txt
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+Prospectus summary 1
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001517010_ecampuscas_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001517010_ecampuscas_prospectus_summary.txt
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+PROSPECTUS SUMMARY The following summary highlights material information found in more detail elsewhere in the Prospectus. It does not contain all of the information you should consider. As such, before you decide to buy shares of our Class A Common Stock, in addition to the following summary, we urge you to carefully read the entire Prospectus, especially the risks of investing in our Class A Common Stock as discussed under "Risk Factors." In this Prospectus, the terms "we," "us," "our," and "Company" refer to eCampusCash Inc., a Nevada corporation. "Class A Common Stock" refers to the Class A Common Stock, par value $0.001 per share, of eCampusCash Inc. The Company. eCampusCash Inc. is a localized e-commerce coupon marketplace focused on college campuses and surrounding areas. We connect local merchants to college students, faculty and employees by allowing them to offer goods and services at a discount. We have generated limited revenues since our inception on August 9, 2010. From our inception through June 30, 2011, we had revenues of $2,536, and a cumulative net loss of $237,929. We had a stockholders' deficit accumulated during the development stage of $15,185 as of June 30, 2011. As of June 30, 2011 we had cash on hand of $ 51,960. We believe we can continue our operations for approximately the next 9 months if no additional financing is raised, with loans to us from shareholders and from our President, Kishore Mamillapalli, who has committed to arrange financing up to an additional $200,000, if necessary. If we are unable to raise sufficient working capital, we will be restricted in the implementation of our business plan. If this were to happen, the value of our securities would diminish and we may be forced to change our business plan. If we raise an adequate amount of working capital to implement our business plan, we anticipate incurring net losses until we obtain a sufficient number of customers to support our expenses and startup costs, if ever. Our principal executive offices are located at 4445 Overland Ave., Culver City, California 90230, and our telephone number is 800-385-3602. We have no history of revenues, have experienced losses since inception, have had only limited operations, and have been issued a going concern opinion by our auditors. We rely upon the sale of our securities and interim loans from our shareholders to fund operations; however, there can be no assurance that either of these sources of financing will be available in the near future, if at all. The Business. We developed and launched a college-oriented, internet-based coupon service after performing our pilot launch in the Southern California area. Our premise is that existing options for coupon services around college campuses are insufficient and unable to achieve market penetration among internet savvy college students. We believe that only a fraction of the target market is aware of coupons currently available, and many of those rarely utilize them because of poor distribution and functionality. Aside from general market coupons, coupons directed to college students are traditional paper booklets or poorly functioning websites. With almost all American college students spending a substantial portion of their time online, we plan to capitalize on this by establishing a simple, yet powerful, website for them to log onto in order to find local deals around their college campus. Our product can change daily to provide our members with constant discounts and coupons that are timely and useful. We allow our advertisers to continuously update and refine their coupons and advertising as they receive ongoing critical feedback from their users/members. In this way, our advertisers are able to monitor usage and trends, and react by modifying coupons, discounts and advertising to better address their markets. This is a summary and the information is selective. It does not contain all information that may be important to you. The summary highlights the more detailed information and financial statements appearing elsewhere in this document. It is only a summary. We urge you to read the entire prospectus carefully.
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001517118_hawker_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001517118_hawker_prospectus_summary.txt
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+PROSPECTUS SUMMARY 1
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+PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001517130_pingtan_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001517130_pingtan_prospectus_summary.txt
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+PROSPECTUS SUMMARY This summary highlights certain information appearing elsewhere in this prospectus. For a more complete understanding of this offering, you should read the entire prospectus carefully, including the risk factors and the financial statements. Unless otherwise stated in this prospectus: Companies Law refers to the Companies Law (2010 Revision) of the Cayman Islands; founder shares refers to the shares held by our initial shareholders prior to this offering; initial shareholders refers to all of our shareholders prior to this offering, including all of our officers and directors; insider warrants refers to the 3,966,667 warrants we are selling privately to Chum Capital Group Limited and two of our directors simultaneously with the completion of this offering; public shares means the ordinary shares which are being sold as part of the units in this public offering. public shareholders means the holders of the ordinary shares which are being sold as part of the units in this public offering (whether they are purchased in the public offering or in the aftermarket), including any of our initial shareholders to the extent that they purchase such shares; references to China or the PRC refer to the People s Republic of China as well as the Hong Kong Special Administrative Region, the Macau Special Administrative Region and Taiwan; references to $ refer to the legal currency of the U.S.; references to RMB refer to Renminbi, the legal currency of the PRC; references to we, us or our company refer to China Growth Equity Investment Ltd.; and unless otherwise specified, the information in this prospectus assumes that the underwriters will not exercise their over-allotment option. You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with different information. We are not making an offer of these securities in any jurisdiction where the offer is not permitted. We are a Cayman Islands limited life blank check company organized on January 18, 2010 as an exempted company with limited liability. Exempted companies are Cayman Islands companies, the objects of which are to be carried out mainly outside the Cayman Islands. As an exempted company, we have obtained, an undertaking from the Cayman Islands authorities that for 20 years from the date of issue of the undertaking, no law that is enacted in the Cayman Islands imposing any tax or duty to be levied on income, profits, gains or appreciation shall apply to us or our operations. We were formed with the purpose of directly or indirectly acquiring, through a merger, share exchange, asset acquisition, plan of arrangement, recapitalization, reorganization or similar business combination, an operating business, or control of such operating business through contractual arrangements, that has its principal business and/or material operations located in the PRC (although we may acquire an entity that is not incorporated in China but has its principal business and/or material operations in China). Our efforts to identify a prospective target business will not be limited to a particular industry. TABLE OF CONTENTS CALCULATION OF REGISTRATION FEE Title of Each Class of Security Being Registered Amount Being Registered Proposed Maximum Offering Price per Security 1 Proposed Maximum Aggregate Offering Price 1 Amount of Registration Fee Units, each consisting of one Ordinary Share, $.001 par value, and one Warrant 2 5,750,000 Units $ 10.00 $ 57,500,000 $ 8,010.90 Ordinary Shares included as part of the Units 2 5,750,000 Shares 3 Warrants included as part of the Units 2 5,750,000 Warrants 3 Total $ 57,500,000 $ 8,010.90 4 (1) Estimated solely for the purpose of calculating the registration fee. (2) Includes 750,000 Units and 750,000 Ordinary Shares and 750,000 Warrants underlying such Units which may be issued on exercise of a 45-day option granted to the Underwriters to cover over-allotments, if any. (3) No fee required pursuant to Rule 457(g). (4) Registration fee previously paid. The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. TABLE OF CONTENTS Our management team represents a mix of entrepreneurs and investment and financial professionals with extensive operating and transactional experience in the PRC. We believe that the combination of the backgrounds of our management team and their networks of contacts will provide us with access to unique opportunities to effect our initial business combination. Our management team, including our executive officers and the majority of our directors, has already been involved in the initial public offerings and the subsequent consummation of business combinations for two U.S. listed prior blank check companies focused on acquisition targets with operations in China as well as having acted as an advisor to two companies which each completed transactions with blank check companies. ChinaGrowth North Acquisition Corporation completed an initial public offering in January 2007, raising gross proceeds of approximately $40 million at an offering price of $8.00 per unit. In January 2009, ChinaGrowth North Acquisition Corporation acquired UIB Group Limited, an insurance brokerage firm in China. The combined entity has since deregistered under the Securities Exchange Act, and there is no longer any public market for the stock of UIB Group Limited. ChinaGrowth South Acquisition Corporation completed an initial public offering in January 2007, raising gross proceeds of approximately $40 million at an offering price of $8.00 per unit. In January 2009, ChinaGrowth South Acquisition Corporation merged with Olympia Media Holdings Limited, an aggregator and operator of print media businesses in China, which was renamed China TopReach, Inc. (OTCBB: CGSXF.OB) post-acquisition. Mr. Michael W. Zhang continues to serve as an independent director of China TopReach Inc. Mr. Zhang is a Director of Chum Capital Group Limited, a merchant banking firm in China which acted as the sole advisor to Origin Agritech Ltd. (NASDAQ:SEED) and Hollysys Automation Technologies, Ltd. (NASDAQ:HOLI) in their respective mergers with Chardan China Acquisition Corporation and Chardan North China Acquisition Corporation. We do not anticipate or plan to deviate from the disclosure contained in the prospectus; however, it is possible that we may deviate from the disclosure in this prospectus in the future, and investors may have limited recourse if we so deviate. Our management team has not been involved with prior blank check companies that have deviated from the disclosure contained in the prospectus for that blank check company. Opportunities for market expansion have emerged for businesses with operations in China due to certain changes in the PRC s political, economic and social policies as well as certain fundamental changes affecting the PRC and its neighboring countries. We believe that China represents both a favorable environment for making acquisitions and an attractive operating environment for a target business for several reasons, including, among other things, increased government focus within China on privatizing assets, improving foreign trade and encouraging business and economic activity, which have led China to have one of the highest gross domestic product growth rates among major industrial countries in the world as well as strong growth in many sectors of its economy driven, in part, by emerging private enterprises. Notwithstanding the foregoing, business combinations with companies having operations in the PRC entail special considerations and risks, including the need to obtain financial statements audited or reconciled in accordance with U.S. generally accepted accounting principles, or GAAP, or prepared or reconciled in accordance with the International Financial Reporting Standards of potential targets that have previously kept their accounts in accordance with GAAP of the PRC, the possible need for restructuring and reorganizing corporate entities and assets and the requirements of complex Chinese regulatory filings and approvals. These may make it more difficult for us to consummate our initial business combination. We do not have any specific business combination under consideration and we have not (nor has anyone on our behalf), directly or indirectly, contacted any prospective target business or had any discussions, formal or otherwise, with respect to such a transaction. We have not (nor have any of our agents or affiliates) been approached by any candidates (or representative of any candidates) with respect to a possible acquisition transaction with our company. Additionally, we have not, nor has anyone on our behalf, taken any measure, directly or TABLE OF CONTENTS The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. SUBJECT TO COMPLETION, MAY 26, 2011 PRELIMINARY PROSPECTUS China Growth Equity Investment Ltd. $50,000,000 5,000,000 Units China Growth Equity Investment Ltd. is a Cayman Islands limited life exempted company organized as a blank check company for the purpose of directly or indirectly acquiring, through a merger, share exchange, asset acquisition, plan of arrangement, recapitalization, reorganization or similar business combination, an operating business, or control of an operating business through contractual arrangements, that has its principal business and/or material operations located in the People s Republic of China. As a limited life exempted company, we will continue in existence only until , 2013 in the event that we fail to consummate an initial business combination on or prior to ______, 2013. Pursuant to our memorandum and articles of association, our failure to consummate our initial business combination by this deadline will trigger the winding-up of our company and we will liquidate and distribute the proceeds held in the trust account and any remaining net assets to our public shareholders. While our board of directors and our management have agreed not to propose any amendment to our memorandum and articles of association relating to our business combination or our automatic dissolution, nor to conduct a solicitation of shareholders for such purpose, our shareholders have the ability under Cayman Islands law to effect such an amendment with supermajority approval. Our efforts to identify a prospective target business will not be limited to a particular industry. We do not have any specific business combination under consideration and we have not (nor has anyone on our behalf), directly or indirectly, contacted any prospective target business or had any discussions, formal or otherwise, with respect to such a transaction. This is an initial public offering of our securities. Each unit that we are offering has a price of $10.00 and consists of one ordinary share and one warrant. Each warrant entitles the holder to purchase one ordinary share at a price of $12.00. Each warrant will become exercisable on the later of one year after the date of this prospectus and 30 days following the consummation of our initial business combination, and will expire on the fifth anniversary of the consummation of our initial business combination, or earlier upon redemption. We have granted the underwriters a 45-day option to purchase up to 750,000 units solely to cover over-allotments, if any (over and above the 5,000,000 units referred to above). The over-allotment option will be used only to cover the net syndicate short position resulting from the initial distribution. Chum Capital Group Limited, an affiliate of our executive officers, and Mr. Xuechu He and Mr. Teng Zhou, two of our directors, have committed to purchase from us an aggregate of 3,966,667 warrants at $0.75 per warrant (for a total purchase price of $2,975,000). These purchases will take place on a private placement basis on the date of this prospectus. All of the proceeds we receive from the purchases will be placed in the trust account described below. These insider warrants will be identical to the warrants underlying the units being offered by this prospectus except that the insider warrants will be exercisable for cash or on a cashless basis, at the holder s option, and will not be redeemable by us, in each case, so long as they are still held by these purchasers or their permitted assigns. The purchasers have agreed that the insider warrants will not be sold or transferred by them until 30 days after we have completed our initial business combination, other than to certain limited permitted transferees. Currently, there is no public market for our units, ordinary shares or warrants. Our units, our ordinary shares and our warrants have been approved for listing on the Nasdaq Capital Market under the symbols CGEIU, CGEI and CGEW, respectively, on or promptly after the date of prospectus. The ordinary shares and warrants comprising the units will begin separate trading on the fifth business day following the earliest to occur of the expiration of the over-allotment option, its exercise in full or the announcement of the underwriters intention not to exercise any remaining portion of the over-allotment option, unless Deutsche Bank Securities Inc. determines to allow earlier separate trading. In any case, separate trading of the ordinary shares and warrants is subject to our having filed a Current Report on Form 8-K with the Securities and Exchange Commission, containing an audited balance sheet reflecting our receipt of the gross proceeds of this offering, including the over-allotment option, if applicable, and issuing a press release announcing when such separate trading will begin. Once the securities comprising the units begin separate trading, the ordinary shares and the warrants are expected to trade on the Nasdaq Capital Market, however, we cannot assure you that our securities will continue to be listed on the Nasdaq Capital Market. Investing in our securities involves a high degree of risk. See Risk Factors beginning on page 24 of this prospectus for a discussion of information that should be considered in connection with an investment in our securities. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. No offer or invitation to subscribe for shares may be made to the public in the Cayman Islands. Public Offering Price Underwriting Discount and Commissions 1 Proceeds, Before Expenses Per Unit $ 10.00 $ 0.70 $ 9.30 Total $ 50,000,000 $ 3,500,000 $ 46,500,000 (1) Includes up to $0.45 per unit, or $2,250,000 in the aggregate (or $2,587,500 if the underwriters over-allotment option is exercised in full), payable to the underwriters for deferred underwriting commissions to be placed in the trust account. Such funds will be released to the underwriters only upon completion of our initial business combination, as described in this prospectus. See Underwriting beginning on page 133. Upon consummation of this offering, an aggregate of $50,250,000 (or $10.05 per unit sold to the public in this offering), or an aggregate of $57,562,500, or $10.01 per unit in the event the over-allotment option is exercised, will be deposited into a trust account at Deutsche Bank Trust Company Americas, maintained by American Stock Transfer & Trust Company acting as trustee. These funds will not be released to us until the earlier of the completion of our initial business combination and our liquidation (which may not occur until , 2013, twenty-one months from the date of the consummation of this offering). Notwithstanding the foregoing, there can be released to us from the trust account (1) interest earned on the funds in the trust account that we need to pay our income tax obligations and for our working capital requirements, and (2) any amounts necessary to purchase up to 15% of the shares sold in this offering. We are offering the units for sale on a firm-commitment basis. Deutsche Bank Securities Inc., acting as representative of the underwriters, expects to deliver our securities to investors in this offering on or about , 2011. Deutsche Bank Securities Morgan Joseph TriArtisan Rodman & Renshaw, LLC , 2011 TABLE OF CONTENTS indirectly, to identify or locate any suitable acquisition candidate, nor have we engaged or retained any agent or other representative to identify or locate any such acquisition candidate. We will provide our shareholders with the opportunity to redeem their public shares for cash equal to their pro rata share of the aggregate amount then on deposit in the trust account, less franchise and income taxes payable, upon the consummation of our initial business combination, subject to the limitations described herein. The amount in the trust account is initially anticipated to be approximately $10.05 per share (or approximately $10.01 per share if the underwriters over-allotment option is exercised in full), including the deferred portion of the underwriting discount. There will be no redemption rights or liquidating distributions with respect to our warrants, which will expire worthless in the event we do not consummate our initial business combination. Our initial shareholders have agreed to waive their redemption rights with respect to their founder shares and any public shares they may hold in connection with the consummation of our initial business combination. In addition, our directors and officers have also agreed to waive their redemption rights with respect to any public shares in connection with the consummation of our initial business combination. The founder shares are excluded from the calculation used to determine the per-share redemption price. We will have until __________________, 2013 to consummate our initial business combination. Pursuant to our memorandum and articles of association, our failure to consummate our initial business combination by _________, 2013 will trigger the winding-up of our company, and we will liquidate and distribute the proceeds held in the trust account and any remaining net assets to our public shareholders. While our board of directors and our management have agreed not to propose any amendment to our memorandum and articles of association relating to our business combination or our automatic dissolution, nor to conduct a solicitation of shareholders for such purpose, our shareholders have the ability under Cayman Islands law to effect such an amendment with supermajority approval. We will not provide redemption rights to our shareholders in connection with any such amendment. Unlike many other blank check companies that hold shareholder votes and conduct proxy solicitations in conjunction with their initial business combinations and provide for related redemptions of public shares for cash upon consummation of such initial business combinations even when a vote is not required by law, we intend to consummate our initial business combination and conduct the redemptions without a shareholder vote pursuant to Rule 13e-4 and Regulation 14E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, which regulate issuer tender offers, and will file tender offer documents with the Securities and Exchange Commission, or SEC. The tender offer documents will contain substantially the same financial and other information about our initial business combination and the redemption rights as is required under Regulation 14A of the Exchange Act, which regulates the solicitation of proxies. In the event we conduct redemptions pursuant to the tender offer rules, our offer to redeem shares shall remain open for at least 20 business days, in accordance with Rule 14e-1(a) under the Exchange Act. If, however, a shareholder vote is required by law, or we decide to hold a shareholder vote for business or other legal reasons, we will, like other blank check companies, offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. If we seek shareholder approval, we will consummate our initial business combination only if a majority of the outstanding ordinary shares voted are voted in favor of the business combination. In such case, our initial shareholders have agreed to vote their founder shares in accordance with the majority of the votes cast by the public shareholders and to vote any public shares purchased during or after this offering in favor of our initial business combination. In the event that we qualify as a foreign private issuer, within the meaning of the rules promulgated under the Exchange Act, at the time we would otherwise conduct a shareholder vote, we would not be subject to the proxy rules at such time, and thus would comply with the tender offer rules as opposed to seeking a shareholder vote in connection with a business combination. TABLE OF CONTENTS We believe that we are presently a foreign private issuer within the meaning of the rules promulgated under the Exchange Act. We currently intend to comply with the periodic reporting requirements of a domestic issuer due to the fact that we are not certain that we will remain a foreign private issuer following our initial public offering. In addition, in the interest of providing consistent public disclosure we have agreed with the underwriters in this offering to provide the disclosure required of a domestic issuer. In addition, most blank check companies are required to consummate their initial business combination with a target whose value is equal to at least 80% of the amount of money held in the trust account of the blank check company at the time of entry into a definitive agreement for a business combination. Because we are not subject to this requirement, and because we are not required to obtain a controlling interest in a target, we will have additional flexibility in identifying and selecting a prospective acquisition candidate. We are incorporated under the laws of the Cayman Islands, and all of our assets will be located outside the U.S. In addition, certain of our directors and officers are nationals or residents of jurisdictions other than the U.S., including the PRC, and all or a substantial portion of their assets are located outside the U.S. As a result, it may be difficult for investors to effect service of process within the U.S. upon our directors or executive officers, or enforce judgments obtained in the U.S. courts against our directors or officers. Moreover, we have been advised that the PRC does not have treaties providing for the reciprocal recognition and enforcement of judgments of courts with the U.S. Further, it is unclear if extradition treaties now in effect between the U.S. and the PRC would permit effective enforcement of criminal penalties of the U.S. federal securities laws. In order to minimize potential conflicts of interest which may arise from multiple corporate affiliations, each of our officers and directors and their affiliate, Chum Capital Group Limited, has agreed, until the earliest of our initial business combination, our liquidation or, in the case of individuals, such time as he ceases to be an officer or director, to present to our company for our consideration, prior to presentation to any other entity, any suitable business opportunity which may reasonably be required to be presented to us, subject to any pre-existing fiduciary or contractual obligations he might have. In addition Chum Capital has granted us a right of first refusal for any investment in excess of $25 million and/or investments in companies seeking a public offering. Our principal executive offices are located at NCI Tower, A12 Jianguomenwai Ave., Chaoyang District, Beijing, PRC 100022 and our telephone number is (86) 10-6569-3988. TABLE OF CONTENTS THE OFFERING Securities offered by the Company 5,000,000 units, at $10.00 per unit, each unit consisting of one ordinary share and one warrant. Trading commencement and separation of ordinary shares and warrants The units will begin trading on or promptly after the date of this prospectus. The ordinary shares and warrants comprising the units will begin separate trading on the fifth business day following the earliest to occur of the expiration of the over-allotment option, its exercise in full or the announcement of the underwriters intention not to exercise any remaining portion of the over-allotment option, unless Deutsche Bank Securities Inc. determines to allow earlier separate trading. In no event will separate trading of the ordinary shares and warrants begin until we have filed the Form 8-K described below and have issued a press release announcing when such separate trading will begin. We will file a Current Report on Form 8-K with the SEC, including an audited balance sheet, promptly upon the consummation of this offering, which is anticipated to take place three business days from the date the units commence trading. The audited balance sheet will reflect our receipt of the proceeds from the exercise of the over-allotment option if the over-allotment option is exercised prior to the filing of the Form 8-K. If the over-allotment option is exercised after our initial filing of a Form 8-K, we will file an amendment to the Form 8-K or a new Form 8-K to provide updated financial information to reflect the exercise and consummation of the over-allotment option. The units will continue to trade along with the ordinary shares and warrants after the units are separated. Holders will need to have their brokers contact our transfer agent in order to separate the units into ordinary shares and warrants. Founder shares Our existing shareholders beneficially own 1,437,500 ordinary shares which they purchased for approximately $0.017 per ordinary share. The founder shares held by our initial shareholders include an aggregate of 187,500 shares subject to forfeiture to the extent that the underwriters over-allotment option is not exercised in full, so that our initial shareholders will collectively own 20% of our issued and outstanding shares after this offering (assuming none of our initial shareholders purchase units in this offering). In addition, 367,647 founder shares (or 422,794 founder shares if the underwriters over-allotment option is exercised in full) will be subject to forfeiture by our sponsor as follows: (1) 189,394 TABLE OF CONTENTS founder shares (or 217,803 founder shares if the underwriters over-allotment option is exercised in full) will be subject to forfeiture in the event the last sales price of our shares does not equal or exceed $15.00 per share and (2) 178,253 founder shares (or 204,991 founder shares if the underwriters over-allotment option is exercised in full) will be subject to forfeiture in the event the last sales price of our shares does not equal or exceed $12.00 per share. For both (1) and (2) above, the share price must be met for any 20 trading days within at least one 30-trading day period within 36 months following the closing of our initial business combination. Insider warrants 3,966,667 insider warrants at $0.75 per warrant (for a total purchase price of $2,975,000) will be sold to Chum Capital Group Limited, an affiliate of Xuesong Song, our Chairman and Chief Financial Officer, and Jin Shi, our Chief Executive Officer and a Director, and Xuechu He, our Vice Chairman and Director, and Teng Zhou, a Director, pursuant to letter agreements among us and such purchasers. These purchases will take place on a private placement basis on the date of this prospectus. The amounts to be paid upon consummation of the private placement will be placed in escrow with our counsel prior to the effectiveness of this registration statement. The insider warrants will be identical to the warrants underlying the units being offered by this prospectus except that the insider warrants will be exercisable for cash or on a cashless basis, at the holder s option, and will not be redeemable by us, in each case so long as they are still held by the initial purchasers or their permitted transferees. The insider warrants will not be transferable or saleable (except to certain permitted transferees) until 30 days after the completion of our initial business combination. No commissions, fees or other compensation will be payable in connection with the private placement. If we do not complete our business combination, the $2,975,000 purchase price of the insider warrants will become part of the amount payable to our public shareholders upon our dissolution and the subsequent liquidation of the trust account, and the insider warrants will expire worthless. TABLE OF CONTENTS Ordinary shares: Number outstanding before this offering 1,437,500 shares 1 Number to be outstanding after the initial public offering 7,187,500 shares 1 Warrants: Number to be sold to initial shareholders 3,966,667 warrants Number to be outstanding after this offering and sale to initial shareholders 9,716,667 warrants 2 Exercisability Each warrant is exercisable for one ordinary share. Exercise price $12.00. No public warrants will be exercisable for cash unless we have an effective and current registration statement covering the ordinary shares issuable upon exercise of the warrants and a current prospectus relating to such ordinary shares. Notwithstanding the foregoing, if a registration statement covering the ordinary shares issuable upon exercise of the public warrants is not effective and current by the 90th calendar day following the closing of our initial business combination, public warrant holders may, until such time as there is an effective registration statement, exercise warrants on a cashless basis pursuant to the exemption provided by Section 3(a)(9) of the Securities Act of 1933, provided that such exemption is available. If that exemption is not available, holders will not be able to exercise their warrants on a cashless basis. Exercise period The warrants will become exercisable on the later of one year after the date of this prospectus and 30 days following the consummation of our initial business combination. However, the warrants will only be exercisable if a registration statement relating to the ordinary shares issuable upon exercise of the warrants is effective and current. The warrants will expire at 5:00 p.m., New York City time, on the fifth anniversary of the consummation of our initial business combination, or earlier upon redemption. We have not registered the ordinary shares underlying the warrants as part of this (1) Assumes full exercise of the over-allotment option and includes 187,500 ordinary shares that are subject to forfeiture by our initial shareholders to the extent that the underwriters over-allotment option is not exercised in full, as well as an additional 367,647 shares (or 422,794 founder shares if the underwriters over-allotment option is exercised in full) that are subject to forfeiture by our initial shareholders if certain share price targets are not achieved following the closing of our initial business combination. (2) Assumes full exercise of the over-allotment option. TABLE OF CONTENTS registration statement. If we are unable to register the underlying shares in the future, the warrants could have no value. Redemption We may redeem the outstanding warrants (excluding the insider warrants): in whole and not in part, at a price of $.01 per warrant at any time while the warrants are exercisable, upon a minimum of 30 days prior written notice of redemption, and if, and only if, the last sales price of our ordinary shares equals or exceeds $18.00 per share for any 20 trading days within a 30 trading day period ending three business days before we send the notice of redemption. We will not redeem the warrants unless an effective registration statement covering the ordinary shares issuable upon exercise of the warrants is available and current throughout the 30-day redemption period. If the foregoing conditions are satisfied and we issue a notice of redemption, each warrant holder can exercise his, her or its warrant prior to the scheduled redemption date. However, the price of the ordinary shares may fall below the $18.00 trigger price as well as the $12.00 warrant exercise price after the redemption notice is issued. The redemption criteria for our warrants have been established at a price which is intended to provide warrant holders a reasonable premium to the initial exercise price and provide a differential between the then-prevailing ordinary share price and the warrant exercise price. Proposed symbols for our: Units CGEIU Ordinary shares CGEI Warrants CGEW Offering proceeds to be held in trust $47,275,000 of the net proceeds of this offering, plus the $2,975,000 we will receive from the sale of the insider warrants, for an aggregate of $50,250,000, or $10.05 per unit sold to the public in this offering, will be placed in a trust account at Deutsche Bank Trust Company Americas in the United States, maintained by American Stock Transfer & Trust Company, acting as trustee pursuant to an agreement to be signed on the date of this prospectus. This amount includes up TABLE OF CONTENTS to $2,250,000 ($0.45 per unit) of deferred underwriting discounts and commissions payable to the underwriters, as follows: (1) 2.25% of the gross proceeds of this offering reduced by the aggregate redemption price of the public shares redeemed in connection with the consummation of our initial business combination, up to $1,125,000, or $1,293,750 if the underwriters over-allotment option is exercised in full, will be automatically released to the underwriters upon completion of our initial business combination, and (2) up to 2.25% of the gross proceeds of this offering, up to a maximum of $1,125,000, or $1,293,750 if the underwriters over-allotment option is exercised in full, that we may pay to the underwriters in our sole discretion. Except as set forth below, these proceeds will not be released until the earlier of (1) the completion of our initial business combination, and (2) the redemption of 100% of our public shares if we are unable to consummate a business combination within the required time frame. Notwithstanding the foregoing, there can be released to us from the trust account (1) interest earned on the funds in the trust account that we need to pay our income tax obligations and for our working capital requirements, and (2) any amounts necessary to purchase up to 15% of the shares sold in this offering. With these exceptions, expenses incurred by us may be paid prior to a business combination only from $725,000 of the net proceeds of this offering not held in the trust account. Limited payments to initial shareholders There will be no fees or other cash payments paid by us or a target business to our initial shareholders, officers, directors or their affiliates prior to, or for any services they render in order to effectuate, the consummation of our initial business combination (regardless of the type of transaction that it is) other than: repayment of loans in the aggregate amount of $200,000, bearing no interest, made to us by, Xuesong Song to cover offering expenses; payment to Chum Capital Group Limited of $10,000 per month for office space, utilities and certain general and administrative services, including but not limited to receptionist, secretarial and general office services; and reimbursement of out-of-pocket expenses incurred by them in connection with certain TABLE OF CONTENTS activities on our behalf, such as identifying and investigating possible business targets and business combinations. There is no limit on the amount of out-of-pocket expenses reimbursable by us (except that reimbursement may not be made using funds in the trust account unless and until a business combination is consummated). Expense reimbursements will be reviewed only by our board of directors or a court of competent jurisdiction if such reimbursement is challenged. Memorandum and Articles of Association Our memorandum and articles of association provide that we will continue in existence only until ______________, 2013, in the event that we fail to consummate an initial business combination on or prior to _______, 2013. Our failure to consummate a business combination by this deadline will trigger the winding-up of our company, and we will liquidate and distribute the proceeds held in the trust account (described below) and any remaining net assets to our public shareholders. No shareholder vote will be required to commence our winding-up and dissolution. While our board of directors and our management have agreed not to propose any amendment to our memorandum and articles of association relating to our business combination or our automatic dissolution, nor to conduct a solicitation of shareholders for such purpose, our shareholders have the ability under Cayman Islands law to effect such an amendment with supermajority approval. In the event shareholders amend our memorandum and articles of association, our articles do not provide for redemption rights in connection with such amendment. Our memorandum and articles of association also contain provisions designed to provide certain other rights and protections to our shareholders prior to the consummation of our initial business combination, including: the right of public shareholders to exercise redemption rights and surrender their shares in lieu of participating in a proposed business combination; provided, however, in connection with a shareholder approval of any proposed initial business combination, a public shareholder, together with any affiliate of his or any other person with whom he is TABLE OF CONTENTS acting in concert or as a group will be restricted from seeking conversion rights with respect to 10% or more of the ordinary shares sold in this offering; limitation on shareholders rights to receive a portion of the trust account; and the separation of our board of directors into three classes and the establishment of related procedures regarding the standing and election of directors. The Companies Law permits a company domiciled in the Cayman Islands to amend its memorandum and articles of association with the approval of the holders of a special majority (at least two-thirds) of the company s outstanding ordinary shares. A company may specify that the approval of a higher majority is required but, provided the approval of the required majority is obtained, any Cayman Islands company may amend its memorandum and articles of association regardless of whether its memorandum and articles of association provides otherwise. Article 169 of our memorandum and articles of association provides that Articles 169 to 174, dealing with provisions relating to business combinations, will not be amended prior to consummation of our initial business combination. Although under Cayman Islands law, our shareholders are nevertheless able to amend the provisions relating to our proposed offering, structure and business plan, which are contained in Articles 169 through 174 of our memorandum and articles of association, our board of directors and management do not intend to initiate or propose any action to amend or waive these provisions. Redemption rights for public shareholders upon consummation of our initial business combination We will provide our shareholders with the opportunity to redeem their public shares for cash equal to their pro rata share of the aggregate amount then on deposit in the trust account, less franchise and income taxes payable, upon the consummation of our initial business combination, subject to the limitations described herein. The amount in the trust account is initially anticipated to be approximately $10.05 per share (or approximately $10.01 per share if the underwriters over-allotment option is exercised in full), $0.05 more than the per-unit offering price of $10.00 (approximately $0.04 less if the underwriters over-allotment option is exercised in TABLE OF CONTENTS full). There will be no redemption rights upon the consummation of our initial business combination with respect to our warrants. Our initial shareholders have agreed to waive their redemption rights with respect to their founder shares and any public shares they may hold in connection with the consummation of our initial business combination. In addition, our directors and officers have also agreed to waive their redemption rights with respect to any public shares in connection with the consummation of our initial business combination. The founder shares are excluded from the calculation used to determine the per-share redemption price. Unlike many other blank check companies that hold shareholder votes and conduct proxy solicitations in conjunction with their business combinations and provide for related redemptions of public shares for cash upon consummation of such initial business combinations even when a vote is not required by law, we intend to consummate our initial business combination and conduct the redemptions without a shareholder vote pursuant to Rule 13e-4 and Regulation 14E of the Exchange Act, which regulate issuer tender offers, and file tender offer documents with the SEC. The tender offer documents will contain substantially the same financial and other information about our initial business combination and the redemption rights as is required under Regulation 14A of the Exchange Act, which regulates the solicitation of proxies. In the event we conduct redemptions pursuant to the tender offer rules, our offer to redeem shares shall remain open for at least 20 business days, in accordance with Rule 14e-1(a) under the Exchange Act. If, however, a shareholder vote is required by law, or we decide to hold a shareholder vote for business or other legal reasons, we will, like other blank check companies, offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. If we seek shareholder approval, we will consummate our initial business combination only if a majority of the outstanding ordinary shares voted are voted in favor of the business combination. In such case, our initial shareholders have agreed to vote their founder shares in accordance with the majority of the votes cast by the public shareholders and to vote any public shares purchased during or after this offering in favor of our initial business combination. In the event that we qualify as a foreign private issuer, TABLE OF CONTENTS within the meaning of the rules promulgated under the Exchange Act, at the time we would otherwise conduct a shareholder vote, we would not be subject to the proxy rules at such time, and thus would comply with the tender offer rules as opposed to seeking a shareholder vote in connection with a business combination. Traditionally, blank check companies would not be able to consummate a business combination if the holders of the company s public shares voted against a proposed business combination and elected to redeem or convert more than a specified percentage of the shares sold in such company s initial public offering, which percentage threshold is typically between 19.99% and 39.99%. As a result, many blank check companies have been unable to complete business combinations because the number of shares voted by their public shareholders electing conversion exceeded the maximum conversion threshold pursuant to which such company could proceed with a business combination. Since we have no specified maximum redemption threshold, our structure is different in this respect from the structure that has been used by most blank check companies. In no event, however, will we redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001 (so that we are not subject to the SEC s penny stock rules). If we enter into an acquisition agreement with a prospective target that requires as a closing condition to our initial business combination that we maintain a minimum net worth or certain amount of cash that is greater than $5,000,001, we will communicate the details of the closing condition to our public shareholders through our tender offer or proxy solicitation materials, as applicable. Our memorandum and articles of association requires us to provide all of our shareholders with an opportunity to redeem all of their shares in connection with the consummation of any initial business combination, provided, however, a public shareholder, in connection with a shareholder approval of any proposed initial business combination, together with any affiliate of his or any other person with whom he is acting in concert or as a group (as defined in Section 13(d)(3) of the Exchange Act) will be restricted from seeking conversion rights with respect to 10% or more of the ordinary shares sold in this offering. Consequently, if accepting all properly submitted redemption requests would cause our net tangible assets to be less than $5,000,001 or TABLE OF CONTENTS such greater amount necessary to satisfy a closing condition as described above, we would not proceed with such redemption and the related business combination and may instead search for an alternate business combination. This closing condition, combined with the lack of limitations on shareholder redemption, could mean that significantly less than all of our public shareholders will have the opportunity to redeem in connection with a business combination. As a result, we may not be able to consummate such business combination and we may not be able to locate another suitable target within the applicable time period, if at all. Public shareholders may therefore have to wait the full 21 months from the closing of this offering in order to be able to receive their pro rata share of the trust account. A shareholder vote would only be required by Cayman Islands law if the business combination was effected pursuant to the merger provisions or the scheme of arrangement provisions contained in the Companies Law. U.S. shareholders could not be excluded from such a vote. A merger pursuant to the Companies Law must be authorized by either (1) a special resolution (usually a two-thirds majority) of the shareholders of each constituent company voting together as one class if the shares to be issued to each shareholder in the consolidated or surviving company will have the same rights and economic value as the shares held in the relevant constituent company or (2) each constituent company through a shareholder resolution by a majority in number representing 75% in value of the shareholders. A scheme of arrangement pursuant to the Companies Law has to be approved through a shareholder resolution by a majority in number representing 75% in value of the shareholders. Once a scheme has been approved by shareholders, it must then be sanctioned by the Grand Court of the Cayman Islands. If we hold a shareholder vote to approve our initial business combination and do not conduct redemptions in connection with our business combination pursuant to the tender offer rules, we or our sponsor, officers, directors or advisors may enter into privately negotiated agreements with our shareholders to purchase their shares to influence the vote. Redemption payments if we hold a shareholder vote If we are not a foreign private issuer and we hold a shareholder vote to approve our initial business combination, public shareholders electing to TABLE OF CONTENTS exercise their redemption rights will be entitled to receive cash equal to their pro rata share of the aggregate amount then on deposit in the trust account, including any amounts representing interest earned on the trust account, less franchise and income taxes payable, provided that such shareholders follow the specific procedures for redemption that will be set forth in the proxy statement relating to the shareholder vote on a proposed initial business combination. Unlike many other blank check companies, our public shareholders would not be required to vote against our initial business combination in order to exercise their redemption rights. Limitation on redemption rights and voting rights of shareholders holding 10% or more of the public shares sold in the offering if we hold a shareholder vote Notwithstanding the foregoing, a public shareholder, in connection with a shareholder approval of any proposed initial business combination, together with any affiliate of his or any other person with whom he is acting in concert or as a group (as defined in Section 13(d)(3) of the Exchange Act) will be restricted from seeking conversion rights with respect to 10% or more of the ordinary shares sold in this offering. Accordingly, in connection with a shareholder approval of any proposed initial business combination, all shares purchased by a holder in excess of 10% of the shares sold in this offering will not be converted to cash. We believe this restriction will prevent an individual shareholder or group from accumulating large blocks of shares before the vote held to approve a proposed business combination and attempt to use the conversion right as a means to force us or our management to purchase its shares at a significant premium to the then current market price. By limiting a shareholder s ability to convert more than 10% of the ordinary shares sold in this offering, we believe we have limited the ability of a small group of shareholders to unreasonably attempt to block a transaction which is favored by our other public shareholders. Permitted purchases of shares Prior to the consummation of a business combination, there can be released to us from the trust account amounts necessary to purchase up to 15% of the shares sold in this offering (750,000 shares, or 862,500 shares if the over-allotment option is exercised in full) at any time commencing upon the filing of a proxy statement TABLE OF CONTENTS related to an initial business combination and ending on the date immediately prior to the record date for the vote held to approve an initial business combination. Such purchases will only be permitted in the event that we seek shareholder approval of a business combination, which we will not be able to conduct if, at the time, we are a foreign private issuer. Purchases will be made only in open market transactions at times when we are not in possession of any material non-public information. It is intended that purchases will comply with the technical requirements of Rule 10b-18 (including timing, pricing and volume of purchases) under the Exchange Act at prices (inclusive of commissions) not to exceed the per-share amount then held in trust (initially approximately $10.05 per share, or approximately $10.01 if the over-allotment option is exercised in full). We can purchase any or all of the 750,000 shares (or 862,500 shares if the over-allotment option is exercised in full) we are entitled to purchase. It will be entirely in our discretion as to how many shares are purchased, when purchases are made and at what prices (provided the price does not exceed the per-share amount then held in trust). While we intend that such purchases will comply with the technical requirements of Rule 10b-18 (including timing, pricing and volume of purchases) under the Securities and Exchange Act, such purchases will not actually be effectuated under Rule 10b-18 due to the fact that we will not be able to satisfy all of the formal requirements of Rule 10b-18 in making such purchases. More specifically, subject to certain limited exceptions, Rule 10b-18 does not include any repurchase of a security effected during the period from the time of the public announcement of a merger, acquisition or similar transaction involving a recapitalization, until the earlier of the completion of such transaction or the completion of the vote by the target shareholders. As a result, we may not be able to comply with all of the requirements of Rule 10b-18 if target shareholder approval of the transaction has not yet been obtained. As a result, were we to make such purchases, and comply with the technical requirements of Rule 10b-18, we may not get the benefit of the safe harbor provided by such rule. Nevertheless, we will still seek to comply with all the technical requirements of Rule 10b-18. Purchasing decisions will be made based on various factors, including the then current market price of our ordinary shares and the terms of the proposed business combination. All shares TABLE OF CONTENTS purchased by us will be immediately cancelled. If we exercise our right to repurchase up to 15% of the shares sold in this offering, while we would still need the vote of at least a majority of the shares left outstanding in order to consummate a business combination, due to the fact that there would be comparatively fewer shares outstanding after the repurchase, we would need a comparatively smaller number of affirmative votes to meet the majority threshold, thus making it easier for us to consummate a business combination. However, if we were to make such repurchases, we would have less cash immediately available to us to complete a proposed business combination and therefore may be required to obtain third-party financing, which would ultimately result in less cash available for working capital following a business combination. Liquidation if no business combination As a limited life exempted company, we will continue in existence only until __________________, 2013, in the event that we fail to consummate an initial business combination on or prior to _______, 2013. If we have not completed a business combination within 21 months from the date of the consummation of this offering, public shareholders shall be entitled to receive a pro rata share of the trust account (which amount is initially anticipated to be approximately $10.05 per share ($10.01 if the over-allotment is exercised in full)). If we are forced to liquidate, under the Companies Law, a liquidator would normally give at least 31 days notice to creditors by notifying known creditors (if any) who have not submitted claims and by placing a public advertisement in the Cayman Islands Official Gazette, that we have been placed into liquidation and such creditors are required to submit particulars of their debts or claims to us, although in practice this notice requirement need not necessarily delay the distribution of assets as the liquidator may be satisfied that no creditors would be adversely affected as a consequence of a distribution before this time period has expired. Pursuant to our memorandum and articles of association, upon the expiration of 21 months from the date of the consummation of this offering our purpose and powers will be limited to winding up our affairs and liquidating. Liquidating distributions will take place promptly after the expiration of 21 months. Also included in our TABLE OF CONTENTS memorandum and articles of association are the provisions requiring the voluntary liquidation of our company at that time. While our board of directors and our management have agreed not to propose any amendment to our memorandum and articles of association relating to our business combination or our automatic dissolution, nor to conduct a solicitation of shareholders for such purpose, our shareholders have the ability under Cayman Islands law to effect such an amendment with supermajority approval. In the event shareholders amend our memorandum and articles of association, our articles do not provide for redemption rights in connection with such amendment. All of our officers and directors directly or indirectly own ordinary shares in our company but have waived their right to receive distributions (other than with respect to ordinary shares, or any ordinary shares underlying units, they purchase in connection with this offering or in the after market) upon the liquidation of the trust account. Until the consummation of our initial business combination, the funds held in the trust account will be our principal asset. Such funds may become subject to the claims of creditors or other parties. In order to protect the amounts held in the trust account, our officers and directors have agreed, jointly and severally, to indemnify us for claims of creditors, vendors, service providers and target businesses who have not executed a valid and binding waiver, enforceable under law, of their right to seek payment of amounts due to them out of the trust account. The only obligations not covered by such indemnity are with respect to claims of creditors, vendors, service providers and target businesses that have executed a valid and binding waiver, enforceable under law, of their right to seek payment of amounts due to them out of the trust account. Although we have a fiduciary obligation to pursue our officers and directors to enforce their indemnification obligations, and intend to pursue such actions, our officers and director may not be able to satisfy those obligations, if required to do so. As a result of the foregoing, we cannot assure you that the per ordinary share distribution from the trust account, if we liquidate, will not be less than $10.05 ($10.01 if the over-allotment is exercised in full), plus interest then held in the trust account. We will pay the costs associated with our distribution and the liquidation of the trust TABLE OF CONTENTS account from our remaining assets outside of the trust account or any portion of the interest earned on the trust account, all of which we are permitted to use for working capital, that we have not drawn from the trust account. We expect that all costs associated with the implementation and completion of our voluntary liquidation will be funded by any funds not held in our trust account or which we are permitted to withdraw from the trust account, although we cannot assure you that there will be sufficient funds for such purpose. If such funds are insufficient, Chum Capital Group Limited has contractually agreed to advance us up to $15,000 which is expected to be sufficient to fund the cost to complete such liquidation. Escrow of founder shares On the date of this prospectus, all of our initial shareholders, including all of our officers and directors, will place their founder shares and insider warrants into an escrow account maintained in New York, New York by American Stock Transfer & Trust Company, acting as escrow agent. The insider warrants will not be transferable or saleable until 30 days following completion of our initial business combination. Subject to certain limited exceptions (as described below), the founder shares will not be transferable or saleable until 12 months following completion of our initial business combination; provided however, these shares will be released from escrow (1) with respect to 50% of such shares, if the closing price of our ordinary shares equals or exceeds $12.00 for any 20 trading days within a 30-trading day period following the consummation of our initial business combination, and (2) with respect to 50% of such shares, if the closing price of our ordinary shares equals or exceeds $15.00 for any 20 trading days within a 30-trading day period following the consummation of our initial business combination or earlier, in any case, if, following a business combination, we engage in a subsequent transaction resulting in our shareholders having the right to exchange their shares for cash or other securities. Our initial shareholders have agreed that up to 187,500 of the founder shares will be forfeited by them on a pro rata basis to the extent the underwriters over-allotment option is not exercised in full. Our initial shareholders have also agreed that up to 367,647 shares (or 422,794 founder shares if the underwriters over-allotment option is exercised in full) will be forfeited by them on a pro rata basis to the extent that certain share price targets are not achieved for any 20 trading days within at least one 30-trading day period TABLE OF CONTENTS within 36 months following the closing of our initial business combination. The founder earnout shares will not be released from escrow until the applicable forfeiture condition lapses. Restriction on transfer of founder shares and insider warrants Our existing shareholders and insider warrant holders will be permitted to transfer all or a portion of the founder shares and insider warrants to their permitted transferees or assigns. Prior to their release from escrow, the securities may only be transferred or assigned: (1) to us or any of our officers, directors and employees, or any affiliates or family members of such individuals, (2) by gift to an affiliate or a member of the holder s immediate family or to a trust or other entity, the beneficiary of which is one of its officers or directors or a member of their respective immediate families, (3) by virtue of the laws of descent and distribution upon death of any holder, (4) pursuant to a qualified domestic relations order, (5) with respect to limited liability companies and partnerships to their respective members or partners, (6) by certain pledges to secure obligations incurred in connection with purchases of our securities, or (7) by private sales made at or prior to the consummation of our initial business combination at prices no greater than the price at which the shares were originally purchased, in the case of each of clauses (1) through (7), where the transferee agrees to the terms of the escrow agreement. Conflicts of Interest As a result of multiple business affiliations, our officers and directors may have similar legal obligations relating to presenting business opportunities to multiple entities. In addition, conflicts of interest may arise when our board evaluates a particular business opportunity. We cannot assure you that any conflict will be resolved in our favor. Under Cayman Islands law, our directors have fiduciary duties to act honestly, in good faith and with a view to our best interests. Our directors also have a duty to exercise the care, diligence and skills that a reasonably prudent person would exercise in comparable circumstances. In fulfilling their duty of care to us, our directors must ensure compliance with our memorandum and articles of association. In certain limited circumstances, a shareholder has the right to seek damages if a duty owed by our directors is breached. In order to minimize potential conflicts of interest which may arise from multiple corporate affiliations, each of our officers and directors has agreed, until the earliest of our initial business combination, our liquidation or such time as he ceases to be an officer or director, to present to our company for our consideration, prior to presentation to any other entity, any suitable business opportunity which may reasonably be required to be presented to us, subject to any pre-existing fiduciary or contractual obligations he might have. The following table summarizes the relevant pre-existing fiduciary or contractual obligations of our officers and directors: TABLE OF CONTENTS Name of Individual Name of Affiliated Company Priority/Preference Relative to China Growth Equity Investment Ltd. Xuesong Song Mobile Vision Communication Ltd. Mr. Song is a director of Mobile Vision Communication Ltd. or MVC. MVC is a mobile media content provider and distributor in the PRC. In the event that we seek to acquire an operating business in the mobile media industry in the PRC, a conflict may arise because Mr. Song has a pre-existing relationship with MVC. Such conflict is likely to be resolved in favor of MVC as Mr. Song must present acquisitions on the mobile media sector in the PRC to MVC before presenting to us. Xuechu He Honbridge Holdings Ltd. Mr. He is the chairman of Honbridge Holdings Ltd., a Hong Kong listed investment holding company that focuses on the new and traditional energy and resources sector, highly purified silicon business, as well as publication. In the event that we seek to acquire an operating business in the energy industry in the PRC, a conflict may arise because Mr. He has a pre-existing relationship with Honbridge Holdings Ltd. Such conflict is like to be resolved in favor of Honbridge Holdings Ltd. as Mr. He must present acquisitions on the energy sector in the PRC to Honbridge Holdings Ltd. before presenting to us. Michael W. Zhang China TopReach Inc. Mr. Zhang is a director of China TopReach Inc. or CTR. CTR is an aggregator and operator of print media businesses in the PRC. In the event that we seek to acquire an operating business in the print media sector in the PRC, a conflict may arise because Mr. Zhang has a pre-existing relationship with CTR. Such conflict is likely to be resolved in favor of CTR as Mr. Zhang must present acquisition opportunities in the print media business in the PRC to CTR before presenting to us. Helios Capital Management Co., Ltd. Mr. Zhang is also the Managing Partner of Helios Capital Management Co., Ltd. or Helios, a private equity firm focused on Chinese growth companies. In the event that we seek to acquire a Chinese growth company, a conflict may arise because Mr. Zhang has a pre-existing relationship with Helios, which may be resolved in favor of Helios. In addition, Xuesong Song, Jin Shi and Michael W. Zhang are each affiliated with Chum Capital Group Limited. Chum Capital Group Limited is a privately owned merchant bank which TABLE OF CONTENTS invests in growth companies and advises mid-market companies in accessing international capital markets through public listing or mergers and acquisitions. We do not believe there is any conflict between Messrs. Song s, Shi s and Zhang s responsibilities at Chum Capital Group Limited and their obligations to our company because Chum Capital Group Limited does not make investments in excess of $15 million, and we expect that our initial business combination will be well in excess of this threshold. In addition Chum Capital has granted us a right of first refusal for any investment in excess of $25 million and/or investments in companies seeking a public offering. Risks In making your decision on whether to invest in our securities, you should take into account the special risks we face as a blank check company, as well as the fact that this offering is not being conducted in compliance with Rule 419 promulgated under the Securities Act of 1933, as amended, and, therefore, you will not be entitled to protections normally afforded to investors in Rule 419 blank check offerings. For additional information concerning how Rule 419 blank check offerings differ from this offering, please see Proposed Business Comparison to offerings of blank check companies subject to Rule 419. Additionally, our initial security holders initial equity investment is below that which is required under the guidelines of the North American Securities Administrators Association, Inc. You should carefully consider these and the other risks set forth in the section entitled Risk Factors beginning on page 24 of this prospectus. TABLE OF CONTENTS
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001517221_mfi_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001517221_mfi_prospectus_summary.txt
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+This summary highlights information contained elsewhere in this prospectus. It does not contain all the information that you may consider important in deciding whether to participate in the exchange offer. Therefore, you should read the entire prospectus carefully, including, in particular, the section entitled Risk Factors and the financial statements and the related notes to those statements. Unless otherwise indicated or the context otherwise requires, all references in this prospectus to Michael Foods Group , our company , we , our , ours , us or similar terms refer to Michael Foods Group, Inc., together with its subsidiaries. Michael Foods, Inc., a wholly owned subsidiary of Michael Foods Group, is referred to as Michael Foods . MFI Holding Corporation is referred to as MFI Holding and MFI Midco Corporation is referred to as Parent . The Company We are a diversified producer and distributor of food products in three areas egg products, potato products and cheese and other dairy case products. Our Egg Products Division produces and distributes egg products to the foodservice, retail and food ingredient markets. Our Potato Products Division processes and distributes refrigerated potato products to the foodservice and retail grocery markets in North America. Our Crystal Farms Division markets a broad line of refrigerated grocery products to U. S. retail grocery outlets, including branded and private-label cheese, eggs and egg products, bagels, butter, muffins, potato products and ethnic foods. We have a strategic focus on value-added processing of food products. The strategy is designed to capitalize on key food industry trends, such as (i) the desire for improved safety and convenience, (ii) the focus by foodservice operators on reducing labor and waste, and (iii) the long-term trend toward food consumption away from home, which continues to be slowed somewhat by the recent economic conditions. We believe our operational scale, product breadth and geographic scope make us an attractive and important strategic partner for our customers. The Egg Products Division, comprised of our wholly owned subsidiaries M. G. Waldbaum Company ( Waldbaum ), Papetti s Hygrade Egg Products, Inc. ( Papetti s ), Abbotsford Farms, Inc., and MFI Food Canada Ltd., produces, processes and distributes numerous egg products. Based on management estimates, we believe that our Egg Products Division is the largest processed egg products producer in North America. Our principal value-added egg products are ultrapasteurized, extended shelf-life liquid eggs ( Easy Eggs and Excelle ), egg white based egg products ( All Whites and Better n Eggs ), and hardcooked and precooked egg products ( Table Ready ). Our other egg products include frozen, liquid and dried products that are used as ingredients in other food products, as well as organic and cage free egg products. Our Egg Products Division distributes its egg products to food processors and foodservice customers primarily throughout North America, with limited international sales in the Far East, South America and Europe. Our extended shelf-life liquid eggs (the largest selling product line within the Division) and other egg products are marketed to a wide variety of foodservice and food ingredients customers. The Egg Products Division also is a supplier of egg white-based egg products sold in the U.S. retail and foodservice markets. Our Crystal Farms Division markets a wide range of refrigerated grocery products directly to retailers and wholesale warehouses. We believe that the Crystal Farm Division s strategy of offering quality branded products at a good value relative to national brands has contributed to the Crystal Farm Division s growth. Crystal Farms cheese is positioned in the mid-tier pricing category and is priced below national brands such as Kraft and Sargento and above store brands (private label). The Crystal Farms Division s distributed refrigerated products, which consist principally of cheese, eggs and egg products, bagels, butter, muffins, potato products and ethnic foods, are supplied by various vendors or our other divisions, to Crystal Farms specifications. Cheese accounted for approximately 69% of the Crystal Farms Division s 2010 sales. While we do not produce cheese, we operate a cheese packaging facility in Lake Mills, Wisconsin, which processes and packages various cheese products for our Crystal Farms brand cheese business and for various private-label customers. Table of Contents Table of Additional Registrants Exact Name of Registrant as Specified in its Charter (Or Other Organizational Document) State or Other Jurisdiction of Incorporation or Organization I.R.S Employer Identification Number Address and Telephone Number of Registrant s Principal Executive Offices Abbotsford Farms, Inc. Minnesota 26-1615833 * Casa Trucking, Inc. Minnesota 22-3493806 * Crystal Farms Refrigerated Distribution Company Minnesota 41-1669454 * Farm Fresh Foods, Inc. Nevada 91-2086470 * MFI Food Asia, LLC Delaware 00-0000000 * MFI International, Inc. Minnesota 27-1428245 * Michael Foods, Inc. Delaware 13-4151741 * Michael Foods of Delaware, Inc. Delaware 41-1579532 * Minnesota Products, Inc. Minnesota 41-1394918 * M. G. Waldbaum Company Nebraska 47-0445304 * Northern Star Co. Minnesota 41-1468193 * Papetti s Hygrade Egg Products, Inc. Minnesota 22-3493805 * * Address and telephone number of Registrant s principal executive office is same as that of Michael Foods Group, Inc. The primary industrial classification number for each additional Registrant is 2015. Table of Contents The Crystal Farms Division has expanded its market area using both company-owned and leased facilities and independent distributors. The Crystal Farms Division s market area is the United States, with a large customer concentration in the central United States. We sell our products to a large number of retail stores, a majority of which are served via customers warehouses. The Crystal Farms Division also maintains a fleet of refrigerated tractor-trailers to deliver products daily to its retail customers from nine distribution centers centrally located in its key marketing areas. Our Potato Products Division consists of shredded hash browns and diced, sliced, mashed and other specialty potato products. Refrigerated potato products are produced and sold by our wholly owned subsidiaries, Northern Star Co. ( Northern Star ) and Farm Fresh Foods, Inc. ( Farm Fresh ), to both the foodservice and retail markets. In 2010, approximately 51% of the Potato Products Division s net sales were to the retail market, with the balance to the foodservice market. The Potato Products division sells refrigerated potato products in the United States in the retail grocery market, where they are marketed under the Simply Potatoes brand and in the foodservice market, where they are principally marketed under the Northern Star and Farm Fresh brands. Due to their freshness and quality, refrigerated potato products are generally sold at higher price points than frozen or dehydrated potato products. The Potato Products Division s largest customers include major retail grocery store chains and major foodservice distributors. The Potato Products Division maintains its main processing facility in Minnesota, with a smaller facility located in Nevada. At April 2, 2011 and January 1, 2011, we had total assets of approximately $2,138.1 million and $2,164.1 million, respectively. For the three-month period ended April 2, 2011 and the six-month period ended January 1, 2011, the Company had net sales of approximately $417.1 million and $858.3 million, respectively, and net earnings (loss) of approximately $(0.4) million and $3.3 million, respectively. For the three-month period ended April 2, 2010 and the six-month period ended June 26, 2010, the Predecessor had net sales of approximately $395.3 million and $744.0 million, respectively, and net earnings (loss) of approximately $15.0 million and $(34.3) million, respectively. Corporate History On June 29, 2010, M-Foods Holdings, Inc. and its subsidiaries (the Predecessor ) was merged with and into the Company, with the Company as the surviving entity and MFI Holding as its direct parent. MFI Holding is owned by GS Capital Partners VI Fund, L.P. and its affiliates (collectively, GS Capital Partners ), Thomas H. Lee Partners, L.P. (collectively, THL and together with GS Capital Partners, the Sponsors ) and certain members of management (the Management Stockholders ). Following the merger, GS Capital Partners, THL and the Management Stockholders indirectly own approximately 74%, 21% and 5%, respectively, of the Company. Our Executive Offices Our principal executive offices are located at 301 Carlson Parkway, Suite 400, Minnetonka, Minnesota 55305, and our telephone number at that address is (952) 258-4000. Our website address is www.michaelfoods.com. Information contained on our website is expressly not incorporated by reference into this prospectus. Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED JULY 15, 2011 PRELIMINARY PROSPECTUS MICHAEL FOODS GROUP, INC. 9.750% Senior Notes due 2018 On June 29, 2010, we issued $430,000,000 9.750% Senior Notes due July 15, 2018 (the Restricted Notes ) in a transaction exempt from the registration requirements of the Securities Act. As part of the issuance of the Restricted Notes, holders were granted benefits pursuant to an exchange and registration rights agreement (the registration rights agreement ) among us, the guarantors and the initial purchasers of the Restricted Notes. To satisfy our obligations under the registration rights agreement, on July 7, 2011, we launched an offer to exchange (the exchange offer ) all Restricted Notes for $430,000,000 9.750% Senior Notes due 2018, the issuance of each of which has been registered under the Securities Act of 1933 (the notes ). The notes bear interest at a rate of 9.750% per annum and mature on July 15, 2018. Interest on the notes is payable on January 15 and July 15 of each year. We have the option to redeem all or a portion of the notes at any time on or after July 15, 2014 at the redemption prices set forth in this prospectus. On or prior to July 15, 2013, we have the option to redeem up to 35% of the notes with proceeds of certain equity offerings at a redemption price equal to 109.750% of their principal amount, plus accrued and unpaid interest, if any, to the date of redemption. In addition, at any time prior to July 15, 2014, we may redeem all or a portion of the notes at a price equal to 100% of the principal amount of the notes, plus a make-whole premium and accrued and unpaid interest, if any, to the date of redemption, as described in this prospectus. The notes are guaranteed on a senior unsecured basis by all of our existing wholly-owned domestic restricted subsidiaries that guarantee our senior secured credit facilities and our future subsidiaries that are wholly-owned domestic subsidiaries or that guarantee our senior secured credit facilities (in each case, subject to certain exceptions). The notes effectively rank behind all of our secured debt, including our senior secured credit facilities, to the extent of the value of the assets securing such debt. In addition, the notes are structurally subordinated to all liabilities of our subsidiaries that do not guarantee the notes. This prospectus includes additional information on the terms of the notes, including redemption and repurchase prices, covenants and transfer restrictions. We do not intend to apply for listing of the notes on any securities exchange or for inclusion of the notes in any automated quotation system. Consider carefully the Risk Factors beginning on page 5 of this prospectus. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. This prospectus has been prepared for and may be used by Goldman, Sachs & Co. and its affiliates in connection with offers and sales of the notes related to market-making transactions in the notes in the secondary market effected from time to time. Goldman, Sachs & Co. and its affiliates may act as principal or agent in such transactions, including as agent for the counterparty when acting as principal or as agent for both counterparties, and may receive compensation in the form of discounts and commissions, including from both counterparties, when it acts as agents for both. Sales of notes pursuant to this prospectus will be made at prevailing market prices at the time of sale, at prices related thereto or at negotiated prices. We will not receive any proceeds from such sales. The date of this prospectus is , 2011 Table of Contents Summary of the Terms of the Notes The following summary describes the principal terms of the notes and is provided solely for your convenience. For a more detailed description of the notes, see Description of Notes . Securities Offered $430,000,000 aggregate principal amount of 9.750% Senior Notes due 2018. Maturity July 15, 2018. Interest Interest will be payable in cash on January 15 and July 15 of each year. Optional Redemption We may redeem all or a portion of the notes beginning on July 15, 2014. The initial redemption price is 104.875% of their principal amount, plus accrued and unpaid interest, if any, to the redemption date. The redemption price will decline each year after 2014 and will be 100% of their principal amount, plus accrued and unpaid interest, if any, to the redemption date, beginning on July 15, 2016. At any time prior to July 15, 2014, we may redeem all or a portion of the notes at a price equal to 100% of the principal amount of the notes plus a make-whole premium and accrued and unpaid interest, if any, to the redemption date, in each case as described in this prospectus under Description of Notes Optional Redemption . In addition, before July 15, 2013, we may redeem up to 35% of the aggregate principal amount of notes with the proceeds of certain equity offerings at 109.750% of their principal amount plus accrued and unpaid interest, if any, to the redemption date. We may make such redemption only if, after any such redemption, at least 65% of the aggregate principal amount of notes originally issued remains outstanding. Offers to Purchase If we sell certain assets without applying the proceeds in a specified manner or experience certain change of control events, each holder of notes may require us to purchase all or a portion of its notes at the purchase prices set forth in this prospectus, plus accrued and unpaid interest, if any, to the purchase date. See Description of Notes Repurchase at the Option of Holders . Our senior secured credit facilities or other agreements may restrict us from repurchasing any of the notes, including any purchase we may be required to make as a result of a change of control or certain asset sales. See Risk Factors Risks Related to the Notes We may not have the ability to raise the funds necessary to finance the change of control offer required by the indenture governing the notes. Ranking The notes will rank equally to all of our other unsecured and unsubordinated indebtedness, but will effectively be junior to all of our secured indebtedness, to the extent of the value of the assets Table of Contents securing that indebtedness. The notes will also be structurally subordinated to all liabilities of our subsidiaries that do not guarantee the notes. Guarantees The notes will be guaranteed by all of our existing wholly-owned domestic restricted subsidiaries that guarantee our senior secured credit facilities. In addition, subject to certain exceptions, the notes will be guaranteed by all of our future wholly-owned domestic restricted subsidiaries and any other domestic restricted subsidiary that guarantees our senior secured credit facilities. The guarantees will rank equally to all other unsecured and unsubordinated indebtedness of the guarantors, but will be effectively junior to all of the secured indebtedness of the guarantors, to the extent of the value of the assets securing that indebtedness. Certain Covenants The terms of the notes restrict our ability and the ability of our restricted subsidiaries (as described in Description of Notes ) to: incur additional indebtedness; create liens; pay dividends or make distributions in respect of capital stock; purchase or redeem capital stock; make investments or certain other restricted payments; sell assets; issue or sell stock of restricted subsidiaries; enter into transactions with affiliates; or effect a consolidation or merger. However, these limitations will be subject to a number of important qualifications and exceptions. For more information, see Description of Notes Certain Covenants . Use of Proceeds This prospectus is delivered in connection with the sale of notes by Goldman, Sachs & Co. and its affiliates in market-making transactions. We will not receive any of the proceeds from such transactions.
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001517222_abbotsford_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001517222_abbotsford_prospectus_summary.txt
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+This summary highlights information contained elsewhere in this prospectus. It does not contain all the information that you may consider important in deciding whether to participate in the exchange offer. Therefore, you should read the entire prospectus carefully, including, in particular, the section entitled Risk Factors and the financial statements and the related notes to those statements. Unless otherwise indicated or the context otherwise requires, all references in this prospectus to Michael Foods Group , our company , we , our , ours , us or similar terms refer to Michael Foods Group, Inc., together with its subsidiaries. Michael Foods, Inc., a wholly owned subsidiary of Michael Foods Group, is referred to as Michael Foods . MFI Holding Corporation is referred to as MFI Holding and MFI Midco Corporation is referred to as Parent . The Company We are a diversified producer and distributor of food products in three areas egg products, potato products and cheese and other dairy case products. Our Egg Products Division produces and distributes egg products to the foodservice, retail and food ingredient markets. Our Potato Products Division processes and distributes refrigerated potato products to the foodservice and retail grocery markets in North America. Our Crystal Farms Division markets a broad line of refrigerated grocery products to U. S. retail grocery outlets, including branded and private-label cheese, eggs and egg products, bagels, butter, muffins, potato products and ethnic foods. We have a strategic focus on value-added processing of food products. The strategy is designed to capitalize on key food industry trends, such as (i) the desire for improved safety and convenience, (ii) the focus by foodservice operators on reducing labor and waste, and (iii) the long-term trend toward food consumption away from home, which continues to be slowed somewhat by the recent economic conditions. We believe our operational scale, product breadth and geographic scope make us an attractive and important strategic partner for our customers. The Egg Products Division, comprised of our wholly owned subsidiaries M. G. Waldbaum Company ( Waldbaum ), Papetti s Hygrade Egg Products, Inc. ( Papetti s ), Abbotsford Farms, Inc., and MFI Food Canada Ltd., produces, processes and distributes numerous egg products. Based on management estimates, we believe that our Egg Products Division is the largest processed egg products producer in North America. Our principal value-added egg products are ultrapasteurized, extended shelf-life liquid eggs ( Easy Eggs and Excelle ), egg white based egg products ( All Whites and Better n Eggs ), and hardcooked and precooked egg products ( Table Ready ). Our other egg products include frozen, liquid and dried products that are used as ingredients in other food products, as well as organic and cage free egg products. Our Egg Products Division distributes its egg products to food processors and foodservice customers primarily throughout North America, with limited international sales in the Far East, South America and Europe. Our extended shelf-life liquid eggs (the largest selling product line within the Division) and other egg products are marketed to a wide variety of foodservice and food ingredients customers. The Egg Products Division also is a supplier of egg white-based egg products sold in the U.S. retail and foodservice markets. Our Crystal Farms Division markets a wide range of refrigerated grocery products directly to retailers and wholesale warehouses. We believe that the Crystal Farm Division s strategy of offering quality branded products at a good value relative to national brands has contributed to the Crystal Farm Division s growth. Crystal Farms cheese is positioned in the mid-tier pricing category and is priced below national brands such as Kraft and Sargento and above store brands (private label). The Crystal Farms Division s distributed refrigerated products, which consist principally of cheese, eggs and egg products, bagels, butter, muffins, potato products and ethnic foods, are supplied by various vendors or our other divisions, to Crystal Farms specifications. Cheese accounted for approximately 69% of the Crystal Farms Division s 2010 sales. While we do not produce cheese, we operate a cheese packaging facility in Lake Mills, Wisconsin, which processes and packages various cheese products for our Crystal Farms brand cheese business and for various private-label customers. Table of Contents Table of Additional Registrants Exact Name of Registrant as Specified in its Charter (Or Other Organizational Document) State or Other Jurisdiction of Incorporation or Organization I.R.S Employer Identification Number Address and Telephone Number of Registrant s Principal Executive Offices Abbotsford Farms, Inc. Minnesota 26-1615833 * Casa Trucking, Inc. Minnesota 22-3493806 * Crystal Farms Refrigerated Distribution Company Minnesota 41-1669454 * Farm Fresh Foods, Inc. Nevada 91-2086470 * MFI Food Asia, LLC Delaware 00-0000000 * MFI International, Inc. Minnesota 27-1428245 * Michael Foods, Inc. Delaware 13-4151741 * Michael Foods of Delaware, Inc. Delaware 41-1579532 * Minnesota Products, Inc. Minnesota 41-1394918 * M. G. Waldbaum Company Nebraska 47-0445304 * Northern Star Co. Minnesota 41-1468193 * Papetti s Hygrade Egg Products, Inc. Minnesota 22-3493805 * * Address and telephone number of Registrant s principal executive office is same as that of Michael Foods Group, Inc. The primary industrial classification number for each additional Registrant is 2015. Table of Contents The Crystal Farms Division has expanded its market area using both company-owned and leased facilities and independent distributors. The Crystal Farms Division s market area is the United States, with a large customer concentration in the central United States. We sell our products to a large number of retail stores, a majority of which are served via customers warehouses. The Crystal Farms Division also maintains a fleet of refrigerated tractor-trailers to deliver products daily to its retail customers from nine distribution centers centrally located in its key marketing areas. Our Potato Products Division consists of shredded hash browns and diced, sliced, mashed and other specialty potato products. Refrigerated potato products are produced and sold by our wholly owned subsidiaries, Northern Star Co. ( Northern Star ) and Farm Fresh Foods, Inc. ( Farm Fresh ), to both the foodservice and retail markets. In 2010, approximately 51% of the Potato Products Division s net sales were to the retail market, with the balance to the foodservice market. The Potato Products division sells refrigerated potato products in the United States in the retail grocery market, where they are marketed under the Simply Potatoes brand and in the foodservice market, where they are principally marketed under the Northern Star and Farm Fresh brands. Due to their freshness and quality, refrigerated potato products are generally sold at higher price points than frozen or dehydrated potato products. The Potato Products Division s largest customers include major retail grocery store chains and major foodservice distributors. The Potato Products Division maintains its main processing facility in Minnesota, with a smaller facility located in Nevada. At April 2, 2011 and January 1, 2011, we had total assets of approximately $2,138.1 million and $2,164.1 million, respectively. For the three-month period ended April 2, 2011 and the six-month period ended January 1, 2011, the Company had net sales of approximately $417.1 million and $858.3 million, respectively, and net earnings (loss) of approximately $(0.4) million and $3.3 million, respectively. For the three-month period ended April 2, 2010 and the six-month period ended June 26, 2010, the Predecessor had net sales of approximately $395.3 million and $744.0 million, respectively, and net earnings (loss) of approximately $15.0 million and $(34.3) million, respectively. Corporate History On June 29, 2010, M-Foods Holdings, Inc. and its subsidiaries (the Predecessor ) was merged with and into the Company, with the Company as the surviving entity and MFI Holding as its direct parent. MFI Holding is owned by GS Capital Partners VI Fund, L.P. and its affiliates (collectively, GS Capital Partners ), Thomas H. Lee Partners, L.P. (collectively, THL and together with GS Capital Partners, the Sponsors ) and certain members of management (the Management Stockholders ). Following the merger, GS Capital Partners, THL and the Management Stockholders indirectly own approximately 74%, 21% and 5%, respectively, of the Company. Our Executive Offices Our principal executive offices are located at 301 Carlson Parkway, Suite 400, Minnetonka, Minnesota 55305, and our telephone number at that address is (952) 258-4000. Our website address is www.michaelfoods.com. Information contained on our website is expressly not incorporated by reference into this prospectus. Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED JULY 15, 2011 PRELIMINARY PROSPECTUS MICHAEL FOODS GROUP, INC. 9.750% Senior Notes due 2018 On June 29, 2010, we issued $430,000,000 9.750% Senior Notes due July 15, 2018 (the Restricted Notes ) in a transaction exempt from the registration requirements of the Securities Act. As part of the issuance of the Restricted Notes, holders were granted benefits pursuant to an exchange and registration rights agreement (the registration rights agreement ) among us, the guarantors and the initial purchasers of the Restricted Notes. To satisfy our obligations under the registration rights agreement, on July 7, 2011, we launched an offer to exchange (the exchange offer ) all Restricted Notes for $430,000,000 9.750% Senior Notes due 2018, the issuance of each of which has been registered under the Securities Act of 1933 (the notes ). The notes bear interest at a rate of 9.750% per annum and mature on July 15, 2018. Interest on the notes is payable on January 15 and July 15 of each year. We have the option to redeem all or a portion of the notes at any time on or after July 15, 2014 at the redemption prices set forth in this prospectus. On or prior to July 15, 2013, we have the option to redeem up to 35% of the notes with proceeds of certain equity offerings at a redemption price equal to 109.750% of their principal amount, plus accrued and unpaid interest, if any, to the date of redemption. In addition, at any time prior to July 15, 2014, we may redeem all or a portion of the notes at a price equal to 100% of the principal amount of the notes, plus a make-whole premium and accrued and unpaid interest, if any, to the date of redemption, as described in this prospectus. The notes are guaranteed on a senior unsecured basis by all of our existing wholly-owned domestic restricted subsidiaries that guarantee our senior secured credit facilities and our future subsidiaries that are wholly-owned domestic subsidiaries or that guarantee our senior secured credit facilities (in each case, subject to certain exceptions). The notes effectively rank behind all of our secured debt, including our senior secured credit facilities, to the extent of the value of the assets securing such debt. In addition, the notes are structurally subordinated to all liabilities of our subsidiaries that do not guarantee the notes. This prospectus includes additional information on the terms of the notes, including redemption and repurchase prices, covenants and transfer restrictions. We do not intend to apply for listing of the notes on any securities exchange or for inclusion of the notes in any automated quotation system. Consider carefully the Risk Factors beginning on page 5 of this prospectus. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. This prospectus has been prepared for and may be used by Goldman, Sachs & Co. and its affiliates in connection with offers and sales of the notes related to market-making transactions in the notes in the secondary market effected from time to time. Goldman, Sachs & Co. and its affiliates may act as principal or agent in such transactions, including as agent for the counterparty when acting as principal or as agent for both counterparties, and may receive compensation in the form of discounts and commissions, including from both counterparties, when it acts as agents for both. Sales of notes pursuant to this prospectus will be made at prevailing market prices at the time of sale, at prices related thereto or at negotiated prices. We will not receive any proceeds from such sales. The date of this prospectus is , 2011 Table of Contents Summary of the Terms of the Notes The following summary describes the principal terms of the notes and is provided solely for your convenience. For a more detailed description of the notes, see Description of Notes . Securities Offered $430,000,000 aggregate principal amount of 9.750% Senior Notes due 2018. Maturity July 15, 2018. Interest Interest will be payable in cash on January 15 and July 15 of each year. Optional Redemption We may redeem all or a portion of the notes beginning on July 15, 2014. The initial redemption price is 104.875% of their principal amount, plus accrued and unpaid interest, if any, to the redemption date. The redemption price will decline each year after 2014 and will be 100% of their principal amount, plus accrued and unpaid interest, if any, to the redemption date, beginning on July 15, 2016. At any time prior to July 15, 2014, we may redeem all or a portion of the notes at a price equal to 100% of the principal amount of the notes plus a make-whole premium and accrued and unpaid interest, if any, to the redemption date, in each case as described in this prospectus under Description of Notes Optional Redemption . In addition, before July 15, 2013, we may redeem up to 35% of the aggregate principal amount of notes with the proceeds of certain equity offerings at 109.750% of their principal amount plus accrued and unpaid interest, if any, to the redemption date. We may make such redemption only if, after any such redemption, at least 65% of the aggregate principal amount of notes originally issued remains outstanding. Offers to Purchase If we sell certain assets without applying the proceeds in a specified manner or experience certain change of control events, each holder of notes may require us to purchase all or a portion of its notes at the purchase prices set forth in this prospectus, plus accrued and unpaid interest, if any, to the purchase date. See Description of Notes Repurchase at the Option of Holders . Our senior secured credit facilities or other agreements may restrict us from repurchasing any of the notes, including any purchase we may be required to make as a result of a change of control or certain asset sales. See Risk Factors Risks Related to the Notes We may not have the ability to raise the funds necessary to finance the change of control offer required by the indenture governing the notes. Ranking The notes will rank equally to all of our other unsecured and unsubordinated indebtedness, but will effectively be junior to all of our secured indebtedness, to the extent of the value of the assets Table of Contents securing that indebtedness. The notes will also be structurally subordinated to all liabilities of our subsidiaries that do not guarantee the notes. Guarantees The notes will be guaranteed by all of our existing wholly-owned domestic restricted subsidiaries that guarantee our senior secured credit facilities. In addition, subject to certain exceptions, the notes will be guaranteed by all of our future wholly-owned domestic restricted subsidiaries and any other domestic restricted subsidiary that guarantees our senior secured credit facilities. The guarantees will rank equally to all other unsecured and unsubordinated indebtedness of the guarantors, but will be effectively junior to all of the secured indebtedness of the guarantors, to the extent of the value of the assets securing that indebtedness. Certain Covenants The terms of the notes restrict our ability and the ability of our restricted subsidiaries (as described in Description of Notes ) to: incur additional indebtedness; create liens; pay dividends or make distributions in respect of capital stock; purchase or redeem capital stock; make investments or certain other restricted payments; sell assets; issue or sell stock of restricted subsidiaries; enter into transactions with affiliates; or effect a consolidation or merger. However, these limitations will be subject to a number of important qualifications and exceptions. For more information, see Description of Notes Certain Covenants . Use of Proceeds This prospectus is delivered in connection with the sale of notes by Goldman, Sachs & Co. and its affiliates in market-making transactions. We will not receive any of the proceeds from such transactions.
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001517223_mfi-food_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001517223_mfi-food_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..5018a9e4278945a612ddee141e8e537894afedee
--- /dev/null
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@@ -0,0 +1 @@
+This summary highlights information contained elsewhere in this prospectus. It does not contain all the information that you may consider important in deciding whether to participate in the exchange offer. Therefore, you should read the entire prospectus carefully, including, in particular, the section entitled Risk Factors and the financial statements and the related notes to those statements. Unless otherwise indicated or the context otherwise requires, all references in this prospectus to Michael Foods Group , our company , we , our , ours , us or similar terms refer to Michael Foods Group, Inc., together with its subsidiaries. Michael Foods, Inc., a wholly owned subsidiary of Michael Foods Group, is referred to as Michael Foods . MFI Holding Corporation is referred to as MFI Holding and MFI Midco Corporation is referred to as Parent . The Company We are a diversified producer and distributor of food products in three areas egg products, potato products and cheese and other dairy case products. Our Egg Products Division produces and distributes egg products to the foodservice, retail and food ingredient markets. Our Potato Products Division processes and distributes refrigerated potato products to the foodservice and retail grocery markets in North America. Our Crystal Farms Division markets a broad line of refrigerated grocery products to U. S. retail grocery outlets, including branded and private-label cheese, eggs and egg products, bagels, butter, muffins, potato products and ethnic foods. We have a strategic focus on value-added processing of food products. The strategy is designed to capitalize on key food industry trends, such as (i) the desire for improved safety and convenience, (ii) the focus by foodservice operators on reducing labor and waste, and (iii) the long-term trend toward food consumption away from home, which continues to be slowed somewhat by the recent economic conditions. We believe our operational scale, product breadth and geographic scope make us an attractive and important strategic partner for our customers. The Egg Products Division, comprised of our wholly owned subsidiaries M. G. Waldbaum Company ( Waldbaum ), Papetti s Hygrade Egg Products, Inc. ( Papetti s ), Abbotsford Farms, Inc., and MFI Food Canada Ltd., produces, processes and distributes numerous egg products. Based on management estimates, we believe that our Egg Products Division is the largest processed egg products producer in North America. Our principal value-added egg products are ultrapasteurized, extended shelf-life liquid eggs ( Easy Eggs and Excelle ), egg white based egg products ( All Whites and Better n Eggs ), and hardcooked and precooked egg products ( Table Ready ). Our other egg products include frozen, liquid and dried products that are used as ingredients in other food products, as well as organic and cage free egg products. Our Egg Products Division distributes its egg products to food processors and foodservice customers primarily throughout North America, with limited international sales in the Far East, South America and Europe. Our extended shelf-life liquid eggs (the largest selling product line within the Division) and other egg products are marketed to a wide variety of foodservice and food ingredients customers. The Egg Products Division also is a supplier of egg white-based egg products sold in the U.S. retail and foodservice markets. Our Crystal Farms Division markets a wide range of refrigerated grocery products directly to retailers and wholesale warehouses. We believe that the Crystal Farm Division s strategy of offering quality branded products at a good value relative to national brands has contributed to the Crystal Farm Division s growth. Crystal Farms cheese is positioned in the mid-tier pricing category and is priced below national brands such as Kraft and Sargento and above store brands (private label). The Crystal Farms Division s distributed refrigerated products, which consist principally of cheese, eggs and egg products, bagels, butter, muffins, potato products and ethnic foods, are supplied by various vendors or our other divisions, to Crystal Farms specifications. Cheese accounted for approximately 69% of the Crystal Farms Division s 2010 sales. While we do not produce cheese, we operate a cheese packaging facility in Lake Mills, Wisconsin, which processes and packages various cheese products for our Crystal Farms brand cheese business and for various private-label customers. Table of Contents Table of Additional Registrants Exact Name of Registrant as Specified in its Charter (Or Other Organizational Document) State or Other Jurisdiction of Incorporation or Organization I.R.S Employer Identification Number Address and Telephone Number of Registrant s Principal Executive Offices Abbotsford Farms, Inc. Minnesota 26-1615833 * Casa Trucking, Inc. Minnesota 22-3493806 * Crystal Farms Refrigerated Distribution Company Minnesota 41-1669454 * Farm Fresh Foods, Inc. Nevada 91-2086470 * MFI Food Asia, LLC Delaware 00-0000000 * MFI International, Inc. Minnesota 27-1428245 * Michael Foods, Inc. Delaware 13-4151741 * Michael Foods of Delaware, Inc. Delaware 41-1579532 * Minnesota Products, Inc. Minnesota 41-1394918 * M. G. Waldbaum Company Nebraska 47-0445304 * Northern Star Co. Minnesota 41-1468193 * Papetti s Hygrade Egg Products, Inc. Minnesota 22-3493805 * * Address and telephone number of Registrant s principal executive office is same as that of Michael Foods Group, Inc. The primary industrial classification number for each additional Registrant is 2015. Table of Contents The Crystal Farms Division has expanded its market area using both company-owned and leased facilities and independent distributors. The Crystal Farms Division s market area is the United States, with a large customer concentration in the central United States. We sell our products to a large number of retail stores, a majority of which are served via customers warehouses. The Crystal Farms Division also maintains a fleet of refrigerated tractor-trailers to deliver products daily to its retail customers from nine distribution centers centrally located in its key marketing areas. Our Potato Products Division consists of shredded hash browns and diced, sliced, mashed and other specialty potato products. Refrigerated potato products are produced and sold by our wholly owned subsidiaries, Northern Star Co. ( Northern Star ) and Farm Fresh Foods, Inc. ( Farm Fresh ), to both the foodservice and retail markets. In 2010, approximately 51% of the Potato Products Division s net sales were to the retail market, with the balance to the foodservice market. The Potato Products division sells refrigerated potato products in the United States in the retail grocery market, where they are marketed under the Simply Potatoes brand and in the foodservice market, where they are principally marketed under the Northern Star and Farm Fresh brands. Due to their freshness and quality, refrigerated potato products are generally sold at higher price points than frozen or dehydrated potato products. The Potato Products Division s largest customers include major retail grocery store chains and major foodservice distributors. The Potato Products Division maintains its main processing facility in Minnesota, with a smaller facility located in Nevada. At April 2, 2011 and January 1, 2011, we had total assets of approximately $2,138.1 million and $2,164.1 million, respectively. For the three-month period ended April 2, 2011 and the six-month period ended January 1, 2011, the Company had net sales of approximately $417.1 million and $858.3 million, respectively, and net earnings (loss) of approximately $(0.4) million and $3.3 million, respectively. For the three-month period ended April 2, 2010 and the six-month period ended June 26, 2010, the Predecessor had net sales of approximately $395.3 million and $744.0 million, respectively, and net earnings (loss) of approximately $15.0 million and $(34.3) million, respectively. Corporate History On June 29, 2010, M-Foods Holdings, Inc. and its subsidiaries (the Predecessor ) was merged with and into the Company, with the Company as the surviving entity and MFI Holding as its direct parent. MFI Holding is owned by GS Capital Partners VI Fund, L.P. and its affiliates (collectively, GS Capital Partners ), Thomas H. Lee Partners, L.P. (collectively, THL and together with GS Capital Partners, the Sponsors ) and certain members of management (the Management Stockholders ). Following the merger, GS Capital Partners, THL and the Management Stockholders indirectly own approximately 74%, 21% and 5%, respectively, of the Company. Our Executive Offices Our principal executive offices are located at 301 Carlson Parkway, Suite 400, Minnetonka, Minnesota 55305, and our telephone number at that address is (952) 258-4000. Our website address is www.michaelfoods.com. Information contained on our website is expressly not incorporated by reference into this prospectus. Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED JULY 15, 2011 PRELIMINARY PROSPECTUS MICHAEL FOODS GROUP, INC. 9.750% Senior Notes due 2018 On June 29, 2010, we issued $430,000,000 9.750% Senior Notes due July 15, 2018 (the Restricted Notes ) in a transaction exempt from the registration requirements of the Securities Act. As part of the issuance of the Restricted Notes, holders were granted benefits pursuant to an exchange and registration rights agreement (the registration rights agreement ) among us, the guarantors and the initial purchasers of the Restricted Notes. To satisfy our obligations under the registration rights agreement, on July 7, 2011, we launched an offer to exchange (the exchange offer ) all Restricted Notes for $430,000,000 9.750% Senior Notes due 2018, the issuance of each of which has been registered under the Securities Act of 1933 (the notes ). The notes bear interest at a rate of 9.750% per annum and mature on July 15, 2018. Interest on the notes is payable on January 15 and July 15 of each year. We have the option to redeem all or a portion of the notes at any time on or after July 15, 2014 at the redemption prices set forth in this prospectus. On or prior to July 15, 2013, we have the option to redeem up to 35% of the notes with proceeds of certain equity offerings at a redemption price equal to 109.750% of their principal amount, plus accrued and unpaid interest, if any, to the date of redemption. In addition, at any time prior to July 15, 2014, we may redeem all or a portion of the notes at a price equal to 100% of the principal amount of the notes, plus a make-whole premium and accrued and unpaid interest, if any, to the date of redemption, as described in this prospectus. The notes are guaranteed on a senior unsecured basis by all of our existing wholly-owned domestic restricted subsidiaries that guarantee our senior secured credit facilities and our future subsidiaries that are wholly-owned domestic subsidiaries or that guarantee our senior secured credit facilities (in each case, subject to certain exceptions). The notes effectively rank behind all of our secured debt, including our senior secured credit facilities, to the extent of the value of the assets securing such debt. In addition, the notes are structurally subordinated to all liabilities of our subsidiaries that do not guarantee the notes. This prospectus includes additional information on the terms of the notes, including redemption and repurchase prices, covenants and transfer restrictions. We do not intend to apply for listing of the notes on any securities exchange or for inclusion of the notes in any automated quotation system. Consider carefully the Risk Factors beginning on page 5 of this prospectus. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. This prospectus has been prepared for and may be used by Goldman, Sachs & Co. and its affiliates in connection with offers and sales of the notes related to market-making transactions in the notes in the secondary market effected from time to time. Goldman, Sachs & Co. and its affiliates may act as principal or agent in such transactions, including as agent for the counterparty when acting as principal or as agent for both counterparties, and may receive compensation in the form of discounts and commissions, including from both counterparties, when it acts as agents for both. Sales of notes pursuant to this prospectus will be made at prevailing market prices at the time of sale, at prices related thereto or at negotiated prices. We will not receive any proceeds from such sales. The date of this prospectus is , 2011 Table of Contents Summary of the Terms of the Notes The following summary describes the principal terms of the notes and is provided solely for your convenience. For a more detailed description of the notes, see Description of Notes . Securities Offered $430,000,000 aggregate principal amount of 9.750% Senior Notes due 2018. Maturity July 15, 2018. Interest Interest will be payable in cash on January 15 and July 15 of each year. Optional Redemption We may redeem all or a portion of the notes beginning on July 15, 2014. The initial redemption price is 104.875% of their principal amount, plus accrued and unpaid interest, if any, to the redemption date. The redemption price will decline each year after 2014 and will be 100% of their principal amount, plus accrued and unpaid interest, if any, to the redemption date, beginning on July 15, 2016. At any time prior to July 15, 2014, we may redeem all or a portion of the notes at a price equal to 100% of the principal amount of the notes plus a make-whole premium and accrued and unpaid interest, if any, to the redemption date, in each case as described in this prospectus under Description of Notes Optional Redemption . In addition, before July 15, 2013, we may redeem up to 35% of the aggregate principal amount of notes with the proceeds of certain equity offerings at 109.750% of their principal amount plus accrued and unpaid interest, if any, to the redemption date. We may make such redemption only if, after any such redemption, at least 65% of the aggregate principal amount of notes originally issued remains outstanding. Offers to Purchase If we sell certain assets without applying the proceeds in a specified manner or experience certain change of control events, each holder of notes may require us to purchase all or a portion of its notes at the purchase prices set forth in this prospectus, plus accrued and unpaid interest, if any, to the purchase date. See Description of Notes Repurchase at the Option of Holders . Our senior secured credit facilities or other agreements may restrict us from repurchasing any of the notes, including any purchase we may be required to make as a result of a change of control or certain asset sales. See Risk Factors Risks Related to the Notes We may not have the ability to raise the funds necessary to finance the change of control offer required by the indenture governing the notes. Ranking The notes will rank equally to all of our other unsecured and unsubordinated indebtedness, but will effectively be junior to all of our secured indebtedness, to the extent of the value of the assets Table of Contents securing that indebtedness. The notes will also be structurally subordinated to all liabilities of our subsidiaries that do not guarantee the notes. Guarantees The notes will be guaranteed by all of our existing wholly-owned domestic restricted subsidiaries that guarantee our senior secured credit facilities. In addition, subject to certain exceptions, the notes will be guaranteed by all of our future wholly-owned domestic restricted subsidiaries and any other domestic restricted subsidiary that guarantees our senior secured credit facilities. The guarantees will rank equally to all other unsecured and unsubordinated indebtedness of the guarantors, but will be effectively junior to all of the secured indebtedness of the guarantors, to the extent of the value of the assets securing that indebtedness. Certain Covenants The terms of the notes restrict our ability and the ability of our restricted subsidiaries (as described in Description of Notes ) to: incur additional indebtedness; create liens; pay dividends or make distributions in respect of capital stock; purchase or redeem capital stock; make investments or certain other restricted payments; sell assets; issue or sell stock of restricted subsidiaries; enter into transactions with affiliates; or effect a consolidation or merger. However, these limitations will be subject to a number of important qualifications and exceptions. For more information, see Description of Notes Certain Covenants . Use of Proceeds This prospectus is delivered in connection with the sale of notes by Goldman, Sachs & Co. and its affiliates in market-making transactions. We will not receive any of the proceeds from such transactions.
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001517224_michael_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001517224_michael_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..5018a9e4278945a612ddee141e8e537894afedee
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+This summary highlights information contained elsewhere in this prospectus. It does not contain all the information that you may consider important in deciding whether to participate in the exchange offer. Therefore, you should read the entire prospectus carefully, including, in particular, the section entitled Risk Factors and the financial statements and the related notes to those statements. Unless otherwise indicated or the context otherwise requires, all references in this prospectus to Michael Foods Group , our company , we , our , ours , us or similar terms refer to Michael Foods Group, Inc., together with its subsidiaries. Michael Foods, Inc., a wholly owned subsidiary of Michael Foods Group, is referred to as Michael Foods . MFI Holding Corporation is referred to as MFI Holding and MFI Midco Corporation is referred to as Parent . The Company We are a diversified producer and distributor of food products in three areas egg products, potato products and cheese and other dairy case products. Our Egg Products Division produces and distributes egg products to the foodservice, retail and food ingredient markets. Our Potato Products Division processes and distributes refrigerated potato products to the foodservice and retail grocery markets in North America. Our Crystal Farms Division markets a broad line of refrigerated grocery products to U. S. retail grocery outlets, including branded and private-label cheese, eggs and egg products, bagels, butter, muffins, potato products and ethnic foods. We have a strategic focus on value-added processing of food products. The strategy is designed to capitalize on key food industry trends, such as (i) the desire for improved safety and convenience, (ii) the focus by foodservice operators on reducing labor and waste, and (iii) the long-term trend toward food consumption away from home, which continues to be slowed somewhat by the recent economic conditions. We believe our operational scale, product breadth and geographic scope make us an attractive and important strategic partner for our customers. The Egg Products Division, comprised of our wholly owned subsidiaries M. G. Waldbaum Company ( Waldbaum ), Papetti s Hygrade Egg Products, Inc. ( Papetti s ), Abbotsford Farms, Inc., and MFI Food Canada Ltd., produces, processes and distributes numerous egg products. Based on management estimates, we believe that our Egg Products Division is the largest processed egg products producer in North America. Our principal value-added egg products are ultrapasteurized, extended shelf-life liquid eggs ( Easy Eggs and Excelle ), egg white based egg products ( All Whites and Better n Eggs ), and hardcooked and precooked egg products ( Table Ready ). Our other egg products include frozen, liquid and dried products that are used as ingredients in other food products, as well as organic and cage free egg products. Our Egg Products Division distributes its egg products to food processors and foodservice customers primarily throughout North America, with limited international sales in the Far East, South America and Europe. Our extended shelf-life liquid eggs (the largest selling product line within the Division) and other egg products are marketed to a wide variety of foodservice and food ingredients customers. The Egg Products Division also is a supplier of egg white-based egg products sold in the U.S. retail and foodservice markets. Our Crystal Farms Division markets a wide range of refrigerated grocery products directly to retailers and wholesale warehouses. We believe that the Crystal Farm Division s strategy of offering quality branded products at a good value relative to national brands has contributed to the Crystal Farm Division s growth. Crystal Farms cheese is positioned in the mid-tier pricing category and is priced below national brands such as Kraft and Sargento and above store brands (private label). The Crystal Farms Division s distributed refrigerated products, which consist principally of cheese, eggs and egg products, bagels, butter, muffins, potato products and ethnic foods, are supplied by various vendors or our other divisions, to Crystal Farms specifications. Cheese accounted for approximately 69% of the Crystal Farms Division s 2010 sales. While we do not produce cheese, we operate a cheese packaging facility in Lake Mills, Wisconsin, which processes and packages various cheese products for our Crystal Farms brand cheese business and for various private-label customers. Table of Contents Table of Additional Registrants Exact Name of Registrant as Specified in its Charter (Or Other Organizational Document) State or Other Jurisdiction of Incorporation or Organization I.R.S Employer Identification Number Address and Telephone Number of Registrant s Principal Executive Offices Abbotsford Farms, Inc. Minnesota 26-1615833 * Casa Trucking, Inc. Minnesota 22-3493806 * Crystal Farms Refrigerated Distribution Company Minnesota 41-1669454 * Farm Fresh Foods, Inc. Nevada 91-2086470 * MFI Food Asia, LLC Delaware 00-0000000 * MFI International, Inc. Minnesota 27-1428245 * Michael Foods, Inc. Delaware 13-4151741 * Michael Foods of Delaware, Inc. Delaware 41-1579532 * Minnesota Products, Inc. Minnesota 41-1394918 * M. G. Waldbaum Company Nebraska 47-0445304 * Northern Star Co. Minnesota 41-1468193 * Papetti s Hygrade Egg Products, Inc. Minnesota 22-3493805 * * Address and telephone number of Registrant s principal executive office is same as that of Michael Foods Group, Inc. The primary industrial classification number for each additional Registrant is 2015. Table of Contents The Crystal Farms Division has expanded its market area using both company-owned and leased facilities and independent distributors. The Crystal Farms Division s market area is the United States, with a large customer concentration in the central United States. We sell our products to a large number of retail stores, a majority of which are served via customers warehouses. The Crystal Farms Division also maintains a fleet of refrigerated tractor-trailers to deliver products daily to its retail customers from nine distribution centers centrally located in its key marketing areas. Our Potato Products Division consists of shredded hash browns and diced, sliced, mashed and other specialty potato products. Refrigerated potato products are produced and sold by our wholly owned subsidiaries, Northern Star Co. ( Northern Star ) and Farm Fresh Foods, Inc. ( Farm Fresh ), to both the foodservice and retail markets. In 2010, approximately 51% of the Potato Products Division s net sales were to the retail market, with the balance to the foodservice market. The Potato Products division sells refrigerated potato products in the United States in the retail grocery market, where they are marketed under the Simply Potatoes brand and in the foodservice market, where they are principally marketed under the Northern Star and Farm Fresh brands. Due to their freshness and quality, refrigerated potato products are generally sold at higher price points than frozen or dehydrated potato products. The Potato Products Division s largest customers include major retail grocery store chains and major foodservice distributors. The Potato Products Division maintains its main processing facility in Minnesota, with a smaller facility located in Nevada. At April 2, 2011 and January 1, 2011, we had total assets of approximately $2,138.1 million and $2,164.1 million, respectively. For the three-month period ended April 2, 2011 and the six-month period ended January 1, 2011, the Company had net sales of approximately $417.1 million and $858.3 million, respectively, and net earnings (loss) of approximately $(0.4) million and $3.3 million, respectively. For the three-month period ended April 2, 2010 and the six-month period ended June 26, 2010, the Predecessor had net sales of approximately $395.3 million and $744.0 million, respectively, and net earnings (loss) of approximately $15.0 million and $(34.3) million, respectively. Corporate History On June 29, 2010, M-Foods Holdings, Inc. and its subsidiaries (the Predecessor ) was merged with and into the Company, with the Company as the surviving entity and MFI Holding as its direct parent. MFI Holding is owned by GS Capital Partners VI Fund, L.P. and its affiliates (collectively, GS Capital Partners ), Thomas H. Lee Partners, L.P. (collectively, THL and together with GS Capital Partners, the Sponsors ) and certain members of management (the Management Stockholders ). Following the merger, GS Capital Partners, THL and the Management Stockholders indirectly own approximately 74%, 21% and 5%, respectively, of the Company. Our Executive Offices Our principal executive offices are located at 301 Carlson Parkway, Suite 400, Minnetonka, Minnesota 55305, and our telephone number at that address is (952) 258-4000. Our website address is www.michaelfoods.com. Information contained on our website is expressly not incorporated by reference into this prospectus. Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED JULY 15, 2011 PRELIMINARY PROSPECTUS MICHAEL FOODS GROUP, INC. 9.750% Senior Notes due 2018 On June 29, 2010, we issued $430,000,000 9.750% Senior Notes due July 15, 2018 (the Restricted Notes ) in a transaction exempt from the registration requirements of the Securities Act. As part of the issuance of the Restricted Notes, holders were granted benefits pursuant to an exchange and registration rights agreement (the registration rights agreement ) among us, the guarantors and the initial purchasers of the Restricted Notes. To satisfy our obligations under the registration rights agreement, on July 7, 2011, we launched an offer to exchange (the exchange offer ) all Restricted Notes for $430,000,000 9.750% Senior Notes due 2018, the issuance of each of which has been registered under the Securities Act of 1933 (the notes ). The notes bear interest at a rate of 9.750% per annum and mature on July 15, 2018. Interest on the notes is payable on January 15 and July 15 of each year. We have the option to redeem all or a portion of the notes at any time on or after July 15, 2014 at the redemption prices set forth in this prospectus. On or prior to July 15, 2013, we have the option to redeem up to 35% of the notes with proceeds of certain equity offerings at a redemption price equal to 109.750% of their principal amount, plus accrued and unpaid interest, if any, to the date of redemption. In addition, at any time prior to July 15, 2014, we may redeem all or a portion of the notes at a price equal to 100% of the principal amount of the notes, plus a make-whole premium and accrued and unpaid interest, if any, to the date of redemption, as described in this prospectus. The notes are guaranteed on a senior unsecured basis by all of our existing wholly-owned domestic restricted subsidiaries that guarantee our senior secured credit facilities and our future subsidiaries that are wholly-owned domestic subsidiaries or that guarantee our senior secured credit facilities (in each case, subject to certain exceptions). The notes effectively rank behind all of our secured debt, including our senior secured credit facilities, to the extent of the value of the assets securing such debt. In addition, the notes are structurally subordinated to all liabilities of our subsidiaries that do not guarantee the notes. This prospectus includes additional information on the terms of the notes, including redemption and repurchase prices, covenants and transfer restrictions. We do not intend to apply for listing of the notes on any securities exchange or for inclusion of the notes in any automated quotation system. Consider carefully the Risk Factors beginning on page 5 of this prospectus. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. This prospectus has been prepared for and may be used by Goldman, Sachs & Co. and its affiliates in connection with offers and sales of the notes related to market-making transactions in the notes in the secondary market effected from time to time. Goldman, Sachs & Co. and its affiliates may act as principal or agent in such transactions, including as agent for the counterparty when acting as principal or as agent for both counterparties, and may receive compensation in the form of discounts and commissions, including from both counterparties, when it acts as agents for both. Sales of notes pursuant to this prospectus will be made at prevailing market prices at the time of sale, at prices related thereto or at negotiated prices. We will not receive any proceeds from such sales. The date of this prospectus is , 2011 Table of Contents Summary of the Terms of the Notes The following summary describes the principal terms of the notes and is provided solely for your convenience. For a more detailed description of the notes, see Description of Notes . Securities Offered $430,000,000 aggregate principal amount of 9.750% Senior Notes due 2018. Maturity July 15, 2018. Interest Interest will be payable in cash on January 15 and July 15 of each year. Optional Redemption We may redeem all or a portion of the notes beginning on July 15, 2014. The initial redemption price is 104.875% of their principal amount, plus accrued and unpaid interest, if any, to the redemption date. The redemption price will decline each year after 2014 and will be 100% of their principal amount, plus accrued and unpaid interest, if any, to the redemption date, beginning on July 15, 2016. At any time prior to July 15, 2014, we may redeem all or a portion of the notes at a price equal to 100% of the principal amount of the notes plus a make-whole premium and accrued and unpaid interest, if any, to the redemption date, in each case as described in this prospectus under Description of Notes Optional Redemption . In addition, before July 15, 2013, we may redeem up to 35% of the aggregate principal amount of notes with the proceeds of certain equity offerings at 109.750% of their principal amount plus accrued and unpaid interest, if any, to the redemption date. We may make such redemption only if, after any such redemption, at least 65% of the aggregate principal amount of notes originally issued remains outstanding. Offers to Purchase If we sell certain assets without applying the proceeds in a specified manner or experience certain change of control events, each holder of notes may require us to purchase all or a portion of its notes at the purchase prices set forth in this prospectus, plus accrued and unpaid interest, if any, to the purchase date. See Description of Notes Repurchase at the Option of Holders . Our senior secured credit facilities or other agreements may restrict us from repurchasing any of the notes, including any purchase we may be required to make as a result of a change of control or certain asset sales. See Risk Factors Risks Related to the Notes We may not have the ability to raise the funds necessary to finance the change of control offer required by the indenture governing the notes. Ranking The notes will rank equally to all of our other unsecured and unsubordinated indebtedness, but will effectively be junior to all of our secured indebtedness, to the extent of the value of the assets Table of Contents securing that indebtedness. The notes will also be structurally subordinated to all liabilities of our subsidiaries that do not guarantee the notes. Guarantees The notes will be guaranteed by all of our existing wholly-owned domestic restricted subsidiaries that guarantee our senior secured credit facilities. In addition, subject to certain exceptions, the notes will be guaranteed by all of our future wholly-owned domestic restricted subsidiaries and any other domestic restricted subsidiary that guarantees our senior secured credit facilities. The guarantees will rank equally to all other unsecured and unsubordinated indebtedness of the guarantors, but will be effectively junior to all of the secured indebtedness of the guarantors, to the extent of the value of the assets securing that indebtedness. Certain Covenants The terms of the notes restrict our ability and the ability of our restricted subsidiaries (as described in Description of Notes ) to: incur additional indebtedness; create liens; pay dividends or make distributions in respect of capital stock; purchase or redeem capital stock; make investments or certain other restricted payments; sell assets; issue or sell stock of restricted subsidiaries; enter into transactions with affiliates; or effect a consolidation or merger. However, these limitations will be subject to a number of important qualifications and exceptions. For more information, see Description of Notes Certain Covenants . Use of Proceeds This prospectus is delivered in connection with the sale of notes by Goldman, Sachs & Co. and its affiliates in market-making transactions. We will not receive any of the proceeds from such transactions.
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/CIK0001517546_cathay_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001517546_cathay_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..9e8a70a74b8fc45e266cd9a8d754b95daf5b24ac
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001517546_cathay_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY The following summary is qualified in its entirety by, and should be read in conjunction with, the more detailed information and financial statements appearing elsewhere in this prospectus. In addition to this summary, we urge you to read the entire prospectus carefully, especially the risks of investing in the ADSs discussed under "Risk Factors," before deciding whether to buy our ADSs. In addition, we commissioned Chemical Market Associates, Inc., or CMAI, Nexant and Technomic Asia, all being independent market research firms, to prepare reports for the purpose of providing various industry information and illustrating our position in the industrial biotechnology industry. We have taken such care as we consider reasonable in the reproduction and extraction of information from the reports prepared by CMAI, Nexant, Technomic Asia and other third-party sources. Our Business We are a leading global industrial biotechnology company as measured by production capacity in key biochemical products and a pioneer in the commercialization of bioprocess technologies, according to CMAI. Our products address the specialty chemicals and biofuels markets. We apply our proprietary technologies to commercialize cost disruptive, environmentally sustainable, drop-in alternatives to products typically produced through petrochemical processes. We are the world's largest producer of biobutanol based on active production capacity in 2011, according to CMAI. Our biobutanol is currently used as an industrial solvent and as a chemical intermediate for the production of paints, resins, coatings, plasticizers, herbicides, pharmaceuticals and food grade extractants. Based on production capacity in 2010, we are also a leading global producer of bioprocess-based long-chain dicarboxylic acids, or LCDAs, which are used as chemical intermediates primarily for the production of nylon, plastics, adhesives, fragrances, lubricant and powder coatings. Our products are sold to a broad base of customers that includes both leading international companies, such as E.I. du Pont de Nemours and Company, or DuPont, Evonik Industries AG, International Flavors & Fragrances Inc., or IFF, Arkema SA, or Arkema, Novo Nordisk A/S, or Novo, and major China-based companies. We are developing two key pipeline product candidates, Disodium Inosine-5'-monophosphate and Disodium Guanosine-5'-monophosphate, or I+G, and biobutanol using biomass as a feedstock. I+G is a food flavor enhancer that complements monosodium glutamate, or MSG. We expect to commence commercial sales of I+G by the end of the first half of 2012. We have developed bioprocess technologies to produce biobutanol from cellulosic biomass feedstock. We believe that using cellulosic biomass feedstock will significantly lower our production cost for biobutanol. We currently operate two commercial scale production facilities in China. Our biobutanol production facility in Jilin Province has an annual production capacity of 100,000 metric tons of biobutanol and co-products acetone and ethanol, or co-products, including 65,000 metric tons, or 21 million gallons, of biobutanol and utilizes multiple continuous fermentation bioreactors, designed and constructed by our team in-house, at a scale of 1.8 million liters, or 475,000 gallons, per bioreactor. Our LCDA production facility in Shandong Province had an annual production capacity of approximately 12,000 metric tons at the beginning of 2011, approximately 13,500 metric tons as of March 31, 2011 and we are currently optimizing our production process to increase production capacity to 15,000 metric tons by the end of 2011. Our production facilities are strategically located in regions with access to feedstock and other key inputs, established logistics and energy infrastructure and local labor pool with a history of fermentation expertise. We believe our biobutanol production facility in Jilin Province gives us an advantage over our competitors as it allows us to implement and test our cellulosic biomass feedstock technologies at commercial scale and conditions. We believe our planned commercialization of our biobutanol from cellulosic biomass will enable us to reduce our production AMENDMENT NO. 1 TO FORM F-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Table of Contents costs, enabling us to enter the biofuels market and expand into different segments of the larger specialty chemicals market with lower price points. At our biobutanol production facility in Jilin Province, we expect to begin pilot stage testing of our proprietary bioprocess technology for producing biobutanol from cellulosic biomass feedstock by the end of 2011. We also plan to begin construction of a cellulosic biomass processing facility adjacent to our current biobutanol production facility in Jilin Province to commercialize biobutanol from cellulosic biomass. We plan to expand the annual production capacity at our biobutanol production facility in Jilin Province to 200,000 metric tons of biobutanol and co-products, including 130,000 metric tons, or 42 million gallons, of biobutanol, in the future. In addition, we plan to complete construction of our I+G production facility in Jilin Province with an annual production capacity of 5,000 metric tons by the end of the first half of 2012. We plan to expand the annual capacity at our LCDA production facility in Shandong Province to 20,000 metric tons by the end of 2012. We have also developed a proprietary bioprocess technology to manufacture LCDAs from renewable feedstock, or renewable LCDAs. We have grown significantly since we first began commercial sales of our bioprocess-based products in 2003. Our total revenues amounted to RMB378.7 million, RMB296.8 million and RMB816.0 million (US$124.6 million) in 2008, 2009 and 2010, respectively. We incurred net losses of RMB10.9 million, RMB12.2 million and RMB13.6 million (US$2.1 million) in 2008, 2009 and 2010, respectively. In the three months ended March 31, 2010 and 2011, our total revenues amounted to RMB147.2 million and RMB271.2 million (US$41.4 million), respectively. Our net income for the three months ended March 31, 2010 was RMB7.0 million and our net loss for the three months ended March 31, 2011 was RMB6.0 million (US$0.9 million). Our Strengths We believe the following strengths will enable us to further build our leadership position in the global industrial biotechnology sector, continue to develop innovative process technologies and rapidly commercialize products to capitalize on attractive growth opportunities: Successful commercialization of bioprocess technologies; Proprietary bioprocess technologies; Value maximization through our biorefinery model; Pipeline of attractive near-term opportunities; Significant advantages from operating in China; Advanced cellulosic biomass and other renewable feedstock technologies; and Highly experienced management team. Our Strategies In order to further strengthen our leadership position in commercializing bioprocess-based products and enter the biofuel market, we plan to implement the following strategies: Commercialize cellulosic biomass feedstock technologies; Rapidly penetrate the I+G market; Continuously improve production processes; Continue to collaborate with selected customers; and Pursue strategic alliances to facilitate the expansion of our business. Cathay Industrial Biotech Ltd. (Exact name of registrant as specified in its charter) Not Applicable (Translation of registrant's name into English) Cayman Islands 2860 Not Applicable (State or other jurisdiction of incorporation or organization) (Primary Standard Industrial Classification Code Number) (I.R.S. Employer Identification Number) 3F, Building 5, 1690 Cailun Road Zhangjiang High-tech Park, Shanghai 201203 People's Republic of China (86)-21-5080-1916 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) Table of Contents Our Challenges We believe that the following are some of the major risks and uncertainties that may materially affect us: We incurred net losses in 2008, 2009 and 2010 and may continue to incur significant losses in the future; In the event that we are unable to obtain raw materials in a timely manner or at reasonable prices, our business, financial condition and results of operations would be harmed; If the price of petroleum decreases, prices of our competitors' products, which are mostly produced from petroleum-based feedstock, will also decrease, which may materially and adversely affect the competitiveness of our biobutanol and LCDAs; Increases in utility prices or shortages of utility supplies may adversely affect our operations; We may not achieve market acceptance for our pipeline products or successfully develop new applications for our existing products; We are subject to third-party claims of intellectual property right infringement; and Our patents may not afford us sufficient protection. See
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/CIK0001517591_techapp_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001517591_techapp_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a8b2aacedcf05e9623e366b56261da96f342e779
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001517591_techapp_prospectus_summary.txt
@@ -0,0 +1,591 @@
+Prospectus Summary.
+
+The Company
+
+Our Business
+
+TechApp Solutions, Inc. was incorporated in the State of Nevada on November 8th, 2010. TechApp Solutions, Inc. is a development stage company with a principal business objective of selling computer and mobile device software programs. The Company plans to have its initial software product be a mobile application for end users using the iPhone/iPod Touch and iPad from Apple, Inc. The mobile application s digital content will be customizable by the owner of the content using TechApp Solutions desktop application. This will be of particular interest to artists and professional photographers and videographers who want to have their own iPhone/iPod Touch/iPad application. We plan to stay on the cutting edge of the constantly changing mobile application market and our goal is to create a quality reputation within the mobile software community and marketplace. TechApp Solutions conducted research on various marketing venues and plans to sell our initial applications through our own online retail website to professionals who would like their own mobile application and want to control the content (photos, videos, etc.). 
+
+TechApp Solutions, Inc. is a development stage company that has not commenced its planned principal operations. TechApp Solutions, Inc. operations to date have been devoted primarily to start-up and development activities. Our President, Karim Rawji, has performed all of the development activities to date, which include the following: 
+
+1. Formation of the Company;
+
+2. Development of the TechApp Solutions, Inc. business plan;
+
+3. Development of initial design and structure for mobile applications and desktop applications; 
+
+4. Conducted research on three major marketing channels/strategies including retail smaller retail stores, major retail outlets, and online sales;
+
+5. Formulated product development and marketing strategies for product lines to include:
+
+ - iPhone/iPod Touch application for professionals in art and music
+
+ - iPad application for professionals in art and music
+
+ - iPhone/iPod Touch application for professionals in photography and videography
+
+ - iPad application for professionals in photography and videography
+
+6. Secured web site domain www.techappsolutionsinc.com; 
+
+7. Conducted research on mobile application user demographics.
+
+TechApp Solutions, Inc. is attempting to become operational and anticipates sales to begin during the third quarter of operations following the completion of our offering. In order to generate revenues, TechApp Solutions, Inc. must address the following areas:
+
+1. Finalize and implement our marketing plan: In order to effectively penetrate our targeted market, TechApp Solutions will use a multi-faceted and a long-term marketing plan that includes a high-end web site, targeting professional photographers and videographers, artists, and musicians, and targeting specific distribution channels using independent representatives. Long-term, independent commissioned sales representatives will work as middlemen between TechApp Solutions and any potential retailers or other web sites that wish to offer our products. Their responsibilities would include approaching any/all appropriate retailers, work trade shows and employ creative marketing techniques to attract other web sites and stores to offer our products. This long term marketing plan is entirely dependent on future financing and thus may not occur. The Company currently does not have any engagements, agreements, or contracts with independent commissioned sales representatives.
+
+2. Tailor our website: TechApp Solutions has secured the web domain located at www.techappsolutionsinc.com. The site is currently under construction and we plan to incorporate this site with strategic vertical market e-commerce retailers. We have budgeted the necessary funding to develop a quality site.
+
+3. Constantly monitor our market: We plan to constantly monitor our target market and adapt to consumers needs, wants and desires. To be successful we plan to evolve and diversify our product lines to satisfy the consumer.
+
+4. Run our Company ethically and responsibly. Conduct our business and ourselves ethically and responsibly.
+
+ 
+
+Our Statement of Organization:
+
+We were incorporated in Nevada on November 8, 2010, as TechApp Solutions, Inc. Our principal executive offices are located at 115 W. California Blvd. #553, Pasadena, CA 91105. Our phone number is (206) 339-7617.
+
+The Offering
+
+ 
+
+The following is a brief summary of this offering. Please see the Plan of Distribution section for a more detailed description of the terms of the offering.
+
+Number of Shares Being Offered:
+
+The Company is offering 4,000,000 shares of common stock, par value $0.001 
+
+Offering Price per share
+
+$0.01
+
+Offering Period:
+
+The shares are being offered for a period not to exceed 180 days. In the event we do not sell all of the shares before the expiration date of the offering, all funds raised will be promptly returned from the escrow account and returned to the investors, without interest or deduction.
+
+Escrow Account:
+
+The subscription proceeds from the sale of the shares in this offering will be payable to Law Office of Clifford J. Hunt, P.A. Trust Account IOTA and will be deposited in a non-interest bearing law office trust bank account until all offering proceeds are raised. All subscription agreements and checks should be delivered to Law Office of Clifford J. Hunt P.A. Failure to do so will result in checks being returned to the investor who submitted the check. TechApp Solutions, Inc. escrow agent, Law Office of Clifford J. Hunt, P.A., acts as legal counsel for TechApp Solutions, Inc. and is therefore not an independent third party.
+
+Gross Proceeds to Company:
+
+$40,000
+
+Use of Proceeds:
+
+We intend to use the proceeds to expand our business operations.
+
+Number of Shares Outstanding Before the Offering:
+
+10,000,000 common shares
+
+Number of Shares Outstanding After the Offering:
+
+14,000,000 common shares 
+
+The offering price of the common stock bears no relationship to any objective criterion of value and has been arbitrarily determined. The price does not bear any relationship to TechApp Solutions, Inc. assets, book value, historical earnings, or net worth.
+
+TechApp Solutions, Inc. will apply the proceeds from the offering to pay for accounting fees, legal and professional fees, equipment, office supplies, salaries/contractors, sales and marketing, and general working capital.
+
+The Company has not presently secured an independent stock transfer agent. TechApp Solutions, Inc. has identified several agents to retain that will facilitate the processing of the certificates upon closing of the offering. 
+
+The purchase of the common stock in this offering involves a high degree of risk. The common stock offered in this prospectus is for investment purposes only and currently no market for TechApp Solutions, Inc. common stock exists. Please refer to the sections herein titled Risk Factors and Dilution before making an investment in this stock.
+
+SUMMARY FINANCIAL INFORMATION
+
+The following table sets forth summary financial data derived from TechApp Solutions, Inc. financial statements. The accompanying notes are an integral part of these financial statements and should be read in conjunction with financial statements, related notes and other financial information included in this prospectus.
+
+6
+
+TechApp Solutions, Inc.
+
+(A Development Stage Corporation)
+
+STATEMENTS OF OPERATION
+
+ 
+
+ 
+
+ 
+
+ 
+
+For the three months ended August 31, 
+
+2011
+
+ 
+
+For the nine months ended August 31, 
+
+2011
+
+ 
+
+Nov 8, 2010 (inception) though Nov 30, 2010
+
+ 
+
+Nov 8, 2010 (inception) through Aug. 31, 2011
+
+ 
+
+ 
+
+ 
+
+(unaudited)
+
+ 
+
+(unaudited)
+
+ 
+
+(audited)
+
+ 
+
+(unaudited)
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+Revenue:
+
+ 
+
+ 
+
+$ -- 
+
+ 
+
+$ --
+
+ 
+
+$ -- 
+
+ 
+
+$ --
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+Operating Expenses:
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ Professional
+
+ 
+
+ 
+
+2,985
+
+ 
+
+5,610
+
+ 
+
+--
+
+ 
+
+5,610
+
+ General & administrative 
+
+ 
+
+ 
+
+952
+
+ 
+
+1,770
+
+ 
+
+ --
+
+ 
+
+1,770
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+Total operating expenses
+
+ 
+
+ 
+
+ 3,937
+
+ 
+
+7,380
+
+ 
+
+ --
+
+ 
+
+7,380
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+Net Loss
+
+ 
+
+ 
+
+$ (3,937)
+
+ 
+
+$ (7,380)
+
+ 
+
+$ --
+
+ 
+
+$ (7,380)
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+Net loss per common share, basic and diluted
+
+ 
+
+ 
+
+$ (0.0004)
+
+ 
+
+$ (0.0007)
+
+ 
+
+$ -- 
+
+ 
+
+$ (0.0007)
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+Weighted average number of common shares, basic and diluted, outstanding
+
+ 
+
+ 
+
+10,000,000
+
+ 
+
+10,000,000
+
+ 
+
+--
+
+ 
+
+10,000,000
+
+The accompanying notes are an integral part of the financial statements.
+
+RISK FACTORS
+
+Before you invest in our common stock, you should be aware that there are risks, as described below. You should carefully consider these risk factors together with all of the other information included in this prospectus before you decide to purchase shares of our common stock. Any of the following risks could adversely affect our business, financial conditions and results of operations.
+
+Risks Related To the Company
+
+(1)Our Auditor Has Expressed Substantial Doubt About Our Ability To Continue As A Going Concern.
+
+These financial statements included with this registration statement have been prepared on a going concern basis. We may not be able to generate profitable operations in the future and/or obtain the necessary financing to meet our obligations and repay liabilities arising from normal business operations when they come due. The outcome of these matters cannot be predicted with any certainty at this time. These factors raise substantial doubt that we will be able to continue as a going concern. Management plans to continue to provide for its capital needs through related party advances. Our financial statements do not include any adjustments to the amounts and classification of assets and liabilities that may be necessary should the Company be unable to continue as a going concern.
+
+(2) The Company s Needs Could Exceed The Amount Of Time Or Level Of Experience That Our Sole Officer And Director May Have. 
+
+7
+
+Our business plan does not provide for the hiring of any additional employees until sales will support the expense, which is estimated to be the third quarter of operations. Until that time, the responsibility of developing the company's business, the offering and selling of the shares through this prospectus and fulfilling the reporting requirements of a public company all fall upon Karim Rawji. While Mr. Rawji has business experience including management and software industry experience, but he does not have extensive experience in a public company setting, including serving as a principal accounting officer or principal financial officer. Nor does Mr. Rawji have any experience running a software company. Mr. Rawji has extensive experience in selling software and financial services, but he has never been an officer or director of a software company. 
+
+Mr. Rawji spends at least ten (10) hours per week on the Company s needs, or about twenty-five (25) percent of his time. Mr. Rawji also this year started his own management consulting firm, Provectus Reputo, that competes for his time. We have not formulated a plan to resolve any possible conflict of interest with his other business activities. In the event he is unable to fulfill any aspect of his duties to the company we may experience a shortfall or complete lack of sales resulting in little or no profits and eventual closure of the business.
+
+(3) Since We Are A Development Stage Company, The Company Has Generated No Revenues And Does Not Have An Operating History. 
+
+The Company was incorporated on November 8, 2010; we have not yet commenced our business operations; and we have not yet realized any revenues. We have no operating history upon which an evaluation of our future prospects can be made. Based upon current plans, we expect to incur operating losses in future periods as we incurred significant expenses associated with the initial startup of our business. Further, we cannot guarantee that we will be successful in realizing revenues or in achieving or sustaining positive cash flow at any time in the future. Any such failure could result in the possible closure of our business or force us to seek additional capital through loans or additional sales of our equity securities to continue business operations, which would dilute the value of any shares you purchase in this offering.
+
+(4) We Don t Have Any Substantial Assets And Are Totally Dependent Upon The Proceeds Of This Offering To Fully Fund Our Business. If We Do Not Sell The Shares In This Offering We Will Have To Seek Alternative Financing To Complete Our Business Plans Or Abandon Them.
+
+TechApp Solutions, Inc. has limited capital resources. To date, the Company has funded its operations from limited funding and has not generated any cash from operations to be profitable. Unless the Company begins to generate sufficient revenues to finance operations as a going concern, TechApp Solutions, Inc. may experience liquidity and solvency problems. Such liquidity and solvency problems may force the Company to cease operations if additional financing is not available. No known alternative resources of funds are available to TechApp Solutions, Inc. in the event it does not have adequate proceeds from this offering. 
+
+(5) We Cannot Predict When Or If We Will Produce Revenues, Which Could Result In A Total Loss Of Your Investment If We Are Unsuccessful In Our Business Plans.
+
+We have not sold any software to date and have not yet generated any revenues from operations. In order for us to continue with our plans and open our business, we must raise our initial capital through this offering. The timing of the completion of the milestones needed to commence operations and generate revenues is contingent on the success of this offering. There can be no assurance that we will generate revenues or that revenues will be sufficient to maintain our business. As a result, you could lose all of your investment if you decide to purchase shares in this offering and we are not successful in our proposed business plans. 
+
+(6) Our performance depends on market acceptance of our products.
+
+The ability to develop software applications that the market finds desirable and willing to purchase is critically important to our success. We cannot be certain that mobile device and desktop software products that we offer will be appealing to the market and as a result there may not be any demand and our sales could be limited and we may never realize any revenues. In addition, there are no assurances that if we alter, or develop new software products in the future that the market s demand for these will develop and this could adversely affect our business and any possible revenues. 
+
+(7) We depend on strategic marketing relationships. 
+
+We expect our future marketing efforts will focus in part on developing business relationships with companies that seek to augment their businesses by offering our products to their customers. Our inability to enter into and retain strategic relationships, or the inability of such companies to effectively market our products, could materially and adversely affect our business, operating results and financial condition.
+
+8
+
+(8) We Are Dependent On The Services Of A Certain Key Employee And The Loss Of His Services Could Harm Our Business.
+
+Our success largely depends on the continuing services of our Chairman and Chief Executive Officer, Karim Rawji. His past experience to lead and nurture small and start-up companies makes the Company dependent on his abilities. Our continued success also depends on our ability to attract and retain qualified personnel. We believe that Mr. Rawji possesses valuable industry and business development knowledge, experience and leadership abilities that would be difficult in the short term to replicate. The loss of him as a key employee could harm our operations, business plans and cash flows.
+
+(9) Rapidly changing technology and substantial competition may adversely affect our business.
+
+ 
+
+Our business is subject to rapid changes in technology. We can provide no assurances that research and development by competitors will not render our technology obsolete or uncompetitive. We compete with a number of software design companies that have technologies and products similar to those offered by us and have greater resources, including more extensive research and development, marketing and capital than us. We can provide no assurances that we will be successful in marketing our existing products and developing and marketing new products in such a manner as to be effective against our competition. If our technology is rendered obsolete or we are unable to compete effectively, our business, operating results and financial condition will be materially and adversely affected.
+
+ 
+
+(10) Defects in our software products may adversely affect our business.
+
+ 
+
+Complex software such as the software developed by TechApp Solutions, Inc. may contain defects when introduced and also when updates and new versions are released. Our introduction of software with defects or quality problems may result in adverse publicity, product returns, reduced orders, uncollectible or delayed accounts receivable, product redevelopment costs, loss of or delay in market acceptance of our products or claims by customers or others against us. Such problems or claims may have a material and adverse effect on our business, financial condition and results of operations.
+
+(11) The Software Industry Is Highly Competitive. If We Cannot Develop And Market Desirable Software Products That The Public Is Willing To Purchase, We Will Not Be Able To Compete Successfully. Our Business May Be Adversely Affected And We May Not Be Able To Generate Any Revenues.
+
+TechApp Solutions, Inc. has many potential competitors in the mobile device and desktop computer software industry. We consider the competition is competent, experienced, and they have greater financial and marketing resources than we do at the present. Our ability to compete effectively may be adversely affected by the ability of these competitors to devote greater resources to the development, sales, and marketing of their products than are available to us. 
+
+Some of the Company s competitors also offer a wider range of software products; have greater name recognition and more extensive customer bases than the Company. These competitors may be able to respond more quickly to new or changing opportunities, customer desires, as well as undertake more extensive promotional activities, offer terms that are more attractive to customers and adopt more aggressive pricing policies than the Company. Moreover, current and potential competitors have established or may establish cooperative relationships among themselves or with third parties to enhance their visibility. The Company expects that new competitors or alliances among competitors have the potential to emerge and may acquire significant market share. Competition by existing and future competitors could result in an inability to secure adequate market share sufficient to support TechApp Solutions endeavors. TechApp Solutions cannot be assured that it will be able to compete successfully against present or future competitors or that the competitive pressure it may face will not force it to cease operations. As a result, you may never be able to liquidate or sell any shares you purchase in this offering. 
+
+(12) Our Growth May Require Additional Capital, Which May Not Be Available.
+
+TechApp Solutions, Inc. has limited capital resources. Unless we begin to generate sufficient revenues to finance operations as a going concern, we may experience liquidity and solvency problems. Such liquidity and solvency problems may force TechApp Solutions, Inc. to cease operations if additional financing is not available. No known alternative resources of funds are available to TechApp Solutions, Inc. in the event it does not have adequate proceeds from this offering. 
+
+Risks Related To This Offering
+
+9
+
+(13)We Are Selling This Offering Without An Underwriter And May Be Unable To Sell Any Shares. Unless We Are Successful In Selling The Minimum Of The Shares And Receiving The Proceeds From This Offering, We May Have To Seek Alternative Financing To Implement Our Business Plans And You Would Receive A Return Of Your Entire Investment.
+
+This offering is self-underwritten on a best-efforts, all-or-none basis. No broker-dealer has been retained as an underwriter to sell the shares and no broker-dealer is under any obligation to purchase any shares of our common stock. There are no firm commitments to purchase any of the shares in this offering. We intend to sell them through our officer and director, who will receive no commissions. He will offer the shares to friends, relatives, acquaintances and business associates; however, there is no guarantee that he will be able to sell any of the shares. In the event we do not sell all of the shares before the expiration date of the offering, all funds raised will be promptly returned to the investors, without interest or deduction. 
+
+(14) Due To The Lack Of A Trading Market For Our Securities, You May Have Difficulty Selling Any Shares You Purchase In This Offering.
+
+There is presently no demand for our common stock and no public market exists for the shares being offered in this prospectus. We plan to contact a market maker immediately following the effectiveness of this Registration Statement and apply to have the shares quoted on the OTC Electronic Bulletin Board (OTCBB). The OTCBB is a regulated quotation service that displays real-time quotes, last sale prices and volume information in over-the-counter (OTC) securities. The OTCBB is not an issuer listing service, market or exchange. Although the OTCBB does not have any listing requirements per se, to be eligible for quotation on the OTCBB, issuers must remain current in their filings with the SEC or applicable regulatory authority. Market Makers are not permitted to begin quotation of a security whose issuer does not meet this filing requirement. Securities already quoted on the OTCBB that become delinquent in their required filings will be removed following a 30 or 60 day grace period if they do not make their required filing during that time. We cannot guarantee that our application will be accepted or approved and our stock listed and quoted for sale. As of the date of this filing, there have been no discussions or understandings between TechApp Solutions, Inc. or anyone acting on our behalf with any market maker regarding participation in a future trading market for our securities. If no market is ever developed for our common stock, it will be difficult for you to sell any shares you purchase in this offering. In such a case, you may find that you are unable to achieve any benefit from your investment or liquidate your shares without considerable delay, if at all. In addition, if we fail to have our common stock quoted on a public trading market, your common stock will not have a quantifiable value and it may be difficult, if not impossible, to ever resell your shares, resulting in an inability to realize any value from your investment. 
+
+(15) Investors In This Offering Will Bear A Substantial Risk Of Loss Due To Immediate And Substantial Dilution.
+
+The principal shareholder of TechApp Solutions, Inc. is Karim Rawji who also serves as its Director, President, Secretary, and Treasurer. Mr. Rawji acquired 10,000,000 restricted shares of TechApp Solutions, Inc. common stock at a price per share of $0.001 for a $10,000 equity investment. Upon the sale of the common stock offered hereby, the investors in this offering will experience an immediate and substantial dilution. Therefore, the investors in this offering will bear a substantial portion of the risk of loss. Additional sales of the Company s common stock in the future could result in further dilution. Please refer to the section titled Dilution herein. 
+
+(16) Purchasers In This Offering Will Have Limited Control Over Decision Making Because Karim Rawji, TechApp Solutions, Inc. s Officer, Director, And Shareholder Controls All Of TechApp Solutions, Inc. Issued And Outstanding Common Stock.
+
+Presently, Karim Rawji, TechApp Solutions Inc. s Director, President, Secretary, and Treasurer beneficially owns 100% of the outstanding common stock. Because of such ownership, investors in this offering will have limited control over matters requiring approval by TechApp Solutions, Inc. security holders, including the election of directors. Mr. Rawji would retain 71.4% ownership in TechApp Solutions, Inc. common stock assuming the maximum offering is attained. Such concentrated control may also make it difficult for TechApp Solutions, Inc. stockholders to receive a premium for their shares of TechApp Solutions, Inc. common stock in the event the Company enters into transactions which require stockholder approval. In addition, certain provisions of Nevada law could have the effect of making it more difficult or more expensive for a third party to acquire, or of discouraging a third party from attempting to acquire, control of TechApp Solutions, Inc. For example, Nevada law provides that not less than two-thirds vote of the stockholders is required to remove a director for cause, which could make it more difficult for a third party to gain control of the Board of Directors. This concentration of ownership limits the power to exercise control by the minority shareholders. 
+
+(17) We Will Incur Ongoing Costs And Expenses For SEC Reporting And Compliance. Without Revenue We May Not Be Able To Remain In Compliance, Making It Difficult For Investors To Sell Their Shares, If At All.
+
+Our business plan allows for the estimated $5,500 cost of this Registration Statement to be paid from our cash on hand. We plan to contact a market maker immediately following the effectiveness of this Registration Statement and apply to have the shares quoted on the OTC Electronic Bulletin Board. To be eligible for quotation on the OTCBB, issuers must remain current in their filings with the 
+
+10
+
+SEC. Market Makers are not permitted to begin quotation of a security whose issuer does not meet this filing requirement. Securities already quoted on the OTCBB that become delinquent in their required filings will be removed following a 30 or 60 day grace period if they do not make their required filing during that time. In order for us to remain in compliance we will require future revenues to cover the cost of these filings, which could comprise a substantial portion of our available cash resources. We estimate that the cost to remain in compliance for 12 months by filing all necessary forms in a timely fashion will be approximately $12,000. The principal costs we anticipate for the next 12 months related to becoming a public reporting company will be for retaining an independent accounting firm (approximately $7,500) and attorneys (approximately $5,000) to assist with the preparation of our financial statements and our disclosures for inclusion with our public filings. We have budgeted only $3,500 from our use of proceeds to apply to the anticipated legal and accounting expenses. Accordingly, we may experience a capital deficiency of $8,500 to pay such estimated expenses. There can be no assurances that we will be able to acquire capital from any other source to pay for these anticipated expenses. If we are unable to generate sufficient revenues to remain in compliance it may be difficult for you to resell any shares you may purchase, if at all. 
+
+(18) There Has Been No Independent Valuation of the Stock, Which Means That the Stock May Be Worth Less Than the Purchase Price.
+
+The per share purchase price has been arbitrarily determined by us without independent valuation of the shares. The price per share in the recent sale of our stock to our founder, Karim Rawji was at par value ($0.001), and was not based on perceived market value, book value, or other established criteria and bears no relationship the price per share in this offering. We did not obtain an independent appraisal opinion on the valuation of the shares. Accordingly, the shares may have a value significantly less than the offering price and the shares may never obtain a value equal to or greater than the offering price.
+
+(19) Our CEO, Mr. Rawji, has no experience as an officer or director of a software company and may not be able implement our business plan or generate any revenue from sales of our products.
+
+Mr. Rawji does not have experience running a mobile device and desktop software solutions company and has never been an officer or director of a software company. Accordingly, Mr. Rawji may not be able to implement our plan or generate any revenue from the sale of our intended products. There can be no assurance that we will be able to attract and hire officers or directors with experience in the software industry to implement the business plan in the event that Mr. Rawji is otherwise unsuccessful in doing so.
+
+(20) Our attorney is also serving as our escrow agent, which may present potential conflict of interest regarding this relationship since our escrow agent is not an independent third party. 
+
+Our attorney is also serving as our escrow agent and, therefore, this relationship may present potential conflict of interest since our attorney is acting in both capacities. As our attorney, Clifford Hunt has a responsibility to carry out his duties in an honest and businesslike manner and within the scope of his authority. As our escrow agent, Clifford Hunt will be entrusted with and responsible for the oversight of our assets and investor funds deposited into escrow. This dual role may present a potential conflict of interest and we cannot provide any assurances that the best interests of investors will be observed. Pursuant to the terms of the Escrow Agreement, Mr. Hunt will be paid $1,000.00 from the proceeds of the Offering for serving as the escrow agent.
+
+(21) This offering is being conducted on an all or none basis with the requirement that all investor subscription proceeds held in escrow shall be promptly returned to the subscriber investor in the event that all 4,000,000 shares in the offering are not sold at the offering price within 180 days of the effective date of this registration statement and all proceeds of the offering are not received by the Company within 20 days after termination of the offering.
+
+This offering is self-underwritten on a best-efforts, all-or-none basis. No broker-dealer has been retained as an underwriter to sell the shares and no broker-dealer is under any obligation to purchase any shares of our common stock. There are no firm commitments to purchase any of the shares in this offering. We intend to sell them through our officer and director, who will receive no commissions. He will offer the shares to friends, relatives, acquaintances and business associates; however, there is no guarantee that he will be able to sell any of the shares. This offering shall terminate 180 days from the date the registration statement is declared effective by the SEC. In the event we do not sell all 4,000,000 of the shares at the price of $.01 per share and collect all proceeds due from the sale of the shares before the termination of the offering, all funds raised will be promptly returned to the investors, without interest or deduction. Accordingly, your subscription proceeds will be held in a non-interest bearing escrow account for the duration of the offering and in the event the Offering is not completely sold, your proceeds will be returned to you without your ever acquiring any shares in the offering.
+
+(22) Until we register a class of our securities under Section 12 of the Securities Exchange Act of 1934 ( Exchange Act ), we will only be subject to the periodic reporting obligations imposed by Section 15(d) of the Exchange Act.
+
+11
+
+Upon our registration statement being declared effective, it is our intention file Form 8-A with the Commission to register our class of common stock pursuant to Section 12 of the Securities Exchange Act of 1934. However, until such time as we register a class of our securities under Section 12 of the Securities Exchange Act of 1934, we will only be subject to the periodic reporting obligations imposed by Section 15(d) of the Exchange Act. Accordingly, we will not be subject to the proxy rules, Section 16 short-swing profit provisions, going-private regulation, beneficial ownership reporting, the bulk of the tender offer rules and the reporting requirements of Section 13 of the Exchange Act.
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/CIK0001517709_umax_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001517709_umax_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..581aae24cc5e8612c8eb60f98e55d746398c1ab0
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001517709_umax_prospectus_summary.txt
@@ -0,0 +1,67 @@
+PROSPECTUS SUMMARY
+
+ 
+
+AS USED IN THIS PROSPECTUS, UNLESS THE CONTEXT OTHERWISE REQUIRES, WE, US, OUR, AND UMAX GROUP CORP. REFERS TO UMAX GROUP CORP. THE FOLLOWING SUMMARY DOES NOT CONTAIN ALL OF THE INFORMATION THAT MAY BE IMPORTANT TO YOU. YOU SHOULD READ THE ENTIRE PROSPECTUS BEFORE MAKING AN INVESTMENT DECISION TO PURCHASE OUR COMMON STOCK.
+
+ 
+
+UMAX GROUP CORP.
+
+ 
+
+We are a development stage company and our business is distribution of arcade machines. Umax Group Corp. was incorporated in Nevada on March 21, 2011. We intend to use the net proceeds from this offering to develop our business operations (See Description of Business and Use of Proceeds ). To implement our plan of operations we require a minimum of $40,000 for the next twelve months as described in our Plan of Operations. Being a development stage company, we have very limited operating history. After twelve months period we may need additional financing. If we do not generate any revenue we may need a minimum of $15,000 of additional funding to pay for ongoing advertising expenses and SEC filing requirements. We do not currently have any arrangements for additional financing. Our principal executive offices are located at Stawisinskiego 4G/78, Torun, 87-100, Poland. Our phone number is + 48 601 212 388.
+
+From inception until the date of this filing, we have had very limited operating activities. Our financial statements from inception (March 21, 2011) through July 31, 2011, reports no revenues and a net loss of $6,269. Our independent registered public accounting firm has issued an audit opinion for Umax Group Corp. which includes a statement expressing substantial doubt as to our ability to continue as a going concern. To date, we have developed our business plan and entered into Exclusive Distribution Contact with Private Enterprise G.E.O. , which agreed to supply us with arcade machines.
+
+ 
+
+As of the date of this prospectus, there is no public trading market for our common stock and no assurance that a trading market for our securities will ever develop.
+
+ 
+
+THE OFFERING
+
+The Issuer:
+
+ 
+
+UMAX GROUP CORP.
+
+Securities Being Offered:
+
+ 
+
+4,000,000 shares of common stock.
+
+Price Per Share:
+
+ 
+
+$0.02
+
+Duration of the Offering:
+
+ 
+
+The shares will be offered for a period of two hundred and forty (240) days from the effective date of this prospectus. Our offering will terminate as of the earlier of that date, when all the shares have been sold or when our sole director, Mr Lewandowski decides to terminate the offering. The Company will deliver stock certificates attributable to shares of common stock purchased directly to the purchasers within ninety (90) days of the close of the offering. 
+
+Gross Proceeds
+
+ 
+
+$80,000
+
+Securities Issued and Outstanding:
+
+There are 4,500,000 shares of common stock issued and outstanding as of the date of this prospectus, held by our officers, Rafal Lewandowski and Ekaterina Goldfinger
+
+ 
+
+Subscriptions
+
+All subscriptions once accepted by us are irrevocable.
+
+Registration Costs
+
+We estimate our total offering registration costs to be approximately $9,000.
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/CIK0001517992_developmen_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001517992_developmen_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..52f7ae8636ee606b61b818ecf679942a25a81355
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001517992_developmen_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary only highlights selected information contained in greater detail elsewhere in this Prospectus. This summary may not contain all the information that you should consider before investing in our common stock. You should read the entire Prospectus, including Risk Factors beginning on page 6, and the financial information beginning on page F-1, before making an investment decision. Development Capital Group, Inc. is referred to herein as we , us or our . Corporate Information We were incorporated in the state of Florida on September 27, 2010. Our address is 6029 Paseo Acampo, Carlsbad, California 92009 and our telephone number is 760-840-9409. Our Business We are a development stage company formed in the state of Florida on September 27, 2010 to serve as a liaison between our customers who are in need of transportation services for their cargo and transportation providers who will deliver our customers cargo. We match our customers with transportation providers who provide shipping by truckload and less than truckload within the United States based upon delivery requirements, transportation routes, type of shipment, equipment requirements, shipment size and price. Our prices are determined on a shipment-by-shipment basis to accommodate our customers needs based on the transportation provider selection, size and type of shipment, distance and route. We do not own transportation vehicles or equipment used to transport freight, including trucks and/or trailers. As noted in more detail in our Business Section beginning at page 16, we have developed our business plan, as follows: Selecting and securing our domain address and planning to expand the content of our website; Locating potential transportation providers to transport cargo for our customers; Conducting due diligence on transportation by determining whether each provider holds business licenses, liability insurance and whether the transportation provider was cited or otherwise violated Environmental Protection Agency, Department of Commerce, or Department of Transportation regulations (or their state equivalents) or whether any other derogatory public information exists regarding the transportation provider; Organizing our transportation providers by their available routes, transportation capabilities (i.e. truck types and engine abilities), trailers and cargo size capabilities, equipment characteristics (i.e. refrigerated) and delivery time; Securing various agreements with companies that: (a) will provide shipping services to our customers; or (b) are in need of our services to arrange transportation services for their cargo; or (c) need our services to locate transportation providers for their customers. Our operations are primarily directed by our Chief Executive Officer, Andriy Korobkin, who devotes full time to our business and secondarily by our Secretary/Treasurer, Lidiya Tregeub, who also devotes full time to our business. Our Chief Financial Officer works on a part-time basis for 24 hours per week. From October 2, 2010 to March 6, 2011, we raised $20,200 from the sale of our common stock in a private placement. Of the private placement proceeds, we used $8,500 to pay for legal fees associated with this registration statement. Of the amount raised in our private placement offering $11,700 remained as of June 30, 2011 and is reflected in our total cash and cash equivalents of $22,132 as of such date. From our inception on September 27, 2010 through June 30, 2011, we had revenues of $28,773. Prior to this registration statement becoming effective, our operating costs were approximately $18,000 annually or $1,500 monthly including phone, internet, webhosting and fees we pay to cargo carrier websites. We anticipate spending an additional $8,000 on advertising for our transportation intermediary services after this offering. As such, after this offering, our operating costs will increase by approximately $50,000 annually or $4,167 monthly because of our anticipated advertising costs of $8,000 and $42,000 of costs associated with being an SEC reporting company. We require aggregate funds of approximately $68,000 over the next 12 months or $5,667 monthly for operating costs after this offering representing $18,000 for annual phone, internet, webhosting and fees paid to cargo carrier websites, $8,000 for advertising and $42,000 for our reporting costs as a public company. Our revenues to date are insufficient to pay our pre or post offering costs. Because our anticipated monthly costs are $5,667 to continue our operations and as of June 30, 2011 we had funds available of only $22,132 we can only fund our operations until approximately October 1, 2011 unless we generate material operating revenues or receive additional debt or equity funding. We do not have any plans or specific agreements for sources of funding.. Should we have inadequate funds to conduct our operations, our Chief Executive Officer has indicated that he will provide loans to us, although there is no agreement obligating him to do so. Should we be unable to generate sufficient revenues to pay our monthly operating expenses of $5,667 after this offering if we are unable to obtain funding we may be forced to limit or discontinue business. The Offering Selling shareholders are offering up to 1,100,000 shares of our common stock. The selling shareholders will offer their shares at $0.10 per share until our shares are quoted on the Over-the-Counter Bulletin Board, commonly referred to as OTC Bulletin Board and thereafter at prevailing market prices or privately negotiated prices. There is no assurance that: our securities will ever become qualified for quotation on the OTC Bulletin Board ; or that the selling shareholders will sell their shares; or that a market for our shares will develop even if our shares are quoted on the OTC Bulletin Board . To be quoted on the OTC Bulletin Board , a market maker must file an application on our behalf to make a market for our common stock. The absence of a public market for our common stock may make it difficult for you to sell your shares of our common stock. Our shares will be penny stocks as that term is generally defined in the Securities Exchange Act of 1934 and will be subject to rules that impose sales practice and disclosure requirements on broker-dealers who engage in certain transactions involving a penny stock. Because of these regulations, broker-dealers may encounter difficulties in their attempt to sell shares of our common stock, which may negatively affect the ability of selling shareholders or other holders to sell their shares in the secondary market and/or reduce the trading activity level of our shares in the secondary market. These additional sales practice and disclosure requirements could impede the sale of our securities with a corresponding decrease in our securities price, if our securities become quoted on the OTC Bulletin Board . Therefore, our shareholders will, in all likelihood, find it difficult to sell their securities. Financial Summary Because this is only a financial summary, it does not contain all the financial information that may be important to you. Therefore, you should carefully read all the information in this Prospectus, including the financial statements and their explanatory notes beginning on page F-1 before making an investment decision. Statement of Operations Data From September 27, 2010 (Inception) to June 30, 2011 R Revenue from operations $ 28,773 Total costs and expenses $ 53,541 Net loss for the period $ (24,768 ) Net loss per weighted share, basic and fully diluted $ ( 0 ) Weighted average shares outstanding, basic and fully diluted $ 5,476,522 Balance Sheet Data As of June 30, 2011 Current assets $ 31,332 Working capital $ 31,332 Tot al assets $ 31,332 Total liabilities $ 0 Total stockholders equity $ 31,332 Use of Proceeds We will incur all costs associated with this registration and Prospectus. We will not receive any of the proceeds from the sale of the shares of our common stock being offered by the Selling shareholders. Description of our Common Stock Our authorized capital stock consists of 490,000,000 shares of common stock, each with a par value of $.001, and 10,000,000 shares of preferred stock, each with a par value of $.001. We have 11,220,000 shares of our common stock and no shares of our preferred stock issued and outstanding. For further information regarding our common stock, refer to Description of Securities beginning on page ___.
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/CIK0001518208_infinity_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001518208_infinity_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..cfb2f8706a3e1a1cc865a6a88a0eebb9dbf3ca93
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001518208_infinity_prospectus_summary.txt
@@ -0,0 +1 @@
+This summary only highlights the more detailed information appearing elsewhere in this prospectus. As this is a summary, it does not contain all of the information that you should consider in making an investment decision. You should read this entire prospectus carefully, including the information under Risk Factors and our financial statements and the related notes included elsewhere in this prospectus, before investing. Unless otherwise stated in this prospectus: references in this prospectus to we, us or our company refer to Infinity China 2 Acquisition Corporation; references in this prospectus to founder shares refer to the shares held by our sponsors, officers and directors prior to this offering; references in this prospectus to initial shareholders collectively refers to our sponsors, officers and directors who own the founder shares; references in this prospectus to our public shares refer to our ordinary shares sold as part of the units in this offering (whether they are purchased in this offering or thereafter in the open market); references to public shareholders refer to the holders of our public shares, including our sponsors and management team to the extent our sponsors and/or members of our management team purchase public shares, provided that our sponsors and each member of management shall be considered a public shareholder only with respect to any public shares; references in this prospectus to our management or our management team refer to our officers and directors; references to our sponsors or the Infinity-I China Funds collectively refer to Infinity I-China Fund (Cayman), L.P., Infinity I-China Fund (Israel), L.P., Infinity I-China Fund (Israel 2), L.P. and Infinity I-China Fund (Israel 3), L.P., each of which is a limited partnership; the general partner of each of the aforementioned funds is Infinity-CSVC Partners, Ltd., a Cayman Islands exempted company; references to China or PRC refers to the People s Republic of China, which, for purpose of discussion in this prospectus only, excludes the Special Administrative Region of Hong Kong, the Special Administrative Region of Macau and Taiwan; references to RMB refer to Renminbi, the legal currency of the People s Republic of China; references to the Companies Act means the BVI Business Companies Act, 2004 of the British Virgin Islands; references in this prospectus to the memorandum and articles of association refer to our memorandum and articles of association, as amended; except as specifically provided otherwise, the information in this prospectus assumes that the underwriters will not exercise their over-allotment option; and registered trademarks referred to in this prospectus are the property of their respective owners. You should rely only on the information contained in this prospectus. We have not, and the underwriters have not, authorized anyone to provide you with different information. We are not, and the underwriters are not, making an offer of these securities in any jurisdiction where the offer is not permitted. TABLE OF CONTENTS CALCULATION OF REGISTRATION FEE Title of Each Class of Security Being Registered Amount Being Registered Proposed Maximum Offering Price per Security 1 Proposed Maximum Aggregate Offering Price 1 Amount of Registration Fee Units, each consisting of one ordinary share, no par value, and one warrant 2 4,600,000 Units $ 10.00 $ 46,000,000 $ 5,340.60 Ordinary shares included as part of the units 2 4,600,000 Shares 3 Warrants included as part of the units 2 4,600,000 Warrants 3 Total $ 46,000,000 $ 5,340.60 4 (1) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended. (2) Includes 600,000 units, consisting of 600,000 ordinary shares and 600,000 warrants, which may be issued upon exercise of a 45-day option granted to the underwriters to cover over-allotments, if any. (3) No fee pursuant to Rule 457(g). (4) Previously paid. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine. TABLE OF CONTENTS
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/CIK0001518222_bankrate_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001518222_bankrate_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001518222_bankrate_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/CIK0001518738_grassmere_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001518738_grassmere_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..d2da68a5c01a940eaa7a01ba15fb5de9a7f2d373
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001518738_grassmere_prospectus_summary.txt
@@ -0,0 +1 @@
+This summary only highlights the more detailed information appearing elsewhere in this prospectus. As this is a summary, it does not contain all of the information that you should consider in making an investment decision. You should read this entire prospectus carefully, including the information under Risk Factors and our financial statements and the related notes included elsewhere in this prospectus, before investing. Unless otherwise stated in this prospectus, references to: we, us, company or our company are to Grassmere Acquisition Corporation; public shares are to shares of our common stock sold as part of the units in this offering (whether they are purchased in this offering or thereafter in the open market); public stockholders are to the holders of our public shares, including our initial stockholders and management team to the extent our initial stockholders and/or members of our management team purchase public shares, provided that each initial stockholder s and member of management s status as a public stockholder shall only exist with respect to such public shares; our management or our management team are to our executive officers and directors; our sponsor are to Grassmere Acquisition Holdings, LLC, a Missouri limited liability company; our founder shares are to shares of our common stock initially purchased by our sponsor in a private placement prior to this offering; and our initial stockholders are to holders of our founder shares prior to this offering. Unless we tell you otherwise, the information in this prospectus assumes that the underwriters will not exercise their over-allotment option. General We are a newly organized blank check company formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses, which we refer to throughout this prospectus as our initial business combination. We have not identified any acquisition target and we have not, nor has anyone on our behalf, initiated any substantive discussions, directly or indirectly, with respect to identifying any acquisition target. We will seek to capitalize on the significant deal sourcing, investing, acquisition and operating expertise of our management team to identify, acquire and operate high-growth businesses which provide products or services used by consumers in their leisure time, or which provide products, services and physical assets that support such businesses. These businesses may operate in the consumer and leisure sectors or more broadly in the media, entertainment, technology, hospitality or retail sectors. We believe that our initial business combination will provide a strong foundation from which to build, through acquisition or organic growth, a consumer and leisure sector-focused platform. We are not limited, however, to any particular industry sector. In addition, a target business does not have to meet any particular minimum value for purposes of consummating an initial business combination, except that we will not effect a business combination with another blank check company or a similar type of company with nominal operations. Our Management Team Our chairman and chief executive officer, Peter C. Brown, our president, Tristram E. Collins, and other members of our management team have extensive operating and deal-making experience in the consumer, leisure, entertainment and related industries. Mr. Brown brings over 30 years of experience as both an operating and financial executive, as well as significant consumer and leisure industry leadership. He currently serves as chairman of Grassmere Partners, LLC, or Grassmere Partners, a private investment firm based in Kansas City, Missouri. Grassmere Partners invests in both private and publicly traded companies and its portfolio consists of companies in the consumer, media, entertainment, technology, energy and healthcare industries. TABLE OF CONTENTS CALCULATION OF REGISTRATION FEE Title of Each Class of Securities to be Registered Amount to be Registered 1 Proposed Maximum Offering Price per Unit 1 Proposed Maximum Aggregate Offering Price 1 Amount of Registration Fee Units, each consisting of one share of common stock, par value $.0001 per share, and one warrant 2 5,750,000 $ 10.00 $ 57,500,000 $ 6,675.75 Common stock included as part of the Units 2 5,750,000 3 Warrants included as part of the Units 2 5,750,000 3 Total $ 57,500,000 $ 6,675.75 4 (1) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended. (2) Includes 750,000 units, and 750,000 shares of common stock and 750,000 warrants underlying such units, which may be issued on exercise of a 45-day option granted to the underwriters to cover over-allotments, if any. (3) No fee pursuant to Rule 457(g). (4) Previously paid. The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine. TABLE OF CONTENTS Prior to Grassmere Partners, Mr. Brown was the chairman and chief executive officer of AMC Entertainment Inc., or AMC, one of the world s largest theatrical exhibition companies. Mr. Brown was appointed chairman and chief executive officer of AMC in 1999 after serving as the company s chief financial officer for nine years. In his 18-year career with AMC, he was involved in raising over $6 billion of capital in 24 financing transactions. During his tenure as chairman and CEO, Mr. Brown led several key financial and strategic transactions that grew revenues from $1 billion to $2.3 billion, increased shareholder value and provided liquidity events for AMC s public and, when AMC went private, private shareholders. From its low in October 2000 to December 2004, AMC s stock price increased from $1.00 to $19.50. In 2006, as a private company, Mr. Brown orchestrated the acquisition of Loews Cineplex, a $1.3 billion transaction which was the industry s largest acquisition to date. Mr. Brown was also involved in the implementation of several key operating initiatives in marketing, pricing, content and concessions, streamlining the organizational structure of the company and the divestiture of non-strategic international operations. He was also involved in the formation and launch of several significant new business ventures including National Cinemedia, Inc. (NASDAQ: NCMI), which went public in February 2007 with an $861 million initial public offering and a $2 billion equity market capitalization, Movietickets.com and Digital Cinema Implementation Partners. While serving as CFO of AMC, Mr. Brown founded Entertainment Properties Trust (NYSE: EPR), a real estate investment trust established to invest in entertainment-related properties, with its initial investments being in 13 megaplex theaters purchased from AMC. In November 1997, EPR completed a $276 million initial public offering. Mr. Brown served as initial chairman of the board of trustees of EPR until May 2003, when he did not stand for re-election at the company s annual shareholders meeting. Mr. Brown rejoined the board of EPR in May 2010, and the company today has an equity market capitalization in excess of $2.0 billion. Prior to AMC, Mr. Brown was a vice president at DJS Inverness & Company, a New York-based leveraged buyout and advisory firm where he focused on cash flow based buyouts in the consumer and retail sectors. Prior to DJS Inverness, Mr. Brown worked in a venture capital firm and a Midwestern based regional commercial bank. Mr. Brown is currently a board member of CenturyLink (NYSE: CTL), Entertainment Properties Trust (NYSE: EPR), Cinedigm (NASDAQ: CIDM) and EcoFit Lighting, LLC. He previously served as a board member of several public and private companies including National Cinemedia (NASDAQ: NCMI), Midway Games, Lab One, Inc., Protection One, Inc., Digital Cinema Implementation Partners and Movietickets.com. Tristram Collins has 25 years of M&A, financing, investment and operating experience, and brings substantial operating and transaction experience in the media and entertainment industries specifically. Mr. Collins currently serves as the founder and CEO of Great Point Holdings, LLC, or Great Point, a private investment company that focuses on funding, developing and incubating early stage companies. Through Great Point, Mr. Collins was a co-founder of AcuStream, LLC, a healthcare technology firm that provides revenue cycle solutions to large physician practice organizations. There, Mr. Collins led the initial and on-going raise of growth capital and also negotiated and executed a strategic initiative to partner with University HealthSystems Consortium, a membership organization that represents 90% of the physician practice organizations in the United States. Mr. Collins was formerly a director and senior executive vice president of operations and finance at Nassau Broadcasting Partners, L.P., a New Jersey based radio broadcasting company. Mr. Collins served in this capacity from May 2004 to September 2010. Mr. Collins helped grow the company from 11 stations to 56 stations and grow revenues from $20 million to $55 million, and in doing so become the 15th largest radio broadcaster based on station count in the United States. Mr. Collins led the business development, negotiation, acquisition, financing and operational integration of 44 radio stations acquired in 16 separate transactions from 12 sellers across New England and the Mid-Atlantic regions over an 18-month period. Mr. Collins led the company s raise of over $265 million in debt and private equity to finance the acquisitions. While at Nassau, Mr. Collins also oversaw and executed various M&A and financing transactions in other affiliated companies in tower communications, real estate, publishing and marine industry. Prior to Nassau, Mr. Collins served as a managing director in the media investment banking division at Citigroup Global Markets, where Mr. Collins managed some of the firm s largest media and entertainment based client relationships, including Viacom, Inc. and the Walt Disney Company. Mr. Collins was responsible for the broadcasting, newspaper and entertainment sectors and executed over $85 billion in financing and advisory transactions during his career including numerous high profile and complex M&A transactions across multiple sectors. As a result of his long tenure as a senior investment banker, Mr. Collins has extensive relationships in the leisure, media and entertainment industries with company management teams as well as with numerous TABLE OF CONTENTS The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION, DATED SEPTEMBER 2, 2011 $50,000,000 GRASSMERE ACQUISITION CORPORATION 5,000,000 Units Grassmere Acquisition Corporation is a newly organized blank check company formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses, which we refer to throughout this prospectus as our initial business combination. We have not identified any acquisition target and we have not, nor has anyone on our behalf, initiated any substantive discussions, directly or indirectly, with respect to identifying any acquisition target. This is an initial public offering of our securities. We are offering 5,000,000 units. Each unit has an offering price of $10.00 and consists of one share of our common stock and one warrant. Each warrant entitles the holder to purchase one share of our common stock at a price of $11.50, subject to adjustment as described in this prospectus. The warrants will become exercisable on the later of 30 days after the completion of our initial business combination or 12 months from the closing of this offering, and will expire five years after the date on which they first become exercisable or earlier upon redemption or liquidation, as described in this prospectus. We have also granted the underwriters a 45-day option to purchase up to an additional 750,000 units to cover over-allotments, if any. We will provide our stockholders with the opportunity to redeem their shares of our common stock upon the completion of our initial business combination at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account described below, including interest but net of franchise and income taxes payable and less any interest permitted to be withdrawn by us for working capital purposes, divided by the number of then outstanding shares of common stock that were sold as part of the units in this offering, which we refer to as our public shares, subject to the limitations described herein. We intend to complete our initial business combination and conduct redemptions of shares of common stock for cash without a stockholder vote pursuant to the tender offer rules of the Securities and Exchange Commission, or the SEC. If, however, a stockholder vote is required by law, or we decide to hold a stockholder vote for business or other legal reasons, we will offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. If we are unable to complete a business combination within 21 months from the date of this prospectus, we will redeem the public shares at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest but net of franchise and income taxes payable (less up to $100,000 of such net interest to pay dissolution expenses), divided by the number of then outstanding public shares, subject to applicable law and as further described herein. Our sponsor, Grassmere Acquisition Holdings, LLC, and our independent director nominees have committed to purchase an aggregate of 3,733,333 warrants at a price of $0.75 per warrant ($2.80 million in the aggregate) in a private placement that will occur simultaneously with the completion of this offering. We refer to these warrants throughout this prospectus as the private placement warrants. Currently, there is no public market for our units, common stock or warrants. It is anticipated that our units will be quoted on the Over-the-Counter Bulletin Board quotation system, or the OTCBB, under the symbol on or promptly after the date of this prospectus. The common stock and warrants comprising the units will begin separate trading on the 52nd day following the date of this prospectus unless Lazard Capital Markets LLC informs us of its decision to allow earlier separate trading, subject to our filing a Current Report on Form 8-K with the SEC containing an audited balance sheet reflecting our receipt of the gross proceeds of this offering and issuing a press release announcing when such separate trading will begin. Once the securities comprising the units begin separate trading, the common stock and warrants will be traded on the OTCBB under the symbols and , respectively. Investing in our securities involves risks. See Risk Factors beginning on page 22. Investors will not be entitled to protections normally afforded to investors in Rule 419 blank check offerings. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. Price to Public Underwriting Discounts and Commissions 1 Proceeds, Before Expenses, to us Per Unit $ 10.00 $ 0.525 $ 9.475 Total $ 50,000,000 $ 2,625,000 $ 47,375,000 (1) Includes $0.30 per unit, or approximately $1.50 million in the aggregate (approximately $1.73 million if the underwriters over-allotment option is exercised in full), payable to the underwriters for deferred underwriting commissions to be placed in the trust account described below. Such funds will be released to the underwriters only on completion of an initial business combination, as described in this prospectus. See also Underwriting beginning on page 114. Of the proceeds we receive from this offering and the sale of the private placement warrants described in this prospectus, $50.50 million ($10.10 per share), or approximately $57.83 million (approximately $10.06 per share) if the underwriters over-allotment option is exercised in full, will be deposited into a trust account at JPMorgan Chase Bank, N.A. maintained by Continental Stock Transfer & Trust Company, acting as trustee. Except for the interest income earned on the trust account balance that may be released to us to pay any franchise and income taxes payable on such interest and to fund our working capital requirements, any amounts necessary to purchase up to 50% of our public shares if we seek stockholder approval of our business combination and any amounts necessary to redeem our public shares upon certain amendments to our amended and restated certificate of incorporation, each as described herein, our amended and restated certificate of incorporation provides that none of the funds held in trust will be released from the trust account until the earlier of (i) the completion of our initial business combination or (ii) the redemption of our public shares if we are unable to complete a business combination within 21 months from the date of this prospectus, subject to applicable law. The proceeds deposited in the trust account could become subject to the claims of our creditors, if any, which could have priority over the claims of our public stockholders. The underwriters are offering the units for sale on a firm commitment basis. The underwriters expect to deliver the units to the purchasers on or about , 2011. Lazard Capital Markets Macquarie Capital Ladenburg Thalmann & Co. Inc. Maxim Group LLC Joseph Gunnar & Co., LLC The date of this prospectus is , 2011 TABLE OF CONTENTS financial sponsors that are active in these sectors. Prior to Citigroup, Mr. Collins was a Vice President in the media investment banking group at Merrill Lynch & Co. and also worked in investment banking at Smith Barney Inc. and PaineWebber, Inc. in the media and public finance groups, respectively. Mr. Collins is currently a private company board member of AcuStream, LLC, a healthcare technology company, and Sustainable Building Innovations, Inc., a manufacturer of rapidly deployable buildings for use in military and commercial applications. Initial Business Combination Strategy We anticipate structuring a business combination to acquire 100% of the equity interest or assets of the target business or businesses. We may, however, structure a business combination to acquire less than 100% of such interests or assets of the target business in order to meet certain objectives of the target management team or shareholders or for other reasons, but we will only complete such business combination if we (or any entity that is a successor to us in a business combination) acquire 50% or more of the outstanding voting securities of the target or otherwise acquire a controlling interest in the target sufficient for us not to be required to register as an investment company under the Investment Company Act of 1940, as amended, or the Investment Company Act. We will not consider any transaction that does not meet such criteria. Even if we (or any entity that is a successor to us in a business combination) own 50% or more of the voting securities of the target, our stockholders prior to the business combination may collectively own a minority interest in the post business combination company, depending on valuations ascribed to the target and us in the business combination transaction. Our management team intends to focus on increasing stockholder value by growing revenue (through organic growth and acquisitions) and improving the efficiency of business operations. Consistent with this strategy, we believe the following general criteria and guidelines are important in evaluating prospective target businesses. We will use these criteria and guidelines in evaluating acquisition opportunities, but we may decide to enter into a business combination with a target business that does not meet these criteria and guidelines. Targets Focused on Consumer Leisure Time. We will seek to identify, acquire and operate high growth businesses which provide products or services used by consumers in their leisure time or which provide products, services and physical assets that support such businesses. These businesses may operate in the consumer and leisure sectors or more broadly in the media, entertainment, technology, hospitality, leisure and retail sectors. Large and Growing Market Supported by Positive Macro Trends. We will seek out opportunities in sectors that have substantial opportunity for revenue growth due to shifts in technology, demographics, consumer preferences or other market factors. We will seek companies that are well positioned to take advantage of such sector growth, can dominate their market and are established as market or industry leaders. We do not intend to acquire start-up companies. Superior Products and/or Service Offerings that Create Sustainable Competitive Advantages. We will seek companies that have solid reputations for their products and/or services and have substantially differentiated themselves in their market as a result of such product quality, exemplary customer service or other such factors that can provide a company with a competitive advantage. Other factors we will consider include the need for up front or on-going capital investment, the potential impact of technology on the efficiencies of the business, the diversification of revenue and customer base, customer loyalty, barriers to entry such as patent protection and opportunities for horizontal or vertical industry expansion. Strong Management Team. We will seek to acquire businesses that have smart, honest, hardworking and experienced management teams. We will focus on management teams with a proven track record of driving revenue growth, enhancing profitability and generating strong free cash flow. Financially Attractive. We will seek to acquire businesses that have strong fundamentals including a history of stable free cash flow generation, growing revenues, improving margins and high returns on invested capital. TABLE OF CONTENTS These criteria are not intended to be exhaustive. Any evaluation relating to the merits of a particular initial business combination may be based, to the extent relevant, on these general guidelines as well as other considerations, factors and criteria that our management may deem relevant. In the event that we decide to enter into a business combination with a target business that does not meet the above criteria and guidelines, we will disclose that the target business does not meet the above criteria in our stockholder communications related to our initial business combination, which, as discussed in this prospectus, would be in the form of tender offer or proxy solicitation materials, as applicable, that we would file with the Securities and Exchange Commission, or the SEC. In evaluating a prospective target business, we expect to conduct an extensive due diligence review which will encompass, among other things, meetings with incumbent management and employees, document reviews, interviews of customers and suppliers, inspections of facilities, as well as reviewing financial and other information which will be made available to us. Sourcing of Potential Acquisition Targets We believe our management s significant operating and transaction experience and relationships with companies in our target sectors will provide us with a substantial number of potential business targets. Over the course of their careers, the members of our management team have developed a broad network of contacts and corporate relationships. This network has grown through the activities of our management including substantial operating, financing and mergers and acquisitions activity with numerous partners, counterparties, financing sources, bankers, brokers, sellers, buyers, clients, employees and other relationships. Mr. Brown has extensive industry and intermediary relationships with individuals in both public and private companies from having been active on numerous boards and his senior leadership positions. Mr. Brown s network extends to private equity firms, as well as to the numerous vendors and other contacts with whom he has worked with over his 30 year professional career. Mr. Collins has extensive relationships from his role as an operating and private equity executive and from serving as a managing director and sector head of Citigroup Capital Markets media investment banking group. Over his investment banking career, Mr. Collins managed the day-to-day relationships and executed transactions on behalf of both U.S. based and international clients in such sectors as radio, TV broadcasting, cable, newspapers, music, motion pictures, theaters, telecom, technology, publishing, theme parks and TV and cable networks. His diversified entertainment clients included such companies as Viacom, Inc. and the Walt Disney Company. Mr. Collins also worked closely with a substantial number of large private equity firms seeking new portfolio company opportunities in the media and entertainment sectors or assessing strategic alternatives for their existing portfolio companies. We believe that the network of contacts and relationships of our management team will provide us with an important source of investment opportunities. In addition, we anticipate that target business candidates will be brought to our attention from various unaffiliated sources, including investment market participants, private equity funds and large business enterprises seeking to divest non-core assets or divisions. We are not prohibited from pursuing an initial business combination with a company that is affiliated with our sponsor, executive officers or directors, or making the acquisition through a joint venture or other form of shared ownership with our sponsor, executive officers or directors. In the event we seek to complete an initial business combination with an acquisition target that is affiliated with our sponsor, executive officers or directors, we, or a committee of independent directors, would obtain an opinion from an independent investment banking firm which is a member of the Financial Industry Regulatory Authority, or FINRA, that such an initial business combination is fair to our company from a financial point of view. In order to minimize potential conflicts of interest that may arise from multiple corporate affiliations, each of our executive officers has agreed, pursuant to a written agreement with us, that until the earliest of: (i) our initial business combination, (ii) our redemption of 100% of our public shares if we do not complete our initial business combination within 21 months from the closing of this offering, or (iii) such time as he ceases to be an executive officer, to present to us for our consideration, prior to presentation to any other entity, any business combination opportunity with a target business having an enterprise value of $75,000,000 or more, subject to any pre-existing fiduciary or contractual obligations he might have. As more fully discussed in Management Conflicts of Interest, if any of our executive officers becomes aware of a business combination opportunity that falls within the line of business of any entity to which he has pre-existing fiduciary or contractual obligations, he may be required to present such business combination opportunity to such entity prior to presenting such business combination opportunity to us. All of our TABLE OF CONTENTS executive officers currently have certain relevant fiduciary duties or contractual obligations that may take priority over their duties to us. However, our executive officers have agreed not to participate in the formation of, or become an officer or director of, any blank check company until we have entered into a definitive agreement regarding our initial business combination or we have failed to complete our initial business combination within the prescribed time frame. Executive Offices Our executive offices are located at 801 W. 47th Street Suite 400, Kansas City, Missouri 64112 and our telephone number is (816) 216-7292. TABLE OF CONTENTS The Offering In making your decision on whether to invest in our securities, you should take into account not only the backgrounds of the members of our management team, but also the special risks we face as a blank check company and the fact that this offering is not being conducted in compliance with Rule 419 promulgated under the Securities Act of 1933, as amended, or the Securities Act. You will not be entitled to protections normally afforded to investors in Rule 419 blank check offerings. You should carefully consider these and the other risks set forth in the section below entitled Risk Factors beginning on page 22 of this prospectus. Securities offered 5,000,000 units, at $10.00 per unit, each unit consisting of: one share of common stock; and one warrant. Proposed OTCBB symbols Units: Common Stock: Warrants: Trading commencement and separation of common stock and warrants The units will begin trading on or promptly after the date of this prospectus. The common stock and warrants comprising the units will begin separate trading on the 52nd day following the date of this prospectus unless Lazard Capital Markets LLC informs us of its decision to allow earlier separate trading, subject to our having filed the Current Report on Form 8-K described below and having issued a press release announcing when such separate trading will begin. Separate trading of the common stock and warrants is prohibited until we have filed a Current Report on Form 8-K In no event will the common stock and warrants be traded separately until we have filed a Current Report on Form 8-K with the SEC containing an audited balance sheet reflecting our receipt of the gross proceeds at the closing of this offering. We will file the Current Report on Form 8-K promptly after the closing of this offering, which is anticipated to take place three business days from the date of this prospectus. If the underwriters over-allotment option is exercised following the initial filing of such Current Report on Form 8-K, a second or amended Current Report on Form 8-K will be filed to provide updated financial information to reflect the exercise of the underwriters over-allotment option. Units: Number outstanding before this offering 0 Number outstanding after this offering 5,000,000 TABLE OF CONTENTS Common stock: Number outstanding before this offering 1,437,500 1 2 Number outstanding after this offering 6,250,000 2 3 Warrants: Number of private placement warrants to be sold in a private placement simultaneously with closing of this offering 3,733,333 Number of warrants to be outstanding after this offering and the private placement 8,733,333 4 Exercisability Each warrant offered in this offering is exercisable to purchase one share of our common stock. Exercise price $11.50 per share, subject to adjustments as described herein. Cashless exercise In lieu of paying cash upon exercise of warrants, a holder may exercise warrants on a cashless basis by surrendering the warrants for that number of shares of common stock equal to the quotient obtained by dividing: (x) the product of the number of shares of common stock underlying the warrants, multiplied by the difference between the exercise price of the warrants and the fair market value (defined below) by (y) the fair market value. The fair market value means the volume weighted average price of the common stock during the 10 trading day period ending on the trading day prior to the date that notice of exercise is received by the warrant agent from the holder of such warrants or its securities broker or intermediary. Exercise period The warrants will become exercisable on the later of: 30 days after the completion of our initial business combination, or 12 months from the closing of this offering; provided in each case that we have an effective registration statement under the Securities Act covering the shares of common stock issuable upon exercise of the warrants and a current prospectus relating to them is available (or holders exercise their warrants on a cashless basis) and such shares are (1) This number includes an aggregate of 187,500 founder shares held by our initial stockholders that are subject to forfeiture to the extent that the over-allotment option is not exercised by the underwriters. (2) This number includes a portion of the founder shares in an amount equal to 5.0% of our issued and outstanding shares after this offering and the expiration of the underwriters over-allotment option that are subject to forfeiture by our initial stockholders as described under Founder shares below. (3) Assumes no exercise of the underwriters over-allotment option and the resulting forfeiture of 187,500 founder shares. (4) Assumes no exercise of the underwriters over-allotment option. TABLE OF CONTENTS registered, qualified or exempt from registration under the securities, or blue sky, laws of the state of residence of the holder. We are not registering the shares of common stock issuable upon exercise of the warrants at this time. However, we have agreed to use our best efforts to file and have an effective registration statement covering the shares of common stock issuable upon exercise of the warrants, to maintain a current prospectus relating to those shares of common stock until the warrants expire or are redeemed and to register the shares of common stock that are issuable upon exercise of the warrants under certain state blue sky laws, to the extent an exemption is not available, as specified in the warrant agreement. The warrants will expire at 5:00 p.m., New York time, five years after the date on which they first become exercisable or earlier upon redemption or liquidation. On the exercise of any warrant, the warrant exercise price will be paid directly to us and not placed in the trust account. Redemption of warrants Once the warrants become exercisable, we may redeem the outstanding warrants (except as described herein with respect to the private placement warrants): in whole and not in part; at a price of $0.01 per warrant; upon a minimum of 30 days prior written notice of redemption, which we refer to as the 30-day redemption period; and if, and only if, the last sale price of our common stock equals or exceeds $18.50 per share for any 20 trading days within a 30 trading day period ending on the third business day before we send the notice of redemption to the warrant holders. We will not redeem the warrants unless an effective registration statement under the Securities Act covering the shares of common stock issuable upon exercise of the warrants is effective and a current prospectus relating to those shares of common stock is available throughout the 30-day redemption period, except if the warrants are required to be exercised on a cashless basis and such cashless exercise is exempt from registration under the Securities Act. If and when the warrants become redeemable by us, we may exercise our redemption right even if we are unable to qualify the underlying securities for sale under all applicable state securities laws. If we call the warrants for redemption as described above, our management will have the option to require all holders that wish to exercise warrants to do so on a cashless basis beginning on the 11th trading day following commencement of the 30-day redemption period, provided that for these purposes, the fair market value will be the volume weighted average price of the common stock for the 10 trading days ending on TABLE OF CONTENTS the third trading day prior to the date on which the notice of redemption is sent to the holders of warrants. None of the private placement warrants will be redeemable by us so long as they are held by the initial purchasers of the private placement warrants or their permitted transferees. Founder shares In April 2011, our sponsor purchased an aggregate of 2,156,250 founder shares for an aggregate purchase price of $25,000, or approximately $0.01 per share. Subsequently, in June 2011, our sponsor transferred an aggregate of 208,336 founder shares to Robert J. Druten and William Thomas Grant II, each of whom has agreed to serve on our board of directors upon the closing of this offering. Thereafter, on August 8, 2011, our sponsor and director nominees returned to us an aggregate of 718,750 of such founder shares, which we have cancelled, such that they hold in the aggregate 1,437,500 founder shares. The founder shares include an aggregate of 187,500 shares subject to forfeiture to the extent that the underwriters over-allotment option is not exercised in full, so that our initial stockholders will own 20.0% of our issued and outstanding shares after this offering (assuming they do not purchase any units in this offering). In addition, a portion of the founder shares equal to 5.0% of our issued and outstanding shares after this offering and the expiration of the underwriters over-allotment option, which we refer to as the founder earnout shares, will be subject to forfeiture by our initial stockholders as follows: 2.5% are subject to forfeiture by our initial stockholders on the second anniversary of the closing of our initial business combination unless following our initial business combination the last sales price of our common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period or we complete a liquidation, merger, stock exchange or other similar transaction that results in all of our stockholders having the right to exchange their shares of common stock for consideration in cash, securities or other property which equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like); and 2.5% are subject to forfeiture by our initial stockholders on the third anniversary of the closing of our initial business combination unless following our initial business combination the last sales price of our common stock equals or exceeds $13.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period or we complete a liquidation, merger, stock exchange or other similar transaction that results in all of our stockholders having the right to exchange their shares of common stock for consideration in cash, securities TABLE OF CONTENTS or other property which equals or exceeds $13.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like). The founder shares are identical to the shares of common stock included in the units being sold in this offering, except that: the founder shares are subject to certain transfer restrictions, as described in more detail below, and our initial stockholders have agreed (i) to waive their redemption rights with respect to their founder shares and public shares in connection with the completion of a business combination and (ii) to waive their redemption rights with respect to their founder shares if we fail to complete a business combination within 21 months from the date of this prospectus (although they will be entitled to redemption rights with respect to any public shares they hold if we fail to complete a business combination within the prescribed time frame). If we submit our initial business combination to our public stockholders for a vote, our initial stockholders have agreed to vote their founder shares and any public shares purchased during or after the offering in favor of our initial business combination. Transfer restrictions on founder shares Our initial stockholders have agreed not to transfer, assign or sell any of their founder shares until: (i) one year after the completion of our initial business combination or earlier if, subsequent to our initial business combination, the last sales price of our common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after our initial business combination, or (ii) the date on which we complete a liquidation, merger, stock exchange or other similar transaction after our initial business combination that results in all of our stockholders having the right to exchange their shares of common stock for cash, securities or other property (except as described herein under Principal Stockholders Transfers of Common Stock and Warrants ). Private placement warrants Our sponsor and our independent director nominees have committed to purchase an aggregate of 3,733,333 private placement warrants (3,400,001 by our sponsor and 333,332 by our independent director nominees), each exercisable to purchase one share of our common stock at $11.50 per share, at a price of $0.75 per warrant ($2.80 million in the aggregate) in a private placement that will occur simultaneously with the closing of this offering. The purchase price of the private placement warrants will be added to the proceeds from this offering to be held in the trust account. If we do not complete a business combination within 21 months from the date of this prospectus, the proceeds of the sale of the private placement warrants will used to fund the redemption of our public shares TABLE OF CONTENTS (subject to the requirements of applicable law) and the private placement warrants will expire worthless. Transfer restrictions on private placement warrants The private placement warrants (including the common stock issuable upon exercise of the private placement warrants) will not be transferable, assignable or salable until 30 days after the completion of our initial business combination and they will be non-redeemable so long as they are held by the initial purchasers of the private placement warrants or their permitted transferees (except as described herein under Principal Stockholders Transfers of Common Stock and Warrants ). If the private placement warrants are held by someone other than the initial purchasers of the private placement warrants or their permitted transferees, the private placement warrants will be redeemable by us and exercisable by such holders on the same basis as the warrants included in the units being sold in this offering. Proceeds to be held in trust account $50.50 million, or $10.10 per share of the proceeds of this offering and the proceeds of the private placement of the private placement warrants ($57.83 million, or approximately $10.06 per share, if the underwriters over-allotment option is exercised in full) will be placed in a segregated trust account at JPMorgan Chase Bank, N.A. with Continental Stock Transfer & Trust Company acting as trustee. These proceeds include approximately $1,500,000 (or approximately $1,725,000 if the underwriters over-allotment option is exercised in full) in deferred underwriting commissions. We may increase the initial amount held in the trust account from approximately $10.10 per share prior to the effectiveness of the registration statement of which this prospectus forms a part. In such case, we expect that the increase would be funded by an increase in the amount of the deferral of the underwriting commissions payable in connection with this offering, the purchase of warrants by the underwriters and/or an increase in the number of private placement warrants to be purchased by our sponsor and our independent director nominees at a price of $0.75 per warrant and/or a reduction from $500,000 of the amount initially available to us for working capital that is not held in the trust account on an equal basis. Public stockholders would own a smaller percentage of our outstanding common stock on a fully diluted basis to the extent that our sponsor purchases additional warrants. We do not intend to reduce the initial amount to be held in the trust account. Except for the portion of the interest income that may be released to us to pay any income or franchise taxes and to fund our working capital requirements, any amounts necessary to purchase up to 50% of our public shares if we seek stockholder approval of our business combination and any amounts necessary to redeem our public shares upon certain amendments to our amended and restated certificate of incorporation, each as discussed below and subject to the requirements of law, none of the funds held in trust will be released from the trust account TABLE OF CONTENTS until the earlier of (i) the completion of our initial business combination or (ii) the redemption of our public shares if we are unable to complete a business combination within 21 months from the date of this prospectus. The proceeds deposited in the trust account could become subject to the claims of our creditors, if any, which could have priority over the claims of our public stockholders. Anticipated expenses and funding sources Unless and until we complete our initial business combination, no proceeds held in the trust account will be available for our use, other than interest income that may be released to us to pay income or franchise taxes, up to $1.5 million of interest income (net of taxes) to fund our working capital requirements and any amounts necessary to purchase up to 50% of our public shares if we seek stockholder approval of our business combination, and we may pay our expenses only from: such interest; and the net proceeds of this offering not held in the trust account, which we expect will be $500,000 in working capital after the payment of approximately $675,000 in expenses relating to this offering. Conditions to completing our initial business combination There is no limitation on our ability to raise funds privately or through loans in connection with our initial business combination. Because, unlike many blank check companies, we do not have the limitation that a target business have a minimum fair market enterprise value equal to a specified percentage of the net assets held in the trust account at the time of our signing a definitive agreement in connection with our initial business combination, our management will have virtually unrestricted flexibility in identifying and selecting one or more prospective target businesses. We will complete our initial business combination only if we (or any entity that is a successor to us in a business combination) acquire 50% or more of the outstanding voting shares of the target or otherwise acquire a controlling interest in the target sufficient for us not to be required to register as an investment company under the Investment Company Act. For instance, we (or such a successor entity) would not be required to register as an investment company if we (or the successor entity) owned more than 25% of the target's voting securities, had primary control of the target (that is, a greater degree of control than any other person) and used that primary control to engage through the target in a business other than investing, reinvesting, owning, holding or trading in securities, or if we (or the successor entity) acquired our interest in the target through ownership of an active general partnership interest or an active joint venture interest in a closely held target that gave us influence over the target analogous to that exercised by a general partner. Even if we (or any entity that is a successor to us in a business combination) own 50% or more of the voting securities of the target, our stockholders prior to the business combination may TABLE OF CONTENTS collectively own a minority interest in the post business combination company, depending on valuations ascribed to the target and us in the business combination transaction. For example, we could pursue a transaction in which we issue a substantial number of new shares of common stock in exchange for all of the outstanding capital stock of a target. In this case, we would acquire a 100% interest in the target. However, as a result of the issuance of a substantial number of new shares of common stock, our stockholders immediately prior to such transaction could own less than a majority of our outstanding shares of common stock subsequent to such transaction. Permitted purchases of public shares by us prior to the completion of our initial business combination using amounts held in the trust account Unlike many blank check companies, if we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our business combination pursuant to the tender offer rules, prior to the completion of a business combination, our amended and restated certificate of incorporation will permit the release to us from the trust account amounts necessary to purchase up to 50% of the shares sold in this offering (2,500,000 shares, or 2,875,000 shares if the underwriters over-allotment option is exercised in full) at any time commencing after the filing of a preliminary proxy statement for our initial business combination and ending on the date of the stockholder meeting to approve the initial business combination. Purchases will be made only in open market transactions at times when we are not in possession of any material non-public information and may not be made during a restricted period under Regulation M under the Securities Exchange Act of 1934, as amended, or the Exchange Act. It is intended that these purchases will comply with Rule 10b-18 under the Exchange Act, which provides a safe harbor for purchases made under certain conditions, including with respect to the manner of sale (sales are required to be effected through one broker on a single day, subject to certain exceptions), timing (purchases are subject to certain restrictions at the beginning and end of the trading session), pricing (the purchase price may not exceed the highest independent bid or the last independent transaction price, whichever is higher) and volume of purchases (the total volume of Rule 10b-18 purchases effected by us or any affiliated purchasers effected on any single day generally must not exceed 25% of the average daily trading volume of the shares). If the conditions of Rule 10b-18, as in effect at the time we wish to make such purchases, are not satisfied, we may still make such purchases provided such purchases do not violate the anti-manipulation provisions of Section 9(a)(2) of the Exchange Act or Rule 10b-5 promulgated under the Exchange Act. Any purchases we make will be at prices (inclusive of commissions) not to exceed the per-share amount then held in the trust account (initially $10.10 per share or approximately $10.06 per share if the underwriters overallotment option is TABLE OF CONTENTS exercised in full). Any difference between the prices we pay and the per-share amount then held in the trust account will remain in the trust account and will be available for distribution to our remaining public stockholders upon any subsequent redemption of our public shares. We can purchase any or all of the 2,500,000 shares (2,875,000 shares if the underwriters over-allotment option is exercised in full) that we are entitled to purchase. It will be entirely in our discretion as to how many shares are purchased. Purchasing decisions will be made based on various factors, including the then current market price of our common stock and the terms of the proposed business combination. All shares purchased by us will be immediately cancelled. Such open market purchases, if any, would be conducted by us to minimize any disparity between the then current market price of our common stock and the per-share amount held in the trust account. A market price below the per-share trust amount could provide an incentive for purchasers to buy our shares after the filing of our preliminary proxy statement at a discount to the per share amount held in the trust account for the sole purpose of voting against our initial business combination and exercising redemption rights for the full per-share amount held in the trust account. Such trading activity could enable such investors to block a business combination by making it difficult for us to obtain the approval of such business combination by the vote of a majority of our outstanding shares of common stock that are voted. Other permitted purchases of public shares by us or our affiliates In addition to the permitted purchases of public shares by us prior to the completion of the initial business combination using amounts held in the trust account, as described above, if we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our business combination pursuant to the tender offer rules, we may enter into privately negotiated transactions to purchase public shares from stockholders following completion of the initial business combination with proceeds released to us from the trust account immediately following completion of the initial business combination. Our initial stockholders, directors, officers, advisors or their affiliates may also purchase shares in privately negotiated transactions either prior to or following the completion of our initial business combination. However, neither we nor our sponsor, directors or officers have any current commitments, plans or intentions to engage in such transactions or formulated any terms or conditions for any such transactions. If either we or they engage in such transactions, neither we nor they will make any such purchases when we or they are in possession of any material nonpublic information not disclosed to the seller or during a restricted period under Regulation M under the Exchange Act. Although neither we nor they currently anticipate paying any premium purchase price for such public shares, in the event we or they do, the payment of a premium may not be in the best interest of those stockholders not receiving any such additional consideration. In addition, the TABLE OF CONTENTS payment of a premium by us after the completion of our initial business combination may not be in the best interest of the remaining stockholders who do not redeem their shares, because such stockholders will experience a reduction in book value per share compared to the value received by stockholders that have their shares purchased by us at a premium. Nevertheless, because any payment of a premium by us will be made only from proceeds released to us from the trust account following completion of a business combination, no such payments will reduce the per share amounts available in the trust account for redemption in connection with the business combination. Except for the limitations described above on use of trust proceeds released to us prior to completing our initial business combination, there is no limit on the amount of shares that could be acquired by us or our affiliates, or the price we or they may pay, if we hold a stockholder vote. We do not currently anticipate that such purchases, if any, would constitute a tender offer subject to the tender offer rules under the Exchange Act or a going-private transaction subject to the going-private rules under the Exchange Act; however, if we determine at the time of any such purchases that the purchases are subject to such rules, we will comply with such rules. Redemption rights for public stockholders upon completion of our initial business combination We will provide our stockholders with the opportunity to redeem their shares of common stock upon the completion of our initial business combination at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest but net of franchise and income taxes payable and less any interest permitted to be withdrawn by us for working capital purposes, divided by the number of then outstanding public shares, subject to the limitations described herein. The amount in the trust account is initially anticipated to be approximately $10.10 per public share (or approximately $10.06 per public share if the underwriters over-allotment option is exercised in full). There will be no redemption rights upon the completion of our initial business combination with respect to our warrants. Our initial stockholders have agreed to waive their redemption rights with respect to their founder shares and any public shares they may acquire in connection with, or following the completion of, this offering in connection with the completion of a business combination. Manner of conducting redemptions Unlike many blank check companies that hold stockholder votes and conduct proxy solicitations in conjunction with their business combinations and related redemptions of public shares for cash upon completion of such initial business combinations even when a vote is not required by law, if a stockholder vote is not required by law and we do not decide to hold a stockholder vote for business or other legal reasons, we will, pursuant to our amended and restated certificate of incorporation: TABLE OF CONTENTS conduct the redemptions pursuant to Rule 13e-4 and Regulation 14E of the Exchange Act, which regulate issuer tender offers, and file tender offer documents with the SEC prior to completing our initial business combination which contain substantially the same financial and other information about the initial business combination and the redemption rights as is required under Regulation 14A of the Exchange Act, which regulates the solicitation of proxies. In the event we conduct redemptions pursuant to the tender offer rules, our offer to redeem will remain open for at least 20 business days, in accordance with Rule 14e-1(a) under the Exchange Act, and we will not be permitted to complete our initial business combination until the expiration of the tender offer period. In addition, the tender offer will be conditioned on public shareholders not tendering more than a specified number of public shares, which number will be based on the requirement that we may not redeem public shares in an amount that would cause our net tangible assets to be less than $5,000,001 (so that we are not subject to the SEC s penny stock rules) or any greater net tangible asset or cash requirement which may be contained in the agreement relating to our initial business combination. If public stockholders tender more shares than we have offered to purchase, we will withdraw the tender offer and not complete the initial business combination. If, however, stockholder approval of the transaction is required by law, or we decide to obtain stockholder approval for business or other legal reasons, we will: conduct the redemptions in conjunction with a proxy solicitation pursuant to Regulation 14A of the Exchange Act, which regulates the solicitation of proxies, and not pursuant to the tender offer rules, and file proxy materials with the SEC. If we seek stockholder approval, we will complete our initial business combination only if a majority of the outstanding shares of common stock voted are voted in favor of the business combination. In such case, our initial stockholders have agreed to vote their founder shares and any public shares purchased during or after the offering in favor of our initial business combination. Additionally, each public stockholder may elect to redeem their public shares irrespective of whether they vote for or against the proposed transaction. Many blank check companies would not be able to complete a business combination if the holders of the company s public shares voted against a proposed business combination and elected to redeem or convert more than a specified percentage of the shares sold in such company s initial public offering, which percentage threshold has typically been between 19.99% TABLE OF CONTENTS and 39.99%. As a result, many blank check companies have been unable to complete business combinations because the amount of shares voted by their public stockholders electing conversion exceeded the maximum conversion threshold pursuant to which such company could proceed with a business combination. Since we have no specified percentage threshold for redemption in our amended and restated certificate of incorporation, our structure is different in this respect from the structure that has been used by many blank check companies. However, in no event will we redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001 (so that we are not subject to the SEC s penny stock rules) or any greater net tangible asset or cash requirement which may be contained in the agreement relating to our initial business combination. For example, the proposed business combination may require: (i) cash consideration to be paid to the target or members of its management team, (ii) cash to be transferred to the target for working capital or other general corporate purposes or (iii) the allocation of cash to satisfy other conditions in accordance with the terms of the proposed business combination. In the event the aggregate cash consideration we would be required to pay for all shares of common stock that are validly submitted for redemption plus any amount required to satisfy cash conditions pursuant to the terms of the proposed business combination exceed the aggregate amount of cash available to us, we will not complete the business combination and any shares of common stock submitted for redemption will be returned to the holders thereof. Limitation on redemption and voting rights of stockholders holding 15% or more of the shares sold in the offering if we hold stockholder vote Notwithstanding the foregoing redemption rights, if we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our business combination pursuant to the tender offer rules, our amended and restated certificate of incorporation provides that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a group (as defined under Section 13 of the Exchange Act), will be restricted from redeeming its shares with respect to more than an aggregate of 15% of the shares sold in this offering. Moreover, any individual stockholder or group will also be restricted from voting public shares in excess of an aggregate of 15% of the public shares sold in this offering, and all additional such shares in excess of 15% will be deemed ineligible to vote at a meeting of stockholders. We believe the restrictions described above will discourage stockholders from accumulating large blocks of shares, and subsequent attempts by such holders to use their ability to redeem their shares as a means to force us or our management to purchase their shares at a significant premium to the TABLE OF CONTENTS then-current market price or on other undesirable terms. Absent these provisions, a public stockholder holding more than an aggregate of 15% of the shares sold in this offering could threaten to exercise its redemption rights or vote against a business combination if such holder s shares are not purchased by us or our management at a premium to the then-current market price or on other undesirable terms. By limiting our stockholders ability to redeem or vote no more than 15% of the shares sold in this offering, we believe we will limit the ability of a small group of stockholders to unreasonably attempt to block our ability to complete a business combination, particularly in connection with a business combination with a target that requires as a closing condition that we have a minimum net worth or a certain amount of cash. Release of funds in trust account on closing of our initial business combination On the closing of our initial business combination, all amounts held in the trust account will be released to us. We will use these funds to pay amounts due to any public stockholders who exercise their redemption rights as described above under Redemption rights for public stockholders upon completion of our initial business combination and to pay the underwriters their deferred underwriting commissions. Funds released from the trust account to us can be used to pay all or a portion of the purchase price of the business or businesses we acquire in our initial business combination. If our initial business combination is paid for using stock or debt securities, or not all of the funds released from the trust account are used for payment of the purchase price in connection with our business combination, we may apply the cash released to us from the trust account that is not applied to the purchase price for general corporate purposes, including for maintenance or expansion of operations of acquired businesses, the payment of principal or interest due on indebtedness incurred in completing the initial business combination, to fund the purchase of other companies or for working capital. Redemption of public shares and distribution and liquidation if no initial business combination Our sponsor, executive officers and directors have agreed that we will have only 21 months from the date of this prospectus to complete our initial business combination. If we are unable to complete a business combination within such 21 month period, we will: (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest but net of franchise and income taxes payable and less up to $100,000 of such net interest to pay dissolution expenses, divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders rights as stockholders (including the right to receive further liquidation distributions, if any), subject to TABLE OF CONTENTS applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject in each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. There will be no redemption rights or liquidating distributions with respect to our warrants, which will expire worthless if we fail to complete a business combination within the 21 month time period. Our initial stockholders have waived their redemption rights with respect to their founder shares if we fail to complete an initial business combination within 21 months from the date of this prospectus. However, if our initial stockholders should acquire public shares in or after this offering, they will be entitled to redemption rights with respect to such public shares if we fail to complete a business combination within the required time frame. The underwriters have agreed to waive their rights to their deferred underwriting commission held in the trust account in the event we do not complete a business combination within 21 months from the date of this prospectus and, in such event, such amounts will be included with the funds held in the trust account that will be available to fund the redemption of our public shares. Our sponsor, executive officers, directors and director nominees have agreed that they will not propose any amendment to our amended and restated certificate of incorporation that would affect the substance or timing of our obligation to redeem 100% of our public shares if we do not complete a business combination with 21 months from the closing of this offering, unless we provide our public stockholders with the opportunity to redeem their shares of common stock upon approval of any such amendment at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest but net of franchise and income taxes payable and less any interest permitted to be withdrawn by us for working capital purposes, divided by the number of then outstanding public shares. However, we may not redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001 (so that we are not subject to the SEC s penny stock rules). Limited payments to insiders There will be no finder s fees, reimbursements or cash payments made to our sponsor, officers, directors, or our or their affiliates for services rendered to us prior to or in connection with the completion of our initial business combination, other than the following payments, none of which will be made from the proceeds of this offering held in the trust account prior to the completion of our initial business combination (except to the extent paid out of any interest income earned on the trust account that may be released to us to fund working capital requirements): TABLE OF CONTENTS Repayment of up to an aggregate of $378,119 in loans made to us by our sponsor or an affiliate of our sponsor to cover offering-related and organizational expenses; A payment of an aggregate of $15,000 per month to Grassmere Partners, which is owned by Peter C. Brown, our chairman and chief executive officer, for office space, secretarial and administrative services provided to members of our management team; Reimbursement for any out-of-pocket expenses related to identifying, investigating and completing an initial business combination; and Repayment of loans which may be made by our sponsor or an affiliate of our sponsor or certain of our officers and directors to finance transaction costs in connection with an intended initial business combination, the terms of which have not been determined nor have any written agreements been executed with respect thereto. Our independent directors will review on a quarterly basis all payments that were made to our sponsor, officers, directors or our or their affiliates. TABLE OF CONTENTS Risks We are a newly formed company that has conducted no operations and has generated no revenues. Until we complete our initial business combination, we will have no operations and will generate no operating revenues. In making your decision whether to invest in our securities, you should take into account not only the background of our management team, but also the special risks we face as a blank check company. This offering is not being conducted in compliance with Rule 419 promulgated under the Securities Act and has certain terms and conditions that deviate from many blank check offerings. Accordingly, you will not be entitled to protections normally afforded to investors in Rule 419 blank check offerings or to investors in many other blank check companies. For additional information concerning how Rule 419 blank check offerings differ from this offering, please see Proposed Business Comparison of This Offering to Those of Blank Check Companies Subject to Rule 419. For additional information concerning how many blank check offerings differ from this offering, please see Proposed Business Comparison of This Offering to Those of Many Blank Check Companies Not Subject to Rule 419. You should carefully consider these and the other risks set forth in the section entitled Risk Factors within this prospectus.
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+This summary only highlights the more detailed information appearing elsewhere in this prospectus. As this is a summary, it does not contain all of the information that you should consider in making an investment decision. You should read this entire prospectus carefully, including the information under Risk Factors and our financial statements and the related notes included elsewhere in this prospectus, before investing. Unless otherwise stated in this prospectus: references in this prospectus to we, us or our company refer to Azteca Acquisition Corporation; references in this prospectus to our founder shares refer to the shares held by our initial stockholders prior to this offering; references in this prospectus to our private placement refer to the private sale of securities simultaneously with the completion of this offering; references in this prospectus to our sponsor warrants refer to 4,333,333 warrants we are selling in a private placement to Gabriel Brener, our Chairman, CEO and President and the sole member of our sponsor, immediately prior to this offering; references in this prospectus to our public shares refer to our shares of common stock sold as part of the units in this offering (whether they are purchased in this offering or thereafter in the open market) and references to public stockholders refer to the holders of our public shares, including our sponsor and management team to the extent our sponsor and/or members of our management team purchase public shares, provided that our sponsor and each member of management shall be considered a public stockholder only with respect to any public shares they own; references in this prospectus to our management or our management team refer to our officers and directors; references in this prospectus to our sponsor refer to Azteca Acquisition Holdings, LLC, a Delaware limited liability company; references in this prospectus to the DGCL refer to the General Corporation Law of the State of Delaware; references in this prospectus to the certificate of incorporation refer to our certificate of incorporation, as amended; and except as specifically provided otherwise, the information in this prospectus assumes that the underwriters will not exercise their over-allotment option. You should rely only on the information contained in this prospectus. We have not, and the underwriters have not, authorized anyone to provide you with different information. We are not, and the underwriters are not, making an offer of these securities in any jurisdiction where the offer is not permitted. TABLE OF CONTENTS CALCULATION OF REGISTRATION FEE Title of Each Class of Security Being Registered Amount Being Registered Proposed Maximum Offering Price per Security 1 Proposed Maximum Aggregate Offering Price 1 Amount of Registration Fee Units, each consisting of one share of common stock, $.0001 par value, and one warrant 2 11,500,000 Units $ 10.00 $ 115,000,000 $ 13,351.50 Common stock included as part of the units 2 11,500,000 Shares 3 Warrants included as part of the units 2 11,500,000 Warrants 3 Total $ 115,000,000 $ 13,351.50 4 (1) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended. (2) Includes 1,500,000 units, consisting of 1,500,000 shares of common stock and 1,500,000 warrants, which may be issued upon exercise of a 45-day option granted to the underwriters to cover over-allotments, if any. (3) No fee pursuant to Rule 457(g). (4) Previously paid. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine. TABLE OF CONTENTS General We are a newly organized blank check company incorporated as a Delaware corporation and formed for the purpose of acquiring, engaging in a share exchange, share reconstruction and amalgamation, purchasing all or substantially all of the assets of, or engaging in any other similar business combination with one or more businesses or assets, which we refer to throughout this prospectus as our initial business combination. We have not identified any acquisition target and we have not, nor has anyone on our behalf, initiated any discussions with an entity that we will acquire in our initial business combination. We will seek to capitalize on the significant experience of our management team to identify, acquire and operate a business operating primarily in Mexico or the United States, although we may pursue acquisition opportunities in other geographic regions. We believe our management team is positioned to take advantage of Mexican or U.S. investment opportunities focused on the Hispanic market to create value for our stockholders. Our management team is led by Gabriel Brener, who has over 20 years of transaction experience investing in a principal capacity for control and minority stakes across numerous industries and geographies. We are supported by various entities owned by the Brener family (without any binding agreements in this regard) in both the U.S. and Mexico, which we expect will help facilitate sourcing, evaluating, structuring and operating any business we may acquire; however, even a strong infrastructure or network cannot guarantee we will find a suitable acquisition opportunity within 21 months or consummate a successful initial business combination. Members of our management team are not obligated to devote any specific number of hours to our matters but they intend to devote as much of their time as they deem necessary to our affairs until we have completed our initial business combination. We expect this commitment initially to be approximately 20 hours per month in the aggregate; however, the amount of time they will devote in any time period will vary based on whether a target business has been selected for our initial business combination and the stage of the business combination process we are in. Our sponsor is an affiliate of Brener International Group, LLC., a holding company for some of the Brener family interests in the United States. Brothers Pablo and Israel Brener built a meat packaging and processed meats producer in Mexico, capturing 25% of the national market before selling to Grupo Alfa in the early 1980s. The Brener family has since redeployed these proceeds into a number of diverse investments in Mexico and the United States, among other countries. The Brener family actively manages its investment and financial affairs through their holding entities in Mexico City (Grupo Bre) and Los Angeles (Brener International Group, LLC). Pablo Brener s son, Gabriel Brener, has resided in the United States for more than thirty years and heads the operations of Brener International Group LLC, with the two founding Brener brothers overseeing the Mexico City office. Control positions are preferred, but the group also makes minority investments, working alongside financial sponsors and other investment groups with similar investing philosophies. Brener International and Grupo Bre s current and past investments in the United States and Mexico span diverse industries, including, among others, transportation, industrials, manufacturing, food and beverage, financial institutions, hospitality, agribusiness, media (including television and newspapers), sports, real estate and energy, and businesses focused on serving the Hispanic markets in the United States. The Brener family s current equity investments in Mexico include, among others: Impulsora Mexicana de Desarrollos Inmobiliarios, S.A. de C.V., a 6,000 acre land development company located in the city of Queretaro in which the Brener family owns a controlling equity interest; Parque Industrial Queretaro, the second largest industrial park in Mexico, leasing to approximately 100 companies, including six among Fortune 500 companies, in which the Brener family owns a minority interest. TABLE OF CONTENTS The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. SUBJECT TO COMPLETION, JUNE 24, 2011 PRELIMINARY PROSPECTUS Azteca Acquisition Corporation $100,000,000 10,000,000 Units Azteca Acquisition Corporation is a newly organized blank check company incorporated as a Delaware corporation and formed for the purpose of, directly or indirectly, acquiring, engaging in a share exchange, share reconstruction and amalgamation, purchasing all or substantially all of the assets of, or engaging in any other similar business combination with one or more businesses or assets, which we refer to throughout this prospectus as our initial business combination. We are not limited to a particular industry or geographic region for purposes of consummating our initial business combination. Notwithstanding, we intend to focus on operating businesses that have their primary operations located in either Mexico or the United States. While we may pursue an acquisition opportunity in any business industry or sector, we intend to focus on industries or sectors that complement our management team s background, such as the fields of transportation, industrials, manufacturing, food and beverage, financial services, hospitality, agribusiness, media (including television and newspapers), sports, real estate and energy, and businesses focused on serving the Hispanic markets in the United States. This is an initial public offering of our securities. We are offering 10,000,000 units at an offering price of $10.00 and consisting of one share of common stock and one warrant. Each warrant entitles the holder to purchase one share of common stock at a price of $12.00, subject to adjustment as described in this prospectus. The warrants will become exercisable on the later of 30 days after the completion of our initial business combination and 12 months from the closing of this offering, and will expire five years after the completion of our initial business combination or earlier upon redemption or liquidation, as described in this prospectus. We have also granted the underwriters a 45-day option to purchase up to an additional 1,500,000 units to cover over-allotments, if any. We will provide our stockholders with the opportunity to redeem their shares of common stock upon the consummation of our initial business combination at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account described below, including interest (net of taxes payable) divided by the number of then outstanding shares of common stock that were sold as part of the units in this offering, which we refer to as our public shares, subject to the limitations described herein. We intend to consummate our initial business combination and conduct redemptions of shares of common stock for cash without a stockholder vote pursuant to the tender offer rules of the Securities and Exchange Commission, or the SEC. If, however, a stockholder vote is required by law, or we decide to hold a stockholder vote for business or other legal reasons, we will offer to redeem shares in conjunction with a proxy solicitation pursuant to the SEC s proxy rules and not pursuant to the tender offer rules. If we are unable to consummate our initial business combination within 21 months from the closing of this offering, we will distribute the aggregate amount then on deposit in the trust account (less up to $50,000 of the net interest earned thereon to pay dissolution expenses), pro rata to our public stockholders by way of redemption and to cease all operations except for the purposes of winding up of our affairs, as further described herein. Gabriel Brener, the sole member of our sponsor, Azteca Acquisition Holdings, LLC, has committed to purchase an aggregate of 4,333,333 warrants at a price of $0.75 per warrant ($3,250,000 in the aggregate) in a private placement that will occur simultaneously with the consummation of this offering. We refer to these warrants throughout this prospectus as the sponsor warrants. Currently, there is no public market for our units, common stock or warrants. It is anticipated that our units will be quoted on the OTC Bulletin Board quotation system, or the OTCBB, under the symbol [ ] on or promptly after the date of this prospectus. The shares of common stock and warrants comprising the units will begin separate trading on the 52nd day following the date of this prospectus unless Deutsche Bank Securities Inc. informs us of its decision to allow earlier separate trading, subject to our filing a Current Report on Form 8-K with the SEC, containing an audited balance sheet reflecting our receipt of the gross proceeds of this offering and issuing a press release announcing when such separate trading will begin. Once the securities comprising the units begin separate trading, we anticipate the shares of common stock and warrants will be quoted on the OTCBB under the symbols [ ] and [ ], respectively. Investing in our securities involves a high degree of risk. See Risk Factors beginning on page 27 for a discussion of information that should be considered in connection with an investment in our securities. Neither the SEC nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. Price to Public Underwriting Discounts and Commissions 1 Proceeds, Before Expenses, to us Per Unit $ 10.00 $ 0.55 $ 9.45 Total $ 100,000,000 $ 5,500,000 $ 94,500,000 (1) Includes $0.35 per unit, or $3,500,000 in the aggregate ($4,025,000 if the underwriters over-allotment option is exercised in full), payable to the underwriters for deferred underwriting commissions to be placed in the trust account described below. These funds will be released to the underwriters only on completion of our initial business combination, as described in this prospectus. Of the proceeds we receive from this offering and the sale of the sponsor warrants described in this prospectus, $100,000,000 in the aggregate ($10.00 per unit), or $114,700,000 if the underwriters over-allotment option is exercised in full (approximately $9.97 per unit), will be deposited into a United States based trust account at Deutsche Bank Trust Company Americas with Continental Stock Transfer & Trust Company acting as trustee. Except for all of the interest income (net of taxes payable) earned on the trust account that may be released to us to fund our working capital requirements, and any amounts necessary to purchase up to 15% of our public shares if we seek stockholder approval of our business combination, each as described herein, our amended and restated certificate of incorporation provides that none of the funds held in the trust account will be released from the trust account except as described in this prospectus. The underwriters are offering the units on a firm commitment basis. Deutsche Bank Securities Inc., acting as representative of the underwriters, expects to deliver the units to purchasers on or about [ ], 2011. Deutsche Bank Securities , 2011 TABLE OF CONTENTS Hipotecaria Casa Mexicana, S.A. de C.V. SOFOM, E.N.R., a residential mortgage and construction specialty finance company in which the Brener family owns a controlling equity interest; Torre Libertad, a high rise comprising retail, hotel (operated by St. Regis) and luxury condominiums in which the Brener family owns a minority interest; Parques Polanco, a high level residential development in Mexico City in which the Brener family owns a minority interest; Mared n, S.A. de C.V., a chain of fish processing and packaging plants in various coastal regions of Mexico, which is wholly owned by the Brener family; Brenland, a chain of storage and logistics warehouses throughout Mexico in which the Brener family owns a controlling equity interest; Apoyo Integral Inmobiliario, S.A. de C.V., SOFOM, E.N.R., a residential mortgage and construction specialty finance company in which the Brener family owns a controlling equity interest; Industrias Tecnos S.A. de C.V., an ammunitions manufacturer, which is wholly owned by the Brener family; and Compa a Tequilera La Capilla, S.A. de C.V., a tequila production company in which the Brener family owns a controlling equity interest. The Brener family s current investments in the United States include, among others: Silver Eagle Refining, which supplies gasoline and diesel fuel to independent marketers throughout the inter-mountain West, as well as upgraded hydro carbon feedstock supplies used as inputs into a variety of products, in which the Brener family owns a controlling equity interest; Maverik, Inc., a chain of gasoline stations in the Western U.S. with 209 branches, in which the Brener family owns a minority interest; Several investments aimed at leveraging the U.S. Hispanic population s demographic trends, such as: the Houston Dynamo, a Major League Soccer club in Houston in which the Brener family owns a minority interest; Golden Boy Promotions, Inc., a boxing production and management company in which the Brener family owns a minority interest; Impremedia, LLC, the largest Spanish language newspaper company in the United States, publishing, among, others, the number one Hispanic print title in each of the country s top two Hispanic markets: La Opinion (Los Angeles) and El Diario La Prensa (New York), and a growing digital business, in which the Brener family owns a minority interest; and Univision Communications, Inc., the largest media company serving the U.S. Hispanic community, whose assets include, among others, the Univision Network, one of the top five networks in the U.S. regardless of language and the most-watched Spanish-language broadcast television network in the U.S., in which the Brener family owns a minority interest. While we may pursue an acquisition opportunity in any business industry or sector, we intend to focus on industries or sectors that complement our management team s background, such as the fields of transportation, industrials, manufacturing, food and beverage, financial services, hospitality, agribusiness, media (including television and newspapers), sports, real estate and energy, and businesses focused on serving the Hispanic markets in the United States. We believe TABLE OF CONTENTS that our contacts and sources, ranging from owners of private and public companies, private equity funds, investment bankers, attorneys, accountants and business brokers, and former government officials in Mexico, including executives of government-owned entities in the energy and electricity sectors, will allow us to generate attractive acquisition opportunities; however, even a strong network cannot guarantee we will find a suitable acquisition opportunity within 21 months or consummate a successful initial business combination. We anticipate structuring our initial business combination to acquire 100% of the equity interest or assets of the target business or businesses. We may, however, structure our initial business combination to acquire less than 100% of such interests or assets of the target business, but we will only consummate such business combination if we (or any entity that is a successor to us in an initial business combination) will become the majority stockholder of the target or are not required to register as an investment company under the Investment Company Act of 1940, as amended, or the Investment Company Act. We will not consider any transaction that does not meet this criterion. Even though we will own a majority interest in the target, our stockholders prior to the business combination may collectively own a minority interest in the post business combination company, depending on valuations ascribed to the target and us in the business combination transaction. For example, we could pursue a transaction in which we issue a substantial number of new shares in exchange for all of the outstanding capital stock of a target. In this case, we would acquire a 100% controlling interest in the target. However, as a result of the issuance of a substantial number of new shares, our stockholders immediately prior to our initial business combination could own less than a majority of our outstanding shares subsequent to our initial business combination. Our management team will focus on creating stockholder value by leveraging its experience in the management, operation and financing of businesses to improve the efficiency of operations and implement strategies to grow revenue (either organically or through acquisitions). Consistent with this strategy, we have identified the following general criteria and guidelines that we believe are important in evaluating prospective target businesses. We will use these criteria and guidelines in evaluating acquisition opportunities, but we may decide to enter into our initial business combination with a target business that does not meet these criteria and guidelines. Middle-Market Business. We will seek to acquire one or more businesses with an enterprise value of approximately $200,000,000 to $500,000,000, determined in the sole discretion of our officers and directors according to reasonably accepted valuation standards and methodologies. We believe that our focus on businesses in this middle market segment will offer us a substantial number of potential business targets that have strong operations and have shown consistent revenue and earnings growth, or that we believe can benefit from improved operations and achieve and maintain significant revenue and earnings growth. Established Companies with Proven Track Records. We will seek to acquire established companies with sound historical financial performance. We will typically focus on companies with a history of strong operating and financial results and strong fundamentals. We do not intend to acquire start-up companies or companies with recurring negative free cash flow. Companies with, or with the Potential for, Strong Free Cash Flow Generation. We will seek to acquire one or more businesses that already have, or have the potential to generate, strong, stable and increasing free cash flow. We will focus on one or more businesses that have predictable revenue streams. TABLE OF CONTENTS Strong Competitive Industry Position. We intend to focus on targets that have a leading, growing or niche market position in their respective industries. We will analyze the strengths and weaknesses of target businesses relative to their competitors. We will seek to acquire a business that demonstrates advantages when compared to their competitors, which may help to protect their market position and profitability. Experienced Management Team. We will seek to acquire one or more businesses with a strong, experienced management team that provides a platform for us to further develop the acquired business management capabilities. We will seek to partner with a potential target s management team and expect that the operating and financial abilities of our executive team will complement their own capabilities. Business with Revenue and Earnings Growth or Potential for Revenue and Earnings Growth. We will seek to acquire one or more businesses that have achieved or have the potential for significant revenue and earnings growth through a combination of brand and new product development, increased production capacity, expense reduction, synergistic follow-on acquisitions and increased operating leverage. Diversified Customer and Supplier Base. We will seek to acquire businesses that have a diversified customer and supplier base. We believe that companies with a diversified customer and supplier base are generally better able to endure economic downturns, industry consolidation, changing business preferences and other factors that may negatively impact their customers, suppliers and competitors. Benefit from Being a Public Company. We intend to acquire a company that will benefit from being publicly traded and can effectively utilize the broader access to capital and public profile that are associated with being a publicly traded company. Companies with the Ability to Participate in the Growth of Mexico. The Mexican economy is expected to grow at 3 5% over the next several years. The unemployment rate in 2010 was an estimated 5.4% and is expected to edge downward to below 4.0% by 2012, according to the IMF World Economic Outlook Database. Based on information from Business Monitor International, economic stability has been further buttressed by the Mexican manufacturing sector, with exports of manufactured goods close to record highs at the start of 2011. Recent changes in federal law have eased restrictions on foreign company participation in certain industries, such as the energy sector, as part of government efforts to offset the nation s declining oil production. Though not exclusively, we will seek businesses that are able to benefit from these conditions in Mexico. These criteria are not intended to be exhaustive. Any evaluation relating to the merits of a particular initial business combination may be based, to the extent relevant, on these general guidelines as well as other considerations, factors and criteria that our management may deem relevant. In the event that we decide to enter into our initial business combination with a target business that does not meet the above criteria and guidelines, we will disclose that the target business does not meet the above criteria in our stockholder communications related to our initial business combination, which, as discussed in this prospectus, would be in the form of tender offer documents or proxy solicitation materials that we would file with the SEC. Over the course of their careers, the members of our management team have developed a broad international network of contacts and corporate relationships that we believe will serve as a useful source of investment opportunities. This network has been developed through our management team s: experience in sourcing, acquiring, operating, financing and selling businesses; reputation for integrity and fair dealing with sellers, capital providers and target management teams; TABLE OF CONTENTS significant experience as advisors on transactions; experience in executing transactions under varying economic and financial market conditions; and experience in operating in developing environments around the world. This network has provided our management team with a flow of referrals that have resulted in numerous transactions. We believe that the network of contacts and relationships of our management team will provide us with an important source of investment opportunities. In addition, we anticipate that target business candidates will be brought to our attention from various unaffiliated sources, including investment market participants, private equity groups, investment banking firms, consultants, accounting firms and large business enterprises. Certain members of our management team have spent their entire careers working with Mexico-based businesses and have developed a network of professional services contacts and business relationships in that region; however, even a strong network cannot guarantee we will find a suitable acquisition opportunity within 21 months or consummate a successful initial business combination. In evaluating a prospective target business, we expect to conduct a thorough due diligence review which will encompass, among other things, meetings with incumbent management and employees, document reviews, inspection of facilities, as well as a review of financial and other information which will be made available to us. We are not prohibited from pursuing an initial business combination with a company that is affiliated with our sponsor, officers or directors. In the event we seek to complete our initial business combination with a company that is affiliated with our sponsor, officers or directors, we, or a committee of independent directors, would obtain an opinion from an independent investment banking firm which is a member of the Financial Industry Regulatory Authority, or FINRA, that our initial business combination is fair to our stockholders from a financial point of view. Additionally, Gabriel Brener, our Chairman, CEO and President, will indirectly own common stock through our sponsor and directly own warrants, and, accordingly, may have a conflict of interest in determining whether a particular target business is an appropriate business with which to effectuate our initial business combination. Further, our officers and directors may have a conflict of interest with respect to evaluating a particular business combination if the retention or resignation of any such officers and directors was included by a target business as a condition to any agreement with respect to our initial business combination. Each of our officers and directors (other than our independent directors) has agreed, pursuant to a written agreement with us, that until the earliest of our initial business combination, our liquidation and such time as he ceases to be an officer or director, to present to us for our consideration, prior to presentation to any other entity, any suitable business transaction opportunities, subject to any pre-existing fiduciary or contractual obligations he might have. Gabriel Brener, our Chairman, CEO and President, and Pablo Brener, our director and the father of Gabriel Brener, have such pre-existing fiduciary duties not only to Brener International Group, LLC and Grupo Bre, but to each of their respective numerous subsidiaries and affiliates. As more fully discussed in Management Conflicts of Interest, if any of such officers or directors becomes aware of a business combination opportunity that falls within the line of business of any entity to which he has pre-existing fiduciary or contractual obligations, he may be required to present such business combination opportunity to such entity prior to presenting such business combination opportunity to us. In addition, our officers have agreed not to participate in the formation of, or become an officer or director of, any other blank check company until we have entered into a definitive agreement regarding our initial business combination or we have failed to complete our initial business combination within 21 months from the closing of this offering. TABLE OF CONTENTS Prior to the date of this prospectus, we will file a Registration Statement on Form 8-A with the SEC to voluntarily register our securities under Section 12 of the Securities Exchange Act of 1934, as amended, or the Exchange Act. As a result, we will be subject to the rules and regulations promulgated under the Exchange Act. We have no current intention of filing a Form 15 to suspend our reporting or other obligations under the Exchange Act prior or subsequent to the consummation of our business transaction. Our executive offices are located at 421 N. Beverly Drive, Suite 300, Beverly Hills, CA 90210, and our telephone number is (310) 553-7009. TABLE OF CONTENTS The Offering In making your decision on whether to invest in our securities, you should take into account not only the backgrounds of the members of our management team, but also the special risks we face as a blank check company and the fact that this offering is not being conducted in compliance with Rule 419 promulgated under the Securities Act of 1933, as amended, or the Securities Act. You will not be entitled to protections normally afforded to investors in Rule 419 blank check offerings. You should carefully consider these and the other risks set forth in the section below entitled Risk Factors beginning on page 27 of this prospectus. Securities offered 10,000,000 units, at $10.00 per unit, each unit consisting of: one share of common stock; and one warrant. Proposed OTCBB symbols Units: Common stock: Warrants: Trading commencement and separation of common stock and warrants The units will begin trading on or promptly after the date of this prospectus. The shares of common stock and warrants comprising the units will begin separate trading on the 52nd day following the date of this prospectus unless Deutsche Bank Securities Inc. informs us of its decision to allow earlier separate trading, subject to our having filed the Current Report on Form 8-K described below and having issued a press release announcing when such separate trading will begin. Separate trading of the common stock and warrants is prohibited until we have filed a Current Report on Form 8-K In no event will the common stock and warrants be traded separately until we have filed a Current Report on Form 8-K with the SEC containing an audited balance sheet reflecting our receipt of the gross proceeds at the closing of this offering. We will file the Current Report on Form 8-K promptly after the closing of this offering, which is anticipated to take place three business days from the date of this prospectus. If the underwriters over-allotment option is exercised following the initial filing of such Current Report on Form 8-K, a second or amended Current Report on Form 8-K will be filed to provide updated financial information to reflect the exercise of the underwriters over-allotment option. Units: Number outstanding before this offering 0 Number outstanding after this offering 10,000,000 TABLE OF CONTENTS Common stock: Number outstanding before this offering 2,875,000 1 2 Number outstanding after this offering 12,500,000 2 (1) This number includes an aggregate of 375,000 founder shares held by our initial stockholders subject to forfeiture to the extent that the over-allotment option is not exercised by the underwriters. (2) This number includes 735,294 founder shares (or 845,588 founder shares if the underwriters over-allotment option is exercised in full) subject to forfeiture by our initial stockholders as follows: (1) 378,788 founder shares (or 435,606 founder shares if the underwriters over-allotment option is exercised in full) will be subject to forfeiture in the event the last sales price of our shares does not equal or exceed $15.00 per share (as adjusted for share splits, share dividends, reorganizations, recapitalizations and the like) for any 20 trading days within at least one 30-trading day period within 36 months following the closing of our initial business combination and (2) 356,506 founder shares (or 409,982 founder shares if the underwriters over-allotment option is exercised in full) will be subject to forfeiture in the event the last sales price of our shares does not equal or exceed $12.50 per share (as adjusted for share splits, share dividends, reorganizations, recapitalizations and the like) for any 20 trading days within at least one 30-trading day period within 36 months following the closing of our initial business combination. Warrants: Number of sponsor warrants to be sold simultaneously with closing of this offering 4,333,333 Number of warrants to be outstanding after this offering and the private placement 14,333,333 Exercisability Each warrant offered in this offering is exercisable to purchase one share of common stock. Exercise price $12.00 per share, subject to adjustments as described herein. Exercise period The warrants will become exercisable on the later of: 30 days after the completion of our initial business combination, and 12 months from the closing of this offering; provided in each case that we have an effective registration statement under the Securities Act covering the common stock issuable upon exercise of the warrants and a current prospectus relating to them is available, and such shares are registered, qualified or exempt from registration under the securities laws of the state of residence of the holder. Notwithstanding the foregoing, if a registration statement covering the common stock issuable upon exercise of the public warrants has not been declared effective within 60 days following the closing of our initial business TABLE OF CONTENTS combination, warrantholders may, until such time as there is an effective registration statement and during any period when we shall have failed to maintain an effective registration statement, exercise warrants on a cashless basis pursuant to the exemption provided by Section 3(a)(9) of the Securities Act of 1933, as amended, or the Securities Act. We are not registering the common stock issuable upon exercise of the warrants at this time. However, we have agreed to use our best efforts to file and have an effective registration statement covering the common stock issuable upon exercise of the warrants, to maintain a current prospectus relating to those shares of common stock until the warrants expire or are redeemed and to register the common stock issuable upon exercise of the warrants under state blue sky laws, to the extent an exemption is not available. The warrants will expire at 5:00 p.m., New York time, five years after the completion of our initial business combination or earlier upon redemption or liquidation. On the exercise of any warrant, the warrant exercise price will be paid directly to us and not placed in the trust account. Redemption of warrants Once the warrants become exercisable, we may redeem the outstanding warrants (except as described below with respect to the sponsor warrants): in whole and not in part; at a price of $0.01 per warrant; upon a minimum of 30 days prior written notice of redemption; and if, and only if, the last sale price of our common stock equals or exceeds $18.00 per share for any 20 trading days within a 30 trading day period ending on the third business day before we send the notice of redemption to the warrant holders. We will not redeem the warrants unless an effective registration statement covering the common stock issuable upon exercise of the warrants is current and available throughout the 30-day redemption period. If we call the warrants for redemption as described above, our management will have the option to require all holders that wish to exercise warrants to do so on a cashless basis. In such event, each holder would pay the exercise price by surrendering the warrants for that number of shares of common stock equal to the quotient obtained by dividing (x) the product of the number of shares of common stock underlying the warrants, multiplied by the difference between the exercise price of the warrants and the fair market TABLE OF CONTENTS value (defined below) by (y) the fair market value. The fair market value shall mean the average reported last sale price of the common stock for the 10 trading days ending on the third trading day prior to the date on which the notice of redemption is sent to the holders of warrants. Please see the section entitled Risk Factors We are not registering the common stock issuable upon exercise of the warrants under the Securities Act or state securities laws at this time, and such registration may not be in place when an investor desires to exercise warrants, thus precluding such investor from being able to exercise its warrants and causing such warrants to expire worthless for additional information. None of the sponsor warrants will be redeemable by us so long as they are held by members of our sponsor or their permitted transferees. Founder shares In April 2011, our sponsor purchased an aggregate of 2,875,000 founder shares for an aggregate purchase price of $25,000, or approximately $0.0087 per share. On June 8, 2011, the sponsor transferred 50,000 shares to each of John Engelman and Alfredo Elias Ayub, our two independent directors. The founder shares held by these initial stockholders include an aggregate of 375,000 shares subject to forfeiture to the extent that the underwriters over-allotment option is not exercised in full, so that our initial stockholders will collectively own 20.0% of our issued and outstanding shares after this offering (assuming our initial stockholders do not purchase any units in this offering and is not required to forfeit the founder earn out shares described in the next sentence below). In addition, 735,294 founder shares (or 845,588 founder shares if the underwriters over-allotment option is exercised in full) will be subject to forfeiture by our sponsor as follows: (1) 378,788 founder shares (or 435,606 founder shares if the underwriters over-allotment option is exercised in full) will be subject to forfeiture in the event the last sales price of our shares does not equal or exceed $15.00 per share (as adjusted for share splits, share dividends, reorganizations, recapitalizations and the like) for any 20 trading days within at least one 30-trading day period within 36 months following the closing of our initial business combination and (2) 356,506 founder shares (or 409,982 founder shares if the underwriter s over-allotment option is exercised in full) will be subject to forfeiture in the event the last sales price of our shares does not equal or exceed $12.50 per share (as adjusted for share splits, share dividends, reorganizations, recapitalizations and the like) for any 20 trading days within at least one 30-trading day period within 36 months following the closing of our initial business combination. TABLE OF CONTENTS The founder shares are identical to the shares of common stock included in the units being sold in this offering, except that: the founder shares are subject to certain transfer restrictions, as described in more detail below, and our initial stockholders have agreed (1) to waive their redemption rights with respect to their founder shares and public shares in connection with the consummation of our initial business combination (our officers and directors have also agreed to waive their redemption rights with respect to any public shares in connection with the consummation of our initial business combination) and (2) to waive their rights to liquidating distributions with respect to its founder shares if we fail to consummate our initial business combination within 21 months from the closing of this offering (although they will be entitled to receive liquidating distributions with respect to any public shares they hold if we fail to consummate our initial business combination within such time period). If we submit our initial business combination to our public stockholders for a vote, our initial stockholders have agreed to vote their founder shares and any public shares purchased during or after the offering in favor of our initial business combination, and our officers and directors have also agreed to vote any public shares purchased during or after this offering in favor of our initial business combination. Transfer restrictions on founder shares Our initial stockholders have agreed not to transfer, assign or sell any of its founder shares (except to permitted transferees, as described in this prospectus) until the earlier of (1) one year after the completion of our initial business combination and (2) the date on which we consummate a liquidation, share exchange, share reconstruction and amalgamation, or other similar transaction after our initial business combination that results in all of our stockholders having the right to exchange their common stock for cash, securities or other property (except as described below under Principal Stockholders Transfers of Founders Shares and Sponsor Warrants ) (the Lock-Up Period ). Notwithstanding the foregoing, if the Company s share price reaches or exceeds $11.50 for any 20 trading days within any 30-trading day period during the Lock-Up Period, 50% of the founder shares will be released from the lock-up and, if the Company s share price reaches or exceeds $15.00 for any 20 trading days within any TABLE OF CONTENTS 30-trading day period during the Lock Up Period, the remaining 50% of the founder shares will be released from the lock-up. In addition, notwithstanding the ability to transfer, assign or sell founder shares to permitted transferees during the lock up periods described above, our initial stockholders have agreed not to transfer, assign or sell the founder earn out shares (whether to a permitted transferee or otherwise) before the applicable forfeiture condition lapses. Sponsor warrants Gabriel Brener, the sole member of our sponsor, has committed to purchase an aggregate of 4,333,333 sponsor warrants, each exercisable to purchase one share of common stock at $12.00 per share, at a price of $0.75 per warrant ($3,250,000 in the aggregate) in a private placement that will occur simultaneously with the closing of this offering. The purchase price of the sponsor warrants will be added to the proceeds from this offering to be held in the trust account. If we do not complete our initial business combination within 21 months from the closing of this offering, the proceeds of the sale of the sponsor warrants will be used to fund the redemption of our public shares, and the sponsor warrants will expire worthless. Transfer restrictions on sponsor warrants The sponsor warrants (including the shares of common stock issuable upon exercise of the sponsor warrants) will not be transferable, assignable or salable until 30 days after the completion of our initial business combination, and they will be non-redeemable so long as they are held by members of our sponsor or their permitted transferees. If the sponsor warrants are held by holders other than members of our sponsor or their permitted transferees, the sponsor warrants will be redeemable by us and exercisable by the holders on the same basis as the warrants included in the units being sold in this offering. Proceeds to be held in trust account $100,000,000, or $10.00 per unit of the proceeds of this offering and the proceeds of the private placement of the sponsor warrants, or $114,700,000, or approximately $9.97 per unit, if the underwriter s over-allotment option is exercised in full, will be placed in a segregated trust account in the United States with Continental Stock Transfer & Trust Company acting as trustee. These proceeds include $3,500,000 (or $4,025,000 if the underwriter s over-allotment option is exercised in full) in deferred underwriting discounts and commissions. Except for the interest income (net of taxes payable) that may be released to us to pay any taxes and to fund our working capital requirements, and any amounts necessary to purchase up to 15% of our public shares if we seek stockholder approval of our business TABLE OF CONTENTS combination, as discussed below, none of the funds held in the trust account will be released from the trust account until the earlier of: (1) the consummation of our initial business combination within 21 months from the closing of this offering and (2) a redemption to public stockholders prior to any voluntary winding-up in the event we do not consummate our initial business combination within this 21-month period. The proceeds deposited in the trust account could become subject to the claims of our creditors, if any, which would have priority over the claims of our public stockholders. Anticipated expenses and funding sources Unless and until we complete our initial business combination, no proceeds held in the trust account, other than the interest earned on the trust account (net of taxes payable), and any amounts necessary to purchase up to 15% of our public shares if we seek stockholder approval of our business combination, will be available for our use. Based upon the current interest rate environment, we expect the trust account to generate approximately $420,000 of interest (net of taxes payable) over the next 21 months. We may pay our expenses only from: interest earned on the funds in the trust account; and the net proceeds of this offering not held in the trust account, which will be $625,000 after the payment of approximately $625,000 in expenses relating to this offering. Conditions to consummating our initial business combination There is no limitation on our ability to raise funds privately or through loans in connection with our initial business combination. Unlike many blank check companies, a target business is not required to have a minimum fair market value equal to a specified percentage of the net assets held in the trust account at the time of our signing a definitive agreement. As a result, and subject to any pre-existing fiduciary duties they may have, our management will have virtually unrestricted flexibility in identifying and selecting one or more prospective target businesses consistent with our criteria as set forth on pages 4 and 5 and elsewhere herein. We will consummate our initial business combination only if we (or any entity which is a successor to us in an initial business combination) will become the majority stockholder of the target or are not required to register as an investment company under the Investment Company Act. Even though we will own a majority interest in the target, our stockholders prior to the business combination may collectively own a minority interest in the post business TABLE OF CONTENTS combination company, depending on valuations ascribed to the target and us in the business combination transaction. For example, we could pursue a transaction in which we issue a substantial number of new shares in exchange for all of the outstanding capital stock of a target. However, as a result of the issuance of a substantial number of new shares, our stockholders immediately prior to our initial business combination could own less than a majority of our outstanding shares subsequent to our initial business combination. Permitted purchases of public shares by us prior to the consummation of our initial business combination using amounts held in the trust account Unlike many blank check companies, if we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our business combination pursuant to the tender offer rules, prior to the consummation of our initial business combination, the investment management trust agreement to be entered into between us and Continental Stock Transfer & Trust Company will permit the release to us from the trust account amounts necessary to purchase up to 15% of the shares sold in this offering (1,500,000 shares, or 1,725,000 shares if the underwriters over-allotment option is exercised in full) at any time commencing after the filing of a preliminary proxy statement for our initial business combination and ending on the record date for the vote to approve our initial business combination. Purchases will be made only in open market transactions at times when we are not in possession of any material non-public information and may not be made during a restricted period under Regulation M under the Exchange Act. It is intended that purchases will comply with Rule 10b-18 under the Exchange Act, which provides a safe harbor for purchases made under certain conditions, including with respect to timing, pricing and volume of purchases. If the conditions of Rule 10b-18, as in effect at the time we wish to make such purchases, are not satisfied, it is likely that we will not make such purchases. Any purchases we make will be at prices (inclusive of commissions) not to exceed the per-share amount then held in the trust account ($10.00 per share or approximately $9.97 per share if the underwriters over-allotment option is exercised in full). We may purchase any or all of the 1,500,000 shares (or 1,725,000 shares if the underwriters over-allotment option is exercised in full) we are entitled to purchase, and it will be entirely in our discretion as to how many shares are purchased. Purchasing decisions will be made based on various factors, including the then current market price of our common stock and the terms of the proposed business combination. All shares purchased by us will be immediately cancelled. Such open market purchases, if TABLE OF CONTENTS any, would be conducted by us to minimize any disparity between the then current market price of our common stock and the per-share amount held in the trust account. A market price below the per-share trust amount could provide an incentive for purchasers to buy our shares after the filing of our preliminary proxy statement at a discount to the per share amount held in the trust account for the sole purpose of voting against our initial business combination and exercising redemption rights for the full per-share amount held in the trust account. Such trading activity could enable such investors to block our initial business combination by making it difficult for us to obtain the approval of such business combination by the vote of a majority of our outstanding common stock that are voted. Please see the section entitled Risk Factors Our purchase of common stock in the open market may support the market price of the common stock and/or warrants during the buyback period and, accordingly, the termination of the support provided by such purchases may materially adversely affect the market price of the units, common stock and/or warrants for additional information. Other permitted purchases of public shares by us or our affiliates In addition to the permitted purchases of public shares by us prior to the consummation of the initial business combination using amounts held in the trust account, as described above, if we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our business combination pursuant to the tender offer rules, we may enter into privately negotiated transactions to purchase public shares from stockholders following consummation of the initial business combination with proceeds released to us from the trust account immediately following consummation of the initial business combination. Our sponsor, directors, officers, advisors or their affiliates also may purchase shares in privately negotiated transactions either prior to or following the consummation of our initial business combination. Although neither we nor they currently anticipate paying any premium purchase price (over the trust value) for such public shares, in the event we or they do, the payment of a premium may not be in the best interest of those stockholders not receiving any such premium. In addition, the payment of a premium by us after the consummation of our initial business combination may not be in the best interest of the remaining stockholders who do not redeem their shares, because such stockholders may experience a reduction in book value per share compared to the value received by stockholders that have their shares purchased by us at a premium. Nevertheless, because any payment of a premium by us will be made only from proceeds TABLE OF CONTENTS released to us from the trust account following completion of a business combination, no such payments will reduce the per share amounts available in the trust account for redemption in connection with the business combination. Except for the limitations described above on use of trust proceeds released to us prior to consummating our initial business combination, there is no limit on the amount of shares that could be acquired by us or our affiliates, or the price we or they may pay, if we hold a stockholder vote. Please see the section entitled Risk Factors If we seek stockholder approval of our initial business combination, we, our sponsor, directors, officers, advisors and their affiliates may elect to purchase shares from stockholders, in which case we or they may influence a vote in favor of a proposed business combination that you do not support for additional information. Redemption rights for public stockholders upon consummation of our initial business combination We will provide our stockholders with the opportunity to redeem their shares of common stock upon the consummation of our initial business combination at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account (net of taxes payable), divided by the number of then outstanding public shares, subject to the limitations described herein. The amount in the trust account is initially anticipated to be $10.00 per share (or approximately $9.97 per public share if the underwriters over-allotment option is exercised in full). There will be no redemption rights upon the consummation of our initial business combination with respect to our warrants. Our initial stockholders have agreed to waive their redemption rights with respect to the founder shares and any public shares they may hold in connection with the consummation of our initial business combination. In addition, our officers and directors have also agreed to waive their redemption rights with respect to any public shares in connection with the consummation of our initial business combination. Manner of conducting redemptions Unlike many blank check companies that hold stockholder votes and conduct proxy solicitations in conjunction with their business combinations and related redemptions of public shares for cash upon consummation of such initial business combinations even when a vote is not required by law, if a stockholder vote is not required by law and we do not decide to hold a stockholder vote for business or other legal reasons, we will, pursuant to our amended and restated certificate of incorporation: TABLE OF CONTENTS offer to redeem our public shares pursuant to Rule 13e-4 and Regulation 14E of the Exchange Act, which regulate issuer tender offers, and subject to any limitations (including but not limited to cash requirements) agreed to in connection with the negotiation of terms of the proposed business combination, and file tender offer documents with the SEC prior to consummating our initial business combination which contain substantially the same financial and other information about the initial business combination and the redemption rights as is required under Regulation 14A of the Exchange Act, which regulates the solicitation of proxies. In the event we conduct redemptions pursuant to the tender offer rules, our offer to redeem shall remain open for at least 20 business days, in accordance with Rule 14e-1(a) under the Exchange Act, and we will not be permitted to consummate our initial business combination until the expiration of the tender offer period. If, however, stockholder approval of the transaction is required by law, or we decide to obtain stockholder approval for business or other legal reasons, we will: conduct the redemptions in conjunction with a proxy solicitation pursuant to Regulation 14A of the Exchange Act, which regulates the solicitation of proxies, and not pursuant to the tender offer rules, and file proxy materials with the SEC. If we seek stockholder approval, we will consummate our initial business combination only if a majority of the outstanding common stock voted is voted in favor of the business combination. In such case, our initial stockholders have agreed to vote their respective founder shares and any public shares purchased during or after the offering in favor of our initial business combination and our officers and directors have also agreed to vote any public shares purchased during or after the offering in favor of our initial business combination. Each public stockholder may elect to redeem their public shares irrespective of whether they vote for or against the proposed transaction. Many blank check companies would not be able to consummate an initial business combination if the holders of the company s public shares voted against a proposed business combination and elected to redeem or convert more than a specified percentage of the shares sold in such company s initial public offering, TABLE OF CONTENTS which percentage threshold has typically been between 19.99% and 39.99%. As a result, many blank check companies have been unable to complete business combinations because the amount of shares voted by their public stockholders electing conversion exceeded the maximum conversion threshold pursuant to which such company could proceed with a business combination. By contrast, we have no specified redemption threshold percentage contained in our amended and restated certificate of incorporation. However, in no event will we redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001 and, in some cases, the terms of the proposed business combination will require our net tangible assets to be greater than $5,000,001. For example, the proposed business combination may require: (1) cash consideration to be paid to the target or members of its management team, (2) cash to be transferred to the target for working capital or other general corporate purposes or (3) the allocation of cash to satisfy other conditions in accordance with the terms of the proposed business combination. In the event the aggregate cash consideration we would be required to pay for all shares that are validly tendered plus any amount required to satisfy cash conditions pursuant to the terms of the proposed business combination exceed the aggregate amount of cash available to us, we will not consummate the business combination and any shares tendered pursuant to the tender offer will be returned to the holders thereof following the expiration of the tender offer. Limitation on redemption rights and voting rights of stockholders holding 15% or more of the shares sold in the offering if we hold a stockholder vote Notwithstanding the foregoing redemption rights, if we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our business combination pursuant to the tender offer rules, our certificate of incorporation provides that a public stockholder, individually or together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a group (as defined under Section 13 of the Exchange Act), will be restricted from redeeming its shares with respect to more than an aggregate of 15% of the shares sold in this offering. Moreover, any individual stockholder or group will also be restricted from voting public shares in excess of an aggregate of 15% of the public shares sold in this offering, and all additional such shares in excess of 15%, which we refer to as the Excess Shares , will not be redeemed for cash. TABLE OF CONTENTS We believe these restrictions will discourage stockholders from accumulating large blocks of shares, and subsequent attempts by such holders to use their ability to redeem or vote their shares as a means to force us or our management to purchase their shares at a significant premium to the then-current market price or on other undesirable terms. Absent these provisions, a public stockholder holding more than an aggregate of 15% of the shares sold in this offering could threaten to exercise its redemption rights or vote against a business combination if such holder s shares are not purchased by us or our management at a premium to the then-current market price or on other undesirable terms. By limiting our stockholders ability to redeem or vote no more than 15% of the shares sold in this offering, we believe we will limit the ability of a small group of stockholders to unreasonably attempt to block our ability to consummate our initial business combination, particularly in connection with a business combination with a target that requires as a closing condition that we have a minimum net worth or a certain amount of cash. Please see the section entitled Risk Factors Limitation on redemption rights upon consummation of our initial business combination and voting rights if we seek stockholder approval for additional information. Redemption rights in connection with proposed amendments to our certificate of incorporation Many blank check companies have a provision in their charter which prohibits the amendment of certain charter provisions. Our amended and restated certificate of incorporation provides that, prior to a business combination, changes in certain rights attaching to shares, including those rights related to pre-business combination activity, may be amended if approved by 65% of our stockholders. If we seek to amend any provisions of our amended and restated certificate of incorporation relating to rights attaching to shares, including such rights related to pre-business combination activity, we will provide dissenting public stockholders with the opportunity to redeem their public shares in connection with any such vote on any proposed amendments to our amended and restated certificate of incorporation. Our initial stockholders and our officers and directors have agreed to waive any redemption rights with respect to any founder shares and any public shares they may hold in connection with any vote to amend our amended and restated certificate of incorporation. TABLE OF CONTENTS Release of funds in trust account on closing of our initial business combination On the closing of our initial business combination, all amounts held in the trust account will be released to us. We will use these funds to pay amounts due to any public stockholders who exercise their redemption rights as described above under Redemption rights for public stockholders upon consummation of our initial business combination and to pay the underwriters their deferred underwriting commissions. Funds released from the trust account to us can be used to pay all or a portion of the purchase price of the business or businesses we acquire in our initial business combination. If our initial business combination is paid for using shares or debt securities, or not all of the funds released from the trust account are used for payment of the purchase price in connection with our business combination, we may apply the cash released to us from the trust account that is not applied to the purchase price for general corporate purposes, including for maintenance or expansion of operations of acquired businesses, the payment of principal or interest due on indebtedness incurred in consummating the initial business combination, to fund the purchase of other companies or for working capital. Redemption of public shares and distribution and liquidation if no initial business combination Our sponsor, officers and directors have agreed that we will have only 21 months from the closing of this offering to consummate our initial business combination. If we are unable to consummate our initial business combination within 21 months from the closing of this offering, we will, as promptly as possible but not more than five business days thereafter, distribute the aggregate amount then on deposit in the trust account (less up to $50,000 of the net interest earned thereon to pay dissolution expenses), pro rata to our public stockholders by way of redemption, cease all operations except for the purposes of winding up of our affairs, as further described herein and as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. There will be no redemption rights or liquidating distributions with respect to our warrants, which will expire worthless if we fail to consummate our initial business combination within the applicable time period. We and our directors and officers have agreed not to propose any amendment to our certificate of incorporation that would affect the substance and TABLE OF CONTENTS timing of our obligation to redeem our public shares if we are unable to consummate our initial business combination within 21 months from the closing of this offering. Please see the section entitled Risk Factors If we are unable to complete our initial business combination within the prescribed time frame, our public stockholders may receive less than $10.00 per share on our redemption and our warrants will expire worthless for additional information. We expect that in the event of a voluntary solvent liquidation of the company, after payment of the liquidation costs and any sums then due to creditors, that we would distribute our assets to our public stockholders on a pari passu basis. Our initial stockholders have agreed to waive their redemption rights with respect to their respective founder shares if we fail to consummate our initial business combination within 21 months from the closing of this offering. However, if any of our sponsor, officers, directors or affiliates acquire public shares in or after this offering, they will be entitled to receive liquidating distributions with respect to such public shares if we fail to consummate our initial business combination within the required time period. The underwriters have agreed to waive their rights to their deferred underwriting commission held in the trust account in the event we do not consummate our initial business combination within 21 months from the closing of this offering and the amount of the deferred underwriting commission will be included with the funds held in the trust account that will be available to fund the redemption of our public shares. We may not have funds sufficient to pay or provide for all creditors claims. Although we are required to have all third parties (including any vendors or other entities we engage after this offering) and any prospective target businesses enter into agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the trust account, there is no guarantee that they will execute such agreements. There is also no guarantee that the third parties would not challenge the enforceability of these waivers and bring claims against the trust account for monies owed them. Gabriel Brener, our Chairman, CEO and President, has agreed that he will be liable to ensure that the proceeds in the trust account are not reduced by the claims of target businesses or claims of vendors or other entities that are owed money by us for services rendered or contracted for or products sold to us, but he may not be able to satisfy his indemnification obligations if he is required to do so. Notwithstanding the foregoing, he will have no liability under this indemnity (1) as to any claimed amounts owed to a target business or vendor or other entity who has executed an agreement with us waiving TABLE OF CONTENTS any right, title, interest or claim of any kind they may have in or to any monies held in the trust account, or (2) as to any claims under our indemnity with the underwriters of this offering against certain liabilities, including liabilities under the Securities Act. The holders of the founder shares will not participate in any redemption distribution with respect to their founders shares. If we are unable to conclude our initial business combination and we expend all of the net proceeds of this offering not deposited in the trust account, without taking into account any interest earned on the trust account, we expect that the initial per-share redemption price will be approximately $10.00 (or approximately $9.97 per share if the underwriters over-allotment option is exercised in full). The proceeds deposited in the trust account could, however, become subject to claims of our creditors that are in preference to the claims of our stockholders. In addition, if we are forced to file a bankruptcy case or an involuntary bankruptcy case is filed against us that is not dismissed, the proceeds held in the trust account could be subject to applicable bankruptcy law, and may be included in our bankruptcy estate and subject to the claims of third parties with priority over the claims of our stockholders. Therefore, the actual per-share redemption price may be less than approximately $10.00 (or approximately $9.97 per share if the underwriters over-allotment option is exercised in full). We will pay the costs of any subsequent liquidation from our remaining assets outside of the trust account. If such funds are insufficient, our sponsor has agreed to pay the funds necessary to complete such liquidation (currently anticipated to be no more than approximately $50,000) and have agreed not to seek repayment for such expenses. Indemnity Gabriel Brener, our Chairman, CEO and President, has agreed he will be liable to us if and to the extent any claims by a vendor for services rendered or products sold to us, or a prospective target business with which we have discussed entering into a transaction agreement, reduce the amounts in the trust account to below $10.00 per share except as to any claims by a third party who executed a waiver of any and all rights to seek access to the trust account and except as to any claims under our indemnity of the underwriters of this offering against certain liabilities, including liabilities under the Securities Act. Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party, then Mr. Brener will not be responsible to the extent of any liability for such third party claims. We have not independently verified whether Mr. Brener has sufficient funds to satisfy his indemnity obligations and, therefore, Mr. Brener may not be able to satisfy those TABLE OF CONTENTS obligations. However, we currently believe Mr. Brener is of substantial means and capable of funding a shortfall in our trust account, even though we have not asked him to reserve for such eventuality. We believe the likelihood of Mr. Brener having to indemnify the trust account is limited because we will endeavor to have all vendors and prospective target businesses as well as other entities execute agreements with us waiving any right, title, interest or claim of any kind in or to monies held in the trust account. Limited payments to insiders There will be no finder s fees, reimbursements or cash (or non-cash) payments made to our sponsor, officers, directors, or our or their affiliates for services rendered to us prior to or in connection with the consummation of our initial business combination, other than: Repayment of a $100,000 loan made to us by our sponsor, to cover offering-related and organizational expenses; A payment of an aggregate of $10,000 per month to our sponsor, an entity controlled by our officers and directors, or an affiliate of our sponsor for office space, utilities and secretarial and administrative services; Reimbursement for any out-of-pocket expenses related to identifying, investigating and consummating our initial business combination, provided that no proceeds of this offering held in the trust account may be applied to the payment of such expenses prior to the consummation of our initial business combination, except the interest earned on the funds held in the trust account (net of taxes payable) that may be released to us to fund working capital requirements; and Repayment of loans made by our sponsor or an affiliate of our sponsor or certain of our officers and directors to finance transaction costs in connection with an intended initial business combination, provided that if we do not consummate our initial business combination, we may use a portion of the offering proceeds held outside the trust account to repay such loaned amounts but no proceeds from our trust account would be used for such repayment. The terms of such loans by our officers and directors, if any, have not been determined and no written agreements exist with respect to such loans. Our independent directors will review on a quarterly basis all payments that were made to our sponsor, officers, directors or our or their affiliates. TABLE OF CONTENTS Item 16. Exhibits and Financial Statement Schedules. (a) The following exhibits are filed as part of this Registration Statement: Exhibit No. Description 1.1 Form of Underwriting Agreement* 3.1 Memorandum and articles of association* 3.2 Certificate of Conversion* 3.3 Certificate of Incorporation* 3.4 Form of Amended and Restated Certificate of Incorporation 3.5 By-laws* 4.1 Specimen Unit Certificate* 4.2 Specimen Common Stock Certificate* 4.3 Specimen Warrant Certificate* 4.4 Form of Warrant Agreement between Continental Stock Transfer & Trust Company and the Registrant* 5.1 Opinion of Ellenoff Grossman & Schole LLP 10.1 Promissory Note, dated April 20, 2011, issued to Azteca Acquisition Holdings, LLC* 10.2 Form of Letter Agreement among the Registrant, its officers and directors, and Azteca Acquisition Holdings, LLC 10.3 Intentionally Omitted. 10.4 Form of Investment Management Trust Agreement between Continental Stock Transfer & Trust Company and the Registrant* 10.5 Form of Letter Agreement between Galco, Inc., an affiliate of our sponsor, and the Registrant regarding administrative support* 10.6 Form of Registration Rights Agreement between the Registrant and Azteca Acquisition Holdings, LLC* 10.7 Securities Purchase Agreement, effective as of April 15, 2011, between the Registrant and Azteca Acquisition Holdings, LLC* 10.8 Sponsor Warrants Purchase Agreement, dated as of April 21, 2011, between the Registrant and Azteca Acquisition Holdings, LLC* 10.9 Form of Indemnity Agreement* 14 Form of Code of Ethics* 23.1 Consent of Rothstein Kass & Company P.C. 23.2 Consent of Ellenoff Grossman & Schole LLP (included on Exhibit 5.1). TABLE OF CONTENTS EXHIBIT INDEX Exhibit No. Description 1.1 Form of Underwriting Agreement* 3.1 Memorandum and articles of association* 3.2 Certificate of Conversion* 3.3 Certificate of Incorporation* 3.4 Form of Amended and Restated Certificate of Incorporation 3.5 By-laws* 4.1 Specimen Unit Certificate* 4.2 Specimen Common Stock Certificate* 4.3 Specimen Warrant Certificate* 4.4 Form of Warrant Agreement between Continental Stock Transfer & Trust Company and the Registrant* 5.1 Opinion of Ellenoff Grossman & Schole LLP 10.1 Promissory Note, dated April 20, 2011, issued to Azteca Acquisition Holdings, LLC* 10.2 Form of Letter Agreement among the Registrant, its officers and directors, and Azteca Acquisition Holdings, LLC 10.3 Intentionally Omitted. 10.4 Form of Investment Management Trust Agreement between Continental Stock Transfer & Trust Company and the Registrant* 10.5 Form of Letter Agreement between Galco, Inc., an affiliate of our sponsor, and the Registrant regarding administrative support* 10.6 Form of Registration Rights Agreement between the Registrant and Azteca Acquisition Holdings, LLC* 10.7 Securities Purchase Agreement, effective as of April 15, 2011, between the Registrant and Azteca Acquisition Holdings, LLC* 10.8 Sponsor Warrants Purchase Agreement, dated as of April 21, 2011, between the Registrant and Azteca Acquisition Holdings, LLC* 10.9 Form of Indemnity Agreement* 14 Form of Code of Ethics* 23.1 Consent of Rothstein Kass & Company P.C. 23.2 Consent of Ellenoff Grossman & Schole LLP (included on Exhibit 5.1). TABLE OF CONTENTS Risks We are a newly formed company that has conducted no operations and has generated no revenues. Until we complete our initial business combination, we will have no operations and will generate no operating revenues. In making your decision whether to invest in our securities, you should take into account not only the background of our management team, but also the special risks we face as a blank check company. This offering is not being conducted in compliance with Rule 419 promulgated under the Securities Act and has certain terms and conditions that deviate from many blank check offerings. Accordingly, you will not be entitled to protections normally afforded to investors in Rule 419 blank check offerings or to investors in many other blank check companies. For additional information concerning how Rule 419 blank check offerings differ from this offering, please see Proposed Business Comparison of This Offering to Those of Blank Check Companies Subject to Rule 419 . For additional information on concerning how many blank check offerings differ from this offering, please see Proposed Business Comparison of This Offering to Those of Blank Check Companies Not Subject to Rule 419 . You should carefully consider these and the other risks set forth in the section entitled Risk Factors beginning on page 27 of this prospectus. TABLE OF CONTENTS
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+PROSPECTUS SUMMARY This summary highlights certain information contained elsewhere in this prospectus. This summary is not complete and does not contain all of the information that you should consider before investing in our common stock. You should read this entire prospectus carefully, including the risks discussed under
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001519177_sollensys_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001519177_sollensys_prospectus_summary.txt
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+PROSPECTUS SUMMARY This summary highlights selected information contained elsewhere in this prospectus. This summary does not contain all the information that you should consider before investing in the common stock. You should carefully read the entire prospectus, including Risk Factors , Management s Discussion and Analysis of Financial Condition and Results of Operations and the Financial Statements, before making an investment decision. In this Prospectus, the terms Company, we, us and our refer to Health Directory, Inc. Overview We were incorporated in the State of Nevada on September 29, 2010 as Health Directory, Inc. and are based in Falls Church, VA. We are a development stage company and have not yet commenced operations. However, we are proceeding with our stated business plan of creating and providing a health related online directory. We have begun taking certain steps in furtherance of our business plan, including the construction and implementation of our fully functioning website. As part of our business plan, we seek to potentially link over fifty advertisers who provide various medical services and gain commission on everything sold based on the advertisers products and services. We are a health related online directory, linking over fifty advertisers who provide various medical services. This online portal gains commission on everything sold based on their products and services. A built in tracking system cohesively tracks all clicks and sales generated by affiliates from our website. Advertisers are responsible for any logistics from customer service to the delivery of products. By providing this service to numerous advertising website sub-domains, we believe we will be able to earn revenues through our one website. Our health related online directory offers a network of alternative medical services and products for customers who need natural, non-prescription products through the internet. It currently provides the following services: Men s Health Women s Health Anti-Aging General Health Live 1-on-1 chats with Doctors Sexual Health Herbal Supplements Nutritional Supplements Pharmacy We do not consider ourself to be a blank check company and we do not have any plan, arrangement, or understanding to engage in a merger or acquisition with any other entity. Additionally, we have a specific business plan and have moved forward with our business operations. Specifically, while in the development stage, we are proceeding with our business plan by constructing and implementing an online health related directory. We have taken certain steps in furtherance of this business plan including establishing the website and programming. Our website is fully functioning and is capable of accepting orders from customers. We will earn a commission on each sale made through our website. We anticipate that depending on market conditions and our plan of operations, we may incur operating losses in the foreseeable future. Therefore, our auditors have raised substantial doubt about our ability to continue as a going concern. Where You Can Find Us Our principal executive office is located at 6312 Seven Corners Center, # 303, Falls Church, VA 22044 and our telephone number is 202-379-2834. Our website is www.healthdirectoryresults.com. Terms of the Offering The selling shareholders named in this prospectus are offering all of the shares of common stock offered through this prospectus. The selling stockholders are selling shares of common stock covered by this prospectus for their own account. We will not receive any of the proceeds from the resale of these shares. The offering price of $0.05 was determined by the price shares were sold to our shareholders in a private placement memorandum and is a fixed price at which the selling security holders may sell their shares until our common stock is quoted on the OTC Bulletin Board, at which time the shares may be sold at prevailing market prices or privately negotiated prices. There can be no assurance that a market maker will agree to file the necessary documents with FINRA, which operates the OTC Electronic Bulletin Board, nor can there be any assurance that such an application for quotation will be approved. We have agreed to bear the expenses relating to the registration of the shares for the selling security holders. Summary of Consolidated Financial Information The following summary financial data should be read in conjunction with Management s Discussion and Analysis, Plan of Operation and the Financial Statements and Notes thereto, included elsewhere in this prospectus. The statement of operations and balance sheet data from September 29, 2010 (inception) through March 31, 2011 are derived from our unaudited financial statements. The data set forth below should be read in conjunction with Management s Discussion and Analysis of Financial Condition and Results of Operations, our financial statements and the related notes included in this prospectus. For the Period from Inception through March 31, 2011 STATEMENT OF OPERATIONS Revenues - Professional Fees $ 7,175 General and Administrative Expenses $ - Total Operating Expenses $ 2,000 Net Loss $ (9,175) As of March 31, 2011 BALANCE SHEET DATA Cash $ 25,000 Total Assets $ 38,070 Total Liabilities $ 7,175 Stockholders Equity $ 38,070 RISK FACTORS The shares of our common stock being offered for resale by the selling security holders are highly speculative in nature, involve a high degree of risk and should be purchased only by persons who can afford to lose the entire amount invested in the common stock. Before purchasing any of the shares of common stock, you should carefully consider the following factors relating to our business and prospects. If any of the following risks actually occurs, our business, financial condition or operating results could be materially adversely affected. In such case, you may lose all or part of your investment. You should carefully consider the risks described below and the other information in this process before investing in our common stock. Risks Related to Our Business WE HAVE A LIMITED OPERATING HISTORY IN WHICH TO EVALUATE OUR BUSINESS. We were incorporated in Nevada on September 29, 2010. We have no revenue to date and have a limited operating history upon which an evaluation of our future success or failure can be made. We estimate needing approximately $50,000 in order to fund our business operations for the next twelve months. In addition, we estimate needing approximately $30,000 each year thereafter in order to be able to sustain our continued business operations as a public company. If we are unable to generate the sufficient revenues needed to sustain our business operations, we may have to delay or cease the implementation of our business strategy. OUR AUDITOR HAS EXPRESSED SUBSTANTIAL DOUBT AS TO OUR ABILITY TO CONTINUE AS A GOING CONCERN. Based on our financial history since inception, our auditor has expressed substantial doubt as to our ability to continue as a going concern. We are a development stage company that has generated no revenue. Specifically the Company, while in the development stage, is proceeding with its business plan by constructing, updating and modifying its portal website for the movie community. If we cannot obtain sufficient funding, we may have to delay or cease the implementation of our business strategy. WE HAVE LIMITED OPERATING HISTORY AND FACE MANY OF THE RISKS AND DIFFICULTIES FREQUENTLY ENCOUNTERED BY DEVELOPMENT STAGE COMPANIES. We are a development stage company, and to date, our development efforts have been focused primarily on the development and marketing of our business model. We have limited operating history for investors to evaluate the potential of our business development. We have not built our customer base and our brand name. In addition, we also face many of the risks and difficulties inherent in gaining market share as a new company: Develop an effective business plan; Meet customer standards; Attain customer loyalty; Develop and upgrade our service Our future will depend on our ability to bring our service to the market place, which requires careful planning of providing a portal that meets industry standards without incurring unnecessary cost and expense. WE NEED ADDITIONAL CAPITAL TO DEVELOP OUR BUSINESS. IF WE FAIL TO OBTAIN ADDITIONAL CAPITAL WE MAY NOT BE ABLE TO IMPLEMENT OUR BUSINESS PLAN. The development of our services will require the commitment of substantial resources to implement our business plan. Currently, we have no established bank-financing arrangements. Therefore, it is likely that we will need to seek additional financing through subsequent future private offering of our equity securities, or through strategic partnerships and other arrangements with corporate partners. We cannot give you any assurance that any additional financing will be available to us, or if available, will be on terms favorable to us. The sale of additional equity securities will result in dilution to our stockholders. The occurrence of indebtedness would result in increased debt service obligations and could require us to agree to operating and financing covenants that would restrict our operations. If adequate additional financing is not available on acceptable terms, we may not be able to implement our business development plan or continue our business operations. OUR ABILITY TO GENERATE REVENUE IS DEPENDENT UPON THE ABILITY OF OUR ADVERTISERS TO GENERATE SALES. We earn revenue as a percentage of sales made on products and services offered by vendors on our website. To the extent that minimal sales needed to generate the revenue needed to sustain our operations are not made, we may not be able to continue our business operations. WE MAY ENCOUNTER SUBSTANTIAL COMPETITION IN OUR BUSINESS AND OUR FAILURE TO COMPETE EFFECTIVELY MAY ADVERSELY AFFECT OUR ABILITY TO GENERATE REVENUE. We believe that existing and new competitors will continue to improve their services and to introduce new services with competitive price and performance characteristics. We expect that we will be required to continue to invest in upgrading our website to compete effectively in our markets. Our competitors could develop a more efficient product or undertake more aggressive and costly marketing campaigns than ours, which may adversely affect our marketing strategies and could have a material adverse effect on our business, results of operations and financial condition. Furthermore, our more established competitors, who provide similar services, currently compete for the same pool of customers as well as compete for prospective advertisers. These competitors may make it difficult to attract customers as well as obtain revenue streams from advertising businesses. CALCULATION OF REGISTRATION FEE Title of Each Class Of Securities to be Registered Amount to be Registered Proposed Maximum Aggregate Offering Price per share Proposed Maximum Aggregate Offering Price Amount of Registration fee Common Stock, $0.0001 par value per share 759,400 $ 0.05 $ 37,970.00 $ 4.41 (1) This Registration Statement covers the resale by our selling shareholders of up to 759,400 shares of common stock previously issued to such selling shareholders. (2) The offering price has been estimated solely for the purpose of computing the amount of the registration fee in accordance with Rule 457(o). Our common stock is not traded on any national exchange and in accordance with Rule 457; the offering price was determined by the price of the shares that were sold to our shareholders in a private placement memorandum. The price of $0.05 is a fixed price at which the selling security holders may sell their shares until our common stock is quoted on the OTCBB at which time the shares may be sold at prevailing market prices or privately negotiated prices. There can be no assurance that a market maker will agree to file the necessary documents with the Financial Industry Regulatory Authority, which operates the OTC Bulletin Board, nor can there be any assurance that such an application for quotation will be approved. THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SUCH SECTION 8(a), MAY DETERMINE. WE MAY INCUR SIGNIFICANT COSTS TO BE A PUBLIC COMPANY TO ENSURE COMPLIANCE WITH U.S. CORPORATE GOVERNANCE AND ACCOUNTING REQUIREMENTS AND WE MAY NOT BE ABLE TO ABSORB SUCH COSTS. We may incur significant costs associated with our public company reporting requirements, costs associated with newly applicable corporate governance requirements, including requirements under the Sarbanes-Oxley Act of 2002 and other rules implemented by the Securities and Exchange Commission. We expect all of these applicable rules and regulations to significantly increase our legal and financial compliance costs and to make some activities more time consuming and costly. We also expect that these applicable rules and regulations may make it more difficult and more expensive for us to obtain director and officer liability insurance and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a result, it may be more difficult for us to attract and retain qualified individuals to serve on our board of directors or as executive officers. We are currently evaluating and monitoring developments with respect to these newly applicable rules, and we cannot predict or estimate the amount of additional costs we may incur or the timing of such costs. In addition, we may not be able to absorb these costs of being a public company which will negatively affect our business operations. THE LACK OF PUBLIC COMPANY EXPERIENCE OF OUR MANAGEMENT TEAM COULD ADVERSELY IMPACT OUR ABILITY TO COMPLY WITH THE REPORTING REQUIREMENTS OF U.S. SECURITIES LAWS. Our Chief Executive Officer ( CEO ) lacks public company experience, which could impair our ability to comply with legal and regulatory requirements such as those imposed by Sarbanes-Oxley Act of 2002. Our CEO has never been responsible for managing a publicly traded company. Such responsibilities include complying with federal securities laws and making required disclosures on a timely basis. Our senior management may not be able to implement programs and policies in an effective and timely manner that adequately respond to such increased legal, regulatory compliance and reporting requirements, including establishing and maintaining internal controls over financial reporting. Any such deficiencies, weaknesses or lack of compliance could have a materially adverse effect on our ability to comply with the reporting requirements of the Securities Exchange Act of 1934 which is necessary to maintain our public company status. If we were to fail to fulfill those obligations, our ability to continue as a U.S. public company would be in jeopardy in which event you could lose your entire investment in our company. OUR FUTURE SUCCESS IS DEPENDENT, IN PART, ON THE PERFORMANCE AND CONTINUED SERVICE OF HUMAIRA HAIDER. WITHOUT HER CONTINUED SERVICE, WE MAY BE FORCED TO INTERRUPT OR EVENTUALLY CEASE OUR OPERATIONS. We are presently dependent to a great extent upon the experience, abilities and continued services of Humaira Haider, our President and Chief Executive Officer. We currently have an employment agreement with Humaira Haider which expires on April 30, 2014. The loss of her services could have a material adverse effect on our business, financial condition or results of operation. Risk Related To Our Capital Stock WE MAY NEVER PAY ANY DIVIDENDS TO SHAREHOLDERS. We have never declared or paid any cash dividends or distributions on our capital stock. We currently intend to retain our future earnings, if any, to support operations and to finance expansion and therefore we do not anticipate paying any cash dividends on our common stock in the foreseeable future. The declaration, payment and amount of any future dividends will be made at the discretion of the board of directors, and will depend upon, among other things, the results of our operations, cash flows and financial condition, operating and capital requirements, and other factors as the board of directors considers relevant. There is no assurance that future dividends will be paid, and, if dividends are paid, there is no assurance with respect to the amount of any such dividend. PRELIMINARY PROSPECTUS Subject to completion, dated October , 2011 Health Directory Inc. 759,400 SHARES OF COMMON STOCK The selling security holders named in this prospectus are offering all of the shares of common stock offered through this prospectus. We will not receive any proceeds from the sale of the common stock covered by this prospectus. Our common stock is presently not traded on any market or securities exchange. The selling security holders have not engaged any underwriter in connection with the sale of their shares of common stock. Common stock being registered in this registration statement may be sold by selling security holders at a fixed price of $0.05 per share until our common stock is quoted on the OTC Bulletin Board ( OTCBB ) and thereafter at a prevailing market prices or privately negotiated prices or in transactions that are not in the public market. There can be no assurance that a market maker will agree to file the necessary documents with the Financial Industry Regulatory Authority ( FINRA ), which operates the OTCBB, nor can there be any assurance that such an application for quotation will be approved. We have agreed to bear the expenses relating to the registration of the shares of the selling security holders. Investing in our common stock involves a high degree of risk. See Risk Factors beginning on page 7 to read about factors you should consider before buying shares of our common stock. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the U.S. Securities and Exchange Commission ( SEC ) is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. The Date of This Prospectus is: October 4 , 2011 OUR ARTICLES OF INCORPORATION PROVIDE FOR INDEMNIFICATION OF OFFICERS AND DIRECTORS AT OUR EXPENSE AND LIMIT THEIR LIABILITY WHICH MAY RESULT IN A MAJOR COST TO US AND HURT THE INTERESTS OF OUR SHAREHOLDERS BECAUSE CORPORATE RESOURCES MAY BE EXPENDED FOR THE BENEFIT OF OFFICERS AND/OR DIRECTORS. Our articles of incorporation and applicable Nevada law provide for the indemnification of our directors, officers, employees, and agents, under certain circumstances, against attorney s fees and other expenses incurred by them in any litigation to which they become a party arising from their association with or activities on our behalf. We will also bear the expenses of such litigation for any of our directors, officers, employees, or agents, upon such person s written promise to repay us if it is ultimately determined that any such person shall not have been entitled to indemnification. This indemnification policy could result in substantial expenditures by us which we will be unable to recoup. We have been advised that, in the opinion of the SEC, indemnification for liabilities arising under federal securities laws is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification for liabilities arising under federal securities laws, other than the payment by us of expenses incurred or paid by a director, officer or controlling person in the successful defense of any action, suit or proceeding, is asserted by a director, officer or controlling person in connection with the securities being registered, we will (unless in the opinion of our counsel, the matter has been settled by controlling precedent) submit to a court of appropriate jurisdiction, the question whether indemnification by us is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. The legal process relating to this matter if it were to occur is likely to be very costly and may result in us receiving negative publicity, either of which factors is likely to materially reduce the market and price for our shares, if such a market ever develops. THE OFFERING PRICE OF THE COMMON STOCK WAS DETERMINED BASED ON THE PRICE OF OUR PRIVATE OFFERING, AND THEREFORE SHOULD NOT BE USED AS AN INDICATOR OF THE FUTURE MARKET PRICE OF THE SECURITIES. THEREFORE, THE OFFERING PRICE BEARS NO RELATIONSHIP TO OUR ACTUAL VALUE, AND MAY MAKE OUR SHARES DIFFICULT TO SELL. Since our shares are not listed or quoted on any exchange or quotation system, the offering price of $0.05 per share for the shares of common stock was determined based on the price of our private offering. The facts considered in determining the offering price were our financial condition and prospects, our limited operating history and the general condition of the securities market. The offering price bears no relationship to the book value, assets or earnings of our company or any other recognized criteria of value. The offering price should not be regarded as an indicator of the future market price of the securities. YOU WILL EXPERIENCE DILUTION OF YOUR OWNERSHIP INTEREST BECAUSE OF THE FUTURE ISSUANCE OF ADDITIONAL SHARES OF OUR COMMON STOCK AND OUR PREFERRED STOCK. In the future, we may issue our authorized but previously unissued equity securities, resulting in the dilution of the ownership interests of our present stockholders. We are currently authorized to issue an aggregate of 510,000,000 shares of capital stock consisting of 500,000,000 shares of common stock, par value $0.0001 per share, and 10,000,000 shares of preferred stock, par value $0.0001 per share. We may also issue additional shares of our common stock or other securities that are convertible into or exercisable for common stock in connection with hiring or retaining employees or consultants, future acquisitions, future sales of our securities for capital raising purposes, or for other business purposes. The future issuance of any such additional shares of our common stock or other securities may create downward pressure on the trading price of our common stock. There can be no assurance that we will not be required to issue additional shares, warrants or other convertible securities in the future in conjunction with hiring or retaining employees or consultants, future acquisitions, future sales of our securities for capital raising purposes or for other business purposes, including at a price (or exercise prices) below the price at which shares of our common stock are currently quoted on the OTCBB. OUR COMMON STOCK IS CONSIDERED A PENNY STOCK, WHICH MAY BE SUBJECT TO RESTRICTIONS ON MARKETABILITY, SO YOU MAY NOT BE ABLE TO SELL YOUR SHARES. If our common stock becomes quoted in the secondary market, we will be subject to the penny stock rules adopted by the Securities and Exchange Commission that require brokers to provide extensive disclosure to their customers prior to executing trades in penny stocks. These disclosure requirements may cause a reduction in the trading activity of our common stock, which in all likelihood would make it difficult for our shareholders to sell their securities. Penny stocks generally are equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on the NASDAQ system). Penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document that provides information about penny stocks and the risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, and monthly account statements showing the market value of each penny stock held in the customer s account. The broker-dealer must also make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser s written agreement to the transaction. These requirements may have the effect of reducing the level of trading activity, if any, in the secondary market for a security that becomes subject to the penny stock rules. The additional burdens imposed upon broker-dealers by such requirements may discourage broker-dealers from effecting transactions in our securities, which could severely limit the market price and liquidity of our securities. These requirements may restrict the ability of broker-dealers to sell our common stock and may affect your ability to resell our common stock. THERE IS NO ASSURANCE OF A PUBLIC MARKET OR THAT OUR COMMON STOCK WILL EVER TRADE ON A RECOGNIZED EXCHANGE. THEREFORE, YOU MAY BE UNABLE TO LIQUIDATE YOUR INVESTMENT IN OUR STOCK. There is no established public trading market for our common stock. Our shares have not been listed or quoted on any exchange or quotation system. There can be no assurance that a market maker will agree to file the necessary documents with FINRA, which operates the OTCBB, nor can there be any assurance that such an application for quotation will be approved or that a regular trading market will develop or that if developed, will be sustained. In the absence of a trading market, an investor may be unable to liquidate their investment. WE MAY BE EXEMPT FROM THE REPORTING OBLIGATIONS PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT AND THEREFORE MAY NOT HAVE TO PROVIDE INVESTORS WITH PERIODIC REPORTS AS MAY BE REQUIRED PURSUANT TO SECTION 13 OF THE SECURITIES EXCHANGE ACT, FOLLOWING THE FORM 10K REQUIRED FOR THE FISCAL YEAR IN WHICH OUR REGISTRATION STATEMENT IS EFFECTIVE. The requirement for an issuer that has filed a registration statement to file pursuant to Section 15(d) of the Securities Exchange Act is suspended for any fiscal year, except for the fiscal year in which such registration statement becomes effective, if, at the beginning of the fiscal year, the issuer has fewer than 300 shareholders. We currently have fewer than 300 shareholders and expect to maintain a fewer than 300 shareholder base. If we do continue to have fewer than 300 shareholders, we will be exempt from the filing requirements as required pursuant to Section 13 of the Securities Exchange Act and will not be required to file any periodic reports, including Form 10Q and 10K filings, with the SEC subsequent to the Form 10K required for the fiscal year in which our registration statement is effective. Further, disclosures in our Form 10K that we will be required to file for the fiscal year in which our registration statement is effective, is less extensive than the disclosures required of fully reporting companies. Specifically, we are not subject to disclose in our Form 10K risk factors, unresolved staff comments, or selected financial data, pursuant to Items 1A, 1B, 6, respectively. UNTIL WE REGISTER A CLASS OF OUR SECURITIES UNDER SECTION 12 OF THE SECURITIES EXCHANGE ACT OF 1934 ( EXCHANGE ACT ), WE WILL ONLY BE SUBJECT TO THE PERIODIC REPORTING OBLIGATIONS IMPOSED BY SECTION 15(D) OF THE EXCHANGE ACT. Until such time as we register a class of our securities under Section 12 of the Securities Exchange Act of 1934, we will only be subject to the periodic reporting obligations imposed by Section 15(d) of the Exchange Act. Accordingly, we will not be subject to the proxy rules, Section 16 short-swing profit provisions, beneficial ownership reporting, the bulk of the tender offer rules and the reporting requirements of Section 13 of the Exchange Act. AS A SMALLER REPORTING COMPANY, OUR MANAGEMENT WILL BE REQUIRED TO PROVIDE A REPORT ON THE EFFECTIVENESS OF OUR INTERNAL CONTROLS OVER FINANCIAL REPORTING, BUT WILL NOT BE REQUIRED TO PROVIDE AN AUDITOR S ATTESTATION REGARDING SUCH REPORT AND MANAGEMENT S REPORT NEED NOT BE PROVIDED UNTIL OUR SECOND ANNUAL REPORT. THEREFORE POTENTIAL INVESTORS MAY NOT BE MADE AWARE OF ANY ASSESSED WEAKNESS THAT COULD RESULT IN A MISSTATEMENT TO OUR FINANCIAL STATEMENTS. As a smaller reporting company, our management will be required to provide a report on the effectiveness of our internal controls over financial reporting, but will not be required to provide an auditor s attestation regarding such report and management s report need not be provided until our second annual report. Investors should be aware of the risk that management may assess and render the Company s internal controls ineffective which could have a material adverse effect on the Company s financial condition or result of operations and such information is not required to be disclosed to investors. SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS The information contained in this report, including in the documents incorporated by reference into this report, includes some statement that are not purely historical and that are forward-looking statements. Such forward-looking statements include, but are not limited to, statements regarding our and their management s expectations, hopes, beliefs, intentions or strategies regarding the future, including our financial condition, results of operations, and the expected impact of the Share Exchange on the parties individual and combined financial performance. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words anticipates, believes, continue, could, estimates, expects, intends, may, might, plans, possible, potential, predicts, projects, seeks, should, would and similar expressions, or the negatives of such terms, may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. The forward-looking statements contained in this report are based on current expectations and beliefs concerning future developments and the potential effects on the parties and the transaction. There can be no assurance that future developments actually affecting us will be those anticipated. These that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements, including the following forward-looking statements involve a number of risks, uncertainties (some of which are beyond the parties control) or other assumptions. Item 4. Use of Proceeds The selling stockholders are selling shares of common stock covered by this prospectus for their own account. We will not receive any of the proceeds from the resale of these shares. We have agreed to bear the expenses relating to the registration of the shares for the selling security holders. Item 5. Determination of Offering Price Since our common stock is not listed or quoted on any exchange or quotation system, the offering price of the shares of common stock was determined by the price of the common stock that was sold to our security holders pursuant to an exemption under Section 4(2) of the Securities Act of 1933 and Rule 506 of Regulation D promulgated under the Securities Act of 1933. The offering price of the shares of our common stock does not necessarily bear any relationship to our book value, assets, past operating results, financial condition or any other established criteria of value. The facts considered in determining the offering price were our financial condition and prospects, our limited operating history and the general condition of the securities market. Although our common stock is not listed on a public exchange, we will be filing to obtain a listing on the OTCBB concurrently with the filing of this prospectus. In order to be quoted on the OTCBB, a market maker must file an application on our behalf in order to make a market for our common stock. There can be no assurance that a market maker will agree to file the necessary documents with FINRA, which operates the OTC Bulletin Board, nor can there be any assurance that such an application for quotation will be approved. In addition, there is no assurance that our common stock will trade at market prices in excess of the initial offering price as prices for the common stock in any public market which may develop will be determined in the marketplace and may be influenced by many factors, including the depth and liquidity. Item 6. Dilution The common stock to be sold by the selling shareholders are provided in the Selling Security Holders section is common stock that is currently issued. Accordingly, there will be no dilution to our existing shareholders. Item 7. Selling Security Holders The common shares being offered for resale by the selling security holders consist of the 759,400 shares of our common stock held by 35 shareholders. Such shareholders include the holders of the 759,400 shares sold in our private offering pursuant to Regulation D Rule 506 completed in May 2011 at an offering price of $0.05. The following table sets forth the name of the selling security holders, the number of shares of common stock beneficially owned by each of the selling stockholders as of October 4 , 2011 and the number of shares of common stock being offered by the selling stockholders. The shares being offered hereby are being registered to permit public secondary trading, and the selling stockholders may offer all or part of the shares for resale from time to time. However, the selling stockholders are under no obligation to sell all or any portion of such shares nor are the selling stockholders obligated to sell any shares immediately upon effectiveness of this prospectus. All information with respect to share ownership has been furnished by the selling stockholders. Name Shares Beneficially Owned Prior To Offering Shares to be Offered Amount Beneficially Owned After Offering Percent Beneficially Owned After Offering Tanya McGinley 26,000 26,000 0 * Kiko Montes 24,000 24,000 0 * Diego A. Barrera 28,000 28,000 0 * Caroline Tsai 18,000 18,000 0 * Chad Houchen 24,000 24,000 0 * Sam Huber 22,000 22,000 0 * Alisha Frias 20,000 20,000 0 * Tatyana Sakovitch 32,000 32,000 0 * Shane Boyce 26,000 26,000 0 * Abraham Villon 32,000 32,000 0 * Loren Endemano 17,000 17,000 0 * Devin Christy 18,000 18,000 0 * Daniel Barrera 26,000 26,000 0 * Maureen Saccio 20,000 20,000 0 * Dena Upton 22,000 22,000 0 * Sage Coody 20,400 20,400 0 * Ramses Munoz 20,000 20,000 0 * Morgan Dinerstein 18,600 18,600 0 * Patrick M. Drayer 22,000 22,000 0 * Jonathan Bartock 24,000 24,000 0 * Tim O Brien 20,000 20,000 0 * Arnold Chavarria 18,000 18,000 0 * Garret Kensler 26,000 26,000 0 * Shane Macatee 20,000 20,000 0 * Vito Ernandes 20,000 20,000 0 * Christian Mayhead 20,000 20,000 0 * Arlene Bugagon 20,000 20,000 0 * Arturo Ramirez 18,000 18,000 0 * Carlo Calderon 26,000 26,000 0 * Alex Choi 18,000 18,000 0 * Thomas Tate 17,400 17,400 0 * John Matthew Weneta 16,000 16,000 0 * Timothy Cojocnean 17,000 17,000 0 * Ryan Barela 20,000 20,000 0 * Joe Reardon 23,000 23,000 0 * There are no agreements between the company and any selling shareholder pursuant to which the shares subject to this registration statement were issued. To our knowledge, none of the selling shareholders or their beneficial owners: - has had a material relationship with us other than as a shareholder at any time within the past three years; or - has ever been one of our officers or directors or an officer or director of our predecessors or affiliates - are broker-dealers or affiliated with broker-dealers. Item 8. Plan of Distribution The selling security holders may sell some or all of their shares at a fixed price of $0.05 per share until our shares are quoted on the OTCBB and thereafter at prevailing market prices or privately negotiated prices. Prior to being quoted on the OTC Bulletin Board, shareholders may sell their shares in private transactions to other individuals. Although our common stock is not listed on a public exchange, we will be filing to obtain a listing on the OTCBB concurrently with the filing of this prospectus. In order to be quoted on the OTC Bulletin Board, a market maker must file an application on our behalf in order to make a market for our common stock. There can be no assurance that a market maker will agree to file the necessary documents with FINRA, which operates the OTC Bulletin Board, nor can there be any assurance that such an application for quotation will be approved. However, sales by selling security holder must be made at the fixed price of $0.05 until a market develops for the stock. Once a market has developed for our common stock, the shares may be sold or distributed from time to time by the selling stockholders, who may be deemed to be underwriters, directly to one or more purchasers or through brokers or dealers who act solely as agents, at market prices prevailing at the time of sale, at prices related to such prevailing market prices, at negotiated prices or at fixed prices, which may be changed. The distribution of the shares may be effected in one or more of the following methods: ordinary brokers transactions, which may include long or short sales; transactions involving cross or block trades on any securities or market where our common stock is trading, market where our common stock is trading; through direct sales to purchasers or sales effected through agents; through transactions in options, swaps or other derivatives (whether exchange listed or otherwise); or any combination of the foregoing; In addition, the selling stockholders may enter into hedging transactions with broker-dealers who may engage in short sales, if short sales were permitted, of shares in the course of hedging the positions they assume with the selling stockholders. The selling stockholders may also enter into option or other transactions with broker-dealers that require the delivery by such broker-dealers of the shares, which shares may be resold thereafter pursuant to this prospectus. To our best knowledge, none of the selling security holders are broker-dealers or affiliates of broker dealers. We will advise the selling security holders that the anti-manipulation rules of Regulation M under the Exchange Act may apply to sales of shares in the market and to the activities of the selling security holders and their affiliates. In addition, we will make copies of this prospectus (as it may be supplemented or amended from time to time) available to the selling security holders for the purpose of satisfying the prospectus delivery requirements of the Securities Act. The selling security holders may indemnify any broker-dealer that participates in transactions involving the sale of the shares against certain liabilities, including liabilities arising under the Securities Act. Brokers, dealers, or agents participating in the distribution of the shares may receive compensation in the form of discounts, concessions or commissions from the selling stockholders and/or the purchasers of shares for whom such broker-dealers may act as agent or to whom they may sell as principal, or both (which compensation as to a particular broker-dealer may be in excess of customary commissions). Neither the selling stockholders nor we can presently estimate the amount of such compensation. We know of no existing arrangements between the selling stockholders and any other stockholder, broker, dealer or agent relating to the sale or distribution of the shares. We will not receive any proceeds from the sale of the shares of the selling security holders pursuant to this prospectus. We have agreed to bear the expenses of the registration of the shares, including legal and accounting fees, and such expenses are estimated to be approximately $20,000.00. Notwithstanding anything set forth herein, no FINRA member will charge commissions that exceed 8% of the total proceeds of the offering. Item 9. Description of Securities to be Registered General We are authorized to issue an aggregate number of 510,000,000 shares of capital stock, of which 500,000,000 shares are common stock, $0.0001 par value per share, and there are 10,000,000 preferred shares, $0.0001 par value per share authorized. Common Stock We are authorized to issue 500,000,000 shares of common stock, $0.0001 par value per share. Currently we have 3,759,400 shares of common stock issued and outstanding. Each share of common stock shall have one (1) vote per share for all purpose. Our common stock does not provide a preemptive, subscription or conversion rights and there are no redemption or sinking fund provisions or rights. Our common stock holders are not entitled to cumulative voting for election of Board of Directors. Preferred Stock We are authorized to issue 10,000,000 shares of preferred stock, $0.0001 par value per share. Currently we have no shares of preferred stock issued and outstanding. Registration No. [ ] ================================== FORM S-1/A 4 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ================================== Health Directory Inc. (Exact Name of Registrant in its Charter) Nevada (State or other Jurisdiction of Incorporation) (Primary Standard Industrial Classification Code) (IRS Employer Identification No.) 6312 Seven Corners Center, # 303 Falls Church, VA 22044 Phone: 202-379-2834 (Address and Telephone Number of Registrant s Principal Executive Offices and Principal Place of Business) VCorp Services, LLC 4675 W. Teco Avenue, Suite 240 Las Vegas, Nevada 89118 (Name, Address and Telephone Number of Agent for Service) Copies of communications to: Gregg E. Jaclin, Esq. Anslow & Jaclin, LLP 195 Route 9 South, Suite204 Manalapan, NJ 07726 Tel. No.: (732) 409-1212 Fax No.: (732) 577-1188 Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. x If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act of 1933, please check the following box and list the Securities Act registration Statement number of the earlier effective registration statement for the same offering. o If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act of 1933, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.o If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act of 1933, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.o If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. o Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. Large accelerated filer o Accelerated filer o Non-accelerated filer o Smaller reporting company Dividends We have not paid any cash dividends to our shareholders. The declaration of any future cash dividends is at the discretion of our board of directors and depends upon our earnings, if any, our capital requirements and financial position, our general economic conditions, and other pertinent conditions. It is our present intention not to pay any cash dividends in the foreseeable future, but rather to reinvest earnings, if any, in our business operations. Warrants There are no outstanding warrants to purchase our securities. Options There are no outstanding options to purchase our securities. Transfer Agent and Registrar Currently we do not have a stock transfer agent. Item 10. Interests of Named Experts and Counsel The validity of the common stock offered by this prospectus will be passed upon for us by Anslow & Jaclin, LLP, Manalapan, New Jersey. No expert or counsel named in this prospectus as having prepared or certified any part of this prospectus or having given an opinion upon the validity of the securities being registered or upon other legal matters in connection with the registration or offering of the common stock was employed on a contingency basis, or had, or is to receive, in connection with the offering, a substantial interest, direct or indirect, in the registrant or any of its parents or subsidiaries. Nor was any such person connected with the registrant or any of its parents or subsidiaries as a promoter, managing or principal underwriter, voting trustee, director, officer, or employee. The financial statements included in this prospectus and the registration statement have been audited by Li & Company, P.C. to the extent and for the periods set forth in their report appearing elsewhere herein and in the registration statement, and are included in reliance upon such report given upon the authority of said firm as experts in auditing and accounting. Anslow & Jaclin, LLP, 195 Route 9 South, Suite 204, Manalapan, New Jersey 07726, telephone (732) 409-1212 has acted as our legal counsel. Item 11. Information about the Registrant DESCRIPTION OF BUSINESS Overview We were incorporated in the State of Nevada on September 29, 2010 as Health Directory, Inc. and are based in Falls Church, VA. We are a development stage company and have not yet commenced operations. However, we are proceeding with our stated business plan of creating and providing a health related online directory. We have begun taking certain steps in furtherance of our business plan, including the construction of a website. As part of our business plan, we seek to potentially link over fifty advertisers who provide various medical services and gain commission on everything sold based on the advertisers products and services. We are a health related online directory, which will potentially link over fifty advertisers who provide various medical services. This online portal gains commission on everything sold based on their products and services. A built in tracking system cohesively tracks all clicks and sales generated by affiliates from our website. Advertisers are responsible for any logistics from customer service to the delivery of products. By providing this service to numerous advertising website sub-domains, we believe we will be able to earn revenues through our one website. Our health related online directory offers a network of alternative medical services and products for customers who need natural, non-prescription products through the internet. It currently provides the following services: Men s Health Women s Health Anti-Aging General Health Live 1-on-1 chats with Doctors Sexual Health Herbal Supplements Nutritional Supplements Pharmacy Business Strategy and Objectives Our automated online health directory allows our customers to advertise through our website, while keeping track of all sales generated through our directory. In that regard, our online portal gains commission on all sales generated through the website. A sophisticated tracking system cohesively works with our website HTML code which tracks all clicks and sales generated by affiliates linked to our website. Our website also provides a Live Chat option, allowing visitors to pay a medical doctor by the minute for medical advice. Our objective for the 2011 fiscal year is to become the leading online health directory website. The Company expects to accomplish this objective by implementing a well-built online marketing practice. We believe that the key to our success is based on a few key factors. First, the website is maintained by HostGator. The website requires low maintenance, and all customers are responsible for interacting and responding to their own clients. Our customers are the product and service providers who would like advertise their products and services on our website. Second, our website is convenient for visitors because it provides information in one location that is available 24 hours per day, 7 days per week. We also believe that we will obtain a strong reputation in the field by our affiliation with companies that are recognized as having the experience, credibility and dedication that visitors seek. Finally, by using Pay-Per-Click, Search Engine Optimization and other forms of online advertising, we expect that our website will maintain a monthly marketing plan that will result in additional clients and revenues. Products and Services We provide thirty sub-domain links where visitors can view, read, and buy products and services by other affiliate companies. With these thirty sub-domain links, Health Directory gains a certain amount of commission based on each product or service. This is all tracked using a tracking system, which is on our current domain. Our commissions earned are deposited directly into our bank account by our customers. Our CEO reconciles the accounts once a week. Our website is commission based. As such prices are controlled by our affiliate partners and we generate revenues in the form of commissions from all sales generated from our website. These sales are maintained and tracked through a sales tracking system, which is linked through our HTML coding system. Our commission rate varies based on the product or service sold. Market Opportunity Through the internet, most people nowadays research their symptoms and shop online. Health Directory carries a 24 hours per day, 7 days per week live chat service for customers who need 1-on-1 conversations with real doctors. This service is used for questions and concerns, which might be useful and will make it easier for customers to gain information rather than to pay for expensive doctor visits. We plan to link our website with thirty sub-domain websites, listed under Products and Services, which we will receive all commission earnings from each sale. By combining thirty sub-domain directories with Live Medical Chats, monthly advertisers, and Google Ad sense, we hope that HealthFindersDirectory.com will become the portal to a diverse set of health products and health information. Due to the current economic downturn, and the soaring unemployment rates, we believe that the population is beginning to consider investing in their health and well-being. There is currently a growing number of citizens in the United States living without health insurance. As such, we believe that the current market will eventually become less reliant on face to face doctor visits and more reliant on web-based health information. As such, we have created a live chat feature, allowing potential clients to chat one on one with medical doctors. Website Marketing Strategy & Revenue Generation We are a start-up company focused on building stable and long-term marketing programs. As such, we are focused on a strategic Internet marketing campaign consisting of Google Ad words. We provide thirty sub-domain links where visitors can view, read, and buy products and services from other companies who use our website as a platform to sell their products/services., instead of building and maintaining their own website. We earn a certain amount of commission based on each product sale. If a specific product/service is not selling, we can remove this product from our site at any time. Our website marketing strategies can be broken into 4 segments: Google Ad-sense: Ad-sense is an application which is run by Google, by managing our website text, images, and advertisements; by monetizing our content we generate revenue by having our visitors click on these links. Social Media Optimization: Due to the current Internet market focusing on Social Media website, we will begin participating and creating a social status which will bring forth more loyal customers, reliability, and image towards the company. Search Engine Optimization: Search Engine Optimization otherwise known as SEO, will make our website's content worthy of higher search engine ranking by being more relevant and competent than our competitors. After a few months worth of optimization, HealthFindersDirectory.com's goal is to begin ranking near our competitors on search engines. Blogs: Blogs are another current Internet strategy many companies are focusing on. By blogging updates and affiliate products, Health Directory Inc. will be engaging to future clients and visitors in an affable manner. Competition We are aware of other health directory related websites that provide similar services as the ones we seek to provide. These websites include: HealthBegin.com, Healthdirectorymoz.com, DirectoryHealthy.com, and TheHealthLinks.com. We believe that Health Directory, Inc. will be able to increase customer interest and improve recognition and acceptance of our affiliate s products by investing in a strong marketing campaign, increasing our monthly ad word budget and maintaining strong customer loyalty programs through our affiliates. We plan to provide an organized and professional website with working links to actual products and services with few sub-domains with non-effective spam. We believe that the avoidance of excessive advertising on our site will result in greater customer loyalty . Employees As of October 4 , 2011, we have one (1) employee. Our President and sole officer and director spends approximately 20 hours per week on Company matters. DESCRIPTION OF PROPERTY Our principal executive office is located at 6312 Seven Corners Center, # 303, Falls Church, VA 22044. Our telephone number is 202-379-2834. LEGAL PROCEEDINGS From time to time, we may become involved in various lawsuits and legal proceedings, which arise, in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. We are currently not aware of any such legal proceedings or claims that we believe will have a material adverse effect on our business, financial condition or operating results. Pursuant to Item 401 (f) of Regulation S-K there are no events that occurred during the past ten (10) years that are material to an evaluation of the ability or integrity of any director, person nominated to become a director or executive officer of the registrant: No petition under the Federal bankruptcy laws or any state insolvency law was filed by or against, or a receiver, fiscal agent or similar officer was appointed by a court for the business or property of such person, or any partnership in which he was a general partner at or within two years before the time of such filing, or any corporation or business association of which he was an executive officer at or within two years before the time of such filing; The registrant has not been convicted in a criminal proceeding and is not named subject of a pending criminal proceeding Such registrant was not the subject of any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from, or otherwise limiting, the following activities: o Acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the Commodity Futures Trading Commission, or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity; o Engaging in any type of business practice; or o Engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of Federal or State securities laws or Federal commodities laws; Such registrant was not the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any Federal or State authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any activity described in Regulation S-K, Item 401 paragraph (f)(3)(i) entitled Involvement in Certain Legal Proceedings , or to be associated with persons engaged in any such activity; Such registrant was not found by a court of competent jurisdiction in a civil action or by the Commission to have violated any Federal or State securities law, and the judgment in such civil action or finding by the Commission has not been subsequently reversed, suspended, or vacated; Such registrant was not found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any Federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated; Such registrant was not the subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of: o Any Federal or State securities or commodities law or regulation; or o Any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or o Any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or Such registrant was not the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS There is presently no public market for our shares of common stock. We anticipate applying for quoting of our common stock on the OTCBB upon the effectiveness of the registration statement of which this prospectus forms apart. However, we can provide no assurance that our shares of common stock will be quoted on the OTCBB or, if quoted, that a public market will materialize. Holders of Capital Stock As of October 4 , 2011 we have 36 holders of our common stock. Rule 144 Shares As of the date of this registration statement, we do not have any shares of our common stock that are currently available for sale to the public in accordance with the volume and trading limitations of Rule 144. Stock Option Grants We do not have any stock option plans. Registration Rights We have not granted registration rights to the selling shareholders or to any other persons. MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULT OF OPERATIONS The following provides information which management believes is relevant to an assessment and understanding of our results of operations and financial condition. The discussion should be read along with our financial statements and notes thereto. This section includes a number of forward-looking statements that reflect our current views with respect to future events and financial performance. Forward-looking statements are often identified by words like believe, expect, estimate, anticipate, intend, project and similar expressions, or words which, by their nature, refer to future events. You should not place undue certainty on these forward-looking statements. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our predictions. We were incorporated in the State of Nevada on September 29, 2010 as Health Directory Inc. and are based in Falls Church, Virginia. We are a development stage company. Specifically, while in the development stage, we are proceeding with our business plan by providing a health related online directory. We have begun taking certain steps in furtherance of our business plan by constructing and updating our website. Plan of Operation We are a health related online directory, linking advertisers who provide various medical services. We provide thirty sub-domain links where visitors can view, read, and buy products and services from our customers. With these thirty sub-domain links, Health Directory gains a certain amount of commission based on each product or service. This is all tracked using a tracking system, which is on our current domain. Advertisers are responsible for any logistics from customer service to the delivery of products. Currently our business relies on getting business through Google AD searches however, we expect to begin marketing our website in the third quarter. We anticipate incurring $1,200 each quarter in marketing expenses. Over the next twelve months we will continue testing products on our website to determine which products/services generate the most revenue for us. We expect the trend of on-line shopping to increase. Results of Operations For the period from September 29, 2010 (inception) through June 30, 2011, we had no revenue. Expenses for the three month period ended June 30, 2011, resulting in a net loss of $7,813. Expenses for the period from September 29, 2010 (inception) through June 30, 2011 totaled $16,988 resulting in a net loss of $16,988. Capital Resources and Liquidity As of June 30, 2011 we had $31,912 in cash, We received proceeds equal to $38,070 related to the sale of 759,400 common shares of stock through our private offering on November 29, 2010 and incurred $7,813 in expenses for the three month period ended June 30, 2011 . Our management anticipates utilizing $4,800 of the capital raised for marketing expenses and approximately $20,200 towards salary and other operational expenses, excluding legal and accounting fees. We anticipate our legal, auditing, and filing costs to increase as a result of being a public company. We expect our legal, accounting and various filing fees will amount to approximately $25,000 in our first year as a result of being a public company . We anticipate that we will need approximately $50,000 in the first twelve months in order to maintain our day to day operations. We believe that if our customers combined are able to achieve on average 10 sales per day at an average commission to us equal to $60 per sale, we will be able to meet our long term and short term cash flow needs by generating expected revenues equal to $18,000 per month. If we are unable to meet our short term or long term cash flow needs, our CEO will contribute the capital needed to maintain operations. If we are unable to meet our short term or long term cash flow needs, we may have to delay or cease the implementation of our business strategy. Management believes that the actions presently being taken to further implement its business plan and generate revenues provide the opportunity for the Company to continue as a going concern. While we believe in the viability of its strategy to increase revenues, there can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent upon the Company s ability to further implement its business plan and generate revenues. We anticipate that depending on market conditions and our plan of operations, we may incur operating losses in the foreseeable future. Therefore, our auditors have raised substantial doubt about our ability to continue as a going concern. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE There have been no changes in or disagreements with accountants on accounting or financial disclosure matters. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS The following table sets forth the name and age of our sole officer and director as of October 4 , 2011. Our Executive officer is elected annually by our Board of Director. Our executive officer holds office until she resigns, are removed by the Board, or her successor is elected and qualified. Name Age Position Humaira Haider 40 Chief Executive Officer, President, Chief Financial Officer, Secretary, Treasurer and Director Set forth below is a brief description of the background and business experience of our executive officers and directors for the past five years. Humaira Haider, Chief Executive Officer, President, Chief Financial Officer, Secretary, Treasurer and Director.Humaira Haider is the founder of Health Directory Inc. She has spent the last four years working as an intern at various hospitals as follows: UCLA Medical Center, Los Angeles, California (2009 2011), Cedars Sinai Medical Center, Los Angeles, California (2008 2009), and Yale New Haven Hospital, New Haven, Connecticut (2007 2008). As an intern at each of the aforementioned hospitals, she spent most of her time assisting surgeons as needed in the emergency room. Prior to being an intern, Dr. Haider, received a PhD degree from the University of Heidelberg, Germany in 2006 and an MD and bachelor s degree in Microbiology from the University of Maryland in 1996. Term of Office Our directors are appointed for a one-year term to hold office until the next annual general meeting of our shareholders or until removed from office in accordance with our bylaws. Our officers are appointed by our board of directors and hold office until removed by the board EXECUTIVE COMPENSATION The following summary compensation table sets forth all compensation awarded to, earned by, or paid to the named executive officers paid by us for the period from September 29, 2010 (Inception) through March 31, 2011. SUMMARY COMPENSATION TABLE Name and Principal Position Year Salary ($) Bonus ($) Stock Awards ($) Option Awards ($) Non-Equity Incentive Plan Compensation ($) Non-Qualified Deferred Compensation Earnings ($) All Other Compensation ($) Totals ($) Humaira Haider, President, Chief Financial Officer, Treasurer, Secretary, Director 2010 $ 0 0 $ 150.00 (1) (2) 0 0 0 0 $ 150.00 (1) 2,000,000 shares have been issued to our Chief Executive Officer at par value $0.0001 per share for compensation upon formation of the Company. The shares were issued for services and are not stock options and therefore there is no black-scholes assumption. (2) The amount of the stock award is not calculable through the latest practicable date. We expect to be able to determine the amount of the stock award once our stock is publically traded. Such amount will be disclosed by the Company under Item 5.02(f) of Form 8-K. Option Grants Table. There were no individual grants of stock options to purchase our common stock made to the executive officers named in the Summary Compensation Table for the period from inception through March 31, 2011. Aggregated Option Exercises and Fiscal Year-End Option Value Table. There were no stock options exercised since inception through March 31, 2011 by the executive officers named in the Summary Compensation Table. Long-Term Incentive Plan ( LTIP ) Awards Table. There were no awards made to a named executive officers in the last completed fiscal year under any LTIP Compensation of Directors Directors are permitted to receive fixed fees and other compensation for their services as directors. The Board of Directors has the authority to fix the compensation of directors. No amounts have been paid to, or accrued to, directors in such capacity. Employment Agreements We entered into an employment agreement ( Employment Agreement ) with our president and chief executive officer , Humaira Haider, commencing May 1, 2011, which requires that Ms. Haider be paid a minimum of $500 per month for three (3) years from date of signing. Either Ms. Haider or the Company has the right to terminate the Employment Agreement upon thirty (30) days notice to the other party. Compensation Committee Interlocks and Insider Participation The Board of Directors has no nominating, auditing or compensation committees or any committee performing a similar function. The functions of those committees are being undertaken by the entire board as a whole. Prospective investors should bear in mind our current lack of corporate governance measures in formulating their investment decisions. TABLE OF CONTENTS PAGE Prospectus Summary 1
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+This summary highlights information about our business and about this prospectus. This summary does not contain all of the information that may be important to you. You should carefully read this prospectus in its entirety before making an investment decision. In particular, you should read the section titled Risk Factors and the consolidated financial statements and notes related to those statements included elsewhere in this prospectus. In this prospectus, unless otherwise indicated or the context requires otherwise, (i) the terms we, us, our, ConvergEx and our company refer to ConvergEx Inc., (ii) all data for 2010 is presented on a historical basis and does not give effect to our acquisition of either the RealTick EMS business or of the LDB Consulting business, (iii) data presented on a pro forma basis for 2010 gives effect to our acquisition of the RealTick EMS business and of the LDB Consulting business, except that the pro forma statement of operations for the year ended December 31, 2010 included in Unaudited Pro Forma Financial Information does not give effect to our acquisition of the LDB Consulting business and (iv) references to revenues refer to our operating revenues only, and do not refer to total revenues including reimbursed expenses. For further information with respect to our current and post-offering organizational structure, see the diagrams in Our Structure. Our Business We are a leading and trusted provider of mission-critical proprietary software products, including workflow automation solutions, and technology-enabled services across multiple asset classes with more than 4,000 customers. In the increasingly dynamic, complex and competitive institutional investment industry, asset managers and financial intermediaries are implementing ever more sophisticated strategies and infrastructure in order to improve their performance, grow their businesses and address new regulatory, compliance and customer requirements. Responding to our customers needs for end-to-end solutions, we combine an extensive array of proprietary software products and technology-enabled services that span the entire investment life cycle with a high level of customer service. Our proprietary software products and technology-enabled services automate and facilitate front-, middle- and back-office functions across geographies, asset classes and regulatory regimes, while providing tools and analytics that enhance these functions and the overall investment process for our customers. We believe our solutions enable our customers to better compete by providing infrastructure and services that support increased sophistication and operational efficiency, enabling them to focus on their core competencies and differentiators. Our large and diverse customer base of asset managers and financial intermediaries includes investment advisors, hedge funds, mutual funds, employee benefit plan sponsors, endowment funds, sovereign wealth funds, trust banks, family offices, separately managed accounts, broker-dealers, exchanges and other marketplaces, alternative trading systems and investment banks. We had more than 4,000 customers in 2010 on a pro forma basis. Our top 200 customers generated 62% of our revenues in 2010. We have a strong customer retention rate, as shown by the fact that 97% of our top 200 customers in 2009 remained customers in 2010. A substantial portion of our revenues come from consistent customers who utilize our products and services on a regular basis throughout the year. In 2010, we generated 71% of our revenues, excluding revenues from our Transition Management business line, from consistent customers. In 2010, no single customer accounted for more than 3.6% of our revenues. For further information on how we define consistent customers and calculate revenues from consistent customers, see Management s Discussion and Analysis of Financial Condition and Results of Operations Overview Consistent Customer Revenues. We provide products and services through two related business segments: Investment Technologies and Investment Services. Technology is at the core of both of our segments. Our Investment Technologies segment develops, markets and sells our proprietary software products, including workflow automation solutions, and technology-enabled services that our customers integrate into their technology infrastructures, which we refer to as being installed directly onto our customer s desktop. Our Investment Services segment utilizes many of the same proprietary software products and technology-enabled services on behalf of our customers, except that the Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities, and we are not soliciting an offer to buy these securities, in any state where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED JUNE 21, 2011 PRELIMINARY PROSPECTUS Shares ConvergEx Inc. Class A Common Stock This is an initial public offering of Class A common stock by ConvergEx Inc. We are offering shares of our Class A common stock, and the selling stockholders are offering an additional shares of our Class A common stock. We will not receive any proceeds from the sale of shares by the selling stockholders. We expect the initial public offering price to be between $ and $ per share. Currently, no public market exists for our Class A common stock. We intend to apply for listing of our Class A common stock on under the symbol CVGX. Investing in our Class A common stock involves a high degree of risk. See
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+$35,000 upon the later of (i) Horizon Tower entering into a tower space license with the Anchor Tenant with a minimum term of five (5) years and otherwise on term and conditions approved by Horizon Tower and (ii) completion of the four (4) other milestones payments described above; $5,000 upon the completion of Construction Management Services for construction of the Tower Site. In exchange for the Marketing Services, Horizon shall pay Service Provider [us] a single payment an amount equal to four (4) times the Annual TCF for each tower space license, other than Excluded Licenses, that commences within twelve (12) months after the Commencement Date. The payment amount shall be equal to three (3) times the Annual TCF for each tower space license, other than Excluded Licenses, that commences between thirteen (13) and twenty-four (24) months after the Commencement Date, two (2) times the Annual TCF for each tower space license, other than Excluded Licenses, that commences between twenty-five (25) and thirty-six (36) months after the Commencement Date and one (1) times the Annual TCF for each tower space license, other than Excluded Licenses, that commences between thirty-seven (37) and forty-eight (48) months after the Commencement Date. The Horizon Services Agreement is for a one-year term, is renewable and may be cancelled by either party on 30 days notice. We may seek to enter into services agreements with other tower companies to the extent they are permitted under the Horizon Services Agreement. We have identified 11 potential sites and submitted our first three tower packages to Horizon Tower in October 2011. We believe that for the next few months we will identify five to ten potential sites per month and present them to Horizon Tower for further analysis. Mr. Calabria has committed to devote as much time as required to execute our plan and fulfill our obligations under the agreement. The development work itself will be outsourced to consultants and independent contractors which specialize in wireless site development services as is common practice within the industry. Once Horizon accepts a tower package and authorizes us to proceed, the company, at Mr. Calabria s direction will issue purchase orders to various sub-contractors to complete the defined scopes of work. We believe that there a sufficient number of qualified sub-contractors available at reasonable prices to meet our needs. Competition Competition for antennae site customers consists of other national independent tower companies, wireless carriers that own and operate their own tower networks and lease tower space to other carriers, site development companies that acquire space on existing towers for wireless service providers and manage new tower construction and traditional local independent tower operators. We believe that tower location, capacity and quality of service historically have been and will continue to be the most significant competitive factors affecting owners, operators and managers of communications sites. There are several dominant public companies that operate in this space, namely American Tower Corporation, Crown Castle International Corporation and SBA Communications. We believe that the recent introduction of 4G and other factors will continue to drive the need for tower capacity and require the construction of new towers. We also believe that many of our existing competitors, although larger and better financed than us have conducted acquisitions on terms that require that they charge more for tower usage than we will. Employees We do not currently have any employees. Mr. Calabria serves us on a part time, as needed basis, but will devote as much time to the business of the company as he determines it reasonably requires (currently approximately 15 hours a week). Mr. Calabria works for us in the field in both northern and southern California. We have recently retained an independent contractor in Oregon to assist us in tower location services. We believe that we will be able to meet most of our needs through consultants and independent contractors as is typical within our industry. Properties We currently use space within offices leased by Mr. Calabria without cost to us. Legal Proceedings We are not party to any legal proceedings. MANAGEMENT Our directors and executive officers and additional information concerning them are as follows: NAME AGE POSITION(S) Donald J. Calabria 40 Director, Chief Executive Officer and Chief Financial Officer Frank J. Hariton 62 Secretary Donald J. Calabria has been our CEO, CFO and President since our inception in March 2011. Prior thereto, from 2006 to 2009 he was President of Gemini Consulting Group, Inc., a business consulting firm providing services to the wireless telecommunications industry including to Metro PCS, Verizon and T-Mobile. Since 2008 he has also been the President of GMV Holdings, LLC a company engaged in providing wireless services to the hospitality industry and from 2008 to 2010 was also president and CEO of its affiliate, GMV Wireless Inc., a public corporation. Mr. Calabria holds a BS in management from Arizona State University granted in 1993 and an MBA in management granted by Pepperdine University in 2000. Frank J. Hariton. Mr. Hariton is an attorney in private practice in New York State. Mr. Hariton has been Secretary of Petrocorp Inc., an OTCQB listed oil and gas Exploration Company, since 2007. Mr. Hariton was appointed secretary of both Liberty Gold Corp., and OTCQB company (a minerals exploration company) and Selga Inc.(an oil and gas exploration company) in April 2011. Mr. Hariton received his BA (1971) and JD (1974) from Case Western Reserve University. During the past five years, there have been no events under any bankruptcy act, no criminal proceedings and no judgments, injunctions, orders or decrees material to the evaluation of the ability and integrity of any director, executive officer, promoter or control person of the Company, including any allegations (not subsequently reversed, suspended or vacated), permanent or temporary injunction, or any other order of any federal or state authority or self-regulatory organization, relating to activities in any phase of the securities, commodities, banking, savings and loan, or insurance businesses in connection with the purchase or sale of any security or commodity, or involving mail or wire fraud in any business. Due to his stock ownership, Mr. Calabria cannot be considered an independent director. There are no family relationships among our officers and directors. Executive Compensation Mr. Calabria has not received any cash or other remuneration since inception. He will not receive any remuneration until the consummation of a business combination. No remuneration of any nature has been paid for services rendered by a director in such capacity. Our sole director and principal officer intends to devote limited time to our business affairs. Mr. Hariton will be paid legal fees, anticipated to be $15,000 and 250,000 shares of common stock in connection with our Form 10 and this registration statement, of which $5,000.00 has already been paid. He will receive no separate compensation for acting as our secretary. These fees are Mr. Hariton s usual and customary fees and do not represent any compensation for serving as Secretary. No retirement, pension, profit sharing, stock option or insurance programs or other similar programs have been adopted by us. Because we have only one director, we do not have standing audit, compensation and corporate governance committees, or committees performing similar functions. Security Ownership of Certain Beneficial Owners and Management. The following table sets forth, as of September 14, 2011, the stock ownership of (i) each of our named executive officers and directors, (ii) all executive officers and directors as a group, and (iii) each person known by us to be a beneficial owner of 5% or more of our common stock assuming the sale of all of the stock offered hereby. No person listed below has any option, warrant or other right to acquire additional securities from us, except as may be otherwise noted. We believe that all persons named in the table have sole voting and investment power with respect to all shares of common stock beneficially owned by them except as stated therein. Name and Address Amount and Nature of Beneficial Ownership(1) Percentage of Class Donald Calabria 3,387,500(2) 67.6% PO Box 10789 Newport Beach, CA 92658 Alan Collier(3) 3,387,500(2) 67.6% 1468 Heather Oaks Lane Westlake Village, CA 91361 C2 Capital, LLC 2,500,000 (3) 50.0% 3835-R East Thousand Oaks Blvd #340 Westlake Village, CA 91362 Frank J. Hariton 215,000 4.3% 1065 Dobbs Ferry Road White Plains, NY 10607 All officers and directors As a group (2 persons) 3,502,500(2) 70.1% (1) Except as otherwise indicated, all shares are owned directly. (2) Includes 2,500,000 shares owned by C2 Capital, LLC. Messrs. Calabria and Collier are each 50% owners of C2 Capital, LLC and have shared voting and dispositive power over these shares. (3) Mr. Collier is an associated person at Mid-Market Securities, LLC where he holds a Series 7, Series 79, Series 63 and Series 24 license as a securities broker and principal. Mid-Market Securities, LLC is not involved in any way with the Company or any of the matters discussed in this document. Mr. Collier s participation involvement and ownership are personal to him and entirely unrelated to his activities to Mid-Market Securities, LLC. CERTAIN TRANSACTIONS Upon our incorporation in March 2011, we issued an aggregate of 5,000,000 shares of our Common Stock to Donald J. Calabria (1,125,000 shares); Allan Collier (1,125,000 shares); C2 Capital LLC (2,500,000 shares) and Frank J. Hariton (250,000 shares), for an aggregate purchase price of $5,000 paid in services. During July and August 2011, Messrs Calabria, Collier and Hariton each gifted 10,000 shares of the stock that they own to relatives and to acquaintances. Neither us nor any person acting on our behalf offered or sold the securities by means of any form of general solicitation or general advertising. These shares of Common Stock were issued under the exemption from registration provided by Section 4(2) of the Securities Act. DESCRIPTION OF SECURITIES The Company s Certificate of Incorporation authorizes us to issue an aggregate of 75,000,000 shares of Common Stock. As of the date of this prospectus 5,000,000 shares of our Common Stock were issued and outstanding. All outstanding shares of Common Stock are of the same class and have equal rights and attributes. The holders of Common Stock are entitled to one vote per share on all matters submitted to a vote of stockholders of the Company. All stockholders are entitled to share in dividends, if any, as may be declared from time to time by the Board of Directors out of funds legally available therefore. In the event of liquidation, the holders of Common Stock are entitled to share ratably in all assets remaining after payment of all liabilities. Holders of Common Stock do not have cumulative or preemptive rights. Warrants or Convertible Securities We have not issued any warrants, options or other securities which are convertible into or exercisable for shares of our Common Stock. Transfer Agent The transfer agent for our common stock is New York Stock Transfer, LLC. Indemnification of Directors and Officers. Under Nevada Law and our Bylaws, we may indemnify an officer or director who is made a party to any proceeding, including a lawsuit, because of his position, if he acted in good faith and in a manner he reasonably believed to be in our best interest. We may advance expenses incurred in defending a proceeding. To the extent that the officer or director is successful on the merits in a proceeding as to which he is to be indemnified, we must indemnify him against all expenses incurred, including attorney's fees. With respect to a derivative action, indemnity may be made only for expenses actually and reasonably incurred in defending the proceeding, and if the officer or director is judged liable, only by a court order. The indemnification is intended to be to the fullest extent permitted by the laws of the State of Nevada. Regarding indemnification for liabilities arising under the Securities Act which may be permitted to directors or officers under Nevada law, we are informed that, in the opinion of the Securities and Exchange Commission, indemnification is against public policy, as expressed in the Securities Act and is, therefore, unenforceable. LEGAL MATTERS Validity of the securities offered by this prospectus will be passed upon for us by Frank J. Hariton, Esq., White Plains, New York. EXPERTS The financial statements included in this prospectus have been audited by Seale and Beers, CPAs, an independent registered public accounting firm, to the extent and for the periods set forth in their reports appearing elsewhere herein, and are included herein in reliance upon such reports given upon the authority of said firm as experts in auditing and accounting. WHERE YOU CAN FIND MORE INFORMATION We file annual, quarterly and special reports and other information with the SEC. These filings contain important information that does not appear in this prospectus. For further information about us, you may read and copy any reports, statements and other information filed by us at the SEC s Public Reference Room at 100 F Street, N.E., Room 1580, Washington, D.C. 20549-0102. You may obtain further information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. Our SEC filings are also available on the SEC Internet site at http://www.sec.gov, which contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. PART I. FINANCIAL INFORMATION ITEM 1. CONDENSED FINANCIAL STATEMENTS. 9/30 FINANCIAL STATEMENTS & NOTES
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001519622_sram_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001519622_sram_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..6fd1b31a26ec10bc1fd1e216e073634da63e7929
--- /dev/null
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@@ -0,0 +1 @@
+Prospectus summary 1
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001519632_lrr_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001519632_lrr_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad
--- /dev/null
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@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001520020_enduro_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001520020_enduro_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..ac9287ec9c92c6073353647cad0f8ed1f272ecfc
--- /dev/null
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@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. To understand this offering fully, you should
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001520047_immunoclin_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001520047_immunoclin_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..9d4d2939111a6ed63f1d34bb34aaeb7be16543c4
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@@ -0,0 +1 @@
+PROSPECTUS SUMMARY The following summary highlights material information contained in this prospectus. This summary does not contain all of the information you should consider before investing in the securities. Before making an investment decision, you should read the entire prospectus carefully, including the risk factors section, the financial statements and the notes to the financial statements. You should also review the other available information referred to in the section entitled Where You Can Find More Information in this prospectus and any amendment or supplement hereto. The Company Overview Pharma Investing News, Inc. was incorporated in the State of Nevada on February 8, 2011. However, we commenced initial operations in July 2008 with the registration of our website domain pharmainvestingnews.com. These initial operations consisted of developing the website and establishing our marketing plan. We officially launched pharmainvestingnews.com in late 2008. Since that time, until we incorporated in 2011, we had been operating as an unincorporated entity, solely owned by our founder, Mr. Robert Lawrence. Upon incorporating we established our corporate headquarters in Vancouver, B.C., Canada, and our telephone number is (604) 563-8467. Pharma Investing News, Inc. is an internet-based company that provides advertising solutions to pharmaceutical and biotechnology companies. The goal of pharmainvestingnews.com is to provide an online community where pharmaceutical and biotechnology companies will be able to provide corporate updates and other information to the public. This service is free of charge to viewers and offers pharmaceutical and biotech companies the ability to showcase their businesses and build brand awareness. We intend to establish our website as a valuable resource for the pharmaceutical and biotechnology industries where the public will go to find the latest information relating to the industry, as a whole, as well as specific information about companies and new product details. We believe that we can position pharmainvestingnews.com to become an all-inclusive resource, allowing users to acquire in-depth analyses, detailed marketing information and current news on research and development and other trends within the pharmaceutical and biotech industries. In order to set ourselves apart and establish pharmainvestingnews.com as the online resource for the latest news and developments in the pharmaceutical and biotechnology sectors, we believe that we have developed a business model that will allow the Company to generate revenue while offering a valuable service to both individuals and the industry alike. For our current clients we assist in the development and management of marketing campaigns that are launched on pharmainvestingnews.com and other outlets across the internet. Our specifically designed marketing campaigns utilize, not only pharmainvestingnews.com, but we also offer a suite of services that allow our clients to take advantage of other online media channels. These marketing campaigns are designed to assist our clients with the promotion of their goods and services directly to the public. The goal of our advertising is to create brand awareness, not only for our clients, but for pharmainvestingnews.com. By establishing pharmainvestingnews.com as a trusted online resource we will be able to maximize our revenue while providing a service that benefits both the public and the pharmaceutical and biotechnology sectors alike. We are currently a development stage company and to date we have recorded no revenue. Accordingly, our independent registered public accountants have issued a comment regarding our ability to continue as a going concern (please refer to the footnotes to the financial statements). Until such time that we are able to establish a consistent flow of revenues from our operations which is sufficient to sustain our operating needs, Management intends to rely primarily upon debt financing to supplement cash flows, if any, generated by our services. We will seek out such financings as necessary to allow the Company to continue to grow our business operations . Assuming we receive no proceeds from this Offering, we will need a minimum amount of $131,182 to cover our operating expenses for the next 12 months after the Offering. This minimum amount includes such additional costs, excluding professional fees, associated with being a reporting Company with the Securities and Exchange Commission ("SEC "). We estimate such to be approximately $10,000 for 12 months following this Offering. The Company has included additional costs related to becoming a publicly reporting company in its targeted expenses for working capital expenses and intends to seek out reasonable loans from friends, family and business acquaintances if it becomes necessary. At this point we have been funded by our sole officer and director, and have not received any firm commitments or indications from any family, friends or business acquaintances regarding any potential investment in the Company. Our current cash and working capital is not sufficient to cover our current estimated expenses of $45,000, which include those fees associated obtaining a Notice of Effectiveness from the Commission for this registration statement. We hope that we will be able to secure additional financing, and complete this Offering within the coming months. Upon obtaining effectiveness, we will conduct the Offering contemplated hereby, and anticipate raising sufficient capital from this Offering to market and grow our Company. We believe that the maximum amount of funds generated from the Offering will provide us with enough proceeds to fund our plan of operations for up to twelve months after the completion of this Offering. Assuming we generate nominal revenues, we may still require additional financing to fund our operations past the twelve month period following the completion of this Offering if the maximum amount of funds is not raised. While our ability to generate revenue is not correlated directly to the amount of shares sold by us under this Offering, our potential to generate revenue can be affected by our marketing and advertising strategies and the personnel the Company employs. These factors are directly related to the amount of proceeds we receive from this Offering, which corresponds to the number of shares we are successful in selling under this Offering (see Use of Proceeds Chart). We believe we will generate revenues by the end of 2011. As we are a start-up company, it is unclear how much revenue our operations will generate; however, it is our hopes that our revenues will exceed our costs. Our revenues will be impacted by how successful and well targeted was the execution of our marketing campaign, the general condition of the economy, and the number of clients we will attract. For a further discussion of our initial operations, plan of operations, growth strategy and marketing strategy see the below section entitled Description of Our Business . SUMMARY OF THIS OFFERING The Issuer Pharma Investing News, Inc. Securities being offered Up to 4,000,000 shares of Common Stock, our Common Stock is described in further detail in the section of this prospectus titled DESCRIPTION OF SECURITIES Common Stock. Offering Type
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001520238_das_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001520238_das_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..a7e919daf62695e26d3ca5893060fc244027a6d2
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@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This Prospectus, and any supplement to this Prospectus include ?forward-looking statements?. To the extent that the information presented in this Prospectus discusses financial projections, information or expectations about our business plans, results of operations, products or markets, or otherwise makes statements about future events, such statements are forward-looking. Such forward-looking statements can be identified by the use of words such as ?intends?, ?anticipates?, ?believes?, ?estimates?, ?projects?, ?forecasts?, ?expects?, ?plans? and ?proposes?. Although we believe that the expectations reflected in these forward-looking statements are based on reasonable assumptions, there are a number of risks and uncertainties that could cause actual results to differ materially from such forward-looking statements. These include, among others, the cautionary statements in the ?Risk Factors? section beginning on page 4 of this Prospectus and the ?Management?s Discussion and Analysis of Financial Position and Results of Operations? section elsewhere in this Prospectus. DAS Global Capital Corp We were incorporated on April 28, 2011 under the laws of the State of Nevada. We do not have any subsidiaries. Our principal executive offices are located at 1785 E Sahara Ave, Ste 490, Las Vegas, Nevada 89104. Our telephone number is (281) 914-8636. Our website will be up shortly www.dasglobalcapital.com. Our fiscal year end is December 31. We are a start-up, development Stage Company. We have only recently begun operations, have no sales or revenues, and therefore rely upon the sale of our securities to fund our operations. We have a going concern uncertainty as of the date of our most recent financial statements. Our website will provide prospective homebuyers with comprehensive and easy-to-use information on foreclosed residential properties. Prospective homebuyers can search our web-based database free of charge, but are required to register in order to save favorite listings and searches. Prospective homebuyers will receive free email updates when new properties become available that match their previous search criteria. We intend to use our website and our web-based database to promote our realtor services to prospective homebuyers interested in foreclosed residential properties. We intend to generate revenue by selling our realtor services to prospective homebuyers interested in foreclosed residential properties. Our website will advertise our realtor services. Also, each registered user of our website will receive follow-up e-mails offering him the ability to schedule an appointment with one of our realtors to view properties he has seen on our website and to alert him to new properties that match her previous search criteria. In some instances, realtors employed or retained by us will provide realtor services. In other instances, we will refer these services to outside realtors. We will collect a fixed percentage of the commissions the realtors receive on transactions. Initially, our focus will be on homebuyers interested in purchasing foreclosed residential properties in Harris, Montgomery, Fort Bend and Galveston Counties in the State of Texas. Depending upon market conditions and market acceptance of our realtor services, we may expand into other counties in the State of Texas. Our principle business activities will be: promoting, marketing, and selling realtor services to prospective homebuyers interested in foreclosed residential properties over the Internet; and developing, maintaining, and updating a comprehensive and easy to use web-based database of information on foreclosed residential properties that can be accessed by prospective homebuyers free of charge and can be used by us to promote our realtor services. The information contained on our website is not part of this Prospectus. 1 We are not a blank check company. Rule 419 of Regulation C under the Securities Act of 1933 defines a ?blank check company? as a (i) development stage company that has no specific business plan or purpose or has indicated that its business plan is to engage in a merger or acquisition with an unidentified company or companies, or other entity or person, and (ii) is issuing a penny stock. Accordingly, we do not believe that our company may be classified as a ?blank check company? because we intend to engage in a specific business plan and do not intend to engage in any merger or acquisition with an unidentified company or other entity. To the extent we cannot meet our cash requirements for the next 12 months by generating revenue, we intend to meet such cash requirements through sale of our equity securities by way of private placements. We currently do not have any arrangements in place to complete any such private placements (nor have we identified any potential investors) and there is no assurance that we will be successful in completing any such private placements on terms acceptable to us. If we are unable to raise sufficient capital to carry out our business plan, we may be forced to cease operations and you may lose your entire investment. The Offering The 2,000,000 shares of our common stock being registered by this Prospectus represent approximately 28.6% of our issued and outstanding common stock as of September 30, 2011. Both before and after the offering, Darrell A Calloway, our sole officer and director, will control DAS Global Capital. As of September 30, 2011, Mr. Calloway owns 5,000,000 shares, representing approximately 71.4% of our issued and outstanding common stock. None of these shares are being registered by this Prospectus. After the offering, Mr. Calloway will continue to own approximately 71.4% of our issued and outstanding common stock. The following is a brief summary of the offering: Securities Offered: 2,000,000 shares of common stock, par value $0.0001 per share, offered by 35 selling security holders. Initial Offering Price: The $0.03 per share initial offering price of our common stock was determined by our Board of Directors based on several factors, including our capital structure and the most recent selling price of 10,000 shares of our common stock in private placements for $0.03 per share on May 9, 2011. The selling security holders will sell at an initial price of $0.03 per share until our common stock is quoted on the OTC Bulletin Board and thereafter at prevailing market prices or privately negotiated prices. However, there can be no assurance that our common stock will ever become quoted on the OTC Bulletin Board. Minimum Number of Securities to be Sold in ther Offering: None. 2 Securities Issued and to be Issued: As of September 30, 2011, we had 7,000,000 issued and outstanding shares of our common stock, and no issued and outstanding convertible securities. All of the common stock to be sold under this Prospectus will be sold by existing security holders. There is no establihed market for the common stock being registered. We intend to engage a market maker to apply to have our common stock quoted on the OTC Bulletin Board. This process usually takes at least 60 days and the application must be made on our behalf by a market maker. We have not yet engaged a market maker to file our application. If our common stock becomes quoted and a market for the stock develops, the actual price of the shares will be determined by prevailing market prices at the time of the sale. The trading of securities on the OTC Bulletin Board is often sporadic and investors may have difficulty buying and selling or obtaining market quotations, which may have a depressive effect on the market price of our common stock. Proceeds: We will not receive any proceeds from the sale of our common stock by the selling security holders. Financial Summary Information All references to currency in this Prospectus are to U.S. Dollars, unless otherwise noted. The following table sets forth selected financial information, which should be read in conjunction with the information set forth in the ?Management?s Discussion and Analysis of Financial Position and Results of Operations? section and the accompanying financial statements and related notes included elsewhere in ther Prospectus. Balance Heet Data As of September 30, 2011 (Audited) As of June 30, 2011 (Unaudited) Balance Heet Working Capital $ 22,675 $ 12,574 Total Current Assets $ 30,700 24,318 Total Current Liabilities $ (8,025 ) $ (11,744 ) Income Heet Data Period from April 28, 2011 (date of inception) to September 30, 2011 (Audited) Three Months Ended June 30, 2011 (Unaudited) Period from September 30, 2011 (date of inception) to June 30, 2011 (Unaudited) Income Statement Revenues $ 0 $ 0 $ 0 Expenses $ 8,425 $ 39,501 $ 47,926 Net Loss $ (8,425 ) $ (39,501 ) $ (47,926 ) Net Loss per share $ (0.00 ) $ (0.01 ) $ (0.01 ) 3
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001520320_polar_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001520320_polar_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..800d4b0c7eb2a81447a98db2aa3d37c4d3ba59c7
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@@ -0,0 +1 @@
+POST DATA, INC. (A DEVELOPMENT STAGE COMPANY) STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY FROM MARCH 22, 2011 (INCEPTION) TO MARCH 31, 2011 Deficit Accumulated Common Stock Additional During Development Stockholders' Shares Amount Paid-in Capital Stage Equity March 25, 2011 Resolution authorizing sale of 2,000,000 shares at $.01 per share 2,000,000 $ 2,000 $ 18,000 $ - $ 20,000 Net Loss from March 22, 2011 (Inception) through March 31, 2011 - - - (1,000) (1,000) Balance, March 31, 2011 2,000,000 $ 2,000 $ 18,000 $ (1,000) $ 19,000 The accompanying notes are an integral part of these financial statements. Page 25 of 41 POST DATA, INC. (A DEVELOPMENT STAGE COMPANY) STATEMENT OF CASH FLOWS FROM MARCH 22, 2011 (INCEPTION) TO MARCH 31, 2011 CASH FLOWS FROM OPERATING ACTIVITIES Net loss $ (1,000) Changes in operating assets and liabilities - Net cash used in operating activities (1,000) CASH FLOWS FROM INVESTING ACTIVITIES - CASH FLOWS FROM FINANCING ACTIVITIES Sale of stock 20,000 NET INCREASE IN CASH AND CASH EQUIVALENTS 19,000 CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD - CASH AND CASH EQUIVALENTS - END OF PERIOD $ 19,000 SUPPLEMENTAL CASH FLOW INFORMATION: Cash paid for interest $ - Cash paid for taxes $ - The accompanying notes are an integral part of these financial statements. Page 26 of 41 POST DATA, INC. (A DEVELOPMENT STAGE COMPANY) NOTES TO FINANCIAL STATEMENTS MARCH 31, 2011 NOTE 1- ORGANIZATION AND BASIS OF PRESENTATION Post Data, Inc. (the Company) was incorporated on March 22, 2011 under the laws of the State of Nevada. The business purpose of the Company is to destroy and recycle electronic devices in Edmonton, Alberta, Canada, in a manner which ensures the confidential destruction of all previous user data. The Company has selected March 31 as its fiscal year end. NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Development Stage Company The Company is considered to be in the development stage as defined in ASC 915-10-05, Development Stage Entity. The Company is devoting substantially all of its efforts to the execution of its business plan. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Cash and Cash Equivalents Cash and cash equivalents consists principally of currency on hand, demand deposits at commercial banks, and liquid investment funds having a maturity of three months or less at the time of purchase. The Company had $19,000 cash and cash equivalents as of March 31, 2011. Start-up Costs In accordance with ASC 720-15-20, Start-up Activities, the Company expenses all costs incurred in connection with the start-up and organization of the Company. Common Stock Issued For Other Than Cash Services purchased and other transactions settled in the Company's common stock are recorded at the estimated fair value of the stock issued if that value is more readily determinable than the fair value of the consideration received. Page 27 of 41 POST DATA, INC. (A DEVELOPMENT STAGE COMPANY) NOTES TO FINANCIAL STATEMENTS MARCH 31, 2011 NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Recently Enacted Accounting Standards (Continued) 2011-02, which contain technical corrections to existing guidance or affect guidance to specialized industries or entities, were recently issued. These updates have no current applicability to the Company or their effect on the financial statements would not have been significant. NOTE 3- PROVISION FOR INCOME TAXES The Company recognizes the tax effects of transactions in the year in which such transactions enter into the determination of net income regardless of when reported for tax purposes. Deferred taxes are provided in the financial statements under FASC 740-10-65-1 to give effect to the temporary differences which may arise from differences in the bases of fixed assets, depreciation methods and allowances based on the income taxes expected to be payable in future years. Minimal development stage deferred tax assets arising as a result of net operating loss carry-forwards have been offset completely by a valuation allowance due to the uncertainty of their utilization in future periods. Operating loss carry-forwards generated during the period from March 22, 2011 (date of inception) through March 31, 2011 of $1,000 will begin to expire in 2031. Accordingly, deferred tax assets of approximately $350 were offset by the valuation allowance. The Company has no tax positions at March 31, 2011 for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility. The Company recognizes interest accrued relative to unrecognized tax benefits in interest expense and penalties in operating expense. During the period from March 22, 2011 (inception) to March 31, 2011 the Company recognized no income tax related interest and penalties. The Company had no accruals for income tax related interest and penalties at March 31, 2011. NOTE 4 - STOCKHOLDERS EQUITY Preferred Stock As of March 31, 2011 the Company has 20,000,000 shares of preferred stock authorized with a par value of $0.001 per share. No preferred shares are issued and outstanding. Page 29 of 41 POST DATA, INC. (A DEVELOPMENT STAGE COMPANY) NOTES TO FINANCIAL STATEMENTS MARCH 31, 2011 NOTE 4 - STOCKHOLDERS EQUITY (CONTINUED) Common Stock As of March 31, 2011 the Company has 100,000,000 shares of common stock authorized with a par value of $0.001 per share. 2,000,000 shares have been sold as of March 31, 2011. The following details the stock transactions for the Company: On March 25, 2011 the Company authorized the sale of 2,000,000 shares of its common stock to its founding President for $.01 per share for a total of $20,000 cash to provide initial working capital. The $20,000 sale of stock, less $1,000 comprehensive loss, equals a stockholders equity of $19,000 as of March 31, 2011. NOTE 5 - COMMON STOCK OFFERING The Company has authorized a common stock offering of a maximum of 10,000,000 shares at a price of $0.01 per share for gross proceeds of $100,000. Proceeds of the offering will be used for administrative expenses and execution of the Company s business plan. NOTE 6 - FOREIGN CURRENCY TRANSLATION Since the Company operates in Canada there is potential for transactions denominated in Canadian dollars, although none occurred as of March 31, 2011. Assets and liabilities denominated in Canadian dollars are revalued to the United States dollar equivalent as of the reporting date. The effect of change in exchange rates from the transaction dates to the reporting date, for assets and liabilities, is reported as a non-operating Foreign Currency Gain or Loss. NOTE 7 - GOING CONCERN The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America, which contemplates continuation of the Company as a going concern. The Company has incurred an operating deficit since its inception, is in the development stage and has generated no operating revenue. These items raise substantial doubt about the Company s ability to continue as a going concern. In view of these matters, realization of the assets of the Company is dependent upon the Company s ability to meet its financial requirements through equity Page 30 of 41 POST DATA, INC. (A DEVELOPMENT STAGE COMPANY) NOTES TO FINANCIAL STATEMENTS MARCH 31, 2011 NOTE 7 - GOING CONCERN (CONTINUED) financing and the success of future operations. These financial statements do not include adjustments relating to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue in existence. NOTE 8 - SUBSEQUENT EVENTS The Company has evaluated events from March 31, 2011 through the date the financial statements were issued. There are no subsequent events required to be disclosed. Page 31 of 41 Management s Discussion and Analysis of Financial Condition and Results of Operations
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001520359_i-am_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001520359_i-am_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..60f7c0f7266ffefb276cbd86270c340269846a6f
--- /dev/null
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+PROSPECTUS SUMMARY This summary highlights some information from this prospectus, and it may not contain all the information important to making an investment decision. A potential investor should read the following summary together with the more detailed information regarding the Company and the common stock being sold in this offering, including Risk Factors and the financial statements and related notes, included elsewhere in this prospectus. The Company History and Development of the Company The Company is a development stage company focusing on innovating and commercializing technologies and products that work in conjunction with smoke or carbon monoxide detectors to shut off power sources to appliances. The Company was incorporated in the State of Colorado in September 25, 2008. The Company was founded by its current chief executive officer, Michael L. Haynes, after watching his mother s home virtually consumed by fire, commencing from a regular kitchen-stove food-preparation fire. Since then, Mr. Haynes has committed himself to building a company to facilitate, alleviate and prevent damaging, harmful and deadly fires. From Mr. Haynes original concept, the Smart Switch has evolved with the inclusion of circuitry for reducing electricity consumption to each appliance connected to it, as well as, operating and tendering surge protection. The Company is focused on innovating and commercializing products that work in conjunction with smoke and carbon monoxide detectors, to shut-off power sources and supplies to electrical and gas operated appliances. The Company is currently incorporating a technology that aims to reduce electricity consumption, as well as, operate as a surge protector on appliances operating with the Smart Switch . In the future, the Company envisions the Smart Switch integrated within appliance cords for the next generation of energy saving and fire avoidance appliances. The Company s products are sustainable and renewable energy technologies. The Smart Switch is better recognized as a Smoke fault Interrupter (SFI), performing a task similar to common Ground Fault Interrupter (GFI) products. The Company s product and technology have the potential to be incorporated within buildings, residences and appliances. The Company plans to introduce its Smart Switch product, which purges the source of power and/or gas to any and all appliances when smoke or toxic levels of carbon monoxide have been detected by smoke or carbon monoxide detection devices (the Company s gas application is currently in the research and development phase). The Company s Smart Switch operates by initially inserting the unit into an electrical outlet. Any electrical appliance may then be plugged into the Smart Switch to become protected and ready. The Smart Switch for multiple appliance usage is currently in the research and development phase at the Company. Once the Smart Switch hears and perceives the detector s sound or tone, it then will switch off power, following a short and pre-determined pause, to any appliance or electrical device protected by the Smart Switch unit. The Company s products are intended to work in conjunction with smoke, heat, fire, and carbon monoxide detectors. The Smart Switch can protect such appliances as stoves, furnaces, microwaves, space heaters, clothes dryers, lighted Christmas trees, and small appliances, such as hot plates, fans and curling irons. The Smart Switch shuts off power to appliances that pose the risk of smoke eventually igniting into a fire, or from an operating appliance that may be emitting toxic levels of carbon monoxide. The Smart Switch is ideal for use in homes, apartments, office buildings, including city, state and federal government buildings, and military buildings, worldwide. The Company s product may help reduce the loss of life and property damage from fires and carbon monoxide. As the Company s technology, along with a working smoke alarm or carbon monoxide detector, allows detection and prevention of fires, the Company believes that its technology represents the next generation of fire safety and detection by offering a preemptive solution. The Company s design of the Smart Switch also reduces electricity usage to the appliance connected to the unit, allowing it to perform and function as a surge protector. The Smart Switch is designed for indoor use only at this time. The Company anticipates that through current research and development efforts that it will conceive of designing and building an enhanced product that may be suitable for outdoor applications. The Company believes that the Smart Switch is a green , or environmentally friendly, energy renewable and sustainable. The Company s product can help reduce atmospheric pollution due to home and building fires. In addition, the product may significantly reduce deaths from carbon monoxide poisoning by switching off appliances or equipment protected with the Smart Switch once the carbon monoxide detector is sounded. Lastly, when operational, the product is capable of reducing the power and may act as a surge protector for the appliances plugged into the Smart Switch.. The Company s technology, identified as Smoke Fault Interruption (SFI), and its products, are UL-approved for residential and commercial use in the United States and Canada. The SFI technology is similar to the existing Ground Fault Interrupter (GFI) technology that is presently codified in various building laws and ordinances across the United States. The Company has not sold any of its products to date, but has completed the design and UL certification of the Smart Switch. Sample units of the product are available that are already designed, tested and manufactured on a small scale. The Company intends to initiate production on a large scale, directly by the Company itself or through its manufacturing partners. The Company is currently seeking to form relationships with retailers and vendors that can help distribute the Company s products on a wide scale to potential customers. The Business Every year, millions of smoke detectors are sold to help homes and businesses detect smoke that may be emitted by fires. The goal of these devices is to help warn individuals that a fire may be in progress. While these devices alert their users to the potential occurrence of a fire, they do nothing to disable any appliances or devices. The Company s first generation product, the Smart Switch, attempts to address this issue. The Smart Switch is the size of a large cell phone and plugs directly into an electrical wall outlet. Once the Smart Switch is plugged into a wall outlet, any appliance may be plugged into the unit. The Smart Switch works to interrupt the electricity of the appliance that is plugged into it, thereby turning off such appliance in critical situations. The Company is attempting to bring its product to the marketplace and revolutionize how individuals and businesses protect their properties. In order to do so, in addition to the Company s products functioning as planned, the Company requires effective and efficient means to reach and sell to its end user customers. As a developing company, the Company is in the process of establishing ongoing relationships with partners, such as distributors and retailers, who can showcase the Company s products to their regular customers. The Company anticipates the use of television, radio, public relations, print media, and internet advertising to market the Smart Switch and any other product that the Company develops. The Company believes that the best way to reach its target customers is generally through media advertising and relationships with retailers and distributors who will market and sell the Company s products as part of their regular offerings to their regular customers. The Company intends to serve as a leading provider of its devices to individuals and businesses that will use the Company s products in homes, apartments and office buildings. The Company, as the designer and manufacturer of the product, will earn a sales price on each product that is sold to an end customer. The Company believes that in addition to retailers and distributors who will promote and distribute the Smart Switch (and any other products that the Company develops) to their regular customers, many consumers will purchase the Company s products directly through the internet. The Company anticipates that once word of mouth for its products gains a foothold, many potential customers are likely to visit the Company s website and purchase products directly through easy-to-use direct internet ordering. The Company also intends to develop additional products that address consumer needs for smart devices or applications. These business plans are based on the Company s ability to market its products and develop the awareness of its products and industry niche and the potential utility of purchasing the Company s products. The Company must develop its strategy to adapt to the marketability and awareness of its products, and as such, any of the areas in which the Company anticipates to develop may have obstacles that may delay such development as the Company s target market becomes increasingly aware of its products and industry niche. Risks and Uncertainties Facing the Company As a development stage company, the Company has no operating history and has continuously experienced losses since its inception. The Company s independent auditors have issued a report raising a substantial doubt about the Company s ability to continue as a going concern. That is, the Company needs to create a source of revenue or locate additional financing in order to continue its developmental plans. As a development stage company, management of the Company has no prior experience in building and selling products similar to that of the Company or in marketing and distributing such products on a broad scale. One of the principal challenges facing the Company is identifying and targeting effective sales, marketing and distribution strategies. As a development company, the Company is in the process of identifying and targeting potential distributors, marketers and sellers of its products in order to reach the intended end users for the Smart Switch. To reach potential end customers, the Company will need to have an effective sales, marketing and distribution strategy. Currently the Company anticipates utilizing a combination of television, radio, public relations, print media, and internet advertising to create a larger awareness of the Smart Switch. The Company believes the best way to reach this market is generally through media advertising and through relationships with retailers and distributors who will showcase the Company s product as part of their offerings to their customers. The Company hopes that it can establish an on-going network of such sales, marketing and distributions strategies to reach end users of the Smart Switch and other products that the Company may develop. As the Company s marketing and advertising resources are limited, the Company will rely on effective execution or sales and marketing strategies as well as strong distribution partnerships in order to reach as many end users of the Company s products as possible. Due to financial constraints, the Company has to date conducted limited advertising and marketing to reach end customers. If the Company were unable to develop strong and reliable sources of potential end users and a means to efficiently reach buyers and customers for the Smart Switch, it is unlikely that the Company could develop its operations to return revenue sufficient to further develop its business plan. Moreover, the above assumes that the Company s product is met with customer satisfaction in the marketplace and exhibit steady adoption of the Smart Switch amongst the potential customer base, neither of which are currently known or guaranteed. Trading Market Currently, there is no trading market for the securities of the Company. The Company intends to initially apply for admission to quotation of its securities on the OTC Bulletin Board as soon as possible which may be while this offering is still in process. There can be no assurance that the Company will qualify for quotation of its securities on the OTC Bulletin Board. See RISK FACTORS and DESCRIPTION OF SECURITIES . The Offering There is no minimum of Shares that must be sold by the Company before the offering can close or the Company can otherwise use funds raised in the offering. The Company may also have additional closings from time to time during the offering period. The maximum number of Shares that can be sold pursuant to the terms of this offering is 4,000,000. The offering will terminate twenty-four (24) months from the date of this prospectus unless earlier fully subscribed or terminated by the Company. This prospectus also relates to the offer and sale by certain shareholders of the Company of up to 2,000,000 Shares (the Selling Shareholder Shares ). The selling shareholders will offer their shares at a price of $3.00 per share until such as the Company's common stock is listed on a national securities exchange after which time such selling shareholders may sell their shares at prevailing market or privately negotiated prices, in one or more transaction that may take place by ordinary broker's transactions, privately-negotiated transactions or through sales to one or more dealers for resale. Common stock outstanding before the offering 9,501,106 (1) Common stock offered by the Company 4,000,000 (2) Common stock for sale by selling shareholders 2,000,000 Common stock outstanding after the offering if maximum number sold 13,501,106 (2) Offering Price $ 3.00 per share Proceeds to the Company $ 12,000,000 (2) (3) (1) Based on number of shares outstanding as of the date of this prospectus. (2) Assumes the sale of the maximum number of Shares. (3) The Company will offer the Shares directly without payment to any officer or director of any commission or compensation for sale of the Shares. The Company will also attempt to locate broker-dealers or selling agents to participate in the sale of the Shares. In such cases, the Company will pay customary selling commissions and expenses of such sales which would reduce the proceeds to the Company. Any and all funds received at any time in the offering will be immediately available to the Company. There is no fixed amount or number of Shares that must be reached or sold before any closing and the Company can use invested funds immediately. Funds will not be held in an escrow account. INDEX TO FINANCIAL STATEMENTS Report of Independent Registered Public Accounting Firm 1 Balance Sheets 2 Statements of Operations 3 Statements of Changes In Stockholders Deficit 4 Statements of Cash Flows 5 Notes to Financial Statements INDEX TO FINANCIAL STATEMENTS Report of Independent Registered Public Accounting Firm 1 Balance Sheets 2 Statements of Operations 3 Statements of Changes In Stockholders Deficit 4 Statements of Cash Flows 5 Notes to Financial Statements Summary Financial Information The statements of operations data for the periods ended December 31, 2010, 2009 and 2008, and the balance sheet data at December 31, 2010, 2009 and 2008, are derived from the Company s audited financial statements and related notes thereto included elsewhere in this prospectus. Period ended 12/31/2010 Period ended 12/31/2009 Period ended 12/31/2008 Statement of operations data Revenue $ 1,333 $ 0 $ 0 Net loss $ (2,024,863 ) $ (29,564 ) $ (508,307 ) Net loss per share, basic and diluted (0.47 ) (0.01 ) (0.15 ) Weighted average number of shares outstanding, weighted and diluted 4,273,840 3,801,748 3,314,041 December 31, 2010 December 31, 2009 December 31, 2008 Balance sheet data Cash and cash equivalents $ 0 $ 1,726 $ 12,132 Total assets $ 0 $ 1,726 $ 12,132 Total liabilities $ 550,667 $ 539.597 $ 520,439 Total stockholders equity (deficit) $ (550,667 ) $ (537,871 ) $ (508,307 )
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001520397_china_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001520397_china_prospectus_summary.txt
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+PROSPECTUS SUMMARY This summary highlights selected information contained elsewhere in this prospectus. This summary does not contain all the information that you should consider before investing in the common stock. You should carefully read the entire prospectus, including Risk Factors , Management s Discussion and Analysis of Financial Condition and Results of Operations and the Consolidated Financial Statements, before making an investment decision. THE COMPANY Company Structure China Fitness & Beauty Inc. ( China Fitness or the Company ) is a Delaware corporation organized on October 30, 2009. China Fitness owns all of the outstanding capital stock of Fitness & Beauty Corporation Limited ( CFB Hong Kong ), a Hong Kong company which was originally founded on December 14, 2009. CFB Hong Kong in turn owns all of the outstanding capital stock of Chengdu Tian Ze Dao Qin Management Consulting Co., Ltd. (the PRC Subsidiary ), a company founded in Sichuan province of the People s Republic of China (the PRC ) on July 27, 2010. On March 3, 2011, we issued a total of 9,950,000 shares of our common stock, $0.0001 par value per share, to several non-U.S. persons in consideration for their aggregate investment of $100,000 in China Fitness, which has been contributed to the capital account of our PRC Subsidiary, a wholly owned subsidiary of CFB Hong Kong. Pursuant to the PRC laws and regulations, the PRC Subsidiary is a wholly foreign owned enterprise. The issuance of such 9,950,000 shares of our common stock was made pursuant to an exemption from registration contained in Regulation S under the Securities Act of 1933, as amended. The following flow chart illustrates our companies organizational structure: Our Business We are a development stage company specializing in providing management services to fitness centers in China. We currently provide management services to two fitness centers in China. The fitness centers under our management currently provide programs, services and products that combine exercise, education and nutrition to help the members and clients of the fitness centers to achieve their fitness goals so as to provide them with a better quality of life and a healthier and richer lifestyle what we call a Wellness lifestyle. These services include professional personal training, group exercise classes, comprehensive fitness assessments, educational demonstrations, nutrition coaching, weight loss programs, and yoga centers including hot yoga. As of the date of this filing, we are currently managing two fitness centers in China, one in Zhenjiang, Jiangsu province, and the other one in Hengyang, Hunan province, with an aggregate size of 3,600 square meters for both such facilities. As of December 31, 2010, the Company had an accumulated deficit of $59,825, shareholders deficit of $28,303 and a negative working capital of $29,417, and it generated $4,230 revenue from operations for the three months ended December 31, 2010. Our auditor Goldman, Kurland, and Mohidin, LLP has expressed their concern as to our ability to continue as a going concern in the audit opinion of our financial statements for the period ended September 30, 2010. Summary of the Offering The selling stockholder named in this prospectus is offering all of the shares of common stock offered through this prospectus. The selling stockholder is selling shares of common stock covered by this prospectus for its own account. We will not receive any of the proceeds from the sale of these shares. The offering price of $0.01 was determined by the price for which certain shares were issued to our shareholders in a private placement issuance in exchange for a $100,000 investment, which has been used for the contribution into the capital account of our PRC Subsidiary. The offering price of $0.01 is a fixed price at which the selling stockholder may sell its shares until our common stock is quoted on the OTCBB, at which time the shares may be sold at prevailing market prices or privately negotiated prices. We have agreed to bear the expenses relating to the registration of the shares for the selling stockholder. The offering will conclude upon the earliest of (i) such time as all of the common stock has been sold pursuant to the registration statement or (ii) such time as all of the common stock becomes eligible for resale without volume limitations pursuant to Rule 144 under the Securities Act. There is currently no public market for our securities and you may not be able to liquidate your investment since there is no assurance that a public market will develop for our common stock or that our common stock will ever be approved for trading on a recognized exchange. After this document is declared effective by the U.S. Securities and Exchange Commission, we intend to seek a market maker to apply for a quotation on the OTCBB in the United States. Our shares are not and have not been listed or quoted on any exchange or quotation system. We cannot assure you that a market maker will agree to file the necessary documents with the OTCBB, nor can there be any assurance that such an application for quotation will be approved or that a regular trading market will develop or that if developed, will be sustained. In the absence of a trading market, an investor may be unable to liquidate its investment. Room 0336, 3rd Floor, Jiangxi Street Wuhou District, Chengdu, Sichuan Province People s Republic of China 610041 +86-28-8551-3003 (Address, including zip code, and telephone number, including area code, of registrant s principal executive offices) We intend to apply for quoting of our common stock on the OTCBB, which we estimate will cost around $100,000. The breakdown of such costs is estimated as following: Legal Counsel $ 70,000 Auditor $ 20,000 Other vendors $ 10,000 Total: $ 100,000 We estimate that to maintain a quoting status will cost us $100,000 to $200,000 annually which will include legal and auditing expenses. We will rely on professional services to carry out this plan, which includes, but is not limited to, a U.S. law firm with corporate and securities practice, a PCAOB registered auditor and consultants. We have engaged the Crone Law Group as our legal counsel. We have engaged Goldman Kurland Mohidin, LLP, as our independent auditor. To be quoted on the OTCBB, we must engage a market maker to file an application for a trading symbol on our behalf with the FINRA. This process may take between three (3) to six (6) months. We plan to engage a market maker after our registration statement is declared effective by the U.S. Securities and Exchange Commission (the SEC ). The Common Stock offered hereby involves a high degree of risk and should not be purchased by investors who cannot afford the loss of their entire investments. See Risk Factors beginning on page 6. Where You Can Find Us We presently maintain our principal office at Room 0336, 3rd Floor, Jiangxi Street, Wuhou District, Chengdu, Sichuan province, People s Republic of China 610041. Our telephone number is +86-28-8551-3003. Chung Ming Thomas Tsang President and Chief Executive Officer Room 0336, 3rd Floor, Jiangxi Street Wuhou District, Chengdu, Sichuan Province People s Republic of China 610041 +86-28-8551-3003 (Name, address, including zip code, and telephone number, including area code, of agent for service)
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001520528_reac_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001520528_reac_prospectus_summary.txt
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+PROSPECTUS SUMMARY This summary highlights selected information contained elsewhere in this prospectus. This summary does not contain all the information that you should consider before investing in the common stock. You should carefully read the entire prospectus, including Risk Factors , Management s Discussion and Analysis of Financial Condition and Results of Operations and the Financial Statements, before making an investment decision. In this Prospectus, the terms Company, we, us and our refer to Real Estate Contacts, Inc. Overview We were incorporated in the State of Florida on March 10, 2005 as RealEstateContacts.com, Inc. On July 1, 2010 we amended our Articles of Incorporation to change our name from RealEstateContacts.com, Inc., to Real Estate Contacts, Inc., in order to better serve our business plan. Real Estate Contacts, Inc. operates an online real estate advertising, marketing and real estate video company that offers real estate professionals the opportunity to reach consumers interested in buying or selling property in their respective geographic area. We are focused on developing our interests initially in the United States. Our company offers real estate professionals, offices, brokerages, agents, mortgage brokers, lenders, and appraisers the opportunity to reach consumers interested in buying or selling their home and property through our search engine portal, (www.realestatecontacts.com) and our Real Estate Video Network, (www.realestatevideochannels.com). Our portal website consists of independent real estate companies and various local independently owned and operated franchisees of the nation s well known real estate companies, as well as various real estate agents, mortgage lenders, mortgage brokers, property appraisers, property auctioneers, and real estate attorneys. Our goal is to have the technology to focus on online media, particularly video. We plan to provide an online Real Estate Video Listings Network (www.realestatevideochannels.com) that will include rich media content including weekly and monthly shows by region which can be sold to sponsors and to affiliates by territory. Our vision is to position our company as a national real estate search engine/social community/video listings network that matches buyers, sellers, brokers, and professionals anywhere in the world through rich social media and real estate search engine capabilities, along with a definitive online video network for real estate. Many consumers use the internet to start their search for a home. Our business objective is to provide an easy and convenient process for the consumer whether they are a home seller or a home buyer to start their search by featuring their local real estate companies or agents website. Once on the website, the consumer who is interested in buying or selling a home can search and view homes for sale in their local area as well as receive many other real estate resources to help with all their real estate needs. While print remains a strong advertising medium for the real estate industry, searching for a local real estate office, brokerage or agent on the Internet is an effective means for a consumer to satisfy their real estate needs. Our goal is to build a national online lead network for our real estate agents as well as to drive homebuyers and sellers to our advertisers and sponsors websites and real estate video listing channel. In addition, real estate businesses, individual brokers, agents, mortgage brokers, mortgage lenders, property appraisers, real estate attorneys, real estate auctioneers, foreclosure and Real Estate Owned (REO) specialists are able to promote themselves or their company in their local city and areas that they service as well as domestic and international. Although the Company has conducted its operations since March 2005, it nonetheless has a limited operating history. Additionally, the Company has been unsuccessful in generating any significant revenues since its inception. This limited operating history and lack of revenues may not serve as an adequate basis to judge the Company s future prospects and results of operations. We have no plans to be acquired or to merge with another company, nor does the company, nor any of its shareholders, have plans to enter into a change of control or similar transaction. Where You Can Find Us Our principal executive office is located at 240 Windsor Ridge #36, New Castle, Pennsylvania 16105 and our telephone number is (724) 656-8886. The Offering Common stock offered by selling security holders 18,030,000 shares of common stock. This number represents 32.76% of our current outstanding common stock (1). Common stock outstanding before the offering 55,030,000 common shares as of July 27 , 2011. Common stock outstanding after the offering 55,030,000 shares. Terms of the Offering The selling security holders will determine when and how they will sell the common stock offered in this prospectus. Termination of the Offering The offering will conclude upon the earliest of (i) such time as all of the common stock has been sold pursuant to the registration statement or (ii) such time as all of the common stock becomes eligible for resale without volume limitations pursuant to Rule 144 under the Securities Act, or any other rule of similar effect. Use of proceeds We are not selling any shares of the common stock covered by this prospectus. Risk Factors The Common Stock offered hereby involves a high degree of risk and should not be purchased by investors who cannot afford the loss of their entire investment. See Risk Factors beginning on page 4. (1) Based on 55,030,000 shares of common stock outstanding as of July 27 , 2011. Summary of Consolidated Financial Information The following summary financial data should be read in conjunction with Management s Discussion and Analysis, Plan of Operation and the Financial Statements and Notes thereto, included elsewhere in this prospectus. The statement of operations and balance sheet data from January 1, 2009 through December 31, 2010 are derived from our audited financial statements and our unaudited financial statements as of March 31, 2011. The data set forth below should be read in conjunction with Management s Discussion and Analysis of Financial Condition and Results of Operations, our consolidated financial statements and the related notes included in this prospectus, and the unaudited financial statements and related notes included in this prospectus. For the three Months Ended March 31, 2011 (Unaudited) For the year ended December 31, 2010 (Audited) STATEMENT OF OPERATIONS Revenues $ 2,296 $ 6,646 Selling expenses 878 18,313 Compensation 17,516 564,430 Professional Fees 19,850 24,500 Rents and overhead 300 1,200 General and Administrative Expenses 1,042 3,106 Depreciation 250 583 Total Operating Expenses 39,836 612,132 Net Loss (38,309) (608,296) March 31, 2011 (Unaudited) December 31, 2010 (Audited) BALANCE SHEET DATA Cash $ 12,896 $ 7,784 Current assets 12,896 13,784 Total Assets 17,063 18,201 Total liabilities 203,161 192,790 Total stockholders' Deficiency (186,098 ) (174,589 ) CALCULATION OF REGISTRATION FEE Title of Each Class Of Securities to be Registered Amount to be Registered Proposed Maximum Aggregate Offering Price per share Proposed Maximum Aggregate Offering Price Amount of Registration fee Common Stock, $0.001 par value per share 18,030,000 $ 0.10 $ 1,803,000 $ 209.33 (1) This Registration Statement covers the resale by our selling shareholders of up to 18,030,000 shares of common stock previously issued to such selling shareholders. (2) The offering price has been estimated solely for the purpose of computing the amount of the registration fee in accordance with Rule 457(o). Our common stock is not traded on any national exchange and in accordance with Rule 457; the offering price was determined by the price of the shares that were sold to our shareholders in a private offering. The price of $0.10 is a fixed price at which the selling security holders may sell their shares until our common stock is quoted on the OTC Bulletin Board ( OTCBB ) at which time the shares may be sold at prevailing market prices or privately negotiated prices. There can be no assurance that a market maker will agree to file the necessary documents with the Financial Industry Regulatory Authority, which operates the OTC BB, nor can there be any assurance that such an application for quotation will be approved. THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SUCH SECTION 8(a), MAY DETERMINE. RISK FACTORS The shares of our common stock being offered for resale by the selling security holders are highly speculative in nature, involve a high degree of risk and should be purchased only by persons who can afford to lose the entire amount invested in the common stock. Before purchasing any of the shares of common stock, you should carefully consider the following factors relating to our business and prospects. If any of the following risks actually occurs, our business, financial condition or operating results could be materially adversely affected. In such case, you may lose all or part of your investment. You should carefully consider the risks described below and the other information in this process before investing in our common stock. Risks Related to Our Business OUR AUDITOR HAS EXPRESSED SUBSTANTIAL DOUBT AS TO OUR ABILITY TO CONTINUE AS A GOING CONCERN. Based on our financial history since March 10, 2005 (inception), our auditor has expressed substantial doubt as to our ability to continue as a going concern. If we cannot obtain sufficient funding, we may have to delay the implementation of our business strategy. WE HAVE LIMITED OPERATING HISTORY, WE HAVE BEEN UNSUCCESFUL IN GENERATING ANY SIGNFICANT REVENUE SINCE INCEPTION. WE CAN NOT ASSURE YOU THAT WE WILL EVER BE PROFITABLE AND MAY FACE INCREAING LOSSES FOR THE FORESEABLE FUTURE. Although the Company has conducted its operations since March 2005, it nonetheless has a limited operating history. Additionally, the Company has been unsuccessful in generating any significant revenues since its inception. The Company has net losses of $608,296 for the year ended December 31, 2010 and $38,309 for the period ended March 31, 2011 and an accumulated deficit of $2,226,918 at March 31, 2011 and $2,188,609 at December 31, 2010. This limited operating history and lack of revenues may not serve as an adequate basis to judge the Company s future prospects and results of operations. The Company s business and prospects must be considered in light of the risks and uncertainties frequently encountered by companies in their early stages of operations, including such companies that operate in the new and rapidly changing online advertising and marketing environment. The Company cannot assure that it will ever be profitable or that it will not be subject to increasing accumulated losses in the foreseeable future. The Company anticipates that its operating expenses will increase in concert with its planned operations. Any significant failure to realize anticipated revenue growth could result in further losses. The Company will continue to encounter risks and difficulties frequently experienced by companies at a similar stage of development, including its potential failure to: Implement and/or adapt and modify the Company s business model and strategy; Develop and increase brand awareness, protect the Company s reputation, and develop customer loyalty; Efficiently manage the Company s planned expansion of its operations and related expenses; and Anticipate and adapt to changing conditions in markets in which the Company operates, such as the impact of any changes mergers and acquisitions involving the Company s competitors, technological developments, and other significant competitive and market dynamics. If the Company is unsuccessful in addressing any or all of these risks, its business and financial condition may be materially and adversely affected. WE NEED ADDITIONAL CAPITAL TO DEVELOP OUR BUSINESS. WITHOUT ADDITONAL CAPITAL WE MAY NOT BE ABLE TO IMPLEMENT OUR BUSINESS PLAN. The continued development of our services will require the commitment of substantial resources to implement our business plan. In addition, substantial expenditures will be required to enable us to manage properties in the future. Currently, we have no established bank-financing arrangements. Therefore, it is likely we would need to seek additional financing through a subsequent future private offering of our equity securities, or through strategic partnerships and other arrangements with corporate partners. We cannot give you any assurance that any additional financing will be available to us, or if available, will be on terms favorable to us. The sale of additional equity securities will result in dilution to our stockholders. The occurrence of indebtedness would result in increased debt service obligations and could require us to agree to operating and financing covenants that would restrict our operations. If adequate additional financing is not available on acceptable terms, we may not be able to implement our business development plan or continue our business operations. OUR BUSINESS IS SUSCEPTIBLE TO FLUCTUATION IN THE REAL ESTATE MARKET WHICH MAY HAVE AN ADVERSE EFFECT ON OUR ABILITY TO GENERATE REVENUE. Our business depends substantially on the conditions of the real estate market. Demand for real estate has grown rapidly in the past decade but such growth is often accompanied by volatility in market conditions and fluctuations in real estate prices. For example, following a period of rising real estate prices and transaction volumes in most major cities from 2003 to 2007, the industry experienced a downturn in 2008, with transaction volumes in many major cities declining significantly compared to 2007. Fluctuations in the real estate market may negatively impact our ability to generate revenue through the advertising of real estate professionals on our website. If we are unable to generate revenue through advertising on our website we may have to cease operations. The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the U.S. Securities and Exchange Commission ( SEC ) is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. PRELIMINARY PROSPECTUS Subject to completion, dated July ______, 2011 REAL ESTATE CONTACTS, INC. 18,030,000 SHARES OF COMMON STOCK The selling security holders named in this prospectus are offering all of the shares of common stock offered through this prospectus. We will not receive any proceeds from the sale of the common stock covered by this prospectus. Our common stock is presently not traded on any market or securities exchange. The selling security holders have not engaged any underwriter in connection with the sale of their shares of common stock. Common stock being registered in this registration statement may be sold by selling security holders at a fixed price of $0.10 per share until our common stock is quoted on the OTC Bulletin Board ( OTCBB ) and thereafter at a prevailing market price or privately negotiated prices or in transactions that are not in the public market. There can be no assurance that a market maker will agree to file the necessary documents with the Financial Industry Regulatory Authority ( FINRA ), which operates the OTCBB, nor can there be any assurance that such an application for quotation will be approved. We have agreed to bear the expenses relating to the registration of the shares of the selling security holders. Investing in our common stock involves a high degree of risk. See Risk Factors beginning on page 6 to read about factors you should consider before buying shares of our common stock. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. The Date of This Prospectus is July ___, 2011 WE ARE SUBJECT TO GENERAL REAL ESTATE RISKS AND OUR REVENUE MAY FLUCTUATE. Our primary revenue is generated from advertisements by real estate agents, professionals, offices, brokerages, agents, mortgage brokers, lenders, appraisers and lawyers in the business which subjects our business to a variety of risks. The revenue available from these advertisements will depend on the current real estate market. If the advertisements on our website do not generate sufficient income to meet operating expenses our cash flow and ability to operate will be adversely affected. . OUR FUTURE SUCCESS IS DEPENDENT, IN PART, ON THE PERFORMANCE AND CONTINUED SERVICE OF ROBERT DEANGELIS, PRESIDENT AND DIRECTOR. WITHOUT HIS CONTINUED SERVICE, WE MAY BE FORCED TO INTERRUPT OR EVENTUALLY CEASE OUR OPERATIONS. We are presently dependent to a great extent upon the experience, abilities and continued services of Robert DeAngelis, President and Director. The loss of the service of Mr. DeAngelis could have a material adverse effect on our business, financial condition or results of operation. WE MAY INCUR SIGNIFICANT COSTS TO BE A PUBLIC COMPANY TO ENSURE COMPLIANCE WITH U.S. CORPORATE GOVERNANCE AND ACCOUNTING REQUIREMENTS AND WE MAY NOT BE ABLE TO ABSORB SUCH COSTS. We may incur significant costs associated with our public company reporting requirements, costs associated with newly applicable corporate governance requirements, including requirements under the Sarbanes-Oxley Act of 2002 and other rules implemented by the Securities and Exchange Commission. We expect all of these applicable rules and regulations to significantly increase our legal and financial compliance costs and to make some activities more time consuming and costly. We also expect that these applicable rules and regulations may make it more difficult and more expensive for us to obtain director and officer liability insurance and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a result, it may be more difficult for us to attract and retain qualified individuals to serve on our board of directors or as executive officers. We are currently evaluating and monitoring developments with respect to these newly applicable rules, and we cannot predict or estimate the amount of additional costs we may incur or the timing of such costs. In addition, we may not be able to absorb these costs of being a public company which will negatively affect our business operations. THE LACK OF PUBLIC COMPANY EXPERIENCE OF OUR MANAGEMENT TEAM COULD ADVERSELY IMPACT OUR ABILITY TO COMPLY WITH THE REPORTING REQUIREMENTS OF U.S. SECURITIES LAWS. Our management team lacks public company experience, which could impair our ability to comply with legal and regulatory requirements such as those imposed by Sarbanes-Oxley Act of 2002. Our senior management has never had responsibility for managing a publicly traded company. Such responsibilities include complying with federal securities laws and making required disclosures on a timely basis. Our senior management may not be able to implement programs and policies in an effective and timely manner that adequately respond to such increased legal, regulatory compliance and reporting requirements, including the establishing and maintaining of internal controls over financial reporting. Any such deficiencies, weaknesses or lack of compliance could have a materially adverse effect on our ability to comply with the reporting requirements of the Securities Exchange Act of 1934 which is necessary to maintain our public company status. If we were to fail to fulfill those obligations, our ability to continue as a U.S. public company would be in jeopardy in which event you could lose your entire investment in our company. WE HAVE NOT FILED FOR TRADEMARK PROTECTION WITH THE UNITED STATES PATENT AND TRADEMARK OFFICE WHICH MAY ADVERSELY IMPACT OUR ABILITY TO GENERATE REVENUE. We have not filed for trademark protection with the United States Patent and Trademark Office regarding the use of the Company s name, Real Estate Contacts, Inc. Should we fail to file for protection of the Company s name, we may be unable to adequately protect the use of our name, which would negatively affect the Company s brand name and its ability to generate revenues. THE COMPANY S OFFICER AND DIRECTOR HAS SIGNIFICANT CONTROL OVER SHAREHOLDER MATTERS AND THE MINORITY SHAREHOLDERS WILL HAVE LITTLE OR NO CONTROL OVER THE COMPANY S AFFAIRS. The Company s officer/director currently owns approximately 37,000,000 of the Company s outstanding Common Stock and has significant control over shareholder matters, such as election of the Company's directors, amendments to its Articles of Incorporation, and approval of significant corporate transactions; as a result, the Company minority shareholders will have little or no control over its affairs. THE COMPANY MAY BECOME DEPENDENT UPON ONLY A FEW CUSTOMERS FOR A SIGNIFICANT PORTION OF ITS REVENUE. IF THESE CUSTOMERS NO LONGER REQUIRE OUR SERVICE IT WILL HAVE AN ADVERSE EFFECT ON OUR BUSINESS OPERATIONS. The Company may become dependent upon only a few customers for a significant portion of its revenues. Should the Company be successful in obtaining those customers, but those customers no longer require the Company s services or terminate the use of its services, the Company s revenues and operations will be negatively affected. THE REAL ESTATE MARKET IS VERY COMPETITIVE WHICH MAY HAVE A NEGATIVE EFFECT ON OUR ABILITY TO GENERATE REVENUE AND CONTINUE OUR BUSINESS OPERATIONS. The Real Estate Advertising/Marketing services market is becoming increasingly competitive and the barriers to entry regarding such services are low. Many of the Company s existing and potential competitors have longer operating histories in the Real Estate Advertising Marketing business, greater name recognition, larger client base, greater Internet traffic, and greater financial, technical and marketing resources than the Company does. The Real Estate Advertising Marketing business is subject to intense competition; should the Company be unable to overcome such competitive forces, its operations will be negatively affected and it will be unable to expand its business. IF THE COMPANY FAILS TO PROMOTE ITS BRAND COST EFFECTIVELY IT MAY HAVE A NEGATIVE IMPACT ON OUR BUSINESS OPERATIONS. If the Company fails to promote and maintain its brand successfully, or the Company incurs significant expenses pertaining to promotion of its brand without corresponding revenue increases, the Company s business may be adversely affected. OUR BUSINESS IS SUBJECT TO VARIOUS RISKS ASSOICATED WITH CONDUCTING BUSINESS ONLINE The Company s business is conducted solely within the Internet arena and is subject to various risks associated with conducting business online, including: (a) the Company s target clients, real estate professionals, offices, agents, and mortgage brokers and lenders, may operate their own Internet portal for advertising and marketing purposes, and have no need for the Company s advertising and marketing services; and (b) consumer traffic to the Company s website and its advertising/marketing revenues are based on consumer and real estate professional s acceptance and/or continued acceptance of online marketing and advertising, which there is no assurance will continue to be an acceptable mode of marketing and advertising. Risk Related To Our Capital Stock WE MAY NEVER PAY ANY DIVIDENDS TO SHAREHOLDERS. We have never declared or paid any cash dividends or distributions on our capital stock. We currently intend to retain our future earnings, if any, to support operations and to finance expansion and therefore we do not anticipate paying any cash dividends on our common stock in the foreseeable future. The declaration, payment and amount of any future dividends will be made at the discretion of the board of directors, and will depend upon, among other things, the results of our operations, cash flows and financial condition, operating and capital requirements, and other factors as the board of directors considers relevant. There is no assurance that future dividends will be paid, and, if dividends are paid, there is no assurance with respect to the amount of any such dividend. THE OFFERING PRICE OF THE COMMON STOCK WAS DETERMINED BASED ON THE PRICE OF OUR PRIVATE OFFERING, AND THEREFORE SHOULD NOT BE USED AS AN INDICATOR OF THE FUTURE MARKET PRICE OF THE SECURITIES. THEREFORE, THE OFFERING PRICE BEARS NO RELATIONSHIP TO OUR ACTUAL VALUE, AND MAY MAKE OUR SHARES DIFFICULT TO SELL. Since our shares are not listed or quoted on any exchange or quotation system, the offering price of $0.10 per share for the shares of common stock was determined based on the price of our private offering. The offering price bears no relationship to the book value, assets or earnings of our company or any other recognized criteria of value. The offering price should not be regarded as an indicator of the future market price of the securities. YOU WILL EXPERIENCE DILUTION OF YOUR OWNERSHIP INTEREST BECAUSE OF THE FUTURE ISSUANCE OF ADDITIONAL SHARES OF OUR COMMON STOCK AND OUR PREFERRED STOCK. In the future, we may issue our authorized but previously unissued equity securities, resulting in the dilution of the ownership interests of our present stockholders. We are currently authorized to issue an aggregate of 510,000,000 shares of capital stock consisting of 500,000,000 shares of common stock, par value $.00001 per share, and 10,000,000 shares of preferred stock, par value $.0001 per share. We may also issue additional shares of our common stock or other securities that are convertible into or exercisable for common stock in connection with hiring or retaining employees or consultants, future acquisitions, future sales of our securities for capital raising purposes, or for other business purposes. OUR COMMON STOCK IS CONSIDERED A PENNY STOCK, WHICH MAY BE SUBJECT TO RESTRICTIONS ON MARKETABILITY, SO YOU MAY NOT BE ABLE TO SELL YOUR SHARES. If our common stock becomes tradable in the secondary market, we will be subject to the penny stock rules adopted by the Securities and Exchange Commission that require brokers to provide extensive disclosure to their customers prior to executing trades in penny stocks. These disclosure requirements may cause a reduction in the trading activity of our common stock, which in all likelihood would make it difficult for our shareholders to sell their securities. Penny stocks generally are equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on the NASDAQ system). Penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document that provides information about penny stocks and the risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, and monthly account statements showing the market value of each penny stock held in the customer s account. The broker-dealer must also make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser s written agreement to the transaction. These requirements may have the effect of reducing the level of trading activity, if any, in the secondary market for a security that becomes subject to the penny stock rules. The additional burdens imposed upon broker-dealers by such requirements may discourage broker-dealers from effecting transactions in our securities, which could severely limit the market price and liquidity of our securities. These requirements may restrict the ability of broker-dealers to sell our common stock and may affect your ability to resell our common stock. THERE IS NO ASSURANCE OF A PUBLIC MARKET OR THAT OUR COMMON STOCK WILL EVER TRADE ON A RECOGNIZED EXCHANGE. THEREFORE, YOU MAY BE UNABLE TO LIQUIDATE YOUR INVESTMENT IN OUR STOCK. There is no established public trading market for our common stock. Our shares have not been listed or quoted on any exchange or quotation system. There can be no assurance that a market maker will agree to file the necessary documents with FINRA, which operates the OTCBB, nor can there be any assurance that such an application for quotation will be approved or that a regular trading market will develop or that if developed, will be sustained. In the absence of a trading market, an investor may be unable to liquidate their investment. SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS The information contained in this report includes some statement that are not purely historical and that are forward-looking statements. Such forward-looking statements include, but are not limited to, statements regarding our and their management s expectations, hopes, beliefs, intentions or strategies regarding the future, including our financial condition, results of operations, and the expected impact of the Share Exchange on the parties individual and combined financial performance. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words anticipates, believes, continue, could, estimates, expects, intends, may, might, plans, possible, potential, predicts, projects, seeks, should, will, would and similar expressions, or the negatives of such terms, may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. The forward-looking statements contained in this report are based on current expectations and beliefs concerning future developments and the potential effects on the parties and the transaction. There can be no assurance that future developments actually affecting us will be those anticipated. These that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements, including the following forward-looking statements involve a number of risks, uncertainties (some of which are beyond the parties control) or other assumptions. Item 4. Use of Proceeds We will not receive any proceeds from the sale of common stock by the selling security holders. All of the net proceeds from the sale of our common stock will go to the selling security holders as described below in the sections entitled Selling Security Holders and Plan of Distribution . We have agreed to bear the expenses relating to the registration of the common stock for the selling security holders. Item 5. Determination of Offering Price Since our common stock is not listed or quoted on any exchange or quotation system, the offering price of the shares of common stock was determined by the price of the common stock that was sold to our security holders pursuant to an exemption under Section 4(2) of the Securities Act of 1933 and Rule 506 of Regulation D promulgated under the Securities Act of 1933. The offering price of the shares of our common stock does not necessarily bear any relationship to our book value, assets, past operating results, financial condition or any other established criteria of value. Although our common stock is not listed on a public exchange, we will be filing to obtain a quotation on the OTCBB concurrently with the filing of this prospectus. In order to be quoted on the OTCBB, a market maker must file an application on our behalf in order to make a market for our common stock. There can be no assurance that a market maker will agree to file the necessary documents with FINRA, which operates the OTC Bulletin Board, nor can there be any assurance that such an application for quotation will be approved. In addition, there is no assurance that our common stock will trade at market prices in excess of the initial offering price as prices for the common stock in any public market which may develop will be determined in the marketplace and may be influenced by many factors, including the depth and liquidity. Item 6. Dilution The common stock to be sold by the selling shareholders are provided in Item 7 is common stock that is currently issued. Accordingly, there will be no dilution to our existing shareholders. However, in the future if we decide to issue more shares our existing shareholders will experience dilution. Item 7. Selling Security Holders The common shares being offered for resale by the selling security holders consist of the 18,030,000 shares of our common stock held by each of the selling security holders as of July 27 , 2011. Such shareholders include the holders of the 17,930,000 shares sold in our private offering pursuant to Regulation D Rule 506 completed at an offering price of $0.10 and 100,000 shares issued for services rendered. The following table sets forth the name of the selling security holders, the number of shares of common stock beneficially owned by each of the selling stockholders as of June 14, 2011 and the number of shares of common stock being offered by the selling stockholders. The shares being offered hereby are being registered to permit public secondary trading, and the selling stockholders may offer all or part of the shares for resale from time to time. However, the selling stockholders are under no obligation to sell all or any portion of such shares nor are the selling stockholders obligated to sell any shares immediately upon effectiveness of this prospectus. All information with respect to share ownership has been furnished by the selling stockholders. Name Shares Beneficially Owned Prior To Offering Shares to be Offered Amount Beneficially Owned After Offering Percent Beneficially Owned After Offering Jim Nelson 200,000 200,000 0 0% 1994 Gary & Kathryn Revocable Trust (Gary Wilstein)(1) 1,000,000 1,000,000 0 0% Robert Burton 1,000,000 1,000,000 0 0% Ron Chapman 200,000 200,000 0 0% Lamar Hattaway 400,000 400,000 0 0% Kish Gohil 10,000 10,000 0 0% Nick Sfroza 25,000 25,000 0 0% Jeff Juneau 300,000 300,000 0 0% Jim Hughes 250,000 250,000 0 0% Greg Barnhart 25,000 25,000 0 0% Joe Antoniotti 25,000 25,000 0 0% Douglas S. Hackett 4,000,000 4,000,000 0 0% Hector Llorens 3,030,000 3,030,000 0 0% Gary Schroeder 100,000 100,000 0 0% Allan Modi 10,000 10,000 0 0% Don Ledingham 25,000 25,000 0 0% Anthony DiPiazza 200,000 200,000 0 0% Mike Eager 200,000 200,000 0 0% Todd Burkdoll 300,000 300,000 0 0% I.D. Bluford 30,000 30,000 0 0% Jim Akers 10,000 10,000 0 0% Don Broughton 300,000 300,000 0 0% Stanley Odem 10,000 10,000 0 0% Dale Baker 25,000 25,000 0 0% Jonathan Reagle 5,000 5,000 0 0% Dorothy Read 30,000 30,000 0 0% John O Donnell 20,000 20,000 0 0% Larry Phillips 5,000 5,000 0 0% William Read 10,000 10,000 0 0% Mike Cross 25,000 25,000 0 0% Tom Winter 100,000 100,000 0 0% Eleanor Sacco 20,000 20,000 0 0% Joe Ball 5,000 5,000 0 0% Byrd & Company (James Byrd)(2) 2,000,000 2,000,000 0 0% Emerging Markets Consulting, LLC (James Painter)(3) 4,000,000 4,000,000 0 0% Abner Siegel 35,000 35,000 0 0% Peter Messineo 100,000 100,000 0 0% (1) Gary Wilstein is the trustee of the 1994 Gary & Kathryn Revocable Trust and has voting and dispositive control of these shares. (2) James Byrd has voting and dispositive control over the shares held by Byrd & Company (3) James Painter has voting and dispositive control over the shares held by Emerging Markets Consulting, LLC To our knowledge, none of the selling shareholders or their beneficial owners: - has had a material relationship with us other than as a shareholder at any time within the past three years; or - has ever been one of our officers or directors or an officer or director of our predecessors or affiliates or - are broker-dealers or affiliated with broker-dealers. Item 8. Plan of Distribution The selling security holders may sell some or all of their shares at a fixed price of $0.10 per share until our shares are quoted on the OTCBB and thereafter at prevailing market prices or privately negotiated prices. Prior to being quoted on the OTC Bulletin Board, shareholders may sell their shares in private transactions to other individuals. Although our common stock is not listed on a public exchange, we will be filing to obtain a quotation on the OTCBB concurrently with the filing of this prospectus. In order to be quoted on the OTC Bulletin Board, a market maker must file an application on our behalf in order to make a market for our common stock. There can be no assurance that a market maker will agree to file the necessary documents with FINRA, which operates the OTC Bulletin Board, nor can there be any assurance that such an application for quotation will be approved. However, sales by selling security holder must be made at the fixed price of $0.10 until a market develops for the stock. Once a market has developed for our common stock, the shares may be sold or distributed from time to time by the selling stockholders, who may be deemed to be underwriters, directly to one or more purchasers or through brokers or dealers who act solely as agents, at market prices prevailing at the time of sale, at prices related to such prevailing market prices, at negotiated prices or at fixed prices, which may be changed. The distribution of the shares may be effected in one or more of the following methods: ordinary brokers transactions, which may include long or short sales, transactions involving cross or block trades on any securities or market where our common stock is trading, market where our common stock is trading, through direct sales to purchasers or sales effected through agents, through transactions in options, swaps or other derivatives (whether exchange listed of otherwise), or exchange listed or otherwise), or any combination of the foregoing. In addition, the selling stockholders may enter into hedging transactions with broker-dealers who may engage in short sales, if short sales were permitted, of shares in the course of hedging the positions they assume with the selling stockholders. The selling stockholders may also enter into option or other transactions with broker-dealers that require the delivery by such broker-dealers of the shares, which shares may be resold thereafter pursuant to this prospectus. To our best knowledge, none of the selling security holders are broker-dealers or affiliates of broker dealers. We will advise the selling security holders that the anti-manipulation rules of Regulation M under the Exchange Act may apply to sales of shares in the market and to the activities of the selling security holders and their affiliates. In addition, we will make copies of this prospectus (as it may be supplemented or amended from time to time) available to the selling security holders for the purpose of satisfying the prospectus delivery requirements of the Securities Act. The selling security holders may indemnify any broker-dealer that participates in transactions involving the sale of the shares against certain liabilities, including liabilities arising under the Securities Act. Brokers, dealers, or agents participating in the distribution of the shares may receive compensation in the form of discounts, concessions or commissions from the selling stockholders and/or the purchasers of shares for whom such broker-dealers may act as agent or to whom they may sell as principal, or both (which compensation as to a particular broker-dealer may be in excess of customary commissions). Neither the selling stockholders nor we can presently estimate the amount of such compensation. We know of no existing arrangements between the selling stockholders and any other stockholder, broker, dealer or agent relating to the sale or distribution of the shares. We will not receive any proceeds from the sale of the shares of the selling security holders pursuant to this prospectus. We have agreed to bear the expenses of the registration of the shares, including legal and accounting fees, and such expenses are estimated to be approximately $51,209.00 Notwithstanding anything set forth herein, no FINRA member will charge commissions that exceed 8% of the total proceeds of the offering. Item 9. Description of Securities to be Registered General We are authorized to issue an aggregate number of 510,000,000 shares of capital stock, of which 500,000,000 shares are common stock, $0.00001 par value per share, and there are 10,000,000 preferred shares, $0.0001 par value per share authorized. UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Amendment No. 2 to FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 REAL ESTATE CONTACTS, INC. (Exact name of registrant as specified in its charter) Florida 6531 593800845 (State or other jurisdiction of incorporation or organization) (Primary Standard Industrial Classification Code) (I.R.S Employer Identification Number) 240 Windsor Ridge #36 New Castle, Pennsylvania 16105 Tel.: (724) 656-8886 (Address, including zip code, and telephone number, including area code, of registrant s principal executive offices) Hamilton & Lehrer 101 Plaza Real South Suite 201 Boca Raton, Florida 33432 US (561) 416-8956 (Name, address, including zip code, and telephone number, including area code, of agent for service) Copies of communications to: Gregg E. Jaclin, Esq. Anslow & Jaclin, LLP 195 Route 9 South, Suite204 Manalapan, NJ 07726 Tel. No.: (732) 409-1212 Fax No.: (732) 577-1188 If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. x If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. Large accelerated filer Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company Common Stock We are authorized to issue 500,000,000 shares of common stock, $0.00001 par value per share. Currently we have 55,030,000 shares of common stock issued and outstanding as of July 27 , 2011. Each share of common stock shall have one (1) vote per share for all purpose. Our common stock does not provide a preemptive, subscription or conversion rights and there are no redemption or sinking fund provisions or rights. Our common stock holders are not entitled to cumulative voting for election of Board of Directors. Preferred Stock We are authorized to issue 10,000,000 shares of preferred stock, $0.0001 par value per share. Currently we have no shares of preferred stock issued and outstanding. Dividends We have not paid any cash dividends to our shareholders. The declaration of any future cash dividends is at the discretion of our board of directors and depends upon our earnings, if any, our capital requirements and financial position, our general economic conditions, and other pertinent conditions. It is our present intention not to pay any cash dividends in the foreseeable future, but rather to reinvest earnings, if any, in our business operations. Warrants There are no outstanding warrants to purchase our securities. Options There are no outstanding options to purchase our securities. Item 10. Interests of Named Experts and Counsel No expert or counsel named in this prospectus as having prepared or certified any part of this prospectus or having given an opinion upon the validity of the securities being registered or upon other legal matters in connection with the registration or offering of the common stock was employed on a contingency basis, or had, or is to receive, in connection with the offering, a substantial interest, direct or indirect, in the registrant or any of its parents or subsidiaries. Nor was any such person connected with the registrant or any of its parents or subsidiaries as a promoter, managing or principal underwriter, voting trustee, director, officer, or employee. The financial statements included in this prospectus and the registration statement have been audited by Webb & Company, P.A. to the extent and for the periods set forth in their report appearing elsewhere herein and in the registration statement, and are included in reliance upon such report given upon the authority of said firm as experts in auditing and accounting. Item 11. Information about the Registrant DESCRIPTION OF BUSINESS Overview We were incorporated in the State of Florida on March 10, 2005 as RealEstateContacts.com, Inc. On July 1, 2010 we amended our Articles of Incorporation to change our name from RealEstateContacts.com, Inc., to Real Estate Contacts, Inc., in order to better serve our business plan. Real Estate Contacts, Inc., is in the business of operating an online real estate advertising and marketing portal. Through our search engine portal website www.realestatecontacts.com our company offers real estate professionals, offices, brokerages, agents, mortgage brokers, lenders, and appraisers the opportunity to reach consumers interested in buying or selling their home and property. Our portal website consists of independent real estate companies and various local independently owned and operated franchisees of the nation s well known real estate companies, as well as various real estate agents, mortgage lenders, mortgage brokers, property appraisers, property auctioneers, and real estate attorneys. We serve as a portal that directs consumers to real estate offices, real estate brokers and real estate agents websites for more detailed information about properties and homes for sale in their local areas. We anticipate having the technology to focus on online media, particularly video. We plan to provide an online Real Estate Video Listings Network (REVLN), www.realestatevideochannels.com that will include rich media content including weekly and monthly shows by geographic region which can be sold to sponsors and to affiliates by territory. We intend for our REVLN to offer real estate professionals the opportunity to reach consumers interested in buying or selling property in their respective geographic area through the internet by online streaming video. At this time, www.realestatevideochannels.com is under construction. We intend to have www.realestatevideochannels.com fully functional by August 2011. We generate our revenue from selling advertisements to real estate professionals on our real estate portal search website: www.realestatecontacts.com. Our advertisers pay a yearly fee that includes a banner ad as well as a profile description in the cities and areas that they service. The profile description consists of a name or corporate name, address, phone number, email address, website address, current listings URL address, blog website and a real estate video website address. Once our real estate video channel is fully functional, it will add to our revenue stream from the sale of advertisements and the sale of video channels to real estate professionals. Our vision is to position our company as the first of its kind national real estate search engine, social community, and video listings network that matches buyers, sellers, brokers, and professionals anywhere in the world through social media and real estate search engine capabilities, along with the most definitive online video network for real estate. Many consumers use the internet to start their search for a home. Our business objective is to provide an easy and convenient process for the consumer whether they are a home seller or a home buyer to start their search by featuring their local real estate companies or agents website. Once on the website, the consumer who is interested in buying or selling a home can search and view homes for sale in their local area as well as receive many other real estate resources to help with all their real estate needs. While print remains a strong advertising medium for the real estate industry, searching for a local real estate office, brokerage or agent on the internet is an effective means for a consumer to satisfy their real estate needs. Real Estate Contacts, Inc currently owns 23domain and URL names to expand our companies online search presence that will include a real estate video network channel, a social media network, and a foreclosure network. We intend to design, build and market several new real estate websites that will include a real estate video channel, a real estate social interactive media network and also a foreclosure website. Our main portal website is realestatecontacts.com. We own realestatevideochannels.com which will be designed to include the first national online real estate video listing channel. This website will also include the sale of video channels to our affiliates. We also own realestatesocialcontacts.com that will be designed and developed for a national real estate social interactive network. We also own foreclosurechannel.net which will be designed to include foreclosures, short sales and bank owned REO s. Our other domain names are: realestatecontacts.tv, realestatecontacts.net, realestatecontacts.info, realestatecontacts.biz, realestatecontacts.us, realestatecontact.com, bankownedchannel.com, bankreochannel.com, theshortsalechannel.com, realestatemediacontacts.com, realestatemediacontacts.net, realestatemedianetworks.com, realestatemedianetworks.net, floridarealestatecontacts.com, californiarealestatecontacts.com, realestatevideochannels.net, realestatevideochannel.com, realestatevideochannel.net, and realestatesocialcontacts.net Our goal is to build a national online lead network for our real estate agents as well as to drive homebuyers and sellers to our advertisers and sponsors websites and real estate video listing channel. In addition, real estate businesses, individual brokers, agents, mortgage brokers, mortgage lenders, property appraisers, real estate attorneys, real estate auctioneers, foreclosure specialists are able to promote themselves or their company in their local city and areas that they service as well as domestic and international. Our Operating Strategy Our website allows real estate professionals and consumers to interact through the Internet as a business medium. Our operating strategy is to feature real estate agents websites on the RealEstateContacts.com portal website in the areas that they service and work enabling potential home buyers to view real estate listings and homes that are for sale and featured on the real estate agency s website. This format would be called a lead generation program for real estate professionals that are on the RealEstateContacts.com portal website. We will also have the technology to focus on online media, particularly video. We will provide an online Real Estate Listings Video Network that will include rich media content including weekly and monthly shows by region which can be sold to sponsors and to affiliates by territory Real Estate Contacts, Inc. will offer affiliate territories for local publishing of online real estate video channels in many areas, where our affiliate partner can own their own network channel, earn additional revenue opportunities, manage the publishing and display hundreds of video properties in a true television format through one simple tool giving real estate professionals exposure for their properties in less time and for less money. Our business strategy is an ease of use approach which allows the consumer to view listings of homes from the website of their local real estate office or agent. In addition, our website will feature no more than five agents per territory. This approach will eliminate a substantial amount of the competition for the real estate agent, broker and office. For this reason alone we believe our concept will have a high level of interest from any real estate professional. Our focus is driving high volumes of traffic to our advertisers putting the consumer with the most relevant and desired professional. Thousands of unique visitors visit our website, (RealEstateContacts.com), to view real estate listings and homes for sale. We accomplish this through highly focused and well designed SEO strategies that allow our advertisers to receive greater amount of sales without spending huge resources. Our methodology and resource expenditures are invaluable tools to our advertisers. We do the marketing and our advertisers get the leads. Currently, while there are other real estate directories and portals on the Internet, only a select few feature real estate agents on a semi-exclusive basis. We believe this approach will be attractive to real estate professionals in each locale. The RealEstateContacts.com portal website also features local mortgage brokers, lenders, real estate appraisers and real estate attorneys that want more traffic and exposure to their website for potential new clients. By featuring local mortgage brokers, appraisers and real estate attorneys our website allows the consumer to have access to any financial, legal or appraisals questions and can receive all the information they would need very quickly in their geographical area. We believe the driving of internet traffic is the key to any online marketing company. We intend to build our advertising campaign around all internet related marketing concepts, such as search engine optimization, pay per clicks advertising, banner advertising, email marketing, and linking up to other real estate portals and directories. Our goal is to connect real estate professionals with consumers who are interested in buying or selling a home. We believe that when a customer does research and knows which house he or she is interested in, the result is a more effective and time-efficient transaction for both buyer and seller. We currently are aligned with over 2000 real estate offices and agents covering all 50 states. Employees As of July 27 , 2011 we have one full time employee, and plan to employ more qualified employees in the near future. On March 10, 2010 we entered into a three year employment agreement with Robert DeAngelis to serve as the President and Chief Executive Officer of the Company. Mr. DeAngelis will be paid a minimum of $5,000.00 per month plus performance bonuses. DESCRIPTION OF PROPERTY Our principal executive office is located at 240 Windsor Ridge #36 New Castle, Pennsylvania 16105, and our telephone number is (724) 656-8886. Office space is provided by our Chief Executive Officer at no charge. LEGAL PROCEEDINGS From time to time, we may become involved in various lawsuits and legal proceedings, which arise, in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. We are currently not aware of any such legal proceedings or claims that we believe will have a material adverse effect on our business, financial condition or operating results. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS There is presently no public market for our shares of common stock. We anticipate applying for quoting of our common stock on the OTCBB upon the effectiveness of the registration statement of which this prospectus forms apart. However, we can provide no assurance that our shares of common stock will be quoted on the OTCBB or, if quoted, that a public market will materialize. Holders of Capital Stock As of the date of this registration statement, we had 37 holders of our common stock. Rule 144 Shares As of the date of this registration statement, we do not have any shares of our common stock that are currently available for sale to the public in accordance with the volume and trading limitations of Rule 144. Stock Option Grants We do not have any stock option plans. Registration Rights We have not granted registration rights to the selling shareholders or to any other persons. MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULT OF OPERATIONS The following plan of operation provides information which management believes is relevant to an assessment and understanding of our results of operations and financial condition. The discussion should be read along with our financial statements and notes thereto. This section includes a number of forward-looking statements that reflect our current views with respect to future events and financial performance. Forward-looking statements are often identified by words like believe, expect, estimate, anticipate, intend, project and similar expressions, or words which, by their nature, refer to future events. You should not place undue certainty on these forward-looking statements. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our predictions. Plan of Operations Our plan of operation is to operate the most definitive online video network and search engine portal for real estate. We want to position our company as the first of its kind national real estate search engine/social community/media video network that matches buyers, sellers, brokers, and professionals anywhere in the world through rich and social media. Our website allows real estate professionals and consumers to interact through the internet as a business medium. The Company s operating strategy is to feature real estate professional s websites on the RealEstateContacts.com portal website in the areas that they service and work enabling potential home buyers to view real estate listings and homes that are for sale and featured on the real estate agency s website. This format is called a lead generation program for real estate professionals that are on the RealEstateContacts.com portal website. Our business strategy is an ease of use approach which allows the consumer to view listings of homes from the website and video channel of their local real estate office or agent. In addition, our website will feature no more than five agents per territory. This policy will eliminate a substantial amount of the competition for the real estate agent, broker and office. For this reason we believe our concept will have a high level of interest from any real estate professional. Currently while there are other real estate directories and portals on the internet only a select few feature real estate agents on a semi-exclusive basis. We believe this approach will be attractive to real estate professionals in each locale. We will also have the technology to focus on online media, particularly video. We will provide an online National Real Estate Video Listings Network that will include rich media content including weekly and monthly shows by region which can be sold to sponsors and to affiliates by territory. We want to position our company as the first of its kind National Real Estate Listings Video Channel. We will operate the most definitive online video network for real estate. Real Estate Contacts, Inc. will offer affiliate territories for local publishing of online real estate video channels in many areas, where our affiliate partner can own their own network channel, manage the publishing and display hundreds of video properties in a true television format through one simple tool giving real estate professionals exposure for their properties in less time and for less money. The RealEstateContacts.com portal website also features local mortgage brokers, lenders, real estate appraisers and real estate attorneys that want more traffic and exposure to their website for potential new clients. By featuring local mortgage brokers, appraisers and real estate attorneys our website allows the consumer to have access to any financial, legal or appraisals questions and can receive all the information they need quickly in their geographical area. The driving of internet traffic is the key to any online marketing company. We intend to build our advertising campaign around all internet related marketing concepts, such as search engine optimization, pay per clicks advertising, banner advertising, email marketing, and linking up to other real estate portals and directories. Our goal is to connect real estate professionals with consumers who are interested in buying or selling a home. We currently are aligned with over 2000 real estate offices and agents covering all 50 states. We plan to grow revenues in the next 12 months by undertaking the following steps: Devote greater resources to marketing and selling our services such as developing and creating a more productive advertising sales division within our company by the hiring of advertising sales account executives. Focus to expand our network of advertisers and real estate professionals by increasing our online presence to include various marketing channels such as the major search engines, Google, Yahoo and Bing. Expand our company s public relations by creating more brand awareness on the internet. An example would be to focus on other social media websites such as Facebook, Twitter, and Linkedin. Develop other marketing programs to efficiently increase our brand awareness such as email campaigns, newsletters, linking our website to other real estate business websites, real estate portals and directories. We intend to continue, maintain and aggressively pursue to build our advertising campaign around all internet related marketing concepts, such as search engine optimization, pay per click advertising, banner advertising and social media networks. Focus on driving more internet traffic and unique visitors to our website by using these search engine marketing techniques. We plan to advertise on internet search engines and other websites, and supplement this advertising with other media to help manage and geographically target consumer traffic and lead volume. We plan to increase our online Search Engine Marketing to create more unique users. Measuring unique users is important to us because our advertising revenues depend in part on our ability to enable our consumers to connect with real estate professionals. We define a unique user as a user who visits our website at least once during a calendar month, as measured by our analytical tools. The number of real estate subscribers (advertiser) on our website is an important driver of revenue growth because each subscriber pays us a yearly fee to participate in the advertising of their services. Build, develop, market and hire national sales account advertising executives and create additional revenues by offering real estate professionals for a yearly advertising fee the opportunity to have their own real estate video channel on the internet. Limited Operating History We have generated a limited financial history and have not previously demonstrated that we will be able to expand our business through increased investment in marketing activities. We cannot guarantee that the expansion efforts described in this Registration Statement will be successful. The business is subject to risks inherent in growing an enterprise, including limited capital resources and possible rejection of our business model and/or sales methods. Future financing may not be available to us on acceptable terms. If debt financing is not available or not available on satisfactory terms, we may be unable to continue expanding our operations. Equity financing will result in a dilution to existing shareholders. For the three months ended March 31, 2011 compared to March 31, 2010 Results of Operation Revenues generated were $2,296 and $2,234 for the period ended March 31, 2011 and 2010, respectively. Revenue has been increasing due to the acceptance and awareness of our sites service offering. Operating expenses were $39,836 and $16,879 for the periods ended March 31, 2011 and 2010, respectively. The Company has recorded significant non-cash expenses related to salaries. Other significant expenses incurred are related to professional expense related to the preparation of our public filing. We expect professional fees to continue to be significant expense as our reporting requirements should be increasing, as required as a public company. Additionally, we had increased our advertising and marketing efforts in 2010, resulting in an increase of approximately $16,000. We anticipate that our advertising and costs of acquiring new subscribers will increase over the future periods, as we attempt to increase our revenue base to cover future operating costs. Capital Resources and Liquidity As of March 31, 2011 we have $12,896 cash on hand to meet our current obligations. As of March 31, 2011, we have a negative working capital of $190,265 and for the three months ended March 31, 2011 have used $17,863 in our operating activities. Based upon the above, we do not believe we have enough cash to support our daily operations for the next 12 months while we are attempting to expand operations and produce revenues. We estimate the Company needs an additional $250,000 to implement its business plans over the next twelve months. We need to spend an additional $15,000 to complete the registration of the securities described in this registration statement. In addition, we anticipate we will need a minimum of $100,000 to cover operational and administrative expenses for the next twelve months. The majority shareholder has committed to cover any cash shortfalls of the Company, although there is no written agreement or guarantee. If we are unable to satisfy our cash requirements we may be unable to proceed with the Offering and our plan of operations. Future financing for our operations may not be available to us on acceptable terms. To raise equity will require the sale of stock and the debt financing will require institutional or private lenders. We do not have any institutional or private lending sources identified. If debt financing is not available or not available on satisfactory terms, we may be unable to continue expanding our operations. Equity financing will result in a dilution to existing shareholders. The foregoing represents our best estimate of our cash needs based on current planning and business conditions. In the event we are not successful in reaching our initial revenue targets, additional funds may be required, and we may not be able to proceed with our business plan for the development and marketing of our core services. Should this occur, we will suspend or cease operations. We anticipate that depending on market conditions and our plan of operations, we may incur operating losses in the foreseeable future. Therefore, our auditors have raised substantial doubt about our ability to continue as a going concern. For the Year ended December 31, 2010 Results of Operations Revenues generated were $6,646 and $3,525 for the years ended December 31, 2010 and 2009, respectively. Revenue has been increasing due to the acceptance and awareness of our sites service offering. Operating expenses were $612,132 and $73,233 for the years ended December 31, 2010 and 2009, respectively. The Company has recorded $500,000 for the year ended December 31, 2010 compared to $0 for the year ended December 31, 2009 in non-cash expenses related to salaries. The Company is currently accruing salaries of $60,000 per year. Other significant expenses incurred are related to professional expense related to the preparation of our public filing. We expect professional fees to continue to be significant expense as our reporting requirements should be increasing, as required as a public company. Additionally, we had increased our advertising and marketing efforts in 2010, resulting in an increase of approximately $16,000. We anticipate that our advertising and costs of acquiring new subscribers will increase over the future periods, as we attempt to increase our revenue base to cover future operating costs. Off-Balance Sheet Arrangements The company does not have any off-balance sheet arrangements. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE There have been no changes in or disagreements with accountants on accounting or financial disclosure matters. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS The following table sets forth the name and age of officers and director as of July 27 , 2011. Our executive officer holds office until he or she resigns. Name Age Position Robert DeAngelis 55 President, Chief Financial Officer, Treasurer and Director Set forth below is a brief description of the background and business experience of our executive officer and director for the past five years. Robert DeAngelis, President, Chief Executive Officer, Age 55 Robert DeAngelis is the Founder, President and Chief Financial Officer of Real Estate Contacts, Inc., and has been since the company s inception in 2005. Mr. DeAngelis brings to the company over 20 years of successful business development and management experience along with a strong diverse background of sales, financial and internet experience. Mr. DeAngelis is responsible for running the overall day to day management operations of the companies administrative functions, corporate filings, strategic evolution direction of the business, the overall vision as well as the sales and marketing for the company. From 1997-2005 Mr. DeAngelis developed a company named The Privilege Club, Inc. This company was a print and internet advertising company for upper scale retailers and business owners. Prior to developing The Privilege Club, between 1987 through 1997 he developed a print and newspaper advertising company named Shopping Center Promotions and Marketing, Inc. In this capacity, Mr. DeAngelis planned successful marketing and advertising strategies working with shopping center owners and management owners in the South Florida area. From 1979 through 1985, Mr. DeAngelis managed several branch real estate offices in Ft. Lauderdale, Florida consisting of Century 21, ERA and Realty World Franchises. In 1974, Mr. DeAngelis received his Associate s Degree in Applied Business and his Bachelor of Science in Business Administration in 1977 from Youngstown University, Youngstown, Ohio. Board Committee The Company does not currently have a designated audit, nominating or compensation committee. The Company currently has no plans to form these separately designated Board committees. Term of Office Our directors are appointed for a one-year term to hold office until the next annual general meeting of our shareholders or until removed from office in accordance with our bylaws. Our officers are appointed by our board of directors and hold office until removed by the board. Involvement in Certain Legal Proceedings To our knowledge, during the past ten (10) years, none of our directors, executive officers, promoters, control persons, or nominees has been: the subject of any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time; convicted in a criminal proceeding or is subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; or found by a court of competent jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law. EXECUTIVE COMPENSATION The following summary compensation table sets forth all compensation awarded to, earned by, or paid to the named executive officers paid by us during the period from 2008, through December 31, 2010. SUMMARY COMPENSATION TABLE Name and Principal Position Year Salary ($) Bonus ($) Stock Awards ($) Option Awards ($) Non-Equity Incentive Plan Compensation ($) Non- Qualified Deferred Compensation Earnings ($) All Other Compensation ($) Totals ($) Robert DeAngelis, President, Chief Executive Officer 2010 2009 2008 $ 60,000 60,000 60,000 500,000 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 $ 560,000 60,000 60,000 The $500,000 performance bonus was paid by the issuance of 10,000,000 common shares. Option Grants Table There were no individual grants of stock options to purchase our common stock made to the executive officer named in the summary compensation table since inception. Aggregated Option Exercises and Fiscal Year-End Option Value Table There were no stock options exercised since inception by the executive officers named in the Summary Compensation Table. Long-Term Incentive Plan ( LTIP ) Awards Table There were no awards made to the named executive officers in the last completed fiscal year under any LTIP. Compensation of Directors Directors are permitted to receive fixed fees and other compensation for their services as directors. The Board of Directors has the authority to fix the compensation of directors. No amounts have been paid to, or accrued to, directors in such capacity. Employment Agreements On March 10, 2010, we entered into an employment agreement with Robert DeAngelis, our Chief Executive Officer. The employment agreement is for a period of three years and can be cancelled upon written notice by either employee or employer (if certain employee acts of misconduct are committed). The total minimum aggregate annual amount due under the employment agreement is $60,000 plus bonuses. During 2010, the Company paid a $500,000 bonus. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table provides the names and addresses of each person known to us to own more than 5% of our outstanding shares of common stock as of July 27 , 2011 and by the officers and directors, individually and as a group. Except as otherwise indicated, all shares are owned directly and the shareholders listed possesses sole voting and investment power with respect to the shares shown. Name Title of Class Number of Shares Beneficially Owned Percent of Class Robert DeAngelis 240 Windsor Ridge #36 New Castle, Pennsylvania 16105 Common Stock 37,000,000 67.2 % All Executive Officers and Directors as a group (1) 67.2 % (1) Based on 55,030,000 shares of common stock outstanding as of July 27 , 2011. Includes persons owning more than 5% of the outstanding shares of common stock. TABLE OF CONTENTS PAGE Prospectus Summary 1
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+PROSPECTUS SUMMARY As used in this prospectus, references to the Company, we, our , us or JH Designs, Inc. refer to JH Designs, Inc. unless the context otherwise indicates. The following summary highlights selected information contained in this prospectus. Before making an investment decision, you should read the entire prospectus carefully, including the Risk Factors section, the financial statements, and the notes to the financial statements. OUR COMPANY JH Designs, Inc. was incorporated on July 29, 2010, under the laws of the State of Nevada, for the purpose of providing home staging and interior design services, currently focusing on customers in the San Fernando Valley and the West Side areas of Los Angeles, California. We are seeking to become a reporting issuer under the Securities Exchange Act of 1934, as amended, because we believe that this will provide us with greater access to capital, that we will become better known, and be able to obtain financing more easily in the future if investor interest in our business grows enough to sustain a secondary trading market in our securities. Additionally, we believe that being a reporting issuer increases our credibility and that we may be able to attract and retain more highly qualified personnel once we are not a shell company by potentially offering stock options, bonuses, or other incentives with a known market value. We must raise approximately $223,000 to complete our plan of operation for the next 12 months, we do not have any financing arranged and in the absence of such financing, our business will fail. Since the date of our incorporation, we have raised an aggregate of $31,530 through private placements of our securities. Proceeds from these placements were used for working capital. We are a development stage company and our auditors have issued an opinion that substantial doubt exists as to whether we can continue as an ongoing business. On September 1, 2010, we entered into a LLC Membership Purchase Agreement with Mr. Hopp, whereby we acquired a 100% limited liability company interest in Staged for Success LLC, a California limited liability company ( Staged for Success ). Staged for Success LLC, formed on February 19, 2009, is an entity through which Mr. Hopp had operated a home staging and interior design services business since its formation. Staged for Success LLC is a wholly owned subsidiary of JH Designs, Inc. The Company s principal offices are located at 11271 Ventura Blvd. #511, Studio City, California 91604 and our telephone number is (818) 472-6001. We are registering the 1,170,000 shares of common stock held by selling stockholders pursuant to verbal representations to such stockholders that the Company would use its best efforts to register such shares for resale. THE OFFERING Securities offered: The selling stockholders are offering hereby up to 1,170,000 shares of common stock. Offering price: The selling stockholders will offer and sell their shares of common stock at a fixed price of $0.20 per share for the duration of the offering. Distribution of Shares: The selling shareholder s determination of when and how to sell the shares will be in accordance with the methods and terms described in the Plan of Distribution section on page 14. Shares outstanding prior to offering: 9,845,000 Shares outstanding after offering: 9,845,000 Market for the common shares: There is no public market for our shares. Our common stock is not traded on any exchange or on the over-the-counter market. After the effective date of the registration statement relating to this prospectus, we hope to have a market maker file an application with the Financial Industry Regulatory Authority ( FINRA ) for our common stock to eligible for trading on the Over The Counter Bulletin Board. We do not yet have a market maker who has agreed to file such application. There is no assurance that a trading market will develop, or, if developed, that it will be sustained. Consequently, a purchaser of our common stock may find it difficult to resell the securities offered herein should the purchaser desire to do so when eligible for public resale. Use of proceeds: We will not receive any proceeds from the sale of shares by the selling stockholders SUMMARY FINANCIAL INFORMATION The tables and information below are derived from our audited financial statements for the period from February 19, 2009 (Inception) to December 31, 2010. The summary financial data as of December 31, 2010, and 2009 is derived from our audited financial statements, which are included elsewhere in this prospectus. Our cash at June 30, 2011 was $2,639. December 31, 2010 ($) Financial Summary Cash and Deposits 12,719 Total Assets 22,638 Total Liabilities 43,808 Total Stockholder s Equity (Deficit) (21,170) Accumulated From February 19, 2009 (Inception) to December 31, 2010 ($) Statement of Operations Total Expenses 140,093 Net Loss for the Period 89,261 Net Loss per Share (0.01) Financial Summary (Unaudited) June 30, 2011 ($) Cash and Deposits 2,639 Total Assets 7,482 Total Liabilities 35,263 Total Stockholder s Equity (Deficit) 27,781 For the Period from February 19, 2009 (Inception) through June 30, 2011 Statement of Operations (Unaudited) Total Expenses 145,823 Net Loss for the Period 95,872 Net Loss per Share (0.01)
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001520920_tmg_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001520920_tmg_prospectus_summary.txt
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this Prospectus and may not contain all of the information you should consider before investing in the shares. You are urged to read this Prospectus in its entirety, including the information under Risk Factors , Management s Discussion and Analysis of Financial Condition and Results of Operations and the Financial Statements, before making an investment decision. Our Company and Our Business Model We are a Nevada corporation formed on March 10, 2011. We are the sole shareholder of TMG Energy Systems Inc. ( TMG Energy Systems , the Company , or, TMG ), incorporated in the State of New York on March 11, 2011. TMG s principal executive offices are located at 555 Theodore Fremd Avenue, Suite C-200, Rye, NY 10580 and its telephone number is (914) 925-0300. TMG s website address is www.tmgenergysystems.com. Overview Our business objective is to become an energy savings company that provides comprehensive energy efficiency and alternative energy solutions by evaluating current systems and then designing and installing efficient systems for the commercial, residential and industrial markets, initially, in the New York Tri-State area. To capture these savings opportunities, we will first identify specific savings opportunities and define the economic return associated with each recommendation. We will then design, engineer, develop and arrange financing for energy efficiency projects and clean energy projects. Finally, we intend to own and operate heat reclamation systems, which will provide energy to potential customers at lower rates than they are currently paying. During our initial twelve months of operations, TMG intends to focus on providing contract performance services for retrofitting existing energy systems and installing, owning and operating Heat Reclamation Systems. These systems, while complex in their internal design are relatively simple in operation. Heat Reclamation units are used in a retrofit application replacing an existing HVAC system while providing the same role and performance but with the added benefit of capturing and reutilizing thermal energy that is usually dispersed into the atmosphere as a byproduct. This thermal energy is reutilized to fulfill demand by the facility. TMG captures the value of this recovered thermal energy through metering points and charges the customer at the pre-agreed rates. Other Pertinent Information References to we, us, our and similar words refer to TMG Energy Corp. and its subsidiaries unless the context indicates otherwise. Our corporate headquarters are located at 555 Theodore Fremd Avenue, Suite C-200, Rye, NY 10580. Our telephone number is is (914) 925-0300. The Offering Common Stock Offered: The selling shareholders are offering a total of 20,052,883 shares of common stock, which includes 445,040 shares of common stock presently outstanding and 19,607,843 shares of common stock that issuable upon conversion of the 10% convertible promissory notes (the 10% Notes ). Initial Offering Price: The selling shareholders will sell our shares at $0.05 per share until our shares are quoted on the OTC Bulletin Board, and thereafter at prevailing market prices or privately negotiated prices. This price was determined arbitrarily by us. Terms of Offering: The selling shareholders will determine when and how they will sell the common stock offered in this prospectus. Termination of the Offering: The offering will conclude when all of the 20,052,883 shares of common stock have been sold or we, in our sole discretion, decide to terminate the registration of the shares. We may decide to terminate the registration if it is no longer necessary due to the operation of the resale provisions of Rule 144 promulgated under the Securities Act of 1933. We also may terminate the offering for no reason whatsoever at the discretion of our management team. Outstanding Shares of Common Stock: 20,052,883 shares which includes 445,040 shares of common stock presently outstanding as well as 19,607,843 shares of common stock issuable upon conversion of the 10% Notes. Use of Proceeds: We will receive no proceeds from the sale of any shares by the selling shareholders.
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001521065_drug-free_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001521065_drug-free_prospectus_summary.txt
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+PROSPECTUS SUMMARY
+
+ 
+
+AS USED IN THIS PROSPECTUS, UNLESS THE CONTEXT OTHERWISE REQUIRES, WE, US, OUR, AND DILMAX CORP. REFERS TO DILMAX CORP. THE FOLLOWING SUMMARY DOES NOT CONTAIN ALL OF THE INFORMATION THAT MAY BE IMPORTANT TO YOU. YOU SHOULD READ THE ENTIRE PROSPECTUS BEFORE MAKING AN INVESTMENT DECISION TO PURCHASE OUR COMMON STOCK.
+
+ 
+
+DILMAX CORP.
+
+ 
+
+We are a development stage company and our business is on-line distribution of music for fitness. Dilmax Corp. was incorporated in Nevada on April 14, 2011. We intend to use the net proceeds from this offering to develop our business operations (See Description of Business and Use of Proceeds ). To implement our plan of operations we require a minimum of $37,500 for the next twelve months as described in our Plan of Operations. We expect our operations to begin to generate revenues during months 6-12 after completion of this offering. At the beginning the revenues will be insignificant but we believe that once we start our marketing campaign it will gradually rise. By the end of the 12-month period after completion our offering we expect the revenues will be approximately $1,000 a month. We believe that it will continue rising and will be more than $1,000 a month in the following months therefore our revenues will exceed costs. However, there is no
+
+ assurance that we will generate any revenue in the first 12 months after completion our offering or ever generate any revenue.
+
+Being a development stage company, we have very limited operating history. After twelve months period we may need additional financing. If we do not generate any revenue we may need a minimum of $10,000 of additional funding to pay for ongoing advertising expenses and SEC filing requirements. We do not currently have any arrangements for additional financing. Our principal executive offices are located at 1659 Donovalska St., Suite 32, Prague 14800, Czech Republic. Our phone number is (702) 430-6148.
+
+From inception until the date of this filing, we have had very limited operating activities. Our financial statements from inception (April 14, 2011) through May 31, 2011, reports no revenues and a net loss of $429. Our independent registered public accounting firm has issued an audit opinion for Dilmax Corp. which includes a statement expressing substantial doubt as to our ability to continue as a going concern. To date, we have developed our business plan and entered into DJ Service Agreement with DJ Namornik, who agreed to compose for us musical tracks and remixes to these tracks.
+
+We plan to sell these musical tracks and tracks remix for $0.75 each. We also plan to sell albums consisting of 10 tracks and remixes made up on basis of BMP (beats per minute) tempo and with duration of 45 minutes for $6.99.
+
+We do not intend to sell music produced by third parties. As of the date of this prospectus, there is no public trading market for our common stock and no assurance that a trading market for our securities will ever develop. Dilmax Corp. has no current plans to merge with another operating company. The company is publicly offering its shares to raise funds in order for our business to develop its operations and increase its likelihood of commercial success.
+
+ THE OFFERING
+
+The Issuer:
+
+ 
+
+DILMAX CORP.
+
+Securities Being Offered:
+
+ 
+
+2,500,000 shares of common stock.
+
+Price Per Share:
+
+ 
+
+$0.03
+
+Duration of the Offering:
+
+ 
+
+The shares will be offered for a period of two hundred and forty (240) days from the effective date of this prospectus. The offering shall terminate on the earlier of (i) when the offering period ends (240 days from the effective date of this prospectus), (ii) the date when the sale of all 2,500,000 shares is completed, (iii) when the Board of Directors decides that it is in the best interest of the Company to terminate the offering prior the completion of the sale of all 2,500,000 shares registered under the Registration Statement of which this Prospectus is part. The Company will deliver stock certificates attributable to shares of common stock purchased directly to the purchasers within ninety (90) days of the close of the offering
+
+Gross Proceeds
+
+ 
+
+$75,000
+
+Securities Issued and Outstanding:
+
+There are 2,700,000 shares of common stock issued and outstanding as of the date of this prospectus, held by our sole officer and director, Konstantin Kupert 
+
+ 
+
+Subscriptions
+
+All subscriptions once accepted by us are irrevocable.
+
+Registration Costs
+
+We estimate our total offering registration costs to be approximately $8,000.
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001521476_scripsamer_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001521476_scripsamer_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..47b3e05b357616f9497d9f718ed9d548344500b8
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@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights selected information contained elsewhere in this prospectus. This summary does not contain all the information that you should consider before investing in the common stock. You should carefully read the entire prospectus, including Risk Factors , Management s Discussion and Analysis of Financial Condition and Results of Operations and the Consolidated Financial Statements, before making an investment decision . About ScripsAmerica, Inc. We are ScripsAmerica, Inc., a Delaware corporation that was formed on May 12, 2008. We are a distributor of prescription and over the counter (OTC) pharmaceuticals. We implement efficient supply chain management on behalf of our clients, from strategic sourcing to delivering niche generic pharmaceuticals to market. Positioned in the center of the pharmaceutical value chain, we receive purchase orders from pharmaceutical distributors, contract with pharmaceutical packagers and their manufacturers to process orders to the end user s specifications, and deliver product to a wide range of customers across the health care industry. Our primary value lies in our growing portfolio of end users to whom we market our services. For end users such as hospitals and home care agencies, custom packaging such as unit of use can save staff time and cost, as well as eliminate dispensing errors at the pharmacist level. Further, we maintain a strategic relationship with the largest pharmaceutical distributor in North America, McKesson Corp. McKesson accounted for 100% of sales for the year ended December 31, 2010 and 93% of our sales for the six months ended June 30, 2011. We expect McKesson to account for a majority of our sales for the year ending December 31, 2011. Through our relationship with McKesson, we gain access to the end users of our product and services. We receive purchase orders from McKesson on a weekly basis. These orders are submitted to McKesson from various kinds of end users, primarily from hospitals, nursing homes and retail outlets. We fulfill the orders and ship the product to McKesson for further distribution to the end users. The end users pay McKesson for the product, and McKesson in turn pays us. McKesson is our most significant customer in terms of providing purchase orders; however, we view the end users as our customers because it is the end users needs (and not McKesson s) that determine our product mix. In addition to purchase order fulfillment, ScripsAmerica seeks to diversify the Company s revenue sources by securing FDA approval for and bringing to market so-called Drug Efficacy Study Implementation ( DESI ) drugs, while minimizing clinical risk, and by developing rapid melt formulations of vitamins, OTC drugs and certain generic products. We also plan to acquire pharmaceutical packagers and pharmaceutical manufacturers for a vertical expansion of our business as well. Principal Executive Offices Our principal executive offices are located at 77 McCullough Drive, New Castle, Delaware 19720. Our telephone number is (800) 957-7622 and our fax number is (215) 405-2650. Our website address is www.scripsamerica.com. The information on our website is not incorporated by reference into this prospectus and should not be relied upon with respect to this offering. Recent Developments On April 1, 2011 we closed on the sale of 2,990,252 shares of our Series A Preferred Stock to a single accredited investor for a purchase price of $1,043,000. The sale of shares was exempt under Section 4(2) of the Securities Act as an offer and sale not involving a public offering. As of the date of this prospectus, each share of Series A Preferred Stock is convertible into two shares of our common stock. The conversion ratio of the Series A Preferred Stock is subject to adjustment (as described below) The Series A Preferred Stock is paid a dividend at annual rate of 8% of the purchase price, which dividend is paid at the end of each fiscal quarter. Such dividends are cumulative. Of the seven members of our board of directors, the holder of the Series A Preferred Stock, as a single class, gets to elect one (1) director to the board and will vote with the common stockholders to four (4) directors (the common stockholders will elect, as a single class, two (2) directors). The Series A Preferred Stockholder will have approval right over certain corporate actions, namely our liquidation or dissolution, any merger, share exchange or asset sale that results in a change of control, the payment of any dividends or the redemption of stock (except for stock dividends, change of control transaction and termination of employment or service). The Series A Preferred Stock is convertible into 5,989,680 shares of our common stock (based on a conversion price of $0.1744, which was adjusted as a result of the forward stock split (as described below). The conversion price of the Series A Preferred Stock will be adjusted for any issuances of stock by us at a price per share less than $0.1744 (subject to certain exemptions such as securities issued under an employee stock option plan or securities issued in business transactions approved by our board). The Series A Preferred Stock has priority to assets over the common stockholders in the event of a liquidation, dissolution or any merger, share exchange or consolidation in which we are not the surviving entity or there is a change in control of us). These rights of the Series A Preferred Stockholder continue until all of the shares of Series A Preferred Stock are converted into our common stock. CALCULATION OF REGISTRATION FEE Title of Each Class Of Securities to be Registered Amount to be Registered (1) Proposed Maximum Aggregate Offering Price per share (2) Proposed Maximum Aggregate Offering Price Amount of Registration fee Common Stock, par value $.001 5,229,000 $ 0.20 $ 1,045,800 $ 121.42 (3) (1) In the event of a stock split, stock dividend, or similar transaction involving the common stock, the number of shares registered shall automatically be increased to cover the additional shares of common stock issuable pursuant to Rule 416 under the Securities Act. (2) The offering price has been estimated solely for the purpose of computing the amount of the registration fee in accordance with Rule 457(a). Our common stock is not currently trading on any national exchange. Therefore, in accordance with Rule 457, the offering price of $0.20 was determined by the price shares of common stock that we sold in a Regulation S offering that closed in May 2011. The price of $0.20 is a fixed price at which the selling security holders may sell their shares until our common stock is quoted on the OTC Bulletin Board at which time the shares may be sold at prevailing market prices or privately negotiated prices. (3) Fee previously paid. The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with section 8(a) of the securities act of 1933 or until the registration statement shall become effective on such date as the commission, acting pursuant to said section 8(a), may determine. We granted the Series A Preferred Stockholder demand and piggyback registration rights. The demand registration rights will continue until the earlier of five (5) years or 180 days after we have an underwritten initial public offering of our capital stock. Additionally, we cannot grant demand registration rights to any other person without the prior written consent of the Series A Preferred Stockholder. We can grant piggyback registration rights so long as such rights are not greater than the Series A Preferred Stockholder s piggyback registration rights. The registration rights will terminate upon the earlier of (i) the sale of the company, (ii) the date on which the Series A Preferred Stockholder can sell all of his shares under Rule 144 or another similar exemption under the Securities Act without limitation during a three-month period without registration; or (iii) the first anniversary of an underwritten initial public offering of our capital stock. In connection with the sale and issuance of the Series A Preferred Stock, our three largest common stockholders, who are our Chief Executive Officer, Chief Financial Officer and our former Executive Vice President, entered into a Right of First Refusal and Co-Sale Agreement with us and the Series A Preferred Stockholder. Under this agreement, we and the Series A Preferred Stockholder have a right of first refusal with respect to a transfer of shares of common stock by any of our current CEO and CFO and/or our former Executive Vice President. This right of first refusal does not apply to a transfer that is (i) done for estate planning purposes or (ii) a pledge of stock as security for a debt for which the large common stockholder is personally liable. On April 15, 2011, we had a forward two-for-one stock split. In addition, as a result of the forward stock split, we adjusted the conversion price of the Series A Preferred Stock to $0.1744 (reduced from $0.3488). In April 2011, we sold 5,200,000 shares of our common stock to four purchasers for an aggregate purchase price of $176,000. Each of the purchasers was a corporation formed outside of the United States with a business address located outside of the United States. This transaction was exempt from the registration provisions of the Securities Act pursuant to Regulation S as an offshore transaction with non-U.S. persons (as such term is defined in Rule 902 of Regulation S). As of November 7 , 2011, the Company has received $5,200 toward the purchase price of $176,000. The Company expects to receive the remaining balance cash for these shares within the next six months. In May 2011, we sold 28,000 shares of our common stock to 56 purchasers for an aggregate purchase price of $5,600. Each of the purchasers was a non-U.S. citizen with a residence address located outside of the United States. This transaction was exempt from the registration provisions of the Securities Act pursuant to Regulation S as an offshore transaction with non-U.S. persons (as such term is defined in Rule 902 of Regulation S). On June 4, 2011, we entered into a consulting agreement with Sarav Patel, pursuant to which Mr. Patel will assist us in developing our supply chain management business by introducing and promoting us with private sector out-patient surgery centers, hospitals and other health care facilities. Mr. Patel will set up direct access for us to present our products, make presentations, and coordinate meetings with potential end users. For his services under this agreement, we issued 100,000 shares of our common stock, valued at $10,000, which valuation was determined by our board of directors. These shares are restricted and are not covered by this prospectus. The consulting agreement with Mr. Patel is for a one year term that will renew automatically each year unless terminated by us or Mr. Patel. Mr. Patel owns and operates Marlex Pharmaceuticals. On June 6, 2011, we entered into a consulting agreement with Lincoln Associates, Inc. pursuant to which Lincoln Associates will assist us in developing our supply chain management business by introducing and promoting us with military out-patient surgery centers, military hospital and other health care facilities, including the Veterans Administration facilities, and Department of Defense (D.O.D.) health care facilities, including D.O.D. s stock pile drug program. Lincoln Associates will set up direct access for us to present our products, make presentations, and coordinate meetings with potential end users. For their services under this agreement, we issued 50,000 shares of our common stock, valued at $5,000, which valuation was determined by our board of directors. These shares are restricted and are not covered by this prospectus. The consulting agreement with Lincoln Associates is for a one year term that will renew automatically each year unless terminated by us or Lincoln Associates. On July 21, 2011, we entered into an agreement with Curing Capital Inc. to assist us to raise up to $17,000,000 and to provide us with financial advisory services. This is a non-exclusive arrangement. Upon signing this agreement, we issued to Curing Capital 104,000 shares of our common stock. Curing Capital has agreed to hold such shares for 12 months. In addition, for any investment in us made by an investor introduced to us by Curing Capital, we will pay a cash fee at the closing of such investment. The cash fee is based on the net amount invested. Such fee will range from $81,388 for any investment of $1,000,000 or less to as much as $1,254,771 for an investment of more than $14,000,000 but less than $17,000,000, plus $79,902 for each $1,000,000 above $17 million. This letter agreement with Curing Capital has a term of 120 days and may be cancelled by either party upon 30 days notice. In June 2011, we added Cardinal Health, Curtis Pharmaceuticals and the United States Veterans Administration as our customers. These customers accounted for approximately 7% of our sales for the six months ended June 30, 2011. The information in this prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and no offer to buy these securities is being solicited in any state where the offer or sale is not permitted. PRELIMINARY SUBJECT TO COMPLETION, DATED NOVEMBER 9 , 2011 PROSPECTUS SCRIPSAMERICA, INC. 5,229,000 shares of Common Stock This prospectus covers the offer and sale of up to 5,229,200 shares of our common stock from time to time by the selling security holders named in this prospectus. The shares of common stock covered by this prospectus are shares that are held, beneficially and of record, by the selling security holders. We are not offering any shares of common stock. The selling security holders will receive all of the net proceeds from sales of the common stock covered by this prospectus. Our common stock is presently not traded on any national market or securities exchange or in the over-the-counter market. The sales price to the public of the shares of our common stock offered by the selling security holders under this prospectus is fixed at $0.20 per share until such time as our common stock is quoted on the Over-The-Counter (OTC) Bulletin Board. Although we intend to request a registered broker-dealer to apply with the Financial Industry Regulatory Authority to have our common stock eligible for quotation on the OTC Bulletin Board, public trading of our common stock may never materialize or, even if materialized, trading may not be sustained. If our common stock is quoted on the OTC Bulletin Board, then the sale price to the public will vary according to prevailing market prices or privately negotiated prices by the selling security holders. To the best of our knowledge, none of the selling security holders are broker-dealers, underwriters or affiliates thereof. As of November 7, 2011 we had 52,012,680 shares of common stock issued and outstanding and 2,990,252 shares of Series A Preferred Stock issued and outstanding. The Series A Preferred Stock is convertible into shares of our common stock but issuance and/or resale of such conversion shares are not covered by this prospectus. INVESTING IN OUR COMMON STOCK IS SPECULATIVE AND INVOLVES A HIGH DEGREE OF RISK AND SHOULD BE CONSIDERED ONLY BY PERSONS WHO CAN AFFORD THE LOSS OF THEIR ENTIRE INVESTMENT. PLEASE REFER TO RISK FACTORS BEGINNING ON PAGE 4. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. Our offices are located at 77 McCullough Drive, New Castle< Delaware 19720. Our telephone number is (800) 957-7622. Our website can be found at www.scripsamerica.com. The Date of This Prospectus Is: _______ __, 2011
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/CIK0001521700_getaway2go_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001521700_getaway2go_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..fa504da4df732c79174ed930e3d9f001bd7ad791
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001521700_getaway2go_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights selected information contained elsewhere in this prospectus. This summary does not contain all the information that you should consider before investing in the common stock. You should carefully read the entire prospectus, including Risk Factors , Management s Discussion and Analysis of Financial Condition and Results of Operations and the Financial Statements, before making an investment decision. In this Prospectus, the terms Company, we, us and our refer to Getaway2golfonline.com Overview We were incorporated in the State of Nevada on April 13, 2011 as Getaway2golfonline.com and our fiscal year end is May 31. Our operations to date have been devoted primarily to start-up and development activities, which include: 1. Formation of the Company; 2. Development of our business plan; 3. Evaluating various travel destinations; 4. Research on marketing channels/strategies for our golf ventures 5. Secured our website domain www.getaway2golfonline.com and are developing our initial online website We anticipate our expenses for the next twelve months to implement our business plan, complete the registration process and fulfill our reporting obligations as a public company to be in the $50,000 range. At this time we do not havethe funds and have taken no steps to raise these funds. We are a development stage company with no revenues nor outside source of funding our aggregate market value would be $518,000 and stockholders equity is $5,000 at May 31. 2011 at this time currently with $5,000 in assets that plans to design and market global golf packages and affinity travel excursions throughout the world for U.S. travelers who seek unique golf opportunities and experiences. Enrichment and affinity travel sometimes is referred to as destination travel includes trips to golf destinations that also provide such other attractions as dancing, food (hands-on and/or demonstrations), wine (tasting or making), other sports like tennis, etc. in exotic-out-of-the-way locales. We plan to act as a travel consultant that advises clients, by planning excursions, assisting with bookings and identifying group traveling packages that may be of interest to our clients with a focus on golf destinations. In addition, we plan to occasionally guide specialty enrichment or adventure tours, leading groups on destination excursions that include a focus on the types of activities listed previously such as food and cooking, wine tasting or physical activities such as biking. These travel experiences are to be designed to challenge client travelers physically, spiritually and intellectually. Our specific services will include investigating/researching specific companies providing services/destinations that clients are interested in - or suggest alternatives. We will also investigate/research countries/areas where travel/service is desired. Mr. Yardley, our sole officer and director has over the past five years + in his capacity as Membership Director at his place of employment successfully managed and planned a number of golf getaway s to various Mexico golf resorts for forty to fifty members at a time. We hope Mr. Yardley s long time employment in the Golf industry will allow him to make the company a success. Blank Check Issue We are not a blank check corporation. Section 7(b)(3) of the Securities Act of 1933, as amended defines the term blank check company to mean, any development stage company that is issuing a penny stock that, (A) has no specific plan or purpose, or (B) has indicated that its business plan is to merge with an unidentified company or companies. We have a specific plan and purpose. Our business purpose is to provide golf related travel packages in the United States and Europe In Securities Act Release No. 6932 which adopted rules relating to blank check offerings, the Securities and Exchange Commission stated in II DISCUSSION OF THE RULES, A. Scope of Rule 419, that, Rule 419 does not apply to start-up companies with specific business plans even if operations have not commenced at the time of the offering. Further, we have not indicated in any manner whatsoever, that we plan to merge with an unidentified company or companies, nor do we have any plans to merge with an unidentified company or companies. We have no plans or intentions to be acquired or to merge with an operating company nor do we have plans to enter into a change of control or similar transaction or to change our management. Our operations to date have been devoted primarily to start-up and development activities, which include: 1. Formation of the Company; 2. Development of our business plan; 3. Evaluating various travel destinations; 4. Research on marketing channels/strategies for our golf ventures 5. Secured our website domain www.getaway2golfonline.com and are developing our initial online website; Because we have nominal assets and no significant revenue, we are considered a "shell company" and will be subject to more stringent reporting requirements. The Securities and Exchange Commission ("SEC") adopted Rule 405 of the Securities Act and Exchange Act Rule 12b-2 which defines a shell company as a registrant that has no or nominal operations, and either (a) no or nominal assets; (b) assets consisting solely of cash and cash equivalents; or (c) assets consisting of any amount of cash and cash equivalents and nominal other assets. Our balance sheet reflects that we have no cash or any other asset and, therefore, we are defined as a shell company. The new rules prohibit shell companies from using a Form S-8 to register securities pursuant to employee compensation plans. However, the new rules do not prevent us from registering securities pursuant to S-1 registration statements. Additionally, the new rule regarding Form 8-K requires shell companies to provide more detailed disclosure upon completion of a transaction that causes it to cease being a shell company. If an acquisition is undertaken (of which we have no current intention of doing), we must file a current report on Form 8-K containing the information required pursuant to Regulation S-K within four business days following completion of the transaction together with financial information of the acquired entity. In order to assist the SEC in the identification of shell companies, we are also required to check a box on Form 10-Q and Form 10-K indicating that we are a shell company. To the extent that we are required to comply with additional disclosure because we are a shell company, we may be delayed in executing any mergers or acquiring other assets that would cause us to cease being a shell company. The SEC adopted a new Rule 144 effective February 15, 2008, which makes resale of restricted securities by shareholders of a shell company more difficult. For the period from April 13, 2011 (inception) to the year ended May 31, 2011, we had no revenue. Operating Expenses from inception to May 31 totaled $25,400 resulting in a net loss of ($25,400). We had $5,000 in total assets as of May 31, 2011. Additionally, our independent auditor s report expresses substantial doubt about our ability to continue as a going concern. We will receive no proceeds from this offering. We have no current plans for financing. Where You Can Find Us Our principal executive office is located at 4790 Caughlin Pkwy, Ste 387, Reno, NV 89519. Our telephone number is (775-232-1950) and our fax is 775-201-8331. Our web site www.getaway2golfonline.com is currently under construction. The Offering Common stock offered by selling security holders 900,000 shares of common stock @ $.02 or $18,000. This number represents 3.5% of our current outstanding common stock (1). Common stock outstanding before the offering 25,900,000 Common stock outstanding after the offering 25,900,000 common shares as of May 31, 2011. Aggregate market value would be $518,000 and stockholders equity is $5,000 at May 31. 2011 Terms of the Offering The selling security holders will determine when and how they will sell the common stock offered in this prospectus. Termination of the Offering The offering will conclude upon the earliest of (i) such time as all of the common stock has been sold pursuant to the registration statement or (ii) such time as all of the common stock becomes eligible for resale without volume limitations pursuant to Rule 144 under the Securities Act, or any other rule of similar effect. Use of proceeds We are not selling any shares of the common stock covered by this prospectus. Risk Factors The Common Stock offered hereby involves a high degree of risk and should not be purchased by investors who cannot afford the loss of their entire investment. See Risk Factors beginning on page 4. (1) Based on 25,900,000 shares of common stock outstanding as of May 31, 2011. Summary of Consolidated Financial Information The following summary financial data should be read in conjunction with Management s Discussion and Analysis, Plan of Operation and the Financial Statements and Notes thereto, included elsewhere in this prospectus. The statement of operations and balance sheet data from inception April 13, 2011 through May 31, 2011 are derived from our audited financial statements. The data set forth below should be read in conjunction with Management s Discussion and Analysis of Financial Condition and Results of Operations, our financial statements and the related notes included in this prospectus. For the Period from Inception ( April 13, 2011) Through May 31, 2011 STATEMENT OF OPERATIONS Revenues $ 0 General and Administrative Expenses 25,400 Total Expenses 25,400 Net Loss $ (25,400 ) As of May 31, 2011 BALANCE SHEET DATA Cash $ 5,000 Total Assets 5,000 Total Liabilities 0 Stockholders Equity $ 5,000 AMENDMENT NO. 3 to FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Getaway2golfonline.com (Exact Name of Registrant in its Charter) Nevada 7200 45-1634701 (State or other Jurisdiction of Incorporation) (Primary Standard Industrial Classification Code) (IRS Employer Identification No.) Getaway2golfonline.com 4790 Caughlin Pkwy, Ste 387 Reno, NV 89519 775-232-1950 or 775-201-8331 fax (Address and Telephone Number of Registrant s Principal Executive Offices and Principal Place of Business) Copies of communications to: How2gopublic.com 18124 Wedge Pkwy, Ste 1050 Reno, NV 89511 775-851-7397 or 775-201-8331 jsmith@howtogopublic.net If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box: If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b 2 of the Exchange Act. Large accelerated filer o Accelerated filer o Non-accelerated filer o Smaller reporting company RISK FACTORS The shares of our common stock being offered for resale by the selling security holders are highly speculative in nature, involve a high degree of risk and should be purchased only by persons who can afford to lose the entire amount invested in the common stock. Before purchasing any of the shares of common stock, you should carefully consider the following factors relating to our business and prospects. If any of the following risks actually occurs, our business, financial condition or operating results could be materially adversely affected. In such case, you may lose all or part of your investment. You should carefully consider the risks described below and the other information in this process before investing in our common stock. Risks Related to Our Business OUR AUDITOR HAS EXPRESSED SUBSTANTIAL DOUBT AS TO OUR ABILITY TO CONTINUE AS A GOING CONCERN. Based on our financial history since inception, our auditor has expressed substantial doubt as to our ability to continue as a going concern. We are a development stage company that has generated no revenues. We have a net loss since inception of ($25,400). This raises substantial doubt about our ability to continue as a going concern. We are not a blank check company, and we have no current intention of engaging in any merger or acquisition. There have been no discussions concerning a merger of any kind, and we have not authorized anyone to have such preliminary discussions on our behalf. WE NEED ADDITIONAL CAPITAL TO DEVELOP OUR BUSINESS. Our current operating funds will not cover the initial stages of our business plan; however, we currently do not have any operations and we have no income. Because of this and the fact that we will incur significant legal and accounting costs necessary to maintain a public corporation, we will require additional financing to complete our development activities. We currently do not have any arrangements for financing and we may not be able to obtain financing when required. We believe the only source of funds that would be realistic is through a loan from our president and the sale of equity capital. The development of our services will require the commitment of substantial resources to implement our business plan. We anticipate Phase 1 could cost as much as $15,000 and Phase 11 as much as $25,000 . Currently, we have no established bank-financing arrangements. Therefore, it is likely we would need to seek additional financing through subsequent future private offering of our equity securities. We have no current plans for additional financing. We hope that once our stock is quoted on the OTCBB it will enable us the opportunity to participate in the equity market and thru the sale of stock raise the necessary capital needed. We cannot give you any assurance that any additional financing will be available to us, or if available, will be on terms favorable to us. The sale of additional equity securities will result in dilution to our stockholders. The occurrence of indebtedness would result in increased debt service obligations and could require us to agree to operating and financing covenants that would restrict our operations. If adequate additional financing is not available on acceptable terms, we may not be able to implement our business development plan or continue our business operations. WE HAVE LIMITED OPERATING HISTORY AND FACE MANY OF THE RISKS AND DIFFICULTIES FREQUENTLY ENCOUNTERED BY DEVELOPMENT STAGE COMPANY. We are a development stage company, and to date, we have no operating history for investors to evaluate the potential of our business development. We have not yet built our customer base and our brand name and it is possible we never will.. We have no customers at this time and we have not yet initiated any operations. Our operations to date have been devoted primarily to start-up and development activities, which include: 1. Formation of the Company; 2. Development of our business plan; 3. Evaluating various travel destinations; 4. Research on marketing channels/strategies for our golf ventures 5. Secured our website domain www.getaway2golfonline.com which is not yet operational Our future will depend on our ability to bring our service to the market place, which requires careful planning without incurring unnecessary cost and expense. CALCULATION OF REGISTRATION FEE Title of Each Class Of Securities to be Registered Amount to be Registered Proposed Maximum Aggregate Offering Price per share Proposed Maximum Aggregate Offering Price Amount of Registration fee Common Stock, $0.001 par value per share 900,000 $ 0.02 $ 18,000 $ 2.09 (1) This Registration Statement covers the resale by our selling shareholders of up to 900,000 shares of common stock previously issued to such selling shareholders. (2) The offering price has been estimated solely for the purpose of computing the amount of the registration fee in accordance with Rule 457(a). Our common stock is not traded on any national exchange and, the offering price was determined by the price of the shares that were sold to our shareholders in a private placement memorandum. The price of $0.02 is a fixed price at which the selling security holders may sell their shares until our common stock is quoted on the OTCBB at which time the shares may be sold at prevailing market prices or privately negotiated prices. Once we achieve effective status for this registration we hope to move the process forward to have our stock quoted on the OTCBB. At this time we have taken no steps to have our stock quoted on the OTCBB. There can be no assurance that a market maker will agree to file the necessary documents with the Financial Industry Regulatory Authority, which operates the OTC Bulletin Board, nor can there be any assurance that such an application for quotation will be approved. THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SUCH SECTION 8(a), MAY DETERMINE. IF WE ARE NOT ABLE TO LOCATE TRAVELERS WILLING TO PAY FOR TRAVEL SERVICES WE MAY HAVE TO CEASE OPERATIONS. The Company s principal business strategy is to design and market global golf travel excursions. The travel industry in general is ruled by lowest price. The Company hopes to reach travelers who are willing and able to pay for expert travel design services and it may be difficult to find these travelers in numbers large enough to make the business model work well enough to attain profitability. If we are unable to locate travelers willing to pay for our special travel services we may not be able to continue our business operations. UNCERTAINTY AND ADVERSE CHANGES IN THE GENERAL ECONOMIC CONDITIONS OF MARKETS IN WHICH WE WILL PARTICIPATE MAY NEGATIVELY AFFECT OUR BUSINESS. Current and future conditions in the economy have an inherent degree of uncertainty. It is even more difficult to estimate growth or contraction in various parts, sectors and regions of the economy, including the markets in which we will participate. As a result, it is difficult to estimate the level of growth or contraction for the economy as a whole. Adverse changes may occur as a result of soft global economic conditions, rising oil prices, wavering consumer confidence, unemployment, declines in stock markets, contraction of credit availability, or other factors affecting economic conditions in general. Since our chosen market is fueled by and dependent on the discretionary buying power of our potential clients it is quite possible many of them will use other resources to plan and manage their trips themselves. These changes may negatively affect our sales or increase our exposure to losses. OUR PRINCIPAL STOCKHOLDER HAS SIGNIFICANT VOTING POWER AND MAY TAKE ACTIONS THAT MAY NOT BE IN THE BEST INTEREST OF ALL OTHER STOCKHOLDERS Our sole officer and director controls approximately 96.5% of our current outstanding shares of voting common stock. He may be able to exert significant control over our management and affairs requiring stockholder approval, including approval of significant corporate transactions. This concentration of ownership may expedite approvals of company decisions, or have the effect of delaying or preventing a change in control or be in the best interests of all our stockholders. He would also be in control of his own compensation. AS A SMALLER TRAVEL COMPANY WITH REPORTING OBLIGATIONS WE MAY BE AT A COMPETITIVE DISADVANTAGE TO OTHER TRAVEL COMPANIES. Because the travel market is competitive, driven in part by costs and consists of mostly non-public reporting companies we may be at a competitive disadvantage because of our reporting obligations. We face additional expenses, which a private travel company does not such as PCAOB auditor fees, Edgar filing fees and legal fees related to our SEC reporting obligations are estimated to be $15,000 annually. We will be dependent on shareholder loans or stock sales until the company has earnings capable of paying these ongoing obligations. Other non-public travel company s do not incur these costs; we are at a competitive disadvantage to our competitors because of this. However, one of the many benefits of being a fully reporting public company is the ability to participate in the equity market for funding. We also hope to be able to use our status as a public company to enable us to use non-cash means of settling obligations and compensate persons and/or firms providing services to us, although there can be no assurances that we will be successful in any of those efforts. We believe that the perception that many people have of a public company make it more likely that they will accept restricted securities from a public company as consideration for indebtedness to them than they would from a private company. We have not performed any studies of this matter. Our conclusion is based on our own beliefs. Issuing shares of our common stock to such persons instead of paying cash to them may increase our chances to establish and expand our business. Having shares of our common stock may also give persons a greater feeling of identity with us which may result in referrals. However, these actions, if successful, will result in dilution of the ownership interests of existing shareholders, may further dilute common stock book value, and that dilution may be material. Such issuances may also serve to enhance existing management s ability to maintain control because the shares may be issued to parties or entities committed to supporting existing management. The company may offer shares of its common stock to settle a portion of the professional fees incurred in connection with its registration statement. No negotiations have taken place with any professional and no assurances can be made as to the likelihood that any professional will accept shares in settlement of obligations due them. Our independent registered public accounting firm will not accept shares of common stock to settle obligations due to them. WE NEED ADDITIONAL CAPITAL TO DEVELOP OUR BUSINESS AND COMPLY WITH OUR REPORTING REQUIREMENTS The development of our services will require the commitment of substantial resources to implement our business plan and to comply with our reporting obligations. Currently, we have no established bank-financing arrangements. Therefore, it is likely we would need to seek additional financing through subsequent future private offering of our equity securities, or through strategic partnerships and other arrangements with corporate partners. We have no current plans for additional financing. We cannot give you any assurance that any additional financing will be available to us, or if available, will be on terms favorable to us. The sale of additional equity securities will result in dilution to our stockholders. The occurrence of indebtedness would result in increased debt service obligations and could require us to agree to operating and financing covenants that would restrict our operations. If adequate additional financing is not available on acceptable terms, we may not be able to implement our business development plan or continue our business operations. We believe the only source of funds that would be realistic is through a loan from our president and the sale of equity capital. We hope that once our stock is quoted on the OTCBB it will enable us the opportunity to participate in the equity market and thru the sale of stock raise the necessary capital needed. OUR SOLE OFFICER AND DIRECTOR CURRENTLY WORKS AS A FULL TIME DIRECTOR OF GOLF MEMBERSHIP AT A PRIVATE COUNTRY CLUB WHICH MAY POTENTIALLY LEAD TO A CONFLICT OF INTEREST. Mr. Yardley has no experience in the travel consulting and marketing industry other than his role as Director of Golf Membership at a golf course as well as no experience as an officer and director of a public reporting company. Our sole officer and director currently serves as a Director of Golf membership at a private country club and this may lead to a conflict of interest which may lead to a loss of business opportunities. If our sole officer/director current employment may divert potential clients and business opportunities for the Company to his current employer, this may have an adverse consequence on our potential revenues. Mr. Yardley has in the past planned trips in his current employment to various resorts in Mexico, such as: Manzanilla, Acapulco, Puerta Vallerta, Cancun and Ixtapa.and this could become a conflict of interest. Our sole officer and director may be unable to spend adequate time developing the Company s business because of his current employment. At this time the company has no safeguards in place to address this issue while this is a part time. WE MAY INCUR SIGNIFICANT COSTS TO BE A PUBLIC COMPANY TO ENSURE COMPLIANCE WITH U.S. CORPORATE GOVERNANCE AND ACCOUNTING REQUIREMENTS AND WE MAY NOT BE ABLE TO ABSORB SUCH COSTS. We may incur significant costs associated with our public company reporting requirements, costs associated with newly applicable corporate governance requirements, including requirements under the Sarbanes-Oxley Act of 2002 and other rules implemented by the Securities and Exchange Commission. We expect all of these applicable rules and regulations to significantly increase our legal and financial compliance costs and to make some activities more time consuming and costly. We also expect that these applicable rules and regulations may make it more difficult and more expensive for us to obtain director and officer liability insurance and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a result, it may be more difficult for us to attract and retain qualified individuals to serve on our board of directors or as executive officers. We are currently evaluating and monitoring developments with respect to these newly applicable rules, and we cannot predict or estimate the amount of additional costs we may incur or the timing of such costs. In addition, we may not be able to absorb these costs of being a public company which will negatively affect our business operations. BECAUSE OUR SOLE OFFICER AND DIRECTOR OCCUPIES ALL CORPORATE POSITIONS IT MAY BE IMPOSSIBLE TO HAVE ADEQUATE INTERNAL CONTROLS. Our sole officer faces inherent limitations over the implementation of internal controls for financial reporting which may not prevent or detect misstatements. Our sole officer will be unable to segregate duties or properly control every aspect of the Company s operation. This may lead to a system of internal controls that is ineffective. THE LACK OF PUBLIC COMPANY EXPERIENCE OF OUR MANAGEMENT TEAM COULD ADVERSELY IMPACT OUR ABILITY TO COMPLY WITH THE REPORTING REQUIREMENTS OF U.S. SECURITIES LAWS. Our management team lacks public company experience, which could impair our ability to comply with legal and regulatory requirements such as those imposed by Sarbanes-Oxley Act of 2002. Our senior management has never had responsibility for managing a publicly traded company. Such responsibilities include complying with federal securities laws and making required disclosures on a timely basis. Our senior management may not be able to implement programs and policies in an effective and timely manner that adequately respond to such increased legal, regulatory compliance and reporting requirements, including the establishing and maintaining internal controls over financial reporting. Any such deficiencies, weaknesses or lack of compliance could have a materially adverse effect on our ability to comply with the reporting requirements of the Securities Exchange Act of 1934 which is necessary to maintain our public company status. If we were to fail to fulfill those obligations, our ability to continue as a U.S. public company would be in jeopardy in which event you could lose your entire investment in our company. Risk Related To Our Capital Stock Because we have nominal assets and no significant revenue, we are considered a "shell company" and will be subject to more stringent reporting requirements. The Securities and Exchange Commission ("SEC") adopted Rule 405 of the Securities Act and Exchange Act Rule 12b-2 which defines a shell company as a registrant that has no or nominal operations, and either (a) no or nominal assets; (b) assets consisting solely of cash and cash equivalents; or (c) assets consisting of any amount of cash and cash equivalents and nominal other assets. Our balance sheet reflects that we have no cash or any other asset and, therefore, we are defined as a shell company. The new rules prohibit shell companies from using a Form S-8 to register securities pursuant to employee compensation plans. However, the new rules do not prevent us from registering securities pursuant to S-1 registration statements. Additionally, the new rule regarding Form 8-K requires shell companies to provide more detailed disclosure upon completion of a transaction that causes it to cease being a shell company. If an acquisition is undertaken (of which we have no current intention of doing), we must file a current report on Form 8-K containing the information required pursuant to Regulation S-K within four business days following completion of the transaction together with financial information of the acquired entity. In order to assist the SEC in the identification of shell companies, we are also required to check a box on Form 10-Q and Form 10-K indicating that we are a shell company. To the extent that we are required to comply with additional disclosure because we are a shell company, we may be delayed in executing any mergers or acquiring other assets that would cause us to cease being a shell company. The SEC adopted a new Rule 144 effective February 15, 2008, which makes resales of restricted securities by shareholders of a shell company more difficult. All of the presently outstanding shares of common stock are restricted securities as defined under Rule 144 promulgated under the Securities Act and may only be sold pursuant to an effective registration statement or an exemption from registration, if available. The SEC has adopted final rules amending Rule 144 which became effective on or about February 15, 2008. Pursuant to the new Rule 144, one year must elapse from the time a shell company , as defined in Rule 405, ceases to be a shell company and files Form 10 information with the SEC, before a restricted shareholder can resell their holdings in reliance on Rule 144. Form 10 information is equivalent to information that a company would be required to file if it were registering a class of securities on Form 10 under the Securities and Exchange Act of 1934 (the Exchange Act ). Under the amended Rule 144, restricted or unrestricted securities, that were initially issued by a reporting or non-reporting shell company or an Issuer that has at any time previously a reporting or non-reporting shell company as defined in Rule 405, can only be resold in reliance on Rule 144 if the following conditions are met: (1) the issuer of the securities that was formerly a reporting or non-reporting shell company has ceased to be a shell company; (2) the issuer of the securities is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act; (3) the issuer of the securities has filed all reports and material required to be filed under Section 13 or 15(d) of the Exchange Act, as applicable, during the preceding twelve months (or shorter period that the Issuer was required to file such reports and materials), other than Form 8-K reports; and (4) at least one year has elapsed from the time the issuer filed the current Form 10 type information with the SEC reflecting its status as an entity that is not a shell company. WE MAY NEVER PAY ANY DIVIDENDS TO SHAREHOLDERS. We have never declared or paid any cash dividends or distributions on our capital stock. We currently intend to retain our future earnings, if any, to support operations and to finance expansion and therefore we do not anticipate paying any cash dividends on our common stock in the foreseeable future. The declaration, payment and amount of any future dividends will be made at the discretion of the board of directors, and will depend upon, among other things, the results of our operations, cash flows and financial condition, operating and capital requirements, and other factors as the board of directors considers relevant. There is no assurance that future dividends will be paid, and, if dividends are paid, there is no assurance with respect to the amount of any such dividend. OUR ARTICLES OF INCORPORATION PROVIDE FOR INDEMNIFICATION OF OFFICERS AND DIRECTORS AT OUR EXPENSE AND LIMIT THEIR LIABILITY WHICH MAY RESULT IN A MAJOR COST TO US AND HURT THE INTERESTS OF OUR SHAREHOLDERS BECAUSE CORPORATE RESOURCES MAY BE EXPENDED FOR THE BENEFIT OF OFFICERS AND/OR DIRECTORS. Our articles of incorporation and applicable Nevada law provide for the indemnification of our directors, officers, employees, and agents, under certain circumstances, against attorney s fees and other expenses incurred by them in any litigation to which they become a party arising from their association with or activities on our behalf. We will also bear the expenses of such litigation for any of our directors, officers, employees, or agents, upon such person s written promise to repay us if it is ultimately determined that any such person shall not have been entitled to indemnification. This indemnification policy could result in substantial expenditures by us which we will be unable to recoup. We have been advised that, in the opinion of the SEC, indemnification for liabilities arising under federal securities laws is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification for liabilities arising under federal securities laws, other than the payment by us of expenses incurred or paid by a director, officer or controlling person in the successful defense of any action, suit or proceeding, is asserted by a director, officer or controlling person in connection with the securities being registered, we will (unless in the opinion of our counsel, the matter has been settled by controlling precedent) submit to a court of appropriate jurisdiction, the question whether indemnification by us is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. The legal process relating to this matter if it were to occur is likely to be very costly and may result in us receiving negative publicity, either of which factors is likely to materially reduce the market and price for our shares, if such a market ever develops. The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the U.S. Securities and Exchange Commission ( SEC ) is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. PRELIMINARY PROSPECTUS Subject to completion, dated October 5, 2011 Getaway2golfonline.com 900,000 SHARES OFCOMMON STOCK The selling security holders named in this prospectus are offering all of the shares of common stock offered through this prospectus. We will not receive any proceeds from the sale of the common stock covered by this prospectus. The selling shareholders will receive $0.02 per share or an aggregate of $18,000 if all of the shares are sold. Our common stock is presently not traded on any market or securities exchange. The selling security holders have not engaged any underwriter in connection with the sale of their shares of common stock. Common stock being registered in this registration statement may be sold by selling security holders at a fixed price of $0.02 per share until our common stock is quoted on the OTC Bulletin Board ( OTCBB ) and thereafter at a prevailing market prices or privately negotiated prices or in transactions that are not in the public market. There can be no assurance that a market maker will agree to file the necessary documents with the Financial Industry Regulatory Authority ( FINRA ), which operates the OTCBB, nor can there be any assurance that such an application for quotation will be approved. We have agreed to bear the expenses relating to the registration of the shares of the selling security holders. We estimate the costs at $15,000. At this time we anticipate the funds will be provided in the form of a loan to the company from Mr. Yardley, our president and sole director. At this time no written agreement exists. Investing in our common stock involves a high degree of risk. See Risk Factors beginning on page 3 to read about factors you should consider before buying shares of our common stock. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. The Date of This Prospectus is: _______, 2011 THE OFFERING PRICE OF THE COMMON STOCK WAS DETERMINED BASED ON THE PRICE OF OUR PRIVATE OFFERING AND THEREFORE SHOULD NOT BE USED AS AN INDICATOR OF THE FUTURE MARKET PRICE OF THE SECURITIES. THEREFORE, THE OFFERING PRICE BEARS NO RELATIONSHIP TO OUR ACTUAL VALUE, AND MAY MAKE OUR SHARES DIFFICULT TO SELL. Since our shares are not listed or quoted on any exchange or quotation system, the offering price of $0.02 per share for the shares of common stock was determined based on the price of our private offering. The facts considered in determining the offering price were our financial condition and prospects, our limited operating history and the general condition of the securities market. The offering price bears no relationship to the book value, assets or earnings of our company or any other recognized criteria of value. The offering price should not be regarded as an indicator of the future market price of the securities. YOU WILL EXPERIENCE DILUTION OF YOUR OWNERSHIP INTEREST BECAUSE OF THE FUTURE ISSUANCE OF ADDITIONAL SHARES OF OUR COMMON STOCK In the future, we may issue our authorized but previously unissued equity securities, resulting in the dilution of the ownership interests of our present stockholders. We are currently authorized to issue 75,000,000 shares of common stock, par value $0.001 per share. We may also issue additional shares of our common stock or other securities that are convertible into or exercisable for common stock in connection with hiring or retaining employees or consultants, future acquisitions, future sales of our securities for capital raising purposes, or for other business purposes. The future issuance of any such additional shares of our common stock or other securities may create downward pressure on the trading price of our common stock. There can be no assurance that we will not be required to issue additional shares, warrants or other convertible securities in the future in conjunction with hiring or retaining employees or consultants, future acquisitions, future sales of our securities for capital raising purposes or for other business purposes, including at a price (or exercise prices) below the price at which shares of our common stock are currently quoted on the OTCBB. OUR COMMON STOCK IS CONSIDERED A PENNY STOCK, WHICH MAY BE SUBJECT TO RESTRICTIONS ON MARKETABILITY, SO YOU MAY NOT BE ABLE TO SELL YOUR SHARES. If our common stock becomes tradable in the secondary market, we will be subject to the penny stock rules adopted by the Securities and Exchange Commission that require brokers to provide extensive disclosure to their customers prior to executing trades in penny stocks. These disclosure requirements may cause a reduction in the trading activity of our common stock, which in all likelihood would make it difficult for our shareholders to sell their securities. Penny stocks generally are equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on the NASDAQ system). Penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document that provides information about penny stocks and the risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, and monthly account statements showing the market value of each penny stock held in the customer s account. The broker-dealer must also make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser s written agreement to the transaction. These requirements may have the effect of reducing the level of trading activity, if any, in the secondary market for a security that becomes subject to the penny stock rules. The additional burdens imposed upon broker-dealers by such requirements may discourage broker-dealers from effecting transactions in our securities, which could severely limit the market price and liquidity of our securities. These requirements may restrict the ability of broker-dealers to sell our common stock and may affect your ability to resell our common stock. THERE IS NO ASSURANCE OF A PUBLIC MARKET OR THAT OUR COMMON STOCK WILL EVER TRADE ON A RECOGNIZED EXCHANGE. THEREFORE, YOU MAY BE UNABLE TO LIQUIDATE YOUR INVESTMENT IN OUR STOCK. There is no established public trading market for our common stock. Our shares have not been listed or quoted on any exchange or quotation system. There can be no assurance that a market maker will agree to file the necessary documents with FINRA, which operates the OTCBB, nor can there be any assurance that such an application for quotation will be approved or that a regular trading market will develop or that if developed, will be sustained. In the absence of a trading market, an investor may be unable to liquidate their investment. ITEM 4 USE OF PROCEEDS We will not receive any proceeds from the sale of common stock by the selling security holders. All of the net proceeds from the sale of our common stock will go to the selling security holders as described below in the sections entitled Selling Security Holders and Plan of Distribution . We have agreed to bear the expenses relating to the registration of the common stock for the selling security holders. The amount of costs will be paid as and when necessary and required or otherwise accrued on the books and records until we are able to pay the full amount due either from revenues or loans from related or unrelated parties. Absent sufficient revenues to pay these amounts within six months from the date of this prospectus, our president has agreed to sign a personal promissory note. ITEM 5 DETERMINATION OF OFFERING PRICE Since our common stock is not listed or quoted on any exchange or quotation system, the offering price of the shares of common stock was determined by the price of the common stock that was sold to our security holders pursuant to an exemption under Section 4(2) of the Securities Act of 1933 and Rule 506 of Regulation D promulgated under the Securities Act of 1933. The offering price of the shares of our common stock does not necessarily bear any relationship to our book value, assets, past operating results, financial condition or any other established criteria of value. The facts considered in determining the offering price were our financial condition and prospects, our limited operating history and the general condition of the securities market. Although our common stock is not listed on a public exchange, we will be filing to obtain a listing on the OTCBB concurrently with the filing of this prospectus. In order to be quoted on the OTCBB, a market maker must file an application on our behalf in order to make a market for our common stock. There can be no assurance that a market maker will agree to file the necessary documents with FINRA, which operates the OTC Bulletin Board, nor can there be any assurance that such an application for quotation will be approved. In addition, there is no assurance that our common stock will trade at market prices in excess of the initial offering price as prices for the common stock in any public market which may develop will be determined in the marketplace and may be influenced by many factors, including the depth and liquidity. ITEM 6 DILUTION The common stock to be sold by the selling shareholders provided in the Selling Security Holders section is common stock that is currently issued. Accordingly, there will be no dilution to our existing shareholders. ITEM 7 SELLING SECURITY HOLDERS The common shares being offered for resale by the selling security holders consist of the 900,000 shares of our common stock held by each of the selling stockholders as of August 18, 2011. Such shareholders include the holders of the 500,000 shares sold in our private offering pursuant to Regulation D Rule 506 completed in April 2011 at an offering price of $0.01. The Company sold through a Regulation D Rule 506 offering completed in April, 2011 a total of 500,000 shares of common stock to 37 investors, at a price per share of $0.01 for an aggregate offering price of $5,000. All of the transactions were transactions by the Company not involving any public offering as required by the exemption provided from the registration provisions of the Securities Act of 1933, as amended. As such, no advertising or general solicitation was employed in offering any of the securities by the Company. All certificates evidencing the securities issued in such transactions will bear restrictive legends as securities issued in non-registered transactions that may only be resold in compliance with applicable federal and state securities laws. The applicable subscription documents relating to such transactions contained acknowledgments by the purchaser of such securities that the securities being acquired have not been registered, were restricted securities, could only be resold in compliance with applicable federal and state securities laws and the certificates evidencing such securities would bear restrictive legends. In all of the transactions above, no principal underwriters were used. The following table sets forth the name of the selling security holders, the number of shares of common stock beneficially owned by each of the selling stockholders as of June 22, 2011 and the number of shares of common stock being offered by the selling stockholders. The shares being offered hereby are being registered to permit public secondary trading, and the selling stockholders may offer all or part of the shares for resale from time to time. However, the selling stockholders are under no obligation to sell all or any portion of such shares nor are the selling stockholders obligated to sell any shares immediately upon effectiveness of this prospectus. All information with respect to share ownership has been furnished by the selling stockholders. None of the selling shareholders is a registered broker-dealer or an affiliate of a registered broker-dealer. Each of the selling shareholders has acquired his, her or its shares pursuant to a private placement solely for investment and not with a view to or for resale or distribution of such securities. The shares were offered and sold to the selling shareholders at a purchase price of $0.01 per share in a private placement, pursuant to the exemption from the registration under the Securities Act provided by section 3(b) of the Securities Act. None of the selling shareholders are affiliates or controlled by our affiliates and none of the selling shareholders are now or were at any time in the past an officer or Director of ours or of any of our predecessors or affiliates. The percentages below are calculated based on 25,900,000 shares of our common stock issued and outstanding. We do not have any outstanding options, warrants or other securities presently exercisable for or convertible into shares of our common stock. Name of Selling Stockholder and Position, Office or Material Relationship with Company (NA) Common Shares Owned by the Selling Stockholder Total Shares to be Registered Pursuant to this Offering Percentage of Common Stock Before Offering Number of Shares Owned by Selling Stockholder After Offering and Percent of Total Issued and Outstanding 1. RICHARD KELSEY 10,000 10,000 * 0 2. DEBORAH COLEMAN 10,000 10,000 * 0 3. KENJI KATAYAMA 10,000 10,000 * 0 4. CHRISTA GERALDE 10,000 10,000 * 0 5. GEORGETTE GERALDE 10,000 10,000 * 0 6. MICHAEL SMITH 50,000 50,000 * 0 7. MEDIAXXL, Michael Smith** 50,000 50,000 * 0 8. AMIE HINGSTON 10,000 10,000 * 0 9. VIRGINIA MUELLER 10,000 10,000 * 0 10. TRACY LARSON 50,000 50,000 * 0 11. PUBLIC COMPANY ADVISORY SERVICE Ramona Smith** 400,000 400,000 1.5 0 12. PATRICK AROFF 10,000 10,000 * 0 13. LORRI BATES 10,000 10,000 * 0 14. SARKIS B MESERLIAN 10,000 10,000 * 0 15. TRACY LARSON 10,000 10,000 * 0 16. CHRISTIAN A. JOHNSON 10,000 10,000 * 0 17. GREG WILKIN 10,000 10,000 * 0 18. JOHN XIE 10,000 10,000 * 0 19. PANTELIS LANGIS 10,000 10,000 * 0 20. NICK PLESSAS 10,000 10,000 * 0 21. DELPHINA GROUP CORP Nick Plessas** 10,000 10,000 * 0 22. MICHAEL NOVI 10,000 10,000 * 0 23. PAUL SHORT 10,000 10,000 * 0 24. MATTHEW J CUNDARI 10,000 10,000 * 0 25. MARK KAISER 10,000 10,000 * 0 26. ALEX PLESSAS 10,000 10,000 * 0 27. CASSANDRA PULVER 10,000 10,000 * 0 28. J.D. PULVER 10,000 10,000 * 0 29. DOUGLAS MCINTYRE 10,000 10,000 * 0 30. KRISTA MCINTYRE 10,000 10,000 * 0 31. JOHN ROSS 10,000 10,000 * 0 32. JOE MAIRE 10,000 10,000 * 0 33. PETER HELLWIG 10,000 10,000 * 0 34. BROOK CROSS 10,000 10,000 * 0 35. DANIELLE COSTELLA 10,000 10,000 * 0 36. JEREMY BUDGE 10,000 10,000 * 0 37. KRISTINA JOHNSON 10,000 10,000 * 0 38. CHARLES J. SMITH 20,000 20,000 * 0 * Less than 1% ** these individuals have dispositive power over the shares in the Corporation 1) Assumes all of the shares of common stock offered are sold and, 25,900,000 common shares are issued and outstanding. 2) Beneficial ownership is determined in accordance with SEC rules and generally includes voting or investment power with respect to securities. There are no agreements between the company and any selling shareholder pursuant to which the shares subject to this registration statement were issued. To our knowledge, none of the selling shareholders or their beneficial owners: has had a material relationship with us other than as a shareholder at any time within the past three years; or has ever been one of our officers or directors or an officer or director of our predecessors or affiliates; or are broker-dealers or affiliated with broker-dealers. Plan of Distribution The selling security holders may sell some or all of their shares at a fixed price of $0.02 per share until our shares are quoted on the OTCBB and thereafter at prevailing market prices or privately negotiated prices. Prior to being quoted on the OTC Bulletin Board, shareholders may sell their shares in private transactions to other individuals. Although our common stock is not listed on a public exchange, we will be filing to obtain a listing on the OTCBB concurrently with the filing of this prospectus. In order to be quoted on the OTC Bulletin Board, a market maker must file an application on our behalf in order to make a market for our common stock. There can be no assurance that a market maker will agree to file the necessary documents with FINRA, which operates the OTC Bulletin Board, nor can there be any assurance that such an application for quotation will be approved. However, sales by selling security holder must be made at the fixed price of $0.02 until a market develops for the stock. Once a market has developed for our common stock, the shares may be sold or distributed from time to time by the selling stockholders, who may be deemed to be underwriters, directly to one or more purchasers or through brokers or dealers who act solely as agents, at market prices prevailing at the time of sale, at prices related to such prevailing market prices, at negotiated prices or at fixed prices, which may be changed. The distribution of the shares may be effected in one or more of the following methods: ordinary brokers transactions, which may include long or short sales; transactions involving cross or block trades on any securities or market where our common stock is trading, market where our common stock is trading; through direct sales to purchasers or sales effected through agents; through transactions in options, swaps or other derivatives (whether exchange listed or otherwise); or any combination of the foregoing; In addition, the selling stockholders may enter into hedging transactions with broker-dealers who may engage in short sales, if short sales were permitted, of shares in the course of hedging the positions they assume with the selling stockholders. The selling stockholders may also enter into option or other transactions with broker-dealers that require the delivery by such broker-dealers of the shares, which shares may be resold thereafter pursuant to this prospectus. To our best knowledge, none of the selling security holders are broker-dealers or affiliates of broker dealers. We will advise the selling security holders that the anti-manipulation rules of Regulation M under the Exchange Act may apply to sales of shares in the market and to the activities of the selling security holders and their affiliates. In addition, we will make copies of this prospectus (as it may be supplemented or amended from time to time) available to the selling security holders for the purpose of satisfying the prospectus delivery requirements of the Securities Act. The selling security holders may indemnify any broker-dealer that participates in transactions involving the sale of the shares against certain liabilities, including liabilities arising under the Securities Act. Brokers, dealers, or agents participating in the distribution of the shares may receive compensation in the form of discounts, concessions or commissions from the selling stockholders and/or the purchasers of shares for whom such broker-dealers may act as agent or to whom they may sell as principal, or both (which compensation as to a particular broker-dealer may be in excess of customary commissions). Neither the selling stockholders nor we can presently estimate the amount of such compensation. We know of no existing arrangements between the selling stockholders and any other stockholder, broker, dealer or agent relating to the sale or distribution of the shares. We will not receive any proceeds from the sale of the shares of the selling security holders pursuant to this prospectus. We have agreed to bear the expenses of the registration of the shares, including legal and accounting fees, and such expenses are estimated to be approximately $15,000. Notwithstanding anything set forth herein, no FINRA member will charge commissions that exceed 8% of the total proceeds of the offering. Description of Securities to be Registered General We are authorized to issue an aggregate number of 75,000,000 shares of capital stock, $0.001 par value per share. Common Stock We are authorized to issue 75,000,000 shares of common stock, $0.001 par value per share. Currently we have 25,900,000 shares of common stock issued and outstanding. Each share of common stock shall have one (1) vote per share for all purpose. Our common stock does not provide a preemptive, subscription or conversion rights and there are no redemption or sinking fund provisions or rights. Our common stock holders are not entitled to cumulative voting for election of Board of Directors. Preferred Stock Currently we have no shares of preferred stock issued and outstanding. Dividends We have not paid any cash dividends to our shareholders. The declaration of any future cash dividends is at the discretion of our board of directors and depends upon our earnings, if any, our capital requirements and financial position, our general economic conditions, and other pertinent conditions. It is our present intention not to pay any cash dividends in the foreseeable future, but rather to reinvest earnings, if any, in our business operations. Warrants There are no outstanding warrants to purchase our securities. Options There are no outstanding options to purchase our securities. Transfer Agent and Registrar Currently we do not have a stock transfer agent. We intend to engage a transfer agent in the near future. Interests of Named Experts and Counsel No expert or counsel named in this prospectus as having prepared or certified any part of this prospectus or having given an opinion upon the validity of the securities being registered or upon other legal matters in connection with the registration or offering of the common stock was employed on a contingency basis, or had, or is to receive, in connection with the offering, a substantial interest, direct or indirect, in the registrant or any of its parents or subsidiaries. Nor was any such person connected with the registrant or any of its parents or subsidiaries as a promoter, managing or principal underwriter, voting trustee, director, officer, or employee. Novi & Wilkin Attorney-At-Law has passed on the validity of the common stock being offered pursuant to this registration statement. The financial statements included in this prospectus and the registration statement have been audited by KCCW Accountancy Corp to the extent and for the periods set forth in their report appearing elsewhere herein and in the registration statement, and are included in reliance upon such report given upon the authority of said firm as experts in auditing and accounting. Information about the Registrant DESCRIPTION OF BUSINESS Getaway2golfonline.com was incorporated on April 13, 2011 to design and market golf travel excursions also featuring entertainment, adventure, intellectual stimulation and access to experts on topics related to the destinations they visit. At this point in time the company has taken no steps to implement its business plan. The company anticipates a need for approximately $50,000 over the next twelve months. At this time the company has no current plans to raise the necessary funds.This segment of the travel industry is referred to as enrichment or adventure travel. The company will need to pay How2gopublic.com their fee of $10,000 for services provided regarding the filing and processing of the S-1 Registration. The fee is dependent on the company achieving its OTCBB listing and its ability to raise sufficient capital in the equity market. No priority for payment has been designated at this time. The Company will not voluntarily send an annual report to shareholders. The Company will file reports with the Securities and Exchange Commission and the public may read a copy of any materials we file with the Commission. You may obtain copies of these reports directly from us or from the SEC at the SEC s Public Reference Room at 100 F. Street, N.E. Washington, D.C. 20549, and you may obtain information about obtaining access to the Reference Room by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains information for electronic filers at its website http://www.sec.gov. Our business strategy is to generate revenue through typical travel industry commissions and mark-ups as well as consulting fees for customized trip and excursion planning. In addition, we intend to generate revenue through subscription fees to our monthly email newsletters, which can offer recommendations to travelers who wish to design and book their own golf packages. We have not yet developed these newsletters. At this time we have taken no steps to market our services, obtain lists of potential customers or hire a media consultant as we do not have the necessary funds available to do so We plan to market our services and newsletters to high-income individuals and affinity groups, such as country club members, private schools, alumni groups and wealth management organizations at banks and investment firms. The company is seeking lists to be used for contacting this audience. It is anticipated to cost minimal money, less than $5,000 for these lists. To reach a critical mass of high-income travelers, we plan to utilize social media that relies on referrals such as Twitter, Facebook and Linked In. In addition, we may choose to place banner ads on web sites that reach these groups or send emails to individuals who have opted-in to receive emails from these affinity groups. The company is currently seeking and advisor to assist with the social media marketing. The estimated cost for the media consultant is $1000 based on 4 hours at $250 per hour the company hopes to have this marketing strategy operational in the fourth quarter of 2011. Although at this time we do not have the necessary funds to complete our web site We plan to launch a web site www.getaway2golfonline.com, currently under construction to promote our golfing offerings and we may develop a free subscription email newsletter that can be marketed through the web site and various social media vehicles. The newsletter can offer travel tips, consultation and discounted pricing to subscribers. Subscribers may be charged a fee for access to information beyond the regular newsletter: a Second Page of the newsletter that offers special offerings, in-depth guides to certain destinations or tips for optimizing or extending trips. However at this time we have no current plans to raise these funds. Business Development We are still in our development stage and plan on commencing business operations on our website in late 2011. At this time we do not have the necessary funds to implement any of the plans set forth and have no current plans to raise these funds and that no shareholder has agreed to loan the company money and there is no guarantee a shareholder will do so.The website has not yet been developed, and substantial additional development work and funding will be required before the website can be fully operational. The first phase of our plan of operations is the early stage development of the website that demonstrates the capabilities of the website, initial content development, and the development of a list of golf and travel related service providers. Expenses related to phase one are expected to be less than $15,000 and we expect to have this stage of the websites development completed by December of 2011. We will be dependent on loans from shareholders or the sale of shares in the company for the necessary funds. If we are successful in the first phase, the development of our website we will move on to the second phase of our plan of operations which is the full development of the website. The company currently does not have sufficient capital to proceed with the second phase of its plan of operations which is estimated at approximately $25,000 and expected to take approximately 6 months. We can provide no assurance that we will be successful in our planned development of our website. The Company seeks to develop mutually beneficial business relationships with tour operators and other travel consultants and begin offering programs for sale to all global travelers. The Company plans to launch a web site to begin marketing its services online. The company anticipates the cost of the website to be less than $10,000 and hopes to have it operational within 60 days of the effectiveness of this registration statement. However this date will in great part be determined by when the company has identified and secured the services of a social media consultant. The company may need to rethink some of its proposed activities based upon the advice and input received from its consultant. The company plans to have these parts of the marketing effort completed in the fourth quarter of 2011. The company estimates that it will cost approximately $2,500 to create the online newsletter and hopes to have that operational within 60 days of the effectiveness of this registration statement. However this will also be tied closely to the rest of the social media marketing strategy and thus looking for a roll out in the fourth quarter of 2011. The company also expects to spend some money cultivating relationships which means meeting with and talking with as many tour operators and golf management companies as is possible to see who has the offerings appropriate for the company s clientele and the operators who can be trusted to deliver what they promise. The current idea is to attend both travel and golf trade shows hopefully at a nominal cost as attendees. Mr. Yardley will be paying these costs as needed. Our initial focus will include establishing relationships and validity for the company with key travel industry organizations which should be completed over the next twelve months. They include Gaining membership in valid travel-related organizations o CLIA (Cruise Lines International Association, Inc.) membership ($320/yr) Continue to gain travel knowledge and be up to date on information o StarService(agent-only hotel and destination service) ($250/yr) o TravelWeekly (provides travel professionals with a necessary global perspective through in-depth coverage of every business sector, including airline, car rental, cruise, destination, hotel and tour operator as well as technology, economic and governmental issues.) o Recommend Magazine (trade magazine that focuses on worldwide destinations and the travel products within them providing themed issues and hands-on reviews of hotels, destinations and tours, etc.) o As owner operator we spent many hours linking to websites catering to travel information and special rates/fares. Various golf magazines, the golf channel We will provide specific services such as investigating/researching specific companies providing services/destinations clients are interested in - or suggest alternatives. We likewise investigate/research countries/areas where travel/service is desired. We will provide advice regarding safety, insurance, medical needs, passport/visa requirements, alternative sites/companies, better pricing, and different routing to save money. We will make actual travel arrangements as well as provide quotes for travel insurance and apply for visas for clients who wish to purchase these services. Our planned services will be world-wide with commissions approximating 8-10% of total package price. Of course there is no guarantee we can get 8-10% commissions. The company will charge minimal commissions in the early stages while the company is finalizing its full offerings through travel partners and while the marketing effort is getting up and going. We will charge a commission of approximately fifty dollars for each airline ticket issued and will receive commissions from travel operators to be determined at a later date. The size of commissions will also be determined in large part by the tour operators who will charge varying fees depending on the destination, size group, complexity etc. The operator s fees will determine what the company can charge in addition. We anticipate receiving $2,500 from companies that will be paying us directly; this anticipates selling two cruises and one tour in the first six months. There is no guarantee that we will be able to sell two cruises and one tour in the next six months. Costs of designing and guiding trips will depend on the destination, air/land arrangements, local guides/services. For example: to estimate the costs of a hands-on golf trip to Italy vs. an historical golf trip to Scotland We are currently drafting a monthly email newsletter the cost of which is in design and implementation. We expect the cost of production and distribution to be minimal. Our website www.getaway2golfonline.comis currently under construction and as discussed above will be operational within 120 days of the effectiveness of this registration statement. Although we currently have taken no steps to raise additional capital necessary to roll out our business plan we hope to investigate whatever funding opportunities we might have as a reporting company The company is still exploring the cost and value added benefit of on line banner advertisements but as discussed above this will be part of the social media effort that the company is seeking an advisor to assist with. This effort will be underway within 60 days of the effectiveness of this registration statement. Target Market Our target market at present is golf junkies falling into these categories: Up-scale, well-educated, professionals, well-heeled travelers Up-scale, well-educated, young professionals Up-scale, well-educated, well-heeled retired (or semi-retired) travelers The greatest difficulty the company expects to have trying to market to high income individuals via social media and banner advertisements is the amount of time these demographic groups spend on the internet and the intense competition for their attention. Nonetheless the company thinks there is an opportunity to reach this clientele. Marketing and Sales The Company plans to launch a web site to begin marketing its services online. The company anticipates the cost of the website to be less than $10,000 and hopes to have it operational within 120 days of the effectiveness of this registration statement. However this date will in great part be determined by when the company has identified and secured the services of a social media consultant. The company may need to rethink some of its proposed activities based upon the advice and input received from its consultant. The company plans to have these parts of the marketing effort completed in the fourth quarter of 2011. Our initial marketing efforts will be geared to drive prospective clients to our web site. We plan to use social media vehicles such as Twitter and Facebook to generate awareness of our web site. We expect to engage prospective clients through promoting our website and responding to requests for information on prospective golf getaways, special travel consultations and general information inquiries. Eventually, we expect to use broader based email marketing to generate a much larger number of sales leads that will be followed up with a personal exchange, via email or telephone. Our operations to date have been devoted primarily to start-up and development activities, which include: 1. Formation of the Company; 2. Development of our business plan; 3. Evaluating various travel destinations; 4. Research on marketing channels/strategies for our golf ventures 5. Secured our website domain www.getaway2golfonline.com which is not yet operational Competition We face competition from many individuals and companies that also develop and market golf packages and enrichment travel excursions. We believe that most large travel agencies place some focus on the adventure and enrichment travel segment we hope to have our golf packages become our niche market. In addition, we believe that the travel industry is generally driven by lowest cost. However, we believe that successful travel consultants protect and increase their revenue opportunity by providing increased value to travelers. We believe that travel consultants who demonstrate that they can consistently provide extra value for their clients are more likely to benefit from repeat and referral business to maintain and increase their business revenues. In the US, there are four types of agencies: Mega, Intermediate-Small, Independent and Airline based American Express & the American Automobile Association (AAA) are examples of mega. Intermediate-Small locally or regionally owned agencies Independent: Usually cater to a special or niche market Airline & other types of travel consolidators are high volume sales companies that specialize in selling to very specific markets (i.e., air-consolidators) Employees As of May 31, 2011, we have one (1) part time employee who works approximately 10 hours per week on Company matters. DESCRIPTION OF PROPERTY Our principal executive office is located at 4790 Caughlin Pkwy, Ste 387, Reno, NV 89519. Our telephone number is (775)-851-232-1950. Neither the company nor Mr. Yardley owns any property. This address is for our Resident Agent for service and promoter How2gopublic.com. LEGAL PROCEEDINGS From time to time, we may become involved in various lawsuits and legal proceedings, which arise, in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. We are currently not aware of any such legal proceedings or claims that we believe will have a material adverse effect on our business, financial condition or operating results. Pursuant to Item 401 (f) of Regulation S-K there are no events that occurred during the past ten (10) years that are material to an evaluation of the ability or integrity of any director, person nominated to become a director or executive officer of the registrant: No petition under the Federal bankruptcy laws or any state insolvency law was filed by or against, or a receiver, fiscal agent or similar officer was appointed by a court for the business or property of such person, or any partnership in which he was a general partner at or within two years before the time of such filing, or any corporation or business association of which he was an executive officer at or within two years before the time of such filing; Such person has not been convicted in a criminal proceeding and is not named subject of a pending criminal proceeding Such person was not the subject of any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from, or otherwise limiting, the following activities: o Acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the Commodity Futures Trading Commission, or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity; o Engaging in any type of business practice; or o Engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of Federal or State securities laws or Federal commodities laws; Such person was not the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any Federal or State authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any activity described in Regulation S-K, Item 401 paragraph (f)(3)(i) entitled Involvement in Certain Legal Proceedings , or to be associated with persons engaged in any such activity; Such person was not found by a court of competent jurisdiction in a civil action or by the Commission to have violated any Federal or State securities law, and the judgment in such civil action or finding by the Commission has not been subsequently reversed, suspended, or vacated; Such person was not found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any Federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated; Such person was not the subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of: o Any Federal or State securities or commodities law or regulation; or o Any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or o Any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or Such person was not the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS There is presently no public market for our shares of common stock. We anticipate applying for quoting of our common stock on the OTCBB upon the effectiveness of the registration statement of which this prospectus forms apart. However, we can provide no assurance that our shares of common stock will be quoted on the OTCBB or, if quoted, that a public market will materialize. If our common stock becomes tradable in the secondary market, we will be subject to the penny stock rules adopted by the Securities and Exchange Commission that require brokers to provide extensive disclosure to their customers prior to executing trades in penny stocks. These disclosure requirements may cause a reduction in the trading activity of our common stock, which in all likelihood would make it difficult for our shareholders to sell their securities. Penny stocks generally are equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on the NASDAQ system). Penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document that provides information about penny stocks and the risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, and monthly account statements showing the market value of each penny stock held in the customer s account. The broker-dealer must also make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser s written agreement to the transaction. These requirements may have the effect of reducing the level of trading activity, if any, in the secondary market for a security that becomes subject to the penny stock rules. The additional burdens imposed upon broker-dealers by such requirements may discourage broker-dealers from effecting transactions in our securities, which could severely limit the market price and liquidity of our securities. These requirements may restrict the ability of broker-dealers to sell our common stock and may affect your ability to resell our common stock. Holders of Capital Stock As of August 18, 2011 we have 39 holders of our common stock. Rule 144 Shares As of the date of this registration statement, we do not have any shares of our common stock that are currently available for sale to the public in accordance with the volume and trading limitations (applicable only to affiliates) of Rule 144. In general, under Rule 144 as currently in effect, a person who has beneficially owned shares of a company s Common Stock for at least one year is entitled to sell within any three month period a number of shares that does not exceed 1% of the number of shares of the company s Common Stock then outstanding which, in our case, would equal approximately 25,900 shares of our Common Stock as of the date of this prospectus. Sales under Rule 144 are also subject to manner of sale provisions and notice requirements and to the availability of current public information about the company. Under Rule 144(k), a person who is not one of the company s affiliates at any time during the three months preceding a sale, and who has beneficially owned the shares proposed to be sold for at least one year, is entitled to sell shares without complying with the manner of sale, public information, volume limitation or notice provisions of Rule 144. Stock Option Grants We do not have any stock option plans. Registration Rights We have not granted registration rights to the selling shareholders or to any other persons. GETAWAY2GOLFONLINE.COM (A DEVELOPMENT STAGE COMPANY) MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULT OF OPERATIONS The following plan of operation provides information which management believes is relevant to an assessment and understanding of our results of operations and financial condition. The discussion should be read along with our financial statements and notes thereto. This section includes a number of forward-looking statements that reflect our current views with respect to future events and financial performance. Forward-looking statements are often identified by words like believe, expect, estimate, anticipate, intend, project and similar expressions, or words which, by their nature, refer to future events. You should not place undue certainty on these forward-looking statements. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our predictions. Limited Operating History We have generated no independent financial history and have not previously demonstrated that we will be able to expand our business. Our business is subject to risks inherent in growing an enterprise, including limited capital resources and possible rejection of our business model and/or sales methods. For the yearendedMay 31, 2011 Results of Operations For the year ended May 31, 2011, we had no revenue. Operating Expenses for the period ended May 31, 2011 totaled $25,400 resulting in a net loss of ($25,400). These operating expenses include the shares issued to Mr. Yardley and Public Company Advisory Service for services provided in connection with the formation of the company. Capital Resources and Liquidity As of May 31, 2011 we had $5,000 cash on hand. Andrew Yardley will be the only employee and sole officer and director initially as the company seeks to generate revenue and will not be taking a salary from the company for the foreseeable future. Initially we will have no out of pocket expenses regarding salaries, rent, utilities, etc. The company will need to pay How2gopublic.com their fee of $10,000 for services provided regarding the filing and processing of the S-1 Registration. The fee is dependent on the company achieving its OTCBB listing and its ability to raise sufficient capital in the equity market. No priority for payment has been designated at this time. The development of our services will require the commitment of substantial resources to implement our business plan. Currently, we have no established bank-financing arrangements. Therefore, it is likely we would need to seek additional financing through subsequent future private offering of our equity securities; we have no current plans for additional financing. We cannot give you any assurance that any additional financing will be available to us, or if available, will be on terms favorable to us. The sale of additional equity securities will result in dilution to our stockholders. The occurrence of indebtedness would result in increased debt service obligations and could require us to agree to operating and financing covenants that would restrict our operations. If adequate additional financing is not available on acceptable terms, we may not be able to implement our business development plan or continue our business operations. We believe the only source of funds that would be realistic is through a loan from our president and the sale of equity capital. We hope that once our stock is quoted on the OTCBB it will enable us the opportunity to participate in the equity market and thru the sale of stock raise the necessary capital needed. Revenue targets The company anticipates generating revenues of $1,000 to $5,000 in the early stages of the company providing travel consulting to friends and family and charging minimal commissions while the marketing of core services is finalized. Core services The company provides specific services such as investigating/researching specific companies providing golf related services/destinations clients are interested in - or suggest alternatives. The company will investigate/research countries/areas where travel/service is desired. Based upon the above, we believe that we have enough cash to support our daily operations while we are attempting to commence operations and produce revenues. However, if we are unable to satisfy our cash requirements we may be unable to proceed with our plan of operations. We do not anticipate the purchase or sale of any significant equipment. We also do not expect any significant additions to the number of employees. The foregoing represents our best estimate of our cash needs based on current planning and business conditions. We anticipate that depending on market conditions and our plan of operations, we may incur operating losses in the foreseeable future. Therefore, our auditors have raised substantial doubt about our ability to continue as a going concern. Our liquidity may be negatively impacted by the significant costs associated with our public company reporting requirements, costs associated with newly applicable corporate governance requirements, including requirements under the Sarbanes-Oxley Act of 2002 and other rules implemented by the Securities and Exchange Commission. We expect all of these applicable rules and regulations to significantly increase our legal and financial compliance costs and to make some activities more time consuming and costly. Off-Balance Sheet Arrangements We have no off-balance sheet arrangements. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE There have been no changes in or disagreements with accountants on accounting or financial disclosure matters. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS The following table sets forth the name and age of our sole officer and director as of May 31, 2011. Our Executive officer is elected annually by our Board of Directors. Our executive officer holds office until he resigns, is removed by the Board, or his successor is elected and qualified. Name Age Position Andrew Yardley 44 President, Chief Financial Officer, Secretary, Treasurer and Director Set forth below is a brief description of the background and business experience of our executive officers and directors for the past five years. Andrew Yardley, President, Chief Financial Officer, Secretary, Treasurer and Director, Age 44, Andrew Yardley has over ten (10)years experience working in the golf industry. From 2004 till the present Andrew Yardley has been the Director of Membership at ArrowCreek Country Club, a private two course facility located in Reno, NV in his capacity as Director of Membership Mr. Yardley has over the years planned and organized numerous winter golf vacations at a number of Mexican golf resorts for as many as fifty members at a time. Mr. Yardley has no experience in the travel consulting and marketing industry other than his role as Director of Golf Membership at a golf course as well as no experience as an officer and director of a public reporting company. Term of Office Our directors are appointed for a one-year term to hold office until the next annual general meeting of our shareholders or until removed from office in accordance with our bylaws. Our officers are appointed by our board of directors and hold office until removed by the board. EXECUTIVE COMPENSATION The following summary compensation table sets forth all compensation awarded to, earned by, or paid to the named executive officers paid by us from April 13, 2011 (inception) to the period ended May 31, 2011. SUMMARY COMPENSATION TABLE Name and Principal Position Year Salary ($) Bonus ($) Stock Awards ($)* Option Awards ($) Non-Equity Incentive Plan Compensation ($) Non-Qualified Deferred Compensation Earnings ($) All Other Compensation ($) Totals ($) Andrew Yardley, President, Chief Financial Officer, Treasurer, Secretary, Director 2011 $ 0 0 25,000 0 0 0 0 0 *On April 13, 2011 the Company issued 25,000,000 shares of common stock at par value $0.001 per share having a fair value of $25,000.00 to its founder in exchange for founder services provided in connection with the formation and administration of the Company. The shares were issued for services and are not stock options and therefore there is no Black-Scholes assumption. Option Grants Table There was no individual grants of stock options to purchase our common stock made to the executive officers named in the Summary Compensation Table for the period from inception through May 31, 2011. Aggregated Option Exercises and Fiscal Year-End Option Value TableThere were no stock options exercised during period ending May 31, 2011 by the executive officers named in the Summary Compensation Table. Long-Term Incentive Plan ( LTIP ) Awards Table There were no awards made to a named executive officers in the last completed fiscal year under any LTIP Compensation of Directors Directors are permitted to receive fixed fees and other compensation for their services as directors. The Board of Directors has the authority to fix the compensation of directors. No amounts have been paid to, or accrued to, directors in such capacity. Employment Agreements Currently, we do not have an employment agreement in place with our sole officer and director. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table provides the names and addresses of each person known to us to own more than 5% of our outstanding shares of common stock as of May 31, 2011 and by the officers and directors, individually and as a group. Except as otherwise indicated, all shares are owned directly and the shareholders listed possesses sole voting and investment power with respect to the shares shown. Name Number of Shares Beneficially Owned Percent of Class (1) Andrew Yardley 25,000,000 96.5 % All Executive Officers and Directors as a group (1 person) 25,000,000 96.5 % (1) Based on 25,900,000 shares of common stock outstanding as of May 31, 2011 TRANSACTIONS WITH RELATED PERSONS, PROMOTERS AND CERTAIN CONTROL PERSONS On April 13, 2011, the Company issued 400,000 shares of common stock at par value $0.001 per share to Public Company Advisory Service (Ramona Smith), having a fair value of $400 in exchange for services provided in connection with the administration and formation of the corporation, its preparation of its financial statements in GAAP format acceptable to the auditor as well as additional services in regards to the S-1 registration process and response to any and all comments.as well as preparing and organizing any and all documents required for the filing of Form 211 with FINRA. How2gopublic.com was hired to assist in the filing of this S-1 Registration and will be paid $10,000 if and when any funds are raised in the future. Mr. Yardley, Public Company Advisory Service and How2gopublic.com are deemed to be Promoters of the Company. ITEM 12A DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION OF SECURITIES ACT LIABILITIES Our directors and officers are indemnified as provided by the Nevada corporate law and our Bylaws. We have agreed to indemnify each of our directors and certain officers against certain liabilities, including liabilities under the Securities Act of 1933. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to our directors, officers and controlling persons pursuant to the provisions described above, or otherwise, we have been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than our payment of expenses incurred or paid by our director, officer or controlling person in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, we will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. We have been advised that in the opinion of the Securities and Exchange Commission indemnification for liabilities arising under the Securities Act is against public policy as expressed in the Securities Act, and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities is asserted by one of our directors, officers, or controlling persons in connection with the securities being registered, we will, unless in the opinion of our legal counsel the matter has been settled by controlling precedent, submit the question of whether such indemnification is against public policy to a court of appropriate jurisdiction. We will then be governed by the court s decision. Getaway2golfonline.com 900,000 SHARES OF COMMON STOCK PROSPECTUS YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT OR THAT WE HAVE REFERRED YOU TO. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT. THIS PROSPECTUS IS NOT AN OFFER TO SELL COMMON STOCK AND IS NOT SOLICITING AN OFFER TO BUY COMMON STOCK IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED. Until _____________, all dealers that effect transactions in these securities whether or not participating in this offering may be required to deliver a prospectus. This is in addition to the dealer s obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions. The Date of This Prospectus is_____, 2011 PART II INFORMATION NOT REQUIRED IN THE PROSPECTUS ITEM 13 OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION Securities and Exchange Commission registration fee $ 2.09 Accounting fees and expenses $ 3,500 Legal fees and expense $ 10,000 Blue Sky fees and expenses $ 1,000 Miscellaneous $ 0 Total $ 14,502.09 All amounts are estimates other than the Commission s registration fee. We are paying all expenses of the offering listed above. No portion of these expenses will be borne by the selling shareholders. The selling shareholders, however, will pay any other expenses incurred in selling their common stock, including any brokerage commissions or costs of sale. ITEM 14 INDEMNIFICATION OF DIRECTORS AND OFFICERS Our directors and officers are indemnified as provided by the Nevada corporate law and our Bylaws. We have agreed to indemnify each of our directors and certain officers against certain liabilities, including liabilities under the Securities Act of 1933. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to our directors, officers and controlling persons pursuant to the provisions described above, or otherwise, we have been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than our payment of expenses incurred or paid by our director, officer or controlling person in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, we will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. We have been advised that in the opinion of the Securities and Exchange Commission indemnification for liabilities arising under the Securities Act is against public policy as expressed in the Securities Act, and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities is asserted by one of our directors, officers, or controlling persons in connection with the securities being registered, we will, unless in the opinion of our legal counsel the matter has been settled by controlling precedent, submit the question of whether such indemnification is against public policy to a court of appropriate jurisdiction. We will then be governed by the court s decision. ITEM 15 RECENT SALES OF UNREGISTERED SECURITIES We were incorporated in the State of Nevada in April 13, 2011. In connection with incorporation, we issued 25,400,000 shares of common stock to our founder and Public Company Advisory Service for services. These shares were issued in reliance on the exemption under Section 4(2) of the Securities Act of 1933, as amended (the Act ) and were issued as founders shares. These shares of our common stock qualified for exemption under Section 4(2) of the Securities Act of 1933 since the issuance shares by us did not involve a public offering. The offering was not a public offering as defined in Section 4(2) due to the insubstantial number of persons involved in the deal, size of the offering, manner of the offering and number of shares offered. We did not undertake an offering in which we sold a high number of shares to a high number of investors. In addition, the investors had the necessary investment intent as required by Section 4(2) since they agreed to and received share certificates bearing a legend stating that such shares are restricted pursuant to Rule 144 of the 1933 Securities Act. This restriction ensures that these shares would not be immediately redistributed into the market and therefore not be part of a public offering. Based on an analysis of the above factors, we have met the requirements to qualify for exemption under Section 4(2) of the Securities Act of 1933 for this transaction. The Company sold through a Regulation D Rule 506 offering completed in April, 2011 a total of 500,000 shares of common stock to 37 investors, 35 of which were not accredited investors at a price per share of $0.01 for an aggregate offering price of $5,000. The above list sets forth the identity of the class of persons to whom we sold these shares and the amount of shares for each shareholder: All of the transactions being registered in this S-1 were transactions by the Company not involving any public offering as required by the exemption provided from the registration provisions of the Securities Act of 1933, as amended. Mr. Yardley our sole officer and director personally interacted with all the investors as they were family, friends or known associates to him. As such, no advertising or general solicitation was employed in offering any of the securities by the Company. All certificates evidencing the securities issued in such transactions will bear restrictive legends as securities issued in non-registered transactions that may only be resold in compliance with applicable federal and state securities laws. The applicable subscription documents relating to such transactions contained acknowledgments by the purchaser of such securities that the securities being acquired have not been registered, were restricted securities, could only be resold in compliance with applicable federal and state securities laws and the certificates evidencing such securities would bear restrictive legends. In all of the transactions above, no principal underwriters were used. II-1 ITEM 16 EXHIBITS EXHIBIT NUMBER DESCRIPTION 3.1 Articles of Incorporation** 3.2 By-Laws** 5.1 Opinion of Novi & Wilkin** 23.1 Consent of KCCW Accountancy Corp* 23.2 Consent of Counsel** * Filed herewith. ** Previously filed. ITEM 17 UNDERTAKINGS (A) The undersigned Registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: i. To include any prospectus required by section 10(a)(3) of the Securities Act of 1933; ii. To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement. iii. To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; II-2 (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (4) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. (5) Each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use. (6) That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities: The undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser: i. Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424; ii. Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant; iii. The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and iv. Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser. II-3 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements of filing on Form S-1 and authorized this registration statement to be signed on its behalf by the undersigned, in Reno, NV on October 5, 2011. GETAWAY2GOLFONLINE.COM By: /s/ Andrew Yardley Andrew Yardley President, Treasurer and Secretary (Principal Executive, Financial and Accounting Officer) POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Andrew Yardley , as his true and lawful attorney-in-fact and agent with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any or all amendments (including post-effective amendments) to this Registration Statement on Form S-1 of Getaway2golfonline.com., and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, grant unto said attorney-in-fact and agent, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the foregoing, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or his substitutes, may lawfully do or cause to be done by virtue hereof. In accordance with the requirements of the Securities Act of 1933, this registration statement was signed by the following persons in the capacities and on the dates stated. Signature Title Date /s/ Andrew Yardley Andrew Yardley President, Treasurer, Secretary and Director (Principal Executive, Financial and Accounting Officer) October 5, 2011 II-4 TABLE OF CONTENTS PAGE Prospectus Summary 1
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@@ -0,0 +1 @@
+Table of Contents The Company expects to begin claiming thoroughbreds beginning with the Santa Anita meet beginning September 28, 2011. However, the Company's ability to begin claiming thoroughbreds is dependent on raising $200,000 and we expect that the Company will need to raise a total of $750,000 to acquire 50 thoroughbreds. These thoroughbreds will initially run solely in California. The Company does not currently expect to expand outside of California. The Company expects to be able to acquire 10 - 15 thoroughbreds from the initial $200,000 it raises. The expected cost of the thoroughbreds are $150,000 with the remaining amount to be used for the on-going operations of the Company (estimated to be up to $25,000) and working capital needs of the Company as a result of the acquisition of the Thoroughbreds such as training and vet fees (estimated to be $25,000).
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@@ -0,0 +1,712 @@
+PROSPECTUS SUMMARY
+
+The following summary is qualified in its entirety by the more detailed information and the financial statements and notes thereto appearing elsewhere in this Prospectus. Prospective investors should consider carefully the information discussed under RISK FACTORS and USE OF PROCEEDS sections, commencing on pages 6 and 14, respectively. An investment in our securities presents substantial risks, and you could lose all or substantially all of your investment. 
+
+Corporate Background and Business Overview
+
+Our Company was incorporated in the State of Nevada on April 22, 2011 to engage in the development and operation of a business engaged in the distribution of Bohemian crystal produced in Czech Republic. Our principal executive offices are located at 2360 Corporate Circle, Ste. 400, Henderson, Nevada 89074. Our phone number is (786) 715-1147. We are a development stage company, we only just completed our first fiscal year end on March 31 and we have no subsidiaries.
+
+We require a minimum funding of $20,000 to conduct our business over the next 12 months, and if we are unable to obtain this level of financing, our business may fail.
+
+We are in the early stages of developing our plan to distribute Bohemian crystal, in forms including but not limited to vases, wine and champagne glasses, plates, trays, baskets, fruit bowls, boxes and decanters. We currently have no revenues, no operating history, and no orders to purchase Bohemian crystal. Our plan of operations over the 12 month period following successful completion of our offering is to develop and establish our Bohemian crystal distribution business and hire one salesperson (See Business of the Company and Plan of Operations ). We currently have commercial Bohemian crystal products available, but do not expect to be selling such Bohemian crystal until approximately 12 months following the completion of this offering.
+
+From inception until the date of this filing we have had limited operating activities, primarily consisting of the incorporation of our company and the initial equity funding by our sole officer and director. We have not generated any revenues and our principal business activities to date consist of creating a business plan and entering into a Supply Agreement, dated June 30, 2011, with Autodily Rachot S.R.O., a Czech Republic limited liability company ( Autodily Rachot ), which is an established distributor of Bohemian crystal. Autodily Rachot is a large and well-established supplier and distributor of Bohemian crystal of almost any kind in the Czech Republic. The terms and conditions of the Supply Agreement provide that, among other things, we have the right to purchase up to an aggregate of $250,000 of Bohemian crystal products (including boxes, bowls, mini vases, vases, an assortment of drinking glasses, plates, trays and bowls) at item prices identified in the Supply Agreement, for a term which expires December 31, 2012. The prices to be paid by us under the Supply Agreement are fixed and can be changed only with a supplemental written agreement between Autodily Rachot and us. The Supply Agreement with Autodily Rachot provides for no minimum purchase requirements. Autodily Rachot is currently a distributor, and not a manufacturer, of Bohemian crystal products.
+
+We received our initial funding of $3,000 through the sale of common stock to our sole officer and director, who purchased 3,000,000 shares at $0.001 per share.
+
+Our financial statements from inception on April 22, 2011 through our first fiscal period ended May 31, 2011 report no revenues and a net loss of $( 400 ). Our independent registered public accountant has issued an audit opinion for our Company which includes a statement expressing substantial doubt as to our ability to continue as a going concern.
+
+5
+
+The following is a brief summary of this Offering:
+
+THE OFFERING
+
+ 
+ 
+ 
+ 
+ 
+
+ 
+
+ 
+
+The Issuer:
+
+ 
+
+Rainbow International, Corp.
+
+Securities Being Offered:
+
+ 
+
+2,000,000 shares of common stock
+
+Price Per Share:
+
+ 
+
+$0. 04
+
+Common stock outstanding before the offering:
+
+3,000,000 shares of common stock
+
+Common stock outstanding after completion of the offering
+
+5,000,000 shares of common stock (assuming the sale of all 2,000,000 shares being offered)
+
+Duration of the Offering:
+
+ 
+
+The Offering will commence promptly on the date upon which this prospectus is declared effective by the SEC and will continue for 180 days. At the discretion of our management, we may discontinue the Offering before expiration of the 180 day period or extend the Offering for up to 90 days following the expiration of the 180-day Offering period. 
+
+ 
+
+Manner of Offering
+
+The offering is a self-underwritten, direct primary offering with no minimum purchase requirement.
+
+Net Proceeds
+
+ 
+
+$80,000 (assuming the sale of all 2,000,000 being offered)
+
+Securities Issued and Outstanding:
+
+There are 3,000,000 shares of common stock issued and outstanding as of the date of this prospectus, held solely by our sole officer and director, Vladimir Bibik.
+
+ 
+
+Anticipated Total Registration Costs:
+
+We estimate our total offering registration costs to be approximately $7,010.
+
+ 
+
+Risk Factors:
+
+See Risk Factors and the other information in this prospectus for a discussion of the factors you should consider before deciding to invest in shares of our common stock.
+
+ 
+
+Summary of Financial Information
+
+The summarized financial data presented below is derived from, and should be read in conjunction with, our audited financial statements and related notes from April 22, 2011 (date of inception) to May 31, 2011, included on Page F-1 in this prospectus.
+
+ 
+ 
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+Financial Summary
+
+ 
+
+May 31, 2011 ($)
+
+Cash and Deposits
+
+ 
+
+ 
+
+3,100
+
+Total Assets
+
+ 
+
+ 
+
+3,100
+
+Total Liabilities
+
+ 
+
+ 
+
+ 500
+
+Total Stockholder s Equity
+
+ 
+
+ 
+
+2,600
+
+ 
+ 
+ 
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+Statement of Operations
+
+ 
+
+Accumulated From April 22, 2011
+
+(Inception) to May 31, 2011 ($)
+
+ 
+
+Total Expenses
+
+ 
+
+ 
+
+400
+
+ 
+
+Net Loss for the Period
+
+ 
+
+ 
+
+(400)
+
+ 
+
+ 
+
+We have just commenced our operations and are currently without revenue. Our accumulated deficit at May 31, 2011 was $( 400 ). We anticipate that we will continue to incur net losses from our operations for the foreseeable future.
+
+6
+
+CAUTIONARY STATEMENT REGAR DING FORWARD-LOOKING STATEMENTS
+
+ 
+
+The information contained in this prospectus, including in the documents incorporated by reference into this prospectus, includes some statements that are not purely historical and that are forward-looking statements. Such forward-looking statements include, but are not limited to, statements regarding our Company and management s expectations, hopes, beliefs, intentions or strategies regarding the future, including our financial condition, results of operations, and the expected impact of the offering on the parties individual and combined financial performance. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words anticipates, believes, continue, could, estimates, expects, intends, may, might, plans, possible, potential, predicts, projects, seeks, should, will, would and similar expressions, or the negatives of such terms, may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking.
+
+The forward-looking statements contained in this prospectus are based on current expectations and beliefs concerning future developments and the potential effects on the parties and the transaction. There can be no assurance that future developments actually affecting us will be those anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond the parties control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. 
+
+RISK FACTORS
+
+An investment in our common stock involves a high degree of risk. You should carefully consider the risks described below and the other information in this prospectus before investing in our common stock. If any of the following risks occur, our business, operating results and financial condition could be seriously harmed. The trading price of our common stock, when and if we trade at a later date, could decline due to any of these risks, and you may lose all or part of your investment.
+
+Risks Relating to our Business
+
+Because our independent registered public accountants have issued a going concern opinion, there is substantial uncertainty that we will continue operations, in which case you could lose your investment.
+
+Our independent registered public accountants have issued a going concern opinion. This means that there is substantial doubt that we can continue as an ongoing business for the next twelve months. The financial statements do not include any adjustments that might result from the uncertainty about our ability to continue in business. As such we may have to cease operations and you could lose your investment.
+
+We have no operating history and have maintained losses since inception, which we expect to continue into the future.
+
+We were incorporated on April 22, 2011 and have very limited operations. We have not realized any revenues to date. Our proposed Bohemian crystal distribution business is under development and we do not have Bohemian crystal ready for commercial sale. We have no operating history at all upon which an evaluation of our future success or failure can be made. Our net loss from inception to May 31, 2011 is $( 400 ). Based upon our proposed plans, we expect to incur significant operating losses in future periods. This will happen because there are substantial costs and expenses associated with the development, marketing and distribution of our product. We may fail to generate revenues in the future. If we cannot attract a significant number of purchasers, we will not be able to generate any significant revenues or income. Failure to generate revenues will cause us to go out of business because we will not have the money to pay our ongoing expenses.
+
+7
+
+In particular, additional capital may be required in the event that:
+
+ the actual expenditures required to be made are at or above the higher range of our estimated expenditures;
+
+ we incur unexpected costs in completing the development of our business or encounter any unexpected difficulties;
+
+ we incur delays and additional expenses related to the development of our product or a commercial market for our product; or
+
+ we are unable to create a substantial market for our products; or we incur any significant unanticipated expenses.
+
+The occurrence of any of the aforementioned events could adversely affect our ability to meet our business plans and achieve a profitable level of operations.
+
+ 
+
+If we are unable to obtain the necessary financing to implement our business plan we will not have the money to pay our ongoing expenses and we may go out of business.
+
+Because we have not generated any revenue from our business, and we are at least 12 months (from the date hereof) away from being in a position to generate revenues, we will need to raise significant, additional funds for the future development of our business and to respond to unanticipated requirements or expenses.
+
+Our ability to successfully market our product and to eventually distribute and use it to generate operating revenues also depends on our ability to obtain the necessary financing to implement our business plan. Given that we have no operating history, no revenues and only losses to date, we may not be able to achieve this goal, and we may go out of business. We may need to issue additional equity securities in the future to raise the necessary funds. We do not currently have any arrangements for additional financing and we can provide no assurance to investors we will be able to find such financing if further funding is required. Obtaining additional financing would be subject to a number of factors, including investor acceptance of our Bohemian crystal products and our business model. The issuance of additional equity securities by us would result in a significant dilution in the equity interests of our current stockholders. Obtaining loans will increase our liabilities and future cash commitments, and there can be no assurance that we will even have sufficient funds to repay our future indebtedness or that we will not default on our future debts if we are able to even obtain loans.
+
+There can be no assurance that capital will continue to be available if necessary to meet future funding needs or, if the capital is available, that it will be on terms acceptable to us. If we are unable to obtain financing in the amounts and on terms deemed acceptable to us, we may be forced to scale back or cease operations, which might result in the loss of some or all of your investment in our common stock.
+
+The Bohemian crystal distribution market is fragmented and competitive and we may not be able to compete successfully with our existing competitors or new entrants into the markets we serve.
+
+The Bohemian crystal distribution market is fragmented and competitive. Our competition varies by product line, customer classification and geographic market. The principal competitive factors in our industry are quality of product, pricing, service and delivery capabilities and availability of product. We will compete with many local, regional and national Bohemian crystal distributors and dealers. In addition, some Bohemian crystal suppliers might sell and distribute their products directly to our customers, and the volume of such direct sales could increase in the future. Additionally, distributors of products similar to those distributed by us, such as distributors of Polish crystal, may elect to sell and distribute to our customers in the future or enter into exclusive supplier arrangements with other distributors. Most of our competitors have greater financial resources and may be able to withstand sales or price decreases more effectively than we can. We also expect to continue to face competition from new market entrants. We may be unable to continue to compete effectively with these existing or new competitors, which could have a material adverse effect on our financial condition and results of operations.
+
+8
+
+We depend on independent Bohemian crystal suppliers for our business to operate.
+
+We are and will continue to be for the foreseeable future, substantially dependent on independent Bohemian crystal suppliers to deliver our Bohemian crustal products. We do not have our own manufacturing facilities to produce Bohemian crystal. We are and will continue to be for the foreseeable future, entirely dependent on third parties to supply Bohemian crystal to operate our Bohemian crystal distribution business. We rely on third-party supply companies to supply Bohemian crystal and deliver it to us for resale. We can make no assurance that we will be able to establish and maintain these third-party relationships or establish additional relationships as necessary to support growth and profitability of our business on economically viable terms. As independent companies, these Bohemian crystal suppliers make their own business decisions. Such suppliers may choose not to do business with us for a variety of reasons, including competition, brand identity, product standards and concerns regarding our economic viability. They may have the right to determine whether, and to what extent, they produce and distribute our products, likely some of our competitors products and their own products. Some of the business for these Bohemian crystal suppliers will likely come from producing or selling our competitors products. These Bohemian crystal suppliers may devote more resources to other products or take other actions detrimental to our brands. In addition, their financial condition could also be adversely affected by conditions beyond our control and our business could suffer. In addition, we will face risks associated with any Bohemian crystal supplier s failure to adhere to quality control and service guidelines we establish or failure to ensure an adequate and timely supply of product to our potential and future customers. Any of these factors could negatively affect our business and financial performance. If we are unable to obtain and maintain a source of supply for Bohemian crystal, our business will be materially and adversely affected.
+
+If we are unable to build and maintain our brand image and corporate reputation, our business may suffer.
+
+We are a new company, having been formed and commenced operations only in 2011. Our success depends on our ability to build and maintain the brand image for our Bohemian crystal products and effectively build the brand image for any new products. We cannot assure you, however, that any additional expenditures on advertising and marketing will have the desired impact on our products brand image and on consumer preferences. Actual or perceived product quality issues or allegations of product flaws, even if false or unfounded, could tarnish the image of our brand and may cause consumers to choose other products. Allegations of product defects, even if untrue, may require us from time to time to recall a product from all of the markets in which the affected product was distributed. Product recalls would negatively affect our profitability and brand image. 
+
+ 
+
+If we are unable to complete our plan to distribute our Bohemian crystal, we will not be able to generate revenues and you will lose your investment.
+
+We have not completed our plan to distribute Bohemian crystal, and we have no revenues from the sale or use of our Bohemian crystal. The success of our proposed business will depend on the completion of our plan and the acceptance of our Bohemian crystal products by the general public. Achieving such acceptance will require significant marketing investment. Once we are capable of distributing our Bohemian crystal products, it may not be accepted by consumers at sufficient levels to support our operations and build our business. If our Bohemian crystal products are not accepted at sufficient levels, our business will fail.
+
+ 
+
+Changes in economic conditions that impact consumer spending could harm our business.
+
+Our financial performance is sensitive to changes in overall economic conditions that impact consumer spending, particularly spending associated with luxury products, such as Bohemian crystal, which is not indispensable to maintaining a basic lifestyle. Future economic conditions affecting consumer income such as employment levels, business conditions, interest rates, and tax rates could reduce consumer spending or cause consumers to shift their spending to other products. A general reduction in the level of consumer spending or shifts in consumer spending to other products could have a material adverse effect on our growth, sales and profitability.
+
+9
+
+Because we will distribute our products to overseas, a disruption in the delivery of exported products may have a greater effect on us than on our competitors.
+
+We will export our product from Czech Republic. Because we export our product and deliver it directly to our customers, we believe that disruptions in shipping deliveries may have a greater effect on us than on competitors who manufacture and/or warehouse products in Europe and North America. Deliveries of our products may be disrupted through factors such as:
+
+ raw material shortages, work stoppages, strikes and political unrest;
+
+ fuel price increases;
+
+ problems with ocean shipping, including work stoppages and shipping;
+
+ container shortages;
+
+ increased inspections of import shipments or other factors causing
+
+delays in shipments; and
+
+ economic crises, international disputes and wars.
+
+Some of our competitors warehouse products they import from overseas, which allows them to continue delivering their products for the near term, despite overseas shipping disruptions. If our competitors are able to deliver products when we cannot, our reputation may be damaged and we may lose customers to our competitors.
+
+Price competition could negatively affect our gross margins.
+
+Price competition could negatively affect our operating results. To respond to competitive pricing pressures, we will have to offer our products at lower prices in order to retain or gain market share and customers. If our competitors offer discounts on products in the future, we will need to lower prices to match the competition, which could adversely affect our gross margins and operating results.
+
+We depend to a significant extent on certain key personnel, the loss of any of whom may materially and adversely affect our company.
+
+Currently, we have only one employee who is also our sole officer and director. We depend entirely on Mr. Bibik for all of our operations. The loss of Mr. Bibik will have a substantial negative effect on our company and may cause our business to fail. Mr. Bibik has not been compensated for his services since our incorporation, and it is highly unlikely that he will receive any compensation unless and until we generate substantial revenues. There is intense competition for skilled personnel and there can be no assurance that we will be able to attract and retain qualified personnel on acceptable terms. The loss of Mr. Bibik s services could prevent us from completing the development of our business distributing Bohemian crystal products and having revenues. In the event of the loss of services of such personnel, no assurance can be given that we will be able to obtain the services of adequate replacement personnel. 
+
+We do not have any employment agreements or maintain key person life insurance policies on our sole officer and director. We do not anticipate entering into employment agreements with him or acquiring key man insurance in the foreseeable future.
+
+We have limited business, sales and marketing experience in our industry.
+
+We have not completed the development of our business distributing Bohemian crystal products and have yet to generate revenues. Our sole officer and director has no prior experience distributing or selling Bohemian crystal products or selling industry experience. While we have plans for marketing and sales, there can be no assurance that such efforts will be successful. There can be no assurance that our proposed Bohemian crystal products will gain wide acceptance in its target market or that we will be able to effectively market our product.
+
+10
+
+We may not be able to compete effectively against our competitors.
+
+The market for Bohemian crystal distribution business is highly competitive and fragmented, with low barriers to entry. The Company expects competition to intensify in the future. We compete in each of our markets with numerous national, regional and local companies, many of which have substantially greater financial, managerial and other resources that are presently not available to us. Numerous well-established companies are focusing significant resources on providing different kind of chandeliers that will compete with our products. No assurance can be given that we will be able to effectively compete with these other companies or that competitive pressures, including possible downward pressure on the prices we charge for our products, will not rise. In the event that we cannot effectively compete on a continuing basis or competitive pressures arise, such inability to compete or competitive pressures will have a material adverse effect on our business, results of operations and financial condition.
+
+Our officers and directors are engaged in other activities and may not devote sufficient time to our affairs, which may affect our ability to conduct operations and generate revenues.
+
+Our sole officer and director has existing responsibilities and has additional responsibilities to provide management and services to other entities. We initially expect Mr. Bibik to spend approximately 20 hours a week on the business of our company. As a result, demands for the time and attention from Mr. Bibik from our company and other entities may conflict from time to time. Because we rely primarily on Mr. Bibik to maintain our business contacts and to promote our product, his limited devotion of time and attention to our business may hurt the operation of our business.
+
+Our insiders beneficially own a significant portion of our stock, and accordingly, may have control over stockholder matters, our business and management.
+
+As of the date of this prospectus, our sole officer and director, Mr. Bibik, beneficially owns 3,000,000 shares of our common stock in the aggregate, or 100% of our issued and outstanding shares of common stock. Assuming completion of the Maximum Offering, he will hold 60% of our issued and outstanding shares of common stock. As a result, our sole officer and director will have significant influence to:
+
+ Elect or defeat the election of our directors;
+
+ amend or prevent amendment of our articles of incorporation or bylaws;
+
+ effect or prevent a merger, sale of assets or other corporate transaction; and
+
+ affect the outcome of any other matter submitted to the stockholders for vote.
+
+Moreover, because of the significant ownership position held by Mr. Bibik, new investors may not be able to effect a change in our business or management, and therefore, stockholders would have no recourse as a result of decisions made by management.
+
+In addition, sales of significant amounts of shares held by our Mr. Bibik, or the prospect of these sales, could adversely affect the market price of our common stock. Management s stock ownership may discourage a potential acquirer from making a tender offer or otherwise attempting to obtain control of us, which in turn could reduce our stock price or prevent our stockholders from realizing a premium over our stock price.
+
+We intend to become subject to the periodic reporting requirements of the Securities Exchange Act of 1934, which will require us to incur audit fees and legal fees in connection with the preparation of such reports. These additional costs will negatively affect our ability to earn a profit.
+
+Following the effective date of the registration statement in which this prospectus is included, we will be required to file periodic reports with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder. In order to comply with such requirements, our independent registered public accountants will have to review our financial statements on a quarterly basis and audit our financial statements on an annual basis. Moreover, our legal counsel will have to review and assist in the preparation of such reports. The costs charged by these professionals for such services cannot be accurately predicted at this time because factors such as the number and type of transactions that we engage in and the complexity of our reports cannot be determined at this time and will have a major affect on the amount of time to be spent by our independent registered public accountants and attorneys. However, the incurrence of such costs will obviously be an expense to our operations and thus have a negative effect on our ability to meet our overhead requirements and earn a profit.
+
+11
+
+Because our headquarters and assets are located outside the U.S., investors may experience difficulties in attempting to effect service of process and to enforce judgments based upon U.S. federal securities laws against the Company and its non-U.S. resident officer and director.
+
+While we are organized under the laws of State of Nevada, our sole officer and director is a non-U.S. resident and our headquarters and assets are located outside the United States, in the Czech Republic. Consequently, it may be difficult for investors to affect service of process on our sole officer and director and to enforce in the United States judgments obtained in United States courts against the Company and its sole officer and director based on the civil liability provisions of the United States securities laws. Since all our assets will be located outside U.S. it may be difficult or impossible for U.S. investors to collect a judgment against us. As well, any judgment obtained in the United States against us is likely not be enforceable in the Czech Republic .
+
+The lack of public company experience of our management team could adversely impact our ability to comply with the reporting requirements of U.S. securities laws.
+
+ 
+
+Mr. Bibik lacks public company experience, which could impair our ability to comply with legal and regulatory requirements such as those imposed by Sarbanes-Oxley Act of 2002. Our CEO has never been responsible for managing a publicly traded company. Such responsibilities include complying with federal securities laws and making required disclosures on a timely basis. Any such deficiencies, weaknesses or lack of compliance could have a materially adverse effect on our ability to comply with the reporting requirements of the Securities Exchange Act of 1934, as amended, which is necessary to maintain our public company status. If we were to fail to fulfill those obligations, our ability to continue as a U.S. public company would be in jeopardy in which event you could lose your entire investment in our company. 
+
+We are selling this offering without an underwriter and may be unable to sell any shares.
+
+This offering is self-underwritten, that is, we are not going to engage the services of an underwriter to sell the shares; we intend to sell our shares through our sole officer and director, Mr. Bibik, who will receive no commissions. He will offer the shares to friends, family members, and business associates, however, there is no guarantee that he will be able to sell any of the shares. Unless he is successful in selling all of the shares and we receive the proceeds from this offering, we may have to seek alternative financing to implement our business plan.
+
+Risks Associated with our Common Stock
+
+Due to the lack of a trading market for our securities, you may have difficulty selling any shares you purchase in this offering.
+
+We are not registered on any market or public stock exchange. There is presently no demand for our common stock and no public market exists for the shares being offered in this prospectus. We plan to contact a market maker immediately following the completion of the offering and apply to have the shares quoted on the Over-the-Counter Bulletin Board ( OTCBB ). The OTCBB is a regulated quotation service that displays real-time quotes, last sale prices and volume information in over-the-counter securities. The OTCBB is not an issuer listing service, market or exchange. Although the OTCBB does not have any listing requirements per se, to be eligible for quotation on the OTCBB, issuers must remain current in their filings with the SEC or applicable regulatory authority. Market makers are not permitted to begin quotation of a security whose issuer does not meet this filing requirement. Securities already quoted on the OTCBB that become delinquent in their required filings will be removed following a 30 to 60 day grace period if they do not make their required filing during that time. We cannot guarantee that our application will be accepted or approved and our stock listed and quoted for sale. As of the date of this filing, there have been no discussions or understandings between us and anyone acting on our behalf, with any market maker regarding participation in a future trading market for our securities. If no market is ever developed for our common stock, it will be difficult for you to sell any shares you purchase in this offering. In such a case, you may find that you are unable to achieve any benefit from your investment or liquidate your shares without considerable delay, if at all. In addition, if we fail to have our common stock quoted on a public trading market, your common stock will not have a quantifiable value and it may be difficult, if not impossible, to ever resell your shares, resulting in an inability to realize any value from your investment.
+
+12
+
+If our shares of common stock commence trading on the OTC Bulletin Board, the trading price will fluctuate significantly and stockholders may have difficulty reselling their shares.
+
+As of the date of this Registration Statement, our common stock does not yet trade on the Over-the-Counter Bulletin Board. If our shares of common stock commence trading on the Bulletin Board, the extremely small numbers of holders will sharply limit liquidity of the shares, and there is a volatility associated with Bulletin Board securities in general and the value of your investment could decline due to the impact of any of the following factors upon the market price of our common stock: (i) disappointing results from our discovery or development efforts; (ii) failure to meet our revenue or profit goals or operating budget; (iii) decline in demand for our common stock; (iv) downward revisions in securities analysts estimates or changes in general market conditions; (v) technological innovations by competitors or in competing technologies; (vi) lack of funding generated for operations; (vii) investor perception of our industry or our prospects; and (viii) general economic trends.
+
+We have not engaged a market maker to apply for quotation on the OTC Bulletin Board on our behalf . There is no current trading market for our securities and if a trading market does not develop, purchasers of our securities may have difficulty selling their shares. In addition, stock markets have experienced price and volume fluctuations and the market prices of securities have been highly volatile. These fluctuations are often unrelated to operating performance and may adversely affect the market price of our common stock. As a result, investors may be unable to sell their shares at a fair price and you may lose all or part of your investment.
+
+Broker-dealers may be discouraged from effecting transactions in our shares because they are considered penny stocks and are subject to the penny stock rules.
+
+The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks generally are equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system). Penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from those rules, to deliver a standardized risk disclosure document prepared by the SEC, which specifies information about penny stocks and the nature and significance of risks of the penny stock market. A broker-dealer must also provide the customer with bid and offer quotations for the penny stock, the compensation of the broker-dealer, and sales person in the transaction, and monthly account statements indicating the market value of each penny stock held in the customer s account. In addition, the penny stock rules require that, prior to a transaction in a penny stock not otherwise exempt from those rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser s written agreement to the transaction. These disclosure requirements may have the effect of reducing the trading activity in the secondary market for stock that becomes subject to those penny stock rules. If a trading market for our common stock develops, our common stock will probably become subject to the penny stock rules, and shareholders may have difficulty in selling their shares.
+
+Because we do not intend to pay any cash dividends on our common stock, our stockholders will not be able to receive a return on their shares unless they sell them.
+
+We have not declared or paid any dividends on our common stock since our inception, and we do not anticipate paying any such dividends for the foreseeable future. Investors that need to rely on dividend income should not invest in our common stock, as any income would only come from any rise in the market price of our common stock, which is uncertain and unpredictable. Investors that require liquidity should also not invest in our common stock. Unless we pay dividends, our stockholders will not be able to receive a return on their shares unless they sell them. There is no established trading market and should one develop, it will likely be volatile and subject to minimal trading volumes. 
+
+13
+
+Because we can issue additional shares of common stock, purchasers of our common stock may incur immediate dilution and may experience further dilution.
+
+We are authorized to issue up to 75,000,000 shares of common stock. At present, there are 3,000,000 issued and outstanding shares of common stock, and if we are successful in completing the Maximum Offering there will be 5,000,000 shares outstanding. Our Board of Directors has the authority to cause us to issue additional shares of common stock without consent of any of our stockholders. Consequently, our stockholders may experience more dilution in their ownership of our Company in the future, which could have an adverse effect on the trading market for our shares of common stock.
+
+Anti-takeover effects of certain provisions of Nevada state law hinder a potential takeover of the company.
+
+Though not now, we may be or in the future we may become subject to Nevada s control share law. A corporation is subject to Nevada s control share law if it has more than 200 stockholders, at least 100 of whom are stockholders of record and residents of Nevada, and it does business in Nevada or through an affiliated corporation. The law focuses on the acquisition of a controlling interest which means the ownership of outstanding voting shares sufficient, but for the control share law, to enable the acquiring person to exercise the following proportions of the voting power of the corporation in the election of directors: (i) one-fifth or more but less than one-third, (ii) one-third or more but less than a majority, or (iii) a majority or more. The ability to exercise such voting power may be direct or indirect, as well as individual or in association with others.
+
+The effect of the control share law is that the acquiring person, and those acting in association with it, obtains only such voting rights in the control shares as are conferred by a resolution of the stockholders of the corporation, approved at a special or annual meeting of stockholders. The control share law contemplates that voting rights will be considered only once by the other stockholders. Thus, there is no authority to strip voting rights from the control shares of an acquiring person once those rights have been approved. If the stockholders do not grant voting rights to the control shares acquired by an acquiring person, those shares do not become permanent non-voting shares. The acquiring person is free to sell its shares to others. If the buyers of those shares themselves do not acquire a controlling interest, their shares do not become governed by the control share law.
+
+If control shares are accorded full voting rights and the acquiring person has acquired control shares with a majority or more of the voting power, any stockholder of record, other than an acquiring person, who has not voted in favor of approval of voting rights is entitled to demand fair value for such stockholder s shares.
+
+Nevada s control share law may have the effect of discouraging takeovers of the corporation. 
+
+In addition to the control share law, Nevada has a business combination law which prohibits certain business combinations between Nevada corporations and interested stockholders for three years after the interested stockholder first becomes an interested stockholder, unless the corporation s board of directors approves the combination in advance. For purposes of Nevada law, an interested stockholder is any person who is (i) the beneficial owner, directly or indirectly, of ten percent or more of the voting power of the outstanding voting shares of the corporation, or (ii) an affiliate or associate of the corporation and at any time within the three previous years was the beneficial owner, directly or indirectly, of ten percent or more of the voting power of the then outstanding shares of the corporation. The definition of the term business combination is sufficiently broad to cover virtually any kind of transaction that would allow a potential acquiror to use the corporation s assets to finance the acquisition or otherwise to benefit its own interests rather than the interests of the corporation and its other stockholders.
+
+The effect of Nevada s business combination law is to potentially discourage parties interested in taking control of us from doing so if it cannot obtain the approval of our board of directors.
+
+14
+
+MARKET FOR OUR COMMON STOCK
+
+ 
+
+Market Information
+
+ 
+
+There is no established public market for our common stock.
+
+ 
+
+After the effective date of the registration statement of which this prospectus forms a part, we intend to try to identify a market maker to file an application with the Financial Industry Regulatory Authority, Inc., or FINRA, to have our common stock quoted on the Over-the-Counter Bulletin Board. We will have to satisfy certain criteria in order for our application to be accepted. We do not currently have a market maker that is willing to participate in this application process, and even if we identify a market maker, there can be no assurance as to whether we will meet the requisite criteria or that our application will be accepted. Our common stock may never be quoted on the Over-the-Counter Bulletin Board, or, even if quoted, a liquid or viable market may not materialize. There can be no assurance that an active trading market for our shares will develop, or, if developed, that it will be sustained.
+
+ 
+
+We have issued 3,000,000 shares of our common stock since our inception on April 22, 2011. There are no outstanding options or warrants or securities that are convertible into shares of common stock.
+
+ 
+
+Holders
+
+ 
+
+We have 1 holder of record of our common stock as of the date of this prospectus.
+
+ 
+
+Securities Authorized for Issuance under Equity Compensation Plans
+
+ 
+
+We have not established any compensation plans under which equity securities are authorized for issuance.
+
+USE OF PROCEEDS
+
+Our offering is being made on a self-underwritten basis: no minimum number of shares must be sold in order for the offering to proceed. The offering price per share is $0.04. The following table sets forth the uses of proceeds assuming the sale of 25%, 50%, 75% and 100%, respectively, of the securities offered for sale by the Company. The various offering amounts presented are for illustrative purposes only and the actual amount of proceeds raised, if any, may differ significantly.
+
+ 
+
+ 
+ 
+ 
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+If 25% of
+
+Shares Sold
+
+If 50% of
+
+Shares Sold
+
+If 75% of
+
+Shares Sold
+
+If 100% of
+
+Shares Sold
+
+SHARES SOLD
+
+500,000 
+
+1,000,000
+
+1,500,000
+
+2,000,000
+
+GROSS PROCEEDS
+
+ $20,000
+
+$40,000
+
+$60,000
+
+$80,000
+
+TOTAL BEFORE EXPENSES
+
+23,100
+
+43,100
+
+63,100
+
+83,100
+
+OFFERING EXPENSES
+
+ 
+
+ 
+
+ 
+
+ 
+
+ Legal and Accounting
+
+5,500
+
+5,500
+
+5,500
+
+5,500 
+
+ Publishing/Edgarizing
+
+500 
+
+500 
+
+500 
+
+500 
+
+ Transfer Agent
+
+1000 
+
+1000 
+
+1000 
+
+1000 
+
+ SEC Filing fee
+
+10
+
+10
+
+10
+
+ 10
+
+TOTAL OFFERING EXPENSES
+
+7,010 
+
+7,010 
+
+7,010 
+
+7,010 
+
+NET AFTER OFFERING EXPENSES
+
+12,990
+
+ 
+
+32,990
+
+ 
+
+52,990
+
+ 
+
+72,990
+
+NET CASH May 31, 2011
+
+3,100
+
+3,100
+
+3,100
+
+3,100
+
+EXPENDITURES (1)
+
+ 
+
+ 
+
+ 
+
+ 
+
+ Maintaining reporting status
+
+12,000 
+
+12,000 
+
+ 12,000 
+
+ 12,000
+
+Office set up
+
+2,000
+
+2,000
+
+3,000
+
+4,000
+
+Web site development
+
+2,090
+
+2,500
+
+4,000
+
+5,000
+
+Advertising/marketing
+
+-
+
+15,000
+
+30,000
+
+35,000
+
+Sales person
+
+-
+
+-
+
+-
+
+12,000
+
+General administrative costs
+
+-
+
+4,590
+
+7,090
+
+8,090
+
+ 
+
+16,090
+
+36,090
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+Net Remaining Balance
+
+-0-
+
+-0-
+
+-0-
+
+-0-
+
+(1) Expenditures for the 12 months following the completion of this Offering. The expenditures are categorized by significant area of activity.
+
+The figures above represent only estimated costs. 
+
+15
+
+Please see a detailed description of the use of proceeds in the Plan of Operation section of this Prospectus.
+
+ 
+
+If the Company is not successful in selling all 2,000,000 shares within the prescribed 180 day period (which may be extended an additional 90 days in our sole discretion), then we will not be able to proceed with our business plan unless additional funds are raised in some other manner.
+
+Please see a detailed description of the use of proceeds in the Plan of Operation section of this Prospectus.
+
+Our offering expenses of approximately $7,010 are comprised primarily of legal and accounting expenses, publishing/Edgarization fees, SEC filing fees and transfer agent fees. Our officers and directors will not receive any compensation for their efforts in selling our shares.
+
+If we are able to sell only 1,500,000, shares (75% of this offering) we can maintain our reporting requirements with the SEC and complete the development of our business to distribute Bohemian crystal, with the exception that we will have insufficient funds to hire a sales person. If we are not able to sell a minimum of 500,000 shares (25% of this offering), we will not implement our business plan at all, except maintaining our reporting with the SEC and remain in good standing with the state of Nevada. If we do not sell at least 500,000 shares (25% of this offering) we will not be able to maintain our reporting status with the SEC, remain in good standing with the state of Nevada and complete most of our website development. If we are unable to complete the Maximum Offering of 2,000,000 shares, we will attempt to raised the funds needed to complete our Plan of Operation through equity financing, debt financing, or other sources, which may result in the dilution in the equity ownership of our shares. We will also need more funds if the costs of developing our website are greater than we have budgeted. We will also require additional financing to sustain our business operations if we are not successful in earning revenues.
+
+We currently do not have any arrangements regarding this Offering or following this Offering for further financing and we may not be able to obtain financing when required. Our future is dependent upon our ability to obtain further financing, the successful development of our Bohemian crystal products business, a successful marketing and promotion program, and achieving a profitable level of operations. The issuance of additional equity securities by us could result in a significant dilution in the equity interests of our current stockholders. Obtaining commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments. There are no assurances that we will be able to obtain further funds required for our continued operations. Even if additional financing is available, it may not be available on terms we find favorable. At this time, there are no anticipated sources of additional funds in place. Failure to secure the needed additional financing will have an adverse effect on our ability to remain in business.
+
+If we are successful in selling all 2,000,000 shares of common stock under this Offering, the net proceeds will be used for our business plan and general working capital, during the twelve months following the successful completion of this Offering. In all instances, after the effectiveness of the registration statement of which this prospectus is a part, we will require some amount of working capital to maintain our basic operations and comply with our public reporting obligations. In addition to changing our allocation of cash because of the amount of proceeds received, we may change the use of proceeds because of changes in our business plan. Investors should understand that we have wide discretion over the use of proceeds.
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/CIK0001524223_manning_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001524223_manning_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001524223_manning_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/CIK0001524747_lashou_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001524747_lashou_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..742ff95c1be27f0745c179740f53ec91b8ac6bdf
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001524747_lashou_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus and does not contain all of the information that you should consider in making your investment decision. Before investing in the ADSs, you should carefully read this entire prospectus, including our financial statements and related notes included in this prospectus and the information set forth under the headings "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations." Our Business Lashou, meaning "hand-in-hand" in Chinese, is a leading online social commerce company in China. We enrich the online shopping experience of consumers in China by offering attractive group-purchase discounts across a variety of services and products on our website, www.lashou.com, and create a new avenue for large numbers of local merchants in China to grow their businesses. As published by iResearch, we are consistently ranked No. 1 among independent online social commerce companies in China and No. 2 among all online social commerce companies in China, based on the number of daily unique visitors to online social commerce websites in China during the months of January 2011 through August 2011, with over 22% of total unique visitors viewing our website in each of these months. Our "Lashou.com" brand is one of the most recognizable online social commerce brands in China, according to a consumer survey conducted by CR-Nielsen in July 2011, which was commissioned by us. Each day, new surprise deals are waiting on our website for our users to discover. Our users can choose from up to 1,000 daily listings of mostly local offerings on substantially discounted services and products in more than 500 cities and towns. These offerings, primarily in food and entertainment, health and beauty, and travel and hospitality, are chosen for their appeal, quality and relevance to our mostly young and urban users. They are typically limited in quantity and conditioned on achieving a minimum number of purchases within a specific time frame. The attractiveness of the deals and the purchase limitations often propel user-initiated sharing of these opportunities with their friends, families and online groups, through word-of-mouth or links to our website, which drives the rapid expansion of our user base. Our large user base gives our merchants an affordable and effective means of sales promotion and inventory management. As a result, we are able to negotiate competitive pricing for our users on a wide range of services and products. As of October 23, 2011, our cumulative merchant base had grown to approximately 46,000 merchants supported by over 3,100 sales personnel in 184 cities and towns across 31 provinces in China, Hong Kong and Macau. Since we launched our website in March 2010, we have successfully grown to capture the tremendous e-commerce opportunities in China, as evidenced by the following: Our average monthly unique visitors, based on data from Google Analytics, grew from approximately 295,000 during the second quarter of 2010 to approximately 29.7 million during the third quarter of 2011; Our registered users grew from approximately 53,000 as of March 31, 2010 to approximately 16.8 million as of September 30, 2011; Our active paying users grew from approximately 25,000 during the second quarter of 2010 to approximately 3.3 million during the third quarter of 2011; Our merchant base grew from less than 400 during the second quarter of 2010 to approximately 24,000 during the third quarter of 2011; and The number of vouchers for services and products sold on our website grew from approximately 56,000 during the second quarter of 2010 to approximately 19.6 million during the third quarter of 2011. Amendment No. 2 to FORM F-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Table of Contents CONVENTIONS THAT APPLY TO THIS PROSPECTUS Unless otherwise indicated, references in this prospectus to: "we," "us," "our," "our company" or "Lashou" refer to LaShou Group Inc., a Cayman Islands company, and its subsidiaries and consolidated variable interest entity; "Shanghai Lashou" refer to Shanghai Lashou Information Technology Co. Ltd., a company incorporated in the PRC; "Beijing Lashou" refer to Beijing Lashou Network Technology Co. Ltd., a company incorporated in the PRC, and our variable interest entity that Shanghai Lashou effectively controls through a series of contractual arrangements; "Beijing Lashou Technology" refer to Beijing Lashou Technology Co. Ltd., a company incorporated in the PRC; "VIE" refer to our variable interest entity, Beijing Lashou; "registered users" refer to users that have registered and activated their accounts on our website www.lashou.com. Users must first register with us, and then "activate" by clicking an activation link in an e-mail we automatically send. Not all users activate the accounts they register with us; "paying user" refer to a user that has purchased at least once from us; "active paying users" refer to registered users that have purchased at least one of our products or services during the applicable measuring period. If the registered user makes more than one purchase during the applicable measuring period, such user will be counted as one active paying user during such period; "unique visitors" refer to Internet users who have visited our website at least once during the applicable measuring period; "completed transaction" refer to a completed sale of a voucher for services or products on our website; "gross billings" refer to the voucher price billed to our users from the sales of vouchers redeemed for service and product offerings provided by our merchants; "Class A ordinary shares" refer to ordinary shares of par value US$0.0000005 per share in the capital of our company, each of which is entitled to ten votes on all matters subject to a shareholder vote and will be entitled to five votes on all matters subject to a shareholder vote following this offering; "Class B ordinary shares" refer to ordinary shares of par value US$0.0000005 per share in the capital of our company, each of which is and will be entitled to one vote on all matters subject to a shareholder vote; "shares" or "ordinary shares" refer collectively to our Class A ordinary shares and Class B ordinary shares; "the 2010 Plan" refer to the 2010 Global Share Plan adopted on July 22, 2010; "ADSs" refer to our American depositary shares, each of which represents 36 Class B ordinary shares; "ADRs" refer to the American depositary receipts, which, if issued, evidence our ADSs; "China" or the "PRC" refer to the People's Republic of China, excluding Taiwan and the special administrative regions of Hong Kong and Macau for the purposes of this prospectus only; Table of Contents Since we launched our website in March 2010, approximately 6.8 million paying users had purchased over 43.3 million vouchers for services and products from us as of September 30, 2011. Given that China's Internet users reached 425 million as of December 2010, which represents 32.4% of the Chinese population, and given that 80 million Internet users in China had bought services or products online in 2010 according to International Data Corporation data as of August 2011, we believe significant market opportunities exist for our future growth. See "Industry" for additional information. To achieve sustained growth and encourage user loyalty, we have built our firm culture around winning our users' trust through the following initiatives: we set the market standard with our "Three Guarantees" that generally promise (i) an unconditional cash refund or credit towards future purchases at the choice of the user within a certain period, (ii) a cash refund or credit towards future purchases at the choice of the user for unsatisfactory services, and (iii) an automatic credit or a cash refund (if requested by the user) for expired and unredeemed vouchers; we offer online and offline user and merchant support with over 400 service representatives in three service centers and our network of local offices; we follow stringent internal guidelines in our selection of merchants and service and product offerings; and we leverage our logistics network and work closely with our merchants to provide timely order fulfillment. As of September 30, 2011, 47.3% of our cumulative paying users were repeat purchasers, and 18.1% of our registered users had been referred to us by existing users. Our revenues grew from nil for the period from September 15, 2009 (date of inception) to December 31, 2009 to RMB10.5 million (US$1.6 million) for the year ended December 31, 2010 and to RMB107.3 million (US$16.8 million) for the nine months ended September 30, 2011. Our gross billings grew from nil for the period from September 15, 2009 (date of inception) to December 31, 2009 to RMB123.2 million (US$19.3 million) for the year ended December 31, 2010 and to RMB1.2 billion (US$189.4 million) for the nine months ended September 30, 2011. We are a growth stage company and incurred sales and marketing expenses for the year ended December 31, 2010 and the nine months ended September 30, 2011 of RMB40.0 million (US$6.3 million) and RMB523.0 million (US$82.0 million), respectively. Our net losses were RMB0.7 million for the period from September 15, 2009 (date of inception) to December 31, 2009, RMB53.5 million (US$8.4 million) for the year ended December 31, 2010 and RMB572.0 million (US$89.7 million) for the nine months ended September 30, 2011. As of September 30, 2011, our accumulated deficit was RMB655.0 million (US$102.7 million). Due to legal restrictions in China, we conduct our business mainly through Beijing Lashou, our consolidated variable interest entity in China, that we effectively control through contractual arrangements. Our Industry China's retail and service sectors have experienced substantial growth in recent years. According to Euromonitor International data as of August 2011, China's retail market reached RMB7.5 trillion (US$1.2 trillion) in 2010 and is forecasted to grow at a CAGR of 11.1% to RMB12.7 trillion (US$2.0 trillion) by 2015. China's online social commerce market has grown rapidly since the first online social commerce site emerged in January 2010. There are currently over one thousand online social commerce sites in LaShou Group Inc. (Exact name of registrant as specified in its charter) Not Applicable (Translation of Registrant's name into English) Cayman Islands 7389 Not Applicable (State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer incorporation or organization) Classification Code Number) Identification Number) Room 1003, H Building (North) Time Fortune Jia-6 Shuguang Xili Chaoyang District Beijing, PRC 100028 Telephone number: +86-10-8444-0025 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) Table of Contents "RMB" or "Renminbi" refer to the legal currency of China; and "US$" or "U.S. dollars" refer to the legal currency of the United States. Unless otherwise indicated, information in this prospectus assumes that: the underwriters do not exercise their option to purchase additional ADSs; and all outstanding preferred shares are converted into 615,774,535 Class B ordinary shares upon the closing of this offering assuming an initial public offering price of US$14.00 per ADS, the midpoint of the estimated initial public price range on the cover of the prospectus. References to share information and per share data reflect the 20-for-1 share split effected on December 31, 2010, pursuant to which every ordinary share and Series A preferred share and Series B preferred share was subdivided into 20 ordinary shares and 20 Series A and Series B preferred shares, respectively, and the par value of the shares was changed from US$0.00001 per share to US$0.0000005 per share. This prospectus contains translations of certain Renminbi amounts into U.S. dollars at specified rates. All translations from Renminbi to U.S. dollars were made at the noon buying rate in New York City for cable transfers in Renminbi per U.S. dollar as certified for customs purposes by the Federal Reserve Bank of New York. Unless otherwise stated, the translation of Renminbi into U.S. dollars has been made at the noon buying rate in effect on September 30, 2011, which was RMB6.3780 to US$1.00. We make no representation that the Renminbi or dollar amounts referred to in this prospectus could have been or could be converted into U.S. dollars or Renminbi, as the case may be, at any particular rate or at all. On November 4, 2011, the noon buying rate was RMB6.3400 to US$1.00. This prospectus contains references to compound annual growth rate, or CAGR, which represents the rate of return on an annualized basis over the relevant time period. We have included references to our website www.lashou.com throughout this prospectus and our logo, which appears on the front and back covers of this prospectus, also includes the word "Lashou.com." However, the information contained on our website does not constitute part of this prospectus. Table of Contents China, according to iResearch. The number of unique Internet users buying services or products online in China is also on the rise. The number of unique Internet users buying services or products online in China grew to 80 million in 2010 and is expected to reach 183 million by 2015, compared to 176 million in the United States in 2010, according to International Data Corporation data as of August 2011. This represents a penetration rate of 18.9% and 34.2% in 2010 and 2015 in China, respectively, among Internet users, compared to a penetration rate of 66.1% in the United States in 2010. See "Industry Rapid Growth of China's E-Commerce Market" for additional information. Given the considerable size of China's retail and service industries, the market opportunity to bring local commerce online is substantial. There were approximately 40 million small and medium enterprises in China in 2010, according to an article published by China's National Bureau of Statistics. For local merchants, which usually are smaller in scale and have limited access to effective sales and marketing channels, online promotions allow them to cost-effectively acquire new consumers in existing or new cities. Furthermore, the majority of local businesses, especially those established in Tier 2 or Tier 3 cities in China, have no online presence. For these companies, establishing an online presence represents a significant market opportunity that they could not otherwise achieve on their own. Our Strengths We believe the following strengths have contributed to our becoming a leading online social commerce brand in China and differentiated us from our competitors: innovation-based growth, through the development of new features such as multiple listings of featured group-purchase offerings and mobile platform applications for Internet-enabled smart phones and tablets; integrity as our core value, as evidenced by our consistently applied guarantees to our users and other policies to ensure the quality of services and products; large, active and loyal user base, with approximately 16.8 million registered users located in over 500 cities and towns in China as of September 30, 2011; nationwide merchant base and fulfillment network of approximately 46,000 cumulative merchants in more than 500 cities and towns in China, 31 distribution stations in eight cities throughout China and over 3,100 sales personnel in 184 cities and towns in China, Hong Kong and Macau; and strong management and execution capabilities, resulting from our senior management team's extensive experience in building and managing rapidly growing online businesses. Our Strategy Our goal is to integrate Lashou into the daily life of Chinese consumers and become the dominant brand in China's online social commerce market. We plan to achieve our goal by implementing the following key strategies: solidify our market leadership position; continue to innovate and increase monetization; continue to improve user and merchant experiences; and focus on long-term growth and sustainable partnerships. Law Debenture Corporate Services Inc. 400 Madison Avenue, 4th Floor New York, New York 10017 (212) 750-6474 (Name, address, including zip code, and telephone number, including area code, of agent for service) Table of Contents Our Challenges We believe that the following are some of the major risks and uncertainties that may materially and adversely affect us: our limited operating history; our history of net losses and uncertainty with respect to our ability to achieve and maintain profitability in the future; our ability to respond to competitive pressures and negative publicity in a highly fragmented and competitive market; uncertainties regarding the growth and acceptance of the online social commerce industry; our inability to register the trademark, Lashou, could expose us to the use of the trademark by third parties and infringement claims. We initially filed two applications for the registration of the Lashou trademark in June and July of 2010, which applications were denied in December 2010 and April 2011, respectively, due to similarities of the trademark with an existing trademark. We submitted a request for the re-examination for one of the applications in April 2011 and the re-examination is currently in progress; uncertainties regarding potential conflicts between the fiduciary duties owed by our management to our PRC and Cayman Islands entities and the lack of a framework for resolving conflicts in fiduciary duty between these jurisdictions; our ability to implement our growth strategies successfully; our ability to adapt to technological advances; and uncertainties in the regulatory environment in China, including regulation of the VIE structure. See "Risk Factors" and other information included in this prospectus for a discussion of these and other risks and uncertainties. Copies to: Karen M. Yan Latham & Watkins LLP 49th Floor, Jin Mao Tower 88 Century Boulevard Shanghai, PRC 200121 +86-21-6101-6000 Alan Seem Shearman & Sterling LLP 12/F, East Tower, Twin Towers B-12 Jianguomenwai Dajie Beijing, PRC 100022 +86-10-5922-8002 Table of Contents Our Corporate History and Structure We commenced operations of our online social commerce business in September 2009 through Beijing Lashou, which is owned by Mr. Ming Guan, the nominee shareholder and cousin of Mr. Bo Wu, our co-founder, chairman and chief executive officer, and Mr. Xiaobo Jia, our co-founder and director. Beijing Lashou holds the Internet information services license, which is required for our business under PRC laws, and operates our website for our online social commerce business in China. Our holding company, LaShou Group Inc., was incorporated under the laws of the Cayman Islands on May 19, 2010. On June 22, 2010, we incorporated Lashou HK Limited, or Lashou HK, our wholly owned subsidiary in Hong Kong, which serves as an operating company for our online social commerce business in Hong Kong and the holding company of our subsidiaries in China. On August 25, 2010, Lashou HK established its wholly owned subsidiary, Beijing Lashou Technology Co. Ltd., in China, which is currently dormant and in the process of liquidation. On October 5, 2010, Lashou HK established its second wholly owned subsidiary, Lashou Macau Sociedade Unipessoal Limitada in Macau, which will serve as an operating company for our online social commerce business in Macau. On January 7, 2011, we incorporated Lashou Group Hong Kong Limited, our second wholly owned subsidiary in Hong Kong, which will serve our future business needs. On April 21, 2011, Lashou HK established its third wholly owned subsidiary, Shanghai Lashou, in China, through which we control the operations of Beijing Lashou. PRC laws currently restrict foreign-invested entities from engaging in value-added telecommunications services. To comply with PRC laws, we operate our online social commerce business through our VIE, Beijing Lashou. We exercise effective control over the operations of Beijing Lashou through a series of contractual arrangements among Shanghai Lashou, Beijing Lashou and its shareholders, which allows us to consolidate the financials of our VIE into our financial statements. The signing of VIE contracts by Shanghai Lashou, Beijing Lashou and its shareholders does not require approval from PRC authorities. See "Corporate History and Structure Corporate Structure Contractual Arrangements with Beijing Lashou and its Shareholders" for additional information. If our VIE or its shareholders fail to perform their obligations under the contractual arrangements, we could be limited in our ability to enforce the contractual arrangements that give us effective control over our VIE. Considering that we derive substantially all of our revenues from our VIE, if we are unable to maintain effective control over our VIE, we would not be able to continue to consolidate our VIE's financial results, which will materially and adversely affect our financial condition. Also, although we are able to derive substantially all of the economic benefits from our VIE through the contractual arrangements, we do not have unfettered access to our VIE's revenues due to substantial PRC legal restrictions, such as those on payments of dividends by PRC companies, foreign exchange control and foreign investment. Under the exclusive service agreement between Shanghai Lashou and Beijing Lashou, Shanghai Lashou is entitled to collect from Beijing Lashou service fees, which include (i) monthly fixed fees of RMB50,000, (ii) performance-based service fees calculated as a certain percentage of Beijing Lashou's annual revenues, and (iii) other fees payable in consideration for other services to be provided by Shanghai Lashou to Beijing Lashou. As of the date of this prospectus, Shanghai Lashou has waived the collection of such service fees from Beijing Lashou and we have not received any dividends from our PRC operating subsidiaries. Nonetheless, we expect to substantially rely on service fees from Beijing Lashou and dividends from our PRC operating subsidiaries. Future collection of the service fees depends on, among others, the profitability and financial condition of our VIE and PRC operating subsidiaries, and it is uncertain when we may reasonably expect to collect any such fees or dividends in the future. Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earliest effective registration statement for the same offering. 1LaShou Group Inc., a company incorporated in the Cayman Islands that serves as our holding company. 2Lashou HK Limited, a company incorporated in Hong Kong that serves as an operating company for our online social commerce business in Hong Kong; it also serves as the holding company of Beijing Lashou Technology, Shanghai Lashou and Lashou Macau Sociedade Unipessoal Limitada. 3Lashou Group Hong Kong Limited, a company incorporated in Hong Kong that will serve as a holding company in the future. 4Lashou Macau Sociedade Unipessoal Limitada, a company incorporated in Macau that is currently inactive and will serve as an operating company for our online social commerce business in Macau. CALCULATION OF REGISTRATION FEE Title of each class of securities to be registered Amount to be registered1,2 Proposed maximum offering price per share Proposed maximum aggregate offering price1 Amount of registration fee Class B ordinary shares, par value US$0.0000005 per share2,3 221,779,368 US$0.4168 US$92,437,641 US$10,5934 1Estimated solely for the purpose of determining the amount of registration fee in accordance with Rule 457(a) under the Securities Act of 1933, as amended. 2Includes 28,927,728 Class B ordinary shares that are issuable upon the exercise of the underwriters' option to purchase additional shares. Also includes Class B ordinary shares initially offered and sold outside the United States that may be resold from time to time in the United States either as part of their distribution or within 40 days after the later of the effective date of this registration statement and the date the shares are first bona fide offered to the public. These ordinary shares are not being registered for the purpose of sales outside the United States. 3American depositary shares issuable upon deposit of the ordinary shares registered hereby will be registered under a separate registration statement on Form F-6 (Registration No. 333-177813). Each American depositary share represents 36 Class B ordinary shares. 4Previously paid. Table of Contents 5Shanghai Lashou Information Technology Co. Ltd, a company incorporated in China that serves as a technical and consulting service provider to, and exercises effective control over, Beijing Lashou. 6Beijing Lashou Technology Co. Ltd., a company incorporated in China that is currently dormant and in the process of liquidation. 7Beijing Lashou Network Technology Co. Ltd, our VIE and a company incorporated in China that serves as an operating company for our online social commerce business in China. 8Mr. Ming Guan is the nominee shareholder and cousin of Mr. Bo Wu, co-founder, chairman and chief executive officer of LaShou Group Inc. Our Corporate Information Our principal executive offices are located at Room 1003, H Building (North), Time Fortune, Jia-6 Shuguang Xili, Chaoyang District, Beijing 100028, People's Republic of China. Our telephone number at this address is +86-10-8444-0025 and our fax number is +86-10-8444-0015. Our registered office in the Cayman Islands is located at the offices of Maples Corporate Services Limited, PO Box 309, Ugland House, Grand Cayman, KY1-1104 Cayman Islands. Investors should submit any inquiries to the address and telephone number of our principal executive offices. Our agent for service of process in the United States is Law Debenture Corporate Services Inc. located at 400 Madison Avenue, 4th Floor, New York, New York 10017. Law Debenture Corporate Services Inc.'s telephone number is (212) 750-6474. The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to such Section 8(a), may determine. Table of Contents
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001524774_empress_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001524774_empress_prospectus_summary.txt
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+PROSPECTUS SUMMARY As used in this prospectus, references to the "Company," "we," "our", "us" or "Penola Inc." refer to Penola Inc. unless the context otherwise indicates. The following summary highlights selected information contained in this prospectus. Before making an investment decision, you should read the entire prospectus carefully, including the "Risk Factors" section, the financial statements, and the notes to the financial statements. OUR COMPANY Penola Inc. was incorporated on May 7, 2010, under the laws of the State of Nevada, for the purpose of conducting mineral exploration activities. We are an exploration stage company formed for the purposes of acquiring, exploring, and if warranted and feasible, developing natural resource property. We raised an aggregate of $31,000 through private placements of our securities. Proceeds from these placements were used for working capital. On July 6, 2010 we entered into a Mineral Property Option Agreement whereby we have the right to acquire a 100% interest in Exploration License E 80/3757 located in Halls Creek Shire, in the Kimberly region of Western Australia and known as the Halls Creek Property. The option agreement requires us to make an initial cash payment of AUD$7,000 (US$7,703), which we paid on July 6, 2010. The option agreement has an exercise price of approximately AUD$200,000 ($208,840) cash to be paid, if exercised by the Company, and the option expires July 6, 2012. We retained a consulting geologist to prepare an evaluation report on the Halls Creek Property. We intend to conduct exploratory activities on the claim and if feasible, develop the Halls Creek Property. In order to execute against our plan of operations for the next 12 months, we will need to raise approximately $413,798. Until such funds are obtained by the Company via debt, equity or other form of financing, we will be unable to take concrete steps towards the implementation of our plan of operations. In order to commence work in accordance with Phase 1 of our plan of operations, detailed on pages 24-26, we will need to secure additional financing. Currently, we have no plan or commitment which would provide us with the required capital to begin Phase 1. The Company's principal offices are located at 492 Gilbert Road, West Preston, Victoria 3072, Australia, and our telephone number is +61 (3) 9605 3907. THE OFFERING Securities offered: The selling stockholders are offering hereby up to 1,160,000 shares of common stock. Offering price: The selling stockholders will offer and sell their shares of common stock at a fixed price of $0.10 per share until our shares are quoted on the OTC Bulletin Board, if our shares of common stock are ever quoted on the OTC Bulletin Board, and thereafter at prevailing market prices or privately negotiated prices. Shares outstanding prior to offering: 3,160,000 Shares outstanding after offering: 3,160,000 Market for the common shares: There is no public market for our shares. Our common stock is not traded on any exchange or on the over-the-counter market. After the effective date of the registration statement relating to this prospectus, we hope to have a market maker file an application with the Financial Industry Regulatory Authority ("FINRA") for our common stock to eligible for trading on the Over The Counter Bulletin Board. We do not yet have a market maker who has agreed to file such application. There is no assurance that a trading market will develop, or, if developed, that it will be sustained. Consequently, a purchaser of our common stock may find it difficult to resell the securities offered herein should the purchaser desire to do so when eligible for public resale. Use of proceeds: We will not receive any proceeds from the sale of shares by the selling security holders SUMMARY FINANCIAL INFORMATION The tables and information below are derived from our audited financial statements for the period from May 7, 2010 (Inception) to February 28, 2011, and our unaudited financial statements for the fiscal quarter ended August 31, 2011. Our working capital as at October 26, 2011 was $20,575. February 28, 2011 ($) --------------------- FINANCIAL SUMMARY Cash and Deposits 21,737 Total Assets 21,737 Total Liabilities 519 Total Stockholder's Equity 21,218 Accumulated From May 7, 2010 (Inception) to February 28, 2011 ($) --------------------- STATEMENT OF OPERATIONS Total Expenses 9,782 Net Loss for the Period 9,782 Net Loss per Share -- August 31, 2011 ($) ------------------- FINANCIAL SUMMARY (UNAUDITED) Cash and Deposits 18,089 Total Assets 18,089 Total Liabilities 734 Total Stockholder's Equity (Deficit) 17,355
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001525249_drugtech_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001525249_drugtech_prospectus_summary.txt
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+PROSPECTUS SUMMARY 4
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+PROSPECTUS SUMMARY 4
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+PROSPECTUS SUMMARY 4
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001525258_ther-rx_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001525258_ther-rx_prospectus_summary.txt
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+PROSPECTUS SUMMARY 4
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+PROSPECTUS SUMMARY 4
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001525260_zeratech_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001525260_zeratech_prospectus_summary.txt
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+PROSPECTUS SUMMARY 4
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001525536_climate_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001525536_climate_prospectus_summary.txt
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+Prospectus Summary This Prospectus, and any supplement to this Prospectus include forward-looking statements . To the extent that the information presented in this Prospectus discusses financial projections, information or expectations about our business plans, results of operations, products or markets, or otherwise makes statements about future events, such statements are forward-looking. Such forward-looking statements can be identified by the use of words such as intends , anticipates , believes , estimates , projects , forecasts , expects , plans and proposes . Although we believe that the expectations reflected in these forward-looking statements are based on reasonable assumptions, there are a number of risks and uncertainties that could cause actual results to differ materially from such forward-looking statements. These include, among others, the cautionary statements in the Risk Factors section beginning on page 8 of this Prospectus and the Management's Discussion and Analysis of Financial Position and Results of Operations section elsewhere in this Prospectus. Our Business We were incorporated on July 17, 2007 under the laws of the State of Nevada. Our principal executive offices are located at Unit 4, 2119 152nd Street, Surrey, BC, V4A 4N7. Our telephone number is (604)535-2597. Our fiscal year end is May 31. Until recently, we were a wholly owned subsidiary of Mantra Venture Group Ltd., a British Columbia company with its stock quoted on the OTC Bulletin Board. In August of 2010, we began issuing securities to various shareholders in private transactions, exempt from registration. As of the filing of this Registration Statement Mantra Venture Group Ltd., still owns approximately 65% of our issued and outstanding common stock. We are a start up, development stage company. We have only recently begun operations, have limited revenues, and therefore rely upon the sale of our securities to fund our operations. We have a going concern uncertainty as of the date of our most recent financial statements. We currently distribute and install light emitting diode (LED) lighting solutions. Our goal is to provide clients with economical lighting solutions that save electric energy and reduce overall power consumption. Currently we have entered into a number of distribution agreements with manufacturers of LED technology and distribute their products to our clients in North America. As our business grows, we intend to license LED technology where we deem it to be the most efficient and manufacture our own products in certain segments. We are initially focusing on several markets, including agricultural applications, industrial, municipal, state and government projects. Agricultural lighting includes lighting for indoor hot houses which provide light to grow agricultural crops. Municipal projects primarily involve street lighting. We believe that the replacement of traditional lighting with LED solutions for municipalities and cities will save millions in power and maintenance costs. We are also pursuing potential industrial projects which will include explosion proof lighting for mines and industrial facilities as well as commercial projects which include chain resellers and warehousing. We are not a blank check company. Rule 419 of Regulation C under the Securities Act of 1933 defines a blank check company as a (i) development stage company that has no specific business plan or purpose or has indicated that its business plan is to engage in a merger or acquisition with an unidentified company or companies, or other entity or person, and (ii) is issuing a penny stock. Accordingly, we do not believe that our company may be classified as a blank check company because we intend to engage in a specific business plan and do not intend to engage in any merger or acquisition with an unidentified company or other entity. The Offering The 15,605,000 shares of our common stock being registered by this Prospectus represent approximately 34% of our issued and outstanding common stock as of July 13, 2011. Securities Offered: 15,605,000 shares of common stock offered by 31 selling security holders. Initial Offering Price: The $0.10 per share initial offering price of our common stock was determined by our Board of Directors based on several factors, including our capital structure and the most recent selling price of 1,305,000 shares of our common stock in private placements for $0.10 per share on May 10, 2011. The selling security holders will sell at an initial price of $0.10 per share until our common stock is quoted on the OTC Bulletin Board and thereafter at prevailing market prices or privately negotiated prices. However, there can be no assurance that our common stock will ever become quoted on the OTC Bulletin Board. Minimum Number of Securities to be Sold in this Offering: None Securities Issued and to be Issued: As of July 13, 2011 we had 46,265,000 issued and outstanding shares of our common stock, and no issued and outstanding convertible securities. All of the common stock to be registered under this Prospectus will be registered by existing stockholders. There is no established market for the common stock being registered. We intend to engage a market maker to apply to have our common stock quoted on the OTC Bulletin Board. This process usually takes at least 60 days and the application must be made on our behalf by a market maker. We have not yet engaged a market maker to file our application. If our common stock becomes quoted and a market for the stock develops, the actual price of the shares will be determined by prevailing market prices at the time of the sale. The trading of securities on the OTC Bulletin Board is often sporadic and investors may have difficulty buying and selling or obtaining market quotations, which may have a depressive effect on the market price for our common stock. Proceeds: We will not receive any proceeds from the sale of our common stock by the selling security holders. Financial Summary Information All references to currency in this Prospectus are to U.S. Dollars, unless otherwise noted. The following table sets forth selected financial information, which should be read in conjunction with the information set forth in the "Management s Discussion and Analysis of Financial Position and Results of Operations" section and the accompanying financial statements and related notes included elsewhere in this Prospectus. Statement of Operations Data Year Ended May 31, 2010 ($) Nine month period ended February 28, 2011 (unaudited) ($) Period from inception on July 17, 2007 to February 28, 2011 (unaudited) ($) Revenues 2,258 2,258 Expenses 498 109,371 127,047 Net Loss (498 ) (109,080 ) (126,756 ) Net Loss per share Balance Sheet Data May 31, 2010 ($) February 28, 2011 (unaudited) ($) Working Capital (Deficiency) (17,666 ) 54,054 Total Assets 16 105,088 Total Current Liabilities 17,682 51,034
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+consolidated financial statements included elsewhere in this prospectus. This summary may not contain all of the information that may be important to you. You should carefully read this entire prospectus, including the section entitled Risk Factors and our consolidated financial statements and notes to those statements. As used in this prospectus, unless the context otherwise requires, all references to we, us, our, our company or the company refer to FriendFinder Networks Inc. and, where appropriate, our consolidated direct and indirect subsidiaries, except where it is clear that the terms mean only FriendFinder Networks Inc. The term INI refers to our subsidiary and co-issuer of the Registrable Notes, Interactive Network, Inc. References to our common stock refer only to our voting common stock and except as otherwise noted, such references do not include our Series B common stock or our preferred common stock. Except where we state otherwise, the information presented in this prospectus reflects (i) the amendment and restatement of our bylaws, effective upon the consummation of our initial public offering on May 16, 2011, and (ii) the amendment and restatement of our articles of incorporation, which became effective on January 25, 2010. About Our Company FriendFinder Networks Inc. is a leading internet and technology company providing services in the rapidly expanding markets of social networking and web-based video sharing. Our business consists of creating and operating technology platforms which run several of the most heavily visited websites in the world. Through our extensive network of more than 44,000 websites, since our inception, we have built a base of more than 484 million registrants and more than 320 million members in more than 200 countries. We are able to create and maintain, in a cost-effective manner, websites intended to appeal to users of diverse cultures and interest groups. In December 2010, we had more than 196 million unique visitors to our network of websites, according to comScore. We offer our members a wide variety of online services so that they can interact with each other and access the content available on our websites. Our most heavily visited websites include AdultFriendFinder.com, Amigos.com, AsiaFriendFinder.com, Cams.com, FriendFinder.com, BigChurch.com and SeniorFriendFinder.com. For the nine months ended September 30, 2011, we had net revenue, income from operations and net losses of $249.6 million, $52.4 million and $(20.9) million, respectively. For the year ended December 31, 2010, we had net revenue, income from operations and net losses of $346.0 million, $71.1 million and ($43.2) million, respectively. Our revenues to date have been primarily derived from online subscription and paid-usage for our products and services. These products and services are delivered primarily through two highly scalable revenue-generating technology platforms: Social Networking. Approximately 69% of our total net revenues for the nine months ended September 30, 2011 and 70% of our total net revenues for the year ended December 31, 2010 were generated through our targeted social networking technology platform. Our social networking technology platform provides users who register or purchase subscriptions to one or more of our websites with the ability to communicate and to establish new connections with other users via our personal chat rooms, instant messaging and e-mail applications and to create, post and view content of interest. We have been able to rapidly create and seamlessly maintain multiple websites tailored to specific categories or genres and designed to cater to targeted audiences with mutual interests. We believe that our ability to create and operate a diverse network of specific interest websites with unique, user-generated content in a cost-effective manner is a significant competitive differentiator that allows us to implement a subscription-fee based revenue model while many other popular social networking websites rely primarily upon free-access, advertising-based revenue models. Live Interactive Video. Approximately 24% of our total net revenues for the nine months ended September 30, 2011 and 22% of our total net revenues for the year ended December 31, 2010 were generated through our live interactive video technology platform. Our live interactive video technology platform is a live video broadcast platform that enables models to broadcast from independent studios throughout the world and interact with our users via instant messaging and video. We believe our live interactive video platform provides a unique offering including bi-directional and omni-directional video and interactive features that allow models to communicate with and attract users through a variety of mediums including blogs, newsletters and video. In addition, we believe the reliability of our live interactive video technology platform, which had approximately 99.1% uptime during 2010, is a key factor allowing us to maintain a large base of users. In addition to our revenue-generating technology platforms, we have invested significant time and resources into developing our back-end marketing, analytics and billing technologies, which are a key contributor to the success of our business. We have developed proprietary systems to allow our marketing affiliates to maximize their revenue for our mutual benefit. These systems include proprietary white-labeling solutions, in which we provide back-end technology solutions to permit affiliates and marketing partners to deliver our products and services while maintaining the affiliate s and marketing partner s own branding and style, self-optimizing ad spots, and a robust banner optimization engine that automatically chooses the best possible site and banner to promote in a given ad spot. Our marketing technology has also enabled the creation and continued growth of our network of more than 280,000 affiliates, which we believe is one of the largest of its kind in the world and a significant barrier to entry to potential and existing competitors. Similarly, our proprietary analytics technology provides us with an advantage relative to less sophisticated competitors by enabling us to estimate future revenue based on short-term response to our advertising campaigns, as well as providing for analysis of key data and metrics in order to optimize our marketing spend and maximize the revenues our websites generate. Our robust billing platform allows our customers to pay using many of the widely-adopted methods of e-commerce, both domestically as well as internationally. We categorize our users into five categories: visitors, registrants, members, subscribers and paid users. Visitors. Visitors are users who visit our websites but do not necessarily register. We believe we achieve large numbers of unique visitors because of our focus on continuously enhancing the user experience and expanding the breadth of our services. We had more than 196 million unique worldwide visitors in the month of December 2010, representing a growth of more than 300% from our approximately 46.9 million unique worldwide visitors in January 2009, according to comScore. Registrants. Registrants are visitors who complete a free registration form on one of our websites by giving basic identification information and submitting their e-mail address. For the nine months ended September 30, 2011, we averaged more than 6.4 million new registrations on our websites each month. For the year ended December 31, 2010, we averaged more than 6.4 million new registrations on our websites each month. Some of our registrants are also members, as described below. Members. Members are registrants who log into one of our websites and make use of our free products and services. For the nine months ended September 30, 2011, we averaged more than 4.0 million new members on our websites each month. For the year ended December 31, 2010, we averaged more than 3.9 million new members on our websites each month. Subscribers. Subscribers are members who purchase daily, three-day, weekly, monthly, quarterly, annual or lifetime subscriptions for one or more of our websites. Subscribers have full access to our websites and may access special features. For the nine months ended September 30, 2011, we had a monthly average of approximately 950 thousand and for the year ended December 31, 2010, we had a monthly average of approximately 1 million paying subscribers. Paid Users. Paid users are members who purchase products or services on a pay-by-usage basis. For the nine months ended September 30, 2011, we averaged approximately 2.9 million purchased minutes by paid users each month. For the year ended December 31, 2010, we averaged approximately 3.0 million purchased minutes by paid users each month. We focus on the following key business metrics to evaluate the effectiveness of our operating strategies. Average Revenue per Subscriber. We calculate average revenue per subscriber, or ARPU, by dividing net revenue for the period by the average number of subscribers in the period and by the number of months in the period. As such, our ARPU is a monthly calculation. For the nine months ended September 30, 2011, our average monthly revenue per subscriber was $20.22. For the year ended December 31, 2010, our average monthly revenue per subscriber was $20.49. Churn. Churn is calculated by dividing terminations of subscriptions during the period by the total number of subscribers at the beginning of that period. Our average monthly churn rate, which measures the rate UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 of loss of subscribers, for the nine months ended September 30, 2011 was 16.3% per month. Our average monthly churn rate for the year ended December 31, 2010 was 16.1% per month. Cost Per Gross Addition. Cost per gross addition, or CPGA, is calculated by adding affiliate commission expense plus ad buy expenses and dividing by new subscribers during the measurement period. Our CPGA for the nine months ended September 30, 2011 was $42.76. Our CPGA for the year ended December 31, 2010 was $47.25. Average Lifetime Net Revenue Per Subscriber. Average Lifetime Net Revenue Per Subscriber is calculated by multiplying the average lifetime (in months) of a subscriber by ARPU for the measurement period and then subtracting the CPGA for the measurement period. Our Average Lifetime Net Revenue Per Subscriber for the nine months ended September 30, 2011 was $81.06. Our Average Lifetime Net Revenue Per Subscriber for the year ended December 31, 2010 was $80.17. While we monitor many statistics in the overall management of our business, we believe that Average Lifetime Net Revenue Per Subscriber and the number of subscribers are particularly helpful metrics for gaining a meaningful understanding of our business as they provide an indication of total revenue and profit generated from our base of subscribers inclusive of affiliate commissions and advertising costs required to generate new subscriptions. In addition to our social networks and live interactive video platforms, we also offer professionally-generated content through our premium content technology platform and our non-internet entertainment business. Through websites such as Penthouse.com and HotBox.com, our subscribers and paid users have access to our collection of more than 15,000 hours of professional video, which includes our library of more than 800 standard and high-definition full-length feature films and one million professionally produced images. We began shooting all of our content in 3D in September 2010. Additionally, subscribers have access to editorial content, chat rooms and other interactive features. In addition to our online products and services, we also have a non-technology legacy entertainment business, in which we produce and distribute original pictorial and video content via traditional distribution channels including licensing and retail DVD channels, and license the globally-recognized Penthouse brand to a variety of consumer product companies and entertainment venues and public branded men s lifestyle magazines. Our Competitive Strengths We believe that we have the following competitive strengths that we can leverage to implement our strategy: Proprietary and Scalable Technology Platform. Our robust, proprietary and highly scalable technology platform supports our social networking, live interactive video and premium content websites. We are able to use our customized back-end interface to quickly and affordably generate new websites, launch new features and target new audiences at a relatively low incremental cost. We believe that our ability to create new websites and provide new features is crucial to cost-effectively maintaining our relationships with existing users and attracting new users. Paid Subscriber-Based Model. We operate social networking websites that allow our members to make connections with other members with whom they share common interests. Our paid subscriber-based model of social networking websites is distinctly different from the business models of other free social networking websites whose users access the websites to remain connected to their pre-existing friends and interest groups. Large and Diverse User Base. We operate some of the most heavily visited social networking websites in the world, currently adding on average more than 6.4 million new registrants and more than 4.0 million new members each month. Our websites are designed to appeal to individuals with a diversity of interests and backgrounds. We believe potential members are attracted to the opportunity to interact with other individuals by having access to our large, diverse user base. Large and Difficult to Replicate Affiliate Network and Significant Marketing Spend. Our marketing affiliates are companies that market our services on their websites, allowing us to market our brand beyond our established user base. As of September 30, 2011 and December 31, 2010, we had more than 280,000 participants in our marketing affiliate program from which we derive a substantial portion of our new members and approximately 46% of our net revenues for the nine months ended September 30, 2011 and 45% of our net revenues for the year ended December 31, 2010. We believe that the difficulty in building an affiliate network of this large size, together with our combined affiliate and advertising spend for the nine months ended September 30, 2011 and the year ended December 31, 2010 of $64.5 million and $103.5 million, respectively, presents a significant barrier to entry for potential competitors. Our Strategy Our goal is to enhance revenue opportunities while improving our profitability. We plan to achieve these goals using the following strategies: Convert Visitors, Registrants and Members into Subscribers or Paid Users. We continually seek to convert visitors, registrants and members into subscribers or paid users. We do this by constantly evaluating, adding and enhancing features on our websites to improve our users experience. Create Additional Websites and Diversify Offerings. We are constantly seeking to identify groups of sufficient size who share a common interest in order to create a website intended to appeal to their interests. Our extensive user database serves as an existing source of potential members and subscribers for new websites we create. Expand into and Monetize Current Foreign Markets. In 2010, nearly 71% of our members were outside the United States, but non-U.S. users accounted for less than half of our total net revenues. We seek to expand in selected geographic markets, including Southeast Europe, South America and Asia. Pursue Targeted Acquisitions. We intend to expand our business by acquiring and integrating additional social networking websites, technology platforms, owners, creators and distributors of content and payment processing and advertising businesses. Our management team possesses significant mergers and acquisitions and integration expertise and regularly screens the marketplace for strategic acquisition opportunities. Generate Online Advertising Revenue. To date, online advertising revenue has represented less than 0.1% of our net revenue, averaging approximately $8,000 per month in the nine months ended September 30, 2011 and $9,000 per month for the year ended December 31, 2010. With continued worldwide growth in this advertising segment, we see this as a significant growth opportunity. We believe that our broad and diverse user base represents a valuable asset that will provide opportunities for us to offer targeted online advertising to specific demographic groups. We intend to focus our advertising efforts on our general audience social networking websites and maintain our subscription-based model for our adult social networking websites. Our New Financing On October 27, 2010, we issued new debt to repay our then existing debt, which we refer to as the New Financing. We, along with our wholly-owned subsidiary Interactive Network, Inc., or INI, co-issued $305.0 million principal amount of the Senior Secured Notes, $13.8 million of the Cash Pay Notes, and $232.5 million of the Non-Cash Pay Notes. Our Initial Public Offering On May 16, 2011, we issued 5,000,000 shares of common stock at a price of $10.00 per share and completed our initial public offering (the IPO ). We raised gross proceeds of $50.0 million, less underwriting fees and commissions of 7.25% of the gross proceeds, or $3.6 million, and incurred other offering expenses of $2.9 million to be paid from the proceeds of the offering, resulting in $43.5 million of net proceeds. In addition, we had incurred and paid as of December 31, 2010, $13.3 million of offering costs, which were included in deferred offering costs in the accompanying balance sheet at December 31, 2010 and written off by a charge to capital in excess of par value in the quarter ended June 30, 2011. On May 19, 2011, we redeemed $37.8 million of our Senior Secured Notes and $1.7 million of our Cash Pay Notes for a total of $39.5 million principal amount of New Financing redeemed from the net proceeds of our IPO and incurred a loss on extinguishment of debt estimated to be approximately $7.3 million. As of September 30, 2011, the outstanding principal amounts of the Senior Secured Notes, Cash Pay Notes and Non-Cash Pay Notes were $235.3 million, $10.6 million and $250.9 million, respectively. Recent Developments In July 2011, we acquired, through one of our subsidiaries, PerfectMatch.com, an online relationship service helping adults seeking successful, lasting connections. We paid approximately $2.5 million in cash and stock to acquire the assets of the website. PerfectMatch.com uses the Duet Total Compatibility System, a system which analyzes the whole person to find friends, taking into account each member s personality, values and ideals, life and love-style preferences to identify and find the person right for them. The acquisition of this website and related assets adds to our portfolio of general audience social networking websites. In September 2011, we acquired, through one of our subsidiaries, BDM Global Ventures Ltd., the company which owns the operations of JigoCity. The acquisition was completed pursuant to an Agreement and Plan of Merger entered into on September 7, 2011 among us, JGC Holdings Limited, our wholly-owned subsidiary, BDM Global Ventures Limited, which we refer to as BDM, Global Investment Ventures LLC and Anthony R. Bobulinski, which we refer to as the Merger Agreement. Under the terms of the Merger Agreement, the shareholders of BDM, in exchange for their outstanding shares and options in BDM and its subsidiaries, received merger consideration consisting of 1,555,555, shares of our common stock, 500,000 of which will be held in escrow until no later than December 31, 2012, and warrants exercisable into 6,436,851 shares of our common stock with exercise prices ranging from $5-$18 per share with an expiration date of December 31, 2021. Pursuant to an equity put agreement we entered into, the shareholders of BDM have the option to sell all of the shares of our common stock and warrants issued as merger consideration back to us in exchange for the return of 70% of the equity in BDM if the volume-weighted average price of our common stock fails to equal or exceed $12.00 per share during any 10 trading day period principally between the closing date and the later of June 30, 2014 and the date upon which our current indentures are fully discharged, or if an indenture modification is made, as defined in the equity put agreement, the later of June 30, 2014 and the date the indenture modification takes place (the later date hereinafter referred to as the Vesting Date ). The equity put agreement provides that the put right shall become exercisable at the sole discretion of the shareholders appointed representative during the period commencing on the Vesting Date and expiring sixty (60) days thereafter. Additionally, if the shareholders of BDM exercise the put right, we have the right to pay them in our common stock and/or cash, having a combined value as of the later of the above dates equal to the product of (i) 2,209,414 shares of common stock (subject to dilutive adjustment) and (ii) the difference between the highest 10 day volume-weighted average price attained by our common stock during such period and $12.00, in which case the put right terminates. Pursuant to a registration rights agreement, we also granted demand registration rights under certain circumstances, with respect to the shares of our common stock and warrants issued as merger consideration. JigoCity is a global social commerce organization committed to providing members with high quality daily deals that are relevant to their individual lifestyles. The acquisition of JigoCity adds to our portfolio a social commerce company and what we believe will be an additional avenue to monetize our foreign markets. Our Corporate Information Our executive offices are located at 6800 Broken Sound Parkway, Suite 200, Boca Raton, Florida 33487 and our telephone number is (561) 912-7000. Our website address is www.ffn.com. The information contained in, or accessible through, our website is not part of this prospectus. 6800 Broken Sound Parkway, Suite 200 Boca Raton, Florida 33487 (561) 912-7000 (Address, including zip code, and telephone number, including area code, of registrant s principal executive offices)
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+consolidated financial statements included elsewhere in this prospectus. This summary may not contain all of the information that may be important to you. You should carefully read this entire prospectus, including the section entitled Risk Factors and our consolidated financial statements and notes to those statements. As used in this prospectus, unless the context otherwise requires, all references to we, us, our, our company or the company refer to FriendFinder Networks Inc. and, where appropriate, our consolidated direct and indirect subsidiaries, except where it is clear that the terms mean only FriendFinder Networks Inc. The term INI refers to our subsidiary and co-issuer of the Registrable Notes, Interactive Network, Inc. References to our common stock refer only to our voting common stock and except as otherwise noted, such references do not include our Series B common stock or our preferred common stock. Except where we state otherwise, the information presented in this prospectus reflects (i) the amendment and restatement of our bylaws, effective upon the consummation of our initial public offering on May 16, 2011, and (ii) the amendment and restatement of our articles of incorporation, which became effective on January 25, 2010. About Our Company FriendFinder Networks Inc. is a leading internet and technology company providing services in the rapidly expanding markets of social networking and web-based video sharing. Our business consists of creating and operating technology platforms which run several of the most heavily visited websites in the world. Through our extensive network of more than 44,000 websites, since our inception, we have built a base of more than 484 million registrants and more than 320 million members in more than 200 countries. We are able to create and maintain, in a cost-effective manner, websites intended to appeal to users of diverse cultures and interest groups. In December 2010, we had more than 196 million unique visitors to our network of websites, according to comScore. We offer our members a wide variety of online services so that they can interact with each other and access the content available on our websites. Our most heavily visited websites include AdultFriendFinder.com, Amigos.com, AsiaFriendFinder.com, Cams.com, FriendFinder.com, BigChurch.com and SeniorFriendFinder.com. For the nine months ended September 30, 2011, we had net revenue, income from operations and net losses of $249.6 million, $52.4 million and $(20.9) million, respectively. For the year ended December 31, 2010, we had net revenue, income from operations and net losses of $346.0 million, $71.1 million and ($43.2) million, respectively. Our revenues to date have been primarily derived from online subscription and paid-usage for our products and services. These products and services are delivered primarily through two highly scalable revenue-generating technology platforms: Social Networking. Approximately 69% of our total net revenues for the nine months ended September 30, 2011 and 70% of our total net revenues for the year ended December 31, 2010 were generated through our targeted social networking technology platform. Our social networking technology platform provides users who register or purchase subscriptions to one or more of our websites with the ability to communicate and to establish new connections with other users via our personal chat rooms, instant messaging and e-mail applications and to create, post and view content of interest. We have been able to rapidly create and seamlessly maintain multiple websites tailored to specific categories or genres and designed to cater to targeted audiences with mutual interests. We believe that our ability to create and operate a diverse network of specific interest websites with unique, user-generated content in a cost-effective manner is a significant competitive differentiator that allows us to implement a subscription-fee based revenue model while many other popular social networking websites rely primarily upon free-access, advertising-based revenue models. Live Interactive Video. Approximately 24% of our total net revenues for the nine months ended September 30, 2011 and 22% of our total net revenues for the year ended December 31, 2010 were generated through our live interactive video technology platform. Our live interactive video technology platform is a live video broadcast platform that enables models to broadcast from independent studios throughout the world and interact with our users via instant messaging and video. We believe our live interactive video platform provides a unique offering including bi-directional and omni-directional video and interactive features that allow models to communicate with and attract users through a variety of mediums including blogs, newsletters and video. In addition, we believe the reliability of our live interactive video technology platform, which had approximately 99.1% uptime during 2010, is a key factor allowing us to maintain a large base of users. In addition to our revenue-generating technology platforms, we have invested significant time and resources into developing our back-end marketing, analytics and billing technologies, which are a key contributor to the success of our business. We have developed proprietary systems to allow our marketing affiliates to maximize their revenue for our mutual benefit. These systems include proprietary white-labeling solutions, in which we provide back-end technology solutions to permit affiliates and marketing partners to deliver our products and services while maintaining the affiliate s and marketing partner s own branding and style, self-optimizing ad spots, and a robust banner optimization engine that automatically chooses the best possible site and banner to promote in a given ad spot. Our marketing technology has also enabled the creation and continued growth of our network of more than 280,000 affiliates, which we believe is one of the largest of its kind in the world and a significant barrier to entry to potential and existing competitors. Similarly, our proprietary analytics technology provides us with an advantage relative to less sophisticated competitors by enabling us to estimate future revenue based on short-term response to our advertising campaigns, as well as providing for analysis of key data and metrics in order to optimize our marketing spend and maximize the revenues our websites generate. Our robust billing platform allows our customers to pay using many of the widely-adopted methods of e-commerce, both domestically as well as internationally. We categorize our users into five categories: visitors, registrants, members, subscribers and paid users. Visitors. Visitors are users who visit our websites but do not necessarily register. We believe we achieve large numbers of unique visitors because of our focus on continuously enhancing the user experience and expanding the breadth of our services. We had more than 196 million unique worldwide visitors in the month of December 2010, representing a growth of more than 300% from our approximately 46.9 million unique worldwide visitors in January 2009, according to comScore. Registrants. Registrants are visitors who complete a free registration form on one of our websites by giving basic identification information and submitting their e-mail address. For the nine months ended September 30, 2011, we averaged more than 6.4 million new registrations on our websites each month. For the year ended December 31, 2010, we averaged more than 6.4 million new registrations on our websites each month. Some of our registrants are also members, as described below. Members. Members are registrants who log into one of our websites and make use of our free products and services. For the nine months ended September 30, 2011, we averaged more than 4.0 million new members on our websites each month. For the year ended December 31, 2010, we averaged more than 3.9 million new members on our websites each month. Subscribers. Subscribers are members who purchase daily, three-day, weekly, monthly, quarterly, annual or lifetime subscriptions for one or more of our websites. Subscribers have full access to our websites and may access special features. For the nine months ended September 30, 2011, we had a monthly average of approximately 950 thousand and for the year ended December 31, 2010, we had a monthly average of approximately 1 million paying subscribers. Paid Users. Paid users are members who purchase products or services on a pay-by-usage basis. For the nine months ended September 30, 2011, we averaged approximately 2.9 million purchased minutes by paid users each month. For the year ended December 31, 2010, we averaged approximately 3.0 million purchased minutes by paid users each month. We focus on the following key business metrics to evaluate the effectiveness of our operating strategies. Average Revenue per Subscriber. We calculate average revenue per subscriber, or ARPU, by dividing net revenue for the period by the average number of subscribers in the period and by the number of months in the period. As such, our ARPU is a monthly calculation. For the nine months ended September 30, 2011, our average monthly revenue per subscriber was $20.22. For the year ended December 31, 2010, our average monthly revenue per subscriber was $20.49. Churn. Churn is calculated by dividing terminations of subscriptions during the period by the total number of subscribers at the beginning of that period. Our average monthly churn rate, which measures the rate UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 of loss of subscribers, for the nine months ended September 30, 2011 was 16.3% per month. Our average monthly churn rate for the year ended December 31, 2010 was 16.1% per month. Cost Per Gross Addition. Cost per gross addition, or CPGA, is calculated by adding affiliate commission expense plus ad buy expenses and dividing by new subscribers during the measurement period. Our CPGA for the nine months ended September 30, 2011 was $42.76. Our CPGA for the year ended December 31, 2010 was $47.25. Average Lifetime Net Revenue Per Subscriber. Average Lifetime Net Revenue Per Subscriber is calculated by multiplying the average lifetime (in months) of a subscriber by ARPU for the measurement period and then subtracting the CPGA for the measurement period. Our Average Lifetime Net Revenue Per Subscriber for the nine months ended September 30, 2011 was $81.06. Our Average Lifetime Net Revenue Per Subscriber for the year ended December 31, 2010 was $80.17. While we monitor many statistics in the overall management of our business, we believe that Average Lifetime Net Revenue Per Subscriber and the number of subscribers are particularly helpful metrics for gaining a meaningful understanding of our business as they provide an indication of total revenue and profit generated from our base of subscribers inclusive of affiliate commissions and advertising costs required to generate new subscriptions. In addition to our social networks and live interactive video platforms, we also offer professionally-generated content through our premium content technology platform and our non-internet entertainment business. Through websites such as Penthouse.com and HotBox.com, our subscribers and paid users have access to our collection of more than 15,000 hours of professional video, which includes our library of more than 800 standard and high-definition full-length feature films and one million professionally produced images. We began shooting all of our content in 3D in September 2010. Additionally, subscribers have access to editorial content, chat rooms and other interactive features. In addition to our online products and services, we also have a non-technology legacy entertainment business, in which we produce and distribute original pictorial and video content via traditional distribution channels including licensing and retail DVD channels, and license the globally-recognized Penthouse brand to a variety of consumer product companies and entertainment venues and public branded men s lifestyle magazines. Our Competitive Strengths We believe that we have the following competitive strengths that we can leverage to implement our strategy: Proprietary and Scalable Technology Platform. Our robust, proprietary and highly scalable technology platform supports our social networking, live interactive video and premium content websites. We are able to use our customized back-end interface to quickly and affordably generate new websites, launch new features and target new audiences at a relatively low incremental cost. We believe that our ability to create new websites and provide new features is crucial to cost-effectively maintaining our relationships with existing users and attracting new users. Paid Subscriber-Based Model. We operate social networking websites that allow our members to make connections with other members with whom they share common interests. Our paid subscriber-based model of social networking websites is distinctly different from the business models of other free social networking websites whose users access the websites to remain connected to their pre-existing friends and interest groups. Large and Diverse User Base. We operate some of the most heavily visited social networking websites in the world, currently adding on average more than 6.4 million new registrants and more than 4.0 million new members each month. Our websites are designed to appeal to individuals with a diversity of interests and backgrounds. We believe potential members are attracted to the opportunity to interact with other individuals by having access to our large, diverse user base. Large and Difficult to Replicate Affiliate Network and Significant Marketing Spend. Our marketing affiliates are companies that market our services on their websites, allowing us to market our brand beyond our established user base. As of September 30, 2011 and December 31, 2010, we had more than 280,000 participants in our marketing affiliate program from which we derive a substantial portion of our new members and approximately 46% of our net revenues for the nine months ended September 30, 2011 and 45% of our net revenues for the year ended December 31, 2010. We believe that the difficulty in building an affiliate network of this large size, together with our combined affiliate and advertising spend for the nine months ended September 30, 2011 and the year ended December 31, 2010 of $64.5 million and $103.5 million, respectively, presents a significant barrier to entry for potential competitors. Our Strategy Our goal is to enhance revenue opportunities while improving our profitability. We plan to achieve these goals using the following strategies: Convert Visitors, Registrants and Members into Subscribers or Paid Users. We continually seek to convert visitors, registrants and members into subscribers or paid users. We do this by constantly evaluating, adding and enhancing features on our websites to improve our users experience. Create Additional Websites and Diversify Offerings. We are constantly seeking to identify groups of sufficient size who share a common interest in order to create a website intended to appeal to their interests. Our extensive user database serves as an existing source of potential members and subscribers for new websites we create. Expand into and Monetize Current Foreign Markets. In 2010, nearly 71% of our members were outside the United States, but non-U.S. users accounted for less than half of our total net revenues. We seek to expand in selected geographic markets, including Southeast Europe, South America and Asia. Pursue Targeted Acquisitions. We intend to expand our business by acquiring and integrating additional social networking websites, technology platforms, owners, creators and distributors of content and payment processing and advertising businesses. Our management team possesses significant mergers and acquisitions and integration expertise and regularly screens the marketplace for strategic acquisition opportunities. Generate Online Advertising Revenue. To date, online advertising revenue has represented less than 0.1% of our net revenue, averaging approximately $8,000 per month in the nine months ended September 30, 2011 and $9,000 per month for the year ended December 31, 2010. With continued worldwide growth in this advertising segment, we see this as a significant growth opportunity. We believe that our broad and diverse user base represents a valuable asset that will provide opportunities for us to offer targeted online advertising to specific demographic groups. We intend to focus our advertising efforts on our general audience social networking websites and maintain our subscription-based model for our adult social networking websites. Our New Financing On October 27, 2010, we issued new debt to repay our then existing debt, which we refer to as the New Financing. We, along with our wholly-owned subsidiary Interactive Network, Inc., or INI, co-issued $305.0 million principal amount of the Senior Secured Notes, $13.8 million of the Cash Pay Notes, and $232.5 million of the Non-Cash Pay Notes. Our Initial Public Offering On May 16, 2011, we issued 5,000,000 shares of common stock at a price of $10.00 per share and completed our initial public offering (the IPO ). We raised gross proceeds of $50.0 million, less underwriting fees and commissions of 7.25% of the gross proceeds, or $3.6 million, and incurred other offering expenses of $2.9 million to be paid from the proceeds of the offering, resulting in $43.5 million of net proceeds. In addition, we had incurred and paid as of December 31, 2010, $13.3 million of offering costs, which were included in deferred offering costs in the accompanying balance sheet at December 31, 2010 and written off by a charge to capital in excess of par value in the quarter ended June 30, 2011. On May 19, 2011, we redeemed $37.8 million of our Senior Secured Notes and $1.7 million of our Cash Pay Notes for a total of $39.5 million principal amount of New Financing redeemed from the net proceeds of our IPO and incurred a loss on extinguishment of debt estimated to be approximately $7.3 million. As of September 30, 2011, the outstanding principal amounts of the Senior Secured Notes, Cash Pay Notes and Non-Cash Pay Notes were $235.3 million, $10.6 million and $250.9 million, respectively. Recent Developments In July 2011, we acquired, through one of our subsidiaries, PerfectMatch.com, an online relationship service helping adults seeking successful, lasting connections. We paid approximately $2.5 million in cash and stock to acquire the assets of the website. PerfectMatch.com uses the Duet Total Compatibility System, a system which analyzes the whole person to find friends, taking into account each member s personality, values and ideals, life and love-style preferences to identify and find the person right for them. The acquisition of this website and related assets adds to our portfolio of general audience social networking websites. In September 2011, we acquired, through one of our subsidiaries, BDM Global Ventures Ltd., the company which owns the operations of JigoCity. The acquisition was completed pursuant to an Agreement and Plan of Merger entered into on September 7, 2011 among us, JGC Holdings Limited, our wholly-owned subsidiary, BDM Global Ventures Limited, which we refer to as BDM, Global Investment Ventures LLC and Anthony R. Bobulinski, which we refer to as the Merger Agreement. Under the terms of the Merger Agreement, the shareholders of BDM, in exchange for their outstanding shares and options in BDM and its subsidiaries, received merger consideration consisting of 1,555,555, shares of our common stock, 500,000 of which will be held in escrow until no later than December 31, 2012, and warrants exercisable into 6,436,851 shares of our common stock with exercise prices ranging from $5-$18 per share with an expiration date of December 31, 2021. Pursuant to an equity put agreement we entered into, the shareholders of BDM have the option to sell all of the shares of our common stock and warrants issued as merger consideration back to us in exchange for the return of 70% of the equity in BDM if the volume-weighted average price of our common stock fails to equal or exceed $12.00 per share during any 10 trading day period principally between the closing date and the later of June 30, 2014 and the date upon which our current indentures are fully discharged, or if an indenture modification is made, as defined in the equity put agreement, the later of June 30, 2014 and the date the indenture modification takes place (the later date hereinafter referred to as the Vesting Date ). The equity put agreement provides that the put right shall become exercisable at the sole discretion of the shareholders appointed representative during the period commencing on the Vesting Date and expiring sixty (60) days thereafter. Additionally, if the shareholders of BDM exercise the put right, we have the right to pay them in our common stock and/or cash, having a combined value as of the later of the above dates equal to the product of (i) 2,209,414 shares of common stock (subject to dilutive adjustment) and (ii) the difference between the highest 10 day volume-weighted average price attained by our common stock during such period and $12.00, in which case the put right terminates. Pursuant to a registration rights agreement, we also granted demand registration rights under certain circumstances, with respect to the shares of our common stock and warrants issued as merger consideration. JigoCity is a global social commerce organization committed to providing members with high quality daily deals that are relevant to their individual lifestyles. The acquisition of JigoCity adds to our portfolio a social commerce company and what we believe will be an additional avenue to monetize our foreign markets. Our Corporate Information Our executive offices are located at 6800 Broken Sound Parkway, Suite 200, Boca Raton, Florida 33487 and our telephone number is (561) 912-7000. Our website address is www.ffn.com. The information contained in, or accessible through, our website is not part of this prospectus. 6800 Broken Sound Parkway, Suite 200 Boca Raton, Florida 33487 (561) 912-7000 (Address, including zip code, and telephone number, including area code, of registrant s principal executive offices)
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001525620_playtime_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001525620_playtime_prospectus_summary.txt
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+consolidated financial statements included elsewhere in this prospectus. This summary may not contain all of the information that may be important to you. You should carefully read this entire prospectus, including the section entitled Risk Factors and our consolidated financial statements and notes to those statements. As used in this prospectus, unless the context otherwise requires, all references to we, us, our, our company or the company refer to FriendFinder Networks Inc. and, where appropriate, our consolidated direct and indirect subsidiaries, except where it is clear that the terms mean only FriendFinder Networks Inc. The term INI refers to our subsidiary and co-issuer of the Registrable Notes, Interactive Network, Inc. References to our common stock refer only to our voting common stock and except as otherwise noted, such references do not include our Series B common stock or our preferred common stock. Except where we state otherwise, the information presented in this prospectus reflects (i) the amendment and restatement of our bylaws, effective upon the consummation of our initial public offering on May 16, 2011, and (ii) the amendment and restatement of our articles of incorporation, which became effective on January 25, 2010. About Our Company FriendFinder Networks Inc. is a leading internet and technology company providing services in the rapidly expanding markets of social networking and web-based video sharing. Our business consists of creating and operating technology platforms which run several of the most heavily visited websites in the world. Through our extensive network of more than 44,000 websites, since our inception, we have built a base of more than 484 million registrants and more than 320 million members in more than 200 countries. We are able to create and maintain, in a cost-effective manner, websites intended to appeal to users of diverse cultures and interest groups. In December 2010, we had more than 196 million unique visitors to our network of websites, according to comScore. We offer our members a wide variety of online services so that they can interact with each other and access the content available on our websites. Our most heavily visited websites include AdultFriendFinder.com, Amigos.com, AsiaFriendFinder.com, Cams.com, FriendFinder.com, BigChurch.com and SeniorFriendFinder.com. For the nine months ended September 30, 2011, we had net revenue, income from operations and net losses of $249.6 million, $52.4 million and $(20.9) million, respectively. For the year ended December 31, 2010, we had net revenue, income from operations and net losses of $346.0 million, $71.1 million and ($43.2) million, respectively. Our revenues to date have been primarily derived from online subscription and paid-usage for our products and services. These products and services are delivered primarily through two highly scalable revenue-generating technology platforms: Social Networking. Approximately 69% of our total net revenues for the nine months ended September 30, 2011 and 70% of our total net revenues for the year ended December 31, 2010 were generated through our targeted social networking technology platform. Our social networking technology platform provides users who register or purchase subscriptions to one or more of our websites with the ability to communicate and to establish new connections with other users via our personal chat rooms, instant messaging and e-mail applications and to create, post and view content of interest. We have been able to rapidly create and seamlessly maintain multiple websites tailored to specific categories or genres and designed to cater to targeted audiences with mutual interests. We believe that our ability to create and operate a diverse network of specific interest websites with unique, user-generated content in a cost-effective manner is a significant competitive differentiator that allows us to implement a subscription-fee based revenue model while many other popular social networking websites rely primarily upon free-access, advertising-based revenue models. Live Interactive Video. Approximately 24% of our total net revenues for the nine months ended September 30, 2011 and 22% of our total net revenues for the year ended December 31, 2010 were generated through our live interactive video technology platform. Our live interactive video technology platform is a live video broadcast platform that enables models to broadcast from independent studios throughout the world and interact with our users via instant messaging and video. We believe our live interactive video platform provides a unique offering including bi-directional and omni-directional video and interactive features that allow models to communicate with and attract users through a variety of mediums including blogs, newsletters and video. In addition, we believe the reliability of our live interactive video technology platform, which had approximately 99.1% uptime during 2010, is a key factor allowing us to maintain a large base of users. In addition to our revenue-generating technology platforms, we have invested significant time and resources into developing our back-end marketing, analytics and billing technologies, which are a key contributor to the success of our business. We have developed proprietary systems to allow our marketing affiliates to maximize their revenue for our mutual benefit. These systems include proprietary white-labeling solutions, in which we provide back-end technology solutions to permit affiliates and marketing partners to deliver our products and services while maintaining the affiliate s and marketing partner s own branding and style, self-optimizing ad spots, and a robust banner optimization engine that automatically chooses the best possible site and banner to promote in a given ad spot. Our marketing technology has also enabled the creation and continued growth of our network of more than 280,000 affiliates, which we believe is one of the largest of its kind in the world and a significant barrier to entry to potential and existing competitors. Similarly, our proprietary analytics technology provides us with an advantage relative to less sophisticated competitors by enabling us to estimate future revenue based on short-term response to our advertising campaigns, as well as providing for analysis of key data and metrics in order to optimize our marketing spend and maximize the revenues our websites generate. Our robust billing platform allows our customers to pay using many of the widely-adopted methods of e-commerce, both domestically as well as internationally. We categorize our users into five categories: visitors, registrants, members, subscribers and paid users. Visitors. Visitors are users who visit our websites but do not necessarily register. We believe we achieve large numbers of unique visitors because of our focus on continuously enhancing the user experience and expanding the breadth of our services. We had more than 196 million unique worldwide visitors in the month of December 2010, representing a growth of more than 300% from our approximately 46.9 million unique worldwide visitors in January 2009, according to comScore. Registrants. Registrants are visitors who complete a free registration form on one of our websites by giving basic identification information and submitting their e-mail address. For the nine months ended September 30, 2011, we averaged more than 6.4 million new registrations on our websites each month. For the year ended December 31, 2010, we averaged more than 6.4 million new registrations on our websites each month. Some of our registrants are also members, as described below. Members. Members are registrants who log into one of our websites and make use of our free products and services. For the nine months ended September 30, 2011, we averaged more than 4.0 million new members on our websites each month. For the year ended December 31, 2010, we averaged more than 3.9 million new members on our websites each month. Subscribers. Subscribers are members who purchase daily, three-day, weekly, monthly, quarterly, annual or lifetime subscriptions for one or more of our websites. Subscribers have full access to our websites and may access special features. For the nine months ended September 30, 2011, we had a monthly average of approximately 950 thousand and for the year ended December 31, 2010, we had a monthly average of approximately 1 million paying subscribers. Paid Users. Paid users are members who purchase products or services on a pay-by-usage basis. For the nine months ended September 30, 2011, we averaged approximately 2.9 million purchased minutes by paid users each month. For the year ended December 31, 2010, we averaged approximately 3.0 million purchased minutes by paid users each month. We focus on the following key business metrics to evaluate the effectiveness of our operating strategies. Average Revenue per Subscriber. We calculate average revenue per subscriber, or ARPU, by dividing net revenue for the period by the average number of subscribers in the period and by the number of months in the period. As such, our ARPU is a monthly calculation. For the nine months ended September 30, 2011, our average monthly revenue per subscriber was $20.22. For the year ended December 31, 2010, our average monthly revenue per subscriber was $20.49. Churn. Churn is calculated by dividing terminations of subscriptions during the period by the total number of subscribers at the beginning of that period. Our average monthly churn rate, which measures the rate UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 of loss of subscribers, for the nine months ended September 30, 2011 was 16.3% per month. Our average monthly churn rate for the year ended December 31, 2010 was 16.1% per month. Cost Per Gross Addition. Cost per gross addition, or CPGA, is calculated by adding affiliate commission expense plus ad buy expenses and dividing by new subscribers during the measurement period. Our CPGA for the nine months ended September 30, 2011 was $42.76. Our CPGA for the year ended December 31, 2010 was $47.25. Average Lifetime Net Revenue Per Subscriber. Average Lifetime Net Revenue Per Subscriber is calculated by multiplying the average lifetime (in months) of a subscriber by ARPU for the measurement period and then subtracting the CPGA for the measurement period. Our Average Lifetime Net Revenue Per Subscriber for the nine months ended September 30, 2011 was $81.06. Our Average Lifetime Net Revenue Per Subscriber for the year ended December 31, 2010 was $80.17. While we monitor many statistics in the overall management of our business, we believe that Average Lifetime Net Revenue Per Subscriber and the number of subscribers are particularly helpful metrics for gaining a meaningful understanding of our business as they provide an indication of total revenue and profit generated from our base of subscribers inclusive of affiliate commissions and advertising costs required to generate new subscriptions. In addition to our social networks and live interactive video platforms, we also offer professionally-generated content through our premium content technology platform and our non-internet entertainment business. Through websites such as Penthouse.com and HotBox.com, our subscribers and paid users have access to our collection of more than 15,000 hours of professional video, which includes our library of more than 800 standard and high-definition full-length feature films and one million professionally produced images. We began shooting all of our content in 3D in September 2010. Additionally, subscribers have access to editorial content, chat rooms and other interactive features. In addition to our online products and services, we also have a non-technology legacy entertainment business, in which we produce and distribute original pictorial and video content via traditional distribution channels including licensing and retail DVD channels, and license the globally-recognized Penthouse brand to a variety of consumer product companies and entertainment venues and public branded men s lifestyle magazines. Our Competitive Strengths We believe that we have the following competitive strengths that we can leverage to implement our strategy: Proprietary and Scalable Technology Platform. Our robust, proprietary and highly scalable technology platform supports our social networking, live interactive video and premium content websites. We are able to use our customized back-end interface to quickly and affordably generate new websites, launch new features and target new audiences at a relatively low incremental cost. We believe that our ability to create new websites and provide new features is crucial to cost-effectively maintaining our relationships with existing users and attracting new users. Paid Subscriber-Based Model. We operate social networking websites that allow our members to make connections with other members with whom they share common interests. Our paid subscriber-based model of social networking websites is distinctly different from the business models of other free social networking websites whose users access the websites to remain connected to their pre-existing friends and interest groups. Large and Diverse User Base. We operate some of the most heavily visited social networking websites in the world, currently adding on average more than 6.4 million new registrants and more than 4.0 million new members each month. Our websites are designed to appeal to individuals with a diversity of interests and backgrounds. We believe potential members are attracted to the opportunity to interact with other individuals by having access to our large, diverse user base. Large and Difficult to Replicate Affiliate Network and Significant Marketing Spend. Our marketing affiliates are companies that market our services on their websites, allowing us to market our brand beyond our established user base. As of September 30, 2011 and December 31, 2010, we had more than 280,000 participants in our marketing affiliate program from which we derive a substantial portion of our new members and approximately 46% of our net revenues for the nine months ended September 30, 2011 and 45% of our net revenues for the year ended December 31, 2010. We believe that the difficulty in building an affiliate network of this large size, together with our combined affiliate and advertising spend for the nine months ended September 30, 2011 and the year ended December 31, 2010 of $64.5 million and $103.5 million, respectively, presents a significant barrier to entry for potential competitors. Our Strategy Our goal is to enhance revenue opportunities while improving our profitability. We plan to achieve these goals using the following strategies: Convert Visitors, Registrants and Members into Subscribers or Paid Users. We continually seek to convert visitors, registrants and members into subscribers or paid users. We do this by constantly evaluating, adding and enhancing features on our websites to improve our users experience. Create Additional Websites and Diversify Offerings. We are constantly seeking to identify groups of sufficient size who share a common interest in order to create a website intended to appeal to their interests. Our extensive user database serves as an existing source of potential members and subscribers for new websites we create. Expand into and Monetize Current Foreign Markets. In 2010, nearly 71% of our members were outside the United States, but non-U.S. users accounted for less than half of our total net revenues. We seek to expand in selected geographic markets, including Southeast Europe, South America and Asia. Pursue Targeted Acquisitions. We intend to expand our business by acquiring and integrating additional social networking websites, technology platforms, owners, creators and distributors of content and payment processing and advertising businesses. Our management team possesses significant mergers and acquisitions and integration expertise and regularly screens the marketplace for strategic acquisition opportunities. Generate Online Advertising Revenue. To date, online advertising revenue has represented less than 0.1% of our net revenue, averaging approximately $8,000 per month in the nine months ended September 30, 2011 and $9,000 per month for the year ended December 31, 2010. With continued worldwide growth in this advertising segment, we see this as a significant growth opportunity. We believe that our broad and diverse user base represents a valuable asset that will provide opportunities for us to offer targeted online advertising to specific demographic groups. We intend to focus our advertising efforts on our general audience social networking websites and maintain our subscription-based model for our adult social networking websites. Our New Financing On October 27, 2010, we issued new debt to repay our then existing debt, which we refer to as the New Financing. We, along with our wholly-owned subsidiary Interactive Network, Inc., or INI, co-issued $305.0 million principal amount of the Senior Secured Notes, $13.8 million of the Cash Pay Notes, and $232.5 million of the Non-Cash Pay Notes. Our Initial Public Offering On May 16, 2011, we issued 5,000,000 shares of common stock at a price of $10.00 per share and completed our initial public offering (the IPO ). We raised gross proceeds of $50.0 million, less underwriting fees and commissions of 7.25% of the gross proceeds, or $3.6 million, and incurred other offering expenses of $2.9 million to be paid from the proceeds of the offering, resulting in $43.5 million of net proceeds. In addition, we had incurred and paid as of December 31, 2010, $13.3 million of offering costs, which were included in deferred offering costs in the accompanying balance sheet at December 31, 2010 and written off by a charge to capital in excess of par value in the quarter ended June 30, 2011. On May 19, 2011, we redeemed $37.8 million of our Senior Secured Notes and $1.7 million of our Cash Pay Notes for a total of $39.5 million principal amount of New Financing redeemed from the net proceeds of our IPO and incurred a loss on extinguishment of debt estimated to be approximately $7.3 million. As of September 30, 2011, the outstanding principal amounts of the Senior Secured Notes, Cash Pay Notes and Non-Cash Pay Notes were $235.3 million, $10.6 million and $250.9 million, respectively. Recent Developments In July 2011, we acquired, through one of our subsidiaries, PerfectMatch.com, an online relationship service helping adults seeking successful, lasting connections. We paid approximately $2.5 million in cash and stock to acquire the assets of the website. PerfectMatch.com uses the Duet Total Compatibility System, a system which analyzes the whole person to find friends, taking into account each member s personality, values and ideals, life and love-style preferences to identify and find the person right for them. The acquisition of this website and related assets adds to our portfolio of general audience social networking websites. In September 2011, we acquired, through one of our subsidiaries, BDM Global Ventures Ltd., the company which owns the operations of JigoCity. The acquisition was completed pursuant to an Agreement and Plan of Merger entered into on September 7, 2011 among us, JGC Holdings Limited, our wholly-owned subsidiary, BDM Global Ventures Limited, which we refer to as BDM, Global Investment Ventures LLC and Anthony R. Bobulinski, which we refer to as the Merger Agreement. Under the terms of the Merger Agreement, the shareholders of BDM, in exchange for their outstanding shares and options in BDM and its subsidiaries, received merger consideration consisting of 1,555,555, shares of our common stock, 500,000 of which will be held in escrow until no later than December 31, 2012, and warrants exercisable into 6,436,851 shares of our common stock with exercise prices ranging from $5-$18 per share with an expiration date of December 31, 2021. Pursuant to an equity put agreement we entered into, the shareholders of BDM have the option to sell all of the shares of our common stock and warrants issued as merger consideration back to us in exchange for the return of 70% of the equity in BDM if the volume-weighted average price of our common stock fails to equal or exceed $12.00 per share during any 10 trading day period principally between the closing date and the later of June 30, 2014 and the date upon which our current indentures are fully discharged, or if an indenture modification is made, as defined in the equity put agreement, the later of June 30, 2014 and the date the indenture modification takes place (the later date hereinafter referred to as the Vesting Date ). The equity put agreement provides that the put right shall become exercisable at the sole discretion of the shareholders appointed representative during the period commencing on the Vesting Date and expiring sixty (60) days thereafter. Additionally, if the shareholders of BDM exercise the put right, we have the right to pay them in our common stock and/or cash, having a combined value as of the later of the above dates equal to the product of (i) 2,209,414 shares of common stock (subject to dilutive adjustment) and (ii) the difference between the highest 10 day volume-weighted average price attained by our common stock during such period and $12.00, in which case the put right terminates. Pursuant to a registration rights agreement, we also granted demand registration rights under certain circumstances, with respect to the shares of our common stock and warrants issued as merger consideration. JigoCity is a global social commerce organization committed to providing members with high quality daily deals that are relevant to their individual lifestyles. The acquisition of JigoCity adds to our portfolio a social commerce company and what we believe will be an additional avenue to monetize our foreign markets. Our Corporate Information Our executive offices are located at 6800 Broken Sound Parkway, Suite 200, Boca Raton, Florida 33487 and our telephone number is (561) 912-7000. Our website address is www.ffn.com. The information contained in, or accessible through, our website is not part of this prospectus. 6800 Broken Sound Parkway, Suite 200 Boca Raton, Florida 33487 (561) 912-7000 (Address, including zip code, and telephone number, including area code, of registrant s principal executive offices)
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001525624_perfectmat_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001525624_perfectmat_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..70c3038c5cc00a545169ebbf4e144f9207388da4
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@@ -0,0 +1 @@
+consolidated financial statements included elsewhere in this prospectus. This summary may not contain all of the information that may be important to you. You should carefully read this entire prospectus, including the section entitled Risk Factors and our consolidated financial statements and notes to those statements. As used in this prospectus, unless the context otherwise requires, all references to we, us, our, our company or the company refer to FriendFinder Networks Inc. and, where appropriate, our consolidated direct and indirect subsidiaries, except where it is clear that the terms mean only FriendFinder Networks Inc. The term INI refers to our subsidiary and co-issuer of the Registrable Notes, Interactive Network, Inc. References to our common stock refer only to our voting common stock and except as otherwise noted, such references do not include our Series B common stock or our preferred common stock. Except where we state otherwise, the information presented in this prospectus reflects (i) the amendment and restatement of our bylaws, effective upon the consummation of our initial public offering on May 16, 2011, and (ii) the amendment and restatement of our articles of incorporation, which became effective on January 25, 2010. About Our Company FriendFinder Networks Inc. is a leading internet and technology company providing services in the rapidly expanding markets of social networking and web-based video sharing. Our business consists of creating and operating technology platforms which run several of the most heavily visited websites in the world. Through our extensive network of more than 44,000 websites, since our inception, we have built a base of more than 484 million registrants and more than 320 million members in more than 200 countries. We are able to create and maintain, in a cost-effective manner, websites intended to appeal to users of diverse cultures and interest groups. In December 2010, we had more than 196 million unique visitors to our network of websites, according to comScore. We offer our members a wide variety of online services so that they can interact with each other and access the content available on our websites. Our most heavily visited websites include AdultFriendFinder.com, Amigos.com, AsiaFriendFinder.com, Cams.com, FriendFinder.com, BigChurch.com and SeniorFriendFinder.com. For the nine months ended September 30, 2011, we had net revenue, income from operations and net losses of $249.6 million, $52.4 million and $(20.9) million, respectively. For the year ended December 31, 2010, we had net revenue, income from operations and net losses of $346.0 million, $71.1 million and ($43.2) million, respectively. Our revenues to date have been primarily derived from online subscription and paid-usage for our products and services. These products and services are delivered primarily through two highly scalable revenue-generating technology platforms: Social Networking. Approximately 69% of our total net revenues for the nine months ended September 30, 2011 and 70% of our total net revenues for the year ended December 31, 2010 were generated through our targeted social networking technology platform. Our social networking technology platform provides users who register or purchase subscriptions to one or more of our websites with the ability to communicate and to establish new connections with other users via our personal chat rooms, instant messaging and e-mail applications and to create, post and view content of interest. We have been able to rapidly create and seamlessly maintain multiple websites tailored to specific categories or genres and designed to cater to targeted audiences with mutual interests. We believe that our ability to create and operate a diverse network of specific interest websites with unique, user-generated content in a cost-effective manner is a significant competitive differentiator that allows us to implement a subscription-fee based revenue model while many other popular social networking websites rely primarily upon free-access, advertising-based revenue models. Live Interactive Video. Approximately 24% of our total net revenues for the nine months ended September 30, 2011 and 22% of our total net revenues for the year ended December 31, 2010 were generated through our live interactive video technology platform. Our live interactive video technology platform is a live video broadcast platform that enables models to broadcast from independent studios throughout the world and interact with our users via instant messaging and video. We believe our live interactive video platform provides a unique offering including bi-directional and omni-directional video and interactive features that allow models to communicate with and attract users through a variety of mediums including blogs, newsletters and video. In addition, we believe the reliability of our live interactive video technology platform, which had approximately 99.1% uptime during 2010, is a key factor allowing us to maintain a large base of users. In addition to our revenue-generating technology platforms, we have invested significant time and resources into developing our back-end marketing, analytics and billing technologies, which are a key contributor to the success of our business. We have developed proprietary systems to allow our marketing affiliates to maximize their revenue for our mutual benefit. These systems include proprietary white-labeling solutions, in which we provide back-end technology solutions to permit affiliates and marketing partners to deliver our products and services while maintaining the affiliate s and marketing partner s own branding and style, self-optimizing ad spots, and a robust banner optimization engine that automatically chooses the best possible site and banner to promote in a given ad spot. Our marketing technology has also enabled the creation and continued growth of our network of more than 280,000 affiliates, which we believe is one of the largest of its kind in the world and a significant barrier to entry to potential and existing competitors. Similarly, our proprietary analytics technology provides us with an advantage relative to less sophisticated competitors by enabling us to estimate future revenue based on short-term response to our advertising campaigns, as well as providing for analysis of key data and metrics in order to optimize our marketing spend and maximize the revenues our websites generate. Our robust billing platform allows our customers to pay using many of the widely-adopted methods of e-commerce, both domestically as well as internationally. We categorize our users into five categories: visitors, registrants, members, subscribers and paid users. Visitors. Visitors are users who visit our websites but do not necessarily register. We believe we achieve large numbers of unique visitors because of our focus on continuously enhancing the user experience and expanding the breadth of our services. We had more than 196 million unique worldwide visitors in the month of December 2010, representing a growth of more than 300% from our approximately 46.9 million unique worldwide visitors in January 2009, according to comScore. Registrants. Registrants are visitors who complete a free registration form on one of our websites by giving basic identification information and submitting their e-mail address. For the nine months ended September 30, 2011, we averaged more than 6.4 million new registrations on our websites each month. For the year ended December 31, 2010, we averaged more than 6.4 million new registrations on our websites each month. Some of our registrants are also members, as described below. Members. Members are registrants who log into one of our websites and make use of our free products and services. For the nine months ended September 30, 2011, we averaged more than 4.0 million new members on our websites each month. For the year ended December 31, 2010, we averaged more than 3.9 million new members on our websites each month. Subscribers. Subscribers are members who purchase daily, three-day, weekly, monthly, quarterly, annual or lifetime subscriptions for one or more of our websites. Subscribers have full access to our websites and may access special features. For the nine months ended September 30, 2011, we had a monthly average of approximately 950 thousand and for the year ended December 31, 2010, we had a monthly average of approximately 1 million paying subscribers. Paid Users. Paid users are members who purchase products or services on a pay-by-usage basis. For the nine months ended September 30, 2011, we averaged approximately 2.9 million purchased minutes by paid users each month. For the year ended December 31, 2010, we averaged approximately 3.0 million purchased minutes by paid users each month. We focus on the following key business metrics to evaluate the effectiveness of our operating strategies. Average Revenue per Subscriber. We calculate average revenue per subscriber, or ARPU, by dividing net revenue for the period by the average number of subscribers in the period and by the number of months in the period. As such, our ARPU is a monthly calculation. For the nine months ended September 30, 2011, our average monthly revenue per subscriber was $20.22. For the year ended December 31, 2010, our average monthly revenue per subscriber was $20.49. Churn. Churn is calculated by dividing terminations of subscriptions during the period by the total number of subscribers at the beginning of that period. Our average monthly churn rate, which measures the rate UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 of loss of subscribers, for the nine months ended September 30, 2011 was 16.3% per month. Our average monthly churn rate for the year ended December 31, 2010 was 16.1% per month. Cost Per Gross Addition. Cost per gross addition, or CPGA, is calculated by adding affiliate commission expense plus ad buy expenses and dividing by new subscribers during the measurement period. Our CPGA for the nine months ended September 30, 2011 was $42.76. Our CPGA for the year ended December 31, 2010 was $47.25. Average Lifetime Net Revenue Per Subscriber. Average Lifetime Net Revenue Per Subscriber is calculated by multiplying the average lifetime (in months) of a subscriber by ARPU for the measurement period and then subtracting the CPGA for the measurement period. Our Average Lifetime Net Revenue Per Subscriber for the nine months ended September 30, 2011 was $81.06. Our Average Lifetime Net Revenue Per Subscriber for the year ended December 31, 2010 was $80.17. While we monitor many statistics in the overall management of our business, we believe that Average Lifetime Net Revenue Per Subscriber and the number of subscribers are particularly helpful metrics for gaining a meaningful understanding of our business as they provide an indication of total revenue and profit generated from our base of subscribers inclusive of affiliate commissions and advertising costs required to generate new subscriptions. In addition to our social networks and live interactive video platforms, we also offer professionally-generated content through our premium content technology platform and our non-internet entertainment business. Through websites such as Penthouse.com and HotBox.com, our subscribers and paid users have access to our collection of more than 15,000 hours of professional video, which includes our library of more than 800 standard and high-definition full-length feature films and one million professionally produced images. We began shooting all of our content in 3D in September 2010. Additionally, subscribers have access to editorial content, chat rooms and other interactive features. In addition to our online products and services, we also have a non-technology legacy entertainment business, in which we produce and distribute original pictorial and video content via traditional distribution channels including licensing and retail DVD channels, and license the globally-recognized Penthouse brand to a variety of consumer product companies and entertainment venues and public branded men s lifestyle magazines. Our Competitive Strengths We believe that we have the following competitive strengths that we can leverage to implement our strategy: Proprietary and Scalable Technology Platform. Our robust, proprietary and highly scalable technology platform supports our social networking, live interactive video and premium content websites. We are able to use our customized back-end interface to quickly and affordably generate new websites, launch new features and target new audiences at a relatively low incremental cost. We believe that our ability to create new websites and provide new features is crucial to cost-effectively maintaining our relationships with existing users and attracting new users. Paid Subscriber-Based Model. We operate social networking websites that allow our members to make connections with other members with whom they share common interests. Our paid subscriber-based model of social networking websites is distinctly different from the business models of other free social networking websites whose users access the websites to remain connected to their pre-existing friends and interest groups. Large and Diverse User Base. We operate some of the most heavily visited social networking websites in the world, currently adding on average more than 6.4 million new registrants and more than 4.0 million new members each month. Our websites are designed to appeal to individuals with a diversity of interests and backgrounds. We believe potential members are attracted to the opportunity to interact with other individuals by having access to our large, diverse user base. Large and Difficult to Replicate Affiliate Network and Significant Marketing Spend. Our marketing affiliates are companies that market our services on their websites, allowing us to market our brand beyond our established user base. As of September 30, 2011 and December 31, 2010, we had more than 280,000 participants in our marketing affiliate program from which we derive a substantial portion of our new members and approximately 46% of our net revenues for the nine months ended September 30, 2011 and 45% of our net revenues for the year ended December 31, 2010. We believe that the difficulty in building an affiliate network of this large size, together with our combined affiliate and advertising spend for the nine months ended September 30, 2011 and the year ended December 31, 2010 of $64.5 million and $103.5 million, respectively, presents a significant barrier to entry for potential competitors. Our Strategy Our goal is to enhance revenue opportunities while improving our profitability. We plan to achieve these goals using the following strategies: Convert Visitors, Registrants and Members into Subscribers or Paid Users. We continually seek to convert visitors, registrants and members into subscribers or paid users. We do this by constantly evaluating, adding and enhancing features on our websites to improve our users experience. Create Additional Websites and Diversify Offerings. We are constantly seeking to identify groups of sufficient size who share a common interest in order to create a website intended to appeal to their interests. Our extensive user database serves as an existing source of potential members and subscribers for new websites we create. Expand into and Monetize Current Foreign Markets. In 2010, nearly 71% of our members were outside the United States, but non-U.S. users accounted for less than half of our total net revenues. We seek to expand in selected geographic markets, including Southeast Europe, South America and Asia. Pursue Targeted Acquisitions. We intend to expand our business by acquiring and integrating additional social networking websites, technology platforms, owners, creators and distributors of content and payment processing and advertising businesses. Our management team possesses significant mergers and acquisitions and integration expertise and regularly screens the marketplace for strategic acquisition opportunities. Generate Online Advertising Revenue. To date, online advertising revenue has represented less than 0.1% of our net revenue, averaging approximately $8,000 per month in the nine months ended September 30, 2011 and $9,000 per month for the year ended December 31, 2010. With continued worldwide growth in this advertising segment, we see this as a significant growth opportunity. We believe that our broad and diverse user base represents a valuable asset that will provide opportunities for us to offer targeted online advertising to specific demographic groups. We intend to focus our advertising efforts on our general audience social networking websites and maintain our subscription-based model for our adult social networking websites. Our New Financing On October 27, 2010, we issued new debt to repay our then existing debt, which we refer to as the New Financing. We, along with our wholly-owned subsidiary Interactive Network, Inc., or INI, co-issued $305.0 million principal amount of the Senior Secured Notes, $13.8 million of the Cash Pay Notes, and $232.5 million of the Non-Cash Pay Notes. Our Initial Public Offering On May 16, 2011, we issued 5,000,000 shares of common stock at a price of $10.00 per share and completed our initial public offering (the IPO ). We raised gross proceeds of $50.0 million, less underwriting fees and commissions of 7.25% of the gross proceeds, or $3.6 million, and incurred other offering expenses of $2.9 million to be paid from the proceeds of the offering, resulting in $43.5 million of net proceeds. In addition, we had incurred and paid as of December 31, 2010, $13.3 million of offering costs, which were included in deferred offering costs in the accompanying balance sheet at December 31, 2010 and written off by a charge to capital in excess of par value in the quarter ended June 30, 2011. On May 19, 2011, we redeemed $37.8 million of our Senior Secured Notes and $1.7 million of our Cash Pay Notes for a total of $39.5 million principal amount of New Financing redeemed from the net proceeds of our IPO and incurred a loss on extinguishment of debt estimated to be approximately $7.3 million. As of September 30, 2011, the outstanding principal amounts of the Senior Secured Notes, Cash Pay Notes and Non-Cash Pay Notes were $235.3 million, $10.6 million and $250.9 million, respectively. Recent Developments In July 2011, we acquired, through one of our subsidiaries, PerfectMatch.com, an online relationship service helping adults seeking successful, lasting connections. We paid approximately $2.5 million in cash and stock to acquire the assets of the website. PerfectMatch.com uses the Duet Total Compatibility System, a system which analyzes the whole person to find friends, taking into account each member s personality, values and ideals, life and love-style preferences to identify and find the person right for them. The acquisition of this website and related assets adds to our portfolio of general audience social networking websites. In September 2011, we acquired, through one of our subsidiaries, BDM Global Ventures Ltd., the company which owns the operations of JigoCity. The acquisition was completed pursuant to an Agreement and Plan of Merger entered into on September 7, 2011 among us, JGC Holdings Limited, our wholly-owned subsidiary, BDM Global Ventures Limited, which we refer to as BDM, Global Investment Ventures LLC and Anthony R. Bobulinski, which we refer to as the Merger Agreement. Under the terms of the Merger Agreement, the shareholders of BDM, in exchange for their outstanding shares and options in BDM and its subsidiaries, received merger consideration consisting of 1,555,555, shares of our common stock, 500,000 of which will be held in escrow until no later than December 31, 2012, and warrants exercisable into 6,436,851 shares of our common stock with exercise prices ranging from $5-$18 per share with an expiration date of December 31, 2021. Pursuant to an equity put agreement we entered into, the shareholders of BDM have the option to sell all of the shares of our common stock and warrants issued as merger consideration back to us in exchange for the return of 70% of the equity in BDM if the volume-weighted average price of our common stock fails to equal or exceed $12.00 per share during any 10 trading day period principally between the closing date and the later of June 30, 2014 and the date upon which our current indentures are fully discharged, or if an indenture modification is made, as defined in the equity put agreement, the later of June 30, 2014 and the date the indenture modification takes place (the later date hereinafter referred to as the Vesting Date ). The equity put agreement provides that the put right shall become exercisable at the sole discretion of the shareholders appointed representative during the period commencing on the Vesting Date and expiring sixty (60) days thereafter. Additionally, if the shareholders of BDM exercise the put right, we have the right to pay them in our common stock and/or cash, having a combined value as of the later of the above dates equal to the product of (i) 2,209,414 shares of common stock (subject to dilutive adjustment) and (ii) the difference between the highest 10 day volume-weighted average price attained by our common stock during such period and $12.00, in which case the put right terminates. Pursuant to a registration rights agreement, we also granted demand registration rights under certain circumstances, with respect to the shares of our common stock and warrants issued as merger consideration. JigoCity is a global social commerce organization committed to providing members with high quality daily deals that are relevant to their individual lifestyles. The acquisition of JigoCity adds to our portfolio a social commerce company and what we believe will be an additional avenue to monetize our foreign markets. Our Corporate Information Our executive offices are located at 6800 Broken Sound Parkway, Suite 200, Boca Raton, Florida 33487 and our telephone number is (561) 912-7000. Our website address is www.ffn.com. The information contained in, or accessible through, our website is not part of this prospectus. 6800 Broken Sound Parkway, Suite 200 Boca Raton, Florida 33487 (561) 912-7000 (Address, including zip code, and telephone number, including area code, of registrant s principal executive offices)
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+consolidated financial statements included elsewhere in this prospectus. This summary may not contain all of the information that may be important to you. You should carefully read this entire prospectus, including the section entitled Risk Factors and our consolidated financial statements and notes to those statements. As used in this prospectus, unless the context otherwise requires, all references to we, us, our, our company or the company refer to FriendFinder Networks Inc. and, where appropriate, our consolidated direct and indirect subsidiaries, except where it is clear that the terms mean only FriendFinder Networks Inc. The term INI refers to our subsidiary and co-issuer of the Registrable Notes, Interactive Network, Inc. References to our common stock refer only to our voting common stock and except as otherwise noted, such references do not include our Series B common stock or our preferred common stock. Except where we state otherwise, the information presented in this prospectus reflects (i) the amendment and restatement of our bylaws, effective upon the consummation of our initial public offering on May 16, 2011, and (ii) the amendment and restatement of our articles of incorporation, which became effective on January 25, 2010. About Our Company FriendFinder Networks Inc. is a leading internet and technology company providing services in the rapidly expanding markets of social networking and web-based video sharing. Our business consists of creating and operating technology platforms which run several of the most heavily visited websites in the world. Through our extensive network of more than 44,000 websites, since our inception, we have built a base of more than 484 million registrants and more than 320 million members in more than 200 countries. We are able to create and maintain, in a cost-effective manner, websites intended to appeal to users of diverse cultures and interest groups. In December 2010, we had more than 196 million unique visitors to our network of websites, according to comScore. We offer our members a wide variety of online services so that they can interact with each other and access the content available on our websites. Our most heavily visited websites include AdultFriendFinder.com, Amigos.com, AsiaFriendFinder.com, Cams.com, FriendFinder.com, BigChurch.com and SeniorFriendFinder.com. For the nine months ended September 30, 2011, we had net revenue, income from operations and net losses of $249.6 million, $52.4 million and $(20.9) million, respectively. For the year ended December 31, 2010, we had net revenue, income from operations and net losses of $346.0 million, $71.1 million and ($43.2) million, respectively. Our revenues to date have been primarily derived from online subscription and paid-usage for our products and services. These products and services are delivered primarily through two highly scalable revenue-generating technology platforms: Social Networking. Approximately 69% of our total net revenues for the nine months ended September 30, 2011 and 70% of our total net revenues for the year ended December 31, 2010 were generated through our targeted social networking technology platform. Our social networking technology platform provides users who register or purchase subscriptions to one or more of our websites with the ability to communicate and to establish new connections with other users via our personal chat rooms, instant messaging and e-mail applications and to create, post and view content of interest. We have been able to rapidly create and seamlessly maintain multiple websites tailored to specific categories or genres and designed to cater to targeted audiences with mutual interests. We believe that our ability to create and operate a diverse network of specific interest websites with unique, user-generated content in a cost-effective manner is a significant competitive differentiator that allows us to implement a subscription-fee based revenue model while many other popular social networking websites rely primarily upon free-access, advertising-based revenue models. Live Interactive Video. Approximately 24% of our total net revenues for the nine months ended September 30, 2011 and 22% of our total net revenues for the year ended December 31, 2010 were generated through our live interactive video technology platform. Our live interactive video technology platform is a live video broadcast platform that enables models to broadcast from independent studios throughout the world and interact with our users via instant messaging and video. We believe our live interactive video platform provides a unique offering including bi-directional and omni-directional video and interactive features that allow models to communicate with and attract users through a variety of mediums including blogs, newsletters and video. In addition, we believe the reliability of our live interactive video technology platform, which had approximately 99.1% uptime during 2010, is a key factor allowing us to maintain a large base of users. In addition to our revenue-generating technology platforms, we have invested significant time and resources into developing our back-end marketing, analytics and billing technologies, which are a key contributor to the success of our business. We have developed proprietary systems to allow our marketing affiliates to maximize their revenue for our mutual benefit. These systems include proprietary white-labeling solutions, in which we provide back-end technology solutions to permit affiliates and marketing partners to deliver our products and services while maintaining the affiliate s and marketing partner s own branding and style, self-optimizing ad spots, and a robust banner optimization engine that automatically chooses the best possible site and banner to promote in a given ad spot. Our marketing technology has also enabled the creation and continued growth of our network of more than 280,000 affiliates, which we believe is one of the largest of its kind in the world and a significant barrier to entry to potential and existing competitors. Similarly, our proprietary analytics technology provides us with an advantage relative to less sophisticated competitors by enabling us to estimate future revenue based on short-term response to our advertising campaigns, as well as providing for analysis of key data and metrics in order to optimize our marketing spend and maximize the revenues our websites generate. Our robust billing platform allows our customers to pay using many of the widely-adopted methods of e-commerce, both domestically as well as internationally. We categorize our users into five categories: visitors, registrants, members, subscribers and paid users. Visitors. Visitors are users who visit our websites but do not necessarily register. We believe we achieve large numbers of unique visitors because of our focus on continuously enhancing the user experience and expanding the breadth of our services. We had more than 196 million unique worldwide visitors in the month of December 2010, representing a growth of more than 300% from our approximately 46.9 million unique worldwide visitors in January 2009, according to comScore. Registrants. Registrants are visitors who complete a free registration form on one of our websites by giving basic identification information and submitting their e-mail address. For the nine months ended September 30, 2011, we averaged more than 6.4 million new registrations on our websites each month. For the year ended December 31, 2010, we averaged more than 6.4 million new registrations on our websites each month. Some of our registrants are also members, as described below. Members. Members are registrants who log into one of our websites and make use of our free products and services. For the nine months ended September 30, 2011, we averaged more than 4.0 million new members on our websites each month. For the year ended December 31, 2010, we averaged more than 3.9 million new members on our websites each month. Subscribers. Subscribers are members who purchase daily, three-day, weekly, monthly, quarterly, annual or lifetime subscriptions for one or more of our websites. Subscribers have full access to our websites and may access special features. For the nine months ended September 30, 2011, we had a monthly average of approximately 950 thousand and for the year ended December 31, 2010, we had a monthly average of approximately 1 million paying subscribers. Paid Users. Paid users are members who purchase products or services on a pay-by-usage basis. For the nine months ended September 30, 2011, we averaged approximately 2.9 million purchased minutes by paid users each month. For the year ended December 31, 2010, we averaged approximately 3.0 million purchased minutes by paid users each month. We focus on the following key business metrics to evaluate the effectiveness of our operating strategies. Average Revenue per Subscriber. We calculate average revenue per subscriber, or ARPU, by dividing net revenue for the period by the average number of subscribers in the period and by the number of months in the period. As such, our ARPU is a monthly calculation. For the nine months ended September 30, 2011, our average monthly revenue per subscriber was $20.22. For the year ended December 31, 2010, our average monthly revenue per subscriber was $20.49. Churn. Churn is calculated by dividing terminations of subscriptions during the period by the total number of subscribers at the beginning of that period. Our average monthly churn rate, which measures the rate UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 of loss of subscribers, for the nine months ended September 30, 2011 was 16.3% per month. Our average monthly churn rate for the year ended December 31, 2010 was 16.1% per month. Cost Per Gross Addition. Cost per gross addition, or CPGA, is calculated by adding affiliate commission expense plus ad buy expenses and dividing by new subscribers during the measurement period. Our CPGA for the nine months ended September 30, 2011 was $42.76. Our CPGA for the year ended December 31, 2010 was $47.25. Average Lifetime Net Revenue Per Subscriber. Average Lifetime Net Revenue Per Subscriber is calculated by multiplying the average lifetime (in months) of a subscriber by ARPU for the measurement period and then subtracting the CPGA for the measurement period. Our Average Lifetime Net Revenue Per Subscriber for the nine months ended September 30, 2011 was $81.06. Our Average Lifetime Net Revenue Per Subscriber for the year ended December 31, 2010 was $80.17. While we monitor many statistics in the overall management of our business, we believe that Average Lifetime Net Revenue Per Subscriber and the number of subscribers are particularly helpful metrics for gaining a meaningful understanding of our business as they provide an indication of total revenue and profit generated from our base of subscribers inclusive of affiliate commissions and advertising costs required to generate new subscriptions. In addition to our social networks and live interactive video platforms, we also offer professionally-generated content through our premium content technology platform and our non-internet entertainment business. Through websites such as Penthouse.com and HotBox.com, our subscribers and paid users have access to our collection of more than 15,000 hours of professional video, which includes our library of more than 800 standard and high-definition full-length feature films and one million professionally produced images. We began shooting all of our content in 3D in September 2010. Additionally, subscribers have access to editorial content, chat rooms and other interactive features. In addition to our online products and services, we also have a non-technology legacy entertainment business, in which we produce and distribute original pictorial and video content via traditional distribution channels including licensing and retail DVD channels, and license the globally-recognized Penthouse brand to a variety of consumer product companies and entertainment venues and public branded men s lifestyle magazines. Our Competitive Strengths We believe that we have the following competitive strengths that we can leverage to implement our strategy: Proprietary and Scalable Technology Platform. Our robust, proprietary and highly scalable technology platform supports our social networking, live interactive video and premium content websites. We are able to use our customized back-end interface to quickly and affordably generate new websites, launch new features and target new audiences at a relatively low incremental cost. We believe that our ability to create new websites and provide new features is crucial to cost-effectively maintaining our relationships with existing users and attracting new users. Paid Subscriber-Based Model. We operate social networking websites that allow our members to make connections with other members with whom they share common interests. Our paid subscriber-based model of social networking websites is distinctly different from the business models of other free social networking websites whose users access the websites to remain connected to their pre-existing friends and interest groups. Large and Diverse User Base. We operate some of the most heavily visited social networking websites in the world, currently adding on average more than 6.4 million new registrants and more than 4.0 million new members each month. Our websites are designed to appeal to individuals with a diversity of interests and backgrounds. We believe potential members are attracted to the opportunity to interact with other individuals by having access to our large, diverse user base. Large and Difficult to Replicate Affiliate Network and Significant Marketing Spend. Our marketing affiliates are companies that market our services on their websites, allowing us to market our brand beyond our established user base. As of September 30, 2011 and December 31, 2010, we had more than 280,000 participants in our marketing affiliate program from which we derive a substantial portion of our new members and approximately 46% of our net revenues for the nine months ended September 30, 2011 and 45% of our net revenues for the year ended December 31, 2010. We believe that the difficulty in building an affiliate network of this large size, together with our combined affiliate and advertising spend for the nine months ended September 30, 2011 and the year ended December 31, 2010 of $64.5 million and $103.5 million, respectively, presents a significant barrier to entry for potential competitors. Our Strategy Our goal is to enhance revenue opportunities while improving our profitability. We plan to achieve these goals using the following strategies: Convert Visitors, Registrants and Members into Subscribers or Paid Users. We continually seek to convert visitors, registrants and members into subscribers or paid users. We do this by constantly evaluating, adding and enhancing features on our websites to improve our users experience. Create Additional Websites and Diversify Offerings. We are constantly seeking to identify groups of sufficient size who share a common interest in order to create a website intended to appeal to their interests. Our extensive user database serves as an existing source of potential members and subscribers for new websites we create. Expand into and Monetize Current Foreign Markets. In 2010, nearly 71% of our members were outside the United States, but non-U.S. users accounted for less than half of our total net revenues. We seek to expand in selected geographic markets, including Southeast Europe, South America and Asia. Pursue Targeted Acquisitions. We intend to expand our business by acquiring and integrating additional social networking websites, technology platforms, owners, creators and distributors of content and payment processing and advertising businesses. Our management team possesses significant mergers and acquisitions and integration expertise and regularly screens the marketplace for strategic acquisition opportunities. Generate Online Advertising Revenue. To date, online advertising revenue has represented less than 0.1% of our net revenue, averaging approximately $8,000 per month in the nine months ended September 30, 2011 and $9,000 per month for the year ended December 31, 2010. With continued worldwide growth in this advertising segment, we see this as a significant growth opportunity. We believe that our broad and diverse user base represents a valuable asset that will provide opportunities for us to offer targeted online advertising to specific demographic groups. We intend to focus our advertising efforts on our general audience social networking websites and maintain our subscription-based model for our adult social networking websites. Our New Financing On October 27, 2010, we issued new debt to repay our then existing debt, which we refer to as the New Financing. We, along with our wholly-owned subsidiary Interactive Network, Inc., or INI, co-issued $305.0 million principal amount of the Senior Secured Notes, $13.8 million of the Cash Pay Notes, and $232.5 million of the Non-Cash Pay Notes. Our Initial Public Offering On May 16, 2011, we issued 5,000,000 shares of common stock at a price of $10.00 per share and completed our initial public offering (the IPO ). We raised gross proceeds of $50.0 million, less underwriting fees and commissions of 7.25% of the gross proceeds, or $3.6 million, and incurred other offering expenses of $2.9 million to be paid from the proceeds of the offering, resulting in $43.5 million of net proceeds. In addition, we had incurred and paid as of December 31, 2010, $13.3 million of offering costs, which were included in deferred offering costs in the accompanying balance sheet at December 31, 2010 and written off by a charge to capital in excess of par value in the quarter ended June 30, 2011. On May 19, 2011, we redeemed $37.8 million of our Senior Secured Notes and $1.7 million of our Cash Pay Notes for a total of $39.5 million principal amount of New Financing redeemed from the net proceeds of our IPO and incurred a loss on extinguishment of debt estimated to be approximately $7.3 million. As of September 30, 2011, the outstanding principal amounts of the Senior Secured Notes, Cash Pay Notes and Non-Cash Pay Notes were $235.3 million, $10.6 million and $250.9 million, respectively. Recent Developments In July 2011, we acquired, through one of our subsidiaries, PerfectMatch.com, an online relationship service helping adults seeking successful, lasting connections. We paid approximately $2.5 million in cash and stock to acquire the assets of the website. PerfectMatch.com uses the Duet Total Compatibility System, a system which analyzes the whole person to find friends, taking into account each member s personality, values and ideals, life and love-style preferences to identify and find the person right for them. The acquisition of this website and related assets adds to our portfolio of general audience social networking websites. In September 2011, we acquired, through one of our subsidiaries, BDM Global Ventures Ltd., the company which owns the operations of JigoCity. The acquisition was completed pursuant to an Agreement and Plan of Merger entered into on September 7, 2011 among us, JGC Holdings Limited, our wholly-owned subsidiary, BDM Global Ventures Limited, which we refer to as BDM, Global Investment Ventures LLC and Anthony R. Bobulinski, which we refer to as the Merger Agreement. Under the terms of the Merger Agreement, the shareholders of BDM, in exchange for their outstanding shares and options in BDM and its subsidiaries, received merger consideration consisting of 1,555,555, shares of our common stock, 500,000 of which will be held in escrow until no later than December 31, 2012, and warrants exercisable into 6,436,851 shares of our common stock with exercise prices ranging from $5-$18 per share with an expiration date of December 31, 2021. Pursuant to an equity put agreement we entered into, the shareholders of BDM have the option to sell all of the shares of our common stock and warrants issued as merger consideration back to us in exchange for the return of 70% of the equity in BDM if the volume-weighted average price of our common stock fails to equal or exceed $12.00 per share during any 10 trading day period principally between the closing date and the later of June 30, 2014 and the date upon which our current indentures are fully discharged, or if an indenture modification is made, as defined in the equity put agreement, the later of June 30, 2014 and the date the indenture modification takes place (the later date hereinafter referred to as the Vesting Date ). The equity put agreement provides that the put right shall become exercisable at the sole discretion of the shareholders appointed representative during the period commencing on the Vesting Date and expiring sixty (60) days thereafter. Additionally, if the shareholders of BDM exercise the put right, we have the right to pay them in our common stock and/or cash, having a combined value as of the later of the above dates equal to the product of (i) 2,209,414 shares of common stock (subject to dilutive adjustment) and (ii) the difference between the highest 10 day volume-weighted average price attained by our common stock during such period and $12.00, in which case the put right terminates. Pursuant to a registration rights agreement, we also granted demand registration rights under certain circumstances, with respect to the shares of our common stock and warrants issued as merger consideration. JigoCity is a global social commerce organization committed to providing members with high quality daily deals that are relevant to their individual lifestyles. The acquisition of JigoCity adds to our portfolio a social commerce company and what we believe will be an additional avenue to monetize our foreign markets. Our Corporate Information Our executive offices are located at 6800 Broken Sound Parkway, Suite 200, Boca Raton, Florida 33487 and our telephone number is (561) 912-7000. Our website address is www.ffn.com. The information contained in, or accessible through, our website is not part of this prospectus. 6800 Broken Sound Parkway, Suite 200 Boca Raton, Florida 33487 (561) 912-7000 (Address, including zip code, and telephone number, including area code, of registrant s principal executive offices)
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001525632_streamray_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001525632_streamray_prospectus_summary.txt
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+consolidated financial statements included elsewhere in this prospectus. This summary may not contain all of the information that may be important to you. You should carefully read this entire prospectus, including the section entitled Risk Factors and our consolidated financial statements and notes to those statements. As used in this prospectus, unless the context otherwise requires, all references to we, us, our, our company or the company refer to FriendFinder Networks Inc. and, where appropriate, our consolidated direct and indirect subsidiaries, except where it is clear that the terms mean only FriendFinder Networks Inc. The term INI refers to our subsidiary and co-issuer of the Registrable Notes, Interactive Network, Inc. References to our common stock refer only to our voting common stock and except as otherwise noted, such references do not include our Series B common stock or our preferred common stock. Except where we state otherwise, the information presented in this prospectus reflects (i) the amendment and restatement of our bylaws, effective upon the consummation of our initial public offering on May 16, 2011, and (ii) the amendment and restatement of our articles of incorporation, which became effective on January 25, 2010. About Our Company FriendFinder Networks Inc. is a leading internet and technology company providing services in the rapidly expanding markets of social networking and web-based video sharing. Our business consists of creating and operating technology platforms which run several of the most heavily visited websites in the world. Through our extensive network of more than 44,000 websites, since our inception, we have built a base of more than 484 million registrants and more than 320 million members in more than 200 countries. We are able to create and maintain, in a cost-effective manner, websites intended to appeal to users of diverse cultures and interest groups. In December 2010, we had more than 196 million unique visitors to our network of websites, according to comScore. We offer our members a wide variety of online services so that they can interact with each other and access the content available on our websites. Our most heavily visited websites include AdultFriendFinder.com, Amigos.com, AsiaFriendFinder.com, Cams.com, FriendFinder.com, BigChurch.com and SeniorFriendFinder.com. For the nine months ended September 30, 2011, we had net revenue, income from operations and net losses of $249.6 million, $52.4 million and $(20.9) million, respectively. For the year ended December 31, 2010, we had net revenue, income from operations and net losses of $346.0 million, $71.1 million and ($43.2) million, respectively. Our revenues to date have been primarily derived from online subscription and paid-usage for our products and services. These products and services are delivered primarily through two highly scalable revenue-generating technology platforms: Social Networking. Approximately 69% of our total net revenues for the nine months ended September 30, 2011 and 70% of our total net revenues for the year ended December 31, 2010 were generated through our targeted social networking technology platform. Our social networking technology platform provides users who register or purchase subscriptions to one or more of our websites with the ability to communicate and to establish new connections with other users via our personal chat rooms, instant messaging and e-mail applications and to create, post and view content of interest. We have been able to rapidly create and seamlessly maintain multiple websites tailored to specific categories or genres and designed to cater to targeted audiences with mutual interests. We believe that our ability to create and operate a diverse network of specific interest websites with unique, user-generated content in a cost-effective manner is a significant competitive differentiator that allows us to implement a subscription-fee based revenue model while many other popular social networking websites rely primarily upon free-access, advertising-based revenue models. Live Interactive Video. Approximately 24% of our total net revenues for the nine months ended September 30, 2011 and 22% of our total net revenues for the year ended December 31, 2010 were generated through our live interactive video technology platform. Our live interactive video technology platform is a live video broadcast platform that enables models to broadcast from independent studios throughout the world and interact with our users via instant messaging and video. We believe our live interactive video platform provides a unique offering including bi-directional and omni-directional video and interactive features that allow models to communicate with and attract users through a variety of mediums including blogs, newsletters and video. In addition, we believe the reliability of our live interactive video technology platform, which had approximately 99.1% uptime during 2010, is a key factor allowing us to maintain a large base of users. In addition to our revenue-generating technology platforms, we have invested significant time and resources into developing our back-end marketing, analytics and billing technologies, which are a key contributor to the success of our business. We have developed proprietary systems to allow our marketing affiliates to maximize their revenue for our mutual benefit. These systems include proprietary white-labeling solutions, in which we provide back-end technology solutions to permit affiliates and marketing partners to deliver our products and services while maintaining the affiliate s and marketing partner s own branding and style, self-optimizing ad spots, and a robust banner optimization engine that automatically chooses the best possible site and banner to promote in a given ad spot. Our marketing technology has also enabled the creation and continued growth of our network of more than 280,000 affiliates, which we believe is one of the largest of its kind in the world and a significant barrier to entry to potential and existing competitors. Similarly, our proprietary analytics technology provides us with an advantage relative to less sophisticated competitors by enabling us to estimate future revenue based on short-term response to our advertising campaigns, as well as providing for analysis of key data and metrics in order to optimize our marketing spend and maximize the revenues our websites generate. Our robust billing platform allows our customers to pay using many of the widely-adopted methods of e-commerce, both domestically as well as internationally. We categorize our users into five categories: visitors, registrants, members, subscribers and paid users. Visitors. Visitors are users who visit our websites but do not necessarily register. We believe we achieve large numbers of unique visitors because of our focus on continuously enhancing the user experience and expanding the breadth of our services. We had more than 196 million unique worldwide visitors in the month of December 2010, representing a growth of more than 300% from our approximately 46.9 million unique worldwide visitors in January 2009, according to comScore. Registrants. Registrants are visitors who complete a free registration form on one of our websites by giving basic identification information and submitting their e-mail address. For the nine months ended September 30, 2011, we averaged more than 6.4 million new registrations on our websites each month. For the year ended December 31, 2010, we averaged more than 6.4 million new registrations on our websites each month. Some of our registrants are also members, as described below. Members. Members are registrants who log into one of our websites and make use of our free products and services. For the nine months ended September 30, 2011, we averaged more than 4.0 million new members on our websites each month. For the year ended December 31, 2010, we averaged more than 3.9 million new members on our websites each month. Subscribers. Subscribers are members who purchase daily, three-day, weekly, monthly, quarterly, annual or lifetime subscriptions for one or more of our websites. Subscribers have full access to our websites and may access special features. For the nine months ended September 30, 2011, we had a monthly average of approximately 950 thousand and for the year ended December 31, 2010, we had a monthly average of approximately 1 million paying subscribers. Paid Users. Paid users are members who purchase products or services on a pay-by-usage basis. For the nine months ended September 30, 2011, we averaged approximately 2.9 million purchased minutes by paid users each month. For the year ended December 31, 2010, we averaged approximately 3.0 million purchased minutes by paid users each month. We focus on the following key business metrics to evaluate the effectiveness of our operating strategies. Average Revenue per Subscriber. We calculate average revenue per subscriber, or ARPU, by dividing net revenue for the period by the average number of subscribers in the period and by the number of months in the period. As such, our ARPU is a monthly calculation. For the nine months ended September 30, 2011, our average monthly revenue per subscriber was $20.22. For the year ended December 31, 2010, our average monthly revenue per subscriber was $20.49. Churn. Churn is calculated by dividing terminations of subscriptions during the period by the total number of subscribers at the beginning of that period. Our average monthly churn rate, which measures the rate UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 of loss of subscribers, for the nine months ended September 30, 2011 was 16.3% per month. Our average monthly churn rate for the year ended December 31, 2010 was 16.1% per month. Cost Per Gross Addition. Cost per gross addition, or CPGA, is calculated by adding affiliate commission expense plus ad buy expenses and dividing by new subscribers during the measurement period. Our CPGA for the nine months ended September 30, 2011 was $42.76. Our CPGA for the year ended December 31, 2010 was $47.25. Average Lifetime Net Revenue Per Subscriber. Average Lifetime Net Revenue Per Subscriber is calculated by multiplying the average lifetime (in months) of a subscriber by ARPU for the measurement period and then subtracting the CPGA for the measurement period. Our Average Lifetime Net Revenue Per Subscriber for the nine months ended September 30, 2011 was $81.06. Our Average Lifetime Net Revenue Per Subscriber for the year ended December 31, 2010 was $80.17. While we monitor many statistics in the overall management of our business, we believe that Average Lifetime Net Revenue Per Subscriber and the number of subscribers are particularly helpful metrics for gaining a meaningful understanding of our business as they provide an indication of total revenue and profit generated from our base of subscribers inclusive of affiliate commissions and advertising costs required to generate new subscriptions. In addition to our social networks and live interactive video platforms, we also offer professionally-generated content through our premium content technology platform and our non-internet entertainment business. Through websites such as Penthouse.com and HotBox.com, our subscribers and paid users have access to our collection of more than 15,000 hours of professional video, which includes our library of more than 800 standard and high-definition full-length feature films and one million professionally produced images. We began shooting all of our content in 3D in September 2010. Additionally, subscribers have access to editorial content, chat rooms and other interactive features. In addition to our online products and services, we also have a non-technology legacy entertainment business, in which we produce and distribute original pictorial and video content via traditional distribution channels including licensing and retail DVD channels, and license the globally-recognized Penthouse brand to a variety of consumer product companies and entertainment venues and public branded men s lifestyle magazines. Our Competitive Strengths We believe that we have the following competitive strengths that we can leverage to implement our strategy: Proprietary and Scalable Technology Platform. Our robust, proprietary and highly scalable technology platform supports our social networking, live interactive video and premium content websites. We are able to use our customized back-end interface to quickly and affordably generate new websites, launch new features and target new audiences at a relatively low incremental cost. We believe that our ability to create new websites and provide new features is crucial to cost-effectively maintaining our relationships with existing users and attracting new users. Paid Subscriber-Based Model. We operate social networking websites that allow our members to make connections with other members with whom they share common interests. Our paid subscriber-based model of social networking websites is distinctly different from the business models of other free social networking websites whose users access the websites to remain connected to their pre-existing friends and interest groups. Large and Diverse User Base. We operate some of the most heavily visited social networking websites in the world, currently adding on average more than 6.4 million new registrants and more than 4.0 million new members each month. Our websites are designed to appeal to individuals with a diversity of interests and backgrounds. We believe potential members are attracted to the opportunity to interact with other individuals by having access to our large, diverse user base. Large and Difficult to Replicate Affiliate Network and Significant Marketing Spend. Our marketing affiliates are companies that market our services on their websites, allowing us to market our brand beyond our established user base. As of September 30, 2011 and December 31, 2010, we had more than 280,000 participants in our marketing affiliate program from which we derive a substantial portion of our new members and approximately 46% of our net revenues for the nine months ended September 30, 2011 and 45% of our net revenues for the year ended December 31, 2010. We believe that the difficulty in building an affiliate network of this large size, together with our combined affiliate and advertising spend for the nine months ended September 30, 2011 and the year ended December 31, 2010 of $64.5 million and $103.5 million, respectively, presents a significant barrier to entry for potential competitors. Our Strategy Our goal is to enhance revenue opportunities while improving our profitability. We plan to achieve these goals using the following strategies: Convert Visitors, Registrants and Members into Subscribers or Paid Users. We continually seek to convert visitors, registrants and members into subscribers or paid users. We do this by constantly evaluating, adding and enhancing features on our websites to improve our users experience. Create Additional Websites and Diversify Offerings. We are constantly seeking to identify groups of sufficient size who share a common interest in order to create a website intended to appeal to their interests. Our extensive user database serves as an existing source of potential members and subscribers for new websites we create. Expand into and Monetize Current Foreign Markets. In 2010, nearly 71% of our members were outside the United States, but non-U.S. users accounted for less than half of our total net revenues. We seek to expand in selected geographic markets, including Southeast Europe, South America and Asia. Pursue Targeted Acquisitions. We intend to expand our business by acquiring and integrating additional social networking websites, technology platforms, owners, creators and distributors of content and payment processing and advertising businesses. Our management team possesses significant mergers and acquisitions and integration expertise and regularly screens the marketplace for strategic acquisition opportunities. Generate Online Advertising Revenue. To date, online advertising revenue has represented less than 0.1% of our net revenue, averaging approximately $8,000 per month in the nine months ended September 30, 2011 and $9,000 per month for the year ended December 31, 2010. With continued worldwide growth in this advertising segment, we see this as a significant growth opportunity. We believe that our broad and diverse user base represents a valuable asset that will provide opportunities for us to offer targeted online advertising to specific demographic groups. We intend to focus our advertising efforts on our general audience social networking websites and maintain our subscription-based model for our adult social networking websites. Our New Financing On October 27, 2010, we issued new debt to repay our then existing debt, which we refer to as the New Financing. We, along with our wholly-owned subsidiary Interactive Network, Inc., or INI, co-issued $305.0 million principal amount of the Senior Secured Notes, $13.8 million of the Cash Pay Notes, and $232.5 million of the Non-Cash Pay Notes. Our Initial Public Offering On May 16, 2011, we issued 5,000,000 shares of common stock at a price of $10.00 per share and completed our initial public offering (the IPO ). We raised gross proceeds of $50.0 million, less underwriting fees and commissions of 7.25% of the gross proceeds, or $3.6 million, and incurred other offering expenses of $2.9 million to be paid from the proceeds of the offering, resulting in $43.5 million of net proceeds. In addition, we had incurred and paid as of December 31, 2010, $13.3 million of offering costs, which were included in deferred offering costs in the accompanying balance sheet at December 31, 2010 and written off by a charge to capital in excess of par value in the quarter ended June 30, 2011. On May 19, 2011, we redeemed $37.8 million of our Senior Secured Notes and $1.7 million of our Cash Pay Notes for a total of $39.5 million principal amount of New Financing redeemed from the net proceeds of our IPO and incurred a loss on extinguishment of debt estimated to be approximately $7.3 million. As of September 30, 2011, the outstanding principal amounts of the Senior Secured Notes, Cash Pay Notes and Non-Cash Pay Notes were $235.3 million, $10.6 million and $250.9 million, respectively. Recent Developments In July 2011, we acquired, through one of our subsidiaries, PerfectMatch.com, an online relationship service helping adults seeking successful, lasting connections. We paid approximately $2.5 million in cash and stock to acquire the assets of the website. PerfectMatch.com uses the Duet Total Compatibility System, a system which analyzes the whole person to find friends, taking into account each member s personality, values and ideals, life and love-style preferences to identify and find the person right for them. The acquisition of this website and related assets adds to our portfolio of general audience social networking websites. In September 2011, we acquired, through one of our subsidiaries, BDM Global Ventures Ltd., the company which owns the operations of JigoCity. The acquisition was completed pursuant to an Agreement and Plan of Merger entered into on September 7, 2011 among us, JGC Holdings Limited, our wholly-owned subsidiary, BDM Global Ventures Limited, which we refer to as BDM, Global Investment Ventures LLC and Anthony R. Bobulinski, which we refer to as the Merger Agreement. Under the terms of the Merger Agreement, the shareholders of BDM, in exchange for their outstanding shares and options in BDM and its subsidiaries, received merger consideration consisting of 1,555,555, shares of our common stock, 500,000 of which will be held in escrow until no later than December 31, 2012, and warrants exercisable into 6,436,851 shares of our common stock with exercise prices ranging from $5-$18 per share with an expiration date of December 31, 2021. Pursuant to an equity put agreement we entered into, the shareholders of BDM have the option to sell all of the shares of our common stock and warrants issued as merger consideration back to us in exchange for the return of 70% of the equity in BDM if the volume-weighted average price of our common stock fails to equal or exceed $12.00 per share during any 10 trading day period principally between the closing date and the later of June 30, 2014 and the date upon which our current indentures are fully discharged, or if an indenture modification is made, as defined in the equity put agreement, the later of June 30, 2014 and the date the indenture modification takes place (the later date hereinafter referred to as the Vesting Date ). The equity put agreement provides that the put right shall become exercisable at the sole discretion of the shareholders appointed representative during the period commencing on the Vesting Date and expiring sixty (60) days thereafter. Additionally, if the shareholders of BDM exercise the put right, we have the right to pay them in our common stock and/or cash, having a combined value as of the later of the above dates equal to the product of (i) 2,209,414 shares of common stock (subject to dilutive adjustment) and (ii) the difference between the highest 10 day volume-weighted average price attained by our common stock during such period and $12.00, in which case the put right terminates. Pursuant to a registration rights agreement, we also granted demand registration rights under certain circumstances, with respect to the shares of our common stock and warrants issued as merger consideration. JigoCity is a global social commerce organization committed to providing members with high quality daily deals that are relevant to their individual lifestyles. The acquisition of JigoCity adds to our portfolio a social commerce company and what we believe will be an additional avenue to monetize our foreign markets. Our Corporate Information Our executive offices are located at 6800 Broken Sound Parkway, Suite 200, Boca Raton, Florida 33487 and our telephone number is (561) 912-7000. Our website address is www.ffn.com. The information contained in, or accessible through, our website is not part of this prospectus. 6800 Broken Sound Parkway, Suite 200 Boca Raton, Florida 33487 (561) 912-7000 (Address, including zip code, and telephone number, including area code, of registrant s principal executive offices)
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001525633_tan-door_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001525633_tan-door_prospectus_summary.txt
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+consolidated financial statements included elsewhere in this prospectus. This summary may not contain all of the information that may be important to you. You should carefully read this entire prospectus, including the section entitled Risk Factors and our consolidated financial statements and notes to those statements. As used in this prospectus, unless the context otherwise requires, all references to we, us, our, our company or the company refer to FriendFinder Networks Inc. and, where appropriate, our consolidated direct and indirect subsidiaries, except where it is clear that the terms mean only FriendFinder Networks Inc. The term INI refers to our subsidiary and co-issuer of the Registrable Notes, Interactive Network, Inc. References to our common stock refer only to our voting common stock and except as otherwise noted, such references do not include our Series B common stock or our preferred common stock. Except where we state otherwise, the information presented in this prospectus reflects (i) the amendment and restatement of our bylaws, effective upon the consummation of our initial public offering on May 16, 2011, and (ii) the amendment and restatement of our articles of incorporation, which became effective on January 25, 2010. About Our Company FriendFinder Networks Inc. is a leading internet and technology company providing services in the rapidly expanding markets of social networking and web-based video sharing. Our business consists of creating and operating technology platforms which run several of the most heavily visited websites in the world. Through our extensive network of more than 44,000 websites, since our inception, we have built a base of more than 484 million registrants and more than 320 million members in more than 200 countries. We are able to create and maintain, in a cost-effective manner, websites intended to appeal to users of diverse cultures and interest groups. In December 2010, we had more than 196 million unique visitors to our network of websites, according to comScore. We offer our members a wide variety of online services so that they can interact with each other and access the content available on our websites. Our most heavily visited websites include AdultFriendFinder.com, Amigos.com, AsiaFriendFinder.com, Cams.com, FriendFinder.com, BigChurch.com and SeniorFriendFinder.com. For the nine months ended September 30, 2011, we had net revenue, income from operations and net losses of $249.6 million, $52.4 million and $(20.9) million, respectively. For the year ended December 31, 2010, we had net revenue, income from operations and net losses of $346.0 million, $71.1 million and ($43.2) million, respectively. Our revenues to date have been primarily derived from online subscription and paid-usage for our products and services. These products and services are delivered primarily through two highly scalable revenue-generating technology platforms: Social Networking. Approximately 69% of our total net revenues for the nine months ended September 30, 2011 and 70% of our total net revenues for the year ended December 31, 2010 were generated through our targeted social networking technology platform. Our social networking technology platform provides users who register or purchase subscriptions to one or more of our websites with the ability to communicate and to establish new connections with other users via our personal chat rooms, instant messaging and e-mail applications and to create, post and view content of interest. We have been able to rapidly create and seamlessly maintain multiple websites tailored to specific categories or genres and designed to cater to targeted audiences with mutual interests. We believe that our ability to create and operate a diverse network of specific interest websites with unique, user-generated content in a cost-effective manner is a significant competitive differentiator that allows us to implement a subscription-fee based revenue model while many other popular social networking websites rely primarily upon free-access, advertising-based revenue models. Live Interactive Video. Approximately 24% of our total net revenues for the nine months ended September 30, 2011 and 22% of our total net revenues for the year ended December 31, 2010 were generated through our live interactive video technology platform. Our live interactive video technology platform is a live video broadcast platform that enables models to broadcast from independent studios throughout the world and interact with our users via instant messaging and video. We believe our live interactive video platform provides a unique offering including bi-directional and omni-directional video and interactive features that allow models to communicate with and attract users through a variety of mediums including blogs, newsletters and video. In addition, we believe the reliability of our live interactive video technology platform, which had approximately 99.1% uptime during 2010, is a key factor allowing us to maintain a large base of users. In addition to our revenue-generating technology platforms, we have invested significant time and resources into developing our back-end marketing, analytics and billing technologies, which are a key contributor to the success of our business. We have developed proprietary systems to allow our marketing affiliates to maximize their revenue for our mutual benefit. These systems include proprietary white-labeling solutions, in which we provide back-end technology solutions to permit affiliates and marketing partners to deliver our products and services while maintaining the affiliate s and marketing partner s own branding and style, self-optimizing ad spots, and a robust banner optimization engine that automatically chooses the best possible site and banner to promote in a given ad spot. Our marketing technology has also enabled the creation and continued growth of our network of more than 280,000 affiliates, which we believe is one of the largest of its kind in the world and a significant barrier to entry to potential and existing competitors. Similarly, our proprietary analytics technology provides us with an advantage relative to less sophisticated competitors by enabling us to estimate future revenue based on short-term response to our advertising campaigns, as well as providing for analysis of key data and metrics in order to optimize our marketing spend and maximize the revenues our websites generate. Our robust billing platform allows our customers to pay using many of the widely-adopted methods of e-commerce, both domestically as well as internationally. We categorize our users into five categories: visitors, registrants, members, subscribers and paid users. Visitors. Visitors are users who visit our websites but do not necessarily register. We believe we achieve large numbers of unique visitors because of our focus on continuously enhancing the user experience and expanding the breadth of our services. We had more than 196 million unique worldwide visitors in the month of December 2010, representing a growth of more than 300% from our approximately 46.9 million unique worldwide visitors in January 2009, according to comScore. Registrants. Registrants are visitors who complete a free registration form on one of our websites by giving basic identification information and submitting their e-mail address. For the nine months ended September 30, 2011, we averaged more than 6.4 million new registrations on our websites each month. For the year ended December 31, 2010, we averaged more than 6.4 million new registrations on our websites each month. Some of our registrants are also members, as described below. Members. Members are registrants who log into one of our websites and make use of our free products and services. For the nine months ended September 30, 2011, we averaged more than 4.0 million new members on our websites each month. For the year ended December 31, 2010, we averaged more than 3.9 million new members on our websites each month. Subscribers. Subscribers are members who purchase daily, three-day, weekly, monthly, quarterly, annual or lifetime subscriptions for one or more of our websites. Subscribers have full access to our websites and may access special features. For the nine months ended September 30, 2011, we had a monthly average of approximately 950 thousand and for the year ended December 31, 2010, we had a monthly average of approximately 1 million paying subscribers. Paid Users. Paid users are members who purchase products or services on a pay-by-usage basis. For the nine months ended September 30, 2011, we averaged approximately 2.9 million purchased minutes by paid users each month. For the year ended December 31, 2010, we averaged approximately 3.0 million purchased minutes by paid users each month. We focus on the following key business metrics to evaluate the effectiveness of our operating strategies. Average Revenue per Subscriber. We calculate average revenue per subscriber, or ARPU, by dividing net revenue for the period by the average number of subscribers in the period and by the number of months in the period. As such, our ARPU is a monthly calculation. For the nine months ended September 30, 2011, our average monthly revenue per subscriber was $20.22. For the year ended December 31, 2010, our average monthly revenue per subscriber was $20.49. Churn. Churn is calculated by dividing terminations of subscriptions during the period by the total number of subscribers at the beginning of that period. Our average monthly churn rate, which measures the rate UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 of loss of subscribers, for the nine months ended September 30, 2011 was 16.3% per month. Our average monthly churn rate for the year ended December 31, 2010 was 16.1% per month. Cost Per Gross Addition. Cost per gross addition, or CPGA, is calculated by adding affiliate commission expense plus ad buy expenses and dividing by new subscribers during the measurement period. Our CPGA for the nine months ended September 30, 2011 was $42.76. Our CPGA for the year ended December 31, 2010 was $47.25. Average Lifetime Net Revenue Per Subscriber. Average Lifetime Net Revenue Per Subscriber is calculated by multiplying the average lifetime (in months) of a subscriber by ARPU for the measurement period and then subtracting the CPGA for the measurement period. Our Average Lifetime Net Revenue Per Subscriber for the nine months ended September 30, 2011 was $81.06. Our Average Lifetime Net Revenue Per Subscriber for the year ended December 31, 2010 was $80.17. While we monitor many statistics in the overall management of our business, we believe that Average Lifetime Net Revenue Per Subscriber and the number of subscribers are particularly helpful metrics for gaining a meaningful understanding of our business as they provide an indication of total revenue and profit generated from our base of subscribers inclusive of affiliate commissions and advertising costs required to generate new subscriptions. In addition to our social networks and live interactive video platforms, we also offer professionally-generated content through our premium content technology platform and our non-internet entertainment business. Through websites such as Penthouse.com and HotBox.com, our subscribers and paid users have access to our collection of more than 15,000 hours of professional video, which includes our library of more than 800 standard and high-definition full-length feature films and one million professionally produced images. We began shooting all of our content in 3D in September 2010. Additionally, subscribers have access to editorial content, chat rooms and other interactive features. In addition to our online products and services, we also have a non-technology legacy entertainment business, in which we produce and distribute original pictorial and video content via traditional distribution channels including licensing and retail DVD channels, and license the globally-recognized Penthouse brand to a variety of consumer product companies and entertainment venues and public branded men s lifestyle magazines. Our Competitive Strengths We believe that we have the following competitive strengths that we can leverage to implement our strategy: Proprietary and Scalable Technology Platform. Our robust, proprietary and highly scalable technology platform supports our social networking, live interactive video and premium content websites. We are able to use our customized back-end interface to quickly and affordably generate new websites, launch new features and target new audiences at a relatively low incremental cost. We believe that our ability to create new websites and provide new features is crucial to cost-effectively maintaining our relationships with existing users and attracting new users. Paid Subscriber-Based Model. We operate social networking websites that allow our members to make connections with other members with whom they share common interests. Our paid subscriber-based model of social networking websites is distinctly different from the business models of other free social networking websites whose users access the websites to remain connected to their pre-existing friends and interest groups. Large and Diverse User Base. We operate some of the most heavily visited social networking websites in the world, currently adding on average more than 6.4 million new registrants and more than 4.0 million new members each month. Our websites are designed to appeal to individuals with a diversity of interests and backgrounds. We believe potential members are attracted to the opportunity to interact with other individuals by having access to our large, diverse user base. Large and Difficult to Replicate Affiliate Network and Significant Marketing Spend. Our marketing affiliates are companies that market our services on their websites, allowing us to market our brand beyond our established user base. As of September 30, 2011 and December 31, 2010, we had more than 280,000 participants in our marketing affiliate program from which we derive a substantial portion of our new members and approximately 46% of our net revenues for the nine months ended September 30, 2011 and 45% of our net revenues for the year ended December 31, 2010. We believe that the difficulty in building an affiliate network of this large size, together with our combined affiliate and advertising spend for the nine months ended September 30, 2011 and the year ended December 31, 2010 of $64.5 million and $103.5 million, respectively, presents a significant barrier to entry for potential competitors. Our Strategy Our goal is to enhance revenue opportunities while improving our profitability. We plan to achieve these goals using the following strategies: Convert Visitors, Registrants and Members into Subscribers or Paid Users. We continually seek to convert visitors, registrants and members into subscribers or paid users. We do this by constantly evaluating, adding and enhancing features on our websites to improve our users experience. Create Additional Websites and Diversify Offerings. We are constantly seeking to identify groups of sufficient size who share a common interest in order to create a website intended to appeal to their interests. Our extensive user database serves as an existing source of potential members and subscribers for new websites we create. Expand into and Monetize Current Foreign Markets. In 2010, nearly 71% of our members were outside the United States, but non-U.S. users accounted for less than half of our total net revenues. We seek to expand in selected geographic markets, including Southeast Europe, South America and Asia. Pursue Targeted Acquisitions. We intend to expand our business by acquiring and integrating additional social networking websites, technology platforms, owners, creators and distributors of content and payment processing and advertising businesses. Our management team possesses significant mergers and acquisitions and integration expertise and regularly screens the marketplace for strategic acquisition opportunities. Generate Online Advertising Revenue. To date, online advertising revenue has represented less than 0.1% of our net revenue, averaging approximately $8,000 per month in the nine months ended September 30, 2011 and $9,000 per month for the year ended December 31, 2010. With continued worldwide growth in this advertising segment, we see this as a significant growth opportunity. We believe that our broad and diverse user base represents a valuable asset that will provide opportunities for us to offer targeted online advertising to specific demographic groups. We intend to focus our advertising efforts on our general audience social networking websites and maintain our subscription-based model for our adult social networking websites. Our New Financing On October 27, 2010, we issued new debt to repay our then existing debt, which we refer to as the New Financing. We, along with our wholly-owned subsidiary Interactive Network, Inc., or INI, co-issued $305.0 million principal amount of the Senior Secured Notes, $13.8 million of the Cash Pay Notes, and $232.5 million of the Non-Cash Pay Notes. Our Initial Public Offering On May 16, 2011, we issued 5,000,000 shares of common stock at a price of $10.00 per share and completed our initial public offering (the IPO ). We raised gross proceeds of $50.0 million, less underwriting fees and commissions of 7.25% of the gross proceeds, or $3.6 million, and incurred other offering expenses of $2.9 million to be paid from the proceeds of the offering, resulting in $43.5 million of net proceeds. In addition, we had incurred and paid as of December 31, 2010, $13.3 million of offering costs, which were included in deferred offering costs in the accompanying balance sheet at December 31, 2010 and written off by a charge to capital in excess of par value in the quarter ended June 30, 2011. On May 19, 2011, we redeemed $37.8 million of our Senior Secured Notes and $1.7 million of our Cash Pay Notes for a total of $39.5 million principal amount of New Financing redeemed from the net proceeds of our IPO and incurred a loss on extinguishment of debt estimated to be approximately $7.3 million. As of September 30, 2011, the outstanding principal amounts of the Senior Secured Notes, Cash Pay Notes and Non-Cash Pay Notes were $235.3 million, $10.6 million and $250.9 million, respectively. Recent Developments In July 2011, we acquired, through one of our subsidiaries, PerfectMatch.com, an online relationship service helping adults seeking successful, lasting connections. We paid approximately $2.5 million in cash and stock to acquire the assets of the website. PerfectMatch.com uses the Duet Total Compatibility System, a system which analyzes the whole person to find friends, taking into account each member s personality, values and ideals, life and love-style preferences to identify and find the person right for them. The acquisition of this website and related assets adds to our portfolio of general audience social networking websites. In September 2011, we acquired, through one of our subsidiaries, BDM Global Ventures Ltd., the company which owns the operations of JigoCity. The acquisition was completed pursuant to an Agreement and Plan of Merger entered into on September 7, 2011 among us, JGC Holdings Limited, our wholly-owned subsidiary, BDM Global Ventures Limited, which we refer to as BDM, Global Investment Ventures LLC and Anthony R. Bobulinski, which we refer to as the Merger Agreement. Under the terms of the Merger Agreement, the shareholders of BDM, in exchange for their outstanding shares and options in BDM and its subsidiaries, received merger consideration consisting of 1,555,555, shares of our common stock, 500,000 of which will be held in escrow until no later than December 31, 2012, and warrants exercisable into 6,436,851 shares of our common stock with exercise prices ranging from $5-$18 per share with an expiration date of December 31, 2021. Pursuant to an equity put agreement we entered into, the shareholders of BDM have the option to sell all of the shares of our common stock and warrants issued as merger consideration back to us in exchange for the return of 70% of the equity in BDM if the volume-weighted average price of our common stock fails to equal or exceed $12.00 per share during any 10 trading day period principally between the closing date and the later of June 30, 2014 and the date upon which our current indentures are fully discharged, or if an indenture modification is made, as defined in the equity put agreement, the later of June 30, 2014 and the date the indenture modification takes place (the later date hereinafter referred to as the Vesting Date ). The equity put agreement provides that the put right shall become exercisable at the sole discretion of the shareholders appointed representative during the period commencing on the Vesting Date and expiring sixty (60) days thereafter. Additionally, if the shareholders of BDM exercise the put right, we have the right to pay them in our common stock and/or cash, having a combined value as of the later of the above dates equal to the product of (i) 2,209,414 shares of common stock (subject to dilutive adjustment) and (ii) the difference between the highest 10 day volume-weighted average price attained by our common stock during such period and $12.00, in which case the put right terminates. Pursuant to a registration rights agreement, we also granted demand registration rights under certain circumstances, with respect to the shares of our common stock and warrants issued as merger consideration. JigoCity is a global social commerce organization committed to providing members with high quality daily deals that are relevant to their individual lifestyles. The acquisition of JigoCity adds to our portfolio a social commerce company and what we believe will be an additional avenue to monetize our foreign markets. Our Corporate Information Our executive offices are located at 6800 Broken Sound Parkway, Suite 200, Boca Raton, Florida 33487 and our telephone number is (561) 912-7000. Our website address is www.ffn.com. The information contained in, or accessible through, our website is not part of this prospectus. 6800 Broken Sound Parkway, Suite 200 Boca Raton, Florida 33487 (561) 912-7000 (Address, including zip code, and telephone number, including area code, of registrant s principal executive offices)
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001525634_traffic_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001525634_traffic_prospectus_summary.txt
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+consolidated financial statements included elsewhere in this prospectus. This summary may not contain all of the information that may be important to you. You should carefully read this entire prospectus, including the section entitled Risk Factors and our consolidated financial statements and notes to those statements. As used in this prospectus, unless the context otherwise requires, all references to we, us, our, our company or the company refer to FriendFinder Networks Inc. and, where appropriate, our consolidated direct and indirect subsidiaries, except where it is clear that the terms mean only FriendFinder Networks Inc. The term INI refers to our subsidiary and co-issuer of the Registrable Notes, Interactive Network, Inc. References to our common stock refer only to our voting common stock and except as otherwise noted, such references do not include our Series B common stock or our preferred common stock. Except where we state otherwise, the information presented in this prospectus reflects (i) the amendment and restatement of our bylaws, effective upon the consummation of our initial public offering on May 16, 2011, and (ii) the amendment and restatement of our articles of incorporation, which became effective on January 25, 2010. About Our Company FriendFinder Networks Inc. is a leading internet and technology company providing services in the rapidly expanding markets of social networking and web-based video sharing. Our business consists of creating and operating technology platforms which run several of the most heavily visited websites in the world. Through our extensive network of more than 44,000 websites, since our inception, we have built a base of more than 484 million registrants and more than 320 million members in more than 200 countries. We are able to create and maintain, in a cost-effective manner, websites intended to appeal to users of diverse cultures and interest groups. In December 2010, we had more than 196 million unique visitors to our network of websites, according to comScore. We offer our members a wide variety of online services so that they can interact with each other and access the content available on our websites. Our most heavily visited websites include AdultFriendFinder.com, Amigos.com, AsiaFriendFinder.com, Cams.com, FriendFinder.com, BigChurch.com and SeniorFriendFinder.com. For the nine months ended September 30, 2011, we had net revenue, income from operations and net losses of $249.6 million, $52.4 million and $(20.9) million, respectively. For the year ended December 31, 2010, we had net revenue, income from operations and net losses of $346.0 million, $71.1 million and ($43.2) million, respectively. Our revenues to date have been primarily derived from online subscription and paid-usage for our products and services. These products and services are delivered primarily through two highly scalable revenue-generating technology platforms: Social Networking. Approximately 69% of our total net revenues for the nine months ended September 30, 2011 and 70% of our total net revenues for the year ended December 31, 2010 were generated through our targeted social networking technology platform. Our social networking technology platform provides users who register or purchase subscriptions to one or more of our websites with the ability to communicate and to establish new connections with other users via our personal chat rooms, instant messaging and e-mail applications and to create, post and view content of interest. We have been able to rapidly create and seamlessly maintain multiple websites tailored to specific categories or genres and designed to cater to targeted audiences with mutual interests. We believe that our ability to create and operate a diverse network of specific interest websites with unique, user-generated content in a cost-effective manner is a significant competitive differentiator that allows us to implement a subscription-fee based revenue model while many other popular social networking websites rely primarily upon free-access, advertising-based revenue models. Live Interactive Video. Approximately 24% of our total net revenues for the nine months ended September 30, 2011 and 22% of our total net revenues for the year ended December 31, 2010 were generated through our live interactive video technology platform. Our live interactive video technology platform is a live video broadcast platform that enables models to broadcast from independent studios throughout the world and interact with our users via instant messaging and video. We believe our live interactive video platform provides a unique offering including bi-directional and omni-directional video and interactive features that allow models to communicate with and attract users through a variety of mediums including blogs, newsletters and video. In addition, we believe the reliability of our live interactive video technology platform, which had approximately 99.1% uptime during 2010, is a key factor allowing us to maintain a large base of users. In addition to our revenue-generating technology platforms, we have invested significant time and resources into developing our back-end marketing, analytics and billing technologies, which are a key contributor to the success of our business. We have developed proprietary systems to allow our marketing affiliates to maximize their revenue for our mutual benefit. These systems include proprietary white-labeling solutions, in which we provide back-end technology solutions to permit affiliates and marketing partners to deliver our products and services while maintaining the affiliate s and marketing partner s own branding and style, self-optimizing ad spots, and a robust banner optimization engine that automatically chooses the best possible site and banner to promote in a given ad spot. Our marketing technology has also enabled the creation and continued growth of our network of more than 280,000 affiliates, which we believe is one of the largest of its kind in the world and a significant barrier to entry to potential and existing competitors. Similarly, our proprietary analytics technology provides us with an advantage relative to less sophisticated competitors by enabling us to estimate future revenue based on short-term response to our advertising campaigns, as well as providing for analysis of key data and metrics in order to optimize our marketing spend and maximize the revenues our websites generate. Our robust billing platform allows our customers to pay using many of the widely-adopted methods of e-commerce, both domestically as well as internationally. We categorize our users into five categories: visitors, registrants, members, subscribers and paid users. Visitors. Visitors are users who visit our websites but do not necessarily register. We believe we achieve large numbers of unique visitors because of our focus on continuously enhancing the user experience and expanding the breadth of our services. We had more than 196 million unique worldwide visitors in the month of December 2010, representing a growth of more than 300% from our approximately 46.9 million unique worldwide visitors in January 2009, according to comScore. Registrants. Registrants are visitors who complete a free registration form on one of our websites by giving basic identification information and submitting their e-mail address. For the nine months ended September 30, 2011, we averaged more than 6.4 million new registrations on our websites each month. For the year ended December 31, 2010, we averaged more than 6.4 million new registrations on our websites each month. Some of our registrants are also members, as described below. Members. Members are registrants who log into one of our websites and make use of our free products and services. For the nine months ended September 30, 2011, we averaged more than 4.0 million new members on our websites each month. For the year ended December 31, 2010, we averaged more than 3.9 million new members on our websites each month. Subscribers. Subscribers are members who purchase daily, three-day, weekly, monthly, quarterly, annual or lifetime subscriptions for one or more of our websites. Subscribers have full access to our websites and may access special features. For the nine months ended September 30, 2011, we had a monthly average of approximately 950 thousand and for the year ended December 31, 2010, we had a monthly average of approximately 1 million paying subscribers. Paid Users. Paid users are members who purchase products or services on a pay-by-usage basis. For the nine months ended September 30, 2011, we averaged approximately 2.9 million purchased minutes by paid users each month. For the year ended December 31, 2010, we averaged approximately 3.0 million purchased minutes by paid users each month. We focus on the following key business metrics to evaluate the effectiveness of our operating strategies. Average Revenue per Subscriber. We calculate average revenue per subscriber, or ARPU, by dividing net revenue for the period by the average number of subscribers in the period and by the number of months in the period. As such, our ARPU is a monthly calculation. For the nine months ended September 30, 2011, our average monthly revenue per subscriber was $20.22. For the year ended December 31, 2010, our average monthly revenue per subscriber was $20.49. Churn. Churn is calculated by dividing terminations of subscriptions during the period by the total number of subscribers at the beginning of that period. Our average monthly churn rate, which measures the rate UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 of loss of subscribers, for the nine months ended September 30, 2011 was 16.3% per month. Our average monthly churn rate for the year ended December 31, 2010 was 16.1% per month. Cost Per Gross Addition. Cost per gross addition, or CPGA, is calculated by adding affiliate commission expense plus ad buy expenses and dividing by new subscribers during the measurement period. Our CPGA for the nine months ended September 30, 2011 was $42.76. Our CPGA for the year ended December 31, 2010 was $47.25. Average Lifetime Net Revenue Per Subscriber. Average Lifetime Net Revenue Per Subscriber is calculated by multiplying the average lifetime (in months) of a subscriber by ARPU for the measurement period and then subtracting the CPGA for the measurement period. Our Average Lifetime Net Revenue Per Subscriber for the nine months ended September 30, 2011 was $81.06. Our Average Lifetime Net Revenue Per Subscriber for the year ended December 31, 2010 was $80.17. While we monitor many statistics in the overall management of our business, we believe that Average Lifetime Net Revenue Per Subscriber and the number of subscribers are particularly helpful metrics for gaining a meaningful understanding of our business as they provide an indication of total revenue and profit generated from our base of subscribers inclusive of affiliate commissions and advertising costs required to generate new subscriptions. In addition to our social networks and live interactive video platforms, we also offer professionally-generated content through our premium content technology platform and our non-internet entertainment business. Through websites such as Penthouse.com and HotBox.com, our subscribers and paid users have access to our collection of more than 15,000 hours of professional video, which includes our library of more than 800 standard and high-definition full-length feature films and one million professionally produced images. We began shooting all of our content in 3D in September 2010. Additionally, subscribers have access to editorial content, chat rooms and other interactive features. In addition to our online products and services, we also have a non-technology legacy entertainment business, in which we produce and distribute original pictorial and video content via traditional distribution channels including licensing and retail DVD channels, and license the globally-recognized Penthouse brand to a variety of consumer product companies and entertainment venues and public branded men s lifestyle magazines. Our Competitive Strengths We believe that we have the following competitive strengths that we can leverage to implement our strategy: Proprietary and Scalable Technology Platform. Our robust, proprietary and highly scalable technology platform supports our social networking, live interactive video and premium content websites. We are able to use our customized back-end interface to quickly and affordably generate new websites, launch new features and target new audiences at a relatively low incremental cost. We believe that our ability to create new websites and provide new features is crucial to cost-effectively maintaining our relationships with existing users and attracting new users. Paid Subscriber-Based Model. We operate social networking websites that allow our members to make connections with other members with whom they share common interests. Our paid subscriber-based model of social networking websites is distinctly different from the business models of other free social networking websites whose users access the websites to remain connected to their pre-existing friends and interest groups. Large and Diverse User Base. We operate some of the most heavily visited social networking websites in the world, currently adding on average more than 6.4 million new registrants and more than 4.0 million new members each month. Our websites are designed to appeal to individuals with a diversity of interests and backgrounds. We believe potential members are attracted to the opportunity to interact with other individuals by having access to our large, diverse user base. Large and Difficult to Replicate Affiliate Network and Significant Marketing Spend. Our marketing affiliates are companies that market our services on their websites, allowing us to market our brand beyond our established user base. As of September 30, 2011 and December 31, 2010, we had more than 280,000 participants in our marketing affiliate program from which we derive a substantial portion of our new members and approximately 46% of our net revenues for the nine months ended September 30, 2011 and 45% of our net revenues for the year ended December 31, 2010. We believe that the difficulty in building an affiliate network of this large size, together with our combined affiliate and advertising spend for the nine months ended September 30, 2011 and the year ended December 31, 2010 of $64.5 million and $103.5 million, respectively, presents a significant barrier to entry for potential competitors. Our Strategy Our goal is to enhance revenue opportunities while improving our profitability. We plan to achieve these goals using the following strategies: Convert Visitors, Registrants and Members into Subscribers or Paid Users. We continually seek to convert visitors, registrants and members into subscribers or paid users. We do this by constantly evaluating, adding and enhancing features on our websites to improve our users experience. Create Additional Websites and Diversify Offerings. We are constantly seeking to identify groups of sufficient size who share a common interest in order to create a website intended to appeal to their interests. Our extensive user database serves as an existing source of potential members and subscribers for new websites we create. Expand into and Monetize Current Foreign Markets. In 2010, nearly 71% of our members were outside the United States, but non-U.S. users accounted for less than half of our total net revenues. We seek to expand in selected geographic markets, including Southeast Europe, South America and Asia. Pursue Targeted Acquisitions. We intend to expand our business by acquiring and integrating additional social networking websites, technology platforms, owners, creators and distributors of content and payment processing and advertising businesses. Our management team possesses significant mergers and acquisitions and integration expertise and regularly screens the marketplace for strategic acquisition opportunities. Generate Online Advertising Revenue. To date, online advertising revenue has represented less than 0.1% of our net revenue, averaging approximately $8,000 per month in the nine months ended September 30, 2011 and $9,000 per month for the year ended December 31, 2010. With continued worldwide growth in this advertising segment, we see this as a significant growth opportunity. We believe that our broad and diverse user base represents a valuable asset that will provide opportunities for us to offer targeted online advertising to specific demographic groups. We intend to focus our advertising efforts on our general audience social networking websites and maintain our subscription-based model for our adult social networking websites. Our New Financing On October 27, 2010, we issued new debt to repay our then existing debt, which we refer to as the New Financing. We, along with our wholly-owned subsidiary Interactive Network, Inc., or INI, co-issued $305.0 million principal amount of the Senior Secured Notes, $13.8 million of the Cash Pay Notes, and $232.5 million of the Non-Cash Pay Notes. Our Initial Public Offering On May 16, 2011, we issued 5,000,000 shares of common stock at a price of $10.00 per share and completed our initial public offering (the IPO ). We raised gross proceeds of $50.0 million, less underwriting fees and commissions of 7.25% of the gross proceeds, or $3.6 million, and incurred other offering expenses of $2.9 million to be paid from the proceeds of the offering, resulting in $43.5 million of net proceeds. In addition, we had incurred and paid as of December 31, 2010, $13.3 million of offering costs, which were included in deferred offering costs in the accompanying balance sheet at December 31, 2010 and written off by a charge to capital in excess of par value in the quarter ended June 30, 2011. On May 19, 2011, we redeemed $37.8 million of our Senior Secured Notes and $1.7 million of our Cash Pay Notes for a total of $39.5 million principal amount of New Financing redeemed from the net proceeds of our IPO and incurred a loss on extinguishment of debt estimated to be approximately $7.3 million. As of September 30, 2011, the outstanding principal amounts of the Senior Secured Notes, Cash Pay Notes and Non-Cash Pay Notes were $235.3 million, $10.6 million and $250.9 million, respectively. Recent Developments In July 2011, we acquired, through one of our subsidiaries, PerfectMatch.com, an online relationship service helping adults seeking successful, lasting connections. We paid approximately $2.5 million in cash and stock to acquire the assets of the website. PerfectMatch.com uses the Duet Total Compatibility System, a system which analyzes the whole person to find friends, taking into account each member s personality, values and ideals, life and love-style preferences to identify and find the person right for them. The acquisition of this website and related assets adds to our portfolio of general audience social networking websites. In September 2011, we acquired, through one of our subsidiaries, BDM Global Ventures Ltd., the company which owns the operations of JigoCity. The acquisition was completed pursuant to an Agreement and Plan of Merger entered into on September 7, 2011 among us, JGC Holdings Limited, our wholly-owned subsidiary, BDM Global Ventures Limited, which we refer to as BDM, Global Investment Ventures LLC and Anthony R. Bobulinski, which we refer to as the Merger Agreement. Under the terms of the Merger Agreement, the shareholders of BDM, in exchange for their outstanding shares and options in BDM and its subsidiaries, received merger consideration consisting of 1,555,555, shares of our common stock, 500,000 of which will be held in escrow until no later than December 31, 2012, and warrants exercisable into 6,436,851 shares of our common stock with exercise prices ranging from $5-$18 per share with an expiration date of December 31, 2021. Pursuant to an equity put agreement we entered into, the shareholders of BDM have the option to sell all of the shares of our common stock and warrants issued as merger consideration back to us in exchange for the return of 70% of the equity in BDM if the volume-weighted average price of our common stock fails to equal or exceed $12.00 per share during any 10 trading day period principally between the closing date and the later of June 30, 2014 and the date upon which our current indentures are fully discharged, or if an indenture modification is made, as defined in the equity put agreement, the later of June 30, 2014 and the date the indenture modification takes place (the later date hereinafter referred to as the Vesting Date ). The equity put agreement provides that the put right shall become exercisable at the sole discretion of the shareholders appointed representative during the period commencing on the Vesting Date and expiring sixty (60) days thereafter. Additionally, if the shareholders of BDM exercise the put right, we have the right to pay them in our common stock and/or cash, having a combined value as of the later of the above dates equal to the product of (i) 2,209,414 shares of common stock (subject to dilutive adjustment) and (ii) the difference between the highest 10 day volume-weighted average price attained by our common stock during such period and $12.00, in which case the put right terminates. Pursuant to a registration rights agreement, we also granted demand registration rights under certain circumstances, with respect to the shares of our common stock and warrants issued as merger consideration. JigoCity is a global social commerce organization committed to providing members with high quality daily deals that are relevant to their individual lifestyles. The acquisition of JigoCity adds to our portfolio a social commerce company and what we believe will be an additional avenue to monetize our foreign markets. Our Corporate Information Our executive offices are located at 6800 Broken Sound Parkway, Suite 200, Boca Raton, Florida 33487 and our telephone number is (561) 912-7000. Our website address is www.ffn.com. The information contained in, or accessible through, our website is not part of this prospectus. 6800 Broken Sound Parkway, Suite 200 Boca Raton, Florida 33487 (561) 912-7000 (Address, including zip code, and telephone number, including area code, of registrant s principal executive offices)
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001525635_transbloom_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001525635_transbloom_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..70c3038c5cc00a545169ebbf4e144f9207388da4
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@@ -0,0 +1 @@
+consolidated financial statements included elsewhere in this prospectus. This summary may not contain all of the information that may be important to you. You should carefully read this entire prospectus, including the section entitled Risk Factors and our consolidated financial statements and notes to those statements. As used in this prospectus, unless the context otherwise requires, all references to we, us, our, our company or the company refer to FriendFinder Networks Inc. and, where appropriate, our consolidated direct and indirect subsidiaries, except where it is clear that the terms mean only FriendFinder Networks Inc. The term INI refers to our subsidiary and co-issuer of the Registrable Notes, Interactive Network, Inc. References to our common stock refer only to our voting common stock and except as otherwise noted, such references do not include our Series B common stock or our preferred common stock. Except where we state otherwise, the information presented in this prospectus reflects (i) the amendment and restatement of our bylaws, effective upon the consummation of our initial public offering on May 16, 2011, and (ii) the amendment and restatement of our articles of incorporation, which became effective on January 25, 2010. About Our Company FriendFinder Networks Inc. is a leading internet and technology company providing services in the rapidly expanding markets of social networking and web-based video sharing. Our business consists of creating and operating technology platforms which run several of the most heavily visited websites in the world. Through our extensive network of more than 44,000 websites, since our inception, we have built a base of more than 484 million registrants and more than 320 million members in more than 200 countries. We are able to create and maintain, in a cost-effective manner, websites intended to appeal to users of diverse cultures and interest groups. In December 2010, we had more than 196 million unique visitors to our network of websites, according to comScore. We offer our members a wide variety of online services so that they can interact with each other and access the content available on our websites. Our most heavily visited websites include AdultFriendFinder.com, Amigos.com, AsiaFriendFinder.com, Cams.com, FriendFinder.com, BigChurch.com and SeniorFriendFinder.com. For the nine months ended September 30, 2011, we had net revenue, income from operations and net losses of $249.6 million, $52.4 million and $(20.9) million, respectively. For the year ended December 31, 2010, we had net revenue, income from operations and net losses of $346.0 million, $71.1 million and ($43.2) million, respectively. Our revenues to date have been primarily derived from online subscription and paid-usage for our products and services. These products and services are delivered primarily through two highly scalable revenue-generating technology platforms: Social Networking. Approximately 69% of our total net revenues for the nine months ended September 30, 2011 and 70% of our total net revenues for the year ended December 31, 2010 were generated through our targeted social networking technology platform. Our social networking technology platform provides users who register or purchase subscriptions to one or more of our websites with the ability to communicate and to establish new connections with other users via our personal chat rooms, instant messaging and e-mail applications and to create, post and view content of interest. We have been able to rapidly create and seamlessly maintain multiple websites tailored to specific categories or genres and designed to cater to targeted audiences with mutual interests. We believe that our ability to create and operate a diverse network of specific interest websites with unique, user-generated content in a cost-effective manner is a significant competitive differentiator that allows us to implement a subscription-fee based revenue model while many other popular social networking websites rely primarily upon free-access, advertising-based revenue models. Live Interactive Video. Approximately 24% of our total net revenues for the nine months ended September 30, 2011 and 22% of our total net revenues for the year ended December 31, 2010 were generated through our live interactive video technology platform. Our live interactive video technology platform is a live video broadcast platform that enables models to broadcast from independent studios throughout the world and interact with our users via instant messaging and video. We believe our live interactive video platform provides a unique offering including bi-directional and omni-directional video and interactive features that allow models to communicate with and attract users through a variety of mediums including blogs, newsletters and video. In addition, we believe the reliability of our live interactive video technology platform, which had approximately 99.1% uptime during 2010, is a key factor allowing us to maintain a large base of users. In addition to our revenue-generating technology platforms, we have invested significant time and resources into developing our back-end marketing, analytics and billing technologies, which are a key contributor to the success of our business. We have developed proprietary systems to allow our marketing affiliates to maximize their revenue for our mutual benefit. These systems include proprietary white-labeling solutions, in which we provide back-end technology solutions to permit affiliates and marketing partners to deliver our products and services while maintaining the affiliate s and marketing partner s own branding and style, self-optimizing ad spots, and a robust banner optimization engine that automatically chooses the best possible site and banner to promote in a given ad spot. Our marketing technology has also enabled the creation and continued growth of our network of more than 280,000 affiliates, which we believe is one of the largest of its kind in the world and a significant barrier to entry to potential and existing competitors. Similarly, our proprietary analytics technology provides us with an advantage relative to less sophisticated competitors by enabling us to estimate future revenue based on short-term response to our advertising campaigns, as well as providing for analysis of key data and metrics in order to optimize our marketing spend and maximize the revenues our websites generate. Our robust billing platform allows our customers to pay using many of the widely-adopted methods of e-commerce, both domestically as well as internationally. We categorize our users into five categories: visitors, registrants, members, subscribers and paid users. Visitors. Visitors are users who visit our websites but do not necessarily register. We believe we achieve large numbers of unique visitors because of our focus on continuously enhancing the user experience and expanding the breadth of our services. We had more than 196 million unique worldwide visitors in the month of December 2010, representing a growth of more than 300% from our approximately 46.9 million unique worldwide visitors in January 2009, according to comScore. Registrants. Registrants are visitors who complete a free registration form on one of our websites by giving basic identification information and submitting their e-mail address. For the nine months ended September 30, 2011, we averaged more than 6.4 million new registrations on our websites each month. For the year ended December 31, 2010, we averaged more than 6.4 million new registrations on our websites each month. Some of our registrants are also members, as described below. Members. Members are registrants who log into one of our websites and make use of our free products and services. For the nine months ended September 30, 2011, we averaged more than 4.0 million new members on our websites each month. For the year ended December 31, 2010, we averaged more than 3.9 million new members on our websites each month. Subscribers. Subscribers are members who purchase daily, three-day, weekly, monthly, quarterly, annual or lifetime subscriptions for one or more of our websites. Subscribers have full access to our websites and may access special features. For the nine months ended September 30, 2011, we had a monthly average of approximately 950 thousand and for the year ended December 31, 2010, we had a monthly average of approximately 1 million paying subscribers. Paid Users. Paid users are members who purchase products or services on a pay-by-usage basis. For the nine months ended September 30, 2011, we averaged approximately 2.9 million purchased minutes by paid users each month. For the year ended December 31, 2010, we averaged approximately 3.0 million purchased minutes by paid users each month. We focus on the following key business metrics to evaluate the effectiveness of our operating strategies. Average Revenue per Subscriber. We calculate average revenue per subscriber, or ARPU, by dividing net revenue for the period by the average number of subscribers in the period and by the number of months in the period. As such, our ARPU is a monthly calculation. For the nine months ended September 30, 2011, our average monthly revenue per subscriber was $20.22. For the year ended December 31, 2010, our average monthly revenue per subscriber was $20.49. Churn. Churn is calculated by dividing terminations of subscriptions during the period by the total number of subscribers at the beginning of that period. Our average monthly churn rate, which measures the rate UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 of loss of subscribers, for the nine months ended September 30, 2011 was 16.3% per month. Our average monthly churn rate for the year ended December 31, 2010 was 16.1% per month. Cost Per Gross Addition. Cost per gross addition, or CPGA, is calculated by adding affiliate commission expense plus ad buy expenses and dividing by new subscribers during the measurement period. Our CPGA for the nine months ended September 30, 2011 was $42.76. Our CPGA for the year ended December 31, 2010 was $47.25. Average Lifetime Net Revenue Per Subscriber. Average Lifetime Net Revenue Per Subscriber is calculated by multiplying the average lifetime (in months) of a subscriber by ARPU for the measurement period and then subtracting the CPGA for the measurement period. Our Average Lifetime Net Revenue Per Subscriber for the nine months ended September 30, 2011 was $81.06. Our Average Lifetime Net Revenue Per Subscriber for the year ended December 31, 2010 was $80.17. While we monitor many statistics in the overall management of our business, we believe that Average Lifetime Net Revenue Per Subscriber and the number of subscribers are particularly helpful metrics for gaining a meaningful understanding of our business as they provide an indication of total revenue and profit generated from our base of subscribers inclusive of affiliate commissions and advertising costs required to generate new subscriptions. In addition to our social networks and live interactive video platforms, we also offer professionally-generated content through our premium content technology platform and our non-internet entertainment business. Through websites such as Penthouse.com and HotBox.com, our subscribers and paid users have access to our collection of more than 15,000 hours of professional video, which includes our library of more than 800 standard and high-definition full-length feature films and one million professionally produced images. We began shooting all of our content in 3D in September 2010. Additionally, subscribers have access to editorial content, chat rooms and other interactive features. In addition to our online products and services, we also have a non-technology legacy entertainment business, in which we produce and distribute original pictorial and video content via traditional distribution channels including licensing and retail DVD channels, and license the globally-recognized Penthouse brand to a variety of consumer product companies and entertainment venues and public branded men s lifestyle magazines. Our Competitive Strengths We believe that we have the following competitive strengths that we can leverage to implement our strategy: Proprietary and Scalable Technology Platform. Our robust, proprietary and highly scalable technology platform supports our social networking, live interactive video and premium content websites. We are able to use our customized back-end interface to quickly and affordably generate new websites, launch new features and target new audiences at a relatively low incremental cost. We believe that our ability to create new websites and provide new features is crucial to cost-effectively maintaining our relationships with existing users and attracting new users. Paid Subscriber-Based Model. We operate social networking websites that allow our members to make connections with other members with whom they share common interests. Our paid subscriber-based model of social networking websites is distinctly different from the business models of other free social networking websites whose users access the websites to remain connected to their pre-existing friends and interest groups. Large and Diverse User Base. We operate some of the most heavily visited social networking websites in the world, currently adding on average more than 6.4 million new registrants and more than 4.0 million new members each month. Our websites are designed to appeal to individuals with a diversity of interests and backgrounds. We believe potential members are attracted to the opportunity to interact with other individuals by having access to our large, diverse user base. Large and Difficult to Replicate Affiliate Network and Significant Marketing Spend. Our marketing affiliates are companies that market our services on their websites, allowing us to market our brand beyond our established user base. As of September 30, 2011 and December 31, 2010, we had more than 280,000 participants in our marketing affiliate program from which we derive a substantial portion of our new members and approximately 46% of our net revenues for the nine months ended September 30, 2011 and 45% of our net revenues for the year ended December 31, 2010. We believe that the difficulty in building an affiliate network of this large size, together with our combined affiliate and advertising spend for the nine months ended September 30, 2011 and the year ended December 31, 2010 of $64.5 million and $103.5 million, respectively, presents a significant barrier to entry for potential competitors. Our Strategy Our goal is to enhance revenue opportunities while improving our profitability. We plan to achieve these goals using the following strategies: Convert Visitors, Registrants and Members into Subscribers or Paid Users. We continually seek to convert visitors, registrants and members into subscribers or paid users. We do this by constantly evaluating, adding and enhancing features on our websites to improve our users experience. Create Additional Websites and Diversify Offerings. We are constantly seeking to identify groups of sufficient size who share a common interest in order to create a website intended to appeal to their interests. Our extensive user database serves as an existing source of potential members and subscribers for new websites we create. Expand into and Monetize Current Foreign Markets. In 2010, nearly 71% of our members were outside the United States, but non-U.S. users accounted for less than half of our total net revenues. We seek to expand in selected geographic markets, including Southeast Europe, South America and Asia. Pursue Targeted Acquisitions. We intend to expand our business by acquiring and integrating additional social networking websites, technology platforms, owners, creators and distributors of content and payment processing and advertising businesses. Our management team possesses significant mergers and acquisitions and integration expertise and regularly screens the marketplace for strategic acquisition opportunities. Generate Online Advertising Revenue. To date, online advertising revenue has represented less than 0.1% of our net revenue, averaging approximately $8,000 per month in the nine months ended September 30, 2011 and $9,000 per month for the year ended December 31, 2010. With continued worldwide growth in this advertising segment, we see this as a significant growth opportunity. We believe that our broad and diverse user base represents a valuable asset that will provide opportunities for us to offer targeted online advertising to specific demographic groups. We intend to focus our advertising efforts on our general audience social networking websites and maintain our subscription-based model for our adult social networking websites. Our New Financing On October 27, 2010, we issued new debt to repay our then existing debt, which we refer to as the New Financing. We, along with our wholly-owned subsidiary Interactive Network, Inc., or INI, co-issued $305.0 million principal amount of the Senior Secured Notes, $13.8 million of the Cash Pay Notes, and $232.5 million of the Non-Cash Pay Notes. Our Initial Public Offering On May 16, 2011, we issued 5,000,000 shares of common stock at a price of $10.00 per share and completed our initial public offering (the IPO ). We raised gross proceeds of $50.0 million, less underwriting fees and commissions of 7.25% of the gross proceeds, or $3.6 million, and incurred other offering expenses of $2.9 million to be paid from the proceeds of the offering, resulting in $43.5 million of net proceeds. In addition, we had incurred and paid as of December 31, 2010, $13.3 million of offering costs, which were included in deferred offering costs in the accompanying balance sheet at December 31, 2010 and written off by a charge to capital in excess of par value in the quarter ended June 30, 2011. On May 19, 2011, we redeemed $37.8 million of our Senior Secured Notes and $1.7 million of our Cash Pay Notes for a total of $39.5 million principal amount of New Financing redeemed from the net proceeds of our IPO and incurred a loss on extinguishment of debt estimated to be approximately $7.3 million. As of September 30, 2011, the outstanding principal amounts of the Senior Secured Notes, Cash Pay Notes and Non-Cash Pay Notes were $235.3 million, $10.6 million and $250.9 million, respectively. Recent Developments In July 2011, we acquired, through one of our subsidiaries, PerfectMatch.com, an online relationship service helping adults seeking successful, lasting connections. We paid approximately $2.5 million in cash and stock to acquire the assets of the website. PerfectMatch.com uses the Duet Total Compatibility System, a system which analyzes the whole person to find friends, taking into account each member s personality, values and ideals, life and love-style preferences to identify and find the person right for them. The acquisition of this website and related assets adds to our portfolio of general audience social networking websites. In September 2011, we acquired, through one of our subsidiaries, BDM Global Ventures Ltd., the company which owns the operations of JigoCity. The acquisition was completed pursuant to an Agreement and Plan of Merger entered into on September 7, 2011 among us, JGC Holdings Limited, our wholly-owned subsidiary, BDM Global Ventures Limited, which we refer to as BDM, Global Investment Ventures LLC and Anthony R. Bobulinski, which we refer to as the Merger Agreement. Under the terms of the Merger Agreement, the shareholders of BDM, in exchange for their outstanding shares and options in BDM and its subsidiaries, received merger consideration consisting of 1,555,555, shares of our common stock, 500,000 of which will be held in escrow until no later than December 31, 2012, and warrants exercisable into 6,436,851 shares of our common stock with exercise prices ranging from $5-$18 per share with an expiration date of December 31, 2021. Pursuant to an equity put agreement we entered into, the shareholders of BDM have the option to sell all of the shares of our common stock and warrants issued as merger consideration back to us in exchange for the return of 70% of the equity in BDM if the volume-weighted average price of our common stock fails to equal or exceed $12.00 per share during any 10 trading day period principally between the closing date and the later of June 30, 2014 and the date upon which our current indentures are fully discharged, or if an indenture modification is made, as defined in the equity put agreement, the later of June 30, 2014 and the date the indenture modification takes place (the later date hereinafter referred to as the Vesting Date ). The equity put agreement provides that the put right shall become exercisable at the sole discretion of the shareholders appointed representative during the period commencing on the Vesting Date and expiring sixty (60) days thereafter. Additionally, if the shareholders of BDM exercise the put right, we have the right to pay them in our common stock and/or cash, having a combined value as of the later of the above dates equal to the product of (i) 2,209,414 shares of common stock (subject to dilutive adjustment) and (ii) the difference between the highest 10 day volume-weighted average price attained by our common stock during such period and $12.00, in which case the put right terminates. Pursuant to a registration rights agreement, we also granted demand registration rights under certain circumstances, with respect to the shares of our common stock and warrants issued as merger consideration. JigoCity is a global social commerce organization committed to providing members with high quality daily deals that are relevant to their individual lifestyles. The acquisition of JigoCity adds to our portfolio a social commerce company and what we believe will be an additional avenue to monetize our foreign markets. Our Corporate Information Our executive offices are located at 6800 Broken Sound Parkway, Suite 200, Boca Raton, Florida 33487 and our telephone number is (561) 912-7000. Our website address is www.ffn.com. The information contained in, or accessible through, our website is not part of this prospectus. 6800 Broken Sound Parkway, Suite 200 Boca Raton, Florida 33487 (561) 912-7000 (Address, including zip code, and telephone number, including area code, of registrant s principal executive offices)
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+consolidated financial statements included elsewhere in this prospectus. This summary may not contain all of the information that may be important to you. You should carefully read this entire prospectus, including the section entitled Risk Factors and our consolidated financial statements and notes to those statements. As used in this prospectus, unless the context otherwise requires, all references to we, us, our, our company or the company refer to FriendFinder Networks Inc. and, where appropriate, our consolidated direct and indirect subsidiaries, except where it is clear that the terms mean only FriendFinder Networks Inc. The term INI refers to our subsidiary and co-issuer of the Registrable Notes, Interactive Network, Inc. References to our common stock refer only to our voting common stock and except as otherwise noted, such references do not include our Series B common stock or our preferred common stock. Except where we state otherwise, the information presented in this prospectus reflects (i) the amendment and restatement of our bylaws, effective upon the consummation of our initial public offering on May 16, 2011, and (ii) the amendment and restatement of our articles of incorporation, which became effective on January 25, 2010. About Our Company FriendFinder Networks Inc. is a leading internet and technology company providing services in the rapidly expanding markets of social networking and web-based video sharing. Our business consists of creating and operating technology platforms which run several of the most heavily visited websites in the world. Through our extensive network of more than 44,000 websites, since our inception, we have built a base of more than 484 million registrants and more than 320 million members in more than 200 countries. We are able to create and maintain, in a cost-effective manner, websites intended to appeal to users of diverse cultures and interest groups. In December 2010, we had more than 196 million unique visitors to our network of websites, according to comScore. We offer our members a wide variety of online services so that they can interact with each other and access the content available on our websites. Our most heavily visited websites include AdultFriendFinder.com, Amigos.com, AsiaFriendFinder.com, Cams.com, FriendFinder.com, BigChurch.com and SeniorFriendFinder.com. For the nine months ended September 30, 2011, we had net revenue, income from operations and net losses of $249.6 million, $52.4 million and $(20.9) million, respectively. For the year ended December 31, 2010, we had net revenue, income from operations and net losses of $346.0 million, $71.1 million and ($43.2) million, respectively. Our revenues to date have been primarily derived from online subscription and paid-usage for our products and services. These products and services are delivered primarily through two highly scalable revenue-generating technology platforms: Social Networking. Approximately 69% of our total net revenues for the nine months ended September 30, 2011 and 70% of our total net revenues for the year ended December 31, 2010 were generated through our targeted social networking technology platform. Our social networking technology platform provides users who register or purchase subscriptions to one or more of our websites with the ability to communicate and to establish new connections with other users via our personal chat rooms, instant messaging and e-mail applications and to create, post and view content of interest. We have been able to rapidly create and seamlessly maintain multiple websites tailored to specific categories or genres and designed to cater to targeted audiences with mutual interests. We believe that our ability to create and operate a diverse network of specific interest websites with unique, user-generated content in a cost-effective manner is a significant competitive differentiator that allows us to implement a subscription-fee based revenue model while many other popular social networking websites rely primarily upon free-access, advertising-based revenue models. Live Interactive Video. Approximately 24% of our total net revenues for the nine months ended September 30, 2011 and 22% of our total net revenues for the year ended December 31, 2010 were generated through our live interactive video technology platform. Our live interactive video technology platform is a live video broadcast platform that enables models to broadcast from independent studios throughout the world and interact with our users via instant messaging and video. We believe our live interactive video platform provides a unique offering including bi-directional and omni-directional video and interactive features that allow models to communicate with and attract users through a variety of mediums including blogs, newsletters and video. In addition, we believe the reliability of our live interactive video technology platform, which had approximately 99.1% uptime during 2010, is a key factor allowing us to maintain a large base of users. In addition to our revenue-generating technology platforms, we have invested significant time and resources into developing our back-end marketing, analytics and billing technologies, which are a key contributor to the success of our business. We have developed proprietary systems to allow our marketing affiliates to maximize their revenue for our mutual benefit. These systems include proprietary white-labeling solutions, in which we provide back-end technology solutions to permit affiliates and marketing partners to deliver our products and services while maintaining the affiliate s and marketing partner s own branding and style, self-optimizing ad spots, and a robust banner optimization engine that automatically chooses the best possible site and banner to promote in a given ad spot. Our marketing technology has also enabled the creation and continued growth of our network of more than 280,000 affiliates, which we believe is one of the largest of its kind in the world and a significant barrier to entry to potential and existing competitors. Similarly, our proprietary analytics technology provides us with an advantage relative to less sophisticated competitors by enabling us to estimate future revenue based on short-term response to our advertising campaigns, as well as providing for analysis of key data and metrics in order to optimize our marketing spend and maximize the revenues our websites generate. Our robust billing platform allows our customers to pay using many of the widely-adopted methods of e-commerce, both domestically as well as internationally. We categorize our users into five categories: visitors, registrants, members, subscribers and paid users. Visitors. Visitors are users who visit our websites but do not necessarily register. We believe we achieve large numbers of unique visitors because of our focus on continuously enhancing the user experience and expanding the breadth of our services. We had more than 196 million unique worldwide visitors in the month of December 2010, representing a growth of more than 300% from our approximately 46.9 million unique worldwide visitors in January 2009, according to comScore. Registrants. Registrants are visitors who complete a free registration form on one of our websites by giving basic identification information and submitting their e-mail address. For the nine months ended September 30, 2011, we averaged more than 6.4 million new registrations on our websites each month. For the year ended December 31, 2010, we averaged more than 6.4 million new registrations on our websites each month. Some of our registrants are also members, as described below. Members. Members are registrants who log into one of our websites and make use of our free products and services. For the nine months ended September 30, 2011, we averaged more than 4.0 million new members on our websites each month. For the year ended December 31, 2010, we averaged more than 3.9 million new members on our websites each month. Subscribers. Subscribers are members who purchase daily, three-day, weekly, monthly, quarterly, annual or lifetime subscriptions for one or more of our websites. Subscribers have full access to our websites and may access special features. For the nine months ended September 30, 2011, we had a monthly average of approximately 950 thousand and for the year ended December 31, 2010, we had a monthly average of approximately 1 million paying subscribers. Paid Users. Paid users are members who purchase products or services on a pay-by-usage basis. For the nine months ended September 30, 2011, we averaged approximately 2.9 million purchased minutes by paid users each month. For the year ended December 31, 2010, we averaged approximately 3.0 million purchased minutes by paid users each month. We focus on the following key business metrics to evaluate the effectiveness of our operating strategies. Average Revenue per Subscriber. We calculate average revenue per subscriber, or ARPU, by dividing net revenue for the period by the average number of subscribers in the period and by the number of months in the period. As such, our ARPU is a monthly calculation. For the nine months ended September 30, 2011, our average monthly revenue per subscriber was $20.22. For the year ended December 31, 2010, our average monthly revenue per subscriber was $20.49. Churn. Churn is calculated by dividing terminations of subscriptions during the period by the total number of subscribers at the beginning of that period. Our average monthly churn rate, which measures the rate UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 of loss of subscribers, for the nine months ended September 30, 2011 was 16.3% per month. Our average monthly churn rate for the year ended December 31, 2010 was 16.1% per month. Cost Per Gross Addition. Cost per gross addition, or CPGA, is calculated by adding affiliate commission expense plus ad buy expenses and dividing by new subscribers during the measurement period. Our CPGA for the nine months ended September 30, 2011 was $42.76. Our CPGA for the year ended December 31, 2010 was $47.25. Average Lifetime Net Revenue Per Subscriber. Average Lifetime Net Revenue Per Subscriber is calculated by multiplying the average lifetime (in months) of a subscriber by ARPU for the measurement period and then subtracting the CPGA for the measurement period. Our Average Lifetime Net Revenue Per Subscriber for the nine months ended September 30, 2011 was $81.06. Our Average Lifetime Net Revenue Per Subscriber for the year ended December 31, 2010 was $80.17. While we monitor many statistics in the overall management of our business, we believe that Average Lifetime Net Revenue Per Subscriber and the number of subscribers are particularly helpful metrics for gaining a meaningful understanding of our business as they provide an indication of total revenue and profit generated from our base of subscribers inclusive of affiliate commissions and advertising costs required to generate new subscriptions. In addition to our social networks and live interactive video platforms, we also offer professionally-generated content through our premium content technology platform and our non-internet entertainment business. Through websites such as Penthouse.com and HotBox.com, our subscribers and paid users have access to our collection of more than 15,000 hours of professional video, which includes our library of more than 800 standard and high-definition full-length feature films and one million professionally produced images. We began shooting all of our content in 3D in September 2010. Additionally, subscribers have access to editorial content, chat rooms and other interactive features. In addition to our online products and services, we also have a non-technology legacy entertainment business, in which we produce and distribute original pictorial and video content via traditional distribution channels including licensing and retail DVD channels, and license the globally-recognized Penthouse brand to a variety of consumer product companies and entertainment venues and public branded men s lifestyle magazines. Our Competitive Strengths We believe that we have the following competitive strengths that we can leverage to implement our strategy: Proprietary and Scalable Technology Platform. Our robust, proprietary and highly scalable technology platform supports our social networking, live interactive video and premium content websites. We are able to use our customized back-end interface to quickly and affordably generate new websites, launch new features and target new audiences at a relatively low incremental cost. We believe that our ability to create new websites and provide new features is crucial to cost-effectively maintaining our relationships with existing users and attracting new users. Paid Subscriber-Based Model. We operate social networking websites that allow our members to make connections with other members with whom they share common interests. Our paid subscriber-based model of social networking websites is distinctly different from the business models of other free social networking websites whose users access the websites to remain connected to their pre-existing friends and interest groups. Large and Diverse User Base. We operate some of the most heavily visited social networking websites in the world, currently adding on average more than 6.4 million new registrants and more than 4.0 million new members each month. Our websites are designed to appeal to individuals with a diversity of interests and backgrounds. We believe potential members are attracted to the opportunity to interact with other individuals by having access to our large, diverse user base. Large and Difficult to Replicate Affiliate Network and Significant Marketing Spend. Our marketing affiliates are companies that market our services on their websites, allowing us to market our brand beyond our established user base. As of September 30, 2011 and December 31, 2010, we had more than 280,000 participants in our marketing affiliate program from which we derive a substantial portion of our new members and approximately 46% of our net revenues for the nine months ended September 30, 2011 and 45% of our net revenues for the year ended December 31, 2010. We believe that the difficulty in building an affiliate network of this large size, together with our combined affiliate and advertising spend for the nine months ended September 30, 2011 and the year ended December 31, 2010 of $64.5 million and $103.5 million, respectively, presents a significant barrier to entry for potential competitors. Our Strategy Our goal is to enhance revenue opportunities while improving our profitability. We plan to achieve these goals using the following strategies: Convert Visitors, Registrants and Members into Subscribers or Paid Users. We continually seek to convert visitors, registrants and members into subscribers or paid users. We do this by constantly evaluating, adding and enhancing features on our websites to improve our users experience. Create Additional Websites and Diversify Offerings. We are constantly seeking to identify groups of sufficient size who share a common interest in order to create a website intended to appeal to their interests. Our extensive user database serves as an existing source of potential members and subscribers for new websites we create. Expand into and Monetize Current Foreign Markets. In 2010, nearly 71% of our members were outside the United States, but non-U.S. users accounted for less than half of our total net revenues. We seek to expand in selected geographic markets, including Southeast Europe, South America and Asia. Pursue Targeted Acquisitions. We intend to expand our business by acquiring and integrating additional social networking websites, technology platforms, owners, creators and distributors of content and payment processing and advertising businesses. Our management team possesses significant mergers and acquisitions and integration expertise and regularly screens the marketplace for strategic acquisition opportunities. Generate Online Advertising Revenue. To date, online advertising revenue has represented less than 0.1% of our net revenue, averaging approximately $8,000 per month in the nine months ended September 30, 2011 and $9,000 per month for the year ended December 31, 2010. With continued worldwide growth in this advertising segment, we see this as a significant growth opportunity. We believe that our broad and diverse user base represents a valuable asset that will provide opportunities for us to offer targeted online advertising to specific demographic groups. We intend to focus our advertising efforts on our general audience social networking websites and maintain our subscription-based model for our adult social networking websites. Our New Financing On October 27, 2010, we issued new debt to repay our then existing debt, which we refer to as the New Financing. We, along with our wholly-owned subsidiary Interactive Network, Inc., or INI, co-issued $305.0 million principal amount of the Senior Secured Notes, $13.8 million of the Cash Pay Notes, and $232.5 million of the Non-Cash Pay Notes. Our Initial Public Offering On May 16, 2011, we issued 5,000,000 shares of common stock at a price of $10.00 per share and completed our initial public offering (the IPO ). We raised gross proceeds of $50.0 million, less underwriting fees and commissions of 7.25% of the gross proceeds, or $3.6 million, and incurred other offering expenses of $2.9 million to be paid from the proceeds of the offering, resulting in $43.5 million of net proceeds. In addition, we had incurred and paid as of December 31, 2010, $13.3 million of offering costs, which were included in deferred offering costs in the accompanying balance sheet at December 31, 2010 and written off by a charge to capital in excess of par value in the quarter ended June 30, 2011. On May 19, 2011, we redeemed $37.8 million of our Senior Secured Notes and $1.7 million of our Cash Pay Notes for a total of $39.5 million principal amount of New Financing redeemed from the net proceeds of our IPO and incurred a loss on extinguishment of debt estimated to be approximately $7.3 million. As of September 30, 2011, the outstanding principal amounts of the Senior Secured Notes, Cash Pay Notes and Non-Cash Pay Notes were $235.3 million, $10.6 million and $250.9 million, respectively. Recent Developments In July 2011, we acquired, through one of our subsidiaries, PerfectMatch.com, an online relationship service helping adults seeking successful, lasting connections. We paid approximately $2.5 million in cash and stock to acquire the assets of the website. PerfectMatch.com uses the Duet Total Compatibility System, a system which analyzes the whole person to find friends, taking into account each member s personality, values and ideals, life and love-style preferences to identify and find the person right for them. The acquisition of this website and related assets adds to our portfolio of general audience social networking websites. In September 2011, we acquired, through one of our subsidiaries, BDM Global Ventures Ltd., the company which owns the operations of JigoCity. The acquisition was completed pursuant to an Agreement and Plan of Merger entered into on September 7, 2011 among us, JGC Holdings Limited, our wholly-owned subsidiary, BDM Global Ventures Limited, which we refer to as BDM, Global Investment Ventures LLC and Anthony R. Bobulinski, which we refer to as the Merger Agreement. Under the terms of the Merger Agreement, the shareholders of BDM, in exchange for their outstanding shares and options in BDM and its subsidiaries, received merger consideration consisting of 1,555,555, shares of our common stock, 500,000 of which will be held in escrow until no later than December 31, 2012, and warrants exercisable into 6,436,851 shares of our common stock with exercise prices ranging from $5-$18 per share with an expiration date of December 31, 2021. Pursuant to an equity put agreement we entered into, the shareholders of BDM have the option to sell all of the shares of our common stock and warrants issued as merger consideration back to us in exchange for the return of 70% of the equity in BDM if the volume-weighted average price of our common stock fails to equal or exceed $12.00 per share during any 10 trading day period principally between the closing date and the later of June 30, 2014 and the date upon which our current indentures are fully discharged, or if an indenture modification is made, as defined in the equity put agreement, the later of June 30, 2014 and the date the indenture modification takes place (the later date hereinafter referred to as the Vesting Date ). The equity put agreement provides that the put right shall become exercisable at the sole discretion of the shareholders appointed representative during the period commencing on the Vesting Date and expiring sixty (60) days thereafter. Additionally, if the shareholders of BDM exercise the put right, we have the right to pay them in our common stock and/or cash, having a combined value as of the later of the above dates equal to the product of (i) 2,209,414 shares of common stock (subject to dilutive adjustment) and (ii) the difference between the highest 10 day volume-weighted average price attained by our common stock during such period and $12.00, in which case the put right terminates. Pursuant to a registration rights agreement, we also granted demand registration rights under certain circumstances, with respect to the shares of our common stock and warrants issued as merger consideration. JigoCity is a global social commerce organization committed to providing members with high quality daily deals that are relevant to their individual lifestyles. The acquisition of JigoCity adds to our portfolio a social commerce company and what we believe will be an additional avenue to monetize our foreign markets. Our Corporate Information Our executive offices are located at 6800 Broken Sound Parkway, Suite 200, Boca Raton, Florida 33487 and our telephone number is (561) 912-7000. Our website address is www.ffn.com. The information contained in, or accessible through, our website is not part of this prospectus. 6800 Broken Sound Parkway, Suite 200 Boca Raton, Florida 33487 (561) 912-7000 (Address, including zip code, and telephone number, including area code, of registrant s principal executive offices)
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001525637_video_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001525637_video_prospectus_summary.txt
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+consolidated financial statements included elsewhere in this prospectus. This summary may not contain all of the information that may be important to you. You should carefully read this entire prospectus, including the section entitled Risk Factors and our consolidated financial statements and notes to those statements. As used in this prospectus, unless the context otherwise requires, all references to we, us, our, our company or the company refer to FriendFinder Networks Inc. and, where appropriate, our consolidated direct and indirect subsidiaries, except where it is clear that the terms mean only FriendFinder Networks Inc. The term INI refers to our subsidiary and co-issuer of the Registrable Notes, Interactive Network, Inc. References to our common stock refer only to our voting common stock and except as otherwise noted, such references do not include our Series B common stock or our preferred common stock. Except where we state otherwise, the information presented in this prospectus reflects (i) the amendment and restatement of our bylaws, effective upon the consummation of our initial public offering on May 16, 2011, and (ii) the amendment and restatement of our articles of incorporation, which became effective on January 25, 2010. About Our Company FriendFinder Networks Inc. is a leading internet and technology company providing services in the rapidly expanding markets of social networking and web-based video sharing. Our business consists of creating and operating technology platforms which run several of the most heavily visited websites in the world. Through our extensive network of more than 44,000 websites, since our inception, we have built a base of more than 484 million registrants and more than 320 million members in more than 200 countries. We are able to create and maintain, in a cost-effective manner, websites intended to appeal to users of diverse cultures and interest groups. In December 2010, we had more than 196 million unique visitors to our network of websites, according to comScore. We offer our members a wide variety of online services so that they can interact with each other and access the content available on our websites. Our most heavily visited websites include AdultFriendFinder.com, Amigos.com, AsiaFriendFinder.com, Cams.com, FriendFinder.com, BigChurch.com and SeniorFriendFinder.com. For the nine months ended September 30, 2011, we had net revenue, income from operations and net losses of $249.6 million, $52.4 million and $(20.9) million, respectively. For the year ended December 31, 2010, we had net revenue, income from operations and net losses of $346.0 million, $71.1 million and ($43.2) million, respectively. Our revenues to date have been primarily derived from online subscription and paid-usage for our products and services. These products and services are delivered primarily through two highly scalable revenue-generating technology platforms: Social Networking. Approximately 69% of our total net revenues for the nine months ended September 30, 2011 and 70% of our total net revenues for the year ended December 31, 2010 were generated through our targeted social networking technology platform. Our social networking technology platform provides users who register or purchase subscriptions to one or more of our websites with the ability to communicate and to establish new connections with other users via our personal chat rooms, instant messaging and e-mail applications and to create, post and view content of interest. We have been able to rapidly create and seamlessly maintain multiple websites tailored to specific categories or genres and designed to cater to targeted audiences with mutual interests. We believe that our ability to create and operate a diverse network of specific interest websites with unique, user-generated content in a cost-effective manner is a significant competitive differentiator that allows us to implement a subscription-fee based revenue model while many other popular social networking websites rely primarily upon free-access, advertising-based revenue models. Live Interactive Video. Approximately 24% of our total net revenues for the nine months ended September 30, 2011 and 22% of our total net revenues for the year ended December 31, 2010 were generated through our live interactive video technology platform. Our live interactive video technology platform is a live video broadcast platform that enables models to broadcast from independent studios throughout the world and interact with our users via instant messaging and video. We believe our live interactive video platform provides a unique offering including bi-directional and omni-directional video and interactive features that allow models to communicate with and attract users through a variety of mediums including blogs, newsletters and video. In addition, we believe the reliability of our live interactive video technology platform, which had approximately 99.1% uptime during 2010, is a key factor allowing us to maintain a large base of users. In addition to our revenue-generating technology platforms, we have invested significant time and resources into developing our back-end marketing, analytics and billing technologies, which are a key contributor to the success of our business. We have developed proprietary systems to allow our marketing affiliates to maximize their revenue for our mutual benefit. These systems include proprietary white-labeling solutions, in which we provide back-end technology solutions to permit affiliates and marketing partners to deliver our products and services while maintaining the affiliate s and marketing partner s own branding and style, self-optimizing ad spots, and a robust banner optimization engine that automatically chooses the best possible site and banner to promote in a given ad spot. Our marketing technology has also enabled the creation and continued growth of our network of more than 280,000 affiliates, which we believe is one of the largest of its kind in the world and a significant barrier to entry to potential and existing competitors. Similarly, our proprietary analytics technology provides us with an advantage relative to less sophisticated competitors by enabling us to estimate future revenue based on short-term response to our advertising campaigns, as well as providing for analysis of key data and metrics in order to optimize our marketing spend and maximize the revenues our websites generate. Our robust billing platform allows our customers to pay using many of the widely-adopted methods of e-commerce, both domestically as well as internationally. We categorize our users into five categories: visitors, registrants, members, subscribers and paid users. Visitors. Visitors are users who visit our websites but do not necessarily register. We believe we achieve large numbers of unique visitors because of our focus on continuously enhancing the user experience and expanding the breadth of our services. We had more than 196 million unique worldwide visitors in the month of December 2010, representing a growth of more than 300% from our approximately 46.9 million unique worldwide visitors in January 2009, according to comScore. Registrants. Registrants are visitors who complete a free registration form on one of our websites by giving basic identification information and submitting their e-mail address. For the nine months ended September 30, 2011, we averaged more than 6.4 million new registrations on our websites each month. For the year ended December 31, 2010, we averaged more than 6.4 million new registrations on our websites each month. Some of our registrants are also members, as described below. Members. Members are registrants who log into one of our websites and make use of our free products and services. For the nine months ended September 30, 2011, we averaged more than 4.0 million new members on our websites each month. For the year ended December 31, 2010, we averaged more than 3.9 million new members on our websites each month. Subscribers. Subscribers are members who purchase daily, three-day, weekly, monthly, quarterly, annual or lifetime subscriptions for one or more of our websites. Subscribers have full access to our websites and may access special features. For the nine months ended September 30, 2011, we had a monthly average of approximately 950 thousand and for the year ended December 31, 2010, we had a monthly average of approximately 1 million paying subscribers. Paid Users. Paid users are members who purchase products or services on a pay-by-usage basis. For the nine months ended September 30, 2011, we averaged approximately 2.9 million purchased minutes by paid users each month. For the year ended December 31, 2010, we averaged approximately 3.0 million purchased minutes by paid users each month. We focus on the following key business metrics to evaluate the effectiveness of our operating strategies. Average Revenue per Subscriber. We calculate average revenue per subscriber, or ARPU, by dividing net revenue for the period by the average number of subscribers in the period and by the number of months in the period. As such, our ARPU is a monthly calculation. For the nine months ended September 30, 2011, our average monthly revenue per subscriber was $20.22. For the year ended December 31, 2010, our average monthly revenue per subscriber was $20.49. Churn. Churn is calculated by dividing terminations of subscriptions during the period by the total number of subscribers at the beginning of that period. Our average monthly churn rate, which measures the rate UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 of loss of subscribers, for the nine months ended September 30, 2011 was 16.3% per month. Our average monthly churn rate for the year ended December 31, 2010 was 16.1% per month. Cost Per Gross Addition. Cost per gross addition, or CPGA, is calculated by adding affiliate commission expense plus ad buy expenses and dividing by new subscribers during the measurement period. Our CPGA for the nine months ended September 30, 2011 was $42.76. Our CPGA for the year ended December 31, 2010 was $47.25. Average Lifetime Net Revenue Per Subscriber. Average Lifetime Net Revenue Per Subscriber is calculated by multiplying the average lifetime (in months) of a subscriber by ARPU for the measurement period and then subtracting the CPGA for the measurement period. Our Average Lifetime Net Revenue Per Subscriber for the nine months ended September 30, 2011 was $81.06. Our Average Lifetime Net Revenue Per Subscriber for the year ended December 31, 2010 was $80.17. While we monitor many statistics in the overall management of our business, we believe that Average Lifetime Net Revenue Per Subscriber and the number of subscribers are particularly helpful metrics for gaining a meaningful understanding of our business as they provide an indication of total revenue and profit generated from our base of subscribers inclusive of affiliate commissions and advertising costs required to generate new subscriptions. In addition to our social networks and live interactive video platforms, we also offer professionally-generated content through our premium content technology platform and our non-internet entertainment business. Through websites such as Penthouse.com and HotBox.com, our subscribers and paid users have access to our collection of more than 15,000 hours of professional video, which includes our library of more than 800 standard and high-definition full-length feature films and one million professionally produced images. We began shooting all of our content in 3D in September 2010. Additionally, subscribers have access to editorial content, chat rooms and other interactive features. In addition to our online products and services, we also have a non-technology legacy entertainment business, in which we produce and distribute original pictorial and video content via traditional distribution channels including licensing and retail DVD channels, and license the globally-recognized Penthouse brand to a variety of consumer product companies and entertainment venues and public branded men s lifestyle magazines. Our Competitive Strengths We believe that we have the following competitive strengths that we can leverage to implement our strategy: Proprietary and Scalable Technology Platform. Our robust, proprietary and highly scalable technology platform supports our social networking, live interactive video and premium content websites. We are able to use our customized back-end interface to quickly and affordably generate new websites, launch new features and target new audiences at a relatively low incremental cost. We believe that our ability to create new websites and provide new features is crucial to cost-effectively maintaining our relationships with existing users and attracting new users. Paid Subscriber-Based Model. We operate social networking websites that allow our members to make connections with other members with whom they share common interests. Our paid subscriber-based model of social networking websites is distinctly different from the business models of other free social networking websites whose users access the websites to remain connected to their pre-existing friends and interest groups. Large and Diverse User Base. We operate some of the most heavily visited social networking websites in the world, currently adding on average more than 6.4 million new registrants and more than 4.0 million new members each month. Our websites are designed to appeal to individuals with a diversity of interests and backgrounds. We believe potential members are attracted to the opportunity to interact with other individuals by having access to our large, diverse user base. Large and Difficult to Replicate Affiliate Network and Significant Marketing Spend. Our marketing affiliates are companies that market our services on their websites, allowing us to market our brand beyond our established user base. As of September 30, 2011 and December 31, 2010, we had more than 280,000 participants in our marketing affiliate program from which we derive a substantial portion of our new members and approximately 46% of our net revenues for the nine months ended September 30, 2011 and 45% of our net revenues for the year ended December 31, 2010. We believe that the difficulty in building an affiliate network of this large size, together with our combined affiliate and advertising spend for the nine months ended September 30, 2011 and the year ended December 31, 2010 of $64.5 million and $103.5 million, respectively, presents a significant barrier to entry for potential competitors. Our Strategy Our goal is to enhance revenue opportunities while improving our profitability. We plan to achieve these goals using the following strategies: Convert Visitors, Registrants and Members into Subscribers or Paid Users. We continually seek to convert visitors, registrants and members into subscribers or paid users. We do this by constantly evaluating, adding and enhancing features on our websites to improve our users experience. Create Additional Websites and Diversify Offerings. We are constantly seeking to identify groups of sufficient size who share a common interest in order to create a website intended to appeal to their interests. Our extensive user database serves as an existing source of potential members and subscribers for new websites we create. Expand into and Monetize Current Foreign Markets. In 2010, nearly 71% of our members were outside the United States, but non-U.S. users accounted for less than half of our total net revenues. We seek to expand in selected geographic markets, including Southeast Europe, South America and Asia. Pursue Targeted Acquisitions. We intend to expand our business by acquiring and integrating additional social networking websites, technology platforms, owners, creators and distributors of content and payment processing and advertising businesses. Our management team possesses significant mergers and acquisitions and integration expertise and regularly screens the marketplace for strategic acquisition opportunities. Generate Online Advertising Revenue. To date, online advertising revenue has represented less than 0.1% of our net revenue, averaging approximately $8,000 per month in the nine months ended September 30, 2011 and $9,000 per month for the year ended December 31, 2010. With continued worldwide growth in this advertising segment, we see this as a significant growth opportunity. We believe that our broad and diverse user base represents a valuable asset that will provide opportunities for us to offer targeted online advertising to specific demographic groups. We intend to focus our advertising efforts on our general audience social networking websites and maintain our subscription-based model for our adult social networking websites. Our New Financing On October 27, 2010, we issued new debt to repay our then existing debt, which we refer to as the New Financing. We, along with our wholly-owned subsidiary Interactive Network, Inc., or INI, co-issued $305.0 million principal amount of the Senior Secured Notes, $13.8 million of the Cash Pay Notes, and $232.5 million of the Non-Cash Pay Notes. Our Initial Public Offering On May 16, 2011, we issued 5,000,000 shares of common stock at a price of $10.00 per share and completed our initial public offering (the IPO ). We raised gross proceeds of $50.0 million, less underwriting fees and commissions of 7.25% of the gross proceeds, or $3.6 million, and incurred other offering expenses of $2.9 million to be paid from the proceeds of the offering, resulting in $43.5 million of net proceeds. In addition, we had incurred and paid as of December 31, 2010, $13.3 million of offering costs, which were included in deferred offering costs in the accompanying balance sheet at December 31, 2010 and written off by a charge to capital in excess of par value in the quarter ended June 30, 2011. On May 19, 2011, we redeemed $37.8 million of our Senior Secured Notes and $1.7 million of our Cash Pay Notes for a total of $39.5 million principal amount of New Financing redeemed from the net proceeds of our IPO and incurred a loss on extinguishment of debt estimated to be approximately $7.3 million. As of September 30, 2011, the outstanding principal amounts of the Senior Secured Notes, Cash Pay Notes and Non-Cash Pay Notes were $235.3 million, $10.6 million and $250.9 million, respectively. Recent Developments In July 2011, we acquired, through one of our subsidiaries, PerfectMatch.com, an online relationship service helping adults seeking successful, lasting connections. We paid approximately $2.5 million in cash and stock to acquire the assets of the website. PerfectMatch.com uses the Duet Total Compatibility System, a system which analyzes the whole person to find friends, taking into account each member s personality, values and ideals, life and love-style preferences to identify and find the person right for them. The acquisition of this website and related assets adds to our portfolio of general audience social networking websites. In September 2011, we acquired, through one of our subsidiaries, BDM Global Ventures Ltd., the company which owns the operations of JigoCity. The acquisition was completed pursuant to an Agreement and Plan of Merger entered into on September 7, 2011 among us, JGC Holdings Limited, our wholly-owned subsidiary, BDM Global Ventures Limited, which we refer to as BDM, Global Investment Ventures LLC and Anthony R. Bobulinski, which we refer to as the Merger Agreement. Under the terms of the Merger Agreement, the shareholders of BDM, in exchange for their outstanding shares and options in BDM and its subsidiaries, received merger consideration consisting of 1,555,555, shares of our common stock, 500,000 of which will be held in escrow until no later than December 31, 2012, and warrants exercisable into 6,436,851 shares of our common stock with exercise prices ranging from $5-$18 per share with an expiration date of December 31, 2021. Pursuant to an equity put agreement we entered into, the shareholders of BDM have the option to sell all of the shares of our common stock and warrants issued as merger consideration back to us in exchange for the return of 70% of the equity in BDM if the volume-weighted average price of our common stock fails to equal or exceed $12.00 per share during any 10 trading day period principally between the closing date and the later of June 30, 2014 and the date upon which our current indentures are fully discharged, or if an indenture modification is made, as defined in the equity put agreement, the later of June 30, 2014 and the date the indenture modification takes place (the later date hereinafter referred to as the Vesting Date ). The equity put agreement provides that the put right shall become exercisable at the sole discretion of the shareholders appointed representative during the period commencing on the Vesting Date and expiring sixty (60) days thereafter. Additionally, if the shareholders of BDM exercise the put right, we have the right to pay them in our common stock and/or cash, having a combined value as of the later of the above dates equal to the product of (i) 2,209,414 shares of common stock (subject to dilutive adjustment) and (ii) the difference between the highest 10 day volume-weighted average price attained by our common stock during such period and $12.00, in which case the put right terminates. Pursuant to a registration rights agreement, we also granted demand registration rights under certain circumstances, with respect to the shares of our common stock and warrants issued as merger consideration. JigoCity is a global social commerce organization committed to providing members with high quality daily deals that are relevant to their individual lifestyles. The acquisition of JigoCity adds to our portfolio a social commerce company and what we believe will be an additional avenue to monetize our foreign markets. Our Corporate Information Our executive offices are located at 6800 Broken Sound Parkway, Suite 200, Boca Raton, Florida 33487 and our telephone number is (561) 912-7000. Our website address is www.ffn.com. The information contained in, or accessible through, our website is not part of this prospectus. 6800 Broken Sound Parkway, Suite 200 Boca Raton, Florida 33487 (561) 912-7000 (Address, including zip code, and telephone number, including area code, of registrant s principal executive offices)
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001525665_friendfind_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001525665_friendfind_prospectus_summary.txt
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+consolidated financial statements included elsewhere in this prospectus. This summary may not contain all of the information that may be important to you. You should carefully read this entire prospectus, including the section entitled Risk Factors and our consolidated financial statements and notes to those statements. As used in this prospectus, unless the context otherwise requires, all references to we, us, our, our company or the company refer to FriendFinder Networks Inc. and, where appropriate, our consolidated direct and indirect subsidiaries, except where it is clear that the terms mean only FriendFinder Networks Inc. The term INI refers to our subsidiary and co-issuer of the Registrable Notes, Interactive Network, Inc. References to our common stock refer only to our voting common stock and except as otherwise noted, such references do not include our Series B common stock or our preferred common stock. Except where we state otherwise, the information presented in this prospectus reflects (i) the amendment and restatement of our bylaws, effective upon the consummation of our initial public offering on May 16, 2011, and (ii) the amendment and restatement of our articles of incorporation, which became effective on January 25, 2010. About Our Company FriendFinder Networks Inc. is a leading internet and technology company providing services in the rapidly expanding markets of social networking and web-based video sharing. Our business consists of creating and operating technology platforms which run several of the most heavily visited websites in the world. Through our extensive network of more than 44,000 websites, since our inception, we have built a base of more than 484 million registrants and more than 320 million members in more than 200 countries. We are able to create and maintain, in a cost-effective manner, websites intended to appeal to users of diverse cultures and interest groups. In December 2010, we had more than 196 million unique visitors to our network of websites, according to comScore. We offer our members a wide variety of online services so that they can interact with each other and access the content available on our websites. Our most heavily visited websites include AdultFriendFinder.com, Amigos.com, AsiaFriendFinder.com, Cams.com, FriendFinder.com, BigChurch.com and SeniorFriendFinder.com. For the nine months ended September 30, 2011, we had net revenue, income from operations and net losses of $249.6 million, $52.4 million and $(20.9) million, respectively. For the year ended December 31, 2010, we had net revenue, income from operations and net losses of $346.0 million, $71.1 million and ($43.2) million, respectively. Our revenues to date have been primarily derived from online subscription and paid-usage for our products and services. These products and services are delivered primarily through two highly scalable revenue-generating technology platforms: Social Networking. Approximately 69% of our total net revenues for the nine months ended September 30, 2011 and 70% of our total net revenues for the year ended December 31, 2010 were generated through our targeted social networking technology platform. Our social networking technology platform provides users who register or purchase subscriptions to one or more of our websites with the ability to communicate and to establish new connections with other users via our personal chat rooms, instant messaging and e-mail applications and to create, post and view content of interest. We have been able to rapidly create and seamlessly maintain multiple websites tailored to specific categories or genres and designed to cater to targeted audiences with mutual interests. We believe that our ability to create and operate a diverse network of specific interest websites with unique, user-generated content in a cost-effective manner is a significant competitive differentiator that allows us to implement a subscription-fee based revenue model while many other popular social networking websites rely primarily upon free-access, advertising-based revenue models. Live Interactive Video. Approximately 24% of our total net revenues for the nine months ended September 30, 2011 and 22% of our total net revenues for the year ended December 31, 2010 were generated through our live interactive video technology platform. Our live interactive video technology platform is a live video broadcast platform that enables models to broadcast from independent studios throughout the world and interact with our users via instant messaging and video. We believe our live interactive video platform provides a unique offering including bi-directional and omni-directional video and interactive features that allow models to communicate with and attract users through a variety of mediums including blogs, newsletters and video. In addition, we believe the reliability of our live interactive video technology platform, which had approximately 99.1% uptime during 2010, is a key factor allowing us to maintain a large base of users. In addition to our revenue-generating technology platforms, we have invested significant time and resources into developing our back-end marketing, analytics and billing technologies, which are a key contributor to the success of our business. We have developed proprietary systems to allow our marketing affiliates to maximize their revenue for our mutual benefit. These systems include proprietary white-labeling solutions, in which we provide back-end technology solutions to permit affiliates and marketing partners to deliver our products and services while maintaining the affiliate s and marketing partner s own branding and style, self-optimizing ad spots, and a robust banner optimization engine that automatically chooses the best possible site and banner to promote in a given ad spot. Our marketing technology has also enabled the creation and continued growth of our network of more than 280,000 affiliates, which we believe is one of the largest of its kind in the world and a significant barrier to entry to potential and existing competitors. Similarly, our proprietary analytics technology provides us with an advantage relative to less sophisticated competitors by enabling us to estimate future revenue based on short-term response to our advertising campaigns, as well as providing for analysis of key data and metrics in order to optimize our marketing spend and maximize the revenues our websites generate. Our robust billing platform allows our customers to pay using many of the widely-adopted methods of e-commerce, both domestically as well as internationally. We categorize our users into five categories: visitors, registrants, members, subscribers and paid users. Visitors. Visitors are users who visit our websites but do not necessarily register. We believe we achieve large numbers of unique visitors because of our focus on continuously enhancing the user experience and expanding the breadth of our services. We had more than 196 million unique worldwide visitors in the month of December 2010, representing a growth of more than 300% from our approximately 46.9 million unique worldwide visitors in January 2009, according to comScore. Registrants. Registrants are visitors who complete a free registration form on one of our websites by giving basic identification information and submitting their e-mail address. For the nine months ended September 30, 2011, we averaged more than 6.4 million new registrations on our websites each month. For the year ended December 31, 2010, we averaged more than 6.4 million new registrations on our websites each month. Some of our registrants are also members, as described below. Members. Members are registrants who log into one of our websites and make use of our free products and services. For the nine months ended September 30, 2011, we averaged more than 4.0 million new members on our websites each month. For the year ended December 31, 2010, we averaged more than 3.9 million new members on our websites each month. Subscribers. Subscribers are members who purchase daily, three-day, weekly, monthly, quarterly, annual or lifetime subscriptions for one or more of our websites. Subscribers have full access to our websites and may access special features. For the nine months ended September 30, 2011, we had a monthly average of approximately 950 thousand and for the year ended December 31, 2010, we had a monthly average of approximately 1 million paying subscribers. Paid Users. Paid users are members who purchase products or services on a pay-by-usage basis. For the nine months ended September 30, 2011, we averaged approximately 2.9 million purchased minutes by paid users each month. For the year ended December 31, 2010, we averaged approximately 3.0 million purchased minutes by paid users each month. We focus on the following key business metrics to evaluate the effectiveness of our operating strategies. Average Revenue per Subscriber. We calculate average revenue per subscriber, or ARPU, by dividing net revenue for the period by the average number of subscribers in the period and by the number of months in the period. As such, our ARPU is a monthly calculation. For the nine months ended September 30, 2011, our average monthly revenue per subscriber was $20.22. For the year ended December 31, 2010, our average monthly revenue per subscriber was $20.49. Churn. Churn is calculated by dividing terminations of subscriptions during the period by the total number of subscribers at the beginning of that period. Our average monthly churn rate, which measures the rate UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 of loss of subscribers, for the nine months ended September 30, 2011 was 16.3% per month. Our average monthly churn rate for the year ended December 31, 2010 was 16.1% per month. Cost Per Gross Addition. Cost per gross addition, or CPGA, is calculated by adding affiliate commission expense plus ad buy expenses and dividing by new subscribers during the measurement period. Our CPGA for the nine months ended September 30, 2011 was $42.76. Our CPGA for the year ended December 31, 2010 was $47.25. Average Lifetime Net Revenue Per Subscriber. Average Lifetime Net Revenue Per Subscriber is calculated by multiplying the average lifetime (in months) of a subscriber by ARPU for the measurement period and then subtracting the CPGA for the measurement period. Our Average Lifetime Net Revenue Per Subscriber for the nine months ended September 30, 2011 was $81.06. Our Average Lifetime Net Revenue Per Subscriber for the year ended December 31, 2010 was $80.17. While we monitor many statistics in the overall management of our business, we believe that Average Lifetime Net Revenue Per Subscriber and the number of subscribers are particularly helpful metrics for gaining a meaningful understanding of our business as they provide an indication of total revenue and profit generated from our base of subscribers inclusive of affiliate commissions and advertising costs required to generate new subscriptions. In addition to our social networks and live interactive video platforms, we also offer professionally-generated content through our premium content technology platform and our non-internet entertainment business. Through websites such as Penthouse.com and HotBox.com, our subscribers and paid users have access to our collection of more than 15,000 hours of professional video, which includes our library of more than 800 standard and high-definition full-length feature films and one million professionally produced images. We began shooting all of our content in 3D in September 2010. Additionally, subscribers have access to editorial content, chat rooms and other interactive features. In addition to our online products and services, we also have a non-technology legacy entertainment business, in which we produce and distribute original pictorial and video content via traditional distribution channels including licensing and retail DVD channels, and license the globally-recognized Penthouse brand to a variety of consumer product companies and entertainment venues and public branded men s lifestyle magazines. Our Competitive Strengths We believe that we have the following competitive strengths that we can leverage to implement our strategy: Proprietary and Scalable Technology Platform. Our robust, proprietary and highly scalable technology platform supports our social networking, live interactive video and premium content websites. We are able to use our customized back-end interface to quickly and affordably generate new websites, launch new features and target new audiences at a relatively low incremental cost. We believe that our ability to create new websites and provide new features is crucial to cost-effectively maintaining our relationships with existing users and attracting new users. Paid Subscriber-Based Model. We operate social networking websites that allow our members to make connections with other members with whom they share common interests. Our paid subscriber-based model of social networking websites is distinctly different from the business models of other free social networking websites whose users access the websites to remain connected to their pre-existing friends and interest groups. Large and Diverse User Base. We operate some of the most heavily visited social networking websites in the world, currently adding on average more than 6.4 million new registrants and more than 4.0 million new members each month. Our websites are designed to appeal to individuals with a diversity of interests and backgrounds. We believe potential members are attracted to the opportunity to interact with other individuals by having access to our large, diverse user base. Large and Difficult to Replicate Affiliate Network and Significant Marketing Spend. Our marketing affiliates are companies that market our services on their websites, allowing us to market our brand beyond our established user base. As of September 30, 2011 and December 31, 2010, we had more than 280,000 participants in our marketing affiliate program from which we derive a substantial portion of our new members and approximately 46% of our net revenues for the nine months ended September 30, 2011 and 45% of our net revenues for the year ended December 31, 2010. We believe that the difficulty in building an affiliate network of this large size, together with our combined affiliate and advertising spend for the nine months ended September 30, 2011 and the year ended December 31, 2010 of $64.5 million and $103.5 million, respectively, presents a significant barrier to entry for potential competitors. Our Strategy Our goal is to enhance revenue opportunities while improving our profitability. We plan to achieve these goals using the following strategies: Convert Visitors, Registrants and Members into Subscribers or Paid Users. We continually seek to convert visitors, registrants and members into subscribers or paid users. We do this by constantly evaluating, adding and enhancing features on our websites to improve our users experience. Create Additional Websites and Diversify Offerings. We are constantly seeking to identify groups of sufficient size who share a common interest in order to create a website intended to appeal to their interests. Our extensive user database serves as an existing source of potential members and subscribers for new websites we create. Expand into and Monetize Current Foreign Markets. In 2010, nearly 71% of our members were outside the United States, but non-U.S. users accounted for less than half of our total net revenues. We seek to expand in selected geographic markets, including Southeast Europe, South America and Asia. Pursue Targeted Acquisitions. We intend to expand our business by acquiring and integrating additional social networking websites, technology platforms, owners, creators and distributors of content and payment processing and advertising businesses. Our management team possesses significant mergers and acquisitions and integration expertise and regularly screens the marketplace for strategic acquisition opportunities. Generate Online Advertising Revenue. To date, online advertising revenue has represented less than 0.1% of our net revenue, averaging approximately $8,000 per month in the nine months ended September 30, 2011 and $9,000 per month for the year ended December 31, 2010. With continued worldwide growth in this advertising segment, we see this as a significant growth opportunity. We believe that our broad and diverse user base represents a valuable asset that will provide opportunities for us to offer targeted online advertising to specific demographic groups. We intend to focus our advertising efforts on our general audience social networking websites and maintain our subscription-based model for our adult social networking websites. Our New Financing On October 27, 2010, we issued new debt to repay our then existing debt, which we refer to as the New Financing. We, along with our wholly-owned subsidiary Interactive Network, Inc., or INI, co-issued $305.0 million principal amount of the Senior Secured Notes, $13.8 million of the Cash Pay Notes, and $232.5 million of the Non-Cash Pay Notes. Our Initial Public Offering On May 16, 2011, we issued 5,000,000 shares of common stock at a price of $10.00 per share and completed our initial public offering (the IPO ). We raised gross proceeds of $50.0 million, less underwriting fees and commissions of 7.25% of the gross proceeds, or $3.6 million, and incurred other offering expenses of $2.9 million to be paid from the proceeds of the offering, resulting in $43.5 million of net proceeds. In addition, we had incurred and paid as of December 31, 2010, $13.3 million of offering costs, which were included in deferred offering costs in the accompanying balance sheet at December 31, 2010 and written off by a charge to capital in excess of par value in the quarter ended June 30, 2011. On May 19, 2011, we redeemed $37.8 million of our Senior Secured Notes and $1.7 million of our Cash Pay Notes for a total of $39.5 million principal amount of New Financing redeemed from the net proceeds of our IPO and incurred a loss on extinguishment of debt estimated to be approximately $7.3 million. As of September 30, 2011, the outstanding principal amounts of the Senior Secured Notes, Cash Pay Notes and Non-Cash Pay Notes were $235.3 million, $10.6 million and $250.9 million, respectively. Recent Developments In July 2011, we acquired, through one of our subsidiaries, PerfectMatch.com, an online relationship service helping adults seeking successful, lasting connections. We paid approximately $2.5 million in cash and stock to acquire the assets of the website. PerfectMatch.com uses the Duet Total Compatibility System, a system which analyzes the whole person to find friends, taking into account each member s personality, values and ideals, life and love-style preferences to identify and find the person right for them. The acquisition of this website and related assets adds to our portfolio of general audience social networking websites. In September 2011, we acquired, through one of our subsidiaries, BDM Global Ventures Ltd., the company which owns the operations of JigoCity. The acquisition was completed pursuant to an Agreement and Plan of Merger entered into on September 7, 2011 among us, JGC Holdings Limited, our wholly-owned subsidiary, BDM Global Ventures Limited, which we refer to as BDM, Global Investment Ventures LLC and Anthony R. Bobulinski, which we refer to as the Merger Agreement. Under the terms of the Merger Agreement, the shareholders of BDM, in exchange for their outstanding shares and options in BDM and its subsidiaries, received merger consideration consisting of 1,555,555, shares of our common stock, 500,000 of which will be held in escrow until no later than December 31, 2012, and warrants exercisable into 6,436,851 shares of our common stock with exercise prices ranging from $5-$18 per share with an expiration date of December 31, 2021. Pursuant to an equity put agreement we entered into, the shareholders of BDM have the option to sell all of the shares of our common stock and warrants issued as merger consideration back to us in exchange for the return of 70% of the equity in BDM if the volume-weighted average price of our common stock fails to equal or exceed $12.00 per share during any 10 trading day period principally between the closing date and the later of June 30, 2014 and the date upon which our current indentures are fully discharged, or if an indenture modification is made, as defined in the equity put agreement, the later of June 30, 2014 and the date the indenture modification takes place (the later date hereinafter referred to as the Vesting Date ). The equity put agreement provides that the put right shall become exercisable at the sole discretion of the shareholders appointed representative during the period commencing on the Vesting Date and expiring sixty (60) days thereafter. Additionally, if the shareholders of BDM exercise the put right, we have the right to pay them in our common stock and/or cash, having a combined value as of the later of the above dates equal to the product of (i) 2,209,414 shares of common stock (subject to dilutive adjustment) and (ii) the difference between the highest 10 day volume-weighted average price attained by our common stock during such period and $12.00, in which case the put right terminates. Pursuant to a registration rights agreement, we also granted demand registration rights under certain circumstances, with respect to the shares of our common stock and warrants issued as merger consideration. JigoCity is a global social commerce organization committed to providing members with high quality daily deals that are relevant to their individual lifestyles. The acquisition of JigoCity adds to our portfolio a social commerce company and what we believe will be an additional avenue to monetize our foreign markets. Our Corporate Information Our executive offices are located at 6800 Broken Sound Parkway, Suite 200, Boca Raton, Florida 33487 and our telephone number is (561) 912-7000. Our website address is www.ffn.com. The information contained in, or accessible through, our website is not part of this prospectus. 6800 Broken Sound Parkway, Suite 200 Boca Raton, Florida 33487 (561) 912-7000 (Address, including zip code, and telephone number, including area code, of registrant s principal executive offices)
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001525668_danni_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001525668_danni_prospectus_summary.txt
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+consolidated financial statements included elsewhere in this prospectus. This summary may not contain all of the information that may be important to you. You should carefully read this entire prospectus, including the section entitled Risk Factors and our consolidated financial statements and notes to those statements. As used in this prospectus, unless the context otherwise requires, all references to we, us, our, our company or the company refer to FriendFinder Networks Inc. and, where appropriate, our consolidated direct and indirect subsidiaries, except where it is clear that the terms mean only FriendFinder Networks Inc. The term INI refers to our subsidiary and co-issuer of the Registrable Notes, Interactive Network, Inc. References to our common stock refer only to our voting common stock and except as otherwise noted, such references do not include our Series B common stock or our preferred common stock. Except where we state otherwise, the information presented in this prospectus reflects (i) the amendment and restatement of our bylaws, effective upon the consummation of our initial public offering on May 16, 2011, and (ii) the amendment and restatement of our articles of incorporation, which became effective on January 25, 2010. About Our Company FriendFinder Networks Inc. is a leading internet and technology company providing services in the rapidly expanding markets of social networking and web-based video sharing. Our business consists of creating and operating technology platforms which run several of the most heavily visited websites in the world. Through our extensive network of more than 44,000 websites, since our inception, we have built a base of more than 484 million registrants and more than 320 million members in more than 200 countries. We are able to create and maintain, in a cost-effective manner, websites intended to appeal to users of diverse cultures and interest groups. In December 2010, we had more than 196 million unique visitors to our network of websites, according to comScore. We offer our members a wide variety of online services so that they can interact with each other and access the content available on our websites. Our most heavily visited websites include AdultFriendFinder.com, Amigos.com, AsiaFriendFinder.com, Cams.com, FriendFinder.com, BigChurch.com and SeniorFriendFinder.com. For the nine months ended September 30, 2011, we had net revenue, income from operations and net losses of $249.6 million, $52.4 million and $(20.9) million, respectively. For the year ended December 31, 2010, we had net revenue, income from operations and net losses of $346.0 million, $71.1 million and ($43.2) million, respectively. Our revenues to date have been primarily derived from online subscription and paid-usage for our products and services. These products and services are delivered primarily through two highly scalable revenue-generating technology platforms: Social Networking. Approximately 69% of our total net revenues for the nine months ended September 30, 2011 and 70% of our total net revenues for the year ended December 31, 2010 were generated through our targeted social networking technology platform. Our social networking technology platform provides users who register or purchase subscriptions to one or more of our websites with the ability to communicate and to establish new connections with other users via our personal chat rooms, instant messaging and e-mail applications and to create, post and view content of interest. We have been able to rapidly create and seamlessly maintain multiple websites tailored to specific categories or genres and designed to cater to targeted audiences with mutual interests. We believe that our ability to create and operate a diverse network of specific interest websites with unique, user-generated content in a cost-effective manner is a significant competitive differentiator that allows us to implement a subscription-fee based revenue model while many other popular social networking websites rely primarily upon free-access, advertising-based revenue models. Live Interactive Video. Approximately 24% of our total net revenues for the nine months ended September 30, 2011 and 22% of our total net revenues for the year ended December 31, 2010 were generated through our live interactive video technology platform. Our live interactive video technology platform is a live video broadcast platform that enables models to broadcast from independent studios throughout the world and interact with our users via instant messaging and video. We believe our live interactive video platform provides a unique offering including bi-directional and omni-directional video and interactive features that allow models to communicate with and attract users through a variety of mediums including blogs, newsletters and video. In addition, we believe the reliability of our live interactive video technology platform, which had approximately 99.1% uptime during 2010, is a key factor allowing us to maintain a large base of users. In addition to our revenue-generating technology platforms, we have invested significant time and resources into developing our back-end marketing, analytics and billing technologies, which are a key contributor to the success of our business. We have developed proprietary systems to allow our marketing affiliates to maximize their revenue for our mutual benefit. These systems include proprietary white-labeling solutions, in which we provide back-end technology solutions to permit affiliates and marketing partners to deliver our products and services while maintaining the affiliate s and marketing partner s own branding and style, self-optimizing ad spots, and a robust banner optimization engine that automatically chooses the best possible site and banner to promote in a given ad spot. Our marketing technology has also enabled the creation and continued growth of our network of more than 280,000 affiliates, which we believe is one of the largest of its kind in the world and a significant barrier to entry to potential and existing competitors. Similarly, our proprietary analytics technology provides us with an advantage relative to less sophisticated competitors by enabling us to estimate future revenue based on short-term response to our advertising campaigns, as well as providing for analysis of key data and metrics in order to optimize our marketing spend and maximize the revenues our websites generate. Our robust billing platform allows our customers to pay using many of the widely-adopted methods of e-commerce, both domestically as well as internationally. We categorize our users into five categories: visitors, registrants, members, subscribers and paid users. Visitors. Visitors are users who visit our websites but do not necessarily register. We believe we achieve large numbers of unique visitors because of our focus on continuously enhancing the user experience and expanding the breadth of our services. We had more than 196 million unique worldwide visitors in the month of December 2010, representing a growth of more than 300% from our approximately 46.9 million unique worldwide visitors in January 2009, according to comScore. Registrants. Registrants are visitors who complete a free registration form on one of our websites by giving basic identification information and submitting their e-mail address. For the nine months ended September 30, 2011, we averaged more than 6.4 million new registrations on our websites each month. For the year ended December 31, 2010, we averaged more than 6.4 million new registrations on our websites each month. Some of our registrants are also members, as described below. Members. Members are registrants who log into one of our websites and make use of our free products and services. For the nine months ended September 30, 2011, we averaged more than 4.0 million new members on our websites each month. For the year ended December 31, 2010, we averaged more than 3.9 million new members on our websites each month. Subscribers. Subscribers are members who purchase daily, three-day, weekly, monthly, quarterly, annual or lifetime subscriptions for one or more of our websites. Subscribers have full access to our websites and may access special features. For the nine months ended September 30, 2011, we had a monthly average of approximately 950 thousand and for the year ended December 31, 2010, we had a monthly average of approximately 1 million paying subscribers. Paid Users. Paid users are members who purchase products or services on a pay-by-usage basis. For the nine months ended September 30, 2011, we averaged approximately 2.9 million purchased minutes by paid users each month. For the year ended December 31, 2010, we averaged approximately 3.0 million purchased minutes by paid users each month. We focus on the following key business metrics to evaluate the effectiveness of our operating strategies. Average Revenue per Subscriber. We calculate average revenue per subscriber, or ARPU, by dividing net revenue for the period by the average number of subscribers in the period and by the number of months in the period. As such, our ARPU is a monthly calculation. For the nine months ended September 30, 2011, our average monthly revenue per subscriber was $20.22. For the year ended December 31, 2010, our average monthly revenue per subscriber was $20.49. Churn. Churn is calculated by dividing terminations of subscriptions during the period by the total number of subscribers at the beginning of that period. Our average monthly churn rate, which measures the rate UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 of loss of subscribers, for the nine months ended September 30, 2011 was 16.3% per month. Our average monthly churn rate for the year ended December 31, 2010 was 16.1% per month. Cost Per Gross Addition. Cost per gross addition, or CPGA, is calculated by adding affiliate commission expense plus ad buy expenses and dividing by new subscribers during the measurement period. Our CPGA for the nine months ended September 30, 2011 was $42.76. Our CPGA for the year ended December 31, 2010 was $47.25. Average Lifetime Net Revenue Per Subscriber. Average Lifetime Net Revenue Per Subscriber is calculated by multiplying the average lifetime (in months) of a subscriber by ARPU for the measurement period and then subtracting the CPGA for the measurement period. Our Average Lifetime Net Revenue Per Subscriber for the nine months ended September 30, 2011 was $81.06. Our Average Lifetime Net Revenue Per Subscriber for the year ended December 31, 2010 was $80.17. While we monitor many statistics in the overall management of our business, we believe that Average Lifetime Net Revenue Per Subscriber and the number of subscribers are particularly helpful metrics for gaining a meaningful understanding of our business as they provide an indication of total revenue and profit generated from our base of subscribers inclusive of affiliate commissions and advertising costs required to generate new subscriptions. In addition to our social networks and live interactive video platforms, we also offer professionally-generated content through our premium content technology platform and our non-internet entertainment business. Through websites such as Penthouse.com and HotBox.com, our subscribers and paid users have access to our collection of more than 15,000 hours of professional video, which includes our library of more than 800 standard and high-definition full-length feature films and one million professionally produced images. We began shooting all of our content in 3D in September 2010. Additionally, subscribers have access to editorial content, chat rooms and other interactive features. In addition to our online products and services, we also have a non-technology legacy entertainment business, in which we produce and distribute original pictorial and video content via traditional distribution channels including licensing and retail DVD channels, and license the globally-recognized Penthouse brand to a variety of consumer product companies and entertainment venues and public branded men s lifestyle magazines. Our Competitive Strengths We believe that we have the following competitive strengths that we can leverage to implement our strategy: Proprietary and Scalable Technology Platform. Our robust, proprietary and highly scalable technology platform supports our social networking, live interactive video and premium content websites. We are able to use our customized back-end interface to quickly and affordably generate new websites, launch new features and target new audiences at a relatively low incremental cost. We believe that our ability to create new websites and provide new features is crucial to cost-effectively maintaining our relationships with existing users and attracting new users. Paid Subscriber-Based Model. We operate social networking websites that allow our members to make connections with other members with whom they share common interests. Our paid subscriber-based model of social networking websites is distinctly different from the business models of other free social networking websites whose users access the websites to remain connected to their pre-existing friends and interest groups. Large and Diverse User Base. We operate some of the most heavily visited social networking websites in the world, currently adding on average more than 6.4 million new registrants and more than 4.0 million new members each month. Our websites are designed to appeal to individuals with a diversity of interests and backgrounds. We believe potential members are attracted to the opportunity to interact with other individuals by having access to our large, diverse user base. Large and Difficult to Replicate Affiliate Network and Significant Marketing Spend. Our marketing affiliates are companies that market our services on their websites, allowing us to market our brand beyond our established user base. As of September 30, 2011 and December 31, 2010, we had more than 280,000 participants in our marketing affiliate program from which we derive a substantial portion of our new members and approximately 46% of our net revenues for the nine months ended September 30, 2011 and 45% of our net revenues for the year ended December 31, 2010. We believe that the difficulty in building an affiliate network of this large size, together with our combined affiliate and advertising spend for the nine months ended September 30, 2011 and the year ended December 31, 2010 of $64.5 million and $103.5 million, respectively, presents a significant barrier to entry for potential competitors. Our Strategy Our goal is to enhance revenue opportunities while improving our profitability. We plan to achieve these goals using the following strategies: Convert Visitors, Registrants and Members into Subscribers or Paid Users. We continually seek to convert visitors, registrants and members into subscribers or paid users. We do this by constantly evaluating, adding and enhancing features on our websites to improve our users experience. Create Additional Websites and Diversify Offerings. We are constantly seeking to identify groups of sufficient size who share a common interest in order to create a website intended to appeal to their interests. Our extensive user database serves as an existing source of potential members and subscribers for new websites we create. Expand into and Monetize Current Foreign Markets. In 2010, nearly 71% of our members were outside the United States, but non-U.S. users accounted for less than half of our total net revenues. We seek to expand in selected geographic markets, including Southeast Europe, South America and Asia. Pursue Targeted Acquisitions. We intend to expand our business by acquiring and integrating additional social networking websites, technology platforms, owners, creators and distributors of content and payment processing and advertising businesses. Our management team possesses significant mergers and acquisitions and integration expertise and regularly screens the marketplace for strategic acquisition opportunities. Generate Online Advertising Revenue. To date, online advertising revenue has represented less than 0.1% of our net revenue, averaging approximately $8,000 per month in the nine months ended September 30, 2011 and $9,000 per month for the year ended December 31, 2010. With continued worldwide growth in this advertising segment, we see this as a significant growth opportunity. We believe that our broad and diverse user base represents a valuable asset that will provide opportunities for us to offer targeted online advertising to specific demographic groups. We intend to focus our advertising efforts on our general audience social networking websites and maintain our subscription-based model for our adult social networking websites. Our New Financing On October 27, 2010, we issued new debt to repay our then existing debt, which we refer to as the New Financing. We, along with our wholly-owned subsidiary Interactive Network, Inc., or INI, co-issued $305.0 million principal amount of the Senior Secured Notes, $13.8 million of the Cash Pay Notes, and $232.5 million of the Non-Cash Pay Notes. Our Initial Public Offering On May 16, 2011, we issued 5,000,000 shares of common stock at a price of $10.00 per share and completed our initial public offering (the IPO ). We raised gross proceeds of $50.0 million, less underwriting fees and commissions of 7.25% of the gross proceeds, or $3.6 million, and incurred other offering expenses of $2.9 million to be paid from the proceeds of the offering, resulting in $43.5 million of net proceeds. In addition, we had incurred and paid as of December 31, 2010, $13.3 million of offering costs, which were included in deferred offering costs in the accompanying balance sheet at December 31, 2010 and written off by a charge to capital in excess of par value in the quarter ended June 30, 2011. On May 19, 2011, we redeemed $37.8 million of our Senior Secured Notes and $1.7 million of our Cash Pay Notes for a total of $39.5 million principal amount of New Financing redeemed from the net proceeds of our IPO and incurred a loss on extinguishment of debt estimated to be approximately $7.3 million. As of September 30, 2011, the outstanding principal amounts of the Senior Secured Notes, Cash Pay Notes and Non-Cash Pay Notes were $235.3 million, $10.6 million and $250.9 million, respectively. Recent Developments In July 2011, we acquired, through one of our subsidiaries, PerfectMatch.com, an online relationship service helping adults seeking successful, lasting connections. We paid approximately $2.5 million in cash and stock to acquire the assets of the website. PerfectMatch.com uses the Duet Total Compatibility System, a system which analyzes the whole person to find friends, taking into account each member s personality, values and ideals, life and love-style preferences to identify and find the person right for them. The acquisition of this website and related assets adds to our portfolio of general audience social networking websites. In September 2011, we acquired, through one of our subsidiaries, BDM Global Ventures Ltd., the company which owns the operations of JigoCity. The acquisition was completed pursuant to an Agreement and Plan of Merger entered into on September 7, 2011 among us, JGC Holdings Limited, our wholly-owned subsidiary, BDM Global Ventures Limited, which we refer to as BDM, Global Investment Ventures LLC and Anthony R. Bobulinski, which we refer to as the Merger Agreement. Under the terms of the Merger Agreement, the shareholders of BDM, in exchange for their outstanding shares and options in BDM and its subsidiaries, received merger consideration consisting of 1,555,555, shares of our common stock, 500,000 of which will be held in escrow until no later than December 31, 2012, and warrants exercisable into 6,436,851 shares of our common stock with exercise prices ranging from $5-$18 per share with an expiration date of December 31, 2021. Pursuant to an equity put agreement we entered into, the shareholders of BDM have the option to sell all of the shares of our common stock and warrants issued as merger consideration back to us in exchange for the return of 70% of the equity in BDM if the volume-weighted average price of our common stock fails to equal or exceed $12.00 per share during any 10 trading day period principally between the closing date and the later of June 30, 2014 and the date upon which our current indentures are fully discharged, or if an indenture modification is made, as defined in the equity put agreement, the later of June 30, 2014 and the date the indenture modification takes place (the later date hereinafter referred to as the Vesting Date ). The equity put agreement provides that the put right shall become exercisable at the sole discretion of the shareholders appointed representative during the period commencing on the Vesting Date and expiring sixty (60) days thereafter. Additionally, if the shareholders of BDM exercise the put right, we have the right to pay them in our common stock and/or cash, having a combined value as of the later of the above dates equal to the product of (i) 2,209,414 shares of common stock (subject to dilutive adjustment) and (ii) the difference between the highest 10 day volume-weighted average price attained by our common stock during such period and $12.00, in which case the put right terminates. Pursuant to a registration rights agreement, we also granted demand registration rights under certain circumstances, with respect to the shares of our common stock and warrants issued as merger consideration. JigoCity is a global social commerce organization committed to providing members with high quality daily deals that are relevant to their individual lifestyles. The acquisition of JigoCity adds to our portfolio a social commerce company and what we believe will be an additional avenue to monetize our foreign markets. Our Corporate Information Our executive offices are located at 6800 Broken Sound Parkway, Suite 200, Boca Raton, Florida 33487 and our telephone number is (561) 912-7000. Our website address is www.ffn.com. The information contained in, or accessible through, our website is not part of this prospectus. 6800 Broken Sound Parkway, Suite 200 Boca Raton, Florida 33487 (561) 912-7000 (Address, including zip code, and telephone number, including area code, of registrant s principal executive offices)
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001525671_confirm_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001525671_confirm_prospectus_summary.txt
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+consolidated financial statements included elsewhere in this prospectus. This summary may not contain all of the information that may be important to you. You should carefully read this entire prospectus, including the section entitled Risk Factors and our consolidated financial statements and notes to those statements. As used in this prospectus, unless the context otherwise requires, all references to we, us, our, our company or the company refer to FriendFinder Networks Inc. and, where appropriate, our consolidated direct and indirect subsidiaries, except where it is clear that the terms mean only FriendFinder Networks Inc. The term INI refers to our subsidiary and co-issuer of the Registrable Notes, Interactive Network, Inc. References to our common stock refer only to our voting common stock and except as otherwise noted, such references do not include our Series B common stock or our preferred common stock. Except where we state otherwise, the information presented in this prospectus reflects (i) the amendment and restatement of our bylaws, effective upon the consummation of our initial public offering on May 16, 2011, and (ii) the amendment and restatement of our articles of incorporation, which became effective on January 25, 2010. About Our Company FriendFinder Networks Inc. is a leading internet and technology company providing services in the rapidly expanding markets of social networking and web-based video sharing. Our business consists of creating and operating technology platforms which run several of the most heavily visited websites in the world. Through our extensive network of more than 44,000 websites, since our inception, we have built a base of more than 484 million registrants and more than 320 million members in more than 200 countries. We are able to create and maintain, in a cost-effective manner, websites intended to appeal to users of diverse cultures and interest groups. In December 2010, we had more than 196 million unique visitors to our network of websites, according to comScore. We offer our members a wide variety of online services so that they can interact with each other and access the content available on our websites. Our most heavily visited websites include AdultFriendFinder.com, Amigos.com, AsiaFriendFinder.com, Cams.com, FriendFinder.com, BigChurch.com and SeniorFriendFinder.com. For the nine months ended September 30, 2011, we had net revenue, income from operations and net losses of $249.6 million, $52.4 million and $(20.9) million, respectively. For the year ended December 31, 2010, we had net revenue, income from operations and net losses of $346.0 million, $71.1 million and ($43.2) million, respectively. Our revenues to date have been primarily derived from online subscription and paid-usage for our products and services. These products and services are delivered primarily through two highly scalable revenue-generating technology platforms: Social Networking. Approximately 69% of our total net revenues for the nine months ended September 30, 2011 and 70% of our total net revenues for the year ended December 31, 2010 were generated through our targeted social networking technology platform. Our social networking technology platform provides users who register or purchase subscriptions to one or more of our websites with the ability to communicate and to establish new connections with other users via our personal chat rooms, instant messaging and e-mail applications and to create, post and view content of interest. We have been able to rapidly create and seamlessly maintain multiple websites tailored to specific categories or genres and designed to cater to targeted audiences with mutual interests. We believe that our ability to create and operate a diverse network of specific interest websites with unique, user-generated content in a cost-effective manner is a significant competitive differentiator that allows us to implement a subscription-fee based revenue model while many other popular social networking websites rely primarily upon free-access, advertising-based revenue models. Live Interactive Video. Approximately 24% of our total net revenues for the nine months ended September 30, 2011 and 22% of our total net revenues for the year ended December 31, 2010 were generated through our live interactive video technology platform. Our live interactive video technology platform is a live video broadcast platform that enables models to broadcast from independent studios throughout the world and interact with our users via instant messaging and video. We believe our live interactive video platform provides a unique offering including bi-directional and omni-directional video and interactive features that allow models to communicate with and attract users through a variety of mediums including blogs, newsletters and video. In addition, we believe the reliability of our live interactive video technology platform, which had approximately 99.1% uptime during 2010, is a key factor allowing us to maintain a large base of users. In addition to our revenue-generating technology platforms, we have invested significant time and resources into developing our back-end marketing, analytics and billing technologies, which are a key contributor to the success of our business. We have developed proprietary systems to allow our marketing affiliates to maximize their revenue for our mutual benefit. These systems include proprietary white-labeling solutions, in which we provide back-end technology solutions to permit affiliates and marketing partners to deliver our products and services while maintaining the affiliate s and marketing partner s own branding and style, self-optimizing ad spots, and a robust banner optimization engine that automatically chooses the best possible site and banner to promote in a given ad spot. Our marketing technology has also enabled the creation and continued growth of our network of more than 280,000 affiliates, which we believe is one of the largest of its kind in the world and a significant barrier to entry to potential and existing competitors. Similarly, our proprietary analytics technology provides us with an advantage relative to less sophisticated competitors by enabling us to estimate future revenue based on short-term response to our advertising campaigns, as well as providing for analysis of key data and metrics in order to optimize our marketing spend and maximize the revenues our websites generate. Our robust billing platform allows our customers to pay using many of the widely-adopted methods of e-commerce, both domestically as well as internationally. We categorize our users into five categories: visitors, registrants, members, subscribers and paid users. Visitors. Visitors are users who visit our websites but do not necessarily register. We believe we achieve large numbers of unique visitors because of our focus on continuously enhancing the user experience and expanding the breadth of our services. We had more than 196 million unique worldwide visitors in the month of December 2010, representing a growth of more than 300% from our approximately 46.9 million unique worldwide visitors in January 2009, according to comScore. Registrants. Registrants are visitors who complete a free registration form on one of our websites by giving basic identification information and submitting their e-mail address. For the nine months ended September 30, 2011, we averaged more than 6.4 million new registrations on our websites each month. For the year ended December 31, 2010, we averaged more than 6.4 million new registrations on our websites each month. Some of our registrants are also members, as described below. Members. Members are registrants who log into one of our websites and make use of our free products and services. For the nine months ended September 30, 2011, we averaged more than 4.0 million new members on our websites each month. For the year ended December 31, 2010, we averaged more than 3.9 million new members on our websites each month. Subscribers. Subscribers are members who purchase daily, three-day, weekly, monthly, quarterly, annual or lifetime subscriptions for one or more of our websites. Subscribers have full access to our websites and may access special features. For the nine months ended September 30, 2011, we had a monthly average of approximately 950 thousand and for the year ended December 31, 2010, we had a monthly average of approximately 1 million paying subscribers. Paid Users. Paid users are members who purchase products or services on a pay-by-usage basis. For the nine months ended September 30, 2011, we averaged approximately 2.9 million purchased minutes by paid users each month. For the year ended December 31, 2010, we averaged approximately 3.0 million purchased minutes by paid users each month. We focus on the following key business metrics to evaluate the effectiveness of our operating strategies. Average Revenue per Subscriber. We calculate average revenue per subscriber, or ARPU, by dividing net revenue for the period by the average number of subscribers in the period and by the number of months in the period. As such, our ARPU is a monthly calculation. For the nine months ended September 30, 2011, our average monthly revenue per subscriber was $20.22. For the year ended December 31, 2010, our average monthly revenue per subscriber was $20.49. Churn. Churn is calculated by dividing terminations of subscriptions during the period by the total number of subscribers at the beginning of that period. Our average monthly churn rate, which measures the rate UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 of loss of subscribers, for the nine months ended September 30, 2011 was 16.3% per month. Our average monthly churn rate for the year ended December 31, 2010 was 16.1% per month. Cost Per Gross Addition. Cost per gross addition, or CPGA, is calculated by adding affiliate commission expense plus ad buy expenses and dividing by new subscribers during the measurement period. Our CPGA for the nine months ended September 30, 2011 was $42.76. Our CPGA for the year ended December 31, 2010 was $47.25. Average Lifetime Net Revenue Per Subscriber. Average Lifetime Net Revenue Per Subscriber is calculated by multiplying the average lifetime (in months) of a subscriber by ARPU for the measurement period and then subtracting the CPGA for the measurement period. Our Average Lifetime Net Revenue Per Subscriber for the nine months ended September 30, 2011 was $81.06. Our Average Lifetime Net Revenue Per Subscriber for the year ended December 31, 2010 was $80.17. While we monitor many statistics in the overall management of our business, we believe that Average Lifetime Net Revenue Per Subscriber and the number of subscribers are particularly helpful metrics for gaining a meaningful understanding of our business as they provide an indication of total revenue and profit generated from our base of subscribers inclusive of affiliate commissions and advertising costs required to generate new subscriptions. In addition to our social networks and live interactive video platforms, we also offer professionally-generated content through our premium content technology platform and our non-internet entertainment business. Through websites such as Penthouse.com and HotBox.com, our subscribers and paid users have access to our collection of more than 15,000 hours of professional video, which includes our library of more than 800 standard and high-definition full-length feature films and one million professionally produced images. We began shooting all of our content in 3D in September 2010. Additionally, subscribers have access to editorial content, chat rooms and other interactive features. In addition to our online products and services, we also have a non-technology legacy entertainment business, in which we produce and distribute original pictorial and video content via traditional distribution channels including licensing and retail DVD channels, and license the globally-recognized Penthouse brand to a variety of consumer product companies and entertainment venues and public branded men s lifestyle magazines. Our Competitive Strengths We believe that we have the following competitive strengths that we can leverage to implement our strategy: Proprietary and Scalable Technology Platform. Our robust, proprietary and highly scalable technology platform supports our social networking, live interactive video and premium content websites. We are able to use our customized back-end interface to quickly and affordably generate new websites, launch new features and target new audiences at a relatively low incremental cost. We believe that our ability to create new websites and provide new features is crucial to cost-effectively maintaining our relationships with existing users and attracting new users. Paid Subscriber-Based Model. We operate social networking websites that allow our members to make connections with other members with whom they share common interests. Our paid subscriber-based model of social networking websites is distinctly different from the business models of other free social networking websites whose users access the websites to remain connected to their pre-existing friends and interest groups. Large and Diverse User Base. We operate some of the most heavily visited social networking websites in the world, currently adding on average more than 6.4 million new registrants and more than 4.0 million new members each month. Our websites are designed to appeal to individuals with a diversity of interests and backgrounds. We believe potential members are attracted to the opportunity to interact with other individuals by having access to our large, diverse user base. Large and Difficult to Replicate Affiliate Network and Significant Marketing Spend. Our marketing affiliates are companies that market our services on their websites, allowing us to market our brand beyond our established user base. As of September 30, 2011 and December 31, 2010, we had more than 280,000 participants in our marketing affiliate program from which we derive a substantial portion of our new members and approximately 46% of our net revenues for the nine months ended September 30, 2011 and 45% of our net revenues for the year ended December 31, 2010. We believe that the difficulty in building an affiliate network of this large size, together with our combined affiliate and advertising spend for the nine months ended September 30, 2011 and the year ended December 31, 2010 of $64.5 million and $103.5 million, respectively, presents a significant barrier to entry for potential competitors. Our Strategy Our goal is to enhance revenue opportunities while improving our profitability. We plan to achieve these goals using the following strategies: Convert Visitors, Registrants and Members into Subscribers or Paid Users. We continually seek to convert visitors, registrants and members into subscribers or paid users. We do this by constantly evaluating, adding and enhancing features on our websites to improve our users experience. Create Additional Websites and Diversify Offerings. We are constantly seeking to identify groups of sufficient size who share a common interest in order to create a website intended to appeal to their interests. Our extensive user database serves as an existing source of potential members and subscribers for new websites we create. Expand into and Monetize Current Foreign Markets. In 2010, nearly 71% of our members were outside the United States, but non-U.S. users accounted for less than half of our total net revenues. We seek to expand in selected geographic markets, including Southeast Europe, South America and Asia. Pursue Targeted Acquisitions. We intend to expand our business by acquiring and integrating additional social networking websites, technology platforms, owners, creators and distributors of content and payment processing and advertising businesses. Our management team possesses significant mergers and acquisitions and integration expertise and regularly screens the marketplace for strategic acquisition opportunities. Generate Online Advertising Revenue. To date, online advertising revenue has represented less than 0.1% of our net revenue, averaging approximately $8,000 per month in the nine months ended September 30, 2011 and $9,000 per month for the year ended December 31, 2010. With continued worldwide growth in this advertising segment, we see this as a significant growth opportunity. We believe that our broad and diverse user base represents a valuable asset that will provide opportunities for us to offer targeted online advertising to specific demographic groups. We intend to focus our advertising efforts on our general audience social networking websites and maintain our subscription-based model for our adult social networking websites. Our New Financing On October 27, 2010, we issued new debt to repay our then existing debt, which we refer to as the New Financing. We, along with our wholly-owned subsidiary Interactive Network, Inc., or INI, co-issued $305.0 million principal amount of the Senior Secured Notes, $13.8 million of the Cash Pay Notes, and $232.5 million of the Non-Cash Pay Notes. Our Initial Public Offering On May 16, 2011, we issued 5,000,000 shares of common stock at a price of $10.00 per share and completed our initial public offering (the IPO ). We raised gross proceeds of $50.0 million, less underwriting fees and commissions of 7.25% of the gross proceeds, or $3.6 million, and incurred other offering expenses of $2.9 million to be paid from the proceeds of the offering, resulting in $43.5 million of net proceeds. In addition, we had incurred and paid as of December 31, 2010, $13.3 million of offering costs, which were included in deferred offering costs in the accompanying balance sheet at December 31, 2010 and written off by a charge to capital in excess of par value in the quarter ended June 30, 2011. On May 19, 2011, we redeemed $37.8 million of our Senior Secured Notes and $1.7 million of our Cash Pay Notes for a total of $39.5 million principal amount of New Financing redeemed from the net proceeds of our IPO and incurred a loss on extinguishment of debt estimated to be approximately $7.3 million. As of September 30, 2011, the outstanding principal amounts of the Senior Secured Notes, Cash Pay Notes and Non-Cash Pay Notes were $235.3 million, $10.6 million and $250.9 million, respectively. Recent Developments In July 2011, we acquired, through one of our subsidiaries, PerfectMatch.com, an online relationship service helping adults seeking successful, lasting connections. We paid approximately $2.5 million in cash and stock to acquire the assets of the website. PerfectMatch.com uses the Duet Total Compatibility System, a system which analyzes the whole person to find friends, taking into account each member s personality, values and ideals, life and love-style preferences to identify and find the person right for them. The acquisition of this website and related assets adds to our portfolio of general audience social networking websites. In September 2011, we acquired, through one of our subsidiaries, BDM Global Ventures Ltd., the company which owns the operations of JigoCity. The acquisition was completed pursuant to an Agreement and Plan of Merger entered into on September 7, 2011 among us, JGC Holdings Limited, our wholly-owned subsidiary, BDM Global Ventures Limited, which we refer to as BDM, Global Investment Ventures LLC and Anthony R. Bobulinski, which we refer to as the Merger Agreement. Under the terms of the Merger Agreement, the shareholders of BDM, in exchange for their outstanding shares and options in BDM and its subsidiaries, received merger consideration consisting of 1,555,555, shares of our common stock, 500,000 of which will be held in escrow until no later than December 31, 2012, and warrants exercisable into 6,436,851 shares of our common stock with exercise prices ranging from $5-$18 per share with an expiration date of December 31, 2021. Pursuant to an equity put agreement we entered into, the shareholders of BDM have the option to sell all of the shares of our common stock and warrants issued as merger consideration back to us in exchange for the return of 70% of the equity in BDM if the volume-weighted average price of our common stock fails to equal or exceed $12.00 per share during any 10 trading day period principally between the closing date and the later of June 30, 2014 and the date upon which our current indentures are fully discharged, or if an indenture modification is made, as defined in the equity put agreement, the later of June 30, 2014 and the date the indenture modification takes place (the later date hereinafter referred to as the Vesting Date ). The equity put agreement provides that the put right shall become exercisable at the sole discretion of the shareholders appointed representative during the period commencing on the Vesting Date and expiring sixty (60) days thereafter. Additionally, if the shareholders of BDM exercise the put right, we have the right to pay them in our common stock and/or cash, having a combined value as of the later of the above dates equal to the product of (i) 2,209,414 shares of common stock (subject to dilutive adjustment) and (ii) the difference between the highest 10 day volume-weighted average price attained by our common stock during such period and $12.00, in which case the put right terminates. Pursuant to a registration rights agreement, we also granted demand registration rights under certain circumstances, with respect to the shares of our common stock and warrants issued as merger consideration. JigoCity is a global social commerce organization committed to providing members with high quality daily deals that are relevant to their individual lifestyles. The acquisition of JigoCity adds to our portfolio a social commerce company and what we believe will be an additional avenue to monetize our foreign markets. Our Corporate Information Our executive offices are located at 6800 Broken Sound Parkway, Suite 200, Boca Raton, Florida 33487 and our telephone number is (561) 912-7000. Our website address is www.ffn.com. The information contained in, or accessible through, our website is not part of this prospectus. 6800 Broken Sound Parkway, Suite 200 Boca Raton, Florida 33487 (561) 912-7000 (Address, including zip code, and telephone number, including area code, of registrant s principal executive offices)
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+consolidated financial statements included elsewhere in this prospectus. This summary may not contain all of the information that may be important to you. You should carefully read this entire prospectus, including the section entitled Risk Factors and our consolidated financial statements and notes to those statements. As used in this prospectus, unless the context otherwise requires, all references to we, us, our, our company or the company refer to FriendFinder Networks Inc. and, where appropriate, our consolidated direct and indirect subsidiaries, except where it is clear that the terms mean only FriendFinder Networks Inc. The term INI refers to our subsidiary and co-issuer of the Registrable Notes, Interactive Network, Inc. References to our common stock refer only to our voting common stock and except as otherwise noted, such references do not include our Series B common stock or our preferred common stock. Except where we state otherwise, the information presented in this prospectus reflects (i) the amendment and restatement of our bylaws, effective upon the consummation of our initial public offering on May 16, 2011, and (ii) the amendment and restatement of our articles of incorporation, which became effective on January 25, 2010. About Our Company FriendFinder Networks Inc. is a leading internet and technology company providing services in the rapidly expanding markets of social networking and web-based video sharing. Our business consists of creating and operating technology platforms which run several of the most heavily visited websites in the world. Through our extensive network of more than 44,000 websites, since our inception, we have built a base of more than 484 million registrants and more than 320 million members in more than 200 countries. We are able to create and maintain, in a cost-effective manner, websites intended to appeal to users of diverse cultures and interest groups. In December 2010, we had more than 196 million unique visitors to our network of websites, according to comScore. We offer our members a wide variety of online services so that they can interact with each other and access the content available on our websites. Our most heavily visited websites include AdultFriendFinder.com, Amigos.com, AsiaFriendFinder.com, Cams.com, FriendFinder.com, BigChurch.com and SeniorFriendFinder.com. For the nine months ended September 30, 2011, we had net revenue, income from operations and net losses of $249.6 million, $52.4 million and $(20.9) million, respectively. For the year ended December 31, 2010, we had net revenue, income from operations and net losses of $346.0 million, $71.1 million and ($43.2) million, respectively. Our revenues to date have been primarily derived from online subscription and paid-usage for our products and services. These products and services are delivered primarily through two highly scalable revenue-generating technology platforms: Social Networking. Approximately 69% of our total net revenues for the nine months ended September 30, 2011 and 70% of our total net revenues for the year ended December 31, 2010 were generated through our targeted social networking technology platform. Our social networking technology platform provides users who register or purchase subscriptions to one or more of our websites with the ability to communicate and to establish new connections with other users via our personal chat rooms, instant messaging and e-mail applications and to create, post and view content of interest. We have been able to rapidly create and seamlessly maintain multiple websites tailored to specific categories or genres and designed to cater to targeted audiences with mutual interests. We believe that our ability to create and operate a diverse network of specific interest websites with unique, user-generated content in a cost-effective manner is a significant competitive differentiator that allows us to implement a subscription-fee based revenue model while many other popular social networking websites rely primarily upon free-access, advertising-based revenue models. Live Interactive Video. Approximately 24% of our total net revenues for the nine months ended September 30, 2011 and 22% of our total net revenues for the year ended December 31, 2010 were generated through our live interactive video technology platform. Our live interactive video technology platform is a live video broadcast platform that enables models to broadcast from independent studios throughout the world and interact with our users via instant messaging and video. We believe our live interactive video platform provides a unique offering including bi-directional and omni-directional video and interactive features that allow models to communicate with and attract users through a variety of mediums including blogs, newsletters and video. In addition, we believe the reliability of our live interactive video technology platform, which had approximately 99.1% uptime during 2010, is a key factor allowing us to maintain a large base of users. In addition to our revenue-generating technology platforms, we have invested significant time and resources into developing our back-end marketing, analytics and billing technologies, which are a key contributor to the success of our business. We have developed proprietary systems to allow our marketing affiliates to maximize their revenue for our mutual benefit. These systems include proprietary white-labeling solutions, in which we provide back-end technology solutions to permit affiliates and marketing partners to deliver our products and services while maintaining the affiliate s and marketing partner s own branding and style, self-optimizing ad spots, and a robust banner optimization engine that automatically chooses the best possible site and banner to promote in a given ad spot. Our marketing technology has also enabled the creation and continued growth of our network of more than 280,000 affiliates, which we believe is one of the largest of its kind in the world and a significant barrier to entry to potential and existing competitors. Similarly, our proprietary analytics technology provides us with an advantage relative to less sophisticated competitors by enabling us to estimate future revenue based on short-term response to our advertising campaigns, as well as providing for analysis of key data and metrics in order to optimize our marketing spend and maximize the revenues our websites generate. Our robust billing platform allows our customers to pay using many of the widely-adopted methods of e-commerce, both domestically as well as internationally. We categorize our users into five categories: visitors, registrants, members, subscribers and paid users. Visitors. Visitors are users who visit our websites but do not necessarily register. We believe we achieve large numbers of unique visitors because of our focus on continuously enhancing the user experience and expanding the breadth of our services. We had more than 196 million unique worldwide visitors in the month of December 2010, representing a growth of more than 300% from our approximately 46.9 million unique worldwide visitors in January 2009, according to comScore. Registrants. Registrants are visitors who complete a free registration form on one of our websites by giving basic identification information and submitting their e-mail address. For the nine months ended September 30, 2011, we averaged more than 6.4 million new registrations on our websites each month. For the year ended December 31, 2010, we averaged more than 6.4 million new registrations on our websites each month. Some of our registrants are also members, as described below. Members. Members are registrants who log into one of our websites and make use of our free products and services. For the nine months ended September 30, 2011, we averaged more than 4.0 million new members on our websites each month. For the year ended December 31, 2010, we averaged more than 3.9 million new members on our websites each month. Subscribers. Subscribers are members who purchase daily, three-day, weekly, monthly, quarterly, annual or lifetime subscriptions for one or more of our websites. Subscribers have full access to our websites and may access special features. For the nine months ended September 30, 2011, we had a monthly average of approximately 950 thousand and for the year ended December 31, 2010, we had a monthly average of approximately 1 million paying subscribers. Paid Users. Paid users are members who purchase products or services on a pay-by-usage basis. For the nine months ended September 30, 2011, we averaged approximately 2.9 million purchased minutes by paid users each month. For the year ended December 31, 2010, we averaged approximately 3.0 million purchased minutes by paid users each month. We focus on the following key business metrics to evaluate the effectiveness of our operating strategies. Average Revenue per Subscriber. We calculate average revenue per subscriber, or ARPU, by dividing net revenue for the period by the average number of subscribers in the period and by the number of months in the period. As such, our ARPU is a monthly calculation. For the nine months ended September 30, 2011, our average monthly revenue per subscriber was $20.22. For the year ended December 31, 2010, our average monthly revenue per subscriber was $20.49. Churn. Churn is calculated by dividing terminations of subscriptions during the period by the total number of subscribers at the beginning of that period. Our average monthly churn rate, which measures the rate UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 of loss of subscribers, for the nine months ended September 30, 2011 was 16.3% per month. Our average monthly churn rate for the year ended December 31, 2010 was 16.1% per month. Cost Per Gross Addition. Cost per gross addition, or CPGA, is calculated by adding affiliate commission expense plus ad buy expenses and dividing by new subscribers during the measurement period. Our CPGA for the nine months ended September 30, 2011 was $42.76. Our CPGA for the year ended December 31, 2010 was $47.25. Average Lifetime Net Revenue Per Subscriber. Average Lifetime Net Revenue Per Subscriber is calculated by multiplying the average lifetime (in months) of a subscriber by ARPU for the measurement period and then subtracting the CPGA for the measurement period. Our Average Lifetime Net Revenue Per Subscriber for the nine months ended September 30, 2011 was $81.06. Our Average Lifetime Net Revenue Per Subscriber for the year ended December 31, 2010 was $80.17. While we monitor many statistics in the overall management of our business, we believe that Average Lifetime Net Revenue Per Subscriber and the number of subscribers are particularly helpful metrics for gaining a meaningful understanding of our business as they provide an indication of total revenue and profit generated from our base of subscribers inclusive of affiliate commissions and advertising costs required to generate new subscriptions. In addition to our social networks and live interactive video platforms, we also offer professionally-generated content through our premium content technology platform and our non-internet entertainment business. Through websites such as Penthouse.com and HotBox.com, our subscribers and paid users have access to our collection of more than 15,000 hours of professional video, which includes our library of more than 800 standard and high-definition full-length feature films and one million professionally produced images. We began shooting all of our content in 3D in September 2010. Additionally, subscribers have access to editorial content, chat rooms and other interactive features. In addition to our online products and services, we also have a non-technology legacy entertainment business, in which we produce and distribute original pictorial and video content via traditional distribution channels including licensing and retail DVD channels, and license the globally-recognized Penthouse brand to a variety of consumer product companies and entertainment venues and public branded men s lifestyle magazines. Our Competitive Strengths We believe that we have the following competitive strengths that we can leverage to implement our strategy: Proprietary and Scalable Technology Platform. Our robust, proprietary and highly scalable technology platform supports our social networking, live interactive video and premium content websites. We are able to use our customized back-end interface to quickly and affordably generate new websites, launch new features and target new audiences at a relatively low incremental cost. We believe that our ability to create new websites and provide new features is crucial to cost-effectively maintaining our relationships with existing users and attracting new users. Paid Subscriber-Based Model. We operate social networking websites that allow our members to make connections with other members with whom they share common interests. Our paid subscriber-based model of social networking websites is distinctly different from the business models of other free social networking websites whose users access the websites to remain connected to their pre-existing friends and interest groups. Large and Diverse User Base. We operate some of the most heavily visited social networking websites in the world, currently adding on average more than 6.4 million new registrants and more than 4.0 million new members each month. Our websites are designed to appeal to individuals with a diversity of interests and backgrounds. We believe potential members are attracted to the opportunity to interact with other individuals by having access to our large, diverse user base. Large and Difficult to Replicate Affiliate Network and Significant Marketing Spend. Our marketing affiliates are companies that market our services on their websites, allowing us to market our brand beyond our established user base. As of September 30, 2011 and December 31, 2010, we had more than 280,000 participants in our marketing affiliate program from which we derive a substantial portion of our new members and approximately 46% of our net revenues for the nine months ended September 30, 2011 and 45% of our net revenues for the year ended December 31, 2010. We believe that the difficulty in building an affiliate network of this large size, together with our combined affiliate and advertising spend for the nine months ended September 30, 2011 and the year ended December 31, 2010 of $64.5 million and $103.5 million, respectively, presents a significant barrier to entry for potential competitors. Our Strategy Our goal is to enhance revenue opportunities while improving our profitability. We plan to achieve these goals using the following strategies: Convert Visitors, Registrants and Members into Subscribers or Paid Users. We continually seek to convert visitors, registrants and members into subscribers or paid users. We do this by constantly evaluating, adding and enhancing features on our websites to improve our users experience. Create Additional Websites and Diversify Offerings. We are constantly seeking to identify groups of sufficient size who share a common interest in order to create a website intended to appeal to their interests. Our extensive user database serves as an existing source of potential members and subscribers for new websites we create. Expand into and Monetize Current Foreign Markets. In 2010, nearly 71% of our members were outside the United States, but non-U.S. users accounted for less than half of our total net revenues. We seek to expand in selected geographic markets, including Southeast Europe, South America and Asia. Pursue Targeted Acquisitions. We intend to expand our business by acquiring and integrating additional social networking websites, technology platforms, owners, creators and distributors of content and payment processing and advertising businesses. Our management team possesses significant mergers and acquisitions and integration expertise and regularly screens the marketplace for strategic acquisition opportunities. Generate Online Advertising Revenue. To date, online advertising revenue has represented less than 0.1% of our net revenue, averaging approximately $8,000 per month in the nine months ended September 30, 2011 and $9,000 per month for the year ended December 31, 2010. With continued worldwide growth in this advertising segment, we see this as a significant growth opportunity. We believe that our broad and diverse user base represents a valuable asset that will provide opportunities for us to offer targeted online advertising to specific demographic groups. We intend to focus our advertising efforts on our general audience social networking websites and maintain our subscription-based model for our adult social networking websites. Our New Financing On October 27, 2010, we issued new debt to repay our then existing debt, which we refer to as the New Financing. We, along with our wholly-owned subsidiary Interactive Network, Inc., or INI, co-issued $305.0 million principal amount of the Senior Secured Notes, $13.8 million of the Cash Pay Notes, and $232.5 million of the Non-Cash Pay Notes. Our Initial Public Offering On May 16, 2011, we issued 5,000,000 shares of common stock at a price of $10.00 per share and completed our initial public offering (the IPO ). We raised gross proceeds of $50.0 million, less underwriting fees and commissions of 7.25% of the gross proceeds, or $3.6 million, and incurred other offering expenses of $2.9 million to be paid from the proceeds of the offering, resulting in $43.5 million of net proceeds. In addition, we had incurred and paid as of December 31, 2010, $13.3 million of offering costs, which were included in deferred offering costs in the accompanying balance sheet at December 31, 2010 and written off by a charge to capital in excess of par value in the quarter ended June 30, 2011. On May 19, 2011, we redeemed $37.8 million of our Senior Secured Notes and $1.7 million of our Cash Pay Notes for a total of $39.5 million principal amount of New Financing redeemed from the net proceeds of our IPO and incurred a loss on extinguishment of debt estimated to be approximately $7.3 million. As of September 30, 2011, the outstanding principal amounts of the Senior Secured Notes, Cash Pay Notes and Non-Cash Pay Notes were $235.3 million, $10.6 million and $250.9 million, respectively. Recent Developments In July 2011, we acquired, through one of our subsidiaries, PerfectMatch.com, an online relationship service helping adults seeking successful, lasting connections. We paid approximately $2.5 million in cash and stock to acquire the assets of the website. PerfectMatch.com uses the Duet Total Compatibility System, a system which analyzes the whole person to find friends, taking into account each member s personality, values and ideals, life and love-style preferences to identify and find the person right for them. The acquisition of this website and related assets adds to our portfolio of general audience social networking websites. In September 2011, we acquired, through one of our subsidiaries, BDM Global Ventures Ltd., the company which owns the operations of JigoCity. The acquisition was completed pursuant to an Agreement and Plan of Merger entered into on September 7, 2011 among us, JGC Holdings Limited, our wholly-owned subsidiary, BDM Global Ventures Limited, which we refer to as BDM, Global Investment Ventures LLC and Anthony R. Bobulinski, which we refer to as the Merger Agreement. Under the terms of the Merger Agreement, the shareholders of BDM, in exchange for their outstanding shares and options in BDM and its subsidiaries, received merger consideration consisting of 1,555,555, shares of our common stock, 500,000 of which will be held in escrow until no later than December 31, 2012, and warrants exercisable into 6,436,851 shares of our common stock with exercise prices ranging from $5-$18 per share with an expiration date of December 31, 2021. Pursuant to an equity put agreement we entered into, the shareholders of BDM have the option to sell all of the shares of our common stock and warrants issued as merger consideration back to us in exchange for the return of 70% of the equity in BDM if the volume-weighted average price of our common stock fails to equal or exceed $12.00 per share during any 10 trading day period principally between the closing date and the later of June 30, 2014 and the date upon which our current indentures are fully discharged, or if an indenture modification is made, as defined in the equity put agreement, the later of June 30, 2014 and the date the indenture modification takes place (the later date hereinafter referred to as the Vesting Date ). The equity put agreement provides that the put right shall become exercisable at the sole discretion of the shareholders appointed representative during the period commencing on the Vesting Date and expiring sixty (60) days thereafter. Additionally, if the shareholders of BDM exercise the put right, we have the right to pay them in our common stock and/or cash, having a combined value as of the later of the above dates equal to the product of (i) 2,209,414 shares of common stock (subject to dilutive adjustment) and (ii) the difference between the highest 10 day volume-weighted average price attained by our common stock during such period and $12.00, in which case the put right terminates. Pursuant to a registration rights agreement, we also granted demand registration rights under certain circumstances, with respect to the shares of our common stock and warrants issued as merger consideration. JigoCity is a global social commerce organization committed to providing members with high quality daily deals that are relevant to their individual lifestyles. The acquisition of JigoCity adds to our portfolio a social commerce company and what we believe will be an additional avenue to monetize our foreign markets. Our Corporate Information Our executive offices are located at 6800 Broken Sound Parkway, Suite 200, Boca Raton, Florida 33487 and our telephone number is (561) 912-7000. Our website address is www.ffn.com. The information contained in, or accessible through, our website is not part of this prospectus. 6800 Broken Sound Parkway, Suite 200 Boca Raton, Florida 33487 (561) 912-7000 (Address, including zip code, and telephone number, including area code, of registrant s principal executive offices)
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+consolidated financial statements included elsewhere in this prospectus. This summary may not contain all of the information that may be important to you. You should carefully read this entire prospectus, including the section entitled Risk Factors and our consolidated financial statements and notes to those statements. As used in this prospectus, unless the context otherwise requires, all references to we, us, our, our company or the company refer to FriendFinder Networks Inc. and, where appropriate, our consolidated direct and indirect subsidiaries, except where it is clear that the terms mean only FriendFinder Networks Inc. The term INI refers to our subsidiary and co-issuer of the Registrable Notes, Interactive Network, Inc. References to our common stock refer only to our voting common stock and except as otherwise noted, such references do not include our Series B common stock or our preferred common stock. Except where we state otherwise, the information presented in this prospectus reflects (i) the amendment and restatement of our bylaws, effective upon the consummation of our initial public offering on May 16, 2011, and (ii) the amendment and restatement of our articles of incorporation, which became effective on January 25, 2010. About Our Company FriendFinder Networks Inc. is a leading internet and technology company providing services in the rapidly expanding markets of social networking and web-based video sharing. Our business consists of creating and operating technology platforms which run several of the most heavily visited websites in the world. Through our extensive network of more than 44,000 websites, since our inception, we have built a base of more than 484 million registrants and more than 320 million members in more than 200 countries. We are able to create and maintain, in a cost-effective manner, websites intended to appeal to users of diverse cultures and interest groups. In December 2010, we had more than 196 million unique visitors to our network of websites, according to comScore. We offer our members a wide variety of online services so that they can interact with each other and access the content available on our websites. Our most heavily visited websites include AdultFriendFinder.com, Amigos.com, AsiaFriendFinder.com, Cams.com, FriendFinder.com, BigChurch.com and SeniorFriendFinder.com. For the nine months ended September 30, 2011, we had net revenue, income from operations and net losses of $249.6 million, $52.4 million and $(20.9) million, respectively. For the year ended December 31, 2010, we had net revenue, income from operations and net losses of $346.0 million, $71.1 million and ($43.2) million, respectively. Our revenues to date have been primarily derived from online subscription and paid-usage for our products and services. These products and services are delivered primarily through two highly scalable revenue-generating technology platforms: Social Networking. Approximately 69% of our total net revenues for the nine months ended September 30, 2011 and 70% of our total net revenues for the year ended December 31, 2010 were generated through our targeted social networking technology platform. Our social networking technology platform provides users who register or purchase subscriptions to one or more of our websites with the ability to communicate and to establish new connections with other users via our personal chat rooms, instant messaging and e-mail applications and to create, post and view content of interest. We have been able to rapidly create and seamlessly maintain multiple websites tailored to specific categories or genres and designed to cater to targeted audiences with mutual interests. We believe that our ability to create and operate a diverse network of specific interest websites with unique, user-generated content in a cost-effective manner is a significant competitive differentiator that allows us to implement a subscription-fee based revenue model while many other popular social networking websites rely primarily upon free-access, advertising-based revenue models. Live Interactive Video. Approximately 24% of our total net revenues for the nine months ended September 30, 2011 and 22% of our total net revenues for the year ended December 31, 2010 were generated through our live interactive video technology platform. Our live interactive video technology platform is a live video broadcast platform that enables models to broadcast from independent studios throughout the world and interact with our users via instant messaging and video. We believe our live interactive video platform provides a unique offering including bi-directional and omni-directional video and interactive features that allow models to communicate with and attract users through a variety of mediums including blogs, newsletters and video. In addition, we believe the reliability of our live interactive video technology platform, which had approximately 99.1% uptime during 2010, is a key factor allowing us to maintain a large base of users. In addition to our revenue-generating technology platforms, we have invested significant time and resources into developing our back-end marketing, analytics and billing technologies, which are a key contributor to the success of our business. We have developed proprietary systems to allow our marketing affiliates to maximize their revenue for our mutual benefit. These systems include proprietary white-labeling solutions, in which we provide back-end technology solutions to permit affiliates and marketing partners to deliver our products and services while maintaining the affiliate s and marketing partner s own branding and style, self-optimizing ad spots, and a robust banner optimization engine that automatically chooses the best possible site and banner to promote in a given ad spot. Our marketing technology has also enabled the creation and continued growth of our network of more than 280,000 affiliates, which we believe is one of the largest of its kind in the world and a significant barrier to entry to potential and existing competitors. Similarly, our proprietary analytics technology provides us with an advantage relative to less sophisticated competitors by enabling us to estimate future revenue based on short-term response to our advertising campaigns, as well as providing for analysis of key data and metrics in order to optimize our marketing spend and maximize the revenues our websites generate. Our robust billing platform allows our customers to pay using many of the widely-adopted methods of e-commerce, both domestically as well as internationally. We categorize our users into five categories: visitors, registrants, members, subscribers and paid users. Visitors. Visitors are users who visit our websites but do not necessarily register. We believe we achieve large numbers of unique visitors because of our focus on continuously enhancing the user experience and expanding the breadth of our services. We had more than 196 million unique worldwide visitors in the month of December 2010, representing a growth of more than 300% from our approximately 46.9 million unique worldwide visitors in January 2009, according to comScore. Registrants. Registrants are visitors who complete a free registration form on one of our websites by giving basic identification information and submitting their e-mail address. For the nine months ended September 30, 2011, we averaged more than 6.4 million new registrations on our websites each month. For the year ended December 31, 2010, we averaged more than 6.4 million new registrations on our websites each month. Some of our registrants are also members, as described below. Members. Members are registrants who log into one of our websites and make use of our free products and services. For the nine months ended September 30, 2011, we averaged more than 4.0 million new members on our websites each month. For the year ended December 31, 2010, we averaged more than 3.9 million new members on our websites each month. Subscribers. Subscribers are members who purchase daily, three-day, weekly, monthly, quarterly, annual or lifetime subscriptions for one or more of our websites. Subscribers have full access to our websites and may access special features. For the nine months ended September 30, 2011, we had a monthly average of approximately 950 thousand and for the year ended December 31, 2010, we had a monthly average of approximately 1 million paying subscribers. Paid Users. Paid users are members who purchase products or services on a pay-by-usage basis. For the nine months ended September 30, 2011, we averaged approximately 2.9 million purchased minutes by paid users each month. For the year ended December 31, 2010, we averaged approximately 3.0 million purchased minutes by paid users each month. We focus on the following key business metrics to evaluate the effectiveness of our operating strategies. Average Revenue per Subscriber. We calculate average revenue per subscriber, or ARPU, by dividing net revenue for the period by the average number of subscribers in the period and by the number of months in the period. As such, our ARPU is a monthly calculation. For the nine months ended September 30, 2011, our average monthly revenue per subscriber was $20.22. For the year ended December 31, 2010, our average monthly revenue per subscriber was $20.49. Churn. Churn is calculated by dividing terminations of subscriptions during the period by the total number of subscribers at the beginning of that period. Our average monthly churn rate, which measures the rate UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 of loss of subscribers, for the nine months ended September 30, 2011 was 16.3% per month. Our average monthly churn rate for the year ended December 31, 2010 was 16.1% per month. Cost Per Gross Addition. Cost per gross addition, or CPGA, is calculated by adding affiliate commission expense plus ad buy expenses and dividing by new subscribers during the measurement period. Our CPGA for the nine months ended September 30, 2011 was $42.76. Our CPGA for the year ended December 31, 2010 was $47.25. Average Lifetime Net Revenue Per Subscriber. Average Lifetime Net Revenue Per Subscriber is calculated by multiplying the average lifetime (in months) of a subscriber by ARPU for the measurement period and then subtracting the CPGA for the measurement period. Our Average Lifetime Net Revenue Per Subscriber for the nine months ended September 30, 2011 was $81.06. Our Average Lifetime Net Revenue Per Subscriber for the year ended December 31, 2010 was $80.17. While we monitor many statistics in the overall management of our business, we believe that Average Lifetime Net Revenue Per Subscriber and the number of subscribers are particularly helpful metrics for gaining a meaningful understanding of our business as they provide an indication of total revenue and profit generated from our base of subscribers inclusive of affiliate commissions and advertising costs required to generate new subscriptions. In addition to our social networks and live interactive video platforms, we also offer professionally-generated content through our premium content technology platform and our non-internet entertainment business. Through websites such as Penthouse.com and HotBox.com, our subscribers and paid users have access to our collection of more than 15,000 hours of professional video, which includes our library of more than 800 standard and high-definition full-length feature films and one million professionally produced images. We began shooting all of our content in 3D in September 2010. Additionally, subscribers have access to editorial content, chat rooms and other interactive features. In addition to our online products and services, we also have a non-technology legacy entertainment business, in which we produce and distribute original pictorial and video content via traditional distribution channels including licensing and retail DVD channels, and license the globally-recognized Penthouse brand to a variety of consumer product companies and entertainment venues and public branded men s lifestyle magazines. Our Competitive Strengths We believe that we have the following competitive strengths that we can leverage to implement our strategy: Proprietary and Scalable Technology Platform. Our robust, proprietary and highly scalable technology platform supports our social networking, live interactive video and premium content websites. We are able to use our customized back-end interface to quickly and affordably generate new websites, launch new features and target new audiences at a relatively low incremental cost. We believe that our ability to create new websites and provide new features is crucial to cost-effectively maintaining our relationships with existing users and attracting new users. Paid Subscriber-Based Model. We operate social networking websites that allow our members to make connections with other members with whom they share common interests. Our paid subscriber-based model of social networking websites is distinctly different from the business models of other free social networking websites whose users access the websites to remain connected to their pre-existing friends and interest groups. Large and Diverse User Base. We operate some of the most heavily visited social networking websites in the world, currently adding on average more than 6.4 million new registrants and more than 4.0 million new members each month. Our websites are designed to appeal to individuals with a diversity of interests and backgrounds. We believe potential members are attracted to the opportunity to interact with other individuals by having access to our large, diverse user base. Large and Difficult to Replicate Affiliate Network and Significant Marketing Spend. Our marketing affiliates are companies that market our services on their websites, allowing us to market our brand beyond our established user base. As of September 30, 2011 and December 31, 2010, we had more than 280,000 participants in our marketing affiliate program from which we derive a substantial portion of our new members and approximately 46% of our net revenues for the nine months ended September 30, 2011 and 45% of our net revenues for the year ended December 31, 2010. We believe that the difficulty in building an affiliate network of this large size, together with our combined affiliate and advertising spend for the nine months ended September 30, 2011 and the year ended December 31, 2010 of $64.5 million and $103.5 million, respectively, presents a significant barrier to entry for potential competitors. Our Strategy Our goal is to enhance revenue opportunities while improving our profitability. We plan to achieve these goals using the following strategies: Convert Visitors, Registrants and Members into Subscribers or Paid Users. We continually seek to convert visitors, registrants and members into subscribers or paid users. We do this by constantly evaluating, adding and enhancing features on our websites to improve our users experience. Create Additional Websites and Diversify Offerings. We are constantly seeking to identify groups of sufficient size who share a common interest in order to create a website intended to appeal to their interests. Our extensive user database serves as an existing source of potential members and subscribers for new websites we create. Expand into and Monetize Current Foreign Markets. In 2010, nearly 71% of our members were outside the United States, but non-U.S. users accounted for less than half of our total net revenues. We seek to expand in selected geographic markets, including Southeast Europe, South America and Asia. Pursue Targeted Acquisitions. We intend to expand our business by acquiring and integrating additional social networking websites, technology platforms, owners, creators and distributors of content and payment processing and advertising businesses. Our management team possesses significant mergers and acquisitions and integration expertise and regularly screens the marketplace for strategic acquisition opportunities. Generate Online Advertising Revenue. To date, online advertising revenue has represented less than 0.1% of our net revenue, averaging approximately $8,000 per month in the nine months ended September 30, 2011 and $9,000 per month for the year ended December 31, 2010. With continued worldwide growth in this advertising segment, we see this as a significant growth opportunity. We believe that our broad and diverse user base represents a valuable asset that will provide opportunities for us to offer targeted online advertising to specific demographic groups. We intend to focus our advertising efforts on our general audience social networking websites and maintain our subscription-based model for our adult social networking websites. Our New Financing On October 27, 2010, we issued new debt to repay our then existing debt, which we refer to as the New Financing. We, along with our wholly-owned subsidiary Interactive Network, Inc., or INI, co-issued $305.0 million principal amount of the Senior Secured Notes, $13.8 million of the Cash Pay Notes, and $232.5 million of the Non-Cash Pay Notes. Our Initial Public Offering On May 16, 2011, we issued 5,000,000 shares of common stock at a price of $10.00 per share and completed our initial public offering (the IPO ). We raised gross proceeds of $50.0 million, less underwriting fees and commissions of 7.25% of the gross proceeds, or $3.6 million, and incurred other offering expenses of $2.9 million to be paid from the proceeds of the offering, resulting in $43.5 million of net proceeds. In addition, we had incurred and paid as of December 31, 2010, $13.3 million of offering costs, which were included in deferred offering costs in the accompanying balance sheet at December 31, 2010 and written off by a charge to capital in excess of par value in the quarter ended June 30, 2011. On May 19, 2011, we redeemed $37.8 million of our Senior Secured Notes and $1.7 million of our Cash Pay Notes for a total of $39.5 million principal amount of New Financing redeemed from the net proceeds of our IPO and incurred a loss on extinguishment of debt estimated to be approximately $7.3 million. As of September 30, 2011, the outstanding principal amounts of the Senior Secured Notes, Cash Pay Notes and Non-Cash Pay Notes were $235.3 million, $10.6 million and $250.9 million, respectively. Recent Developments In July 2011, we acquired, through one of our subsidiaries, PerfectMatch.com, an online relationship service helping adults seeking successful, lasting connections. We paid approximately $2.5 million in cash and stock to acquire the assets of the website. PerfectMatch.com uses the Duet Total Compatibility System, a system which analyzes the whole person to find friends, taking into account each member s personality, values and ideals, life and love-style preferences to identify and find the person right for them. The acquisition of this website and related assets adds to our portfolio of general audience social networking websites. In September 2011, we acquired, through one of our subsidiaries, BDM Global Ventures Ltd., the company which owns the operations of JigoCity. The acquisition was completed pursuant to an Agreement and Plan of Merger entered into on September 7, 2011 among us, JGC Holdings Limited, our wholly-owned subsidiary, BDM Global Ventures Limited, which we refer to as BDM, Global Investment Ventures LLC and Anthony R. Bobulinski, which we refer to as the Merger Agreement. Under the terms of the Merger Agreement, the shareholders of BDM, in exchange for their outstanding shares and options in BDM and its subsidiaries, received merger consideration consisting of 1,555,555, shares of our common stock, 500,000 of which will be held in escrow until no later than December 31, 2012, and warrants exercisable into 6,436,851 shares of our common stock with exercise prices ranging from $5-$18 per share with an expiration date of December 31, 2021. Pursuant to an equity put agreement we entered into, the shareholders of BDM have the option to sell all of the shares of our common stock and warrants issued as merger consideration back to us in exchange for the return of 70% of the equity in BDM if the volume-weighted average price of our common stock fails to equal or exceed $12.00 per share during any 10 trading day period principally between the closing date and the later of June 30, 2014 and the date upon which our current indentures are fully discharged, or if an indenture modification is made, as defined in the equity put agreement, the later of June 30, 2014 and the date the indenture modification takes place (the later date hereinafter referred to as the Vesting Date ). The equity put agreement provides that the put right shall become exercisable at the sole discretion of the shareholders appointed representative during the period commencing on the Vesting Date and expiring sixty (60) days thereafter. Additionally, if the shareholders of BDM exercise the put right, we have the right to pay them in our common stock and/or cash, having a combined value as of the later of the above dates equal to the product of (i) 2,209,414 shares of common stock (subject to dilutive adjustment) and (ii) the difference between the highest 10 day volume-weighted average price attained by our common stock during such period and $12.00, in which case the put right terminates. Pursuant to a registration rights agreement, we also granted demand registration rights under certain circumstances, with respect to the shares of our common stock and warrants issued as merger consideration. JigoCity is a global social commerce organization committed to providing members with high quality daily deals that are relevant to their individual lifestyles. The acquisition of JigoCity adds to our portfolio a social commerce company and what we believe will be an additional avenue to monetize our foreign markets. Our Corporate Information Our executive offices are located at 6800 Broken Sound Parkway, Suite 200, Boca Raton, Florida 33487 and our telephone number is (561) 912-7000. Our website address is www.ffn.com. The information contained in, or accessible through, our website is not part of this prospectus. 6800 Broken Sound Parkway, Suite 200 Boca Raton, Florida 33487 (561) 912-7000 (Address, including zip code, and telephone number, including area code, of registrant s principal executive offices)
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+consolidated financial statements included elsewhere in this prospectus. This summary may not contain all of the information that may be important to you. You should carefully read this entire prospectus, including the section entitled Risk Factors and our consolidated financial statements and notes to those statements. As used in this prospectus, unless the context otherwise requires, all references to we, us, our, our company or the company refer to FriendFinder Networks Inc. and, where appropriate, our consolidated direct and indirect subsidiaries, except where it is clear that the terms mean only FriendFinder Networks Inc. The term INI refers to our subsidiary and co-issuer of the Registrable Notes, Interactive Network, Inc. References to our common stock refer only to our voting common stock and except as otherwise noted, such references do not include our Series B common stock or our preferred common stock. Except where we state otherwise, the information presented in this prospectus reflects (i) the amendment and restatement of our bylaws, effective upon the consummation of our initial public offering on May 16, 2011, and (ii) the amendment and restatement of our articles of incorporation, which became effective on January 25, 2010. About Our Company FriendFinder Networks Inc. is a leading internet and technology company providing services in the rapidly expanding markets of social networking and web-based video sharing. Our business consists of creating and operating technology platforms which run several of the most heavily visited websites in the world. Through our extensive network of more than 44,000 websites, since our inception, we have built a base of more than 484 million registrants and more than 320 million members in more than 200 countries. We are able to create and maintain, in a cost-effective manner, websites intended to appeal to users of diverse cultures and interest groups. In December 2010, we had more than 196 million unique visitors to our network of websites, according to comScore. We offer our members a wide variety of online services so that they can interact with each other and access the content available on our websites. Our most heavily visited websites include AdultFriendFinder.com, Amigos.com, AsiaFriendFinder.com, Cams.com, FriendFinder.com, BigChurch.com and SeniorFriendFinder.com. For the nine months ended September 30, 2011, we had net revenue, income from operations and net losses of $249.6 million, $52.4 million and $(20.9) million, respectively. For the year ended December 31, 2010, we had net revenue, income from operations and net losses of $346.0 million, $71.1 million and ($43.2) million, respectively. Our revenues to date have been primarily derived from online subscription and paid-usage for our products and services. These products and services are delivered primarily through two highly scalable revenue-generating technology platforms: Social Networking. Approximately 69% of our total net revenues for the nine months ended September 30, 2011 and 70% of our total net revenues for the year ended December 31, 2010 were generated through our targeted social networking technology platform. Our social networking technology platform provides users who register or purchase subscriptions to one or more of our websites with the ability to communicate and to establish new connections with other users via our personal chat rooms, instant messaging and e-mail applications and to create, post and view content of interest. We have been able to rapidly create and seamlessly maintain multiple websites tailored to specific categories or genres and designed to cater to targeted audiences with mutual interests. We believe that our ability to create and operate a diverse network of specific interest websites with unique, user-generated content in a cost-effective manner is a significant competitive differentiator that allows us to implement a subscription-fee based revenue model while many other popular social networking websites rely primarily upon free-access, advertising-based revenue models. Live Interactive Video. Approximately 24% of our total net revenues for the nine months ended September 30, 2011 and 22% of our total net revenues for the year ended December 31, 2010 were generated through our live interactive video technology platform. Our live interactive video technology platform is a live video broadcast platform that enables models to broadcast from independent studios throughout the world and interact with our users via instant messaging and video. We believe our live interactive video platform provides a unique offering including bi-directional and omni-directional video and interactive features that allow models to communicate with and attract users through a variety of mediums including blogs, newsletters and video. In addition, we believe the reliability of our live interactive video technology platform, which had approximately 99.1% uptime during 2010, is a key factor allowing us to maintain a large base of users. In addition to our revenue-generating technology platforms, we have invested significant time and resources into developing our back-end marketing, analytics and billing technologies, which are a key contributor to the success of our business. We have developed proprietary systems to allow our marketing affiliates to maximize their revenue for our mutual benefit. These systems include proprietary white-labeling solutions, in which we provide back-end technology solutions to permit affiliates and marketing partners to deliver our products and services while maintaining the affiliate s and marketing partner s own branding and style, self-optimizing ad spots, and a robust banner optimization engine that automatically chooses the best possible site and banner to promote in a given ad spot. Our marketing technology has also enabled the creation and continued growth of our network of more than 280,000 affiliates, which we believe is one of the largest of its kind in the world and a significant barrier to entry to potential and existing competitors. Similarly, our proprietary analytics technology provides us with an advantage relative to less sophisticated competitors by enabling us to estimate future revenue based on short-term response to our advertising campaigns, as well as providing for analysis of key data and metrics in order to optimize our marketing spend and maximize the revenues our websites generate. Our robust billing platform allows our customers to pay using many of the widely-adopted methods of e-commerce, both domestically as well as internationally. We categorize our users into five categories: visitors, registrants, members, subscribers and paid users. Visitors. Visitors are users who visit our websites but do not necessarily register. We believe we achieve large numbers of unique visitors because of our focus on continuously enhancing the user experience and expanding the breadth of our services. We had more than 196 million unique worldwide visitors in the month of December 2010, representing a growth of more than 300% from our approximately 46.9 million unique worldwide visitors in January 2009, according to comScore. Registrants. Registrants are visitors who complete a free registration form on one of our websites by giving basic identification information and submitting their e-mail address. For the nine months ended September 30, 2011, we averaged more than 6.4 million new registrations on our websites each month. For the year ended December 31, 2010, we averaged more than 6.4 million new registrations on our websites each month. Some of our registrants are also members, as described below. Members. Members are registrants who log into one of our websites and make use of our free products and services. For the nine months ended September 30, 2011, we averaged more than 4.0 million new members on our websites each month. For the year ended December 31, 2010, we averaged more than 3.9 million new members on our websites each month. Subscribers. Subscribers are members who purchase daily, three-day, weekly, monthly, quarterly, annual or lifetime subscriptions for one or more of our websites. Subscribers have full access to our websites and may access special features. For the nine months ended September 30, 2011, we had a monthly average of approximately 950 thousand and for the year ended December 31, 2010, we had a monthly average of approximately 1 million paying subscribers. Paid Users. Paid users are members who purchase products or services on a pay-by-usage basis. For the nine months ended September 30, 2011, we averaged approximately 2.9 million purchased minutes by paid users each month. For the year ended December 31, 2010, we averaged approximately 3.0 million purchased minutes by paid users each month. We focus on the following key business metrics to evaluate the effectiveness of our operating strategies. Average Revenue per Subscriber. We calculate average revenue per subscriber, or ARPU, by dividing net revenue for the period by the average number of subscribers in the period and by the number of months in the period. As such, our ARPU is a monthly calculation. For the nine months ended September 30, 2011, our average monthly revenue per subscriber was $20.22. For the year ended December 31, 2010, our average monthly revenue per subscriber was $20.49. Churn. Churn is calculated by dividing terminations of subscriptions during the period by the total number of subscribers at the beginning of that period. Our average monthly churn rate, which measures the rate UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 of loss of subscribers, for the nine months ended September 30, 2011 was 16.3% per month. Our average monthly churn rate for the year ended December 31, 2010 was 16.1% per month. Cost Per Gross Addition. Cost per gross addition, or CPGA, is calculated by adding affiliate commission expense plus ad buy expenses and dividing by new subscribers during the measurement period. Our CPGA for the nine months ended September 30, 2011 was $42.76. Our CPGA for the year ended December 31, 2010 was $47.25. Average Lifetime Net Revenue Per Subscriber. Average Lifetime Net Revenue Per Subscriber is calculated by multiplying the average lifetime (in months) of a subscriber by ARPU for the measurement period and then subtracting the CPGA for the measurement period. Our Average Lifetime Net Revenue Per Subscriber for the nine months ended September 30, 2011 was $81.06. Our Average Lifetime Net Revenue Per Subscriber for the year ended December 31, 2010 was $80.17. While we monitor many statistics in the overall management of our business, we believe that Average Lifetime Net Revenue Per Subscriber and the number of subscribers are particularly helpful metrics for gaining a meaningful understanding of our business as they provide an indication of total revenue and profit generated from our base of subscribers inclusive of affiliate commissions and advertising costs required to generate new subscriptions. In addition to our social networks and live interactive video platforms, we also offer professionally-generated content through our premium content technology platform and our non-internet entertainment business. Through websites such as Penthouse.com and HotBox.com, our subscribers and paid users have access to our collection of more than 15,000 hours of professional video, which includes our library of more than 800 standard and high-definition full-length feature films and one million professionally produced images. We began shooting all of our content in 3D in September 2010. Additionally, subscribers have access to editorial content, chat rooms and other interactive features. In addition to our online products and services, we also have a non-technology legacy entertainment business, in which we produce and distribute original pictorial and video content via traditional distribution channels including licensing and retail DVD channels, and license the globally-recognized Penthouse brand to a variety of consumer product companies and entertainment venues and public branded men s lifestyle magazines. Our Competitive Strengths We believe that we have the following competitive strengths that we can leverage to implement our strategy: Proprietary and Scalable Technology Platform. Our robust, proprietary and highly scalable technology platform supports our social networking, live interactive video and premium content websites. We are able to use our customized back-end interface to quickly and affordably generate new websites, launch new features and target new audiences at a relatively low incremental cost. We believe that our ability to create new websites and provide new features is crucial to cost-effectively maintaining our relationships with existing users and attracting new users. Paid Subscriber-Based Model. We operate social networking websites that allow our members to make connections with other members with whom they share common interests. Our paid subscriber-based model of social networking websites is distinctly different from the business models of other free social networking websites whose users access the websites to remain connected to their pre-existing friends and interest groups. Large and Diverse User Base. We operate some of the most heavily visited social networking websites in the world, currently adding on average more than 6.4 million new registrants and more than 4.0 million new members each month. Our websites are designed to appeal to individuals with a diversity of interests and backgrounds. We believe potential members are attracted to the opportunity to interact with other individuals by having access to our large, diverse user base. Large and Difficult to Replicate Affiliate Network and Significant Marketing Spend. Our marketing affiliates are companies that market our services on their websites, allowing us to market our brand beyond our established user base. As of September 30, 2011 and December 31, 2010, we had more than 280,000 participants in our marketing affiliate program from which we derive a substantial portion of our new members and approximately 46% of our net revenues for the nine months ended September 30, 2011 and 45% of our net revenues for the year ended December 31, 2010. We believe that the difficulty in building an affiliate network of this large size, together with our combined affiliate and advertising spend for the nine months ended September 30, 2011 and the year ended December 31, 2010 of $64.5 million and $103.5 million, respectively, presents a significant barrier to entry for potential competitors. Our Strategy Our goal is to enhance revenue opportunities while improving our profitability. We plan to achieve these goals using the following strategies: Convert Visitors, Registrants and Members into Subscribers or Paid Users. We continually seek to convert visitors, registrants and members into subscribers or paid users. We do this by constantly evaluating, adding and enhancing features on our websites to improve our users experience. Create Additional Websites and Diversify Offerings. We are constantly seeking to identify groups of sufficient size who share a common interest in order to create a website intended to appeal to their interests. Our extensive user database serves as an existing source of potential members and subscribers for new websites we create. Expand into and Monetize Current Foreign Markets. In 2010, nearly 71% of our members were outside the United States, but non-U.S. users accounted for less than half of our total net revenues. We seek to expand in selected geographic markets, including Southeast Europe, South America and Asia. Pursue Targeted Acquisitions. We intend to expand our business by acquiring and integrating additional social networking websites, technology platforms, owners, creators and distributors of content and payment processing and advertising businesses. Our management team possesses significant mergers and acquisitions and integration expertise and regularly screens the marketplace for strategic acquisition opportunities. Generate Online Advertising Revenue. To date, online advertising revenue has represented less than 0.1% of our net revenue, averaging approximately $8,000 per month in the nine months ended September 30, 2011 and $9,000 per month for the year ended December 31, 2010. With continued worldwide growth in this advertising segment, we see this as a significant growth opportunity. We believe that our broad and diverse user base represents a valuable asset that will provide opportunities for us to offer targeted online advertising to specific demographic groups. We intend to focus our advertising efforts on our general audience social networking websites and maintain our subscription-based model for our adult social networking websites. Our New Financing On October 27, 2010, we issued new debt to repay our then existing debt, which we refer to as the New Financing. We, along with our wholly-owned subsidiary Interactive Network, Inc., or INI, co-issued $305.0 million principal amount of the Senior Secured Notes, $13.8 million of the Cash Pay Notes, and $232.5 million of the Non-Cash Pay Notes. Our Initial Public Offering On May 16, 2011, we issued 5,000,000 shares of common stock at a price of $10.00 per share and completed our initial public offering (the IPO ). We raised gross proceeds of $50.0 million, less underwriting fees and commissions of 7.25% of the gross proceeds, or $3.6 million, and incurred other offering expenses of $2.9 million to be paid from the proceeds of the offering, resulting in $43.5 million of net proceeds. In addition, we had incurred and paid as of December 31, 2010, $13.3 million of offering costs, which were included in deferred offering costs in the accompanying balance sheet at December 31, 2010 and written off by a charge to capital in excess of par value in the quarter ended June 30, 2011. On May 19, 2011, we redeemed $37.8 million of our Senior Secured Notes and $1.7 million of our Cash Pay Notes for a total of $39.5 million principal amount of New Financing redeemed from the net proceeds of our IPO and incurred a loss on extinguishment of debt estimated to be approximately $7.3 million. As of September 30, 2011, the outstanding principal amounts of the Senior Secured Notes, Cash Pay Notes and Non-Cash Pay Notes were $235.3 million, $10.6 million and $250.9 million, respectively. Recent Developments In July 2011, we acquired, through one of our subsidiaries, PerfectMatch.com, an online relationship service helping adults seeking successful, lasting connections. We paid approximately $2.5 million in cash and stock to acquire the assets of the website. PerfectMatch.com uses the Duet Total Compatibility System, a system which analyzes the whole person to find friends, taking into account each member s personality, values and ideals, life and love-style preferences to identify and find the person right for them. The acquisition of this website and related assets adds to our portfolio of general audience social networking websites. In September 2011, we acquired, through one of our subsidiaries, BDM Global Ventures Ltd., the company which owns the operations of JigoCity. The acquisition was completed pursuant to an Agreement and Plan of Merger entered into on September 7, 2011 among us, JGC Holdings Limited, our wholly-owned subsidiary, BDM Global Ventures Limited, which we refer to as BDM, Global Investment Ventures LLC and Anthony R. Bobulinski, which we refer to as the Merger Agreement. Under the terms of the Merger Agreement, the shareholders of BDM, in exchange for their outstanding shares and options in BDM and its subsidiaries, received merger consideration consisting of 1,555,555, shares of our common stock, 500,000 of which will be held in escrow until no later than December 31, 2012, and warrants exercisable into 6,436,851 shares of our common stock with exercise prices ranging from $5-$18 per share with an expiration date of December 31, 2021. Pursuant to an equity put agreement we entered into, the shareholders of BDM have the option to sell all of the shares of our common stock and warrants issued as merger consideration back to us in exchange for the return of 70% of the equity in BDM if the volume-weighted average price of our common stock fails to equal or exceed $12.00 per share during any 10 trading day period principally between the closing date and the later of June 30, 2014 and the date upon which our current indentures are fully discharged, or if an indenture modification is made, as defined in the equity put agreement, the later of June 30, 2014 and the date the indenture modification takes place (the later date hereinafter referred to as the Vesting Date ). The equity put agreement provides that the put right shall become exercisable at the sole discretion of the shareholders appointed representative during the period commencing on the Vesting Date and expiring sixty (60) days thereafter. Additionally, if the shareholders of BDM exercise the put right, we have the right to pay them in our common stock and/or cash, having a combined value as of the later of the above dates equal to the product of (i) 2,209,414 shares of common stock (subject to dilutive adjustment) and (ii) the difference between the highest 10 day volume-weighted average price attained by our common stock during such period and $12.00, in which case the put right terminates. Pursuant to a registration rights agreement, we also granted demand registration rights under certain circumstances, with respect to the shares of our common stock and warrants issued as merger consideration. JigoCity is a global social commerce organization committed to providing members with high quality daily deals that are relevant to their individual lifestyles. The acquisition of JigoCity adds to our portfolio a social commerce company and what we believe will be an additional avenue to monetize our foreign markets. Our Corporate Information Our executive offices are located at 6800 Broken Sound Parkway, Suite 200, Boca Raton, Florida 33487 and our telephone number is (561) 912-7000. Our website address is www.ffn.com. The information contained in, or accessible through, our website is not part of this prospectus. 6800 Broken Sound Parkway, Suite 200 Boca Raton, Florida 33487 (561) 912-7000 (Address, including zip code, and telephone number, including area code, of registrant s principal executive offices)
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001525682_friendfind_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001525682_friendfind_prospectus_summary.txt
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+consolidated financial statements included elsewhere in this prospectus. This summary may not contain all of the information that may be important to you. You should carefully read this entire prospectus, including the section entitled Risk Factors and our consolidated financial statements and notes to those statements. As used in this prospectus, unless the context otherwise requires, all references to we, us, our, our company or the company refer to FriendFinder Networks Inc. and, where appropriate, our consolidated direct and indirect subsidiaries, except where it is clear that the terms mean only FriendFinder Networks Inc. The term INI refers to our subsidiary and co-issuer of the Registrable Notes, Interactive Network, Inc. References to our common stock refer only to our voting common stock and except as otherwise noted, such references do not include our Series B common stock or our preferred common stock. Except where we state otherwise, the information presented in this prospectus reflects (i) the amendment and restatement of our bylaws, effective upon the consummation of our initial public offering on May 16, 2011, and (ii) the amendment and restatement of our articles of incorporation, which became effective on January 25, 2010. About Our Company FriendFinder Networks Inc. is a leading internet and technology company providing services in the rapidly expanding markets of social networking and web-based video sharing. Our business consists of creating and operating technology platforms which run several of the most heavily visited websites in the world. Through our extensive network of more than 44,000 websites, since our inception, we have built a base of more than 484 million registrants and more than 320 million members in more than 200 countries. We are able to create and maintain, in a cost-effective manner, websites intended to appeal to users of diverse cultures and interest groups. In December 2010, we had more than 196 million unique visitors to our network of websites, according to comScore. We offer our members a wide variety of online services so that they can interact with each other and access the content available on our websites. Our most heavily visited websites include AdultFriendFinder.com, Amigos.com, AsiaFriendFinder.com, Cams.com, FriendFinder.com, BigChurch.com and SeniorFriendFinder.com. For the nine months ended September 30, 2011, we had net revenue, income from operations and net losses of $249.6 million, $52.4 million and $(20.9) million, respectively. For the year ended December 31, 2010, we had net revenue, income from operations and net losses of $346.0 million, $71.1 million and ($43.2) million, respectively. Our revenues to date have been primarily derived from online subscription and paid-usage for our products and services. These products and services are delivered primarily through two highly scalable revenue-generating technology platforms: Social Networking. Approximately 69% of our total net revenues for the nine months ended September 30, 2011 and 70% of our total net revenues for the year ended December 31, 2010 were generated through our targeted social networking technology platform. Our social networking technology platform provides users who register or purchase subscriptions to one or more of our websites with the ability to communicate and to establish new connections with other users via our personal chat rooms, instant messaging and e-mail applications and to create, post and view content of interest. We have been able to rapidly create and seamlessly maintain multiple websites tailored to specific categories or genres and designed to cater to targeted audiences with mutual interests. We believe that our ability to create and operate a diverse network of specific interest websites with unique, user-generated content in a cost-effective manner is a significant competitive differentiator that allows us to implement a subscription-fee based revenue model while many other popular social networking websites rely primarily upon free-access, advertising-based revenue models. Live Interactive Video. Approximately 24% of our total net revenues for the nine months ended September 30, 2011 and 22% of our total net revenues for the year ended December 31, 2010 were generated through our live interactive video technology platform. Our live interactive video technology platform is a live video broadcast platform that enables models to broadcast from independent studios throughout the world and interact with our users via instant messaging and video. We believe our live interactive video platform provides a unique offering including bi-directional and omni-directional video and interactive features that allow models to communicate with and attract users through a variety of mediums including blogs, newsletters and video. In addition, we believe the reliability of our live interactive video technology platform, which had approximately 99.1% uptime during 2010, is a key factor allowing us to maintain a large base of users. In addition to our revenue-generating technology platforms, we have invested significant time and resources into developing our back-end marketing, analytics and billing technologies, which are a key contributor to the success of our business. We have developed proprietary systems to allow our marketing affiliates to maximize their revenue for our mutual benefit. These systems include proprietary white-labeling solutions, in which we provide back-end technology solutions to permit affiliates and marketing partners to deliver our products and services while maintaining the affiliate s and marketing partner s own branding and style, self-optimizing ad spots, and a robust banner optimization engine that automatically chooses the best possible site and banner to promote in a given ad spot. Our marketing technology has also enabled the creation and continued growth of our network of more than 280,000 affiliates, which we believe is one of the largest of its kind in the world and a significant barrier to entry to potential and existing competitors. Similarly, our proprietary analytics technology provides us with an advantage relative to less sophisticated competitors by enabling us to estimate future revenue based on short-term response to our advertising campaigns, as well as providing for analysis of key data and metrics in order to optimize our marketing spend and maximize the revenues our websites generate. Our robust billing platform allows our customers to pay using many of the widely-adopted methods of e-commerce, both domestically as well as internationally. We categorize our users into five categories: visitors, registrants, members, subscribers and paid users. Visitors. Visitors are users who visit our websites but do not necessarily register. We believe we achieve large numbers of unique visitors because of our focus on continuously enhancing the user experience and expanding the breadth of our services. We had more than 196 million unique worldwide visitors in the month of December 2010, representing a growth of more than 300% from our approximately 46.9 million unique worldwide visitors in January 2009, according to comScore. Registrants. Registrants are visitors who complete a free registration form on one of our websites by giving basic identification information and submitting their e-mail address. For the nine months ended September 30, 2011, we averaged more than 6.4 million new registrations on our websites each month. For the year ended December 31, 2010, we averaged more than 6.4 million new registrations on our websites each month. Some of our registrants are also members, as described below. Members. Members are registrants who log into one of our websites and make use of our free products and services. For the nine months ended September 30, 2011, we averaged more than 4.0 million new members on our websites each month. For the year ended December 31, 2010, we averaged more than 3.9 million new members on our websites each month. Subscribers. Subscribers are members who purchase daily, three-day, weekly, monthly, quarterly, annual or lifetime subscriptions for one or more of our websites. Subscribers have full access to our websites and may access special features. For the nine months ended September 30, 2011, we had a monthly average of approximately 950 thousand and for the year ended December 31, 2010, we had a monthly average of approximately 1 million paying subscribers. Paid Users. Paid users are members who purchase products or services on a pay-by-usage basis. For the nine months ended September 30, 2011, we averaged approximately 2.9 million purchased minutes by paid users each month. For the year ended December 31, 2010, we averaged approximately 3.0 million purchased minutes by paid users each month. We focus on the following key business metrics to evaluate the effectiveness of our operating strategies. Average Revenue per Subscriber. We calculate average revenue per subscriber, or ARPU, by dividing net revenue for the period by the average number of subscribers in the period and by the number of months in the period. As such, our ARPU is a monthly calculation. For the nine months ended September 30, 2011, our average monthly revenue per subscriber was $20.22. For the year ended December 31, 2010, our average monthly revenue per subscriber was $20.49. Churn. Churn is calculated by dividing terminations of subscriptions during the period by the total number of subscribers at the beginning of that period. Our average monthly churn rate, which measures the rate UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 of loss of subscribers, for the nine months ended September 30, 2011 was 16.3% per month. Our average monthly churn rate for the year ended December 31, 2010 was 16.1% per month. Cost Per Gross Addition. Cost per gross addition, or CPGA, is calculated by adding affiliate commission expense plus ad buy expenses and dividing by new subscribers during the measurement period. Our CPGA for the nine months ended September 30, 2011 was $42.76. Our CPGA for the year ended December 31, 2010 was $47.25. Average Lifetime Net Revenue Per Subscriber. Average Lifetime Net Revenue Per Subscriber is calculated by multiplying the average lifetime (in months) of a subscriber by ARPU for the measurement period and then subtracting the CPGA for the measurement period. Our Average Lifetime Net Revenue Per Subscriber for the nine months ended September 30, 2011 was $81.06. Our Average Lifetime Net Revenue Per Subscriber for the year ended December 31, 2010 was $80.17. While we monitor many statistics in the overall management of our business, we believe that Average Lifetime Net Revenue Per Subscriber and the number of subscribers are particularly helpful metrics for gaining a meaningful understanding of our business as they provide an indication of total revenue and profit generated from our base of subscribers inclusive of affiliate commissions and advertising costs required to generate new subscriptions. In addition to our social networks and live interactive video platforms, we also offer professionally-generated content through our premium content technology platform and our non-internet entertainment business. Through websites such as Penthouse.com and HotBox.com, our subscribers and paid users have access to our collection of more than 15,000 hours of professional video, which includes our library of more than 800 standard and high-definition full-length feature films and one million professionally produced images. We began shooting all of our content in 3D in September 2010. Additionally, subscribers have access to editorial content, chat rooms and other interactive features. In addition to our online products and services, we also have a non-technology legacy entertainment business, in which we produce and distribute original pictorial and video content via traditional distribution channels including licensing and retail DVD channels, and license the globally-recognized Penthouse brand to a variety of consumer product companies and entertainment venues and public branded men s lifestyle magazines. Our Competitive Strengths We believe that we have the following competitive strengths that we can leverage to implement our strategy: Proprietary and Scalable Technology Platform. Our robust, proprietary and highly scalable technology platform supports our social networking, live interactive video and premium content websites. We are able to use our customized back-end interface to quickly and affordably generate new websites, launch new features and target new audiences at a relatively low incremental cost. We believe that our ability to create new websites and provide new features is crucial to cost-effectively maintaining our relationships with existing users and attracting new users. Paid Subscriber-Based Model. We operate social networking websites that allow our members to make connections with other members with whom they share common interests. Our paid subscriber-based model of social networking websites is distinctly different from the business models of other free social networking websites whose users access the websites to remain connected to their pre-existing friends and interest groups. Large and Diverse User Base. We operate some of the most heavily visited social networking websites in the world, currently adding on average more than 6.4 million new registrants and more than 4.0 million new members each month. Our websites are designed to appeal to individuals with a diversity of interests and backgrounds. We believe potential members are attracted to the opportunity to interact with other individuals by having access to our large, diverse user base. Large and Difficult to Replicate Affiliate Network and Significant Marketing Spend. Our marketing affiliates are companies that market our services on their websites, allowing us to market our brand beyond our established user base. As of September 30, 2011 and December 31, 2010, we had more than 280,000 participants in our marketing affiliate program from which we derive a substantial portion of our new members and approximately 46% of our net revenues for the nine months ended September 30, 2011 and 45% of our net revenues for the year ended December 31, 2010. We believe that the difficulty in building an affiliate network of this large size, together with our combined affiliate and advertising spend for the nine months ended September 30, 2011 and the year ended December 31, 2010 of $64.5 million and $103.5 million, respectively, presents a significant barrier to entry for potential competitors. Our Strategy Our goal is to enhance revenue opportunities while improving our profitability. We plan to achieve these goals using the following strategies: Convert Visitors, Registrants and Members into Subscribers or Paid Users. We continually seek to convert visitors, registrants and members into subscribers or paid users. We do this by constantly evaluating, adding and enhancing features on our websites to improve our users experience. Create Additional Websites and Diversify Offerings. We are constantly seeking to identify groups of sufficient size who share a common interest in order to create a website intended to appeal to their interests. Our extensive user database serves as an existing source of potential members and subscribers for new websites we create. Expand into and Monetize Current Foreign Markets. In 2010, nearly 71% of our members were outside the United States, but non-U.S. users accounted for less than half of our total net revenues. We seek to expand in selected geographic markets, including Southeast Europe, South America and Asia. Pursue Targeted Acquisitions. We intend to expand our business by acquiring and integrating additional social networking websites, technology platforms, owners, creators and distributors of content and payment processing and advertising businesses. Our management team possesses significant mergers and acquisitions and integration expertise and regularly screens the marketplace for strategic acquisition opportunities. Generate Online Advertising Revenue. To date, online advertising revenue has represented less than 0.1% of our net revenue, averaging approximately $8,000 per month in the nine months ended September 30, 2011 and $9,000 per month for the year ended December 31, 2010. With continued worldwide growth in this advertising segment, we see this as a significant growth opportunity. We believe that our broad and diverse user base represents a valuable asset that will provide opportunities for us to offer targeted online advertising to specific demographic groups. We intend to focus our advertising efforts on our general audience social networking websites and maintain our subscription-based model for our adult social networking websites. Our New Financing On October 27, 2010, we issued new debt to repay our then existing debt, which we refer to as the New Financing. We, along with our wholly-owned subsidiary Interactive Network, Inc., or INI, co-issued $305.0 million principal amount of the Senior Secured Notes, $13.8 million of the Cash Pay Notes, and $232.5 million of the Non-Cash Pay Notes. Our Initial Public Offering On May 16, 2011, we issued 5,000,000 shares of common stock at a price of $10.00 per share and completed our initial public offering (the IPO ). We raised gross proceeds of $50.0 million, less underwriting fees and commissions of 7.25% of the gross proceeds, or $3.6 million, and incurred other offering expenses of $2.9 million to be paid from the proceeds of the offering, resulting in $43.5 million of net proceeds. In addition, we had incurred and paid as of December 31, 2010, $13.3 million of offering costs, which were included in deferred offering costs in the accompanying balance sheet at December 31, 2010 and written off by a charge to capital in excess of par value in the quarter ended June 30, 2011. On May 19, 2011, we redeemed $37.8 million of our Senior Secured Notes and $1.7 million of our Cash Pay Notes for a total of $39.5 million principal amount of New Financing redeemed from the net proceeds of our IPO and incurred a loss on extinguishment of debt estimated to be approximately $7.3 million. As of September 30, 2011, the outstanding principal amounts of the Senior Secured Notes, Cash Pay Notes and Non-Cash Pay Notes were $235.3 million, $10.6 million and $250.9 million, respectively. Recent Developments In July 2011, we acquired, through one of our subsidiaries, PerfectMatch.com, an online relationship service helping adults seeking successful, lasting connections. We paid approximately $2.5 million in cash and stock to acquire the assets of the website. PerfectMatch.com uses the Duet Total Compatibility System, a system which analyzes the whole person to find friends, taking into account each member s personality, values and ideals, life and love-style preferences to identify and find the person right for them. The acquisition of this website and related assets adds to our portfolio of general audience social networking websites. In September 2011, we acquired, through one of our subsidiaries, BDM Global Ventures Ltd., the company which owns the operations of JigoCity. The acquisition was completed pursuant to an Agreement and Plan of Merger entered into on September 7, 2011 among us, JGC Holdings Limited, our wholly-owned subsidiary, BDM Global Ventures Limited, which we refer to as BDM, Global Investment Ventures LLC and Anthony R. Bobulinski, which we refer to as the Merger Agreement. Under the terms of the Merger Agreement, the shareholders of BDM, in exchange for their outstanding shares and options in BDM and its subsidiaries, received merger consideration consisting of 1,555,555, shares of our common stock, 500,000 of which will be held in escrow until no later than December 31, 2012, and warrants exercisable into 6,436,851 shares of our common stock with exercise prices ranging from $5-$18 per share with an expiration date of December 31, 2021. Pursuant to an equity put agreement we entered into, the shareholders of BDM have the option to sell all of the shares of our common stock and warrants issued as merger consideration back to us in exchange for the return of 70% of the equity in BDM if the volume-weighted average price of our common stock fails to equal or exceed $12.00 per share during any 10 trading day period principally between the closing date and the later of June 30, 2014 and the date upon which our current indentures are fully discharged, or if an indenture modification is made, as defined in the equity put agreement, the later of June 30, 2014 and the date the indenture modification takes place (the later date hereinafter referred to as the Vesting Date ). The equity put agreement provides that the put right shall become exercisable at the sole discretion of the shareholders appointed representative during the period commencing on the Vesting Date and expiring sixty (60) days thereafter. Additionally, if the shareholders of BDM exercise the put right, we have the right to pay them in our common stock and/or cash, having a combined value as of the later of the above dates equal to the product of (i) 2,209,414 shares of common stock (subject to dilutive adjustment) and (ii) the difference between the highest 10 day volume-weighted average price attained by our common stock during such period and $12.00, in which case the put right terminates. Pursuant to a registration rights agreement, we also granted demand registration rights under certain circumstances, with respect to the shares of our common stock and warrants issued as merger consideration. JigoCity is a global social commerce organization committed to providing members with high quality daily deals that are relevant to their individual lifestyles. The acquisition of JigoCity adds to our portfolio a social commerce company and what we believe will be an additional avenue to monetize our foreign markets. Our Corporate Information Our executive offices are located at 6800 Broken Sound Parkway, Suite 200, Boca Raton, Florida 33487 and our telephone number is (561) 912-7000. Our website address is www.ffn.com. The information contained in, or accessible through, our website is not part of this prospectus. 6800 Broken Sound Parkway, Suite 200 Boca Raton, Florida 33487 (561) 912-7000 (Address, including zip code, and telephone number, including area code, of registrant s principal executive offices)
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+consolidated financial statements included elsewhere in this prospectus. This summary may not contain all of the information that may be important to you. You should carefully read this entire prospectus, including the section entitled Risk Factors and our consolidated financial statements and notes to those statements. As used in this prospectus, unless the context otherwise requires, all references to we, us, our, our company or the company refer to FriendFinder Networks Inc. and, where appropriate, our consolidated direct and indirect subsidiaries, except where it is clear that the terms mean only FriendFinder Networks Inc. The term INI refers to our subsidiary and co-issuer of the Registrable Notes, Interactive Network, Inc. References to our common stock refer only to our voting common stock and except as otherwise noted, such references do not include our Series B common stock or our preferred common stock. Except where we state otherwise, the information presented in this prospectus reflects (i) the amendment and restatement of our bylaws, effective upon the consummation of our initial public offering on May 16, 2011, and (ii) the amendment and restatement of our articles of incorporation, which became effective on January 25, 2010. About Our Company FriendFinder Networks Inc. is a leading internet and technology company providing services in the rapidly expanding markets of social networking and web-based video sharing. Our business consists of creating and operating technology platforms which run several of the most heavily visited websites in the world. Through our extensive network of more than 44,000 websites, since our inception, we have built a base of more than 484 million registrants and more than 320 million members in more than 200 countries. We are able to create and maintain, in a cost-effective manner, websites intended to appeal to users of diverse cultures and interest groups. In December 2010, we had more than 196 million unique visitors to our network of websites, according to comScore. We offer our members a wide variety of online services so that they can interact with each other and access the content available on our websites. Our most heavily visited websites include AdultFriendFinder.com, Amigos.com, AsiaFriendFinder.com, Cams.com, FriendFinder.com, BigChurch.com and SeniorFriendFinder.com. For the nine months ended September 30, 2011, we had net revenue, income from operations and net losses of $249.6 million, $52.4 million and $(20.9) million, respectively. For the year ended December 31, 2010, we had net revenue, income from operations and net losses of $346.0 million, $71.1 million and ($43.2) million, respectively. Our revenues to date have been primarily derived from online subscription and paid-usage for our products and services. These products and services are delivered primarily through two highly scalable revenue-generating technology platforms: Social Networking. Approximately 69% of our total net revenues for the nine months ended September 30, 2011 and 70% of our total net revenues for the year ended December 31, 2010 were generated through our targeted social networking technology platform. Our social networking technology platform provides users who register or purchase subscriptions to one or more of our websites with the ability to communicate and to establish new connections with other users via our personal chat rooms, instant messaging and e-mail applications and to create, post and view content of interest. We have been able to rapidly create and seamlessly maintain multiple websites tailored to specific categories or genres and designed to cater to targeted audiences with mutual interests. We believe that our ability to create and operate a diverse network of specific interest websites with unique, user-generated content in a cost-effective manner is a significant competitive differentiator that allows us to implement a subscription-fee based revenue model while many other popular social networking websites rely primarily upon free-access, advertising-based revenue models. Live Interactive Video. Approximately 24% of our total net revenues for the nine months ended September 30, 2011 and 22% of our total net revenues for the year ended December 31, 2010 were generated through our live interactive video technology platform. Our live interactive video technology platform is a live video broadcast platform that enables models to broadcast from independent studios throughout the world and interact with our users via instant messaging and video. We believe our live interactive video platform provides a unique offering including bi-directional and omni-directional video and interactive features that allow models to communicate with and attract users through a variety of mediums including blogs, newsletters and video. In addition, we believe the reliability of our live interactive video technology platform, which had approximately 99.1% uptime during 2010, is a key factor allowing us to maintain a large base of users. In addition to our revenue-generating technology platforms, we have invested significant time and resources into developing our back-end marketing, analytics and billing technologies, which are a key contributor to the success of our business. We have developed proprietary systems to allow our marketing affiliates to maximize their revenue for our mutual benefit. These systems include proprietary white-labeling solutions, in which we provide back-end technology solutions to permit affiliates and marketing partners to deliver our products and services while maintaining the affiliate s and marketing partner s own branding and style, self-optimizing ad spots, and a robust banner optimization engine that automatically chooses the best possible site and banner to promote in a given ad spot. Our marketing technology has also enabled the creation and continued growth of our network of more than 280,000 affiliates, which we believe is one of the largest of its kind in the world and a significant barrier to entry to potential and existing competitors. Similarly, our proprietary analytics technology provides us with an advantage relative to less sophisticated competitors by enabling us to estimate future revenue based on short-term response to our advertising campaigns, as well as providing for analysis of key data and metrics in order to optimize our marketing spend and maximize the revenues our websites generate. Our robust billing platform allows our customers to pay using many of the widely-adopted methods of e-commerce, both domestically as well as internationally. We categorize our users into five categories: visitors, registrants, members, subscribers and paid users. Visitors. Visitors are users who visit our websites but do not necessarily register. We believe we achieve large numbers of unique visitors because of our focus on continuously enhancing the user experience and expanding the breadth of our services. We had more than 196 million unique worldwide visitors in the month of December 2010, representing a growth of more than 300% from our approximately 46.9 million unique worldwide visitors in January 2009, according to comScore. Registrants. Registrants are visitors who complete a free registration form on one of our websites by giving basic identification information and submitting their e-mail address. For the nine months ended September 30, 2011, we averaged more than 6.4 million new registrations on our websites each month. For the year ended December 31, 2010, we averaged more than 6.4 million new registrations on our websites each month. Some of our registrants are also members, as described below. Members. Members are registrants who log into one of our websites and make use of our free products and services. For the nine months ended September 30, 2011, we averaged more than 4.0 million new members on our websites each month. For the year ended December 31, 2010, we averaged more than 3.9 million new members on our websites each month. Subscribers. Subscribers are members who purchase daily, three-day, weekly, monthly, quarterly, annual or lifetime subscriptions for one or more of our websites. Subscribers have full access to our websites and may access special features. For the nine months ended September 30, 2011, we had a monthly average of approximately 950 thousand and for the year ended December 31, 2010, we had a monthly average of approximately 1 million paying subscribers. Paid Users. Paid users are members who purchase products or services on a pay-by-usage basis. For the nine months ended September 30, 2011, we averaged approximately 2.9 million purchased minutes by paid users each month. For the year ended December 31, 2010, we averaged approximately 3.0 million purchased minutes by paid users each month. We focus on the following key business metrics to evaluate the effectiveness of our operating strategies. Average Revenue per Subscriber. We calculate average revenue per subscriber, or ARPU, by dividing net revenue for the period by the average number of subscribers in the period and by the number of months in the period. As such, our ARPU is a monthly calculation. For the nine months ended September 30, 2011, our average monthly revenue per subscriber was $20.22. For the year ended December 31, 2010, our average monthly revenue per subscriber was $20.49. Churn. Churn is calculated by dividing terminations of subscriptions during the period by the total number of subscribers at the beginning of that period. Our average monthly churn rate, which measures the rate UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 of loss of subscribers, for the nine months ended September 30, 2011 was 16.3% per month. Our average monthly churn rate for the year ended December 31, 2010 was 16.1% per month. Cost Per Gross Addition. Cost per gross addition, or CPGA, is calculated by adding affiliate commission expense plus ad buy expenses and dividing by new subscribers during the measurement period. Our CPGA for the nine months ended September 30, 2011 was $42.76. Our CPGA for the year ended December 31, 2010 was $47.25. Average Lifetime Net Revenue Per Subscriber. Average Lifetime Net Revenue Per Subscriber is calculated by multiplying the average lifetime (in months) of a subscriber by ARPU for the measurement period and then subtracting the CPGA for the measurement period. Our Average Lifetime Net Revenue Per Subscriber for the nine months ended September 30, 2011 was $81.06. Our Average Lifetime Net Revenue Per Subscriber for the year ended December 31, 2010 was $80.17. While we monitor many statistics in the overall management of our business, we believe that Average Lifetime Net Revenue Per Subscriber and the number of subscribers are particularly helpful metrics for gaining a meaningful understanding of our business as they provide an indication of total revenue and profit generated from our base of subscribers inclusive of affiliate commissions and advertising costs required to generate new subscriptions. In addition to our social networks and live interactive video platforms, we also offer professionally-generated content through our premium content technology platform and our non-internet entertainment business. Through websites such as Penthouse.com and HotBox.com, our subscribers and paid users have access to our collection of more than 15,000 hours of professional video, which includes our library of more than 800 standard and high-definition full-length feature films and one million professionally produced images. We began shooting all of our content in 3D in September 2010. Additionally, subscribers have access to editorial content, chat rooms and other interactive features. In addition to our online products and services, we also have a non-technology legacy entertainment business, in which we produce and distribute original pictorial and video content via traditional distribution channels including licensing and retail DVD channels, and license the globally-recognized Penthouse brand to a variety of consumer product companies and entertainment venues and public branded men s lifestyle magazines. Our Competitive Strengths We believe that we have the following competitive strengths that we can leverage to implement our strategy: Proprietary and Scalable Technology Platform. Our robust, proprietary and highly scalable technology platform supports our social networking, live interactive video and premium content websites. We are able to use our customized back-end interface to quickly and affordably generate new websites, launch new features and target new audiences at a relatively low incremental cost. We believe that our ability to create new websites and provide new features is crucial to cost-effectively maintaining our relationships with existing users and attracting new users. Paid Subscriber-Based Model. We operate social networking websites that allow our members to make connections with other members with whom they share common interests. Our paid subscriber-based model of social networking websites is distinctly different from the business models of other free social networking websites whose users access the websites to remain connected to their pre-existing friends and interest groups. Large and Diverse User Base. We operate some of the most heavily visited social networking websites in the world, currently adding on average more than 6.4 million new registrants and more than 4.0 million new members each month. Our websites are designed to appeal to individuals with a diversity of interests and backgrounds. We believe potential members are attracted to the opportunity to interact with other individuals by having access to our large, diverse user base. Large and Difficult to Replicate Affiliate Network and Significant Marketing Spend. Our marketing affiliates are companies that market our services on their websites, allowing us to market our brand beyond our established user base. As of September 30, 2011 and December 31, 2010, we had more than 280,000 participants in our marketing affiliate program from which we derive a substantial portion of our new members and approximately 46% of our net revenues for the nine months ended September 30, 2011 and 45% of our net revenues for the year ended December 31, 2010. We believe that the difficulty in building an affiliate network of this large size, together with our combined affiliate and advertising spend for the nine months ended September 30, 2011 and the year ended December 31, 2010 of $64.5 million and $103.5 million, respectively, presents a significant barrier to entry for potential competitors. Our Strategy Our goal is to enhance revenue opportunities while improving our profitability. We plan to achieve these goals using the following strategies: Convert Visitors, Registrants and Members into Subscribers or Paid Users. We continually seek to convert visitors, registrants and members into subscribers or paid users. We do this by constantly evaluating, adding and enhancing features on our websites to improve our users experience. Create Additional Websites and Diversify Offerings. We are constantly seeking to identify groups of sufficient size who share a common interest in order to create a website intended to appeal to their interests. Our extensive user database serves as an existing source of potential members and subscribers for new websites we create. Expand into and Monetize Current Foreign Markets. In 2010, nearly 71% of our members were outside the United States, but non-U.S. users accounted for less than half of our total net revenues. We seek to expand in selected geographic markets, including Southeast Europe, South America and Asia. Pursue Targeted Acquisitions. We intend to expand our business by acquiring and integrating additional social networking websites, technology platforms, owners, creators and distributors of content and payment processing and advertising businesses. Our management team possesses significant mergers and acquisitions and integration expertise and regularly screens the marketplace for strategic acquisition opportunities. Generate Online Advertising Revenue. To date, online advertising revenue has represented less than 0.1% of our net revenue, averaging approximately $8,000 per month in the nine months ended September 30, 2011 and $9,000 per month for the year ended December 31, 2010. With continued worldwide growth in this advertising segment, we see this as a significant growth opportunity. We believe that our broad and diverse user base represents a valuable asset that will provide opportunities for us to offer targeted online advertising to specific demographic groups. We intend to focus our advertising efforts on our general audience social networking websites and maintain our subscription-based model for our adult social networking websites. Our New Financing On October 27, 2010, we issued new debt to repay our then existing debt, which we refer to as the New Financing. We, along with our wholly-owned subsidiary Interactive Network, Inc., or INI, co-issued $305.0 million principal amount of the Senior Secured Notes, $13.8 million of the Cash Pay Notes, and $232.5 million of the Non-Cash Pay Notes. Our Initial Public Offering On May 16, 2011, we issued 5,000,000 shares of common stock at a price of $10.00 per share and completed our initial public offering (the IPO ). We raised gross proceeds of $50.0 million, less underwriting fees and commissions of 7.25% of the gross proceeds, or $3.6 million, and incurred other offering expenses of $2.9 million to be paid from the proceeds of the offering, resulting in $43.5 million of net proceeds. In addition, we had incurred and paid as of December 31, 2010, $13.3 million of offering costs, which were included in deferred offering costs in the accompanying balance sheet at December 31, 2010 and written off by a charge to capital in excess of par value in the quarter ended June 30, 2011. On May 19, 2011, we redeemed $37.8 million of our Senior Secured Notes and $1.7 million of our Cash Pay Notes for a total of $39.5 million principal amount of New Financing redeemed from the net proceeds of our IPO and incurred a loss on extinguishment of debt estimated to be approximately $7.3 million. As of September 30, 2011, the outstanding principal amounts of the Senior Secured Notes, Cash Pay Notes and Non-Cash Pay Notes were $235.3 million, $10.6 million and $250.9 million, respectively. Recent Developments In July 2011, we acquired, through one of our subsidiaries, PerfectMatch.com, an online relationship service helping adults seeking successful, lasting connections. We paid approximately $2.5 million in cash and stock to acquire the assets of the website. PerfectMatch.com uses the Duet Total Compatibility System, a system which analyzes the whole person to find friends, taking into account each member s personality, values and ideals, life and love-style preferences to identify and find the person right for them. The acquisition of this website and related assets adds to our portfolio of general audience social networking websites. In September 2011, we acquired, through one of our subsidiaries, BDM Global Ventures Ltd., the company which owns the operations of JigoCity. The acquisition was completed pursuant to an Agreement and Plan of Merger entered into on September 7, 2011 among us, JGC Holdings Limited, our wholly-owned subsidiary, BDM Global Ventures Limited, which we refer to as BDM, Global Investment Ventures LLC and Anthony R. Bobulinski, which we refer to as the Merger Agreement. Under the terms of the Merger Agreement, the shareholders of BDM, in exchange for their outstanding shares and options in BDM and its subsidiaries, received merger consideration consisting of 1,555,555, shares of our common stock, 500,000 of which will be held in escrow until no later than December 31, 2012, and warrants exercisable into 6,436,851 shares of our common stock with exercise prices ranging from $5-$18 per share with an expiration date of December 31, 2021. Pursuant to an equity put agreement we entered into, the shareholders of BDM have the option to sell all of the shares of our common stock and warrants issued as merger consideration back to us in exchange for the return of 70% of the equity in BDM if the volume-weighted average price of our common stock fails to equal or exceed $12.00 per share during any 10 trading day period principally between the closing date and the later of June 30, 2014 and the date upon which our current indentures are fully discharged, or if an indenture modification is made, as defined in the equity put agreement, the later of June 30, 2014 and the date the indenture modification takes place (the later date hereinafter referred to as the Vesting Date ). The equity put agreement provides that the put right shall become exercisable at the sole discretion of the shareholders appointed representative during the period commencing on the Vesting Date and expiring sixty (60) days thereafter. Additionally, if the shareholders of BDM exercise the put right, we have the right to pay them in our common stock and/or cash, having a combined value as of the later of the above dates equal to the product of (i) 2,209,414 shares of common stock (subject to dilutive adjustment) and (ii) the difference between the highest 10 day volume-weighted average price attained by our common stock during such period and $12.00, in which case the put right terminates. Pursuant to a registration rights agreement, we also granted demand registration rights under certain circumstances, with respect to the shares of our common stock and warrants issued as merger consideration. JigoCity is a global social commerce organization committed to providing members with high quality daily deals that are relevant to their individual lifestyles. The acquisition of JigoCity adds to our portfolio a social commerce company and what we believe will be an additional avenue to monetize our foreign markets. Our Corporate Information Our executive offices are located at 6800 Broken Sound Parkway, Suite 200, Boca Raton, Florida 33487 and our telephone number is (561) 912-7000. Our website address is www.ffn.com. The information contained in, or accessible through, our website is not part of this prospectus. 6800 Broken Sound Parkway, Suite 200 Boca Raton, Florida 33487 (561) 912-7000 (Address, including zip code, and telephone number, including area code, of registrant s principal executive offices)
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+consolidated financial statements included elsewhere in this prospectus. This summary may not contain all of the information that may be important to you. You should carefully read this entire prospectus, including the section entitled Risk Factors and our consolidated financial statements and notes to those statements. As used in this prospectus, unless the context otherwise requires, all references to we, us, our, our company or the company refer to FriendFinder Networks Inc. and, where appropriate, our consolidated direct and indirect subsidiaries, except where it is clear that the terms mean only FriendFinder Networks Inc. The term INI refers to our subsidiary and co-issuer of the Registrable Notes, Interactive Network, Inc. References to our common stock refer only to our voting common stock and except as otherwise noted, such references do not include our Series B common stock or our preferred common stock. Except where we state otherwise, the information presented in this prospectus reflects (i) the amendment and restatement of our bylaws, effective upon the consummation of our initial public offering on May 16, 2011, and (ii) the amendment and restatement of our articles of incorporation, which became effective on January 25, 2010. About Our Company FriendFinder Networks Inc. is a leading internet and technology company providing services in the rapidly expanding markets of social networking and web-based video sharing. Our business consists of creating and operating technology platforms which run several of the most heavily visited websites in the world. Through our extensive network of more than 44,000 websites, since our inception, we have built a base of more than 484 million registrants and more than 320 million members in more than 200 countries. We are able to create and maintain, in a cost-effective manner, websites intended to appeal to users of diverse cultures and interest groups. In December 2010, we had more than 196 million unique visitors to our network of websites, according to comScore. We offer our members a wide variety of online services so that they can interact with each other and access the content available on our websites. Our most heavily visited websites include AdultFriendFinder.com, Amigos.com, AsiaFriendFinder.com, Cams.com, FriendFinder.com, BigChurch.com and SeniorFriendFinder.com. For the nine months ended September 30, 2011, we had net revenue, income from operations and net losses of $249.6 million, $52.4 million and $(20.9) million, respectively. For the year ended December 31, 2010, we had net revenue, income from operations and net losses of $346.0 million, $71.1 million and ($43.2) million, respectively. Our revenues to date have been primarily derived from online subscription and paid-usage for our products and services. These products and services are delivered primarily through two highly scalable revenue-generating technology platforms: Social Networking. Approximately 69% of our total net revenues for the nine months ended September 30, 2011 and 70% of our total net revenues for the year ended December 31, 2010 were generated through our targeted social networking technology platform. Our social networking technology platform provides users who register or purchase subscriptions to one or more of our websites with the ability to communicate and to establish new connections with other users via our personal chat rooms, instant messaging and e-mail applications and to create, post and view content of interest. We have been able to rapidly create and seamlessly maintain multiple websites tailored to specific categories or genres and designed to cater to targeted audiences with mutual interests. We believe that our ability to create and operate a diverse network of specific interest websites with unique, user-generated content in a cost-effective manner is a significant competitive differentiator that allows us to implement a subscription-fee based revenue model while many other popular social networking websites rely primarily upon free-access, advertising-based revenue models. Live Interactive Video. Approximately 24% of our total net revenues for the nine months ended September 30, 2011 and 22% of our total net revenues for the year ended December 31, 2010 were generated through our live interactive video technology platform. Our live interactive video technology platform is a live video broadcast platform that enables models to broadcast from independent studios throughout the world and interact with our users via instant messaging and video. We believe our live interactive video platform provides a unique offering including bi-directional and omni-directional video and interactive features that allow models to communicate with and attract users through a variety of mediums including blogs, newsletters and video. In addition, we believe the reliability of our live interactive video technology platform, which had approximately 99.1% uptime during 2010, is a key factor allowing us to maintain a large base of users. In addition to our revenue-generating technology platforms, we have invested significant time and resources into developing our back-end marketing, analytics and billing technologies, which are a key contributor to the success of our business. We have developed proprietary systems to allow our marketing affiliates to maximize their revenue for our mutual benefit. These systems include proprietary white-labeling solutions, in which we provide back-end technology solutions to permit affiliates and marketing partners to deliver our products and services while maintaining the affiliate s and marketing partner s own branding and style, self-optimizing ad spots, and a robust banner optimization engine that automatically chooses the best possible site and banner to promote in a given ad spot. Our marketing technology has also enabled the creation and continued growth of our network of more than 280,000 affiliates, which we believe is one of the largest of its kind in the world and a significant barrier to entry to potential and existing competitors. Similarly, our proprietary analytics technology provides us with an advantage relative to less sophisticated competitors by enabling us to estimate future revenue based on short-term response to our advertising campaigns, as well as providing for analysis of key data and metrics in order to optimize our marketing spend and maximize the revenues our websites generate. Our robust billing platform allows our customers to pay using many of the widely-adopted methods of e-commerce, both domestically as well as internationally. We categorize our users into five categories: visitors, registrants, members, subscribers and paid users. Visitors. Visitors are users who visit our websites but do not necessarily register. We believe we achieve large numbers of unique visitors because of our focus on continuously enhancing the user experience and expanding the breadth of our services. We had more than 196 million unique worldwide visitors in the month of December 2010, representing a growth of more than 300% from our approximately 46.9 million unique worldwide visitors in January 2009, according to comScore. Registrants. Registrants are visitors who complete a free registration form on one of our websites by giving basic identification information and submitting their e-mail address. For the nine months ended September 30, 2011, we averaged more than 6.4 million new registrations on our websites each month. For the year ended December 31, 2010, we averaged more than 6.4 million new registrations on our websites each month. Some of our registrants are also members, as described below. Members. Members are registrants who log into one of our websites and make use of our free products and services. For the nine months ended September 30, 2011, we averaged more than 4.0 million new members on our websites each month. For the year ended December 31, 2010, we averaged more than 3.9 million new members on our websites each month. Subscribers. Subscribers are members who purchase daily, three-day, weekly, monthly, quarterly, annual or lifetime subscriptions for one or more of our websites. Subscribers have full access to our websites and may access special features. For the nine months ended September 30, 2011, we had a monthly average of approximately 950 thousand and for the year ended December 31, 2010, we had a monthly average of approximately 1 million paying subscribers. Paid Users. Paid users are members who purchase products or services on a pay-by-usage basis. For the nine months ended September 30, 2011, we averaged approximately 2.9 million purchased minutes by paid users each month. For the year ended December 31, 2010, we averaged approximately 3.0 million purchased minutes by paid users each month. We focus on the following key business metrics to evaluate the effectiveness of our operating strategies. Average Revenue per Subscriber. We calculate average revenue per subscriber, or ARPU, by dividing net revenue for the period by the average number of subscribers in the period and by the number of months in the period. As such, our ARPU is a monthly calculation. For the nine months ended September 30, 2011, our average monthly revenue per subscriber was $20.22. For the year ended December 31, 2010, our average monthly revenue per subscriber was $20.49. Churn. Churn is calculated by dividing terminations of subscriptions during the period by the total number of subscribers at the beginning of that period. Our average monthly churn rate, which measures the rate UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 of loss of subscribers, for the nine months ended September 30, 2011 was 16.3% per month. Our average monthly churn rate for the year ended December 31, 2010 was 16.1% per month. Cost Per Gross Addition. Cost per gross addition, or CPGA, is calculated by adding affiliate commission expense plus ad buy expenses and dividing by new subscribers during the measurement period. Our CPGA for the nine months ended September 30, 2011 was $42.76. Our CPGA for the year ended December 31, 2010 was $47.25. Average Lifetime Net Revenue Per Subscriber. Average Lifetime Net Revenue Per Subscriber is calculated by multiplying the average lifetime (in months) of a subscriber by ARPU for the measurement period and then subtracting the CPGA for the measurement period. Our Average Lifetime Net Revenue Per Subscriber for the nine months ended September 30, 2011 was $81.06. Our Average Lifetime Net Revenue Per Subscriber for the year ended December 31, 2010 was $80.17. While we monitor many statistics in the overall management of our business, we believe that Average Lifetime Net Revenue Per Subscriber and the number of subscribers are particularly helpful metrics for gaining a meaningful understanding of our business as they provide an indication of total revenue and profit generated from our base of subscribers inclusive of affiliate commissions and advertising costs required to generate new subscriptions. In addition to our social networks and live interactive video platforms, we also offer professionally-generated content through our premium content technology platform and our non-internet entertainment business. Through websites such as Penthouse.com and HotBox.com, our subscribers and paid users have access to our collection of more than 15,000 hours of professional video, which includes our library of more than 800 standard and high-definition full-length feature films and one million professionally produced images. We began shooting all of our content in 3D in September 2010. Additionally, subscribers have access to editorial content, chat rooms and other interactive features. In addition to our online products and services, we also have a non-technology legacy entertainment business, in which we produce and distribute original pictorial and video content via traditional distribution channels including licensing and retail DVD channels, and license the globally-recognized Penthouse brand to a variety of consumer product companies and entertainment venues and public branded men s lifestyle magazines. Our Competitive Strengths We believe that we have the following competitive strengths that we can leverage to implement our strategy: Proprietary and Scalable Technology Platform. Our robust, proprietary and highly scalable technology platform supports our social networking, live interactive video and premium content websites. We are able to use our customized back-end interface to quickly and affordably generate new websites, launch new features and target new audiences at a relatively low incremental cost. We believe that our ability to create new websites and provide new features is crucial to cost-effectively maintaining our relationships with existing users and attracting new users. Paid Subscriber-Based Model. We operate social networking websites that allow our members to make connections with other members with whom they share common interests. Our paid subscriber-based model of social networking websites is distinctly different from the business models of other free social networking websites whose users access the websites to remain connected to their pre-existing friends and interest groups. Large and Diverse User Base. We operate some of the most heavily visited social networking websites in the world, currently adding on average more than 6.4 million new registrants and more than 4.0 million new members each month. Our websites are designed to appeal to individuals with a diversity of interests and backgrounds. We believe potential members are attracted to the opportunity to interact with other individuals by having access to our large, diverse user base. Large and Difficult to Replicate Affiliate Network and Significant Marketing Spend. Our marketing affiliates are companies that market our services on their websites, allowing us to market our brand beyond our established user base. As of September 30, 2011 and December 31, 2010, we had more than 280,000 participants in our marketing affiliate program from which we derive a substantial portion of our new members and approximately 46% of our net revenues for the nine months ended September 30, 2011 and 45% of our net revenues for the year ended December 31, 2010. We believe that the difficulty in building an affiliate network of this large size, together with our combined affiliate and advertising spend for the nine months ended September 30, 2011 and the year ended December 31, 2010 of $64.5 million and $103.5 million, respectively, presents a significant barrier to entry for potential competitors. Our Strategy Our goal is to enhance revenue opportunities while improving our profitability. We plan to achieve these goals using the following strategies: Convert Visitors, Registrants and Members into Subscribers or Paid Users. We continually seek to convert visitors, registrants and members into subscribers or paid users. We do this by constantly evaluating, adding and enhancing features on our websites to improve our users experience. Create Additional Websites and Diversify Offerings. We are constantly seeking to identify groups of sufficient size who share a common interest in order to create a website intended to appeal to their interests. Our extensive user database serves as an existing source of potential members and subscribers for new websites we create. Expand into and Monetize Current Foreign Markets. In 2010, nearly 71% of our members were outside the United States, but non-U.S. users accounted for less than half of our total net revenues. We seek to expand in selected geographic markets, including Southeast Europe, South America and Asia. Pursue Targeted Acquisitions. We intend to expand our business by acquiring and integrating additional social networking websites, technology platforms, owners, creators and distributors of content and payment processing and advertising businesses. Our management team possesses significant mergers and acquisitions and integration expertise and regularly screens the marketplace for strategic acquisition opportunities. Generate Online Advertising Revenue. To date, online advertising revenue has represented less than 0.1% of our net revenue, averaging approximately $8,000 per month in the nine months ended September 30, 2011 and $9,000 per month for the year ended December 31, 2010. With continued worldwide growth in this advertising segment, we see this as a significant growth opportunity. We believe that our broad and diverse user base represents a valuable asset that will provide opportunities for us to offer targeted online advertising to specific demographic groups. We intend to focus our advertising efforts on our general audience social networking websites and maintain our subscription-based model for our adult social networking websites. Our New Financing On October 27, 2010, we issued new debt to repay our then existing debt, which we refer to as the New Financing. We, along with our wholly-owned subsidiary Interactive Network, Inc., or INI, co-issued $305.0 million principal amount of the Senior Secured Notes, $13.8 million of the Cash Pay Notes, and $232.5 million of the Non-Cash Pay Notes. Our Initial Public Offering On May 16, 2011, we issued 5,000,000 shares of common stock at a price of $10.00 per share and completed our initial public offering (the IPO ). We raised gross proceeds of $50.0 million, less underwriting fees and commissions of 7.25% of the gross proceeds, or $3.6 million, and incurred other offering expenses of $2.9 million to be paid from the proceeds of the offering, resulting in $43.5 million of net proceeds. In addition, we had incurred and paid as of December 31, 2010, $13.3 million of offering costs, which were included in deferred offering costs in the accompanying balance sheet at December 31, 2010 and written off by a charge to capital in excess of par value in the quarter ended June 30, 2011. On May 19, 2011, we redeemed $37.8 million of our Senior Secured Notes and $1.7 million of our Cash Pay Notes for a total of $39.5 million principal amount of New Financing redeemed from the net proceeds of our IPO and incurred a loss on extinguishment of debt estimated to be approximately $7.3 million. As of September 30, 2011, the outstanding principal amounts of the Senior Secured Notes, Cash Pay Notes and Non-Cash Pay Notes were $235.3 million, $10.6 million and $250.9 million, respectively. Recent Developments In July 2011, we acquired, through one of our subsidiaries, PerfectMatch.com, an online relationship service helping adults seeking successful, lasting connections. We paid approximately $2.5 million in cash and stock to acquire the assets of the website. PerfectMatch.com uses the Duet Total Compatibility System, a system which analyzes the whole person to find friends, taking into account each member s personality, values and ideals, life and love-style preferences to identify and find the person right for them. The acquisition of this website and related assets adds to our portfolio of general audience social networking websites. In September 2011, we acquired, through one of our subsidiaries, BDM Global Ventures Ltd., the company which owns the operations of JigoCity. The acquisition was completed pursuant to an Agreement and Plan of Merger entered into on September 7, 2011 among us, JGC Holdings Limited, our wholly-owned subsidiary, BDM Global Ventures Limited, which we refer to as BDM, Global Investment Ventures LLC and Anthony R. Bobulinski, which we refer to as the Merger Agreement. Under the terms of the Merger Agreement, the shareholders of BDM, in exchange for their outstanding shares and options in BDM and its subsidiaries, received merger consideration consisting of 1,555,555, shares of our common stock, 500,000 of which will be held in escrow until no later than December 31, 2012, and warrants exercisable into 6,436,851 shares of our common stock with exercise prices ranging from $5-$18 per share with an expiration date of December 31, 2021. Pursuant to an equity put agreement we entered into, the shareholders of BDM have the option to sell all of the shares of our common stock and warrants issued as merger consideration back to us in exchange for the return of 70% of the equity in BDM if the volume-weighted average price of our common stock fails to equal or exceed $12.00 per share during any 10 trading day period principally between the closing date and the later of June 30, 2014 and the date upon which our current indentures are fully discharged, or if an indenture modification is made, as defined in the equity put agreement, the later of June 30, 2014 and the date the indenture modification takes place (the later date hereinafter referred to as the Vesting Date ). The equity put agreement provides that the put right shall become exercisable at the sole discretion of the shareholders appointed representative during the period commencing on the Vesting Date and expiring sixty (60) days thereafter. Additionally, if the shareholders of BDM exercise the put right, we have the right to pay them in our common stock and/or cash, having a combined value as of the later of the above dates equal to the product of (i) 2,209,414 shares of common stock (subject to dilutive adjustment) and (ii) the difference between the highest 10 day volume-weighted average price attained by our common stock during such period and $12.00, in which case the put right terminates. Pursuant to a registration rights agreement, we also granted demand registration rights under certain circumstances, with respect to the shares of our common stock and warrants issued as merger consideration. JigoCity is a global social commerce organization committed to providing members with high quality daily deals that are relevant to their individual lifestyles. The acquisition of JigoCity adds to our portfolio a social commerce company and what we believe will be an additional avenue to monetize our foreign markets. Our Corporate Information Our executive offices are located at 6800 Broken Sound Parkway, Suite 200, Boca Raton, Florida 33487 and our telephone number is (561) 912-7000. Our website address is www.ffn.com. The information contained in, or accessible through, our website is not part of this prospectus. 6800 Broken Sound Parkway, Suite 200 Boca Raton, Florida 33487 (561) 912-7000 (Address, including zip code, and telephone number, including area code, of registrant s principal executive offices)
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+consolidated financial statements included elsewhere in this prospectus. This summary may not contain all of the information that may be important to you. You should carefully read this entire prospectus, including the section entitled Risk Factors and our consolidated financial statements and notes to those statements. As used in this prospectus, unless the context otherwise requires, all references to we, us, our, our company or the company refer to FriendFinder Networks Inc. and, where appropriate, our consolidated direct and indirect subsidiaries, except where it is clear that the terms mean only FriendFinder Networks Inc. The term INI refers to our subsidiary and co-issuer of the Registrable Notes, Interactive Network, Inc. References to our common stock refer only to our voting common stock and except as otherwise noted, such references do not include our Series B common stock or our preferred common stock. Except where we state otherwise, the information presented in this prospectus reflects (i) the amendment and restatement of our bylaws, effective upon the consummation of our initial public offering on May 16, 2011, and (ii) the amendment and restatement of our articles of incorporation, which became effective on January 25, 2010. About Our Company FriendFinder Networks Inc. is a leading internet and technology company providing services in the rapidly expanding markets of social networking and web-based video sharing. Our business consists of creating and operating technology platforms which run several of the most heavily visited websites in the world. Through our extensive network of more than 44,000 websites, since our inception, we have built a base of more than 484 million registrants and more than 320 million members in more than 200 countries. We are able to create and maintain, in a cost-effective manner, websites intended to appeal to users of diverse cultures and interest groups. In December 2010, we had more than 196 million unique visitors to our network of websites, according to comScore. We offer our members a wide variety of online services so that they can interact with each other and access the content available on our websites. Our most heavily visited websites include AdultFriendFinder.com, Amigos.com, AsiaFriendFinder.com, Cams.com, FriendFinder.com, BigChurch.com and SeniorFriendFinder.com. For the nine months ended September 30, 2011, we had net revenue, income from operations and net losses of $249.6 million, $52.4 million and $(20.9) million, respectively. For the year ended December 31, 2010, we had net revenue, income from operations and net losses of $346.0 million, $71.1 million and ($43.2) million, respectively. Our revenues to date have been primarily derived from online subscription and paid-usage for our products and services. These products and services are delivered primarily through two highly scalable revenue-generating technology platforms: Social Networking. Approximately 69% of our total net revenues for the nine months ended September 30, 2011 and 70% of our total net revenues for the year ended December 31, 2010 were generated through our targeted social networking technology platform. Our social networking technology platform provides users who register or purchase subscriptions to one or more of our websites with the ability to communicate and to establish new connections with other users via our personal chat rooms, instant messaging and e-mail applications and to create, post and view content of interest. We have been able to rapidly create and seamlessly maintain multiple websites tailored to specific categories or genres and designed to cater to targeted audiences with mutual interests. We believe that our ability to create and operate a diverse network of specific interest websites with unique, user-generated content in a cost-effective manner is a significant competitive differentiator that allows us to implement a subscription-fee based revenue model while many other popular social networking websites rely primarily upon free-access, advertising-based revenue models. Live Interactive Video. Approximately 24% of our total net revenues for the nine months ended September 30, 2011 and 22% of our total net revenues for the year ended December 31, 2010 were generated through our live interactive video technology platform. Our live interactive video technology platform is a live video broadcast platform that enables models to broadcast from independent studios throughout the world and interact with our users via instant messaging and video. We believe our live interactive video platform provides a unique offering including bi-directional and omni-directional video and interactive features that allow models to communicate with and attract users through a variety of mediums including blogs, newsletters and video. In addition, we believe the reliability of our live interactive video technology platform, which had approximately 99.1% uptime during 2010, is a key factor allowing us to maintain a large base of users. In addition to our revenue-generating technology platforms, we have invested significant time and resources into developing our back-end marketing, analytics and billing technologies, which are a key contributor to the success of our business. We have developed proprietary systems to allow our marketing affiliates to maximize their revenue for our mutual benefit. These systems include proprietary white-labeling solutions, in which we provide back-end technology solutions to permit affiliates and marketing partners to deliver our products and services while maintaining the affiliate s and marketing partner s own branding and style, self-optimizing ad spots, and a robust banner optimization engine that automatically chooses the best possible site and banner to promote in a given ad spot. Our marketing technology has also enabled the creation and continued growth of our network of more than 280,000 affiliates, which we believe is one of the largest of its kind in the world and a significant barrier to entry to potential and existing competitors. Similarly, our proprietary analytics technology provides us with an advantage relative to less sophisticated competitors by enabling us to estimate future revenue based on short-term response to our advertising campaigns, as well as providing for analysis of key data and metrics in order to optimize our marketing spend and maximize the revenues our websites generate. Our robust billing platform allows our customers to pay using many of the widely-adopted methods of e-commerce, both domestically as well as internationally. We categorize our users into five categories: visitors, registrants, members, subscribers and paid users. Visitors. Visitors are users who visit our websites but do not necessarily register. We believe we achieve large numbers of unique visitors because of our focus on continuously enhancing the user experience and expanding the breadth of our services. We had more than 196 million unique worldwide visitors in the month of December 2010, representing a growth of more than 300% from our approximately 46.9 million unique worldwide visitors in January 2009, according to comScore. Registrants. Registrants are visitors who complete a free registration form on one of our websites by giving basic identification information and submitting their e-mail address. For the nine months ended September 30, 2011, we averaged more than 6.4 million new registrations on our websites each month. For the year ended December 31, 2010, we averaged more than 6.4 million new registrations on our websites each month. Some of our registrants are also members, as described below. Members. Members are registrants who log into one of our websites and make use of our free products and services. For the nine months ended September 30, 2011, we averaged more than 4.0 million new members on our websites each month. For the year ended December 31, 2010, we averaged more than 3.9 million new members on our websites each month. Subscribers. Subscribers are members who purchase daily, three-day, weekly, monthly, quarterly, annual or lifetime subscriptions for one or more of our websites. Subscribers have full access to our websites and may access special features. For the nine months ended September 30, 2011, we had a monthly average of approximately 950 thousand and for the year ended December 31, 2010, we had a monthly average of approximately 1 million paying subscribers. Paid Users. Paid users are members who purchase products or services on a pay-by-usage basis. For the nine months ended September 30, 2011, we averaged approximately 2.9 million purchased minutes by paid users each month. For the year ended December 31, 2010, we averaged approximately 3.0 million purchased minutes by paid users each month. We focus on the following key business metrics to evaluate the effectiveness of our operating strategies. Average Revenue per Subscriber. We calculate average revenue per subscriber, or ARPU, by dividing net revenue for the period by the average number of subscribers in the period and by the number of months in the period. As such, our ARPU is a monthly calculation. For the nine months ended September 30, 2011, our average monthly revenue per subscriber was $20.22. For the year ended December 31, 2010, our average monthly revenue per subscriber was $20.49. Churn. Churn is calculated by dividing terminations of subscriptions during the period by the total number of subscribers at the beginning of that period. Our average monthly churn rate, which measures the rate UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 of loss of subscribers, for the nine months ended September 30, 2011 was 16.3% per month. Our average monthly churn rate for the year ended December 31, 2010 was 16.1% per month. Cost Per Gross Addition. Cost per gross addition, or CPGA, is calculated by adding affiliate commission expense plus ad buy expenses and dividing by new subscribers during the measurement period. Our CPGA for the nine months ended September 30, 2011 was $42.76. Our CPGA for the year ended December 31, 2010 was $47.25. Average Lifetime Net Revenue Per Subscriber. Average Lifetime Net Revenue Per Subscriber is calculated by multiplying the average lifetime (in months) of a subscriber by ARPU for the measurement period and then subtracting the CPGA for the measurement period. Our Average Lifetime Net Revenue Per Subscriber for the nine months ended September 30, 2011 was $81.06. Our Average Lifetime Net Revenue Per Subscriber for the year ended December 31, 2010 was $80.17. While we monitor many statistics in the overall management of our business, we believe that Average Lifetime Net Revenue Per Subscriber and the number of subscribers are particularly helpful metrics for gaining a meaningful understanding of our business as they provide an indication of total revenue and profit generated from our base of subscribers inclusive of affiliate commissions and advertising costs required to generate new subscriptions. In addition to our social networks and live interactive video platforms, we also offer professionally-generated content through our premium content technology platform and our non-internet entertainment business. Through websites such as Penthouse.com and HotBox.com, our subscribers and paid users have access to our collection of more than 15,000 hours of professional video, which includes our library of more than 800 standard and high-definition full-length feature films and one million professionally produced images. We began shooting all of our content in 3D in September 2010. Additionally, subscribers have access to editorial content, chat rooms and other interactive features. In addition to our online products and services, we also have a non-technology legacy entertainment business, in which we produce and distribute original pictorial and video content via traditional distribution channels including licensing and retail DVD channels, and license the globally-recognized Penthouse brand to a variety of consumer product companies and entertainment venues and public branded men s lifestyle magazines. Our Competitive Strengths We believe that we have the following competitive strengths that we can leverage to implement our strategy: Proprietary and Scalable Technology Platform. Our robust, proprietary and highly scalable technology platform supports our social networking, live interactive video and premium content websites. We are able to use our customized back-end interface to quickly and affordably generate new websites, launch new features and target new audiences at a relatively low incremental cost. We believe that our ability to create new websites and provide new features is crucial to cost-effectively maintaining our relationships with existing users and attracting new users. Paid Subscriber-Based Model. We operate social networking websites that allow our members to make connections with other members with whom they share common interests. Our paid subscriber-based model of social networking websites is distinctly different from the business models of other free social networking websites whose users access the websites to remain connected to their pre-existing friends and interest groups. Large and Diverse User Base. We operate some of the most heavily visited social networking websites in the world, currently adding on average more than 6.4 million new registrants and more than 4.0 million new members each month. Our websites are designed to appeal to individuals with a diversity of interests and backgrounds. We believe potential members are attracted to the opportunity to interact with other individuals by having access to our large, diverse user base. Large and Difficult to Replicate Affiliate Network and Significant Marketing Spend. Our marketing affiliates are companies that market our services on their websites, allowing us to market our brand beyond our established user base. As of September 30, 2011 and December 31, 2010, we had more than 280,000 participants in our marketing affiliate program from which we derive a substantial portion of our new members and approximately 46% of our net revenues for the nine months ended September 30, 2011 and 45% of our net revenues for the year ended December 31, 2010. We believe that the difficulty in building an affiliate network of this large size, together with our combined affiliate and advertising spend for the nine months ended September 30, 2011 and the year ended December 31, 2010 of $64.5 million and $103.5 million, respectively, presents a significant barrier to entry for potential competitors. Our Strategy Our goal is to enhance revenue opportunities while improving our profitability. We plan to achieve these goals using the following strategies: Convert Visitors, Registrants and Members into Subscribers or Paid Users. We continually seek to convert visitors, registrants and members into subscribers or paid users. We do this by constantly evaluating, adding and enhancing features on our websites to improve our users experience. Create Additional Websites and Diversify Offerings. We are constantly seeking to identify groups of sufficient size who share a common interest in order to create a website intended to appeal to their interests. Our extensive user database serves as an existing source of potential members and subscribers for new websites we create. Expand into and Monetize Current Foreign Markets. In 2010, nearly 71% of our members were outside the United States, but non-U.S. users accounted for less than half of our total net revenues. We seek to expand in selected geographic markets, including Southeast Europe, South America and Asia. Pursue Targeted Acquisitions. We intend to expand our business by acquiring and integrating additional social networking websites, technology platforms, owners, creators and distributors of content and payment processing and advertising businesses. Our management team possesses significant mergers and acquisitions and integration expertise and regularly screens the marketplace for strategic acquisition opportunities. Generate Online Advertising Revenue. To date, online advertising revenue has represented less than 0.1% of our net revenue, averaging approximately $8,000 per month in the nine months ended September 30, 2011 and $9,000 per month for the year ended December 31, 2010. With continued worldwide growth in this advertising segment, we see this as a significant growth opportunity. We believe that our broad and diverse user base represents a valuable asset that will provide opportunities for us to offer targeted online advertising to specific demographic groups. We intend to focus our advertising efforts on our general audience social networking websites and maintain our subscription-based model for our adult social networking websites. Our New Financing On October 27, 2010, we issued new debt to repay our then existing debt, which we refer to as the New Financing. We, along with our wholly-owned subsidiary Interactive Network, Inc., or INI, co-issued $305.0 million principal amount of the Senior Secured Notes, $13.8 million of the Cash Pay Notes, and $232.5 million of the Non-Cash Pay Notes. Our Initial Public Offering On May 16, 2011, we issued 5,000,000 shares of common stock at a price of $10.00 per share and completed our initial public offering (the IPO ). We raised gross proceeds of $50.0 million, less underwriting fees and commissions of 7.25% of the gross proceeds, or $3.6 million, and incurred other offering expenses of $2.9 million to be paid from the proceeds of the offering, resulting in $43.5 million of net proceeds. In addition, we had incurred and paid as of December 31, 2010, $13.3 million of offering costs, which were included in deferred offering costs in the accompanying balance sheet at December 31, 2010 and written off by a charge to capital in excess of par value in the quarter ended June 30, 2011. On May 19, 2011, we redeemed $37.8 million of our Senior Secured Notes and $1.7 million of our Cash Pay Notes for a total of $39.5 million principal amount of New Financing redeemed from the net proceeds of our IPO and incurred a loss on extinguishment of debt estimated to be approximately $7.3 million. As of September 30, 2011, the outstanding principal amounts of the Senior Secured Notes, Cash Pay Notes and Non-Cash Pay Notes were $235.3 million, $10.6 million and $250.9 million, respectively. Recent Developments In July 2011, we acquired, through one of our subsidiaries, PerfectMatch.com, an online relationship service helping adults seeking successful, lasting connections. We paid approximately $2.5 million in cash and stock to acquire the assets of the website. PerfectMatch.com uses the Duet Total Compatibility System, a system which analyzes the whole person to find friends, taking into account each member s personality, values and ideals, life and love-style preferences to identify and find the person right for them. The acquisition of this website and related assets adds to our portfolio of general audience social networking websites. In September 2011, we acquired, through one of our subsidiaries, BDM Global Ventures Ltd., the company which owns the operations of JigoCity. The acquisition was completed pursuant to an Agreement and Plan of Merger entered into on September 7, 2011 among us, JGC Holdings Limited, our wholly-owned subsidiary, BDM Global Ventures Limited, which we refer to as BDM, Global Investment Ventures LLC and Anthony R. Bobulinski, which we refer to as the Merger Agreement. Under the terms of the Merger Agreement, the shareholders of BDM, in exchange for their outstanding shares and options in BDM and its subsidiaries, received merger consideration consisting of 1,555,555, shares of our common stock, 500,000 of which will be held in escrow until no later than December 31, 2012, and warrants exercisable into 6,436,851 shares of our common stock with exercise prices ranging from $5-$18 per share with an expiration date of December 31, 2021. Pursuant to an equity put agreement we entered into, the shareholders of BDM have the option to sell all of the shares of our common stock and warrants issued as merger consideration back to us in exchange for the return of 70% of the equity in BDM if the volume-weighted average price of our common stock fails to equal or exceed $12.00 per share during any 10 trading day period principally between the closing date and the later of June 30, 2014 and the date upon which our current indentures are fully discharged, or if an indenture modification is made, as defined in the equity put agreement, the later of June 30, 2014 and the date the indenture modification takes place (the later date hereinafter referred to as the Vesting Date ). The equity put agreement provides that the put right shall become exercisable at the sole discretion of the shareholders appointed representative during the period commencing on the Vesting Date and expiring sixty (60) days thereafter. Additionally, if the shareholders of BDM exercise the put right, we have the right to pay them in our common stock and/or cash, having a combined value as of the later of the above dates equal to the product of (i) 2,209,414 shares of common stock (subject to dilutive adjustment) and (ii) the difference between the highest 10 day volume-weighted average price attained by our common stock during such period and $12.00, in which case the put right terminates. Pursuant to a registration rights agreement, we also granted demand registration rights under certain circumstances, with respect to the shares of our common stock and warrants issued as merger consideration. JigoCity is a global social commerce organization committed to providing members with high quality daily deals that are relevant to their individual lifestyles. The acquisition of JigoCity adds to our portfolio a social commerce company and what we believe will be an additional avenue to monetize our foreign markets. Our Corporate Information Our executive offices are located at 6800 Broken Sound Parkway, Suite 200, Boca Raton, Florida 33487 and our telephone number is (561) 912-7000. Our website address is www.ffn.com. The information contained in, or accessible through, our website is not part of this prospectus. 6800 Broken Sound Parkway, Suite 200 Boca Raton, Florida 33487 (561) 912-7000 (Address, including zip code, and telephone number, including area code, of registrant s principal executive offices)
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+consolidated financial statements included elsewhere in this prospectus. This summary may not contain all of the information that may be important to you. You should carefully read this entire prospectus, including the section entitled Risk Factors and our consolidated financial statements and notes to those statements. As used in this prospectus, unless the context otherwise requires, all references to we, us, our, our company or the company refer to FriendFinder Networks Inc. and, where appropriate, our consolidated direct and indirect subsidiaries, except where it is clear that the terms mean only FriendFinder Networks Inc. The term INI refers to our subsidiary and co-issuer of the Registrable Notes, Interactive Network, Inc. References to our common stock refer only to our voting common stock and except as otherwise noted, such references do not include our Series B common stock or our preferred common stock. Except where we state otherwise, the information presented in this prospectus reflects (i) the amendment and restatement of our bylaws, effective upon the consummation of our initial public offering on May 16, 2011, and (ii) the amendment and restatement of our articles of incorporation, which became effective on January 25, 2010. About Our Company FriendFinder Networks Inc. is a leading internet and technology company providing services in the rapidly expanding markets of social networking and web-based video sharing. Our business consists of creating and operating technology platforms which run several of the most heavily visited websites in the world. Through our extensive network of more than 44,000 websites, since our inception, we have built a base of more than 484 million registrants and more than 320 million members in more than 200 countries. We are able to create and maintain, in a cost-effective manner, websites intended to appeal to users of diverse cultures and interest groups. In December 2010, we had more than 196 million unique visitors to our network of websites, according to comScore. We offer our members a wide variety of online services so that they can interact with each other and access the content available on our websites. Our most heavily visited websites include AdultFriendFinder.com, Amigos.com, AsiaFriendFinder.com, Cams.com, FriendFinder.com, BigChurch.com and SeniorFriendFinder.com. For the nine months ended September 30, 2011, we had net revenue, income from operations and net losses of $249.6 million, $52.4 million and $(20.9) million, respectively. For the year ended December 31, 2010, we had net revenue, income from operations and net losses of $346.0 million, $71.1 million and ($43.2) million, respectively. Our revenues to date have been primarily derived from online subscription and paid-usage for our products and services. These products and services are delivered primarily through two highly scalable revenue-generating technology platforms: Social Networking. Approximately 69% of our total net revenues for the nine months ended September 30, 2011 and 70% of our total net revenues for the year ended December 31, 2010 were generated through our targeted social networking technology platform. Our social networking technology platform provides users who register or purchase subscriptions to one or more of our websites with the ability to communicate and to establish new connections with other users via our personal chat rooms, instant messaging and e-mail applications and to create, post and view content of interest. We have been able to rapidly create and seamlessly maintain multiple websites tailored to specific categories or genres and designed to cater to targeted audiences with mutual interests. We believe that our ability to create and operate a diverse network of specific interest websites with unique, user-generated content in a cost-effective manner is a significant competitive differentiator that allows us to implement a subscription-fee based revenue model while many other popular social networking websites rely primarily upon free-access, advertising-based revenue models. Live Interactive Video. Approximately 24% of our total net revenues for the nine months ended September 30, 2011 and 22% of our total net revenues for the year ended December 31, 2010 were generated through our live interactive video technology platform. Our live interactive video technology platform is a live video broadcast platform that enables models to broadcast from independent studios throughout the world and interact with our users via instant messaging and video. We believe our live interactive video platform provides a unique offering including bi-directional and omni-directional video and interactive features that allow models to communicate with and attract users through a variety of mediums including blogs, newsletters and video. In addition, we believe the reliability of our live interactive video technology platform, which had approximately 99.1% uptime during 2010, is a key factor allowing us to maintain a large base of users. In addition to our revenue-generating technology platforms, we have invested significant time and resources into developing our back-end marketing, analytics and billing technologies, which are a key contributor to the success of our business. We have developed proprietary systems to allow our marketing affiliates to maximize their revenue for our mutual benefit. These systems include proprietary white-labeling solutions, in which we provide back-end technology solutions to permit affiliates and marketing partners to deliver our products and services while maintaining the affiliate s and marketing partner s own branding and style, self-optimizing ad spots, and a robust banner optimization engine that automatically chooses the best possible site and banner to promote in a given ad spot. Our marketing technology has also enabled the creation and continued growth of our network of more than 280,000 affiliates, which we believe is one of the largest of its kind in the world and a significant barrier to entry to potential and existing competitors. Similarly, our proprietary analytics technology provides us with an advantage relative to less sophisticated competitors by enabling us to estimate future revenue based on short-term response to our advertising campaigns, as well as providing for analysis of key data and metrics in order to optimize our marketing spend and maximize the revenues our websites generate. Our robust billing platform allows our customers to pay using many of the widely-adopted methods of e-commerce, both domestically as well as internationally. We categorize our users into five categories: visitors, registrants, members, subscribers and paid users. Visitors. Visitors are users who visit our websites but do not necessarily register. We believe we achieve large numbers of unique visitors because of our focus on continuously enhancing the user experience and expanding the breadth of our services. We had more than 196 million unique worldwide visitors in the month of December 2010, representing a growth of more than 300% from our approximately 46.9 million unique worldwide visitors in January 2009, according to comScore. Registrants. Registrants are visitors who complete a free registration form on one of our websites by giving basic identification information and submitting their e-mail address. For the nine months ended September 30, 2011, we averaged more than 6.4 million new registrations on our websites each month. For the year ended December 31, 2010, we averaged more than 6.4 million new registrations on our websites each month. Some of our registrants are also members, as described below. Members. Members are registrants who log into one of our websites and make use of our free products and services. For the nine months ended September 30, 2011, we averaged more than 4.0 million new members on our websites each month. For the year ended December 31, 2010, we averaged more than 3.9 million new members on our websites each month. Subscribers. Subscribers are members who purchase daily, three-day, weekly, monthly, quarterly, annual or lifetime subscriptions for one or more of our websites. Subscribers have full access to our websites and may access special features. For the nine months ended September 30, 2011, we had a monthly average of approximately 950 thousand and for the year ended December 31, 2010, we had a monthly average of approximately 1 million paying subscribers. Paid Users. Paid users are members who purchase products or services on a pay-by-usage basis. For the nine months ended September 30, 2011, we averaged approximately 2.9 million purchased minutes by paid users each month. For the year ended December 31, 2010, we averaged approximately 3.0 million purchased minutes by paid users each month. We focus on the following key business metrics to evaluate the effectiveness of our operating strategies. Average Revenue per Subscriber. We calculate average revenue per subscriber, or ARPU, by dividing net revenue for the period by the average number of subscribers in the period and by the number of months in the period. As such, our ARPU is a monthly calculation. For the nine months ended September 30, 2011, our average monthly revenue per subscriber was $20.22. For the year ended December 31, 2010, our average monthly revenue per subscriber was $20.49. Churn. Churn is calculated by dividing terminations of subscriptions during the period by the total number of subscribers at the beginning of that period. Our average monthly churn rate, which measures the rate UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 of loss of subscribers, for the nine months ended September 30, 2011 was 16.3% per month. Our average monthly churn rate for the year ended December 31, 2010 was 16.1% per month. Cost Per Gross Addition. Cost per gross addition, or CPGA, is calculated by adding affiliate commission expense plus ad buy expenses and dividing by new subscribers during the measurement period. Our CPGA for the nine months ended September 30, 2011 was $42.76. Our CPGA for the year ended December 31, 2010 was $47.25. Average Lifetime Net Revenue Per Subscriber. Average Lifetime Net Revenue Per Subscriber is calculated by multiplying the average lifetime (in months) of a subscriber by ARPU for the measurement period and then subtracting the CPGA for the measurement period. Our Average Lifetime Net Revenue Per Subscriber for the nine months ended September 30, 2011 was $81.06. Our Average Lifetime Net Revenue Per Subscriber for the year ended December 31, 2010 was $80.17. While we monitor many statistics in the overall management of our business, we believe that Average Lifetime Net Revenue Per Subscriber and the number of subscribers are particularly helpful metrics for gaining a meaningful understanding of our business as they provide an indication of total revenue and profit generated from our base of subscribers inclusive of affiliate commissions and advertising costs required to generate new subscriptions. In addition to our social networks and live interactive video platforms, we also offer professionally-generated content through our premium content technology platform and our non-internet entertainment business. Through websites such as Penthouse.com and HotBox.com, our subscribers and paid users have access to our collection of more than 15,000 hours of professional video, which includes our library of more than 800 standard and high-definition full-length feature films and one million professionally produced images. We began shooting all of our content in 3D in September 2010. Additionally, subscribers have access to editorial content, chat rooms and other interactive features. In addition to our online products and services, we also have a non-technology legacy entertainment business, in which we produce and distribute original pictorial and video content via traditional distribution channels including licensing and retail DVD channels, and license the globally-recognized Penthouse brand to a variety of consumer product companies and entertainment venues and public branded men s lifestyle magazines. Our Competitive Strengths We believe that we have the following competitive strengths that we can leverage to implement our strategy: Proprietary and Scalable Technology Platform. Our robust, proprietary and highly scalable technology platform supports our social networking, live interactive video and premium content websites. We are able to use our customized back-end interface to quickly and affordably generate new websites, launch new features and target new audiences at a relatively low incremental cost. We believe that our ability to create new websites and provide new features is crucial to cost-effectively maintaining our relationships with existing users and attracting new users. Paid Subscriber-Based Model. We operate social networking websites that allow our members to make connections with other members with whom they share common interests. Our paid subscriber-based model of social networking websites is distinctly different from the business models of other free social networking websites whose users access the websites to remain connected to their pre-existing friends and interest groups. Large and Diverse User Base. We operate some of the most heavily visited social networking websites in the world, currently adding on average more than 6.4 million new registrants and more than 4.0 million new members each month. Our websites are designed to appeal to individuals with a diversity of interests and backgrounds. We believe potential members are attracted to the opportunity to interact with other individuals by having access to our large, diverse user base. Large and Difficult to Replicate Affiliate Network and Significant Marketing Spend. Our marketing affiliates are companies that market our services on their websites, allowing us to market our brand beyond our established user base. As of September 30, 2011 and December 31, 2010, we had more than 280,000 participants in our marketing affiliate program from which we derive a substantial portion of our new members and approximately 46% of our net revenues for the nine months ended September 30, 2011 and 45% of our net revenues for the year ended December 31, 2010. We believe that the difficulty in building an affiliate network of this large size, together with our combined affiliate and advertising spend for the nine months ended September 30, 2011 and the year ended December 31, 2010 of $64.5 million and $103.5 million, respectively, presents a significant barrier to entry for potential competitors. Our Strategy Our goal is to enhance revenue opportunities while improving our profitability. We plan to achieve these goals using the following strategies: Convert Visitors, Registrants and Members into Subscribers or Paid Users. We continually seek to convert visitors, registrants and members into subscribers or paid users. We do this by constantly evaluating, adding and enhancing features on our websites to improve our users experience. Create Additional Websites and Diversify Offerings. We are constantly seeking to identify groups of sufficient size who share a common interest in order to create a website intended to appeal to their interests. Our extensive user database serves as an existing source of potential members and subscribers for new websites we create. Expand into and Monetize Current Foreign Markets. In 2010, nearly 71% of our members were outside the United States, but non-U.S. users accounted for less than half of our total net revenues. We seek to expand in selected geographic markets, including Southeast Europe, South America and Asia. Pursue Targeted Acquisitions. We intend to expand our business by acquiring and integrating additional social networking websites, technology platforms, owners, creators and distributors of content and payment processing and advertising businesses. Our management team possesses significant mergers and acquisitions and integration expertise and regularly screens the marketplace for strategic acquisition opportunities. Generate Online Advertising Revenue. To date, online advertising revenue has represented less than 0.1% of our net revenue, averaging approximately $8,000 per month in the nine months ended September 30, 2011 and $9,000 per month for the year ended December 31, 2010. With continued worldwide growth in this advertising segment, we see this as a significant growth opportunity. We believe that our broad and diverse user base represents a valuable asset that will provide opportunities for us to offer targeted online advertising to specific demographic groups. We intend to focus our advertising efforts on our general audience social networking websites and maintain our subscription-based model for our adult social networking websites. Our New Financing On October 27, 2010, we issued new debt to repay our then existing debt, which we refer to as the New Financing. We, along with our wholly-owned subsidiary Interactive Network, Inc., or INI, co-issued $305.0 million principal amount of the Senior Secured Notes, $13.8 million of the Cash Pay Notes, and $232.5 million of the Non-Cash Pay Notes. Our Initial Public Offering On May 16, 2011, we issued 5,000,000 shares of common stock at a price of $10.00 per share and completed our initial public offering (the IPO ). We raised gross proceeds of $50.0 million, less underwriting fees and commissions of 7.25% of the gross proceeds, or $3.6 million, and incurred other offering expenses of $2.9 million to be paid from the proceeds of the offering, resulting in $43.5 million of net proceeds. In addition, we had incurred and paid as of December 31, 2010, $13.3 million of offering costs, which were included in deferred offering costs in the accompanying balance sheet at December 31, 2010 and written off by a charge to capital in excess of par value in the quarter ended June 30, 2011. On May 19, 2011, we redeemed $37.8 million of our Senior Secured Notes and $1.7 million of our Cash Pay Notes for a total of $39.5 million principal amount of New Financing redeemed from the net proceeds of our IPO and incurred a loss on extinguishment of debt estimated to be approximately $7.3 million. As of September 30, 2011, the outstanding principal amounts of the Senior Secured Notes, Cash Pay Notes and Non-Cash Pay Notes were $235.3 million, $10.6 million and $250.9 million, respectively. Recent Developments In July 2011, we acquired, through one of our subsidiaries, PerfectMatch.com, an online relationship service helping adults seeking successful, lasting connections. We paid approximately $2.5 million in cash and stock to acquire the assets of the website. PerfectMatch.com uses the Duet Total Compatibility System, a system which analyzes the whole person to find friends, taking into account each member s personality, values and ideals, life and love-style preferences to identify and find the person right for them. The acquisition of this website and related assets adds to our portfolio of general audience social networking websites. In September 2011, we acquired, through one of our subsidiaries, BDM Global Ventures Ltd., the company which owns the operations of JigoCity. The acquisition was completed pursuant to an Agreement and Plan of Merger entered into on September 7, 2011 among us, JGC Holdings Limited, our wholly-owned subsidiary, BDM Global Ventures Limited, which we refer to as BDM, Global Investment Ventures LLC and Anthony R. Bobulinski, which we refer to as the Merger Agreement. Under the terms of the Merger Agreement, the shareholders of BDM, in exchange for their outstanding shares and options in BDM and its subsidiaries, received merger consideration consisting of 1,555,555, shares of our common stock, 500,000 of which will be held in escrow until no later than December 31, 2012, and warrants exercisable into 6,436,851 shares of our common stock with exercise prices ranging from $5-$18 per share with an expiration date of December 31, 2021. Pursuant to an equity put agreement we entered into, the shareholders of BDM have the option to sell all of the shares of our common stock and warrants issued as merger consideration back to us in exchange for the return of 70% of the equity in BDM if the volume-weighted average price of our common stock fails to equal or exceed $12.00 per share during any 10 trading day period principally between the closing date and the later of June 30, 2014 and the date upon which our current indentures are fully discharged, or if an indenture modification is made, as defined in the equity put agreement, the later of June 30, 2014 and the date the indenture modification takes place (the later date hereinafter referred to as the Vesting Date ). The equity put agreement provides that the put right shall become exercisable at the sole discretion of the shareholders appointed representative during the period commencing on the Vesting Date and expiring sixty (60) days thereafter. Additionally, if the shareholders of BDM exercise the put right, we have the right to pay them in our common stock and/or cash, having a combined value as of the later of the above dates equal to the product of (i) 2,209,414 shares of common stock (subject to dilutive adjustment) and (ii) the difference between the highest 10 day volume-weighted average price attained by our common stock during such period and $12.00, in which case the put right terminates. Pursuant to a registration rights agreement, we also granted demand registration rights under certain circumstances, with respect to the shares of our common stock and warrants issued as merger consideration. JigoCity is a global social commerce organization committed to providing members with high quality daily deals that are relevant to their individual lifestyles. The acquisition of JigoCity adds to our portfolio a social commerce company and what we believe will be an additional avenue to monetize our foreign markets. Our Corporate Information Our executive offices are located at 6800 Broken Sound Parkway, Suite 200, Boca Raton, Florida 33487 and our telephone number is (561) 912-7000. Our website address is www.ffn.com. The information contained in, or accessible through, our website is not part of this prospectus. 6800 Broken Sound Parkway, Suite 200 Boca Raton, Florida 33487 (561) 912-7000 (Address, including zip code, and telephone number, including area code, of registrant s principal executive offices)
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001525688_xvhub_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001525688_xvhub_prospectus_summary.txt
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+consolidated financial statements included elsewhere in this prospectus. This summary may not contain all of the information that may be important to you. You should carefully read this entire prospectus, including the section entitled Risk Factors and our consolidated financial statements and notes to those statements. As used in this prospectus, unless the context otherwise requires, all references to we, us, our, our company or the company refer to FriendFinder Networks Inc. and, where appropriate, our consolidated direct and indirect subsidiaries, except where it is clear that the terms mean only FriendFinder Networks Inc. The term INI refers to our subsidiary and co-issuer of the Registrable Notes, Interactive Network, Inc. References to our common stock refer only to our voting common stock and except as otherwise noted, such references do not include our Series B common stock or our preferred common stock. Except where we state otherwise, the information presented in this prospectus reflects (i) the amendment and restatement of our bylaws, effective upon the consummation of our initial public offering on May 16, 2011, and (ii) the amendment and restatement of our articles of incorporation, which became effective on January 25, 2010. About Our Company FriendFinder Networks Inc. is a leading internet and technology company providing services in the rapidly expanding markets of social networking and web-based video sharing. Our business consists of creating and operating technology platforms which run several of the most heavily visited websites in the world. Through our extensive network of more than 44,000 websites, since our inception, we have built a base of more than 484 million registrants and more than 320 million members in more than 200 countries. We are able to create and maintain, in a cost-effective manner, websites intended to appeal to users of diverse cultures and interest groups. In December 2010, we had more than 196 million unique visitors to our network of websites, according to comScore. We offer our members a wide variety of online services so that they can interact with each other and access the content available on our websites. Our most heavily visited websites include AdultFriendFinder.com, Amigos.com, AsiaFriendFinder.com, Cams.com, FriendFinder.com, BigChurch.com and SeniorFriendFinder.com. For the nine months ended September 30, 2011, we had net revenue, income from operations and net losses of $249.6 million, $52.4 million and $(20.9) million, respectively. For the year ended December 31, 2010, we had net revenue, income from operations and net losses of $346.0 million, $71.1 million and ($43.2) million, respectively. Our revenues to date have been primarily derived from online subscription and paid-usage for our products and services. These products and services are delivered primarily through two highly scalable revenue-generating technology platforms: Social Networking. Approximately 69% of our total net revenues for the nine months ended September 30, 2011 and 70% of our total net revenues for the year ended December 31, 2010 were generated through our targeted social networking technology platform. Our social networking technology platform provides users who register or purchase subscriptions to one or more of our websites with the ability to communicate and to establish new connections with other users via our personal chat rooms, instant messaging and e-mail applications and to create, post and view content of interest. We have been able to rapidly create and seamlessly maintain multiple websites tailored to specific categories or genres and designed to cater to targeted audiences with mutual interests. We believe that our ability to create and operate a diverse network of specific interest websites with unique, user-generated content in a cost-effective manner is a significant competitive differentiator that allows us to implement a subscription-fee based revenue model while many other popular social networking websites rely primarily upon free-access, advertising-based revenue models. Live Interactive Video. Approximately 24% of our total net revenues for the nine months ended September 30, 2011 and 22% of our total net revenues for the year ended December 31, 2010 were generated through our live interactive video technology platform. Our live interactive video technology platform is a live video broadcast platform that enables models to broadcast from independent studios throughout the world and interact with our users via instant messaging and video. We believe our live interactive video platform provides a unique offering including bi-directional and omni-directional video and interactive features that allow models to communicate with and attract users through a variety of mediums including blogs, newsletters and video. In addition, we believe the reliability of our live interactive video technology platform, which had approximately 99.1% uptime during 2010, is a key factor allowing us to maintain a large base of users. In addition to our revenue-generating technology platforms, we have invested significant time and resources into developing our back-end marketing, analytics and billing technologies, which are a key contributor to the success of our business. We have developed proprietary systems to allow our marketing affiliates to maximize their revenue for our mutual benefit. These systems include proprietary white-labeling solutions, in which we provide back-end technology solutions to permit affiliates and marketing partners to deliver our products and services while maintaining the affiliate s and marketing partner s own branding and style, self-optimizing ad spots, and a robust banner optimization engine that automatically chooses the best possible site and banner to promote in a given ad spot. Our marketing technology has also enabled the creation and continued growth of our network of more than 280,000 affiliates, which we believe is one of the largest of its kind in the world and a significant barrier to entry to potential and existing competitors. Similarly, our proprietary analytics technology provides us with an advantage relative to less sophisticated competitors by enabling us to estimate future revenue based on short-term response to our advertising campaigns, as well as providing for analysis of key data and metrics in order to optimize our marketing spend and maximize the revenues our websites generate. Our robust billing platform allows our customers to pay using many of the widely-adopted methods of e-commerce, both domestically as well as internationally. We categorize our users into five categories: visitors, registrants, members, subscribers and paid users. Visitors. Visitors are users who visit our websites but do not necessarily register. We believe we achieve large numbers of unique visitors because of our focus on continuously enhancing the user experience and expanding the breadth of our services. We had more than 196 million unique worldwide visitors in the month of December 2010, representing a growth of more than 300% from our approximately 46.9 million unique worldwide visitors in January 2009, according to comScore. Registrants. Registrants are visitors who complete a free registration form on one of our websites by giving basic identification information and submitting their e-mail address. For the nine months ended September 30, 2011, we averaged more than 6.4 million new registrations on our websites each month. For the year ended December 31, 2010, we averaged more than 6.4 million new registrations on our websites each month. Some of our registrants are also members, as described below. Members. Members are registrants who log into one of our websites and make use of our free products and services. For the nine months ended September 30, 2011, we averaged more than 4.0 million new members on our websites each month. For the year ended December 31, 2010, we averaged more than 3.9 million new members on our websites each month. Subscribers. Subscribers are members who purchase daily, three-day, weekly, monthly, quarterly, annual or lifetime subscriptions for one or more of our websites. Subscribers have full access to our websites and may access special features. For the nine months ended September 30, 2011, we had a monthly average of approximately 950 thousand and for the year ended December 31, 2010, we had a monthly average of approximately 1 million paying subscribers. Paid Users. Paid users are members who purchase products or services on a pay-by-usage basis. For the nine months ended September 30, 2011, we averaged approximately 2.9 million purchased minutes by paid users each month. For the year ended December 31, 2010, we averaged approximately 3.0 million purchased minutes by paid users each month. We focus on the following key business metrics to evaluate the effectiveness of our operating strategies. Average Revenue per Subscriber. We calculate average revenue per subscriber, or ARPU, by dividing net revenue for the period by the average number of subscribers in the period and by the number of months in the period. As such, our ARPU is a monthly calculation. For the nine months ended September 30, 2011, our average monthly revenue per subscriber was $20.22. For the year ended December 31, 2010, our average monthly revenue per subscriber was $20.49. Churn. Churn is calculated by dividing terminations of subscriptions during the period by the total number of subscribers at the beginning of that period. Our average monthly churn rate, which measures the rate UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 of loss of subscribers, for the nine months ended September 30, 2011 was 16.3% per month. Our average monthly churn rate for the year ended December 31, 2010 was 16.1% per month. Cost Per Gross Addition. Cost per gross addition, or CPGA, is calculated by adding affiliate commission expense plus ad buy expenses and dividing by new subscribers during the measurement period. Our CPGA for the nine months ended September 30, 2011 was $42.76. Our CPGA for the year ended December 31, 2010 was $47.25. Average Lifetime Net Revenue Per Subscriber. Average Lifetime Net Revenue Per Subscriber is calculated by multiplying the average lifetime (in months) of a subscriber by ARPU for the measurement period and then subtracting the CPGA for the measurement period. Our Average Lifetime Net Revenue Per Subscriber for the nine months ended September 30, 2011 was $81.06. Our Average Lifetime Net Revenue Per Subscriber for the year ended December 31, 2010 was $80.17. While we monitor many statistics in the overall management of our business, we believe that Average Lifetime Net Revenue Per Subscriber and the number of subscribers are particularly helpful metrics for gaining a meaningful understanding of our business as they provide an indication of total revenue and profit generated from our base of subscribers inclusive of affiliate commissions and advertising costs required to generate new subscriptions. In addition to our social networks and live interactive video platforms, we also offer professionally-generated content through our premium content technology platform and our non-internet entertainment business. Through websites such as Penthouse.com and HotBox.com, our subscribers and paid users have access to our collection of more than 15,000 hours of professional video, which includes our library of more than 800 standard and high-definition full-length feature films and one million professionally produced images. We began shooting all of our content in 3D in September 2010. Additionally, subscribers have access to editorial content, chat rooms and other interactive features. In addition to our online products and services, we also have a non-technology legacy entertainment business, in which we produce and distribute original pictorial and video content via traditional distribution channels including licensing and retail DVD channels, and license the globally-recognized Penthouse brand to a variety of consumer product companies and entertainment venues and public branded men s lifestyle magazines. Our Competitive Strengths We believe that we have the following competitive strengths that we can leverage to implement our strategy: Proprietary and Scalable Technology Platform. Our robust, proprietary and highly scalable technology platform supports our social networking, live interactive video and premium content websites. We are able to use our customized back-end interface to quickly and affordably generate new websites, launch new features and target new audiences at a relatively low incremental cost. We believe that our ability to create new websites and provide new features is crucial to cost-effectively maintaining our relationships with existing users and attracting new users. Paid Subscriber-Based Model. We operate social networking websites that allow our members to make connections with other members with whom they share common interests. Our paid subscriber-based model of social networking websites is distinctly different from the business models of other free social networking websites whose users access the websites to remain connected to their pre-existing friends and interest groups. Large and Diverse User Base. We operate some of the most heavily visited social networking websites in the world, currently adding on average more than 6.4 million new registrants and more than 4.0 million new members each month. Our websites are designed to appeal to individuals with a diversity of interests and backgrounds. We believe potential members are attracted to the opportunity to interact with other individuals by having access to our large, diverse user base. Large and Difficult to Replicate Affiliate Network and Significant Marketing Spend. Our marketing affiliates are companies that market our services on their websites, allowing us to market our brand beyond our established user base. As of September 30, 2011 and December 31, 2010, we had more than 280,000 participants in our marketing affiliate program from which we derive a substantial portion of our new members and approximately 46% of our net revenues for the nine months ended September 30, 2011 and 45% of our net revenues for the year ended December 31, 2010. We believe that the difficulty in building an affiliate network of this large size, together with our combined affiliate and advertising spend for the nine months ended September 30, 2011 and the year ended December 31, 2010 of $64.5 million and $103.5 million, respectively, presents a significant barrier to entry for potential competitors. Our Strategy Our goal is to enhance revenue opportunities while improving our profitability. We plan to achieve these goals using the following strategies: Convert Visitors, Registrants and Members into Subscribers or Paid Users. We continually seek to convert visitors, registrants and members into subscribers or paid users. We do this by constantly evaluating, adding and enhancing features on our websites to improve our users experience. Create Additional Websites and Diversify Offerings. We are constantly seeking to identify groups of sufficient size who share a common interest in order to create a website intended to appeal to their interests. Our extensive user database serves as an existing source of potential members and subscribers for new websites we create. Expand into and Monetize Current Foreign Markets. In 2010, nearly 71% of our members were outside the United States, but non-U.S. users accounted for less than half of our total net revenues. We seek to expand in selected geographic markets, including Southeast Europe, South America and Asia. Pursue Targeted Acquisitions. We intend to expand our business by acquiring and integrating additional social networking websites, technology platforms, owners, creators and distributors of content and payment processing and advertising businesses. Our management team possesses significant mergers and acquisitions and integration expertise and regularly screens the marketplace for strategic acquisition opportunities. Generate Online Advertising Revenue. To date, online advertising revenue has represented less than 0.1% of our net revenue, averaging approximately $8,000 per month in the nine months ended September 30, 2011 and $9,000 per month for the year ended December 31, 2010. With continued worldwide growth in this advertising segment, we see this as a significant growth opportunity. We believe that our broad and diverse user base represents a valuable asset that will provide opportunities for us to offer targeted online advertising to specific demographic groups. We intend to focus our advertising efforts on our general audience social networking websites and maintain our subscription-based model for our adult social networking websites. Our New Financing On October 27, 2010, we issued new debt to repay our then existing debt, which we refer to as the New Financing. We, along with our wholly-owned subsidiary Interactive Network, Inc., or INI, co-issued $305.0 million principal amount of the Senior Secured Notes, $13.8 million of the Cash Pay Notes, and $232.5 million of the Non-Cash Pay Notes. Our Initial Public Offering On May 16, 2011, we issued 5,000,000 shares of common stock at a price of $10.00 per share and completed our initial public offering (the IPO ). We raised gross proceeds of $50.0 million, less underwriting fees and commissions of 7.25% of the gross proceeds, or $3.6 million, and incurred other offering expenses of $2.9 million to be paid from the proceeds of the offering, resulting in $43.5 million of net proceeds. In addition, we had incurred and paid as of December 31, 2010, $13.3 million of offering costs, which were included in deferred offering costs in the accompanying balance sheet at December 31, 2010 and written off by a charge to capital in excess of par value in the quarter ended June 30, 2011. On May 19, 2011, we redeemed $37.8 million of our Senior Secured Notes and $1.7 million of our Cash Pay Notes for a total of $39.5 million principal amount of New Financing redeemed from the net proceeds of our IPO and incurred a loss on extinguishment of debt estimated to be approximately $7.3 million. As of September 30, 2011, the outstanding principal amounts of the Senior Secured Notes, Cash Pay Notes and Non-Cash Pay Notes were $235.3 million, $10.6 million and $250.9 million, respectively. Recent Developments In July 2011, we acquired, through one of our subsidiaries, PerfectMatch.com, an online relationship service helping adults seeking successful, lasting connections. We paid approximately $2.5 million in cash and stock to acquire the assets of the website. PerfectMatch.com uses the Duet Total Compatibility System, a system which analyzes the whole person to find friends, taking into account each member s personality, values and ideals, life and love-style preferences to identify and find the person right for them. The acquisition of this website and related assets adds to our portfolio of general audience social networking websites. In September 2011, we acquired, through one of our subsidiaries, BDM Global Ventures Ltd., the company which owns the operations of JigoCity. The acquisition was completed pursuant to an Agreement and Plan of Merger entered into on September 7, 2011 among us, JGC Holdings Limited, our wholly-owned subsidiary, BDM Global Ventures Limited, which we refer to as BDM, Global Investment Ventures LLC and Anthony R. Bobulinski, which we refer to as the Merger Agreement. Under the terms of the Merger Agreement, the shareholders of BDM, in exchange for their outstanding shares and options in BDM and its subsidiaries, received merger consideration consisting of 1,555,555, shares of our common stock, 500,000 of which will be held in escrow until no later than December 31, 2012, and warrants exercisable into 6,436,851 shares of our common stock with exercise prices ranging from $5-$18 per share with an expiration date of December 31, 2021. Pursuant to an equity put agreement we entered into, the shareholders of BDM have the option to sell all of the shares of our common stock and warrants issued as merger consideration back to us in exchange for the return of 70% of the equity in BDM if the volume-weighted average price of our common stock fails to equal or exceed $12.00 per share during any 10 trading day period principally between the closing date and the later of June 30, 2014 and the date upon which our current indentures are fully discharged, or if an indenture modification is made, as defined in the equity put agreement, the later of June 30, 2014 and the date the indenture modification takes place (the later date hereinafter referred to as the Vesting Date ). The equity put agreement provides that the put right shall become exercisable at the sole discretion of the shareholders appointed representative during the period commencing on the Vesting Date and expiring sixty (60) days thereafter. Additionally, if the shareholders of BDM exercise the put right, we have the right to pay them in our common stock and/or cash, having a combined value as of the later of the above dates equal to the product of (i) 2,209,414 shares of common stock (subject to dilutive adjustment) and (ii) the difference between the highest 10 day volume-weighted average price attained by our common stock during such period and $12.00, in which case the put right terminates. Pursuant to a registration rights agreement, we also granted demand registration rights under certain circumstances, with respect to the shares of our common stock and warrants issued as merger consideration. JigoCity is a global social commerce organization committed to providing members with high quality daily deals that are relevant to their individual lifestyles. The acquisition of JigoCity adds to our portfolio a social commerce company and what we believe will be an additional avenue to monetize our foreign markets. Our Corporate Information Our executive offices are located at 6800 Broken Sound Parkway, Suite 200, Boca Raton, Florida 33487 and our telephone number is (561) 912-7000. Our website address is www.ffn.com. The information contained in, or accessible through, our website is not part of this prospectus. 6800 Broken Sound Parkway, Suite 200 Boca Raton, Florida 33487 (561) 912-7000 (Address, including zip code, and telephone number, including area code, of registrant s principal executive offices)
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001525689_global_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001525689_global_prospectus_summary.txt
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+consolidated financial statements included elsewhere in this prospectus. This summary may not contain all of the information that may be important to you. You should carefully read this entire prospectus, including the section entitled Risk Factors and our consolidated financial statements and notes to those statements. As used in this prospectus, unless the context otherwise requires, all references to we, us, our, our company or the company refer to FriendFinder Networks Inc. and, where appropriate, our consolidated direct and indirect subsidiaries, except where it is clear that the terms mean only FriendFinder Networks Inc. The term INI refers to our subsidiary and co-issuer of the Registrable Notes, Interactive Network, Inc. References to our common stock refer only to our voting common stock and except as otherwise noted, such references do not include our Series B common stock or our preferred common stock. Except where we state otherwise, the information presented in this prospectus reflects (i) the amendment and restatement of our bylaws, effective upon the consummation of our initial public offering on May 16, 2011, and (ii) the amendment and restatement of our articles of incorporation, which became effective on January 25, 2010. About Our Company FriendFinder Networks Inc. is a leading internet and technology company providing services in the rapidly expanding markets of social networking and web-based video sharing. Our business consists of creating and operating technology platforms which run several of the most heavily visited websites in the world. Through our extensive network of more than 44,000 websites, since our inception, we have built a base of more than 484 million registrants and more than 320 million members in more than 200 countries. We are able to create and maintain, in a cost-effective manner, websites intended to appeal to users of diverse cultures and interest groups. In December 2010, we had more than 196 million unique visitors to our network of websites, according to comScore. We offer our members a wide variety of online services so that they can interact with each other and access the content available on our websites. Our most heavily visited websites include AdultFriendFinder.com, Amigos.com, AsiaFriendFinder.com, Cams.com, FriendFinder.com, BigChurch.com and SeniorFriendFinder.com. For the nine months ended September 30, 2011, we had net revenue, income from operations and net losses of $249.6 million, $52.4 million and $(20.9) million, respectively. For the year ended December 31, 2010, we had net revenue, income from operations and net losses of $346.0 million, $71.1 million and ($43.2) million, respectively. Our revenues to date have been primarily derived from online subscription and paid-usage for our products and services. These products and services are delivered primarily through two highly scalable revenue-generating technology platforms: Social Networking. Approximately 69% of our total net revenues for the nine months ended September 30, 2011 and 70% of our total net revenues for the year ended December 31, 2010 were generated through our targeted social networking technology platform. Our social networking technology platform provides users who register or purchase subscriptions to one or more of our websites with the ability to communicate and to establish new connections with other users via our personal chat rooms, instant messaging and e-mail applications and to create, post and view content of interest. We have been able to rapidly create and seamlessly maintain multiple websites tailored to specific categories or genres and designed to cater to targeted audiences with mutual interests. We believe that our ability to create and operate a diverse network of specific interest websites with unique, user-generated content in a cost-effective manner is a significant competitive differentiator that allows us to implement a subscription-fee based revenue model while many other popular social networking websites rely primarily upon free-access, advertising-based revenue models. Live Interactive Video. Approximately 24% of our total net revenues for the nine months ended September 30, 2011 and 22% of our total net revenues for the year ended December 31, 2010 were generated through our live interactive video technology platform. Our live interactive video technology platform is a live video broadcast platform that enables models to broadcast from independent studios throughout the world and interact with our users via instant messaging and video. We believe our live interactive video platform provides a unique offering including bi-directional and omni-directional video and interactive features that allow models to communicate with and attract users through a variety of mediums including blogs, newsletters and video. In addition, we believe the reliability of our live interactive video technology platform, which had approximately 99.1% uptime during 2010, is a key factor allowing us to maintain a large base of users. In addition to our revenue-generating technology platforms, we have invested significant time and resources into developing our back-end marketing, analytics and billing technologies, which are a key contributor to the success of our business. We have developed proprietary systems to allow our marketing affiliates to maximize their revenue for our mutual benefit. These systems include proprietary white-labeling solutions, in which we provide back-end technology solutions to permit affiliates and marketing partners to deliver our products and services while maintaining the affiliate s and marketing partner s own branding and style, self-optimizing ad spots, and a robust banner optimization engine that automatically chooses the best possible site and banner to promote in a given ad spot. Our marketing technology has also enabled the creation and continued growth of our network of more than 280,000 affiliates, which we believe is one of the largest of its kind in the world and a significant barrier to entry to potential and existing competitors. Similarly, our proprietary analytics technology provides us with an advantage relative to less sophisticated competitors by enabling us to estimate future revenue based on short-term response to our advertising campaigns, as well as providing for analysis of key data and metrics in order to optimize our marketing spend and maximize the revenues our websites generate. Our robust billing platform allows our customers to pay using many of the widely-adopted methods of e-commerce, both domestically as well as internationally. We categorize our users into five categories: visitors, registrants, members, subscribers and paid users. Visitors. Visitors are users who visit our websites but do not necessarily register. We believe we achieve large numbers of unique visitors because of our focus on continuously enhancing the user experience and expanding the breadth of our services. We had more than 196 million unique worldwide visitors in the month of December 2010, representing a growth of more than 300% from our approximately 46.9 million unique worldwide visitors in January 2009, according to comScore. Registrants. Registrants are visitors who complete a free registration form on one of our websites by giving basic identification information and submitting their e-mail address. For the nine months ended September 30, 2011, we averaged more than 6.4 million new registrations on our websites each month. For the year ended December 31, 2010, we averaged more than 6.4 million new registrations on our websites each month. Some of our registrants are also members, as described below. Members. Members are registrants who log into one of our websites and make use of our free products and services. For the nine months ended September 30, 2011, we averaged more than 4.0 million new members on our websites each month. For the year ended December 31, 2010, we averaged more than 3.9 million new members on our websites each month. Subscribers. Subscribers are members who purchase daily, three-day, weekly, monthly, quarterly, annual or lifetime subscriptions for one or more of our websites. Subscribers have full access to our websites and may access special features. For the nine months ended September 30, 2011, we had a monthly average of approximately 950 thousand and for the year ended December 31, 2010, we had a monthly average of approximately 1 million paying subscribers. Paid Users. Paid users are members who purchase products or services on a pay-by-usage basis. For the nine months ended September 30, 2011, we averaged approximately 2.9 million purchased minutes by paid users each month. For the year ended December 31, 2010, we averaged approximately 3.0 million purchased minutes by paid users each month. We focus on the following key business metrics to evaluate the effectiveness of our operating strategies. Average Revenue per Subscriber. We calculate average revenue per subscriber, or ARPU, by dividing net revenue for the period by the average number of subscribers in the period and by the number of months in the period. As such, our ARPU is a monthly calculation. For the nine months ended September 30, 2011, our average monthly revenue per subscriber was $20.22. For the year ended December 31, 2010, our average monthly revenue per subscriber was $20.49. Churn. Churn is calculated by dividing terminations of subscriptions during the period by the total number of subscribers at the beginning of that period. Our average monthly churn rate, which measures the rate UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 of loss of subscribers, for the nine months ended September 30, 2011 was 16.3% per month. Our average monthly churn rate for the year ended December 31, 2010 was 16.1% per month. Cost Per Gross Addition. Cost per gross addition, or CPGA, is calculated by adding affiliate commission expense plus ad buy expenses and dividing by new subscribers during the measurement period. Our CPGA for the nine months ended September 30, 2011 was $42.76. Our CPGA for the year ended December 31, 2010 was $47.25. Average Lifetime Net Revenue Per Subscriber. Average Lifetime Net Revenue Per Subscriber is calculated by multiplying the average lifetime (in months) of a subscriber by ARPU for the measurement period and then subtracting the CPGA for the measurement period. Our Average Lifetime Net Revenue Per Subscriber for the nine months ended September 30, 2011 was $81.06. Our Average Lifetime Net Revenue Per Subscriber for the year ended December 31, 2010 was $80.17. While we monitor many statistics in the overall management of our business, we believe that Average Lifetime Net Revenue Per Subscriber and the number of subscribers are particularly helpful metrics for gaining a meaningful understanding of our business as they provide an indication of total revenue and profit generated from our base of subscribers inclusive of affiliate commissions and advertising costs required to generate new subscriptions. In addition to our social networks and live interactive video platforms, we also offer professionally-generated content through our premium content technology platform and our non-internet entertainment business. Through websites such as Penthouse.com and HotBox.com, our subscribers and paid users have access to our collection of more than 15,000 hours of professional video, which includes our library of more than 800 standard and high-definition full-length feature films and one million professionally produced images. We began shooting all of our content in 3D in September 2010. Additionally, subscribers have access to editorial content, chat rooms and other interactive features. In addition to our online products and services, we also have a non-technology legacy entertainment business, in which we produce and distribute original pictorial and video content via traditional distribution channels including licensing and retail DVD channels, and license the globally-recognized Penthouse brand to a variety of consumer product companies and entertainment venues and public branded men s lifestyle magazines. Our Competitive Strengths We believe that we have the following competitive strengths that we can leverage to implement our strategy: Proprietary and Scalable Technology Platform. Our robust, proprietary and highly scalable technology platform supports our social networking, live interactive video and premium content websites. We are able to use our customized back-end interface to quickly and affordably generate new websites, launch new features and target new audiences at a relatively low incremental cost. We believe that our ability to create new websites and provide new features is crucial to cost-effectively maintaining our relationships with existing users and attracting new users. Paid Subscriber-Based Model. We operate social networking websites that allow our members to make connections with other members with whom they share common interests. Our paid subscriber-based model of social networking websites is distinctly different from the business models of other free social networking websites whose users access the websites to remain connected to their pre-existing friends and interest groups. Large and Diverse User Base. We operate some of the most heavily visited social networking websites in the world, currently adding on average more than 6.4 million new registrants and more than 4.0 million new members each month. Our websites are designed to appeal to individuals with a diversity of interests and backgrounds. We believe potential members are attracted to the opportunity to interact with other individuals by having access to our large, diverse user base. Large and Difficult to Replicate Affiliate Network and Significant Marketing Spend. Our marketing affiliates are companies that market our services on their websites, allowing us to market our brand beyond our established user base. As of September 30, 2011 and December 31, 2010, we had more than 280,000 participants in our marketing affiliate program from which we derive a substantial portion of our new members and approximately 46% of our net revenues for the nine months ended September 30, 2011 and 45% of our net revenues for the year ended December 31, 2010. We believe that the difficulty in building an affiliate network of this large size, together with our combined affiliate and advertising spend for the nine months ended September 30, 2011 and the year ended December 31, 2010 of $64.5 million and $103.5 million, respectively, presents a significant barrier to entry for potential competitors. Our Strategy Our goal is to enhance revenue opportunities while improving our profitability. We plan to achieve these goals using the following strategies: Convert Visitors, Registrants and Members into Subscribers or Paid Users. We continually seek to convert visitors, registrants and members into subscribers or paid users. We do this by constantly evaluating, adding and enhancing features on our websites to improve our users experience. Create Additional Websites and Diversify Offerings. We are constantly seeking to identify groups of sufficient size who share a common interest in order to create a website intended to appeal to their interests. Our extensive user database serves as an existing source of potential members and subscribers for new websites we create. Expand into and Monetize Current Foreign Markets. In 2010, nearly 71% of our members were outside the United States, but non-U.S. users accounted for less than half of our total net revenues. We seek to expand in selected geographic markets, including Southeast Europe, South America and Asia. Pursue Targeted Acquisitions. We intend to expand our business by acquiring and integrating additional social networking websites, technology platforms, owners, creators and distributors of content and payment processing and advertising businesses. Our management team possesses significant mergers and acquisitions and integration expertise and regularly screens the marketplace for strategic acquisition opportunities. Generate Online Advertising Revenue. To date, online advertising revenue has represented less than 0.1% of our net revenue, averaging approximately $8,000 per month in the nine months ended September 30, 2011 and $9,000 per month for the year ended December 31, 2010. With continued worldwide growth in this advertising segment, we see this as a significant growth opportunity. We believe that our broad and diverse user base represents a valuable asset that will provide opportunities for us to offer targeted online advertising to specific demographic groups. We intend to focus our advertising efforts on our general audience social networking websites and maintain our subscription-based model for our adult social networking websites. Our New Financing On October 27, 2010, we issued new debt to repay our then existing debt, which we refer to as the New Financing. We, along with our wholly-owned subsidiary Interactive Network, Inc., or INI, co-issued $305.0 million principal amount of the Senior Secured Notes, $13.8 million of the Cash Pay Notes, and $232.5 million of the Non-Cash Pay Notes. Our Initial Public Offering On May 16, 2011, we issued 5,000,000 shares of common stock at a price of $10.00 per share and completed our initial public offering (the IPO ). We raised gross proceeds of $50.0 million, less underwriting fees and commissions of 7.25% of the gross proceeds, or $3.6 million, and incurred other offering expenses of $2.9 million to be paid from the proceeds of the offering, resulting in $43.5 million of net proceeds. In addition, we had incurred and paid as of December 31, 2010, $13.3 million of offering costs, which were included in deferred offering costs in the accompanying balance sheet at December 31, 2010 and written off by a charge to capital in excess of par value in the quarter ended June 30, 2011. On May 19, 2011, we redeemed $37.8 million of our Senior Secured Notes and $1.7 million of our Cash Pay Notes for a total of $39.5 million principal amount of New Financing redeemed from the net proceeds of our IPO and incurred a loss on extinguishment of debt estimated to be approximately $7.3 million. As of September 30, 2011, the outstanding principal amounts of the Senior Secured Notes, Cash Pay Notes and Non-Cash Pay Notes were $235.3 million, $10.6 million and $250.9 million, respectively. Recent Developments In July 2011, we acquired, through one of our subsidiaries, PerfectMatch.com, an online relationship service helping adults seeking successful, lasting connections. We paid approximately $2.5 million in cash and stock to acquire the assets of the website. PerfectMatch.com uses the Duet Total Compatibility System, a system which analyzes the whole person to find friends, taking into account each member s personality, values and ideals, life and love-style preferences to identify and find the person right for them. The acquisition of this website and related assets adds to our portfolio of general audience social networking websites. In September 2011, we acquired, through one of our subsidiaries, BDM Global Ventures Ltd., the company which owns the operations of JigoCity. The acquisition was completed pursuant to an Agreement and Plan of Merger entered into on September 7, 2011 among us, JGC Holdings Limited, our wholly-owned subsidiary, BDM Global Ventures Limited, which we refer to as BDM, Global Investment Ventures LLC and Anthony R. Bobulinski, which we refer to as the Merger Agreement. Under the terms of the Merger Agreement, the shareholders of BDM, in exchange for their outstanding shares and options in BDM and its subsidiaries, received merger consideration consisting of 1,555,555, shares of our common stock, 500,000 of which will be held in escrow until no later than December 31, 2012, and warrants exercisable into 6,436,851 shares of our common stock with exercise prices ranging from $5-$18 per share with an expiration date of December 31, 2021. Pursuant to an equity put agreement we entered into, the shareholders of BDM have the option to sell all of the shares of our common stock and warrants issued as merger consideration back to us in exchange for the return of 70% of the equity in BDM if the volume-weighted average price of our common stock fails to equal or exceed $12.00 per share during any 10 trading day period principally between the closing date and the later of June 30, 2014 and the date upon which our current indentures are fully discharged, or if an indenture modification is made, as defined in the equity put agreement, the later of June 30, 2014 and the date the indenture modification takes place (the later date hereinafter referred to as the Vesting Date ). The equity put agreement provides that the put right shall become exercisable at the sole discretion of the shareholders appointed representative during the period commencing on the Vesting Date and expiring sixty (60) days thereafter. Additionally, if the shareholders of BDM exercise the put right, we have the right to pay them in our common stock and/or cash, having a combined value as of the later of the above dates equal to the product of (i) 2,209,414 shares of common stock (subject to dilutive adjustment) and (ii) the difference between the highest 10 day volume-weighted average price attained by our common stock during such period and $12.00, in which case the put right terminates. Pursuant to a registration rights agreement, we also granted demand registration rights under certain circumstances, with respect to the shares of our common stock and warrants issued as merger consideration. JigoCity is a global social commerce organization committed to providing members with high quality daily deals that are relevant to their individual lifestyles. The acquisition of JigoCity adds to our portfolio a social commerce company and what we believe will be an additional avenue to monetize our foreign markets. Our Corporate Information Our executive offices are located at 6800 Broken Sound Parkway, Suite 200, Boca Raton, Florida 33487 and our telephone number is (561) 912-7000. Our website address is www.ffn.com. The information contained in, or accessible through, our website is not part of this prospectus. 6800 Broken Sound Parkway, Suite 200 Boca Raton, Florida 33487 (561) 912-7000 (Address, including zip code, and telephone number, including area code, of registrant s principal executive offices)
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+consolidated financial statements included elsewhere in this prospectus. This summary may not contain all of the information that may be important to you. You should carefully read this entire prospectus, including the section entitled Risk Factors and our consolidated financial statements and notes to those statements. As used in this prospectus, unless the context otherwise requires, all references to we, us, our, our company or the company refer to FriendFinder Networks Inc. and, where appropriate, our consolidated direct and indirect subsidiaries, except where it is clear that the terms mean only FriendFinder Networks Inc. The term INI refers to our subsidiary and co-issuer of the Registrable Notes, Interactive Network, Inc. References to our common stock refer only to our voting common stock and except as otherwise noted, such references do not include our Series B common stock or our preferred common stock. Except where we state otherwise, the information presented in this prospectus reflects (i) the amendment and restatement of our bylaws, effective upon the consummation of our initial public offering on May 16, 2011, and (ii) the amendment and restatement of our articles of incorporation, which became effective on January 25, 2010. About Our Company FriendFinder Networks Inc. is a leading internet and technology company providing services in the rapidly expanding markets of social networking and web-based video sharing. Our business consists of creating and operating technology platforms which run several of the most heavily visited websites in the world. Through our extensive network of more than 44,000 websites, since our inception, we have built a base of more than 484 million registrants and more than 320 million members in more than 200 countries. We are able to create and maintain, in a cost-effective manner, websites intended to appeal to users of diverse cultures and interest groups. In December 2010, we had more than 196 million unique visitors to our network of websites, according to comScore. We offer our members a wide variety of online services so that they can interact with each other and access the content available on our websites. Our most heavily visited websites include AdultFriendFinder.com, Amigos.com, AsiaFriendFinder.com, Cams.com, FriendFinder.com, BigChurch.com and SeniorFriendFinder.com. For the nine months ended September 30, 2011, we had net revenue, income from operations and net losses of $249.6 million, $52.4 million and $(20.9) million, respectively. For the year ended December 31, 2010, we had net revenue, income from operations and net losses of $346.0 million, $71.1 million and ($43.2) million, respectively. Our revenues to date have been primarily derived from online subscription and paid-usage for our products and services. These products and services are delivered primarily through two highly scalable revenue-generating technology platforms: Social Networking. Approximately 69% of our total net revenues for the nine months ended September 30, 2011 and 70% of our total net revenues for the year ended December 31, 2010 were generated through our targeted social networking technology platform. Our social networking technology platform provides users who register or purchase subscriptions to one or more of our websites with the ability to communicate and to establish new connections with other users via our personal chat rooms, instant messaging and e-mail applications and to create, post and view content of interest. We have been able to rapidly create and seamlessly maintain multiple websites tailored to specific categories or genres and designed to cater to targeted audiences with mutual interests. We believe that our ability to create and operate a diverse network of specific interest websites with unique, user-generated content in a cost-effective manner is a significant competitive differentiator that allows us to implement a subscription-fee based revenue model while many other popular social networking websites rely primarily upon free-access, advertising-based revenue models. Live Interactive Video. Approximately 24% of our total net revenues for the nine months ended September 30, 2011 and 22% of our total net revenues for the year ended December 31, 2010 were generated through our live interactive video technology platform. Our live interactive video technology platform is a live video broadcast platform that enables models to broadcast from independent studios throughout the world and interact with our users via instant messaging and video. We believe our live interactive video platform provides a unique offering including bi-directional and omni-directional video and interactive features that allow models to communicate with and attract users through a variety of mediums including blogs, newsletters and video. In addition, we believe the reliability of our live interactive video technology platform, which had approximately 99.1% uptime during 2010, is a key factor allowing us to maintain a large base of users. In addition to our revenue-generating technology platforms, we have invested significant time and resources into developing our back-end marketing, analytics and billing technologies, which are a key contributor to the success of our business. We have developed proprietary systems to allow our marketing affiliates to maximize their revenue for our mutual benefit. These systems include proprietary white-labeling solutions, in which we provide back-end technology solutions to permit affiliates and marketing partners to deliver our products and services while maintaining the affiliate s and marketing partner s own branding and style, self-optimizing ad spots, and a robust banner optimization engine that automatically chooses the best possible site and banner to promote in a given ad spot. Our marketing technology has also enabled the creation and continued growth of our network of more than 280,000 affiliates, which we believe is one of the largest of its kind in the world and a significant barrier to entry to potential and existing competitors. Similarly, our proprietary analytics technology provides us with an advantage relative to less sophisticated competitors by enabling us to estimate future revenue based on short-term response to our advertising campaigns, as well as providing for analysis of key data and metrics in order to optimize our marketing spend and maximize the revenues our websites generate. Our robust billing platform allows our customers to pay using many of the widely-adopted methods of e-commerce, both domestically as well as internationally. We categorize our users into five categories: visitors, registrants, members, subscribers and paid users. Visitors. Visitors are users who visit our websites but do not necessarily register. We believe we achieve large numbers of unique visitors because of our focus on continuously enhancing the user experience and expanding the breadth of our services. We had more than 196 million unique worldwide visitors in the month of December 2010, representing a growth of more than 300% from our approximately 46.9 million unique worldwide visitors in January 2009, according to comScore. Registrants. Registrants are visitors who complete a free registration form on one of our websites by giving basic identification information and submitting their e-mail address. For the nine months ended September 30, 2011, we averaged more than 6.4 million new registrations on our websites each month. For the year ended December 31, 2010, we averaged more than 6.4 million new registrations on our websites each month. Some of our registrants are also members, as described below. Members. Members are registrants who log into one of our websites and make use of our free products and services. For the nine months ended September 30, 2011, we averaged more than 4.0 million new members on our websites each month. For the year ended December 31, 2010, we averaged more than 3.9 million new members on our websites each month. Subscribers. Subscribers are members who purchase daily, three-day, weekly, monthly, quarterly, annual or lifetime subscriptions for one or more of our websites. Subscribers have full access to our websites and may access special features. For the nine months ended September 30, 2011, we had a monthly average of approximately 950 thousand and for the year ended December 31, 2010, we had a monthly average of approximately 1 million paying subscribers. Paid Users. Paid users are members who purchase products or services on a pay-by-usage basis. For the nine months ended September 30, 2011, we averaged approximately 2.9 million purchased minutes by paid users each month. For the year ended December 31, 2010, we averaged approximately 3.0 million purchased minutes by paid users each month. We focus on the following key business metrics to evaluate the effectiveness of our operating strategies. Average Revenue per Subscriber. We calculate average revenue per subscriber, or ARPU, by dividing net revenue for the period by the average number of subscribers in the period and by the number of months in the period. As such, our ARPU is a monthly calculation. For the nine months ended September 30, 2011, our average monthly revenue per subscriber was $20.22. For the year ended December 31, 2010, our average monthly revenue per subscriber was $20.49. Churn. Churn is calculated by dividing terminations of subscriptions during the period by the total number of subscribers at the beginning of that period. Our average monthly churn rate, which measures the rate UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 of loss of subscribers, for the nine months ended September 30, 2011 was 16.3% per month. Our average monthly churn rate for the year ended December 31, 2010 was 16.1% per month. Cost Per Gross Addition. Cost per gross addition, or CPGA, is calculated by adding affiliate commission expense plus ad buy expenses and dividing by new subscribers during the measurement period. Our CPGA for the nine months ended September 30, 2011 was $42.76. Our CPGA for the year ended December 31, 2010 was $47.25. Average Lifetime Net Revenue Per Subscriber. Average Lifetime Net Revenue Per Subscriber is calculated by multiplying the average lifetime (in months) of a subscriber by ARPU for the measurement period and then subtracting the CPGA for the measurement period. Our Average Lifetime Net Revenue Per Subscriber for the nine months ended September 30, 2011 was $81.06. Our Average Lifetime Net Revenue Per Subscriber for the year ended December 31, 2010 was $80.17. While we monitor many statistics in the overall management of our business, we believe that Average Lifetime Net Revenue Per Subscriber and the number of subscribers are particularly helpful metrics for gaining a meaningful understanding of our business as they provide an indication of total revenue and profit generated from our base of subscribers inclusive of affiliate commissions and advertising costs required to generate new subscriptions. In addition to our social networks and live interactive video platforms, we also offer professionally-generated content through our premium content technology platform and our non-internet entertainment business. Through websites such as Penthouse.com and HotBox.com, our subscribers and paid users have access to our collection of more than 15,000 hours of professional video, which includes our library of more than 800 standard and high-definition full-length feature films and one million professionally produced images. We began shooting all of our content in 3D in September 2010. Additionally, subscribers have access to editorial content, chat rooms and other interactive features. In addition to our online products and services, we also have a non-technology legacy entertainment business, in which we produce and distribute original pictorial and video content via traditional distribution channels including licensing and retail DVD channels, and license the globally-recognized Penthouse brand to a variety of consumer product companies and entertainment venues and public branded men s lifestyle magazines. Our Competitive Strengths We believe that we have the following competitive strengths that we can leverage to implement our strategy: Proprietary and Scalable Technology Platform. Our robust, proprietary and highly scalable technology platform supports our social networking, live interactive video and premium content websites. We are able to use our customized back-end interface to quickly and affordably generate new websites, launch new features and target new audiences at a relatively low incremental cost. We believe that our ability to create new websites and provide new features is crucial to cost-effectively maintaining our relationships with existing users and attracting new users. Paid Subscriber-Based Model. We operate social networking websites that allow our members to make connections with other members with whom they share common interests. Our paid subscriber-based model of social networking websites is distinctly different from the business models of other free social networking websites whose users access the websites to remain connected to their pre-existing friends and interest groups. Large and Diverse User Base. We operate some of the most heavily visited social networking websites in the world, currently adding on average more than 6.4 million new registrants and more than 4.0 million new members each month. Our websites are designed to appeal to individuals with a diversity of interests and backgrounds. We believe potential members are attracted to the opportunity to interact with other individuals by having access to our large, diverse user base. Large and Difficult to Replicate Affiliate Network and Significant Marketing Spend. Our marketing affiliates are companies that market our services on their websites, allowing us to market our brand beyond our established user base. As of September 30, 2011 and December 31, 2010, we had more than 280,000 participants in our marketing affiliate program from which we derive a substantial portion of our new members and approximately 46% of our net revenues for the nine months ended September 30, 2011 and 45% of our net revenues for the year ended December 31, 2010. We believe that the difficulty in building an affiliate network of this large size, together with our combined affiliate and advertising spend for the nine months ended September 30, 2011 and the year ended December 31, 2010 of $64.5 million and $103.5 million, respectively, presents a significant barrier to entry for potential competitors. Our Strategy Our goal is to enhance revenue opportunities while improving our profitability. We plan to achieve these goals using the following strategies: Convert Visitors, Registrants and Members into Subscribers or Paid Users. We continually seek to convert visitors, registrants and members into subscribers or paid users. We do this by constantly evaluating, adding and enhancing features on our websites to improve our users experience. Create Additional Websites and Diversify Offerings. We are constantly seeking to identify groups of sufficient size who share a common interest in order to create a website intended to appeal to their interests. Our extensive user database serves as an existing source of potential members and subscribers for new websites we create. Expand into and Monetize Current Foreign Markets. In 2010, nearly 71% of our members were outside the United States, but non-U.S. users accounted for less than half of our total net revenues. We seek to expand in selected geographic markets, including Southeast Europe, South America and Asia. Pursue Targeted Acquisitions. We intend to expand our business by acquiring and integrating additional social networking websites, technology platforms, owners, creators and distributors of content and payment processing and advertising businesses. Our management team possesses significant mergers and acquisitions and integration expertise and regularly screens the marketplace for strategic acquisition opportunities. Generate Online Advertising Revenue. To date, online advertising revenue has represented less than 0.1% of our net revenue, averaging approximately $8,000 per month in the nine months ended September 30, 2011 and $9,000 per month for the year ended December 31, 2010. With continued worldwide growth in this advertising segment, we see this as a significant growth opportunity. We believe that our broad and diverse user base represents a valuable asset that will provide opportunities for us to offer targeted online advertising to specific demographic groups. We intend to focus our advertising efforts on our general audience social networking websites and maintain our subscription-based model for our adult social networking websites. Our New Financing On October 27, 2010, we issued new debt to repay our then existing debt, which we refer to as the New Financing. We, along with our wholly-owned subsidiary Interactive Network, Inc., or INI, co-issued $305.0 million principal amount of the Senior Secured Notes, $13.8 million of the Cash Pay Notes, and $232.5 million of the Non-Cash Pay Notes. Our Initial Public Offering On May 16, 2011, we issued 5,000,000 shares of common stock at a price of $10.00 per share and completed our initial public offering (the IPO ). We raised gross proceeds of $50.0 million, less underwriting fees and commissions of 7.25% of the gross proceeds, or $3.6 million, and incurred other offering expenses of $2.9 million to be paid from the proceeds of the offering, resulting in $43.5 million of net proceeds. In addition, we had incurred and paid as of December 31, 2010, $13.3 million of offering costs, which were included in deferred offering costs in the accompanying balance sheet at December 31, 2010 and written off by a charge to capital in excess of par value in the quarter ended June 30, 2011. On May 19, 2011, we redeemed $37.8 million of our Senior Secured Notes and $1.7 million of our Cash Pay Notes for a total of $39.5 million principal amount of New Financing redeemed from the net proceeds of our IPO and incurred a loss on extinguishment of debt estimated to be approximately $7.3 million. As of September 30, 2011, the outstanding principal amounts of the Senior Secured Notes, Cash Pay Notes and Non-Cash Pay Notes were $235.3 million, $10.6 million and $250.9 million, respectively. Recent Developments In July 2011, we acquired, through one of our subsidiaries, PerfectMatch.com, an online relationship service helping adults seeking successful, lasting connections. We paid approximately $2.5 million in cash and stock to acquire the assets of the website. PerfectMatch.com uses the Duet Total Compatibility System, a system which analyzes the whole person to find friends, taking into account each member s personality, values and ideals, life and love-style preferences to identify and find the person right for them. The acquisition of this website and related assets adds to our portfolio of general audience social networking websites. In September 2011, we acquired, through one of our subsidiaries, BDM Global Ventures Ltd., the company which owns the operations of JigoCity. The acquisition was completed pursuant to an Agreement and Plan of Merger entered into on September 7, 2011 among us, JGC Holdings Limited, our wholly-owned subsidiary, BDM Global Ventures Limited, which we refer to as BDM, Global Investment Ventures LLC and Anthony R. Bobulinski, which we refer to as the Merger Agreement. Under the terms of the Merger Agreement, the shareholders of BDM, in exchange for their outstanding shares and options in BDM and its subsidiaries, received merger consideration consisting of 1,555,555, shares of our common stock, 500,000 of which will be held in escrow until no later than December 31, 2012, and warrants exercisable into 6,436,851 shares of our common stock with exercise prices ranging from $5-$18 per share with an expiration date of December 31, 2021. Pursuant to an equity put agreement we entered into, the shareholders of BDM have the option to sell all of the shares of our common stock and warrants issued as merger consideration back to us in exchange for the return of 70% of the equity in BDM if the volume-weighted average price of our common stock fails to equal or exceed $12.00 per share during any 10 trading day period principally between the closing date and the later of June 30, 2014 and the date upon which our current indentures are fully discharged, or if an indenture modification is made, as defined in the equity put agreement, the later of June 30, 2014 and the date the indenture modification takes place (the later date hereinafter referred to as the Vesting Date ). The equity put agreement provides that the put right shall become exercisable at the sole discretion of the shareholders appointed representative during the period commencing on the Vesting Date and expiring sixty (60) days thereafter. Additionally, if the shareholders of BDM exercise the put right, we have the right to pay them in our common stock and/or cash, having a combined value as of the later of the above dates equal to the product of (i) 2,209,414 shares of common stock (subject to dilutive adjustment) and (ii) the difference between the highest 10 day volume-weighted average price attained by our common stock during such period and $12.00, in which case the put right terminates. Pursuant to a registration rights agreement, we also granted demand registration rights under certain circumstances, with respect to the shares of our common stock and warrants issued as merger consideration. JigoCity is a global social commerce organization committed to providing members with high quality daily deals that are relevant to their individual lifestyles. The acquisition of JigoCity adds to our portfolio a social commerce company and what we believe will be an additional avenue to monetize our foreign markets. Our Corporate Information Our executive offices are located at 6800 Broken Sound Parkway, Suite 200, Boca Raton, Florida 33487 and our telephone number is (561) 912-7000. Our website address is www.ffn.com. The information contained in, or accessible through, our website is not part of this prospectus. 6800 Broken Sound Parkway, Suite 200 Boca Raton, Florida 33487 (561) 912-7000 (Address, including zip code, and telephone number, including area code, of registrant s principal executive offices)
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+consolidated financial statements included elsewhere in this prospectus. This summary may not contain all of the information that may be important to you. You should carefully read this entire prospectus, including the section entitled Risk Factors and our consolidated financial statements and notes to those statements. As used in this prospectus, unless the context otherwise requires, all references to we, us, our, our company or the company refer to FriendFinder Networks Inc. and, where appropriate, our consolidated direct and indirect subsidiaries, except where it is clear that the terms mean only FriendFinder Networks Inc. The term INI refers to our subsidiary and co-issuer of the Registrable Notes, Interactive Network, Inc. References to our common stock refer only to our voting common stock and except as otherwise noted, such references do not include our Series B common stock or our preferred common stock. Except where we state otherwise, the information presented in this prospectus reflects (i) the amendment and restatement of our bylaws, effective upon the consummation of our initial public offering on May 16, 2011, and (ii) the amendment and restatement of our articles of incorporation, which became effective on January 25, 2010. About Our Company FriendFinder Networks Inc. is a leading internet and technology company providing services in the rapidly expanding markets of social networking and web-based video sharing. Our business consists of creating and operating technology platforms which run several of the most heavily visited websites in the world. Through our extensive network of more than 44,000 websites, since our inception, we have built a base of more than 484 million registrants and more than 320 million members in more than 200 countries. We are able to create and maintain, in a cost-effective manner, websites intended to appeal to users of diverse cultures and interest groups. In December 2010, we had more than 196 million unique visitors to our network of websites, according to comScore. We offer our members a wide variety of online services so that they can interact with each other and access the content available on our websites. Our most heavily visited websites include AdultFriendFinder.com, Amigos.com, AsiaFriendFinder.com, Cams.com, FriendFinder.com, BigChurch.com and SeniorFriendFinder.com. For the nine months ended September 30, 2011, we had net revenue, income from operations and net losses of $249.6 million, $52.4 million and $(20.9) million, respectively. For the year ended December 31, 2010, we had net revenue, income from operations and net losses of $346.0 million, $71.1 million and ($43.2) million, respectively. Our revenues to date have been primarily derived from online subscription and paid-usage for our products and services. These products and services are delivered primarily through two highly scalable revenue-generating technology platforms: Social Networking. Approximately 69% of our total net revenues for the nine months ended September 30, 2011 and 70% of our total net revenues for the year ended December 31, 2010 were generated through our targeted social networking technology platform. Our social networking technology platform provides users who register or purchase subscriptions to one or more of our websites with the ability to communicate and to establish new connections with other users via our personal chat rooms, instant messaging and e-mail applications and to create, post and view content of interest. We have been able to rapidly create and seamlessly maintain multiple websites tailored to specific categories or genres and designed to cater to targeted audiences with mutual interests. We believe that our ability to create and operate a diverse network of specific interest websites with unique, user-generated content in a cost-effective manner is a significant competitive differentiator that allows us to implement a subscription-fee based revenue model while many other popular social networking websites rely primarily upon free-access, advertising-based revenue models. Live Interactive Video. Approximately 24% of our total net revenues for the nine months ended September 30, 2011 and 22% of our total net revenues for the year ended December 31, 2010 were generated through our live interactive video technology platform. Our live interactive video technology platform is a live video broadcast platform that enables models to broadcast from independent studios throughout the world and interact with our users via instant messaging and video. We believe our live interactive video platform provides a unique offering including bi-directional and omni-directional video and interactive features that allow models to communicate with and attract users through a variety of mediums including blogs, newsletters and video. In addition, we believe the reliability of our live interactive video technology platform, which had approximately 99.1% uptime during 2010, is a key factor allowing us to maintain a large base of users. In addition to our revenue-generating technology platforms, we have invested significant time and resources into developing our back-end marketing, analytics and billing technologies, which are a key contributor to the success of our business. We have developed proprietary systems to allow our marketing affiliates to maximize their revenue for our mutual benefit. These systems include proprietary white-labeling solutions, in which we provide back-end technology solutions to permit affiliates and marketing partners to deliver our products and services while maintaining the affiliate s and marketing partner s own branding and style, self-optimizing ad spots, and a robust banner optimization engine that automatically chooses the best possible site and banner to promote in a given ad spot. Our marketing technology has also enabled the creation and continued growth of our network of more than 280,000 affiliates, which we believe is one of the largest of its kind in the world and a significant barrier to entry to potential and existing competitors. Similarly, our proprietary analytics technology provides us with an advantage relative to less sophisticated competitors by enabling us to estimate future revenue based on short-term response to our advertising campaigns, as well as providing for analysis of key data and metrics in order to optimize our marketing spend and maximize the revenues our websites generate. Our robust billing platform allows our customers to pay using many of the widely-adopted methods of e-commerce, both domestically as well as internationally. We categorize our users into five categories: visitors, registrants, members, subscribers and paid users. Visitors. Visitors are users who visit our websites but do not necessarily register. We believe we achieve large numbers of unique visitors because of our focus on continuously enhancing the user experience and expanding the breadth of our services. We had more than 196 million unique worldwide visitors in the month of December 2010, representing a growth of more than 300% from our approximately 46.9 million unique worldwide visitors in January 2009, according to comScore. Registrants. Registrants are visitors who complete a free registration form on one of our websites by giving basic identification information and submitting their e-mail address. For the nine months ended September 30, 2011, we averaged more than 6.4 million new registrations on our websites each month. For the year ended December 31, 2010, we averaged more than 6.4 million new registrations on our websites each month. Some of our registrants are also members, as described below. Members. Members are registrants who log into one of our websites and make use of our free products and services. For the nine months ended September 30, 2011, we averaged more than 4.0 million new members on our websites each month. For the year ended December 31, 2010, we averaged more than 3.9 million new members on our websites each month. Subscribers. Subscribers are members who purchase daily, three-day, weekly, monthly, quarterly, annual or lifetime subscriptions for one or more of our websites. Subscribers have full access to our websites and may access special features. For the nine months ended September 30, 2011, we had a monthly average of approximately 950 thousand and for the year ended December 31, 2010, we had a monthly average of approximately 1 million paying subscribers. Paid Users. Paid users are members who purchase products or services on a pay-by-usage basis. For the nine months ended September 30, 2011, we averaged approximately 2.9 million purchased minutes by paid users each month. For the year ended December 31, 2010, we averaged approximately 3.0 million purchased minutes by paid users each month. We focus on the following key business metrics to evaluate the effectiveness of our operating strategies. Average Revenue per Subscriber. We calculate average revenue per subscriber, or ARPU, by dividing net revenue for the period by the average number of subscribers in the period and by the number of months in the period. As such, our ARPU is a monthly calculation. For the nine months ended September 30, 2011, our average monthly revenue per subscriber was $20.22. For the year ended December 31, 2010, our average monthly revenue per subscriber was $20.49. Churn. Churn is calculated by dividing terminations of subscriptions during the period by the total number of subscribers at the beginning of that period. Our average monthly churn rate, which measures the rate UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 of loss of subscribers, for the nine months ended September 30, 2011 was 16.3% per month. Our average monthly churn rate for the year ended December 31, 2010 was 16.1% per month. Cost Per Gross Addition. Cost per gross addition, or CPGA, is calculated by adding affiliate commission expense plus ad buy expenses and dividing by new subscribers during the measurement period. Our CPGA for the nine months ended September 30, 2011 was $42.76. Our CPGA for the year ended December 31, 2010 was $47.25. Average Lifetime Net Revenue Per Subscriber. Average Lifetime Net Revenue Per Subscriber is calculated by multiplying the average lifetime (in months) of a subscriber by ARPU for the measurement period and then subtracting the CPGA for the measurement period. Our Average Lifetime Net Revenue Per Subscriber for the nine months ended September 30, 2011 was $81.06. Our Average Lifetime Net Revenue Per Subscriber for the year ended December 31, 2010 was $80.17. While we monitor many statistics in the overall management of our business, we believe that Average Lifetime Net Revenue Per Subscriber and the number of subscribers are particularly helpful metrics for gaining a meaningful understanding of our business as they provide an indication of total revenue and profit generated from our base of subscribers inclusive of affiliate commissions and advertising costs required to generate new subscriptions. In addition to our social networks and live interactive video platforms, we also offer professionally-generated content through our premium content technology platform and our non-internet entertainment business. Through websites such as Penthouse.com and HotBox.com, our subscribers and paid users have access to our collection of more than 15,000 hours of professional video, which includes our library of more than 800 standard and high-definition full-length feature films and one million professionally produced images. We began shooting all of our content in 3D in September 2010. Additionally, subscribers have access to editorial content, chat rooms and other interactive features. In addition to our online products and services, we also have a non-technology legacy entertainment business, in which we produce and distribute original pictorial and video content via traditional distribution channels including licensing and retail DVD channels, and license the globally-recognized Penthouse brand to a variety of consumer product companies and entertainment venues and public branded men s lifestyle magazines. Our Competitive Strengths We believe that we have the following competitive strengths that we can leverage to implement our strategy: Proprietary and Scalable Technology Platform. Our robust, proprietary and highly scalable technology platform supports our social networking, live interactive video and premium content websites. We are able to use our customized back-end interface to quickly and affordably generate new websites, launch new features and target new audiences at a relatively low incremental cost. We believe that our ability to create new websites and provide new features is crucial to cost-effectively maintaining our relationships with existing users and attracting new users. Paid Subscriber-Based Model. We operate social networking websites that allow our members to make connections with other members with whom they share common interests. Our paid subscriber-based model of social networking websites is distinctly different from the business models of other free social networking websites whose users access the websites to remain connected to their pre-existing friends and interest groups. Large and Diverse User Base. We operate some of the most heavily visited social networking websites in the world, currently adding on average more than 6.4 million new registrants and more than 4.0 million new members each month. Our websites are designed to appeal to individuals with a diversity of interests and backgrounds. We believe potential members are attracted to the opportunity to interact with other individuals by having access to our large, diverse user base. Large and Difficult to Replicate Affiliate Network and Significant Marketing Spend. Our marketing affiliates are companies that market our services on their websites, allowing us to market our brand beyond our established user base. As of September 30, 2011 and December 31, 2010, we had more than 280,000 participants in our marketing affiliate program from which we derive a substantial portion of our new members and approximately 46% of our net revenues for the nine months ended September 30, 2011 and 45% of our net revenues for the year ended December 31, 2010. We believe that the difficulty in building an affiliate network of this large size, together with our combined affiliate and advertising spend for the nine months ended September 30, 2011 and the year ended December 31, 2010 of $64.5 million and $103.5 million, respectively, presents a significant barrier to entry for potential competitors. Our Strategy Our goal is to enhance revenue opportunities while improving our profitability. We plan to achieve these goals using the following strategies: Convert Visitors, Registrants and Members into Subscribers or Paid Users. We continually seek to convert visitors, registrants and members into subscribers or paid users. We do this by constantly evaluating, adding and enhancing features on our websites to improve our users experience. Create Additional Websites and Diversify Offerings. We are constantly seeking to identify groups of sufficient size who share a common interest in order to create a website intended to appeal to their interests. Our extensive user database serves as an existing source of potential members and subscribers for new websites we create. Expand into and Monetize Current Foreign Markets. In 2010, nearly 71% of our members were outside the United States, but non-U.S. users accounted for less than half of our total net revenues. We seek to expand in selected geographic markets, including Southeast Europe, South America and Asia. Pursue Targeted Acquisitions. We intend to expand our business by acquiring and integrating additional social networking websites, technology platforms, owners, creators and distributors of content and payment processing and advertising businesses. Our management team possesses significant mergers and acquisitions and integration expertise and regularly screens the marketplace for strategic acquisition opportunities. Generate Online Advertising Revenue. To date, online advertising revenue has represented less than 0.1% of our net revenue, averaging approximately $8,000 per month in the nine months ended September 30, 2011 and $9,000 per month for the year ended December 31, 2010. With continued worldwide growth in this advertising segment, we see this as a significant growth opportunity. We believe that our broad and diverse user base represents a valuable asset that will provide opportunities for us to offer targeted online advertising to specific demographic groups. We intend to focus our advertising efforts on our general audience social networking websites and maintain our subscription-based model for our adult social networking websites. Our New Financing On October 27, 2010, we issued new debt to repay our then existing debt, which we refer to as the New Financing. We, along with our wholly-owned subsidiary Interactive Network, Inc., or INI, co-issued $305.0 million principal amount of the Senior Secured Notes, $13.8 million of the Cash Pay Notes, and $232.5 million of the Non-Cash Pay Notes. Our Initial Public Offering On May 16, 2011, we issued 5,000,000 shares of common stock at a price of $10.00 per share and completed our initial public offering (the IPO ). We raised gross proceeds of $50.0 million, less underwriting fees and commissions of 7.25% of the gross proceeds, or $3.6 million, and incurred other offering expenses of $2.9 million to be paid from the proceeds of the offering, resulting in $43.5 million of net proceeds. In addition, we had incurred and paid as of December 31, 2010, $13.3 million of offering costs, which were included in deferred offering costs in the accompanying balance sheet at December 31, 2010 and written off by a charge to capital in excess of par value in the quarter ended June 30, 2011. On May 19, 2011, we redeemed $37.8 million of our Senior Secured Notes and $1.7 million of our Cash Pay Notes for a total of $39.5 million principal amount of New Financing redeemed from the net proceeds of our IPO and incurred a loss on extinguishment of debt estimated to be approximately $7.3 million. As of September 30, 2011, the outstanding principal amounts of the Senior Secured Notes, Cash Pay Notes and Non-Cash Pay Notes were $235.3 million, $10.6 million and $250.9 million, respectively. Recent Developments In July 2011, we acquired, through one of our subsidiaries, PerfectMatch.com, an online relationship service helping adults seeking successful, lasting connections. We paid approximately $2.5 million in cash and stock to acquire the assets of the website. PerfectMatch.com uses the Duet Total Compatibility System, a system which analyzes the whole person to find friends, taking into account each member s personality, values and ideals, life and love-style preferences to identify and find the person right for them. The acquisition of this website and related assets adds to our portfolio of general audience social networking websites. In September 2011, we acquired, through one of our subsidiaries, BDM Global Ventures Ltd., the company which owns the operations of JigoCity. The acquisition was completed pursuant to an Agreement and Plan of Merger entered into on September 7, 2011 among us, JGC Holdings Limited, our wholly-owned subsidiary, BDM Global Ventures Limited, which we refer to as BDM, Global Investment Ventures LLC and Anthony R. Bobulinski, which we refer to as the Merger Agreement. Under the terms of the Merger Agreement, the shareholders of BDM, in exchange for their outstanding shares and options in BDM and its subsidiaries, received merger consideration consisting of 1,555,555, shares of our common stock, 500,000 of which will be held in escrow until no later than December 31, 2012, and warrants exercisable into 6,436,851 shares of our common stock with exercise prices ranging from $5-$18 per share with an expiration date of December 31, 2021. Pursuant to an equity put agreement we entered into, the shareholders of BDM have the option to sell all of the shares of our common stock and warrants issued as merger consideration back to us in exchange for the return of 70% of the equity in BDM if the volume-weighted average price of our common stock fails to equal or exceed $12.00 per share during any 10 trading day period principally between the closing date and the later of June 30, 2014 and the date upon which our current indentures are fully discharged, or if an indenture modification is made, as defined in the equity put agreement, the later of June 30, 2014 and the date the indenture modification takes place (the later date hereinafter referred to as the Vesting Date ). The equity put agreement provides that the put right shall become exercisable at the sole discretion of the shareholders appointed representative during the period commencing on the Vesting Date and expiring sixty (60) days thereafter. Additionally, if the shareholders of BDM exercise the put right, we have the right to pay them in our common stock and/or cash, having a combined value as of the later of the above dates equal to the product of (i) 2,209,414 shares of common stock (subject to dilutive adjustment) and (ii) the difference between the highest 10 day volume-weighted average price attained by our common stock during such period and $12.00, in which case the put right terminates. Pursuant to a registration rights agreement, we also granted demand registration rights under certain circumstances, with respect to the shares of our common stock and warrants issued as merger consideration. JigoCity is a global social commerce organization committed to providing members with high quality daily deals that are relevant to their individual lifestyles. The acquisition of JigoCity adds to our portfolio a social commerce company and what we believe will be an additional avenue to monetize our foreign markets. Our Corporate Information Our executive offices are located at 6800 Broken Sound Parkway, Suite 200, Boca Raton, Florida 33487 and our telephone number is (561) 912-7000. Our website address is www.ffn.com. The information contained in, or accessible through, our website is not part of this prospectus. 6800 Broken Sound Parkway, Suite 200 Boca Raton, Florida 33487 (561) 912-7000 (Address, including zip code, and telephone number, including area code, of registrant s principal executive offices)
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+PROSPECTUS SUMMARY This summary highlights important features of this offering and the information included in this prospectus. This summary does not contain all of the information that you should consider before investing in our securities. You should read this prospectus carefully as it contains important information you should consider when making your investment decision. See Risk Factors on page 7. UEG-Green Energy Solutions/Alberta, Inc. We are a newly formed independent wind energy company focused solely on the acquisition of the assets for, and the subsequent development, financing, construction, ownership and operation of, one 100-135 MW utility-scale wind energy project (the Project ) in Willow Ridge, Ft. Macleod, Province of Alberta, Canada (the Project Site ). Wind energy project returns depend mainly on the following factors: energy prices, transmission costs, wind resources, turbine costs, construction costs, financing cost and availability and government incentives. We will manage the Project with a team of professionals with experience in all aspects of wind energy development, financing, construction and operations. UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Ownership of UEG-Alberta We currently have 102,700,000 shares of our common stock issued and outstanding. Eighty-five million (85,000,000) shares of our common stock, representing approximately 83.88% of all issued and outstanding shares are owned by United Energy Group, LLC, a Delaware limited liability company ( UEG ). In turn, UEG is one hundred percent (100%) owned by Messrs. Avraham Einhoren (50%) and Kyle E. Barnette (50%), who also serve, respectively, as our President and CEO and Chairman of our Board of Directors, and Secretary and Treasurer and a member of our board of directors. See Security Ownership of Certain Beneficial Owners and Management. As a result, UEG is the controlling stockholder of UEG-Alberta, and has the ability to elect all members of the board of directors and otherwise control the policies of our company. During the course of seeking financing for the Project, it is anticipated that UEG will return a portion of its shares to UEG-Alberta s treasury so that UEG-Alberta may sell such shares to participants in its funding process. The precise amounts to be returned and the final ownership percentage of UEG-Delaware cannot be determined presently. See Business Funding of the Project and Plan of Operations. Project Status Note: All dollar amounts, statistical information and time lines concerning the Project are estimates only. The final dollar amounts, Project characteristics and achievement of actual milestones for the Project will vary and such variation could be material. Our majority stockholder, UEG, has entered into a memorandum of understanding dated June 30, 2011 (the MOU ) with Private Energy Solutions, Inc., a Minnesota corporation ( PES ), pursuant to which UEG and PES will jointly develop the Project with responsibility for fund raising assigned to UEG and responsibility for construction and management and operation of the Project assigned to PES. See BUSINESS Agreement between UEG-Alberta and PES. We are currently negotiating an asset purchase agreement (the Willow Ridge Asset Purchase Agreement ) with Vindt Resources, Inc., an Alberta corporation ( Vindt Resources ), to acquire substantially all assets associated with the Project (the Project Assets ). The Project Assets include, among others, five years of wind assessment studies, long-term renewable lease agreements on more than 14,000 acres of farm land in Alberta and approval of a 100 MW interconnection agreement by the Alberta Electric System Operator ( AESO ). We are preparing applications for all remaining approvals required from various regulatory authorities in order to proceed with the Project. These approvals include, among others, the final approval of the Alberta Utilities Commission ( AUC ). In order to apply for AUC approval, we must first complete a number of other steps including an environmental impact assessment report and required crossing agreements, and allow time for public consultations with residents of the Willow Ridge area in which the Project will be located. We reasonably estimate that we will submit our application to the AUC in the first quarter of 2012, and that the AUC will issue its decision in the third quarter of 2012. See "BUSINESS The Project." We have identified the manufacturer of the wind turbines we will use at the Project, and we have negotiated the terms and conditions of the purchase; however, the final agreement has not been signed. We will do so in coordination with seeking Project final approvals from the AUC. FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Project Financing The Project requires approximately $250,000,000 to be completed. This includes approximately $161,000,000 for the purchase of the estimated number of turbines and $16,000,000 for installation at the Project Site. We intend to finance the Project through periodic private sales of our common stock, and there can be no assurance we will be successful in raising the funds required in the amounts and at the times needed Project Revenues We will generate revenues from the sale of electricity to AESO. We will sell the power generated by the Project directly into the local power grid at market prices that are reset hourly based on changing patterns of supply and demand. The pricing process as well as all other aspects of the electricity market in Alberta is supervised by AESO. See BUSINESS AESO. We will generate substantial losses and negative operating cash flows for the period through completion of construction of the Project; however, we expect that the Project will begin to generate cash flow at completion of the Project. The amount of revenue we will generate is subject to fluctuation due to a variety of factors and risks. For example, prices for power fluctuate hourly in the Alberta energy market manner regulated by AESO. Furthermore, the production of wind energy depends heavily on suitable wind conditions and if wind conditions are unfavorable, our anticipated electricity production and revenue from the Project may be substantially below our expectations. See "Risk Factors Risks Related to Our Business and the Wind Energy Industry." Principal Executive Offices Our principal executive offices are located at 2 Bloor Street West Suite 735, Toronto, Canada M4W 3R1. Our telephone number is (416) 972-5068 and our fax number is (416) 972-5071. We are creating a web site www.ueggreen.com, however, it is not accessible yet. When our web site is created, the information that will appear on our website is not incorporated by reference into this prospectus and should not be relied upon with respect to this offering. The Offering Shares of common stock being registered 16,600,000 shares of our common stock offered by selling security holders Total shares of common stock outstanding as of the date of this prospectus 102,700,000 Total proceeds raised by us from the disposition of the common stock by the selling security holders or their transferees We will not receive any proceeds from the sale of shares by the selling security holders UEG-GREEN ENERGY SOLUTIONS/ALBERTA, INC. (Exact Name of Small Business Issuer in its Charter) NEVADA 4911 45-2204813 (State of Incorporation) (Primary Standard Classification Code) (IRS Employer ID No.) 2 Bloor Street West Suite 735 Toronto, Canada M4W 3R1 (416) 972-5068 (Address and Telephone Number of Registrant s Principal Executive Offices and Principal Place of Business) Kyle. E. Barnette, Treasurer and Secretary UEG-Green Energy Solutions/Alberta, Inc. 300 Brickstone Square Suite 201 Andover, Massachusetts 01801 (603) 363-6046 (Name, Address and Telephone Number of Agent for Service) Copies of communications to: Fox Law Offices, P.A. 61 Knickerbocker Lane Peaks Island, ME 04108 (207) 766-0944 Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. x If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act of 1933, please check the following box and list the Securities Act registration Statement number of the earlier effective registration statement for the same offering. o If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act of 1933, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act of 1933, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer, and smaller reporting company in Rule 12b-2 of the Exchange Act. Large accelerated filer o Accelerated filer o Non-accelerated filer o (do not check if a smaller reporting company) Smaller reporting company x Risk Factors The Project is subject to numerous risks and uncertainties, including: the receipt of all final approvals and the timing thereof; the ability to raise all Project funding in the amounts and at the times required; the ability to coordinate orders for and delivery of the turbines required for the Project; our ability to build the Project and make it operational; the impact of schedule delays, cost overruns, revenue shortfalls, and lower than expected capacity for the Project; changes in the policies of the Province of Alberta and the federal government of Canada regarding renewable energy policy or support for other forms of energy; the dependence on suitable wind conditions; the need for ongoing access to capital to support the Project; and the potential for mechanical breakdowns or other natural events that interfere with the supply of electricity to the grid. You should carefully consider all of the information in this prospectus and, in particular, the information under "Risk Factors," prior to making an investment in our common stock.
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/CIK0001525852_bots-inc_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001525852_bots-inc_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..3e882d7b2fa1ad2abaa917722f0696debcdc82d6
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001525852_bots-inc_prospectus_summary.txt
@@ -0,0 +1,1226 @@
+Summary Compensation Table 
+ 
+
+ The table below summarizes all compensation awarded to, earned by, or paid to our Principal Executive Officer, our most highly compensated executive officers other than our PEO who occupied such position at the end of our latest fiscal year and up to two additional executive officers who would have been included in the table below except for the fact that they were not executive officers at the end of our latest fiscal year, by us, or by any third party where the purpose of a transaction was to furnish compensation, for all services rendered in all capacities to us for the latest fiscal year ended April, 2011. 
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ Name
+ 
+ Title
+ 
+ Year
+ 
+ Salary
+ 
+ Bonus
+ 
+ Stock
+ awards
+ 
+ Option
+ awards
+ 
+ Non equity
+ incentive plan
+ compensation
+ 
+ Non qualified
+ deferred
+ compensation
+ 
+ All other
+ compensation
+ 
+ 
+
+ 
+
+ Total
+ 
+
+ Benjamin Chung
+ 
+ 
+ CEO
+ 
+ 
+ 2011
+ 
+ 
+ 0
+ 
+ 
+ 0
+ 
+ 
+ $5,000
+ 
+ 
+ 0
+ 
+ 
+ 0
+ 
+ 
+ 0
+ 
+ 
+ 0
+ 
+ 
+ $5,000
+ 
+
+ 
+
+ 
+
+ 
+ 
+
+ 
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 31 
+ 
+
+Stock Option Grants 
+ 
+
+ We have not granted any stock options to the executive officers since our inception. 
+ 
+
+ Compensation Agreements 
+ 
+
+ We do not have employment agreements with our sole officer. Members of our Board of Directors do not receive compensation for their services as Directors. 
+ 
+ Security Ownership of Certain Beneficial Owners and Management 
+ 
+ The following tables set forth the ownership, as of the date of this Prospectus, of our common stock by each person known by us to be the beneficial owner of more than 5% of our outstanding common stock, our directors, and our executive officers and directors as a group. To the best of our knowledge, the persons named have sole voting and investment power with respect to such shares, except as otherwise noted. There are not any pending or anticipated arrangements that may cause a change in control. 
+ 
+
+ 
+
+ The information presented below regarding beneficial ownership of our voting securities has been presented in accordance with the rules of the Securities and Exchange Commission and is not necessarily indicative of ownership for any other purpose. Under these rules, a person is deemed to be a "beneficial owner" of a security if that person has or shares the power to vote or direct the voting of the security or the power to dispose or direct the disposition of the security. A person is deemed to own beneficially any security as to which such person has the right to acquire sole or shared voting or investment power within 60 days through the conversion or exercise of any convertible security, warrant, option or other right. More than one person may be deemed to be a beneficial owner of the same securities. The percentage of beneficial ownership by any person as of a particular date is calculated by dividing the number of shares beneficially owned by such person, which includes the number of shares as to which such person has the right to acquire voting or investment power within 60 days, by the sum of the number of shares outstanding as of such date plus the number of shares as to which such person has the right to acquire voting or investment power within 60 days. Consequently, the denominator used for calculating such percentage may be different for each beneficial owner. Except as otherwise indicated below and under applicable community property laws, we believe that the beneficial owners of our common stock listed below have sole voting and investment power with respect to the shares shown. The mailing address for all persons is 4081 West 8th Street, Los Angeles, CA 90005. 
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ Shareholders
+ 
+ # of Shares
+ 
+ Percentage
+ 
+
+ Benjamin Chung
+ 
+ 
+ 25,000,000
+ 
+ 
+ 50
+ %
+ 
+
+ All directors and executive officers as a group [1 person]
+ 
+ 
+ 25,000,000
+ 
+ 
+ 50
+ %
+ 
+
+ 
+ This table is based upon information derived from our stock records. Unless otherwise indicated in the footnotes to this table and subject to community property laws where applicable, each of the shareholders named in this table has sole or shared voting and investment power with respect to the shares indicated as beneficially owned. Applicable percentages are based upon 50,000,000 shares of common stock outstanding as of October 28 , 2011. 
+
+ 32 
+ 
+
+ 
+ Certain Relationships and Related Transactions 
+ 
+ Our president has orally agreed to provide us necessary funding to maintain minimal operations and fund the cost of our becoming a public company at interest of 5%, payable upon demand. The anticipated amount of this loan will be not be known at until the time a loan is determined to be needed. The amount will be based on the amount of funding needed to maintain minimal operation and the cost of becoming a public company from that point in time going forward. He is not obligated to make any further advances. We have no agreement, commitment or understanding to secure any such funding from any other source.
+ 
+
+ Mr. Chung may be considered our promoter.
+ 
+
+ Our office is located at 4081 West 8th Street, Los Angeles, CA 90005. The office is provided by our President. 
+ 
+
+ Except as set forth above, we have not entered into any material transactions with any director, executive officer, promoter, beneficial owner of five percent or more of our shares, or family members of such persons since our inception. 
+ 
+
+ Disclosure of Commission Position of Indemnification for Securities Act Liabilities
+ 
+ Our Bylaws, subject to the provisions of Nevada Law, contain provisions which allow the corporation to indemnify any person against liabilities and other expenses incurred as the result of defending or administering any pending or anticipated legal issue in connection with service to us if it is determined that person acted in good faith and in a manner which he reasonably believed was in the best interest of the corporation. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to our directors, officers and controlling persons, we have been advised that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. 
+ 
+ 33 
+ 
+
+ LIFETECH INDUSTRIES INC.
+ (A DEVELOPMENT STAGE COMPANY)
+ 
+
+ FINANCIAL STATEMENTS
+ AS OF APRIL 30, 2011
+ 
+ 
+
+ 
+ 
+
+ 
+
+ 
+
+ Report of Independent Registered Public Accounting Firm
+ 
+
+ F-1
+
+ 
+ 
+ 
+
+ Balance Sheet 
+ 
+ F-2
+
+ 
+ 
+ 
+
+ Statement of Operations
+ 
+ F-3
+
+ 
+ 
+ 
+
+ Statement of Stockholders Equity
+ 
+ F-4
+
+ 
+ 
+ 
+
+ Statement of Cash Flows
+ 
+ F-5
+
+ 
+ 
+ 
+
+ Notes to the Financial Statements
+ 
+ F-6
+
+ 
+ 
+ 34 
+ 
+
+ 
+
+ 
+
+ REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
+ 
+
+ 
+
+ Shareholders and Board of Directors
+ Lifetech Industries Inc.
+ (A Development Stage Company)
+ 
+
+ 
+
+ 
+
+ REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
+ 
+ To the Board of Directors and Stockholders
+ Lifetech Industries, Inc.
+ 
+ We have audited the accompanying balance sheet of Lifetech Industries, Inc. (A Development Stage Company) as of April 30, 2011 and the related statements of operations, stockholders equity, and cash flows from inception (December 30, 2011) to April 30, 2011. Lifetech Industries, Inc. management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits.
+ 
+ We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The company is not required to have, nor were we engaged to perform an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company s internal control over the financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
+ 
+ In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Lifetech Industries, Inc. (A Development Stage Company) as of April 30, 2011 and the results of its operations and its cash flows from inception (December 30, 2011) to April 30, 2011, in conformity with accounting principles generally accepted in the United States of America.
+ 
+ The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has suffered recurring losses from operations, which raise substantial doubt about its ability to continue as a going concern. Management s plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
+ 
+ De Joya Griffith & Company, LLC
+ 
+ /s/ De Joya Griffith & Company, LLC
+ Henderson, Nevada
+ July 12, 2011
+ 
+ 
+ F-1 
+ 
+
+LIFETECH INDUSTRIES INC.
+ (A Development Stage Company)
+ BALANCE SHEET
+ As of April 30, 2011
+ (Audited)
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+ 
+
+ ASSETS
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ CURRENT ASSETS
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+ Cash
+ 
+ 
+ 
+ 
+ 
+ $ 18,594 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+ 
+ Total current assets
+ 
+ 
+ 
+ 18,594 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+ 
+ TOTAL ASSETS
+ 
+ 
+ 
+ $ 18,594 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ LIABILITIES AND STOCKHOLDERS' EQUITY
+ 
+ 
+ 
+ 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ CURRENT LIABILITIES
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+ Accounts payable
+ 
+ 
+ 
+ $ 224 
+
+ 
+ 
+ Due to related party
+ 
+ 
+ 
+ 
+ 
+ 11,269
+
+ 
+ 
+ 
+
+ Accrued expense
+ 
+
+ 
+
+ 
+
+ 
+
+ 5,000 
+
+ 
+ 
+ 
+ Total current liabilities
+ 
+ 
+ 
+ 16,493 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ STOCKHOLDERS' EQUITY
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+ Common Stock - Par value $0.0001;
+ 
+ 
+ 
+ 
+
+ 
+ 
+ Authorized: 200,000,000
+ 
+ 
+ 
+ 
+
+ 
+ 
+ Issued and Outstanding: 25,000,000
+ 
+ 
+ 2,500 
+
+ 
+
+ 
+
+ Additional paid in capital 
+ 
+
+ 
+ 
+
+ 22,400
+
+ 
+ 
+ Stock payable
+ 
+ 
+ 
+ 100 
+
+ 
+
+ 
+
+ Deficit accumulated during development stage
+ 
+
+ 
+
+ 
+
+ (22,899)
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+ 
+ Total stockholders' equity
+ 
+ 
+ 2,101
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+ 
+ TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
+ 
+ $ 18,594 
+
+ 
+ The accompanying notes are an integral part of these financial statements.
+ 
+ F-2 
+ 
+
+ 
+ 
+
+ LIFETECH INDUSTRIES INC.
+ (A Development Stage Company)
+ STATEMENT OF OPERATIONS
+ (AUDITED)
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+From Inception (December 30, 2011) to April 30, 2011
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ REVENUE
+ 
+ 
+ 
+ 
+ 
+ 
+ $ - 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ OPERATING EXPENSES:
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ GENERAL AND ADMINISTRATIVE EXPENSES
+ 
+ 
+ 22,899 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ TOTAL OPERATING EXPENSES
+ 
+ 
+ 
+ 22,899 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ LOSS BEFORE INCOME TAXES
+ 
+ 
+ 
+ (22,899)
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ INCOME TAXES
+ 
+ 
+ 
+ 
+ 
+ - 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ NET LOSS 
+ 
+ 
+ 
+ 
+ 
+ 
+ $ (22,899)
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Net loss per common share, basic 
+ 
+ 
+ 
+ $ (0.00)
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Weighted common shares outstanding, basic 
+ 
+ 
+ 6,782,192 
+
+ 
+ The accompanying notes are an integral part of these financial statements.
+ 
+ F-3 
+ 
+ 
+ 
+
+ 
+
+ LIFETECH INDUSTRIES INC.
+ (A Development Stage Company)
+ STATEMENT OF STOCKHOLDER S EQUITY
+ (AUDITED)
+
+ 
+ 
+
+Common Shares
+ 
+
+Additional
+Paid-In
+ 
+
+Stock
+ Deficit 
+Accumulated 
+During 
+Development
+ 
+
+Total 
+Stockholders'
+
+ Outstanding
+ 
+ Amount
+ 
+ Capital
+ 
+ Payable
+ 
+ Stage
+ 
+ Equity
+
+ Inception, December 31, 2010 $
+ 
+ $
+ -
+ $
+ -
+ $
+ -
+
+ 
+ Cash received in January 2011 for stock to be 
+issued
+ 
+ 100
+ 100
+
+ January and Febuary 2011, net offering
+costs
+ 25,000,000
+ 2,500
+ 22,400
+ -
+ -
+ 24,900
+
+ Net loss (22,899)
+ (22,899)
+
+ Balance, April 30, 2011 25,000,000
+ $
+ 2,500
+ $
+ 22,400
+ 100
+ $
+ (22,899)
+ $
+ 2,101
+
+ 
+
+ 
+ The accompanying notes are an integral part of these financial statements.
+ 
+ F-4 
+ 
+
+ LIFETECH INDUSTRIES INC.
+ (A Development Stage Company)
+ STATEMENT OF CASH FLOWS
+ (AUDITED)
+ 
+
+ 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ From Inception (December 30, 2011) to April 30, 2011
+ 
+
+ CASH FLOWS FROM OPERATING ACTIVITIES
+ 
+ 
+ 
+ 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ Net loss
+ 
+ 
+ 
+ 
+ 
+ $ (22,899)
+ 
+
+ 
+ Adjustments to reconcile net loss to net cash provided by operations
+ Increase in accounts payable
+ 
+ 
+ 
+ 
+ 
+ 
+ 224
+ 
+
+ 
+ Increase in accrued expense
+ 
+ 
+ 5,000
+ 
+
+ 
+ Net cash used by operating activities
+ 
+ 
+ (17,675)
+ 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ CASH FLOWS FROM INVESTING ACTIVITIES
+ 
+ 
+ 
+ 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ Net cash provided by (used in) investing activities
+ 
+ - 
+ 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ CASH FLOWS FROM FINANCING ACTIVITIES
+ 
+ 
+ 
+ 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ Proceeds from due to related party
+ 
+ 
+ 11,269
+ 
+
+ 
+ Proceeds from stock issuance
+ 
+ 
+ 
+ 
+ 
+ 24,900
+ 
+
+ 
+ Stock payable
+ 
+ 
+ 100 
+ 
+
+ 
+ Net cash provided by financing activities
+ 
+ 
+ 
+ 
+ 
+ 36,269
+ 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ Net increase(decrease) in cash
+ 
+ 
+ 18,594
+ 
+
+ 
+ CASH BALANCE BEGINNING OF THE PERIOD
+ 
+ 
+ - 
+ 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ CASH BALANCE - END OF PERIOD 
+ 
+ 
+ $ 18,594 
+ 
+
+ Supplemental cash flow information: Cash paid for: Interest $ -
+ Taxes $ -
+ 
+ 
+
+ F-5 
+ 
+
+ 
+
+ LifeTech Industries Inc.
+ (A Development Stage Company)
+ Notes To The Financial Statements
+ April 30, 2011
+ (Audited)
+ 
+
+ 1. ORGANIZATION AND BUSINESS OPERATIONS 
+ 
+
+ LifeTech Industries Inc. ( the Company ) was incorporated under the laws of the State of Nevada, U.S. on December 30, 2010. The Company is in the development stage as defined under Statement on Financial Accounting Standards Accounting Standards Codification FASB ASC 915-205 "Development-Stage Entities. The Company has not generated any revenue to date and consequently its operations are subject to all risks inherent in the establishment of a new business enterprise. As of April 30, 2011 the Company has $18,594 in cash.
+ 
+
+ 2.
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/CIK0001526103_pure_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001526103_pure_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..70c3038c5cc00a545169ebbf4e144f9207388da4
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001526103_pure_prospectus_summary.txt
@@ -0,0 +1 @@
+consolidated financial statements included elsewhere in this prospectus. This summary may not contain all of the information that may be important to you. You should carefully read this entire prospectus, including the section entitled Risk Factors and our consolidated financial statements and notes to those statements. As used in this prospectus, unless the context otherwise requires, all references to we, us, our, our company or the company refer to FriendFinder Networks Inc. and, where appropriate, our consolidated direct and indirect subsidiaries, except where it is clear that the terms mean only FriendFinder Networks Inc. The term INI refers to our subsidiary and co-issuer of the Registrable Notes, Interactive Network, Inc. References to our common stock refer only to our voting common stock and except as otherwise noted, such references do not include our Series B common stock or our preferred common stock. Except where we state otherwise, the information presented in this prospectus reflects (i) the amendment and restatement of our bylaws, effective upon the consummation of our initial public offering on May 16, 2011, and (ii) the amendment and restatement of our articles of incorporation, which became effective on January 25, 2010. About Our Company FriendFinder Networks Inc. is a leading internet and technology company providing services in the rapidly expanding markets of social networking and web-based video sharing. Our business consists of creating and operating technology platforms which run several of the most heavily visited websites in the world. Through our extensive network of more than 44,000 websites, since our inception, we have built a base of more than 484 million registrants and more than 320 million members in more than 200 countries. We are able to create and maintain, in a cost-effective manner, websites intended to appeal to users of diverse cultures and interest groups. In December 2010, we had more than 196 million unique visitors to our network of websites, according to comScore. We offer our members a wide variety of online services so that they can interact with each other and access the content available on our websites. Our most heavily visited websites include AdultFriendFinder.com, Amigos.com, AsiaFriendFinder.com, Cams.com, FriendFinder.com, BigChurch.com and SeniorFriendFinder.com. For the nine months ended September 30, 2011, we had net revenue, income from operations and net losses of $249.6 million, $52.4 million and $(20.9) million, respectively. For the year ended December 31, 2010, we had net revenue, income from operations and net losses of $346.0 million, $71.1 million and ($43.2) million, respectively. Our revenues to date have been primarily derived from online subscription and paid-usage for our products and services. These products and services are delivered primarily through two highly scalable revenue-generating technology platforms: Social Networking. Approximately 69% of our total net revenues for the nine months ended September 30, 2011 and 70% of our total net revenues for the year ended December 31, 2010 were generated through our targeted social networking technology platform. Our social networking technology platform provides users who register or purchase subscriptions to one or more of our websites with the ability to communicate and to establish new connections with other users via our personal chat rooms, instant messaging and e-mail applications and to create, post and view content of interest. We have been able to rapidly create and seamlessly maintain multiple websites tailored to specific categories or genres and designed to cater to targeted audiences with mutual interests. We believe that our ability to create and operate a diverse network of specific interest websites with unique, user-generated content in a cost-effective manner is a significant competitive differentiator that allows us to implement a subscription-fee based revenue model while many other popular social networking websites rely primarily upon free-access, advertising-based revenue models. Live Interactive Video. Approximately 24% of our total net revenues for the nine months ended September 30, 2011 and 22% of our total net revenues for the year ended December 31, 2010 were generated through our live interactive video technology platform. Our live interactive video technology platform is a live video broadcast platform that enables models to broadcast from independent studios throughout the world and interact with our users via instant messaging and video. We believe our live interactive video platform provides a unique offering including bi-directional and omni-directional video and interactive features that allow models to communicate with and attract users through a variety of mediums including blogs, newsletters and video. In addition, we believe the reliability of our live interactive video technology platform, which had approximately 99.1% uptime during 2010, is a key factor allowing us to maintain a large base of users. In addition to our revenue-generating technology platforms, we have invested significant time and resources into developing our back-end marketing, analytics and billing technologies, which are a key contributor to the success of our business. We have developed proprietary systems to allow our marketing affiliates to maximize their revenue for our mutual benefit. These systems include proprietary white-labeling solutions, in which we provide back-end technology solutions to permit affiliates and marketing partners to deliver our products and services while maintaining the affiliate s and marketing partner s own branding and style, self-optimizing ad spots, and a robust banner optimization engine that automatically chooses the best possible site and banner to promote in a given ad spot. Our marketing technology has also enabled the creation and continued growth of our network of more than 280,000 affiliates, which we believe is one of the largest of its kind in the world and a significant barrier to entry to potential and existing competitors. Similarly, our proprietary analytics technology provides us with an advantage relative to less sophisticated competitors by enabling us to estimate future revenue based on short-term response to our advertising campaigns, as well as providing for analysis of key data and metrics in order to optimize our marketing spend and maximize the revenues our websites generate. Our robust billing platform allows our customers to pay using many of the widely-adopted methods of e-commerce, both domestically as well as internationally. We categorize our users into five categories: visitors, registrants, members, subscribers and paid users. Visitors. Visitors are users who visit our websites but do not necessarily register. We believe we achieve large numbers of unique visitors because of our focus on continuously enhancing the user experience and expanding the breadth of our services. We had more than 196 million unique worldwide visitors in the month of December 2010, representing a growth of more than 300% from our approximately 46.9 million unique worldwide visitors in January 2009, according to comScore. Registrants. Registrants are visitors who complete a free registration form on one of our websites by giving basic identification information and submitting their e-mail address. For the nine months ended September 30, 2011, we averaged more than 6.4 million new registrations on our websites each month. For the year ended December 31, 2010, we averaged more than 6.4 million new registrations on our websites each month. Some of our registrants are also members, as described below. Members. Members are registrants who log into one of our websites and make use of our free products and services. For the nine months ended September 30, 2011, we averaged more than 4.0 million new members on our websites each month. For the year ended December 31, 2010, we averaged more than 3.9 million new members on our websites each month. Subscribers. Subscribers are members who purchase daily, three-day, weekly, monthly, quarterly, annual or lifetime subscriptions for one or more of our websites. Subscribers have full access to our websites and may access special features. For the nine months ended September 30, 2011, we had a monthly average of approximately 950 thousand and for the year ended December 31, 2010, we had a monthly average of approximately 1 million paying subscribers. Paid Users. Paid users are members who purchase products or services on a pay-by-usage basis. For the nine months ended September 30, 2011, we averaged approximately 2.9 million purchased minutes by paid users each month. For the year ended December 31, 2010, we averaged approximately 3.0 million purchased minutes by paid users each month. We focus on the following key business metrics to evaluate the effectiveness of our operating strategies. Average Revenue per Subscriber. We calculate average revenue per subscriber, or ARPU, by dividing net revenue for the period by the average number of subscribers in the period and by the number of months in the period. As such, our ARPU is a monthly calculation. For the nine months ended September 30, 2011, our average monthly revenue per subscriber was $20.22. For the year ended December 31, 2010, our average monthly revenue per subscriber was $20.49. Churn. Churn is calculated by dividing terminations of subscriptions during the period by the total number of subscribers at the beginning of that period. Our average monthly churn rate, which measures the rate UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 of loss of subscribers, for the nine months ended September 30, 2011 was 16.3% per month. Our average monthly churn rate for the year ended December 31, 2010 was 16.1% per month. Cost Per Gross Addition. Cost per gross addition, or CPGA, is calculated by adding affiliate commission expense plus ad buy expenses and dividing by new subscribers during the measurement period. Our CPGA for the nine months ended September 30, 2011 was $42.76. Our CPGA for the year ended December 31, 2010 was $47.25. Average Lifetime Net Revenue Per Subscriber. Average Lifetime Net Revenue Per Subscriber is calculated by multiplying the average lifetime (in months) of a subscriber by ARPU for the measurement period and then subtracting the CPGA for the measurement period. Our Average Lifetime Net Revenue Per Subscriber for the nine months ended September 30, 2011 was $81.06. Our Average Lifetime Net Revenue Per Subscriber for the year ended December 31, 2010 was $80.17. While we monitor many statistics in the overall management of our business, we believe that Average Lifetime Net Revenue Per Subscriber and the number of subscribers are particularly helpful metrics for gaining a meaningful understanding of our business as they provide an indication of total revenue and profit generated from our base of subscribers inclusive of affiliate commissions and advertising costs required to generate new subscriptions. In addition to our social networks and live interactive video platforms, we also offer professionally-generated content through our premium content technology platform and our non-internet entertainment business. Through websites such as Penthouse.com and HotBox.com, our subscribers and paid users have access to our collection of more than 15,000 hours of professional video, which includes our library of more than 800 standard and high-definition full-length feature films and one million professionally produced images. We began shooting all of our content in 3D in September 2010. Additionally, subscribers have access to editorial content, chat rooms and other interactive features. In addition to our online products and services, we also have a non-technology legacy entertainment business, in which we produce and distribute original pictorial and video content via traditional distribution channels including licensing and retail DVD channels, and license the globally-recognized Penthouse brand to a variety of consumer product companies and entertainment venues and public branded men s lifestyle magazines. Our Competitive Strengths We believe that we have the following competitive strengths that we can leverage to implement our strategy: Proprietary and Scalable Technology Platform. Our robust, proprietary and highly scalable technology platform supports our social networking, live interactive video and premium content websites. We are able to use our customized back-end interface to quickly and affordably generate new websites, launch new features and target new audiences at a relatively low incremental cost. We believe that our ability to create new websites and provide new features is crucial to cost-effectively maintaining our relationships with existing users and attracting new users. Paid Subscriber-Based Model. We operate social networking websites that allow our members to make connections with other members with whom they share common interests. Our paid subscriber-based model of social networking websites is distinctly different from the business models of other free social networking websites whose users access the websites to remain connected to their pre-existing friends and interest groups. Large and Diverse User Base. We operate some of the most heavily visited social networking websites in the world, currently adding on average more than 6.4 million new registrants and more than 4.0 million new members each month. Our websites are designed to appeal to individuals with a diversity of interests and backgrounds. We believe potential members are attracted to the opportunity to interact with other individuals by having access to our large, diverse user base. Large and Difficult to Replicate Affiliate Network and Significant Marketing Spend. Our marketing affiliates are companies that market our services on their websites, allowing us to market our brand beyond our established user base. As of September 30, 2011 and December 31, 2010, we had more than 280,000 participants in our marketing affiliate program from which we derive a substantial portion of our new members and approximately 46% of our net revenues for the nine months ended September 30, 2011 and 45% of our net revenues for the year ended December 31, 2010. We believe that the difficulty in building an affiliate network of this large size, together with our combined affiliate and advertising spend for the nine months ended September 30, 2011 and the year ended December 31, 2010 of $64.5 million and $103.5 million, respectively, presents a significant barrier to entry for potential competitors. Our Strategy Our goal is to enhance revenue opportunities while improving our profitability. We plan to achieve these goals using the following strategies: Convert Visitors, Registrants and Members into Subscribers or Paid Users. We continually seek to convert visitors, registrants and members into subscribers or paid users. We do this by constantly evaluating, adding and enhancing features on our websites to improve our users experience. Create Additional Websites and Diversify Offerings. We are constantly seeking to identify groups of sufficient size who share a common interest in order to create a website intended to appeal to their interests. Our extensive user database serves as an existing source of potential members and subscribers for new websites we create. Expand into and Monetize Current Foreign Markets. In 2010, nearly 71% of our members were outside the United States, but non-U.S. users accounted for less than half of our total net revenues. We seek to expand in selected geographic markets, including Southeast Europe, South America and Asia. Pursue Targeted Acquisitions. We intend to expand our business by acquiring and integrating additional social networking websites, technology platforms, owners, creators and distributors of content and payment processing and advertising businesses. Our management team possesses significant mergers and acquisitions and integration expertise and regularly screens the marketplace for strategic acquisition opportunities. Generate Online Advertising Revenue. To date, online advertising revenue has represented less than 0.1% of our net revenue, averaging approximately $8,000 per month in the nine months ended September 30, 2011 and $9,000 per month for the year ended December 31, 2010. With continued worldwide growth in this advertising segment, we see this as a significant growth opportunity. We believe that our broad and diverse user base represents a valuable asset that will provide opportunities for us to offer targeted online advertising to specific demographic groups. We intend to focus our advertising efforts on our general audience social networking websites and maintain our subscription-based model for our adult social networking websites. Our New Financing On October 27, 2010, we issued new debt to repay our then existing debt, which we refer to as the New Financing. We, along with our wholly-owned subsidiary Interactive Network, Inc., or INI, co-issued $305.0 million principal amount of the Senior Secured Notes, $13.8 million of the Cash Pay Notes, and $232.5 million of the Non-Cash Pay Notes. Our Initial Public Offering On May 16, 2011, we issued 5,000,000 shares of common stock at a price of $10.00 per share and completed our initial public offering (the IPO ). We raised gross proceeds of $50.0 million, less underwriting fees and commissions of 7.25% of the gross proceeds, or $3.6 million, and incurred other offering expenses of $2.9 million to be paid from the proceeds of the offering, resulting in $43.5 million of net proceeds. In addition, we had incurred and paid as of December 31, 2010, $13.3 million of offering costs, which were included in deferred offering costs in the accompanying balance sheet at December 31, 2010 and written off by a charge to capital in excess of par value in the quarter ended June 30, 2011. On May 19, 2011, we redeemed $37.8 million of our Senior Secured Notes and $1.7 million of our Cash Pay Notes for a total of $39.5 million principal amount of New Financing redeemed from the net proceeds of our IPO and incurred a loss on extinguishment of debt estimated to be approximately $7.3 million. As of September 30, 2011, the outstanding principal amounts of the Senior Secured Notes, Cash Pay Notes and Non-Cash Pay Notes were $235.3 million, $10.6 million and $250.9 million, respectively. Recent Developments In July 2011, we acquired, through one of our subsidiaries, PerfectMatch.com, an online relationship service helping adults seeking successful, lasting connections. We paid approximately $2.5 million in cash and stock to acquire the assets of the website. PerfectMatch.com uses the Duet Total Compatibility System, a system which analyzes the whole person to find friends, taking into account each member s personality, values and ideals, life and love-style preferences to identify and find the person right for them. The acquisition of this website and related assets adds to our portfolio of general audience social networking websites. In September 2011, we acquired, through one of our subsidiaries, BDM Global Ventures Ltd., the company which owns the operations of JigoCity. The acquisition was completed pursuant to an Agreement and Plan of Merger entered into on September 7, 2011 among us, JGC Holdings Limited, our wholly-owned subsidiary, BDM Global Ventures Limited, which we refer to as BDM, Global Investment Ventures LLC and Anthony R. Bobulinski, which we refer to as the Merger Agreement. Under the terms of the Merger Agreement, the shareholders of BDM, in exchange for their outstanding shares and options in BDM and its subsidiaries, received merger consideration consisting of 1,555,555, shares of our common stock, 500,000 of which will be held in escrow until no later than December 31, 2012, and warrants exercisable into 6,436,851 shares of our common stock with exercise prices ranging from $5-$18 per share with an expiration date of December 31, 2021. Pursuant to an equity put agreement we entered into, the shareholders of BDM have the option to sell all of the shares of our common stock and warrants issued as merger consideration back to us in exchange for the return of 70% of the equity in BDM if the volume-weighted average price of our common stock fails to equal or exceed $12.00 per share during any 10 trading day period principally between the closing date and the later of June 30, 2014 and the date upon which our current indentures are fully discharged, or if an indenture modification is made, as defined in the equity put agreement, the later of June 30, 2014 and the date the indenture modification takes place (the later date hereinafter referred to as the Vesting Date ). The equity put agreement provides that the put right shall become exercisable at the sole discretion of the shareholders appointed representative during the period commencing on the Vesting Date and expiring sixty (60) days thereafter. Additionally, if the shareholders of BDM exercise the put right, we have the right to pay them in our common stock and/or cash, having a combined value as of the later of the above dates equal to the product of (i) 2,209,414 shares of common stock (subject to dilutive adjustment) and (ii) the difference between the highest 10 day volume-weighted average price attained by our common stock during such period and $12.00, in which case the put right terminates. Pursuant to a registration rights agreement, we also granted demand registration rights under certain circumstances, with respect to the shares of our common stock and warrants issued as merger consideration. JigoCity is a global social commerce organization committed to providing members with high quality daily deals that are relevant to their individual lifestyles. The acquisition of JigoCity adds to our portfolio a social commerce company and what we believe will be an additional avenue to monetize our foreign markets. Our Corporate Information Our executive offices are located at 6800 Broken Sound Parkway, Suite 200, Boca Raton, Florida 33487 and our telephone number is (561) 912-7000. Our website address is www.ffn.com. The information contained in, or accessible through, our website is not part of this prospectus. 6800 Broken Sound Parkway, Suite 200 Boca Raton, Florida 33487 (561) 912-7000 (Address, including zip code, and telephone number, including area code, of registrant s principal executive offices)
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+PROSPECTUS SUMMARY The following information is a summary of the prospectus about Auto Home Lock, Inc. (AHL) and it does not contain all the information that you should consider before making an investment decision. You should read the entire prospectus carefully, including the financial statements and the notes relating to the financial statements.
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001526185_african_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001526185_african_prospectus_summary.txt
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+PROSPECTUS SUMMARY The following summary highlights material information contained in this prospectus. This summary does not contain all of the information you should consider before investing in the securities. Before making an investment decision, you should read the entire prospectus carefully, including the risk factors section, the financial statements and the notes to the financial statements. You should also review the other available information referred to in the section entitled Where You Can Find More Information in this prospectus and any amendment or supplement hereto. The Company Overview New York Tutor Company (the Company or NYTC ) was incorporated in the State of Nevada on April 6, 2011. NYTC was founded by Professor Mark Simon to offer tutoring services in New York City. Throughout Mr. Simon s tenure as a professor, he has taught hundreds of students and is now ready to concentrate on developing this business into a potential source of revenue while retaining the joy of teaching that attracted him to the business. Throughout his career, Mr. Simon has developed an understanding of the many different method in which students learn. NYTC will rely on Mr. Simon s extensive experience to build a foundation for the Company that will allow us to offer our students every opportunity to reach their goals. Mr. Simon believes that utilizing his background and years of practical application will allow him to assist his students in exceeding all expectations. NYTC will take a unique and innovative approach to teaching that will help students connect with the subject matter they need to master, through personalized and focused teaching processes. We believe that our approach will help students develop the tools they need for ongoing success in any field of study. We understand that our success will depend on the success of our students, as this is the foundation of the Company: when our students succeed; we succeed. To this end, we have formulated a long-term focus of empowering students rather than a short-term problem-solving strategy. Although we were only recently incorporated and have not yet commenced substantive operations, we believe that conducting this Offering will allow the Company added flexibility to raise capital in today's financial climate. There can be no assurance that we will be successful in our attempt to sell 100% of the shares being registered hereunder; however, we believe that investors in today's markets demand full transparency and by our registering this Offering and becoming a reporting company, we will be able to capitalize on this fact. Since inception, our operations have consisted of incorporating our Company and formulating our business plan. The Company intends to begin substantive operations within 2-3 months after we obtain a Notice of Effectiveness of this Offering and our initial plan of operations calls for the Company to begin marketing our services to potential clients. As our sole officer and director is an adjunct college professor, he has a flexible schedule in which he can devote more time to the Company as needed. As we generate revenue through our tutoring services and grow our clientele base, we may need to retain qualified tutors to hire in order to accommodate more clients. At this point, we do not have any verbal or written agreements regarding the retention of any qualified tutors. Although the Company has no market for its common stock, management believes that the Company will meet all requirements to be quoted on the OTC market, and even though the Company s common stock will likely will be a penny stock, becoming a reporting company will provide us with enhanced visibility and give us a greater possibility to provide liquidity to our shareholders. We are currently a development stage company and to date we have recorded no revenue. Accordingly, our independent registered public accountants have issued a comment regarding our ability to continue as a going concern (please refer to the footnotes to the financial statements). Until such time that we are able to establish a consistent flow of revenues from our operations sufficient to sustain our operations, Management intends to rely primarily upon debt financing as needed to supplement the cash flows generated by the sale of our products and services. Our Management will seek out reasonable loans from friends, family and business acquaintances necessary to allow the Company to continue to meet its obligations, including covering any such cost associated with being a reporting Company with the Securities and Exchange Commission ("SEC") and continuing to develop our business operations. At this point we have been funded by an initial lender, 888 Investment Ltd., of which Mr. Barron Wedderly is the Principal and beneficial owner, and have not received any firm commitments or indications from any family, friends or business acquaintances regarding any potential investment in the Company. Our current cash and working capital is not sufficient to cover our current estimated expenses of $45,000, which include those fees associated obtaining a Notice of Effectiveness from the SEC for this registration statement. We hope that we will be able to secure additional financing, and complete this Offering within the coming months. Upon obtaining a Notice of Effectiveness, we will conduct the Offering contemplated hereby, and anticipate raising sufficient capital from this Offering to commerce business operations and market our Company. We believe that the maximum amount of funds generated from the Offering will allow us to operate for up to twelve months after the completion of this Offering and during the execution of our marketing strategy. Assuming we generate nominal or no revenues, even if the maximum amount of funds is raised under this Offering, we will still require additional financing to fund our operations past the twelve month period following the completion of this Offering. For a further discussion of our initial operations, plan of operations, growth strategy and marketing strategy see the below section entitled Description of Our Business . Neither the Company, Mr. Simon nor any other affiliated or unaffiliated entity has any plans to use the Company as a vehicle for a private company to become a reporting company once New York Tutor Company becomes a reporting Company. Additionally, we do not believe the Company is a blank check company as defined in Section a(2) of Rule 419 under the Securities Act of 1933, as amended because the Company has a specific business plan and has no plans or intentions to engage in a merger or acquisition with an unidentified entity. SUMMARY OF THIS OFFERING The Issuer New York Tutor Company Securities being offered Up to 2,500,000 shares of Common Stock, our Common Stock is described in further detail in the section of this prospectus titled DESCRIPTION OF SECURITIES Common Stock. Offering Type
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+consolidated financial statements included elsewhere in this prospectus. This summary may not contain all of the information that may be important to you. You should carefully read this entire prospectus, including the section entitled Risk Factors and our consolidated financial statements and notes to those statements. As used in this prospectus, unless the context otherwise requires, all references to we, us, our, our company or the company refer to FriendFinder Networks Inc. and, where appropriate, our consolidated direct and indirect subsidiaries, except where it is clear that the terms mean only FriendFinder Networks Inc. The term INI refers to our subsidiary and co-issuer of the Registrable Notes, Interactive Network, Inc. References to our common stock refer only to our voting common stock and except as otherwise noted, such references do not include our Series B common stock or our preferred common stock. Except where we state otherwise, the information presented in this prospectus reflects (i) the amendment and restatement of our bylaws, effective upon the consummation of our initial public offering on May 16, 2011, and (ii) the amendment and restatement of our articles of incorporation, which became effective on January 25, 2010. About Our Company FriendFinder Networks Inc. is a leading internet and technology company providing services in the rapidly expanding markets of social networking and web-based video sharing. Our business consists of creating and operating technology platforms which run several of the most heavily visited websites in the world. Through our extensive network of more than 44,000 websites, since our inception, we have built a base of more than 484 million registrants and more than 320 million members in more than 200 countries. We are able to create and maintain, in a cost-effective manner, websites intended to appeal to users of diverse cultures and interest groups. In December 2010, we had more than 196 million unique visitors to our network of websites, according to comScore. We offer our members a wide variety of online services so that they can interact with each other and access the content available on our websites. Our most heavily visited websites include AdultFriendFinder.com, Amigos.com, AsiaFriendFinder.com, Cams.com, FriendFinder.com, BigChurch.com and SeniorFriendFinder.com. For the nine months ended September 30, 2011, we had net revenue, income from operations and net losses of $249.6 million, $52.4 million and $(20.9) million, respectively. For the year ended December 31, 2010, we had net revenue, income from operations and net losses of $346.0 million, $71.1 million and ($43.2) million, respectively. Our revenues to date have been primarily derived from online subscription and paid-usage for our products and services. These products and services are delivered primarily through two highly scalable revenue-generating technology platforms: Social Networking. Approximately 69% of our total net revenues for the nine months ended September 30, 2011 and 70% of our total net revenues for the year ended December 31, 2010 were generated through our targeted social networking technology platform. Our social networking technology platform provides users who register or purchase subscriptions to one or more of our websites with the ability to communicate and to establish new connections with other users via our personal chat rooms, instant messaging and e-mail applications and to create, post and view content of interest. We have been able to rapidly create and seamlessly maintain multiple websites tailored to specific categories or genres and designed to cater to targeted audiences with mutual interests. We believe that our ability to create and operate a diverse network of specific interest websites with unique, user-generated content in a cost-effective manner is a significant competitive differentiator that allows us to implement a subscription-fee based revenue model while many other popular social networking websites rely primarily upon free-access, advertising-based revenue models. Live Interactive Video. Approximately 24% of our total net revenues for the nine months ended September 30, 2011 and 22% of our total net revenues for the year ended December 31, 2010 were generated through our live interactive video technology platform. Our live interactive video technology platform is a live video broadcast platform that enables models to broadcast from independent studios throughout the world and interact with our users via instant messaging and video. We believe our live interactive video platform provides a unique offering including bi-directional and omni-directional video and interactive features that allow models to communicate with and attract users through a variety of mediums including blogs, newsletters and video. In addition, we believe the reliability of our live interactive video technology platform, which had approximately 99.1% uptime during 2010, is a key factor allowing us to maintain a large base of users. In addition to our revenue-generating technology platforms, we have invested significant time and resources into developing our back-end marketing, analytics and billing technologies, which are a key contributor to the success of our business. We have developed proprietary systems to allow our marketing affiliates to maximize their revenue for our mutual benefit. These systems include proprietary white-labeling solutions, in which we provide back-end technology solutions to permit affiliates and marketing partners to deliver our products and services while maintaining the affiliate s and marketing partner s own branding and style, self-optimizing ad spots, and a robust banner optimization engine that automatically chooses the best possible site and banner to promote in a given ad spot. Our marketing technology has also enabled the creation and continued growth of our network of more than 280,000 affiliates, which we believe is one of the largest of its kind in the world and a significant barrier to entry to potential and existing competitors. Similarly, our proprietary analytics technology provides us with an advantage relative to less sophisticated competitors by enabling us to estimate future revenue based on short-term response to our advertising campaigns, as well as providing for analysis of key data and metrics in order to optimize our marketing spend and maximize the revenues our websites generate. Our robust billing platform allows our customers to pay using many of the widely-adopted methods of e-commerce, both domestically as well as internationally. We categorize our users into five categories: visitors, registrants, members, subscribers and paid users. Visitors. Visitors are users who visit our websites but do not necessarily register. We believe we achieve large numbers of unique visitors because of our focus on continuously enhancing the user experience and expanding the breadth of our services. We had more than 196 million unique worldwide visitors in the month of December 2010, representing a growth of more than 300% from our approximately 46.9 million unique worldwide visitors in January 2009, according to comScore. Registrants. Registrants are visitors who complete a free registration form on one of our websites by giving basic identification information and submitting their e-mail address. For the nine months ended September 30, 2011, we averaged more than 6.4 million new registrations on our websites each month. For the year ended December 31, 2010, we averaged more than 6.4 million new registrations on our websites each month. Some of our registrants are also members, as described below. Members. Members are registrants who log into one of our websites and make use of our free products and services. For the nine months ended September 30, 2011, we averaged more than 4.0 million new members on our websites each month. For the year ended December 31, 2010, we averaged more than 3.9 million new members on our websites each month. Subscribers. Subscribers are members who purchase daily, three-day, weekly, monthly, quarterly, annual or lifetime subscriptions for one or more of our websites. Subscribers have full access to our websites and may access special features. For the nine months ended September 30, 2011, we had a monthly average of approximately 950 thousand and for the year ended December 31, 2010, we had a monthly average of approximately 1 million paying subscribers. Paid Users. Paid users are members who purchase products or services on a pay-by-usage basis. For the nine months ended September 30, 2011, we averaged approximately 2.9 million purchased minutes by paid users each month. For the year ended December 31, 2010, we averaged approximately 3.0 million purchased minutes by paid users each month. We focus on the following key business metrics to evaluate the effectiveness of our operating strategies. Average Revenue per Subscriber. We calculate average revenue per subscriber, or ARPU, by dividing net revenue for the period by the average number of subscribers in the period and by the number of months in the period. As such, our ARPU is a monthly calculation. For the nine months ended September 30, 2011, our average monthly revenue per subscriber was $20.22. For the year ended December 31, 2010, our average monthly revenue per subscriber was $20.49. Churn. Churn is calculated by dividing terminations of subscriptions during the period by the total number of subscribers at the beginning of that period. Our average monthly churn rate, which measures the rate UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 of loss of subscribers, for the nine months ended September 30, 2011 was 16.3% per month. Our average monthly churn rate for the year ended December 31, 2010 was 16.1% per month. Cost Per Gross Addition. Cost per gross addition, or CPGA, is calculated by adding affiliate commission expense plus ad buy expenses and dividing by new subscribers during the measurement period. Our CPGA for the nine months ended September 30, 2011 was $42.76. Our CPGA for the year ended December 31, 2010 was $47.25. Average Lifetime Net Revenue Per Subscriber. Average Lifetime Net Revenue Per Subscriber is calculated by multiplying the average lifetime (in months) of a subscriber by ARPU for the measurement period and then subtracting the CPGA for the measurement period. Our Average Lifetime Net Revenue Per Subscriber for the nine months ended September 30, 2011 was $81.06. Our Average Lifetime Net Revenue Per Subscriber for the year ended December 31, 2010 was $80.17. While we monitor many statistics in the overall management of our business, we believe that Average Lifetime Net Revenue Per Subscriber and the number of subscribers are particularly helpful metrics for gaining a meaningful understanding of our business as they provide an indication of total revenue and profit generated from our base of subscribers inclusive of affiliate commissions and advertising costs required to generate new subscriptions. In addition to our social networks and live interactive video platforms, we also offer professionally-generated content through our premium content technology platform and our non-internet entertainment business. Through websites such as Penthouse.com and HotBox.com, our subscribers and paid users have access to our collection of more than 15,000 hours of professional video, which includes our library of more than 800 standard and high-definition full-length feature films and one million professionally produced images. We began shooting all of our content in 3D in September 2010. Additionally, subscribers have access to editorial content, chat rooms and other interactive features. In addition to our online products and services, we also have a non-technology legacy entertainment business, in which we produce and distribute original pictorial and video content via traditional distribution channels including licensing and retail DVD channels, and license the globally-recognized Penthouse brand to a variety of consumer product companies and entertainment venues and public branded men s lifestyle magazines. Our Competitive Strengths We believe that we have the following competitive strengths that we can leverage to implement our strategy: Proprietary and Scalable Technology Platform. Our robust, proprietary and highly scalable technology platform supports our social networking, live interactive video and premium content websites. We are able to use our customized back-end interface to quickly and affordably generate new websites, launch new features and target new audiences at a relatively low incremental cost. We believe that our ability to create new websites and provide new features is crucial to cost-effectively maintaining our relationships with existing users and attracting new users. Paid Subscriber-Based Model. We operate social networking websites that allow our members to make connections with other members with whom they share common interests. Our paid subscriber-based model of social networking websites is distinctly different from the business models of other free social networking websites whose users access the websites to remain connected to their pre-existing friends and interest groups. Large and Diverse User Base. We operate some of the most heavily visited social networking websites in the world, currently adding on average more than 6.4 million new registrants and more than 4.0 million new members each month. Our websites are designed to appeal to individuals with a diversity of interests and backgrounds. We believe potential members are attracted to the opportunity to interact with other individuals by having access to our large, diverse user base. Large and Difficult to Replicate Affiliate Network and Significant Marketing Spend. Our marketing affiliates are companies that market our services on their websites, allowing us to market our brand beyond our established user base. As of September 30, 2011 and December 31, 2010, we had more than 280,000 participants in our marketing affiliate program from which we derive a substantial portion of our new members and approximately 46% of our net revenues for the nine months ended September 30, 2011 and 45% of our net revenues for the year ended December 31, 2010. We believe that the difficulty in building an affiliate network of this large size, together with our combined affiliate and advertising spend for the nine months ended September 30, 2011 and the year ended December 31, 2010 of $64.5 million and $103.5 million, respectively, presents a significant barrier to entry for potential competitors. Our Strategy Our goal is to enhance revenue opportunities while improving our profitability. We plan to achieve these goals using the following strategies: Convert Visitors, Registrants and Members into Subscribers or Paid Users. We continually seek to convert visitors, registrants and members into subscribers or paid users. We do this by constantly evaluating, adding and enhancing features on our websites to improve our users experience. Create Additional Websites and Diversify Offerings. We are constantly seeking to identify groups of sufficient size who share a common interest in order to create a website intended to appeal to their interests. Our extensive user database serves as an existing source of potential members and subscribers for new websites we create. Expand into and Monetize Current Foreign Markets. In 2010, nearly 71% of our members were outside the United States, but non-U.S. users accounted for less than half of our total net revenues. We seek to expand in selected geographic markets, including Southeast Europe, South America and Asia. Pursue Targeted Acquisitions. We intend to expand our business by acquiring and integrating additional social networking websites, technology platforms, owners, creators and distributors of content and payment processing and advertising businesses. Our management team possesses significant mergers and acquisitions and integration expertise and regularly screens the marketplace for strategic acquisition opportunities. Generate Online Advertising Revenue. To date, online advertising revenue has represented less than 0.1% of our net revenue, averaging approximately $8,000 per month in the nine months ended September 30, 2011 and $9,000 per month for the year ended December 31, 2010. With continued worldwide growth in this advertising segment, we see this as a significant growth opportunity. We believe that our broad and diverse user base represents a valuable asset that will provide opportunities for us to offer targeted online advertising to specific demographic groups. We intend to focus our advertising efforts on our general audience social networking websites and maintain our subscription-based model for our adult social networking websites. Our New Financing On October 27, 2010, we issued new debt to repay our then existing debt, which we refer to as the New Financing. We, along with our wholly-owned subsidiary Interactive Network, Inc., or INI, co-issued $305.0 million principal amount of the Senior Secured Notes, $13.8 million of the Cash Pay Notes, and $232.5 million of the Non-Cash Pay Notes. Our Initial Public Offering On May 16, 2011, we issued 5,000,000 shares of common stock at a price of $10.00 per share and completed our initial public offering (the IPO ). We raised gross proceeds of $50.0 million, less underwriting fees and commissions of 7.25% of the gross proceeds, or $3.6 million, and incurred other offering expenses of $2.9 million to be paid from the proceeds of the offering, resulting in $43.5 million of net proceeds. In addition, we had incurred and paid as of December 31, 2010, $13.3 million of offering costs, which were included in deferred offering costs in the accompanying balance sheet at December 31, 2010 and written off by a charge to capital in excess of par value in the quarter ended June 30, 2011. On May 19, 2011, we redeemed $37.8 million of our Senior Secured Notes and $1.7 million of our Cash Pay Notes for a total of $39.5 million principal amount of New Financing redeemed from the net proceeds of our IPO and incurred a loss on extinguishment of debt estimated to be approximately $7.3 million. As of September 30, 2011, the outstanding principal amounts of the Senior Secured Notes, Cash Pay Notes and Non-Cash Pay Notes were $235.3 million, $10.6 million and $250.9 million, respectively. Recent Developments In July 2011, we acquired, through one of our subsidiaries, PerfectMatch.com, an online relationship service helping adults seeking successful, lasting connections. We paid approximately $2.5 million in cash and stock to acquire the assets of the website. PerfectMatch.com uses the Duet Total Compatibility System, a system which analyzes the whole person to find friends, taking into account each member s personality, values and ideals, life and love-style preferences to identify and find the person right for them. The acquisition of this website and related assets adds to our portfolio of general audience social networking websites. In September 2011, we acquired, through one of our subsidiaries, BDM Global Ventures Ltd., the company which owns the operations of JigoCity. The acquisition was completed pursuant to an Agreement and Plan of Merger entered into on September 7, 2011 among us, JGC Holdings Limited, our wholly-owned subsidiary, BDM Global Ventures Limited, which we refer to as BDM, Global Investment Ventures LLC and Anthony R. Bobulinski, which we refer to as the Merger Agreement. Under the terms of the Merger Agreement, the shareholders of BDM, in exchange for their outstanding shares and options in BDM and its subsidiaries, received merger consideration consisting of 1,555,555, shares of our common stock, 500,000 of which will be held in escrow until no later than December 31, 2012, and warrants exercisable into 6,436,851 shares of our common stock with exercise prices ranging from $5-$18 per share with an expiration date of December 31, 2021. Pursuant to an equity put agreement we entered into, the shareholders of BDM have the option to sell all of the shares of our common stock and warrants issued as merger consideration back to us in exchange for the return of 70% of the equity in BDM if the volume-weighted average price of our common stock fails to equal or exceed $12.00 per share during any 10 trading day period principally between the closing date and the later of June 30, 2014 and the date upon which our current indentures are fully discharged, or if an indenture modification is made, as defined in the equity put agreement, the later of June 30, 2014 and the date the indenture modification takes place (the later date hereinafter referred to as the Vesting Date ). The equity put agreement provides that the put right shall become exercisable at the sole discretion of the shareholders appointed representative during the period commencing on the Vesting Date and expiring sixty (60) days thereafter. Additionally, if the shareholders of BDM exercise the put right, we have the right to pay them in our common stock and/or cash, having a combined value as of the later of the above dates equal to the product of (i) 2,209,414 shares of common stock (subject to dilutive adjustment) and (ii) the difference between the highest 10 day volume-weighted average price attained by our common stock during such period and $12.00, in which case the put right terminates. Pursuant to a registration rights agreement, we also granted demand registration rights under certain circumstances, with respect to the shares of our common stock and warrants issued as merger consideration. JigoCity is a global social commerce organization committed to providing members with high quality daily deals that are relevant to their individual lifestyles. The acquisition of JigoCity adds to our portfolio a social commerce company and what we believe will be an additional avenue to monetize our foreign markets. Our Corporate Information Our executive offices are located at 6800 Broken Sound Parkway, Suite 200, Boca Raton, Florida 33487 and our telephone number is (561) 912-7000. Our website address is www.ffn.com. The information contained in, or accessible through, our website is not part of this prospectus. 6800 Broken Sound Parkway, Suite 200 Boca Raton, Florida 33487 (561) 912-7000 (Address, including zip code, and telephone number, including area code, of registrant s principal executive offices)
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+PROSPECTUS SUMMARY 1
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+PROSPECTUS SUMMARY The following summary highlights material information contained in this prospectus. This summary does not contain all of the information you should consider before investing in the securities. Before making an investment decision, you should read the entire prospectus carefully, including the risk factors section, the financial statements and the notes to the financial statements. You should also review the other available information referred to in the section entitled Where You Can Find More Information in this prospectus and any amendment or supplement hereto. The Company Overview Bahamas Concierge, Inc. was in incorporated in the state of Nevada on May 2, 2011. Headquartered in Nassau, Bahamas, we plan on becoming a full-service concierge company for the Bahamas. We intend to offer a wide array of concierge services to our clients, thereby hoping to reach a wider range of clients. Initially, we intend to market our services to the following three sectors: (i) tourists, (ii) business travelers, and (iii) local island residents. We will offer different pricing structures for each of the sectors, and we will focus on marketing different services to each sector as we believe their requests and needs will be different. We intend to charge a monthly subscription price for the local island residents and long-term tourists using our services, and charge business travelers and short-term vacationers on a per-transaction basis. As requests for concierge services become more popular, our goal is to become a leading provider of concierge services. We would like to highlight everything that the Bahamas has to offer, whether offering our services to local permanent residents or visitors that are only in town for a couple of days. We believe that the key factors that will enable us to effectively grow in the concierge industry will be our intended competitive pricing on services offered, our customer service, our marketing strategies and the training and quality control of all future employees that may represent our Company. We believe that the first year of our operations will be devoted to the further development of our business and to the sale and marketing of our services, including researching and establishing a network of vendors, designing and developing our website, and advertising our services in order to reach our target market. We intend to develop a relationship with third-party vendors in the Bahamas in order to assist and facilitate in providing our services. As a result, our prices will be affected by the prices our vendors charge us. Although we were only recently incorporated and have not yet commenced substantive operations, we believe that conducting this Offering will allow the Company added flexibility to raise capital in today's financial climate. There can be no assurance that we will be successful in our attempt to sell 100% of the shares being registered hereunder; however, we believe that investors in today's markets demand full transparency and by our registering this Offering and becoming a reporting company, we will be able to capitalize on this fact. Since inception, our operations have consisted of incorporating our Company and formulating our business plan. The Company intends to begin substantive operations within 2-4 months after we obtain a Notice of Effectiveness of this Offering and our initial plan of operations calls for the Company to establish our network of third-party vendors. We anticipate that it will take between 1-2 months to establish a sufficient network of third party vendors in order to begin marketing our services to outside clients. Our sole officer and director has only recently become interested in creating and developing a concierge company, and does not have any professional training or technical credentials in the development of such a business; however, he has over thirty years of management experience and his flexible schedule as an independent business consultant allows him to devote time to the Company s operations. We may need to retain qualified consultants who will help us establish a network of vendors in order for us to provide clients with the services we will offer, and to market and offer our services. At this point, we do not have any verbal or written agreements regarding the retention of any qualified consultants or established vendors. Although the Company has no market for its common stock, management believes that the Company will meet all requirements to be quoted on the OTC market, and even though the Company s common stock will likely will be a penny stock, becoming a reporting company will provide us with enhanced visibility and give us a greater possibility to provide liquidity to our shareholders. We are currently a development stage company and to date we have recorded no revenue and our initial operations have been funded by a $17,500 promissory note. Accordingly, our independent registered public accountants have issued a comment regarding our ability to continue as a going concern (please refer to the footnotes to the financial statements). Until such time that we are able to establish a consistent flow of revenues from our operations sufficient to sustain our operations, Management intends to rely primarily upon debt financing as needed to supplement the cash flows generated by the sale of our services in order to allow the Company to continue to meet its obligations, including continuing to develop our initial business operation, and covering any such additional costs, excluding professional fees, associated with being a reporting Company with the Securities and Exchange Commission ( SEC ). We estimate such to be around $10,000 for 12 months following this Offering. The Company has included such additional costs to become a publicly reporting company in its targeted expenses for working capital expenses and intends to seek out reasonable loans from friends, family and business acquaintances if it becomes necessary. At this point the Company has not received any firm commitments or indications from any family, friends or business acquaintances regarding any potential investment in the Company. Our current cash and working capital is not sufficient to cover our current estimated expenses of $45,000, which include those fees associated with obtaining a Notice of Effectiveness from the Commission for this registration statement. We hope that we will be able to secure additional financing, and complete this Offering within the next few months. Upon obtaining a Notice of Effectiveness, we will conduct the Offering contemplated hereby, and anticipate raising sufficient capital from this Offering to initiate our business plan. To initiate the full extent of our business plan, additional funding will be needed for general administrative expenses, business development, marketing costs and support materials, which funding we anticipate coming from this Offering. We believe that the maximum amount of proceeds generated from the Offering will provide us with enough funds to finance our plan of operations for up to twelve months after the completion of this Offering and during the execution of our business plan. Assuming we generate nominal or no revenues, even if the maximum amount of funds is raised under this Offering, we will still require additional financing to fund our operations past the twelve month period following the completion of this Offering. For a further discussion of our plan of operations, initial operations and our growth strategy see the below section entitled Description of Our Business. Neither the Company, Mr. Williams nor any other affiliated or unaffiliated entity has any plans to use the Company as a vehicle for a private company to become a reporting company once Bahamas Concierge, Inc. becomes a reporting Company. Additionally, we do not believe the Company is a blank check company as defined in Section a(2) of Rule 419 under the Securities Act of 1933, as amended because the Company has a specific business plan and has no plans or intentions to engage in a merger or acquisition with an unidentified entity. SUMMARY OF THIS OFFERING The Issuer Bahamas Concierge, Inc. Securities being offered Up to 2,500,000 shares of Common Stock, our Common Stock is described in further detail in the section of this prospectus titled DESCRIPTION OF SECURITIES Common Stock. Offering Type
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+However, participant investment directions are subject to subscription rights and purchase priorities. See Summary Persons Who May Order Stock in the Offering in the attached prospectus. Subscription requests for common stock will be filled in the following order of priority: (1) persons with $50 or more on deposit at Wellesley Bank as of the close of business on April 30, 2010; (2) persons with $50 or more on deposit at Wellesley Bank as of the close of business on June 30, 2011; and (3) employees and directors who do not have a higher priority right. If you fall into one of the above subscription offering categories, you have subscription rights to purchase shares of Wellesley Bancorp common stock in the Stock Offering and you may use your account balance in the 401(k) Plan to subscribe for shares of Wellesley Bancorp common stock. To the extent shares of common stock remain available after filling offers in the subscription offering, shares will be available in a community offering. The limitations on the total amount of Wellesley Bancorp common stock that you may purchase in the Stock Offering, as described in the prospectus (see The Conversion and Stock Offering Limitations on Purchases of Shares ), will be calculated based on the aggregate amount that you subscribed for: (a) through your 401(k) Plan account and (b) through your sources of funds outside of the 401(k) Plan. Whether you place an order through the 401(k) Plan, outside the 401(k) Plan, or both, the number of shares of Wellesley Bancorp common stock, if any, that you receive will be determined based on the total number of subscriptions, your purchase priority and the allocation priorities described in the Table of Contents WELLESLEY BANK EMPLOYEE 401(k) PLAN INVESTMENT FORM Name of Plan Participant: Social Security Number: 1. Instructions. In connection with the stock offering, you may direct up to 100% of your current 401(k) Plan account balance into the Wellesley Bancorp Fund (the Employer Stock Fund ). The percentage of your 401(k) Plan account (up to 100%) transferred into the Employer Stock Fund will be used to purchase shares of Wellesley Bancorp stock in the stock offering. To direct a transfer of the funds credited to your 401(k) Plan account to the Employer Stock Fund, you must complete, sign and submit this form to Eloise C. Thibault by 12:00 noon on [date]. Current Wellesley Bank employees should return their forms through inter-office mail. Former Wellesley Bank employees should return their forms using the business reply envelope that has been provided. A representative for the Plan Administrator will retain a copy of this form and return a copy to you. If you need any assistance in completing this form, please contact Eloise C. Thibault at (781) 235-2550. If you do not complete and return this form to Eloise C. Thibault by 12:00 noon on [date], the funds credited to your account under the 401(k) Plan will continue to be invested in accordance with your prior investment directions, or in accordance with the terms of the Plan if no investment directions have been provided. 2. Investment Directions. I hereby authorize the Plan Administrator to direct the Trustee to invest the following percentages (in multiples of not less than 1%) of my 401(k) Plan account balance in the Employer Stock Fund: Fund Name [Funds to be included] ______ % I understand that my election to transfer funds to the Employer Stock Fund to purchase shares of Wellesley Bancorp stock in the stock offering is irrevocable. I understand that the funds transferred to the Employer Stock Fund will be divisible by $10.00, the per share price for the common stock. 3. Purchaser Information. The ability of a 401(k) Plan participant to purchase Wellesley Bancorp stock in the stock offering is based upon the participant s subscription rights in the stock offering. Please indicate your status (check one): Check here if you had $50.00 or more on deposit with Wellesley Bank as of April 30, 2010. Check here if you had $50.00 or more on deposit with Wellesley Bank as of close of business on June 30, 2011. Check here if you are not eligible for either category noted above, but you are an employee or director of Wellesley Bank. Table of Contents SUBSCRIPTION AND COMMUNITY OFFERING PROSPECTUS (Proposed Holding Company for Wellesley Bank) Up to 2,760,000 Shares of Common Stock (Subject to increase to 3,174,000 shares) Wellesley Bancorp, Inc., a newly formed Maryland corporation, is offering common stock for sale in connection with the conversion of Wellesley Bank from the mutual to stock form of organization. We expect that our common stock will be listed for trading on the Nasdaq Capital Market under the symbol WEBK upon conclusion of the stock offering. There is currently no public market for the shares of our common stock. We are offering up to 2,760,000 shares of common stock for sale on a best efforts basis, subject to certain conditions. We must sell a minimum of 2,040,000 shares to complete the offering. All shares are offered at a price of $10.00 per share. Purchasers will not pay a commission to purchase shares of common stock in the offering. The amount of capital being raised is based on an independent appraisal of Wellesley Bank. Most of the terms of this offering are required by regulations of the Federal Deposit Insurance Corporation and the Massachusetts Commissioner of Banks. If, as a result of regulatory considerations, demand for the shares or changes in financial market conditions, the independent appraiser determines that our market value has increased, we may sell up to 3,174,000 shares without giving you further notice or the opportunity to change or cancel your order. We are offering the shares of common stock in a subscription offering to eligible depositors of Wellesley Bank. Shares of common stock not purchased in the subscription offering may be offered for sale to the general public in a community offering, with a preference given to natural persons residing in the municipalities of Wellesley, Dover, Needham, Newton, Natick and Weston, Massachusetts. To the extent any shares offered for sale are not purchased in the subscription offering or community offering, they may be sold in an underwritten public offering to be managed by Sandler O Neill + Partners, L.P. With respect to the subscription offering and the community offering, Sandler O Neill + Partners, L.P. will use its best efforts to assist Wellesley Bancorp in its selling efforts but is not required to purchase any shares of common stock that are being offered for sale in such offerings. The minimum order is 25 shares. The subscription offering will end at 4:00 p.m., Eastern time, on December 12, 2011. We expect that the community offering, if held, will terminate at the same time, although the offering may continue without notice to you until January 26, 2012 or longer if the Massachusetts Commissioner of Banks approves a later date. The offering must be completed by July 20, 2013. Once submitted, orders are irrevocable unless the offering is terminated or is extended beyond January 26, 2012, or the number of shares of common stock to be sold is increased to more than 3,174,000 shares or decreased to less than 2,040,000 shares. If we extend the offering beyond January 26, 2012, all subscribers will be notified and given the opportunity to confirm, change or cancel their orders. If you do not respond to this notice, we will promptly return your funds with interest calculated at Wellesley Bank s passbook savings rate or cancel your deposit account withdrawal authorization. If we intend to sell fewer than 2,040,000 shares or more than 3,174,000 shares, we will promptly return all funds and set a new offering range. All subscribers will be notified and given the opportunity to place a new order. Funds received before the completion of the subscription and community offerings will be held in a segregated account at Wellesley Bank and will earn interest at Wellesley Bank s passbook savings rate, which is currently 0.10%. In addition to the shares that we will sell in the offering, we intend to establish a charitable foundation in connection with the conversion and contribute to it an amount equal to 8% of the gross offering proceeds, 87.5% of which will be funded with our common stock and 12.5% of which will be funded with cash (193,200 shares and $276,000 in cash at the maximum of the offering range). We expect that our directors and executive officers, together with their associates, will subscribe for approximately 250,000 shares, which is 9.7% of the shares that would be sold in the offering and issued to the charitable foundation at the midpoint of the offering range. This investment involves a degree of risk, including the possible loss of principal. Please read Risk Factors beginning on page 12. OFFERING SUMMARY Price Per Share: $10.00 Minimum Maximum Maximum, as Adjusted Number of shares 2,040,000 2,760,000 3,174,000 Gross offering proceeds $ 20,400,000 $ 27,600,000 $ 31,740,000 Estimated offering expenses, excluding selling agent fees and discounts $ 960,000 $ 960,000 $ 960,000 Estimated selling agent fees and discounts(1) $ 270,000 $ 270,000 $ 270,000 Estimated net proceeds $ 19,170,000 $ 26,370,000 $ 30,510,000 Estimated net proceeds per share $ 9.40 $ 9.55 $ 9.61 (1) Excludes fees payable if an underwritten public offering is held. In the unlikely event that all shares are sold in the underwritten public offering, the selling agent fees and discounts would be $1,290,000, $1,650,000 and $1,857,000 at the minimum, maximum and adjusted maximum of the offering range. For a discussion of the compensation of Sandler O Neill + Partners, L.P. and the other underwriters that may participate in the underwritten public offering, see The Conversion and Stock Offering Marketing Arrangements. These securities are not deposits or savings accounts and are not insured or guaranteed by the Federal Deposit Insurance Corporation, any other government agency or the Share Insurance Fund. None of the Securities and Exchange Commission, the Federal Deposit Insurance Corporation, the Board of Governors of the Federal Reserve System, the Massachusetts Commissioner of Banks or any state securities commission has approved or disapproved of these securities or determined if this prospectus is accurate or complete. Any representation to the contrary is a criminal offense. For assistance, please contact the Conversion Center at (781) 489-7648. SANDLER O NEILL + PARTNERS, L.P. The date of this prospectus is , 2011 Table of Contents Our Business Strategy Our mission is to operate and grow a profitable community-oriented financial institution. The following are the key elements of our business strategy: increasing our deposit market share within Wellesley, Massachusetts and the surrounding communities; continuing to emphasize our commercial real estate, construction and commercial business loans, as well as increasing our commercial business depository relationships in our market area; increasing our residential mortgage lending in our market area; continuing conservative underwriting practices while maintaining a high quality loan portfolio; seeking to enhance fee income by growing our investment advisory services; and emphasizing lower cost core deposits to maintain low funding costs. The Conversion and Offering Description of the Conversion Currently, we are a Massachusetts chartered mutual cooperative bank with no stockholders. Our depositors currently have the right to vote on certain matters such as the election of directors and this conversion. The conversion transaction that we are undertaking involves a change from our mutual form to a stock cooperative bank that will result in all of Wellesley Bank s capital stock being owned by Wellesley Bancorp. Voting rights in Wellesley Bancorp will belong to its stockholders, including our employee stock ownership plan and our charitable foundation. We are conducting the conversion under the terms of our plan of conversion. We have called a special meeting of depositors for December 21, 2011 to vote on the plan of conversion and the establishment and funding of the charitable foundation. The following diagram depicts our corporate structure after the conversion and offering: Reasons for the Conversion and Offering Our primary reasons for the conversion and offering are to: increase the capital of Wellesley Bank to support future lending and operational growth; enhance profitability and earnings through reinvesting and leveraging the proceeds, primarily through traditional funding and lending activities; support future branching activities; retain and attract qualified directors, management and employees by establishing stock-based benefit plans; Table of Contents prospectus. If, as a result of the calculation, you are allocated insufficient shares to fill all of your orders, available shares will be allocated between orders on a pro rata basis. Value of Participation Interests As of June 30, 2011, the market value of the 401(k) Plan assets equaled approximately $5,115,000. The plan administrator has distributed quarterly statements to each participant reflecting the value of his or her beneficial interest in the 401(k) Plan as of June 30, 2011. The value of the 401(k) Plan assets represents past contributions made to the 401(k) Plan on your behalf, plus or minus earnings or losses on the contributions, less previous withdrawals. Method of Directing Your Investment Election Included with this prospectus supplement is a blue investment form ( Investment Election Form ). If you wish to direct the 401(k) Plan trustee to liquidate a portion of your current investments and use the funds to subscribe for shares in the Stock Offering you must complete, sign and submit this form to Eloise C. Thibault. If you do not wish to invest in the Wellesley Bancorp Stock Fund at this time, you do not need to take any action. The minimum investment in the Wellesley Bancorp Stock Fund during the Stock Offering is $250.00 and the maximum individual investment is $200,000. Time for Directing Your Investment Election If you wish to participate in the Stock Offering using your 401(k) Plan funds, you must submit your Investment Election Form to Eloise C. Thibault by 12:00 noon on [date]. If you have any questions regarding the Wellesley Bancorp Stock Fund, you can call Eloise C. Thibault at (781) 235-2550. Irrevocability of Your Investment Election Once you have submitted your Investment Election Form, you cannot change your election to subscribe for shares of common stock through the 401(k) Plan in the Stock Offering. Purchase Price of Wellesley Bancorp, Inc. Common Stock The 401(k) Plan trustee will use the funds transferred to the Wellesley Bancorp Stock Fund to purchase shares of Wellesley Bancorp common stock in the Stock Offering. The 401(k) Plan trustee will pay the same price for shares of Wellesley Bancorp common stock as all other persons who purchase shares of Wellesley Bancorp common stock in the Stock Offering. If there is not enough common stock available in the Stock Offering to fill all subscriptions, the common stock will be apportioned and the trustee may not be able to purchase all of the common stock you requested. If the Stock Offering is oversubscribed and your order is cut back, your 401(k) Plan funds that are not invested in the Wellesley Bancorp common stock as a result of the cut-back will be reinvested in accordance with the investment elections you have in place for your elective deferrals. Nature of a Participant s Interest in Wellesley Bancorp, Inc. Common Stock The 401(k) Plan trustee will hold Wellesley Bancorp common stock in the name of the 401(k) Plan. The 401(k) Plan trustee will credit shares of Wellesley Bancorp common stock acquired at your direction to your account under the 401(k) Plan. Your interest in the Wellesley Bancorp Stock Fund will be credited in units. Immediately after the close of the Stock Offering each unit will equal one share of Wellesley Bancorp common stock. Once the Wellesley Bancorp Stock Fund begins to have open market Table of Contents 4. Acknowledgment of Participant. I understand that this Investment Form shall be subject to all of the terms and conditions of the 401(k) Plan. I acknowledge that I have received a copy of the Prospectus and the Prospectus Supplement. I acknowledge further that my investment election on this form is irrevocable. Signature of Participant Date Acknowledgment of Receipt by Administrator. This Investment Form was received by the Plan Administrator and will become effective on the date noted below. By: Date THE PARTICIPATION INTERESTS REPRESENTED BY THE COMMON STOCK OFFERED HEREBY ARE NOT DEPOSIT ACCOUNTS AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY AND ARE NOT GUARANTEED BY WELLESLEY BANCORP OR WELLESLEY BANK. THE COMMON STOCK IS SUBJECT TO AN INVESTMENT RISK, INCLUDING THE POSSIBLE LOSS OF THE PRINCIPAL INVESTED. PLEASE COMPLETE AND RETURN TO ELOISE C. THIBAULT AT WELLESLEY BANK BY 12:00 P.M. ON [DATE]. Table of Contents Table of Contents increase our philanthropic endeavors to the communities we serve through the formation and funding of the Wellesley Bank Charitable Foundation; and support the future acquisition of other financial institutions or financial services companies. For further information about our reasons for the conversion and offering, see The Conversion and Stock Offering Reasons for the Conversion and Offering. Purchase Price The purchase price is $10.00 per share. You will not pay a commission to buy any shares in the offering. Number of Shares to be Sold We are offering for sale between 2,040,000 and 2,760,000 shares of Wellesley Bancorp common stock in this offering. With regulatory approval, we may increase the number of shares to be sold to 3,174,000 shares without giving you further notice or the opportunity to change or cancel your order. In considering whether to increase the offering size, the Federal Deposit Insurance Corporation and the Massachusetts Commissioner of Banks will consider the level of subscriptions, the views of our independent appraiser, our financial condition and results of operations and changes in market conditions. How We Determined the Offering Range We decided to offer between 2,040,000 and 2,760,000 shares, which is our offering range, as approved by our board of directors, and based on an independent appraisal of our pro forma market value prepared by Feldman Financial Advisors, Inc., an appraisal firm experienced in appraisals of financial institutions. Feldman Financial estimates that as of August 23, 2011, our pro forma market value was between $21.8 million and $29.5 million, with a midpoint of $25.7 million, inclusive of shares to be issued to the charitable foundation. In preparing its appraisal, Feldman Financial considered the information in this prospectus, including our consolidated financial statements. Feldman Financial also considered the following factors, among others: our historical and projected operating results and financial condition and the economic and demographic characteristics of our primary market area; a comparative evaluation of the operating and financial statistics of Wellesley Bank with those of other similarly situated, publicly traded companies; the effect of the capital raised in this offering on our net worth and earnings potential; the trading market for securities of comparable institutions and general conditions in the market for such securities; and our intention to contribute to the Wellesley Bank Charitable Foundation an amount equal to 8% of the gross offering proceeds, 87.5% of which will be funded with shares of Wellesley Bancorp s common stock and 12.5% of which will be funded with cash. Two measures that some investors use to analyze whether a stock might be a good investment are the ratio of the offering price to the issuer s book value and the ratio of the offering price per share to the issuer s earnings per share for the past 12 months. Feldman Financial considered these ratios, among other factors, in preparing its appraisal. Book value is the same as total equity and represents the difference between the issuer s assets and liabilities. Feldman Financial s appraisal also incorporates an analysis of a peer group of publicly traded companies that Feldman Financial considered to be comparable to us. Table of Contents purchases each unit will consist of a portion of cash and common stock. For liquidity purposes, the Wellesley Bancorp Stock Fund will be 3-5% in cash. Voting and Tender Rights of Wellesley Bancorp, Inc. Common Stock The 401(k) Plan trustee will exercise voting and tender rights attributable to all Wellesley Bancorp common stock held in the Wellesley Bancorp Stock Fund, as directed by participants with interests in the Wellesley Bancorp Stock Fund. With respect to each matter as to which holders of Wellesley Bancorp common stock have a right to vote, you will have voting instruction rights that reflect your proportionate interest in the Wellesley Bancorp Stock Fund. The number of shares of Wellesley Bancorp common stock held in the Wellesley Bancorp Stock Fund voted for and against each matter will be proportionate to the number of voting instruction rights exercised. If there is a tender offer for Wellesley Bancorp common stock, the 401(k) Plan allots each participant a number of tender instruction rights reflecting each participant s proportionate interest in the Wellesley Bancorp Stock Fund. The percentage of shares of Wellesley Bancorp common stock held in the Wellesley Bancorp Stock Fund that will be tendered will be the same as the percentage of the total number of tender instruction rights exercised in favor of the tender offer. The remaining shares of Wellesley Bancorp common stock held in the Wellesley Bancorp Stock Fund will not be tendered. The 401(k) Plan provides that participants will exercise their voting instruction rights and tender instruction rights on a confidential basis. Future Direction to Purchase Common Stock You will be able to invest in the Wellesley Bancorp Stock Fund after the stock offering by accessing your account via the internet and directing the trustee to invest your future contributions or your account balance in the 401(k) Plan into the Wellesley Bancorp Stock Fund. After the stock offering, to the extent that shares of common stock are available, Pentegra Trust Company will acquire Wellesley Bancorp common stock at your election in open market transactions at the prevailing market price. Special restrictions may apply to transfers directed to and from the Wellesley Bancorp Stock Fund by the participants who are subject to the provisions of Section 16(b) of the Securities Exchange Act of 1934, as amended, relating to the purchase and sale of securities by officers, directors and principal shareholders of Wellesley Bancorp. In addition, if you are an officer of Wellesley Bancorp that is restricted by the Federal Deposit Insurance Corporation from selling shares acquired in the stock offering for one year, the shares you purchased in the stock offering will not be tradable for one year. DESCRIPTION OF THE 401(k) PLAN Introduction Wellesley Bank adopted the amended and restated 401(k) Plan effective [date]. Wellesley Bank intends for the 401(k) Plan to comply, in form and in operation, with all applicable provisions of the Internal Revenue Code and the Employee Retirement Income Security Act of 1974, as amended ( ERISA ). Wellesley Bank may amend the 401(k) Plan from time to time in the future to ensure continued compliance with these laws. Wellesley Bank may also amend the 401(k) Plan from time to time in the future to add, modify, or eliminate certain features of the plan, as it sees fit. Federal law provides you with various rights and protections as a participant in the 401(k) Plan, which is governed by ERISA. However, the Pension Benefit Guaranty Corporation does not guarantee your benefits under the 401(k) Plan. Table of Contents The following table presents a summary of selected pricing ratios for the peer group companies and for us utilized by Feldman Financial Advisors in its appraisal. These ratios are based on our book value, tangible book value and core earnings as of and for the 12 months ended June 30, 2011 and the latest date for which complete financial data is publicly available for the peer group. Price to Core Earnings Multiple Price to Book Value Ratio Price to Tangible Book Value Ratio Wellesley Bancorp (pro forma): Minimum 10.6 x 56.8 % 56.8 % Midpoint 12.7 61.7 61.7 Maximum 14.9 65.8 65.8 Maximum, as adjusted 17.2 69.9 69.9 Peer group companies as of August 23, 2011: BCSB Bancorp, Inc. 43.3 x 76.9 % 77.0 % Central Bancorp, Inc. N/M 80.5 85.6 Chicopee Bancorp, Inc. N/M 90.8 90.8 CMS Bancorp, Inc. N/M 68.4 68.4 Elmira Savings Bank, FSB 9.5 77.2 113.8 Hampden Bancorp, Inc. N/M 86.5 86.5 Mayflower Bancorp, Inc. 14.4 76.9 76.9 Newport Bancorp, Inc. 22.6 87.3 87.3 OBA Financial Services, Inc. N/M 78.9 78.9 WVS Financial Corp. 15.3 65.6 65.6 Average 21.0 78.9 83.1 Median 15.3 78.1 82.2 Compared to the average pricing ratios of the peer group at the maximum of the offering range, our stock would be priced at a discount of 29.0% to the peer group on a price-to-core earnings basis, a discount of 16.6% to the peer group on a price-to-book basis and a discount of 20.8% on a price-to-tangible book basis. This means that, at the maximum of the offering range, a share of our common stock would be less expensive than the peer group on an earnings, book value and tangible book value basis. In addition to a peer group comparison of equity and earnings pricing ratios, Feldman Financial s valuation took into consideration the recent volatility of the stock markets, bank and thrift stocks in general and the appraisal peer group. The pro forma pricing ratios and uneven after-market price performance of recently converted banks and thrifts was also considered. The appraisal, as approved by our board of directors, concluded that the pro forma pricing ratio discounts represented an appropriate balance of these various considerations in establishing Wellesley Bancorp s valuation, and the number of shares to be sold. Our board of directors reviewed Feldman Financial s appraisal report, including the methodology and the assumptions used by Feldman Financial, and determined that the valuation range was reasonable and adequate. The purchase price of $10.00 per share was determined by the board of directors, taking into account, among other factors, offering the common stock in a manner that will achieve the widest distribution of the stock and desired liquidity in the common stock after the offering. The independent appraisal does not indicate market value. You should not assume or expect that the valuation described above means that our common stock will trade at or above the $10.00 purchase price after the offering. Possible Change in Offering Range Feldman Financial will update its appraisal before we complete the stock offering, subject to final approval by our board of directors. If, as a result of regulatory considerations, demand for the shares or changes in market conditions, Feldman Financial determines that our pro forma market value has increased, we may sell up to 3,174,000 shares without further notice to you. If our pro forma market value at the end of the stock offering period is either below $21.8 million or above $34.0 million, then, after consulting with the Federal Deposit Insurance Corporation and the Table of Contents Reference to Full Text of the Plan. The following portions of this prospectus supplement summarize the material provisions of the 401(k) Plan. Wellesley Bank qualifies this summary in its entirety by reference to the full text of the 401(k) Plan. You may obtain copies of the 401(k) Plan document, including any amendments to the plan and a summary plan description, by contacting Eloise C. Thibault at (781) 235-2550. You should carefully read the 401(k) Plan documents to understand your rights and obligations under the 401(k) Plan. Eligibility and Participation Wellesley Bank employees must attain age 21 in order to be eligible to participate in the 401(k) Plan. As of June 30, 2011, 32 of the 32 eligible employees of Wellesley Bank participated in the 401(k) Plan. Contributions Under the 401(k) Plan Employee Pre-Tax Contributions. You may defer a percentage of your eligible compensation into the 401(k) Plan after you satisfy the Plan s eligibility requirements. For pre-tax contributions being made to the Plan, the percentage you defer is subject to an annual limit of the lesser of 75% of eligible compensation or $16,500 (2011 IRS limit) in a calendar year. For purposes of the Plan, eligible compensation is defined as taxable compensation reportable by Wellesley Bank on your Form W-2, excluding reimbursement or other expense allowances, fringe benefits, moving expenses, deferred compensation and welfare benefits and including salary reduction contributions made to Bank-sponsored cafeteria, qualified transportation fringe, simplified employee pension, 401(k), 457(b) or 403(b) plans. In addition to pre-tax salary deferrals, you may make catch up contributions if you are currently age 50 or will be 50 before the end of the calendar year. You are always 100% vested in your elective deferrals. Wellesley Bank Matching Contributions. The 401(k) Plan currently provides that Wellesley Bank will make matching contributions on behalf of each eligible participant with respect to each eligible participant s elective deferrals. If you elect to defer funds into the 401(k) Plan, Wellesley Bank currently matches 150% of the first 7% of compensation you defer into the 401(k) Plan. Wellesley Bank makes matching contributions only to those participants who actively defer a percentage of their compensation into the 401(k) Plan. Rollover Contributions. Wellesley Bank allows employees who receive a distribution from a previous employer s tax-qualified employee benefit plan to deposit that distribution into a Rollover Contribution account under the 401(k) Plan, provided the rollover contribution satisfies IRS requirements. For additional information on Rollover Contributions see the Summary Plan Description for the 401(k) Plan. Limitations on Contributions Limitation on Employee Salary Deferrals. By law, your total deferrals under the 401(k) Plan, together with similar plans, may not exceed $16,500 for 2011. Eligible employees who are age 50 and over may also make additional catch-up contributions to the plan, up to a maximum of $5,500 for 2011. The Internal Revenue Service periodically increases these limitations. An eligible participant who exceeds these limitations must include any excess deferrals in gross income for federal income tax purposes in the year of deferral. In addition, the participant must pay federal income taxes on any excess deferrals when distributed by the 401(k) Plan to the participant, unless the plan distributes the excess deferrals and any related income no later than the first April 15th following the close of the taxable year in which the participant made the excess deferrals. Any income on excess deferrals distributed before Table of Contents Massachusetts Commissioner of Banks, we may: terminate the offering and promptly return all funds, with interest; promptly return all funds with interest, set a new offering range and give all subscribers the opportunity to place a new order; or take such other actions as may be permitted by the Federal Deposit Insurance Corporation, the Massachusetts Commissioner of Banks and the Securities and Exchange Commission. Conditions to Completing the Conversion and Offering We are conducting the conversion and offering under the terms of our plan of conversion. We cannot complete the conversion and offering unless: we sell at least the minimum number of shares offered; we receive the final regulatory approvals and nonobjections from the Massachusetts Commissioner of Banks, the Federal Deposit Insurance Corporation and the Federal Reserve Bank of Boston to complete the offering; and our depositors approve the plan of conversion. We Will Issue Shares to the Wellesley Bank Charitable Foundation To continue our long-standing commitment to our local communities, we intend to establish a charitable foundation, the Wellesley Bank Charitable Foundation, as part of the conversion. Subject to separate approval by depositors of Wellesley Bank, we will make a contribution to the charitable foundation in an amount equal to 8% of the gross offering proceeds, 87.5% of which will be funded with newly issued shares of Wellesley Bancorp common stock and 12.5% of which will be funded with cash (193,200 shares and $276,000 at the maximum of the offering range). At the maximum of the offering range, this contribution to the charitable foundation would reduce net earnings by approximately $1.3 million, after tax, in the year in which the contribution is made to the charitable foundation, which is expected to be the fourth calendar quarter of 2011. The charitable foundation will make grants and donations to support charitable purposes within the communities served, currently or in the future, by Wellesley Bank. The amount of common stock that we are offering for sale would be greater if the conversion were to be completed without the contribution to the charitable foundation. For a further discussion of the financial impact of the contribution to the charitable foundation, see Comparison of Independent Valuation and Pro Forma Financial Information With and Without the Foundation. Benefits of the Offering to Management Employee Stock Ownership Plan. We have adopted an employee stock ownership plan that will purchase 8% of the shares sold in the offering and contributed to the charitable foundation. The employee stock ownership plan s purchase will be funded by a 15-year loan from Wellesley Bancorp. As the loan is repaid and shares are released from collateral, the plan will allocate shares to the accounts of participating employees. Participants will receive allocations based on their individual compensation as a percentage of total plan compensation. Nonemployee directors are not eligible to participate in the employee stock ownership plan. We will incur additional compensation expense as a result of this plan. See Pro Forma Data for an illustration of the effects of this plan. Future Equity Incentive Plan. We intend to implement an equity incentive plan no earlier than six months after completion of the conversion. If we implement the plan within one year after the conversion, the plan must be approved by a majority of the total votes eligible to be cast by our stockholders. If we implement the plan more than one year after the conversion, it must be approved by a majority of the total votes cast. If adopted within one year following the completion of the conversion, the equity incentive plan will reserve a number of shares of common stock equal to not more than 4% of the shares issued in the conversion (including shares contributed to our charitable foundation), for restricted stock awards to key employees and directors, at no cost to the recipients, and will also reserve a number of stock options equal to not more than 10% of the shares of common stock issued in the conversion (including shares contributed to our charitable foundation) for key employees and directors. If the equity incentive plan is adopted after one year from the date of the completion of the conversion, the 4% and 10% limitations described above will no longer apply, and we may adopt equity incentive plans encompassing more than 14% of the shares of common stock that were issued in the conversion. However, if Wellesley Bancorp adopts the equity incentive plan within three years of the completion of the offering, the plan may be subject to other applicable regulatory Table of Contents such date is treated, for federal income tax purposes, as earned and received by the participant in the taxable year of the distribution. Limitation on Annual Additions and Benefits. As required by the Internal Revenue Code, the 401(k) Plan provides that the total amount of contributions and forfeitures (annual additions) credited to a participant during any year under all defined contribution plans of Wellesley Bank (including the 401(k) Plan and the proposed Wellesley Bank Employee Stock Ownership Plan) may not exceed the lesser of 100% of the participant s annual compensation or $49,000 for 2011. Limitation on Plan Contributions for Highly Compensated Employees. Special provisions of the Internal Revenue Code limit the amount of pre-tax and matching contributions that may be made to the 401(k) Plan in any year on behalf of highly compensated employees, in relation to the amount of pre-tax and matching contributions made by or on behalf of all other employees eligible to participate in the 401(k) Plan. If pre-tax and matching contributions exceed these limitations, the plan must adjust the contribution levels for highly compensated employees. In general, a highly compensated employee includes any employee who (1) was a 5% owner of the sponsoring employer at any time during the year or the preceding year, or (2) had compensation for the preceding year in excess of $110,000 and, if the sponsoring employer so elects, was in the top 20% of employees by compensation for that year. The preceding dollar amount applies for 2011 and may be adjusted periodically by the Internal Revenue Service. Top-Heavy Plan Requirements. If the 401(k) Plan is a Top-Heavy Plan for any calendar year, Wellesley Bank may be required to make certain minimum contributions to the 401(k) Plan on behalf of non-key employees. In general, the 401(k) Plan will be treated as a Top-Heavy Plan for any calendar year if, as of the last day of the preceding calendar year, the aggregate balance of the accounts of Key Employees exceeds 60% of the aggregate balance of the accounts of all employees under the plan. A Key Employee is generally any employee who, at any time during the calendar year or any of the four preceding years, is: (1) an officer of Wellesley Bank whose annual compensation exceeds $160,000; (2) a 5% owner of the employer, meaning an employee who owns more than 5% of the outstanding stock of Wellesley Bancorp, or who owns stock that possesses more than 5% of the total combined voting power of all stock of Wellesley Bancorp; or (3) a 1% owner of the employer, meaning an employee who owns more than 1% of the outstanding stock of Wellesley Bancorp, or who owns stock that possesses more than 1% of the total combined voting power of all stock of Wellesley Bancorp, and whose annual compensation exceeds $150,000. The foregoing dollar amounts are for 2011. Table of Contents requirements. We have not yet determined when we will present these plans for stockholder approval and we have not yet determined the number of shares that would be reserved for issuance under this plan. We will incur additional compensation expense as a result of this plan. See Pro Forma Data for an illustration of the effects of this plan. Potential Dilution And Increased Compensation Costs Related To Equity Benefit Plans. The following table summarizes at the maximum of the offering range the total number and value of the shares of common stock that the employee stock ownership plan expects to acquire in the offering and the total value of all restricted stock awards and stock options that are expected to be available under the equity incentive plan (assuming the equity incentive plan is implemented within one year following completion of the conversion). The equity incentive plan may award a greater number of options and restricted stock awards if the plan is adopted more than one year after completion of the conversion. At the maximum of the offering range and upon completion of the offering, we would sell 2,760,000 shares and have 2,953,200 shares outstanding inclusive of shares of common stock to be contributed to the charitable foundation Number of Shares to be Granted or Purchased At Maximum of Offering Range As a % of Common Stock Issued in Conversion Dilution Resulting from Issuance of Additional Shares (1) Total Estimated Value Employee stock ownership plan (2) 236,256 8.0 % % $ 2,362,560 Restricted stock awards (2) 118,128 4.0 3.8 1,181,280 Stock options (3) 295,320 10.0 9.1 1,160,608 Total 649,704 22.0 % 12.3 % $ 4,704,448 (1) Assumes the issuance of authorized but unissued shares to satisfy awards and option exercises. (2) Assumes the value of Wellesley Bancorp common stock is $10.00 per share for purposes of determining the total estimated value of the grants. (3) Assumes the value of a stock option is $3.93, which was determined using the Black-Scholes option-pricing formula. See Pro Forma Data. We will recognize additional annual employee compensation and benefit expenses stemming from our employee stock ownership plan and equity incentive plan if approved by stockholders. We cannot determine the actual amount of these new stock-related compensation and benefit expenses at this time because applicable accounting practices generally require that they be based on the fair value of the options or shares of common stock at the date of the grant, with respect to the equity incentive plan, and the average market value of the shares during the year in which shares are committed to be released and allocated, with respect to the employee stock ownership plan. We will recognize expenses for our employee stock ownership plan when shares are committed to be released and allocated to participants accounts as the trustee repays the loan used to acquire the shares over the expected 15 year loan term. We will recognize expenses for restricted stock awards and stock options generally over the vesting period of awards made to recipients. These benefit expenses in the first year following the offering have been estimated to be approximately $445,000, after taxes, at the maximum of the offering range, as set forth in the pro forma financial information under Pro Forma Data assuming the $10.00 per share purchase price as fair market value. Actual expenses, however, may be higher or lower, depending on the price of our common stock. Employment Agreement. Wellesley Bank and Wellesley Bancorp intend to enter into an amended and restated three-year employment agreement with Thomas J. Fontaine, President and Chief Executive Officer. This employment agreement will provide for severance benefits if the executive is terminated following a change in control of Wellesley Bancorp or Wellesley Bank. The initial base salary under the employment agreement will be $263,864. See Our Management Employment Agreements and Severance Arrangements. Supplemental Executive Retirement Plan. We intend to implement a supplemental executive retirement plan that will provide benefits to eligible employees if their retirement benefits under the employee stock ownership plan and the 401(k) plan are reduced because of federal tax law limitations. This plan will also provide benefits to eligible Table of Contents 401(k) Plan Investments Effective [date], the 401(k) Plan offers the following investment choices: Annual Rates of Return as of December 31, Fund Name 2010 2009 2008 Wells Fargo Stable Return Fund J 2.20 % 2.53 % 3.85 % PIMCO Total Return Fund Instl 8.84 13.87 4.82 T. Rowe Price Retirement Income Fund 10.11 22.06 -18.38 T. Rowe Price Retirement 2010 Fund 12.70 27.95 -26.71 T. Rowe Price Retirement 2015 Fund 13.79 31.35 -30.22 T. Rowe Price Retirement 2020 Fund 14.74 34.19 -33.48 T. Rowe Price Retirement 2025 Fund 15.37 36.29 -35.90 T. Rowe Price Retirement 2030 Fund 16.01 37.99 -37.79 T. Rowe Price Retirement 2035 Fund 16.34 39.04 -38.88 T. Rowe Price Retirement 2040 Fund 16.51 39.07 -38.85 T. Rowe Price Retirement 2045 Fund 16.44 39.1 -38.83 T. Rowe Price Retirement 2050 Fund 16.41 38.92 -38.80 T. Rowe Price Retirement 2055 Fund 16.41 38.97 -38.89 Vanguard 500 Index Fund Signal 15.05 26.61 -36.97 Vanguard Value Index Fund Signal 14.46 19.70 -35.93 Vanguard Growth Index Fund Signal 17.11 36.42 -38.21 Principal MidCap Blend Fund Instl 23.78 33.08 -33.75 Royce Pennsylvania Mutual Fund Investment 23.86 36.28 -34.78 Dodge & Cox International Stock Fund 13.69 47.46 -46.69 Loomis Sayles Global Bond Fund Instl 8.00 22.75 -8.56 Vanguard Inflation-Protected Securities Fund Investor 6.17 10.80 -2.85 Wells Fargo Stable Return Fund J. This is a stable value fund and seeks safety of principal and consistency of returns with minimal volatility. The fund invests in financial instruments issued by highly rated companies. These include guaranteed investment contracts ( GICs , security-backed contracts (synthetic GICs) and cash equivalents. The weighted average quality of the portfolio is maintained at AA or better. PIMCO Total Return Fund Instl. This is an intermediate-term bond fund that seeks total return. The fund invests primarily in bonds of corporate and governmental issuers located in the U.S. and foreign countries, including emerging markets. The fund invests in a diversified portfolio of bonds, which include all types of fixed-income securities. These include mortgage related-securities and asset-backed securities. The fund invests primarily in investment grade securities, (with an average weighted portfolio quality of A), but may invest up to 15% of its assets in below investment grade domestic and foreign securities, commonly referred to as high-yield. Table of Contents employees following a change in control before the complete allocation of shares under the employee stock ownership plan. At this time, we expect to designate only Mr. Fontaine as a participant in the supplemental executive retirement plan. The benefits under the plan are dependent in part upon the demographics of the employee stock ownership plan and the 401(k) plan as well as certain limitations set by the Internal Revenue Service which may vary from year to year. Accordingly, we cannot determine the actual benefits that may be provided under the plan for any particular year or the related compensation expense. However, we do not expect any related expenses to be material. See Our Management Pension and Nonqualified Retirement Benefits. Employee Severance Compensation Plan. We expect to adopt an employee severance compensation plan that will provide severance benefits to eligible employees if there is a change in control of Wellesley Bancorp or Wellesley Bank. Employees will become eligible for severance benefits under the plan if they complete a minimum of one year of service and are not subject to a separate employment or change in control agreement. Under the severance plan, if, within twelve months after a change in control, an employee s employment involuntarily terminates, or if an employee voluntarily terminates employment without being offered continued employment in a comparable position (as defined in the plan), the former employee would receive a severance payment equal to two week s of base compensation for each year of service up to a maximum of 52 week s of base compensation and with a minimum of four week s base compensation. Any eligible employee who is designated as a Vice President or above would receive a severance benefit equal to 52 week s base compensation, regardless of the employee s years of service. Benefits under this plan are not accrued or payable until there is a change in control of Wellesley Bancorp or Wellesley Bank and a termination of employment by a covered participant. As a result, no annual compensation expense will be incurred in connection with this plan. See Our Management Employment Agreements and Severance Arrangements. Persons Who Can Order Stock in the Subscription and Community Offerings We have granted rights to subscribe for shares of Wellesley Bancorp common stock in a subscription offering to the following persons in the following order of priority: 1 Persons with $50 or more on deposit at Wellesley Bank as of the close of business on April 30, 2010. 2. Persons with $50 or more on deposit at Wellesley Bank as of the close of business on June 30, 2011. 3. Our employee stock ownership plan. 4. Wellesley Bank s employees, officers and directors who do not have a higher priority right. If we receive subscriptions for more shares than are to be sold in this offering, we may be unable to fill or may only partially fill your order. Shares will be allocated in order of the priorities described above under a formula outlined in the plan of conversion. If we increase the number of shares to be sold above 2,760,000, the employee stock ownership plan will have the first priority right to purchase any shares exceeding that amount to the extent that its subscription has not previously been filled. Any shares remaining will be allocated in the order of priorities described above. See The Conversion and Stock Offering Subscription Offering and Subscription Rights for a description of the allocation procedures. Unlike our employee stock ownership plan, our 401(k) plan has not been granted priority subscription rights. Accordingly, a 401(k) plan participant who elects to purchase shares in the offering through self-directed purchases within the 401(k) plan will receive the same subscription priority, and be subject to the same purchase limitations, as if the participant had elected to purchase shares using funds outside the 401(k) plan. We intend to offer shares not sold in the subscription offering to the general public in a community offering. Natural persons who are residents of the Massachusetts municipalities of Wellesley, Dover, Needham, Newton, Natick and Weston will be given a preference to purchase shares in the community offering. We may, in our sole discretion, reject orders received in the community offering either in whole or in part. If your order is rejected in part, you cannot cancel the remainder of your order. Shares not sold in the subscription offering or the community offering may be sold in an underwritten public offering to be managed by Sandler O Neill + Partners, L.P. Such underwritten public offering will only occur after the completion of the subscription offering and the community offering. Table of Contents T. Rowe Price Retirement Income Fund. The fund seeks to provide the highest total return over time consistent with an emphasis on both capital growth and income. It provides a simplified option for retirement investing including professional management and broad-based diversification. The fund invests in a diversified portfolio of underlying T. Rowe Price mutual funds consisting of about 40% stocks and 60% bonds (at the time of this writing) this fund s asset allocation does not get more conservative as time progresses (unlike the other T. Rowe Price Retirement funds) but rather remains relatively static. The fund invests in a broad range of underlying mutual funds that include stocks, bonds, and short-term investments. T. Rowe Price Retirement 2010 Fund. The fund seeks to provide the highest total return over time consistent with an emphasis on both capital growth and income. It provides a simplified option for retirement investing including professional management and broad-based diversification. The fund invests in a broad range of underlying mutual funds that include stocks and bonds. It emphasizes potential capital appreciation during the early phases of retirement asset accumulation, balances the need for appreciation with the need for income as retirement approaches, and focuses more on income and principal stability during retirement. The fund invests in a diversified portfolio of underlying T. Rowe Price mutual funds, consisting of about 55% stocks and 45% bonds (at the time of this writing), with both an increasing allocation to bonds and an increasing emphasis to short-term bonds over time. The fund s allocation to stocks will remain fixed at 20% approximately 30 years after its target date. T. Rowe Price Retirement 2015 Fund. The fund seeks to provide the highest total return over time consistent with an emphasis on both capital growth and income. It provides a simplified option for retirement investing including professional management and broad-based diversification. The fund invests in a broad range of underlying mutual funds that include stocks and bonds. It emphasizes potential capital appreciation during the early phases of retirement asset accumulation, balances the need for appreciation with the need for income as retirement approaches, and focuses more on income and principal stability during retirement. The fund invests in a diversified portfolio of underlying T. Rowe Price mutual funds, consisting of about 64% stocks and 36% bonds (at the time of this writing), with both an increasing allocation to bonds and an increasing emphasis to short-term bonds over time. The fund s allocation to stocks will remain fixed at 20% approximately 30 years after its target date. T. Rowe Price Retirement 2020 Fund. The fund seeks to provide the highest total return over time consistent with an emphasis on both capital growth and income. It provides a simplified option for retirement investing including professional management and broad-based diversification. The fund invests in a broad range of underlying mutual funds that include stocks and bonds. It emphasizes potential capital appreciation during the early phases of retirement asset accumulation, balances the need for appreciation with the need for income as retirement approaches, and focuses more on income and principal stability during retirement. The fund invests in a diversified portfolio of underlying T. Rowe Price mutual funds, consisting of about 72% stocks and 28% bonds (at the time of this writing), with an increasing allocation to bonds over time. The fund s allocation to stocks will remain fixed at 20% approximately 30 years after its target date. T. Rowe Price Retirement 2025 Fund. The fund seeks to provide the highest total return over time consistent with an emphasis on both capital growth and income. It provides a simplified option for retirement investing including professional management and broad-based diversification. The fund invests in a broad range of underlying mutual funds that include stocks and bonds. It emphasizes potential capital appreciation during the early phases of retirement asset accumulation, balances the need for appreciation with the need for income as retirement approaches, and focuses more on income and principal stability during retirement. The fund invests in a diversified portfolio of underlying T. Rowe Price mutual funds, consisting of about 79% stocks and 21% bonds (at the time of this writing), with an Table of Contents Subscription Rights You are not allowed to transfer your subscription rights, and we will act to ensure that you do not do so. With the exception of individual retirement account stock purchases, the subscription rights of a qualifying account may not be transferred to an account that is in a different form of ownership. Adding or deleting a name or otherwise altering the form of beneficial ownership of a qualifying account will result in the loss of your subscription rights. You will be required to certify that you are purchasing shares solely for your own account and that you have no agreement or understanding with another person involving the transfer of the shares that you purchase. We will not accept any stock orders that we believe involve the transfer of subscription rights. Depositors who enter into agreements to allow other investors to participate in the subscription offering may be violating federal and state law and may be subject to civil enforcement actions or criminal prosecution. Deadline for Ordering Stock in the Subscription and Community Offerings The subscription offering will end at 4:00 p.m., Eastern time, on December 12, 2011. We expect that the community offering, if held, will terminate at the same time, although the offering may continue without notice to you until January 26, 2012, or longer if the Federal Deposit Insurance Corporation and Massachusetts Commissioner of Banks approve a later date. If we extend the offering beyond January 26, 2012, all subscribers will be notified and given the opportunity to confirm, change or cancel their orders. If you do not respond to this notice, we will return your funds promptly with interest at our passbook savings rate or cancel your deposit account withdrawal authorization. Purchase Limitations Our plan of conversion establishes limitations on the purchase of stock in the offering. These limitations include the following: The minimum purchase is 25 shares. No individual (or individuals on a single deposit account) may purchase more than $200,000 of common stock (which equals 20,000 shares) in all categories of the offering combined. No individual, together with any associates, and no group of persons acting in concert, may purchase more than $350,000 of common stock (which equals 35,000 shares) in all categories of the offering combined. Subject to the approval of the Federal Deposit Insurance Corporation and Massachusetts Commissioner of Banks, we may increase or decrease the purchase limitations at any time. Our employee stock ownership plan may purchase up to 8% of the shares sold in the offering and contributed to the charitable foundation without regard to theses purchase limitations. How to Purchase Common Stock If you want to place an order for shares in the offering, you must complete an original stock order form and send it to us together with full payment, or deliver it in person to the Conversion Center located at 47 Church Street, Wellesley, Massachusetts 02482. We must receive your stock order form before the end of the subscription offering or the end of the community offering, as appropriate, regardless of the postmark date. Once we receive your order, you cannot cancel or change it without our consent. To ensure that we properly identify your subscription rights, you must list all of your deposit accounts as of the applicable eligibility date on the stock order form. If you fail to do so, your subscription may be reduced or rejected if the offering is oversubscribed. To preserve your purchase priority, you must register the shares only in the name(s) of person(s) listed on your deposit account at the applicable date of eligibility. You may not add the names of others who were not eligible to purchase common stock in the offering on the applicable date of eligibility. You may pay for shares in the subscription offering or the community offering in any of the following ways: By check or money order made payable to Wellesley Bancorp; or By authorizing withdrawal from an account at Wellesley Bank. Table of Contents increasing allocation to bonds over time. The fund s allocation to stocks will remain fixed at 20% approximately 30 years after its target date. T. Rowe Price Retirement 2030 Fund. The fund seeks to provide the highest total return over time consistent with an emphasis on both capital growth and income. It provides a simplified option for retirement investing including professional management and broad-based diversification. The fund invests in a broad range of underlying mutual funds that include stocks and bonds. It emphasizes potential capital appreciation during the early phases of retirement asset accumulation, balances the need for appreciation with the need for income as retirement approaches, and focuses more on income and principal stability during retirement. The fund invests in a diversified portfolio of underlying T. Rowe Price mutual funds, consisting of about 85% stocks and 15% bonds for several years (at the time of this writing) then increasing the allocation to bonds over time. The fund s allocation to stocks will remain fixed at 20% approximately 30 years after its target date. T. Rowe Price Retirement 2035 Fund. The fund seeks to provide the highest total return over time consistent with an emphasis on both capital growth and income. It provides a simplified option for retirement investing including professional management and broad-based diversification. The fund invests in a broad range of underlying mutual funds that include stocks and bonds. It emphasizes potential capital appreciation during the early phases of retirement asset accumulation, balances the need for appreciation with the need for income as retirement approaches, and focuses more on income and principal stability during retirement. The fund invests in a diversified portfolio of underlying T. Rowe Price mutual funds, consisting of about 90% stocks and 10% bonds for several years (at the time of this writing) then increasing the allocation to bonds over time. The fund s allocation to stocks will remain fixed at 20% approximately 30 years after its target date. T. Rowe Price Retirement 2040 Fund. The fund seeks to provide the highest total return over time consistent with an emphasis on both capital growth and income. It provides a simplified option for retirement investing including professional management and broad-based diversification. The fund invests in a broad range of underlying mutual funds that include stocks and bonds. It emphasizes potential capital appreciation during the early phases of retirement asset accumulation, balances the need for appreciation with the need for income as retirement approaches, and focuses more on income and principal stability during retirement. The fund invests in a diversified portfolio of underlying T. Rowe Price mutual funds, consisting of about 90% stocks and 10% bonds for several years (at the time of this writing) then increasing the allocation to bonds over time. The fund s allocation to stocks will remain fixed at 20% approximately 30 years after its target date. T. Rowe Price Retirement 2045 Fund. The fund seeks to provide the highest total return over time consistent with an emphasis on both capital growth and income. It provides a simplified option for retirement investing including professional management and broad-based diversification. The fund invests in a broad range of underlying mutual funds that include stocks and bonds. It emphasizes potential capital appreciation during the early phases of retirement asset accumulation, balances the need for appreciation with the need for income as retirement approaches, and focuses more on income and principal stability during retirement. The fund invests in a diversified portfolio of underlying T. Rowe Price mutual funds, consisting of about 90% stocks and 10% bonds for several years (at the time of this writing) then increasing the allocation to bonds over time. The fund s allocation to stocks will remain fixed at 20% approximately 30 years after its target date. T. Rowe Price Retirement 2050 Fund. The fund seeks to provide the highest total return over time consistent with an emphasis on both capital growth and income. It provides a simplified option for retirement investing including professional management and broad-based diversification. The fund invests in a broad range of underlying mutual funds that include stocks and bonds. It emphasizes potential Table of Contents We will pay interest on your subscription funds at the rate we pay on our passbook savings accounts, which is currently 0.10% per annum, from the date we receive your funds until the offering is completed or terminated. All funds authorized for withdrawal from deposit accounts with us will earn interest at the applicable account rate until the offering is completed or terminated. If, as a result of a withdrawal from a certificate of deposit, the balance falls below the minimum balance requirement, the remaining funds will earn interest at our passbook savings rate. There will be no early withdrawal penalty for withdrawals from certificates of deposit held at Wellesley Bank and used to pay for stock. Using IRA Funds to Purchase Shares in the Offering You may be able to subscribe for shares of common stock using funds in your individual retirement account(s), or IRA. If you wish to use some or all of the funds in your Wellesley Bank IRA or other retirement account, the applicable funds must first be transferred to a self-directed retirement account maintained by an unaffiliated institutional trustee or custodian, such as a brokerage firm. An annual fee may be payable to the new trustee. If you do not have such an account, you will need to establish one and transfer your funds before placing your stock order. Our Conversion Center can give you guidance if you wish to place an order for stock using funds held in a retirement account at Wellesley Bank or elsewhere. Because processing retirement account transactions takes additional time, we recommend that you contact our Conversion Center for guidance promptly, preferably at least two weeks before the December 12, 2011 offering deadline. Whether you may use retirement funds for the purchase of shares in the offering will depend on timing constraints and, possibly, limitations imposed by the institution where the funds are held. How We Will Use the Proceeds of This Offering The following table summarizes how we will use the proceeds of this offering, based on the sale of shares at the minimum and maximum of the offering range. (In thousands) Minimum 2,040,000 Shares at $10.00 per Share Maximum 2,760,000 Shares at $10.00 per Share Offering proceeds $ 20,400 $ 27,600 Less estimated offering expenses (1,230 ) (1,230 ) Net offering proceeds 19,170 26,370 Less: Proceeds contributed to Wellesley Bank (9,585 ) (13,185 ) Proceeds used for loan to employee stock ownership plan (1,746 ) (2,363 ) Proceeds contributed to charitable foundation (204 ) (276 ) Proceeds remaining for Wellesley Bancorp $ 7,635 $ 10,546 Initially, we intend to invest the proceeds of the offering in short-term investments. In the future, Wellesley Bancorp may use the portion of the proceeds that it retains to, among other things, pay cash dividends, repurchase shares of common stock, subject to regulatory restrictions, or for general corporate purposes. Over time, Wellesley Bank intends to use the portion of the proceeds that it receives to fund new loans. We expect that much of the loan growth will occur in our residential mortgage and commercial real estate loan portfolios, but we have not allocated specific dollar amounts to any particular area of our portfolio. The amount of time that it will take to deploy the proceeds of the offering into loans will depend primarily on the level of loan demand. In addition, after the offering we expect to hire an additional residential mortgage lender to complement our existing residential mortgage lending operations and, in connection with our efforts to continue to enhance our fee income, we expect to engage at least one additional sales-focused investment or financial planning professional. We also may use the proceeds of the offering to diversify our business or acquire other companies or expand our branch network, although we have no specific plans to do so at this time other than the opening of our third branch in the first quarter of 2012. This new branch is expected to be funded by cash generated by our business. We do not Table of Contents capital appreciation during the early phases of retirement asset accumulation, balances the need for appreciation with the need for income as retirement approaches, and focuses more on income and principal stability during retirement. The fund invests in a diversified portfolio of underlying T. Rowe Price mutual funds, consisting of about 90% stocks and 10% bonds for several years (at the time of this writing) then increasing the allocation to bonds over time. The fund s allocation to stocks will remain fixed at 20% approximately 30 years after its target date. T. Rowe Price Retirement 2055 Fund. The fund seeks to provide the highest total return over time consistent with an emphasis on both capital growth and income. It provides a simplified option for retirement investing including professional management and broad-based diversification. The fund invests in a broad range of underlying mutual funds that include stocks and bonds. It emphasizes potential capital appreciation during the early phases of retirement asset accumulation, balances the need for appreciation with the need for income as retirement approaches, and focuses more on income and principal stability during retirement. The fund invests in a diversified portfolio of underlying T. Rowe Price mutual funds, consisting of about 90% stocks and 10% bonds for several years (at the time of this writing) then increasing the allocation to bonds over time. The fund s allocation to stocks will remain fixed at 20% approximately 30 years after its target date. Vanguard 500 Index Fund Signal. This is a large-cap core fund. The fund seeks investment results that correspond to the total return (i.e., the combination of capital changes and income) of common stocks publicly traded in the United States, as represented by the Standard & Poor s 500 Index (S&P 500), while keeping transaction cost and other expenses lower. Vanguard Value Index Fund Signal. This is a passively managed (indexed) large-cap value fund. The fund seeks to track the performance of the MSCI U.S. Prime Market Value Index, a broadly diversified index predominantly made up of value stocks of large U.S. companies. The fund uses a full replication approach and holds all the stocks in the index at comparable weights. Vanguard Growth Index Fund Signal. This is a passively managed (indexed) large-cap growth fund. The fund seeks to track the performance of the MSCI U.S. Prime Market Growth Index, a broadly diversified index predominantly made up of growth stocks of large U.S. companies. The fund uses a full replication approach and holds all the stocks in the index at comparable weights. Principal MidCap Blend Fund Instl. The fund seeks long-term growth of capital. The fund invests primarily in common stocks and other equity securities of medium-capitalization companies. It normally invests at least 80% of net assets in companies with market capitalizations similar to those of companies in the Russell Midcap Index. Management s security selection is based on stocks with value and/or growth characteristics, and management constructs an investment portfolio that has a blend of stocks with these characteristics. Royce Pennsylvania Mutual Fund Investment. This is a small-cap core fund. The fund s investment goal is long-term growth of capital. The fund invests the fund s assets primarily in a broadly diversified portfolio of equity securities issued by both small- and micro-cap companies that the portfolio manager believes are trading significantly below its estimate of their current worth, basing this assessment chiefly on balance sheet quality and cash flow levels. Dodge & Cox International Stock Fund. The fund seeks long-term growth of principal and income. The fund invests primarily in a diversified portfolio of equity securities issued by non-U.S. companies from at least three different countries, including emerging markets. The fund focuses on countries whose economic and political systems appear more stable and are believed to provide some Table of Contents expect to borrow funds for this expansion project. Based on current estimates, we expect the total cost of equipment and leasehold improvements required to open the new Wellesley branch location to be approximately $942,000, none of which had been incurred at June 30, 2011. Funding for this branch is not contingent on this offering. Purchases by Directors and Executive Officers We expect that our directors and executive officers, together with their associates, will subscribe for approximately 250,000 shares, which is 9.7% of the shares that would be sold in the offering and issued to the charitable foundation at the midpoint of the offering range. Our directors and executive officers will pay the same $10.00 per share price as everyone else who purchases shares in the offering. Like all of our depositors, our directors and executive officers have subscription rights based on their deposits and, if there is an oversubscription, their orders will be subject to the allocation provisions set forth in our plan of conversion. Purchases by our directors and executive officers will count towards the minimum number of shares we must sell to close the offering. Market for Wellesley Bancorp Common Stock We have applied for approval to list our common stock on the Nasdaq Capital Market under the symbol WEBK. Sandler O Neill + Partners, L.P. currently intends to become a market maker in the common stock, but it is under no obligation to do so. Wellesley Bancorp Dividend Policy Following the offering, our board of directors will consider adopting a policy of paying cash dividends. We cannot guarantee that we will pay dividends or that, if paid, we will not reduce or eliminate dividends in the future. Our ability to pay dividends will depend on a number of factors, including capital requirements, regulatory limitations and our operating results and financial condition. In addition, in connection with its nonobjection to the conversion, the Federal Deposit Insurance Corporation has required Wellesley Bancorp to commit that for the 12-month period immediately following the closing of the conversion it will not declare any distributions of capital to shareholders, including cash dividends or a return of capital, except in accordance with applicable regulations of the Federal Deposit Insurance Corporation and the Board of Governors of the Federal Reserve System and as provided for in the business plan submitted with the conversion application. Our business plan does not contemplate the declaration or payment of dividends during 2012. Tax Consequences As a general matter, the conversion will not be a taxable transaction for purposes of federal income taxes to persons who receive or exercise subscription rights. We have received an opinion from our special counsel, Kilpatrick Townsend & Stockton LLP, to this effect. See The Conversion and Offering Material Income Tax Consequences. Delivery of Prospectus To ensure that each person in the subscription and community offerings receives a prospectus at least 48 hours before the offering deadline, we may not mail prospectuses any later than five days before such date or hand-deliver prospectuses later than two days before that date. Stock order forms may only be delivered if accompanied or preceded by a prospectus. We are not obligated to deliver a prospectus or order form by means other than U.S. mail. We will make reasonable attempts to provide a prospectus and offering materials to holders of subscription rights. The subscription offering and all subscription rights will expire at 4:00 p.m., Eastern time, on December 12, 2011 whether or not we have been able to locate each person entitled to subscription rights. Delivery of Stock Certificates in the Subscription and Community Offerings Certificates representing shares of common stock issued in the subscription and community offerings will be mailed to purchasers at the address provided by them on the order form as soon as practicable following completion of Table of Contents protection to foreign shareholders. The fund invests primarily in medium-to-large well established companies based on standards of the applicable market. Loomis Sayles Global Bond Fund Instl. This global bond fund seeks high total investment return. The fund invests in a broad universe of investment grade fixed-income securities worldwide. The fund may invest up to 20% of assets in lower-rated fixed-income securities. Vanguard Inflation-Protected Securities Fund Investor. This is an inflation protected securities bond fund. The fund seeks to provide inflation protection and income to investors, consistent with investment in inflation-indexed securities. The fund invests at least 80% of its assets in inflation-indexed bonds issued by the U.S. government, its agencies and instrumentalities, and corporations. Wellesley Bancorp Stock Fund. In connection with the Stock Offering, Wellesley Bank has added the Wellesley Bancorp Stock Fund as an additional choice to the investment alternatives described above. The Wellesley Bancorp Stock Fund invests primarily in the common stock of Wellesley Bancorp. Participants in the 401(k) Plan may direct the 401(k) Plan trustee to invest a portion of their 401(k) Plan account balances in the Wellesley Bancorp Stock Fund during the Stock Offering. The Wellesley Bancorp Stock Fund consists of investments in the common stock of Wellesley Bancorp made on the closing date of the Stock Offering. Your investment in the Wellesley Bancorp Stock Fund will be recorded using the unitized accounting method. If cash dividends are paid on Wellesley Bancorp common stock, the trustee will, to the extent practicable, use the dividends held in the Wellesley Bancorp Stock Fund to purchase shares of the common stock. Pending investment in the common stock, assets held in the Wellesley Bancorp Stock Fund will be placed in the short-term investment component of the Wellesley Bancorp Stock Fund. The Wellesley Bancorp Stock Fund will maintain a 3-5% cash ratio target following the Stock Offering. As of the date of this prospectus supplement, no shares of Wellesley Bancorp common stock have been issued or are outstanding, and there is no established market for Wellesley Bancorp common stock. Accordingly, there is no record of the historical performance of the Wellesley Bancorp Stock Fund. Performance of the Wellesley Bancorp Stock Fund depends on a number of factors, including the financial condition and profitability of Wellesley Bank and general stock market conditions. See Risk Factors in the attached prospectus. Once you have submitted your Investment Election Form, you may not change your investment directions in the Stock Offering. Benefits Under the 401(k) Plan Vesting. All participants are 100% vested in their contributions and any earnings thereon. This means you have a non-forfeitable right to these funds and any earnings on the funds at all times. Participants fully vest in matching contributions after six years of service. Withdrawals and Distributions from the 401(k) Plan Withdrawals Before Termination of Employment. While in active service, participants may take loans from the 401(k) Plan (subject to the restrictions set forth in the 401(k) Plan and the Wellesley Bank loan policy). A participant may also take hardship withdrawals, provided the participant has a hardship event as defined by the Internal Revenue Service regulations and subject to approval by the Plan Administrator. If a participant reaches age 59 1/2, the Participant may elect to withdraw all or a portion of his or her 401(k) Plan account balance while still employed by Wellesley Bank. Table of Contents the conversion and offering. Until certificates for common stock are available and delivered to purchasers, purchasers may not be able to sell their shares, even though trading of the common stock will have commenced. Conversion Center If you have any questions regarding the offering, please call the Conversion Center at (781) 489-7648 to speak to a registered representative of Sandler O Neill + Partners, L.P. The Conversion Center is open Monday through Friday, 10:00 a.m. to 4:00 p.m., Eastern time, except for bank holidays. Table of Contents Distribution Upon Retirement, Death or Disability. If a participant s accounts are $1,000 or less upon termination of employment, payment will be in the form of a lump sum as of a valuation date as soon thereafter as administratively possible. If a participant s accounts exceed $1,000 upon termination of employment, and the participant does not elect to have his/her distribution paid, payment will be in the form of a Direct Rollover to an individual retirement plan designated by the Plan Administrator. Distribution Upon Termination for Any Other Reason. If a participant s accounts are $1,000 or less upon termination of employment, payment will be in the form of a lump sum as of a valuation date as soon thereafter as administratively possible. If a participant s accounts exceed $1,000 upon termination of employment, and the participant does not elect to have his/her distribution paid, payment will be in the form of a Direct Rollover to an individual retirement plan designated by the Plan Administrator. Nonalienation of Benefits. Except with respect to federal income tax withholding, and as provided for under a qualified domestic relations order, benefits payable under the 401(k) Plan will not be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, charge, garnishment, execution, or levy of any kind, either voluntary or involuntary, and any attempt to anticipate, alienate, sell, transfer, assign, pledge, encumber, charge or otherwise dispose of any rights to benefits payable under the 401(k) Plan will be void. Applicable federal tax law requires the 401(k) Plan to impose substantial restrictions on your right to withdraw amounts held under the 401(k) Plan before your termination of employment with Wellesley Bank. Federal law may also impose an excise tax on withdrawals from the 401(k) Plan before you attain 59 1/2 years of age, regardless of whether the withdrawal occurs during your employment with Wellesley Bank or after termination of employment. ADMINISTRATION OF THE 401(k) PLAN Trustees The board of directors of Wellesley Bank has appointed Pentegra Company to serve as trustee for the 401(k) Plan. The Plan trustee receives, holds and invests the contributions to the 401(k) Plan in trust and distributes them to participants and beneficiaries in accordance with the terms of the 401(k) Plan and the directions of the Plan Administrator. The trustee is responsible for the investment of the trust assets, as directed by the Plan Administrator and the participants. Reports to 401(k) Plan Participants The Plan Administrator furnishes participants quarterly statements that show the balance in their accounts as of the statement date, contributions made to their accounts during that period and any additional adjustments required to reflect earnings or losses. Plan Administrator Wellesley Bank acts as Plan Administrator for the 401(k) Plan. The Plan Administrator handles the following administrative functions: interpreting the provisions of the plan, prescribing procedures for filing applications for benefits, preparing and distributing information explaining the plan, maintaining plan records, books of account and all other data necessary for the proper administration of the plan, preparing and filing all returns and reports required by the U.S. Department of Labor and the IRS and making all required disclosures to participants, beneficiaries and others under ERISA. Table of Contents
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@@ -0,0 +1,1381 @@
+Prospectus Summary 4
+
+Risk Factors 7
+
+If we do not obtain additional financing, our business plan will fail. 7
+
+If we fail to make required payments or expenditures, we could lose title to the mining claim. 8
+
+Because we have only recently commenced business operations, we face a high risk of business failure. 8
+
+Because we have only recently commenced business operations, we expect to incur operating losses for the foreseeable future causing us to run out of funds. 8
+
+If we do not find a joint venture partner for the continued development of our mining claim, we may not be able to advance exploration work. 8
+
+Because our management has no experience in the mineral exploration business, we may make errors and this could cause our business to fail. 9
+
+Because our sole director and officer owns the majority of our company's common stock, he has the ability to override the interests of the other stockholders. 9
+
+Because of the speculative nature of mineral exploration, there is substantial risk that no commercially viable mineral deposits will be found 9
+
+Because of the inherent dangers involved in mineral exploration, there is a risk that we may incur liability or damages as we conduct our business. 9
+
+Because access to our mining claim is often restricted by inclement weather, we will be delayed in our exploration and any future mining efforts. 9
+
+As we undertake exploration of our mining claim, we will be subject to compliance of government regulation, this may increase the anticipated time and cost of our exploration program. 10
+
+Because market factors in the mining business are out of our control, we may not be able to market any minerals that may be found. 10
+
+Because we hold a significant portion of our cash reserves in United States dollars, we may experience weakened purchasing power in Canadian dollar terms and not be able to afford to conduct our planned exploration program. 11
+
+Because our auditors have expressed substantial doubt about our ability to continue as a going concern, we may find it difficult to obtain additional financing. 10 
+
+Because there is no liquidity and no established public market for our common stock, it may prove impossible to sell your shares. 11
+
+If the selling shareholders sell a large number of shares all at once or in blocks, the value of our shares would most likely decline. 11
+
+ Our common stock is subject to the "penny stock" rules of the SEC and the trading market in our securities is limited, which makes transactions in our stock cumbersome and may reduce the value of an investment in our stock. 11
+
+Use of Proceeds 12
+
+Determination of Offering Price 12
+
+Dilution 12
+
+Selling Shareholders 12
+
+Plan of Distribution 15
+
+Legal Proceedings 18
+
+Directors, Executive Officers, Promoters and Control Persons 19
+
+Security Ownership of Certain Beneficial Owners and Management 20
+
+Description of Securities 21
+
+Interest of Named Experts and Counsel 22
+
+Disclosure of Commission Position of Indemnification for Securities Act Liabilities 23
+
+Organization within Last Five Years 23
+
+Description of Business 23
+
+Management's Discussion and Analysis 29
+
+Description of Property 34
+
+Certain Relationships and Related Transactions 34
+
+Market for Common Equity and Related Stockholder Matters 35
+
+Executive Compensation 37
+
+Financial Statements F-2 F-14
+
+Changes In and Disagreements with Accountants on Accounting and Financial Disclosure 40
+
+Prospectus Summary
+
+The following summary is a shortened version of more detailed information, exhibits and financial statements appearing elsewhere in this prospectus. Prospective investors are urged to read this prospectus in its entirety.
+
+We were incorporated on February 16, 2011 and are a startup exploration stage company without mining operations and we are in the business of mineral exploration. We have no revenues, have achieved losses since inception, have been issued a going concern opinion by our auditors and rely upon the sale of our securities to fund operations. We have not implemented our business plan to date. In order complete Phase 1, with an estimated cost of $6,400 and Phase II, with an estimated cost of $30,090 of our anticipated exploration program we will need to raise additional funds, with Phase 1 being combined with Phase II and is expected to commence between March 1, 2012 and June 30, 2012. To date we have not commenced our exploration program. Our first years exploration obligation is $20,000 on the Weepah Hills Prospect, with an additional amount of $15,000 due on or before June 30, 2012. We are having to raise additional funds of approximately $200,000 commencing immediately, to allow us sufficient time to raise the additional capital and to meet our operations, exploration and contractual obligations through June 30, 2014. There is no assurance that a commercially viable gold and or silver mineral deposit exists on our mining claims. Further exploration will be required before a final evaluation as to the economic and legal feasibility of our mining claims can be determined. Even if we complete our current exploration program and it is successful in identifying a gold and or silver deposit, we will have to spend substantial funds on further drilling and engineering studies before we will know if we have a commercially viable mineral deposit or reserve.
+ On May 27, 2011, we entered into a purchase agreement to acquire the Weepah Hills Prospect comprising of one claim block of 14 claims or 280 acres respectively, and are located approximately 6 miles (9.6 km) northeast of Silver Peak and 21 miles (33.6 km) west-northwest of Goldfield, Nevada. Access is via 7 miles (11 km) of paved and gravel roads from the town of Silver Peak. The Weepah Hills Prospect is approximately 5 miles (8 km) south of the historic Weepah mine and 8.5 miles (14 km) northeast of the Mineral Ridge mine from Minquest, Inc. for the initial sum of $13,360 comprised of a $10,000 down payment and 3,360 in holding and renewal costs and subsequent additional payments and exploration expenditures representing an aggregate total of $705,000 in payments and $2,920,000 in exploration expenditures over a period of ten years as outlined in our purchase agreement ( See Exhibit 10.1) to purchase a 100% interest in the property. There is a 2% royalty interest attached to the claims in favor of Minquest, Inc. and the claims are registered in the name of Minquest, Inc. with the State of Nevada. There is no electrical power that can be utilized on the claim other than electrical power that can be provided by gas or diesel generators that we would bring on site.
+Mr. Michael Gismondi and Andrea Grande, our directors and officers have not visited the property yet, and have had no previous experience in mineral exploration or operating a mining company. Our directors own 56.76% of our outstanding common stock. Since our directors own a majority of our outstanding shares and they are the sole directors and officers of our company they have the ability to elect directors and control the future course of our company. Investors may find that the corporate decisions influenced by our directors are inconsistent with the interests of other stockholders.
+
+4
+
+Our objective is to conduct exploration activities on our mining claims to assess whether the claim possess any commercially viable mineral deposits.
+
+Until we can validate otherwise, the claims are without known reserves and we are planning a four phase program to explore our claims. 
+
+The claims are not accessible all year round, there are periods where our claims may be un-accessible each year due to snow in the area. This means that our exploration activities may be limited to a period of about eight to nine months per year. We plan commence exploration on our claims in September or October 2011 and our goal is to complete the first phase of exploration before November 30, 2011, and is contingent upon availability of an exploration crew.
+
+The following table summarizes the four phases of our anticipated exploration program.
+
+Phase Number
+
+Planned Exploration Activities
+
+Time table
+
+Phase 1
+
+Preliminary Surface Sampling, Geological and Geochemical Screening. 
+
+Estimated Cost: $6,400
+
+Between March 1, 2012 and June 30, 2012
+
+Phase II
+
+Detailed Evaluation, Geological Mapping, Site Prep, geophysics including VLF-EM and IP Surveys 
+
+Estimated Cost: $30,090
+
+Between March 1, 2012 and June 30, 2012
+
+Phase III
+
+Permitting and Target Sampling Trenching: additional Geophysics as Warranted
+
+Estimated Cost: $67,144
+
+Between July 1, 2012 and October 31, 2012
+
+Phase iV
+
+Drilling and follow up evaluation
+
+Estimated Cost: $336,930
+
+Between May 1, 2013 and October 31 2013
+
+ If our exploration activities indicate that there are no commercially viable mineral deposits on our mining claims we will abandon the claims and stake or acquire new claims to explore. We will continue to stake and explore claims as long as we can afford to do so.
+
+To date we have raised $56,000 via two offerings. The following table summarizes the date of offering, the price per share paid, the number of shares sold and the amount raised for the offering.
+
+Closing Date of Offering
+
+Price Per Share Paid
+
+Number of Shares Sold
+
+Amount Raised
+
+March 31, 2011
+
+$0.001
+
+6,500,000
+
+$6,500
+
+March 31, 2011
+
+$0.01
+
+4,950,000
+
+$49,500
+
+5
+
+We have no revenues, have achieved losses since inception, have no operations, have been issued a going concern opinion by our auditors and rely upon the sale of our securities to fund operations.
+
+Name, Address, and Telephone Number of Registrant
+
+Centor, Inc. 
+
+4667A Dundas Street West
+
+Etobicoke Ontario, Canada
+
+M9A 1A4
+
+416-418-1582
+
+The Offering
+
+Securities Offered
+
+Being up to 4,950,000 shares of common stock. The shares of common stock are being offered by selling shareholders and not our company.
+
+Offering Price
+
+The selling shareholders may sell their shares at $0.02 per share until our shares are quoted on the OTC Bulletin Board, and thereafter at prevailing market prices or privately negotiated prices. We determined this offering price arbitrarily, and the selling shareholders will be able to sell their shares once the offering is effective and would theoretically have a marketplace to sell their shares.
+
+Terms of the Offering
+
+The selling shareholders will determine when and how they sell the common stock offered in this prospectus. We will cover the expenses associated with the offering which we estimate to be $23,111.50 . Refer to Plan of Distribution on Page 15.
+
+Termination of the Offering
+
+The offering will conclude when all of the 4,950,000 shares of common stock have been sold or the shares no longer need to be registered to be sold.
+
+Securities Issued
+
+And to be Issued
+
+11,450,000 shares of our common stock are issued and outstanding as of. December 5, 2011. All of the common stock to be sold under this prospectus will be sold by existing shareholders.
+
+Use of Proceeds
+
+We will not receive any proceeds from the sale of the common stock by the selling shareholders. The funds that we raised through the sale of our common stock were used to cover administrative and professional fees such as accounting, legal, geologist, technical writing, printing and filing costs.
+
+The absence of a public market for our common stock makes our shares highly illiquid. It will be difficult to sell the common stock of the company.
+
+Summary Financial Information
+
+The tables and information below are derived from our audited financial statements for year ended March 31, 2011 and interim financial statements for the period ended September 30, 2011. We have working capital of $5,864as at September 30, 2011 
+
+6
+
+Financial Summary
+
+September 30, 2011
+
+March 31, 2011
+
+Cash
+
+$ 5,864
+
+$ 55,850
+
+Total Assets
+
+ $ 5,864
+
+$ 55,850
+
+Total Liabilities
+
+ -
+
+ -
+
+Total Liabilities and Stockholder's Equity
+
+$ 5,864
+
+$ 55,850
+
+Statement of Operations
+
+For the six monthended 
+
+ September 30, 2011
+
+From inception February 16, 2011 to September 30, 2011
+
+Revenue
+
+ 
+
+ 
+
+Net Loss For the Period
+
+(34,515)
+
+(50,136)
+
+Net Loss per Share
+
+(0.00)
+
+ 
+
+The book value of our company's outstanding common stock is $0.00 per share as at September 30, 2011
+
+Risk Factors
+
+An investment in our common stock involves a number of very significant risks. You should carefully consider the following known material risks and uncertainties in addition to other information in this prospectus in evaluating our company and its business before purchasing shares of our company's common stock. Our business, operating results and financial condition could be seriously harmed due to any of the following known material risks. Additional risks not presently known to us may also impair our business operations. You could lose all or part of your investment due to any of these risks.
+
+If we do not obtain additional financing, our business plan will fail.
+
+Our current operating funds are estimated to be sufficient to complete the first and a portion of our second phase of exploration on our mining claims. However, we will need to obtain additional financing in order to complete our business plan. Our business plan calls for significant expenses in connection with the exploration of our mining claims. To date we have not made arrangements to secure any additional financing.
+
+ If we fail to make required payments or expenditures, we could lose title to the mining claims.
+
+In order to retain title to the mining claims, we are required to renew the Weepah Hills claims on an annual basis totaling $151 per claim. On August 12, 2011, we advanced the sum of 2,111 to pay for the annual claim renewal which was due on August 31, 2011. If we fail to pay the required renewal fee, the mining claims will expire. Additionally, we are required to make additional payments and exploration expenditures on annual basis in order to remain in compliance with our purchase agreement. These payments and expenditure represent and aggregate total of $2,920,000 in exploration expenditures and $705,000 in payments to Minquest, Inc. over the ten year term of the purchase agreement. See Exhibit 10.1.
+
+7
+
+Because we have only recently commenced business operations, we face a high risk of business failure.
+
+We have not begun the initial stages of exploration of our mining claims, and thus have no way to evaluate the likelihood whether we will be able to operate our business successfully. We were incorporated on February 16, 2011 and to date have been involved primarily in organizational activities, acquiring the mining claims and obtaining financing. 
+
+We have not earned any revenues to date and we have not achieved profitability as of September 30, 2011. Potential investors should be aware of the difficulties normally encountered by new mineral exploration companies and the high rate of failure of such enterprises. The likelihood of success must be considered in the light of problems, expenses, difficulties, complications and delays encountered in connection with the exploration of the mining claims that we plan to undertake. These potential problems include, but are not limited to, unanticipated problems relating to exploration and additional costs and expenses that may exceed current estimates. We have no history upon which to base any assumption as to the likelihood that our business will prove successful, and we can provide no assurance to investors that we will generate any operating revenues or ever achieve profitable operations. If we are unsuccessful in addressing these risks our business will likely fail and you will lose your entire investment in this offering.
+Because we have only recently commenced business operations, we expect to incur operating losses for the foreseeable future causing us to run out of funds.
+
+We have not earned revenue and we have never been profitable. Prior to completing exploration on our mining claims, we may incur increased operating expenses without realizing any revenues from our claims, this could cause us to run out of funds and make our business fail and you will lose your entire investment in this offering.
+
+If we do not find a joint venture partner for the continued development of our mining claims, we may not be able to advance exploration work.
+
+If the results of our Phase Two, Phase III and Phase IV exploration programs are successful, we may try to enter a joint venture agreement with a partner for the further exploration and possible production on our mining claims. We would face competition from other junior mineral resource exploration companies who have properties that they deem to be attractive in terms of potential return and investment cost. In addition, if we entered into a joint venture agreement, we would likely assign a percentage of our interest in the mining claims to the joint venture partner. If we are unable to enter into a joint venture agreement with a partner, we may fail and you may lose your entire investment in this offering.
+
+Because our management has no experience in the mineral exploration business, we may make errors and this could cause our business to fail.
+
+Our Directors and Officers have had no previous experience operating an exploration or mining company and because of this lack of experience they may be prone to errors. Our management lacks the technical training and experience with exploring for, starting, or operating a mine. 
+
+8
+
+With no direct training or experience in these areas our management may not be fully aware of the many specific requirements related to working in this industry. Our management's decisions and choices may not take into account standard engineering or managerial approaches mineral exploration companies commonly use. Consequently, our operations, earnings, and ultimate financial success could suffer irreparable harm due to our management's lack of experience in this industry.
+
+Because our directors and officers own the majority of our company's common stock, they have the ability to override the interests of the other stockholders.
+
+Our Directors own 56.76% of our outstanding common stock and serves as our sole directors. Investors may find the corporate decisions influenced by our Directors are inconsistent with the interests of other stockholders.
+
+Because of the speculative nature of mineral exploration, there is substantial risk that no commercially viable mineral deposits will be found.
+
+Exploration for commercially viable mineral deposits is a speculative venture involving substantial risk. We cannot provide investors with assurance that our mining claims contain commercially viable mineral deposits. The exploration program that we will conduct on our claims may not result in the discovery of commercial viable mineral deposits. Problems such as unusual and unexpected rock formations and other conditions are involved in mineral exploration and often result in unsuccessful exploration efforts. In such a case, we may be unable to complete our business plan and you could lose your entire investment in this offering.
+
+Because of the inherent dangers involved in mineral exploration, there is a risk that we may incur liability or damages as we conduct our business.
+
+The search for minerals involves numerous hazards. As a result, we may become subject to liability for such hazards, including pollution, cave-ins and other hazards against which we cannot insure or against which we may elect not to insure. We currently have no such insurance nor do we expect to get such insurance for the foreseeable future. If a hazard were to occur, the costs of rectifying the hazard may exceed our asset value and cause us to liquidate all of our assets resulting in the loss of your entire investment in this offering.
+
+Because access to our mining claims may be restricted by inclement weather, we may be delayed in our exploration and any future mining efforts.
+
+Access to our mining claims may be restricted each year due to snow in the area. As a result, any attempts to visit, test, or explore the property maybe largely limited to about nine months per year when weather permits such activities. These limitations can result in significant delays in exploration efforts, as well as mining and production in the event that commercial amounts of minerals are found. 
+
+Such delays can result in our inability to meet deadlines for exploration expenditures as defined by the State of Nevada. This could cause our business venture to fail and the loss of your entire investment in this offering unless we can meet deadlines.
+
+9
+
+As we undertake exploration of our mining claims, we will be subject to compliance of government regulation, this may increase the anticipated time and cost of our exploration program.
+
+There are several governmental regulations that materially restrict the exploration of minerals. We will be subject to the mining laws and regulations as contained in the Mineral Act of the State of Nevada as we carry out our exploration program. We may be required to obtain work permits, post bonds and perform remediation work for any physical disturbance to the land in order to comply with these regulations. While our planned exploration program provides a budget for regulatory compliance, there is a risk that new regulations could increase our time and costs of doing business and prevent us from carrying out our exploration program.
+
+Because market factors in the mining business are out of our control, we may not be able to market any minerals that may be found.
+
+The mining industry, in general, is intensely competitive and we can provide no assurance to investors even if minerals are discovered that a ready market will exist from the sale of any ore found. Numerous factors beyond our control may affect the marketability of metals. These factors include market fluctuations, the proximity and capacity of natural resource markets and processing equipment, government regulations, including regulations relating to prices, taxes, royalties, land tenure, land use, importing and exporting of minerals and environmental protection. The exact effect of these factors cannot be accurately predicted, but the combination of these factors may result in our not receiving an adequate return on invested capital and you may lose your entire investment in this offering.
+
+Because our auditors have expressed substantial doubt about our ability to continue as a going concern, we may find it difficult to obtain additional financing.
+
+The accompanying financial statements have been prepared assuming that we will continue as a going concern. As discussed in Note 1 to the financial statements, we were recently incorporated on, February 16, 2011 and we do not have a history of earnings, and as a result, our auditors have expressed substantial doubt about our ability to continue as a going concern. Continued operations are dependent on our ability to complete equity or debt financings or generate profitable operations. Such financings may not be available or may not be available on reasonable terms. Our financial statements do not include any adjustments that may result from the outcome of this uncertainty.
+
+Because there is no liquidity and no established public market for our common stock, it may prove impossible to sell your shares.
+
+There is presently no public market in our shares. While we intend to contact an authorized OTC Bulletin Board market maker for sponsorship of our securities, we cannot guarantee that such sponsorship will be approved and our stock listed and quoted for sale. Even if our shares are quoted for sale, buyers may be insufficient in numbers to allow for a robust market, it may prove impossible to sell your shares.
+
+10
+
+If the selling shareholders sell a large number of shares all at once or in blocks, the value of our shares would most likely decline.
+
+The selling shareholders are offering 4,950,000 shares of our common stock through this prospectus. They may sell these shares at a fixed price of $0.02 until such time as they are quoted on the OTC Bulletin Board or other quotation system or stock exchange. Our common stock is not presently traded on any market or securities exchange, but should a market develop, shares sold at a price below the current market price at which the common stock is trading will cause that market price to decline. Moreover, the offer or sale of large numbers of shares at any price may cause the market price to fall. The outstanding shares of common stock covered by this prospectus represent approximately 43.24% of the common shares currently outstanding.
+
+Our common stock is subject to the "penny stock" rules of the SEC and the trading market in our securities is limited, which makes transactions in our stock cumbersome and may reduce the value of an investment in our stock.
+
+The Securities and Exchange Commission has adopted Rule 15g-9 which establishes the definition of a "penny stock," for the purposes relevant to us, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require:
+
+ 
+
+that a broker or dealer approve a person's account for transactions in penny stocks; and
+
+ 
+
+the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased.
+
+ 
+
+In order to approve a person's account for transactions in penny stocks, the broker or dealer must: 
+
+ 
+
+obtain financial information and investment experience objectives of the person; and
+
+ 
+
+make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.
+
+ 
+
+The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prepared by the Securities and Exchange Commission relating to the penny stock market, which, in highlight form:
+
+ 
+
+sets forth the basis on which the broker or dealer made the suitability determination; and
+
+ 
+
+that the broker or dealer received a signed, written agreement from the investor prior to the transaction.
+
+Generally, brokers may be less willing to execute transactions in securities subject to the "penny stock" rules. This may make it more difficult for investors to dispose of our common stock and cause a decline in the market value of our stock. Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.
+
+11
+
+Use of Proceeds
+
+We will not receive any proceeds from the sale of the common stock offered through this prospectus by the selling shareholders.
+
+Determination of Offering Price
+
+We determined the initial private placement offering price of $0.01, based on our being a startup exploration company with no market for our securities and what we found we could attract investors to invest in our high risk mineral exploration company. The selling shareholders may sell their shares at $0.02 per share until our shares are quoted on the OTC Bulletin Board, and thereafter at prevailing market prices or privately negotiated prices. We determined this offering price arbitrarily, and the selling shareholders will be able to sell their shares once the offering is effective and would theoretically have a marketplace to sell their shares.
+
+Dilution
+
+The common stock to be sold by the selling shareholders is common stock that is currently issued and outstanding. Accordingly, there will be no dilution to our existing shareholders.
+
+Selling Shareholders
+
+The selling shareholders named in this prospectus are offering all of the 4,950,000 shares of the common stock offered through this prospectus. These shares were acquired from us in one private placement of our common stock. This offering was exempt from registration under Regulation S of the Securities Act of 1933. The initial private placement offering was conducted at a price of $0.01 per share, of which 4,950,000 shares of common stock were sold and the offering was closed on March 31, 2011. The shares were sold solely by our Directors to their family, close friends and close business associates under exemptions provided in Canada and Regulation S. There was no private placement agent or others who were involved in placing the shares with the selling shareholders.
+
+The following table provides as of December 5, 2011 information regarding the beneficial ownership of our common stock held by each of the selling shareholders, including the:
+
+1.
+
+Number of shares owned by each before the offering;
+
+2.
+
+Total number of shares that are to be offered for each;
+
+3.
+
+Total number of shares that will be owned by each upon completion of the offering; and
+
+4.
+
+Percentage owned by each upon completion of the offering.
+
+12
+
+Name of Selling Shareholder
+
+Shares Owned Before the Offering
+
+Total Number of Shares to be Offered for the Security Holder's Account
+
+Total Shares Owned After the Offering is Complete
+
+Percentage of Shares Owned After the Offering is Complete
+
+Altion Andoni
+
+200,000
+
+200,000
+
+Nil
+
+Nil
+
+Allison Bogoslowsky
+
+100,000
+
+100,000
+
+Nil
+
+Nil
+
+Nina Barsegiants
+
+150,000
+
+150,000
+
+Nil
+
+Nil
+
+Luccio Capalbo
+
+200,000
+
+200,000
+
+Nil
+
+Nil
+
+Antonio Chiuccariello
+
+200,000
+
+200,000
+
+Nil
+
+Nil
+
+Joseph Clarke
+
+100,000
+
+100,000
+
+Nil
+
+Nil
+
+Giovanna Cozza
+
+100,000
+
+100,000
+
+Nil
+
+Nil
+
+Marisa Cozza-Gargiulo
+
+100,000
+
+100,000
+
+Nil
+
+Nil
+
+Dallas Dyer
+
+100,000
+
+100,000
+
+Nil
+
+Nil
+
+Sarah Giannini
+
+100,000
+
+100,000
+
+Nil
+
+Nil
+
+David Graham
+
+100,000
+
+100,000
+
+Nil
+
+Nil
+
+Maxim Gutsan
+
+150,000
+
+150,000
+
+Nil
+
+Nil
+
+Stella Hamel-Polson
+
+150,000
+
+150,000
+
+Nil
+
+Nil
+
+Adam Hoffman
+
+100,000
+
+100,000
+
+Nil
+
+Nil
+
+Kevin Isherwood
+
+100,000
+
+100,000
+
+Nil
+
+Nil
+
+Jason Kapushynski 
+
+100,000
+
+100,000
+
+Nil
+
+Nil
+
+Eric Kratinshten
+
+150,000
+
+150,000
+
+Nil
+
+Nil
+
+Jean Kyte
+
+100,000
+
+100,000
+
+Nil
+
+Nil
+
+Ashley Lee
+
+100,000
+
+100,000
+
+Nil
+
+Nil
+
+Jason Lolli
+
+100,000
+
+100,000
+
+Nil
+
+Nil
+
+John Lovett
+
+200,000
+
+200,000
+
+Nil
+
+Nil
+
+Kassaundra Martin
+
+100,000
+
+100,000
+
+Nil
+
+Nil
+
+Anthony Murira
+
+200,000
+
+200,000
+
+Nil
+
+Nil
+
+Anna Naryzhny
+
+200,000
+
+200,000
+
+Nil
+
+Nil
+
+Karina Osipian
+
+200,000
+
+200,000
+
+Nil
+
+Nil
+
+Raymond Poirier
+
+100,000
+
+100,000
+
+Nil
+
+Nil
+
+Shannon Ruller
+
+100,000
+
+100,000
+
+Nil
+
+Nil
+
+13
+
+Kamilla Sadykhova
+
+200,000
+
+ 200,000
+
+Nil
+
+Nil
+
+Juliana Slizki
+
+ 150,000
+
+ 150,000
+
+Nil
+
+Nil
+
+Valerie Skinner
+
+200,000
+
+ 200,000
+
+Nil
+
+ Nil
+
+Sergey Smalgo
+
+200,000
+
+200,000
+
+Nil
+
+Nil
+
+Dale Sooknanan
+
+100,000
+
+100,000
+
+Nil
+
+Nil
+
+Arthur Sunday
+
+200,000
+
+200,000
+
+Nil
+
+Nil
+
+Laubov Tichonova
+
+150,000
+
+150,000
+
+Nil
+
+Nil
+
+Alexandre Zop
+
+150,000
+
+150,000
+
+Nil
+
+Nil
+
+Total
+
+4,950,000
+
+4,950,000
+
+ 
+ 
+
+Family Relationships: There are no family relationships other than Marisa Cozza-Gargiulo and Giovanna Cozza and they are sisters.
+
+Except as indicated above, the named shareholders beneficially own and have sole voting and investment power over all shares or rights to these shares. The numbers in this table assume that none of the selling shareholders sells shares of common stock not being offered in this prospectus or purchases additional shares of common stock, and assumes that all shares offered are sold. There percentages are based on 11,450,000 shares of common stock outstanding on December 5, 2011. The selling shareholders named in this prospectus are offering a total of 4,950,000 shares of common stock which represents 43.24% of our outstanding common stock on December 5, 2011
+
+Except as indicated above, none of the selling shareholders or their beneficial owners:
+
+1.
+
+Has ever been one of our officers or directors; or
+
+2.
+
+Is a registered broker-dealer or an affiliate of a broker-dealer.
+
+Because our offering has no broker-dealer involvement the selling shareholders are considered to be our underwriters.
+
+Plan of Distribution
+
+The selling shareholders may sell some or all of their common stock in one or more transactions, including block transactions:
+
+1.
+
+On such public markets or exchanges as the common stock may from time to time be trading;
+
+2.
+
+In privately negotiated transactions;
+
+3.
+
+Through the writing of options on the common stock;
+
+4.
+
+In short sales; or
+
+5.
+
+In any combination of these methods of distribution.
+
+No public market currently exists for our shares of common stock. We intend to contact an authorized OTC Bulletin Board market maker for sponsorship of our securities on the OTC Bulletin Board.
+
+14
+
+The OTC Bulletin Board is a securities market but should not be confused with the NASDAQ market. OTC Bulletin Board companies are subject to less requirements and regulations that are companies traded on the NASDAQ market. There is no assurance that our common stock will be quoted on the OTC Bulletin Board.
+
+FINRA regulates the OTC Bulletin Board and has requirements regarding the quotation of securities. We currently do not meet these requirements because our common stock is unregistered and we are not yet a reporting company. We intend to register our common stock by [ten days + effective date], by filing a Form 8 A with the SEC. This Form 8 A will also cause us to become a reporting company. We cannot give any assurance that the shares offered will have a market value, or that they can be resold at the offered price if and when an active secondary market might develop, or that a public market for our securities may be sustained even if developed.
+
+Regarding our intention to contact an authorized OTC Bulletin Board market maker for sponsorship of our securities on the OTC Bulletin Board, we intend to engage a market maker to file an application on our behalf in order to make a market for our common stock by [ninety days + effective date]. We expect that the application process will take two to four months to complete because there is a detailed review process that we must undergo. If our common stock is quoted on the OTC Bulletin Board, it will become simpler to buy and sell our common stock and we expect the liquidity of our common stock will be improved.
+
+The selling shareholders are required to sell our shares at $0.02 per share until our shares are quoted on the OTC Bulletin Board. Thereafter, the sales price offered by the selling shareholders to the public may be:
+
+1.
+
+The market price prevailing at the time of sale;
+
+2.
+
+A price related to such prevailing market price; or
+
+3.
+
+Such other price as the selling shareholders determine from time to time.
+
+The shares may also be sold in compliance with the Securities and Exchange Commission's Rule 144. A description of the selling limitations defined by Rule 144 can be located in this prospectus.
+
+The selling shareholders may also sell their shares directly to market makers acting as principals or brokers or dealers, who may act as agent or acquire the common stock as a principal. Any broker or dealer participating in such transactions as agent may receive a commission from the selling shareholders, or, if they act as agent for the purchaser of such common stock, from such purchaser. The selling shareholders will likely pay the usual and customary brokerage fees for such services. Brokers or dealers may agree with the selling shareholders to sell a specified number of shares at a stipulated price per share and, to the extent such broker or dealer is unable to do so acting as agent for the selling shareholders, to purchase, as principal, any unsold shares at the price required to fulfill the respective broker's or dealer s commitment to the selling shareholders. Brokers or dealers who acquire shares as principals may thereafter resell such shares from time to time in transactions in a market or on an exchange, in negotiated transactions or otherwise, at market prices prevailing at the time of sale or at negotiated prices, and in connection with such re-sales may pay or receive commissions to or from the purchasers of such shares. 
+15
+
+These transactions may involve cross and block transactions that may involve sales to and through other brokers or dealers. If applicable, the selling shareholders may distribute shares to one or more of their partners who are unaffiliated with us. Such partners may, in turn, distribute such shares as described above. We can provide no assurance that all or any of the common stock offered will be sold by the selling shareholders.
+
+If our selling shareholders enter into arrangements with brokers or dealers, as described above, we are obligated to file a post-effective amendment to this registration statement disclosing such arrangements, including the names of any broker dealers acting as underwriters.
+
+We are bearing all costs relating to the registration of the common stock. The selling shareholders, however, will pay any commissions or other fees payable to brokers or dealers in connection with any sale of the common stock.
+
+The selling shareholders must comply with the requirements of the Securities Act and the Securities Exchange Act in the offer and sale of the common stock. In particular, during such times as the selling shareholders may be deemed to be engaged in a distribution of the common stock, and therefore be considered to be an underwriter, they must comply with applicable law and may, among other things:
+
+1.
+
+Not engage in any stabilization activities in connection with our common stock;
+
+2.
+
+Furnish each broker or dealer through which common stock may be offered, such copies of this prospectus, as amended from time to time, as may be required by such broker or dealer; and
+
+3.
+
+Not bid for or purchase any of our securities or attempt to induce any person to purchase any of our securities other than as permitted under the Securities Exchange Act.
+
+Penny Stock Rules
+
+The Securities Exchange Commission has also adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on the NASDAQ system provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system).
+
+The shares offered by this prospectus constitute penny stock under the Securities and Exchange Act. The shares will remain penny stock for the foreseeable future. The classification of penny stock makes it more difficult for a broker-dealer to sell the stock into a secondary market, which makes it more difficult for a purchaser to liquidate his or her investment. Any broker-dealer engaged by the purchaser for the purpose of selling his or her shares in our company will be subject to rules 15g-1 through 15g-10 of the Securities and Exchange Act. Rather than creating a need to comply with those rules, some broker-dealers will refuse to attempt to sell penny stock.
+
+The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from those rules, to deliver a standardized risk disclosure document prepared by the Securities and Exchange Commission, which:
+
+16
+
+ 
+
+Contains a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading;
+
+ 
+
+Contains a description of the broker's or dealer s duties to the customer and of the rights and remedies available to the customer with respect to a violation to such duties or other requirements;
+
+ 
+
+Contains a brief, clear, narrative description of a dealer market, including bid and ask prices for penny stocks and the significance of the spread between the bid and ask price;
+
+ 
+
+Contains a toll-free telephone number for inquiries on disciplinary actions;
+
+ 
+
+Defines significant terms in the disclosure document or in the conduct of trading penny stocks; and
+
+ 
+
+Contains such other information and is in such form (including language, type, size, and format) as the Security and Exchange Commission shall require by rule or regulation.
+
+The broker-dealer also must provide, prior to effecting any transaction in a penny stock, the customer:
+
+ 
+
+With bid and offer quotations for the penny stock;
+
+ 
+
+The compensation of the broker-dealer and its salesperson in the transaction;
+
+ 
+
+The number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock; and
+
+ 
+
+Monthly account statements showing the market value of each penny stock held in the customer's account.
+
+Regulation M
+
+During such time as we may be engaged in a distribution of any of the shares we are registering by this registration statement, we are required to comply with Regulation M. In general, Regulation M precludes any selling security holder, any affiliated purchasers and any broker-dealer or other person who participates in a distribution from bidding for or purchasing, or attempting to induce any person to bid for or purchase, any security which is the subject of the distribution until the entire distribution is complete. Regulation M defines a distribution as an offering of securities that is distinguished from ordinary trading activities by the magnitude of the offering and the presence of special selling efforts and selling methods. Regulation M also defines a distribution participant as an underwriter, prospective underwriter, broker, dealer, or other person who has agreed to participate or who is participating in a distribution. 
+Regulation M under the Exchange Act prohibits, with certain exceptions, participants in a distribution from bidding for or purchasing, for an account in which the participant has a beneficial interest, any of the securities that are the subject of the distribution. Regulation M also governs bids and purchases made in order to stabilize the price of a security in connection with a distribution of the security. We have informed the selling shareholders that the anti-manipulation provisions of Regulation M may apply to the sales of their shares offered by this prospectus, and we have also advised the selling shareholders of the requirements for delivery of this prospectus in connection with any sales of the common stock offered by this prospectus.
+
+17
+
+Legal Proceedings
+
+During the past ten years no director, executive officer, promoter or control person of the Company has been involved in the following:
+
+(1)
+
+A petition under the Federal bankruptcy laws or any state insolvency law which was filed by or against, or a receiver, fiscal agent or similar officer was appointed by a court for the business or property of such person, or any partnership in which he was a general partner at or within two years before the time of such filing, or any corporation or business association of which he was an executive officer at or within two years before the time of such filing;
+
+(2)
+
+Such person was convicted in a criminal proceeding or is a named subject of a pending criminal proceeding (excluding traffic violations and other minor offenses);
+
+(3)
+
+Such person was the subject of any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from, or otherwise limiting, the following activities:
+
+i.
+
+Acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the Commodity Futures Trading Commission, or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity;
+
+ii.
+
+Engaging in any type of business practice; or
+
+iii.
+
+Engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of Federal or State securities laws or Federal commodities laws;
+
+(4)
+
+Such person was the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any Federal or State authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any activity described in paragraph (f)(3)(i) of this section, or to be associated with persons engaged in any such activity;
+
+(5)
+
+Such person was found by a court of competent jurisdiction in a civil action or by the Commission to have violated any Federal or State securities law, and the judgment in such civil action or finding by the Commission has not been subsequently reversed, suspended, or vacated;
+
+(6)
+
+Such person was found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any Federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated;
+
+18
+
+(7)
+
+Such person was the subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of:
+
+i.
+
+Any Federal or State securities or commodities law or regulation; or
+
+ii.
+
+Any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or
+
+iii.
+
+Any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or
+
+(8)
+
+Such person was the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member. 
+
+ Directors, Executive Officers, Promoters and Control Persons
+
+The Directors and Officers currently serving our Company is as follows:
+
+Name
+
+Age
+
+Positions Held and Tenure
+
+Michael Gismondi
+
+37
+
+President, Chief Executive Officer and Director since February 16, 2011 
+
+Andrea Grande
+
+31
+
+Secretary, Treasurer and Director since February 16, 2011 
+
+The Directors named above will serve until the next annual meeting of the stockholders. Thereafter, directors will be elected for one-year terms at the annual stockholders' meeting. Officers will hold their positions at the pleasure of the board of directors, absent any employment agreement, of which none currently exists or is contemplated. 
+
+Biographical information
+
+Michael Gismondi: Mr. Gismondi has acted as our President, Chief Executive Officer, Chief Financial officer and Director since our inception on February 16, 2011. Mr. Gismondi is currently employed and has been for the last 8 years for Raymond Homes Inc. an independent contractor and builder of new homes in the Toronto Area owned by Mr.Gismondi.
+
+Andrea Grande: Mr. Grande has acted as our Secretary, Treasurer, and Chief Accounting Officer and Director since our inception on February 16, 2011.
+
+19
+
+Mr. Grande has been employed by Impact Manufacturing Solutions a business that specializes in private label packaging of computer components. Mr. Grande has worked for Impact Manufacturing Solutions for the last 7 Years, where he is in charge of Sales and Marketing.
+
+Given that our directors have no previous experience in mineral exploration or operating a mining and exploration company, our directors also lack accounting credentials, they intend to perform their job for us by engaging consultants who have experience in the areas where they are lacking. Our directors are also studying information about the Mining and Exploration industry to familiarize themselves with our business. 
+
+Significant Employees and Consultants
+
+We have no significant employees other than our Directors and Officers. Mr. Michael Gismondi will devote approximately 10 hours per week or 25% of his working time based on a 40 hour work week to our business, With Mr. Andrea Grande contributing on an as needed basis.
+
+Conflicts of Interest
+
+Though our directors do not work with any other mineral exploration companies other than ours, they may in the future. We do not have any written procedures in place to address conflicts of interest that may arise between our business and the future business activities of our directors.
+
+Audit Committee Financial Expert
+
+We do not have a financial expert serving on an audit committee. We do not have an audit committee because we are a start-up exploration company and have no revenue.
+
+Security Ownership of Certain Beneficial Owners and Management
+
+The following table sets forth, as of December 5, 2011, the number of shares of Common Stock owned of record and beneficially by executive officers, directors and persons who hold 5% or more of the outstanding common stock of our company.
+
+Title of Class
+
+Name and Address of Beneficial Owner
+
+Number of Shares Owned Beneficially
+
+Percent of Class Owned Prior To This Offering
+
+Common Stock
+
+Michael Gismondi
+
+President, Principal Executive Officer, Principal Financial Officer,
+
+and Director 
+
+4667A Dundas Street West, Etobicoke Ontario, Canada 
+
+5,000,000
+
+43.66%
+
+ Common Stock
+
+Andrea Grande
+
+Secretary, Treasurer, Principal Accounting Officer and Director 
+
+ 155 Coons Road , Oakridge Ontario, Canada 
+
+1,500,000
+
+13.10%
+
+Title of Class
+
+Security Ownership of Management
+
+Number of Shares Owned Beneficially
+
+Percent of Class Owned Prior To This Offering
+
+Common Stock
+
+All executive officers
+
+and directors as a
+
+group
+
+6.500,000
+
+56.76%
+
+The percent of class is based on 11,450,000 of common stock issued and outstanding as of December 5, 2011.
+
+The persons listed above are the Directors and Officers of our company and has full voting and investment power with respect to the shares indicated. Under the rules of the Securities and Exchange Commission, a person (or a group of persons) is deemed to be a "beneficial owner" of a security if he or she, directly or indirectly, has or shares power to vote or to direct the voting of such security. Accordingly, more than one person may be deemed to be a beneficial owner of the same security. A person is also deemed to be a beneficial owner of any security, which that person has the right to acquire within 60 days, such as options or warrants to purchase our common stock.
+
+Description of Securities
+
+General
+
+Our authorized capital stock consists of 75,000,000 shares of common stock at a par value of $0.001 per share.
+
+Common Stock
+
+As at December 5, 2011, 11,450,000 shares of common stock are issued and outstanding and held by 37 shareholders of record. Holders of our common stock are entitled to one vote for each share on all matters submitted to a stockholder vote. Holders of common stock do not have cumulative voting rights. Therefore, holders of a majority of the shares of common stock voting for the election of directors can elect all of the directors. Holders of three percent of shares of common stock issued and outstanding, represented in person or by proxy, are necessary to constitute a quorum at any meeting of our stockholders. 
+
+A vote by the holders of a majority of our outstanding shares is required to effectuate certain fundamental corporate changes such as liquidation, merger or an amendment to our Articles of Incorporation.
+
+Holders of common stock are entitled to share in all dividends that the board of directors, in its discretion, declares from legally available funds. In the event of liquidation, dissolution or winding up, each outstanding share entitles its holder to participate pro rata in all assets that remain after payment of liabilities and after providing for each class of stock, if any, having preference over the common stock. Holders of our common stock have no preemptive rights, no conversion rights and there are no redemption provisions applicable to our common stock.
+
+Dividend Policy
+
+We have never declared or paid any cash dividends on our common stock. We currently intend to retain future earnings, if any, to finance the expansion of our business. As a result, we do not anticipate paying any cash dividends in the foreseeable future.
+
+21
+
+Share Purchase Warrants
+
+As of December 5, 2011, there are no outstanding warrants to purchase our securities. We may, however, issue warrants in the future, to purchase our securities.
+
+Options
+
+As of December 5, 2011, there are no options to purchase our securities outstanding. We may, however, in the future grant such options and/or establish an incentive stock option plan for our directors, employees and consultants.
+
+Convertible Securities
+
+As of December 5, 2011, we have not issued and do not have outstanding any securities convertible into shares of our common stock or any rights convertible or exchangeable into shares of our common stock. We may, however, issue such convertible or exchangeable securities in the future.
+
+Nevada Anti-Takeover Laws
+
+The provisions of the Nevada Revised Statutes (NRS) sections 78.378 to 78.3793 apply to any acquisition of a controlling interest in a certain type of Nevada corporation known as an Issuing Corporation , unless the articles of incorporation or bylaws of the corporation in effect the tenth day following the acquisition of a controlling interest by an acquiring person provide that the provisions of those sections do not apply to the corporation, or to an acquisition of a controlling interest specifically by types of existing or future stockholders, whether or not identified.
+
+The provisions of NRS 78.378 to NRS 78.3793 do not restrict the directors of an Issuing Corporation from taking action to protect the interests of the corporation and its stockholders, including, but not limited to, adopting or signing plans, arrangements or instruments that deny rights, privileges, power or authority to a holders of a specified number of shares or percentage of share ownership or voting power.
+
+An Issuing Corporation is a corporation organized in the state of Nevada and which has 200 or more stockholders of record, with at least 100 of whom have addresses in the state of Nevada appearing on the stock ledger of the corporation and does business in the state of Nevada directly. As we currently have less than 200 stockholders the statute does not currently apply to us.
+
+If we do become an Issuing Corporation in the future, and the statute does apply to us, our directors will have the ability to adopt any of the above mentioned protection techniques whether or not he owns a majority of our outstanding common stock, provided he does so by the specified tenth day after any acquisition of a controlling interest.
+
+22
+
+Interests of Named Experts and Counsel
+
+No expert or counsel named in this prospectus as having prepared or certified any part of this prospectus or having given an opinion upon the validity of the securities being registered or upon other legal matters in connection with the registration or offering of the common stock was employed on a contingency basis, or had, or is to receive, in connection with the offering, a substantial interest exceeding $50,000, directly or indirectly, in the registrant or any of its parents or subsidiaries. Nor was any such person connected with the registrant or any of its parents or subsidiaries as a promoter, managing or principal underwriter, voting trustee, director, officer, or employee.
+
+The law firm Carrillo Huettel, LLP, our independent legal counsel, has provided an opinion on the validity of our common stock.
+
+The financial statements included in this prospectus have been audited by Madsen and Associates CPA s, Inc. of Murray, Utah, USA, to the extent and for the periods set forth in their report appearing elsewhere herein, and are included in reliance upon such report given upon the authority of said firm as experts in auditing and accounting.
+
+The summary geological report for our mining claims was prepared by Minquest, Inc. and the summary information of the geological report disclosed in this prospectus is in reliance upon the authority and capability of Minquest, Inc.
+
+Disclosure of Commission Position of Indemnification for Securities Act Liabilities
+
+Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers or persons controlling the Company pursuant to provisions of the State of Nevada, the Company has been informed that, in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in that Act and is, therefore, unenforceable.
+
+Organization in the Last Five Years
+
+We were incorporated on February 16, 2011 under the laws of the state of Nevada. On the date of our incorporation, we appointed Michael Gismondi and Andrea Grande as our Directors. On February 16, 2011, Mr. Michael Gismondi was appointed President, Principal Executive Officer, Principal Financial Officer, and Andrea Grande was appointed Secretary, Treasurer and Principal Accounting Officer of the company. Our Directors may be deemed to be our promoters. On May 27, 2011 we entered into an agreement with Minquest Inc. to acquire a 100% interest in the Weepah Hills Prospect mining claims located in Esmeralda County Nevada, for an initial consideration totaling $13, 360, comprised of a $10,000 down payment and 3,360 in holding and renewal costs and subsequent additional payments and exploration expenditures representing an aggregate total of $705,000 in payments and $2,920,000 in exploration expenditures over a period of ten years as outlined in our purchase agreement ( See Exhibit 10.1).to purchase a 100% interest in the property. The claims are currently registered in the name of Minquest, Inc.
+
+23
+
+Description of Business
+
+Business Development
+
+We are a startup exploration stage company without operations, and we are in the business of mineral exploration. There is no assurance that a commercially viable mineral deposit exists on our mining claims. Additional exploration will be required before a final evaluation as to the economic and legal feasibility of our mining claims can be determined.
+
+On May 27, 2011, we entered into a purchase agreement to acquire one mining claim block comprising of 14 claims, covering an area of 280 acres respectively, from Minquest, Inc. the claim block is known as the Weepah Hills Prospect. 
+
+The mining claims were staked by Minquest, Inc. and on May 27, 2011, we entered into a purchase agreement to acquire one mining claim block comprising of 14 claims, covering an area of 280 acres respectively, from Minquest, Inc. The mining claims are located in Esmeralda County Nevada, approximately 6 miles (9.6 km) northeast of Silver Peak and 21 miles (33.6 km) west-northwest of Goldfield, Nevada.
+
+Access is via 7 miles (11 km) of paved and gravel roads from the town of Silver Peak. The claims are in good standing until August 31, 2012. The total area of the mining claims amounts to approximately 280 acres.
+
+Our Directors have not visited the Weepah Hills Property and have no previous experience exploring for minerals or operating a mining company. Even if we complete our current exploration program and it is successful in identifying a gold and or silver deposit, we will have to spend substantial funds on further drilling and engineering studies before we will know if we have a commercially viable mineral deposit or reserve.
+
+On May 27, 2011, we entered into an agreement with Minquest, Inc. They are familiar with the area of the Weepah Hills Prospect and have provided us with a summary report about the mining claims, describes the mining claims, the regional geology, the mineral potential of the claim and recommendations how we should explore the claim.
+
+The cost of the mining claim charged to operations by us was $13,360 comprised of a
+
+$10,000 down payment and $3,360 in holding and renewal costs. Under the terms of the agreement (see Exhibit 10.1), additional payments and exploration expenditures representing an aggregate total of $705,000 in acquisition payments and $2,920,000 in exploration expenditures, over a period of ten years, are required.to purchase a 100% interest in the property, as follows:
+
+On or before June 30, 2012 , the Purchaser incurring Expenditures of $20,000 USD on
+
+the property; the Purchaser paying $15,000 USD to the Vendor;
+
+On or before June 30, 2013, the Purchaser incurring Expenditures of $100,000 USD on
+
+the Property, the Purchaser paying $20,000 U.S to the Vendor;
+
+On or before June 30, 2014, the Purchaser incurring Expenditures of $200,000 USD on
+
+the Property , the Purchaser paying $30,000 USD to the Vendor;
+
+On or before June 30, 2015, the Purchaser incurring Expenditures of $250,000 USD on
+
+the Property, the Purchaser paying $40,000 USD to the Vendor; and
+
+24
+
+On or before June 30, 2016, the Purchaser incurring Expenditures of $250,000 USD on
+
+the Property, the Purchaser paying $50,000 USD to the Vendor; and
+
+On or before June 30, 2017, the Purchaser incurring Expenditures of $300,000 USD on the Property, the Purchaser paying $60,000 USD to the Vendor; and
+
+On or before June 30, 2018, the Purchaser incurring Expenditures of $300,000 USD on
+
+the Property, the Purchaser paying $70,000 USD to the Vendor; and
+
+ 
+
+ On or before June 30, 2019, the Purchaser incurring Expenditures of $350,000 USD on
+
+the Property, the Purchaser paying $80,000 USD to the Vendor; and
+
+On or before June 30, 2020, the Purchaser incurring Expenditures of $400,000 USD on
+
+the Property the Purchaser paying $90,000 USD to the Vendor; and
+
+On or before June 30, 2021 the Purchaser incurring Expenditures of $750,000 USD on
+
+the Property, the Purchaser paying $250,000 USD to the Vendor. Following which the
+
+Purchaser shall be deemed to have exercised the Purchase (the Exercise Date ) and shall
+
+be entitled to an undivided 100% right, title and interest in and to the Property with the
+
+full right and authority to equip the Property for production and operate the Property as a
+
+mine subject to the rights of the Vendor to receive the NSR. 
+
+We have no current plans to change our business activities from mineral exploration or to combine with another business. It is possible that beyond the foreseeable future that if our mineral exploration efforts fail and world demand for the minerals we are seeking drops to the point that it is no longer economical to explore for these minerals we may need to change our business plans. However, until we encounter such a situation we intend to explore for minerals in USA or elsewhere.
+
+Location and Means of Access to Our Mining Claim
+
+The Weepah Hills Prospect lies approximately 6 miles (9.6 km) northeast of Silver Peak and 21 miles (33.6 km) west-northwest of Goldfield, Nevada. Access is via 7 miles (11 km) of paved and gravel roads from the town of Silver Peak.
+
+25
+
+Mining Claim Description
+
+The Weepah Hills Prospect mining claims are unencumbered and in good standing and there are no third party conditions which affect the claim other than conditions defined by the State of Nevada as described below. The claims cover an area of 280 acres. We have no insurance covering the claims. We believe that no insurance is necessary since the claims are unimproved and contain no buildings or improvements. The claim numbers, registered owner number, expiry date, number of units, and work requirement as typically recorded in the State of Nevada is as follows:
+
+Claim Number
+
+Registered
+
+Owner
+
+Due
+
+Date
+
+Number of
+
+Claims
+
+Renewal Requirement
+
+NMC899984-NMC899997
+
+Minquest, Inc. (100%)
+
+2012-Aug-31
+
+14
+
+$2,111
+
+The Weepah hills Prospect mining claims are located in Esmeralda County, Nevada approximately 6 miles (9.6 km) northeast of Silver Peak and 21 miles (33.6 km) west-northwest of Goldfield, Nevada. Access is via 7 miles (11 km) of paved and gravel roads from the town of Silver Peak. 
+
+There is no assurance that a commercially viable mineral deposit exists on the claims. Exploration will be required before an evaluation as to the economic feasibility of the claim can be determined. It is our intention to record the deed of ownership in the name of our subsidiary. Until we can validate otherwise, the property is without known reserves and we have planned a four phase exploration program as recommended by our consulting Geologist. We have not commenced any exploration or work on the claim.
+
+Conditions to Retain Title the Mining Claim
+
+In order to retain title to the mining claims, we are required to renew the claims on an annual basis in the amount totaling $2,111 or approximately $151 per claim by August 31, 2011. On August 12, 2011 we have advanced the sum of $2,111 to Minquest for the annual claim renewal of the Weepah Hills Prospect.Additionally, we are required to make additional payments and exploration expenditures on an annual basis in order to remain in compliance with our purchase agreement. These payments and expenditures represent and aggregate total of $2,920,000 in exploration expenditures and $705,000 in payments to Minquest, Inc. over the ten year term of the purchase agreement.. See Exhibit 10.1
+
+History of the Weepah Hills Prospect and of the Mining Claims Area
+
+The following history is summarized from the report prepared by Minquest, Inc. concerning the mining claims. Until we can validate otherwise, the claims are without known reserves and we have planned a four phase program to explore our claims.
+
+The Property was likely first discovered in the 1860 s when Silver Peak was first developed. No production is reported for the area, although historic workings suggest some small shipments may have occurred from high-grade veins. If so, the ore was probably shipped to the nearby Silver Peak mill. 
+
+26
+
+Recent exploration efforts began in the early 1980's when Grayhill Exploration sampled the property. Since then WX Syndicate, Newmont and Mountain West Exploration have conducted exploration efforts totaling over US$100,000 in expenditures. 
+
+ 
+
+Grayhill Exploration
+
+1983-84
+
+Geochemical sampling
+
+ 
+
+WX Syndicate
+
+1986-91
+
+4 RC holes for 500 feet (160 m)
+
+ 
+
+Newmont
+
+1988
+
+Geochemical sampling
+
+ 
+
+Mountain West
+
+1991-92
+
+Geochemical Sampling
+
+A total of 500 feet (160 m) in 4 holes have been completed on the property. All of the drilling was shallow and drilled in the pediment. Drilling targeted the extension of mineralization within the range. Drilling failed to encounter the mineralized zone because geology of the area was not understood. This lack of understanding leaves substantial potential for development of ore reserves.
+
+Geology of the Mining Claims
+
+The property lies within the southern portion of the Walker Lane structural corridor. The Weepah Hills prospect is hosted within the Pre-Cambrian Wyman Formation, Reed Dolomite and Lone Mountain Formation. The Wyman Formation is composed of up to 300 meters of micaceous shale, thin to thick-bedded limestone and interbedded quartzite. The Reed Dolomite is composed of over 3000 feet of thick bedded dolostone with interbedded limestone and quartzite. The Lone Mountain Formation is composed of more than 2100 feet of massive dolomite and limestone with thin interbeds of shaley limestone. Gold and silver mineralization are associated with quartz stockworks, silicified limestone and disseminations within low and high-angle shear zones. 
+
+The Weepah Hills property contains excellent untested sediment hosted mineralization. Gold and silver mineralization identified at the Weepah Hills property from previous surface sampling have identified two zones from 1200 to 1500 feet long and up to 50 feet wide. Structure is the most important factor in ore control in the Silver Peak Mining District. 
+
+The Weepah Hills property has aspects showing both low and high angle fault zones and associated mineralization. The Weepah Hills mineralization is largely localized along three parallel structures which trend northerly. The low angle structures measure 20 to 30 degrees dipping southeasterly and nearly parallel to bedding. The high angle structures dip 70 to 80 degrees to the west. The mineralization has been offset by a west-northwest fault on the south end and becomes covered by dolomite to the north. Gold/silver is hosted by silicified limestone, quartz veined shale and iron rich shear zones. The highest grade mineralization occurs in iron rich quartz veins within shale beds. Numerous dikes of intermediate to felsic origin have been mapped in within the core area. 
+
+Competitive Conditions
+
+The mineral exploration business is an extremely competitive industry. We are competing with many other exploration companies looking for minerals. We are one of the smallest exploration companies and a very small participant in the mineral exploration business. Being a junior mineral exploration company, we compete with other companies like ours for financing and joint venture partners. Additionally, we compete for resources such as professional geologists, camp staff, helicopters and mineral exploration supplies.
+
+27
+
+Dependence on Major Customers
+
+We have no customers.
+
+Intellectual Property and Agreements
+
+We have no intellectual property such as patents or trademarks. Additionally, we have no royalty agreements or labor contracts. 
+
+Government Approvals and Regulations
+
+We will be required to comply with all regulations defined by the State of Nevada Division of Minerals and the Nevada Revised Statutes (NRS) The effect of these existing regulations on our business is that we are able to carry out our exploration program as we have described in this prospectus. Additionally, we will be required to obtain permits for exploration activities commencing with Phase II, where we are required to file an exploration plan with State, as well, file a plan of remediation in the event the ground has been disturbed as well as post a surety bond. It is possible that a future government could change the regulations that could limit our ability to explore our claims, but we believe this is unlikely.
+
+Exploration Expenditures
+
+As of December 5, 2011 we have made expenditures in regard to the actual exploration of the mining claims, other than spending $13,360 for our property acquisition and summary geological report and $2,111 for the renewal of the claims due on August 31, 2011 .
+
+Costs and Effects of Compliance with Environmental Laws
+
+We currently have no costs to comply with environmental laws concerning our exploration program. We will encounter costs upon commencing Phase II, where we will be required to file a plan of remediation with the State in the event the ground has been disturbed and post a surety bond so that the ground can be returned to its original form. 
+
+Employees
+
+We do not have any employees other than our directors. We intend to retain the services of independent geologists and engineers on a contract basis to conduct the exploration program on the Weepah Hills Prospect.
+
+Reports to Security Holders
+
+We are not required to deliver an annual report to security holders. However, we intend to voluntarily send an annual report to security holders and this annual report will include audited financial statements. This prospectus and exhibits will be contained in a
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/CIK0001527967_callidus_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001527967_callidus_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..30488cf33b3cff324496bd6a8ed579d9aba67cdd
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001527967_callidus_prospectus_summary.txt
@@ -0,0 +1 @@
+Item 3. Prospectus Summary. This summary highlights certain information contained elsewhere in this prospectus. You should read the following summary together with the more detailed information regarding Callidus Corporation ( Us, We, Our, Callidus, the Company, or the Corporation ) and our financial statements and the related notes appearing elsewhere in this prospectus. The Company Our Business Callidus Corporation was incorporated in the State of Nevada on September 28, 2010. Callidus Corporation is a development stage company with a principal business objective of selling protective screens for all flat panel televisions and computers. The company plans to have its initial screens consist of sizes ranging between 19 -52 for all flat panel televisions and an Apple computer monitor screen of 24 . Our goal is to provide aesthetically pleasing and affordable screen protectors for all business and households to protect their investment. Callidus plans to provide its first initial offerings through Amazon and eBay as well as direct ordering through their retail website. Callidus Corporation is a development stage company that has not commenced its planned principal operations. Callidus operations to date have been devoted primarily to start-up and development activities. Our President, Brian Morsch, has performed all of the development activities to date, which include the following: 1. Formation of the Company; 2. Development of the Callidus Corporation business plan; 3. Initiated final screen designs, materials and a manufacturer to produce the product 4. Conducted research on competition, specifically two competitors 5. Formulated product development and marketing strategies for product lines to include: - Flat panel televisions - Apple computer monitors 6. Researched largest TV providers in the commercial space which include: - Sports Bars, Restaurants, Health Clubs and Airports 7. Secured web site domain www.calliduscorp.com; 8. Conducted research on flat panel television sales nation and worldwide. Callidus Corporation is attempting to become operational and anticipates sales to begin during the third quarter of operations following the completion of our offering. In order to generate revenues, Callidus must address the following areas: 1. Finalize and implement our long-term marketing plan: In order to effectively penetrate our targeted market, Callidus will use a multi-faceted marketing plan that includes a high-end web site, Amazon, eBay, targeted retail outlets, and target specific distribution channels using independent representatives. We anticipate using independent commissioned sales representatives to work as middlemen between Callidus and the retailers. Their responsibilities would include approaching any/all appropriate retailers, work on creative marketing techniques to attract business from companies that sell televisions/flat screens to their customers. The Company currently does not have any engagements, agreements, or contracts with independent commissioned sales representatives. 2. Tailor our website: Callidus Corporation has secured the web domain located at www.calliduscorp.com. The site is currently under construction and we plan to incorporate this site with strategic vertical market e-commerce retailers. We have budgeted the necessary funding to develop a quality site. 3. Constantly monitor our market: We plan to constantly monitor our target market and adapt to consumers needs, wants and desires. To be successful we plan to evolve and diversify our product lines to satisfy the consumer. Our product will be like no other on the market which our competitors currently provide. 4. Run our Company ethically and responsibly. Conduct our business and ourselves ethically and responsibly. Our Statement of Organization: We were incorporated in Nevada on September 28, 2010, as Callidus Corporation. Our principal executive offices are located at 9788 Cheewall Lane, Parker, CO 80134. Our phone number is (303) 346-8384. The Offering The following is a brief summary of this offering. Please see the Plan of Distribution section for a more detailed description of the terms of the offering. Number of Shares Being Offered: The Company is offering 4,000,000 shares of common stock, par value $0.001 Offering Price per share $0.01 Offering Period: The shares are being offered for a period not to exceed 180 days. In the event we do not sell all of the shares before the expiration date of the offering, all funds raised will be promptly returned from the escrow account and returned to the investors, without interest or deduction. Escrow Account: The subscription proceeds from the sale of the shares in this offering will be payable to Diane D. Dalmy Trust Account and will be deposited in a non-interest bearing law office trust bank account until all offering proceeds are raised. All subscription agreements and checks should be delivered to Diane Dalmy. Failure to do so will result in checks being returned to the investor who submitted the check. Callidus Corporation s escrow agent, Diane Dalmy acts as legal counsel for Callidus Corporation and is therefore not an independent third party. Gross Proceeds to Company: $40,000 Use of Proceeds: We intend to use the proceeds to expand our business operations. Number of Shares Outstanding Before the Offering: 10,000,000 common shares Number of Shares Outstanding After the Offering: 14,000,000 common shares The offering price of the common stock bears no relationship to any objective criterion of value and has been arbitrarily determined. The price does not bear any relationship to Callidus Corporation assets, book value, historical earnings, or net worth. Callidus Corporation will apply the proceeds from the offering to pay for accounting fees, legal and professional fees, equipment, office supplies, salaries/contractors, sales and marketing, and general working capital. The Company has not presently secured an independent stock transfer agent. Callidus Corporation has identified several agents to retain that will facilitate the processing of the certificates upon closing of the offering. The purchase of the common stock in this offering involves a high degree of risk. The common stock offered in this prospectus is for investment purposes only and currently no market for Callidus Corporation common stock exists. Please refer to the sections herein titled Risk Factors and Dilution before making an investment in this stock. SUMMARY FINANCIAL INFORMATION The following table sets forth summary financial data derived from Callidus Corporation financial statements. The accompanying notes are an integral part of these financial statements and should be read in conjunction with financial statements, related notes and other financial information included in this prospectus. Callidus Corporation (A Development Stage Company) Statement of Operations For the Three Month Period Ended June 30, 2011 and for the period from September 28, 2010 (date of inception) through March 31, 2011. For the Three Months Ended June 30, 2011 For the Period from Sept. 28, 2010 (date of inception) through March 31, 2011 (unaudited) (audited) Revenues: $ -- $ -- Expenses: Operating Expenses: Marketing and sales -- -- Compensation -- -- Professional 2,250 -- General and administrative 675 555 Research and development -- -- Depreciation and amortization -- -- Total operating expenses 2,925 555 Net loss from operations (2,925 ) (555 ) Other income (expense) Interest income -- -- Interest expense -- -- Loss before income taxes (2,925 ) (555 ) Income tax benefit (provision) -- -- Net Loss $ (2,925 ) $ (555 ) Basic and diluted loss per common share $ 0.00 $ 0.00 Basic and diluted weighted average common shares outstanding 10,000,000 10,000,000 The accompanying notes are an integral part of the financial statements.
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/CIK0001528709_hawaii_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001528709_hawaii_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001528709_hawaii_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/CIK0001528710_horizon_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001528710_horizon_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001528710_horizon_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/CIK0001529293_altovida_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001529293_altovida_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..d50eda5a2b996247af399f05d6f8a27c3a87ee49
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001529293_altovida_prospectus_summary.txt
@@ -0,0 +1 @@
+Table of Contents Summary Remmington Enterprises, Inc. The Company We are an exploration stage mineral exploration company incorporated in Nevada on July 15, 2011. On July 29, 2011, we acquired a 100% ownership interest in the Remington #1 through #4 lode mining claim located in Mineral County, Nevada. The Remington claims are located on federal lands administered by the Bureau of Land Management. Our ownership rights on the claim are limited to the exploration and extraction of mineral deposits subject to applicable regulations. The Remington claims total roughly 100 acres in size and are located in the Garfield Hills approximately 38 miles south of the town of Hawthorne, Nevada. We have performed an initial reconnaissance sampling program on our mining claim. Our initial sampling program indicated the presence elevated silver mineralization in the rock outcrops which were sampled. Based upon the results of our initial reconnaissance sampling program, our consulting geologist has recommended an additional detailed rock sampling program, together with geological mapping of the claims and a reconnaissance sampling of nearby properties on the boundaries of the Remington claims to determine if the acquisition of neighboring properties would be beneficial. Our planned additional exploration activities will be designed to explore for additional indications that the Remington claims may contain commercially viable quantities of silver. We have not identified commercially exploitable reserves of silver or other precious metals on the Remington claims to date. We are an exploration stage company and there is no assurance that commercially viable silver quantities exist on the Remington mineral claims. Further exploration activities beyond our currently planned exploration program will be dependent upon a number of factors, including our consulting geologist s recommendations based upon the exploration program results, and our available funds. Since we are in the exploration stage of our business plan, we have not yet earned any revenues from our planned operations. As of July 31, 2011, we had $4,370 cash on hand and current liabilities in the amount of $3,249. Accordingly, our working capital position as of July 31, 2011 was $1,121. Since our inception through July 31, 2011, we have incurred a net loss of $8,279. We attribute our net loss to having no revenues to offset our expenses and the professional fees related to the creation and operation of our business. Our management estimates that, until such time that we are able to identify a commercially viable mineral deposit and to generate revenue from the extraction of silver on our mineral claims, we will continue to experience negative cash flow. Our business plan is to pursue exploration of the Remington claims as described in this Prospectus. We do not have any current or future plans to engage in mergers or acquisitions with other companies or entities. Our fiscal year end is July 31. Our principal offices are located at 7582 Las Vegas Blvd. S., Ste. 236, Las Vegas, Nevada 89123. Our phone number is (702) 217-3964. Table of Contents The Offering Securities Being Offered Up to 3,000,000 shares of our common stock. Offering Price The offering price of the common stock is $0.008 per share. There is no public market for our common stock. We cannot give any assurance that the shares offered will have a market value, or that they can be resold at the offered price if and when an active secondary market might develop, or that a public market for our securities may be sustained even if developed. The absence of a public market for our stock will make it difficult to sell your shares in our stock. Upon the effectiveness of the registration statement of which this prospectus is a part, we intend to apply through FINRA to the over-the-counter bulletin board, through a market maker that is a licensed broker dealer, to allow the trading of our common stock upon our becoming a reporting entity under the Securities Exchange Act of 1934. We currently have no market maker who is willing to list quotations for our stock. Further, even assuming we do locate such a market maker, it could take several months before the market maker s listing application for our shares is approved. Minimum Number of Shares To Be Sold in This Offering n/a Maximum Number of Shares To Be Sold in This Offering 3,000,000 Securities Issued and to be Issued 10,000,000 shares of our common stock are issued and outstanding as of the date of this prospectus. Our sole officer and director, Gary A. Scoggins, owns an aggregate of 100% of the common shares of our company and therefore have substantial control. Upon the completion of this offering, our officer and director will own approximately 76.92% of the issued and outstanding shares of our common stock if the maximum number of shares is sold. Number of Shares Outstanding After The Offering If All The Shares Are Sold 13,000,000 Use of Proceeds If we are successful at selling all the shares we are offering, our proceeds from this offering will be approximately $24,000. We intend to use these proceeds to execute our business plan. Offering Period The shares are being offered for a period up to 120 days after the date of this Prospectus, unless extended by us for an additional 90 days. Table of Contents Summary Financial Information Balance Sheet Data Fiscal Year Ended July 31, 2011 (derived from audited financial information) Cash $ 4,370 Total Assets $ 24,970 Liabilities $ 3,249 Total Stockholder s Equity $ 21,721 Statement of Operations July 15, 2011 (date of inception) to July 30, 2011 (derived from audited financial information) Revenue $ 0 Net Loss for Reporting Period $ 8,279 Table of Contents
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/CIK0001529433_nycamedia_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001529433_nycamedia_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..ab2364a131f598c49adade123803709900d732d6
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001529433_nycamedia_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary Our Business: We were incorporated in Nevada on May 1, 2009. Our principal business address is 1077 Balboa Avenue, Laguna Beach, California 92651. Our telephone number is (714) 651-8000. We are a development stage print production, design and media company specializing in all types of advertising print and digital design which range from large format graphics and poster printing to digital motion graphics and client website construction. We specialize in outdoor advertising with our primary services include printing for large banners, billboards, adhesive backed wall graphics, posters, newsstands and bus shelters. We also provide services for newsstands, vehicle/fleet wraps, tradeshow graphics, color offset, signs and wall-coverings. Our current operations have focused on large format outdoor media print management that involves prepress, management of print production and assisting with installation and design. Our design services are typically used for enhancing the graphics and images prior to printing, including touch-up work and creative design work. We work with large corporations, agencies and design marketing firms across the country to help deliver clients messages through numerous advertising channels. Our management has over twenty-six years of experience in the print industry, including experience in conceptual design, pre-press and production management. We utilize a number of third-party contactors each with a different specialty, which, together with the experience of our management, provides the basis for the printing services that we provide to our clients. The steps we have taken to become an operating company include: In May 2009, our founder, Michael Hawks, incorporated us in the State of Nevada; In May 2009, we negotiated our first order with our first client and began establishing our current client base; From May 2009 to June 2009, we negotiated with contractors and suppliers to service our first order and began establishing relationships with those parties that provide services to us; During 2009 through the present, we have continued to maintain the relationships we have established with our clients and suppliers; and During 2010 and 2011, we have focused our efforts on expanding our operations by increasing the number of clients that we service and increasing the amount of work that we provide for each of our current clients. We believe we have built solid relationships with our customers which will allow us grow beyond our current operations and provide more creative design, advertising and installation. We believe there is a significant opportunity to provide additional installation services particularly with installations of the printed material we are already producing. We have had discussions with potential installation partners, and we hope to partner with a national company that can handle all regions domestically. There is no guarantee that we will be able to establish a relationship with an installation partner in order to expand our operations nationally. We hope to implement these future plans for providing installations within the next twelve months. The steps involved in implementing these future plans for providing installations are primarily continuing our discussions and negotiations with potential installation partners and reaching a formal agreement to provide those services with the party that we choose to be our installation partner. Our primary obstacle to providing installations is the business terms that we are able to negotiate an installation partner. We may not be able to negotiate terms that are economically favorable to us. In order to provide installations, we will not need proceeds from this offering as we expect our negotiations to occur via telephone and electronic communication. As of December 28, 2011, our current cash balance is approximately $7,700 . Our current monthly burn rate is approximately $10,000 per month. Based on our current burn rate, we will run out of funds in January 2012 without additional capital and assuming we do not generate any revenues during that period. We expect our burn rate to remain at approximately $10,000 per month after the offering is complete and if we raise at least $125,000. We believe that $125,000 will be sufficient to pay for the expenses of this offering and conduct our proposed business activities for the next six months. If we only raise $125,000 in this offering, then we will need to raise additional capital in order to continue operations and to implement our plan of operations for the next 12 months. We believe we will need to raise approximately $250,000 to pay for rent/office expenses, computer equipment, website development expenses, employees/contractors, marketing expenses, working capital and offering expenses for the next 12 months. If we are unable to obtain additional financing, then we will need to rely solely on revenues to meet our working capital requirements. We cannot guaranty that we will obtain additional financing or generate sufficient revenues to meet our working capital requirements. Our failure to raise additional capital will negatively impact our business and, potentially, our ability to continue operations. Accordingly, the notes to our financial statements for the nine month period ended September 30, 2011 disclose uncertainty as to our ability to continue as a going concern. Summary financial information: The summary financial information set forth below is derived from the more detailed financial statements appearing elsewhere in this Form S-1. We have prepared our financial statements contained in this Form S-1 in accordance with accounting principles generally accepted in the United States. All information should be considered in conjunction with our financial statements and the notes contained elsewhere in this Form S-1. Income Statement For the nine month period ended September 30, 2011 (Unaudited) For the year ended December 31, 2010 For the period from May 1, 2009 (inception) to December 31, 2009 $ $ $ Revenue 82,242 154,215 150,381 Total Operating Expenses 94,610 70,253 45,142 Net (Loss) Income (36,943) 6,689 3,511 Net Income (Loss) Per Share (0.01) 0.00 0.00 Balance Sheet September 30, 2011 (Unaudited) December 31, 2010 December 31, 2009 $ $ $ Total Assets 32,293 32,897 41,458 Total Liabilities 48,236 13,697 31,347 Stockholders' Equity (Deficit) (15,943) 19,200 10,111 Number of shares being offered: We are offering for sale 10,000,000 shares of our common stock. We will sell the shares we are registering only to those individuals who have received a copy of the prospectus. There is no trading market for our common stock. We are not currently listed or quoted on any exchange or market. We hope to have our common stock quoted on the Over the Counter Bulletin Board and OTCQB although we do not have any current plans in place to have our common stock quoted. We cannot guaranty that our common stock will be quoted on the Over the Counter Bulletin Board or OTCQB. Number of shares outstanding after the offering: 5,000,000 shares of our common stock are currently issued and outstanding. After the offering, there may be up to 15,000,000 shares of our common stock issued and outstanding if all of the offered shares are sold. Estimated use of proceeds: We will receive $500,000 if all of the offered shares are sold and $250,000 if half the offered shares are sold. If all of the offered shares are purchased, we intend to use the proceeds for rent/office expenses, computer equipment and website development expenses, employees/contractors, marketing expenses, working capital and offering expenses. Offering expenses are estimated to be $15,000. This is a best efforts offering with no minimum offering amount. There is no guarantee that we will even raise enough funds to cover the expenses of this offering.
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diff --git a/parsed_sections/prospectus_summary/2011/CIK0001529516_crimson_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001529516_crimson_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..2fd16a8e18d1436f75a22174281e84eb4b1471cc
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001529516_crimson_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights selected information contained elsewhere in this prospectus. This summary does not contain all the information that you should consider before investing in the common stock. You should carefully read the entire prospectus, including Risk Factors, Management s Discussion and Analysis of Financial Condition and Results of Operations and the Financial Statements, before making an investment decision. In this Prospectus, the terms East Shore, Company, we, us and our refer to East Shore Distributors, Inc. Overview We were incorporated in the State of Nevada on June 11, 2010, as Drive Assure, Inc. On July 26, 2011, we filed a certificate of amendment to the Company s articles of incorporation with the Secretary of State of Nevada in order to change our name to East Shore Distributors, Inc. (the Company ) to more properly reflect the Company s operations. The shares of our common stock being offered for resale by the selling security holders consists of 3,755,000 shares of our common stock beneficially owned by 34 shareholders, including (i) 155,000 shares sold in our private offering pursuant to Regulation D Rule 506 completed in September 2011 at an offering price of $0.10 and (ii) 3,600,000 shares issued pursuant to three stock purchase agreements on July 29, 2011. The selling security holders may sell some or all of their shares at a fixed price of $0.10 per share until our shares are quoted on the OTCBB and thereafter at prevailing market prices or privately negotiated prices. Prior to being quoted on the OTCBB, shareholders may sell their shares in private transactions to other individuals. Although our common stock is not listed on a public exchange, we will be filing to obtain a listing on the OTCBB concurrently with the filing of this prospectus. In order to be quoted on the OTCBB, a market maker must file an application on our behalf in order to make a market for our common stock. There can be no assurance that a market maker will agree to file the necessary documents with FINRA, which operates the OTCBB, nor can there be any assurance that such an application for quotation will be approved. However, sales by selling security holders must be made at the fixed price of $0.10 until a market develops for the stock. Using an annualized figure of $30,000 for our costs, including professional and legal services (e.g. bookkeeping, audit costs, attorney fees, advertising and EDGAR services), costs are approximately $2,500 a month. Given the amount of cash currently on hand, we expect our current cash reserves to last for approximately 5 months. Where You Can Find Us Our principal executive office is located at 1020 Fourth Avenue, Wall Township, NJ 07719 and our telephone number is (732) 414-7302. The Offering Common stock offered by selling security holders 3,755,000 shares of common stock. This number represents approximately 9.45% of our current outstanding common stock. Common stock outstanding before the offering 39,755,000 Common stock outstanding after the offering 39,755,000 common shares as of December 21, 2011. Terms of the Offering The selling security holders will determine when and how they will sell the common stock offered in this prospectus. Termination of the Offering The offering will conclude upon the earliest of (i) such time as all of the common stock has been sold pursuant to the registration statement or (ii) such time as all of the common stock becomes eligible for resale without volume limitations pursuant to Rule 144 under the Securities Act, or any other rule of similar effect. Use of proceeds We are not selling any shares of the common stock covered by this prospectus.
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/CIK0001531618_licont_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001531618_licont_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..856f603ed5a874df60d1ad40fb4168ebc4b02734
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001531618_licont_prospectus_summary.txt
@@ -0,0 +1,1089 @@
+Summary Financial Information 
+
+The following financial information summarizes the more complete historical financial information at the end of this prospectus.
+
+ 
+
+As of September 30, 2011 (Audited)
+
+Balance Sheet 
+
+ 
+ 
+ 
+
+Total Assets 
+
+ 
+
+$
+
+ 22,661
+
+Total Liabilities 
+
+ 
+
+$
+
+ 179
+
+Stockholders Equity 
+
+ 
+
+$
+
+ 22,482
+
+ 
+
+ Period from May 2, 2011 (date of inception) to September 30, 2011 (Audited) 
+
+Income Statement 
+
+ 
+ 
+ 
+
+Revenue 
+
+ 
+
+$
+
+ -
+
+Total Expenses 
+
+ 
+
+$
+
+ 818
+
+Net Loss 
+
+ 
+
+$
+
+(818)
+
+Risk Factors 
+
+AN INVESTMENT IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD CAREFULLY CONSIDER THE RISKS DESCRIBED BELOW AND THE OTHER INFORMATION IN THIS PROSPECTUS BEFORE INVESTING IN OUR COMMON STOCK. IF ANY OF THE FOLLOWING RISKS OCCUR, OUR BUSINESS, OPERATING RESULTS AND FINANCIAL CONDITION COULD BE SERIOUSLY HARMED. WE DO NOT CURRENTLY HAVE A TRADING PRICE FOR OUR COMMON STOCK. IF AND WHEN OUR COMMON STOCK BECOME ELIGIBLE FOR TRADING ON THE OVER-THE-COUNTER BULLETIN BOARD, THE TRADING PRICE OF OUR COMMON STOCK COULD DECLINE DUE TO ANY OF THESE RISKS, AND YOU MAY LOSE ALL OR PART OF YOUR INVESTMENT. THERE IS NO ASSURANCE OUR COMMON STOCK WILL BE ELIGIBLE FOR TRADING ON THE OTCBB.
+
+OUR BUSINESS PLAN IS AT AN EARLY STAGE OF DEVELOPMENT AND WE MAY NOT DEVELOP MOBILE APPLICATION SOFTWARE THAT CAN BE COMMERCIALIZED.
+
+The success of our business is dependent on our ability to fully develop our business plan and to develop successfully our mobile application software. Our ability to achieve these goals is unproven, and the lack of operating history makes it difficult to validate our business plan at its current stage of development. Currently, our business plan consists of an idea to create a mobile phone application that will assist users to order food from their mobile devises. The application will be developed by one (1) independent contractor and marketed by our sole executive officer and director. We will need to further develop our business plan in the area of additional application developers, finance, marketing and research and development. In addition, the success of our business plan is dependent upon acceptance of our application by the restaurant business and end-users. Should the target market not be as responsive as we anticipate, we will not have in place an alternate application that we can offer to ensure our continuing as a going concern.
+
+IF WE DO NOT OBTAIN ADDITIONAL FINANCING, OUR BUSINESS WILL FAIL.
+
+While on September 30, 2011, we had cash on hand of $22,661 we have accumulated a deficit of $818 in business development and administrative expenses. Our current cash reserves are not sufficient to meet our obligations for the next twelve-month period. We anticipate that the minimum additional capital necessary to fund our planned operations for the 12-month period will be approximately $10,500 and will be needed for general administrative expenses, business development, marketing costs and costs associated with being a publicly reporting company. 
+
+The most likely source of this additional capital is through the sale of additional shares of common stock, bay way of a privet debt or advances from our sole officer and director.
+
+We have not generated any revenue from operations to date. In order to expand our business operations, we anticipate that we will have to raise additional funding. If we are not able to raise the capital necessary to fund our business expansion objectives, we may have to delay the implementation of our business plan. We do not currently have any arrangements for financing. Obtaining additional funding will be subject to a number of factors, including general market conditions, investor acceptance of our business plan and initial results from our business operations. These factors may impact the timing, amount, terms or conditions of additional financing available to us. 
+
+7 | Page
+
+We are not raising any money in this offering. The most likely source of future funds available to us is through the sale of additional shares of common stock, bay way of a privet debt or advances from our sole officer and director. Andro Gvichiya, our sole officer and director, has agreed to loan the Company funds to meet our obligations and complete our 12-months business plan. However, Mr. Gvichiya has no firm commitment, arrangement or legal obligation to advance or loan funds to the Company. There is no assurance that any additional financing will be available or if available, on terms that will be acceptable to us. Failure to raise additional financing will cause us to go out of business. If this happens, you could lose all or part of your investment.
+
+WE LACK AN OPERATING HISTORY AND THERE IS NO ASSURANCE OUR FUTURE OPERATIONS WILL RESULT IN REVENUES OR PROFITABILITY. IF WE CANNOT GENERATE SUFFICIENT REVENUES TO OPERATE PROFITABLY, WE MAY SUSPEND OR CEASE OPERATIONS.
+
+We were incorporated on May 2, 2011, and our net loss since inception is $818, of which $314 is for bank charges and $504 is for an incorporation service fee. We have very little operating history upon which an evaluation of our future success or failure can be made. Based upon current plans, we expect to incur operating losses in the foreseeable future because we will be incurring large expenses and generating small revenues. Failure to generate significant revenues in the future will cause us to go out of business.
+
+BECAUSE OUR AUDITORS HAVE RAISED A GOING CONCERN, THERE IS A SUBSTANTIAL UNCERTAINTY THAT WE WILL CONTINUE OPERATIONS IN WHICH CASE YOU COULD LOSE YOUR INVESTMENT.
+
+Our auditors have issued a going concern opinion. This means that there is substantial doubt that we can continue as an ongoing business for the next twelve months. The financial statements do not include any adjustments that might result from the uncertainty about our ability to continue in business. As such we may have to cease operations and you could lose your investment.
+
+LACK OF REVENUES TO DATE MAY CAUSE A SUBSTANTIAL DOUBT AS TO WHETHER WE WILL CONTINUE OPERATIONS. IF WE DISCONTINUE OPERATIONS, YOU COULD LOSE YOUR INVESTMENT.
+
+We were incorporated on May 2, 2011 and to date have been involved primarily in organizational activities. We have not earned revenues as of the date of this prospectus and have incurred total losses since inception of $818. 
+
+Accordingly, you cannot evaluate our business, and therefore our future prospects, due to a lack of operating history and revenues. To date, our business operations have been limited to primarily, the development of a business plan and the signing of the Consulting Agreement on October 3, 2011. We have also started to develop a concept of our first software application. Potential investors should be aware of the difficulties normally encountered by development stage companies and the high rate of failure of such enterprises. In addition, there is no guarantee that we will be able to expand our business operations. Even if we expand our operations, at present, we do not know precisely when this will occur. We cannot guarantee that we will be successful in generating revenues and profit in the future. Failure to generate revenues and profit will cause us to suspend or cease operations. If this happens, you could lose all or part of your investment.
+
+8 | Page
+
+WE EXPECT TO ENCOUNTER SEVERAL COMPETITIVE MOBILE SOFTWARE APPLICATIONS ON THE MARKET.
+
+After our first mobile application is fully developed and we begin marketing, we will encounter competition from other similar applications which are presently on the market. These competing applications may offer similar or superior features to ours at a competitive price. Competitors may also be able to develop new or enhanced applications that may be more efficient and less expensive. Further, competitors may develop proprietary positions that prevent us from successfully commercializing our software application that we are developing. As a result, our first application may not be able to compete successfully and our business will fail.
+
+THE SUCCESS OF OUR BUSINESS DEPENDS ON RESTAURANT OWNERS AND CONSUMER ACCEPTANCE OF OUR MOBILE APPLICATION SOFTWARE. 
+
+We are a mobile application development company operating in the highly-competitive market. With our first mobile application we rely on continued restaurant owners and consumer demand or preference for our product. To generate sales and profits, we must gain popularity among restaurants owners and consumers. There is no guarantee that there will be significant market acceptance of our application or it will be on a scale necessary to achieve sustained profitability. 
+
+The market for mobile software application is evolving rapidly and we may not be able to accurately assess the size of the market or trends that may emerge and affect our business. Consumer preferences can change due to a variety of factors, including social trends, negative publicity and economic changes. If we are unable to convince potential restaurant owners and individual consumers of the advantages and desirability of our first application, our ability to generate profit will be limited. Any significant changes in consumer preferences for mobile applications could result in reduced demand for ours and erosion of our competitive and financial position. 
+
+COMPETITORS WITH MORE RESOURCES MAY FORCE US OUT OF BUSINESS.
+
+The mobile application development industry is highly competitive. Many competitors with similar applications are significantly larger and have substantially greater financial, marketing and other resources and have achieved public recognition for their services. Competition by existing and future competitors could result in an inability to secure adequate consumer relationships sufficient enough to support Company endeavors. We cannot be assured that we will be able to compete successfully against present or future competitors or that the competitive pressure we may face will not force us to cease our operations.
+
+TECHNICAL DIFFICULITES OR NETWORK INTERRUPTIONS THAT BEYOND OUR CONTROL CAN NEGATIVELY AFFECT TO OUR BUSINESS. 
+
+ 
+
+We plan to develop mobile application software that will run on customer s mobile devices that use existing networks. In order for the software to be successful, it needs to be running on a reliable network. Network providers often experience downtime, and if the network is not working properly neither will the mobile application provided by us.
+
+9 | Page
+
+OUR SOLE OFFICER AND DIRECTOR HAS LACK OF EXPERIENCE MANAGING PUBLIC REPORTING COMPANY AND ACCOUNTING WHICH IS REQUIRED TO ESTABLISH AND MAINTAIN DISCLOSURE CONTROL AND PROCEDURES AND INTERNAL CONTROL OVER FINANCIAL REPORTING.
+
+We have never operated as a public company. Andro Gvichiya, our Sole officer and Director has no experience managing a public company that is required to establish and maintain disclosure controls and
+
+procedures and internal control over financial reporting. Also, Mr. Andro Gvichiya has only limited experience in accounting. As our operations become more complex we will be required to hire additional
+
+accounting personal to comply with our reporting obligations. If we cannot operate successfully as a public company, your investment may be materially adversely affected.
+
+BECAUSE COMPANY S HEADQUARTERS AND ASSETS ARE LOCATED OUTSIDE THE UNITED STATES, U.S. INVESTORS MAY EXPERIENCE DIFFICULTIES IN ATTEMPTING TO EFFECT SERVICE OF PROCESS AND TO ENFORCE JUDGMENTS BASED UPON U.S. FEDERAL SECURITIES LAWS AGAINST THE COMPANY AND ITS NON-U.S. RESIDENT OFFICER AND DIRECTOR. 
+
+Our Sole officer and Director is non-U.S. resident and our headquarters and assets are located outside the United States. Consequently, it may be difficult for investors to affect service of process on them in the United States and to enforce in the United States judgments obtained in United States courts against them based on the civil liability provisions of the United States securities laws. Since all our assets will be located outside U.S. it may be difficult or impossible for U.S. investors to collect a judgment against us. As well, any judgment obtained in the United States against us may not be enforceable in the United States.
+
+OUR SUCCESS IS DEPENDENT ON CURRENT MANAGEMENT, WHO MAY BE UNABLE TO DEVOTE SUFFICIENT TIME TO THE DEVELOPMENT OF OUR BUSINESS PLAN, WHICH COULD CAUSE THE BUSINESS TO FAIL.
+
+ 
+
+We heavily dependent on the management experience that our sole Officer and Director, Andro Gvichiya, brings to the company. If something were to happen to him, it would greatly delay the company s daily operations until further industry contacts could be established. Furthermore, there is no assurance that suitable people could be found to replace Mr. Gvichiya. In that instance, we may be unable to further our business plan. Additionally, Mr. Gvichiya has other business interests. Mr. Gvichiya has been and continues to expect to be able to commit approximately 15 hours per week of his time, to the development of the company s business plan in the next twelve months. If management is required to spend additional time with his outside interests, he may not have sufficient time to devote to Licont, Corp. and Licont, Corp would be unable to develop its business plan.
+
+BECAUSE OUR SOLE OFFICER AND DIRECTOR OWNS 57.92% OF OUR ISSUED AND OUTSTANDING COMMON STOCK, HE COULD MAKE AND CONTROL CORPORATE DECISIONS THAT MAY BE DISADVANTAGEOUS TO MINORITY SHAREHOLDERS.
+
+Our sole officer and director, Andro Gvichiya, owns approximately 57.92% of the outstanding shares of our common stock. Accordingly, he will have a significant influence in determining the outcome of all corporate transactions or other matters, including mergers, consolidations, and the sale of all or substantially all of our assets. He will also have the power to prevent or cause a change in control. The interests of our sole officer and director may differ from the interests of the other stockholders and thus result in corporate decisions that are disadvantageous to other shareholders.
+
+10 | Page
+
+ANY ADDITIONAL FUNDING WE ARRANGE THROUGH THE SALE OF OUR COMMON STOCK WILL RESULT IN DILUTION TO EXISTING SHAREHOLDERS.
+
+We must raise additional capital in order for our business plan to succeed. We are not raising any money in this offering. Our most likely source of additional capital will be through the sale of additional shares of common stock. Such stock issuances will cause stockholders' interests in our company to be diluted. Such dilution will negatively affect the value of investors shares.
+
+WE DO NOT EXPECT TO PAY DIVIDENDS IN THE FORESEEABLE FUTURE.
+
+We have never paid any dividends on our common stock. We do not expect to pay cash dividends on our common stock at any time in the foreseeable future. The future payment of dividends directly depends upon our future earnings, capital requirements, financial requirements and other factors that our board of directors will consider. Since we do not anticipate paying cash dividends on our common stock, a return on your investment, if any, will depend solely on an increase, if any, in the market value of our common stock.
+
+OUR SHARES OF COMMON STOCK ARE SUBJECT TO THE PENNY STOCK RULES OF THE SECURITIES AND EXCHANGE COMMISSION AND THE TRADING MARKET IN OUR SECURITIES WILL BE LIMITED, WHICH WILL MAKE TRANSACTIONS IN OUR STOCK CUMBERSOME AND MAY REDUCE THE VALUE OF AN INVESTMENT IN OUR STOCK.
+
+The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in "penny stocks. Penny stocks generally are equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system). Penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from those rules, to deliver a standardized risk disclosure document prepared by the SEC, which specifies information about penny stocks and the nature and significance of risks of the penny stock market. A broker-dealer must also provide the customer with bid and offer quotations for the penny stock, the compensation of the broker-dealer, and sales person in the transaction, and monthly account statements indicating the market value of each penny stock held in the customer's account. In addition, the penny stock rules require that, prior to a transaction in a penny stock not otherwise exempt from those rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction. These disclosure requirements may have the effect of reducing the trading activity in the secondary market for stock that becomes subject to those penny stock rules. If a trading market for our common stock develops, our common stock will probably become subject to the penny stock rules, and shareholders may have difficulty in selling their shares.
+
+IF OUR SHARES OF COMMON STOCK COMMENCE TRADING ON THE OTC BULLETIN BOARD, THE TRADING PRICE MAY FLUCTUATE SIGNIFICANTLY AND STOCKHOLDERS MAY HAVE DIFFICULTY RESELLING THEIR SHARES.
+
+As of the date of this Registration Statement, our common stock does not yet trade on the Over-the-Counter Bulletin Board. If our shares of common stock commence trading on the Bulletin Board, there is a volatility associated with Bulletin Board securities in general and the value of your investment could decline due to the impact of any of the following factors upon the market price of our common stock: (i) disappointing results from our development efforts; (ii) failure to meet our revenue or profit goals or operating budget; (iii) decline in demand for our common stock; (iv) downward revisions in securities analysts' estimates or changes in general market conditions; (v) technological innovations by competitors or in competing technologies; (vi) lack of funding generated for operations; (vii) investor perception of our industry or our prospects; and (viii) general economic trends.
+
+11 | Page
+
+We do not have a market maker. There is no current trading market for our securities and if a trading market does not develop, purchasers of our securities may have difficulty selling their shares. In addition, stock markets have experienced price and volume fluctuations and the market prices of securities have been highly volatile. These fluctuations are often unrelated to operating performance and may adversely affect the market price of our common stock. As a result, investors may be unable to sell their shares at a fair price and you may lose all or part of your investment.
+
+THERE IS NO CURRENT TRADING MARKET FOR OUR SECURITIES AND IF A TRADING MARKET DOES NOT DEVELOP, PURCHASERS OF OUR SECURITIES MAY HAVE DIFFICULTY SELLING THEIR SHARES.
+
+There is currently no established public trading market for our securities and an active trading market in our securities may not develop or, if developed, may not be sustained. We intend to have a market maker apply for admission to quotation of our securities on the Over-the-Counter Bulletin Board after the Registration Statement relating to this prospectus is declared effective by the SEC. We do not yet have a market maker who has agreed to file such application. If for any reason our common stock is not quoted on the Over-the-Counter Bulletin Board or a public trading market does not otherwise develop, purchasers of the share may have difficulty selling their common stock should they desire to do so. No market makers have committed to becoming market makers for our common stock and none may do so.
+
+WE HAVE NO EXPERIENCE AS A PUBLIC COMPANY.
+
+We have never operated as a public company. We have no experience in complying with the various rules and regulations, which are required of a public company. As a result, we may not be able to operate successfully as a public company, even if our operations are successful. If we cannot operate successfully as a public company, your investment may be adversely affected. Our inability to operate as a public company could be the basis of your losing your entire investment in us.
+
+Forward-Looking Statements
+
+This prospectus contains forward-looking statements that involve risks and uncertainties. We use words such as anticipate, believe, plan, expect, future, intend and similar expressions to identify such forward-looking statements. You should not place too much reliance on these forward-looking statements. Our actual results are most likely to differ materially from those anticipated in these forward-looking statements for many reasons, including the risks faced by us described in the Risk Factors section and elsewhere in this prospectus. 
+
+Use of Proceeds
+
+We will not receive any proceeds from the sale of the common stock offered through this prospectus by the selling shareholders. 
+
+12 | Page
+
+Determination of Offering Price 
+
+The selling shareholders will sell our shares at $0.05 per share. We determined this offering price arbitrarily, by adding a $0.03 premium to the last sale price of our common stock to investors. This offering is priced at the time of the commencement of the offering and must remain offered at such price during the entire duration of the offering. The selling shareholders will be considered to be underwriters of this offering. 
+
+Mr. Gvichiya received his shares at a price of $0.001 per share. The price at which Mr. Gvichiya received his shares on May 27, 2011 is significantly less than the price paid by selling security holders on September 22, 2011 because risks of failure were significantly higher at the time he purchased his shares. Also, he is the founder of the Company, he advanced funds for registration of the Company and he has been the Company s sole officer and director since inception.
+
+Dilution
+
+The common stock to be sold by the selling shareholders is common stock that is currently issued and outstanding. Accordingly, there will be no dilution to our existing shareholders. 
+
+Selling Shareholders 
+
+The selling shareholders named in this prospectus are offering all of the 1,090,000 shares of common stock offered through this prospectus. These shares were acquired from us in private placements that were exempt from registration under Regulation S promulgated pursuant to the Securities Act of 1933. All shares were acquired outside of the United States by non-U.S. persons. The shares include the following: 
+
+1,090,000 shares of our common stock that the selling shareholders acquired from us in a private offering that was exempt from registration under Regulation S of the Securities Act of 1933, as amended, which offering closed on September 22, 2011.
+
+The following table provides as of the date of this prospectus, information regarding the beneficial ownership of our common stock held by each of the selling shareholders, including: 
+
+1. the number of shares owned by each shareholder prior to this offering;
+
+2. the percentage of shares that owned by each shareholder;
+
+3. the total number of shares being offered in this the offering; and
+
+4. the total number of shares to be owned by each shareholder upon completion of the offering assuming all the shares are sold in the offering.
+
+Name Of Selling Shareholder
+
+Shares Owned Prior To This Offering
+
+Percentage
+
+Of shares owned Prior to Offering
+
+Number Of Shares Being Offered
+
+Total Shares to Be Owned Upon Completion Of This Offering
+
+VARDAN BESALJAN
+
+40,000
+
+1.54%
+
+40,000
+
+-0-
+
+DAVID RICARDO BARBERI RIOS
+
+35,000
+
+1.35%
+
+35,000
+
+-0-
+
+ASKHAT ZHAILAUBEK
+
+35,000
+
+1.35%
+
+35,000
+
+-0-
+
+RENATO IVAN RIVERA LEON
+
+40,000
+
+1.54%
+
+40,000
+
+-0-
+
+JOSE ADRIAN RUMBEA SAULEO
+
+45,000
+
+1.74%
+
+45,000
+
+-0-
+
+LIDIA ARAVISKAYA
+
+45,000
+
+1.74%
+
+45,000
+
+-0-
+
+FAINA MALCEVA
+
+35,000
+
+1.35%
+
+35,000
+
+-0-
+
+ZVARD SOGOMONOVA
+
+45,000
+
+1.74%
+
+45,000
+
+-0-
+
+ELIZAVETA PUTYATINA
+
+45,000
+
+1.74%
+
+45,000
+
+-0-
+
+LUIS RAMIRO CHIMBORAZO TOAPANTA 
+
+40,000
+
+1.54%
+
+40,000
+
+-0-
+
+NURLAN KOSMAMBETOV
+
+35,000
+
+1.35%
+
+35,000
+
+-0-
+
+HOMERO GIOVANNI PENAHERRERA ZAVALA
+
+40,000
+
+1.54%
+
+40,000
+
+-0-
+
+EDDY ANTONIO JUMA 
+
+40,000
+
+1.54%
+
+40,000
+
+-0-
+
+ISABEL CELINA LEON DELGADO
+
+35,000
+
+1.35%
+
+35,000
+
+-0-
+
+ADRIAN DARIO RIVERA TCHERNIKOV 
+
+35,000
+
+1.35%
+
+35,000
+
+-0-
+
+GLORIA PAMELA NOBOA MARIN
+
+45,000
+
+1.74%
+
+45,000
+
+-0-
+
+ALEXANDER DONDIKOV
+
+45,000
+
+1.74%
+
+45,000
+
+-0-
+
+ADRIANA VALERIA SAULEO CARDENAS
+
+45,000
+
+1.74%
+
+45,000
+
+-0-
+
+ALEXANDER GAVRILOV
+
+45,000
+
+1.74%
+
+45,000
+
+-0-
+
+YURIY STEPANOV
+
+40,000
+
+1.54%
+
+40,000
+
+-0-
+
+VIKTOR DONDIKOV
+
+50,000
+
+1.93%
+
+50,000
+
+-0-
+
+INNA BELIKOVA
+
+50,000
+
+1.93%
+
+50,000
+
+-0-
+
+IGOR ZHOKHOV
+
+50,000
+
+1.93%
+
+50,000
+
+-0-
+
+DARIA VISHNYAKOVA
+
+40,000
+
+1.54%
+
+40,000
+
+-0-
+
+NATALIYA STOKOLOS
+
+50,000
+
+1.93%
+
+50,000
+
+-0-
+
+OLEKSANDRA LYASHKO
+
+40,000
+
+1.54%
+
+40,000
+
+-0-
+
+The named party beneficially owns and has sole voting and investment power over all shares or rights to these shares. The numbers in this table assume that none of the selling shareholders sells shares of common stock not being offered in this prospectus or purchases additional shares of common stock, and assumes that all shares offered are sold. The percentages are based on 2,590,000 shares of common stock issued and outstanding on the date of this prospectus. 
+
+Other than disclosed above, none of the selling shareholders: 
+
+1. has had a material relationship with us other than as a shareholder at any time within the past three years; 
+
+2. has had any material relationship with Mr. Gvichiya;
+
+3. has ever been one of our officers or directors;
+
+4. is a broker-dealer; or a broker-dealer's affiliate.
+
+Mr. Andro Gvichiya, our president and sole director who owns 1,500,000 shares of common stock is not offering any shares of his common stock for resale in this offering.
+
+13 | Page
+
+Plan of Distribution 
+
+The selling shareholders may sell some or all of their common stock in one or more transactions, including block transactions. There are no arrangements, agreements or understandings with respect to the sale of these securities. 
+
+The selling shareholders will sell our shares at $0.05 per share. We determined this offering price arbitrarily by adding a $0.03 premium to the last sale price of our common stock to investors. This offering is priced at the time of the commencement of the offering and must remain offered at such price during the entire duration of the offering. The selling shareholders will be considered to be underwriters of this offering. 
+
+The shares may also be sold in compliance with the Securities and Exchange Commission's Rule 144, when eligible.
+
+If applicable, the selling shareholders may distribute shares to one or more of their partners who are unaffiliated with us. Such partners may, in turn, distribute such shares as described above. If these shares being registered for resale are transferred from the named selling shareholders and the new shareholders wish to rely on the prospectus to resell these shares, then we must first file a prospectus supplement naming these individuals as selling shareholders and providing the information required concerning the identity of each selling shareholder and he or her relationship to us. There is no agreement or understanding between the selling shareholders and any partners with respect to the distribution of the shares being registered for resale pursuant to this registration statement. 
+
+We can provide no assurance that all or any of the common stock offered will be sold by the selling shareholders. 
+
+We are bearing all costs relating to the registration of the common stock. The selling shareholders, however, will pay any commissions or other fees payable to brokers or dealers in connection with any sale of the common stock. 
+
+The selling shareholders must comply with the requirements of the Securities Act of 1933 and the Securities Exchange Act of 1934 in the offer and sale of the common stock. In particular, during such times as the selling shareholders may be deemed to be engaged in a distribution of the common stock, and therefore be considered to be an underwriter, they must comply with applicable law and may, among other things: 
+
+ 
+
+1.
+
+Not engage in any stabilization activities in connection with our common stock;
+
+ 
+
+ 
+ 
+
+ 
+
+2.
+
+Furnish each broker or dealer through which common stock may be offered, such copies of this prospectus, as amended from time to time, as may be required by such broker or dealer; and
+
+ 
+
+ 
+ 
+
+ 
+
+3.
+
+Not bid for or purchase any of our securities or attempt to induce any person to purchase any of our securities other than as permitted under the Securities Exchange Act.
+
+The Securities and Exchange Commission (the Commission ) has also adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system). 
+
+14 | Page
+
+The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from those rules, deliver a standardized risk disclosure document prepared by the Commission, which contains: 
+
+- a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading;
+
+- a description of the broker's or dealer's duties to the customer and of the rights and remedies available to the customer with respect to a violation of such duties or other requirements;
+
+- a brief, clear, narrative description of a dealer market, including "bid" and "ask" prices for penny stocks and the significance of the spread between the bid and ask price;
+
+- a toll-free telephone number for inquiries on disciplinary actions;
+
+- a definition of significant terms in the disclosure document or in the conduct of trading penny stocks; and
+
+- such other information and is in such form (including language, type, size, and format) as the Commission shall require by rule or regulation.
+
+The broker-dealer also must provide, prior to effecting any transaction in a penny stock, the customer with: 
+
+- bid and offer quotations for the penny stock;
+
+- the compensation of the broker-dealer and its salesperson in the transaction;
+
+- the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock; and
+
+- monthly account statements showing the market value of each penny stock held in the customer's account.
+
+In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those rules; the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written acknowledgment of the receipt of a risk disclosure statement, a written agreement to transactions involving penny stocks, and a signed and dated copy of a written suitability statement. These disclosure requirements will have the effect of reducing the trading activity in the secondary market for our stock because it will be subject to these penny stock rules. Therefore, stockholders may have difficulty selling those securities. 
+
+Description of Securities 
+
+General 
+
+Our authorized capital stock consists of 75,000,000 shares of common stock at a par value of $0.001 per share. 
+
+Common Stock 
+
+As of September 30, 2011 there were 2,590,000 shares of our common stock issued and outstanding that are held by 27 stockholders of record. 
+
+Holders of our common stock are entitled to one vote for each share on all matters submitted to a stockholder vote. Holders of common stock do not have cumulative voting rights. Therefore, holders of a majority of the shares of common stock voting for the election of directors can elect all of the directors. 
+
+15 | Page
+
+Holders of our common stock representing a majority of the voting power of our capital stock issued, outstanding and entitled to vote, represented in person or by proxy, are necessary to constitute a quorum at any meeting of our stockholders. A vote by the holders of a majority of our outstanding shares is required to effectuate certain fundamental corporate changes such as liquidation, merger or an amendment to our articles of incorporation. 
+
+Holders of common stock are entitled to share in all dividends that the board of directors, in its discretion, declares from legally available funds. In the event of liquidation, dissolution or winding up, each outstanding share entitles its holder to participate pro rata in all assets that remain after payment of liabilities and after providing for each class of stock, if any, having preference over the common stock. Holders of our common stock have no pre-emptive rights, no conversion rights and there are no redemption provisions applicable to our common stock. 
+
+Preferred Stock
+
+We do not have an authorized class of preferred stock. 
+
+Dividend Policy 
+
+We have never declared or paid any cash dividends on our common stock. We currently intend to retain future earnings, if any, to finance the expansion of our business. As a result, we do not anticipate paying any cash dividends in the foreseeable future. 
+
+Share Purchase Warrants 
+
+We have not issued and do not have any outstanding warrants to purchase shares of our common stock. 
+
+Options 
+
+We have not issued and do not have any outstanding options to purchase shares of our common stock. 
+
+Convertible Securities 
+
+We have not issued and do not have any outstanding securities convertible into shares of our common stock or any rights convertible or exchangeable into shares of our common stock. 
+
+Interests of Named Experts and Counsel 
+
+No expert or counsel named in this prospectus as having prepared or certified any part of this prospectus or having given an opinion upon the validity of the securities being registered or upon other legal matters in connection with the registration or offering of the common stock was employed on a contingency basis, or had, or is to receive, in connection with the offering, an interest, direct or indirect, in the registrant or any of its parents or subsidiaries. Nor was any such person connected with the registrant or any of its parents or subsidiaries as a promoter, managing or principal underwriter, voting trustee, director, officer, or employee. 
+
+W. Scott Lawler has provided an opinion on the validity of our common stock.
+
+The financial statements included in this prospectus and the registration statement have been audited by Thomas J. Harris to the extent and for the periods set forth in their report appearing elsewhere in this document and in the registration statement filed with the SEC, and are included in reliance upon such report given upon the authority of said firm as experts in auditing and accounting.
+
+16 | Page
+
+Description of Business 
+
+We were incorporated in the State of Nevada on May 2, 2011. We are a mobile applications development company and just recently started our operations. We are a development stage company and cannot state with certainty whether we will achieve profitability. We do not have revenues, have minimal assets and have incurred losses since inception. Our plan of operation is forward-looking. It is likely that we will not be able to achieve profitability and might need to cease operations due to the lack of funding. To date, our business operations have been limited to primarily, the development of a business plan and the signing of the Consulting Agreement on October 3, 2011. We have also started to develop a concept of our first software application. We maintain our statutory registered agent's office at 2360 Corporate Circle, Ste. 400, Henderson, Nevada 89074-7722. Our business office is located at Gundelsheimer str. 44, Stuttgart, Germany 70437. Our telephone number is +49-71191413498.
+
+Our current cash reserves are not sufficient to meet our obligations for the next twelve-month period. As a result, we will need to seek additional funding in the near future.
+
+The most likely source of this additional capital is through the sale of additional shares of common stock, bay way of a privet debt or advances from our sole officer and director.
+
+Andro Gvichiya, our sole officer and director, has agreed to loan the Company funds to meet our obligations and complete our 12-months business plan. However, Mr. Gvichiya has no firm commitment, arrangement or legal obligation to advance or loan funds to the Company. We also anticipate that additional funding can be raised from the sale of additional common stocks and by way of a private debt.
+
+Industry Overview
+
+Mobile application development is the process by which application software is developed for small low-power handheld devices such as personal digital assistants, enterprise digital assistants or mobile phones. These applications are designed to help the user to perform specific tasks and can be downloaded by customers from various mobile software distribution platforms.
+
+Application developers can propose and publish their applications on the stores, being rewarded by a revenue sharing of the selling price. Most famous is Apple's App Store, where only approved applications may be distributed and run on iOS devices, such as iPod, iPhone and iPad. The service allows users to browse and download applications from the iTunes Store that were developed with the iOS SDK or Mac SDK and published through Apple, Inc. Depending on the application, they are available either for free or at a cost. The applications can be downloaded directly to a target device, or downloaded onto a PC or Mac via iTunes. 30% of revenue from the store goes to Apple, and 70% go to the producer of the application. The App Store opened on July 10, 2008 via an update to iTunes. According to Wikipedia, as of October 4, 2011, there were at least 500,000 third-party applications officially available on the App Store with over 18 billion downloads.
+
+Android Market is another big and popular online software store developed by Google for Android OS devices. Its gateway is an application program called "Market", preinstalled on most Android devices, allows users to browse and download applications published by third-party developers. Google announced the Android Market on 28 August 2008, and made it available to users on 22 October 2008. The Android Market application is not open source. Only Android devices that comply with Google's compatibility requirements may install and access Google's closed-source Android Market application, subject to entering into a licensing agreement with Google. Developers in 29 countries may sell applications on the Android Market. Application developers receive 70% of the application price, with the remaining 30% distributed among carriers and payment processors (Google does not take a percentage). According to Wikipedia, as of July 2011 there were 250,000 available on the Android Market and 4.5 billion applications have been installed.
+
+There are other applications stores such as BlackBerry App World, an application distribution for a majority of BlackBerry devices; Amazon Appstore, an American mobile application store for the Google Android operating system which was opened on March 22, 2011; Palm App Catalog created by HP / Palm, Inc where HP / Palm, Inc webOS device users can download applications directly from the device or send a link to the application via a unique web distribution method. Microsoft has confirmed the introduction of a Windows Store on Windows 8, similar to the Mac App Store that allows developers to publish their Metro-style applications on Windows 8 devices.
+
+17 | Page
+
+Product Description 
+
+We plan to develop our first mobile application software that lets customers find food and order delivery from a plethora of restaurants wherever they are. Initially, we will develop this application for iOS devices, and when/if we are successful, we will develop it for Android OS devices. We just started to develop a concept of our first application and there is no guarantee that we ever develop this application. We will develop other mobile applications when/if our first mobile application is successful and we have available funds for further development.
+
+Our first application will allow customers to order food from mobile phones and tablets from and to any places. For example, someone can order food from public transportation heading home if he would like dinner to be on the way as he arrives. Search can be done by cuisine, restaurant name, address or menu item. The default search will be for restaurants that are delivering now. The application will start out by asking if the search should be done by location, which it automatically detects, or by address. Much of the time, those two things are going to be the same. When search is completed by either of those criteria, a list of restaurants that will deliver food is shown. Once restaurant is selected, the screen will show the name, the logo, the address, and a button to online order. A customer can view listing of the entire delivery menu. Tapping on each item allows getting an extended description. When desired food is found, a customer can place an order online, free of charge. Our customers can to log in with their accounts and go through the checkout process without having to re-enter information. As of today we have not identify any customers and there is no assurance that we will ever have them. 
+
+Advantages of our application
+
+With the advent of mobile application devises, the online experience has changed substantially. The ability to browse the net over a mobile device is quickly becoming an expected standard for Internet user. Our mobile application will allow customers to order desired food online without computer in any given time. There is also opportunity for forward-thinking companies to excel in the now essential world of mobile devices. Businesses taking advantage of the mobile application market are strategically positioning themselves to leverage the new opportunities and customers that this medium provides. Our application will be free for both, customers searching for foods and for restaurants that want to benefit from going mobile. Restaurants, registered in our mobile application, will have the following advantages:
+
+1. Draw new customers
+
+2. Boost sales through mobile marketing
+
+3. Expend information to untapped markets
+
+4. Gain advantage over competitors
+
+When our mobile application is developed we plan to devote resources to research and development in order to maintain and enhance the competitiveness of our software.
+
+Marketing Our Product
+
+Initially, our product will be promoted by our President, Mr. Andro Gvichiya. As we need participating as many restaurants as possible, the marketing and advertising will be targeted to any types of restaurants. Our methods of communication will include: phone calls, email, and regular mail. We will market and advertise our mobile application on our web site by showing its advantages and conveniences. We intend to attract traffic to our website by a variety of online marketing tactics such as registering with top search engines using selected key words (meta tags) and utilizing link and banner exchange options. We intend to promote our website by displaying it on our promotion materials. We also plan to attend business shows in our industry to promote our application with a view to find new customers.
+
+18 | Page
+
+Social Networking
+
+To draw attention from potential customers we plan to market and advertise our mobile application though social networking. We believe social networking is one of the fastest growing industries on the planet. Websites such as Facebook and Twitter have come a long way in only a few years to be household names all over the world. We intend to use these websites to spread out information about our application. We believe that Facebook and Twitter, as well as many other types of social media websites have become an excellent way of getting a business's message across. We intend to create our customer group on these social media websites to keep registered members informed about news and special offers.
+
+Word of Mouth Marketing
+
+We intend to implement word of mouth advertising into our business model. We believe a huge marketing opportunity on the internet is spreading word of mouth, a form of free advertising. We believe the internet has provided the biggest medium to spread word of mouth and social networking sites have been the place where everyone has come together. These days, companies have the capabilities of increased speed at which the message comes across. Bloggers and journalists can post their thoughts and reviews of products, and then people in all corners of the world can read it immediately. Twitter is a good example of this. If a company wants to release a statement to the media, they can use Twitter as a tool to do it. Afterwards, people can use twitter to respond, and everybody has access to all information as well as the abilities to connect with each other and start forums and conversations. Not only is word of mouth considered free advertising, but we believe it is one of the most powerful advertising tools out there.
+
+Competition
+
+The application software market is highly competitive and rapidly changing. There are several mobile applications in the market similar to ours. In addition, we believe that a number of companies are planning to offer similar products. Our ability to compete depends upon many factors within and outside our control, including the timely development and introduction of our mobile application and its enhancements, its functionality, performance, reliability, customer service and support and marketing efforts. 
+
+Due to the relatively low barriers to entry in the mobile application market, we expect additional competition from other emerging companies. Many of the Company's existing and potential competitors are substantially larger than us and have significantly greater financial, technical and marketing resources. As a result, they may be able to respond more quickly to new or emerging technologies and changes in customer requirements, or to devote greater resources to the development and promotion of their mobile applications. In addition, current and potential competitors have established or may establish cooperative relationships among themselves or prospective customers. Accordingly, it is possible that new competitors or alliances among competitors may emerge and rapidly acquire significant market share. There can be no assurance that we will be able to compete successfully against current or future competitors or that competitive pressure will not have a material adverse effect on our business, operating results and financial condition.
+
+Revenue
+
+Our application will be free to download and free to use. We do not plan to add any fees to the prices charged by our restaurants and delivery services. We plan to charge the restaurant a small fee (2-3% of the total bill) for each order we provide to them. 
+
+19 | Page
+
+Consulting Agreement
+
+On October 3, 2010, we have signed a consulting agreement with a consultant, Pavel Rozum, an individual. The consultant, Pavel Rozum, will provide assistance and consulting in the development of concept of our mobile application. He will assist in hiring a designer and an application software writer, and will oversee the whole process of our mobile application software development.
+
+The agreement with the registrant contains the following additional material terms:
+
+ 1. Consultant shall submit written, signed reports of the time spent performing consulting, itemizing in reasonable detail the dates on which services were performed, the number of hours spent and a brief description of the services rendered.
+
+ 2. In consideration for the Consulting Services to be performed by the Consultant under this agreement, Licont, Corp. will pay Consultant at the rate of $10.00 USD per hour for the time spent on Consulting Services. The Company shall pay Consultant the amounts due pursuant to submitted reports within 14 days after such reports are received by the Company.
+
+3. The registrant will reimburse to consultant the following expenses incurred while the Agreement exists: all travel expenses to and from work sites including miscellaneous travel-related expenses (parking and tolls), meal expenses, administrative expenses and lodging expenses if work demands overnight stays.
+
+ 4. The consultant is an independent contractor and not an employee of the registrant or any of its subsidiaries or affiliates.
+
+ 5. In the course of performing consulting services, the parties recognize that consultant may come in contact with or become familiar with information with the registrant or its subsidiaries or affiliates may consider confidential. This information may include, but is not limited to, information pertaining to the registrant's information technology and other business systems, which information may be of value to a competitor. Consultant agrees to keep all such information confidential.
+
+ 6. The agreement commenced on October 3, 2011 and shall terminate on October 3, 2012, unless earlier terminated by either party hereto. Either party may terminate the agreement upon Thirty (30) days prior written notice. The registrant may, at its option, renew this Agreement for an additional one (1) year term on the same terms and conditions as set forth herein by giving notice to consultant of such intent to renew on or before October 3, 2012.
+
+Description of property 
+
+We do not have an ownership or leasehold interest in any property. Our office is currently located at Gundelsheimer str. 44, Stuttgart, Germany 70437. This is the part of our Sole Officer and Director s residence. We do not pay any rent to Mr. Gvichiya and there is no agreement to pay any rent in the future. We do not have a lease agreement with Andro Gvichiya. If Mr. Gvichiya disallows us the use of his facilities at anytime in the future, we will have to find alternative facilities to use as our office which will disrupt our operations. 
+
+Insurance
+
+We do not maintain any insurance and do not intend to maintain insurance in the future. Because we do not have any insurance, if we are made a party of a products liability action, we may not have sufficient funds to defend the litigation. If that occurs a judgment could be rendered against us that could cause us to cease operations. 
+
+20 | Page
+
+Employees. Identification of Certain Significant Employees.
+
+We are a development stage company and currently have no employees, other than our sole officer and director Andro Gvichiya. We intend to hire additional employees on an as needed basis. 
+
+Research and Development Expenditures 
+
+We have not incurred any other research or development expenditures since our incorporation. 
+
+Government Regulation
+
+We will be required to comply with all regulations, rules and directives of governmental authorities and agencies applicable to the construction and operation of any facility in any jurisdiction which we would conduct activities. We do not believe that government regulations will have a material impact on the way we conduct business.
+
+Subsidiaries 
+
+We do not have any subsidiaries.
+
+Patents and Trademarks 
+
+We do not own, either legally or beneficially, any patents or trademarks. 
+
+Offices
+
+Our office is currently located at Gundelsheimer str. 44, Stuttgart, Germany 70437. Our telephone number is +49-71191413498. This is the office of our Director, Mr. Andro Gvichiya. We do not pay any rent to Mr. Gvichiya and there is no agreement to pay any rent in the future. Upon the completion of our offering, we do not intend to establish an office elsewhere.
+
+Legal Proceedings 
+
+We are not currently a party to any legal proceedings. Our address for service of process in Nevada is 2360 Corporate Circle, Ste. 400, Henderson, Nevada 89074-7722.
+
+Market for Common Equity and Related Stockholder Matters
+
+No Public Market for Common Stock 
+
+There is presently no public market for our common stock. We anticipate applying for trading of our common stock on the over the counter bulletin board upon the effectiveness of the registration statement of which this prospectus forms a part. However, we can provide no assurance that our shares will be traded on the bulletin board or, if traded, that a public market will materialize.
+
+Stockholders of Our Common Shares
+
+As of the date of this registration statement we have 27 registered shareholders. 
+
+21 | Page
+
+Rule 144 Shares 
+
+A total of 1,500,000 shares of our common stock are available for resale to the public in accordance with the volume and trading limitations of Rule 144. Pursuant to Rule 144, a person who has beneficially owned restricted shares of our common stock for at least six months is entitled to sell their securities provided that (i) such person is not deemed to have been one of our affiliates at the time of, or at any time during the three months preceding the sale and (ii) we are subject to the Securities Exchange Act of 1934 periodic reporting requirements for at least three months before the sale. 
+
+Persons who have beneficially owned restricted shares of our common stock for at least six months but who are our affiliates at the time of, or at any time during the three months preceding the sale, are subject to additional restrictions. Such person is entitled to sell within any three-month period only a number of securities that does not exceed the greater of either of the following: 
+
+ 
+ 
+ 
+
+ 
+
+ 
+
+1% of the total number of securities of the same class then outstanding, which will equal 25,900 shares as of the date of this prospectus; or 
+
+ 
+
+ 
+ 
+ 
+
+ 
+
+ 
+
+the average weekly trading volume of such securities during the four calendar weeks preceding the filing of a notice on Form 144 with respect to the sale; 
+
+ 
+
+provided, in each case that we are subject to the Exchange Act periodic reporting requirements for at least three months before the sale. Such sales must also comply with the manner of sale and notice provisions of Rule 144. 
+
+As of the date of this prospectus, our Sole Officer and Director, an affiliate, holds all of the 1,500,000 shares that may be sold pursuant to Rule 144. 
+
+Stock Option Grants 
+
+To date, we have not granted any stock options. 
+
+Registration Rights 
+
+We have not granted registration rights to the selling shareholders or to any other persons. 
+
+Dividends 
+
+There are no restrictions in our articles of incorporation or bylaws that prevent us from declaring dividends. The Nevada Revised Statutes, however, do prohibit us from declaring dividends where, after giving effect to the distribution of the dividend: 
+
+1. 
+
+we would not be able to pay our debts as they become due in the usual course of business; or
+
+ 
+
+ 
+
+2. 
+
+our total assets would be less than the sum of our total liabilities plus the amount that would be needed to satisfy the rights of shareholders who have preferential rights superior to those receiving the distribution.
+
+We have not declared any dividends, and we do not plan to declare any dividends in the foreseeable future. 
+
+22 | Page
+
+Plan of Operation
+
+We are a development stage corporation. To date, our business operations have been limited to primarily, the development of a business plan and the signing of the Consulting Agreement on October 3, 2011. We have also started to develop a concept of our first software application. We have not generated or realized any revenues from our business operations yet.
+
+Our auditors have issued a going concern opinion. This means that our auditors believe there is substantial doubt that we can continue as an on-going business for the next twelve months unless we obtain additional capital to pay our bills. This is because we have not generated any revenues and no revenues are anticipated until we implement our business plan and execute our first service agreement. We are not raising any money in this offering. Our only sources for cash at this time are investments by shareholders in our company and cash advances from our sole director Andro Gvichiya. 
+
+There is no assurance that any additional financing will be available or if available, on terms that will be acceptable to us. Failure to raise additional financing will cause us to go out of business. If this happens, you could lose all or part of your investment.
+
+We will not be conducting any product research or development. We do not expect to purchase or sell plant or significant equipment. Further we do not expect significant changes in the number of employees. Upon completion of our public offering, our specific goal is to profitably sell our services. Our plan of operations is as follows:
+
+October 2011 December 2011: Application Concept Development. No material cost.
+
+During this period we plan to research existing market of mobile applications similar to ours in restaurant and food delivery business. We will find out weak and strong points of these applications. According to our research we plan to develop a concept of our first mobile application software. We will try to eliminate the week sides and add new features and create improved design. Our sole officer and director will perform the concept development.
+
+December 2011 February 2012: Set up Office. Estimated cost $4,000.
+
+By February of 2011, we plan to set up office in and acquire the necessary equipment to begin operations and application writing. We believe that it will cost at least $4,000 to set up office and obtain the necessary equipment to begin operations. Our sole officer and director will handle our administrative duties. We will need an Intel-based Mac computer for developing our applications, as well as a test device, an iPhone.
+
+Minimum office requirements:
+
+ 
+
+ Mac computer $ 2,000
+
+ iPhone $ 600
+
+ Print/Scan/Fax $ 700
+
+ Phone $ 100
+
+ Furnishings $ 300
+
+ Misc $ 300
+
+February 2012: Join the Apple Developer Program. Cost: $
+
+99
+
+.
+
+Apple Developer is Apple Inc.'s developer network. It is designed to make available resources to help software developers write software for the Mac OS X and iOS platforms. To be registered as an Apple developer means to have access to a complete set of technical resources, support, pre-release software and everything needed to create applications for iPod, iPhone and iPad. Apple Inc. allows anyone register as an Apple Developer. The cost is US$99/year per developer program. As soon as our office is established and the necessary equipment is purchased we will register to Apple Developer Program.
+
+March 2012-June 2012: Hire Designer and Application Software Writer. Estimated Cost $7,000.
+
+During this period we intend to begin our recruitment of software writer and developer. We will try to find someone who has experience designing for mobile devices as they may have some good feedback and suggested improvements for your sketches. 
+
+23 | Page
+
+June 2012-July 2012: Testing Our Mobile Application. No material costs.
+
+Testing is a technique to uncover the hidden bugs in the application developed on mobile platform. Mobile Application Testing is a one of the most important part of mobile application development life cycle. Mobile application development is a very miscellaneous process and hence the possibility of errors in the coding cannot be ignored. It is a challenging process as it involves testing of applications across different handsets, carriers, languages and locations. Our sole officer and director will be responsible for the testing.
+
+Before submitting our application to Apple Store we must ensure that it works correctly on real devise. We will test it on our iPhone. The steps we need to take in order to test our application on a real device are the following:
+
+- Sign up for Apple Developer Program which will be done by this time
+
+- Obtain an iPhone Development Certificate
+
+- Create application ID
+
+- Generate a Provisioning profile
+
+- Download the generated Provisioning profile onto our Mac
+
+- Install the Provisioning profile onto our connected iPhone
+
+- Download and install the development certificate onto our iPhone
+
+- Deploy our application onto your iPhone
+
+- Test the application
+
+June 2012-August 2012: Submit Our Application To Apple Store. No material costs.
+
+Applications are subject to approval by Apple, for basic reliability testing and other analysis. During this period we will:
+
+ Create your Certificates
+
+ Define your App ID s
+
+ Create your Distribution Provisioning Profile
+
+ Compile the application
+
+ Upload to iTunes Connect (Only in the event that Apple approves our application).
+
+August 2012-October 2012: Develop Our Website and Commence Marketing Campaign. Estimated cost $7,000.
+
+Our marketing efforts will be directed at both, restaurants and end-users. We will identify the restaurants through internet search and business directories such as Yellow Pages. As iOS devices share is significant in the market we intend to market our product to general public. We project to begin development of the website during this period. This should become and extremely important tool for the marketing. The website will be set up to begin promoting the software and outlining its benefits. Our director, Mr. Gvichiya will be in charge of registering our web domain. The website development costs, including site design and implementation will be approximately $2,000. Updating and improving our website will continue throughout the lifetime of our operations.
+
+We intend to use marketing strategies, such as web advertisements, direct mailing, and phone calls. We also expect to get new clients from Internet, social networking and "word of mouth" advertising. We also plan to attend shows and exhibitions in software development industry. We intend to spend about $5,000 on marketing efforts during the first year. Marketing is an ongoing matter that will continue during the life of our operations.
+
+We therefore expect to incur the following costs in the next 12 months in connection with our business operations:
+
+Marketing costs
+
+$
+
+ 5,000
+
+Website development costs
+
+$
+
+ 2,000
+
+Apple Developer Program
+
+$
+
+99
+
+Commissions of the designer and application software writer
+
+$
+
+ 7,000
+
+Estimated cost of this offering
+
+$
+
+ 6,000
+
+Office Set Up
+
+$
+
+ 4,000
+
+Consulting fees
+
+$
+
+1,000
+
+Costs associated with being a publicly reporting company
+
+$
+
+8,000
+
+Total
+
+$
+
+ 
+
+33,099
+
+ 
+
+Our current cash reserves are not sufficient to meet our obligations for the next twelve-month period. 
+
+We anticipate that the minimum additional capital necessary to fund our planned operations for the 12-month period will be approximately $10,500 and will be needed for general administrative expenses, business development, marketing costs and costs associated with being a publicly reporting company.
+
+As a result, we will need to seek additional funding in the near future.
+
+The most likely source of this additional capital is through the sale of additional shares of common stock, bay way of a privet debt or advances from our sole officer and director.
+
+Andro Gvichiya, our sole officer and director, has agreed to loan the Company funds to meet our obligations and complete our 12-months business plan. However, Mr. Gvichiya has no firm commitment, arrangement or legal obligation to advance or loan funds to the Company. We also anticipate that additional funding can be raised from the sale of additional common stocks and by way of a private debt. 
+
+24 | Page
+
+Limited operating history; need for additional capital 
+
+There is no historical financial information about us upon which to base an evaluation of our performance. We are in start-up stage operations and have not generated any revenues. We cannot guarantee we will be successful in our business operations. Our business is subject to risks inherent in the establishment of a new business enterprise, including limited capital resources and possible cost overruns due to price and cost increases in services and products. 
+
+Our current cash reserves are not sufficient to meet our obligations for the next twelve-month period. As a result, we will need to seek additional funding in the near future. 
+
+We anticipate that additional funding will be from the sale of additional common stock. We may seek to obtain short-term loans from our director as well, although no such arrangement has been made. At this time, we cannot provide investors with any assurance that we will be able to raise sufficient funding from the sale of our common stock or through a loan from our director to meet our obligations over the next twelve months. We do not have any arrangements in place for any future equity financing. If we are unable to raise the required financing, our operations could be materially adversely affected and we could be forced to cease operations.
+
+Results of Operations for Period Ending September 30, 2011 
+
+Since our inception on May 2, 2011 to September 30, 2011, we incurred net loss of $818. These operating expenses were comprised of $314 for bank charges, $504 is for an incorporation service fee. As of September 30, 2011, we had cash of $22,661 in our bank accounts. However, we anticipate that we will incur substantial losses over the next 12 months. 
+
+We have not attained profitable operations and are dependent upon obtaining financing to continue with our business plan. For these reasons, there is substantial doubt that we will be able to continue as a going concern. 
+
+Changes In and Disagreements with Accountants 
+
+We have had no changes in or disagreements with our accountants. 
+
+Available Information
+
+We will be subject to the informational requirements of the Securities Exchange Act of 1934, and in accordance therewith files reports, or information statements and other information with the Securities and Exchange Commission. We have filed with the Securities and Exchange Commission (the SEC ) a registration statement on Form S-1 under the Securities Act of 1933 with respect to the shares of our common stock offered through this prospectus. This prospectus is filed as a part of that registration statement, but does not contain all of the information contained in the registration statement and exhibits. For further information with respect to common stock offered hereby, reference is made to our registration statement and each exhibit attached to it. You may inspect the registration statement, exhibits and schedules filed with the Securities and Exchange Commission at the Commission s principal office in Washington, D.C. Copies of all or any part of the registration statement may be obtained from the Public Reference Section of the Securities and Exchange Commission, 100 F Street NE, Washington, D.C. 20549. D.C. 20549. Please call the Commission at 1-800-SEC-0330 for further information on the operation of the public reference rooms.
+
+The Securities and Exchange Commission also maintains a web site at http://www.sec.gov that contains reports, proxy statements and information regarding registrants that file electronically with the Commission. Our registration statement and the referenced exhibits can also be found on this site. 
+
+25 | Page
+
+Reports to Security Holders
+
+Upon effectiveness of this Prospectus, we will be subject to the reporting and other requirements of the Exchange Act. We will make available to our shareholders annual reports containing financial statements audited by our independent auditors and our quarterly reports containing unaudited financial statements for each of the first three quarters of each year; however, we will not send the annual report to our shareholders unless requested by an individual shareholder. 
+
+The public may read and copy any materials that we file with the SEC at the SEC's Public Reference Room at 100 F Street, NE, Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. The address of that site is www.sec.gov. 
+
+Directors, Executive Officers, Promoters and Control Persons
+
+Our executive officer and director and his age as of the date of this prospectus is as follows: 
+
+Director:
+
+Name of Director
+
+Age
+
+ 
+
+Andro Gvichiya
+
+26
+
+ 
+
+ 
+ 
+ 
+
+Executive Officers:
+
+Name of Officer
+
+Age
+
+Office
+
+Andro Gvichiya
+
+26
+
+President, Chief Executive Officer, Treasurer, Chief Financial Officer and Chief Accounting Officer, Secretary
+
+Biographical Information 
+
+Set forth below is a brief description of the background and business experience of our Sole Officer and Director for the past five years. 
+
+Mr. Gvichiya has acted as our sole President, Chief Executive Officer, Treasurer, Chief Financial Officer, Chief Accounting Officer, Secretary and sole member of our board of directors since our incorporation on May 2, 2011. Mr. Gvichiya owns 57.92% of the outstanding shares of our common stock. As such, it was unilaterally decided that Mr. Gvichiya was going to be our sole President, Chief Executive Officer, Treasurer, Chief Financial Officer, Chief Accounting Officer, Secretary and sole member of our board of directors. This decision did not in any manner relate to Mr. Gvichiya s previous employments. Mr. Gvichiya graduated with a Bachelor degree in Computer Science from Irkutsk State Technical University in 2007. Since graduation Mr. Gvichiya has been owner/operator of Next , a computer club. The club has 50 computers with high-speed internet connection. People come to Next read and send emails, browse the Internet, work with documents, upload and download files, but most of the clients come to play video games. Next is also involved in organizing video games competitions. Andro Gvichiya is Next s CEO. His responsibilities are to carry out the everyday operations, strategic plans and policies of the company, general and administrative duties; financial, tax and risk management. Mr. Gvichiya intends to devote approximately 15 hours a week to planning and organizing activities of Licont, Corp.
+
+During the past ten years, Mr. Gvichiya has not been the subject to any of the following events:
+
+ 1. Any bankruptcy petition filed by or against any business of which Mr. Gvichiya was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time.
+
+26 | Page
+
+ 2. Any conviction in a criminal proceeding or being subject to a pending criminal proceeding.
+
+ 3. An order, judgment, or decree, not subsequently reversed, suspended or vacated, or any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting Mr. Gvichiya s involvement in any type of business, securities or banking activities.
+
+ 4. Found by a court of competent jurisdiction (in a civil action), the Securities and Exchange Commission or the Commodity Future Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated.
+
+Significant Employees 
+
+We have no significant employees other than our Sole Officers and Director. 
+
+Audit Committee Financial Expert
+
+We do not have an audit committee financial expert. We do not have an audit committee financial expert because we believe the cost related to retaining a financial expert at this time is prohibitive. Further, because we have no operations, at the present time, we believe the services of a financial expert are not warranted.
+
+Conflicts of Interest 
+
+Andro Gvichiya, our President will be devoting approximately15 hours a week to our operations. Because Mr. Gvichiya will only be devoting limited time to our operations, our operations may be sporadic and occur at times which are convenient to him. As a result, operations may be periodically interrupted or suspended which could result in a lack of revenues and a cessation of operations.
+
+Executive Compensation
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/CIK0001533455_aja_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CIK0001533455_aja_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..3819586d136e298d0db3dfb4b3c66384238eaf29
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CIK0001533455_aja_prospectus_summary.txt
@@ -0,0 +1 @@
+Table of Contents Summary Step Out, Inc. The Company We were incorporated as Step Out, Inc. on May 2, 2011 in the State of Nevada for the purpose of developing a chain of flotation tank therapy spas, beginning with the Northern Nevada market. We have procured our initial equipment and seeking funding for the purpose of testing and developing our service and opening our first location in the Reno, Nevada area. We are a development stage company and have not generated any revenues to date. As of August 31, 2011, we had $15,032 in current assets and current liabilities in the amount of $7,877. Accordingly, we had working capital of $7,155 as of August 31, 2011. Our current working capital is not sufficient to enable us to implement our business plan as set forth in this prospectus. In addition, if we are unable to achieve sales revenue sufficient to fund ongoing operations by the end of our fiscal year beginning September 1, 2011, we will be required to seek additional financing. We currently do not have any arrangements for financing and we may not be able to obtain financing when required. For these and other reasons, our independent auditors have raised substantial doubt about our ability to continue as a going concern. Accordingly, we will require additional financing, including the equity funding sought in this prospectus. Because there is no minimum amount of shares that must be sold in order for the Offering to close, there is a risk that we may receive no proceeds from this Offering, or that investors in the Offering will own in shares in a company that has: (1) not received enough proceeds from the Offering to begin operations, and (2) has no market for its shares. We are offering for sale to investors a maximum of 2,000,000 shares of our common stock at an offering price of $0.01 per share (the "Offering"). Our business plan is to use the proceeds of this offering for certain supplies and other expenses necessary for the initial testing and development of planned flotation tank therapy service, and for certain start-up costs involved in opening our first planned location. The minimum investment amount for a single investor is $400 for 40,000 shares. The shares are being offered by us on a "best efforts" basis and there can be no assurance that all or any of the shares offered will be subscribed. If less than the maximum proceeds are available to us, our development and prospects could be adversely affected. There is no minimum offering required for this offering to close. The proceeds of this offering will be immediately available to us for our general business purposes. The Maximum Offering amount is 2,000,000 shares ($20,000). We are not a , ' ': blank check company and have no plans to engage in a merger or acquisition with any other company or other entity. We do not intend for our company to be used as a vehicle for a private company to become a reporting company. In addition, our officers, directors, and affiliates have no such intention. We are offering our shares publicly and paying the expenses of the offering because we seek to become a reporting company with the Commission under the Securities Exchange Act of 1934 and to enable the potential future development of a market for our common stock. In addition, we believe that the financial transparency and potential future liquidity which may be afforded to holders of our common stock will make an investment in our common stock more attractive to investors in this Offering and to future investors. We believe that this will, in turn, better enable to us to raise additional capital to implement and grow our business plan. In addition to the costs of this Offering, we expect to incur additional legal and accounting costs in the approximate amount of $ 10,000 per year as a result of becoming a publicly reporting company. In the event that substantially less than the Maximum Offering is sold, or in the event that we otherwise experience a cash shortfall, the necessity to pay these additional legal and accounting costs may leave us with insufficient funds to fully execute our business plans as described in the Prospectus. Further, as of the date of this Prospectus, there is no public trading market for our common stock and no assurance that a trading market for our securities will ever develop. Although we intend to apply for quotation of our common stock on the over-the-counter bulletin board in the future, there can be no assurance that our stock will be accepted for quotation or that, if quoted, will develop an orderly trading market. Finally, our common stock, if quoted on the OTC Bulletin Board, will likely be a "Penny Stock." Broker disclosure requirements related to Penny Stocks may have the effect of reducing the trading activity in the secondary market for stock. Despite these potential drawbacks to becoming a public company, however, we feel that our investors will benefit on the whole as a result of our public status. Our address is 1976 Glacier Meadow Dr., Reno, NV 89521. Our phone number is (775) 200-5814. Our fiscal year end is August 31. Table of Contents The Offering Securities Being Offered Up to 2,000,000 shares of our common stock. Offering Price The offering price of the common stock is $0.01 per share. There is no public market for our common stock. We cannot give any assurance that the shares offered will have a market value, or that they can be resold at the offered price if and when an active secondary market might develop, or that a public market for our securities may be sustained even if developed. The absence of a public market for our stock will make it difficult to sell your shares in our stock. Upon the effectiveness of the registration statement of which this prospectus is a part, we intend to apply through FINRA to the over-the-counter bulletin board, through a market maker that is a licensed broker dealer, to allow the trading of our common stock upon our becoming a reporting entity under the Securities Exchange Act of 1934. Minimum Number of Shares To Be Sold in This Offering n/a Maximum Number of Shares To Be Sold in This Offering 2,000,000 Securities Issued and to be Issued 10,000,000 shares of our common stock are issued and outstanding as of the date of this prospectus. Our sole officer and director, Sterling Hamilton, owns 100% of the common shares of our company and therefore has substantial control. Upon the completion of this offering, our officer and director will own an aggregate of approximately 83.33% of the issued and outstanding shares of our common stock if the maximum number of shares is sold. Number of Shares Outstanding After The Offering If All The Shares Are Sold 12,000,000 Use of Proceeds If we are successful at selling all the shares we are offering, our proceeds from this offering will be approximately $20,000. We intend to use these proceeds to execute our business plan. Offering Period The shares are being offered for a period up to 120 days after the date of this Prospectus, unless extended by us for an additional 90 days. Summary Financial Information Balance Sheet Data Fiscal Year Ended August 31, 2011 (audited) Cash $ 10,032 Total Assets 15,032 Liabilities 7,877 Total Stockholder s Equity 7,155 Statement of Operations May 2, 2011 (date of inception) to August 31, 2011 (audited) Revenue $ 0 Net Profit (Loss) for Reporting Period $ ($7,845) Table of Contents
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/CPF_central_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/CPF_central_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..5558c5f4fa6e595139d310ddc128ccbfe58a8eae
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/CPF_central_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY The following summary highlights selected information contained elsewhere in this prospectus and in the documents incorporated by reference in this prospectus and does not contain all the information you will need in making your investment decision. You should read carefully this entire prospectus and the documents incorporated by reference in this prospectus before making your investment decision. Central Pacific Financial Corp. Company Overview Central Pacific Financial Corp. is a Hawaii corporation and a bank holding company. Our principal business is to serve as a holding company for our bank subsidiary, Central Pacific Bank. Central Pacific Bank (the "bank") is a full-service commercial bank with 34 branches and 120 ATMs located throughout the state of Hawaii. The bank offers a broad range of products and services including accepting time and demand deposits and originating loans, including commercial loans, construction loans, commercial and residential mortgage loans, and consumer loans. The bank also has an office in California. At December 31, 2010, we had total assets of approximately $3.9 billion, loans and leases of $2.2 billion and total deposits of $3.1 billion. Our Common Stock is traded on the NYSE under the ticker symbol "CPF." Our principal executive offices are located at 220 South King Street Honolulu, Hawaii 96813 and our telephone number is (808) 544-0500. Our internet address is http://www.centralpacificbank.com. The information contained on our web site is not part of this prospectus. The Recapitalization We recently completed the following transactions as part of our recapitalization: a one-for-twenty reverse stock split of our Common Shares on February 2, 2011 (the "Reverse Stock Split"), for which shareholder approval was obtained on May 24, 2010. a capital raise of $325 million in a private placement (the "Private Placement") that was completed on February 18, 2011, at a price of $10 per share, with investments from (1) affiliates of each of The Carlyle Group ("Carlyle") and Anchorage Capital Group, L.L.C. ("Anchorage" and, together with Carlyle, the "Lead Investors"), pursuant to investment agreements with each of the Lead Investors (collectively, the "Investment Agreements") and (2) various other investors, including certain of our directors and officers (the "Additional Investors" and, together with the Lead Investors, the "Investors"), pursuant to subscription agreements with each of such investors; and concurrently with the Private Placement, (1) the exchange (the "TARP Exchange") of 135,000 shares of our Fixed Rate Cumulative Perpetual Preferred Stock, no par value per share and liquidation preference $1,000 per share (the "TARP Preferred Stock"), held by the Treasury, and accrued and unpaid dividends thereon for 5,620,117 Common Shares and (2) the amendment of the Warrant to, among other things, reflect an exercise price of $10 per share. In addition, the Company is conducting a rights offering that will allow shareholders of record as of 5:00 p.m., Eastern time, on February 17, 2011, and their transferees to purchase our Common Shares at the same price per share paid by the Investors in the Private Placement (the "Rights Offering"). with a copy to: Alison S. Ressler Sullivan & Cromwell LLP 1888 Century Park East, Suite 2100 Los Angeles, CA 90067 (310) 712-6600 Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement is declared effective. If any of the securities being registered on this Form are offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, as amended (the "Securities Act") check the following box. If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer", "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). (Check one): Large accelerated filer Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company CALCULATION OF REGISTRATION FEE Title of securities to be registered Amount to be registered Maximum offering price per share Proposed maximum aggregate offering price Amount of registration fee(1) Common stock, no par value per share(2) 18,408,427 $29.22 $537,894,236.94 $62,449.52 Common stock, no par value per share, issuable upon exercise of a warrant(2) 79,288 $10.00 $792,880.00 $92.05 Total 18,487,715 $538,687,116.94 $62,541.57(3) (1)Estimated in accordance with Rule 457(c) under the Securities Act of 1933, as amended, solely for the purpose of calculating the registration fee, based on the average of the high and low prices of shares of Central Pacific Financial Corp. common stock reported on the New York Stock Exchange on February 22, 2011 with the exception of shares issuable upon exercise of warrants, which are based on the exercise price of the warrant in accordance with Rule 457(i). (2)The common stock being registered hereby includes associated rights to acquire Junior Participating Preferred Stock, Series C, of Central Pacific Financial Corp. pursuant to the Tax Benefits Preservation Plan described in the prospectus contained in this registration statement. (3)Previously paid. The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act or until the registration statement shall become effective on such date as the Commission, acting pursuant to Section 8(a), may determine. Table of Contents The Offering Issuer Central Pacific Financial Corp. Common Shares Offered by Us None. Common Shares Offered by Selling Shareholders Up to 18,487,715 Common Shares, which includes 79,288 Common Shares issuable upon exercise of the Warrant. Use of Proceeds We will not receive any proceeds from the sale of the Common Shares by the Selling Shareholders. Listing Our Common Shares are listed on the NYSE under the symbol "CPF."
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/DREM_dream_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/DREM_dream_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..84fca820391558db0cf3273546a14134c972cdf3
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/DREM_dream_prospectus_summary.txt
@@ -0,0 +1,3528 @@
+Summary of Prospectus
+
+Summary Financial Data
+
+Risk Factors
+
+Plan of Distribution
+
+Determination of Offering Price
+
+Use of Proceeds
+
+Dilution
+
+Description of Business
+
+Competition
+
+Management s Discussion and Analysis
+
+Plan of Operation
+
+Results of Operations
+
+Off-Balance Sheet Arrangements
+
+Management
+
+Executive Compensation
+
+Certain Relationships and Related Party Transactions
+
+Security Ownership of Certain Beneficial Owners and Management
+
+Plan of Distribution 
+
+Shares Eligible for Future Sale
+
+Description of Securities
+
+Interest of Named Experts and Counsel
+
+Transfer Agent
+
+Legal Matters
+
+Experts
+
+Description of Property
+
+Litigation
+
+Where You Can Find More Information
+
+Financial Statements
+
+Notes to the Financial Statements
+
+5
+
+5
+
+7
+
+8
+
+26
+
+27
+
+27
+
+28
+
+28
+
+40
+
+43
+
+44
+
+51
+
+54
+
+55
+
+56
+
+56
+
+57
+
+58
+
+61
+
+62
+
+62
+
+62
+
+62
+
+62
+
+63
+
+63
+
+64
+
+69
+
+75
+
+4
+
+Questions And Answers About The Offering
+
+Q: How Many Virtual Shares Will I Receive?
+
+A: Virtual will issue to you one (1) share of our common stock for each fifty (50) cents that you choose to invest. Fractional shares will not be issued.
+
+Q: What Are Shares Of Virtual Worth?
+
+A: The value of our shares will be determined by their trading price after the offering. We do not know what the trading price will be and we can provide no assurances as to value or even if the shares will trade at all.
+
+Q: What Will Virtual do After The Offering?
+
+A: The Company s business will not change as a result of this transaction. We are currently a development stage enterprise.
+
+Q: Will Virtual Shares Be Listed On a National Stock Exchange Or The NASDAQ Stock Market?
+
+A: Our shares will not be listed on any national stock exchange or the NASDAQ Stock Market. It is our hope that the shares will be quoted by one or more market makers on the Bulletin Board.
+
+SUMMARY OF PROSPECTUS
+
+You should read the following summary together with the more detailed business information, financial statements and related notes that appear elsewhere in this prospectus. In this Prospectus, unless the context otherwise denotes, references to "we," "us," "our", Virtual Learning and Company are to The Virtual Learning Company, Inc.
+
+A Cautionary Note on Forward-Looking Statements
+
+This prospectus contains forward-looking statements, which relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as may, should, expects, plans, anticipates, believes, estimates, predicts, potential, or continue or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled Risk Factors, that may cause our industry s actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance, or achievements expressed or implied by these forward-looking statements.
+
+While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested herein. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.
+
+General Information about Our Company
+
+Virtual was formed as a Nevada corporation on January 6, 2009. Virtual Learning is a subscription-based, software-as-a-service provider of education products. The Company provides standards-based instruction, practice and assessments that improve the performance of students via proprietary web-based platforms through any one of our several websites on the World Wide Web with the URL www.mathisbasic.com; www.learningisbasic.com ; 
+
+5
+
+www.eschoolroom.com; and www.educationisbasic.com. All of these web sites feed into the Company s sole 
+
+consolidated content providing web site www.learningisbasic.com.
+
+Virtual Learning is also a producer and distributor of computer software and video educational materials on CD and DVD formatted disks which will be available through various distributors and our websites either as a download or in boxed format We have combined rigorous content in math with interactive features and games that engage students, reinforce and reward learning achievement.
+
+We are a development stage company and have not yet commenced business operations or generated any revenues. We have been issued a "substantial doubt" going concern opinion from our auditors and our only assets are our cash, property and equipment, and capitalized curriculum development costs, at March 31, 2011, consisting of approximately $15,329, $3,009 and $277,000.. 
+
+Virtual Learning s principal place of business and corporate offices are located at 60 Knolls Crescent, Suite 9M, Bronx, NY 10463. Our telephone number is (973) 768-4181 and our registered agent for service of process is Marilyn Radloff, 115 Taurus Circle, Reno, NV 89511. Our fiscal year end is December 31.
+
+We received our initial funding of $10,000 through the sale of common stock to our officers and directors. To date, Virtual Learning cash-based operations have been funded by the issuance of 10,000,000 shares of common stock for $10,000 or $.001 per share to Thomas P. Monahan (President and majority shareholder) and the issuance of an additional 100,000 shares of common stock for an aggregate price of $20,000 or $.20 per share to an unrelated party.
+
+In addition, Mr. Monahan loaned Virtual Learning cash of $16,000, charged Virtual Learning costs and expenses of $8,540 on a personal credit card, and contributed computer equipment at a stated value of $3,000. As of March 31, 2011, Mr. Monahan has charged Virtual Learning costs and expenses of an additional $902. As of December 31, 2010, $25,900 of these amounts have been repaid.
+
+This is our initial public offering. We are registering a total of 1,000,000 shares of our common stock, all for sale by the Company All of the shares being registered for sale by the Company will be sold at a price per share of $0.50 for the duration of the Offering. We cannot guarantee that our shares will ever be quoted on the OTCBB, or if quoted, that a market will develop. Additionally, our stock will be subject to penny stock rules, as described more fully in the Risk Factors section, below.
+
+We will be selling all of the 1,000,000 shares of common stock we are offering as a self-underwritten offering. There is no minimum amount we are required to raise in this offering and any funds received will be immediately available to us. This Offering will terminate on the earlier of the sale of all of the shares offered or 270 days after the date of the Prospectus, unless extended an additional 90 days by our board of directors.
+
+There is no current public market for our securities. As our stock is not publicly traded, investors should be aware they probably will be unable to sell their shares and their investment in our securities is not liquid.
+
+6
+
+The Offering
+
+Following is a brief summary of this Offering. Please see the Plan of Distribution and Terms of the Offering sections for a more detailed description of the terms of the offering.
+
+Offering
+
+Securiti
+
+1,000,000 shares of common stock which we are offering. This offering will terminate on the earlier of the sale of all of the shares offered by the Company or 270 days after the date of the Prospectus, unless extended by our Board of Directors for an additional 90 days
+
+Price per share
+
+All of the shares being registered for sale by the Company will be sold at a fixed price per share of $0.50 for the duration of the offering.
+
+Securities Issued and Registration Costs
+
+15,350,000 shares of common stock are issued and outstanding before the Offering and 16,350,000 shares will be outstanding after the Offering, assuming all shares are sold. However, if 50% or 75% of the shares being offered are sold, there will be 15,850,000 or 16,100,000 shares outstanding, respectively.
+
+We estimate our total offering registration costs to be $20,000. If we experience a shortage of funds prior to funding, our directors have informally agreed to advance funds to allow us to pay for offering costs, filing fees, and correspondence with our shareholders; however, our directors have no formal commitment or legal obligation to advance or loan funds to the Company. 
+
+Our officers, directors, control persons and/or affiliates do not intend to purchase any Shares in this Offering. If all the Shares in this Offering are sold, our executive officers and directors will own 61.16% of our common stock. However, if only 50% or 25% of the Shares in this Offering are sold, our executive officers and directors will own 63.15% or 64.16%, respectively.
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+Summary Financial Information
+
+The following table summarizes selected financial data regarding our business and should be read in conjunction with our financial statements and related notes contained elsewhere in this prospectus as well as the information under Management s Discussion and Analysis or Plan of Operations .
+
+The financial statement data as of and for the fiscal year ended December 31, 2010, from inception (January 6, 2009) through December 31, 2009, and from inception (January 6, 2009) through December 31, 2010 has been derived from our audited financial statements which are included elsewhere in this prospectus. 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+7
+
+Summary of Statements of Operations Data
+
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+
+For the year ended
+
+December 31,
+
+2010
+
+ 
+From inception (January 6, 2009) to December 31,
+
+2009
+
+Totals from inception
+
+(January 6, 2009) through December 31,
+
+2010
+
+Sales
+
+ 
+$ -0-
+
+ 
+$ -0-
+
+$ -0-
+
+Total operating expenses
+
+ 
+$ 129,236
+
+ 
+$ 680,672
+
+$ 809,908
+
+Net loss
+
+ 
+$ (129,236)
+
+ 
+$ (680,672)
+
+$ (809,908)
+
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+For the three months ended
+
+For the three months ended
+
+ 
+From inception
+
+(January 6, 2009) to
+
+ 
+March 31,
+
+2011
+
+March 31,
+
+2010
+
+ 
+March 31, 2009
+
+March 31,
+
+2011
+
+Sales
+
+$ -0-
+
+$ -0-
+
+ 
+$ -0-
+
+$ -0-
+
+Total operating expenses
+
+4,296
+
+121,956
+
+ 
+680,000
+
+814,204
+
+Net loss
+
+$ (4,296)
+
+$(121,956)
+
+ 
+$ (680,000)
+
+$(814,204)
+
+ 
+9
+
+March 31, 2011
+
+Unaudited
+
+As of December 31,
+
+2010
+
+ 
+
+As of December 31, 2009
+
+ 
+
+ 
+ 
+ 
+ 
+ 
+ 
+
+Summary of Balance Sheets Data
+
+ 
+ 
+ 
+ 
+ 
+
+TOTAL CURRENT ASSETS 
+
+$ 15,329
+
+$ 18,573 
+
+ 
+$ 22,028
+
+ 
+
+TOTAL ASSETS 
+
+$ 295,338
+
+$ 295,732 
+
+ 
+$ 176,728
+
+ 
+
+TOTAL LIABILITIES 
+
+$ 2,542
+
+$ 1,640 
+
+ 
+$ 15,400
+
+ 
+
+TOTAL STOCKHOLDERS' EQUITY 
+
+$ 292,796
+
+$ 294,092 
+
+ 
+$ 161,328
+
+ 
+
+TOTAL LIABILITIES AND 
+
+ 
+ 
+ 
+ 
+ 
+
+STOCKHOLDERS' EQUITY 
+
+$ 295,338
+
+$ 295,732
+
+ 
+$ 176,728
+
+ 
+
+RISK FACTORS
+
+An investment in our common stock is highly speculative and involves a high degree of risk. Therefore, we are disclosing all material risks herein and you should consider all of the risk factors discussed below, as well as the other information contained in this document. You should not invest in our common stock unless you can afford to lose your entire investment and you are not dependent on the funds you are investing.
+
+Added Costs Due to Being a Public Company.
+
+There is a substantial increase of costs to the Company as a result of being Public. These costs include, but are not limited to the cost of conducting a yearly audit of the financial condition and quarterly reviews of the Company and such costs can be in excess of $50,000 yearly. In addition, there can be additional legal costs associated with preparing all necessary filings with the Securities and Exchange Commission or other regulatory body, if the Company is not subject to the reporting requirements of section 13 or 15(d) of the Securities Act. There are also assorted other additional costs to the Company for being Public. As a result of all of these additional costs, the Company is likely to be less profitable, if it becomes profitable, if it does not generate enough revenue, when and if commences producing revenue, to cover the additional costs.
+
+8
+
+Current Economic Conditions May Impact Our Commercial Success and Ability to Obtain Financing.
+
+The current economic conditions could have a serious impact on the ability of the Company to achieve viability. Due to the decrease in overall spending, there is a possibility that spending on educational software and related services may decrease for the foreseeable future, resulting in less potential economic activity for the Company. Since we are a very small operation, we may not be able to create sufficient sales to sustain ourselves. In addition, due to the severe difficulty in obtaining credit in the current economic crisis, we may have trouble seeking out and locating additional funds or require financing of our operations.
+
+If we fail to develop subscriber relationships, our ability to grow our business will be impaired.
+
+Our growth depends to a significant degree upon our ability to develop subscriber relationships. We cannot guarantee that subscribers will be found; that any such relationships will be successful when they are in place, or that business with the subscribers will increase. Failure to develop such relationships could have a material adverse effect on our business, results of operations, and financial condition.
+
+Effect of Governmental Regulations: Compliance with Environmental Laws
+
+We do not believe that we are subject to any material government or industry regulations.
+
+The recent ongoing adoption of online learning in established education markets makes it difficult for us to evaluate our current and future business prospects for sales to school systems. If web-based education fails to achieve widespread acceptance by students, parents, teachers, schools and other institutions, our growth and profitability may suffer. 
+
+The use of online learning technology is a relatively new approach in the traditional K-12 education testing and assessment markets. There can be no assurance that our online products and services will achieve success in the K-12 or postsecondary education markets. Our success depends in part upon the adoption by students, teachers, and school districts of technology-based education initiatives. Some academicians and educators oppose online education in principle and have expressed concerns regarding the perceived loss of control over the education process that can result from offering content online. As a necessary corollary to the acceptance of web-based education in the classroom, our growth depends in part on parental acceptance of the role of technology in education and the availability of internet access in the home. If the acceptance of technology-based education does not continue to increase, our ability to continue to grow our business could be materially impaired. 
+
+Our revenue will be primarily generated by sales of subscriptions to our website over the term of the subscription. Our subscriber renewal rates are difficult to predict and declines in sales of our products or subscriber renewal rates may materially adversely affect our business and results of operations. 
+
+We anticipate that revenue from subscription sales will account for a substantial majority of our revenue for the next few years. The average subscription period for our products is expected to be 12 months. Additionally, promotional incentives, such as complimentary months of service, will be offered periodically to new subscribers, resulting in a subscription term longer than one year. Our subscribers will not obligated to renew their subscriptions at the end of the term, nor will they be required to pay any penalties if they fail to renew their subscriptions. As a result, our subscribers have no obligation to renew their subscriptions after the expiration of their initial subscription period. We will begin the renewal process approximately two months prior to a subscription ending. Sales of our products or services or our subscriber renewal rates may decline or fluctuate as a result of a number of factors, including decreased demand, adverse regulatory actions, pricing pressures, competitive factors or any other reason. These and other factors that have affected our product sales or subscriber renewal rates in the past are not predictive of the future, and, as a result, we cannot accurately predict subscriber renewal rates. If planned sales to new subscribers do not materialize or our subscribers do not renew their subscriptions at anticipated previous levels, our revenue, when and if such revenue generation commences, may decline, which would negatively impact our business, financial condition, results of operations and cash flow. 
+
+9
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+Our business is expected to be subject to seasonal fluctuations, which may cause our cash flow to fluctuate from quarter-to-quarter and materially adversely impact the market price of our common stock. 
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+Our cash flow may fluctuate as a result of seasonal variations in our anticipated business, principally due to: 
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+our subscribers spending patterns, which we expect to relate to typical gift giving holidays and the start of the academic year
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+the timing of expirations and renewals of subscriptions;
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+the timing of special promotions and discounts, including additional free months of subscriptions
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+It is expected that a significant percentage of our new sales and subscription renewals will occur in the second and fourth quarters because parents make purchases related to the new academic year. The fourth calendar quarter may produce the second highest level of sales and renewals, relating to holidays which are occasions for gift giving. Because payment in full for subscriptions is typically due at the time of subscription or renewal, and our operating expense, of which labor and sales commissions make up the largest portion, will be been fairly consistent throughout the year, we typically expect higher cash flow in the quarters with stronger sales and renewals. We do. however, expect quarterly fluctuations in cash flow. 
+
+System disruptions, vulnerability from security risks to our networks, databases and online applications and an inability to expand and upgrade our systems in a timely manner to meet unexpected increases in demand could damage our reputation, impact our ability to generate revenue and limit our ability to attract and retain subscribers. 
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+The performance and reliability of our technology infrastructure is critical to our business. Any failure to maintain satisfactory online product performance, reliability, security, or availability of our web platform infrastructure may significantly reduce subscriber satisfaction and damage our reputation, which would negatively impact our ability to attract new subscribers and obtain subscriber renewals. The risks associated with our web platform include: 
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+breakdowns or system failures resulting in a prolonged shutdown of our servers, including failures attributable to power shutdowns or attempts to gain unauthorized access to our systems, which may cause loss or corruption of data or malfunction of software or hardware;
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+breakdowns or system failures resulting from the release of new features or functionality, which may cause unintended malfunctions of software or hardware;
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+human error by systems engineers, programmers, other internal staff, and other vendor staff; performance issues, such as low response time or bugs, that detract from the user experience;
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+increased complexity or more difficult navigation resulting from implementation of new features and functionality, that detract from the user experience;
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+disruption or failure in our Web Host provider, which would make it difficult or impossible for students to log on to our websites;
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+damage from fire, flood, tornado, power loss, or telecommunications failures;
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+Infiltration by hackers or other unauthorized persons; and
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+any infection by or spread of computer viruses.
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+10
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+In addition, increases in the volume of traffic on our websites could strain the capacity of our Web Host s existing infrastructure, which could lead to slower response times or system failures. This would cause a disruption or suspension of our product and service offerings. Any web platform interruption or inadequacy that causes performance issues or interruptions in the availability of our websites could reduce subscriber satisfaction and result in a reduction in the number of subscribers using our products and services. If sustained or repeated, these performance issues could reduce the attractiveness of our websites and products and services. 
+
+We may need to incur additional costs to Web Host s systems in order to accommodate system disruptions, security risks, and increased demand if we anticipate that our systems cannot handle higher volumes of traffic in the future. We may also need to upgrade our web platform and systems as new technologies become available that we are required to implement in order to keep our infrastructure up-to-date and product offerings relevant. We may be forced to make upgrades in response to new competitors or significant improvements to existing competitors web platforms and system capabilities. However, the costs and complexities involved in expanding and upgrading our systems may prevent us from doing so in a timely manner and may prevent us from adequately meeting the demand placed on our systems. 
+
+We are subject to laws and regulations as a result of our collection and use of personal information, particularly from our K-12 student users, and any violations of such laws or regulations, or any breach, theft or loss of such information, could materially adversely affect our reputation and operations and expose us to costly litigation. 
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+We anticipate that the vast majority of our product users will be minors. The Child Online Protection Act and the Children s Online Privacy Protection Act restrict the distribution of materials considered harmful to children and impose additional restrictions on the ability of online services to collect information from minors. Many states have also passed laws requiring notification to users when there is a security breach of personal data. Additionally, the Family Educational Rights and Privacy Act, or FERPA, protects the privacy and restricts the disclosure of student information, and we must remain FERPA-compliant through security policies, processes, systems, and controls, including using software that detects hackers and other unauthorized or illegal activities. We cannot predict whether new technological developments could circumvent these security measures. If the security measures that we use to protect personal or student information or credit card information are ineffective, we may be subject to liability, including claims for invasion of privacy, impersonation, unauthorized purchases with credit card information or other similar claims. In addition, the Federal Trade Commission and several states have investigated the use of personal information by certain internet companies. We could incur significant expense and our business could be materially adversely affected if new regulations regarding use of personal information are introduced, if our security measures are ineffective or if our privacy practices are investigated.
+
+We may not be able to develop new products and services or expand our existing product lines in a timely and cost effective manner. 
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+Each of our products are created from state standards for a particular grade level and subject in the K-12 market for math subjects. With these standards continually changing, as well as the updating of our current learning products, our product and content development teams may not be able to respond to changing market requirements on a timely basis. If we are not able to generate sufficient new revenue to exceed the incremental costs associated with developing and delivering new products and entering new markets, our results of operations may be materially and adversely affected. Furthermore, we may be unable to develop and offer additional products and services on commercially reasonable terms and in a timely manner or maintain the quality and consistency necessary to keep pace with changes in market requirements and respond to competitive pressures. A failure to do any of these things may result in a material decline in our revenue and may prevent us from achieving profitability. 
+
+If we are unable to develop, maintain and enhance our brand identity, our business and results of operations may suffer. 
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+The initial development and continued development of our brand identity is important to our business, and expanding brand awareness is critical to attracting and retaining our subscribers. Potential subscribers may not be 
+
+11
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+aware of the relationship of our brands with one and another, particularly Learning is Basic serving as an umbrella for each of our product lines. If and when we begin to obtain subscriptions and extend our geographic reach, maintaining quality and consistency across all of our products and services may become more difficult to achieve, and any significant and well-publicized failure to maintain this quality and consistency will have a detrimental effect on our brands. We cannot provide assurances that our sales and marketing efforts will be successful in promoting our brands in a competitive and cost-effective manner. If we are unable to create, maintain and enhance our brand recognition and awareness of our products and services, or if we incur excessive sales and marketing expense, our business and results of operations could be materially and adversely affected. 
+
+Our future growth and profitability will depend in large part upon the effectiveness and efficiency of our sales and marketing expenditures in recruiting subscribers. 
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+Our future growth and profitability will depend in large part upon the effectiveness and efficiency of our sales efforts, including our ability to: 
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+Obtain any subscribers and if obtained retain the then existing subscribers and sell them additional products and services
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+Develop and then enhance word-of-mouth subscriber referrals
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+Obtain sales personnel and, once obtained, retain our most productive sales managers and staff
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+Compete effectively against larger competitors to secure sales.
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+In addition, our future growth and profitability will depend in large part upon the effectiveness and efficiency of our marketing expenditures, including our ability to: 
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+create awareness of our brands
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+select the right market, media and specific media vehicles in which to advertise
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+identify the most effective and efficient level of spending in each market, media and specific media vehicle
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+provide timely and appropriate sales collateral to assist the sales team
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+determine the appropriate creative message and media mix for advertising, marketing and promotional expenditures
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+determine the most appropriate pricing models and simple quote generator for subscribers and sales reps
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+effectively manage marketing costs, including creative and media expense, in order to maintain acceptable subscriber acquisition costs
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+keep the website navigation and messaging simple and relevant to subscribers;
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+generate leads for sales, including obtaining subscriber lists in a cost-effective manner
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+drive traffic to our website
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+convert subscriber inquiries into actual orders.
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+12
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+Our planned sales and marketing efforts and expenditures may not result in increased revenue or generate sufficient levels of product and brand awareness, and we may not be able to increase our net sales at the same rate as we increase our sales and marketing efforts and expenditures. 
+
+If our products or services contain errors, new product releases could be delayed or our services could be disrupted. As a result, our subscribers may choose not to renew their subscriptions and our business could be materially adversely affected. 
+
+If our products or services contain defects, errors or security vulnerabilities, our reputation could be harmed, which could result in significant costs to us and impair our ability to sell our products and services in the future. Because our products and services are complex and because we do not pre-launch any of our products or upgrades to any third parties prior to the official launch, they may contain undetected errors or defects, known as bugs. Bugs can be detected at any point in time, but are more common when a new product or service is introduced or when new versions are released. We expect that, despite our testing, errors will be found in the future. If an error occurs, our product and service offerings may be disrupted, causing delays or interruptions. Significant errors, delays, or disruptions could lead to: 
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+decreases in subscriber satisfaction with and loyalty toward our products and services;
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+delays in or loss of market acceptance of our products and services;
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+diversion of our resources;
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+a lower rate of subscription renewals or upgrades;
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+injury to our reputation;
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+rebates or refunds of subscription fees;
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+increased service expense or payment of damages; or
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+increased competitive focus on our existing and prospective subscriber base.
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+If we are unable to adapt our products and services to technological changes, the emergence of new computing devices or to more sophisticated online services, we may lose market share and revenue, and our business could suffer. 
+
+We need to anticipate, develop, and introduce new products, services, and applications on a timely and cost effective basis that keeps pace with technological developments and changing subscriber needs. For example, the number of individuals who access the internet through devices other than a personal computer, such as personal digital assistants, mobile telephones, televisions and set-top box devices, has increased dramatically and this trend is likely to continue. Our products and services were designed for internet use on desktop and laptop computers. The lower resolution, functionality, and memory associated with alternative devices currently available may make the use of our products and services through such devices difficult. We have no experience to date in operating versions of our products and services developed or optimized for users of alternative devices. Accordingly, it is difficult to predict the problems we may encounter in developing versions of our products and services for use on these alternative devices, and we may need to devote significant resources to the creation, support, and maintenance of such versions. If we fail to develop or sell products and services cost effectively that respond to these or other technological developments and changing subscriber needs, we may lose market share and revenue and our business could materially suffer. 
+
+13
+
+Protection of our intellectual property is limited, and any misuse of our intellectual property by others, including software piracy, could harm our business, reputation, and competitive position. 
+
+Our trademarks, copyrights, trade secrets, and designs are valuable and integral to our success and competitive position. However, we cannot assure you that we will be able to adequately protect our proprietary rights through reliance on a combination of copyrights, trademarks, trade secrets, confidentiality procedures, contractual provisions, and technical measures. Protection of trade secrets and other intellectual property rights in the markets in which we operate and compete is highly uncertain and may involve complex legal questions. We cannot completely prevent the unauthorized use or infringement of our intellectual property rights as such prevention is inherently difficult. Despite enforcement efforts against software piracy, we may lose significant revenue due to illegal use of our software in the event that we develop significant revenue. If piracy activities increase, they may further harm our future business, if any develops. 
+
+We also expect that the more successful we are, the more likely that competitors will try to illegally use our proprietary information and develop products that are similar to ours, which may infringe on our proprietary rights. In addition, we could potentially lose future trade secret protection for our source code if any unauthorized disclosure of such code occurs. The loss of future trade secret protection could make it easier for third parties to compete with our products by copying the basic functionality. Any changes in or unexpected interpretations of, the trade secret and other intellectual property laws in any country in which we operate may compromise our ability to enforce our trade secret and intellectual property rights. Costly and time-consuming litigation could be necessary to enforce and determine the scope of our confidential information and trade secret protection. If we are unable to protect our proprietary rights or if third parties independently develop or gain access to our or similar technologies, our business, revenue, reputation and competitive position could be materially adversely affected. 
+
+We may be sued for infringing the intellectual property rights of others and such actions would be costly to defend, could require us to pay damages or enter into royalty or license agreements with third parties and could limit our ability or increase our costs to use certain content or technologies in the future. 
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+We may be sued for infringing the intellectual property rights of others or be subject to litigation based on allegations of infringement or other violations of intellectual property rights. Regardless of merits, intellectual property claims are often time-consuming and expensive to litigate and settle. In addition, to the extent claims against us are successful, we may have to pay substantive monetary damages or discontinue any of our products, services or practices that are found to be in violation of another party s rights. We also may have to seek a license and make royalty payments to continue offering our products and services or following such practices, which may significantly increase our operating expense. 
+
+The confidentiality, non-disclosure and other agreements we use to protect our products, trade secrets, and proprietary information may prove unenforceable or inadequate.
+
+We intend to protect our products, trade secrets and proprietary information, in part, by requiring all of our employees and consultants to enter into agreements providing for the maintenance of confidentiality and the assignment of rights to inventions made by them while employed by us. We will also enter into non-disclosure agreements with our technical consultants, vendors, and resellers to protect our confidential and proprietary information. We cannot assure you that our confidentiality agreements with our employees, consultants and other third parties will not be breached, that we will be able to effectively enforce these agreements, that we will have adequate remedies for any breach, or that our trade secrets and other proprietary information will not be disclosed or will otherwise be protected. 
+
+We have not registered copyrights for all of our products, which may limit our ability to enforce them. 
+
+We have not registered or copyrighted all of our software, written materials, website information, designs, or other copyrightable works. The U.S. Copyright Act automatically protects all of our copyrightable works, but without registration, we cannot enforce those copyrights against infringers or seek certain statutory remedies for any such infringement. Preventing others from copying our products, written materials and other copyrightable works is 
+
+14
+
+important to our overall success in the marketplace. In the event we decide to enforce any of our copyrights against infringers, we will first be required to register the relevant copyrights, and we cannot be sure that all of the material for which we seek copyright registration would be registered in whole or in part, or that once registered, we would be successful in bringing a copyright claim against any such infringers. 
+
+We must monitor and protect our internet domain names to preserve their value. We may be unable to prevent third parties from acquiring domain names that are similar to, infringe on or otherwise decrease the value of our trademarks. 
+
+We own several domain names that include the terms Learning and Basic among others. Third parties may acquire substantially similar domain names that may decrease the value of our domain names and trademarks and other proprietary rights, and this may hurt our business. Moreover, the regulation of domain names in the United States and foreign countries is subject to change. Governing bodies could appoint additional domain name registrars or modify the requirements for holding domain names. Governing bodies could also establish additional top-level domains, which are the portion of the web address that appears to the right of the dot, such as com, net, gov or org. As a result, we may not maintain exclusive rights to all potentially relevant domain names in the United States or in other countries in which we conduct business, which could harm our business and reputation. 
+
+We do not own all of the software, content and other technologies used in our products and services.
+
+Some of our products and services include intellectual property owned by third parties. From time to time, we may be required to renegotiate with these third parties or negotiate with new third parties to include or continue using their technology or content in our existing products, in new versions of our existing products or in wholly new products. We may not be able to negotiate or renegotiate licenses on commercially reasonable terms, or at all, and the third-party software we use may not be appropriately supported, maintained, or enhanced by the licensors. If we are unable to obtain the rights necessary to use or continue to use third-party technology or content in our products and services, or if those third parties are unable to support, maintain and enhance their software, we could experience increased costs or delays or reductions in product releases and functionality until equivalent software or content can be developed, identified, licensed and integrated. 
+
+As a start-up or development stage enterprise, an investment in our company is considered a high-risk investment whereby you could lose your entire investment.
+
+We have not commenced operations and, therefore, we are considered a start-up or development stage enterprise company. We have limited experience selling educational software. We may incur significant expenses in order to implement our business plan. As an investor, you should be aware of the difficulties, delays, and expenses normally encountered by an enterprise in its development stage, many of which are beyond our control, including unanticipated developmental expenses, inventory costs, employment costs, and advertising and marketing expenses. We cannot assure you that our proposed business plan as described in this prospectus will materialize or prove successful, or that we will ever be able to operate profitably. If we cannot operate profitably, you could lose your entire investment.
+
+Our Board of Directors does not contain any independent directors.
+
+Our board is composed of one member, Thomas Monahan, our sole officer and director. Thus, the Board member is not an independent director, based on the independence criteria set forth in the corporate governance listing standards of the NASDAQ Stock Market. The NASDAQ is the exchange that we selected in order to determine whether our directors and committee members meet the independence criteria of a national securities exchange, as required by Item 407(a)(1) of Regulation S-K. An independent director means a person who is not an employee (or a relative of an employee), who has no material business relationship with the company, and also is not a significant owner of the company s shares. Due to our small size the Company does not presently have a separately designated audit committee, compensation committee, or nominating committee.
+
+15
+
+We have a history of no revenue and no income and recent losses since our inception that may continue and cause investors to lose their entire investment. 
+
+Virtual was formed on January 6, 2009, and it has cumulative net losses amounting to $680,672 from Inception to December 31, 2009, losses amounting to $129,236 for the year ended December 31, 2010 and losses amounting to $4,296 for the three months ending March 31, 2011. 
+
+Because of these conditions, we will require additional working capital to develop our business operations. We have not achieved profitability and we can give no assurances that we will achieve profitability within the foreseeable future, as we fund operating and capital expenditures, in such areas as sales and marketing and research and development. We cannot assure investors that we will ever achieve or sustain profitability or that our operating losses will not increase in the future. If we continue to incur losses, we will not be able to fund any of our sales and marketing and research and development activities, and we may be forced to cease our operations. If we are forced to cease operations, investors will lose the entire amount of their investment. 
+
+Our independent auditors have expressed substantial doubt about our ability to continue as a going concern, which may hinder our ability to obtain future financing and which may force us to cease operations. 
+
+In their report dated April 15, 2011, our independent auditors stated that our financial statements for the year ended December 31, 2009 and 2010 were prepared assuming that we would continue as a going concern. Our ability to continue as a going concern is an issue raised as a result of recurring losses from operations and cash flow deficiencies since our inception. We continue to experience net losses. Our ability to continue as a going concern is subject to our ability to generate a profit and/or obtain necessary funding from outside sources. These include obtaining additional funding from the sale of our securities, increasing sales or obtaining loans and grants from various financial institutions. In light of our financial position, and the current global credit crisis, we may be unable to raise working capital sufficient to continue to fund the operations of the business. If we are unable to continue as a going concern, you may lose your entire investment. Our management has currently been advancing funds to the Company to help sustain its operations on a non-interest bearing and unsecured basis. Given the difficult current economic environment, we believe that it will be difficult to raise additional funds and there can be no assurance as to the availability of additional financing or the terms upon which additional financing may be available. In addition, the going concern explanatory paragraph included in our auditor s report on our financial statements could inhibit our ability to enter into strategic alliances or other collaborations or our ability to raise additional financing. If we are unable to obtain such additional capital, we will not be able to sustain our operations and would be required to cease our operations and/or seek bankruptcy protection. Even if we do raise sufficient capital and generate revenues to support our operating expenses, there can be no assurance that the revenue will be sufficient to enable us to develop our business to a level where it will generate profits and cash flows from operations. In addition, if we raise additional funds through the issuance of equity or convertible debt securities, the percentage ownership of our stockholders could be significantly diluted, and these newly-issued securities may have rights, preferences, or privileges senior to those of existing stockholders. If we obtain additional debt financing, a substantial portion of our operating cash flow may be dedicated to the payment of principal and interest on such indebtedness, and the terms of the debt securities issued could impose significant restrictions on our operations.
+
+The loss of Thomas Monahan, our President, or our inability to attract and retain qualified personnel could significantly disrupt our business. 
+
+We are wholly dependent, at present, on the personal efforts and abilities of Thomas Monahan, our President. He is 63 years old. The loss of services of Mr. Monahan will disrupt, if not stop, our operations. In addition, our success will depend on our ability to attract and retain highly motivated, well-educated specialists to our staff. Our inability to recruit and retain such individuals may delay implementing and conducting our business on the internet, and or result in high employee turnover, which could have a materially adverse effect on our business or results of operations once commenced. There is no assurance that personnel of the caliber that we require will be available. 
+
+16
+
+We expect to incur losses in the future and, as a result, the value of our shares and our ability to raise additional capital may be negatively affected.
+
+There is no assurance that our operations will initiate a successful profitable enterprise. Due to our limited operating history as well as the recent emergence of the market addressed by us, we have neither internal nor industry-based historical financial data for any significant period of time upon which to base planned operating revenues and expenses. We expect to incur losses during the next 12 months of operations or possibly for a longer period of time. We are also likely to experience significant fluctuations in quarterly operating results caused by many factors, including the rate of growth, usage and acceptance of the Internet, changes in the demand for the our products and services, introductions or enhancements of products and services by us and our competitors, delays in the introduction or enhancement of products and services by us or our competitors, subscriber order deferrals in anticipation of new products, changes in our pricing policies or those of our competitors and suppliers, changes in the distribution channels through which products are purchased, our ability to anticipate and effectively adapt to developing markets and rapidly changing technologies, our ability to attract, retain and motivate qualified personnel, changes in the mix of products and services sold, changes in foreign currency exchange rates and changes in general economic conditions. We are attempting to expand our channels of supply and distribution. There also may be other factors that significantly affect our quarterly results that are difficult to predict given our limited operating history, such as seasonality and the timing of receipt and delivery of orders within a fiscal quarter. As a retail business, we expect to operate with little or no backlog. As a result, quarterly sales and operating results depend generally on the volume and timing of orders and the ability of the Company to fulfill orders received within the quarter, All of these factors can be difficult to forecast. Our expense levels are based in part on our expectations as to future orders and sales, which, given our limited operating history, are also extremely difficult to predict. Our expense levels are, to a certain extent fixed, and it will be difficult for us to adjust spending in a timely manner to compensate for any unexpected revenue shortfall. Accordingly, any significant shortfall in demand for our products and services in relation to our expectations would have an immediate adverse impact on our business, results of operations and financial condition, and could be material. Due to all of the foregoing factors, we believe that our quarterly operating results are likely to vary significantly in the future. In some future quarter our operating results may fall below the expectations of securities analysts and investors. In such event, the trading price of our common stock would likely be materially adversely affected. 
+
+We plan to use any revenues received to further develop and advance our range of educational products, and to increase our sales and marketing. Many of the expenses associated with these activities (for example, costs associated with hiring professional programmers) are relatively fixed in the short-term. We may be unable to adjust spending quickly enough to offset unexpected revenue shortfalls. If so, our operational results will suffer.
+
+Because we have a limited operating history, we may not be able to successfully manage our business or achieve profitability, it will be difficult for you to evaluate an investment in our stock, and you may lose your entire investment.
+
+We were initially formed in January 2009. We have a limited operating history. The market for our products sold through the Internet has not begun to develop and will be rapidly evolving when marketing of our products on the internet commences. If our website is inactive, we may experience limited sales. Our prospects must be considered in light of the risks, costs and difficulties frequently encountered by companies in their early stage of development, particularly companies in the new and rapidly evolving Internet market. In order to be successful, we must, among other things, attract, retain and motivate qualified subscribers to view our website, successfully implement our Internet marketing programs, respond to competitive developments and successfully expand our internal infrastructure, particularly sales, marketing and administrative personnel and its accounting system. There is, therefore, nothing at this time on which to base an assumption that our business will prove successful, and there is no assurance that it will be able to operate profitably if or when operations commence. You may lose your entire investment due to our lack of experience.
+
+Our industry is highly competitive and we may not have the resources to compete effectively and be profitable, and as a result, you may lose your entire investment.
+
+17
+
+The markets for our products and services are new and intensely competitive. We expect competition to persist, increase, and intensify in the future as the markets for our products and services continue to develop and as additional companies enter each of its markets. We are aware of a few major retailers as well as smaller entrepreneurial companies that are focusing significant resources on developing and marketing products and services that will compete with our products and services. Numerous product offerings and services that compete with those of ours can be expected in the near future. Intense price competition may develop in our markets. We face competition in the overall Internet market, as well as in each of the market segments where our products and services compete. We have multiple competitors for each of our products and services. Many of our current and potential competitors in each of its markets have longer operating histories and significantly greater financial, technical, and marketing resources, name recognition and a more developed subscriber base. We do not believe our markets will support the increasing number of competitors and their products and services. In the past, a number of 
+product markets have become dominated by one or a small number of suppliers, and a small number of suppliers or even a single supplier may dominate one or more of our market segments. There can be no assurance that we will be able to compete effectively with current and future competitors.
+
+Our future success depends upon successful sale of our products through electronic market media, and if we do not successfully achieve significant market acceptance and usage of our products, such failure would materially adversely affect our business.
+
+Many of our products and services are intended to be introduced for sale through electronic market media. Our success will depend largely upon the success of these and future products and services, and marketing presentation enhancements. Failure of these products and services or enhancements to achieve significant market acceptance and usage would materially adversely affect our results of operations and financial condition. If we are unable to successfully market our products and services, develop new products, services, and enhancements, complete products and services currently under development, or if such new products and services or enhancements do not achieve market acceptance, our business, results of operations and financial condition would be materially adversely affected. The market for our products and services is characterized by rapid technological change, changing subscriber needs, frequent new product introductions, and evolving industry standards. These market characteristics are exacerbated by the emerging nature of the Internet market and the fact that many companies are expected to introduce new products through the Internet in the near future. Our future success will depend in significant part on our ability to continually and on a timely basis introduce new products, services, and technologies and to continue to improve our products and services in response to both evolving demands of the marketplace and competitive product offerings. As a result, demand for and market acceptance of new products or services is subject to a high level of uncertainty, risk, and competition. These pressures may force us to incur significant expenditures to become and remain competitive in these marketplaces, and, if we fail to appropriately address these pressures, our business, financial condition, and prospects could be materially adversely affected.
+
+Our limited experience in implementing and conducting internet based commerce may impair our ability to grow and adversely affect our prospects.
+
+Our growth depends to a significant degree upon the development of our Internet/Direct Commerce business. If our website is inactive, we may experience limited sales. We have limited experience in the businesses comprising our Internet/Direct Commerce business. In order for our Internet/Direct Commerce business to succeed, we must, among other things:
+
+ 
+ 
+ 
+
+ 
+ 
+
+make significant investments in our Internet/Direct Commerce business, including upgrading our technology and adding a significant number of new employees;
+
+ 
+ 
+
+significantly increase our online traffic and sales volume;
+
+ 
+ 
+
+attract and retain a loyal base of frequent visitors to our website;
+
+ 
+ 
+
+expand the products and services we offer over our website;
+
+ 
+ 
+
+respond to competitive developments and maintain a distinct brand identity;
+
+ 
+ 
+
+form and maintain relationships with strategic partners;
+
+ 
+ 
+
+provide quality subscriber service; and
+
+ 
+ 
+
+continue to develop and upgrade our technologies.
+
+18
+
+We cannot assure you that we will be successful in achieving these and other necessary objectives or that our Internet/Direct Commerce business will ever be profitable. If we are not successful in achieving these objectives, our business, financial condition and prospects would be materially adversely affected.
+
+Transactions conducted on the internet involve security risks, and there can be no assurance that all of our subscribers transactions will be secure.
+
+We rely on encryption and authentication technology licensed from third parties to provide the security and authentication necessary to effect secure transmission of confidential information, such as subscriber credit card numbers. There can be no assurance that advances in computer capabilities; new discoveries in the field of cryptography, or other events or developments will not result in a compromise or breach of the algorithms used by us to protect our subscriber s transaction data. Any compromise of our security could have a material adverse effect on our reputation. A party who is able to circumvent our security measures could misappropriate proprietary information or cause interruptions in our operations. We may be required to expend significant capital and other resources to protect against such security breaches or to alleviate problems caused by such breaches. To the extent that activities of our or third-party contractors involve the storage and transmission of proprietary information, such as credit card numbers, security breaches could damage our reputation and expose our company to a risk of loss or litigation and possible liability which could have a material adverse effect on us.
+
+Thomas Monahan will continue to control matters affecting our company after this offering, which may conflict with your interests.
+
+After giving effect to this offering, Thomas Monahan, director and President of our Company will beneficially own 10,000,000 shares (61.16%) of the common stock of our Company. Mr. Monahan will control the vote on all matters submitted to a vote of our stockholders, including the election of directors, amendments to the certificate of incorporation and the by-laws, and the approval of significant corporate transactions. 
+
+Our working capital is limited and we will likely need to complete this offering to fully implement our business. 
+
+We have limited working capital on hand. Our ability to commence and continue operations and operate as a going concern is wholly contingent on the successful completion of this offering, our ability to borrow funds from Thomas P. Monahan, President of the Company, and unrelated third parties, and the receipt of proceeds from the sale subscriptions and of our CD/DVD products on commencement of operation. If adequate funds are not available, we may not be able to fund our expansion, take advantage of acquisition opportunities, develop or enhance products or services or respond to competitive pressures. Such inability could have a material adverse effect on our business, results of operations and financial condition. As of this date, we have generated no income and there can be no assurance that any such income will be forthcoming in the future.
+
+There may be a major change in the core curriculum requirements of school systems throughout the United States which would require a complete reprogramming of our virtual textbooks.
+
+Core curricula change from time to time and any significant change in such curricula would force us to reprogram our virtual textbooks to address such changes. This would consume both management time and corporate resources, especially funding, to conform our textbooks to the changes. If such changes are extensive it could find the Company in a position where such changes could not be addressed rapidly enough to remain competitive and thus could materially and adversely effect our business operations.
+
+We depend on products made using one technology; and products using different technologies may attract subscribers jeopardizing our business prospects. 
+
+We are using Adobe Flash as the platform for all of our software. Adobe Flash is one of the most versatile programming systems available. It is unique in its ability to allow the integration of many forms of electronic 
+
+19
+
+formatted media into an interactive and user friendly system. It is this quality that has allowed us to adopt our style of presenting educational materials into saleable products. Adobe Flash offers the ability to output our programs in a format that will play both PC based computer systems and Macintosh computer systems.
+
+If Adobe Flash were to become deleted from Adobe s product line or become not supported or updated to keep pace with current computer hardware, then our software products would become obsolete very quickly. To our knowledge no other programming system can match the product abilities of Adobe Flash. 
+
+In the unfortunate event that Adobe ceases to produce and sell Adobe Flash, we cannot assure that we will be successful in finding a substitute for the same. Our failure to find a substitute may lead to termination of the operation, and thus cause adverse effects to our prospects. 
+
+We may need and be unable to obtain additional funding on satisfactory terms, which could dilute our shareholders or impose burdensome financial restrictions on our business.
+
+Unforeseeable circumstances may occur which could compel us to seek additional funds. Future events, including the problems, delays, expenses and other difficulties frequently encountered by start-up companies may lead to cost increases that could require additional financing Thus, we may have to borrow or otherwise raise additional funds to accomplish such objectives. We may seek additional sources of capital, including an offering of our equity securities, an offering of debt securities or obtaining financing through a bank or other entity. This may not be available on a timely basis, in sufficient amounts or on terms acceptable to us. Our inability to raise additional equity capital or borrow funds required to affect our business plan, may have a material adverse effect on our financial condition and future prospects. Additionally, to the extent that further funding ultimately proves to be available, both debt and equity financing involve risks. Debt financing may require us to pay significant amounts of interest and principal payments, reducing the resources available to us to expand our existing businesses. Some types of equity financing may be highly dilative to our stockholders' interest in our assets and earnings. Any debt financing or other financing of securities senior to common stock will likely include financial and other covenants that will restrict our flexibility.
+
+RISKS RELATING TO OUR COMMON SHARES
+
+You will not receive dividend income from an investment in the shares and as a result, you may never see a return on your investment.
+
+We have never declared or paid a cash dividend on our shares nor will we in the foreseeable future. We currently intend to retain any future earnings, if any, to finance the operation and expansion of our business. Accordingly, investors who anticipate the need for immediate income from their investments by way of cash dividends should refrain from purchasing any of the securities offered by our company. As we do not intend to declare dividends in the future, you may never see a return on your investment and you indeed may lose your entire investment.
+
+Since this is a direct public offering and there is no underwriter, we may not be able to sell any shares ourselves.
+
+We have not retained an underwriter to sell these shares. We will conduct this offering as a direct public offering, meaning there is no guarantee as to how much money we will be able to raise through the sale of our stock. If we fail to sell all the shares we are trying to sell, our ability to expand and complete our business plan will be materially affected, and you may lose all or substantially all of your investment. 
+
+Our officers, directors and holders of 10% or more of the issued and outstanding common shares of the Company own 84.7% of the outstanding shares of our common stock. After the completion of this Offering, they will beneficially own 79.5% of the outstanding shares, if the maximum is sold. If they or our present non-
+
+20
+
+affiliated shareholders choose to sell their shares in the future, it might have an adverse effect on the price of our stock.
+
+Prior to this offering there has been no market for the common stock of the Company. If a market develops and due to the controlling amount of their share ownership in our Company, if our officers, directors and holders of 10% or more of the issued and outstanding common shares of the Company (presently Thomas Monahan and John Swint) decide to sell their shares in the public market, the market price of our stock could decrease and all shareholders suffer a reduction to the value of their stock. Unless registered in the future, if our officers, directors and 10% or more holders decide to sell any of their common stock, they will be subject to Rule 144 under the 1933 Securities Act. Rule 144 restricts the ability of a director, officer or person holding 10% or more of the common stock (affiliates) to sell shares by limiting the sales of securities made under Rule 144 during the three-month period preceding the date of sale to the greater of: (1) 1% of the outstanding common stock of the issuer (163,500 shares if the maximum is sold); or (2) the average weekly reported trading volume in the outstanding common stock reported on all securities exchanges during the four calendar weeks preceding the filing of the required notice of the sale under Rule 144 with the SEC.
+Based on the number of shares outstanding on March 31, 2011, upon completion of this offering 16,350,000 shares of common stock will be outstanding, assuming the maximum is sold. All of the shares of common stock sold in this offering, 1,000,000 if the maximum is sold, will be freely tradable without restrictions or further registration under the Securities Act, except for any shares sold to our affiliates, as that term is defined under Rule 144 under the Securities Act. The remaining 13,000,000 shares of common stock held by existing affiliate stockholders and an additional 2,350,000 shares held by non-affiliates are restricted securities, as that term is defined in Rule 144 under the Securities Act. Restricted securities may be sold in the public market only if registered or if their resale qualifies for exemption from registration described below under Rule 144 promulgated under the Securities Act. 
+As a result of Rules 144, the shares sold in this offering and the restricted securities will be available for sale in the public market as follows: 
+
+Rule 144 
+
+In general, persons who have beneficially owned restricted shares of our common stock for at least six months, and any affiliate of the company who owns either restricted or unrestricted shares of our common stock, are entitled to sell their securities without registration with the SEC under an exemption from registration provided by Rule 144 under the Securities Act. 
+
+Non-Affiliates 
+
+ Any person who is not deemed to have been one of our affiliates at the time of, or at any time during the three months preceding a sale, may sell an unlimited number of restricted securities under Rule 144 if: 
+
+ 
+ 
+ 
+
+ 
+
+ 
+
+the restricted securities have been held for at least six months (including the holding period of any prior owner other than one of our affiliates); 
+
+ 
+
+ 
+
+21
+
+ 
+
+ 
+
+we have been subject to the Exchange Act periodic reporting requirements for at least 90 days before the sale; and 
+
+ 
+
+ 
+ 
+
+ 
+
+ 
+
+we are current in our Exchange Act reporting at the time of sale. 
+
+Affiliates 
+
+Persons seeking to sell restricted securities who are our affiliates at the time of, or any time during the three months preceding, a sale, would be subject to the restrictions described above. They are also subject to additional restrictions, by which such person would be required to comply with the manner of sale and notice provisions of Rule 144 and would be entitled to sell within any three-month period only that number of securities that does not exceed the greater of either of the following: 
+
+ 
+ 
+ 
+
+ 
+
+ 
+
+1% of the number of shares of our common stock then outstanding, which will equal approximately 163,500 shares immediately after the completion of this offering based on the number of common shares outstanding as of March 31, 2010; or 
+
+ 
+ 
+ 
+
+ 
+
+ 
+
+the average weekly trading volume of our common stock during the four calendar weeks preceding the filing of a notice on Form 144 with respect to the sale. 
+
+ 
+
+Additionally, persons who are our affiliates at the time of, or any time during the three months preceding, a sale may sell unrestricted securities under the requirements of Rule 144 described above, without regard to the six month holding period of Rule 144, which does not apply to sales of unrestricted securities. 
+
+Unlimited Resales by Non-Affiliates 
+
+Any person who is not deemed to have been an affiliate of ours at the time of, or at any time during the three months preceding, a sale and has held the restricted securities for at least one year, including the holding period of any prior owner other than one of our affiliates, will be entitled to sell an unlimited number of restricted securities without regard to the length of time we have been subject to Exchange Act periodic reporting or whether we are current in our Exchange Act reporting. 
+
+ State securities laws may limit secondary trading, which may restrict the states in which and conditions under which you can sell the shares offered by this prospectus.
+
+Secondary trading in common stock sold in this offering will not be possible in any state until the common stock is qualified for sale under the applicable securities laws of the state or there is confirmation that an exemption, such as 
+
+22
+
+listing in certain recognized securities manuals, is available for secondary trading in the state. If we fail to register or qualify, or to obtain or verify an exemption for the secondary trading of, the common stock in any particular state, the common stock could not be offered or sold to, or purchased by, a resident of that state. In the event that a significant number of states refuse to permit secondary trading in our common stock, the liquidity for the common stock could be significantly impacted thus causing you to realize a loss on your investment.
+
+Our Common Stock Is A Penny Stock, And Compliance With Requirements For Dealing In Penny Stocks May Make It Difficult For Holders Of Our Common Stock To Resell Their Shares.
+
+Currently there is no public market for our common stock. If the common stock is ever listed in, the public market in what is known as the over-the-counter market and at least for the foreseeable future, our common stock will be deemed to be a penny stock as that term is defined in Rule 3a51-1 under the Securities Exchange Act of 1934. Rule 15g-2 under the Exchange Act requires broker/dealers dealing in penny stocks to provide potential investors with a document disclosing the risks of penny stocks and to obtain from these investors a manually signed and dated written acknowledgement of receipt of the document before effecting a transaction in a penny stock for the investor's account. Compliance with these requirements may make it more difficult for holders of our common stock to resell their shares to third Parties or otherwise, which could have a material adverse effect on the liquidity and market price of our common stock.
+
+Penny stocks are stocks with a price of less than $5.00 per share unless traded on NASDAQ or a national securities exchange.
+
+Penny stocks are also stocks, which are issued by companies with:
+
+Net tangible assets of less than $2.0 million (if the issuer has been in continuous operation for at least three years); or $5.0 million (if in continuous operation for less than three years); or average revenue of less than $6.0 million for the last three years.
+
+The application of laws and regulations from jurisdictions whose laws do not currently apply to our business, or the application of existing laws and to the Internet and other online services could have a material adverse effect on us. 
+
+We are not currently subject to direct regulation by any domestic or foreign governmental agency, other than regulations applicable to businesses generally, and laws or regulations directly applicable to access to online commerce. However, due to the increasing popularity and use of the Internet and other online services, it is possible that a number of laws and regulations may be adopted with respect to the Internet or other online services covering issues such as user privacy, pricing, content, copyrights, distribution, and characteristics and quality of products and services. Furthermore, the growth and development of the market for online commerce may prompt more stringent consumer protection laws that may impose additional burdens on those companies conducting business online. The adoption of any additional laws or regulations may decrease the growth of the Internet or other online services, which could, in turn, decrease the demand for our products and services and increase our cost of doing business, or otherwise have an adverse effect on us. Moreover, the applicability to the Internet and other online services of existing laws in various jurisdictions governing issues such as property ownership, sales and other taxes and personal privacy is uncertain and may take years to resolve. In addition, as our service is available over the Internet in multiple states and foreign countries, and as we sell to numerous consumers residing in such states and foreign countries, such jurisdictions may claim that we are required to qualify to do business as a foreign corporation in each such state and foreign country. We are qualified to do business in only two states, and failure by us to qualify as a foreign corporation in a jurisdiction where it is required to do so could subject us to taxes and penalties for the failure to qualify. Any such new legislation or regulation, the application of laws and regulations from jurisdictions whose laws do not currently apply to our business, or the application of existing laws and to the Internet and other online services could have a material adverse effect on us. 
+
+23
+
+Our stock price may fluctuate significantly, and you may not be able to resell your shares at or above the current market price. 
+
+The trading price of our common stock is likely to be volatile and subject to wide price fluctuations in response to various factors, including: 
+
+ 
+ 
+ 
+ 
+
+ 
+ 
+
+ 
+regulatory or political developments;
+
+ 
+ 
+ 
+ 
+
+ 
+ 
+
+ 
+market conditions in the broader stock market;
+
+ 
+ 
+ 
+ 
+
+ 
+ 
+
+ 
+actual or anticipated fluctuations in our quarterly financial and results of operations;
+
+ 
+ 
+ 
+ 
+
+ 
+ 
+
+ 
+introduction of new products or services by us or our competitors;
+
+ 
+ 
+ 
+ 
+
+ 
+ 
+
+ 
+issuance of new or changed securities analysts reports or recommendations;
+
+ 
+ 
+ 
+ 
+
+ 
+ 
+
+ 
+investor perceptions of us and the educational industry;
+
+ 
+ 
+ 
+ 
+
+ 
+ 
+
+ 
+sales, or anticipated sales, of large blocks of our stock;
+
+ 
+ 
+ 
+ 
+
+ 
+ 
+
+ 
+additions or departures of key personnel;
+
+ 
+ 
+ 
+ 
+
+ 
+ 
+
+ 
+litigation and governmental investigations; and
+
+ 
+ 
+ 
+ 
+
+ 
+ 
+
+ 
+changing economic conditions.
+
+These and other factors may cause the market price and demand for our common stock to fluctuate substantially, which may limit or prevent investors from readily selling their shares of common stock and may otherwise negatively affect the liquidity of our common stock. In addition, in the past, when the market price of a stock has been volatile, holders of that stock have sometimes instituted securities class action litigation against the Company that issued the stock. If any of our stockholders were to bring a lawsuit against us, we could incur substantial costs defending the lawsuit. Such a lawsuit could also divert the time and attention of our management from our business. 
+
+If a trading market if the Company s common stock develops, and if securities or industry analysts do not publish research or reports about our business, if they adversely change their recommendations regarding our stock or if our results of operations do not meet their expectations, our stock price and trading volume could decline in the event that atrading market for the Company s common stock develops. 
+
+If a trading market for our common stock develops, it will be influenced by the research and reports that industry or securities analysts publish about us or our business. If one or more of these analysts cease coverage of our company or fail to publish reports on us regularly, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline, if such a market develops. Moreover, if one or more of the analysts who cover us downgrade recommendations regarding our stock, or if our results of operations do not meet their expectations, our stock price could decline and such decline could be material, if a trading market in the Company s common stock develops. 
+
+Sales of substantial amounts of our common stock in the public markets, or the perception that such sales might occur, could reduce the price of our common stock and may dilute your voting power and your ownership interest in us. 
+
+If our existing stockholders sell substantial amounts of our common stock in the public market, the market price of our common stock could decrease significantly. The perception in the public market that our existing stockholders might sell shares of common stock could also depress our market price
+
+24
+
+Insiders have substantial control over us and could limit your ability to influence the outcome of key transactions, including a change of control. 
+
+As of December 31, 2010 and March 31, 2011, our principal stockholders, directors, and executive officers and entities affiliated with them owned approximately 84.7% of the outstanding shares of our common stock. As a result, these stockholders, if acting together, would be able to influence or control matters requiring approval by our stockholders, including the election of directors and the approval of mergers or other extraordinary transactions. They may also have interests that differ from yours and may vote in a way with which you disagree and which may be adverse to your interests. The concentration of ownership may have the effect of delaying, preventing, or deterring a change of control of our company, could deprive our stockholders of an opportunity to receive a premium for their common stock as part of a sale of our company and may materially adversely affect the market price of our common stock. 
+
+As a result of becoming a public company, we are obligated to develop and maintain proper and effective internal control over financial reporting and are subject to other requirements that will be burdensome and costly. We may not timely complete our analysis of our internal control over financial reporting, or these internal controls may not be determined to be effective, which could adversely affect investor confidence in our company and, as a result, the value of our common stock. 
+
+Prior to our initial public offering, we are operating our business as a private company. We will now be required to file with the Securities and Exchange Commission, or SEC, annual and quarterly information and other reports that are specified in Section 13 of the Securities Exchange Act of 1934, as amended, or the Exchange Act. We will also be required to ensure that we have the ability to prepare financial statements that are fully compliant with all SEC reporting requirements on a timely basis. In addition, we are subject to other reporting and corporate governance requirements, including the requirements of listing on the OTCBB, and if listed for continuing to remain listed on the OTCBB, and certain provisions of the Sarbanes-Oxley Act of 2002 and the regulations promulgated there under, which impose significant compliance obligations upon us. As a public company, we will be required to: 
+
+ 
+ 
+ 
+ 
+
+ 
+ 
+
+ 
+Prepare and distribute periodic public reports and other stockholder communications in compliance with our obligations under the federal securities laws and OTCBB rules;
+
+ 
+ 
+ 
+ 
+
+ 
+ 
+
+ 
+create or expand the roles and duties of our board of directors and committees of the board;
+
+ 
+ 
+
+ 
+maintain a more comprehensive financial reporting and disclosure compliance functions;
+
+ 
+ 
+ 
+ 
+
+ 
+ 
+
+ 
+maintain an accounting and financial reporting department, including personnel with expertise in accounting and reporting for a public company;
+
+ 
+ 
+ 
+ 
+
+ 
+ 
+
+ 
+enhance and formalize closing procedures at the end of our accounting periods;
+
+ 
+ 
+ 
+ 
+
+ 
+ 
+
+ 
+maintain an internal audit function;
+
+ 
+ 
+ 
+ 
+
+ 
+ 
+
+ 
+enhance our investor relations function;
+
+ 
+ 
+ 
+ 
+
+ 
+ 
+
+ 
+establish and maintain new internal policies, including those relating to disclosure controls and procedures; and
+
+ 
+ 
+ 
+ 
+
+ 
+ 
+
+ 
+involve and retain to a greater degree outside counsel and accountants in the activities listed above.
+
+These requirements entail a significant commitment of additional resources. We may not be successful in implementing these requirements and implementing them could adversely affect our business or results of operations. In addition, if we fail to implement the requirements with respect to our internal accounting and audit functions, our ability to report our results of operations on a timely and accurate basis could be impaired. 
+
+25
+
+FORWARD LOOKING STATEMENT
+
+Certain statements in this document are forward-looking in nature and relate to trends and events that may affect the Company s future financial position and operating results. The words expect anticipate and similar words or expressions are to identify forward-looking statements. These statements speak only as of the date of the document; those statements are based on current expectations, are inherently uncertain, and should be viewed with caution. Actual results may differ materially from the forward-looking statements as a result of many factors, including changes in economic conditions and other unanticipated events and conditions. It is not possible to foresee or to identify all such factors. The Company makes no commitment, other than as required, to update any forward-looking statement or to disclose any facts, events, or circumstances after the date of this document that may affect the accuracy of any forward-looking statement.
+
+RELIANCE ON MANAGEMENT
+
+The investors will have no rights to participate in the management decisions of the Company; the shareholder will only have such rights as other shareholders.
+
+PLAN OF DISTRIBUTION
+
+ 
+ 
+ 
+
+Distributing Company:
+
+ 
+Virtual is distributing up to 1,000,000 shares of its common stock in its capacity as underwriter of this offering
+
+ 
+ 
+ 
+
+Shares To Be Distributed:
+
+ 
+1,000,000 shares of our common stock, $0.001 par value. The shares to be distributed in the offering will represent 6.1% of our total common shares outstanding.
+
+ 
+ 
+ 
+
+ 
+ 
+ 
+
+ 
+ 
+ 
+
+Payment Required:
+
+ 
+The Offering price of $0.50 must paid in cash and the subscription attached to the Prospectus must be executed before the Company will deliver certificates for the shares purchased.
+
+ 
+ 
+ 
+
+ 
+ 
+ 
+
+ 
+ 
+ 
+
+Prospectus Mailing Date:
+
+ 
+, 2011. We have mailed this prospectus to you on or about this date free of charge.
+
+ 
+ 
+ 
+
+Closing Date:
+
+ 
+The Company may close on subscriptions from time to time up to one year after the Effective Date. The common shares which are purchased will be delivered as soon as practical after acceptance of any subscriptions.
+
+ 
+ 
+
+ 
+ 
+ 
+
+ 
+ 
+ 
+
+ 
+ 
+ 
+
+ 
+ 
+ 
+
+Listing and Trading of Our Shares:
+
+ 
+There is currently no public market for our shares. We do not expect a market for our common shares to develop until after the distribution date. Our shares will not qualify for trading on any national or regional stock exchange or on the NASDAQ Stock Market. _____________ has filed to become our primary market maker. If a public trading market develops for our common shares, of which there can be no assurance, we cannot ensure that an active trading market 
+
+will be available to you. Many factors will influence the market price of our shares, including the depth and liquidity of the market that may develop investor perception of our business, growth prospects, and general market conditions.
+
+26
+
+We plan to apply for trading of our common stock on the over-the-counter (OTC) Bulletin Board upon the effectiveness of the registration statement of which this prospectus forms a part. To have our securities quoted on the OTC Bulletin Board we must: (1) be a company that reports its current financial information to the Securities and Exchange Commission, banking regulators or insurance regulators; and (2) has at least one market maker who completes and files a Form 211 with NASD Regulation, Inc., which ____________ has done. The OTC Bulletin Board differs substantially from national and regional stock exchanges because it (1) operates through communication of bids, offers and confirmations between broker-dealers, rather than one centralized market or exchange; and, (2) securities admitted to quotation are offered by one or more broker-dealers rather than specialists which operate in stock exchanges. There is currently no market for our shares of common stock. There can be no assurance that a market for our common stock will be established or that, if established, such market will be sustained. Therefore, purchasers of our shares registered hereunder may be unable to sell their securities, because there may not be a public market for our securities. As a result, you may find it more difficult to dispose of, or obtain accurate quotes of our common stock. Any purchaser of our securities should be in a financial position to bear the risks of losing their entire investment.
+
+DETERMINATION OF THE OFFERING PRICE
+
+There is no established public market for our shares of common stock. The offering price for the sale of common stock of $0.50 per share was determined by us arbitrarily. This price bears no relationship whatsoever to our business plan, the price paid for our shares by our founder, our assets, earnings, book value or any other criteria of value. The offering price should not be regarded as an indicator of the market price, if any, of the common stock that may develop in a trading market after this offering, which is likely to fluctuate.
+
+The $0.50 price of the shares that are being offered on a best efforts basis was arbitrarily determined in order for us to raise up to a total of $500,000 in this offering.
+
+ 
+
+There are no warrants, rights or convertible securities associated with this offering.
+
+USE OF PROCEEDS
+
+The net proceeds from the sale of the Maximum Offering are estimated at $480,000 after deducting estimated Offering expenses of $20,000. The net proceeds from the sale of the maximum number of Shares should satisfy the Company's current working capital needs. The following table details the Company's projected use of proceeds of the Offering based upon 100%, 50% and 25% of the Offering sold.
+
+ 
+ 
+ 
+ 
+
+Percentage of Offering
+
+100%
+
+50%
+
+25%
+
+Salaries
+
+$47,000
+
+$47,000
+
+$11,750
+
+Rent
+
+18,000
+
+18,000
+
+18,000
+
+Office equipment
+
+45,000
+
+45,000
+
+10,000
+
+Inventory
+
+5,000
+
+5,000
+
+5,000
+
+Marketing 
+
+125,000
+
+65,000
+
+10,250
+
+Working capital
+
+240,000
+
+50,000
+
+ 
+
+Total
+
+$480,000
+
+$230,000
+
+$105,000
+
+ 
+ 
+ 
+ 
+
+1. The Offering has no minimum and funds will be deposited in our operating bank account as subscriptions are accepted. Funds will be applied as received in the most productive manner to be determined by Management.
+
+27
+
+DILUTION
+
+As of March 31, 2011, we had a net tangible book value of $15,796 or $.001 per Share. Net tangible book value per Share represents our tangible assets, less its liabilities, divided by the number of Shares outstanding prior to the Offering.
+
+If the Maximum Offering is sold, there will be 16,350,000 Shares of Common Stock outstanding, having a net tangible book value of $.030 per share. The shareholders purchasing Shares will suffer an immediate dilution in value of $0.47 per share in the net tangible book value of Shares held by them. The immediate dilution in value is due in part to the lower net tangible book value of the Shares of Common Stock outstanding prior to the Offering and to the payment of the Offering expenses.
+
+If the 50% Offering is sold, there will be 15,850,000 Shares of Common Stock outstanding, having a net tangible book value of $.015 per share. The shareholders purchasing Shares will suffer an immediate dilution in value of $0.485 per share in the net tangible book value of Shares held by them. The immediate dilution in value is due in part to the lower net tangible book value of the Shares of Common Stock outstanding prior to the Offering and to the payment of the Offering expenses.
+
+If the 25% Offering is sold, there will be 15,600,000 Shares of Common Stock outstanding, having a net tangible book value of $.008 per share. The shareholders purchasing Shares will suffer an immediate dilution in value of $0.492 per share in the net tangible book value of Shares held by them. The immediate dilution in value is due in part to the lower net tangible book value of the Shares of Common Stock outstanding prior to the Offering and to the payment of the Offering expenses.
+
+The immediate dilution in value represents the difference between the Offering Price and the net tangible book value per share immediately after the completion of the public offering. It is determined by subtracting net tangible book value per Share after the Offering from the amount paid by a Subscriber for a Share. The following tables illustrate the dilution of Subscribers in the Offering purchasing Shares.
+
+ 
+ 
+ 
+ 
+
+ 
+100%
+
+50%
+
+25%
+
+Public Offering price
+
+$.50
+
+$.50
+
+$.50
+
+Net tangible book value per Share of Common Stock before the Offering(1)
+
+$.001
+
+$.001
+
+$.001
+
+Net tangible book value per share after the Offering(1)
+
+$.030
+
+$.015
+
+$.008
+
+Increase per Common Share attributable to offering 
+
+$.030
+
+$.015
+
+$.007
+
+Dilution to Investors
+
+$.470
+
+$.485
+
+$.492
+
+1. After deducting Offering expenses (estimated, in the aggregate, at $20,000).
+
+DESCRIPTION OF BUSINESS
+
+BUSINESS
+
+History of the Company
+
+Virtual was formed as a Nevada corporation on January 6, 2009. Virtual Learning plans to become a subscription-based online education company. We intend to provide standards-based instruction through our fully animated 
+
+28
+
+talking virtual textbooks. Our fully animated, interactive featured, colorful, and audio virtual textbooks have combined rigorous content along with a variety of practice problems, activities, assessments, games, and productivity tools that we hope will improve the performance of students via proprietary web-based platforms that engage students, reinforce and reward learning achievement. 
+
+As part of our Learning is Basic series we have created, as a subset, our Math is Basic series of virtual math textbooks and assessment programs. It is intended that our core product line will help students in First through 12th grade, master grade level academic standards in a fun and engaging manner. We provide our products via proprietary web-based platforms through one of our several websites on the World Wide Web with the URL www.mathisbasic.com; www.learningisbasic.com, www.eschoolroom.com, www.educationisbasic.com. Please note though that we have only one operational website www.learningisbasic.com.
+
+Virtual Learning is also a producer and plans to be a distributor of computer software and video educational materials on CD and DVD formatted disks which we plan to make available through various distributors and our websites either as a download or in boxed format. We have established ecommerce store fronts on Amazon.com, Ebay.com, and Yahoo.com. 
+
+We plan to capitalize on two significant trends in the education market: (1) an increased focus on higher academic standards and educator accountability for student achievement, which has led to periodic assessment in the classroom to gauge student learning and inform instruction, also known as formative assessment, and (2) the increased availability and utilization of web-based technologies to enhance and supplement teacher instruction, engage today s technology-savvy learners and improve student outcomes. 
+
+Despite spending an estimated $630 billion in the 2007-2008 school year on K-12 education more than any other developed country the United States ranks 25th in the world in the quality of its primary education system, according to the World Economic Forum. In response to this gap, policymakers and parents are paying greater attention to the effectiveness of U.S. public schools, demanding higher educational standards and accountability from teachers, administrators, and school districts. In addition, increased usage and acceptance of online technology is changing how educational content, such as lessons, homework and assessments, is delivered and utilized. These new educational tools and technologies help improve the learning experience of students by augmenting the teaching techniques of skilled teachers and supporting and strengthening the skills of inexperienced or less effective instructors. An estimated $8 billion was spent on the K-12 instructional materials market in 2008, according to the Center for education Reform 2009 and the National Center for Educational Statistics. 
+
+Our virtual textbooks and assessment programs are designed to improve educational results and meet accountability criteria, leveraging the widespread adoption of online technologies. Virtual Learning combines rigorous content that is highly customized to specific standards in math with interactive features that reinforce and reward student accomplishments. We believe that our subscribers purchase our products because we are innovative, low-cost and a high-impact solution for enhancing teacher effectiveness, promoting student learning of core subject concepts and skills and preparing students for state standardized tests. We believe that our flexible web-based distribution model and in-house content development capabilities will allow us to continually update and improve our products, distribute our products in a cost-efficient manner, and price our products affordably. 
+
+To date, we have completed 5 titles on CD formatted disks relating to the teaching of basic English to foreign speaking individuals. These titles include English for Russian Speaking People ; English for Portuguese Speaking People ; English for Spanish Speaking People ; English for Chinese Speaking People ; and English for Polish Speaking People . These are not yet available online.
+
+We have also completed virtual textbooks with the titles: First Grade Math ; Second Grade Math ; Third Grade Math ; Third Grade Math: Geometry ; Fourth Grade math: Geometry ; Fifth Grade Math: Geometry ; First Grade Math: Learning to Tell Time ; Second Grade Math: Learning to Tell Time ; Third Grade Math: Algebra ; Mr. Clock for First Grade ; Mr. Clock Teaching Time ; and Mr. Clock Teaches Elapsed Time and assessment 
+
+29
+
+based review level titles for grades first through third grade . Our other educational titles on CD and or DVD formatted disks will consist primarily of virtual mathematics text books and work book courses for grades First grade through college level. We intend to follow the core curriculum requirements required to be taught throughout the United States.
+
+We are also in production stage on several other virtual audio and animated teaching textbook computer program titles relating to teaching Money for First Grade ; Fourth Grade Algebra and Fifth Grade Algebra ; First Grade Math: Measurements ; Second Grade Math: Measurement ; Third Grade Math: Measurement ; High School Geometry and High School Algebra in CD format and one video title relating to teaching Calculus I, college level. We are also in preproduction on additional video titles relating to Trigonometry, pre-calculus, and Calculus II.
+
+The business of the Company was originally developed through a prior entity formed under the name the Terra Media, Ltd., a Delaware company ( Terra ). Terra did complete a registration statement pursuant to the 1933 Act and was approved for trading on the Bulletin Board. On June 2, 2008, the volume in Terra s Common Stock was non-existent. 
+
+In January 2009, Terra decided to pursue the purchase and development of coal leases and entered into an agreement with Thomas Monahan to sell to Mr. Monahan the assets of Terra's subsidiary Ding Dong School, Ltd. for a purchase price of $5,000 which included certain assets including computers, various software titles, Trade Marks, and production software with a book value of $37,688, assumption of officer loans aggregating $28,437, and the assumption of accrued liabilities aggregating $35,085. Mr. Monahan was the former President and controlling shareholder of both Terra and Ding Dong School, Ltd. and during the time when Mr. Monahan was in control of Terra, the Ding Dong School subsidiary was the only asset of Terra. Control, of Terra was purchased by Catherine Balloqui who also became Terra s President and sole director. In 2009, Ms. Balloqui made the determination that Ding Dong School s business was less desirable than energy assets and Terra then sold the assets to Mr. Monahan in exchange for the forgiveness of $5,000 owed to Roger Fidler by Terra for legal fees. Mr. Monahan retains no shares in Terra and Ms. Balloqui has no shares in Virtual Learning.
+
+Our Markets 
+
+ 
+
+The U.S. educational system, consisting of K-12 and postsecondary education, collectively includes approximately 59 million students. Our virtual textbooks and materials are being developed to appeal primarily in the U.S. K-12 education market, which consists of approximately 59 million students in more than 132,656 schools according to schools according to Center for education Reform 2009.
+
+Since 1999, the National Household Education Surveys Program (NHES), conducted by the U.S. Department of Education s National Center for Education Statistics (NCES) in the Institute of Education Sciences, has collected nationally representative data that can be used to estimate the number of home schooled students in the United States. Additionally, according to the U.S. Department of Education Institute of Education Sciences both the number and the proportion of students in the United States who were being home schooled increased between 1999 and 2003. Approximately 1.1 million students (1,096,000) were being home schooled in the United States in the spring of 2003, an increase from the estimated 850,000 students who were being home schooled in the spring of 1999 (Bielick, Chandler, and Broughman 2001). In addition, the percentage of the entire student population who were being home schooled increased from 1.7 percent in 1999 to 2.2 percent in 2003. Data from the 2007 NHES survey show an estimated 1.5 million students (1,508,000) were home schooled in the United States in the spring of 2007. This represents an increase from the estimated 1.1 million students who were home schooled in the spring of 2003 (Princiotta, Bielick, and Chapman 2004). The percentage of the school-age population that was home schooled increased from 2.2 percent in 2003 to 2.9 percent in 2007. 
+
+30
+
+A number of key dynamics have impacted the K-12 education market in recent years: 
+
+Increased Accountability. Despite spending an estimated $650 billion during the 2007-2008 school year on K-12 education more than any other developed country the United States ranks 25th in the world in the quality of its primary education system, according to a 2008-2009 report by the World Economic Forum, which describes this as a competitive disadvantage. American students are slipping further behind their foreign peers in international assessments, and fewer are showing an interest in the science, technology, engineering, and math fields that are vital to innovation and entrepreneurial vigor. Within the United States, there exists a growing disparity in the academic performance of students in public schools in affluent communities compared to that of students in poorer neighborhoods. As a result, policymakers and parents have paid greater attention to the effectiveness of U.S. public schools, demanding higher educational standards and accountability from teachers, administrators, and school districts. States publish accountability reports that show each school s progress and ability to meet proficiency standards, and these results are often reported by local press outlets. This increased visibility into school performance has led to increased parent and policymaker pressure on schools and teachers, including at the presidential level. President Obama s administration has launched the $4.35 billion Race to the Top fund to highlight and replicate innovative education strategies as part of the administration s highly publicized efforts to reform education. 
+
+Legislative Developments. In 2001, Congress passed the reauthorization of the Elementary and Secondary Education Act, commonly referred to as No Child Left Behind, or NCLB. NCLB requires states receiving federal funding for education to establish high, state-wide, academic standards in reading, mathematics and science for students in grades 3 through 8 and in high school and to assess students proficiency in meeting these standards annually. NCLB requires states to set incremental milestones for all students to show yearly proficiency improvements, with the goal that all students perform at grade-level proficiency by 2014. As states implemented new, higher academic standards and assessments in response to NCLB, it became clear that after the first two years of implementation, many schools, particularly those in large, urban, poorer communities were not meeting NCLB s Adequate Yearly Progress, or AYP, milestones. As a result, educators began exploring instructional tools to help students master academic standards and improve performance on accountability assessments. This has driven demand for standards-based content and both formative and summative, or end-of-year, assessment products. The Elementary and Secondary Education Act initially was scheduled for reauthorization in October 2008, but was extended in order to allow the new U.S. presidential administration to impact the direction of any future reauthorization. In early 2009, Congress passed the American Recovery and Reinvestment Act, better known as the stimulus act, which provides more than $64 billion of federal funds for the Department of Education, with a phased roll-out of such funds to states between April 2009 and the spring of 2010. In order to receive these education funds, states must satisfy certain conditions, which are expected to correspond with the basic tenets of NCLB reauthorization. These conditions include assurances that states will strive to meet more rigorous educational standards, improve underperforming schools, lower high school dropout rates and ensure student readiness for success in college and in the workforce. 
+
+Increased Access to Computers and the Internet. Today s students use computer technology in and out of the classroom, and many students have access to internet-enabled computers at school and home. Increased usage and acceptance of online technology is changing how educational content is delivered and utilized by teachers and students. According to the Consortium for School Networking, 98% of rural and wealthy schools have high-speed internet access in classrooms, as do 93% of classrooms in poor urban school districts. More than 80% of Americans now have a computer in their homes and, of those, almost 92% have internet access, according to a study on home internet access from The Nielsen Company. In addition, NCLB mandates that schools improve school-to-home or school-to-parent communication and involvement in their child s education. As a result, schools are increasingly looking for integrated website portals and productivity tools to more easily comply with this mandate, more effectively use student achievement data to keep parents informed and more readily guide parents ability to help their children improve their skills and proficiency. 
+
+32
+
+The Market for Supplemental Learning Materials 
+
+Schools use a variety of supplemental materials to augment their core curriculum, provide remediation and 
+
+enrichment and offer additional learning opportunities in the classroom and at home. These materials include traditional print-based materials, such as textbooks, workbooks, problem sheets and printed reading materials. With increased availability and use of computers in the classroom and at home, vendors have developed software and, increasingly, online programs and content as an alternative to print-based materials. 
+
+An estimated $8 billion was spent on the K-12 instructional materials market in 2008, according to Association of American Publishers. In 2007, according to Market Data Research's annual expenditures report, the national average for instructional materials spending is $237 per pupil.
+
+Limitations of Traditional Print Products. Educators increasingly are recognizing the limitations of traditional print-based textbook and workbook learning materials, which are static, cannot be quickly corrected for errors or updated to address evolving standards, cannot provide individualized feedback to students, do not provide teachers with a method to quickly track student progress and become ragged and obsolete with time and usage. Such traditional print-based learning materials are costly and need to be replaced on a regular basis due to the publication of newer editions or, in the case of workbooks, use by students. These materials also do not provide administrators with easily obtainable metrics to measure the performance of classes, teachers, or individual grades in their schools on a regular basis. Increasingly, parents are finding their children coming home with fewer and fewer textbooks and other printed materials because the costs of providing children with materials to take home is simply too costly.
+
+Limitations of Software Products. As a result of the recognition of the limitations of print-based products and the perceived advantages of computer-based materials, educators began to utilize software-based supplemental materials, such as CD-ROMs. However, these materials also have significant limitations. Software products are designed to run on specific operating systems with specific memory requirements, and require installation on individual computers or costly and time-consuming installations on centralized computer systems. Software products place increased demands on schools limited IT personnel, systems, and budgets. Access to these products is typically limited to the computers in a specific classroom or computer lab and cannot be used at home unless schools provide a student with a disk containing the software and the student has access to a computer with the appropriate operating system or ability to play a CD-ROM. Any updates require the publication, receipt, distribution and installation of new software or CD-ROMs, which would require the school and parents to purchase new versions. In addition, software-based products are typically unable to provide real-time feedback about student performance to teachers or educators. CD-ROM s are also subject to being illegally duplicated. 
+
+Advantages of Online Learning Solutions. Online products can provide educators and parents with real-time feedback on student progress, allowing for tailored instruction based on individual student or classroom needs, and can generate reports for parents and teachers. Online products also are easily, automatically, and frequently updated with new or more current content, additional features and enhancements and provide students with instant feedback, positive reinforcement and remediation when proficiency levels are not met. Also, unlike software- or CD-ROM-based learning materials, web-based products require no software to be installed in school or home computers and can be accessed anywhere the internet is available. Web-based products can be offered at lower prices as they do not require expenditures for publishing, paper, or electronic media, shipping or warehousing. Web-based products are also becoming increasingly available for Smartphones, Tablets and Ebooks.
+
+Our Competitive Strengths 
+
+We believe the following are our key competitive strengths: 
+
+Customized, Standards-Based Content. Our line of virtual textbooks and assessment programs offers online, standards-based instruction, practice and assessments for certain subjects, primarily math in the first, second, third, fourth and fifth grades which we hope to expand to cover all grades and most subjects from first grade through twelfth grade and which we have attempted to build to meet the applicable standards in 43 states, i.e. trying to comply with the Common Core State Standard Initiative. We believe this customization will be attractive to parents 
+
+32
+
+and educators, providing them with a resource that meets their specific state and grade-level teaching needs in a variety of subjects. 
+
+Real-time Student Tracking, Built-in Remediation and Enrichment. In addition to our virtual textbooks, we have designed software that will assess a student s progress in learning. We can provide real-time reporting on student achievement, allowing parents and educators the option to quickly identify learning gaps and provide targeted instruction and practice. Our assessment software also provides students with immediate feedback and explanations and, when required, remediation content designed to build foundational skills in order to accelerate students to grade-level proficiency.
+
+Engaging, Fun and Easy to Use for Students. Our products utilize a simple, graphical user interface that we believe to be intuitive and easy to use. In addition, our virtual textbooks and supplementary web-based programs incorporate games and rewards in an attempt to make learning fun and engaging for students. By engaging students and providing them with the tools they need to succeed, we hope to enable them to take control of their own learning, boost their confidence, and keep them interested in using our products, while creating a culture of academic success.
+
+Accessible, Dynamic Web-based Platform. Our products are delivered online so they can be used by teachers and students on computers wherever internet access is available, such as classrooms, computer labs, media centers, school libraries, public libraries or at home. Our programs are compatible with existing school and home systems and require no additional software, no installation or maintenance and no extensive implementation or training. Moreover, unlike traditional workbooks or software products, our Virtual Learning content is easily and quickly updated whenever content or functionality enhancements are introduced or products are modified due to changes in state standards. 
+
+High Impact, Low Cost Solution. Virtual Learning plans to offer a comprehensive online educational solution on a hosted platform and provides high quality content, assessment, and reporting for core subjects in a wide range of grade levels. At an anticipated annual subscription rate of $29.95 per family, Virtual Learning products are significantly less expensive than competing traditional print, software and online alternatives provided by large education publishers. 
+
+We have designed our software to enable quick modification to any language: We have designed into our software the ability to easily modify and convert its content to any language that we feel there is a market or would be required to meet the requirements of any of our subscriber base.
+
+We believe increased accountability, including the need for school districts and states to meet the requirements of NCLB and other legislative developments, combined with the increased availability and utilization of web-based technologies by teachers, students, and administrators has resulted in decreased spending on traditional print-based and software-based supplemental materials and increased spending on innovative online programs that offer functionality and real-time assessment and reporting not provided by traditional solutions. 
+
+Our online products are easily, automatically, and frequently updated with new or more current content, additional features and enhancements and can provide students with instant feedback, positive reinforcement and remediation when proficiency levels are not met. Web-based products require no software to be installed in school or home computers and can be accessed anywhere the internet is available. Web-based products can be offered at lower prices as they do not require expenditures for publishing, paper, or electronic media, shipping or warehousing
+
+Key Attributes of Our Business Model
+
+We believe the following are the key attributes of our business model (Please note that NONE of the key attributes of our business model have materialized yet): 
+
+ 
+
+ 
+
+High Revenue Visibility and Strong Cash Flow Generation. We believe we have an attractive business model characterized by a visible recurring revenue stream and high profit margins, neither of which have materialized to 
+
+33
+
+the date of this Prospectus. We have not yet generated any revenue and have never generated a profit. In addition, we believe our low capital expenditure requirements and up-front subscription payments by subscribers should result in strong cash flow generation and high returns on invested capital when and if our future sales materialize. 
+
+ 
+
+Scalability and Flexibility. We continue to scale our business by increasing our product offerings using our products without incurring significant incremental expense. Our content development process, our flexible sales model and our cost-effective centralized, hosted online delivery platform will allow us to minimize our costs as we expand our product offerings and, hopefully, our business when and if sales develop.
+
+Solution to Various Learning Problems: As a software development company, we have developed our products in direct response to parents and teachers concerns relating to student s ability to master all of the material mandated the national core curriculum requirements in a timely manner. Our software includes, at present, over fifty modules that teach subjects as diverse as geometry, algebra, measurement, addition, subtraction, multiplication, division, and fractions, to name a few, This time pressure issue was further substantiated and further reported by such sources as the Education Resources Information Center; through several studies documenting the importance of time needed for learning and time spent in learning as parameters of educational achievement. Several studies have examined differences in student learning rates, amount of information acquired, and amount of information retained in three common types of classroom tasks. Tasks that required knowledge of specific facts; comprehension of basic concepts and principles; or application of facts, concepts, and principles to problem-solving activities. Results of studies indicated large differences among knowledge, comprehension, and application tasks for all measures of student performance. The effect of this is apparent in the The National Assessment of Educational Progress , commonly known as NAEP, or the nation s report card, shows that not only have state scores not changed since the test was last administered in 2008, the states have not seen significant growth since the late 1990s.
+An attempt at resolving this problem hopefully will be accomplished by the adoption of The Common Core Standards which has been adopted by 43 States and the District of Columbia is a state-led initiative that aims to establish basic, uniform education requirements across the country. These standards are sponsored by the National Governors Association and the Council of Chief State School Officers with the participation of many states. 
+
+The standards will be phased in over time, with curriculum development scheduled to begin in 2010-2011. The State Board s resolution directs that school district curricula for all students be aligned with these revised K-12 standards in mathematics and English language arts and literacy in history/social studies, science, and technical subjects, according to the phased-in timeline. The standards will provide more clarity about and consistency in what is expected of student learning across the country. Until now, every state has had its own set of academic standards, meaning public education students at the same grade level in different states have been expected to achieve at different levels.
+
+Falling budgets, increased student density per classroom, and what may be perceived by parents and teachers as more demanding learning requirements will only place a greater burden for the student to keep up. Our virtual textbooks and other learning products may help a student overcome this problem by learning on an individual level and at his or her own rate in a non-threatening, non-judgmental environment,
+
+Secondly: Granting access to all our subscribing students to all of our materials for all grade levels with the payment of one annual subscription fee gives students the opportunity to learn beyond his or her level and get a head start when advancing to a higher grade or the next level in the learning process.
+
+Third: Granting access to all of our subscribing students to all of our virtual courses and supplementary material and assessment programs will allow students who are deficient in having mastered content required in a prior classroom module, prior grade or from another school, will give students an opportunity to make up for any deficiencies at his or her own pace and in a non-threatening and non-judgmental environment . 
+
+Fourth: The software platform we currently use for all of our products is ideally suited to adapt all of our products to any number of languages with minimal programming changes. It is our intention to make all of our products available in the Spanish language. 
+
+ 
+
+Our Growth Strategy 
+
+ 
+
+Ability to Implement Growth Initiatives. With regard to the section Develop New Products and Enhance our Online Platform below, the reference to new products in that section refers to completing the additional titles 
+
+34
+
+mentioned below and this process is on-going and the essence of our growth strategy. The completion of the additional titles is the primary goal of the Company during the next year. The main obstacle to achieving the growth strategy initiatives is the fact that at present we have one employee and limited funds. The failure to complete this offering or obtain additional funding elsewhere, would seriously impair or prevent achieving any of the growth strategy initiatives set forth below prior to development of the 32 titles mentioned bleow. With such funding, prior to developing the 32 titles we contemplate achieving certain of our growth initiatives or substanbtial parts of them. For example, with respect to cross platform functionaility, while we are in the process of completing the four stages of development for any given title, we are constantly seeking ways to adapt the programming of each title to be operational on as many platforms as possible. By taking into account several other changes our files will play any standard PC, android cellphone and also play in a video player. Other initiatives such as commencing development of an eBook platform will not be possible until additional funds are acquired and employees hired. Use of the HTML5 standard is not anticipated until 2014 when we anticipate that HTML5 will become standard. Similarly, programming for additional science and reading titles,as well as translation into other languages need additional employees and funding and thus will not occur prior to completion of the 32 titles.
+
+ 
+
+Develop New Products and Enhance our Online Platform. Once we have achieved a revenue stream we intend to develop new products, as well as new features and functionality for our online platform, to address student needs, parents, and teacher requests in order to maintain the competitiveness we feel necessary to maintain growth both in the number of subscribers to our online services and to enable us to increase our per subscriber revenue by offering increased value. The development of new products and the enhancement of our Online Platform are relevant to our growth because such development and enhancement improve functionality of content to be viewed over a broader base of communications platforms, e.g. it is now primarily viewed over a desk top or laptop computer over the internet whereas in the future it will be viewable over cellphones and tablets. To date our system is viewable through any Windows or MacIntosh computer systems over the internet and has been modified to be viewed over any cell phone or tablet using Android operating system. In the future we want to extend this to include the iPhone, iPad and Blackberry. We also want to convert our modules to become a video presentation.
+
+Continue development in cross platform functionality for mobile telephone systems. As briefly addressed above, in order to address additional subscribers we intend to make our online services available to mobile telephone users. We are currently capable of serving Android and Blackberry Tablet users. We intend to extend this cross platform functionality to iPad and IPhone and Blackberry cell phones. These Smartphones appear to be establishing a significant and increasing market share of the mobile telecommunications business. A Smartphone is a mobile phone that offers more advanced computing ability and connectivity than a contemporary feature phone. Smartphones and feature phones may be thought of as handheld computers integrated with a mobile telephone, but while most feature phones are able to run applications based on platforms such as Java Me a smartphone usually allows the user to install and run more advanced applications. Smartphones run complete operating system software providing a platform for application developers. Thus, they combine the functions of a camera phone and a Personal digital assistant (PDA). The increased availability and utilization of web-based and mobile technologies enhances and supplements teacher instruction, engages today s technology-savvy learners and improves student outcomes. 
+Some smartphones, sometimes called NirvanaPhones, have a docking station with an external display and keyboard to create a desktop or laptop environment. Growth in demand for advanced mobile devices boasting powerful processors, abundant memory, larger screens, and open operating systems has outpaced the rest of the mobile phone market for several years. According to a study by ComScore, over 45.5 million people in the United States owned smartphones in 2010 out of 234 million total subscribers. Despite the large increase in smartphone sales in the last few years, smartphone shipments only make up 20% of total handset shipments, as of the first half of 2010. In March 2011, Berg Insight reported data that showed global smartphone shipments increased 74% from 2009 to 2010.
+
+Develop New Products and Enhance our EBook Platform. Our strategy calls for development of electronic books as an additional source of revenue, additive to revenue coming from online services. An electronic book (also e-book, ebook, digital book) is a text and image-based publication in digital form produced on, published by, and readable 
+
+35
+
+on computers or other digital devices. Numerous e-book formats emerged and proliferated, some supported by major software companies such as Adobe with its PDF format, and others supported by independent and open-source programmers. Multiple readers follow multiple formats, most of them specializing in only one format. As of 2009, new marketing models for e-books were being developed and dedicated reading hardware was produced. E-books have yet to achieve global distribution. 
+
+In the United States, as of September 2009, Amazon Kindle and Sony s PRS-500 were the dominant e-reading devices. By March 2010, some reported that the Barnes & Noble Nook may be selling more units than the Kindle. On January 27, 2010 Apple Inc. launched a multi-function device called the iPad In July 2010, online bookseller Amazon.com reported sales of ebooks for its proprietary Kindle outnumbered sales of hardcover books for the first time ever during the second quarter of 2010, saying it sold 140 e-books for every 100 hardcover books, including hardcovers for which there was no digital edition. By January 2011, ebook sales at Amazon had surpassed its paperback sales. In the overall U.S. market, paperback book sales are still much larger than either hardcover or e-book; the American Publishing Association estimated e-books represented 8.5% of sales as of mid-2010. 
+
+This last year 2010 saw an expansion of eBook platforms. Amazon released the Kindle DX International Edition worldwide and released the third generation Kindle, available in 3G+Wi-Fi and Wi-Fi versions. Bookeen revealed the Cybook Orizon at CES and debuted the Orizon touchscreen e-book reader. Apple released the iPad with an e-book app called iBooks. Between its release in April 2010, to October, Apple has sold 7 million iPads. Kobo Inc. released its Kobo eReader to be sold atIndigo/Chapters in Canada and Borders in the United States. Kobo Inc. released an updated Kobo eReader, which now includes Wi-Fi. Barnes & Noble released the new NOOKcolor. Sony released its second generation Daily Edition PRS-950. PocketBook expanded its successful line of e-readers in the ever-growing market. Lastly, Google launched Google eBooks. The development of new products and the adapting and enhancement of our present courses to the EBook Platform are relevant to our growth because such development and enhancements improves the functionality of content to be viewed by the students through systems that are most relevant to them which includes the eBook platform. To date we have applied to become a registered developer for Amazon Kindle and Barnes and Noble Nookcolor. In the future, if approved we will have to adapt our modules from Adobe Flash into Java and JavaScript and then market the products to the users of these platforms expanding our customer base, i.e. growth.. 
+
+Develop New Products and Modify Products Based Upon the HTML5 Standard. At present only iPad and the iPhone can run a fully developed HTML5 application. However, we believe that HTML5 will become the new standard for web sites. Thus, we intend to make all of our web sites, both present and future, fully functional in HTML5 so that we will continue to present what we believe to be the most advanced instructional software for each of the modules we create hopefully insuring that our future growth will become impaired by less than current functionality. HTML5 is a language for structuring and presenting content for the World Wide Web, a core technology of the Internet. The target date for full adoption of the HTML5 standard is schedule for 2014. It is the latest revision of the HTML standard (originally created in 1990) and currently remains under development. Its core aims have been to improve the language with support for the latest multimedia while keeping it easily readable by humans and consistently understood by computers and devices (web browsers, parsers etc.). HTML5 promises to offer extensive cross platform features and functionality in animation, video applications and products for use on the World Wide Web for PC s, mobile phones and Tablets. The development of new products and the enhancement of our Online Platform is relevant to our growth because such development and enhancement improve the functionality of content to be viewed over a broader base of communications platforms, At present, we are relying upon Adobe Flash to continue its own development and continue to be the most viewed and adaptable software platform to create our courses. Adobe Flash has built its reputation as one of the most media rich platforms on the market with an installed user base in excess of 90% on the desktop and laptop computers marketed today. HTML5 is expected to be the new challenger to the success of Adobe Flash. It is expected that beginning in 2014, HTML5 will rival Adobe Flash s abilities to present an equally broad base of content over a broader range of communication devices including but not limited to cellphones, tablets and eBook devices. To date our system is viewable through any Windows or MacIntosh computer systems over the internet and has been modified to be viewed over any cell phone or tablet using Android operating system. In the future we want to extend this to include the iPhone, iPad and Blackberry cellphone. By so doing we will expand our customer base and further the growth of our business, 
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+Our flexible web-based distribution model and in-house content development capabilities allow us to continually update and improve our products, make our products immediately available on the World Wide Web regardless of platform and distribute our products in a cost-efficient manner.
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+Increasingly tech-savvy students today are increasingly relying on multiple devices and media to access information, through the World Wide Web. As such, it is important to deliver our content in the way that best suits their needs. With 3 Screen access,(PC, Mobile, Tablet) we will open up new distribution channels, extending our reach while making our content conveniently accessible, regardless of time or place. And, since our content is always on', we may achieve higher numbers of subscribers. In this way we hope that our products will garner the widest possible user audience and hence positively impact our growth. 
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+We have adapted our software platform to permit us to embed video content which will allow our subscribers to seamlessly watch our videos, regardless of whether they come to our site by way of a PC, mobile Smart Phone, or Tablet. We feel that by re-designing the format of our virtual courses, we can create a line of virtual courses that may be viewed using an interactive video format such as is available through the smartphone and tablet technologies. The development of new products and the enhancement of our Online Platform to a video platform are relevant to our growth because such development and enhancement improve functionality of content to be viewed over a broader base of communications platforms, e.g. it is now primarily viewed over a desk top or laptop computer over the internet whereas in the future it will be viewable over cellphones, tablets and internet ready television sets. To date our system is viewable through any Windows or MacIntosh computer systems over the internet and has been modified to be viewed over any cell phone or tablet using Android operating system. In the future we want to extend this to include the cellphone, tablet and internet connected television systems to expand the customer base, especially among young viewers. 
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+Expand Into New Related Markets for Further Growth. 
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+We believe there is a significant opportunity to utilize our programming language platform to create fully animated, talking, colorful, interactive content for the subject fields of science and reading and sell our products in new geographic and end markets that will enhance our growth. 
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+We believe there is a significant opportunity to modify the content of our virtual textbooks and related assessment materials into other languages. Bilingual Education is a program used to help limited English proficient (LEP) children keep up with all their required academic competencies, such as math, history and science, while they are learning English through ESL (English as a Second Language) classes. Many LEP students learn to speak conversational English within the first 2 years, but research consistently shows that it takes 4 to 7 years before most students are able to use English to learn academic subjects and perform on a par with native English-speaking peers. A recent national research (Collier & Thomas 1996) shows that late-exit quality bilingual programs actually create the best results, with students in 2-way bilingual programs (bilingual students and native-English speakers learning in 2 languages in the same classroom) out-performing their mainstream peers. Despite what the research is showing, most bilingual education programs transition their students into the mainstream within the first 3 years.
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+Bilingual program students continue learning academic subjects like math and science in the language in which they are able to learn most effectively, while learning English. There is always an ESL component to each bilingual program. Uninterrupted development of children's cognitive, academic, and linguistic skills is critical in the academic success of limited English proficient students. Moreover, is it not better to build on the assets that the students bring with them- their knowledge, languages and cultures- rather than discouraging the development of those valuable resources.
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+Bilingual programs have been proven to be cost effective for school systems to implement for the following reasons: 1) LEP students who chose bilingual education programs are less likely to be placed into expensive special education programs as those who chose to stay in the sink or swim English-only programs, 2) With the additional support, bilingual education students are less likely to drop out of high school than their language minority peers in English-only programs, 3) Bilingual education helps to nurture and support the continual development of valuable bilingual/bicultural skills that are needed in our global economy.
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+There are numerous contributing factors that help explain the desertion of bilingual children and the cultural diverse child. Some of them reside in teenagers themselves, some are institutional, and some are social. Teenagers start questioning the educational system in which their needs are not satisfied. Families pressed by economic needs encourage teenagers to work, because they see education as a very expensive commodity. Pressing economic need impels them to earn a living instead of continuing their education. The exorbitant and rising costs of a college education and misinformation about the opportunities to succeed in college combine to present a bleak future for minority students. The lack of basic skills is another contributing factor. A typical bilingual student lags two years behind his or her classmates, which imprint on them a label that in some cases is very difficult to overcome. Children know who are the good students and are the ones who lack behind. Teenagers feel the alienation and become truants. Truancy makes their stay at school even more difficult. While the students who come to class regularly gain knowledge, the youngsters who are truant fall farther behind, and the gap between their knowledge level and the ideal level becomes greater.
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+By addressing bi-lingual educational needs and by translating our online programming and eBooks into other languages we will expand our potential user base and hence promote subscriber and revenue growth. The development of new products and the enhancement of our business by producing product for non-English speakers is relevant to our growth because such development and enhancement aims to expand customer base into new markets to be viewed over a broader base of communications platforms, e.g. it is now primarily viewed over a desk top or laptop computer over the internet whereas in the future it will be viewable over cellphones and tablets, for non-english speakers. To date we have translated third and fourth grade geometry courses into Spanish and in the future we intend to translate all modules into Spanish to expand our market to include more Spanish speaking customers. We also have been having preliminary discussions for marketing Asian language courses again with an eye toward expanding the customer base in the future. 
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+We have designed into our User Registration and billing procedure the flexibility to attract sales and offer promotions and incentives to school systems, organizations and groups to sign on groups of students.
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+In addition to attracting individual students to sign on to our web-based virtual textbooks and related assessment materials, we have designed into our system the flexibility to permit a school system, organization, or group to enroll any number of students and have our system track their subscription and learning progress and to notify the parents and/or sponsors as to the student s progress. This capability should enhance our prospects for growth by allowing organizations to acquire access to our web site for many subscribers in one easy registration process. The registration and billing procedure are relevant to our growth because such programs allow large user groups to be serviced at lower per pupil cost and paying the group for the benefit derived by the Company through the lowered servicing costs per pupil. To date our system has been adapted to allow sales to a group and tie them to one payer. In the future we expect this system to be upgraded as we gain more experience in group sales. This will also allow us to us commissioned salespersons with less effort. All of these are anticipated to enhance sales growth.
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+Our Products and Services
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+Virtual Learning is a subscription-based online education company. As of March 31, 2011, we have not begun to accept subscribers. We have had only preliminary discussions with a very limited number of potential distributors. We provide standards-based instruction through our fully interactive virtual textbooks. Our fully animated, interactive featured, colorful and audio virtual textbooks have combined rigorous content along with a variety of practice problems, activities, assessments, games, and productivity tools that improve the performance of students via proprietary web-based platforms games that engage students, reinforce and reward learning achievement. As part of our Learning is Basic series we have created, as a subset, our Math is Basic series of virtual math textbooks and assessment programs. Our core product line helps students in First through 12th grade, master grade level academic standards in a fun and engaging manner. We provide our products via proprietary web-based platforms through one of our several websites on the World Wide Web with the URL www.mathisbasic.com; www.learningisbasic.com, www.eschoolroom.com, www.educationisbasic.com. Please note that we have only one operational website www.learningisbasic.com.
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+When a student logs into our web-based system, the student is granted total access to all subjects regardless of grade. Falling budgets, increased student density per classroom, and what may be perceived by parents and teachers as more demanding learning requirements have only placed a greater burden for the student to keep up. Our virtual textbooks and other learning products may help a student overcome this problem by learning on an individual level and at his or her own rate in a non-threatening, non-judgmental environment. Since it is self paced and fully contained it allows students to work at an advanced pace as well as provide remedial support.
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+Virtual Learning is also a producer and intends to distribute computer software and video educational materials on CD and DVD formatted disks which will be available through various distributors and our websites either as a download or in boxed format. We have opened ecommerce store fronts on Amazon.com, Ebay.com and Yahoo.com. We have combined rigorous content in math with interactive features and games that engage students, reinforce and reward learning achievement. It is our intention to eventually have all our content available both online and in the CD and DVD formats. However, at present there are some titles that are not available in both formats.
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+To date, we have completed 5 titles on CD formatted disks relating to the teaching of basic English to foreign speaking people. These titles include English for Russian Speaking People ; English for Portuguese Speaking People ; English for Spanish Speaking People ; English for Chinese Speaking People ; and English for Polish Speaking People . These are not yet available online.
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+We have also completed virtual textbooks with the titles: First Grade Math ; Second Grade Math ; Third Grade Math ; Third Grade Math: Geometry ; Fourth Grade math: Geometry ; Fifth Grade Math: Geometry ; First Grade Math: Learning to Tell Time ; Second Grade Math: Learning to Tell Time ; Third Grade Math: Algebra Mr. Clock for First Grade ; Mr. Clock Teaching Time ; and Mr. Clock Teaches Elapsed Time and assessment based review level titles for grades first through third grade . These titles will all be available online, as well as in CD and DVD format. Our other educational titles on CD and or DVD formatted disks will consist primarily of virtual mathematics and science text books and work book courses for grades Pre-K through college level. We intend to follow the core curriculum requirements required to be taught by each of the 50 United States.
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+We are also in production stage on several other virtual audio and animated teaching textbook computer program titles relating to teaching Money for First Grade; Fourth Grade Algebra and Fifth Grade Algebra ; First Grade Math: Measurements ; Second Grade Math: Measurement ; Third Grade Math: Measurement ; High School Geometry and High School Algebra in CD format and one video title relating to teaching Calculus I, college level. We are also in preproduction on additional video titles relating to Trigonometry, pre-calculus, and Calculus II.
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+Core Educational Principles 
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+We believe that one of the keys to our success lies in our core educational principles that guide product design and development: 
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+Clear expectations. We have subdivided each grade into approximately twenty four different modules. Each module focuses on an underlying topic which is further explored with rigorous content which has been presented in an in depth, animated, colorful, and interactive format. Our initial presentation starts out with a review of the basic underlying concepts and skills and is patiently and painstaking incremented with all of the content and skills required to be learned and mastered for that particular grade. Clear goals for the student to master the targeted skills or concepts. Each module includes activities and various types of questions to assess the student s mastery and progress. 
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+High quality, rigorous content. We are in the process of building courses from the ground-up, customized to each set of standards for a particular topic. We utilize a scaffolding approach to content development that begins with skill building and then builds to higher level thinking skills. 
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+Fun and engaging assignments. Our virtual textbooks are embedded with short games, an assortment of activities and a variety of question formats to assess the student s mastery of the material. These features provide continual positive reinforcement and reward learning to engage students and build student confidence in a non-judgmental and non-threatening environment.
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+Immediate feedback. Students will receive immediate feedback and explanations for each question and activity, allowing them to learn and quickly apply new knowledge to subsequent questions and to build skills and conceptual understanding in order to handle more complex content that follows.
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+Our Subscribers 
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+Our target market is the approximately 74 million students that attend school throughout the United States consisting of K-12 and postsecondary education and the approximately 1.5 million students that are being home schooled though out the United States.
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+Marketing, Sales and Subscriber Support
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+Marketing Activities 
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+When implemented our marketing strategy will be to continually increase our brand and Web-site awareness, to introduce and to continually generate qualified subscriber leads for our web-site. We intend to focus our marketing efforts on individual students and their parents, individual schools, principals, and teachers for sales to both new and existing subscribers. 
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+Our primary marketing activities will include: 
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+targeted campaigns to individual students and their parents and other family members, schools, and organizations sponsoring after school learning opportunities by using search engine marketing, direct mail, e-mail marketing and print advertisements; 
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+participation in tradeshows; 
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+building on relationships with satisfied students and parents, organizations, and school subscribers to target new sales to other interested parties in the geographic area;
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+Webinars for existing subscribers introducing them to new products, add-on features and upgrades; 
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+incentives such as free months to attract new subscribers or free trials of add-on products to attract renewals; and we intend to promote ourselves through magazine advertisements describing and offering our virtual textbooks.
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+Subscriber Support 
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+We will provide our subscribers with service through contact us via phone, live chat or by email. 
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+Our Competition 
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+Virtual Learning will compete primarily with other providers of supplemental educational materials and online learning tools.
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+We believe our principal competitors will include: 
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+providers of online and offline supplemental instructional materials for the core subject areas of reading, mathematics, science and social studies for K-12 institutions; 
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+companies that provide K-12-oriented software and online-based educational assessment and remediation products and services to students, educators, parents, and educational institutions; 
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+the assessment divisions of established education publishers, including Pearson Education, Inc., The McGraw-Hill Companies, and Houghton Mifflin Harcourt Company; 
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+providers of online and offline test preparation materials; 
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+traditional print textbook and workbook companies that publish K-12 core subject educational materials, standardized test preparation materials or paper and pencil assessment tools; 
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+summative assessment companies that have expanded their product lines to include formative assessment and instruction products; 
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+non-profit and membership educational organizations and government agencies that offer online and offline products and services, including in some cases at no cost, to assist individuals in standards mastery and test preparation; and 
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+providers of website hosting for students, teachers and schools. 
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+We believe the principal competitive factors in Virtual Learning s market will be: 
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+quality of content and deep customization to standards; 
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+formative assessment and reporting to inform instruction;
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+ease of use, including whether a product is available online; 
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+program efficacy and the ability to provide improved student outcomes; 
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+ability to engage students; 
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+vendor reputation; and 
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+price.
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+Virtual Learning expects to compete primarily with textbook, workbook, study guide and software products published by the large postsecondary publishers, such as Pearson, McGraw-Hill, Cengage, Wiley, and Mosby (Reed Elsevier). 
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+Concentrations
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+We anticipate that the majority of our revenues from the sale of subscriptions and our products and services will occur in North America. 
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+The Technology
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+We are using Adobe Flash as the platform upon which to develop our virtual textbooks and CD and DVD formatted educational titles. Adobe Flash has several unique features that make it ideal for our purposes. First, it has the ability to publish our work in several formats including as an executable file which may be played on either a PC or a Macintosh Computer. In additional the same programming may also be used as the basis for presentation on our website with no change in the basic core code. Adobe Flash is especially useful in its ability to incorporate and integrate many forms of media into a single interactive program.
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+Adobe Flash is one of the most popular and versatile applications for digital multimedia and website development. Flash is a vector-based medium able to deliver compelling vector animated content at a fraction of the bandwidth required by other animation media. Flash is now one of the most flexible interactive digital-media authoring tools available, offering the capabilities to run not only on the Internet and desktop computer platforms, but on game consoles and mobile devices as well. 
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+As the Internet has become more complex, more easily accessed, and more plentiful in rich media, it has increasingly become a destination for those wanting to be educated and entertained at the same time. Education is a subset of media (online or offline, interactive or not) that presents science, math, history or culture in a compelling and entertaining manner. This is where Flash-based education and entertainment enters the scene. Flash allows for the creation of nonlinear, self-motivated, educational experiences that feature compelling and powerful use of sound, video, imagery, and interactivity. 
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+Flash offers a series of file types to which our creations can be published. Each format has its own particular strengths and weaknesses. In particular and as they relate to our products we utilize the publishing option of producing our content as SWF files. SWF, is viewable only if our intended audience has installed a Flash Player on their computer. Adobe Flash CS5 is the latest in the Flash family of software. Not only is the player that plays Flash content one of the most downloaded pieces of software-surpassing both Internet Explorer and Netscape as well as nearly all media players. Flash Players 4,5,6, 7,8, 9 and now version 10 accompanied virtually every copy of Windows, from Windows 98 first edition on up through Windows XP SP2 and Internet Explorer 7, 8 and 9. The only exceptions are Windows 2000, Windows XP Pro x64 and Windows Server 2003. The Flash Player is also available as a free downloadable file from Adobe s home website.
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+In addition, we also publish our titles in the Windows Projector format, which is a self-executing EXE file that does not need a web browser or a plug-in to view the content. We can distribute the Windows Projector without having to worry whether our intended audience has the necessary Flash plug-in, a compatible web browser, or even an Internet connection. Our titles are self-contained packages produced and distributed on CD ROM or DVD formatted disks. We can also produce our titles in the Macintosh equivalent of the Windows Projector as a self-executing HQX file. The Macintosh Projector does not need the Flash plug-in or a browser to be viewed. 
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+One of the most important and relevant characteristics of Adobe Flash is its ability to present material in almost any language. The language component of the computer program is documented as an image file, which then is displayed independent of the computer user s operating system limitations and graphic display limitations. This will allow us to present our content in many languages simultaneously from within the program and not have to worry about the user s computer system to display that language.
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+Intellectual Property
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+The Company has copyrighted the content on all of its virtual textbooks and related materials and CD or DVD products and has obtained a trademark on our URL Learning is Basic .
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+We consider elements of our software and peer-to-peer clustering technology to be proprietary. We rely on a combination of trade secrets, copyright and trademark law, contractual provisions, confidentiality agreements, and certain technology and security measures to protect our intellectual property, proprietary technology, and know-how. Our future results of operations are highly dependent on the proprietary technology that we have developed internally. 
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+Employees
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+As of December 31, 2010, we had 1 full-time employee. Our success is highly dependent on our ability to attract and retain qualified resellers and to retain qualified outsourced information system management. To date, we believe we have been successful in our efforts, but there is no assurance that we will continue to be as successful in the future. Our employee is not subject to a collective bargaining agreement. 
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+Facilities
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+We currently occupy office space rent free from our President on a month to month basis. 
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+MANAGEMENT S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
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+Forward-Looking Statements
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+Management s Discussion and Analysis or Plan of Operation contains forward-looking statements, as well as historical information. Although we believe that the expectations reflected in these forward-looking statements are reasonable, we can give no assurance that the expectations reflected in these forward-looking statements will prove to be correct. Forward-looking statements include those that use forward-looking terminology, such as the words anticipate, believe, estimate, expect, intend, may, project, plan, will, shall, should, and similar expressions, including when used in the negative. Although we believe the expectations reflected in these forward-looking statements are reasonable and achievable, these statements involve risks and uncertainties, and no assurance can be given that actual results will be consistent with these forward-looking statements. Current shareholders and prospective investors are cautioned that any forward-looking statements are not guarantees of future performance. Such forward-looking statements by their nature involve substantial risks and uncertainties, certain of which are beyond our control, and actual results for future periods could differ materially from those discussed in this report, depending on a variety of important factors, among which are our ability to implement our business strategy, our ability to compete with major established companies, the acceptance of our products in our target markets, the outcome of litigation, our ability to attract and retain qualified personnel, our ability to obtain financing, our ability to continue as a going concern, and other risks described from time to time in our filings with the Securities and Exchange Commission. Forward-looking statements contained in this report speak only as of the date of this report. Future events and actual results could differ materially from the forward-looking statements. You should read this report completely and with the understanding that actual future results may be materially different from what management expects. We will not update forward-looking statements even though its situation may change in the future.
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+We undertake no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Important factors on which such statements are based are assumptions concerning uncertainties, including but not limited to uncertainties associated with the following:
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+(a) potential fluctuation in quarterly results;
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+(b) our failure to earn revenues or profits;
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+(c) inadequate capital and barriers to raising the additional capital or to obtaining the financing needed to implement its business plans;
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+43
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+(d) inadequate capital to continue business;
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+(e) changes in demand for our products and services;
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+(f) rapid and significant changes in markets;
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+(g) litigation with or legal claims and allegations by outside parties;
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+(h) insufficient revenues to cover operating costs.
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+You should read the following discussion and analysis in conjunction with our financial statements and notes thereto, included herewith. This discussion should not be construed to imply that the results discussed herein will necessarily continue into the future, or that any conclusion reached herein will necessarily be indicative of actual operating results in the future. Such discussion represents only the best present assessment of management.
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+PLAN OF OPERATION
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+Overview
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+Virtual Learning was formed as a Nevada corporation on January 6, 2009. We are a development stage enterprise who is a subscription-based, software-as-a-service provider of education products. Virtual Learning provides standards-based instruction, practice, and assessments that improve the performance of students via proprietary web-based platforms through one of our several websites on the World Wide Web with the URL www.mathisbasic.com; www.learningisbasic.com; and www.eschoolroom.com; www.educationisbasic.com. Please note that we have only one operational website learningisbasic.com. Virtual Learning is also a producer and distributor of computer software and video educational materials on CD and DVD formatted disks, which will be available through various distributors and our websites either as a download or in boxed format. We have combined rigorous content in math with interactive features and games that engage students, reinforce, and reward learning achievement. 
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+The Company has one curriculum development contract with Lawrence William Kazmierczak, a professor of mathematics at Stevens Institute of Technology, Hoboken, New Jersey which requires the Company to pay him to author courses in Pre-Calculus, Calculus I and II, and to consult on the creation of high school level math courses. This Agreement provides for Professor Kazmierczak to receive 5% royalties on the Company s net revenues up to one million dollars of net revenues, and 5% royalty on net revenues beyond one million one dollar on projects in which he directly participates and has made material contributions. In addition, he has received 200,000 shares of the Company s common stock. We determine what projects in which he has directly participated and made material contributions by our internal record keeping as to time devoted to each project. We determine the revenue attributed to those projects by monitoring devices that allow us to determine which authorized user has devoted how much time to which module and then comparing the same to the entire revenue stream.
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+Events and Uncertainties critical to our business
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+Demand for our products and services is affected by the general economic conditions in the United States. When economic conditions are favorable and discretionary income increases, purchases of non-essential items like software generally increase. When economic conditions are less favorable, sales of non-essential educational items are generally lower. In addition, we may experience more competitive pricing pressures during economic downturns. Therefore, any significant economic downturn or any future changes in consumer spending habits could have a material adverse effect on our financial condition and results of operations.
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+There is no guarantee that we will be able to generate sufficient sales to make our operations profitable. We may continue to have little or no sales and continue to sustain losses in the future. If we continue to sustain losses, we will be forced to curtail our operations and go out of business. Our success depends in a large part in the ability of our ability to create additional product lines sufficient to create a catalog of programs to offer allowing us to 
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+implement a successful marketing and sales plan. While we are currently seeking to hire additional computer programmers and educators to consult with as to program accuracy and content there is no guarantee that these efforts will result in any substantial sales. Because of the lack of funding, we are unable to hire a dedicated programming and research consulting team who will devote their efforts to helping us design and create new programs of high quality in a timely manner.
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+If we are able to obtain sufficient funding to become fully operational, there is no guarantee that we will be able to find personnel who will be able to work closely with the Company to help design and create new lines of product or to process orders, including special orders, made via the internet.
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+Critical Accounting Policies
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+We have identified the following policies below as critical to our business and results of operations. For further discussion on the application of these and other accounting policies, see Note 1 to the accompanying audited financial statements for the year ended December 31, 2010, from inception (January 6, 2009) through December 31, 2009, and from inception (January 6, 2009) through December 31, 2010, included elsewhere in this Prospectus. Our reported results are impacted by the application of the following accounting policies, certain of which require management to make subjective or complex judgments. These judgments involve making estimates about the effect of matters that are inherently uncertain and may significantly impact quarterly or annual results of operations. For all of these policies, management cautions that future events rarely develop exactly as expected, and the best estimates routinely require adjustment. Specific risks associated with these critical accounting policies are described in the following paragraphs.
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+Basis of Presentation/Going Concern
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+These financial statements have been prepared for purposes of registration with the Securities and Exchange Commission ("SEC"), and they present Virtual Learning s financial position, results of operations, and cash flows in accordance with accounting principles generally accepted in the United States of America. These standards contemplate continuation of Virtual Learning as a going concern.
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+However, Virtual Learning has sustained substantial stock-based operating losses aggregating $800,000 and cash-based losses of $9,908 for the period from inception (January 6, 2009) through December 31, 2010 $4,296 for the three months ended March 31, 2011. This factor alone raises substantial doubt about Virtual Learning s ability to continue as a going concern. Virtual Learning has also capitalized $274,000 of stock-based curriculum development costs as of December 31, 2010. The recovery of these assets and continuation of future operations are dependent upon Virtual Learning s ability to obtain additional debt or equity capital and its ability to generate revenues sufficient to continue pursuing its business purposes. Virtual Learning is actively pursuing financing to fund future operations.
+
+To date, Virtual Learning s cash-based operations have been funded by the issuance of 10,000,000 shares of common stock for $10,000 or $.001 per share to Thomas P. Monahan (President and majority shareholder) and the issuance of an additional 100,000 shares of common stock for an aggregate price of $20,000 or $.20 per share to an unrelated third party.
+
+In addition, Mr. Monahan loaned Virtual Learning cash of $16,000, charged Virtual Learning costs and expenses of $8,540 on a personal credit card, and contributed computer equipment at a stated value of $3,000 As of March 31, 2011 Mr. Monahan has charged an additional $903 on a personal credit card. As of December 31, 2010, $25,900 of these amounts have been repaid.
+
+Virtual Learning is subject to a number of risks similar to those of other development stage enterprises. These risks include, but are not limited to, rapid technological change, dependence on key personnel, competing new product introductions and other activities of competitors, the successful development and marketing of its products, and the need to obtain adequate additional capital necessary to fund future operations.
+
+45
+
+Since its inception on January 6, 2009, Virtual Learning has devoted its efforts principally to creating initial computer software products, research and development, and the accumulation of content for additional titles, business development activities, and raising capital. As a result, Virtual Learning is considered a development stage enterprise as defined in accounting principles generally accepted in the United States of America. Virtual Learning s accumulated deficit during the development stage (the period from inception (January 6, 2009) through December 31, 2010 equals $809,908. Virtual Learning s accumulated deficit during the development stage (the period from inception (January 6, 2009) through March 31, 2011 equals $814,204.
+
+Virtual Learning's future capital requirements will depend upon many factors, including progress with marketing its technologies, competing technological and market developments, and its ability to establish collaborative arrangements, effective commercialization, marketing activities, and other arrangements.
+
+There is no assurance that Virtual Learning can reverse its operating losses, or that it can raise additional capital to allow it to continue its planned future operations. These factors raise substantial doubt about Virtual Learning's ability to continue as a going concern. These financial statements do not include any adjustments relating to the recoverability of recorded asset amounts that might be necessary from an unfavorable resolution of this uncertainty.
+
+Management expects that Virtual Learning will experience negative cash flows from operations and net losses for the foreseeable future or until Virtual Learning completes enough software and video educational titles to implement a successful marketing program. Management believes that a total of sixteen (16) titles representing courses in mathematics and science for grades K through 8 will be sufficient to generate sufficient revenue to bring Virtual Learning to a break-even-point. Management has completed five (5) computer software titles relating to the teaching of Basic English for foreign speaking individuals ( these 5 language titles are in addition to the 16 minimum titles needed to achieve breakeven) and eleven (11) titles relating to geometry and algebra for grades first through fifth grade. To complete the 16 titles required 1) generation of a core curriculum analysis; 2) generation of a storyboard incorporating and outlining the core curriculum; 3) development of the related content, i.e. generating a artistic rendition of the storyboard in an Adobe Flash based environment; and 4) iterative improvements upon the preliminary product based upon feedback from educators, parents and students. The estimated time to complete the 5 additional minimum titles needed to achieve breakeven is approximately 2 months if the offering is successful to the extent of the sale of at least 50% of the shares offered hereby, four months if 25% of the shares offered hereby are sold, and up to seven months if no proceeds result from this offering. The cost to produce these additional titles is approximately $16,000. However, it should be noted that if necessary, the expense to produce these titles will be a further capital contribution made by Mr. Monahan if the offering is not completed in that Mr. Monahan intends to continue to perform all programming needed to complete the additional five titles as well as planning to continue beyond those five additional titles to add additional titles himself if funding is not achieved.
+Based upon current expectations, management believes that Virtual Learning's existing capital resources, plus the proceeds of a planned public offering of approximately $500,000 will be sufficient to meet Virtual Learning's operating expenses and capital requirements to create the minimum of 16 additional titles to achieving a goal of 32 titles (which also is in addition to the five language titles described above) at which point Virtual Learning expects to have been shipping commercial product and recognizing revenue for over twelve months and selling annual memberships to view courses on line. To complete the next 16 titles will require the same steps as for the eleven titles set forth above.. It is hoped that by utilizing the proceeds of this Offering that the time frame for generating the next 16 titles can be substantially decreased and accomplished in the next year following the completion of the Offering contemplated herein. It is believed by management that the proceeds of this Offering, if the maximum is sold, will be sufficient to meet all of the anticipated capital requirements of the Company during the next twelve months.
+
+46
+
+With respect to the time line for accomplishing the above milestones and their associated cost, please note that the percentage of the maximum offering proceeds obtained by the Company will effect the speed with which each function is met. The following table presents those trade-offs for the development of the five additional mathematics and science courses needed to complete the first sixteen titles as well as the sixteen additional titles mentioned above:
+
+ Maximum 
+
+50% of Maximum
+
+25% of Maximum
+
+ Sold
+
+ Sold
+
+ Sold
+
+1) Curriculum
+
+ 3 months
+
+ 5 months
+
+ 7 months
+
+ Analysis
+
+ $8,000
+
+ $4,000
+
+ $2,000
+
+2) Storyboards
+
+ 3 months
+
+ 5 months
+
+ 8 months
+
+ $8,000
+
+ $4,000
+
+ $2,000
+
+3) Flash
+
+ 4 months
+
+ 7 months
+
+ 12 months
+
+ Rendition
+
+ $120,000
+
+ $60,000
+
+ $29,000
+
+4) Feedback 2 months
+
+ 4 months
+
+ 3 months
+
+ Improvements $30,000
+
+ $15,000
+
+ $6,750
+
+Totals
+
+ 12 months
+
+ 21 months
+
+ 30 months
+
+ $166,000
+
+ $83,000
+
+ $39,750
+
+In the event a public offering cannot be completed in a timely manner or under acceptable conditions, Virtual Learning believes that it can continue to run its operations by operating at minimal staffing and relying on the services of Thomas P. Monahan to provide the funds and skills required to continue operating and complete the design and computer programming of the required educational titles and enable Virtual Learning to complete its marketing plans.
+
+If Virtual Learning does not complete the planned public offering, and if no other sources of additional capital are available, management anticipates that it would substantially reduce Virtual Learning's operating expenses to the minimum required to support the continued development of its technology. Mr. Monahan has agreed to provide the additional funds as needed to ensure the continuation of Virtual Learning and to provide the programming and technical skills needed to complete the planned software and video titles on CD and DVD formatted disks. There can be no assurance that Mr. Monahan will be able to complete the titles in a timely manner to take advantage of the void in the market place for this form of educational materials in these formats. There can be no assurance that Virtual Learning's negative cash flows will not necessitate ceasing operations entirely.
+
+We intend to start soliciting membership for our website within the next two months regardless of the results of this offering. Only the extent of the solicitation will be affected by the offering proceeds. We would commence the solicitation with fewer modules. To solicit memberships and ship product with the sixteen planned titles would occur in seven months if no proceeds resulted from this offering (assuming no other funds were obtained by the Company); six months if 25% of the shares offered hereby are sold; four months if 50% of the shares offered hereby are sold and three months if the maximum number of shares offered hereby are sold..
+
+47
+
+The costs of the marketing plan is set forth below based upon the amounts of proceeds derived from this offering and the individually planned marketing efforts:
+
+ 
+Percentage of Maximum Proceeds
+
+ 
+100%
+
+50%
+
+25%
+
+None(2)
+
+Radio advertising
+
+$5,000
+
+$5,000
+
+$1,000
+
+$1,000
+
+Trade shows
+
+30,000
+
+5,000
+
+1,000
+
+100
+
+Newspaper and magazine ads 
+
+10,000
+
+5,000
+
+-0-
+
+-0-
+
+Bill board
+
+5,000
+
+3,000
+
+1,000
+
+500
+
+Advertising on Cable TV
+
+4,000
+
+2,000
+
+-0-
+
+-0-
+
+Direct Email advertising
+
+4,000
+
+2,000
+
+500
+
+500
+
+Internet marketing (pay per click budget)
+
+3,600
+
+1,800
+
+600
+
+300
+
+Internet banners
+
+5,000
+
+5,000
+
+-0-
+
+-0-
+
+Purchasing Internet space on another website
+
+4,000
+
+2,000
+
+500
+
+500
+
+Search engine optimization
+
+4,000
+
+2,000
+
+-0-
+
+-0-
+
+Social media presence on Face Book, My Space etc
+
+NC(1)
+
+NC
+
+NC
+
+NC
+
+Sales through commissioned salespeople
+
+NC
+
+NC
+
+NC
+
+NC
+
+Direct marketing to teachers
+
+5,000
+
+3,000
+
+1,000
+
+500
+
+Direct marketing to homeschoolers
+
+5,000
+
+3,000
+
+1,000
+
+500
+
+Distributor marketing (word of mouth)
+
+NC
+
+NC
+
+NC
+
+NC
+
+Permission marketing 
+
+NC
+
+NC
+
+NC
+
+NC
+
+Pass-it-On Viral marketing
+
+NC
+
+NC
+
+NC
+
+NC
+
+Affiliate Programs
+
+NC
+
+NC
+
+NC
+
+NC
+
+Total marketing costs
+
+$84,600
+
+$38,800
+
+$6,600
+
+$3,900
+
+Unallocated marketing budget
+
+40,400
+
+26,200
+
+3,650
+
+ 
+
+Total marketing budget
+
+$125,000
+
+$65,000
+
+$10,250
+
+ 
+
+(1)NC means no cash is needed to execute these marketing avenues. 
+
+(2)Cash amounts in the None category will be supplied from other sources. 
+
+(3)Cash uncommitted from the use of proceeds for marketing will be reallocated based upon results from the above initial outlays from the offering proceeds to reinforce the most successful marketing approaches based upon the experience derived from those outlays
+
+ 
+
+Property and Equipment
+
+Property and equipment is presented at stated value upon contribution or at the cost of acquisition. Depreciation is provided using the straight-line method over an estimated useful life of five years. Repairs and maintenance is expensed as incurred, and renewals and betterments are capitalized.
+
+Use of Estimates
+
+The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported and disclosed in the financial statements and the accompanying notes. Actual results could differ materially from these estimates.
+
+On an ongoing basis, Virtual Learning s management evaluates its estimates, including those related to revenue recognition, the need for an allowance for uncollectible accounts receivable, fair value of investments, fair value of 
+
+48
+
+acquired intangible assets and goodwill, useful lives of intangible assets and property and equipment, deemed value of common stock for the purpose of determining stock-based compensation, and income taxes, among others. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities.
+
+Virtual Learning s management (board of directors) determines the value assigned to shares of common stock in the absence of a public market for these shares.
+
+Fair Value of Financial Instruments
+
+The carrying amounts of Virtual Learning s financial instruments, including cash and cash equivalents, short-term investments, accounts receivable, accounts payable, and accrued liabilities, approximate fair value because of their short maturities.
+
+Capitalized Curriculum Development Costs
+
+Virtual Learning internally develops curriculum, which is primarily provided as web content and accessed via the Internet. Virtual Learning also creates textbooks and other offline materials.
+
+Virtual Learning capitalizes curriculum development costs incurred during the application development stage in accordance with accounting principles generally accepted in the United States of America. These principles provide guidance for the treatment of costs associated with computer software development and defines those costs to be capitalized and those to be expensed. Costs that qualify for capitalization are external direct costs, payroll and payroll-related expenses. Costs related to general and administrative functions are not capitalized and are expensed as incurred. Virtual Learning capitalizes curriculum development costs when the projects under development reach technological feasibility. Many of our new courses are leveraged off of proven delivery platforms and are primarily content, which has no technological hurdles. As a result, a significant portion of our courseware development costs qualify for capitalization due to the concentration of our development efforts on the content of the courseware.
+
+Technological feasibility is established when we have completed all planning, designing, coding, and testing activities necessary to establish that a course can be produced to meet its design specifications. Capitalization ends when a course is available for general release to our customers, at which time amortization of the capitalized costs begins. The period of time over which these development costs will be amortized is generally five years. This is consistent with the capitalization period used by others in our industry and corresponds with our product development lifecycle.
+
+Total capitalized curriculum development costs incurred were $122,000, $152,000 and $3,000 for the year ended December 31, 2010 and from inception (January 6, 2009) through December 31, 2009 and for the three months ended March 31, 2011, respectively. These amounts are recorded in the accompanying balance sheets, net of amortization and impairment charges, if applicable. Amortization and impairment charges are recorded in product development expenses on the accompanying statements of operations. Amortization expense for the year ended December 31, 2010 and from inception (January 6, 2009) through December 31, 2009 and for the three months ended March 31, 2011 were none, none and none, respectively.
+
+Cash and Cash Equivalents and Short-Term Investments
+
+Virtual Learning invests its excess cash, if any, in money market funds and in highly liquid debt instruments of the U.S. government, its agencies, and municipalities. All highly liquid investments with stated maturities of three months or less from date of purchase are classified as cash equivalents; all highly liquid investments with stated maturities of greater than three months are classified as short-term investments.
+
+49
+
+Offering Costs
+
+Deferred offering costs incurred by Virtual Learning in connection with the proposed registration statement will be expensed as incurred
+
+Revenue Recognition
+
+Revenue is recognized when all of the following conditions are satisfied: there is persuasive evidence of an arrangement, the customer has access to full use of the product, the collection of the fees is reasonably assured, and the amount of the fees to be paid by the customer is fixed or determinable.
+
+Revenue from customer subscriptions is recognized ratably over the subscription term beginning on the commencement date of each subscription. The average subscription term is twelve (12) months for our products, and all subscriptions are on a non-cancelable basis. When additional months are offered as a promotional incentive, those months are part of the subscription term. As part of their subscriptions, customers generally benefit from new features and functionality with each release at no additional cost.
+
+Although our membership contracts are generally non-cancelable, customers have the right to cancel their contracts by providing prior written notice to us of their intent to cancel the remainder of the contract term. In the event a customer cancels its contract, they are not entitled to a refund for prior services we have provided to them.
+
+On a quarterly basis, the amount of revenue that is reserved for future cancellations is calculated based on our historical trends and data specific to each reporting period. We review the actual cancellations evidenced in prior quarters as a percent of revenue to determine a historical cancellation rate. We then apply the historical rate to the current period revenue as a basis for estimating future cancellations. When necessary, we will also provide a specific cancellation reserve.
+
+Customer support is provided to customers following the sale at no additional charge and at a minimal cost per call.
+
+Virtual Learning does not incur significant up-front costs related to providing its products and services and therefore does not defer any expenses.
+
+Revenue from the sale of CD s or DVD s and other materials is recognized when shipped or available to the customer in a downloadable format.
+
+Cost of Revenue
+
+Cost of revenue includes the cost to host and make available Virtual Learning s products and services to its customers. A significant portion of the cost of revenue includes salaries and related costs of engineering employees and contractors who maintain Virtual Learning s servers and technical equipment and work on Virtual Learning s web-based hosted platform. Other costs include facility costs for Virtual Learning s web platform servers and routers, network monitoring costs, depreciation of network assets and amortization of the technical development intangible assets.
+
+Operating Expenses
+
+Operating expenses consists of sales and marketing, content development and general and administrative expense. Sales and marketing expense consists primarily of salaries, commissions and related costs for Virtual Learning s inside and field sales teams, marketing, customer service, training, and account management. Sales and marketing also includes direct marketing costs, travel, and amortization of customer relationship intangible assets.
+
+Content development expense consists primarily of salaries and related costs for employees who write the questions 
+
+for Virtual Learning s products and amortization of content intangible costs. General and administrative expense 
+
+50
+
+consists primarily of salaries and related costs for executives, finance and accounting, human resources, customer relations and order management. General and administrative expense also includes professional services, rent, insurance, travel, depreciation, and other corporate expenses.
+
+Net Income (Loss) Per Share
+
+Per share data has been computed and presented pursuant to the provisions of accounting principles generally accepted in the United States of America. Net income (loss) per common share - basic is calculated by dividing net income (loss) by the weighted average number of common shares outstanding during the period.
+
+Income Taxes
+
+Virtual Learning accounts for income taxes using the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax reporting purposes. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of deferred tax assets and liabilities of a change in tax rates is recognized in the provision for income tax in the statements of operations. Virtual Learning evaluates the probability of realizing the future benefits of its deferred tax assets and provides a valuation allowance when realization of the assets is not reasonably assured.
+
+Virtual Learning recognizes in its financial statements the impact of tax positions that meet a more likely than not threshold, based on the technical merits of the position. The tax benefits recognized from such a position are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement.
+
+Seasonality of Business
+
+In the United States, seasonal trends associated summer vacations, start of academic years, normal gift giving holidays, popular shopping holidays and occasions, promotion to the next grade level expected to be higher because of relationship of purchasing gifts and needed items for friends and family members being specifically associated with these occasions. In addition, sales of subscriptions to organizations willing to sponsor group subscribers, start of school budget years, and state testing calendars also affect the timing of our sales of subscriptions to new and existing subscribers. At present, we anticipate that subscriptions to our products will generate the vast majority of our revenue. We rely significantly on our ability to secure renewals for subscriptions to our products as well as sales to new subscribers. 
+
+RESULTS OF OPERATIONS VIRTUAL LEARNING COMPANY
+
+Results of Operations - Comparison for the periods ended December 31, 2009 and 2010 
+
+We are a development stage enterprise formed to market a unique line of educational software, including audio-visual textbooks and online content through our website with the registered domain name of mathisbasic.com and learningisbasic.com. The lack of completed titles and working capital hampered operations in both 2009 and 2010. 
+
+Management has taken substantial time in the development and programming of our virtual textbooks and related materials 
+
+and thought was spent in updating our website. The measure of our success in the future will depend on our ability to navigate through a treacherous macroeconomic environment and challenging market conditions, execute our strategic vision, including attracting and retaining the management talent necessary for such execution, designing and delivering products that are acceptable to the marketplaces that we serve, sourcing the manufacture and distribution of our products on a competitive and optimal basis and focusing our retail capabilities.
+
+The summary of selected financial data table below should be referenced in connection with a review of the following discussion of our results of operations for both the year ending December 31, 2010, from inception (January 9, 2009) through December 31, 2009, and from inception (January 9, 2009) through December 31, 2010.
+
+51
+
+STATEMENTS OF OPERATIONS
+
+(A Development Stage Enterprise)
+
+ 
+ 
+ 
+ 
+
+ 
+
+For the
+
+Year ended
+
+December 31,
+
+2010
+
+From
+
+January 6, 2009 (inception)
+
+To December 31,
+
+2009
+
+From
+
+January 6, 2009
+
+(inception)
+
+To December 31,
+
+2010
+
+ 
+ 
+ 
+ 
+
+ 
+ 
+ 
+ 
+
+Revenue
+
+$ - 
+
+$ - 
+
+$ - 
+
+ 
+ 
+ 
+ 
+
+Operating Expenses
+
+ 
+ 
+ 
+
+Selling, general and administrative
+
+8,540
+
+372
+
+8,912
+
+Common stock issued for consulting fees
+
+ 
+600,000
+
+600,000
+
+Common stock issued for legal fees
+
+120,000
+
+80,000
+
+200,000
+
+Depreciation and amortization
+
+_____696
+
+_____300
+
+____996
+
+ 
+ 
+ 
+ 
+
+Total operating expenses
+
+__129,236
+
+__680,672
+
+809,908
+
+ 
+ 
+ 
+ 
+
+Loss from operations
+
+(129,236)
+
+(680,672)
+
+(809,908)
+
+ 
+ 
+ 
+ 
+
+Other income/deductions
+
+______-
+
+______-
+
+______-
+
+ 
+ 
+ 
+ 
+
+Net loss 
+
+$ (129,236)
+
+$ (680,672)
+
+$ (809,908)
+
+ 
+ 
+ 
+ 
+
+Revenues
+
+From inception (January 9, 2009) through December 31, 2009, revenues were none as compared to none for the year ended December 31, 2010. This lack of revenue was mainly the result of the lack of capital to implement its business plan and hire additional personnel to help complete virtual textbook courses.
+
+Cost of Sales
+
+From inception (January 9, 2009) through December 31, 2009, cost of sales were none as compared to none for the year ended December 31, 2010. This lack of cost of sales can be attributed to lack of initiating our marketing plan.
+
+Operating Expenses
+
+From inception (January 9, 2009) through December 31, 2009, we incurred $372 in selling, general, and administrative expenses as compared to $8,540 for the year ended December 31, 2010. Expenses for the year ending December 31, 2010 aggregating $8,540 include: Nevada state franchise taxes of $700; computer expenses of $6,871; office expenses of $437; and, travel expenses of $532. This increase of $8,168, results in the increase in expenses relating to the development of our website, courses, and the purchase of services from web hosting companies. In addition, the Company issued an aggregate of 3,000,000 shares of common stock to Dr. John Swint for an aggregate consideration of $600,000 or $0.20 per share, in consideration for educational, marketing, and financial consulting services for the year ended December 31, 2009. We also issued an aggregate of 600,000 shares of common stock to Mr. Roger Fidler in consideration for legal services valued at $120,000 or $0.20 per share.
+
+Liquidity and Capital Resources
+
+As of December 31, 2009 and 2010, our cash balance was $22,028 and $18,573, respectively, total assets were $176,728 and $295,732, respectively, and total current liabilities amounted to $15,400 and $1,640, respectively, including an advance from Mr. Monahan of $18,500 and $9,040 respectively and repayments of officer loans payable of $3,100 and $22,800 respectively. As of December 31, 2009 and 2010, the total stockholders equity was $161,328 and $294,092, respectively. Until the company achieves a net positive cash flow from operations, we are dependent on Mr. Monahan to advance the Company sufficient funds to continue operations as well as the continued contribution of services by officers of the Company. We may seek additional capital to fund potential costs associated with expansion and/or acquisitions.
+
+52
+
+Results of Operations - Comparison for the three months ended March 31, 2009, 2010 and 2011 
+
+The summary of selected financial data table below should be referenced in connection with a review of the following
+
+discussion of our results of operations for both the three months ending March 31, 2011 and 2010, from inception (January 6, 2009) through March 31, 2009, and from inception (January 6, 2009) through March 31, 2011.
+
+ 
+ 
+ 
+ 
+ 
+
+ 
+Three months
+
+ended
+
+March 31,
+
+2011
+
+Three months
+
+ended
+
+March 31,
+
+2010
+
+From inception (January 6, 2009) to March 31,
+
+2009
+
+From inception (January 6, 2009) to March 31, 2011
+
+Revenue
+
+$ -
+
+$ -
+
+$ -
+
+$ -
+
+ 
+ 
+ 
+ 
+ 
+
+Selling, general and administrative
+
+4,146
+
+1,806
+
+-- 
+
+13,058
+
+Common stock issued for consulting fees
+
+-
+
+ 
+600,000
+
+600,000
+
+Common stock issued for legal fees
+
+ 
+120,000
+
+80,000
+
+200,000
+
+Depreciation and amortization
+
+150
+
+150
+
+ 
+1,146
+
+Total operating expenses
+
+4,296
+
+121,,956
+
+680,000
+
+814,204
+
+ 
+ 
+ 
+ 
+ 
+
+Loss from operations
+
+(4,296)
+
+(121,956)
+
+(680,000)
+
+(814,204)
+
+ 
+ 
+ 
+ 
+ 
+
+Other income/deductions
+
+-
+
+-
+
+-
+
+-
+
+ 
+ 
+ 
+ 
+ 
+
+Net loss
+
+$ (4,296)
+
+$ (121,956)
+
+$ (680,000)
+
+$ (814,204)
+
+ 
+ 
+ 
+ 
+ 
+
+Revenues
+
+For the three months ended March 31, 2011, 2010 and , from inception (January 6, 2009) through March 31, 2009, revenues were none, none and none. This lack of revenue was mainly the result of the lack of capital to implement its business plan and hire additional personnel to help complete virtual textbook courses.
+
+Cost of Sales
+
+For the three months ended March 31, 2011, 2010 and , from inception (January 6, 2009) through March 31, 2009, cost of sales were none, none and none. This lack of cost of sales can be attributed to lack of initiating our marketing plan.
+
+Operating Expenses
+
+From inception (January 9, 2009) through March 31, 2009 , we incurred $-0- in selling, general, and administrative expenses as compared to $1,806 and $4,146 for the three months ended March 31, 2010 and 2011 respectively. These increases of $1,806 and $2,340, result in the increase in expenses relating to the development of our website, courses, and the purchase of services from web hosting companies. General and administrative expenses for the three months ended March 31, 2011 aggregating $4,146 include: Nevada franchise taxes of $550; computer expenses of $1,016; copyright expenses of $280; and, professional fees of $2,300. General and administrative expenses for the three months ended March 31, 2010 aggregated $1,806 include office expenses of $114 and computer expenses of $1,692. In addition, the Company issued an aggregate of 3,000,000 shares of common stock to Dr. John Swint for an aggregate consideration of $600,000 or $0.20 per share for educational, marketing and financial consulting services. We also issued an aggregate of $600,000 shares to Mr. Roger Fidler in consideration of legal services valued at $120,000 or $0.20 per share.
+
+53
+
+Liquidity and Capital Resources
+
+As of March 31, 2011, our cash balance was $15,329, total assets were $295,338, and total current liabilities amounted to $2,542, which includes an advance from Mr. Monahan of $902. As of March 31, 2011, the total stockholders equity was $292,796. Until the company achieves a net positive cash flow from operations, we are dependent on Mr. Monahan to advance the Company sufficient funds to continue operations as well as the continued contribution of services by officers of the Company. We may seek additional capital to fund potential costs associated with expansion and/or acquisitions.
+
+In their report dated April 15, 2011, our independent auditors stated that our financial statements for the year ended December 31, 2009 and 2010 were prepared assuming that we would continue as a going concern. Our ability to continue as a going concern is an issue raised as a result of recurring losses from operations and cash flow deficiencies since our inception. We continue to experience net losses. Our ability to continue as a going concern is subject to our ability to generate a profit and/or obtain necessary funding from outside sources, including obtaining additional funding from the sale of our securities, increasing sales or obtaining loans and grants from various financial institutions where possible. In light of our financial position, and the current global credit crisis, we may be unable to raise working capital sufficient to continue to fund the operations of the business. If we are unable to continue as a going concern, you may lose your entire investment. Our management has currently been advancing funds to the Company to help sustain its operations on a non-interest bearing and unsecured basis. Given the difficult current economic environment, we believe that it will be difficult to raise additional funds and there can be no assurance as to the availability of additional financing or the terms upon which additional financing may be available. In addition, the going concern explanatory paragraph included in our auditor s report on our financial statements could inhibit our ability to enter into strategic alliances or other collaborations or our ability to raise additional financing. If we are unable to obtain such additional capital, we will not be able to sustain our operations and would be required to cease our operations and/or seek bankruptcy protection. Even if we do raise sufficient capital and generate revenues to support our operating expenses, there can be no assurance that the revenue will be sufficient to enable us to develop our business to a level where it will generate profits and cash flows from operations. In addition, if we raise additional funds through the issuance of equity securities, the percentage ownership of our stockholders could be significantly diluted. 
+
+We believe that future funding may be obtained from public or private offerings of equity securities, debt or convertible debt securities or other sources. Stockholders should assume that any additional funding will likely be dilutive. Accordingly, our officers, directors, and other affiliates are not legally bound to provide funding to us. Because of our limited operations, if our officers and directors do not pay for our expenses, we will be forced to obtain funding. We currently do not have any arrangements to obtain additional financing from other sources. In view of our limited operating history, our ability to obtain additional funds is limited. Additional financing may only be available, if at all, upon terms which may not be commercially advantageous to us.
+
+Inflation
+
+The impact of inflation on the costs of our company, and the ability to pass on cost increases to its subscribers over time is dependent upon market conditions. We are not aware of any inflationary pressures that have had any significant impact on our operations over the past quarter, and we do not anticipate that inflationary factors will have a significant impact on future operations.
+
+OFF-BALANCE SHEET ARRANGEMENTS
+
+We do not maintain off-balance sheet arrangements nor do we participate in non-exchange traded contracts requiring fair value accounting treatment.
+
+We estimate that in the next twelve months we will need a minimum of approximately $230,000 in new funds; specifically $47,000 in salaried, $18,000 in general and administrative costs, $45,000 for the purchase of additional computers and $65,000 in marketing and promotion, $5,000 for inventory and product samples, and $50,000 in working capital.
+
+54
+
+We believe that future funding may be obtained from public or private offerings of equity securities, debt or convertible debt securities or other sources. Stockholders should assume that any additional funding will likely be dilutive. Accordingly, our officers, directors and other affiliates are not legally bound to provide funding to us. Because of our limited operations, if our officers and directors do not pay for our expenses, we will be forced to obtain funding. We currently do not have any arrangements to obtain additional financing from other sources. In view of our limited operating history, our ability to obtain additional funds is limited. Additional financing may only be available, if at all, upon terms which may not be commercially advantageous to us.
+
+DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
+
+Executive Officers and Directors
+
+Below are the names and certain information regarding our sole executive officer and directors:
+
+ 
+ 
+ 
+
+Name
+
+Age
+
+Position
+
+Thomas Monahan
+
+63
+
+Chief Executive Officer, Chief Financial Officer, President, Secretary and Director
+
+ 
+ 
+ 
+
+Set forth below is a biographical description of our executive officers and directors based on information supplied by each of them.
+
+Thomas Monahan has been President of the Company from its inception to present. Mr. Monahan is a retired Certified Public Accountant who was in public practice as a sole practitioner from 1986 though December 2005. During this time, an injury to both of his legs and an extensive hospital and rehabilitation period no longer permitted him to meet the travel requirements of his engagements. On December 19, 2005, the New Jersey State Board of Accountancy entered a Consent Order whereby Mr. Monahan voluntarily agreed not to renew his license to practice accountancy in the State of New Jersey and to surrender his license, which expired December 31, 2005. The action arose because Mr. Monahan did not respond to an ethics inquiry by the American Institute of Certified Public Accountants. The failure to respond was due initially to Mr. Monahan s prolonged hospital stay, caused by an accident and his failure to receive the notice mailed to his vacated residence during the hospital stay. Subsequently, Mr. Monahan had no interest in pursuing public accountancy due to his physical disability and thus did not bother to respond to the inquiry. No further action was taken by either the American Institute of Certified Public Accountants or the New Jersey State Board of Accountancy with respect to the underlying ethics inquiry that had been pending for many years concerning Mr. Monahan s involvement in the audit of Searex, Inc., a private company because Mr. Monahan decided not to renew his license to practice accounting in 2006. 
+
+Before working as a Certified Public Accountant, Mr. Monahan served as Comptroller for Superior Steakhouse Systems, Inc. Mineola, New York. From 1983 to 1984, Mr. Monahan was Assistant Comptroller for CoverTemp, Inc. in White Plains, New York. Mr. Monahan received his B.A. degree from Rutgers University in 1970, his M.A. in Distributive and General Business Education from Montclair State College in Montclair, New Jersey in 1975 and was certified as a teacher for the State of New Jersey K-12 and Distributive and Marketing education. Mr. Monahan s teaching license has lapsed. He served as a student teacher at Orange High School in Orange, New Jersey for 16 weeks specializing in Urban Education and taught at John F. Kennedy High School in Paterson, New Jersey.
+
+CODE OF ETHICS
+
+We have not adopted a Code of Ethics and Business Conduct for Officers, Directors, and Employees that applies to all of the officers, directors, and employees of our company.
+
+55
+
+EXECUTIVE COMPENSATION
+
+SUMMARY COMPENSATION TABLE
+
+The following table sets forth the cash compensation (including cash bonuses) paid or accrued and equity awards granted by us from inception (January 9, 2009) through December 31, 2009 and for the year ended December 31, 2010 to our Chief Executive Officer and our most highly compensated officers other than the Chief Executive Officer at December 31, 2010, whose total compensation exceeded $100,000. No compensation greater than $100,000 was awarded during the period ended December 31, 2009. 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+Name & Principal Position
+
+Year
+
+Salary ($)
+
+Bonus ($)
+
+Stock Awards($)
+
+Option Awards ($)
+
+Non-Equity Incentive Plan Compensation ($)
+
+Change in Pension Value and Non-Qualified Deferred Compensation Earnings ($)
+
+All Other Compensation ($)
+
+Total ($)
+
+Thomas
+
+Monahan(1)
+
+2009
+
+--
+
+--
+
+--
+
+--
+
+--
+
+--
+
+--
+
+--
+
+ 
+2010
+
+--
+
+--
+
+--
+
+--
+
+--
+
+--
+
+--
+
+--
+
+(1) President and director.
+
+OUTSTANDING EQUITY AWARDS
+
+No named executive officer has received an equity award.
+
+DIRECTOR COMPENSATION
+
+We do not pay directors compensation for their service as directors.
+
+Employment and Other Agreements
+
+We have not entered into any employment agreement as of the date hereof.
+
+DIRECTOR INDEPENDENCE
+
+Our board of directors has determined that Thomas P. Monahan is not an independent director, based on the independence criteria set forth in the corporate governance listing standards of the Nasdaq Stock Market, the exchange that we selected in order to determine whether our directors and committee members meet the independence criteria of a national securities exchange, as required by Item 407(a) (1) of Regulation S-K. An independent director means a person who is not an employee (or a relative of an employee), who has no material business relationship with the company, and is not a significant owner of the company s shares. Due to its small size, the Company does not presently have a separately designated audit committee, compensation committee, or nominating committee.
+
+CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
+
+On January 6, 2009, Virtual Learning issued an aggregate of 10,000,000 shares of common stock valued at $.001 per share to Thomas P. Monahan, President, in consideration for cash of $10,000. 
+
+As of December 31, 2009 and 2010 and March 31, 2011, Thomas P. Monahan had advanced Virtual Learning net interest free loans aggregating $15,400, $1,640 and $2,542 respectively. 
+
+56
+
+Virtual Learning occupies office space rent free on a month to month basis at 60 Knolls Crescent, Apartment 9M, Bronx,
+
+ New York 10463.
+
+Virtual Learning has accumulated capitalized software development costs at December 31, 2009 and 2010 aggregating $12,000 and $12,000 and contributed these amounts to Virtual Learning as additional paid-in capital. These costs represent the fair market value of time contributed to Virtual Learning by Thomas Monahan, President.
+
+SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
+
+The following table sets forth certain information, as of December 31, 2010 with respect to the beneficial ownership of the Company's outstanding common stock by (i) any holder of more than five (5%) percent; (ii) each of the named executive officers, directors, and director nominees; and (iii) our directors, director nominees, and named executive officers as a group, as such will exist after the issuance of shares. Except as otherwise indicated, each of the stockholders listed below has sole voting and investment power over the shares beneficially owned. The below table is based on 15,350,000 shares of common stock outstanding as of May 31, 2011.
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+Common Stock Beneficially Owned (1)
+
+ 
+ 
+Percentage of Common Stock (1)
+
+Thomas Monahan
+
+60 Knolls Crescent Apt 9M
+
+Bronx, New York 10463
+
+ 
+ 
+10,000,000 
+
+ 
+ 
+ 
+65.15%
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+The following table sets forth certain information, as of December 31, 2010 with respect to the pro forma beneficial ownership of the Company's outstanding common stock by (i) any holder of more than five (5%) percent; (ii) each of the named executive officers, directors, and director nominees; and (iii) our directors, director nominees, and named executive officers as a group, as such will exist after the issuance of shares, assuming the maximum numbers of shares offered hereby are sold. Except as otherwise indicated, each of the stockholders listed below has sole voting and investment power over the shares beneficially owned. The below table is based on 15,350,000 shares of common stock outstanding as of December 31, 2010 and at May 31, 2011. 
+
+ 
+ 
+ 
+ 
+
+ 
+Common Stock Beneficially Owned (1)
+
+ 
+Percentage of Common Stock (1)
+
+Thomas Monahan (2)
+
+60 Knolls Crescent Apt 9M
+
+Bronx, New York 10463
+
+10,000,000
+
+ 
+65.15%
+
+ 
+ 
+ 
+ 
+
+Dr. John Swint (3)
+
+1302 Normandy Road
+
+Macon, Georgia 31210
+
+3,000,000
+
+ 
+19.54%
+
+ 
+ 
+ 
+ 
+
+Roger L. Fidler (3)
+
+400 Grove Street
+
+Glen Rock, New Jersey 07452
+
+1,000,000
+
+ 
+6.51%
+
+All officers and directors as group of 1 person
+
+10,000,000
+
+ 
+65.15%
+
+(1) Beneficial ownership is determined in accordance with the Rule 13d-3(d) (1) of the Exchange Act, as amended 
+
+57
+
+and generally includes voting or investment power with respect to securities. Pursuant to the rules and regulations of the Securities and Exchange Commission, shares of common stock that an individual or group has a right to acquire within 60 days pursuant to the exercise of options or warrants are deemed to be outstanding for the purposes of computing the percentage ownership of such individual or group, but are not deemed to be outstanding for the purposes of computing the percentage ownership of any other person shown in the table.
+
+(2) Officer and/or director of the Company.
+
+(3) Any holder of more than five (5%) percent.
+
+Blue Sky 
+
+Thirty-eight states and the District of Columbia have what is commonly referred to as a manual exemption for secondary trading of securities. In these states, so long as we obtain and maintain a listing in Standard and Poor s Corporate Manual, secondary trading can occur without any filing, review or approval by state regulatory authorities in these states. These states are: Alaska, Arizona, Arkansas, Colorado, Connecticut, Delaware, District of Columbia, Florida, Hawaii, Idaho, Indiana, Iowa, Kansas, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Rhode Island, South Carolina, South Dakota, Texas, Utah, Vermont, Washington, West Virginia, and Wyoming. We cannot secure this listing, and thus this qualification, until after this registration statement is declared effective. Once we secure this listing, secondary trading can occur in these states without further action. 
+
+All our shareholders currently reside in these states, outside the U.S. or in Pennsylvania, New York, and Louisiana. We will make the appropriate filings in Pennsylvania, New York, and Louisiana to permit sales of the securities registered in this offering. 
+
+We currently do not intend to and may not be able to qualify securities for resale in other states which require shares to be qualified before they can be resold by our shareholders. 
+
+PLAN OF DISTRIBUTION
+
+This Offering relates to the sale of up to 1,000,000 Shares at the estimated Offering price of $.50 per share in a best-efforts direct public offering, without any involvement of underwriters. The Shares will be offered and sold by our officers, directors, and/or employees. None of these persons will receive a sales commission or any other form of compensation for this Offering. In connection with their efforts, our officers, directors and employees will rely on the safe harbor provisions of Rule 3a4-1 of the Securities Exchange Act of 1934. Generally speaking, Rule 3a4-1 provides an exemption from the broker/dealer registration requirements of the Securities Exchange Act of 1934 for persons associated with an issuer provided that they meet certain requirements. No one has made any commitment to purchase any or all of the Shares being offered. Rather, our directors, officers, and/or employees will use their best efforts to find purchasers for the Shares. We are not required to sell any minimum number of Shares in this Offering. Funds received from investors will not be placed in an escrow, trust, or similar account. Instead, all cleared funds will be immediately available to us following their deposit into our bank account, and there will be no refunds once a subscription for Shares are accepted. We cannot predict how many Shares, if any, will be sold.
+We will bear any expenses of this offering, which we estimate to be $20,000.
+
+We also may retain an underwriter to assist us or to supplant our selling efforts in the Offering. At this time we do not have any binding commitments, agreements, or understandings with any potential underwriter. If we elect to utilize an underwriter, we will amend this Prospectus. We have prepared this prospectus as if we are not using an underwriter to assist us with this Offering. To the extent that we are able to sell the Shares directly through our officers, directors, and employees, the net proceeds received from this Offering will be correspondingly higher than if we engage an underwriter.
+
+This Offering will terminate no later than 12 months after the effective date of this prospectus, unless the Offering is 
+
+58
+
+fully subscribed before that date or we decide to close the Offering prior to that date. In either event, the Offering may be closed without further notice to you. All costs associated with the registration will be borne by us.
+
+We have not authorized any person to give any information or to make any representations in connection with this Offering other than those contained in this prospectus and if given or made, that information or representation must not be relied on as having been authorized by us. This prospectus is not an offer to sell or a solicitation of an offer to buy any of the securities to any person in any jurisdiction in which that offer or solicitation is unlawful. Neither the delivery of this prospectus nor any sale hereunder shall under any circumstances, create any implication that the information in this prospectus is correct as of any date later than the date of this prospectus. Purchasers of share either in this Offering or in any subsequent trading market that may develop must be residents of states in which the securities are registered or exempt from registration. Some of the exemptions are self-executing, that is to say that there are no notice or filing requirements, and compliance with the conditions of the exemption renders the exemption applicable.
+
+Prior to the date of this prospectus, there has been no trading market for our Common Stock. We hope our shares of Common Stock will be quoted for trading on the OTCBB. Until an active and steady trading market develops for our Common Stock, the price at which shares of our Common Stock may trade may fluctuate significantly. Prices for our Common Stock will be determined in the marketplace and may be influenced by many factors, including the depth and liquidity of the market for our shares, developments affecting our businesses generally, including the impact of the factors referred to in RISK FACTORS above, investor perception of the Company, and general economic and market conditions. No assurances can be given that an orderly or liquid market will ever develop for our shares or that an investor will be able to resell the Shares purchased in this Offering.
+
+Shares of Common Stock sold in this Offering will be freely transferable, except for shares of our Common Stock received by persons who may be deemed to be affiliates of the Company under the Securities Act. Persons who may be deemed to be affiliates of the Company generally include individuals or entities that control, are controlled by or are under common control with us, and may include our senior officers and directors, as well as principal stockholders. Persons who are affiliates will be permitted to sell their shares of Common Stock only pursuant to an effective registration statement under the Securities Act or an exemption from the registration requirements of the Securities Act, such as the exemption afforded by Section 4(1) of the Securities Act or Rule 144 adopted under the Securities Act.
+
+Penny Stock Regulations
+
+Our Common Stock is considered a penny stock as defined by Section 3(a)(51) and Rule 3a51-1(g) under the Securities Exchange Act of 1934 because we do not have:
+
+Net tangible assets (i.e., total assets less intangible assets and liabilities) in excess of $2,000,000, and
+
+Average revenue of at least $6,000,000 for the last three years.
+
+For any transaction involving a penny stock, unless exempt, the penny stock rules require that a broker or dealer approve a person s account for transactions in penny stocks and the broker or dealer receive from the investor a written agreement to the transaction setting forth the identity and quantity of the penny stock to be purchased.
+
+In order to approve a person s account for transactions in penny stocks, the broker or dealer must obtain financial information and investment experience and objectives of the person and make a reasonable determination that the transactions in penny stocks are suitable for that person and that person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.
+
+The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prepared by the SEC relating to the penny stock market, which, in highlight form, sets forth the basis on which the broker or dealer made the suitability determination, and that the broker or dealer received a signed, written agreement from the investor prior to the transaction.
+
+Disclosure also has to be made about the risks of investing in penny stock in both public offerings and in secondary trading and commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. 
+
+59
+
+Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the 
+
+account and information on the limited market in penny stocks. The above-referenced requirements may create a lack of liquidity, making trading difficult or impossible, and accordingly, shareholders may find it difficult to dispose of our shares.
+
+State Securities Blue Sky Laws
+
+Transfer of our Common Stock may also be restricted under the securities laws or securities regulations promulgated by various states and foreign jurisdictions, commonly referred to as Blue Sky laws. Absent compliance with such individual state laws, our Common Stock may not be traded in such jurisdictions. Because the securities registered hereunder have not been registered for resale under the blue sky laws of any state, the holders of such shares and persons who desire to purchase them in any trading market that might develop in the future, should be aware that there may be significant state blue-sky law restrictions upon the ability of investors to sell the securities and of purchasers to purchase the securities. Accordingly, investors may not be able to liquidate their investments and should be prepared to hold the Common Stock for an indefinite period of time.
+
+We are not currently listed in Standard and Poor's Corporation Records, a nationally recognized securities manual, which would provide us with manual exemptions in 38 states as indicated in 1 Blue Sky L. Rep. (CCH) 2401 (2008), entitled Standard Manuals Exemptions. We intend to obtain a listing in Standard and Poor's Corporation Records and intend to do so as soon as possible.
+
+Thirty-eight states have what is commonly referred to as a manual exemption for secondary trading of securities purchased under this registration statement. In these states, so long as we obtain and maintain a Standard and Poor s Corporate Records listing or another acceptable manual, secondary trading of our Common Stock can occur without any filing, review or approval by state regulatory authorities in these states. These states are: Alaska, Arizona, Arkansas, Colorado, Connecticut, Delaware, Florida, Hawaii, Idaho, Indiana, Iowa, Kansas, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Rhode Island, South Carolina, South Dakota, Texas, Utah, Vermont, Washington, West Virginia, Wisconsin, and Wyoming. In most instances, under current state rules, secondary trading can occur in these states without further action. However, no assurance can be given that such rules will not change in the future or that a specific secondary trading transaction will qualify for a manual exemption.
+
+We may not be able to qualify securities for resale in other states which require shares to be qualified before they can be resold by our shareholders.
+
+Procedures for Subscribing to Shares Offered by the Company
+
+If you decide to subscribe for any shares in this Offering, you are required to execute a Subscription Agreement and tender it, together with a check or certified funds to us. All checks for subscriptions should be made payable to The Virtual Learning Company, Inc.
+
+OTC Bulletin Board Considerations 
+
+To be quoted on the OTC Bulletin Board, a market maker must file an application on our behalf in order to make a market for our common stock. We have engaged in preliminary discussions with an FINRA Market Maker and they have filed our application on Form 211 with the FINRA, and FINRA has cleared such listing pending the effectiveness of the registration statement of which this prospectus forms a part. Based upon our counsel s prior experience, we anticipate that after this registration statement is declared effective, it will take approximately 2 - 8 weeks for the FINRA to issue a trading symbol. 
+
+The OTC Bulletin Board is separate and distinct from the NASDAQ stock market. NASDAQ has no business relationship with issuers of securities quoted on the OTC Bulletin Board. The SEC s order handling rules, which apply to NASDAQ-listed securities, do not apply to securities quoted on the OTC Bulletin Board. 
+
+60
+
+Although the NASDAQ stock market has rigorous listing standards to ensure the high quality of its issuers, and can delist issuers for not meeting those standards, the OTC Bulletin Board has no listing standards. Rather, it is the market maker who chooses to quote a security on the system, files the application, and is obligated to comply with keeping information about the issuer in its files. FINRA cannot deny an application by a market maker to quote the stock of a company. The only requirement for inclusion in the bulletin board is that the issuer be current in its reporting requirements with the SEC. 
+
+Although we anticipate listing on the OTC Bulletin board will increase liquidity for our stock, investors may have greater difficulty in getting orders filled because it is anticipated that if our stock trades on a public market, it initially will trade on the OTC Bulletin Board rather than on NASDAQ. Investors orders may be filled at a price much different than expected when an order is placed. Trading activity in general is not conducted as efficiently and effectively as with NASDAQ-listed securities. 
+
+Investors must contact a broker-dealer to trade OTC Bulletin Board securities. Investors do not have direct access to the bulletin board service. For bulletin board securities, there only has to be one market maker. 
+
+Bulletin board transactions are conducted almost entirely manually. Because there are no automated systems for negotiating trades on the bulletin board, they are conducted via telephone. In times of heavy market volume, the limitations of this process may result in a significant increase in the time it takes to execute investor orders. Therefore, when investors place market orders - an order to buy or sell a specific number of shares at the current market price - it is possible for the price of a stock to go up or down significantly during the lapse of time between placing a market order and getting execution. 
+
+Because bulletin board stocks are usually not followed by analysts, there may be lower trading volume than for NASDAQ-listed securities. 
+
+SHARES ELIGIBLE FOR FUTURE SALE
+
+As of December 31, 2010, and May 31, 2011, the Company s 15,350,000 shares of issued and outstanding Common Stock were held by the Company s twelve (12) present shareholders. Only the shares to be held by Thomas P. Monahan and Dr. John Swint will be subject to the volume selling requirements and manner of sale requirements of Rule 144. 
+
+In general with respect to companies who are reporting companies under the 1934 Securities Exchange Act , under Rule 144 as currently in effect, an affiliate person or persons who has beneficially owned Restricted Shares for at least six months is entitled to sell, within any three-month period, a number of such shares that does not exceed the greater of:
+
+(i) One percent of the outstanding shares of Common Stock; or
+
+(ii) The average weekly trading volume in the Common Stock during the four calendar weeks preceding the date on which notice of such sale is filed with the Securities and Exchange Commission. These shares must be sold in a open market transaction and the Company must have been current in its required filings under the 1934 Securities Exchange Act for the preceding twelve months or such shorter time that the Company was subject to the reporting requirements and must be presently current for ninety (90) days in those filings. An affiliate must also file a notice of the sale
+
+A person who is not an Affiliate and has not been an Affiliate for at least three months prior to the sale and who has beneficially owned Restricted Shares for at least six months may resell such shares without regard to the quantity of sale, manner of sale or notice requirements described above. VIRTUAL is unable to estimate the number of Restricted Shares that ultimately will be sold under Rule 144 because the number of shares will depend in part on the market price for the Common Stock, the personal circumstances of the sellers and other factors. See Risk Factors--Shares Eligible for Future Sale and Risk Factors--Possible Volatility of Stock Price .
+
+61
+
+If the Company is not a reporting company or not current in its filing requirements then the non-affiliates holding period is increased to one year. Affiliates may not sell under such circumstances pursuant to Rule 144.
+
+DESCRIPTION OF SECURITIES
+
+The authorized capital stock consists of 70,000,000 shares of common stock, par value $.001 per share. As of December 31, 2010, there were 15,350,000 shares of Common Stock issued and outstanding. The following summary description of the Common Stock is qualified in its entirety by reference to the Company's Certificate of Incorporation and all amendments thereto. 
+
+Common Stock
+
+Our authorized capital stock consists of 70,000,000 shares of common stock, par value $.001 per share. Each share of Common Stock entitles its holder to one non-cumulative vote per share and, the holders of more than fifty percent (50%) of the shares voting for the election of directors can elect all the directors if they choose to do so, and in such event the holders of the remaining shares will not be able to elect a single director. Holders of shares of Common Stock are entitled to receive such dividends, as the board of directors may, from time to time, declare out of Company funds legally available for the payment of dividends. Upon any liquidation, dissolution, or winding up of the Company, holders of shares of Common Stock are entitled to receive pro rata all of the assets of the Company available for distribution to common stockholders.
+
+Stockholders do not have any pre-emptive rights to subscribe for or purchase any stock, warrants, or other securities of the Company. The Common Stock is not convertible or redeemable. Neither the Company's Certificate of Incorporation nor its By-Laws provide for pre-emptive rights.
+
+We have to mention preferred shares at $.001 par value nothing outstanding at December 31, 2010 with rights and privileges as may be determined from time to time by the Board of Directors.
+
+INTEREST OF NAMED EXPERTS AND COUNSEL
+
+None of the experts named herein was or is a promoter, underwriter, voting trustee, director, officer, or employee of the Company. Furthermore, none of the experts was hired on a contingent basis and none of the other experts named herein will receive a direct or indirect interest in the Company except Roger Fidler.
+
+TRANSFER AGENT
+
+The Transfer Agent and Registrar for the common stock will be ______________.
+
+LEGAL MATTERS
+
+The validity of the shares of common stock offered in this prospectus has been passed upon for us by Roger L. Fidler, Esq., 145 Highview Terrace, Hawthorne, New Jersey 07506. His telephone number is (973) 949-4193. Mr. Fidler owns 1,000,000 shares of the Company s common stock.
+
+EXPERTS
+
+Our audited financial statements as of December 31, 2010 and 2009 and for the periods then ended and for the period from January 6, 2009 (inception) to December 31, 2010 have been included in this prospectus and in the registration statement filed with the Securities and Exchange Commission in reliance upon the report of independent auditors, dated April 15, 2011 upon authority as experts in accounting and auditing. LGG & Associates, PC s report on the financial statements can be found at the end of this prospectus and in the registration statement.
+
+62
+
+DESCRIPTION OF PROPERTY
+
+We maintain our principal office at 60 Knolls Crescent, Apt. 9M, Bronx, NY 10463. Our telephone number is (973) 768-4181. We currently do not occupy office space, as our business is primarily e-commerce. This arrangement is expected to continue until such times as it becomes necessary for us to relocate, as to which no assurances can be given.
+
+Our management does not currently have policies regarding the acquisition or sale of real estate assets primarily for possible capital gain or primarily for income. We do not presently hold any investments or interests in real estate, investments in real estate mortgages, or securities of or interests in persons primarily engaged in real estate activities.
+
+LITIGATION
+
+The Company is not engaged in any litigation, nor is any litigation pending or been threatened.
+
+OUR TRADING SYMBOL
+
+The Common Stock of Virtual does not have a trading symbol at this time.
+
+As of March 31, 2011 there were 11 shareholders of record for the Company s 15,350,000 shares of outstanding common stock. 
+
+DIVIDENDS
+
+We have never paid a cash dividend on our common stock. It is our present policy to retain earnings, if any, to finance the development and growth of our business. Accordingly, we do not anticipate that cash dividends will be paid until our earnings and financial condition justify such dividends, and there can be no assurance that we can achieve such earnings.
+
+CERTAIN PROVISIONS OF THE BYLAWS REGARDING INDEMNIFICATION OF DIRECTORS AND OFFICERS REGARDING INDEMNIFICATION
+
+Article X of the By-Laws of the Company provides indemnification to the fullest extent permitted by Nevada law for any person whom the Company may indemnify there under, including directors, officers, employees, and agents of the Company. In addition, the By-Laws, as permitted under the Nevada General Corporation Law, eliminates the personal liability of the directors to the Company or any of its stockholders for damages for breaches of their fiduciary duty as directors except for liability for (1) a breach of the director's duty of loyalty to the corporation or its stockholders, (2) any act or omission not in good faith or that involves intentional misconduct or a knowing violation of the law, (3) unlawful payments of dividends or unlawful stock repurchases or redemptions, or (4) any transaction from which the director derived an improper personal benefit.. As a result of the inclusion of such provision, stockholders may be unable to recover damages against directors for actions taken by directors which constitute negligence or gross negligence or that are in violation of their fiduciary duties. The inclusion of this provision in the Company's By-laws may reduce the likelihood of derivative litigation against directors and other types of stockholder litigation, even though such action, if successful, might otherwise benefit the Company and its stockholders.
+
+Insofar as indemnification for liabilities arising under the Securities Act of 1933 (the Act ) may be permitted to directors, officers, and controlling persons of the small business issuer pursuant to the foregoing provisions, or otherwise, the small business issuer has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. The Company's By-Laws provides that no director of the Company shall be personally liable to the Company or its stockholders for monetary damages for breach of fiduciary duty as a director except as limited by Nevada law. The Company's Bylaws provide that the Company shall indemnify to the full extent authorized by law each of its directors and officers against expenses incurred in connection with any proceeding arising by reason of the fact that such person is or was an agent of the corporation.
+
+63
+
+Insofar as indemnification for liabilities may be invoked to disclaim liability for damages arising under the Securities Act of 1933, as amended, or the Securities Act of 1934, (collectively, the Acts ) as amended, it is the position of the Securities and Exchange Commission that such indemnification is against public policy as expressed in the Acts and are therefore, unenforceable.
+
+ 
+
+NEVADA ANTI-TAKEOVER LAW AND OUR CERTIFICATE OF INCORPORATION AND BY-LAW PROVISIONS
+
+Provisions of Nevada law and our Certificate of Incorporation and By-Laws could make more difficult our acquisition by a third party and the removal of our incumbent officers and directors. These provisions, summarized below, are expected to discourage coercive takeover practices and inadequate takeover bids and to encourage persons seeking to acquire control of the Company to first negotiate with us. We believe that the benefits of increased protection of our ability to negotiate with proponent of an unfriendly or unsolicited acquisition proposal outweigh the disadvantages of discouraging such proposals because, among other things, negotiation could result in an improvement of their terms.
+
+We are subject to the Nevada General Corporation Law, which regulates corporate acquisitions. In general, Section 203 prohibits a publicly held Nevada corporation from engaging in a business combination with an interested stockholder for a period of three years following the date the person became an interested stockholder, unless:
+
+(i) The Board of Directors approved the transaction in which such stockholder became an interested stockholder prior to the date the interested stockholder attained such status;
+
+(ii) Upon consummation of the transaction that resulted in the stockholder's becoming an interested stockholder, he or she owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding shares owned by persons who are directors and also officers; or
+
+(iii) On subsequent to such date the business combination is approved by the Board of Directors and authorized at an annual or special meeting of stockholders.
+
+A business combination generally includes a merger, asset or stock sale, or other transaction resulting in a financial benefit to the interested stockholder. In general, an interested stockholder is a person who, together with affiliates and associates, owns, or within three years prior to the determination of interested stockholder status, did own, 15% or more of the corporation's voting stock.
+
+WHERE YOU CAN FIND MORE INFORMATION
+
+Upon effectiveness of this registration statement, we will commence filing reports, proxy statements and other information with the Securities and Exchange Commission. You may read and copy any report, proxy statement or other information we file with the Commission at the Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the Commission at 1-800-SEC-0330. In addition, we will file electronic versions of these documents on the Commission's Electronic Data Gathering Analysis and Retrieval, or EDGAR, System. The Commission maintains a website at http://www.sec.gov that contains reports, proxy statements and other information filed with the Commission.
+
+We have filed a registration statement on
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diff --git a/parsed_sections/prospectus_summary/2011/FN_fabrinet_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/FN_fabrinet_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/FN_fabrinet_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/FRSPF_first_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/FRSPF_first_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..be8cef317e70fb86a5d5fc099075f0b4f0c901df
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/FRSPF_first_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY In this prospectus, unless otherwise specified, all references to common shares refer to the shares of our common stock and the terms we , us , our , and the Company mean Pan American Lithium Corp. The following summary highlights selected information from this prospectus and may not contain all the information that is important to you. To understand our business and this offering fully, you should read this entire prospectus carefully, including the financial statements and the related notes beginning on page F-1. This prospectus contains forward-looking statements and information relating to us. See Cautionary Note Regarding Forward Looking Statements on page 32. Our Company We were incorporated under the laws of the Province of British Columbia on September 18, 2006. We are a mineral exploration company traded on the TSX Venture Exchange engaged in the business of acquiring, exploring, and evaluating natural resource properties, and recently focused on the acquisition of interests in, and exploring for, lithium properties in Latin America. We are currently listed for trading on the TSX Venture Exchange under the symbol PL. We currently have one set of lithium exploration properties consisting of interests in nine lithium brine salars in Atacama Region III, Chile and an option to acquire an indirect interest in the Cerro Prieto lithium geothermal brine project in Baja California Norte, Mexico, described below under Proposed Transactions. We formerly owned the Aspen Grove copper property in the Nicola Mining District, British Columbia, Canada, the details of which are set out below. We have not yet determined whether our property interests contain reserves that are economically recoverable. The recoverability of amounts shown for resource properties and related deferred exploration expenditures are dependent upon the discovery of economically recoverable reserves, confirmation of the our interest in the underlying mineral claims, our ability to obtain necessary financing to complete the development of the resource at such property and upon future profitable production or proceeds from the disposition thereof. Our principal executive office is located at Suite 110, 3040 N. Campbell Avenue, Tucson, Arizona USA 85719. Our telephone number is ( 520) 623-3090.
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diff --git a/parsed_sections/prospectus_summary/2011/GFMH_goliath_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/GFMH_goliath_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..ccb662c220e34a04c96a5129c2f83974e498723d
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/GFMH_goliath_prospectus_summary.txt
@@ -0,0 +1,19 @@
+PROSPECTUS SUMMARY
+
+The following is intended to be a summary of the most important aspects of our business.
+
+China Advanced Technology
+
+We are engaged in providing marketing assistance to internet businesses. Our activities include consulting on, and providing, web page design, search engine optimization, website marketing, and non-traditional marketing. 
+
+We began operations in May, 2008 by developing our own, internally developed integration of search engine optimization and non-traditional marketing, including viral marketing, combined with conventional web design. We define non-traditional marketing to refer to marketing which is outside the traditional media of paid advertising, such as blogs, infotainment, video marketing through video sharing sites, and social networking sites. Viral marketing is a term referring to marketing, or attempting to market, through non-paid, consumer driven means of diffusion. Similar to propagation of a virus, viral marketing techniques utilize self-replicating processes and may take place through the use of videoclips, interactive flash games, advergames, ebooks, or text messages. As of April 2010 we have produced several demonstration projects but have not yet obtained revenues. These projects involved blogging, search engine optimization and search engine management for a retailer of vitamin products. We received our first revenues in the six months ended January 31, 2011. 
+
+Or business model is predicated on the fact that the consumer is deluged with advertisements, and management's opinion that traditional advertisements are becoming less effective and more expensive. We offer marketing and advertising solutions which we believe are effective and reasonably priced and which we believe are especially suited to internet businesses because of their low cost and because they utilize the internet for propagation. These solutions include blogging, placement of soft or lifestyle news in print or other traditional media, and infotainment, and advice on video production and commercial production. We do not intend to market software or other goods. We are a service business. We have already developed all of the methods by which we offer services; the costs for developing those services are included in our results of operations for the two years ended April 30, 2010. 
+
+All our operations are carried out through our wholly-owned subsidiary, Live Wise, Inc. Whenever we employ the terms "we," "us," "our," or similar words, we refer to the combined entity. Our independent registered public accounting firm has expressed substantial doubt about our ability to continue as a going concern in their report on our consolidated financial statements. 
+
+Our address is 710 Market Street, Chapel Hill, North Carolina 27516 and our telephone number is (919) 370-4408.
+
+The Offering
+
+The offering is being made by the selling stockholders, who are offering all of the shares owned by them. Each selling stockholder is an "
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diff --git a/parsed_sections/prospectus_summary/2011/HCA_hca_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/HCA_hca_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/HCA_hca_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/HRTX_heron_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/HRTX_heron_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..4279031465c08d2f848017be104ee2a76867437e
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/HRTX_heron_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY Our Business A.P. Pharma, Inc. is a specialty pharmaceutical company developing products using its proprietary Biochronomer(TM) polymer-based drug delivery technology. Our primary focus is on our lead product candidate, APF530, for the prevention of chemotherapy-induced nausea and vomiting, or CINV. We are seeking regulatory approval of APF530 for the prevention of acute CINV for patients undergoing both moderately and highly emetogenic chemotherapy, and for prevention of delayed CINV for patients undergoing moderately emetogenic chemotherapy. We received a Complete Response Letter on the APF530 NDA and are targeting the resubmission of the new drug application, or NDA, for the first half of 2012. If we obtain regulatory approval for APF530, we intend to seek a collaborative arrangement to commercialize APF530, or anticipate obtaining additional funding and resources that would be required to launch APF530 without a partner. We have additional clinical and preclinical stage programs in the area of pain management, all of which utilize our bioerodible, injectable and implantable delivery systems. For additional information relating to the Company and its operations, please refer to the reports incorporated herein by reference as described under the caption Information Incorporated by Reference beginning on page 10. Our Common Stock is quoted on the OTCQB under the symbol APPA.PK . The Offering This prospectus relates to the resale by the Selling Stockholders identified in this prospectus of up to 240,000,011 shares of Common Stock, which consists of 160,000,006 shares of Common Stock and 80,000,005 shares of Common Stock issuable upon exercise of the Warrants (such shares collectively being referred to herein as the Shares ). All of the Shares, if and when sold, will be sold by the Selling Stockholders. The Selling Stockholders may sell their Shares from time to time at market prices prevailing at the time of sale, at prices related to the prevailing market price, or at negotiated prices. We will not receive any proceeds from the sale of Shares by the Selling Stockholders. The total value of the 240,000,011 shares of Common Stock being registered hereunder is approximately $74,400,003.41, based on the last quoted sale price for our Common Stock of $0.31 on July 28, 2011. Corporate Information Our executive offices are located at 123 Saginaw Drive, Redwood City, California 94063 and our telephone number is 650-366-2626. Additional information regarding our company, including our audited financial statements and descriptions of our business, is contained in the documents incorporated by reference in this prospectus. See Where You Can Find Additional Information on page 10 and Information Incorporated by Reference beginning on page 10.
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/IROQ_if_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/IROQ_if_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..086a2571695744a43ada022ced9e1269c8b1806d
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/IROQ_if_prospectus_summary.txt
@@ -0,0 +1 @@
+S-1/A 1 ds1a.htm AMENDMENT #1 TO FORM S-1 Amendment #1 to Form S-1 Table of Contents As filed with the Securities and Exchange Commission on April 28, 2011 Registration No. 333-172843 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 PRE-EFFECTIVE AMENDMENT NO. 1 TO THE FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 IF Bancorp, Inc. and Iroquois Federal Savings and Loan Association 401(k) Profit Sharing Plan (Exact Name of Registrant as Specified in Its Charter) Maryland 6712 Being applied for (State or Other Jurisdiction of Incorporation or Organization) (Primary Standard Industrial Classification Code Number) (I.R.S. Employer Identification Number) 201 East Cherry Street Watseka, Illinois 60970 (815) 432-2476 (Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant s Principal Executive Offices) Mr. Alan D. Martin President and Chief Executive Officer 201 East Cherry Street Watseka, Illinois 60970 (815) 432-2476 (Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent for Service) Copies to: Lawrence M. F. Spaccasi, Esq. Michael J. Brown, Esq. Luse Gorman Pomerenk & Schick, P.C. 5335 Wisconsin Avenue, N.W. Suite 780 Washington, D.C. 20015 (202) 274-2000 Daniel C. McKay, II, Esq. Jennifer Durham King, Esq. Vedder Price P.C. 222 North LaSalle Street Suite 2600 Chicago, Illinois 60601 (312) 609-7500 Approximate date of commencement of proposed sale to the public: As soon as practicable after this registration statement becomes effective. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box: If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company CALCULATION OF REGISTRATION FEE Title of each class of securities to be registered Amount to be registered Proposed maximum offering price per share Proposed maximum aggregate offering price Amount of registration fee Common Stock, $0.01 par value per share 4,811,255 $10.00 $48,112,550 (1) $5,586 (2) Participation interests 323,144 interests (3) (1) Estimated solely for the purpose of calculating the registration fee. (2) Previously filed. (3) The securities of IF Bancorp, Inc. to be purchased by the Iroquois Federal Savings and Loan Association 401(k) Profit Sharing Plan are included in the amount shown for the common stock. Accordingly, no separate fee is required for the participation interests. In accordance with Rule 457(h) of the Securities Act of 1933, as amended, the registration fee has been calculated on the basis of the number of shares of common stock that may be purchased with the current assets of such Plan. The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine. Table of Contents TABLE OF CONTENTS Page SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2011/KOS_kosmos_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/KOS_kosmos_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..efe7926205fd1b308e4e2663ac8895e8a86245aa
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/KOS_kosmos_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights certain information appearing elsewhere in this prospectus. As this is a summary, it
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/LAB_standard_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/LAB_standard_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/LAB_standard_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/LOOP_loop_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/LOOP_loop_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..34fd47323ed05c7545ad0d2fc836e8495cb8420d
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2011/LOOP_loop_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY AS USED IN THIS PROSPECTUS, UNLESS THE CONTEXT OTHERWISE REQUIRES, "WE," "US," "OUR," THE "COMPANY" AND "FIRST AMERICAN GROUP INC." REFERS TO FIRST AMERICAN GROUP INC. THE FOLLOWING SUMMARY IS NOT COMPLETE AND DOES NOT CONTAIN ALL OF THE INFORMATION THAT MAY BE IMPORTANT TO YOU. YOU SHOULD READ THE ENTIRE PROSPECTUS BEFORE MAKING AN INVESTMENT DECISION TO PURCHASE OUR COMMON STOCK. FIRST AMERICAN GROUP INC. We are a development stage company which is engaged in the development, sales and marketing of voice-over-Internet-protocol ("VoIP") telephone services to enable end-users to place free phone calls over the Internet in return for viewing and listening to advertising. First American Group Inc. was incorporated in Nevada on March 11, 2010, under the name "Radikal Phones Inc." We changed our name to First American Group Inc. on October 7, 2010. We intend to use the net proceeds from this offering to develop our business operations (See "Description of Business" and "Use of Proceeds"). Being a development stage company, we have no revenues or operating history. Our principal executive offices are located at 11037 Warner Ave, Suite 132, Fountain Valley, California 92708. Our phone number is (714) 500-8919. From inception until the date of this filing, we have had no operating activities. Our financial statements from inception (March 11, 2010) through September 30, 2010, report no revenues and a net loss of $4,601. Our independent registered public accountant has issued an audit opinion for First American Group Inc. which includes a statement expressing substantial doubt as to our ability to continue as a going concern. We are offering our shares and seeking to become a reporting issuer under the Securities Exchange Act of 1934, as amended, because we believe that this will provide us with greater access to capital, that we will become better known, and be able to obtain financing more easily in the future if investor interest in our business grows enough to sustain a secondary trading market in our securities. Additionally, we believe that being a reporting issuer increases our credibility and that we may be able to attract and retain more highly qualified personnel once we are not a shell company by potentially offering stock options, bonuses, or other incentives with a known market value. Please see the disclosure on page 12 titled, "BECAUSE WE ARE A SHELL COMPANY, YOU WILL NOT BE ABLE TO RESELL YOUR SHARES IN CERTAIN CIRCUMSTANCES, WHICH COULD HINDER THE RESALE OF YOUR SHARES" for a discussion of the restrictions on resales of "shell company" securities. We anticipate that our revenue will come from two primary sources: first, from the placement of advertising on our website and phone software, and second, from paid calls by our customers. We anticipate that our operations will begin to generate revenue approximately 18 to 24 months following the date of this prospectus. If we sell 100% of shares being offered, we believe we will be able to be able to execute our business plan to the fullest potential and have a sufficient amount of funds budgeted toward sales and marketing. We will also initiate an online advertising campaign using Google Adwords. The first year after raising the funds will be spent on the development of our products and services and we expect revenue to materialize at the first quarter of the second year, as illustrated in the following chart: If we sell 75% of the shares being offered, we believe we will have sufficient funding to complete the development of our products and services. Mazen Kouta and Zeeshan Sajid, officers and directors of our Company, will either conduct all the marketing, sale and customer support activities or provide the company, and will seek a loan of up to $10,000 to hire a sales and marketing assistant and conduct some advertising. We expect that our revenue will decrease between 25-30% from the above projections because of our inability to spend as much as we would like on advertising and having less resources for marketing and sale. If we sell 50% of the shares being offered, we believe will have sufficient funding to develop a Beta version of our software product. We cannot be assured however if the software product will be in a sufficient state of development to be able to be brought to commercialization. At that point, we will evaluate the state of product and services development. If product is ready or very close to commercialization, the directors will loan the company up to $10,000 to finalize the product and market the product. We expect Mazen Kouta and Zeeshan Sajid to conduct all the marketing, sale and customer support activities. Even with a loan from our Directors, we expect that our revenue figures will suffer because of our inability to advertise for the company's services and our reliance solely on social marketing, such as Facebook,Twitter and YouTube and word of mouth. Additionally, if we encounter additional development costs, we may not be able to deploy, market and sell our products. This may result of no revenue and the failure of our business. In the most optimistic scenario, we expect revenue to be less than 40% of the revenue projected above. If we sell 25% of the shares being offered, we will not have sufficient funds to develop our products and services and don not expect to have any revenues. We will have sufficient funds only to maintain the Company operations on a minimal basis while we seek further funding. If we sell less than 25% of the shares offered, the directors will loan the company up to $10,000 to maintain the Company operations. Year 1 will be spent on developing our products and services and we expect zero revenue during that period. In Year 2, we anticipate revenues of $153,750. We anticipate that we will start generating revenue in month 13 after we have completed the share sale outline. We expect that revenue will continue to increase and exceed expenses by month 19. We anticipate that we will sustain $15,105 in losses between months 13-24. In Year 3, we anticipate revenues of $460,000 and a profit of $105,884 between months 25-36, and only at this point will our revenues exceed our costs. We make the following assumptions in our projections above for Year 2: - We anticipate we will earn $20 CPM ($0.02 every time a customer views an advertising) on the basis of estimating 2 million impressions, which represents approximately 167,000 impression per month. - We anticipate we will earn $0.3 every time a customer clicks on advertising, on the basis of estimating 200,000 clicks or approximately 16,700 clicks per month. - When a customer fills in a form or takes a survey or clicks through and purchases a product, we will earn revenue. We are estimating a $1 per action and assuming that we will have 50,000 completions per year or approximately 4,200 completions per month. - We anticipate that many calls outside North America will incur cost to the customer. We are estimating 750,000 minutes, which is approximately 2000 customers making 300 chargeable minutes per month. Since we are planning to provide this service as cheaply as possible to customers, we are only assuming $0.005 (half a cent) per minute profit. Our revenue estimates are based on current expectations, estimates and projections about our business based primarily on assumptions made by management. In making our revenue projections, we have assumed that we will be able to generate revenues from advertising based on our subjective view that our telephony services and products will be fully developed and that there will be a certain level of customer acceptance and demand for our telephony services and products. Therefore, actual revenue outcomes and results may differ materially from what is expressed or forecasted in our revenue estimates due primarily to factors that advertisers generally look to in deciding whether to advertise on a website. Some of these factors are: (i) monthly traffic and its repeat rate, (ii) the number of unique visitors, (iii) targeted marketing opportunities and demographics, (iv) how professionally designed the website is, and (v) how established the website is. We currently do not satisfy any of the aforementioned factors as they relate to our business, and the revenues we actually generate will depend primarily on our success in developing our business plan, and more specifically, our ability to attract potential advertisers based on potential advertisers' views about the quality of our business based on these factors. While going to make a phone call, a customer is likely to see multiple advertisements which will include a combination of banners and videos on the web site, the advertiser's portal and our software phone. As well, people investigating our service, but not necessarily register, will earn us revenue because they will be viewing advertising. Our product will consist of: (i) one or more telephony servers, (ii) a software phone which allow customers to place calls, view and/or listen to advertising, and (iii) a server to store customer information and to keep customer records, call, credits and payment history, and which server will also contains our web site, support center and customer account portal. Since we are presently in the development stage of our business, we can provide no assurance that we will successfully sell any products or services related to our planned activities. The Company has no plan, agreement, arrangement or understanding to engage in a merger or acquisition with an unidentified company or companies, or other entity or person. Similarly, the Company's officer and directors, the Company promoters, and their affiliates, do not intend for the Company, once it is reporting, to be used as a vehicle for a private company to become a reporting issuer under the Securities Exchange Act of 1934, as amended. As of the date of this prospectus, there is no public trading market for our common stock and no assurance that a trading market for our securities will ever develop. THE OFFERING The Issuer: First American Group Inc. Securities Being Offered: 628,000 shares of common stock Price Per Share: $0.10 Common stock outstanding before the offering: 2,000,000 shares of common stock Common stock outstanding before the offering: 2,628,000 shares of common stock Duration of the Offering: The offering will conclude upon the earliest of (i) such time as all of the common stock has been sold pursuant to the registration statement or (ii) such time as our Officers and Directors decide to close the offering. Net Proceeds: If 10% of the shares are sold - $6,280 If 50% of the shares are sold - $31,400 If 100% of the shares are sold - $62,800 Securities Issued and Outstanding: There are 2,000,000 shares of common stock issued and outstanding as of the date of this prospectus, 1,125,000 shares of which are by our President, Treasurer and Director, Mazen Kouta, and 875,000 shares of which are held by our Secretary and Director, Zeeshan Sajid. Registration Costs: We estimate our total offering registration costs to be approximately $15,004.47. Risk Factors: See "Risk Factors" and the other information in this prospectus for a discussion of the factors you should consider before deciding to invest in shares of our common stock. SUMMARY FINANCIAL INFORMATION The tables and information below are derived from our audited financial statements for the period from March 11, 2010 (Inception) to September 30, 2010, and our unaudited financial statements for the quarter ended December 31, 2010. FINANCIAL SUMMARY September 30, 2010 ------------------ Cash and Deposits $ 8,224 Total Assets $13,224 Total Liabilities $ 1,825 Total Stockholder's Equity (Deficit) $11,399 STATEMENT OF OPERATIONS Accumulated From March 11, 2010 (Inception) to September 30, 2010 --------------------------------- Total Expenses $ 4,601 Net Loss for the Period $ 4,601 FINANCIAL SUMMARY (UNAUDITED) December 31, 2010 ----------------- Cash and Deposits $ 7,845 Total Assets $12,845 Total Liabilities $ 3,825 Total Stockholder's Deficit $ 9,020 CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS The information contained in this prospectus, including in the documents incorporated by reference into this prospectus, includes some statements that are not purely historical and that are "forward-looking statements." Such forward-looking statements include, but are not limited to, statements regarding our Company and management's expectations, hopes, beliefs, intentions or strategies regarding the future, including our financial condition, results of operations, and the expected impact of the offering on the parties' individual and combined financial performance. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words "anticipates," "believes," "continue," "could," "estimates," "expects," "intends," "may," "might," "plans," "possible," "potential," "predicts," "projects," "seeks," "should," "will," "would" and similar expressions, or the negatives of such terms, may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. The forward-looking statements contained in this prospectus are based on current expectations and beliefs concerning future developments and the potential effects on the parties and the transaction. There can be no assurance that future developments actually affecting us will be those anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond the parties' control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements.
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diff --git a/parsed_sections/prospectus_summary/2011/MLRT_metalert_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/MLRT_metalert_prospectus_summary.txt
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@@ -0,0 +1 @@
+PRELIMINARY PROSPECTUS Subject To Completion, Dated October 27, 2011 GTX Corp 11,670,000 SHARES OF COMMON STOCK This prospectus covers the sale by the selling shareholders identified in this prospectus under the section titled Selling Shareholders (the Selling Shareholders ) of up to 11,670,000 shares of the common stock of GTX Corp, a Nevada corporation (together with its subsidiaries, we, our, or Company ), which includes 5,720,000 shares of common stock issuable upon the exercise of warrants. We will pay all expenses, except for any brokerage expenses, fees, discounts and commissions, which will all be paid by the Selling Shareholders, incurred in connection with the offering described in this prospectus. Our common stock is more fully described in the section of this prospectus entitled Description of Securities. Our common stock is quoted on the OTC Bulletin Board ( OTCBB ) under the symbol GTXO. The closing price of our common stock as reported on the OTCBB on October 25, 2011, was $0.08 per share. The prices at which the Selling Shareholders may sell the shares of common stock that are part of this offering will be determined by the prevailing market price for the shares at the time the shares are sold, or at such a price negotiated price or prices determined, from time to time, by the Selling Shareholders. See Plan of Distribution. The Selling Shareholders may be deemed underwriters within the meaning of the Securities Act of 1933, as amended, in connection with the sale of their common stock under this prospectus. We will not receive any of the proceeds from the sale of the shares of common stock owned by the Selling Shareholders, but we may receive funds from the exercise of their warrants upon exercise. Any proceeds received from the exercise of the warrants will be used by us for working capital and general corporate purposes. You should read this prospectus, and any amendment or supplement, together with additional information described under the heading General before you decide to invest. You should not assume that the information in this prospectus is accurate as of any date other than the date on the front of this document. Our principal executive offices are located at 117 W. 9th Street, # 1214, Los Angeles, California 90015, and our telephone number is (213) 489-3019. Our home page on the Internet can be located at www.gtxcorp.com. Information included on our website is not part of this prospectus. See the section of this document titled Risk Factors beginning on page 7 for certain factors relating to an investment in the shares of common stock offered hereby. GTX CORP CONSOLIDATED BALANCE SHEETS June 30, 2011 December 31, 2010 (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 341,372 $ 66,488 Accounts receivable, net 66,501 29,962 Inventory, net 194,628 87,069 Other current assets 19,505 14,220 Total current assets 622,006 197,739 Property and equipment, net 289,342 313,762 Other assets 10,972 10,972 Total assets $ 922,320 $ 522,473 LIABILITIES AND STOCKHOLDERS EQUITY Current liabilities: Accounts payable and accrued expenses $ 222,374 $ 177,811 Accounts payable and accrued expenses - related parties 119,253 150,951 Deferred revenues 124,722 54,939 Loan payable 37,500 - Convertible promissory notes payable, net 11,584 22,660 Derivative liability 13,898 74,340 Total current liabilities 529,331 480,701 Total liabilities 529,331 480,701 Commitments and contingencies Stockholders equity: Preferred stock, $0.001 par value; 10,000,000 shares authorized; no shares issued and outstanding - - Common stock, $0.001 par value; 2,071,000,000 shares authorized; 61,568,764 and 47,353,624 shares issued and outstanding at June 30, 2011 and December 31 , 2010, respectively 61,569 47,354 Additional paid-in capital 12,382,383 11,241,121 Accumulated deficit (12,050,963 ) (11,246,703 ) Total stockholders equity 392,989 41,772 Total liabilities and stockholders equity $ 922,320 $ 522,473 See accompanying notes to consolidated financial statements NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THE COMMON STOCK OFFERED HEREBY OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. The date of this prospectus is ________________, 2011. GTX CORP CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three Months Ended June 30, Six Months Ended June 30, 2011 2010 2011 2010 Revenues $ 118,320 $ 142,446 $ 254,568 $ 217,712 Cost of goods sold 85,229 64,288 183,336 101,112 Gross profit 33,091 78,158 71,232 116,600 Operating expenses Salaries and professional fees 322,416 320,697 719,550 872,293 Research and development 3,070 18,199 4,049 40,475 General and administrative 71,447 90,276 139,698 185,675 Total operating expenses 396,933 429,172 863,297 1,098,443 Loss from operations (363,842 ) (351,014 ) (792,065 ) (981,843 ) Other income (expense) Derivative income 55,596 - 60,442 - Gain on conversion of debt 6,348 - 9,552 - Interest income - 91 - 636 Interest expense (32,699 ) - (82,190 ) - Total other income (expense) 29,245 91 (12,196 ) 636 Net loss $ (334,597 ) $ (350,923 ) $ (804,261 ) $ (981,207 ) Weighted average number of common shares outstanding - basic and diluted 56,001,108 41,972,735 53,164,000 40,849,135 Net loss per share - basic and diluted $ (0.01 ) $ (0.01 ) $ (0.02 ) $ (0.02 ) See accompanying notes to consolidated financial statements TABLE OF CONTENTS PAGE STATEMENT REGARDING FORWARD LOOKING STATEMENTS 1 PROSPECTUS SUMMARY 3
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diff --git a/parsed_sections/prospectus_summary/2011/MMYT_makemytrip_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/MMYT_makemytrip_prospectus_summary.txt
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+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2011/MTBLY_moatable_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/MTBLY_moatable_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..0fe18cceb0d3a082446dde0e2b77de2887df1eea
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@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus and does not contain all of the information that you should
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diff --git a/parsed_sections/prospectus_summary/2011/MX_magnachip_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/MX_magnachip_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..cfc529ea1f022e4e8fe979f2b1b57533b0657f07
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. This summary does not contain all of the information that you should consider before deciding to invest in our common stock. You should read this entire prospectus carefully, including the Risk Factors and Management s Discussion and Analysis of Financial Condition and Results of Operations sections contained in this prospectus and our consolidated financial statements before making an investment decision. On March 10, 2011, we converted from a Delaware limited liability company to a Delaware corporation and changed our name from MagnaChip Semiconductor LLC to MagnaChip Semiconductor Corporation. In this prospectus, we refer to such transactions as the corporate conversion. In this prospectus, unless the context otherwise requires, the terms we, us, our and MagnaChip refer to MagnaChip Semiconductor LLC and its consolidated subsidiaries for the periods prior to the consummation of the corporate conversion, and such terms refer to MagnaChip Semiconductor Corporation and its consolidated subsidiaries for the periods after the consummation of the corporate conversion. The term Korea refers to the Republic of Korea or South Korea. All references to shares of common stock being sold in this offering include shares held in the form of depositary shares, as described under Description of Depositary Shares. Overview MagnaChip is a Korea-based designer and manufacturer of analog and mixed-signal semiconductor products for high-volume consumer applications. We believe we have one of the broadest and deepest analog and mixed-signal semiconductor technology platforms in the industry, supported by our 30-year operating history, large portfolio of approximately 2,730 novel registered patents and 760 pending novel patent applications, and extensive engineering and manufacturing process expertise. Our business is comprised of three key segments: Display Solutions, Power Solutions and Semiconductor Manufacturing Services. Our Display Solutions products include display drivers that cover a wide range of flat panel displays and mobile multimedia devices. Our Power Solutions products include discrete and integrated circuit solutions for power management in high-volume consumer applications. Our Semiconductor Manufacturing Services segment provides specialty analog and mixed-signal foundry services for fabless semiconductor companies that serve the consumer, computing and wireless end markets. Our wide variety of analog and mixed-signal semiconductor products and manufacturing services combined with our deep technology platform allows us to address multiple high-growth end markets and to rapidly develop and introduce new products and services in response to market demands. Our substantial manufacturing operations in Korea and design centers in Korea and Japan place us at the core of the global consumer electronics supply chain. We believe this enables us to quickly and efficiently respond to our customers needs and allows us to better service and capture additional demand from existing and new customers. We have a long history of supplying and collaborating on product and technology development with leading innovators in the consumer electronics market. As a result, we have been able to strengthen our technology platform and develop products and services that are in high demand by our customers and end consumers. We sold over 2,400 and 2,300 distinct products to over 500 and 185 customers for the year ended December 31, 2010 and combined twelve-month period ended December 31, 2009, respectively, with a substantial portion of our revenues derived from a concentrated number of customers. The increase in number of customers is due to the continuing growth of our Power Solutions business. Our largest semiconductor manufacturing services customers include some of the fastest growing and leading semiconductor companies that design analog and mixed-signal products for the consumer, computing and wireless end markets. Table of Contents The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. Subject to Completion. Dated March 10, 2011 MagnaChip Semiconductor Corporation 9,500,000 Depositary Shares Representing 9,500,000 Shares of Common Stock This is the initial public offering of common stock of MagnaChip Semiconductor Corporation. MagnaChip Semiconductor Corporation is offering 950,000 shares of common stock. The selling stockholders identified in this prospectus are offering 8,550,000 shares of common stock. We will not receive any of the proceeds from the sale of the shares by the selling stockholders. All of the shares of common stock sold in this offering will be sold in the form of depositary shares. Each depositary share represents an ownership interest in one share of common stock. On , 2011 (45 days after the date of this prospectus), each holder of depositary shares will be credited with a number of shares of common stock equal to the number of depositary shares held by such holder on that date, and the depositary shares will be canceled. Until the cancellation of the depositary shares on , 2011, holders of depositary shares will be entitled to all proportional rights and preferences of the shares of common stock. Prior to this offering, there has been no public market for our depositary shares or our common stock. We currently estimate that the initial public offering price per depositary share will be between $15.00 and $17.00. The depositary shares and the common stock have been approved for listing on the New York Stock Exchange under the symbol MX with the listing being only for the depositary shares upon the completion of this offering and only for the common stock following the cancellation of the depositary shares. See Risk Factors beginning on page 14 to read about factors you should consider before buying the depositary shares and shares of the common stock. Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense. Per depositary share Total Initial public offering price $ $ Underwriting discounts and commissions $ $ Proceeds, before expenses to MagnaChip Semiconductor Corporation $ $ Proceeds, before expenses to Selling Stockholders $ $ To the extent that the underwriters sell more than 9,500,000 depositary shares, the underwriters have the option to purchase up to an additional 142,500 depositary shares from us and up to an additional 1,282,500 depositary shares from the selling stockholders at the initial public offering price less the underwriting discount. The underwriters expect to deliver the depositary shares against payment in New York, New York on , 2011. Barclays Capital Deutsche Bank Securities Goldman, Sachs & Co. Citi UBS Investment Bank Prospectus dated , 2011 Table of Contents Our business is largely driven by innovation in the consumer electronics markets and the growing adoption by consumers worldwide of electronic devices for use in their daily lives. The consumer electronics market is large and growing rapidly, largely due to consumers increasingly accessing a wide variety of available rich media content, such as high definition audio and video, mobile television and games on advanced consumer electronic devices. According to Gartner, production of liquid crystal display, or LCD televisions, smartphones, mobile personal computers, or PCs, and media tablets is expected to grow from 2010 to 2013 by a compound annual growth rate of 8%, 39%, 25%, and 99%, respectively. Electronics manufacturers are continuously implementing advanced technologies in new generations of electronic devices using analog and mixed-signal semiconductor components, such as display drivers that enable display of high resolution images, encoding and decoding devices that allow playback of high definition audio and video, and power management semiconductors that increase power efficiency, thereby reducing heat dissipation and extending battery life. According to iSuppli Corporation, in 2009, the display driver semiconductor market was $6.2 billion and the power management semiconductor market was $22.4 billion. For the year ended December 31, 2010, we generated net sales of $770.4 million, income from continuing operations of $74.1 million, Adjusted EBITDA of $157.9 million and Adjusted Net Income of $89.2 million. See Prospectus Summary Summary Historical and Unaudited Pro Forma Consolidated Financial Data, beginning on page 8 for an explanation of our use of Adjusted EBITDA and Adjusted Net Income. Our Products and Services Our Display Solutions products include source and gate drivers and timing controllers that cover a wide range of flat panel displays used in LCD, light emitting diode, or LED, and 3D televisions and displays, mobile PCs and mobile communications and entertainment devices. Our display solutions support the industry s most advanced display technologies, such as low temperature polysilicon, or LTPS, and active matrix organic light emitting diode, or AMOLED, as well as high-volume display technologies such as thin film transistor, or TFT. Our Display Solutions business represented 39.7%, 50.5% and 50.5% of our net sales for the fiscal years ended December 31, 2010, 2009 (on a combined basis) and 2008, respectively. We expanded our business and market opportunity by establishing our Power Solutions business in late 2007. We have introduced a number of products for power management applications, including metal oxide semiconductor field effect transistors, or MOSFETs, analog switches, LED drivers, DC-DC converters and linear regulators for a range of devices, including LCD and LED digital televisions, mobile phones, computers and other consumer electronics products. Our Power Solutions business represented 7.4%, 2.2% and 0.9% of our net sales for the fiscal years ended December 31, 2010, 2009 (on a combined basis) and 2008, respectively. We offer semiconductor manufacturing services to fabless analog and mixed-signal semiconductor companies that require differentiated, specialty analog and mixed-signal process technologies. We believe the majority of our top twenty semiconductor manufacturing services customers use us as their primary manufacturing source for the products that we manufacture for them. Our process technologies are optimized for analog and mixed-signal devices and include standard complementary metal-oxide semiconductor, or CMOS, high voltage CMOS, ultra-low leakage high voltage CMOS and bipolar complementary double-diffused metal oxide semiconductor, or BCDMOS, and electronically erasable programmable read only memory, or EEPROM. Our semiconductor manufacturing services customers use us to manufacture a wide range of products, including display drivers, LED drivers, audio encoding and decoding devices, microcontrollers, Table of Contents Table of Contents electronic tags and power management semiconductors. Our Semiconductor Manufacturing Services business represented 52.6%, 46.7% and 47.7% of our net sales for the fiscal years ended December 31, 2010, 2009 (on a combined basis) and 2008, respectively. We manufacture all of our products at our three fabrication facilities located in Korea. We have approximately 240 proprietary process flows we can utilize for our products and offer to our semiconductor manufacturing services customers. Our manufacturing base serves both our display driver and power management businesses and semiconductor manufacturing services customers, allowing us to optimize our asset utilization and leverage our investments across our product and service offerings. Analog and mixed-signal manufacturing facilities and processes are typically distinguished by design and process implementation expertise rather than the use of the most advanced equipment. These processes also tend to migrate more slowly to smaller geometries due to technological barriers and increased costs. For example, some of our products use high-voltage technology that requires larger geometries and that may not migrate to smaller geometries for several years, if at all. As a result, our manufacturing base and strategy does not require substantial investment in leading edge process equipment, allowing us to utilize our facilities and equipment over an extended period of time with moderate required capital investments. Our Competitive Strengths We believe our strengths include: Broad and advanced analog and mixed-signal semiconductor technology and intellectual property platform that allows us to develop new products and meet market demands quickly; Established relationships and close collaboration with leading global consumer electronics companies, which enhance our visibility into new product opportunities, markets and technology trends; Longstanding presence of our management, personnel and manufacturing base in Asia and proximity to our largest customers and to the core of the global consumer electronics supply chain, which allows us to respond rapidly and efficiently to our customers needs; Flexible, service-oriented culture and approach to customers; Distinctive analog and mixed-signal process technology and manufacturing expertise; and Manufacturing facilities with specialty processes and a low-cost operating structure, which allow us to maintain price competitiveness across our product and service offerings. Our Strategy Our objective is to grow our business, our cash flow and profitability and to establish our position as a leading provider of analog and mixed-signal semiconductor products and services for high-volume markets. Our business strategy emphasizes the following key elements: Leverage our advanced analog and mixed-signal technology platform to continuously innovate and deliver products with high levels of performance and integration, as well as to expand our technology offerings within our target markets, such as our power management products; Increase business with our global customer base of leading consumer electronics original equipment manufacturers, or OEMs, and fabless companies by collaborating on critical design, product and manufacturing process development and leveraging our deep knowledge of customer needs; Table of Contents TABLE OF CONTENTS Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2011/NAGE_niagen_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/NAGE_niagen_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad
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+++ b/parsed_sections/prospectus_summary/2011/NAGE_niagen_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2011/NXPI_nxp_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/NXPI_nxp_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..34e4295564c806851be9a6f6e362fd374886b71d
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@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in, or incorporated by reference into, this prospectus. The information set forth in this summary does not contain all the information you should consider before making your investment decision. You should carefully read the entire prospectus, including the section Risk Factors and our consolidated financial statements and related notes, before making your investment decision. This summary contains forward-looking statements that contain risks and uncertainties. Our actual results may differ significantly from future results as a result of factors such as those set forth in the sections Risk Factors and Special Note Regarding Forward-Looking Statements. Unless the context otherwise requires, all references herein to we, our, us, NXP and the Company are to NXP Semiconductors N.V. and its subsidiaries. A glossary of abbreviations and technical terms used in this prospectus is set forth on page 168. Our Company We are a global semiconductor company and a long-standing supplier in the industry, with over 50 years of innovation and operating history. We provide leading High-Performance Mixed-Signal and Standard Products solutions that leverage our deep application insight and our technology and manufacturing expertise in radio frequency ( RF ), analog, power management, interface, security and digital processing products. Our product solutions are used in a wide range of automotive, identification, wireless infrastructure, lighting, industrial, mobile, consumer and computing applications. We engage with leading original equipment manufacturers ( OEMs ) worldwide and 58% of our revenues both in 2010 and 2009 were derived from Asia Pacific (excluding Japan). Since our separation from Koninklijke Philips Electronics N.V. ( Philips ) in 2006, we have significantly repositioned our business to focus on High-Performance Mixed-Signal solutions and have implemented a redesign program (the Redesign Program ) aimed at achieving a world-class cost structure and processes. As of December 31, 2010, we had approximately 24,500 full-time equivalent employees located in at least 30 countries, with research and development activities in Asia, Europe and the United States, and manufacturing facilities in Asia and Europe. The NXP Solution We design and manufacture High-Performance Mixed-Signal semiconductor solutions to meet the challenging requirements of systems and sub-systems in our target markets. High-Performance Mixed-Signal solutions are an optimized mix of analog and digital functionality integrated into a system or sub-system. These solutions are fine-tuned to meet the specific performance, cost, power, size and quality requirements of applications. High-Performance Mixed-Signal solutions alleviate the need for OEMs to possess substantial system, sub-system and component-level design expertise required to integrate discrete components into an advanced fully functional system. We have what we believe is an increasingly uncommon combination of capabilities in this area our broad range of analog and digital technologies, application insights and world-class process technology and manufacturing capabilities to provide our customers with differentiated solutions that serve their critical requirements. Customers often engage with us early, which allows us to hone our understanding of their application requirements and future product roadmaps and to become an integral partner in their system design process. Our Strengths We believe we have a number of strengths that create the opportunity for us to be a leader in our target markets. Some of these strengths include: Market-leading products. In 2009, approximately 68% of our High-Performance Mixed-Signal sales and 80% of our Standard Products sales were generated by products for which we held the number one or number two market position based on product sales. The information in this prospectus is not complete and may be changed. The selling stockholders may not sell the securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and the selling stockholders are not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. Subject to completion, dated March 30, 2011. NXP Semiconductors N.V. 25,000,000 Shares Common Stock The selling stockholders identified in this prospectus, including entities affiliated with directors of our company and with members of our senior management, are offering all of the shares of our common stock offered hereby and will receive all of the proceeds from this offering. See Principal and Selling Stockholders. Our shares of common stock are listed on the NASDAQ Global Select Market under the symbol NXPI. On March 25, 2011, the closing price of our shares of common stock as reported on the NASDAQ Global Select Market was $27.88 per share. An investment in our common stock involves risks. See Risk Factors beginning on page 12 of this prospectus. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. Per share Total Public offering price $ $ Underwriting discount and commissions $ $ Proceeds, before expenses, to the selling stockholders $ $ To the extent that the underwriters sell more than 25,000,000 shares of common stock, the underwriters have the option to purchase up to an additional 3,750,000 shares of common stock from the selling stockholders at the public offering price, less the underwriting discount and commissions, within 30 days of the date of this prospectus. See the section of this prospectus entitled Underwriting. The underwriters expect to deliver the shares against payment on or about , 2011. Credit Suisse Goldman, Sachs & Co. Morgan Stanley BofA Merrill Lynch Barclays Capital J.P. Morgan KKR ABN AMRO HSBC Rabobank International Prospectus dated , 2011 Large base of experienced High-Performance Mixed-Signal engineers and strong intellectual property portfolio. We have what we believe is one of the industry s largest pools of experienced High-Performance Mixed-Signal engineers, with over 2,800 engineers with an average of 15 years of experience. In addition, we have an extensive intellectual property portfolio of approximately 14,000 issued and pending patents covering the key technologies used in our target application areas. Deep applications expertise. We have built, and continue to build, through our relationships with leading OEMs and through internal development efforts in our advanced systems lab, deep insight into the component requirements and architectural challenges of electronic system solutions in our target end-market applications, thereby enhancing our engagement in our customers product platforms. Strong, well-established customer relationships. We have strong, well-established relationships with almost every major automotive, identification, mobile handset, consumer electronics, mobile base station and lighting supplier in the world. We directly engage with over 1,000 customer design locations worldwide. Our top OEM customers, in terms of revenue, include Apple, Bosch, Continental Automotive, Delphi, Ericsson, Harman/Becker, Huawei, Nokia, Nokia Siemens Networks, Oberthur, Panasonic, Philips, Samsung, Sony and Visteon. We also serve over 30,000 customers through our distribution partners. Differentiated process technologies and competitive manufacturing. We focus our internal and joint venture wafer manufacturing operations on running a portfolio of proprietary specialty process technologies that enable us to differentiate our products on key performance features. By concentrating our manufacturing activities in Asia and by significantly streamlining our operations through our Redesign Program, we believe we have a competitive manufacturing base. NXP Repositioning and Redesign Since our separation from Philips in 2006, we have significantly repositioned our business and market strategy. Further, in September 2008, we launched our Redesign Program to better align our costs with our more focused business scope and to achieve a world-class cost structure and processes. The Redesign Program was subsequently accelerated and expanded from its initial scope. Key elements of our repositioning and redesign are: Our Repositioning New leadership team. Nine of the twelve members of our executive management team are new to the Company or new in their roles since our separation from Philips in 2006, and seven of the twelve have been recruited from outside NXP. Focus on High-Performance Mixed-Signal solutions. We have implemented our strategy of focusing on High-Performance Mixed-Signal solutions because we believe it to be an attractive market in terms of growth, barriers to entry, relative market share, relative business and pricing stability, and capital intensity. We have exited all of our system-on-chip businesses over the past three years, and have significantly increased our research and development investments in the High-Performance Mixed-Signal applications on which we focus. New customer engagement strategy. We have implemented a new approach to serving our customers and have invested significant additional resources in our sales and marketing organizations, including hiring over 100 field application engineers in 2010 and 2009. We have also created application marketing teams that focus on delivering solutions and systems reference designs that leverage our broad portfolio of products. TABLE OF CONTENTS Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2011/OPK_opko_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/OPK_opko_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..2081a166267958a2ac043cf8141f82f9ba6a285e
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@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights information contained elsewhere or incorporated by reference into this prospectus. Because it is a summary, it does not contain all of the information that you should consider before investing in our securities. You should read this entire prospectus carefully, including the section entitled Risk Factors, any prospectus supplement and the documents that we incorporate by reference into this prospectus, before making an investment decision.
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+PROSPECTUS SUMMARY 1
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+PROSPECTUS SUMMARY This summary highlights certain significant aspects of our business and this offering, but it is not complete and does not contain all of the information that you should consider before making your investment decision. You should carefully read the entire prospectus and the information incorporated by reference into this prospectus, including the information presented under the section entitled "Risk Factors" and the financial data and related notes, before making an investment decision. This summary contains forward-looking statements that involve risks and uncertainties. Our actual results may differ significantly from future results contemplated in the forward-looking statements as a result of factors such as those set forth in "Risk Factors" and "Cautionary Statement Regarding Forward-Looking Statements." Certain historical information in this prospectus has been adjusted to reflect the 23.75-for-one stock split of our common stock that occurred immediately prior to the consummation of our initial public offering. In this prospectus, unless the context indicates otherwise: "Douglas Dynamics," the "Company," "we," "our," "ours" or "us" refer to Douglas Dynamics, Inc. (formerly known as Douglas Dynamics Holdings, Inc.) and its subsidiaries and "Douglas Holdings" refers to Douglas Dynamics, Inc. exclusive of its subsidiaries. Douglas Dynamics, Inc. is a Delaware corporation and the issuer of the common stock offered hereby. Our Company We are the North American leader in the design, manufacture and sale of snow and ice control equipment for light trucks, which consists of snowplows and sand and salt spreaders, and related parts and accessories. We sell our products under the WESTERN , FISHER and BLIZZARD brands which are among the most established and recognized in the industry. We believe that in 2010 our share of the light truck snow and ice control equipment market was greater than 50%. In 2010, we generated net sales, Adjusted EBITDA (as defined in "Summary Historical Consolidated Financial and Operating Data"), net income, and Adjusted Net Income (as defined in "Summary Historical Consolidated Financial and Operating Data") of $176.8 million, $47.3 million, $1.7 million and $12.7 million, respectively, as compared to net sales, Adjusted EBITDA, net income, and Adjusted Net Income of $174.3 million, $45.2 million, $9.8 million, and $9.8 million, respectively, for 2009. In the first three months of 2011, we generated net sales, Adjusted EBITDA, and net loss of $23.5 million, $4.1 million, and $0.8 million, respectively, as compared to net sales, Adjusted negative EBITDA, and net loss of $14.6 million, $1.2 million, and $5.7 million, respectively, for the first three months of 2010. See "Summary Historical Consolidated Financial and Operating Data" for a discussion of why management uses Adjusted EBITDA and Adjusted Net Income to measure our financial performance, and a reconciliation of net income to Adjusted EBITDA and Adjusted Net Income. We offer the broadest and most complete product line of snowplows and sand and salt spreaders for light trucks in the U.S. and Canadian markets. We also provide a full range of related parts and accessories, which generates an ancillary revenue stream throughout the lifecycle of our snow and ice control equipment. For the year ended December 31, 2010, 86% of our net sales were generated from sales of snow and ice control equipment, and 14% of our net sales were generated from sales of parts and accessories. We sell our products through a distributor network primarily to professional snowplowers who are contracted to remove snow and ice from commercial, municipal and residential areas. Over the last 50 years, we have engendered exceptional customer loyalty for our products because of our ability to satisfy the stringent demands of our customers for a high degree of quality, reliability and service. As a result, we believe our installed base is the largest in the industry with over 500,000 snowplows and sand and salt spreaders in service. Because sales of snowplows and sand and salt spreaders are primarily driven by the need of our core end-user base to replace worn existing equipment, we believe our Table of Contents The information in this prospectus is not complete and may be changed. The selling stockholders may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and the selling stockholders are not soliciting offers to buy these securities in any state where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED MAY 13, 2011 5,000,000 Shares Douglas Dynamics, Inc. Common Stock Table of Contents substantial installed base provides us with a high degree of predictable sales over any extended period of time. We believe we have the industry's most extensive North American distributor network, which primarily consists of over 710 truck equipment distributors who purchase directly from us and are located throughout the snowbelt regions in North America (primarily the Midwest, East and Northeast regions of the United States as well as all provinces of Canada). Beginning in 2005, we began to extend our reach to international markets, establishing distribution relationships in Northern Europe and Asia, where we believe meaningful growth opportunities exist. We believe we are the industry's most operationally efficient manufacturer due to our vertical integration, highly variable cost structure and intense focus on lean manufacturing. We continually seek to use lean principles to reduce costs and increase the efficiency of our manufacturing operations. Our manufacturing efficiencies have contributed to the increase of our gross profit per unit by approximately 3.2% per annum, compounded annually, from 2000 to 2010. In addition, as a result of improvements in our manufacturing efficiency, we closed our Johnson City, Tennessee facility in August 2010 (which is still owned by the Company, but is held for sale), reducing our manufacturing facilities from three to two. We now manufacture our products in two facilities that we own in Milwaukee, Wisconsin and Rockland, Maine. Furthermore, our manufacturing efficiency allows us to deliver desired products quickly to our customers during times of sudden and unpredictable snowfall events when our customers need our products immediately. Our Industry The light truck snow and ice control equipment industry in North America consists predominantly of domestic participants that manufacture their products in North America. The annual demand for snow and ice control equipment is driven primarily by the replacement cycle of the existing installed base, which is predominantly a function of the average life of a snowplow or spreader and is driven by usage and maintenance practices of the end-user. We believe actively-used snowplows are typically replaced, on average, every seven to eight years. The primary factor influencing the replacement cycle for snow and ice control equipment is the level, timing and location of snowfall. Sales of snow and ice control equipment in any given year and region are most heavily influenced by local snowfall levels in the prior snow season. Heavy snowfall during a given winter causes equipment usage to increase, resulting in greater wear and tear and shortened life cycles, thereby creating a need for replacement equipment and additional parts and accessories. While snowfall levels vary within a given year and from year-to-year, snowfall, and the corresponding replacement cycle of snow and ice control equipment, is relatively consistent over multi-year periods. The following chart depicts an aggregate annual and eight-year (based on the typical life of our snowplows) rolling average of the aggregate snowfall levels in 66 cities in 26 snowbelt states across the Northeast, East, Midwest and Western United States where we monitor snowfall levels from 1980 to 2011. As the chart indicates, since 1982, aggregate snowfall levels in any given rolling eight-year period have been fairly consistent, ranging from 2,742 to 3,419 inches. The shares of common stock are being sold by the selling stockholders. We will not receive any proceeds from the sale of these shares. Our common stock is listed on the New York Stock Exchange under the symbol "PLOW." On May 12, 2011, the last sale price of our common stock on the New York Stock Exchange was $16.17 per share. The underwriters have a 30-day option to purchase on a pro rata basis an aggregate of 750,000 additional outstanding shares from the selling stockholders to cover over-allotments of shares. Investing in our common stock involves risks. See "Risk Factors" beginning on page 17. Price to Public Underwriting Discounts and Commissions Proceeds to Selling Stockholders Per Share $ $ $ Total $ $ $ Delivery of the shares of our common stock will be made on or about , 2011. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. Joint Book-Running Managers Credit Suisse Oppenheimer & Co. Baird Co-Manager Piper Jaffray The date of this prospectus is , 2011. Table of Contents Snowfall in Snowbelt States (inches) (for October 1 through March 31) Note:The 8-year rolling average snowfall is not presented prior to 1982 for purposes of the calculation due to lack of snowfall data prior to 1975. Snowfall data in this chart is not adjusted for snowfall outside of the 66 cities in the 26 states reflected. Source: National Oceanic and Atmospheric Administration's National Weather Service. The demand for snow and ice control equipment can also be influenced by general economic conditions in the United States, as well as local economic conditions in the snowbelt regions in North America. In stronger economic conditions, our end-users may choose to replace or upgrade existing equipment before its useful life has ended, while in weak economic conditions, our end-users may seek to extend the useful life of equipment, thereby increasing the sales of parts and accessories. However, since snow and ice control management is a non-discretionary service necessary to ensure public safety and continued personal and commercial mobility in populated areas that receive snowfall, end-users cannot extend the useful life of snow and ice control equipment indefinitely and must replace equipment that has become too worn, unsafe or unreliable, regardless of economic conditions. Table of Contents Table of Contents The next chart depicts annual unit sales of snow and ice control equipment since 1980 and an eight-year (based on the typical life of our snowplows) rolling average since 1982. As the chart reveals, sales of our snow and ice control equipment have been relatively consistent over any eight year period. Equipment Sales (units) Note:The 8-year rolling average equipment sales are not presented prior to 1982 for purposes of the calculation chart due to lack of equipment unit sales data prior to 1975. In addition, units of equipment sales for years 2002 through 2005 are adjusted to include units sold by Blizzard Corporation prior to its acquisition by us in November 2005. Data for Blizzard Corporation prior to 2002 is not available. Although sales of snow and ice control units increased in 2010 as compared to 2009, management believes that absent the continued economic downturn, equipment sales in 2009 and 2010 would have been considerably higher due to the high levels of snowfall during these years, as equipment unit sales in 2009 and 2010 remained below the rolling ten-year average, while snowfall levels in 2009 and 2010 were considerably above the rolling ten-year average. Further to this point, sales of parts and accessories for 2009 and 2010, respectively, were approximately 58.3% and 34.4% higher than the applicable rolling ten-year average, which management believes is largely a result of the deferral of new equipment purchases due to the economic downturn. Management believes this deferral of new equipment purchases could result in an elevated multi-year replacement cycle as the economy recovers. Long-term growth in the overall snow and ice control equipment market also results from geographic expansion of developed areas in the snowbelt regions of North America, as well as consumer demand for technological enhancements in snow and ice control equipment and related parts and accessories that improves efficiency and reliability. Continued construction in the snowbelt regions in North America increases the aggregate area requiring snow and ice removal, thereby growing the market for snow and ice control equipment. In addition, the development and sale of more reliable, more efficient and more sophisticated products have contributed to an approximate 2-4% average unit price increase in each of the past five years. Our Competitive Strengths We compete solely with other North American manufacturers who do not benefit from our extensive distributor network, manufacturing efficiencies and depth and breadth of products. We compete against these companies to provide the broadest, highest quality, most reliable product offering at competitive prices; however, because of our reputation for reliable and durable product performance, we can often demand a premium price in the marketplace. Further, as the market leader in snow and ice control equipment for light trucks, we enjoy a set of competitive advantages versus smaller equipment providers, which allows us to generate robust cash flows in all snowfall environments and to support continued investment in our products, distribution capabilities and brand regardless of Table of Contents annual volume fluctuations. We believe these competitive advantages are rooted in the following competitive strengths and reinforces our industry leadership over time. Exceptional Customer Loyalty and Brand Equity. Our brands enjoy exceptional customer loyalty and brand equity in the snow and ice control equipment industry with both end-users and distributors which have been developed through over 50 years of superior innovation, productivity, reliability and support, consistently delivered season after season. We believe past brand experience, rather than price, is the key factor impacting snowplow purchasing decisions. Broadest and Most Innovative Product Offering. We provide the industry's broadest product offering with a full range of snowplows, sand and salt spreaders and related parts and accessories. Through our acquisition of Blizzard Corporation in November 2005, we acquired the highly-patented, groundbreaking BLIZZARD technology that represents one of the most significant innovations in our industry. More specifically, we acquired industry-leading hinged plow technology, which has significant advantages over competing products because it utilizes expandable wings for more effective snow removal. We also believe we maintain the industry's largest and most advanced in-house new product development program, and that our market leadership position permits us the flexibility to devote more resources to research and development than any of our competitors. We historically introduce several new and redesigned products each year, as research and development is a major focus of our management. New product development projects are typically the result of end-user feedback, plow productivity improvements, quality and reliability improvements and vehicle application expansion. Our broad product offering and commitment to new product development is essential to maintaining and growing our leading market share position as well as continuing to increase the profitability of our business. Extensive North American Distributor Network. With over 710 direct distributors, we benefit from having the most extensive North American direct distributor network in the industry, providing a significant competitive advantage over our peers. Our distributors function not only as sales and support agents (providing access to parts and service), but also as industry partners providing real-time end-user information, such as retail inventory levels, changing consumer preferences or desired functionality enhancements, which we use as the basis for our product development efforts. Leader in Operational Efficiency. We believe we are a leader in operational efficiency in our industry, resulting from our application of lean manufacturing principles and a highly variable cost structure. By utilizing lean principles, we are able to adjust production levels easily to meet fluctuating demand, while controlling costs in slower periods. This operational efficiency is supplemented by our highly variable cost structure, driven in part by our access to a sizable temporary workforce (comprising approximately 10-15% of our total workforce), which we can quickly adjust, as needed. These manufacturing efficiencies enable us to respond rapidly to urgent customer demand during times of sudden and unpredictable snowfalls, allowing us to provide exceptional service to our existing customer base and capture new customers from competitors that we believe cannot service their customers' needs with the same speed and reliability. Strong Cash Flow Generation. We are able to generate significant cash flow as a result of relatively consistent high profitability (Adjusted EBITDA Margins averaged 26.4% for the three-year period from 2008 to 2010), low capital spending requirements and predictable timing of our working capital requirements. Our cash flow results will also benefit substantially from approximately $18 million of annual tax-deductible intangible and goodwill expense over the next nine years, which has the impact of reducing our corporate taxes owed by approximately $6.7 million on an annual basis during this period, in the event we have sufficient taxable income to utilize such benefit. Our significant cash flow has allowed us to reinvest in our business, pay down long term debt, and pay substantial dividends to our Table of Contents stockholders. Effective upon the consummation of our initial public offering, our Board of Directors adopted a regular quarterly cash dividend of $0.1825 per share, which was first paid on September 30, 2010. In November 2010, we increased our quarterly dividend, effective as of the fourth quarter of 2010, by $0.0175 to $0.20 per share, an increase of 9.6%, and on March 31, 2011, we paid an additional special cash dividend of $0.37 per share. This dividend program has resulted in an aggregate of $20.7 million being paid to our stockholders in the form of cash dividends since our initial public offering. Experienced Management Team. We believe our business benefits from an exceptional management team that is responsible for establishing our leadership in the snow and ice control equipment industry for light trucks. Our senior management team, consisting of four officers, has an average of approximately 20 years of weather-related industry experience and an average of over ten years with our company. James Janik, our President and Chief Executive Officer, has been with us for over 18 years and in his current role since 2000, and through his strategic vision, we have been able to expand our distributor network and grow our market leading position. Our Business Strategy Our business strategy is to capitalize on our competitive strengths to maximize cash flow to pay dividends, reduce indebtedness and reinvest in our business to create stockholder value. The building blocks of our strategy are: Continuous Product Innovation. We believe new product innovation is critical to maintaining and growing our market-leading position in the snow and ice control equipment industry. We will continue to focus on developing innovative solutions to increase productivity, ease of use, reliability, durability and serviceability of our products and on incorporating lean manufacturing concepts into our product development process, which has allowed us to reduce the overall cost of development and, more importantly, to reduce our time-to-market by nearly one-half. As a result of these efforts, approximately $87 million, or 49.5%, of our 2010 net sales came from products introduced or redesigned in the last five years. Distributor Network Optimization. Over the last ten years, we have grown our network by over 250 distributors. We will continually seek opportunities to continue to expand our extensive distribution network by adding high-quality, well-capitalized distributors in select geographic areas and by cross-selling our industry-leading brands within our distribution network to ensure we maximize our ability to generate revenue while protecting our industry leading reputation, customer loyalty and brands. We will also focus on optimizing this network by providing in-depth training, valuable distributor support and attractive promotional and incentive opportunities. As a result of these efforts, we believe a majority of our distributors choose to sell our products exclusively. We believe this sizable high quality network is unique in the industry, providing us with valuable insight into purchasing trends and customer preferences, and would be very difficult to replicate. Aggressive Asset Management and Profit Focus. We will continue to aggressively manage our assets in order to maximize our cash flow generation despite seasonal and annual variability in snowfall levels. We believe our ability is unique in our industry and enables us to achieve attractive margins in all snowfall environments. Key elements of our asset management and profit focus strategies include: employment of a highly variable cost structure, which allows us to quickly adjust costs in response to real-time changes in demand; use of enterprise-wide lean principles, which allow us to easily adjust production levels up or down to meet demand; You should rely only on the information contained in this prospectus or in any free-writing prospectus we may authorize. We have not, the selling stockholders have not, and the underwriters have not, authorized anyone to provide you with additional or different information. The information in this prospectus or any free-writing prospectus may only be accurate as of its date, regardless of its time of delivery or of any sale of shares of common stock. This prospectus does not constitute an offer to sell, or a solicitation of an offer to buy, any securities offered hereby in any jurisdiction where, or to any person to whom, it is unlawful to make such offer or solicitation. Table of Contents implementation of a pre-season order program, which incentivizes distributors to place orders prior to the retail selling season and thereby enables us to more efficiently utilize our assets; and development of a vertically integrated business model, which we believe provides us cost advantages over our competition. These asset management and profit focus strategies, among other management tools, allow us to adjust fixed overhead and sales, general and administrative expenditures to account for the year-to-year variability of our sales volumes. Management currently estimates that annual fixed overhead expenses generally range from approximately $15.3 million in low sales volume years to approximately $18.3 million in high sales volume years. Further, management currently estimates that annual sales, general and administrative expenses other than amortization generally approximate $21.5 million, but can be reduced to approximately $20.5 million to maximize cash flow in low sales volume years, and can increase to approximately $25.5 million to maintain customer service and responsiveness in high sales volume years. Additionally, although modest, our capital expenditure requirements, which are normally budgeted at $3.5 million, can be temporarily reduced by up to approximately 60% in response to actual or anticipated decreases in sales volumes in a particular year to maximize cash flow. Flexible, Lean Enterprise Platform. We will continue to utilize lean principles to maximize the flexibility, efficiency and productivity of our manufacturing operations while reducing the associated costs, enabling us to increase distributor and end-user satisfaction. For example, in an environment where shorter lead times and near-perfect order fulfillment are important to our distributors, we believe our lean processes have helped us to improve our shipping performance and build a reputation for providing industry leading shipping performance. In 2010, we fulfilled 96.1% of our orders on or before the requested ship date, without error in content, packaging or delivery, continuing the strength of our performance in 2009 in which we filled 98.2% of our orders on or before the requested ship date without such errors, and representing a significant improvement from our 81.5% error-free performance in 2008. Our cost reduction efforts also include the rationalization of our supply base and implementation of a global sourcing strategy, resulting in approximately $3.9 million of cumulative annualized cost savings from 2006 to 2010 with the goal of an additional $1 million in annualized cost savings in 2011. In January 2009, we opened a sourcing office in China, which we expect to become our central focus for specific component purchases and provide a majority of our procurement cost savings in the future. Our Growth Opportunities Increase Our Industry Leading Market Share. We plan to leverage our industry leading position, distribution network and new product innovation capabilities to capture market share in the North American snow and ice control equipment market, focusing our primary efforts on increasing penetration in those North American markets where we believe our overall market share is less than 50%. We also plan to continue growing our presence in the snow and ice control equipment market outside of North America, particularly in Asia and Europe, which we believe could provide significant growth opportunities in the future. Opportunistically Seek New Products and New Markets. We will consider external growth opportunities within the snow and ice control industry and other equipment or component markets. We plan to continue to evaluate acquisition opportunities within our industry and in complementary industries that can help us expand our distribution reach, enhance our technology and improve the breadth and depth of our product lines. We also consider diversification opportunities in adjacent markets that complement our business model and could offer us the ability to leverage our core competencies to create stockholder value. Table of Contents Summary Risk Factors An investment in our common stock involves a high degree of risk. You should carefully consider the risks summarized below, the risks described under "Risk Factors" beginning on page 16 and the other information contained in, or incorporated by reference into, this prospectus, before deciding to purchase any shares of our common stock: our results of operations depend primarily on the level, timing and location of snowfall in the regions in which we offer our products; the seasonality and year-to-year variability of our business can cause our results of operations and financial condition to be materially different from quarter-to-quarter and from year-to-year; if economic conditions in the United States continue to remain weak or deteriorate further, our results of operations and ability to pay dividends may be adversely affected; our failure to maintain good relationships with our distributors, the loss or consolidation of our distributor base or the actions or inactions of our distributors could have an adverse effect on our results of operations and ability to pay dividends; if we are unable to develop new products or improve upon our existing products on a timely basis, our business and financial condition could be adversely affected; if our price of steel or other components of our products increase, our gross margins could decline; if petroleum prices increase, our results of operations could be adversely affected; you may not receive the level of dividends provided for in the dividend policy adopted by our Board of Directors or any dividends at all; and satisfying our debt service obligations and paying dividends may leave us with insufficient cash to fund unexpected cash needs and growth. Principal Stockholders Aurora Equity Partners II L.P., a Delaware limited partnership, and Aurora Overseas Equity Partners II, L.P., a Cayman Islands exempt limited partnership, which we refer collectively to in this prospectus as the Aurora Entities, collectively beneficially own approximately 29.8% of our common stock, prior to giving effect to this offering. The Aurora Entities are affiliates of Aurora Capital Group. Ares Corporate Opportunities Fund, L.P., a Delaware limited partnership, which we refer to in this prospectus as Ares, beneficially owns approximately 10.7% of our common stock, prior to giving effect to this offering. Ares is an affiliate of Ares Management LLC, which we refer to in this prospectus as Ares Management. After giving effect to this offering, the Aurora Entities and Ares will beneficially own approximately 13.2% and 4.5% of our common stock, respectively. Aurora Capital Group is a Los Angeles-based private equity firm managing over $2 billion that utilizes two distinct investment strategies. Aurora's traditional private equity vehicles focus principally on control-investments in middle-market businesses in a diverse set of industries, each with a leading market position, a strong cash flow profile, and actionable opportunities for both operational and strategic enhancement. Aurora's Resurgence fund invests in debt and equity securities of middle-market companies and targets complex situations that are created by operational or financial challenges either within a company or a broader industry. Ares Management is a global alternative asset manager and SEC-registered investment adviser with total committed capital under management of approximately $40 billion as of March 31, 2011. With complementary pools of capital in private equity, private debt and capital markets, Ares Table of Contents Management has the ability to invest across all levels of a company's capital structure from senior debt to common equity in a variety of industries in a growing number of international markets. The Ares Private Equity Group manages over $6 billion of committed capital and has a track record of partnering with high quality, middle-market companies and creating value with its flexible capital. The firm is headquartered in Los Angeles with over 380 employees and professionals located across the United States, Europe and Asia. Interests of Certain Affiliates in this Offering Certain of our executive officers and other affiliates may stand to benefit as a result of this offering. Specifically, certain of our executive officers will sell shares of common stock in this offering, including through the exercise and sale of shares underlying stock options. In addition, our principal stockholders, the Aurora Entities and Ares, together with certain of our other stockholders, will also sell a portion of their shares of our common stock in this offering. For a description of the interests of these parties in this offering, see "Interests of Certain Affiliates in this Offering." Company Information We maintain our principal executive offices at 7777 North 73rd Street, Milwaukee, Wisconsin 53223, and our telephone number is (414) 354-2310. We maintain a website at www.DouglasDynamics.com. Information contained on our website is not a part of, and is not incorporated by reference into, this prospectus. "WESTERN," "FISHER" and "BLIZZARD" and their respective logos are trademarks. Solely for convenience, from time to time we refer to our trademarks in this prospectus without the symbols, but such references are not intended to indicate that we will not assert, to the fullest extent under applicable law, our rights to our trademarks. Table of Contents The Offering Issuer Douglas Dynamics, Inc. Common stock offered by the selling stockholders 5,000,000 shares Over-allotment option The selling stockholders have granted the underwriters a 30-day option to purchase up to 750,000 additional outstanding shares of common stock from the selling stockholders. Common stock outstanding after this offering 21,996,251 shares Use of proceeds The selling stockholders will receive all of the proceeds from this offering and we will not receive any proceeds from the sale of shares in this offering. Any proceeds received by us in connection with the exercise of options to purchase shares of our common stock by the selling stockholders in connection with this offering will be used for general corporate purposes. See "Use of Proceeds." Dividend policy Our Board of Directors has adopted a dividend policy that reflects an intention to distribute to our stockholders a regular quarterly cash dividend of $0.20 per share. The declaration and payment of this quarterly dividend will be at the discretion of our Board of Directors and will depend upon many factors, including our financial condition and earnings, legal requirements, taxes, the terms of our indebtedness and other factors our Board of Directors may deem to be relevant. See "Dividend Policy and Restrictions." Risk factors See "Risk Factors" beginning on page 16 of this prospectus for a discussion of factors you should carefully consider before deciding to invest in our common stock. NYSE symbol PLOW The number of shares of our common stock outstanding after this offering is based on 21,848,947 shares outstanding as of May 12, 2011, plus an aggregate of 147,304 shares of common stock subject to outstanding options being exercised by certain selling stockholders for the purpose of selling shares in this offering. Unless otherwise noted, all information in this prospectus assumes no exercise of the underwriters' over-allotment option to purchase up to 750,000 additional shares of our common stock from the selling stockholders. Certain historical information in this prospectus has been adjusted to reflect the 23.75-for-one stock split of our common stock that occurred immediately prior to the consummation of our initial public offering. Table of Contents
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. To understand this offering fully, you should
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+Prospectus Summary
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+Summary Financials
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+Risk Factors
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+Use of Proceeds
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+Determination of Offering Price
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+Dilution
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+Selling Shareholders
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+Plan of Distribution
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+Description of Securities to be Registered
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+Interests of Named Experts and Counsel
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+Organization Within Last Five Years
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+Description of Business
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+Description of Property
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+Available Information
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+Index to Financial Statements
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+Management Discussion and Analysis of Financial Condition and Financial Results
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+Plan of Operations
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+Executive Compensation
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+Security Ownership of Certain Beneficial Owners and Management
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+Table of Contents
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+Please read this prospectus carefully. It describes our business, our financial condition and results of operations. We have prepared this prospectus so that you will have the information necessary to make an informed investment decision.
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+PROSPECTUS SUMMARY
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+This summary highlights selected information contained elsewhere in this prospectus. This summary does not contain all the information that you should consider before investing in the common stock. You should carefully read the entire prospectus, including Risk Factors , Management s Discussion and Analysis of Financial Condition and Results of Operations and the Financial Statements, before making an investment decision .
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+About Our Company
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+We are a Delaware Corporation incorporated on February 25, 2010 and operate our business through our wholly-owned subsidiary, RPM Dental Systems, LLC, a limited liability company formed in Kentucky on September 15, 2009. Our subsidiary commenced operations as a consulting and marketing company for dentists. RPM Dental Systems, LLC was formed to help medical and other professionals educate their patients via the internet. The parent company, RPM Dental Inc., will focus on assisting dentists in marketing their practice and reaching out to potential patients using the internet and wireless media. RPM Dental Systems, LLC became our wholly owned subsidiary in connection with our desire to expand, raise money and become a publicly traded company. Our website addresses are www.rpmdental.com and www.outrankmydentalcompetition.com.
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+On April 1, 2010, we issued four million (4,000,000) shares of common stock par value $.000001 to Josh Morita, Director and Chief Executive Officer for the formation of the Corporation and facilitation of the acquisition of RPM Systems, LLC as our wholly owned subsidiary. The shares issued to Mr. Morita are subject to Rule 144 of the Securities Act of 1933 and as such, are defined as restricted securities.
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+Where You Can Find Us
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+Our principal executive offices are located at 3285 Blazer Parkway, Suite 200, Lexington, Kentucky 40509 and our telephone number is (859) 552-6204.
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+Terms of the Offering
+
+ 
+
+The selling shareholders named in this prospectus are offering all of the shares of common stock offered through this prospectus. The selling stockholders are selling shares of common stock covered by this prospectus for their own account.
+
+ 
+
+We will not receive any of the proceeds from the resale of these shares. The offering price of $0.02 was determined by the price shares were sold to our shareholders in a private placement memorandum and is a fixed price at which the selling security holders may sell their shares until our common stock is quoted on the OTC Bulletin Board, at which time the shares may be sold at prevailing market prices or privately negotiated prices. There can be no assurance that a market maker will agree to file the necessary documents with FINRA, which operates the OTC Electronic Bulletin Board, nor can there be any assurance that such an application for quotation will be approved. We have agreed to bear the expenses relating to the registration of the shares for the selling security holders.
+
+ 
+
+ 
+
+1
+
+Table of Contents
+
+ 
+
+SUMMARY FINANCIAL DATA
+
+ 
+
+The following summary financial data should be read in conjunction with Management s Discussion and Analysis, Plan of Operation and the Financial Statements and Notes thereto, included elsewhere in this prospectus. The statement of operations and balance sheet data for the period ended December 31, 2010 is derived from our audited financial statements.
+
+ 
+
+ 
+ 
+
+For the Period Ending December 31, 2010 
+
+ 
+
+STATEMENT OF OPERATIONS
+
+ 
+ 
+ 
+
+Revenues
+
+ 
+
+$
+
+ 5,000 
+
+ 
+
+Cost of revenues
+
+ 
+ 
+
+ 5,038 
+
+ 
+
+Professional Fees
+
+ 
+ 
+
+ 18,875 
+
+ 
+
+General and Administrative Expenses
+
+ 
+ 
+
+ 9,556 
+
+ 
+
+Net Loss
+
+ 
+ 
+
+ (28,469) 
+
+ 
+
+ 
+
+ 
+ 
+
+As of 
+
+December 31,
+
+ 2010 
+
+ 
+
+BALANCE SHEET DATA
+
+ 
+ 
+ 
+
+Cash
+
+ 
+
+$
+
+ 16,542 
+
+ 
+
+Total Assets
+
+ 
+ 
+
+ 16,542 
+
+ 
+
+Total Liabilities
+
+ 
+ 
+
+ - 
+
+ 
+
+Stockholders Equity
+
+ 
+ 
+
+ 16,542 
+
+ 
+
+ 
+
+ 
+
+ 
+
+2
+
+Table of Contents
+
+ 
+
+RISK FACTORS
+
+ 
+
+An investment in our common stock involves a high degree of risk. You should carefully consider the risks described below and the other information in this prospectus before investing in our common stock. If any of the following risks occur, our business, operating results and financial condition could be seriously harmed. Please note that throughout this prospectus, the words we , our or us refer to the Company and not to the selling stockholders.
+
+ 
+
+WE HAVE A LIMITED OPERATING HISTORY THAT YOU CAN USE TO EVALUATE US, AND THE LIKELIHOOD OF OUR SUCCESS MUST BE CONSIDERED IN LIGHT OF THE PROBLEMS, EXPENSES, DIFFICULTIES, COMPLICATIONS AND DELAYS FREQUENTLY ENCOUNTERED BY A SMALL DEVELOPING COMPANY.
+
+ 
+
+RPM Dental, Inc. is a Delaware Corporation founded on February 25, 2010 and we operate our business through our wholly-owned subsidiary, RPM Dental Systems, LLC, a limited liability company formed in Kentucky on September 15, 2009. We have no significant financial resources and minimal revenues to date. The likelihood of our success must be considered in light of the problems, expenses, difficulties, complications and delays frequently encountered by a small developing company starting a new business enterprise and the highly competitive environment in which we will operate. Since we have a limited operating history, we cannot assure you that our business will be profitable or that we will ever generate sufficient revenues to meet our expenses and support our anticipated activities.
+
+ 
+
+WE WILL REQUIRE FINANCING TO ACHIEVE OUR CURRENT BUSINESS STRATEGY AND OUR INABILITY TO OBTAIN SUCH FINANCING COULD PROHIBIT US FROM EXECUTING OUR BUSINESS PLAN AND CAUSE US TO SLOW DOWN OUR EXPANSION OF OPERATIONS.
+
+ 
+
+We will need to raise additional funds through public or private debt or sale of equity to achieve our current business strategy. Such financing may not be available when needed. Even if such financing is available, it may be on terms that are materially adverse to your interests with respect to dilution of book value, dividend preferences, liquidation preferences, or other terms. Our capital requirements to implement our business strategy will be significant. Moreover, in addition to monies needed to continue operations over the next twelve months, we anticipate requiring additional funds in order to execute our plan of operations. No assurance can be given that such funds will be available or, if available, will be on commercially reasonable terms satisfactory to us. There can be no assurance that we will be able to obtain financing if and when it is needed on terms we deem acceptable.
+
+ 
+
+If we are unable to obtain financing on reasonable terms, we could be forced to delay or scale back our plans for expansion. In addition, such inability to obtain financing on reasonable terms could have a material adverse effect on our business, operating results, or financial condition.
+
+ 
+
+OUR AUDITOR HAS EXPRESSED SUBSTANTIAL DOUBT AS TO OUR ABILITY TO CONTINUE AS A GOING CONCERN.
+
+ 
+
+We are a development stage company. Based on our financial history since inception, our auditor has expressed substantial doubt as to our ability to continue as a going concern. If we cannot obtain sufficient funding, we may have to delay the implementation of our business strategy.
+
+ 
+
+OUR FUTURE SUCCESS IS DEPENDENT, IN PART, ON THE PERFORMANCE AND CONTINUED SERVICES OFJOSHUA MORITA AND DR. LAURA JUSTICE SLONE. WITHOUT THEIR CONTINUED SERVICE, WE MAY BE FORCED TO INTERRUPT OR EVENTUALLY CEASE OUR OPERATIONS.
+
+ 
+
+We are presently dependent to a great extent upon the experience, abilities and continued services of Joshua Morita, our President and Chief Executive Officer and Dr. Laura Justice Slone, our Director. We currently do not have employment agreements with Mr. Morita or Dr. Laura Justice Slone. The loss of either of their services could have a material adverse effect on our business, financial condition or results of operation.
+
+ 
+
+ 
+
+3
+
+Table of Contents
+
+ 
+
+THE OFFERING PRICE OF THE SHARES WAS ARBITRARILY DETERMINED, AND THEREFORE SHOULD NOT BE USED AS AN INDICATOR OF THE FUTURE MARKET PRICE OF THE SECURITIES. THEREFORE, THE OFFERING PRICE BEARS NO RELATIONSHIP TO THE ACTUAL VALUE OF THE COMPANY, AND MAY MAKE OUR SHARES DIFFICULT TO SELL.
+
+ 
+
+Since our shares are not listed or quoted on any exchange or quotation system, the offering price of $0.02 per share for the shares of common stock was arbitrarily determined. The facts considered in determining the offering price were our financial condition and prospects, our limited operating history and the general condition of the securities market. The offering price bears no relationship to the book value, assets or earnings of our company or any other recognized criteria of value. The offering price should not be regarded as an indicator of the future market price of the securities.
+
+ 
+
+WE MAY INCUR SIGNIFICANT COSTS TO BE A PUBLIC COMPANY TO ENSURE COMPLIANCE WITH UNITED STATES CORPORATE GOVERNANCE AND ACCOUNTING REQUIREMENTS AND WE MAY NOT BE ABLE TO ABSORB SUCH COSTS.
+
+ 
+
+We may incur significant costs associated with our public company reporting requirements, costs associated with newly applicable corporate governance requirements, including requirements under the Sarbanes-Oxley Act of 2002 and other rules implemented by the Securities and Exchange Commission. We expect all of these applicable rules and regulations to significantly increase our legal and financial compliance costs and to make some activities more time consuming and costly. We also expect that these applicable rules and regulations may make it more difficult and more expensive for us to obtain director and officer liability insurance and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a result, it may be more difficult for us to attract and retain qualified individuals to serve on our board of directors or as executive officers. We are currently evaluating and monitoring developments with respect to these newly applicable rules, and we cannot predict or estimate the amount of additional costs we may incur or the timing of such costs. In addition, we may not be able to absorb these costs of being a public company which will negatively affect our business operations.
+
+ 
+
+THE LACK OF PUBLIC COMPANY EXPERIENCE OF OUR MANAGEMENT TEAM COULD ADVERSELY IMPACT OUR ABILITY TO COMPLY WITH THE REPORTING REQUIREMENTS OF U.S. SECURITIES LAWS.
+
+ 
+
+Our management team lacks public company experience, which could impair our ability to comply with legal and regulatory requirements such as those imposed by Sarbanes-Oxley Act of 2002. Our senior management has never had responsibility for managing a publicly traded company. Such responsibilities include complying with federal securities laws and making required disclosures on a timely basis. Our senior management may not be able to implement programs and policies in an effective and timely manner that adequately respond to such increased legal, regulatory compliance and reporting requirements, including the establishing and maintaining internal controls over financial reporting. Any such deficiencies, weaknesses or lack of compliance could have a materially adverse effect on our ability to comply with the reporting requirements of the Securities Exchange Act of 1934 which is necessary to maintain our public company status. If we were to fail to fulfill those obligations, our ability to continue as a U.S. public company would be in jeopardy in which event you could lose your entire investment in our company. 
+
+ 
+
+THERE IS NO ASSURANCE OF A PUBLIC MARKET OR THAT THE COMMON STOCK WILL EVER TRADE ON A RECOGNIZED EXCHANGE. THEREFORE, YOU MAY BE UNABLE TO LIQUIDATE YOUR INVESTMENT IN OUR STOCK.
+
+ 
+
+There is no established public trading market for our common stock. Our shares are not and have not been listed or quoted on any exchange or quotation system. There can be no assurance that a market maker will agree to file the necessary documents with FINRA, which operates the OTC Electronic Bulletin Board, nor can there be any assurance that such an application for quotation will be approved or that a regular trading market will develop or that if developed, will be sustained. In the absence of a trading market, an investor may be unable to liquidate their investment.
+
+ 
+
+WE ARE NOT REQUIRED TO FILE PROXY STATEMENTS PURSUANT TO THE SECURITIES EXCHANGE ACT of 1934, WHICH MAY IMPEDE YOUR ABILITY TO OBTAIN INFORMATION ABOUT OUR BUSINESS AND OPERATIONS.
+
+ 
+
+Upon effectiveness of this registration statement we will be subject to Section 15(d) of the Exchange Act unless we file a Form 8A to register our common stock under Section 12 of the Securities Exchange Act of 1934. Pursuant to section 15(d) we are not required to file proxy statements. Proxy statements may be useful to investors in assessing corporate business decisions such as how management is paid and potential conflict-of-interest issues with auditors. Proxy statements may include but are not limited to:
+
+ 
+
+ 
+
+Voting procedure and information;
+
+ 
+
+ 
+
+Background information about the company's nominated directors including relevant history in the company or industry, positions on other corporate boards, and potential conflicts of interest;
+
+ 
+
+ 
+
+Board compensation;
+
+ 
+
+ 
+
+Executive compensation, including salary, bonus, non-equity compensation, stock awards, options, and deferred compensation. Also, information is included about perks such as personal use of company transportation, travel, and tax gross-ups. Many companies will also include pre-determined payout packages if an executive leaves the company; and
+
+ 
+
+ 
+
+Who is on the audit committee, as well as a breakdown of audit and non-audit fees paid to the auditor;
+
+ 
+
+We are subject to section 15(d) of the Exchange Act. We may never file a Form 8A to register our common stock under Section 12 of the Securities Exchange Act of 1934. If we do not file a Form 8A, we are not required to file proxy statements and it may impede your ability to obtain information about our business and operations which may have a negative effect on your investment.
+
+ 
+
+ 
+
+4
+
+Table of Contents
+
+ 
+
+OUR COMMON STOCK IS CONSIDERED A PENNY STOCK, WHICH IS SUBJECT TO RESTRICTIONS ON MARKETABILITY, SO YOU MAY NOT BE ABLE TO SELL YOUR SHARES.
+
+ 
+
+If our common stock becomes tradable in the secondary market, we will be subject to the penny stock rules adopted by the Securities and Exchange Commission that require brokers to provide extensive disclosure to their customers prior to executing trades in penny stocks. These disclosure requirements may cause a reduction in the trading activity of our common stock, which in all likelihood would make it difficult for our shareholders to sell their securities.
+
+ 
+
+Penny stocks generally are equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on the NASDAQ system). Penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document that provides information about penny stocks and the risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, and monthly account statements showing the market value of each penny stock held in the customer s account. The broker-dealer must also make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser s written agreement to the transaction. These requirements may have the effect of reducing the level of trading activity, if any, in the secondary market for a security that becomes subject to the penny stock rules. The additional burdens imposed upon broker-dealers by such requirements may discourage broker-dealers from effecting transactions in our securities, which could severely limit their market price and liquidity of our securities. These requirements may restrict the ability of broker-dealers to sell our common stock and may affect your ability to resell our common stock.
+
+ 
+
+USE OF PROCEEDS
+
+ 
+
+The selling stockholders are selling shares of common stock covered by this prospectus for their own account. We will not receive any of the proceeds from the resale of these shares. We have agreed to bear the expenses relating to the registration of the shares for the selling security holders.
+
+ 
+
+DETERMINATION OF OFFERING PRICE
+
+ 
+
+Since our shares are not listed or quoted on any exchange or quotation system, the offering price of the shares of common stock was arbitrarily determined. The offering price was determined by the price shares were sold to our shareholders in our private placement which was completed on July 30, 2010 pursuant to an exemption under Rule 506 of Regulation D. 
+
+ 
+
+The offering price of the shares of our common stock has been determined arbitrarily by us and does not necessarily bear any relationship to our book value, assets, past operating results, financial condition or any other established criteria of value. The facts considered in determining the offering price were our financial condition and prospects, our limited operating history and the general condition of the securities market. Although our common stock is not listed on a public exchange, we will be filing to obtain a listing on the Over The Counter Bulletin Board (OTCBB) concurrently with the filing of this prospectus. In order to be quoted on the Bulletin Board, a market maker must file an application on our behalf in order to make a market for our common stock. There can be no assurance that a market maker will agree to file the necessary documents with FINRA, which operates the OTC Electronic Bulletin Board, nor can there be any assurance that such an application for quotation will be approved.
+
+ 
+
+In addition, there is no assurance that our common stock will trade at market prices in excess of the initial public offering price as prices for the common stock in any public market which may develop will be determined in the marketplace and may be influenced by many factors, including the depth and liquidity.
+
+ 
+
+DILUTION
+
+ 
+
+The common stock to be sold by the selling shareholders is common stock that is currently issued. Accordingly, there will be no dilution to our existing shareholders.
+
+ 
+
+SELLING SHAREHOLDERS
+
+ 
+
+The shares being offered for resale by the selling stockholders consist of the 1,525,000 shares of our common stock held by 30 shareholders of our common stock which were sold in our Regulation D Rule 506 offering completed on July 30, 2010.
+
+ 
+
+The following table sets forth the name of the selling stockholders, the number of shares of common stock beneficially owned by each of the selling stockholders as of April 18 , 2011 and the number of shares of common stock being offered by the selling stockholders. The shares being offered hereby are being registered to permit public secondary trading, and the selling stockholders may offer all or part of the shares for resale from time to time. However, the selling stockholders are under no obligation to sell all or any portion of such shares nor are the selling stockholders obligated to sell any shares immediately upon effectiveness of this prospectus. All information with respect to share ownership has been furnished by the selling stockholders.
+
+ 
+
+ 
+
+5
+
+Table of Contents
+
+ 
+
+Name of selling stockholder
+
+Shares of common
+
+stock owned prior to
+
+offering
+
+Shares of common
+
+stock to be sold
+
+Shares of common
+
+stock owned
+
+after offering
+
+Percent of common
+
+stock owned
+
+after offering
+
+Jerry Thomas
+
+25,000
+
+25,000
+
+0
+
+0%
+
+Carol Aldy
+
+25,000
+
+25,000
+
+0
+
+0%
+
+Jim Brown
+
+50,000
+
+50,000
+
+0
+
+0%
+
+Joseph Shriver
+
+75,000
+
+75,000
+
+0
+
+0%
+
+Charles D. Porter
+
+25,000
+
+25,000
+
+0
+
+0%
+
+Cynthia Stewart
+
+75,000
+
+75,000
+
+0
+
+0%
+
+Joanna Miller
+
+25,000
+
+25,000
+
+0
+
+0%
+
+Tammy May
+
+50,000
+
+50,000
+
+0
+
+0%
+
+Joe McWilliams
+
+25,000
+
+25,000
+
+0
+
+0%
+
+Jack Stewart
+
+25,000
+
+25,000
+
+0
+
+0%
+
+Bonita Walters
+
+25,000
+
+25,000
+
+0
+
+0%
+
+Renee Todd
+
+75,000
+
+75,000
+
+0
+
+0%
+
+Kyle Bicknell
+
+75,000
+
+75,000
+
+0
+
+0%
+
+Tim Mudd
+
+75,000
+
+75,000
+
+0
+
+0%
+
+Shirley Todd
+
+75,000
+
+75,000
+
+0
+
+0%
+
+Nathaniel Valentine
+
+75,000
+
+75,000
+
+0
+
+0%
+
+Curtis Turley
+
+75,000
+
+75,000
+
+0
+
+0%
+
+Courtney Turley
+
+75,000
+
+75,000
+
+0
+
+0%
+
+Chuck Brown
+
+50,000
+
+50,000
+
+0
+
+0%
+
+Annette Rardin
+
+25,000
+
+25,000
+
+0
+
+0%
+
+Justin Tackett
+
+25,000
+
+25,000
+
+0
+
+0%
+
+Glenn Gentry
+
+25,000
+
+25,000
+
+0
+
+0%
+
+Gary Long
+
+25,000
+
+25,000
+
+0
+
+0%
+
+Kenneth Byrd Jr.
+
+25,000
+
+25,000
+
+0
+
+0%
+
+George Fletcher
+
+75,000
+
+75,000
+
+0
+
+0%
+
+Sharon Betts
+
+75,000
+
+75,000
+
+0
+
+0%
+
+R. David Slone
+
+75,000
+
+75,000
+
+0
+
+0%
+
+Joseph Justice
+
+75,000
+
+75,000
+
+0
+
+0%
+
+Carolyn Edwards
+
+75,000
+
+75,000
+
+0
+
+0%
+
+Eric Lynn
+
+25,000
+
+25,000
+
+0
+
+0%
+
+ 
+
+ 
+
+6
+
+Table of Contents
+
+ 
+
+To our knowledge, none of the selling shareholders or their beneficial owners:
+
+ 
+
+ 
+
+has had a material relationship with us other than as a shareholder at any time within the past three years; or
+
+ 
+
+has ever been one of our officers or directors or an officer or director of our predecessors or affiliates 
+
+ 
+
+ 
+
+are broker-dealers or affiliated with broker-dealers. 
+
+ 
+
+ 
+
+PLAN OF DISTRIBUTION
+
+ 
+
+The selling security holders may sell some or all of their shares at a fixed price of $0.02 per share until our shares are quoted on the OTC Bulletin Board and thereafter at prevailing market prices or privately negotiated prices. Prior to being quoted on the OTCBB, shareholders may sell their shares in private transactions to other individuals. Although our common stock is not listed on a public exchange, we will be filing to obtain a listing on the Over the Counter Bulletin Board (OTCBB) concurrently with the filing of this prospectus. In order to be quoted on the Bulletin Board, a market maker must file an application on our behalf in order to make a market for our common stock. There can be no assurance that a market maker will agree to file the necessary documents with FINRA, which operates the OTC Electronic Bulletin Board, nor can there be any assurance that such an application for quotation will be approved. There can be no assurance that a market maker will agree to file the necessary documents with FINRA, which operates the OTC Electronic Bulletin Board, nor can there be any assurance that such an application for quotation will be approved. However, sales by selling security holder must be made at the fixed price of $0.02 until a market develops for the stock.
+
+ 
+
+Once a market has been developed for our common stock, the shares may be sold or distributed from time to time by the selling stockholders directly to one or more purchasers or through brokers or dealers who act solely as agents, at market prices prevailing at the time of sale, at prices related to such prevailing market prices, at negotiated prices or at fixed prices, which may be changed. The distribution of the shares may be effected in one or more of the following methods:
+
+ 
+
+ 
+
+ordinary brokers transactions, which may include long or short sales,
+
+ 
+
+transactions involving cross or block trades on any securities or market where our common stock is trading, market where our common stock is trading,
+
+ 
+
+through direct sales to purchasers or sales effected through agents,
+
+ 
+
+through transactions in options, swaps or other derivatives (whether exchange listed of otherwise), or exchange listed or otherwise), or
+
+ 
+
+any combination of the foregoing.
+
+ 
+
+In addition, the selling stockholders may enter into hedging transactions with broker-dealers who may engage in short sales, if short sales were permitted, of shares in the course of hedging the positions they assume with the selling stockholders. The selling stockholders may also enter into option or other transactions with broker-dealers that require the delivery by such broker-dealers of the shares, which shares may be resold thereafter pursuant to this prospectus.
+
+ 
+
+Brokers, dealers, or agents participating in the distribution of the shares may receive compensation in the form of discounts, concessions or commissions from the selling stockholders and/or the purchasers of shares for whom such broker-dealers may act as agent or to whom they may sell as principal, or both (which compensation as to a particular broker-dealer may be in excess of customary commissions). Neither the selling stockholders nor we can presently estimate the amount of such compensation. We know of no existing arrangements between the selling stockholders and any other stockholder, broker, dealer or agent relating to the sale or distribution of the shares. We will not receive any proceeds from the sale of the shares of the selling security holders pursuant to this prospectus. We have agreed to bear the expenses of the registration of the shares, including legal and accounting fees, and such expenses are estimated to be approximately $20,000.
+
+ 
+
+Notwithstanding anything set forth herein, no FINRA member will charge commissions that exceed 8% of the total proceeds of the offering.
+
+ 
+
+ 
+
+7
+
+Table of Contents
+
+ 
+
+DESCRIPTION OF SECURITIES
+
+ 
+
+General
+
+ 
+
+Our authorized capital stock consists of 95,000,000 shares of common stock, $0.000001 par value per share and 5,000,000 shares of preferred stock, $0.000001 par value per share. There are no provisions in our charter or by-laws that would delay, defer or prevent a change in our control.
+
+ 
+
+Common Stock
+
+ 
+
+We are authorized to issue 95,000,000 shares of common stock, $0.000001 par value per share. Currently we have 5,525,000 common shares issued and outstanding. 
+
+ 
+
+The holders of our common stock have equal ratable rights to dividends from funds legally available if and when declared by our board of directors and are entitled to share ratably in all of our assets available for distribution to holders of common stock upon liquidation, dissolution or winding up of our affairs. Our common stock does not provide the right to a preemptive, subscription or conversion rights and there are no redemption or sinking fund provisions or rights. Our common stock holders are entitled to one non-cumulative vote per share on all matters on which shareholders may vote.
+
+ 
+
+All shares of common stock now outstanding are fully paid for and non-assessable and all shares of common stock which are the subject of this private placement are fully paid and non-assessable. We refer you to our Articles of Incorporation, Bylaws and the applicable statutes of the state of Delaware for a more complete description of the rights and liabilities of holders of our securities. All material terms of our common stock have been addressed in this section.
+
+ 
+
+Holders of shares of our common stock do not have cumulative voting rights, which means that the holders of more than 50% of the outstanding shares, voting for the election of directors, can elect all of the directors to be elected, if they so choose, and, in that event, the holders of the remaining shares will not be able to elect any of our directors.
+
+ 
+
+Preferred Stock
+
+ 
+
+We are authorized to issue 5,000,000 shares of preferred stock and currently have no shares issued and outstanding. 
+
+ 
+
+Dividends
+
+ 
+
+We have not paid any cash dividends to shareholders. The declaration of any future cash dividends is at the discretion of our board of directors and depends upon our earnings, if any, our capital requirements and financial position, our general economic conditions, and other pertinent conditions. It is our present intention not to pay any cash dividends in the foreseeable future, but rather to reinvest earnings, if any, in our business operations.
+
+ 
+
+Warrants
+
+ 
+
+There are no outstanding warrants to purchase our securities.
+
+ 
+
+Options
+
+ 
+
+There are no options to purchase our securities outstanding.
+
+ 
+
+ 
+
+8
+
+Table of Contents
+
+ 
+
+INTERESTS OF NAMED EXPERTS AND COUNSEL
+
+ 
+
+No expert or counsel named in this prospectus as having prepared or certified any part of this prospectus or having given an opinion upon the validity of the securities being registered or upon other legal matters in connection with the registration or offering of the common stock was employed on a contingency basis, or had, or is to receive, in connection with the offering, a substantial interest, direct or indirect, in the registrant or any of its parents or subsidiaries. Nor was any such person connected with the registrant or any of its parents or subsidiaries as a promoter, managing or principal underwriter, voting trustee, director, officer, or employee.
+
+ 
+
+The financial statements included in this prospectus and the registration statement have been audited by M & K CPAs, PLLC to the extent and for the periods set forth in their report appearing elsewhere herein and in the registration statement, and are included in reliance upon such report given upon the authority of said firm as experts in auditing and accounting.
+
+ 
+
+Item 11. Information with Respect to the Registrant.
+
+ 
+
+Our proceeds from the Regulation D offering totaled $30,500. Our initial cost of becoming a public company is approximately $20,002. We have monthly expenses of approximately $2,500. We generate monthly revenue of approximately $500.
+
+ 
+
+Organization Within Last Five Years
+
+ 
+
+We are a Delaware Corporation incorporated on February 25, 2010 and operate our business through our wholly-owned subsidiary, RPM Dental Systems, LLC, a limited liability company formed in Kentucky on September 15, 2009. Our subsidiary commenced operations as a consulting and marketing company for dentists. RPM Dental Systems, LLC was formed to help medical and other professionals educate their patients via the internet. The parent company, RPM Dental Inc., will focus on assisting dentists in marketing their practice and reaching out to potential patients using the internet and wireless media. RPM Dental Systems, LLC became our wholly owned subsidiary in connection with our desire to expand, raise money and become a publicly traded company. Our website addresses are www.rpmdental.com and www.outrankmydentalcompetition.com.
+
+ 
+
+We issued 4,000,000 founder shares at par value of $0.000001 to Josh Morita in consideration for services provided as our Director and Chief Executive Officer. On July 30, 2010 we completed an offering in which we sold 1,525,000 common shares at $0.02 per share in connection with our private placement.
+
+ 
+
+Description of Business
+
+ 
+
+General
+
+ 
+
+RPM Dental, Inc. is a Delaware Corporation founded on February 25, 2010. Our business is operated through our wholly-owned subsidiary, RPM Dental Systems, LLC, a limited liability company formed in Kentucky on September 15, 2009. On March 23, 2010, Mr. Josh Morita was appointed as our Chief Executive Officer and Chairman of the Board of Directors. On April 1, 2010, we issued four million (4,000,000) shares of common stock par value $.000001 to Josh Morita, Director and Chief Executive Officer. The shares issued to Mr. Morita are subject to Rule 144 of the Securities Act of 1933 and as such, are defined as restricted securities.
+
+Business Model
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+ 
+
+Our business model is to target all dentists across America through our websites www.rpmdental.com and www.outrankmydentalcompetition.com. We generate revenue by offering traditional marketing plans targeted to our client s locale and online marketing plans in which our client s services can be optimized online through Search Engine Marketing ( SEM ). We plan to attract dentists through our website and online advertising, in addition to word of mouth referrals at dental conferences and conventions. As our good will grows, we will research and consider joint venture and affiliate opportunities with dental consultants, dental newsletter writers, and dental business brokers. 
+
+ 
+
+Business Development
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+ 
+
+The core of our business is to offer marketing services to dentists through our websites. Although still under construction at this time, customers buy our services and learn about our business by viewing both of our web sites located at www.rpmdental.com. and www.outrankmydentalcompetition.com.
+
+www.rpmdental.com
+
+We implement our Responsive Patient Marketing campaign ( RPM ) by initiating a consultation between our clients and a Dental Marketing Consultant. After the initial consultation we create a unique marketing plan for our client s practice. We work with our clients to identify key demographics about their existing patient base, and whether or not they are best utilizing marketing materials that are currently in use by their business. We also localize our client s practice by making sure that all their marketing materials are targeted to their local area. Since each locale is different, our research will include ways to attract customers by incorporating what we learn about their local area. In order to obtain the most favorable results for our clients, we develop a step-by-step marketing plan for their business, which highlights the roles of our team and our clients in marketing their practice. This service was announced to the public in December 2009 and has been in operation for over 9 months.
+
+www.outrankmydentalcompetition.com
+
+The goal of www.outrankmydentalcompetition.com is to optimize web page rankings for dentists across the country on search engines such as www.google.com; www.yahoo.com; and www.bing.com. Our goal is to elevate dental practices to the top of the online rankings to noticeably increase their visibility and business. Our unique approach to optimize our client web pages and services is to create a video campaign which includes:
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+ 
+
+ 
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+Two custom videos: We create two videos promoting our clients unique practice and distribute it to appropriate sources.
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+ 
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+Strategic, localized keyword selection: We determine and purchase keyword phrases focused on our client s specific local market, using our "competition domination" keyword study method.
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+ 
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+First page ranking: Our clients practice lands on page one, under those keyword terms for their practice.
+
+The services that are included in our online web page optimization plan include:
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+ 
+
+ 
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+Video Preproduction Phase: We build a client-specific HD photo collection and conduct keyword research and analysis.
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+ 
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+Video Production Phase: We write and record voice tracks as well as mp3 music tracks to create a customized video slideshow that elegantly promote our client s businesses.
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+ 
+
+9
+
+Table of Contents
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+ 
+
+ 
+
+Video Pre-distribution: We prepare 63 authority channels for media distribution and create a custom YouTube channel for our client s practice.
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+ 
+
+ 
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+Video Distribution Phase: We conduct manual upload tests to verify successful video builds and set video distribution engines to autopilot mode. Additionally, we audit upload results and carefully monitor www.google.com for top 10 placement results.
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+ 
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+ 
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+Results Phase: We mail our client their video on DVD, as well as printed ranking results.
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+ 
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+By creating custom videos that promote our clients unique practice to patients and implementing a localized keyword selection for online search engines we optimize our client s online marketing strategy and help them generate more business.
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+Competition
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+ 
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+The services we offer to our clients are generally cheaper than those offered by our competitors. Further, unlike our competitors, we do almost all of the work for our clients, allowing the dentists to focus their time on caring for their patients.
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+ 
+
+Marketing Plan 
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+ 
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+Our marketing strategy is to aggressively enhance, promote and support the dentist in their efforts to educate patients about their practice. This will be accomplished by implementing a traditional marketing plan which focuses on our clients locale, and utilizing very high quality professionally produced video and print media.
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+ 
+
+We will market to dentists online with our websites and search engine advertising such as Google, Facebook, Bing, and Yahoo. We intend to joint venture with publishers of online dental newsletters who have thousands of dentists in their online distribution database such as www.TheWealthyDentist.com or www.DentalInsiders.com. We plan to advertise online and in hardcopy with e-zines, websites and magazines like www.DentalTown.com.
+
+ 
+
+Our Director is a member or on the board of numerous national dental organizations, including American Academy of Cosmetic Dentistry (www.aacd.com), American Association of Women Dentists (www.aawd.org), Academy of General Dentistry (www.agd.org), and American Academy of Implant Dentistry (www.aaid-implant.org). We plan to use our director s contacts in the industry to help market our business operations.
+
+ 
+
+Sales Strategy
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+ 
+
+RPM Dental's sales strategy is to utilize online marketing and websites to generate repeat, referral and new business. We will offer free consultations to dentists, evaluating their current marketing plan. This will allow us to collect contact information and to continue marketing to our contacts. We will reach out to established dental consultants and online newsletter writers such as www.TheWealthyDentist.com and www.DentalInsiders.com, and offer affiliate and joint venture opportunities to rapidly grow sales.
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+ 
+
+In this section we outline our plan of operation for the remainder of the fiscal year and the first six (6) months of the next fiscal year.
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+ 
+
+Timeline Business Start-up:
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+ 
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+Remainder of the fiscal year:
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+ 
+
+ 
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+Legal procedures including but not limited to filing papers of incorporation and SEC compliance.
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+ 
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+Obtaining all necessary licenses and permits
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+ 
+
+Website development: finalize branding
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+ 
+
+Establishing key people and points of contact
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+ 
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+First six months of the next fiscal year:
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+ 
+
+ 
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+Purchase of materials: office hardware, software
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+ 
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+Start date for marketing activities
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+ 
+
+Opening date for business
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+ 
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+Task 1: Legal procedures: to fully establish RPM Dental as a web based business
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+ 
+
+Open bank accounts and credit/debit Merchant, PayPal, and dental payment systems.
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+ 
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+Task 2: Licenses and Permits
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+ 
+
+Further business permits or licenses may not be required, but due diligence must be done.
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+ 
+
+Task 3: Website Development
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+ 
+
+Establish workflow turnaround time for placing and receiving inquiries and orders from users; ensuring all linkages are fluid.
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+ 
+
+Test and finalize methods of user interaction.
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+ 
+
+Test and finalize implementation of branding with website.
+
+ 
+
+ 
+
+10
+
+Table of Contents
+
+ 
+
+Task 4: Work on Marketing Plan
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+ 
+
+Decide initial marketing channels and strategy.
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+ 
+
+We believe our cash assets and the proceeds from the implementation of our sales strategy will satisfy our cash requirements for the remainder of the year and the first quarter of our next fiscal year. If we do not generate sufficient revenue after the first quarter of our next fiscal year it may be necessary to raise additional funds to meet the expenditures required to operate our business. Specifically, we may need additional funds to market our website, maintain our domain name, update our web design and pay costs associated with being a public company. If it is necessary to raise additional funds we plan to conduct an additional private offering.
+
+ 
+
+We do not anticipate initiating any material product research and development, material acquisition of plants and equipment, or material changes in the number of employees during the period covered in our plan of operations.
+
+ 
+
+DESCRIPTION OF PROPERTY
+
+ 
+
+Our business office is located at 3285 Blazer Parkway, Suite 200, Lexington, Kentucky 40509 and our telephone number is (859) 552-6204. There are no material terms or arrangements relating to our use of business offices between our Company and Pearson, Justice and Coffman and Dr. Laura Justice Sloan. Our director, Dr. Laura Justice Sloan of Pearson, Justice & Coffman DMD and Associates provides our office space at no cost.
+
+ 
+
+LEGAL PROCEEDINGS
+
+ 
+
+Pursuant to Item 401 (f) of Regulation S-K there are no events that occurred during the past ten (10) years that are material to an evaluation of the ability or integrity of any director, person nominated to become a director or executive officer of the registrant:
+
+ 
+
+ 
+
+No petition under the Federal bankruptcy laws or any state insolvency law was filed by or against, or a receiver, fiscal agent or similar officer was appointed by a court for the business or property of such person, or any partnership in which he was a general partner at or within two years before the time of such filing, or any corporation or business association of which he was an executive officer at or within two years before the time of such filing;
+
+ 
+
+The registrant has not been convicted in a criminal proceeding and is not named subject of a pending criminal proceeding
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+ 
+
+Such registrant was not the subject of any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from, or otherwise limiting, the following activities:
+
+o 
+
+Acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the Commodity Futures Trading Commission, or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity;
+
+o 
+
+Engaging in any type of business practice; or
+
+o 
+
+Engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of Federal or State securities laws or Federal commodities laws;
+
+ 
+
+Such registrant was not the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any Federal or State authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any activity described in Regulation S-K, Item 401 paragraph (f)(3)(i) entitled Involvement in Certain Legal Proceedings, or to be associated with persons engaged in any such activity;
+
+ 
+
+Such registrant was not found by a court of competent jurisdiction in a civil action or by the Commission to have violated any Federal or State securities law, and the judgment in such civil action or finding by the Commission has not been subsequently reversed, suspended, or vacated;
+
+ 
+
+Such registrant was not found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any Federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated;
+
+ 
+
+Such registrant was not the subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of:
+
+o 
+
+Any Federal or State securities or commodities law or regulation; or
+
+o 
+
+Any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or
+
+o 
+
+Any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or
+
+ 
+
+Such registrant was not the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.
+
+ 
+
+MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
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+ 
+
+There is presently no public market for our shares of common stock. We anticipate applying for trading of our common stock on the Over the Counter Bulletin Board upon the effectiveness of the registration statement of which this prospectus forms apart. However, we can provide no assurance that our shares of common stock will be traded on the Bulletin Board or, if traded, that a public market will materialize.
+
+ 
+
+Holders of Our Common Stock
+
+ 
+
+As of the date of this registration statement, we had 31 shareholders of our common stock.
+
+ 
+
+ 
+
+ 
+
+11
+
+Table of Contents
+
+ 
+
+Rule 144 Shares
+
+ 
+
+As of April 18 , 2011, there are no shares of our common stock which are currently available for resale to the public and in accordance with the volume and trading limitations of Rule 144 of the Act. As of April 18 , 2011, 1,525,000 shares of our common stock are held by the 30 shareholders who purchased their shares in the Regulation D 506 offering by us will become available for resale to the public. Sales under Rule 144 are subject availability of current public information about the Company.
+
+ 
+
+Stock Option Grants
+
+ 
+
+To date, we have not granted any stock options.
+
+ 
+
+Registration Rights
+
+ 
+
+We have not granted registration rights to the selling shareholders or to any other persons.
+
+ 
+
+AVAILABLE INFORMATION
+
+ 
+
+We have filed with the SEC a registration statement on
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2011/SMBC_southern_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/SMBC_southern_prospectus_summary.txt
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@@ -0,0 +1 @@
+S-1/A 1,000,000 Shares Common Stock ________________________________ PROSPECTUS ___________________________ [ ], 2011 PART II INFORMATION NOT REQUIRED IN PROSPECTUS Item 13. Other Expenses of Issuance and Distribution Set forth below is an estimate of the amount of fees and expenses (other than underwriting discounts and commissions) to be incurred in connection with the issuance of the shares by Southern Missouri Bancorp, Inc. (the Registrant ): SEC Filing Fee $ 3,338 Registrant s Counsel Fees and Expenses 295,000 Registrant s Accounting Fees and Expenses 50,000 Underwriter's Legal Fees and Expenses 175,000 Printing and EDGAR 18,000 FINRA Filing Fee 3,375 Other 10,000 TOTAL $ 554,713 Item 14. Indemnification of Directors and Officers Section 351.355 of the Missouri General and Business Corporation Law provides for permissible and mandatory indemnification of directors, officers, employees and agents in certain circumstances. Section 351.355.1 provides that a corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation), by reason of the fact that the person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another entity, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by the person in connection with such action, suit or proceeding if the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe the person=s conduct was unlawful. Section 351.355.1 further provides that the termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which the person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that the person=s conduct was unlawful. Section 351.355.2 provides that a corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that the person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another entity against expenses (including attorneys' fees) and amounts paid in settlement actually and reasonably incurred by the person in connection with the defense or settlement of such action or suit if the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the corporation and except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable for negligence or misconduct in the performance of the person s duties to the corporation unless and only to the extent that the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the court shall deem proper. Section 351.355.3 provides that except to the extent otherwise provided in the corporation s articles of incorporation or bylaws, to the extent that a director, officer, employee or agent of the corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in Sections 351.355.1 and 351.355.2, or in defense of any claim, issue or matter therein, that person shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by such person in connection therewith. II-1 Section 351.355.4 provides that any indemnification under Sections 351.355.1 and 351.355.2 (unless ordered by a court) shall be made by the corporation only as authorized in the specific case upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstances because the person has met the applicable standard of conduct set forth in Section 351.355. Section 351.355.5 provides that expenses incurred in defending any civil, criminal, administrative or investigative action, suit or proceeding may be paid by the corporation in advance of the final disposition of the action, suit or proceeding upon receipt of an undertaking to repay the amount if it is ultimately determined that the person is not entitled to be indemnified by the corporation. Section 351.355.6 provides that indemnification and advancement of expenses provided under Section 351.355 are not exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under the corporation s articles of incorporation or bylaws, or any agreement, vote of shareholders or disinterested directors or otherwise. Section 351.355.8 provides that a corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against such person and incurred by such person in any such capacity, or arising out of such person=s status as such, whether or not the corporation would have the power to indemnify such person against such liability under Section 351.355. Article IX of the Registrant s articles of incorporation provides that the Registrant shall indemnify any present or former director or executive officer of the Registrant or any subsidiary of the Registrant against any and all expenses, including attorneys' fees), judgments, fines and amounts paid in settlement and reasonably incurred by such person in connection with any threatened, pending or completed civil, criminal, administrative or investigative action, suit, proceeding or claim (including any action by or in the right of the Registrant or a subsidiary) by reason of the fact that such person is or was serving in such capacity; provided, however, that no such person shall be entitled to any indemnification pursuant to Article IX on account of (i) conduct which is finally adjudged to have been knowingly fraudulent or deliberately dishonest or to have constituted willful misconduct, or (ii) an accounting for profits pursuant to Section 16(b) of the Securities Exchange Act of 1934, as amended. Item 15. Recent Sales of Unregistered Securities Not Applicable. Item 16. Exhibits and Financial Statement Schedules (a) List of Exhibits: See the Exhibit Index filed as part of this Registration Statement. (b) Financial Statement Schedules: No financial statement schedules are filed because the required information is not applicable or is included in the consolidated financial statements or related notes. Item 17. Undertakings The undersigned Registrant hereby undertakes that: (1)For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective. (2)For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. II-2 Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act, and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. II-3 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Poplar Bluff, State of Missouri, on the 7 th day of November , 2011. SOUTHERN MISSOURI BANCORP, INC. By: /s/ Greg A. Steffens Greg A. Steffens President and Chief Executive Officer (Duly Authorized Representative) Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated. /s/ Greg A. Steffens * Greg A. Steffens Matthew T. Funke President and Chief Executive Officer and Director Chief Financial Officer (Principal Executive Officer) (Principal Financial and Accounting Officer) Date: November 7 , 2011 Date: November 7 , 2011 * * Samuel H. Smith L. Douglas Bagby Chairman of the Board of Directors Vice Chairman and Director Date: November 7 , 2011 Date: November 7 , 2011 * * Ronnie D. Black Rebecca McLane Brooks Director Director Date: November 7 , 2011 Date: November 7 , 2011 * * Charles R. Love Charles R. Moffitt Director Director Date: November 7 , 2011 Date: November 7 , 2011 * * Dennis C. Robison Sammy A. Schalk Director Director Date: November 7 , 2011 Date: November 7 , 2011 David J. Tooley Director Date: *By: /s/ Greg A. Steffens Greg A. Steffens Attorney-in-fact EXHIBIT INDEX Exhibit Number Document 1.0 Form of Underwriting Agreement* 3.1(i) Articles of Incorporation of the Registrant (filed as an exhibit to the Registrant s Annual Report on Form 10-KSB for the fiscal year ended June 30, 1999 and incorporated herein by reference) 3.1(ii) Certificate of Designation for the Registrant s Senior Non-Cumulative Perpetual Preferred Stock, Series A (filed as an exhibit to the Registrant s Current Report on Form 8-K filed on July 26, 2011 and incorporated herein by reference) 3.2 Bylaws of the Registrant (filed as an exhibit to the Registrant s Current Report on Form 8-K filed on December 6, 2007 and incorporated herein by reference) 5.0 Opinion of Silver, Freedman & Taff, L.L.P. regarding the legality of the shares being registered* 10.1 2008 Equity Incentive Plan (attached to the Registrant s definitive proxy statement filed on September 19, 2008 and incorporated herein by reference) 10.2 2003 Stock Option and Incentive Plan (attached to the Registrant s definitive proxy statement filed on September 17, 2003 and incorporated herein by reference) 10.3 1994 Stock Option and Incentive Plan (attached to the Registrant s definitive proxy statement filed on October 21, 1994 and incorporated herein by reference) 10.4 Management Recognition and Development Plan (attached to the Registrant s definitive proxy statement filed on October 21, 1994 and incorporated herein by reference) 10.5(i) Director s Retirement Agreement with Samuel H. Smith (filed as an exhibit to the Registrant s Annual Report on Form 10-KSB for the fiscal year ended June 30, 1995 and incorporated herein by reference) 10.5(ii) Director s Retirement Agreement with Sammy A. Schalk (filed as an exhibit to the Registrant s Quarterly Report on Form 10-QSB for the quarter ended December 31, 2000 and incorporated herein by reference) 10.5(iii) Director s Retirement Agreement with Ronnie D. Black (filed as an exhibit to the Registrant s Quarterly Report on Form 10-QSB for the quarter ended December 31, 2000 and incorporated herein by reference) 10.5(iv) Director s Retirement Agreement with L. Douglas Bagby (filed as an exhibit to the Registrant s Quarterly Report on Form 10-QSB for the quarter ended December 31, 2000 and incorporated herein by reference) 10.5(v) Director s Retirement Agreement with Rebecca McLane Brooks (filed as an exhibit to the Registrant s Quarterly Report on Form 10-QSB for the quarter ended December 31, 2004 and incorporated herein by reference) 10.5(vi) Director s Retirement Agreement with Charles R. Love (filed as an exhibit to the Registrant s Quarterly Report on Form 10-QSB for the quarter ended December 31, 2004 and incorporated herein by reference) 10.5(vii) Director s Retirement Agreement with Charles R. Moffitt (filed as an exhibit to the Registrant s Quarterly Report on Form 10-QSB for the quarter ended December 31, 2004 and incorporated herein by reference) 10.5(viii) Director s Retirement Agreement with Dennis C. Robison (filed as an exhibit to the Registrant s Quarterly Report on Form 10-QSB for the quarter ended December 31, 2008 and incorporated herein by reference) 10.6 Employment Agreement with Greg Steffens (filed as an exhibit to the Registrant's Annual Report on Form 10-KSB for the fiscal year ended June 30, 1999 and incorporated herein by reference) 21.0 Subsidiaries of the Registrant (filed as an exhibit to the Registrant s Annual Report on Form 10-K for the fiscal year ended June 30, 2011 and incorporated herein by reference) 23.1 Consent of Silver, Freedman & Taff, L.L.P. (contained in opinion included as Exhibit 5.0)* 23.2 Consent of BKD, LLP 24.0 Power of Attorney (set forth on signature page)* __________________ *Previously filed. UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 PRE-EFFECTIVE AMENDMENT NO. 3 TO FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 SOUTHERN MISSOURI BANCORP, INC. (Exact name of registrant as specified in its charter) Missouri 6022 43-1665523 (State or other jurisdiction of incorporation or organization) (Primary Standard Industrial Classification Code Number) (I.R.S. Employer Identification No.) 531 Vine Street, Poplar Bluff, Missouri 63901 (573) 778-1800 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) Greg A. Steffens, President and Chief Executive Officer 531 Vine Street, Poplar Bluff, Missouri 63901 (573) 778-1800 (Name, address, including zip code, and telephone number, including area code, of agent for service) Copies to: Martin L. Meyrowitz, P.C. Kevin M. Houlihan, Esq. Craig M. Scheer, P.C. William H. Levay, Esq. SILVER, FREEDMAN & TAFF, L.L.P. PATTON BOGGS LLP (a limited liability partnership including professional corporations) 2550 M Street, N.W. 3299 K Street, N.W., Suite 100 Washington, D.C. 20037 Washington, DC 20007 (202) 457-6000 (202) 295-4500 Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box. [ ] If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b- 2 of the Exchange Act. (Check one): Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [ ] Smaller reporting company [X] (Do not check if a smaller reporting company) CALCULATION OF REGISTRATION FEE Title of Each Class of Securities to be Registered Proposed Maximum Aggregate Offering Price Amount of Registration Fee Common Stock, par value $.01 per share $28,750,000(1)(2) $3,338(3) _______________________ (1) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o) under the Securities Act. (2) Includes the offering price of shares that the underwriter has the option to purchase to cover over-allotments, if any. (3) Previously paid. The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED NOVEMBER 7 , 2011 PRELIMINARY PROSPECTUS 1,000,000 Shares Common Stock We are offering 1,000,000 shares of our common stock, par value $0.01 per share, which is equal to 32.3 % of our total outstanding shares of common stock as of November 3 , 2011 (giving effect to 1,000,000 shares issued in the offering) , at a price of $[ ] per share. Our common stock is currently listed on the Nasdaq Global Market under the symbol SMBC. On November 3 , 2011, the ^closing price of our common stock on the Nasdaq Global Market was $ 23.25 per share. Investing in our common stock involves risks. See Risk Factors beginning on page 14 of this prospectus to read about risks you should carefully consider before making your investment decision. Per Share Total Public offering price $ $ Underwriting discounts and commissions(1) $ $ Proceeds to us, before expenses $ $ _____________ (1) See Underwriting beginning on page 40 for disclosure regarding the underwriting discounts and expenses payable to the underwriter by us. The shares of common stock are being offered through the underwriter on a firm commitment basis. We have granted the underwriter a 30 day option to purchase up to 150,000 additional shares of common stock at the same price, and on the same terms, solely to cover over-allotments, if any. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. The shares of common stock are not savings accounts, deposits or other obligations of our bank subsidiary or any of our non-banking subsidiaries and are not insured by the Federal Deposit Insurance Corporation or any other government agency. The underwriter expects to deliver the shares of common stock in book-entry form only, through the facilities of The Depository Trust Company, against payment on or about [ ], 2011, subject to customary closing conditions. The date of this prospectus is [ ], 2011 TABLE OF CONTENTS Page FORWARD-LOOKING STATEMENTS ii ABOUT THIS PROSPECTUS iii PROSPECTUS SUMMARY 1
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+Prospectus Summary The following summary highlights information contained elsewhere in this prospectus and does not contain all of the information you should consider in making your investment decision. You should read this summary together with the more detailed information, including our financial statements and the related notes, elsewhere in this prospectus. You should carefully consider, among other things, the matters discussed in Risk Factors and Management s Discussion and Analysis of Financial Condition and Results of Operations before making an investment decision. Unless otherwise indicated, Sequans Communications S.A. , Sequans Communications , the Company , we , us and our refer to Sequans Communications S.A. and its consolidated subsidiaries. Overview We are a leading fabless designer, developer and supplier of 4G semiconductor solutions for wireless broadband applications. Our solutions incorporate baseband processor and radio frequency, or RF, transceiver integrated circuits, or ICs, along with our proprietary signal processing techniques, algorithms and software stacks. Our high performance ICs deliver high throughput, low latency, strong signal reach, low power consumption and high reliability in a small form factor and at a low cost. We leverage our deep understanding of system-level architecture and our advanced wireless signal processing and RF expertise to provide 4G semiconductor solutions for a wide range of wireless broadband devices. Our solutions serve as the core wireless broadband communications platform in these devices, including smartphones; USB dongles; portable routers; embedded wireless modems for laptops, netbooks, tablets, and other consumer multimedia and industrial devices; consumer premises equipment, or CPE, such as residential gateways; and basestations. Since 2005 through 2010, we have shipped over 6.3 million semiconductor solutions, which have been deployed by leading wireless carriers around the world. Our solutions are incorporated into the highly successful HTC EVO 4G, the first mass-market 4G smartphone, which was launched by Sprint in the United States in June 2010, as well as the HTC EVO Shift smartphone, launched by Sprint in January 2011. In February 2011, KDDI announced that the HTC EVO WiMAX smartphone, which also incorporates our solutions, is expected to be introduced in Japan in April 2011. In addition, on March 22, 2011, Sprint announced the HTC EVO View 4G 7 tablet computer and the HTC EVO 3D smartphone, both of which incorporate our solutions. According to ABI Research, the number of 4G chipsets shipped annually will increase from 14.5 million in 2010 to 245.9 million in 2014, representing a compound annual growth rate, or CAGR, of approximately 103%. Our semiconductor solutions support the two commonly accepted wireless broadband 4G protocols, Worldwide Interoperability for Microwave Access, or WiMAX, and Long-Term Evolution, or LTE. Our products have been deployed by many wireless carriers worldwide, including 7 of the 10 largest WiMAX carriers globally by number of subscribers according to BWA Research UK. Given that WiMAX and LTE share a common technology platform, we have also leveraged our leadership in WiMAX to successfully develop LTE semiconductor solutions that are being deployed globally as existing 2G and 3G networks are upgraded to 4G. Our LTE solutions are currently in trials with wireless carriers in the United States and China, where China Mobile has successfully demonstrated its LTE capabilities using our solution at the World Expo in Shanghai and at the Asian Games in Guangzhou, which were both held in 2010. Our solutions are incorporated into devices sold by many leading original equipment manufacturers, or OEMs, and original design manufacturers, or ODMs, including HTC, Huawei, MitraStar Technology (a spin-off of Zyxel), Gemtek, Sagemcom, Teltonika, Accton Wireless Broadband and ZTE. For 2008 and 2010, our total revenue increased from $22.7 million to $68.5 million and our annual net loss decreased from $8.3 million to $2.7 million. One customer, HTC, accounted for 66% of our total revenue in 2010. Industry Overview The use of wireless communications devices has increased dramatically in the past decade, and mobile phones and wireless data services have become an integral part of day-to-day communication. Wireless technologies have evolved through successive generations of protocols driven by the need for more efficient networks with Table of Contents The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state or other jurisdiction where the offer or sale is not permitted. Subject to Completion, April 14, 2011 Preliminary Prospectus American Depositary Shares Representing 9,166,666 Ordinary Shares This is the initial public offering of American Depositary Shares, or ADSs, representing ordinary shares of Sequans Communications S.A., a French company. Each ADS will represent one ordinary share, nominal value 0.02 per share. We are offering 6,666,666 ADSs and the selling shareholders identified in this prospectus are offering an aggregate of 2,500,000 ADSs. We will not receive any proceeds from the sale of the ADSs by the selling shareholders. Prior to this offering, there has been no public market for the ADSs or our ordinary shares. The estimated initial public offering price is between $11.00 and $13.00 per ADS. We have applied to list the ADSs on the New York Stock Exchange, or NYSE, under the symbol SQNS . Investing in the ADSs involves a high degree of risk. See Risk Factors beginning on page 9 of this prospectus. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed on the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. Per ADS Total Initial public offering price $ $ Underwriting discounts and commissions $ $ Proceeds to us, before expenses $ $ Proceeds to the selling shareholders, before expenses $ $ We and the selling shareholders have granted the underwriters an option to purchase up to an aggregate of 1,375,000 additional ADSs at the initial public offering price, less underwriting discounts and commissions, within 30 days from the date of this prospectus to cover over-allotments, if any. The underwriters are offering the ADSs as set forth under Underwriting . Delivery of the ADSs will be made on or about , 2011. UBS Investment Bank Jefferies Baird Needham & Company, LLC Natixis The date of this prospectus is , 2011. Table of Contents greater bandwidth and adequate capacity to handle a rising number of subscribers and increasing usage of data services. Unable to effectively address the fast growing demand for wireless broadband services in a cost-effective manner using 2G and 3G networks that are constrained by legacy technologies that were originally designed for voice traffic, many wireless carriers are moving to 4G networks using WiMAX or LTE, which provide peak downlink data capacity of 46 megabits per second, or Mbps, and of 173 Mbps, respectively, to enable higher data throughput. 4G architecture represents a fundamental technological change in the design of wireless communication networks. 2G and 3G networks were originally designed to support voice communications and utilize older circuit switching technology based on wireline telephone system design concepts. Circuit switching technology is inflexible as it requires a continuous dedicated connection between the source and destination of the communication, and is inefficient as network capacity is wasted on connections that are established but not in continuous use. 4G, which employs concepts such as packet switching and internet protocol, or IP, improves the efficiency, scalability and performance of data networks. Packet switching technology makes more efficient use of network capacity for data communication by transmitting data in packets over multiple shared connections as compared to a dedicated connection. Orthogonal Frequency Division Multiple Access, or OFDMA, and Multiple-Input Multiple-Output, or MIMO, have emerged as key technologies that increase efficient use of spectrum, signal reliability, throughput and range in 4G networks compared to 2G and 3G networks. Both commonly accepted 4G protocols, WiMAX and LTE, are IP-based, share the same OFDMA and MIMO technologies and have very similar radio designs, coding schemes and signal processing algorithms. Suppliers of 4G semiconductor solutions face significant execution challenges due to the ongoing evolution of wireless protocols, rapid product lifecycles and extensive certification processes, which require sustained product development excellence and ongoing collaboration with carriers to meet technology needs. In addition, high performance standards, system integration, power efficiency, shrinking form factors and the need to reduce cost create challenges that 4G semiconductor solution suppliers must overcome. Our Competitive Strengths We believe the following competitive strengths enable us to address the challenges faced by 4G wireless semiconductor providers: A strong track record of execution in 4G. We were an early provider of WiMAX products and have been shipping our wireless broadband semiconductor solutions since 2005. We believe we have a strong position in the WiMAX market and are an early leader in the LTE market; Understanding of wireless system-level architecture and expertise in signal processing. We have an end-to-end understanding of wireless system-level architectures and networks based on our team s deep experience and expertise in a broad range of wireless technologies including 2G, 3G, Wi-Fi, WiMAX and LTE; High performance solutions for 4G applications. We offer high performance solutions for use in a wide variety of 4G-enabled devices; and Fully integrated 4G solutions. We believe that we provide the industry s most highly integrated 4G semiconductor solutions integrating baseband, RF and other functionality into a single die or package. Our Strategy Our goal is to be the leading provider of next-generation wireless semiconductors by providing best-in-class solutions that enable mass-market adoption of 4G technologies worldwide. Key elements of our strategy include: Maintaining and extending our market position in WiMAX. We intend to maintain our market position in WiMAX by growing our revenues through continued penetration into 4G WiMAX devices that are deployed by large wireless carriers and the expansion of our sales in CPE broadband wireless applications for emerging markets; Table of Contents You should rely only on the information contained in this prospectus or in any free writing prospectus prepared by or on behalf of us and delivered or made available to you. We have not authorized anyone to provide you with information that is different from that contained in this prospectus or contained in any free writing prospectus prepared by or on behalf of us and delivered or made available to you. We are offering to sell, and seeking offers to buy, ADSs only in jurisdictions where offers and sales are permitted. The information in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of the ADSs. Our business, financial condition, results of operations and prospects may have changed since that date. Table of Contents Prospectus Summary 1
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+Prospectus summary This summary highlights information contained elsewhere in this prospectus. This summary does not contain all of the information you should consider before investing in our common stock. You should read this entire prospectus carefully, especially the risks of investing in our common stock discussed under Risk factors beginning on page 16, and our consolidated financial statements and the accompanying notes, before making an investment decision. Unless the context otherwise requires, in this prospectus, (1) SS C Holdings means SS C Technologies Holdings, Inc., our top-level holding company that was formerly known as Sunshine Acquisition Corporation, (2) SS C means SS C Technologies, Inc., our primary operating company and a direct wholly owned subsidiary of SS C Holdings, (3) we, us and our mean (a) prior to November 23, 2005, SS C and its consolidated subsidiaries and (b) on and after November 23, 2005, SS C Holdings and its consolidated subsidiaries, including SS C, and (4) references to our common stock include both shares of our common stock and shares of our Class A non-voting common stock. Overview We are a leading provider of mission-critical, sophisticated software products and software-enabled services that allow financial services providers to automate complex business processes and effectively manage their information processing requirements. Our portfolio of software products and rapidly deployable software-enabled services allows our clients to automate and integrate front-office functions such as trading and modeling, middle-office functions such as portfolio management and reporting, and back-office functions such as accounting, performance measurement, reconciliation, reporting, processing and clearing. Our solutions enable our clients to focus on core operations, better monitor and manage investment performance and risk, improve operating efficiency and reduce operating costs. We provide our solutions globally to more than 4,500 clients, principally within the institutional asset management, alternative investment management and financial institutions vertical markets. We provide the global financial services industry with a broad range of software-enabled services, which consist of software-enabled outsourcing services and subscription-based on-demand software that are managed and hosted at our facilities, and specialized software products, which are deployed at our clients facilities. Our software-enabled services, which combine the strengths of our proprietary software with our domain expertise, enable our clients to contract with us to provide many of their mission-critical and complex business processes. For example, we utilize our software to offer comprehensive fund administration services for alternative investment managers, including fund manager services, transfer agency services, fund of funds services, tax processing and accounting. We offer clients the flexibility to choose from multiple software delivery options, including on-premise applications and hosted, multi-tenant or dedicated applications. Our principal software products and software-enabled services include: Portfolio Management/Accounting Fund Administration Services Financial Modeling Loan Management/Accounting Trading/Treasury Operations Money Market Processing Property Management Our business model is characterized by substantial contractually recurring revenues, high operating margins and significant cash flow. We generate revenues primarily through our high-value software-enabled services, which are typically sold on a long-term subscription basis and Table of Contents integrated into our clients business processes. Our software-enabled services are generally provided under non-cancelable contracts with initial terms of one to five years that require monthly or quarterly payments and are subject to automatic annual renewal at the end of the initial term unless terminated by either party. We also generate revenues by licensing our software to clients through either perpetual or term licenses and by selling maintenance services. Maintenance services are generally provided under annually renewable contracts. As a consequence, a significant portion of our revenues consists of subscription payments and maintenance fees and is contractually recurring in nature. Our pricing typically scales as a function of our clients assets under management, the complexity of asset classes managed and the volume of transactions. Our contractually recurring revenue model helps us minimize the fluctuations in revenues and cash flows typically associated with up-front, perpetual software license revenues and enhances our ability to manage costs. Our contractually recurring revenues, which we define as our software-enabled services and maintenance revenues, increased as a percentage of total revenues from 52% in the year ended December 31, 2000 to 85% in the year ended December 31, 2009 and to 86% in the nine months ended September 30, 2010. We have experienced average revenue retention rates in each of the last five years of greater than 90% on our software-enabled services and maintenance contracts for our core enterprise products. Through a combination of organic growth and acquisitions, we generated revenues of $270.9 million for the year ended December 31, 2009 as compared to revenues of $95.9 million for the year ended December 31, 2004, which was the last reported fiscal year before the going-private transaction described below. Our revenues increased from $199.9 million in the nine months ended September 30, 2009 to $242.8 million in the nine months ended September 30, 2010. We generated 83% of our revenues in the nine months ended September 30, 2010 from clients in North America and 17% from clients outside North America. Our revenues are highly diversified, with our largest client in the nine months ended September 30, 2010 accounting for less than 5% of our revenues. Our industry We serve a number of vertical markets within the financial services industry, including alternative investment funds, investment management firms, insurance companies, banks and brokerage firms. The financial crisis negatively affected each of these markets and contributed to a significant decline in asset value. In particular, alternative investment funds, such as hedge funds, experienced a shift from equities to money market funds, treasuries and other liquid instruments. These factors all contributed to reducing revenues among the financial services firms, which, in turn, affected their access to credit, spending ability and, in some cases, their long-term viability. With improvements in the financial services industry since the height of the financial crisis, we have experienced increased demand for our products and services, as evidenced by the increase in our organic revenues in the nine months ended September 30, 2010 from the comparable period of 2009, and we expect to benefit from continued improvements in the financial services industry. Asset Classes and Securities Products Growing in Volume and Complexity. Investment professionals must increasingly track and invest in numerous types of asset classes far more complex than traditional equity and debt instruments. These assets require more sophisticated systems to automate functions such as trading and modeling, portfolio management, accounting, performance measurement, reconciliation, reporting, processing and clearing. Increasing Regulatory Requirements and Investor Demand for Transparency. Recent market and economic conditions have led to new legislation and numerous proposals for changes in the Table of Contents regulation of the financial services industry. Several high-profile scandals have also led to increased investor demand for transparency. In addition, as the financial services industry continues to grow in complexity, we anticipate regulatory oversight will continue to impose new demands on financial services providers. The expectation is that hedge funds may start to experience similar regulatory pressures. In addition, financial services providers continue to face increasing regulatory oversight from domestic organizations such as the Financial Industry Regulatory Authority, U.S. Treasury Department, U.S. Securities and Exchange Commission, New York Stock Exchange, National Association of Insurance Commissioners and U.S. Department of Labor as well as foreign regulatory bodies such as the Office of Supervision of Financial Institutions in Ottawa, Canada, Financial Services Association in London, England and Ministry of Finance in Tokyo, Japan. Increasing Willingness to Implement Solutions from Independent Software Vendors and Outsource IT Operations. Rather than internally developing applications that automate business processes, many financial services providers are implementing advanced software solutions from independent software vendors to replace their current systems, which are often cumbersome, time-consuming to operate and expensive to implement, customize, update and support. Additionally, financial services providers globally are outsourcing a growing percentage of their business processes to benefit from best-in-class process execution, focus on core operations, quickly expand into new markets, reduce costs, streamline organizations, handle increased transaction volumes and ensure system redundancy. Intense Global Competition Among Financial Services Providers. Competition within the financial services industry has become intense as financial services providers expand into new markets and offer new services to their clients. In response to these increasingly competitive conditions worldwide, financial services organizations seek to rapidly expand into new markets, manage operational enterprise risk, increase front-office productivity, and drive cost savings by utilizing software to automate and integrate their mission-critical and labor intensive business processes. Our competitive strengths We believe that our position in the marketplace results from several key competitive strengths, including: Enhanced Capability Through Software Ownership. We use our proprietary software products and infrastructure to provide our software-enabled services, strengthening our overall operating margins. Because we primarily use our own proprietary software in the execution of our software-enabled services and generally own and control our products source code, we can quickly identify and deploy product improvements and respond to client feedback. Broad Portfolio of Products and Services Focused on Financial Services Organizations. Our broad portfolio of over 60 software products and software-enabled services allows professionals in the financial services industry to efficiently and rapidly analyze and manage information, increase productivity, devote more time to critical business decisions and reduce costs. We provide highly flexible, scalable and cost-effective solutions that enable our clients to track complex securities, better employ sophisticated investment strategies, scale efficiently and meet evolving regulatory requirements. Independent Fund Administration Services. Third-party service providers in the alternative investment market, such as auditors, fund administrators, attorneys, custodians and prime brokers, provide transparency of the fund s assets and the valuation of those assets. Conflicts of interest may arise when the above parties attempt to provide more than one of these services. Table of Contents The industry is increasingly becoming aware of these conflicts and seeking independent fund administrators such as SS C. Highly Attractive Operating Model. By growing our contractually recurring revenues from our software-enabled services and our maintenance contracts, we gain greater predictability in the operation of our business, reduce volatility in our revenues and earnings, enhance our ability to manage our business and strengthen long-term relationships with our clients. We have designed our software and software-enabled services to be highly scalable to accommodate significant additional business volumes with limited incremental costs, providing us with opportunities to improve our operating margins and generate significant operating cash flows. We utilize a direct sales force model that benefits from significant direct participation by senior management and leverages the Internet as a direct marketing medium. Deep Domain Knowledge and Extensive Industry Experience. As of December 31, 2010, we had 1,195 development, service and support professionals with significant expertise across the vertical markets that we serve and a deep working knowledge of our clients businesses. By leveraging our domain expertise and knowledge, we have developed, and continue to improve, our mission-critical software products and services to enable our clients to overcome the complexities inherent in their businesses. Trusted Provider to Our Highly Diversified and Growing Client Base. By providing mission-critical, reliable software products and services for more than 20 years, we have become a trusted provider to a large and growing installed base within multiple segments of the financial services industry. Our clients include some of the largest and most well-recognized firms in the financial services industry. Our strong client relationships provide us with a significant opportunity to sell additional solutions to our existing clients and drive future revenue growth at lower cost. Superior Client Support and Focus. Our ability to rapidly deliver improvements and our reputation for superior service have proven to be a strong competitive advantage when developing client relationships. We believe a close and active service and support relationship, which we foster through our dedicated client support teams for larger clients and through our interactive online client community (SS C Solution Center), significantly enhances client satisfaction, strengthens client relationships and furnishes us with information regarding evolving client issues. Our growth strategy We intend to be the leading provider of superior technology solutions to the financial services industry. The key elements of our growth strategy include: Continue to Develop Software-Enabled Services and New Proprietary Software. Since our founding in 1986, we have focused on building substantial financial services domain expertise, which enables us to respond to our clients most complex financial, accounting, actuarial, tax and regulatory needs. We intend to maintain and enhance our technological leadership by using our domain expertise to build valuable new software-enabled services, continuing to invest in internal development and opportunistically acquiring products and services that address the highly specialized needs of the financial services industry. Our software-enabled services revenues increased from $30.9 million for the year ended December 31, 2004 to $163.3 million for the year ended December 31, 2009, representing a compound annual growth rate of 40%. For the nine months ended September 30, 2009 to the nine months ended September 30, 2010, our software-enabled services revenues increased from $120.8 million to $155.7 million. Table of Contents Expand Our Client Base. Our client base of more than 4,500 clients represents a fraction of the total number of financial services providers globally. As a result, we believe there is substantial opportunity to grow our client base over time as our products become more widely adopted and to capitalize on the increasing adoption of mission-critical, sophisticated software and software-enabled services by financial services providers as they continue to replace inadequate legacy solutions and custom in-house solutions that are inflexible and costly to maintain. Increase Revenues from Existing Clients. Revenues from our existing clients generally grow along with the amount and complexity of assets that they manage and the volume of transactions that they execute. Many of our current clients use our products only for a portion of their total assets under management and investment funds, providing us with significant opportunities to expand our business relationship and revenues. We have been successful in, and expect to continue to focus our marketing efforts on, providing additional modules or features to the products and services our existing clients already use, as well as cross-selling our other products and services. Moreover, our high quality of service helps us maintain significant client retention rates and longer lasting client relationships. Continue to Capitalize on Acquisitions of Complementary Businesses and Technologies. We intend to continue to employ a highly disciplined and focused acquisition strategy to broaden and enhance our product and service offerings, expand our intellectual property portfolio, add new clients and supplement our internal development efforts. Our acquisitions have enabled us to expand our product and service offerings into new markets or client bases within the financial services industry. We believe our acquisitions have been an extension of our research and development effort that has enabled us to purchase proven products and remove the uncertainties associated with software development projects. We have a proven ability to integrate complementary businesses as demonstrated by the 31 businesses we have acquired since 1995. Strengthen Our International Presence. We believe that there is a significant market opportunity to provide software and services to financial services providers outside North America. In the nine months ended September 30, 2010, we generated 17% of our revenues from clients outside North America. We are building our international operations in order to increase our sales outside North America. We plan to expand our international market presence by leveraging our existing software products and software-enabled services. Our acquisitions We intend to continue to employ a highly disciplined and focused acquisition strategy to broaden and enhance our product and service offerings, add new clients and supplement our internal development efforts. Our acquisitions have enabled us to expand our product and service offerings into new markets or client bases within the financial services industry. The addition of new products and services has also enabled us to market other products and services to acquired client bases. We believe our acquisitions have been an extension of our research and development effort and have enabled us to purchase proven products and remove the uncertainties sometimes associated with software development projects. Since 1995, we have acquired 31 businesses within our industry. These acquisitions have contributed marketable products and services, which have added to our revenues and earnings. We believe we have generally been able to improve the operating performance and profitability of our acquired businesses. We seek to reduce the costs of the acquired businesses by consolidating sales and marketing efforts and by eliminating redundant administrative tasks and research and development expenses. In many cases, we have also been able to increase Table of Contents revenues generated by acquired products and services by leveraging our existing products and services, larger sales capabilities and client base. Risks associated with our business Our business is subject to numerous risks and uncertainties, as more fully described under Risk factors beginning on page 16, which you should carefully consider before purchasing our common stock. For example: Our business is greatly affected by changes in the state of the general economy and the financial markets, and economic uncertainty or a prolonged downturn in the general economy or the financial services industry could adversely affect demand for our products and services. We face significant competition, which may result in price reductions, reduced gross margins or loss of market share. If we cannot attract, train and retain qualified managerial, technical and sales personnel, we may not be able to provide adequate technical expertise and customer service to our clients or maintain focus on our business strategy. Our substantial indebtedness could adversely affect our financial health and prevent us from fulfilling our obligations under our 113/4% senior subordinated notes due 2013 and our senior credit facilities. In addition, the ability of new investors to influence corporate matters may be limited because a small number of stockholders will beneficially own a substantial amount of our common stock after this offering. Following the completion of this offering, investment funds affiliated with Carlyle will beneficially own approximately 47.1% of our common stock, and William C. Stone, our Chairman of the Board of Directors and Chief Executive Officer, will beneficially own approximately 23.3% of our common stock, assuming that the underwriters do not exercise their option to purchase additional shares. Principal stockholder The Carlyle Group The Carlyle Group, or Carlyle, is a global alternative asset manager with $97.7 billion of assets under management committed to 76 funds as of September 30, 2010. Carlyle invests across three asset classes private equity, real estate and credit alternatives in Africa, Asia, Australia, Europe, North America and South America focusing on aerospace defense, automotive transportation, consumer retail, energy power, financial services, healthcare, industrial, infrastructure, technology business services and telecommunications media. Since 1987, the firm has invested $64.7 billion of equity in 1,015 transactions. The Carlyle Group employs more than 900 people in 19 countries. Carlyle deals have included the acquisitions of OpenLink Financial, a leading provider of portfolio management software solutions to the commodity, energy and financial services markets, Freescale Semiconductor, Inc., one of the world s largest semiconductor companies, The Hertz Corporation, the largest worldwide car rental brand, Blackboard, Inc., a leading e-learning platform provider, Booz Allen, a provider of management consulting for businesses and governments, and CommScope, a global leader in infrastructure solutions for communications networks. The going-private transaction On November 23, 2005, SS C Holdings, a Delaware corporation owned by investment funds affiliated with Carlyle, acquired SS C through the merger of Sunshine Merger Corporation with and into SS C, with SS C being the surviving company and a wholly owned subsidiary of SS C Holdings, and SS C s outstanding common stock converted into the right to receive $37.25 per Table of Contents share in cash (without giving effect to the 8.5-for-1 stock split of our common stock that was effected on March 10, 2010). We refer to the acquisition of SS C by SS C Holdings as the Acquisition. The following transactions occurred in connection with the Acquisition: Carlyle capitalized SS C Holdings with an aggregate equity contribution of $381.0 million; William C. Stone, SS C s Chairman of the Board and Chief Executive Officer, contributed $165.0 million of equity in the form of stock and rollover options, and certain other management and employee option holders contributed approximately $9.0 million of additional equity in the form of rollover options, to SS C Holdings; SS C entered into senior secured credit facilities consisting of: a $75.0 million revolving credit facility, of which $10.0 million was drawn at closing; and a $275.0 million term loan B facility, which was fully drawn at closing and of which the equivalent of $75.0 million was drawn in Canadian dollars by one of SS C s Canadian subsidiaries; SS C issued and sold $205.0 million in aggregate principal amount of 113/4% senior subordinated notes due 2013; all outstanding options to purchase shares of SS C s common stock became fully vested and immediately exercisable, and each outstanding option (other than options held by (1) non-employee directors, (2) certain individuals identified in a schedule to the Merger Agreement and (3) individuals who held options that were exercisable for fewer than 100 shares of SS C s common stock) were, subject to certain conditions, assumed by SS C Holdings and converted into an option to acquire common stock of SS C Holdings; and all in-the-money warrants to purchase shares of SS C s common stock were cancelled in exchange for cash equal to the excess of the transaction price over the exercise price of the warrants. In this prospectus, we refer to the Acquisition, the equity contributions to SS C Holdings, the offering of the senior subordinated notes and the other transactions described above as the Transaction. As a result of the Transaction, as of December 31, 2010, investment funds affiliated with Carlyle beneficially owned approximately 59.8% of the common stock of SS C Holdings and William C. Stone, the Chairman of the Board and Chief Executive Officer of each of SS C and SS C Holdings, beneficially owned approximately 24.6% of the common stock of SS C Holdings. See Principal and selling stockholders for additional information, including the calculation of beneficial ownership. The term Successor refers to us following the Acquisition, and the term Predecessor refers to us prior to the Acquisition. The table set forth below compares the per share and aggregate amounts contributed to SS C Holdings by William C. Stone, Carlyle and certain other management and employee option holders at the time of Transaction with the implied per share and aggregate value of the shares of our common stock at the time of this offering, based on an assumed public offering price of Table of Contents $19.06 per share, which is the closing price of our common stock as reported on The NASDAQ Global Select Market on January 26, 2011: Time of Time of Transaction this offering Per share $8.64 $19.06 Aggregate $555 million $1,225 million Recent operating results Our consolidated financial statements for the three months ended December 31, 2010, our fourth fiscal quarter, are not yet available. Our expectations with respect to our unaudited results for the three months ended December 31, 2010 as set forth below are based upon management estimates and are the responsibility of SS C Holdings. Our independent registered public accounting firm, PricewaterhouseCoopers LLP, has not audited, reviewed, compiled or performed any procedures with respect to this preliminary financial data and, accordingly, PricewaterhouseCoopers LLP does not express an opinion or any other form of assurance with respect thereto. This summary is not meant to be a comprehensive statement of our unaudited financial results for the three months ended December 31, 2010 and our actual results may differ from these estimates. Based on the foregoing, we estimate that revenues for the three months ended December 31, 2010 will be between $85.6 million and $86.1 million and that Consolidated EBITDA for the three months ended December 31, 2010 will be between $35.0 million and $35.5 million. For this purpose, Consolidated EBITDA has the same definition and is subject to the same limitations as set forth below on pages 12-14. Additional information SS C Holdings was incorporated in Delaware as Sunshine Acquisition Corporation in July 2005 and changed its name to SS C Technologies Holdings, Inc. in June 2007. SS C was organized as a Connecticut corporation in March 1986 and reincorporated as a Delaware corporation in April 1996. On November 23, 2005, SS C Holdings acquired SS C, as described above under The going-private transaction. Our principal executive offices are located at 80 Lamberton Road, Windsor, Connecticut 06095, and our telephone number at that location is (860) 298-4500. Our website address is www.ssctech.com. Information contained on our website does not constitute a part of this prospectus. Table of Contents The offering Common stock offered by SS C Technologies Holdings, Inc. 2,000,000 shares Common stock offered by the selling stockholders 9,000,000 shares Total 11,000,000 shares Common stock to be outstanding after this offering 75,272,612 shares Over-allotment option offered by certain of the selling stockholders Certain of the selling stockholders have granted the underwriters a 30-day option to purchase up to 1,650,000 shares of common stock. Use of proceeds We estimate that we will receive approximately $35.7 million in net proceeds from the 2,000,000 shares of common stock that we are offering based upon an assumed public offering price of $19.06 per share (the closing price of our common stock as reported on The NASDAQ Global Select Market on January 26, 2011) and after deducting underwriting discounts and commissions and estimated offering expenses payable by us. We intend to use our net proceeds of this offering to redeem a portion of our outstanding 113/4% senior subordinated notes due 2013 at a redemption price of 102.9375% of the principal amount, plus accrued and unpaid interest. We will not receive any proceeds from the sale of shares by the selling stockholders, except for the aggregate exercise price of options held by certain selling stockholders. See Use of proceeds for additional information. The NASDAQ Global Select Market symbol SSNC The number of shares of our common stock to be outstanding following this offering is based on 73,272,612 shares of our common stock outstanding as of December 31, 2010, which includes 480,100 shares to be sold by selling stockholders upon the exercise of outstanding options in connection with this offering and excludes: 12,182,192 shares of common stock issuable upon the exercise of stock options outstanding as of December 31, 2010 at a weighted average exercise price of $8.51 per share; 1,497,711 shares of common stock reserved as of December 31, 2010 for future issuance under our 2006 equity incentive plan; and 2,361,077 shares of common stock reserved as of December 31, 2010 for future issuance under our 2008 stock incentive plan. Table of Contents The shares of common stock offered by us and the selling stockholders in this offering will represent 14.6% of the total shares of common stock to be outstanding after this offering. Unless otherwise indicated, all information in this prospectus reflects and assumes the following: no exercise of outstanding options after December 31, 2010; an 8.5-for-1 stock split of our common stock that was effected on March 10, 2010; and no exercise by the underwriters of their over-allotment option. Table of Contents Summary historical financial data The tables below summarize our historical consolidated financial data as of and for the periods indicated. You should read the following information together with the more detailed information contained in Selected historical financial data, Management s discussion and analysis of financial condition and results of operations and our consolidated financial statements and the accompanying notes. On November 23, 2005, SS C Holdings acquired SS C through the merger of Sunshine Merger Corporation, a wholly owned subsidiary of SS C Holdings, with and into SS C, with SS C being the surviving company and a wholly owned subsidiary of SS C Holdings. We refer to the acquisition of SS C by SS C Holdings as the Acquisition. We refer to the Acquisition, together with related transactions entered into to finance the cash consideration for the Acquisition, to refinance certain of our existing indebtedness and to pay related transaction fees and expenses, as the Transaction. The term Successor refers to us following the Acquisition, and the term Predecessor refers to us prior to the Acquisition. Certain financial information in this prospectus for the Predecessor period from January 1, 2005 through November 22, 2005 and the Successor period from November 23, 2005 through December 31, 2005 has been presented on a combined basis. This presentation does not comply with generally accepted accounting principles or with the rules for pro forma presentation, but is presented because we believe that it provides a meaningful comparison of our results. The combined operating results may not reflect the actual results we would have achieved absent the Transaction and may not be predictive of future results of operations. The as adjusted balance sheet data set forth below give effect to the receipt by us of approximately $35.7 million in net proceeds from the sale of 2,000,000 shares of our common stock in this offering at an assumed public offering price of $19.06 per share (the closing price of our common stock as reported on The NASDAQ Global Select Market on January 26, 2011), after deducting underwriting discounts and commissions and estimated offering expenses payable by us, and the use of such net proceeds and $32.9 million of our existing cash resources to redeem $66.6 million in original principal amount of our outstanding 113/4% senior subordinated notes at a redemption price of 102.9375% of the principal amount, plus accrued and unpaid interest. The as adjusted balance sheet also gives effect to our receipt of the aggregate exercise price for the 480,100 shares of common stock to be acquired by certain of the selling stockholders upon exercise of options in connection with this offering, a loss on extinguishment of debt of approximately $2.9 million, including a $2.0 million redemption premium and a non-cash charge of approximately $0.9 million relating to the write-off of deferred financing fees attributable to the redeemed notes and the related tax effects of the above. Table of Contents Predecessor Successor Combined1 Successor January 1 November 23 Year Year Year Year Year through through ended ended ended ended ended Nine Months Ended (In thousands, November 22, December 31, December 31, December 31, December 31, December 31, December 31, September 30, September 30, except per share data) 2005 2005 2005 2006 2007 2008 2009 2009 2010 (unaudited) (unaudited) Statement of operations data: Revenues: Software licenses $ 20,147 $ 3,587 $ 23,734 $ 22,925 $ 27,514 $ 24,844 $ 20,661 $ 15,632 $ 17,629 Maintenance 44,064 3,701 47,765 55,222 61,910 65,178 66,099 48,565 54,130 Professional services 12,565 2,520 15,085 19,582 17,491 24,352 20,889 14,872 15,384 Software-enabled services 67,193 7,857 75,050 107,740 141,253 165,632 163,266 120,801 155,652 Total revenues 143,969 17,665 161,634 205,469 248,168 280,006 270,915 199,870 242,795 Total cost of revenues 59,004 7,627 66,631 100,016 128,882 142,433 137,740 102,394 122,439 Gross profit 84,965 10,038 95,003 105,453 119,286 137,573 133,175 97,476 120,356 Operating expenses: Selling, marketing, general and administrative 25,078 2,504 27,582 37,964 44,274 45,686 39,559 29,912 38,075 Research and development 19,199 2,071 21,270 23,620 26,282 26,804 26,513 19,593 23,486 Merger costs 36,912 36,912 Total operating expenses 81,189 4,575 85,764 61,584 70,556 72,490 66,072 49,505 61,561 Operating income 3,776 5,463 9,239 43,869 48,730 65,083 67,103 47,971 58,795 Interest income 1,031 30 1,061 388 939 409 28 24 9 Interest expense (2,092 ) (4,920 ) (7,012 ) (47,427 ) (45,463 ) (41,539 ) (36,891 ) (27,815 ) (23,827 ) Other (expense) income, net 655 258 913 456 1,911 1,994 (1,418 ) (1,256 ) 653 Loss on extinguishment of debt (5,480 ) Income (loss) before income taxes 3,370 831 4,201 (2,714 ) 6,117 25,947 28,822 18,924 30,150 Provision (benefit) for income taxes 2,658 2,658 (3,789 ) (458 ) 7,146 9,804 5,928 6,913 Net income $ 712 $ 831 $ 1,543 $ 1,075 $ 6,575 $ 18,801 $ 19,018 $ 12,996 $ 23,237 Earnings per share2 Basic $ 0.03 $ 0.01 $ 0.02 $ 0.11 $ 0.31 $ 0.31 $ 0.22 $ 0.34 Diluted $ 0.03 $ 0.01 $ 0.02 $ 0.10 $ 0.30 $ 0.30 $ 0.21 $ 0.32 Weighted average shares outstanding2 Basic 23,300 60,138 60,172 60,245 60,284 60,381 60,378 67,919 Diluted 24,478 62,167 62,182 63,382 63,700 63,653 63,132 71,499 Other financial data: Recurring revenue percentage3 77.3% 65.4% 76.0% 79.3% 81.9% 82.4% 84.7% 84.7% 86.4% Consolidated EBITDA4 $ 64,989 $ 8,588 $ 73,577 $ 83,998 $ 98,667 $ 115,566 $ 119,266 $ 82,979 $ 99,579 Table of Contents As of September 30, 2010 (In thousands) Actual As adjusted (unaudited) (unaudited) Balance sheet data: Cash and cash equivalents $ 86,975 $ 56,437 Working capital 71,064 42,882 Total assets 1,245,639 1,215,759 113/4% senior subordinated notes due 2013 133,250 66,625 Senior credit facility, including current portion 157,072 157,072 Total stockholders equity 828,489 866,399 (1) Our combined results for the year ended December 31, 2005 represent the addition of the Predecessor period from January 1, 2005 through November 22, 2005 and the Successor period from November 23, 2005 through December 31, 2005. This combination does not comply with generally accepted accounting principles (GAAP) or with the rules for pro forma presentation, but is presented because we believe it provides the most meaningful comparison of our results. (2) Amounts for the Predecessor period are computed based upon the capital structure in existence prior to the Acquisition. Amounts for the Successor periods are computed based upon the capital structure in existence subsequent to the Acquisition. (3) Recurring revenue percentage represents software-enabled services revenues and maintenance revenues as a percentage of total revenues. We do not believe that the recurring revenue percentage for the Successor period of 2005 is meaningful because such period is only five weeks in duration and not indicative of our overall trends. (4) Consolidated EBITDA is a non-GAAP financial measure used in key financial covenants contained in our senior credit facilities, which are material facilities supporting our capital structure and providing liquidity to our business. Consolidated EBITDA is defined as earnings before interest, taxes, depreciation and amortization (EBITDA), further adjusted to exclude unusual items and other adjustments permitted in calculating covenant compliance under our senior credit facilities. We believe that the inclusion of supplementary adjustments to EBITDA applied in presenting Consolidated EBITDA is appropriate to provide additional information to investors to demonstrate compliance with the specified financial ratios and other financial condition tests contained in our senior credit facilities. Management uses Consolidated EBITDA to gauge the costs of our capital structure on a day-to-day basis when full financial statements are unavailable. Management further believes that providing this information allows our investors greater transparency and a better understanding of our ability to meet our debt service obligations and make capital expenditures. Any breach of covenants in our senior credit facilities that are tied to ratios based on Consolidated EBITDA could result in a default under that agreement, in which case the lenders could elect to declare all amounts borrowed due and payable and to terminate any commitments they have to provide further borrowings. Any such acceleration would also result in a default under our indenture. Any default and subsequent acceleration of payments under our debt agreements would have a material adverse effect on our results of operations, financial position and cash flows. Additionally, under our debt agreements, our ability to engage in activities such as incurring additional indebtedness, making investments and paying dividends is also tied to ratios based on Consolidated EBITDA. Consolidated EBITDA does not represent net income or cash flow from operations as those terms are defined by GAAP and does not necessarily indicate whether cash flows will be sufficient to fund cash needs. Further, our senior credit facilities require that Consolidated EBITDA be calculated for the most recent four fiscal quarters. As a result, the measure can be disproportionately affected by a particularly strong or weak quarter. Further, it may not be comparable to the measure for any subsequent four-quarter period or any complete fiscal year. Consolidated EBITDA is not a recognized measurement under GAAP, and investors should not consider Consolidated EBITDA as a substitute for measures of our financial performance and liquidity as determined in accordance with GAAP, such as net income, operating income or net cash provided by operating activities. Because other companies may calculate Consolidated EBITDA differently than we do, Consolidated EBITDA may not be comparable to similarly titled measures reported by other companies. Consolidated EBITDA has other limitations as an analytical tool, when compared to the use of net income, which is the most directly comparable GAAP financial measure, including: Consolidated EBITDA does not reflect the provision of income tax expense in our various jurisdictions; Consolidated EBITDA does not reflect the significant interest expense we incur as a result of our debt leverage; Consolidated EBITDA does not reflect any attribution of costs to our operations related to our investments and capital expenditures through depreciation and amortization charges; Consolidated EBITDA does not reflect the cost of compensation we provide to our employees in the form of stock option awards; and Consolidated EBITDA excludes expenses that we believe are unusual or non-recurring, but which others may believe are normal expenses for the operation of a business. Table of Contents The following is a reconciliation of net income to EBITDA and Consolidated EBITDA: Nine Months Ended September 30, Predecessor Successor Combineda Successor Period Period from from November 23, Twelve January 1 2005 Year Year Year Year Year Months through through ended ended ended ended ended Ended November 22, December 31, December 31, December 31, December 31, December 31, December 31, September 30, (In thousands) 2005 2005 2005 2006 2007 2008 2009 2010b 2009 2010 (unaudited) (unaudited) (unaudited) Net income $ 712 $ 831 $ 1,543 $ 1,075 $ 6,575 $ 18,801 $ 19,018 $ 29,259 $ 12,996 $ 23,237 Interest expense, netc 1,061 4,890 5,951 47,039 44,524 41,130 36,863 38,370 27,791 29,298 Income taxes 2,658 2,658 (3,789 ) (458 ) 7,146 9,804 10,789 5,928 6,913 Depreciation and amortization 9,575 2,301 11,876 27,128 35,047 35,038 36,028 39,677 26,707 30,356 EBITDA 14,006 8,022 22,028 71,453 85,668 102,115 101,713 118,095 73,422 89,804 Purchase accounting adjustmentsd 616 616 3,017 (296 ) (289 ) (93 ) (54 ) (163 ) (124 ) Merger costs 36,912 36,912 Capital-based taxes 1,841 1,721 1,212 795 984 672 861 Unusual or non-recurring charges (income)e (737 ) (242 ) (979 ) 1,485 (1,718 ) 1,480 1,990 (142 ) 1,683 (449 ) Acquired EBITDA and cost savingsf 14,808 85 14,893 1,147 135 2,379 8,053 2,121 2,025 192 Stock-based compensation 3,871 10,979 7,323 5,607 10,425 4,363 9,181 Otherg 107 107 1,184 2,158 1,346 1,201 338 977 114 Consolidated EBITDA $ 64,989 $ 8,588 $ 73,577 $ 83,998 $ 98,667 $ 115,566 $ 119,266 $ 131,767 $ 82,979 $ 99,579 (a) Our combined results for the year ended December 31, 2005 represent the addition of the Predecessor period from January 1, 2005 through November 22, 2005 and the Successor period from November 23, 2005 through December 31, 2005. This combination does not comply with GAAP or with the rules for pro forma presentation, but is presented because we believe it provides the most meaningful comparison of our results. (b) Results for the twelve months ended September 30, 2010 are included because our senior credit facilities require the calculation of our consolidated total leverage and consolidated net interest coverage ratio for the prior four consecutive quarters. With the exception of acquired EBITDA and cost savings, our results for the twelve months ended September 30, 2010 are calculated based on our results for the year ended December 31, 2009, in addition to our results for the nine months ended September 30, 2010, less our results for the nine months ended September 30, 2009. (c) Interest expense includes any loss on extinguishment of debt shown as a separate line item on the statement of operations. (d) Purchase accounting adjustments include (1) an adjustment to increase revenues by the amount that would have been recognized if deferred revenue were not adjusted to fair value at the date of the Transaction and (2) an adjustment to increase rent expense by the amount that would have been recognized if lease obligations were not adjusted to fair value at the date of the Transaction. (e) Unusual or non-recurring charges include foreign currency transaction gains and losses, expenses related to our prior proposed public offering, severance expenses associated with workforce reduction, gains and losses on the sales of marketable securities, equity earnings and losses on investments, proceeds and payments associated with legal and other settlements, costs associated with the closing of a regional office and other one-time gains and expenses. (f) Acquired EBITDA and cost savings reflects the EBITDA impact of significant businesses that were acquired during the period as if the acquisition occurred at the beginning of the period and cost savings to be realized from such acquisitions. (g) Other includes management fees and related expenses paid to Carlyle and the non-cash portion of straight-line rent expense. Table of Contents Consolidated EBITDA and consolidated leverage ratios Our senior credit facilities require us to maintain both a maximum consolidated total leverage to Consolidated EBITDA ratio (currently no more than 5.50) and a minimum Consolidated EBITDA to consolidated net interest coverage ratio (currently not less than 2.25), in each case calculated for the trailing four quarters. The table below summarizes our Consolidated EBITDA, consolidated total leverage ratio and consolidated net interest coverage ratio for the periods presented. Combined1 Successor Twelve months Twelve months Twelve months Twelve months Twelve months Twelve months Twelve months ended ended ended ended ended ended ended September 30, 2010 September 30, 2010 (In thousands, except ratio data) December 31, 2005 December 31, 2006 December 31, 2007 December 31, 2008 December 31, 2009 (Actual) (As adjusted)6 Consolidated EBITDA2 $ 73,577 $ 83,998 $ 98,667 $ 115,566 $ 119,266 $ 131,767 $ 131,767 Consolidated total leverage to Consolidated EBITDA ratio (current maximum covenant level: 5.50)3 6.43 5.48 4.30 3.28 3.17 1.98 1.47 Consolidated EBITDA to consolidated net interest coverage ratio (current minimum covenant level: 2.25)4 10.87 5 1.88 2.34 2.98 3.45 4.30 5.77 (1) Our combined results for the year ended December 31, 2005 represent the addition of the Predecessor period from January 1, 2005 through November 22, 2005 and the Successor period from November 23, 2005 through December 31, 2005. This combination does not comply with GAAP or with the rules for pro forma presentation, but is presented because we believe it provides the most meaningful comparison of our results. (2) We reconcile our Consolidated EBITDA for the trailing four quarters to net income for the same period using the same methods set forth above. (3) Consolidated total leverage ratio is defined in our senior credit facilities at the last day of any period of four consecutive fiscal quarters, as the ratio of (a) the principal amount of all debt at such date, minus the amount, up to a maximum amount of $30.0 million, of cash and cash equivalents to (b) Consolidated EBITDA. The current maximum consolidated total leverage ratio is 5.50. The maximum consolidated total leverage ratio for 2010 and 2009 was 5.50, for 2008 was 6.00, for 2007 was 6.75 and for 2006 was 7.50. There was no maximum consolidated total leverage ratio covenant prior to June 30, 2006. (4) Consolidated net interest coverage ratio is defined in our senior credit facilities as for any period, the ratio of (a) Consolidated EBITDA for such period to (b) total cash interest expense for such period with respect to all outstanding indebtedness minus total cash interest income for such period. The current minimum consolidated net interest coverage ratio is 2.25. The minimum consolidated net interest coverage ratio for 2010 and 2009 was 2.00, for 2008 was 1.70, for 2007 was 1.50 and for 2006 was 1.40. There was no minimum consolidated net interest coverage ratio covenant prior to June 30, 2006. (5) This ratio is not comparable because we did not incur debt under our existing senior credit facilities until November 2005 in connection with the Transaction. (6) As adjusted to give effect to the receipt by us of approximately $35.7 million in net proceeds from the sale of 2,000,000 shares of our common stock in this offering at an assumed public offering price of $19.06 per share (the closing price of our common stock as reported on The NASDAQ Global Select Market on January 26, 2011), after deducting underwriting discounts and commissions and estimated offering expenses payable by us, and the use of such net proceeds and $32.9 million of our existing cash resources to redeem $66.6 million in original principal amount of our outstanding 113/4% senior subordinated notes at a redemption price of 102.9375% of the principal amount, plus accrued and unpaid interest. The as adjusted data also give effect to our receipt of the aggregate exercise price for the 480,100 shares of common stock to be acquired by certain of the selling stockholders upon exercise of options in connection with this offering. Table of Contents Risk factors Investing in our common stock involves a high degree of risk. You should carefully consider the following risk factors, as well as the other information in this prospectus, before deciding whether to invest in our common stock. If any of the following risks occur, our business, financial condition and operating results could be materially affected. The trading price of our common stock could decline as a result of any of these risks, and you might lose all or part of your investment in our common stock. Risks relating to our business Our business is greatly affected by changes in the state of the general economy and the financial markets, and economic uncertainty or a prolonged downturn in the general economy or the financial services industry could adversely affect the demand for our products and services. As widely reported, global credit and financial markets have experienced extreme disruptions over the past several years, including severely diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, increases in unemployment rates, and uncertainty about economic stability. These factors have caused and could continue to cause our clients or prospective clients to delay or reduce purchases of our products, and our revenues could be adversely affected. Fluctuations in the value of assets under our clients management could also adversely affect our revenues. Unfavorable economic conditions or continuing economic uncertainty could make it difficult for our clients to obtain credit on reasonable terms or at all, preventing them from making desired purchases of our products and services, and may impair the ability of our clients to pay for products they have purchased. We cannot predict the timing or duration of any economic downturn, generally, or in the markets in which our businesses operate. Continued turbulence in the U.S. and international markets, renewed concern about the strength and sustainability of a recovery, particularly given the risk of sovereign debt defaults by European Union member countries, and prolonged declines in business consumer spending could materially adversely affect our liquidity and financial condition, and the liquidity and financial condition of our clients. Our clients include a range of organizations in the financial services industry whose success is linked to the health of the economy generally and of the financial markets specifically. As a result, we believe that fluctuations, disruptions, instability, downturns or uncertainty in the general economy and the financial services industry could adversely affect demand for our products and services. For example, such fluctuations, disruptions, instability, downturns or uncertainty may cause our clients to do the following: cancel or reduce planned expenditures for our products and services; process fewer transactions through our software-enabled services; seek to lower their costs by renegotiating their contracts with us; move their IT solutions in-house; switch to lower-priced solutions provided by our competitors; or exit the industry. If such conditions occur and persist, our business and financial results, including our liquidity and our ability to fulfill our obligations to the holders of our 113/4% senior subordinated notes Table of Contents due 2013, which we refer to as the notes or senior subordinated notes, and our other lenders, could be materially adversely affected. Further or accelerated consolidations and failures in the financial services industry could adversely affect our results of operations due to a resulting decline in demand for our products and services. If banks and financial services firms fail or continue to consolidate, there could be a decline in demand for our products and services. Failures, mergers and consolidations of banks and financial institutions reduce the number of our clients and potential clients, which could adversely affect our revenues even if these events do not reduce the aggregate activities of the consolidated entities. Further, if our clients fail and/or merge with or are acquired by other entities that are not our clients, or that use fewer of our products and services, they may discontinue or reduce their use of our products and services. It is also possible that the larger financial institutions resulting from mergers or consolidations would have greater leverage in negotiating terms with us. In addition, these larger financial institutions could decide to perform in-house some or all of the services that we currently provide or could provide or to consolidate their processing on a non-SS C system. The resulting decline in demand for our products and services could have a material adverse effect on our revenues. If we are unable to retain and attract clients, our revenues and net income would remain stagnant or decline. If we are unable to keep existing clients satisfied, sell additional products and services to existing clients or attract new clients, then our revenues and net income would remain stagnant or decline. A variety of factors could affect our ability to successfully retain and attract clients, including: the level of demand for our products and services; the level of client spending for information technology; the level of competition from internal client solutions and from other vendors; the quality of our client service; our ability to update our products and services and develop new products and services needed by clients; our ability to understand the organization and processes of our clients; and our ability to integrate and manage acquired businesses. We face significant competition with respect to our products and services, which may result in price reductions, reduced gross margins or loss of market share. The market for financial services software and services is competitive, rapidly evolving and highly sensitive to new product and service introductions and marketing efforts by industry participants. The market is also highly fragmented and served by numerous firms that target only local markets or specific client types. We also face competition from information systems developed and serviced internally by the IT departments of financial services firms. Table of Contents Some of our current and potential competitors have significantly greater financial, technical, distribution and marketing resources, generate higher revenues and have greater name recognition. Our current or potential competitors may develop products comparable or superior to those developed by us, or adapt more quickly to new technologies, evolving industry trends or changing client or regulatory requirements. It is also possible that alliances among competitors may emerge and rapidly acquire significant market share. Increased competition may result in price reductions, reduced gross margins and loss of market share. Accordingly, our business may not grow as expected and may decline. Catastrophic events may adversely affect our ability to provide, our clients ability to use, and the demand for, our products and services, which may disrupt our business and cause a decline in revenues. A war, terrorist attack, natural disaster or other catastrophe may adversely affect our business. A catastrophic event could have a direct negative impact on us or an indirect impact on us by, for example, affecting our clients, the financial markets or the overall economy and reducing our ability to provide, our clients ability to use, and the demand for, our products and services. The potential for a direct impact is due primarily to our significant investment in infrastructure. Although we maintain redundant facilities and have contingency plans in place to protect against both man-made and natural threats, it is impossible to fully anticipate and protect against all potential catastrophes. A computer virus, security breach, criminal act, military action, power or communication failure, flood, severe storm or the like could lead to service interruptions and data losses for clients, disruptions to our operations, or damage to important facilities. In addition, such an event may cause clients to cancel their agreements with us for our products or services. Any of these events could cause a decline in our revenues. Our software-enabled services may be subject to disruptions that could adversely affect our reputation and our business. Our software-enabled services maintain and process confidential data on behalf of our clients, some of which is critical to their business operations. For example, our trading systems maintain account and trading information for our clients and their customers. There is no guarantee that the systems and procedures that we maintain to protect against unauthorized access to such information are adequate to protect against all security breaches. If our software-enabled services are disrupted or fail for any reason, or if our systems or facilities are infiltrated or damaged by unauthorized persons, our clients could experience data loss, financial loss, harm to their reputation and significant business interruption. If that happens, we may be exposed to unexpected liability, our clients may leave, our reputation may be tarnished, and client dissatisfaction and lost business may result. We may not achieve the anticipated benefits from our acquisitions and may face difficulties in integrating our acquisitions, which could adversely affect our revenues, subject us to unknown liabilities, increase costs and place a significant strain on our management. We have acquired and intend in the future to acquire companies, products or technologies that we believe could complement or expand our business, augment our market coverage, enhance our technical capabilities or otherwise offer growth opportunities. However, acquisitions could subject us to contingent or unknown liabilities, and we may have to incur debt or severance liabilities or write off investments, infrastructure costs or other assets. Table of Contents Our success is also dependent on our ability to complete the integration of the operations of acquired businesses in an efficient and effective manner. Successful integration in the rapidly changing financial services software and services industry may be more difficult to accomplish than in other industries. We may not realize the benefits we anticipate from acquisitions, such as lower costs or increased revenues. We may also realize such benefits more slowly than anticipated, due to our inability to: combine operations, facilities and differing firm cultures; retain the clients or employees of acquired entities; generate market demand for new products and services; coordinate geographically dispersed operations and successfully adapt to the complexities of international operations; integrate the technical teams of these companies with our engineering organization; incorporate acquired technologies and products into our current and future product lines; and integrate the products and services of these companies with our business, where we do not have distribution, marketing or support experience for these products and services. Integration may not be smooth or successful. The inability of management to successfully integrate the operations of acquired companies could disrupt our ongoing operations, divert management from day-to-day responsibilities, increase our expenses and harm our operating results or financial condition. Such acquisitions may also place a significant strain on our administrative, operational, financial and other resources. To manage growth effectively, we must continue to improve our management and operational controls, enhance our reporting systems and procedures, integrate new personnel and manage expanded operations. If we are unable to manage our growth and the related expansion in our operations from recent and future acquisitions, our business may be harmed through a decreased ability to monitor and control effectively our operations and a decrease in the quality of work and innovation of our employees. Certain of our acquisitions have generated disputes with stockholders or management of acquired companies that have required the expenditure of our resources to address or have led to litigation; any such disputes may reduce the value we hope to realize from our acquisitions, either by increasing our costs of the acquisition, reducing our opportunities to realize revenues from the acquisition or imposing litigation costs or adverse judgments on us. We expect that our operating results, including our profit margins and profitability, may fluctuate over time. Historically, our revenues, profit margins and other operating results have fluctuated from period to period and over time primarily due to the timing, size and nature of our license and service transactions. Additional factors that may lead to such fluctuation include: the timing of the introduction and the market acceptance of new products, product enhancements or services by us or our competitors; the lengthy and often unpredictable sales cycles of large client engagements; Table of Contents the amount and timing of our operating costs and other expenses; the financial health of our clients; changes in the value of assets under our clients management; cancellations of maintenance and/or software-enabled services arrangements by our clients; changes in local, national and international regulatory requirements; changes in our personnel; implementation of our licensing contracts and software-enabled services arrangements; changes in economic and financial market conditions; and changes in the mix in the types of products and services we provide. If we cannot attract, train and retain qualified managerial, technical and sales personnel, we may not be able to provide adequate technical expertise and customer service to our clients or maintain focus on our business strategy. We believe that our success is due in part to our experienced management team. We depend in large part upon the continued contribution of our senior management and, in particular, William C. Stone, our Chief Executive Officer and Chairman of our Board of Directors. Losing the services of one or more members of our senior management could significantly delay or prevent the achievement of our business objectives. Mr. Stone has been instrumental in developing our business strategy and forging our business relationships since he founded the company in 1986. We maintain no key man life insurance policies for Mr. Stone or any other senior officer or manager. Our success is also dependent upon our ability to attract, train and retain highly skilled technical and sales personnel. Loss of the services of these employees could materially affect our operations. Competition for qualified technical personnel in the software industry is intense, and we have, at times, found it difficult to attract and retain skilled personnel for our operations. Locating candidates with the appropriate qualifications, particularly in the desired geographic location and with the necessary subject matter expertise, is difficult. Our failure to attract and retain a sufficient number of highly skilled employees could prevent us from developing and servicing our products at the same levels as our competitors and we may, therefore, lose potential clients and suffer a decline in revenues. If we are unable to protect our proprietary technology, our success and our ability to compete will be subject to various risks, such as third-party infringement claims, unauthorized use of our technology, disclosure of our proprietary information or inability to license technology from third parties. Our success and ability to compete depends in part upon our ability to protect our proprietary technology. We rely on a combination of trade secret, copyright and trademark law, nondisclosure agreements and technical measures to protect our proprietary technology. We have registered trademarks for some of our products and will continue to evaluate the registration of additional trademarks as appropriate. We generally enter into confidentiality Table of Contents and/or license agreements with our employees, distributors, clients and potential clients. We seek to protect our software, documentation and other written materials under trade secret and copyright laws, which afford only limited protection. These efforts may be insufficient to prevent third parties from asserting intellectual property rights in our technology. Furthermore, it may be possible for unauthorized third parties to copy portions of our products or to reverse engineer or otherwise obtain and use our proprietary information, and third parties may assert ownership rights in our proprietary technology. Existing patent and copyright laws afford only limited protection. Third parties may develop substantially equivalent or superseding proprietary technology, or competitors may offer equivalent products in competition with our products, thereby substantially reducing the value of our proprietary rights. There are many patents in the financial services field. As a result, we are subject to the risk that others will claim that the important technology we have developed, acquired or incorporated into our products will infringe the rights, including the patent rights, such persons may hold. These claims, if successful, could result in a material loss of our intellectual property rights. Expensive and time-consuming litigation may be necessary to protect our proprietary rights. We incorporate open source software into a limited number of our software solutions. We monitor our use of open source software to avoid subjecting our products to conditions we do not intend. Although we believe that we have complied with our obligations under the applicable licenses for open source software that we use, there is little or no legal precedent governing the interpretation of many of the terms of certain of these licenses. Therefore, the potential impact of these terms is uncertain and may result in unanticipated obligations or restrictions regarding those of our products, technologies or solutions affected. We have acquired and may acquire important technology rights through our acquisitions and have often incorporated and may incorporate features of this technology across many products and services. As a result, we are subject to the above risks and the additional risk that the seller of the technology rights may not have appropriately protected the intellectual property rights we acquired. Indemnification and other rights under applicable acquisition documents are limited in term and scope and therefore provide us with only limited protection. In addition, we currently use certain third-party software in providing some of our products and services, such as industry standard databases and report writers. If we lost our licenses to use such software or if such licenses were found to infringe upon the rights of others, we would need to seek alternative means of obtaining the licensed software to continue to provide our products or services. Our inability to replace such software, or to replace such software in a timely manner, could have a negative impact on our operations and financial results. We could become subject to litigation regarding intellectual property rights, which could seriously harm our business and require us to incur significant costs, which, in turn, could reduce or eliminate profits. In recent years, there has been significant litigation in the United States involving patents and other intellectual property rights. We may be a party to litigation in the future to enforce our intellectual property rights or as a result of an allegation that we infringe others intellectual property rights, including patents, trademarks and copyrights. From time to time we have received notices claiming our technology may infringe third-party intellectual property rights or otherwise threatening to assert intellectual property rights. Any parties asserting that our products or services infringe upon their proprietary rights could force us to defend ourselves Table of Contents and possibly our clients against the alleged infringement. These claims and any resulting lawsuit, if successful, could subject us to significant liability for damages and invalidation of our proprietary rights. These lawsuits, regardless of their success, could be time-consuming and expensive to resolve, adversely affect our revenues, profitability and prospects and divert management time and attention away from our operations. We may be required to re-engineer our products or services or obtain a license of third-party technologies on unfavorable terms. Our failure to continue to derive substantial revenues from the licensing of, or the provision of software-enabled services related to, our CAMRA, TradeThru, Pacer, AdvisorWare and Total Return software, and the provision of maintenance and professional services in support of such licensed software, could adversely affect our ability to sustain or grow our revenues and harm our business, financial condition and results of operations. The licensing of, and the provision of software-enabled services, maintenance and professional services relating to, our CAMRA, TradeThru, Pacer, AdvisorWare and Total Return software accounted for approximately 54% of our revenues for the year ended December 31, 2009 and approximately 43% of our revenues for the nine months ended September 30, 2010. We expect that the revenues from these software products and services will continue to account for a significant portion of our total revenues for the foreseeable future. As a result, factors adversely affecting the pricing of or demand for such products and services, such as competition or technological change, could have a material adverse effect on our ability to sustain or grow our revenues and harm our business, financial condition and results of operations. We may be unable to adapt to rapidly changing technology and evolving industry standards and regulatory requirements, and our inability to introduce new products and services could result in a loss of market share. Rapidly changing technology, evolving industry standards and regulatory requirements and new product and service introductions characterize the market for our products and services. Our future success will depend in part upon our ability to enhance our existing products and services and to develop and introduce new products and services to keep pace with such changes and developments and to meet changing client needs. The process of developing our software products is extremely complex and is expected to become increasingly complex and expensive in the future due to the introduction of new platforms, operating systems and technologies. Our ability to keep up with technology and business and regulatory changes is subject to a number of risks, including that: we may find it difficult or costly to update our services and software and to develop new products and services quickly enough to meet our clients needs; we may find it difficult or costly to make some features of our software work effectively and securely over the Internet or with new or changed operating systems; we may find it difficult or costly to update our software and services to keep pace with business, evolving industry standards, regulatory and other developments in the industries where our clients operate; and we may be exposed to liability for security breaches that allow unauthorized persons to gain access to confidential information stored on our computers or transmitted over our network. Table of Contents Our failure to enhance our existing products and services and to develop and introduce new products and services to promptly address the needs of the financial markets could adversely affect our business and results of operations. Undetected software design defects, errors or failures may result in loss of our clients data, litigation against us and harm to our reputation and business. Our software products are highly complex and sophisticated and could contain design defects or software errors that are difficult to detect and correct. Errors or bugs may result in loss of client data or require design modifications. We cannot assure you that, despite testing by us and our clients, errors will not be found in new products, which errors could result in data unavailability, loss or corruption of client assets, litigation and other claims for damages against us. The cost of defending such a lawsuit, regardless of its merit, could be substantial and could divert management s attention from ongoing operations of the company. In addition, if our business liability insurance coverage proves inadequate with respect to a claim or future coverage is unavailable on acceptable terms or at all, we may be liable for payment of substantial damages. Any or all of these potential consequences could have an adverse impact on our operating results and financial condition. Challenges in maintaining and expanding our international operations can result in increased costs, delayed sales efforts and uncertainty with respect to our intellectual property rights and results of operations. For the years ended December 31, 2007, 2008 and 2009 and the nine months ended September 30, 2010, international revenues accounted for 41%, 39%, 36% and 32%, respectively, of our total revenues. We sell certain of our products, such as Altair and Pacer, primarily outside the United States. Our international business may be subject to a variety of risks, including: changes in a specific country s or region s political or economic condition; difficulties in obtaining U.S. export licenses; potentially longer payment cycles; increased costs associated with maintaining international marketing efforts; foreign currency fluctuations; the introduction of non-tariff barriers and higher duty rates; foreign regulatory compliance; and difficulties in enforcement of third-party contractual obligations and intellectual property rights. Such factors could have a material adverse effect on our ability to meet our growth and revenue projections and negatively affect our results of operations. Table of Contents Risks relating to our indebtedness Our substantial indebtedness could adversely affect our financial health and prevent us from fulfilling our obligations under our 113/4% senior subordinated notes due 2013 and our senior credit facilities. We have incurred a significant amount of indebtedness. As of December 31, 2010, we had total indebtedness of $290.8 million and additional available borrowings of $75.0 million under our revolving credit facility. Our total indebtedness consisted of $133.3 million of 113/4% senior subordinated notes due 2013 and $157.5 million of secured indebtedness under our term loan B facility. Our substantial indebtedness could have important consequences. For example, it could: make it more difficult for us to satisfy our obligations with respect to our notes and our senior credit facilities; require us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, thereby reducing the availability of our cash flow to fund acquisitions, working capital, capital expenditures, research and development efforts and other general corporate purposes; increase our vulnerability to and limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; expose us to the risk of increased interest rates as borrowings under our senior credit facilities are subject to variable rates of interest; place us at a competitive disadvantage compared to our competitors that have less debt; and limit our ability to borrow additional funds. In addition, the indenture governing the notes and the agreement governing our senior credit facilities contain financial and other restrictive covenants that limit our ability to engage in activities that may be in our long-term best interests. Our failure to comply with those covenants could result in an event of default which, if not cured or waived, could result in the acceleration of all of our debts. To service our indebtedness, we require a significant amount of cash. Our ability to generate cash depends on many factors beyond our control. We are currently obligated to make periodic principal and interest payments on our senior and subordinated debt of approximately $21.3 million annually. Our ability to make payments on and to refinance our indebtedness and to fund planned capital expenditures will depend on our ability to generate cash in the future. This, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control. We cannot assure you that our business will generate sufficient cash flow from operations or that future borrowings will be available to us under our senior credit facilities in an amount sufficient to enable us to pay our indebtedness or to fund our other liquidity needs. We may need to refinance all or a portion of our indebtedness on or before maturity. We cannot assure you that we will be able to refinance any of our indebtedness, including our senior credit facilities and the notes, on commercially reasonable terms or at all. If we cannot service our Table of Contents indebtedness, we may have to take actions such as selling assets, seeking additional equity or reducing or delaying capital expenditures, strategic acquisitions, investments and alliances. We cannot assure you that any such actions, if necessary, could be effected on commercially reasonable terms or at all. Despite current indebtedness levels, we and our subsidiaries may still be able to incur substantially more debt. This could further exacerbate the risks associated with our substantial financial leverage. We and our subsidiaries may be able to incur substantial additional indebtedness in the future because the terms of the indenture governing the notes and our senior credit facilities do not fully prohibit us or our subsidiaries from doing so. Subject to covenant compliance and certain conditions, our senior credit facilities permit additional borrowing, including borrowing up to $75.0 million under our revolving credit facility. If new debt is added to our and our subsidiaries current debt levels, the related risks that we and they now face could intensify. Restrictive covenants in the indenture governing the notes and the agreement governing our senior credit facilities may restrict our ability to pursue our business strategies. The indenture governing the notes and the agreement governing our senior credit facilities limit SS C s ability, among other things, to: incur additional indebtedness; sell assets, including capital stock of restricted subsidiaries; agree to payment restrictions affecting SS C s restricted subsidiaries; pay dividends; consolidate, merge, sell or otherwise dispose of all or substantially all of SS C s assets; make strategic acquisitions; enter into transactions with SS C s affiliates; incur liens; and designate any of SS C s subsidiaries as unrestricted subsidiaries. In addition, our senior credit facilities include other covenants which, subject to permitted exceptions, prohibit us from making capital expenditures in excess of certain thresholds, making investments, loans and other advances, engaging in sale-leaseback transactions, entering into speculative hedging agreements, and prepaying our other indebtedness while indebtedness under our senior credit facilities is outstanding. The agreement governing our senior credit facilities also requires us to maintain compliance with a leverage ratio and an interest coverage ratio. Our ability to comply with these ratios may be affected by events beyond our control. See Description of certain indebtedness Senior credit facilities for additional information. The restrictions contained in the indenture governing the notes and the agreement governing our senior credit facilities could limit our ability to plan for or react to market conditions, meet capital needs, acquire companies, products or technologies, or otherwise restrict our activities or business plans. Table of Contents A breach of any of these restrictive covenants or our inability to comply with the required financial ratios could result in a default under the agreement governing our senior credit facilities. If such a default occurs, the lenders under our senior credit facilities may elect to: declare all borrowings outstanding, together with accrued interest and other fees, to be immediately due and payable; or prevent us from making payments on the notes, either of which would result in an event of default under the notes. The lenders also have the right in these circumstances to terminate any commitments they have to provide further borrowings. If we are unable to repay outstanding borrowings when due, the lenders under our senior credit facilities also have the right to proceed against the collateral, including our available cash, granted to them to secure the indebtedness. If the indebtedness under our senior credit facilities and the notes were to be accelerated, we cannot assure you that our assets would be sufficient to repay in full that indebtedness and our other indebtedness. We may not have the ability to raise the funds necessary to finance the change of control offer required by the indenture governing the notes. Upon the occurrence of certain specific kinds of change of control events, we will be required to offer to repurchase all outstanding notes at 101% of the principal amount thereof plus accrued and unpaid interest and liquidated damages, if any, to the date of repurchase. However, it is possible that we will not have sufficient funds at the time of the change of control to repurchase the notes at the required price or that restrictions in our senior credit facilities will not allow such repurchases. In addition, certain important corporate events, such as leveraged recapitalizations that would increase the level of our indebtedness, would not constitute a Change of Control under the indenture governing the notes. SS C Holdings is a holding company with no operations or assets of its own and its ability to pay dividends is limited or otherwise restricted. SS C Holdings has no direct operations and no significant assets other than the stock of SS C. Our ability to pay dividends is limited by our status as a holding company and by the terms of the indenture governing our notes and the agreement governing our senior credit facilities, which significantly restrict the ability of our subsidiaries to pay dividends or otherwise transfer assets to SS C Holdings. See Risk factors Risks relating to our indebtedness Restrictive covenants in the indenture governing the notes and the agreement governing our senior credit facilities may restrict our ability to pursue our business strategies. Moreover, even in the absence of any such restrictions, none of the subsidiaries of SS C Holdings is obligated to make funds available to SS C Holdings for the payment of dividends or otherwise. In addition, Delaware law imposes requirements that may restrict the ability of our subsidiaries, including SS C, to pay dividends to SS C Holdings. Also, SS C Holdings has no ability to acquire businesses or property or conduct other business activities directly. These limitations could reduce our attractiveness to investors. Table of Contents Risks relating to this offering and ownership of our common stock If equity research analysts do not publish or cease publishing research or reports about our business or if they issue unfavorable commentary or downgrade our common stock, the price and trading volume of our common stock could decline. The trading market for our common stock is influenced by the research and reports that equity research analysts publish about us and our business. We do not control these analysts. The price of our stock could decline if one or more equity analysts downgrade our stock or if those analysts issue other unfavorable commentary or cease publishing reports about us or our business. If any equity research analyst who covers us or may cover us in the future were to cease coverage of our company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline. The market price of our common stock may be volatile, which could result in substantial losses for investors purchasing shares in this offering. Shares of our common stock were sold in our initial public offering, or IPO, at a price of $15.00 per share on March 31, 2010, and our common stock has subsequently traded as high as $21.95 and as low as $13.27. An active, liquid and orderly market for our common stock may not be sustained, which could depress the trading price of our common stock. In addition, the market price of our common stock may fluctuate significantly. Some of the factors that may cause the market price of our common stock to fluctuate include: fluctuations in our quarterly financial results or the quarterly financial results of companies perceived to be similar to us; changes in estimates of our financial results or recommendations by securities analysts; failure of any of our products to achieve or maintain market acceptance; changes in market valuations of similar companies; success of competitive products; changes in our capital structure, such as future issuances of securities or the incurrence of additional debt; announcements by us or our competitors of significant products, contracts, acquisitions or strategic alliances; regulatory developments in the United States, foreign countries or both; litigation involving our company, our general industry or both; additions or departures of key personnel; investors general perception of us; and changes in general economic, industry and market conditions. In addition, if the market for technology stocks or the stock market in general experiences a loss of investor confidence, the trading price of our common stock could decline for reasons unrelated to our business, financial condition or results of operations. If any of the foregoing Table of Contents occurs, it could cause our stock price to fall and may expose us to class action lawsuits that, even if unsuccessful, could be costly to defend and a distraction to management. A significant portion of our total outstanding shares may be sold into the public market in the near future, which could cause the market price of our common stock to drop significantly, even if our business is doing well. Based on shares outstanding as of December 31, 2010, upon completion of this offering, we will have 75,272,612 shares of our common stock outstanding, which includes 480,100 shares to be sold by selling stockholders upon the exercise of outstanding options in connection with this offering. Of these shares, the shares of common stock sold in our IPO are, and the shares sold in this offering will be, freely tradable, except for any shares purchased by our affiliates as defined in Rule 144 of the Securities Act of 1933. We and all of our directors and officers and certain other stockholders who collectively owned 66,143,147 shares of our common stock (including vested options and the shares of our common stock to be sold by the selling stockholders in this offering) on December 31, 2010 have signed lock-up agreements under which they have agreed not to sell, transfer or dispose of, directly or indirectly, any shares of our common stock or any securities exercisable or exchangeable for shares of our common stock without the prior written consent of J.P. Morgan Securities LLC for a period of 90 days, subject to a possible extension under certain circumstances, after the date of this prospectus. After expiration of the lock-up period, these shares may be sold into the public market, subject to prior registration or qualification for an exemption from registration, including, in the case of shares held by affiliates, compliance with the volume restrictions of Rule 144 of the Securities Act of 1933. To the extent that any of these stockholders sell, or indicate an intent to sell, substantial amounts of our common stock in the public after the contractual lock-ups and other legal restrictions on resale discussed in this prospectus lapse, the trading price of our common stock could decline significantly. In addition, (i) the 12,182,192 shares subject to outstanding options as of December 31, 2010, and (ii) the 3,858,788 shares reserved for future issuance under our equity compensation plans as of December 31, 2010, will become eligible for sale in the public market in the future, subject to certain legal and contractual limitations. If these additional shares are sold, or if it is perceived that they will be sold, in the public market, the price of our common stock could decline substantially. A few significant stockholders control the direction of our business. If the ownership of our common stock continues to be highly concentrated, it will prevent you and other stockholders from influencing significant corporate decisions. Following the completion of this offering, investment funds affiliated with Carlyle will beneficially own approximately 47.1% of our common stock, and William C. Stone, our Chairman of the Board and Chief Executive Officer, will beneficially own approximately 23.3% of our common stock, assuming that the underwriters do not exercise their option to purchase additional shares. We are also party to a stockholders agreement with Carlyle and Mr. Stone, pursuant to which Carlyle and Mr. Stone have agreed to vote in favor of nominees to our board of directors nominated by each other. As a result, Carlyle and Mr. Stone will continue to exercise control over matters requiring stockholder approval and our policy and affairs. See Certain relationships and related transactions Stockholders agreement. Table of Contents The presence of Carlyle s nominees on our board of directors may result in a delay or the deterrence of possible changes in control of our company, which may reduce the market price of our common stock. The interests of our existing stockholders may conflict with the interests of our other stockholders. Additionally, Carlyle and its affiliates are in the business of making investments in companies, and from time to time acquire interests in businesses that directly or indirectly compete with certain portions of our business or are suppliers or clients of ours. Our management has broad discretion in the use of our existing cash resources and may not use such funds effectively. Our management will continue to have broad discretion in the application of our cash resources. Accordingly, you will have to rely upon the judgment of our management with respect to our existing cash resources, with only limited information concerning management s specific intentions. Our management may spend our cash resources in ways that our stockholders may not desire or that may not yield a favorable return. The failure by our management to apply these funds effectively could harm our business. Provisions in our certificate of incorporation and bylaws might discourage, delay or prevent a change of control of our company or changes in our management and, therefore, depress the trading price of our common stock. Provisions of our certificate of incorporation and bylaws and Delaware law may discourage, delay or prevent a merger, acquisition or other change in control that stockholders may consider favorable, including transactions in which you might otherwise receive a premium for your shares of our common stock. These provisions may also prevent or frustrate attempts by our stockholders to replace or remove our management. These provisions include: limitations on the removal of directors; a classified board of directors so that not all members of our board are elected at one time; advance notice requirements for stockholder proposals and nominations; the inability of stockholders to call special meetings; the ability of our board of directors to make, alter or repeal our bylaws; the ability of our board of directors to designate the terms of and issue new series of preferred stock without stockholder approval, which could be used to institute a rights plan, or a poison pill, that would work to dilute the stock ownership of a potential hostile acquirer, likely preventing acquisitions that have not been approved by our board of directors; and a prohibition on stockholders from acting by written consent if William C. Stone, investment funds affiliated with Carlyle, and certain transferees of Carlyle cease to collectively hold a majority of our outstanding common stock. The existence of the foregoing provisions and anti-takeover measures could limit the price that investors might be willing to pay in the future for shares of our common stock. They could also deter potential acquirers of our company, thereby reducing the likelihood that you could receive a premium for your common stock in an acquisition. See Description of capital stock Anti-takeover provisions for additional information on the anti-takeover measures applicable to us. Table of Contents Our management is required to devote significant time to public company compliance requirements. This may divert management s attention from the growth and operation of the business. The Sarbanes-Oxley Act of 2002, and rules subsequently implemented by the Securities and Exchange Commission and The NASDAQ Global Select Market, impose a number of requirements on public companies, including provisions regarding corporate governance practices. Our management and other personnel devote a significant amount of time to compliance with these requirements. Moreover, these rules and regulations may make some activities time-consuming and costly. For example, these rules and regulations may make it more difficult and more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced policy limits and coverage or incur substantial additional costs to maintain the same or similar coverage. These rules and regulations may also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, our board committees or as executive officers. In addition, the Sarbanes-Oxley Act requires, among other things, that we maintain effective internal control over financial reporting and disclosure controls and procedures. In particular, we perform system and process evaluation and testing of our internal control over financial reporting to allow management to report on the effectiveness of our internal control over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act. Our testing, or the subsequent testing by our independent registered public accounting firm, may reveal deficiencies in our internal control over financial reporting that are deemed to be material weaknesses. Our compliance with Section 404 requires that we expend significant management time on compliance-related issues. Moreover if we or our independent registered public accounting firm identify deficiencies in our internal control over financial reporting that are deemed to be material weaknesses, the market price of our common stock could decline and we could be subject to sanctions or investigations by The NASDAQ Global Select Market, the Securities and Exchange Commission or other regulatory authorities, which would require additional financial and management resources. Table of Contents Forward-looking statements This prospectus includes statements that are, or may be deemed to be, forward-looking statements. These forward-looking statements can be identified by the use of forward-looking terminology, including the terms believes, estimates, anticipates, plans, expects, intends, may, will or should or, in each case, their negative or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts. They appear in a number of places throughout this prospectus and include statements regarding our intentions, beliefs or current expectations concerning, among other things, our results of operations, financial condition, liquidity, prospects, growth, technology and strategies and the industry in which we operate. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. We caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity, and the development of the industry in which we operate may differ materially from those made in or suggested by the forward-looking statements contained in this prospectus. In addition, even if our results of operations, financial condition and liquidity, and the development of the industry in which we operate, are consistent with the forward-looking statements contained in this prospectus, those results or developments may not be indicative of results or developments in subsequent periods. The following list represents some, but not all, of the factors that may cause actual results to differ from those anticipated or predicted: the effect of a prolonged downturn in the general economy or the financial services industry; the effect of any further or accelerated consolidations in the financial services industry; our ability to retain and attract clients and key personnel; the integration of acquired businesses; our ability to continue to derive substantial revenues from the licensing of, or provision of software-enabled services relating to, certain of our licensed software, and the provision of maintenance and professional services in support of such licensed software; our ability to adapt to rapidly changing technology and evolving industry standards, and our ability to introduce new products and services; challenges in maintaining and expanding our international operations; the effects of war, terrorism and other catastrophic events; the risk of increased interest rates due to the variable rates of interest on certain of our indebtedness; and other risks and uncertainties, including those listed under the
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+PROSPECTUS SUMMARY The following summary is qualified in its entirety by the more detailed information, including the section entitled Risk Factors and the consolidated financial statements and related notes, included elsewhere in this prospectus. Because this is a summary, it may not contain all of the information that may be important to you. You should read the entire prospectus and the other documents to which we have referred you before deciding whether to invest in this offering. You should carefully consider, among other things, the matters
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+Table of Contents SELLING SHAREHOLDERS The following table details the name of each selling shareholder, the number of shares owned by such Selling Shareholders and the number of shares that may be offered by such Selling Shareholders for resale under this prospectus. Each Selling Stockholder purchased the securities registered hereunder. Except for Frank Stronach, David Taylor and David Elliott, none of the Selling Shareholders are affiliates of broker-dealers. Frank Stronach, David Taylor and David Elliott are affiliates of Haywood Securities, Inc., a Canadian Broker-Dealer. None of the other Selling Shareholders have had any material relationship with us within the past three years. The following table is based on 27,001,740 shares outstanding as of December 31, 2010. None of these shares are being offered by directors, officers or principal shareholders. Common stock Owned Prior to Offering Maximum Number of Common Shares to be Sold Pursuant to this Prospectus (1) Common stock Owned After Offering Name of Selling Shareholder Number Percent Number Percent Frank Stronach [1] 50,000 0.185 50,000 Nil Nil David Taylor [1] 50,000 0.185 50,000 Nil Nil Halcorp Capital Inc.[2] 200,000 0.741 200,000 Nil Nil Patricia Saunders 250,000 0.926 250,000 Nil Nil Millerd Holdings Ltd. [3] 500,000 1.85 500,000 Nil Nil Terry Evancio 100,000 0.37 100,000 Nil Nil Laurence Guichon 100,000 0.37 100,000 Nil Nil Timothy Turyk 100,000 0.37 100,000 Nil Nil John Day 50,000 0.185 50,000 Nil Nil Ed McKim 50,000 0.185 50,000 Nil Nil Trafalgar 1805 Ltd. [4] 100,000 0.37 100,000 Nil Nil Virginia Clarke 50,000 0.185 50,000 Nil Nil Matthew Clarke 50,000 0.185 50,000 Nil Nil Giles Clarke 50,000 0.185 50,000 Nil Nil Aeneas MaCkay Millenium Trust [5] 50,000 0.185 50,000 Nil Nil Batell Investments Ltd. [6] 50,000 0.185 50,000 Nil Nil David Elliott [1] 250,000 0.926 250,000 Nil Nil David Shepherd 100,000 0.37 100,000 Nil Nil Kerry Smith 250,000 0.926 250,000 Nil Nil Dragon Equities Ltd. [7] 150,000 0.555 150,000 Nil Nil Datmix Investments Ltd. [8] 150,000 0.555 150,000 Nil Nil Platoro Investments Ltd. [9] 225,000 0.833 225,000 Nil Nil Jean Williams 50,000 0.185 50,000 Nil Nil Gold Equities Holdings Ltd. [10] 50,000 0.185 50,000 Nil Nil David Rankin 25,000 0.092 25,000 Nil Nil Paul Amundson 25,000 0.092 25,000 Nil Nil Andrew Williams 75,000 0.278 75,000 Nil Nil Lisa Stefani 75,000 0.278 75,000 Nil Nil Chelmer Investments Corp. [11] 50,000 0.185 50,000 Nil Nil Peter Hemstead 50,000 0.185 50,000 Nil Nil SOTET Capital [12] 75,000 0.278 75,000 Nil Nil Private Pension - David Kenworth 37,500 0.139 37,500 Nil Nil Private Pension - Mary Kenworth 37,500 0.139 37,500 Nil Nil Caroline Gallagher 37,500 0.139 37,500 Nil Nil Andrew Colquhoun 37,500 0.139 37,500 Nil Nil Leonard Rawcliffe 37,500 0.139 37,500 Nil Nil Mark H. Hamilton 37,500 0.139 37,500 Nil Nil Gillian Gardiner 37,500 0.139 37,500 Nil Nil Roger Hardaker 100,000 0.37 100,000 Nil Nil Anthony Cowburn 37,500 0.139 37,500 Nil Nil Private Pension - Simon Sharpe 37,500 0.139 37,500 Nil Nil Private Pension - Peter Isaacs 50,000 0.185 50,000 Nil Nil David Hamilton 37,500 0.139 37,500 Nil Nil Private Pension - Karen Smith 25,000 0.092 25,000 Nil Nil Pilling & Co [13] 375,000 1.388 375,000 Nil Nil C.J. Beverly SOPP 37,500 0.139 37,500 Nil Nil Table of Contents Paul Laity 37,500 0.139 37,500 Nil Nil Lamond Investments [14] 150,000 0.555 150,000 Nil Nil Ian McAvity 75,000 0.278 75,000 Nil Nil Bill Deasy 634,441 2.35 634,441 Nil Nil Jerry Beto 51,830 0.192 51,830 Nil Nil Bob Bishop 300,000 1.11 300,000 Nil Nil Norm Burmeister 100,000 0.37 100,000 Nil Nil Ed Fisher 15,000 0.055 15,000 Nil Nil Scott Gibson 100,000 0.37 100,000 Nil Nil David Elliott RRSA Accounts 250,000 0.926 250,000 Nil Nil David Shepard RRSA Accounts 100,000 0.37 100,000 Nil Nil Kerry Smith RRSA Accounts 250,000 0.926 250,000 Nil Nil Ronald W. Guill 1,250,000 4.63 1,250,000 Nil Nil Total 7,676,271 28.42 7,676,271 * Less than 1%. None of the Selling Shareholders file any reports under the Exchange Act. None of the Selling Shareholders are registered investment advisers under the 1940 Act or a registered broker-dealers. The Selling Shareholders have represented they have no agreement or understandings, directly or indirectly, with any person to distribute our securities, as of the time of their purchase of the Shares and have not entered into any agreements or understandings, directly or indirectly, with any person to distribute our securities since their purchases of the Shares. [1] David Elliott, David Taylor and Frank Stronach are principals in the firm of Haywood Securities, Inc. ( Haywood ), a British Columbia company and Canadian broker-dealer. The principal address of Haywood is 2000-400 Burrard Street, Vancouver, BC V6C 3A6. David Elliott and Frank Stronach are the natural persons who exercise voting power over Haywood. Haywood is not a natural person. Haywood does not file any reports under the Exchange Act. Haywood is not a majority subsidiary of a reporting Company under the Exchange Act. Haywood is not a registered investment adviser under the 1940 Act or a registered broker-dealer in the United States. [2] Halcorp Capital Inc. is a Alberta Corporation. The principal address of Halcorp Capital is 7928 Rowland Road, Edmonton, AB T6A 3W1. Halcorp Capital Inc. does not file any reports under the Exchange Act. Michael Halvorson is the individual that exercises voting and investment power on behalf of Halcorp Capital Inc. [3] Millerd Holdings Ltd. is a British Columbia Corporation. The principal address of Millerd Holdings Ltd. is 833 West 3rd St, North Vancouver, BC V7P 3K7. Millerd Holdings Ltd. does not file any reports under the Exchange Act. Don Millerd is the individual that exercises voting and investment power on behalf of Millerd Holdings Ltd. [4] Trafalgar 1805 Ltd. is a United Kingdom Corporation. The principal address of Trafalgar 1805 Ltd. is 90 Jermyn St., London, UK SW1Y 6JD. Trafalgar 1805 Ltd. does not file any reports under the Exchange Act. Henry Clarke is the individual that exercises voting and investment power on behalf of Trafalgar 1805 Ltd. [5] Aeneas MaCkay Millenium Trust is a Trust organized under the province of Monaco. The principal address of Aenas MaCkay Millenium Trust is C/O BP 167 17 Ave De La Costa, Monte Carlo, Monaco 98003. The Aeneas MaCkay Millenium Trust does not file any reports under the Exchange Act. Aeneas Mackay is the Trustee and individual that exercises voting and investment power on behalf of the Aeneas MaCkay Millenium Trust. [6] Batell Investments Ltd. is a British Columbia Corporation. The principal address of Batell Investments Ltd. is 3999 40th St, Delta, BC V4K 3N2. Batell Investments Ltd. does not file any reports under the Exchange Act. Ken Bates and David Elliott is the individual that exercises voting and investment power on behalf of Batell Investments Ltd. [7] Dragon Equities Ltd. is a England and Wales Corporation. The principal address of Dragon Equities Ltd. is 22 Grosvenor Square, London, UK W1K 6LF. Dragon Equities Ltd. does not file any reports under the Exchange Act. Anthony Williams is the individual that exercises voting and investment power on behalf of Dragon Equities Ltd. [8] Datmix Investments Ltd. is a British Virgin Island Corporation. The principal address of Datmix Investments Ltd. is Herrengasse 2, PO Box 562, FL-9490 Vaduz, Liechtenstein. Datmix Investments Ltd. does not file any reports under the Exchange Act. Margrith Burer is the individual that exercises voting and investment power on behalf of Datmix Investments Ltd. [9] Platoro Investments Ltd. is a Seychelles Corporation. The principal address of Platoro Investments Ltd. is 303 Aarti Chambers, Mont Fleuri, PO Box 983, Victoria Mahe, Seychelles. Platoro Investments Ltd. does not file any reports under the Exchange Act. Benjamin Lee and Jordan Eliseo is the individual that exercises voting and investment power on behalf of Platoro Investments Ltd [10] Gold Equities Holdings Ltd. is a British Virgin Island Corporation. The principal address of Gold Equities Holdings Ltd is Herrengasse 2, PO Box 562, FL-9490 Vaduz, Liechtenstein. Gold Equities Holdings Ltd. does not file any reports under the Exchange Act. Margirth Burer is the individual that exercises voting and investment power on behalf of Gold Equities Holdings Ltd. [11] Chelmer Investments Corp. is a British Columbia Corporation. The principal address of Chelmer Investments Corp. is 2717 West 29th Ave., Vancouver, BC V6L 1X8. Chelmer Investments Corp. does not file any reports under the Exchange Act. Darren Divine is the individual that exercises voting and investment power on behalf of Gold Equities Holdings Ltd. [12] SOTET Capital is a British Columbia Corporation. The principal address of SOTET Capital is 21985 86A Ave., Fort Langley, BC V1M 3S7. SOTET Capital does not file any reports under the Exchange Act. Stephen Stanley is the individual that exercises voting and investment power on behalf of SOTET Capital. [13] Pilling & Co. is a United Kingdom Corporation. The principal address of Pilling & Co. is Henry Pilling House, Booth Street, Manchester M2 4AF UK. Pilling & Co. does not file any reports under the Exchange Act. Tony Cawley is the individual that exercises voting and investment power on behalf of Pilling & Co. [14] Lamond Investments is a Alberta Corporation. The principal address of Lamond Investments is 1800-633 6 Ave, Calgary, AB T2P 2Y5. Lamond Investments does not file any reports under the Exchange Act. Robert Lamond is the individual that exercises voting and investment power on behalf of Lamond Investments Table of Contents Each of the Selling Shareholders that is an affiliate of a broker-dealer has represented to us that it purchased the shares offered by this prospectus in the ordinary course of business and, at the time of purchase of those shares, did not have any agreements, understandings or other plans, directly or indirectly, with any person to distribute those shares. As of December 31, 2010, the number of shares of Common Stock that can be sold by officers, directors, principal shareholders, and others pursuant to Rule 144 is 887,247. However, as a condition to our listing on the TSX-V, our officers and directors were required to deposit their Common Stock totaling 4,799,239 shares of the outstanding shares, into an escrow account with Computershares Investor Services, Inc. Those escrowed shares are subject to the TSX-V s Tier 1 escrow requirement. Those requirements provide for an 18 month escrow release mechanism with 25% of the escrowed securities being released on September 24, 2010 (the date our common shares commenced trading on the TSX-V), and 25% of the escrowed securities to be released every 6 months thereafter. No officer or director has requested release of any of their escrowed shares, and no current officer or director has ever sold any of their shares. Shares purchased in this offering, which will be immediately resalable, and sales of all of our other shares after applicable restrictions expire, could have a depressive effect on the market price, if any, of our common stock. We are filing a registration statement, of which this Prospectus is a part, primarily to fulfill a contractual obligation to do so. In connection with our Summer 2010 offering, no warrant solicitation fees will be paid, and the gross proceeds received by us were US $1,204,272. As of March 15, 2011, we had 27,001,740 shares of our common stock outstanding, which shares were held by approximately 2,100 shareholders of record. Sponsorship Agreement with Haywood Securities, Inc. Pursuant to a letter of intent dated September 20, 2010, between Haywood and us, we agreed to pay Haywood a fee of $35,000 plus Canadian GS Tax, and issue 200,000 shares of common stock on delivery of Haywood s final report to the TSX-V for our TSX-V listing. We also agreed that Haywood has a first right of refusal for any brokered offerings of equity or debt by us for one year following the acceptance of our TSX-V Listing. Haywood s final report was delivered to the TSX-V on September 22, 2010. On September 22, 2010, our application for listing on the TSX-V was accepted and our common stock commenced trading on the TSX-V on September 24, 2010 under the symbol THM. We also agreed to indemnify Haywood and its respective officers, directors and employees against all losses, claims, damages, liability and expenses related to or arising out of Haywood s activities in connection with the sponsorship. Haywood Securities is not a natural person. Haywood Securities does not file any reports under the Exchange Act. Haywood Securities is not a majority subsidiary of a reporting Company under the Exchange Act. Haywood Securities is not a registered investment adviser under the 1940 Act or a registered broker-dealer under U.S. Law. Haywood Securities has represented it has no agreement or understandings, directly or indirectly, with any person to distribute our securities, as of the time of their purchase of the warrants. Frank Stronach, David Taylor and David Elliott exercise voting and investment power on behalf of Haywood Securities. Frank Stronach and David Elliott are each Selling Shareholders. Finder s Fees Pursuant to a Non-brokered Private Placement Agreement, dated July 20, 2010, between us and Haywood, we agreed to pay a finder s fee to Haywood in connection with our private placement offering of Units (the Unit Offering ) as follows: (i) a cash commission of 10 percent (10%) of the gross proceeds attributable to amounts Haywood raised during our most recent private placement of securities; and, (ii) common stock purchase warrants equal to 10% of the underlying securities sold in the Unit Offering attributable to Haywood. There was no accountable or unaccountable expense allowances. On September 24, 2010, we closed the Unit Offering. A finder s fee of US$92,233 (CDN$95,000) together with the grant of 475,000 share purchase warrants was paid to Haywood and Bolder Investment Partners, Ltd., a British Columbia, Canada Company ( Bolder ) for their sales of securities in the offering. Bolder is currently located at 1450 Creekside Drive, Suite 800, Vancouver, British Columbia. Bolder is an investment banking firm which was acquired by Haywood on October 22, 2010. Bolder does not file any reports under the Exchange Act. Bolder is not a majority subsidiary of a reporting Company under the Exchange Act. Bolder is not a registered investment adviser under the 1940 Act or a registered broker-dealer under U.S. Law. Frank Stronach, David Taylor and David Elliot, as the principals of Haywood, exercise voting and investment power on behalf of Bolder. Stronach, Taylor, and Elliott are each Selling Shareholders. For three years prior to July 13, 2010, Haywood and Bolder had no material relationship with us. Table of Contents Our Relationships with Selling Security Holders None of the Selling Shareholders has at any time during the past three years acted as one of our employees, officers or directors or had a material relationship with us. Haywood currently holds over 200,000 shares of our common stock which shares were issued as compensation for its role as our sponsor in connection with our listing on the TSX-V. Prior to the Unit Offering and the engagement of Haywood as sponsor, we did not have a material relationship with Haywood. PLAN OF DISTRIBUTION This prospectus includes up to 7,676,271 shares of common stock offered by the Selling Shareholders. We will not receive any of the proceeds from the sale by the Selling Shareholders of the Shares, except from exercise of the warrants. The Selling Shareholders may sell all or a portion of their Shares beneficially owned by them and offered hereby from time to time directly or through one or more underwriters, broker-dealers or agents. If the Shares are sold through underwriters or broker-dealers, the Selling Shareholders will be responsible for underwriting discounts or commissions or agent's commissions. The Shares may be sold in one or more transactions at fixed prices, at prevailing market prices at the time of the sale, at varying prices determined at the time of sale, or at negotiated prices. These sales may be effected in transactions, which may involve crosses or block transactions: on any national securities exchange or quotation service on which the securities may be listed or quoted at the time of sale; in the over-the-counter market; otherwise than on these exchanges or systems or in the over-the-counter market; through the writing of options, whether such options are listed on an options exchange or otherwise; as ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers; as block trades in which the broker-dealer will attempt to sell the Shares as agent but may position and resell a portion of the block as principal to facilitate the transaction; as purchases by a broker-dealer as principal and resale by the broker-dealer for its account; as an exchange distribution in accordance with the rules of the applicable exchange; as privately negotiated transactions; as short sales; as sales pursuant to Rule 144; where broker-dealers may agree with the selling security holders to sell a specified number of such shares at a stipulated price per share; as a combination of any such methods of sale; and by any other method permitted pursuant to applicable law. If the Selling Shareholders effect such transactions by selling the Shares to or through underwriters, broker-dealers or agents, such underwriters, broker-dealers or agents may receive commissions in the form of discounts, concessions or commissions from the Selling Shareholders or commissions from purchasers of the common stock for whom they may act as agent or to whom they may sell as principal (which discounts, concessions or commissions as to particular underwriters, broker-dealers or agents may be in excess of those customary in the types of transactions involved). In connection with sales of the Shares, the Selling Shareholders may enter into hedging transactions with broker-dealers, which may in turn engage in short sales of the common stock in the course of hedging in positions they assume. The Selling Shareholders may also sell common stock short and deliver common stock, as applicable, covered by this prospectus to close out short positions and to return borrowed shares Table of Contents in connection with such short sales. The Selling Shareholders may also loan or pledge common stock to broker-dealers that in turn may sell such shares. The Selling Shareholders may pledge or grant a security interest in some or all of the common stock owned by them and, if they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell the common stock from time to time pursuant to this prospectus or any amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act of 1933, as amended, amending, if necessary, the list of Selling Shareholders to include the pledgee, transferee or other successors in interest as Selling Shareholders under this prospectus. The Selling Shareholders also may transfer and donate the common stock in other circumstances in which case the transferees, donees, pledgees or other successors in interest will be the selling beneficial owners for purposes of this prospectus. The Selling Shareholders and any broker-dealer participating in the distribution of the Shares may be deemed to be underwriters within the meaning of the Securities Act, and any commissions paid, or any discounts or concessions allowed to, any such broker-dealer may be deemed to be underwriting commissions or discounts under the Securities Act. In the event any underwriter, dealer or agent who is a member of the Financial Industry Regulatory Authority, or FINRA, participates in the distribution of any securities offered pursuant to this prospectus and any applicable prospectus supplement, the maximum underwriters compensation to be received by such FINRA member will not be greater than eight percent (8%) of the gross proceeds from the sale of the securities. At the time a particular offering of the Shares is made, a prospectus supplement, if required, will be distributed which will set forth the aggregate amount of the Shares being offered and the terms of the offering, including the name or names of any broker-dealers or agents, any discounts, commissions and other terms constituting compensation from the Selling Shareholders and any discounts, commissions or concessions allowed or re-allowed or paid to broker-dealers. If the Selling Stockholders use this prospectus for any sale of the Shares, they will be subject to the prospectus delivery requirements of the Securities Act. Other than David Elliot, David Taylor and Frank Stronach, to our knowledge, no Selling Shareholder is a broker-dealer or any affiliate of a broker-dealer. Under the securities laws of some states, the Shares may be sold in such states only through registered or licensed brokers or dealers. In addition, in some states the Shares may not be sold unless such shares have been registered or qualified for sale in such state or an exemption from registration or qualification is available and is complied with. There can be no assurance that any Selling Shareholder will sell any or all of the Shares registered pursuant to the registration statement, of which this prospectus forms a part. The Selling Shareholders and any other person participating in such distribution will be subject to applicable provisions of the Exchange Act of 1934, as amended, and the rules and regulations thereunder, including, without limitation, Regulation M of the Exchange Act, which may limit the timing of purchases and sales of any of the common stock by the Selling Shareholders and any other participating person. Regulation M may also restrict the ability of any person engaged in the distribution of the common stock to engage in market-making activities with respect to the Shares. All of the foregoing may affect the marketability of the Shares and the ability of any person or entity to engage in market-making activities with respect to the Shares. We will pay all expenses of the registration of the Shares, estimated to be $15,000 in total, including, without limitation, Securities and Exchange Commission filing fees and expenses of compliance with state securities or blue sky laws; provided, however, that a Selling Shareholder will pay all underwriting discounts and selling commissions, if any Once sold under the registration statement of which this prospectus forms a part, the Shares will be freely tradable in the hands of persons other than our affiliates. Section 15(g) of the Exchange Act a/k/a Penny Stock Rules Our common stock is defined as "penny stock" under the Securities Exchange Act of 1934, and its rules. The Securities and Exchange Commission (SEC) has adopted regulations that define "penny stock" to include common stock that has a market price of less than $5.00 per share, subject to certain exceptions. These rules include the following requirements: broker-dealers must deliver, prior to the transaction, a disclosure schedule prepared by the SEC relating to the penny stock market; broker-dealers must disclose the commissions payable to the broker-dealer and its registered representative; broker-dealers must disclose current quotations for the securities; Table of Contents if a broker-dealer is the sole market-maker, the broker-dealer must disclose this fact and the broker-dealers presumed control over the market; and a broker-dealer must furnish its customers with monthly statements disclosing recent price information for all penny stocks held in the customers account and information on the limited market in penny stocks. Additional sales practice requirements are imposed on broker-dealers who sell penny stocks to persons other than established customers and accredited investors. For these types of transactions, the broker-dealer must make a special suitability determination for the purchaser and must have received the purchasers written consent to the transaction prior to sale. If our common stock becomes subject to these penny stock rules these disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for our common stock, if such trading market should occur. As a result, fewer broker-dealers are willing to make a market in our stock. You would then be unable to resell your shares. State Securities Laws Under the securities laws of some states, the shares may be sold in such states only through registered or licensed brokers or dealers. In addition, in some states the shares may not be sold unless the shares have been registered or qualified for sale in the state or an exemption from registration or qualification is available and is complied with. We currently file periodic and annual reports under the Exchange Act. Therefore, under the National Securities Market Improvement Act of 1996 ( NSMIA ), the states and territories of the United States are preempted from requiring registration of resales by holders of shares. However, NSMIA does allow states and territories of the United States to require notice filings and collect fees with regard to these transactions and a state may suspend the offer and sale of securities within such state if any such required filing is not made or fee is not paid. Resales Under Canadian Securities Laws Any resale of our securities in Canada must comply with applicable securities laws that will vary depending on the relevant jurisdiction, and which may require resales to be made under available statutory exemptions from the prospectus and registration requirements of applicable Canadian securities laws, or under a discretionary exemption from such requirements granted by the applicable Canadian securities regulatory authority. Selling Shareholders are advised to seek legal advice prior to any resale of our securities. Table of Contents OUR BUSINESS Company History The Company was originally incorporated under the laws of the State of Idaho on November 9, 1935, under the name of Montgomery Mines, Inc. In April, 1978 controlling interest in the Montgomery Mines Corporation was obtained by a group of the Thunder Mountain property holders who then changed the corporate name to Thunder Mountain Gold, Inc. with the primary goal to further develop their holdings in the Thunder Mountain Mining District, Valley County, Idaho. Change in Situs and Authorized Capital We moved our situs from Idaho to Nevada, but maintain our corporate offices in Garden City, Idaho. On December 10, 2007, Articles of Incorporation were filed with the Secretary of State in Nevada for Thunder Mountain Gold, Inc., a Nevada Corporation. The Directors of Thunder Mountain Gold, Inc. (Nevada) were the same as for Thunder Mountain Gold, Inc. (Idaho). On January 25, 2008, the shareholders approved the merger of Thunder Mountain Gold, Inc. (Idaho) with Thunder Mountain Gold, Inc. (Nevada), which was completed by a share for share exchange of common stock. The terms of the merger were such that the Nevada Corporation was the surviving entity. The number of authorized shares for the Nevada Corporation is 200,000,000 shares of common stock with a par value of $0.001 per share and 5,000,000 shares of preferred stock with a par value of $0.0001 per share. We are structured as follows: We own 100% of the outstanding stock of Thunder Mountain Resources, Inc., a Nevada Corporation. Thunder Mountain Resources, Inc. owns 100% of the outstanding stock of South Mountain Mines, Inc., an Idaho Corporation. We have no patents, licenses, franchises or concessions which are considered by the Company to be of importance. The business is not of a seasonal nature. Since the potential products are traded in the open market, we have no control over the competitive conditions in the industry. There is no backlog of orders. There are numerous Federal and State laws and regulation related to environmental protection, which have direct application to mining and milling activities. The more significant of these laws deal with mined land reclamation and wastewater discharge from mines and milling operations. We do not believe that these laws and regulations as presently enacted will have a direct material adverse effect on our operations. Corporate Structure The following diagram illustrates our corporate structure as of the date of this prospectus: Table of Contents Subsidiary Companies On May 21, 2007, we filed articles of incorporation with the Secretary of State in Nevada for Thunder Mountain Resources, Inc., a wholly-owned subsidiary of Thunder Mountain Gold, Inc. G. Peter Parsley was appointed as President, Secretary, Treasurer and sole Director. The financial information for the new subsidiary is included in the consolidated financial statements. On September 27, 2007, Thunder Mountain Resources, Inc., a wholly-owned subsidiary of Thunder Mountain Gold, Inc., completed the purchase of all the outstanding stock of South Mountain Mines, Inc., an Idaho corporation. The sole asset of South Mountain Mines, Inc. consists of seventeen patented mining claims, totaling approximately 326 acres, located in the South Mountain Mining District, Owyhee County, Idaho. The Stock Purchase Agreement was previously filed as an Exhibit to a Form 8-K filed on June 11, 2007. Current Operations We are a mineral exploration stage company with no producing mines. We intend to remain in the business of exploring for mining properties that have the potential to produce gold, silver, base metals and other commodities. Reports to Security Holders We do not issue annual or quarterly reports to our security holders other than the annual Form 10-K and quarterly Forms 10-Q as electronically filed with the SEC. Electronically filed reports may be accessed at www.sec.gov. Interested parties also may read and copy any materials filed with the SEC at the SEC's Public Reference Room at 450 Fifth Street, N. W., Washington, D.C. 20549. Information may be obtained on the operation of the Public Reference Room by calling the SEC at 1 (800) SEC-0330. PROPERTIES We own rights to claims and properties in the mining areas of Nevada, Idaho and Arizona. None of the properties contain any known probable (indicated) or proven (measured) ore reserves under the definition of ore reserves that meet the definition of reserves as defined by SEC Industry Guide 7. We own 100% of the outstanding stock of Thunder Mountain Resources, Inc., a Nevada Corporation. Thunder Mountain Resources, Inc. owns 100% of the outstanding stock of South Mountain Mines, Inc., an Idaho Corporation. South Mountain Mines, Inc. owns the South Mountain Project. Thunder Mountain Resources, Inc. completed the direct purchase of 100% ownership of South Mountain Mines, Inc. on September 27, 2007. Thunder Mountain Gold, Inc. West Tonopah Claim Group, Esmeralda County, Nevada Eight unpatented lode mining claims totaling approximately 160 acres in the Tonopah Mining district of Esmeralda County, Nevada were located by us in 2007. The claims are situated on what has been interpreted to be the offset portion of the West End and Ohio Veins along the south limb of the Tonopah District West End Rhyolite intrusive dome. The target is projected to be 500 to 800 feet deep and could initially be tested by surface drilling. The typical veins historically mined in this area were 10-20 feet thick, with localized ore shoots up to 50 feet thick. Grades historically mined in the area were 15 to 20 ounces per ton (opt) silver and 0.15 to 0.20 ounce per ton (opt) gold. There is approximately 3,000 feet of relatively unexplored strike length. Clover Mountain Claim Group, Owyhee County, Idaho A geologic reconnaissance program in the fall of 2006 identified anomalous gold, silver, and other base metals in rock chips and soils at Clover Mountain. In February 2007 we located the Clover Mountain claim group consisting of 40 unpatented lode mining claims totaling approximately 800 acres. Mineralization appears to be associated with stockwork veining in a granitic stock which has been intruded by northeast and northwest-trending rhyolitic dikes. The property is overlain by locally silicified rhyolitic tuff. Follow-up rock chip sampling within the area of the anomaly has identified quartz veining with gold values ranging from 3.6 part per million (ppm) to 16.5 ppm. A soil sample program consisting of 215 samples was conducted on 200 x 200 grid spacing which defined two northeast tending soil anomalies with gold values ranging from 0.020 ppm to 0.873 ppm Au. The Table of Contents gold anomalies are approximately 1,000 in length and approximately 300 in width. The gold anomalies are associated with northeast trending structures with accompanying quartz stockwork veining in an exposure of Cretaceous/Tertiary granite. A 2,500 base metal soil anomaly is observed trending northwest proximal to rhyolite and rhyodacitic dikes which intrude the granitic stock. No work was completed on the claim group in 2010, but additional field work is warranted in the future that may include backhoe trenching and sampling in the significantly anomalous area followed by exploration drilling. CAS Iron Creek Cobalt Gold Property, Lemhi County, Idaho We purchased a first right on a prospective cobalt/gold property in the Idaho Cobalt Belt during the 4th quarter 2010. CAS claims are in the Iron Creek Mining District of the Idaho Cobalt Belt. The property consists of 46 unpatented lode claims located on U.S. Forest Service managed lands. The property has had extensive geophysical and geochemical work completed from 2003 through 2006, plus 19 drill holes in some of the anomalous zones. Selected assay results from previous drilling are shown below: Drill Hole Orientation Interval (ft) Total Footage Grade Gold (OPT) Grade Cobalt (%/lb/t) IC0302 N10E / -50 0 254.5 to 275.0 / 20.5 0.241 0.510 / 10.25 IC0303 N10E / -45 0 239.0 to 252.0 / 13.0 0.106 0.260 / 5.14 IC0304 N10E / -50 0 420.0 to 435.0 / 15.0 0.243 0.340 / 6.72 IC0307 N50W / -55 0 125.0 to 155.0 / 30.0 0.102 0.040 / 0.073 SRR6001 S20W / -55 0 151.0 to 161.0 / 10.0 N/A 0.470 / 9.33 The gold-cobalt present on the CAS claim group consists of exhalative style sulfide mineralization typical of the Cobalt Belt. Our Management feels that this prospect has significant potential of high-grade underground gold-cobalt mineralization and will be conducting a geologic evaluation of the property once the snow melts in the late spring 2011 prior to finalizing and agreement with the claim owner. Under the terms of the option, we have until July 31, 2011 to finalize an agreement on the property to acquire 100% interest in the property. Financial terms have not been disclosed. Thunder Mountain Resources, Inc. Trout Creek Claim Group, Lander County, Nevada The Trout Creek pediment exploration target is located in Lander County, Nevada in T.29N. R44E. The property consists of 60 unpatented mining claims totaling approximately 1,200 acres that are located along the western flank of the Shoshone Range in the Eureka-Battle Mountain mineral trend. The claims are located along a northwest structural tend which projects into the Battle Mountain mining district to the northwest and into the Goat Ridge window and the Gold Acres, Pipeline, and Cortez area to the southeast. Northwest trending mineralized structures in the Battle Mountain mining district are characterized by elongated plutons, granodiorite porphyry dikes, magnetic lineaments, and regional alignment of mineralized areas. The Trout Creek target is located at the intersection of this northwest trending mineral belt and north-south trending extensional structures. The Trout Creek target is based on a regional gravity anomaly on a well-defined northwest-southeast trending break in the alluvial fill thickness and underlying bedrock. Previous geophysical work in the 1980s revealed a airborne magnetic anomaly associated with the same structure, and this was further verified and outlined in 2008 by our personnel using a ground magnetometer. The target is covered by alluvial fan deposits of unknown thickness shed from the adjacent Shoshone Range, a fault block mountain range composed of Paleozoic sediments of both upper and lower plate rocks of the Roberts Mountains thrust. The geophysical anomaly could define a prospective and unexplored target within a well mineralized region. Effective March 22, 2011, we entered into a Minerals Lease and Agreement with and among Newmont Mining USA Limited,, a Delaware Corporation, Newmont Mining Corporation, a Delaware Corporation, (collectively Newmont ). Under the terms of the Agreement, we are responsible for conducting the exploration program and obligated to expend a minimum of $150,000 over the next two years, with additional expenditures possible in future years. Conducting drilling on Newmont lands is part of the work commitment, but the Agreement can be terminated after the minimum expenditure commitment has been made. The Agreement outlines the terms of a joint venture if our program is successful in which Newmont can earn up to 70% of the project by expending 150% of our expenditures up to the point that Newmont decides to form a joint venture. If we define economic mineralization and Newmont decides not to joint venture, then we can obtain ownership of any or all of the Newmont lands within the Area of Influence and Newmont would retain three percent (3%) of net smelter returns (NSR) as royalty interest. The Agreement expanded our exploration area by adding 9,565 leased acres to our 60 unpatented mining claims (1,200 acres) staked in 2007. The exploration area is situated on the Eureka-Battle Mountain trend in the Reese River Table of Contents Valley to the east of Newmont s operating Phoenix Mine and past producing Cove-McCoy Mines. The Agreement also makes available to us geophysical information, as well as geochemical and drill data from previous Newmont exploration projects on either side of our main target area. We have retained a consultant to interpret the Newmont data package and recommend additional geophysical work to enhance the primary target area. The work plan for 2011 and 2012 is to conduct additional geophysics that will help define important structural trends under the gravels, depth to bedrock and other important features of the valley fill. Interpretation of the geochemical and drill data provided by Newmont, in conjunction with the geophysics, will help guide the drilling program to be done over the next couple of field seasons. Portland Claim Group, Mohave County, Arizona In 2008 Thunder Mountain Resources, Inc. located 19 unpatented mining claims totaling approximately 380 acres at the Portland property located approximately 30 miles northwest of Kingman, Arizona. The identified gold exploration target is along a detachment at the contact of basement Precambrian gneiss and overlying Tertiary volcanics. Surface samples of silicified rhyolite on the Portland Claim Group range from a trace to 1.35 ppm gold. The alteration and anomalous mineralization is interpreted to be leakage along vertical structures from a potentially mineralized detachment similar to the Portland 1980 s open pit mine located approximately 7,500 feet east of the claim group. Gold Hill Claim Group, La Paz County, Arizona In 2008, Thunder Mountain Resources, Inc. staked unpatented mining claims that total approximately 440 acres in the Ellsworth mining district in west central. The Gold Hill Project covers prospective geology for a detachment style precious metals deposit. Select and chip-channel samples of exposures in shallow workings adjacent to the main covered target are highly anomalous in gold with values ranging from 5.14 ppm to 26.8 ppm gold. Much of the exposed outcrop in the project area consists of Proterozoic gneiss with numerous metamorphic quartz veins with minor copper and gold. Along the eastern edge of a small embayment of alluvial cover, numerous prospect pits expose mineralized gneisses and quartzites that have been sheared at a low angle dipping both to the east and west. Select samples of this material have assayed as high as 26.8 ppm gold, and vertical chip channel samples of the walls of some of the accessible pits have found gold values up to 4.6 ppm gold. South Mountain Mines, Inc. South Mountain Project, Owyhee County, Idaho The sole asset of South Mountain Mines, Inc. consists of 17 patented mining claims totaling approximately 326 acres owned outright by South Mountain Mines, Inc. In addition, the South Mountain Mines, Inc. has negotiated three leases on private ranch parcels with mineral rights and one patented claim that total approximately 542 additional acres. Thunder Mountain Resources also staked 21 unpatented mining claims totaling approximately 290 acres to cover BLM-managed land that is situated between the various private parcels. All holdings are located in the South Mountain Mining District, Owyhee County, Idaho. In 2009, we engaged Gregory P. Wittman of Northwestern Groundwater & Geology, a Qualified Person under National Instrument 43-101 Standards of Disclosure for Mineral Projects ( NI 43-101 ), to prepare a NI 43-101-compliant technical report on the South Mountain property. On July 19, 2010, we received approval of the Technical Report entitled NI 43-101 Technical Report South Mountain Project Owyhee County, Idaho Thunder Mountain Gold, Inc. dated March 23, 2010 (the Technical Report ) from securities regulatory authorities in Canada, pursuant to Canadian securities laws and the rules of TSX-V. We also furnished it to the SEC as Exhibit 99.1 to our Form 8-K, filed on July 17, 2011. Additional drilling and sampling will be necessary before the resource can be classified as a mineable reserve, but Kleinfelder West s calculations provided a potential resource number that is consistent with South Mountain Mines (Bowes 1985) reserve model. During the 2008 field season two core drill holes were drilled to test the downdip extension of the sulfide mineralization in the main mine area, one on the DMEA2 ore shoot and one on the Texas ore shoot. The DMEA 2 target was successful, with two distinct sulfide zones totaling 30 feet being encountered in an overall altered and mineralized intercept of approximately 73 feet. The samples over the entire intercept were detail sampled over the entire 73 feet resulting in a total of 34 discrete sample intervals ranging from 0.5 to 3.7 feet. The samples cut at the Company s office in Garden City, Idaho and Company personnel delivered the samples to ALS Chemex preparation lab in Elko, Nevada. The analytical results showed two distinct zones of strong mineralization. Table of Contents Interval Weighted Average Gold Fire Assay (ounce per ton) Silver Fire Assay (ounce per ton) Zinc (%) Copper ( %) Lead ( %) 657 - 669.5 (12.5 feet) 0.066 1.46 7.76 0.276 0.306 687 704.5 (17.5 feet) 0.129 1.89 2.18 0.183 0.152 These intercepts are down dip approximately 300 feet below of the DMEA 2 mineralized zone encountered in Sonneman Level tunnel, and 600 feet below the DMEA 2 zone on the Laxey Level tunnel. The tenor of mineralization the DMEA 2 on the Sonneman is similar to that intercepted in the core hole, including two distinct zones with differing grades. The second drill hole, TX-1, was designed to test the Texas Ore Shoot approximately 300 feet down dip of the Sonneman Level. The small core hole achieved a depth of 1,250 feet, but deviated parallel to the bedding and the targeted carbonate horizon was not intercepted. The Technical Report showed the estimated indicated and inferred mineralization as follows: Estimated Indicated Resources Tons Gold (oz) Silver (oz) Copper (lbs) Lead (lbs) Zinc (lbs) Indicated Resources 895,451 36,886 2,978,747 16,326,048 4,426,102 75,557,257 Weighted Average Grade* 0.04 opt 3.33 opt 0.79% 0.25% 4.22% Estimated Inferred Resources Tons Gold (oz) Silver (oz) Copper (lbs) Lead (lbs) Zinc (lbs) Indicated Resources 2,517,057 24,768 1,948,040 30,630,750 4,339,697 45,687,709 Weighted Average Grade* 0.01 opt 0.78 opt 0.61% 0..09% .91% * A weighted average was used for the grades instead of a simple average since the panel block sizes vary in size and volume. Weighted Average differs from a regular average because calculation of the average is affected by volume. In general, a weight is assigned to individual quantities to ensure an accurate average is calculated. During 2011, we plan on engaging a Qualified Person to prepare an updated technical report on the South Mountain Property in accordance with the requirements of National Instrument 43-101 of the Canadian Securities Administrators, including an updated pre-feasibility study, which reflects the updated phased mine plan and which updates other technical data relating to the South Mountain Property. Cautionary Note to U.S. Investors U.S. reporting requirements for disclosure of mineral properties are governed by the SEC Industry Guide 7 ( Guide 7 ). NI 43-101 and Guide 7 standards are substantially different. The terms mineral reserve , proven mineral reserve and probable mineral reserve are Canadian mining terms as defined in accordance with NI 43-101. These definitions differ from the definitions in Guide 7. Under Guide 7 standards, a final or bankable feasibility study is required to report reserves, the three-year historical average price is used in any reserve or cash flow analysis to designate reserves and the primary environmental analysis or report must be filed with the appropriate governmental authority. The Technical Report is not a bankable feasibility study and cannot form the basis for proven or probable reserves on the South Mountain Property The Technical Report also uses the terms mineral resource, measured mineral resource, indicated mineral resource and inferred mineral resource . We advise investors that these terms are defined in and required to be disclosed by National Instrument 43-101 of the Canadian Securities Administrators; however, these terms are not defined terms under Guide 7 and are normally not permitted to be used in reports and registration statements filed with the SEC. Investors are cautioned not to assume that any part or all of mineral deposits in these categories will ever be converted into reserves. Inferred mineral Table of Contents resources have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category. Under Canadian rules, estimates of inferred mineral resources may not form the basis of feasibility or pre-feasibility studies, except in rare cases. Investors are cautioned not to assume that all or any part of an inferred mineral resource exists or is economically or legally mineable. Disclosure of contained pounds in a resource is permitted disclosure under Canadian regulations; however, the SEC normally only permits issuers to report mineralization that does not constitute reserves by SEC standards as in place tonnage and grade without reference to unit measures. Location Map of South Mountain and Clover Mountain Projects A multi-lithic intrusive breccia outcrop was identified and sampled in 2008 on property leased by the Company. This large area, approximately one mile long and one-half a mile wide, is located several thousand feet south of the main mine area. The intrusive breccia is composed of rounded to sub-rounded fragments of altered intrusive rock and silicified fragments of altered schist and marble. Initial rock chip samples from the outcrop area ranged from 0.49 ppm to 1.70 ppm gold, and follow-up outcrop and float sampling in 2009 yielded gold values ranging from 0.047 ppm to 5.81 ppm. A first pass orientation soil survey completed in 2008 was conducted near the discovery breccia outcrop at a spacing of 100 feet over a distance of 800 feet east/west and 1,000 feet north/south. The soil assays ranged from a trace to 0.31 ppm Gold. Surface mapping indicates that the intrusive breccia covers an area of approximately 5,000 feet x 1,500 feet. Table of Contents The 2010 drilling focused primarily the breccia gold zone. Centra Consulting completed the storm water plan needed for the exploration road construction on private land, and it was accepted by the Environmental Protection Agency. Road construction started on August 1, 2010 by Warner Construction and a total of 3.2 miles of access and drill site roads were completed through the end of September. A campaign of road cut sampling was undertaken on the new roads as they were completed. Three sets of samples were obtained along the cut bank of the road. Channel samples were taken on 25-foot, 50-foot or 100-foot intervals, depending upon the nature of the material cut by the road with the shorter spaced intervals being taken in areas of bedrock. A total of 197 samples were collected and sent to ALS Chemex labs in Elko, Nevada. A majority of the samples contained anomalous gold values and in addition to confirming the three anomalies identified by soils sampling, the road cuts added a fourth target that yielded a 350-foot long zone that averaged 378 parts per billion gold (0.011 ounce per ton). Follow up sampling on a road immediately adjacent to this zone yielded a 100-foot sample interval that ran 5.91 parts per million gold (0.173 ounce per ton). Drilling on the intrusive breccia target commenced on October 1, 2010 with a Schramm reverse circulation rig contracted through Drill Tech of Winnemucca, Nevada. Five widely-spaced holes on the four significant gold anomalies in the intrusive breccia target were completed with the following results: Intrusive Breccia 2010 Drill Results Hole Number Depth (ft) Average Gold Value (opt) Entire Hole Highest Grade 5 ft Interval (opt) Comments LO-1 625 0.0034 0.015 All 5 foot intervals had detectable gold. Discovery outcrop area highly altered intrusive breccia with sulfides. LO-2 845 0.001 0.016 95% of the intervals had detectable gold. Highly altered intrusive breccia with sulfides. LO-3 940 0.0033 0.038 95% of the intervals had detectable gold. Mixed altered intrusive breccia and skarn; abundant sulfides (15 to 20% locally). West end of anomaly. LO-4 500 0.002 0.0086 Entire hole had detectable gold. Altered intrusive breccia with sulfides. East end of anomaly. LO-5 620 0.0037 0.036 Entire hole had detectable gold. Altered intrusive breccia with sulfides. East end of anomaly. Management believes that the first-pass drill results from the intrusive breccia target proves the existence of a significant gold system in an intrusive package that is related to the polymetallic mineralization in the carbonate in the historic mine area. Additional work is planned for 2011, including a draped aeromagnetic, resistivity and IP surveys to isolate potential feeder structures and to evaluate the contact between the metasediments and the gold-bearing intrusive. In addition to the drilling completed in on the Intrusive Breccia target, two reverse circulation drill holes were completed targeting the down dip extension of the polymetallic zones in an effort to confirm continuity of the ore zones to a greater depth. Vertical drill hole LO 6 was placed to intercept the down dip extension of the DMEA 2 ore shoot exposed on both the Laxey and Sonneman levels of the underground workings, as well as the 2008 core hole drilled by the Company that extended the zone 300 feet down dip of the Sonneman level. Drillhole LO 6 cut a thick zone of skarn alteration and polymetallic mineralization at 760 feet to 790 feet. The intercept contained 30 feet of 3.55% zinc, 1.87 ounce per ton silver, and 0.271% copper. Internal to this zone was 15 feet of 0.060 OPT gold and 20 feet of 0.21% lead. Importantly, this intercept proves the continuity of the ore zone an additional 115 feet down dip of the 2008 drill hole, or 415 feet below the Sonneman level. It remains open at depth. Drill hole LO 7 was placed to test the down dip extension of the Laxey ore zone, the zone that produced a majority of the silver, zinc, copper, lead and gold during the World War II period. A portion of the ore zone was intercepted approximately 180 feet below the bottom of the Laxey Shaft which mined the zone over an 800-foot length. This hole intercepted 25 feet (600-625 feet) of 8.56% zinc and 1.15 ounce per ton (opt) silver. This intercept proves the extension of the Laxey ore zone approximately 120 feet below the maximum depth previously mined when over 51,000 tons of sulfide ore were mined and direct shipped to the Anaconda smelter in Utah. The grade of this ore mined over the 800 feet of shaft and stope mining was 15% zinc, 10 opt silver, 0.06 opt gold, 2.3% lead and 0.7% copper. Management is encouraged by both of these intercepts as they prove the continuation of the replacement sulfide mineralized ore shoots at depth. Detailed follow-up core drilling will be needed to better define the potential of the ore shoots at depth. Table of Contents MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND PLAN OF OPERATION The following Management s Discussion and Analysis of Financial Condition and Results of Operation ( MD&A ) is intended to help the reader understand our financial condition. MD&A is provided as a supplement to, and should be read in conjunction with, our financial statements and the accompanying integral notes ( Notes ) thereto. The following statements may be forward-looking in nature and actual results may differ materially. Factors that could cause actual results to differ materially include the following: inability to locate property with mineralization, lack of financing for exploration efforts, competition to acquire mining properties; risks inherent in the mining industry, and
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+PROSPECTUS SUMMARY The following summary highlights selected information contained in this prospectus and may not contain all the information that may be important to you. You should read this entire prospectus, including the section entitled "Risk Factors," before making an investment decision. Unless otherwise specified or the context otherwise requires, references to "$" or "dollars" in this prospectus are to United States dollars, and the terms "we," "our," "us" and the "Company," as used in this prospectus, refer to Thermon Group Holdings, Inc. and its directly and indirectly owned subsidiaries as a combined entity. Our Business We are one of the largest providers of highly engineered thermal solutions for process industries. For over 50 years, we have served a diverse base of thousands of customers around the world in attractive and growing markets, including energy, chemical processing and power generation. We are a global leader and one of the few thermal solutions providers with a global footprint and a full suite of products (heating cables, tubing bundles and control systems) and services (design optimization, engineering, installation and maintenance services) required to deliver comprehensive solutions to complex projects. We serve our customers locally through a global network of sales and service professionals and distributors in more than 30 countries and through our four manufacturing facilities on three continents. These capabilities and longstanding relationships with some of the largest multinational energy, chemical processing, power and engineering, procurement and construction, or EPC, companies in the world have enabled us to diversify our revenue streams and opportunistically access high growth markets worldwide. Our thermal solutions, also referred to as heat tracing, provide an external heat source to pipes, vessels and instruments for the purposes of freeze protection, temperature and flow maintenance and environmental monitoring. Customers typically purchase our products when constructing a new facility, which we refer to as Greenfield projects, or when performing maintenance, repair and operations on a facility's existing heat-traced pipes or upgrading or expanding a current facility, which we refer to collectively as MRO/UE. Our products are low in cost relative to the total cost of a typical processing facility, but critical to the safe and profitable operation of the facility. Our customers' need for MRO/UE solutions provides us with an attractive recurring revenue stream. Customers typically use the incumbent heat tracing provider for MRO/UE projects to avoid complications and compatibility problems associated with switching providers. We typically begin to realize meaningful MRO/UE revenue from new Greenfield installations one to three years after completion of the project as customers begin to remove and replace our products during routine and preventative maintenance on in-line mechanical equipment, such as pipes and valves. As a result, our growth has been driven by new facility construction, as well as by servicing our continually growing base of solutions installed around the world, which we refer to as our installed base. Our revenues have grown in 17 of the past 21 fiscal years, and our gross margins have averaged 44% over that period. In addition, we have generated significant growth in both revenue and profitability in recent years. Our revenue grew by 59% to $192.7 million for fiscal 2010 from $121.4 million for fiscal 2007, and gross profit grew by 65% to $91.3 million from $55.3 million over the same period. For the nine months ended December 31, 2010, we achieved revenue of $179.0 million, gross profit of $73.7 million, a net loss of $11.2 million and Adjusted EBITDA of $43.8 million and 71% of our revenues were generated outside of the United States. See note 9 to the " Summary Historical and Pro Forma Consolidated Financial and Operating Data" table. AMENDMENT NO. 4 TO FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Table of Contents Our Industry Alvarez & Marsal Private Equity Performance Improvement Group, LLC, or A&M, estimates that the market for industrial electric heat tracing is approximately $1 billion in annual revenues and estimates that it is growing its share of the overall heat tracing market as end users appear to continue to favor electric heat tracing solutions over steam heat tracing solutions for new installations. When revenues for steam heat tracing parts are included, A&M estimates the overall addressable market for heat tracing is approximately $2 billion in annual revenues. The industrial electric heat tracing industry is fragmented and consists of approximately 40 companies that typically only serve discrete local markets with manufactured products and provide a limited service offering. Large multinational companies drive the majority of spending for the types of major industrial facilities that require heat tracing, and we believe that they prefer providers who have a global footprint and a comprehensive suite of products and services. The major end markets that drive demand for heat tracing include energy, petrochemical and power generation. We believe that there are attractive near- to medium-term trends in each of these end markets. Energy. Heat tracing is used to facilitate the processing, transportation and freeze protection of energy products in both upstream and downstream oil and gas applications. In order to meet growing demand and offset natural declines in existing oil and gas production, a significant increase in capital expenditures in upstream infrastructure will be required, with a particular focus on reservoirs that are in harsher climates, are deeper or have other complex characteristics that magnify the need for heat tracing. According to Wood Mackenzie, a leading independent energy research and consulting firm, as of October 2010, global upstream development expenditures are expected to increase 11% to approximately $420 billion in 2013 from approximately $380 billion in 2010. An increase in upstream production coupled with increased demand for refined products will require a corresponding increase in downstream refining capacity. Chemical Processing. Heat tracing is required for temperature maintenance and freeze protection in a variety of chemical processing applications. Factors that may impact heat tracing demand in chemicals end markets include the rapid industrialization of the developing world, a shift in base chemical processing operations to low-cost feedstock regions, a transition of Western chemical processing activities from commodity products to specialty products and environmental compliance. According to the American Institute of Chemical Engineers, global capital spending by the chemical processing industry is estimated to increase to $418.4 billion, representing a compound annual growth rate of 11.1% from 2010 to 2015. Power Generation. Heat tracing is required in high-temperature processes, freeze protection and environmental regulation compliance in coal and gas facilities and for safety injection systems in nuclear facilities. An important driver of demand for heat tracing solutions for power generation is increasing demand for electricity worldwide. According to the EIA, global net electricity generation is projected to increase 87% between 2007 and 2035. We believe capital spending on new and existing power generation infrastructure will be required to meet this demand. Continuing selection of electric-based heat tracing solutions over steam-based solutions. Beginning in the 1960s, electric heat tracing products entered the market as an alternative to steam heat tracing products. While steam-based products are still used today for heavy oil, chemical and processing applications, electric-based products generally offer greater cost savings and operating efficiencies. As a consequence, Greenfield projects commissioned in recent years are increasingly designed to incorporate electric heat tracing. THERMON GROUP HOLDINGS, INC. (Exact name of registrant as specified in its charter) Table of Contents Our Competitive Strengths We believe that the following strengths differentiate us from our competitors: We have access to attractive high growth sectors of our global addressable market. We have a network of sales and service professionals and distributors in more than 30 countries and a manufacturing footprint that includes four facilities on three continents. This footprint allows us to diversify our revenue streams and opportunistically access the most attractive regions and sub-sectors of our markets. For example, growing demand for energy is pushing the search for resources to increasingly harsh cold weather countries, including Canada and Russia, where demand for our products is magnified, and strong petrochemical demand in China and India has led to a shift in chemical production to the Asia-Pacific region. We have a strong, established local presence in each of these markets. We are a global market leader. We believe that we are the second largest industrial electric heat tracing company in the world, significantly larger than our next largest competitor and one of only a few solutions providers with a comprehensive suite of products and services, global capabilities and local on-site presence. Over our 56-year history, we have developed an installed base operated by thousands of customers and long-standing relationships with some of the largest companies in the world that drive the spending decisions for the major facilities that require our products. We believe these multinational companies prefer providers with our scale, global presence and comprehensive product and service offering. Our highly engineered solutions are "mission critical" to our customers. Reliable thermal solutions are critical to the safe and profitable operation of our customers' facilities. These facilities are often complex, with numerous classified areas that are inherently hazardous and where product safety concerns are paramount. Therefore, we believe that our customers consider safety, reliability and customer service to be the most important purchase criteria for our products. We are a leader in the national and international standards setting process for the heat tracing industry and hold leadership positions on numerous industry standards development organizations. Our favorable business model positions us to achieve attractive financial results. The following features of our business model contribute to our attractive financial results: Existing installed base generates significant recurring revenue. On average, annual MRO/UE expenditures generated from an installed heat tracing system are approximately 5 to 10% of the initial cost of the system and expansions may require approximately 10 to 20% of the initial cost of the system. We estimate that approximately 60% of our revenues in fiscal 2010 were generated from MRO/UE sales. We believe that we have the second largest installed base in the industrial electric heat tracing industry and, as we continue to complete new Greenfield installations, we believe that, subject to customers' continuing capital and maintenance expenditures, our growing global installed base of heat tracing solutions will drive increased MRO/UE business. Diversified, global customer base and end markets. Over the past five decades, we have sold our solutions to thousands of customers in more than 90 countries, serving a broad range of end-market applications. The diversity of our customer base and end-markets limits our exposure to any individual industry sector or geographic region and provides us with an opportunity to access the most attractive high growth sectors of our end markets. Strong revenue visibility. We believe that we have strong visibility into our future revenue as a result of recurring demand that we expect will be generated from our global installed base, a growing backlog of signed purchase orders and a robust pipeline of planned projects. Our visibility into the timing of our recognition of revenue out of backlog is not always certain, particularly with larger projects; however, our solutions are ordered and installed toward the end Delaware 3629 27-2228185 (State or other jurisdiction of incorporation or organization) (Primary Standard Industrial Classification Code Number) (IRS Employer Identification Number) 100 Thermon Drive, San Marcos, Texas 78666, (512) 396-5801 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) Table of Contents of Greenfield project construction, and therefore, historically, purchase orders have rarely been cancelled. Consistent gross margins and cash flow generation. We have a long history of stable gross margins and positive operating cash flow through a variety of economic cycles. We have consistently had positive income from operations, and gross margins have averaged 44% over the past 21 fiscal years, which we believe reflect our customers' recognition of the value and reliability of our heat tracing solutions, our highly variable cost structure and the limited capital expenditures required to maintain our business. Our management team has a proven track record. Our senior management team averages approximately 22 years of experience with us and is responsible for growing Thermon through a variety of business cycles, building our global platform and developing our reputation for quality and reliability in the heat tracing industry. Our senior management and key employees will continue to have a significant equity stake in Thermon following this offering. Our Growth Strategy Our business strategy is designed to capitalize on our competitive strengths. Key elements of our strategy include: Capitalize on our leading market position to continue pursuing organic growth opportunities. Our primary growth engine has traditionally been organic expansion. We will continue to focus on strategically building the necessary global sales infrastructure to expand our footprint in high growth markets. We believe that this footprint and our local presence are attractive to our customers and differentiate us from other industry participants. We expect to continue to pursue growth opportunities in emerging markets and across industry sectors in the future. Leverage our installed base to expand our recurring revenue stream. Once the MRO/UE cycle begins, we typically realize MRO/UE revenues, which are typically higher margin than Greenfield revenues, over the life of each installation. As we continue to grow our large, global installed base with new Greenfield projects, we expect to generate incremental MRO/UE revenues related to these new projects. Since the beginning of fiscal 2008 through December 31, 2010, we estimate that we have realized approximately $290 million in revenues from Greenfield projects, which represents a meaningful opportunity for us to create MRO/UE revenues in the future. Drive growth through alliances with major customers and suppliers. We have developed strategic alliances with other industry participants in order to enhance our growth opportunities, and we are a "pre-qualified" heat tracing provider for several of our key customers. These relationships provide us with an advantage in identifying and bidding for new Greenfield and MRO/UE projects, and we intend to target additional opportunities with suppliers of complementary products that will allow us to take mutual advantage of our customer relationships and enhance our cross-selling opportunities. Continue to offer solutions that support evolving environmental applications. A portion of our recent growth has been driven by the use of our products in alternative energy initiatives, including carbon capture, thermal solar and coal gasification facilities. In addition, our products help our customers monitor their facilities' environmental or other regulatory compliance. We intend to continue to focus on driving growth by providing solutions that address our customers' evolving environmental application needs. Selectively pursue investment opportunities. Given the fragmented nature of the heat tracing industry, we believe that there will be opportunities to pursue value-added acquisitions at attractive valuations in the future, including Rodney Bingham President and Chief Executive Officer Thermon Group Holdings, Inc. 100 Thermon Drive San Marcos, Texas 78666 (512) 396-5801 (Name, address, including zip code, and telephone number, including area code, of agent for service) Table of Contents by augmenting our geographic footprint, broadening our product offerings, expanding our technological capabilities and capitalizing on potential operating synergies. We plan to pursue strategic investment opportunities, including the expansion of our principal manufacturing facility in San Marcos, Texas.
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+S-1/A 1 h81084a1sv1za.htm FORM S-1/A sv1za Table of Contents As filed with the Securities and Exchange Commission on April 13, 2011 Registration No. 333-173262 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Amendment No. 1 to Form S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 TARGA RESOURCES CORP. (Exact name of registrant as specified in its charter) Delaware (State or other jurisdiction of incorporation or organization) 4922 (Primary Standard Industrial Classification Code Number) 20-3701075 (I.R.S. Employer Identification Number) 1000 Louisiana, Suite 4300 Houston, Texas 77002 (713) 584-1000 (Address, including zip code, and telephone number, including area code, of registrant s principal executive offices) Rene R. Joyce Chief Executive Officer 1000 Louisiana, Suite 4300 Houston, Texas 77002 (713) 584-1000 (Name, address, including zip code, and telephone number, including area code, of agent for service) Copies to: David P. Oelman Christopher S. Collins Vinson Elkins LLP 1001 Fannin Street, Suite 2500 Houston, Texas 77002 (713) 758-2222 Douglass M. Rayburn Baker Botts L.L.P. 2001 Ross Avenue Dallas, Texas 75201 (214) 953-6500 Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act, check the following box. If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission acting pursuant to said Section 8(a), may determine. TABLE OF CONTENTS Page Summary 1
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diff --git a/parsed_sections/prospectus_summary/2011/TSLA_tesla-inc_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/TSLA_tesla-inc_prospectus_summary.txt
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. You should read the following summary together with the more detailed information appearing in this prospectus, including Selected Consolidated Financial Data, Management s Discussion and Analysis of Financial Condition and Results of Operations, Risk Factors, Business and our consolidated financial statements and related notes before deciding whether to purchase shares of our capital stock. Unless the context otherwise requires, the terms Tesla Motors, Tesla, the Company, we, us and our in this prospectus refer to Tesla Motors, Inc., and its subsidiaries, and the term Tesla store means Tesla retail locations as well as Tesla galleries where we show potential customers our vehicles but do not consummate sales. Overview We design, develop, manufacture and sell high-performance fully electric vehicles and advanced electric vehicle powertrain components. We own our sales and service network and have operationally structured our business in a manner that we believe will enable us to rapidly develop and launch advanced electric vehicles and technologies. We believe our vehicles, electric vehicle engineering expertise, and operational structure differentiates us from incumbent automobile manufacturers. We are the first company to commercially produce a federally-compliant electric vehicle, the Tesla Roadster, which achieves a market-leading range on a single charge combined with attractive design, driving performance and zero tailpipe emissions. Our Tesla Roadster offers impressive acceleration and performance without producing any tailpipe emissions. The Tesla Roadster s proprietary electric vehicle powertrain system is the foundation of our business and, with design enhancements, will also form the basis for our Model S sedan, our Model X crossover and other future vehicles. The Model S, which is currently scheduled to begin customer deliveries in mid-2012, is in development with several drivable prototypes already complete. We expect the Model S will be manufactured with an adaptable platform architecture upon which other future vehicles, including our Model X crossover, will be based. We currently plan to reveal a prototype of the Model X crossover by the end of 2011 followed by the anticipated commercial introduction of this vehicle in the fourth quarter of 2013. We are designing the Model X to incorporate the functionality of a minivan with the consumer appeal of a sports utility vehicle. In addition to developing our own vehicles, we provide services for the development of electric powertrain components and sell electric powertrain components to other automotive manufacturers. We have provided development services to Daimler AG (Daimler) and are currently selling battery packs and chargers to Daimler for its Smart fortwo and A-Class electric vehicles. We also have a development services agreement to produce a validated electric powertrain system for Toyota Motor Corporation (Toyota) for use in its RAV4 EV. Toyota anticipates bringing the RAV4 EV to market in the United States in 2012, and we are negotiating with Toyota to finalize a separate agreement to supply production parts for that project; however, no agreement has yet been executed and there are no assurances that we will be able to enter into any such agreement. The commercial production of a highway capable, fully electric vehicle that meets consumers range and performance expectations required substantial design, engineering, and integration work on almost every system of our Tesla Roadster. Our roots in Silicon Valley have enabled us to recruit engineers with strong skills in electrical engineering, power electronics and software engineering. We have complemented this talent base with automotive engineers with substantial expertise in vehicle engineering and manufacturing. Our ability to combine expertise in electric powertrain and vehicle engineering provides a broad capability in electric vehicle design and systems integration. We believe these capabilities, coupled with our focus solely on electric vehicle technology as well as our strong inhouse engineering and manufacturing capacity, will enable us to sustain the electric vehicle industry leadership we created through the production of the Tesla Roadster. Table of Contents The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. SUBJECT TO COMPLETION DATED JUNE 2, 2011 5,300,000 Shares Common Stock This is a public offering of shares of common stock of Tesla Motors, Inc.
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+Prospectus Summary 1
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+PROSPECTUS SUMMARY 1
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+Prospectus Summary 1
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+PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2011/WNFT_worldwide_prospectus_summary.txt b/parsed_sections/prospectus_summary/2011/WNFT_worldwide_prospectus_summary.txt
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+SUMMARY As used in this prospectus, unless the context otherwise requires, "we", "us", "our" "the Company" or "Goff" refers to Goff Corp. All dollar amounts in this prospectus are in U.S. dollars unless otherwise stated. The following summary is not complete and does not contain all of the information that may be important to you. Prospective investors are urged to read the entire prospectus before making an investment decision to purchase our common shares. We were incorporated on July 12, 2010 under the laws of the state of Nevada. Our principal offices are located at 9 NOF Commercial Centre Industrial Park, Old Mallow Rd, Cork City, Ireland. Our telephone number is 353-86-704-4784. We intend to provide web-based services in that focus around our website that will operate as a link for employers in and individuals seeking employment in the UK and Ireland. At the time of filing this registration statement the company has begun the development of a corporate website using the following URL:and (www.goffcareers.com), raised $28,350 in share capital and completed an audit of the company's financial statements ended June 30, 2011. We have yet to implement our business plan. The following steps are required in order to begin operations (All figures have been converted into US dollars our reporting currency): COMPLETION OF SECONDARY FINANCING (180 DAYS AFTER THE EFFECTIVENESS OF THIS REGISTRATION STATEMENT) BUDGET: $20,000 DEVELOP WEBSITE (45 DAYS AFTER THE SECONDARY FINANCING) BUDGET: $20,000 MARKETING AND SEARCH ENGINE OPTIMIZATION (IMMEDIATELY AFTER SECONDARY FINANCING) BUDGET: $60,000 VIDEO CONFERENCING AND MOBILE APPLICATIONS (AFTER COMPLETION OF WEBSITE) BUDGET: $20,000 GENERAL AND ADMINISTRATIVE BUDGET: $65,000 REVENUE Revenue is expected to be generated from two main sources: Employers listing job positions on website. Advertisements and click through marketing placed on website. TOTAL TIMELINE: 225 DAYS AFTER THE EFFECTIVENESS OF THIS REGISTRATION STATEMENT TOTAL BUDGET: $185,000 At our year end, June 30, 2011 we had assets of $24,759 made up completely of cash and a net loss of ($4,416). Our current monthly burn rate is approximately $1,500 and our current capital will last the company less than 7 months. Our budget to complete our plan of operations is $185,000. The estimated costs associated with this offering are approximately $15,000 leaving us with post-offering cash assets of $9,759 as of June 30, 2011. The current burn rate is primarily made up of the costs associated with being a reporting issuer and is projected to increase substantially once operations begin. THE OFFERING: Securities Being Offered Up to 7,090,000 shares of common stock. Offering Price The selling shareholders will sell our shares at a fixed price of $0.01 per share unless and until our shares are quoted on the OTC Bulletin Board. There is no public market for our common stock. We cannot give any assurance that the shares offered will have a market value, or that they can be resold at the offered price if and when an active secondary market might develop, or that a public market for our securities may be sustained even if developed. The absence of a public market for our stock will make it difficult to sell your shares in our stock. We intend to apply to the OTC Bulletin Board, through a market maker that is a licensed broker dealer, to allow the trading of our common stock upon our becoming a reporting entity under the Securities Exchange Act of 1934. If our common stock becomes so quoted and a market for the stock develops, the actual price of stock will be determined by prevailing market prices at the time of sale or by private transactions negotiated by the selling shareholders. The offering price would thus be determined by market factors and the independent decisions of the selling shareholders. Terms of the Offering The selling shareholders will determine when and how they will sell the common stock offered in this prospectus. Termination of the Offering The offering will conclude when all of the 7,090,000 shares of common stock have been sold, the shares no longer need to be registered to be sold due to the operation of Rule 144 or we decide at any time to terminate the registration of the shares at our sole discretion but in no event later than two years from the effective date of this registration statement. ( Date of expiration will be provided for this continuous offering once known) Securities Issued and to be Issued 7,090,000 shares of our common stock to be sold in this prospectus are issued and outstanding as of the date of this prospectus. All of the common stock to be sold under this prospectus will be sold by existing shareholders. Use of Proceeds We will not receive any proceeds from the sale of the common stock by the selling shareholders. The purpose of this offering is to offer existing shareholders (other than officers and directors) the opportunity to benefit from a trading market, if one develops in response to the Company's future performance. Depending on the level of market interest, the Company may consider selling additional shares to new investors to help fund working capital requirements and expand the scope of business. The Company is aware of the fact that the creation of a secondary market of shares for sale may have an adverse effect on our ability to raise capital in the future. The Company is not contractually obligated to file the S-1. SUMMARY FINANCIAL INFORMATION The following financial information summarizes the more complete historical financial information at the end of this prospectus. As of June 30, 2011 ------------------- (Audited) BALANCE SHEET Total Assets $ 24,759 Total Liabilities $ 825 Stockholders Equity $ 23,934 Period from July 12, 2010 (date of inception) to June 30, 2011 ------------- (Audited) INCOME STATEMENT Revenue $ -- Total Expenses $ 4,416 Net Loss $ (4,416)
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+this prospectus. This summary does not contain all of the information that may be important to you. You should read and carefully consider the entire prospectus, especially our financial statements and the notes thereto appearing at the end of this prospectus and the Risk Factors and Management s Discussion and Analysis of Financial Condition and Results of Operations sections of this prospectus, before deciding to invest in our common stock. Except as otherwise indicated herein or as the context otherwise requires, references in this prospectus to resTORbio, the Company, we, us and our refer to resTORbio, Inc. Overview We are a clinical-stage biopharmaceutical company focused on the development and commercialization of novel therapeutics for the treatment of aging-related diseases. Our lead program has demonstrated in several clinical trials, including a randomized, placebo-controlled trial, the potential to treat multiple diseases of aging for which there are no approved therapies. The decline in immune function that occurs during aging, or immunosenescence, increases susceptibility to a variety of diseases, including respiratory tract infections, or RTIs, that significantly contribute to morbidity and mortality in the elderly. Our approach focuses on the mechanistic target of rapamycin, or mTOR, pathway, an evolutionarily conserved pathway that regulates aging, and specifically on selective inhibition of the target of rapamycin complex 1, or TORC1. Our initial focus is on the development of RTB101, an orally administered, small molecule, potent TORC1 inhibitor, alone and in combination with other mTOR inhibitors such as everolimus as a first-in-class immunotherapy program designed to improve immune function and thereby reduce the incidence of RTIs in the elderly regardless of the causative pathogen. We licensed the worldwide rights to our TORC1 program, including RTB101 alone or in combination with everolimus or other mTOR inhibitors, from Novartis International Pharmaceutical Ltd., or Novartis, in March 2017. Our TORC1 immunotherapy approach is supported by a randomized, placebo-controlled Phase 2a clinical trial in 264 elderly subjects that provided statistically significant and clinically meaningful results. This trial demonstrated that treatment with RTB101 alone and in combination with everolimus can enhance the ability of the aging immune system to fight infectious pathogens and consequently reduce the incidence of all infections, including RTIs in elderly subjects. Six weeks of treatment with RTB101 alone and in combination with everolimus met a prespecified endpoint of reducing the incidence of infections by 33% and 38%, respectively, during a period of one year following initiation of therapy. We are evaluating RTB101 alone and in combination with everolimus in a Phase 2b clinical trial for the reduction in the incidence of RTIs in the elderly and expect to report top-line data from this trial in the second half of 2018. Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. Subject to Completion Preliminary Prospectus dated January 16, 2018 PROSPECTUS 5,666,667 Shares Common Stock This is resTORbio, Inc. s initial public offering. We are selling 5,666,667 shares of our common stock. We expect the public offering price to be between $14.00 and $16.00 per share. Currently, no public market exists for the shares. We have applied to list common stock on The Nasdaq Global Market under the symbol TORC. We are an emerging growth company under federal securities laws and are subject to reduced public company disclosure standards. See Summary Implications of Being an Emerging Growth Company. Investing in the common stock involves risks that are described in the Risk Factors section beginning on page 11 of this prospectus. Per Share Total Public offering price $ $ Underwriting discounts and commissions(1) $ $ Proceeds to us before expenses $ $ (1) We refer you to Underwriting beginning on page 174 of this prospectus for additional information regarding underwriting compensation. Certain of our existing stockholders, including certain affiliates of our directors, have indicated an interest in purchasing an aggregate of up to $35 million of shares of our common stock in this offering at the initial public offering price. However, because indications of interest are not binding agreements or commitments to purchase, the underwriters may determine to sell more, less or no shares in this offering to any of these stockholders, or any of these stockholders may determine to purchase more, less or no shares in this offering. The underwriters may also exercise their option to purchase up to an additional 850,000 shares from us, at the public offering price, less underwriting discounts and commissions, for 30 days after the date of this prospectus. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The shares will be ready for delivery on or about , 2018. BofA Merrill Lynch Leerink Partners Evercore ISI Wedbush PacGrow The date of this prospectus is , 2018. Table of Contents Our Product Pipeline The following table summarizes key information about our product candidates. * Other infections include those that the elderly are at increased risk of contracting, such as urinary tract infections. ** For heart failure with preserved ejection fraction, autophagy-related neurodegenerative diseases and certain other infections, we may be required to file an investigational new drug application, or IND, prior to initiating Phase 2 clinical trials. We expect to have the ability to initiate these Phase 2 clinical trials without the need to conduct prior Phase 1 clinical trials. We also have a follow-on TORC1 inhibitor program at discovery stage. We expect market exclusivity for RTB101 alone and in combination with everolimus until at least 2031 in the United States, 2032 in major European markets, and 2030 in Japan, and additional pending patent applications may prolong the exclusivity of these product candidates up to 2036. TORC1 Inhibition for Improving Immune Function in the Elderly Recent scientific findings, including those published in the scientific journals Cell, Nature and Science suggest that aging and aging-related conditions, such as immunosenescence, are attributable not only to random cellular wear and tear, but also to specific intra-cellular signaling pathways, including the mTOR pathway. mTOR is a protein kinase that signals via two multiprotein complexes, known as TORC1 and TORC2. TORC1 inhibition has been observed to prolong lifespan, enhance immune function, ameliorate heart failure, enhance memory and mobility and delay the onset of aging-related diseases in multiple animal studies. Specifically with respect to enhanced immune function, TORC1 inhibition was observed in preclinical studies to rejuvenate blood, or hematopoietic, stem cell function, increase infection-fighting white blood cell production and enhance antibody-mediated, or adaptive, immunity. On the other hand, TORC2 inhibition has been observed to decrease lifespan in preclinical studies and cause unwanted side effects of hyperlipidemia and hyperglycemia in certain animals and humans. Therefore, based on these observations and data from the Phase 2a clinical trial, we believe our TORC1 program is well-suited to improve immune function and counteract immunosenescence in the elderly. High Unmet Need for Addressing Respiratory Tract Infections in the Elderly The reduced ability of elderly patients to effectively detect and fight infections is most commonly manifested in their susceptibility to RTIs and the negative effects such infections have on their overall health. According to the U.S. Census Bureau, RTIs are the fifth leading cause of death in people age 85 and over and the Table of Contents seventh leading cause of death in people age 65 and over, and result in high healthcare burdens and costs for the elderly population and the healthcare system. The majority of RTIs are caused by viruses for which there are no approved therapies. Despite this, antibiotics, which are ineffective against viruses, are often prescribed indiscriminately to treat RTIs, which may cause side effects related to antibiotic use and contribute to the growing global problem of antibiotic resistance. As the elderly represent the fastest growing population in the world as a whole, we believe there is significant unmet medical need for innovative therapeutic options for reducing the incidence of RTIs by enhancing the function of the aging immune system. Our TORC1 Program for Addressing Respiratory Tract Infections in the Elderly We believe our approach to addressing RTIs in the elderly possesses several clinical and commercial advantages. Our TORC1 program offers an immunotherapy approach that has the potential to address a broad range of viral, and potentially bacterial, pathogens. Statistically significant and clinically meaningful reductions in RTI incidence were observed in the Phase 2a clinical trial that evaluated RTB101 alone and in combination with everolimus. We believe the risk-to-benefit ratio of our program is well-suited to the elderly due to the following observations: our oral product candidates were well-tolerated in elderly subjects and none of the participants in the active treatment arms experienced a serious adverse event that was related to the study drug, and the doses being investigated in our ongoing Phase 2b clinical trial are 60 to 240 times lower than maximum tolerated doses established in prior clinical trials for other indications. Based on communications, including those during a high-level policy meeting, with the U.S. Food and Drug Administration, or FDA, to date, we believe a reduction in the incidence of RTIs has the potential to be a clinically relevant endpoint. We are conducting a randomized, double-blinded, placebo-controlled Phase 2b clinical trial to assess the safety, tolerability and efficacy of 16 weeks of treatment with RTB101 alone or in combination with everolimus as compared to placebo in elderly patients without unstable medical conditions but who are at increased risk of RTI-related morbidity or mortality. Elderly patients at increased risk of RTI-associated morbidity and mortality are defined as subjects who are 85 years of age or older or subjects 65 years of age or older with asthma, chronic obstructive pulmonary disease, chronic bronchitis, Type 2 diabetes mellitus, congestive heart failure, an emergency room visit or hospitalization for an RTI within the past 12 months, or who are current smokers. We are conducting the trial in two parts across two hemispheres. The first part was conducted during the winter cold and flu season in the southern hemisphere. Following an interim analysis that we conducted in October 2017, we commenced the second part during the winter cold and flu season in the United States in the fourth quarter of 2017. We expect to report top-line data from this trial in the second half of 2018. The primary endpoint of the trial is to assess the potential of RTB101 alone or in combination with everolimus to decrease the percentage of subjects with RTIs compared to placebo during the 16-week administration period. If the results from the ongoing Phase 2b clinical trial are positive, we intend to conduct two Phase 3 pivotal clinical trials across two hemispheres. The Phase 3 clinical program is expected to start in the southern hemisphere in the first half of 2019 at the beginning of the winter cold and flu season and run through the second quarter of 2020. If our Phase 3 clinical trials are successful, we anticipate filing a New Drug Application, or NDA, with the FDA in 2020, and a Marketing Authorization Application, or MAA, with the European Medicines Agency, or EMA, in 2021. Other Potential Indications for Our TORC1 Program We may evaluate RTB101 alone or in combination with everolimus or other drugs for the treatment of additional indications, such as heart failure with preserved ejection fraction, urinary tract infections, Huntington s disease and Parkinson s disease. We plan to initiate at least one Phase 2 proof of concept study in 2018. We expect to select indications based on strong scientific rationale, preclinical or clinical data, unmet medical need and other relevant considerations. Table of Contents Company Management and Investors We were founded by Chen Schor, who serves as our President and Chief Executive Officer, Joan Mannick, M.D., who serves as our Chief Medical Officer, and PureTech Health LLC, or PureTech Health, an affiliate of PureTech Health plc, an advanced clinical-stage biopharma company. Dr. Mannick led the TORC1 clinical program at Novartis Institutes for Biomedical Research, Inc., or NIBR, prior to our in-licensing of the program. PureTech Health currently provides us with certain business services pursuant to a business services, personnel and information management agreement. In addition, we currently share administrative resources with PureTech Health, including legal, accounting and human resources support, computer and telecommunications systems and other office infrastructure pursuant to the agreement. PureTech Health has also assisted with our market research efforts, including conducting a market survey in the United States prior to our initiation of our ongoing Phase 2b clinical trial of RTB101 alone and in combination with everolimus. We were a subsidiary of PureTech Health until the closing of our Series B financing in November 2017. Based on the number of shares outstanding as of December 31, 2017 and after giving effect to the sale of 5,666,667 shares in this offering (without giving effect to any potential purchases by PureTech Health of shares of our common stock in this offering), PureTech Health will beneficially own shares representing approximately 35.2% of our outstanding common stock. In addition, PureTech Health has appointed two directors to our board of directors. Our management team includes veterans in drug development and discovery, with executive experience in leading global pharmaceutical companies. We are supported by investors that include both private equity venture capital funds and public healthcare investment funds. Our investors include OrbiMed Advisors, Fidelity Management & Research Company, Rock Springs Capital, Quan Capital and Nest Bio. Our Strategy Our goal is to be a leading biopharmaceutical company focused on treating aging-related diseases. We strive to maintain a leadership position in the TORC1 inhibitor class of pharmaceutical products. The key elements of our strategy to achieve this goal include: Rapidly advance our TORC1 program as immunotherapy for reducing the incidence of RTIs in elderly subjects; Develop our TORC1 program for additional indications; Commercialize our product candidates in the United States and potentially collaborate with others globally to maximize their commercial value; Maintain and grow a robust intellectual property portfolio in the field of TORC1 inhibition for aging-related diseases; and Develop, acquire or in-license product candidates that enhance our global leadership position. Risks Associated with Our Business Our business is subject to a number of risks of which you should be aware before making an investment decision. These risks are discussed more fully in the Risk Factors section of this prospectus immediately following this prospectus summary. These risks include the following: We have a limited operating history, have incurred significant operating losses since inception, expect to incur significant and increasing losses for the foreseeable future, will need substantial additional funding and may never achieve or maintain profitability; investors may lose their entire investment; Table of Contents Our business has no history of commercialization and depends virtually entirely upon the success of RTB101 alone or in combination with everolimus, which is still under clinical development. If we are unable to obtain regulatory approval for or successfully commercialize RTB101, our business would be materially harmed. Even if we receive regulatory approval to market product candidates, the market may not be receptive to our product candidates upon their commercial introduction, which will prevent us from becoming profitable; Our product candidates may cause undesirable side effects or have other properties that could delay or prevent their regulatory approval, limit the commercial profile of an approved label, or result in significant negative consequences following regulatory approval, if any; We may be subject to additional risks because we are administering RTB101 in combination with other mTOR inhibitors, such as everolimus; If we fail to develop RTB101 alone or in combination with an mTOR inhibitor for additional therapies or develop other product candidates, we may be unable to grow our business; Use of third parties to manufacture our product candidates may increase the risk that we will not have sufficient quantities of our product candidates or products, or necessary quantities at an acceptable cost; Our commercial success depends on our ability to protect our intellectual property and proprietary technology; We depend heavily on our executive officers and principal consultants and the loss of their services could materially harm our business; and Concentration of ownership of our common stock may prevent new investors in this offering from influencing significant corporate decisions. Our Corporate Information We were incorporated under the laws of the State of Delaware on July 5, 2016 under the name resTORbio, Inc. Our executive offices are located at 501 Boylston Street, Suite 6102, Boston, Massachusetts 02116, and our telephone number is (617) 482-2333. Our website address is www.restorbio.com. The information contained on, or that can be accessed through, our website is not a part of this prospectus. We have included our website address in this prospectus solely as an inactive textual reference. In this prospectus, unless otherwise stated or the context otherwise requires, references to resTORbio, the Company, we, us, our and similar references refer to resTORbio, Inc. resTORbio and other trademarks or service marks of resTORbio appearing in this prospectus are the property of resTORbio. The other trademarks, trade names and service marks appearing in this prospectus are the property of their respective owners. Solely for convenience, the trademarks and trade names in this prospectus are referred to without the and symbols, but such references should not be construed as any indicator that their respective owners will not assert, to the fullest extent under applicable law, their rights thereto. Implications of Being an Emerging Growth Company As a company with less than $1.07 billion of revenue during our last fiscal year, we qualify as an emerging growth company as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. Table of Contents We may remain an emerging growth company for up to five years, or until such earlier time as we have more than $1.07 billion in annual revenue, the market value of our stock held by non-affiliates is more than $700.0 million or we issue more than $1.0 billion of non-convertible debt over a three-year period. For so long as we remain an emerging growth company, we are permitted and intend to rely on exemptions from certain disclosure and other requirements that are applicable to other public companies that are not emerging growth companies. These exemptions include: only two years of audited financial statements in addition to any required unaudited interim financial statements with correspondingly reduced Management s Discussion and Analysis of Financial Condition and Results of Operations disclosure; reduced disclosure about our executive compensation arrangements; no non-binding advisory votes on executive compensation or golden parachute arrangements; exemption from the auditor attestation requirement in the assessment of our internal control over financial reporting; and an exemption from new or revised financial accounting standards until they would apply to private companies and from compliance with any new requirements adopted by the Public Company Accounting Oversight Board requiring mandatory audit firm rotation. In particular, in this prospectus, we have not included all of the executive compensation-related information that would be required if we were not an emerging growth company. Accordingly, the information contained herein may be different than the information you receive from other public companies in which you hold stock. We are considering whether to opt out of the exemption for the delayed adoption of certain accounting standards and thereby be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies. If we do elect to opt out of this exemption, such election is irrevocable. Table of Contents THE OFFERING Common stock offered by us 5,666,667 shares Common stock to be outstanding immediately following this offering 27,196,315 shares (28,046,315 shares if the underwriters exercise their option to purchase additional shares of common stock in full) Option to purchase additional shares The underwriters have the option to purchase an additional 850,000 shares of common stock. The underwriters may exercise this option at any time within 30 days from the date of this prospectus. Use of proceeds We estimate that the net proceeds to us from this offering, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us, will be approximately $77.6 million, or approximately $89.4 million if the underwriters exercise their option to purchase additional shares from us in full, assuming an initial public offering price of $15.00 per share, which is the midpoint of the price range set forth on the cover page of this prospectus. We intend to use the net proceeds from this offering, together with our existing cash and cash equivalents, to fund the development of RTB101, alone and in combination with everolimus, for RTIs and other indications, and our TORC1 follow-on candidate and other pipeline candidates, and the remainder, if any, for working capital and general corporate purposes. See the Use of Proceeds section in this prospectus for a more complete description of the intended use of proceeds from this offering.
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+PROSPECTUS SUMMARY 1
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+PROSPECTUS SUMMARY The following summary highlights information contained elsewhere in this prospectus. It may not contain all the information that may be important to you. You should read this entire prospectus carefully, including the sections entitled "Risk Factors" and "Management s Discussion and Analysis of Financial Condition and Results of Operations," and our historical financial statements and related notes included elsewhere in this prospectus or any accompanying prospectus supplement before making an investment decision. In this prospectus, unless the context requires otherwise, all references to "we," "our," "us," "AudioEye" and the "Company" refer to AudioEye, Inc., a Delaware corporation. The Company AudioEye is a marketplace leader providing digital accessibility technology solutions for our clients customers through our Ally Platform products. Our solutions advance accessibility with patented technology that reduces barriers, expands access for individuals with disabilities, as well as aging persons, and enhances the user experience for a broader audience of users. When implemented, we believe that our solutions offer businesses the opportunity to reach more customers, improve brand image, build additional brand loyalty, and, most importantly, provide an accessible and usable web experience to the expansive and ever-growing population of individuals with disabilities throughout the world. In addition, our solutions help organizations comply with internationally accepted Web Content Accessibility Guidelines (WCAG) as well as U.S., Canadian, Australian, and United Kingdom accessibility laws. We generate revenues through the sale of subscriptions of our software-as-a-service (SaaS) technology platform, called the AudioEye Ally Platform, to website owners, publishers, developers, and operators and through the delivery of managed services combined with the implementation of our solutions. Our solutions have been adopted by some of the largest and most influential companies in the world. Our customers span disparate industries and target market verticals, which encompass (but are not limited to) the following categories: human resources, finance, retail/ecommerce, food services, automotive, transportation, media, and education. Government agencies have also integrated our software in their digital platforms. Business History AudioEye, Inc. was formed as a Delaware corporation on May 20, 2005. On March 31, 2010, CMG Holdings Group, Inc. ("CMGO") acquired our company. In connection with the acquisition, our former stockholders retained rights to receive cash from the exploitation of our technology (the "Rights") consisting of 50% of any cash received from income earned, settlements or judgments directly resulting from our patent strategy and a share of our net income for 2010, 2011 and 2012 from the exploitation of our technology. The Rights were then contributed to a newly formed Nevada corporation, AudioEye Acquisition Corporation ("AEAC") in exchange for shares of AEAC. During the period as a wholly owned subsidiary of CMGO, we continued to expand our patent portfolio to protect our proprietary Internet content publication and distribution technology. On June 22, 2011, CMGO entered into a Master Agreement with AEAC pursuant to which: (i) the stockholders of AEAC would acquire from CMGO 80% of our capital stock (the "Separation") and (ii) CMGO would distribute to its stockholders, in the form of a dividend, 5% of our capital stock (the "Spin-off"). Pursuant to the Master Agreement, AEAC was required to arrange for the release of senior secured notes (the "Senior Notes") issued by CMGO in an aggregate principal amount of $1,025,000, which CMGO had been unable to service. On August 15, 2012, we, CMGO and AEAC completed the Separation. In connection with the Separation, AEAC arranged for the release of CMGO under the Senior Notes by payment to the holders thereof of $700,000, the delivery of a secured promissory note in the principal amount of $425,000 and the issuance of 1,500,000 shares of the common stock of AEAC. On February 6, 2013, the note was paid in full. On January 29, 2013, the Securities and Exchange Commission declared effective our registration statement on Form S-1 with respect to 1,500,259 shares of our common stock to be issued in the Spin-off. On February 22, 2013, CMGO completed the Spin-off. On March 22, 2013, we and AEAC entered into an Agreement and Plan of Merger (the "Merger Agreement") pursuant to which AEAC would be merged with and into our company (the "Merger") with our company being the surviving entity. Pursuant to the Merger Agreement, each share of AEAC common stock issued and outstanding immediately prior to the Merger effective date would be converted into 94,134 shares of our common stock and the outstanding convertible debentures of AEAC (the "AEAC Debentures") in the aggregate principal amount of $1,400,200, together with accrued interest thereon, would be assumed by us and then exchanged for convertible debentures of our company (the "AE Debentures"). Effective March 25, 2013, the Merger was completed. In connection with the Merger, the stockholders of AEAC received on a pro rata basis the 24,004,143 shares of our common stock that were held by AEAC, and the former holders of the AEAC Debentures received an aggregate of 5,871,752 shares of our common stock pursuant to their conversion of all of the AE Debentures issued to replace the AEAC Debentures. The principal assets of AEAC were the Rights that had been contributed to AEAC by the former stockholders of our company. As a result of the Merger, the Rights have been extinguished. On December 30, 2013, we completed the repurchase of 2,184,583 shares of our common stock owned by CMGO which shares were transferred to us in January 2014 and retired to treasury. In connection with the repurchase, we paid CMGO $573,000 and forgave a $50,000 payable from an affiliate of CMGO. Recent Developments Effectiveness of Stock Split and Decrease in Authorized Shares On August 1, 2018, we amended our Articles of Incorporation to implement a reverse stock split in the ratio of 1 share for every 25 shares of common stock and to reduce the number of authorized shares of common stock from 250,000,000 to 50,000,000. As a result, 186,994,384 shares of our common stock were exchanged for 7,479,775 shares of our common stock (inclusive of 992,000 shares of common stock sold on August 6, 2018). All numbers in this prospectus have been adjusted where necessary to reflect this reverse stock split. Private Placement of Common Stock On August 6, 2018, we sold 992,000 shares of our common stock at $6.25 per share for net proceeds of $5,547,635, after costs and expenses of $652,365. In addition, on August 23, 2018, we sold 8,000 shares of our common stock at a sales price of $6.25 per share for net proceeds of $48,000, after costs and expenses of $2,000. Amendment of Common Stock Purchase Agreement On August 23, 2018, the Company entered into an Amended and Restated Common Stock and Warrant Purchase Agreement, which amended the Common Stock Purchase Agreement dated September 29, 2017, pursuant to which we issued warrants to the purchasers of our common stock thereunder. Pursuant to such agreement, the Company issued an additional 85,719 warrants to certain purchasers. The warrants have a term of 5 years and an exercise price of $6.25. Risk Factors Our business is subject to risks, as discussed more fully in the section entitled "Risk Factors." Risks discussed in the "Risk Factors" section should be carefully considered before investing in our common stock. In particular, the following risks, among others, may have an adverse effect on our business, which could cause the trading price of our common stock to decline and result in a loss of all or a portion of your investment: the uncertain market acceptance of our existing and future products; our need for, and the availability of, additional capital in the future to fund our operations and the development of new products; rapid changes in Internet-based applications that may affect the utility and commercial viability of our products; the timing and magnitude of expenditures we may incur in connection with our ongoing product development activities; the success, timing and financial consequences of new strategic relationships or licensing agreements we may enter into; the level of competition from our existing and from new competitors in our marketplace; and regulatory environment for our products and services. Our Principal Executive Offices Our principal executive offices are located at 5210 E. Williams Circle, Suite 750, Tucson, Arizona 85711. Our telephone number is (866) 331-5324. General We maintain an Internet website at http://www.audioeye.com. Our annual reports, quarterly reports, current reports on Form 8-K and amendments to such reports filed or furnished pursuant to section 13(a) or 15(d) of the Securities and Exchange Act of 1934, as amended (the "Exchange Act"), and other information related to our company, are available, free of charge, on our website as soon as we electronically file those documents with, or otherwise furnish them to, the Securities and Exchange Commission. Our company s Internet website and the information contained therein, or connected thereto, are not, and are not intended to be, incorporated into this prospectus.
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+This summary highlights information contained in other parts of this prospectus and in the documents incorporated by reference herein and does not contain all of the information that you should consider in making your investment decision. Before investing in our securities, you should carefully read this entire prospectus and the documents incorporated by reference herein, including our consolidated financial statements and the related notes, and the information set forth under the sections titled Risk Factors. Some of the statements in this prospectus and the documents incorporated by reference herein constitute forward-looking statements that involve risks and uncertainties. See information set forth under the section Cautionary Note Regarding Forward-Looking Statements. Company Overview We are a clinical stage immunotherapeutics company focused on the development of products to stimulate robust and durable immune responses for the prevention and treatment of diseases. Our most advanced product candidate is NasoVAX, an intranasally administered recombinant influenza vaccine that uses an adenovector to achieve expression of the influenza antigen in the target cell thereby potentially stimulating a broader and more rapid immune response than traditional influenza vaccines. We recently completed our first Phase 2 study for NasoVAX. Initial data, released in March 2018, indicated that NasoVAX was well tolerated at all doses tested. Additionally, the achievement of 100% seroprotection at two of the three dose levels studied sets it apart from other intranasally administered vaccines. Strong T-cell responses were observed at the highest dose. This combination of antibody and T-cell responses provides the potential for preventing infection and shedding of the flu virus. Subjects were followed for an additional six months after vaccination to assess durability of the antibody response. These new NasoVAX data, released in September 2018, demonstrate (a) a durable, dose dependent protective immune response, (b) significant mucosal immune response one month after vaccination compared to both placebo and Fluzone, and (c) a clean safety profile. We expect to continue the development of the NasoVAX product candidate in an additional Phase 2 trial in 2019. We are also developing two government funded assets, NasoShield and SparVax-L. NasoShield is an anthrax vaccine designed to provide rapid, stable protection after a single intranasal administration. In a head-to-head comparison with the existing approved anthrax vaccine in a gold-standard animal model, a single dose of NasoShield showed complete protection from inhalation anthrax and was non-inferior to multiple doses of the existing approved anthrax vaccine while providing for a more rapid and stable immune response. We have developed the product candidate with the support of the Biomedical Advanced Research and Development Authority ( BARDA ), and with their continued financial and contractual support, we launched a Phase 1 trial with NasoShield in first quarter of 2018. The purpose of the Phase 1 study was to assess the safety and immunogenicity of a single intranasal dose of NasoShield at four dose cohort levels. An additional cohort received a repeated dose of NasoShield at Day 21. Based on initial data from the single-dose cohorts, NasoShield was safe and well-tolerated with no serious adverse events. The study also showed limited immunogenicity, indicating that like other anthrax vaccines, NasoShield may require more than one dose. With the support of the National Institutes of Allergy and Infectious Diseases, or NIAID, we are developing, SparVax-L, a recombinant protein-based anthrax vaccine designed to require fewer doses and have a longer shelf life than the only currently licensed anthrax vaccine. We have demonstrated a significant improvement in shelf life (two years at room temperature and six years at refrigerated temperatures) with a lyophilized formulation. Recent preclinical experiments have shown it to be 100% protective with a two-dose regimen (administered on study Days 0 and 14 days) with higher protective (toxin neutralizing) antibodies than the currently licensed vaccine administered under the same schedule. We are seeking additional government funding to continue to move this program forward. Table of Contents If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of large accelerated filer, accelerated filer, smaller reporting company and emerging growth company in Rule 12b-2 of the Exchange Act Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company Emerging Growth Company If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act . The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine. Table of Contents HepTcell, an immunotherapy for patients chronically infected with HBV, has recently completed a Phase 1 trial in the United Kingdom and South Korea. While generally well tolerated, the initial immunogenicity results from this trial in patients with chronic HBV were inconclusive and the Company is awaiting six-month follow up results that will be available in the fourth quarter of 2018, to determine whether to continue with further development of HepTcell, including any further clinical trials. Risk Factors An investment in our securities involves a high degree of risk. Any of the factors set forth under Risk Factors may limit our ability to successfully execute our business strategy. You should carefully consider all of the information set forth in this prospectus and, in particular, should evaluate the specific factors set forth under Risk Factors in deciding whether to invest in our securities. These risk factors include, among others: We have incurred significant losses since our founding and anticipate that we will continue to incur significant losses for the foreseeable future and may never achieve or maintain profitability; Our profitability depends on our ability to develop and commercialize our current and future product candidates; Our ability to continue as a going concern will require us to obtain additional financing to fund our current operations, which may not be available on acceptable terms, or at all; We must obtain the approval of our stockholders to amend our Certificate of Incorporation to increase our authorized shares of common stock in order to complete this offering; We may be unable to complete the offering if our stockholders do not approve the issuance of shares of our common stock to satisfy our obligations under certain exchange agreements; Because our product candidates are in an early stage of development, there is a high risk of failure, and we may never succeed in developing marketable products or generating product revenue; We will require substantial additional financing to achieve our goals, and a failure to obtain this necessary capital when needed would force us to delay, limit, reduce or terminate our product development or commercialization efforts; We may encounter substantial delays in our clinical trials, or our clinical trials may fail to demonstrate the safety and efficacy of our product candidates to the satisfaction of applicable regulatory authorities; It may be difficult for us to predict the timing and cost of product development. Unforeseen problems may prevent further development or approval of our product candidates; We rely, and expect to continue to rely, on third parties to conduct preclinical studies and clinical trials for our product candidates, and if they do not properly and successfully perform their obligations to us, our clinical trials could be delayed or halted and we may not be able to obtain regulatory approvals for our product candidates on a timely basis, or at all; We face substantial competition from other pharmaceutical and biotechnology companies, which may result in others discovering, developing or commercializing products before, or more successfully, than we do; It is difficult and costly to protect our proprietary rights, and we may not be able to ensure their protection. If our patent position and other intellectual property rights do not adequately protect our product candidates, others could compete against us (including directly), which could materially harm our business, results of operations and financial condition; and We have in-licensed a portion of our intellectual property, and, if we fail to comply with our obligations under these arrangements, we could lose such intellectual property rights or owe damages to the licensor of such intellectual property. Table of Contents The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED SEPTEMBER 26, 2018 Prospectus 1,438,848 Common Units, Each Consisting of One Share of Common Stock and a Warrant to Purchase One Share of Common Stock 1,438,848 Pre-funded Units, Each Consisting of a Pre-funded Warrant to Purchase One Share of Common Stock and a Warrant to Purchase One Share of Common Stock We are offering 1,438,848 common units (each a Common Unit ), each Common Unit consisting of one share of our common stock and a warrant to purchase one share of our common stock at an exercise price per whole share of common stock of $ (100% of the closing bid price of our common stock as of the close of trading immediately preceding the pricing of this offering) (each a Warrant ). Each Warrant will be exercisable immediately and will expire five years from the date of issuance. We are also offering to those purchasers, if any, whose purchase of Common Units in this offering would otherwise result in the purchaser, together with its affiliates and certain related parties, beneficially owning more than 4.99% (or, at the election of the purchaser, 9.99%) of our outstanding common stock immediately following the consummation of this offering, the opportunity to purchase, if the purchaser so chooses, pre-funded units (each a Pre-funded Unit ) in lieu of Common Units that would otherwise result in the purchaser s beneficial ownership exceeding 4.99% (or, at the election of the purchaser, 9.99%) of our outstanding common stock. Each Pre-funded Unit will consist of a pre-funded warrant to purchase one share of our common stock at an exercise price of $0.01 per share (each a Pre-funded Warrant ) and a Warrant. The purchase price of each Pre-funded Unit is equal to the price per Common Unit being sold to the public in this offering, minus $0.01. The Pre-funded Warrants will be immediately exercisable and may be exercised at any time until all of the Pre-funded Warrants are exercised in full. We are offering up to 1,438,848 Common Units and up to 1,438,848 Pre-funded Units, in the aggregate not exceeding more than a total of 1,438,848 units. For each Pre-funded Unit we sell, the number of Common Units we are offering will be decreased on a one-for-one basis. Common Units and Pre-funded Units will not be issued or certificated. The shares of common stock or Pre-funded Warrants, as the case may be, and the Warrants included in the Common Units or the Pre-funded Units, can only be purchased together in this offering, but the securities contained in the Common Units or Pre-funded Units will be issued separately and will be immediately separable upon issuance. Our common stock is listed on The Nasdaq Global Market under the symbol ALT. On September 24, 2018, the last reported sale price of our common stock on The Nasdaq Global Market was $13.90. The public offering price per Common Unit or Pre-funded Unit, as the case may be, will be determined between us, the underwriter and investors based on market conditions at the time of pricing, and may be at a discount to the current market price of our common stock. Therefore, the recent market price used throughout this prospectus may not be indicative of the final offering price. There is no established public trading market for the Warrants or the Pre-funded Warrants, and we do not expect a market to develop. In addition, we do not intend to apply to list the Warrants or the Pre-funded Warrants on any national securities exchange or other nationally recognized trading system. Without an active trading market, the liquidity of the Warrants or the Pre-funded Warrants will be limited. Investing in our securities involves a high degree of risk, including that the trading price of our common stock has been subject to extreme volatility and investors in this offering may not be able to sell their common stock above the actual offering price or at all. See Risk Factors beginning on page 11. Per Common Unit Per Pre-funded Unit Total Public offering price $ $ $ Underwriting discount(1) $ $ $ Proceeds to us (before expenses) $ $ $ (1) We have agreed to reimburse certain expenses of the underwriter. We have also agreed to issue to the underwriter warrants to purchase up to that number of shares of our common stock equal to 4% of the number of shares of our common stock to be issued and sold in this offering, including the shares of common stock issuable upon the exercise of the Pre-funded Warrants and the Warrants issued to investors in this offering (including shares issued or issuable upon exercise of the over-allotment option described below). See Underwriting for a description of the compensation payable to the underwriter. We have granted the underwriter a 30-day option to purchase additional Common Units, Pre-funded Units, shares of our common stock, Pre-funded Warrants and/or Warrants from us at prices described herein to cover over-allotments, if any, of the Common Units and the Pre-funded Units offered hereby. See Underwriting. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed on the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. Delivery of the securities offered hereby is expected to be made on or about , 2018. Roth Capital Partners , 2018 Table of Contents Recent Developments Reverse Stock Split As reported in our Current Report on Form 8-K filed on May 18, 2018, on May 17, 2018, we received notification from the Nasdaq Listing Qualifications department of The Nasdaq Stock Market LLC indicating that our common stock was subject to potential delisting from The Nasdaq Global Market because, for a period of thirty (30) consecutive business days, the bid price of our common stock had closed below the minimum $1.00 per share requirement for continued inclusion under Nasdaq Marketplace Rule 5550(a)(2). The notification had no immediate effect on the listing or trading of our common stock on the Nasdaq Capital Market. Nasdaq stated in its letter that in accordance with the Nasdaq Listing Rules we have been provided an initial period of 180 calendar days, or until November 13, 2018, to regain compliance. If we are unable to regain compliance by November 13, 2018, the Company may be eligible for an additional 180-calendar day compliance period to demonstrate compliance with the bid price requirement. On September 13, 2018 we amended our Amended and Restated Certificate of Incorporation to effect a reverse stock split at a ratio 1-for-30 (the Reverse Stock Split ). The Reverse Stock Split was effective on September 13, 2018, and our shares of common stock commenced trading on Nasdaq on a post-Reverse Stock Split basis on September 14, 2018. We believe that the Reverse Stock Split will improve the price level of our common stock so that we are able to maintain compliance with the Nasdaq minimum bid price listing standard. However, the effect of the Reverse Stock Split upon the market price for our common stock cannot be predicted, and the history of similar reverse stock splits for companies in like circumstances is varied. The market price per share of our common stock after the Reverse Stock Split may not rise in proportion to the reduction in the number of shares of our common stock outstanding resulting from the Reverse Stock Split. Unless otherwise noted, all share and per share numbers in this prospectus, including the number of shares issuable upon the exercise of outstanding options and warrants, shares reserved under incentive plans, exercise prices of outstanding options and warrants, and the per share amount of the special one time cash dividend of PharmAthene, Inc. are reflected on a post-reverse share split basis for all periods presented. As of September 24, 2018, we had 1,433,884 shares of common stock outstanding after giving effect to the Reverse Stock Split. Exchange Agreements On June 22, 2018 we entered into exchange agreements with certain holders of our Series B Redeemable Convertible Preferred Stock ( Series B Preferred Stock ) and warrants ( Existing Warrants ) pursuant to which, we (i) issued an aggregate of 85,356 shares of common stock, (ii) issued convertible notes (the Exchange Notes ) with an aggregate principal value of $1,500,000, which are initially convertible into up to 73,529 shares of our common stock upon the default by the Company, subject to adjustment under certain circumstances in accordance with the terms of the Exchange Notes, and (iii) paid $1,100,000 in aggregate cash consideration, all in exchange for Existing Warrants to purchase 53,125 shares of common stock. We refer to these transactions as the First Exchange . On July 11, 2018, we entered into exchange agreements with certain holders of our Series B Preferred Stock and Existing Warrants pursuant to which we (i) issued an aggregate of 32,124 shares of common stock and (ii) paid $22,241 in cash, all in exchange for all of the outstanding shares of our Series B Preferred Stock. We issued an additional 145,038 shares of common stock in exchange for Existing Warrants to purchase 22,523 shares of common stock. We refer to these transactions as the Second Exchange and together with the First Exchange as the Exchanges . BARDA Amendment BARDA has modified its existing contract with us by adding $2.5 million to the $21.6 million base contract ($24.1 million total for the modified base contract) and extending the performance period through November Table of Contents 2019. The increase in funding is intended to allow vaccine characterization including key formulation parameters and batch consistency. In addition, we will assay clinical samples from its ongoing Phase 1 clinical trial for a mmucosal immune response and compare different methods of intranasal administration of the vaccine in preclinical models. The NasoShield program is funded through a contract with BARDA (HHSO100201600008C), which runs through September 2021 and, if all options are exercised, an additional $105 million is expected to provide funding through the end of Phase 2 development. Immunogenicity data for the two-dose cohort is expected to be available in the fourth quarter of this year. Registered Direct Offering On September 24, 2018, we sold an aggregate of 286,633 shares of our common stock at a purchase price of $17.02 per share to certain institutional investors in a registered direct offering (the Registered Direct Offering ). We expect that the net proceeds of the Registered Direct Offering will be approximately $4.3 million, after deducting placement agent fees and estimated offering expenses payable by us. Merger with PharmAthene Our business is the result of a merger between PharmAthene, Inc. ( PharmAthene ) and the business previously known as Altimmune, Inc. ( Private Altimmune ). In May of 2017, Private Altimmune merged with PharmAthene pursuant to an Agreement and Plan of Merger and Reorganization (the Merger Agreement ) dated January 18, 2017, among Private Altimmune, PharmAthene, its wholly owned acquisition subsidiaries Mustang Merger Sub Corp I Inc. ( Merger Sub Corp ) and Mustang Merger Sub II LLC ( Merger Sub LLC ). Pursuant to the Merger Agreement, Merger Sub LLC agreed to acquire 100% of the outstanding capital stock of Private Altimmune in a reverse triangular merger and reorganization pursuant to section 368(a) of the Internal Revenue Code of 1986, as amended (the Mergers ). Prior to the Mergers, PharmAthene was a publicly traded biodefense company engaged in Phase 2 clinical trials in developing a next generation anthrax vaccine. On May 4, 2017, Private Altimmune and PharmAthene closed the Mergers in accordance with the terms of the Merger Agreement. Upon the closing of the Mergers, (i) Merger Sub Corp merged with and into Private Altimmune, with Private Altimmune remaining as the surviving corporation; (ii) Private Altimmune then merged with and into Merger Sub LLC, with Merger Sub LLC (renamed as Altimmune LLC ) remaining as the surviving entity; and (iii) PharmAthene was renamed as Altimmune, Inc. Upon closing of the Mergers, all equity instruments of Private Altimmune were exchanged for corresponding equity instruments of PharmAthene. Except where the context indicates otherwise, references to we, us, our, Altimmune or the Company refer, for periods prior to the completion of the Mergers, to Private Altimmune and its subsidiaries, and for periods following the completion of the Mergers to the combined company and its subsidiaries. Corporate Information We completed the Mergers between Private Altimmune and PharmAthene in 2017. Our stock is traded on The Nasdaq Global Market under the symbol ALT . Our principal executive offices located at 910 Clopper Road, Suite 201S, Gaithersburg, Maryland 20878. Our telephone number is (240) 654-1450, and our Internet website is www.altimmune.com and our investor relations website is located under the Investors tab. The information on, or that can be accessed through, our website is not part of this prospectus and is not incorporated by reference herein. Table of Contents Altimmune, the Altimmune logo and other trademarks, trade names or service marks of Altimmune appearing in this prospectus, including NasoVAX, HepTcell, RespirVec, Densigen, NasoShield and Oncosyn, are the property of Altimmune. The other trademarks, trade names and service marks appearing in this prospectus are the property of their respective owners. Solely for convenience, trademarks and trade names referred to in this prospectus may appear without the or TM symbols. Table of Contents
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+PROSPECTUS SUMMARY 1
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+PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2018/AMTB_amerant_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/AMTB_amerant_prospectus_summary.txt
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+This summary highlights information included elsewhere in this prospectus and does not contain all of the information you should consider in making an investment decision. You should read this entire prospectus carefully, including the sections entitled Risk Factors, Cautionary Note Regarding Forward-Looking Statements, Selected Consolidated Financial Data, and Management s Discussion and Analysis of Financial Condition and Results of Operations and our financial statements and the notes thereto before making an investment decision regarding our Class A common stock. For all historical periods described, we have reported our financial condition and results of operations and other financial data, including certain ratios and information calculated for bank regulatory purposes as of and for the periods shown herein. The historical financial information presented may not be indicative of our future operating results or financial condition as a standalone public company. About Our Company Our Company We are a bank holding company headquartered in Coral Gables, Florida, with $8.4 billion in assets, $6.2 billion in loans, $6.2 billion in deposits, $727.7 million of shareholders equity and $1.7 billion in assets under management and custody as of September 30, 2018. We provide individuals and businesses a comprehensive array of deposit, credit, investment, wealth management, retail banking and fiduciary services. We serve customers in our United States markets and select international customers. These services are offered through Amerant Bank, N.A., or the Bank, which is also headquartered in Coral Gables, Florida, and its subsidiaries. Fiduciary, investment and wealth management services are provided by the Bank s national trust company subsidiary, or the Trust Company, and the Bank s securities broker-dealer subsidiary, or Investment Services. We call these services and entities wealth management. The Bank was founded in 1979 and is the largest community bank headquartered in Florida. We currently operate 23 banking centers where we offer personal and commercial banking services. The Bank s primary markets are South Florida, where we operate 15 banking centers in the Miami-Dade, Broward and Palm Beach counties; the greater Houston, Texas area, where we have eight banking centers that serve nearby areas of Harris, Montgomery, Fort Bend and Waller counties; and the New York City area, where we have a loan production office, or LPO, in Midtown Manhattan. We are opening a LPO in Dallas, Texas in the fourth quarter of 2018. We currently have 948 full time equivalent employees, or FTEs, throughout our markets. We have no foreign offices. From 1987 through December 31, 2017, we were a wholly-owned subsidiary of Mercantil Servicios Financieros, C.A., which we refer to as MSF or the selling shareholder. On March 15, 2018, MSF transferred 100% of our outstanding Class A common stock and Class B common stock, together, the Company Shares, to a newly created Florida common law, non-discretionary, grantor trust, which we refer to as the Distribution Trust or the Trust. TMI Trust Company is the trustee of the Distribution Trust. See Certain Relationships and Related Party Transactions Distribution Trust. On August 10, 2018, we completed our spin-off from MSF, or Spin-off, through the distribution, or Distribution, of 19,814,992 shares of our Class A common stock and 14,218,596 Table of Contents The information in this preliminary prospectus is not complete and may be changed. Neither we nor the selling shareholder may offer these securities until the registration statement filed with the United States Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED DECEMBER 18, 2018 PRELIMINARY PROSPECTUS Shares Class A Common Stock This is the initial public offering of Mercantil Bank Holding Corporation s Class A common stock, which we refer to as the Offering. We are a bank holding company for Amerant Bank, N.A., a national bank headquartered in Coral Gables, Florida. We are rebranding our organization as Amerant. We are offering 1,377,523 shares of our Class A common stock. Mercantil Servicios Financieros, C.A., the selling shareholder identified in this prospectus, is offering all of its 4,922,477 shares of our Class A common stock. We will not receive any of the proceeds from the sale of the shares being sold by the selling shareholder. We currently estimate that the Offering price per share of our Class A common stock will be $13.00 per share. Our Class A common stock and our Class B common stock are listed on the Nasdaq Global Select Market under the trading symbols AMTB and AMTBB, respectively. On December 17, 2018, the last reported sales price of our Class A common stock was $10.65 per share. Our Class B common stock is not convertible into our Class A common stock and no shares of our Class B common stock are included in this Offering. Investing in our Class A common stock involves risks. See Risk Factors beginning on page 26, for a discussion of certain risks that you should consider before investing in our Class A common stock. Neither the United States Securities and Exchange Commission nor any state securities commission nor regulatory body has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. Our Class A common stock is not a deposit and is not insured or guaranteed by the FDIC or any other governmental agency. We are an emerging growth company, as defined in Section 2(a) of the Securities Act of 1933, which we refer to as the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012, which we refer to as the JOBS Act. Therefore, we are allowed to provide in this registration statement, which we refer to as the Offering Registration Statement, more limited disclosures than a registrant that would not so qualify. In addition, for so long as we remain an emerging growth company, we may also take advantage of certain limited exceptions from investor protection laws such as the Sarbanes-Oxley Act of 2002, which we refer to as the Sarbanes-Oxley Act, and the Investor Protection and Securities Reform Act of 2010, for limited periods. See Emerging Growth Company Status below. Per Share Total Offering price $ $ Underwriting discount (1) $ $ Proceeds to us before expenses $ $ Proceeds to selling shareholder before expenses $ $ (1) See Underwriting for additional information regarding the underwriting discounts and commissions and certain expenses payable to the underwriters by us. The underwriters have an option for a period of 30 days to purchase up to an additional 945,000 shares of our Class A common stock from us at the Offering price less the underwriting discount. The underwriters expect to deliver the shares of our Class A common stock to purchasers on or about , 2018 through the book-entry facilities of The Depository Trust Company. RAYMOND JAMES KEEFE, BRUYETTE & WOODS A Stifel Company STEPHENS INC. SUNTRUST ROBINSON HUMPHREY FIG PARTNERS, LLC The date of this prospectus is , 2018 Table of Contents ABOUT THIS PROSPECTUS Unless the context indicates otherwise, references in this prospectus to we, our, us, and the Company refer to Mercantil Bank Holding Corporation, a Florida corporation, and its consolidated subsidiaries. All references in this prospectus to Amerant Bank or the Bank refer to Amerant Bank, N.A., our wholly-owned bank subsidiary. Neither we, the selling shareholder nor the underwriters have authorized anyone to provide you with information that is additional to, different from, or inconsistent with, that contained in this prospectus. If anyone provides you with additional, different or inconsistent information, you should not rely on it as having been authorized by us, the selling shareholder or the underwriters. Neither we, the selling shareholder nor the underwriters take responsibility for, or can provide any assurance as to the reliability of, any other information that others may give you. This prospectus is an offer to sell only the shares of our Class A common stock offered hereby, and only under circumstances and in jurisdictions where it is lawful to do so. Neither we, the selling shareholder nor the underwriters are making an offer of, or a solicitation of an offer to buy, shares of our Class A common stock in any state, country or other jurisdiction where the offer or solicitation is not permitted. You should not assume that the information in this prospectus or any free writing prospectus is accurate as of any date other than the date of the applicable document regardless of its time of delivery or the time of any sales of our Class A common stock. Our business, financial condition, results of operations and cash flows may have changed since the date of the applicable document. This prospectus describes the specific details regarding this Offering and the terms and conditions of our Class A common stock being offered hereby and the risks of investing in our Class A common stock. For additional information, please see the section entitled Where You Can Find More Information. INDUSTRY AND MARKET DATA This prospectus includes industry and market data that we obtained from periodic industry publications, third-party studies and surveys, filings of public companies in our industry and internal company surveys. These sources include government and industry sources. Industry publications and surveys generally state that the information contained therein has been obtained from sources believed to be reliable. Although we believe the industry and market data to be reliable as of the date of this prospectus, this information could prove to be inaccurate. Industry and market data could be wrong because of the method by which sources obtained their data and because information cannot always be verified with complete certainty due to the limits on the availability and reliability of raw data, the voluntary nature of the data gathering process and other limitations and uncertainties. In addition, we do not know all of the assumptions regarding general economic conditions or growth that were used in preparing the forecasts from the sources relied upon or cited herein. Forward-looking information obtained from these sources is subject to the same qualifications and the additional uncertainties regarding the other forward-looking statements in this prospectus. See Cautionary Note Regarding Forward-Looking Statements. Trademarks used in this prospectus are the property of their respective owners, although for presentational convenience, we may not use the or the symbols to identify such trademarks. EMERGING GROWTH COMPANY STATUS We are an emerging growth company, as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act. As such, we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including, but not limited to, not being required to comply with Table of Contents shares of our Class B common stock in each case adjusted for the October 24, 2018 stock split. The shares distributed in the Distribution, or Distributed Shares, constitute 80.1% of the total issued and outstanding Company Shares of each class. As a result of the Distribution, each holder of record of MSF s Class A common stock or Class B common stock on April 2, 2018 received one share of our Class A common stock or one share of our Class B common stock for each share of MSF Class A common stock or Class B common stock, respectively. The Distributed Shares were registered with the United States Securities and Exchange Commission, or SEC, on Form 10, or the Spin-off Registration Statement. Except for Company Shares held by our affiliates, including Company Shares held in the Distribution Trust on behalf of MSF, the Distributed Shares are freely transferable. The Distribution Trust retains the remaining 19.9% of the outstanding Company Shares of each class pending their sale or disposition by MSF. These shares are called the Retained Shares. MSF, as the
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diff --git a/parsed_sections/prospectus_summary/2018/APLS_apellis_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/APLS_apellis_prospectus_summary.txt
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+elsewhere in this prospectus. This summary does not contain all of the information that may be important to you. You should read and carefully consider the entire prospectus, especially our consolidated financial statements and the related notes thereto appearing at the end of this prospectus and the Risk Factors section of this prospectus, before deciding to invest in our common stock. Overview We are a clinical-stage biopharmaceutical company focused on the development of novel therapeutic compounds to treat disease through the inhibition of the complement system, which is an integral component of the immune system, at the level of C3, the central protein in the complement cascade. We believe that this approach can result in broad inhibition of the principal pathways of the complement system and has the potential to effectively control a broad array of complement-dependent autoimmune and inflammatory diseases. We have the most advanced clinical program targeting C3. We believe that our lead product candidate, APL-2, has the potential to be a best-in-class treatment that may address the limitations of existing treatment options or provide a treatment option where there currently is none. APL-2 has already shown activity that we believe is clinically meaningful in clinical trials for two distinct medical conditions geographic atrophy in age-related macular degeneration, or GA, and paroxysmal nocturnal hemoglobinuria, or PNH and we plan to conduct clinical trials in additional complement-dependent diseases. In our Phase 2 clinical trial of APL-2 in patients with GA, treatment with APL-2 resulted in a significant reduction in the rate of GA lesion growth over 12 months, and we are planning to initiate a Phase 3 clinical program evaluating APL-2 in patients with GA. In our two ongoing Phase 1b clinical trials in PNH, APL-2 achieved improvements in transfusion dependency, hemoglobin levels and other hematological indicators that we believe are clinically meaningful. We are also developing other novel compounds targeting C3. We hold worldwide commercialization rights to APL-2 and these other novel compounds targeting C3. Our Programs Our lead product candidate, APL-2, is a C3 inhibitor. APL-2 is a conjugate of a compstatin analogue, formulated both for intravitreal injection, which is an injection directly into the eye, and systemic administration by subcutaneous injection, which is an injection into the tissue under the skin. Table of Contents The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting offers to buy these securities in any state or other jurisdiction where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED April 16, 2018 PRELIMINARY PROSPECTUS 5,000,000 Shares Common Stock $ per share We are offering 5,000,000 shares of our common stock in this offering. Our common stock is listed on the Nasdaq Global Select Market under the symbol APLS. The last reported sale price of our common stock on the Nasdaq Global Select Market on April 13, 2018 was $26.73 per share. The final public offering price will be determined through negotiation between us and the lead underwriters in the offering and the recent market price used throughout the prospectus may not be indicative of the actual offering price. Investing in our common stock involves risks. See Risk Factors beginning on page 11. We are an emerging growth company under applicable Securities and Exchange Commission rules and, as such, have elected to comply with certain reduced public company disclosure requirements. See Summary Implications of Being an Emerging Growth Company. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense. Per Share Total Public Offering Price $ $ Underwriting Discounts and Commissions(1) $ $ Proceeds to us (before expenses) $ $ (1) We refer you to Underwriting beginning on page 165 for additional information regarding underwriter compensation. The underwriters also have the option to purchase up to an additional 750,000 shares of our common stock on the same terms and conditions set forth above for 30 days after the date of this prospectus. The underwriters expect to deliver the shares to purchasers on or about , 2018. Citigroup J.P. Morgan Cowen , 2018. Table of Contents The following table summarizes key information about our clinical programs: Geographic Atrophy In GA, we are developing APL-2 to be injected intravitreally as a monotherapy. GA is an advanced form of age-related macular degeneration, or AMD, which is a disorder of the central portion of the retina characterized by progressive retinal cell death that ultimately leads to blindness. GA is a disease with significant unmet need that affects approximately one million patients in the United States and for which there are no U.S. Food and Drug Administration, or FDA, approved therapies. In August 2017, we completed the primary endpoint analysis for the 12-month treatment period in our Phase 2 clinical trial in 246 patients with GA, and in February 2018 we completed our analysis of the results for the six-month period following the 12-month treatment period during which patients were monitored and did not receive APL-2. In the Phase 2 trial, APL-2 achieved the primary endpoint of reduction in the rate of GA lesion growth at 12 months. Patients treated monthly with APL-2 showed a 29% reduction in the rate of GA lesion growth compared to sham, with a p-value of 0.008, and patients treated with APL-2 every other month showed a 20% reduction, with a p-value of 0.067. P-value is a conventional statistical method for measuring the statistical significance of clinical results. In our Phase 2 trial, we set statistical significance as a p-value of 0.1 or less, meaning that there is a 1-in-10 or less statistical probability that the observed results occurred by chance rather than as a result of a treatment effect. Because the p-value of these results was less than 0.1, they are statistically significant. Additionally, in a post hoc analysis of the Phase 2 trial, a greater effect was observed during the second six months of the treatment period compared to the first six months. During the second six months, we observed a reduction in the rate of GA lesion growth for patients for whom images were available at six and 12 months of 47% with monthly administration compared to sham, with a p-value of less than 0.001, and a reduction of 33% with administration every other month compared to sham, with a p-value of 0.01. These results are also statistically significant. After the 12-month treatment period, patients were monitored for a further six months without treatment. During this monitoring period, the GA lesions in the previously treated groups grew at a rate similar to sham. Patients who received monthly APL-2, and for whom images were available at 12 and 18 months, showed Table of Contents TABLE OF CONTENTS Page Summary 1
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+PROSPECTUS SUMMARY 1
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+PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2018/ARVN_arvinas_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/ARVN_arvinas_prospectus_summary.txt
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+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2018/ATUS_optimum_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/ATUS_optimum_prospectus_summary.txt
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+This summary of certain information contained in this prospectus may not include all the information that is important to you. To understand fully and for a more complete description of the terms and conditions of the Distribution, you should read this prospectus in its entirety and the documents referred to herein. See "Where You Can Find More Information." Unless the context indicates otherwise, "Altice USA," "we," "us," "our" and the "Company" refer to Altice USA, Inc. and its consolidated subsidiaries, "Altice N.V." refers to our parent company, Altice N.V., prior to the Distribution and "Altice Group" refers to Altice N.V. and its consolidated subsidiaries. See "Industry Terms" for a glossary of certain abbreviations and terms used throughout this prospectus. Information About Altice USA Altice USA is one of the largest broadband communications and video services providers in the United States. We deliver broadband, pay television, telephony services, proprietary content and advertising services to approximately 4.9 million residential and business customers. Our footprint extends across 21 states through a fiber-rich broadband network with more than 8.6 million homes passed as of March 31, 2018. We acquired Cequel Corporation ("Suddenlink" or "Cequel") on December 21, 2015 and Cablevision Systems Corporation ("Optimum" or "Cablevision") on June 21, 2016. These acquisitions are referred to throughout this prospectus as the "Suddenlink Acquisition" or the "Cequel Acquisition" and the "Optimum Acquisition" or the "Cablevision Acquisition," respectively, and collectively as the "Acquisitions." We are a holding company that does not conduct any business operations of our own. We serve our customers through two business segments: Optimum, which operates in the New York metropolitan area, and Suddenlink, which principally operates in markets in the south-central United States. We have made significant progress in integrating the operations of Optimum and Suddenlink and are realizing the operational and commercial benefits of common ownership and one management team. We are currently majority-owned and controlled by Altice N.V. As of May 22, 2018, Mr. Drahi (through entities controlled directly or indirectly by Mr. Drahi or his family (including Next Alt, Uppernext and A4 S.A.)) owned, on a combined basis, 74.5% of our issued and outstanding shares of common stock, which represents 98.5% of the voting power of our outstanding capital stock. Information About Altice N.V. Altice Group is a multinational cable, fiber, mobile, telecommunications, content, media and advertising company operating in Western Europe (comprising France and Portugal), the U.S., Israel, the Dominican Republic and the French Overseas Territories. The parent company of the Altice Group is Altice N.V., which succeeded Altice S.A. pursuant to a cross-border merger completed on August 9, 2015. Altice N.V. is a public company with limited liability (naamloze vennootschap) incorporated under the laws of the Netherlands. Altice N.V. is ultimately controlled by Mr. Drahi through Next Alt. As of May 22, 2018, Next Alt held 67.5% of the share capital and voting rights of Altice N.V., representing 49.5% of the economic rights and 69.6% of the voting power in general meetings. Altice N.V.'s common shares A and common shares B are listed on Euronext Amsterdam. Altice Group has expanded internationally through a number of acquisitions of telecommunications businesses, including: SFR and PT Portugal in Western Europe; HOT in Israel; Altice Hispaniola and Tricom in the Dominican Republic; Cequel Corporation, which, through its subsidiary Cequel Communications, LLC, operates the 'Suddenlink' brand in the U.S., and Cablevision Systems Corporation in the U.S. Table of Contents Risk Factors There are a number of risks you should carefully consider regarding the Distribution, our business and Altice USA common stock. These risks are discussed more fully under "Risk Factors" beginning on page 21 of this prospectus. Company Information We were incorporated in Delaware on September 14, 2015. Our principal executive office is located at 1 Court Square West, Long Island City, NY 11101. Our telephone number at that address is (516) 803-2300. Our website address is www.alticeusa.com. Information on our and our subsidiaries' websites or Twitter feeds, the Altice N.V. website or Twitter feed, or any Altice N.V. filing, is deemed not to be a part of this prospectus and inclusions of websites and Twitter feeds are inactive textual references only. Table of Contents
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+PROSPECTUS SUMMARY This summary highlights information contained in other parts of this prospectus or incorporated by reference into this prospectus from our Annual Report on Form 10-K for the year ended December 31, 2017, our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2018, our definitive proxy statement on Schedule 14A filed with the Securities and Exchange Commission, or the SEC, on April 26, 2018 and our other filings with the SEC listed in the section of the prospectus entitled "Incorporation of Certain Documents by Reference." Because it is only a summary, it does not contain all of the information that you should consider before investing in our securities and it is qualified in its entirety by, and should be read in conjunction with, the more detailed information appearing elsewhere or incorporated by reference in this prospectus. You should read the entire prospectus, the registration statement of which this prospectus is a part, and the information incorporated by reference herein in their entirety before investing in our securities, including the "Risk Factors" section beginning on page 12 of this prospectus and the information in our Annual Report on Form 10-K for the year ended December 31, 2017 and our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2018, which include our financial statements and the related notes. Except as otherwise indicated herein or as the context otherwise requires, references in this prospectus to "Catabasis," "the company," "we," "us" and "our" refer to Catabasis Pharmaceuticals, Inc. and its consolidated subsidiary. Overview We are a clinical-stage biopharmaceutical company focused on the discovery, development and commercialization of novel therapeutics based on our proprietary Safely Metabolized And Rationally Targeted linker, or SMART LinkerSM, drug discovery platform. Our SMART Linker drug discovery platform enables us to engineer product candidates that can simultaneously modulate multiple targets in a disease. Our proprietary product candidates impact pathways that are central to diseases where efficacy may be optimized by a multiple target approach. We have applied our SMART Linker drug discovery platform to build an internal pipeline of product candidates for rare diseases, including our primary focus, edasalonexent, in development for the treatment of Duchenne muscular dystrophy, or DMD. Our lead product candidate is edasalonexent, formerly known as CAT-1004, which we believe has the potential to be a disease-modifying therapy for all patients affected by DMD, regardless of the underlying dystrophin mutation. Edasalonexent is an oral small molecule that inhibits NF-kB, or nuclear factor kappa-light-chain-enhancer of activated B cells. DMD is an ultimately fatal genetic disorder involving progressive muscle degeneration. The United States Food and Drug Administration, or FDA, has granted orphan drug, fast track and rare pediatric disease designations to edasalonexent for the treatment of DMD. The European Commission, or EC, has granted orphan medicinal product designation to edasalonexent for the treatment of DMD. Our MoveDMD Phase 1/2 trial enrolled ambulatory boys four to seven years old with a genetically confirmed diagnosis of DMD who were steroid naive or had not used steroids for at least six months prior to the trial. Boys enrolled in the trial were not limited to any specific dystrophin mutations and the 31 boys in the trial had 26 different dystrophin mutations. The MoveDMD trial was designed to be conducted in three sequential parts, Phase 1, Phase 2, and an open-label extension, which is on-going. We have completed key efficacy and safety assessments from the MoveDMD trial and have observed substantial slowing of DMD disease progression as supported by functional assessments, magnetic resonance imaging, or MRI, results and biomarker results with edasalonexent treatment. In the open-label extension of the MoveDMD trial after more than a year of oral 100 mg/kg/day edasalonexent treatment, we observed preserved muscle function and consistent improvements in all CATABASIS PHARMACEUTICALS, INC. (Exact name of registrant as specified in its charter) Table of Contents four assessments of muscle function compared to the rates of change in the control period for boys prior to receiving edasalonexent treatment. Additionally, changes in non-effort based measures of muscle health were seen, supporting the durability of edasalonexent treatment effects. Specifically, we observed statistically significant improvement in the rate of change in lower leg composite magnetic resonance imaging T2 through 12, 24, 36 and 48 weeks on oral 100 mg/kg of edasalonexent treatment compared to the off-treatment control period. The relative proportion of fat in muscle, which is referred to as fat fraction and is correlated with functional ability, can also be determined by magnetic resonance spectroscopy, or MRS. Improvements in the MRS fat fraction rate of change through 48 weeks of edasalonexent treatment compared to the off-treatment control period were observed in both soleus and vastus lateralis leg muscles, which are strongly correlated with ambulatory function. Through more than one year of treatment, edasalonexent continued to be well tolerated with no safety signals observed in the trial. We plan to initiate a global Phase 3 clinical trial for the treatment of DMD to evaluate the efficacy and safety of edasalonexent for registration purposes, dependent on raising capital. We are also evaluating other diseases where the inhibition of NF-kB may be beneficial for further therapeutic applications of edasalonexent, such as Becker muscular dystrophy, or BMD. Patients with BMD express low levels of dystrophin due to mutations in the dystrophin gene. Dystrophin production is reduced through the NF-kB-mediated induction of microRNAs that inhibit dystrophin translation. Inhibition of NF-kB in BMD directly enhances dystrophin production. In addition to edasalonexent, we have developed additional product candidates using our SMART Linker drug discovery platform as potential treatments for rare diseases, including CAT-5571, a potential treatment for cystic fibrosis, or CF. CAT-5571 is a small molecule that is designed to activate autophagy, a mechanism for recycling cellular components and digesting pathogens, which is important for host defenses and is depressed in CF. We have completed investigational new drug, or IND, application-enabling activities for CAT-5571. As of April 30, 2018, we owned six issued U.S. patents with composition of matter and method of use claims directed to edasalonexent and four issued U.S. patents with composition of matter and method of use claims directed to CAT-5571. These patents are expected to expire between 2029 and 2030, without taking into account potential patent term extensions. In addition, our patent portfolio includes over 70 issued foreign patents, seven pending U.S. patent applications and 20 pending foreign patent applications. This patent portfolio does not include a number of patents and patent applications related to the development of certain product candidates other than those directed to edasalonexent and CAT-5571, because we have elected to abandon those patents or patent applications as part of our recent restructuring in April 2018. For additional information regarding our business, see the sections entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our financial statements and the related notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2017 and our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2018, as well as the section entitled "Business" included in our Annual Report on Form 10-K for the year ended December 31, 2017, each of which is incorporated by reference into this prospectus. Delaware (State or other jurisdiction of incorporation or organization) 2834 (Primary Standard Industrial Classification Code Number) 26-3687168 (I.R.S. Employer Identification No.) One Kendall Square Bldg. 1400E, Suite B14202 Cambridge, Massachusetts 02139 (617) 349-1971 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) Table of Contents Our Product Candidates The following chart summarizes key information regarding our product candidates. We hold rights to all of our product candidates throughout the world. Edasalonexent Edasalonexent is a SMART Linker conjugate of salicylic acid and the omega-3 fatty acid docosahexaenoic acid, or DHA, a naturally occurring unsaturated fatty acid with anti-inflammatory properties. We designed edasalonexent to inhibit NF-kB, a protein that is activated in DMD and that drives inflammation, fibrosis and muscle degeneration, and suppresses muscle regeneration. We have reported results from Phase 1, Phase 2 and the open-label extension of the MoveDMD trial through administration of edasalonexent for up to 60 weeks, as described further below under " Edasalonexent Clinical Development." The FDA has granted edasalonexent orphan drug, fast track and rare pediatric disease designations for the treatment of DMD. The EC has granted orphan medicinal product designation to edasalonexent for the treatment of DMD. Edasalonexent Clinical Development MoveDMD Phase 1/2 Trial of Edasalonexent in Patients with DMD Our MoveDMD Phase 1/2 trial enrolled ambulatory boys ages four to seven with a genetically confirmed diagnosis of DMD, regardless of mutation, who were steroid naive or had not used steroids for at least six months prior to the trial. The MoveDMD trial was designed to be conducted in three sequential parts, Phase 1, Phase 2, and an open-label extension, which is on-going. We have completed key efficacy and safety assessments from the MoveDMD trial and have observed substantial slowing of DMD disease progression as supported by functional assessments, MRI results and biomarker results with edasalonexent treatment. Edasalonexent has been well tolerated with no clinical safety signals. We have evaluated the data collected in the MoveDMD trial against two benchmarks. Our MoveDMD trial design pre-specified an assessment of the rate of change of muscle function and magnetic resonance, or MR, for boys participating in the MoveDMD trial during off-treatment periods prior to the Phase 2 portion of the trial, which averaged more than 6 months. We also compared the Jill C. Milne, Ph.D. President and Chief Executive Officer Catabasis Pharmaceuticals, Inc. One Kendall Square Bldg. 1400E, Suite B14202 Cambridge, Massachusetts 02139 (617) 349-1971 (Name, address, including zip code, and telephone number, including area code, of agent for service) 1P-value is a conventional statistical method for measuring the statistical significance of clinical results. A p-value of 0.05 or less represents statistical significance, meaning that there is a 1-in-20 or less statistical probability that the observed results occurred by chance. Copies to: Rosemary G. Reilly, Esq. WilmerHale 60 State Street Boston, MA 02109 Telephone: (617) 526-6000 Fax: (617) 526-5000 John D. Hogoboom Lowenstein Sandler LLP 1251 Avenue of the Americas New York, NY 10020 Telephone: (212) 262-6700 Fax: (212) 262-7402 Table of Contents was significantly decreased with edasalonexent at 12, 24, 36 and 48 weeks compared to baseline in the 100 mg/kg/day treatment group (p 0.001). CRP is a well-characterized blood test marker that provides a global assessment of inflammation and is elevated in boys affected by DMD. The significant decrease observed in CRP supports a conclusion that the biological activity of edasalonexent in inhibiting NF-kB can decrease inflammation. In addition, to provide a preclinical understanding of a potential future clinical dosing regimen, we developed a population pharmacokinetic model using data from multiple clinical trials. We observed in the MoveDMD Phase 1 data that edasalonexent produces dose-related reductions in NF-kB regulated and inflammation-related gene transcripts that are driven by Ctrough, which is the lowest concentration of drug substance prior to receiving the next dose. In preclinical models, we observed that Ctrough is a driver of efficacy. Our pharmacokinetic/pharmacodynamic profiles and population pharmacokinetic modeling suggest that dosing frequency to maximize time over a certain threshold drug concentration, rather than maximum concentration or drug total exposure, primarily drives pharmacologic effect. Edasalonexent has been well tolerated in the MoveDMD trial with no clinical safety signals observed to date. The majority of adverse events, or AEs, have been mild in nature with no serious AEs, no drug discontinuations and no dose reductions. Height, weight and BMI growth patterns were similar to standard growth curves for unaffected boys in the age range of the boys participating in the MoveDMD trial, unlike the adverse treatment effects on these growth patterns with the current standard of care in DMD, corticosteroids. Additionally, boys with DMD in this age range typically have resting tachycardia, a heart rate that exceeds the normal resting rate, and the heart rate of the boys treated with edasalonexent decreased toward age-normative values during treatment through the last measurements taken at 48 weeks. Planned Phase 3 Clinical Trial We plan to initiate a single global Phase 3 clinical trial for the treatment of DMD in 2018 with top-line results expected in the second quarter of 2020, assuming the completion of this offering. The purpose of the trial is to evaluate the efficacy and safety of edasalonexent for registration purposes. The design of this randomized, double-blind, placebo-controlled trial has been informed by discussions with the FDA and the European Medicines Agency. We expect that the Phase 3 clinical trial will have many key elements in common with the Phase 2 trial, including the patient population and endpoints. We anticipate enrolling approximately 125 boys, four to seven years old, who have not been on steroids for at least 6 months. We may consider enrolling boys on a stable dose of EXONDYS 51, one of two therapies approved by the FDA for the treatment of DMD, dependent on final trial design. Overview of DMD DMD is a rare pediatric disorder involving progressive muscle degeneration that eventually leads to death. DMD is caused by various mutations in the dystrophin gene that result in a lack of functional dystrophin in muscle fibers, which renders muscle fibers more susceptible to mechanical stress. Dystrophin is a protein that resides in the membrane of muscle cells and is critical to the structural and membrane stability of muscle fibers in skeletal, diaphragm, and cardiac muscle. When muscles contract or stretch during normal use, the absence of normally functioning dystrophin results in activation of the NF-kB pathway, triggering inflammation in the muscles, initiating muscle degeneration, and reducing the ability of muscles to regenerate. As muscle damage progresses, connective and adipose tissues replace muscle fibers, resulting in inexorable muscle weakness. DMD is the most common fatal genetic childhood disease and it occurs almost exclusively in males, occurring in approximately 1 in 3,500 live male births. Based on this incidence rate, we estimate that Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement is declared effective. If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act. Large accelerated filer Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company Emerging growth company If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. Table of Contents DMD affects a total of approximately 15,000 patients in the United States and approximately 19,000 patients in the European Union. Children with DMD typically begin to show symptoms of disease between ages two and five, when they develop a waddling gait, frequently fall and have difficulty rising from the floor. Progressive weakness then develops in the muscles in the arms, legs and trunk. This muscle weakness is accompanied by fixations, or contractures, of joints, such as knees, hips and elbows. By age eight, most patients have difficulty ascending stairs. Patients typically lose walking ability between the ages of ten and fourteen and, by about twelve years of age, most people with DMD are unable to walk and need to use a wheelchair on a regular basis. Patients' cardiac and respiratory muscles are also adversely affected, typically requiring use of ventilators in their late teens. Progressive weakening of cardiac and respiratory muscles of DMD patients eventually results in death, generally in the patient's mid-twenties. CAT-5571 CAT-5571 is a SMART Linker conjugate that contains cysteamine, a naturally occurring molecule that is a degradation product of the amino acid cysteine, and DHA. We have developed CAT-5571 as a potential oral treatment for CF, designed to activate autophagy and thereby restore host defense. Autophagy is a mechanism for recycling cellular components and digesting pathogens, which is depressed in CF. CAT-5571 has been shown to restore autophagy, reestablish host defense and enhance the clearance of pathogens, including P. aeruginosa and B. cenocepacia in preclinical models of CF. We have completed IND-enabling activities for CAT-5571. CF is a rare, chronic, genetic, life-shortening orphan disease that affects over 70,000 patients worldwide, predominantly in the Caucasian population. In CF, a malfunctioning cystic fibrosis transmembrane conductance regulator ion channel impairs chloride secretion, with deleterious effects on multiple organs, and particularly devastating effects on pulmonary, intestinal and pancreatic function. Patients affected with CF are also predisposed to respiratory failure caused by persistent lung infections, notably bacteria and most commonly P. aeruginosa, that are difficult to treat with standard antibiotics. CF patients have frequent pulmonary exacerbations due to their inability to clear the persistent lung infections. Advancement in research and treatments have extended the life expectancy for those living with CF, however, there is currently no cure. Our Corporate Information We were incorporated under the laws of the State of Delaware on June 26, 2008 under the name Catabasis Pharmaceuticals, Inc. Our executive offices are located at One Kendall Square, Bldg. 1400E, Suite B14202, Cambridge, Massachusetts 02139, and our telephone number is (617) 349-1971. Our website address is www.catabasis.com. The information contained on, or that can be accessed through, our website is not a part of this prospectus. We have included our website address in this prospectus solely as an inactive textual reference. Implications of Being an Emerging Growth Company We qualify as an "emerging growth company" as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act, and we may remain an emerging growth company until the end of our 2020 fiscal year. However, if certain events occur prior to the end of such period, including if we become a "large accelerated filer," our annual gross revenue exceeds $1.07 billion, or we issue more than $1.0 billion of non-convertible debt in any three-year period, we will cease to be an emerging growth company prior to the end of such period. For so long as we remain an emerging growth company, we are permitted and intend to rely on exemptions from certain disclosure and other requirements that are CALCULATION OF REGISTRATION FEE Title of Each Class of Securities to be Registered Proposed Maximum Aggregate Offering Price(1)(2) Amount of Registration Fee Common Units, each Common Unit consisting of one share of common stock, par value $0.001 per share, and one warrant to purchase one share of common stock $35,000,000(3) $4,358 (i) Common stock included in the Common Units(4) (ii) Warrants included in the Common Units(4) Pre-funded Units, each Pre-funded Unit consisting of one Pre-funded Warrant to purchase one share of common stock, and one Warrant to purchase one share of common stock (3) (3) (i) Pre-funded Warrants included in the Pre-funded Units(4) (ii) Warrants included in the Pre-funded Units(4) Shares of common stock underlying Pre-funded Warrants included in the Pre-funded Units(4) (3) (3) Shares of common stock underlying Warrants included in the Common Units and the Pre-funded Units(5) $42,000,000 $5,229 Total $77,000,000 $9,587(6) (1)Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended. (2)Pursuant to Rule 416(a) under the Securities Act of 1933, as amended, this registration statement shall also cover an indeterminate number of shares that may be issued and resold resulting from stock splits, stock dividends or similar transactions. (3)The proposed maximum aggregate offering price of the Common Units proposed to be sold in the offering will be reduced on a dollar-for-dollar basis based on the offering price of any Pre-funded Units offered and sold in the offering, and the proposed maximum aggregate offering price of the Pre-funded Units to be sold in the offering will be reduced on a dollar-for-dollar basis based on the offering price of any Common Units sold in the offering. Accordingly, the proposed maximum aggregate offering price of the Common Units and Pre-funded Units (including the common stock issuable upon exercise of the Pre-funded Warrants included in the Pre-funded Units), if any, is $35,000,0000. (4)Filing fee included with the Common Units or Pre-funded Units, as applicable. (5)Pursuant to Staff Compliance and Disclosure Interpretation 240.06, equals the aggregate exercise price of the Warrants. (6)The Registrant previously paid a registration fee of $8,217 in connection with this registration statement. Accordingly, the registrant has paid an additional registration fee of $1,370 in connection with the filing of this Amendment No. 3. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. Table of Contents applicable to other public companies that are not emerging growth companies. These exemptions include: reduced disclosure about our executive compensation arrangements; exemption from holding non-binding advisory votes on executive compensation, including golden parachute arrangements; and exemption from the auditor attestation requirement in the assessment of our internal controls over financial reporting. Accordingly, the information contained in this prospectus, and the information incorporated herein by reference, may be different than the information you receive from other public companies in which you hold stock. However, we have irrevocably elected not to avail ourselves of the extended transition period for complying with new or revised accounting standards, and, therefore, we are subject to the same new or revised accounting standards as other public companies that are not emerging growth companies. Table of Contents The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting offers to buy these securities in any state or other jurisdiction where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED JUNE 18, 2018 PRELIMINARY PROSPECTUS Catabasis Pharmaceuticals, Inc. 26,119,403 Common Units, Each Consisting of One Share of Common Stock and a Warrant to Purchase One Share of Common Stock 26,119,403 Pre-funded Units, Each Consisting of a Pre-funded Warrant to Purchase One Share of Common Stock and a Warrant to Purchase One Share of Common Stock We are offering 26,119,403 common units (each a "Common Unit"), each Common Unit consisting of one share of our common stock and a warrant to purchase one share of our common stock at an exercise price per share of common stock equal to 120% of the public offering price per Common Unit (each a "Warrant"). Each Warrant will be exercisable immediately and will expire five years from the date of issuance. We are also offering to those purchasers, if any, whose purchase of Common Units in this offering would otherwise result in the purchaser, together with its affiliates and certain related parties, beneficially owning more than 4.99% (or, at the election of the purchaser, 9.99%) of our outstanding common stock immediately following the consummation of this offering, the opportunity to purchase, if the purchaser so chooses, pre-funded units (each a "Pre-funded Unit") in lieu of Common Units that would otherwise result in the purchaser's beneficial ownership exceeding 4.99% (or, at the election of the purchaser, 9.99%) of our outstanding common stock. We are offering a maximum of 26,119,403 Pre-funded Units. Each Pre-funded Unit will consist of a pre-funded warrant to purchase one share of our common stock at an exercise price of $0.01 per share (each a "Pre-funded Warrant") and a Warrant. The purchase price of each Pre-funded Unit is equal to the price per Common Unit being sold to the public in this offering, minus $0.01. The Pre-funded Warrants will be immediately exercisable and may be exercised at any time until all of the Pre-funded Warrants are exercised in full. We are also offering the shares of common stock that are issuable from time to time upon exercise of the Warrants and Pre-funded Warrants being offered by this prospectus. For each Pre-funded Unit we sell, the number of Common Units we are offering will be decreased on a one-for-one basis. Common Units and Pre-funded Units will not be issued or certificated. The shares of common stock or Pre-funded Warrants, as the case may be, and the Warrants included in the Common Units or the Pre-funded Units, can only be purchased together in this offering, but the securities contained in the Common Units or Pre-funded Units will be issued separately and will be immediately separable upon issuance. There is no established public trading market for the Warrants or the Pre-funded Warrants, and we do not expect a market to develop. We do not intend to apply for listing of the Warrants or the Pre-funded Warrants on any securities exchange or other nationally recognized trading system. Without an active trading market, the liquidity of the Warrants or the Pre-funded Warrants will be limited. Our common stock is listed on the Nasdaq Global Market under the symbol "CATB." On June 15, 2018, the last reported sale price of our common stock on the Nasdaq Global Market was $1.34 per share. The public offering price per Common Unit or Pre-funded Unit, as the case may be, will be determined between us, the underwriters and investors based on market conditions at the time of pricing, and may be at a discount to the current market price of our common stock. Therefore, the recent market price used throughout this prospectus may not be indicative of the final offering price. We are an "emerging growth company" under applicable Securities and Exchange Commission rules and are subject to reduced public company disclosure requirements. See "Summary Implications of Being an Emerging Growth Company." You should read this prospectus, together with additional information described under the headings "Incorporation of Certain Documents by Reference" and "Where You Can Find More Information," carefully before you invest in any of our securities. Investing in our securities involves risks. See "Risk Factors" beginning on page 12 of this prospectus and in our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2018, which is incorporated herein by reference. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense. Per Common Unit Per Pre-funded Unit Total Price to the public $ $ $ Underwriting discount and commissions(1) $ $ $ Proceeds to us (before expenses) $ $ $ Table of Contents
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+Prospectus Summary The following is a summary of this prospectus, and while it contains material information about the Trust and the Shares, it does not contain or summarize all of the information about the Trust and the Shares contained in this prospectus that is material and that may be important to you. You should read this entire prospectus, including "Risk Factors" beginning on page 10 before making an investment decision about the Shares. Capitalized terms not defined in this section have the meaning set forth in the Glossary. Trust Structure, the Sponsor, the Trustee and the Custodian The Trust was formed in 2017 when an initial deposit of gold was made in exchange for the issuance of two Baskets. The purpose of the Trust is to own gold transferred to the Trust in exchange for Shares issued by the Trust. Each Share represents a fractional undivided beneficial interest in the net assets of the Trust. The assets of the Trust consist primarily of gold held by the Custodian on behalf of the Trust. However, there may be situations where the Trust will unexpectedly hold cash. For example, a claim may arise against a third party, which is settled in cash. In situations where the Trust unexpectedly receives cash or other assets, no new Shares will be issued until after the record date for the distribution of such cash or other property has passed. The Sponsor of the Trust is GraniteShares LLC, a Delaware limited liability company. The Shares are not obligations of, and are not guaranteed by the Sponsor, or any of its subsidiaries or affiliates. The Trust is governed by the provisions of the Depositary Trust Agreement (as amended from time to time, the "Trust Agreement") executed on August 24, 2017 by the Sponsor and the Trustee. The Trust issues Shares only in blocks of 10,000 or integral multiples thereof. Baskets of Shares may be redeemed by the Trust in exchange for the amount of gold corresponding to their redemption value. Individual Shares are not redeemed by the Trust, but are listed and trade on the Exchange under the symbol "BAR." The Trust seeks to reflect generally the performance of the price of gold. The Trust seeks to reflect such performance before payment of the Trust s expenses and liabilities. The material terms of the Trust are discussed in greater detail under the section "Description of the Shares and the Trust Agreement." The Trust is not a registered investment company under the Investment Company Act of 1940, as amended, and is not required to register under such Act. The Trust is not a commodity pool for purposes of the Commodity Exchange Act of 1936, as amended. The Sponsor arranged for the creation of the Trust and is responsible for the ongoing registration of the Shares for their public offering in the United States and the listing of the Shares on the Exchange. The Sponsor will not exercise day-to-day oversight over the Trustee or the Custodian. The Sponsor has developed a marketing plan for the Trust, prepares marketing materials regarding the Shares of the Trust, and executes the marketing plan of the Trust on an ongoing basis. The Sponsor has agreed to assume the following expenses incurred by the Trust: the Trustee s fee (the "Trustee s Fee") and its ordinary out-of-pocket expenses, the Custodian s fee (the "Custodian s Fee") and its reimbursable expenses, the Exchange listing fees, SEC registration fees, marketing expenses, printing and mailing costs, audit fees and expenses and up to $100,000 per annum in legal fees and expenses. The Trustee is The Bank of New York Mellon and the Custodian is ICBC Standard Bank Plc. The agreements between the Trustee and the Custodian for the custody of the Trust s gold are governed by English law. The Trustee is responsible for the day-to-day administration of the Trust. The responsibilities of the Trustee include (1) processing orders for the creation and redemption of Baskets; (2) coordinating with the Custodian the receipt and delivery of gold transferred to, or by, the Trust in connection with each issuance and redemption of Baskets; (3) calculating the net asset value of the Trust on each business day; and (4) selling the Trust s gold as needed to cover the Trust s expenses. For a more detailed description of the role and responsibilities of the Trustee see "Description of the Shares and the Trust Agreement" and "The Trustee." The Custodian is responsible for safekeeping the gold owned by the Trust. The Custodian was selected by the Sponsor and, at the direction of the Sponsor, appointed by the Trustee, and is responsible to the Trustee under the Trust s gold custody agreements. The general role and responsibilities of the Custodian are further described in "The Custodian." Trust Objective The objective of the Trust is for the value of the Shares to reflect, at any given time, the value of the assets owned by the Trust at that time less the Trust s accrued expenses and liabilities as of that time. The Shares are intended to constitute a simple and cost-effective means of making an investment similar to an investment in gold. An investment in allocated physical gold bullion requires expensive and sometimes complicated arrangements in connection with the assay, transportation and warehousing of the metal. Traditionally, such expense and complications have resulted in investments in physical gold bullion being efficient only in amounts beyond the reach of many investors. The Shares have been designed to remove the obstacles represented by the expense and complications involved in an investment in physical gold bullion, while at the same time having an intrinsic value that reflects, at any given time, the price of the assets owned by the Trust at such time less the Trust expenses and liabilities. Although the Shares are not the exact equivalent of an investment in gold, they provide investors with an alternative that allows a level of participation in the gold market through the securities market. Advantages of investing in the Shares include: Minimal credit risk. The Shares represent an interest in physical gold owned by the Trust (other than up to a maximum of 430 ounces of gold held in unallocated form) and held in physical custody at the Custodian. Physical gold of the Trust in the Custodian s possession is not subject to borrowing arrangements with third parties. Other than the gold temporarily being held in an unallocated gold account of the Trust in connection with deposits and an amount of gold comprising less than 430 ounces which may be held in the unallocated gold account of the Trust on an ongoing basis, the physical gold of the Trust is not subject to counterparty or credit risks. This contrasts with most other financial products that gain exposure to precious metals through the use of derivatives that are subject to counterparty and credit risks. Backed by gold held by the Custodian on behalf of the Trust. The Shares are backed primarily by allocated physical gold bullion identified as the Trust s property in the Custodian s books. The Trust arrangements contemplate that no Shares can be issued unless the corresponding amount of gold has been deposited into the Trust. Once deposited into the Trust, gold is only removed from the Trust if (i) sold to pay Trust expenses (such as the Sponsor s Fee and any other expenses not assumed by the Sponsor) or liabilities to which the Trust may be subject, or (ii) transferred from the Trust s account to an Authorized Participant s account in exchange for one or more Baskets of Shares surrendered for redemption. Ease and flexibility of investment. Retail investors may purchase and sell Shares through traditional brokerage accounts. Because the amount of gold corresponding to a Share is significantly less than the minimum amounts of physical gold bullion that are commercially available for investment purposes, the cash outlay necessary for an investment in Shares should be less than the amount required for currently existing means of investing in physical gold bullion. Shares are eligible for margin accounts. Relatively cost efficient. Although the return, if any, of an investment in the Shares is subject to the additional expenses of the Trust, including the Sponsor s Fee and other costs and expenses not assumed by the Sponsor which would not be incurred in the case of a direct investment in gold, the Shares may represent a cost-efficient alternative for investors not otherwise in a position to participate directly in the market for allocated physical gold bullion, because the expenses involved in an investment in allocated physical gold bullion through the Shares are dispersed among all holders of Shares. Emerging Growth Company Status The Trust is an "emerging growth company," as defined in the JOBS Act. For as long as the Trust is an "emerging growth company," the Trust may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not "emerging growth companies," including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes–Oxley Act of 2002 (the "Sarbanes-Oxley Act"), reduced disclosure obligations regarding executive compensation in the Trust s periodic reports, and exemptions from the requirements of holding advisory "say-on-pay" votes on executive compensation and shareholder advisory votes on golden parachute compensation. Under the JOBS Act, the Trust will remain an "emerging growth company" until the earliest of: The last day of the fiscal year during which the Trust has total annual gross revenues of $1 billion; The last day of the fiscal year following the fifth anniversary of the completion of this offering; The date on which the Trust has, during the previous three-year period, issued more than $1 billion in non-convertible debt; and The date on which the Trust is deemed to be a "large accelerated filer" (i.e., an issuer that (1) has more than $700 million in outstanding equity held by non-affiliates and (2) has been subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act") for at least 12 calendar months and has filed at least one annual report on Form 10-K. The JOBS Act also provides that an "emerging growth company" can utilize the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended (the "Securities Act") for complying with new or revised accounting standards. The Trust is choosing to opt out of this extended transition period and, as a result, the Trust will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for companies that are not "emerging growth companies." Section 107 of the JOBS Act provides that the Trust s decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable. Principal Offices The Sponsor s office is located at 205 Hudson Street, 7th Floor, New York, New York 10013. The Trustee has a Trust office at 2 Hanson Place, 9th Floor, Brooklyn, New York 11217. The Custodian s office is located at 20 Gresham Street, London, EC2V 7JE, United Kingdom. The Offering Offering The Shares represent units of fractional undivided beneficial interest in the net assets of the Trust. Use of proceeds Proceeds received by the Trust from the issuance and sale of Baskets and the Shares (as described on the front page of this prospectus) will consist of gold deposits and, possibly from time to time, cash. Pursuant to the Trust Agreement, during the life of the Trust such proceeds will only be (1) held by the Trust, (2) distributed to Authorized Participants in connection with the redemption of Baskets, or (3) disbursed or sold as needed to pay the Trust s ongoing expenses. Exchange symbol BAR CUSIP 38748G 101 Creation and redemption The Trust will issue and redeem Baskets of Shares on a continuous basis. Baskets of Shares will only be issued or redeemed in exchange for an amount of gold determined by the Trustee on each day that the Exchange is open for regular trading. No Shares will be issued unless the Custodian has allocated to the Trust s account the corresponding amount of gold. Initially, a Basket will require delivery of 998.502 Fine Ounces of gold. The amount of gold necessary for the creation of a Basket, or to be received upon redemption of a Basket, will decrease over the life of the Trust, due to the payment or accrual of fees and other expenses or liabilities payable by the Trust. Baskets may be created or redeemed only by Authorized Participants, who will pay the Trustee a transaction fee for each order to create or redeem Baskets. See "Description of the Shares and the Trust Agreement" for more details. Net Asset Value The net asset value of the Trust will be obtained by subtracting the Trust s expenses and liabilities on any day from the value of the gold owned by the Trust on that day; the NAV per Share will be obtained by dividing the net asset value of the Trust on a given day by the number of Shares outstanding on that day. On each day on which the Exchange is open for regular trading, the Trustee will determine the net asset value of the Trust and the NAV per Share as promptly as practicable after 4:00 p.m. (New York time). The Trustee will value the Trust s gold on the basis of LBMA Gold Price PM. If there is no LBMA Gold Price PM on any day, the Trustee is authorized to use the LBMA Gold Price AM announced on that day. If neither price is available for that day, the Trustee will value the Trust s gold based on the most recently announced LBMA Gold Price PM or LBMA Gold Price AM. If the Sponsor determines that such price is inappropriate to use, the Sponsor will identify an alternate basis for evaluation to be employed by the Trustee. Further, the Sponsor may instruct the Trustee to use on an on-going basis a different publicly available price which the Sponsor determines to fairly represent the commercial value of the Trust s gold. See "The Trust—Valuation of Gold; Computation of Net Asset Value." Trust Expenses The Trust s only ordinary recurring expense is expected to be the remuneration due to the Sponsor (the "Sponsor s Fee"). In exchange for the Sponsor s Fee, the Sponsor has agreed to assume the following expenses of the Trust: the Trustee s Fee and its ordinary out-of-pocket expenses, the Custodian s Fee and its reimbursable expenses, the Exchange listing fees, SEC registration fees, marketing expenses, printing and mailing costs, audit fees and expenses and up to $100,000 per annum in legal fees and expenses. The Sponsor s Fee is accrued daily at an annualized rate equal to 0.20% of the net asset value of the Trust and is payable monthly in arrears. The Sponsor may, at its discretion and from time to time, waive all or a portion of the Sponsor s Fee for stated periods of time. The Sponsor is under no obligation to waive any portion of its fees and any such waiver shall create no obligation to waive any such fees during any period not covered by the waiver. Presently, the Sponsor does not intend to waive any part of its fee. The Trustee from time to time may sell gold in such quantities as may be necessary to permit the payment of the Sponsor s Fee and other Trust expenses and liabilities not assumed by the Sponsor. The Trustee will endeavor to sell gold at such times and in the smallest amounts required to permit such payments as they become due, it being the intention to avoid or minimize the Trust s holdings of assets other than gold. Accordingly, the amount of gold to be sold may vary from time to time depending on the level of the Trust s expenses and liabilities and the market price of gold. See "The Trust—Trust Expenses" and "Description of the Shares and the Trust Agreement—Trust Expenses and Gold Sales." Federal Income Tax Considerations Owners of Shares are treated, for U.S. federal income tax purposes, as if they owned a corresponding share of the assets of the Trust. They are also viewed as if they directly received a corresponding share of any income of the Trust, or as if they had incurred a corresponding share of the expenses of the Trust. Consequently, each sale of gold by the Trust constitutes a taxable event to owners of beneficial interests in the Shares ("Shareholders"). See "United States Federal Income Tax Consequences—Taxation of U.S. Shareholders" and "ERISA and Related Considerations." Voting Rights Owners of Shares have the right to vote in limited circumstances, i.e., causing the Trustee to cure a material breach by the Trustee under the Trust Agreement, or requiring the Trustee to terminate the Trust Agreement. See "Description of the Shares and the Trust Agreement—Voting Rights." Suspension of Issuance, Transfers and Redemptions The Trustee may, and upon direction of the Sponsor will, generally suspend the delivery of Shares against deposits of gold or the registration of transfer of Shares or refuse a particular delivery or transfer (i) during any period when the Trustee s transfer books are closed, (ii) if the Custodian has informed the Trustee and the Sponsor that it is unable to allocate gold to the Trust Allocated Account or (iii) if any such action is otherwise deemed necessary or advisable by the Sponsor for any reason in its sole discretion. Redemptions may be suspended only (i) during any period in which regular trading on the Exchange is suspended or restricted, or the Exchange is closed, or (ii) during an emergency as a result of which delivery, disposal or evaluation of gold is not reasonably practicable. See "Description of the Shares and the Trust Agreement—Redemption of Baskets." Limitation on Liability The Sponsor and the Trustee: are only obligated to take the actions specifically set forth in the Trust Agreement without gross negligence, willful misconduct or bad faith; are not liable for the exercise of discretion permitted under the Trust Agreement; and have no obligation to prosecute any lawsuit or other proceeding on behalf of the Shareholders or any other person. See "Description of the Shares and the Trust Agreement—The Sponsor (Liability of the Sponsor and indemnification)" and "The Trustee (Limitation on Trustee s liability)." Termination events The Trustee will terminate the Trust Agreement if: the Trustee is notified that the Shares are delisted from the Exchange and are not approved for listing on another national securities exchange within five business days of their delisting; Shareholders acting in respect of at least 75% of the outstanding Shares notify the Trustee that they elect to terminate the Trust; 60 days have elapsed since the Trustee notified the Sponsor of the Trustee s election to resign or since the Sponsor removed the Trustee, and a successor trustee has not been appointed and accepted its appointment; any sole Custodian then acting resigns or is removed and no successor custodian has been employed within 60 days of such resignation or removal; the SEC determines that the Trust is an investment company under the Investment Company Act of 1940, as amended, and the Trustee has actual knowledge of that determination; the U.S. Commodity Futures Trading Commission (the "CFTC") determines that (i) the Trust is a commodity pool under the Commodity Exchange Act of 1936, as amended (the "CEA"); and/or (ii) the Shares constitute "commodity interests", as defined by the CFTC in CFTC Regulation 1.3(yy) and the Trustee has actual knowledge of that determination; the aggregate market capitalization of the Trust, based on the closing price for the Shares, is less than $50 million (as adjusted for inflation by reference to the U.S. Consumer Price Index) at any time more than 18 months after the Trust s formation, and the Trust receives, within 6 months after the last trading date on which such capitalization was less than $50 million, notice from the Sponsor of its decision to terminate the Trust; the Trust fails to qualify for treatment, or ceases to be treated, as a grantor trust under the United States Internal Revenue Code of 1986, as amended (the "Code"), or under any comparable provision of any other jurisdiction where such treatment is sought, and the Trustee receives notice that the Sponsor has determined that the termination of the Trust is advisable; or 60 days have elapsed since DTC ceases to act as depository with respect to the Shares and the Sponsor has not identified another depository which is willing to act in such capacity. If the Sponsor resigns without appointing a successor sponsor, or is dissolved or has ceased to exist as a legal entity for any reason or is deemed to have resigned because (1) it fails to undertake or perform, or becomes incapable of undertaking or performing, any of the duties required by the Trust Agreement, and such failure or incapacity is not cured, or (2) the Sponsor is adjudged bankrupt or insolvent, or a receiver of the Sponsor or of its property is appointed, or a trustee or liquidator or any public officer takes charge or control of the Sponsor or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, then the Trustee may, among other actions, terminate and liquidate the Trust. See "Description of the Shares and the Trust Agreement—Amendment and Termination." After termination of the Trust, the Trustee will deliver Trust property to Authorized Participants upon surrender and cancellation of Shares and, at least 60 days after termination, may sell any remaining Trust property in a private or public sale, and hold the proceeds, uninvested and in a non-interest bearing account, for the benefit of the holders who have not surrendered their Shares for cancellation. See "Description of the Shares and the Trust Agreement—Amendment and Termination." Authorized Participants Baskets may be created or redeemed only by Authorized Participants. Each Authorized Participant must be a registered broker-dealer or other securities market participant, a participant in DTC, have entered into an agreement with the Trustee and the Sponsor (the "Authorized Participant Agreement") and have established a gold unallocated account with the Custodian or another LBMA-approved gold-clearing bank. The Authorized Participant Agreement provides the procedures for the creation and redemption of Baskets and for the delivery of gold in connection with such creations or redemptions. A list of the current Authorized Participants can be obtained from the Trustee or the Sponsor. Clearance and settlement The Shares are issued in book-entry form only. Transactions in Shares clear through the facilities of DTC. Investors may hold their Shares through DTC, if they are participants in DTC, or indirectly through entities that are participants in DTC. Summary Financial Condition As of March 31, 2018, the net asset value of the Trust, which represents the value of the gold deposited into the Trust, was $14,546,000 and the NAV per Share was $132.23. Risk Factors Before making an investment decision, you should consider carefully the risks described below, as well as the other information included in this prospectus Because the Shares are created to reflect the price of the gold held by the Trust, the market price of the Shares will be as unpredictable as the price of gold has historically been. This creates the potential for losses, regardless of whether you hold Shares for the short-, mid- or long-term. Shares are created to reflect, at any given time, the market price of gold owned by the Trust at that time less the Trust s expenses and liabilities. Because the value of Shares depends on the price of gold, it is subject to fluctuations similar to those affecting gold prices. The price of gold has fluctuated widely over the past several years. If gold markets continue to be characterized by the wide fluctuations that they have shown in the past several years, the price of the Shares will change widely and in an unpredictable manner. This exposes your investment in Shares to potential losses if you need to sell your Shares at a time when the price of gold is lower than it was when you made your investment in Shares. Even if you are able to hold Shares for the mid- or long-term you may never realize a profit, because gold markets have historically experienced extended periods of flat or declining prices. Following an investment in Shares, several factors may have the effect of causing a decline in the prices of gold and a corresponding decline in the price of Shares. Among them: Large sales, including those by the official sector (government, central banks and related institutions), which own a significant portion of the aggregate world holdings. If one or more of these institutions decides to sell in amounts large enough to cause a decline in world gold prices, the price of the Shares will be adversely affected. A significant increase in gold hedging activity by gold producers. Should there be an increase in the level of hedge activity of gold producing companies, it could cause a decline in world gold prices, adversely affecting the price of the Shares. A significant change in the attitude of speculators and investors towards gold. Should the speculative community take a negative view towards gold, it could cause a decline in world gold prices, negatively impacting the price of the Shares. Attitudes towards gold could be influenced by: Investors expectations regarding future inflation rates; Currency exchange rate volatility; Interest rate volatility; and Unexpected political, economic, global or regional incidents. Conversely, several factors may trigger a temporary increase in the price of gold prior to your investment in the Shares. If that is the case, you will be buying Shares at prices affected by the temporarily high prices of gold, and you may incur losses when the causes for the temporary increase disappear. As the Sponsor has a limited history of operating an investment vehicle like the Trust, its experience may be inadequate or unsuitable to manage the Trust. The Sponsor has a limited history of past performance in operating an investment vehicle like the Trust. The past performances of the Sponsor s management in other positions are no indication of their ability to manage an investment vehicle such as the Trust. If the experience of the Sponsor and its management is not adequate or suitable to manage an investment vehicle such as the Trust, the operations of the Trust may be adversely affected. Actual or perceived disruptions in the processes used to determine the new LBMA Gold Price PM, or lack of confidence in that benchmark, may adversely affect the return on your investment in the Shares (if any). The London PM Fix was the benchmark price for valuation of gold prior to March 20, 2015, at which time the London PM Fix was discontinued and replaced by the LBMA Gold Price PM. The LBMA Gold Price AM and LBMA Gold Price PM are gold price benchmark mechanisms administered by ICE Benchmark Administration ("IBA"), an independent specialist benchmark administrator appointed by the LBMA. Twice daily during London business hours IBA hosts an electronic, physically settled, and tradable auction, during which buyers and sellers trade physical spot gold at a pre-determined price and the price of the final auction is published to the market as the LBMA Gold Price AM and LBMA Gold Price PM for that day. IBA hosts each auction in rounds of 45 seconds (which may be adjusted by IBA by notice). The prices for each round of any auction are set by an independent chairperson appointed by IBA, who sets the prices in their sole discretion in line with the market conditions and the activity in the auction. An auction will conclude following a round in which the difference between the entered buying and selling interest (referred to as imbalance) does not exceed a certain volume of gold identified by IBA (initially set at 20,000 troy ounces), and the price for that round will be published as the LBMA Gold Price AM (for the auction taking place at 10:00 a.m. (London time)) or the LBMA Gold Price PM (for the auction taking place at 3:00 p.m. (London time)) for that day. IBA has indicated that the chairperson responsible for setting the prices for the auctions will have the requisite credentials and experience and will be independent from any direct participant or sponsored client. However, because the identity of the chairperson will not be disclosed to the market, it will not be possible to independently assess the adequacy of the chairperson s qualifications or to assure the chairperson s independence from any third party or market participant. In addition, because the chairperson has unlimited discretion in setting the auction prices and does not rely on any automated algorithm for the price setting, there can be no assurance that the LBMA Gold Price AM or LBMA Gold Price PM will accurately reflect the fundamentals of the gold market. See "The Trust – Valuation of Gold; Computation of Net Asset Value" for a description of how the LBMA Gold Price PM is determined. Furthermore, while the features of the mechanism to determine the LBMA Gold Price AM and LBMA Gold Price PM may be improvements over the London AM Fix and London PM Fix, investors should keep in mind that electronic markets are not exempt from failures. As with any innovation, it is possible that electronic failures or other unanticipated events may occur that could result in delays in the announcement of, or the inability of the system to produce, a LBMA Gold Price AM or LBMA Gold Price PM on any given day. In addition, if a perception were to develop that the LBMA Gold Price AM or LBMA Gold Price PM is vulnerable to manipulation attempts, or if the new administration proceedings surrounding the determination of the LBMA Gold Price AM or LBMA Gold Price PM are not received with confidence by the markets, the behavior of investors and traders in gold may change, and those changes may have an effect on the price of gold (and, consequently, the value of the Shares). In any of these circumstances, the intervention of extraneous events disruptive of the normal interaction of supply and demand of gold at any given time may result in distorted prices and losses on an investment in the Shares that, but for such extraneous events, might not have occurred. Other effects of disruptions in the determination of the LBMA Gold Price AM or LBMA Gold Price PM or any inaccuracies in setting of the auction prices on the operations of the Trust include the potential for an incorrect valuation of the Trust s gold, an inaccurate computation of the Sponsor s Fee, and the sales of gold to cover Trust expenses at prices that do not accurately reflect the fundamentals of the gold market. Each of these events could have an adverse effect on the value of the Shares. Effective April 1, 2015, the LBMA Gold Price AM and LBMA Gold Price PM became regulated by the Financial Conduct Authority of the United Kingdom (the "FCA"). As of the date of this prospectus, the Sponsor has no reason to believe that the LBMA Gold Price (AM or PM) will not fairly represent the price of the gold held by the Trust. Should this situation change, the Sponsor expects to use the powers granted by the Trust s governing documents to seek to replace the LBMA Gold Price PM with a more reliable indicator of the value of the Trust s gold. There is no assurance that such alternative value indicator will be identified, or that the process of changing from the LBMA Gold Price PM to a new benchmark price will not adversely affect the price of the Shares. The amount of gold represented by each Share will decrease over the life of the Trust due to the sales of gold necessary to pay the Sponsor s Fee and Trust expenses. Without increases in the price of gold sufficient to compensate for that decrease, the price of the Shares will also decline and you will lose money on your investment in Shares. Although the Sponsor has agreed to assume all organizational and certain ordinary expenses incurred by the Trust, not all Trust expenses have been assumed by the Sponsor. For example, any taxes and other governmental charges that may be imposed on the Trust s property will not be paid by the Sponsor. As part of its agreement to assume some of the Trust s ordinary administrative expenses, the Sponsor has agreed to pay legal fees and expenses of the Trust not in excess of $100,000 per annum. Any legal fees and expenses in excess of that amount will be the responsibility of the Trust. Because the Trust does not have any income, it needs to sell gold to cover expenses not assumed by the Sponsor. The Trust may also be subject to other liabilities (for example, as a result of litigation) which have also not been assumed by the Sponsor. The only source of funds to cover those liabilities will be sales of gold held by the Trust. Even if there are no expenses other than those assumed by the Sponsor, and there are no other liabilities of the Trust, the Trustee will still need to sell gold to pay the Sponsor s Fee. The result of these sales is a decrease in the amount of gold represented by each Share. New deposits of gold, received in exchange for new Shares issued by the Trust, do not reverse this trend. A decrease in the amount of gold represented by each Share results in a decrease in its price even if the price of gold has not changed. To retain the Share s original price, the price of gold has to increase. Without that increase, the lesser amount of gold represented by the Share will have a correspondingly lower price. If these increases do not occur, or are not sufficient to counter the lesser amount of gold represented by each Share, you will sustain losses on your investment in Shares. An increase in the Trust expenses not assumed by the Sponsor, or the existence of unexpected liabilities affecting the Trust, will force the Trustee to sell larger amounts of gold, and will result in a more rapid decrease of the amount of gold represented by each Share and a corresponding decrease in its value. Future governmental decisions may have significant impact on the price of gold, which may result in a significant decrease or increase in the value of the net assets and the net asset value of the Trust. Generally, gold prices reflect the supply and demand of available gold. Governmental decisions, such as the executive order issued by the President of the United States in 1933 requiring all persons in the United States to deliver gold to the Federal Reserve or the abandonment of the gold standard by the United States in 1971, have been viewed as having significant impact on the supply and demand of gold and the price of gold. Future governmental decisions may have an impact on the price of gold, and may result in a significant decrease or increase in the value of the net assets and the net asset value of the Trust. Further regulations applicable to U.S. banks and non-U.S. bank entities operating in the U.S. with respect to their trading in physical commodities, such as precious metals, may further impact the price of gold in the U.S. The Trust is a passive investment vehicle. This means that the value of your Shares may be adversely affected by Trust losses that, if the Trust had been actively managed, it might have been possible to avoid. The Trustee does not actively manage the gold held by the Trust. This means that the Trustee does not sell gold at times when its price is high, or acquire gold at low prices in the expectation of future price increases. It also means that the Trustee does not make use of any of the hedging techniques available to professional gold investors to attempt to reduce the risks of losses resulting from price decreases. Any losses sustained by the Trust will adversely affect the value of your Shares. The price received upon the sale of Shares may be less than the value of the gold represented by them. The result obtained by subtracting the Trust s expenses and liabilities on any day from the price of the gold owned by the Trust on that day is the net asset value of the Trust which, when divided by the number of Shares outstanding on that day, results in the NAV per Share. Shares may trade at, above or below their NAV. The NAV will fluctuate with changes in the market value of the Trust s assets. The trading prices of Shares will fluctuate in accordance with changes in their NAVs as well as market supply and demand. The amount of the discount or premium in the trading price relative to the NAV may be influenced by non-concurrent trading hours between the major gold markets and the Exchange. While the Shares will trade on the Exchange until 4:00 p.m. (New York time), liquidity in the market for gold will be reduced after the close of the major world gold markets, including London, Zurich and COMEX. As a result, during this time, trading spreads, and the resulting premium or discount on Shares, may widen. An investment in the Trust may be adversely affected by competition from other methods of investing in gold. The Trust competes with other financial vehicles, including traditional debt and equity securities issued by companies in the gold industry and other securities backed by or linked to gold, direct investments in gold and investment vehicles similar to the Trust. Market and financial conditions, and other conditions beyond the Sponsor s control, may make it more attractive to invest in other financial vehicles or to invest in gold directly, which could affect the market capitalization of the Trust and reduce the NAV. To the extent existing exchange traded funds, or ETFs, or other exchange traded vehicles tracking gold markets represent a significant proportion of demand for physical gold bullion, large redemptions of the securities of these ETFs or other exchange traded vehicles could negatively affect physical gold bullion prices and the price and NAV. The Trust may be forced to sell gold earlier than anticipated if expenses are higher than expected. The Trust may be forced to sell physical gold earlier than anticipated if the Trust s expenses are higher than estimated. Such accelerated sales may result in a reduction of the NAV and the value of the Shares. Because the Trust is not a diversified investment, it may be more volatile than other investments. An investment in the Trust is not intended as a complete investment plan. Because the Trust principally only holds physical gold, an investment in the Trust may be more volatile than an investment in a more broadly diversified portfolio. Accordingly, the NAV may be more volatile than another investment vehicle with a more broadly diversified portfolio and may fluctuate substantially over time. An investment in the Trust may be deemed speculative and is not intended as a complete investment program; therefore investors should review closely the objective and strategy, the investment and operating restrictions and the redemption provisions of the Trust as outlined herein and familiarize themselves with the risks associated with an investment in the Trust. The liquidation of the Trust may occur at a time when the disposition of the Trust s gold will result in losses to investors in Shares. The Trust may have a limited duration. If certain events occur, at any time, the Trustee will have to terminate the Trust. See "Description of the Shares and the Trust Agreement—Amendment and Termination" for more information about the termination of the Trust, including when events outside the control of the Sponsor, the Trustee or the Shareholders may prompt the Trust s termination. Upon termination of the Trust, the Trustee will sell gold in the amount necessary to cover all expenses of liquidation, and to pay any outstanding liabilities of the Trust. The remaining gold will be distributed among Authorized Participants surrendering Shares. Any gold remaining in the possession of the Trustee after 60 days may be sold by the Trustee and the proceeds of the sale will be held by the Trustee until claimed by any remaining holders of Shares. Sales of gold in connection with the liquidation of the Trust at a time of low prices will likely result in losses, or adversely affect your gains, on your investment in Shares. There may be situations where an Authorized Participant is unable to redeem a Basket of Shares. To the extent the value of gold decreases, these delays may result in a decrease in the value of the gold the Authorized Participant will receive when the redemption occurs, as well as a reduction in liquidity for all Shareholders in the secondary market. Although Shares surrendered by Authorized Participants in Basket-size aggregations are redeemable in exchange for the underlying amount of gold, redemptions may be suspended during any period while regular trading on the Exchange is suspended or restricted, or in which an emergency exists that makes it reasonably impracticable to deliver, dispose of, or evaluate gold. If any of these events occurs at a time when an Authorized Participant intends to redeem Shares, and the price of gold decreases before such Authorized Participant is able again to surrender Shares for redemption, such Authorized Participant will sustain a loss with respect to the amount that it would have been able to obtain in exchange for the gold received from the Trust upon the redemption of its Shares, had the redemption taken place when such Authorized Participant originally intended it to occur. As a consequence, Authorized Participants may reduce their trading in Shares during periods of suspension, decreasing the number of potential buyers of Shares in the secondary market and, therefore, decreasing the price a Shareholder may receive upon sale. The liquidity of the Shares may also be affected by the withdrawal from participation of Authorized Participants. In the event that one or more Authorized Participants that have substantial interests in Shares withdraw from participation, the liquidity of the Shares will likely decrease which could adversely affect the market price of the Shares and result in your incurring a loss on your investment. The Trust is an "emerging growth company" and it cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make the Shares less attractive to investors. The Trust is an "emerging growth company" as defined in the JOBS Act. For as long as the Trust continues to be an emerging growth company it may choose to take advantage of certain exemptions from various reporting requirements applicable to other public companies but not to emerging public companies, which include, among other things: Exemption from the auditor attestation requirements under Section 404 of the Sarbanes-Oxley Act; Reduced disclosure obligations regarding executive compensation in the Trust s periodic reports; Exemption from the requirements of holding non-binding shareholder votes on executive compensation arrangements; and Exemption from any rules requiring mandatory audit firm rotation and auditor discussion and analysis and, unless otherwise determined by the SEC, any new audit rules adopted by the Public Company Accounting Oversight Board. The Trust could be an emerging growth company until the last day of the fiscal year following the fifth anniversary after its initial public offering, or until the earliest of (1) the last day of the fiscal year in which it has annual gross revenue of $1 billion or more, (2) the date on which it has, during the previous three year period, issued more than $1 billion in non-convertible debt or (3) the date on which it is deemed to be a large accelerated filer under the federal securities laws. The Trust will qualify as a large accelerated filer as of the first day of the first fiscal year after it has (A) more than $700 million in outstanding equity held by nonaffiliates and (B) been public for at least 12 months. The value of the Trust s outstanding equity will be measured each year on the last day of its second fiscal quarter. Under the JOBS Act, emerging growth companies are also permitted to elect to delay adoption of new or revised accounting standards until companies that are not subject to periodic reporting obligations are required to comply, if such accounting standards apply to non-reporting companies. However, the Trust has chosen to opt out of this extended transition period for complying with new or revised accounting standards. Section 107 of the JOBS Act provides that the decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable. The Trust cannot predict if investors will find an investment in the Trust less attractive if it relies on these exemptions. Authorized Participants with large holdings may choose to terminate the Trust. Holders of 75% of the Shares have the power to terminate the Trust. This power may be exercised by a relatively small number of holders. If it is so exercised, investors who wished to continue to invest in gold through the vehicle of the Trust will have to find another vehicle, and may not be able to find another vehicle that offers the same features as the Trust. The lack of an active trading market for the Shares may result in losses on your investment at the time of disposition of your Shares. Although Shares are listed for trading on the Exchange, you should not assume that an active trading market for the Shares will develop or be maintained. If you need to sell your Shares at a time when no active market for them exists, such lack of an active market will most likely adversely affect the price you receive for your Shares (assuming you are able to sell them). If the process of creation and redemption of Baskets encounters any unanticipated difficulties, the possibility for arbitrage transactions intended to keep the price of the Shares closely linked to the price of gold may not exist and, as a result, the price of the Shares may fall or otherwise diverge from NAV. If the processes of creation and redemption of Shares (which depend on timely transfers of gold to and by the Custodian) encounter any unanticipated difficulties, potential market participants, such as the Authorized Participants and their customers, who would otherwise be willing to purchase or redeem Baskets to take advantage of any arbitrage opportunity arising from discrepancies between the price of the Shares and the price of the underlying gold may not take the risk that, as a result of those difficulties, they may not be able to realize the profit they expect. If this is the case, the liquidity of the Shares may decline and the price of the Shares may fluctuate independently of the price of gold and may fall or otherwise diverge from NAV. As an owner of Shares, you will not have the rights normally associated with ownership of other types of shares. Shares are not entitled to the same rights as shares issued by a corporation. By acquiring Shares, you are not acquiring the right to elect directors, to receive dividends, to vote on certain matters regarding the issuer of your Shares or to take other actions normally associated with the ownership of shares of a corporation. You will only have the limited rights described under "Description of the Shares and the Trust Agreement." As an owner of Shares, you will not have the protections normally associated with ownership of shares in an investment company registered under the Investment Company Act of 1940, as amended, or the protections afforded by the Commodity Exchange Act of 1936, as amended. The Trust is not registered as an investment company for purposes of United States federal securities laws, and is not subject to regulation by the SEC as an investment company. Consequently, the owners of Shares do not have the regulatory protections provided to investors in registered investment companies. For example, the provisions of the Investment Company Act that limit transactions with affiliates, prohibit the suspension of redemptions (except under certain limited circumstances) or limit sales loads, among others, do not apply to the Trust. The Trust does not hold or trade in commodity futures contracts, "commodity interests", or any other instruments regulated by the CEA, as administered by the CFTC and the National Futures Association (the "NFA"). Furthermore, the Trust is not a commodity pool for purposes of the CEA and the Shares are not "commodity interests". Consequently, the Trustee and Sponsor are not subject to registration as commodity pool operators or commodity trading advisors with respect to the Trust or the Shares. The owners of Shares do not receive the CEA disclosure document and certified annual report required to be delivered by a registered commodity pool operator or a commodity trading advisor with respect to the Trust, and the owners of Shares do not have the regulatory protections provided to investors in commodity pools operated by registered commodity pool operators or advised by commodity trading advisors. The value of the Shares will be adversely affected if gold owned by the Trust is lost or damaged in circumstances in which the Trust is not in a position to recover the corresponding loss. The Custodian is responsible to the Trust for loss or damage to the Trust s gold only under limited circumstances. The agreements with the Custodian contemplate that the Custodian will be responsible to the Trust only if it acts with negligence, fraud or in willful default of its obligations under those agreements. The Custodian s liability will not exceed the market value of the gold credited to the Trust Unallocated Account and the Trust Allocated Account at the time such negligence, fraud or willful default is either discovered by or notified to the Custodian (such market value calculated using the nearest available LBMA Gold Price PM following the occurrence of such negligence, fraud or willful default), provided that, in the case of such discovery by or notification to the Custodian, the Custodian notifies the Sponsor and the Trustee promptly after any discovery of such negligence, fraud or willful default. Furthermore, the Custodian is not liable for any delay in performance, or for the non-performance, of any of its obligations under the Custody Agreements by reason of any cause beyond the Custodian s reasonable control, including any act of God or war or terrorism, any breakdown, malfunction or failure of, or connected with, any communication, computer, transmission, clearing or settlement facilities, industrial action, or acts, rules and regulations of any governmental or supra national bodies or authorities or any relevant regulatory or self-regulatory organization. In addition, because the Custody Agreements are governed by English law, the holders of the Shares may have no rights against the Custodian and any rights they may have against the Custodian will be different from, and may be more limited than, those that could have been available to them under the laws of a different jurisdiction. The choice of English law to govern the Custody Agreements, however, is not expected to affect any rights that the holders of the Shares may have against the Trust or the Trustee. Moreover, the Trust may not be in a position to recover insurance proceeds in the event of any loss with respect to its gold. The Trust does not insure its gold. The Custodian maintains insurance with regard to its business on such terms and conditions as it considers appropriate, which does not cover the full amount of gold held in custody. The Trust is not a beneficiary of any such insurance and does not have the ability to dictate the existence, nature or amount of coverage. Therefore, Shareholders cannot be assured that the Custodian will maintain adequate insurance or any insurance with respect to the gold held by the Custodian on behalf of the Trust. The Custodian and the Trustee do not require any direct or indirect subcustodians to be insured or bonded with respect to their custodial activities or in respect of the gold held by them on behalf of the Trust. Consequently, a loss may be suffered with respect to the Trust s gold which is not covered by insurance and for which no person is liable in damages. Any loss of gold owned by the Trust will result in a corresponding loss in the net asset value of the Trust and it is reasonable to expect that such loss will also result in a decrease in the value at which the Shares are traded on the Exchange. Although the relationship between the Custodian and the Trustee concerning the Trust s allocated gold is expressly governed by English law, a court hearing any legal dispute concerning that arrangement may disregard that choice of law and apply U.S. law, in which case the ability of the Trust to seek legal redress against the Custodian may be frustrated. The obligations of the Custodian under the Custody Agreements are governed by English law. The Trust is a New York common law trust. Any United States, New York or other court situated in the United States may have difficulty interpreting English law (which, insofar as it relates to custody arrangements, is largely derived from court rulings rather than statute), London Bullion Market Association (LBMA) rules or the customs and practices in the London custody market. It may be difficult or impossible for the Trust to sue the Custodian in a United States, New York or other court situated in the United States. In addition, it may be difficult, time consuming and/or expensive for the Trust to enforce in a foreign court a judgment rendered by a United States, New York or other court situated in the United States. Shareholders and Authorized Participants lack the right under the Custody Agreements to assert claims directly against the Custodian, which significantly limits their options for recourse. Neither the Shareholders nor any Authorized Participant will have a right under the Custody Agreements to assert a claim of the Trustee against the Custodian. Claims under the Custody Agreements may only be asserted by the Trustee on behalf of the Trust. Gold held in the Trust Unallocated Account and any Authorized Participant s unallocated gold account will not be segregated from the Custodian s assets. If the Custodian becomes insolvent, its assets may not be adequate to satisfy a claim by the Trust or any Authorized Participant. In addition, in the event of the Custodian s insolvency, there may be a delay and costs incurred in identifying the gold bars held in the Trust Allocated Account. Gold which is part of a deposit for a purchase order or part of a redemption distribution will be held for a time in the Trust Unallocated Account and, previously or subsequently in, the unallocated gold account of the purchasing or redeeming Authorized Participant. During those times, the Trust and the Authorized Participant, as the case may be, will have no proprietary rights to any specific bars of gold held by the Custodian and will each be an unsecured creditor of the Custodian with respect to the amount of gold held in such unallocated accounts. In addition, if the Custodian fails to allocate the Trust s gold in a timely manner, in the proper amounts or otherwise in accordance with the terms of the Trust Unallocated Account Agreement, or if a subcustodian fails to so segregate gold held by it on behalf of the Trust, unallocated gold will not be segregated from the Custodian s assets, and the Trust will be an unsecured creditor of the Custodian with respect to the amount so held in the event of the insolvency of the Custodian. In the event the Custodian becomes insolvent, the Custodian s assets might not be adequate to satisfy a claim by the Trust or the Authorized Participant for the amount of gold held in their respective unallocated gold accounts. In the event of the insolvency of the Custodian, a liquidator may seek to freeze access to the gold held in all of the accounts held by the Custodian, including the Trust Allocated Account. Although the Trust would retain legal title to the allocated gold bars, the Trust could incur expenses in connection with obtaining control of the allocated gold bars, and the assertion of a claim by such liquidator for unpaid fees could delay creations and redemptions of Baskets. From time to time subcustodians may be employed by the Custodian to provide temporary custody and safekeeping of the Trust s gold. The obligations of any subcustodian of the Trust s gold are not determined by contractual arrangements but by LBMA rules and London bullion market customs and practices, which may prevent the Trust s recovery of damages for losses on its gold custodied with subcustodians. Gold bars may be held by one or more subcustodians appointed by the Custodian, or employed by the subcustodians appointed by the Custodian, until it is transported to the Custodian s London vault premises. Under the Trust Allocated Account Agreement, except for an obligation on the part of the Custodian to use commercially reasonable efforts to obtain delivery of the Trust s gold bars from any subcustodians appointed by the Custodian, the Custodian is not liable for the acts or omissions of its subcustodians unless the selection of such subcustodians was made negligently or in bad faith. There are expected to be no written contractual arrangements between subcustodians that hold the Trust s gold bars and the Trustee or the Custodian, because traditionally such arrangements are based on the LBMA s rules and on the customs and practices of the London bullion market. In the event of a legal dispute with respect to or arising from such arrangements, it may be difficult to define such customs and practices. The LBMA s rules may be subject to change outside the control of the Trust. Under English law, neither the Trustee nor the Custodian would have a supportable breach of contract claim against a subcustodian for losses relating to the safekeeping of gold. If the Trust s gold bars are lost or damaged while in the custody of a subcustodian, the Trust may not be able to recover damages from the Custodian or the subcustodian. Because neither the Trustee nor the Custodian oversees or monitors the activities of subcustodians who may temporarily hold the Trust s gold bars until transported to the Custodian s London vault, failure by the subcustodians to exercise due care in the safekeeping of the Trust s gold bars could result in a loss to the Trust. Under the Trust Allocated Account Agreement, the Custodian agreed that it will hold all of the Trust s gold bars in its own vault premises except when the gold bars have been allocated in a vault other than the Custodian s vault premises, and in such cases the Custodian agreed that it will use commercially reasonable efforts promptly to transport the gold bars to the Custodian s vault, at the Custodian s cost and risk. Nevertheless, there may be periods of time when some portion of the Trust s gold bars will be held by one or more subcustodians appointed by the Custodian or by a subcustodian of such subcustodian. The Custodian is required under the Trust Allocated Account Agreement to use reasonable care in appointing its subcustodians but otherwise has no other responsibility in relation to the subcustodians appointed by it. These subcustodians may in turn appoint further subcustodians, but the Custodian is not responsible for the appointment of these further subcustodians. The Custodian does not undertake to monitor the performance by subcustodians of their custody functions or their selection of further subcustodians. The Trustee does not undertake to monitor the performance of any subcustodian. Furthermore, the Trustee may have no right to visit the premises of any subcustodian for the purposes of examining the Trust s gold bars or any records maintained by the subcustodian, and no subcustodian will be obligated to cooperate in any review the Trustee may wish to conduct of the facilities, procedures, records or creditworthiness of such subcustodian. In addition, the ability of the Trustee to monitor the performance of the Custodian may be limited because under the Custody Agreements the Trustee has only limited rights to visit the premises of the Custodian for the purpose of examining the Trust s gold bars and certain related records maintained by the Custodian. The value of the Shares will be adversely affected if any services provided to the Trust by the Sponsor, the Custodian or the Trustee are suddenly or unexpectedly terminated. Upon the sudden or unexpected termination, resignation or removal of any service provider to the Trust, it is possible that a comparable replacement service provider will be available or able to be appointed without material delay. Any such unavailability or delay could cause the Trustee to expend assets of the Trust and consequently, the NAV of the Shares, in finding a replacement service provider. The value of the Shares will be adversely affected if the Trust is required to indemnify the Sponsor, the Trustee, or the Custodian as contemplated in the Trust Agreement and the Custody Agreements. Under the Trust Agreement, the Sponsor and the Trustee each have the right to be indemnified from the Trust for any liability or expense it incurs without gross negligence, bad faith, willful misconduct or willful malfeasance on its part. Similarly, the Custody Agreements provide for indemnification of the Custodian by the Trust under certain circumstances. This means that it may be necessary to sell assets of the Trust in order to cover losses or liability suffered by the Sponsor, the Trustee or the Custodian. Any sale of that kind would reduce the net asset value of the Trust and the value of the Shares. The service providers engaged by the Trust may not carry adequate insurance to cover claims against them by the Trust, which could adversely affect the value of net assets of the Trust. The Trustee, the Custodian and other service providers engaged by the Trust maintain such insurance as they deem adequate with respect to their respective businesses. Investors cannot be assured that any of the aforementioned parties will maintain any insurance with respect to the Trust s assets held or the services that such parties provide to the Trust and, if they maintain insurance, that such insurance is sufficient to satisfy any losses incurred by them in respect of their relationship with the Trust. Accordingly, the Trust will have to rely on the efforts of the service provider to recover from their insurer compensation for any losses incurred by the Trust in connection with such arrangements. The Sponsor and its affiliates manage other funds, including those that invest in physical gold bullion or other precious metals, and conflicts of interest may occur, which may reduce the value of the net assets of the Trust, the NAV and the trading price of the Shares. The Sponsor or its affiliates and associates currently engage in, and may in the future engage, in the promotion, management or investment management of other accounts, funds or trusts that invest primarily in physical gold bullion or other precious metals. Although officers and professional staff of the Sponsor s management intend to devote as much time to the Trust as is deemed appropriate to perform their duties, the Sponsor s management may allocate their time and services among the Trust and the other accounts, funds or trusts. The Sponsor will provide any such services to the Trust on terms not less favorable to the Trust than would be available from a non-affiliated party. The Trust may have to meet certain indemnification obligations which could affect the value of the Shares. The Trust has an obligation to reimburse the Trustee, the Sponsor and certain other parties for certain liabilities. If the Trust is forced to meet such obligations, it could adversely affect an investment in the Shares. The Trust will not carry any insurance to cover such potential obligations and any indemnification paid by the Trust would reduce the net asset value of the Trust. The Sponsor and the Trustee may agree to amend the Trust Agreement without the consent of the Shareholders. The Sponsor and the Trustee may agree to amend the Trust Agreement, including to increase the Sponsor s Fee, without Shareholder consent. If an amendment imposes new fees and charges or increases existing fees or charges, including the Sponsor s Fee (except for taxes and other governmental charges, registration fees or other such expenses, or prejudices a substantial right of Shareholders), it will become effective for outstanding Shares 30 days after notice of such amendment is given to registered owners. Shareholders that are not registered owners (which most shareholders will not be) may not receive specific notice of a fee increase other than through an amendment to the prospectus. Moreover, at the time an amendment becomes effective, by continuing to hold Shares, Shareholders are deemed to agree to the amendment and to be bound by the Trust Agreement as amended without specific agreement to such increase (other than through the "negative consent" procedure described above). Shareholders could incur a tax liability without an associated distribution of the Trust. In the normal course of business it is possible that the Trust could incur a taxable gain in connection with the sale of gold that is otherwise not associated with a distribution. In the event that this occurs, Shareholders may be subject to tax due to the grantor trust status of the Trust even though there is not a corresponding distribution from the Trust. Use of Proceeds Proceeds received by the Trust from the issuance and sale of Baskets consist of gold deposits. Such deposits are held by the Custodian on behalf of the Trust until (i) delivered to Authorized Participants in connection with redemptions of Baskets or (ii) sold to pay fees due to the Sponsor and Trust expenses and liabilities not assumed by the Sponsor. See "The Trust—Trust Expenses." Description of the Gold Industry Introduction This section provides a brief introduction to the gold industry by looking at some of the key participants, detailing the primary sources of demand and supply and outlining the role of the "official" sector (i.e., central banks) in the market. Market Participants The participants in the world gold industry may be classified in the following sectors: the mining and producer sector, the banking sector, the official sector, the investment sector, and the manufacturing sector. A brief description of each follows. The Mining and Producer Sector This group includes mining companies that specialize in gold and silver production; mining companies that produce gold as a by-product of other production (such as a copper or silver producer); scrap merchants and recyclers. The Banking Sector Bullion banks provide a variety of services to the gold market and its participants, thereby facilitating interactions between other parties. Services provided by the bullion banking community include traditional banking products as well as mine financing, physical gold purchases and sales, hedging and risk management, inventory management for industrial users and consumers, and gold deposit and loan instruments. The Official Sector The official sector encompasses the activities of the various central banking operations of gold-holding countries. Having been a source of gold supply for many years, the official sector became a source of net demand in 2010. The prominence given by market commentators to this activity coupled with the total amount of gold held by the official sector has resulted in this area being a significant shift in the gold market. The Investment Sector This sector includes the investment and trading activities of both professional and private investors and speculators. These participants range from large hedge and mutual funds to day-traders on futures exchanges and retail-level coin collectors. The Manufacturing Sector The fabrication and manufacturing sector represents all the commercial and industrial users of gold for whom gold is a daily part of their business. The jewelry industry is a large user of gold. Other industrial users of gold include the electronics and dental industries. World Gold Supply and Demand (2008-2017) The following table sets forth a summary of the world gold supply and demand from 2008 to 2017: (tonnes)(1) Supply 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Mine production 2,467 2,651 2,775 2,868 2,883 3,077 3,172 3,209 3,222 3,247 Scrap 1,388 1,765 1,743 1,704 1,700 1,303 1,158 1,172 1,268 1,210 Net hedging supply -357 -234 -106 18 -40 -39 108 21 21 -41 Total Supply 3,497 4,182 4,411 4,590 4,544 4,341 4,438 4,401 4,511 4,415 Demand Jewelry 2,355 1,866 2,083 2,091 2,061 2,610 2,469 2,395 1,891 2,214 Industrial fabrication 479 426 480 471 429 421 403 365 354 380 of which electronics 334 295 346 343 307 300 290 258 254 277 of which dental & medical 56 53 48 43 39 36 34 32 30 29 of which other industrial 89 79 86 85 83 85 79 76 70 73 Net official sector -235 -34 77 457 544 409 466 436 257 366 Retail investment 937 866 1,263 1,616 1,407 1,873 1,163 1,162 1,057 1,028 of which bars 667 562 946 1,247 1,056 1,444 886 876 787 780 of which coins 270 304 317 369 351 429 278 286 271 248 Physical Demand 3,536 3,125 3,903 4,635 4,441 5,314 4,501 4,357 3,559 3,988 Physical Surplus/Deficit -38 1,057 508 -45 102 -973 -62 44 952 427 ETF inventory build 321 623 382 185 279 -880 -155 -125 524 177 Exchange Inventory build 34 39 54 -6 -10 -98 1 -48 86 0 Net Balance 394 394 73 -224 -167 5 92 217 342 250 Gold Price (LBMA PM, US$/oz) 871.96 972.35 1,224.52 1,571.69 1,668.98 1,411.23 1,266.40 1,160.06 1,250.80 1,257.15 Note: Totals may not add due to independent rounding. Net producer hedging is the change in the physical market impact of mining companies gold loans, forwards and options positions. (1) "Tonne" refers to one metric ton. This is equivalent to 1,000 kilograms or 32,150.7465 troy ounces. Source: Gold Survey 2018, GFMS, Thomson Reuters Historical Chart of the Price of Gold The price of gold is volatile and its fluctuations are expected to have a direct impact on the value of the Shares. However, movements in the price of gold in the past, and any past or present trends, are not a reliable indicator of future movements. Movements may be influenced by various factors, including announcements from central banks regarding a country s reserve gold holdings, agreements among central banks, fluctuations in the value of the U.S. dollar, political uncertainties around the world, and economic concerns. The following chart illustrates the changes in the LBMA gold prices from May 2008 through May 2018: Source: Bloomberg Operation of the Gold Market The global trade in gold consists of Over-the-Counter ("OTC") transactions in spot, forwards, and options and other derivatives, together with exchange-traded futures and options. Over-the-Counter Market The OTC gold market includes spot, forward, and option and other derivative transactions conducted on a principal-to-principal basis. While this is a global, nearly 24-hour per day market, its main centers are London, New York and Zurich. Most OTC market trades are cleared through London. The LBMA plays an important role in setting OTC gold trading industry standards. A London Good Delivery Bar (as described below), which is acceptable for settlement of any OTC transaction, will be acceptable for delivery to the Trust in connection with the issuance of Baskets. Futures Exchanges Futures exchanges seek to provide a neutral, regulated marketplace for the trading of derivatives contracts for commodities, such as futures, options and certain swaps. The terms of these contracts are defined by an exchange for each commodity. For each commodity traded, the contract specifies the precise commodity quality and quantity standards, as well as the location and timing of physical delivery for the reference physical commodity, although only a very small number of these contracts result in the actual commodity delivery. An exchange does not buy or sell those contracts, but seeks to offer a transparent forum where members, on their own behalf or on the behalf of customers, can trade the contracts in a safe, efficient and orderly manner. The futures and options contracts, as well as some swaps, are cleared through a derivatives clearing organization which ensures more accurate valuation of positions in these contracts as well as settlement of trades in these contracts. The most significant gold futures exchange in the U.S. is COMEX, operated by Commodities Exchange, Inc., a subsidiary of New York Mercantile Exchange, Inc., and a subsidiary of the Chicago Mercantile Exchange Group (the "CME Group"). Other commodity exchanges include the Tokyo Commodity Exchange ("TOCOM"), the Multi Commodity Exchange Of India ("MCX"), the Shanghai Futures Exchange, ICE Futures US (the "ICE"), and the Dubai Gold & Commodities Exchange. Exchange Regulation In addition to the public nature of the pricing, futures exchanges in the United States are regulated at two levels, internal and external governmental supervision. The internal is performed through self-regulation as self-regulatory organizations and consists of regular monitoring of the trading process to ensure that it is conducted in conformance with all exchange rules; the financial condition of all exchange member firms to ensure that they continuously meet financial commitments; and the positions of commercial and non-commercial customers to ensure that physical delivery and other commercial commitments can be met, and that pricing is not being improperly affected by the size of any particular customer positions. External governmental oversight is performed by the CFTC, which reviews all the rules and regulations of United States futures exchanges and monitors their enforcement. The CFTC oversees the operation of the U.S. commodity futures markets, including COMEX and ICE Futures US. One of the principal public policy objectives of the Commodity Exchange Act is to ensure the integrity of the markets it oversees and the reliability of the prices of trades on those markets. The Commodity Exchange Act and CFTC require futures exchanges to ensure compliance with core principles applicable to designated contract markets to have rules and procedures to prevent market manipulation, abusive trade practice and fraud, and the CFTC conducts regular review of the markets rule enforcement programs. Other local regulators enforce their own regulations governing trading platforms and futures exchanges located in their jurisdictions. The London Bullion Market Most trading in physical gold is conducted on the OTC market, predominantly in London. The LBMA coordinates various OTC-market activities, including clearing and vaulting, acts as the principal intermediary between physical gold market participants and the relevant regulators, promotes good trading practices and develops standard market documentation. In addition, the LBMA promotes refining standards for the gold market by maintaining the "London Good Delivery List," which identifies refiners of gold that have been approved by the LBMA. In the OTC market, gold bars that meet the specifications for weight, dimensions, fineness (or purity), identifying marks (including the assay stamp of an LBMA-acceptable refiner) and appearance described in "The Good Delivery Rules for Gold and Silver Bars" published by the LBMA are referred to as "London Good Delivery Bars." A London Good Delivery Bar (typically called a "400 ounce bar") must contain between 350 and 430 fine troy ounces of gold (1 troy ounce = 31.1034768 grams), with a minimum fineness (or purity) of 995 parts per 1000 (99.5%), be of good appearance and be easy to handle and stack. The fine gold content of a gold bar is calculated by multiplying the gross weight of the bar (expressed in units of 0.025 troy ounces) by the fineness of the bar. A London Good Delivery Bar must also bear the stamp of one of the refiners identified on the London Good Delivery List. London Market Regulation Following the enactment of the Financial Markets Act 2012, the Prudential Regulation Authority of the Bank of England is responsible for regulating most of the financial firms that are active in the bullion market, and the Financial Conduct Authority is responsible for consumer and competition issues. Trading in spot, forwards and wholesale deposits in the bullion market is subject to the Non-Investment Products Code adopted by market participants. Not a Regulated Commodity Pool The Trust does not trade in gold futures, options or swap contracts on any futures exchange or over the counter. The Trust takes delivery of gold that complies with the LBMA gold delivery rules. Because the Trust does not trade in gold futures, options or swap contracts on any futures exchange or OTC, the Trust is not regulated by the CFTC or the NFA under the Commodity Exchange Act as a "commodity pool," and is not required to be operated by a CFTC-regulated commodity pool operator or advised by a commodity trading advisor. Investors in the Trust do not receive the regulatory protections afforded to investors in commodity pools operated by registered commodity pool operators, nor may any futures exchange or the NFA enforce its rules with respect to the Trust s activities. In addition, investors in the Trust do not benefit from the protections afforded to investors in gold futures, options or swaps contracts on regulated futures exchanges or OTC. Other Methods of Investing in Gold The Trust competes with other financial vehicles, including traditional debt and equity securities issued by companies in the gold industry and other securities backed by or linked to gold, direct investments in gold and investment vehicles similar to the Trust. The Trust The activities of the Trust are limited to (1) issuing Baskets in exchange for the gold deposited with the Custodian as consideration, (2) selling gold as necessary to cover the Sponsor s Fee and Trust expenses not assumed by the Sponsor and other liabilities, and (3) delivering gold in exchange for Baskets surrendered for redemption. The Trust is not actively managed. It does not engage in any activities designed to obtain a profit from, or to ameliorate losses caused by, changes in the price of gold. Trust Objective The objective of the Trust is for the value of the Shares to reflect, at any given time, the value of the assets owned by the Trust at that time less the Trust s accrued expenses and liabilities as of that time. The Shares are intended to constitute a simple and cost-effective means of making an investment similar to an investment in gold. An investment in allocated physical gold bullion requires expensive and sometimes complicated arrangements in connection with the assay, transportation and warehousing of the metal. Traditionally, such expense and complications have resulted in investments in physical gold bullion being efficient only in amounts beyond the reach of many investors. The Shares have been designed to remove the obstacles represented by the expense and complications involved in an investment in physical gold bullion, while at the same time having an intrinsic value that reflects, at any given time, the price of the assets owned by the Trust at such time less the Trust expenses and liabilities. Although the Shares are not the exact equivalent of an investment in gold, they provide investors with an alternative that allows a level of participation in the gold market through the securities market. Advantages of investing in the Shares include: Minimal credit risk. The Shares represent an interest in physical gold owned by the Trust (other than up to a maximum of 430 ounces of gold held in unallocated form) and held in physical custody at the Custodian. Physical gold of the Trust in the Custodian s possession is not subject to borrowing arrangements with third parties. Other than the gold temporarily being held in an unallocated gold account of the Trust in connection with deposits and an amount of gold comprising less than 430 ounces which may be held in the unallocated gold account of the Trust on an ongoing basis, the physical gold of the Trust is not subject to counterparty or credit risks. This contrasts with most other financial products that gain exposure to precious metals through the use of derivatives that are subject to counterparty and credit risks. Backed by gold held by the Custodian on behalf of the Trust. The Shares are backed primarily by allocated physical gold bullion identified as the Trust s property in the Custodian s books. The Trust arrangements contemplate that no Shares can be issued unless the corresponding amount of gold has been deposited into the Trust. Once deposited into the Trust, gold is only removed from the Trust if (i) sold to pay Trust expenses (such as the Sponsor s Fee and any other expenses not assumed by the Sponsor) or liabilities to which the Trust may be subject, or (ii) transferred from the Trust s account to an Authorized Participant s account in exchange for one or more Baskets of Shares surrendered for redemption. Ease and flexibility of investment. Retail investors may purchase and sell Shares through traditional brokerage accounts. Because the amount of gold corresponding to a Share is significantly less than the minimum amounts of physical gold bullion that are commercially available for investment purposes, the cash outlay necessary for an investment in Shares should be less than the amount required for currently existing means of investing in physical gold bullion. Shares are eligible for margin accounts. Relatively cost efficient. Although the return, if any, of an investment in the Shares is subject to the additional expenses of the Trust, including the Sponsor s Fee, the Trustee s Fee, the Custodian s Fee, and to other costs and expenses not assumed by the Sponsor which would not be incurred in the case of a direct investment in gold, the Shares may represent a cost-efficient alternative for investors not otherwise in a position to participate directly in the market for allocated physical gold bullion, because the expenses involved in an investment in allocated physical gold bullion through the Shares are dispersed among all holders of Shares. Secondary Market Trading While the Trust seeks to reflect generally the performance of the price of gold less the Trust s expenses and liabilities, Shares may trade at, above or below their NAV. The NAV of Shares will fluctuate with changes in the market value of the Trust s assets. The trading prices of Shares will fluctuate in accordance with changes in their NAV as well as market supply and demand. The amount of the discount or premium in the trading price relative to the NAV may be influenced by non-concurrent trading hours between the major gold markets and the Exchange. While the Shares trade on the Exchange until 4:00 p.m. (New York time), liquidity in the market for gold may be reduced after the close of the major world gold markets, including London, Zurich and COMEX. As a result, during this time, trading spreads, and the resulting premium or discount, on Shares may widen. However, given that Baskets of Shares can be created and redeemed in exchange for the underlying amount of gold, the Sponsor believes that the arbitrage opportunities may provide a mechanism to mitigate the effect of such premium or discount. Valuation of Gold; Computation of Net Asset Value On each business day, as soon as practicable after 4:00 p.m. (New York time), the Trustee evaluates the gold held by the Trust and determines the net asset value of the Trust and the NAV. For purposes of making these calculations, a business day means any day other than a day when the Exchange is closed for regular trading. The Trustee values the gold held by the Trust using that day s LBMA Gold Price PM. LBMA Gold Price PM is the price per fine troy ounce of gold, stated in U.S. dollars, determined by IBA following one or more 45-second electronic auctions conducted starting at 3:00 p.m. (London time), on each day that the London gold market is open for business, and announced by the LBMA shortly thereafter. If there is no LBMA Gold Price PM on any day, the Trustee is authorized to use the LBMA Gold Price AM announced on that day. If neither price is available for that day, the Trustee will value the Trust s gold based on the most recently announced LBMA Gold Price PM or LBMA Gold Price AM. If the Sponsor determines that such price is inappropriate to use, the Sponsor will identify an alternate basis for evaluation to be employed by the Trustee. Further, the Sponsor may instruct the Trustee to use on an on-going basis a different publicly available price which the Sponsor determines to fairly represent the commercial value of the Trust s gold. Neither the Trustee nor the Sponsor are liable to any person for the determination that the most recently announced LBMA Gold Price PM (or other benchmark price) is not appropriate as a basis for evaluation of the gold held or receivable by the Trust or for any determination as to the alternative basis for evaluation, provided that such determination is made in good faith. On each day that the LBMA Gold Price PM is to be determined, a price for the first round of auction (and any round thereafter) is set by a chairperson appointed by IBA, based on a set of rules and taking into account relevant pricing information available at the time, and made publicly available in advance of the auction. Beginning at 3:00 p.m. (London time), the direct participants pre-qualified by IBA and their sponsored clients are allowed, but not required, to electronically submit during a 45-second period buy and/or sell orders for spot transactions in gold at the pre-determined price. If at the conclusion of the 45-second round the market is determined by IBA to be balanced, the price determined by a chairperson for that round is the LBMA Gold Price PM for that day and announced as such by the LBMA. If the market is not balanced at the end of the first auction, a chairperson will revise the starting price, and an additional 45-second auction is held at the new price. If necessary, the process is repeated until the market is determined to be balanced and the price at which that determination occurs is the LBMA Gold Price PM for that date. For these purposes, the market is considered to be balanced when, at the end of an auction, the total number of ounces of gold for which buy orders were submitted in that auction falls within a certain pre-determined margin of tolerance from the total number of ounces of gold for which sell orders were submitted in the auction. Once the LBMA Gold Price PM has been determined for a given day, the buy and sell orders entered by the auction participants during the last auction will be executed at that day s LBMA Gold Price PM. Any market imbalance remaining after the last auction (which must be within the margin of tolerance) is allocated equally among all participants (and not only those participating in any auction held on that date). IBA reserves a right to limit the allocation of any market imbalance on any date only among participants that have entered an order during an auction on that date. Once the value of the Trust s gold has been determined, the Trustee subtracts all accrued fees, expenses and other liabilities of the Trust from the total value of the gold and all other assets of the Trust. The resulting figure is the net asset value of the Trust. The Trustee determines the NAV per Share by dividing the net asset value of the Trust by the number of Shares outstanding at the time the computation is made. Any estimate of the accrued but unpaid fees, expenses and liabilities of the Trust for purposes of computing the net asset value of the Trust and NAV per Share of the Trust made by the Trustee in good faith shall be conclusive upon all persons interested in the Trust. Trust Expenses The Trust s only ordinary recurring expense is expected to be the Sponsor s Fee. In exchange for the Sponsor s Fee, the Sponsor has agreed to assume the following expenses incurred by the Trust: the Trustee s Fee and its ordinary out-of-pocket expenses, the Custodian s Fee and its reimbursable expenses, the Exchange listing fees, SEC registration fees, marketing expenses, printing and mailing costs, audit fees and expenses and up to $100,000 per annum in legal fees and expenses. The Sponsor s Fee is accrued daily at an annualized rate equal to 0.20% of the net asset value of the Trust and is payable monthly in arrears. The Sponsor may, at its discretion and from time to time, waive all or a portion of the Sponsor s Fee for stated periods of time. The Sponsor is under no obligation to waive any portion of its fees and any such waiver shall create no obligation to waive any such fees during any period not covered by the waiver. Presently, the Sponsor does not intend to waive any part of its fee. Furthermore, the Sponsor may, in its sole discretion, agree to rebate all or a portion of the Sponsor s Fee attributable to Shares held by certain institutional investors subject to minimum Share holding and lock up requirements as determined by the Sponsor to foster stability in the Trust s asset levels. Any such rebate will be subject to negotiation and written agreement between the Sponsor and the investor on a case by case basis. The Sponsor is under no obligation to provide any rebates of the Sponsor s Fee. Neither the Trust nor the Trustee will be a party to any Sponsor s Fee rebate arrangements negotiated by the Sponsor. Any Sponsor s Fee rebate shall be paid from the funds of the Sponsor and not from the assets of the Trust. The Sponsor s Fee will be paid through delivery of gold from the Trust Unallocated Account that has been de-allocated from the Trust Allocated Account for this purpose. The Trustee will, when directed by the Sponsor, and, in the absence of such direction, may, in its discretion, sell gold in such quantity and at such times, as may be necessary to permit payment of the Trust expenses or liabilities not assumed by the Sponsor. The Trustee will endeavor to sell gold at such times and in the smallest amounts required to permit such payments as they become due, it being the intention to avoid or minimize the Trust s holdings of assets other than gold. Accordingly, the amount of gold to be sold will vary from time to time depending on the level of the Trust s expenses and the market price of gold. The Custodian may, but is not required to purchase gold needed to cover Trust expenses provided that if the Trustee s instruction to sell gold is received by the Custodian by 2:00 p.m. (London time), the purchase price for the gold will be that day s LBMA Gold Price PM (or other applicable benchmark price), and if the Trustee s instruction to sell gold is received by the Custodian after 2:00 p.m. (London time), the purchase price will be the next LBMA Gold Price PM (or other applicable benchmark price) available after that day. Cash held by the Trustee pending payment of the Trust s expenses will not bear any interest. Each sale of gold by the Trust will be a taxable event to Shareholders for federal income tax purposes. See "United States Federal Income Tax Consequences—Taxation of U.S. Shareholders." Impact of Trust Expenses The Trust sells gold to raise the funds needed for the payment of the Sponsor s Fee and all other Trust expenses or liabilities not assumed by the Sponsor. The purchase price received as consideration for such sales is the Trust s sole source of funds to cover its liabilities. The Trust does not engage in any activity designed to derive a profit from changes in the price of gold. Gold not needed to redeem Baskets of Shares, or to cover the Sponsor s Fee and Trust expenses or liabilities not assumed by the Sponsor, will be held in physical form by the Custodian. As a result of the recurring deliveries or sales of gold necessary to pay the Sponsor s Fee and the Trust expenses or liabilities not assumed by the Sponsor, the fractional amount of gold represented by each Share will decrease over the life of the Trust. New deposits of gold, received in exchange for additional new Baskets issued by the Trust, do not reverse this trend. Hypothetical Expense Example The following table, prepared by the Sponsor, illustrates the anticipated impact of the deliveries and sales of gold discussed above on the fractional amount of gold represented by each outstanding Share for three years. It assumes that the only dispositions of gold will be those sales needed to pay the Sponsor s Fee and that the price of gold and the number of Shares remain constant during the three-year period covered. The table does not show the impact of any extraordinary expenses the Trust may incur. Any such extraordinary expenses, if and when incurred, will accelerate the decrease in the fractional amount of gold represented by each Share. In addition, the table does not show the effect of any waivers of the Sponsor s Fee that may be in effect from time to time. Year 1 2 3 Hypothetical gold price per ounce $1,000.00 $1,000.00 $1,000.00 Sponsor s Fee 0.20% 0.20% 0.20% Shares of Trust, beginning 100,000 100,000 100,000 Ounces of gold in Trust, beginning 9,985.02 9,965.04 9,945.15 Beginning adjusted net asset value of the Trust $9,985,020.00 $9,965,039.93 $9,945,154.47 Ounces of gold to be delivered to cover the Sponsor s Fee 19.98 19.89 19.85 Ounces of gold in Trust, ending 9,965.04 9,945.15 9,925.31 Ending adjusted net asset value of the Trust $9,965,039.93 $9,945,154.47 $9,925,308.74 Ending NAV per share $99.65 $99.45 $99.25 Description of the Shares and the Trust Agreement General The Trust was formed in 2017 when an initial deposit of gold was made in exchange for the issuance of two Baskets. The purpose of the Trust is to own gold transferred to the Trust in exchange for Shares issued by the Trust. The Trust is governed by the Trust Agreement between the Sponsor and the Trustee. The Trust Agreement sets out the rights of depositors of gold and registered holders of Shares and the rights and obligations of the Sponsor and the Trustee. New York law governs the Trust Agreement, the Trust and the Shares. The following is a general description of the Shares and a summary of material provisions of the Trust Agreement. It is qualified by reference to the entire Trust Agreement, which is filed as an exhibit to the registration statement of which this prospectus is a part. Each Share represents a fractional undivided beneficial interest in the net assets of the Trust. The assets of the Trust consist primarily of gold held by the Custodian on behalf of the Trust. However, the Trustee will, at the direction of the Sponsor, or, in the absence of such direction, may, in its discretion, sell the Trust s gold as necessary to cover the Sponsor s Fee and expenses and liabilities not assumed by the Sponsor. Such sales result in the Trust holding cash for brief periods of time. In addition, there may be other situations where the Trust may hold cash. For example, a claim may arise against the Custodian, an Authorized Participant, or any other third party, which is settled in cash. In those situations where the Trust unexpectedly receives cash or any other assets, the Trust Agreement provides that no deposits of gold will be accepted (i.e., there will be no issuance of new Shares) until after the record date for the distribution of such cash or other property has passed. The Trustee is authorized under the Trust Agreement to create and issue an unlimited number of Shares. The Trustee will create Shares only in Baskets (a Basket equals a block of 10,000 Shares) and only upon the order of an Authorized Participant. Any creation and issuance of Shares above the amount registered on the registration statement of which this prospectus is a part will require the registration of such additional Shares. Baskets of Shares may be redeemed by the Trust in exchange for the amount of gold represented by the aggregate number of Shares redeemed. The Trust is not a registered investment company under the Investment Company Act of 1940, as amended, and is not required to register under such act. The Trust is not a commodity pool for purposes of the Commodity Exchange Act of 1936, as amended. Deposit of Gold; Issuance of Baskets The Trust creates and redeems Shares on a continuous basis but only in Baskets of 10,000 Shares. Upon the deposit of the corresponding amount of gold with the Custodian, and the payment of the Trustee s applicable fee and of any expenses, taxes or charges (such as stamp taxes or stock transfer taxes or fees), the Trustee will deliver the appropriate number of Baskets to the DTC account of the depositing Authorized Participant. Only Authorized Participants can deposit gold and receive Baskets of Shares in exchange. As of the date of this prospectus, J.P. Morgan Securities LLC, Merrill Lynch Professional Clearing Corp. and Virtu Financial BD LLC are the Authorized Participants. The Sponsor and the Trustee maintain a current list of Authorized Participants. Gold allocated by the Custodian to the Trust Allocated Account must meet the London Good Delivery Standards. Before making a deposit, the Authorized Participant must deliver to the Trustee a written purchase order indicating the number of Baskets it intends to acquire. The Trustee will acknowledge the purchase order unless it or the Sponsor decides to refuse the purchase order as permitted by the Trust Agreement. The date the Trustee receives that order determines the Basket Amount the Authorized Participant needs to deposit. However, orders received by the Trustee after 3:59 p.m. (New York time) on a business day or on a business day when the LBMA Gold Price PM or other applicable benchmark price is not announced, will not be accepted. If the Trustee accepts the purchase order, it transmits to the Authorized Participant, via facsimile or electronic mail message, no later than 5:30 p.m. (New York time) on the date such purchase order is received, or deemed received, a copy of the purchase order endorsed "Accepted" by the Trustee and indicating the Basket Amount that the Authorized Participant must deliver to the Custodian at the Trust Unallocated Account loco London in exchange for each Basket. Prior to the Trustee s acceptance as specified above, a purchase order only represents the Authorized Participant s unilateral offer to deposit gold in exchange for Baskets of Shares and has no binding effect upon the Trust, the Trustee, the Custodian or any other party. The Basket Amount necessary for the creation of a Basket changes from day to day. On each day that the Exchange is open for regular trading, the Trustee adjusts the quantity of gold constituting the Basket Amount as appropriate to reflect sales of gold, any loss of gold that may occur, and accrued expenses. The computation is made by the Trustee as promptly as practicable after 4:00 p.m. (New York time). See "The Trust—Valuation of Gold; Computation of Net Asset Value" for a description of how the LBMA Gold Price PM is determined, and description of how the Trustee determines the NAV. The Trustee determines the Basket Amount for a given day by dividing the number of Fine Ounces of gold held by the Trust as of the opening of business on that business day, adjusted for the amount of gold constituting estimated accrued but unpaid fees and expenses of the Trust as of the opening of business on that business day, by the quotient of the number of Shares outstanding at the opening of business divided by 10,000. Fractions of a Fine Ounce of gold smaller than 0.001 Fine Ounce are disregarded for purposes of the computation of the Basket Amount. The Basket Amount so determined is communicated via electronic mail message to all Authorized Participants, and made available on the Sponsor s website for the Shares. The Exchange also publishes the Basket Amount determined by the Trustee as indicated above. Because the Sponsor has assumed what are expected to be most of the Trust s expenses, and the Sponsor s Fee accrues daily at the same rate (i.e., 1/365th of the net asset value of the Trust multiplied by 0.20%), in the absence of any extraordinary expenses or liabilities, the amount of gold by which the Basket Amount decreases each day is predictable. Authorized Participants may use that indicative Basket Amount as guidance regarding the amount of gold that they may expect to have to deposit with the Custodian in respect of purchase orders placed by them on such next business day and accepted by the Trustee. The Authorized Participant Agreement provides, however, that once a purchase order has been accepted by the Trustee, the Authorized Participant will be required to deposit with the Custodian the Basket Amount determined by the Trustee on the effective date of the purchase order. No Shares are issued unless and until the Custodian has informed the Trustee that it has allocated to the Trust Allocated Account (other than up to 430 Fine Ounces, which may be held in the Trust Unallocated Account) the corresponding amount of gold. Redemption of Baskets Authorized Participants, acting on authority of the registered holder of Shares or on their own account, may surrender Baskets of Shares in exchange for the corresponding Basket Amount announced by the Trustee. Upon the surrender of such Shares and the payment of the Trustee s applicable fee and of any expenses, taxes or charges (such as stamp taxes or stock transfer taxes or fees), the Trustee will deliver to the order of the redeeming Authorized Participant the amount of gold corresponding to the redeemed Baskets. Shares can only be surrendered for redemption in Baskets of 10,000 Shares each. Before surrendering Baskets of Shares for redemption, an Authorized Participant must deliver to the Trustee a written request indicating the number of Baskets it intends to redeem or on a business day when the LBMA Gold Price PM or other applicable benchmark price is not announced. The date the Trustee receives that order determines the Basket Amount to be received in exchange. However, orders received by the Trustee after 3:59 p.m. (New York time) on a business day or on a business day when the LBMA Gold Price PM or other applicable benchmark price is not announced, will not be accepted. The redemption distribution from the Trust will consist of a credit to the redeeming Authorized Participant s unallocated account representing the amount of the gold held by the Trust evidenced by the Shares being redeemed as of the date of the redemption order. Fractions of a Fine Ounce included in the redemption distribution smaller than 0.001 of a Fine Ounce are disregarded. The redemption distribution will not be delivered unless and until all of the Shares to be redeemed have been received by the Trustee. In connection with any issuance or redemption of Shares, the Authorized Participant shall be responsible for paying or reimbursing to the Custodian and the Trustee the amount of any applicable tax, fees or other governmental charge that may be due in connection with the transfer of gold and the issuance and delivery of Shares, and any expense associated with the delivery of gold other than by credit to an Authorized Participant s unallocated account with the Custodian. Redemptions may be suspended, or the date for delivery of gold may be postponed, only (i) during any period in which regular trading on the Exchange is suspended or restricted or the Exchange is closed (other than scheduled holiday or weekend closings), or (ii) during an emergency as a result of which delivery, disposal or evaluation of gold is not reasonably practicable. Neither the Trustee nor the Sponsor will be liable to any person by reason of any such suspension or postponement. Certificates Evidencing the Shares The Shares are evidenced by certificates executed and delivered by the Trustee on behalf of the Trust. DTC has accepted the Shares for settlement through its book-entry settlement system. So long as the Shares are eligible for DTC settlement, there will be only one or more global certificates evidencing Shares that will be registered in the name of a nominee of DTC. Investors will be able to own Shares only in the form of book-entry security entitlements with DTC or direct or indirect participants in DTC. No investor will be entitled to receive a separate certificate evidencing Shares. Because Shares can only be held in the form of book-entries through DTC and its participants, investors must rely on DTC, a DTC participant and any other financial intermediary through which they hold Shares to receive the benefits and exercise the rights described in this section. Investors should consult with their broker or financial institution to find out about the procedures and requirements for securities held in DTC book-entry form. Cash and Other Distributions If the Sponsor and Trustee determine that there is more cash being held in the Trust than is needed to pay the Trust s expenses for the next month, the Trustee will distribute the extra cash to DTC for further distribution to the Shareholders. If the Trust receives any property other than gold or cash, the Trustee will distribute that property in proportion to the number of Shares owned by any means the Sponsor thinks is lawful, equitable and feasible. If the Sponsor is of the opinion that the distribution cannot be made in that way, the Trustee will adopt a method the Sponsor deems lawful, equitable and feasible for the purpose of effecting the distribution, including the public or private sale of the property, or any part thereof, and the net proceeds shall be distributed in the same manner as a distribution of cash. Such distributions shall be made after deduction or upon payment of the expenses of the Trustee. Registered holders of Shares are entitled to receive these distributions in proportion to the number of Shares owned. Before making a distribution, the Trustee may deduct any applicable withholding taxes and governmental charges and any expenses of the Trustee that have not been paid. The Trustee distributes only whole dollars and cents and shall round fractional cents down to the nearest whole cent. Shareholders of record on the record date fixed by the Trustee for a distribution will be entitled to receive their pro rata portion of any distribution. If the Trust is terminated and liquidated, the Trustee will distribute to the Shareholders in exchange for their Shares their pro rata share of any amounts remaining after the satisfaction of all outstanding liabilities of the Trust and the establishment of such reserves for applicable taxes, other governmental charges and contingent or future liabilities as the Trustee shall determine. See "Description of the Shares and the Trust Agreement—Amendment and Termination." Voting Rights The Shares do not represent a traditional investment and you should not view them as similar to "shares" of a corporation operating a business enterprise with management and a board of directors. As a Shareholder, you will not have the statutory rights normally associated with the ownership of shares of a corporation, including, for example, the right to bring "oppression" or "derivative" actions. All Shares are of the same class with equal rights and privileges. Each Share is transferable, is fully paid and non- assessable and entitles the holder to vote on the limited matters upon which Shareholders may vote under the Trust Agreement. The Shares do not entitle their holders to any conversion or pre-emptive rights or any redemption rights or rights to distributions. However, registered holders of at least 25% of the Shares have the right to require the Trustee to cure any material breach by it of the Trust Agreement, and registered holders of at least 75% of the Shares have the right to require the Trustee to terminate the Trust Agreement as described below. In addition, certain amendments to the Trust Agreement require advance notice to the Shareholders before the effectiveness of such amendments, but no Shareholder vote or approval is required for any amendment to the Trust Agreement. Fees and Expenses of the Trustee Each deposit of gold for the creation of Baskets of Shares and each surrender of Baskets of Shares for the purpose of withdrawing Trust property (including if the Trust Agreement terminates) must be accompanied by a payment to the Trustee of a fee of $500 (or such other fee as the Trustee, with the prior written consent of the Sponsor, may from time to time announce). The Trustee is entitled to reimburse itself from the assets of the Trust for all expenses and disbursements incurred by it for extraordinary services it may provide to the Trust or in connection with any discretionary action the Trustee may take to protect the Trust or the interests of the holders. Trust Expenses and Gold Sales In addition to the fee payable to the Sponsor (See "The Sponsor—The Sponsor s Fee"), the following expenses are paid out of the assets of the Trust: any expenses or liabilities of the Trust and the Trustee that are not assumed by the Sponsor; any taxes and other governmental charges that may fall on the Trust or its property; expenses and costs of any action taken by the Trustee or the Sponsor to protect the Trust and the rights and interests of holders of Shares; and any indemnification of the Trustee or the Sponsor as described below. The Trustee may sell the Trust s gold from time to time as necessary to permit payment of the fees and expenses that the Trust is required to pay. See "The Trust—Trust Expenses." The Trustee and the Sponsor shall not be responsible for any depreciation or loss incurred by reason of sales of gold made in compliance with the Trust Agreement, including upon termination of the Trust Agreement. Payment of Taxes The Trustee may deduct the amount of any taxes owed from any distributions it makes. It may also sell trust assets, by public or private sale, to pay any taxes owed. Authorized Participants are responsible for any transfer tax, sales or use tax, recording tax, value added tax or similar tax or other governmental charge applicable to the creation or redemption of Baskets regardless of whether such tax or charge is imposed directly on the Authorized Participant. By placing a purchase order or redemption order, the Authorized Participant agrees to indemnify the Sponsor, the Trustee and the Trust if any of them is required by law to pay any such tax or charge, together with any applicable penalties, additions to tax and interest thereon. Evaluation of Gold and the Trust Assets See "The Trust—Valuation of Gold; Computation of Net Asset Value." Amendment and Termination The Sponsor and the Trustee may agree to amend the Trust Agreement without the consent of the holders of Shares. If an amendment imposes or increases fees or charges, except for taxes and other governmental charges, registration fees or other such expenses, or prejudices a substantial right of holders of Shares, it will not become effective for outstanding Shares until 30 days after the Trustee notifies DTC of the amendment. At the time an amendment becomes effective, by continuing to hold Shares, registered and beneficial owners of Shares are deemed to agree to the amendment and to be bound by the Trust Agreement as amended. The Trustee will terminate the Trust Agreement if: the Trustee is notified that the Shares are delisted from the Exchange and are not approved for listing on another national securities exchange within five business days of their delisting; Shareholders acting in respect of at least 75% of the outstanding Shares notify the Trustee that they elect to terminate the Trust; 60 days have elapsed since the Trustee notified the Sponsor of the Trustee s election to resign or since the Sponsor removed the Trustee, and a successor trustee has not been appointed and accepted its appointment; any sole Custodian then acting resigns or is removed and no successor custodian has been employed within 60 days of such resignation or removal; the SEC determines that the Trust is an investment company under the Investment Company Act of 1940, as amended, and the Trustee has actual knowledge of that determination; the CFTC determines that (i) the Trust is a commodity pool under the CEA; and/or (ii) the Shares constitute "commodity interests", as defined by the CFTC or in CFTC Regulation 1.3(yy) and the Trustee has actual knowledge of that determination; the aggregate market capitalization of the Trust, based on the closing price for the Shares, is less than $50 million (as adjusted for inflation by reference to the U.S. Consumer Price Index) at any time more than 18 months after the Trust s formation, and the Trust receives, within 6 months after the last trading date on which such capitalization was less than $50 million, notice from the Sponsor of its decision to terminate the Trust; the Trust fails to qualify for treatment, or ceases to be treated, as a grantor trust under the Code, or under any comparable provision of any other jurisdiction where such treatment is sought, and the Trustee receives notice that the Sponsor has determined that the termination of the Trust is advisable; or 60 days have elapsed since DTC ceases to act as depository with respect to the Shares and the Sponsor has not identified another depository which is willing to act in such capacity. If the Sponsor resigns without appointing a successor sponsor, is dissolved or ceases to exist as a legal entity for any reason, or is deemed to have resigned because (1) it fails to undertake or perform, or becomes incapable of undertaking or performing, any of the duties required by the Trust Agreement, and such failure or incapacity is not cured, or (2) the Sponsor is adjudged bankrupt or insolvent, or a receiver of the Sponsor or of its property is appointed, or a trustee or liquidator or any public officer takes charge or control of the Sponsor or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, the Sponsor shall be deemed to have resigned, in which case the Trustee may, among other actions, terminate and liquidate the Trust. The Trustee will notify DTC at least 30 days before the date for termination of the Trust Agreement. After termination, the Trustee and its agents will do the following under the Trust Agreement but nothing else: (i) collect distributions pertaining to Trust property; (ii) pay the Trust s expenses and sell gold as necessary to meet those expenses; and (iii) deliver Trust property to Authorized Participants upon surrender of Shares. 60 days or more after termination, the Trustee will sell any remaining Trust property. After that, the Trustee will hold the money it received on the sale, as well as any other cash it is holding under the Trust Agreement, for the pro rata benefit of the registered holders that have not surrendered their Shares and will deliver to such registered holders against the surrender of their Shares their pro rata portion thereof. It will not invest the money and has no liability for interest. The Trustee will deduct from any delivery to Authorized Participants or registered holders of Shares any applicable fees, Trust expenses and taxes and governmental charges. The Sponsor This section summarizes some of the important provisions of the Trust Agreement which apply to the Sponsor. For a general description of the Sponsor s role concerning the Trust, see "The Sponsor—The Sponsor s Role." Liability of the Sponsor and indemnification The Sponsor is required to perform its obligations under the Trust Agreement without gross negligence, willful misconduct or bad faith. Otherwise the Sponsor has no obligation, and will not be liable, to any Shareholder, Authorized Participant or other person under the Trust Agreement. Additionally, the Sponsor will not have any liability to any Shareholder, Authorized Participant or other person if it is prevented or delayed by law or circumstances beyond its control from performing its obligations under the Trust Agreement, or for any act or omission it made in reliance upon information or advice from legal counsel, accountants, any Authorized Participant, Shareholder or other person believed by it in good faith to be competent to give such information or advice. The Sponsor has no obligation to prosecute any action, suit or proceeding in respect of any Trust property or in respect of the Shares on behalf of a Shareholder, Authorized Participant or other person, or to comply with any direction or instruction from a Shareholder or Authorized Participant regarding Shares, unless specifically required to do so by the Trust Agreement. The Sponsor and its members, managers, directors, officers, employees, agents and affiliates (as such term is defined under the Securities Act) and subsidiaries shall be indemnified from the Trust and held harmless against any loss, liability, or expense (including reasonable fees and expenses of legal counsel) arising out of or in connection with the performance of its obligations under the Trust Agreement and under each other agreement entered into by the Sponsor in furtherance of the administration of the Trust (including Authorized Participant agreements to which the Sponsor is a party, including the Sponsor s indemnification obligations thereunder) or any actions taken in accordance with the provisions of the Trust Agreement to the extent such loss, liability or expense was incurred without (1) gross negligence, bad faith, willful misconduct or willful malfeasance on the part of such indemnified party in connection with the performance of its obligations under the Trust Agreement or any such other agreement or any actions taken in accordance with the provisions of the Trust Agreement or any such other agreement, or (2) reckless disregard on the part of such indemnified party of its obligations and duties under the Trust Agreement or any such other agreement. Such indemnity shall include payment from the Trust of the reasonable costs and expenses incurred by such indemnified party in investigating or defending itself against any claim or liability in its capacity as Sponsor. Any amounts payable to an indemnified party may be payable in advance or shall be secured by a lien on the Trust s assets. The Sponsor may, in its discretion, undertake any action which it may deem necessary or desirable in respect of the Trust Agreement and the interests of the Shareholders and, in such event, the reasonable legal expenses and costs of any such actions shall be expenses and costs of the Trust and the Sponsor shall be entitled to be reimbursed therefor by the Trust. Successor sponsors If the Sponsor fails to undertake or perform, or becomes incapable of undertaking or performing, any of its duties and such failure or incapacity is not cured within 30 days following receipt of notice from the Trustee of such failure or incapacity, or if the Sponsor is adjudged bankrupt or insolvent, or a receiver of the Sponsor or of its property is appointed, or a trustee or liquidator or any public officer takes charge or control of the Sponsor or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, then, in any such case, the Trustee may (1) appoint a successor sponsor, (2) agree to act as the sponsor, or (3) terminate and liquidate the Trust and distribute its remaining assets. The Trustee has no obligation to appoint a successor sponsor or to assume the duties of the Sponsor and will have no liability to any person because the Trust is or is not terminated as described in the preceding sentence. The Trustee This section summarizes some of the important provisions of the Trust Agreement which apply to the Trustee. For a general description of the Trustee s role concerning the Trust, see "The Trustee—The Trustee s Role." Qualifications of the Trustee The Trustee and any successor trustee must be (1) a bank, trust company, corporation or national banking association organized and doing business under the laws of the United States or any of its states, and authorized under such laws to exercise corporate trust powers, (2) a participant in DTC or such other securities depository as shall then be acting with respect to Shares, and (3) unless counsel to the Sponsor, the appointment of which is acceptable to the Trustee, determines that such requirement is not necessary for the exception under section 408(m)(3)(B) of the Code, to apply, a banking institution as defined in Code section 408(n). The Trustee and any successor trustee must have, at all times, an aggregate capital, surplus, and undivided profits of at least $150 million. General duty of care of Trustee The Trustee is a fiduciary under the Trust Agreement; provided, however, that the fiduciary duties and responsibilities and liabilities of the Trustee are limited by, and are only those specifically set forth in, the Trust Agreement. For limitations of the fiduciary duties of the Trustee, see the limitations on liability set forth in "Description of the Shares and the Trust Agreement—The Trustee." Limitation on Trustee s liability The Trustee is required to perform its obligations under the Trust Agreement without gross negligence, willful misconduct or bad faith. Otherwise the Trustee has no obligations, and will not be liable to any Shareholder, Authorized Participant or other person, under the Trust Agreement. The Trustee will not have any liability to any Shareholder or Authorized Participant if it is prevented or delayed by law or circumstances beyond its control from performing its obligations under the Trust Agreement, or for any act or omission it made in reliance upon information or advice from legal counsel, accountants, any Authorized Participant, any Shareholder or any other person believed by it in good faith to be competent to give such information or advice. The Trustee has no obligation to comply with any direction or instruction from any Shareholder or Authorized Participant regarding Shares, unless specifically required to do so by the Trust Agreement. In no event will the Trustee be liable for acting in accordance with or conclusively relying upon any instruction, notice, demand, certificate or document (1) from the Sponsor or a Custodian or any entity acting on behalf of either which the Trustee believes is given pursuant to or is authorized by the Trust Agreement or a Custody Agreement, respectively; or (2) from or on behalf of any Authorized Participant which the Trustee believes is given pursuant to or is authorized by an Authorized Participant Agreement (provided that the Trustee has complied with any verification procedures specified in the Authorized Participant Agreement). The Trustee will not be liable for any indirect, consequential, punitive or special damages, regardless of the form of action and whether or not any such damages were foreseeable or contemplated, or for an amount in excess of the value of the Trust s assets. Trustee s liability for custodial services and agents The Trustee will not be answerable for the default of the Custodian or any other custodian of the Trust s gold employed at the direction of the Sponsor or selected by the Trustee with reasonable care. The Trustee does not monitor the performance of the Custodian or any sub-custodian other than to review the reports provided by the Custodian pursuant to the Custody Agreements. The Trustee may also employ custodians for Trust assets other than gold, agents, attorneys, accountants, auditors and other professionals and shall not be answerable for the default or misconduct of any of them if they were selected with reasonable care. The fees and expenses charged by custodians for the custody of gold and related services, agents, attorneys, accountants, auditors or other professionals, and expenses reimbursable to any custodian under a custody agreement authorized by the Trust Agreement, exclusive of fees for services to be performed by the Trustee, will be expenses of the Sponsor or the Trust. Fees paid for the custody of assets other than gold will be an expense of the Trustee. Taxes The Trustee will not be personally liable for any taxes or other governmental charges imposed upon the gold or its custody, moneys or other Trust assets, or on the income therefrom or the sale or proceeds of the sale thereof, or upon it as Trustee (except that it shall be personally liable for any income or other taxes on the amounts it receives from the Sponsor for its fee for acting as Trustee and for reimbursement for out of pocket expenses) or upon or in respect of the Trust or the Shares which it may be required to pay under any present or future law of the United States of America or of any other taxing authority having jurisdiction in the premises. For all such taxes and charges and for any expenses, including reasonable counsel s fees, which the Trustee may sustain or incur with respect to such taxes or charges, the Trustee will be reimbursed and indemnified out of the Trust s assets and the payment of such amounts shall be secured by a lien on the Trust s assets. Indemnification of the Trustee The Trustee and its directors, officers, employees, shareholders, agents and affiliates (as such term is defined under the Securities Act) shall be indemnified from the Trust and held harmless against any loss, liability or expense (including the reasonable fees and expenses of counsel) arising out of or in connection with the performance of its obligations under the Trust Agreement and under each other agreement entered into by the Trustee in furtherance of the administration of the Trust (including the Custody Agreements and any Authorized Participant Agreement, including the Trustee s indemnification obligations thereunder) or otherwise by reason of the Trustee s acceptance or administration of the Trust, to the extent such loss, liability or expense was incurred without (i) gross negligence, bad faith, willful misconduct or willful malfeasance on the part of such indemnified party in connection with the performance of its obligations under the Trust Agreement or any such other agreement or any actions taken in accordance with the provisions of the Trust Agreement or any such other agreement or (ii) reckless disregard on the part of such indemnified party of its obligations and duties under the Trust Agreement or any such other agreement. Such indemnity shall include payment from the Trust of the costs and expenses incurred by such indemnified party in investigating or defending itself against any claim or liability. Any amounts payable to an indemnified party may be payable in advance or shall be secured by a lien on the Trust s assets. Indemnity for actions taken to protect the Trust The Trustee is under no obligation to appear in, prosecute or defend any action that in its opinion may involve it in expense or liability, unless it is furnished with reasonable security and indemnity against the expense or liability. Subject to the preceding conditions, the Trustee may, in its sole discretion, undertake such action as it may deem necessary or desirable to protect the Trust and the rights and interests of all Shareholders pursuant to the terms of the Trust Agreement. The expenses, costs and disbursements incurred by the Trustee in connection with taking any action under the preceding sentence (including the reasonable fees and disbursements of legal counsel) shall be expenses of the Trust, and shall be deductible from, and constitute a lien on, the assets of the Trust. Protection for amounts due to Trustee If any fees or costs owed to the Trustee under the Trust Agreement are not paid when due by the Sponsor, the Trustee may charge those amounts to the Trust, in any amount not exceeding the amount that could be charged to the Trust in respect of the Sponsor s Fee (without regard to whether the Sponsor may not be entitled to such fee due to its default, waiver or other reason), and any subsequent amount paid to the Sponsor as its fee shall be net of the amounts withheld. The Trustee s right of reimbursement shall be secured by a lien on amounts chargeable to the Trust for the Sponsor s Fee, without giving effect to any fee waiver, which shall have priority over the interest of the Sponsor, the Shareholders and any other person. Holding of Trust property other than gold The Trustee will hold and record the ownership of the Trust s assets in a manner so that it will be owned by the Trust and the Trustee as trustee thereof for the benefit of the Shareholders for the purposes of, and subject to and limited by the terms and conditions set forth in, the Trust Agreement. Other than issuance of the Shares, the Trust shall not issue or sell any certificates or other obligations or, except as provided in the Trust Agreement, otherwise incur, assume or guarantee any indebtedness for money borrowed. All moneys held by the Trustee shall be held by it, without interest thereon or investment thereof, as a deposit for the account of the Trust. Such monies held shall be deemed segregated by maintaining such monies in an account or accounts for the exclusive benefit of the Trust. The Trustee may also employ custodians for Trust assets other than gold, agents, attorneys, accountants, auditors and other professionals and shall not be answerable for the default or misconduct of any of them if they were selected with reasonable care. Any Trust assets other than gold or cash will be held by the Trustee either directly or through the commercial book-entry system operated by the Federal Reserve Banks ("Book Entry System"), DTC, or through any other clearing agency or similar system ("Clearing Agency"), if available. The Trustee will have no responsibility or liability for the actions or omissions of the Book Entry System, DTC or any Clearing Agency. The Trustee shall not be liable for ascertaining or acting upon any calls, conversions, exchange offers, tenders, interest rate changes, or similar matters relating to securities held at DTC. Resignation, discharge or removal of Trustee; successor trustees The Trustee may at any time resign as Trustee by written notice of its election so to do, delivered to the Sponsor, and such resignation shall take effect upon the appointment of a successor Trustee and its acceptance of such appointment. The Sponsor may remove the Trustee in its sole discretion by written notice delivered to the Trustee not more than 120 days and at least 90 days prior to the fifth anniversary of the date of the Trust Agreement or, thereafter, by written notice delivered to the Trustee not more than 120 days and at least 90 days prior to the last day of any subsequent three-year period. The Sponsor may also remove the Trustee at any time if the Trustee (1) ceases to be a Qualified Bank (as defined below), (2) is in material breach of its obligations under the Trust Agreement and fails to cure such breach within 30 days after receipt of written notice from the Sponsor or Shareholders acting on behalf of at least 25% of the outstanding Shares specifying such default and requiring the Trustee to cure such default, or (3) fails to consent to the implementation of an amendment to the Trust s initial Internal Control Over Financial Reporting deemed necessary by the Sponsor and, after consultations with the Sponsor, the Sponsor and the Trustee fail to resolve their differences regarding such proposed amendment. Under such circumstances, the Sponsor, acting on behalf of the Shareholders, may remove the Trustee by written notice delivered to the Trustee and such removal shall take effect upon the appointment of a successor Trustee and its acceptance of such appointment. A "Qualified Bank" means a bank, trust company, corporation or national banking association organized and doing business under the laws of the United States or any State of the United States that is authorized under those laws to exercise corporate trust powers and that (i) is a DTC Participant or a participant in such other depository as is then acting with respect to the Shares; (ii) unless counsel to the Sponsor, the appointment of which is acceptable to the Trustee, determines that the following requirement is not necessary for the exception under Section 408(m)(3) of the Code, to apply, is a banking institution as defined in Section 408(n) of the Code and (iii) had, as of the date of its most recent annual financial statements, an aggregate capital, surplus and undivided profits of at least $150 million. The Sponsor may also remove the Trustee at any time if the Trustee merges into, consolidates with or is converted into another corporation or entity in a transaction in which the Trustee is not the surviving entity. The surviving entity from such a transaction shall be the successor of the Trustee without the execution or filing of any document or any further act; however, during the 90-day period following the effectiveness of such transaction, the Sponsor may, by written notice to the successor Trustee, remove the Trustee and designate a successor Trustee. If the Trustee resigns or is removed, the Sponsor, acting on behalf of the Shareholders, shall use its reasonable efforts to appoint a successor Trustee, which shall be a Qualified Bank. Every successor Trustee shall execute and deliver to its predecessor and to the Sponsor, acting on behalf of the Shareholders, an instrument in writing accepting its appointment, and thereupon such successor Trustee, without any further act or deed, shall become fully vested with all the rights, powers, duties and obligations of its predecessor; but such predecessor, nevertheless, upon payment of all sums due it and on the written request of the Sponsor, acting on behalf of the Shareholders, shall execute and deliver an instrument transferring to such successor all rights and powers of such predecessor, shall duly assign, transfer and deliver all right, title and interest in the Trust s assets to such successor, and shall deliver to such successor a list of the registered owners of all outstanding Shares. The Sponsor or any such successor Trustee shall promptly give notice of the appointment of such successor Trustee to the Shareholders. If the Trustee resigns and a successor trustee has not been appointed and accepted its appointment within 60 days after the date the Trustee issues its notice of resignation, the Trustee will terminate and liquidate the Trust and distribute its remaining assets. The Custodian and Custody of the Trust s Gold In addition to this section, see "The Custodian—The Custodian s Role" for a summary of some of the important provisions of the Trust Agreement which apply to the Custodian and the custody of the Trust s gold. The Trustee, on behalf of the Trust, will enter into the Custody Agreements with the Custodian. The Sponsor will appoint accountants, auditors, or other inspectors to audit or examine the accounts and operations of the Custodian and any successor custodian or additional custodian at such times as directed by the Sponsor as permitted by the Custody Agreements. The Trustee has no obligation to monitor the activities of any Custodian other than to receive and review such reports of the gold held for the Trust by such Custodian and of transactions in gold held for the account of the Trust made by such Custodian pursuant to the Custody Agreements. Appointment and removal of custodians The Sponsor may direct the Trustee to employ one or more other custodians in addition to or in replacement of the Custodian, provided that the Trustee shall not be answerable for the default of any custodian employed at the direction of the Sponsor or selected by the Trustee with reasonable care. When directed by the Sponsor, the Trustee will employ one or more successor or additional custodians selected by the Sponsor for the safekeeping of gold and services in connection with the deposit and delivery of gold. The Securities Depository; Book-Entry-Only System; Global Security DTC acts as securities depository for the Shares. DTC is a limited-purpose trust company organized under the laws of the State of New York, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Exchange Act. DTC was created to hold securities of DTC Participants and to facilitate the clearance and settlement of transactions in those securities among DTC Participants through electronic book-entry changes. This eliminates the need for physical movement of securities certificates. DTC Participants include securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations, some of whom (and/or their representatives) own DTC. Access to the DTC system is also available to others such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a DTC Participant, either directly or indirectly. DTC agrees with and represents to DTC Participants that it will administer its book-entry system in accordance with its rules and by-laws and requirements of law. Individual certificates are not issued for the Shares. Instead, one or more global certificates are signed by the Trustee on behalf of the Trust, registered in the name of Cede & Co., as nominee for DTC, and deposited with the Trustee on behalf of DTC. The global certificates represent all of the Shares outstanding at any time. Upon the settlement date of any creation, transfer or redemption of Shares, DTC will credit or debit, on its book-entry registration and transfer system, the number of Shares so created, transferred or redeemed to the accounts of the appropriate DTC Participants. The Trustee and the DTC Participants will designate the accounts to be credited and charged in the case of creation or redemption of Shares. Beneficial ownership of the Shares is limited to DTC Participants, Indirect Participants and persons holding interests through DTC Participants and Indirect Participants. Owners of beneficial interests in the Shares will be shown on, and the transfer of ownership is effected only through, records maintained by DTC, with respect to DTC Participants, the records of DTC Participants, with respect to Indirect Participants, and the records of Indirect Participants with respect to beneficial owners that are not DTC Participants or Indirect Participants. Beneficial owners are expected to receive from or through a DTC Participant a written confirmation relating to their purchase of the Shares. Investors may transfer Shares through DTC by instructing the DTC Participant or Indirect Participant through which they hold their Shares to transfer the Shares. Transfers will be made in accordance with standard securities industry practice. DTC may decide to discontinue providing its service for the Shares by giving notice to the Trustee and the Sponsor. Under these circumstances, the Sponsor will either find a replacement for DTC to perform its functions at a comparable cost or, if a replacement is unavailable, the Trustee will terminate the Trust. The rights of the Shareholders generally must be exercised by DTC Participants acting on their behalf in accordance with the rules and procedures of DTC. The Trust Agreement provides that, as long as the Shares are eligible for deposit with DTC, the sole registered owner will be DTC or its nominee and transfer of Shares will be effected solely by DTC in accordance with its customary practices from time to time. The Sponsor The Sponsor is a Delaware limited liability company and was formed on January 6, 2017. The Sponsor s office is located at 205 Hudson Street, 7th Floor, New York, New York 10013. Under the Delaware Limited Liability Company Act and the governing documents of the Sponsor, the sole member of the Sponsor, GraniteShares, Inc., is not responsible for the debts, obligations and liabilities of the Sponsor solely by reason of being the sole member of the Sponsor. The Sponsor s Role The Sponsor arranged for the creation of the Trust and is responsible for the ongoing registration of the Shares for their public offering in the United States and the listing of the Shares on the Exchange. The Sponsor has agreed to assume the organizational expenses of the Trust and the following expenses incurred by the Trust: the Trustee s monthly fee and its ordinary out-of-pocket expenses, the Custodian s Fee and its reimbursable expenses, Exchange listing fees, SEC registration fees, marketing expenses, printing and mailing costs, audit fees and expenses and up to $100,000 per annum in legal fees and expenses. The Sponsor will not exercise day-to-day oversight over the Trustee or the Custodian. The Sponsor may remove the Trustee and appoint a successor Trustee (i) if the Trustee ceases to meet certain objective requirements (including the requirement that it have capital, surplus and undivided profits of at least $150 million), (ii) if, having received written notice of a material breach of its obligations under the Trust Agreement, the Trustee has not cured the breach within 30 days, or (iii) if the Trustee refuses to consent to the implementation of an amendment to the Trust s initial Internal Control Over Financial Reporting. The Sponsor also has the right to replace the Trustee during the 90 days following any merger, consolidation or conversion in which the Trustee is not the surviving entity or, in its discretion, on the fifth anniversary of the creation of the Trust or on any subsequent third anniversary thereafter. The Sponsor also has the right to direct the Trustee to appoint any new or additional Custodian that the Sponsor selects. The Sponsor has developed a marketing plan for the Trust, prepares marketing materials regarding the Shares, including the content of the Trust s website, and executes the marketing plan for the Trust on an ongoing basis. Management of the Sponsor The Trust does not have any directors, officers or employees. The creation and operation of the Trust has been arranged by the Sponsor. The Sponsor is not governed by a board of directors. The principals and executive officers of the Sponsor are as follows: William Rhind has been the Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO") of the Sponsor since its inception on January 6, 2017. Prior to forming the Sponsor and becoming its CEO and CFO, Mr. Rhind was the CEO of World Gold Trust Services, LLC ("WGTS") from September 2014 to February 2016. WGTS is the sponsor of SPDR Gold Trust, the largest gold fund in the world, and is a wholly-owned subsidiary of the World Gold Council, a market development organization for the gold industry. Mr. Rhind also served as the Managing Director, Institutional Investment, of the World Gold Council from September 2013 to February 2016. From March 2007 to September 2013, Mr. Rhind was employed by ETF Securities Ltd ("ETF Securities"), an independent exchange-traded product provider, in a number of leadership roles, including as Managing Director from June 2009 to September 2013. In that role, Mr. Rhind managed the company s U.S. exchange traded fund business. Prior to joining ETF Securities, Mr. Rhind was a Principal for the iShares unit of Barclays Global Investors. He began his career as an investment banking analyst at Nomura International in London. Mr. Rhind earned a Bachelor of Arts in Modern Languages (French & Russian) and European Studies from the University of Bath in England. Mr. Rhind is 39 years old. Benoit Autier has been the Chief Accounting Officer ("CAO") and Head of Products of the Sponsor since its inception on January 6, 2017. Mr. Autier was previously the Head of Product Management for the World Gold Council from September 2015 to October 2016. As Head of Product Management, Mr. Autier designed the index and liaised with the swap provider for the SPDR Long Dollar Gold Trust. From January 2015 to September 2015, Mr. Autier was the President of ETF Securities Advisors, LLC, an affiliate of ETF Securities. As President, Mr. Autier managed all aspects of implementation of ETF Securities platform for funds registered under the Investment Company Act of 1940, as amended. Mr. Autier was also the Head of Product Management of ETF Securities from July 2005 to September 2015. Mr. Autier designed and implemented operational processes for over 300 European and U.S. financial products in that role. Mr. Autier previously was employed by Flow Traders, one of the leading market makers in Europe for exchange-traded commodities; by KPMG in Paris as a senior consultant; and by Ricol, Lasteyrie, a member of the Ernst and Young Corporate Finance network. Mr. Autier holds a Masters in Finance from London Business School and a Bachelors degree in Accounting and Finance from the University of Paris (Pantheon Assas). Mr. Autier is 43 years old. The Sponsor s Fee The Sponsor s Fee accrues daily and is paid monthly in arrears at an annualized rate equal to 0.20% of the net asset value of the Trust. The Trustee The Bank of New York Mellon, a banking corporation organized under the laws of the State of New York with trust powers, serves as the Trustee. The Bank of New York Mellon has a trust office at 2 Hanson Place, 9th Floor, Brooklyn, New York 11217. The Bank of New York Mellon is subject to supervision by the New York State Department of Financial Services and the Board of Governors of the Federal Reserve System. A copy of the Trust Agreement is available for inspection at The Bank of New York Mellon s trust office identified above. The Bank of New York Mellon had at least $150 million in capital and retained earnings as of December 31, 2017. The Trustee s Role The Trustee is responsible for the day-to-day administration of the Trust. This includes (i) processing orders for the creation and redemption of Baskets; (ii) coordinating with the Custodian the receipt and delivery of gold transferred to, or by, the Trust in connection with each issuance and redemption of Baskets; (iii) calculating the net asset value of the Trust on each business day; and (iv) selling the Trust s gold as needed to cover the Trust s expenses. The Trustee intends to regularly communicate with the Sponsor to monitor the overall performance of the Trust. The Trustee does not monitor the performance of the Custodian other than to review the reports provided by the Custodian pursuant to the Custody Agreements. The Trustee, along with the Sponsor, will liaise with the Trust s legal, accounting and other professional service providers as needed. The Trustee will assist and support the Sponsor with the preparation of the financial statements of the Trust and with all periodic reports required to be filed with the SEC on behalf of the Trust. The Trustee s Fees are paid by the Sponsor. The Trustee and any of its affiliates may from time to time purchase or sell Shares for their own account, as agent for their customers and for accounts over which they exercise investment discretion. The Custodian ICBC Standard Bank Plc, a public limited company incorporated under the laws of England and Wales, serves as the Custodian of the Trust s gold. The Custodian s Role The Custodian is responsible for holding the Trust s allocated gold as well as receiving and converting allocated and unallocated gold on behalf of the Trust. Unless otherwise agreed between the Trustee (as instructed by the Sponsor) and the Custodian, physical gold must be held by the Custodian at its London vault premises. At the end of each business day, the Custodian will hold no more than 430 Fine Ounces of unallocated gold for the Trust, which corresponds to the maximum Fine Ounce weight of a London Good Delivery Bar. The Custodian converts the Trust s gold between allocated and unallocated gold when: (1) Authorized Participants engage in creation and redemption transactions with the Trust; or (2) gold is sold to pay Trust expenses. The Custodian will facilitate the transfer of gold in and out of the Trust through the unallocated gold accounts it may maintain for each Authorized Participant or unallocated gold accounts that may be maintained for an Authorized Participant by another LBMA-approved gold-clearing bank, and through the unallocated gold account it will maintain for the Trust. The Custodian is responsible for allocating specific bars of gold to the Trust Allocated Account. The Custodian will provide the Trustee with regular reports detailing the gold transfers in and out of the Trust Unallocated Account with the Custodian and identifying the gold bars held in the Trust Allocated Account. The Custodian s fees and expenses are to be paid by the Sponsor. The Custodian and its affiliates may from time to time act as Authorized Participants or purchase or sell gold or shares for their own account, as an agent for their customers and for accounts over which they exercise investment discretion. The Trustee, on behalf of the Trust, has entered into the Custody Agreements with the Custodian, under which the Custodian maintains the Trust Unallocated Account and the Trust Allocated Account. Pursuant to the Trust Agreement, if, upon the resignation of the Custodian, there would be no custodian acting pursuant to the Custody Agreements, the Trustee shall, promptly after receiving notice of such resignation, appoint a substitute custodian or custodians selected by the Sponsor pursuant to custody agreement(s) approved by the Sponsor (provided, however, that the rights and duties of the Trustee under the Trust Agreement and the custody agreement(s) shall not be materially altered without its consent). When directed by the Sponsor, and to the extent permitted by, and in the manner provided by, the Custody Agreements, the Trustee shall remove the Custodian and appoint a substitute or appoint an additional custodian or custodians selected by the Sponsor. Each such substitute or additional custodian shall, forthwith upon its appointment, enter into a Custody Agreement in form and substance approved by the Sponsor. After the entry into the Custody Agreements, the Trustee shall not enter into or amend any Custody Agreement with a custodian without the written approval of the Sponsor (which approval shall not be unreasonably withheld or delayed). When instructed by the Sponsor, the Trustee shall demand that a custodian of the Trust deliver such of the Trust s gold held by it as is requested of it to any other custodian or such substitute or additional custodian or custodians directed by the Sponsor. In connection with such transfer of physical gold, the Trustee will, at the direction of the Sponsor, cause the physical gold to be weighed or assayed. The Trustee shall have no liability for any transfer of physical gold or weighing or assaying of delivered physical gold as directed by the Sponsor, and in the absence of such direction shall have no obligation to effect such a delivery or to cause the delivered physical gold to be weighed, assayed or otherwise validated. Under the Trust Agreement, the Sponsor is responsible for appointing accountants, auditors or other inspectors to audit or examine the accounts and operations of the Custodian and any successor custodian or additional custodian at such times as directed by the Sponsor as permitted by the Custody Agreements. See "—Inspection of Gold" for a summary of the provisions of the Custody Agreements permitting the Sponsor and the Trustee and their identified representatives, independent public accountants and physical gold auditors to access the premises of the Custodian and to examine the physical gold and records maintained by the Custodian pursuant to the Custody Agreements. The Trustee has no obligation to monitor the activities of the Custodian other than to receive and review such reports of the gold held for the Trust by such Custodian and of transactions in gold held for the account of the Trust made by such Custodian pursuant to the Custody Agreements. Description of the Custody Agreements The Trustee has entered into the Custody Agreements with the Custodian on the Trust s behalf. The Custody Agreements establish the Trust Unallocated Account and the Trust Allocated Account with the Custodian and define the Custodian s responsibilities to the Trust. Transfers from the Trust Unallocated Account The Custodian will arrange for the transfer of gold from the Trust Unallocated Account only in accordance with the Trustee s instructions to the Custodian. A transfer of gold from the Trust Unallocated Account may only be made (1) by transferring gold to an Authorized Participant s unallocated account, (2) by transferring gold to the Trust Allocated Account, (3) the collection of physical gold from the Custodian at its vault premises or such other location as the Custodian may direct, at the Trust s expense and risk, (4) delivery of gold to such location as the Trustee directs, at the Trust s expense and risk, or (5) by transfer to an account maintained by the Custodian or a third party on an unallocated basis in connection with the sale of gold or other transfers permitted under the Trust Agreement. Transfers made pursuant to clauses (3) and (4) are anticipated to be made only on an exceptional basis, with transfers under clause (5) to include transfers made in connection with a sale of gold to pay the Sponsor s Fee and any extraordinary expenses of the Trust not paid by the Sponsor or on the liquidation of the Trust. Any gold made available in physical form by the Custodian will be in a form that complies with the rules, regulations, practices, procedures and customs of the LBMA, the Bank of England or any applicable regulatory body that apply to such gold or in such other form as may be agreed between the Trustee and the Custodian, the combined weight of which will not exceed the number of Fine Ounces the Trustee has instructed the Custodian to debit. The Custodian shall identify bars of a weight most closely approximating, but not exceeding, the balance in the Trust Unallocated Account and shall transfer such weight from the Trust Unallocated Account to the Trust Allocated Account. Right to Refuse Transfers or Amend Transfer Procedures The Custodian will, where practicable, refuse to accept instructions to transfer gold to or from the Trust Unallocated Account or the Trust Allocated Account if, in the Custodian s reasonable opinion, they are or may be contrary to the rules, regulations, practices, procedures and customs of the LBMA or the Bank of England or contrary to any applicable law. The Custodian may amend the procedures for transferring gold to or from the Trust Unallocated Account or the Trust Allocated Account or impose such additional procedures in relation to the transfer of gold to or from the Trust Unallocated Account or the Trust Allocated Account where such amendment or imposition is caused by a change in the rules, regulations, practices, procedures and customs of the LBMA or the Bank of England or other applicable regulatory authority. The Custodian will, whenever practicable, notify the Trustee and the Sponsor within a commercially reasonable time before the Custodian amends these procedures or imposes additional ones. Trust Unallocated Account Credit and Debit Balances No interest will be paid by the Custodian on any credit balance to the Trust Unallocated Account or the Trust Allocated Account. The Trust Unallocated Account may not at any time have a debit or negative balance. Exclusion of Liability The Custodian will use reasonable care in the performance of its duties under the Custody Agreements and will only be responsible for any loss or damage suffered by the Trustee or the Trust as a direct result of any negligence, fraud or willful default on its part in the performance of its duties. In the case where gold is lost or damaged, the Custodian s liability under the Custody Agreements is further limited to the market value of the gold credited to the Trust Unallocated Account and the Trust Allocated Account at the time such negligence, fraud or willful default is either discovered by the Custodian or notified to the Custodian by the Trustee. Indemnity The Trustee will, solely out of and to the extent of the Trust s assets, indemnify and keep indemnified the Custodian (on an after-tax basis) on demand against all costs and expenses, damages, liabilities and losses (other than value added taxes and expenses assumed by the Sponsor) that the Custodian may suffer or incur directly or indirectly in connection with the Custody Agreements, except to the extent that such sums are due directly to the Custodian s negligence, willful default or fraud. Insurance The Custodian (or one of its affiliates) will maintain such insurance as it deems appropriate in connection with its custodial and other obligations and will be responsible for all costs, fees and expenses (including any relevant taxes) arising from the insurance policy or policies attributable to its relationship with the Trust. The Trustee and the Sponsor may, subject to confidentiality restrictions, review the details of this insurance coverage from time to time upon reasonable prior notice. In the event the Custodian or one of its affiliates elects to reduce, cancel or not renew the Custodian s insurance, the Custodian will give the Trustee and the Sponsor written notice of the election within 15 days thereafter. Force Majeure The Custodian will not be liable for any delay in performance or any non-performance of any of its obligations under the Custody Agreements by reason of any cause beyond its reasonable control, including acts of God, war or terrorism or other breakdowns or acts set forth in the Custody Agreements. Reports The Custodian will provide the Trustee with reports for each London business day identifying (1) the credits and debits of gold to the Trust Unallocated Account and the Trust Allocated Account and (2) sufficient information to identify each bar of physical gold held in the Trust Allocated Account. The Custodian will provide notification to the Trustee on each London business day of (1) each separate transaction transferring gold to and from the Trust Unallocated Account and the Trust Allocated Account, (2) the amount of gold transferred to and from the Trust Allocated Account, and (3) the closing balance of gold in the Trust Unallocated Account and the Trust Allocated Account, and the Custodian will use commercially reasonable efforts to send the notification by 12:00 noon (New York time). For each calendar month, the Custodian will provide the Trustee within a reasonable time after the end of the month a statement of account for the Trust Allocated Account and the Trust Unallocated Account which shall include the opening and closing monthly balances and all transfers to and from the Trust Allocated Account and the Trust Unallocated Account, accompanied by one or more weight lists containing information sufficient to identify each bar of gold held in the Trust Allocated Account as of the last London Business Day of the calendar month. Under the Custody Agreements, a "business day" generally means any day that is a "London Business Day," when commercial banks generally and the London gold market are open for the transaction of business in London. Transfers into the Trust Unallocated Account The Custodian will credit to the Trust Unallocated Account the amount of gold it receives from an Authorized Participant s unallocated account. Additionally, in the ordinary course, the only gold the Custodian will accept for credit to the Trust Unallocated Account is gold that has transferred from an Authorized Participant s unallocated account or from the Trust Allocated Account. Termination The Custody Agreements each have an initial five (5) years term and will automatically renew for successive one (1) year terms unless otherwise terminated. The Trustee, upon instruction from the Sponsor, and the Custodian may each terminate any Custody Agreement for any reason or for no reason upon 90 days prior written notice. Each Custody Agreement may also be terminated immediately upon written notice as follows: (1) by the Trustee, if the Custodian ceases to offer the services contemplated by the Custody Agreement to its clients or proposes to withdraw from the gold bullion business, (2) by the Trustee or the Custodian, if it becomes unlawful for the Custodian or the Trustee to have entered into the agreement or to provide or receive the services thereunder, (3) by the Custodian, if the Custodian determines in its reasonable view that the Trust or the Sponsor is insolvent or faces impending insolvency, or by the Trustee, if the Sponsor determines in its view that the Custodian or the Sponsor is insolvent or faces impending insolvency, (4) by the Trustee, if the Trust is to be terminated, or (5) by the Trustee or the Custodian, if the other Custody Agreement ceases to be in full force and effect. If arrangements acceptable to the Custodian for redelivery of the balance in the Trust Unallocated Account or the gold in the Trust Allocated Account are not made, the Custodian may continue to maintain the Trust Unallocated Account and the Trust Allocated Account and charge for its fees and expenses payable under the Trust Allocated Account Agreement, and, after six months from the termination date, the Custodian may close the Trust Allocated Account and Trust Unallocated Account, sell the Trust s gold and account to the Trustee for the proceeds. Governing Law The Custody Agreements are governed by English law. The Trustee and the Custodian both consent to the non-exclusive jurisdiction of the courts of the State of New York and the federal courts located in the borough of Manhattan in New York City. Such consent is not required for any person to assert a claim of New York jurisdiction over the Trustee or the Custodian. Inspection of Gold Under the Custody Agreements, the Custodian will allow the Sponsor and the Trustee and their identified representatives, independent public accountants and physical gold auditors (currently Inspectorate), access to its premises upon reasonable notice during normal business hours, to examine the physical gold and such records as they may reasonably require to perform their respective duties with regard to investors in Shares. The Trustee agrees that any such access shall be subject to execution of a confidentiality agreement and agreement to the Custodian s security procedures, and any such audit shall be at the Trust s expense. United States Federal Income Tax Consequences The following discussion of the material United States federal income tax consequences that generally will apply to the purchase, ownership and disposition of Shares by a U.S. Shareholder (as defined below), and certain United States federal income consequences that may apply to an investment in Shares by a Non-U.S. Shareholder (as defined below), represents, insofar as it describes conclusions as to United States federal income tax law and subject to the limitations and qualifications described therein, the opinion of Vedder Price P.C., special United States federal income tax counsel to the Sponsor. The discussion below is based on the Internal Revenue Code of 1986, as amended (the "Code"), Treasury Regulations promulgated thereunder and judicial and administrative interpretations of the Code, all as in effect on the date of this prospectus and all of which are subject to change either prospectively or retroactively. The tax treatment of Shareholders may vary depending upon their own particular circumstances. Certain Shareholders (including but not limited to banks, financial institutions, insurance companies, tax-exempt organizations, broker-dealers, traders, Shareholders that are partnerships for United States federal income tax purposes, persons holding Shares as a position in a "hedging," "straddle," "conversion," or "constructive sale" transaction for United States federal income tax purposes, persons whose "functional currency" is not the U.S. dollar, or other investors with special circumstances) may be subject to special rules not discussed below. In addition, the following discussion applies only to investors who will hold Shares as "capital assets" within the meaning of Section 1221 of the Code. Moreover, the discussion below does not address the effect of any state, local or foreign tax law on an owner of Shares. Purchasers of Shares are urged to consult their own tax advisers with respect to all federal, state, local and foreign tax law considerations potentially applicable to their investment in Shares. For purposes of this discussion, a "U.S. Shareholder" is a Shareholder that is: an individual who is treated as a citizen or resident of the United States for United States federal income tax purposes; a corporation (or entity treated as a corporation for United States federal income tax purposes) created or organized in or under the laws of the United States, any state thereof or the District of Columbia; an estate, the income of which is includible in gross income for United States federal income tax purposes regardless of its source; or a trust, if a court within the United States is able to exercise primary supervision over the administration of the trust and one or more United States persons have the authority to control all substantial decisions of the trust, or a trust that has made a valid election under applicable Treasury Regulations to be treated as a domestic trust. A Shareholder that is not (i) a U.S. Shareholder as defined above or (ii) a partnership for United States federal income tax purposes is considered a "Non-U.S. Shareholder" for purposes of this discussion. Taxation of the Trust The Sponsor and the Trustee will treat the Trust as a "grantor trust" for United States federal income tax purposes. In the opinion of Vedder Price P.C., special United States federal income tax counsel to the Sponsor, the Trust will be classified as a "grantor trust" for United States federal income tax purposes. As a result, the Trust itself will not be subject to United States federal income tax. Instead, the Trust s income and expenses will "flow through" to the Shareholders, and the Trustee will report the Trust s income, gains, losses and deductions to the Internal Revenue Service (the "IRS") on that basis. The opinion of Vedder Price P.C. represents only its best legal judgment and is not binding on the IRS or any court. Accordingly, there can be no assurance that the IRS will agree with the conclusions of counsel s opinion and it is possible that the IRS or another tax authority could assert a position contrary to one or all of those conclusions and that a court could sustain that contrary position. Neither the Sponsor nor the Trustee will request a ruling from the IRS with respect to the classification of the Trust for United States federal income tax purposes. If the IRS were to assert successfully that the Trust is not classified as a "grantor trust," the Trust would likely be classified as a partnership for United States federal income tax purposes, which may affect the timing and other tax consequences to the Shareholders. The following discussion assumes that the Trust will be classified as a "grantor trust" for United States federal income tax purposes. Taxation of U.S. Shareholders Shareholders will be treated, for United States federal income tax purposes, as if they directly owned a pro rata share of the underlying assets held in the Trust. Shareholders also will be treated as if they directly received their respective pro rata shares of the Trust s income, if any, and as if they directly incurred their respective pro rata shares of the Trust s expenses. In the case of a Shareholder that purchases Shares for cash, its initial tax basis in its pro rata share of the assets held in the Trust at the time it acquires its Shares will be equal to its cost of acquiring the Shares. In the case of a Shareholder that acquires its Shares as part of a creation of a Basket, the delivery of gold to the Trust in exchange for the underlying gold represented by the Shares will not be a taxable event to the Shareholder, and the Shareholder s tax basis and holding period for the Shareholder s pro rata share of the gold held in the Trust will be the same as its tax basis and holding period for the gold delivered in exchange therefor. For purposes of this discussion, and unless stated otherwise, it is assumed that all of a Shareholder s Shares are acquired on the same date and at the same price per Share. Shareholders that hold multiple lots of Shares, or that are contemplating acquiring multiple lots of Shares, should consult their own tax advisers as to the determination of the tax basis and holding period for the underlying gold related to such Shares. When the Trust sells gold, for example to pay expenses, a Shareholder will recognize gain or loss in an amount equal to the difference between (a) the Shareholder s pro rata share of the amount realized by the Trust upon the sale and (b) the Shareholder s tax basis for its pro rata share of the gold that was sold. A Shareholder s tax basis for its share of any gold sold by the Trust generally will be determined by multiplying the Shareholder s total basis for its share of all of the gold held in the Trust immediately prior to the sale, by a fraction the numerator of which is the amount of gold sold, and the denominator of which is the total amount of the gold held in the Trust immediately prior to the sale. After any such sale, a Shareholder s tax basis for its pro rata share of the gold remaining in the Trust will be equal to its tax basis for its share of the total amount of the gold held in the Trust immediately prior to the sale, less the portion of such basis allocable to its share of the gold that was sold. Upon a Shareholder s sale of some or all of its Shares, the Shareholder will be treated as having sold the portion or all, respectively, of its pro rata share of the gold held in the Trust at the time of the sale that is attributable to the Shares sold. Accordingly, the Shareholder generally will recognize gain or loss on the sale in an amount equal to the difference between (a) the amount realized pursuant to the sale of the Shares, and (b) the Shareholder s tax basis for the portion of its pro rata share of the gold held in the Trust at the time of sale that is attributable to the Shares sold, as determined in the manner described in the preceding paragraph. A redemption of some or all of a Shareholder s Shares in exchange for the underlying gold represented by the Shares redeemed generally will not be a taxable event to the Shareholder. The Shareholder s tax basis for the gold received in the redemption generally will be the same as the Shareholder s tax basis for the portion of its pro rata share of the gold held in the Trust immediately prior to the redemption that is attributable to the Shares redeemed. The Shareholder s holding period with respect to the gold received should include the period during which the Shareholder held the Shares redeemed. A subsequent sale of the gold received by the Shareholder will be a taxable event, unless a nonrecognition provision of the Code applies to such sale. After any sale or redemption of less than all of a Shareholder s Shares, the Shareholder s tax basis for its pro rata share of the gold held in the Trust immediately after such sale or redemption generally will be equal to its tax basis for its share of the total amount of the gold held in the Trust immediately prior to the sale or redemption, less the portion of such basis which is taken into account in determining the amount of gain or loss recognized by the Shareholder upon such sale or, in the case of a redemption, that is treated as the basis of the gold received by the Shareholder in the redemption Maximum 28% Long-Term Capital Gains Tax Rate for U.S. Shareholders Who Are Individuals Under current law, gains recognized by individuals from the sale of "collectibles," including gold, held for more than one year are taxed at a maximum rate of 28%, rather than the current maximum 20% rate applicable to most other long-term capital gains. For these purposes, gain recognized by an individual upon the sale of an interest in a trust that holds collectibles is treated as gain recognized on the sale of collectibles, to the extent that the gain is attributable to unrealized appreciation in value of the collectibles held by the Trust. Therefore, any gain recognized by an individual U.S. Shareholder attributable to a sale of Shares held for more than one year, or attributable to the Trust s sale of any gold which the Shareholder is treated (through its ownership of Shares) as having held for more than one year, generally will be taxed at a maximum federal income tax rate of 28%. The federal income tax rates for capital gains recognized upon the sale of assets held by an individual U.S. Shareholder for one year or less are generally the same as those at which ordinary income is taxed. A U.S. corporation s capital gain is generally taxed at the same federal income tax rates applicable to the corporation s ordinary income. 3.8% Tax on Net Investment Income Certain U.S. Shareholders who are individuals are required to pay a 3.8% tax on the lesser of the excess of their modified adjusted gross income over a threshold amount ($250,000 for married persons filing jointly and $200,000 for single taxpayers) or their "net investment income," which generally includes capital gains from the disposition of property. This tax is in addition to any capital gains taxes due on such investment income. A similar tax applies to estates and trusts. U.S. Shareholders should consult their own tax advisers regarding the effect, if any, this law may have on their investment in the Shares. Brokerage Fees and Trust Expenses Any brokerage or other transaction fee incurred by a Shareholder in purchasing Shares will be treated as part of the Shareholder s tax basis in the underlying assets of the Trust. Similarly, any brokerage fee incurred by a Shareholder in selling Shares will reduce the amount realized by the Shareholder with respect to the sale. Shareholders will be required to recognize the full amount of gain or loss upon a sale of gold by the Trust (as discussed above), even though some or all of the proceeds of such sale are used by the Trustee to pay Trust expenses. Shareholders may deduct their respective pro rata shares of each expense incurred by the Trust to the same extent as if they directly incurred the expense. Shareholders who are individuals, estates or trusts, however, may be required to treat some or all of the expenses of the Trust as miscellaneous itemized deductions. An individual may not deduct miscellaneous itemized deductions for tax years beginning after December 31, 2017 and before January 1, 2026. For tax years beginning before January 1, 2018 and after December 31, 2025, individuals may deduct certain miscellaneous itemized deductions only to the extent they exceed 2% of adjusted gross income. In addition, such deductions may be subject to phase outs and other limitations under applicable provisions of the Code. Investment by U.S. Tax-Exempt Shareholders Certain U.S. Shareholders ("U.S. Tax-Exempt Shareholders") are subject to United States federal income tax only on their "unrelated business taxable income" ("UBTI"). Unless they incur debt in order to purchase Shares, it is expected that U.S. Tax-Exempt Shareholders should not realize UBTI in respect of income or gains from the Shares. U.S. Tax-Exempt Shareholders should consult their own independent tax advisers regarding the United States federal income tax consequences of holding Shares in light of their particular circumstances. Investment by Regulated Investment Companies Mutual funds and other investment vehicles which are "regulated investment companies" within the meaning of Code Section 851 should consult with their tax advisers concerning (i) the likelihood that an investment in Shares may be considered an investment in the underlying gold for purposes of Code Section 851(b), and (ii) the extent to which an investment in Shares might nevertheless be consistent with preservation of their qualification under Code Section 851. We note that in recent administrative guidance, the IRS stated that it will no longer issue rulings under Code Section 851(b) relating to the determination of whether or not an instrument or position is a "security," but, instead, intends to defer to guidance from the SEC for such determination. Investment by Certain Retirement Plans Section 408(m) of the Code provides that the purchase of a "collectible" as an investment for an IRA, or for a participant-directed account maintained under any plan that is tax-qualified under Section 401(a) of the Code ("Tax Qualified Account"), is treated as a taxable distribution from the account to the owner of the IRA, or to the participant for whom the Tax Qualified Account is maintained, of an amount equal to the cost to the account of acquiring the collectible. The IRS has issued private letter rulings which provide that the purchase of shares of trusts similar to the Trust by an IRA or a Tax Qualified Account will not constitute the acquisition of a collectible or be treated as resulting in a taxable distribution to the IRA owner or Tax Qualified Account participant under Code Section 408(m). However, if any of the Shares so purchased are distributed from an IRA or Tax Qualified Account to the IRA owner or plan participant, or if any gold received by such IRA or Tax Qualified Account upon the redemption of any of the Shares purchased by it is distributed (or treated as distributed pursuant to Code section 408(m)) to the IRA owner or plan participant, the Shares or gold so distributed will be subject to federal income tax in the year of distribution, to the extent provided under the applicable provisions of Code sections 408(d), 408(m) or 402. Private letter rulings are only binding on the IRS with respect to the taxpayer to which they were issued and the Trust has neither requested nor obtained such a private letter ruling. Accordingly, potential IRA or Tax Qualified Account investors are urged to consult with their own professional advisors concerning the treatment of an investment in Shares under Code Section 408(m). Taxation of Non-U.S. Shareholders A Non-U.S. Shareholder generally will not be subject to United States federal income tax with respect to gain recognized upon the sale or other disposition of Shares, or upon the sale of gold by the Trust, unless (1) the Non-U.S. Shareholder is an individual and is present in the United States for 183 days or more during the taxable year of the sale or other disposition, and the gain is treated as being from United States sources; or (2) the gain is effectively connected with the conduct by the Non-U.S. Shareholder of a trade or business in the United States and certain other conditions are met. United States Information Reporting and Backup Withholding The Trustee will file certain information returns with the IRS, and provide certain tax-related information to Shareholders, in connection with the Trust. To the extent required by applicable regulations, each Shareholder will be provided with information regarding its allocable portion of the Trust s annual income (if any) and expenses. A U.S. Shareholder may be subject to United States backup withholding tax, at a rate of 24%, in certain circumstances unless it provides its taxpayer identification number and complies with certain certification procedures. Non-U.S. Shareholders may have to comply with certification procedures to establish that they are not a United States person, and some Non-U.S. Shareholders will be required to meet certain information reporting or certification requirements imposed by the Foreign Account Tax Compliance Act, in order to avoid certain information reporting and withholding tax requirements. The amount of any backup withholding will be allowed as a credit against a Shareholder s United States federal income tax liability and may entitle such a Shareholder to a refund, provided that the required information is furnished to the IRS in a timely manner. Taxation in Jurisdictions Other Than the United States Prospective purchasers of Shares that are based in or acting out of a jurisdiction other than the United States are advised to consult their own tax advisers as to the tax consequences, under the laws of such jurisdiction (or any other jurisdiction other than the United States to which they are subject), of their purchase, holding, sale and redemption of or any other dealing in Shares and, in particular, as to whether any value added tax, other consumption tax or transfer tax is payable in relation to such purchase, holding, sale, redemption or other dealing. ERISA and Related Considerations ERISA and/or Code section 4975 impose certain requirements on certain employee benefit plans and certain other plans and arrangements, including individual retirement accounts and annuities, Keogh plans, and certain commingled investment vehicles or insurance company general or separate accounts in which such plans or arrangements are invested (collectively, "Plans"), and on persons who are fiduciaries with respect to the investment of "plan assets" of a Plan. Government plans and some church plans are not subject to the fiduciary responsibility provisions of ERISA or the provisions of section 4975 of the Code, but may be subject to substantially similar rules under other federal law, or under state or local law ("Other Law"). In contemplating an investment of a portion of Plan assets in Shares, the Plan fiduciary responsible for making such investment should carefully consider, taking into account the facts and circumstances of the Plan and the "Risk Factors" discussed above and whether such investment is consistent with its fiduciary responsibilities under ERISA or Other Law, including, but not limited to: (1) whether the investment is permitted under the Plan s governing documents, (2) whether the fiduciary has the authority to make the investment, (3) whether the investment is consistent with the Plan s funding objectives, (4) the tax effects of the investment on the Plan, and (5) whether the investment is prudent considering the factors discussed in this prospectus. In addition, ERISA and Code section 4975 prohibit a broad range of transactions involving assets of a plan and persons who are "parties in interest" under ERISA or "disqualified persons" under section 4975 of the Code. A violation of these rules may result in the imposition of significant excise taxes and other liabilities. Plans subject to Other Law may be subject to similar restrictions. It is anticipated that the Shares will constitute "publicly offered securities" as defined in the Department of Labor "Plan Asset Regulations," 2510.3-101 (b)(2) as modified by section 3(42) of ERISA. Accordingly, pursuant to the Plan Asset Regulations, only Shares purchased by a Plan, and not an interest in the underlying assets held in the Trust, should be treated as assets of the Plan, for purposes of applying the "fiduciary responsibility" rules of ERISA and the "prohibited transaction" rules of ERISA and the Code. Fiduciaries of plans subject to Other Law should consult legal counsel to determine whether there would be a similar result under the Other Law. Allowing an investment in the Trust is not to be construed as a representation by the Sponsor or any of its affiliates, agents or employees that this investment meets some or all of the relevant legal requirements with respect to investments by any particular Plan or that this investment is appropriate for any such particular Plan. The person with investment discretion should consult with the Plan s attorney and financial advisors as to the propriety of an investment in the Trust in light of the circumstances of the particular Plan, current tax law and ERISA. Plan of Distribution In addition to, and independent of the initial purchases by the initial Authorized Participant (described below), the Trust will issue Shares in Baskets to Authorized Participants in exchange for deposits of gold on a continuous basis. Because new Shares can be created and issued on an ongoing basis, at any point during the life of the Trust, a "purchases," as such term is used in the Securities Act, will be occurring. Broker-dealers and other persons are cautioned that some of their activities will result in their being deemed participants in a distribution in a manner which would render them statutory underwriters and subject them to the prospectus-delivery and liability provisions of the Securities Act. For example, a broker-dealer firm or its client will be deemed a statutory underwriter if it purchases a Basket from the Trust, breaks the Basket down into the constituent Shares and sells the Shares directly to its customers; or if it chooses to couple the creation of a supply of new Shares with an active selling effort involving solicitation of secondary market demand for the Shares. A determination of whether a particular market participant is an underwriter must take into account all the facts and circumstances pertaining to the activities of the broker-dealer or its client in the particular case, and the examples mentioned above should not be considered a complete description of all the activities that could lead to designation as an underwriter. Investors that purchase Shares through a commission/fee-based brokerage account may pay commissions/fees charged by the brokerage account. We recommend that investors review the terms of their brokerage accounts for details on applicable charges. Dealers that are not "underwriters" but are participating in a distribution (as contrasted to ordinary secondary trading transactions), and thus dealing with Shares that are part of an "unsold allotment" within the meaning of Section 4(a)(3)(C) of the Securities Act, would be unable to take advantage of the prospectus-delivery exemption provided by Section 4(a)(3) of the Securities Act. The Sponsor intends to qualify the Shares in states selected by the Sponsor and that sales be made through broker-dealers who are members of FINRA. Investors intending to create or redeem Baskets through Authorized Participants in transactions not involving a broker-dealer registered in such investor s state of domicile or residence should consult their legal advisor regarding applicable broker-dealer or securities regulatory requirements under the state securities laws prior to such creation or redemption. Authorized Participants will offer Shares at an offering price that will vary, depending on, among other factors, the price of gold and the trading price of the Shares on the Exchange at the time of offer. Authorized Participants will not receive from the Trust, the Sponsor, the Trustee or any of their affiliates a fee or other compensation in connection with the sale of the Shares, although Authorized Participants may receive commissions/fees from investors who purchase Shares. The Trust will not bear any expenses in connection with the offering or sales of the Shares. The offering of Baskets is being made in compliance with Conduct Rule 2810 of FINRA. Accordingly, the Authorized Participants will not make any sales to any account over which it has discretionary authority without the prior written approval of a purchaser of Shares. Authorized Participants will not receive from the Trust or the Sponsor any compensation in connection with an offering of the Shares. Accordingly, there is, and will be, no payment of underwriting compensation in connection with any such offering
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+Prospectus Summary 1
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+PROSPECTUS SUMMARY 1 RISK FACTORS 4 NOTE REGARDING FORWARD-LOOKING STATEMENTS 8 USE OF PROCEEDS 10 MARKET PRICE OF SHARES 11
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. This summary does not contain all of the information you should consider before investing in our securities. Before deciding to invest in our securities, you should read this entire prospectus carefully, including the section of this prospectus entitled Risk Factors beginning on page 8. All brand names or trademarks appearing in this report are the property of their respective holders. Unless the context requires otherwise, references in this report to Bridgeline, the Company, we, us, and our refer to Bridgeline Digital, Inc., a Delaware corporation. Overview Bridgeline Digital, The Digital Engagement Company , helps customers maximize the performance of their full digital experience from websites and intranets to online stores. Bridgeline s Unbound platform integrates Web Content Management, eCommerce, eMarketing, Social Media management, and Web Analytics (Insights) with the goal of assisting marketers deliver digital experiences that attract, engage and convert their customers across all channels. Bridgeline s Unbound platform combined with its digital services assists customers in maximizing on-line revenue, improving customer service and loyalty, enhancing employee knowledge, and reducing operational costs. Our Unbound franchise product is a platform that empowers large franchise and multi-unit organizations with state-of-the-art web engagement management while providing superior oversight of corporate branding. Our Unbound franchise product also deeply integrates content management, eCommerce, eMarketing and web analytics on one unified platform. The Unbound platform is delivered through a cloud-based software as a service ( SaaS ) multi-tenant business model, whose flexible architecture provides customers with state of the art deployment providing maintenance, daily technical operation and support; or via a traditional perpetual licensing business model, in which the software resides on a dedicated server in either the customer s facility or hosted by Bridgeline via a cloud-based hosted services model. The Bridgeline Unbound Platform is an award-winning application recognized around the globe. Our teams of Microsoft Gold certified developers have won over 100 industry related awards. In 2017, our Marketing Automation platform was named a 2017 SIIA CODiE Award finalist in the Best Marketing Solution category. In 2016, CIO Review selected Bridgeline Unbound (formerly iAPPS) as one of the 20 Most Promising Digital Marketing Solution Providers. This followed accolades from the SIIA (Software and Information Industry Association) which recognized Content Manager with the 2015 SIIA CODiE Award for Best Web Content Management Platform. Also in 2015, EContent magazine named Bridgeline s Unbound Digital Engagement Platform to its Trendsetting Products list. The list of 75 products and platforms was compiled by EContent s editorial staff, and selections were based on each offering s uniqueness and importance to digital publishing, media, and marketing. We were also recognized in 2015 as a strong performer by Forrester Research, Inc in its independence report, The Forrester Wave : Through-Channel Marketing Automation Platforms, Q3 2015. In recent years, our Content Manager and Commerce products were selected as finalists for the 2014, 2013, and 2012 CODiE Awards for Best Content Management Solution and Best Electronic Commerce Solution, globally. In 2014 and 2013, Bridgeline Digital won twenty-five Horizon Interactive Awards for outstanding development of web applications and websites. Also in 2013, the Web Marketing Association sponsored Internet Advertising Competition honored Bridgeline Digital with three awards for customer websites and B2B Magazine selected Bridgeline Digital as one of the Top Interactive Technology companies in the United States. KMWorld Magazine Editors selected Bridgeline Digital as one of the 100 Companies That Matter in Knowledge Management and also selected Bridgeline s Unbound (formerly iAPPS) as a Trend Setting Product in 2013. Corporate Information We were incorporated in the state of Delaware in 2000. Our principal place of business is located at 80 Blanchard Road, Burlington, Massachusetts 01803. Our telephone number is (781) 376-5555. We maintain a corporate website at http://www.bridgeline.com. The information contained on our website is not, and should not be interpreted to be, a part of this prospectus. -2- Table of Contents THE OFFERING The following summary contains general information about this offering. The summary is not intended to be complete. You should read the full text and more specific details contained elsewhere in this prospectus. Issuer Bridgeline Digital, Inc. Class A Units Offered by us Up to 7,530,120 Class A Units, with each Class A Unit consisting of one share of our common stock and a warrant to purchase one share of our common stock at an exercise price equal to 125% of the per unit public offering price of the Class A Units. The Class A Units will not be certificated and the shares of common stock and warrants that are part of such units will be immediately separable and will be issued separately in this offering. Assuming no exercise of the over-allotment option and that we sell all Class A Units (and no Class B Units) being offered in this offering at an assumed public offering price of $0.83 per Class A Unit (which was the last reported sale price of our common stock on the Nasdaq Capital Market on October 11, 2018), we would issue in this offering an aggregate of 7,530,120 shares of our common stock and warrants to purchase 7,530,120 shares of our common stock. The actual offering price per Class A Unit will be negotiated between us and the underwriters based on the trading of our common stock prior to the offering, among other things, and may be at a discount to the current market price. We are also offering the shares of common stock issuable upon exercise of warrants sold as part of the Class A Units. Assumed Public Offering Price per Class A Unit $0.83 per Class A Unit Class B Units Offered by us Up to 6,250 Class B Units. We are also offering to each purchaser whose purchase of Class A Units in this offering would otherwise result in the purchaser, together with its affiliates and certain related parties, beneficially owning more than 4.99% of our outstanding common stock immediately following the consummation of this offering, the opportunity to purchase, if the purchaser so chooses, Class B Units, in lieu of Class A Units. Each Class B Unit will consist of one share of our Series B Preferred, with a stated value of $1,000 per share and convertible into shares of our common stock at conversion price equal to the per unit public offering price of the Class A Units, together with an equivalent number of warrants as would have been issued to such purchaser if they had purchased Class A Units based on the per unit public offering price of the Class A Units. The Class B Units will not be certificated and the shares of Series B Preferred and warrants that are part of such unit will be immediately separable and will be issued separately in this offering. We are also offering the shares of common stock issuable upon exercise of warrants sold in Class B Units and shares issuable upon conversion of the shares of Series B Preferred sold in each Class B Unit. For each Class B Unit we sell, the number of Class A Units we are offering will be decreased on a dollar-for-dollar basis. Because we will issue a warrant as part of each Class A Unit and Class B Unit (together, the Units ), the number of warrants sold in this offering will not change as a result of a change in the mix of the Units sold. Public Offering Price per Class B Unit $1,000 per Class B Unit Warrants Offered by us Each warrant included in the Units will have an exercise price of 125% of the per unit public offering price of the Class A Units, will be exercisable upon issuance and will expire five years from the date of issuance. Each warrant will be exercisable to purchase one share of our common stock. No fractional shares of common stock will be issued in connection with the exercise of a warrant. In lieu of fractional shares, we will round up to the next whole share. Pursuant to the terms of the warrants, in the event of a fundamental transaction, the Company shall, at the sole option of the holder of the warrants, purchase the warrants from the holder at a price equal to the Black Scholes Value (as defined in the warrant) on the date of the consummation of such fundamental transaction;provided, however, that if the fundamental transaction is not within the Company s control, the holder shall only be entitled to receive the same type of consideration that is being offered to holders of the Company s common stock.The warrants also provide that in the event of a fundamental transaction we are required to cause any successor entity to assume our obligations under the warrants. In addition, holders of the warrants will be entitled to receive, upon exercise of the warrant, the kind and amount of securities, cash or property that the holder would have received had the holder exercised the warrant immediately prior to such fundamental transaction. This prospectus also relates to the offering of the shares of common stock issuable upon exercise of the warrants. Over-allotment option We have granted a 45-day option to the underwriters to purchase (i) a maximum of 1,129,518 additional shares of common stock for a price per share equal to the per unit public offering price of the Class A Units, less underwriting discounts and expenses (15% of the shares of common stock included in the Class A Units and the shares of common stock issuable upon conversion of the Series B Preferred shares sold as part of the Class B Units, and/or (ii) warrants to purchase a maximum of 1,129,518 shares of common stock at an offering price of $0.01 per warrant (15% of the warrants included as part of the Units sold in this offering), solely to cover over-allotments, if any. Common Stock to be Outstanding Immediately after this Offering 11,771,375 shares of our common stock (at an assumed offering price of $0.83 per Class A Unit, which was the last reported sale price of our common stock on the Nasdaq Capital Market on October 11, 2018), assuming that no Class B Units are sold in this offering and that none of the warrants offered hereby are exercised. If the underwriters exercise their over-allotment option in full, the total number of shares of common stock outstanding immediately after this offering would be 12,900,893 (at an assumed offering price of $0.83 per Class A Unit, which was the last reported sale price of our common stock on the Nasdaq Capital Market on October 11, 2018), assuming that no Class B Units are sold in this offering and that none of the warrants offered hereby are exercised. Series B Convertible Preferred Stock The shares of Series B Preferred offered as a part of the Class B Units will be convertible into shares of our common stock (subject to adjustment as provided in the related certificate of designation of preferences, rights and limitations) at any time at the option of the holder, at a conversion price equal to the per unit public offering price of the Class A Units. See Description of Securities We Are Offering for a discussion of the terms of the Series B Preferred. Use of Proceeds We estimate that we will receive net proceeds from this offering of approximately $4.6 million, or approximately $5.4 million if the underwriters exercise their over-allotment option in full, in each case, after deducting underwriting discounts and commissions, our estimated offering expenses and amounts necessary to repay certain term notes. We currently intend to use a portion of the net proceeds that we receive from this offering to repay certain term notes, and to utilize the remaining net proceeds for research and development, working capital needs, capital expenditures and other general corporate purposes. In addition, we may use a portion of the net proceeds from this offering to pursue potential strategic acquisitions, although we do not have any specific plans or arrangements to do so at this time. See Use of Proceeds on page 17 of this prospectus. Risk Factors Investing in our securities involves significant risks. Before making a decision whether to invest in our securities, please read the information contained in or incorporated by reference under the heading Risk Factors in this prospectus, the documents we have incorporated by reference herein, and under similar headings in other documents filed after the date hereof and incorporated by reference into this prospectus. See Incorporation of Certain Information by Reference and Where You Can Find More Information. Nasdaq Capital Market Symbol BLIN. There is no established public trading market for the warrants or shares of Series B Preferred offered herein, and we do not expect an active trading market to develop. We do not intend to list the warrants or Series B Preferred on the Nasdaq Capital Market or any other securities exchange or other trading market. Without an active trading market, the liquidity of the warrants and the Series B Preferred will be limited. -3- Table of Contents The number of shares of our common stock shown above to be outstanding immediately after the offering is based on 4,241,225 shares outstanding as of October 11, 2018, asnd assumes the issuance and sale of 7,530,120 Class A Units in this offering and no Class B Units. Unless we specifically state otherwise, the share information in this prospectus excludes: 459,846 shares of our common stock issuable upon the exercise of outstanding stock options outstanding at a weighted-average exercise price of $6.81 per share; 546,151 shares of common stock issuable upon the exercise of warrants at a weighted-average exercise price of $6.16 per share; 260,534 shares of common stock reserved for future issuance under our 2016 Stock Incentive Plan (the 2016 Plan ); 161,455 shares of common stock issuable upon conversion of 262,364 outstanding shares of Series A Convertible Preferred Stock ( Series A Preferred ); and 376,506 shares of common stock issuable upon the exercise of the Representative s Warrants to be issued to the representative of the underwriters upon closing of this offering. The above numbers reflect the 1-for-5 stock split effectuated by us on July 24, 2017. Unless otherwise indicated, all information in this prospectus assumes: no conversion of outstanding shares of Series A Preferred; no shares of Series B Preferred are sold in this offering; no exercise of outstanding warrants or the outstanding stock options issued under the 2016 Plan, as described above; and no exercise by the underwriters of their over-allotment option. To the extent we sell any Class B Units in this offering, the same aggregate number of common stock equivalents resulting from this offering would be convertible under the Series B Preferred issued as part of the Class B Units. -4- Table of Contents SUMMARY FINANCIAL DATA The following tables set forth a summary of our historical financial data as of, and for the periods ended on, the dates indicated. We have derived the statements of operations data for the years ended September 30, 2017 and 2016 from our audited financial statements and the related notes appearing in our Annual Report on Form 10-K for the year ended September 30, 2017 (the 2017 10-K ), which is incorporated by reference into this prospectus. The statements of operations data for the nine-months ended June 30, 2018 and 2017 and the balance sheet data as of June 30, 2018 have been derived from our unaudited financial statements appearing in our Quarterly Report on Form 10-Q for the period ended June 30, 2018 (the June 10-Q ), which is incorporated by reference into this prospectus. In the opinion of the management, the unaudited data reflects all adjustments, consisting of normal and recurring adjustments, necessary for a fair presentation of results as of and for these periods. The following summary financial data should be read together with our consolidated financial statements and related notes appearing in the 2017 10-K and in the June 10-Q, as well as in the sections entitled Management s Discussion and Analysis of Financial Condition and Results of Operations in each of the 2017 10-K and in our June 10-Q, each of which are incorporated by reference into this prospectus. Our audited consolidated financial statements have been prepared in U.S. dollars in accordance with U.S. generally accepted accounting principles. Our historical results for any prior period are not indicative of our future results, and our results for the nine-months ended June 30, 2018 may not be indicative of our results for the year ending September 30, 2018. -5- Table of Contents Statement of Operations Data: (dollars in thousands) Nine Months Ended Years Ended June 30, September 30, 2018 2017 2017 2016 Revenue (unaudited) Digital engagement services $5,559 $6,298 $8,498 $8,520 Subscription and perpetual licenses 4,367 5,018 6,788 6,084 Managed service hosting 839 743 1,007 1,291 Total revenue 10,765 12,059 16,293 15,895 Cost of revenue Digital engagement services 3,666 3,569 4,911 5,143 Subscription and perpetual licenses 1,503 1,468 1,969 1,835 Managed service hosting 213 209 280 304 Total cost of revenue 5,382 5,246 7,160 7,282 Gross profit 5,383 6,813 9,133 8,613 Operating expenses Sales and marketing 3,045 3,661 4,807 4,934 General and administrative 2,156 2,395 3,256 3,456 Research and development 1,221 1,175 1,587 1,578 Depreciation and amortization 305 468 582 1,309 Goodwill impairment 4,615 - - - Restructuring expenses 187 249 286 879 Total operating expenses 11,529 7,948 10,518 12,156 Loss from operations (6,146) (1,135) (1,385) (3,543) Interest and other expense, net (115) (122) (201) (914) Loss on inducement of debt (convertible notes) - - - (3,414) Loss before income taxes (6,261) (1,257) (1,586) (7,871) (Benefit)/provision for income taxes 11 13 16 (47) Net loss $(6,272) $(1,270) $(1,602) $(7,824) Dividends on convertible preferred stock (231) (207) (281) (131) Net loss applicable to common shareholders (6,503) (1,477) (1,883) (7,955) Net loss per share attributable to common shareholders: Basic and diluted $(1.54) $(0.36) $(0.45) $(4.20) Number of weighted average shares outstanding: Basic and diluted 4,222,848 4,129,481 4,147,140 1,893,003 -6- Table of Contents Consolidated Balance Sheet Data: As of June 30, 2018 Pro Forma (unaudited, dollars in thousands) Actual Pro Forma(1) As Adjusted(2) Cash and cash equivalents $427 $1,187 $ 5,755 Total assets 11,422 12,182 16,750 Debt, current portion, less unamortized discount and issuance costs 198 958 198 Debt, net of current portion 2,810 2,810 2,810 Total liabilities 6,090 6,850 6,090 Total stockholders equity 5,332 5,332 10,660 (1) The pro forma figures give effect to the sale by the Company of certain term promissory notes (the Term Notes ) in the aggregate principal amount of $941,176, which sales occurred on September 7, 2018. After recording $141,176 of original issue discount and debt issuance costs of $40,000, the Company received net cash proceeds in the aggregate amount of $760,000 for the Term Notes. The original issue discount and debt issuance costs are recorded as a contra liability and will be amortized over the life of the Term Notes. The Term Notes have an original issue discount of fifteen percent (15%), bear interest at a rate of twelve percent (12%) per annum, and mature on the earlier to occur of (i) six months from September 7, 2018, or (ii) the consummation of a debt or equity financing resulting in gross proceeds to the Company of at least $3.0 million. In connection with the issuance of the Term Notes, each purchaser also entered into a Subordination Agreement with the Company s lenders, Heritage Bank of Commerce and Montage Capital II, L.P. (the Lenders ), pursuant to which the purchasers agreed to subordinate (i) all of the Company s indebtedness and obligations to the purchasers, whether presently existing or arising in the future, to all of the Company s indebtedness to the Lenders, and (ii) all of the purchasers security interests, if any, to all of the Lenders security interests in property of the Company. (2) Pro forma as adjusted balance sheet data reflects the items described in footnote 1 and our sale of 7,530,120 Class A Units in this offering at an assumed public offering price of $0.83 per share, which was the last reported sale price of our common stock on the Nasdaq Capital Market on October 11, 2018, after deducting underwriting discounts and commissions and estimated offering expenses payable by us, as well as the amounts necessary to repay the Term Notes, including all accrued interest, which amounted to approximately $10,000 as of October 11, 2018, out of proceeds of this offering. Pro forma as adjusted balance sheet data is illustrative only and will change based on the actual public offering price and other terms of this offering determined at pricing. Each $0.25 increase (decrease) in the assumed public offering price per Class A Unit would increase (decrease) the amount of cash and cash equivalents, working capital, total assets, and total stockholders equity by approximately $1.8 million, assuming the number of Class A Units offered by us, as set forth on the cover page of this prospectus, remains the same, and after deducting underwriting discounts and commissions, estimated offering expenses payable by us, and the amounts necessary to repay the Term Notes, including all accrued interest, which amounted to approximately $10,000 as of October 11, 2018. We may also increase or decrease the number of Class A Units to be issued in this offering. Each increase (decrease) of 1.0 million Class A Units offered by us would increase (decrease) the as adjusted amount of cash and cash equivalents, working capital, total assets and total stockholders deficit by approximately $771,900, assuming the assumed public offering price per Class A Unit remains the same, and after deducting underwriting discounts and commissions, estimated offering expenses payable by us, and the amounts necessary to repay the Term Notes, including all accrued interest, which amounted to approximately $10,000 as of October 11, 2018. The pro forma as adjusted basis assumes no sale of Class B Units and excludes the proceeds, if any, from the exercise of any warrants issued in this offering. The pro forma information discussed above is illustrative only and will be adjusted based on the actual public offering price and other terms of this offering determined between us and the underwriters at pricing. -7- Table of Contents
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index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad
--- /dev/null
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@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2018/BSVN_bank7-corp_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/BSVN_bank7-corp_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad
--- /dev/null
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@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2018/BTAI_bioxcel_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/BTAI_bioxcel_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad
--- /dev/null
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@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2018/BUDZ_weed-inc_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/BUDZ_weed-inc_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..44f9ad5ae387852cee3ff4bb234285a6ca2f27e5
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@@ -0,0 +1,68 @@
+PROSPECTUS
+SUMMARY
+
+ 
+
+You should read the following summary together with the more
+detailed information and the financial statements appearing
+elsewhere in this Prospectus. This Prospectus contains
+forward-looking statements that involve risks and uncertainties.
+Our actual results could differ materially from those anticipated
+in these forward-looking statements as a result of certain factors,
+including those set forth under Risk Factors and
+elsewhere in this Prospectus. Unless the context indicates or
+suggests otherwise, references to we, 
+ our, us, the Company, or
+the Registrant refer to WEED, Inc., a Nevada
+corporation.
+
+ 
+
+WEED,
+INC.
+
+ 
+
+We are
+an early stage holding company currently focused on the development
+and application of cannabis-derived compounds for the treatment of
+human disease. Our wholly-owned subsidiary, Sangre AT, LLC
+( Sangre ), has begun a planned five-year Cannabis
+Genomic Study to complete a genetic blueprint of the Cannabis plant
+genus, by creating a global genomic classification of the entire
+plant. By targeting cannabis-derived molecules that stimulate the
+endocannabinoid system, Sangre s research team plans to
+develop scientifically-valid and evidence-based cannabis strains
+for the production of disease-specific medicines. The goal of the
+research is to identify, collect, patent, and archive a collection
+of highly-active medicinal strains. We plan to conduct this study
+only in states where cannabis has been legalized for medicinal
+purposes.
+
+ 
+
+Using
+annotated genomic data and newly generated phenotypic data, Sangre
+plans to identify and isolate regions of the plant genome which are
+related to growth, synthesis of desired molecules, and drought and
+pest resistance. This complex data set would then be utilized in a
+breeding program to generate and establish new hybrid cultivars
+which exemplify the traits that are desired by the medical and
+patient community. This breeding program would produce new seed
+stocks and clones, which we plan on patenting. If successful this
+intellectual property should generate immense value for the
+Company. After developing a comprehensive understanding of the
+annotated genome of a variety of cannabis strains, and obtaining
+intellectual property protection over the most promising strains,
+we plan to move forward either independently or with strategic
+partners to develop medicinal products for the treatment of a
+multitude of human diseases.
+
+ 
+
+Currently, we do
+not have the money or funding to achieve the above goals and we
+will not be able to achieve our goals unless we are successful in
+obtaining additional funding, likely through sales of our
+securities, all which may serve to dilute the ownership position of
+our current and future shareholders.
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index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
--- /dev/null
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@@ -0,0 +1 @@
+Prospectus Summary 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2018/BWBBP_bridgewate_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/BWBBP_bridgewate_prospectus_summary.txt
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@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights selected information contained in greater detail elsewhere in this prospectus. Because this is a summary, it does not contain all of the information that you should consider before deciding to invest in our common stock. You should read this entire prospectus carefully, including the "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections and our historical financial statements and the accompanying notes before making an investment decision. Some of the statements in this prospectus constitute forward-looking statements. See "Cautionary Note Regarding Forward-Looking Statements." Our Company We are a financial holding company headquartered in Bloomington, Minnesota, a suburb located approximately 10 miles south of downtown Minneapolis and in close proximity to the Minneapolis-St. Paul International Airport. We say that we are "founded by, funded by and focused on entrepreneurs," and this focus underlies everything we do for our clients. Our bank subsidiary, Bridgewater Bank, was established in 2005 as a de novo bank by a group of industry veterans and local business leaders committed to serving the diverse needs of commercial real estate investors, small business entrepreneurs and high-net-worth individuals. Our investors are strong local advocates and are part of an expanding referral network that consistently generates new clients for the Bank. Since inception, we have grown significantly and profitably, with a focus on organic growth, driven primarily by commercial real estate lending. Our assets have grown at a compound annual growth rate, or CAGR, of 37.6%, since 2005, surpassing total asset milestones of $500 million in 2013, $1.0 billion in 2016 and $1.5 billion in 2017. This growth made us the fastest growing de novo bank in the Minneapolis-St. Paul-Bloomington metropolitan statistical area, or Twin Cities MSA, over the past two decades. As of June 30, 2017, we were the 8th largest bank headquartered in Minnesota by asset size, and the 10th largest bank in the Twin Cities MSA by deposit market share, based on Federal Deposit Insurance Corporation, or FDIC, data. Following our initial equity capital raise of $10.0 million, we raised $57.3 million in additional equity capital to support our growth, including $42.5 million from affiliates of Castle Creek Capital LLC, EJF Capital LLC, Endeavour Capital Advisors Inc. and GCP Capital Partners, four nationally recognized institutional community bank investors. As of December 31, 2017, we had total assets of approximately $1.6 billion, total gross loans of approximately $1.3 billion, total deposits of approximately $1.3 billion and total shareholders' equity of approximately $137.2 million. We believe our credit quality today is strong, as demonstrated by the low level of nonperforming assets to total assets of 0.11% as of December 31, 2017 and net charge-offs to average loans of 0.00% for the year ended December 31, 2017. We believe our company is one of only a few in the banking industry to have achieved substantial growth while maintaining consistently strong earnings. We became profitable in our third month of operations and have achieved monthly profitability since that time. For the year ended December 31, 2017, our return on average assets, or ROA, was 1.16%, and our return on average shareholders' equity, or ROE, was 13.18%. Our operating efficiency, as evidenced by our efficiency ratio of 44.4% for the year ended December 31, 2017, is one of the main drivers of our profitability. Our 2017 profitability was negatively impacted by a large, non-recurring expense associated with Public Law 115-97, or the Tax Cuts and Jobs Act, being signed into law on December 22, 2017. While the Tax Cuts and Jobs Act reduces the federal corporate tax rate from a maximum of 35% to a flat rate of 21%, it correspondingly reduces the future net tax benefits of timing differences between book and taxable income recorded as a net deferred tax asset. Therefore, we revalued our net deferred tax asset and recorded a one-time additional income tax expense of $2.0 million in December of 2017. Net income for the year ended December 31, 2017, before giving effect to the adjustment of our net deferred tax asset, was $18.9 million, which would have resulted in a ROA and ROE of 1.30% and 14.75%, respectively. BRIDGEWATER BANCSHARES, INC. (Exact name of registrant as specified in its charter) Minnesota (State or other jurisdiction of incorporation or organization) 6022 (Primary Standard Industrial Classification Code Number) 26-0113412 (I.R.S. Employer Identification No.) 3800 American Boulevard West, Suite 100 Bloomington, Minnesota 55431 (952) 893-6868 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) Table of Contents licensors to these trademarks and other intellectual property. All trademarks appearing in this prospectus are the property of their respective owners. Any discrepancies included in this prospectus between totals and the sums of the percentages and dollar amounts presented are due to rounding. Market and Industry Data Although we are responsible for all of the disclosures contained in this prospectus, this prospectus contains industry, market and competitive position data and forecasts that are based on industry publications and studies conducted by independent third parties. The industry publications and third-party studies generally state that the information that they contain has been obtained from sources believed to be reliable, although they do not guarantee the accuracy or completeness of such information. Although we believe that the economic, employment, industry and other market data, including market position, market opportunity and market size information included in this prospectus is generally reliable, we have not verified the data, which is inherently imprecise and subject to change. The forward-looking statements included in this prospectus related to industry, market and competitive data position may be materially different than actual results. Implications of Being an Emerging Growth Company As a company with less than $1.07 billion in revenues during our last fiscal year, we qualify as an "emerging growth company" under the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. An emerging growth company may take advantage of reduced reporting requirements and is relieved of certain other significant requirements that are otherwise generally applicable to public companies. As an emerging growth company: we may present as few as two years of audited financial statements and two years of related management discussion and analysis of financial condition and results of operations; we are exempt from the requirement to obtain an attestation and report from our auditors on management's assessment of our internal control over financial reporting under the Sarbanes-Oxley Act of 2002; we are permitted to provide reduced disclosure regarding our executive compensation arrangements pursuant to the rules applicable to smaller reporting companies, which means we do not have to include a compensation discussion and analysis and certain other disclosures regarding our executive compensation; and we are not required to give our shareholders non-binding advisory votes on executive compensation or golden parachute arrangements. In this prospectus, we have elected to take advantage of the reduced disclosure requirements and other relief described above, and in the future we may take advantage of any or all of these exemptions for as long as we remain an emerging growth company. We will remain an emerging growth company until the earliest of (i) the end of the fiscal year during which we have total annual gross revenues of $1.07 billion or more, (ii) the end of the fiscal year following the fifth anniversary of the completion of this offering, (iii) the date on which we have, during the previous three-year period, issued more than $1.0 billion in non-convertible debt and (iv) the end of the first fiscal year in which (A) the market value of our equity securities that are held by non-affiliates exceeds $700 million as of June 30 of that year, (B) we have been a public reporting company under the Securities Exchange Act of 1934, as amended, or Exchange Act, for at least twelve calendar months and (C) we have filed at least one annual report on Form 10-K. Source: S&P Global Market Intelligence (1)Our Nationwide Industry Group consists of the 159 commercial bank holding companies located throughout the United States with total assets between $1.0 billion and $7.5 billion as of December 31, 2017. (2)Our High Loan Growth Peer Group consists of: Eagle Bancorp, Inc. (EGBN), HomeStreet, Inc. (HMST), Preferred Bank (PFBC), Guaranty Bancshares, Inc. (GNTY), Bankwell Financial Group, Inc. (BWFG), Southern First Bancshares, Inc. (SFST), Hanmi Financial Corporation (HAFC), Northeast Bancorp (NBN) and Middlefield Banc Corp. (MBCN). (3)Our High Performing Peer Group consists of: Eagle Bancorp, Inc. (EGBN), First Financial Bankshares, Inc. (FFIN), Westamerica Bancorporation (WABC), Hanmi Financial Corporation (HAFC), Lakeland Financial Corporation (LKFN), Washington Trust Bancorp, Inc. (WASH), Community Trust Bancorp, Inc. (CTBI), Preferred Bank (PFBC), Stock Yards Bancorp, Inc. (SYBT), German American Bancorp, Inc. (GABC), West Bancorporation, Inc. (WTBA), and Parke Bancorp, Inc. (PKBK). Based on industry data, we believe many institutions sacrifice returns on their capital for more aggressive growth, while others forgo growth opportunities to focus on attractive earnings metrics. We believe we have consistently combined the two concepts of growth and earnings to create a high growth, high performing company as illustrated in the tables below. Jerry Baack President and Chief Executive Officer Bridgewater Bancshares, Inc. 3800 American Boulevard West, Suite 100 Bloomington, Minnesota 55431 (952) 893-6868 (Name, address, including zip code and telephone number, including area code, of agent for service) Table of Contents In addition to the relief described above, the JOBS Act permits us to take advantage of an extended transition period for complying with new or revised accounting standards affecting public companies. We have elected to use this extended transition period, which means that the financial statements included in this prospectus, as well as any financial statements that we file in the future, will not be subject to all new or revised accounting standards generally applicable to public companies for the transition period for so long as we remain an emerging growth company or until we affirmatively and irrevocably opt out of the extended transition period under the JOBS Act. As a result, our financial statements may not be comparable to the financial statements of public companies that comply with such new or revised accounting standards on a non-delayed basis. Source: S&P Global Market Intelligence (1)For the five-year period ended December 31, 2017. (2)Net income divided by average assets. (3)Net income divided by average shareholders' equity. (4)Net interest income divided by average earning assets. (5)Efficiency ratio is a non-GAAP financial measure. See "GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures" for additional information. Copies to: Joseph Ceithaml Barack Ferrazzano Kirschbaum & Nagelberg LLP 200 West Madison Street Chicago, Illinois 60606 (312) 984-3100 Jennifer Durham King Vedder Price P.C. 222 North LaSalle Street Chicago, Illinois 60601 (312) 609-7500 Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definition of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act. Large accelerated filer Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company Emerging growth company If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. Table of Contents We believe these metrics illustrate our ability to achieve high performing earnings, while still maintaining growth and efficiency. Another key contributor to our profitability is the productivity of our employees. As of December 31, 2017, we had $14.2 million of total assets per full-time equivalent employee, or FTE. We believe this productivity has allowed us to invest significantly in technology and operational systems, further enhancing our efficient delivery system and positioning us to capitalize on the opportunity in our market. Our Market Area We operate in the Twin Cities MSA, which had total deposits of $188.7 billion as of June 30, 2017, and ranks as the 11th largest metropolitan statistical area in the United States in total deposits, and the second largest metropolitan statistical area in the Midwest in total deposits, based on FDIC data. This area is commonly known as the "Twin Cities" after its two largest cities, Minneapolis, the city with the largest population in the state, and St. Paul, which is the state capital. The Twin Cities MSA is defined by attractive market demographics, including strong household incomes, dense populations, low unemployment and the presence of a diverse group of large and small businesses. As of December 31, 2017, our market ranked first in median household income in the Midwest and fifth in the nation, when compared to the top 20 metropolitan statistical areas by population size in each area, based on data available on S&P Global Market Intelligence. According to the U.S. Bureau of Labor Statistics, the population in the Twin Cities MSA was approximately 3.6 million as of December 31, 2017, making it the third largest metropolitan statistical area in the Midwest and 16th largest metropolitan statistical area in the United States. The low unemployment rate of 2.4% and the significant presence of national and international businesses make the Twin Cities MSA one of the most economically vibrant and diverse markets in the country. As of the end of 2016, the Twin Cities MSA was home to 16 of the 17 Fortune 500 companies headquartered in Minnesota and a number of significant private companies, including one of the country's largest privately owned companies. Within our market, we target commercial real estate investors, small business entrepreneurs and high-net-worth individuals living or investing in the Twin Cities MSA. We currently have six offices, including our headquarters in Bloomington. Our branches are strategically located across the Twin Cities MSA in areas densely populated with successful professionals and companies, which we believe provide attractive loan and deposit opportunities. On August 28, 2017, we announced plans to open our seventh office in St. Paul in the summer of 2018 as a natural extension within our existing market. In addition, we are in the process of seeking city approval for a real estate development project next to the location of our existing branch in St. Louis Park, a suburb of Minneapolis, that would eventually become our new corporate headquarters. We operate in a competitive market area and compete with other, often much larger, retail and commercial banks and financial institutions. Two large, national banking chains, Wells Fargo and US Bank, together controlled 77.8% of the deposit market share in the Twin Cities MSA as of June 30, 2017, based on FDIC data and as displayed in the table below. By comparison, as of the same date, we The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. Table of Contents had a deposit market share of approximately 0.7%, which ranked us tenth in the Twin Cities MSA overall and fifth in the Twin Cities MSA among banks headquartered in Minnesota. Rank Institution State Headquarters Branch Count Total Deposits ($000) Market Share (%) 1 Wells Fargo & Co CA 98 76,689,285 40.64 2 U.S. Bancorp MN 99 70,184,348 37.19 3 TCF Financial Corp. MN 87 6,163,189 3.27 4 Bremer Financial Corp. MN 25 4,246,178 2.25 5 Bank of Montreal N/A 32 3,125,818 1.66 6 Associated Banc-Corp WI 24 1,724,183 0.91 7 Old National Bancorp IN 17 1,677,373 0.89 8 Klein Financial Inc. MN 19 1,512,396 0.80 9 Bank of America Corp. NC 7 1,435,337 0.76 10 Bridgewater Bancshares, Inc. MN 6 1,223,929 0.65 Top 10 Institutions 414 167,982,036 89.02 This market has also experienced disruption in recent years due to acquisitions of local institutions by larger regional banks headquartered outside of the market. We seek to attract customers by offering a higher level of professionalism, responsiveness and certainty than our larger competitors and by providing a more tailored array of products and services. Our Products and Services Consistent with our straightforward business model, we offer a full array of simple, quality loan and deposit products primarily for commercial clients. While we provide products and services that compete with those offered by our large, national and regional competitors, we offer responsive support and personalized solutions tailored for each client. We emphasize customer service over price, and we believe we provide distinguishing levels of client service through the experience of our people, the responsiveness and certainty of our credit process and the efficiency with which we conduct our business. We believe that our clients notice a difference when dealing with our bank compared to the much larger institutions in our market. We depend on our reputation in the communities we serve, and we believe we have built a strong referral network that continually provides us with new client relationships. At this time, we do not operate any non-depository business lines such as mortgage, wealth management or trust. Lending. We focus primarily on commercial lending, consisting of loans secured by nonfarm, nonresidential properties, loans secured by multifamily residential properties, construction loans, land development loans and commercial and industrial loans. As of December 31, 2017, commercial loans represented $1.1 billion, or 85.2%, of our total gross loans. Table of Contents The information in this preliminary prospectus is not complete and may be changed. We and the selling shareholders may not sell these securities until the Registration Statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED MARCH 9, 2018 PROSPECTUS 6,700,000 Shares Common Stock This is the initial public offering of Bridgewater Bancshares, Inc. We are offering 4,374,513 shares of our common stock and the selling shareholders are offering 2,325,487 shares of our common stock. We will not receive any proceeds from the sales of shares by the selling shareholders. Prior to this offering, there has been no established public market for our common stock. We anticipate that the public offering price of our common stock will be between $10.50 and $12.50 per share. Our common stock has been approved for listing on the Nasdaq Capital Market under the symbol "BWB." Investing in our common stock involves risk. See "Risk Factors" beginning on page 19. We are an "emerging growth company" under the federal securities laws and will be subject to reduced public company reporting requirements. Per Share Total Public offering price $ $ Underwriting discounts and commissions(1) $ $ Proceeds to us, before expenses $ $ Proceeds to the selling shareholders, before expenses $ $ (1)See "Underwriting" for additional information regarding underwriting compensation. The underwriters have an option to purchase up to an additional 1,005,000 shares from us at the public offering price, less the underwriting discount, within 30 days from the date of this prospectus. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense. Shares of our common stock are not savings accounts or deposits and are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The shares of common stock will be ready for delivery on or about , 2018. Joint Book-Running Managers The date of this prospectus is , 2018. Source: Company data as of December 31, 2017. Multifamily loans comprised our largest category of commercial loans at $317.9 million, or 23.6% of our total gross loans, as of December 31, 2017. Our multifamily clients typically invest in smaller, seasoned apartment buildings with an average of 30 units per property and fewer amenities and lower rental rates compared to newer luxury buildings. Commercial real estate loans (excluding multifamily and construction) totaled $480.9 million, or 35.7% of our total gross loans, as of December 31, 2017. Our clients target infill properties located close to the downtown areas of Minneapolis and St. Paul, which we believe have greater barriers to entry. This portfolio segment is also well diversified with loans secured by office buildings, retail strip centers, industrial properties, senior housing, hospitality and mixed-use properties. In addition to loans secured by improved commercial real estate properties, we engage in construction lending, which totaled $130.6 million, or 9.7% of our total gross loans, as of December 31, 2017. In recent years, we have also increased our commercial and industrial lending, which totaled $217.8 million, or 16.2% of our total gross loans, as of December 31, 2017. We focus on lending to borrowers located or investing in the Twin Cities MSA across a diverse range of industries and property types. We do not generally lend outside of our market; however, as a relationship lender, we will, from time to time, finance properties located outside of Minnesota for our existing customers in select situations. Loans to finance real estate located outside of Minnesota totaled 5.9% of our total gross loans outstanding as of December 31, 2017. Table of Contents Source: Company data as of December 31, 2017. As of December 31, 2017, 76.7% of our total deposits were considered to be core deposits, which consist of deposits other than brokered deposits and time deposits in excess of $250,000, compared to 77.2% and 79.4% as of December 31, 2016 and 2015, respectively. While we are committed to growing our core deposits, we use brokered deposits as a strategic component of our funding strategy and interest rate risk management. As we have grown our core deposits, brokered deposits have remained a consistent part of the portfolio at 15.5% of our total deposits as of December 31, 2017, compared to 13.7% and 15.3% as of December 31, 2016 and December 31, 2015, respectively. Table of Contents TABLE OF CONTENTS Table of Contents Our Competitive Strengths As we seek to continue to grow our business, we believe the following strengths provide us with a competitive advantage over other financial institutions operating in our market area: Commercial Banking Expertise. We believe we have earned a reputation as one of the prominent commercial real estate lenders in the Twin Cities MSA due in large part to the strength of our lending team. We have an experienced, professional team of 15 commercial lenders, and we believe our ability to drive quality, commercial loan growth is a result of being able to provide each of our clients with access to a knowledgeable, experienced and dedicated banker. Due to their market knowledge and understanding of our clients' businesses, our lenders are well positioned to provide timely and relevant feedback to our clients. We believe our responsive credit culture separates us from our competitors. To fund the growth of our loan portfolio, we continue to focus on growing our deposits. We have continued to build market share by offering a more personalized model than our larger competitors. For the year ended December 31, 2017, our noninterest bearing transaction accounts and savings and money market accounts grew at a rate of 22.9% and 54.7%, respectively, and represented 21.9% and 27.6%, respectively, of total deposits as of December 31, 2017. Many of these clients take advantage of our dedicated and specialized business banking support team and are utilizing multiple electronic products including ACH, wire payments and fraud protection. Multifamily Lending Niche. We specialize in multifamily lending, which typically represents between 20% to 25% of our total loan portfolio. We believe this lending niche lowers the risk profile of our overall loan portfolio due to its lower historical loss rates when compared to other loan types. Over the past 25 years, loans secured by multifamily properties have experienced an average annual loss rate of approximately 0.4%, compared to 0.9% for all loan classes. While this asset class performs well on a national level, multifamily loans in the Twin Cities MSA have outperformed those in the national market. Over the past 15 years, the Twin Cities MSA has experienced lower historic vacancy and loan loss rates compared to the national average. Engaged and Experienced Board of Directors and Management Team. Our board of directors consists of highly accomplished individuals with strong industry and business experience in our market area. We believe that the combined expertise of our board of directors and the significant banking and regulatory experience of our executive management team, which we refer to as our strategic leadership team, help us execute our growth strategy. Also, the interests of our directors and members of our strategic leadership team are aligned with those of our shareholders through common stock ownership. At December 31, 2017, this group beneficially owned approximately 25.1% of our common stock, and we estimate that our directors and executive officers will own approximately 18.9% after the completion of this offering, assuming no shares of common stock are sold to them in this offering. Our five-person strategic leadership team has a strong balance of extensive banking and regulatory experience, drive and talent. Our team has over 100 years of combined banking and financial services experience and more than 20 years of regulatory experience. Three members of the team have been leading the Bank since its formation, and with an average age of 45, we believe this group will continue to drive our growth for years to come. As we continue to grow our company, we believe the following members of our strategic leadership team are key to our success: Jerry Baack, our Chairman, Chief Executive Officer, President and principal founder, leads our strategic leadership team with over 25 years of commercial banking and regulatory experience, including working at the FDIC for seven years. In 2017, Mr. Baack received the award of Banker of the Year from the NorthWestern Financial Review. Table of Contents Jeffrey D. Shellberg, our Executive Vice President and Chief Credit Officer, is a founder of the Company and has worked in the banking industry for over 30 years. Mr. Shellberg began his banking career at and spent over 15 years with the FDIC. Mary Jayne Crocker, our Executive Vice President and Chief Operating Officer, has been with us since our inception and has over 20 years in the financial services industry. In 2017, Ms. Crocker was recognized as a "Women in Business" honoree by the Minneapolis/St. Paul Business Journal. Joe Chybowski is Senior Vice President and our Chief Financial Officer and has over nine years of industry experience, joining us in 2013 from Performance Trust Capital Partners in Chicago. Nick Place is Senior Vice President and our Chief Lending Officer. Joining us in 2007, Mr. Place was promoted to Chief Lending Officer in 2015 and currently oversees our lending function. In addition to our strategic leadership team, we have demonstrated an ability to grow our company through the recruitment of high performing individuals. We seek to hire people with significant in-market experience who fit our hard-working, driven culture. We often recruit individuals who are early in their careers who we believe have strong potential, and we have been successful in developing this talent internally. Through our targeted hiring and internal development efforts, we believe we have established a deep bench of talent to continue to grow and manage our business. By combining our more experienced strategic leadership and commercial lending teams with the next generation of leaders, we believe we are preparing our organization for long-term success. Efficiency. We operate an efficient organization based on a simple business model. By focusing on commercial real estate lending, our employee overhead is low due to the increased loan portfolio sizes of our lenders compared to smaller loan portfolio sizes related to other types of commercial lending. Our low efficiency ratio is also driven by the productivity of our lending team, which we believe is supported by our high gross loan-to-deposit ratio of 100.6% as of December 31, 2017. In addition, we serve our clients through a strategically positioned branch model, as well as through online, mobile and direct banking channels, and are not dependent on a traditional branch network with a large number of locations. Source: Company data for the years shown. Efficiency ratio is a non-GAAP financial measure. See "GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures" for additional information. Our efficiency ratio during the periods presented above was significantly better than the median efficiency ratios of both the High Loan Growth Peer Group and the High Performing Peer Group. We intend to continue to focus on operational efficiency, which we believe to be important to our profitability and future growth prospects. Hard-Working and Entrepreneurial Culture. We have developed a hard-working and entrepreneurial culture, which we believe is a critical component for attracting and retaining experienced and talented bankers, as well as clients. We have established a set of core values, based on characteristics that we believe describe and inspire our culture we are unconventional, responsive, dedicated, focused on growth and accurate. To maintain our culture, all potential and current personnel evaluations include an assessment of these attributes. We believe that our people are our most valuable asset, and we maintain high delivery standards and reward strong performers and our key personnel with above-market compensation and benefits. We encourage the personal and professional growth of all of our employees by providing them with training, networking, mentorship and volunteering opportunities. The Bank was recognized by the Star Tribune in 2015, 2016 and 2017 as one of the top places to work in Minneapolis / St Paul and recognized as one of the best banks to work for by American Banker in 2017. Solid Asset Quality Metrics. We believe our risk-management focused business model has contributed to strong asset quality during a period of strong loan growth over the past five years. As of December 31, 2017, the level of nonperforming assets as a percentage of our total assets was 0.11%, and our year-to-date net charge-offs were 0.00% of average loans. We diligently monitor and routinely stress test the loan portfolio. We believe our strong credit metrics are the result of our prudent Source: Company data as of the dates shown. Proactive Enterprise Risk Management. We believe that our enterprise risk management practices provide an enhanced level of oversight allowing us to be proactive rather than reactive. Our Bank-level risk committee, comprised of senior representatives from all departments, meets monthly to review the Bank's overall enterprise risk position and to discuss how the Bank's strategic initiatives may impact the Bank's risk profile. Enterprise risk management reports are provided to the full Bank board on a quarterly basis. In 2016, we formed Bridgewater Risk Management, Inc. as a captive insurance subsidiary to provide supplemental insurance coverage to the Company and its subsidiaries for risk management purposes. We also have a comprehensive Commercial Real Estate Portfolio Risk Management Policy which implements formal processes and procedures specifically for managing and mitigating risk within our commercial real estate portfolio. This policy addresses regulatory guidelines for institutions, such as the Bank, that exhibit higher levels of commercial real estate concentrations. These processes and procedures include board and management oversight, commercial real estate exposure limits, portfolio monitoring tools, management information systems, market reports, underwriting standards, a credit risk review function and periodic stress testing to evaluate potential credit risk and the subsequent impact on capital and earnings. Strong Branding in an Attractive Market. We believe we have created a brand that is recognized across the Twin Cities. We are proud to be one of the largest community banks headquartered in the Twin Cities MSA, and we believe that local investors, entrepreneurs, small business owners and professionals prefer to partner with a locally focused and operated bank. To distinguish our Bank from the larger, national institutions in our market, we launched a "Big Banks, No Thanks" marketing campaign, which speaks to our ability to be nimble, provide a personalized banking experience and find simple and creative solutions for our clients. We believe many of our clients and potential clients Table of Contents appreciate banking with a locally-headquartered institution that is able to couple the sophistication of a larger bank with the responsive and flexible decision-making process and personal connections of a local community bank. Our Strategies for Growth To generate future growth, we intend to continue to execute the strategies that we have used over the past 12 years to achieve some of the strongest performance results in the community banking industry. These strategies include the following: Focus on Organic Growth in Our Market Area. We intend to continue to grow our business organically in a focused and strategic manner by leveraging our competitive strengths, including our commercial banking expertise, experienced management team, efficient business model and strong branding, to capitalize on the opportunities we see in our market area. We believe what is missing from our market is a publicly traded but locally-headquartered community bank that can go beyond what the small banks can provide by offering the same sophisticated products and services as the much larger, out-of-state banks but in a manner that is tailored to the needs of local clients in a more efficient, responsive and flexible way. If this offering is successful, we will be the first bank holding company headquartered in Minnesota to complete an initial public offering since 1995 and the first bank headquartered in the Twin Cities MSA to do so in over 25 years. Although we may in the future identify new markets to enter, we believe that the long-term growth potential of our current market is substantial and that we have the ability to continue to grow organically in our market. We plan to increase our core deposits and build market share by expanding our existing client relationships, including lending clients that do not currently have a deposit relationship with us, and by developing new deposit-focused clients. Following the acquisition we completed in 2016, we retained substantially all of the acquired bank's existing clients and intend to continue to expand our footprint in the locations we acquired through marketing and networking efforts focused on generating deposits. Although we are committed to growing our core deposits, we intend to continue to supplement our growth, when necessary, with non-core, wholesale funding sources. On the lending side, we intend to rely on our commercial real estate lending expertise, and we believe we are well-positioned to continue to organically grow our commercial loans based on the favorable market demographics in the Twin Cities MSA. We believe that we have built a branch network that allows us to efficiently serve our clients throughout the entire Twin Cities MSA. We believe our existing branch footprint is scalable, and we are adding a new branch in St. Paul to provide us with better access to our clients on the east side of the Twin Cities. As of December 31, 2017, our branches had an average of $223.2 million in deposits per branch. Although we may consider opening new branches in the future, we do not believe that we need to establish a physical location in each community that we serve within our market area. Leverage our Entrepreneurial Culture and Talent. We believe we have built a team of bankers that is hard-working, passionate and energized by the opportunities to continue to grow our business and develop our brand in our market area. With an experienced strategic leadership team and a strong layer of talented middle managers, we believe we are well positioned for future growth. We will continue to aggressively recruit qualified personnel and develop talent internally and believe our culture, which empowers our employees to be entrepreneurs for our business, will allow us to continue to attract and develop the talent we need to drive our growth. Consider Opportunistic Acquisitions. In addition to our organic growth, we may, from time to time, consider additional acquisition opportunities that fit with our organization. Specifically, we will evaluate acquisitions that we believe would be complementary to our existing business. For example, our acquisition in 2016 added primarily consumer loans, as well as core, in-market deposits to our balance Table of Contents sheet, two areas that we intend to grow. We will continue to seek acquisitions that will bolster our balance sheet in areas where we would like to grow or diversify, without compromising our risk profile or culture. While we will pursue acquisitions that fit, we intend to be disciplined in our approach to pricing and will not generally look to acquire new business lines or sellers located in new markets. In the future, we may evaluate and act upon acquisition opportunities that we believe would produce attractive returns for our shareholders. We believe that there will be further bank consolidation in the Twin Cities MSA and that we are well positioned to be a preferred partner for smaller institutions looking to exit through a sale to an in-market buyer. Summary Risk Factors There are a number of risks that you should consider before investing in our common stock. These risks are discussed more fully in the section titled "Risk Factors," beginning on page 19, and include, but are not limited to, the following: credit risks, including risks related to the concentration of commercial real estate loans in our portfolio, our ability to effectively manage our credit risk and the business and economic conditions in our market area; liquidity and funding risks, including the risk that we will not be able to meet our obligations and risks relating to our non-core funding sources and high concentration of large depositors; operational, strategic and reputational risks, including the risk that we may not be able to implement our growth strategy and risks related to cybersecurity, a loss of members of our senior leadership team and maintaining our reputation; legal, accounting and compliance risks, including risks related to the extensive state and federal regulation we operate under and changes in such regulations and accounting policies or standards; market and interest rate risks, including risks related to interest rate fluctuations, the monetary policies and regulations of the Board of Governors of the Federal Reserve System, or Federal Reserve, and potential losses in our securities portfolio; and offering and investment risks, including illiquidity and volatility in the trading of our common stock, limitations on our ability to pay dividends and the dilution that investors in this offering will experience. Corporate Information Our principal executive office is located at 3800 American Boulevard West, Suite 100, Bloomington, Minnesota 55431, and our telephone number at that address is (952) 893-6868. Our website address is www.bridgewaterbankmn.com. The information contained on our website is not a part of, or incorporated by reference into, this prospectus. Table of Contents Historically, our profitable growth has been driven by applying our core competencies, including our commercial banking expertise, experienced management team and efficient business model, to capitalize on opportunities in our attractive market area. In 2016, we completed a complementary small bank acquisition, which added approximately $76.1 million in assets, $66.7 million in seasoned core deposits and two branch locations within our market. While small in scale, this targeted transaction demonstrates that we have the ability to execute and integrate an acquisition. In future periods, we intend to continue to execute our existing business strategy, which is focused on organic growth, and pursue opportunistic acquisitions. Our goal is to be one of the highest performing entrepreneurial banks headquartered in the Twin Cities MSA. Our Growth and Financial Performance As a result of our commercial banking focus, simple and efficient business model and attractive market area, we have consistently delivered some of the strongest performance metrics in the community banking industry. We measure our success using two primary categories, growth and earnings. To monitor our performance, we routinely track our results relative to the broader industry as a whole and comparable peer groups using several key metrics. Specifically, the comparative financial performance analyses described in this prospectus measure our results against: a Nationwide Industry Group, which we define as all publicly traded bank holding companies with total assets between $1.0 billion and $7.5 billion;(1) a High Loan Growth Peer Group, which we define as a group of 9 publicly traded bank holding companies with a five-year gross loans CAGR greater than 15.0%;(2) and a High Performing Peer Group, which we define as a group of 12 publicly traded bank holding companies with a five-year average ROA greater than 1.15% and a five-year average efficiency ratio less than 60.0%.(3) Table of Contents
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+This summary highlights information contained in other parts of this prospectus. Because it is a summary, it does not contain all the information that you should consider before investing in our common shares. You should read and carefully consider this entire prospectus before making an investment decision, especially the information presented under the headings Risk Factors, Cautionary Note Regarding Forward-Looking Statements, Management s Discussion and Analysis of Financial Condition and Results of Operations and our Consolidated Financial Statements and the accompanying notes included elsewhere in this prospectus. Except as otherwise indicated or required by the context, all references in this prospectus to the Company, we, us and our refer to Corporaci n Am rica Airports S.A., or CAAP, and its consolidated subsidiaries, as well as those entities we account for using the equity method. Overview We acquire, develop and operate airport concessions. We are the largest private sector airport concession operator in the world based on the number of airports under management and the tenth largest private sector airport operator in the world based on passenger traffic. Currently, we operate 52 airports globally in Latin America, Europe and Eurasia. Since 1998, when we acquired the concession rights related to the management and operation of 33 airports in Argentina, we have expanded the environments and geographies in which we operate airports by acquiring concessions in Armenia, Uruguay, Ecuador, Peru, Brazil, Italy and additional concessions in Argentina. We operate some of the largest and most important airports in the countries where we are present, including a large international airport, such as Ezeiza Airport in Argentina, domestic airports such as Brasilia Airport in Brazil and Aeroparque Airport in Argentina, airports in tourist destinations such as Bariloche and Iguazu in Argentina, Galapagos Ecological Airport in Ecuador and Florence Airport in Italy, as well as mid-sized domestic and tourist destination airports. In our largest and longest established market, Argentina, we operate and manage 37 of the 56 airports in the national airport system, including the country s two largest airports, Ezeiza and Aeroparque. In each year since we acquired the rights under the concession agreement, dated February 9, 1998, by and between the Argentine Government and Aeropuertos Argentina 2000 S.A. ( AA2000 ) (the AA2000 Concession Agreement ), our airports in Argentina handled over 90% of Argentina s total passenger traffic. For the nine-month period ended September 30, 2017, we had total consolidated revenue of U.S.$1.2 billion, consolidated income from continuing operations of U.S.$72.6 million and Adjusted EBITDA of U.S.$354.7 million, and our airports handled 637,288 total aircraft movements and served 57.1 million total passengers (of which approximately 35.9% were international, approximately 53.4% were domestic and approximately 10.6% were transit passengers). For the year ended December 31, 2016, we had total combined consolidated revenue of U.S.$1.4 billion, combined consolidated income from continuing operations of U.S.$38.7 million and Adjusted EBITDA of U.S.$427.2 million, and our airports handled 836,354 total aircraft movements and served 71.8 million total passengers (of which approximately 34.2% were international, approximately 52.8% were domestic and approximately 13.0% were transit passengers). The following map shows, by country where we are present, the number of airports we operate, our total passenger traffic in millions for 2016 and our revenue in millions of U.S.$, as well as the percentage of our total consolidated revenue that such country represents. TABLE OF CONTENTS of the Reorganization. This means that the assets and liabilities of the entities and businesses contributed as part of the Reorganization included in our Audited Restated Combined Consolidated Financial Statements correspond to the historical amounts in the individual financial statements of combined entities (i.e., predecessor values). El Palomar Airport This prospectus excludes historical results of El Palomar Airport, since concession of such airport was only granted to AA2000 on December 27, 2017. See Summary Our History and Regulatory and Concessions Framework Argentina. Brazilian Consolidation On December 11, 2015, we acquired from Infravix Participa es S.A. ( Infravix ) its 49.95% interest in Infram rica Concessionaria do Aeroporto de S o Gon alo do Amarante S.A. ( ICASGA ). ICASGA is the operator of the Natal Airport in Brazil. As a result of this transaction, we increased our ownership interest in ICASGA from 50.00% to 99.95%. On December 30, 2015, we acquired from Infravix its 43.05% interest in Inframerica Participa es S.A. ( Inframerica ). Inframerica owns a 51.00% interest in Infram rica Concessionaria do Aeroporto do Brasilia S.A. ( ICAB ) while the remaining 49.00% is owned by the Brazilian Government s company for airport infrastructure, Empresa Brasileira de Infraestrutura Aeroportu ria ( Infraero ). ICAB is the operator of the Brasilia Airport in Brazil. As a result of this transaction, we increased our indirect ownership interest in ICAB from 29.02% to 50.98%. The aforementioned acquisitions of a direct interest in ICASGA and an indirect interest in ICAB through Inframerica are hereinafter referred to as the Brazilian Consolidation. Subsequent to the Brazilian Consolidation, we made additional capital contributions into both ICASGA and ICAB. As of the date of this prospectus, our ownership interest in ICASGA and ICAB is 99.97% and 50.98%, respectively. We account for these acquisitions of controlling interests under the purchase method of accounting. We have included the operating results related to these acquisitions as from their respective acquisition dates. For further information on the Brazilian Consolidation, see Management s Discussion and Analysis of Financial Condition and Results of Operations Factors Affecting Comparability The Brazilian Consolidation and Note 28 to our Audited Restated Combined Consolidated Financial Statements. Separate Financial Statements of Inframerica and ICASGA Significant equity method investments (Rule 3-09 of Regulation S-X) We accounted for our investments in Inframerica and ICASGA using the equity method until December 30, 2015 and December 11, 2015, respectively. We analyzed both of these equity method investments under Rule 3-09 of Regulation S-X for significance, based on the two tests outlined in Section 1-02(w) (3) of Regulation S-X, and determined that we were required to provide separate financial statements for these investments. We are presenting full-year audited financial statements for each of these equity method investments in lieu of the partial-year financial statements required when a registrant ceases accounting for an investment utilizing the equity method during a fiscal year. Therefore, full-year audited financial statements for each of these equity method investments as of December 31, 2015 and 2014 and for the years ended December 31, 2015 and 2014 are included in this prospectus. Significant acquisitions (Rule 3-05 of Regulation S-X) We analyzed the acquisition of the additional interests in Inframerica and ICASGA and determined that they triggered the significance test exceeding the 50% threshold under Rule 3-05 of Regulation S-X ( Rule TABLE OF CONTENTS (1) We account for the results of operations of AAP and ECOGAL using the equity method in our Consolidated Financial Statements. (2) AA2000 operates the Termas de Rio Hondo Airport in Argentina, our 36th airport in Argentina. As of the date of this prospectus, there are certain regulatory approvals pending to include the Rio Hondo Airport within the AA2000 Concession Agreement. Our History We have been operating since 1998 and have become a leading global airport concession operator. In 1998, as part of the AA2000 consortium, we were awarded the national and international public bid conducted by the Argentine Government for the concession rights related to the operation of 33 airports in Argentina, including the two largest airports, the Ministro Pistarini International Airport ( Ezeiza Airport ), located at Ezeiza, Buenos Aires, and the Jorge Newbery Aeroparque Airport ( Aeroparque Airport ), located in Buenos Aires. In 2001, as part of the Aeropuertos del Neuqu n S.A. ( NQN ) consortium, we were awarded the concession to operate Aeropuerto de Neuqu n ( Neuqu n Airport ), our 34th airport in Argentina. In 2002, our subsidiary Armenia International Airports CJSC ( AIA ) was awarded the concession to operate the Zvartnots International Airport ( Zvartnots Airport ), located 12 kilometers from downtown Yerevan, Armenia s capital. In 2003, in a public auction conducted by the Uruguayan Government, we purchased the shares of Puerta del Sur S.A. ( Puerta del Sur ), owner of the concession that operates the General Ces reo Berisso International Airport ( Carrasco Airport ) in Carrasco, Uruguay, located 19 kilometers from downtown Montevideo, Uruguay s capital. In 2004, as part of the Terminal Aeroportuaria de Guayaquil S.A. ( TAGSA ) consortium, we were awarded the concession to operate the Jos Joaqu n de Olmedo International Airport ( Guayaquil Airport ), located five kilometers from downtown Guayaquil, Ecuador. In 2007, we executed an amendment to the Zvartnots Airport concession agreement to include Shirak Airport in Gyumri ( Shirak Airport ), the second largest civil airport in Armenia. TABLE OF CONTENTS 3-05 ), based on the three tests outlined in Rule 1-02(w) (3) of Regulation S-X. As a result, we are required to present pre-acquisition audited financial statements covering a period of 36 months. We are using pre-acquisition and post-acquisition periods to satisfy the financial statement requirements of Rule 3-05 in lieu of the acquired companies pre-acquisition financial statements. Therefore, the pre-acquisition audited financial statements as of December 31, 2015 and 2014, and for the years ended December 31, 2015 and 2014, are included in this prospectus. Unaudited Pro Forma Financial Information This prospectus includes unaudited pro forma condensed combined consolidated financial information in connection with the disposal of Corporaci n Am rica Europa S.A. ( Corporaci n Am rica Europa ), which we disposed of on December 15, 2016. Corporaci n Am rica Europa owned a minority interest in Aeroporto Vincenzo Florio di Trapani Birgi, a small airport in Sicily, Italy. The unaudited pro forma condensed combined consolidated statement of income is based on our historical statements of income as adjusted to give effect to the disposal of Corporaci n Am rica Europa as if the transaction had occurred on January 1, 2016. The disposition of Corporaci n Am rica Europa triggered the significance test exceeding the 10% threshold under Article 11 of Regulation S-X, based on the tests outlined in Rule 1-02(w) (3) of Regulation S-X and has therefore triggered the requirement for the presentation of unaudited pro forma of condensed combined financial statements. See Unaudited Pro Forma Condensed Combined Consolidated Financial Information. Adjusted Segment EBITDA Adjusted Segment EBITDA is defined, with respect to each segment, as income from continuing operations before financial income, financial loss, income tax expense, depreciation and amortization for such segment. Adjusted Segment EBITDA excludes certain items that are not considered part of our core operating results. Specifically, we do not allocate financial income, financial loss, income tax expense, depreciation and amortization to our reportable segments. Although Adjusted Segment EBITDA is commonly viewed as a non-IFRS measure in other contexts, pursuant to IFRS 8, Segment Information, Adjusted Segment EBITDA is treated as an IFRS measure in the manner in which we utilize this measure. We use Adjusted Segment EBITDA for purposes of making decisions about allocating resources to our segments and to internally evaluate their financial performance because we believe it reflects current core operating performance and provides an indicator of the segment s ability to generate cash. Non-IFRS Information Adjusted EBITDA Adjusted EBITDA is a non-IFRS financial measure defined as net income from continuing operations before financial income, financial loss, income tax expense, depreciation and amortization. Adjusted EBITDA is not defined under IFRS and has important limitations as an analytical tool. You should not consider it in isolation or as a substitute for analysis of our results as reported under IFRS. For example, Adjusted EBITDA: excludes certain tax payments that may represent a reduction in cash available to us; does not reflect any cash capital expenditure requirements for the assets being depreciated and amortized that may have to be replaced in the future; does not reflect changes in, or cash requirements for, our working capital needs; and does not reflect the significant interest expense, or the cash requirements, necessary to service our debt. TABLE OF CONTENTS In 2008, in a private transaction, we acquired all of the equity interests of Consorcio Aeropuertos Internacionales S.A. ( CAISA ), which owns the concession that operates the Carlos A. Curbelo Airport ( Punta del Este Airport ) located in Maldonado, by Punta del Este, Uruguay. In 2008, as part of the consortium Aeropuerto de Bah a Blanca S.A. ( BBL ), we were awarded the concession to operate Aeropuerto de Bah a Blanca ( Bah a Blanca Airport ), our 35th airport in Argentina. In 2011, as part of the consortium Aeropuertos Andinos del Per S.A. ( AAP ), we were awarded the concession to operate six principal airports in southern Peru (the AAP Airports ). Currently, we operate five of the six airports that are part of the AAP concession agreement. In 2011, as part of the consortium Aeropuertos Ecol gicos de Gal pagos S.A. ( ECOGAL ), we were awarded the concession to operate the Seymour Airport ( Galapagos Airport ), located in Baltra Island, Galapagos Archipelago, our second airport in Ecuador. In 2011, as part of the consortium ICASGA, we were awarded the concession to operate the International Airport of S o Gon alo do Amarante ( Natal Airport ), located in Natal, Brazil. In 2012, pursuant to an agreement between AA2000 and the Argentine province of Santiago del Estero, we began operating the Termas de R o Hondo Airport, our 36th airport in Argentina. In 2012, as part of the consortium ICAB, we were awarded the concession to operate the Presidente Juscelino Kubitschek International Airport ( Brasilia Airport ), located 11 kilometers from downtown Brasilia, Brazil s capital. In 2012, we formed A.C.I. Airports International S. r.l. to hold, either directly or indirectly, our interests in various companies that own our airport concessions. In 2014, we acquired controlling interests in the companies that own the Aeroporto Galileo Galilei di Pisa ( Pisa Airport ) located in Pisa, Italy, and the Aeroporto di Firenze ( Florence Airport, and together with Pisa Airport, the Italian Airports ) located in Florence, Italy, through a number of private acquisitions with former shareholders as well as the consummation of two public tender offers. In 2015, we merged the two companies that operated the Italian Airports to form Toscana Aeroporti S.p.A. ( TA ), a company publicly listed on the Milan Stock Exchange (Borsa Italiana) and of which we own 51.1% of the issued and outstanding common stock. The concessions for the Pisa Airport and the Florence Airport have been transferred to TA. In 2014, we executed an amendment to the concession agreement of the Carrasco Airport extending the term by 10 years to 2033. In 2015, we completed the Reorganization. In 2015, we completed the Brazilian Consolidation. In 2015, as part of the Reorganization, we completed the dispositions of Latin Exploration S.A. ( Latin Exploration ) and its subsidiary Compa a General de Combustibles S.A., and Helport S.A. In 2016, as additional steps in the Reorganization, we completed the dispositions of Helport do Brasil S.A. and Hidroaconcagua S.A. In 2016, we completed the disposition of Corporaci n Am rica Europa. In 2017, we completed the Conversion and renamed our company Corporaci n Am rica Airports S.A. In 2017, as part of the AA2000 consortium, we were awarded the concession rights related to the operation of the El Palomar Airport ( El Palomar Airport ), located in the province of Buenos Aires, our 37th airport in Argentina. TABLE OF CONTENTS We believe that the presentation of Adjusted EBITDA enhances an investor s understanding of our performance. We believe this measure is a useful metric for investors to assess our operating performance from period to period by excluding certain items that we believe are not representative of our core business. We present Adjusted EBITDA in order to provide supplemental information that we consider relevant for the readers of our Consolidated Financial Statements included elsewhere in this prospectus, and such information is not meant to replace or supersede IFRS measures. In addition, our management believes Adjusted EBITDA is useful because it allows us to more effectively evaluate our operating performance and compare the results of our operations from period to period without regard to our financing methods, capital structure or income taxes. We exclude the items listed above from income for the year in arriving at Adjusted EBITDA because these amounts can vary substantially from company to company within our industry depending upon accounting methods and book values of assets, capital structures and the method by which the assets were acquired. Adjusted EBITDA should not be considered as an alternative to, or more meaningful than, consolidated net income for the year as determined in accordance with IFRS or as an indicator of our operating performance from continuing operations. Adjusted EBITDA may not be the same as similarly titled measures used by other companies. We have included the reconciliation of Adjusted EBITDA to consolidated net income from continuing operations for all the periods presented. For a reconciliation of Adjusted EBITDA to consolidated net income from continuing operations, see Selected Consolidated Financial Information. Presentation of Industry and Market Data In this prospectus, we rely on, and refer to, information regarding our business and the markets in which we operate and compete. The market data and certain economic and industry data and forecasts used in this prospectus were obtained from internal surveys, market research, governmental and other publicly available information and independent industry publications. Industry publications, surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable, but that the accuracy and completeness of such information is not guaranteed. We believe that these industry publications, surveys and forecasts are reliable, but we have not independently verified them and cannot guarantee their accuracy or completeness. Certain market share information and other statements presented herein regarding our position relative to our competitors are not based on published statistical data or information obtained from independent third parties, but reflects our best estimates. We have based these estimates upon information obtained from publicly available information from our competitors in the industry in which we operate. TABLE OF CONTENTS The following table lists our concessions by country, together with their commencement date and extension details (if any): Country Concession CAAP Effective Ownership Number of Airports Concession Start Date Current Concession End Date Extension Details Argentina AA2000 81.3% 35(1) 1998 2028 Extendable for 10 years(2) NQN 74.1% 1 2001 2021 Extendable for 5 years(2) BBL 81.1% 1 2008 2033 Extendable for 10 years(2) Italy TA (SAT)(3) 51.1% 1 2006 (2014)(4) 2046 TA (ADF)(3) 51.1% 1 2003 (2014)(5) 2043 Brazil ICASGA 99.9%(6) 1 2012(7) 2040 5 years ICAB 51.0% 1 2012(8) 2037 5 years Uruguay Puerta del Sur 100.0% 1 2003 2033(9) CAISA 100.0% 1 1993 (2008)(10) 2019(11) Ecuador TAGSA 50.0% 1 2004 2024 ECOGAL 99.9% 1 2011 2026 Armenia AIA 100.0% 2 2002 2032 Option to renew every 5 years(12) Peru AAP(13) 50.0% 5 2011 2036 Extendable to 2071 Total 52 (1) Includes Termas de Rio Hondo Airport, which is operated by AA2000 but is pending certain regulatory approvals to be included in the AA2000 Concession Agreement. (2) Subject to certain terms and conditions, including governmental approval. (3) Both SAT and ADF have been merged into TA, of which we own a 51.1% equity interest. (4) We began operating the Pisa Airport in 2014. (5) We began operating the Florence Airport in 2014. (6) Our effective ownership is 99.97%. (7) The concession for the Natal Airport was awarded in August 2011, which became effective in January 2012. The Natal Airport began operating in June 2014. (8) We began operating the Brasilia Airport in December 2012. (9) Renegotiated extension in 2014. (10) We acquired the shares of CAISA in 2008. (11) We are currently in negotiations with the Uruguayan Government to extend the term of this concession. (12) Renewable at our sole discretion for an indefinite number of 5-year extension periods. (13) AAP s concession comprises six airports; however, we currently only operate five. TABLE OF CONTENTS The following table provides summary data on passenger traffic and total air traffic movements for our airports by segment for the nine-month period ended September 30, 2017, and the year ended December 31, 2016. Nine-Month Period Ended September 30, 2017 Year Ended December 31, 2016 Country Passenger Traffic Passenger Traffic Total Air Traffic Movements Total Air Traffic Movements Passenger Traffic Passenger Traffic Total Air Traffic Movements Total Air Traffic Movements (in millions) (% of total) (in thousands) (% of total) (in millions) (% of total) (in thousands) (% of total) Argentina 27.5 48.1% 314.1 49.3% 32.6 45.4% 393.1 47.0% Italy 6.3 11.0% 61.2 9.6% 7.5 10.5% 76.2 9.1% Brazil 14.3 25.1% 138.1 21.7% 20.4 28.3% 198.8 23.8% Uruguay 1.7 3.1% 27.0 4.2% 2.0 2.8% 32.4 3.9% Ecuador(1) 3.1 5.5% 60.1 9.4% 4.2 5.9% 87.6 10.5% Armenia 1.9 3.4% 16.0 2.5% 2.1 2.9% 18.7 2.2% Peru(2) 2.3 4.0% 20.9 3.3% 3.0 4.2% 29.6 3.5% Total 57.1 100.0% 637.3 100.0% 71.8 100.0% 836.4 100.0% (1) We do not consolidate the operations of our associate ECOGAL; however, we have included 100% of the operational information of ECOGAL with respect to passenger traffic and aircraft movements in this table. (2) We do not consolidate the operations of our associate AAP; however, we have included 100% of the operational information of AAP with respect to passenger traffic and aircraft movements in this table. Sources of Revenue We charge fees to departing passengers and landing and parking fees to aircraft operators for the use of our premises and for certain aeronautical services. These fees for aeronautical services are typically regulated under each airport s concession agreement. We also earn revenue from commercial services, including warehouse usage, duty free, retail and food and beverage shops, advertising and parking fees, as well as other sources. Fees for commercial services are typically not regulated under our concession agreements. Under the International Financial Reporting Interpretation Committee 12 Service Concession Arrangements ( IFRIC 12 ), our construction activities (including development of new infrastructure and improvements to existing infrastructure) require that we recognize construction service revenue and costs during the construction period by stage of completion method. See Management s Discussion and Analysis of Financial Condition and Results of Operations Our Revenue from Continuing Operations Construction Service Revenue. The following table summarizes our sources of revenue on a consolidated basis for the nine-month periods ended September 30, 2017 and 2016, and for the years ended December 31, 2016 and 2015: For the Nine-Month Period Ended September 30, For the Year Ended December 31, 2017 (Unaudited) 2016 (Unaudited) 2016 2015 (in millions of U.S.$) (% of Total Revenue) (in millions of U.S.$) (% of Total Revenue) (in millions of U.S.$) (% of Total Revenue) (in millions of U.S.$) (% of Total Revenue) Aeronautical revenue 575.1 49.6% 495.6 50.5% 673.5 49.3% 543.2 45.8% Non-aeronautical revenue Commercial revenue 409.7 35.4% 383.7 39.1% 522.2 38.2% 459.7 38.7% Construction service revenue 172.3 14.9% 99.4 10.1% 165.1 12.1% 178.4 15.0% Other revenue 1.3 0.1% 3.2 0.3% 5.6 0.4% 5.7 0.5% Total consolidated revenue 1,158.5 100.0% 981.9 100.0% 1,366.3 100.0% 1,187.1 100.0% TABLE OF CONTENTS The following chart summarizes total revenues by segment for the nine-month periods ended September 30, 2017 and 2016, and for the years ended December 31, 2016 and 2015. For the Nine-Month Period Ended September 30, For the Year Ended December 31, 2017 (Unaudited) 2016 (Unaudited) 2016 2015 (in millions of U.S.$) (in millions of U.S.$) Argentina Aeronautical revenue 318.8 262.4 366.1 309.9 Non-aeronautical revenue Commercial revenue 249.4 238.0 320.8 323.0 Construction service revenue 161.6 93.2 153.9 151.0 Other revenue Total revenue 729.7 593.7 840.9 783.9 Italy Aeronautical revenue 82.2 77.7 99.2 96.5 Non-aeronautical revenue Commercial revenue 24.2 22.3 29.5 29.0 Construction service revenue 8.9 4.3 8.0 21.4 Other revenue 1.3 3.1 4.7 5.7 Total revenue 116.6 107.5 141.3 152.7 Brazil(1) Aeronautical revenue 49.4 44.2 60.6 0.4 Non-aeronautical revenue Commercial revenue 46.7 46.2 65.6 0.4 Construction service revenue Other revenue 0.9 Total revenue 96.1 90.4 127.0 0.8 Uruguay Aeronautical revenue 42.3 36.4 47.7 43.5 Non-aeronautical revenue Commercial revenue 39.9 35.7 47.2 47.0 Construction service revenue 1.8 1.7 2.9 2.6 Other revenue Total revenue 84.0 73.9 97.8 93.1 Ecuador(2) Aeronautical revenue 47.8 46.5 61.9 57.3 Non-aeronautical revenue Commercial revenue 16.6 17.5 23.4 21.8 Construction service revenue Other revenue Total revenue 64.5 64.0 85.3 79.0 Armenia Aeronautical revenue 34.6 28.4 38.1 35.6 Non-aeronautical revenue Commercial revenue 32.3 23.9 34.9 35.7 Construction service revenue 0.1 0.1 0.2 3.4 Other revenue Total revenue 67.0 52.4 73.2 74.7 TABLE OF CONTENTS For the Nine-Month Period Ended September 30, For the Year Ended December 31, 2017 (Unaudited) 2016 (Unaudited) 2016 2015 (in millions of U.S.$) (in millions of U.S.$) Unallocated Aeronautical revenue Non-aeronautical revenue Commercial revenue 0.6 0.1 0.8 2.9 Construction service revenue Other revenue Total revenue 0.6 0.1 0.8 2.9 Total consolidated revenue for all segments(3) 1,158.5 981.9 1,366.3 1,187.1 (1) For the year ended December 31, 2015, our revenue in Brazil includes consolidated revenue as from the dates of the acquisitions of ICASGA and Inframerica. See Brazilian Consolidation. (2) We account for the results of operations of ECOGAL using the equity method. (3) We account for the results of operations of AAP using the equity method. Main Customers Main Aeronautical Customers The following table sets forth our main aeronautical customers for the nine-month periods ended September 30, 2017, and 2016, and for the years ended December 31, 2016 and 2015, based on total combined consolidated aeronautical revenue. For the Nine-Month Period Ended September 30, For the Year Ended December 31, 2017 (Unaudited) 2016 (Unaudited) 2016 2015 Main Aeronautical Customers (in millions of U.S.$) % of Total Aeronautical Revenue (in millions of U.S.$) % of Total Aeronautical Revenue (in millions of U.S.$) % of Total Aeronautical Revenue (in millions of U.S.$) % of Total Aeronautical Revenue LATAM Airlines Group 133.8 23.3% 111.1 22.4% 153.2 22.8% 105.1 19.3% Grupo Aerol neas Argentinas 94.5 16.4% 73.0 14.7% 102.3 15.2% 93.1 17.1% Gol Transportes A reos 42.1 7.3% 36.4 7.4% 49.9 7.4% 27.9 5.1% American Airlines 25.9 4.5% 24.3 4.9% 33.8 5.0% 28.0 5.2% Avianca 30.9 5.4% 23.7 4.8% 33.2 5.0% 22.8 4.2% Ryanair Ltd 25.7 4.5% 25.1 5.1% 32.0 4.8% 32.1 5.9% Copa 18.6 3.2% 17.5 3.5% 23.1 3.4% 19.8 3.6% Air France 12.0 2.1% 11.7 2.4% 20.9 3.1% 20.5 3.8% Lufthansa Group 15.4 2.7% 14.6 2.9% 19.4 2.9% 21.4 3.9% Others 176.3 30.7% 158.3 31.9% 205.5 30.5% 172.5 31.8% Total 575.1 100.0% 495.6 100.0% 673.5 100.0% 543.2 100.0% TABLE OF CONTENTS Main Commercial Customers The following table sets forth our main commercial customers based on total consolidated commercial revenue at our airports for the nine-month periods ended September 30, 2017 and 2016, and the years ended December 31, 2016 and 2015. For the Nine-Month Period Ended September 30, For the Year Ended Decmeber 31, 2017 (Unaudited) 2016 (Unaudited) 2016 2015 Main Commercial Customers (in millions of U.S.$) % of Total Commercial Revenue(1) (in millions of U.S.$) % of Total Commercial Revenue(1) (in millions of U.S.$) % of Total Commercial Revenue(1) (in millions of U.S.$) % of Total Commercial Revenue(1) Dufry 50.9 12.4% 49.9 13.0% 71.2 13.6% 70.5 15.3% Grupo Aerol neas Argentinas 7.5 1.8% 8.0 2.1% 10.6 2.0% 13.1 2.8% Gate Gourmet 7.3 1.8% 5.8 1.5% 8.1 1.6% 9.1 2.0% Aerofuels Overseas 7.7 1.9% 3.7 1.0% 5.7 1.1% 7.6 1.7% JCDecaux do Brasil S.A. 4.1 1.0% 3.7 1.0% 5.4 1.0% Intercargo S.A.C. 4.3 1.1% 3.8 1.0% 5.2 1.0% 5.1 1.1% International Meal Company Alimenta 1.0 0.2% 3.5 0.9% 4.5 0.9% Sita Information Networking 3.6 0.9% 3.0 0.8% 4.1 0.8% 3.9 0.9% Petrobras 3.0 0.7% 2.7 0.7% 3.9 0.8% 0.4 0.1% Others 320.3 78.2% 299.6 78.1% 403.4 77.3% 350.0 76.1% Total 409.7 100.0% 383.7 100.0% 522.2 100.0% 459.7 100.0% (1) Based on the percentage of total commercial revenue invoiced by us (net of value added tax). Our Strengths Largest private sector airport operator by number of airports with an extensive track record of acquiring and developing airports. Today, we operate 52 airports in seven countries. Since commencing operations in 1998, we have acquired more than 10 different concessions through public tender processes or through negotiated private acquisition transactions. We acquired many of our airport concessions through a public tender process and, in most cases, we significantly improved the infrastructure through large capital expenditure programs once we acquired the concessions. We believe our extensive track record and operating experience will be a key advantage when competing for future concessions. When bidding on new concessions, we create multi-functional teams with experience across many disciplines: corporate development, airport design, aeronautical and commercial services, governmental affairs, legal and finance. These in-house capabilities allow us to quickly analyze and prepare concession bids and negotiate agreements that are highly responsive to the particular needs and desires of the entities offering the concessions while also extracting the maximum value from concession terms. Our flexible and disciplined approach to acquiring new concessions provides a competitive advantage when evaluating new concession opportunities. We begin by forecasting passenger growth through an evaluation of the demographics and traveling and spending habits of the passengers in a given region. We only proceed with a bid submission once all aspects of a concession have been analyzed (regulatory, legal, financial, etc.) and have cleared our internal investment committee and return benchmarks. Once we acquire a concession, TABLE OF CONTENTS our deep operational know-how allows us to maximize passenger flow and determine the optimal mix of retail and food and beverage stores in the airport, while also identifying operating inefficiencies in an effort to reduce costs. We also evaluate the capital structure of each concession on an ongoing basis. Deep know-how in the operation of airports and the development and design of state-of-the-art infrastructure. We are experienced airport operators, which enables us to undertake detailed analysis of terminal capacity and expansion, and attract new routes to underserved markets. We also maintain a very active dialogue with airlines to promote new routes or increase frequencies. We seek to optimize our aircraft movements to minimize time on the ground, reduce connection times and minimize delays. Additionally, we have the experience and personnel to undertake operations such as handling, cargo and fueling. With our experience in airport design and operations, we formulate a plan around optimizing passenger flow to maximize customer satisfaction and revenue per passenger. We then use our operational benchmarks and financial experience to determine future costs and potential returns. We always integrate the regulatory dynamics and requirements into our analysis. We also work closely with our retail operators to determine the optimal composition of stores and brands that best suits the passenger profile of a given airport. The layout of our retail concessions and passenger flow is designed to increase revenue opportunities throughout our airports. We also have experience in growing other sources of revenues such as advertising, VIP lounges and vehicle parking. Additionally, we have developed our own set of key performance indicators ( KPIs ), that we use to monitor our operations for cost reductions and opportunities to increase commercial revenues. The airports we operate service many of the largest airlines in the world including Delta Air Lines, American Airlines, Lufthansa, Iberia, Air France, LATAM Airlines and GOL Transportes A reos, as well as low cost carriers such as Ryanair, among others. We continuously invest in developing and improving our airports infrastructure. We have developed and constructed state-of-the-art airports such as the Carrasco Airport, the Guayaquil Airport, the Natal Airport and the Zvartnots Airport, and added state-of-the art infrastructure to already existing airports such as Ezeiza Airport, where we added a new 66,000 square meter terminal, and Brasilia Airport, where we added 53,000 square meters in terminal space. Our CEO, Mart n Eurnekian, has overseen our growth since 1998 when we managed 33 airports in Argentina to today s portfolio of 52 airports across seven countries. We have country-level CEOs serving in each country in which we operate and have devised systems to ensure best practices are shared across our operations. We believe our management s extensive operating experience will allow us to continue to grow the business both organically and through acquisitions. Diversified airport portfolio positioned in key geographic markets with compelling fundamentals and growing passenger traffic. We have experience operating a diverse airport portfolio across a wide range of geographies. We operate international, regional, mid-size, domestic and tourist airports in major cities across seven countries in Latin America, Europe and Eurasia. In Argentina, we oversee the operation of 37 airports. In Italy, we operate the Florence and Pisa Airports in Tuscany, one of the top tourist regions in the country. In Brazil, we operate the capital city airport, Brasilia Airport, which is one of the main domestic airports for three of the four largest Brazilian airlines. In Uruguay, we operate the Carrasco Airport nearby the country s capital, Montevideo. In Ecuador, we operate the second largest airport in the country in the most populous city in Ecuador, Guayaquil. In Armenia, we operate the Zvartnots Airport, located in the country s capital, Yerevan, which serves as the only access gateway point in the country for international air travel. We operate five regional airports in southern Peru. The airports we operate are situated in countries with compelling macroeconomic trends and in key cities within those countries. GDP is an important driver of air passenger traffic. In the countries in which we operate, the average projected real GDP growth rate from 2017E 2021E is 2.2% according to each country s official public data and other public data sources. According to the Airbus Global Market Forecast 2016 2035, Sabre Corporation and IHS, the average trips per capita for passengers in the seven countries in which we operate in 2016 was 0.51. As compared to 1.82 trips per capita in the United States in 2016, this TABLE OF CONTENTS represents an opportunity to further penetrate the markets in which we operate by increasing per capita travel frequency. Additionally, a country s rising middle class creates the opportunity for increased passenger traffic. Throughout our portfolio, we have exposure to countries with growing middle classes and increasing income per capita. According to The Brookings Institution, the middle class as a percentage of total population from 2005 to 2025 is expected to increase in all of the Latin American countries in which we operate as well as in Armenia. Leading airport operator and concessionaire in Argentina, Uruguay and Armenia, which are markets with significant de facto barriers to entry. We are the primary airport concessionaire in Argentina and have served over 90.0% of Argentina s passenger air traffic in each year since we acquired the AA2000 Concession Agreement. The airports we operate serve major metropolitan areas in 22 of the 23 Argentine provinces. We operate the two largest airports in Argentina, Ezeiza Airport and Aeroparque Airport. Ezeiza Airport, a large international airport in Buenos Aires, handled 7.4 million passengers in the nine-month period ended September 30, 2017 (9.8 million passengers in the year ended December 31, 2016). Aeroparque Airport, a large domestic airport, handled 10.2 million passengers in the nine-month period ended September 30, 2017 (11.7 million passengers in the year ended December 31, 2016). We also operate key domestic airports such as Cordoba, Bariloche and Mendoza. We have invested over U.S.$1.5 billion in construction, expansion and remodeling of terminals, platform construction, and construction and repaving of runways and taxiways at our airports in Argentina. Our operations in Uruguay consist of the two main airports receiving commercial flights: Carrasco Airport and Punta del Este Airport. Carrasco Airport is Uruguay s largest airport in terms of passenger traffic and serves as the country s primary gateway for international travel. We completed the development of a new 45,000 square meter terminal at Carrasco Airport in 2009 with 44 check-in positions, 8 gates for simultaneous boarding and capacity for 4.5 million passengers per year. During the nine-month period ended September 30, 2017, our operations in Uruguay served a total of 1.7 million passengers (2.0 million passengers in the year ended December 31, 2016). In Armenia, we own the concession to operate the only two operating airports for scheduled commercial flights in the country: Zvartnots Airport and Shirak Airport. Zvartnots Airport is the primary point in the country for international aeronautical travel. Since we were awarded the concession in 2002, we have modernized Zvartnots Airport including a renovation of the runway and the development of a new 50,000 square meter terminal. During the nine-month period ended September 30, 2017, our operations in Armenia served a total of 1.9 million passengers (2.1 million passengers in the year ended December 31, 2016). In Argentina, Uruguay and Armenia, we handle the majority of all scheduled commercial flights. Additionally, we believe there are significant barriers to entry for competitors in these markets based upon the size of capital expenditures we have made to date and, in some cases, exclusivity rights granted to us in the relevant concession agreements. Scalable, diverse and adaptable platform with predictable cash flows and potential to support organic growth. Our scalable platform has the resources, personnel and experience to grow our current concessions. Many of the airports we currently operate have ample capacity available to accommodate incremental traffic with limited required capital expenditures. In certain airports, we are in the process of transformative growth opportunities such as the new runway and terminal at Florence Airport, a new departure and arrival lounge at Ezeiza Airport and an expanded commercial area at the Brasilia Airport that will be fully integrated with the existing terminal. Some of our concession agreements provide for a specified rate of return, which is typically achieved via adjustments of aeronautical fees throughout the concession period. These established concession terms provide us with visibility into our required expenditures. In each country where we operate, either the Chief Executive Officer or our local (or regional) government affairs director is responsible for managing the relationship with the government and other relevant agencies, and maintains local contact and dialogue TABLE OF CONTENTS with the local regulatory authorities. Our concession agreements are long-term agreements, typically at least 25 years. As of September 30, 2017, we have an average remaining life weighted by 2016 annual passenger traffic and ownership stake of 14.5 years under our concession agreements with several concessions offering potential for extensions such as AA2000 in Argentina, ICAB and ICASGA in Brazil, AIA in Armenia, CAISA in Uruguay and AAP in Peru. Our Strategy Leverage our scalable platform to support our organic growth as well as our global expansion strategy. We have created a global platform with operational expertise and resources to support our organic growth plan and our global expansion strategy. To manage our existing assets, we employ teams across architecture, aeronautical activities, commercial activities, corporate and project finance and accounting, legal and government affairs. These professionals possess the operational skills to manage all of our airport concessions as well as design and develop infrastructure for expansions at our airports. When bidding on new concessions, we create multi-functional teams of experts that include corporate development, aeronautical, commercial, finance, legal and design personnel. Our size and scale allows us to maintain all these resources in-house, thereby allowing us to address opportunities quickly and efficiently. We believe that having access to all of these in-house resources and expertise, across both geography and functional areas, provides us with a competitive advantage as we pursue our global expansion strategy. We will continue to seek additional attractive airport concessions both in our current markets and new markets where we can leverage our experience and local market knowledge. We also look for opportunities globally where we see markets that are underserved and where we can leverage our competitive operational strengths. Since 2009, we have analyzed and prequalified concession opportunities in Brazil, Chile, Greece, India, Italy, Jamaica, Mexico, Paraguay, Poland and Portugal, among others. Our substantial in-house resources allow us to quickly develop airport infrastructure expansion plans and business plans best suited to each unique location. We have the flexibility to adopt the most advantageous structure when bidding for a particular concession and have structured our prior concessions as outright owners as well as majority and minority partners. In addition, we may look for opportunities to enter into relationships with strategic partners in some of our existing concessions if we determine that such relationships would add value to our platform and enhance our growth prospects. Increase our revenues through improving our mix of airline customers and routes to increase passenger traffic. We undertake continuous and detailed analysis of our aviation markets in order to attract new routes or new airport strategies. We have long-standing relationships with all major airlines and airline alliances operating at our airports and maintain an active dialogue with them. We also analyze developments in aviation technology as new generations of airplanes with greater ranges that allow for new routes are introduced to the market. As we monitor the next generation of airplanes entering the market, we incorporate this analysis into our capital expenditure planning to create efficiencies and ensure we meet airlines demands. Maximize revenue growth in existing concessions through capital expenditure programs. We continuously look for opportunities to increase our revenue in strategic locations by developing new infrastructure, by increasing and optimizing passenger traffic and by expanding the commercial space at our concessions. We have the ability to increase air traffic demand through the construction, expansion and remodeling of terminals, the construction of platforms, new runways and taxiways, as well as attracting new routes to our existing facilities. For example, in Argentina, we completed an 88,000 square meter terminal and parking expansion at Aeroparque Airport and built a new 66,000 square meter passenger terminal at Ezeiza Airport. At the Brasilia Airport, we added 53,000 square meters in terminal space and 308,000 square meters in runway, platform and taxiway, which added 28 airport positions, 16 boarding gates and 24 check-in desks. At the Guayaquil Airport, we completed a 50,000 square meter terminal in 2006, which was expanded by 10,000 square meters in 2014. We believe that we have identified transformative growth opportunities at our Brasilia, Ezeiza and Florence Airports. At our Brasilia Airport, we are in the final development planning stages of a significant expansion of the terminal to accommodate additional commercial area, which will include retail stores, entertainment, TABLE OF CONTENTS a food court, upscale restaurants and services. In addition, at Ezeiza Airport, we are developing a project for the terminal area that includes new passenger buildings, apron expansions, new ground access and parking. The arrivals terminal and the departures terminals will accommodate extensive commercial areas, including duty free shops, retail stores, entertainment, restaurants, coffee shops and several other services. The development will significantly increase our ability to generate commercial revenues at the airport, as well as expand the capacity to accommodate future passenger growth. In partnership with the Italian Government, we have developed an investment plan for Florence Airport to invest U.S.$351.1 million in capital expenditures for intangible assets during the period from 2017 until 2022. The funds will be used to build a new 48,500 square meter terminal and 2,400 square meter runway to unlock Florence Airport s potential growth and accommodate greater passenger flow. In addition, the new terminal will offer 7,300 square meters of commercial space. We estimate these improvements will result in an increase in passenger flows and commercial spending per passenger as the new infrastructure will offer significantly larger commercial space and improved retail layout. In addition, we estimate Florence Airport will likely gain passengers from nearby airports such as Pisa and Bologna as well as from other main airports that function as an entryway to Italy (e.g., Rome and Venice). Optimize commercial revenue in our existing concessions without material amounts of capital expenditures. We derive revenue from a mix of both aeronautical and commercial services. For the nine-month period ended September 30, 2017, and the year ended December 31, 2016, 50.2% and 49.3%, respectively, of our total consolidated revenue were derived from aeronautical services and 35.0% and 38.2%, respectively, were derived from commercial services. The key driver of revenue is passenger traffic, as increased passenger traffic allows us to generate both aeronautical and commercial revenue. There are various initiatives we can implement to maximize revenues. At all of our concessions, we continuously look for ways to optimize commercial revenue from duty-free, retail and food and beverage vendors. We focus on increasing our commercial revenues at each airport by expanding our commercial space, optimizing the ideal mix and layout of retail, food and beverage operations, seeking additional advertising contracts, VIP lounges and car parking. Using our in-depth experience, we seek ways to optimize passenger flow throughout the airport. This includes creating increased exposure to commercial vendors and minimizing wait times throughout the airport. We work with all of our airport vendors to implement operational improvements such as technology-enabled ordering while waiting in line and improved product and design layout in order to maximize revenue. In some of our airports, we are also seeking to develop hotels and other real estate projects. Our scale and size allows us to attract high-quality subconcessions such as Hudson News, Starbucks Coffee, Hard Rock Caf and McDonald s. Improve operating efficiency and reduce costs by leveraging our experience and sharing innovations and improvements across our airports. We work closely with the airlines using our airports to maximize operational efficiency, minimize time on the ground and avoid flight delays. Also, as a result of our extensive experience operating airports of different types in diverse locations, we have developed a set of best practices and KPIs which can be shared across our current portfolio of airport concessions. In addition, we implement techniques such as zero-based budgeting practices and KPIs in order to continuously monitor costs to identify reduction opportunities. We ensure that these best practices are spread across our airports by regularly rotating our key management personnel into positions managing airports in different locations and by having them attend global management conferences. Our KPIs and expertise have allowed us to reduce operating costs while maintaining the same, high level of service to our passengers. Recent Developments We are in the process of finalizing our operational and financial results for the fourth quarter and for the year ended December 31, 2017. Based on preliminary information currently available to management, our preliminary estimate of total passengers for the year ended December 31, 2017 is approximately 37.3 million in Argentina, an increase of 14.3% from the 32.6 million recorded for the year ended December 31, 2016; 7.9 million in Italy, an increase TABLE OF CONTENTS of 5.2% from the 7.5 million recorded for the year ended December 31, 2016; 19.3 million in Brazil, a decrease of 5.1% from the 20.4 million recorded for the year ended December 31, 2016; 2.3 million in Uruguay, an increase of 11.9% from the 2.0 million recorded for the year ended December 31, 2016; 4.2 million in Ecuador, the same number of passengers as recorded for the year ended December 31, 2016; 2.4 million in Armenia, an increase of 15.0% from the 2.1 million recorded for the year ended December 31, 2016; and 3.1 million in Peru, an increase of 3.5% from the 3.0 million recorded for the year ended December 31, 2016. Based on these preliminary estimates, we expect our total passengers, in the aggregate, for the year ended December 31, 2017 to increase relative to the total passengers, in the aggregate, for the year ended December 31, 2016. Based on preliminary information currently available to management, we expect our total consolidated revenue for the year ended December 31, 2017 to increase relative to our total consolidated revenue for the year ended December 31, 2016, principally resulting from the increase in our consolidated total passengers. We have not completed the process of reviewing our operational and financial results for the year ended December 31, 2017 and thus, once completed, we may report financial results and/or operational results that could differ, and the differences could be material. Prior to the closing of this offering, the Selling Shareholder intends to approve a 1-to-10.12709504 reverse stock split of its common shares, consequently decreasing the outstanding common shares from 1,500,000,000 common shares to 148,117,500 common shares (the Reverse Stock Split ). The Reverse Stock Split will be implemented through a share capital reduction and a concurrent allocation of the reduced share capital amount to a non-distributable reserve account. The nominal value of U.S.$1.00 of each common share will not change as a result of the Reverse Stock Split. Our Corporate Information We are a public limited liability company (soci t anonyme) incorporated under, and governed by, the laws of Luxembourg. We are registered with the Trade and Companies Register in Luxembourg under the number 174.140. We were incorporated on December 14, 2012, under the name A.C.I. Airports International S. r.l. The name changed to Corporaci n Am rica Airports S.A. on September 14, 2017, upon conversion from a private limited liability company (soci t responsabilit limit e) to a public limited company (soci t anonyme). Our registered office is located at 4, rue de la Gr ve, L-1643, Luxembourg. Our phone number is +35226258274. Our corporate website is http://www.corporacionamericaairports.com. The information on our website is not part of, and is not incorporated into, this prospectus or the registration statement of which it forms a part. We have appointed Puglisi & Associates as our agent for service of process in the United States, located at 850 Library Avenue, Suite 204, Newark, Delaware 19711. Our Corporate and Ownership Structure Prior to this offering, we are 100% controlled by ACI Airports S. r.l., a holding company incorporated in Luxembourg, which is 100% owned by ACI Holding S. r.l., a holding company also incorporated in Luxembourg ( ACI Holding ). ACI Holding is a holding company that is 85.0% owned by Corporaci n Am rica International S. r.l. ( CAI ) and 15.0% owned by A.C.I. Investment S. r.l., both of which are holding companies incorporated in Luxembourg. CAI and A.C.I. Investment S. r.l. are both wholly-owned subsidiaries of Liska Investments Corp., a corporation incorporated under the laws of the British Virgin Islands ( Liska ). Liska is wholly-owned by SCF, a foundation created under the laws of Liechtenstein, which manages assets for the benefit of the foundation s beneficiaries. The potential beneficiaries of this foundation are certain members of the Eurnekian family as well as religious, charitable and educational institutions designated by the foundation s board of directors. The board of directors of the foundation is currently composed of six individuals and decisions are taken by majority vote. The board of directors has broad authority to manage the affairs of the foundation and to designate its beneficiaries and additional board members. We account for the results of operations of AAP and ECOGAL using the equity method in our Consolidated Financial Statements. TABLE OF CONTENTS Most of our operating subsidiaries have non-controlling interests, some of which are significant. The following diagram reflects a simplified summary of our organizational structure immediately following this offering: Risk Factors Investing in our common shares involves substantial risks. You should carefully consider all the information in this prospectus, including the information set forth under Risk Factors. If any of such risks occurs, our business, financial condition or results of operations could be materially and adversely affected. The market price of our common shares could decline if one or more of such risks or uncertainties actually occur, causing you to lose all or part of your investment in our common shares. TABLE OF CONTENTS
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+Prospectus Summary This summary highlights selected information appearing elsewhere or incorporated by reference in this prospectus and may not contain all of the information that is important to you. This prospectus includes or incorporate by reference information about our common stock as well as information regarding our business and detailed financial data. After you read this summary, you should read this prospectus in its entirety, including the information incorporated by reference in this prospectus, especially the section entitled "Risk Factors." If you invest in our securities, you are assuming a high degree of risk. Unless the context requires otherwise, in this prospectus the terms "IsoRay," the "Company," "we," "us," "our," and similar terms refer to IsoRay, Inc. and its operating subsidiary IsoRay Medical, Inc., and, to the extent applicable, its non-operating subsidiary, IsoRay International LLC. Business Overview In 2003, IsoRay obtained clearance from the Food and Drug Administration (FDA) for the use of Cesium-131 (Cesium-131) radioisotope in the treatment of all malignant tumors. As of the date of this Report, such applications include prostate cancer, brain cancer, breast cancer, colorectal cancer, gynecological cancer, lung cancer, liver cancer, ocular melanoma and pancreatic cancer. The brachytherapy seed form (a sealed source) of Cesium-131 may be used in surface, interstitial and intra-cavity applications for tumors with known radio-sensitivity. Management believes the combination of a short half-life and relatively high-energy of Cesium-131 will allow it to become a leader in the brachytherapy market, and Cesium-131 represents the first major advancement in brachytherapy technology in approximately 30 years with attributes that could make it the long-term "seed of choice" for internal radiation therapy procedures. The Company s core product is its Cesium-131 sealed source brachytherapy "seed." These seeds can be inserted individually or in combination into various locations in the body until the physician is satisfied with the radiation dose delivered. The Company also sells seeds in strands to keep them from individually moving and to allow the physician to put multiple seeds in a row as desired. In addition, "pre-loaded" needles may have Cesium-131 brachytherapy seeds inserted in them, or a strand with seeds in the strand, inserted into the needle. Seeds can also be loaded into suture material, which can be sewn by IsoRay into a piece of bio-absorbable mesh which can be sewn or stapled into tissue by the physician for use in lung, pelvic floor and other cancer locations. Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. PROSPECTUS IsoRay, Inc. 5,830,000 Shares of Common Stock This prospectus relates to the sale or other disposition from time to time of up to 5,830,000 shares of our common stock underlying warrants to purchase shares of our common stock by the persons (the "selling stockholders") identified in the section entitled "Selling Stockholders" in this prospectus, or their transferees. This registration does not mean that the selling stockholders will actually offer or sell any of these shares. We will not receive any proceeds from the sale or other disposition of the shares of common stock offered by the selling stockholders. However, we may receive up to $4,434,375 in gross proceeds, solely to the extent the warrants are exercised for cash. We will pay for the expenses of this offering which are estimated to be $15,000. Our common stock is listed on the NYSE American stock exchange under the symbol "ISR." On December 7, 2018, the last reported sale price of our common stock on the NYSE American stock exchange was $0.42 per share. Investing in our securities involves a high degree of risk. Before buying any securities, you should read the discussion of material risks of investing in our securities referred to under the heading "Risk Factors" beginning on page 24 of our annual report on Form 10-K for the fiscal year ended June 30, 2018, and on page 17 of our quarterly report on Form 10-Q for the quarterly period ended September 30, 2018, which are incorporated by reference. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense. Subject to Completion, dated December 10, 2018. Table of Contents Brachytherapy seeds are small devices containing a therapeutic dose of radiation used in an interstitial radiation procedure. The procedure has become one of the primary treatments for prostate cancer. The brachytherapy procedure places radioactive seeds as close as possible to (in or near) the cancerous tumor (the word "brachytherapy" is derived from Greek and means close therapy). A primary advantage of seed brachytherapy is the ability of the seeds to deliver therapeutic radiation thereby killing the cancerous tumor cells while minimizing exposure (damage) to adjacent healthy tissue. This procedure allows doctors to administer a higher dose of radiation directly to the tumor. A seed contains a radioisotope sealed within a titanium capsule. The number of seeds used varies based on the size of the cancerous area being treated, the isotope used and the activity level specified by the physician. When brachytherapy is combined with another treatment method (dual-therapy), fewer seeds are used in the procedure. The isotope decays over time (half-life) and eventually the seeds become inert (typically over 6 half-lives). The seeds may be used as a primary treatment (monotherapy) or as an adjunct therapy with other treatment modalities, or as treatment for residual disease after excision of primary tumors. The number of seeds for treatment sites vary widely (as few as 8 seeds to more than 100 seeds) depending on the type of cancer, the tumor location, the prescribed activity level and any additional type of therapy being utilized. In the cases of lung and brain tumors (and other solid tumors), a surgeon will remove the tumor if it is medically prudent and this offers the patient some benefit in terms of controlling the growth of the cancer or its symptoms. In many cases, radiation therapy is added following the surgery; this is known as "adjuvant" radiation therapy. The Company believes that its form of adjuvant radiation therapy deployable in such cases offers advantages over external beam methods. However, external beam holds the vast majority of the market for adjuvant radiation therapy. The FDA clearance granted in August 2009 to permit loading Cesium-131 seeds into bio-absorbable braided sutures or "braided strands" gives the Company the ability to treat brain, lung, head and neck, colorectal, and chest wall cancers. The Company has also received CE Mark clearance to commercially deliver Cesium-131 brachytherapy seeds that are pre-loaded into braided strands in Europe. This clearance permits the product to be commercially distributed in Europe for treatment of prostate, brain, lung, and head and neck tumors as well as tumors in other organs. Prostate Cancer IsoRay began the production and sales of Cesium-131 brachytherapy seeds in October 2004 for the treatment of prostate cancer after receiving clearance of its premarket notification (510(k)) by the Food and Drug Administration. Prostate cancer treatment represents over 85% of the business of IsoRay today. When brachytherapy is the only treatment (monotherapy) used in the prostate, approximately 70 to 120 seeds are permanently implanted in the prostate during an outpatient procedure. Typically, physicians use loose seeds in needles or in a cartridge or seeds loaded into strands which can also be loaded into needles from the treatment of prostate cancer. Seeds may be combined with another treatment method (dual therapy) when treating prostate cancer. In late 2017, the first report with long-term follow-up clinical outcomes for patients treated with Cesium-131 brachytherapy for low-risk patients was presented at the annual meeting of the American Society for Therapeutic Radiation Oncology. Moran, B. J. and M. H. Braccioforte (2017). Long-term PSA outcomes in a single institution, prospective randomized 131-Cs/125-I permanent prostate brachytherapy trial. Int J Radiat Oncol Biol Phys 99(2 (Suppl)): E255. In this randomized study of 140 patients no statistically significant difference in biochemical failure was seen with long-term follow-up between the Cesium-131 group and the group implanted with I-125. In addition to the long-term cancer control data mentioned above, a report from 2017 describes favorable long-term quality of life outcomes following Cesium-131 brachytherapy in the treatment of prostate cancer (S.M. Glaser, et al., Long-Term Quality of Life in Prostate Cancer Patients Treated With Cesium-131, Int J Radiat Oncol Biol Phys. 98(5):1053-1058 (2017)). The Company continues to identify and support work that seeks to employ and study Cesium-131 brachytherapy seeds in combination with external beam radiation therapy ("EBRT"). Compelling evidence is emerging supporting the use of such combination brachytherapy and EBRT in intermediate and high-risk prostate cancer cases. (Kwok, Y., et al. (2018). Recent advances in radiation oncology: multimodal targeting of high risk and recurrent prostate cancer. Curr Opin Oncol 30(3): 165-171). Table of Contents For low-risk prostate cancer, studies are ongoing to evaluate the use of Cesium-131 in "focal," or sub-total brachytherapy of the prostate. It is hypothesized that low-risk patients using focal brachytherapy may achieve rates of prostate cancer control comparable to that of full gland treatment while significantly reducing side effects. (M.H. Mendez, et al., Current trends and new frontiers in focal therapy for localized prostate cancer, Current Urology Report 16, 35 (June 2015)). Early results from a series of men treated with Cesium-131 focal therapy were presented at the 2018 Annual Meeting of the American Brachytherapy Society, Kalash, R., et al., (2018), Focal brachytherapy using Cesium-131 in low-risk prostate cancer. Brachytherapy 17 (Suppl):S89. The authors conclude that, while too early to estimate disease specific outcomes, serum PSAs in these men have declined in the short term and there was no residual effect on urinary, bowel or erectile symptoms. Gynecologic Cancer Individual seeds can also be placed via needle into the female reproductive tract for the treatment of various gynecologic cancers. This effort has been led by Dr. Jonathan Feddock, formerly of the University of Kentucky, and currently of Baptist Health Lexington. In June 2016, Dr. Feddock conducted two presentations on gynecological cancer patients who underwent treatment with permanent implantation of Cesium-131 brachytherapy seeds. In the first presentation, it was noted that 21 out of 26 recurrent cancer patients remained visually free of cancer at a median of 14 months after implantation which equates to 80.7% local control (J. Feddock, et al., Permanent interstitial re-irradiation with cesium-131: a highly successful second chance for cure in recurrent pelvic malignancies, Brachytherapy 15 (S1)S78-9 (2016)). In the second presentation, a series of 22 women with pelvic cancer underwent Cesium-131 brachytherapy seed implantation with other forms of radiation therapy treating patients who were recently diagnosed and had not yet undergone any treatment. All these cancers were successfully controlled at a median follow-up of 16 months. Side effects using the Cesium-131 brachytherapy seeds were minor and all treatments were performed as outpatient procedures. (J. Feddock, et al., Outpatient interstitial implants - integrating cesium-131 permanent interstitial brachytherapy into definitive treatment for gynecologic malignancies, Brachytherapy 15 (S1):S93-4 (2016)). Dr. Feddock and his team are continuing ongoing research. Brain and Head and Neck Cancer Starting in 2012, multiple institutions began utilizing Cesium-131 brachytherapy seeds loaded in braided strands for treatment of brain and head and neck cancers. The application of Cesium-131 brachytherapy seeds loaded in braided strands to date has been primarily in salvage cases as a treatment of last resort for brain and head cancers where aggressive tumors had reoccurred multiple times following standard of care treatment. From 2014 to 2016 there have been numerous published abstracts and society presentations which have been presented and support the effectiveness of treating very difficult and aggressive cancers with Cesium-131 in multiple body sites. Dr. Gabriella Wernicke s group, at Weill Cornell Medical College at the NY Presbyterian Hospital, published four papers on the efficacy, favorable side-effect profile and cost-effectiveness of Cesium-131 brachytherapy seeds in the treatment of metastatic brain cancer. (A. Pham, et al., Neurocognitive function and quality of life in patients with newly diagnosed brain metastasis after treatment with intra-operative cesium-131 brachytherapy: a prospective trial, J Neurooncol 127(1):63-71 (2016); A.G. Wernicke, et al., Surgical technique and clinically relevant resection cavity dynamics following implantation of cesium-131 brachytherapy in patients with brain metastases, Operative Neurosurgery 12(1):49-60 (2016); A.G. Wernicke, et al., Cesium-131 brachytherapy for recurrent brain metastases: durable salvage treatment for previously irradiated metastatic disease, J Neurosurg DOI: 10.3171/2016.3.JNS152836 (Published online June 3, 2016); A.G. Wernicke, et al., The cost-effectiveness of surgical resection and cesium-131 intraoperative brachytherapy versus surgical resection and stereotactic radiosurgery in the treatment of metastatic brain tumors, J Neurooncol 127(1):145-53 (2016)). At the same institution, Dr. Bhupesh Parashar has published two journal articles on the effectiveness of Cesium-131 brachytherapy seeds in the treatment of both head and neck and lung cancer. (B. Parashar, et al., Analysis of stereotactic radiation vs. wedge resection vs. wedge resection plus Cesium-131 brachytherapy in early stage lung cancer, Brachytherapy 14(5):648-54 (2015); A. Pham, et al., Cesium-131 brachytherapy in high risk and recurrent head and neck cancers: first report of long-term outcomes, J Contemp Brachytherapy 7(6):445-52 (2015).) In 2017, Dr. Wernicke s group published favorable results on a series of patients with large brain metastases treated with Cesium-131 in braided strands. A. G. Wernicke, et al., Clinical Outcomes of Large Brain Metastases Treated With Neurosurgical Resection and Intraoperative Cesium-131 Brachytherapy: Results of a Prospective Trial, Int J Radiat Oncol Biol Phys. 98 (5):1059-1068 (2017)). Table of Contents During fiscal 2013, the Company began providing technical assistance and selling Cesium-131 brachytherapy seeds for embedding in collagen tiles by physicians at Barrow Neurological Institute (Barrow) to treat malignant meningioma, primary brain cancers and metastases of cancers to the brain. From this a company was formed, GammaTile LLC, now GT Medical Technologies, Inc. ("GT Med Tech"), and further refined this technology which integrates Cesium-131 brachytherapy seeds and has resulted in the issuance of multiple patents to GT Med Tech for the treatment of brain cancers. In December 2014 and June 2016, physicians representing Barrow presented their findings at two society conferences for neuro-oncologists. Highlights of the presentation included a new treatment delivery system of Cesium-131 brachytherapy seeds to the brain while embedded in collagen tiles by applying directly to brain tissue after tumor removal. The trial presented included 16 patients with 20 tumors. The patients in the study had multiple reoccurrences of tumors following previous surgeries in conjunction with treatments with external beam radiation and had an increased risk for additional reoccurrences. Following treatment with Cesium-131, 95% of the treated tumors had no evidence of regrowth at the operative site (local control). The incidence of radiation side effects to the brain from Cesium-131 brachytherapy seeds (a common side effect) occurred in only 2 of the 20 treatments. (D. Brachman, Prospective trial of surgery and permanent intraoperative brachytherapy (S+BT) using a modular, biocompatible radiation implant for recurrent aggressive meningiomas, Society of Neuro-Oncology Conference on Meningioma, Toronto, Canada (June 18, 2016)). In November of 2016, Dr. Emad Youssef of the Barrow Neurological Institute presented a study conducted on 13 patients with recurrent high grade gliomas (primary brain cancer) at the annual meeting of the Society for Neuro-Oncology meeting. (E. Youssef, et al; Rthp-23. Cs131 Implants For Salvage Therapy Of Recurrent High Grade Gliomas (Hgg), Neuro-Oncology Volume 18, Issue suppl_6, 1 November 2016, Pages vi179). These patients were reported to have achieved a 92% rate of local control of their cancers during the follow-up interval. Due to the fact that the GammaTile treatment has displayed promising results in difficult to control recurrent brain cancers, the Company has collaborated with GT Med Tech, in filing applications to: the U.S. Food and Drug Administration (FDA) to clear GammaTile for clinical use; and a New Technology Add-on Payment to the Center for Medicare and Medicaid Services (CMS) seeking re-imbursement for the GammaTile treatment in the in-patient setting. The application with the FDA was cleared on July 6, 2018, however, the NTAP referenced herein is not currently under consideration. GT Med Tech re-filed the NTAP in October 2018 for the Federal Fiscal Year 2020, which begins October 1, 2019. In the meantime, CMS has allowed properly licensed medical centers to apply for re-imbursement under an existing Diagnostic Related Groups (DRG) code that allows partial recovery of the GammaTile treatment cost. The Company continues to work with GT Med Tech in preparation of a commercial launch of GammaTile by GT Med Tech, who is the sole commercial agent of the GammaTile Therapy. Our Corporate Information Our principal executive offices are located at 350 Hills Street, Suite 106, Richland, Washington 99354, and our telephone number is (509) 375-1202. We maintain a website at www.isoray.com. Information on or accessible through our website does not constitute part of this prospectus and should not be relied upon in connection with making any investment decision with respect to the securities offered by this prospectus. Although our predecessor operating company was organized in 1998, IsoRay, Inc. was incorporated in 1983 in Minnesota and operated under the name Century Park Pictures Corporation until the merger with IsoRay Medical, Inc. on July 28, 2005. On July 6, 2018, the Company received clearance for its 510(k) application required to commercialize the GammaTile system. The Company continues to work with GT Med Tech in preparation of a commercial launch of GammaTile by GT Med Tech, who is the sole commercial agent of the GammaTile Therapy. Table of Contents
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+PROSPECTUS SUMMARY 1
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+This summary highlights information included elsewhere and incorporated by reference in this prospectus and does not contain all of the information you should consider in making an investment decision. You should read this entire prospectus carefully, including the sections entitled Risk Factors, Special Note Regarding Forward-Looking Statements and Industry Data and Selected Historical Financial Information and the information in our filings with the Securities and Exchange Commission, or the SEC, incorporated by reference into this prospectus before making an investment decision regarding our common stock. Our Company Overview We are a consumer-centric, food- and agriculture-focused company. We are pioneering a paradigm shift to deliver healthier food ingredients, such as healthier oils and high fiber wheat, for consumers and crop traits that benefit the environment and reduce pesticide applications, such as disease tolerance, for farmers. We develop non-transgenic crops leveraging processes that occur in nature by combining our leading gene-editing technology and technical expertise with our innovative commercial strategy. While the traits that enable these characteristics may occur naturally and randomly through evolution or under a controlled environment through traditional agricultural technologies those processes are imprecise and take many years, if not decades. Our technology enables us to precisely and specifically edit a plant genome to elicit the desired traits and characteristics, resulting in a final product that has no foreign DNA. We believe the precision, specificity, cost effectiveness and development speed of our gene-editing technologies will enable us to provide meaningful disruption to the food and agriculture industries. Food-related issues, including obesity and diabetes, are some of the most prevalent health issues today and continue to grow rapidly. As awareness of diet-related health issues grows, consumers have emphasized a healthier lifestyle and a desire for nutritionally rich foods that are better tasting, less processed and more convenient. This trend is leading to an increase in the demand for higher valued, premium segments of the food industry, such as higher fiber, reduced gluten and reduced fat products. As a result of these trends, food companies are looking for specialty ingredients and solutions that can help them satisfy their customers evolving needs and drive growth in market share and new value-added products. Our first product candidate, which we expect to be commercialized by the end of 2018, is a high oleic soybean designed to produce a healthier oil that has increased heat stability with zero trans fats. Among our other product candidates are high fiber wheat and herbicide tolerant wheat. We are developing a high fiber wheat to create flour with up to three times more dietary fiber than standard white flour while maintaining the same flavor and convenience of use. Our high fiber wheat may provide benefits associated with a high fiber diet, including reduced risk of coronary heart disease. Our herbicide tolerant wheat is designed to provide farmers with better weed control options to increase yields. We believe each of these three product candidates addresses a multibillion dollar market opportunity. While food companies are focused on health and nutrition trends, we believe the legacy agriculture companies have overlooked society s food-related issues and are not properly equipped with a business model to address health-driven consumer food trends. These legacy agriculture companies have historically focused on increasing yields and volume to address population growth while increasing profit margins and market share by reducing input costs. They have been burdened by high research and development costs and a high degree of commoditization in their deep, farmer-focused supply chains. We believe that our proprietary gene-editing technologies and innovative commercial strategy will allow us to bridge the divide between evolving consumer preferences and the historical approach by the large legacy companies in the agriculture supply chain. Table of Contents The information in this preliminary prospectus is not complete and may be changed. We may not offer these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED MAY 15, 2018 PRELIMINARY PROSPECTUS Calyxt, Inc. 3,050,000 Shares of Common Stock We are offering 3,050,000 shares of our common stock. Our common stock is listed on the NASDAQ Global Market (the NASDAQ ) under the symbol CLXT. On May 14, 2018, the last reported sale price of our common stock on the NASDAQ was $17.09 per share. We are an emerging growth company as that term is defined in the Jumpstart Our Business Startups Act of 2012 and, as such, are subject to certain reduced public company reporting requirements. See Summary Implications of Being an Emerging Growth Company. Investing in our common stock involves a high degree of risk. See Risk Factors beginning on page 13. Per Share Total Public offering price $ $ Underwriting discounts $ $ Proceeds to us before expenses $ $ Cellectis S.A., which, as of March 31, 2018, owned 79.1% of our outstanding common stock, has indicated to us that it may choose to purchase additional shares of common stock in this offering. The shares, if any, would be purchased directly from Calyxt and not through the underwriters and there would be no payment of any underwriting discount. The underwriters have the option to purchase up to 457,500 shares of additional common stock from us at the public offering price less the underwriting discount within 30 days from the date of this prospectus. The underwriters expect to deliver the shares of common stock to purchasers on or about , 2018 through the book-entry facilities of The Depository Trust Company. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. Citigroup Goldman Sachs & Co. LLC Jefferies Wells Fargo Securities BMO Capital Markets The date of this prospectus is , 2018 Table of Contents Using our proprietary technologies and expertise, we edit the genome of food crops by using our molecular scissors to precisely cut DNA in a single plant cell, use the plant s natural repair machinery to make our desired edit and finally regenerate the single cell into a full plant. We believe we are able to develop targeted traits some of which would be nearly impossible to develop using traditional trait-development methods quicker, more efficiently and more cost effectively than traditional trait-development methods. Our technology positions us to assess the probability of success early on in the research and development process, potentially eliminating expensive late stage failures and allowing for a larger breadth of products to be developed. We have a strong track record with respect to our technologies and expertise as we have successfully edited more than 20 unique genes in 6 plant species since our inception in 2010. Our commercial strategy is centered on two core elements: developing healthier specialty food ingredients to enable the food industry to address evolving consumer trends and developing agriculturally advantageous traits with potential to protect the environment, such as potential to reduce pesticide applications, for farmers. This will involve developing and leveraging our supply chain to effectively bring our consumer- and environmentally conscious farmer-centric products to the marketplace. For our consumer-centric products we intend to repurpose and leverage existing supply chain capacity by contracting, tolling or partnering with players in the existing supply chain, such as seed production companies, farmers, crushers, refiners or millers, which we expect will allow us to apply our resources to maximizing innovation and product development while minimizing our capital expenditures and overhead. For our farmer-centric products, we intend to broadly out-license our products to the seed industry. Our Competitive Strengths We believe that we are strategically well-positioned to develop high-value and innovative products. Our competitive strengths include: Proprietary technologies creating a powerful platform to design and develop new products. Since our founding, we have been at the forefront of the research, development and application of plant-based gene-editing technologies. Our capabilities enable us to precisely edit specific genes from a target food crop to improve the nutritional composition or provide agricultural and environmental benefits to farmers. Three examples of our technological innovation include: High Oleic Soybean: We deactivated key genes associated with fatty acid biosynthesis to achieve a healthier soybean oil. High Fiber Wheat: We simultaneously deactivated all six copies of a gene within a single wheat plant with the purpose of increasing fiber content. Disease Resistant Wheat: We have achieved Powdery Mildew disease resistance in two wheat varieties, one spring and one winter. We were able to deactivate the same gene six times to achieve disease resistance in both varieties. We believe we can develop crop varieties that will be tolerant to certain diseases by identifying and making subtle edits, which we believe will be sufficient to confer disease tolerance. We expect to be able to replicate this process to combine multiple disease targets in wheat. Innovative portfolio of product candidates with an accelerated path to market. We are currently developing a diversified portfolio spanning across five core crops soybean, wheat, canola, potato and alfalfa and a multitude of product candidates. These include innovative consumer-centric product candidates like our high-fiber wheat that is designed to produce flour with up to three times the fiber content of standard white flour, as well as innovative, farmer-centric solutions like disease resistant wheat and products with valuable supply chain benefits like cold storable potatoes that are designed to store longer and produce much less acrylamide in the frying process, a human health concern that has been linked to cancer. We believe our portfolio of product candidates, coupled with our ability to quickly develop future product candidates, affords us the opportunity to disrupt the food industry. Table of Contents TABLE OF CONTENTS PAGE Summary 1
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+Prospectus Summary 1
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+This summary highlights material information appearing elsewhere in this prospectus. While this summary highlights what we consider to be the most important information about us, before investing in our common shares or ADSs, you should carefully read this prospectus and the registration statement of which this prospectus is a part in their entirety for a more complete understanding of our business and the global offering, including Risk Factors, Management s Discussion and Analysis of Financial Condition and Results of Operations, Unaudited Pro Forma Consolidated Financial Information and the related notes and our consolidated financial statements and related notes beginning on page F-1. Overview We are the largest private sector power generation company in Argentina, as measured by generated power, according to data from CAMMESA. In the nine-month period ended September 30, 2017, we generated a total of 12,239 net GWh of power, and in the year ended December 31, 2016, we generated a total of 15,544 net GWh of power, representing approximately 20% of the power generated by private sector generation companies in the country during each of these periods, according to data from CAMMESA. We had an installed generating capacity of 3,791 MW as of September 30, 2017. We have a generation asset portfolio that is geographically and technologically diversified. Our facilities are distributed across the City of Buenos Aires and the provinces of Buenos Aires, Mendoza, Neuqu n and R o Negro. We use conventional technologies (including hydro power) to generate power, and our power generation assets include combined cycle, gas turbine, steam turbine, hydroelectric and co-generation. The following table presents a brief description of the power plants we own and operate as of the date of this prospectus. Power plant Location Installed capacity (MW) Technology Puerto Nuevo(1) City of Buenos Aires 589 Steam turbines Nuevo Puerto(1) City of Buenos Aires 360 Steam turbines Puerto combined cycle(1) City of Buenos Aires 765 Combined cycle Luj n de Cuyo plant Province of Mendoza 509 Steam turbines, gas turbines, two cycles and mini-hydro turbine generator, producing electric power and steam La Plata plant(2) La Plata, Province of Buenos Aires 128 Co-generation plant producing electric power and steam Piedra del Aguila plant Piedra del Aguila (Limay River, bordering the provinces of Neuqu n and R o Negro) 1,440 Hydroelectric plant Total 3,791 MW (1) Part of the Puerto Complex as defined in Business. (2) On December 20, 2017, YPF EE accepted our offer to sell the La Plata plant, subject to certain conditions. For further information on the La Plata Plant Sale, see Recent Developments La Plata Plant Sale. Table of Contents The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the U.S. Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities, and we are not soliciting offers to buy these securities, in any jurisdiction where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED JANUARY 18, 2018 PRELIMINARY PROSPECTUS 354,865,808 Common Shares Central Puerto S.A. which may be represented by American depositary shares This is a public offering of our shares of common stock, par value Ps.1.00 per share and one vote per share (the common shares ), by the selling shareholders identified in this prospectus, who we refer to as the selling shareholders. The selling shareholders are offering 354,865,808 common shares in a global offering, which consists of: (i) an international offering in the United States and other countries outside Argentina and (ii) a concurrent offering in Argentina. The international offering of common shares is being underwritten by the international underwriters named in this prospectus (the international underwriters ), and such common shares, at the option of the international underwriters, may be represented by American depositary shares ( ADSs ). Each ADS represents ten common shares. In the Argentine offering, common shares are being offered by the selling shareholders to investors in Argentina through the Argentine placement agents named in this prospectus. The closings of the international and Argentine offerings are conditioned upon each other. We will not receive any proceeds from the sale of common shares by the selling shareholders. Our common shares are listed on the Bolsas y Mercados Argentinos S.A. (the BYMA ) under the symbol CEPU. On January 17, 2018, the last reported sales price of our common shares on the BYMA was Ps.45.50 per common share (equivalent to approximately US$24.14 per ADS based on the exchange rate on such date). Prior to this offering, no public market existed for the ADSs. The initial public offering price of the ADSs in the international offering is expected to be between US$17.50 and US$21.50 per ADS. After the pricing of this offering, we expect the ADSs to trade on the New York Stock Exchange (the NYSE ) under the symbol CEPU. Our common shares are publicly offered in Argentina and are registered with the Argentine securities regulator (the Comisi n Nacional de Valores). Neither the U.S. Securities and Exchange Commission (the Commission ) nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. Investing in the common shares and ADSs involves risks. See Risk Factors beginning on page 36 of this prospectus. Per ADS Per common share Total Public offering price US$ US$ US$ Underwriting discounts and commissions US$ US$ US$ Proceeds, before expenses, from the sale of common shares, and, if applicable, ADSs, to the selling shareholders US$ US$ US$ As part of the offering, one of the selling shareholders, Guillermo Pablo Reca, has granted the international underwriters the option for a period of 30 days from the date of this prospectus to purchase up to an additional 53,229,870 common shares from the selling shareholders at the initial public offering price paid by investors minus any applicable discounts and commissions, which common shares, at the option of the international underwriters, may be represented by ADSs. The common shares and ADSs will be ready for delivery on or about , 2018. Global Coordinators and Joint Bookrunners BofA Merrill Lynch JP Morgan Joint Bookrunner Morgan Stanley The date of this prospectus is , 2018. Table of Contents accounting principles in Argentina. The term GDP refers to gross domestic product and all references in this prospectus to GDP growth are to real GDP growth. The term CPI refers to the consumer price index, and the term WPI refers to the wholesale price index. Accounting terms have the definitions set forth under International Financial Reporting Standards ( IFRS ), as issued by the International Accounting Standards Board ( IASB ). We have not authorized anyone to provide any information other than that contained in this prospectus or in any free writing prospectus prepared by or on behalf of us or to which we may have referred you. We take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. Neither we, the selling shareholders, the international underwriters, the Argentine placement agents nor any of our or their affiliates have authorized any other person to provide you with different or additional information. Neither we, the selling shareholders, the international underwriters, the Argentine placement agents, nor any of our or their affiliates are making an offer to sell the ADSs or common shares in any jurisdiction where the offer or sale is not permitted. You should assume that the information appearing in this prospectus is accurate only as of the date on the front cover of this prospectus, regardless of the time of delivery of this prospectus or any sale of the ADSs or common shares. Our business, financial condition, results of operations and prospects may have changed since the date on the front cover of this prospectus. The distribution of this prospectus and the global offering and sale of the common shares and the ADSs in certain jurisdictions may be restricted by law. We, the selling shareholders and the international underwriters require persons into whose possession this prospectus comes to inform themselves about and to observe any such restrictions. This prospectus does not constitute an offer of, or an invitation to purchase, any of the common shares or ADSs in any jurisdiction in which such offer or invitation would be unlawful. The offering of ADSs is being made in the United States and elsewhere outside Argentina solely on the basis of the information contained in this prospectus. The selling shareholders are also offering common shares in Argentina using a Spanish-language informational filing that will be filed with the CNV. The Argentine informational filing is in a different format than this prospectus in accordance with CNV regulations but contains substantially the same information included in this prospectus. The common shares are publicly offered in Argentina and are registered with the CNV. No offer or sale of ADSs may be made to the public in Argentina except in circumstances that do not constitute a public offer or distribution under Argentine laws and regulations. This prospectus has been prepared on the basis that all offers of common shares and ADSs will be made pursuant to an exemption under the Prospectus Directive (Directive 2003/71/EC, as amended), as implemented in member states of the European Economic Area, or EEA , from the requirement to produce a prospectus for offers of the common shares and ADSs. Accordingly any person making or intending to make any offer within the EEA of common shares and ADSs which are the subject of the global offering contemplated in this prospectus should only do so in circumstances in which no obligation arises for the selling shareholders or any of the international underwriters or the Argentine placement agents to produce a prospectus for such offer. Neither the selling shareholders nor the international underwriters or Argentine placement agents have authorized, nor do they authorize, the making of any offer of common shares and ADSs through any financial intermediary, other than offers made by the international underwriters or the Argentine placement agents which constitute the global offering of common shares and ADSs contemplated in this prospectus. Table of Contents In addition, we participate in an arrangement known as the FONINVEMEM, which is managed by CAMMESA at the instruction of the Ministry of Energy. The prior Argentine government s administration created the FONINVEMEM with the purpose of repaying power generation companies, like us, the existing receivables for electric power sales between 2004 and 2011 and funding the expansion and development of new power capacity. As a result of our participation in this arrangement, we receive monthly payments for certain of our outstanding receivables with CAMMESA. In addition, we have an equity interest in the companies that operate the FONINVEMEM s new combined cycle projects, which will be entitled to take ownership of the combined cycle projects on a date ten years from the date of their initial operation. Under this arrangement, we began collecting our outstanding receivables from electric power sales from January 2004 through December 2007 from CAMMESA, denominated in U.S. dollars, over the ten-year period once the Termoel ctrica Jos de San Mart n S.A. ( TJSM ) and Termoel ctrica Manuel Belgrano S.A. ( TMB ) combined cycles became operational in March 2010. We also expect to begin to collect our outstanding receivables from electric power sales from January 2008 through December 2011 from CAMMESA, denominated in U.S. dollars, over the ten-year period once the CVOSA combined cycle plant becomes operational, which we expect will occur in the first quarter of 2018. See Business FONINVEMEM and Similar Programs and Our Competitive Strengths Strong cash flow generation, supported by U.S. dollar denominated cash flows for more information on FONINVEMEM. We hold equity interests in the companies that operate the following FONINVEMEM thermal power plants: Power plant Location Installed capacity (MW) Technology % Interest in the operating company(1) San Mart n Timbues, Province of Santa Fe 865 Combined cycle plant, which became operational in 2010 30.8752 % Manuel Belgrano Campana, Province of Buenos Aires 873 Combined cycle plant, which became operational in 2010 30.9464 % Vuelta de Obligado Timbues, Province of Santa Fe 816 Combined cycle plant expected to be operational during 1st quarter 2018 56.1900 % (1) In each case, we are the private sector generator with the largest ownership stake. After ten years operating each company, if all governmental entities that financed the constructions of such plants are incorporated as shareholders of TJSM, TMB and CVOSA, our interests in TJSM, TMB and CVOSA may be diluted. See Risk Factors Risks Relating to Our Business Our interests in TJSM, TMB and CVOSA may be significantly diluted. The following set of graphs shows our total assets under the FONINVEMEM program: 1 Enel includes Enel Generaci n Costanera S.A., Central Dock Sud S.A. and Enel Generaci n El Choc n S.A. Source: TJSM, TMB and CVOSA Table of Contents FORWARD-LOOKING STATEMENTS This prospectus contains estimates and forward-looking statements, principally in Summary, Risk Factors, Management s Discussion and Analysis of Financial Condition and Results of Operations and Business. Our estimates and forward-looking statements are mainly based on our current beliefs, expectations and estimates of future courses of action, events and trends that affect or may affect our business and results of operations. Although we believe that these estimates and forward-looking statements are based upon reasonable assumptions, they are subject to several risks and uncertainties and are made in light of information currently available to us. Many important factors, in addition to those discussed elsewhere in this prospectus, could cause our actual results to differ substantially from those anticipated in our forward-looking statements, including, among other things: changes in general economic, financial, business, political, legal, social or other conditions in Argentina; changes in conditions elsewhere in Latin America or in either developed or emerging markets; changes in capital markets in general that may affect policies or attitudes toward lending to or investing in Argentina or Argentine companies, including volatility in domestic and international financial markets; increased inflation; fluctuations in exchange rates, including a significant devaluation of the Argentine peso; changes in the law, norms and regulations applicable to the Argentine electric power and energy sector, including changes to the current regulatory frameworks, changes to programs established to incentivize investments in new generation capacity and reductions in government subsidies to consumers; our ability to develop our expansion projects and to win awards for new potential projects; increases in financing costs or the inability to obtain additional debt or equity financing on attractive terms, which may limit our ability to fund new activities; government intervention, including measures that result in changes to the Argentine labor market, exchange market or tax system; adverse legal or regulatory disputes or proceedings; changes in the price of energy, power and other related services; changes in the prices and supply of natural gas or liquid fuels; changes in the amount of rainfall and accumulated water; changes in environmental regulations, including exposure to risks associated with our business activities; risks inherent to the demand for and sale of energy; the operational risks related to the generation, as well as the transmission and distribution, of electric power; ability to implement our business strategy, including the ability to complete our construction and expansion plans in a timely manner and according to our budget; competition in the energy sector, including as a result of the construction of new generation capacity; exposure to credit risk due to credit arrangements with CAMMESA; our ability to retain key members of our senior management and key technical employees; Table of Contents The following map breaks down where our plants and power investments are located in Argentina and their installed capacity: (1) Plants under construction refers to (a) the wind farms Achiras and La Castellana, both of which are under construction and are expected to be finished in the second quarter of 2018; (b) the Luj n de Cuyo co-generation unit, which is under construction and is expected to be finished in the fourth quarter of 2019; (c) the Terminal 6 Plant, which is under construction and is expected to be finished in the second quarter of 2020; and (d) the wind farm Genoveva I, which is expected to be finished in the second quarter of 2020. (2) FONINVEMEM Plants refers to the plants Jos de San Mart n, Manuel Belgrano and Vuelta de Obligado that we expect to be transferred from FONINVEMEM trusts to the operating companies, TJSM, TMB and CVOSA, respectively, after the first ten years of operation as a result of the FONINVEMEM program and other similar programs. For a description of when we expect this transfer to occur and other information, see Business FONINVEMEM and Similar Programs. In the nine-month period ended September 30, 2017, we had revenues of Ps.5.72 billion (or US$0.33 billion), while in the year ended December 31, 2016, we had revenues of Ps.5.32 billion (or US$0.31 billion). In the nine-month period ended September 30, 2017, we sold approximately 93.25% of our electric power sales (in MWh) under the Energ a Base, while in the year ended December 31, 2016, we sold approximately 93.83% of our electric power sales (in MWh) under the Energ a Base. In the year ended December 31, 2016, Table of Contents our relationship with our employees; and other factors discussed under Risk Factors in this prospectus. The words believe, may, will, aim, estimate, continue, anticipate, intend, expect, forecast and similar words are intended to identify forward-looking statements. Forward-looking statements include information concerning our possible or assumed future results of operations, business strategies, financing plans, competitive position, industry environment, potential growth opportunities, the effects of future regulation and the effects of competition. Forward-looking statements speak only as of the date they were made, and we do not undertake any obligation to update publicly or to revise any forward-looking statements after we distribute this prospectus because of new information, future events or other factors, except as required by applicable law. In light of the risks and uncertainties described above, the forward-looking events and circumstances discussed in this prospectus might not occur and do not constitute guarantees of future performance. Because of these uncertainties, you should not make any investment decisions based on these estimates and forward-looking statements. Table of Contents tariffs under the Energ a Base were paid by CAMMESA based on a fixed and variable costs system which was determined by the former Secretariat of Electric Energy pursuant to Resolution SE No. 95/13, as amended. These tariffs were adjusted annually, denominated in pesos, and remained unchanged throughout the year. Sales under the Energ a Base accounted for 62.05% of our revenues in the nine-month period ended September 30, 2017 and 58.54% of our revenues for the year ended December 31, 2016. Since February 2017, the Energ a Base has been regulated by Resolution SEE No. 19/17, which replaced Resolution SE No. 95/13, as amended. Resolution SEE No. 19/17 increased the Energ a Base s tariffs and denominated them in U.S. dollars. Under the Energ a Base, the fuel required to produce the energy we generate is supplied by CAMMESA free of charge, and the price we receive as generators is determined by the Secretariat of Electric Energy without accounting for the fuel CAMMESA supplies. Our compensation under the Energ a Base depends to a large extent on the availability and energy output of our plants. Additionally, we have sales under contracts, including (i) term market sales under contract and (ii) Energ a Plus sales under contract. Term market sales under contract include sales of electric power under negotiated contracts with private sector counterparties such as YPF. Sales under contracts generally involve PPAs with customers and are contracted in U.S. dollars. The prices in these contracts include the price of fuel used for generation, the cost of which is assumed by the generator. For terms longer than one year, these contracts typically include electric power price updating mechanisms in the case of fuel price variations or the generator being required to use liquid fuels in the event of a shortage of natural gas. For more information regarding our main clients for term market sales under contract, see Business Our Customers. Term market sales under contract accounted for 4.32% and 4.55% of our electric power sales (in MWh) and 11.36% and 13.81% of our revenues for the nine-month period ended September 30, 2017 and the year ended December 31, 2016, respectively. In our Luj n de Cuyo plant, we are also permitted to sell a minor portion (up to 16 MW) of our generation capacity and electric power under negotiated contracts with private sector counterparties under the Energ a Plus, to encourage private sector investments in new generation facilities. Energ a Plus sales under contracts accounted for 0.57% and 0.35% of our electric power sales (in MWh) and 1.72% and 1.49% of our revenues for the nine-month period ended September 30, 2017 and the year ended December 31, 2016, respectively. These contracts typically have one- to two- year terms, are denominated in U.S. dollars and are paid in pesos at the exchange rate as of the date of payment. Under the rules and regulations of the Energ a Plus, the generator buys the fuel to cover the committed demand of electric power and supplies the electric power to large electric power consumers at market prices, denominated in U.S. dollars, previously agreed between the generator and its clients. See The Argentine Electric Power Sector. This year, we continued to sell a portion of electric power in the spot market under the regulatory framework in place prior to Resolution SE No. 95/13. The La Plata plant sells the energy in excess of the demand of its business partner, YPF, on the spot market through the Argentine Interconnection System ( SADI ) pursuant to such prior framework, and we are paid for such sales in pesos. Electric power sold on the spot market accounted for 1.86% and 1.97% of our electric power sold (in MWh) and 12.10% and 11.76% of our revenues for the nine-month period ended September 30, 2017 and the year ended December 31, 2016, respectively. See Management s Discussion and Analysis of Financial Condition and Results of Operations Electric Power Sold on the Spot Market. We also receive remuneration under Resolution No. 724/2008, relating to agreements with CAMMESA to improve existing power generation capacity, which is denominated in U.S. dollars and is paid in pesos at the exchange rate as of the date of payment. Revenues under Resolution No. 724/2008, accounted for 4.40% and 4.37% of our revenues for the nine-month period ended September 30, 2017 and the year ended December 31, 2016, respectively. See Management s Discussion and Analysis of Financial Condition and Results of Operations Electric Power Sold on the Spot Market. We also produce steam and have an installed capacity of 390 tons per hour. Steam sales accounted for 8.38% and 9.99% of our revenues for the nine-month period ended September 30, 2017 and the year ended Table of Contents PRESENTATION OF FINANCIAL AND OTHER INFORMATION Financial Statements We maintain our financial books and records and publish our consolidated financial statements (as defined below) in Argentine pesos, which is our functional currency. This prospectus contains our audited consolidated financial statements as of December 31, 2016 and 2015 and for the years then ended (our audited consolidated financial statements ). We prepare our financial statements in Argentine pesos and in conformity with the accounting rules established by the CNV, which as of the date hereof are in accordance with the IFRS as issued by the IASB. The audited consolidated financial statements included herein were approved by our board of directors (our Board of Directors ) on September 26, 2017 for purposes of inclusion in this prospectus. These financial statements give retroactive effect to the 2016 Merger (as defined below), which was a merger of companies under common control, accounted for at historical cost similar to a pooling of interest, to reflect the combination as if it had occurred from the beginning of the earliest period presented in the financial statements. For more information on the 2016 Merger, see Business History and Development of the Company. Because we qualify as an emerging growth company (an EGC ) as defined in Section 2(a)(19) of the U.S. Securities Act of 1933, as amended (the Securities Act ), we have elected to provide in this prospectus more limited disclosures than an issuer that would not qualify as an EGC would be required to provide by presenting two years of audited financial information instead of three years. Despite our election to present two years of audited financial information in this prospectus, we remind investors that we are required to file financial statements and other periodic reports with the CNV because we are a public company in Argentina. Investors can access our historical financial statements published in Spanish on the CNV s website at www.cnv.gob.ar. The information found on the CNV s website is not a part of this prospectus. Investors are cautioned not to place undue reliance on our financial statements not included in this prospectus. Our unaudited interim condensed consolidated financial statements as of September 30, 2017 and for the nine-month periods ended September 30, 2017 and 2016 (our interim condensed consolidated financial statements and, together with our audited consolidated financial statements, our consolidated financial statements ), in the opinion of management, include all adjustments (consisting of normal recurring adjustments) necessary to present fairly the information set forth in the interim condensed consolidated financial statements on a basis consistent with our audited annual financial statements included herein and in compliance with International Accounting Standard ( IAS ) 34, Interim Financial Reporting. Our unaudited pro forma financial information presented in this prospectus has been derived by the application of pro forma adjustments to the historical consolidated financial statements included elsewhere in this prospectus. The unaudited pro forma consolidated statement of financial position as of September 30, 2017 gives effect to the La Plata Plant Sale (as defined below) as if it had occurred on September 30, 2017. The unaudited pro forma consolidated statements of income for the nine-month period ended September 30, 2017 and for the years ended December 31, 2016 and 2015 give effect to the La Plata Plant Sale as if it had occurred on January 1, 2015. See Unaudited Pro Forma Consolidated Financial Information for a complete description of the adjustments and assumptions underlying the pro forma financial information included in this prospectus. We have determined that, as of the date of this prospectus, the Argentine peso does not qualify as a currency of a hyperinflationary economy according to the guidelines IAS 29, Financial Reporting in Hyperinflationary Economies, whereby financial information recorded in a hyperinflationary currency is adjusted by applying a general price index and expressed in the measuring unit (the hyperinflationary currency) current at the end of the reporting period. Therefore, the consolidated financial statements included herein were not restated in constant currency. For more information, see Management s Discussion and Analysis of Financial Condition and Results of Operations Factors Affecting our Results of Operations Inflation. Notwithstanding the above, in recent Table of Contents December 31, 2016, respectively. Our production of steam for the nine-month period ended September 30, 2017 was 2,141,365 metric tons. For the year ended December 31, 2016 our steam production was 2,823,373 metric tons. Our Luj n de Cuyo plant and La Plata plant, which YPF EE agreed to purchase from us subject to certain conditions, supply steam under negotiated contracts with YPF. Our Luj n de Cuyo plant has a combined heat and power (CHP) unit in place, which supplies 150 metric tons per hour of steam to YPF s refinery in Luj n de Cuyo under a steam supply agreement. This contract is denominated and invoiced in U.S. dollars, but can be adjusted in the event of variations in U.S. dollar-denominated prices for fuel necessary for power generation. In January 2018, we expect to sign an agreement to extend our steam supply agreement with YPF at our Luj n de Cuyo plant for a period of up to 24 months from January 1, 2019 under the same terms as our existing steam supply agreement. On December 15, 2017, we also executed a new steam supply contract with YPF for a period of 15 years that will replace our existing contract with YPF and will begin when the new co-generation unit at our Luj n de Cuyo plant begins operation, which is expected to occur in December 2018. For further information on the recent steam supply agreements with YPF for the Luj n de Cuyo plant, see Recent Developments Contracts with YPF for Steam Supply and CAMMESA for the Luj n de Cuyo project. The La Plata plant, which YPF EE agreed to purchase from us subject to certain conditions, has a steam-generating capacity of 240 metric tons per hour and supplies steam to YPF s refinery in La Plata. Under our contract with YPF related to the La Plata plant, YPF (i) must purchase electric power and all the steam produced by the La Plata plant until the contract, with respect to the supply of steam to YPF, has been extended for a period of five months from October 31, 2017, is terminated on the first of either the current contract termination date or the La Plata Plant Sale Effective Date, and (ii) is responsible for supplying us with all the necessary gas oil and natural gas for the operation of the plant and the water in the conditions required to be converted into steam. This contract is denominated and invoiced in U.S. dollars, but can be adjusted in the event of variations in U.S. dollar-denominated fuel prices for fuel necessary for power generation. On December 20, 2017, YPF EE accepted our offer to sell the La Plata plant, subject to certain conditions. For further information on the La Plata Plant Sale, see Recent Developments La Plata Plant Sale and Unaudited Pro Forma Consolidated Financial Information. Table of Contents years, certain macroeconomic variables affecting our business, such as the cost of labor, the exchange rate of the Argentine peso to the U.S. dollar and costs of sales associated with inputs necessary to run our business that are denominated in pesos, have experienced significant annual changes, which, although they may not surpass the levels established in IAS 29 are significant and should be considered in the assessment and interpretation of our financial performance reported in this prospectus. See Risk Factors Risks Relating to Argentina If the current levels of inflation do not decrease, the Argentine economy could be adversely affected. Argentine inflation could therefore affect the comparability of the different periods presented herein. Currency and Rounding All references herein to pesos, Argentine pesos or Ps. are to Argentine pesos, the legal currency of Argentina. All references to U.S. dollars, dollars or US$ are to U.S. dollars. All references to SEK$ are to Swedish krona. A billion is a thousand million. Certain figures included in this prospectus and in the consolidated financial statements contained herein have been rounded for ease of presentation. Percentage figures included in this prospectus have in some cases been calculated on the basis of such figures prior to rounding. For this reason, certain percentage amounts in this prospectus may vary from those obtained by performing the same calculations using the figures in this prospectus and in the consolidated financial statements contained herein. Certain other amounts that appear in this prospectus may not sum due to rounding. Exchange Rates Solely for the convenience of the reader, we have translated certain amounts included in this prospectus from pesos into U.S. dollars, unless otherwise indicated, using the seller rate for U.S. dollars quoted by the Banco de la Naci n Argentina for wire transfers (divisas) as of September 29, 2017, of Ps.17.31 per US$1.00. The Federal Reserve Bank of New York does not report a noon buying rate for pesos. The U.S. dollar equivalent information presented in this prospectus is provided solely for the convenience of the reader and should not be construed to represent that the peso amounts have been, or could have been or could be, converted into U.S. dollars at such rates or at any other rate. The exchange rate for U.S. dollars quoted by the Banco de la Naci n Argentina for wire transfers (divisas) on January 17, 2018 was Ps.18.85 to US$1.00. See Exchange Rates for information regarding exchange rates for pesos into U.S. dollars since 2012. Adjusted EBITDA In this prospectus, we define Adjusted EBITDA as net income for the year, plus finance expenses, minus finance income, minus share of the profit of associates, plus income tax expense, plus depreciation and amortization. We believe that Adjusted EBITDA, a non-IFRS financial measure, provides useful supplemental information to investors about us and our results. Adjusted EBITDA is among the measures used by our management team to evaluate our financial and operating performance and make day-to-day financial and operating decisions. In addition, Adjusted EBITDA is frequently used by securities analysts, investors and other parties to evaluate companies in our industry. We also believe that Adjusted EBITDA is helpful to investors because it provides additional information about trends in our core operating performance prior to considering the impact of capital structure, depreciation, amortization and taxation on our results. Adjusted EBITDA should not be considered in isolation or as a substitute for other measures of financial performance reported in accordance with IFRS. Adjusted EBITDA has limitations as an analytical tool, including: Adjusted EBITDA does not reflect changes in, including cash requirements for, our working capital needs or contractual commitments; Table of Contents The following graphs break down our revenues in the nine-month period ended September 30, 2017 and the year ended December 31, 2016 by regulatory framework: Source: Central Puerto Source: Central Puerto Table of Contents Adjusted EBITDA does not reflect our finance expenses, or the cash requirements to service interest or principal payments on our indebtedness, or interest income or other finance income; Adjusted EBITDA does not reflect our income tax expense or the cash requirements to pay our income taxes; although depreciation and amortization are non-cash charges, the assets being depreciated or amortized often will need to be replaced in the future, and Adjusted EBITDA does not reflect any cash requirements for these replacements; although share of the profit of associates is a non-cash charge, Adjusted EBITDA does not consider the potential collection of dividends; and other companies may calculate Adjusted EBITDA differently, limiting its usefulness as a comparative measure. We compensate for the inherent limitations associated with using Adjusted EBITDA through disclosure of these limitations, presentation of our consolidated financial statements in accordance with IFRS and reconciliation of Adjusted EBITDA to the most directly comparable IFRS measure, net income. For a reconciliation of our net income to Adjusted EBITDA, see Summary Financial and Operating Information. Market Share and Other Information The information set forth in this prospectus with respect to the market environment, market developments, growth rates and trends in the markets in which we operate are based on information published by the Argentine federal and local governments through the Instituto Nacional de Estad siticas y Censos (the National Statistics and Census Institute, or INDEC ), the Ministry of Interior, the Ministry of Energy, the Central Bank, Compa a Administradora del Mercado Mayorista El ctrico S.A. ( CAMMESA ), the Direcci n General de Estad stica y Censos de la Ciudad de Buenos Aires (General Directorate of Statistics and Census of the City of Buenos Aires) and the Direcci n Provincial de Estad stica y Censos de la Provincia de San Luis (Provincial Directorate of Statistics and Census of the Province of San Luis), as well as on independent third-party data, statistical information and reports produced by unaffiliated entities, such as well as on our own internal estimates. In addition, this prospectus contains information from (i) an industry report commissioned by us and prepared by Daniel G. Gerold of G&G Energy Consultants, an independent research firm, to provide information regarding our industry and the Argentine market and (ii) Vaisala, Inc. ( Vaisala - 3 Tier ), a company that develops, manufactures and markets products and services for environmental and industrial measurement. This prospectus also contains estimates that we have made based on third-party market data. Market studies are frequently based on information and assumptions that may not be exact or appropriate. Although we have no reason to believe any of this information or these sources are inaccurate in any material respect, neither we or the selling shareholders nor the international underwriters or Argentine placement agents have verified the figures, market data or other information on which third parties have based their studies, nor have we or they confirmed that such third parties have verified the external sources on which such estimates are based. Therefore, neither we or the selling shareholders nor the international underwriters or Argentine placement agents guarantee, nor do we or the selling shareholders or the international underwriters or Argentine placement agents assume responsibility for, the accuracy of the information from third-party studies presented in this prospectus. This prospectus also contains estimates of market data and information derived therefrom which cannot be gathered from publications by market research institutions or any other independent sources. Such information is based on our internal estimates. In many cases there is no publicly available information on such market data, for example from industry associations, public authorities or other organizations and institutions. We believe that Table of Contents The following graphs break down our electric energy sales in the nine-month period ended September 30, 2017 and the year ended December 31, 2016 by regulatory framework: Source: Central Puerto Source: Central Puerto As of the date of this prospectus, we have significant plans underway to expand our generating capacity through renewable energy projects, including our first three wind energy projects with expected generating capacity of 99 MW, 48MW and 86.8 MW. In 2016, we formed a subsidiary, CP Renovables S.A. ( CP Renovables ), to develop, construct and operate renewable energy generation projects. As of the date of this prospectus, we own a 70.19 % interest in CP Renovables. The remaining 29.81% interest is owned by Guillermo Pablo Reca. Table of Contents these internal estimates of market data and information derived therefrom are helpful in order to give investors a better understanding of the industry in which we operate as well as our position within this industry. Although we believe that our internal market observations are reliable, our estimates are not reviewed or verified by any external sources. These may deviate from estimates made by our competitors or future statistics provided by market research institutes or other independent sources. We cannot assure you that our estimates or the assumptions are accurate or correctly reflect the state and development of, or our position in, the industry. Table of Contents In 2015 and 2016, we acquired four heavy-duty, highly efficient gas turbines: (i) one GE gas turbine with a capacity of 373 MW; (ii) two Siemens gas turbines, each with a capacity of 298 MW; and (iii) one Siemens gas turbine with a capacity of 286 MW. Additionally, we have also acquired 130 hectares of land in the north of the Province of Buenos Aires, in a location that provides excellent conditions for fuel delivery and access to power transmission lines. We also own long-term significant non-controlling investments in companies that have utility licenses to distribute natural gas through their networks in the provinces of Mendoza, San Juan, San Luis, C rdoba, Catamarca and La Rioja. Taking into account direct and indirect interests, we hold (i) a 22.49% equity stake in DGCU and (ii) a 39.69% equity stake in DGCE (which we refer to together as Ecogas). Ecogas had a gas distribution network covering 30,976 km and served approximately 1,309,997 customers as of September 30, 2017. In the first nine months of 2017, Ecogas distributed an average of 14.89 million cubic meters of natural gas per day; and in 2016, Ecogas distributed an average of 14.45 million cubic meters of natural gas per day. This volume of distribution represented approximately 11.75% and 11.85% of the gas distributed in Argentina in the first nine months of 2017 and in the year ended December 31, 2016, respectively, according to data from Ente Nacional Regulador de Gas ( ENARGAS ). In the first nine months of 2017, our interest in Ecogas produced Ps.193.89 million in share of profit of an associate, which represented 9.33% of our net income for such period. In the year ended December 31, 2016, our interest in Ecogas produced Ps.110.66 million in share of profit of an associate, which represented 6.26% of our net income for the year. At a meeting of our shareholders on December 16, 2016, in accordance with the strategic objective of focusing on assets within the energy industry, the shareholders considered a potential sale of our equity interests in Ecogas to Magna Energ a S.A., but voted to postpone the decision. We are currently assessing various strategic opportunities regarding DGCU and DGCE, including a possible sale of our equity interest in them. Argentine Power Sector Argentina is in the process of significant political change, with the Macri administration, which assumed office on December 10, 2015, developing a series of measures designed to improve macroeconomic conditions and encourage new domestic and foreign investment. The Argentine government has taken several concrete actions, such as to: (i) facilitate access to international financing (including through agreements with hold-out creditors), (ii) limit the use of the Central Bank s foreign reserves to finance the government s debt repayments, (iii) substantially reduce foreign exchange controls and liberalize the exchange rate, (iv) implement a gradual fiscal deficit reduction plan, primarily through lowering public services subsidies, (v) focus on monetary policy to attempt to curb inflation with the aim of meeting certain progressive inflation reduction goals and (vi) substantially improve the legal and regulatory environment to facilitate business. The Argentine power and energy sectors, in particular, must grow to cover unsatisfied demand at peak times, and significant investments are needed in order to meet that challenge. The power market in Argentina is characterized by increasing demand for electric power, coupled with aging, inefficient generating capacity and high operating costs, which has created a very narrow supply and demand gap at peak times. In recent years, energy shortages have resulted in significant imports of power from neighboring countries. According to data from CAMMESA, during the historical peak demand experienced on February 24, 2017 (25.63 GW), imports of energy totaled 0.93 GW. Table of Contents CERTAIN DEFINITIONS In this registration statement, except where otherwise indicated or where the context otherwise requires: CAMMESA refers to Compa a Administradora del Mercado Mayorista El ctrico Sociedad An nima. See The Argentine Electric Power Sector General Overview of Legal Framework CAMMESA; CTM refers to Centrales T rmicas Mendoza S.A.; CVOSA refers to Central Vuelta de Obligado S.A.; Ecogas refers collectively to Distribuidora de Gas Cuyana ( DGCU ) and Distribuidora de Gas del Centro ( DGCE ); Energ a Base refers to the regulatory framework established under Resolution SE No. 95/13, as amended, and, since February 2017, regulated by Resolution SEE No. 19/17. See The Argentine Electric Power Sector; Energ a Plus refers to the regulatory framework established under Resolution SE No. 1281/06, as amended. See The Argentine Electric Power Sector Structure of the Industry Energ a Plus; FONINVEMEM refers to the Fondo para Inversiones Necesarias que Permitan Incrementar la Oferta de Energ a El ctrica en el Mercado El ctrico Mayorista (the Fund for Investments Required to Increase the Electric Power Supply). See The Argentine Electric Power Sector Structure of the Industry The FONINVEMEM and Similar Programs and Business FONINVEMEM and Similar Programs; HPDA refers Hidroel ctrica Piedra del guila S.A., the corporation that previously owned the Piedra del Aguila plant; La Plata Plant Sale refers to the sale, subject to certain conditions, of the La Plata plant to YPF EE. For further information on the La Plata Plant Sale, see Summary Recent Developments La Plata Plant Sale; La Plata Plant Sale Effective Date refers to the date on which the La Plata plant will effectively transfer to YPF EE, which will be the second business day after the conditions under the offer to YPF EE, dated as of December 15, 2017, are met. For more information on the La Plata Plant Sale Effective Date, see Summary Recent Developments La Plata Plant Sale; LPC refers to La Plata Cogeneraci n S.A., the corporation that previously owned the La Plata plant; LVFVD refers to liquidaciones de venta con fecha de vencimientos a definir, or receivables from CAMMESA without a fixed due date. See Business FONINVEMEM and Similar Programs; MULC refers to the foreign exchange market; sales under contracts refers collectively to (i) term market sales of energy under contracts with private sector counterparties and (ii) sales of energy sold under the Energ a Plus; the spot market refers to energy sold by generators to the WEM and remunerated by CAMMESA pursuant to the framework in place prior to the Energ a Base. See The Argentine Electric Power Sector Structure of the Industry Electricity Dispatch and Spot Market Pricing prior to Resolution SE No. 95/13; PPA refers to capacity and energy supply agreements with customers; YPF refers to YPF S.A., Argentina s state-owned oil and gas company; YPF EE refers to YPF Energ a El ctrica S.A., a subsidiary of YPF; and WEM refers to the Argentine Mercado El ctrico Mayorista, the wholesale electric power market. See The Argentine Electric Power Sector General Overview of Legal Framework CAMMESA. Table of Contents The chart below illustrates the demand for power capacity (net of shortages) versus the available supply of power capacity during five peak moments for each year between 2007 and 2017: Source: CAMMESA In 2003, the average annual available capacity totaled 21.07 GW, 46.7% higher than the peak demand of 14.36 GW for the year, while in 2016 the average annual available capacity was 27.35 GW (from total installed capacity of 33.9 GW largely as a result of aging, obsolete and unavailable machinery), 7.68% higher than the peak demand of 25.4 GW for such year, when consumption was limited by imposed restrictions. However, according to data from CAMMESA, during the peak demand of that year, experienced on February 12, 2016 (25.3 GW), imports of energy totaled 1.8 GW. This demand/supply gap is made more noteworthy considering that demand in 2015 and 2016 was affected by regulations requiring reduction of energy consumption. Without such regulations, we believe the peak demand would have exceeded the average available capacity by a larger margin. Additionally, during 2016, Argentina imported 1,470 GWh from neighboring countries. Table of Contents In the nine-month period ended September 30, 2017, the total power generation in Argentina was 102,654 GWh and the composition was 67.19% thermal, 27.11% hydroelectric, 3.84% nuclear and 1.86% wind and solar: Source: CAMMESA In 2016, the total power generation in Argentina was 136,599 GWh and the composition was 65.94% thermal, 26.50% hydroelectric, 5.62% nuclear and 1.95% wind and solar: Source: CAMMESA Table of Contents In the nine-month period ended September 30, 2017, the composition of installed generation capacity in Argentina, by technology, was as follows: Source: CAMMESA In 2016, the composition of installed generation capacity in Argentina, by technology, was as follows: Source: CAMMESA Table of Contents Increasing power supply to meet demand in Argentina is a key objective for the Argentine government. The country s installed capacity must increase considerably in order to replace the aging, obsolete generating units in the sector. The Minister of Energy has publicly noted the need for new energy-generating capacity, which he has stated should be addressed by new projects developed by the private sector. In this respect, the Minister of Energy has stated that the country needs to incorporate 20 GW of generating capacity, including 10 GW from conventional energy sources and 10 GW from renewable sources, in order to meet current and increasing demand over the next ten years. To address the Argentine economic crisis of 2001 and 2002, the former Argentine government adopted regulations that had significant effects on power generation, distribution and transmission companies and included the effective freezing of tariffs, the revocation of adjustment and inflation indexation mechanisms for tariffs, a limitation on the ability of electric power distribution companies to pass on to the consumer increases in costs and the introduction of a new price-setting mechanism in the WEM, which had a significant impact on electric power generators and caused substantial price differences within the market. Such strict regulation and government intervention represented an obstacle to the development of the electric power sector. The current Argentine government has begun implementing fundamental reforms that we believe will improve the long-term sustainability of the power sector, including the reduction of certain government subsidies affecting public utilities. On December 16, 2015, the Argentine government declared a state of emergency with respect to the national electric power system which remained in effect until December 31, 2017. The state of emergency allowed the Argentine government to take actions designed to guarantee the supply of electric power in Argentina, such as instructing the Ministry of Energy to elaborate and implement a coordinated program to guarantee the quality and security of the electric power system and rationalize public entities consumption of energy. Additionally, in March 2016, the Secretariat of Electric Energy enacted Resolution SEE No. 22/16, through which it increased the electric power prices for the sale of energy by generation companies under the Energ a Base. Following the tariff increases, preliminary injunctions suspending such increases were requested by customers, politicians and non-governmental organizations and were granted by Argentine courts, but subsequently denied by the Supreme Court, arguing formal objections and procedural defects. As of the date of this prospectus, increases of the electric power end-users tariffs are not suspended. For further details, see The Argentine Electric Power Sector Remuneration Scheme The Previous Remuneration Scheme, Management s Discussion and Analysis of Financial Condition and Results of Operations Factors Affecting Our Operations The Energ a Base and Risk Factors Risks Relating to the Electric Power Sector in Argentina The Argentine government has intervened in the electric power sector in the past, and is likely to continue intervening. On January 27, 2017, the Secretariat of Electric Energy enacted Resolution SEE No. 19/17, substantially amending the tariff scheme applicable to the Energ a Base, which was previously governed by Resolution SEE No. 22/16. Among its most significant provisions, such resolution established: (i) that generation companies would receive a remuneration of electric power generated and available capacity; (ii) gradual increases in tariffs to become effective as of February, May and November 2017; (iii) that the new tariffs would be denominated in U.S. dollars, instead of Argentine pesos, thus protecting generation companies from potential fluctuations in the value of the Argentine peso; and (iv) that 100% of the energy sales would be collected in cash by generators, eliminating the creation of additional LVFVD receivables. For further details, see The Argentine Electric Power Sector Remuneration Scheme The Current Remuneration Scheme and Risk Factors Risks Relating to the Electric Power Sector in Argentina The Argentine government has intervened in the electric power sector in the past, and is likely to continue intervening. Table of Contents Furthermore, the current administration has established public bidding processes for the development of new generation projects from both thermal and renewable sources: Thermal bidding processes Pursuant to Resolution SEE No. 21/16, the Secretariat of Electric Energy called for bids to install new thermal generation units to become operational between Summer 2016/2017 (some of which are now operational) and Summer 2017/2018. The power generation companies awarded the bids entered into a PPA with CAMMESA, denominated in U.S. dollars, and electric power and capacity from these units will be remunerated at the price indicated in the bid and under the terms established in Resolution SEE No. 21/16. Pursuant to Resolution SEE No. 287-E/17, the Argentine government called for proposals for the supply of electric power to be generated through existing units, the conversion of open combined cycle units into closed combined cycle units or the installation of co-generation units. The main objectives behind this process were to (i) increase the supply of electric power generation from thermal generation units and (ii) strengthen the reliability of the Argentine electric power system with efficient generation units that have their own permanent and guaranteed fuel supply thus reducing the need for electric transportation and lowering the costs of the Argentine government and the WEM. Renewable sources bidding process RenovAR Programs Rounds 1 and 1.5: The Secretariat of Electric Energy also called for bids to install 1,600 MW of new renewable power capacity (the RenovAR Program ). This bid process is governed by Law No. 27,191 and Decree No. 531/16, which encouraged the increase of power generation from renewable sources by providing, among other things, significant tax benefits. These benefits include, for example, accelerated depreciation of fixed assets for income tax purposes, early refund of value added tax ( VAT ), extended compensation regime of loss carry forwards, temporary reduction of the tax base in the minimum presumed income tax, deduction of expenses, tax exemptions on the distribution of dividends or profits and the granting of certain fiscal certificates to be applied to the payment of federal taxes. Additionally, until December 31, 2017, with respect to the import of new capital assets, special equipment and related parts and components that are necessary for the implementation of the projects developed under this regime, Law No. 27,191 establishes an exemption for the payment of import and export duties. In July 2016, the public auction process for submitting bids for Round 1 of the RenovAR Program was launched. In October 2016, the Ministry of Energy and Mining, pursuant to Resolution No. 252/16, launched Round 1.5 of the RenovAR Program as a continuation of Round 1. This follow-up round allowed participants to re-submit their bids with a new price. RenovAR Program Round 2: Following Rounds 1 and 1.5 of the RenovAR Program, the Ministry of Energy and Mining, pursuant to Resolution No. 275/17, launched Round 2 of the program on August 17, 2017 and granted awards in the amount of 2,043 MW of renewable power capacity. Law No. 27,191, provides that Large Users (users who, due to their consumption levels, purchase electric power directly from the WEM, and referred to in this prospectus as Large Users ), whose demand exceeds 300 KW of average annual power, should comply with the obligation to purchase renewable energy by entering into a contract with a generating company or through self-generation. The Ministry of Energy and Mining through Resolution 281-E/ 2017, established the regulatory framework that allows Large Users to purchase renewable energy from private generating companies and the conditions for granting the dispatch priority that allows such transactions to take place and ensures that the private generating companies will not be restricted in the future in its generation dispatch (see The Argentine Electric Power Sector Resolution No. 281-E/17: The Renewable Energy Term Market in Argentina ). Table of Contents We believe that, if the Argentine government s energy reforms are implemented as expected, generators should be able to attain higher profitability from their existing power assets, and new investment opportunities in the power sector should arise. Furthermore, we believe that we are well-positioned to benefit from the Argentine government s new initiatives, particularly those measures to reform the power sector, expand generation capacity and widen the supply and demand gap. Our Competitive Strengths We believe that we have achieved a strong competitive position in the Argentine power generation sector primarily as a result of the following strengths: Largest private sector power company in Argentina. We are the largest private sector power generation company in Argentina, as measured by power generated, according to data from CAMMESA. In the nine-month period ended September 30, 2017, we generated a total of 12,239 net GWh of power, and in the year ended December 31, 2016, we generated a total of 15,544 GWh. As of September 30, 2017, we had an installed generating capacity of 3,791 MW. Our leading position allows us to develop a range of sales and marketing strategies, without depending on any one market in particular. Additionally, our size within the Argentine market positions us well to take advantage of future developments as investments are made in the electric power generation sector. Our ample installed capacity is also an advantage, as we have sufficient capacity to support large, negotiated contracts. The following graphs shows the SADI s total power generation by private companies and market share for 2016 (grouped by related companies and subsidiaries): Source: CAMMESA. (i) Enel includes Enel Generaci n Costanera S.A., Central Dock Sud S.A. and Enel Generaci n El Choc n S.A.; (ii) Pampa Energ a includes Central T rmica G emes S.A., Central T rmica Loma la Lata S.A., Inversora Piedra Buena S.A., Inversora Diamante S.A., CTG and Inversora Nihuiles, and Petrobras Argentina S.A.; and (iii) AES Argentina Generaci n includes Central T rmica San Nicol s S.A. and Hidroel ctrica Alicur S.A. Table of Contents High quality assets with strong operational performance. We have a variety of high quality power generation assets, including combined cycle turbines, gas turbines, steam turbines, hydroelectric technology and steam and power co-generation technology, with a combined installed generating capacity of 3,791 MW. Our efficiency levels compare favorably to those of our competitors due to our efficient technologies. The following chart shows the efficiency level for the period between November 2016 and April 2017 of each of our generating units compared to our main competitors based on heat rate, which is the amount of energy used by an electric power generator or power plant to generate one kWh of electric power when operating with natural gas. Source: CAMMESA. The following chart shows the availability ratio of our thermal assets as compared to the market average. Source: Central Puerto, CAMMESA. 1 Average market availability for thermal unit We have long-term maintenance contracts with the manufacturers of our combined cycle units and co-generation plants with the largest capacity, namely the Puerto combined cycle unit (CEPUCC), the LDCUDCC25 combined cycle unit at the Luj n de Cuyo plant and the co-generation units at the Luj n de Cuyo plant (LDCUTG23) and LDCUTG24) and the La Plata plant (ENSETG01), under which the manufacturers provide maintenance using best practices recommended for such units. Our remaining Table of Contents units receive maintenance through our highly trained and experienced personnel, who strictly follow the recommendations and best practice established by the manufacturers of such units. We are also capable of generating power from several sources of fuel, including natural gas, diesel oil and fuel oil. In addition, in recent years we have invested in adapting our facilities to be able to generate power from biofuels, and we have developed business relationships over the years with strategic companies from the oil and gas and the biofuel sectors. Our power generation units are also favorably positioned along the system s power dispatch curve (the WEM marginal cost curve) as a result of our technologically diverse power generation assets and high level of efficiency in terms of fuel consumption, which ensures ample dispatch of energy to the system, even when taking into account new capacity additions expected in the coming years that were awarded pursuant to auctions to increase thermal generation capacity and capacity from renewable energy sources. Diversified and strategically located power sector assets. Our business is both geographically and technologically diverse. Our assets are critical to the Argentine electric power network due to the flexibility provided by the large fuel storage capacity, that allows us to store 32,000 tons of fuel oil (enough to cover 6.3 days of consumption) and 20,000 tons of gas oil (enough to cover 5.7 days of consumption) at our thermal generation plants, in addition to our access to deep water docks, our dam water capacity and our ability to store energy for 45 days operating at full capacity at Piedra del guila. The prices for power transmission are regulated and based on the distance from the generating company to the user, among other factors. In this regard, our thermal power plants are strategically located in important city centers or near some of the system s largest customers, which constitutes a significant competitive advantage. For example, approximately 39% of Argentine energy consumption was concentrated within the metropolitan area of Buenos Aires during 2016. Because the lack of capacity in SADI limits the efficient distribution of energy generated in other geographic areas, our generation plants in Buenos Aires and Mendoza are essential to the supply of energy to meet the high demand in these areas. In addition, this need to generate energy close to a high consumption area in Argentina means that our plants are less affected by the installation of new capacity in other regions. The diversification of our fuel sources enables us to generate energy in different contexts, as shown in the following chart: Source: Central Puerto Attractive growth pipeline. We have identified opportunities to improve our strategic position as a leader among conventional power generation technologies by expanding our thermal generation capacity and stepping into the renewable energy market as well. Given the narrowing gap between Table of Contents demand and supply, there is a critical need for the incorporation of new generating capacity in Argentina. As a result, the Argentine government has begun a bidding process for new generation projects, both from conventional and renewable sources. In this context, one of our objectives is to incorporate a significant amount of additional capacity into the system to widen the demand and supply gap in the near term. Thermal Generation. In 2015 and 2016, we acquired four heavy-duty, highly efficient gas turbines: (i) one GE gas turbine with a capacity of 373 MW; (ii) two Siemens gas turbines, each with a capacity of 298 MW; and (iii) one Siemens gas turbine with a capacity of 286 MW. We also acquired 130 hectares of land in the north of the Province of Buenos Aires, which we believe will allow us to develop new projects that could add 1,255 MW to our total installed capacity under a simple cycle configuration or through combined cycle operations. For example, we will use a Siemens gas turbine, with a capacity of 286 MW, for the Terminal 6 San Lorenzo co-generation project described below. Our objective is to use the remaining three units and the aforementioned land, in which we have already invested US$134 million, to submit bids for new generation capacity, through one or more projects, in future bidding processes that may be called by the Argentine government. In addition, as of the date of this prospectus, we have already paid SEK$381.37 million (which, converted at the exchange rate quoted by the Central Bank as of the date of each payment, equals US$45.46 million) to purchase two additional Siemens gas turbines for our Luj n de Cuyo project described below. For example, on November 16, 2016, the Secretariat of Electric Energy, pursuant to Resolution SEE No. 420-E/16, called for companies interested in developing or expanding thermal generation units to submit their preliminary proposals for new projects. The objective of the aforementioned resolution was to identify the possible terms of projects that could contribute to cost reduction in the WEM and an increase in the reliability of the Argentine electric power system. In response, on January 13, 2017, we presented a series of non-binding preliminary projects. As a result, we expect the Argentine government to call for additional bids during 2018 under one or several bidding processes embracing the categories established by Resolution SEE No. 420-E/16: (a) new combined cycles; (b) supply and storage facilities for generation companies; and (c) ducts reducing or minimizing costs associated with electric power generation. The Secretariat of Electric Energy, pursuant to Resolution SEE No. 287-E/17, called for proposals for supply of electric power to be generated through existing units, the conversion of open combined cycle units into closed combined cycle units or the installation of co-generation units. We submitted bids on August 9, 2017, and, on September 25, 2017, we were awarded the two co-generation projects with the characteristics set forth in the table below. Our newly awarded Terminal 6 San Lorenzo and Luj n de Cuyo projects have the following two potential sources of income: (i) electric power sales to CAMMESA through PPAs with a 15-year term which are priced in U.S. dollars; and (ii) steam sales pursuant to separate steam supply agreements negotiated with private offtakers, which are expected to be priced in U.S. dollars. We executed the PPAs with CAMMESA on January 4, 2018. We executed the steam supply agreements with T6 Industrial S.A. and YPF on December 27, 2017 and December 15, 2017, respectively. Terminal 6 San Lorenzo Luj n de Cuyo Location San Lorenzo, Province of Santa F (within the Terminal 6 agroindustrial complex) Luj n de Cuyo, Province of Mendoza (within our Luj n de Cuyo plant) Expected commercial operation date May 2020 November 2019 Table of Contents Terminal 6 San Lorenzo Luj n de Cuyo Estimated total capital expenditure (excluding VAT) US$284 million US$91 million Awarded electric capacity 330 MW (for the winter) 317 MW (for the summer) 93 MW (for the winter) 89 MW (for the summer) Technical configuration Co-generation system with one gas turbine and one steam turbine Co-generation system with two gas turbines Electric energy segment: Awarded electric capacity price per MW of installed capacity US$17,000 per month US$17,100 per month Awarded generated energy price (without fuel cost recognition) US$8.00 per MWh for natural gas operation and US$10.00 per MWh for gas oil operation US$8.00 per MWh Contract length 15 years 15 years PPA signing date January 4, 2018 January 4, 2018 Steam segment: Steam production capacity 350 tons per hour 125 tons per hour Steam buyer T6 Industrial S.A. YPF Contract length 15 years 15 years We are evaluating additional projects for future bidding processes the Argentine government may launch in connection with the other categories set forth in Resolution SEE No. 420-E/16. According to public reports, as of April 2016, the Ministry of Energy noted that the Argentine government plans to add 20 GW of new electric capacity, of which 10 GW should be provided by conventional sources. After the previous two bidding processes of Resolution SEE 21/16 and Resolution SEE 287/17, the government approved two projects with an awarded electric capacity of 2.9 GW and 1.8 GW, respectively. Renewable Generation. We are developing two wind energy projects in Argentina with the following characteristics: La Castellana Achiras Location Province of Buenos Aires Province of C rdoba Expected commercial operation date April 2018 April 2018 Estimated total capital expenditure (including VAT) US$148 million US$74 million Awarded electric capacity 99 MW 48 MW Awarded price per MWh US$61.50 US$59.38 Contract length 20 years, starting from commercial operation 20 years, starting from commercial operation PPA signing date January 2017 May 2017 Number of generators 32 15 Capacity per unit 3.15 MW 3.2 MW Wind turbine provider Acciona Windpower Nordex Acciona Windpower Nordex Table of Contents In connection with both the La Castellana wind energy project (the La Castellana Project ) and the Achiras wind energy project (the Achiras Project ), we have already obtained energy production assessments prepared by an independent expert, regulatory approvals of the environmental impact studies, relevant municipal qualifications and regulatory approvals of the electrical studies in connection with access to the transmission network. In addition, we have a usufruct over the land until May 9, 2041, in the Province of Buenos Aires to be used for our La Castellana Project, and we own the necessary land in the Province of C rdoba to be used for our Achiras Project. We have begun construction of the facilities and have executed contracts with suppliers to acquire and maintain the wind turbines for both projects. Following Rounds 1 and 1.5 of the RenovAR Program, the Ministry of Energy and Mining, pursuant to Resolution No. 275/17, launched Round 2 of the program on August 17, 2017 and granted awards in the amount of 2,043 MW of renewable power capacity. We submitted bids for Round 2 of the RenovAR Program on October 19, 2017 and on November 29, 2017, we were awarded a wind energy project called, La Genoveva I, which will allow us to add an additional capacity of 86.6 MW and continue to build a presence in the renewable energies sector. The main characteristics of the awarded project are summarized below: La Genoveva I Location Province of Buenos Aires Expected commercial operation date May 2020 Estimated PPA signing date May 2018 Estimated total capital expenditure (including VAT) US$105 million Awarded electric capacity 86.6 MW Awarded electric capacity price per MWh of installed capacity US$ 40.90 per MWh Expected contract length 20 years, starting from commercial operation Number of generators 25 Capacity per unit 3.46 MW We expect to submit bids in future rounds of the RenovAr Program and/or to develop in order to supply Large Users in the renewable energy term market (see The Argentine Electric Power Sector Resolution No. 281-E/17: The Renewable Energy Term Market in Argentina ), including the projects listed below: Potential Project Name Renewable Source Location Potential Power in MW La Castellana II(1) Wind Bah a Blanca, Buenos Aires Province 15.75 Achiras II(1) Wind Achiras, C rdoba Province 81.90 La Genoveva II(1) Wind Bah a Blanca, Buenos Aires Province 97.02 Cerro Senillosa(2) Wind Senillosa, Neuqu n Province 100.00 Pic n Leuf (2) Wind Pic n Leuf , Neuqu n Province 100.00 (1) Projects are potential projects in renewable energy for which we have already requested the energy dispatch priority to the renewable term market, pursuant to Resolution No. 281-E/17 (see The Argentine Electric Power Sector Resolution No. 281-E/17: The Renewable Energy Term Market in Argentina ). CAMMESA has not granted the priority to dispatch energy yet. Table of Contents (2) Potential projects of renewable energy with respect to which we expect to submit bids in future rounds of RenovAR Program. However, we cannot assure you that the Argentine government will open new auction processes or that our bids will be successful or that we will be able to enter into PPAs in the future. Moreover, we cannot assure you that we will be able to benefit as expected from the Argentine government s energy reforms. See Risk Factors Risks Relating to our Business Factors beyond our control may affect our ability to win public bids for new generation capacity, or affect or delay the completion of new power plants once we have been awarded projects. Strong cash flow generation, supported by U.S. dollar denominated cash flows. We have strong, stable cash flows, mainly through payments we receive from CAMMESA, primarily as a result of the power generation remuneration structure in Argentina. Such payments principally depend on two factors: (i) the availability of power capacity and (ii) the amount of power generated. Both variables have been relatively stable in recent years, as a result of the diversified technology and high efficiency of our power generation units. Certain of these cash flows were previously denominated and paid by CAMMESA in Argentine pesos. However, after February 2017, under Resolution SEE No. 19/17, payments under the Energ a Base are denominated in U.S. dollars but paid in pesos and subject to certain tariff increases. In addition, our cash flows have little exposure to fuel price changes as the fuel needed to produce the energy under the Energ a Base is supplied by CAMMESA without charge or offset in the revenues we receive, and our term market sales under contracts typically include price adjustment mechanisms based on fuel price variations. In addition to these payments, our cash flow is supported by the U.S. dollar-denominated payments we receive from CAMMESA, related to our credits pursuant to the San Mart n and Manuel Belgrano FONINVEMEM arrangements, which began in March 2010 and are expected to continue until March 2020. During the nine-month period ended September 30, 2017, we received Ps.238.17 million (US$14.86 million in U.S. dollar-denominated payments) in principal and Ps.19.83 million (US$1.24 million in U.S. dollar-denominated payments) in interest for these receivables (including VAT); from these amounts, Ps. 16.08 million (US$1.00 million in U.S. dollar-denominated payments) was retained as tax withholdings that are used as tax credits. During the twelve-month period ended September 30, 2017, we received Ps.313.02 million (US$19.81 million in U.S. dollar-denominated payments) in principal and Ps.26.77 million (US$1.70 million in U.S. dollar-denominated payments) in interest for these receivables (including VAT); from these amounts, Ps. 16.08 million (US$1.00 million in U.S. dollar-denominated payments) was retained as tax withholdings that are used as tax credits. During the year ended December 31, 2016 we received Ps.281.19 million (US$19.81 million in U.S. dollar-denominated payments) in principal and Ps.26.02 million (US$1.83 million in U.S. dollar-denominated payments) in interest for these receivables (including VAT). In addition, we expect to receive new monthly U.S. dollar denominated payments from CAMMESA relating to our credits included in the Vuelta de Obligado thermal power plant arrangement, beginning when combined-cycle operations commence, which is expected to occur during the first quarter of 2018. Strong financial position and ample room for additional leverage. We benefit from a strong financial position, operating efficiency and a low level of indebtedness, allowing us to deliver on our business growth strategy and create value for our shareholders. In terms of our financial position, our total cash and cash equivalents and current other financial assets was Ps.1.01 billion (US$0.06 billion) as of September 30, 2017 and Ps.1.83 billion (US$0.11 billion) as of December 31, 2016. As of the date of this prospectus, we also have uncommitted lines of credit with commercial banks, totaling approximately Ps.3.20 billion. Solid and experienced management team with a successful track record in delivering growth. Our executive officers have vast experience and a long track record in corporate management with, on average, 18 years of experience in the industry. Our management has diverse experience navigating Table of Contents different business cycles, markets and sectors, as evidenced by the growth and expansion we have undergone since the early 1990s. They also have a proven track record in acquisitions and accessing financial markets. For example, in 2007, HPDA successfully issued bonds in an aggregate principal amount of US$100 million, which were paid in full in 2016. In addition, in 2015, jointly with an investment consortium, we acquired non-controlling equity interests in Ecogas, which distributes natural gas through its network covering 30,976 km and serving approximately 1,309,997 customers, further diversifying our interest in the sector. We believe that our management team has been successful in identifying attractive investment opportunities, structuring innovative business plans and completing complex transactions efficiently. Our management has significant in-country know-how, with professionals who have taken an active role in project development and construction, developing private and public investment plans with both Argentine and international partners. In addition, our management team has business experience at the international and national level, are familiar with the operation of our assets in a constantly-changing business environment and are strongly committed to our day-to-day decision-making process. Finally, our executive officers have a solid understanding of Argentina s historically volatile business environment. They have built and maintained mutually beneficial and long lasting relationships with a diversified group of suppliers and customers, and have cultivated relationships with regulatory authorities. Strong corporate governance. We have adopted a corporate governance code to put into effect corporate governance best practices, which are based on strict standards regarding transparency, efficiency, ethics, investor protection and equal treatment of investors. The corporate governance code follows the guidelines established by the CNV. We have also adopted a code of ethics and an internal conduct code designed to establish guidelines with respect to professional conduct, morals and employee performance. In addition, the majority of our Board of Directors qualifies as independent in accordance with the criteria established by the CNV, which may differ from the independence criteria of the NYSE and NASDAQ. See Risk Factors As a foreign private issuer, we are not subject to certain NYSE corporate governance rules applicable to U.S. listed companies. Our Business Strategy We seek to consolidate and grow our position in the Argentine energy industry by maintaining our existing asset base, which we expect will benefit from tariff increases planned by the Argentine government, and by acquiring and developing new assets related to the sector. The key components of our strategy are as follows: Capitalizing on expected growth initiatives while leveraging opportunities in an improved regulatory environment. Historically, Argentine regulations in the energy generation sector have hindered growth in the sector. Investment in the Argentine power and energy sector has been low since the 2001-2002 economic crisis in Argentina and the resulting regulatory changes in 2002 wherein the Argentine government set power generation tariffs in pesos and capped energy generation, transportation and distribution tariffs, which resulted in a steady decrease of the U.S. dollar value of these tariffs in subsequent years. Since the Macri administration assumed office, it has significantly curtailed currency controls and import-export taxes, and demonstrated a willingness to adjust tariffs applicable to power distributors, generators and transporters. As a response to the current electric power shortage, the Argentine government has declared a state of emergency for the national power system, has opened auction processes for the acquisition of power from renewable energy and the increase thermal generation capacity. In addition, the Argentine government has set forth overall guidelines for the development of energy projects, the procedures for compliance with energy goals and bids for thermal generation capacity and associated power generation to meet energy demand requirements in Argentina through 2018. For information about the call for bids, see the discussion of Resolution SEE No. 21/16, Table of Contents Resolution SEE No. 71/16 (complemented by Resolution No. 136/16 of the Ministry of Energy) and Resolution SEE No. 287-E/17 in The Argentine Electric Power Sector. We expect investment in the power generation sector to grow as a result of these reforms. We believe we are well-positioned to capitalize on the Argentine government s focus on expanding generation capacity, given our strong track record and competitive advantages, including our low level of indebtedness and technologically diverse and highly efficient power generation assets. In this respect, we plan to expand our generation capacity from thermal and renewable sources. As an example, we have acquired 130 hectares of land in the north of the Province of Buenos Aires near the Parana River and have purchased four thermal generation units with the intention of expanding our current generating capacity. We intend to present a bid for new thermal generation capacity, through one or more projects, in future bidding processes, and we continue to analyze other project and investment opportunities in the sector. Consolidating our leading position in the energy sector. We seek to consolidate our position in the energy sector by analyzing value-generating alternatives through investments with a balanced approach to profitability and risk exposure. We are committed to maintaining our high operating standards and availability levels. To this end, we follow a strict maintenance strategy for our units based on recommendations from their manufacturers, and we perform periodic preventative and predictive maintenance tasks. We plan to focus our efforts on optimizing our current resources from a business, administrative and technological perspective, in addition to capitalizing on operating synergies from future businesses that rely on similar systems, know-how, customers and suppliers. Becoming a leading company in renewable energy in Argentina. Several research studies from organizations such as the C mara Argentina de Energ as Renovables suggest that Argentina has a significant potential in renewable energy (mainly in wind and solar energy). We also believe that renewable energy will become a larger part of the installed capacity in Argentina. The Ministry of Energy and Mining, through Law No. 27,191, has established a target for renewable energy sources to account for 20% of Argentina s electric power consumption by December 31, 2025. We intend to capitalize on this opportunity by expanding our investments into renewable energy generation. In order to achieve this goal, we are strengthening our renewable energy portfolio, in particular with our first three wind energy projects (La Castellana, Achiras and La Genoveva I) that are expected to increase our generating capacity by 99 MW, 48 MW and 86.6 MW, respectively, and exploring several other options to diversify our generation assets to include sustainable power generation sources. In 2016, we formed our subsidiary, CP Renovables, to develop, construct and operate renewable energy generation projects. Maintaining a strong financial position and sound cash flow levels. We have a low level of debt, which reflects our strong financial position and additional debt capacity. We believe our strong financial position is the result of our responsible financial policies and stable cash flows. We seek to preserve our current cash flow levels in the coming years by, among other things, keeping a rigorous maintenance program for our production units, which we expect will help us continue the positive operational results we have experienced, particularly with regard to our electric power dispatch availability. We intend to fund our expansion plans primarily with loan arrangements, such as credit facilities and project financing in the case of our renewable energy projects. CP La Castellana S.A.U. ( CP La Castellana ) recently entered into loans to fund the development of renewable energy projects they were awarded and to purchase wind turbines. Additionally, we hope that the expected new capacity from these projects will allow us to further increase our cash flow, while enhancing our financial position. Table of Contents Risk Factors We are subject to certain risks related to our industry and our business, and there are risks associated with investing in the ADSs. Some of these risks include: substantially all of our revenues are generated in Argentina and thus are highly dependent on economic and political conditions in Argentina; the Argentine economy remains vulnerable and any significant decline could adversely affect our results of operations; if the current levels of inflation do not decrease, the Argentine economy could be adversely affected; fluctuations in the value of the peso could adversely affect the Argentine economy and, in turn, adversely affect our results of operations; government intervention may adversely affect the Argentine economy and, as a result, our business and results of operations; the Argentine government has intervened in the electric power sector in the past, and is likely to continue intervening; electricity generators, distributors and transmitters have been materially and adversely affected by emergency measures adopted in response to Argentina s economic crisis of 2001 and 2002, many of which remain in effect; we have, in the recent past, been unable to collect payments, or to collect them in a timely manner, from CAMMESA and other customers in the electric power sector; our results depend largely on the compensation established by the Secretariat of Electric Energy and received from CAMMESA for our electric power generation delivered to the transmission system; factors beyond our control may affect our ability to win public bids for new generation capacity, or affect or delay the completion of new power plants once we have been awarded projects; factors beyond our control may delay the completion of CVOSA s combined cycle plant; our business may require substantial capital expenditures for ongoing maintenance requirements and the expansion of our installed generation capacity; the non-renewal or early termination of the HPDA Concession Agreement (as defined below) would adversely affect our results of operations; and if the conditions for the La Plata Plant Sale are not met, our results of operations could be adversely affected. See Risk Factors and Forward-Looking Statements for a discussion of these and other risks and uncertainties associated with our business and investing in the ADSs. Recent Developments Loans from the IIC IFC Facilities CP La Castellana On October 20, 2017, CP La Castellana entered into a common terms agreement with (i) the Inter-American Investment Corporation, (ii) the Inter-American Investment Corporation, acting as agent for the Inter-American Development Bank, (iii) the Inter-American Investment Corporation, as agent of the Inter-American Development Bank, in its capacity as administrator of the Canadian Climate Fund for the Private Sector of the Americas, and (iv) the International Finance Corporation (collectively, the senior lenders ) to provide loans for a total amount of up to US$100,050,000 (the IIC IFC Facility I ), from which US$5 million will accrue interest at an annual rate equal to LIBOR plus 3.5% and the rest at LIBOR plus 5.25%, and shall be repaid in 52 Table of Contents quarterly equal installments. Several other agreements and related documents, such as the guarantee and sponsor support agreement, where we will fully, unconditionally and irrevocably guarantee, as primary obligor, all payment obligations assumed and/or to be assumed by CP La Castellana until the project reaches the commercial operation date (the Guarantee and Sponsor Support Agreement ), hedge agreements, guarantee trust agreements, a share pledge agreement, an asset pledge agreement over the wind turbines, direct agreements and promissory notes have been executed. On January 9, 2018, CP La Castellana received the first disbursement from the IIC IFC Facility I for a total amount of US$80,000,000. Pursuant to the Guarantee and Sponsor Support Agreement, among other customary covenants for this type of facilities, we committed, until the La Castellana project completion date, to maintain (i) a leverage ratio of (a) until (and including) December 31, 2018, not more than 4.00:1.00; and (b) thereafter, not more than 3.5:1.00; and (ii) an interest coverage ratio of not less than 2.00:1.00. In addition, our subsidiary, CP Renovables, and we, upon certain conditions, agreed to make certain equity contributions to CP La Castellana. We also agreed to maintain, unless otherwise consented to in writing by each senior lender, ownership and control of the CP La Castellana as follows: (i) until the La Castellana project completion date, (a) we shall maintain (x) directly or indirectly, at least seventy percent (70%) beneficial ownership of CP La Castellana; and (y) control of the CP La Castellana; and (b) CP Renovables shall maintain (x) directly, ninety-five percent (95%) beneficial ownership of CP La Castellana; and (y) control of CP La Castellana. In addition, (ii) after La Castellana project completion date, (a) we shall maintain (x) directly or indirectly, at least fifty and one tenth percent (50.1%) beneficial ownership of each of CP La Castellana and CP Renovables; and (y) control of each of CP La Castellana and CP Renovables; and (b) CP Renovables shall maintain control of the CP La Castellana. La Castellana project completion date is defined in the common terms agreement as the date in which the commercial operation date has occurred and certain other conditions have been met, which is expected to occur in the first quarter of 2019. For further information on La Castellana project see Management s Discussion and Analysis of Financial Condition and Results of Operations Factors Affecting Our Results of Operations Proposed Expansion of Our Generating Capacity. CP Achiras On January 17, 2018, CP Achiras entered into a common terms agreement with (i) the Inter-American Investment Corporation, (ii) the Inter-American Investment Corporation, acting as agent for the Inter-American Development Bank, (iii) the Inter-American Investment Corporation, as agent of the Inter-American Development Bank, in its capacity as administrator of the Canadian Climate Fund for the Private Sector of the Americas, and (iv) the International Finance Corporation (collectively, the senior lenders ) to provide loans for a total amount of up to US$50,700,000 (the IIC IFC Facility II and together with the IIC IFC Facility I, the IIC IFC Facilities ), from which US$10,000,000 will accrue interest at an annual rate equal to LIBOR plus 4.0%, US$20,000,000 will accrue interest at an annual rate equal to LIBOR plus 5.25% and the remaining amount at a rate reflecting the cost at which the International Finance Corporation can provide U.S. dollar funding at a fixed interest rate plus 5.25%, and shall be repaid in 52 quarterly installments. CP Achiras has not received any disbursement at the date of this prospectus. The Achiras project completion date is expected to occur in the first quarter of 2019 and is defined in the common terms agreement as the date in which the commercial operation date has occurred and certain other conditions have been met. For further information on the Achiras project see Management s Discussion and Analysis of Financial Condition and Results of Operations Factors Affecting Our Results of Operations Proposed Expansion of Our Generating Capacity. Loans from Banco de Galicia y Buenos Aires S.A. to CP La Castellana and CP Achiras S.A.U. On October 26, 2017 and October 30, 2017, CP La Castellana and CP Achiras S.A.U. ( CP Achiras ) entered into loans with Banco de Galicia y Buenos Aires S.A. in the amount of Ps.330 million (US$18.7 million, Table of Contents using the exchange rate as of the date of the disbursement) and Ps.175 million (US$9.9 million, using the exchange rate as of the date of the disbursement), respectively, for the development of renewable energy projects that were awarded by the Secretary of Electric Energy (the Castellana and Achiras Loans ). The Castellana and Achiras Loans accrue interest at an interest rate equal to BADLAR private banks plus a 3.10% margin and shall mature on the dates that are two years from the execution and disbursement. The proceeds from these loans will be used to finance the Achiras Project and the La Castellana Project. We have fully, unconditionally and irrevocably guaranteed, as primary obligor, all payment obligations assumed and/or to be assumed by CP La Castellana and CP Achiras under these loans and any other ancillary document related to them. On November 10, 2017, CP La Castellana and CP Achiras entered into two short-term bridge loans with Banco de Galicia y Buenos Aires S.A. in the amount of US$35 million and US$18 million, respectively, for the acquisition of wind turbines. These loans accrue interest at an annual interest rate of 3.6% and mature on January 9, 2018. On December 21, 2017, CP La Castellana and CP Achiras entered into two short-term bridge loans with Banco de Galicia y Buenos Aires S.A. in the amount of US$9 million and US$5.8 million, respectively, for the acquisition of wind turbines. These loans accrue interest at an annual interest rate of 3.6% and mature on February 19, 2018. On December 22, 2017, CP La Castellana and CP Achiras entered into two short-term bridge loans with Banco de Galicia y Buenos Aires S.A. in the amount of US$6.5 million and US$3.2 million, respectively, for the acquisition of wind turbines. These loans accrue interest at an annual interest rate of 3.6% and mature on February 20, 2018. On January 15, 2018, CP Achiras entered into a short-term bridge loan with Banco de Galicia y Buenos Aires S.A. in the amount of US$7 million, for the acquisition of wind turbines. This loan accrues interest at an annual interest rate of 3.1% and matures on March 18, 2018. On January 9, 2018, CP La Castellana applied the funds from the IIC IFC Facility I to prepay all of its outstanding short-term bridge loans with Banco de Galicia y Buenos Aires S.A. The Argentine government has authorized the Ministry of Energy and Mining to proceed with the sale of their shareholdings in power plants, including their participation in us. By means of Decree No. 882/17, signed on October 31, 2017 and published in the Official Gazette on November 1, 2017, the Argentine government authorized the Ministry of Energy and Mining to promote the measures necessary to proceed with the sale, assignment or transfer of the equity interest owned by the Argentine government in (i) our Company (representing 8.25% of our outstanding shares); (ii) several unaffiliated companies, including (a) Central Dique Sociedad An nima; (b) Central T rmica G emes Sociedad An nima, (c) Centrales T rmicas Patagonicas Sociedad An nima, (d) Empresa de Transporte de Energ a El ctrica por Distribuci n Troncal de la Patagonia Sociedad An nima, (e) Dioxitek Sociedad An nima; and (iii) the interest of the national government in the FONINVEMEM thermal power plants (TMB, TJSM, CVOSA and Central Guillermo Brown). The Argentine government has authorized the Ministry of Energy and Mining to accept LVFVD in consideration for the sale, assignment or transfer of the above mentioned assets, granting generators, like us, the opportunity to increase capacity or participation in thermal power plants, including the FONINVEMEM. In the case of FONINVEMEM thermal plants operated by TMB and TJSM, we and the other shareholders may exercise our right of first refusal for the sales of these assets. New remuneration scheme for Energ a Base Resolution SEE No. 19/17, enacted by the Secretariat of Electric Energy on January 27, 2017 and published in the Official Gazette on February 2, 2017, created a new remuneration scheme for the Energ a Base. Pursuant to this resolution, generators, co-generators and self-generators can make guaranteed availability offers (ofertas de disponibilidad garantizada) in the WEM and, through those offers, generation companies commit a specific and limited output of electric power for their generation units. The offers must be accepted by CAMMESA (acting on behalf of the WEM agents demanding electric power), who will be the purchaser of the power in the guaranteed availability agreement. Resolution SEE No. 19/17 establishes that such agreements can be assigned to electricity distribution companies and Large Users of the WEM once the state of emergency of the electric power system in Argentina, declared pursuant to Decree No. 134/2015 has expired (such state of emergency expired on December 31, 2017). Remuneration in favor of the generation company is calculated in U.S. dollars in Table of Contents accordance with the formulas and values set forth in this resolution, and, comprised of (i) a price for the monthly capacity availability and (ii) a price for the electric power generated and operated. The following chart shows the average unitary (monomic) price per MWh received by Central Puerto in each period under the Energ a Base, calculated as the Sales under Energ a Base for the period, divided by the energy generated under the Energ a Base for the year: La Plata Plant Sale On December 20, 2017, YPF EE accepted our offer to sell the La Plata plant, subject to certain conditions, for a total sum of US$31.5 million (without VAT), subject to certain conditions (the La Plata Plant Sale ). The effective transfer of the La Plata plant is subject to the following conditions: (i) the termination of a due diligence process during which YPF can, at its own discretion, terminate the La Plata Plant Sale; (ii) the payment by YPF EE of the purchase price for the La Plata Plant; (iii) the extension of our steam supply agreement with YPF at our Luj n de Cuyo plant for a period of up to 24 months from January 1, 2019 under the same terms as our existing steam supply agreement, which we expect to sign in January 2018; (iv) we and YPF EE shall have complied with the regulation in force in connection with the resale of the aggregate transportation capacity under a firm transportation capacity ( FTC ) contract to YPF EE, and MEGSA (Mercado El ctrico de Gas) shall have awarded such aggregate transportation capacity under the FTC contract to YPF EE; (v) the renewal of two contracts between us and certain third parties and the acceptance by such third parties of the assignment of such contracts to YPF EE; and (vi) other formal conditions. We will effectively transfer the La Plata plant to YPF EE on the second business day after each of the aforementioned conditions are met (the La Plata Plant Sale Effective Date ). See Risk Factors Risks Relating to Our Business If the conditions for the La Plata Plant Sale are not met, our results of operations could be adversely affected and Unaudited Pro Forma Consolidated Financial Information. Contracts with YPF for Steam Supply and CAMMESA for the Luj n de Cuyo project In January 2018, we expect to sign an agreement to extend our steam supply agreement with YPF at our Luj n de Cuyo plant for a period of up to 24 months from January 1, 2019 under the same terms as our existing Table of Contents steam supply agreement. On December 15, 2017, we also executed a new steam supply contract with YPF for a period of 15 years that will replace our existing contract with YPF and will begin when the new co-generation unit at our Luj n de Cuyo plant begins operations. Additionally, we entered into a PPA with CAMMESA in January 4, 2018, in connection with the new co-generation unit at our Luj n de Cuyo plant. As of the date of this prospectus, the new co-generation unit at our Luj n de Cuyo plant is in the pre-construction phase. Construction is projected to begin in January 2018. The plant is expected to start commercial operations 24 months after November 22, 2017. The execution of the contracts with YPF for steam supply and the PPA with CAMMESA for the Luj n de Cuyo project referred to herein are both conditions to the La Plata Plant Sale. For further information, see Summary Recent Developments La Plata Plant Sale. Agreement between Transportadora de Gas del Mercosur S.A. and YPF In 2009, Transportadora de Gas del Mercosur S.A. ( TGM ), in which CPSA holds a 20% interest, terminated its gas supply contract with YPF as a result of repeated breached by YPF. On December 22, 2017, YPF agreed to pay TGM, without recognizing any facts or rights, US$114 million in order to end TGM s claim against YPF. Social Security Reform Law On December 19, 2017, the Argentine Congress approved the Social Security Reform Law which, among other things, modified the adjustment formula for the country s then current pension system. The goal of the law is to resolve the shortage of necessary ANSES funds needed to guarantee the mobility formula for 82% of all retirees who receive minimum pension. The social benefits will be subject to updating a formula that will be applied in March, June, September and December of each year, and which will be calculated as 70% of the variation of the Consumer Price Index (IPC) indicated by INDEC, and 30% remaining due to the variation of the Remuneraci n Imponible Promedio de los Trabajadores Estables (RIPTE), an indicator of the Ministry of Labor that measures the evolution of the salary of the state employees. In addition, instead of semiannual increases, an update will be applied each quarter. After the approval of the social security reform, on December 20, 2017, Decree No. 1058 was issued to avoid the gap that occurred between the application of the previous mobility formula and the one recently passed by Congress, establishing a compensatory bonus for retirees, pensioners and beneficiaries of the Universal Child Allowance (Asignaci n Universal por Hijo). Project to Amend the Labor System The Macri administration published a project to amend the labor system. The project s main purpose is to improve the efficiency and productivity of different labor sectors, to increase the level of employment, to attract investments and to reduce employment costs. The project will be analyzed by both chambers of the Argentine Congress in 2018. Reforma Tributaria (the Tax Reform ) On December 27, 2017, the Argentine Congress also approved the Tax Reform, which is intended to eliminate certain of the existing complexities and inefficiencies of the Argentine tax regime, diminish evasion, increase the coverage of income tax as applied to individuals and encourage investment while sustaining its medium and long term efforts aimed at restoring fiscal balance. The reforms will gradually come into effect over the next five years. The fiscal cost of the Tax Reform is estimated to be 0.3% of the gross national product. The reforms form part of a larger program announced by President Macri intended to increase the competitiveness of Table of Contents the Argentine economy (including by reducing the fiscal deficit) as well as employment, and diminish poverty on a sustainable basis. The Tax Reform was enacted on December 29, 2017 (Law No. 27,430) and has introduced many changes to the income tax treatment applicable to financial income. The main aspects of this reform may be summarized as follows: Income obtained from the sales of (i) shares by individuals residing in Argentina for tax purposes ( Argentine Individuals ) and (ii) shares and ADSs by non-Argentine residents, will be exempt from income tax on capital gains, subject to compliance with certain requirements. See Taxation Material Argentine Tax Considerations . Taxation applicable to dividends distributed by Argentine companies would be as follows: (i) dividends originated from profits obtained before fiscal year 2018 are not subject to any income tax withholding (except for the Equalization Tax (as discussed in Taxation Material Argentine Tax Considerations )); (ii) dividends originated from profits obtained during fiscal years 2018 and 2019 paid to Argentine Individuals and/or non-Argentine residents are subject to a 7% income tax withholding on the amount of such dividends; and (iii) for dividends originated from profits obtained during fiscal year 2020 onward, the tax rate is raised to 13%. Interest and capital gains derived from the sale or disposition of public notes, among other assets, obtained by Argentine resident individuals and undivided estates located in Argentina, would be subject to income tax at a rate of (a) 5% in the case of peso-denominated securities without a revaluation clause and (b) 15% in the case of peso-denominated securities with a revaluation clause or dollar-denominated securities; income obtained by Argentine resident individuals and undivided estates located in Argentina from the sale of shares made on a stock exchange will remain exempt, subject to compliance with certain requirements; Non-Argentine residents would be exempt from taxes on interest and capital gains derived from the public issuance of notes by the federal government, the provinces and municipalities of Argentina and the Autonomous City of Buenos Aires, to the extent said beneficiaries neither reside in nor channel their funds through non-cooperative jurisdictions. The non-cooperative jurisdictions list would be prepared and published by the executive branch. Short-term notes issued by the Central Bank (LEBACs) are outside the scope of these exemptions applicable to non-Argentine residents. The aforementioned amendments will be enforced beginning January 1, 2018. The corporate income tax of Argentine legal entities gradually would be reduced to 30% for fiscal periods commencing after January 1, 2018 through December 31, 2019, and to 25% for fiscal periods commencing after January 1, 2020, inclusive. Argentine legal entities will have to apply an additional withholding tax on dividends or distributed profits to complete the aggregate tax burden of 35%. The Tax Reform contemplates other amendments regarding the following matters: social security contributions, tax administrative procedures law, criminal tax law, tax on liquid fuels, and excise taxes, among others. Holders of our common shares or the ADSs are encouraged to consult their tax advisors as to the particular Argentine income tax consequences of owning our common shares or the ADSs. For more information, see Taxation Material Argentine Tax Considerations. Corporate Information Our principal executive offices are located at Avda. Thomas Edison 2701, City of Buenos Aires. Our phone number is (+54 11) 4317-5000; our fax number is (+54 11) 4317-5099; our website is www.centralpuerto.com; and the e-mail address of our main offices is info@centralpuerto.com. Information contained or accessible through our website is not incorporated by reference in, and should not be considered part of, this prospectus. Table of Contents
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+S-1/A 1 wddds1a.htm As filed with the Securities and Exchange Commission on June 8, 2018 Registration No. 333-______ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM S-1 Amendment No.1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 WORLDS INC. (Exact name of registrant as specified in its charter) Delaware (State or other jurisdiction of incorporation or organization) 7370 (Primary Standard Industrial Classification Code Number) 22-1848316 (I.R.S. Employer Identification Number) 11 Royal Road Brookline, MA 02445 (617) 725-8900 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) Thom Kidrin, CEO 11 Royal Road Brookline, MA 02445 (617) 725-8900 (Name, address, including zip code, and telephone number, including area code, of agent for service) Copies to: Irving Rothstein, Esq. Feder Kaszovitz LLP 845 Third Avenue, 11th Floor New York, New York 10022 Telephone: (212) 888-8200 Facsimile: (212) 888-7776 Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act. Large accelerated filer Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company Emerging growth company CALCULATION OF REGISTRATION FEE Proposed Maximum Proposed Maximum Title of Each Class of Amount to Offering Price Aggregate Offering Amount of Registration Securities to be Registered be Registered(1) per Unit(2) Price(2) Fee Common Stock, par value $0.001 per share 7,000,000 Shares $ 0.25 (3) $ 1,750,000 $ 217.88 Common Stock, par value $0.001 per share 3,500,000 Shares (4) $ 0.325 (5) $ 1,137,500 $ 141.62 (1) Pursuant to Rule 416 under the Securities Act of 1933, as amended, the securities being registered hereunder includes such indeterminate number of shares of common stock as may be issuable with respect to the securities being registered hereunder as a result of stock splits, stock dividends, anti-dilution provisions or similar transactions. (2) Estimated solely for the purpose of computing the amount of the registration fee pursuant to Rule 457(c). (3) Pursuant to Rule 457(c), represents the closing sales prices of our common stock for any of the five business days preceding the date hereof. (4) Represents shares underlying currently exercisable warrants. (5) Exercise price of the warrants. The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. (2) The information in this prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting offers to buy these securities in any jurisdiction where the offer or sale is not permitted. PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION DATED June __, 2018 WORLDS INC. 10,500,000 Shares of Common Stock This prospectus relates to the resale of up to 7,000,000 shares of our common stock issued to various shareholders upon the exercise of warrants previously issued in an exempt private placement, and 3,500,000 shares of common stock underlying warrants held by the same investors. The selling security holders may sell the shares of common stock described in this prospectus in public or private transactions, at prevailing market prices, or at privately negotiated prices. The selling security holders may sell shares directly to purchasers or through brokers or dealers. Brokers or dealers may receive compensation in the form of discounts, concessions or commissions from the selling security holders. We will not receive any of the proceeds from the sale of the shares by the selling security holders. However, we will be receiving the exercise price of $0.325 from any warrants which are exercised. The selling security holders will receive all of the proceeds from the sale of such shares and will pay all underwriting discounts and selling commissions, if any, applicable to the sale of the shares. We will pay the expenses of registration of the sale of the shares. It is not possible at the present time to determine the price to the public in any sale of the shares by the selling security holders and the selling security holders reserve the right to accept or reject, in whole or in part, any proposed purchase of shares. Accordingly, the public offering price, the amount of any applicable underwriting discounts and commissions and the net proceeds to the selling security holders will be determined at the time of such sale by the selling security holders. Our common stock is traded on the OTCQB under the symbol "WDDD." On June 7, 2018, the closing sale price of our common stock on the OTCQB was $0.23 per share. (3) INVESTING IN OUR COMMON STOCK INVOLVES RISKS. SEE "RISK FACTORS" ON PAGE 8. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful and complete. Any representation to the contrary is a criminal offense. The date of this Prospectus is June 8, 2018 TABLE OF CONTENTS Page Prospectus Summary 1
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+PROSPECTUS SUMMARY You should read this summary in conjunction with the more detailed information and financial statements in this prospectus and any supplement thereto. This summary does not contain all of the information you should consider before investing in our securities. You should read all of the information in this prospectus and any supplement thereto carefully, especially the risks of investing in our securities (see "Risk Factors") before making an investment decision. In this prospectus and any amendment or supplement hereto, unless otherwise indicated, the terms the "Company", "we", "us", and "our" refer and relate to Applied Minerals, Inc. The Offering Up to 52,224,722 shares of Common Stock, issuable on conversion of certain 10% PIK-Election Convertible Series A Notes (the "Series A Notes") The conversion price of the Series A Notes as of August 22, 2018 is $0.40 per share and that price is used to calculate the number of shares referred to above. At the Company s election, interest may be paid in cash or in Series A Notes, (payment in the form of Notes is referred to as payment-in-kind or "PIK"). As of August 22, 2018, 32,575,758 shares are issuable on conversion of the Series A Notes that were issued on November 3, 2014 (the date of the initial issuance of Series A Notes) and 12,089,584 shares are issuable on conversion of Series A Notes that have been issued as interest. If the Company issues additional Series A Notes in payment of interest and/or penalties, the number of shares that may be sold pursuant to this Prospectus will increase. If the Company makes all the interest payments by issuing additional Series A Notes and all the Series A Notes remain outstanding until maturity, the additional shares issuable on conversion of the Series A Notes could increase the number of shares issuable on conversion of the Notes by 7,559,380 shares. This number is based on the current conversion rate of $0.40. Given the Company s current financial position, it is anticipated that for the foreseeable future, the Company will likely pay interest using Series A issued as payment-in-kind interest. The number of shares issuable pursuant to this prospectus could increase as a result of the impact of antidilution provisions on the Series A Notes or as a result of agreements between the Company and the holders of the Series A Notes. Given the Company s current financial position, it is anticipated that for the foreseeable future, the Company will likely pay interest using Series A Notes issued as payment-in-kind interest. 32,625,000 outstanding shares of Common Stock issued for cash. 2,275,000 outstanding shares of Common Stock issued in lieu of cash to a financial advisory firm for services provided in 2017. 2,000,000 shares issued upon the exercise of warrants to purchase Common Stock 666,391 shares of Common Stock issued as Liquidated Damages for violation of the terms of the Registration Statement Agreement for the Series A Notes. 17,602,033 shares of Common Stock issuable on the exercise of warrants. 1,250,000 shares are issuable upon the exercise of warrants with an exercise price of $0.08 per share ("June 2018 Warrants"), 2,068,750 shares are issuable upon the exercise of warrants with an exercise price of $0.04 per share ("August 2017 Warrants"), 11,000,000 shares are issuable upon the exercise of warrants with an exercise price of $0.10 per share ("May 2017 Warrants"); and 3,283,283 shares are issuable upon the exercise of warrants with an exercise of $0.25 per shares ("June 2016 Warrants") The number of shares issuable on conversion of the Series A Notes and on exercise of the June 2018 Warrants, August 2017 Warrants, May 2017 Warrants and June 2016 Warrants could increase as a result of the impact of antidilution provisions. The maximum number of shares offered pursuant to this prospectus could increase as a result of the antidilution provisions, stock splits, stock dividends and similar transactions. Table of Contents PROSPECTUS APPLIED MINERALS, INC. 107,393,146 Shares of Common Stock This prospectus relates to the offer and sale by the Selling Stockholders, from time to time, of the following: Up to 52,224,722, shares of Common Stock, issuable on conversion of certain 10% PIK-Election Convertible Series A Notes (the "Series A Notes") The conversion price of the Series A Notes as of August 22, 2018 is $0.40 per share and that price is used to calculate the number of shares referred to above. At the Company s election, interest may be paid in cash or in Series A Notes, (payment in the form of Notes is referred to as payment-in-kind or "PIK"). As of August 22, 2018, 32,575,758 shares are issuable on conversion of the Series A Notes that were issued on November 3, 2014 (the date of the initial issuance of Series A Notes) and 12,089,584 shares are issuable on conversion of Series A Notes that have been issued as interest. If the Company issues additional Series A Notes in payment of interest, the number of shares that may be sold pursuant to this Prospectus will increase. If the Company makes all the interest payments by issuing additional Series A Notes and all the Series A Notes remain outstanding until maturity, the additional shares issuable on conversion of the Series A Notes could increase the number of shares issuable on conversion of the Notes by 7,559,380 shares. Given the Company s current financial position, it is anticipated that for the foreseeable future, the Company will likely pay interest using Series A issued as payment-in-kind interest. Given the Company s current financial position, it is anticipated that for the foreseeable future, the Company will likely pay interest using Series A Notes issued as payment-in-kind interest. 32,625,000 outstanding shares of Common Stock issued for cash. 2,275,000 outstanding shares of Common Stock issued in lieu of cash to a financial advisory firm for services provided. 2,000,000 shares issued upon the exercise of warrants to purchase Common Stock 666,391 shares of Common Stock issued as Liquidated Damages for violation of the terms of the Registration Statement Agreement for the Series A Notes. 17,602,033 shares of Common Stock issuable on the exercise of warrants. 1,250,000 shares are issuable upon the exercise of warrants with an exercise price of $0.08 per share ("June 2018 Warrants"), 2,068,750 shares are issuable upon the exercise of warrants with an exercise price of $0.04 per share ("August 2017 Warrants"), 11,000,000 shares are issuable upon the exercise of warrants with an exercise price of $0.10 per share ("May 2017 Warrants"); and 3,283,283 shares are issuable upon the exercise of warrants with an exercise of $0.25 per shares ("June 2016 Warrants"). The number of shares issuable on conversion of the Series A Notes and on exercise of the June 2018 Warrants, August 2017 Warrants, May 2017 Warrants and June 2016 Warrants could increase as a result of the impact of antidilution provisions. The maximum number of shares offered pursuant to this prospectus could increase as a result of the antidilution provisions, stock splits, stock dividends and similar transactions. Table of Contents The sellers referred to above as collectively referred to as the "Selling Stockholders" and the shares referred to above as collectively referred to as the "Shares. The term "Selling Stockholders" includes the persons listed in the table under "Selling Stockholders " and also donees, pledgees, transferees or other successors-in- interest selling Common Stock or interests in Common Stock received after the date of this prospectus from a Selling Stockholder as a gift, pledge, partnership distribution or similar transfer. See "The Offering," "Selling Stockholders," and "Antidilution Provisions." Antidilution Provisions The Series A Notes contain standard antidilution provisions whereby the conversion price of the Notes into Common Stock is reduced upon the occurrence of certain events, including sales of equity securities at price below market price and/or below the then conversion price. The conversion prices hav already been reduced from $0.92 to $0.40. Reductions in the conversion price means that more shares of Common Stock would be issuable upon conversion. The June 2018 Warrants, June 2016 Warrants, the May 2017 Warrants and the August 2017 Warrants also contain antidilution provisions but not antidilution provisions for sales of equity securities at price below market price and/or below the then conversion price See "Antidilution Provisions" for a detailed description of the antidilution provisions. Use of Proceeds The Company will receive none of the proceeds from the sale of the Common Stock by the Selling Stockholders. The proceeds will go to the Selling Stockholders. See "Use of Proceeds." However, if all of the June 2018 Warrants, June 2016 Warrants, May 2017 Warrants, and August 2017 Warrants are exercised, we will receive $2,103,571. Plan of Distribution The Selling Stockholders may, from time to time, sell any or all of their Common Stock on any stock exchange, market or trading facility on which the Shares are traded or in private transactions. These sales may be at fixed or negotiated prices. The Selling Stockholders may also engage in puts and calls and other transactions in our Common Stock or derivatives of our Common Stock and may sell or deliver the Common Stock in connection with these trades. Broker-dealers that may be engaged by the Selling Stockholders may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the Selling Stockholders (or, if any broker-dealer acts as agent for the purchaser of shares, from the purchaser) in amounts to be negotiated. See "Plan of Distribution." Business Applied Minerals, Inc. (the "Company" or "Applied Minerals" or "we" or "us") (OTCQB: AMNL) owns the Dragon Mine in central Utah. From the mine we extract, process, or have processed by a third party, halloysite clay and iron oxide for sale to a range of end markets. We market the minerals directly and through distributors and also under a profit-sharing agreement with the Kaolin business unit of BASF Corp. ("BASF"). We also engage in research and development and frequently work collaboratively with potential customers, consultants, distributors, and a third party processor (BASF) to process and enhance our halloysite clay products to improve the performance of our customers existing and new products. Table of Contents The sellers of the Common Stock referred to above as collectively referred to as the "Selling Stockholders" and the shares referred to above as collectively referred to as the "Shares. The term "Selling Stockholders" includes the persons listed in the table under "Selling Stockholders " and also donees, pledgees, transferees or other successors-in-interest selling Common Stock or interests in Common Stock received after the date of this prospectus from a Selling Stockholder as a gift, pledge, partnership distribution or similar transfer. The Selling Stockholders may sell all or any portion of their Common Stock in one or more transactions on any stock exchange, market or trading facility on which the shares are traded or in private, negotiated transactions. Each Selling Stockholder will determine the prices at which the Selling Stockholder s securities will be sold. Although we will incur expenses in connection with the registration of the shares of Common Stock offered under this prospectus, we will not receive any proceeds from the sale of the shares of Common Stock by the Selling Stockholders. We will, however, receive the exercise prices for each share issued upon exercise of the Warrants. If all Warrants are exercised, we will receive $2,103,571. Our Common Stock is quoted on the OTCQB under the symbol "AMNL." On August 22, 2018, the closing bid quotation of our Common Stock was $0.12. Our principal executive offices are located at 55 Washington Street, Brooklyn NY 11201. Our telephone number is (212) 226-4265. We may amend or supplement this prospectus from time to time by filing amendments or supplements as required. You should carefully read this entire prospectus and any amendments or supplements to this prospectus as well as material incorporated by reference into this prospectus before you make your investment decision. The shares of Common Stock offered under this prospectus involve a high degree of risk. See "Risk Factors" beginning at page 23. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. The date of this prospectus is ________, 2018 Table of Contents Halloysite Our halloysite clay, which we market under the DRAGONITE trade name, is an aluminosilicate mineral with a hollow tubular shape. DRAGONITE can utilize halloysite s shape, high surface area, and reactivity to add significant functionality to a number of applications. The Company sells halloysite at negotiated prices and there is no established market for the sale of DRAGONITE for the applications for which the Company sells it Iron Oxide Our iron oxide, which we market under the AMIRON trade name, is a high purity product. We have sold it at a negotiated price to one customer as an absorbent for hydrogen sulfide gas contained in natural gas and are marketing to that customer. The Company is not aware of an established market price in that market. Otherwise we are not selling iron oxide on a continuing basis. Sales In 2017, we recorded revenues of $2,444,677, of which $1,011,654 was related to sales of DRAGONITE to 13 customers and $1,433,023 was related to sales of AMIRON to one customer. In the second quarter of 2018, we recorded revenues of $92,438. Recent Sale of Surface Piles On August 21, 2018, the Company sold its five mixed-clay surface piles for initial net proceeds of $4.3 million. The purchaser must pay an additional $1 per ton for each ton of material from the surface piles removed from the property over a number of years. Total additional net proceeds up to $4.3 million may be realized. The purchaser is not required to remove all of the material from the surface piles. The five surface piles of the Dragon Mine property were created primarily from the production of unusable clay mineral during open pit and underground mining operations carried out between 1949 and 1976. Classification for SEC Purposes The Company is classified as an "exploration stage" company for purposes of Industry Guide 7 of the U.S. Securities and Exchange Commission ("SEC") Under Industry Guide 7, companies engaged in significant mining operations are classified into three categories, referred to as "stages" - exploration, development, and production. Exploration stage includes all companies that do not have established reserves in accordance with Industry Guide 7. Such companies are deemed to be "in the search for mineral deposits." Notwithstanding the nature and extent of development-type or production-type activities that have been undertaken or completed, a company cannot be classified as a development or production stage company unless it has established reserves in accordance with Industry Guide 7. Development/Exploration Activities In 2017 and 2016, the Company spent $508,861 and $981,045, respectively, on exploration and development. The Company does not expect to perform any exploration or development activities in the next year. Processing Capability In 2017, we entered into a tolling agreement with BASF under which BASF will use a water-based system that will process the Company s halloysite in accordance with the Company s specifications, which can include eliminating impurities, such as iron oxide, and surface treating the halloysite to achieve desired effects and functionality. We have a mineral processing plant with a capacity of up to 45,000 tons of halloysite mineralization per annum for certain applications. Additionally, the Company has a second processing facility with a capacity of up to 10,000 tons per annum that is dedicated to processing its halloysite mineralization. These facilities can process halloysite using a dry-based, micronizing system. This dry-based system does not eliminate impurities such as iron oxide as effectively as wet processing but is useful in situations where wet processing in not necessary. For the foreseeable future, only crushing (instead of pulverizing) will be needed for iron oxide and we have a crusher for such purpose. If pulverizing is necessary, the Company will rent or buy pulverizing equipment or use a third-party processor. Table of Contents Distribution Channels The Company markets and sells its products directly and through distributors. The Company s CEO spends a significant amount of his time on sales, marketing and product development. The Director of Sales focuses on the marketing of the Company s DRAGONITE products. The Company also uses several leading distribution organizations, E.T. Horn, Brandt Technologies, LLC, and Azelis to market its products. The Company has a non-exclusive distribution agreement with a distributor for Taiwan and an exclusive agreement with a distributor for Japan. In October, 2017, we entered into a supply agreement with the Kaolin business unit of BASF ("Supply Agreement"). The Supply Agreement provides that the Company will sell up to 15,000 tons of halloysite to BASF per year and BASF may process and/or treat and will have an exclusive license (a) to sell halloysite on a worldwide basis for use within the following third party markets: (i) paints and coatings; (ii) inks; (iii) rubbers (excludes flame retardant and wire and cable applications); (iv) adhesives; (v) paper, and (vi) ceramic honeycomb catalytic substrates and (b) to sell halloysite to other business units of BASF. See "Business," "Properties," and "Financial Statements." Risk Factors An investment in our Common Stock is very speculative and involves a high degree of risk. If you decide to buy our Common Stock, you should be able to afford a complete loss of your investment. Among the risks are the following. You should read the full risk factor section within. Losses, Deficits, Going Concern. We have experienced annual operating losses since 1998. For the years ended December 31, 2017 and 2016, the Company sustained net losses of $14,910,659 and $7,639,772, respectively. At December 31, 2017 and 2016, the Company had accumulated deficits of $104,493,857 and $89,583,198, respectively. For the six months ended June 30, 2018 and 2017, the Company sustained net losses of $12,395,021 and $4,603,866, respectively. At June 30, 2018 and 2017, the Company had accumulated deficits of $116,888,877 and $94,187,084, respectively. We have very limited cash as of the date of this report, negative cash flow, and continuing unprofitable operations. Accordingly, our independent registered public accounting firm, EisnerAmper, LLP has included a going concern paragraph in its opinion on our December 31, 2017 financial statements. We will need to seek additional financing to support our continued operations; however, there are no assurances that any such financing can be obtained on favorable terms, if at all, especially in light of the restrictions imposed on the incurrence of additional debt by the Series A Notes and the Series 2023 Notes. Material Weakness in our Internal Control over Financial Reporting We have identified material weaknesses in our internal control over financial reporting. If we fail to develop or maintain an effective system of internal controls, we may not be able to accurately report our financial results or prevent fraud. As a result, current and potential stockholders could lose confidence in our financial reporting, which could harm our business and the trading price of our stock. During the preparation of our consolidated financial statements for the year ended December 31, 2017, we and our independent registered public accounting firm, identified deficiencies in our internal control over financial reporting, as defined in the standards established by the Public Company Accounting Oversight Board. Management determined the control deficiencies constitute material weaknesses in our internal control over financial reporting. The existence of a material weakness could result in errors in our financial statements, cause us to fail to meet our reporting obligations and cause investors to lose confidence in our reported financial information, leading to a decline in the trading price of our stock. Table of Contents Maturity Of Outstanding PIK-Election Convertible Notes. Unless the Company becomes quite successful its outstanding PIK-Election Convertible Notes may not elect to voluntarily convert into common stock. Unless the Company is able to generate significant cash flow, the Company may not have sufficient funds to pay outstanding PIK-Election Convertible Notes when such notes mature. Unless the stock price increases very significantly, the Company may not be able to force conversion of the notes before maturity. The Company has two series of convertible, PIK notes outstanding, 3% PIK-Election Convertible Notes due May 1, 2023 ("Series A Notes") and 3% PIK-Election Notes due August 1, 2023 ("Series 2023 Notes"). As of August 22, 2018, the outstanding balance of the Series A Notes was approximately $27.2 million and the outstanding balance of the Series 2023 Notes was approximately $16.4 million. If the Company continues to pay interest in additional PIK Notes, the outstanding balances will increase to approximately $51.1 million at the maturities of the Notes. The description of the risks associated with maturity and mandatory conversion set forth below is limited to the Series A Notes, but the risks related to the Series 2023 Notes are similar. The Series A Notes mature on May 1, 2023. The Series 2023 Notes mature on August 1, 2023. The holders of the Series A Notes may convert their principal and accrued but unpaid interest into shares of common stock of the Company at any time. As of August 22, 2018, the conversion price of the Series A Notes was $0.40 per share and would have converted into approximately 69.0 million shares of common stock of the Company. As of August 22, 2018, the conversion price of the Series 2023 Notes was $0.59 per shares and would have converted into approximately 28.0 million shares of common stock of the Company. The Series A Notes are mandatorily convertible by the Company at any time when (i) the volume weighted average price of the shares of the common stock of the Company is equal to or greater than $1.00 for thirty (30) consecutive trading days and (ii) the closing market price of the shares of the common stock of the Company is equal to or greater than $1.00. The Series 2023 are mandatorily convertible by the Company at any time when the weighted average trading price of a share of the Company s common stock is in excess of $0.59 for ten (10) consecutive trading days. The Series A Notes and Series 2023 Notes contain significant negative covenants that limit or eliminate, without the consent of a majority by principal of the each series of Notes, among other things, mergers, sales of assets, dividends, borrowings, secured transactions, liens and transactions with affiliates. Penetrating Markets For the Company to survive, we must penetrate our target markets and achieve sales levels and generate sufficient cash flow to break-even. To be a success, we must do better than that. As outlined below, and in light of the disclosures above, there is significant uncertainty that we will be able to do so. Many of the applications for which we are selling for our halloysite-based material are applications for which halloysite has not been used previously. As a result, there are a number of special obstacles that we need to overcome to achieve sales in these markets. It may be necessary to convince manufacturers to change their manufacturing processes and substitute our halloysite-based material for the product they are currently using, and in some cases, to use our halloysite-based material where no product was used before. Table of Contents The process beginning with introducing our halloysite-based material to manufacturers and ending with the manufacturers using our products in their production (i) can encounter inertia, skepticism, and different corporate priorities, (ii) requires educating potential customers (some of whom can be resistant) on whether our product actually works for the manufacturer s particular need, the benefits of our material, and how to test and use our material (how much to add, when to add, and so forth), and (iii) often requires working with potential customers to assure that the potential customers test the materials under proper conditions to assure that our products provide the desired results, do not adversely affect the customer s product and do not interfere with the other constituents of, or processes to make, the customer s product. In summary, while we believe that our halloysite-based material often adds significant value, we can say two things about the process that ends with manufacturers using our halloysite-based material: it can take a long time and there is no certainty that we will be able to convince enough manufacturers to use our halloysite-base material. Similarly, we have attempted to sell our iron oxides, which are natural, into markets where synthetic iron oxides have been used in the past. In trying to make such sales, we encounter the same or similar types of problems described in the preceding paragraph Other applications for our halloysite-based material and our iron oxides are applications for which halloysite or natural iron oxides have been used previously. To penetrate these markets, we face the difficulties encountered by any company trying to enter an established market competing against established players that may be in better financial condition than we are and are already familiar to, and in many cases have relationships with, the potential customers, which may make purchasing from such competitors more attractive than purchasing from us. While we believe that in many cases, our products are superior to those already in the market; there is uncertainty that we will be able to penetrate those markets to a sufficient degree. Because individual halloysite and iron oxide deposits can differ in significant respects, we may have to demonstrate that our halloysite or iron oxide will actually work for the manufacturer s particular need and thus we can encounter the problems discussed in the third paragraph of this section. See "Risk Factors" Common Stock Rights Holders of Common Stock are entitled to one vote per share. Holders of Common Stock have no cumulative voting rights in the election of directors. Two shareholders and the holders of the Series 2023 Notes have certain rights, which are described in the "Description of Capital Stock -- Common Stock," to nominate directors. Holders of Common Stock are entitled to receive ratably dividends if, as, and when dividends are declared from time to time by our Board of Directors out of funds legally available for that purpose, after payment of dividends required to be paid on outstanding preferred stock or series Common Stock. The Series 2023 Notes and Series A Notes prohibit dividends without the approval of the holders of a majority of the principal amount of the Series 2023 Notes and Series A Notes. The Company has never paid a dividend and does not anticipate paying one in the future. See "Description of Capital Stock." Market for Our Common Stock Our Common Stock is traded on the OTCBB. On August 22, 2018, the closing market price on the OTCQB was $0.12. See "Price Range of our Common Stock." Table of Contents
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diff --git a/parsed_sections/prospectus_summary/2018/CIK0000086264_carbon_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0000086264_carbon_prospectus_summary.txt
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+summary highlights selected information contained elsewhere in this prospectus. You should read the entire prospectus carefully, including the information under the headings "Risk Factors," "Forward-Looking Statements" and "Management s Discussion and Analysis of Financial Condition and Results of Operations" and the financial statements and the notes to those financial statements appearing elsewhere in this prospectus. The information presented in this prospectus assumes (i) a public offering price of $ per share of common stock (the midpoint of the price range set forth on the cover of this prospectus) and (ii) unless otherwise indicated, that the underwriters do not exercise their option to purchase additional shares of common stock. Carbon Energy Corporation Overview Carbon Energy Corporation, a Delaware corporation formed in 2007 and formerly known as Carbon Natural Gas Company, is a growth-oriented, independent oil and natural gas company engaged in the acquisition, exploration, development and production of oil, natural gas and natural gas liquids properties in the United States. Our acreage positions provide multiple resource play opportunities and have been delineated largely through drilling by us, as well as by other industry operators. Our primary business objective is to grow our reserves, production and cash generated from operations over the long term, while paying, to the extent practicable, a quarterly dividend to our stockholders. Our assets, held through our majority-owned subsidiaries, are characterized by stable, long-lived producing properties in the Appalachian Basin in Kentucky, Ohio, Tennessee, Virginia and West Virginia; the Ventura Basin in California; and the Illinois Basin in Illinois and Indiana: We own 100% of the outstanding shares of Nytis USA, which in turn owns 98.1% of Nytis LLC. Nytis LLC holds the majority interest in our operating subsidiaries other than Carbon Appalachia and Carbon California, including 47 consolidated partnerships and 17 non-consolidated partnerships. We hold a 53.92% proportionate share of the profits interest in Carbon California. We currently hold a 27.24% proportionate share of the profits interest in Carbon Appalachia. Effective upon the Old Ironsides Buyout (which we intend to fund using proceeds from this offering), we will own 100% of Carbon Appalachia. In late 2016, we saw an opportunity to consolidate producing oil and gas properties in Southern Appalachia and the Ventura Basin as larger E&P companies began abandoning legacy assets in favor of unconventional resource plays. We began acquiring mature, producing conventional assets with long reserve lives and low levels of base production declines from the following types of companies: large companies that deemed such assets to no longer be consistent with their strategic objectives; small or undercapitalized companies; and companies seeking liquidity. We consider the properties that we acquired to be relatively low risk given their established production histories. We believe that the acquisition prices for these properties were at attractive cash flow multiples and discounts to proved PV-10 values, reflecting the reduced competition in the market for properties with these characteristics. Moreover, these acquisitions enable us to execute on the following operational improvements: reduction of per-unit operating costs through basin consolidation; offset of the natural decline of production from existing properties; consolidation and optimization of midstream assets; and future development drilling as commodity prices warrant. To facilitate this acquisition strategy, we formed, with the assistance of two institutions as part owners, two co-investment vehicles – Carbon Appalachia, which is focused on acquiring gas-weighted mature properties in Appalachia, and Carbon California, which is focused on acquiring oil-weighted mature properties in California. We formed Carbon Appalachia with Yorktown and Old Ironsides to capitalize on opportunities to acquire producing assets in Southern Appalachia at a discount to total proved PV-10 and to subsequently create value through overhead and maintenance cost reductions, field-level optimization and gathering system reconfigurations. Carbon Appalachia focuses on producing gas properties in Southern Appalachia as economies of scale and efficiency gains from spreading fixed operating costs over a larger asset base are realized upon integration with our existing asset base in the region. CALCULATION OF REGISTRATION FEE Title of Each Class of Securities to be Registered Proposed Maximum Aggregate Offering Price(1) Amount of Registration Fee(2) Common stock, par value $0.01 per share $ 115,000,000 $ 14,317.50 (1) Estimated solely for the purpose of calculating the amount of the registration fee in accordance with Rule 457(o) under the Securities Act of 1933, as amended. (2) Includes $9,337.50 previously paid in connection with the filing of this Registration Statement. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine. Table of Contents Industry and Market Data The market data and certain other statistical information used throughout this prospectus are based on independent industry publications, government publications or other published independent sources. Although we believe these third-party sources are reliable as of their respective dates, neither we nor the underwriters have independently verified the accuracy or completeness of this information. Some data is also based on our good faith estimates. The industry in which we operate is subject to a high degree of uncertainty
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diff --git a/parsed_sections/prospectus_summary/2018/CIK0000100122_tucson_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0000100122_tucson_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..8510a00fd44c4d76fae5bfd495c23d8e470a3891
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@@ -0,0 +1 @@
+The following summary information is qualified in its entirety by the information contained elsewhere in this prospectus, in the documents incorporated by reference herein and in the indenture (as defined below). TEP and its predecessor companies have served the greater Tucson metropolitan area for 125 years. TEP was incorporated in the State of Arizona in 1963. TEP is a regulated electric utility company serving approximately 425,000 retail customers. TEP s service territory covers 1,155 square miles and includes a population of over one million people in Pima County, as well as parts of Cochise County. TEP s principal business operations include generating, transmitting, and distributing electricity to its retail customers. In addition to retail sales, TEP sells electricity, transmission, and ancillary services to other utilities, municipalities, and energy marketing companies on a wholesale basis. TEP is subject to comprehensive state and federal regulation. The regulated electric utility operation is TEP s only business segment. TEP is a wholly-owned subsidiary of UNS Energy Corporation ( UNS Energy ), a utility services holding company. In 2014, UNS Energy was acquired by Fortis Inc. and became an indirect wholly-owned subsidiary of Fortis which is a leader in the North American electric and gas utility business. Our principal executive offices are located at 88 E. Broadway Boulevard, Tucson, Arizona, 85701. Our telephone number is (520) 571-4000. Table of Contents Summary of the Offering Issuer Tucson Electric Power Company. Securities Offered We are offering $300 million aggregate principal amount of our % senior notes due . Maturity Date The notes will mature on . Interest Rate Interest on the notes will accrue at a rate of % per annum. Interest Payment Dates Interest on the notes will accrue from the interest accrual date set forth on the cover of this prospectus and will be payable semi-annually in arrears on each and , beginning on , 2019, and at maturity. Optional Redemption We may redeem the notes at any time or from time to time, in whole or in part, at the applicable redemption price as described under the heading Description of Notes Optional Redemption herein. Security and Ranking The notes will be our direct unsecured and unsubordinated general obligations and will rank equally with all of our other existing and future unsecured and unsubordinated debt, will be senior in right of payment to any subordinated debt that we may issue in the future and will effectively be junior to any of our existing and future secured debt to the extent of the value of the collateral securing such secured debt. See Description of Notes Ranking herein. Limitation on Secured Debt As long as the notes are outstanding, we will not create, issue, incur or assume any debt secured by a lien upon any of our property (other than Excepted Property, as described below), except for certain permitted secured debt, unless the notes are also secured by that lien. See Description of Notes Limitation on Secured Debt herein. Sinking Fund There is no sinking fund for the notes. Additional Issuances We may, from time to time, without the consent of the holders of the notes, create and issue additional notes having the same terms and conditions as the notes in all respects Table of Contents (except for the issue date, public offering price and, if applicable, the first interest payment date), so that the additional issuance is consolidated and forms a single series with the previously outstanding notes. Form and Denomination The notes will be represented by one or more global certificate(s) deposited with, or on behalf of, DTC or its nominee. See Description of Notes Book-Entry System; Delivery and Form herein. The notes will be issued in fully registered form only in denominations of $2,000 and integral multiples of $1,000 in excess thereof. Use of Proceeds We intend to use the net proceeds from this offering to repay (i) borrowings under our revolving credit facility which provided funds for the redemption in November 2018 of $100 million of tax-exempt local furnishing bonds maturing in 2032; (ii) $36.7 million of tax-exempt pollution control bonds maturing in 2032, which are backed by a letter of credit expiring in February 2019; and (iii) other amounts outstanding under our revolving credit facility, with any remaining balance to be applied to general corporate purposes. See Use of Proceeds herein. Conflicts of Interest The underwriters or their respective affiliates are lenders under our revolving credit facility, which we intend to repay using a portion of the net proceeds of this offering. As a consequence, the underwriters or their respective affiliates are expected to receive more than 5% of the net proceeds of the offering and, accordingly, are deemed to have a conflict of interest under FINRA Rule 5121 (Public Offerings of Securities with Conflicts of Interest). As a result, the underwriters are required to conduct the distribution of the notes in accordance with FINRA Rule 5121 and to not confirm sales to an account over which they exercise discretionary authority without first receiving specific written approval from the account holder. See Underwriting (Conflicts of Interest) Conflicts of Interest herein.
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diff --git a/parsed_sections/prospectus_summary/2018/CIK0000315449_uqm_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0000315449_uqm_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/CIK0000315449_uqm_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2018/CIK0000357097_fibrocell_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0000357097_fibrocell_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..a584fd7fe07324fee2dba4f358d658078f124526
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/CIK0000357097_fibrocell_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights information contained in other parts of this prospectus and in the documents we incorporate by reference. Because it is only a summary, it does not contain all of the information that you should consider before investing in our securities and it is qualified in its entirety by, and should be read in conjunction with, the more detailed information appearing elsewhere in this prospectus, any applicable free writing prospectus and the documents incorporated by reference herein and therein. You should read all such documents carefully, especially the risk factors and our consolidated financial statements and the related notes included or incorporated by reference herein or therein, before deciding to buy shares of our common stock. Company Overview We are an autologous cell and gene therapy company focused on translating personalized biologics into medical breakthroughs for diseases affecting the skin and connective tissue. Our distinctive approach to personalized biologics is based on our proprietary autologous fibroblast technology. Fibroblasts are the most common cell in skin and connective tissue and are responsible for synthesizing extracellular matrix proteins, including collagen and other growth factors, that provide structure and support. Because fibroblasts naturally reside in the localized environment of the skin and connective tissue, they represent an ideal delivery vehicle for proteins targeted to these areas. We target the underlying cause of disease by using fibroblast cells from a patient s skin and genetically modifying them to create localized therapies that are compatible with the unique biology of the patient (i.e., which are autologous). We are focused on discovering and developing localized therapies for diseases affecting the skin and connective tissue, where there are high unmet needs, to improve the lives of patients and their families. In that regard, we commit significant resources to our research and development programs. Currently, all of our research and development operations and focus are on gaining regulatory approvals to commercialize our product candidates in the United States; however, we may seek to expand into international markets in the future. For more information about our company, please refer to other documents that we have filed with the SEC and that are incorporated by reference into this prospectus, as listed under the heading Incorporation of Certain Information by Reference. Corporate Information Our corporate headquarters is located at 405 Eagleview Boulevard, Exton, Pennsylvania 19341. Our phone number is (484) 713-6000. Our corporate website is www.fibrocell.com. We make available free of charge on our website our annual, quarterly and current reports, including amendments to such reports, as soon as reasonably practicable after we electronically file such material with, or furnish such material to, the SEC. Information contained on our website is not incorporated by reference into this prospectus, and you should not consider information contained on our website as part of this prospectus. Risks Associated with Our Business Our business is subject to a number of risks of which you should be aware before making an investment decision. These risks are discussed more fully in the Risk Factors section of this prospectus immediately following this prospectus summary and in Part I, Item 1A Risk Factors of our Annual Report on Form 10-K filed with the SEC on March 19, 2018 and in Part II, Item 1A Risk Factors of our Quarterly Report on Form 10-Q filed with the SEC on May 10, 2018, which are incorporated by reference in this prospectus. These risks include the following: There can be no assurance that our review of strategic alternatives will result in any additional stockholder value, and speculation and uncertainty regarding the outcome of our review of strategic alternatives may adversely impact our business, financial condition and results of operations. We have incurred significant losses since our inception, which we anticipate will continue for the foreseeable future. As of March 31, 2018, we had an accumulated deficit of $181.7 million. We have never generated significant revenue from product sales and may never be profitable. The information in this prospectus is not complete and may be changed. The selling stockholders may not sell these securities pursuant to this prospectus until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and is not soliciting offers to buy these securities in any jurisdiction where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED JULY 27, 2018 PROSPECTUS 2,732,682 Shares of Common Stock Issuable upon Exercise of Outstanding Warrants This prospectus relates to the resale, from time to time, by the selling stockholders identified in this prospectus under the caption Selling Stockholders, of up to 2,732,682 shares of our common stock, par value $0.001 per share, issuable upon exercise of certain outstanding common stock purchase warrants issued and sold by us. We are not selling any shares of common stock under this prospectus and will not receive any proceeds from the sale of shares of common stock by the selling stockholders. We will receive proceeds from any cash exercise of the warrants, which, if exercised in cash with respect to all of the 2,732,682 shares of common stock offered hereby, would result in gross proceeds to us of approximately $7.8 million; however, we cannot predict when or if the warrants will be exercised and it is possible that the warrants may expire and never be exercised, in which case we would not receive any cash proceeds. The selling stockholders will bear all commissions and discounts, if any, attributable to the sale of the shares. We will pay for the expenses of this offering which are estimated to be $125,000. The selling stockholders may sell the shares of our common stock offered by this prospectus from time to time on terms to be determined at the time of sale through ordinary brokerage transactions or through any other means described in this prospectus under the caption Plan of Distribution. The shares of common stock may be sold at fixed prices, at market prices prevailing at the time of sale, at prices related to prevailing market price or at negotiated prices. Our common stock is listed on the Nasdaq Capital Market under the symbol FCSC. On July 26, 2018, the closing price of our common stock was $2.25 per share. ______________________________________________________________ Investing in our common stock involves a high degree of risk. See Risk Factors beginning on page 7 of this prospectus and under similar headings in the documents incorporated by reference into this prospectus. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The date of this prospectus is , 2018. Our business is highly dependent on the success of FCX-007, our lead product candidate. We may encounter difficulties enrolling or retaining subjects in our clinical trials. Clinical product development is costly and time consuming and involves uncertain outcomes, and results of earlier studies and trials may not be predictive of future trial results. We may not be able to submit investigational new drug applications, commence clinical trials or report data on the timelines we expect, and even if we are able to, the U.S. Food and Drug Administration may not permit us to proceed. If our product candidates fail to demonstrate quality, safety and efficacy to the satisfaction of regulatory authorities, we may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of our product candidates. We will need to obtain additional funding for commercialization. Failure to obtain additional funding when needed may force us to delay, limit or terminate our product development efforts or other operations. There is substantial doubt relating to our ability to continue as a going concern as determined by management and as reflected in the report of our independent registered public accounting firm. We will need to raise substantial additional capital to fund our operations. If we are unable to remain in compliance with the continued listing requirements of the Nasdaq Capital Market, our common stock may be delisted from the Nasdaq Capital Market. We have relied and expect to rely on third parties to conduct aspects of our research and development and clinical trials. If they terminate our arrangements, fail to meet deadlines or perform in an unsatisfactory manner, our business could be harmed. The potential commercial success of any current or future product candidate will depend upon the degree of market acceptance by physicians, patients, third-party payors and others in the medical community. Description of Private Placements May 2018 Private Placement On May 29, 2018, we entered into securities purchase agreements with certain institutional and accredited investors named therein, or the May 2018 Private Placement Purchasers, pursuant to which we agreed, among other things, to issue and sell common stock purchase warrants exercisable for up to 1,528,668 shares of our common stock at an exercise price of $2.86 per share (subject to adjustment as set forth therein) to the May 2018 Private Placement Purchasers. We refer to the sale of these warrants as the May 2018 Private Placement. Each warrant sold in the May 2018 Private Placement was immediately exercisable on the date of its issuance and expires on the 5.5 year anniversary of the date of issuance. The warrants and the shares of our common stock issuable upon the exercise of the warrants were not registered under the Securities Act of 1933, as amended, or the Securities Act, were not offered pursuant to a registration statement and were offered pursuant to the exemption provided in Section 4(a)(2) under the Securities Act, and Rule 506(b) promulgated thereunder. All such warrants are exercisable on a cashless basis if at the time of exercise there is no effective registration statement registering, or the prospectus contained therein is not available for, the resale of shares of common stock for which the warrants are exercisable. On May 31, 2018, we also issued unregistered warrants to purchase up to an aggregate of 142,676 shares of our common stock to the designees of H.C. Wainwright & Co., LLC, or Wainwright, as partial compensation for placement agent services by Wainwright in connection with our registered direct public offering in May 2018, or the May 2018 Registered Direct Public Offering, and the May 2018 Private Placement. Such unregistered warrants have an initial exercise price of $3.679 per share (subject to adjustment as set forth therein), are immediately exercisable and expire on May 30, 2023. We are filing a registration statement on Form S-1, of which this prospectus forms a part, to provide for the resale (i) by the May 2018 Private Placement Purchasers of up to 1,528,668 shares of our common stock issuable upon exercise of the warrants we sold in the May 2018 Private Placement and (ii) by designees of Wainwright of 142,676 shares of our common stock issuable upon the exercise of the warrants we issued to Wainwright s designees. July 2018 Private Placement On July 2, 2018, we entered into securities purchase agreements with certain institutional and accredited investors named therein, or the July 2018 Private Placement Purchasers, pursuant to which we agreed, among other things, to issue and sell common stock purchase warrants exercisable for up to 958,152 shares of our common stock at an exercise price of $2.70 per share (subject to adjustment as set forth therein) to the July 2018 Private Placement Purchasers. We refer to the sale of these warrants as the July 2018 Private Placement. Each warrant sold in the July 2018 Private Placement was immediately exercisable on the date of its issuance and expires on the 5.5 year anniversary of the date of issuance. The warrants and the shares of our common stock issuable upon the exercise of the warrants were not registered under the Securities Act, were not offered pursuant to a registration statement and were offered pursuant to the exemption provided in Section 4(a)(2) under the Securities Act, and Rule 506(b) promulgated thereunder. All such warrants are exercisable on a cashless basis if at the time of exercise there is no effective registration statement registering, or the prospectus contained therein is not available for, the resale of shares of common stock for which the warrants are exercisable. On July 5, 2018, we also issued unregistered warrants to purchase up to an aggregate of 103,186 shares of our common stock to the designees of Wainwright as partial compensation for placement agent services by Wainwright in connection with our registered direct public offering in July 2018, or the July 2018 Registered Direct Public Offering, and the July 2018 Private Placement. Such unregistered warrants have an initial exercise price of $3.464 per share (subject to adjustment as set forth therein), are immediately exercisable and expire on July 3, 2023. We are filing a registration statement on Form S-1, of which this prospectus forms a part, to provide for the resale (i) by the July 2018 Private Placement Purchasers of up to 958,152 shares of our common stock issuable upon exercise of the warrants we sold in the July 2018 Private Placement and (ii) by designees of Wainwright of 103,186 shares of our common stock issuable upon the exercise of the warrants we issued to Wainwright s designees.
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diff --git a/parsed_sections/prospectus_summary/2018/CIK0000700764_victory_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0000700764_victory_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..fe299e3ed631fec0d7e92a20f4f5d2f85b0e5f19
--- /dev/null
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+changes in government regulations; fluctuations in our quarterly and annual operating results; and general market and economic conditions. In addition, the stock markets have, in recent years, experienced significant volume and price fluctuations. These fluctuations often have been unrelated to the operating performance of the specific companies whose stock is traded. Market prices and the trading volume of our stock may continue to experience significant fluctuations due to the matters described above, as well as economic and political conditions in the United States and worldwide, investors attitudes towards our business prospects, and changes in the interests of the investing community. As a result, the market price of our common stock has been and may continue to be adversely affected and our stockholders may not be able to sell their shares or to sell them at desired prices. We may be subject to penny stock regulations and restrictions and you may have difficulty selling shares of our common stock. The SEC has adopted regulations which generally define so-called penny stocks to be an equity security that has a market price less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exemptions. Our common stock is a penny stock and is subject to Rule 15g-9 under the Exchange Act. This rule imposes additional sales practice requirements on broker-dealers that sell such securities to persons other than established customers and accredited investors (generally, individuals with a net worth in excess of $1,000,000 or annual incomes exceeding $200,000, or $300,000 together with their spouses). For transactions covered by Rule 15g-9, a broker-dealer must make a special suitability determination for the purchaser and have received the purchaser's written consent to the transaction prior to sale. As a result, this rule may affect the ability of broker-dealers to sell our securities and may affect the ability of purchasers to sell any of our securities in the secondary market, thus possibly making it more difficult for us to raise additional capital. For any transaction involving a penny stock, unless exempt, the rules require delivery, prior to any transaction in penny stock, of a disclosure schedule prepared by the SEC relating to the penny stock market. Disclosure is also required to be made about sales commissions payable to both the broker-dealer and the registered representative and current quotations for the securities. Finally, monthly statements are required to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stock. There can be no assurance that our common stock will qualify for exemption from this rule. In any event, even if our common stock were exempt from this rule, we would remain subject to Section 15(b)(6) of the Exchange Act, which gives the SEC the authority to restrict any person from participating in a distribution of penny stock, if the SEC finds that such a restriction would be in the public interest. Future sales or perceived sales of our common stock could depress our stock price. The registration statement of which this prospectus is a part covers 4,382,872 shares of common stock. If the holders of these shares were to attempt to sell a substantial amount of their holdings at once, our stock price could decline. Moreover, the perceived risk of this potential dilution could cause stockholders to attempt to sell their shares and investors to short the shares, a practice in which an investor sells shares that he or she does not own at prevailing market prices, hoping to purchase shares later at a lower price to cover the sale. As each of these events would cause the number of shares being offered for sale to increase, our stock price would likely further decline. All of these events could combine to make it very difficult for us to sell equity or equity-related securities in the future at a time and price that we deem appropriate. Issuance of shares of our common stock upon the exercise of options or warrants will dilute the ownership interest of our existing stockholders and could adversely affect the market price of our common stock. As of April 18, 2018, we had outstanding stock options to purchase an aggregate of 223,556 shares of common stock and warrants to purchase an aggregate of 2,383,813 shares of common stock. The exercise of the stock options and warrants and the sales of stock issuable pursuant to them would further reduce a stockholder s percentage voting and ownership interest. Further, the stock options and warrants are likely to be exercised when our common stock is trading at a price that is higher than the exercise price of these options and warrants and we would be able to obtain a higher price for our common stock than we would receive under such options and warrants. The exercise, or potential exercise, of these options and warrants could adversely affect the market price of our common stock and the terms on which we could obtain additional financing. The ownership interest of our existing stockholders may be further diluted through adjustments to certain outstanding warrants under the terms of their anti-dilution provisions.
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+PROSPECTUS SUMMARY This summary highlights certain information appearing elsewhere in this prospectus. For a more complete understanding of this offering, you should read the entire prospectus carefully, including the risk factors and the financial statements. References in this prospectus to we, us, our, the Company and NewBridge refer to NewBridge Global Ventures, Inc. You should read both this prospectus together with additional information described below under the heading Where You Can Find More Information. Organization NewBridge Global Ventures, Inc. was incorporated in May 1983 in the State of Colorado and re-incorporated in the State of Delaware in April 2008. Effective June 19, 2014 the Company sold its prior subsidiary and became a shell company. On November 30, 2015, we consummated the transaction evidenced by an Agreement and Plan of Share Exchange (the "Share Exchange Agreement") dated October 8, 2015 by and among the Company and Nabufit Denmark, pursuant to which the Company acquired from the Nabufit Denmark shareholders all of the issued and outstanding equity interests of Nabufit Denmark in exchange for 516,667 shares of the Company (the Share Exchange ). As a result of the Share Exchange, the former shareholders of Nabufit Denmark, became the controlling shareholders of the Company and Nabufit Denmark became a subsidiary of the Company. The Share Exchange was accounted for as a reverse merger/recapitalization effected by a share exchange, wherein Nabufit Denmark was considered the acquirer for accounting and financial reporting purposes. In September 2017, the Company sold Nabufit Denmark and its other subsidiaries, ceased its previous operations and changed its business model. On October 19, 2017, the shareholders approved of an amendment to the Company s Certificate of Incorporation effecting a change of the Company s name from Nabufit Global, Inc. to NewBridge Global Ventures, Inc. to more accurately reflects its business objectives. The name change was effective as of December 12, 2017 and the Company s new symbol is NBGV . On February 14, 2018, the Company elected to form Elevated Education, Inc. ( Elevated ) as a Delaware corporation and wholly owned subsidiary of the Company. On February 19, 2018, the Company entered into an Asset Purchase Agreement ( Purchase Agreement ) with Elevated Portfolio Holdings, LLC ( Elevated Portfolio ), whereby Elevated agreed to purchase the assets of Elevated Portfolio for 2,000,000 shares of the Company s common stock, par value $0.0001 per share. The shares were valued at $2,700,000 based on the market price of $1.35 per share on February 19, 2018. Nature of Business NewBridge is an early stage business which provides consulting services related to the legal medical cannabis production and distribution industries. Prior to September 2017, the Company designed, manufactured and marketed the Nabufit virtual training and fitness products and services. In September 2017, the Company sold its operating subsidiaries and the related business and as a result changed its business model. NewBridge is currently engaged in providing business consulting services to several companies in the medical marijuana and cannabis related industries. These companies include an online education company providing education to healthcare professionals on medical cannabis and the endocannabinoid system, a distribution company focused on delivering best in class hemp oil and medical marijuana products and a Wellness center delivering medical recommendations to patient and sales of CBD and hemp oil products. In connection with such consulting agreements, the Company provides the following services: Strategic advisory and services; Business services; Marketing services; Acquisition and development services; and Strategic partnership and consolidation services. You should rely only on the information contained or incorporated by reference in this prospectus. We have not authorized anyone to provide you with different information. We have not authorized the placement agent or any underwriters, brokers or dealers to make an offer of the securities in any jurisdiction where the offer is not permitted. You should not assume that the information in this prospectus is accurate as of any date other than the date on the front of this prospectus. PROSPECTUS SUMMARY This summary highlights certain information appearing elsewhere in this prospectus. For a more complete understanding of this offering, you should read the entire prospectus carefully, including the risk factors and the financial statements. References in this prospectus to we, us, our, the Company and NewBridge refer to NewBridge Global Ventures, Inc. You should read both this prospectus together with additional information described below under the heading Where You Can Find More Information. Organization NewBridge Global Ventures, Inc. was incorporated in May 1983 in the State of Colorado and re-incorporated in the State of Delaware in April 2008. Effective June 19, 2014 the Company sold its prior subsidiary and became a shell company. On November 30, 2015, we consummated the transaction evidenced by an Agreement and Plan of Share Exchange (the "Share Exchange Agreement") dated October 8, 2015 by and among the Company and Nabufit Denmark, pursuant to which the Company acquired from the Nabufit Denmark shareholders all of the issued and outstanding equity interests of Nabufit Denmark in exchange for 516,667 shares of the Company (the Share Exchange ). As a result of the Share Exchange, the former shareholders of Nabufit Denmark, became the controlling shareholders of the Company and Nabufit Denmark became a subsidiary of the Company. The Share Exchange was accounted for as a reverse merger/recapitalization effected by a share exchange, wherein Nabufit Denmark was considered the acquirer for accounting and financial reporting purposes. In September 2017, the Company sold Nabufit Denmark and its other subsidiaries, ceased its previous operations and changed its business model. On October 19, 2017, the shareholders approved of an amendment to the Company s Certificate of Incorporation effecting a change of the Company s name from Nabufit Global, Inc. to NewBridge Global Ventures, Inc. to more accurately reflects its business objectives. The name change was effective as of December 12, 2017 and the Company s new symbol is NBGV . On February 14, 2018, the Company elected to form Elevated Education, Inc. ( Elevated ) as a Delaware corporation and wholly owned subsidiary of the Company. On February 19, 2018, the Company entered into an Asset Purchase Agreement ( Purchase Agreement ) with Elevated Portfolio Holdings, LLC ( Elevated Portfolio ), whereby Elevated agreed to purchase the assets of Elevated Portfolio for 2,000,000 shares of the Company s common stock, par value $0.0001 per share. The shares were valued at $2,700,000 based on the market price of $1.35 per share on February 19, 2018. Nature of Business NewBridge is an early stage business which provides consulting services related to the legal medical cannabis production and distribution industries. Prior to September 2017, the Company designed, manufactured and marketed the Nabufit virtual training and fitness products and services. In September 2017, the Company sold its operating subsidiaries and the related business and as a result changed its business model. NewBridge is currently engaged in providing business consulting services to several companies in the medical marijuana and cannabis related industries. These companies include an online education company providing education to healthcare professionals on medical cannabis and the endocannabinoid system, a distribution company focused on delivering best in class hemp oil and medical marijuana products and a Wellness center delivering medical recommendations to patient and sales of CBD and hemp oil products. In connection with such consulting agreements, the Company provides the following services: Strategic advisory and services; Business services; Marketing services; Acquisition and development services; and Strategic partnership and consolidation services. On February 19, 2018, New Bridge Global Ventures, Inc. (the Company ) entered into an Asset Purchase Agreement ( Purchase Agreement ) with Elevated Portfolio Holdings, LLC ( Elevated Portfolio ), whereby Elevated Education Inc., a wholly owned subsidiary of the Company ( Subsidiary ) agreed to purchase the assets of Elevated Portfolio for 2,000,000 shares ( Shares ) of the Company s common stock, par value $0.0001 per share ( Common Stock ). Elevated Portfolio offers medically focused education modules to health professionals about the use of cannabis for health and wellness. The Purchase Agreement was closed on March 5, 2018. As a result, the Company is able to use the acquired assets to continue its consulting business and provide key educational products as part of its service offering. Corporation Information Our principal executive offices are located at 626 East 1820 North, Orem, Utah 84097, and our telephone number is (801) 362-2115. Our website address is www.newbridgegv.com, although the information on our website is not deemed to be part of this prospectus.
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diff --git a/parsed_sections/prospectus_summary/2018/CIK0000753772_medizone_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0000753772_medizone_prospectus_summary.txt
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+PROSPECTUS SUMMARY This summary highlights selected information contained elsewhere in this prospectus and does not contain all of the information you should consider in making your investment decision. Before investing in the securities offered hereby, you should read the entire prospectus, including our consolidated financial statements and related notes included in this prospectus and the information set forth under the headings Risk Factors and Management s Discussion and Analysis of Financial Condition and Results of Operations. In this prospectus, the terms Medizone, the Company, we, us, and our refer collectively, to Medizone International, Inc., a Nevada corporation, our subsidiary, Medizone Canada Inc., and the Canadian Foundation for Global Health, a non-profit organization that is affiliated with us. Our Business We are a global provider of disinfection solutions. We invented the AsepticSure system to provide a superior means of disinfecting non-porous surfaces in numerous settings, including hospitals, other healthcare facilities and non-hospital/healthcare facilities. The AsepticSure system utilizes hydrogen peroxide vapor and ozone in a patented process that achieves a six-log reduction across a broad array of bacterial and viral pathogens. We were incorporated in the State of Nevada on August 24, 1984, as Madison Funding, Inc. We changed our name in March 1986, to Medizone International, Inc. when we acquired certain proprietary rights registered under that mark related to a patented developmental oxygen and ozone mixture and process targeted at inactivating lipid enveloped viruses for the intended purpose of decontaminating blood and blood products and assisting in the treatment of certain diseases, and developing related technology and equipment for production and delivery of those products. We subsequently directed our efforts toward the disinfection solutions that are our current business. Our principal executive office is located at 350 East Michigan Avenue, Suite 500, Kalamazoo, MI 49007. Our corporate website is www.medizoneint.com. Information contained on, or accessible through, our website is not a part of, and is not incorporated by reference into, this prospectus or the registration statement of which it is a part. Our telephone number at our principal executive office is (269) 202-5020. The Equity Line On January 31, 2018 (the Closing Date ), we entered into that certain Equity Purchase Agreement with the Investors, which was subsequently amended on March 16, 2018 (as amended, the Purchase Agreement ), pursuant to which Investors committed to purchase in the aggregate, up to $10,000,000 of value of our Common Stock (the Equity Line ). In consideration of their commitment under the Purchase Agreement, on the Closing Date, we issued to each Investor 4,087,193 shares of Common Stock (the Commitment Shares ) as a commitment fee. Pursuant to the Purchase Agreement, provided certain conditions are met, we have the right, but not the obligation, to direct the Investors to purchase shares of our Common Stock (the Put Shares ) (i) in a minimum amount of not less than $20,000 and (ii) in a maximum amount of $1,000,000, provided that the number of Put Shares shall not exceed 300% of the average daily trading volume in the 10 trading days immediately preceding a Put Notice (as defined below). At any time, and from time to time during the term of the Purchase Agreement (the Commitment Period ), we may deliver a notice to the Investors requiring them to purchase shares under the Equity Line (each such notice, a Put Notice ). We also will deliver the Put Shares to the Investors via the Deposit/Withdrawal at Custodian system or DWAC within one trading day of the Put Notice. The purchase price for the Put Shares is 85% of the market price of our Common Stock (as defined in the Purchase Agreement) during the five trading days immediately following the date the Investors receive the Put Shares via DWAC associated with the applicable Put Notice (the Valuation Period ); provided, however, that if the market price of our Common Stock during the Valuation Period is less than $0.01 per share, then the purchase price for the Put Shares will be 80% of the market price of our Common Stock during the Valuation Period. Market price is defined in the Purchase Agreement as the lowest VWAP (volume weighted average price) of the Common Stock on the principal market on which our shares are traded for any trading day during the Valuation Period, as reported by Bloomberg Finance L.P. or other reputable source. The closing of the purchase of Put Shares under a Put Notice shall occur within one trading day following the end of the respective Valuation Period, at which time (i) the Investors shall deliver to us the purchase price for the shares by wire transfer of immediately available funds, and (ii) the Investors shall return surplus Put Shares if the value of the Put Shares delivered to the Investors causes us to exceed the maximum commitment amount under the Purchase Agreement. Under the terms of the Purchase Agreement, we may not deliver another Put Notice to the Investors within seven trading days of a prior Put Notice. UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Table of Contents Our right to issue and sell shares under the Purchase Agreement is subject to the satisfaction of certain conditions, including, but not limited to, (i) an effective registration statement for resale by the Investors of the Put Shares and Commitment Shares, (ii) the accuracy of our representations and warranties, (iii) our performance of our obligations under the Purchase Agreement in all material respects, (iv) no suspension of trading or delisting of the Common Stock, (v) limitation of each Investor s beneficial ownership to no more than 9.99% of our outstanding Common Stock, (vi) our maintaining our DWAC-eligible status, and (vii) our maintaining a sufficient number of authorized shares of Common Stock in reserve. The obligation of the Investors to purchase shares under the Purchase Agreement will expire (the Commitment Period ) on the earlier of (i) the date on which the Investors shall have purchased $10,000,000 value of shares of Common Stock from us pursuant to the Equity Line, (ii) January 31, 2021, or (iii) upon our provision of written notice to the Investors that we elect to terminate the Purchase Agreement. Neither of the Investors, nor any affiliate of either of the Investors acting on its behalf or pursuant to any understanding with it, will execute any short sales during the period from the date hereof to the end of the Commitment Period. In connection with the Purchase Agreement, we also entered into a Registration Rights Agreement requiring us to prepare and file a registration statement registering the resale of the Commitment Shares and the shares to be issued to the Investors under the Purchase Agreement (collectively, the Registrable Shares ), to use commercially reasonable efforts to cause such registration statement to become effective, and to keep such registration statement effective until the later of (i) the date as of which the Investors may sell all the Registrable Shares owned by them without restriction under Rule 144 promulgated under the Securities Act, or (ii) the date they have sold all the Registrable Shares and no Available Amount remains under the Purchase Agreement. In accordance with the Registration Rights Agreement, on April 3, 2018, we filed the registration statement of which this prospectus is a part registering the resale by the Investors of up to 14,059,041 shares that may be issued and sold to the Investors under the Equity Line and 8,174,386 Commitment Shares. This registration statement was declared effective by the Securities and Exchange Commission ( SEC ) on [_______ [ ]], 2018. The shares being offered pursuant to this prospectus by the selling stockholders will represent approximately 5.6% of our issued and outstanding shares held by non-affiliates as of the date of this prospectus, assuming the offering is fully subscribed. The foregoing description of the terms of the Purchase Agreement and Registration Rights Agreement is not complete and is subject to and qualified in its entirety by reference to the agreements and instruments themselves, copies of which are filed as Exhibits 10.7 and 10.8 to our Current Report on Form 8-K dated February 6, 2018; the Amendment to the Purchase Agreement was filed as Exhibit 10.23 to our Annual Report on Form 10-K for the year ended December 31, 2017, filed March 20, 2018. The benefits and representations and warranties set forth in such agreements and instruments are not intended to and do not constitute continuing representations and warranties of the Company or any other party to persons not a party thereto. We intend to sell shares of Common Stock to the Investors periodically under the Purchase Agreement and the Investors may, in turn, sell such shares as selling stockholders and determine at what price they will sell shares under this prospectus, and such sales may be made at prevailing market prices, or at privately negotiated prices. This may cause our stock price to decline, which will require us to issue increasing numbers of shares of Common Stock under the Equity Line to raise the intended amount of funds as our stock price declines. Likelihood of Accessing the Full Amount of the Equity Line Notwithstanding that the Equity Line is in an amount of $10,000,000, we anticipate that the actual likelihood that we will be able access the full amount of the Equity Line is low due to several factors, including that our ability to access the Equity Line is affected by the average daily trading volume of our stock, which may limit the maximum dollar amount of each Put Notice we deliver, and our stock price. Our use of the Equity Line will continue to be limited and restricted if our share trading volume or the market price of our stock continue at their current levels or decrease further in the future from the volume and stock prices reported over the past year. Further, if the price of our stock remains at $0.01975 per share (which represents the average of the high and low quoted bid prices of our Common Stock on April 2, 2018), the sale by the selling stockholders of all 14,059,041 of the shares offered under this prospectus that would be issued to them under the Equity Line would mean we would have received only $179,252.77 when they acquired the shares originally from us. Our ability to issue shares in excess of such 14,059,041 shares covered by the registration statement of which this prospectus is a part will be subject to our filing a subsequent registration statement with the SEC and the SEC declaring such subsequent registration statement effective. At current market prices, it will be necessary for us to increase the number of our authorized shares of Common Stock in order to issue shares under the Equity Line in the future, if we want to raise the full available amount of $10,000,000. Increasing the number of our authorized shares will require further board and stockholder approval. We intend to seek stockholder approval to increase our authorized capital, but there is no assurance we will obtain the approval necessary. Accordingly, because our ability to deliver Put Notices under the Purchase Agreement is subject to a number of conditions, there is no guarantee that we will receive all or any portion of the $10,000,000 that is otherwise contractually available to us under the Equity Line. Amendment No. 1 to FORM S-1 Table of Contents January 31, 2018 Convertible Note and Warrant Financing Transaction On January 31, 2018, we entered into identical securities purchase agreements (the Securities Purchase Agreements ) with the Investors, pursuant to which we issued to the Investors identical unsecured convertible promissory notes (collectively, the Notes ) in the aggregate principal amount of $305,000. The Notes accrue interest at a rate of 8% per annum. Principal and accrued interest are payable at maturity, six months from the date of issue. The Notes were issued with original issue discount of $35,000. We also paid $20,000 from the proceeds of the Notes to the Investors to reimburse them for their legal fees in connection with the preparation of the Notes and the related loan and investment transaction documentation. Accordingly, the net proceeds we received from these Notes was $250,000. The Notes are convertible at any time at the option of the Investors into shares of Common Stock at a conversion price of $0.05 per share (the Fixed Conversion Price ), subject to adjustment upon the occurrence of certain Events of Default (as defined) with respect to the Notes; provided, however, that in no event shall an Investor be entitled to convert any portion of a Note in excess of that portion of the Note on conversion of which the sum of (1) the number of shares of Common Stock beneficially owned by the Investor and its affiliates (disregarding for this purpose certain other shares that may be deemed to be beneficially owned by the Investor) and (2) the number of shares of Common Stock issuable upon the conversion of the portion of the Note with respect to which the determination of beneficial ownership is being made, would result in beneficial ownership by the Investor and its affiliates of more than 4.99% of the outstanding shares of our Common Stock. However, an Investor may increase the 4.99% limitation to 9.99% by providing us with 61 calendar days prior written notice. We may prepay the amount outstanding under either Note at any time by making a cash payment to the holder of an amount equal to 130% multiplied by the total outstanding amount owed under the Note at the time of such repayment. The Investor may convert the Note in whole or in part at any time after it has been called for redemption. Upon an Event of Default, the Investors may convert at an alternative conversion price (the Default Conversion Price ) equal to the lower of the then applicable Fixed Conversion Price or sixty percent (60%) of the Market Price defined in the Notes (the Variable Conversion Price ). Market Price means the lowest Trading Price (as defined) for the Common Stock during the 30 trading day period ending on the last complete trading day prior to the conversion date. Trading Price means the lowest traded price on the OTCQB as reported by a reliable reporting service designated by the Investors, provided, if the OTCQB is not the principal trading market for the Common Stock, on the principal securities exchange or trading market where the Common Stock is listed or traded or, if the lowest intraday trading price of the Common Stock is not available in any of the foregoing manners, the Trading Price means the lowest intraday price of any market makers for the Common Stock that are quoted on the OTCQB. If the Trading Price cannot be calculated on such date in the manner provided above, the Trading Price shall be the fair market value as mutually determined by us and the Investors holding a majority in interest of the Notes being converted for which the calculation of the Trading Price is required in order to determine the Variable Conversion Price of such Notes. Each time an Event of Default occurs while the Notes are outstanding, an additional discount of five percent (5%) is factored into the Variable Conversion Price. All expenses incurred by the Investors for the issuance and clearing of the Common Stock into which the Notes are convertible, are to be immediately and automatically added to the balance of the Notes at such time as the expenses are incurred. Events of Default, none of which have occurred as of the date of this prospectus, are defined under the Notes to include: (i) failure to pay the principal of and interest on the Notes when due; (ii) failure to reserve a sufficient number of shares of Common Stock to permit the conversion of the Notes, failure to convert or to take certain other actions necessary to permit the Investors to convert the Notes; (iii) breach of any material term or condition contained in the Notes, the Purchase Agreement or the Securities Purchase Agreements or the occurrence of any breach of or default under any such agreements; (iv) breach of a representation or warranty in the Notes, the Purchase Agreement or the Securities Purchase Agreement which has (or with the passage of time will have) a material adverse effect on the rights of the Investors with respect to the Notes; (v) certain acts of insolvency, bankruptcy or liquidation or a cessation of our operations; (vi) entry against us or any subsidiary or against any of our property, subject to certain exceptions, of a money judgement for an amount in excess of $100,000; (vii) failure to maintain the quotation of our Common Stock on the OTCQB or an alternate exchange; (viii) failure to comply with the reporting requirements of the Exchange Act or to be subject to such reporting requirements; (ix) replacement of our auditor or, under certain circumstances, restatement of any of our financial statements; (x) effectuation of a reverse split of our Common Stock without providing the Investors with 20 days prior written notice; (xi) replacement of our transfer agent without providing irrevocable instructions to the successor transfer agent to reserve the number of shares reserved by the prior transfer agent for the conversion of the Notes; (xii) disclosure or attempted disclosure by us to the Investors of material non-public information concerning us unless we immediately file a Form 8-K pursuant to Regulation FD promulgated under the Exchange Act; (xiii) the lowest trading price for our Common Stock is equal to or less than $0.0001 per share; (xiv) issuance of any security that has or may have conversion rights, a conversion price or an exchange price that varies with the market price of our Common Stock (subject to certain exceptions); and (xv) failure to have the registration statement of which this prospectus is a part declared effective on or before June 2, 2018. REGISTRATION STATEMENT Under THE SECURITIES ACT OF 1933 Medizone International, Inc. (Exact name of registrant as specified in its charter) Nevada 5122 87-0412648 (State or other jurisdiction of incorporation) (Primary Standard Industrial Classification Code Number) (IRS Employer Identification No.) 350 East Michigan Avenue, Suite 500 Kalamazoo, MI 49007 (269) 202-5020 (Address, including zip code, and telephone number, including area code, of principal executive offices) Philip A. Theodore Executive Vice President, General Counsel Medizone International, Inc. 350 East Michigan Avenue, Suite 500 Kalamazoo, Michigan 49007 (269) 202-5020 (Name, address, including zip code, and telephone number, including area code, of agent for service) Copies to Kevin R. Pinegar, Esq. Wayne D. Swan, Esq. Durham Jones & Pinegar, P.C. 111 S. Main Street, Suite 2400 Salt Lake City, Utah 84111 (801) 415-3000 Approximate date of commencement of proposed sale to the public: From time-to-time after the effective date of this registration statement. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box: If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Table of Contents In connection with the issuance of the Notes, we also issued to each Investor a warrant (collectively, the Warrants ) to purchase 2,833,168 shares of Common Stock. The Warrants are immediately exercisable for five years at an exercise price $0.04169 (which is equal to 110% multiplied by the closing bid price of the Common Stock on the issuance date, which was $0.0379 per share). The Warrants include a cashless net exercise provision whereby the holder can elect to receive shares equal to the value of the Warrants minus the fair market value of shares being surrendered to pay for the exercise. The Warrants contain customary anti-dilution provisions. The foregoing description of the terms of the Securities Purchase Agreements, the Notes, and the Warrants is not complete and is subject to and qualified in its entirety by reference to the agreements and instruments themselves, copies of which are filed as Exhibits 10.1, 10.2, 10.3, 10.4, 10.5, and 10.6 to our Current Report on Form 8-K dated February 5, 2018. The benefits and representations and warranties set forth in such agreements and instruments are not intended to and do not constitute continuing representations and warranties of the Company or any other party to persons not a party thereto. Risks Associated with Our Business Our ability to execute our strategy and to capitalize on our competitive strengths is subject to a number of risks more fully discussed in the Risk Factors beginning on page 6 . Before you invest in our shares, you should carefully consider all of the information in this prospectus, including matters set forth under the heading Risk Factors, such as: our history of losses and the fact that we have significant accumulated deficits, and that we can expect losses to continue for the foreseeable future; our net operating losses and our lack of revenues will require that we finance our operations through the sale of our securities for the foreseeable future; the commercialization of our technology; technological advances by our competitors; changes to regulatory requirements relating to environmental approvals for the disinfection of health care facilities and the capital needs to fund any delays or extensions of development programs; delays in the manufacture of new and existing products by us or third-party contractors; market acceptance of the AsepticSure system; the loss of any key employees; delays in obtaining federal, state or local regulatory clearance for the AsepticSure system changes in governmental regulations; and the availability of capital on terms satisfactory to us. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of large accelerated filer, accelerated filer, smaller reporting company and emerging growth company in Rule 12b-2 of the Exchange Act. Large accelerated filer Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company Emerging growth company CALCULATION OF REGISTRATION FEE Title of each class of securities to be registered Amount to be registered(1) Proposed maximum offering price per share (2) Proposed maximum aggregate offering price(3) Amount of registration Fee (4) Common Stock, $0.001, par value per share 22,233,427 $ 0.01975 $ 439,110.18 $ 54.67 * __________________ (1) We are registering (i) 14,059,041 shares of our common stock, par value $0.001 per share ( Common Stock ) that we may put to L2 Capital, LLC ( L2 ) and SBI Investments LLC, 2014-1 ( SBI and, together with L2, the Investors or the selling stockholders ), pursuant to an equity purchase agreement entered into by the Investors with us on January 31, 2018, as amended on March 16, 2018, and (ii) 8,174,386 shares (the Commitment Shares ) of Common Stock that we issued to the Investors (4,087,193 to each Investor) as a commitment fee in connection with the equity purchase agreement. In the event of stock splits, stock dividends or similar transactions involving the Common Stock, the number of shares being registered hereunder shall, unless otherwise expressly provided, automatically be deemed to cover the additional securities to be offered or issued pursuant to Rule 416 promulgated under the Securities Act of 1933, as amended (the Securities Act ). In the event that the adjustment provisions of the equity purchase agreement require the registrant to issue more shares than are being registered in this registration statement, for reasons other than those stated in Rule 416 of the Securities Act, the registrant will file a new registration statement to register those additional shares. (2)
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+Calculation of Registration Fee Title of Each Class of Securities to be Registered Amount to be Registered* Proposed Maximum Offering Price Per Unit* Proposed Maximum Aggregate Offering Price Amount of Registration Fee** Interests in real property separate account underlying variable life insurance and annuity contracts $23,000,000 100% 100% $972.87 * These securities are not issued in predetermined amounts or units and the maximum aggregate offering price is estimated solely for purposes of determining the registration fee. **Prior to the filing of this Registration Statement, $15,185,774 of units of interest of the registrant (for a filing fee of $1,890.63) remained registered and unsold, pursuant to Registration Statement File No. 333- 202193 on Form S-1 which was filed with the Commission on April 1, 2015, and are being carried forward pursuant to Rule 415(a)(6). A payment of $972.87 for an additional $7,814,226 of units of interest has been wired to U.S. Bank of St. Louis, MO for deposit into the Commission's account. Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until Registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to Section 8(a), may determine. PART I INFORMATION REQUIRED IN PROSPECTUS PROSPECTUS May 1, 2018 PRUCO LIFE VARIABLE CONTRACT REAL PROPERTY ACCOUNT There are two other types of prospectuses. The first type describes either a variable annuity contract or a variable life insurance contract (collectively, the "Contract") issued by Pruco Life Insurance Company ("Pruco Life," "us," "we," or "our"), a stock life insurance company that is a wholly owned subsidiary of The Prudential Insurance Company of America ("Prudential"). The second prospectus type describes several investment options available under that variable contract through one or more funds (the "Funds"). The Funds are registered under the Investment Company Act of 1940. The Funds are separate investment portfolios that are mutual funds, each with a different investment policy and objective. This prospectus describes the Pruco Life Variable Contract Real Property Account (the "Real Property Account"), an additional available investment option. Although it is not a mutual fund, in many ways it is like a mutual fund. Instead of holding a diversified portfolio of securities, such as stocks or bonds, it consists mainly of a portfolio of commercial and residential real properties. Pruco Life determines the price of a "share" or, as we call it, a "participating interest" in this portfolio of properties, just as it does for the other investment options. It is based upon our best estimate of the fair market value of the properties and other assets held in this portfolio. The portion of your "Contract Fund" (the total amount invested under the Contract) that you allocate to this investment option will change daily in value, up or down, as our estimate of the fair market value of these real properties and other assets change. The risks of investing in real property are different from the risks of investing in mutual funds. See RISK FACTORS. Also, your ability to withdraw or transfer your investment in this option is not as freely available as it is for the other investment options. See RESTRICTIONS ON WITHDRAWALS. Please read this prospectus and keep it for future reference. In compliance with US law, Pruco Life delivers this prospectus to contract owners that currently reside outside of the United States. Neither the Securities and Exchange Commission ("SEC") nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is accurate or complete. Any representation to the contrary is a criminal offense. Pruco Life Insurance Company 213 Washington Street Newark, New Jersey 07102 2992 Telephone: (800) 778-2255 PRPA 1 Ed 5 2018 PER SHARE INVESTMENT INCOME, CAPITAL CHANGES AND SELECTED RATIOS (FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD) The following information on per share investment income, capital changes and selected ratios has been provided for your information. This page should be read in conjunction with the financial statements and notes thereto of The Prudential Variable Contract Real Property Partnership. 01/01/2017 01/01/2016 01/01/2015 01/01/2014 01/01/2013 To To To To To 12/31/2017 12/31/2016 12/31/2015 12/31/2014 12/31/2013 Revenue from real estate and improvements $5.08 $5.02 $4.94 $5.49 $5.81 Equity in income of real estate partnership $0.00* $0.00* $0.00* $0.00* $0.00* Interest on short-term investments $0.07 $0.02 $0.00* $0.00* $0.00* TOTAL INVESTMENT INCOME $5.15 $5.04 $4.94 $5.49 $5.81 Investment Management fee $0.75 $0.71 $0.62 $0.55 $0.52 Real Estate Taxes $0.62 $0.49 $0.63 $0.58 $0.53 Administrative expense $0.71 $0.70 $0.69 $0.97 $0.94 Operation expense $0.62 $0.64 $0.76 $1.15 $1.28 Interest expense $0.80 $0.77 $0.77 $0.64 $0.59 Minority interest in consolidated partnership $0.14 $0.15 $0.14 $0.14 $0.09 TOTAL INVESTMENT EXPENSES $3.64 $3.46 $3.61 $4.03 $3.95 NET INVESTMENT INCOME $1.51 $1.58 $1.33 $1.46 $1.86 Net realized gain (loss) on real estate investments sold or converted ($0.30) ($0.06) $0.03 $0.10 $0.03 Change in unrealized gain (loss) on real estate investments $1.38 $0.72 $2.78 $1.35 $1.82 Minority interest in unrealized gain (loss) on investments ($0.26) $0.00 ($0.43) ($0.16) ($0.32) Net unrealized gain (loss) on real estate investments $1.12 $0.72 $2.35 $1.19 $1.50 NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS $0.82 $0.66 $2.38 $1.29 $1.53 Net change in share value $2.33 $2.25 $3.71 $2.76 $3.39 Share value at beginning of period $46.42 $44.17 $40.48 $37.78 $34.49 Share value at end of period $48.69 $46.42 $44.17 $40.48 $37.78 Ratio of expenses to average net assets (1) 5.56% 5.57% 6.36% 8.15% 8.85% Ratio of net investment income to average net assets (1) 3.39% 3.83% 3.50% 4.03% 5.29% Number of shares outstanding at end of period (000 s) 4,427 4,530 4,530 4,651 4,908 All per share calculations are based on weighted average shares outstanding. (1) Average net assets are calculated based on an average of ending monthly net assets. *Per Share amount less than $0.01 (rounded) 1 - Real Property SUMMARY This Summary provides a brief overview of the more significant aspects of the Real Property Account. We provide further detail in the subsequent sections of this prospectus. The Real Property Account is a separate account of Pruco Life created pursuant to Arizona insurance law. Under that law, the assets of the Real Property Account are not chargeable with liabilities arising out of any other business of Pruco Life. Owners of certain variable life insurance and variable annuity contracts issued by Pruco Life may allocate a portion of their net premiums or purchase payments, or transfer a portion of their Contract Fund, to the Real Property Account. Values and benefits under the Contracts will thereafter reflect the investment experience of the Real Property Account. Contract owners, not Pruco Life, bear the risks and rewards of the investment performance of the Real Property Account to the extent of the Contract owner's Contract Fund invested in the Real Property Account. This prospectus is attached to and should be read in conjunction with the prospectus for the Contract you selected. Investment of the Real Property Account Assets The Real Property Account assets are invested primarily in income producing real estate through The Prudential Variable Contract Real Property Partnership (the "Partnership"), which is a general partnership that was established by Prudential and two of its wholly-owned subsidiaries, Pruco Life and Pruco Life Insurance Company of New Jersey ( Pruco Life of New Jersey ). See The Prudential Variable Contract Real Property Partnership. Currently PGIM, Inc. ( PGIM ) serves as the investment manager of the Partnership. See The Investment Manager. The Partnership invests at least 65% of its assets in direct ownership interests in: 1. income producing real estate; 2. participating mortgage loans (mortgages providing for participation in the revenues generated by, or the appreciation of, the underlying property, or both) originated for the Partnership; and 3. real property sale leasebacks negotiated on behalf of the Partnership. The large majority of these real estate investments will be in direct ownership interests in income producing real estate, such as office buildings, shopping centers, apartments, industrial properties or hotels. The Partnership may also invest up to 5% of its assets in direct ownership interests in agricultural land. Approximately 10% of the Partnership's assets will be held in cash or invested in liquid instruments and securities. The remainder of the Partnership's assets may be invested in other types of real estate related investments, including non participating mortgage loans and real estate investment trusts. Investment Objectives The investment objectives of the Partnership are to: 1. preserve and protect the Partnership's capital; 2. compound income by reinvesting investment cash flow; and 3. over time, increase the income amount through appreciation in the value of permitted investments and, to a lesser extent, through mortgage loans and sale-leaseback transactions. There is no assurance that the Partnership's objectives will be attained. See INVESTMENT POLICIES. Risk Factors Investment in the Real Property Account, and thereby, participation in the investment experience of the Partnership, involves significant risks. See RISK FACTORS. These include the risk of fluctuating real estate values and the risk that the appraised or estimated values of the Partnership's real property investments will not be realized upon their disposition. Many of the Partnership's real estate investments will not be quickly convertible into cash. Therefore, the Real Property Account should be viewed as a long term investment. See RESTRICTIONS ON WITHDRAWALS. Pruco Life and the investment manager have taken steps that are designed to ensure that the Real Property Account and Partnership will be sufficiently liquid to satisfy all withdrawal or loan requests promptly (within seven days), see Liquidity of Investments. The management of the Partnership is subject to certain conflicts of interest, including the possible acquisition of properties from Pruco Life affiliates. See CONFLICTS OF INTEREST. Summary of Charges The Partnership pays a daily investment management fee, which amounts to 1.25% per year of the average daily gross assets of the Partnership. The Partnership also compensates the investment manager for providing certain accounting and administrative services. See CHARGES. The portion of your Contract Fund allocated to the Real Property Account is subject to the same Contract charges as the portion of your Contract Fund allocated to the Funds. The Funds are the underlying funding vehicle for the other variable investment options available to Contract owners. You should read the Contract prospectus for a description of those charges. Availability to Pruco Life Contracts The Real Property Account is currently available to purchasers of Pruco Life's Variable Appreciable Life Insurance Contracts, Variable Life Insurance Contracts, Discovery Life Plus Contracts, and Discovery Plus Contracts. It is not available on Contracts that are purchased in connection with IRAs, Section 403(b) annuities, and other tax qualified plans, that are subject to the Employee Retirement Income Security Act of 1974 ("ERISA") or to the prohibited transaction excise tax provisions of the Internal Revenue Code. See THE REAL PROPERTY ACCOUNT'S UNAVAILABILITY TO CERTAIN CONTRACTS. For example, a Variable Appreciable Life Contract owner who elects to invest part of his or her net premiums in the Pruco Life Variable Appreciable Account, a separate account of Pruco Life registered as a unit investment trust under the Investment Company Act of 1940, and part in the Real Property Account, will be subject to the same: (1) monthly sales charges; (2) risk charges; (3) administrative charges; (4) insurance charges; and (5) contingent deferred sales charges 2 - Real Property without regard to what portion is invested in the Pruco Life Variable Appreciable Account and what portion is invested in the Real Property Account. The Real Property Account has established different subaccounts, relating to the different types of variable Contracts that may participate in the Real Property Account. These subaccounts provide the mechanism and maintain the records whereby these different Contract charges are made. This prospectus may only be offered in jurisdictions in which the offering is lawful. No person is authorized to make any representations in connection with this offering other than those contained in this prospectus. GENERAL INFORMATION ABOUT PRUCO LIFE INSURANCE COMPANY, PRUCO LIFE VARIABLE CONTRACT REAL PROPERTY ACCOUNT, THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP, AND THE INVESTMENT MANAGER Pruco Life Insurance Company Pruco Life, a stock life insurance company, was organized on December 23, 1971 under the laws of the State of Arizona. It is licensed to sell life insurance and annuities in the District of Columbia, Guam, and in all states except New York. These Contracts are not offered in any state in which the necessary approvals have not been obtained. Pruco Life is a wholly owned subsidiary of Prudential, a stock life insurance company that has been doing business since October 13, 1875. Prudential is a wholly-owned subsidiary of Prudential Financial, Inc. ("Prudential Financial"), a New Jersey insurance holding company. As Pruco Life s ultimate parent, Prudential Financial exercises significant influence over the operations and capital structure of Pruco Life and Prudential. However, neither Prudential Financial, Prudential, nor any other related company has any legal responsibility to pay amounts that Pruco Life may owe under the Contract. Pruco Life Variable Contract Real Property Account The Real Property Account was established on August 27, 1986 under Arizona law as a separate investment account. The Real Property Account meets the definition of a "separate account" under the federal securities laws. The Real Property Account holds assets that are separated from all of Pruco Life's other assets. The Real Property Account is used only to support the variable benefits payable under the Contracts that are funded by the real estate investment option. The Contract obligations to Contract owners and beneficiaries are general corporate obligations of Pruco Life. Pruco Life is also the legal owner of the Real Property Account assets. Pruco Life will maintain assets in the Real Property Account with a total market value at least equal to the amounts credited under the real estate option to all the Contracts participating in the Real Property Account. These assets may not be charged with liabilities, which arise from any other business that Pruco Life conducts. In addition to these assets, the Real Property Account's assets may include funds contributed by Pruco Life, and reflect any accumulations of the charges Pruco Life makes against the Real Property Account. See VALUATION OF CONTRACT OWNER S PARTICIPATING INTERESTS. Pruco Life will bear the risks and rewards of the Real Property Account's investment experience to the extent of its investment in the Real Property Account. Pruco Life may withdraw or redeem its investment in the Real Property Account at any time. We will not make any such redemption if it will have a materially adverse impact on the Real Property Account. Accumulations of charges will be withdrawn on a regular basis. Unlike the other separate accounts funding the Contracts, the Real Property Account is not registered with the Securities and Exchange Commission ("SEC") under the Investment Company Act of 1940 as an investment company. For state law purposes, the Real Property Account is treated as a part or division of Pruco Life. Contract owners have no voting rights with respect to the Real Property Account. The Real Property Account is under the control and management of Pruco Life. The Board of Directors and officers of Pruco Life are responsible for the management of the Real Property Account. No salaries of Pruco Life personnel are paid by the Real Property Account. The Prudential Variable Contract Real Property Partnership The assets of the Real Property Account are invested in the Partnership. The Partnership, a general partnership organized under New Jersey law on April 29, 1988, was formed through an agreement among Prudential, Pruco Life, and Pruco Life of New Jersey(collectively, the "Partners"), to provide a means for assets allocated to the real estate investment option under certain variable life insurance and variable annuity contracts issued by the respective companies to be invested in a commingled pool. This was done to provide greater diversification of investments and lower transaction costs than would be possible if the assets were separately invested by each company. All amounts allocated to the Real Property Account are contributed by Pruco Life to the Partnership. Pruco Life's general partnership interest in the Partnership is held in the Real Property Account. The initial contributions to the Partnership were made on April 29, 1988. Prudential contributed $100,000 in cash to the Partnership; Pruco Life of New Jersey contributed $100,000 in cash to the Partnership; and Pruco Life contributed the real estate and other assets held in its real estate separate account, which had been actively investing in real estate for more than a year. Those assets had an estimated market value of $91,538,737 on that date. Each Partner is entitled to its respective proportionate share of all income, gains, and losses of the Partnership. The Partnership assets are valued on each business day. The value of each Partner's interest will fluctuate with the investment performance of the Partnership. In addition, the Partners interests are proportionately readjusted, at the current value, on each day when a Partner makes a contribution to, or withdrawal from, the Partnership. When you choose to allocate a portion of your net premiums or purchase payments, or transfer a portion of your Contract Fund, to the Real Property Account, Pruco Life will contribute that amount to the Partnership as a capital contribution. It will correspondingly increase the Real Property Account's interest in the Partnership. Values and benefits under the Contract will thereafter vary with the performance of the Partnership's investments. For 3 - Real Property more information on how the value of your interest in the Real Property Account and the value of the Partnership's investments are calculated, see VALUATION OF CONTRACT OWNERS' PARTICIPATING INTERESTS. Contract owners have no voting rights with respect to the Partnership operations. The Investment Manager Currently, PGIM acts as investment manager of the Partnership. PGIM invests in and manages real estate equities and mortgages for the general account and separate accounts of Prudential Financial affiliates, and other third party accounts. PGIM, on behalf of the general account, and separate accounts of Prudential Financial affiliates, and other third party accounts, is one of the largest real estate investors in North America. PGIM and Prudential Financial affiliates participate in real estate ventures through public and private partnerships. As of December 31, 2017, PGIM managed $109.3 billion of net domestic real estate mortgages and equities of which $56.8 billion is in Prudential s general account and $52.5 billion is in separate accounts and other third party accounts. Statement value for general account assets is recorded at depreciated cost and for assets in separate accounts and other third party accounts at market value. For a discussion of how the Partnership's real estate related investments are valued, see VALUATION OF CONTRACT OWNERS' PARTICIPATING INTERESTS . PGIM has organized its real estate activities into separate business units. PGIM Real Estate is the unit responsible for the investments of the Real Property Partnership. PGIM Real Estate's investment staff is responsible for both general account and third party account real estate investment management activities. PGIM Real Estate provides global investment management services to institutional investors worldwide. PGIM Real Estate is headquartered in Madison, New Jersey and has 6 field offices across the United States. As of December 31, 201 7 , PGIM Real Estate had under management, within the US, approximately 33.4 million rentable square feet of office real estate, 34.8 million rentable square feet of industrial real estate, 28.9 million net rentable square feet of retail real estate, 885 hotel rooms, 47,369 multifamily residential units, 132,254 units of self-storage real estate, 5,919 units of senior housing real estate and 1,496 sited of manufactured housing. PGIM has entered into an administrative services agreement with Prudential, Pruco Life, and Pruco Life of New Jersey under which it pays the companies a fee for performing certain of PGIM s record keeping and other obligations under its investment management agreement with the Partnership. INVESTMENT POLICIES Overview The Partnership has an investment policy of investing at least 65% of its assets in direct ownership interests in income-producing real estate and participating mortgage loans. The largest portion of these real estate investments are direct ownership interests in income-producing real estate, such as office buildings, shopping centers, hotels, apartments, or industrial properties. Approximately 10% of the Partnership s assets are generally held in cash or invested in liquid instruments and securities although the Partners reserve discretion to increase this amount to meet partnership liquidity requirements. The remainder of the Partnership s assets are invested in other types of real estate-related investments, including real estate investment trusts. Investment in Direct Ownership Interests in Real Estate Acquisition. The Partnership's principal investment policy involves acquiring direct ownership interests in existing (including newly constructed) income producing real estate, including office buildings, shopping centers, apartment buildings, industrial properties, and hotels. The Partnership may also invest up to 5% of its assets in direct ownership interests in agricultural land. Property acquisitions will generally be carried out by the real estate acquisition offices in PGIM Real Estate's network of field offices located in Parsippany, New Jersey, Atlanta, Georgia, Chicago, Illinois and San Francisco, California. A field office or an affiliate of Prudential Financial supervises the management of properties in all of PGIM's accounts. Proposals to acquire properties for the Partnership are usually originated by a field office. They are reviewed and approved by the Investment Management Committee of PGIM Real Estate. Depending upon the size of the acquisition and other factors, a proposed real estate investment may also be submitted for review to the Investment Committee of the Board of Directors of Prudential. Although percentage limitations on the type and location of properties that may be acquired by the Partnership have not been established, the Partnership plans to diversify its investments through the type of property acquired and its geographic location. The Partnership's investments will be maintained to meet the Internal Revenue Code diversification requirements. See General Investment and Operating Policies. In order for the Partnership to meet its stated objectives, it will have to acquire properties that generate more cash than needed to pay its gross operating expenses. To do this, a substantial portion of the Partnership's assets will be invested in properties with operating histories that include established rent and expense schedules. However, the Partnership may also acquire recently constructed properties that may be subject to agreements with sellers providing for certain minimum levels of income. Upon the expiration of or default under these agreements, there is no assurance that the Partnership will maintain the level of operating income necessary to produce the return it was previously experiencing. The Partnership may purchase real property from Prudential Financial or its affiliates under certain conditions. See CONFLICTS OF INTEREST. The property acquired by the Partnership is usually real estate, which is ready for use. Accordingly, the Partnership is not usually subject to the development or construction risks inherent in the purchase of unimproved real estate. From time to time, however, the Partnership may invest in a developmental real estate project that is consistent with the Partnership's objectives. The Partnership will then be subject to those risks. 4 - Real Property The Partnership will often own the entire fee interest in an acquired property, but it may also hold other direct ownership interests. These include, but are not limited to, partnership interests, limited liability company interests, leaseholds, and tenancies in common. Property Management and Leasing Services. The Partnership usually retains a management company operating in the area of a property to perform local property management services. A field office or other affiliate of Prudential Financial will usually: (1) supervise and monitor the performance of the local management company; (2) determine and establish the required accounting information to be supplied; (3) periodically inspect the property; (4) review and approve property operating budgets; and (5) review actual operations to ensure compliance with budgets. In addition to day to day management of the property, the local management company will have responsibility for: (1) supervision of any on site personnel; (2) negotiation of maintenance and service contracts; (3) major repair advice; (4) replacements and capital improvements; (5) the review of market conditions to recommend rent schedule changes; and (6) creation of marketing and advertising programs to obtain and maintain good occupancy rates by responsible tenants. The local management company fees will reduce the cash flow from the property to the Partnership. The Partnership usually retains a leasing company to perform leasing services on any property with actual or projected vacancies. The leasing company will coordinate with the property management company to provide marketing and leasing services for the property. When the property management company is qualified to handle leasing, it may also be hired to provide leasing services. Leasing commissions and expenses will reduce the cash flow from the property to the Partnership. PGIM Real Estate may, on behalf of the Partnership, hire a Prudential Financial affiliate to perform property management or leasing services. The affiliate's services must be provided on terms competitive with unaffiliated entities performing similar services in the same geographic area. See CONFLICTS OF INTEREST. Annually, the field office which oversees the management of each property owned by the Partnership will, together with the local property management firm, develop a business plan and budget for each property. It will consider, among other things, the projected rollover of individual leases, necessary capital expenditures and any expansion or modification of the use of the property. The approval of an officer of PGIM Real Estate is required. The field office will also periodically report the operating performance of the property to PGIM Real Estate. Investments in Mortgage Loans Types of Mortgage Loans The Partnership is authorized to invest in mortgage loans, including conventional mortgage loans that may pay fixed or variable rates of interest and mortgage loans that have a Participation (as defined below). The Partnership will not make mortgage loans to Prudential Financial affiliates. The Partnership intends to give mortgage loans on: (1) commercial properties (such as office buildings, shopping centers, hotels, industrial properties, and office showrooms); (2) agricultural properties; and (3) residential properties (such as garden apartment complexes and high rise apartment buildings). These loans are usually secured by properties with income producing potential based on historical or projected data. Usually, they are not personal obligations of the borrower and are not insured or guaranteed. 1. First Mortgage Loans. The Partnership will primarily make first mortgage loans secured by mortgages on existing income producing property. These loans may provide for interest only payments and a balloon payment at maturity. 2. Wraparound Mortgage Loans. The Partnership also may make wraparound mortgage loans on income producing properties which are already mortgaged to unaffiliated entities. A wraparound mortgage loan is a mortgage with a principal amount equal to the outstanding balance of the prior existing mortgage plus the amount to be advanced by the lender under the wraparound mortgage loan, thereby providing the property owner with additional funds without disturbing the existing loan. The terms of wraparound mortgage loans made by the Partnership require the borrower to make all principal and interest payments on the underlying loan to the Partnership, which will then pay the holder of the prior loan. Because the existing first mortgage loan is preserved, the lien of the wraparound mortgage loan is junior to it. The Partnership will make wraparound mortgage loans only in states where local applicable foreclosure laws permit a lender, in the event of the borrower's default, to obtain possession of the property, which secures the loan. 3. Junior Mortgage Loans. The Partnership may also invest in other junior mortgage loans. Junior mortgage loans will be secured by mortgages, which are subordinate to one or more prior liens on the real property. They will generally, but not in all cases, provide for repayment in full prior to the end of the amortization period of the senior mortgages. Recourse on such loans will include the real property encumbered by the Partnership's mortgage and may also include other collateral or personal guarantees by the borrower. The Partnership will generally make junior or wraparound mortgage loans only if the senior mortgage, when combined with the amount of the Partnership's mortgage loan, would not exceed the maximum amount which the Partnership would be willing to commit to a first mortgage loan and only under such circumstances and on such property as to which the Partnership would otherwise make a first mortgage loan. 4. Participations. The Partnership may make mortgage loans, which, in addition to charging a base rate of interest, will include provisions permitting the Partnership to participate (a "Participation") in the economic benefits of the underlying property. The Partnership would receive a percentage of: (1) the gross or net revenues from the property operations; and/or (2) the increase in the property value realized by the borrower, such as through sale or refinancing of the property. These arrangements may also grant the Partnership an option to acquire the property or an undivided interest in the property securing the loan. When the Partnership negotiates the right to receive additional interest in the form of a percentage of the gross revenues or otherwise, the fixed cash return to the Partnership from that investment will generally be less than would otherwise be the case. It is expected that the Partnership will be entitled to percentage Participations when the gross or net revenues from the property operations exceed a certain base amount. This base amount may be adjusted if real estate taxes or similar charges are increased. The form and extent of the additional interest that the Partnership receives will vary with each transaction depending on: (1) the equity investment of the owner or developer of the property; (2) other 5 - Real Property financing or credit obtained by the owner or developer; (3) the fixed base interest rate on the mortgage loan by the Partnership; (4) any other security arrangement; (5) the cash flow and pro forma cash flow from the property; and (6) market conditions. The Partnership intends to use this additional interest as a hedge against inflation. It assumes that as prices increase in the economy, the rental prices on properties, such as shopping centers or office buildings, will increase and there should be a corresponding increase in the property value. There is no assurance that additional interest or increased property values will be received. In that event, the Partnership will be entitled to receive only the fixed portion of its return. Standards for Mortgage Loan Investments In making mortgage loans, the investment manager will consider relevant real property and financial factors, including: (1) the location, condition, and use of the underlying property; (2) its operating history; (3) its future income producing capacity; and (4) the quality, experience, and creditworthiness of the unaffiliated borrower. Before the Partnership makes a mortgage loan, the investment manager analyzes the fair market value of the underlying real estate. In general, the amount of each mortgage loan made by the Partnership will not exceed, when added to the amount of any existing indebtedness, 80% of the estimated or appraised value of the property mortgaged. Dealing with Outstanding Loans The Partnership may sell its mortgage loans prior to maturity if it is deemed advisable by the investment manager and consistent with the Partnership's investment objectives. The investment manager may also: (1) extend the maturity of any mortgage loan made by the Partnership; (2) consent to a sale of the property subject to a mortgage loan or finance the purchase of a property by making a new mortgage loan in connection with the sale of a property (either with or without requiring the repayment of the mortgage loan); (3) renegotiate the terms of a mortgage loan; and (4) otherwise deal with the mortgage loans of the Partnership. Investments in Sale Leasebacks A portion of the Partnership s investments may consist of real property sale-leaseback transactions ( Leasebacks ). In this type of transaction, the Partnership will purchase land and income-producing improvements on the land and simultaneously lease the land and improvements, generally to the seller, under a long-term lease. Leasebacks may be for very long periods and may provide for increasing payments from the lessee. Under the terms of the Leaseback, the tenant will operate, or provide for the operation of, the property and generally be responsible for the payment of all costs, including: (1) taxes; (2) mortgage debt service; (3) maintenance and repair of the improvements; and (4) insurance. In some cases, the Partnership may also grant the lessee an option to acquire the land and improvements from the Partnership after a period of years. The option exercise price would be based on the fair market value of the property, as encumbered by the lease, the increase in the gross revenues from the property or other objective criteria reflecting the increased value of the property. In some Leasebacks, the Partnership may only purchase the land under an income producing building and lease the land to the building owner. In such cases, the Partnership may seek, in addition to base rents in its Leasebacks, Participations in the gross revenues from the building in a form such as a percentage of the gross revenues of the lessee above a base amount (which may be adjusted if real property taxes increase or for other events). The Partnership may invest in Leasebacks which are subordinate to other interests in the land, buildings, and improvements, such as a first mortgage, other mortgage, or lien. In those situations, the Partnership's Leaseback interest will be subject to greater risks. The Partnership will only acquire a property for a Leaseback if the purchase price is equal to not more than 100% of the estimated or appraised property value. The Partnership may dispose of its Leasebacks when deemed advisable by the investment manager and consistent with the Partnership's investment objectives. General Investment and Operating Policies The Partnership does not intend to invest in any direct ownership interests in properties, mortgage loans or Leasebacks in order to make short term profits from their sale, although in exceptional cases, the investment manager may decide to do so in the best interests of the Partnership. The Partnership may dispose of its investments whenever necessary to meet its cash requirements or when it is deemed to be desirable by the investment manager because of market conditions or otherwise. The Partnership will reinvest any proceeds from the disposition of assets (and any cash flow from operations) which are not necessary for the Partnership's operations and which are not withdrawn by the Partners in order to make distributions to investors pursuant to the variable contracts issued by the Partners, or to Prudential to return its equity interests pursuant to this prospectus. The proceeds will be reinvested in investments consistent with the Partnership's investment objectives and policies. In making investments in properties, mortgage loans, Leasebacks or other real estate investments, the Partnership will rely on the investment manager's analysis of the investment and will not receive an independent appraisal prior to acquisition. The Partnership expects, however, that all the properties it owns, and most mortgage loans it holds, will be appraised or valued annually by an independent appraiser who is a member of a nationally recognized society of appraisers. Each appraisal will be maintained in the Partnership records for at least five years. It should be noted that appraised values are opinions and, as such, may not represent the true worth or realizable value of the property being appraised. The Partnership usually purchases properties on an unleveraged basis. The properties acquired will typically be free and clear of mortgage debt immediately after their acquisition. The Partnership may, however, acquire properties subject to existing mortgage loans. In addition, the Partnership may mortgage or acquire properties partly with the proceeds of purchase money mortgage loans, up to 80% of the property value. Although this is not usually done, the Partnership may do so if the investment manager decides that it is consistent with its investment objectives. When the Partnership mortgages its properties, it bears the expense of mortgage payments. See BORROWING BY THE PARTNERSHIP. 6 - Real Property The Partnership may also invest a portion of its assets in non-participating mortgage loans, real estate limited partnerships, limited liability companies, real estate investment trusts, and other vehicles whose underlying investment is in real estate. The Partnership's investments will be maintained in order to meet the diversification requirements set forth in regulations under the Internal Revenue Code (the "Code") relating to the investments of variable life insurance and variable annuity separate accounts. In order to meet the diversification requirements under the regulations, the Partnership will meet the following test: (1) no more than 55% of the assets will be invested in any one investment; (2) no more than 70% of the assets will be invested in any two investments; (3) no more than 80% of the assets will be invested in any three investments; and (4) no more than 90% of the assets will be invested in any four investments. All interests in the same real property project are treated as a single investment. The Partnership must meet the above test within 30 days of the end of each calendar quarter. To comply with the diversification requirements of the State of Arizona, the Partnership will limit additional investments in any one parcel or related parcels to an amount not exceeding 10% of Partnership's gross assets, as of the prior fiscal year end. In managing the assets of the Partnership, the investment manager will use its discretion in determining whether to foreclose on defaulting borrowers or to evict defaulting tenants. The investment manager will decide which course of action is in the best interests of the Partnership in maintaining the value of the investment. Property management services are usually required for the Partnership's investments in properties which are owned and operated by the Partnership, but usually will not be needed for mortgage loans owned by the Partnership, except for mortgage servicing. It is possible, however, that these services will be necessary or desirable in exercising default remedies under a foreclosure on a mortgage loan. The investment manager may engage, on behalf of the Partnership, Prudential Financial affiliated or unaffiliated entities to provide these additional services to the Partnership. The investment manager may engage Prudential Financial affiliates to provide property management, property development services, loan servicing or other services if and only if the fees paid to an affiliate do not exceed the amount that would be paid to an independent party for similar services rendered in the same geographic area. See CONFLICTS OF INTEREST. The investment manager will manage the Partnership so that the Real Property Account will not be subject to registration under the Investment Company Act of 1940. This requires monitoring the proportion of the Partnership's assets to be placed in various investments. CURRENT REAL ESTATE RELATED INVESTMENTS The current principal real estate related investments held by the Partnership are described below. Many of these investments were originated by, and previously held in, The Prudential Real Property Account of Pruco Life Insurance Company (the Pruco Life Account ), a separate account established to fund the real estate investment option under variable contracts issued by Pruco Life. Prior to the formation of the Partnership, the Pruco Life Account followed the same investment policies as those followed by the Partnership. Pruco Life contributed the assets held in the Pruco Life Account to the Partnership as its initial capital contribution to the Partnership. Properties As of December 31, 2017 the Partnership owns apartment complexes, retail property and a storage facility. Detailed information about the above properties can be found later in this prospectus. See INFORMATION ABOUT THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY ACCOUNT for more information about the properties. The following table lists the rentable area of retail properties subject to expiring leases during the next five years, and an aggregate figure for expirations in 2023 and thereafter, in the Account's commercial properties. While many of these leases contain renewal options with varying terms, this chart assumes that none of the tenants exercise their renewal options, including those with terms that expired on December 31, 2017 or are month-to-month leases. Retail Properties Year of Lease Expiration 2018 2019 2020 2021 2022 2023 and thereafter Total Rentable Area Subject to Expiring Leases (sq. ft.) 116,713 112,407 62,111 26,803 66,770 244,994 629,798 Percentage of Total Rentable Area of Partnership's Retail Properties Represented by Expiring Leases 17.52% 16.87% 9.32% 4.02% 10.02% 36.78% 94.53% RISK FACTORS There are certain risk factors that you should consider before allocating a portion of your net premiums or purchase payments, or transferring a portion of your Contract Fund, to the Real Property Account. These include valuation risks, (see VALUATION OF CONTRACT OWNERS' PARTICIPATING INTERESTS), certain conflicts of interest, (see CONFLICTS OF INTEREST), as well as the following risks: Liquidity of Investments Because the Real Property Account will, through the Partnership, invest primarily in real estate, its assets will not be as liquid as the investments generally made by separate accounts of life insurance companies funding variable life insurance and variable annuity contracts. The Partnership will, however, hold approximately 10% of its assets in cash and invested in liquid securities. The primary purposes for such investments are to meet the expenses involved in the operation of the Partnership and to allow it to have sufficient 7 - Real Property liquid assets to meet any requests for withdrawals from the Real Property Account. Such withdrawals would be made in order to meet requested or required payments under the Contracts. The Partnership may also borrow funds to meet liquidity needs. See BORROWING BY THE PARTNERSHIP. We have taken steps to ensure that the Partnership will be liquid enough to meet all anticipated withdrawals by the Partners to meet the separate accounts' liquidity requirements. It is possible that the Partnership may need to dispose of a real property or mortgage loan investment promptly in order to meet such withdrawal requests. General Risks of Real Property Investments By participating in the Real Property Account and thereby in the investment performance of the Partnership, you will be subject to many of the risks of real property investments. These include: 1. Risks of Ownership of Real Properties. The Partnership will be subject to the risks inherent in the ownership of real property such as fluctuations in occupancy rates and operating expenses and variations in rental schedules. It may be adversely affected by general and local economic conditions, the supply of and demand for properties of the type in which the Partnership invests, zoning laws, and real property tax rates. Operation of property in which the Partnership invests will primarily involve rental of that property to tenants. The financial failure of a tenant resulting in the termination of their lease might cause a reduction in the cash flow to the Partnership. If a lease is terminated, there is no assurance that the Partnership will be able to find a new tenant for the property on terms as favorable to the Partnership as those from the prior tenant. Investments in hotels are subject to additional risk from the daily turnover and fluctuating occupancy rates of hotel rooms and the absence of long-term tenants. The Partnership's properties will also be subject to the risk of loss due to certain types of property damage (such as from nuclear power plant accidents and wars) which are either uninsurable or not economically insurable. 2. Risks of Mortgage Loan Investments. The Partnership s mortgage loan investments will be subject to the risk of default by the borrowers. In this event the Partnership would have the added responsibility of foreclosing on or pursuing other remedies on the underlying properties to protect the value of its mortgage loans. A borrower s ability to meet its mortgage loan payments will be dependent upon the risks generally inherent to the ownership of real property. Mortgage loans made by the Partnership will generally not be personal obligations of the borrowers. The Partnership will only rely on the value of the underlying property for its security. Mechanics , material men's, government, and other liens may have or obtain priority over the Partnership s security interest in the property. In addition, the Partnership's mortgage loan investments will be subject to prepayment risks. If the terms of the mortgage loans permit, mortgagors may prepay the loans, thus possibly changing the Partnership's return. Junior mortgage loans (including wraparound mortgage loans) will be subject to greater risk than first mortgage loans, since they will be subordinate to liens of senior mortgagees. In the event a default occurs on a senior mortgage, the Partnership may be required to make payments or take other actions to cure the default (if it has the right to do so) in order to prevent foreclosure on the senior mortgage and possible loss of all or portions of the Partnership's investment. "Due on sale" clauses included in some senior mortgages, accelerating the amount due under the senior mortgage in the case of sale of the property, may be applied to the sale of the property upon foreclosure by the Partnership of its junior mortgage loan. The risk of lending on real estate increases as the proportion, which the amount of the mortgage loan bears to the fair market value of the real estate increases. The Partnership usually does not make mortgage loans of over 80% of the estimated or appraised value of the property that secures the loan. There can be no assurance, that in the event of a default, the Partnership will realize an amount equal to the estimated or appraised value of the property on which a mortgage loan was made. Mortgage loans made by the Partnership may be subject to state usury laws. These laws impose limits on interest charges and possible penalties for violation of those limits, including restitution of excess interest, unenforceability of debt, and treble damages. The Partnership does not intend to make mortgage loans at usurious rates of interest. Uncertainties in determining the legality of interest rates and other borrowing charges under some statutes could result in inadvertent violations, in which case the Partnership could incur the penalties mentioned above. 3. Risks with Participations. The Partnership may seek to invest in mortgage loans and Leasebacks with Participations, which will provide the Partnership with both fixed interest and additional interest based upon gross revenues, sale proceeds, and/or other variable amounts. If the interest income received by the Partnership is based, in part, on a percentage of the gross revenues or sale proceeds of the underlying property, the Partnership's income will depend on the success in the leasing of the underlying property, the management and operation of such property by the borrower or lessee and upon the market value of the property upon ultimate disposition. If the Partnership negotiates a mortgage loan with a lower fixed interest rate and an additional percentage of the gross revenues or eventual sale proceeds of the underlying property, and the underlying property fails to generate increased revenues or to appreciate, the Partnership will have foregone a potentially greater fixed return without receiving the benefit of appreciation. State laws may limit Participations. In the event of the borrower's bankruptcy, it is possible that as a result of the Partnership's interest in the gross revenues or sale proceeds, a court could treat the Partnership as a partner or joint venturer with the borrower, and the Partnership could lose the priority its security interest would have been given, or be liable for the borrower s debts. The Partnership will structure its Participations to avoid being characterized as a partner or joint venturer with the borrower. 4. Risks with Sale-Leaseback. Leasebacks typically involve the acquisition of land and improvements thereon and the lease of such land and improvements to the seller or another party. The value of the land and improvements will depend, in large part, on the performance and financial stability of the lessee and its tenants, if any. The tenants leases may have shorter terms than the leaseback. Therefore, the lessee's future ability to meet payment obligations to the Partnership will depend on its ability to obtain renewals of such leases or new leases upon satisfactory terms and the ability of the tenants to meet their rental payments to the lessee. 8 - Real Property PGIM Real Estate investigates the stability and creditworthiness of lessees in all commercial properties it may acquire, including Leasebacks. However, a lessee in a Leaseback may have few, if any, assets. The Partnership will therefore rely for its security on the value of the land and improvements. When the Partnership's Leaseback interest is subordinate to other interests in the land or improvements, such as a first mortgage or other lien, the Partnership's Leaseback will be subject to greater risk. A default by a lessee or other premature termination of the Leaseback may result in the Partnership being unable to recover its investment unless the property is sold or leased on favorable terms. The ability of the lessee to meet its obligations under the Leaseback, and the value of a property, may be affected by a number of factors inherent in the ownership of real property which are described above. Furthermore, the long term nature of a Leaseback may, in the future, result in the Partnership receiving lower average annual rentals. However, this risk may be lessened if the Partnership obtains Participations in connection with its Leasebacks. Reliance on the Partners and the Investment Manager You do not have a vote in determining the policies of the Partnership or the Real Property Account. You also have no right or power to take part in the management of the Partnership or the Real Property Account. The investment manager alone, subject to the supervision of the Partners, will make all decisions with respect to the management of the Partnership, including the determination as to what properties to acquire, subject to the investment policies and restrictions. Although the Partners have the right to replace the investment manager, it should be noted that Prudential, Pruco Life, Pruco Life of New Jersey, and the investment manager are direct or indirect wholly-owned subsidiaries of Prudential Financial. The Partnership will compete in the acquisition of its investments with many other individuals and entities engaged in real estate activities, including the investment manager and its affiliates. See CONFLICTS OF INTEREST. There may be intense competition in obtaining properties or mortgages in which the Partnership intends to invest. Competition may result in increased costs of suitable investments. Since the Partnership will continuously look for new investments, you will not be able to evaluate the economic merit of many of the investments, which may be acquired by the Partnership. You must depend upon the ability of the investment manager to select investments. INVESTMENT RESTRICTIONS The Partnership has adopted certain restrictions relating to its investment activities. These restrictions may be changed, if the law permits, by the Partners. Pursuant to these restrictions, the Partnership will not: 1. Make any investments not related to real estate, other than liquid instruments and securities. 2. Engage in underwriting of securities issued by others. 3. Invest in securities issued by any investment company. 4. Sell securities short. 5. Purchase or sell oil, gas, or other mineral exploration or development programs. 6. Make loans to the Partners, any of their affiliates, or any investment program sponsored by such parties. 7. Enter into Leasebacks in which the lessee is Prudential, Pruco Life, Pruco Life of New Jersey, their affiliates, or any investment program sponsored by such parties. 8. Borrow more than 331/3% (pursuant to California state requirements) of the value of the assets of the Partnership (based upon periodic valuations and appraisals). See VALUATION OF CONTRACT OWNERS' PARTICIPATING INTERESTS. DIVERSIFICATION REQUIREMENTS The Partnership s investments are maintained so as to meet the diversification requirements set forth in Treasury Regulations issued pursuant to Section 817(h) of the Internal Revenue Code relating to the investments of variable life insurance and variable annuity separate accounts. Section 817(h) requires, among other things, that the partnership will have no more than 55% of the assets invested in any one investment, no more than 70% of the assets will be invested in any two investments, no more than 80% of the assets will be invested in any three investments, and no more than 90% of the assets will be invested in any four investments. To comply with requirements of the State of Arizona, the Partnership will limit additional investments in any one parcel or related parcels to an amount not exceeding 10% of the Partnership s gross assets as of the prior fiscal year. CONFLICTS OF INTEREST The investment manager, will be subject to various conflicts of interest in managing the Partnership. PGIM invests in real estate equities and mortgages for the general account of Prudential Financial affiliates and for third parties, including through separate accounts established for the benefit of qualified pension and profit sharing plans. PGIM also manages, or advises in the management of, real estate equities and mortgages owned by other persons. In addition, affiliates of Prudential Financial are general partners in publicly offered limited partnerships that invest in real estate equities and mortgage loans. Prudential Financial and its affiliates may engage in business activities, which will be competitive with the Partnership. Moreover, the Partnership may purchase properties from Prudential Financial or its affiliates. The potential conflicts involved in managing the Partnership include: 1. Lack of Independent Negotiations between the Partnership and the Investment Manager. All agreements and arrangements relating to compensation between the Partnership and the investment manager, or any affiliate of Prudential Financial, may not be the result of arm's length negotiations. 2. Competition by the Partnership with Prudential Financial s Affiliates for Acquisition and Disposition of Investments. Prudential Financial affiliates are involved in numerous real estate investment activities for their general account, their separate accounts, and other entities. They may involve investment policies comparable to the Partnership s and may compete with the Partnership for the 9 - Real Property acquisition and disposition of investments. Moreover, additional accounts or affiliated entities may be formed in the future with investment objectives similar to those of the Partnership. In short, existing or future real estate investment accounts or entities managed or advised by Prudential Financial affiliates may have the same management as the Partnership and may be in competition with the Partnership regarding real property investments, mortgage loan investments, Leasebacks, and the management and sale of such investments. Prudential Financial affiliates are not obligated to present to the Partnership any particular investment opportunity, regardless of whether the opportunity would be suitable for investment by the Partnership. Prudential Financial affiliates have, however, adopted procedures to distinguish between equity investments available for the Partnership as opposed to the other programs and entities described above. If investment accounts or entities managed by Prudential Financial affiliates have investment objectives and policies similar to the Partnership and are in the market to acquire properties or make investments at the same time as the Partnership, the following procedures will be followed to resolve any conflict of interest. The Investment Allocation Procedure ( IAP ) has been established to provide a reasonable and fair procedure for allocating real estate investments among the several accounts managed by PGIM Real Estate. The IAP is administered by an Allocation Committee composed of the Managing Directors, Portfolio Management. Allocation decisions are made by vote of the Allocation Committee, and are approved by the Chief Executive Officer of PGIM Real Estate ( CEO ). Sufficient information on each investment opportunity is distributed to all portfolio managers, who each indicate to the Allocation Committee their account s interest in the opportunity. Based on such expressions of interest, the Allocation Committee allocates the investment opportunity to an account (and may also determine a back-up account or accounts to receive the allocation in the event the account, which is first allocated the opportunity, fails to pursue the investment for any reason) after giving appropriate consideration to the following factors and with the goal of providing each account a fair allotment of investment opportunities: (1) the investment opportunity s conformity with an account s investment criteria and objectives (including property type, size and location, diversification, anticipated returns, investment structure, etc.); (2) the amount of funds available for investment (in total and by property type) by an account; (3) the length of time such funds (in total and by property type) have been available for investment; (4) any limitations or restrictions upon the availability of funds for investment; (5) the absolute and relative (to amount of funds available) amount of funds invested and committed for the account; (6) whether funds available for investment are discretionary or non-discretionary, particularly in relation to the timing of the investment opportunity; (7) an account s prior dealings or investments with the seller, developer, lender or other counterparty; and (8) other factors which the Allocation Committee feel should be considered in fairness to all accounts participating in the IAP. If an account which has been allocated an investment opportunity does not proceed with the acquisition, and either (i) no back-up account has been determined by the Allocation Committee, or (ii) all accounts which were deemed back-up accounts do not proceed with the acquisition, the opportunity may be reallocated to another account by the Allocation Committee. If an investment opportunity is appropriate for more than one account, the Allocation Committee may (subject to the CEO s approval) permit the sharing of the investment among accounts, which permit such sharing. Such division of the investment opportunity may be accomplished by separating properties (in a multi-property investment), by co-investment, or otherwise. 3. Competition with the Partnership from Affiliates for the Time and Services of Common Officers, Directors, and Management Personnel. As noted above, PGIM and Prudential Financial affiliates are involved in numerous real estate investment activities. Accordingly, many of the personnel of PGIM and Prudential Financial affiliates who will be involved in performing services for the Partnership have competing demands on their time. Conflicts of interest may arise with respect to allocating time among such entities and the Partnership. The directors and officers of Prudential Financial and affiliates will determine how much time will be devoted to the Partnership affairs. Prudential Financial believes it has sufficient personnel to meet its responsibilities to all entities to which it is affiliated. 4. Competitive Properties. Some properties of affiliates may be competitive with Partnership properties. Among other things, the properties could be in competition with the Partnership's properties for prospective tenants. 5. Lessee Position. It is possible that Prudential Financial or its affiliates may be a lessee in one or more of the properties owned by the Partnership. The terms of such a lease will be competitive with leases with non affiliated third parties. The Partnership limits the amount of space that an affiliate of Prudential may rent in a property owned by the Partnership. 6. Use of Affiliates to Perform Additional Services for the Partnership. The Partnership may engage Prudential Financial affiliates to provide additional services to the Partnership, such as real estate brokerage, mortgage servicing, property management, leasing, property development, and other real estate related services. The Partnership may utilize the services of such affiliates and pay their fees, as long as the fees paid to an affiliate do not exceed the amount that would be paid to an independent party for similar services rendered in the same geographic area. 7. Joint Ventures with Affiliates. The Partnership may enter into investments through joint ventures with Prudential Financial, its affiliates, or investment programs they sponsor. The Partnership may enter into such a joint venture investment with an affiliate only if the following conditions are met: (1) the affiliate must have investment objectives substantially identical to those of the Partnership; (2) there must be no duplicative property management fee, mortgage servicing fee or other fees; (3) the compensation payable to the sponsor of the affiliate must be no greater than that payable to the Partnership's investment manager; (4) the Partnership must have a right of first refusal to buy if such affiliate wishes to sell the property held in the joint venture; and (5) the investment of the Partnership and the affiliate in the joint venture must be made on the same terms and conditions (although not the same percentage). In connection with such an investment, both affiliated parties would be required to approve any decision concerning the investment. Thus, an impasse may result in the event the affiliated joint venture partners disagree. However, in the event of a disagreement regarding a proposed sale or other disposition of the investment, the party not desiring to sell would have a right of first refusal to purchase the affiliated joint venture partner's interest in the investment. If this happens, it is possible that in the future the joint venture partners would no longer be affiliated. In the event of a proposed sale initiated by the joint venture partner, the Partnership would also have a right of first refusal to purchase the joint venture partner's interest in the investment. The exercise of a right of first refusal would be subject to the Partnership's having the financial resources to effectuate such a purchase. 10 - Real Property If the Partnership invests in joint venture partnerships which own properties, instead of investing directly in the properties themselves, they may be subject to risks not otherwise present. These risks include risks associated with the possible bankruptcy of the Partnership's co venturer or such co venturer at any time having economic or business interests or goals which are inconsistent with those of the Partnership. 8. Purchase of Real Property from Prudential Financial or Affiliates. The Partnership may acquire properties owned by Prudential Financial or its affiliates, subject to compliance with special conditions designed to minimize the conflicts of interests. The Partnership may purchase property satisfying the Partnership's investment objectives and policies from an affiliate only if: (1) the applicable insurance regulators approve the Partnership s acquisition of real property from Prudential Financial or affiliates to the extent such approval is required under applicable insurance regulations; (2) the Partnership acquires the property at a price not greater than the appraised value, with the appraisal being conducted by a qualified, unaffiliated appraiser; (3) a qualified and independent real estate adviser (other than the appraiser) reviews the proposed acquisition and provides a letter of opinion that the transaction is fair to the Partnership; and (4) the affiliate has owned the property at least two years, the cost paid by the affiliate is established, and any increase in the proposed purchase price over the cost to the affiliate is, in the opinion of the independent real estate adviser, explicable by material factors (including the passage of time) that have increased the value of the property. THE REAL PROPERTY ACCOUNT S UNAVAILABILITY TO CERTAIN CONTRACTS Pruco Life has determined that it is in the best interest of Contract owners participating in the Real Property Account to provide the Real Property Account with the flexibility to engage in transactions that may be prohibited if the Real Property Account accepts funds under Contracts subject to ERISA or the prohibited transaction excise tax provisions of the Internal Revenue Code. Accordingly, owners of Pruco Life Contracts that are purchased in connection with: (1) IRAs; (2) tax deferred annuities subject to Section 403(b) of the Code; (3) other employee benefit plans which are subject to ERISA; or (4) prohibited transaction excise tax provisions of the Code, may not select the Real Property Account as one of the investment options under their Contract. By not offering the Real Property Account as an investment option under such contracts, Pruco Life is able to comply with state insurance law requirements that policy loans be made available to Contract owners. VALUATION OF CONTRACT OWNERS PARTICIPATING INTERESTS A Contract owner's interest in the Real Property Account will initially be the amount they allocated to the Real Property Account. Thereafter, that value will change daily. The value of a Contract owner's interest in the Real Property Account at the close of any day is equal to its amount at the close of the preceding day, multiplied by the "net investment factor" for that day arising from the Real Property Account's participation in the Partnership, plus any additional amounts allocated to the Real Property Account by the Contract owner, and reduced by any withdrawals by the Contract owner from the Real Property Account and by the applicable Contract charges recorded in that Contract's subaccount. Some of the charges will be made: (1) daily; (2) on the Contract's monthly anniversary date; (3) at the end of each Contract year; and (4) upon withdrawal or annuitization. Periodically Pruco Life will withdraw from the Real Property Account an amount equal to the aggregate charges recorded in the subaccounts. The "net investment factor" is calculated on each business day by dividing the value of the net assets of the Partnership at the end of that day (ignoring, for this purpose, changes resulting from new contributions to or withdrawals from the Partnership) by the value of the net assets of the Partnership at the end of the preceding business day. The value of the net assets of the Partnership at the end of any business day is equal to the sum of all cash held by the Partnership plus the aggregate value of the Partnership's liquid securities and instruments, the individual real properties and the other real estate related investments owned by the Partnership, determined in the manner described below, and an estimate of the accrued net operating income earned by the Partnership from properties and other real estate related investments, reduced by the liabilities of the Partnership, including the daily investment management fee and certain other expenses attributable to the operation of the Partnership. See CHARGES. The Partnership may invest in various liquid securities and instruments. These investments will generally be carried at their market value as determined by a valuation method, which the Partners deem appropriate for the particular type of liquid security or instrument. The value of the individual real properties and other real estate related investments, including mortgages, acquired by the Partnership will be determined as follows. Each property or other real estate related investment acquired by the Partnership will initially be valued at its purchase price. In acquiring a property or other real estate related investment, PGIM will not obtain an independent appraisal but will instead rely on its own analysis of the investment's fair market value. Thereafter, all properties and most real estate related investments will ordinarily be appraised by an independent appraiser at least annually. At least every three months, PGIM will review each property or other real estate related investments and adjust its valuation if it concludes there has been a change in the value of the property or other real estate related investment since the last valuation. The revised value will remain in effect and will be used in each day's calculation of the value of the Partnership's assets until the next review or appraisal. It should be noted that appraisals are only estimates and do not necessarily reflect the realizable value of an investment. The estimated amount of the net operating income of the Partnership from properties and other real estate related investments will be based on estimates of revenues and expenses for each property and other real estate related investments. Annually, PGIM will prepare a month by month estimate of the revenues and expenses ("Estimated Net Operating Income") for each property and other real estate related investments owned by the Partnership. Each day PGIM will add to the value of the assets, as determined above, a proportionate part of the Estimated Net Operating Income for the month. In effect, PGIM will establish a daily accrued receivable of the Estimated Net Operating Income from each property and other real estate related investments owned by the Partnership (the "Daily Accrued Receivable"). On a monthly basis, the Partnership will receive a report of actual operating results for each property and other real estate related investments ("Actual Net Operating Income"). Such Actual Net Operating Income will be recognized on the books of the Partnership and the amount of the then outstanding daily accrued receivable will be correspondingly adjusted. In addition, as cash from a property or other real estate related investment is actually received by the Partnership, receivables and other accounts will be appropriately adjusted. Periodically, but at least every three months, PGIM will review its prospective estimates of net operating 11 - Real Property income in light of actual experience and make an adjustment to such estimates if circumstances indicate that such an adjustment is warranted. PGIM follows this practice of accruing Estimated Net Operating Income from properties and other real estate related investments because net operating income from such investments is generally received on an intermittent rather than daily basis, and the Partners believe it is more equitable to participating Contract owners if such net operating income is estimated and a proportionate amount is recognized daily. Because the daily accrual of Estimated Net Operating Income is based on estimates that may not turn out to reflect actual revenue and expenses, Contract owners will bear the risk that this practice will result in the undervaluing or overvaluing of the Partnership's assets. PGIM may adjust the value of any asset held by the Partnership based on events that have increased or decreased the realizable value of a property or other real estate related investment. For example, adjustments may be made for events indicating an impairment of a borrower's or a lessee's ability to pay any amounts due or events which affect the property values of the surrounding area. There can be no assurance that the factors for which an adjustment may be made will immediately come to the attention of PGIM. Additionally, because the evaluation of such factors may be subjective, there can be no assurance that such adjustments will be timely made in all cases where the value of the Partnership's investments may be affected. All adjustments made to the valuation of the Partnership's investments, including adjustments to Estimated Net Operating Income, the daily accrued receivable, and adjustments to the valuation of properties and other real estate related investments, will be on a prospective basis only. The above method of valuation of the Partnership's assets may be changed, without the consent of Contract owners, should the Partners determine that another method would more accurately reflect the value of the Partnership s investments. Changes in the method of valuation could result in a change in the Contract Fund values which may have either an adverse or beneficial effect on Contract owners. Information concerning any material change in the valuation method will be given in FINANCIAL STATEMENTS OF THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP. Although the above described valuation methods have been adopted because the Partners believe they will provide a reasonable way to estimate the fair market value of the Partnership's investments, there may well be variations between the amount realizable upon disposition and the Partnership's valuation of such assets. Contract owners may be either favorably or adversely affected if the valuation method results in either overvaluing or undervaluing the Partnership's investments. If a Contract owner invests in the Real Property Account at a time in which the Partnership's investments are overvalued, the Contract owner will be credited with less of an interest than if the value had been correctly stated. A Contract owner withdrawing from the Real Property Account during such time will receive more than he or she would if the value had been correctly stated, to the detriment of other Contract owners. The converse situation will exist if the Partnership's assets are undervalued. BORROWING BY THE PARTNERSHIP The Partnership may borrow for Partnership purposes, including to meet its liquidity requirements and the leveraging of currently-owned property to buy new property, subject to a maximum debt to value ratio of 331/3% (pursuant to California state requirements) based on the aggregate value of all Partnership assets. The Partnership will bear the cost of all such borrowings. The Real Property Account, and Contract owners participating in it, will bear a portion of any borrowing costs equal to their percentage interest in the Partnership. Moreover, although the Partnership will generally make unleveraged investments, it reserves the right to borrow up to 80% of the value of a property (with the value of a property determined as explained under VALUATION OF CONTRACT OWNERS' PARTICIPATING INTERESTS). Increasing the Partnership's assets through leveraged investments would increase the compensation paid to PGIM since its investment management fee is a percentage of the Partnership's gross assets. Any borrowing by the Partnership would increase the Partnership's risk of loss. It could also inhibit the Partnership from achieving its investment objectives because the Partnership's payments on any loans would have to be made regardless of the profitability of its investments. CHARGES Pursuant to the investment management agreement, the Partnership pays a daily investment management fee, which is equal to an effective annual rate of 1.25% of the average daily gross assets of the Partnership. Certain other expenses and charges attributable to the operation of the Partnership are also charged against the Partnership. In acquiring an investment, the Partnership may incur various types of expenses paid to third parties, including but not limited to, brokerage fees, attorneys' fees, architects' fees, engineers' fees, and accounting fees. After acquisition of an investment, the Partnership will incur recurring expenses for the preparation of annual and semi-annual reports, periodic appraisal costs, mortgage servicing fees, annual audit charges, accounting and legal fees, and various administrative expenses. These expenses will be charged against the Partnership's assets. Some of these operating expenses represent reimbursement of the investment manager for the cost of providing certain services necessary to the operation of the Partnership, such as daily accounting services, preparation of annual and semi-annual reports, and various administrative services. The investment manager charges the Partnership mortgage loan servicing fees pursuant to the standards outlined in item 6 under CONFLICTS OF INTEREST . In addition to the various expenses charged against the Partnership's assets, other expenses such as insurance costs, taxes, and property management fees will ordinarily be deducted from rental income, thereby reducing the gross income of the Partnership. As explained earlier, charges to the Contracts will be recorded in the corresponding subaccounts of the Real Property Account. From time to time, Pruco Life will withdraw from the Real Property Account an amount equal to the aggregate amount of these charges. Aside from the charges to the Contracts, Pruco Life does not charge the Real Property Account for the expenses involved in the Real Property Account s operation. The Real Property Account will, however, bear its proportionate share of the charges made to the Partnership as described above. The Partnership is not a taxable entity under the provisions of the Internal Revenue Code. The income, gains, and losses of the Partnership are attributed, for federal income tax purposes, to the Partners in the Partnership. The earnings of the Real Property Account are, in turn, taxed as part of the operations of Pruco Life. Pruco Life is currently not charging the Real Property Account for company federal income taxes. Pruco Life may make such a charge in the future. 12 - Real Property Under current laws Pruco Life may incur state and local taxes (in addition to premium taxes) in several states. At present, Pruco Life does not charge these taxes against the Contracts or the Real Property Account, but Pruco Life may decide to charge the Real Property Account for such taxes in the future. RESTRICTIONS ON WITHDRAWALS Before allocating any portion of your net premium or purchase payments, or transferring any portion of your Contract Fund, to the Real Property Account, you should be aware that withdrawals from the Real Property Account may have greater restrictions than the other variable investment options available under the Contracts. Pruco Life reserves the right to restrict transfers into or out of the Real Property Account. Apart from the limitations on transfers out of the Real Property Account described below, Pruco Life will only restrict transfers out of the Real Property Account if there is insufficient cash available to meet Contract owners' requests and prompt disposition of the Partnership's investments to meet such requests could not be made on commercially reasonable terms. Generally, we will pay any death benefit, cash surrender value, loan proceeds, or partial withdrawal within seven days after all the documents required for such a payment are received at the Service Office. Other than the death benefit, which is determined as of the date of death, the amount will be determined as of the end of the valuation period in which the necessary documents are received at a Service Office. The funds necessary to pay any death benefit, cash surrender value, withdrawal or loan proceeds funded by the Real Property Account will normally be obtained, first, from any cash flows into the Real Property Account on the day the funds are required. If, on the day the funds are required, cash flows into the Real Property Account are less than the amount of funds required, Pruco Life will seek to obtain such funds by withdrawing a portion of its interest in the Partnership. The Partnership will normally obtain funds to meet such a withdrawal request from its net operating income and from the liquid securities and instruments it holds. If the Partners determine that these sources are insufficient to meet anticipated withdrawals from the Partnership, the Partnership may use a line of credit or otherwise borrow up to 331/3% (pursuant to California state requirements) of the value of the Partnership's assets. See BORROWING BY THE PARTNERSHIP. If the Partners determine that such a borrowing by the Partnership would not serve the best interests of Contract owners, Pruco Life may, in the event of a Contract loan or withdrawal, rather than take the amount of any loan or withdrawal request proportionately from all investment options under the Contract (including the Real Property Account), take any such loan or withdrawal first from the other investment options under the Contract. Transfers from the Real Property Account to the other investment options available under the Contract are currently permitted only during the 30 day period beginning on the Contract anniversary. The maximum amount that may be transferred out of the Real Property Account each year is the greater of: (a) 50% of the amount invested in the Real Property Account or (b) $10,000. Such transfer requests received prior to the Contract anniversary will be effected on the Contract anniversary. Transfer requests received within the 30 day period beginning on the Contract anniversary will be effected as of the end of the valuation period in which a proper written request or authorized telephone request is received. The "valuation period" means the period of time from one determination of the value of the amount invested in the Real Property Account to the next. Such determinations are made when the value of the assets and liabilities of the Partnership is calculated, which is generally at 4:00 p.m. Eastern time on each day during which the New York Stock Exchange is open. Transfers into or out of the Real Property Account are also subject to the general limits under the Contracts. RESTRICTIONS ON CONTRACT OWNERS INVESTMENT IN THE REAL PROPERTY ACCOUNT As explained earlier, identification and acquisition of real estate investments meeting the Partnership's investment objectives is a time consuming process. Because the Real Property Account and the Partnership are managed so they will not become investment companies subject to the Investment Company Act of 1940, the portion of the Partnership's assets that may be invested in securities, as opposed to non securities real estate investments, is strictly limited. For these reasons, Pruco Life reserves the right to restrict or limit Contract owners' allocation of funds to the Real Property Account. Any such restrictions are likely to take the form of restricting the timing, amount and/or frequency of transfers into the Real Property Account and/or precluding Contract owners who have not previously selected the Real Property Account from allocating a portion of their net premiums or purchase payments to the Real Property Account. FEDERAL INCOME TAX CONSIDERATIONS The federal income tax treatment of Contract benefits is described briefly in the attached prospectus for the particular Contract you selected. Pruco Life believes that the same principles will apply with respect to Contracts funded in whole or part by the Real Property Account. The Partnership's conformity with the diversification standards for the investments of variable life insurance and variable annuity separate accounts is essential to ensure that treatment. See Investment Policies-General Investment and Operating Policies. Pruco Life urges you to consult a qualified tax adviser. Under the Internal Revenue Code, the Partnership is not a taxable entity and any income, gains or losses of the Partnership are passed through to the Partners, including Pruco Life, with respect to the Real Property Account. The Real Property Account is not a separate taxpayer for purposes of the Internal Revenue Code. The earnings of the Real Property Account are taxed as part of the operations of Pruco Life. No charge is currently being made to the Real Property Account for company federal income taxes. We may make such a charge in the future, see CHARGES. DISTRIBUTION OF THE CONTRACTS As explained in the attached prospectus for the Contracts, Pruco Securities, LLC, an indirect wholly owned subsidiary of Prudential Financial, acts as the principal underwriter of the Contracts. Consult that prospectus for information about commission scales and other facts relating to sale of the Contracts. 13 - Real Property STATE REGULATION Pruco Life is subject to regulation and supervision by the Department of Insurance of the State of Arizona, which periodically examines its operations and financial condition. It is also subject to the insurance laws and regulations of all jurisdictions in which it is authorized to do business. Pruco Life is required to submit annual statements of its operations, including financial statements, to the insurance departments of the various jurisdictions in which it does business to determine solvency and compliance with local insurance laws and regulations. In addition to the annual statements referred to above, Pruco Life is required to file with Arizona and other jurisdictions a separate statement with respect to the operations of all its variable contract accounts, in a form promulgated by the National Association of Insurance Commissioners. ADDITIONAL INFORMATION Pruco Life has filed a registration statement with the SEC under the Securities Act of 1933, relating to the offering described in this prospectus. This prospectus does not include all of the information set forth in the registration statement. Certain portions have been omitted pursuant to the rules and regulations of the SEC. All reports and information filed by Pruco Life can be inspected and copied at the Public Reference Section of the Commission at 100 F Street, N.E., Washington, D.C. 20549, and at certain of its regional offices: Midwestern Regional Office, 175 West Jackson Boulevard, Suite 900, Chicago, IL 60604; Northeastern Regional Office SEC, 233 Broadway, New York, NY 10279, or by telephoning (202) 551-8090. The SEC maintains a Web site (http://www.sec.gov) that contains material incorporated by reference and other information regarding registrants that file electronically with the SEC. Pursuant to the delivery obligations under Section 5 of the Securities Act of 1933 and Rule 159 thereunder, Pruco Life delivers this prospectus to contract owners that reside outside of the United States. Further information may also be obtained from Pruco Life. The address and telephone number are on the cover of this prospectus. EXPERTS The financial statements of the Partnership as of December 31, 2017 and 2016 and for each of the three years in the period ended December 31, 2017, the financial statement schedule of the Partnership as of December 31, 2017 and the financial statements of the Real Property Account as of December 31, 2017 and 2016 and for each of the three years in the period ended December 31, 2017 included in this prospectus have been so included in reliance on the reports of PricewaterhouseCoopers LLP, an independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting. LITIGATION No litigation is pending, and no litigation is known to be contemplated by governmental authorities, that would have an adverse material effect upon the Real Property Account or the Partnership. REPORTS TO CONTRACT OWNERS If you allocate a portion of your Contract Fund to the Real Property Account, Pruco Life will mail you an annual and semi-annual report and any other information that may be required by applicable regulation or law. 14 - Real Property PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION Item of Expense Estimated Expense Registration fees $0.00 Federal taxes $12,500 per $1 million of premium payments State taxes $25,000 per $1 million of premium payments Printing Costs $20,000* Legal Costs N/A Accounting Costs $10,000* * Estimated Expense ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS The Registrant, in connection with certain affiliates, maintains various insurance coverages under which the underwriter and certain affiliated persons may be insured against liability which may be incurred in such capacity, subject to the terms, conditions, and exclusions of the insurance policies. Arizona, being the state of organization of Pruco Life Insurance Company ("Pruco Life"), permits entities organized under its jurisdiction to indemnify directors and officers with certain limitations. The relevant provisions of Arizona law permitting indemnification can be found in Section 10-850 et seq. of the Arizona Statutes Annotated. The text of Pruco Life's By-law, Article VIII, which relates to indemnification of officers and directors, is incorporated by reference to Exhibit Item 16.(a)(3B) on Form S-1, Registration No. 333-158229, filed March 27, 2009 on behalf of Pruco Life Variable Contract Real Property Account. Insofar as indemnification for liabilities arising under the Securities Act of 1933 (the "Act") may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES Not Applicable. ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES (a) Exhibits (1A) Distribution Agreement between Pruco Securities, LLC and Pruco Life Insurance Company with respect to the Pruco Life Variable Insurance Account. Incorporated by reference to Post-Effective Amendment No. 24 to Form S-6, Registration No. 2-80513, filed April 30, 1997, on behalf of the Pruco Life Variable Insurance Account. (1B) Distribution Agreement between Pruco Securities, LLC and Pruco Life Insurance Company with respect to the Pruco Life Variable Appreciable Account. Incorporated by reference to Post-Effective Amendment No. 26 to Form S-6, Registration No. 2-89558, filed April 29, 1997, on behalf of the Pruco Life Variable Appreciable Account. (1C) Distribution Agreement between Pruco Securities, LLC and Pruco Life Insurance Company with respect to the Pruco Life Single Premium Variable Life Account and Pruco Life Single Premium Variable Annuity Account. Incorporated by reference to Post-Effective Amendment No. 3 to Form S-1 Registration No. 33-86780, filed April 9, 1997, on behalf of the Pruco Life Variable Contract Real Property Account. (3A) Articles of Incorporation of Pruco Life Insurance Company, as amended October 19, 1993. Incorporated by reference to Registration Statement Form S-1, Registration Number 333-158229 filed March 27, 2009 on behalf of Pruco Life Variable Contract Real Property Account. II - 2 (3B) By-Laws of Pruco Life Insurance Company, as amended May 6, 1997. Incorporated by reference to Registration Statement Form S-1, Registration Number 333-158229 filed March 27, 2009 on behalf of Pruco Life Variable Contract Real Property Account. (3C) Resolution of the Board of Directors establishing the Pruco Life Variable Contract Real Property Account. Incorporated by reference to Post-Effective Amendment No. 3 to Form S-1 Registration No. 33-86780, filed April 9, 1997, on behalf of the Pruco Life Variable Contract Real Property Account. (4A) Variable Life Insurance Contract. Incorporated by reference to Post-Effective Amendment No. 24 to Form S-6, Registration No. 2-80513, filed April 30, 1997, on behalf of the Pruco Life Variable Insurance Account. (4B)(i) Revised Variable Appreciable Life Insurance Contract with fixed death benefit. Incorporated by reference to Post-Effective Amendment No. 26 to Form S-6, Registration No. 2-89558, filed April 29, 1997, on behalf of the Pruco Life Variable Appreciable Account. (4B)(ii) Revised Variable Appreciable Life Insurance Contract with variable death benefit. Incorporated by reference to Post-Effective Amendment No. 26 to Form S-6, Registration No. 2-89558, filed April 29, 1997, on behalf of the Pruco Life Variable Appreciable Account. (4C) Single Premium Variable Annuity Contract. Incorporated by reference to Post-Effective Amendment No. 3 to Form S-1 Registration No. 33-86780, filed April 9, 1997, on behalf of the Pruco Life Variable Contract Real Property Account. (4D) Flexible Premium Variable Life Insurance Contract. Incorporated by reference to Post-Effective Amendment No. 3 to Form S-1 Registration No. 33-86780, filed April 9, 1997, on behalf of the Pruco Life Variable Contract Real Property Account. (5) Opinion and Consent of Jordan K. Thomsen, Esq., as to the legality of the securities being registered. Filed herewith. (10A) Investment Management Agreement between Prudential Investment Management, Inc. and The Prudential Variable Contract Real Property Partnership. Incorporated by reference to Form S-1, Registration No. 33 20083-01, filed April 10, 2003 on behalf of the Prudential Variable Contract Real Property Account. (10B) Administrative Service Agreement among PIM, Prudential Insurance Company of America, Pruco Life Insurance Company, and Pruco Life Insurance Company of New Jersey. Incorporated by reference to Post-Effective Amendment No. 17 to Form S-1, Registration No. 33 20083-01, filed April 14, 2004 on behalf of the Prudential Variable Contract Real Property Account. (10C) Partnership Agreement of The Prudential Variable Contract Real Property Partnership. Incorporated by reference to Post-Effective Amendment No. 9 to Form S-1, Registration No. 33 20083-01, filed April 9, 1997 on behalf of the Prudential Variable Contract Real Property Account. (23A) Written consent of PricewaterhouseCoopers LLP, independent registered public accounting firm. Filed herewith. (23B) Written consent of Jordan K. Thomsen, Esq. Incorporated by reference to Exhibit (5) hereto. (24) Powers of Attorney:John Chieffo, Caroline A. Feeney, Lori D. Fouch , Christine Knight, Candace J. Woods, Kent D. Sluyter, Kenneth Y. Tanji. Filed herewith. (b) Financial Statement Schedules Schedule III Real Estate Owned by The Prudential Variable Contract Real Property Partnership and independent accountant's report thereon. Filed herewith. (c) Financial Statement Financial Statements of Pruco Life Variable Contract Real Property Account and the consolidated Financial Statements of The Prudential Variable Contract Real Property Partnership. Filed herewith. II - 3 ITEM 17. UNDERTAKINGS The undersigned registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (i) To include any prospectus required by Section 10 (a)(3) of the Securities Act of 1933; (ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; and (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement. (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at the time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (4) That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser: each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness; provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use. (5) That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities: The undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser: (i) Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424; (ii) Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant; (iii) The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and (iv) Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser. (6) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. II - 4 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, this registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Newark, State of New Jersey, on the 29th day of March, 2018. Pruco Life Insurance Company In Respect of Pruco Life Variable Contract Real Property Account By: /s/ Jordan K. Thomsen Jordan K. Thomsen Vice President and Corporate Counsel Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed below by the following persons in the capacities indicated on this 29th day of March, 2018. Signature and Title /s/ * John Chieffo Vice President, Chief Financial Officer, Chief Accounting Officer, and Director /s/ * Caroline Feeney Director /s/ * Lori D. Fouch Director *By: /s/ Jordan K. Thomsen /s/ * Jordan K. Thomsen Christine Knight (Attorney-in-Fact) Vice President and Director /s/ * Kent D. Sluyter President, Chief Executive Officer, and Director /s/ * Kenneth Y. Tanji Treasurer and Director /s/ * Candace Woods Director II - 5 EXHIBIT INDEX Item 16. (a) (5) Opinion and Consent of Jordan K. Thomsen, Esq., as to the legality of the securities being registered. (a) (23A) Written consent of PricewaterhouseCoopers LLP, independent registered public accounting firm. (a) (24) Powers of Attorneys II - 6 Appendix: Information about Pruco Life Variable Contract Real Property Account Table of Contents Page No. Risk Factors A-2 Market for Registrant s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities A-5 Selected Financial Data A-5 Management s Discussion and Analysis of Financial Condition and Results of Operations A-6 Quantitative and Qualitative Disclosures About Market Risk A-14 Market Conditions A-14 Property Markets A-14 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure A-14 Directors, Executive Officers and Corporate Governance A-15 Code of Ethics A-15 Executive Compensation A-16 Certain Relationships and Related Transactions, and Director Independence A-16 Principal Accounting Fees and Services A-16 Financial Statements and Supplementary Data A-17 Financial Statements of Pruco Life Variable Contract Real Property Account B-1 Financial Statements of The Prudential Variable Contract Real Property Partnership C-1 Risk Factors This "Risk Factors" section provides a summary of some of the significant risks. Many of these risks are interrelated and could occur under similar business and economic conditions, and the occurrence of certain of them may in turn cause the emergence or exacerbate the effect of others. Such a combination could materially increase the severity of the impact of these risks on our businesses, results of operations, financial condition and liquidity. Throughout this section we , our , and "Company" refer to Pruco Life Insurance Company. Market fluctuations and general economic, market and political conditions may adversely affect our business and profitability. Our business and our results of operations may be materially adversely affected by conditions in the global financial markets and by economic conditions generally. Even under relatively favorable market conditions, our insurance and annuity products, as well as our investment returns and our access to and cost of financing, are sensitive to fixed income, equity, real estate and other market fluctuations and general economic, market and political conditions. These fluctuations and conditions could adversely affect our results of operations, financial position and liquidity, including in the following respects: The profitability of many of our insurance and annuity products depends in part on the value of the separate accounts supporting these products, which can fluctuate substantially depending on the foregoing conditions. A change in market conditions, such as high inflation and high interest rates, could cause a change in consumer sentiment and behavior adversely affecting sales and persistency of our savings and protection products. Conversely, low inflation and low interest rates could cause persistency of these products to vary from that anticipated and adversely affect profitability (as further described below). Similarly, changing economic conditions and unfavorable public perception of financial institutions can influence customer behavior, including increasing claims or surrenders in certain product lines. Adverse capital market conditions could significantly affect our ability to meet liquidity needs, our access to capital and our cost of capital, including capital that may be required by the Company's subsidiaries. Under such conditions, we may seek additional debt or equity capital but may be unable to obtain it. Adverse capital market conditions could affect the availability and cost of borrowed funds and could impact our ability to refinance existing borrowings, thereby ultimately impacting our profitability and ability to support or grow our businesses. We need liquidity to pay our operating expenses, interest and maturities on our debt and dividends on our capital stock. The principal sources of our liquidity are insurance premiums, annuity considerations, cash flow from our investment portfolio, and fees from separate account assets. In the normal course of business, The Prudential Variable Real Property Partnership (the "Partnership") enters into loan agreements with certain lenders to finance its real estate investment transactions. Unfavorable economic conditions could increase related borrowing costs, limit access to the capital markets or result in a decision by lenders not to extend credit to the Partnership. There is no guarantee that the Partnership s borrowing arrangements or ability to obtain leverage will continue to be available, or if available, will be available on terms and conditions acceptable to the Partnership. Further, these loan agreements contain, among other conditions, events of default and various covenants and representations. In the normal course of business, the Partnership may be in the process of renegotiating terms for loans outstanding that have passed their maturity dates. At December 31, 2017, the Partnership had no outstanding matured loans. A decline in market value of the Partnership s assets may also have particular adverse consequences in instances where the Partnership borrowed money based on the fair value of specific assets. A decrease in market value of these assets may result in the lender requiring the Partnership to post additional collateral or otherwise repay these loans. In the event the Partnership s current investment obligations are not refinanced or extended when they become due and/or the Partnership is required to repay such borrowings and obligations, management anticipates that the repayment of these obligations will be provided by operating cash flow, new debt refinancing, and/or real estate investment sales. The companies offering the variable life insurance and variable annuity contracts and the Partnership are heavily regulated and changes in regulation may adversely affect our results of operations and financial condition. Our business is subject to comprehensive regulation and supervision. The purpose of this regulation is primarily to protect our customers and not necessarily our shareholders or debt holders. Many of the laws and regulations to which we are subject, are regularly re-examined, and existing or future laws and regulations may become more restrictive or otherwise adversely affect our operations. The financial market dislocations we have experienced have produced, and are expected to continue to produce, extensive changes in existing laws and regulations, and regulatory frameworks, applicable to our business. Compliance with applicable laws and regulations is time consuming and personnel-intensive, and changes in these laws and regulations may materially increase our direct and indirect compliance and other expenses of doing business, and thereby have a material adverse effect on our financial condition or results of operations. Changes in accounting requirements could negatively impact our reported results of operations and our reported financial position. Accounting standards are continuously evolving and subject to change. For example, the Financial Accounting Standards Board ("FASB") has an ongoing project to revise accounting standards for long duration insurance contracts. While the final resolution of changes to U.S. generally accepted accounting principles ("U.S. GAAP") pursuant to this project is unclear, changes to the manner in which we account for insurance products, or other changes in accounting standards, could have a material effect on our reported results of operations and financial condition. Further, changes in accounting standards may impose special demands on issuers in areas such as corporate governance, internal controls and disclosure, and may result in substantial conversion costs to implement. Changes in U.S. federal income tax law or in the income tax laws of other jurisdictions in the U.S. in which we operate could make some of our products less attractive to consumers and also increase our tax costs. H.R.1, also referred to as the Tax Cuts and Jobs Act of 2017 (the Tax Act of 2017 ), was enacted into law on December 22, 2017 and is generally effective starting in 2018. Our analysis of the Tax Act of 2017 is ongoing, as guidance may be needed from the Treasury Department and the Internal Revenue Service ( IRS ) to fully understand and implement several provisions. Other life insurance and financial services companies may benefit more or less from these tax law changes, which could impact the Company s overall competitive position. The law is also expected to reduce the Company s domestic statutory capital and risk-based capital. Notwithstanding the enactment of the Tax Act of 2017, the President, Congress, as well as state and local governments, may continue to consider from time to time legislation that could increase the amount of corporate taxes we pay, thereby reducing earnings. U.S. federal tax law generally permits tax deferral on the inside build-up of investment value of certain retirement savings, annuities and life insurance products until there is a contract distribution and, in general, excludes from taxation the death benefit paid under a life insurance contract. The Tax Act of 2017 did not change these rules, though it is possible that some individuals with overall lower effective tax rates could be less attracted to the tax deferral aspect of the Company s products. The general reduction in individual tax rates and elimination of certain individual deductions may also impact the Company depending on whether current and potential customers have more or less after-tax income to save for retirement and manage their mortality and longevity risk through the purchase of the Company s products. Congress from time to time may enact other changes to the tax law that could make our products less attractive to consumers, including legislation that would modify the tax favored treatment of retirement savings, life insurance and annuities products. The products we sell have different tax characteristics and in some cases generate tax deductions and credits for the Company. Changes in either the U.S. or foreign tax laws may negatively impact the deductions and credits available to the Company, including the ability of the Company to claim foreign tax credits with respect to taxes withheld on separate account products. These changes would increase the Company s actual tax expense and reduce its consolidated net income. The level of profitability of certain products is significantly dependent on these characteristics and our ability to continue to generate taxable income, which is taken into consideration when pricing products and is a component of our capital management strategies. Accordingly, changes in tax law, our ability to generate taxable income, or other factors impacting the availability or value of the tax characteristics generated by our products, could impact product pricing and returns or require us to reduce our sales of these products or implement other actions that could be disruptive to our businesses. Interruption in telecommunication, information technology and other operational systems, or a failure to maintain the security, confidentiality or privacy of sensitive data residing on such systems, could harm our business. We depend heavily on our telecommunication, information technology and other operational systems and on the integrity and timeliness of data we use to run our businesses and service our customers. These systems may fail to operate properly or become disabled as a result of events or circumstances wholly or partly beyond our control. Further, we face the risk of operational and technology failures by others, including clearing agents, exchanges and other financial intermediaries and of vendors and parties to which we outsource the provision of services or business operations. If these parties do not perform as anticipated, we may experience operational difficulties, increased costs and other adverse effects on our business. These risks are heightened by our offering of increasingly complex products, such as those that feature automatic rebalancing or re-allocation strategies, and by our employment of complex investment, trading and hedging programs. Despite our implementation of a variety of security measures, our information technology and other systems could be subject to physical or electronic break-ins, unauthorized tampering or other security breaches, resulting in a failure to maintain the security, confidentiality or privacy of sensitive data, including personal information relating to customers, or in the misappropriation of our intellectual property or proprietary information. Many financial services institutions and companies engaged in data processing have reported security breaches and service disruptions related to their websites or other systems, some of which have involved sophisticated and targeted attacks intended to obtain unauthorized access to confidential information, destroy data, disrupt or degrade service, sabotage systems or cause other damage, often through the introduction of computer viruses or malware, denial -of-service attacks and other means. Despite our efforts to ensure the integrity of our systems, it is possible that we may not be able to anticipate or to implement effective preventive measures against all security breaches and disruptions of these types, especially because the techniques used change frequently or are not recognized until launched, and because cyber attacks can originate from a wide variety of sources, including third-parties outside of the Company such as persons who are involved with organized crime or who may be linked to terrorist organizations or hostile foreign governments, as well as external service providers. Those parties may also attempt to fraudulently induce employees, customers or other users of the Company s systems to disclose sensitive information in order to gain access to our data or that of our customers or clients. In addition, while we have certain standards for all vendors that provide us services, our vendors, and in turn, their own service providers, may become subject to a security breach, including as a result of their failure to perform in accordance with contractual arrangements. Security breaches or other technological failures may also result in regulatory inquiries, regulatory proceedings, regulatory and litigation costs, and reputational damage. We may incur reimbursement and other expenses, including the costs of litigation and litigation settlements and additional compliance costs. We may also incur considerable expenses in enhancing and upgrading computer systems and systems security following such a failure. Interruption in telecommunication, information technology and other operational systems, or a failure to maintain the security, confidentiality or privacy of sensitive data residing on such systems, whether due to actions by us or others, could delay or disrupt our ability to do business and service our customers, harm our reputation, result in a violation of applicable privacy and other laws, subject us to substantial regulatory sanctions and other claims, lead to a loss of customers and revenues, or financial loss to our customers and otherwise adversely affect our business. The occurrence of natural or man-made disasters could adversely affect our operations, results of operations and financial condition. The occurrence of natural disasters, including hurricanes, floods, earthquakes, tsunamis, tornadoes, fires, explosions, pandemic disease and man-made disasters, including acts of terrorism and military actions, could adversely affect our operations, results of operations or financial condition, including in the following respects: Catastrophic loss of life due to natural or man-made disasters could cause us to pay benefits at higher levels and/or materially earlier than anticipated and could lead to unexpected changes in persistency rates. A man-made or natural disaster, such as an earthquake in Japan, could result in disruptions in our operations, losses in our investment portfolio or the failure of our counterparties to perform, or cause significant volatility in global financial markets. A terrorist attack affecting financial institutions in the U.S. or elsewhere could negatively impact the financial services industry in general and our business operations, investment portfolio and profitability in particular. Pandemic disease could have a severe adverse effect on Prudential Financial s business. The potential impact of such a pandemic on Prudential Financial s results of operations and financial position is variable, and would depend on numerous factors, including the effectiveness of vaccines and the rate of contagion, the regions of the world most affected and the effectiveness of treatment for the infected population. The above risks are more pronounced in respect of geographic areas, including major metropolitan centers, where we have concentrations of customers, including under group and individual life insurance, concentrations of employees or significant operations, and in respect of countries and regions in which we operate subject to a greater potential threat of military action or conflict. Ultimate losses would depend on the rates of mortality and morbidity among various segments of the insured population, the collectability of reinsurance, the possible macroeconomic effects on our asset portfolio, the effect on lapses and surrenders of existing policies, as well as sales of new policies and other variables. There can be no assurance that our business continuation plans and insurance coverages would be effective in mitigating any negative effects on our operations or profitability in the event of a terrorist attack or other disaster. Finally, climate change may increase the frequency and severity of weather related disasters and pandemics. In addition, climate change regulation may affect the prospects of companies and other entities whose securities we hold, or our willingness to continue to hold their securities. It may also impact other counterparties, including reinsurers, and affect the value of investments, including real estate investments we hold or manage for others. We cannot predict the long-term impacts on us from climate change or related regulation. Market for Registrant s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Owners of the contracts may participate by allocating all or part of the net premiums or purchase payments to Pruco Life Variable Contract Real Property Account ("Real Property Account"). Contract values vary with the performance of the Real Property Account s investments through the Partnership. Participating interests in the Real Property Account are not traded in any public market; therefore, a discussion of market information is not relevant. As of December 31, 2017, 16,762 contract owners of record held investments in the Real Property Account. Selected Financial Data The Partnership Results of Operations and Financial Position are summarized as follows: Year Ended December 31, CONSOLIDATED RESULTS OF OPERATIONS: 2017 2016 2015 2014 2013 Total Investment Income $ 22,810,587 $ 22,829,303 $ 22,394,116 $ 25,546,941 $ 28,525,763 Net Investment Income $ 7,286,442 $ 7,874,446 $ 6,711,044 $ 7,474,906 $ 9,574,870 Net Recognized and Unrealized Gain (Loss) on Investments 4,778,649 3,003,702 12,722,180 6,735,778 9,086,821 Net Increase (Decrease) in Net Assets Resulting From Operations $ 12,065,091 $ 10,878,148 $ 19,433,224 $ 14,210,684 $ 18,661,691 CONSOLIDATED FINANCIAL POSITION: December 31, 2017 2016 2015 2014 2013 Total Assets $ 328,824,566 $ 320,397,053 $ 282,274,678 $ 270,454,664 $ 258,047,298 Investment Level Debt* $ 96,905,747 $ 93,958,234 $ 66,026,362 $ 69,515,899 $ 58,892,867 *Certain prior period amounts in the consolidated financial statements have been reclassified to conform with current period presentation. See New Accounting Pronouncements adopted in Note 2 of Notes to the Consolidated Financial Statements of the Partnership. Management s Discussion and Analysis of Financial Condition and Results of Operations All assets of the Real Property Account are invested in the Partnership. Accordingly, the liquidity and capital resources and results of operations for the Real Property Account are contingent upon those of the Partnership. Therefore, this Management s Discussion and Analysis of Financial Condition and Results of Operations addresses these items at the Partnership level. The general partners in the Partnership are The Prudential Insurance Company of America, Pruco Life Insurance Company, and Pruco Life Insurance Company of New Jersey (collectively, the General Partners ). The following discussion and analysis of the liquidity and capital resources and results of operations of the Partnership should be read in conjunction with the audited financial statements of the Real Property Account and the audited consolidated financial statements of the Partnership and the related Notes included in this filing. (a) Liquidity and Capital Resources As of December 31, 2017, the Partnership s liquid assets, consisting of cash and cash equivalents, were approximately $26.7 million, a decrease of approximately $20.8 million from $47.5 million as of December 31, 2016. The decrease was primarily due to the following activities: (a) $28.7 million in real estate investments and improvements which includes $18.8 million for the acquisition of a self-storage facility located in Miami, FL, $5.6 million for construction costs at the development property in Chicago, IL and $2.7 million for building improvements at the retail property in Ocean City, MD; (b) $5.0 million in distributions to investors; (c) $1.7 million in net cash outflows to joint venture partners; and (d) $1.3 million of principal payments on financed properties. These decreases were partially offset by the following: (e) $7.3 million of cash flow generated from property operations; (f) $4.5 million of net proceeds from the sale of a retail center property in Dunn, NC; and (g) $4.2 million of proceeds from investment level debt. Sources of liquidity included net cash flow from property operations, mortgage debt on real estate investments, and interest from cash equivalents. The Partnership uses cash for its real estate investment activities and for distributions to its General Partners. As of December 31, 2017, approximately 8.1% of the Partnership s total assets consisted of cash and cash equivalents. The following table sets forth a summary regarding the Partnership's known contractual obligations, including required interest payments for those items that are interest bearing as of December 31, 2017 (amounts in millions). Amounts Due During Years Ending December, 31 2018 2019 2020 2021 2022 Thereafter Total Mortgage Loans Payable: Principal Payments $9.4 $1.7 $1.9 $44.5 $13.8 $26.6 $97.9 Interest Payments (1) 3.2 2.8 2.8 2.8 1.6 1.1 14.3 Total Mortgage Loans Payable $12.6 $4.5 $4.7 $47.3 $15.4 $27.7 $112.3 Other Commitments (2) - - - - - - - Total Contractual Obligations $12.6 $4.5 $4.7 $47.3 $15.4 $27.7 $112.3 (1) These amounts represent interest payments due on mortgage loans payable based on stated rates at December 31, 2017. (2) This includes the Partnership's commitment to fund any additional equity on development projects. As of December 31, 2017 the Partnership has satisfied this equity commitment. (b) Results of Operations for the years ended December 31, 2017 and December 31, 2016 The following is a comparison of the Partnership s results of operations for the years ended December 31, 2017 and December 31, 2016. Net investment income overview The Partnership s net investment income attributable to the General Partners controlling interest for the year ended December 31, 2017 was approximately $6.7 million, a decrease of approximately $0.5 million from the prior year. The decrease in net investment income attributable to the General Partners controlling interest was primarily due to a decrease of $0.5 million in the retail sector s net investment income from the prior year and a decrease of approximately $0.3 million in the office sector s net investment income from the prior year. Partially offsetting this was a decrease of approximately $0.2 million from the prior year in portfolio level expenses. Net investment income attributable to the General Partner s controlling interest in the apartment sector was essentially flat from the prior year. Valuation overview The Partnership recorded net recognized and unrealized gains attributable to the General Partners controlling interest of approximately $3.6 million for the year ended December 31, 2017. This is compared with a net recognized and unrealized gain attributable to the General Partners controlling interest of approximately $3.0 million for the year ended December 31, 2016, an increase of $0.6 million. Unrealized gains attributable to the General Partners controlling interest from the prior year increased by $1.7 million and were primarily due to a valuation increase in the apartment sector of $1.0 million and a valuation increase in the retail sector of $0.8 million. Recognized losses attributable to the General Partners controlling interest from the prior year increased by $1.1 million, and were primarily due to a $1.3 million increase in recognized losses from retail sector investments, partially offset by a $0.3 million decrease in recognized losses from office sector investments. The following table presents a comparison of the Partnership s sources of net investment income (loss) attributable to the General Partners controlling interest and net recognized and unrealized gains (losses) attributable to the General Partners controlling interest for the years ended December 31, 2017 and 2016. Year Ended December 31, 2017 2016 Net Investment Income (Loss): Office properties $ 10,563 $ 279,236 Apartment properties 4,043,285 4,118,208 Retail properties 6,216,988 6,668,035 Hotel properties (103,350 ) Storage properties 8,667 Other (including interest income, investment management fees, etc.) (3,622,829 ) (3,755,676 ) Total Net Investment Income $ 6,656,674 $ 7,206,453 Net Recognized Gain (Loss) on Real Estate Investments: Office properties $ $ (256,982 ) Hotel properties (1,419 ) Retail properties (1,332,637 ) Net Recognized Gain (Loss) on Real Estate Investments $ (1,334,056 ) $ (256,982 ) Net Unrealized Gain (Loss) on Real Estate Investments: Apartment properties $ 4,629,031 $ 3,593,146 Retail properties 400,741 (353,072 ) Storage properties (53,115 ) Net Unrealized Gain (Loss) on Real Estate Investments 4,976,657 3,240,074 Net Recognized and Unrealized Gain (Loss) on Real Estate Investments $ 3,642,601 $ 2,983,092 Increase/(Decrease) in Net Assets $ 10,299,275 $ 10,189,545 OFFICE PROPERTIES Year Ended December 31, Net Investment Income/(Loss) 2017 Net Investment Income/(Loss) 2016 Recognized/ Unrealized Gain/(Loss) 2017 Recognized/ Unrealized Gain/(Loss) 2016 Occupancy 2017 Occupancy 2016 Property Lisle, IL (1) $ $ 280,307 $ $ (256,982 ) N/A N/A Beaverton, OR (2) (8,135 ) (1,071 ) N/A N/A Nashville, TN (3) 9,753 N/A N/A Brentwood, TN (4) 8,945 N/A N/A $ 10,563 $ 279,236 $ $ (256,982 ) (1) The Lisle, IL property was sold in 2016. (2) The Beaverton, OR property was sold in 2015. (3) The Nashville, TN property was sold in 2015. (4) The Brentwood, TN property was sold in 2013. Net investment income/(loss) Net investment income attributable to the General Partners controlling interest for the Partnership s office properties was approximately $0.01 million for the year ended December 31, 2017, which represents a decrease of approximately $0.3 million from the year ended December 31, 2016. The decrease in net investment income is primarily due to the sale of the property located in Lisle, IL in 2016. Recognized and Unrealized gain/(loss) Recognized and unrealized gains/(losses) attributable to the General Partners controlling interest for the Partnership s office properties were $0 million for the year ended December 31, 2017, which represents a $0.3 million increase from the year ended December 31, 2016. The recognized loss attributable to the General Partners controlling interest for the year ended December 31, 2016 was due to the sale of the property located in Lisle, IL in 2016. APARTMENT PROPERTIES Year Ended December 31, Net Investment Income/(Loss) 2017 Net Investment Income/(Loss) 2016 Unrealized Gain/(Loss) 2017 Unrealized Gain/(Loss) 2016 Occupancy 2017 Occupancy 2016 Property Austin, TX $ 1,279,409 $ 1,382,288 $ 1,650,204 $ 792,614 96 % 98 % Charlotte, NC 673,779 762,469 38,409 697,772 96 % 96 % Seattle, WA #1 649,850 647,341 1,603,120 1,860,881 88 % 93 % Seattle, WA #2 902,972 816,523 1,503,560 154,572 87 % 96 % Maplewood, NJ 537,275 509,587 (169,305 ) 87,275 86 % 94 % Chicago, IL (1) 3,043 32 N/A N/A $ 4,043,285 $ 4,118,208 $ 4,629,031 $ 3,593,146 (1) The Chicago, IL property is in development. Net investment income/(loss) Net investment income attributable to the General Partners controlling interest for the Partnership s apartment properties was approximately $4.0 million for the year ended December 31, 2017, which represents a decrease of approximately $0.1 million from the prior year. Unrealized gain/(loss) The apartment properties owned by the Partnership produced a net unrealized gain attributable to the General Partners controlling interest of approximately $4.6 million for the year ended December 31, 2017 compared with a net unrealized gain attributable to the General Partners controlling interest of approximately $3.6 million from the prior year. The net unrealized gain attributable to the General Partners controlling interest for the year ended December 31, 2017 was primarily due to favorable market leasing and rent assumptions at both Seattle, WA properties and the Austin, TX property, as well as an anticipated decrease in property taxes at one property in Seattle, WA, and a decrease in previously forecasted capital expenditures at the property in Austin, TX. RETAIL PROPERTIES Year Ended December 31, Net Investment Income/(Loss) 2017 Net Investment Income/(Loss) 2016 Unrealized/Recognized Gain/(Loss) 2017 Unrealized Gain/(Loss) 2016 Occupancy 2017 Occupancy 2016 Property Hampton, VA $ 1,566,352 $ 1,461,915 $ (897,008 ) $ (2,641,636 ) 97 % 99 % Ocean City, MD 1,062,793 933,195 581,195 (72,872 ) 98 % 100 % Westminster, MD 1,281,159 1,400,268 549,046 100,000 100 % 100 % Dunn, NC (1) (154,716 ) 96,803 (1,332,637 ) 677,134 N/A 58 % Roswell, GA 1,193,805 1,146,671 162,248 600,000 96 % 94 % North Fort Myers, FL 510,105 855,640 (94,740 ) 284,302 88 % 88 % Roswell, GA (2) 28,008 N/A N/A Norcross, GA 729,482 773,543 100,000 700,000 100 % 100 % $ 6,216,988 $ 6,668,035 $ (931,896 ) $ (353,072 ) (1) The Dunn, NC property was sold in 2017. (2) The Roswell, GA property was sold in 2009. Net investment income/(loss) Net investment income attributable to the General Partners controlling interest for the Partnership s retail properties was approximately $6.2 million for the year ended December 31, 2017, which represents a decrease of approximately $0.5 million from the prior year. Approximately $0.3 million of the decrease relates to revenue from rental income, common area maintenance, and tenant improvements that was set aside by the seller in an escrow account and released at the end of the prior year at the North Fort Meyers, FL property. The remaining variance is primarily related to the sale of the Dunn, NC property in 2017. Recognized and unrealized gain/(loss) The retail properties owned by the Partnership produced a recognized/unrealized loss attributable to the General Partners controlling interest of approximately $0.9 million for the year ended December 31, 2017, compared with a net unrealized loss attributable to the General Partners controlling interest of approximately $0.4 million from the prior year period. The net unrealized loss attributable to the General Partners' controlling interest for year ended December 31, 2017 was primarily due to the sale of the Dunn, NC property in 2017, as well as vacancy of the anchor tenant, and a reduction of the market leasing assumption for the outparcel in the Hampton, VA property. The loss was partially offset by gains in the Ocean City, MD and Westminster, MD properties from additional leases signed/renewed in 2017. HOTEL PROPERTIES Year Ended December 31, Net Investment Income/(Loss) 2017 Net Investment Income/(Loss) 2016 Recognized Unrealized Gain/(Loss) 2017 Recognized Gain/(Loss) 2016 Occupancy 2017 Occupancy 2016 Property Lake Oswego, OR (1) $ $ (103,350 ) $ (1,419 ) $ N/A N/A (1) The property was sold in 2014. Net investment income/(loss) Net investment loss attributable to the General Partners controlling interest related to the Partnership s former hotel property was $0 million for the year ended December 31, 2017. The net investment losses in 2016 represent post-closing expenses. Recognized Unrealized gain/(loss) The recognized loss attributable to the General Partners controlling interest for the Partnership s former hotel property for the year ended December 31, 2017 represents post-closing expenses. STORAGE PROPERTIES Year Ended December 31, Net Investment Income/(Loss) 2017 Net Investment Income/(Loss) 2016 Unrealized Gain/(Loss) 2017 Unrealized Gain/(Loss) 2016 Occupancy 2017 Occupancy 2016 Property Miami, FL (1) $ 8,667 $ $ (53,115 ) $ 42% N/A (1) The property was acquired in 2017. Net investment income/(loss) Net investment income attributable to the General Partners controlling interest related to the Partnership s storage property was $0.01 million for the year ended December 31, 2017. Unrealized gain/(loss) The storage property owned by the Partnership produced a net unrealized loss attributable to the General Partners controlling interest of approximately $0.05 million for the year ended December 31, 2017. Other Other net investment expense mainly includes investment management fees, other portfolio level expenses and interest income. Other net investment expense attributable to the General Partners controlling interest was approximately $3.6 million for the year ended December 31, 2017, which represents a decrease of approximately $0.2 million from the prior year. The decrease in other net investment expense is primarily due to an increase in short term interest income, from slightly higher cash and cash equivalent balances in 2017. (c) Results of Operations for years ended December 31, 2016 and December 31, 2015 The following is a comparison of the Partnership's results of operations for the years ended December 31, 2016 and 2015. Net investment income overview The Partnership s net investment income attributable to the General Partners controlling interest for the year ended December 31, 2016 was approximately $7.2 million, an increase of approximately $1.1 million from the prior year period. The increase in net investment income attributable to the General Partners controlling interest was primarily due to an increase of $1.0 million in the retail sector s net investment income from the prior year period and an increase of approximately $0.7 million in the office sector s net investment income from the prior year period. Partially offsetting this growth was an increase of approximately $0.5 million from the prior year period in portfolio level expenses. Net investment income attributable to the General Partner s controlling interest in the apartment and hotel sectors were essentially flat from the prior year period. Valuation overview The Partnership recorded net recognized and unrealized gains attributable to the General Partners controlling interest of approximately $3.0 million for the year ended December 31, 2016. This is compared with a net recognized and unrealized gain attributable to the General Partners controlling interest of approximately $10.7 million for the year ended December 31, 2015. The unrealized gains attributable to the General Partners controlling interest for the year ended December 31, 2016 were due to a valuation increase in the apartment investments of $3.6 million. The General Partners controlling interest of the retail investments depreciated $0.4 million for the year ended December 31, 2016. Further offsetting the unrealized gains was a recognized loss of $0.3 million in the office sector investments. The following table presents a comparison of the Partnership s sources of net investment income (loss) attributable to the General Partners controlling interest and net recognized and unrealized gains (losses) attributable to the General Partners controlling interest for the year ended December 31, 2016 and 2015. Year Ended December 31, 2016 2015 Net Investment Income (Loss): Office properties $ 279,236 $ (386,446 ) Apartment properties 4,118,208 4,167,541 Retail properties 6,668,035 5,643,088 Hotel properties (103,350 ) (55,098 ) Other (including interest income, investment management fees, etc.) (3,755,676 ) (3,300,701 ) Total Net Investment Income $ 7,206,453 $ 6,068,384 Net Recognized Gain (Loss) on Real Estate Investments: Office properties $ (256,982 ) $ 125,879 Net Recognized Gain (Loss) on Real Estate Investments $ (256,982 ) $ 125,879 Net Unrealized Gain (Loss) on Real Estate Investments: Office properties $ $ (1,179,179 ) Apartment properties 3,593,146 6,597,881 Retail properties (353,072 ) 5,203,865 Net Unrealized Gain (Loss) on Real Estate Investments 3,240,074 10,622,567 Net Recognized and Unrealized Gain (Loss) on Real Estate Investments $ 2,983,092 $ 10,748,446 Increase/(Decrease) in Net Assets $ 10,189,545 $ 16,816,830 APARTMENT PROPERTIES Year Ended December 31, Net Investment Income/(Loss) 2016 Net Investment Income/(Loss) 2015 Unrealized Gain/(Loss) 2016 Unrealized Gain/(Loss) 2015 Occupancy 2016 Occupancy 2015 Property Austin, TX $ 1,382,288 $ 1,435,683 $ 792,614 $ 2,787,287 98 % 96 % Charlotte, NC 762,469 935,383 697,772 923,823 96 % 98 % Seattle, WA #1 647,341 589,338 1,860,881 97,912 93 % 95 % Seattle, WA #2 816,523 729,934 154,572 2,723,411 96 % 93 % Maplewood, NJ (1) 509,587 477,203 87,275 65,448 94 % 80 % Chicago, IL (2) 32 N/A N/A $ 4,118,208 $ 4,167,541 $ 3,593,146 $ 6,597,881 (1) The Maplewood, NJ property was acquired April 2, 2015. (2) The Chicago, IL property was acquired on November 9, 2015 and is currently under development. Net investment income/(loss) Net investment income attributable to the General Partners controlling interest for the Partnership s apartment properties was approximately $4.1 million for the year ended December 31, 2016, which represents a decrease of approximately $0.1 million from the year ended December 31, 2015. The decrease was primarily due to the interest expense associated with the investment level debt placed on the property in Charlotte, NC, which was financed in January 2016. Unrealized gain/(loss) The apartment properties owned by the Partnership produced a net unrealized gain attributable to the General Partners controlling interest of approximately $3.6 million for the year ended December 31, 2016 compared with a net unrealized gain attributable to the General Partners controlling interest of approximately $6.6 million from the prior year period. The net unrealized gain attributable to the General Partners controlling interest for the year ended December 31, 2016 was primarily due to favorable market leasing and rent assumptions at both properties in Seattle, WA, as well as the properties in Charlotte, NC and Austin, TX. Additionally, gains at the property in Maplewood, NJ were primarily due to rent increases. RETAIL PROPERTIES Year Ended December 31, Net Investment Income/(Loss) 2016 Net Investment Income/(Loss) 2015 Unrealized/Recognized Gain/(Loss) 2016 Unrealized Gain/(Loss) 2015 Occupancy 2016 Occupancy 2015 Property Hampton, VA $ 1,461,915 $ 1,418,163 $ (2,641,636 ) $ 774,336 99 % 96 % Ocean City, MD 933,195 914,371 (72,872 ) 638,666 100 % 96 % Westminster, MD 1,400,268 1,349,841 100,000 1,394,504 100 % 100 % Dunn, NC 96,803 120,633 677,134 (468,836 ) 58 % 26 % Roswell, GA 1,146,671 567,590 600,000 1,153,211 94 % 94 % North Fort Myers, FL 855,640 506,480 284,302 694,700 88 % 85 % Norcross, GA 773,543 766,010 700,000 1,017,284 100 % 100 % $ 6,668,035 $ 5,643,088 $ (353,072 ) $ 5,203,865 Net investment income/(loss) Net investment income attributable to the General Partners controlling interest for the Partnership s retail properties was approximately $6.7 million for the year ended December 31, 2016, which represents an increase of approximately $1.0 million from the prior year period. The increase was largely due to interest expense savings from the November 2015 loan payoff at the property in Roswell, GA. Additional increases were caused by revenue growth at the North Fort Myers, FL property due to the expiration of a reserve held in escrow since the property s acquisition for vacant spaces rental income, common area maintenance and tenant improvements. The reserve expired during the fourth quarter and was recognized as revenue. Unrealized gain/(loss) The retail properties owned by the Partnership produced a net unrealized loss attributable to the General Partners controlling interest of approximately $0.4 million for the year ended December 31, 2016, compared with a net unrealized gain attributable to the General Partners controlling interest of approximately $5.2 million from the prior year period. The net unrealized loss attributable to the General Partners controlling interest for the year ended December 31, 2016 was primarily due to increased investment rates for the property in Hampton, VA based on the recent marketing of the property. Investment rates include direct and terminal capitalization rates, and discount rates, which reflect investors yield requirements on investments. The loss was partially offset by gains at the Norcross, GA property related to discount rate compression, gains at the Dunn, NC property due to increased occupancy, and gains at the Roswell, GA property driven by increased net investment income. OFFICE PROPERTIES Year Ended December 31, Net Investment Income/(Loss) 2016 Net Investment Income/(Loss) 2015 Unrealized/Recognized Gain/(Loss) 2016 Unrealized Gain/(Loss) 2015 Occupancy 2016 Occupancy 2015 Property Lisle, IL (1) $ 280,307 $ (141,037 ) $ (256,982 ) $ (1,179,179 ) N/A 55 % Beaverton, OR (2) (1,071 ) (245,409 ) 125,879 N/A N/A $ 279,236 $ (386,446 ) $ (256,982 ) $ (1,053,300 ) (1) The Lisle, IL property was sold on January 21, 2016. (2) The Beaverton, OR property was sold on June 8, 2015. Net investment income/(loss) Net investment income attributable to the General Partners controlling interest for the Partnership s office properties was approximately $0.3 million for the year ended December 31, 2016, which represents an increase of approximately $0.7 million from the year ended December 31, 2015. The increase in net investment income is due to selling the properties in Lisle, IL, and Beaverton, OR. The two properties had large vacancies and were providing negative cash flow resulting in losses in 2015. The 2016 net investment income was primarily driven by a decrease in accrued post closing balances. Recognized and unrealized gain/(loss) The office property formerly owned by the Partnership produced a recognized loss attributable to the General Partners controlling interest of approximately $0.3 million for the year ended December 31, 2016, compared with a recognized and net unrealized loss attributable to the General Partners controlling interest of approximately $1.1 million for the year ended December 31, 2015. The recognized loss attributable to the General Partners controlling interest for the year ended December 31, 2016 was due to the sale of the property located in Lisle, IL. HOTEL PROPERTY Year Ended December 31, Net Investment Income/(Loss) 2016 Net Investment Income/(Loss) 2015 Unrealized/Recognized Gain/(Loss) 2016 Unrealized Gain/(Loss) 2015 Occupancy 2016 Occupancy 2015 Property Lake Oswego, OR (1) $ (103,350 ) $ (55,098 ) $ $ N/A N/A (1) The property was sold on October 29, 2014. Net investment income/(loss) Net investment loss attributable to the General Partners controlling interest related to the Partnership s former hotel property was than $0.1 million for the year ended December 31, 2016. This property was sold on October 29, 2014. The net investment losses in both periods represent post closing expenses. (d) Inflation A majority of the Partnership s leases with its commercial tenants provide for recoveries of expenses based upon the tenant s proportionate share of, and/or increases in, real estate taxes and certain operating costs, which may partially reduce the Partnership s exposure to increases in operating costs resulting from inflation. The Partnership is not able to recover any expenses in unleased space. Critical Accounting Policies The preparation of financial statements in conformity with U.S. GAAP requires the application of accounting policies that often involve a significant degree of judgment. Management reviews critical estimates and assumptions on an ongoing basis. If management determines, as a result of its consideration of facts and circumstances, that modifications in assumptions and estimates are appropriate, results of operations and financial position as reported in the audited financial statements of the Real Property Account and the audited consolidated financial statements of the Partnership may change significantly. The following sections discuss the critical accounting policies applied in preparing the financial statements of the Real Property Account and the consolidated financial statements of the Partnership that are most dependent on the application of estimates and assumptions. Valuation of Investments Real estate investments are carried at fair value. Properties owned are initially recorded at the purchase price plus closing costs. Development costs and major renovations are capitalized as a component of cost, and routine maintenance and repairs are charged to expense as incurred. Real estate costs include the cost of acquired property, including all the tangible and intangible assets. Tangible assets include the value of all land, building and tenant improvements at the time of acquisition. Intangible assets include the value of any above and below market leases in-place leases and tenant relationships at the time of acquisition. In general, fair value estimates are based upon property appraisal reports prepared by independent real estate appraisers (members of the Appraisal Institute or an equivalent organization) within a reasonable amount of time following acquisition of the real estate and no less frequently than annually thereafter. The Chief Real Estate Appraiser of PGIM, Inc. ( PGIM ) is responsible for assuring that the valuation process provides independent and reasonable property fair value estimates. PGIM is an indirectly owned subsidiary of Prudential Financial. An unaffiliated third party has been appointed by PGIM to assist the Chief Real Estate Appraiser in maintaining and monitoring the independence and the accuracy of the appraisal process. The fair value of real estate investments does not reflect the transaction sale costs, which may be incurred upon disposition of the real estate investments. The purpose of an appraisal is to estimate the fair value of real estate as of a specific date. In accordance with FASB authoritative guidance on fair value measurements and disclosures, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The estimate of fair value is based on the conventional approaches to value, all of which require the exercise of subjective judgment. The three approaches are: (1) current cost of reproducing the real estate less deterioration and functional and economic obsolescence; (2) discounting a series of income streams and reversion at a specific yield or by directly capitalizing a single year income estimate by an appropriate factor; and (3) value indicated by recent sales of comparable real estate in the market. Key inputs and assumptions include rental income and expense amounts, related rental income and expense growth rates, discount rates and capitalization rates. In the reconciliation of these three approaches, the independent appraiser uses one or a combination of them to determine the approximate value for the type of real estate in the market. Cash equivalents include short-term investments with maturities of three months or less when purchased. Other Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements of the Real Property Account and the consolidated financial statements of the Partnership and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. ITEM 3. Quantitative and Qualitative Disclosures about Market Risk The table below discloses the Partnership s investment level debt as of December 31, 2017. The fair value of the Partnership s long-term investment level debt is affected by changes in market interest rates. The following table presents principal cash flows based upon maturity dates of the debt obligations and the related weighted-average interest rates by expected maturity dates for the debt. Investment level debt ($ in 000s), including current portion 2018 2019 2020 2021 2022 Thereafter Total Estimated Fair Value Weighted Average Fixed Interest Rate 4.04 % 4.02 % 4.03 % 3.75 % 3.79 % 3.67 % 3.50 % Future Annual Principal Payments $ 9,399 $ 1,680 $ 1,916 $ 44,495 $ 13,809 $ 26,625 $ 97,924 $ 98,691 Credit Risk The Partnership is exposed to market risk from tenants. While the Partnership has not experienced any significant credit losses, in the event of significant increases in interest rates and/or an economic downturn, tenant delinquencies could increase and result in losses to the Partnership and the Real Property Account that could adversely affect operating results and liquidity. Market Conditions The U.S. economic conditions continued to improve in 2017, as GDP expanded 2.3% much stronger than the 2016 growth of 1.5%, according to the U.S. Bureau of Economic Analysis. The U.S. labor market also strengthened with 2.1 million job gains which led to continued compression of the unemployment rate, as reported by the U.S. Bureau of Labor Statistics. These trends supported steady wage growth, as reported by the Federal Reserve Bank of Atlanta. In addition, leading economic indicators remain positive, particularly sentiment, which was boosted further by the passing of the U.S. Tax Cuts and Jobs Act of 2017. Property Markets Vacancies remain tight across the property markets, and rent growth remains positive. In 2017, development activity remained robust in the apartment and industrial sectors, and limited in the retail and office sectors. Apartment: Job growth and demographic trends continued to fuel rental demand for apartments in 2017. However, strong development activity put some upward pressure on vacancies and more modest rent growth compared to previous years. Retail: Construction remained extremely limited in 2017. Weak retail absorption trends continued, leading rent growth to soften further. Property market sentiment remains bearish and rent growth may remain weak. Office: Office-using job gains continued in 2017. While forward-looking indicators suggested ongoing tenant demand for office space, net absorption decelerated in 2017. Vacancies were stable though, as construction leveled off. Industrial: Industrial continues its run as the best performer of all property types. At the close of 2017, occupancies were at record highs, fueled by overall U.S. economic growth and strong e-commerce demand. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None. Directors, Executive Officers and Corporate Governance JOHN CHIEFFO, Director, Chief Financial Officer Chief Accounting Officer, and Vice President (current term expires March 2019) - Vice President, Finance, Annuities, Prudential Financial since November 2016. Previously, he served as Vice President, Individual Life Insurance, Prudential Financial from January 2013 to November 2016. Age 54. CAROLINE A. FEENEY, Director (current term expires March 2019) - President, Individual Life Insurance and Prudential Advisors, Prudential Financial since November 2017. Previously, she served as President, Prudential Advisors, Prudential Financial from September 2012 to October 2017. Age 48. LORI D. FOUCH , Director (current term expires March 2019) - Head of Individual Solutions, Prudential Financial since November 2017. Previously, she served as President, Annuities, Prudential Financial and President and Chief Executive Officer of Pruco Life Insurance Company, Prudential Financial from December 2015 to October 2017; Senior Vice President and Chief Executive Officer, Group Insurance, Prudential Financial from February 2014 to December 2015; and President and Chief Operating Officer, Group Insurance, Prudential Financial from July 2013 to February 2014. Prior to joining Prudential, Ms. Fouch served as President and Chief Executive Officer of Commercial Insurance, Firemen s Insurance Group from November 2011 to June 2013. Age 48. CHRISTINE KNIGHT, Director and Vice President (current term expires March 2019) - Vice President, Finance, Individual Life Insurance, Prudential Financial since November 2016. Previously, she served as Vice President, Finance, Group Insurance, Prudential Financial from December 2010 to November 2016. Age 56. KENT D. SLUYTER, Director, Chief Executive Officer, President, and Senior Vice President (current term expires March 2019) - President, Annuities, Prudential Financial since November 2017. Previously, he served as Chief Executive Officer, Individual Life Insurance and Prudential Advisors, Prudential Financial from 2013 to October 2017, and Chief Actuary, Individual Life Insurance, Prudential Financial from 2006 to January 2013. Age 58. KENNETH Y. TANJI, Director and Treasurer (current term expires March 2019) - Senior Vice President and Treasurer, Prudential Financial since March 2013. Age 52. CANDACE J. WOODS, Director (current term expires March 2019) - Senior Vice President and Chief Actuary, Prudential Financial since November 2017. Previously, she served as Vice President and Chief Actuary, the Center of Excellence, Prudential Financial from July 2017 to November 2017; Vice President and International Chief Actuary, Prudential International Insurance from June 2013 to June 2017; and Vice President and Actuary, Prudential International Insurance from December 2012 to May 2013. Age 57. EXECUTIVE OFFICERS LYNN K. STONE, Chief Legal Officer, Secretary and Vice President - Chief Legal Officer for the Individual Solutions Group, Prudential Financial since January 2018 and Chief Legal Officer for Individual Life Insurance, Prudential Financial since March 2017. Previously, she served as Chief Legal Officer for Annuities, Prudential Financial from February 2015 to March 2017; Chief Counsel, Individual Life and Annuity Operations and Reinsurance, Prudential Financial from December 2013 to January 2015; and prior to that, Vice President and Corporate Counsel, Annuities Law, Prudential Financial since 2008. Age 59. ARTHUR W. WALLACE, Senior Vice President, Chief Actuary, Appointed Actuary, and Actuary - Vice President and Actuary, Prudential Financial since November 2014. Previously, he served as Director of Pruco Life Insurance Company, Prudential Financial from July 2017 to December 2017. Prior to joining Prudential, Mr. Wallace served as Chief Risk Officer, Retirement, Voya Financial from February 2012 to October 2014. Age 42. The business address of all directors and officers of Pruco Life is 213 Washington Street, Newark, New Jersey 07102-2992. Pruco Life directors and officers are elected annually. Code of Ethics We have adopted Prudential Financial s code of business conduct and ethics, known as Making the Right Choices, which applies to our Chief Executive Officer, Chief Financial Officer and our Principal Accounting Officer, as well as to our directors and all other employees. Making the Right Choices is posted on Prudential Financial s website at www.investor.prudential.com. In addition, we have adopted Prudential Financial s Corporate Governance Guidelines, which we refer to herein as the Corporate Governance Principles and Practices. Prudential Financial s Corporate Governance Principles and Practices are available free of charge at www.investor.prudential.com. Executive Compensation The Real Property Account does not pay any fees, compensation or reimbursement to any Director or Officer of the Registrant. Certain Relationships and Related Transactions, and Director Independence See Related Party Transactions in Note 11 of Notes to the Consolidated Financial Statements of the Partnership. The Registrant is a separate investment account of Pruco Life Insurance Company, which is a wholly-owned subsidiary of The Prudential Insurance Company of America ("Prudential"), which, in turn, is a wholly-owned subsidiary of Prudential Financial. All Directors and Executive Officers of the Registrant are employees and officers of Prudential. Principal Accounting Fees and Services The Audit Committee of the Board of Directors of Prudential Financial has appointed PricewaterhouseCoopers, LLP as the independent registered public accounting firm of Prudential Financial and certain of its domestic and international subsidiaries, including the Registrant. The Audit Committee has established a policy requiring its pre-approval of all audit and permissible non-audit services provided by the independent auditor. Fees related to such services are hereby incorporated by reference to the section entitled Item 2 - Ratification of the Appointment of Independent Auditors in Prudential Financial's definitive proxy statement for the Annual Meeting of Shareholders to be held on May 7, 2018, to be filed by Prudential Financial with the Securities and Exchange Commission pursuant to Regulation 14A within 120 days after December 31, 2017. Financial Statements and Supplementary Data Table of Contents PRUCO LIFE VARIABLE CONTRACT REAL PROPERTY ACCOUNT Financial Statements: Report of Independent Registered Public Accounting Firm B-1 Statements of Net Assets December 31, 2017 and 2016 B-2 Statements of Operations Years Ended December 31, 2017, 2016 and 2015 B-2 Statements of Changes in Net Assets Years Ended December 31, 2017, 2016 and 2015 B-2 Notes to the Financial Statements B-3 THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP Financial Statements: Report of Independent Registered Public Accounting Firm C-1 Consolidated Statements of Assets and Liabilities December 31, 2017 and 2016 C-2 Consolidated Statements of Operations Years Ended December 31, 2017, 2016 and 2015 C-3 Consolidated Statements of Changes in Net Assets - Years Ended December 31, 2017, 2016 and 2015 C-4 Consolidated Statements of Cash Flows Years Ended December 31, 2017, 2016 and 2015 C-5 Consolidated Schedules of Investments - December 31, 2017 and 2016 C-6 Notes to the Consolidated Financial Statements C-7 Financial Statement Schedules: Schedule III Real Estate Owned: Properties - December 31, 2017 C-17 Other 101.INS -XBRL Instance Document 101.SCH -XBRL Taxonomy Extension Schema Document. 101.CAL -XBRL Taxonomy Extension Calculation Linkbase Document. 101.LAB -XBRL Taxonomy Extension Label Linkbase Document. 101.PRE -XBRL Taxonomy Extension Presentation Linkbase Document. 101.DEF -XBRL Taxonomy Extension Definition Linkbase Document Report of Independent Registered Public Accounting Firm To the Board of Directors of Pruco Life Insurance Company and the Contract Owners of Pruco Life Variable Contract Real Property Account Opinion on the Financial Statements We have audited the accompanying statements of net assets of Pruco Life Variable Contract Real Property Account (the "Account") as of December 31, 2017 and 2016, the related statements of operations for each of the three years in the period ended December 31, 2017 and the statements of changes in net assets for each of the three years in the period ended December 31, 2017, including the related notes (collectively referred to as the financial statements ). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Account as of December 31, 2017 and 2016, the results of its operations for each of the three years in the period ended December 31, 2017 and the changes in its net assets for each of the three years in the period ended December 31, 2017 in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These financial statements are the responsibility of Pruco Life Insurance Company s management. Our responsibility is to express an opinion on the Account s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ( PCAOB ) and are required to be independent with respect to the Account in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of the investment owned as of December 31, 2017 by correspondence with the investee partnership. We believe that our audits provide a reasonable basis for our opinion. /s/ PricewaterhouseCoopers LLP New York, New York March 29, 2018 We have served as the Account s auditor since 1996. FINANCIAL STATEMENTS OF PRUCO LIFE VARIABLE CONTRACT REAL PROPERTY ACCOUNT STATEMENTS OF NET ASSETS December 31, 2017 and 2016 December 31, 2017 December 31, 2016 ASSETS Investment in The Prudential Variable Contract Real Property Partnership $ 114,589,520 $ 112,083,448 Net Assets $ 114,589,520 $ 112,083,448 NET ASSETS, representing: Equity of contract owners $ 80,711,731 $ 81,138,039 Equity of Pruco Life Insurance Company 33,877,789 30,945,409 $ 114,589,520 $ 112,083,448 Portfolio shares held 2,353,328 2,414,615 Portfolio net asset value per share $ 48.69 $ 46.42 Contract owner units outstanding 19,952,161 20,921,375 STATEMENTS OF OPERATIONS For the years ended December 31, 2017, 2016 and 2015 December 31, 2017 December 31, 2016 December 31, 2015 INVESTMENT INCOME Net investment income allocated from The Prudential Variable Contract Real Property Partnership $ 3,548,394 $ 3,841,585 $ 3,237,254 EXPENSES Charges for mortality and expense risk, and for administration 478,481 481,549 470,364 NET INVESTMENT INCOME 3,069,913 3,360,036 2,766,890 NET RECOGNIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net unrealized gain (loss) on investments allocated from The Prudential Variable Contract Real Property Partnership 2,653,031 1,727,205 5,666,123 Net recognized gain (loss) on investments allocated from The Prudential Variable Contract Real Property Partnership (711,130 ) (136,991 ) 67,194 NET GAIN (LOSS) ON INVESTMENTS 1,941,901 1,590,214 5,733,317 NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 5,011,814 $ 4,950,250 $ 8,500,207 STATEMENTS OF CHANGES IN NET ASSETS For the years ended December 31, 2017, 2016 and 2015 December 31, 2017 December 31, 2016 December 31, 2015 OPERATIONS Net investment income $ 3,069,913 $ 3,360,036 $ 2,766,890 Net unrealized gain (loss) on investments allocated from The Prudential Variable Contract Real Property Partnership 2,653,031 1,727,205 5,666,123 Net recognized gain (loss) on investments allocated from The Prudential Variable Contract Real Property Partnership (711,130 ) (136,991 ) 67,194 NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 5,011,814 4,950,250 8,500,207 CAPITAL TRANSACTIONS Net contributions (withdrawals) by contract owners (3,812,777 ) (3,274,882 ) (2,788,759 ) Net contributions (withdrawals) by Pruco Life Insurance Company 1,307,035 3,756,431 266,935 NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL TRANSACTIONS (2,505,742 ) 481,549 (2,521,824 ) TOTAL INCREASE (DECREASE) IN NET ASSETS 2,506,072 5,431,799 5,978,383 NET ASSETS Beginning of year 112,083,448 106,651,649 100,673,266 End of year $ 114,589,520 $ 112,083,448 $ 106,651,649 The accompanying notes are an integral part of these financial statements. NOTES TO THE FINANCIAL STATEMENTS OF PRUCO LIFE VARIABLE CONTRACT REAL PROPERTY ACCOUNT December 31, 2017 Note 1: General Pruco Life Variable Contract Real Property Account (the Real Property Account or the Registrant ) was established on August 27, 1986 by resolution of the Board of Directors of Pruco Life Insurance Company ( Pruco Life or the Company ), as a separate investment account pursuant to Arizona law and is registered under the Securities Act of 1933, as amended. Pruco Life is a wholly-owned subsidiary of The Prudential Insurance Company of America ( Prudential ), which is a wholly-owned subsidiary of Prudential Financial, Inc. ( Prudential Financial ). The assets of the Real Property Account are segregated from Pruco Life s other assets. The Real Property Account is used to fund benefits under certain variable life insurance and variable annuity contracts issued by Pruco Life. These products are Variable Appreciable Life ( VAL ), Variable Life Insurance ( VLI ), Discovery Plus ( SPVA ), and Discovery Life Plus ( SPVL ). The assets of the Real Property Account are invested in The Prudential Variable Contract Real Property Partnership (the Partnership ). The Partnership is the investment vehicle for assets allocated to the real estate investment option under certain variable life insurance and variable annuity contracts. The Real Property Account, along with The Prudential Variable Contract Real Property Account and Pruco Life of New Jersey Variable Contract Real Property Account, are the sole investors in the Partnership. These financial statements should be read in conjunction with the accompanying audited consolidated financial statements of the Partnership. The Partnership has a policy of investing at least 65% of its assets in direct ownership interests in income-producing real estate and participating mortgage loans. Note 2: Summary of Significant Accounting Policies A. Basis of Accounting The financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ( U.S. GAAP ). The Real Property Account has evaluated subsequent events through the date these financial statements were issued. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The most significant estimates include valuation of the investment in the Partnership. B. Investment in Partnership Interest The investment in the Partnership is based on the Real Property Account s proportionate interest of the Partnership s fair value. At December 31, 2017 and 2016, the Real Property Account s share of the general partners' controlling interest of the Partnership was 53.2% or 2,353,328 shares and 53.3% or 2,414,615 shares, respectively. Properties owned by the Partnership are illiquid and their fair value is based on estimated fair value as disclosed in the notes to the consolidated financial statements of the Partnership. C. Income Recognition Net investment income or loss and recognized gains and losses are allocated based upon the daily average net assets for the investment in the Partnership. Amounts are based on the Real Property Account s proportionate interest in the Partnership. All changes in fair value are recorded as net change in unrealized gains (losses) on investments in the Statement of Operations. D. Equity of Pruco Life Insurance Company Pruco Life maintains a position in the Real Property Account for liquidity purposes, including unit purchases and redemptions, Partnership share transactions, and expense processing. The position does not affect contract owners accounts or the related unit values. There were no cash transactions at the Real Property Account level for the years ended December 31, 2017, 2016 and 2015 as all of the transactions are settled by Pruco Life on behalf of the Real Property Account through a redemption or an issuance of units. Therefore, no statement of cash flows is presented for the years ended December 31, 2017, 2016 and 2015. Note 3: Taxes Pruco Life is taxed as a life insurance company , as defined by the Internal Revenue Code. The results of operations of the Real Property Account form a part of Prudential Financial s consolidated federal tax return. Under current federal, state and local law, no federal, state or local income taxes are payable by the Real Property Account. As such, no provision for the tax liability has been recorded in these financial statements. Prudential management will review periodically the status of the policy in the event of changes in the tax law. NOTES TO THE FINANCIAL STATEMENTS OF PRUCO LIFE VARIABLE CONTRACT REAL PROPERTY ACCOUNT December 31, 2017 Note 4: Net Contributions (Withdrawals) by Contract Owners Net contributions (withdrawals) by contract owners(1) for the Real Property Account by product for the years ended December 31, 2017, 2016 and 2015 were as follows: December 31, 2017 VAL VLI SPVA SPVL TOTAL Contract owner net payments $ 2,211,649 $ 162,995 $ $ $ 2,374,644 Policy loans (883,472 ) (55,521 ) (16,669 ) (955,662 ) Policy loan repayments and interest 1,526,708 56,834 80,993 1,664,535 Surrenders, withdrawals and death benefits (3,310,976 ) (189,130 ) (901 ) (201,771 ) (3,702,778 ) Net transfers from/(to) other subaccounts or fixed rate option (1,213,145 ) (54,342 ) (1,267,487 ) Miscellaneous transactions 12,164 (1,245 ) (1,147 ) 9,772 Administrative and other charges (1,754,899 ) (169,362 ) (11,540 ) (1,935,801 ) $ (3,411,971 ) $ (249,771 ) $ (901 ) $ (150,134 ) $ (3,812,777 ) December 31, 2016 VAL VLI SPVA SPVL TOTAL Contract owner net payments $ 2,332,773 $ 167,551 $ $ $ 2,500,324 Policy loans (944,232 ) (46,919 ) (17,701 ) (1,008,852 ) Policy loan repayments and interest 1,661,227 64,768 56,677 1,782,672 Surrenders, withdrawals and death benefits (3,129,243 ) (215,582 ) (15,032 ) (379,923 ) (3,739,780 ) Net transfers from/(to) other subaccounts or fixed rate option (653,809 ) (118,820 ) (1,818 ) (774,447 ) Miscellaneous transactions 5,721 2,425 2,460 10,606 Administrative and other charges (1,860,803 ) (172,386 ) (12,216 ) (2,045,405 ) $ (2,588,366 ) $ (318,963 ) $ (15,032 ) $ (352,521 ) $ (3,274,882 ) December 31, 2015 VAL VLI SPVA SPVL TOTAL Contract owner net payments $ 2,367,886 $ 177,155 $ $ $ 2,545,041 Policy loans (1,049,046 ) (54,592 ) (32,732 ) (1,136,370 ) Policy loan repayments and interest 1,906,719 85,486 155,308 2,147,513 Surrenders, withdrawals and death benefits (3,459,721 ) (246,562 ) (3,818 ) (347,949 ) (4,058,050 ) Net transfers from/(to) other subaccounts or fixed rate option (301,500 ) (19,143 ) 387 (320,256 ) Miscellaneous transactions 10,550 2,495 6,408 19,453 Administrative and other charges (1,801,533 ) (170,547 ) (14,010 ) (1,986,090 ) $ (2,326,645 ) $ (225,708 ) $ (3,818 ) $ (232,588 ) $ (2,788,759 ) (1) Certain prior period contract owner transaction amounts have been reclassified to conform to the current period s presentation. Note 5: Partnership Distributions For the year ended December 31, 2017, the Partnership distributed a total of $5.0 million, which occurred on December 28, 2017. The Real Property Account s share of this distribution was $3.0 million. For the year ended December 31, 2016, the Partnership made no distribution. For the year ended December 31, 2015, the Partnership distributed a total of $5.0 million, which occurred on March 30, 2015. The Real Property Account s share of this distribution was $3.0 million. For the years ended December 31, 2017, 2016 and 2015, there were no purchases of the Partnership by the Real Property Account. NOTES TO THE FINANCIAL STATEMENTS OF PRUCO LIFE VARIABLE CONTRACT REAL PROPERTY ACCOUNT December 31, 2017 Note 6: Unit Activity The changes in contract owner units outstanding(1) for the Real Property Account by product for the years ended December 31, 2017, 2016 and 2015 were as follows: December 31, 2017 VAL VLI SPVA SPVL TOTAL Units issued: 57,866 12,157 1,509 71,532 Units redeemed: (921,987 ) (70,800 ) (277 ) (47,682 ) (1,040,746 ) December 31, 2016 VAL VLI SPVA SPVL TOTAL Units issued: 126,555 11,594 9,747 147,896 Units redeemed: (806,240 ) (89,637 ) (4,825 ) (123,398 ) (1,024,100 ) December 31, 2015 VAL VLI SPVA SPVL TOTAL Units issued: 112,065 19,923 3,081 135,069 Units redeemed: (765,881 ) (78,922 ) (1,278 ) (82,139 ) (928,220 ) (1) Certain prior period contract owner transaction amounts have been reclassified to conform to the current period s presentation. Note 7: Financial Highlights Pruco Life sells a number of variable annuity and variable life insurance products. These products have unique combinations of features and fees that are charged against the contract owner s account balance. Differences in the fee structures result in a variety of unit values, expense ratios and total returns. The following table was developed by determining which products offered by Pruco Life have the lowest and highest total expense ratio and reflects contract owner units only. The table may not reflect the minimum and maximum contract charges offered by Pruco Life as contract owners may not have selected all available and applicable products as disclosed in Note 1. Units (000 s) Unit Value Lowest- Highest Net Assets (000 s) Investment Income Ratio(1) Expense Ratio(2) Lowest-Highest Total Return(3) Lowest-Highest December 31, 2017 19,952 $ 3.30531 $ 4.36813 $ 80,712 3.10 % 0.35% 1.25% 3.60% 4.53% December 31, 2016 20,921 $ 3.19050 $ 4.17877 $ 81,138 3.51 % 0.35% 1.25% 3.80% 4.73% December 31, 2015 21,798 $ 3.07375 $ 3.99015 $ 80,863 3.16 % 0.35% 1.25% 7.78% 8.74% December 31, 2014 22,591 $ 2.85193 $ 3.66932 $ 77,231 3.68 % 0.35% 1.25% 5.82% 6.77% December 31, 2013 23,400 $ 2.69505 $ 3.43650 $ 75,103 5.04 % 0.35% 1.25% 8.19% 9.17% (1) This amount represents the contract owners' proportionate share of net investment income from the underlying Partnership divided by the contract owners' average net assets of the Real Property Account. This ratio excludes those expenses, such as mortality and expense risk and administrative expenses that result in direct reductions in the unit values. (2) These amounts represent the annualized contract expenses of the Real Property Account, consisting primarily of mortality and expense charges, for each period indicated. These ratios include only those expenses that result in a direct reduction to unit values. Charges made directly to contract owner accounts through the redemption of units and expenses of the underlying Partnership are excluded. (3) These amounts represent the total return for the periods indicated, including changes in the value of the underlying Partnership, and reflect deductions for all items included in the expense ratio. The total return does not include any expense assessed through the redemption of units; inclusion of these expenses in the calculation would result in a reduction in the total return presented. NOTES TO THE FINANCIAL STATEMENTS OF PRUCO LIFE VARIABLE CONTRACT REAL PROPERTY ACCOUNT December 31, 2017 Note 7: Financial Highlights (continued) Pruco Life also maintains a position in the Real Property Account to provide for property acquisitions and capital expenditure funding needs. The table below reflects information for assets held by Pruco Life. Charges for mortality and expense risk and administrative expenses are used by Pruco Life to purchase additional investments in its account resulting in no impact to its net assets. Net Assets (000 s) December 31, 2017 $33,878 December 31, 2016 $30,945 December 31, 2015 $25,788 December 31, 2014 $23,442 December 31, 2013 $24,688 Charges and Expenses A. Mortality and Expense Risk Charges Mortality and expense risk charges are determined daily using an effective annual rate of 0.6%, 0.35%, 0.9% and 0.9% for VAL, VLI, SPVA and SPVL, respectively. Mortality risk is the risk that life insurance contract owners may not live as long as estimated or annuitants may live longer than estimated and expense risk is the risk that the cost of issuing and administering the contracts may exceed related charges by Pruco Life. The mortality risk and expense risk charges are assessed through reduction in unit values. B. Administrative Charges Administrative charges are determined daily using an effective annual rate of 0.35% applied daily against the net assets representing equity of contract owners held in each subaccount for SPVA and SPVL. Administrative charges include costs associated with issuing the contract, establishing and maintaining records, and providing reports to contract owners. The administrative charge is assessed through reduction in unit values. C. Cost of Insurance and Other Related Charges Contract owner contributions are subject to certain deductions prior to being invested in the Real Property Account. The deductions for VAL and VLI are (1) taxes attributable to premiums; (2) sales charges, not to exceed 5% for VAL, which are deducted in order to compensate Pruco Life for the cost of selling the contract; and (3) transaction costs, applicable to VAL, which are deducted from each premium payment to cover premium collection and processing costs. Contracts are subject to charges on each basic premium for assuming a guaranteed minimum death benefit risk. This charge compensates Pruco Life for the risk that an insured may die at a time when the death benefit exceeds the benefit that would have been payable in the absence of a minimum guarantee. These charges are assessed through the redemption of units. D. Deferred Sales Charge For SPVA, there is a deferred sales charge that applies at the time of a full or partial withdrawal, and the amount of the charge (which declines over time) depends on the number of years that have elapsed since the contract was issued. This deferred sales charge is assessed through the redemption of units. E. Partial Withdrawal Charge A charge is imposed by Pruco Life on partial withdrawals of the cash surrender value for VAL. A charge equal to the lesser of $15 or 2% will be made in connection with each partial withdrawal of the cash surrender value of a contract. This charge is assessed through the redemption of units. Note 8: Related Party Transactions The Real Property Account has transactions and relationships with Prudential and other affiliates. Due to these relationships, it is possible that the terms of these transactions are not the same as those that would result from transactions among unrelated parties. Prudential and its affiliates perform various services on behalf of the Partnership in which the Real Property Account invests and may receive fees for the services performed. These services include, among other things, shareholder communications, postage, transfer agency and various other record keeping and customer service functions. NOTES TO THE FINANCIAL STATEMENTS OF PRUCO LIFE VARIABLE CONTRACT REAL PROPERTY ACCOUNT December 31, 2017 Note 9: Fair Value Measurements Fair value represents the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Real Property Account values its investment in the Partnership using the net asset value provided by the Partnership as a practical expedient. Effective January 1, 2016, the Real Property Account adopted Accounting Standards Update ( ASU ) 2015-07 Fair Value Measurement (Topic 820): Disclosure for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent), which removes the requirement to classify the investment in the Partnership in the fair value hierarchy. As a result, certain tables and additional disclosures related to the leveling of assets and liabilities are no longer applicable. Properties owned by the Partnership are illiquid and fair value is based on estimates from property appraisal reports prepared by independent real estate appraisers as discussed in the notes to the Partnership s audited consolidated financial statements. The purpose of an appraisal is to estimate the fair value of real estate as of a specific date. The estimate of fair value of real estate is based on the conventional approaches to value, all of which require the exercise of subjective judgment. The three approaches are: (1) current cost of reproducing the real estate less deterioration and functional and economic obsolescence; (2) discounting a series of income streams and reversion at a specific yield or by directly capitalizing a single year income estimate by an appropriate factor; and (3) value indicated by recent sales of comparable real estate in the market. In the reconciliation of these three approaches, the independent appraiser uses one or a combination of them, to come up with the approximate value for the type of real estate in the market. The following is a summary of the investment strategy, risks, and redemption provisions of the Partnership: The Partnership has a policy of investing at least 65% of its assets in direct ownership interests in income-producing real estate, such as office buildings, shopping centers, hotels, apartments or industrial properties, and participating mortgage loans. The Partnership is subject to the risks inherent in the ownership of real property such as fluctuations in occupancy rates and operating expenses and variations in rental schedules. The Partnership properties are also subject to the risk of loss due to certain types of damage, which are either uninsurable or not economically insurable. The Partnership enters into loan agreements with certain lenders to finance its real estate investment transactions. Unfavorable economic conditions could increase related borrowing costs, limit access to the capital markets or result in a decision by lenders not to extend credit to the Partnership. Refer to the Partnership s audited consolidated financial statements for other related risks. The Partnership allows for withdrawal of cash, in any amount up to a partner s value of the Partnership. Ordinarily payment of the amount requested will be made on the day following the request. The Partnership reserves the right to defer such payments for a period of up to six months if the partners or the investment manager determine that there is insufficient cash available and prompt disposition of investments held by the Partnership cannot be made on commercially reasonable terms. The Real Property Account had no unfunded capital commitments as of December 31, 2017. Report of Independent Registered Public Accounting Firm To the General Partners of The Prudential Variable Contract Real Property Partnership: Opinion on the Financial Statements We have audited the accompanying consolidated statements of assets and liabilities, including the consolidated schedules of real estate investments, of The Prudential Variable Contract Real Property Partnership and its subsidiaries as of December 31, 2017 and December 31, 2016, and the related consolidated statements of operations, of changes in net assets and of cash flows for each of the three years in the period ended December 31, 2017, including the related notes and accompanying Schedule III - Real Estate Owned: Properties (collectively referred to as the consolidated financial statements ). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Partnership as of December 31, 2017 and December 31, 2016, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2017 in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These consolidated financial statements are the responsibility of the Partnership s management. Our responsibility is to express an opinion on the Partnership s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ( PCAOB ) and are required to be independent with respect to the Partnership in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB and in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. /s/ PricewaterhouseCoopers LLP New York, New York March 29, 2018 We have served as the Partnership's auditor since 1996. THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES December 31, 2017 December 31, 2016 ASSETS REAL ESTATE INVESTMENTS - At estimated fair value: Real estate and improvements (cost: 12/31/2017 - $252,500,936; 12/31/2016 $234,186,993) $ 298,177,876 $ 269,471,676 CASH AND CASH EQUIVALENTS 26,734,968 47,541,618 OTHER ASSETS, NET 3,911,722 3,383,759 Total assets $ 328,824,566 $ 320,397,053 LIABILITIES & PARTNERS EQUITY INVESTMENT LEVEL DEBT (net of deferred financing costs: $ 96,905,747 $ 93,958,234 12/31/2017 - $1,018,029; 12/31/2016 - $1,095,035) ACCOUNTS PAYABLE AND ACCRUED EXPENSES 2,163,012 2,150,818 DUE TO AFFILIATES 843,319 815,990 OTHER LIABILITIES 716,956 743,284 Total liabilities 100,629,034 97,668,326 COMMITMENTS AND CONTINGENCIES NET ASSETS, REPRESENTING PARTNERS EQUITY: GENERAL PARTNERS CONTROLLING INTEREST 215,557,286 210,258,011 NONCONTROLLING INTEREST 12,638,246 12,470,716 Total partners' equity 228,195,532 222,728,727 Total liabilities and partners equity $ 328,824,566 $ 320,397,053 NUMBER OF SHARES OUTSTANDING AT END OF PERIOD 4,426,906 4,529,591 GENERAL PARTNERS' SHARE VALUE AT END OF PERIOD $ 48.69 $ 46.42 The accompanying notes are an integral part of these consolidated financial statements. TABLE OF CONTENTS Page PER SHARE INVESTMENT INCOME, CAPITAL CHANGES AND SELECTED RATIOS 1 SUMMARY 2
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+PROSPECTUS SUMMARY 1 QUESTIONS AND ANSWERS ABOUT THE RIGHTS OFFERING 9 RISK FACTORS 16 USE OF PROCEEDS 21 THE BACKSTOP AGREEMENTS 22 CAPITALIZATION 24 THE RIGHTS OFFERING 25 PLAN OF DISTRIBUTION 34 DESCRIPTION OF OUR COMMON STOCK 35 MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES 36 LEGAL MATTERS 40 EXPERTS 40 WHERE YOU CAN FIND MORE INFORMATION 40 INCORPORATION OF CERTAIN INFORMATION BY REFERENCE 41 Table of Contents PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. This summary is not complete and may not contain all of the information that you should consider before making any decision to invest in our Common Stock. Prior to making any investment decision, we encourage you to read the entire prospectus carefully, including the risks discussed in the "Risk Factors" section, as well as risk factors incorporated into this prospectus by reference to other documents. We also encourage you to review our financial statements and the other information that we provide in our periodic reports and other documents that we file with the SEC, as described under the caption: "Where You Can Find More Information." Our Company ARC Group Worldwide, Inc., a Utah corporation, is a global advanced manufacturer offering a full suite of products and services to its customers, with specific expertise in metal injection molding and metal 3D printing. These products are widely deployed in medical and dental device, defense and firearm, automotive, aerospace, and defense industries, among others. To further advance and support these core capabilities, the Company also offers complementary services associated with: (i) precision metal stamping; (ii) traditional and clean room plastic injection molding; and (iii) advanced rapid and conformal tooling. Through its diverse product offering, the Company provides its customers with a holistic manufacturing solution which incorporates speed to market in both the precision metal and plastic fabrication. Our Common Stock is traded on the NASDAQ Capital Market under the symbol "ARCW." The address of our principal executive office is 810 Flightline Blvd., Deland, FL 32724. The Rights Offering Securities Offered We are distributing, at no charge, to holders of our outstanding Common Stock, non-transferable subscription rights to purchase in the aggregate up to 5,000,000 shares of our Common Stock, $0.0005 par value per share. You will receive one (1) subscription right for each one (1) share of Common Stock that you own on the record date. Each subscription right will entitle you to purchase 0.273 shares of our Common Stock. We will issue shares of our Common Stock in the rights offering only in book-entry form. We will not issue stock certificates. Subscription Price The subscription price is $2.00 per whole share, payable in cash. The subscription price was determined by our Board of Directors based upon a 10% discount to the closing price of our Common Stock on the record date, subject to a minimum subscription price of $2.00 per whole share of Common Stock. To be effective, any payment related to the exercise of a subscription right must be received by the Subscription Agent before the expiration of the rights offering described below. After the date of this prospectus, our Common Stock may trade at prices below the subscription price. In that event, our Board of Directors may change the subscription price of this offering or determine to cancel or otherwise alter the terms of the rights offering. Table of Contents The information in this prospectus is not complete and may be changed without notice. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and we are not soliciting offers to buy these securities in any state where the offer or sale of these securities is not permitted. PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION, DATED FEBRUARY 7, 2018 ARC Group Worldwide, Inc. Non-transferable Subscription Rights to Purchase an Aggregate of up to 5,000,000 Shares of Common Stock at $2.00 per Whole Share Issuable upon Exercise of the Subscription Rights We are distributing, at no charge, to holders of our outstanding Common Stock, non-transferable subscription rights to purchase in the aggregate up to 5,000,000 shares of our Common Stock, $0.0005 par value per share, which we refer to as "Common Stock" at a cash subscription price of $2.00 per whole share for maximum gross proceeds of $10,000,000. We refer to the offering of our Common Stock through the subscription rights as the "rights offering." In the rights offering, you will receive one (1) subscription right for each one (1) share of Common Stock you hold as of 5:00 p.m. Eastern Standard Time, on February 6, 2018, the record date of the rights offering. Each subscription right will entitle you to purchase 0.273 of shares of our Common Stock at a subscription price of $2.00 per whole share, which we refer to as the "basic subscription right." The subscription price was determined by our board of directors (the "Board of Directors"). We will not issue fractional shares in the rights offering. You will not receive any rights in our rights offering unless you hold shares of our Common Stock at the close of business on the record date, which is 5:00 p.m. Eastern Standard Time, on February 6, 2018. If you exercise your basic subscription rights in full and other shareholders do not fully exercise their basic subscription rights, we will grant you an over-subscription right to purchase, at the same subscription price of $2.00 per share, additional shares of Common Stock that remain unsubscribed at the expiration of the rights offering. Over-subscription rights will be available only to shareholders who exercise their basic subscription rights in full. The over-subscription rights will be subject to availability and pro rata allocation of shares among shareholders exercising their over-subscription right. You may exercise your subscription rights at any time beginning on the effective date of this prospectus and before the expiration of the rights offering, on February [ ], 2018, at 5:00 p.m., Eastern Standard Time, which is 16 calendar days after the effective date of this prospectus, unless we extend the rights offering period, as determined at our sole discretion, for up to 30 calendar days. We reserve the right to cancel the rights offering for any reason at our sole discretion any time before the expiration date. If we cancel the rights offering, any and all subscription payments that have been received by our Subscription Agent will be returned as soon as reasonably possible, without interest or penalty. Broadridge Corporate Issuer Solutions, Inc. (referred to herein as "Broadridge" and the "Subscription Agent") will serve as the Subscription Agent for the rights offering. The Subscription Agent will hold in escrow the funds we receive from subscribers until we complete or cancel the rights offering. We are directly offering the subscription rights and the shares of Common Stock issuable upon exercise of the rights, all of which are covered by this Registration Statement. We have not engaged the services of any underwriters or selling agents. We will bear all costs, expenses and fees in connection with the registration of the shares of Common Stock issuable upon exercise of the subscription rights. Our Common Stock is traded on the NASDAQ Capital Market under the symbol "ARCW." The shares of Common Stock that we issue in connection with the rights offering will also be listed on the NASDAQ Capital Market under the same symbol. The subscription rights will not be listed for trading on the NASDAQ Capital Market or any other stock exchange or market. On February 6, 2018, the last reported sale price for our Common Stock was $1.95 per share. As of the close of business on February 6, 2018, our Company had 18,305,982 shares of Common Stock issued and outstanding. Neither our Board of Directors nor our management has made any recommendations regarding the exercise of your subscription rights. You may not revoke or revise any exercises of subscription rights once made, unless we cancel the rights offering. You should carefully read this entire prospectus and all information that we incorporate by reference before you make any investment decision. See the section in this prospectus under the caption: "Incorporation of Certain Information by Reference." Investing in our Common Stock involves certain risks. See "Risk Factors" beginning on page 16 to read about factors you should consider before exercising your subscription rights. Upon completion of the rights offering, shareholders who do not fully exercise their basic subscription rights will own a smaller proportional interest in the Company than if they had timely and fully exercised their basic subscription rights. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. The date of this prospectus is , 2018. Table of Contents ABOUT THIS PROSPECTUS In considering any decision regarding an investment in the shares which are the subject of this prospectus, you should rely only upon the information contained in this prospectus and the information that we incorporate by reference into this prospectus. We have not authorized any persons to provide you with information which is different from the information contained in this prospectus or the information that we incorporate by reference into this prospectus. We take no responsibility for, and can provide no assurances as to the reliability of, any other information that you may obtain from other sources. The information contained in this prospectus is accurate only as of the date on the front cover of this prospectus. Any and all information that we incorporate by reference is accurate only as of the date of the referenced document so incorporated. This prospectus is an offer to sell only the securities that are offered hereby, and only where it is lawful to do so. This prospectus does not offer to sell, or ask for offers to buy, any shares of our Common Stock in any state or jurisdiction (within or outside the United States) where it would not be lawful or where the person making the offer is not qualified to do so. This prospectus is part of a registration statement that we filed with the U.S. Securities and Exchange Commission (the "SEC"). Please carefully read both this entire prospectus together with all information that we incorporate by reference. See the section of this prospectus under the caption: "Incorporation of Certain Information by Reference." Except as otherwise indicated herein or as the context otherwise requires, references in this prospectus to "ARC Group Worldwide," "ARC," "the Company," "we," "us," "our," and similar references refer to ARC Group Worldwide, Inc. and its subsidiaries. References in this prospectus to "Subscription Agent" refers to Broadridge. Table of Contents Basic Subscription Right Each subscription right will entitle you to purchase 0.273 shares of our Common Stock at a subscription price of $2.00 per whole share (the "basic subscription right"). The Company will allocate to you, by reference to your percentage ownership of the Company on the record date, a proportionate number of the rights offered. See the section in this prospectus under the caption: "The Rights Offering The Subscription Rights Basic Subscription Right." Over-Subscription Right If you exercise your basic subscription rights in full and other shareholders do not fully exercise their basic subscription rights, you may also exercise an over-subscription right to purchase, at the same subscription price of $2.00 per whole share, some or all of the unsubscribed shares of Common Stock that remain available at the expiration of the rights offering. If the number of remaining shares is not sufficient to satisfy all of the over-subscriptions, the available remaining shares will be prorated among those subscribers who exercise over-subscription rights in proportion to their respective basic subscription rights. See the section in this prospectus under the caption: "The Rights Offering The Subscription Rights Over-Subscription Right." Record Date 5:00 p.m., Eastern Standard Time, on February 6, 2018. Expiration of the Offering Period 5:00 p.m., Eastern Standard Time, on February [ ], 2018 which is 16 calendar days after the effective date of this prospectus. We may extend, in our sole discretion, the expiration of the offering period for exercising your subscription rights for a period not to exceed 30 calendar days. No Fractional Shares We will not issue any fractional shares in the rights offering. You may only exercise your rights to purchase shares in whole numbers. Use of Proceeds We intend to use the net proceeds from the rights offering as additional capital for general corporate purposes. See the section in this prospectus under the caption: "Use of Proceeds." Non-transferability of Subscription Rights The subscription rights that we issue in the rights offering may not be sold, transferred or subject to any other disposition. See the section in this prospectus under the caption: "The Rights Offering Non-transferability of Subscription Rights." No Board Recommendation Our Board of Directors is making no recommendation regarding your exercise of the subscription rights. You should carefully consider all relevant facts and circumstances in determining whether or not to exercise your subscription rights. See the section in this prospectus under the caption: "Risk Factors" for a discussion of some of the risks related to exercising your subscription rights and investing in our Common Stock. Table of Contents DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS This prospectus and the documents we incorporate by reference into this prospectus may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, about the Company and its subsidiaries. We intend the coverage of our forward-looking statements to be within the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not statements of historical fact, and can be identified by the use of forward-looking terminology such as "believes," "expects," "may," "will," "could," "should," "projects," "plans," "goal," "targets," "potential," "estimates," "pro forma," "seeks," "intends," or "anticipates" or the negative form of these terms or comparable qualifying words. The basis for our forward-looking statements includes our current expectations and a number of known and unknown risks and uncertainties that could cause actual outcomes to differ materially from our forward-looking statements. We caution readers not to place undue reliance on our forward-looking statements. In light of inherent uncertainties in forward-looking statements, the reader should not interpret inclusion of these statements as any representation by us or any other person that we will achieve or accomplish any of the matters expressed within the scope of any of our forward-looking statements. We assume no obligation to publicly update or revise our forward-looking statements or to advise of any changes regarding the basis of our assumptions and other factors relating to the forward-looking statements. Table of Contents No Revocation Except in the event we make a fundamental change to the terms and conditions of our rights offering, your exercise of subscription rights will be irrevocable, even if you later change your mind about exercising your subscription rights. The irrevocability of your exercise will apply even if new information comes to your attention or if the market price of our Common Stock falls below the subscription price of $2.00 per whole share. Your exercise of the rights will also remain irrevocable if the authorized period for the rights offering is extended by our Board of Directors. You should not exercise your subscription rights unless you are certain that you wish to purchase shares of our Common Stock at the subscription price of $2.00 per whole share. Extension We reserve the right to extend the rights offering period for a period not to exceed 30 calendar days. If we decide to extend the rights offering period, we will issue a press release announcing the extension in advance of the expiration of the rights offering period. We may also extend the duration of the rights offering period if applicable law or regulations require us to do so. Our Board of Directors has broad discretion regarding any and all determinations whether or not to extend the rights offering period. See the section in this prospectus under the caption: "The Rights Offering Expiration Date, Extension, and Amendments." Cancellation Our Board of Directors may at its sole discretion cancel the rights offering at any time before the expiration of the rights offering period. If we cancel the rights offering, we will issue a press release notifying all of our shareholders of the cancellation. If we cancel the rights offering, the Subscription Agent will promptly return all subscription payments, without interest or penalty, as soon as reasonably possible after the cancellation date. See the section in this prospectus under the caption: "The Rights Offering Expiration Date, Extension, and Amendments." Amendment Our Board of Directors reserves the right to amend or modify the terms of the rights offering. The amendments or modifications may be made for any reason. These changes may include, for example, changes to the subscription price or other matters that may induce greater participation by our shareholders in the rights offering. See the section in this prospectus under the caption: "The Rights Offering Expiration Date, Extension, and Amendments." Table of Contents Fundamental Changes If we make any fundamental change to the terms of the rights offering after the date of effectiveness of this prospectus, we will file a post-effective amendment to the registration statement in which this prospectus is included and offer subscribers the opportunity to cancel their subscriptions. In such event, if you have subscribed to purchase shares in the rights offering and request a refund, we will issue the refund to you and recirculate an amended prospectus after the post-effective amendment is declared effective with the SEC. If we extend the expiration date of the rights offering period in connection with any post-effective amendment, we will allow holders of rights a reasonable period of additional time to make new investment decisions on the basis of the new information set forth in the amended prospectus that will form a part of the post-effective amendment registration statement. In such event, we will issue a press release announcing the changes to the rights offering and the new expiration date. See the section in this prospectus under the caption: "The Rights Offering Expiration Date, Extension, and Amendments." Procedures for Exercising Rights To exercise your subscription rights, you must complete the subscription rights certificate and deliver the certificate to the Subscription Agent before the expiration of the offering period. Your subscription must include full payment for the exercise of all of your basic subscription rights and all over-subscription rights that you wish to exercise. For details regarding the procedure and requirements for exercising your subscription rights, see the section in this prospectus under the caption: "The Rights Offering Method of Exercising Subscription Rights" You may deliver the subscription documents and payments by mail or overnight commercial carrier. If regular mail is used for this purpose, we recommend that you use registered mail, properly insured, with return receipt requested. Brokerage Account Shareholders If you are a beneficial owner of shares that are registered in the name of a broker, dealer, bank or other nominee, and you wish to participate in the rights offering, you should immediately instruct your broker, dealer, bank or other nominee to exercise your subscription rights on your behalf and deliver all required documents and payment before the expiration of the rights offering period. Guaranteed Delivery Procedures If you are not able to deliver your rights certificate to the Subscription Agent before the expiration of the rights offering period, you may follow the procedures that we describe in the section of this prospectus under the caption: "The Rights Offering Guaranteed Delivery Procedures." Minimum Subscription Requirement You may exercise your rights in the full amount of your allocation or in any partial amount that you determine. We have not set any minimum subscription amount. Table of Contents No Obligation to Participate in the Rights Offering You are under no obligation to exercise your rights to subscribe for any shares in the rights offering. If you choose not to participate in the rights offering, you do not have to take any special action to decline to participate. Backstop Purchasers Weintraub Capital Management, L.P. ("Weintraub"), Zori Investment Limited ("Zori"), Kurt Butenhoff ("KB"), and Everest Hill Group Inc. ("Everest Hill") (each, a "Backstop Purchaser" and, collectively, the "Backstop Purchasers") have severally agreed with us, as of February 6, 2018, to exercise their respective basic subscription rights in full (the "Basic Commitment," or collectively, the "Basic Commitments") and to purchase substantially simultaneously with the completion of our rights offering, in the aggregate, 100% of all remaining available shares not otherwise subscribed as basic subscriptions or over-subscriptions in the rights offering (the "Backstop Commitments"), subject to the aggregate of each Backstop Purchaser's total investment limit (each, a "Total Commitment Amount"). The respective Total Commitment Amount consists of the aggregate amount in U.S. dollars committed by each Backstop Purchaser in respect of such purchaser's commitment to purchase shares of Common Stock in the rights offering pursuant to its basic subscription right, its over-subscription right, and its Backstop Commitment. As of February 6, 2018, we have entered into agreements with each Backstop Purchaser (each a "Backstop Agreement" and, collectively, the "Backstop Agreements"), under which we have agreed to issue and sell to each Backstop Purchaser, and each Backstop Purchaser has agreed to purchase from us, at the price per share equal to the subscription price, shares of our Common Stock equal to the number of shares that are not subscribed for in the rights offering, subject to the terms and conditions and limitations of the respective Backstop Agreement and the respective Total Commitment Amount. As of February 6, 2018, Weintraub has agreed that its Total Commitment Amount shall be $1,000,000; Zori has agreed that its Total Commitment Amount shall be $250,000; and KB has agreed that its Total Commitment Amount shall be $250,000. Everest Hill has no maximum Total Commitment Amount and as of February 6, 2018, has agreed to purchase any and all remaining available rights offering shares after exercise of all basic subscription rights, over-subscription rights and Backstop Commitments by all other shareholders of the Company. Everest Hill has been a major shareholder of the Company since 2008. As of the record date for this rights offering, Everest Hill, together with its affiliates, beneficially owns approximately 49.8% of our Common Stock; Zori, Weintraub and KB are each beneficial owners of less than 1% our Common Stock. Table of Contents Backstop Agreements We have entered into the Backstop Agreements with each of the Backstop Purchasers. The Backstop Agreements set forth, among other things, the terms of the Backstop Purchasers' Basic Commitments and Backstop Commitments. The Backstop Purchasers' obligations under the Backstop Agreements are subject to various conditions as described in the section of this prospectus under the caption: "The Backstop Agreements." Basic Commitments Pursuant to the respective Backstop Agreements, the Backstop Purchasers have agreed to exercise their respective basic subscription rights in full (each, a "Basic Commitment," and collectively, the "Basic Commitments".) Backstop Commitments Subject to the terms and conditions set forth in the Backstop Agreements, the Backstop Purchasers have severally agreed to purchase from us, substantially simultaneously with the completion of the rights offering, in the aggregate, all of the available shares not otherwise sold in the rights offering following the exercise of all holders' basic subscription rights and over-subscription rights, at the same subscription price of $2.00 per whole share, equal to the rights offering subscription price for all other shareholders of our Company, subject to the aggregate of each Backstop Purchaser's total investment limit (each, a "Total Commitment Amount"). The respective Total Commitment Amount consists of the aggregate amount in U.S. dollars committed by each Backstop Purchaser in respect of such purchaser's commitment to purchase shares of Common Stock in the rights offering pursuant to its basic subscription right, its over-subscription right, and its Backstop Commitment. We refer to the subscription commitments of the Backstop Purchasers to purchase shares of Common Stock not otherwise sold in the rights offering as a "Backstop Commitment," and collectively, as the "Backstop Commitments". Backstop Purchasers' Total Commitment Amounts As of February 6, 2018, Weintraub has agreed that its Total Commitment Amount shall be $1,000,000; Zori has agreed that its Total Commitment Amount shall be $250,000; and KB has agreed that its Total Commitment Amount shall be $250,000. As of February 6 2018, Everest Hill has not limited its Total Commitment Amount and has agreed to purchase any and all remaining available rights offering shares after exercise of all basic subscription rights, over-subscription rights and Backstop Commitments by all other shareholders of the Company. The Backstop Closings The Backstop Commitments will close substantially simultaneously with the completion of our rights offering, thus assuring the sale of all remaining available rights offering shares not otherwise subscribed in the rights offering. Table of Contents Backstop Consideration No Backstop Purchaser will receive any compensation for its Backstop Commitment. Backstop Purchasers' Share Ownership As of the record date for the rights offering, Everest Hill, together with its affiliates, beneficially owns approximately 49.8% of our Common Stock; Zori, Weintraub and KB are each beneficial owners of less than 1% our Common Stock. Exclusion of Backstop Commitment shares from Registration We will issue the Backstop Commitment shares to each Backstop Purchaser on a private basis in a transaction exempt from the registration requirements of the Securities Act of 1933, as amended (the "Securities Act"). We are not registering any of the Backstop Commitment shares in the registration statement of which this prospectus forms a part. Registration Rights We have entered into Registration Rights Agreements with each of the Backstop Purchasers (each a "Registration Rights Agreement" and collectively, the "Registration Rights Agreements"). Under the terms of the Registration Rights Agreements, each Backstop Purchaser may request the Company to register their Backstop Commitment shares for resale beginning six (6) months after the closing of the rights offering. Shares of Common Stock Outstanding as of the Record Date 18,305,982 shares of our Common Stock are outstanding as of the record date. Shares of Common Stock Outstanding After Completion of the Rights Offering If our rights offering is fully subscribed, we expect to issue approximately 5,000,000 shares of Common Stock. If our rights offering is fully subscribed, we would have approximately 23,305,982 shares of Common Stock issued and outstanding at the closing of the rights offering. Delivery of Shares Any shares you elect to purchase in the rights offering will be delivered to you or your broker as soon as reasonably possible following the closing of the rights offering. Market for Common Stock The Company's Common Stock is listed and trades on Nasdaq Capital Market under the symbol "ARCW." Table of Contents U.S. Federal Income Tax Considerations It is the opinion of our tax counsel, Wuersch & Gering, LLP, that the distribution of subscription rights to U.S. holders of our Common Stock or of rights to acquire shares of our Common Stock should be treated, for U.S. federal income tax purposes, as a non-taxable distribution under Section 305(a) of the Internal Revenue Code of 1986, as amended (the "Code"), and the Treasury Regulations promulgated thereunder. However, there is a lack of authority addressing the application of the Code to distributions of subscription rights and your receipt of subscription rights may be treated as a taxable distribution. We urge you to consult with your own tax advisor regarding the facts and circumstances of your own tax situation. See, "Risk Factors The receipt of subscription rights may be treated as a taxable distribution to you." See also, "Material U.S. Federal Income Tax Consequences." Subscription Agent Broadridge will act as our subscription agent in connection with the rights offering. You may contact Broadridge directly with any questions or comments toll-free at (855) 793-5068. Foreign Holders of Registered Common Stock Certificates The Subscription Agent will not mail rights certificates to you if your address is outside the United States or if you have an Army Post Office or a Fleet Post Office address. Foreign shareholders will receive written notice of the rights offering. The Subscription Agent will hold the rights to which those subscription certificates pertain for those shareholders' accounts until instructions are received to exercise the rights, subject to applicable law. Risk Factors If you are considering making an investment by exercising subscription rights in the rights offering, you should carefully read the risks and other information set forth in this prospectus in the section under the caption: "Risk Factors" beginning on page 15 of this prospectus. You should also carefully review the documents incorporated by reference into this prospectus, and the risks that we discuss in other sections of this prospectus. Questions We answer some of the common questions that we anticipate shareholders may ask about the rights offering in the section below. See the
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+Calculation of Registration Fee Title of Each Class of Securities to be Registered Amount to be Registered* Proposed Maximum Offering Price Per Unit* Proposed Maximum Aggregate Offering Price Amount of Registration Fee** Interests in real property separate account underlying variable life insurance and annuity contracts $2,975,851 100% 100% $ * These securities are not issued in predetermined amounts or units and the maximum aggregate offering price is estimated solely for purposes of determining the registration fee. **Prior to the filing of this Registration Statement, $2,975,851 of units of interest of the registrant (for a filing fee of $370.49) remained registered and unsold, pursuant to Registration Statement File No. 333- 202194 on Form S-1 which was filed with the Commission on April 1, 2015, and are being carried forward pursuant to Rule 415(a)(6). No additional filing fee is being paid with this Registration Statement because no additional securities are being registered. Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until Registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to Section 8(a), may determine. PART I INFORMATION REQUIRED IN PROSPECTUS PROSPECTUS May 1, 2018 PRUCO LIFE OF NEW JERSEY VARIABLE CONTRACT REAL PROPERTY ACCOUNT There are two other types of prospectuses. The first type describes either a variable annuity contract or a variable life insurance contract (collectively, the "Contract") issued by Pruco Life Insurance Company of New Jersey ("Pruco Life of New Jersey," "us," "we," or "our"), a stock life insurance company that is an indirect, wholly owned subsidiary of The Prudential Insurance Company of America ("Prudential"). The second prospectus type describes several investment options available under that variable contract through one or more funds (the "Funds"). The Funds are registered under the Investment Company Act of 1940. The Funds are separate investment portfolios that are mutual funds, each with a different investment policy and objective. This prospectus describes the Pruco Life of New Jersey Variable Contract Real Property Account (the "Real Property Account"), an additional available investment option. Although it is not a mutual fund, in many ways it is like a mutual fund. Instead of holding a diversified portfolio of securities, such as stocks or bonds, it consists mainly of a portfolio of commercial and residential real properties. Pruco Life of New Jersey determines the price of a "share" or, as we call it, a "participating interest" in this portfolio of properties, just as it does for the other investment options. It is based upon our best estimate of the fair market value of the properties and other assets held in this portfolio. The portion of your "Contract Fund" (the total amount invested under the Contract) that you allocate to this investment option will change daily in value, up or down, as our estimate of the fair market value of these real properties and other assets change. The risks of investing in real property are different from the risks of investing in mutual funds. See RISK FACTORS. Also, your ability to withdraw or transfer your investment in this option is not as freely available as it is for the other investment options. See RESTRICTIONS ON WITHDRAWALS. Please read this prospectus and keep it for future reference. In compliance with US law, Pruco Life Insurance Company of New Jersey delivers this prospectus to contract owners that currently reside outside of the United States. Neither the Securities and Exchange Commission ("SEC") nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is accurate or complete. Any representation to the contrary is a criminal offense. Pruco Life Insurance Company of New Jersey 213 Washington Street Newark, New Jersey 07102 2992 Telephone: (800) 778-2255 PRPA2 Ed 5-2018 PER SHARE INVESTMENT INCOME, CAPITAL CHANGES AND SELECTED RATIOS (FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD) The following information on per share investment income, capital changes and selected ratios has been provided for your information. This page should be read in conjunction with the financial statements and notes thereto of The Prudential Variable Contract Real Property Partnership. 01/01/2017 01/01/2016 01/01/2015 01/01/2014 01/01/2013 To To To To To 12/31/2017 12/31/2016 12/31/2015 12/31/2014 12/31/2013 Revenue from real estate and improvements $5.08 $5.02 $4.94 $5.49 $5.81 Equity in income of real estate partnership $0.00* $0.00* $0.00* $0.00* $0.00* Interest on short-term investments $0.07 $0.02 $0.00* $0.00* $0.00* TOTAL INVESTMENT INCOME $5.15 $5.04 $4.94 $5.49 $5.81 Investment Management fee $0.75 $0.71 $0.62 $0.55 $0.52 Real Estate Taxes $0.62 $0.49 $0.63 $0.58 $0.53 Administrative expense $0.71 $0.70 $0.69 $0.97 $0.94 Operation expense $0.62 $0.64 $0.76 $1.15 $1.28 Interest expense $0.80 $0.77 $0.77 $0.64 $0.59 Minority interest in consolidated partnership $0.14 $0.15 $0.14 $0.14 $0.09 TOTAL INVESTMENT EXPENSES $3.64 $3.46 $3.61 $4.03 $3.95 NET INVESTMENT INCOME $1.51 $1.58 $1.33 $1.46 $1.86 Net realized gain (loss) on real estate investments sold or converted ($0.30) ($0.06) $0.03 $0.10 $0.03 Change in unrealized gain (loss) on real estate investments $1.38 $0.72 $2.78 $1.35 $1.82 Minority interest in unrealized gain (loss) on investments ($0.26) $0.00 ($0.43) ($0.16) ($0.32) Net unrealized gain (loss) on real estate investments $1.12 $0.72 $2.35 $1.19 $1.50 NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS $0.82 $0.66 $2.38 $1.29 $1.53 Net change in share value $2.33 $2.25 $3.71 $2.76 $3.39 Share value at beginning of period $46.42 $44.17 $40.48 $37.78 $34.49 Share value at end of period $48.69 $46.42 $44.17 $40.48 $37.78 Ratio of expenses to average net assets (1) 5.56% 5.57% 6.36% 8.15% 8.85% Ratio of net investment income to average net assets (1) 3.39% 3.83% 3.50% 4.03% 5.29% Number of shares outstanding at end of period (000 s) 4,427 4,530 4,530 4,651 4,908 All per share calculations are based on weighted average shares outstanding. (1) Average net assets are calculated based on an average of ending monthly net assets. *Per Share amount less than $0.01 (rounded) 1 - Real Property SUMMARY This Summary provides a brief overview of the more significant aspects of the Real Property Account. We provide further detail in the subsequent sections of this prospectus. The Real Property Account is a separate account of Pruco Life of New Jersey created pursuant to New Jersey insurance law. Under that law, the assets of the Real Property Account are not chargeable with liabilities arising out of any other business of Pruco Life of New Jersey. Owners of certain variable life insurance and variable annuity contracts issued by Pruco Life of New Jersey may allocate a portion of their net premiums or purchase payments, or transfer a portion of their Contract Fund, to the Real Property Account. Values and benefits under the Contracts will thereafter reflect the investment experience of the Real Property Account. Contract owners, not Pruco Life of New Jersey, bear the risks and rewards of the investment performance of the Real Property Account to the extent of the Contract owner's Contract Fund invested in the Real Property Account. This prospectus is attached to and should be read in conjunction with the prospectus for the Contract you selected. Investment of the Real Property Account Assets The Real Property Account assets are invested primarily in income producing real estate through The Prudential Variable Contract Real Property Partnership (the "Partnership"), which is a general partnership that was established by Prudential and two of its wholly-owned subsidiaries, Pruco Life Insurance Company ("Pruco Life") and Pruco Life of New Jersey. See The Prudential Variable Contract Real Property Partnership. Currently PGIM, Inc. ( PGIM ) serves as the investment manager of the Partnership. See The Investment Manager. The Partnership invests at least 65% of its assets in direct ownership interests in: 1. income producing real estate; 2. participating mortgage loans (mortgages providing for participation in the revenues generated by, or the appreciation of, the underlying property, or both) originated for the Partnership; and 3. real property sale leasebacks negotiated on behalf of the Partnership. The large majority of these real estate investments will be in direct ownership interests in income producing real estate, such as office buildings, shopping centers, apartments, industrial properties or hotels. The Partnership may also invest up to 5% of its assets in direct ownership interests in agricultural land. Approximately 10% of the Partnership's assets will be held in cash or invested in liquid instruments and securities. The remainder of the Partnership's assets may be invested in other types of real estate related investments, including non participating mortgage loans and real estate investment trusts. Investment Objectives The investment objectives of the Partnership are to: 1. preserve and protect the Partnership's capital; 2. compound income by reinvesting investment cash flow; and 3. over time, increase the income amount through appreciation in the value of permitted investments and, to a lesser extent, through mortgage loans and sale-leaseback transactions. There is no assurance that the Partnership's objectives will be attained. See INVESTMENT POLICIES. Risk Factors Investment in the Real Property Account, and thereby, participation in the investment experience of the Partnership, involves significant risks. See RISK FACTORS. These include the risk of fluctuating real estate values and the risk that the appraised or estimated values of the Partnership's real property investments will not be realized upon their disposition. Many of the Partnership's real estate investments will not be quickly convertible into cash. Therefore, the Real Property Account should be viewed as a long term investment. See RESTRICTIONS ON WITHDRAWALS. Pruco Life of New Jersey and the investment manager have taken steps that are designed to ensure that the Real Property Account and Partnership will be sufficiently liquid to satisfy all withdrawal or loan requests promptly (within seven days), see Liquidity of Investments. The management of the Partnership is subject to certain conflicts of interest, including the possible acquisition of properties from Pruco Life of New Jersey affiliates. See CONFLICTS OF INTEREST. Summary of Charges The Partnership pays a daily investment management fee, which amounts to 1.25% per year of the average daily gross assets of the Partnership. The Partnership also compensates the investment manager for providing certain accounting and administrative services. See CHARGES. The portion of your Contract Fund allocated to the Real Property Account is subject to the same Contract charges as the portion of your Contract Fund allocated to the Funds. The Funds are the underlying funding vehicle for the other variable investment options available to Contract owners. You should read the Contract prospectus for a description of those charges. Availability to Pruco Life of New Jersey Contracts The Real Property Account is currently available to purchasers of Pruco Life of New Jersey's Variable Appreciable Life Insurance Contracts, Variable Life Insurance Contracts, Discovery Life Plus Contracts and Discovery Plus Contracts. It is not available on Contracts that are purchased in connection with IRAs, Section 403(b) annuities, and other tax qualified plans, that are subject to the Employee Retirement Income Security Act of 1974 ("ERISA") or to the prohibited transaction excise tax provisions of the Internal Revenue Code. See THE REAL PROPERTY ACCOUNT'S UNAVAILABILITY TO CERTAIN CONTRACTS. For example, a Variable Appreciable Life Contract owner who elects to invest part of his or her net premiums in the Pruco Life of New Jersey Variable Appreciable Account, a separate account of Pruco Life of New Jersey registered as a unit investment trust under the Investment Company Act of 1940, and part in the 2 - Real Property Real Property Account, will be subject to the same: (1) monthly sales charges; (2) risk charges; (3) administrative charges; (4) insurance charges; and (5) contingent deferred sales charges without regard to what portion is invested in the Pruco Life of New Jersey Variable Appreciable Account and what portion is invested in the Real Property Account. The Real Property Account has established different subaccounts, relating to the different types of variable Contracts that may participate in the Real Property Account. These subaccounts provide the mechanism and maintain the records whereby these different Contract charges are made. This prospectus may only be offered in jurisdictions in which the offering is lawful. No person is authorized to make any representations in connection with this offering other than those contained in this prospectus. GENERAL INFORMATION ABOUT PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY, PRUCO LIFE OF NEW JERSEY VARIABLE CONTRACT REAL PROPERTY ACCOUNT, THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP, AND THE INVESTMENT MANAGER Pruco Life Insurance Company of New Jersey Pruco Life of New Jersey, a stock life insurance company, was organized on September 17, 1982 under the laws of the State of New Jersey. It is licensed to sell life insurance and annuities only in the States of New Jersey and New York. These Contracts are not offered in any state in which the necessary approvals have not yet been obtained. Pruco Life of New Jersey is an indirect, wholly-owned subsidiary of The Prudential Insurance Company of America ( Prudential ), a stock life insurance company that has been doing business since October 13, 1875. Prudential is a wholly-owned subsidiary of Prudential Financial, Inc. ("Prudential Financial"), a New Jersey insurance holding company. As Pruco Life of New Jersey s ultimate parent, Prudential Financial exercises significant influence over the operations and capital structure of Pruco Life of New Jersey and Prudential. However, neither Prudential Financial, Prudential, nor any other related company has any legal responsibility to pay amounts that Pruco Life of New Jersey may owe under the Contract. Pruco Life of New Jersey Variable Contract Real Property Account The Real Property Account was established on October 30, 1987 under New Jersey law as a separate investment account. The Real Property Account meets the definition of a "separate account" under the federal securities laws. The Real Property Account holds assets that are separated from all of Pruco Life of New Jersey's other assets. The Real Property Account is used only to support the variable benefits payable under the Contracts that are funded by the real estate investment option. The Contract obligations to Contract owners and beneficiaries are general corporate obligations of Pruco Life of New Jersey. Pruco Life of New Jersey is also the legal owner of the Real Property Account assets. Pruco Life of New Jersey will maintain assets in the Real Property Account with a total market value at least equal to the amounts credited under the real estate option to all the Contracts participating in the Real Property Account. These assets may not be charged with liabilities, which arise from any other business that Pruco Life of New Jersey conducts. In addition to these assets, the Real Property Account's assets may include funds contributed by Pruco Life of New Jersey, and reflect any accumulations of the charges Pruco Life of New Jersey makes against the Real Property Account. See VALUATION OF CONTRACT OWNER S PARTICIPATING INTERESTS. Pruco Life of New Jersey will bear the risks and rewards of the Real Property Account's investment experience to the extent of its investment in the Real Property Account. Pruco Life of New Jersey may withdraw or redeem its investment in the Real Property Account at any time. We will not make any such redemption if it will have a materially adverse impact on the Real Property Account. Accumulations of charges will be withdrawn on a regular basis. Unlike the other separate accounts funding the Contracts, the Real Property Account is not registered with the Securities and Exchange Commission ("SEC") under the Investment Company Act of 1940 as an investment company. For state law purposes, the Real Property Account is treated as a part or division of Pruco Life of New Jersey. Contract owners have no voting rights with respect to the Real Property Account. The Real Property Account is under the control and management of Pruco Life of New Jersey. The Board of Directors and officers of Pruco Life of New Jersey are responsible for the management of the Real Property Account. No salaries of Pruco Life of New Jersey personnel are paid by the Real Property Account. The Prudential Variable Contract Real Property Partnership The assets of the Real Property Account are invested in the Partnership. The Partnership, a general partnership organized under New Jersey law on April 29, 1988, was formed through an agreement among Prudential, Pruco Life, and Pruco Life of New Jersey (collectively, the "Partners"), to provide a means for assets allocated to the real estate investment option under certain variable life insurance and variable annuity contracts issued by the respective companies to be invested in a commingled pool. This was done to provide greater diversification of investments and lower transaction costs than would be possible if the assets were separately invested by each company. All amounts allocated to the Real Property Account are contributed by Pruco Life of New Jersey to the Partnership. Pruco Life of New Jersey's general partnership interest in the Partnership is held in the Real Property Account. The initial contributions to the Partnership were made on April 29, 1988. Prudential contributed $100,000 in cash to the Partnership; Pruco Life of New Jersey contributed $100,000 in cash to the Partnership; and Pruco Life contributed the real estate and other assets held in its real estate separate account, which had been actively investing in real estate for more than a year. Those assets had an estimated market value of $91,538,737 on that date. Each Partner is entitled to its respective proportionate share of all income, gains, and losses of the Partnership. The Partnership assets are valued on each business day. The value of each Partner's interest will fluctuate with the investment performance of the Partnership. In addition, the Partners interests are proportionately readjusted, at the current value, on each day 3 - Real Property when a Partner makes a contribution to, or withdrawal from, the Partnership. When you choose to allocate a portion of your net premiums or purchase payments, or transfer a portion of your Contract Fund, to the Real Property Account, Pruco Life of New Jersey will contribute that amount to the Partnership as a capital contribution. It will correspondingly increase the Real Property Account's interest in the Partnership. Values and benefits under the Contract will thereafter vary with the performance of the Partnership's investments. For more information on how the value of your interest in the Real Property Account and the value of the Partnership's investments are calculated, see VALUATION OF CONTRACT OWNERS' PARTICIPATING INTERESTS. Contract owners have no voting rights with respect to the Partnership operations. The Investment Manager Currently, PGIM acts as investment manager of the Partnership. PGIM invests in and manages real estate equities and mortgages for the general account and separate accounts of Prudential Financial affiliates, and other third party accounts. PGIM, on behalf of the general account, and separate accounts of Prudential Financial affiliates, and other third party accounts, is one of the largest real estate investors in North America. PGIM and Prudential Financial affiliates participate in real estate ventures through public and private partnerships. As of December 31, 2017, PGIM managed $109.3 billion of net domestic real estate mortgages and equities of which $56.8 billion is in Prudential s general account and $52.5 billion is in separate accounts and other third party accounts. Statement value for general account assets is recorded at depreciated cost and for assets in separate accounts and other third party accounts at market value. For a discussion of how the Partnership's real estate related investments are valued, see VALUATION OF CONTRACT OWNERS' PARTICIPATING INTERESTS. PGIM has organized its real estate activities into separate business units. PGIM Real Estate is the unit responsible for the investments of the Real Property Partnership. PGIM Real Estate's investment staff is responsible for both general account and third party account real estate investment management activities. PGIM Real Estate provides global investment management services to institutional investors worldwide. PGIM Real Estate is headquartered in Madison, New Jersey and has 6 field offices across the United States. As of December 31, 201 7 , PGIM Real Estate had under management, within the US, approximately 33.4 million rentable square feet of office real estate, 34.8 million rentable square feet of industrial real estate, 28.9 million net rentable square feet of retail real estate, 885 hotel rooms, 47,369 multifamily residential units, 132,254 units of self-storage real estate, 5,919 units of senior housing real estate and 1,496 sited of manufactured housing. PGIM has entered into an administrative services agreement with Prudential, Pruco Life, and Pruco Life of New Jersey under which it pays the companies a fee for performing certain of PGIM s record keeping and other obligations under its investment management agreement with the Partnership. INVESTMENT POLICIES Overview The Partnership has an investment policy of investing at least 65% of its assets in direct ownership interests in income-producing real estate and participating mortgage loans. The largest portion of these real estate investments are direct ownership interests in income-producing real estate, such as office buildings, shopping centers, hotels, apartments, or industrial properties. Approximately 10% of the Partnership s assets are generally held in cash or invested in liquid instruments and securities although the Partners reserve discretion to increase this amount to meet partnership liquidity requirements. The remainder of the Partnership s assets are invested in other types of real estate-related investments, including real estate investment trusts. Investment in Direct Ownership Interests in Real Estate Acquisition. The Partnership's principal investment policy involves acquiring direct ownership interests in existing (including newly constructed) income producing real estate, including office buildings, shopping centers, apartment buildings, industrial properties, and hotels. The Partnership may also invest up to 5% of its assets in direct ownership interests in agricultural land. Property acquisitions will generally be carried out by the real estate acquisition offices in PGIM Real Estate's network of field offices located in Parsippany, New Jersey, Atlanta, Georgia, Chicago, Illinois and San Francisco, California. A field office or an affiliate of Prudential Financial supervises the management of properties in all of PGIM's accounts. Proposals to acquire properties for the Partnership are usually originated by a field office. They are reviewed and approved by the Investment Management Committee of PGIM Real Estate. Depending upon the size of the acquisition and other factors, a proposed real estate investment may also be submitted for review to the Investment Committee of the Board of Directors of Prudential. Although percentage limitations on the type and location of properties that may be acquired by the Partnership have not been established, the Partnership plans to diversify its investments through the type of property acquired and its geographic location. The Partnership's investments will be maintained to meet the Internal Revenue Code diversification requirements. See General Investment and Operating Policies. In order for the Partnership to meet its stated objectives, it will have to acquire properties that generate more cash than needed to pay its gross operating expenses. To do this, a substantial portion of the Partnership's assets will be invested in properties with operating histories that include established rent and expense schedules. However, the Partnership may also acquire recently constructed properties that may be subject to agreements with sellers providing for certain minimum levels of income. Upon the expiration of or default under these agreements, there is no assurance that the Partnership will maintain the level of operating income necessary to produce the return it was previously experiencing. The Partnership may purchase real property from Prudential Financial or its affiliates under certain conditions. See CONFLICTS OF INTEREST. 4 - Real Property The property acquired by the Partnership is usually real estate, which is ready for use. Accordingly, the Partnership is not usually subject to the development or construction risks inherent in the purchase of unimproved real estate. From time to time, however, the Partnership may invest in a developmental real estate project that is consistent with the Partnership's objectives. The Partnership will then be subject to those risks. The Partnership will often own the entire fee interest in an acquired property, but it may also hold other direct ownership interests. These include, but are not limited to, partnership interests, limited liability company interests, leaseholds, and tenancies in common. Property Management and Leasing Services. The Partnership usually retains a management company operating in the area of a property to perform local property management services. A field office or other affiliate of Prudential Financial will usually: (1) supervise and monitor the performance of the local management company; (2) determine and establish the required accounting information to be supplied; (3) periodically inspect the property; (4) review and approve property operating budgets; and (5) review actual operations to ensure compliance with budgets. In addition to day to day management of the property, the local management company will have responsibility for: (1) supervision of any on site personnel; (2) negotiation of maintenance and service contracts; (3) major repair advice; (4) replacements and capital improvements; (5) the review of market conditions to recommend rent schedule changes; and (6) creation of marketing and advertising programs to obtain and maintain good occupancy rates by responsible tenants. The local management company fees will reduce the cash flow from the property to the Partnership. The Partnership usually retains a leasing company to perform leasing services on any property with actual or projected vacancies. The leasing company will coordinate with the property management company to provide marketing and leasing services for the property. When the property management company is qualified to handle leasing, it may also be hired to provide leasing services. Leasing commissions and expenses will reduce the cash flow from the property to the Partnership. PGIM Real Estate may, on behalf of the Partnership, hire a Prudential Financial affiliate to perform property management or leasing services. The affiliate's services must be provided on terms competitive with unaffiliated entities performing similar services in the same geographic area. See CONFLICTS OF INTEREST. Annually, the field office which oversees the management of each property owned by the Partnership will, together with the local property management firm, develop a business plan and budget for each property. It will consider, among other things, the projected rollover of individual leases, necessary capital expenditures and any expansion or modification of the use of the property. The approval of an officer of PGIM Real Estate is required. The field office will also periodically report the operating performance of the property to PGIM Real Estate. Investments in Mortgage Loans Types of Mortgage Loans The Partnership is authorized to invest in mortgage loans, including conventional mortgage loans that may pay fixed or variable rates of interest and mortgage loans that have a Participation (as defined below). The Partnership will not make mortgage loans to Prudential Financial affiliates. The Partnership intends to give mortgage loans on: (1) commercial properties (such as office buildings, shopping centers, hotels, industrial properties, and office showrooms); (2) agricultural properties; and (3) residential properties (such as garden apartment complexes and high rise apartment buildings). These loans are usually secured by properties with income producing potential based on historical or projected data. Usually, they are not personal obligations of the borrower and are not insured or guaranteed. 1. First Mortgage Loans. The Partnership will primarily make first mortgage loans secured by mortgages on existing income producing property. These loans may provide for interest only payments and a balloon payment at maturity. 2. Wraparound Mortgage Loans. The Partnership also may make wraparound mortgage loans on income producing properties which are already mortgaged to unaffiliated entities. A wraparound mortgage loan is a mortgage with a principal amount equal to the outstanding balance of the prior existing mortgage plus the amount to be advanced by the lender under the wraparound mortgage loan, thereby providing the property owner with additional funds without disturbing the existing loan. The terms of wraparound mortgage loans made by the Partnership require the borrower to make all principal and interest payments on the underlying loan to the Partnership, which will then pay the holder of the prior loan. Because the existing first mortgage loan is preserved, the lien of the wraparound mortgage loan is junior to it. The Partnership will make wraparound mortgage loans only in states where local applicable foreclosure laws permit a lender, in the event of the borrower's default, to obtain possession of the property which secures the loan. 3. Junior Mortgage Loans. The Partnership may also invest in other junior mortgage loans. Junior mortgage loans will be secured by mortgages which are subordinate to one or more prior liens on the real property. They will generally, but not in all cases, provide for repayment in full prior to the end of the amortization period of the senior mortgages. Recourse on such loans will include the real property encumbered by the Partnership's mortgage and may also include other collateral or personal guarantees by the borrower. The Partnership will generally make junior or wraparound mortgage loans only if the senior mortgage, when combined with the amount of the Partnership's mortgage loan, would not exceed the maximum amount which the Partnership would be willing to commit to a first mortgage loan and only under such circumstances and on such property as to which the Partnership would otherwise make a first mortgage loan. 4. Participations. The Partnership may make mortgage loans, which, in addition to charging a base rate of interest, will include provisions permitting the Partnership to participate (a "Participation") in the economic benefits of the underlying property. The Partnership would receive a percentage of: (1) the gross or net revenues from the property operations; and/or (2) the increase in the property value realized by the borrower, such as through sale or refinancing of the property. These arrangements may also grant the Partnership an option to acquire the property or an undivided interest in the property securing the loan. When the Partnership negotiates the right to receive additional interest in the form of a percentage of the gross revenues or otherwise, the fixed cash return to the Partnership from 5 - Real Property that investment will generally be less than would otherwise be the case. It is expected that the Partnership will be entitled to percentage Participations when the gross or net revenues from the property operations exceed a certain base amount. This base amount may be adjusted if real estate taxes or similar charges are increased. The form and extent of the additional interest that the Partnership receives will vary with each transaction depending on: (1) the equity investment of the owner or developer of the property; (2) other financing or credit obtained by the owner or developer; (3) the fixed base interest rate on the mortgage loan by the Partnership; (4) any other security arrangement; (5) the cash flow and pro forma cash flow from the property; and (6) market conditions. The Partnership intends to use this additional interest as a hedge against inflation. It assumes that as prices increase in the economy, the rental prices on properties, such as shopping centers or office buildings, will increase and there should be a corresponding increase in the property value. There is no assurance that additional interest or increased property values will be received. In that event, the Partnership will be entitled to receive only the fixed portion of its return. Standards for Mortgage Loan Investments In making mortgage loans, the investment manager will consider relevant real property and financial factors, including: (1) the location, condition, and use of the underlying property; (2) its operating history; (3) its future income producing capacity; and (4) the quality, experience, and creditworthiness of the unaffiliated borrower. Before the Partnership makes a mortgage loan, the investment manager analyzes the fair market value of the underlying real estate. In general, the amount of each mortgage loan made by the Partnership will not exceed, when added to the amount of any existing indebtedness, 80% of the estimated or appraised value of the property mortgaged. Dealing with Outstanding Loans The Partnership may sell its mortgage loans prior to maturity if it is deemed advisable by the investment manager and consistent with the Partnership's investment objectives. The investment manager may also: (1) extend the maturity of any mortgage loan made by the Partnership; (2) consent to a sale of the property subject to a mortgage loan or finance the purchase of a property by making a new mortgage loan in connection with the sale of a property (either with or without requiring the repayment of the mortgage loan); (3) renegotiate the terms of a mortgage loan; and (4) otherwise deal with the mortgage loans of the Partnership. Investments in Sale Leasebacks A portion of the Partnership's investments may consist of real property sale leaseback transactions ("Leasebacks"). In this type of transaction, the Partnership will purchase land and income producing improvements on the land and simultaneously lease the land and improvements, generally to the seller, under a long term lease. Leasebacks may be for very long periods and may provide for increasing payments from the lessee. Under the terms of the Leaseback, the tenant will operate, or provide for the operation of, the property and generally be responsible for the payment of all costs, including: (1) taxes; (2) mortgage debt service; (3) maintenance and repair of the improvements; and (4) insurance. In some cases, the Partnership may also grant the lessee an option to acquire the land and improvements from the Partnership after a period of years. The option exercise price would be based on the fair market value of the property, as encumbered by the lease, the increase in the gross revenues from the property or other objective criteria reflecting the increased value of the property. In some Leasebacks, the Partnership may only purchase the land under an income producing building and lease the land to the building owner. In such cases, the Partnership may seek, in addition to base rents in its Leasebacks, Participations in the gross revenues from the building in a form such as a percentage of the gross revenues of the lessee above a base amount (which may be adjusted if real property taxes increase or for other events). The Partnership may invest in Leasebacks which are subordinate to other interests in the land, buildings, and improvements, such as a first mortgage, other mortgage, or lien. In those situations, the Partnership's Leaseback interest will be subject to greater risks. The Partnership will only acquire a property for a Leaseback if the purchase price is equal to not more than 100% of the estimated or appraised property value. The Partnership may dispose of its Leasebacks when deemed advisable by the investment manager and consistent with the Partnership's investment objectives. General Investment and Operating Policies The Partnership does not intend to invest in any direct ownership interests in properties, mortgage loans or Leasebacks in order to make short term profits from their sale, although in exceptional cases, the investment manager may decide to do so in the best interests of the Partnership. The Partnership may dispose of its investments whenever necessary to meet its cash requirements or when it is deemed to be desirable by the investment manager because of market conditions or otherwise. The Partnership will reinvest any proceeds from the disposition of assets (and any cash flow from operations) which are not necessary for the Partnership's operations and which are not withdrawn by the Partners in order to make distributions to investors pursuant to the variable contracts issued by the Partners, or to Prudential to return its equity interests pursuant to this prospectus. The proceeds will be reinvested in investments consistent with the Partnership's investment objectives and policies. In making investments in properties, mortgage loans, Leasebacks or other real estate investments, the Partnership will rely on the investment manager's analysis of the investment and will not receive an independent appraisal prior to acquisition. The Partnership expects, however, that all the properties it owns, and most mortgage loans it holds, will be appraised or valued annually by an independent appraiser who is a member of a nationally recognized society of appraisers. Each appraisal will be maintained in the Partnership records for at least five years. It should be noted that appraised values are opinions and, as such, may not represent the true worth or realizable value of the property being appraised. The Partnership usually purchases properties on an unleveraged basis. The properties acquired will typically be free and clear of mortgage debt immediately after their acquisition. The Partnership may, however, acquire properties subject to existing mortgage loans. In 6 - Real Property addition, the Partnership may mortgage or acquire properties partly with the proceeds of purchase money mortgage loans, up to 80% of the property value. Although this is not usually done, the Partnership may do so if the investment manager decides that it is consistent with its investment objectives. When the Partnership mortgages its properties, it bears the expense of mortgage payments. See BORROWING BY THE PARTNERSHIP. The Partnership may also invest a portion of its assets in non-participating mortgage loans, real estate limited partnerships, limited liability companies, real estate investment trusts, and other vehicles whose underlying investment is in real estate. The Partnership's investments will be maintained in order to meet the diversification requirements set forth in regulations under the Internal Revenue Code (the "Code") relating to the investments of variable life insurance and variable annuity separate accounts. In order to meet the diversification requirements under the regulations, the Partnership will meet the following test: (1) no more than 55% of the assets will be invested in any one investment; (2) no more than 70% of the assets will be invested in any two investments; (3) no more than 80% of the assets will be invested in any three investments; and (4) no more than 90% of the assets will be invested in any four investments. All interests in the same real property project are treated as a single investment. The Partnership must meet the above test within 30 days of the end of each calendar quarter. To comply with the diversification requirements of the State of Arizona, the Partnership will limit additional investments in any one parcel or related parcels to an amount not exceeding 10% of Partnership's gross assets, as of the prior fiscal year end. In managing the assets of the Partnership, the investment manager will use its discretion in determining whether to foreclose on defaulting borrowers or to evict defaulting tenants. The investment manager will decide which course of action is in the best interests of the Partnership in maintaining the value of the investment. Property management services are usually required for the Partnership's investments in properties which are owned and operated by the Partnership, but usually will not be needed for mortgage loans owned by the Partnership, except for mortgage servicing. It is possible, however, that these services will be necessary or desirable in exercising default remedies under a foreclosure on a mortgage loan. The investment manager may engage, on behalf of the Partnership, Prudential Financial affiliated or unaffiliated entities to provide these additional services to the Partnership. The investment manager may engage Prudential Financial affiliates to provide property management, property development services, loan servicing or other services if and only if the fees paid to an affiliate do not exceed the amount that would be paid to an independent party for similar services rendered in the same geographic area. See CONFLICTS OF INTEREST. The investment manager will manage the Partnership so that the Real Property Account will not be subject to registration under the Investment Company Act of 1940. This requires monitoring the proportion of the Partnership's assets to be placed in various investments. CURRENT REAL ESTATE-RELATED INVESTMENTS The current principal real estate related investments held by the Partnership are described below. Many of these investments were originated by, and previously held in, The Prudential Real Property Account of Pruco Life Insurance Company (the Pruco Life Account ), a separate account established to fund the real estate investment option under variable contracts issued by Pruco Life. Prior to the formation of the Partnership, the Pruco Life Account followed the same investment policies as those followed by the Partnership. Pruco Life contributed the assets held in the Pruco Life Account to the Partnership as its initial capital contribution to the Partnership. Properties As of December 31, 2017 the Partnership owns apartment complexes, retail property, and a storage facility. Detailed information about the above properties can be found later in this prospectus. See INFORMATION ABOUT THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY ACCOUNT for more information about the properties. The following table lists the rentable area of retail properties subject to expiring leases during the next five years, and an aggregate figure for expirations in 2023 and thereafter, in the Account's commercial properties. While many of these leases contain renewal options with varying terms, this chart assumes that none of the tenants exercise their renewal options, including those with terms that expired on December 31, 2017 or are month-to-month leases. Retail Properties Year of Lease Expiration 2018 2019 2020 2021 2022 2023 and thereafter Total Rentable Area Subject to Expiring Leases (sq. ft.) 116,713 112,407 62,111 26,803 66,770 244,994 629,798 Percentage of Total Rentable Area of Partnership's Retail Properties Represented by Expiring Leases 17.52% 16.87% 9.32% 4.02% 10.02% 36.78% 94.53% 7 - Real Property RISK FACTORS There are certain risk factors that you should consider before allocating a portion of your net premiums or purchase payments, or transferring a portion of your Contract Fund, to the Real Property Account. These include valuation risks, (see VALUATION OF CONTRACT OWNERS' PARTICIPATING INTERESTS), certain conflicts of interest, (see CONFLICTS OF INTEREST), as well as the following risks: Liquidity of Investments Because the Real Property Account will, through the Partnership, invest primarily in real estate, its assets will not be as liquid as the investments generally made by separate accounts of life insurance companies funding variable life insurance and variable annuity contracts. The Partnership will, however, hold approximately 10% of its assets in cash and invested in liquid securities. The primary purposes for such investments are to meet the expenses involved in the operation of the Partnership and to allow it to have sufficient liquid assets to meet any requests for withdrawals from the Real Property Account. Such withdrawals would be made in order to meet requested or required payments under the Contracts. The Partnership may also borrow funds to meet liquidity needs. See BORROWING BY THE PARTNERSHIP. We have taken steps to ensure that the Partnership will be liquid enough to meet all anticipated withdrawals by the Partners to meet the separate accounts' liquidity requirements. It is possible that the Partnership may need to dispose of a real property or mortgage loan investment promptly in order to meet such withdrawal requests. General Risks of Real Property Investments By participating in the Real Property Account and thereby in the investment performance of the Partnership, you will be subject to many of the risks of real property investments. These include: 1. Risks of Ownership of Real Properties. The Partnership will be subject to the risks inherent in the ownership of real property such as fluctuations in occupancy rates and operating expenses and variations in rental schedules. It may be adversely affected by general and local economic conditions, the supply of and demand for properties of the type in which the Partnership invests, zoning laws, and real property tax rates. Operation of property in which the Partnership invests will primarily involve rental of that property to tenants. The financial failure of a tenant resulting in the termination of their lease might cause a reduction in the cash flow to the Partnership. If a lease is terminated, there is no assurance that the Partnership will be able to find a new tenant for the property on terms as favorable to the Partnership as those from the prior tenant. Investments in hotels are subject to additional risk from the daily turnover and fluctuating occupancy rates of hotel rooms and the absence of long-term tenants. The Partnership's properties will also be subject to the risk of loss due to certain types of property damage (such as from nuclear power plant accidents and wars) which are either uninsurable or not economically insurable. 2. Risks of Mortgage Loan Investments. The Partnership s mortgage loan investments will be subject to the risk of default by the borrowers. In this event the Partnership would have the added responsibility of foreclosing on or pursuing other remedies on the underlying properties to protect the value of its mortgage loans. A borrower s ability to meet its mortgage loan payments will be dependent upon the risks generally inherent to the ownership of real property. Mortgage loans made by the Partnership will generally not be personal obligations of the borrowers. The Partnership will only rely on the value of the underlying property for its security. Mechanics , material men's, government, and other liens may have or obtain priority over the Partnership s security interest in the property. In addition, the Partnership's mortgage loan investments will be subject to prepayment risks. If the terms of the mortgage loans permit, mortgagors may prepay the loans, thus possibly changing the Partnership's return. Junior mortgage loans (including wraparound mortgage loans) will be subject to greater risk than first mortgage loans, since they will be subordinate to liens of senior mortgagees. In the event a default occurs on a senior mortgage, the Partnership may be required to make payments or take other actions to cure the default (if it has the right to do so) in order to prevent foreclosure on the senior mortgage and possible loss of all or portions of the Partnership's investment. "Due on sale" clauses included in some senior mortgages, accelerating the amount due under the senior mortgage in the case of sale of the property, may be applied to the sale of the property upon foreclosure by the Partnership of its junior mortgage loan. The risk of lending on real estate increases as the proportion, which the amount of the mortgage loan bears to the fair market value of the real estate increases. The Partnership usually does not make mortgage loans of over 80% of the estimated or appraised value of the property that secures the loan. There can be no assurance, that in the event of a default, the Partnership will realize an amount equal to the estimated or appraised value of the property on which a mortgage loan was made. Mortgage loans made by the Partnership may be subject to state usury laws. These laws impose limits on interest charges and possible penalties for violation of those limits, including restitution of excess interest, unenforceability of debt, and treble damages. The Partnership does not intend to make mortgage loans at usurious rates of interest. Uncertainties in determining the legality of interest rates and other borrowing charges under some statutes could result in inadvertent violations, in which case the Partnership could incur the penalties mentioned above. 3. Risks with Participations. The Partnership may seek to invest in mortgage loans and Leasebacks with Participations, which will provide the Partnership with both fixed interest and additional interest based upon gross revenues, sale proceeds, and/or other variable amounts. If the interest income received by the Partnership is based, in part, on a percentage of the gross revenues or sale proceeds of the underlying property, the Partnership's income will depend on the success in the leasing of the underlying property, the management and operation of such property by the borrower or lessee and upon the market value of the property upon ultimate disposition. If the Partnership negotiates a mortgage loan with a lower fixed interest rate and an additional percentage of the gross revenues or eventual sale proceeds of the underlying property, and the underlying property fails to generate increased revenues or to appreciate, the 8 - Real Property Partnership will have foregone a potentially greater fixed return without receiving the benefit of appreciation. State laws may limit Participations. In the event of the borrower's bankruptcy, it is possible that as a result of the Partnership's interest in the gross revenues or sale proceeds, a court could treat the Partnership as a partner or joint venturer with the borrower, and the Partnership could lose the priority its security interest would have been given, or be liable for the borrower s debts. The Partnership will structure its Participations to avoid being characterized as a partner or joint venturer with the borrower. 4. Risks with Sale-Leaseback. Leasebacks typically involve the acquisition of land and improvements thereon and the lease of such land and improvements to the seller or another party. The value of the land and improvements will depend, in large part, on the performance and financial stability of the lessee and its tenants, if any. The tenants leases may have shorter terms than the leaseback. Therefore, the lessee's future ability to meet payment obligations to the Partnership will depend on its ability to obtain renewals of such leases or new leases upon satisfactory terms and the ability of the tenants to meet their rental payments to the lessee. PGIM Real Estate investigates the stability and creditworthiness of lessees in all commercial properties it may acquire, including Leasebacks. However, a lessee in a Leaseback may have few, if any, assets. The Partnership will therefore rely for its security on the value of the land and improvements. When the Partnership's Leaseback interest is subordinate to other interests in the land or improvements, such as a first mortgage or other lien, the Partnership's Leaseback will be subject to greater risk. A default by a lessee or other premature termination of the Leaseback may result in the Partnership being unable to recover its investment unless the property is sold or leased on favorable terms. The ability of the lessee to meet its obligations under the Leaseback, and the value of a property, may be affected by a number of factors inherent in the ownership of real property which are described above. Furthermore, the long term nature of a Leaseback may, in the future, result in the Partnership receiving lower average annual rentals. However, this risk may be lessened if the Partnership obtains Participations in connection with its Leasebacks. Reliance on the Partners and the Investment Manager You do not have a vote in determining the policies of the Partnership or the Real Property Account. You also have no right or power to take part in the management of the Partnership or the Real Property Account. The investment manager alone, subject to the supervision of the Partners, will make all decisions with respect to the management of the Partnership, including the determination as to what properties to acquire, subject to the investment policies and restrictions. Although the Partners have the right to replace the investment manager, it should be noted that Prudential, Pruco Life, Pruco Life of New Jersey, and the investment manager are direct or indirect wholly-owned subsidiaries of Prudential Financial. The Partnership will compete in the acquisition of its investments with many other individuals and entities engaged in real estate activities, including the investment manager and its affiliates. See CONFLICTS OF INTEREST. There may be intense competition in obtaining properties or mortgages in which the Partnership intends to invest. Competition may result in increased costs of suitable investments. Since the Partnership will continuously look for new investments, you will not be able to evaluate the economic merit of many of the investments, which may be acquired by the Partnership. You must depend upon the ability of the investment manager to select investments. INVESTMENT RESTRICTIONS The Partnership has adopted certain restrictions relating to its investment activities. These restrictions may be changed, if the law permits, by the Partners. Pursuant to these restrictions, the Partnership will not: 1. Make any investments not related to real estate, other than liquid instruments and securities. 2. Engage in underwriting of securities issued by others. 3. Invest in securities issued by any investment company. 4. Sell securities short. 5. Purchase or sell oil, gas, or other mineral exploration or development programs. 6. Make loans to the Partners, any of their affiliates, or any investment program sponsored by such parties. 7. Enter into leaseback transactions in which the lessee is Prudential, Pruco Life, Pruco Life of New Jersey, their affiliates, or any investment program sponsored by such parties. 8. Borrow more than 331/3% (pursuant to California state requirements) of the value of the assets of the Partnership (based upon periodic valuations and appraisals). See VALUATION OF CONTRACT OWNERS' PARTICIPATING INTERESTS. DIVERSIFICATION REQUIREMENTS The Partnership s investments are maintained so as to meet the diversification requirements set forth in Treasury Regulations issued pursuant to Section 817(h) of the Internal Revenue Code relating to the investments of variable life insurance and variable annuity separate accounts. Section 817(h) requires, among other things, that the partnership will have no more than 55% of the assets invested in any one investment, no more than 70% of the assets will be invested in any two investments, no more than 80% of the assets will be invested in any three investments, and no more than 90% of the assets will be invested in any four investments. To comply with requirements of the State of Arizona, the Partnership will limit additional investments in any one parcel or related parcels to an amount not exceeding 10% of the Partnership s gross assets as of the prior fiscal year. CONFLICTS OF INTEREST The investment manager, will be subject to various conflicts of interest in managing the Partnership. PGIM invests in real estate equities and mortgages for the general account of Prudential Financial affiliates and for third parties, including through separate accounts established for the benefit of qualified pension and profit sharing plans. PGIM also manages, or advises in the management of, real 9 - Real Property estate equities and mortgages owned by other persons. In addition, affiliates of Prudential Financial are general partners in publicly offered limited partnerships that invest in real estate equities and mortgage loans. Prudential Financial and its affiliates may engage in business activities, which will be competitive with the Partnership. Moreover, the Partnership may purchase properties from Prudential Financial or its affiliates. The potential conflicts involved in managing the Partnership include: 1. Lack of Independent Negotiations between the Partnership and the Investment Manager. All agreements and arrangements relating to compensation between the Partnership and the investment manager, or any affiliate of Prudential Financial, may not be the result of arm's length negotiations. 2. Competition by the Partnership with Prudential Financial s Affiliates for Acquisition and Disposition of Investments. Prudential Financial affiliates are involved in numerous real estate investment activities for their general account, their separate accounts, and other entities. They may involve investment policies comparable to the Partnership s and may compete with the Partnership for the acquisition and disposition of investments. Moreover, additional accounts or affiliated entities may be formed in the future with investment objectives similar to those of the Partnership. In short, existing or future real estate investment accounts or entities managed or advised by Prudential Financial affiliates may have the same management as the Partnership and may be in competition with the Partnership regarding real property investments, mortgage loan investments, Leasebacks, and the management and sale of such investments. Prudential Financial affiliates are not obligated to present to the Partnership any particular investment opportunity, regardless of whether the opportunity would be suitable for investment by the Partnership. Prudential Financial affiliates have, however, adopted procedures to distinguish between equity investments available for the Partnership as opposed to the other programs and entities described above. If investment accounts or entities managed by Prudential Financial affiliates have investment objectives and policies similar to the Partnership and are in the market to acquire properties or make investments at the same time as the Partnership, the following procedures will be followed to resolve any conflict of interest. The Investment Allocation Procedure ( IAP ) has been established to provide a reasonable and fair procedure for allocating real estate investments among the several accounts managed by PGIM Real Estate. The IAP is administered by an Allocation Committee composed of the Managing Directors, Portfolio Management. Allocation decisions are made by vote of the Allocation Committee, and are approved by the Chief Executive Officer of PGIM Real Estate ( CEO ). Sufficient information on each investment opportunity is distributed to all portfolio managers, who each indicate to the Allocation Committee their account s interest in the opportunity. Based on such expressions of interest, the Allocation Committee allocates the investment opportunity to an account (and may also determine a back-up account or accounts to receive the allocation in the event the account, which is first allocated the opportunity, fails to pursue the investment for any reason) after giving appropriate consideration to the following factors and with the goal of providing each account a fair allotment of investment opportunities: (1) the investment opportunity s conformity with an account s investment criteria and objectives (including property type, size and location, diversification, anticipated returns, investment structure, etc.); (2) the amount of funds available for investment (in total and by property type) by an account; (3) the length of time such funds (in total and by property type) have been available for investment; (4) any limitations or restrictions upon the availability of funds for investment; (5) the absolute and relative (to amount of funds available) amount of funds invested and committed for the account; (6) whether funds available for investment are discretionary or non-discretionary, particularly in relation to the timing of the investment opportunity; (7) an account s prior dealings or investments with the seller, developer, lender or other counterparty; and (8) other factors which the Allocation Committee feel should be considered in fairness to all accounts participating in the IAP. If an account which has been allocated an investment opportunity does not proceed with the acquisition, and either (i) no back-up account has been determined by the Allocation Committee, or (ii) all accounts which were deemed back-up accounts do not proceed with the acquisition, the opportunity may be reallocated to another account by the Allocation Committee. If an investment opportunity is appropriate for more than one account, the Allocation Committee may (subject to the CEO s approval) permit the sharing of the investment among accounts, which permit such sharing. Such division of the investment opportunity may be accomplished by separating properties (in a multi-property investment), by co-investment, or otherwise. 3. Competition with the Partnership from Affiliates for the Time and Services of Common Officers, Directors, and Management Personnel. As noted above, PGIM and Prudential Financial affiliates are involved in numerous real estate investment activities. Accordingly, many of the personnel of PGIM and Prudential Financial affiliates who will be involved in performing services for the Partnership have competing demands on their time. Conflicts of interest may arise with respect to allocating time among such entities and the Partnership. The directors and officers of Prudential Financial and affiliates will determine how much time will be devoted to the Partnership affairs. Prudential Financial believes it has sufficient personnel to meet its responsibilities to all entities to which it is affiliated. 4. Competitive Properties. Some properties of affiliates may be competitive with Partnership properties. Among other things, the properties could be in competition with the Partnership's properties for prospective tenants. 5. Lessee Position. It is possible that Prudential Financial or its affiliates may be a lessee in one or more of the properties owned by the Partnership. The terms of such a lease will be competitive with leases with non affiliated third parties. The Partnership limits the amount of space that an affiliate of Prudential may rent in a property owned by the Partnership. 6. Use of Affiliates to Perform Additional Services for the Partnership. The Partnership may engage Prudential Financial affiliates to provide additional services to the Partnership, such as real estate brokerage, mortgage servicing, property management, leasing, property development, and other real estate related services. The Partnership may utilize the services of such affiliates and pay their fees, as long as the fees paid to an affiliate do not exceed the amount that would be paid to an independent party for similar services rendered in the same geographic area. 7. Joint Ventures with Affiliates. The Partnership may enter into investments through joint ventures with Prudential Financial, its affiliates, or investment programs they sponsor. The Partnership may enter into such a joint venture investment with an affiliate only 10 - Real Property if the following conditions are met: (1) the affiliate must have investment objectives substantially identical to those of the Partnership; (2) there must be no duplicative property management fee, mortgage servicing fee or other fees; (3) the compensation payable to the sponsor of the affiliate must be no greater than that payable to the Partnership's investment manager; (4) the Partnership must have a right of first refusal to buy if such affiliate wishes to sell the property held in the joint venture; and (5) the investment of the Partnership and the affiliate in the joint venture must be made on the same terms and conditions (although not the same percentage). In connection with such an investment, both affiliated parties would be required to approve any decision concerning the investment. Thus, an impasse may result in the event the affiliated joint venture partners disagree. However, in the event of a disagreement regarding a proposed sale or other disposition of the investment, the party not desiring to sell would have a right of first refusal to purchase the affiliated joint venture partner's interest in the investment. If this happens, it is possible that in the future the joint venture partners would no longer be affiliated. In the event of a proposed sale initiated by the joint venture partner, the Partnership would also have a right of first refusal to purchase the joint venture partner's interest in the investment. The exercise of a right of first refusal would be subject to the Partnership's having the financial resources to effectuate such a purchase. If the Partnership invests in joint venture partnerships which own properties, instead of investing directly in the properties themselves, they may be subject to risks not otherwise present. These risks include risks associated with the possible bankruptcy of the Partnership's co venturer or such co venturer at any time having economic or business interests or goals which are inconsistent with those of the Partnership. 8. Purchase of Real Property from Prudential Financial or Affiliates. The Partnership may acquire properties owned by Prudential Financial or its affiliates, subject to compliance with special conditions designed to minimize the conflicts of interests. The Partnership may purchase property satisfying the Partnership's investment objectives and policies from an affiliate only if: (1) the applicable insurance regulators approve the Partnership s acquisition of real property from Prudential Financial or affiliates to the extent such approval is required under applicable insurance regulations; (2) the Partnership acquires the property at a price not greater than the appraised value, with the appraisal being conducted by a qualified, unaffiliated appraiser; (3) a qualified and independent real estate adviser (other than the appraiser) reviews the proposed acquisition and provides a letter of opinion that the transaction is fair to the Partnership; and (4) the affiliate has owned the property at least two years, the cost paid by the affiliate is established, and any increase in the proposed purchase price over the cost to the affiliate is, in the opinion of the independent real estate adviser, explicable by material factors (including the passage of time) that have increased the value of the property. THE REAL PROPERTY ACCOUNT S UNAVAILABILITY TO CERTAIN CONTRACTS Pruco Life of New Jersey has determined that it is in the best interest of Contract owners participating in the Real Property Account to provide the Real Property Account with the flexibility to engage in transactions that may be prohibited if the Real Property Account accepts funds under Contracts subject to ERISA or the prohibited transaction excise tax provisions of the Internal Revenue Code. Accordingly, owners of Pruco Life of New Jersey Contracts that are purchased in connection with: (1) IRAs; (2) tax deferred annuities subject to Section 403(b) of the Code; (3) other employee benefit plans which are subject to ERISA; or (4) prohibited transaction excise tax provisions of the Code, may not select the Real Property Account as one of the investment options under their Contract. By not offering the Real Property Account as an investment option under such contracts, Pruco Life of New Jersey is able to comply with state insurance law requirements that policy loans be made available to Contract owners. VALUATION OF CONTRACT OWNERS PARTICIPATING INTERESTS A Contract owner's interest in the Real Property Account will initially be the amount they allocated to the Real Property Account. Thereafter, that value will change daily. The value of a Contract owner's interest in the Real Property Account at the close of any day is equal to its amount at the close of the preceding day, multiplied by the "net investment factor" for that day arising from the Real Property Account's participation in the Partnership, plus any additional amounts allocated to the Real Property Account by the Contract owner, and reduced by any withdrawals by the Contract owner from the Real Property Account and by the applicable Contract charges recorded in that Contract's subaccount. Some of the charges will be made: (1) daily; (2) on the Contract's monthly anniversary date; (3) at the end of each Contract year; and (4) upon withdrawal or annuitization. Periodically Pruco Life of New Jersey will withdraw from the Real Property Account an amount equal to the aggregate charges recorded in the subaccounts. The "net investment factor" is calculated on each business day by dividing the value of the net assets of the Partnership at the end of that day (ignoring, for this purpose, changes resulting from new contributions to or withdrawals from the Partnership) by the value of the net assets of the Partnership at the end of the preceding business day. The value of the net assets of the Partnership at the end of any business day is equal to the sum of all cash held by the Partnership plus the aggregate value of the Partnership s liquid securities and instruments, the individual real properties and the other real estate related investments owned by the Partnership, determined in the manner described below, and an estimate of the accrued net operating income earned by the Partnership from properties and other real estate related investments, reduced by the liabilities of the Partnership, including the daily investment management fee and certain other expenses attributable to the operation of the Partnership. See CHARGES. The Partnership may invest in various liquid securities and instruments. These investments will generally be carried at their market value as determined by a valuation method, which the Partners deem appropriate for the particular type of liquid security or instrument. The value of the individual real properties and other real estate related investments, including mortgages, acquired by the Partnership will be determined as follows. Each property or other real estate related investment acquired by the Partnership will initially be valued at its purchase price. In acquiring a property or other real estate related investment, PGIM will not obtain an independent appraisal but will instead rely on its own analysis of the investment's fair market value. Thereafter, all properties and most real estate related investments will ordinarily be appraised by an independent appraiser at least annually. At least every three months, PGIM will review each property or other real estate related investments and adjust its valuation if it concludes there has been a change in the value of the property or other real estate related investment since the last valuation. The revised value will remain in effect and will be used 11 - Real Property in each day's calculation of the value of the Partnership's assets until the next review or appraisal. It should be noted that appraisals are only estimates and do not necessarily reflect the realizable value of an investment. The estimated amount of the net operating income of the Partnership from properties and other real estate related investments will be based on estimates of revenues and expenses for each property and other real estate related investments. Annually, PGIM will prepare a month by month estimate of the revenues and expenses ("Estimated Net Operating Income") for each property and other real estate related investments owned by the Partnership. Each day PGIM will add to the value of the assets, as determined above, a proportionate part of the Estimated Net Operating Income for the month. In effect, PGIM will establish a daily accrued receivable of the Estimated Net Operating Income from each property and other real estate related investments owned by the Partnership (the "Daily Accrued Receivable"). On a monthly basis, the Partnership will receive a report of actual operating results for each property and other real estate related investments ("Actual Net Operating Income"). Such Actual Net Operating Income will be recognized on the books of the Partnership and the amount of the then outstanding daily accrued receivable will be correspondingly adjusted. In addition, as cash from a property or other real estate related investment is actually received by the Partnership, receivables and other accounts will be appropriately adjusted. Periodically, but at least every three months, PGIM will review its prospective estimates of net operating income in light of actual experience and make an adjustment to such estimates if circumstances indicate that such an adjustment is warranted. PGIM follows this practice of accruing Estimated Net Operating Income from properties and other real estate related investments because net operating income from such investments is generally received on an intermittent rather than daily basis, and the Partners believe it is more equitable to participating Contract owners if such net operating income is estimated and a proportionate amount is recognized daily. Because the daily accrual of Estimated Net Operating Income is based on estimates that may not turn out to reflect actual revenue and expenses, Contract owners will bear the risk that this practice will result in the undervaluing or overvaluing of the Partnership's assets. PGIM may adjust the value of any asset held by the Partnership based on events that have increased or decreased the realizable value of a property or other real estate related investment. For example, adjustments may be made for events indicating an impairment of a borrower's or a lessee's ability to pay any amounts due or events, which affect the property values of the surrounding area. There can be no assurance that the factors for which an adjustment may be made will immediately come to the attention of PGIM. Additionally, because the evaluation of such factors may be subjective, there can be no assurance that such adjustments will be timely made in all cases where the value of the Partnership's investments may be affected. All adjustments made to the valuation of the Partnership's investments, including adjustments to Estimated Net Operating Income, the daily accrued receivable, and adjustments to the valuation of properties and other real estate related investments, will be on a prospective basis only. The above method of valuation of the Partnership's assets may be changed, without the consent of Contract owners, should the Partners determine that another method would more accurately reflect the value of the Partnership s investments. Changes in the method of valuation could result in a change in the Contract Fund values, which may have either an adverse or beneficial effect on Contract owners. Information concerning any material change in the valuation method will be given in FINANCIAL STATEMENTS OF THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP. Although the above described valuation methods have been adopted because the Partners believe they will provide a reasonable way to estimate the fair market value of the Partnership's investments, there may well be variations between the amount realizable upon disposition and the Partnership's valuation of such assets. Contract owners may be either favorably or adversely affected if the valuation method results in either overvaluing or undervaluing the Partnership's investments. If a Contract owner invests in the Real Property Account at a time in which the Partnership's investments are overvalued, the Contract owner will be credited with less of an interest than if the value had been correctly stated. A Contract owner withdrawing from the Real Property Account during such time will receive more than he or she would if the value had been correctly stated, to the detriment of other Contract owners. The converse situation will exist if the Partnership's assets are undervalued. BORROWING BY THE PARTNERSHIP The Partnership may borrow for Partnership purposes, including to meet its liquidity requirements and the leveraging of currently-owned property to buy new property, subject to a maximum debt to value ratio of 331/3% (pursuant to California state requirements) based on the aggregate value of all Partnership assets. The Partnership will bear the cost of all such borrowings. The Real Property Account, and Contract owners participating in it, will bear a portion of any borrowing costs equal to their percentage interest in the Partnership. Moreover, although the Partnership will generally make unleveraged investments, it reserves the right to borrow up to 80% of the value of a property (with the value of a property determined as explained under VALUATION OF CONTRACT OWNERS' PARTICIPATING INTERESTS). Increasing the Partnership's assets through leveraged investments would increase the compensation paid to PGIM since its investment management fee is a percentage of the Partnership's gross assets. Any borrowing by the Partnership would increase the Partnership's risk of loss. It could also inhibit the Partnership from achieving its investment objectives because the Partnership's payments on any loans would have to be made regardless of the profitability of its investments. CHARGES Pursuant to the investment management agreement, the Partnership pays a daily investment management fee, which is equal to an effective annual rate of 1.25% of the average daily gross assets of the Partnership. Certain other expenses and charges attributable to the operation of the Partnership are also charged against the Partnership. In acquiring an investment, the Partnership may incur various types of expenses paid to third parties, including but not limited to, brokerage fees, attorneys' fees, architects' fees, engineers' fees, and accounting fees. After acquisition of an investment, the Partnership will incur recurring expenses for the preparation of annual and semi-annual reports, periodic appraisal costs, mortgage servicing fees, annual audit charges, accounting and legal fees, and various administrative expenses. These expenses will be charged against the Partnership's assets. Some of these operating expenses represent reimbursement of the investment manager for the cost of providing certain services necessary to the operation of the Partnership, such as daily accounting services, preparation of annual and semi-annual reports, and various administrative services. The investment manager charges the Partnership mortgage loan servicing fees pursuant to the standards outlined in item 6 under CONFLICTS OF 12 - Real Property INTEREST. In addition to the various expenses charged against the Partnership's assets, other expenses such as insurance costs, taxes, and property management fees will ordinarily be deducted from rental income, thereby reducing the gross income of the Partnership. As explained earlier, charges to the Contracts will be recorded in the corresponding subaccounts of the Real Property Account. From time to time, Pruco Life of New Jersey will withdraw from the Real Property Account an amount equal to the aggregate amount of these charges. Aside from the charges to the Contracts, Pruco Life of New Jersey does not charge the Real Property Account for the expenses involved in the Real Property Account s operation. The Real Property Account will, however, bear its proportionate share of the charges made to the Partnership as described above. The Partnership is not a taxable entity under the provisions of the Internal Revenue Code. The income, gains, and losses of the Partnership are attributed, for federal income tax purposes, to the Partners in the Partnership. The earnings of the Real Property Account are, in turn, taxed as part of the operations of Pruco Life of New Jersey. Pruco Life of New Jersey is currently not charging the Real Property Account for company federal income taxes. Pruco Life of New Jersey may make such a charge in the future. Under current laws Pruco Life of New Jersey may incur state and local taxes (in addition to premium taxes) in several states. At present, Pruco Life of New Jersey does not charge these taxes against the Contracts or the Real Property Account, but Pruco Life of New Jersey may decide to charge the Real Property Account for such taxes in the future. RESTRICTIONS ON WITHDRAWALS Before allocating any portion of your net premium or purchase payments, or transferring any portion of your Contract Fund, to the Real Property Account, you should be aware that withdrawals from the Real Property Account may have greater restrictions than the other variable investment options available under the Contracts. Pruco Life of New Jersey reserves the right to restrict transfers into or out of the Real Property Account. Apart from the limitations on transfers out of the Real Property Account described below, Pruco Life of New Jersey will only restrict transfers out of the Real Property Account if there is insufficient cash available to meet Contract owners' requests and prompt disposition of the Partnership's investments to meet such requests could not be made on commercially reasonable terms. Generally, we will pay any death benefit, cash surrender value, loan proceeds, or partial withdrawal within seven days after all the documents required for such a payment are received at the Service Office. Other than the death benefit, which is determined as of the date of death, the amount will be determined as of the end of the valuation period in which the necessary documents are received at a Service Office. The funds necessary to pay any death benefit, cash surrender value, withdrawal or loan proceeds funded by the Real Property Account will normally be obtained, first, from any cash flows into the Real Property Account on the day the funds are required. If, on the day the funds are required, cash flows into the Real Property Account are less than the amount of funds required, Pruco Life of New Jersey will seek to obtain such funds by withdrawing a portion of its interest in the Partnership. The Partnership will normally obtain funds to meet such a withdrawal request from its net operating income and from the liquid securities and instruments it holds. If the Partners determine that these sources are insufficient to meet anticipated withdrawals from the Partnership, the Partnership may use a line of credit or otherwise borrow up to 331/3% (pursuant to California state requirements) of the value of the Partnership's assets. See BORROWING BY THE PARTNERSHIP. If the Partners determine that such a borrowing by the Partnership would not serve the best interests of Contract owners, Pruco Life of New Jersey may, in the event of a Contract loan or withdrawal, rather than take the amount of any loan or withdrawal request proportionately from all investment options under the Contract (including the Real Property Account), take any such loan or withdrawal first from the other investment options under the Contract. Transfers from the Real Property Account to the other investment options available under the Contract are currently permitted only during the 30 day period beginning on the Contract anniversary. The maximum amount that may be transferred out of the Real Property Account each year is the greater of: (a) 50% of the amount invested in the Real Property Account or (b) $10,000. Such transfer requests received prior to the Contract anniversary will be effected on the Contract anniversary. Transfer requests received within the 30 day period beginning on the Contract anniversary will be effected as of the end of the valuation period in which a proper written request or authorized telephone request is received. The "valuation period" means the period of time from one determination of the value of the amount invested in the Real Property Account to the next. Such determinations are made when the value of the assets and liabilities of the Partnership is calculated, which is generally at 4:00 p.m. Eastern time on each day during which the New York Stock Exchange is open. Transfers into or out of the Real Property Account are also subject to the general limits under the Contracts. RESTRICTIONS ON CONTRACT OWNERS INVESTMENT IN THE REAL PROPERTY ACCOUNT As explained earlier, identification and acquisition of real estate investments meeting the Partnership's investment objectives is a time consuming process. Because the Real Property Account and the Partnership are managed so they will not become investment companies subject to the Investment Company Act of 1940, the portion of the Partnership's assets that may be invested in securities, as opposed to non securities real estate investments, is strictly limited. For these reasons, Pruco Life of New Jersey reserves the right to restrict or limit Contract owners' allocation of funds to the Real Property Account. Any such restrictions are likely to take the form of restricting the timing, amount and/or frequency of transfers into the Real Property Account and/or precluding Contract owners who have not previously selected the Real Property Account from allocating a portion of their net premiums or purchase payments to the Real Property Account. 13 - Real Property FEDERAL INCOME TAX CONSIDERATIONS The federal income tax treatment of Contract benefits is described briefly in the attached prospectus for the particular Contract you selected. Pruco Life of New Jersey believes that the same principles will apply with respect to Contracts funded in whole or part by the Real Property Account. The Partnership's conformity with the diversification standards for the investments of variable life insurance and variable annuity separate accounts is essential to ensure that treatment. See Investment Policies-General Investment and Operating Policies. Pruco Life of New Jersey urges you to consult a qualified tax adviser. Under the Internal Revenue Code, the Partnership is not a taxable entity and any income, gains or losses of the Partnership are passed through to the Partners, including Pruco Life of New Jersey, with respect to the Real Property Account. The Real Property Account is not a separate taxpayer for purposes of the Internal Revenue Code. The earnings of the Real Property Account are taxed as part of the operations of Pruco Life of New Jersey. No charge is currently being made to the Real Property Account for company federal income taxes. We may make such a charge in the future, see CHARGES. DISTRIBUTION OF THE CONTRACTS As explained in the attached prospectus for the Contracts, Pruco Securities, LLC, an indirect wholly owned subsidiary of Prudential Financial, acts as the principal underwriter of the Contracts. Consult that prospectus for information about commission scales and other facts relating to sale of the Contracts. STATE REGULATION Pruco Life of New Jersey is subject to regulation and supervision by the Department of Insurance of the State of New Jersey, which periodically examines its operations and financial condition. It is also subject to the insurance laws and regulations of all jurisdictions in which it is authorized to do business. Pruco Life of New Jersey is required to submit annual statements of its operations, including financial statements, to the insurance departments of the various jurisdictions in which it does business to determine solvency and compliance with local insurance laws and regulations. In addition to the annual statements referred to above, Pruco Life of New Jersey is required to file with New Jersey and other jurisdictions a separate statement with respect to the operations of all its variable contract accounts, in a form promulgated by the National Association of Insurance Commissioners. ADDITIONAL INFORMATION Pruco Life of New Jersey has filed a registration statement with the SEC under the Securities Act of 1933, relating to the offering described in this prospectus. This prospectus does not include all of the information set forth in the registration statement. Certain portions have been omitted pursuant to the rules and regulations of the SEC. All reports and information filed by Pruco Life of New Jersey can be inspected and copied at the Public Reference Section of the Commission at 100 F Street, N.E., Washington, D.C. 20549, and at certain of its regional offices: Midwestern Regional Office, 175 West Jackson Boulevard, Suite 900, Chicago, IL 60604; Northeastern Regional Office SEC, 233 Broadway, New York, NY 10279, or by telephoning (202) 551-8090. The SEC maintains a Web site (http://www.sec.gov) that contains material incorporated by reference and other information regarding registrants that file electronically with the SEC. Pursuant to the delivery obligations under Section 5 of the Securities Act of 1933 and Rule 159 thereunder, Pruco Life Insurance Company of New Jersey delivers this prospectus to contract owners that reside outside of the United States. Further information may also be obtained from Pruco Life of New Jersey. The address and telephone number are on the cover of this prospectus. EXPERTS The financial statements of the Partnership as of December 31, 2017 and 2016 and for each of the three years in the period ended December 31, 2017, the financial statement schedule of the Partnership as of December 31, 2017 and the financial statements of the Real Property Account as of December 31, 2017 and 2016 and for each of the three years in the period ended December 31, 2017 included in this prospectus have been so included in reliance on the reports of PricewaterhouseCoopers LLP, an independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting. LITIGATION No litigation is pending, and no litigation is known to be contemplated by governmental authorities, that would have an adverse material effect upon the Real Property Account or the Partnership. REPORTS TO CONTRACT OWNERS If you allocate a portion of your Contract Fund to the Real Property Account, Pruco Life of New Jersey will mail you an annual and semi-annual report and any other information that may be required by applicable regulation or law. 14 - Real Property PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION Item of Expense Estimated Expense Registration fees $ Federal taxes $12,500 per $1 million of premium payments State taxes $25,000 per $1 million of premium payments Printing Costs $10,000* Legal Costs N/A Accounting Costs $10,000* * Estimated Expense ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS The Registrant, in connection with certain affiliates, maintains various insurance coverages under which the underwriter and certain affiliated persons may be insured against liability, which may be incurred in such capacity, subject to the terms, conditions, and exclusions of the insurance policies. New Jersey, being the state of organization of Pruco Life Insurance Company of New Jersey ("Pruco Life of New Jersey"), permits entities organized under its jurisdiction to indemnify directors and officers with certain limitations. The relevant provisions of New Jersey law permitting indemnification can be found in Section 14A:3-5 of the New Jersey Statutes Annotated. The text of Pruco Life of New Jersey's By-law, Article V, which relates to indemnification of officers and directors, is incorporated by reference to Exhibit Item 16.(a)(3C) on Form S-1, Registration No. 333-158230, filed March 27, 2009 on behalf of The Pruco Life of New Jersey Variable Contract Real Property Account. Insofar as indemnification for liabilities arising under the Securities Act of 1933 (the "Act") may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES Not Applicable. ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES (a) Exhibits (1A) Distribution Agreement between Pruco Securities, LLC and Pruco Life Insurance Company of New Jersey with respect to the Pruco Life of New Jersey Variable Insurance Account. Incorporated by reference to Post Effective Amendment No. 24 to Form S 6, Registration No. 2 81243, filed April 29, 1997, on behalf of the Pruco Life of New Jersey Variable Insurance Account. (1B) Distribution Agreement between Pruco Securities, LLC and Pruco Life Insurance Company of New Jersey with respect to the Pruco Life of New Jersey Variable Appreciable Account. Incorporated by reference to Post-Effective Amendment No. 26 to Form S 6, Registration No. 2 89780, filed April 28, 1997, on behalf of the Pruco Life of New Jersey Variable Appreciable Account. II-1 (1C) Distribution Agreement between Pruco Securities, LLC and Pruco Life Insurance Company of New Jersey with respect to the Pruco Life of New Jersey Single Premium Variable Life Account and Pruco Life of New Jersey Single Premium Variable Annuity Account. Incorporated by reference to Post-Effective Amendment No. 9 to Form S-1, Registration No. 33-20018, filed April 9, 1997, on behalf of the Pruco Life of New Jersey Variable Contract Real Property Account. (3A) Certificate of Incorporation of Pruco Life Insurance Company of New Jersey, as amended March 11, 1983. Incorporated by reference to Registration Statement Form S-1, Registration Number 333-158230 filed March 27, 2009 on behalf of The Pruco Life of New Jersey Variable Contract Real Property Account. (3B) a. Certificate of Amendment of the Certificate of Incorporation of Pruco Life Insurance Company of New Jersey, February 12, 1998 Incorporated by reference to Post-Effective Amendment No. 40 to Registration Statement 002-89780, filed April 21, 2009 on behalf of the Pruco Life of New Jersey Variable Appreciable Account. (3B) b. Certificate of Amendment of the Certificate of Incorporation of Pruco Life Insurance Company of New Jersey, October 1, 2012. Incorporated by reference to Registration Statement Form S-1, Registration Statement 333-202194 filed February 20, 2015 on behalf of The Pruco Life of New Jersey Variable Contract Real Property Account. (3C) By Laws of Pruco Life Insurance Company of New Jersey, as amended August 4, 1999. Incorporated by reference to Registration Statement Form S-1, Registration Number 333-158230 filed March 27, 2009 on behalf of The Pruco Life of New Jersey Variable Contract Real Property Account. (3D) Resolution of the Board of Directors establishing Pruco Life of New Jersey Variable Contract Real Property Account. Incorporated by reference to Post-Effective Amendment No. 9 to Form S-1, Registration No. 33-20018, filed April 9, 1997, on behalf of the Pruco Life of New Jersey Variable Contract Real Property Account. (4A) Variable Life Insurance Contract. Incorporated by reference to Post Effective Amendment No. 24 to Form S 6, Registration No. 2 81243, filed April 29, 1997, on behalf of the Pruco Life of New Jersey Variable Insurance Account. (4B)(i) Revised Variable Appreciable Life Insurance Contract with fixed death benefit. Incorporated by reference to Post-Effective Amendment No. 26 to Form S 6, Registration No. 2 89780, filed April 28, 1997, on behalf of the Pruco Life of New Jersey Variable Appreciable Account. (4B)(ii) Revised Variable Appreciable Life Insurance Contract with variable death benefit. Incorporated by reference to Post-Effective Amendment No. 26 to Form S 6, Registration No. 2 89780, filed April 28, 1997, on behalf of the Pruco Life of New Jersey Variable Appreciable Account. (4C) Single Premium Variable Annuity Contract. Incorporated by reference to Post-Effective Amendment No. 9 to Form S-1, Registration No. 33-20018, filed April 9, 1997, on behalf of the Pruco Life of New Jersey Variable Contract Real Property Account. (4D) Flexible Premium Variable Life Insurance Contract. Incorporated by reference to Post-Effective Amendment No. 9 to Form S-1, Registration No. 33-20018, filed April 9, 1997, on behalf of the Pruco Life of New Jersey Variable Contract Real Property Account. II-2 (5) Opinion and Consent of Jordan K. Thomsen, Esq., as to the legality of the securities being registered. Filed herewith. (10A) Investment Management Agreement between Prudential Investment Management, Inc. and The Prudential Variable Contract Real Property Partnership. Incorporated by reference to Post-Effective Amendment No. 16 to Form S-1, Registration No. 33-20083-01, filed April 10, 2003, on behalf of the Prudential Variable Contract Real Property Account. (10B) Administrative Service Agreement among PIM, Prudential Insurance Company of America, Pruco Life Insurance Company, and Pruco Life Insurance Company of New Jersey. Incorporated by reference to Post-Effective Amendment No. 17 to Form S-1, Registration No. 33 20083-01, filed April 14, 2004 on behalf of the Prudential Variable Contract Real Property Account. (10C) Partnership Agreement of The Prudential Variable Contract Real Property Partnership. Incorporated by reference to Post-Effective Amendment No. 9 to Form S-1, Registration No. 33-20018, filed April 9, 1997, on behalf of the Pruco Life of New Jersey Variable Contract Real Property Account. (23A) Written consent of PricewaterhouseCoopers LLP, independent registered public accounting firm. Filed herewith. (23B) Written consent of Jordan K. Thomsen, Esq. Incorporated by reference to Exhibit (5) hereto. (24) Powers of Attorney:John Chieffo, Caroline A. Feeney, Lori D. Fouch , Christine Knight, Kent D. Sluyter, Kenneth Y. Tanji, Candace Woods. Filed herewith. (b) Financial Statement Schedules Schedule III Real Estate Owned by The Prudential Variable Contract Real Property Partnership and independent accountant's report thereon. Filed herewith. (c) Financial Statements Financial Statements of Pruco Life of New Jersey Variable Contract Real Property Account and the consolidated Financial Statements of The Prudential Variable Contract Real Property Partnership. Filed herewith. II-3 ITEM 17. UNDERTAKINGS The undersigned registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (i) To include any prospectus required by Section 10 (a)(3) of the Securities Act of 1933; (ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; and (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement. (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at the time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (4) That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser: each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness; provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use. (5) That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities: The undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser: (i) Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424; (ii) Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant; (iii) The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and (iv) Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser. (6) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. II-4 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, this registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Newark, State of New Jersey, on the 12th day of April, 2018. Pruco Life Insurance Company of New Jersey In Respect of Pruco Life of New Jersey Variable Contract Real Property Account By: /s/ Jordan K. Thomsen Jordan K. Thomsen Vice President and Corporate Counsel Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed below by the following persons in the capacities indicated on this 12th day of April, 2018. Signature and Title /s/ * John Chieffo Vice President, Chief Financial Officer, Chief Accounting Officer, and Director /s/ * Caroline Feeney Director /s/ * Lori D. Fouch Director *By: /s/ Jordan K. Thomsen /s/ * Jordan K. Thomsen Christine Knight (Attorney-in-Fact) Vice President and Director /s/ * Kent D. Sluyter President, Chief Executive Officer, and Director /s/ * Kenneth Y. Tanji Treasurer and Director /s/ * Candace Woods Director II-5 EXHIBIT INDEX Item 16. (a) (5) Opinion and Consent of Jordan K. Thomsen, Esq., as to the legality of the securities being registered. (a) (23A) Written consent of PricewaterhouseCoopers LLP, independent registered public accounting firm. (a) (24) Powers of Attorneys II-6 Appendix: Information about Pruco Life of New Jersey Variable Contract Real Property Account Table of Contents Page No. Risk Factors A-2 Market for Registrant s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities A-5 Selected Financial Data A-5 Management s Discussion and Analysis of Financial Condition and Results of Operations A-6 Quantitative and Qualitative Disclosures About Market Risk A-14 Market Conditions A-14 Property Markets A-14 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure A-14 Directors, Executive Officers and Corporate Governance A-15 Code of Ethics A-15 Executive Compensation A-16 Certain Relationships and Related Transactions, and Director Independence A-16 Principal Accounting Fees and Services A-16 Financial Statements and Supplementary Data A-17 Financial Statements of Pruco Life of New Jersey Variable Contract Real Property Account B-1 Financial Statements of The Prudential Variable Contract Real Property Partnership C-1 Risk Factors This "Risk Factors" section provides a summary of some of the significant risks. Many of these risks are interrelated and could occur under similar business and economic conditions, and the occurrence of certain of them may in turn cause the emergence or exacerbate the effect of others. Such a combination could materially increase the severity of the impact of these risks on our businesses, results of operations, financial condition and liquidity. Throughout this section we , our , and "Company" refer to Pruco Life Insurance Company of New Jersey. Market fluctuations and general economic, market and political conditions may adversely affect our business and profitability. Our business and our results of operations may be materially adversely affected by conditions in the global financial markets and by economic conditions generally. Even under relatively favorable market conditions, our insurance and annuity products, as well as our investment returns and our access to and cost of financing, are sensitive to fixed income, equity, real estate and other market fluctuations and general economic, market and political conditions. These fluctuations and conditions could adversely affect our results of operations, financial position and liquidity, including in the following respects: The profitability of many of our insurance and annuity products depends in part on the value of the separate accounts supporting these products, which can fluctuate substantially depending on the foregoing conditions. A change in market conditions, such as high inflation and high interest rates, could cause a change in consumer sentiment and behavior adversely affecting sales and persistency of our savings and protection products. Conversely, low inflation and low interest rates could cause persistency of these products to vary from that anticipated and adversely affect profitability (as further described below). Similarly, changing economic conditions and unfavorable public perception of financial institutions can influence customer behavior, including increasing claims or surrenders in certain product lines. Adverse capital market conditions could significantly affect our ability to meet liquidity needs, our access to capital and our cost of capital, including capital that may be required by the Company's subsidiaries. Under such conditions, we may seek additional debt or equity capital but may be unable to obtain it. Adverse capital market conditions could affect the availability and cost of borrowed funds and could impact our ability to refinance existing borrowings, thereby ultimately impacting our profitability and ability to support or grow our businesses. We need liquidity to pay our operating expenses, interest and maturities on our debt and dividends on our capital stock. The principal sources of our liquidity are insurance premiums, annuity considerations, cash flow from our investment portfolio, and fees from separate account assets. In the normal course of business, The Prudential Variable Real Property Partnership (the "Partnership") enters into loan agreements with certain lenders to finance its real estate investment transactions. Unfavorable economic conditions could increase related borrowing costs, limit access to the capital markets or result in a decision by lenders not to extend credit to the Partnership. There is no guarantee that the Partnership s borrowing arrangements or ability to obtain leverage will continue to be available, or if available, will be available on terms and conditions acceptable to the Partnership. Further, these loan agreements contain, among other conditions, events of default and various covenants and representations. In the normal course of business, the Partnership may be in the process of renegotiating terms for loans outstanding that have passed their maturity dates. At December 31, 2017, the Partnership had no outstanding matured loans. A decline in market value of the Partnership s assets may also have particular adverse consequences in instances where the Partnership borrowed money based on the fair value of specific assets. A decrease in market value of these assets may result in the lender requiring the Partnership to post additional collateral or otherwise repay these loans. In the event the Partnership s current investment obligations are not refinanced or extended when they become due and/or the Partnership is required to repay such borrowings and obligations, management anticipates that the repayment of these obligations will be provided by operating cash flow, new debt refinancing, and/or real estate investment sales. The companies offering the variable life insurance and variable annuity contracts and the Partnership are heavily regulated and changes in regulation may adversely affect our results of operations and financial condition. Our business is subject to comprehensive regulation and supervision. The purpose of this regulation is primarily to protect our customers and not necessarily our shareholders or debt holders. Many of the laws and regulations to which we are subject, are regularly re-examined, and existing or future laws and regulations may become more restrictive or otherwise adversely affect our operations. The financial market dislocations we have experienced have produced, and are expected to continue to produce, extensive changes in existing laws and regulations, and regulatory frameworks, applicable to our business. Compliance with applicable laws and regulations is time consuming and personnel-intensive, and changes in these laws and regulations may materially increase our direct and indirect compliance and other expenses of doing business, and thereby have a material adverse effect on our financial condition or results of operations. Changes in accounting requirements could negatively impact our reported results of operations and our reported financial position. Accounting standards are continuously evolving and subject to change. For example, the Financial Accounting Standards Board ("FASB") has an ongoing project to revise accounting standards for long duration insurance contracts. While the final resolution of changes to U.S. generally accepted accounting principles ("U.S. GAAP") pursuant to this project is unclear, changes to the manner in which we account for insurance products, or other changes in accounting standards, could have a material effect on our reported results of operations and financial condition. Further, changes in accounting standards may impose special demands on issuers in areas such as corporate governance, internal controls and disclosure, and may result in substantial conversion costs to implement. Changes in U.S. federal income tax law or in the income tax laws of other jurisdictions in the U.S. in which we operate could make some of our products less attractive to consumers and also increase our tax costs. H.R.1, also referred to as the Tax Cuts and Jobs Act of 2017 (the Tax Act of 2017 ), was enacted into law on December 22, 2017 and is generally effective starting in 2018. Our analysis of the Tax Act of 2017 is ongoing, as guidance may be needed from the Treasury Department and the Internal Revenue Service ( IRS ) to fully understand and implement several provisions. Other life insurance and financial services companies may benefit more or less from these tax law changes, which could impact the Company s overall competitive position. The law is also expected to reduce the Company s domestic statutory capital and risk-based capital. Notwithstanding the enactment of the Tax Act of 2017, the President, Congress, as well as state and local governments, may continue to consider from time to time legislation that could increase the amount of corporate taxes we pay, thereby reducing earnings. U.S. federal tax law generally permits tax deferral on the inside build-up of investment value of certain retirement savings, annuities and life insurance products until there is a contract distribution and, in general, excludes from taxation the death benefit paid under a life insurance contract. The Tax Act of 2017 did not change these rules, though it is possible that some individuals with overall lower effective tax rates could be less attracted to the tax deferral aspect of the Company s products. The general reduction in individual tax rates and elimination of certain individual deductions may also impact the Company depending on whether current and potential customers have more or less after-tax income to save for retirement and manage their mortality and longevity risk through the purchase of the Company s products. Congress from time to time may enact other changes to the tax law that could make our products less attractive to consumers, including legislation that would modify the tax favored treatment of retirement savings, life insurance and annuities products. The products we sell have different tax characteristics and in some cases generate tax deductions and credits for the Company. Changes in either the U.S. or foreign tax laws may negatively impact the deductions and credits available to the Company, including the ability of the Company to claim foreign tax credits with respect to taxes withheld on separate account products. These changes would increase the Company s actual tax expense and reduce its consolidated net income. The level of profitability of certain products is significantly dependent on these characteristics and our ability to continue to generate taxable income, which is taken into consideration when pricing products and is a component of our capital management strategies. Accordingly, changes in tax law, our ability to generate taxable income, or other factors impacting the availability or value of the tax characteristics generated by our products, could impact product pricing and returns or require us to reduce our sales of these products or implement other actions that could be disruptive to our businesses. Interruption in telecommunication, information technology and other operational systems, or a failure to maintain the security, confidentiality or privacy of sensitive data residing on such systems, could harm our business. We depend heavily on our telecommunication, information technology and other operational systems and on the integrity and timeliness of data we use to run our businesses and service our customers. These systems may fail to operate properly or become disabled as a result of events or circumstances wholly or partly beyond our control. Further, we face the risk of operational and technology failures by others, including clearing agents, exchanges and other financial intermediaries and of vendors and parties to which we outsource the provision of services or business operations. If these parties do not perform as anticipated, we may experience operational difficulties, increased costs and other adverse effects on our business. These risks are heightened by our offering of increasingly complex products, such as those that feature automatic rebalancing or re-allocation strategies, and by our employment of complex investment, trading and hedging programs. Despite our implementation of a variety of security measures, our information technology and other systems could be subject to physical or electronic break-ins, unauthorized tampering or other security breaches, resulting in a failure to maintain the security, confidentiality or privacy of sensitive data, including personal information relating to customers, or in the misappropriation of our intellectual property or proprietary information. Many financial services institutions and companies engaged in data processing have reported security breaches and service disruptions related to their websites or other systems, some of which have involved sophisticated and targeted attacks intended to obtain unauthorized access to confidential information, destroy data, disrupt or degrade service, sabotage systems or cause other damage, often through the introduction of computer viruses or malware, denial -of-service attacks and other means. Despite our efforts to ensure the integrity of our systems, it is possible that we may not be able to anticipate or to implement effective preventive measures against all security breaches and disruptions of these types, especially because the techniques used change frequently or are not recognized until launched, and because cyber attacks can originate from a wide variety of sources, including third-parties outside of the Company such as persons who are involved with organized crime or who may be linked to terrorist organizations or hostile foreign governments, as well as external service providers. Those parties may also attempt to fraudulently induce employees, customers or other users of the Company s systems to disclose sensitive information in order to gain access to our data or that of our customers or clients. In addition, while we have certain standards for all vendors that provide us services, our vendors, and in turn, their own service providers, may become subject to a security breach, including as a result of their failure to perform in accordance with contractual arrangements. Security breaches or other technological failures may also result in regulatory inquiries, regulatory proceedings, regulatory and litigation costs, and reputational damage. We may incur reimbursement and other expenses, including the costs of litigation and litigation settlements and additional compliance costs. We may also incur considerable expenses in enhancing and upgrading computer systems and systems security following such a failure. Interruption in telecommunication, information technology and other operational systems, or a failure to maintain the security, confidentiality or privacy of sensitive data residing on such systems, whether due to actions by us or others, could delay or disrupt our ability to do business and service our customers, harm our reputation, result in a violation of applicable privacy and other laws, subject us to substantial regulatory sanctions and other claims, lead to a loss of customers and revenues, or financial loss to our customers and otherwise adversely affect our business. The occurrence of natural or man-made disasters could adversely affect our operations, results of operations and financial condition. The occurrence of natural disasters, including hurricanes, floods, earthquakes, tsunamis, tornadoes, fires, explosions, pandemic disease and man-made disasters, including acts of terrorism and military actions, could adversely affect our operations, results of operations or financial condition, including in the following respects: Catastrophic loss of life due to natural or man-made disasters could cause us to pay benefits at higher levels and/or materially earlier than anticipated and could lead to unexpected changes in persistency rates. A man-made or natural disaster, such as an earthquake in Japan, could result in disruptions in our operations, losses in our investment portfolio or the failure of our counterparties to perform, or cause significant volatility in global financial markets. A terrorist attack affecting financial institutions in the U.S. or elsewhere could negatively impact the financial services industry in general and our business operations, investment portfolio and profitability in particular. Pandemic disease could have a severe adverse effect on Prudential Financial s business. The potential impact of such a pandemic on Prudential Financial s results of operations and financial position is variable, and would depend on numerous factors, including the effectiveness of vaccines and the rate of contagion, the regions of the world most affected and the effectiveness of treatment for the infected population. The above risks are more pronounced in respect of geographic areas, including major metropolitan centers, where we have concentrations of customers, including under group and individual life insurance, concentrations of employees or significant operations, and in respect of countries and regions in which we operate subject to a greater potential threat of military action or conflict. Ultimate losses would depend on the rates of mortality and morbidity among various segments of the insured population, the collectability of reinsurance, the possible macroeconomic effects on our asset portfolio, the effect on lapses and surrenders of existing policies, as well as sales of new policies and other variables. There can be no assurance that our business continuation plans and insurance coverages would be effective in mitigating any negative effects on our operations or profitability in the event of a terrorist attack or other disaster. Finally, climate change may increase the frequency and severity of weather related disasters and pandemics. In addition, climate change regulation may affect the prospects of companies and other entities whose securities we hold, or our willingness to continue to hold their securities. It may also impact other counterparties, including reinsurers, and affect the value of investments, including real estate investments we hold or manage for others. We cannot predict the long-term impacts on us from climate change or related regulation. Market for Registrant s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Owners of the contracts may participate by allocating all or part of the net premiums or purchase payments to Pruco Life of New Jersey Variable Contract Real Property Account ("Real Property Account"). Contract values vary with the performance of the Real Property Account s investments through the Partnership. Participating interests in the Real Property Account are not traded in any public market; therefore, a discussion of market information is not relevant. As of December 31, 2017, 1,607 contract owners of record held investments in the Real Property Account. Selected Financial Data The Partnership Results of Operations and Financial Position are summarized as follows: Year Ended December 31, CONSOLIDATED RESULTS OF OPERATIONS: 2017 2016 2015 2014 2013 Total Investment Income $ 22,810,587 $ 22,829,303 $ 22,394,116 $ 25,546,941 $ 28,525,763 Net Investment Income $ 7,286,442 $ 7,874,446 $ 6,711,044 $ 7,474,906 $ 9,574,870 Net Recognized and Unrealized Gain (Loss) on Investments 4,778,649 3,003,702 12,722,180 6,735,778 9,086,821 Net Increase (Decrease) in Net Assets Resulting From Operations $ 12,065,091 $ 10,878,148 $ 19,433,224 $ 14,210,684 $ 18,661,691 CONSOLIDATED FINANCIAL POSITION: December 31, 2017 2016 2015 2014 2013 Total Assets $ 328,824,566 $ 320,397,053 $ 282,274,678 $ 270,454,664 $ 258,047,298 Investment Level Debt* $ 96,905,747 $ 93,958,234 $ 66,026,362 $ 69,515,899 $ 58,892,867 *Certain prior period amounts in the consolidated financial statements have been reclassified to conform with current period presentation. See New Accounting Pronouncements adopted in Note 2 of Notes to the Consolidated Financial Statements of the Partnership. Management s Discussion and Analysis of Financial Condition and Results of Operations All assets of the Real Property Account are invested in the Partnership. Accordingly, the liquidity and capital resources and results of operations for the Real Property Account are contingent upon those of the Partnership. Therefore, this Management s Discussion and Analysis of Financial Condition and Results of Operations addresses these items at the Partnership level. The general partners in the Partnership are The Prudential Insurance Company of America, Pruco Life Insurance Company, and Pruco Life Insurance Company of New Jersey (collectively, the General Partners ). The following discussion and analysis of the liquidity and capital resources and results of operations of the Partnership should be read in conjunction with the audited financial statements of the Real Property Account and the audited consolidated financial statements of the Partnership and the related Notes included in this filing. (a) Liquidity and Capital Resources As of December 31, 2017, the Partnership s liquid assets, consisting of cash and cash equivalents, were approximately $26.7 million, a decrease of approximately $20.8 million from $47.5 million as of December 31, 2016. The decrease was primarily due to the following activities: (a) $28.7 million in real estate investments and improvements which includes $18.8 million for the acquisition of a self-storage facility located in Miami, FL, $5.6 million for construction costs at the development property in Chicago, IL and $2.7 million for building improvements at the retail property in Ocean City, MD; (b) $5.0 million in distributions to investors; (c) $1.7 million in net cash outflows to joint venture partners; and (d) $1.3 million of principal payments on financed properties. These decreases were partially offset by the following: (e) $7.3 million of cash flow generated from property operations; (f) $4.5 million of net proceeds from the sale of a retail center property in Dunn, NC; and (g) $4.2 million of proceeds from investment level debt. Sources of liquidity included net cash flow from property operations, mortgage debt on real estate investments, and interest from cash equivalents. The Partnership uses cash for its real estate investment activities and for distributions to its General Partners. As of December 31, 2017, approximately 8.1% of the Partnership s total assets consisted of cash and cash equivalents. The following table sets forth a summary regarding the Partnership's known contractual obligations, including required interest payments for those items that are interest bearing as of December 31, 2017 (amounts in millions). Amounts Due During Years Ending December, 31 2018 2019 2020 2021 2022 Thereafter Total Mortgage Loans Payable: Principal Payments $9.4 $1.7 $1.9 $44.5 $13.8 $26.6 $97.9 Interest Payments (1) 3.2 2.8 2.8 2.8 1.6 1.1 14.3 Total Mortgage Loans Payable $12.6 $4.5 $4.7 $47.3 $15.4 $27.7 $112.3 Other Commitments (2) - - - - - - - Total Contractual Obligations $12.6 $4.5 $4.7 $47.3 $15.4 $27.7 $112.3 (1) These amounts represent interest payments due on mortgage loans payable based on stated rates at December 31, 2017. (2) This includes the Partnership's commitment to fund any additional equity on development projects. As of December 31, 2017 the Partnership has satisfied this equity commitment. (b) Results of Operations for the years ended December 31, 2017 and December 31, 2016 The following is a comparison of the Partnership s results of operations for the years ended December 31, 2017 and December 31, 2016. Net investment income overview The Partnership s net investment income attributable to the General Partners controlling interest for the year ended December 31, 2017 was approximately $6.7 million, a decrease of approximately $0.5 million from the prior year. The decrease in net investment income attributable to the General Partners controlling interest was primarily due to a decrease of $0.5 million in the retail sector s net investment income from the prior year and a decrease of approximately $0.3 million in the office sector s net investment income from the prior year. Partially offsetting this was a decrease of approximately $0.2 million from the prior year in portfolio level expenses. Net investment income attributable to the General Partner s controlling interest in the apartment sector was essentially flat from the prior year. Valuation overview The Partnership recorded net recognized and unrealized gains attributable to the General Partners controlling interest of approximately $3.6 million for the year ended December 31, 2017. This is compared with a net recognized and unrealized gain attributable to the General Partners controlling interest of approximately $3.0 million for the year ended December 31, 2016, an increase of $0.6 million. Unrealized gains attributable to the General Partners controlling interest from the prior year increased by $1.7 million and were primarily due to a valuation increase in the apartment sector of $1.0 million and a valuation increase in the retail sector of $0.8 million. Recognized losses attributable to the General Partners controlling interest from the prior year increased by $1.1 million, and were primarily due to a $1.3 million increase in recognized losses from retail sector investments, partially offset by a $0.3 million decrease in recognized losses from office sector investments. The following table presents a comparison of the Partnership s sources of net investment income (loss) attributable to the General Partners controlling interest and net recognized and unrealized gains (losses) attributable to the General Partners controlling interest for the years ended December 31, 2017 and 2016. Year Ended December 31, 2017 2016 Net Investment Income (Loss): Office properties $ 10,563 $ 279,236 Apartment properties 4,043,285 4,118,208 Retail properties 6,216,988 6,668,035 Hotel properties (103,350 ) Storage properties 8,667 Other (including interest income, investment management fees, etc.) (3,622,829 ) (3,755,676 ) Total Net Investment Income $ 6,656,674 $ 7,206,453 Net Recognized Gain (Loss) on Real Estate Investments: Office properties $ $ (256,982 ) Hotel properties (1,419 ) Retail properties (1,332,637 ) Net Recognized Gain (Loss) on Real Estate Investments $ (1,334,056 ) $ (256,982 ) Net Unrealized Gain (Loss) on Real Estate Investments: Apartment properties 4,629,031 3,593,146 Retail properties 400,741 (353,072 ) Storage properties (53,115 ) Net Unrealized Gain (Loss) on Real Estate Investments 4,976,657 3,240,074 Net Recognized and Unrealized Gain (Loss) on Real Estate Investments $ 3,642,601 $ 2,983,092 Increase/(Decrease) in Net Assets $ 10,299,275 $ 10,189,545 OFFICE PROPERTIES Year Ended December 31, Net Investment Income/(Loss) 2017 Net Investment Income/(Loss) 2016 Recognized/ Unrealized Gain/(Loss) 2017 Recognized/ Unrealized Gain/(Loss) 2016 Occupancy 2017 Occupancy 2016 Property Lisle, IL (1) $ $ 280,307 $ $ (256,982 ) N/A N/A Beaverton, OR (2) (8,135 ) (1,071 ) N/A N/A Nashville, TN (3) 9,753 N/A N/A Brentwood, TN (4) 8,945 N/A N/A $ 10,563 $ 279,236 $ $ (256,982 ) (1) The Lisle, IL property was sold in 2016. (2) The Beaverton, OR property was sold in 2015. (3) The Nashville, TN property was sold in 2015. (4) The Brentwood, TN property was sold in 2013. Net investment income/(loss) Net investment income attributable to the General Partners controlling interest for the Partnership s office properties was approximately $0.01 million for the year ended December 31, 2017, which represents a decrease of approximately $0.3 million from the year ended December 31, 2016. The decrease in net investment income is primarily due to the sale of the property located in Lisle, IL in 2016. Recognized and Unrealized gain/(loss) Recognized and unrealized gains/(losses) attributable to the General Partners controlling interest for the Partnership s office properties were $0 million for the year ended December 31, 2017, which represents a $0.3 million increase from the year ended December 31, 2016. The recognized loss attributable to the General Partners controlling interest for the year ended December 31, 2016 was due to the sale of the property located in Lisle, IL in 2016. APARTMENT PROPERTIES Year Ended December 31, Net Investment Income/(Loss) 2017 Net Investment Income/(Loss) 2016 Unrealized Gain/(Loss) 2017 Unrealized Gain/(Loss) 2016 Occupancy 2017 Occupancy 2016 Property Austin, TX $ 1,279,409 $ 1,382,288 $ 1,650,204 $ 792,614 96 % 98 % Charlotte, NC 673,779 762,469 38,409 697,772 96 % 96 % Seattle, WA #1 649,850 647,341 1,603,120 1,860,881 88 % 93 % Seattle, WA #2 902,972 816,523 1,503,560 154,572 87 % 96 % Maplewood, NJ 537,275 509,587 (169,305 ) 87,275 86 % 94 % Chicago, IL (1) 3,043 32 N/A N/A $ 4,043,285 $ 4,118,208 $ 4,629,031 $ 3,593,146 (1) The Chicago, IL property is in development. Net investment income/(loss) Net investment income attributable to the General Partners controlling interest for the Partnership s apartment properties was approximately $4.0 million for the year ended December 31, 2017, which represents a decrease of approximately $0.1 million from the prior year. Unrealized gain/(loss) The apartment properties owned by the Partnership produced a net unrealized gain attributable to the General Partners controlling interest of approximately $4.6 million for the year ended December 31, 2017 compared with a net unrealized gain attributable to the General Partners controlling interest of approximately $3.6 million from the prior year. The net unrealized gain attributable to the General Partners controlling interest for the year ended December 31, 2017 was primarily due to favorable market leasing and rent assumptions at both Seattle, WA properties and the Austin, TX property, as well as an anticipated decrease in property taxes at one property in Seattle, WA, and a decrease in previously forecasted capital expenditures at the property in Austin, TX. RETAIL PROPERTIES Year Ended December 31, Net Investment Income/(Loss) 2017 Net Investment Income/(Loss) 2016 Unrealized/Recognized Gain/(Loss) 2017 Unrealized Gain/(Loss) 2016 Occupancy 2017 Occupancy 2016 Property Hampton, VA $ 1,566,352 $ 1,461,915 $ (897,008 ) $ (2,641,636 ) 97 % 99 % Ocean City, MD 1,062,793 933,195 581,195 (72,872 ) 98 % 100 % Westminster, MD 1,281,159 1,400,268 549,046 100,000 100 % 100 % Dunn, NC (1) (154,716 ) 96,803 (1,332,637 ) 677,134 N/A 58 % Roswell, GA 1,193,805 1,146,671 162,248 600,000 96 % 94 % North Fort Myers, FL 510,105 855,640 (94,740 ) 284,302 88 % 88 % Roswell, GA (2) 28,008 N/A N/A Norcross, GA 729,482 773,543 100,000 700,000 100 % 100 % $ 6,216,988 $ 6,668,035 $ (931,896 ) $ (353,072 ) (1) The Dunn, NC property was sold in 2017. (2) The Roswell, GA property was sold in 2009. Net investment income/(loss) Net investment income attributable to the General Partners controlling interest for the Partnership s retail properties was approximately $6.2 million for the year ended December 31, 2017, which represents a decrease of approximately $0.5 million from the prior year. Approximately $0.3 million of the decrease relates to revenue from rental income, common area maintenance, and tenant improvements that was set aside by the seller in an escrow account and released at the end of the prior year at the North Fort Meyers, FL property. The remaining variance is primarily related to the sale of the Dunn, NC property in 2017. Recognized and unrealized gain/(loss) The retail properties owned by the Partnership produced a recognized/unrealized loss attributable to the General Partners controlling interest of approximately $0.9 million for the year ended December 31, 2017, compared with a net unrealized loss attributable to the General Partners controlling interest of approximately $0.4 million from the prior year period. The net unrealized loss attributable to the General Partners' controlling interest for year ended December 31, 2017 was primarily due to the sale of the Dunn, NC property in 2017, as well as vacancy of the anchor tenant, and a reduction of the market leasing assumption for the outparcel in the Hampton, VA property. The loss was partially offset by gains in the Ocean City, MD and Westminster, MD properties from additional leases signed/renewed in 2017. HOTEL PROPERTIES Year Ended December 31, Net Investment Income/(Loss) 2017 Net Investment Income/(Loss) 2016 Recognized Unrealized Gain/(Loss) 2017 Recognized Gain/(Loss) 2016 Occupancy 2017 Occupancy 2016 Property Lake Oswego, OR (1) $ $ (103,350 ) $ (1,419 ) $ N/A N/A (1) The property was sold in 2014. Net investment income/(loss) Net investment loss attributable to the General Partners controlling interest related to the Partnership s former hotel property was $0 million for the year ended December 31, 2017. The net investment losses in 2016 represent post-closing expenses. Recognized Unrealized gain/(loss) The recognized loss attributable to the General Partners controlling interest for the Partnership s former hotel property for the year ended December 31, 2017 represents post-closing expenses. STORAGE PROPERTIES Year Ended December 31, Net Investment Income/(Loss) 2017 Net Investment Income/(Loss) 2016 Unrealized Gain/(Loss) 2017 Unrealized Gain/(Loss) 2016 Occupancy 2017 Occupancy 2016 Property Miami, FL (1) $ 8,667 $ $ (53,115 ) $ 42% N/A (1) The property was acquired in 2017. Net investment income/(loss) Net investment income attributable to the General Partners controlling interest related to the Partnership s storage property was $0.01 million for the year ended December 31, 2017. Unrealized gain/(loss) The storage property owned by the Partnership produced a net unrealized loss attributable to the General Partners controlling interest of approximately $0.05 million for the year ended December 31, 2017. Other Other net investment expense mainly includes investment management fees, other portfolio level expenses and interest income. Other net investment expense attributable to the General Partners controlling interest was approximately $3.6 million for the year ended December 31, 2017, which represents a decrease of approximately $0.2 million from the prior year. The decrease in other net investment expense is primarily due to an increase in short term interest income, from slightly higher cash and cash equivalent balances in 2017. (c) Results of Operations for years ended December 31, 2016 and December 31, 2015 The following is a comparison of the Partnership's results of operations for the years ended December 31, 2016 and 2015. Net investment income overview The Partnership s net investment income attributable to the General Partners controlling interest for the year ended December 31, 2016 was approximately $7.2 million, an increase of approximately $1.1 million from the prior year period. The increase in net investment income attributable to the General Partners controlling interest was primarily due to an increase of $1.0 million in the retail sector s net investment income from the prior year period and an increase of approximately $0.7 million in the office sector s net investment income from the prior year period. Partially offsetting this growth was an increase of approximately $0.5 million from the prior year period in portfolio level expenses. Net investment income attributable to the General Partner s controlling interest in the apartment and hotel sectors were essentially flat from the prior year period. Valuation overview The Partnership recorded net recognized and unrealized gains attributable to the General Partners controlling interest of approximately $3.0 million for the year ended December 31, 2016. This is compared with a net recognized and unrealized gain attributable to the General Partners controlling interest of approximately $10.7 million for the year ended December 31, 2015. The unrealized gains attributable to the General Partners controlling interest for the year ended December 31, 2016 were due to a valuation increase in the apartment investments of $3.6 million. The General Partners controlling interest of the retail investments depreciated $0.4 million for the year ended December 31, 2016. Further offsetting the unrealized gains was a recognized loss of $0.3 million in the office sector investments. The following table presents a comparison of the Partnership s sources of net investment income (loss) attributable to the General Partners controlling interest and net recognized and unrealized gains (losses) attributable to the General Partners controlling interest for the year ended December 31, 2016 and 2015. Year Ended December 31, 2016 2015 Net Investment Income (Loss): Office properties $ 279,236 $ (386,446 ) Apartment properties 4,118,208 4,167,541 Retail properties 6,668,035 5,643,088 Hotel properties (103,350 ) (55,098 ) Other (including interest income, investment management fees, etc.) (3,755,676 ) (3,300,701 ) Total Net Investment Income $ 7,206,453 $ 6,068,384 Net Recognized Gain (Loss) on Real Estate Investments: Office properties $ (256,982 ) $ 125,879 Net Recognized Gain (Loss) on Real Estate Investments $ (256,982 ) $ 125,879 Net Unrealized Gain (Loss) on Real Estate Investments: Office properties $ $ (1,179,179 ) Apartment properties 3,593,146 6,597,881 Retail properties (353,072 ) 5,203,865 Net Unrealized Gain (Loss) on Real Estate Investments 3,240,074 10,622,567 Net Recognized and Unrealized Gain (Loss) on Real Estate Investments $ 2,983,092 $ 10,748,446 Increase/(Decrease) in Net Assets $ 10,189,545 $ 16,816,830 APARTMENT PROPERTIES Year Ended December 31, Net Investment Income/(Loss) 2016 Net Investment Income/(Loss) 2015 Unrealized Gain/(Loss) 2016 Unrealized Gain/(Loss) 2015 Occupancy 2016 Occupancy 2015 Property Austin, TX $ 1,382,288 $ 1,435,683 $ 792,614 $ 2,787,287 98 % 96 % Charlotte, NC 762,469 935,383 697,772 923,823 96 % 98 % Seattle, WA #1 647,341 589,338 1,860,881 97,912 93 % 95 % Seattle, WA #2 816,523 729,934 154,572 2,723,411 96 % 93 % Maplewood, NJ (1) 509,587 477,203 87,275 65,448 94 % 80 % Chicago, IL (2) 32 N/A N/A $ 4,118,208 $ 4,167,541 $ 3,593,146 $ 6,597,881 (1) The Maplewood, NJ property was acquired April 2, 2015. (2) The Chicago, IL property was acquired on November 9, 2015 and is currently under development. Net investment income/(loss) Net investment income attributable to the General Partners controlling interest for the Partnership s apartment properties was approximately $4.1 million for the year ended December 31, 2016, which represents a decrease of approximately $0.1 million from the year ended December 31, 2015. The decrease was primarily due to the interest expense associated with the investment level debt placed on the property in Charlotte, NC, which was financed in January 2016. Unrealized gain/(loss) The apartment properties owned by the Partnership produced a net unrealized gain attributable to the General Partners controlling interest of approximately $3.6 million for the year ended December 31, 2016 compared with a net unrealized gain attributable to the General Partners controlling interest of approximately $6.6 million from the prior year period. The net unrealized gain attributable to the General Partners controlling interest for the year ended December 31, 2016 was primarily due to favorable market leasing and rent assumptions at both properties in Seattle, WA, as well as the properties in Charlotte, NC and Austin, TX. Additionally, gains at the property in Maplewood, NJ were primarily due to rent increases. RETAIL PROPERTIES Year Ended December 31, Net Investment Income/(Loss) 2016 Net Investment Income/(Loss) 2015 Unrealized/Recognized Gain/(Loss) 2016 Unrealized Gain/(Loss) 2015 Occupancy 2016 Occupancy 2015 Property Hampton, VA $ 1,461,915 $ 1,418,163 $ (2,641,636 ) $ 774,336 99 % 96 % Ocean City, MD 933,195 914,371 (72,872 ) 638,666 100 % 96 % Westminster, MD 1,400,268 1,349,841 100,000 1,394,504 100 % 100 % Dunn, NC 96,803 120,633 677,134 (468,836 ) 58 % 26 % Roswell, GA 1,146,671 567,590 600,000 1,153,211 94 % 94 % North Fort Myers, FL 855,640 506,480 284,302 694,700 88 % 85 % Norcross, GA 773,543 766,010 700,000 1,017,284 100 % 100 % $ 6,668,035 $ 5,643,088 $ (353,072 ) $ 5,203,865 Net investment income/(loss) Net investment income attributable to the General Partners controlling interest for the Partnership s retail properties was approximately $6.7 million for the year ended December 31, 2016, which represents an increase of approximately $1.0 million from the prior year period. The increase was largely due to interest expense savings from the November 2015 loan payoff at the property in Roswell, GA. Additional increases were caused by revenue growth at the North Fort Myers, FL property due to the expiration of a reserve held in escrow since the property s acquisition for vacant spaces rental income, common area maintenance and tenant improvements. The reserve expired during the fourth quarter and was recognized as revenue. Unrealized gain/(loss) The retail properties owned by the Partnership produced a net unrealized loss attributable to the General Partners controlling interest of approximately $0.4 million for the year ended December 31, 2016, compared with a net unrealized gain attributable to the General Partners controlling interest of approximately $5.2 million from the prior year period. The net unrealized loss attributable to the General Partners controlling interest for the year ended December 31, 2016 was primarily due to increased investment rates for the property in Hampton, VA based on the recent marketing of the property. Investment rates include direct and terminal capitalization rates, and discount rates, which reflect investors yield requirements on investments. The loss was partially offset by gains at the Norcross, GA property related to discount rate compression, gains at the Dunn, NC property due to increased occupancy, and gains at the Roswell, GA property driven by increased net investment income. OFFICE PROPERTIES Year Ended December 31, Net Investment Income/(Loss) 2016 Net Investment Income/(Loss) 2015 Unrealized/Recognized Gain/(Loss) 2016 Unrealized Gain/(Loss) 2015 Occupancy 2016 Occupancy 2015 Property Lisle, IL (1) $ 280,307 $ (141,037 ) $ (256,982 ) $ (1,179,179 ) N/A 55 % Beaverton, OR (2) (1,071 ) (245,409 ) 125,879 N/A N/A $ 279,236 $ (386,446 ) $ (256,982 ) $ (1,053,300 ) (1) The Lisle, IL property was sold on January 21, 2016. (2) The Beaverton, OR property was sold on June 8, 2015. Net investment income/(loss) Net investment income attributable to the General Partners controlling interest for the Partnership s office properties was approximately $0.3 million for the year ended December 31, 2016, which represents an increase of approximately $0.7 million from the year ended December 31, 2015. The increase in net investment income is due to selling the properties in Lisle, IL, and Beaverton, OR. The two properties had large vacancies and were providing negative cash flow resulting in losses in 2015. The 2016 net investment income was primarily driven by a decrease in accrued post closing balances. Recognized and unrealized gain/(loss) The office property formerly owned by the Partnership produced a recognized loss attributable to the General Partners controlling interest of approximately $0.3 million for the year ended December 31, 2016, compared with a recognized and net unrealized loss attributable to the General Partners controlling interest of approximately $1.1 million for the year ended December 31, 2015. The recognized loss attributable to the General Partners controlling interest for the year ended December 31, 2016 was due to the sale of the property located in Lisle, IL. HOTEL PROPERTY Year Ended December 31, Net Investment Income/(Loss) 2016 Net Investment Income/(Loss) 2015 Unrealized/Recognized Gain/(Loss) 2016 Unrealized Gain/(Loss) 2015 Occupancy 2016 Occupancy 2015 Property Lake Oswego, OR (1) $ (103,350 ) $ (55,098 ) $ $ N/A N/A (1) The property was sold on October 29, 2014. Net investment income/(loss) Net investment loss attributable to the General Partners controlling interest related to the Partnership s former hotel property was than $0.1 million for the year ended December 31, 2016. This property was sold on October 29, 2014. The net investment losses in both periods represent post closing expenses. (d) Inflation A majority of the Partnership s leases with its commercial tenants provide for recoveries of expenses based upon the tenant s proportionate share of, and/or increases in, real estate taxes and certain operating costs, which may partially reduce the Partnership s exposure to increases in operating costs resulting from inflation. The Partnership is not able to recover any expenses in unleased space. Critical Accounting Policies The preparation of financial statements in conformity with U.S. GAAP requires the application of accounting policies that often involve a significant degree of judgment. Management reviews critical estimates and assumptions on an ongoing basis. If management determines, as a result of its consideration of facts and circumstances, that modifications in assumptions and estimates are appropriate, results of operations and financial position as reported in the audited financial statements of the Real Property Account and the audited consolidated financial statements of the Partnership may change significantly. The following sections discuss the critical accounting policies applied in preparing the financial statements of the Real Property Account and the consolidated financial statements of the Partnership that are most dependent on the application of estimates and assumptions. Valuation of Investments Real estate investments are carried at fair value. Properties owned are initially recorded at the purchase price plus closing costs. Development costs and major renovations are capitalized as a component of cost, and routine maintenance and repairs are charged to expense as incurred. Real estate costs include the cost of acquired property, including all the tangible and intangible assets. Tangible assets include the value of all land, building and tenant improvements at the time of acquisition. Intangible assets include the value of any above and below market leases in-place leases and tenant relationships at the time of acquisition. In general, fair value estimates are based upon property appraisal reports prepared by independent real estate appraisers (members of the Appraisal Institute or an equivalent organization) within a reasonable amount of time following acquisition of the real estate and no less frequently than annually thereafter. The Chief Real Estate Appraiser of PGIM, Inc. ( PGIM ) is responsible for assuring that the valuation process provides independent and reasonable property fair value estimates. PGIM is an indirectly owned subsidiary of Prudential Financial. An unaffiliated third party has been appointed by PGIM to assist the Chief Real Estate Appraiser in maintaining and monitoring the independence and the accuracy of the appraisal process. The fair value of real estate investments does not reflect the transaction sale costs, which may be incurred upon disposition of the real estate investments. The purpose of an appraisal is to estimate the fair value of real estate as of a specific date. In accordance with FASB authoritative guidance on fair value measurements and disclosures, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The estimate of fair value is based on the conventional approaches to value, all of which require the exercise of subjective judgment. The three approaches are: (1) current cost of reproducing the real estate less deterioration and functional and economic obsolescence; (2) discounting a series of income streams and reversion at a specific yield or by directly capitalizing a single year income estimate by an appropriate factor; and (3) value indicated by recent sales of comparable real estate in the market. Key inputs and assumptions include rental income and expense amounts, related rental income and expense growth rates, discount rates and capitalization rates. In the reconciliation of these three approaches, the independent appraiser uses one or a combination of them to determine the approximate value for the type of real estate in the market. Cash equivalents include short-term investments with maturities of three months or less when purchased. Other Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements of the Real Property Account and the consolidated financial statements of the Partnership and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. ITEM 3. Quantitative and Qualitative Disclosures about Market Risk The table below discloses the Partnership s investment level debt as of December 31, 2017. The fair value of the Partnership s long-term investment level debt is affected by changes in market interest rates. The following table presents principal cash flows based upon maturity dates of the debt obligations and the related weighted-average interest rates by expected maturity dates for the debt. Investment level debt ($ in 000s), including current portion 2018 2019 2020 2021 2022 Thereafter Total Estimated Fair Value Weighted Average Fixed Interest Rate 4.04 % 4.02 % 4.03 % 3.75 % 3.79 % 3.67 % 3.50 % Future Annual Principal Payments $ 9,399 $ 1,680 $ 1,916 $ 44,495 $ 13,809 $ 26,625 $ 97,924 $ 98,691 Credit Risk The Partnership is exposed to market risk from tenants. While the Partnership has not experienced any significant credit losses, in the event of significant increases in interest rates and/or an economic downturn, tenant delinquencies could increase and result in losses to the Partnership and the Real Property Account that could adversely affect operating results and liquidity. Market Conditions The U.S. economic conditions continued to improve in 2017, as GDP expanded 2.3% much stronger than the 2016 growth of 1.5%, according to the U.S. Bureau of Economic Analysis. The U.S. labor market also strengthened with 2.1 million job gains which led to continued compression of the unemployment rate, as reported by the U.S. Bureau of Labor Statistics. These trends supported steady wage growth, as reported by the Federal Reserve Bank of Atlanta. In addition, leading economic indicators remain positive, particularly sentiment, which was boosted further by the passing of the U.S. Tax Cuts and Jobs Act of 2017. Property Markets Vacancies remain tight across the property markets, and rent growth remains positive. In 2017, development activity remained robust in the apartment and industrial sectors, and limited in the retail and office sectors. Apartment: Job growth and demographic trends continued to fuel rental demand for apartments in 2017. However, strong development activity put some upward pressure on vacancies and more modest rent growth compared to previous years. Retail: Construction remained extremely limited in 2017. Weak retail absorption trends continued, leading rent growth to soften further. Property market sentiment remains bearish and rent growth may remain weak. Office: Office-using job gains continued in 2017. While forward-looking indicators suggested ongoing tenant demand for office space, net absorption decelerated in 2017. Vacancies were stable though, as construction leveled off. Industrial: Industrial continues its run as the best performer of all property types. At the close of 2017, occupancies were at record highs, fueled by overall U.S. economic growth and strong e-commerce demand. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None. Directors, Executive Officers and Corporate Governance JOHN CHIEFFO, Director, Chief Financial Officer Chief Accounting Officer, and Vice President (current term expires March 2019) - Vice President, Finance, Annuities, Prudential Financial since November 2016. Previously, he served as Vice President, Individual Life Insurance, Prudential Financial from January 2013 to November 2016. Age 54. CAROLINE A. FEENEY, Director (current term expires March 2019) - President, Individual Life Insurance and Prudential Advisors, Prudential Financial since November 2017. Previously, she served as President, Prudential Advisors, Prudential Financial from September 2012 to October 2017. Age 48. LORI D. FOUCH , Director (current term expires March 2019) - Head of Individual Solutions, Prudential Financial since November 2017. Previously, she served as President, Annuities, Prudential Financial and President and Chief Executive Officer of Pruco Life Insurance Company of New Jersey, Prudential Financial from December 2015 to October 2017; Senior Vice President and Chief Executive Officer, Group Insurance, Prudential Financial from February 2014 to December 2015; and President and Chief Operating Officer, Group Insurance, Prudential Financial from July 2013 to February 2014. Prior to joining Prudential, Ms. Fouch served as President and Chief Executive Officer of Commercial Insurance, Firemen s Insurance Group from November 2011 to June 2013. Age 48. CHRISTINE KNIGHT, Director and Vice President (current term expires March 2019) - Vice President, Finance, Individual Life Insurance, Prudential Financial since November 2016. Previously, she served as Vice President, Finance, Group Insurance, Prudential Financial from December 2010 to November 2016. Age 56. KENT D. SLUYTER, Director, Chief Executive Officer, President, and Senior Vice President (current term expires March 2019) - President, Annuities, Prudential Financial since November 2017. Previously, he served as Chief Executive Officer, Individual Life Insurance and Prudential Advisors, Prudential Financial from 2013 to October 2017, and Chief Actuary, Individual Life Insurance, Prudential Financial from 2006 to January 2013. Age 58. KENNETH Y. TANJI, Director and Treasurer (current term expires March 2019) - Senior Vice President and Treasurer, Prudential Financial since March 2013. Age 52. CANDACE J. WOODS, Director (current term expires March 2019) - Senior Vice President and Chief Actuary, Prudential Financial since November 2017. Previously, she served as Vice President and Chief Actuary, the Center of Excellence, Prudential Financial from July 2017 to November 2017; Vice President and International Chief Actuary, Prudential International Insurance from June 2013 to June 2017; and Vice President and Actuary, Prudential International Insurance from December 2012 to May 2013. Age 57. EXECUTIVE OFFICERS LYNN K. STONE, Chief Legal Officer, Secretary and Vice President - Chief Legal Officer for the Individual Solutions Group, Prudential Financial since January 2018 and Chief Legal Officer for Individual Life Insurance, Prudential Financial since March 2017. Previously, she served as Chief Legal Officer for Annuities, Prudential Financial from February 2015 to March 2017; Chief Counsel, Individual Life and Annuity Operations and Reinsurance, Prudential Financial from December 2013 to January 2015; and prior to that, Vice President and Corporate Counsel, Annuities Law, Prudential Financial since 2008. Age 59. ARTHUR W. WALLACE, Senior Vice President, Chief Actuary, Appointed Actuary, and Actuary - Vice President and Actuary, Prudential Financial since November 2014. Previously, he served as Director of Pruco Life Insurance Company of New Jersey, Prudential Financial from July 2017 to December 2017. Prior to joining Prudential, Mr. Wallace served as Chief Risk Officer, Retirement, Voya Financial from February 2012 to October 2014. Age 42. The business address of all directors and officers of Pruco Life of New Jersey is 213 Washington Street, Newark, New Jersey 07102-2992. Pruco Life of New Jersey directors and officers are elected annually. Code of Ethics We have adopted Prudential Financial s code of business conduct and ethics, known as Making the Right Choices, which applies to our Chief Executive Officer, Chief Financial Officer and our Principal Accounting Officer, as well as to our directors and all other employees. Making the Right Choices is posted on Prudential Financial s website at www.investor.prudential.com. In addition, we have adopted Prudential Financial s Corporate Governance Guidelines, which we refer to herein as the Corporate Governance Principles and Practices. Prudential Financial s Corporate Governance Principles and Practices are available free of charge at www.investor.prudential.com. Executive Compensation The Real Property Account does not pay any fees, compensation or reimbursement to any Director or Officer of the Registrant. Certain Relationships and Related Transactions, and Director Independence See Related Party Transactions in Note 11 of Notes to the Consolidated Financial Statements of the Partnership. The Registrant is a separate investment account of Pruco Life Insurance Company of New Jersey, which is a wholly-owned subsidiary of Pruco Life Insurance Company ("Pruco Life"). Pruco Life is a wholly owned subsidiary of The Prudential Insurance Company of America ("Prudential"), which, in turn, is a wholly-owned subsidiary of Prudential Financial, Inc. ("Prudential Financial"). All Directors and Executive Officers of the Registrant are employees and officers of Prudential. Principal Accounting Fees and Services The Audit Committee of the Board of Directors of Prudential Financial has appointed PricewaterhouseCoopers, LLP as the independent registered public accounting firm of Prudential Financial and certain of its domestic and international subsidiaries, including the Registrant. The Audit Committee has established a policy requiring its pre-approval of all audit and permissible non-audit services provided by the independent auditor. Fees related to such services are hereby incorporated by reference to the section entitled Item 2 - Ratification of the Appointment of Independent Auditors in Prudential Financial's definitive proxy statement for the Annual Meeting of Shareholders to be held on May 7, 2018, to be filed by Prudential Financial with the Securities and Exchange Commission pursuant to Regulation 14A within 120 days after December 31, 2017. Financial Statements and Supplementary Data Table of Contents PRUCO LIFE OF NEW JERSEY VARIABLE CONTRACT REAL PROPERTY ACCOUNT Financial Statements: Report of Independent Registered Public Accounting Firm B-1 Statements of Net Assets December 31, 2017 and 2016 B-2 Statements of Operations Years Ended December 31, 2017, 2016 and 2015 B-2 Statements of Changes in Net Assets Years Ended December 31, 2017, 2016 and 2015 B-2 Notes to the Financial Statements B-3 THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP Financial Statements: Report of Independent Registered Public Accounting Firm C-1 Consolidated Statements of Assets and Liabilities December 31, 2017 and 2016 C-2 Consolidated Statements of Operations Years Ended December 31, 2017, 2016 and 2015 C-3 Consolidated Statements of Changes in Net Assets Years Ended December 31, 2017, 2016 and 2015 C-4 Consolidated Statements of Cash Flows Years Ended December 31, 2017, 2016 and 2015 C-5 Consolidated Schedules of Investments - December 31, 2017 and 2016 C-6 Notes to the Consolidated Financial Statements C-7 Financial Statement Schedules: Schedule III Real Estate Owned: Properties - December 31, 2017 C-17 Other 101.INS -XBRL Instance Document 101.SCH -XBRL Taxonomy Extension Schema Document. 101.CAL -XBRL Taxonomy Extension Calculation Linkbase Document. 101.LAB -XBRL Taxonomy Extension Label Linkbase Document. 101.PRE -XBRL Taxonomy Extension Presentation Linkbase Document. 101.DEF -XBRL Taxonomy Extension Definition Linkbase Document Report of Independent Registered Public Accounting Firm To the Board of Directors of Pruco Life Insurance Company of New Jersey and the Contract Owners of Pruco Life of New Jersey Variable Contract Real Property Account Opinion on the Financial Statements We have audited the accompanying statements of net assets of Pruco Life of New Jersey Variable Contract Real Property Account (the "Account") as of December 31, 2017 and 2016, the related statements of operations for each of the three years in the period ended December 31, 2017 and the statements of changes in net assets for each of the three years in the period ended December 31, 2017, including the related notes (collectively referred to as the financial statements ). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Account as of December 31, 2017 and 2016, the results of its operations for each of the three years in the period ended December 31, 2017 and the changes in its net assets for each of the three years in the period ended December 31, 2017 in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These financial statements are the responsibility of Pruco Life Insurance Company of New Jersey s management. Our responsibility is to express an opinion on the Account s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ( PCAOB ) and are required to be independent with respect to the Account in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of the investment owned as of December 31, 2017 by correspondence with the investee partnership. We believe that our audits provide a reasonable basis for our opinion. /s/ PricewaterhouseCoopers LLP New York, New York March 29, 2018 We have served as the Account s auditor since 1996. FINANCIAL STATEMENTS OF PRUCO LIFE OF NEW JERSEY VARIABLE CONTRACT REAL PROPERTY ACCOUNT STATEMENTS OF NET ASSETS December 31, 2017 and 2016 December 31, 2017 December 31, 2016 ASSETS Investment in The Prudential Variable Contract Real Property Partnership $ 9,721,949 $ 9,497,031 Net Assets $ 9,721,949 $ 9,497,031 NET ASSETS, representing: Equity of contract owners $ 6,995,514 $ 7,172,574 Equity of Pruco Life Insurance Company of New Jersey 2,726,435 2,324,457 $ 9,721,949 $ 9,497,031 Portfolio shares held 199,660 204,595 Portfolio net asset value per share $ 48.69 $ 46.42 Contract owner units outstanding 1,713,035 1,834,551 STATEMENTS OF OPERATIONS For the years ended December 31, 2017, 2016 and 2015 December 31, 2017 December 31, 2016 December 31, 2015 INVESTMENT INCOME Net investment income allocated from The Prudential Variable Contract Real Property Partnership $ 300,666 $ 325,505 $ 273,969 EXPENSES Charges for mortality and expense risk, and for administration 40,145 40,843 40,024 NET INVESTMENT INCOME 260,521 284,662 233,945 NET RECOGNIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net unrealized gain (loss) on investments allocated from The Prudential Variable Contract Real Property Partnership 224,793 146,348 479,615 Net recognized gain (loss) on investments allocated from The Prudential Variable Contract Real Property Partnership (60,256 ) (11,607 ) 5,677 NET GAIN (LOSS) ON INVESTMENTS 164,537 134,741 485,292 NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 425,058 $ 419,403 $ 719,237 STATEMENTS OF CHANGES IN NET ASSETS For the years ended December 31, 2017, 2016 and 2015 December 31, 2017 December 31, 2016 December 31, 2015 OPERATIONS Net investment income $ 260,521 $ 284,662 $ 233,945 Net unrealized gain (loss) on investments allocated from The Prudential Variable Contract Real Property Partnership 224,793 146,348 479,615 Net recognized gain (loss) on investments allocated from The Prudential Variable Contract Real Property Partnership (60,256 ) (11,607 ) 5,677 NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 425,058 419,403 719,237 CAPITAL TRANSACTIONS Net contributions (withdrawals) by contract owners (477,098 ) (330,229 ) (268,769 ) Net contributions (withdrawals) by Pruco Life Insurance Company of New Jersey 276,958 371,072 101,116 NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL TRANSACTIONS (200,140 ) 40,843 (167,653 ) TOTAL INCREASE (DECREASE) IN NET ASSETS 224,918 460,246 551,584 NET ASSETS Beginning of year 9,497,031 9,036,785 8,485,201 End of year $ 9,721,949 $ 9,497,031 $ 9,036,785 The accompanying notes are an integral part of these financial statements. NOTES TO THE FINANCIAL STATEMENTS OF PRUCO LIFE OF NEW JERSEY VARIABLE CONTRACT REAL PROPERTY ACCOUNT December 31, 2017 Note 1: General Pruco Life of New Jersey Variable Contract Real Property Account (the Real Property Account or the Registrant ) was established on October 30, 1987 by resolution of the Board of Directors of Pruco Life Insurance Company of New Jersey ( Pruco Life of New Jersey or the Company ), as a separate investment account pursuant to New Jersey law and is registered under the Securities Act of 1933, as amended. Pruco Life of New Jersey is a wholly-owned subsidiary of Pruco Life Insurance Company ("Pruco Life"). Pruco Life is a wholly-owned subsidiary of The Prudential Insurance Company of America ( Prudential ), which is a wholly-owned subsidiary of Prudential Financial, Inc. ( Prudential Financial ). The assets of the Real Property Account are segregated from Pruco Life of New Jersey s other assets. The Real Property Account is used to fund benefits under certain variable life insurance and variable annuity contracts issued by Pruco Life of New Jersey. These products are Variable Appreciable Life ( VAL ), Variable Life Insurance ( VLI ), Discovery Plus ( SPVA ), and Discovery Life Plus ( SPVL ). The assets of the Real Property Account are invested in The Prudential Variable Contract Real Property Partnership (the Partnership ). The Partnership is the investment vehicle for assets allocated to the real estate investment option under certain variable life insurance and variable annuity contracts. The Real Property Account, along with Pruco Life Variable Contract Real Property Account and The Prudential Variable Contract Real Property Account, are the sole investors in the Partnership. These financial statements should be read in conjunction with the accompanying audited consolidated financial statements of the Partnership. The Partnership has a policy of investing at least 65% of its assets in direct ownership interests in income-producing real estate and participating mortgage loans. Note 2: Summary of Significant Accounting Policies A. Basis of Accounting The financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ( U.S. GAAP ). The Real Property Account has evaluated subsequent events through the date these financial statements were issued. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The most significant estimates include valuation of the investment in the Partnership. B. Investment in Partnership Interest The investment in the Partnership is based on the Real Property Account s proportionate interest of the Partnership s fair value. At December 31, 2017 and 2016, the Real Property Account s share of the general partners' controlling interest of the Partnership was 4.5% or 199,660 shares and 4.5% or 204,595 shares, respectively. Properties owned by the Partnership are illiquid and their fair value is based on estimated fair value as disclosed in the notes to the consolidated financial statements of the Partnership. C. Income Recognition Net investment income or loss and recognized gains and losses are allocated based upon the daily average net assets for the investment in the Partnership. Amounts are based on the Real Property Account s proportionate interest in the Partnership. All changes in fair value are recorded as net change in unrealized gains (losses) on investments in the Statement of Operations. D. Equity of Pruco Life Insurance Company of New Jersey Pruco Life of New Jersey maintains a position in the Real Property Account for liquidity purposes, including unit purchases and redemptions, Partnership share transactions, and expense processing. The position does not affect contract owners accounts or the related unit values. There were no cash transactions at the Real Property Account level for the years ended December 31, 2017, 2016 and 2015 as all of the transactions are settled by Pruco Life of New Jersey on behalf of the Real Property Account through a redemption or an issuance of units. Therefore, no statement of cash flows is presented for the years ended December 31, 2017, 2016 and 2015. Note 3: Taxes Pruco Life of New Jersey is taxed as a life insurance company , as defined by the Internal Revenue Code. The results of operations of the Real Property Account form a part of Prudential Financial s consolidated federal tax return. Under current federal, state and local law, no federal, state or local income taxes are payable by the Real Property Account. As such, no provision for the tax liability has been recorded in these financial statements. Prudential management will review periodically the status of the policy in the event of changes in the tax law. NOTES TO THE FINANCIAL STATEMENTS OF PRUCO LIFE OF NEW JERSEY VARIABLE CONTRACT REAL PROPERTY ACCOUNT December 31, 2017 Note 4: Net Contributions (Withdrawals) by Contract Owners Net contributions (withdrawals) by contract owners(1) for the Real Property Account by product for the years ended December 31, 2017, 2016 and 2015 were as follows: December 31, 2017 VAL VLI SPVA SPVL TOTAL Contract owner net payments $ 192,889 $ 30,893 $ $ $ 223,782 Policy loans (82,142 ) (12,077 ) (94,219 ) Policy loan repayments and interest 123,690 13,977 137,667 Surrenders, withdrawals and death benefits (334,844 ) (80,421 ) (44,533 ) (459,798 ) Net transfers from/(to) other subaccounts or fixed rate option (103,358 ) 9,472 (93,886 ) Miscellaneous transactions (327 ) (113 ) (440 ) Administrative and other charges (157,031 ) (32,658 ) (515 ) (190,204 ) $ (361,123 ) $ (70,927 ) $ (44,533 ) $ (515 ) $ (477,098 ) December 31, 2016 VAL VLI SPVA SPVL TOTAL Contract owner net payments $ 202,513 $ 32,228 $ $ $ 234,741 Policy loans (146,138 ) (11,265 ) (157,403 ) Policy loan repayments and interest 199,916 22,762 222,678 Surrenders, withdrawals and death benefits (293,113 ) (74,749 ) (367,862 ) Net transfers from/(to) other subaccounts or fixed rate option (70,978 ) 8,092 (62,886 ) Miscellaneous transactions 429 495 924 Administrative and other charges (165,657 ) (34,577 ) (187 ) (200,421 ) $ (273,028 ) $ (57,014 ) $ $ (187 ) $ (330,229 ) December 31, 2015 VAL VLI SPVA SPVL TOTAL Contract owner net payments $ 213,285 $ 35,474 $ $ $ 248,759 Policy loans (123,429 ) (11,826 ) (135,255 ) Policy loan repayments and interest 143,872 19,801 163,673 Surrenders, withdrawals and death benefits (254,324 ) (50,233 ) (73,125 ) (377,682 ) Net transfers from/(to) other subaccounts or fixed rate option 11,809 10,808 22,617 Miscellaneous transactions (81 ) 187 2,909 3,015 Administrative and other charges (160,712 ) (32,951 ) (233 ) (193,896 ) $ (169,580 ) $ (28,740 ) $ $ (70,449 ) $ (268,769 ) (1) Certain prior period contract owner transaction amounts have been reclassified to conform to the current period s presentation. Note 5: Partnership Distributions For the year ended December 31, 2017, the Partnership distributed a total of $5.0 million, which occurred on December 28, 2017. The Real Property Account's share of this distribution was $0.2 million. For the year ended December 31, 2016, the Partnership made no distribution. For the year ended December 31, 2015, the Partnership distributed a total of $5.0 million, which occurred on March 30, 2015. The Real Property Account's share of this distribution was $0.2 million. For the years ended December 31, 2017, 2016 and 2015, there were no purchases of the Partnership by the Real Property Account. NOTES TO THE FINANCIAL STATEMENTS OF PRUCO LIFE OF NEW JERSEY VARIABLE CONTRACT REAL PROPERTY ACCOUNT December 31, 2017 Note 6: Unit Activity The changes in contract owner units outstanding(1) for the Real Property Account by product for the years ended December 31, 2017, 2016 and 2015 were as follows: December 31, 2017 VAL VLI SPVA SPVL TOTAL Units issued: 14,469 4,978 19,447 Units redeemed: (105,566 ) (21,478 ) (13,762 ) (157 ) (140,963 ) December 31, 2016 VAL VLI SPVA SPVL TOTAL Units issued: 47,751 9,826 57,577 Units redeemed: (119,376 ) (23,456 ) (60 ) (142,892 ) December 31, 2015 VAL VLI SPVA SPVL TOTAL Units issued: 40,782 9,440 50,222 Units redeemed: (88,675 ) (16,935 ) (23,570 ) (129,180 ) (1) Certain prior period contract owner transaction amounts have been reclassified to conform to the current period s presentation. Note 7: Financial Highlights Pruco Life of New Jersey sells a number of variable annuity and variable life insurance products. These products have unique combinations of features and fees that are charged against the contract owner s account balance. Differences in the fee structures result in a variety of unit values, expense ratios and total returns. The following table was developed by determining which products offered by Pruco Life of New Jersey have the lowest and highest total expense ratio and reflects contract owner units only. The table may not reflect the minimum and maximum contract charges offered by Pruco Life of New Jersey as contract owners may not have selected all available and applicable products as disclosed in Note 1. Units (000 s) Unit Value Lowest-Highest Net Assets (000 s) Investment Income Ratio(1) Expense Ratio(2) Lowest-Highest Total Return(3) Lowest-Highest December 31, 2017 1,713 $ 3.30531 $ 4.36813 $ 6,996 3.10 % 0.35 % 1.25 % 3.60 % 4.53 % December 31, 2016 1,835 $ 3.19050 $ 4.17877 $ 7,173 3.51 % 0.35 % 1.25 % 3.80 % 4.73 % December 31, 2015 1,920 $ 3.07375 $ 3.99015 $ 7,184 3.16 % 0.35 % 1.25 % 7.78 % 8.74 % December 31, 2014 1,999 $ 2.85193 $ 3.66932 $ 6,880 3.68 % 0.35 % 1.25 % 5.82 % 6.77 % December 31, 2013 2,070 $ 2.69505 $ 3.43650 $ 6,692 5.04 % 0.35 % 1.25 % 8.19 % 9.17 % (1) This amount represents the contract owners' proportionate share of net investment income from the underlying Partnership divided by the contract owners' average net assets of the Real Property Account. This ratio excludes those expenses, such as mortality and expense risk and administrative expenses that result in direct reductions in the unit values. (2) These amounts represent the annualized contract expenses of the Real Property Account, consisting primarily of mortality and expense charges, for each period indicated. These ratios include only those expenses that result in a direct reduction to unit values. Charges made directly to contract owner accounts through the redemption of units and expenses of the underlying Partnership are excluded. (3) These amounts represent the total return for the periods indicated, including changes in the value of the underlying Partnership, and reflect deductions for all items included in the expense ratio. The total return does not include any expense assessed through the redemption of units; inclusion of these expenses in the calculation would result in a reduction in the total return presented. NOTES TO THE FINANCIAL STATEMENTS OF PRUCO LIFE OF NEW JERSEY VARIABLE CONTRACT REAL PROPERTY ACCOUNT December 31, 2017 Note 7: Financial Highlights (continued) Pruco Life of New Jersey also maintains a position in the Real Property Account to provide for property acquisitions and capital expenditure funding needs. The table below reflects information for assets held by Pruco Life of New Jersey. Charges for mortality and expense risk and administrative expenses are used by Pruco Life of New Jersey to purchase additional investments in its account resulting in no impact to its net assets. Net Assets (000 s) December 31, 2017 $2,726 December 31, 2016 $2,324 December 31, 2015 $1,853 December 31, 2014 $1,606 December 31, 2013 $1,619 Charges and Expenses A. Mortality and Expense Risk Charges Mortality and expense risk charges are determined daily using an effective annual rate of 0.6%, 0.35%, 0.9% and 0.9% for VAL, VLI, SPVA and SPVL, respectively. Mortality risk is the risk that life insurance contract owners may not live as long as estimated or annuitants may live longer than estimated and expense risk is the risk that the cost of issuing and administering the contracts may exceed related charges by Pruco Life of New Jersey. The mortality risk and expense risk charges are assessed through reduction in unit values. B. Administrative Charges Administrative charges are determined daily using an effective annual rate of 0.35% applied daily against the net assets representing equity of contract owners held in each subaccount for SPVA and SPVL. Administrative charges include costs associated with issuing the contract, establishing and maintaining records, and providing reports to contract owners. The administrative charge is assessed through reduction in unit values. C. Cost of Insurance and Other Related Charges Contract owner contributions are subject to certain deductions prior to being invested in the Real Property Account. The deductions for VAL and VLI are (1) taxes attributable to premiums; (2) sales charges, not to exceed 5% for VAL, which are deducted in order to compensate Pruco Life of New Jersey for the cost of selling the contract; and (3) transaction costs, applicable to VAL, which are deducted from each premium payment to cover premium collection and processing costs. Contracts are subject to charges on each basic premium for assuming a guaranteed minimum death benefit risk. This charge compensates Pruco Life of New Jersey for the risk that an insured may die at a time when the death benefit exceeds the benefit that would have been payable in the absence of a minimum guarantee. These charges are assessed through the redemption of units. D. Deferred Sales Charge For SPVA, there is a deferred sales charge that applies at the time of a full or partial withdrawal, and the amount of the charge (which declines over time) depends on the number of years that have elapsed since the contract was issued. This deferred sales charge is assessed through the redemption of units. E. Partial Withdrawal Charge A charge is imposed by Pruco Life of New Jersey on partial withdrawals of the cash surrender value for VAL. A charge equal to the lesser of $15 or 2% will be made in connection with each partial withdrawal of the cash surrender value of a contract. This charge is assessed through the redemption of units. Note 8: Related Party Transactions The Real Property Account has transactions and relationships with Prudential and other affiliates. Due to these relationships, it is possible that the terms of these transactions are not the same as those that would result from transactions among unrelated parties. Prudential and its affiliates perform various services on behalf of the Partnership in which the Real Property Account invests and may receive fees for the services performed. These services include, among other things, shareholder communications, postage, transfer agency and various other record keeping and customer service functions. NOTES TO THE FINANCIAL STATEMENTS OF PRUCO LIFE OF NEW JERSEY VARIABLE CONTRACT REAL PROPERTY ACCOUNT December 31, 2017 Note 9: Fair Value Measurements Fair value represents the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Real Property Account values its investment in the Partnership using the net asset value provided by the Partnership as a practical expedient. Effective January 1, 2016, the Real Property Account adopted Accounting Standards Update ( ASU ) 2015-07 Fair Value Measurement (Topic 820): Disclosure for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent), which removes the requirement to classify the investment in the Partnership in the fair value hierarchy. As a result, certain tables and additional disclosures related to the leveling of assets and liabilities are no longer applicable. Properties owned by the Partnership are illiquid and fair value is based on estimates from property appraisal reports prepared by independent real estate appraisers as discussed in the notes to the Partnership s audited consolidated financial statements. The purpose of an appraisal is to estimate the fair value of real estate as of a specific date. The estimate of fair value of real estate is based on the conventional approaches to value, all of which require the exercise of subjective judgment. The three approaches are: (1) current cost of reproducing the real estate less deterioration and functional and economic obsolescence; (2) discounting a series of income streams and reversion at a specific yield or by directly capitalizing a single year income estimate by an appropriate factor; and (3) value indicated by recent sales of comparable real estate in the market. In the reconciliation of these three approaches, the independent appraiser uses one or a combination of them, to come up with the approximate value for the type of real estate in the market. The following is a summary of the investment strategy, risks, and redemption provisions of the Partnership: The Partnership has a policy of investing at least 65% of its assets in direct ownership interests in income-producing real estate, such as office buildings, shopping centers, hotels, apartments or industrial properties, and participating mortgage loans. The Partnership is subject to the risks inherent in the ownership of real property such as fluctuations in occupancy rates and operating expenses and variations in rental schedules. The Partnership properties are also subject to the risk of loss due to certain types of damage, which are either uninsurable or not economically insurable. The Partnership enters into loan agreements with certain lenders to finance its real estate investment transactions. Unfavorable economic conditions could increase related borrowing costs, limit access to the capital markets or result in a decision by lenders not to extend credit to the Partnership. Refer to the Partnership s audited consolidated financial statements for other related risks. The Partnership allows for withdrawal of cash, in any amount up to a partner s value of the Partnership. Ordinarily payment of the amount requested will be made on the day following the request. The Partnership reserves the right to defer such payments for a period of up to six months if the partners or the investment manager determine that there is insufficient cash available and prompt disposition of investments held by the Partnership cannot be made on commercially reasonable terms. The Real Property Account had no unfunded capital commitments as of December 31, 2017. Report of Independent Registered Public Accounting Firm To the General Partners of The Prudential Variable Contract Real Property Partnership: Opinion on the Financial Statements We have audited the accompanying consolidated statements of assets and liabilities, including the consolidated schedules of real estate investments, of The Prudential Variable Contract Real Property Partnership and its subsidiaries as of December 31, 2017 and December 31, 2016, and the related consolidated statements of operations, of changes in net assets and of cash flows for each of the three years in the period ended December 31, 2017, including the related notes and accompanying Schedule III - Real Estate Owned: Properties (collectively referred to as the consolidated financial statements ). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Partnership as of December 31, 2017 and December 31, 2016, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2017 in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These consolidated financial statements are the responsibility of the Partnership s management. Our responsibility is to express an opinion on the Partnership s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ( PCAOB ) and are required to be independent with respect to the Partnership in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB and in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. /s/ PricewaterhouseCoopers LLP New York, New York March 29, 2018 We have served as the Partnership's auditor since 1996. THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES December 31, 2017 December 31, 2016 ASSETS REAL ESTATE INVESTMENTS - At estimated fair value: Real estate and improvements (cost: 12/31/2017 - $252,500,936; 12/31/2016 $234,186,993) $ 298,177,876 $ 269,471,676 CASH AND CASH EQUIVALENTS 26,734,968 47,541,618 OTHER ASSETS, NET 3,911,722 3,383,759 Total assets $ 328,824,566 $ 320,397,053 LIABILITIES & PARTNERS EQUITY INVESTMENT LEVEL DEBT (net of deferred financing costs: $ 96,905,747 $ 93,958,234 12/31/2017 - $1,018,029; 12/31/2016 - $1,095,035) ACCOUNTS PAYABLE AND ACCRUED EXPENSES 2,163,012 2,150,818 DUE TO AFFILIATES 843,319 815,990 OTHER LIABILITIES 716,956 743,284 Total liabilities 100,629,034 97,668,326 COMMITMENTS AND CONTINGENCIES NET ASSETS, REPRESENTING PARTNERS EQUITY: GENERAL PARTNERS CONTROLLING INTEREST 215,557,286 210,258,011 NONCONTROLLING INTEREST 12,638,246 12,470,716 Total partners' equity 228,195,532 222,728,727 Total liabilities and partners equity $ 328,824,566 $ 320,397,053 NUMBER OF SHARES OUTSTANDING AT END OF PERIOD 4,426,906 4,529,591 GENERAL PARTNERS' SHARE VALUE AT END OF PERIOD $ 48.69 $ 46.42 The accompanying notes are an integral part of these consolidated financial statements. TABLE OF CONTENTS Page PER SHARE INVESTMENT INCOME, CAPITAL CHANGES AND SELECTED RATIOS 1 SUMMARY 2
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+This summary highlights information contained elsewhere in this prospectus. This summary does not contain all of the information that you should consider before investing in the units. You should read this entire prospectus carefully, including the risk factors beginning on page 20, the Statement of Additional Information and all exhibits to the prospectus, before deciding to invest. See the glossary in Appendix E for definitions of certain key terms relating to Grant Park s trading activities that are used in this prospectus. Any March 31, 2018 and April 30, 2018 financial information disclosed herein is unaudited. This prospectus is intended to be used beginning, 2018. Grant Park Grant Park is a multi advisor commodity pool organized to pool assets of investors for the purpose of trading in the U.S. and international spot and derivatives markets for currencies, interest rates, stock indices, agricultural and energy products, precious and base metals and other commodities and underliers. In trading on these markets, Grant Park may enter into: exchange traded derivatives, such as futures contracts, options on futures contracts, security futures contracts and listed option contracts (collectively, exchange traded derivatives ); over the counter, or OTC, derivatives, such as forwards, swaps, options and structured financial products (collectively, OTC derivatives ); and contracts on cash, or spot, commodities (collectively, cash commodities ) (collectively, exchange traded derivatives, OTC derivatives and cash commodities are referred to as commodity interests ). Grant Park invests the assets of each class of the fund in various trading companies which (i) enter into advisory agreements with the independent commodity trading advisors retained by the general partner; (ii) enter into swap transactions or derivative instruments tied to the performance of certain reference traders; and/or (iii) allocate assets to Grant Park s cash management trading company. Grant Park s general partner, commodity pool operator and sponsor is Dearborn Capital Management, L.L.C., an Illinois limited liability company. The manager of Dearborn Capital Management, L.L.C. is David M. Kavanagh, its President. Grant Park has been trading continuously since January 1989 and, as of April 30, 2018, had a net asset value of approximately $97.8 million and 3,944 limited partners. Since its inception and through February 28, 2003, Grant Park offered its beneficial interests exclusively to qualified investors on a private placement basis. Effective June 30, 2003, Grant Park began offering units for sale to the public. Grant Park s main office is located at 555 West Jackson Boulevard, Suite 600, Chicago, Illinois 60661, and its telephone number is (312) 756 4450. The Offered Units Grant Park s limited partnership units are being offered in five separate and distinct classes: the Legacy 1 Class units, the Legacy 2 Class units, the Global 1 Class units, the Global 2 Class units and the Global 3 Class units. In addition to the offered units, Grant Park has two outstanding classes of limited partnership units, the Class A and Class B units, which are no longer being offered for sale and are not offered hereunder. Proceeds from investments in the offered units are traded through different commodity trading advisors or through swap transactions based on reference programs of such advisors retained or selected by the general partner with respect to each class of units. Each of the trading advisors employs either technical and trend following trading strategies or disciplined macro thematic strategies through proprietary trading programs in an effort to achieve capital appreciation while controlling risk and volatility. The general partner may, in its sole discretion, reallocate assets among the trading advisors either directly or through swap transactions upon termination of a trading advisor or retention of any new trading advisors, or at the commencement of any month. Consequently, the current apportionments are subject to change. The offered units are subject to a three month lock up period. Legacy 1 Class and Legacy 2 Class units The Legacy 1 Class and Legacy 2 Class units are allocated to the same trading advisors and are being offered only to investors who are represented by approved selling agents who are directly compensated by the investor for Pre-effective Amendment No. 2 to FORM S 1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Table of Contents services rendered in connection with an investment in Grant Park (such arrangements commonly referred to as wrap accounts ). Selling agents who sell Legacy 1 Class or Legacy 2 Class units do not receive any upfront sales compensation. Each selling agent who sells Legacy 2 Class units does, however, receive ongoing compensation for continuing administrative services at an annual rate of 25 basis points (0.25%) of the month end net asset value of the unit. See FEES AND EXPENSES Fees and Expenses Paid by the General Partner Selling Agent Compensation. Through their respective trading companies, each of Rabar Market Research, Inc., or Rabar, EMC Capital Advisors LLC, or EMC, Transtrend B.V., or Transtrend, Amplitude Capital International Limited, or Amplitude, Lynx Asset Management AB, or Lynx, Quantica Capital AG, or Quantica, and Revolution Capital Management LLC, or RCM, serve as Grant Park s commodity trading advisors with respect to the Legacy 1 Class and Legacy 2 Class units. Legacy 1 Class and Legacy 2 Class units obtain the equivalent of net profits or net losses generated by H2O AM LLP, or H2O, and Winton Capital Management Limited, or Winton, as reference traders through off-exchange swap transactions and will not allocate assets to H2O or Winton directly. The trading advisors and their respective asset allocations and the reference traders with respect to the Legacy 1 Class and Legacy 2 Class units are the same as with respect to the fund s Class A and Class B units. With respect to the Class A and Class B units and the Legacy 1 Class and Legacy 2 Class, each of Amplitude, Transtrend, Rabar, EMC, Lynx, Quantica, and RCM manage between 5% and 25% of Grant Park s net assets, and the swap transactions for which Winton and H2O are reference traders are similarly within this range. Global 1 Class, Global 2 Class and Global 3 Class units Investments in the Global 1 Class, Global 2 Class and Global 3 Class units are allocated to the same trading advisors or reference traders. However, Global 1 Class and Global 2 Class units are being offered only to investors purchasing such units through wrap accounts. Selling agents who sell Global 1 Class or Global 2 Class units do not receive any upfront sales compensation. Each selling agent who sells Global 2 Class units does, however, receive ongoing compensation for continuing administrative services at an annual rate of 25 basis points (0.25%) of the month end net asset value of the unit. See FEES AND EXPENSES Fees and Expenses Paid by the General Partner Selling Agent Compensation. Selling agents who sell Global 3 Class units receive an upfront sales commission of up to 2.0% of the subscription amount. Beginning with the thirteenth month after the subscription proceeds of a Global 3 Class unit are invested in Grant Park, each selling agent who sells Global 3 Class units will receive ongoing compensation for continuing administrative services at an annual rate of 2.0% of the month end net asset value of the unit. In the event that the total underwriting compensation paid to a selling agent per a Global 3 Class unit meets certain limits, such Global 3 Class unit will be automatically exchanged for an equal net asset amount of Global 1 Class units at no additional cost. See FEES AND EXPENSES Fees and Expenses Paid by the General Partner Selling Agent Compensation. Global 3 Class units redeemed after the three month lock up period, but on or before the one year anniversary of the subscription are subject to a fee of up to 1.50% of the net asset value of the redeemed units; the Global 1 Class and Global 2 Class units are not subject to an early redemption fee. Through their respective trading companies, each of Rabar, EMC, Transtrend, Amplitude, Lynx, Quantica and RCM serve as Grant Park s commodity trading advisors with respect to the Global 1 Class, Global 2 Class and Global 3 Class units. Global 1 Class, Global 2 Class, and Global 3 Class units obtain the equivalent of net profits or net losses generated by H2O AM LLP, or H2O, and Winton Capital Management Limited, or Winton, as reference traders through off-exchange swap transactions and will not allocate assets to H2O or Winton directly. With respect to the Global 1 Class, Global 2 Class and Global 3 Class units, each of Rabar, EMC, Transtrend, Amplitude, Lynx, Quantica, and RCM manage between 5% and 25% of Grant Park s net assets, and the swap transactions for which Winton and H2O are reference traders are similarly within this range. Break Even Amounts for Each Class of Units The following summarizes the approximate dollar returns and percentage returns required for the redemption value of a hypothetical $1,000 initial investment in offered units to equal the amount invested 12 months after the GRANT PARK FUTURES FUND LIMITED PARTNERSHIP (Exact name of Registrant as Specified in its Charter) Illinois (State or other jurisdiction of incorporation or organization) 6799 (Primary Standard Industrial Classification Code Number) 36 3596839 (I.R.S. Employer Identification Number) c/o Dearborn Capital Management, L.L.C. 555 West Jackson Boulevard, Suite 600 Chicago, Illinois 60661 (312) 756 4450 (Address, including zip code, and telephone number, including area code of registrant s principal executive offices) Copies to: David M. Kavanagh Grant Park Futures Fund Limited Partnership c/o Dearborn Capital Management, L.L.C. 555 West Jackson Boulevard, Suite 600 Chicago, Illinois 60661 (312) 756 4450 Jennifer Durham King, Esq. Vedder Price P.C. 222 North LaSalle Street, Suite 2600 Chicago, Illinois, 60601 (312) 609 7500 (name, address, including zip code, and telephone number, including area code, of agent for service) Table of Contents investment was made. The break even summary for the Global 3 Class units shows the amount required to break even both with and without an early redemption fee which, for purposes of this summary, the highest early redemption fee has been presented to approximate the effect that payment of an early redemption fee will have on a redemption of such units during the first year of investment. Legacy 1 Class: 3.93% (or $39.28). Legacy 2 Class: 4.20% (or $42.02). Global 1 Class: 3.34% (or $33.37). Global 2 Class: 3.61% (or $36.14). Global 3 Class: 5.56% (or $55.55) without highest early redemption fee, or 7.06% (or $70.55) with highest early redemption fee. See SUMMARY Break Even Analysis beginning on page 11 for detailed breakeven analysis of the offered units. Continuous Offering Period Grant Park offers the offered units on a continuous basis and will continue to offer such units until the maximum amount of Legacy 1 Class, Legacy 2 Class, Global 1 Class, Global 2 Class and Global 3 Class units, respectively, which are registered are sold. We refer to this period as the continuous offering period. The general partner may terminate the continuous offering period at any time. Commodity Interests Grant Park trades in the U.S. and international spot and derivatives markets for currencies, interest rates, stock indices, agricultural and energy products, precious and base metals and other commodities and underliers. In trading on these markets, Grant Park may enter into exchange traded derivatives, OTC derivatives and cash commodities. A brief description of Grant Park s main types of investments is set forth below. A futures contract is a standardized, exchange traded contract to buy or sell a commodity for a specified price in the future. A forward contract is a bilaterally negotiated contract to buy or sell something (i.e., the underlier) at a specified price in the future. An option on a futures contract, forward contract, swap or a commodity gives the buyer of the option the right, but not the obligation, to buy or sell a futures contract, forward contract or a commodity, as applicable, at a specified price on or before a specified date. Options on futures contracts are standardized contracts traded on an exchange, while options on forward contracts and commodities, referred to collectively in this prospectus as over the counter, or OTC, options, generally are bilaterally negotiated, principal to principal contracts not traded on an exchange. A swap is a bilaterally negotiated agreement between two parties to exchange cash flows based upon an asset, rate or something else (i.e., the underlier). A commodity spot contract is a cash market transaction in which the buyer and seller agree to the immediate purchase and sale of a commodity, usually with a two day settlement. Spot contracts are not uniform and not exchange traded. A security futures contract is a futures contract on a single equity security or a narrow based security index. Security futures contracts are exchange traded. Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement. Table of Contents For more detailed descriptions of futures contracts, forward contracts, options contracts, other commodity interest contracts and other aspects of the commodity interest markets, see Part Two: Statement of Additional Information. Plan of Distribution What is the minimum investment? The minimum investment required to invest in the Legacy 1 Class and Legacy 2 Class units is $10,000, except in the case of investors that are employee benefit plans and/or individual retirement accounts for which the minimum investment is $1,000; subsequent investment in the Legacy 1 Class and Legacy 2 Class units must be at least $1,000. The selling agents offer the Legacy 1 Class and Legacy 2 Class units at a price equal to the net asset value per unit of each of the units at the close of business on each closing date, which is the last business day of each month. The Legacy 1 Class and Legacy 2 Class units are being offered only to investors purchasing such units through wrap accounts. The minimum investment in the Global 1 Class, Global 2 Class and Global 3 Class units is $5,000, except in the case of investors in such units that are employee benefit plans and/or individual retirement accounts for which the minimum investment is $1,000; subsequent investment in the Global 1 Class, Global 2 Class and Global 3 Class units must be at least $1,000. The selling agents offer the Global 1 Class, Global 2 Class and Global 3 Class units at a price equal to the net asset value per unit of each of the units at the close of business on each closing date, which is the last business day of each month. The Global 1 Class and Global 2 Class units are being offered only to investors purchasing such units through wrap accounts. Any of these minimum investment requirements, including the requirement to invest in certain classes of units through wrap accounts, may be waived by the general partner in its sole discretion. Units are sold in fractions calculated to five decimal places. How do I invest in Grant Park? You may buy units at the close of business on the last business day of each month, each a closing date, by submitting a subscription at least five business days before the applicable closing date, or at an earlier date if required by your selling agent. The number of units that you receive will be based on the net asset value per unit of the applicable class of units at the close of business on the closing date. Approved subscriptions will be accepted once payments are received and cleared, and each investor will receive written confirmation of the purchase following acceptance. The general partner will accept or reject your subscription, in whole or in part, in its sole discretion. The general partner will deposit your subscription funds in Grant Park s non interest bearing subscription account. If the general partner accepts your subscription, your subscription funds will be invested in Grant Park on the next applicable closing date. There is no minimum aggregate subscription amount that must be received before new investors funds can be invested. If the general partner does not accept your subscription, your subscription funds will be returned to you without interest. The selling agents, which are the registered broker dealers who are offering the units, will use their best efforts to sell the units being offered, without any firm underwriting commitment. You will not directly pay sales commissions to the selling agents. All sales commissions and other compensation to the selling agents are paid by the general partner out of the brokerage charge paid by Grant Park to the general partner. Carefully read the prospectus, along with all appendices, including the limited partnership agreement and the subscription agreement and power of attorney and discuss with your financial advisor any questions you have about Grant Park. Investors will be required to make the representations and warranties set forth in Appendix C relating to their suitability to purchase the offered units in the subscription agreement and power of attorney. If you decide to invest, please complete and sign the subscription agreement and power of attorney and deliver to your selling agent a check made payable to Grant Park Futures Fund Limited If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box: If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: If this Form is a post effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: If this Form is a post effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non accelerated filer, a smaller reporting company or an emerging growth company. See definitions of large accelerated filer, accelerated filer, smaller reporting company and emerging growth company in Rule 12b 2 of the Exchange Act. Large accelerated filer Accelerated filer Non accelerated filer (Do not check if a smaller reporting company) Smaller reporting company Emerging growth company If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided to Section 7(a)(2)(B) of the Securities Act. THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE. Table of Contents Partnership Subscription Account, or authorize a wire transfer in the amount of your subscription in accordance with the instructions set forth in the subscription agreement and power of attorney. Alternatively, if available, you may authorize your selling agent to debit your customer securities brokerage account in the amount of your subscription. What is the difference between the Legacy 1 Class, the Legacy 2 Class, the Global 1 Class, the Global 2 Class and the Global 3 Class units? The Legacy 1 Class, Legacy 2 Class, Global 1 Class and Global 2 Class units are being offered only to investors who purchase such units through wrap accounts, provided that they meet the suitability criteria described below and in Appendix C. The Global 3 Class units are reserved for investments by new investors generally, provided they meet the same suitability criteria. The trading advisors or swap transactions based on reference programs of such advisors for the Legacy 1 Class and Legacy 2 Class units are Rabar, EMC, Winton, Transtrend, Amplitude, Lynx, Quantica, RCM and H2O. The trading advisors, asset allocations and trading philosophy with respect to the Legacy 1 Class and Legacy 2 Class units are the same as those utilized for Grant Park s Class A and Class B units. The trading advisors or swap transactions based on reference programs of such advisors for the Global 1 Class, Global 2 Class and Global 3 Class units are Rabar, EMC, Winton, Transtrend, Amplitude, Lynx, Quantica, RCM and H2O. The investment process is uniquely managed for each class of units. The Legacy 1 Class units bear organization and offering expenses at an annual rate of 30 basis points (0.30%) of the adjusted net assets of the Legacy 1 Class units, calculated and payable monthly on the basis of month end adjusted assets (before accruals for fees and expenses and redemptions). With respect to the monthly brokerage charge payable by Grant Park to the general partner, Legacy 1 Class units are charged 0.3750% of month end adjusted net assets of the Legacy 1 Class units, a rate of 4.50% annually. The Legacy 2 Class units bear organization and offering expenses at an annual rate of 30 basis points (0.30%) of the adjusted net assets of the Legacy 2 Class units, calculated and payable monthly on the basis of month end adjusted assets (before accruals for fees and expenses and redemptions). With respect to the monthly brokerage charge payable by Grant Park to the general partner, Legacy 2 Class units are charged 0.3958% of month end adjusted net assets of the Legacy 2 Class units, a rate of 4.75% annually. The Global 1 Class units bear organization and offering expenses at an annual rate of 30 basis points (0.30%) of the adjusted net assets of the Global 1 Class units, calculated and payable monthly on the basis of month end adjusted assets (before accruals for fees and expenses and redemptions). With respect to the monthly brokerage charge payable by Grant Park to the general partner, Global 1 Class units are charged 0.3292% of month end adjusted net assets of the Global 1 Class units, a rate of 3.95% annually. The Global 2 Class units bear organization and offering expenses at an annual rate of 30 basis points (0.30%) of the adjusted net assets of the Global 2 Class units, calculated and payable monthly on the basis of month end adjusted assets (before accruals for fees and expenses and redemptions). With respect to the monthly brokerage charge payable by Grant Park to the general partner, Global 2 Class units are charged 0.3500% of month end adjusted net assets of the Global 2 Class units, a rate of 4.20% annually. The Global 3 Class units bear organization and offering expenses at an annual rate of 30 basis points (0.30%) of the adjusted net assets of the Global 3 Class units, calculated and payable monthly on the basis of month end adjusted assets (before accruals for fees and expenses and redemptions). With respect to the monthly brokerage charge payable by Grant Park to the general partner, Global 3 Class units are charged 0.4958% of month end adjusted net assets of the Global 3 Class units, a rate of 5.95% annually. Investors in the offered units are prohibited from redeeming such units for three months following the subscription date. This lock up period may be waived by the general partner at its sole discretion. Global 3 Class units that are redeemed before the one year anniversary of the subscription date will pay an early redemption fee of up to 1.5% of the net asset value at which such units are redeemed. The general partner has discretion to waive the redemption fee. Table of Contents SUBJECT TO COMPLETION, DATED JULY 12, 2018 The information in this Prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This Prospectus is not an offer to sell these securities and we are not soliciting offers to buy these securities in any jurisdiction where the offer or sale is not permitted. PART ONE: DISCLOSURE DOCUMENT GRANT PARK FUTURES FUND LIMITED PARTNERSHIP $191,606,823 Legacy 1 Class Units $179,318,591 Legacy 2 Class Units $119,076,039 Global Alternative Markets 1 Class Units $158,617,364 Global Alternative Markets 2 Class Units $199,459,166 Global Alternative Markets 3 Class Units The Offering Grant Park Futures Fund Limited Partnership, which is referred to in this prospectus as Grant Park, is a multi advisor commodity pool organized to pool assets of investors for the purpose of trading in the U.S. and international spot and derivatives markets for currencies, interest rates, stock indices, agricultural and energy products, precious and base metals and other commodities and underliers. Grant Park, which is not registered as a mutual fund under the Investment Company Act of 1940, has been in continuous operation since January 1989. It is managed by its general partner, Dearborn Capital Management, L.L.C., and invests through independent professional commodity trading advisors. This offering consists of five classes of limited partnership units: Legacy 1 Class units, Legacy 2 Class units, Global Alternative Markets 1 ( Global 1 ) Class units, Global Alternative Markets 2 ( Global 2 ) Class units and Global Alternative Markets 3 ( Global 3 ) Class units, each of which are being offered to new and existing investors of Grant Park. Grant Park previously publicly offered two additional classes of units: Class A units and Class B units. Although we are no longer offering Class A Units or Class B Units, existing holders of Class A and Class B Units may continue to own such units. The offered units have different fee arrangements and restrictions on redemptions. Additionally, investments in the offered units will be allocated to different commodity trading advisors who apply different investment strategies with respect to each class of units. The Legacy 1 Class and Legacy 2 Class units and Global 1 Class and Global 2 Class units are being offered only to investors who are represented by approved selling agents who are directly compensated by the investor for services rendered in connection with an investment in Grant Park (such arrangements commonly referred to as wrap accounts ). The selling agents offer the units at a price equal to the net asset value per unit of each of the units at the close of business on each closing date, which is the last business day of each month. The selling agents are not required to sell any specific quantity or dollar amount of units, but have agreed to use their best efforts to sell the units offered. Subscriptions approved for investment will be effective as of each closing date and will be held in Grant Park s subscription account until invested. The offering is not contingent on a minimum aggregate level of investment and is expected to continue until all registered units are sold. The general partner may, however, in its discretion, suspend or terminate the offering at any time, or it may elect to register and offer additional units. Table of Contents The Legacy 1 Class, Legacy 2 Class, Global 1 Class and Global 2 Class units are not subject to an early redemption fee. After termination of the lock up period, you may cause Grant Park to redeem your units at the net asset value per applicable unit as of the last business day of each month with at least 10 days advance written notice to the general partner, or at an earlier date if required by your selling agent. Is Grant Park a suitable investment for you? An investment in Grant Park is speculative and involves a high degree of risk. Grant Park is not suitable for all investors. The general partner offers Grant Park as a diversification opportunity for an investor s entire investment portfolio, and therefore an investment in Grant Park should only represent a limited portion of an investor s overall portfolio. To invest in Grant Park, you must have at a minimum: (1) a net worth of at least $250,000, exclusive of home, furnishings and automobiles; or (2) a net worth, similarly calculated, of at least $70,000 and an annual gross income of $70,000. A number of jurisdictions in which the units are offered impose on their residents higher minimum suitability requirements, which are described in Appendix C to this prospectus. Please see Appendix C for a detailed description of the minimum suitability requirements in the state in which you reside. You will be required to represent that you meet the requirements set forth in your state of residence before your subscription to purchase units will be accepted. These suitability requirements are, in each case, regulatory minimums only, and just because you meet such requirements does not mean that an investment in the units is suitable for you. In no event may you invest more than 10% of your net worth, exclusive of home, furnishings and automobiles, in Grant Park. Employee benefit plans and individual retirement accounts are subject to special suitability requirements. See INVESTMENT BY ERISA AND OTHER PLAN ACCOUNTS. In addition, individual selling agents may impose even higher minimum suitability requirements on their clients investing in Grant Park than those described above or required by an individual state. You should consult with your financial advisor to confirm that you meet these requirements before deciding to invest in Grant Park. Summary of Risk Factors You Should Consider Before Investing in Grant Park An investment in Grant Park is highly speculative and involves a high degree of risk. Some of the risks you may face are summarized below. A comprehensive discussion of risks begins on page 20. The prices of commodity interest contracts are highly volatile and subject to rapid and substantial fluctuations. You could therefore lose all or substantially all of your investment if Grant Park s trading positions are or become unprofitable. These movements in price are often the result of factors outside of Grant Park s and the trading advisors control and may not be anticipated by Grant Park s trading advisors. Because Grant Park s trading positions are typically secured by the deposit of margin funds that represent only a small percentage of a contract s face value, Grant Park is highly leveraged. As a result of this leverage, relatively small movements in the price of a contract can cause significant losses. Grant Park s use of multiple independent trading advisors may result in Grant Park taking offsetting positions on the same commodity interest contract, thereby possibly incurring additional expenses but without any net change in Grant Park s holdings. In addition, the trading programs used by each trading advisor bear some similarities to the trading programs used by other trading advisors, which may negate the potential benefits of having multiple trading advisors. Past performance of Grant Park is not necessarily indicative of future results, and you should not rely on the performance record to date of Grant Park and/or the trading advisors in deciding whether to invest. The general partner has increased Grant Park s fee and expense structure in certain respects to accommodate the public offering of units, and the fees and expenses have an impact on Grant Park s net performance. Table of Contents Summary of Risks Before you decide whether to invest, you should read this entire prospectus carefully and consider the risk factors beginning on page 20. Several risk factors include, but are not limited to: An investment in Grant Park is speculative and leveraged; as a result of this leverage, small movements in the price of a commodity interest may cause you to incur significant losses. Performance can be volatile; rapid and substantial fluctuations in commodity interest prices could cause Grant Park s trading positions to suddenly turn unprofitable and cause you to lose all or substantially all of your investment in Grant Park. Grant Park s past performance is not necessarily indicative of future results. Grant Park s use of multiple trading advisors may result in Grant Park taking offsetting trading positions, thereby incurring additional expenses with no net change in holdings. No secondary market exists for the units; redemptions of the units are prohibited during the first three months following an initial and each subsequent investment and, in the case of the Global 3 Class units, redemptions prior to the first anniversary date of an investment will result in early redemption fees. Grant Park pays substantial fees and expenses, including fees paid to its trading advisors, that must be offset by trading profits and interest income. A substantial portion of the trades executed for Grant Park takes place outside of the U.S., much of which exposes Grant Park to substantial credit, regulatory and foreign exchange risk. You will have no right to participate in the management of Grant Park. The structure and operation of Grant Park involve several conflicts of interest. The commodity interest markets are the subject of regulatory scrutiny, from both a national and international perspective, and the implementation of certain proposed laws or regulations could adversely impact Grant Park s ability to trade speculatively and implement its trading strategies. Minimum Investment There is a $10,000 minimum investment required to invest in the Legacy 1 Class and Legacy 2 Class units, except that, in the case of investors that are employee benefit plans and/or individual retirement accounts, the minimum investment is $1,000. The minimum investment in the Global 1 Class, Global 2 Class and Global 3 Class units is $5,000, respectively, except that in the case of investors that are employee benefit plans and/or individual retirement accounts, the minimum investment is $1,000. Any minimum initial investment amounts or wrap account requirements may be waived in the sole discretion of the general partner. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense. THE COMMODITY FUTURES TRADING COMMISSION HAS NOT PASSED UPON THE MERITS OF PARTICIPATING IN THIS POOL NOR HAS THE COMMODITY FUTURES TRADING COMMISSION PASSED ON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. This prospectus is in two parts: a disclosure document and a statement of additional information. These parts are bound together, and both parts contain important information. The date of this prospectus is , 2018 Table of Contents The Dodd Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) and related regulatory actions have, among other things, significantly changed the regulation of swaps and certain other derivative transactions, which may result in lost profit opportunities for Grant Park. A substantial portion of Grant Park s trades takes place on markets and exchanges outside the United States. Some non U.S. markets present risks because they are not subject to the same degree of regulation as their U.S. counterparts. In some of these non U.S. markets, the performance on a contract is the responsibility of the counterparty and the contract is not backed by or novated to a centralized clearing house and therefore exposes Grant Park to credit risk in the form of a counterparty default or payment risk. Trading in non U.S. markets also leaves Grant Park susceptible to swings in the value of the local currency against the U.S. dollar. Grant Park pays substantial fees and expenses that are incurred regardless of whether it is profitable. In addition, Grant Park pays each of its trading advisors an incentive fee that is based only on that trading advisor s trading profits, which means that Grant Park could pay incentive fees to one or more of the trading advisors even if Grant Park as a whole is not profitable. You will have no rights to participate in the management of Grant Park and will have to rely on the fiduciary duty and judgment of the general partner to manage Grant Park in the best interest of the limited partners. The structure and operation of Grant Park involves several conflicts of interest. For example, DCM Brokers, LLC, an affiliate of Grant Park s general partner, serves as Grant Park s lead selling agent. Certain principals of Grant Park s general partner own a minority interest in EMC Capital Advisors, LLC, one of Grant Park s trading advisors. An affiliate of one of Grant Park s clearing brokers, Wells Fargo Securities, LLC, also serves as one of Grant Park s selling agents. These and other conflicts may cause the parties involved to act in a manner that is other than in Grant Park s best interests. The commodity interest markets are the subject of regulatory scrutiny, from both a national and international perspective, and implementation of certain proposed laws or regulations could adversely impact Grant Park s ability to trade speculatively and implement its trading strategies. Investment Factors to Consider Before Investing in Grant Park Grant Park is an alternative investment fund managed by experienced, professional trading advisors or reference traders that trade in commodity interests. The trading programs that the trading advisors use for Grant Park are comprised of a variety of proprietary trading strategies and systems. An investment in Grant Park may diversify a traditional securities portfolio. A diverse portfolio consisting of assets that perform in an unrelated manner, or non correlated assets, may increase overall return and reduce the volatility of a portfolio. As a risk transfer activity, trading in commodity interests has no inherent correlation with any other investment. However, non correlation will not provide any diversification advantages unless the non correlated assets are outperforming other portfolio assets, and there is no guarantee that Grant Park will outperform other sectors of an investor s portfolio or not produce losses. Grant Park s profitability also depends on the success of the trading advisors or reference traders trading techniques. If Grant Park is unprofitable, then it will not increase the return on an investor s portfolio or achieve its diversification objectives. Investors in Grant Park obtain the advantage of limited liability in highly leveraged trading. Table of Contents REGULATORY NOTICES NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND, THE GENERAL PARTNER, THE AUTHORIZED PARTICIPANTS OR ANY OTHER PERSON. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY THE SECURITIES OFFERED HEREBY TO ANY PERSON OR BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION MAY NOT LAWFULLY BE MADE. THE BOOKS AND RECORDS OF THE FUND WILL BE MAINTAINED AT ITS PRINCIPAL OFFICE, 555 WEST JACKSON BOULEVARD, SUITE 600, CHICAGO, IL 60661. LIMITED PARTNERS WILL HAVE THE RIGHT, DURING NORMAL BUSINESS HOURS, TO HAVE ACCESS TO AND COPY (UPON PAYMENT OF REASONABLE REPRODUCTION COSTS) SUCH BOOKS AND RECORDS IN PERSON OR BY THEIR AUTHORIZED ATTORNEY OR AGENT. EACH MONTH, THE GENERAL PARTNER WILL DISTRIBUTE REPORTS TO ALL LIMITED PARTNERS SETTING FORTH SUCH INFORMATION AS THE COMMODITY FUTURES TRADING COMMISSION (THE CFTC ) AND THE NATIONAL FUTURES ASSOCIATION (THE NFA ) MAY REQUIRE BE GIVEN TO THE PARTICIPANTS IN COMMODITY POOLS WITH RESPECT TO THE FUND AND ANY SUCH OTHER INFORMATION AS THE GENERAL PARTNER MAY DEEM APPROPRIATE. THERE WILL SIMILARLY BE DISTRIBUTED TO LIMITED PARTNERS, NOT MORE THAN 90 DAYS AFTER THE CLOSE OF EACH OF THE FUND S FISCAL YEARS, CERTIFIED AUDITED FINANCIAL STATEMENTS AND (IN NO EVENT LATER THAN MARCH 15 OF THE IMMEDIATELY FOLLOWING YEAR) THE TAX INFORMATION RELATING TO SHARES OF THE FUND NECESSARY FOR THE PREPARATION OF LIMITED PARTNERS ANNUAL FEDERAL INCOME TAX RETURNS. THE DIVISION OF INVESTMENT MANAGEMENT OF THE SECURITIES AND EXCHANGE COMMISSION REQUIRES THAT THE FOLLOWING STATEMENT BE PROMINENTLY SET FORTH HEREIN: GRANT PARK FUTURES FUND LIMITED PARTNERSHIP IS NOT A MUTUAL FUND OR ANY OTHER TYPE OF INVESTMENT COMPANY WITHIN THE MEANING OF THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED, AND IS NOT SUBJECT TO REGULATION THEREUNDER. You should rely only on the information contained in this prospectus. Grant Park, the general partner and the selling agents have not authorized anyone to provide you with different information, and if you receive any unauthorized information, you should not rely on it. We are not making an offer of these securities in any place where the offer is not permitted. You should assume that the information in this prospectus or any prospectus supplement is accurate only as of the date of the front cover of that document, regardless of the time you receive this prospectus. Table of Contents The General Partner Dearborn Capital Management, L.L.C., an Illinois limited liability company, is Grant Park s general partner and commodity pool operator and has sole authority and responsibility for administering Grant Park. Along with its predecessor as Grant Park s general partner and commodity pool operator, Dearborn Capital Management, Ltd., the general partner has had management responsibility for Grant Park since Grant Park s inception. The general partner is registered as a commodity pool operator and as a commodity trading advisor under the Commodity Exchange Act, as amended (Commodity Exchange Act) and is a member of the National Futures Association, or NFA. The office of the general partner is located at 555 West Jackson Boulevard, Suite 600, Chicago, Illinois 60661; telephone: (312) 756 4450; facsimile: (312) 756 4452; e mail: cs@dearborncapital.com. The general partner s website address is: www.grantparkfunds.com. The information on this website is not a part of this prospectus. The books and records of the general partner and Grant Park are kept and made available for inspection at the general partner s office. The Trading Advisors and Reference Traders Grant Park trades through its nine professional commodity trading advisors or through swap transactions based on reference programs of such advisors: Amplitude Capital International Limited, EMC Capital Advisors LLC, H2O AM LLP, Lynx Asset Management AB, Quantica Capital AG, Rabar Market Research, Inc., Revolution Capital Management LLC, Transtrend B.V. and Winton Capital Management Limited. Each of the trading advisors that receives a direct allocation from Grant Park is registered as a commodity trading advisor under the Commodity Exchange Act and is a member of the NFA. The general partner may terminate or replace any or all of the trading advisors or swap transactions based on reference programs of such advisors, or add additional trading advisors, at any time in its sole discretion. Amplitude Capital International Limited is located at Highwater, Grand Pavilion Commercial Centre, 1st Floor, 802 West Bay Road, P.O. Box 31855, KY1 1203 Cayman Islands, and its telephone number is (345) 943 2295. EMC Capital Advisors, LLC is located at 2201 Waukegan Road, Suite W240, Bannockburn, Illinois 60015, and its telephone number is (847) 267 8700. H2O AM LLP is located at 10 Old Burlington Street, London W1S 3AG, and its telephone number is +44-207-292-1600. Lynx Asset Management AB is located at Regeringsgatan 30-32, Box 7060, Stockholm, Sweden, SE 103 86 and its telephone number is +46 8 663 3360. Quantica Capital AG is located at Freier Platz 10, Schaffhausen, CH 8200, Switzerland, and its telephone number is +41 52 557-00-07. Rabar Market Research, Inc. is located at 120 S. Riverside Plaza, Suite 1600, Chicago, Illinois 60606, and its telephone number is (312) 646 7200. Revolution Capital Management LLC is located at 1400 16th St., Suite 510, Denver, Colorado 80202, and its telephone number is (720) 496-0940. Transtrend B.V. is located at Weena 723, Unit C5.070, 3013 AM Rotterdam, The Netherlands and its telephone number is +31 10 453 6510. Winton Capital Management Limited is located at Grove House, 27 Hammersmith Grove, London, W6 ONE, England, and its telephone number is +44 20 8576 5800. The Clearing Brokers and Swap Counterparty ADM Investor Services, Inc. ( ADMIS ) became a Futures Commission Merchant for Grant Park effective May 30, 2018. ADM Investor Services, Inc. ( ADMIS ) is a registered futures commission merchant and is a member of the National Futures Association. Its main office is located at 141 W. Jackson Blvd., Suite 2100A, Chicago, IL 60604, and its telephone number is (312) 242-7000. SG Americas Securities, LLC ( SG ) acts as a clearing broker for Grant Park. Newedge USA became one of Grant Park s clearing brokers effective July 1, 2008 and in January 2015, Newedge USA, LLC ( Newedge USA ) merged with and into SG, with the latter as the surviving entity. Currently, SG serves as Grant Park s clearing broker to execute and clear Grant Park s futures and equities transactions and provide other brokerage-related services. SG is a futures commission merchant and broker dealer registered with the CFTC and the SEC and is a member of FINRA. SG is a clearing member of all principal futures exchanges located in the United States as well as a member of the Chicago Board Options Exchange, International Securities Exchange, New York Stock Exchange, Options Clearing Corporation, and Government Securities Clearing Corporation. SG is headquartered at 245 Park Avenue, New York, NY 10167, and its telephone number is (212) 278-6000. Table of Contents COMMODITY FUTURES TRADING COMMISSION RISK DISCLOSURE STATEMENT YOU SHOULD CAREFULLY CONSIDER WHETHER YOUR FINANCIAL CONDITION PERMITS YOU TO PARTICIPATE IN A COMMODITY POOL. IN SO DOING, YOU SHOULD BE AWARE THAT COMMODITY INTEREST TRADING CAN QUICKLY LEAD TO LARGE LOSSES AS WELL AS GAINS. SUCH TRADING LOSSES CAN SHARPLY REDUCE THE NET ASSET VALUE OF THE POOL AND CONSEQUENTLY THE VALUE OF YOUR INTEREST IN THE POOL. IN ADDITION, RESTRICTIONS ON REDEMPTIONS MAY AFFECT YOUR ABILITY TO WITHDRAW YOUR PARTICIPATION IN THE POOL. FURTHER, COMMODITY POOLS MAY BE SUBJECT TO SUBSTANTIAL CHARGES FOR MANAGEMENT AND ADVISORY AND BROKERAGE FEES. IT MAY BE NECESSARY FOR THOSE POOLS THAT ARE SUBJECT TO THESE CHARGES TO MAKE SUBSTANTIAL TRADING PROFITS TO AVOID DEPLETION OR EXHAUSTION OF THEIR ASSETS. THIS DISCLOSURE DOCUMENT CONTAINS A COMPLETE DESCRIPTION OF EACH EXPENSE TO BE CHARGED THIS POOL AT PAGE 9 AND A STATEMENT OF THE PERCENTAGE RETURN NECESSARY TO BREAK EVEN, THAT IS, TO RECOVER THE AMOUNT OF YOUR INITIAL INVESTMENT, AT PAGE 11. THIS BRIEF STATEMENT CANNOT DISCLOSE ALL THE RISKS AND OTHER FACTORS NECESSARY TO EVALUATE YOUR PARTICIPATION IN THIS COMMODITY POOL. THEREFORE, BEFORE YOU DECIDE TO PARTICIPATE IN THIS COMMODITY POOL, YOU SHOULD CAREFULLY STUDY THIS DISCLOSURE DOCUMENT, INCLUDING A DESCRIPTION OF THE PRINCIPAL RISK FACTORS OF THIS INVESTMENT, AT PAGE 20. YOU SHOULD ALSO BE AWARE THAT THIS COMMODITY POOL MAY TRADE FOREIGN FUTURES OR OPTIONS CONTRACTS. TRANSACTIONS ON MARKETS LOCATED OUTSIDE THE UNITED STATES, INCLUDING MARKETS FORMALLY LINKED TO A UNITED STATES MARKET, MAY BE SUBJECT TO REGULATIONS WHICH OFFER DIFFERENT OR DIMINISHED PROTECTION TO THE POOL AND ITS PARTICIPANTS. FURTHER, UNITED STATES REGULATORY AUTHORITIES MAY BE UNABLE TO COMPEL THE ENFORCEMENT OF THE RULES OF REGULATORY AUTHORITIES OR MARKETS IN NON UNITED STATES JURISDICTIONS WHERE TRANSACTIONS FOR THE POOL MAY BE EFFECTED. YOU SHOULD ALSO BE AWARE THAT THIS COMMODITY POOL MAY ENGAGE IN OFF EXCHANGE FOREIGN CURRENCY TRADING. SUCH TRADING IS NOT CONDUCTED IN THE INTERBANK MARKET. THE FUNDS THAT THE POOL USES FOR OFF EXCHANGE FOREIGN CURRENCY TRADING WILL NOT RECEIVE THE SAME PROTECTIONS AS FUNDS USED TO MARGIN OR GUARANTEE EXCHANGE TRADED FUTURES AND OPTION CONTRACTS. IF THE POOL DEPOSITS SUCH FUNDS WITH A COUNTERPARTY AND THAT COUNTERPARTY BECOMES INSOLVENT, THE POOL S CLAIM FOR AMOUNTS DEPOSITED OR PROFITS EARNED ON TRANSACTIONS WITH THE COUNTERPARTY MAY NOT BE TREATED AS A COMMODITY CUSTOMER CLAIM FOR PURPOSES OF SUBCHAPTER IV OF CHAPTER 7 OF THE BANKRUPTCY CODE AND THE REGULATIONS THEREUNDER. THE POOL MAY BE A GENERAL CREDITOR AND ITS CLAIM MAY BE PAID, ALONG WITH THE CLAIMS OF OTHER GENERAL CREDITORS, FROM ANY MONIES STILL AVAILABLE AFTER PRIORITY CLAIMS ARE PAID. EVEN POOL FUNDS THAT THE COUNTERPARTY KEEPS SEPARATE FROM ITS OWN FUNDS MAY NOT BE SAFE FROM THE CLAIMS OF PRIORITY AND OTHER GENERAL CREDITORS. SWAPS TRANSACTIONS, LIKE OTHER FINANCIAL TRANSACTIONS, INVOLVE A VARIETY OF SIGNIFICANT RISKS. THE SPECIFIC RISKS PRESENTED BY A PARTICULAR SWAP TRANSACTION NECESSARILY DEPEND UPON THE TERMS OF THE TRANSACTION AND YOUR CIRCUMSTANCES. IN GENERAL, HOWEVER, ALL SWAPS TRANSACTIONS INVOLVE SOME COMBINATION OF MARKET RISK, CREDIT RISK, COUNTERPARTY CREDIT RISK, FUNDING RISK, LIQUIDITY RISK, AND OPERATIONAL RISK. Table of Contents Wells Fargo Securities, LLC became a Futures Commission Merchant for Grant Park effective May 1, 2016. Wells Fargo Securities, LLC is an indirect wholly owned subsidiary of Wells Fargo & Co. Wells Fargo Securities, LLC is registered as a futures commission merchant under the Commodity Exchange Act and is a member of the NFA. Its principal place of business is 555 South Tryon Street, 6th Floor, D1086-060, Charlotte, North Carolina 28202, and its telephone number is (704) 715-6133. The clearing brokers or their affiliates also may act as dealers through which Grant Park s OTC derivatives will be effected. The trading advisors also may utilize other dealers in engaging in such transactions, with the general partner s consent. The general partner may retain additional or substitute clearing brokers for Grant Park in its sole discretion. Deutsche Bank AG, acting through its London Branch, became the counterparty and principal for one of Grant Park s swap transactions on July 1, 2015 and for a second swap transaction on April 5, 2016. Pursuant to agreements between Deutsche Bank and Grant Park in connection with these transactions, Grant Park is required to deposit collateral based on the notional values of the transactions in a custodial account maintained with Deutsche Bank Trust Company Americas, a subsidiary of Deutsche Bank and a New York State-chartered bank. Fees and Expenses The following fees and expenses include all compensation, fees, profits and other benefits that the general partner, the trading advisors, the selling agents, the clearing brokers, any executing brokers and other dealers used by Grant Park, and the affiliates of those parties may earn or receive in connection with the offering of units in, and the operation of, Grant Park. Net asset value as of a specified time with respect to any class of units or of Grant Park as a whole equals the value of the net assets attributable to such class or of Grant Park, as applicable, as of that time. Net assets is defined as the total assets attributable to any class of units or of Grant Park, as applicable, including all cash, plus Treasury securities at accrued interest and the market value of all open commodity interest positions attributable to such class or of Grant Park, less all liabilities attributable to such class or of Grant Park, determined in accordance with generally accepted accounting principles (GAAP). Brokerage Charge The following units are assessed monthly brokerage charges: Legacy 1 Class units pay the general partner a monthly brokerage charge equal to 0.3750%, a rate of 4.50% annually, of the month end adjusted net assets of the Legacy 1 Class units. Legacy 2 Class units pay the general partner a monthly brokerage charge equal to 0.3958%, a rate of 4.75% annually, of the month end adjusted net assets of the Legacy 2 Class units. Global 1 Class units pay the general partner a monthly brokerage charge equal to 0.3292%, a rate of 3.95% annually, of the month end adjusted net assets of the Global 1 Class units. Global 2 Class units pay the general partner a monthly brokerage charge equal to 0.3500%, a rate of 4.20% annually, of the month end adjusted net assets of the Global 2 Class units. Global 3 Class units pay the general partner a monthly brokerage charge equal to 0.4958%, a rate of 5.95% annually, of the month end adjusted net assets of the Global 3 Class units. The general partner pays from the brokerage charge all clearing, execution and give up, floor brokerage, exchange, and NFA fees, any other transaction costs, selling agent compensation, selling agent administration fees, and consulting fees to the trading advisors. Transaction costs and consulting fees are taken into account by the swap counterparty in determining the net amount Grant Park receives or pays in connection with swap transactions or derivative instruments, but such costs or fees are not directly charged to Grant Park or any of its trading companies. A trading advisor through its respective trading company that has assets allocated to a swap transaction does not receive any consulting fees directly from Grant Park but instead receives a management fee from the fees embedded in the swap transaction. Also embedded in the swap transactions is a fee to the swap counterparty in respect of any swap transaction or derivative instrument of up to 0.50% of the notional amount of such swap transaction or derivative instrument. This Table of Contents HIGHLY CUSTOMIZED SWAPS TRANSACTIONS IN PARTICULAR MAY INCREASE LIQUIDITY RISK, WHICH MAY RESULT IN A SUSPENSION OF REDEMPTIONS. HIGHLY LEVERAGED TRANSACTIONS MAY EXPERIENCE SUBSTANTIAL GAINS OR LOSSES IN VALUE AS A RESULT OF RELATIVELY SMALL CHANGES IN THE VALUE OR LEVEL OF AN UNDERLYING OR RELATED MARKET FACTOR. IN EVALUATING THE RISKS AND CONTRACTUAL OBLIGATIONS ASSOCIATED WITH A PARTICULAR SWAP TRANSACTION, IT IS IMPORTANT TO CONSIDER THAT A SWAP TRANSACTION MAY BE MODIFIED OR TERMINATED ONLY BY MUTUAL CONSENT OF THE ORIGINAL PARTIES AND SUBJECT TO AGREEMENT ON INDIVIDUALLY NEGOTIATED TERMS. THEREFORE, IT MAY NOT BE POSSIBLE FOR THE COMMODITY POOL OPERATOR TO MODIFY, TERMINATE, OR OFFSET THE POOL S OBLIGATIONS OR THE POOL S EXPOSURE TO THE RISKS ASSOCIATED WITH A TRANSACTION PRIOR TO ITS SCHEDULED TERMINATION DATE. NATIONAL FUTURES ASSOCIATION HAS NEITHER PASSED UPON THE MERITS OF PARTICIPATING IN THIS POOL NOR THE ADEQUACY OR ACCURACY OF THIS DISCLOSURE DOCUMENT. A NUMBER OF JURISDICTIONS IN WHICH THE UNITS ARE OFFERED IMPOSE ON THEIR RESIDENTS HIGHER MINIMUM SUITABILITY REQUIREMENTS, WHICH ARE DESCRIBED IN APPENDIX C TO THIS PROSPECTUS. PLEASE SEE PAGES C 3 AND C 4 OF APPENDIX C FOR A DETAILED DESCRIPTION OF THE MINIMUM SUITABILITY REQUIREMENTS IN THE STATE IN WHICH YOU RESIDE. YOU WILL BE REQUIRED TO REPRESENT THAT YOU MEET THE REQUIREMENTS SET FORTH IN YOUR STATE OF RESIDENCE BEFORE YOUR SUBSCRIPTION TO PURCHASE UNITS WILL BE ACCEPTED. THESE SUITABILITY REQUIREMENTS ARE, IN EACH CASE, REGULATORY MINIMUMS ONLY, AND JUST BECAUSE YOU MEET SUCH REQUIREMENTS DOES NOT MEAN THAT AN INVESTMENT IN THE UNITS IS SUITABLE FOR YOU. IN NO EVENT MAY YOU INVEST MORE THAN 10% OF YOUR NET WORTH, EXCLUSIVE OF HOME, FURNISHINGS AND AUTOMOBILES, IN GRANT PARK. Dearborn Capital Management, L.L.C. General Partner 555 West Jackson Boulevard, Suite 600 Chicago, IL 60661 (312) 756 4450 Table of Contents fee is not directly paid by Grant Park. The general partner will reduce (but not below zero) the brokerage charge by the amount of such costs and fees. Payments to the clearing brokers will be based upon a specified amount per round turn for each futures transaction executed on behalf of Grant Park. A round turn is both the purchase and sale of a futures contract. The all inclusive payments to the clearing brokers are expected to be between $5.00 and $10.00 per round turn transaction. The amounts paid to selling agents, trading advisors or others may be based upon a specified percentage of net asset value or round turn transactions of the units. The balance of the brokerage charge not paid out to other parties is retained by the general partner as payment for its services to Grant Park. The amount retained by the general partner varies based on allocations to the trading advisors and has ranged from approximately 1.20% to 3.24% in the past. Dealer Spreads Grant Park trades OTC derivatives. These contracts are traded among dealers, which act as principals or counterparties to each trade. The execution costs are included in the price of the contract purchased or sold and accordingly these costs to Grant Park cannot necessarily be determined. However, the general partner believes the bid ask spreads (i.e., compensation) paid by Grant Park are competitive with the spreads paid by other institutional customers that are comparable in size and trading activity to Grant Park. Any commissions or other transaction fees that may be incurred by Grant Park in trading OTC derivatives, other than the associated bid ask spreads, will be paid by the general partner out of the brokerage charge. Incentive Fees Grant Park currently pays each trading advisor a quarterly, semi annual or annual incentive fee based on any new trading profits achieved on the trading advisor s allocated net assets at the end of each calendar period. An incentive fee embedded in swap transactions or derivative instrument is taken into account in determining any net amount Grant Park receives in connection with such swap transaction or derivative instrument. A trading advisor through its respective trading company that has assets allocated to a swap transaction does not receive any incentive fees directly from Grant Park but instead receives incentive compensation from the fees embedded in the swap transaction. As of the date of this prospectus, the incentive fees embedded in the swap transactions in which Grant Park beneficially participates are 16% and 20% of trading profits earned by the relevant reference programs. Generally, new trading profits means the net increase in trading profits, realized and unrealized, experienced by the trading advisor on its allocated net assets from the most recent prior period in which an incentive fee was paid to the trading advisor, or if an incentive fee has yet to be paid to that trading advisor, the trading advisor s initial allocation of net assets. Currently, the incentive fees payable to each of Grant Park s trading advisors or reference traders directly or through swap transactions are as follows: 24.5% to Amplitude, 20% to EMC Classic Program, 0% to EMC Balanced Program, 20% to H2O, 23% to Lynx , 20% to Quantica, 20% to Rabar, 20% to RCM, 20% to Transtrend and 16% to Winton. The method of calculating new trading profits on the allocated net assets of each trading advisor is described in FEES AND EXPENSES Fees and Expenses Paid by Grant Park Incentive Fees. Organization and Offering Expenses All expenses incurred in connection with the organization and ongoing offering of the units are paid by the general partner and then reimbursed to the general partner by Grant Park. This reimbursement is made monthly. Each class of offered units will bear organization and offering expenses at an annual rate of 30 basis points (0.30%) of the adjusted net assets of each such class, calculated and payable monthly on the basis of month end adjusted net assets. Adjusted net assets is defined as the month end net assets of the particular class before accruals for fees and expenses and redemptions. In its discretion, the general partner may require Grant Park to reimburse the general partner in any subsequent calendar year for amounts that exceed these limits in any calendar year, provided that the maximum amount reimbursed by Grant Park will not exceed the overall limit set forth above. Amounts reimbursed by Grant Park with respect to the ongoing public offering expenses are charged against partners capital at the time of reimbursement or accrual. Any amounts reimbursed by Grant Park with respect to organization expenses are expensed at the time the reimbursement is incurred or accrued. If Grant Park terminates prior to completion of payment of the calculated amounts to the general partner, the general partner will not be entitled to any additional payments, and Grant Park will have no further obligation to the general partner. Operating Expenses Grant Park has borne, and will continue to bear, all ongoing operating expenses subject to a maximum charge for such expenses of 0.25% of the average net assets of Grant Park per year, Table of Contents TABLE OF CONTENTS Page Summary 1
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+Calculation of Registration Fee Title of Each Class of Securities to be Registered Amount to be Registered* Proposed Maximum Offering Price Per Unit* Proposed Maximum Aggregate Offering Price Amount of Registration Fee** Interests in real property separate account underlying variable life insurance and annuity contracts $28,000,000 100% 100% $1,426.53 * These securities are not issued in predetermined amounts or units and the maximum aggregate offering price is estimated solely for purposes of determining the registration fee. **Prior to the filing of this Registration Statement, $16,541,923 of units of interest of the registrant (for a filing fee of $2,059.47) remained registered and unsold, pursuant to Registration Statement File No. 333- 202192 on Form S-1 which was filed with the Commission on April 1, 2015, and are being carried forward pursuant to Rule 415(a)(6). A payment of $1,423.53 for an additional $11,458,077 of units of interest has been wired to U.S. Bank of St. Louis, MO for deposit into the Commission's account. Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until Registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to Section 8(a), may determine. PART I INFORMATION REQUIRED IN PROSPECTUS PROSPECTUS May 1, 2018 THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY ACCOUNT There are two other types of prospectuses. The first type describes either a variable annuity contract or a variable life insurance contract (collectively, the "Contract") issued by The Prudential Insurance Company of America ("Prudential," "us," "we," or "our"). The second prospectus type describes several investment options available under that variable contract through one or more funds (the "Funds"). The Funds are registered under the Investment Company Act of 1940. The Funds are separate investment portfolios that are mutual funds, each with a different investment policy and objective. This prospectus describes The Prudential Variable Contract Real Property Account (the "Real Property Account"), an additional available investment option. Although it is not a mutual fund, in many ways it is like a mutual fund. Instead of holding a diversified portfolio of securities, such as stocks or bonds, it consists mainly of a portfolio of commercial and residential real properties. Prudential determines the price of a "share" or, as we call it, a "participating interest" in this portfolio of properties, just as it does for the other investment options. It is based upon our best estimate of the fair market value of the properties and other assets held in this portfolio. The portion of your "Contract Fund" (the total amount invested under the Contract) that you allocate to this investment option will change daily in value, up or down, as our estimate of the fair market value of these real properties and other assets change. The risks of investing in real property are different from the risks of investing in mutual funds. See RISK FACTORS. Also, your ability to withdraw or transfer your investment in this option is not as freely available as it is for the other investment options. See RESTRICTIONS ON WITHDRAWALS. Please read this prospectus and keep it for future reference. In compliance with US law, Prudential delivers this prospectus to contract owners that currently reside outside of the United States. Neither the Securities and Exchange Commission ("SEC") nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is accurate or complete. Any representation to the contrary is a criminal offense. The Prudential Insurance Company of America 751 Broad Street Newark, New Jersey 07102 3777 Telephone: (800) 778-2255 PRPA 3 Ed 5 2018 PER SHARE INVESTMENT INCOME, CAPITAL CHANGES AND SELECTED RATIOS (FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD) The following information on per share investment income, capital changes and selected ratios has been provided for your information. This page should be read in conjunction with the financial statements and notes thereto of The Prudential Variable Contract Real Property Partnership. 01/01/2017 01/01/2016 01/01/2015 01/01/2014 01/01/2013 To To To To To 12/31/2017 12/31/2016 12/31/2015 12/31/2014 12/31/2013 Revenue from real estate and improvements $5.08 $5.02 $4.94 $5.49 $5.81 Equity in income of real estate partnership $0.00* $0.00* $0.00* $0.00* $0.00* Interest on short-term investments $0.07 $0.02 $0.00* $0.00* $0.00* TOTAL INVESTMENT INCOME $5.15 $5.04 $4.94 $5.49 $5.81 Investment Management fee $0.75 $0.71 $0.62 $0.55 $0.52 Real Estate Taxes $0.62 $0.49 $0.63 $0.58 $0.53 Administrative expense $0.71 $0.70 $0.69 $0.97 $0.94 Operation expense $0.62 $0.64 $0.76 $1.15 $1.28 Interest expense $0.80 $0.77 $0.77 $0.64 $0.59 Minority interest in consolidated partnership $0.14 $0.15 $0.14 $0.14 $0.09 TOTAL INVESTMENT EXPENSES $3.64 $3.46 $3.61 $4.03 $3.95 NET INVESTMENT INCOME $1.51 $1.58 $1.33 $1.46 $1.86 Net realized gain (loss) on real estate investments sold or converted ($0.30) ($0.06) $0.03 $0.10 $0.03 Change in unrealized gain (loss) on real estate investments $1.38 $0.72 $2.78 $1.35 $1.82 Minority interest in unrealized gain (loss) on investments ($0.26) $0.00 ($0.43) ($0.16) ($0.32) Net unrealized gain (loss) on real estate investments $1.12 $0.72 $2.35 $1.19 $1.50 NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS $0.82 $0.66 $2.38 $1.29 $1.53 Net change in share value $2.33 $2.25 $3.71 $2.76 $3.39 Share value at beginning of period $46.42 $44.17 $40.48 $37.78 $34.49 Share value at end of period $48.69 $46.42 $44.17 $40.48 $37.78 Ratio of expenses to average net assets (1) 5.56% 5.57% 6.36% 8.15% 8.85% Ratio of net investment income to average net assets (1) 3.39% 3.83% 3.50% 4.03% 5.29% Number of shares outstanding at end of period (000's) 4,427 4,530 4,530 4,651 4,908 All per share calculations are based on weighted average shares outstanding. (1) Average net assets are calculated based on an average of ending monthly net assets. *Per Share amount less than $0.01 (rounded) 1 - Real Property SUMMARY This Summary provides a brief overview of the more significant aspects of the Real Property Account. We provide further detail in the subsequent sections of this prospectus. The Real Property Account is a separate account of Prudential created pursuant to New Jersey insurance law. Under that law, the assets of the Real Property Account are not chargeable with liabilities arising out of any other business of Prudential. Owners of certain variable life insurance and variable annuity contracts issued by Prudential may allocate a portion of their net premiums or purchase payments, or transfer a portion of their Contract Fund, to the Real Property Account. Values and benefits under the Contracts will thereafter reflect the investment experience of the Real Property Account. Contract owners, not Prudential, bear the risks and rewards of the investment performance of the Real Property Account to the extent of the Contract owner's Contract Fund invested in the Real Property Account. This prospectus is attached to and should be read in conjunction with the prospectus for the Contract you selected. Investment of the Real Property Account Assets The Real Property Account assets are invested primarily in income producing real estate through The Prudential Variable Contract Real Property Partnership (the "Partnership"), which is a general partnership that was established by Prudential and two of its wholly-owned subsidiaries, Pruco Life Insurance Company ("Pruco Life") and Pruco Life Insurance Company of New Jersey ( Pruco Life of New Jersey ). See The Prudential Variable Contract Real Property Partnership. Currently PGIM, Inc. ( PGIM ) serves as the investment manager of the Partnership. See The Investment Manager. The Partnership invests at least 65% of its assets in direct ownership interests in: 1. income producing real estate; 2. participating mortgage loans (mortgages providing for participation in the revenues generated by, or the appreciation of, the underlying property, or both) originated for the Partnership; and 3. real property sale leasebacks negotiated on behalf of the Partnership. The large majority of these real estate investments will be in direct ownership interests in income producing real estate, such as office buildings, shopping centers, apartments, industrial properties or hotels. The Partnership may also invest up to 5% of its assets in direct ownership interests in agricultural land. Approximately 10% of the Partnership's assets will be held in cash or invested in liquid instruments and securities. The remainder of the Partnership's assets may be invested in other types of real estate related investments, including non participating mortgage loans and real estate investment trusts. Investment Objectives The investment objectives of the Partnership are to: 1. preserve and protect the Partnership's capital; 2. compound income by reinvesting investment cash flow; and 3. over time, increase the income amount through appreciation in the value of permitted investments and, to a lesser extent, through mortgage loans and sale-leaseback transactions. There is no assurance that the Partnership's objectives will be attained. See INVESTMENT POLICIES. Risk Factors Investment in the Real Property Account, and thereby, participation in the investment experience of the Partnership, involves significant risks. See RISK FACTORS. These include the risk of fluctuating real estate values and the risk that the appraised or estimated values of the Partnership's real property investments will not be realized upon their disposition. Many of the Partnership's real estate investments will not be quickly convertible into cash. Therefore, the Real Property Account should be viewed as a long term investment. See RESTRICTIONS ON WITHDRAWALS. Prudential and the investment manager have taken steps that are designed to ensure that the Real Property Account and Partnership will be sufficiently liquid to satisfy all withdrawal or loan requests promptly (within seven days), see Liquidity of Investments. The management of the Partnership is subject to certain conflicts of interest, including the possible acquisition of properties from Prudential affiliates. See CONFLICTS OF INTEREST. Summary of Charges The Partnership pays a daily investment management fee, which amounts to 1.25% per year of the average daily gross assets of the Partnership. The Partnership also compensates the investment manager for providing certain accounting and administrative services. See CHARGES. The portion of your Contract Fund allocated to the Real Property Account is subject to the same Contract charges as the portion of your Contract Fund allocated to the Funds. The Funds are the underlying funding vehicle for the other variable investment options available to Contract owners. You should read the Contract prospectus for a description of those charges. Availability to Prudential Contracts The Real Property Account is currently available to purchasers of Prudential's Variable Investment Plan Contracts, Prudential's Discovery Plus Contracts, Prudential's Variable Appreciable Life Insurance Contracts, and Prudential's Custom VALSM Life Insurance Contracts. It is not available on Contracts that are purchased in connection with IRAs, Section 403(b) annuities, and other tax qualified plans, that are subject to the Employee Retirement Income Security Act of 1974 ("ERISA") or to the prohibited transaction excise tax provisions of the Internal Revenue Code. See THE REAL PROPERTY ACCOUNT'S UNAVAILABILITY TO CERTAIN CONTRACTS. For example, a Variable Appreciable Life Contract owner who elects to invest part of his or her net premiums in The Prudential Variable Appreciable Account, a separate account of Prudential registered as a unit investment trust under the Investment Company Act of 1940, and part in the Real Property Account, will be subject to the same: (1) monthly sales charges; (2) risk charges; (3) administrative charges; (4) 2 - Real Property insurance charges; and (5) contingent deferred sales charges without regard to what portion is invested in The Prudential Variable Appreciable Account and what portion is invested in the Real Property Account. The Real Property Account has established different subaccounts, relating to the different types of variable Contracts that may participate in the Real Property Account. These subaccounts provide the mechanism and maintain the records whereby these different Contract charges are made. This prospectus may only be offered in jurisdictions in which the offering is lawful. No person is authorized to make any representations in connection with this offering other than those contained in this prospectus. GENERAL INFORMATION ABOUT THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY ACCOUNT, THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP, AND THE INVESTMENT MANAGER The Prudential Insurance Company of America Prudential, a stock life insurance company, has been doing business since October 13, 1875. Prudential is licensed to sell life insurance and annuities in the District of Columbia, Guam, U.S. Virgin Islands, and in all states. These Contracts are not offered in any state in which the necessary approvals have not yet been obtained. Prudential is a wholly-owned subsidiary of Prudential Financial, Inc. ("Prudential Financial"), a New Jersey insurance holding company. Prudential Financial exercises significant influence over the operations and capital structure of Prudential. However, neither Prudential Financial nor any other related company has any legal responsibility to pay amounts that Prudential may owe under the Contract. The Prudential Variable Contract Real Property Account The Real Property Account was established on November 20, 1986 under New Jersey law as a separate investment account. The Real Property Account meets the definition of a "separate account" under the federal securities laws. The Real Property Account holds assets that are separated from all of Prudential s other assets. The Real Property Account is used only to support the variable benefits payable under the Contracts that are funded by the real estate investment option. The Contract obligations to Contract owners and beneficiaries are general corporate obligations of Prudential. Prudential is also the legal owner of the Real Property Account assets. Prudential will maintain assets in the Real Property Account with a total market value at least equal to the amounts credited under the real estate option to all the Contracts participating in the Real Property Account. These assets may not be charged with liabilities, which arise from any other business that Prudential conducts. In addition to these assets, the Real Property Account's assets may include funds contributed by Prudential, and reflect any accumulations of the charges Prudential makes against the Real Property Account. See VALUATION OF CONTRACT OWNER S PARTICIPATING INTERESTS. Prudential will bear the risks and rewards of the Real Property Account's investment experience to the extent of its investment in the Real Property Account. Prudential may withdraw or redeem its investment in the Real Property Account at any time. We will not make any such redemption if it will have a materially adverse impact on the Real Property Account. Accumulations of charges will be withdrawn on a regular basis. Unlike the other separate accounts funding the Contracts, the Real Property Account is not registered with the Securities and Exchange Commission ("SEC") under the Investment Company Act of 1940 as an investment company. For state law purposes, the Real Property Account is treated as a part or division of Prudential. Contract owners have no voting rights with respect to the Real Property Account. The Real Property Account is under the control and management of Prudential. The Board of Directors and officers of Prudential are responsible for the management of the Real Property Account. No salaries of Prudential personnel are paid by the Real Property Account. The Prudential Variable Contract Real Property Partnership The assets of the Real Property Account are invested in the Partnership. The Partnership, a general partnership organized under New Jersey law on April 29, 1988, was formed through an agreement among Prudential, Pruco Life, and Pruco Life of New Jersey (collectively, the "Partners"), to provide a means for assets allocated to the real estate investment option under certain variable life insurance and variable annuity contracts issued by the respective companies to be invested in a commingled pool. This was done to provide greater diversification of investments and lower transaction costs than would be possible if the assets were separately invested by each company. All amounts allocated to the Real Property Account are contributed by Prudential to the Partnership. Prudential's general partnership interest in the Partnership is held in the Real Property Account. The initial contributions to the Partnership were made on April 29, 1988. Prudential contributed $100,000 in cash to the Partnership; Pruco Life of New Jersey contributed $100,000 in cash to the Partnership; and Pruco Life contributed the real estate and other assets held in its real estate separate account, which had been actively investing in real estate for more than a year. Those assets had an estimated market value of $91,538,737 on that date. Each Partner is entitled to its respective proportionate share of all income, gains, and losses of the Partnership. The Partnership assets are valued on each business day. The value of each Partner's interest will fluctuate with the investment performance of the Partnership. In addition, the Partners interests are proportionately readjusted, at the current value, on each day when a Partner makes a contribution to, or withdrawal from, the Partnership. When you choose to allocate a portion of your net premiums or purchase payments, or transfer a portion of your Contract Fund, to the Real Property Account, Prudential will contribute that amount to the Partnership as a capital contribution. It will correspondingly increase the Real Property Account's interest in the Partnership. Values and benefits under the Contract will thereafter vary with the performance of the Partnership's investments. For more information on how the value of your interest in the Real Property Account and the value of the Partnership's investments are calculated, see VALUATION OF CONTRACT OWNERS' PARTICIPATING INTERESTS. 3 - Real Property Contract owners have no voting rights with respect to the Partnership operations. The Investment Manager Currently, PGIM acts as investment manager of the Partnership. PGIM invests in and manages real estate equities and mortgages for the general account and separate accounts of Prudential Financial affiliates, and other third party accounts. PGIM, on behalf of the general account, and separate accounts of Prudential Financial affiliates, and other third party accounts, is one of the largest real estate investors in North America. PGIM and Prudential Financial affiliates participate in real estate ventures through public and private partnerships. As of December 31, 2017, PGIM managed $109.3 billion of net domestic real estate mortgages and equities of which $56.8 billion is in Prudential s general account and $52.5 billion is in separate accounts and other third party accounts. Statement value for general account assets is recorded at depreciated cost and for assets in separate accounts and other third party accounts at market value. For a discussion of how the Partnership's real estate related investments are valued, see VALUATION OF CONTRACT OWNERS' PARTICIPATING INTERESTS . PGIM has organized its real estate activities into separate business units. PGIM Real Estate is the unit responsible for the investments of the Real Property Partnership. PGIM Real Estate's investment staff is responsible for both general account and third party account real estate investment management activities. PGIM Real Estate provides global investment management services to institutional investors worldwide. PGIM Real Estate is headquartered in Madison, New Jersey and has 6 field offices across the United States. As of December 31, 201 7 , PGIM Real Estate had under management, within the US, approximately 33.4 million rentable square feet of office real estate, 34.8 million rentable square feet of industrial real estate, 28.9 million net rentable square feet of retail real estate, 885 hotel rooms, 47,369 multifamily residential units, 132,254 units of self-storage real estate, 5,919 units of senior housing real estate and 1,496 sited of manufactured housing. PGIM has entered into an administrative services agreement with Prudential, Pruco Life, and Pruco Life of New Jersey under which it pays the companies a fee for performing certain of PGIM s record keeping and other obligations under its investment management agreement with the Partnership. INVESTMENT POLICIES Overview The Partnership has an investment policy of investing at least 65% of its assets in direct ownership interests in income-producing real estate and participating mortgage loans. The largest portion of these real estate investments are direct ownership interests in income-producing real estate, such as office buildings, shopping centers, hotels, apartments, or industrial properties. Approximately 10% of the Partnership s assets are generally held in cash or invested in liquid instruments and securities although the Partners reserve discretion to increase this amount to meet partnership liquidity requirements. The remainder of the Partnership s assets are invested in other types of real estate-related investments, including real estate investment trusts. Investment in Direct Ownership Interests in Real Estate Acquisition. The Partnership's principal investment policy involves acquiring direct ownership interests in existing (including newly constructed) income producing real estate, including office buildings, shopping centers, apartment buildings, industrial properties, and hotels. The Partnership may also invest up to 5% of its assets in direct ownership interests in agricultural land. Property acquisitions will generally be carried out by the real estate acquisition offices in PGIM Real Estate's network of field offices located in Parsippany, New Jersey, Atlanta, Georgia, Chicago, Illinois and San Francisco, California. A field office or an affiliate of Prudential Financial supervises the management of properties in all of PGIM s accounts. Proposals to acquire properties for the Partnership are usually originated by a field office. They are reviewed and approved by the Investment Management Committee of PGIM Real Estate. Depending upon the size of the acquisition and other factors, a proposed real estate investment may also be submitted for review to the Investment Committee of the Board of Directors of Prudential. Although percentage limitations on the type and location of properties that may be acquired by the Partnership have not been established, the Partnership plans to diversify its investments through the type of property acquired and its geographic location. The Partnership's investments will be maintained to meet the Internal Revenue Code diversification requirements. See General Investment and Operating Policies. In order for the Partnership to meet its stated objectives, it will have to acquire properties that generate more cash than needed to pay its gross operating expenses. To do this, a substantial portion of the Partnership's assets will be invested in properties with operating histories that include established rent and expense schedules. However, the Partnership may also acquire recently constructed properties that may be subject to agreements with sellers providing for certain minimum levels of income. Upon the expiration of or default under these agreements, there is no assurance that the Partnership will maintain the level of operating income necessary to produce the return it was previously experiencing. The Partnership may purchase real property from Prudential Financial or its affiliates under certain conditions. See CONFLICTS OF INTEREST. The property acquired by the Partnership is usually real estate, which is ready for use. Accordingly, the Partnership is not usually subject to the development or construction risks inherent in the purchase of unimproved real estate. From time to time, however, the Partnership may invest in a developmental real estate project that is consistent with the Partnership's objectives. The Partnership will then be subject to those risks. The Partnership will often own the entire fee interest in an acquired property, but it may also hold other direct ownership interests. These include, but are not limited to, partnership interests, limited liability company interests, leaseholds, and tenancies in common. 4 - Real Property Property Management and Leasing Services. The Partnership usually retains a management company operating in the area of a property to perform local property management services. A field office or other affiliate of Prudential Financial will usually: (1) supervise and monitor the performance of the local management company; (2) determine and establish the required accounting information to be supplied; (3) periodically inspect the property; (4) review and approve property operating budgets; and (5) review actual operations to ensure compliance with budgets. In addition to day to day management of the property, the local management company will have responsibility for: (1) supervision of any on site personnel; (2) negotiation of maintenance and service contracts; (3) major repair advice; (4) replacements and capital improvements; (5) the review of market conditions to recommend rent schedule changes; and (6) creation of marketing and advertising programs to obtain and maintain good occupancy rates by responsible tenants. The local management company fees will reduce the cash flow from the property to the Partnership. The Partnership usually retains a leasing company to perform leasing services on any property with actual or projected vacancies. The leasing company will coordinate with the property management company to provide marketing and leasing services for the property. When the property management company is qualified to handle leasing, it may also be hired to provide leasing services. Leasing commissions and expenses will reduce the cash flow from the property to the Partnership. PGIM Real Estate may, on behalf of the Partnership, hire a Prudential Financial affiliate to perform property management or leasing services. The affiliate's services must be provided on terms competitive with unaffiliated entities performing similar services in the same geographic area. See CONFLICTS OF INTEREST. Annually, the field office which oversees the management of each property owned by the Partnership will, together with the local property management firm, develop a business plan and budget for each property. It will consider, among other things, the projected rollover of individual leases, necessary capital expenditures and any expansion or modification of the use of the property. The approval of an officer of PGIM Real Estate is required. The field office will also periodically report the operating performance of the property to PGIM Real Estate. Investments in Mortgage Loans Types of Mortgage Loans The Partnership is authorized to invest in mortgage loans, including conventional mortgage loans that may pay fixed or variable rates of interest and mortgage loans that have a Participation (as defined below). The Partnership will not make mortgage loans to Prudential Financial affiliates. The Partnership intends to give mortgage loans on: (1) commercial properties (such as office buildings, shopping centers, hotels, industrial properties, and office showrooms); (2) agricultural properties; and (3) residential properties (such as garden apartment complexes and high rise apartment buildings). These loans are usually secured by properties with income producing potential based on historical or projected data. Usually, they are not personal obligations of the borrower and are not insured or guaranteed. 1. First Mortgage Loans. The Partnership will primarily make first mortgage loans secured by mortgages on existing income producing property. These loans may provide for interest only payments and a balloon payment at maturity. 2. Wraparound Mortgage Loans. The Partnership also may make wraparound mortgage loans on income producing properties which are already mortgaged to unaffiliated entities. A wraparound mortgage loan is a mortgage with a principal amount equal to the outstanding balance of the prior existing mortgage plus the amount to be advanced by the lender under the wraparound mortgage loan, thereby providing the property owner with additional funds without disturbing the existing loan. The terms of wraparound mortgage loans made by the Partnership require the borrower to make all principal and interest payments on the underlying loan to the Partnership, which will then pay the holder of the prior loan. Because the existing first mortgage loan is preserved, the lien of the wraparound mortgage loan is junior to it. The Partnership will make wraparound mortgage loans only in states where local applicable foreclosure laws permit a lender, in the event of the borrower's default, to obtain possession of the property, which secures the loan. 3. Junior Mortgage Loans. The Partnership may also invest in other junior mortgage loans. Junior mortgage loans will be secured by mortgages, which are subordinate to one or more prior liens on the real property. They will generally, but not in all cases, provide for repayment in full prior to the end of the amortization period of the senior mortgages. Recourse on such loans will include the real property encumbered by the Partnership's mortgage and may also include other collateral or personal guarantees by the borrower. The Partnership will generally make junior or wraparound mortgage loans only if the senior mortgage, when combined with the amount of the Partnership's mortgage loan, would not exceed the maximum amount which the Partnership would be willing to commit to a first mortgage loan and only under such circumstances and on such property as to which the Partnership would otherwise make a first mortgage loan. 4. Participations. The Partnership may make mortgage loans, which, in addition to charging a base rate of interest, will include provisions permitting the Partnership to participate (a "Participation") in the economic benefits of the underlying property. The Partnership would receive a percentage of: (1) the gross or net revenues from the property operations; and/or (2) the increase in the property value realized by the borrower, such as through sale or refinancing of the property. These arrangements may also grant the Partnership an option to acquire the property or an undivided interest in the property securing the loan. When the Partnership negotiates the right to receive additional interest in the form of a percentage of the gross revenues or otherwise, the fixed cash return to the Partnership from that investment will generally be less than would otherwise be the case. It is expected that the Partnership will be entitled to percentage Participations when the gross or net revenues from the property operations exceed a certain base amount. This base amount may be adjusted if real estate taxes or similar charges are increased. The form and extent of the additional interest that the Partnership receives will vary with each transaction depending on: (1) the equity investment of the owner or developer of the property; (2) other financing or credit obtained by the owner or developer; (3) the fixed base interest rate on the mortgage loan by the Partnership; (4) any other security arrangement; (5) the cash flow and pro forma cash flow from the property; and (6) market conditions. 5 - Real Property The Partnership intends to use this additional interest as a hedge against inflation. It assumes that as prices increase in the economy, the rental prices on properties, such as shopping centers or office buildings, will increase and there should be a corresponding increase in the property value. There is no assurance that additional interest or increased property values will be received. In that event, the Partnership will be entitled to receive only the fixed portion of its return. Standards for Mortgage Loan Investments In making mortgage loans, the investment manager will consider relevant real property and financial factors, including: (1) the location, condition, and use of the underlying property; (2) its operating history; (3) its future income producing capacity; and (4) the quality, experience, and creditworthiness of the unaffiliated borrower. Before the Partnership makes a mortgage loan, the investment manager analyzes the fair market value of the underlying real estate. In general, the amount of each mortgage loan made by the Partnership will not exceed, when added to the amount of any existing indebtedness, 80% of the estimated or appraised value of the property mortgaged. Dealing with Outstanding Loans The Partnership may sell its mortgage loans prior to maturity if it is deemed advisable by the investment manager and consistent with the Partnership's investment objectives. The investment manager may also: (1) extend the maturity of any mortgage loan made by the Partnership; (2) consent to a sale of the property subject to a mortgage loan or finance the purchase of a property by making a new mortgage loan in connection with the sale of a property (either with or without requiring the repayment of the mortgage loan); (3) renegotiate the terms of a mortgage loan; and (4) otherwise deal with the mortgage loans of the Partnership. Investments in Sale-Leasebacks A portion of the Partnership's investments may consist of real property sale leaseback transactions ("Leasebacks"). In this type of transaction, the Partnership will purchase land and income producing improvements on the land and simultaneously lease the land and improvements, generally to the seller, under a long term lease. Leasebacks may be for very long periods and may provide for increasing payments from the lessee. Under the terms of the Leaseback, the tenant will operate, or provide for the operation of, the property and generally be responsible for the payment of all costs, including: (1) taxes; (2) mortgage debt service; (3) maintenance and repair of the improvements; and (4) insurance. In some cases, the Partnership may also grant the lessee an option to acquire the land and improvements from the Partnership after a period of years. The option exercise price would be based on the fair market value of the property, as encumbered by the lease, the increase in the gross revenues from the property or other objective criteria reflecting the increased value of the property. In some Leasebacks, the Partnership may only purchase the land under an income producing building and lease the land to the building owner. In such cases, the Partnership may seek, in addition to base rents in its Leasebacks, Participations in the gross revenues from the building in a form such as a percentage of the gross revenues of the lessee above a base amount (which may be adjusted if real property taxes increase or for other events). The Partnership may invest in Leasebacks which are subordinate to other interests in the land, buildings, and improvements, such as a first mortgage, other mortgage, or lien. In those situations, the Partnership's Leaseback interest will be subject to greater risks. The Partnership will only acquire a property for a Leaseback if the purchase price is equal to not more than 100% of the estimated or appraised property value. The Partnership may dispose of its Leasebacks when deemed advisable by the investment manager and consistent with the Partnership's investment objectives. General Investment and Operating Policies The Partnership does not intend to invest in any direct ownership interests in properties, mortgage loans or Leasebacks in order to make short term profits from their sale, although in exceptional cases, the investment manager may decide to do so in the best interests of the Partnership. The Partnership may dispose of its investments whenever necessary to meet its cash requirements or when it is deemed to be desirable by the investment manager because of market conditions or otherwise. The Partnership will reinvest any proceeds from the disposition of assets (and any cash flow from operations) which are not necessary for the Partnership's operations and which are not withdrawn by the Partners in order to make distributions to investors pursuant to the variable contracts issued by the Partners, or to Prudential to return its equity interests pursuant to this prospectus. The proceeds will be reinvested in investments consistent with the Partnership's investment objectives and policies. In making investments in properties, mortgage loans, Leasebacks or other real estate investments, the Partnership will rely on the investment manager's analysis of the investment and will not receive an independent appraisal prior to acquisition. The Partnership expects, however, that all the properties it owns, and most mortgage loans it holds, will be appraised or valued annually by an independent appraiser who is a member of a nationally recognized society of appraisers. Each appraisal will be maintained in the Partnership records for at least five years. It should be noted that appraised values are opinions and, as such, may not represent the true worth or realizable value of the property being appraised. The Partnership usually purchases properties on an unleveraged basis. The properties acquired will typically be free and clear of mortgage debt immediately after their acquisition. The Partnership may, however, acquire properties subject to existing mortgage loans. In addition, the Partnership may mortgage or acquire properties partly with the proceeds of purchase money mortgage loans, up to 80% of the property value. Although this is not usually done, the Partnership may do so if the investment manager decides that it is consistent with its investment objectives. When the Partnership mortgages its properties, it bears the expense of mortgage payments. See BORROWING BY THE PARTNERSHIP. The Partnership may also invest a portion of its assets in non-participating mortgage loans, real estate limited partnerships, limited liability companies, real estate investment trusts, and other vehicles whose underlying investment is in real estate. 6 - Real Property The Partnership's investments will be maintained in order to meet the diversification requirements set forth in regulations under the Internal Revenue Code (the "Code") relating to the investments of variable life insurance and variable annuity separate accounts. In order to meet the diversification requirements under the regulations, the Partnership will meet the following test: (1) no more than 55% of the assets will be invested in any one investment; (2) no more than 70% of the assets will be invested in any two investments; (3) no more than 80% of the assets will be invested in any three investments; and (4) no more than 90% of the assets will be invested in any four investments. All interests in the same real property project are treated as a single investment. The Partnership must meet the above test within 30 days of the end of each calendar quarter. To comply with the diversification requirements of the State of Arizona, the Partnership will limit additional investments in any one parcel or related parcels to an amount not exceeding 10% of Partnership's gross assets, as of the prior fiscal year end. In managing the assets of the Partnership, the investment manager will use its discretion in determining whether to foreclose on defaulting borrowers or to evict defaulting tenants. The investment manager will decide which course of action is in the best interests of the Partnership in maintaining the value of the investment. Property management services are usually required for the Partnership's investments in properties which are owned and operated by the Partnership, but usually will not be needed for mortgage loans owned by the Partnership, except for mortgage servicing. It is possible, however, that these services will be necessary or desirable in exercising default remedies under a foreclosure on a mortgage loan. The investment manager may engage, on behalf of the Partnership, Prudential Financial affiliated or unaffiliated entities to provide these additional services to the Partnership. The investment manager may engage Prudential Financial affiliates to provide property management, property development services, loan servicing or other services if and only if the fees paid to an affiliate do not exceed the amount that would be paid to an independent party for similar services rendered in the same geographic area. See CONFLICTS OF INTEREST. The investment manager will manage the Partnership so that the Real Property Account will not be subject to registration under the Investment Company Act of 1940. This requires monitoring the proportion of the Partnership's assets to be placed in various investments. CURRENT REAL ESTATE RELATED INVESTMENTS The current principal real estate related investments held by the Partnership are described below. Many of these investments were originated by, and previously held in, The Prudential Real Property Account of Pruco Life Insurance Company (the "Pruco Life Account"), a separate account established to fund the real estate investment option under variable contracts issued by Pruco Life. Prior to the formation of the Partnership, the Pruco Life Account followed the same investment policies as those followed by the Partnership. Pruco Life contributed the assets held in the Pruco Life Account to the Partnership as its initial capital contribution to the Partnership. Properties As of December 31, 2017 the Partnership owns apartment complexes, retail property, and a storage facility. Detailed information about the above properties can be found later in this prospectus. See INFORMATION ABOUT THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY ACCOUNT for more information about the properties. The following table lists the rentable area of retail properties subject to expiring leases during the next five years, and an aggregate figure for expirations in 2023 and thereafter, in the Account's commercial properties. While many of these leases contain renewal options with varying terms, this chart assumes that none of the tenants exercise their renewal options, including those with terms that expired on December 31, 2017 or are month-to-month leases. Retail Properties Year of Lease Expiration 2018 2019 2020 2021 2022 2023 and thereafter Total Rentable Area Subject to Expiring Leases (sq. ft.) 116,713 112,407 62,111 26,803 66,770 244,994 629,798 Percentage of Total Rentable Area of Partnership's Retail Properties Represented by Expiring Leases 17.52% 16.87% 9.32% 4.02% 10.02% 36.78% 94.53% RISK FACTORS There are certain risk factors that you should consider before allocating a portion of your net premiums or purchase payments, or transferring a portion of your Contract Fund, to the Real Property Account. These include valuation risks, (see VALUATION OF CONTRACT OWNERS' PARTICIPATING INTERESTS), certain conflicts of interest, (see CONFLICTS OF INTEREST), as well as the following risks: 7 - Real Property Liquidity of Investments Because the Real Property Account will, through the Partnership, invest primarily in real estate, its assets will not be as liquid as the investments generally made by separate accounts of life insurance companies funding variable life insurance and variable annuity contracts. The Partnership will, however, hold approximately 10% of its assets in cash and invested in liquid securities. The primary purposes for such investments are to meet the expenses involved in the operation of the Partnership and to allow it to have sufficient liquid assets to meet any requests for withdrawals from the Real Property Account. Such withdrawals would be made in order to meet requested or required payments under the Contracts. The Partnership may also borrow funds to meet liquidity needs. See BORROWING BY THE PARTNERSHIP. We have taken steps to ensure that the Partnership will be liquid enough to meet all anticipated withdrawals by the Partners to meet the separate accounts' liquidity requirements. It is possible that the Partnership may need to dispose of a real property or mortgage loan investment promptly in order to meet such withdrawal requests. General Risks of Real Property Investments By participating in the Real Property Account and thereby in the investment performance of the Partnership, you will be subject to many of the risks of real property investments. These include: 1. Risks of Ownership of Real Properties. The Partnership will be subject to the risks inherent in the ownership of real property such as fluctuations in occupancy rates and operating expenses and variations in rental schedules. It may be adversely affected by general and local economic conditions, the supply of and demand for properties of the type in which the Partnership invests, zoning laws, and real property tax rates. Operation of property in which the Partnership invests will primarily involve rental of that property to tenants. The financial failure of a tenant resulting in the termination of their lease might cause a reduction in the cash flow to the Partnership. If a lease is terminated, there is no assurance that the Partnership will be able to find a new tenant for the property on terms as favorable to the Partnership as those from the prior tenant. Investments in hotels are subject to additional risk from the daily turnover and fluctuating occupancy rates of hotel rooms and the absence of long-term tenants. The Partnership's properties will also be subject to the risk of loss due to certain types of property damage (such as from nuclear power plant accidents and wars) which are either uninsurable or not economically insurable. 2. Risks of Mortgage Loan Investments. The Partnership s mortgage loan investments will be subject to the risk of default by the borrowers. In this event the Partnership would have the added responsibility of foreclosing on or pursuing other remedies on the underlying properties to protect the value of its mortgage loans. A borrower s ability to meet its mortgage loan payments will be dependent upon the risks generally inherent to the ownership of real property. Mortgage loans made by the Partnership will generally not be personal obligations of the borrowers. The Partnership will only rely on the value of the underlying property for its security. Mechanics , material men's, government, and other liens may have or obtain priority over the Partnership s security interest in the property. In addition, the Partnership's mortgage loan investments will be subject to prepayment risks. If the terms of the mortgage loans permit, mortgagors may prepay the loans, thus possibly changing the Partnership's return. Junior mortgage loans (including wraparound mortgage loans) will be subject to greater risk than first mortgage loans, since they will be subordinate to liens of senior mortgagees. In the event a default occurs on a senior mortgage, the Partnership may be required to make payments or take other actions to cure the default (if it has the right to do so) in order to prevent foreclosure on the senior mortgage and possible loss of all or portions of the Partnership's investment. "Due on sale" clauses included in some senior mortgages, accelerating the amount due under the senior mortgage in the case of sale of the property, may be applied to the sale of the property upon foreclosure by the Partnership of its junior mortgage loan. The risk of lending on real estate increases as the proportion, which the amount of the mortgage loan bears to the fair market value of the real estate increases. The Partnership usually does not make mortgage loans of over 80% of the estimated or appraised value of the property that secures the loan. There can be no assurance, that in the event of a default, the Partnership will realize an amount equal to the estimated or appraised value of the property on which a mortgage loan was made. Mortgage loans made by the Partnership may be subject to state usury laws. These laws impose limits on interest charges and possible penalties for violation of those limits, including restitution of excess interest, unenforceability of debt, and treble damages. The Partnership does not intend to make mortgage loans at usurious rates of interest. Uncertainties in determining the legality of interest rates and other borrowing charges under some statutes could result in inadvertent violations, in which case the Partnership could incur the penalties mentioned above. 3. Risks with Participations. The Partnership may seek to invest in mortgage loans and Leasebacks with Participations, which will provide the Partnership with both fixed interest and additional interest based upon gross revenues, sale proceeds, and/or other variable amounts. If the interest income received by the Partnership is based, in part, on a percentage of the gross revenues or sale proceeds of the underlying property, the Partnership's income will depend on the success in the leasing of the underlying property, the management and operation of such property by the borrower or lessee and upon the market value of the property upon ultimate disposition. If the Partnership negotiates a mortgage loan with a lower fixed interest rate and an additional percentage of the gross revenues or eventual sale proceeds of the underlying property, and the underlying property fails to generate increased revenues or to appreciate, the Partnership will have foregone a potentially greater fixed return without receiving the benefit of appreciation. State laws may limit Participations. In the event of the borrower's bankruptcy, it is possible that as a result of the Partnership's interest in the gross revenues or sale proceeds, a court could treat the Partnership as a partner or joint venturer with the borrower, and the Partnership could lose the priority its security interest would have been given, or be liable for the borrower s debts. The Partnership will structure its Participations to avoid being characterized as a partner or joint venturer with the borrower. 8 - Real Property 4. Risks with Sale-Leaseback. Leasebacks typically involve the acquisition of land and improvements thereon and the lease of such land and improvements to the seller or another party. The value of the land and improvements will depend, in large part, on the performance and financial stability of the lessee and its tenants, if any. The tenants leases may have shorter terms than the leaseback. Therefore, the lessee's future ability to meet payment obligations to the Partnership will depend on its ability to obtain renewals of such leases or new leases upon satisfactory terms and the ability of the tenants to meet their rental payments to the lessee. PGIM Real Estate investigates the stability and creditworthiness of lessees in all commercial properties it may acquire, including Leasebacks. However, a lessee in a Leaseback may have few, if any, assets. The Partnership will therefore rely for its security on the value of the land and improvements. When the Partnership's Leaseback interest is subordinate to other interests in the land or improvements, such as a first mortgage or other lien, the Partnership's Leaseback will be subject to greater risk. A default by a lessee or other premature termination of the Leaseback may result in the Partnership being unable to recover its investment unless the property is sold or leased on favorable terms. The ability of the lessee to meet its obligations under the Leaseback, and the value of a property, may be affected by a number of factors inherent in the ownership of real property which are described above. Furthermore, the long term nature of a Leaseback may, in the future, result in the Partnership receiving lower average annual rentals. However, this risk may be lessened if the Partnership obtains Participations in connection with its Leasebacks. Reliance on the Partners and the Investment Manager You do not have a vote in determining the policies of the Partnership or the Real Property Account. You also have no right or power to take part in the management of the Partnership or the Real Property Account. The investment manager alone, subject to the supervision of the Partners, will make all decisions with respect to the management of the Partnership, including the determination as to what properties to acquire, subject to the investment policies and restrictions. Although the Partners have the right to replace the investment manager, it should be noted that Prudential, Pruco Life, Pruco Life of New Jersey, and the investment manager are direct or indirect wholly-owned subsidiaries of Prudential Financial. The Partnership will compete in the acquisition of its investments with many other individuals and entities engaged in real estate activities, including the investment manager and its affiliates. See CONFLICTS OF INTEREST. There may be intense competition in obtaining properties or mortgages in which the Partnership intends to invest. Competition may result in increased costs of suitable investments. Since the Partnership will continuously look for new investments, you will not be able to evaluate the economic merit of many of the investments, which may be acquired by the Partnership. You must depend upon the ability of the investment manager to select investments. INVESTMENT RESTRICTIONS The Partnership has adopted certain restrictions relating to its investment activities. These restrictions may be changed, if the law permits, by the Partners. Pursuant to these restrictions, the Partnership will not: 1.Make any investments not related to real estate, other than liquid instruments and securities. 2.Engage in underwriting of securities issued by others. 3.Invest in securities issued by any investment company. 4.Sell securities short. 5.Purchase or sell oil, gas, or other mineral exploration or development programs. 6.Make loans to the Partners, any of their affiliates, or any investment program sponsored by such parties. 7. Enter into Leasebacks in which the lessee is Prudential, Pruco Life, Pruco Life of New Jersey, their affiliates, or any investment program sponsored by such parties. 8. Borrow more than 331/3% (pursuant to California state requirements) of the value of the assets of the Partnership (based upon periodic valuations and appraisals). See VALUATION OF CONTRACT OWNERS' PARTICIPATING INTERESTS. DIVERSIFICATION REQUIREMENTS The Partnership s investments are maintained so as to meet the diversification requirements set forth in Treasury Regulations issued pursuant to Section 817(h) of the Internal Revenue Code relating to the investments of variable life insurance and variable annuity separate accounts. Section 817(h) requires, among other things, that the partnership will have no more than 55% of the assets invested in any one investment, no more than 70% of the assets will be invested in any two investments, no more than 80% of the assets will be invested in any three investments, and no more than 90% of the assets will be invested in any four investments. To comply with requirements of the State of Arizona, the Partnership will limit additional investments in any one parcel or related parcels to an amount not exceeding 10% of the Partnership s gross assets as of the prior fiscal year. CONFLICTS OF INTEREST The investment manager, will be subject to various conflicts of interest in managing the Partnership. PGIM invests in real estate equities and mortgages for the general account of Prudential Financial affiliates and for third parties, including through separate accounts established for the benefit of qualified pension and profit sharing plans. PGIM also manages, or advises in the management of, real estate equities and mortgages owned by other persons. In addition, affiliates of Prudential Financial are general partners in publicly offered limited partnerships that invest in real estate equities and mortgage loans. Prudential Financial and its affiliates may engage in business activities, which will be competitive with the Partnership. Moreover, the Partnership may purchase properties from Prudential Financial or its affiliates. 9 - Real Property The potential conflicts involved in managing the Partnership include: 1. Lack of Independent Negotiations between the Partnership and the Investment Manager. All agreements and arrangements relating to compensation between the Partnership and the investment manager, or any affiliate of Prudential Financial, may not be the result of arm's length negotiations. 2. Competition by the Partnership with Prudential Financial's Affiliates for Acquisition and Disposition of Investments. Prudential Financial affiliates are involved in numerous real estate investment activities for their general account, their separate accounts, and other entities. They may involve investment policies comparable to the Partnership s and may compete with the Partnership for the acquisition and disposition of investments. Moreover, additional accounts or affiliated entities may be formed in the future with investment objectives similar to those of the Partnership. In short, existing or future real estate investment accounts or entities managed or advised by Prudential Financial affiliates may have the same management as the Partnership and may be in competition with the Partnership regarding real property investments, mortgage loan investments, Leasebacks, and the management and sale of such investments. Prudential Financial affiliates are not obligated to present to the Partnership any particular investment opportunity, regardless of whether the opportunity would be suitable for investment by the Partnership. Prudential Financial affiliates have, however, adopted procedures to distinguish between equity investments available for the Partnership as opposed to the other programs and entities described above. If investment accounts or entities managed by Prudential Financial affiliates have investment objectives and policies similar to the Partnership and are in the market to acquire properties or make investments at the same time as the Partnership, the following procedures will be followed to resolve any conflict of interest. The Investment Allocation Procedure ( IAP ) has been established to provide a reasonable and fair procedure for allocating real estate investments among the several accounts managed by PGIM Real Estate. The IAP is administered by an Allocation Committee composed of the Managing Directors, Portfolio Management. Allocation decisions are made by vote of the Allocation Committee, and are approved by the Chief Executive Officer of PGIM Real Estate ( CEO ). Sufficient information on each investment opportunity is distributed to all portfolio managers, who each indicate to the Allocation Committee their account s interest in the opportunity. Based on such expressions of interest, the Allocation Committee allocates the investment opportunity to an account (and may also determine a back-up account or accounts to receive the allocation in the event the account, which is first allocated the opportunity, fails to pursue the investment for any reason) after giving appropriate consideration to the following factors and with the goal of providing each account a fair allotment of investment opportunities: (1) the investment opportunity s conformity with an account s investment criteria and objectives (including property type, size and location, diversification, anticipated returns, investment structure, etc.); (2) the amount of funds available for investment (in total and by property type) by an account; (3) the length of time such funds (in total and by property type) have been available for investment; (4) any limitations or restrictions upon the availability of funds for investment; (5) the absolute and relative (to amount of funds available) amount of funds invested and committed for the account; (6) whether funds available for investment are discretionary or non-discretionary, particularly in relation to the timing of the investment opportunity; (7) an account s prior dealings or investments with the seller, developer, lender or other counterparty; and (8) other factors which the Allocation Committee feel should be considered in fairness to all accounts participating in the IAP. If an account which has been allocated an investment opportunity does not proceed with the acquisition, and either (i) no back-up account has been determined by the Allocation Committee, or (ii) all accounts which were deemed back-up accounts do not proceed with the acquisition, the opportunity may be reallocated to another account by the Allocation Committee. If an investment opportunity is appropriate for more than one account, the Allocation Committee may (subject to the CEO s approval) permit the sharing of the investment among accounts, which permit such sharing. Such division of the investment opportunity may be accomplished by separating properties (in a multi-property investment), by co-investment, or otherwise. 3. Competition with the Partnership from Affiliates for the Time and Services of Common Officers, Directors, and Management Personnel. As noted above, PGIM and Prudential Financial affiliates are involved in numerous real estate investment activities. Accordingly, many of the personnel of PGIM and Prudential Financial affiliates who will be involved in performing services for the Partnership have competing demands on their time. Conflicts of interest may arise with respect to allocating time among such entities and the Partnership. The directors and officers of Prudential Financial and affiliates will determine how much time will be devoted to the Partnership affairs. Prudential Financial believes it has sufficient personnel to meet its responsibilities to all entities to which it is affiliated. 4. Competitive Properties. Some properties of affiliates may be competitive with Partnership properties. Among other things, the properties could be in competition with the Partnership's properties for prospective tenants. 5. Lessee Position. It is possible that Prudential Financial or its affiliates may be a lessee in one or more of the properties owned by the Partnership. The terms of such a lease will be competitive with leases with non affiliated third parties. The Partnership limits the amount of space that an affiliate of Prudential may rent in a property owned by the Partnership. 6. Use of Affiliates to Perform Additional Services for the Partnership. The Partnership may engage Prudential Financial affiliates to provide additional services to the Partnership, such as real estate brokerage, mortgage servicing, property management, leasing, property development, and other real estate related services. The Partnership may utilize the services of such affiliates and pay their fees, as long as the fees paid to an affiliate do not exceed the amount that would be paid to an independent party for similar services rendered in the same geographic area. 7. Joint Ventures with Affiliates. The Partnership may enter into investments through joint ventures with Prudential Financial, its affiliates, or investment programs they sponsor. The Partnership may enter into such a joint venture investment with an affiliate only if the following conditions are met: (1) the affiliate must have investment objectives substantially identical to those of the Partnership; (2) there must be no duplicative property management fee, mortgage servicing fee or other fees; (3) the compensation payable to the sponsor of the affiliate must be no greater than that payable to the Partnership's investment manager; (4) the Partnership must have a right of first refusal to buy if such affiliate wishes to sell the property held in the joint venture; and (5) the investment of the Partnership and the affiliate in the joint venture must be made on the same terms and conditions (although not the same percentage). In connection 10 - Real Property with such an investment, both affiliated parties would be required to approve any decision concerning the investment. Thus, an impasse may result in the event the affiliated joint venture partners disagree. However, in the event of a disagreement regarding a proposed sale or other disposition of the investment, the party not desiring to sell would have a right of first refusal to purchase the affiliated joint venture partner's interest in the investment. If this happens, it is possible that in the future the joint venture partners would no longer be affiliated. In the event of a proposed sale initiated by the joint venture partner, the Partnership would also have a right of first refusal to purchase the joint venture partner's interest in the investment. The exercise of a right of first refusal would be subject to the Partnership's having the financial resources to effectuate such a purchase. If the Partnership invests in joint venture partnerships which own properties, instead of investing directly in the properties themselves, they may be subject to risks not otherwise present. These risks include risks associated with the possible bankruptcy of the Partnership's co venturer or such co venturer at any time having economic or business interests or goals which are inconsistent with those of the Partnership. 8. Purchase of Real Property from Prudential Financial or Affiliates. The Partnership may acquire properties owned by Prudential Financial or its affiliates, subject to compliance with special conditions designed to minimize the conflicts of interests. The Partnership may purchase property satisfying the Partnership's investment objectives and policies from an affiliate only if: (1) the applicable insurance regulators approve the Partnership s acquisition of real property from Prudential Financial or affiliates to the extent such approval is required under applicable insurance regulations; (2) the Partnership acquires the property at a price not greater than the appraised value, with the appraisal being conducted by a qualified, unaffiliated appraiser; (3) a qualified and independent real estate adviser (other than the appraiser) reviews the proposed acquisition and provides a letter of opinion that the transaction is fair to the Partnership; and (4) the affiliate has owned the property at least two years, the cost paid by the affiliate is established, and any increase in the proposed purchase price over the cost to the affiliate is, in the opinion of the independent real estate adviser, explicable by material factors (including the passage of time) that have increased the value of the property. THE REAL PROPERTY ACCOUNT S UNAVAILABILITY TO CERTAIN CONTRACTS Prudential has determined that it is in the best interest of Contract owners participating in the Real Property Account to provide the Real Property Account with the flexibility to engage in transactions that may be prohibited if the Real Property Account accepts funds under Contracts subject to ERISA or the prohibited transaction excise tax provisions of the Internal Revenue Code. Accordingly, owners of Prudential Contracts that are purchased in connection with: (1) IRAs; (2) tax deferred annuities subject to Section 403(b) of the Code; (3) other employee benefit plans which are subject to ERISA; or (4) prohibited transaction excise tax provisions of the Code, may not select the Real Property Account as one of the investment options under their Contract. By not offering the Real Property Account as an investment option under such contracts, Prudential is able to comply with state insurance law requirements that policy loans be made available to Contract owners. VALUATION OF CONTRACT OWNERS PARTICIPATING INTERESTS A Contract owner's interest in the Real Property Account will initially be the amount they allocated to the Real Property Account. Thereafter, that value will change daily. The value of a Contract owner's interest in the Real Property Account at the close of any day is equal to its amount at the close of the preceding day, multiplied by the "net investment factor" for that day arising from the Real Property Account's participation in the Partnership, plus any additional amounts allocated to the Real Property Account by the Contract owner, and reduced by any withdrawals by the Contract owner from the Real Property Account and by the applicable Contract charges recorded in that Contract's subaccount. Some of the charges will be made: (1) daily; (2) on the Contract's monthly anniversary date; (3) at the end of each Contract year; and (4) upon withdrawal or annuitization. Periodically Prudential will withdraw from the Real Property Account an amount equal to the aggregate charges recorded in the subaccounts. The "net investment factor" is calculated on each business day by dividing the value of the net assets of the Partnership at the end of that day (ignoring, for this purpose, changes resulting from new contributions to or withdrawals from the Partnership) by the value of the net assets of the Partnership at the end of the preceding business day. The value of the net assets of the Partnership at the end of any business day is equal to the sum of all cash held by the Partnership plus the aggregate value of the Partnership's liquid securities and instruments, the individual real properties and the other real estate related investments owned by the Partnership, determined in the manner described below, and an estimate of the accrued net operating income earned by the Partnership from properties and other real estate related investments, reduced by the liabilities of the Partnership, including the daily investment management fee and certain other expenses attributable to the operation of the Partnership. See CHARGES. The Partnership may invest in various liquid securities and instruments. These investments will generally be carried at their market value as determined by a valuation method, which the Partners deem appropriate for the particular type of liquid security or instrument. The value of the individual real properties and other real estate related investments, including mortgages, acquired by the Partnership will be determined as follows. Each property or other real estate related investment acquired by the Partnership will initially be valued at its purchase price. In acquiring a property or other real estate related investment, PGIM will not obtain an independent appraisal but will instead rely on its own analysis of the investment's fair market value. Thereafter, all properties and most real estate related investments will ordinarily be appraised by an independent appraiser at least annually. At least every three months, PGIM will review each property or other real estate related investments and adjust its valuation if it concludes there has been a change in the value of the property or other real estate related investment since the last valuation. The revised value will remain in effect and will be used in each day's calculation of the value of the Partnership's assets until the next review or appraisal. It should be noted that appraisals are only estimates and do not necessarily reflect the realizable value of an investment. The estimated amount of the net operating income of the Partnership from properties and other real estate related investments will be based on estimates of revenues and expenses for each property and other real estate related investments. Annually, PGIM will prepare a month by month estimate of the revenues and expenses ("Estimated Net Operating Income") for each property and other real estate related investments owned by the Partnership. Each day PGIM will add to the value of the assets, as determined above, a 11 - Real Property proportionate part of the Estimated Net Operating Income for the month. In effect, PGIM will establish a daily accrued receivable of the Estimated Net Operating Income from each property and other real estate related investments owned by the Partnership (the "Daily Accrued Receivable"). On a monthly basis, the Partnership will receive a report of actual operating results for each property and other real estate related investments ("Actual Net Operating Income"). Such Actual Net Operating Income will be recognized on the books of the Partnership and the amount of the then outstanding daily accrued receivable will be correspondingly adjusted. In addition, as cash from a property or other real estate related investment is actually received by the Partnership, receivables and other accounts will be appropriately adjusted. Periodically, but at least every three months, PGIM will review its prospective estimates of net operating income in light of actual experience and make an adjustment to such estimates if circumstances indicate that such an adjustment is warranted. PGIM follows this practice of accruing Estimated Net Operating Income from properties and other real estate related investments because net operating income from such investments is generally received on an intermittent rather than daily basis, and the Partners believe it is more equitable to participating Contract owners if such net operating income is estimated and a proportionate amount is recognized daily. Because the daily accrual of Estimated Net Operating Income is based on estimates that may not turn out to reflect actual revenue and expenses, Contract owners will bear the risk that this practice will result in the undervaluing or overvaluing of the Partnership's assets. PGIM may adjust the value of any asset held by the Partnership based on events that have increased or decreased the realizable value of a property or other real estate related investment. For example, adjustments may be made for events indicating an impairment of a borrower's or a lessee's ability to pay any amounts due or events which affect the property values of the surrounding area. There can be no assurance that the factors for which an adjustment may be made will immediately come to the attention of PGIM. Additionally, because the evaluation of such factors may be subjective, there can be no assurance that such adjustments will be timely made in all cases where the value of the Partnership's investments may be affected. All adjustments made to the valuation of the Partnership's investments, including adjustments to Estimated Net Operating Income, the daily accrued receivable, and adjustments to the valuation of properties and other real estate related investments, will be on a prospective basis only. The above method of valuation of the Partnership's assets may be changed, without the consent of Contract owners, should the Partners determine that another method would more accurately reflect the value of the Partnership s investments. Changes in the method of valuation could result in a change in the Contract Fund values which may have either an adverse or beneficial effect on Contract owners. Information concerning any material change in the valuation method will be given in FINANCIAL STATEMENTS OF THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP. Although the above described valuation methods have been adopted because the Partners believe they will provide a reasonable way to estimate the fair market value of the Partnership's investments, there may well be variations between the amount realizable upon disposition and the Partnership's valuation of such assets. Contract owners may be either favorably or adversely affected if the valuation method results in either overvaluing or undervaluing the Partnership's investments. If a Contract owner invests in the Real Property Account at a time in which the Partnership's investments are overvalued, the Contract owner will be credited with less of an interest than if the value had been correctly stated. A Contract owner withdrawing from the Real Property Account during such time will receive more than he or she would if the value had been correctly stated, to the detriment of other Contract owners. The converse situation will exist if the Partnership's assets are undervalued. BORROWING BY THE PARTNERSHIP The Partnership may borrow for Partnership purposes, including to meet its liquidity requirements and the leveraging of currently-owned property to buy new property, subject to a maximum debt to value ratio of 331/3% (pursuant to California state requirements) based on the aggregate value of all Partnership assets. The Partnership will bear the cost of all such borrowings. The Real Property Account, and Contract owners participating in it, will bear a portion of any borrowing costs equal to their percentage interest in the Partnership. Moreover, although the Partnership will generally make unleveraged investments, it reserves the right to borrow up to 80% of the value of a property (with the value of a property determined as explained under VALUATION OF CONTRACT OWNERS' PARTICIPATING INTERESTS). Increasing the Partnership's assets through leveraged investments would increase the compensation paid to PGIM since its investment management fee is a percentage of the Partnership's gross assets. Any borrowing by the Partnership would increase the Partnership's risk of loss. It could also inhibit the Partnership from achieving its investment objectives because the Partnership's payments on any loans would have to be made regardless of the profitability of its investments. CHARGES Pursuant to the investment management agreement, the Partnership pays a daily investment management fee, which is equal to an effective annual rate of 1.25% of the average daily gross assets of the Partnership. Certain other expenses and charges attributable to the operation of the Partnership are also charged against the Partnership. In acquiring an investment, the Partnership may incur various types of expenses paid to third parties, including but not limited to, brokerage fees, attorneys' fees, architects' fees, engineers' fees, and accounting fees. After acquisition of an investment, the Partnership will incur recurring expenses for the preparation of annual and semi-annual reports, periodic appraisal costs, mortgage servicing fees, annual audit charges, accounting and legal fees, and various administrative expenses. These expenses will be charged against the Partnership's assets. Some of these operating expenses represent reimbursement of the investment manager for the cost of providing certain services necessary to the operation of the Partnership, such as daily accounting services, preparation of annual and semi-annual reports, and various administrative services. The investment manager charges the Partnership mortgage loan servicing fees pursuant to the standards outlined in item 6 under CONFLICTS OF INTEREST. In addition to the various expenses charged against the Partnership's assets, other expenses such as insurance costs, taxes, and property management fees will ordinarily be deducted from rental income, thereby reducing the gross income of the Partnership. As explained earlier, charges to the Contracts will be recorded in the corresponding subaccounts of the Real Property Account. From time to time, Prudential will withdraw from the Real Property Account an amount equal to the aggregate amount of these charges. Aside from the charges to the Contracts, Prudential does not charge the Real Property Account for the expenses involved in the Real 12 - Real Property Property Account s operation. The Real Property Account will, however, bear its proportionate share of the charges made to the Partnership as described above. The Partnership is not a taxable entity under the provisions of the Internal Revenue Code. The income, gains, and losses of the Partnership are attributed, for federal income tax purposes, to the Partners in the Partnership. The earnings of the Real Property Account are, in turn, taxed as part of the operations of Prudential. Prudential is currently not charging the Real Property Account for company federal income taxes. Prudential may make such a charge in the future. Under current laws Prudential may incur state and local taxes (in addition to premium taxes) in several states. At present, Prudential does not charge these taxes against the Contracts or the Real Property Account, but Prudential may decide to charge the Real Property Account for such taxes in the future. RESTRICTIONS ON WITHDRAWALS Before allocating any portion of your net premium or purchase payments, or transferring any portion of your Contract Fund, to the Real Property Account, you should be aware that withdrawals from the Real Property Account may have greater restrictions than the other variable investment options available under the Contracts. Prudential reserves the right to restrict transfers into or out of the Real Property Account. Apart from the limitations on transfers out of the Real Property Account described below, Prudential will only restrict transfers out of the Real Property Account if there is insufficient cash available to meet Contract owners' requests and prompt disposition of the Partnership's investments to meet such requests could not be made on commercially reasonable terms. Generally, we will pay any death benefit, cash surrender value, loan proceeds, or partial withdrawal within seven days after all the documents required for such a payment are received at the Service Office. Other than the death benefit, which is determined as of the date of death, the amount will be determined as of the end of the valuation period in which the necessary documents are received at a Service Office. The funds necessary to pay any death benefit, cash surrender value, withdrawal or loan proceeds funded by the Real Property Account will normally be obtained, first, from any cash flows into the Real Property Account on the day the funds are required. If, on the day the funds are required, cash flows into the Real Property Account are less than the amount of funds required, Prudential will seek to obtain such funds by withdrawing a portion of its interest in the Partnership. The Partnership will normally obtain funds to meet such a withdrawal request from its net operating income and from the liquid securities and instruments it holds. If the Partners determine that these sources are insufficient to meet anticipated withdrawals from the Partnership, the Partnership may use a line of credit or otherwise borrow up to 331/3% (pursuant to California state requirements) of the value of the Partnership's assets. See BORROWING BY THE PARTNERSHIP. If the Partners determine that such a borrowing by the Partnership would not serve the best interests of Contract owners, Prudential may, in the event of a Contract loan or withdrawal, rather than take the amount of any loan or withdrawal request proportionately from all investment options under the Contract (including the Real Property Account), take any such loan or withdrawal first from the other investment options under the Contract. Transfers from the Real Property Account to the other investment options available under the Contract are currently permitted only during the 30 day period beginning on the Contract anniversary. The maximum amount that may be transferred out of the Real Property Account each year is the greater of: (a) 50% of the amount invested in the Real Property Account or (b) $10,000. Such transfer requests received prior to the Contract anniversary will be effected on the Contract anniversary. Transfer requests received within the 30 day period beginning on the Contract anniversary will be effected as of the end of the valuation period in which a proper written request or authorized telephone request is received. The "valuation period" means the period of time from one determination of the value of the amount invested in the Real Property Account to the next. Such determinations are made when the value of the assets and liabilities of the Partnership is calculated, which is generally at 4:00 p.m. Eastern time on each day during which the New York Stock Exchange is open. Transfers into or out of the Real Property Account are also subject to the general limits under the Contracts. RESTRICTIONS ON CONTRACT OWNERS' INVESTMENT IN THE REAL PROPERTY ACCOUNT As explained earlier, identification and acquisition of real estate investments meeting the Partnership's investment objectives is a time consuming process. Because the Real Property Account and the Partnership are managed so they will not become investment companies subject to the Investment Company Act of 1940, the portion of the Partnership's assets that may be invested in securities, as opposed to non securities real estate investments, is strictly limited. For these reasons, Prudential reserves the right to restrict or limit Contract owners' allocation of funds to the Real Property Account. Any such restrictions are likely to take the form of restricting the timing, amount and/or frequency of transfers into the Real Property Account and/or precluding Contract owners who have not previously selected the Real Property Account from allocating a portion of their net premiums or purchase payments to the Real Property Account. FEDERAL INCOME TAX CONSIDERATIONS The federal income tax treatment of Contract benefits is described briefly in the attached prospectus for the particular Contract you selected. Prudential believes that the same principles will apply with respect to Contracts funded in whole or part by the Real Property Account. The Partnership's conformity with the diversification standards for the investments of variable life insurance and variable annuity separate accounts is essential to ensure that treatment. See Investment Policies-General Investment and Operating Policies. Prudential urges you to consult a qualified tax adviser. Under the Internal Revenue Code, the Partnership is not a taxable entity and any income, gains or losses of the Partnership are passed through to the Partners, including Prudential, with respect to the Real Property Account. The Real Property Account is not a separate taxpayer for purposes of the Internal Revenue Code. The earnings of the Real Property Account are taxed as part of the operations of 13 - Real Property Prudential. No charge is currently being made to the Real Property Account for company federal income taxes. We may make such a charge in the future, see CHARGES. DISTRIBUTION OF THE CONTRACTS As explained in the attached prospectus for the Contracts, Pruco Securities, LLC, an indirect wholly owned subsidiary of Prudential Financial, acts as the principal underwriter of the Contracts. Consult that prospectus for information about commission scales and other facts relating to sale of the Contracts. STATE REGULATION Prudential is subject to regulation and supervision by the Department of Insurance of the State of New Jersey, which periodically examines its operations and financial condition. It is also subject to the insurance laws and regulations of all jurisdictions in which it is authorized to do business. Prudential is required to submit annual statements of its operations, including financial statements, to the insurance departments of the various jurisdictions in which it does business to determine solvency and compliance with local insurance laws and regulations. In addition to the annual statements referred to above, Prudential is required to file with New Jersey and other jurisdictions a separate statement with respect to the operations of all its variable contract accounts, in a form promulgated by the National Association of Insurance Commissioners. ADDITIONAL INFORMATION Prudential has filed a registration statement with the SEC under the Securities Act of 1933, relating to the offering described in this prospectus. This prospectus does not include all of the information set forth in the registration statement. Certain portions have been omitted pursuant to the rules and regulations of the SEC. All reports and information filed by Prudential can be inspected and copied at the Public Reference Section of the Commission at 100 F Street, N.E., Washington, D.C. 20549, and at certain of its regional offices: Midwestern Regional Office, 175 West Jackson Boulevard, Suite 900, Chicago, IL 60604; Northeastern Regional Office SEC, 233 Broadway, New York, NY 10279, or by telephoning (202) 551-8090. The SEC maintains a Web site (http://www.sec.gov) that contains material incorporated by reference and other information regarding registrants that file electronically with the SEC. Pursuant to the delivery obligations under Section 5 of the Securities Act of 1933 and Rule 159 thereunder, Prudential delivers this prospectus to contract owners that reside outside of the United States. Further information may also be obtained from Prudential. The address and telephone number are on the cover of this prospectus. EXPERTS The financial statements of the Partnership as of December 31, 2017 and 2016 and for each of the three years in the period ended December 31, 2017, the financial statement schedule of the Partnership as of December 31, 2017 and the financial statements of the Real Property Account as of December 31, 2017 and 2016 and for each of the three years in the period ended December 31, 2017 included in this prospectus have been so included in reliance on the reports of PricewaterhouseCoopers LLP, an independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting. LITIGATION No litigation is pending, and no litigation is known to be contemplated by governmental authorities, that would have an adverse material effect upon the Real Property Account or the Partnership. REPORTS TO CONTRACT OWNERS If you allocate a portion of your Contract Fund to the Real Property Account, Prudential will mail you an annual and semi-annual report and any other information that may be required by applicable regulation or law. 14 - Real Property PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION Item of Expense Estimated Expense Registration fees $0.00 Federal taxes $12,500 per $1 million of premium payments State taxes $25,000 per $1 million of premium payments Printing Costs $40,000* Legal Costs N/A Accounting Costs $10,000* * Estimated Expense ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS The Registrant, in connection with certain affiliates, maintains various insurance coverages under which the underwriter and certain affiliated persons may be insured against liability, which may be incurred in such capacity, subject to the terms, conditions, and exclusions of the insurance policies. New Jersey, being the state of organization of The Prudential Insurance Company of America ("Prudential"), permits entities organized under its jurisdiction to indemnify directors and officers with certain limitations. The relevant provisions of New Jersey law permitting indemnification can be found in Section 14A:3-5 of the New Jersey Statutes Annotated. The text of Prudential's By-law Article VII, Section 1, which relates to indemnification of officers and directors, is incorporated by reference to Exhibit Item 16.(a)(3B) on Form S-1, Registration No. 333-158228, filed March 27, 2009 on behalf of The Prudential Variable Contract Real Property Account. Insofar as indemnification for liabilities arising under the Securities Act of 1933 (the "Act") may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES Not Applicable. ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES (a) Exhibits (1A) Distribution Agreement between Pruco Securities, LLC and The Prudential Insurance Company of America with respect to The Prudential Individual Variable Contract Account. Incorporated by reference to Post-Effective Amendment No. 9 to Form S-1, Registration No. 33-20083-01, filed April 9, 1997 on behalf of The Prudential Variable Contract Real Property Account. (1B) Distribution Agreement between Pruco Securities LLC and The Prudential Insurance Company of America with respect to The Prudential Variable Appreciable Account. Incorporated by reference to Post Effective Amendment No. 19 to Form S 6, Registration No. 33 20000, filed April 19, 1997, on behalf of The Prudential Variable Appreciable Account. (3A) Charter of The Prudential Insurance Company of America, as amended July 19, 2004. Incorporated by reference to Registration Statement Form S-1, Registration Number 333-158228 filed March 27, 2009 on behalf of The Prudential Variable Contract Real Property Account. II-2 (3B) By Laws of The Prudential Insurance Company of America, as amended December 9, 2008. Incorporated by reference to Registration Statement Form S-1, Registration Number 333-158228 filed March 27, 2009 on behalf of The Prudential Variable Contract Real Property Account. (3C) Resolution of the Board of Directors establishing The Prudential Variable Contract Real Property Account. Incorporated by reference to Post-Effective Amendment No. 9 to Form S-1, Registration No. 33-20083-01, filed April 9, 1997 on behalf of The Prudential Variable Contract Real Property Account. (4A)(i) Revised Individual Variable Annuity Contract. Incorporated by reference to Post-Effective Amendment No. 9 to Form S-1, Registration No. 33-20083-01, filed April 9, 1997 on behalf of The Prudential Variable Contract Real Property Account. (4A)(ii) Discovery Plus Contract. Incorporated by reference to Post-Effective Amendment No. 9 to Form S-1, Registration No. 33-20083-01, filed April 9, 1997 on behalf of The Prudential Variable Contract Real Property Account. (4B)(i) Variable Appreciable Life Insurance Contract with fixed death benefit. Incorporated by reference to Post Effective Amendment No. 19 to Form S 6, Registration No. 33 20000, filed April 28, 1997, on behalf of The Prudential Variable Appreciable Account. (4B)(ii) Variable Appreciable Life Insurance Contract with variable death benefit. Incorporated by reference to Post Effective Amendment No. 19 to Form S 6, Registration No. 33 20000, filed April 28, 1997, on behalf of The Prudential Variable Appreciable Account. (4C)(i) Custom VAL Life Insurance Contract with fixed death benefit. Incorporated by reference to Post Effective Amendment No. 19 to Form S 6, Registration No. 33 20000, filed April 28, 1997, on behalf of The Prudential Variable Appreciable Account. (4C)(ii) Custom VAL Life Insurance Contract with variable death benefit. Incorporated by reference to Post Effective Amendment No. 19 to Form S 6, Registration No. 33 20000, filed April 28, 1997, on behalf of The Prudential Variable Appreciable Account. (5) Opinion and Consent of Jordan K. Thomsen, Esq., as to the legality of the securities being registered. Filed herewith. (10A) Investment Management Agreement between Prudential Investment Management, Inc. and The Prudential Variable Contract Real Property Partnership. Incorporated by reference to Post-Effective Amendment No. 16 to Form S-1, Registration No. 33-20083-01, filed April 10, 2003. (10B) Administrative Service Agreement among PIM, Prudential Insurance Company of America, Pruco Life Insurance Company, and Pruco Life Insurance Company of New Jersey. Incorporated by reference to Post-Effective Amendment No. 17 to Form S-1, Registration No. 33-20083-01, filed April 14, 2004. (10C) Partnership Agreement of The Prudential Variable Contract Real Property Partnership. Incorporated by reference to Post-Effective Amendment No. 9 to Form S-1, Registration No. 33-20083-01, filed April 9, 1997 on behalf of The Prudential Variable Contract Real Property Account. (23A) Written consent of PricewaterhouseCoopers LLP, independent registered public accounting firm. Filed herwith. (23B) Written consent of Jordan K. Thomsen, Esq. Incorporated by reference to Exhibit (5) hereto. (24) Powers of Attorneys: R. Axel, T. Baltimore Jr., G. Casellas, Robert M. Falzon, M. Grier, M. Hund-Mejean, K. Krapek, Peter R. Lighte, George Paz, S. Pianalto, C. Poon, D. Scovanner, J. Strangfeld Jr., Michael A. Todman. Filed herewith. (b) Financial Statement Schedules Schedule III Real Estate Owned by The Prudential Variable Contract Real Property Partnership and independent accountant's report thereon. Filed herewith. II-3 (c) Financial Statements Financial Statements of The Prudential Variable Contract Real Property Account and the consolidated Financial Statements of The Prudential Variable Contract Real Property Partnership. Filed herewith. ITEM 17. UNDERTAKINGS The undersigned registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (i) To include any prospectus required by Section 10 (a)(3) of the Securities Act of 1933; (ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; and (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement. (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at the time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (4) That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser: each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness; provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use. (5) That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities: The undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser: (i) Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424; (ii) Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant; (iii) The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and (iv) Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser. (6) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the II-4 opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. II-5 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, this registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Newark, State of New Jersey, on the 29th day of March, 2018. The Prudential Insurance Company of America In Respect of The Prudential Variable Contract Real Property Account By: /s/ Jordan K. Thomsen Jordan K. Thomsen Vice President and Corporate Counsel Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed below by the following persons in the capacities indicated on this 29th day of March, 2018. Signature and Title /s/ * John R. Strangfeld, Jr. President, Chairman of the Board, and Chief Executive Officer /s/ * Robert D. Axel Senior Vice President, Principal Accounting Officer, and Corporate Controller /s/ * Robert M. Falzon Executive Vice President and Chief Financial Officer *By: /s/ Jordan K. Thomsen /s/ * Jordan K. Thomsen Thomas J. Baltimore, Jr. (Attorney-in-Fact) Director /s/ * Gilbert F. Casellas Director /s/ * Mark B. Grier Director II-6 /s/ * Martina T. Hund-Mejean Director /s/ * Karl J. Krapek *By: /s/ Jordan K. Thomsen Director Jordan K. Thomsen (Attorney-in-Fact) /s/ * Peter Rupert Lighte Director /s/ * George Paz Director /s/ * Sandra Pianalto Director /s/ * Christine A. Poon Director /s/ * Douglas A. Scovanner Director /s/ * Michael A. Todman Director II-7 EXHIBIT INDEX Item 16. (a) (5) Opinion and Consent of Jordan K. Thomsen, Esq., as to the legality of the securities being registered. (a) (23A) Written consent of PricewaterhouseCoopers LLP, independent registered public accounting firm. (a) (24) Powers of Attorneys II-8 Appendix: Information about The Prudential Variable Contract Real Property Account Table of Contents Page No. Risk Factors A-2 Market for Registrant s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities A-5 Selected Financial Data A-5 Management s Discussion and Analysis of Financial Condition and Results of Operations A-6 Quantitative and Qualitative Disclosures About Market Risk A-13 Market Conditions A-14 Property Markets A-14 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure A-14 Directors, Executive Officers and Corporate Governance A-15 Code of Ethics A-16 Executive Compensation A-16 Certain Relationships and Related Transactions, and Director Independence A-16 Principal Accounting Fees and Services A-16 Financial Statements and Supplementary Data A-17 Financial Statements of The Prudential Variable Contract Real Property Account B-1 Financial Statements of The Prudential Variable Contract Real Property Partnership C-1 Risk Factors This "Risk Factors" section provides a summary of some of the significant risks. Many of these risks are interrelated and could occur under similar business and economic conditions, and the occurrence of certain of them may in turn cause the emergence or exacerbate the effect of others. Such a combination could materially increase the severity of the impact of these risks on our businesses, results of operations, financial condition and liquidity. Throughout this section we , our , and "Company" refer to The Prudential Insurance Company of America. Market fluctuations and general economic, market and political conditions may adversely affect our business and profitability. Our business and our results of operations may be materially adversely affected by conditions in the global financial markets and by economic conditions generally. Even under relatively favorable market conditions, our insurance and annuity products, as well as our investment returns and our access to and cost of financing, are sensitive to fixed income, equity, real estate and other market fluctuations and general economic, market and political conditions. These fluctuations and conditions could adversely affect our results of operations, financial position and liquidity, including in the following respects: The profitability of many of our insurance and annuity products depends in part on the value of the separate accounts supporting these products, which can fluctuate substantially depending on the foregoing conditions. A change in market conditions, such as high inflation and high interest rates, could cause a change in consumer sentiment and behavior adversely affecting sales and persistency of our savings and protection products. Conversely, low inflation and low interest rates could cause persistency of these products to vary from that anticipated and adversely affect profitability (as further described below). Similarly, changing economic conditions and unfavorable public perception of financial institutions can influence customer behavior, including increasing claims or surrenders in certain product lines. Adverse capital market conditions could significantly affect our ability to meet liquidity needs, our access to capital and our cost of capital, including capital that may be required by the Company's subsidiaries. Under such conditions, we may seek additional debt or equity capital but may be unable to obtain it. Adverse capital market conditions could affect the availability and cost of borrowed funds and could impact our ability to refinance existing borrowings, thereby ultimately impacting our profitability and ability to support or grow our businesses. We need liquidity to pay our operating expenses, interest and maturities on our debt and dividends on our capital stock. The principal sources of our liquidity are insurance premiums, annuity considerations, cash flow from our investment portfolio, and fees from separate account assets. In the normal course of business, The Prudential Variable Real Property Partnership (the "Partnership") enters into loan agreements with certain lenders to finance its real estate investment transactions. Unfavorable economic conditions could increase related borrowing costs, limit access to the capital markets or result in a decision by lenders not to extend credit to the Partnership. There is no guarantee that the Partnership s borrowing arrangements or ability to obtain leverage will continue to be available, or if available, will be available on terms and conditions acceptable to the Partnership. Further, these loan agreements contain, among other conditions, events of default and various covenants and representations. In the normal course of business, the Partnership may be in the process of renegotiating terms for loans outstanding that have passed their maturity dates. At December 31, 2017, the Partnership had no outstanding matured loans. A decline in market value of the Partnership s assets may also have particular adverse consequences in instances where the Partnership borrowed money based on the fair value of specific assets. A decrease in market value of these assets may result in the lender requiring the Partnership to post additional collateral or otherwise repay these loans. In the event the Partnership s current investment obligations are not refinanced or extended when they become due and/or the Partnership is required to repay such borrowings and obligations, management anticipates that the repayment of these obligations will be provided by operating cash flow, new debt refinancing, and/or real estate investment sales. The companies offering the variable life insurance and variable annuity contracts and the Partnership are heavily regulated and changes in regulation may adversely affect our results of operations and financial condition. Our business is subject to comprehensive regulation and supervision. The purpose of this regulation is primarily to protect our customers and not necessarily our shareholders or debt holders. Many of the laws and regulations to which we are subject, are regularly re-examined, and existing or future laws and regulations may become more restrictive or otherwise adversely affect our operations. The financial market dislocations we have experienced have produced, and are expected to continue to produce, extensive changes in existing laws and regulations, and regulatory frameworks, applicable to our business. Compliance with applicable laws and regulations is time consuming and personnel-intensive, and changes in these laws and regulations may materially increase our direct and indirect compliance and other expenses of doing business, and thereby have a material adverse effect on our financial condition or results of operations. Changes in accounting requirements could negatively impact our reported results of operations and our reported financial position. Accounting standards are continuously evolving and subject to change. For example, the Financial Accounting Standards Board ("FASB") has an ongoing project to revise accounting standards for long duration insurance contracts. While the final resolution of changes to U.S. generally accepted accounting principles ("U.S. GAAP") pursuant to this project is unclear, changes to the manner in which we account for insurance products, or other changes in accounting standards, could have a material effect on our reported results of operations and financial condition. Further, changes in accounting standards may impose special demands on issuers in areas such as corporate governance, internal controls and disclosure, and may result in substantial conversion costs to implement. Changes in U.S. federal income tax law or in the income tax laws of other jurisdictions in the U.S. in which we operate could make some of our products less attractive to consumers and also increase our tax costs. H.R.1, also referred to as the Tax Cuts and Jobs Act of 2017 (the Tax Act of 2017 ), was enacted into law on December 22, 2017 and is generally effective starting in 2018. Our analysis of the Tax Act of 2017 is ongoing, as guidance may be needed from the Treasury Department and the Internal Revenue Service ( IRS ) to fully understand and implement several provisions. Other life insurance and financial services companies may benefit more or less from these tax law changes, which could impact the Company s overall competitive position. The law is also expected to reduce the Company s domestic statutory capital and risk-based capital. Notwithstanding the enactment of the Tax Act of 2017, the President, Congress, as well as state and local governments, may continue to consider from time to time legislation that could increase the amount of corporate taxes we pay, thereby reducing earnings. U.S. federal tax law generally permits tax deferral on the inside build-up of investment value of certain retirement savings, annuities and life insurance products until there is a contract distribution and, in general, excludes from taxation the death benefit paid under a life insurance contract. The Tax Act of 2017 did not change these rules, though it is possible that some individuals with overall lower effective tax rates could be less attracted to the tax deferral aspect of the Company s products. The general reduction in individual tax rates and elimination of certain individual deductions may also impact the Company depending on whether current and potential customers have more or less after-tax income to save for retirement and manage their mortality and longevity risk through the purchase of the Company s products. Congress from time to time may enact other changes to the tax law that could make our products less attractive to consumers, including legislation that would modify the tax favored treatment of retirement savings, life insurance and annuities products. The products we sell have different tax characteristics and in some cases generate tax deductions and credits for the Company. Changes in either the U.S. or foreign tax laws may negatively impact the deductions and credits available to the Company, including the ability of the Company to claim foreign tax credits with respect to taxes withheld on separate account products. These changes would increase the Company s actual tax expense and reduce its consolidated net income. The level of profitability of certain products is significantly dependent on these characteristics and our ability to continue to generate taxable income, which is taken into consideration when pricing products and is a component of our capital management strategies. Accordingly, changes in tax law, our ability to generate taxable income, or other factors impacting the availability or value of the tax characteristics generated by our products, could impact product pricing and returns or require us to reduce our sales of these products or implement other actions that could be disruptive to our businesses. Interruption in telecommunication, information technology and other operational systems, or a failure to maintain the security, confidentiality or privacy of sensitive data residing on such systems, could harm our business. We depend heavily on our telecommunication, information technology and other operational systems and on the integrity and timeliness of data we use to run our businesses and service our customers. These systems may fail to operate properly or become disabled as a result of events or circumstances wholly or partly beyond our control. Further, we face the risk of operational and technology failures by others, including clearing agents, exchanges and other financial intermediaries and of vendors and parties to which we outsource the provision of services or business operations. If these parties do not perform as anticipated, we may experience operational difficulties, increased costs and other adverse effects on our business. These risks are heightened by our offering of increasingly complex products, such as those that feature automatic rebalancing or re-allocation strategies, and by our employment of complex investment, trading and hedging programs. Despite our implementation of a variety of security measures, our information technology and other systems could be subject to physical or electronic break-ins, unauthorized tampering or other security breaches, resulting in a failure to maintain the security, confidentiality or privacy of sensitive data, including personal information relating to customers, or in the misappropriation of our intellectual property or proprietary information. Many financial services institutions and companies engaged in data processing have reported security breaches and service disruptions related to their websites or other systems, some of which have involved sophisticated and targeted attacks intended to obtain unauthorized access to confidential information, destroy data, disrupt or degrade service, sabotage systems or cause other damage, often through the introduction of computer viruses or malware, denial -of-service attacks and other means. Despite our efforts to ensure the integrity of our systems, it is possible that we may not be able to anticipate or to implement effective preventive measures against all security breaches and disruptions of these types, especially because the techniques used change frequently or are not recognized until launched, and because cyber attacks can originate from a wide variety of sources, including third-parties outside of the Company such as persons who are involved with organized crime or who may be linked to terrorist organizations or hostile foreign governments, as well as external service providers. Those parties may also attempt to fraudulently induce employees, customers or other users of the Company s systems to disclose sensitive information in order to gain access to our data or that of our customers or clients. In addition, while we have certain standards for all vendors that provide us services, our vendors, and in turn, their own service providers, may become subject to a security breach, including as a result of their failure to perform in accordance with contractual arrangements. Security breaches or other technological failures may also result in regulatory inquiries, regulatory proceedings, regulatory and litigation costs, and reputational damage. We may incur reimbursement and other expenses, including the costs of litigation and litigation settlements and additional compliance costs. We may also incur considerable expenses in enhancing and upgrading computer systems and systems security following such a failure. Interruption in telecommunication, information technology and other operational systems, or a failure to maintain the security, confidentiality or privacy of sensitive data residing on such systems, whether due to actions by us or others, could delay or disrupt our ability to do business and service our customers, harm our reputation, result in a violation of applicable privacy and other laws, subject us to substantial regulatory sanctions and other claims, lead to a loss of customers and revenues, or financial loss to our customers and otherwise adversely affect our business. The occurrence of natural or man-made disasters could adversely affect our operations, results of operations and financial condition. The occurrence of natural disasters, including hurricanes, floods, earthquakes, tsunamis, tornadoes, fires, explosions, pandemic disease and man-made disasters, including acts of terrorism and military actions, could adversely affect our operations, results of operations or financial condition, including in the following respects: Catastrophic loss of life due to natural or man-made disasters could cause us to pay benefits at higher levels and/or materially earlier than anticipated and could lead to unexpected changes in persistency rates. A man-made or natural disaster, such as an earthquake in Japan, could result in disruptions in our operations, losses in our investment portfolio or the failure of our counterparties to perform, or cause significant volatility in global financial markets. A terrorist attack affecting financial institutions in the U.S. or elsewhere could negatively impact the financial services industry in general and our business operations, investment portfolio and profitability in particular. Pandemic disease could have a severe adverse effect on Prudential Financial s business. The potential impact of such a pandemic on Prudential Financial s results of operations and financial position is variable, and would depend on numerous factors, including the effectiveness of vaccines and the rate of contagion, the regions of the world most affected and the effectiveness of treatment for the infected population. The above risks are more pronounced in respect of geographic areas, including major metropolitan centers, where we have concentrations of customers, including under group and individual life insurance, concentrations of employees or significant operations, and in respect of countries and regions in which we operate subject to a greater potential threat of military action or conflict. Ultimate losses would depend on the rates of mortality and morbidity among various segments of the insured population, the collectability of reinsurance, the possible macroeconomic effects on our asset portfolio, the effect on lapses and surrenders of existing policies, as well as sales of new policies and other variables. There can be no assurance that our business continuation plans and insurance coverages would be effective in mitigating any negative effects on our operations or profitability in the event of a terrorist attack or other disaster. Finally, climate change may increase the frequency and severity of weather related disasters and pandemics. In addition, climate change regulation may affect the prospects of companies and other entities whose securities we hold, or our willingness to continue to hold their securities. It may also impact other counterparties, including reinsurers, and affect the value of investments, including real estate investments we hold or manage for others. We cannot predict the long-term impacts on us from climate change or related regulation. FINANCIAL STATEMENTS OF THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY ACCOUNT Market for Registrant s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Owners of the contracts may participate by allocating all or part of the net premiums or purchase payments to The Prudential Variable Contract Real Property Account ("Real Property Account"). Contract values vary with the performance of the Real Property Account s investments through the Partnership. Participating interests in the Real Property Account are not traded in any public market; therefore, a discussion of market information is not relevant. As of December 31, 2017, 21,583 contract owners of record held investments in the Real Property Account. Selected Financial Data The Partnership Results of Operations and Financial Position are summarized as follows: Year Ended December 31, CONSOLIDATED RESULTS OF OPERATIONS: 2017 2016 2015 2014 2013 Total Investment Income $ 22,810,587 $ 22,829,303 $ 22,394,116 $ 25,546,941 $ 28,525,763 Net Investment Income $ 7,286,442 $ 7,874,446 $ 6,711,044 $ 7,474,906 $ 9,574,870 Net Recognized and Unrealized Gain (Loss) on Investments 4,778,649 3,003,702 12,722,180 6,735,778 9,086,821 Net Increase (Decrease) in Net Assets Resulting From Operations $ 12,065,091 $ 10,878,148 $ 19,433,224 $ 14,210,684 $ 18,661,691 CONSOLIDATED FINANCIAL POSITION: December 31, 2017 2016 2015 2014 2013 Total Assets $ 328,824,566 $ 320,397,053 $ 282,274,678 $ 270,454,664 $ 258,047,298 Investment Level Debt* $ 96,905,747 $ 93,958,234 $ 66,026,362 $ 69,515,899 $ 58,892,867 *Certain prior period amounts in the consolidated financial statements have been reclassified to conform with current period presentation. See New Accounting Pronouncements adopted in Note 2 of Notes to the Consolidated Financial Statements of the Partnership. Management s Discussion and Analysis of Financial Condition and Results of Operations All assets of the Real Property Account are invested in the Partnership. Accordingly, the liquidity and capital resources and results of operations for the Real Property Account are contingent upon those of the Partnership. Therefore, this Management s Discussion and Analysis of Financial Condition and Results of Operations addresses these items at the Partnership level. The general partners in the Partnership are The Prudential Insurance Company of America, Pruco Life Insurance Company, and Pruco Life Insurance Company of New Jersey (collectively, the General Partners ). The following discussion and analysis of the liquidity and capital resources and results of operations of the Partnership should be read in conjunction with the audited financial statements of the Real Property Account and the audited consolidated financial statements of the Partnership and the related Notes included in this filing. (a) Liquidity and Capital Resources As of December 31, 2017, the Partnership s liquid assets, consisting of cash and cash equivalents, were approximately $26.7 million, a decrease of approximately $20.8 million from $47.5 million as of December 31, 2016. The decrease was primarily due to the following activities: (a) $28.7 million in real estate investments and improvements which includes $18.8 million for the acquisition of a self-storage facility located in Miami, FL, $5.6 million for construction costs at the development property in Chicago, IL and $2.7 million for building improvements at the retail property in Ocean City, MD; (b) $5.0 million in distributions to investors; (c) $1.7 million in net cash outflows to joint venture partners; and (d) $1.3 million of principal payments on financed properties. These decreases were partially offset by the following: (e) $7.3 million of cash flow generated from property operations; (f) $4.5 million of net proceeds from the sale of a retail center property in Dunn, NC; and (g) $4.2 million of proceeds from investment level debt. Sources of liquidity included net cash flow from property operations, mortgage debt on real estate investments, and interest from cash equivalents. The Partnership uses cash for its real estate investment activities and for distributions to its General Partners. As of December 31, 2017, approximately 8.1% of the Partnership s total assets consisted of cash and cash equivalents. The following table sets forth a summary regarding the Partnership's known contractual obligations, including required interest payments for those items that are interest bearing as of December 31, 2017 (amounts in millions). Amounts Due During Years Ending December, 31 2018 2019 2020 2021 2022 Thereafter Total Mortgage Loans Payable: Principal Payments $9.4 $1.7 $1.9 $44.5 $13.8 $26.6 $97.9 Interest Payments (1) 3.2 2.8 2.8 2.8 1.6 1.1 14.3 Total Mortgage Loans Payable $12.6 $4.5 $4.7 $47.3 $15.4 $27.7 $112.3 Other Commitments (2) - - - - - - - Total Contractual Obligations $12.6 $4.5 $4.7 $47.3 $15.4 $27.7 $112.3 (1) These amounts represent interest payments due on mortgage loans payable based on stated rates at December 31, 2017. (2) This includes the Partnership's commitment to fund any additional equity on development projects. As of December 31, 2017 the Partnership has satisfied this equity commitment. (b) Results of Operations for the years ended December 31, 2017 and December 31, 2016 The following is a comparison of the Partnership s results of operations for the years ended December 31, 2017 and December 31, 2016. Net investment income overview The Partnership s net investment income attributable to the General Partners controlling interest for the year ended December 31, 2017 was approximately $6.7 million, a decrease of approximately $0.5 million from the prior year. The decrease in net investment income attributable to the General Partners controlling interest was primarily due to a decrease of $0.5 million in the retail sector s net investment income from the prior year and a decrease of approximately $0.3 million in the office sector s net investment income from the prior year. Partially offsetting this was a decrease of approximately $0.2 million from the prior year in portfolio level expenses. Net investment income attributable to the General Partner s controlling interest in the apartment sector was essentially flat from the prior year. Valuation overview The Partnership recorded net recognized and unrealized gains attributable to the General Partners controlling interest of approximately $3.6 million for the year ended December 31, 2017. This is compared with a net recognized and unrealized gain attributable to the General Partners controlling interest of approximately $3.0 million for the year ended December 31, 2016, an increase of $0.6 million. Unrealized gains attributable to the General Partners controlling interest from the prior year increased by $1.7 million and were primarily due to a valuation increase in the apartment sector of $1.0 million and a valuation increase in the retail sector of $0.8 million. Recognized losses attributable to the General Partners controlling interest from the prior year increased by $1.1 million, and were primarily due to a $1.3 million increase in recognized losses from retail sector investments, partially offset by a $0.3 million decrease in recognized losses from office sector investments. The following table presents a comparison of the Partnership s sources of net investment income (loss) attributable to the General Partners controlling interest and net recognized and unrealized gains (losses) attributable to the General Partners controlling interest for the years ended December 31, 2017 and 2016. Year Ended December 31, 2017 2016 Net Investment Income (Loss): Office properties $ 10,563 $ 279,236 Apartment properties 4,043,285 4,118,208 Retail properties 6,216,988 6,668,035 Hotel properties (103,350 ) Storage properties 8,667 Other (including interest income, investment management fees, etc.) (3,622,829 ) (3,755,676 ) Total Net Investment Income $ 6,656,674 $ 7,206,453 Net Recognized Gain (Loss) on Real Estate Investments: Office properties $ $ (256,982 ) Hotel properties (1,419 ) Retail properties (1,332,637 ) Net Recognized Gain (Loss) on Real Estate Investments $ (1,334,056 ) $ (256,982 ) Net Unrealized Gain (Loss) on Real Estate Investments: Apartment properties $ 4,629,031 $ 3,593,146 Retail properties 400,741 (353,072 ) Storage properties (53,115 ) Net Unrealized Gain (Loss) on Real Estate Investments 4,976,657 3,240,074 Net Recognized and Unrealized Gain (Loss) on Real Estate Investments $ 3,642,601 $ 2,983,092 Increase/(Decrease) in Net Assets $ 10,299,275 $ 10,189,545 OFFICE PROPERTIES Year Ended December 31, Net Investment Income/(Loss) 2017 Net Investment Income/(Loss) 2016 Recognized/ Unrealized Gain/(Loss) 2017 Recognized/ Unrealized Gain/(Loss) 2016 Occupancy 2017 Occupancy 2016 Property Lisle, IL (1) $ $ 280,307 $ $ (256,982 ) N/A N/A Beaverton, OR (2) (8,135 ) (1,071 ) N/A N/A Nashville, TN (3) 9,753 N/A N/A Brentwood, TN (4) 8,945 N/A N/A $ 10,563 $ 279,236 $ $ (256,982 ) (1) The Lisle, IL property was sold in 2016. (2) The Beaverton, OR property was sold in 2015. (3) The Nashville, TN property was sold in 2015. (4) The Brentwood, TN property was sold in 2013. Net investment income/(loss) Net investment income attributable to the General Partners controlling interest for the Partnership s office properties was approximately $0.01 million for the year ended December 31, 2017, which represents a decrease of approximately $0.3 million from the year ended December 31, 2016. The decrease in net investment income is primarily due to the sale of the property located in Lisle, IL in 2016. Recognized and Unrealized gain/(loss) Recognized and unrealized gains/(losses) attributable to the General Partners controlling interest for the Partnership s office properties were $0 million for the year ended December 31, 2017, which represents a $0.3 million increase from the year ended December 31, 2016. The recognized loss attributable to the General Partners controlling interest for the year ended December 31, 2016 was due to the sale of the property located in Lisle, IL in 2016. APARTMENT PROPERTIES Year Ended December 31, Net Investment Income/(Loss) 2017 Net Investment Income/(Loss) 2016 Unrealized Gain/(Loss) 2017 Unrealized Gain/(Loss) 2016 Occupancy 2017 Occupancy 2016 Property Austin, TX $ 1,279,409 $ 1,382,288 $ 1,650,204 $ 792,614 96 % 98 % Charlotte, NC 673,779 762,469 38,409 697,772 96 % 96 % Seattle, WA #1 649,850 647,341 1,603,120 1,860,881 88 % 93 % Seattle, WA #2 902,972 816,523 1,503,560 154,572 87 % 96 % Maplewood, NJ 537,275 509,587 (169,305 ) 87,275 86 % 94 % Chicago, IL (1) 3,043 32 N/A N/A $ 4,043,285 $ 4,118,208 $ 4,629,031 $ 3,593,146 (1) The Chicago, IL property is in development. Net investment income/(loss) Net investment income attributable to the General Partners controlling interest for the Partnership s apartment properties was approximately $4.0 million for the year ended December 31, 2017, which represents a decrease of approximately $0.1 million from the prior year. Unrealized gain/(loss) The apartment properties owned by the Partnership produced a net unrealized gain attributable to the General Partners controlling interest of approximately $4.6 million for the year ended December 31, 2017 compared with a net unrealized gain attributable to the General Partners controlling interest of approximately $3.6 million from the prior year. The net unrealized gain attributable to the General Partners controlling interest for the year ended December 31, 2017 was primarily due to favorable market leasing and rent assumptions at both Seattle, WA properties and the Austin, TX property, as well as an anticipated decrease in property taxes at one property in Seattle, WA, and a decrease in previously forecasted capital expenditures at the property in Austin, TX. RETAIL PROPERTIES Year Ended December 31, Net Investment Income/(Loss) 2017 Net Investment Income/(Loss) 2016 Unrealized/Recognized Gain/(Loss) 2017 Unrealized Gain/(Loss) 2016 Occupancy 2017 Occupancy 2016 Property Hampton, VA $ 1,566,352 $ 1,461,915 $ (897,008 ) $ (2,641,636 ) 97 % 99 % Ocean City, MD 1,062,793 933,195 581,195 (72,872 ) 98 % 100 % Westminster, MD 1,281,159 1,400,268 549,046 100,000 100 % 100 % Dunn, NC (1) (154,716 ) 96,803 (1,332,637 ) 677,134 N/A 58 % Roswell, GA 1,193,805 1,146,671 162,248 600,000 96 % 94 % North Fort Myers, FL 510,105 855,640 (94,740 ) 284,302 88 % 88 % Roswell, GA (2) 28,008 N/A N/A Norcross, GA 729,482 773,543 100,000 700,000 100 % 100 % $ 6,216,988 $ 6,668,035 $ (931,896 ) $ (353,072 ) (1) The Dunn, NC property was sold in 2017. (2) The Roswell, GA property was sold in 2009. Net investment income/(loss) Net investment income attributable to the General Partners controlling interest for the Partnership s retail properties was approximately $6.2 million for the year ended December 31, 2017, which represents a decrease of approximately $0.5 million from the prior year. Approximately $0.3 million of the decrease relates to revenue from rental income, common area maintenance, and tenant improvements that was set aside by the seller in an escrow account and released at the end of the prior year at the North Fort Meyers, FL property. The remaining variance is primarily related to the sale of the Dunn, NC property in 2017. Recognized and unrealized gain/(loss) The retail properties owned by the Partnership produced a recognized/unrealized loss attributable to the General Partners controlling interest of approximately $0.9 million for the year ended December 31, 2017, compared with a net unrealized loss attributable to the General Partners controlling interest of approximately $0.4 million from the prior year period. The net unrealized loss attributable to the General Partners' controlling interest for year ended December 31, 2017 was primarily due to the sale of the Dunn, NC property in 2017, as well as vacancy of the anchor tenant, and a reduction of the market leasing assumption for the outparcel in the Hampton, VA property. The loss was partially offset by gains in the Ocean City, MD and Westminster, MD properties from additional leases signed/renewed in 2017. HOTEL PROPERTIES Year Ended December 31, Net Investment Income/(Loss) 2017 Net Investment Income/(Loss) 2016 Recognized Unrealized Gain/(Loss) 2017 Recognized Gain/(Loss) 2016 Occupancy 2017 Occupancy 2016 Property Lake Oswego, OR (1) $ $ (103,350 ) $ (1,419 ) $ N/A N/A (1) The property was sold in 2014. Net investment income/(loss) Net investment loss attributable to the General Partners controlling interest related to the Partnership s former hotel property was $0 million for the year ended December 31, 2017. The net investment losses in 2016 represent post-closing expenses. Recognized Unrealized gain/(loss) The recognized loss attributable to the General Partners controlling interest for the Partnership s former hotel property for the year ended December 31, 2017 represents post-closing expenses. STORAGE PROPERTIES Year Ended December 31, Net Investment Income/(Loss) 2017 Net Investment Income/(Loss) 2016 Unrealized Gain/(Loss) 2017 Unrealized Gain/(Loss) 2016 Occupancy 2017 Occupancy 2016 Property Miami, FL (1) $ 8,667 $ $ (53,115 ) $ 42% N/A (1) The property was acquired in 2017. Net investment income/(loss) Net investment income attributable to the General Partners controlling interest related to the Partnership s storage property was $0.01 million for the year ended December 31, 2017. Unrealized gain/(loss) The storage property owned by the Partnership produced a net unrealized loss attributable to the General Partners controlling interest of approximately $0.05 million for the year ended December 31, 2017. Other Other net investment expense mainly includes investment management fees, other portfolio level expenses and interest income. Other net investment expense attributable to the General Partners controlling interest was approximately $3.6 million for the year ended December 31, 2017, which represents a decrease of approximately $0.2 million from the prior year. The decrease in other net investment expense is primarily due to an increase in short term interest income, from slightly higher cash and cash equivalent balances in 2017. (c) Results of Operations for years ended December 31, 2016 and December 31, 2015 The following is a comparison of the Partnership's results of operations for the years ended December 31, 2016 and 2015. Net investment income overview The Partnership s net investment income attributable to the General Partners controlling interest for the year ended December 31, 2016 was approximately $7.2 million, an increase of approximately $1.1 million from the prior year period. The increase in net investment income attributable to the General Partners controlling interest was primarily due to an increase of $1.0 million in the retail sector s net investment income from the prior year period and an increase of approximately $0.7 million in the office sector s net investment income from the prior year period. Partially offsetting this growth was an increase of approximately $0.5 million from the prior year period in portfolio level expenses. Net investment income attributable to the General Partner s controlling interest in the apartment and hotel sectors were essentially flat from the prior year period. Valuation overview The Partnership recorded net recognized and unrealized gains attributable to the General Partners controlling interest of approximately $3.0 million for the year ended December 31, 2016. This is compared with a net recognized and unrealized gain attributable to the General Partners controlling interest of approximately $10.7 million for the year ended December 31, 2015. The unrealized gains attributable to the General Partners controlling interest for the year ended December 31, 2016 were due to a valuation increase in the apartment investments of $3.6 million. The General Partners controlling interest of the retail investments depreciated $0.4 million for the year ended December 31, 2016. Further offsetting the unrealized gains was a recognized loss of $0.3 million in the office sector investments. The following table presents a comparison of the Partnership s sources of net investment income (loss) attributable to the General Partners controlling interest and net recognized and unrealized gains (losses) attributable to the General Partners controlling interest for the year ended December 31, 2016 and 2015. Year Ended December 31, 2016 2015 Net Investment Income (Loss): Office properties $ 279,236 $ (386,446 ) Apartment properties 4,118,208 4,167,541 Retail properties 6,668,035 5,643,088 Hotel properties (103,350 ) (55,098 ) Other (including interest income, investment management fees, etc.) (3,755,676 ) (3,300,701 ) Total Net Investment Income $ 7,206,453 $ 6,068,384 Net Recognized Gain (Loss) on Real Estate Investments: Office properties $ (256,982 ) $ 125,879 Net Recognized Gain (Loss) on Real Estate Investments $ (256,982 ) $ 125,879 Net Unrealized Gain (Loss) on Real Estate Investments: Office properties $ $ (1,179,179 ) Apartment properties 3,593,146 6,597,881 Retail properties (353,072 ) 5,203,865 Net Unrealized Gain (Loss) on Real Estate Investments 3,240,074 10,622,567 Net Recognized and Unrealized Gain (Loss) on Real Estate Investments $ 2,983,092 $ 10,748,446 Increase/(Decrease) in Net Assets $ 10,189,545 $ 16,816,830 APARTMENT PROPERTIES Year Ended December 31, Net Investment Income/(Loss) 2016 Net Investment Income/(Loss) 2015 Unrealized Gain/(Loss) 2016 Unrealized Gain/(Loss) 2015 Occupancy 2016 Occupancy 2015 Property Austin, TX $ 1,382,288 $ 1,435,683 $ 792,614 $ 2,787,287 98 % 96 % Charlotte, NC 762,469 935,383 697,772 923,823 96 % 98 % Seattle, WA #1 647,341 589,338 1,860,881 97,912 93 % 95 % Seattle, WA #2 816,523 729,934 154,572 2,723,411 96 % 93 % Maplewood, NJ (1) 509,587 477,203 87,275 65,448 94 % 80 % Chicago, IL (2) 32 N/A N/A $ 4,118,208 $ 4,167,541 $ 3,593,146 $ 6,597,881 (1) The Maplewood, NJ property was acquired April 2, 2015. (2) The Chicago, IL property was acquired on November 9, 2015 and is currently under development. Net investment income/(loss) Net investment income attributable to the General Partners controlling interest for the Partnership s apartment properties was approximately $4.1 million for the year ended December 31, 2016, which represents a decrease of approximately $0.1 million from the year ended December 31, 2015. The decrease was primarily due to the interest expense associated with the investment level debt placed on the property in Charlotte, NC, which was financed in January 2016. Unrealized gain/(loss) The apartment properties owned by the Partnership produced a net unrealized gain attributable to the General Partners controlling interest of approximately $3.6 million for the year ended December 31, 2016 compared with a net unrealized gain attributable to the General Partners controlling interest of approximately $6.6 million from the prior year period. The net unrealized gain attributable to the General Partners controlling interest for the year ended December 31, 2016 was primarily due to favorable market leasing and rent assumptions at both properties in Seattle, WA, as well as the properties in Charlotte, NC and Austin, TX. Additionally, gains at the property in Maplewood, NJ were primarily due to rent increases. RETAIL PROPERTIES Year Ended December 31, Net Investment Income/(Loss) 2016 Net Investment Income/(Loss) 2015 Unrealized/Recognized Gain/(Loss) 2016 Unrealized Gain/(Loss) 2015 Occupancy 2016 Occupancy 2015 Property Hampton, VA $ 1,461,915 $ 1,418,163 $ (2,641,636 ) $ 774,336 99 % 96 % Ocean City, MD 933,195 914,371 (72,872 ) 638,666 100 % 96 % Westminster, MD 1,400,268 1,349,841 100,000 1,394,504 100 % 100 % Dunn, NC 96,803 120,633 677,134 (468,836 ) 58 % 26 % Roswell, GA 1,146,671 567,590 600,000 1,153,211 94 % 94 % North Fort Myers, FL 855,640 506,480 284,302 694,700 88 % 85 % Norcross, GA 773,543 766,010 700,000 1,017,284 100 % 100 % $ 6,668,035 $ 5,643,088 $ (353,072 ) $ 5,203,865 Net investment income/(loss) Net investment income attributable to the General Partners controlling interest for the Partnership s retail properties was approximately $6.7 million for the year ended December 31, 2016, which represents an increase of approximately $1.0 million from the prior year period. The increase was largely due to interest expense savings from the November 2015 loan payoff at the property in Roswell, GA. Additional increases were caused by revenue growth at the North Fort Myers, FL property due to the expiration of a reserve held in escrow since the property s acquisition for vacant spaces rental income, common area maintenance and tenant improvements. The reserve expired during the fourth quarter and was recognized as revenue. Unrealized gain/(loss) The retail properties owned by the Partnership produced a net unrealized loss attributable to the General Partners controlling interest of approximately $0.4 million for the year ended December 31, 2016, compared with a net unrealized gain attributable to the General Partners controlling interest of approximately $5.2 million from the prior year period. The net unrealized loss attributable to the General Partners controlling interest for the year ended December 31, 2016 was primarily due to increased investment rates for the property in Hampton, VA based on the recent marketing of the property. Investment rates include direct and terminal capitalization rates, and discount rates, which reflect investors yield requirements on investments. The loss was partially offset by gains at the Norcross, GA property related to discount rate compression, gains at the Dunn, NC property due to increased occupancy, and gains at the Roswell, GA property driven by increased net investment income. OFFICE PROPERTIES Year Ended December 31, Net Investment Income/(Loss) 2016 Net Investment Income/(Loss) 2015 Unrealized/Recognized Gain/(Loss) 2016 Unrealized Gain/(Loss) 2015 Occupancy 2016 Occupancy 2015 Property Lisle, IL (1) $ 280,307 $ (141,037 ) $ (256,982 ) $ (1,179,179 ) N/A 55 % Beaverton, OR (2) (1,071 ) (245,409 ) 125,879 N/A N/A $ 279,236 $ (386,446 ) $ (256,982 ) $ (1,053,300 ) (1) The Lisle, IL property was sold on January 21, 2016. (2) The Beaverton, OR property was sold on June 8, 2015. Net investment income/(loss) Net investment income attributable to the General Partners controlling interest for the Partnership s office properties was approximately $0.3 million for the year ended December 31, 2016, which represents an increase of approximately $0.7 million from the year ended December 31, 2015. The increase in net investment income is due to selling the properties in Lisle, IL, and Beaverton, OR. The two properties had large vacancies and were providing negative cash flow resulting in losses in 2015. The 2016 net investment income was primarily driven by a decrease in accrued post closing balances. Recognized and unrealized gain/(loss) The office property formerly owned by the Partnership produced a recognized loss attributable to the General Partners controlling interest of approximately $0.3 million for the year ended December 31, 2016, compared with a recognized and net unrealized loss attributable to the General Partners controlling interest of approximately $1.1 million for the year ended December 31, 2015. The recognized loss attributable to the General Partners controlling interest for the year ended December 31, 2016 was due to the sale of the property located in Lisle, IL. HOTEL PROPERTY Year Ended December 31, Net Investment Income/(Loss) 2016 Net Investment Income/(Loss) 2015 Unrealized/Recognized Gain/(Loss) 2016 Unrealized Gain/(Loss) 2015 Occupancy 2016 Occupancy 2015 Property Lake Oswego, OR (1) $ (103,350 ) $ (55,098 ) $ $ N/A N/A (1) The property was sold on October 29, 2014. Net investment income/(loss) Net investment loss attributable to the General Partners controlling interest related to the Partnership s former hotel property was than $0.1 million for the year ended December 31, 2016. This property was sold on October 29, 2014. The net investment losses in both periods represent post closing expenses. (d) Inflation A majority of the Partnership s leases with its commercial tenants provide for recoveries of expenses based upon the tenant s proportionate share of, and/or increases in, real estate taxes and certain operating costs, which may partially reduce the Partnership s exposure to increases in operating costs resulting from inflation. The Partnership is not able to recover any expenses in unleased space. Critical Accounting Policies The preparation of financial statements in conformity with U.S. GAAP requires the application of accounting policies that often involve a significant degree of judgment. Management reviews critical estimates and assumptions on an ongoing basis. If management determines, as a result of its consideration of facts and circumstances, that modifications in assumptions and estimates are appropriate, results of operations and financial position as reported in the audited financial statements of the Real Property Account and the audited consolidated financial statements of the Partnership may change significantly. The following sections discuss the critical accounting policies applied in preparing the financial statements of the Real Property Account and the consolidated financial statements of the Partnership that are most dependent on the application of estimates and assumptions. Valuation of Investments Real estate investments are carried at fair value. Properties owned are initially recorded at the purchase price plus closing costs. Development costs and major renovations are capitalized as a component of cost, and routine maintenance and repairs are charged to expense as incurred. Real estate costs include the cost of acquired property, including all the tangible and intangible assets. Tangible assets include the value of all land, building and tenant improvements at the time of acquisition. Intangible assets include the value of any above and below market leases in-place leases and tenant relationships at the time of acquisition. In general, fair value estimates are based upon property appraisal reports prepared by independent real estate appraisers (members of the Appraisal Institute or an equivalent organization) within a reasonable amount of time following acquisition of the real estate and no less frequently than annually thereafter. The Chief Real Estate Appraiser of PGIM, Inc. ( PGIM ) is responsible for assuring that the valuation process provides independent and reasonable property fair value estimates. PGIM is an indirectly owned subsidiary of Prudential Financial. An unaffiliated third party has been appointed by PGIM to assist the Chief Real Estate Appraiser in maintaining and monitoring the independence and the accuracy of the appraisal process. The fair value of real estate investments does not reflect the transaction sale costs, which may be incurred upon disposition of the real estate investments. The purpose of an appraisal is to estimate the fair value of real estate as of a specific date. In accordance with FASB authoritative guidance on fair value measurements and disclosures, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The estimate of fair value is based on the conventional approaches to value, all of which require the exercise of subjective judgment. The three approaches are: (1) current cost of reproducing the real estate less deterioration and functional and economic obsolescence; (2) discounting a series of income streams and reversion at a specific yield or by directly capitalizing a single year income estimate by an appropriate factor; and (3) value indicated by recent sales of comparable real estate in the market. Key inputs and assumptions include rental income and expense amounts, related rental income and expense growth rates, discount rates and capitalization rates. In the reconciliation of these three approaches, the independent appraiser uses one or a combination of them to determine the approximate value for the type of real estate in the market. Cash equivalents include short-term investments with maturities of three months or less when purchased. Other Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements of the Real Property Account and the consolidated financial statements of the Partnership and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. ITEM 3. Quantitative and Qualitative Disclosures about Market Risk The table below discloses the Partnership s investment level debt as of December 31, 2017. The fair value of the Partnership s long-term investment level debt is affected by changes in market interest rates. The following table presents principal cash flows based upon maturity dates of the debt obligations and the related weighted-average interest rates by expected maturity dates for the debt. Investment level debt ($ in 000s), including current portion 2018 2019 2020 2021 2022 Thereafter Total Estimated Fair Value Weighted Average Fixed Interest Rate 4.04 % 4.02 % 4.03 % 3.75 % 3.79 % 3.67 % 3.50 % Future Annual Principal Payments $ 9,399 $ 1,680 $ 1,916 $ 44,495 $ 13,809 $ 26,625 $ 97,924 $ 98,691 Credit Risk The Partnership is exposed to market risk from tenants. While the Partnership has not experienced any significant credit losses, in the event of significant increases in interest rates and/or an economic downturn, tenant delinquencies could increase and result in losses to the Partnership and the Real Property Account that could adversely affect operating results and liquidity. Market Conditions The U.S. economic conditions continued to improve in 2017, as GDP expanded 2.3% much stronger than the 2016 growth of 1.5%, according to the U.S. Bureau of Economic Analysis. The U.S. labor market also strengthened with 2.1 million job gains which led to continued compression of the unemployment rate, as reported by the U.S. Bureau of Labor Statistics. These trends supported steady wage growth, as reported by the Federal Reserve Bank of Atlanta. In addition, leading economic indicators remain positive, particularly sentiment, which was boosted further by the passing of the U.S. Tax Cuts and Jobs Act of 2017. Property Markets Vacancies remain tight across the property markets, and rent growth remains positive. In 2017, development activity remained robust in the apartment and industrial sectors, and limited in the retail and office sectors. Apartment: Job growth and demographic trends continued to fuel rental demand for apartments in 2017. However, strong development activity put some upward pressure on vacancies and more modest rent growth compared to previous years. Retail: Construction remained extremely limited in 2017. Weak retail absorption trends continued, leading rent growth to soften further. Property market sentiment remains bearish and rent growth may remain weak. Office: Office-using job gains continued in 2017. While forward-looking indicators suggested ongoing tenant demand for office space, net absorption decelerated in 2017. Vacancies were stable though, as construction leveled off. Industrial: Industrial continues its run as the best performer of all property types. At the close of 2017, occupancies were at record highs, fueled by overall U.S. economic growth and strong e-commerce demand. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None. Directors, Executive Officers and Corporate Governance THE PRUDENTIAL INSURANCE COMPANY OF AMERICA DIRECTORS THOMAS J. BALTIMORE, JR.-Director. Chair, Investment Committee; Chair, Executive Committee; Chair, Risk Committee; Member, Compensation Committee. Mr. Baltimore is Chairman, President and Chief Executive Officer of Park Hotels & Resorts, Inc. Age 54. GILBERT F. CASELLAS-Director. Chair, Corporate Governance and Business Ethics Committee; Member, Executive Committee; Member, Risk Committee. Mr. Casellas is Chairman of OMNITRU. Age 65. MARK B. GRIER-Director. Member, Risk Committee. Mr. Grier is Vice Chairman of the Board of Prudential Financial, Inc. and The Prudential Insurance Company of America. Age 65. MARTINA T. HUND-MEJEAN-Director. Member, Audit Committee. Ms. Hund-Mejean is the Chief Financial Officer of MasterCard Worldwide. Age 57. KARL J. KRAPEK-Director. Chair, Compensation Committee; Member, Executive Committee; Member, Risk Committee. Mr. Krapek is the former President and Chief Operating Officer, United Technologies Corporation, and a director of Northrop Grumman Corporation and Pensare Acquisitions Corporation. Age 69. PETER R. LIGHTE-Director. Member, Investment Committee; Member, Corporate Governance and Business Ethics Committee. Mr. Lighte is the former Vice Chairman, J.P. Morgan Corporate Bank, and the founding Chairman of J.P. Morgan Chase Bank, China. Age 68. GEORGE PAZ-Director. Member, Audit Committee. Mr. Paz is Non-Executive Chairman and former Chief Executive Officer of Express Scripts Holding Company, and a director of Honeywell International Inc. and Express Scripts Holding Company. Age 62. SANDRA PIANALTO-Director. Member, Corporate Governance and Business Ethics Committee; Member, Finance Committee. Ms. Pianalto is the former President and Chief Executive Officer of the Federal Reserve Bank of Cleveland, and a director of Eaton Corporation and The J.M. Smucker Company. Age 63. CHRISTINE A. POON-Director. Chair, Finance Committee; Member, Investment Committee; Member, Executive Committee; Member, Risk Committee. Ms. Poon is a Professor at the Max M. Fisher College of Business at The Ohio State University, and a director of Koninklijke Phillips Electronics NV, Regeneron Pharmaceuticals and The Sherwin-Williams Company. Age 65. DOUGLAS A. SCOVANNER-Director. Chair, Audit Committee; Member, Executive Committee; Member, Risk Committee. Mr. Scovanner is the Founder and Managing Member of Comprehensive Financial Strategies, LLC. Age 62. JOHN R. STRANGFELD-Director. Member, Executive Committee. Mr. Strangfeld is Chairman and Chief Executive Officer of Prudential Financial Inc. and The Prudential Insurance Company of America. Age 64. MICHAEL A. TODMAN-Director. Member, Compensation Committee; Member, Finance Committee. Mr. Todman is the former Vice Chairman of the Whirlpool Corporation, and a director of Brown-Forman Corporation and Newell Rubbermaid, Inc. Age 60. THE PRUDENTIAL INSURANCE COMPANY OF AMERICA EXECUTIVE OFFICERS ** LUCIEN A. ALZIARI-Senior Vice President and Chief Human Resources Officer, Prudential. Age 58. ROBERT M. FALZON-Executive Vice President and Chief Financial Officer, Prudential. Age 58. MARK B. GRIER-Vice Chairman, Prudential. Age 65. TIMOTHY P. HARRIS-Executive Vice President and General Counsel, Prudential. Age 57. BARBARA G. KOSTER-Senior Vice President and Chief Information Officer, Prudential. Age 63. CHARLES F. LOWREY-Executive Vice President and Chief Operating Officer, International Businesses, Prudential. Age 60. STEPHEN PELLETIER-Executive Vice President and Chief Operating Officer, U.S. Businesses, Prudential. Age 64. NICHOLAS C. SILITCH-Senior Vice President and Chief Risk Officer, Prudential. Age 56. SCOTT G. SLEYSTER-Senior Vice President and Chief Investment Officer, Prudential. Age 58. JOHN R. STRANGFELD-Chairman and Chief Executive Officer, Prudential. Age 64. CANDACE J.WOODS-Senior Vice President and Chief Actuary, Prudential. Age 57. ** Principal Officers of The Prudential Insurance Company of America hold comparable positions with Prudential Financial, Inc. FINANCIAL STATEMENTS OF THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY ACCOUNT Code of Ethics We have adopted Prudential Financial s code of business conduct and ethics, known as Making the Right Choices, which applies to our Chief Executive Officer, Chief Financial Officer and our Principal Accounting Officer, as well as to our directors and all other employees. Making the Right Choices is posted on Prudential Financial s website at www.investor.prudential.com. In addition, we have adopted Prudential Financial s Corporate Governance Guidelines, which we refer to herein as the Corporate Governance Principles and Practices. Prudential Financial s Corporate Governance Principles and Practices are available free of charge at www.investor.prudential.com. Executive Compensation The Real Property Account does not pay any fees, compensation or reimbursement to any Director or Officer of the Registrant. Certain Relationships and Related Transactions, and Director Independence See Related Party Transactions in Note 11 of Notes to the Consolidated Financial Statements of the Partnership. The Registrant is a separate investment account of The Prudential Insurance Company of America ("Prudential"), which is a wholly-owned subsidiary of Prudential Financial. All Directors and Executive Officers of the Registrant are employees and officers of Prudential. Principal Accounting Fees and Services The Audit Committee of the Board of Directors of Prudential Financial has appointed PricewaterhouseCoopers, LLP as the independent registered public accounting firm of Prudential Financial and certain of its domestic and international subsidiaries, including the Registrant. The Audit Committee has established a policy requiring its pre-approval of all audit and permissible non-audit services provided by the independent auditor. Fees related to such services are hereby incorporated by reference to the section entitled Item 2 - Ratification of the Appointment of Independent Auditors in Prudential Financial's definitive proxy statement for the Annual Meeting of Shareholders to be held on May 7, 2018, to be filed by Prudential Financial with the Securities and Exchange Commission pursuant to Regulation 14A within 120 days after December 31, 2017. Financial Statements and Supplementary Data Table of Contents THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY ACCOUNT Financial Statements: Report of Independent Registered Public Accounting Firm B-1 Statements of Net Assets December 31, 2017 and 2016 B-2 Statements of Operations Years Ended December 31, 2017, 2016 and 2015 B-2 Statements of Changes in Net Assets Years Ended December 31, 2017, 2016 and 2015 B-2 Notes to the Financial Statements B-3 THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP Financial Statements: Report of Independent Registered Public Accounting Firm C-1 Consolidated Statements of Assets and Liabilities December 31, 2017 and 2016 C-2 Consolidated Statements of Operations Years Ended December 31, 2017, 2016 and 2015 C-3 Consolidated Statements of Changes in Net Assets Years Ended December 31, 2017, 2016 and 2015 C-4 Consolidated Statements of Cash Flows Years Ended December 31, 2017, 2016 and 2015 C-5 Consolidated Schedules of Investments - December 31, 2017 and 2016 C-6 Notes to the Consolidated Financial Statements C-7 Financial Statement Schedules: Schedule III Real Estate Owned: Properties - December 31, 2017 C-17 Other 101.INS -XBRL Instance Document 101.SCH -XBRL Taxonomy Extension Schema Document. 101.CAL -XBRL Taxonomy Extension Calculation Linkbase Document. 101.LAB -XBRL Taxonomy Extension Label Linkbase Document. 101.PRE -XBRL Taxonomy Extension Presentation Linkbase Document. 101.DEF -XBRL Taxonomy Extension Definition Linkbase Document Report of Independent Registered Public Accounting Firm To the Board of Directors of The Prudential Insurance Company of America and the Contract Owners of The Prudential Variable Contract Real Property Account Opinion on the Financial Statements We have audited the accompanying statements of net assets of The Prudential Variable Contract Real Property Account (the "Account") as of December 31, 2017 and 2016, the related statements of operations for each of the three years in the period ended December 31, 2017 and the statements of changes in net assets for each of the three years in the period ended December 31, 2017, including the related notes (collectively referred to as the financial statements ). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Account as of December 31, 2017 and 2016, the results of its operations for each of the three years in the period ended December 31, 2017 and the changes in its net assets for each of the three years in the period ended December 31, 2017 in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These financial statements are the responsibility of The Prudential Insurance Company of America s management. Our responsibility is to express an opinion on the Account s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ( PCAOB ) and are required to be independent with respect to the Account in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of the investment owned as of December 31, 2017 by correspondence with the investee partnership. We believe that our audits provide a reasonable basis for our opinion. /s/ PricewaterhouseCoopers LLP New York, New York March 29, 2018 We have served as the Account s auditor since 1996. FINANCIAL STATEMENTS OF THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY ACCOUNT STATEMENTS OF NET ASSETS December 31, 2017 and 2016 December 31, 2017 December 31, 2016 ASSETS Investment in The Prudential Variable Contract Real Property Partnership $ 91,245,817 $ 88,677,532 Net Assets $ 91,245,817 $ 88,677,532 NET ASSETS, representing: Equity of contract owners $ 71,066,875 $ 71,455,960 Equity of The Prudential Insurance Company of America 20,178,942 17,221,572 $ 91,245,817 $ 88,677,532 Portfolio shares held 1,873,918 1,910,381 Portfolio net asset value per share $ 48.69 $ 46.42 Contract owner units outstanding 20,711,486 21,671,015 STATEMENTS OF OPERATIONS For the years ended December 31, 2017, 2016 and 2015 December 31, 2017 December 31, 2016 December 31, 2015 INVESTMENT INCOME Net investment income allocated from The Prudential Variable Contract Real Property Partnership $ 2,807,614 $ 3,039,363 $ 2,557,161 EXPENSES Charges for mortality and expense risk, and for administration 548,820 546,279 516,043 NET INVESTMENT INCOME 2,258,794 2,493,084 2,041,118 NET RECOGNIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net unrealized gain (loss) on investments allocated from The Prudential Variable Contract Real Property Partnership 2,098,833 1,366,521 4,476,829 Net recognized gain (loss) on investments allocated from The Prudential Variable Contract Real Property Partnership (562,670 ) (108,384 ) 53,008 NET GAIN (LOSS) ON INVESTMENTS 1,536,163 1,258,137 4,529,837 NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 3,794,957 $ 3,751,221 $ 6,570,955 STATEMENTS OF CHANGES IN NET ASSETS For the years ended December 31, 2017, 2016 and 2015 December 31, 2017 December 31, 2016 December 31, 2015 OPERATIONS Net investment income $ 2,258,794 $ 2,493,084 $ 2,041,118 Net unrealized gain (loss) on investments allocated from The Prudential Variable Contract Real Property Partnership 2,098,833 1,366,521 4,476,829 Net recognized gain (loss) on investments allocated from The Prudential Variable Contract Real Property Partnership (562,670 ) (108,384 ) 53,008 NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 3,794,957 3,751,221 6,570,955 CAPITAL TRANSACTIONS Net contributions (withdrawals) by contract owners (3,264,422 ) (1,268,714 ) (668,585 ) Net contributions (withdrawals) by The Prudential Insurance Company of America 2,037,750 1,814,993 (615,507 ) NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL TRANSACTIONS (1,226,672 ) 546,279 (1,284,092 ) TOTAL INCREASE (DECREASE) IN NET ASSETS 2,568,285 4,297,500 5,286,863 NET ASSETS Beginning of year 88,677,532 84,380,032 79,093,169 End of year $ 91,245,817 $ 88,677,532 $ 84,380,032 The accompanying notes are an integral part of these financial statements. NOTES TO THE FINANCIAL STATEMENTS OF THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY ACCOUNT December 31, 2017 Note 1: General The Prudential Variable Contract Real Property Account (the Real Property Account or the Registrant ) was established on November 20, 1986 by resolution of the Board of Directors of The Prudential Insurance Company of America ( Prudential or the Company ), as a separate investment account pursuant to New Jersey law and is registered under the Securities Act of 1933, as amended. Prudential is a wholly-owned subsidiary of Prudential Financial, Inc. ( Prudential Financial ). The assets of the Real Property Account are segregated from Prudential s other assets. The Real Property Account is used to fund benefits under certain variable life insurance and variable annuity contracts issued by Prudential. These products are Variable Appreciable Life ( PVAL , PVAL $100,000+ Face Value, and CVAL ), Discovery Plus ( PDISCO+ ), and Variable Investment Plan ( VIP ). The assets of the Real Property Account are invested in The Prudential Variable Contract Real Property Partnership (the Partnership ). The Partnership is the investment vehicle for assets allocated to the real estate investment option under certain variable life insurance and variable annuity contracts. The Real Property Account, along with Pruco Life Variable Contract Real Property Account and Pruco Life of New Jersey Variable Contract Real Property Account, are the sole investors in the Partnership. These financial statements should be read in conjunction with the accompanying audited consolidated financial statements of the Partnership. The Partnership has a policy of investing at least 65% of its assets in direct ownership interests in income-producing real estate and participating mortgage loans. Note 2: Summary of Significant Accounting Policies A. Basis of Accounting The financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ( U.S. GAAP ). The Real Property Account has evaluated subsequent events through the date these financial statements were issued. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The most significant estimates include valuation of the investment in the Partnership. B. Investment in Partnership Interest The investment in the Partnership is based on the Real Property Account s proportionate interest of the Partnership s fair value. At December 31, 2017 and 2016, the Real Property Account s share of the general partners' controlling interest of the Partnership was 42.3% or 1,873,918 shares and 42.2% or 1,910,381 shares, respectively. Properties owned by the Partnership are illiquid and their fair value is based on estimated fair value as disclosed in the notes to the consolidated financial statements of the Partnership. C. Income Recognition Net investment income or loss and recognized gains and losses are allocated based upon the daily average net assets for the investment in the Partnership. Amounts are based on the Real Property Account s proportionate interest in the Partnership. All changes in fair value are recorded as net change in unrealized gains (losses) on investments in the Statement of Operations. D. Equity of The Prudential Insurance Company of America Prudential maintains a position in the Real Property Account for liquidity purposes, including unit purchases and redemptions, Partnership share transactions, and expense processing. The position does not affect contract owners accounts or the related unit values. There were no cash transactions at the Real Property Account level for the years ended December 31, 2017, 2016, and 2015 as all of the transactions are settled by Prudential on behalf of the Real Property Account through a redemption or an issuance of units. Therefore, no statement of cash flows is presented for the years ended December 31, 2017, 2016, and 2015. Note 3: Taxes Prudential is taxed as a life insurance company , as defined by the Internal Revenue Code. The results of operations of the Real Property Account form a part of Prudential Financial s consolidated federal tax return. Under current federal, state and local law, no federal, state or local income taxes are payable by the Real Property Account. As such, no provision for the tax liability has been recorded in these financial statements. Prudential management will review periodically the status of the policy in the event of changes in the tax law. NOTES TO THE FINANCIAL STATEMENTS OF THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY ACCOUNT December 31, 2017 Note 4: Net Contributions (Withdrawals) by Contract Owners Net contributions (withdrawals) by contract owners(1) for the Real Property Account by product for the years ended December 31, 2017, 2016 and 2015 were as follows: December 31, 2017 VIP & PDISCO+ PVAL & PVAL $100,000+ face value CVAL TOTAL Contract owner net payments $ 636 $ 2,544,753 $ $ 2,545,389 Policy loans (974,618 ) (974,618 ) Policy loan repayments and interest 1,391,042 1,391,042 Surrenders, withdrawals and death benefits (237,974 ) (4,048,771 ) (4,286,745 ) Net transfers from/(to) other subaccounts or fixed rate option (25,448 ) (297,235 ) (322,683 ) Miscellaneous transactions 256 256 Administrative and other charges (458 ) (1,616,605 ) (1,617,063 ) $ (263,244 ) $ (3,001,178 ) $ $ (3,264,422 ) December 31, 2016 VIP & PDISCO+ PVAL & PVAL $100,000+ face value CVAL TOTAL Contract owner net payments $ 25,539 $ 2,698,189 $ $ 2,723,728 Policy loans (1,054,588 ) (1,054,588 ) Policy loan repayments and interest 1,345,089 1,345,089 Surrenders, withdrawals and death benefits (272,041 ) (2,980,721 ) (3,252,762 ) Net transfers from/(to) other subaccounts or fixed rate option 21,244 700,482 721,726 Miscellaneous transactions 5,091 5,091 Administrative and other charges (545 ) (1,756,453 ) (1,756,998 ) $ (225,803 ) $ (1,042,911 ) $ $ (1,268,714 ) December 31, 2015 VIP & PDISCO+ PVAL & PVAL $100,000+ face value CVAL TOTAL Contract owner net payments $ 18,703 $ 2,709,541 $ $ 2,728,244 Policy loans (1,107,759 ) (1,107,759 ) Policy loan repayments and interest 1,425,891 1,425,891 Surrenders, withdrawals and death benefits (122,477 ) (2,718,901 ) (2,841,378 ) Net transfers from/(to) other subaccounts or fixed rate option 103,422 676,078 779,500 Miscellaneous transactions 13 11,857 11,870 Administrative and other charges (826 ) (1,664,127 ) (1,664,953 ) $ (1,165 ) $ (667,420 ) $ $ (668,585 ) (1) Certain prior period contract owner transaction amounts have been reclassified to conform to the current period s presentation. Note 5: Partnership Distributions For the year ended December 31, 2017, the Partnership distributed a total of $5.0 million, which occurred on December 28, 2017. The Real Property Account's share of this distribution was $1.8 million. For the year ended December 31, 2016, the Partnership made no distribution. For the year ended December 31, 2015, the Partnership distributed a total of $5.0 million, which occurred on March 30, 2015. The Real Property Account s share of this distribution was $1.8 million. For the years ended December 31, 2017, 2016 and 2015, there were no purchases of the Partnership by the Real Property Account. NOTES TO THE FINANCIAL STATEMENTS OF THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY ACCOUNT December 31, 2017 Note 6: Unit Activity The changes in contract owner units outstanding(1) for the Real Property Account by product for the years ended December 31, 2017, 2016 and 2015 were as follows: December 31, 2017 VIP & PDISCO+ PVAL & PVAL $100,000+ face value CVAL TOTAL Units issued: 726 257,536 258,262 Units redeemed: (87,972 ) (1,129,819 ) (1,217,791 ) December 31, 2016 VIP & PDISCO+ PVAL & PVAL $100,000+ face value CVAL TOTAL Units issued: 19,419 464,588 484,007 Units redeemed: (97,044 ) (787,882 ) (884,926 ) December 31, 2015 VIP & PDISCO+ PVAL & PVAL $100,000+ face value CVAL TOTAL Units issued: 45,970 563,355 609,325 Units redeemed: (47,467 ) (802,957 ) (850,424 ) (1) Certain prior period contract owner transaction amounts have been reclassified to conform to the current period s presentation. Note 7: Financial Highlights Prudential sells a number of variable annuity and variable life insurance products. These products have unique combinations of features and fees that are charged against the contract owner s account balance. Differences in the fee structures result in a variety of unit values, expense ratios and total returns. The following table was developed by determining which products offered by Prudential have the lowest and highest total expense ratio and reflects contract owner units only. The table may not reflect the minimum and maximum contract charges offered by Prudential as contract owners may not have selected all available and applicable products as disclosed in Note 1. Units (000 s) Unit Value Lowest- Highest Net Assets (000 s) Investment Income Ratio(1) Expense Ratio(2) Lowest-Highest Total Return(3) Lowest-Highest December 31, 2017 20,711 $3.07270 $ 3.61008 $ 71,067 3.10 % 0.60% 1.20 % 3.66% 4.28 % December 31, 2016 21,671 $2.96418 $ 3.46206 $ 71,456 3.51 % 0.60% 1.20 % 3.85% 4.47 % December 31, 2015 22,072 $2.85437 $ 3.31402 $ 69,745 3.16 % 0.60% 1.20 % 7.83% 8.48 % December 31, 2014 22,313 $2.64710 $ 3.05509 $ 65,090 3.68 % 0.60% 1.20 % 5.88% 6.50 % December 31, 2013 22,850 $2.50018 $ 2.86852 $ 62,659 5.04 % 0.60% 1.20 % 8.25% 8.90 % (1) This amount represents the contract owners' proportionate share of net investment income from the underlying Partnership divided by the contract owners' average net assets of the Real Property Account. This ratio excludes those expenses, such as mortality and expense risk and administrative expenses that result in direct reductions in the unit values. (2) These amounts represent the annualized contract expenses of the Real Property Account, consisting primarily of mortality and expense charges, for each period indicated. These ratios include only those expenses that result in a direct reduction to unit values. Charges made directly to contract owner accounts through the redemption of units and expenses of the underlying Partnership are excluded. (3) These amounts represent the total return for the periods indicated, including changes in the value of the underlying Partnership, and reflect deductions for all items included in the expense ratio. The total return does not include any expense assessed through the redemption of units; inclusion of these expenses in the calculation would result in a reduction in the total return presented. NOTES TO THE FINANCIAL STATEMENTS OF THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY ACCOUNT December 31, 2017 Note 7: Financial Highlights (continued) Prudential also maintains a position in the Real Property Account to provide for property acquisitions and capital expenditure funding needs. The table below reflects information for assets held by Prudential. Charges for mortality and expense risk and administrative expenses are used by Prudential to purchase additional investments in its account resulting in no impact to its net assets. Net Assets (000 s) December 31, 2017 $20,179 December 31, 2016 $17,222 December 31, 2015 $14,635 December 31, 2014 $14,003 December 31, 2013 $14,646 Charges and Expenses A. Mortality and Expense Risk Charges Mortality and expense risk charges are determined daily using an effective annual rate of 1.2%, 0.9%, 0.6% and 1.2% for PDISCO+, PVAL, PVAL $100,000 + Face Value and VIP, respectively (for PDISCO+, the 1.2% includes a 0.20% administrative charge). CVAL used the same fees and charges as the PVAL $100,000 + Face Value. Mortality risk is the risk that life insurance contract owners may not live as long as estimated or annuitants may live longer than estimated and expense risk is the risk that the cost of issuing and administering the contracts may exceed related charges by Prudential. The mortality risk and expense risk charges are assessed through reduction in unit values. B. Cost of Insurance and Other Related Charges Contract owner contributions are subject to certain deductions prior to being invested in the Real Property Account. The deductions for PVAL and PVAL $100,000 + Face Value are (1) taxes attributable to premiums; and (2) transaction costs which are deducted from each premium payment to cover premium collection and processing costs. Contracts are subject to charges on each basic premium for assuming a guaranteed minimum death benefit risk. This charge compensates Prudential for the risk that an insured may die at a time when the death benefit exceeds the benefit that would have been payable in the absence of a minimum guarantee. These charges are assessed through the redemption of units. C. Deferred Sales Charge A deferred sales charge is imposed upon the withdrawals of certain purchase payments to compensate Prudential for sales and other marketing expenses for PDISCO+ and VIP. The amount of any deferred sales charge will depend on the amount withdrawn and the number of contract years that have elapsed since the contract owner or annuitant made the purchase payments deemed to be withdrawn. As the amount of time that has elapsed since a given purchase payment made increases, the deferred sales charge applicable to that purchase payment generally decreases. No deferred sales charge is made against the withdrawal of investment income. No sales charge is imposed upon death benefit payments or upon transfers made between subaccounts. This deferred sales charge is assessed through the redemption of units. D. Partial Withdrawal Charge A charge is imposed by Prudential on partial withdrawals of the cash surrender value for PVAL and PVAL $100,000 + Face Value. A charge equal to the lesser of $15 or 2% will be made in connection with each partial withdrawal of the cash surrender value of a contract. This charge is assessed through the redemption of units. E. Annual Maintenance Charge An annual maintenance charge, applicable to PDISCO+ and VIP, of $30 will be deducted if and only if the contract account value is less than $10,000 on a contract anniversary or at the time a full withdrawal is effected, including a withdrawal to effect an annuity. The charge is made by reducing accumulation units credited to a contract owner s account. Note 8: Related Party Transactions The Real Property Account has transactions and relationships with Prudential and other affiliates. Due to these relationships, it is possible that the terms of these transactions are not the same as those that would result from transactions among unrelated parties. Prudential and its affiliates perform various services on behalf of the Partnership in which the Real Property Account invests and may receive fees for the services performed. These services include, among other things, shareholder communications, postage, transfer agency and various other record keeping and customer service functions. NOTES TO THE FINANCIAL STATEMENTS OF THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY ACCOUNT December 31, 2017 Note 9: Fair Value Measurements Fair value represents the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Real Property Account values its investment in the Partnership using the net asset value provided by the Partnership as a practical expedient. Effective January 1, 2016, the Real Property Account adopted Accounting Standards Update ( ASU ) 2015-07 Fair Value Measurement (Topic 820): Disclosure for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent), which removes the requirement to classify the investment in the Partnership in the fair value hierarchy. As a result, certain tables and additional disclosures related to the leveling of assets and liabilities are no longer applicable. Properties owned by the Partnership are illiquid and fair value is based on estimates from property appraisal reports prepared by independent real estate appraisers as discussed in the notes to the Partnership s audited consolidated financial statements. The purpose of an appraisal is to estimate the fair value of real estate as of a specific date. The estimate of fair value of real estate is based on the conventional approaches to value, all of which require the exercise of subjective judgment. The three approaches are: (1) current cost of reproducing the real estate less deterioration and functional and economic obsolescence; (2) discounting a series of income streams and reversion at a specific yield or by directly capitalizing a single year income estimate by an appropriate factor; and (3) value indicated by recent sales of comparable real estate in the market. In the reconciliation of these three approaches, the independent appraiser uses one or a combination of them, to come up with the approximate value for the type of real estate in the market. The following is a summary of the investment strategy, risks, and redemption provisions of the Partnership: The Partnership has a policy of investing at least 65% of its assets in direct ownership interests in income-producing real estate, such as office buildings, shopping centers, hotels, apartments or industrial properties, and participating mortgage loans. The Partnership is subject to the risks inherent in the ownership of real property such as fluctuations in occupancy rates and operating expenses and variations in rental schedules. The Partnership properties are also subject to the risk of loss due to certain types of damage, which are either uninsurable or not economically insurable. The Partnership enters into loan agreements with certain lenders to finance its real estate investment transactions. Unfavorable economic conditions could increase related borrowing costs, limit access to the capital markets or result in a decision by lenders not to extend credit to the Partnership. Refer to the Partnership s audited consolidated financial statements for other related risks. The Partnership allows for withdrawal of cash, in any amount up to a partner s value of the Partnership. Ordinarily payment of the amount requested will be made on the day following the request. The Partnership reserves the right to defer such payments for a period of up to six months if the partners or the investment manager determine that there is insufficient cash available and prompt disposition of investments held by the Partnership cannot be made on commercially reasonable terms. The Real Property Account had no unfunded capital commitments as of December 31, 2017. Report of Independent Registered Public Accounting Firm To the General Partners of The Prudential Variable Contract Real Property Partnership: Opinion on the Financial Statements We have audited the accompanying consolidated statements of assets and liabilities, including the consolidated schedules of real estate investments, of The Prudential Variable Contract Real Property Partnership and its subsidiaries as of December 31, 2017 and December 31, 2016, and the related consolidated statements of operations, of changes in net assets and of cash flows for each of the three years in the period ended December 31, 2017, including the related notes and accompanying Schedule III - Real Estate Owned: Properties (collectively referred to as the consolidated financial statements ). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Partnership as of December 31, 2017 and December 31, 2016, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2017 in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These consolidated financial statements are the responsibility of the Partnership s management. Our responsibility is to express an opinion on the Partnership s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ( PCAOB ) and are required to be independent with respect to the Partnership in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB and in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. /s/ PricewaterhouseCoopers LLP New York, New York March 29, 2018 We have served as the Partnership's auditor since 1996. THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES December 31, 2017 December 31, 2016 ASSETS REAL ESTATE INVESTMENTS - At estimated fair value: Real estate and improvements (cost: 12/31/2017 - $252,500,936; 12/31/2016 $234,186,993) $ 298,177,876 $ 269,471,676 CASH AND CASH EQUIVALENTS 26,734,968 47,541,618 OTHER ASSETS, NET 3,911,722 3,383,759 Total assets $ 328,824,566 $ 320,397,053 LIABILITIES & PARTNERS EQUITY INVESTMENT LEVEL DEBT (net of deferred financing costs: $ 96,905,747 $ 93,958,234 12/31/2017 - $1,018,029; 12/31/2016 - $1,095,035) ACCOUNTS PAYABLE AND ACCRUED EXPENSES 2,163,012 2,150,818 DUE TO AFFILIATES 843,319 815,990 OTHER LIABILITIES 716,956 743,284 Total liabilities 100,629,034 97,668,326 COMMITMENTS AND CONTINGENCIES NET ASSETS, REPRESENTING PARTNERS EQUITY: GENERAL PARTNERS CONTROLLING INTEREST 215,557,286 210,258,011 NONCONTROLLING INTEREST 12,638,246 12,470,716 Total partners' equity 228,195,532 222,728,727 Total liabilities and partners equity $ 328,824,566 $ 320,397,053 NUMBER OF SHARES OUTSTANDING AT END OF PERIOD 4,426,906 4,529,591 GENERAL PARTNERS' SHARE VALUE AT END OF PERIOD $ 48.69 $ 46.42 The accompanying notes are an integral part of these consolidated financial statements. TABLE OF CONTENTS Page PER SHARE INVESTMENT INCOME, CAPITAL CHANGES AND SELECTED RATIOS 1 SUMMARY 2
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+PROSPECTUS SUMMARY This summary highlights selected information contained elsewhere in this prospectus. This summary does not contain all the information that you should consider before investing in our common stock. You should carefully read the entire prospectus, including "Risk Factors", "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements and related notes included elsewhere in this prospectus, before making an investment decision. In this prospectus, unless otherwise noted or as the context otherwise requires, the "Company" ,"CYIG", "we", "us" and "our" refer to the combined business of China YCT International Group, Inc., a Delaware corporation, Landway Nano Bio-Tech Group, Inc. ("Landway Nano") a Delaware corporation, and Shandong Spring Pharmaceutical Co., Ltd. ("Shandong Spring Pharmaceutical"), which is our 97%-owned subsidiary formed under the laws of the People's Republic of China. "China" or "PRC" refers to the People's Republic of China, excluding Hong Kong Special Administrative Region of China, Macau Special Administrative Region of China and the Taiwan Region. Item 15. Recent Sales of Unregistered Securities None Item 16. Exhibits. 1.1 Form of Underwriting Agreement.* 3.1 Certificate of Incorporation - filed as Exhibit 3a to the Company's Registration Statement on Form 8-A on March 23, 2009 (SEC File No. 000-53600) and incorporated herein by reference. 3.2 Certificate of Amendment to Certificate of Incorporation - filed as Exhibit 3b to the Company's Registration Statement on Form 8-A on March 23, 2009 (SEC File No. 000-53600) and incorporated herein by reference. 3.3 By-laws filed as Exhibit 3c to the Company's Registration Statement on Form 8-A on March 23, 2009 (SEC File No. 000-53600) and incorporated herein by reference. 4.1 Purchase Agreement between China YCT and L.Y. Research Corporation, filed as an exhibit to the Company's Current Report on Form 8-K filed on March 3, 2011. 4.2 English Translation of Amendment to Purchase Agreement between China YCT, LY (HK Biotech) Holdings and L.Y. Research Corporation, dated August 15, 2011, filed as an exhibit to the Company's Current Report on Form 8-K filed on August 26, 2011 4.3 Form of Underwriters' Warrant (included in Exhibit 1.1).* 5.1 Opinion of McLaughlin & Stern, LLP * 10.1 English Translation of Patent Transfer Agreement between Shandong Spring Pharmaceutical and Shandong Yongchuntang, filed as an exhibit to the Company's Annual Report on Form 10-K filed on September 9, 2011 10.2 English Translation of Distribution Agreement between China YCT and Shandong Yongchuntang, filed as an exhibit to the Company's Annual Report on Form 10-K filed on June 29, 2018 10.3 English Translation of Employment Agreement between Shandong Spring Pharmaceutical and Chuanmin Li as CFO dated June 15, 2013, expired as of June 28, 2018, filed as an exhibit to the Company's Annual Report on Form 10-K filed on June 29, 2018 10.4 Amended and restated Acer Truncatum Industrial Project Acquisition Agreement with Shandong Yongchuntang Group Co., Ltd dated as of June 19, 2018, filed as an exhibit to the Company's Annual Report on Form 10-K filed on June 29, 2018 10.5 English Translation of Employment Agreement between Shandong Spring Pharmaceutical and Tinghe Yan as CEO dated December 10, 2013, filed as an exhibit to the Company's Annual Report on Form 10-K filed on June 29, 2018 10.6 English Translation of Direct Selling Authorization Agreement between Shandong Spring Pharmaceutical Co., Ltd., Inc. and Shandong Yongchuntang dated June 25, 2015, filed as an exhibit to the Company's Annual Report on Form 10-K filed on June 29, 2018 10.7 English Translation of Supplementary Agreement to the Direct Selling Authorization Agreement Supplementary Agreement between Shandong Spring Pharmaceutical Co., Ltd and Shandong Yongchuntang dated January 4, 2017, filed as an exhibit to the Company's Annual Report on Form 10-K filed on June 29, 2018 10.8 China YCT International Group, Inc. 2018 Stock Incentive Plan dated April 21, 2018, filed as an exhibit to the Company's Annual Report on Form 10-K filed on June 29, 2018 10.9 English Translation of Patent Transfer Agreement dated March 14, 2011 between Shandong Spring Pharmaceutical and Jining Tianruitong Technology Development Limited Company, filed as an exhibit to the Company's Annual Report on Form 10-K filed on September 9, 2011 10.10 Amendment to Purchase Agreement between China YCT, LY (HK Biotech) Holdings and L.Y. Research Corporation, dated August 15 2011, filed as an exhibit to the Company's Report on Form 8-K filed on August 26, 2011 10.11 Amendment Agreement, dated as of October 21, 2011 between China YCT International Group, Inc. and L.Y. Research Corporation, filed as an exhibit to the Company's Report on Form 8-K filed on October 24, 2011 10.12 Termination Agreement, dated as of October 29, 2012, by China YCT International Group, Inc. and L.Y. Research Corporation, Filed as an exhibit to the Company's report on Form 8-K on January 16, 2013. This prospectus contains translations of certain Chinese currency Renminbi or RMB amounts into U.S. dollar amounts at specified rates solely for the convenience of the reader. The relevant exchange rates are listed below: For the years ended March 31, 2018 2017 2016 Period Ended RMB: USD exchange rate 6.2881 6.8993 6.4612 Period Average RMB: USD exchange rate 6.6254 6.7287 6.3214 Our Company Overview We are a vertically integrated and innovative health care company focusing on developing, manufacturing, marketing and distributing modernized Traditional Chinese Medicines ("TCM") and health care products in China. Our proprietary product, Huoliyuan capsule, is a China Food and Drug Administration ("CFDA") approved prescription TCM that has a wide range of therapeutic benefits. We believe that it is the only TCM of its kind made in slow-release capsule form for improved absorption rate and therapeutic effects. In addition, in an effort to capitalize on the initiative of developing plant-based oil products promulgated by the State Forestry Administration of China, we are actively engaging in research and development and production of acer truncatum bunge seed oil products. We currently have approximately 5,880 mu (approximately 968.65 acres) of acer truncatum bunge plantation base located in Sishui, Shandong Province coupled with modern production facilities. Production from acer truncatum bunge trees in 2018 will enable us to cease sole reliance on third party producers of our raw material and achieve cost savings and enhance control of raw material supplies. We believe we are the only company in China to have achieved industrial-scale production and vertically integrated capability for acer truncatum bunge seed oil products. We plan to continue increasing the breadth our acer truncatum bunge seed oil product portfolio and improving our capabilities to produce raw materials and finished products as we envision this particular business segment will become a major growth driver for us in the future. We have three distinctive business segments: developing, manufacturing and selling Huoliyuan capsules, a medicine made primarily from panax ginseng leaves extract, developing, manufacturing and selling seed oil products from acer truncatum bunge trees, a maple tree native to China, and distributing health care supplement products manufactured by another company in the PRC. We conduct our sales and marketing activities for the acer truncatum bunge seed oil products and health care supplement products produced by Shandong Yongchuntang Group Co., Ltd. ("Shandong Yongchuntang") primarily through seven major distributors who collectively control a 200,000+ person direct sales force, covering 33 provinces throughout China. We also have an internal sales and marketing team responsible for developing key sales strategies and campaigns, and utilize independent distributors for sales of Huoliyuan capsules. We have realized significant growth in revenue and net income in recent periods. We realized $64,942,737 in revenue, representing an increase of 15.0% or $8,479,573, for the year ended March 31, 2018, as compared to $56,463,164 for the prior year. We also realized net income of $11,738,488, representing a 16.7% or $1,683,834 increase, for the year ended March 31, 2018, compared to $10,054,654 for the prior year. 10.13 Payment Agreement, dated as of January 1, 2013 between Shandong Spring Pharmaceutical and Jining Tianruitong Corporation. Filed as an exhibit to the Company's report on Form 10-K filed on July 1, 2014 14.1 China YCT International Group Code of Ethics. Filed as an exhibit to the Company's report on Form 10-K filed on September 9, 2011 14.2 Charter for the Audit Committee. Filed as an exhibit to the Company's report on Form 10-K filed on September 9, 2011 14.3 Charter for the Governance and Nominating Committee. Filed as an exhibit to the Company's report on Form 10-K filed on September 9, 2011 21.1 Subsidiaries of the registrant. Filed as an exhibit to the Company's report on Form 10-K filed on July 13, 2015 23.1 Consent of Paritz & Company, P.A. 23.2 Consent McLaughlin & Stern, LLP. (contained in Exhibit 5.1 hereto). * 24.1 Power of Attorney* (filed herewith) *To be filed by amendment Our Growth Opportunity We believe that sales of our diversified products are growing and evolving. Drivers of growth include: Policies from several levels of the Chinese government which support and encourage development of acer truncatum bunge seed oil industry China's increasing expenditures on medicines and healthcare products due to China's increasing per capita disposable income and the growth of China's aging population Use of the cost-effective licensed direct sales program and development of relationships with major distributors to increase the distribution and sales of our acer truncatum bunge seed oil products and health care products purchased from Shandong Yongchuntang as we expand geographically and add new products The upcoming harvest of acer truncatum bunge pods and the establishment of a cooperative relationship with local farmers who plant the acer truncatum bunge trees is expected to increase our supply of acer truncatum bunge pods for processing the seeds into oil, which should lower the per unit cost and eliminate our reliance on third party suppliers for our raw material. Our Competitive Strengths We believe the following competitive strengths have contributed to, or will contribute to, our recent and ongoing growth: Dominant Producer of Acer Truncatum Bunge Seed Oil We believe that we are the largest producer of acer truncatum bunge seed oil in China, accounting for 47.7% of the market in China in 2017. We have also obtained a food production license for the production of edible vegetable oil from the Food and Drug Administration of Sishui County, and expect to produce blended edible oil products that contain acer truncatum bungee seed oil as one of the major ingredients. We believe that being the dominant producer and having stronger vertically integrated production capabilities will provide us with advantages in pricing, production and distribution of our products and spur further growth. Diversified Revenue and Profit Stream We generate revenue through the sales of diversified products, including prescription medicines, acer truncatum bunge seed oil products, and health care products purchased from Shandong Yongchuntang . With a diversified revenue stream, which can reduce financial stress during times of economic decline by relying on more than a single product, we believe alternative revenue sources provide the diversification to create a more financially stable company as well as additional opportunities for growth. Strong Relationship with Key Distributors We conduct our sales primarily through our seven distributors, who collectively control a person direct sales force of over 200,000 people and use person-to-person marketing to promote and sell our acer truncatum bunge seed oil products and nine products purchased from Shandong Yongchuntang. Compared to health and nutrition products that are distributed through traditional market means, these personal marketing efforts are supported by various mediums, including our marketing content, websites, events and social business solutions. Reputable Brands Our acer truncatum bunge seed oil products are distributed under the recognized brand name "Bao Feng San Yi". In addition, we believe that we are the largest producer of Huoliyuan capsules and tablets in China, that our Huoliyuan capsule is the only herbal medicine of its type made in the form of a capsule, and we believe that we are recognized by customers as a leader in the Huoliyuan market. Other peer products are produced in the form of tablets. The capsule permits the medication to be formulated for slow release. We believe that our reputable brand name will be of benefit to our future expansion and growth efforts. Item 17. Undertakings The undersigned registrant hereby undertakes to provide to the underwriters at the closing specified in the underwriting agreement, certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act, and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. The undersigned Registrant hereby undertakes: (1) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective. (2) For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (i) To include any prospectus required by section 10(a)(3) of the Securities Act of 1933; (ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement. Raw Materials Competitive Pricing Our goal is to be a vertically integrated acer truncatum bunge seed oil and blended edible oil producer once our own trees begin production, which is expected to occur in the fall of 2018. While to date we have produced acer truncatum bunge seed oil from raw materials purchased from third parties, we began to develop and cultivate our own trees in June 2013. We have leased 5,880 mu (approximately 2,324.77 acres) of farmland for terms of 30 years and 14 years, respectively, and have planted approximately seven million trees at a cost of approximately $49 million through March 31, 2018. Having our own tree base will significantly reduce our cost to produce the seed oils compared to our competitors that purchase the acer truncatum bunge pods from third parties. The intended principal use of the proceeds that we will receive from this offering is to expand and further automate our manufacturing facilities. Experienced Management We are led by highly experienced and entrepreneurial executive officers. Mr. Tinghe Yan, our founder, Chairman and Chief Executive Officer, has over twenty years of experience in corporate management within the food and food supplements industries. Mr. Yan founded Shandong Spring Pharmaceutical in 2006. From 1998 to 2006, Mr. Yan was employed as the Chairman and General Manager of Shandong Yongchuntang, which manufactures a wide variety of food supplements and health care products and is currently the exclusive supplier of nine health care products distributed by Shandong Spring Pharmaceutical. Corporate information Our principal executive office is located at c/o Shandong Spring Pharmaceutical Co., Ltd., Economic Development Zone, Gucheng Road, Sishui County, Shandong Province 373200, People's Republic of China, and our telephone number is +86 0537-4268171. Our website address is www.yctgroup.com. The information contained therein or connected thereto shall not be deemed to be incorporated into this prospectus or the registration statement of which it forms a part. (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; (4) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (5) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering (6) That, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use. (7) That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities: The undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser: (i) Any preliminary prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424; (ii) Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant; (iii) The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and (iv) Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser. The Offering The following summary contains basic information about the offering and the securities we are offering and is not intended to be complete. It does not contain all the information that is important to you. For a more complete understanding of the securities we are offering, please refer to the section of this prospectus titled "Description of Capital Stock". Securities being offered [ ] shares of common stock Offering Price $[ ] per share. Over-allotment option We have granted the underwriter the option to purchase up to [ ] additional shares of common stock, solely to cover over-allotments, if any, at the price to the public set forth on the cover page to this prospectus less the underwriting discounts and commissions. The over-allotment option is exercisable for 45 days from the date of this prospectus. Common stock outstanding before this offering 29,839,168 shares of common stock(1) Common stock outstanding after this offering [ ] shares of common stock (or [ ] shares if the underwriter exercises its over-allotment option in full).(2) Use of proceeds We estimate that our net proceeds from this offering will be $[ ] million (or approximately $[ ] million if the underwriters' option to purchase additional shares of our common stock from us is exercised in full), after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. We intend to use the net proceeds of the offering for (i) the expansion and automation of our manufacturing facilities for acer truncatum bunge seed oil products, (ii) the purchase of equipment and (iii) general working capital to meet the needs of our continued development. See "Use of Proceeds" for additional information
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+PROSPECTUS SUMMARY THIS SUMMARY IS QUALIFIED BY THE MORE DETAILED INFORMATION APPEARING ELSEWHERE IN THIS PROSPECTUS. We develop software, products and related services which are designed to enable an organization to rapidly and cost effectively create a comprehensive promotional and marketing campaign using social media marketing, customer relationship management and lead generation. We market our software to a variety of clients, including businesses, financial institutions, real estate related entities, national franchise organizations, governmental agencies, schools and charities. Our executive offices are located at 3801 East Florida Ave., Suite 400, CO 80210, and our telephone number is (855) 448-2346. Securities Offered: In order to provide a long-term funding facility for our operations, we entered into an Investment Agreement with Tangiers Investment Group, LLC. Under the Investment Agreement, Tangiers has agreed to provide us with up to $5,000,000 of funding during the period ending on the date which is three years after the date of this prospectus. During this period, we may sell shares of our common stock to Tangiers, and Tangiers will be obligated to purchase the shares. These shares may be offered for sale from time to time by means of this prospectus by or for the account of Tangiers. The minimum amount we can raise at any one time is $5,000, and the maximum amount we can raise at any one time is $350,000. We are under no obligation to sell any shares under the Investment Agreement. We will not receive any proceeds from the sale of the shares by Tangiers. However, we will receive proceeds from any sale of common stock to Tangiers under the Investment Agreement. We expect to use substantially all the net proceeds for our operations. A number of our shareholders may also offer to sell, by means of this prospectus, up to 181,818 shares of our common stock. The shares owned by the selling shareholders may be sold at prices and terms then prevailing or at prices related to the then-current market price, or in negotiated transactions. We will not receive any proceeds from the sale of the common stock by the selling stockholders. As of October 31 , 2018, we had 16,673,143 outstanding shares of common stock. The number of outstanding shares does not give effect to shares which may be issued pursuant to the Investment Agreement or upon the exercise and/or conversion of options, warrants or convertible notes. See "Description of Securities" for more information.
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diff --git a/parsed_sections/prospectus_summary/2018/CIK0000923571_us-xpress_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0000923571_us-xpress_prospectus_summary.txt
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+PROSPECTUS SUMMARY This summary highlights significant aspects of our business and this offering, but it is not complete and does not contain all of the information that you should consider before making your investment decision. You should carefully read this entire prospectus, including the information presented under the section entitled "Risk Factors" and the historical consolidated financial data and related notes included elsewhere in this prospectus, before making an investment decision. This summary contains forward-looking statements that involve risks and uncertainties. Our actual results may differ significantly from the results discussed in the forward-looking statements due to certain factors, including those set forth in "Risk Factors" and "Special Note Regarding Forward-Looking Statements." Our Company We are the fifth largest asset-based truckload carrier in the United States by revenue, generating over $1.5 billion in total operating revenue in 2017. We provide services primarily throughout the United States, with a focus in the densely populated and economically diverse eastern half of the United States. We offer customers a broad portfolio of services using our own truckload fleet and third-party carriers through our non-asset-based truck brokerage network. As of March 31, 2018, our fleet consisted of approximately 6,800 tractors and approximately 16,000 trailers, including approximately 1,300 tractors provided by independent contractors. All of our tractors have been equipped with electronic logs since 2012, and our systems and network are engineered for compliance with the recent federal electronic log mandate. Our terminal network and information technology infrastructure are established and capable of handling significantly larger volumes without meaningful additional investment. For much of our history, we focused primarily on scaling our fleet and expanding our service offerings to support sustainable, multi-faceted relationships with customers. More recently, we have focused on our core service offerings and refined our network to focus on shorter, more profitable lanes with more density, which we believe are more attractive to drivers. Over the last three years, we have recruited and developed new executive and operational management teams with significant industry experience and instilled a new culture of professional management. These changes, which are ongoing, helped us to maintain relatively stable profitability during the weak truckload market of 2016 and early 2017 and drive significant improvements to profitability during the strong truckload market beginning in the second half of 2017. This momentum was reflected in our first quarter of 2018, which produced a 300 basis point improvement in our operating ratio, compared to our first quarter of 2017, and a 330 basis point improvement in our Adjusted Operating Ratio for the same period. For the definition of Adjusted Operating Ratio and a reconciliation to the most directly comparable GAAP measure, see " Summary Consolidated Financial Data." The truckload market is cyclical and it is currently experiencing increases in volumes and rates, primarily due to tightening driver supply coupled with increasing industrial and retail freight demand. According to FTR Transportation Intelligence, truckload rates (excluding fuel surcharge) in the first quarter of 2018 were 14.4% higher than rates in the first quarter of 2017. We believe the current truckload market presents us with an opportunity to take advantage of rising rates across all of our service offerings, while continuing to benefit from our operational initiatives. We believe our scale, management team and continued roll-out of tactical operational improvements, as well as our mix of over-the-road, dedicated and brokerage services, position us for long-term success in our industry. We maintain a diverse, long-standing customer base that includes many Fortune 500 companies, including Amazon, Dollar General, Dollar Tree, FedEx, Home Depot, Kroger, Procter & Gamble, Target, Tractor Supply and Walmart. Our customers fall within a broad spectrum of geographies and end markets, including retail, food and beverage, e-commerce and packages, manufacturing and AMENDMENT NO. 3 TO FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Table of Contents ABOUT THIS PROSPECTUS In this prospectus, unless the context otherwise requires, "U.S. Xpress," "the Company," "us," "we" and "our" refers to U.S. Xpress Enterprises, Inc., a Nevada corporation, together with its consolidated subsidiaries. In this prospectus, we refer to our Class A common stock, par value $0.01 per share, and our Class B common stock, par value $0.01 per share, as our Class A common stock and our Class B common stock, respectively, and, together, as our common stock. Unless otherwise indicated, all references to our common stock refer to our common stock as in effect at the time of the completion of this offering. This prospectus contains references to 2017, 2016, 2015, 2014 and 2013 which represent our fiscal years ended December 31, 2017, 2016, 2015, 2014 and 2013, respectively. NON-GAAP FINANCIAL MEASURES In addition to our net income determined in accordance with U.S. generally accepted accounting principles ("GAAP"), we evaluate operating performance using certain non-GAAP measures, including Adjusted EBITDA and Adjusted Operating Ratio (on both a consolidated and segment basis). Management believes the use of non-GAAP measures assists investors and securities analysts in understanding the ongoing operating performance of our business by allowing more effective comparison between periods. The non-GAAP information provided is used by our management and may not be comparable to similar measures disclosed by other companies, because of differing methods used by other companies in calculating Adjusted EBITDA and Adjusted Operating Ratio. Our presentation of industry Adjusted Operating Ratio, however, is based upon total operating expenses, net of fuel surcharges and excluding gains and losses from fuel purchase arrangements, as a percentage of revenue, excluding fuel surcharge revenue and derived from publicly available information. The non-GAAP measures used herein have limitations as analytical tools, and you should not consider them in isolation or as substitutes for analysis of our results as reported under GAAP. Management compensates for these limitations by relying primarily on GAAP results and using non-GAAP financial measures on a supplemental basis. For definitions of Adjusted EBITDA and Adjusted Operating Ratio and reconciliations of those measures to the most directly comparable GAAP measures, see "Prospectus Summary Summary Consolidated Financial Data." MARKET, INDUSTRY AND OTHER DATA This prospectus includes market and industry data that we obtained from industry publications, surveys, public filings and internal company sources. As noted in this prospectus, American Trucking Associations, Inc., or the "ATA," Federal Reserve Bank of St. Louis, Bureau of Labor Statistics, FTR Transportation Intelligence and Bloomberg were the primary sources for third-party industry data and forecasts. Industry publications, surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable, but there can be no assurance as to the accuracy or completeness of included information. We have not independently verified any of the data from third-party sources, nor have we ascertained the underlying economic assumptions relied upon therein. Statements as to our market position and ranking are based on market data currently available to us, management's estimates and assumptions we have made regarding the size of our markets within our industry. While we are not aware of any misstatements regarding our industry data presented herein, our estimates involve risks and uncertainties and are subject to change based on various factors, including those discussed under the heading "Risk Factors" in this prospectus. Neither we nor the underwriters can guarantee the accuracy or completeness of such information contained in this prospectus. (1)Based on revenue, before fuel surcharge. Approximately 1% of revenue is attributable to detention and other ancillary services. Our Transformation Over the last three years, we have improved our operating performance through the following areas of focus: Leadership and Culture. We appointed Eric Fuller as President in 2015 and Chief Executive Officer in 2017. Under his leadership, we launched a program to identify and attract talent with deep industry knowledge at the executive and operational management levels, ultimately replacing 61 of our 94 executives and senior managers with a combination of external hires from our peers and internal promotions of high achievers. U.S. Xpress Enterprises, Inc. (Exact name of Registrant as specified in its charter) Table of Contents TRADEMARKS, SERVICE MARKS AND TRADE NAMES Solely for convenience, the trademarks, service marks, logos and trade names referred to in this prospectus are without the and symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights to these trademarks, service marks and trade names. This prospectus contains additional trademarks, service marks and trade names of others, which, to our knowledge, are the property of their respective owners. We do not intend our use or display of other parties' trademarks, trade names or service marks to imply, and such use or display should not be construed to imply, a relationship with, or endorsement or sponsorship of us by, these other parties. GLOSSARY OF TRUCKING AND OTHER TERMS As used in this prospectus: "Adjusted Operating Ratio," which is a non-GAAP measure, means operating expenses, net of fuel surcharge revenue and gain or loss on fuel purchase arrangements, expressed as a percentage of revenue, before fuel surcharge. See "Prospectus Summary Summary Consolidated Financial Data" for a reconciliation to the most directly comparable GAAP measure. "Automatic Onboard Recording Device" or "AOBRD", an electronic or mechanical device that is integrally synchronized with the operations of the commercial vehicle in which it is installed, is capable of recording a driver's duty status information accurately and automatically and meets the requirements of 49 CFR 395.15. "Brokering" or "Brokerage" means contracting with third-party trucking companies to haul our customer's freight under third-party authority. "Company tractors" means tractors owned or leased by the Company. "CSA" means the Federal Motor Carrier Safety Administration's (the "FMCSA") Compliance, Safety, Accountability initiative, which ranks fleets based on multiple categories of safety-related data in its online Safety Measurement System. "C-TPAT " means the Customs-Trade Partnership Against Terrorism, a program designed to improve cross-border security between the United States and Canada and the United States and Mexico. Carrier members of the C-TPAT are entitled to shorter border delays and other priorities over non-member carriers. "Dedicated contract" means a contract in which we have agreed to dedicate certain truck and trailer capacity for use by a specific customer. Dedicated contracts generally are for multi-year terms and often have predictable routes and revenue. "Electronic Logging Device" or "ELD" means a device or technology that automatically records a driver's driving time, facilitates the accurate recording of the driver's hours-of-service and meets the requirements of 49 CFR 395 subpart B. "Empty miles" means miles driven without revenue generation for us such as the miles driven between the delivery of a load and the pickup of the next load. "For-hire carrier" means a carrier available to shippers for hire. "Fuel surcharge" means fees that are charged to a customer by a shipping company to pass through the costs of fuel in excess of a predetermined cost per gallon base (generally based on the average price of fuel in the United States as determined by the Department of Energy). The majority of our customers pay a fuel surcharge. "Fuel surcharge revenue" means revenue generated by us attributable to fuel surcharges. Table of Contents We have reconfigured our daily operations to hold our employees accountable for operational metrics over which they have direct control, and we have designed our incentive compensation plan to reward achievement of those metrics. We believe we have the team and culture in place to execute on our performance and profitability initiatives. The results of our new leadership team and operational reconfiguration are ongoing, and we believe the impact has been reflected in our peer comparisons over the last three years. Asset Optimization. In 2015, we began to redesign our fleet renewal and maintenance programs with the goal of improving reliability, reducing downtime for all tractors and reducing maintenance costs on the older tractors in our fleet. These initiatives, among others, were intended to improve the quality of our assets by purchasing, maintaining and trading our tractors in a manner designed to optimize life cycle costs. In addition, in early 2016 we began enhancing our asset utilization by analyzing our consolidated Truckload and Brokerage freight demand using optimization software, allocating the most profitable freight to our Truckload assets and outsourcing the remainder to third-party carriers. With more loads to choose from, we have more options for improving the pricing and miles on our company tractor and trailer assets. Focus on Front-line Tactics. Tactical execution is critical to our success. Beginning in early 2017, we started making significant changes to our operational infrastructure in order to focus on and measure our frontline tactical execution. The initiatives below are ongoing, and we believe the early results of our load planning, fleet management and customer service initiatives have begun to be reflected in our operating metrics. Load Planning Initiative. During 2017, we shifted from a load planning strategy based on minimizing empty miles to one that maximizes utilization of our drivers' available hours. We believe the focus on drivers' hours more effectively utilizes our scarcest resource and improves driver satisfaction. Following this change, miles per seated tractor per week and driver turnover rate both improved. Fleet Management Initiative. In October 2017, we initiated a fleet management pilot program on 250 tractors in which our fleet managers emphasize proactive interactions with drivers to anticipate and fix issues such as home time planning and load scheduling. Inbound driver calls declined and driver turnover decreased, resulting in more time for our managers to proactively solve problems, thereby improving our efficiency and utilization. We have seen similar results as we continue to roll out this program to the rest of our fleet, which we expect to complete during 2018. Customer Service Initiative. In January 2018, we redesigned our customer service around regional specialists to drive deeper knowledge of specific markets. Under this new structure, experts in managing freight flows in and out of their respective regions become key points of contact with customers and arrange load pickup and delivery to meet available service hours for our drivers. We believe this service model will contribute to improved equipment utilization, driver satisfaction and network balance. Nevada (State or other jurisdiction of Incorporation or organization) 4213 (Primary Standard Industrial Classification Code Number) 62-1378182 (I.R.S. Employer Identification Number) 4080 Jenkins Road Chattanooga, Tennessee 37421 (423) 510-3000 (Address, including zip code, and telephone number, including area code, of Registrant's principal executive offices) Table of Contents "Independent contractor" means a trucking business with whom we contract to move freight utilizing our operating authority, and often our trailers. The driver of an independent contractor truck may be the owner or an employee of the associated independent contractor trucking business. Independent contractors are generally compensated on a percentage of revenue or per mile basis and must pay their own operating expenses, such as fuel, maintenance, the truck's physical damage insurance and driver costs, and must meet our specified standards with respect to safety. "Less-than-truckload carriers" means carriers that pick up and deliver multiple shipments, each typically weighing less than 10,000 pounds, for multiple customers in a single trailer. "Loads" is used to refer to requests from our customers for services. "New Mountain Lake" means New Mountain Lake Holdings, LLC, the holding company for U.S. Xpress prior to giving effect to the Reorganization (as defined below). "Operating ratio" means operating expenses expressed as a percentage of revenue. "Over-the-road" or "OTR" means truckload transportation of freight involving irregular routes, customers and schedules, and is generally associated with a longer length of haul than shipments in our dedicated contract service offering. "Private fleet" means the tractors and trailers owned or leased, and operated, by a shipper to transport its own goods. "Restricted stock" or "restricted stock unit" means restricted stock or restricted stock units that may be issued by the Company after this offering and restricted membership units issued by New Mountain Lake prior to this offering. "Revenue per tractor per week" means the revenue (excluding fuel surcharge) that a truck, available to work, generates (on average) over a week. "Spot" means the short-term engagement of a carrier for transportation services (often for a single shipment and outside a contractual arrangement) and is generally associated with higher than average freight rates during periods of tight capacity and lower than average freight rates during periods of excess capacity. "Team" means two drivers occupying a single truck who alternate between driving and non-driving time (such as time spent sleeping and resting) in order to expedite the shipment and maximize the overall production of the truck by decreasing idle time in transit to its destination. "Third-party carrier" means a carrier with its own operating authority that may be utilized to provide transportation services for customers by our Brokerage segment. "Total miles" means both empty miles and revenue-generating miles. "Tractor" or "Truck" means a vehicle with the ability to tow a trailer, generally by the use of the fifth wheel mounted over the tractor's drive axle. Our truck fleet is mostly comprised of Class 8 tractors, which are generally over 33,000 pounds in gross vehicle weight rating. "Trailer" means an enclosed 53-foot trailer that carries general cargo, including food and other products. "Truckload carrier" means a carrier that generally dedicates an entire trailer to one customer from origin to destination. (1)The group of publicly traded truckload companies includes Werner Enterprises, Inc., Schneider National, Inc., Swift Transportation Company (prior to 2017, the year of its merger with Knight Transportation, Inc.), Covenant Transportation Group, Inc., USA Truck, Inc., Marten Transport, Ltd., Knight Transportation, Inc. (prior to 2017, the year of its merger with Swift Transportation Company) and Heartland Express, Inc. Adjusted Operating Ratio for these truckload companies is based upon total operating expenses, net of fuel surcharges and excluding gains and losses from fuel purchase arrangements, as a percentage of revenue, excluding fuel surcharge revenue and derived from publicly available information. See "Non-GAAP Financial Measures" and " Summary Consolidated Financial Data" for a Eric Fuller President and Chief Executive Officer U.S. Xpress Enterprises, Inc. 4080 Jenkins Road Chattanooga, Tennessee 37421 (423) 510-3000 (Name, address, including zip code, and telephone number, including area code, of agent for service) Source: FTR Transportation Intelligence Demand Demand for freight moves is primarily driven by GDP growth, industrial production and retail demand. There are several data points that demonstrate the current strength of demand for freight, including U.S. GDP growth of 2.3% in the first quarter of 2018, the manufacturing Purchasing Copies to: Mark A. Scudder, Esq. Heidi Hornung-Scherr, Esq. Scudder Law Firm, P.C., L.L.O. 411 South 13th Street, Suite 200 Lincoln, Nebraska 68508 (402) 435-3223 Arthur D. Robinson, Esq. David W. Azarkh, Esq. Simpson Thacher & Bartlett LLP 425 Lexington Avenue New York, New York 10017 (212) 455-2000 Source: Bloomberg, Bureau of Labor Statistics Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement. Table of Contents Pressure on truckload supply has been exacerbated by increased regulatory constraints. In particular, in December 2017, a federal safety rule requiring drivers to track their hours behind the wheel with ELDs became effective. Most of the large truckload carriers, including us, have been using electronic logs for many years and have adapted their freight patterns, driver assignments and pricing to conform to levels of utilization consistent with the ELD mandate, which began to be enforced in April 2018. Many industry observers believe that enforcement of the ELD mandate will reduce the miles driven by certain historically non-compliant carriers, which are predominantly smaller operators. This dynamic is expected to further constrain capacity and encourage a level playing field for carriers that previously offered lower rates to customers and covered their costs and compensated their drivers by operating excessive miles. Current Environment The combination of tighter supply and increased demand has contributed to a recent improvement in the pricing environment. We believe the improved pricing environment reflects the impact of economic expansion, low unemployment and the expectation of a more level playing field for driver hours-of-service brought on by enforcement of the ELD mandate. Our Competitive Strengths We believe the following competitive strengths provide us with a strong foundation to improve our profitability and stockholder value: Industry leading truckload operator with significant scale As the fifth largest asset-based truckload carrier in the United States in 2017 by total operating revenue, we believe our large scale provides us with significant benefits. These benefits include economies of scale on major expenditures such as tractors, trailers and fuel, as well as our overall infrastructure. Additionally, we can offer an enhanced value proposition for large customers who seek efficiency in sourcing capacity from a limited number of carriers and flexible capacity to accommodate seasonal surge volumes. Our established and well-maintained terminal network and information technology infrastructure are capable of handling meaningfully larger volumes without meaningful additional investment. Complementary mix of services to afford flexibility and stability throughout economic cycles Our service offerings have unique characteristics and are subject to differing market forces, which we believe allows us to respond effectively through economic cycles. OTR OTR business involves short-term customer contracts without pricing or volume guarantees that allow us to benefit from periods of supply and demand imbalance and price volatility. This is the largest part of our business and the overall truckload market, which is currently benefiting from strength in pricing and volumes described under " Truckload Market." Dedicated Dedicated business features committed rates, lanes and volumes under contracts that generally afford us greater revenue predictability over the contract period and help smooth the impact of market cycles. Additionally, our dedicated contract service offering generally has higher driver retention rates than our OTR service offering, which we believe is because our professional drivers prefer the more predictable time at home that dedicated routes offer. In addition, this increased visibility allows us to commit and invest fleet resources with a more predictable return profile. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 (the "Securities Act") check the following box. If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company Emerging growth company If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided to Section 7(a)(2)(B) of the Securities Act. CALCULATION OF REGISTRATION FEE Title of Each Class of Securities to be Registered Amount to be Registered Proposed Maximum Aggregate Offering Price per Share Proposed Maximum Aggregate Offering Price(1)(2) Amount of Registration Fee(3) Class A Common Stock, par value $0.01 per share 20,764,400 $20.00 $415,288,000.00 $51,703.36 (1)Includes 2,708,400 shares to be sold upon exercise of the underwriters' option to purchase additional shares. See "Underwriting (Conflict of Interest)." (2)Estimated solely for the purpose of calculating the amount of the registration fee pursuant to Rule 457(a) under the Securities Act. (3)Previously paid. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine. Table of Contents Brokerage Brokerage capacity allows us to aggregate volume and to flex the amount allocated to our own fleet with freight cycles. Typically, we allocate more loads to our OTR fleet during slow freight demand to keep our assets productive, and more loads to third-party carriers during higher freight demand to maintain control over customer freight and make a margin on outsourcing the moves. By retaining control over significantly more freight than we are able to serve with our own assets, and allocating the available loads first to our own tractors, we have more choices for optimizing the utilization and pricing of our fleet every day and throughout market cycles. Long-standing, diverse and resilient customer base We maintain a long-standing customer base that includes many Fortune 500 companies with national footprints, including Amazon, Dollar General, Dollar Tree, FedEx, Home Depot, Kroger, Procter & Gamble, Target, Tractor Supply and Walmart. As of March 31, 2018, relationships with our top ten customers exceeded ten years on average. Our portfolio of blue-chip customers allows us to benefit from the less cyclical and more-stable demand from grocery and dollar stores in addition to increasing demand due to secular growth trends in end-markets such as e-commerce. We also benefit from significant cross-selling opportunities among large key customers, as all of our top ten customers use at least two of our three service offerings, which allows us to have multiple points of contact with our customers and take advantage of varying bid cycles. Certain of our customers have recently recognized our commitment to service with the following awards: Procter & Gamble 2017 Carrier of the Year, Dollar General Dedicated Carrier of the Year, Whirlpool Dedicated Carrier of the Year and FedEx Ground Superior Peak Performance Award. Modern fleet and maintenance system designed to optimize life cycle investment and minimize operating costs Our fleet represents our largest capital investment, a visible representation of our brand for customers and drivers and a large portion of our controllable costs. We select, maintain and dispose of our fleet based on rigorous analysis of our investments and operating costs. Our modern and well-maintained fleet consisted of approximately 5,500 company tractors with an average age of approximately 2.5 years and approximately 16,000 trailers at March 31, 2018. We also contracted for approximately 1,300 tractors provided by independent contractors at March 31, 2018. We equip our tractors with carefully selected components based on initial cost, maintenance requirements, warranty coverage, safety and efficiency advantages, driver preference and resale value. Our company tractor fleet is technologically advanced and equipped with safety and efficiency features, including using electronic logs since 2012, electronic speed limiters, automatic transmissions, lane departure and collision warning systems, air disc brakes and high performance wide brake drums and electronic roll stability. In addition, we are installing forward-facing event recorders in our company tractors, which we expect to further enhance our safety program and reduce insurance costs over time. Over the past several years, we have developed a disciplined and effective in-house maintenance program designed to actively manage these assets based on customized timetables for preventive maintenance and replacement of parts. We believe this approach, coupled with our in-house maintenance facilities and in-house technicians dedicated to fleet maintenance, helps us effectively manage our maintenance cost per mile, keeps drivers on the road efficiently and creates an attractive asset and record for resale. Motivated management team focused on tactical execution and leadership in the truckload market Our management and operations team has been carefully assembled to obtain a mix of industry veterans from successful competitors and high-performing internal candidates, all of whom are motivated to perform in our transparent, metric-driven environment. Our President and Chief Table of Contents The information in this prospectus is not complete and may be changed. We and the selling stockholders may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. Subject to Completion Preliminary Prospectus, dated June 11, 2018 PROSPECTUS 18,056,000 Shares U.S. Xpress Enterprises, Inc. Class A Common Stock Table of Contents Executive Officer, Eric Fuller, has over 18 years of experience at U.S. Xpress and has been responsible for developing the team and spearheading our transformation program over the last three years. Our management team's compensation and ownership of our common stock provide further incentive to improve business performance and profitability. In addition, with active positions in industry associations, such as the ATA, our management team provides us with a key role in the discussions that we believe are shaping the future of the industry. We believe our leadership team is well-positioned to execute our strategy and remains a key driver of our financial and operational success. Our Strategies We believe we possess the scale, infrastructure and service offerings to compete effectively in our markets. We believe our opportunity for further improvement is significant, and our strategies are designed to enhance stockholder value. Complete the implementation of our tactical initiatives and pursue additional strategic initiatives through technology Fine-tune our Load Planning Initiative to maximize use of drivers' hours-of-service Roll out our Fleet Management Initiative from pilot stage to the rest of our fleet over the remainder of 2018 Continue to develop regional freight market balance and density through our Customer Service Initiative Access additional cost saving opportunities as a result of more efficient workflow environments Continue developing a graph database platform that uses real-time information and machine learning to enhance load planning capabilities Grow profitably as appropriate to the market cycle Continue to leverage our service mix to manage through all market cycles Grow our revenue base prudently with a focus on dedicated contract service and brokerage by cross-selling our services with existing customers and pursuing new customer opportunities Maximize profitability for new freight across OTR and brokerage operations by selectively allocating freight to company assets Seek favorable dedicated service contracts and brokerage freight to manage Capitalize on current favorable truckload environment Continue to secure rate increases in all of our service offerings Strategically expand our fleet based on expected profitability and driver availability, including through our company-sponsored independent contractor lease program (which has grown from zero drivers in the second quarter of 2017 to approximately 485 drivers at March 31, 2018) Leverage current market conditions to accelerate timeline for enhancement of network This is U.S. Xpress Enterprises, Inc.'s initial public offering. We are selling 16,668,000 shares of our Class A common stock and the selling stockholders identified in this prospectus are selling 1,388,000 shares of our Class A common stock. We will not receive any proceeds from the sale of shares being sold by the selling stockholders. Prior to this offering, there has been no public market for our Class A common stock. We expect the public offering price to be between $18.00 and $20.00 per share. We have applied to list our Class A common stock on The New York Stock Exchange (the "NYSE") under the symbol "USX." Following this offering, we will have two classes of common stock outstanding: Class A common stock and Class B common stock. The rights of the holders of our Class A common stock and our Class B common stock are generally identical, except with respect to certain voting and conversion rights. Each share of Class A common stock is entitled to one vote. Each share of Class B common stock is entitled to five votes and is convertible at any time into one share of Class A common stock. See "Description of Capital Stock Class A and Class B Common Stock Conversion." Outstanding shares of Class B common stock will represent approximately 71.3% of the voting power of our outstanding capital stock following this offering. At or following the closing of this offering, Messrs. Eric Fuller and Max Fuller will purchase an aggregate of $20.0 million of Class B common stock from the Quinn Family Partnership (as defined below) at the public offering price. Investing in our Class A common stock involves risks that are described in the "Risk Factors" section beginning on page 21 of this prospectus. Table of Contents Capitalize on technological change and developments Use our scale and relationships to gain early access to technological advances and evaluate the costs and benefits Pursue artificial intelligence to accommodate individual drivers' preferences with the goal of improving driver satisfaction and retention Apply data analytics across the billions of dollars of freight spend we see every year to capture and optimize the execution of our customers' loads and our network Partner with manufacturers to test, evaluate and refine electric, autonomous and other advanced vehicle technology Pursue blockchain technology to secure supply chains and our information Maintain flexibility through long-term enterprise planning and conservative financial policies Maximize our free cash flow generation by managing expenses, taxes and capital expenditures Prioritize growth in dedicated contract services, which offers more predictable revenue streams and greater asset productivity Prioritize growth in brokerage, which requires limited capital investment and affords network-balancing freight volumes Monitor capital allocation to improve long-term return on invested capital Maintain a conservative leverage profile after this offering Credit Facility Refinancing In connection with, and contingent upon, this offering, we intend to enter into a new revolving credit facility (the "New Revolver") and a new term loan credit agreement (the "New Term Loan" and, together with the New Revolver, the "New Credit Facilities") to refinance our existing term loan and our existing revolver. However, there are no assurances that we will enter into the New Credit Facilities on the terms described in this prospectus or at all. See "Management's Discussion and Analysis of Financial Condition and Results of Operations Sources of Liquidity After this Offering New Credit Facilities." Risks Related to Our Business and This Offering Investing in our Class A common stock involves a high degree of risk. Before you invest in our Class A common stock, you should carefully consider all the information in this prospectus, including matters set forth in the section entitled "Risk Factors." If any of these risks actually occur, our business, financial condition and results of operations may be materially adversely affected. In such case, the trading price of our Class A common stock may decline and you may lose part or all of your investment. The primary risks to our business include, but are not limited to, the following: our ability to attract and retain qualified drivers, including independent contractors, which could materially adversely affect our profitability and ability to maintain or grow our fleet, and may require us to incur additional costs, such as increases in driver compensation; general economic, business and regulatory factors affecting the truckload industry that are largely beyond our control, any of which could have a material adverse effect on our results of operations; Per Share Total Public offering price $ $ Underwriting discounts and commissions(1) $ $ Proceeds, before expenses, to us $ $ Proceeds, before expenses, to the selling stockholders $ $ (1)See "Underwriting (Conflict of Interest)" for additional information regarding underwriting compensation. The underwriters may also exercise their option to purchase up to an additional 2,708,400 shares of Class A common stock from the selling stockholders at the public offering price, less underwriting discounts and commissions, for 30 days after the date of this prospectus. We will not receive any proceeds from any exercise by the underwriters of their option to purchase additional Class A common stock from the selling stockholders in this offering. The shares will be ready for delivery on or about , 2018. Neither the Securities and Exchange Commission (the "SEC") nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. Table of Contents we have a history of net losses; we may not be successful in achieving our business strategies; we operate in a highly competitive and fragmented industry, and numerous competitive factors could impair our ability to improve our profitability and materially adversely affect our results of operations; we retain high deductibles on a significant portion of our claims exposure, which could significantly increase the volatility of, and decrease the amount of, our earnings, and materially adversely affect our results of operations; and if the independent contractors we contract with are deemed by regulators or judicial process to be employees, our business, financial condition and results of operations could be materially adversely affected. Corporate Information Our principal executive offices are located at 4080 Jenkins Road, Chattanooga, TN 37421, and our telephone number at that address is (423) 510-3000. Our website is located at https://www.usxpress.com. The reference to our website is intended to be an inactive textual reference only. Our website and the information contained on, or that can be accessed through, our website will not be deemed to be incorporated by reference in, and are not considered part of, this prospectus. You should not rely on our website or any such information in making your decision whether to purchase shares of our Class A common stock. BofA Merrill Lynch Morgan Stanley J.P. Morgan Wells Fargo Securities Stephens Inc. Stifel Wolfe Capital Markets and Advisory Table of Contents The Offering Class A common stock offered Class A common stock offered by us 16,668,000 shares. Class A common stock offered by the selling stockholders 1,388,000 shares. Option to purchase additional shares of Class A common stock from the selling stockholders The underwriters have the option for 30 days following the date of this prospectus to purchase up to an additional 2,708,400 shares of Class A common stock from the selling stockholders at the initial public offering price less underwriting discounts and commissions. Selling stockholders The selling stockholders identified in "Principal and Selling Stockholders." Class A common stock to be outstanding after this offering 32,191,905 shares, representing a 28.7% voting interest (or 32,714,624 shares, representing a 29.7% voting interest, if the underwriters exercise in full their option to purchase additional shares of Class A common stock from the selling stockholders). The number of shares outstanding does not include 1,558,787 unvested restricted stock units as of May 31, 2018. Class B common stock to be outstanding after this offering 16,009,279 shares, representing a 71.3% voting interest (or 15,486,560 shares, representing a 70.3% voting interest, if the underwriters exercise in full their option to purchase additional shares of Class A common stock from the selling stockholders). Any shares of Class B common stock sold by the selling stockholders will automatically convert to Class A common stock upon such sale, and 522,719 of the shares to be sold upon the underwriters' exercise of their option to purchase additional shares from the selling stockholders are shares of Class B common stock. Voting rights Shares of Class A common stock are entitled to one vote per share. Shares of Class B common stock are entitled to five votes per share. Holders of our Class A common stock and Class B common stock will generally vote together as a single class, unless otherwise required by law or in our Articles of Incorporation (as defined below). After this offering, certain members of the Fuller and Quinn families (or trusts for the benefit of any of them or entities owned by any of them) will control 83.0% of the voting power of our outstanding capital stock (or 80.2% if the underwriters exercise in full their option to purchase additional shares of Class A common stock from the selling stockholders), will continue to hold all of our Class B common stock and will effectively control all matters submitted to our stockholders for a vote. See "Description of Capital Stock." The date of this prospectus is , 2018. Table of Contents Although we may qualify as a "controlled company" under NYSE listing rules because certain members of the Fuller and Quinn families will hold over 50% of the voting power of our outstanding common stock, we do not intend to rely on the "controlled company" exemptions for NYSE listed companies. Use of proceeds We estimate that the net proceeds we will receive from selling Class A common stock in this offering will be approximately $292.7 million, after deducting underwriting discounts and commissions and estimated unpaid offering expenses payable by us, based on an assumed public offering price of $19.00 per share, the mid point of the price range set forth on the cover page of this prospectus. We expect to use the net proceeds from this offering as follows: (a) approximately $269.0 million to repay (i) our existing term loan facility, including breakage fees, (ii) borrowings outstanding under our existing revolving credit facility and (iii) the 2007 Restated Term Note, which is held in part by certain related parties and (b) approximately $23.7 million for general corporate purposes, including, but not limited to, the purchase of the Tunnel Hill, Georgia, real estate we historically have leased from Q&F Realty, a related party. Additional proceeds, if any, will be used to increase cash on our balance sheet. We expect to use the net proceeds of the New Term Loan as follows: (a) to repay a portion of our equipment installment notes, (b) for fees and expenses incurred in connection with the entry into the New Credit Facilities and (c) for general corporate purposes, including, but not limited to, the purchase of tractors and trailers scheduled for delivery in 2018. See "Use of Proceeds." We will not receive any proceeds from the sale of shares by the selling stockholders but have agreed to pay the selling stockholders' expenses related to this offering, other than underwriting discounts and commissions related to any shares of Class A common stock sold by the selling stockholders. Reorganization Immediately prior to the effectiveness of the registration statement, of which this prospectus is a part, we expect to complete a series of reorganization transactions pursuant to which New Mountain Lake will merge with and into U.S. Xpress Enterprises, Inc., with U.S. Xpress Enterprises, Inc. continuing as the surviving corporation. New Mountain Lake currently owns all of the issued and outstanding stock of U.S. Xpress Enterprises, Inc. In connection with the Reorganization (as defined below), we expect that the issued and outstanding membership units of New Mountain Lake outstanding immediately prior to the Reorganization will be converted into and exchanged for U.S. Xpress Enterprises, Inc. capital stock. Specifically, we expect to provide for the issuance of 4.6666667 shares of common stock for each Class A voting membership unit in New Mountain Lake and Class B non-voting membership unit in New Mountain Lake. All unvested New Mountain Lake restricted membership units will convert into unvested restricted stock units of U.S. Xpress Enterprises, Inc. at the same exchange rate. Messrs. Eric Fuller, Max Fuller and Ms. Lisa Quinn Pate and certain trusts for the benefit of any of them or their family members or certain entities owned by any of them or their family members will receive Class B common stock in exchange for their New Mountain Lake membership units. Any other holders of New Mountain Lake membership units will receive Class A common stock. Table of Contents Table of Contents Dividend policy We currently intend to retain all available funds and any future earnings for use in the development and expansion of our business, the repayment of debt and for general corporate purposes. Any future determination to pay dividends and other distributions will be at the discretion of our Board of Directors. Such determinations will depend on then-existing conditions, including our financial condition and result of operations, contractual restrictions, including restrictive covenants contained in our financing agreements, capital requirements and other factors that our Board of Directors may deem relevant. In addition, we expect that our New Credit Facilities will contain covenants that will restrict our ability to pay cash dividends. See "Dividend Policy." Purchases by Eric Fuller and Max Fuller At or following the closing of this offering, Messrs. Eric Fuller and Max Fuller will purchase an aggregate of $20.0 million of Class B common stock from certain members of the Quinn family (or trusts for the benefit of any of them or entities controlled by any of them), including Ms. Lisa Quinn Pate (the "Quinn Family Partnership"), at the public offering price (the "Fuller Purchase"). Conflict of interest An affiliate of Wells Fargo Securities, LLC, an underwriter in this offering, is a lender under our existing revolving credit facility. Certain of our outstanding borrowings under the existing revolving credit facility will be repaid with the net proceeds of this offering. Because more than 5% of the net proceeds of this public offering may be paid to an affiliate of Wells Fargo Securities, LLC participating in the distribution of our Class A common stock, this public offering is being made in compliance with FINRA Rule 5121, as administered by FINRA. Pursuant to that rule, the appointment of a "qualified independent underwriter" is not required in connection with this offering as the members primarily responsible for managing the public offering do not have a conflict of interest, are not affiliates of any member that has a conflict of interest and meet the requirements of paragraph (f)(12)(E) of Rule 5121. Wells Fargo Securities, LLC will not confirm sales of the securities to any account over which it exercises discretionary authority without the specific written approval of the account holder.
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+This summary highlights selected information about us, this offering and selected information appearing elsewhere in this prospectus and in the documents we incorporate by reference herein. This summary is not complete and does not contain all of the information that you should consider before deciding whether to invest in our common stock. You should read this entire prospectus carefully, including information set forth under the heading Risk Factors and our financial statements and the related notes included or incorporated by reference in this prospectus. Unless the context otherwise requires, the terms we, us, our, Aradigm, and the Company refer to Aradigm Corporation, a California corporation, and its subsidiaries. Aradigm Overview We are an emerging specialty pharmaceutical company focused on the development and commercialization of products for the treatment and prevention of severe respiratory diseases. Over the last decade, we invested a large amount of capital to develop drug delivery technologies, particularly the development of a significant amount of expertise in respiratory (pulmonary) drug delivery as incorporated in our lead product candidate Apulmiq, or inhaled ciprofloxacin (formerly known as Linhaliq and Pulmaquin with respect to the Food and Drug Administration, or the FDA, and known as Linhaliq for purposes of the European Medicines Agency, or EMA), that completed two Phase 3 clinical trials. We also invested considerable effort into the development of laboratory and clinical data demonstrating the performance of our AERx pulmonary drug delivery platform and other proprietary technologies. The key asset we have focused our efforts on in recent years is our inhaled ciprofloxacin product candidates. We have not been profitable since inception and expect to incur additional operating losses over at least the foreseeable future as we continue with our efforts towards regulatory approval of Apulmiq for non-cystic fibrosis bronchiectasis, or NCFBE, patients who have chronic lung infections with Pseudomonas aeruginosa. Our business has focused on opportunities in the development of drugs for the treatment of severe respiratory disease. We believe that there are significant unmet medical needs in severe respiratory diseases, as well as opportunities to replace some of the existing therapies with products that are more efficacious, safer and more convenient to use by patients. In selecting our proprietary development programs, we primarily seek drugs approved by the FDA that can be reformulated for both existing and new indications in respiratory disease or drugs that have been discovered by others. Our intent is to use our pulmonary delivery methods and formulations to improve their safety, efficacy, and convenience of administration to patients. We believe that this strategy will allow us to reduce cost, development time and risk of failure when compared to the discovery of new drugs. Inhaled Ciprofloxacin Program Our lead development candidates are proprietary formulations of the potent antibiotic ciprofloxacin (Apulmiq (ARD-3150) and Lipoquin (ARD-3100)) that are delivered by inhalation for the management of infections associated with the severe respiratory diseases of cystic fibrosis, or CF, and NCFBE. Apulmiq is a proprietary, specifically developed formulation of slow release liposomally encapsulated ciprofloxacin and immediately available unencapsulated aqueous solution of ciprofloxacin for inhalation. In January 2018, we announced that the FDA provided a Complete Response Letter, or CRL, regarding our new drug application, or NDA, stating that it could not approve the NDA in its present form and providing specific reasons for this action along with requisite recommendations pertaining to resubmission; the areas of concern include clinical data, human factors validation study and product quality. The recommendations in the CRL include an independent third party verification of the Phase 3 results via analyses of source data as per the statistical analysis plan contained in the Phase 3 clinical trial protocols and an additional Phase 3 clinical trial or trials that demonstrates a significant treatment effect on clinically meaningful endpoints which could evaluate the co-primary endpoints of frequency and severity of exacerbations to assess for durable evidence of efficacy over a period of two years (or more, if scientifically justified). The CRL also included a request to conduct another Human Factors Study to demonstrate that the product packaging and instructions for use are effective in instructing patients how to use the product. The CRL also requested, among other things, additional microbiological product quality information and an in vitro drug release method development report. We remain confident in the efficacy, safety and quality of Apulmiq and are formally interacting with the FDA to address the issues covered in the CRL, with our Table of Contents current goal being to move towards resubmission of the Apulmiq NDA or a new NDA as soon as possible. We are committed to continue working on obtaining regulatory approval of Apulmiq in the US for NCFBE patients who suffer from this very severe disease which carries the burden of high morbidity and mortality with no available approved treatment options. As planned, in March 2018 we submitted a marketing authorization application, or MAA, to the EMA, seeking approval for Linhaliq for the treatment of NCFBE patients suffering chronic lung infection with P. aeruginosa. Our submission is based on the positive Phase 3 clinical trial ARD-3150-1202 or ORBIT 4, with a primary endpoint of time to first exacerbation and the secondary endpoints of frequency of all exacerbations and severe exacerbations. Supporting evidence was provided from an identical Phase 3 trial ARD-3150-1201 or ORBIT 3, a Phase 2 study of Apulmiq and proprietary preclinical studies, as well as referencing additional information about ciprofloxacin from publicly available sources. Two previous Scientific Advice procedures indicated that the EMA would focus on the totality of clinical evidence, including primary and secondary exacerbation endpoints in their decision-making. The EMA completed its validation of the MAA and the formal start date of the MAA review procedure was March 29, 2018. We have received the list of Day 120 questions and are in the process of addressing them. The EMA review of the MAA for Linhaliq will be according to standard timelines, with an opinion of the Committee for Medicinal Products for Human Use, or CHMP, expected in the second quarter of 2019. The time needed by us to respond to EMA questions during the MAA review will trigger formal clock-stops of the procedure and add several months to the nominal duration, until the final CHMP opinion will be issued. After the adoption of a CHMP opinion, a final decision regarding the MAA assessment is carried out by the European Commission within 2-3 months. Liposomal Ciprofloxacin for Non-Tuberculous Mycobacteria In August 2013, the National Institute of Allergy and Infectious Diseases, or NIAID, awarded us a Small Business Initiative Research, or SBIR, Phase I grant of approximately $278,000 to investigate the treatment of pulmonary non-tuberculous mycobacteria, or PNTM, infections with our inhaled liposomal ciprofloxacin product candidates, Apulmiq and Lipoquin. The research program was conducted in collaboration with Oregon State University, Corvallis, or OSU. Based on an epidemiological study in U.S. adults aged 65 years or older, PNTM infections are an important cause of morbidity among older adults in the United States. The current clinical paradigm is to treat patients with lung or disseminated disease with combination therapy given orally or by IV or by inhalation. Unfortunately, current therapies often fail and may have significant side effects. In April 2015, we announced the first results from the collaboration between scientists from OSU and Aradigm. The research demonstrated that after 4 days of in vitro treatment of human macrophages infected with M. avium and M. abscessus, liposomal ciprofloxacin caused a decrease of >99% colony forming units, or CFU, at ciprofloxacin concentration of 200 mcg/ml, which is an order-of-magnitude below the peak sputum levels observed in humans in the ORBIT-3 and ORBIT-4 Phase 3 clinical trials. Liposomal ciprofloxacin at 100 mcg/ml also significantly reduced the CFU in a biofilm assay by >50%. In May 2015, we announced that scientists from OSU and Aradigm demonstrated that Aradigm s investigational drugs Lipoquin and Apulmiq significantly reduced the growth of M. avium after 3 weeks of once-daily respiratory tract dosing in mice. The CFUs were reduced by 79% and 77% by Lipoquin and Apulmiq, respectively (p<0.05) compared to saline controls. In September 2015, we announced that scientists from OSU and Aradigm demonstrated that Aradigm s investigational drugs Lipoquin and Apulmiq significantly reduced M. abscessus using once daily dosing in mice that had established colonization with this microorganism. After 3 weeks of treatment, CFUs in lungs were significantly reduced (p<0.05) by 95.2% and 96.1% by Lipoquin and Apulmiq, respectively; after 6 weeks, CFUs were further reduced (p<0.05) by 99.7% and 99.4% for Lipoquin and Apulmiq, respectively. This collaboration between OSU and Aradigm resulted in inventions leading to several patent applications. In January 2017, Patent no. 9,532,986 titled Liposomal Ciprofloxacin Formulations with Activity Against Non-Tuberculous Mycobacteria was issued by the US Patent Office, with OSU and Aradigm being the assignees. Table of Contents In August 2017, NIAID awarded us a Phase II SBIR grant to investigate the treatment of M. avium and M. abscessus with Apulmiq and Lipoquin and a novel liposomal formulation containing nanocrystalline ciprofloxacin with standard combination therapies. This novel formulation is described in Patent nos. 9,844,548 titled Liposomal Ciprofloxacin Formulations with encapsulated ciprofloxacin nanocrystals issued in May 2018 and 9,968,555 titled Novel Liposomal Formulations that Form Drug Nanocrystals after Freeze-Thaw issued in May 2018 by the US Patent Office, with Aradigm being the assignee. Aradigm will work with OSU, which will lead the laboratory research as a part of the consortium funded by this two year grant of approximately $972,000. Liposomal Ciprofloxacin for Biodefense Purposes: Treatment of Q Fever, Tularemia, Pneumonic Plague, Inhalation Anthrax and other biodefense purposes In addition to bronchiectasis, CF, and PTNM, liposomal ciprofloxacin has also been tested for the prevention/ treatment of inhaled bioterrorism infections. Grifols has provided us a royalty-bearing license for biodefense applications. In September 2012, UK scientists from the Health Protection Agency, or HPA, and Defence Science and Technology Laboratory (Dstl) reported efficacy of liposomal ciprofloxacin for 7 days of treatment against Q fever. In November 2012, Dstl reported in a preliminary study that they demonstrated that a single dose of Lipoquin administered 24 hours post-exposure to a lethal dose of the Yersinia pestis had 100% survival in a murine model of pneumonic plague for 28 days post-exposure. Dstl also demonstrated in another series of experiments that a single dose of inhaled liposomal ciprofloxacin at 24 hours after infection had 100% survival in mice against lethal doses of inhaled Francisella tularensis (tularemia) infection for up to 14 days post-infection. In October 2016, we announced Dstl received funding of up to $6.9 million from the U.S. Defense Threat Reduction Agency, or DTRA, for Inhalational ciprofloxacin for improved protection against biowarfare agents . The total potential funding for Dstl is $3.2 million (base period) and $3.7 million (option period). The initial funding is $1.7 million, for which Dstl and Aradigm will study the efficacy of Apulmiq and Lipoquin in mice models of tularemia, melioidosis, glanders and Q fever, which will allow broad-spectrum prophylaxis/treatment against multiple bioterrorism threats. If we can obtain sufficient additional funding, we may be able to complete the development of liposomal ciprofloxacin for approval under FDA regulations for new drugs/biologics for potentially fatal diseases where human studies cannot be conducted ethically or practically, termed the Animal Rule. Collaboration with Grifols, S.A. In August 2013, we partnered with Grifols, S.A., a European-based multinational pharmaceutical company, and its controlled affiliates, or Grifols, via a License and Collaboration Agreement, or the License Agreement, and granted to Grifols an exclusive, world-wide license to our inhaled liposomal ciprofloxacin product candidates for the indication of NCFBE and other indications (excluding Bio-Defense Aradigm Products, as defined in the agreement), or the Licensed Products. The license permits Grifols to commercialize the Licensed Products throughout the world. We are responsible for obtaining regulatory approval of the first indication for the product candidates in the U.S. and the EU. Grifols is responsible to use diligent efforts to commercialize the Licensed Products in countries where regulatory approval has been obtained. Under the License Agreement, Grifols pays development milestones and royalties on future commercial sales of Licensed Products. We develop the Licensed Products for NCFBE. Under the License Agreement, Grifols makes development milestone payments of up to $25 million upon the achievement of specified events. As of November 2018, we have earned and collected a total of $10 million in milestone payments for certain development-related events. Up to a total of $15 million in milestone payments may be paid to us in the future, subject to the achievement of regulatory approval milestones in specified geographic regions. In addition, Grifols will make royalty payments on net sales of Licensed Products on a country-by-country basis for so long as there is a valid patent claim or orphan drug designation (or, if longer, 10 years after the first commercial sale) in such country. The royalty rate applicable at any time is determined as follows (subject to adjustment as described below): The royalty rate is 12.5% if worldwide (rather than country-by-country) aggregate net sales were less than or equal to $300 million at the time the relevant portion of net sales was made in that country, on a year-to-date basis. The royalty rate is 20% if worldwide aggregate net sales were above $300 million at the time the relevant portion of net sales was made in that country, on a year-to-date basis. Table of Contents Royalty payments will be reduced by 50% on a country-by-country basis (1) during such time, if any, that another inhaled liposomal product containing ciprofloxacin is being sold in that country for an indication for which we have regulatory approval or (2) if we have no valid patent claim or orphan drug protection in that country (these reductions may not be combined and the maximum reduction in royalties under the License Agreement is 50%). Grifols is the beneficial owner of approximately 48% of the Company s common stock. For more information on the License Agreement and our agreements with Grifols, see Certain Relationships and Related Transactions and Description of Securities Common Stock. Corporate Developments 2016 Private Placement On April 21, 2016, we entered into a securities purchase agreement to conduct a private offering, or 2016 Private Placement, consisting of $23 million in aggregate principal amount of 9% senior convertible notes due 2021 convertible into shares of common stock, or the Convertible Notes, and 263,436 warrants to purchase shares of the Company s common stock or the Warrants. The Convertible Notes bear interest at a rate of 9% per year, payable semiannually in arrears on November 1 and May 1 of each year commencing on November 1, 2016. The Convertible Notes mature on May 1, 2021, unless earlier redeemed or converted. 2018 Private Placements On April 13, 2018, we entered into a senior note purchase agreement whereby the lenders signatory thereto agreed to purchase up to approximately $7 million aggregate principal amount of our 9.0% senior promissory notes due 2021, or the Notes. We completed the first closing under the note purchase agreement on April 13, 2018, at which time we issued and sold approximately $2 million aggregate principal amount of Notes to the lenders thereunder. We completed subsequent closings under the note purchase agreement on May 14, 2018, June 13, 2018, July 13, 2018, August 13, 2018 and September 12, 2018 pursuant to which we sold, at each such subsequent closing, Notes in the aggregate principal amount of approximately $1 million to certain of the lenders under the note purchase agreement. On October 25, 2018, we entered into a senior note purchase agreement under which Grifols, pursuant to which Grifols agreed to purchase approximately up to $4 million aggregate principal amount of our senior unsecured promissory notes due 2021, or the October 2018 Notes. We completed the first closing under this note purchase agreement on October 25, 2018, at which time we issued and sold $2 million aggregate principal amount of notes to Grifols. Subject to the satisfaction or waiver of the conditions to the closing set forth in the purchase agreement, we anticipate the sale of the remaining approximately $2 million of the October 2018 Notes to occur in one subsequent closing, which we currently anticipate to occur prior to December 31, 2018. Nasdaq Compliance As previously disclosed, on March 7, 2018, we received written notice from The Nasdaq Stock Market, LLC, or Nasdaq, notifying us that we no longer complied with Nasdaq Listing Rule 5550(b)(2), or the Rule, as we had not maintained a minimum Market Value of Listed Securities, or MVLS, of $35 million for 30 consecutive business days. In accordance with applicable Nasdaq Listing Rules, we were provided with a period of 180 calendar days, or until September 4, 2018, in which to regain compliance by evidencing a MVLS of $35 million or more for a minimum of ten consecutive business days. On September 5, 2018, we received written notification from Nasdaq indicating that, as we had not regained compliance with the Rule, our securities would be subject to delisting and trading in our common stock would be suspended as of the opening of business on September 14, 2018 unless we timely requested a hearing to appeal the delisting determination. Such request was timely made and such request stayed the suspension and delisting of the Company s securities pending the decision of the Nasdaq Hearings Panel. At our hearing with the Nasdaq Hearings Panel, we undertook to comply with certain conditions, including our completion of this offering, prior to February 15, 2019, in order to maintain our listing on the Nasdaq Capital Market. The Nasdaq Hearings Panel has not yet provided any formal guidance regarding our continued listing on the Nasdaq Capital Market and we cannot assure you that we will be successful in regaining compliance with Nasdaq continued listing requirements or that we will be able to meet Nasdaq listing standards going forward. Table of Contents Reverse Stock Split Prior to the effectiveness of this registration statement, we intend to hold a special meeting of our stockholders for the purpose of obtaining stockholder approval on an amendment to our certificate of incorporation to effect a reverse stock split of our common stock at an exchange ratio between 1-for - and 1-for- with our Board of Directors retaining the discretion as to whether to implement the reverse stock split and the exact exchange ratio to implement. Accordingly, prior to the effectiveness of the registration statement of which this prospectus is a part, and subject to the approval of our Board and our stockholders, we will effect a reverse stock split of our common stock upon a ratio to be determined by our Board of Directors. Risks Relating to Our Business We are an emerging specialty pharmaceutical company, and our business and ability to execute our business strategy are subject to a number of risks of which you should be aware before you decide to invest in this offering. In particular, you should consider the risks discussed in the Risk Factors section of this prospectus and documents incorporated by reference herein, including, but not limited to, the following risks: We have incurred net losses in each year since our inception. We expect to incur net losses and negative operating cash flow for the foreseeable future, and may never achieve or maintain profitability; We will require additional funding to fund our operations generally and such funding may not be available on acceptable terms or at all; We are substantially dependent on the success of our leading product candidate, Apulmiq. We cannot be certain that Apulmiq will receive regulatory approval or be successfully commercialized even if we receive regulatory approval; If we are unable to obtain the required regulatory and marketing approvals for, commercialize, obtain and maintain patent protection for, or gain sufficient market acceptance by physicians, patients and healthcare payers of, Apulmiq, or experience significant delays in doing so, our business will be materially harmed and our ability to generate revenue will be materially impaired; If we are unable to maintain compliance with the covenants under our indebtedness, including as a result of events beyond our control, we could be deemed to be in a default under our indebtedness, including our outstanding note securities, which could materially and adversely affect the ongoing viability of our business; It we are unable to resolve our noncompliance with the applicable continued listing requirements of The Nasdaq Capital Market, including those related to the Nasdaq Listing Rule 5550(b)(2), our common stock will be delisted from The Nasdaq Capital Market which could have a material adverse effect on our financial condition; Apulmiq will be subject to ongoing regulatory requirements and any violations of these requirements could negatively affect our business and results of operations; We will be substantially dependent on third-party manufacturers to manufacture Apulmiq and its key ingredients in sufficient quantities and on a timely basis, while complying with extensive FDA and EMA requirements; Table of Contents We may not be able to manage our business effectively if we are unable to attract and retain key personnel and consultants; If we are unable to maintain valid and enforceable intellectual property rights or if our intellectual property rights are inadequate for Apulmiq, our competitive position could be harmed; and We could face competition from other biotechnology and pharmaceutical companies and our operating results will suffer if we fail to compete effectively. Corporate Information We were incorporated in California in 1991. Our principal executive offices are located at 3929 Point Eden Way, Hayward, California 94545, and our main telephone number is (510) 265-9000. Available Information Investors can obtain access to our Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q, our Current Reports on Form 8-K and all amendments to these reports, free of charge, on our website at www.aradigm.com as soon as reasonably practicable after such filings are electronically filed with the SEC. Information contained on our website is not part of, or incorporated by reference in, this prospectus, the registration statement of which this prospectus is a part or our other filings with the SEC. The SEC maintains an Internet site, www.sec.gov, that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC. For more information as to our business, properties and financial condition, please refer to the documents cited in Where You Can Find More Information. Table of Contents The Offering Class A Units offered by us We are offering Class A Units. Each Class A Unit consists of shares of common stock and a warrant to purchase shares of our common stock (together with the shares of common stock underlying such warrants). Offering price per Class A Unit $ Class B Units offered by us We are also offering to those purchasers whose purchase of Class A Units in this offering would result in the purchaser, together with its affiliates and certain related parties, beneficially owning more than 4.99% (or, at the election of the purchaser, 9.99%) of our outstanding common stock following the consummation of this offering, the opportunity to purchase, in lieu of the number of Class A Units that would result in ownership in excess of 4.99% (or, at the election of the purchaser, 9.99%) of our outstanding common stock, Class B Units. Each Class B Unit will consist of shares of Series A Preferred Stock, par value $0.001 per share, convertible into a number of shares of common stock equal to and a warrant to purchase shares of our common stock (together with the shares of our common stock underlying such shares of Series A Preferred Stock and warrants). Offering price per Class B Unit $ Overallotment option The underwriters have the option to purchase up to additional shares of common stock, and/or warrants to purchase shares of common stock solely to cover overallotments, if any, at the price to the public less the underwriting discounts and commissions. The overallotment option may be used to purchase shares of common stock, or warrants, or any combination thereof, as determined by the underwriters, but such purchases cannot exceed an aggregate of 15% of the number of shares of common stock (including the number of shares of common stock issuable upon conversion of shares of Series A Preferred Stock) and warrants sold in the primary offering. The overallotment option is exercisable for 45 days from the date of this prospectus. Description of warrants The warrants will be exercisable beginning on the date of issuance and expire on the five (5) year anniversary of the date of issuance at an initial exercise price per share equal to , subject to appropriate adjustment in the event of recapitalization events, stock dividends, stock splits, stock combinations, reclassifications, reorganizations or similar events affecting our common stock. Description of Series A Preferred Stock Each share of Series A Preferred Stock is convertible at any time at the holder s option into shares of common stock. Table of Contents Notwithstanding the foregoing, we shall not effect any conversion of Series A Preferred Stock, with certain exceptions, to the extent that, after giving effect to an attempted conversion, the holder of shares of Series A Preferred Stock (together with such holder s affiliates, and any persons acting as a group together with such holder or any of such holder s affiliates) would beneficially own a number of shares of our common stock in excess of 4.99% (or, at the election of the purchaser prior to the date of issuance, 9.99%) of the shares of our common stock then outstanding after giving effect to such exercise. For additional information, see Description of Securities Preferred Stock. Shares of common stock outstanding after this offering shares Shares of Series A Preferred Stock outstanding after this offering shares Use of Proceeds We estimate that the net proceeds to us from this offering will be approximately $ million, after deducting the underwriting discounts and commissions and estimated offering expenses payable by us. We intend to use the net proceeds from the sale of the units for working capital needs, capital expenditures, and other general corporate purposes in pursuit of advancing our commercial, clinical, and pre-clinical efforts. See Use of Proceeds.
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+PROSPECTUS SUMMARY 1 RISK FACTORS 4 USE OF PROCEEDS 11 PLAN OF DISTRIBUTION 13 MARKET FOR OUR COMMON STOCK 15 DIVIDEND POLICY 15 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 16 DESCRIPTION OF OUR BUSINESS 29 DESCRIPTION OF PROPERTY 31 LEGAL PROCEEDINGS 32 DESCRIPTION OF CAPITAL STOCK 32 MANAGEMENT 33 DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES LIABILITIES 36 LEGAL MATTERS 36 EXPERTS 36 AVAILABLE INFORMATION 37 PROSPECTUS SUMMARY This summary highlights certain information described in greater detail elsewhere or incorporated by reference in this prospectus.
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+PROSPECTUS SUMMARY This summary highlights selected information from this prospectus, and does not contain all of the information that you need to consider in making your investment decision. You should carefully read the entire prospectus and any related free writing prospectus, including the risks of investing in our securities referred to under the heading "Risk Factors" in this prospectus and any related free writing prospectus. You should also carefully read our financial statements and the related notes included in this prospectus and the exhibits to the registration statement of which this prospectus is a part. Unless otherwise mentioned or unless the context requires otherwise, throughout this prospectus and any related free writing prospectus, the words "eMagin Corporation," "eMagin," "the Company," "we," "us," and "our company" or similar references refer to eMagin Corporation and its wholly owned subsidiary, Virtual Vision, Inc. Unless otherwise stated, all information contained in this prospectus assumes or gives effect to no exercise of the warrants or options to purchase common stock and no exercise by the underwriters of their over-allotment option. Overview We are a leader in the manufacture of microdisplays using organic light emitting diode (OLED) technology. We design, develop, manufacture and market OLED miniature displays, which we refer to as OLED-on-silicon microdisplays, virtual imaging products that utilize OLED microdisplays, and related products. We also perform research in the OLED field. Our virtual imaging products integrate OLED technology with silicon chips to produce high-resolution microdisplays one-inch diagonally and smaller, which when viewed through a magnifier, create virtual images that appear comparable in size to that of a computer monitor or a large-screen television. Our products enable our original equipment manufacturer (OEM) customers to develop and market improved or new electronic products, especially products that are mobile and highly portable so that people have immediate access to information and can experience immersive forms of communications and entertainment. We believe that a key growth area for us is the consumer electronic OEM market for augmented reality (AR) and virtual reality (VR) hardware. Our potential channels to this market include licensing of our direct patterning technology and partnering for the mass production of microdisplays. We believe that our direct patterning technology is a key differentiator for enabling next generation AR/VR hardware for the consumer and enterprise segments because of the brightness and the pixel density afforded by the technology. We also develop and manufacture night vision products for the consumer electronics, recreational, law enforcement and first responder markets, including a smart phone attachment and a wearable device. We believe that our OLED microdisplays offer a number of significant advantages over comparable liquid crystal microdisplays, including higher contrast, greater power efficiency, less weight, more compact size, and negligible image smearing. Using our active matrix OLED technology, many computer and electronic system functions can be built directly into the OLED microdisplay silicon backplane, resulting in compact, high resolution and power efficient systems. Already proven in military and commercial systems, our portfolio of OLED microdisplays deliver high-resolution, flicker-free virtual images that perform effectively even in extreme temperatures and high-vibration conditions. We also believe that our direct patterning technology gives us a substantial advantage over other OLED microdisplays because it allows us to produce microdisplays with the high brightness required for VR and AR. Traditional OLED microdisplays utilize white emitting OLED with color filters that lessen the intensity of emitted light by as much as 85%, significantly reducing brightness. Microdisplays manufactured by direct patterning do not require color filters to achieve color variations and allow for the application of more efficient OLED structures which achieve high brightness. We have developed our own intellectual property portfolio that includes patents, over 15 years of manufacturing know-how and proprietary technologies to create high performance OLED-on-silicon. We believe our technology, intellectual property portfolio and position in the marketplace give us a leadership position in OLED and OLED-on-silicon microdisplay technology. We believe that we are AMENDMENT NO. 2 TO FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Table of Contents This prospectus contains summaries of certain provisions contained in some of the documents described herein, but reference is made to the actual documents for complete information. All of the summaries are qualified in their entirety by the actual documents. Copies of some of the documents referred to herein have been filed or will be filed as exhibits to the registration statement of which this prospectus is a part, and you may obtain copies of those documents as described below under the heading "Where You Can Find Additional Information." INDUSTRY AND MARKET DATA We obtained the industry and market data in this prospectus from our own research as well as from industry and general publications, surveys and studies conducted by third parties. These data involve a number of assumptions and limitations, and you are cautioned not to give undue weight to such estimates. In addition, projections, assumptions and estimates of our future performance and the future performance of the industry in which we operate is necessarily subject to a high degree of uncertainty and risk due to a variety of factors, including those described in "Risk Factors" and elsewhere in this prospectus. These and other factors could cause results to differ materially from those expressed in the estimates made by the independent parties and by us. See "Cautionary Note Regarding Forward-Looking Statements." TRADEMARKS This prospectus includes trademarks, service marks and trade names owned by us or other companies. All trademarks, service marks and trade names included in this prospectus or any related free writing prospectus are the property of their respective owners. Table of Contents one of only a few companies to market and produce significant quantities of high resolution, small molecule OLED-on-silicon microdisplays. We derive the majority of our revenue from sales of our OLED microdisplay products. We also earn revenue from government, commercial and consumer product development contracts that may complement and support our internal research and development programs. In addition, we generate sales from optics and microdisplays combined with optics. Beginning in the first quarter of fiscal 2017, we introduced two night vision consumer products, BlazeSpark and BlazeTorch, although revenue from these products to date has been minimal. Recent Developments Recent Operating Results (Preliminary and Unaudited) For the three months and year ended December 31, 2017, we expect total revenues to be between $6.2 million and $6.4 million and $21.8 and $22.0 million, respectively, as compared to total revenues of $4.6 million and $21.4 million for the three months and year ended December 31, 2016, and $4.2 million for the three months ended September 30, 2017. These expected increases compared to 2016 are driven by increases in bookings during the third and fourth quarter of 2017 reflecting military and commercial programs awarded over the past year. As of December 31, 2017, we had cash of $3.5 million and a revolving credit loan balance of $4.0 million, compared to cash of $2.0 million and a revolving credit loan balance of $1.1 million as of September 30, 2017. In addition, as of December 31, 2017, our backlog of open orders scheduled for delivery though December 31 2018 was approximately $9.8 million and we have an additional $3.9 million in orders scheduled for delivery through 2020. Our consolidated financial statements for the three months and year ended December 31, 2017 are not yet available. The foregoing information reflects our estimate with respect to total revenues based on currently available information, which is preliminary and unaudited, is not a comprehensive statement of our financial results and is subject to completion of our financial closing procedures. While we have not identified any unusual or unique events or trends that occurred during the period that might materially affect this preliminary estimate, our actual results for the three months and year ended December 31, 2017 will not be available until after this offering is completed, may differ materially from our preliminary estimate and are not indicative of the results to be expected for any future period. We have provided an approximate range, rather than a specific amount, for total revenues primarily because our financial closing procedures for the three months and year ended December 31, 2017 are not yet complete and, as a result, our final results upon completion of our closing procedures may vary from the preliminary estimate. This preliminary estimate has been prepared by and is the responsibility of management. Our independent registered public accounting firm has not conducted a review of and does not express an opinion or any other form of assurance with respect to this preliminary estimate. This information should be read in conjunction with our consolidated financial statements and the related notes and "Management's Discussion and Analysis of Financial Condition and Results of Operations" for prior periods included in this prospectus. Our Industry A microdisplay typically has a screen size that is less than two inches in diagonal. The miniature size enables them to be used in a wide variety of applications that require a screen that takes up small space, like head-mounted displays (HMDs), viewfinders and digital cameras. Microdisplays are used across various industries including consumer electronics, enterprise/industrial, military, defense, aerospace, and healthcare. Microdisplays provide many advantages over other displays where small size is a requirement. Benefits include compact size, high brightness and resolution, low power consumption, and high contrast. Devices incorporating microdisplays include HMDs, smart glasses and eMAGIN CORPORATION (Exact name of Registrant as specified in its charter) Table of Contents headset products. Sales of AR and VR gear, which include HMD, smart glasses and headsets, are estimated to exceed $26 billion by 2021, according to Technavio. Display quality is widely accepted as a key performance driver for ensuring the optimal user experience. We believe that this requirement for better display quality will result in next generation products in consumer electronics, defense, aviation, medical and industrial/enterprise segments of the market which utilize microdisplays. Our Technology Platforms Small Molecule, Top-Emitting Active Matrix OLED Technology. Our microdisplays are currently based upon active matrix small molecule OLED technology, which we refer to as active matrix OLED (AMOLED). Our AMOLED technology uniquely permits millions of individual low-voltage light sources to be built on low-cost, silicon computer chips to produce single color, white or full-color display arrays. Using our OLED technology, many computer and video electronic system functions can be built directly into the silicon chip, under the OLED film, resulting in a compact, integrated system with lower overall system costs relative to alternative technologies. Our OLED microdisplays use less power and deliver much higher contrast and fuller color than liquid crystal microdisplays. We believe that our AMOLED technology provides significant advantages over other microdisplay technologies in our targeted markets. We believe these key advantages include: High brightness Sharp contrast Low power consumption for improved battery life and longer system life; High-speed performance resulting in clear video images; Compact form factor and light weight; Wide angle light emission resulting in large apparent screen size and more immersive experience; Wide operating temperature range; Good environmental stability (vibration and humidity); and Low manufacturing cost at higher volumes. Prism Optics We sell high quality, large viewing angle prism optics with a wide range for eye positioning, both of which are essential for using our displays in immersive near-eye systems. We have developed advanced molded plastic prism lenses that permit our AMOLED microdisplays to provide large field of view images that can be viewed for extended periods with reduced eye-fatigue. We have developed an additional prism optic for a project that will pair with our SXGA096 display. Our Market Opportunities We target the military, aviation, industrial/medical, and consumer markets although many of our products cater to multiple markets. Within each of these market sectors we believe that our OLED microdisplays, when combined with compact optic lenses, can become a key component for a variety of mobile electronic products. Many of these products employ head-wearable displays that incorporate microdisplays mounted in or on eyeglasses, goggles, simple headbands, helmets, or hardhats, and are often referred to as HMDs or headsets. Head-wearable displays may block out surroundings for a fully immersive experience, or be designed to "see-through" or "see-around" to the user's surroundings. Delaware (State or other jurisdiction of incorporation or organization) 3679 (Primary Standard Industrial Classification Code Number) 56-1764501 (I.R.S. Employer Identification Number) 2070 Route 52 Hopewell Junction, NY 12533 (845) 838-7900 (Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant's Principal Executive Offices) Table of Contents They may contain one (monocular) or two (binocular) displays. We have leveraged our experience in developing for military and commercial aviation helmets and believe this experience will allow us to more rapidly introduce displays suitable for specialized/high-end mass market consumer VR/AR applications than our competitors. Consumer. We believe that the most significant driver of the longer term near-eye virtual imaging microdisplay market is the growing consumer demand for mobile access to larger volumes of information and entertainment in smaller and more affordable packages. This desire for mobility has resulted in the development of mobile video personal viewer products in three general categories: (i) immersive VR headset-application platforms such as accessories for gaming computers, portable digital optical disc (DVD) systems and wearable telepresence systems; (ii) AR electronic viewers incorporated in products such as data glasses and personal viewers for cell phones; and (iii) low cost thermal and low light imaging and scopes for hunting and other outdoor activities. As we manufacture our OLED displays in higher volumes at reduced costs and capitalize on our direct patterning technology, we believe that our products will be increasingly well positioned to compete with and displace liquid crystal displays and cell phone size displays in the rapidly growing consumer market, particularly as demand expands for sophisticated mobile personal viewers offering higher resolution and better image quality for VR and AR applications. Military/Aviation. Properly implemented, we believe that head-mounted systems incorporating our microdisplays increase the user's effectiveness by allowing hands-free operation and increasing situational awareness with sufficient brightness for use in daylight, yet controllable for nighttime light security. As a COTS (commercial off-the-shelf) component, OLED microdisplays possess performance characteristics important to military and other demanding commercial and industrial applications, including high contrast, wide dimming range, shock and vibration resistance and insensitivity to high G-forces. The design features and performance characteristics of our OLED microdisplays reduce the size, weight, and power required by current and future military systems, while also providing a wide operating temperature range. Our OLED microdisplays have been incorporated into a broad range of U.S. and foreign military tactical programs as well as aviation helmets that require the high brightness of the OLED technology that we have developed. Our products' military applications primarily fall into three broad areas: (1) helmet-mounted and handheld displays for situational awareness and data; (2) night vision/thermal imaging goggles, rifles and targeting sights, and handheld viewers; and (3) training and simulation devices. These systems are also well suited for demanding operations such as urban security, homeland defense, and fire and rescue. Situational Awareness. Our OLED microdisplays have been incorporated into a broad range of U.S. and foreign military situational awareness programs. Situational awareness products include head-mounted displays that are used to display images, including digital map, sensor imagery and pilot aviation information. In addition, handheld imagers provide improved situational awareness on the battlefield, as well as in training and simulation. These products can also be combined with a weapon system to give the user the capability to select targets without direct exposure. Night Vision/Thermal Imaging. We believe the power efficiency and environmental ruggedness of our microdisplay products are strong competitive advantages in night vision and thermal imaging products, particularly for smaller handheld non-cooled systems. Fielded products incorporating our OLED microdisplays include Harris' and L3 Insight's Enhanced Night Vision Goggle II, the Enhanced Night Vision Goggle III, Family of Weapons Sights Individual and Crew Served for the U.S. Army, L-3's Javelin medium-range anti-tank missile system, Northrop Grumman's Lightweight Laser Designator Rangefinders, Thales' SOPHIE handheld thermal imagers, and Thales' MINIE , LUCIE , and MONIE night vision goggles. Andrew G. Sculley Chief Executive Officer eMagin Corporation 2070 Route 52 Hopewell Junction, NY 12533 (845) 838-7900 (Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent for Service) Table of Contents Training and Simulation. Our OLED microdisplays are purchased by OEMs for use with their simulation and training products. The companies that incorporate our OLEDs into their training and simulation applications include Quantum 3D, Rockwell Collins, Intevac Vision Systems, and Sensics, among others. Our displays have been commercialized and prototyped for situational awareness and night vision/thermal imaging applications by military systems integrators, including Elbit, L-3 Communications, Intevac Vision Systems, Nivisys, BAE Systems Technology, DRS, Harris (formerly Excelis/ITT), Intevac Vision Systems, Qioptiq, Rockwell Collins, SA Photonics, Saab, Sagem DS, and Thales, among others. Commercial, Industrial, and Medical. We believe that a wide variety of commercial and industrial markets offer significant opportunities for our products due to increasing demand for instant data accessibility in mobile workplace environments and due to the benefit of mobile displays to enhance visual performance. Examples of existing and potential microdisplay applications include enhanced visualization for ocular surgery, mobile ultrasound, mobile nondestructive testing, enhanced vision for those with visual impairments, immediate access to inventory or maintenance and construction manuals, routine quality assurance inspection, and real-time viewing of images and data for a variety of applications. Our Products OLED Microdisplays. We provide a wide variety of OLED microdisplays to our customers. We offer our products to OEMs and other buyers as both separate components, integrated bundles coupled with our own optics, or complete systems. We also offer engineering support to enable customers to quickly integrate our products into their own product development programs and design customized displays with resolutions or features to meet specific customer requirements. Lens and Design Reference Kits. We offer a prism optic with mounting brackets or combined with OLED microdisplays to form an optic-display module. We provide design reference kits, which include a microdisplay and associated electronics to help OEMs evaluate our microdisplay products and to assist their efforts to build and test new products incorporating our microdisplays. Integrated Modules. We provide near-eye virtual imaging modules that incorporate our OLED-on-silicon microdisplays with our lenses and electronic interfaces for integration into OEM products. We have shipped customized modules to several customers, some of which have incorporated our products into their own commercial products. Headsets. We have developed and demonstrated a new Immersive Head Mounted Display (IHMD) with a different look and superior performance than other VR HMDs. Compared to other VR HMDs, it has four times the resolution, no pixelization, and a much smaller form factor. We entered into a nonexclusive license agreement in 2015 to allow an undisclosed company to use the technology in this IHMD for their own applications and may incorporate our 2K 2K displays in headsets that use the technology. The retrofit of our latest 2K 2K microdisplay prototypes into the original design of this IHMD is being considered as a means to showcase their superior performance and higher resolution. Night Vision Smartphone Camera Attachment and Goggles. In 2016, we announced night vision products for the consumer market and began limited sales in the first quarter of 2017. A smartphone camera attachment allows consumers to see clear, high-resolution images in the dark. A companion application allows users to record and live stream content directly to our social media sites and share with other sites. We also developed a wearable device that utilizes our OLED microdisplay technology to provide hands-free operation for night-time activities with the capability to record and upload content. We are completing the development of these products and pursuing channels of distribution. Copies to: Jocelyn M. Arel, Esq. 100 Northern Avenue Boston, MA 02210 Phone: (617) 570-1000 Fax: (617) 523-1231 Robert Charron, Esq. Ellenoff Grossman & Schole LLP 1345 Avenue of the Americas New York, New York 10105 (212) 370-1300 Table of Contents Our Strategy Our strategy is to strengthen our leadership position as a worldwide supplier of microdisplays and virtual imaging technology solutions for applications in high growth segments of the consumer, military and commercial electronics industry by capitalizing on our experience and expertise in active matrix OLED technology and silicon wafer design. Key elements of our strategy to achieve these objectives include: Develop OEM and mass production partnerships in the consumer HMD market. Strengthen our technology leadership. Optimize microdisplay manufacturing efficiencies while protecting proprietary processes and partner with large volume manufacturers to bring our technology into high volume production. Build and maintain strong design capabilities. Leverage strategic relationships. Enter consumer electronics markets. Selected Risk Factors Our business is subject to many risks and uncertainties of which you should be aware before you decide to invest in our common stock and/or warrants to purchase common stock. These risks are discussed more fully under "Risk Factors" in this prospectus. Some of these risks are: We have had losses in the past and may incur losses in the future. If we are unable to meet our obligations as they become due over the next twelve months, we may not be able to continue our current operations. Our operating results have significant fluctuations. Our business strategy may fail if we cannot continue to form strategic relationships with companies that manufacture and use products that could incorporate our active matrix OLED technology. The manufacture of active matrix OLED microdisplays encompasses several complex processes resulting in irregular production schedules, including production delays and interruptions, which could adversely affect our operating results. Several steps of our production processes are dependent upon certain critical machines and tools which could result in delivery interruptions and foregone revenues. We may not be successful in protecting our intellectual property and proprietary rights. The success of the commercial and consumer microdisplay industry is dependent upon widespread acceptance of microdisplay systems products, including their incorporation into AR and VR systems and products. The microdisplay market is highly competitive with several competing technologies. Corporate Information We were formed through the merger of Fashion Dynamics Corporation, which was organized on January 23, 1996 under the laws of the State of Nevada, and FED Corporation, a developer and manufacturer of optical systems and microdisplays for use in the electronics industry. Simultaneous with this merger, we changed our name to eMagin Corporation. We are incorporated in the State of Delaware. The address of our principal executive offices is 2070 Route 52, Hopewell Junction, NY 12533 and our telephone number is (845) 838-7900. Our website address is www.emagin.com. We do not incorporate the information on or accessible through our website into this prospectus, and you should not consider any information on, or that can be accessed through, our website as part of this prospectus. Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act. Large Accelerated Filer Accelerated Filer Non-Accelerated Filer (Do not check if a smaller reporting company) Smaller Reporting Company Emerging Growth Company If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided to Section 7(a)(2)(B) of the Securities Act. Table of Contents
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+PROSPECTUS SUMMARY This summary highlights selected information contained elsewhere in this prospectus. To understand this offering fully, you should read the entire prospectus carefully, including the "Risk Factors" section, the financial statements and the notes to the financial statements. Unless the context otherwise requires, references contained in this prospectus to the "Company," "we," "us," or "our" refers to Sunburst Acquisitions V, Inc., a Colorado corporation, and its subsidiaries. Overview Sunburst Acquisitions V, Inc., a Colorado corporation (the "Company") was incorporated under the laws of the State of Colorado on April 30, 1998. On August 11, 2005, Onping Limited, a British Virgin Islands Corporation, wholly owned by Mr. Terence Ho, purchased an aggregate of 2,464,000 shares or approximately 90% of the issued and outstanding common stock of the Company from five of the Company s then shareholders, pursuant to a Purchase Agreement with the five then Company shareholders, dated June 21, 2005 (the "Onping Purchase Agreement"). Upon the closing of the transactions underlying the Onping Purchase Agreement and pursuant thereto, Mr. Terence Ho became the CEO and a director of the Company. On October 26, 2016, the Company entered into a Stock Purchase Agreement (the "Sea Treasure Agreement") with Sea Treasure Holdings Limited ("Sea Treasure"), a related party controlled by Mr. Ho, pursuant to which the Company issued an aggregate of 25,000,000 shares of common stock (the "Sea Treasure Purchase"), or approximately 91% of the Company s then issued and outstanding common stock to Sea Treasure, at an aggregate purchase price of approximately $250,000. Sea Treasure used its cash on hand to purchase the "Stock". Following the closing of the Sea Treasure Purchase, Mr. Ho held approximately 99% of the Company s issued and outstanding common stock. On December 8, 2016, the Company filed Articles of Amendment to its Amended Articles of Incorporation (the "Certificate of Amendment") with the Secretary of State of the State of Colorado effecting an increase in the number of authorized shares of stock of the Company, to 720,000,000, of which 700,000,000 are designated common stock and 20,000,000 are designated preferred stock. On November 13, 2017, a Share Exchange Agreement (the "Success Green Agreement") was entered into by and among the Company, Success Green (Group) Limited, a British Virgin Islands business company ("Success Green BVI") and Mr. Ho, being the beneficial owner of 27,464,000 shares of the Company s common stock and also the sole shareholder of all of the issued share capital of Success Green BVI (the "SG Stock"). The Company was a blank check company until the Company completed a business combination under common control on November 13, 2017. CALCULATION OF REGISTRATION FEE Title of each Class of Security being registered Amount to be Registered Proposed maximum offering price per share Proposed Maximum Aggregate Offering Price(1)(2) Amount of Registration Fee(4) Common stock, no par value (3) 10,000,000 $ 0.02 $ 200,000 $ 24.90 (1) Estimated solely for purposes of calculating the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended (the "Securities Act"). (2) Estimated solely for the purpose of computing the registration fee pursuant to Rule 457(o) of the Securities Act. (3) In accordance with Rule 416(a), the Registrant is also registering an indeterminate number of additional common stock that shall be issuable pursuant to Rule 416 to prevent dilution resulting from share splits, share dividends or similar transactions. (4) Previously paid. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine. Table of Contents Pursuant to the Share Exchange Agreement, upon surrender by Mr. Ho and the cancellation by Success Green BVI of the certificates evidencing the SG Stock as registered to Mr. Ho, and pursuant to the registration of the Company in the register of members maintained by Success Green BVI as the new holder of the SG Stock and the issuance of the certificates evidencing the aforementioned registration of the SG Stock in the name of the Company, the Company issued 72,265,000 shares (the "Acquisition Stock") of the Company s common stock to Mr. Ho. The Acquisition Stock collectively represents 72.27% of the issued and outstanding common stock of the Company immediately after the Closing, in exchange for the SG Stock, representing 100% of the issued share capital of Success Green BVI in a reverse merger, or the "RTO". Following the RTO, Mr. Ho continues to be the majority beneficial owner of the Company s common stock, holding 99.73% equity interest in the Company, and Success Green BVI and its subsidiary became wholly owned subsidiaries of the Company. As such, the Company is the 100% owner of ZhaoQing NengCheng Import and Export Co., Ltd. ("Nengcheng"), an operating company incorporated on July 3, 2012 under the laws of the PRC, through Success Green BVI. Accounting Treatment of the RTO For financial reporting purposes, the Share Exchange represents a business combination under common control where the sole shareholder of Success Green BVI is the beneficial shareholder of Sunburst Acquisitions V, Inc. Consequently, the assets and liabilities and the operations of Success Green BVI and its subsidiaries have been presented at their carrying values at the date of the transaction, the stockholders equity of the Company has been retrospectively restated to reflect the acquisition as recapitalization of the Company. The consolidated financial statements after completion of the Share Exchange will include the assets and liabilities of the Company and Success Green BVI, and the historical operations of Success Green BVI and operations of the combined entities (Sunburst Acquisition V and its wholly owned subsidiary Success Green BVI) from the closing date of the Share Exchange. Through Nengcheng, we are a one-stop import service provider for third-party manufacturers who have needs for the import of various types of raw materials and half-finished goods. In the fiscal years of 2015 and 2016, our primary revenues were generated from importing various types of cowhides such as wet blue cowhide, rawhide, salt wet cowhide, which accounted for, in the aggregate, approximately 88.97% and 87.91% of our total revenues, respectively, and less significantly, scrap plastic which accounted for approximately 5.36% and 1.04% of our total revenues, respectively. For a service fee, we negotiate and enter into import supply orders with overseas suppliers on behalf of our customers, remit the funds to the suppliers in foreign exchange, receive and inspect the imported raw material and goods once overseas suppliers ship them to seaports, clear customs on behalf of the customers and coordinate transportation of the raw material and goods from sea ports to our manufacturer customers. By utilizing our one-stop import services, our customers are able to access quality raw material and goods in the international market, without increasing administrative cost and expenses for obtaining and maintaining import and customs related licenses and permits. Beginning in the end of 2017, soley in response to client demand, we delivered trading services to clients who requested us to purchase Daugres Ceramiche ceramics products on their behalf and then resell them to our clients. We purchased the ceramics products from Daugres Ceramiche (Tianjin) and Daugres Ceramiche (PRC), with whom Nengcheng has business relationships and were able to purchase Daugres Ceramiche ceramics products at a discount from market prices. In the three months ended March 31, 2018 and 2017, we generated revenues from trading services that accounted for, in the aggregate, approximately 92.37% and nil% of our total revenues, respectively. We provided trading services solely due to the request of our clients and do not expect to provide any trading services after the three months ending June 30, 2018. Our primary business focus continues to be one-stop import services. Competitive Advantage We believe that the following competitive strengths enhance our position in the PRC market: Our one-stop import service is more efficient than our competitors. Our management team and employees have extensive experiences in providing one-stop import services and have created our own business process that maximizes our efficiency to allow us to serve our customers. With our service, our customers are able to clear customs 2-3 days faster, on average compared to our competitors. Our service is more cost-effective than our competitors. We charge a lower rate for our services than our similar competitors, as our experiences of over 20 years in coordinating international supply processes and customs clearing allow us to develop cost-effective and efficient business processes. Word of mouth reputation. We have generated a significant amount of our business through word-of-mouth referrals from past and current customers. We expect to continue to generate substantial future revenues through word of mouth referrals. Growth Plan While we have established a close and stable working relationship with many of our customers, we have been growing the range of our services from various types of cowhides, to include scrap plastics in 2015 and rubber wood timber in 2017. However, due to the PRC government s recent restriction on the import of scrap plastics in 2016, we have transitioned away from customers needing scrap plastics, and while reinforcing our business with existing customers in various types of cowhide leathers, we have endeavored to build our customer base for those needing processed and recycled plastics, which we believe will see a steady rise in demand in the near future. Beginning in the fourth quarter of 2017, we have established working relationship with a few well-established plastics producers including Guangdong Xiongsu Technology Group Co., Ltd., Midea Group Co. Ltd., and China Lesso Group Holdings Ltd. where we are expected to provide import services to them on an as-needed basis beginning in 2018. EXPLANATORY NOTE We are filing this Amendment No. 2 to our registration statement on Form S-1, initially filed on March 16, 2018 and Pre-Effective Amendment No. 1 filed on May 11, 2018 (File No. 333-223749) (the "Registration Statement") to comments we received from the U.S. Securities and Exchange Commission, including a comment that we file this amendment to provide financial statements for the three months ended March 31, 2018, filed as part of the quarterly report for the same period on Form 10-Q on May 21, 2018 and the corresponding updated disclosures throughout the Amendment No. 2. No additional securities are being registered under this Amendment No.2. All applicable registration fees were paid at the time of the original filing of the Registration Statement. Table of Contents Our long-term objective is to establish our company as the regional leader in providing one-stop import services in the processed and recycled plastics industry while continuing to steadily expand our supplier and customer base for the goods offering we currently provide, such as various types of cowhides and rubber wood timber, and make acquisitions or equity investments in additional businesses that complement our existing business. While we are open to acquisition and equity investment opportunities that we may encounter, we do not currently have any specific acquisitions or equity investment plans in place, nor are we currently actively searching for such opportunities. As of the date of this prospectus, we expect to achieve this objective through the following strategies, although general market conditions and our financial results may require us to delay these strategies or establish alternative strategies: Between the years of 2018 and 2020, we plan to grow our processed plastics customer base in Guangdong province and expand our customer base in Fujian province; add to our sales personnel; and establish working relationships with additional overseas suppliers. Between the years of 2021 and 2023, we plan to expand our customer base to other provinces with significant demand for processed plastics such as Zhejiang, Hebei and Shandong; hire additional sales personnel; and establish working relationship with more overseas suppliers; we hope that by the end of fiscal 2023, we have relationships with at least 30 more overseas suppliers than we do as of the date of this prospectus. Risks Factors Summary Our business is subject to numerous significant risks, as more fully described in the section entitled "Risk Factors" immediately following this prospectus summary.
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+PROSPECTUS SUMMARY 1
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+All withdrawals from your Account are withdrawals of your own money. They are not payments by the Company. This applies even during the Income Phase of the Contract, during which a certain amount of withdrawals may be taken without negatively affecting your Contract. Excess Withdrawals reduce your potential guaranteed income payments and reduce the amount of withdrawals that you may take during the Income Phase without negatively affecting your Contract. These reductions may be substantial. Excess Withdrawals may also result in the termination of your Contract. Except for Contract Fee Withdrawals, all withdrawals taken during the Accumulation Phase will be treated as Excess Withdrawals, including any required minimum distributions for a Qualified Account. Your Contract will be terminated if, during the Accumulation Phase or the Income Phase, your Covered Asset Value declines below $2,500 as a result of an Excess Withdrawal. Failure to adhere to the Investment Restrictions will result in the Contract being terminated and no payments of any kind will be made under the Contract. The Company seeks to mitigate its risks associated with making guaranteed income payments when selecting Covered Models and setting Contract fees. Asset allocation models with higher investment risks (and perhaps higher potential returns) may not be designated as Covered Models or may be subject to higher Contract fees. The Company reserves the right to permit future deposits into your Account only during your first year of owning the Contract. The Company also reserves the right to limit your aggregate future deposits to 150% of the amount in your Account on the first day that your Contract is in effect. The Company will provide thirty (30) days written notice prior to exercising either of these rights. If the Company exercises these rights, you may not be able to increase your potential guaranteed income payments or the amount of withdrawals that may be taken during the Income Phase without negatively affecting your Contract. The Company will terminate your Contract if you make an impermissible deposit and then fail to take the affirmative actions necessary to maintain the Contract. You must engage a Financial Intermediary that is compatible with the Contract at all times while your Contract is in the Accumulation Phase or the Income Phase. In addition, the assets in your Account must be held by a certain custodian depending on your Financial Intermediary. There are circumstances under which an existing Contract Owner may be required to engage a new Financial Intermediary or move his or her Account to a new custodian in order to maintain the Contract. Failing to satisfy these requirements may result in the termination of the Contract. Failing to satisfy these requirements may result in the termination of the Contract. The Contract is a complex insurance product. A potential investor should speak with a financial professional about the Contract s features, benefits, risks, and fees, and whether the Contract is an appropriate investment based on his or her financial situation and objectives. The Company s payment obligations under the Contract are subject to the Company s financial strength and claims-paying ability. You may terminate the Contract at any time by providing written notice to the Company; however, the Company will not return your previously-paid Contract fees unless you cancel the Contract during the Free Look Period. This prospectus describes all material rights and obligations of Contract Owners under the Contract. Other important risks that you will assume by purchasing and owning the Contract are discussed under Risk Factors beginning on page [ ]. The Contract has no cash value, surrender value, or death benefit. Interests in the Contract may not be transferred, sold, assigned, pledged, charged, securitized, encumbered, or alienated in any way. Prospective purchasers may obtain an application to purchase the Contract through broker-dealers that have been appointed by us as insurance agents and that have selling agreements with Global Atlantic Distributors LLC ( GAD ), the principal underwriter for the Contracts. GAD may sell the Contracts through affiliated and unaffiliated broker-dealers. GAD will use its best efforts to sell the Contracts, but is not required to sell any number or dollar amount of Contracts. We may stop offering the Contracts at any time. SUMMARY This section provides a basic overview of the Contract. You should fully read and understand the entire prospectus, including the section Risk Factors, as well as the Contract itself, before deciding to purchase the Contract or to retain the Contract beyond the Free Look Period described below. Preliminary Note Regarding Terms Used in this Prospectus Specialized terms used in this prospectus have specific and important meanings. Often, the meanings of specialized terms are explained the first time that they are used herein. You may also find the definitions for all specialized terms in the section titled Definitions. As you read this prospectus, please be aware: We, us, our, Commonwealth Annuity, and the Company all refer to Commonwealth Annuity and Life Insurance Company. The Contract is the [ ] , an individual contingent deferred annuity contract issued by Commonwealth Annuity and described in this prospectus. Contract Owner refers to the owner of the Contract. You and your refer to the Contract Owner or a potential purchaser of the Contract, as the context requires. Financial Intermediary refers to the registered investment advisor that you have engaged to provide advice on the management of your Account. Custodian refers to the entity that holds and safeguards the assets in your Account. Your Custodian also provides various services related to your Account (e.g., administration, transaction settlement, distribution and interest collection). Covered Model refers to any asset allocation model that you may select for investment under the Contract. Model Provider refers to the service provider to your Financial Intermediary that provides the asset management platform necessary for you to select, and invest in accordance with, a Covered Model. Your Model Provider may also provide asset management services on behalf of your Account such as automatic asset rebalancing and realignment. Model Strategist refers to the registered investment adviser responsible for the design of a particular Covered Model. Who may become a Contract Owner? You may apply for the Contract if you have an Account and have engaged a Financial Intermediary through whom the Contract is currently made available. Please note: The Contract is not made available through all Financial Intermediaries. In order to purchase the Contract, the Custodian for your Account must be the approved Custodian for your Financial Intermediary. In addition to the custodial services performed for your Account, your Custodian will remit Contract Fees to us when they are due and will provide us with the information and data necessary for us to monitor the composition and activity of your Account at all times. In order to comply with the Investment Restrictions, your Account must be invested in accordance with the Covered Model that you select for investment. The Covered Models that you may select for investment are made available through the approved Model Provider(s) for your Financial Intermediary. Your Model Provider will inform us about the Covered Model that you have selected for investment. For the approved Custodian and approved Model Provider(s) for your Financial Intermediary, you should refer to the Financial Intermediary Prospectus Supplement in effect for your Financial Intermediary. See What are the Financial Intermediary Prospectus Supplements? below or Financial Intermediary Prospectus Supplements later in this prospectus for additional information. Corporation or other enterprise. No matter disposed of by settlement, compromise, the entry of a consent decree or the entry of any plea in a criminal proceeding, shall of itself be deemed an adjudication of not having acted in good faith in the reasonable belief that the action was in the best interest of the Corporation. The rights provided to any person by this by-law shall be enforceable against the Corporation by such person who shall be presumed to have relied upon it in serving or continuing to serve as director, officer or employee as provided above. No amendment of this by-law shall impair the rights of any person arising at any time with respect to events occurring prior to such amendment. Item 15. Recent Sales of Unregistered Securities Not applicable Item 16. Exhibits and Financial Statement Schedules (a) Exhibits 1.1 Form of Underwriting Agreement* 1.2 Form of Amendment to Broker-Dealer Selling Agreement* 3.1 Restated Articles of Organization of Allmerica Financial Life Insurance and Annuity Company (incorporated by reference to Exhibit 6 of the initial registration statement on Form N-4 filed by Commonwealth Annuity Separate Account A on March 2, 2007 (File Nos. 333-141019; 811-22024)) 3.2 Amended and Restated Bylaws of Commonwealth Annuity and Life Insurance Company (incorporated by reference to Exhibit 3.2 of the initial registration statement on Form S-1 filed by Commonwealth Annuity and Life Insurance Company on January 26, 2018 (File No. 333-222722)) 4.1 Form of contingent deferred annuity contract* 4.2 Form of contingent deferred annuity application* 5 Legal opinion of Sarah M. Patterson, Senior Vice President, Associate General Counsel and Assistant Secretary for Commonwealth Annuity and Life Insurance Company* 10 * 21 Subsidiaries of Commonwealth Annuity and Life Insurance Company* 23.1 Consent of Eversheds Sutherland (US) LLP* 23.2 Consent of [ ], the independent registered public accounting firm for Commonwealth Annuity and Life Insurance Company* 24.1 Powers of Attorney for John J. Fowler (incorporated by reference to Exhibit 24.1 of the initial registration statement on Form S-1 filed by Commonwealth Annuity and Life Insurance Company on January 26, 2018 (File No. 333-222722)) 24.2 Powers of Attorney for Robert Arena (incorporated by reference to Exhibit 24.2 of the initial registration statement on Form S-1 filed by Commonwealth Annuity and Life Insurance Company on January 26, 2018 (File No. 333-222722)) 24.3 Powers of Attorney for David Jacoby (incorporated by reference to Exhibit 24.3 of the initial registration statement on Form S-1 filed by Commonwealth Annuity and Life Insurance Company on January 26, 2018 (File No. 333-222722)) 24.4 Powers of Attorney for Nicholas H. von Moltke (incorporated by reference to Exhibit 24.4 of the initial registration statement on Form S-1 filed by Commonwealth Annuity and Life Insurance Company on January 26, 2018 (File No. 333-222722)) 24.5 Powers of Attorney for Hanben Kim Lee (incorporated by reference to Exhibit 24.5 of the initial registration statement on Form S-1 filed by Commonwealth Annuity and Life Insurance Company on January 26, 2018 (File No. 333-222722)) 24.6 Powers of Attorney for Gilles M. Dellaert (incorporated by reference to Exhibit 24.6 of the initial registration statement on Form S-1 filed by Commonwealth Annuity and Life Insurance Company on January 26, 2018 (File No. 333-222722)) 24.7 Powers of Attorney for Peter Cai (incorporated by reference to Exhibit 24.7 of the initial registration statement on Form S-1 filed by Commonwealth Annuity and Life Insurance Company on January 26, 2018 (File No. 333-222722)) This prospectus provides important information that a prospective purchaser of the Contract should know before investing. Please retain this prospectus and all future supplements hereto for future reference. The Contract is novel and innovative. While the Internal Revenue Service (the IRS ) may be considering tax issues associated with products similar to the Contract, the tax consequences of the Contract have not been addressed in published legal authorities to date. You should therefore consult a tax advisor before purchasing the Contract. The Contract is: NOT a bank deposit NOT FDIC insured NOT insured or endorsed by a bank of any government agency NOT available in every state Neither the Securities and Exchange Commission (the SEC ) nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. You will not be able to purchase the Contract unless you authorize your Account to be automatically rebalanced and realigned from time to time by your Financial Intermediary or your Model Provider, as described in this prospectus. If your Model Provider provides such services, we will require that your Model Provider be authorized to perform those transactions on behalf of your Account. It is possible for an existing Contract Owner to change his or her Financial Intermediary and continue to maintain the Contract. However, you must engage a Financial Intermediary that is compatible with the Contract for so long as your Contract is in the Accumulation Phase or the Income Phase. The Contract is compatible with the Financial Intermediaries listed in Appendix C, which we may update from time to time. In addition, your Account must always be with the approved Custodian for your Financial Intermediary. There are circumstances under which an existing Contract Owner may be required to engage a new Financial Intermediary and/or move his or her Account to a new Custodian in order to maintain the Contract. See Financial Intermediary, Custodian, Model Provider, Model Strategist under Purchasing the Contract. In addition, to purchase a Contract, the following eligibility requirements must be satisfied: The Contract Owner must be an individual or an eligible trust. The Account related to the Contract must be a Qualified (IRA or Roth IRA) or Non-Qualified Account. At the time of purchase, the Covered Life must be at least 50 and no older than 85 years of age. The Contract Owner must have at least $25,000 in the Account at the time of purchase, but no more than $1,000,000 without our prior approval. A Contract may be issued only in connection with a single Account. A person with multiple Accounts may purchase multiple Contracts. However, if you purchase multiple Contracts, certain limitations will apply in the aggregate across all of your Contracts as described herein. Prospective purchasers may obtain an application to purchase the Contract through broker-dealers that have entered into selling agreements with GAD, the principal underwriter for the Contracts. For additional information about who may become a Contract Owner, see Purchasing the Contract and Contract Eligibility and Ownership. How may the Contract be owned? The Contract may be owned in the following ways: (1) By an individual, who must also be the Covered Life under the Contract as of the Contract Date (i.e., the date the Contract is issued); (2) By an individual and his or her Spouse, one of whom being the Covered Life under the Contract as of the Contract Date; (3) By an eligible trust, which must designate an eligible individual as the Covered Life under the Contract as of the Contract Date; or (4) By a Qualified Account holding assets on behalf of a Covered Life. Note related to the Annuitization Option. On the Contract Date, the Annuitant for purposes of the Annuitization Option will be named. The Annuitant is the person on whose life annuity payments under the single premium immediate annuity that is issued if the Contract Owner elects to exercise the Annuitization Option will be based. For (1) above, the Annuitant will be the Contract Owner. For (2) above, the Annuitant will be the primary Contract Owner (as indicated on the application for the Contract). For (3) and (4) above, the Annuitant will be the Covered Life. * To be filed by post-effective amendment. (b) Financial Statement Schedules Financial statements to be added by pre-effective amendment Item 17. Undertakings (a) The undersigned registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made of the securities registered hereby, a post-effective amendment to this registration statement: (i) To include any prospectus required by section 10(a)(3) of the Securities Act of 1933; (ii) To reflect in the prospectus any facts or events arising after the effective date of this registration statement (or the most recent post-effective amendment hereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in this registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from low or high end estimated offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b), if, in the aggregate, the changes in volume and price represent no more than 20 percent change in maximum aggregate offering price set forth in the Calculation of Registration Fee table in the effective registration statement; and (iii) To include any material information with respect to the plan of distribution not previously disclosed in this registration statement or any material change to such information in this registration statement. (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (4) That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser: (i) If the registrant is subject to Rule 430C ( 230.430C of this chapter), each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A ( 230.430A of this chapter), shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus The Annuitant cannot be changed. However, under certain circumstances the Annuitant s Spouse may or will be added as a Joint Annuitant when (and if) the Annuitization Option is exercised. See What is the Annuitization Option? below or The Annuitization Option later in this prospectus. All Contracts are issued as single-life Contracts, which means that each Contract has only one Covered Life on the Contract Date. At certain points in time, a Contract Owner may elect joint-life coverage for the Covered Life and the Covered Life s Spouse, subject to certain restrictions, in which case the Contract would have two Covered Lives. The Covered Life (or Covered Lives) generally cannot be changed. See Contract Eligibility and Ownership for additional information. What protections does the Contract provide? The Contract is designed to provide three basic protections to Contract Owners. The Contract s guarantee, if triggered, will provide a level of protection from: Longevity risk, which is the risk that you will outlive the assets in your Account; and Income volatility risk, which is the risk of downward fluctuations in your retirement income due to sub-par or poor market performance. The Contract does not guarantee that the assets in your Account will grow or not decline in value. Instead, the Contract guarantees that you (assuming that you are the Covered Life) will receive a guaranteed level of annual income for life regardless of how long you live or the market performance of the assets in your Account, but only if certain conditions under the Contract are met. It is important for you to understand that while the preservation of capital may be one of your financial goals, the achievement of that goal is not guaranteed by the Contract. See What is the Contract s guarantee? below and The Contract later in this prospectus for additional information. What is the Contract s guarantee? If and when the Insured Event occurs, you will be entitled to payments from us for the rest your life (assuming that you are the Covered Life). These payments are referred to as Guaranteed Benefit Payments. Guaranteed Benefit Payments are paid from our general account, not your Account. The Insured Event occurs when your Covered Asset Value (i.e., the aggregate dollar value of your Covered Assets on the Contract Date or at the end of any Valuation Date) is reduced below $2,500 for a reason other than an Excess Withdrawal and several other requirements under the Contract are met. See The Benefit Phase The Insured Event for a full list of the requirements related to the occurrence of the Insured Event. Once the Insured Event occurs, if ever, the amount of the Guaranteed Benefit Payments that you receive will not increase or decrease. Prior to the Insured Event, the amount of your potential future Guaranteed Benefit Payments may increase or decrease under particular circumstances. Excess Withdrawals, which are discussed below, will reduce (perhaps significantly) your future Guaranteed Benefit Payments and may cause your Contract to be terminated entirely. See The Benefit Phase for additional information. How does the Contract work? The Contract has three phases: (1) the Accumulation Phase, (2) the Income Phase, and (3) the Benefit Phase. Each phase has distinct characteristics. There are circumstances under which your Contract may enter the Benefit Phase directly from the Accumulation Phase, thereby skipping the Income Phase. Guaranteed Benefit Payments are paid, if at all, during the Benefit Phase. that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration or made in any such document immediately prior to such date of first use. (5) That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities: The undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be seller to the purchaser and will be considered to offer or sell such securities to such purchaser: (i) Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424; (ii) Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant; (iii) The portion of any other free writing prospectus relating to the offering containing materials or information about the undersigned registrant or their securities provided by or on behalf of the undersigned registrant; and (iv) Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser. (6) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. Accumulation Phase The Accumulation Phase is the Contract phase during which you may increase the potential future benefits of your Contract through both Subsequent Contributions and Automatic Resets. Your potential future benefits increase when you increase your Coverage Base. Relationship between the Coverage Base and your Contract benefits. Your Coverage Base is one component of how we calculate your Coverage Amount the annual dollar value of your potential future Guaranteed Benefit Payments (as well as the annual amount of Covered Amount Withdrawals that you may take during the Income Phase). We calculate your Coverage Amount at the end of the Accumulation Phase. The Accumulation Phase begins on the Contract Date (i.e., the date you purchase your Contract). On the Contract Date, your Coverage Base will equal your Covered Asset Value. You may make Subsequent Contributions (i.e., additional deposits into your Account) during the Accumulation Phase (as well as the Income Phase), subject to our reserved rights. Each time you make a Subsequent Contribution to your Account, your Coverage Base is immediately increased dollar-for-dollar by the increase to your Covered Asset Value, subject to the Coverage Base Cap. The Coverage Base Cap is $5,000,000. Reserved rights related to Subsequent Contributions. We reserve the right to limit Subsequent Contributions to your first Contract Year. We also reserve the right to limit your aggregate Subsequent Contributions to 150% of your Initial Contribution. We may exercise these rights in our sole discretion and at any time upon thirty (30) days prior written notice. Our approval is required prior to making aggregate Contributions equal to or in excess of $1,000,000. If we limit your ability to make Subsequent Contributions, your ability to increase your Coverage Base through Subsequent Contributions during the Accumulation Phase will be limited. If you are prevented from making Subsequent Contributions, your Coverage Base may increase during the Accumulation Phase only through Automatic Resets. We will terminate your Contract if you make an impermissible Subsequent Contribution and then fail to take the affirmative actions necessary to maintain your Contract. On each Contract Anniversary during the Accumulation Phase until (but not including) your twenty-first (21st) Contract Anniversary, your Coverage Base may increase as a result of an Automatic Reset. If your Covered Asset Value exceeds your Coverage Base on that date, we will increase your Coverage Base so that it equals your Covered Asset Value, subject to the Coverage Base Cap. If your Covered Asset Value does not exceed your Coverage Base, your Coverage Base will not change. Any withdrawal during the Accumulation Phase is an Excess Withdrawal, with the exception of any Contract Fee Withdrawal. Excess Withdrawals proportionally reduce your Coverage Base immediately and have the effect of reducing your future Coverage Amount (perhaps significantly). Any such reduction may be substantially more than the actual dollar amount of the Excess Withdrawal. Excess Withdrawals also have the effect of reducing the amount of withdrawals that you may take during the Income Phase without negatively affecting your Contract. If you have less than $2,500 in Covered Asset Value immediately after an Excess Withdrawal, your Contract will be terminated and the Company will not make payments of any kind under the Contract. If your Covered Asset Value is reduced below $2,500 during the Accumulation Phase for any reason other than an Excess Withdrawal and the other requirements under the Contract are met, your Contract will skip the Income Phase and will directly enter the Benefit Phase. If your Contract enters the Benefit Phase directly from the Accumulation Phase, you will have an opportunity to elect joint-life coverage under the Contract. Your Coverage Amount (i.e., the annual amount of Guaranteed Benefit Payments to be paid by us) will equal your Coverage Base multiplied by the applicable Coverage Percentage. Your Coverage Percentage will be determined in the same manner as a Contract that enters the Income Phase (rather than the Benefit Phase) from the Accumulation Phase. If the Covered Life (or the youngest Covered Life, if joint-life coverage is elected) has not attained the age of 60 as of the date that the Insured Event occurred, the applicable Coverage Percentage will be the lowest possible Coverage Percentage under your Contract (regardless of how close the applicable Covered Life is to obtaining the age of 60). The Coverage Percentage for a Covered Life younger than age 60 is SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Brighton, Commonwealth of Massachusetts, on the 2nd day of July, 2018. COMMONWEALTH ANNUITY AND LIFE INSURANCE COMPANY By: /s/ Sarah M. Patterson Name: Sarah M. Patterson Title: Senior Vice President, Associate General Counsel, and Assistant Secretary Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated. Signatures Title Date * Senior Vice President and Chief Financial Officer July 2, 2018 John J. Fowler * Director, Executive Vice President and Chairman of the Board July 2, 2018 Robert Arena * Senior Vice President and Chief Accounting Officer July 2, 2018 David Jacoby * Director, President and Chief Executive Officer July 2, 2018 Nicholas H. von Moltke * Director and Executive Vice President July 2, 2018 Hanben Kim Lee * Director and Chief Investment Officer July 2, 2018 Gilles M. Dellaert * Director and Chief Risk Officer July 2, 2018 Peter Cai * Director July 2, 2018 Eric Todd * Director July 2, 2018 David Wilken *Sarah M. Patterson, by signing her name hereto, does hereby sign this document on behalf of each of the above-named Directors and Officers of the Registrant pursuant to the Powers of Attorney duly executed by such persons and filed with the initial registration statement on Form S-1 filed by Commonwealth Annuity and Life Insurance Company on January 26, 2018 (File No. 333-222722). /s/ Sarah M. Patterson Sarah M. Patterson, Attorney-in-Fact substantially lower than the Coverage Percentage for a Covered Life that has attained the age of 60. The application of the lowest Coverage Percentage will result in lowest possible Guaranteed Benefit Payments based on your Coverage Base. See The Benefit Phase Occurrence of the Insured Event During the Accumulation Phase for additional information. The Accumulation Phase ends on the Income Activation Date or the occurrence of the Insured Event, whichever occurs first. See The Accumulation Phase for additional information. Income Phase The Income Phase is the Contract phase during which you may begin taking Covered Amount Withdrawals from your Covered Assets. Each Contract Year, you may take Covered Amount Withdrawals up to your Coverage Amount. Covered Amount Withdrawals do not reduce the potential future benefits of your Contract. The Income Phase begins on the Income Activation Date. You may select the Income Activation Date at any time during the Accumulation Phase, except that it must be a Valuation Date and may not occur until the Covered Life (or the youngest of the Covered Lives, if you will elect joint-life coverage) attains the age of 60. On the Income Activation Date, we will calculate your Coverage Amount for the first time (unless your Contract entered the Benefit Phase directly from the Accumulation Phase, thereby skipping the Income Phase). Your Coverage Amount will equal your Coverage Base multiplied by the applicable Coverage Percentage. We change the Coverage Percentages for prospective purchasers of the Contract from time-to-time as described in this prospectus. The Coverage Percentages that apply to your Contract will be the higher of the Coverage Percentages in effect (i) on the date your Contract application is signed or (ii) on the Contract Date. Your Coverage Percentages will be included in your Contract. Coverage Percentage Prospectus Supplements. We change the Coverage Percentages for prospective purchasers of the Contract through Coverage Percentage Prospectus Supplements. If you are a prospective purchaser of the Contract, the Coverage Percentage Prospectus Supplement in effect accompanies this prospectus. If you purchase the Contract, the Coverage Percentage Prospectus Supplement that applies to your Contract will be delivered to you either with this prospectus or no later than the Contract Date. Each Coverage Percentage Prospectus Supplement will be filed with the SEC and will be available on the SEC s website (http://www.sec.gov) under File No. 333-222722. You may also obtain copies of the Coverage Percentage Prospectus Supplements by contacting us at [ ], visiting www.[ ].com, or contacting your Financial Intermediary. Existing Contract Owners will not receive Coverage Percentage Prospectus Supplements because their Coverage Percentages will not change for the life of their Contracts. The Coverage Percentages for prospective purchasers are subject to guaranteed minimums described under The Income Phase Calculation of the Coverage Amount on the Income Activation Date and The Benefit Phase Calculation of the Coverage Amount for Contracts that Enter the Benefit Phase Directly from the Accumulation Phase. The Coverage Percentage applied to your Coverage Base depends on the age of the Covered Life (or the youngest of the Covered Lives, if you elect joint-life coverage) on the Income Activation Date. Once you begin the Income Phase, the Coverage Percentage applied to your Coverage Base will not change under any circumstances except as described under Contract Eligibility and Ownership Divorce. You may make Subsequent Contributions during the Income Phase (as well as the Accumulation Phase), subject to our reserved rights. Each time you make a Subsequent Contribution to your Account during the Income Phase, your Coverage Amount is immediately recalculated. Subsequent Contributions increase your Coverage Amount because, like during the Accumulation Phase, your Coverage Base is increased dollar-for-dollar by the increase to your Covered Asset Value, subject to the Coverage Base Cap. The Coverage Base Cap is $5,000,000. Reserved rights related to Subsequent Contributions. We reserve the right to limit Subsequent Contributions to your first Contract Year. We also reserve the right to limit your aggregate Subsequent Contributions to 150% of your Initial Contribution. We may exercise these rights in our sole discretion and at any time upon thirty (30) days prior written notice. Our approval is required prior to making aggregate Contributions equal to or in excess of $1,000,000. If we limit your ability to make Subsequent Contributions, your ability to increase your Coverage Amount through Subsequent Contributions during the Income Phase will be limited. If you are prevented from making Subsequent Contributions, you will not be able to increase your Coverage Amount during the Income Phase. There are no Automatic Resets during the Income Phase. We will terminate your Contract if you make an impermissible Subsequent Contribution and then fail to take the affirmative actions necessary to maintain the Contract. In general, any portion of a withdrawal that is in excess of your Coverage Amount is an Excess Withdrawal. Your Coverage Amount will be immediately recalculated when you take an Excess Withdrawal. Excess Withdrawals proportionally reduce your Coverage Base and, in turn, reduce your Coverage Amount (perhaps significantly). Any such reduction may be substantially more than the actual dollar amount of the Excess Withdrawal. Excess Withdrawals also have the effect of reducing the amount of withdrawals that you may take during the Income Phase without negatively affecting your Contract. If you have less than $2,500 in Covered Asset Value immediately after an Excess Withdrawal, including any withdrawal that is partially an Excess Withdrawal, your Contract will be terminated and the Company will not make payments of any kind under the Contract. The Income Phase ends when Insured Event occurs, if ever. See The Income Phase for additional information. Benefit Phase The Benefit Phase begins if and when the Insured Event occurs. The Benefit Phase must begin before the Covered Life s (or the youngest Covered Life s, if you elected joint-life Coverage) 95th birthday or the Contract will be terminated and the Company will not make payments of any kind under the Contract. See Annuitization Option and Contract Termination Termination of the Contract for additional information about the Contract when the Benefit Phase does not begin by the applicable Covered Life s 95th birthday. During the Benefit Phase, the Covered Life will be entitled to receive payments from us in the form of Guaranteed Benefit Payments for the rest of his or her life. If you elected joint-life coverage on the Income Activation Date (or upon entering the Benefit Phase directly from the Accumulation Phase), you and your Spouse will receive the Guaranteed Benefit Payments from us until both you and your Spouse have died. The annual amount of Guaranteed Benefit Payments that we will pay will equal your Coverage Amount on the date of the Insured Event. This annual amount will not increase or decrease during the Benefit Phase under any circumstances. For Contracts that enter the Benefit Phase from the Income Phase, we will pay any remaining Coverage Amount for the current Contract Year as Guaranteed Benefit Payments for that Contract Year. Thereafter, beginning on the Contract Anniversary following the Insured Event, we will pay the Coverage Amount each Contract Year until the Covered Life s death (or the death of both Covered Lives, if joint-life coverage was elected on the Income Activation Date). For Contracts that enter the Benefit Phase from the Accumulation Phase, we will pay a pro-rated amount of the Coverage Amount for the current Contract Year as Guaranteed Benefit Payments for that Contract Year. Thereafter, beginning on the Contract Anniversary following the Insured Event, we will pay the Coverage Amount each Contract Year until the Covered Life s death (or the death of both Covered Lives, if joint-life coverage was elected). The Contract Owner may elect for Guaranteed Benefit Payments to be made either monthly, quarterly, semi-annually, or annually. Guaranteed Benefit Payments during the Benefit Phase will begin on a date of the Contract Owner s choosing. However, they may begin no earlier than 60 days after the Insured Event occurs. If the Covered Life dies (or, if joint-life coverage was elected, the Covered Lives have both died) after the Insured Event occurs but prior to the beginning of Guaranteed Benefit Payments, no Guaranteed Benefit Payments will be made under the Contract. See The Benefit Phase for additional information. What are Excess Withdrawals? Because you own and control your Account, you may take withdrawals from your Account at any time and in any amount that you wish. A withdrawal includes any withdrawal or transfer of Covered Assets from the Account. However, withdrawals that are treated as Excess Withdrawals under the Contract reduce the potential future Guaranteed Benefit Payments that we will make to you during the Benefit Phase, as well as the amount of Covered Amount Withdrawals that you may take during the Income Phase. These reductions may be substantially more than the actual dollar amount of the Excess Withdrawals. The entire amount or only a portion of a withdrawal may be treated as an Excess Withdrawal under the Contract. In addition, Excess Withdrawals may cause your Contract to be terminated. If you have less than $2,500 in Covered Asset Value immediately after an Excess Withdrawal, your Contract will be terminated, regardless of whether the entire withdrawal or a portion of the withdrawal was an Excess Withdrawal. We will not warn you if you attempt to take or are taking an Excess Withdrawal. If you take an Excess Withdrawal, we will send you a post-withdrawal notification stating that you have taken an Excess Withdrawal and describing the impact on your Contract. You also may contact us prior to taking a withdrawal to determine whether a portion or all of the contemplated withdrawal will be an Excess Withdrawal or if it would trigger Contract termination. Excess Withdrawals During the Accumulation Phase All withdrawals are Excess Withdrawals, except Contract Fee Withdrawals. Contract Fee Withdrawals are never Excess Withdrawals under the Contract. For Qualified Accounts, withdrawals that count towards Required Minimum Distribution requirements under the Code ( RMD Withdrawals ), if any, will be treated as Excess Withdrawals during the Accumulation Phase. See The Accumulation Phase Coverage Base Decreases During the Accumulation Phase for additional information. Excess Withdrawals During the Income Phase During the Income Phase, you may take withdrawals during each Contract Year in the aggregate up to your Coverage Amount. Amounts withdrawn in excess of the Coverage Amount in a Contract Year will be treated as Excess Withdrawals. Contract Fee Withdrawals do not count as withdrawals against your Coverage Amount. Contract Fee Withdrawals are never Excess Withdrawals under the Contract. If you have a Qualified Account subject to Required Minimum Distribution requirements under the Code during the Income Phase, any RMD Withdrawal will count against your remaining Coverage Amount. An RMD Withdrawal (or any portion thereof) in excess of your remaining Coverage Amount will not be treated as an Excess Withdrawal, provided that you notify us prior to taking the withdrawal. You are not otherwise required to notify us prior to taking an RMD Withdrawal. If you fail to notify us prior to taking an RMD Withdrawal in excess of your Coverage Amount, it will be treated as an Excess Withdrawal. However, as of the date of the written notice that you will receive indicating that you have taken an Excess Withdrawal, you will have five (5) business days to notify us that the Excess Withdrawal (or a portion thereof) was an RMD Withdrawal. See The Income Phase Calculation of the Coverage Amount After the Income Activation Date for additional information. Excess Withdrawals During the Benefit Phase After the Insured Event occurs, if ever, the Contract s provisions do not apply to the operation of your Account. As such, you may deposit money into and withdraw money from your Account without affecting the stream of Guaranteed Benefit Payments under your Contract. What are the Investment Restrictions? Your Account and the assets in your Account belong to you. We do not control how the assets in your Account are deposited, withdrawn, or otherwise managed. However, in order to maintain your Contract, your Account must adhere to the Investment Restrictions. In addition, we must have access to the information and data necessary to monitor the composition and activity of your Account at all times. The Investment Restrictions Under the Investment Restrictions, your Account must be invested exclusively in shares of mutual funds or ETFs ( Covered Model Funds ) in accordance with the Covered Model that you select for investment. In general, your target weightings for the Covered Model Funds in which you invest must conform to the weightings in your Covered Model. Under our Model Customization Tolerance, we permit a certain amount of customization to your target weightings and the funds in which you invest. Your Account may also hold cash. The Investment Restrictions do not apply to your cash holdings. The list of Covered Models that are eligible for investment under the Investment Restrictions is subject to change. The Covered Models that are currently eligible for investment under the Investment Restrictions are included in the most recent Financial Intermediary Prospectus Supplements to this prospectus. You should review the Financial Intermediary Prospectus Supplement that applies to your Financial Intermediary. You may also visit www.[ ].com or contact your Financial Intermediary for the current list of Covered Models, as well as other information about the Investment Restrictions. We may change the Covered Models that are eligible for investment by publishing new Financial Intermediary Prospectus Supplements. New Financial Intermediary Prospectus Supplements are applicable to both prospective purchasers and existing owners of the Contract. We reserve the right to add and remove Covered Models at any time. We also reserve the right to designate only a single Covered Model as being eligible for investment under the Investment Restrictions. The Covered Models that are available for investment may vary among Financial Intermediaries and Model Providers. Only one Covered Model may be selected at a given time, although you may change the Covered Model that you select for investment at any time. We must be notified when you change the Covered Model that you select for investment. The number of Covered Models at any given time is limited, so your ability to choose among asset allocation models is restricted. If we exercise our right to designate only a single Covered Model, only one Covered Model will be available and you will have no ability to choose or change your Covered Model. If we change the list of Covered Models that are eligible for investment under the Investment Restrictions, you will be notified at least thirty (30) business days in advance. At any time during this period of advance notice, you may realign the assets in your Account based on the updated Investment Restrictions. Before you purchase the Contract, you should consult with your Financial Intermediary and tax advisor to assist you in determining whether the Investment Restrictions are suited for your financial needs and risk tolerances. Information about the Covered Model Funds (and any other mutual fund or ETF in which you invest, if you elect to customize the Covered Model that you select for investment), including their investment objectives, expenses, strategies, and risks, can be found in their respective prospectuses. You should read those separate prospectuses carefully before investing. Non-Compliance with the Investment Restrictions You bear the responsibility for complying with the Investment Restrictions. This means that you are responsible for assuring that the assets in your Account are invested in the appropriate funds and that the weightings of the assets in your Account are appropriate. Your Financial Intermediary may help you monitor your Account, but you are ultimately responsible for purposes of maintaining the Contract. If at any time and for any reason your Account does not comply with the Investment Restrictions, you will be sent a written notice of non-compliance. From the date of a written notice of non-compliance, you will have five (5) business days to comply with the Investment Restrictions. If you fail to do so, your Contract will be terminated and the Company will not make payments of any kind under the Contract. You will have an opportunity to reinstate your Contract if it is terminated due to non-compliance with the Investment Restrictions. Compliance with the Investment Restrictions is assessed on each Valuation Date. If you make a Subsequent Contribution or a withdrawal, you may need to rebalance or realign your Account in accordance with the Investment Restrictions. If your target weightings for your Covered Assets comply with the Investment Restrictions and your asset allocation deviates from those target weightings over time solely due to market performance, you will still be in compliance with the Investment Restrictions (assuming that your Covered Model is still an eligible investment option under the Contract). However, if you make a Subsequent Contribution or withdrawal during any such time, your Account will need to be rebalanced to your target weightings in order to comply with the Investment Restrictions. In addition, your Covered Assets will be automatically rebalanced to your target weightings by either your Financial Intermediary or the Model Provider of the Covered Model that you selected for investment periodically at the frequency determined by the Model Provider (e.g., weekly, monthly, quarterly). If we learn that you revoked the authority of your Financial Intermediary or the Model Provider to rebalance your Covered Assets at those times, you will be deemed to be out of compliance with the Investment Restrictions. You may voluntarily rebalance your Covered Assets at any time without any adverse effects under the Contract (provided that your target weightings do not violate the Investment Restrictions). The Covered Models may be reconstructed from time to time. If the Covered Model that you selected for investment is reconstructed, your Financial Intermediary or the Model Provider of the Covered Model that you selected for investment will automatically realign the assets in your Account and your target weightings to conform to the Covered Model (with no customization, unless you provide alternative instructions to your Financial Intermediary). If we learn that you revoked the authority of your Financial Intermediary or the Model Provider to realign the assets in your Account or your target weightings at those times, you will be deemed to be out of compliance with the Investment Restrictions. You may voluntarily realign the assets in your Account and your target weightings at any time without any adverse effects under the Contract (provided that your target weightings do not violate the Investment Restrictions). If we remove the Covered Model that you selected for investment from our list of Covered Models, you will need to select a new Covered Model for investment and realign your Account accordingly within the 30-day advance notice period provided whenever we remove a Covered Model as an eligible investment option. See Investment Restrictions for additional information. How much does the Contract cost? Contract Fees While your Contract remains in effect, you will pay Contract Fees during the Accumulation Phase and the Income Phase. Contract Fees during those Contract phases accrue on each Calendar Day and are due on the next Calendar Quarterversary. If the Calendar Quarterversary falls on a day that is not a Valuation Date, the Contract Fees will be due on the next Valuation Date. While the payment of Contract Fees is ultimately your responsibility, your Custodian will automatically remit accrued Contract Fees to us when due through Contract Fee Withdrawals. If we do not receive the Contract Fees on the due date for any reason, you will be sent at least two notices of deficiency within forty-five (45) days. If the required Contract Fees are not paid within ninety-five (95) days of the due date, we will terminate the Contract and we will not make payments of any kind under the Contract. Your Contract Fee accrued on a given Calendar Day is based on (i) your Covered Asset Value and (ii) the Current Fee Percentage applicable to your Contract. Your Covered Asset Value at the end of the Calendar Day is used to calculate your Contract Fee for that day. On any Calendar Day that is not a Valuation Date, your Covered Asset Value calculated on the last Valuation Date will be used to calculate your Contract Fee. The Current Fee Percentage applicable to your Contract for that day depends on the Covered Model that you select for investment. Each Covered Model belongs to a specific Fee Category, and each Fee Category has an annualized Current Fee Percentage. All Current Fee Percentages are subject to a 2.50% Maximum Fee Percentage. The Financial Intermediary Prospectus Supplement in effect for your Financial Intermediary contains the information necessary to determine your Current Fee Percentage. Each Financial Intermediary Prospectus Supplement will list: The Covered Models that you may select for investment; The Fee Category to which each Covered Model belongs; and The Current Fee Percentage associated with each Fee Category. While the Covered Models that may be selected for investment may vary among Financial Intermediaries, the Fee Category and Current Fee Percentage specific to a particular Covered Model will not differ among Financial Intermediaries. See What are the Financial Intermediary Prospectus Supplements? and Financial Intermediary Prospectus Supplements. The following calculation describes how we determine your Contract Fee on a given Calendar Day: (Current Fee Percentage) x (Covered Asset Value) Number of Calendar Days in a Contract Year State and/or local premium taxes may be applicable upon the payment of Contract Fees in certain states. We reserve the right to add any premium taxes in connection with your payment of Contract Fees to the amount of Contract Fees due. Premium tax applicability and rates vary by state and may change. If you change the Covered Model that you select for investment during a Calendar Quarter, your Contract Fees going forward from the Calendar Day on which the change occurred will be based on your new investment selection. Your Contract Fees due on the next Calendar Quarterversary (or the next Valuation Date on which your Contract Fees are due, if applicable) will reflect the Contract Fees accrued before and after each change of investment. Contract Fees cease upon the earlier of (a) the Insured Event or (b) the termination of the Contract. If your Contract is terminated prior to the Insured Event on any day other than a Calendar Quarterversary (or the next Valuation Date on which your accrued Contract Fees during that Calendar Quarter become due, if applicable), your Contract Fees that accrued during that Calendar Quarter will become due immediately. This includes if your Contract is terminated because you elected to exercise the Annuitization Option. It does not include if your Contract is terminated due to death, however. On each date that your accrued Contract Fees become due, a Contract Fee Withdrawal will be taken from your Account. You must authorize your Custodian to remit Contract Fees to us through Contract Fee Withdrawals in order to purchase and maintain the Contract. The necessary authorizations will be included in the application for the Contract. The Fee Categories, Current Fee Percentages, and the Maximum and Minimum Fee Percentage As summarized above, each Covered Model belongs to a specific Fee Category, and each Fee Category has an annualized Current Fee Percentage. For all Fee Categories, the annualized Current Fee Percentage will be never be lower than 0.50%. The annualized Maximum Fee Percentage for each Fee Category is 2.50%. Contract Owners should refer to the Financial Intermediary Prospectus Supplements in effect for their Financial Intermediaries for the Current Fee Percentages that apply to each Covered Model that they may select for investment. Upon thirty (30) days prior written notice, we reserve the right to make the following changes in our sole discretion and for any reason: Add and eliminate Fee Categories; Decrease Current Fee Percentages, subject to the 0.50% Current Fee Percentage minimum; Increase Current Fee Percentages, subject to the 2.50% Maximum Fee Percentage; and Change the Fee Categories to which the Covered Models belong. Any such changes will not take effect until the end of the advance notice period. See Contract Fees for additional information. What are the Financial Intermediary Prospectus Supplements? The Financial Intermediary Prospectus Supplements provide you with important information regarding the Investment Restrictions and your Contract Fees. The Financial Intermediary Prospectus Supplements are how we communicate: The Covered Models that you may select for investment; The Fee Categories to which the Covered Models belong; The Current Fee Percentage associated with each Fee Category; and The addition or elimination of a Fee Category. We publish Financial Intermediary Prospectus Supplements that are specific to your Financial Intermediary. We do so, in part, because not all Covered Models are available through every Financial Intermediary. The Fee Category to which a particular Covered Model belongs or the Current Fee Percentage associated with a particular Fee Category will not differ depending on your Financial Intermediary. The Financial Intermediary Prospectus Supplements for your Financial Intermediary also list the approved Custodian and approved Model Provider(s) for your Financial Intermediary. They also list the Model Strategist for each Covered Model that you may select for investment. When we publish a new Financial Intermediary Prospectus Supplement, the information set forth therein applies to and will be provided to both prospective purchasers and existing owners of the Contract. Each Financial Intermediary Prospectus Supplement will include, if applicable, a section for existing Contract Owners that summarizes all changes since the last Financial Intermediary Prospectus Supplement and any mandatory actions that must be taken in order to maintain the Contract. A prospective purchaser of the Contract who obtains this prospectus through a Financial Intermediary will receive along with this prospectus the Financial Intermediary Prospectus Supplement in effect for that Financial Intermediary, as well as any Financial Intermediary Prospectus Supplement for that Financial Intermediary that has been published and will go into effect at a later date (i.e., a Financial Intermediary Prospectus Supplement that provides advance notice of a change). All other prospective purchasers of the Contract will receive along with this prospectus all of the Financial Intermediary Prospectus Supplements then in effect and all of the Financial Intermediary Prospectus Supplements that have been published and will go into effect at a later date. Existing Contract Owners will receive all future Financial Intermediary Prospectus Supplements applicable to their Financial Intermediaries as we publish them. You should not purchase this Contract without reviewing the accompanying Financial Intermediary Prospectus Supplement(s) for your Financial Intermediary. Each Financial Intermediary Prospectus Supplement will be filed with the SEC and will be available on the SEC s website (http://www.sec.gov) under File No. 333-222722. You may also obtain copies of the Financial Intermediary Prospectus Supplements by contacting us at [ ] or visiting www.[ ].com. Who is the Contract right for? The Contract may be right for you if you believe that you may outlive your retirement investments or are concerned about longevity risk or income volatility risk. The Contract may not be suitable for you if: You believe that your retirement investments will be sufficient to provide for your retirement expenses regardless of market performance or your lifespan. You expect to take Excess Withdrawals, which essentially includes all withdrawals during the Accumulation Phase. You do not expect to take Covered Withdrawals up to your Coverage Amount each Contract Year during the Income Phase. The Investment Restrictions are not consistent with your financial situation or objectives. The Contract does not guarantee that the assets in your Account will maintain their value or appreciate. For example, if you have $500,000 in Covered Assets on the Contract Date, and your Covered Assets have dropped to $250,000 by the Income Activation Date, we will not add any money to your Account. Instead, assuming no additional facts and subject to the conditions of the Contract, you will be entitled to take Covered Amount Withdrawals during the Income Phase based upon a Coverage Base of $500,000 rather than $250,000. In addition, (again assuming no additional facts and subject to the conditions of the Contract) if the Benefit Phase begins, you will be entitled to take Guaranteed Benefit Payments for the rest of your life based upon the same Coverage Base. Covered Amount Withdrawals are made from the assets in your Account. Guaranteed Benefit Payments are paid by us from our general account. As such, we only pay you our money during the Benefit Phase. We limit our risk by requiring your Account to adhere to the Investment Restrictions and reducing your benefit (or, under certain circumstances, even terminating your Contract) when you take Excess Withdrawals. These factors may reduce the likelihood of your Contract entering the Benefit Phase. The Contract may not be right for you if you plan on taking Excess Withdrawals, which essentially includes all withdrawals during the Accumulation Phase. Excess Withdrawals will reduce the amount of your Covered Amount Withdrawals during the Income Phase and Guaranteed Benefit Payments during the Benefit Phase, if it occurs. An Excess Withdrawal will even result in the termination of the Contract if, immediately after the Excess Withdrawal, you have less than $2,500 in Covered Asset Value, in which case no benefits will be paid and your previously-paid Contract Fees will not be returned. You cannot reverse the harm done by Excess Withdrawals under the Contract. Understanding that your financial needs may require you to make Excess Withdrawals, you should carefully manage your Account to avoid them. If the return on your Covered Assets over time is sufficient to generate gains that can sustain Covered Amount Withdrawals until your death, then the Contract would not have provided any financial gain to you. Conversely, if the return on your Covered Assets over time is not sufficient to generate gains that can sustain Covered Amount Withdrawals until your death, then the Contract would be beneficial to you. If you do not expect to take Covered Withdrawals up to your Coverage Amount each Contract Year during the Income Phase, this Contract may not be appropriate for you, because doing so will reduce the likelihood of the Insured Event occurring. You should discuss your investment strategy and risk tolerance with your Financial Intermediary before purchasing the Contract. You should consider the payment of Contract Fees (which is in addition to the costs of investing your Covered Assets and maintaining and managing your Account) relative to the benefits and features of the Contract, your risk tolerance, and your anticipated retirement age. The Contract has no cash value, surrender value, or death benefit. The Contract is intended for long-term investors. What is the Annuitization Option? At any time during the Accumulation Phase or the Income Phase after your first Contract Year, you may exercise the Annuitization Option under the Contract. You may exercise the Annuitization Option for any reason. To exercise the Annuitization Option, you must notify us in writing. We will then require you to liquidate and withdraw all of your Covered Assets and pay the proceeds to us. In exchange, we will issue to you a single premium immediate annuity. Your Contract terminates once you exercise the Annuitization Option. A single premium immediate annuity is a lifetime annuity purchased for a lump sum. The payments under the annuity begin immediately after purchase and are based on the annuity option that you select. State and/or local premium taxes may be applicable upon the purchase of a single premium immediate annuity. We reserve the right to deduct any premium taxes in connection with your purchase from the lump sum paid to us. Premium tax applicability and rates vary by state and may change. If you exercise the Annuitization Option during the Accumulation Phase, you may choose between a single-life annuity (Option 1) and a joint-life annuity (Option 2). The amount of the annuity payments under Option 1 and Option 2 will be calculated on the date of issue based on the lump sum of money used to purchase the annuity, the purchase rates that we are then using for similar classes of annuitants, and the annuity option that you select. The class of annuitant to which an Annuitant (or Joint Annuitants) belongs depends on his or her age (or their ages) at the time the Annuitization Option is exercised. All else being equal, an older class of annuitant will have a higher purchase rate than a younger class of annuitant because an older annuitant s life expectancy is shorter. The applicable purchase rate will never be lower than the guaranteed purchase rate set forth in your Contract. If you exercise the Annuitization Option during the Income Phase, a third annuity option (Option 3) will be made available in addition to Option 1 and Option 2. Under Option 3, we will make annuity payments each year up to your Coverage Amount as of the date that the Annuitization Option is exercised. In the event that the Contract is terminated due to the actions of a third-party (as determined by us in our sole discretion), the Contract Owner will have 30 Calendar Days to exercise the Annuitization Option. We refer to this as the Cancellation Benefit. See Annuitization Option The Cancellation Benefit for additional Information. You should consult with your Financial Intermediary and tax advisor prior to exercising the Annuitization Option. If you exercise the Annuitization Option, we will not have made any payments under the Contract and your previously-paid Contract Fees will not be returned. See Annuitization Option for additional information. Is there a Free Look Period? After you purchase and receive the Contract, you are given a Free Look Period of 30 Calendar Days. If you provide written notice of cancellation to us within thirty (30) Calendar Days after receiving the Contract (or such longer period as your state may require), the Contract will be terminated and we will return any Contract Fees that you paid.
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+PROSPECTUS SUMMARY The following summary highlights selected information contained in greater detail elsewhere in this prospectus. This summary does not contain all the information you should consider before investing in our common stock. You should carefully read this prospectus in its entirety before investing in our common stock, including the sections entitled "Risk Factors" and "Management s Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements and related notes included elsewhere in this prospectus. Unless otherwise indicated, (i) the terms "Solbright," "Arkados," the "Company," "we," "us" and "our" refer to Solbright Group, Inc., formerly known as Arkados Group, Inc., a Delaware corporation, and our two wholly-owned subsidiaries Arkados, Inc., a Delaware corporation, and SolBright Energy Solutions, LLC, or SES, a Delaware limited liability company formerly known as Arkados Energy Solutions, LLC, and (ii) the term "common stock" refers to the common stock, par value $0.001 per share, of Solbright Group, Inc., a Delaware corporation. The financial information included herein is presented in United States dollars, the functional currency of our company. Business Overview Solbright Group, Inc., a Delaware corporation, was incorporated in 1998. Through our two wholly-owned subsidiaries, Arkados, Inc., a Delaware corporation, and SolBright Energy Solutions, LLC, or SES, a Delaware limited liability company formerly known as Arkados Energy Solutions, LLC, we deliver technology solutions and services for building and machine automation and energy conservation and provide energy conservation services such as LED lighting retrofits, HVAC system retrofits and solar engineering, procurement and construction services. Our focus is towards the development and commercialization of an Internet of Things software platform that supports Big Data applications that complement our energy management services that lower costs for commercial and industrial facilities owners and managers. Our principal offices are located in Newark, New Jersey at One Gateway Center, 26th Floor, Newark, NJ 07102. On May 1, 2017, we acquired substantially all of the assets and certain liabilities of SolBright Renewable Energy, LLC ("SolBright RE"), used in the operation of SolBright RE s solar engineering, procurement and construction business (the "SolBright Assets"). Following our acquisition of substantially all of the assets of SolBright RE discussed below, we have entered the solar engineering, procurement and construction business. Arkados Arkados, our software development subsidiary, was organized in 2004. It develops proprietary, cloud-based device and system management software solutions, which we refer to as the Arktic software platform, and delivers software services and support. Arktic is an open, scalable and interoperable software platform that supports industrial applications, including applications for smart manufacturing, measurement and verification as well as predictive analysis, or data gathering for baselining machine performance data and reporting of anomalies. Efficient software technology enables innovative smart monitoring of devices and features energy management and intelligent control over cloud services. This is ideal for many Industrial Internet of Things ("IIot") applications as follows: Smart Building – data gathering and analysis to improve performance of commercial building systems, such as lighting, HVAC, access control and energy management. Data includes temperature, humidity, illumination and air quality, including CO2 and Volatile Organic Compounds. Smart Machine – data gathering and analysis to improve industrial and commercial machinery performance. Data includes, but is not limited to, temperature, humidity, vibration, energy consumption and run cycles. Smart Manufacturing – data gathering and analysis to improve efficiency for manufacturing items. Data includes, but is not limited to, specific machine performance, input/output measurements and defect analysis. Table of Contents The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED [ ], 2018 SOLBRIGHT GROUP, INC. 320,000 Shares of 10% Series A-1 Cumulative Convertible Redeemable Perpetual Preferred Stock $25.00 per Share Up to 15,824,177 Shares of our Common Stock We are offering to qualifying accredited investors, pursuant to certain subscription agreements described herein, up to 320,000 shares of our 10% Series A-1 Cumulative Convertible Redeemable Perpetual Preferred Stock, which we refer to as the Series A-1 Preferred Stock. Dividends on the Series A-1 Preferred Stock offered hereby are cumulative from the first day of the calendar month in which they are issued, and will be payable on the fifteenth day of each calendar month, when, as and if declared by our board of directors. Dividends will be payable out of amounts legally available therefor at a rate equal to 10% per annum per $25.00 of stated liquidation preference per share, or $2.50 per share of Series A-1 Preferred Stock per year. Commencing on April 2, 2021, we may redeem, at our option, the Series A-1 Preferred Stock, in whole or in part, at a cash redemption price of $25.00 per share, plus all accrued and unpaid dividends to, but not including, the redemption date. The Series A-1 Preferred Stock has no stated maturity, will not be subject to any sinking fund or other mandatory redemption. Holders of the Series A-1 Preferred Stock generally will have no voting rights except for limited voting rights if dividends payable on the outstanding Series A-1 Preferred Stock are in arrears for eighteen or more consecutive or non-consecutive monthly dividend periods. The shares of Series A-1 Preferred Stock are convertible for shares of common stock at a conversion price of $1.50 per Series A-1 Preferred Stock, or 16.67 shares of the Company Common Stock for each share of Series A-1 Preferred Stock. In a concurrent private placement, we are selling to such investors warrants to purchase up to 2,666,667 shares of our common stock which represent 50% of the proposed maximum offering price of the Series A-1 Preferred Stock at an exercise price of $1.50 per share (the "Warrants"). This concurrent private placement of warrants is part of a unit offering of which the Series A-1 Preferred Stock is registered and the Warrants are not registered. The Warrants offering is being made to the same group of investors as will invest in the offering of the Series A-1 Preferred Stock. The Warrants and the shares of our common stock issuable upon the exercise of the Warrants are being offered pursuant to the exemption provided in Section 4(a)(2) under the Securities Act of 1933, as amended (the "Securities Act"), and Rule 506(b) promulgated thereunder, and they are not being offered pursuant to this prospectus supplement and the accompanying prospectus. The Company will not receive any consideration from the issuance of the warrants or the subsequent sale of such warrants. We have retained Paulson Investment Company, LLC as our exclusive lead placement agent as placement agent to use its reasonable best efforts to solicit offers to purchase the securities in this offering. The placement agent has no obligation to buy any of the securities from us or to arrange for the purchase or sale of any specific number or dollar amount of the securities. If we sell all 320,000 shares of Series A-1 Preferred Stock we are offering pursuant to this prospectus at the offering price of $25.00 per share, we will receive approximately $8.0 million in gross proceeds and approximately $7 million in net proceeds, after deducting the cash placement agent fee of ten percent (10%) and warrant placement agent fee of ten percent (10%) estimated offering expenses payable by us. Because there is a One Million Dollar ($1,000,000) minimum offering amount required as a condition to an initial closing in this offering, the actual public offering amount, cash placement agent fee of ten percent (10%) and warrant placement agent fee of ten percent (10%) and proceeds to us, if any, are a minimum fee of One Hundred Thousand Dollars ($100,000) as a cash placement fee and One Hundred Thousand Dollars ($100,000) as a placement agent fee in warrants, and the resulting proceeds to us are Nine Hundred Thousand Dollars ($900,000). After the initial closing, we anticipate additional closings of funds on a weekly basis. At each weekly closing, we will pay the cash placement agent fee of ten percent (10%) and warrant placement agent fee of ten percent (10%) and the net proceeds of the closing will be delivered to us, if any. After the initial minimum, there are no minimums to each subsequent closing. The funds will only be available for closings after the state-mandated rescission rights have expired. The final placement agent fees may be substantially less than the total maximum offering amounts set forth above. Although the amount of our working capital would be less, we do not believe our inability to raise any minimum amount in this offering will have a material impact on us. Table of Contents SES SES, formerly known as AES, Arkados Energy Solutions, LLC, our energy conservation services subsidiary, was organized in 2013 and commenced operations in early 2015. SES provides energy conservation services and solutions to commercial and buildings throughout the northeastern United States. These services include energy consumption assessments and recommendations as well as acting as the general contractor for light-emitting diode ("LED") lighting retrofits, oil-to-natural gas boiler conversions and solar photovoltaic ("PV") system installation. SES also markets and sells Arkados technology solutions to help building owners save money. SES sells its services directly to building owners and managers. As a result of our acquisition of the SolBright Assets discussed in detail below, SES has now entered the solar engineering, procurement and construction business. SES s New Renewable Energy Business Through the acquisition of the SolBright Assets, including SolBright personnel, SES has become a turnkey developer of Solar Photovoltaic and Solar Thermal projects for long term, stable, distributed power solutions. SES focus markets, capitalizing on SolBright s historical activities, will be military and commercial scale projects primarily in the 100 kWp (kilowatt peak) to 5,000 kWp size range. SES will offer market assessment, design/engineering, installation, operation & maintenance/monitoring, financing and project ownership (where desired). SES will have distinct competitive advantages for ground, parking canopy and roof-top solar applications that ensure continuity with existing/new roof warranties. SES will offer a broad range of US and internationally manufactured products, including zero-penetration rooftop solar solutions and innovative, space-leveraging parking canopy/parking garage solar solutions and ground mount systems. Ground Mount1 Rooftop Canopies Organization We were incorporated in the State of Delaware in 1998. We underwent a significant restructuring after December 23, 2010 when substantially all of our then-existing assets were acquired by STMicroelectronics, Inc., a Delaware corporation. Currently, we carry out our activities through our wholly-owned subsidiaries, Arkados, Inc., or Arkados, a Delaware corporation, and SolBright Energy Solutions, LLC, or SES, a Delaware limited liability company formerly known as Arkados Energy Solutions, LLC. On September 7, 2017, the holders of a majority of the votes entitled to be cast by all our outstanding shares adopted resolutions by written consent, in lieu of a meeting of stockholders, to amend our Certificate of Incorporation to change our name from Arkados Group, Inc. to Solbright Group, Inc. to better reflect our business. The name change become effective by FINRA on November 6, 2017 and our new stock symbol is "SBRT". 1 These three pictures depict SolBright solar installations. There can be no assurance that we will be able to replicate projects such as these or successfully exploit our acquisition of the SolBright Assets. Table of Contents This offering may be closed without further notice to you. We have arranged to place the funds from investors in an escrow with Signature Bank, a New York chartered back located at 950 Third Avenue, 9th Floor, New York, NY 10022 pending the raising of the minimum investment to break escrow. The minimum investment to break escrow is One Million Dollars ($1,000,000). This prospectus also relates to the offer and sale from time to time by the selling stockholders identified in this prospectus or a supplement hereto of up to an aggregate of 16,144,177 shares of our common stock consisting of (i) up to 5,061,556 shares of common stock held by the selling stockholders, (ii) up to 4,166,667 shares of our common stock that are issuable upon the conversion of our 10% convertible promissory notes issued in connection with a private placement offering of convertible notes that we closed on May 1, 2017, (iii) up to 1,261,554 shares of our common stock that are issuable upon the exercise of warrants issued in connection with a private placement offering of shares and warrants that was closed in April 2017; and (iv) 5,334,400 shares of our common stock that are issuable upon the exercise of the conversion feature of the Series A-1 Preferred Stock. This prospectus describes the general manner in which the shares of common stock may be offered and sold by the selling stockholders. If necessary, the specific manner in which shares of common stock may be offered and sold will be described in a supplement to this prospectus. We are not offering any shares of common stock for sale under this prospectus, and we will not receive any of the proceeds from the sale or other disposition of the shares of common stock offered hereby. However, we will receive proceeds from the exercise of the warrants if the warrants are exercised for cash. We intend to use those proceeds, if any, for general corporate purposes. Our common stock is quoted for trading on the OTC QB under the symbol "SBRT". On May 23, 2018, the last reported sale price of our common stock on OTCQB was $0.39. The Warrants being issued in the concurrent private placement are not listed on any securities exchange, and we do not expect to list the Warrants. INVESTING IN OUR SECURITIES INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD CAREFULLY READ AND CONSIDER THE "RISK FACTORS" BEGINNING ON PAGE 5. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. CERTAIN MATTERS REGARDING PLACEMENT AGENTS Fees Paid to Placement Agents Paulson Investment Company, LLC ("PIC") has been engaged to act as a placement agent for the offering of 10% Series A-1 Preferred Stock (the "Offering"). As compensation for this, PIC will receive cash fees and warrants as follows: (a) The Company shall, at each closing of the Offering (each a "Closing"), as compensation for the services provided by the Placement Agent hereunder, pay the Placement Agent a cash commission equal to ten percent (10%) of the gross proceeds of the Offering closed on that closing date (the "Cash Fee") from persons referred to the Company by PIC (each, a "Qualified Investor"). (b) As of the date of the final Closing, the Placement Agent shall be issued Placement Agent Warrants (the "Placement Agent Warrants"). The Placement Agent Warrants shall be exercisable to purchase a number of shares of the Company s Common Stock equal to ten percent (10%) of the total number of shares into which the Series A-1 Preferred Stock are convertible into the Company s Common Stock. The Warrants are exercisable for five (5) years at an exercise price per share equal to one hundred percent (100%) of the price per share at which common stock is sold in the offering. The Placement Agent Warrants shall have standard terms, as well as cashless exercise rights and rights to assign such warrants to affiliates and employees of the Placement Agent who are "accredited investors" and to any subagent(s) participating in the Offering, in its sole discretion. (c) PIC will receive an expense reimbursement at each closing but such aggregate reimbursement shall be limited to $75,000. PIC will also receive consulting fees equal to $10,000 per month for three months. Other Information A Managing Partner in PIC s New York, NY office, Robert J. Setteducati, entered into a final settlement with the Massachusetts Securities Division in 2001 pursuant to which he agreed, among other things, never to seek to register with the Massachusetts Securities Division in any capacity. The settlement resolved allegations that Mr. Setteducati failed to adequately supervise employees at a prior broker-dealer. The date of this prospectus is [ ], 2018 Table of Contents Our principal executive offices are located at One Gateway Center, 26th Floor, Newark, NJ 07102. Our telephone number is (973) 339-3855 . We maintain a website at www.solbrightgroup.com. The information on our website or any other website is not incorporated by reference into this prospectus and does not constitute a part of this prospectus. About The Series A-1 Offering The following summary contains basic terms about this offering and the Series A-1 Preferred Stock and is not intended to be complete. It may not contain all of the information that is important to you. You should read the more detailed information contained in this prospectus, including but not limited to, the risk factors beginning on page *. For a more complete description of the terms of the Series A-1 Preferred Stock, see "Description of the Series A-1 Preferred Stock." Issuer Solbright Group, Inc. Securities Offered Up to 320,000 shares of 10% Series A-1 Cumulative Convertible Redeemable Perpetual Preferred Stock (or "Series A-1 Preferred Stock") Up to 5,334,400 of Common Stock if 320,000 shares of Series A-1 Preferred Stock are converted Concurrent Private Placement Unregistered warrants to purchase 2,666,667 shares of common stock at an exercise price of $1.50 which are immediately exercisable with a term of Five (5) years after the initial exercise date. Series A-1 Preferred Stock to be outstanding after this offering if the maximum number of shares are sold 320,000 shares of Series A-1 Preferred Stock Series A-1 Preferred Stock to be outstanding after this offering if 67% of the maximum number of shares are sold 214,400 shares of Series A-1 Preferred Stock Series A-1 Preferred Stock to be outstanding after this offering if 33% of the maximum number of shares are sold 105,600 shares of Series A-1 Preferred Stock Offering Price $25.00 per share of Series A-1 Preferred Stock Dividends Holders of the Series A-1 Preferred Stock will be entitled to receive cumulative cash dividends at a rate of 10% per annum of the $25.00 per share liquidation preference (equivalent to $2.50 per annum per share). Dividends will be payable monthly on the 15th day of each month (each, a "dividend payment date"), provided that if any dividend payment date is not a business day, then the dividend that would otherwise have been payable on that dividend payment date may be paid on the next succeeding business day without adjustment in the amount of the dividend. Dividends will be payable to holders of record as they appear in our stock records for the Series A-1 Preferred Stock at the close of business on the corresponding record date, which shall be the last day of the calendar month, whether or not a business day, immediately preceding the month in which the applicable dividend payment date falls (each, a "dividend record date"). As a result, holders of shares of Series A-1 Preferred Stock will not be entitled to receive dividends on a dividend payment date if such shares were not issued and outstanding on the applicable dividend record date. Any dividend payable on the Series A-1 Preferred Stock, including dividends payable for any partial dividend period, will be computed on the basis of a 360-day year consisting of twelve 30-day months; however, the shares of Series A-1 Preferred Stock offered hereby will be credited as having accrued dividends since the first day of the calendar month in which they are issued. Table of Contents TABLE OF CONTENTS Page PROSPECTUS SUMMARY 2
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+PROSPECTUS SUMMARY This summary highlights certain information contained elsewhere in this prospectus. This summary is not intended to be complete and does not contain all of the information that you should consider in making your investment decision. You should carefully read this entire prospectus, including our consolidated financial statements and the related notes and the information set forth under the headings Risk Factors and Management s Discussion and Analysis of Financial Condition and Results of Operations contained in this prospectus before making an investment decision. Unless the context otherwise requires, references to we, our, us, or the Company in this prospectus mean MabVax Therapeutics Holdings, Inc. on a consolidated basis with its wholly-owned subsidiary, MabVax Therapeutics, Inc., as applicable. About Us MabVax Therapeutics Holdings, Inc. is a clinical-stage biotechnology company with a fully human antibody discovery platform focused on the rapid translation into clinical development of products to address unmet medical needs in the treatment of cancer and pancreatitis. We discovered a pipeline of human monoclonal antibody product candidates based on the protective immune responses generated by patients who have been vaccinated against targeted cancers. Our therapeutic vaccine product candidates under development were discovered at Memorial Sloan Kettering Cancer Center ( MSK ) and are exclusively licensed to us as well as exclusive rights to blood samples from patients who were vaccinated with the same licensed vaccines. Our lead development product, MVT-5873, is a fully human IgG1 monoclonal antibody (mAb) that targets sialyl Lewis A (sLea), an epitope on CA19-9. MVT-5873 is currently in Phase 1 clinical trials as a therapeutic agent for patients with pancreatic cancer and other CA19-9 positive tumors. CA19-9 is expressed in over 90% of pancreatic cancers and in other diseases including pancreatitis. CA19-9 plays an important role in tumor adhesion and metastasis and is a marker of an aggressive cancer phenotype. CA19-9 also has an important role in the biological pathways that can result in pancreatitis. CA19-9 serum levels are considered a valuable adjunct in the diagnosis, prognosis and treatment monitoring of pancreatic cancer and now pancreatitis. With our collaborators including MSK, Sarah Cannon Research Institute, Honor Health and Imaging Endpoints, we have treated more than 56 patients with either our therapeutic antibody designated as MVT-5873 or our PET imaging diagnostic product designated as MVT-2163 in Phase 1 clinical studies, and demonstrated early safety, specificity for the target and a potential efficacy signal. The Company also has a radioimmunotherapy product, designated as MVT-1075, that is also in Phase 1 clinical development. For additional information, please visit the Company's website, www.mabvax.com. Studies conducted by Cold Spring Harbor Laboratories have demonstrated that antibodies capable of binding to CA19-9 and blocking the downstream biological pathways of pancreatitis have a positive effect on ameliorating the disease. Combining the preclinical science supporting the use of the CA19-9 blocking antibodies in the treatment of pancreatitis with the clinically validated data and supplies of MVT-5873 already available gives MabVax the opportunity, assuming adequate funding, to move quickly into the clinic in a mid-stage proof of concept clinical trial in the near-term. The Company completed a preclinical asset sale and license agreement with Boehringer Ingelheim International GmbH ( Boehringer Ingelheim ) in July 2018, and a license agreement for a cancer vaccine to Y-mAbs Therapeutics, Inc. in June 2018. The Company received nearly $5 million in upfront payments from these two transactions to begin the third quarter, with an additional $7.6 million in downstream milestones the Company expects to receive based either on reaching an anniversary date of entering the agreement, or upon reaching a milestone. Plan for Remainder of 2018 Based on the experience with recent asset sales and license agreements, and continuing inquiries from third parties regarding their interest in other MabVax assets and clinical progress to date related to MVT-5873, MVT-1075, and MVT-2163, we intend on continuing to explore additional licensing and/or collaboration opportunities for certain fields of use of our technology. However, there can be no assurance that any such transaction will occur. -1- Table of Contents If we are able to secure additional funds, we intend to, among other things: continue enrollment in our clinical study of MVT-5873 in combination with gemcitabine and nab-paclitaxel in first line therapy for the treatment of patients newly diagnosed with pancreatic cancer with the objective of confirming early observations seen to date, to enable discussions with potential strategic partners and investors. enroll additional patients into the MVT-5873 monotherapy trial with the aim of establishing a higher maximum tolerated dose. We have submitted our Investigational New Drug Application ( IND ), to the FDA, for a revised protocol to enable continuation of the trial at higher doses. support the continued development of the MVT-2163 imaging agent under the R01 grant made to MSK for the Phase 1b portion of this clinical program. continue clinical development of MVT-1075 for the treatment of locally advanced or metastatic pancreatic cancer patients, by completing additional cohorts of patients in a dose escalation safety trial to continue to assess the safety and potential efficacy of this treatment; also, to enable discussions with potential strategic partners and investors. Use a portion of existing supplies of MVT-5873 to pursue a proof of concept clinical trial of MVT-5873 in the treatment of pancreatitis. Overview of 2018 Private Placements Between February 2 and February 10, 2018, the Company entered into separate purchase agreements with investors pursuant to which the Company sold (i) shares of its common stock, (ii) shares of its convertible preferred stock, and (iii) warrants to purchase shares of common (the February 2018 Private Placements ). From April 30 to May 2, 2018, the Company entered into separate purchase agreements with investors pursuant to which we agreed to sell shares of its common stock and convertible preferred stock (the May 2018 Private Placements ). No financial advisor was used in connection with the February 2018 Private Placements nor the May 2018 Private Placements. The securities issued in connection with the February 2018 Private Placements and the May 2018 Private Placements were offered and sold solely to accredited investors in reliance on the exemption from registration afforded by Rule 506 of Regulation D and Section 4(a)(2) of the Securities Act of 1933, as amended (the Securities Act ). The Company entered into separate registration rights agreements with each of the investors in the February 2018 Private Placements and the May 2018 Private Placements, pursuant to which the Company agreed to undertake to file a registration statement to register the resale of the shares of common stock and the shares of common stock underlying the warrants and preferred stock. The Company also agreed to use reasonable best efforts to cause such registration statement to be declared effective and to maintain the effectiveness of the registration statement until all of such shares of common stock have been sold or are otherwise able to be sold pursuant to Rule 144 under the Securities Act, without any restrictions. February 2018 Private Placements In connection with the February 2018 Private Placements, the Company sold (i) an aggregate of 555,557 shares of its common stock for an aggregate purchase price of $1,250,000, or $2.25 per share, (ii) 5,000 shares of our newly designated 0% Series M Convertible Preferred Stock (the Series M Preferred Stock ) for an aggregate purchase price of $1,500,000, or $300.00 per share, and (iii) warrants to purchase up to an aggregate of 855,561 shares of common stock each with an exercise price of $2.70 per share. The net proceeds of the February 2018 Private Placements were $2,700,000 after transaction costs of $50,000. May 2018 Private Placements In connection with the May 2018 Private Placements, the Company agreed to sell (i) 218,182 shares of common stock at an aggregate purchase price of $240,000, or $1.10 per share, and (ii) 5,363.64 shares of newly designated 0% Series N Convertible Preferred Stock (the Series N Preferred Stock ) at an aggregate purchase price of $590,000, or $110.00 per share. The following investors in the May 2018 Private Placements also invested in the February 2018 Private Placements (the Prior Investors ): GRQ Consultants Inc., Roth 401K FBO Renee Honig; GRQ Consultants Inc., Roth 401K FBO Barry Honig; Melechdavid, Inc.; Grander Holdings Inc. 401K; Robert S. Colman Trust UDT 3/13/85; Ben Brauser; Joshua A. Brauser; Daniel A. Brauser; Gregory Aaron Brauser; Erick E. Richardson; and Ronald B. Low. -2- Table of Contents Under the terms of the May 2018 Private Placements, we were required to offer an aggregate of 12,777.77 shares (the May 2018 Inducement Shares ) of newly designated 0% Series O Preferred Stock (the Series O Preferred Stock ) to investors who previously purchased securities in the February 2018 Private Placements and who also purchased securities in the May 2018 Private Placements with an aggregate purchase price of at least 40% of their investment amounts in the February 2018 Private Placements. Based on the closing of the offering, and participation of the Prior Investors who invested an aggregate of $830,000 (the May 2018 Inducement Investors ), the Company issued an aggregate of 10,605.56 May 2018 Inducement Shares in the form of Series O Preferred Stock convertible into an aggregate of 1,060,556 shares of common stock. The May 2018 Private Placements closed on May 15, 2018, with the Company receiving gross proceeds totaling $830,000. Going Concern and Plans for Continuing to Fund the Company s Losses from Operations We plan to continue to fund the Company s losses from operations and capital funding needs through equity financings in the form of common stock and preferred stock, licensing agreements, asset sales, strategic collaborations, government grants, issuance of common stock in lieu of cash for services, debt financings or other arrangements. Further, to extend availability of existing cash available for our programs for achieving milestones or a strategic transaction, in mid-2017 we began reducing personnel from twenty-five (25) full time employees to six (6) as of November 19, 2018, and reduced other operating expenses following the completion of two (2) Phase 1a clinical trials of our lead antibody product candidate, HuMab 5B1, which has enabled us to reduce our expenditures on clinical trials. We plan to continue funding Phase 1 clinical trials of our product candidate MVT-5873 in cancer patients, MVT-2163 as a diagnostic agent in pancreatic cancer patients, and MVT-1075 as a radioimmunotherapy agent for the treatment of various cancers, preclinical testing of follow-on antibody candidates, investor and public relations, SEC compliance efforts, and the general and administrative expenses associated with each of these activities, and prepare for a mid-stage proof-of-concept clinical trial of MVT-5873 as a treatment for pancreatitis. We will also support research efforts and continued Phase 1 clinical development by MSK of our PET imaging agent MVT-2163 under an R01 Research Grant provided by the National Institutes of Health ( NIH ) to MSK in April 2018, with the bulk of the costs of the research and clinical development being borne by the NIH. Although we achieved two strategic transactions in late June 2018 and early July 2018, there can be no assurance that we will be able to achieve additional license and or sales agreements and earn revenues large enough to offset our operating expenses in the future. We cannot be sure that asset sales or licensing agreements can be signed in a timely manner, if any, or that capital funding will be available on reasonable terms, or at all. If we are unable to secure significant asset sales or licensing agreements and adequate additional funding, we may be forced to make additional reductions in spending, incur further cutbacks in personnel, extend payment terms with suppliers, liquidate assets where possible, suspend or curtail planned programs and/or cease our operations entirely. In addition, if the Company does not meet its payment obligations to third parties as they come due, it may be subject to litigation claims. Even if we are successful in defending against these claims, litigation could result in substantial costs and be a distraction to management. We anticipate the Company will continue to incur net losses into the foreseeable future as we: (i) continue our clinical trial of MVT-5873 in cancer patients, (ii) continue our clinical trial for the development of MVT-1075 as a radioimmunotherapy, (iii) prepare for a mid-stage proof-of-concept clinical trial of MVT-5873 as a treatment for pancreatitis, to be initiated in early 2019, and (iv) continue operations as a public company. Based on receipt of $2.7 million net of transaction costs in February 2018, an additional $830,000 from a financing in May 2018, and receipt of $700,000 from an upfront payment under a sublicense agreement with Y-mAbs Therapeutics, Inc. ( Y-mAbs ) during the first nine months of 2018; and receipt of $4.0 million in gross proceeds from an asset purchase and license agreement with Boehringer Ingelheim in July 2018, and without any other additional funding or receipt of payments from potential asset sales or licensing agreements, we expect we will have sufficient funds to meet our obligations until December 2018. These conditions give rise to substantial doubt as to the Company s ability to continue as a going concern. Any of these actions could materially harm the Company s business, results of operations, and prospects. The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. If the Company raises additional funds by issuing equity securities, substantial dilution to existing stockholders could result. If the Company raises additional funds by incurring debt financing, the terms of the debt may involve significant cash payment obligations as well as covenants and specific financial ratios that may restrict the Company s ability to operate its business. -3- Table of Contents Summary of the Offering The selling stockholders may offer and resale of up to 6,175,000 shares of our common stock, par value $0.01 per share, pursuant to this prospectus. Up to 6,000,000 of such shares represent shares of our common stock issuable upon conversion of our Series P Preferred Stock, which Triton has agreed to purchase from us pursuant to the terms and conditions of an Equity Purchase Agreement that we entered into with them on November 19, 2018 (the Equity Purchase Agreement ), which is described below. The remaining 175,000 shares of common stock are shares that we agreed to issue to Triton Funds LLC, manager of Triton, upon execution of the Equity Purchase Agreement to support the cost of the student-run fund. Equity Purchase Agreement and Registration Rights Agreement with Triton Funds LLC Subject to the terms and conditions of the Equity Purchase Agreement, we have the right to put, or sell, to Triton up to $1,000,000 worth of shares of our Series P Preferred Stock convertible into shares of our common stock. Unless terminated earlier, Triton s purchase commitment will automatically terminate on the earlier of the date on which Triton shall have purchased shares pursuant to the Equity Purchase Agreement for an aggregate purchase price of $1,000,000 or 90 days after the effectiveness of a registration statement registering the resale of the shares of our common stock underlying the Series P Preferred Stock. This arrangement is also sometimes referred to herein as the Triton Offering. As provided in the Equity Purchase Agreement, we may require Triton to purchase shares of Series P Preferred Stock from time to time, subject to a maximum purchase price of $300,000 for the initial purchase and terms providing we may not direct Triton to purchase shares of Series P Preferred Stock during the 30 day period immediately following the initial put notice, by delivering a put notice to Triton specifying the total number of shares to be purchased (such number of shares of Series P Preferred Stock, the Investment Amount ). Per the terms of the Equity Purchase Agreement and the Series P Certificate of Designations (defined on page 83 below), Triton may convert each share of Series P Preferred Stock into shares of common stock at the rate of $100.00 divided by 75% of the 5-day volume-weighted average price of the Company s common stock prior to the Series P Preferred Stock conversion notice (the Market Price ), except that Triton, together with its affiliates and certain related parties, will be restricted from converting its Series P Preferred Stock into common stock to the extent the conversion would cause Triton to own beneficially more than 4.99% of our outstanding common stock immediately following the conversion. The closing date is one day after the shares have been delivered to Triton in accordance with the Equity Purchase Agreement. On the settlement date, Triton will purchase the applicable number of shares subject to customary closing conditions, including without limitation a requirement that a registration statement remain effective registering the resale by Triton of the shares of common stock issuable upon conversion of the preferred stock to be issued under the Triton Offering as contemplated by the Registration Rights Agreement described below. The Equity Purchase Agreement is not transferable, and any benefits attached thereto may not be assigned. The Equity Purchase Agreement contains covenants, representations and warranties of us and Triton that are typical for transactions of this type. In addition, we and Triton have granted each other customary indemnification rights in connection with the Equity Purchase Agreement. The Equity Purchase Agreement may be terminated by mutual agreement, at any time. In connection with the Equity Purchase Agreement, we also entered into a Registration Rights Agreement with Triton requiring us to prepare and file a registration statement registering the resale by Triton of shares of common stock issuable upon conversion of Series P Preferred Stock under the Triton Offering, to use commercially reasonable efforts to cause such registration statement to become effective, and to keep such registration statement effective until (i) the date as of which the Triton may sell all of the Registrable Securities (as defined in the Registration Rights Agreement) without restriction pursuant to Rule 144 promulgated under the Securities Act and (ii) the date on which the Investor shall have sold all the Registrable Securities covered thereby. In accordance with the Registration Rights Agreement, on November 20, 2018, we filed the registration statement of which this prospectus is a part registering the resale by Triton of up to 6,000,000 shares that may be issued, which represents shares of common stock issuable upon conversion of Series P Preferred Stock and sold to Triton under the Triton Offering, and the resale by Triton Funds LLC of 175,000 shares of common stock we agreed to issue upon execution of the Equity Purchase Agreement to support the cost of the student-run fund. -4- Table of Contents
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+Table of Contents If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer Accelerated filer x Non-accelerated filer Smaller reporting company x Emerging growth company (Do not check if a smaller reporting company) If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. CALCULATION OF REGISTRATION FEE Title of each class of securities to be registered Amount to be registered(1) Proposed maximum offering price per unit(2) Proposed maximum aggregate offering price Amount of registration fee(2) Common Stock, par value $0.001 per share 5,456,566 $4.38 $23,899,759.10 $2,896.65 TOTAL $23,899,759.10 $2,896.65 __________ (1)Pursuant to Rule 416 of the Securities Act, the securities being registered hereunder include such indeterminate number of additional shares of common stock as may be issued after the date hereof as a result of stock splits, stock dividends or similar transactions. (2)With respect to the shares of common stock offered by the selling stockholders named herein, estimated at $4.38 per share, which is the average of the high and low prices as reported on the NYSE American exchange on November 9, 2018, for the purpose of calculating the registration fee in accordance with Rule 457(c) under the Securities Act. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act, or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission acting pursuant to said Section 8(a), may determine. Table of Contents The information contained in this prospectus is not complete and may be changed. No securities may be sold until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these shares, and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. Subject to Completion, dated November 16, 2018 Preliminary Prospectus GlobalSCAPE, Inc. 5,456,566 Shares of Common Stock This prospectus covers the sale or other disposition from time to time of up to 5,456,566 shares of our common stock, $0.001 par value per share, by the selling stockholders identified in this prospectus, including their transferees, pledgees, donees or successors. The selling stockholders may, from time to time, sell, transfer, or otherwise dispose of any or all of their shares of common stock or interests in shares of common stock on any stock exchange, market, or trading facility on which the shares are traded or in private transactions. These dispositions may be at fixed prices, at prevailing market prices at the time of sale, at prices related to the prevailing market price, at varying prices determined at the time of sale, or at negotiated prices. We are not offering any shares of our common stock for sale under this prospectus. We will not receive any of the proceeds from the sale or other disposition of the shares of our common stock by the selling stockholders. Our common stock is listed on the NYSE American exchange ("NYSE American") under the symbol "GSB". On November 15, 2018, the last reported sale price of our common stock was $4.59 per share. An investment in our common stock involves significant risks. You should carefully consider the risk factors beginning on page 5 of this prospectus before you make your decision to invest in our shares of common stock. Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense. Our securities are not being offered in any jurisdiction where the offer is not permitted under applicable local laws. The date of this prospectus is November 16, 2018 Table of Contents Background GlobalSCAPE was incorporated in Delaware in 1996. GlobalSCAPE, along with its one subsidiary TappIn, Inc., a Delaware Corporation, provides managed file transfer software and services to clients worldwide. Additional Information Our principal executive offices are located at 4500 Lockhill-Selma Road, Suite 150, San Antonio, Texas 78249, and our telephone number is (210) 308-8267. Our website is www.globalscape.com. The information contained on our website is not incorporated by reference into this prospectus, and you should not consider any information contained on, or that can be accessed through, our website as part of this prospectus or in deciding whether to purchase our common stock. Recent Developments GlobalSCAPE recently completed its previously announced modified Dutch auction tender offer ("Tender Offer") to purchase up to $15,000,000 in value of shares of its common stock at a purchase price not greater than $4.50 nor less than $4.00 per share. The Tender Offer expired at 12:00 midnight, New York City time, on Wednesday, September 19, 2018. Based on the final count by American Stock Transfer & Trust Company, the Depositary for the Tender Offer, the Company has accepted for purchase 4,011,013 shares at a purchase price of $4.20 per share, for an aggregate cost of approximately $16.8 million, excluding fees and expenses relating to the Tender Offer. Included within the shares accepted for purchase are 439,585 shares that the Company elected to purchase pursuant to its right to increase the size of the Tender Offer by up to 2.0% of the Company s outstanding common stock. As such, the Company used a proration factor of approximately 77.1% of shares from each tendering stockholder. The shares purchased represent approximately 18.2% of the Company s common stock issued and outstanding as of September 24, 2018. Following consummation of the Tender Offer, the Company has 17,968,268 shares outstanding. Table of Contents The Offering This prospectus relates to the resale from time to time by the selling stockholders identified herein of up to 5,456,566 shares of our common stock. We are not offering any shares for sale under the registration statement of which this prospectus is a part. Common stock outstanding immediately prior to this offering: 17,968,268 shares. Common stock being offered by the selling stockholders hereunder: Up to 5,456,566 shares. Common stock to be outstanding immediately after this offering: 17,968,268 shares. Use of proceeds: We will not receive any proceeds from the sale of our common stock offered by the selling stockholders under this prospectus.
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+Table of Contents EXECUTIVE COMPENSATION Summary Compensation Table The following table and narrative summarizes and explains the compensation that we paid to, or that was earned by, each person who served as our principal executive officer and each of the named executive officers determined under Item 402(m)(2) of Regulation S-K during our fiscal year ended December 31, 2017. We refer to these individuals in this prospectus as our named executive officers. Name and Principal Position Year Salary($) Stock Awards ($)(1) Option Awards ($)(1) Non-Equity Incentive Plan Compensation ($) All Other Compensation ($) Total ($) Michael DeCesare, Chief Executive Officer and President 2017 410,000 2,431,334 446,080(2) 12,808(3) 3,304,764 2016 350,000 1,390,125 671,212 356,600(4) 4,542(5) 2,772,479 Pedro Abreu, Chief Strategy Officer 2017 380,000 810,451 201,960(2) 1,392,411 2016 320,000 346,185 120,770(4) 788,845 Christopher Harms, Chief Financial Officer 2017 304,000 1,620,902 201,960(2) 11,628(6) 2,138,490 2016 272,857 341,240 97,301(4) 713,261 _____________________ (1) The amounts in this column represent the aggregate grant date fair value of the award as computed in accordance with Financial Accounting Standard Board Accounting Standards Codification Topic 718. The assumptions used in calculating the grant date fair value of the awards reported in this column are set forth in the Notes to our Consolidated Financial Statements included elsewhere in this prospectus. (2) The amounts included in the Non-Equity Incentive Plan Compensation column represent the amounts earned and paid under the 2017 Bonus Plan as discussed under the section title Non-Equity Incentive Plan Compensation. (3) Consists of (i) charity event tickets for Mr. DeCesare of $11,628 and (ii) entertainment expenses of $1,180. (4) The amounts included in the Non-Equity Incentive Plan Compensation column represent the amounts earned and paid under the 2016 Bonus Plan. (5) Consists of entertainment expenses. (6) Consists of charity event tickets for Mr. Harms and his spouse. Non-Equity Incentive Plan Compensation 2017 Bonus Plan Messrs. DeCesare, Abreu, and Harms each received performance-based bonuses pursuant to the terms of our 2017 Bonus Plan. Under our 2017 Bonus Plan, bonuses were payable semiannually based on company and individual performance goals established by our board of directors, in the case of Mr. DeCesare, and by our compensation committee, in the case of Messrs. Abreu, and Harms, for fiscal 2017 and measured over two, semiannual performance periods during 2017. For the fiscal 2017 performance period, with bonuses payable semiannually, a progress payment could become payable at the end of the first half of fiscal 2017, based on specified levels of achievement of the performance goals for such semiannual period. Any such bonus amount for the first half-portion of the year was capped at 100% of the participant s target bonus opportunity for such half-year. If the participant exceeded his or her performance goals for the first semiannual performance period, he or she would not receive more than 100% of his or her bonus target for the first semiannual performance period. Rather, if a participant exceeds his or her performance goals for the first semiannual performance period, such portion greater than 100% would be applied to measuring whether the participant s performance goals were met in the second semiannual performance period. To fund the bonus pool for the applicable performance period, we had to achieve specified company goals at a minimum of 85% for each of revenue, operating margin, and our net promoter score, or NPS. Achievement of all three corporate goals at 100% would fund the bonus pool at the target level. Each of Messrs. DeCesare, Abreu, and Harms were eligible to earn 70% of his respective target bonus based on the company performance goals and 30% of his target bonus based on individual performance goals. For the first half of 2017, we achieved 107.7% of the company performance goals, resulting in the full funding of the Table of Contents bonus pool for such performance period. Each of Messrs. DeCesare, Abreu, and Harms achieved all of their respective individual performance goals. For the second half of 2017, we achieved 120% of the company performance goals, and each of Messrs. DeCesare, Abreu, and Harms achieved all of their respective individual performance goals. Mr. DeCesare s individual performance goals included goals related to employee recruitment and retention, marketing strategy, sales pipeline, our sales enablement program, expansion of our product, services and support organizations, engineering capacity, corporate strategy, and deal execution. Mr. Abreu s individual performance goals included goals related to alliance partnerships, product lifecycle, and execution of the Company s strategy. Mr. Harms individual performance goals included goals related to sales execution, public company readiness, revenue, and facilities. The 2017 Bonus Plan required continued employment through the bonus payment date in order to receive a bonus for the applicable performance period. The aggregate amount of bonus payments made to these named executive officers for 2017 is set forth in the Non-Equity Incentive Plan Compensation column of the 2017 Summary Compensation Table above. Executive Employment Arrangements Chief Executive Officer We entered into an amended and restated employment agreement with Michael DeCesare, our Chief Executive Officer and President in May 2016, as amended in September 2017. The agreement provides an initial term through December 31, 2020, with automatic renewal of successive, one-year terms thereafter unless either party provides notice of non-renewal at least 60 days prior to the renewal date, provided that any non-renewal by us will not be permitted after a definitive agreement to enter into a change in control, as defined in the agreement, has been executed (until the change in control occurs or the transaction is abandoned). Mr. DeCesare s base salary is $410,000 and target bonus opportunity for fiscal year 2018 is 100% of his base salary. If Mr. DeCesare s employment is terminated by us without cause or by him for good reason, as such terms are defined in his employment agreement, then provided he signs and does not revoke a separation agreement with us, he will receive a lump sum cash payment equal to 100% of his then-base salary plus target bonus opportunity, 12 months of premiums he otherwise would be required to pay for continued post-employment, group health coverage, and vesting acceleration of his equity awards to the extent they would have vested through the one-year anniversary of the termination of his employment, with any performance-based criteria deemed met at target levels. If any equity awards were subject to vest upon the earlier of our change in control or expiration of the lock-up and blackout periods following our initial public offering (referred to as our liquidity event), the liquidity event would be deemed satisfied for purposes of such vesting acceleration. The separation agreement would include, among other terms, a mutual release of claims and mutual nondisparagement obligations, as well as obligations by Mr. DeCesare relating to non-solicitation for 12 months post-employment, post-employment confidentiality, and certain post employment cooperation efforts with respect to certain investigations, audits and other actions or proceedings relating to the period during which the employee was employed by us. In the event of our change in control, the vesting of Mr. DeCesare s equity awards will accelerate to the extent they would have vested through the one-year anniversary of our change in control, with any performance-based criteria deemed met at target levels. In addition, if any of Mr. DeCesare's equity awards are not assumed or substituted in connection with our change in control, such equity awards will fully vest immediately prior to the change in control. Further, if Mr. DeCesare s employment is terminated by us without cause or by him for good reason during the period beginning three months before the first event that leads to our change in control through 18 months after our change in control, then provided Mr. DeCesare signs and does not revoke the separation agreement described above, he will receive the bonus and health premium severance described above, he will receive (i) a lump sum cash payment equal to 100% of the greater of his then-current base salary and the base salary in effect immediately before the change in control, (ii) a lump sum cash payment equal to 100% of his target incentive opportunity, (iii) a lump sum cash payment equal to 12 months of premiums he otherwise would be required to pay for continued post-employment, group health coverage, and (iv) 100% accelerated vesting of his then-unvested equity awards with any performance-based criteria being deemed met at target levels. In the event of Mr. DeCesare s death or disability that occurs in connection with his performance of his required duties as our employee, then provided he or his legal custodian or executor of his estate, as applicable, signs and does not revoke the separation agreement described above, 100% of his then-unvested equity awards shall immediately vest, including any equity awards that were subject to performance-based criteria that shall be deemed achieved at target. For purposes of the employment agreement between us and Mr. DeCesare, the following terms will have the following meanings: The term cause generally means (i) an act of dishonesty by the employee in connection with his responsibilities as an employee; (ii) his being convicted of, or plea of no contest to, a felony or any crime involving fraud or embezzlement; (iii) his Table of Contents gross misconduct in connection with the performance of his duties; (iv) his willful breach of any obligations under any written agreement or covenant with us; (v) his failure to cooperate in good faith with a governmental or internal investigation of us or our directors, officers, or employees, if we requested his cooperation; or (vi) his continued failure to perform his employment duties after he has received a written demand from us, provided that in the case of (v) and (vi), he will have a 30-day period to cure the act or omission to the extent capable of cure. The term change in control generally means any of the following: (i) any person (including certain affiliates and associates of the person), other than us and certain persons affiliated with us, become the beneficial owner, directly or indirectly, of our securities representing 50% or more of the combined voting power of our securities having the right to vote in an election of our board of directors; or (ii) our consolidation or merger in which our stockholders immediately before the consolidation or merger would not, immediately after the consolidation or merger, beneficially own, directly or indirectly, in aggregate more than 50% of voting shares of us or our ultimate parent corporation (if any) issuing cash or securities in the consolidation or merger, or (iii) any sale or other transfer of all or substantially all of our assets; but excluding for purposes of clause (i) above, (x) due to acquisitions directly from us or (y) our acquisition of our securities that proportionately increases the shares owned by a person to 50% or more of the combined voting power of our securities having the right to vote in an election of our board of directors provided that acquisitions thereafter by such person that results in the person owning 50% or more or such securities will result in our change in control. The term good reason generally means the occurrence of any of the following events: (i) a material reduction of his base salary; (ii) a material reduction of his target bonus; (iii) a material reduction in his duties, authority, reporting relationship, or responsibilities; (iv) a requirement that the employee relocate more than 50 miles from his then-current office location; (v) a material violation by us of a material term of any employment, severance, or change of control agreement between him and us; or (vi) a failure by any successor entity to us to assume the employment agreement. However, good reason will not be deemed satisfied unless the employee gives us written notice of the condition within 90 days after the condition comes into existence and we fail to remedy the condition within 30 days after receiving notice. Other Named Executive Officers We entered into an employment agreement with each of Messrs. Abreu and Harms, effective January 1, 2017. Each agreement provides for an initial term through December 31, 2019, with automatic renewal of successive, one-year terms thereafter unless either party provides notice of non-renewal at least 30 days prior to the renewal date, provided that in the event of our change in control, as defined in the agreement, the agreement will be extended automatically through the date that is 12 months following the change in control. In the event that a definitive agreement for a transaction that, if consummated, would result in a change in control, is entered into by us, any nonrenewal notice by us will not be permitted (until the change in control occurs or the definitive agreement is terminated). The base salary for each of Messrs. Abreu and Harms is $380,000, and the target bonus opportunity of each such individual for fiscal year 2018 is 45% of his base salary. If the named executive officer s employment is terminated by us without cause or by him for good reason, as such terms are defined in the employment agreement, then provided he signs and does not revoke a separation agreement (which includes a release of claims in our favor, a nonsolicitation obligation for 12 months post-employment, and post-employment nondisparagement and confidentiality obligations, on the part of the named executive officer), he will receive a lump sum cash payment equal to the sum of 100% of his then-base salary and 12 months of premiums he otherwise would be required to pay for continued post-employment, group health coverage. If such termination occurs during the period beginning three months before our change in control through 12 months after our change in control, then the named executive officer will receive (i) a lump sum cash payment equal to 100% of the greater of his then current base salary and the base salary in effect immediately before the change in control, (ii) a lump sum cash payment equal to 12 months of premiums he otherwise would be required to pay for continued past-employment, group health coverage, (iii) a lump sum cash amount equal to 100% of his target incentive opportunity, and (iv) 100% accelerated vesting of his then-unvested equity awards with any performance-based criteria being deemed met at target levels. In addition, if any equity awards are not assumed or substituted in connection with our change in control, such equity awards will fully vest immediately prior to the change in control. For purposes of the employment agreement between us and each of Messrs. Abreu and Harms, the following terms generally have the following meanings: The term cause generally means (i) a material act of dishonesty by the named executive officer in connection with his responsibilities as an employee; (ii) his being convicted of, or plea of no contest to, a felony or any crime involving fraud or embezzlement; (iii) his gross misconduct in connection with the performance of his duties; (iv) his willful breach of any material obligations under any written agreement or covenant with us; (v) his failure to cooperate in good faith with a governmental or internal investigation of us or our directors, officers, or employees, if we requested his cooperation; or (vi) his continued failure Table of Contents to perform his employment duties after he has received a written demand from us, provided that in the case of (v) and (vi), he will have a 30-day period to cure the act or omission to the extent capable of cure. The term change in control generally means any of the following: (i) a change in our ownership as a result of any one person, or more than one person acting as a group, or person, acquiring ownership of our stock that, with the stock held by such person, is more than 50% of the total voting power of our stock; but excluding any acquisition of additional stock by any one person, who is already considered to own more than 50% of the total voting power and any transaction in which our stockholders immediately before the change in ownership retain immediately thereafter, in substantially the same proportions as their ownership of our voting stock immediately before the change in ownership, direct or indirect beneficial ownership of at least 50% of the total voting power of our stock; or (ii) a change in our effective control resulting in a majority of members of our board of directors being replaced during any 12 month period by directors whose appointment or election is not endorsed by a majority of the members of our board of directors before the appointment or election, excluding the acquisition of additional control of us by any person already in effective control of us; or (iii) a change in the ownership of a substantial portion of our assets occurring as a result of any person acquiring (or having acquired during the last 12-months) our assets that have a total gross fair market value of at least 50% of the total gross fair market value of all of our assets immediately before such acquisition(s); but excluding (i) a transfer to an entity controlled by our stockholders immediately after the transfer, or (ii) a transfer of our assets to: (A) a stockholder of us in exchange for our stock, (B) an entity of which we own 50% or more of the total value or voting power, (C) a person, that owns, directly or indirectly, 50% or more of the total value or voting power of all of our outstanding stock, or (D) an entity that is owned by any person described in (A) or (C) above, as to at least 50% of its total value or voting power. Further, the transaction must qualify as a change in control within the meaning of Code Section 409A and will not be treated as a change in control if its primary purpose is to (1) change the state of our incorporation, or (2) create a holding company owned in substantially the same proportions by the persons who held our securities immediately before such transaction. The term good reason generally means the occurrence of any of the following events, without the named executive officer s written consent: (i) a material reduction of his base salary; (ii) a material reduction of his target cash incentive opportunity; (iii) a material reduction in his duties, authority, reporting relationship, or responsibilities; (iv) a requirement that the named executive officer relocate more than 50 miles from his then-current office location; (v) a material violation by us of a material term of any employment, severance or change of control agreement between him and us; or (vi) a failure by any successor entity to us to assume the employment agreement. However, good reason will not be deemed satisfied unless the named executive officer gives us written notice of the condition within 90 days after the condition comes into existence, we fail to remedy the condition within 30 days after receiving notice, and he terminates his employment with us within 90 days following the expiration of our remedy period. Table of Contents Outstanding Equity Awards at 2017 Fiscal Year-End The following table presents certain information concerning equity awards held by our named executive officers, as of December 31, 2017. Name(1) Grant Date Option Awards Stock Awards Number of Securities Underlying Unexercised Options (#) Exercisable Number of Securities Underlying Unexercised Options (#) Unexercisable Option Exercise Price ($) Option Expiration Date Number of Shares or Units of Stock That Have Not Vested (#)(2) Market Value of Shares or Units of Stock That Have Not Vested ($)(3) Michael DeCesare 03/10/2015(4) 758,465 7.98 03/10/2025 03/10/2015(5) 638,707 20,368,366 05/18/2016(6) 82,499 16.08 05/18/2026 05/18/2016(7) 82,500 2,630,925 05/15/2017(8) 129,533 4,130,807 Pedro Abreu 06/05/2015(9) 235,869 8.52 06/05/2025 09/29/2015(10) 54,750 9.88 09/29/2025 10/10/2016(11) 17,500 558,075 05/15/2017(12) 43,178 1,376,946 Christopher Harms 03/27/2013(13) 57,223 2.18 03/27/2023 09/18/2014(14) 34,999 7.04 09/18/2024 07/31/2015(15) 75,000 9.88 07/31/2025 10/10/2016(16) 17,250 550,103 05/15/2017(17) 86,356 2,753,893 _____________________ (1) Each of the outstanding equity awards held by our named executive officers, as described below, was granted pursuant to the 2000 Stock Incentive Plan, or 2000 Plan. (2) Represents (i) restricted stock unit awards and (ii) shares of restricted stock under the 2000 Plan, issued upon the early exercise of stock options, each of which remained unvested as of December 31, 2017. We have the right to repurchase any unvested shares subject to each such award if the holder of the award ceases to provide services to us prior to the date on which all shares subject to the award have vested in accordance with the applicable vesting schedule described in the footnotes below. (3) This amount reflects the fair market value of our common stock of $31.89 per share as of December 29, 2017, as reported on The NASDAQ Global Market, multiplied by the amount shown in the column for the Number of Shares or Units of Stock That Have Not Vested. (4) One-fourth of the shares subject to the option vested on March 1, 2016, and one forty-eighth of the shares vest monthly thereafter, subject to Mr. DeCesare s continued status as a service provider on each such vesting date. All shares subject to the option are early exercisable. (5) One-fourth of the shares subject to the restricted stock unit grant vested on March 1, 2016, and the remaining shares vest in equal quarterly installments over a period of three years commencing thereafter. Notwithstanding the satisfaction of this time-based vesting requirement, no shares underlying the restricted stock unit grant will vest until the earlier of (i) a change of control or (ii) April 25, 2018, subject to Mr. DeCesare s continued status as a service provider on each such vesting date. (6) One forty-eighth of the shares subject to the option vest monthly commencing on March 1, 2016, subject to Mr. DeCesare s continued status as a service provider on each such vesting date. All shares subject to the option are early exercisable. (7) One-fourth of the shares subject to the restricted stock unit grant vest each year commencing May 15, 2017. Notwithstanding the satisfaction of this time-based vesting requirement, no shares underlying the restricted stock unit grant will vest until the earlier of (i) a change of control or (ii) April 25, 2018, subject to Mr. DeCesare s continued status as a service provider on each such vesting date. (8) One-fourth of the shares subject to the restricted stock unit grant vest each year commencing May 15, 2018. Notwithstanding the satisfaction of this time-based vesting requirement, no shares underlying the restricted stock unit grant will vest until the earlier of (i) a change of control or (ii) April 25, 2018, subject to Mr. DeCesare s continued status as a service provider on each such vesting date. (9) One-fourth of the shares subject to the option vested on April 29, 2016 and one forty-eighth of the shares vest monthly thereafter, subject to Mr. Abreu s continued status as a service provider on each such vesting date. All shares subject to the option are early exercisable. Table of Contents (10) One-fifth of the shares subject to the option vest in equal monthly installments over each of the first and second annual periods following September 1, 2015 and three-tenths of the shares subject to the option vest in equal monthly installments over each of the third and fourth annual periods following September 1, 2015, subject to Mr. Abreu s continued status as a service provider on each such vesting date. All shares subject to the option are early exercisable. (11) One-fourth of the shares subject to the restricted stock unit grant vest each year commencing August 15, 2017. Notwithstanding the satisfaction of this time-based vesting requirement, no shares underlying the restricted stock unit grant will vest until the earlier of (i) a change of control or (ii) April 25, 2018, subject to Mr. Abreu s continued status as a service provider on each such vesting date. (12) One-fourth of the shares subject to the restricted stock unit grant vest each year commencing May 15, 2018. Notwithstanding the satisfaction of this time-based vesting requirement, no shares underlying the restricted stock unit grant will vest until the earlier of (i) a change of control or (ii) April 25, 2018, subject to Mr. Abreu s continued status as a service provider on each such vesting date. (13) One-fourth of the shares subject to the option vested on March 11, 2014 and one forty-eighth of the shares vest monthly thereafter, subject to Mr. Harms continued status as a service provider on each such vesting date. All shares subject to the option are early exercisable. (14) One forty-eighth of the shares subject to the option vest monthly commencing on July 24, 2014, subject to Mr. Harms continued status as a service provider on each such vesting date. All shares subject to the option are early exercisable. (15) One-fifth of the shares subject to the option vest in equal monthly installments over each of the first and second annual periods following July 31, 2015 and three-tenths of the shares subject to the option vest in equal monthly installments over each of the third and fourth annual periods following July 31, 2015, subject to Mr. Harms continued status as a service provider on each such vesting date. All shares subject to the option are early exercisable. (16) One-fourth of the shares subject to the restricted stock unit grant vest each year commencing on August 15, 2017. Notwithstanding the satisfaction this time-based vesting requirement, no shares underlying the restricted stock unit grant will vest until the earlier of (i) a change of control or (ii) April 25, 2018, subject to Mr. Harms continued status as a service provider on each such vesting date. (17) One-fourth of the shares subject to the restricted stock unit grant vest each year commencing on May 15, 2018. Notwithstanding the satisfaction this time-based vesting requirement, no shares underlying the restricted stock unit grant will vest until the earlier of (i) a change of control or (ii) April 25, 2018, subject to Mr. Harms continued status as a service provider on each such vesting date. Employee Benefits and Stock Plans 2017 Equity Incentive Plan Our board of directors adopted, and our stockholders approved, our 2017 Equity Incentive Plan, referred to as our 2017 Plan, in February 2017 and October 2017, respectively. Our 2017 Plan became effective on October 26, 2017, the effective date of our initial public offering, and serves as the successor to our 2000 Plan. Our 2017 Plan provides for the grant of incentive stock options, within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended, to our employees and any of our parent and subsidiary corporations employees, and for the grant of nonstatutory stock options, restricted stock, restricted stock units, stock appreciation rights, performance stock units, performance shares, and performance awards to our employees, directors and consultants, and employees and consultants of our parent and subsidiary corporations and any entity that directly or indirectly is in control of, is controlled by, or is in common control with us. As of December 31, 2017, options to purchase 91,137 shares of our common stock and 1,197,443 shares subject to restricted stock units remained outstanding under our 2017 Plan. No shares of restricted stock remained subject to forfeiture under our 2017 Plan as of such date. Authorized Shares. As of the date of this prospectus, a total of 6,925,695 shares of our common stock are reserved for issuance pursuant to the 2017 Plan. In addition, the shares reserved for issuance under our 2017 Plan include shares subject to outstanding awards granted under our 2000 Plan, that, after the termination of our 2000 Plan, are cancelled, expire, or otherwise terminate without having been exercised in full, and shares previously issued pursuant to our 2000 Plan that are forfeited to us, tendered to or withheld by us for the payment of an award s exercise price or for tax withholding, or repurchased by us due to failure to vest (provided that the maximum number of shares that may be added to our 2017 Plan pursuant to the provision described in this sentence is 12,500,000 shares). The number of shares available for issuance under our 2017 Plan will increase automatically each year, equal to the least of: 3,800,000 shares; 5% of the outstanding shares of common stock as of the last day of our immediately preceding fiscal year; or Table of Contents such lower number of shares as the administrator may determine, as determined no later than the earlier of (x) the last day of our first fiscal quarter of, or (y) the date on which the first regularly scheduled meeting of our compensation committee occurs during the fiscal year in which such increase occurs. In addition, if an option or stock appreciation right awarded under the 2017 Plan expires or becomes unexercisable without having been exercised in full or is surrendered under an award exchange program, then unissued shares subject to the award will become available for future issuance under the 2017 Plan. Only shares actually issued pursuant to a stock appreciation right (i.e., the net shares issued) will cease to be available under the 2017 Plan; all remaining shares originally subject to the stock appreciation right will remain available for future issuance. Shares issued pursuant to awards of restricted stock, restricted stock units, performance shares, performance stock units, and stock-settled performance awards that are reacquired by us due to failure to vest or are forfeited to us will become available for future issuance under the 2017 Plan. Shares used to pay the exercise price of an award or to satisfy tax withholding obligations related to an award will become available for future issuance under the 2017 Plan. If any portion of an award granted under the 2017 Plan is paid in cash rather than shares, that cash payment will not reduce the number of shares available for issuance under the 2017 Plan. Shares under the 2017 Plan may be our authorized but unissued common stock or our common stock issued and then reacquired by us. Plan Administration. Our compensation committee administers our 2017 Plan. The administrator has the power to administer our 2017 Plan, including but not limited to, the power to interpret the terms of our 2017 Plan and awards granted under it, to create, amend, and revoke rules relating to our 2017 Plan, including creating subplans and appendices, and to determine the terms of the awards, including the exercise price, the number of shares subject to each such award, the exercisability of the awards, and the form of consideration, if any, payable upon exercise. The administrator also has the authority to amend existing awards including to increase or reduce the exercise price of an outstanding award, to allow participants the opportunity to transfer outstanding awards to a financial institution or other person or entity selected by the administrator, and to institute an exchange program by which outstanding awards may be surrendered in exchange for awards of the same type which may have a higher or lower exercise price or different terms, awards of a different type, and/or cash. Stock Options. Stock options may be awarded under our 2017 Plan. The per share exercise price of incentive stock options awarded under our 2017 Plan must at least be equal to the fair market value of a share of our common stock on the date of grant. The term of an incentive stock option may not exceed 10 years, except that with respect to any participant who owns more than 10% of the voting power of all classes of our outstanding stock or the stock of any of our parent or subsidiaries, the term must not exceed five years and the per share exercise price must equal at least 110% of the fair market value of a share of our common stock on the grant date. Subject to the provisions of our 2017 Plan, the administrator will determine the exercise price and term of all other options. The administrator will determine the methods of payment of the exercise price of an option, which may include, to the extent permitted by applicable law, cash, shares, or other property acceptable to the administrator, as well as other types of consideration. After the termination of service of an employee, director or consultant, he or she may exercise his or her option for the period of time stated in his or her award agreement. However, in no event may an option be exercised later than the expiration of its term, except in certain circumstances where the exercise period is extended due to the exercise of the option being prevented by applicable laws. Restricted Stock. Restricted stock may be awarded under our 2017 Plan. Restricted stock awards are grants of shares of our common stock that vest in accordance with terms and conditions established by the administrator. The administrator will determine the number of shares subject to the restricted stock award and may impose any conditions to vesting it determines to be appropriate (for example, the administrator may set restrictions based on the achievement of specific performance goals or continued service to us). The administrator, in its sole discretion, may accelerate the time at which any restrictions will lapse or be removed. Shares subject to the restricted stock award that do not vest are subject to our right of repurchase or forfeiture. Restricted Stock Units. Restricted stock units, or RSUs, may be awarded under our 2017 Plan. RSUs are bookkeeping entries representing an amount equal to the fair market value of one share of our common stock. The administrator will determine the terms and conditions of RSUs, including the number of units awarded, any vesting criteria (which may include accomplishing specified performance criteria or continued service to us), and the form and timing of payment (unless otherwise provided in the award agreement). The administrator, in its sole discretion, may reduce or waive any criteria that must be met to earn the restricted stock units. Stock Appreciation Rights. Stock appreciation rights may be awarded under our 2017 Plan. Stock appreciation rights allow the recipient to receive the appreciation in the fair market value of our common stock between the exercise date and the date of grant. Subject to the provisions of our 2017 Plan, the administrator will determine the terms of stock appreciation rights, including when such rights become exercisable and whether to pay any increased appreciation in cash or with shares of our common stock, Table of Contents or a combination of both. After the termination of service of an employee, director or consultant, he or she may exercise his or her stock appreciation right for the period of time stated in his or her award agreement. Performance Stock Units, Performance Shares, and Performance Awards. Performance stock units, performance shares, and performance awards may be awarded under our 2017 Plan. Performance stock units, performance shares, and performance awards are awards that will result in a payment to a participant generally if the performance goals established by the administrator are achieved or the awards otherwise vest. The administrator will establish organizational or individual performance goals or other vesting criteria in its discretion, which, depending on the extent to which they are met, will determine the number and/or the value of performance stock units, performance shares, and performance awards to be paid out to participants. After the grant of a performance stock unit, performance share, or performance award, the administrator, in its sole discretion, may reduce or waive any performance objectives or other vesting provisions for such performance stock unit, performance share, or performance award. Performance stock units will have an initial value established by the administrator on or prior to the grant date. Performance shares will have an initial value equal to the fair market value of our common stock on the grant date. Performance awards will have threshold, target, and maximum payout values established by the administrator on or prior to the grant date. The administrator, in its sole discretion, may pay earned performance stock units, performance shares, or performance awards in the form of cash, shares, or some combination thereof. Non-Employee Directors. Our 2017 Plan provides that all non-employee directors will be eligible to receive all types of awards (except for incentive stock options) under the 2017 Plan. In order to provide an annual maximum limit on the awards that can be made to our non-employee directors, our 2017 Plan provides that in any given fiscal year a non-employee director may not be granted awards under the 2017 Plan with a grant date fair market value (determined under U.S. generally accepted accounting principles with respect to awards) greater than $750,000, increased to $1.5 million in connection with his or her initial service as a non-employee director. Awards granted to a non-employee director for services as an employee or consultant (other than a non-employee director) will not count toward these limits. The maximum limits do not reflect the intended size of any potential grants or a commitment to make grants to our non-employee directors under our 2017 Plan in the future. Please see the description of our non-employee director compensation above under Management Non-Employee Director Compensation. Non-Transferability of Awards. Unless the administrator provides otherwise, our 2017 Plan generally does not allow for the transfer of awards, and only the recipient of an award may exercise an award during his or her lifetime. Certain Adjustments. In the event of certain changes in our capitalization such as an extraordinary dividend or other extraordinary distribution (whether in cash, shares, other securities, or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange of shares of our common stock or other securities, issuance of warrants or other rights to acquire our securities, other change in our corporate structure affecting our common stock, or any similar equity restructuring transaction, then to prevent diminution or enlargement of the benefits or potential benefits available under our 2017 Plan, the administrator will adjust the number and class of shares that may be delivered under our 2017 Plan and/or the number, class and price of shares covered by each outstanding award, and the numerical share limits set forth in our 2017 Plan in such a manner as it deems equitable. Dissolution or Liquidation. In the event of our proposed liquidation or dissolution, the administrator will notify participants that all awards will terminate immediately prior to the consummation of such proposed transaction. Any outstanding awards will terminate immediately prior to the consummation of such proposed transaction. Merger or Change in Control. Our 2017 Plan provides that in the event of a merger or change in control, as defined under our 2017 Plan, each outstanding award will be treated as the administrator determines, except that if a successor corporation does not continue any outstanding award (or some portion of any award) in accordance with the terms of our 2017 Plan, then such award will fully vest (but in no event as to more than 100% of the grant), all restrictions on such award will lapse, all performance goals or other vesting criteria applicable to such award will be deemed achieved at 100% of target levels, and such award will become fully exercisable, if applicable, for a specified period prior to the transaction. The award will then terminate upon the expiration of the specified period of time. With respect to awards granted to a non-employee director, the participant will fully vest in and have the right to exercise any outstanding options and stock appreciation rights, all restrictions on other outstanding awards will lapse, and with respect to any awards with performance-based vesting, all performance goals or other vesting criteria applicable to such award will be deemed achieved at 100% of target levels. Forfeiture and Clawback. All awards granted under our 2017 Plan are subject to recoupment under any clawback policy that we are required to adopt under applicable law. In addition, the administrator may provide in an award agreement that the recipient s rights, payments, and benefits with respect to such award shall be subject to reduction, cancellation, forfeiture, or recoupment upon the occurrence of specified events. In the event of certain accounting restatements, certain award recipients will be required Table of Contents to repay a portion of the proceeds received in connection with the settlement of an award earned or accrued under certain circumstances. Amendment; Termination. Our 2017 Plan automatically terminates in 2027, unless we terminate it sooner. The administrator has the authority to amend, alter, suspend, or terminate our 2017 Plan provided such action does not materially impair the existing rights of any participant, subject to certain exceptions in accordance with the terms of our 2017 Plan. 2000 Stock Option and Incentive Plan, as amended Our board of directors adopted, and our stockholders approved, our 2000 Plan in December 2000. Our 2000 Plan was most recently amended on May 11, 2017. Our 2000 Plan terminated in connection with our initial public offering, and accordingly, after such termination, no shares are available for issuance under our 2000 Plan. Our 2000 Plan will continue to govern outstanding awards granted thereunder. As of December 31, 2017, options to purchase 9,222,496 shares of our common stock and 3,018,558 shares subject to restricted stock units remained outstanding under our 2000 Plan. Additionally, 146,468 shares of restricted stock remained subject to forfeiture as of such date. Plan Administration. Our compensation committee administers the 2000 Plan. Subject to the provisions of our 2000 Plan, the administrator has the full authority and discretion to take any actions it deems necessary or advisable for the administration of the 2000 Plan. The administrator also has the authority to amend existing awards to reduce or increase their exercise price, to allow participants the opportunity to transfer outstanding awards to a financial institution or other person or entity selected by the administrator and to institute an exchange program by which outstanding awards may be surrendered in exchange for awards of the same type, which may have a higher or lower exercise price or different terms, awards of a different type and/or cash. All decisions, interpretations and other actions of the administrator will be final and binding on all participants. Stock Options. Our 2000 Plan provided for the grant of stock options. The exercise price per share of all options granted under our 2000 Plan must equal at least 100% of the fair market value per share of our common stock on the date of grant. The term of an option may not exceed 10 years from the date of grant. An incentive stock option held by a participant who owns more than 10% of the total combined voting power of all classes of our stock, or of any parent or subsidiary corporations, may not have a term in excess of five years. Any stock option held by such a participant must have an exercise price of at least 110% of the fair market value per share of our common stock on the date of grant. The administrator determined the methods of payment of the exercise price of an option, which may include cash, shares, or certain other consideration acceptable to the administrator. After the termination of service of an employee, director or consultant, the participant may generally exercise his or her options, to the extent vested as of such date of termination, for at least three months after termination. If termination is due to disability, the option will generally remain exercisable, to the extent vested as of such date of termination, for at least six months after termination. If termination is due to death, the option will generally remain exercisable, to the extent vested as of such date of termination, for at least 12 months after termination. If the termination is for cause, as defined in the 2000 Plan, the option will expire on the date of termination or such later date as the administrator may determine. However, in no event may an option be exercised after the expiration of its term. Shares and Restricted Stock. Our 2000 Plan provided for grants of shares of our common stock including restricted stock . Restricted stock awards are grants of shares of our common stock that are subject to various restrictions, including restrictions on transferability and forfeiture provisions. Restricted stock granted to a participant who owns more than 10% of the total combined voting power of all classes of our stock, or of any parent or subsidiary corporations, may not have a purchase price of less than 100% of the fair market value per share of our common stock on the date of grant. Shares of restricted stock will vest, and the restrictions on such shares will lapse, in accordance with terms and conditions established by the administrator. Restricted Stock Units. Our 2000 Plan provided for grants of restricted stock units. Restricted stock units are bookkeeping entries representing an amount equal to the fair market value of one share of our common stock. Subject to the provisions of our 2000 Plan, the administrator determined the terms and conditions of restricted stock units, including the vesting criteria (which may include accomplishing specified performance criteria or continued service to us) and the form and timing of payment. Restricted stock units may be settled in cash or shares of our common stock. Special Provisions for Israeli Participants. Our 2000 Plan includes special provisions that are applicable only to residents of the State of Israel in order to comply with applicable Israeli legal requirements or otherwise achieve favorable tax consequences for participants of the 2000 Plan under applicable Israeli law. Transferability of Options. Our 2000 Plan generally does not allow for the transfer of options, and generally only the recipient of an option may exercise such an award during his or her lifetime. Adjustments. In the event of certain changes in our capitalization such as a subdivision of our common stock, declaration of a dividend payable in common stock, declaration of an extraordinary dividend payable in a form other than our common stock Table of Contents in an amount that has a material effect on the fair market value of our common stock, a combination or consolidation of outstanding common stock into a lesser number of shares of common stock, recapitalization, spin-off, or reclassification, then our board of directors will make appropriate adjustments to the number of shares reserved under our 2000 Plan, the exercise prices of, and the number of shares subject to, outstanding options. Merger or Change in Control. Our 2000 Plan provides that if we are party to a merger or consolidation, such agreement may provide for (i) the continuation of such outstanding option by the surviving company; (ii) the assumption of the 2000 Plan and such outstanding option by the surviving corporation or its parent; (iii) the substitution by the surviving corporation or its parent of options with substantially the same terms for such outstanding options; (iv) the full exercisability of such outstanding options and full vesting of the shares subject to such options, followed by cancellation of such options; (v) the settlement of the full value of such outstanding options (whether or not then exercisable) in cash or cash equivalents, followed by the cancellation of such options; or (vi) any other action permitted by applicable law. 2017 Employee Stock Purchase Plan Our board of directors adopted, and our stockholders approved, our 2017 Employee Stock Purchase Plan, or ESPP, in February 2017 and October 2017, respectively. Our ESPP became effective on October 26, 2017, the effective date of our initial public offering. Authorized Shares. As of the date of this prospectus, a total of 1,181,219 shares of our common stock are available for sale under the ESPP. The number of shares available for issuance under our ESPP also includes an automatic, annual increase, equal to the least of: 800,000 shares; 1% of the total number of shares of our common stock outstanding on the last day of our immediately preceding fiscal year; or such lower number of shares as determined by the administrator no later than the earlier of (x) the last day of our first fiscal quarter of, or (y) the date on which the first regularly scheduled meeting of our compensation committee occurs during, the fiscal year in which such increase occurs. Plan Administration. Our compensation committee administers the ESPP. The administrator has full and exclusive authority to interpret the terms of the plan and determine eligibility to participate, subject to the conditions of the ESPP as described below. Eligibility. Generally, all of our employees are eligible to participate if they are employed by us, or any designated subsidiary or affiliate, for customarily at least 20 hours per week and more than five months in any calendar year. However, an employee may not be granted rights to purchase stock under the ESPP if such employee: immediately after the grant would own stock possessing 5% or more of the total combined voting power or value of all classes of our capital stock; or hold rights to purchase stock under all employee stock purchase plans of ours or our parent or subsidiary that accrue at a rate that exceeds $25,000 worth of stock for each calendar year. Offering Periods. Our ESPP includes a component that allows us to make offerings intended to qualify under Section 423 of the Internal Revenue Code of 1986, as amended, and a component that allows us to make offerings not intended to qualify under Section 423 of the Internal Revenue Code of 1986, as amended, to designated companies, as described in our ESPP. Our ESPP provides for consecutive, overlapping six month offering periods. The offering periods are scheduled to start on the first trading day on or after May 20 and November 20 of each year, except for the first offering period following our initial public offering, which will end on the first trading day on or after May 20, 2018, and the second offering period, which will commence on the first trading day on or after May 20, 2018. Contributions. Our ESPP will permit participants to purchase shares of our common stock through contributions, generally in the form of payroll deductions, of up to 15% of their eligible compensation. Compensation includes the participant s base straight time gross earnings (including thirteenth and fourteenth month payments and similar concepts under local law) and payments for overtime and shift premium, but exclusive of payments for commissions, incentive compensation, bonuses, equity compensation income, and other similar compensation. Exercise of Purchase Right. Contributions accumulated by the participant will be used to purchase shares of our common stock on the last trading day of an offering period, referred to as the exercise date. The purchase price of the shares will be 85% of the lower of the fair market value of our common stock on the first trading day of each offering period or on the exercise date. Table of Contents With respect to offering periods, if any, under the ESPP that provide for more than one purchase period, if the fair market value of our common stock on the exercise date is less than the fair market value on the first trading day of the offering period, participants will be withdrawn from the current offering period following their purchase of shares of our common stock on the purchase date and will be automatically re-enrolled in a new offering period. Participants may end their participation at any time during an offering period and will be paid their accrued contributions that have not yet been used to purchase shares of our common stock. Participation ends automatically upon termination of employment with us. Participants may decrease the rate of their contributions one time during an offering period and may not increase the rate of their contributions during an offering period. A participant will be able to purchase a maximum of 2,500 shares of our common stock during an offering period. Participation will end automatically upon termination of employment with us. Non-Transferability. A participant may not transfer rights granted under the ESPP. If the administrator permits the transfer of rights, it may only be done by will, the laws of descent and distribution, or as otherwise provided under the ESPP. Certain Adjustments. In the event of certain changes in our capitalization such as any dividend or other distribution (whether in the form of cash, our common stock, other securities, or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange of our common stock or other securities or other change in our corporate structure that affects our common stock, then to prevent dilution or enlargement of the benefits or potential benefits available under our ESPP, the administrator will adjust the number and class of shares that may be delivered under our ESPP and/or the number, class, and purchase price of shares covered by each outstanding purchase right, and the numerical share limits set forth in our ESPP. Dissolution or Liquidation. In the event of our proposed liquidation or dissolution, the offering period then in progress will be shortened, and a new exercise date occurring before the date of the proposed dissolution or liquidation, unless otherwise provided by the administrator. The administrator will notify each participant that the exercise date has been changed and that the participant s option will be exercised automatically on the new exercise date unless prior to such date the participant has withdrawn from the offering period. Merger or Change in Control. In the event of our merger or change in control, as defined under the ESPP, a successor corporation may assume or substitute for each outstanding purchase right. If the successor corporation refuses to assume or substitute for the outstanding purchase right, the offering period then in progress will be shortened, and a new exercise date will be set. The administrator will notify each participant that the exercise date has been changed and that the participant s option will be exercised automatically on the new exercise date unless prior to such date the participant has withdrawn from the offering period. Amendment; Termination. Our ESPP will automatically terminate in 2037, unless we terminate it sooner. The administrator may amend, suspend, or terminate our ESPP or any part of our ESPP at any time and for any reason, subject to certain exceptions described in our ESPP. Executive Bonus Compensation Plan Our board of directors and our stockholders adopted an Executive Bonus Compensation Plan, which we refer to as our Bonus Plan. Our Bonus Plan is administered by our compensation committee. The purposes of the Bonus Plan are to increase stockholder value and our success by motivating key executives to perform to the best of their abilities and to achieve our objectives. Our Bonus Plan allows our compensation committee to provide cash incentive awards to selected employees, including our named executive officers, based upon performance goals established by our compensation committee. Pursuant to the Bonus Plan, our compensation committee, in its sole discretion, will select our employees or employees of our affiliates (or those expected to become such employees during a performance period) who will be participants during a performance period under the Bonus Plan, establish the performance goal and any payout formula for each participant for each performance period, and establish a target award for each participant. Our compensation committee has all powers and discretion for administering the Bonus Plan, including the authority to determine any other terms and conditions of awards, interpret the Bonus Plan and awards, delegate certain powers to one or more of our officers or members of our board of directors, and adopt rules, procedures and subplans for the administration of the Bonus Plan. The maximum amount of an award for any fiscal year that a participant may receive under the Bonus Plan will be 300% of such participant s target bonus. Under the Bonus Plan, the performance goals applicable to awards may include one or more of the following: cash flow (including operating cash flow or free cash flow), revenue (on an absolute basis or adjusted for currency effects), gross margin, operating expenses, or operating expenses as a percentage of revenue, earnings (which may include earnings before interest and taxes and net earnings), earnings per share, stock price, return on equity, total stockholder return, growth in stockholder value relative to the moving average of the S&P 500 Index or another index, return on capital, return on assets or net assets, return on investment, economic value added, operating profit or net operating expenses, operating income, operating margin, market share, contract awards or backlog, overhead or other expense reduction, credit rating, objective customer indicators, new product Table of Contents invention or innovation, attainment of research and development milestones, improvements in productivity, attainment of objective operating goals, contingent or non-contingent orders, net promoter score, bookings, expenses, and growth rates in any of the foregoing performance criteria. As determined by our compensation committee, performance goals may differ from participant to participant, and award to award. The criteria may be measured in absolute terms, in combination with other criteria, in relative terms, against the performance of the company as a whole or specific business units, affiliates, business segments, or products, on a per share or per capita basis, or on a pre tax or post tax basis. Our compensation committee also will determine any significant elements or items that will be included in or excluded from the calculation of any performance goal. Otherwise, performance goals will be calculated in accordance with our financial statements, prepared in accordance with U.S. Generally Accepted Accounting Principles or accounting principles established by the Internal Accounting Standards Board or under a methodology established by our compensation committee that is consistently applied with respect to a performance goal in the applicable performance period. In the event of any stock dividend or split, repurchase, recapitalization, combination, or exchange of shares, or other similar changes in our stock, our compensation committee will make adjustments to criteria that relate to the number or value of our stock affected by such events. Our compensation committee will determine the actual award payable to a participant under the Bonus Plan. Our compensation committee, in its sole discretion, may reduce or eliminate a participant s actual award, determine whether an actual award will be paid in the event of termination of a participant s employment due to his or her death or disability or that occurs upon or following our change in control, or in other types of terminations of a participant s employment prior to a change in control but subject to attainment of the applicable performance criteria. Our compensation committee, in its sole discretion, may amend or terminate the Bonus Plan or any part of the Bonus Plan at any time and for any reason. Any amendment, suspension, or termination of the Bonus Plan may not impair any rights or obligations under any target award granted to a participant under the Bonus Plan. Unless earlier terminated, our Bonus Plan will remain in effect through our 2021 annual meeting of stockholders. 401(k) Plan We maintain our 401(k) Savings Plan, referred to as our 401(k) Plan, a tax-qualified retirement plan that provides eligible employees with an opportunity to save for retirement on a tax-advantaged basis. All participants interests in their deferrals are 100% vested when contributed. In 2017, we made contributions to our 401(k) Plan of $1.1 million. A participant s contributions are allocated to the participant s individual account on a pre-tax basis, or on a post-tax basis with respect to the Roth 401(k) plan component. The contributions are invested in selected investment alternatives according to the participants directions. Our 401(k) Plan is intended to qualify under Sections 401(a) and 501(a) of the Code. As a tax-qualified retirement plan, contributions to our 401(k) Plan (other than with respect to the Roth 401(k) plan component) and any earnings on contributions are not taxable to the employees until distributed from our 401(k) Plan, and all contributions are deductible by us when made. Limitation on Liability and Indemnification Matters Our amended and restated certificate of incorporation and amended and restated bylaws provide that we will indemnify our directors and officers, and may indemnify our employees and other agents, to the fullest extent permitted by the Delaware General Corporation Law, which prohibits our amended and restated certificate of incorporation from limiting the liability of our directors for the following: any breach of the director s duty of loyalty to us or our stockholders; acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law; unlawful payment of dividends or unlawful stock repurchases or redemptions; and any transaction from which the director derived an improper personal benefit. If Delaware law is amended to authorize corporate action further eliminating or limiting the personal liability of a director, then the liability of our directors will be eliminated or limited to the fullest extent permitted by Delaware law, as so amended. Our amended and restated certificate of incorporation does not eliminate a director s duty of care and in appropriate circumstances, equitable remedies, such as injunctive or other forms of non-monetary relief, remain available under Delaware law. This provision also does not affect a director s responsibilities under any other laws, such as the U.S. federal securities laws or other state or U.S. federal laws. Under our amended and restated bylaws, we will also be empowered to purchase insurance on behalf of any person whom we are required or permitted to indemnify. In addition to the indemnification required in our amended and restated certificate of incorporation and amended and restated bylaws, we have entered into indemnification agreements with our current directors and officers. These agreements provide indemnification for certain expenses and liabilities incurred in connection with any action, suit, proceeding, alternative dispute Table of Contents resolution mechanism, hearing, inquiry or investigation that may lead to the foregoing, to which they are a party, or are threatened to be made a party, by reason of the fact that they are or were a director, officer, employee, agent, or fiduciary of our company, or any of our subsidiaries, by reason of any action or inaction by them while serving as an officer, director, agent, or fiduciary, or by reason of the fact that they were serving at our request as a director, officer, employee, agent or fiduciary of another entity. In the case of an action or proceeding by, or in the right of, our company or any of our subsidiaries, no indemnification will be provided for any claim where a court determines that the indemnified party is prohibited from receiving indemnification. We believe that these bylaw provisions and indemnification agreements are necessary to attract and retain qualified persons as directors and officers. We also maintain directors and officers liability insurance. The limitation of liability and indemnification provisions in our amended and restated certificate of incorporation and amended and restated bylaws may discourage stockholders from bringing a lawsuit against directors for breach of their fiduciary duties. They may also reduce the likelihood of derivative litigation against directors and officers, even though an action, if successful, might benefit us and our stockholders. A stockholder s investment may be harmed to the extent we pay the costs of settlement and damage awards against directors and officers pursuant to these indemnification provisions. Insofar as we may provide indemnification for liabilities arising under the Securities Act to our directors, officers and controlling persons pursuant to the foregoing provisions, or otherwise, we have been advised that, in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act of 1933, as amended, and is, therefore, unenforceable. There is no pending litigation or proceeding naming any of our directors or officers as to which indemnification is being sought, nor are we aware of any pending or threatened litigation that may result in claims for indemnification by any director or officer. Table of Contents CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS In addition to the compensation arrangements, including employment, termination of employment and change in control arrangements, discussed in the sections titled Management and Executive Compensation and the registration rights described in the section titled Description of Capital Stock Registration Rights, the following is a description of each transaction since January 1, 2015 and each currently proposed transaction in which: we have been or are to be a participant; the amounts involved exceeded or will exceed $120,000; and any of our directors, executive officers, or beneficial owners of more than 5% of any class of our capital stock or any immediate family member of, or person sharing a household with, and of these individuals or entities had or will have a direct or indirect material interest. Private Placements Series G Redeemable Convertible Preferred Stock Transaction In November 2015 and January 2016, we issued and sold an aggregate of 3,344,540 shares of our Series G redeemable convertible preferred stock at a purchase price of $23.7340 per share, for an aggregate purchase price of approximately $79.4 million. At the initial public offering price of $22.00 per share, 3,344,540 outstanding shares of our Series G redeemable convertible preferred stock converted into 3,926,794 shares of common stock upon the initial public offering. Purchasers of our Series G redeemable convertible preferred stock include venture capital funds that beneficially own more than 5% of our outstanding capital stock and/or are represented on our board of directors. The following table presents the number of shares and the total purchase price paid by these entities: Investor Shares of Series G Redeemable Convertible Preferred Stock Total Purchase Price Entities affiliated with Aspect Ventures(1) 421,335 $ 9,999,989 Entities affiliated with Wellington Management Company(2) 2,413,434 $ 57,280,490 _____________________ (1) Entities affiliated with Aspect Ventures holding our securities whose shares are aggregated for purposes of reporting share ownership information include Aspect Ventures, L.P., and Aspect Ventures I-A, L.P. Theresia Gouw, a member of our board of directors, is a partner at Aspect Ventures. (2) Entities affiliated with Wellington Management Company holding our securities whose shares are aggregated for purposes of reporting share ownership information include Hartford Global Capital Appreciation Fund, Global Multi-Strategy Fund, The Hartford Growth Opportunities Fund, The Hartford Capital Appreciation Fund, Hartford Growth Opportunities HLS Fund, Hadley Harbor Master Investors (Cayman) L.P., and Ithan Creek Master Investors (Cayman) L.P. Investors Rights Agreement We are party to an amended and restated investors rights agreement with our founders, including Yehezkel Yeshurun, and the holders of our redeemable convertible preferred stock, including entities affiliated with Wellington Management Company, Amadeus Capital, Aspect Ventures, Meritech Capital Partners, Accel, and Pitango, each of which beneficially owns more than 5% of our capital stock or is affiliated with a member of our board of directors. This agreement provides, among other things, that holders of our redeemable convertible preferred stock have certain registration rights, including the right to demand that we file a registration statement or request that their shares be covered by a registration statement that we are otherwise filing. For a more detailed description of these registration rights, see the section titled Description of Capital Stock Registration Rights. Special Stockholder Voting Agreement and Irrevocable Proxy We are party to a special stockholder voting agreement and irrevocable proxy, or Voting Agreement, with Michael DeCesare, our Chief Executive Officer, and entities affiliated with Amadeus Capital, which beneficially own more than 5% of our capital stock and are affiliated with Richard Anton, a former member of our board of directors. The Voting Agreement provides that the entities affiliated with Amadeus Capital, or the Amadeus Entities, irrevocably appoint our then-serving chief executive officer, Table of Contents as the sole and exclusive attorney-in-fact and proxy holder of each Amadeus Entity, to vote, or refrain from voting, the shares held by the Amadeus Entities in identical proportions to the votes cast by our other stockholders with respect to any matter at any meeting of our stockholders or any actions taken by written consent of our stockholders. The proxy granted to our then-serving chief executive officer does not apply to certain matters, including: (i) matters regarding our liquidation, dissolution, or winding up in the event that as of the record date for the stockholder action to be taken with respect to such event, the Amadeus Entities are or are deemed to be the beneficial owners of no more than 18.0% of our outstanding common stock, (ii) matters relating to our bankruptcy or insolvency, (iii) any matter that would adversely impact the rights, preferences, or privileges of the Amadeus Entities in a manner different than our other stockholders, or (iv) any matter that would limit or adversely affect the right or ability of the Amadeus Entities to dispose of any of our capital stock held by the Amadeus Entities. Limitation of Liability and Indemnification of Directors and Executive Officers We have entered into indemnification agreements with our directors and certain of our executive officers. The indemnification agreements and our amended and restated certificate of incorporation and amended and restated bylaws require us to indemnify our directors and officers to the fullest extent permitted by Delaware law. See the section titled Executive Compensation Limitation on Liability and Indemnification Matters for additional information. The underwriting agreement provides for indemnification by the underwriters of us and our directors and executive officers for certain liabilities arising under the Securities Act of 1933, as amended, or otherwise. Relationship with FireEye, Inc. David DeWalt, a member of our board of directors and our Vice-Chairman since June 2015, previously served as the chief executive officer of FireEye, Inc., or FireEye, a global network cybersecurity company, from November 2012 until June 2016 and served as its Executive Chairman of the Board from June 2016 to January 2017. We maintain several on-going commercial relationships with FireEye, including a reciprocal vendor-customer relationship, an Alliance Partner relationship, a technology partner relationship, and a joint-sponsor relationship related to marketing programs. In 2016 and 2017, we purchased products and services from FireEye pursuant to the terms of a product and service purchase agreement and paid FireEye approximately $373,253 and $132,000, respectively, under the terms of this agreement. In 2015 and 2016, we sold ForeScout products and services to FireEye and received payments from FireEye totaling approximately $790,000. In 2017, we sold services to FireEye totaling approximately $600. In March 2013 and February 2014, we entered into a technology partnership arrangement, as amended, with FireEye which focus on the integration and interoperability between our respective security products. For the years ended December 31, 2015, 2016, and 2017, we incurred fees of approximately $0, $43,800, and $0, respectively, under the terms of the 2013 technology partnership arrangement with FireEye, and we expect to incur additional fees under this arrangement in the ordinary course of business following the completion of this offering. In January 2016, we entered into a mutual referral fee partnership arrangement with FireEye to increase market opportunities for both FireEye s and our product and service offerings. We did not receive any fees from FireEye or paid any fees to FireEye under this relationship. Additionally, we have entered into a number of agreements with FireEye related to the joint sponsorship of marketing events. For the years ended December 31, 2015, 2016, and 2017, we incurred fees of approximately $76,500, $174,000, and $25,000, respectively, under these joint sponsorship agreements. Employment Arrangement with an Immediate Family Member of Our Chairman Shai Yeshurun is a Senior Director of Finance and the son of Yehezkel Yeshurun, the Chairman of our board of directors. His 2015, 2016, and 2017 total compensation was approximately $151,700, $168,000, and $154,000, respectively. His current annual salary is approximately $130,000. Policies and Procedures for Related Party Transactions Our audit committee has adopted a formal written policy providing that our audit committee is responsible for reviewing related party transactions, which are transactions (i) in which we were, are or will be a participant, (ii) in which the aggregate amount involved exceeds or may be expected to exceed $120,000, and (iii) in which a related person had, has or will have a direct or indirect material interest. For purposes of this policy, a related person is defined as a director, nominee for director, executive officer, or greater than 5% beneficial owner of our common stock and their immediate family members, in each case, since the beginning of the most recently completed year. Under this policy, all related party transactions may be consummated or continued only if approved or ratified by our audit committee. In determining whether to approve or ratify any such proposal, our audit committee will take into account, among other factors it deems appropriate, (i) whether the transaction is on terms no less favorable than terms generally available to an unaffiliated third party and (ii) the extent of the related party s interest in the Table of Contents transaction. The policy grants standing pre-approval of certain transactions, including (i) certain compensation arrangements of executive officers, (ii) certain director compensation arrangements, (iii) transactions with another company at which a related party s only relationship is as an employee, other than an executive officer or director, or beneficial owner of less than 5% of that company s shares, (iv) charitable contributions, grants or endowments by us to a charitable organization, foundation or university where the related party s only relationship is as an employee, other than an executive officer or director, if the aggregate amount involved does not exceed the greater of $100,000 or 2% of the charitable organization s total annual receipts, and (v) transactions where a related party s interest arises solely from the ownership of our common stock and all holders of our common stock received the same benefit on a pro rata basis. Table of Contents PRINCIPAL AND SELLING STOCKHOLDERS The following table sets forth certain information available to us with respect to the beneficial ownership of our common stock as of February 28, 2018, as adjusted to reflect the sale of common stock in this offering by us and the selling stockholders in this offering, assuming no exercise of the underwriters option to purchase additional shares of our common stock from the selling stockholders, for: each of our directors; each of our named executive officers; all of our current directors and executive officers as a group; each person, or group of affiliated persons, known by us to beneficially own more than 5% of our common stock; and each selling stockholder. We have determined beneficial ownership in accordance with the rules of the Securities and Exchange Commission, and the information is not necessarily indicative of beneficial ownership for any other purpose. Except as indicated by the footnotes below, we believe, based on information furnished to us, that the persons and entities named in the table below have sole voting and sole dispositive power with respect to all shares of common stock that they beneficially owned, subject to applicable community property laws. We have based our calculation of percentage ownership of our common stock before this offering on 38,370,757 shares of our common stock outstanding on February 28, 2018. Our calculation of percentage ownership of our common stock after this offering (assuming no exercise of the underwriters option to purchase additional shares from certain selling stockholders) also assumes the sale of common stock by us and the selling stockholders of 4,411,000 shares of common stock in this offering (including the shares that are issued upon the exercise of options to purchase shares of our common stock and sold in this offering). We have deemed shares of our capital stock subject to stock options that are currently exercisable or exercisable within 60 days of February 28, 2018 to be outstanding and to be beneficially owned by the person holding the stock option for the purpose of computing the percentage ownership of that person. We have deemed shares of our common stock subject to restricted stock units for which the service condition has been satisfied or would be satisfied within 60 days of February 28, 2018 to be outstanding and to be beneficially owned by the person holding the restricted stock units for the purpose of computing the percentage ownership of that person. However, we did not deem these shares subject to stock options or restricted stock units outstanding for the purpose of computing the percentage ownership of any other person. Unless otherwise indicated, the address of each beneficial owner listed in the table below is c/o ForeScout Technologies, Inc., 190 West Tasman Drive, San Jose, California 95134. Table of Contents Name of Beneficial Owner+ Beneficial Ownership Prior to this Offering Shares Being Offered Beneficial Ownership After this Offering Number Percent Number Percent 5% Stockholders: Entities affiliated with Accel(1) 4,751,280 12.4 % 979,999 3,771,281 9.6 % Entities affiliated with Amadeus Capital(2) 6,114,161 15.9 % 738,415 5,375,746 13.7 % Entities affiliated with Meritech Capital Partners(3) 4,165,295 10.9 % 833,049 3,332,246 8.5 % Entities affiliated with Pitango(4) 4,379,625 11.4 % 492,231 3,887,394 9.9 % Entities affiliated with Wellington Management Group LLP and certain of its investment advisory clients(5) 3,045,918 7.9 % 3,045,918 7.8 % Executive Officers and Directors: Michael DeCesare(6) 1,500,299 3.8 % 210,000 1,290,299 3.2 % Shares subject to voting proxy 6,114,161 15.9 % 738,415 5,375,746 13.7 % Total(6)(7) 7,614,460 19.4 % 948,415 6,666,045 16.7 % Pedro Abreu(8) 294,994 * 41,600 253,394 * Christopher Harms(9) 297,520 * 46,169 251,351 * Darren J. Milliken(10) 178,313 * 178,313 * Yehezkel Yeshurun(11) 565,432 1.5 % 113,137 452,295 1.1 % David DeWalt(12) 1,007,481 2.6 % 251,870 755,611 1.9 % James Beer(13) 25,000 * 25,000 * T. Kent Elliott(14) 516,060 1.3 % 125,000 391,060 1.0 % Theresia Gouw(15) 692,883 1.8 % 692,883 1.8 % Mark Jensen(16) 112,669 * 14,530 98,139 * Rami Kalish(17) 4,379,625 11.4 % 492,231 3,887,394 9.9 % Enrique Salem(18) 458,873 1.2 % 65,000 393,873 1.0 % All current directors and executive officers as a group (12 persons)(19) 16,143,310 39.9 % 2,097,952 14,045,358 33.9 % _____________________ * Represents beneficial ownership of less than one percent (1%). + Options to purchase shares of our capital stock included in this table are generally early exercisable, and to the extent such shares are unvested as of a given date, such shares will remain subject to a right of repurchase held by us. (1) Consists of (i) 3,703,261 shares held of record by Accel VIII L.P. ( Accel VIII ); (ii) 727,365 shares held of record by Accel Internet Fund IV L.P. ( Fund IV ); and (iii) 320,654 shares held of record by Accel Investors 2000 L.L.C. ( Investors 2000 ). Accel VIII Associates LLC ( Accel Associates ), the general partner of Accel VIII and Fund IV, has sole voting and dispositive power with respect to the shares held by Accel VIII and Fund IV. Arthur Patterson and Jim Swartz are the managing members of Investors 2000 and share voting and dispositive power over the securities held by Investors 2000. Arthur Patterson and Jim Swartz are the managing members of Accel Associates and share voting and dispositive power over the securities held by Accel Associates. If the option to purchase additional shares is exercised by the underwriters in full, an additional 213,036 shares of common stock will be sold by entities affiliated with Accel Associates, after which the entities affiliated with Accel Associates will beneficially own 3,558,245 shares of common stock, which represents 9.1% of the total voting power after this offering. The address for each of these entities is 500 University Avenue, Palo Alto, California 94301. (2) Consists of (i) 2,107,078 shares held of record by Amadeus II A ( Amadeus A ); (ii) 1,404,717 shares held of record by Amadeus II B ( Amadeus B ); (iii) 983,292 shares held of record by Amadeus II C ( Amadeus C ); (iv) 46,807 shares held of record by Amadeus II D GmbH & Co KG ( Amadeus D ); (v) 140,437 shares held of record by Amadeus II Affiliates Fund L.P. ( Affiliates Fund ); (vi) 572,442 shares held of record by Amadeus IV Velocity Fund L.P. ( Velocity Fund ); (vii) 210,796 shares held of record by Amadeus EI L.P. ( Amadeus EI ) ; and (viii) 648,592 shares held of record by Amadeus EII L.P. ( Amadeus EII and together with each of Amadeus A, Amadeus B, Amadeus C, Amadeus D, Affiliates Fund, Velocity Fund, and Amadeus EI, the Amadeus Funds ). Amadeus II General Partner LP ( Amadeus II GP ) is the general partner of each of Amadeus A, Amadeus B, Amadeus C, Amadeus D, and Affiliates Fund; Amadeus IV Velocity GP LP ( Amadeus Velocity GP ) is the general partner of Velocity Fund; Amadeus EI General Partner LP ( Amadeus EI Table of Contents GP ) is the general partner of Amadeus EI; and Amadeus EII General Partner LP ( Amadeus EII GP and together with each of Amadeus II GP, Amadeus Velocity GP, and Amadeus EI GP, the Amadeus Direct General Partners ) is the general partner of Amadeus EII. Amadeus General Partner LTD ( Amadeus GP LTD ) and Amadeus Capital GP LLP ( Amadeus Capital GP ) are the general partners of each of the Amadeus Direct General Partners. Amadeus Capital Partners Limited ( Amadeus Limited ) and Amadeus GP LTD are the partners of Amadeus Capital GP, Amadeus Limited is the manager of each of the Amadeus Funds, have sole voting and dispositive power with respect to the shares held by the Amadeus Funds. Each of Anne Glover, Hermann Hauser, Andrea Traversone, and Alex van Someren are the directors of Amadeus Limited (the Amadeus Directors ). The Amadeus Directors have delegated their shared voting and dispositive power with respect to the shares held by each of the Amadeus Funds to a committee comprised of Ms. Glover, Mr. Hauser, Ms. Traversone, Richard Anton, and Mikael Johnsson (the Amadeus Committee ). Each of the members of the Amadeus Committee share voting and dispositive power with respect to the shares held by the Amadeus Funds. If the option to purchase additional shares is exercised by the underwriters in full, an additional 160,520 shares of common stock will be sold by entities affiliated with the Amadeus Funds, after which the entities affiliated with the Amadeus Funds will beneficially own 5,215,226 shares of common stock, which represents 13.3% of the total voting power after this offering. The address for each of Amadeus A, Amadeus B, Amadeus C, Velocity Fund, Amadeus EI, Amadeus EII, Amadeus Capital GP, Amadeus Limited, and each of the Amadeus Directors is c/o Amadeus Capital, Suite 1, 2nd Floor, 2 Quayside, Cambridge, England CB5 8AB. The address for Amadeus D is c/o PE Concepts Verwaltungs GmbH, M hlstr. 23 c/o BLLW, 81675 Munich, Germany. The address for Affiliates Fund is c/o The Corporation Trust Company, 1209 Orange Street, Wilmington, New Castle County, Delaware, 19801. The address for each of Amadeus II GP, Amadeus Velocity GP, Amadeus EI GP, Amadeus EII GP, and Amadeus GP LTD is c/o Amadeus Capital, 50 Lothian Road, Festival Square, Edinburgh, Scotland EH3 9WJ. All of the shares held by the Amadeus Funds and referenced in this footnote (2) are subject to a voting agreement in favor of the Company s Chief Executive Officer referred to in footnote (7) below. (3) Consists of (i) 30,819 shares held of record by MCP Entrepreneur Partners II L.P. ( MCP ); (ii) 103,606 shares held of record by Meritech Capital Affiliates II L.P. ( Capital Affiliates ); and (iii) 4,030,870 shares held of record by Meritech Capital Partners II L.P. ( Capital Partners and collectively, the Meritech Entities ). Meritech Capital Associates II L.L.C. ( Meritech Capital ), the general partner of the Meritech Entities, has sole voting and dispositive power with respect to the shares held by the Meritech Entities. Meritech Management Associates II L.L.C. ( Meritech Associates ), managing member of Meritech Capital, has sole voting and dispositive power with respect to the shares held by Meritech Capital. Paul Madera and Michael Gordon, the managing members of Meritech Associates, share the voting and dispositive power with respect to the shares held by Meritech Associates. If the option to purchase additional shares is exercised by the underwriters in full, an additional 181,091 shares of common stock will be sold by entities affiliated with the Meritech Entities, after which the entities affiliated with the Meritech Entities will beneficially own 3,151,155 shares of common stock, which represents 8.0% of the total voting power after this offering. The address for the Meritech Entities is 245 Lytton Ave, Suite 125, Palo Alto, California 94301. (4) Consists of (i) 2,727,332 shares held of record by Pitango Venture Capital Fund III (USA) L.P.; (ii) 252,110 shares held of record by Pitango Venture Capital Fund III (USA) Non-Q L.P.; (iii) 737,464 shares held of record by Pitango Venture Capital Fund III (Israeli Investors) L.P.; (iv) 95,998 shares held of record by Pitango Principals Fund III (USA) L.P.; (v) 374,768 shares held of record by Pitango Parallel Investor Fund III (USA) L.P (collectively, the Pitango Entities ); and (vi) 191,953 shares held of record by Pitango Venture Capital Fund III Trusts 2000 Ltd. ( Pitango Trusts ). Pitango VC Fund III GP ( GP ), the sole general partner of the Pitango Entities, has sole voting and dispositive power with respect to the shares held by the Pitango Entities. The partners of the GP are eight private companies (the Principal Funds ) that are each owned by one of the following individuals: Rami Beracha, Bruce Crocker, Isaac Hillel, Rami Kalish, Aaron Mankovski, Chemi Peres, Isaac Shrem, and Zeev Binman, respectively (the Principals ), share voting and dispositive power with respect to the shares held by GP. If the option to purchase additional shares is exercised by the underwriters in full, an additional 107,003 shares of common stock will be sold by entities affiliated with the Pitango Entities and Pitango Trusts, after which the entities affiliated with the Pitango Entities and Pitango Trusts will beneficially own 3,780,391 shares of common stock, which represents 9.6% of the total voting power after this offering. The Principals, managing members of Pitango Trusts, share voting and dispositive power with respect to the shares held by Pitango Trusts. The address for the above listed entities is 11 HaMenofim Street, Building B, Herzeliya 4672562, Israel. (5) According to a Schedule 13G filed with the SEC on February 2, 2018, Wellington Management Group LLP holds shared voting power of 3,018,571 shares and shares dispositive power over 3,045,918 shares. The shares are owned of record by clients of the following investment advisers directly or indirectly owned by Wellington Management Group LLP : Wellington Management Company LLP, Wellington Management Canada LLC, Wellington Management Singapore Pte Ltd, Wellington Management Hong Kong Ltd, Wellington Management International Ltd, Wellington Management Japan Pte Ltd and Wellington Management Australia Pty Ltd. (collectively, the Wellington Investment Advisers ). The Wellington Investment Advisers have the right to receive, or the power to direct the receipt of, dividends from, or the proceeds from the sale of, such shares. Wellington Investment Advisors Holdings LLP, which is owned by Wellington Group Holdings LLP, which Table of Contents is owned by Wellington Management Group LLP, controls directly, or indirectly through Wellington Management Global Holdings, Ltd., the Wellington Investment Advisers. The business address of Wellington Management Group LLP, Wellington Group Holdings LLP, Wellington Investment Advisors Holdings LLP and Wellington Management Company LLP is 280 Congress Street, Boston, Massachusetts 02210. (6) Consists of (i) 212,903 shares held of record by Mr. DeCesare; (ii) 840,964 shares subject to options exercisable within 60 days of February 28, 2018, 627,619 of which are fully vested as of such date; and (iii) 446,432 shares of common stock issuable upon the vesting of restricted stock units within 60 days of February 28, 2018. (7) Consists of the shares listed in footnote (2) above over which, except under limited circumstances, Mr. DeCesare, as our Chief Executive Officer, holds an irrevocable proxy, pursuant to a voting agreement between Mr. DeCesare, us and the entities affiliated with the Amadeus Entities. We do not believe that the parties to this voting agreement constitute a group under Section 13 of the Securities Exchange Act of 1934, as amended, as Mr. DeCesare exercises voting control over these shares. For more information about the voting agreement, see Certain Relationships and Related Party Transactions Special Stockholder Voting Agreement and Irrevocable Proxy. (8) Consists of (i) 290,619 shares subject to options exercisable within 60 days of February 28, 2018, 212,758 of which are fully vested as of such date; and (ii) 4,375 shares of common stock issuable upon the vesting of restricted stock units within 60 days of February 28, 2018. (9) Consists of (i) 16,023 shares held of record by Mr. Harms; (ii) 109,962 shares held of record by Harms Family Trust Dated April 20, 2006, for which Mr. Harms and Cassandra R. Harms serve as Trustees; (iii) 167,222 shares subject to options exercisable within 60 days of February 28, 2018, 135,036 of which are fully vested as of such date; and (iv) 4,313 shares of common stock issuable upon the vesting of restricted stock units within 60 days of February 28, 2018. In connection with a personal loan, Mr. Harms has entered into (i) a Consumer Pledge Agreement dated September 28, 2015, pursuant to which Mr. Harms has granted to the lender a security interest in 64,091 shares of our common stock held by Mr. Harms and (ii) an option agreement dated September 28, 2015, pursuant to which Mr. Harms has granted to the optionee an option to purchase 16,023 shares of our common stock. (10) Consists of (i) 174,000 shares subject to options exercisable within 60 days of February 28, 2018, 148,001 of which are fully vested as of such date; and (ii) 4,313 shares of common stock issuable upon the vesting of restricted stock units within 60 days of February 28, 2018. (11) Consists of (i) 327,386 shares held of record by the Yeshurun Family Trust; and (ii) 238,046 shares subject to options exercisable within 60 days of February 28, 2018, 215,328 of which are fully vested as of such date. (12) Consists of (i) 839,568 shares held of record by Mr. DeWalt, of which 97,950 were issued upon early exercise of stock options and remained subject to further vesting within 60 days of February 28, 2018; and (ii) 167,913 shares of common stock issuable upon the vesting of restricted stock units within 60 days of February 28, 2018. (13) Consists of 25,000 shares of common stock issuable upon the vesting of restricted stock units within 60 days of February 28, 2018. (14) Consists of (i) 240,835 shares held of record by Mr. Elliott; and (ii) 275,225 shares subject to options exercisable within 60 days of February 28, 2018, 267,252 of which are fully vested as of such date. (15) Consists of (i) 575,856 shares held of record by Aspect Ventures, L.P. ( Aspect Ventures ); and (ii) 117,027 shares held of record by Aspect Ventures I-A, L.P. ( Aspect I-A ). Aspect Ventures Management, LLC (Aspect Management), the general partner of Aspect Ventures and Aspect I-A, has sole voting and dispositive power with respect to the shares held by Aspect Ventures and Aspect I-A. Ms. Gouw and Jennifer Fonstad are the managing partners of Aspect Management and share voting and dispositive power with respect to the shares held by Aspect Management. (16) Consists of 112,669 shares subject to options exercisable within 60 days of February 28, 2018, 98,846 of which are fully vested as of such date. (17) Consists of the shares listed in footnote 4 above, which are held by the Pitango Entities. Mr. Kalish is one of the Principals of the Principal Funds, which shares voting and dispositive power with respect to the shares held by GP, which has sole voting and dispositive power with respect to the shares held by the Pitango Entities. (18) Consists of (i) 333,873 shares held of record by Mr. Salem, of which 11,238 were issued upon early exercise of stock options and remained subject to further vesting within 60 days of February 28, 2018; and (ii) 125,000 shares held of record by Enrique Salem 2017 Guarantor Retained Annuity Trust, for which Mr. Salem serves as Trustee. (19) Consists of (i) 16,143,310 shares beneficially owned by our current officers and directors, of which 109,188 shares may be repurchased by us at the original purchase price as of February 28, 2018; (ii) 2,098,745 shares subject to options exercisable within 60 days of February 28, 2018, of which 1,704,840 shares are fully vested; and (iii) 652,346 shares of common stock issuable upon the vesting of restricted stock units within 60 days of February 28, 2018. Table of Contents DESCRIPTION OF CAPITAL STOCK General The following is a summary of the rights of our common stock and preferred stock and certain provisions of our amended and restated certificate of incorporation and amended and restated bylaws. This summary does not purport to be complete and is qualified in its entirety by the provisions of our amended and restated certificate of incorporation and amended and restated bylaws, which are included as exhibits to the registration statement of which this prospectus forms a part, and to the provisions of applicable Delaware law. Our authorized capital stock consists of 1,100,000,000 shares, with a par value of $0.001 per share, of which: 1,000,000,000 shares are designated as common stock; and 100,000,000 shares are designated as preferred stock. As of December 31, 2017, there were 38,266,450 shares of our common stock outstanding, held by approximately 258 stockholders of record, and no shares of preferred stock outstanding. Our board of directors is authorized, without stockholder approval, except as required by the listing standards of The NASDAQ Stock Market, to issue additional shares of our capital stock. Common Stock Dividend Rights Subject to preferences that may apply to any shares of preferred stock outstanding at the time, the holders of our common stock will be entitled to receive dividends out of funds legally available if our board of directors, in its discretion, determines to issue dividends and then only at the times and in the amounts that our board of directors may determine. See the section titled Dividend Policy for additional information. Voting Rights Holders of our common stock are entitled to one vote for each share held on all matters submitted to a vote of stockholders. We have not provided for cumulative voting for the election of directors in our amended and restated certificate of incorporation. Our amended and restated certificate of incorporation establishes a classified board of directors that is divided into three classes with staggered three-year terms. Only the directors in one class will be subject to election by a plurality of the votes cast at each annual meeting of our stockholders, with the directors in the other classes continuing for the remainder of their respective three-year terms. In September 2017, we entered into a voting agreement with Michael DeCesare, our Chief Executive Officer, and entities affiliated with Amadeus Capital, or the Amadeus Entities. Under certain circumstances, Mr. DeCesare, as our Chief Executive Officer, holds an irrevocable proxy to vote all shares of our capital stock held by the Amadeus Entities in identical proportions to the votes cast by our other stockholders. For a description of the voting agreement, please see the section titled Certain Relationships and Related Party Transactions Special Stockholder Voting Agreement and Irrevocable Proxy. No Preemptive or Similar Rights Our common stock is not entitled to preemptive rights, and is not subject to conversion, redemption, or sinking fund provisions. Right to Receive Liquidation Distributions If we become subject to a liquidation, dissolution, or winding-up, the assets legally available for distribution to our stockholders would be distributed ratably among the holders of our common stock and any participating preferred stock outstanding at that time, subject to prior satisfaction of all outstanding debt and liabilities and the preferential rights of and the payment of liquidation preferences, if any, on any outstanding shares of preferred stock. Preferred Stock Pursuant to our amended and restated certificate of incorporation, our board of directors is authorized, subject to limitations prescribed by Delaware law, to issue preferred stock in one or more series, to establish from time to time the number of shares Table of Contents to be included in each series, and to fix the designation, powers, preferences, and rights of the shares of each series and any of its qualifications, limitations, or restrictions, in each case without further vote or action by our stockholders. Our board of directors can also increase or decrease the number of shares of any series of preferred stock, but not below the number of shares of that series then outstanding, without any further vote or action by our stockholders. Our board of directors may authorize the issuance of preferred stock with voting or conversion rights that could adversely affect the voting power or other rights of the holders of our common stock. The issuance of preferred stock, while providing flexibility in connection with possible acquisitions and other corporate purposes, could, among other things, have the effect of delaying, deferring, or preventing a change in our control of our company and might adversely affect the market price of our common stock and the voting and other rights of the holders of our common stock. We have no current plan to issue any shares of preferred stock. Warrants As of December 31, 2017, warrants to purchase 83,237 shares of our common stock at a weighted-average exercise price of $6.61 per share were outstanding. Except for certain warrants to purchase 74 shares of our common stock, each of these warrants have a net exercise provision under which its holder may, in lieu of payment of the exercise price in cash, surrender the warrant and receive a net amount of shares based on the fair market value of the underlying shares at the time of exercise of the warrant after deduction of a number of shares equal in value to the aggregate exercise price. Each warrant contains provisions for the adjustment of the exercise price and the number of shares issuable upon the exercise of the warrant in the event of certain stock dividends, stock splits, reorganizations, reclassifications, and consolidations. Except for certain warrants to purchase 74 shares of our common stock, the holders of the shares issuable upon exercise of our warrants are entitled to registration rights with respect to such shares as described in greater detail below under the heading titled Registration Rights. Registration Rights Immediately following this offering, assuming no exercise of the underwriters option to purchase additional shares, the holders of approximately 23,831,000 shares of our common stock or their permitted transferees will be entitled to rights with respect to the registration of these shares under the Securities Act, as described below. Demand Registration Rights Following the six-month anniversary of the completion of our initial public offering, until the fifth anniversary of the completing of our initial public offering, we will be required, upon the written request of holders of at least a majority of the shares that are entitled to registration rights under the investors rights agreement, to register, as soon as practicable, all or a portion of these shares for public resale. We are required to effect only two registrations pursuant to this provision of the investors rights agreement. We will not be required to effect a demand registration within the period 180 days following the effective date of, a registration statement relating to a public offering of our securities. We may defer the filing of a registration statement once during any 12 month period for a period of not more than 90 days, if it would be seriously detrimental to us and our stockholders for the registration statement to be effected at that time. Piggyback Registration Rights If we register any of our securities for our own account the holders of these shares will be entitled to include their shares in the registration. The underwriters of any underwritten offering have the right to limit the number of shares registered by these holders for marketing reasons, subject to limitations set forth in our amended and restated investors rights agreement. Form S-3 Registration Rights If we are eligible to file a registration statement on Form S-3, these holders have the right, upon written request from holders of at least 40% of the shares that are entitled to registration rights under the amended and restated investors rights agreement, to have such shares registered by us. We are required to effect only two registrations during any 12 month period pursuant to this provision of the amended and restated investors rights agreement. We may defer the filing of the Form S-3 registration statement once during any 12 month period for a period of not more than 90 days, if it would be seriously detrimental to us and our stockholders for the registration statement to be effected at that time. Table of Contents Anti-Takeover Effects of Delaware Law and Our Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws Our amended and restated certificate of incorporation and amended and restated bylaws contain provisions that could have the effect of delaying, deferring, or discouraging another party from acquiring control of us. These provisions and certain provisions of Delaware law, which are summarized below, could discourage takeovers, coercive or otherwise. These provisions are also designed, in part, to encourage persons seeking to acquire control of us to negotiate first with our board of directors. We believe that the benefits of increased protection of our potential ability to negotiate with an unfriendly or unsolicited acquirer outweigh the disadvantages of discouraging a proposal to acquire us. Undesignated Preferred Stock. As discussed above under the section titled Preferred Stock, our board of directors has the ability to designate and issue preferred stock with voting or other rights or preferences that could deter hostile takeovers or delay changes in our control or management. Limits on Ability of Stockholders to Act by Written Consent or Call a Special Meeting. Our amended and restated certificate of incorporation provides that our stockholders may not act by written consent. This limit on the ability of stockholders to act by written consent may lengthen the amount of time required to take stockholder actions. As a result, the holders of a majority of our capital stock would not be able to amend the amended and restated bylaws or remove directors without holding a meeting of stockholders called in accordance with the amended and restated bylaws. In addition, our amended and restated bylaws provide that special meetings of the stockholders may be called only by our board of directors, chairperson of our board of directors, the chief executive officer, or the president (in the absence of a chief executive officer). A stockholder may not call a special meeting, which may delay the ability of our stockholders to force consideration of a proposal or for holders controlling a majority of our capital stock to take any action, including the removal of directors. Requirements for Advance Notification of Stockholder Nominations and Proposals. Our amended and restated bylaws establish advance notice procedures with respect to stockholder proposals and the nomination of candidates for election as directors, other than nominations made by or at the direction of our board of directors or a committee of the board of directors. These advance notice procedures may have the effect of precluding the conduct of certain business at a meeting if the proper procedures are not followed and may also discourage or deter a potential acquirer from conducting a solicitation of proxies to elect its own slate of directors or otherwise attempt to obtain control of our company. Board Classification. Our board of directors is divided into three classes. The directors in each class serve for a three-year term, one class being elected each year by our stockholders. This system of electing and removing directors may tend to discourage a third party from making a tender offer or otherwise attempting to obtain control of us, because it generally makes it more difficult for stockholders to replace a majority of the directors. Directors Removed Only for Cause. Our amended and restated certificate of incorporation provides that stockholders may remove directors only for cause. Amendments of Charter and Bylaw Provisions. Amendments to our amended and restated certificate of incorporation and our amended and restated bylaws require approval by holders of at least 66-2/3% of our then outstanding capital stock. Delaware Anti-Takeover Statute. We are subject to the provisions of Section 203 of the Delaware General Corporation Law regulating corporate takeovers. In general, Section 203 prohibits a publicly-held Delaware corporation from engaging, under certain circumstances, in a business combination with an interested stockholder for a period of three years following the date the person became an interested stockholder unless: prior to the date of the transaction, our board of directors approved either the business combination or the transaction that resulted in the stockholder becoming an interested stockholder; upon completion of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for purposes of determining the voting stock outstanding but not the outstanding voting stock owned by the interested stockholder, (1) shares owned by persons who are directors and also officers and (2) shares owned by employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or Table of Contents at or subsequent to the date of the transaction, the business combination is approved by our board of directors and authorized at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote of at least 66 2/3% of the outstanding voting stock that is not owned by the interested stockholder. Generally, a business combination includes a merger, asset or stock sale, or other transaction resulting in a financial benefit to the interested stockholder. An interested stockholder is a person who, together with affiliates and associates, owns or, within three years prior to the determination of interested stockholder status, did own 15% or more of a corporation s outstanding voting stock. We expect the existence of this provision to have an anti-takeover effect with respect to transactions our board of directors does not approve in advance. We also anticipate that Section 203 may discourage attempts that might result in a premium over the market price for the shares of common stock held by stockholders. The provisions of Delaware law and the provisions of our amended and restated certificate of incorporation and amended and restated bylaws could have the effect of discouraging others from attempting hostile takeovers and as a consequence, they might also inhibit temporary fluctuations in the market price of our common stock that often result from actual or rumored hostile takeover attempts. These provisions might also have the effect of preventing changes in our management. It is also possible that these provisions could make it more difficult to accomplish transactions that stockholders might otherwise deem to be in their best interests. Choice of Forum Our amended and restated bylaws provide that, subject to limited exceptions, a state or federal court located within the State of Delaware or a state or federal court located within the county of Santa Clara, California will be the sole and exclusive forums for any derivative action or proceeding brought on our behalf, any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers, or other employees to us or our stockholders, any action asserting a claim against us or any of our directors, officers, or employees arising pursuant to any provision of the DGCL, our amended and restated certificate of incorporation or our amended and restated bylaws, or any other action asserting a claim against us or any of our directors, officers, or employees that is governed by the internal affairs doctrine. Transfer Agent and Registrar Our transfer agent and registrar for our common stock is Computershare Trust Company, N.A. Our transfer agent s address is 250 Royall Street, Canton, Massachusetts 02021. Exchange Listing Our common stock is listed on The NASDAQ Global Market under the symbol FSCT. Table of Contents SHARES ELIGIBLE FOR FUTURE SALE Future sales of substantial amounts of our common stock, including shares issued upon exercise of outstanding options, in the public market after this offering could adversely affect market prices prevailing from time to time and could impair our ability to raise capital through the sale of our equity securities. Upon the completion of this offering, based on the number of shares outstanding as of December 31, 2017, we will have 39,191,886 shares of common stock outstanding. Of these outstanding shares, all of the 500,000 shares sold in this offering will be freely tradable, except that any shares purchased by our affiliates, as that term is defined in Rule 144 under the Securities Act, may only be sold in compliance with the limitations described below. The remaining outstanding shares of our common stock will be deemed restricted securities as defined under Rule 144. Restricted securities may be sold in the public market only if registered or if they qualify for an exemption from registration under Rule 144 or Rule 701 promulgated under the Securities Act of 1933, as amended, or the Securities Act, which rules are summarized below. In addition, substantially all of our stockholders have entered into market standoff agreements with us or lock up agreements with the underwriters under which they agreed, subject to specific exceptions, not to sell any of their stock as described below. Subject to the provisions of Rule 144 or Rule 701, shares are or will be available for sale in the public market as follows: on the date of this prospectus, assuming no exercise of the underwriters option to purchase additional shares, 10,483,000 shares of our common stock (including all 4,411,000 shares of our common stock sold in this offering, which includes 3,911,000 shares of common stock to be sold in this offering by selling stockholders that Morgan Stanley & Co. LLC, on behalf of the underwriters, has released from lock-up restrictions, including 1,359,537 shares beneficially owned by our directors and executive officers and their affiliated entities, and all 6,072,000 shares of our common stock sold in our initial public offering to non-affiliates) are available for sale in the public market, except for the shares purchased by affiliates in this offering which are subject to the volume and other restrictions of Rule 144 as well as the lock-up agreement restrictions described below; approximately 11,536,050 shares will be eligible for sale on April 25, 2018 in the public market upon the expiration of lock-up agreements entered into in connection with our initial public offering, certain of such shares are held by persons subject to our insider trading policy and are subject to quarterly black-out restrictions on trading until after the close of trading on the second full trading day following the public release of our earnings for the quarterly period ending March 31, 2018; approximately 20,456,002 additional shares will be eligible for sale in the public market 90 days from the date of the final prospectus relating to this offering upon the expiration of lock-up agreements entered into in connection with this offering; and the remainder of the shares will be eligible for sale in the public market from time to time thereafter, subject in some cases to the volume and other restrictions of Rule 144, as described below. We do not currently know the number of shares of common stock that will be withheld or issued in connection with the net settlement of the RSUs because it depends on many factors, including our share price on the date of settlement, foreign exchange rates applicable to international employees and the number of shares underlying RSUs that are settled on such date. Lock-Up Agreements In connection with our initial public offering, all of our directors, executive officers, the holders of substantially all of our then common stock and securities convertible into or exchangeable for our common stock entered into lock-up agreements with the underwriters prior to the commencement of this offering pursuant to which each of these persons or entities, with limited exceptions, until April 25, 2018, may not, without the prior written consent of Morgan Stanley & Co. LLC, offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend or otherwise transfer or dispose of, directly or indirectly, any shares of our common stock or any securities convertible into or exercisable or exchangeable for our common stock. See the section titled Underwriters for additional information. In addition, in connection with this offering, we, all directors and executive officers and the selling stockholders agreed that, without the prior written consent of Morgan Stanley & Co. LLC on behalf of the underwriters and subject to certain exceptions, we and they will not, offer, sell, or agree to sell, directly or indirectly, any shares of common stock until 90 days from the date of the final prospectus relating to this offering. See the section titled Underwriters for additional information. Table of Contents Rule 144 In general, under Rule 144 as currently in effect, a person who is not deemed to have been one of our affiliates for purposes of the Securities Act at any time during the 90 days preceding a sale and who has beneficially owned the shares proposed to be sold for at least six months, including the holding period of any prior owner other than our affiliates, is entitled to sell such shares without complying with the manner of sale, volume limitation, or notice provisions of Rule 144, subject to compliance with the public information requirements of Rule 144. If such a person has beneficially owned the shares proposed to be sold for at least one year, including the holding period of any prior owner other than our affiliates, then such person is entitled to sell such shares without complying with any of the requirements of Rule 144. In general, under Rule 144, as currently in effect, our affiliates or persons selling shares on behalf of our affiliates are entitled to sell upon expiration of the lock-up agreements described below, within any three-month period beginning 90 days after the date of this prospectus, a number of shares that does not exceed the greater of: 1% of the number of shares of common stock then outstanding, which will equal approximately 391,919 shares immediately after this offering; or the average weekly trading volume of the common stock during the four calendar weeks preceding the filing of a notice on Form 144 with respect to such sale. Sales under Rule 144 by our affiliates or persons selling shares on behalf of our affiliates are also subject to certain manner of sale provisions and notice requirements and to the availability of current public information about us. Rule 701 Rule 701 generally allows a stockholder who purchased shares of our common stock pursuant to a written compensatory plan or contract and who is not deemed to have been an affiliate of our company during the immediately preceding 90 days to sell these shares in reliance upon Rule 144 but without being required to comply with the public information, holding period, volume limitation, or notice provisions of Rule 144. Rule 701 also permits affiliates of our company to sell their Rule 701 shares under Rule 144 without complying with the holding period requirements of Rule 144. However, all holders of Rule 701 shares are required to wait until 90 days after the date of this prospectus before selling such shares pursuant to Rule 701. Substantially all Rule 701 shares are subject to a lock-up agreement as described below and elsewhere in this prospectus and will become eligible for sale upon the expiration of the restrictions set forth in those agreements. Rule 10b5-1 Trading Plans Certain of our executive officers and directors have adopted written plans, known as Rule 10b5-1 trading plans, under which they will contract with a broker to buy or sell shares of our common stock on a periodic basis to diversify their assets and investments. Under these 10b5-1 trading plans, a broker may execute trades pursuant to parameters established by the executive officer or director when entering into the plan, without further direction from such officer or director. Such sales would not commence until the expiration of the applicable lock-up agreements entered into by such executive officer or director in connection with our initial public offering and this offering. Registration Rights Immediately following this offering, assuming no exercise of the underwriters option to purchase additional shares, the holders of approximately 23,831,000 shares of common stock or their transferees are entitled to various rights with respect to the registration of these shares under the Securities Act. Registration of these shares under the Securities Act would result in these shares becoming fully tradable without restriction under the Securities Act immediately upon the effectiveness of the registration, except for shares purchased by affiliates. See the section titled Description of Capital Stock Registration Rights for additional information. Registration Statements on Form S-8 We filed registration statements on Form S-8 under the Securities Act to register shares of our common stock issued or reserved for issuance under our equity incentive plans and Employee Stock Purchase Plan. The registration statements on Form S-8 became effective immediately upon filing, and shares of our common stock covered by those registration statements are eligible for sale in the public market, upon the expiration or release from the terms of the lock-up agreements and subject to vesting of such shares and the Rule 144 limitations applicable to affiliates. Table of Contents MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES TO NON-U.S. HOLDERS OF OUR COMMON STOCK The following is a summary of the material U.S. federal income and estate tax consequences to non-U.S. holders (as defined below) of their ownership and disposition of our common stock purchased in this offering but is for general information purposes only and does not purport to be a complete analysis of all the potential tax considerations relating thereto. This summary is based upon the provisions of the Internal Revenue Code of 1986, as amended, or the Code, existing and proposed Treasury regulations promulgated thereunder, administrative rulings and judicial decisions, all as of the date hereof. These authorities may be changed, possibly retroactively, so as to result in U.S. federal income and estate tax consequences different from those set forth below. There can be no assurance that the Internal Revenue Service, or the IRS, will not challenge one or more of the tax consequences described herein, and we have not obtained, and do not intend to obtain, an opinion of counsel or ruling from the IRS with respect to the U.S. federal income tax consequences to a non-U.S. holder of the purchase, ownership or disposition of our common stock. This summary does not address any alternative minimum tax considerations, any considerations regarding the tax on net investment income, or the tax considerations arising under the laws of any state, local, or non-U.S. jurisdiction, or under any non-income tax laws, including U.S. federal gift and estate tax laws, except to the limited extent set forth below. In addition, this summary does not address tax considerations applicable to an investor s particular circumstances or to investors that may be subject to special tax rules, including, without limitation: banks, insurance companies, or other financial institutions; tax-exempt organizations or governmental organizations; regulated investment companies and real estate investment trusts; controlled foreign corporations, passive foreign investment companies, and corporations that accumulate earnings to avoid U.S. federal income tax; brokers or dealers in securities or currencies; traders in securities that elect to use a mark-to-market method of accounting for their securities holdings; persons that own, or are deemed to own, more than five percent of our capital stock (except to the extent specifically set forth below); tax-qualified retirement plans; certain former citizens or long-term residents of the United States; partnerships or entities or arrangements classified as partnerships for U.S. federal income tax purposes and other pass-through entities (and investors therein); persons who hold our common stock as a position in a hedging transaction, straddle, conversion transaction, or other risk reduction transaction or integrated investment; persons who hold or receive our common stock pursuant to the exercise of any employee stock option or otherwise as compensation; persons who do not hold our common stock as a capital asset within the meaning of Section 1221 of the Code; or persons deemed to sell our common stock under the constructive sale provisions of the Code. In addition, if a partnership (or entity or arrangement classified as a partnership for U.S. federal income tax purposes) holds our common stock, the tax treatment of a partner generally will depend on the status of the partner and upon the activities of the partnership. Accordingly, partnerships that hold our common stock, and partners in such partnerships, should consult their tax advisors. Table of Contents You are urged to consult your own tax advisors with respect to the application of the U.S. federal income tax laws to your particular situation, as well as any tax consequences of the purchase, ownership and disposition of our common stock arising under the U.S. federal estate or gift tax laws or under the laws of any state, local, non-U.S., or other taxing jurisdiction or under any applicable tax treaty. Non-U.S. Holder Defined For purposes of this discussion, you are a non-U.S. holder if, for U.S. federal income tax purposes, you are a beneficial owner of our common stock, other than a partnership, that is not: an individual citizen or resident of the United States; a corporation or other entity taxable as a corporation created or organized in the United States or under the laws of the United States, any State thereof or the District of Columbia; an estate whose income is subject to U.S. federal income tax regardless of its source; or a trust (x) whose administration is subject to the primary supervision of a U.S. court and which has one or more U.S. persons (within the meaning of Section 7701(a)(30) of the Code) who have the authority to control all substantial decisions of the trust or (y) which has made a valid election to be treated as a U.S. person. Distributions As described in the section titled Dividend Policy, we have never declared or paid cash dividends on our common stock and do not anticipate paying any dividends on our common stock in the foreseeable future However, if we do make distributions on our common stock, those payments will constitute dividends for U.S. tax purposes to the extent paid from our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. To the extent those distributions exceed both our current and our accumulated earnings and profits, the excess will constitute a return of capital and will first reduce your basis in our common stock, but not below zero, and then will be treated as gain from the sale of stock as described below under Gain on Disposition of Common Stock. Subject to the discussion below regarding effectively connected income, any dividend paid to you generally will be subject to U.S. withholding tax either at a rate of 30% of the gross amount of the dividend or such lower rate as may be specified by an applicable income tax treaty. In order to receive a reduced treaty rate, you must provide us with an IRS Form W-8BEN, IRS Form W-8BEN-E or other applicable IRS Form W-8 properly certifying qualification for the reduced rate. These forms must be updated periodically. A non-U.S. holder of shares of our common stock eligible for a reduced rate of U.S. withholding tax pursuant to an income tax treaty may obtain a refund of any excess amounts withheld by timely filing an appropriate claim for refund with the IRS. If the non-U.S. holder holds our common stock through a financial institution or other agent acting on the non-U.S. holder s behalf, the non-U.S. holder will be required to provide appropriate documentation to the agent, which then may be required to provide certification to us or our paying agent, either directly or through other intermediaries. Dividends received by you that are effectively connected with your conduct of a U.S. trade or business (and, if required by an applicable income tax treaty, attributable to a permanent establishment or fixed base maintained by you in the United States) are generally exempt from such withholding tax if you satisfy certain certification and disclosure requirements. In order to obtain this exemption, you must provide us with an IRS Form W-8ECI or other applicable IRS Form W-8 properly certifying such exemption. Such effectively connected dividends, although not subject to withholding tax, are taxed at the same graduated U.S. federal income tax rates applicable to U.S. persons, net of certain deductions and credits. In addition, if you are a corporate non-U.S. holder, dividends you receive that are effectively connected with your conduct of a U.S. trade or business may also be subject to a branch profits tax at a rate of 30% or such lower rate as may be specified by an applicable income tax treaty. You should consult your tax advisor regarding any applicable tax treaties that may provide for different rules. Gain on Disposition of Common Stock Subject to the discussion below regarding backup withholding and foreign accounts, you generally will not be required to pay U.S. federal income tax on any gain realized upon the sale, exchange, or other disposition of our common stock unless: the gain is effectively connected with your conduct of a U.S. trade or business (and, if required by an applicable income tax treaty, the gain is attributable to a permanent establishment or fixed base maintained by you in the United States); Table of Contents you are a non-resident alien individual who is present in the United States for a period or periods aggregating 183 days or more during the calendar year in which the sale or disposition occurs and certain other conditions are met; or our common stock constitutes a U.S. real property interest by reason of our status as a United States real property holding corporation, or a USRPHC, for U.S. federal income tax purposes at any time within the shorter of the five-year period preceding your disposition of, or your holding period for, our common stock. We believe that we are not currently and will not become a USRPHC for U.S. federal income tax purposes, and the remainder of this discussion so assumes. However, because the determination of whether we are a USRPHC depends on the fair market value of our U.S. real property relative to the fair market value of our other business assets, there can be no assurance that we will not become a USRPHC in the future. Even if we become a USRPHC, however, as long as our common stock is regularly traded on an established securities market, such common stock will be treated as U.S. real property interests only if you actually or constructively hold more than five percent of such regularly traded common stock at any time during the shorter of the five-year period preceding your disposition of, or your holding period for, our common stock. If you are a non-U.S. holder described in the first bullet above, you will be required to pay tax on the net gain derived from the sale under regular graduated U.S. federal income tax rates, and a corporate non-U.S. holder described in the first bullet above also may be subject to the branch profits tax at a rate of 30% or such lower rate as may be specified by an applicable income tax treaty. If you are an individual non-U.S. holder described in the second bullet above, you will be required to pay a flat 30% tax (or such lower rate specified by an applicable income tax treaty) on the gain derived from the sale, which gain may be offset by U.S. source capital losses for the year (provided you have timely filed U.S. federal income tax returns with respect to such losses). You should consult your tax advisor regarding any applicable income tax or other treaties that may provide for different rules. Federal Estate Tax Our common stock beneficially owned by an individual who is not a citizen or resident of the United States (as defined for U.S. federal estate tax purposes) at the time of their death will generally be includable in the decedent s gross estate for U.S. federal estate tax purposes. Such shares, therefore, may be subject to U.S. federal estate tax, unless an applicable estate tax treaty provides otherwise. Backup Withholding and Information Reporting Generally, we must report annually to the IRS the amount of dividends paid to you, your name and address, and the amount of tax withheld, if any. A similar report will be sent to you. Pursuant to applicable income tax treaties or other agreements, the IRS may make these reports available to tax authorities in your country of residence. Payments of dividends on or of proceeds from the disposition of our common stock made to you may be subject to information reporting and backup withholding at a current rate of 24% unless you establish an exemption, for example, by properly certifying your non-U.S. status on an IRS Form W-8BEN or IRS Form W-8BEN-E or other applicable IRS Form W-8. Notwithstanding the foregoing, backup withholding and information reporting may apply if either we or our paying agent has actual knowledge, or reason to know, that you are a U.S. person. Backup withholding is not an additional tax; rather, the U.S. federal income tax liability of persons subject to backup withholding will be reduced by the amount of tax withheld. If withholding results in an overpayment of taxes, a refund or credit may generally be obtained from the IRS, provided that the required information is furnished to the IRS in a timely manner. Foreign Account Tax Compliance The Foreign Account Tax Compliance Act, or FATCA, generally imposes withholding tax at a rate of 30% on dividends on and gross proceeds from the sale or other disposition of our common stock paid to a foreign financial institution (as specially defined under these rules), unless such institution enters into an agreement with the U.S. government to, among other things, withhold on certain payments and to collect and provide to the U.S. tax authorities substantial information regarding the U.S. account holders of such institution (which includes certain equity and debt holders of such institution, as well as certain account holders that are foreign entities with U.S. owners) or otherwise establishes an exemption. FATCA also generally imposes a U.S. federal withholding tax of 30% on dividends on and gross proceeds from the sale or other disposition of our common stock paid to a non-financial foreign entity (as specially defined for purposes of these rules) unless such entity provides the withholding agent with a certification identifying certain substantial direct and indirect U.S. owners of the entity, certifies that there are none or otherwise establishes an exemption. The withholding provisions under FATCA generally apply to dividends on our common stock, and under current transitional rules are expected to apply with respect to the gross proceeds from a sale or other disposition Table of Contents of our common stock on or after January 1, 2019. Under certain circumstances, a non-U.S. holder might be eligible for refunds or credits of such taxes. An intergovernmental agreement between the United States and an applicable foreign country may modify the requirements described in this paragraph. Non-U.S. holders should consult their own tax advisors regarding the possible implications of this legislation on their investment in our common stock. Each prospective investor should consult its own tax advisor regarding the particular U.S. federal, state, and local and non-U.S. tax consequences of purchasing, owning, and disposing of our common stock, including the consequences of any proposed changes in applicable laws. Table of Contents UNDERWRITERS Under the terms and subject to the conditions to be contained in an underwriting agreement, the underwriters named below, for whom Morgan Stanley & Co. LLC and J.P. Morgan Securities LLC are acting as representatives, will severally agree to purchase, and we and the selling stockholders will agree to sell to them the number of shares of common stock indicated below: Name Number of Shares Morgan Stanley & Co. LLC J.P. Morgan Securities LLC Citigroup Global Markets Inc. UBS Securities LLC KeyBanc Capital Markets Inc. Stephens Inc. Total: 4,411,000 The underwriters and the representatives are collectively referred to as the underwriters and the representatives, respectively. The underwriters will offer the shares of common stock subject to their acceptance of the shares from us and subject to prior sale. The underwriting agreement will provide that the obligations of the several underwriters to pay for and accept delivery of the shares of common stock offered by this prospectus are subject to the approval of certain legal matters by their counsel and to certain other conditions. The underwriters will be obligated to take and pay for all of the shares of common stock offered by this prospectus if any such shares are taken. However, the underwriters will not be required to take or pay for the shares covered by the underwriters option to purchase additional shares described below. The underwriters initially propose to offer part of the shares of common stock directly to the public at the offering price listed on the cover page of this prospectus and part to certain dealers. After the initial offering of the shares of common stock, the offering price and other selling terms may from time to time be varied by the representatives. Certain of the selling stockholders will grant to the underwriters an option, exercisable for 30 days from the date of this prospectus, to purchase up to 661,650 additional shares of common stock at the public offering price listed on the cover page of this prospectus, less underwriting discounts and commissions. The underwriters may exercise this option solely for the purpose of covering over-allotments, if any, made in connection with the offering of the shares of common stock offered by this prospectus. To the extent the option is exercised, each underwriter will become obligated, subject to certain conditions, to purchase about the same percentage of the additional shares of common stock as the number listed next to the underwriter s name in the preceding table bears to the total number of shares of common stock listed next to the names of all underwriters in the preceding table. The following table shows the per share and total public offering price, underwriting discounts and commissions, and proceeds before expenses to us and the selling stockholders. These amounts are shown assuming both no exercise and full exercise of the underwriters option to purchase up to an additional 661,650 shares of common stock from certain selling stockholders. Total Per Share No Exercise Full Exercise Public offering price $ $ $ Underwriting discounts and commissions to be paid by: Us $ $ $ The selling stockholders $ $ $ Proceeds, before expenses, to us $ $ $ Proceeds, before expenses, to selling stockholders $ $ $ The estimated offering expenses payable by us, exclusive of the underwriting discounts and commissions, are approximately $0.9 million. We have agreed to reimburse the underwriters for expenses relating to clearance of this offering with the Financial Industry Regulatory Authority, Inc., or FINRA, up to $25,000. The underwriters have informed us that they do not intend sales to discretionary accounts to exceed 5% of the total number of shares of common stock offered by them. Table of Contents Our common stock is listed on The NASDAQ Global Market under the trading symbol FSCT. In connection with our initial public offering, we, all directors and officers and the holders of substantially all of our outstanding equity securities agreed that, subject to certain exceptions, without the prior written consent of Morgan Stanley & Co. LLC on behalf of the underwriters, we and they will not, offer, sell or agree to sell, transfer or dispose of, directly or indirectly, any shares of common stock without the permission of Morgan Stanley & Co. LLC until April 25, 2018. Morgan Stanley & Co. LLC, on behalf of the underwriters, has consented to the release of these lock-up restrictions with respect to 4,572,650 shares of common stock (including 661,650 shares of common stock that may be sold by certain selling stockholders upon exercise of the underwriters option to purchase additional shares) to be sold in this offering by the selling stockholders, including 1,359,537 shares beneficially owned by our directors and executive officers or their affiliated entities. The release will take effect on the pricing of this offering. In addition, we, all of our directors and executive officers, and the selling stockholders have agreed with Morgan Stanley & Co., LLC, on behalf of the underwriters, that we and they will not, during the period ending 90 days after the date of this prospectus: offer, pledge, sell, contract to sell, sell any option, or contract to purchase, purchase any option, or contract to sell, grant any option, right, or warrant to purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any shares of common stock beneficially owned or any securities so owned convertible into or exercisable or exchangeable for shares of common stock, or publicly announce its intention to enter into any of the foregoing transactions; enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the common stock, whether any such transaction described in these first two bullet points is to be settled by delivery of common stock or such other securities, in cash or otherwise; in the case of our directors, officers and security holders, make any demand for, or exercise any right with respect to, the registration of any shares of common stock or any security convertible into or exercisable or exchangeable for common stock; in our case, file any registration statement with the Securities and Exchange Commission relating to the offering of any shares of common stock or any securities convertible into or exercisable or exchangeable for common stock; or make any public announcement of any intention to do any of the foregoing. The restrictions described in the immediately preceding paragraph to do not apply to: the sale of shares to the underwriters; the issuance by us of shares of common stock upon the exercise of an option or a warrant or the conversion of a security outstanding on the date of this prospectus or the transfer by a security holder of shares of common stock or any securities convertible into common stock to us upon a vesting event of our securities or upon the exercise of options or warrants to purchase common stock on a cashless or net exercise basis; provided that no filing under Section 16(a) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, is required or voluntarily made during the restricted period; transfers by a security holder of shares of common stock or any security convertible into or exercisable or exchangeable for common stock to us pursuant to agreements under which the shares were issued and we have the option to repurchase such shares or securities; provided that no filing under Section 16(a) the Exchange Act is required or voluntarily made during the restricted period; transactions by a security holder relating to shares of common stock or other securities acquired in open market transactions after the completion of this offering; provided that no filing under Section 16(a) of the Exchange Act is required or voluntarily made during the restricted period; transfers by a security holder of shares of common stock or any security convertible into or exchangeable for common stock (i) to an immediate family member of the security holder or trust formed for the benefit of an immediate family member of the security holder, (ii) as a bona fide gift, or by will or intestacy, (iii) not involving a change to beneficial ownership, or (iv) if the security holder is a corporation, partnership, limited liability company, or other business entity (A) to another corporation, partnership, limited liability company, or other business entity that controls, is controlled by or is under common control with the security holder or (B) as part of a disposition, transfer, or distribution by the security holder to its equity holders, or (v) if the security holder is a trust to a trustor or beneficiary of the trust; provided that in each case, the transferee, donee, or distributee signs and delivers a lock-up agreement prior to or upon such transfer, no filing under Section 16 of the Exchange Act is required or voluntarily made during the restricted period, and the transfer does not involve a disposition for value; Table of Contents the transfer of shares of common stock or any security convertible into or exercisable or exchangeable for common stock in connection with the consummation of a bona fide third-party tender offer, merger, consolidation, or other similar transaction that is approved by our board of directors, made to all holders of common stock involving a Change of Control (as defined in the lockup agreement) after the completion of this offering; provided that in the event that the tender offer, merger, consolidation, or other such transaction is not completed, such shares of common stock remain subject to the terms of the agreement; the establishment of a trading plan pursuant to Rule 10b5-1 under the Exchange Act for the transfer of shares of common stock, provided that (i) such plan does not provide for the transfer of common stock during the restricted period and (ii) no public announcement or filing under the Exchange Act regarding the establishment of such plan shall be required or be voluntarily made by or on behalf of the undersigned or us; or the transfer of shares of common stock or any security convertible or exercisable or exchangeable for common stock that occurs by order of a court of competent jurisdiction pursuant to a qualified domestic relations order, subject to customary restrictions. Morgan Stanley & Co. LLC, in its sole discretion, may release the common stock and other securities subject to the lock-up agreements described above in whole or in part at any time with or without notice, provided that, when and as required by FINRA Rule 5131, at least two business days before the release or waiver of any applicable lock-up, Morgan Stanley & Co. LLC will notify us of the impending release or waiver and announce the impending release or waiver through a major news service, except where the release or waiver is effected solely to permit a transfer of securities that is not for consideration and where the transferee has agreed in writing to be bound by the same lock-up agreement terms in place for the transferor. Morgan Stanley & Co. LLC, in its sole discretion, may release the common stock and other securities subject to the lock-up agreements described above in whole or in part at any time. In order to facilitate the offering of the common stock, the underwriters may engage in transactions that stabilize, maintain, or otherwise affect the price of the common stock. Specifically, the underwriters may sell more shares than they are obligated to purchase under the underwriting agreement, creating a short position. A short sale is covered if the short position is no greater than the number of shares available for purchase by the underwriters under the option to purchase additional shares. The underwriters can close out a covered short sale by exercising the option to purchase additional shares or purchasing shares in the open market. In determining the source of shares to close out a covered short sale, the underwriters will consider, among other things, the open market price of shares compared to the price available under the option to purchase additional shares. The underwriters may also sell shares in excess of the option to purchase additional shares, creating a naked short position. The underwriters must close out any naked short position by purchasing shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of the common stock in the open market after pricing that could adversely affect investors who purchase in this offering. As an additional means of facilitating this offering, the underwriters may bid for, and purchase, shares of common stock in the open market to stabilize the price of the common stock. These activities may raise or maintain the market price of the common stock above independent market levels or prevent or retard a decline in the market price of the common stock. The underwriters are not required to engage in these activities and may end any of these activities at any time. We, the selling stockholders and the underwriters will agree to indemnify each other against certain liabilities, including liabilities under the Securities Act. A prospectus in electronic format may be made available on websites maintained by one or more underwriters or selling group members, if any, participating in this offering. The representatives may agree to allocate a number of shares of common stock to underwriters for sale to their online brokerage account holders. Internet distributions will be allocated by the representatives to underwriters that may make internet distributions on the same basis as other allocations. The underwriters and their respective affiliates are full service financial institutions engaged in various activities, which may include securities trading, commercial and investment banking, financial advisory, investment management, investment research, principal investment, hedging, financing, and brokerage activities. Certain of the underwriters and their respective affiliates have, from time to time, performed, and may in the future perform, various financial advisory and investment banking services for us, for which they received or will receive customary fees and expenses. In addition, in the ordinary course of their various business activities, the underwriters and their respective affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers and may at any time hold long and short positions in such securities and instruments. Such investment and securities activities may involve our securities and instruments. The underwriters and their respective affiliates may also make investment recommendations or publish Table of Contents or express independent research views in respect of such securities or instruments and may at any time hold, or recommend to clients that they acquire, long or short positions in such securities and instruments. Selling Restrictions European Economic Area In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive, each, a Relevant Member State, an offer to the public of any shares of our common stock may not be made in that Relevant Member State, except that an offer to the public in that Relevant Member State of any shares of our common stock may be made at any time under the following exemptions under the Prospectus Directive, if they have been implemented in that Relevant Member State: (a) to any legal entity which is a qualified investor as defined in the Prospectus Directive; (b) to fewer than 100 or, if the Relevant Member State has implemented the relevant provision of the 2010 PD Amending Directive, 150, natural or legal persons (other than qualified investors as defined in the Prospectus Directive), as permitted under the Prospectus Directive, subject to obtaining the prior consent of the representatives for any such offer; or (c) in any other circumstances falling within Article 3(2) of the Prospectus Directive, provided that no such offer of shares of our common stock shall result in a requirement for the publication by us or any underwriter of a prospectus pursuant to Article 3 of the Prospectus Directive. For the purposes of this provision, the expression an offer to the public in relation to any shares of our common stock in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and any shares of our common stock to be offered so as to enable an investor to decide to purchase any shares of our common stock, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State, the expression Prospectus Directive means Directive 2003/71/EC (and amendments thereto, including the 2010 PD Amending Directive, to the extent implemented in the Relevant Member State), and includes any relevant implementing measure in the Relevant Member State, and the expression 2010 PD Amending Directive means Directive 2010/73/EU. United Kingdom Each underwriter has represented and agreed that: (a) it has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the Financial Services and Markets Act 2000, or FSMA, received by it in connection with the issue or sale of the shares of our common stock in circumstances in which Section 21(1) of the FSMA does not apply to us; and (b) it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the shares of our common stock in, from or otherwise involving the United Kingdom. Canada Our common stock may be sold only to purchasers purchasing, or deemed to be purchasing, as principal that are accredited investors, as defined in National Instrument 45-106 Prospectus Exemptions or subsection 73.3(1) of the Securities Act (Ontario), and are permitted clients, as defined in National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations. Any resale of our common stock must be made in accordance with an exemption from, or in a transaction not subject to, the prospectus requirements of applicable securities laws. Securities legislation in certain provinces or territories of Canada may provide a purchaser with remedies for rescission or damages if this prospectus (including any amendment thereto) contains a misrepresentation, provided that the remedies for rescission or damages are exercised by the purchaser within the time limit prescribed by the securities legislation of the purchaser s province or territory. The purchaser should refer to any applicable provisions of the securities legislation of the purchaser s province or territory for particulars of these rights or consult with a legal advisor. Pursuant to section 3A.3 (or, in the case of securities issued or guaranteed by the government of a non-Canadian jurisdiction, section 3A.4) of National Instrument 33-105 Underwriting Conflicts (NI 33-105), the underwriters are not required to comply with the disclosure requirements of NI 33 105 regarding underwriter conflicts of interest in connection with this offering. Table of Contents Switzerland The shares of common stock may not be publicly offered in Switzerland and will not be listed on the SIX Swiss Exchange, or SIX, or on any other stock exchange or regulated trading facility in Switzerland. This document has been prepared without regard to the disclosure standards for issuance prospectuses under art. 652a or art. 1156 of the Swiss Code of Obligations or the disclosure standards for listing prospectuses under art. 27 ff. of the SIX Listing Rules or the listing rules of any other stock exchange or regulated trading facility in Switzerland. Neither this document nor any other offering or marketing material relating to the shares or the offering may be publicly distributed or otherwise made publicly available in Switzerland. Neither this document nor any other offering or marketing material relating to the offering, us, or the shares have been or will be filed with or approved by any Swiss regulatory authority. In particular, this document will not be filed with, and the offer of shares will not be supervised by, the Swiss Financial Market Supervisory Authority FINMA, or FINMA, and the offer of shares has not been and will not be authorized under the Swiss Federal Act on Collective Investment Schemes, or CISA. The investor protection afforded to acquirers of interests in collective investment schemes under the CISA does not extend to acquirers of shares. Dubai International Financial Centre This prospectus relates to an Exempt Offer in accordance with the Offered Securities Rules of the Dubai Financial Services Authority, or DFSA. This prospectus is intended for distribution only to persons of a type specified in the Offered Securities Rules of the DFSA. It must not be delivered to, or relied on by, any other person. The DFSA has no responsibility for reviewing or verifying any documents in connection with Exempt Offers. The DFSA has not approved this prospectus nor taken steps to verify the information set forth herein and has no responsibility for the prospectus. The shares to which this prospectus relates may be illiquid and/or subject to restrictions on their resale. Prospective purchasers of the shares offered should conduct their own due diligence on the shares. If you do not understand the contents of this prospectus you should consult an authorized financial advisor. Australia No placement document, prospectus, product disclosure statement or other disclosure document has been lodged with the Australian Securities and Investments Commission, or ASIC, in relation to the offering. This prospectus does not constitute a prospectus, product disclosure statement or other disclosure document under the Corporations Act 2001, or the Corporations Act, and does not purport to include the information required for a prospectus, product disclosure statement or other disclosure document under the Corporations Act. Any offer in Australia of the shares may only be made to persons, or the Exempt Investors, who are sophisticated investors (within the meaning of section 708(8) of the Corporations Act), professional investors (within the meaning of section 708(11) of the Corporations Act) or otherwise pursuant to one or more exemptions contained in section 708 of the Corporations Act so that it is lawful to offer the shares without disclosure to investors under Chapter 6D of the Corporations Act. The shares applied for by Exempt Investors in Australia must not be offered for sale in Australia in the period of 12 months after the date of allotment under the offering, except in circumstances where disclosure to investors under Chapter 6D of the Corporations Act would not be required pursuant to an exemption under section 708 of the Corporations Act or otherwise or where the offer is pursuant to a disclosure document which complies with Chapter 6D of the Corporations Act. Any person acquiring shares must observe such Australian on-sale restrictions. This prospectus contains general information only and does not take into account the investment objectives, financial situation or particular needs of any particular person. It does not contain any securities recommendations or financial product advice. Before making an investment decision, investors need to consider whether the information in this prospectus is appropriate for their needs, objectives and circumstances, and, if necessary, seek expert advice on those matters. New Zealand The shares of common stock offered hereby have not been offered or sold, and will not be offered or sold, directly or indirectly in New Zealand and no offering materials or advertisements have been or will be distributed in relation to any offer of shares in New Zealand, in each case other than: (a) to persons whose principal business is the investment of money or who, in the course of and for the purposes of their business, habitually invest money; (b) to persons who in all the circumstances can properly be regarded as having been selected otherwise than as members of the public; Table of Contents (c) to persons who are each required to pay a minimum subscription price of at least NZ$500,000 for the shares before the allotment of those shares (disregarding any amounts payable, or paid, out of money lent by the issuer or any associated person of the issuer); or (d) in other circumstances where there is no contravention of the Securities Act 1978 of New Zealand (or any statutory modification or re-enactment of, or statutory substitution for, the Securities Act 1978 of New Zealand). Hong Kong The shares of common stock have not been offered or sold and will not be offered or sold in Hong Kong, by means of any document, other than (a) to professional investors as defined in the Securities and Futures Ordinance (Cap. 571) of Hong Kong and any rules made under that Ordinance; or (b) in other circumstances which do not result in the document being a prospectus as defined in the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32) of Hong Kong or which do not constitute an offer to the public within the meaning of that Ordinance. No advertisement, invitation, or document relating to the shares of common stock has been or may be issued or has been or may be in the possession of any person for the purposes of issuance, whether in Hong Kong or elsewhere, which is directed at, or the contents of which are likely to be accessed or read by, the public of Hong Kong (except if permitted to do so under the securities laws of Hong Kong) other than with respect to shares of common stock which are or are intended to be disposed of only to persons outside Hong Kong or only to professional investors as defined in the Securities and Futures Ordinance and any rules made under that Ordinance. Japan No registration pursuant to Article 4, paragraph 1 of the Financial Instruments and Exchange Law of Japan (Law No. 25 of 1948, as amended), or the FIEL, has been made or will be made with respect to the solicitation of the application for the acquisition of the shares of common stock. Accordingly, the shares of common stock have not been, directly or indirectly, offered or sold and will not be, directly or indirectly, offered or sold in Japan or to, or for the benefit of, any resident of Japan (which term as used herein means any person resident in Japan, including any corporation or other entity organized under the laws of Japan) or to others for re-offering or re-sale, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan except pursuant to an exemption from the registration requirements, and otherwise in compliance with, the FIEL and the other applicable laws and regulations of Japan. For Qualified Institutional Investors, or QII Please note that the solicitation for newly-issued or secondary securities (each as described in Paragraph 2, Article 4 of the FIEL) in relation to the shares of common stock constitutes either a QII only private placement or a QII only secondary distribution (each as described in Paragraph 1, Article 23-13 of the FIEL). Disclosure regarding any such solicitation, as is otherwise prescribed in Paragraph 1, Article 4 of the FIEL, has not been made in relation to the shares of common stock. The shares of common stock may only be transferred to QIIs. For Non-QII Investors Please note that the solicitation for newly-issued or secondary securities (each as described in Paragraph 2, Article 4 of the FIEL) in relation to the shares of common stock constitutes either a small number private placement or a small number private secondary distribution (each as is described in Paragraph 4, Article 23-13 of the FIEL). Disclosure regarding any such solicitation, as is otherwise prescribed in Paragraph 1, Article 4 of the FIEL, has not been made in relation to the shares of common stock. The shares of common stock may only be transferred en bloc without subdivision to a single investor. Singapore This prospectus has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this prospectus and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the shares of common stock may not be circulated or distributed, nor may the shares of common stock be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore, or the SFA, (ii) to a relevant person pursuant to Section 275(1), or any person pursuant to Section 275(1A), and in accordance with the conditions specified in Section 275, of the SFA, or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA. Table of Contents Where the shares of common stock are subscribed or purchased under Section 275 of the SFA by a relevant person which is: (a) a corporation (which is not an accredited investor (as defined in Section 4A of the SFA)) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or (b) a trust (where the trustee is not an accredited investor) the sole purpose of which is to hold investments and each beneficiary of the trust is an individual who is an accredited investor, securities (as defined in Section 239(1) of the SFA) of that corporation or the beneficiaries rights and interest (howsoever described) in that trust shall not be transferred within six months after that corporation or that trust has acquired the shares of common stock pursuant to an offer made under Section 275 of the SFA except: (a) to an institutional investor or to a relevant person defined in Section 275(2) of the SFA, or to any person arising from an offer referred to in Section 275(1A) or Section 276(4)(i)(B) of the SFA; (b) where no consideration is or will be given for the transfer; (c) where the transfer is by operation of law; (d) as specified in Section 276(7) of the SFA; or (e) as specified in Regulation 32 of the Securities and Futures (Offers of Investments) (Shares and Debentures) Regulations 2005 of Singapore. Chile The shares of common stock are not registered in the Securities Registry (Registro de Valores) or subject to the control of the Chilean Securities and Exchange Commission (Superintendencia de Valores y Seguros de Chile). This prospectus and other offering materials relating to the offer of the shares do not constitute a public offer of, or an invitation to subscribe for or purchase, the shares in the Republic of Chile, other than to individually identified purchasers pursuant to a private offering within the meaning of Article 4 of the Chilean Securities Market Act (Ley de Mercado de Valores) (an offer that is not addressed to the public at large or to a certain sector or specific group of the public ). Table of Contents LEGAL MATTERS The validity of the issuance of our common stock offered in this prospectus will be passed upon for us by Wilson Sonsini Goodrich & Rosati, Professional Corporation, Palo Alto, California. Goodwin Procter LLP, Menlo Park, California, is representing the underwriters in this offering.
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+This summary provides a brief overview of information contained elsewhere in this prospectus. This summary does not contain all of the information that you should consider before investing in our common stock. You should read the entire prospectus carefully, including the information set forth under Risk Factors, Forward-Looking Statements and Management s Discussion and Analysis of Financial Condition and Results of Operations and the financial statements and the related notes thereto included elsewhere in this prospectus. Unless indicated otherwise, the information presented in this prospectus assumes (i) an initial public offering price of $ per share (the midpoint of the price range on the cover page of this prospectus), (ii) that the underwriters do not exercise their option to purchase additional shares, and (iii) other than in the consolidated financial statements and related notes included elsewhere in this prospectus, the consummation of a stock split immediately prior to and contingent upon the completion of this offering pursuant to which each share of common stock held of record by the holder thereof will be reclassified into approximately shares of common stock (the Stock Split ). Unless the context otherwise requires, references in this prospectus to IPSCO Tubulars Inc., the Company, our company, we, our and us, or like terms, refer to IPSCO Tubulars Inc. and its subsidiaries. References to the selling stockholder refer to PAO TMK, a company organized under the laws of the Russian Federation. We have provided definitions for some of the terms we use to describe our business and industry and other terms used in this prospectus in the Glossary beginning on page A-1 of this prospectus. IPSCO Tubulars Inc. Overview We are a leading, growth-oriented producer and supplier of seamless and welded oil country tubular goods, or OCTG, with a proprietary suite of premium and semi-premium connections. As a vertically integrated producer of seamless pipe and an efficient operator of our steel pipe production, heat treating and threading facilities, we are able to efficiently meet customer demand and exercise control over our cost structure. The primary end market for our products is onshore exploration and production, or E&P, operators in the United States and Canada, who purchase our products directly from us or through our distributors. Our E&P end-users operate in geographic locations with environments that require casing and tubing materials capable of meeting exacting standards for temperature, pressure, corrosion, torque resistance and abrasion. Through our comprehensive and technologically advanced portfolio of OCTG, we are able to serve as a single-source supplier for our E&P end-users and respond to a rapidly increasing per-well demand for OCTG. Our OCTG are available with the end-user s choice of our 29 market-leading proprietary connections as well as multiple connections that meet or exceed American Petroleum Institute certified, or API, standards. We also produce line pipe for the transport of crude oil, natural gas and natural gas liquids from producing fields to processing plants and refineries and for the transport of refined products, as well as standard, structural and industrial pipe for the agricultural, commercial construction and automotive industries. Our operations benefit from our broad, strategically positioned geographic footprint, which supports our ability to supply seamless and welded OCTG to the most active major oil and gas basins in the United States and Canada. We own and operate 12 production facilities in the United States and Canada that produce a wide range of OCTG in various sizes and grades and together offer approximately 1.5 million tons of annual steel pipe production capacity, approximately 1.5 million tons of annual threading capacity and 674,000 tons of annual heat treating capacity. We have finishing facilities in close proximity to our end-users E&P operations, which allows us to provide our customers with customized technical solutions and to synchronize our production and logistics with evolving demands. We also import seamless OCTG and line pipe in sizes that we do not produce domestically from our parent, PAO TMK, and its non-U.S. subsidiaries. We refer to PAO TMK and its affiliates Table of Contents The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. Subject to Completion Preliminary Prospectus dated , 2018 PROSPECTUS Shares IPSCO Tubulars Inc. Common Stock This is the initial public offering of the common stock of IPSCO Tubulars Inc. We are offering shares of our common stock and PAO TMK, or the selling stockholder, is offering shares of our common stock. We will not receive any proceeds from the sale of shares by the selling stockholder. We expect the initial public offering price will be between $ and $ per share. Currently, no public market exists for the shares. We have been approved to list our common stock on the New York Stock Exchange, or NYSE, subject to official notice of issuance, under the symbol IPSC. We are an emerging growth company as that term is used in the Jumpstart Our Business Startups Act of 2012, or JOBS Act, and will be subject to reduced public company reporting requirements. See Summary Our Emerging Growth Company Status. Following the completion of this offering, we will be a controlled company as defined under the corporate governance rules of the NYSE because PAO TMK will continue to control approximately % of the voting power of our common stock (or approximately % of the voting power if the underwriters exercise in full their option to purchase additional shares of common stock). See Management Status as a Controlled Company. Investing in our common stock involves risks that are described in the Risk Factors section beginning on page 17 of this prospectus. Per Share Total Initial public offering price $ $ Underwriting discounts and commissions(1) $ $ Proceeds, before expenses, to IPSCO Tubulars Inc.(2) $ $ Proceeds, before expenses, to the selling stockholder(2) $ $ (1) Please read Underwriting (Conflicts of Interest) for a description of all underwriting compensation payable in connection with this offering. (2) We have agreed to pay the selling stockholder s underwriting discounts and commissions otherwise payable by it to the underwriters for this offering. We have granted the underwriters a 30-day option to purchase up to an additional shares at the public offering price, less the underwriting discounts. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. Delivery of the shares of common stock is expected to be made on or about , 2018 through the book-entry facilities of The Depository Trust Company. Credit Suisse J.P. Morgan BofA Merrill Lynch Morgan Stanley BTIG UBS Investment Bank Citigroup Barclays Guggenheim Securities The date of this prospectus is , 2018. Table of Contents ABOUT THIS PROSPECTUS We and the selling stockholder have not, and the underwriters have not, authorized any other person to provide you with information different from that contained in this prospectus and any free writing prospectus that we have prepared, and we take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. We and the selling stockholder are not, and the underwriters are not, making an offer to sell these securities in any jurisdiction where an offer or sale is not permitted. The information in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or any sale of our common stock. Our business, financial condition, results of operations and prospects may have changed since that date. You should not, under any circumstances, construe the delivery of this prospectus or any sale made hereunder to imply that the information in this prospectus is correct as of any date subsequent to the date on the front cover of this prospectus. This prospectus contains forward-looking statements that are subject to a number of risks and uncertainties, many of which are beyond our control. Please read Risk Factors and Forward-Looking Statements. We own or have rights to various trademarks, service marks and trade names that we use in connection with the operation of our business. This prospectus may also contain trademarks, service marks and trade names of third parties, which are the property of their respective owners. Our use or display of a third party s trademarks, service marks, trade names or products in this prospectus is not intended to, and does not imply, a relationship with, or endorsement or sponsorship by, us. Solely for convenience, the trademarks, service marks and trade names referred to in this prospectus may appear without the , TM or SM symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the right of the applicable licensor to these trademarks, service marks and trade names. INDUSTRY AND MARKET DATA The data included in this prospectus regarding the industry in which we operate, including descriptions of trends in the market and our position and the position of our competitors within our industries, is based on a variety of sources, including independent publications, government publications, information obtained from customers, distributors, suppliers, trade and business organizations and publicly available information, as well as our good faith estimates, which have been derived from management s knowledge and experience in the industry in which we operate. The industry data sourced from the U.S. Energy Information Administration, or the EIA, is from its publications titled Annual Energy Outlook 2018, published in June 2018, and Short-Term Energy Outlook, published in November 2018. The industry data sourced from Baker Hughes Inc., or Baker Hughes, is from its publication titled Baker Hughes North America Rotary Rig Count, published in November 2018. The industry data sourced from Coras Research, LLC, or Coras Oilfield Research, is from its OFS Data Packet, published in the second quarter of 2018. The industry data sourced from Preston Publishing Co., or Preston Pipe, is from its report titled Preston Pipe & Tube Report, published in October 2018. The industry data sourced from Rystad Energy Inc., or Rystad Energy, is from its publication titled Shale Trends Report, published in July 2018. The industry data sourced from Spears & Associates, Inc., or Spears & Associates, is from its publications titled Drilling and Production Outlook, published in March 2018 and June 2018, and its publications titled Oilfield Market Report 2006 2018, published in April 2018, and Global Directional Drilling, published in the fourth quarter of 2017. We believe that these third-party sources are reliable and that the third-party information included in this prospectus and in our estimates is accurate and complete; however, we have not independently verified such information. The industry in which we operate is subject to a high degree of uncertainty and risk due to a variety of factors, including those described in the sections entitled Forward-Looking Statements and
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this Prospectus and does not contain all of the information that you should consider in making your investment decision. Before investing in our securities, you should carefully read this entire Prospectus, including our financial statements and the documents to which we refer you. The following summary is qualified in its entirety by reference to the detailed information appearing elsewhere in the Registration Statement on Form S-1/A (the "Registration Statement") of which this Prospectus is a part. Unless the context indicates or suggests otherwise, references to "we," "our," "us," the "Company" or the "Registrant" refer to US VR Global.com Inc. and its subsidiaries. Business Overview US VR Global.com Inc. (formerly known as Boly Group Holdings Corp.) (the "Company") seeks to establish our Hero Central theme parks, which we believe are new generation playgrounds that use virtual reality ("VR") and augmented reality ("AR") technologies to provide interactive and immersive rides, games and attractions. They are also planned to have conventional rides, games and attractions, as well as sports-entertainment facilities for those who enjoy an active lifestyle. The Company is a provider of cutting-edge VR and AR enhanced leisure and entertainment activities. We are creating our Hero Central Digital Platform as an online enabler and integrated platform for our businesses: Hero Central theme parks, a chain of next generation indoor shopping mall-based VR and AR enhanced theme parks and arcades; Publishing AR Trading Card Game Applications; and Collaborating with Hero Makers, our brand and IP partners and application developers to develop content. In addition, we are developing Hero Central Theme Parks as a multi-level platform with intellectual property ("IP") developed by us and by third party interested IP owners and developers, who we refer to as "Hero Makers." We can select from a variety of IP to create the best guest experience, and are not limited to any single brand, theme or Hero Maker. We intend to set out our flagship Hero Central theme parks in China and Malaysia. We intend our flagship Hero Central theme part in China will cover approximately 48,000 square feet of space in Studio City in Macau China. We intend our flagship Hero Central theme park in Malaysia will cover approximately 170,000 square feet of high-energy space at Empire City Damansara, in Malaysia. This is a mixed development in Damansara Perdana, which is in Malaysia s Greater Kuala Lumpur metropolis. We have a flexible expansion model that we believe is highly modular and scalable for our Hero Central Theme Parks. We plan to create locations that range in size from a VR theme park, to arcades that fit in retail lots. Each theme park and arcade are planned to be tied together by our Hero Central Digital Platform and operated with common management systems. To support our Hero Central Theme Park expansion plan, we plan to develop a licensing program for third party licensees. Under this planned program, licensees will be provided with access to our content, online platform, management system and other back-office systems. Licensees will be responsible for the initial capital investment and daily operations. We are also developing our own AR-enhanced trading card game application that is enabled and driven by our Hero Central Digital Platform. We plan to publish applications to users in Malaysia and globally. It is planned that the trading card will be a physical card with printed codes such that a smartphone or tablet will be able to read the codes to create 3D images overlaid on the viewer s existing environment. The 3D image will be displayed on the viewer s device. The viewer may also interact with the created 3D image using the device. US VR Global.com Inc. ("US VR.com", "the Company") was incorporated in the State of Delaware in 2003. US VR Global Inc. ("US VR Sub") was incorporated on February 27, 2017 under the laws of the State of Delaware, and commenced operations at that time. On February 6, 2018, US VR Sub, and each of the shareholders of US VR Sub who executed a counterpart signature to the Share Exchange Agreement dated February 6, 2018 (the "Exchange Agreement") or executed a joinder agreement to the Exchange Agreement following the effective date of the Exchange Agreement but prior to the First Closing (as hereinafter defined) (such shareholders, the "US VR Sub shareholders"), and Lai Chee Mei (Amanda) as representative of the US VR Sub shareholders entered into the Exchange Agreement. Pursuant to the terms of the Exchange Agreement, (i) the Company agreed to acquire from the US VR Sub shareholders all of the shares of common stock of US VR Sub in exchange for the issuance by the Company to the US VR Sub shareholders of shares of the Company s common stock and shares of the Company s Series A preferred stock, and (ii) US VR Sub will become a wholly owned subsidiary of the Company. Table of Contents Page Number Prospectus Summary 2
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diff --git a/parsed_sections/prospectus_summary/2018/CIK0001278150_adaptive_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001278150_adaptive_prospectus_summary.txt
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+PROSPECTUS SUMMARY This summary highlights selected information contained elsewhere in this prospectus. This summary does not contain all of the information you should consider before investing in our common stock. You should read this entire prospectus carefully, including the sections titled Risk Factors, Management s Discussion and Analysis of Financial Condition and Results of Operations and our consolidated financial statements and the related notes included elsewhere in this prospectus, before making an investment decision. Our fiscal year ends on January 31. Unless the context otherwise requires, all references in this prospectus to we, us, our, our company and Adaptive Insights refer to Adaptive Insights, Inc. ADAPTIVE INSIGHTS, INC. Overview We are a leading provider of cloud-based software to modernize business planning. Our platform the Adaptive Insights Business Planning Cloud transforms business planning into a strategic and competitive advantage by enabling organizations to respond to changing business conditions with confidence and agility. The Adaptive Insights Business Planning Cloud allows customers to rapidly and effectively model their businesses, monitor and analyze performance on an ongoing basis, share dashboards, and generate management reports. In addition, customers can use our Business Planning Cloud to evaluate actual performance versus plan, test alternative scenarios, and leverage insights from analytics to make informed, timely decisions that drive future business results. Every organization plans. This includes small businesses, nonprofits, government agencies and Fortune 500 enterprises. Within these organizations, every function and department plans. We believe that the Adaptive Insights Business Planning Cloud is capable of transforming how all organizations plan. Our Business Planning Cloud is: Easy our intuitive, accessible user interface empowers all users within an organization to contribute to the planning and performance management process. Powerful our innovative, in-memory architecture scales to support very large and complex multi-dimensional models, enabling users to run and analyze virtually unlimited scenarios. Fast users can quickly access and update planning models utilizing data from numerous sources, allowing people across an organization to access real-time views of performance versus plan, and rapidly respond to change. Our Business Planning Cloud enables a continuous, comprehensive, and collaborative planning process across the organization from business-wide planning to in-depth planning within specific business units and functions, such as sales, marketing and operations. We believe that the market opportunity for our cloud-based planning platform is largely untapped because most organizations still rely on spreadsheets and other manual processes to plan. Our solutions are capable of addressing these opportunities and are also a modern replacement for legacy planning tools. Our platform is easy to use, has powerful modeling capabilities, enables insights from analytics, facilitates rapid iterative planning processes, and offers fast time-to-value and low total cost of ownership for our customers. This allows us to address the needs of a wide range of organizations, whether they use legacy planning tools or spreadsheets and manual processes to plan. To capitalize on this opportunity, we have built both a direct sales force and a customer success team. We also have a global partner ecosystem, which includes over 150 software solution Table of Contents The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and neither we nor the selling stockholders are soliciting offers to buy these securities in any jurisdiction where the offer or sale is not permitted. PRELIMINARY PROSPECTUS (Subject to Completion) Issued June 1, 2018 8,200,000 SHARES COMMON STOCK Adaptive Insights, Inc. is offering 7,820,000 shares of our common stock and the selling stockholders are offering 380,000 shares of common stock. We will not receive any proceeds from the sale of shares by the selling stockholders. This is our initial public offering and no public market currently exists for our shares of common stock. We anticipate that the initial public offering price will be between $13.00 and $15.00 per share. Our common stock has been approved for listing on the New York Stock Exchange under the symbol ADIN. We are an emerging growth company as defined under the federal securities laws. Investing in our common stock involves risks. See Risk Factors beginning on page 14. PRICE $ A SHARE Price to Public Underwriting Discounts and Commissions(1) Proceeds to Adaptive Proceeds to Selling Stockholders Per Share $ $ $ $ Total $ $ $ $ (1) See the section titled Underwriting for additional information regarding compensation payable to the underwriters. We have granted the underwriters the right to purchase up to an additional 1,230,000 shares of common stock to cover overallotments, if any. The Securities and Exchange Commission and state regulators have not approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The underwriters expect to deliver the shares to purchasers on , 2018. MORGAN STANLEY BofA MERRILL LYNCH JEFFERIES RBC CAPITAL MARKETS JMP SECURITIES OPPENHEIMER & CO. , 2018. Table of Contents providers, enterprise resource planning vendors, systems integrators and regional consulting firms. We have been consistently recognized as a leader in the market and were positioned as a Leader in the 2017 Gartner Magic Quadrant for Cloud Strategic Corporate Performance Management Solutions for the second consecutive year. Additionally, we are positioned as a Leader by Forrester in its most recent Wave on this topic, the 2016 Forrester Enterprise Performance Management (EPM) Wave Report. We believe that our customers are our greatest asset. As of April 30, 2018, we had over 3,800 customers located in more than 50 countries. Our powerful and scalable platform with an intuitive user interface is able to reach across the market spectrum, as low total cost of ownership makes it accessible to small and medium-sized business, or SMB, and mid-market customers. At the same time, our scalability enables us to serve large enterprise customers. Our solutions have broad applicability across all types of organizations, and our domain expertise in certain verticals enhances our market leadership. Our mission is to free people to do their best work and to empower teams to better manage their business. We do this in part by eliminating repetitive, manual tasks, enabling people to do higher value, more strategic work. Because of this, our customers are passionate about how our solutions have transformed their day-to-day jobs. We initially created our Business Planning Cloud for financial planning and analysis teams. Over time, our customers have leveraged our platform s flexible modeling capabilities to create solutions to address other use cases specific to their businesses. For example, a global airline extended their use of our platform to analyze route profitability, and a global software company expanded their use of our platform for integrated departmental budgeting and sales quota and capacity planning. We recently introduced a purpose-built solution for sales planning and analysis targeting sales teams, and we plan to continue to provide new solutions to address additional customer needs outside of finance and sales. We have experienced significant platform adoption leading to revenue growth in recent periods. For our fiscal years ended January 31, 2016, 2017 and 2018, our total revenues were $61.7 million, $81.8 million and $106.5 million, respectively. For the three months ended April 30, 2017 and 2018, our total revenues were $24.2 million and $32.1 million, respectively. For our fiscal years ended January 31, 2016, 2017 and 2018, our subscription revenues were $49.4 million, $69.7 million and $93.9 million, respectively. For the three months ended April 30, 2017 and 2018, our subscription revenues were $21.2 million and $28.3 million, respectively. Our net losses were $59.1 million, $44.7 million and $42.7 million for the fiscal years ended January 31, 2016, 2017 and 2018, respectively. Our net losses were $10.0 million and $11.0 million for the three months ended April 30, 2017 and 2018, respectively. Industry Background Planning is a Universal, Mission-Critical Function Every organization plans, from small businesses and nonprofits to government agencies and Fortune 500 enterprises. Within organizations, every function plans, including finance, sales, marketing and operations. An effective planning process democratizes participation across an organization, enabling managers to determine strategy, set priorities and allocate resources, while providing a real-time, single source of truth in order to monitor, evaluate and report on performance. Leveraging insights from this planning process, companies are able to make timely and better-informed decisions to drive future results. Businesses Need to Adapt to Dynamic Markets Faster Than Ever Before The global business environment is increasingly competitive and dynamic. The fast pace of technological development enables companies to launch and scale quickly, while requiring them to adapt to shortened product Table of Contents Software For People Who Plan Everybody plans.That s why we make planning easy. P.F. Chang s relies on Adaptive Insights for corporate-wide planning across its 400+ restaurants. Table of Contents cycles and increased customer expectations. At the same time, with advances in technology, organizations of all sizes are now capturing more data than ever before. This data, however, is often locked away in siloed applications or systems of record within an organization. The relative speed with which an organization can utilize this data and adapt its plans to changing market dynamics is increasingly important as a competitive advantage. Cloud-Based Software Has Significant Advantages Mission-critical applications are increasingly being delivered reliably, securely and cost-effectively to customers via the cloud without the need to purchase and manage supporting hardware, or engage in costly upgrades or ongoing maintenance. More importantly, cloud-based solutions more readily facilitate real-time collaboration across the organization, which is particularly relevant to an effective planning process. Limitations of Existing Planning Tools Most organizations still use legacy tools, spreadsheets and manual processes for planning purposes. Due to the limitations of these existing tools, businesses currently face numerous challenges with their planning processes. Business Planning is Episodic and Lacks Agility. To compete effectively, organizations need to have a continuous planning process in which plans are revised and adapted on an ongoing basis. However, due to the limitations of current planning tools, many organizations only engage in the planning process on an episodic basis, leading to plans that are out of date by the time they are completed. According to an Association of Finance Professionals Benchmarking Survey from October 2016, it takes a typical organization 75 days to complete its annual planning process. Planning is Conducted in Silos with Stale Data. In order for organizations to plan effectively, teams and departments need to be able to collaborate with one another using assumptions and accurate data that are shared. However, due to the limitations of legacy tools, spreadsheets and manual processes, teams are often forced to plan in isolation, without access to a real-time, accurate or centralized source of data, leading to inconsistencies and lack of an organization-wide view. Existing Business Planning Processes are Error Prone. Legacy tools, spreadsheets and manual processes often introduce errors and delays into businesses planning processes. Multiple users operating in silos use different assumptions and different data, resulting in a lack of coordination across the organization. In addition, the often manual and time-consuming aggregation of disparate plans into an organization-wide view adds a further layer of complexity and risk to an already burdensome process. Current Tools Do Not Effectively Provide Business Insights. Organizations need to be able to leverage their historical performance and key performance indicators, or KPIs, in order to develop informed assumptions that influence future business strategy. However, traditional legacy tools are too complicated for non-finance users, and spreadsheets and manual processes are too limited in capability. Neither of these legacy approaches provides widespread access to reliable data and analytics. Legacy Planning Tools are Costly and Burdensome. On-premise legacy tools typically used by enterprise customers require considerable support from dedicated IT resources or professional services for model changes, report creation, data integration and data management. Significant investments in costly professional services are also required to deploy, customize, maintain and update these legacy systems. Spreadsheets burden organizations of all sizes with manual processes that take critical business resources away from strategic tasks and focus them on low-value tasks, such as the aggregation of data. Table of Contents TABLE OF CONTENTS Prospectus Page Prospectus Summary 1
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+Summary of Committee Service The following is a table showing board members involvement in each committee: Name Audit Compensation Nominating/Governance Wayne Harding - - - Samuel Morris M C C Michael Harnish C M - James Cochran - M - T. Keith Wiggins - - M Christopher Bragg M - - M = Member C = Chair Limitations on Liability and Indemnification Matters Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers or controlling persons, we have been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable. DIRECTOR COMPENSATION Fiscal Year 2017 Director Compensation The following table sets forth information concerning compensation paid to our outside directors for services during 2017: Name Fees Earned or Paid In cash Stock Award Total Samuel Morris $18,000 $34,843 $41,843 Michael Harnish $18,000 $34,843 $41,843 James Cochran $18,000 $34,843 $41,843 T. Keith Wiggins $18,000 $34,843 $41,843 Christopher Bragg $18,000 $34,843 $41,843 From September 30, 2016 to August 31, 2017, each outside director receives $1,000 for each meeting attended in person. Directors were also paid $4,000 per calendar quarter. At the annual meeting of the board of directors on September 7, 2017, the board voted to award each outside director options for 150,000 shares of common stock. These stock option shares vested 1/8 on the date granted with the balance equally over seven quarters commencing December 31, 2017. The chair of the audit committee received an additional 20,000 stock options per year. The chair of the compensation committee received an additional 10,000 stock options per year. Committee chair options vest half immediately, half in six months. At the September 7, 2017 board meeting, the Compensation Committee recommended, and the Board approved, to increase each independent director s quarterly cash compensation from $4,000 per calendar quarter to $5,000 per calendar quarter. EXECUTIVE COMPENSATION Executive Compensation Summary Compensation Table for 2017 The following table sets forth certain information concerning compensation paid to each of the individuals who served as executive officers during 2017: Name & Position Year Salary ($) Bonus ($) Stock Awards ($) (1) Option Awards ($) Non-equity incentive plan comp ($) Non-qualified deferred comp earnings ($) All other comp ($) Total ($) John McKowen, 2017 - - - - - - - - prior Chief Executive 2016 (6,2) 192,164 - - - - - 12,361 204,525 Officer, Chairman 2015 (3) 258,050 - - - - - 38,284 296,334 Wayne Harding, 2017 (9) 131,250 - - 92,000 - - 10,800 234,050 Chief Executive 2016 (7,4) 131,379 - 33,093 - - - 6,050 170,522 Officer, Chief 2015 (5) 154,231 - - - - - 6,800 161,031 Financial Officer, Chairman William Gregorak, 2017 (8,10) 120,000 2,790 - 22,000 - - 4,800 149,590 Chief Financial 2016 - - - - - - - - Officer & Secretary 2015 - - - - - - - - (1) Stock award compensation is based on stock options or RSUs granted, vested and issued during the year. For payroll tax purposes, and as reported here, valuation of the RSU grants that are vested is recorded through payroll at a 25% fair value discount due to large blocks and limitations on selling. This is based on outside executive compensation consultant s opinion. For financial statement purposes, the full fair value of the grant is recorded, less expected forfeitures. (2) Other Compensation is the payment of the health insurance benefit by the Company ($2,361) and office allowance ($10,000). (3) Other Compensation is the payment of the health insurance benefit by the Company ($13,284) and office allowance ($25,000). (4) Other Compensation is the payment of the health insurance benefit by the Company ($6,050). (5) Other Compensation is the payment of the health insurance benefit by the Company ($6,800). (6) Mr. McKowen resigned June 2016 (7) Mr. Harding was named Chief Executive Officer in June 2016 and became Chairman in September 2016. Mr. Harding was named interim Chief Financial Officer effective February 9. 2018. (8) Mr. Gregorak was named Chief Financial Officer in March of 2017 and resigned on February 1, 2018. (9) Other Compensation is the payment of the health insurance benefit by the Company ($9,800). (10) Other Compensation is the payment of the health insurance benefit by the Company ($4,800) Grants and Issuance of Plan-Based Awards for 2017 and 2016 For the year ended December 31, 2016, the Company issued 225,000 options to purchase shares of common stock to Wayne Harding, with 64,286 shares vested by December 31, 2017. For the year ended December 31, 2016, the Company issued 600,000 options to purchase shares of common stock to Wayne Harding, 200,000 with immediate vesting, 400,000 with vesting in future years. Outstanding Equity Awards at Fiscal Year End The following table sets forth certain information as to unexercised restricted stock units held on December 31, 2017 by the named executive officer. Stock Awards Name Number of Options that have vested (#) Market value of Options that have vested ($)(1) Options that have not vested (#) Market value of stock options that have not vested ($)(1) Wayne Harding 464,286 92,000 360,714 144,286 William Gregorak 150,000 22,000 525,000 210,000 (1) The closing price of our common stock on OTCQB on December 31, 2017 was $0.59 Option Exercises and Stock Vested in 2017 Mr. Harding, our sole executive officer has no RSU holdings. In 2016 he was granted 600,000 stock options, 200,000 of which vested immediately with the remainder vesting in future years. In September of 2017, he was granted 225,000 stock options, 64,286 of which vested immediately with the remainder vesting in future years. Employment and Change in Control Agreements We entered into an employment agreement with Wayne Harding effective as of January 1, 2011. This employment agreement renews automatically for successive one-year terms until either party delivers notice of termination within 30 days of the expiration of the then-current term. Under each agreement, annual base salary and other compensation is to be reviewed, and may be adjusted upward, no less frequently than quarterly. Mr. Harding s annual base salary has been $120,000 per year until November 2016, when his salary was increased to $150,000 per year. On August 22, 2017, Mr. Harding entered into a new compensation agreement. This agreement contains the same terms as the prior agreement with the exception of the expanded definition of "Early Termination: Resignation by the Employee for Good Reason." This definition has been expanded to include the election or appointment of 50% or more new members of the Company s board. The employment agreement provides that Mr. Harding will be entitled, in the event his employment is terminated during the term by us without cause (as defined) or by him for good reason (as defined), to (a) receive an amount in cash equal to six months base salary at the highest base salary in effect during the twelve months prior to termination plus the amount of the annual bonus, if any, paid to him for the preceding fiscal year, prorated to the termination date and (b) immediate vesting of all non-vested stock options. The agreement also provides for immediate vesting of all non-vested stock options in the event of a change in control, which generally is defined to be a sale or other disposition to a person, entity or group of 50% or more of our consolidated assets. The following table sets forth estimated compensation that would have been payable to Mr. Harding upon termination of employment, assuming termination took place on December 31, 2017, whether in connection with a change in control or otherwise. Mr. Harding held unvested options as of December 31, 2017, and therefore would have been entitled to additional compensation had a change in control occurred as of December 31, 2017. Potential Payments Upon Termination or Change in Control Name Acceleration of Compensation Upon Change of Control Acceleration of Compensation Upon Termination Wayne Harding $150,000 $75,000 Equity Plans 2011 Long-Term Stock Incentive Plan In 2011 the board of directors adopted the 2011 Long-Term Stock Incentive Plan, or the 2011 Plan. The 2011 Plan and we expect our shareholders to approve the 2016 Plan prior to the completion of this offering. The 2016 Plan became effective immediately on adoption. Share Reserve: 10,000,000 shares of common stock. Participation: All employees may participate while employed with by us or any of our subsidiaries. Administration. The 2016 Plan may be administered by the board of directors or its compensation committee. The compensation committee, in its discretion, selects the individuals to whom awards may be granted, the time or times at which such awards are granted, and the terms of such awards. Types of Awards. The 2016 Plan permits the granting of any or all of option, stock appreciation right, restricted stock award, restricted stock unit awards, performance awards, other stock-based award or performance compensation award. Purchase of Securities Pursuant to the Plan and Payment for Securities Offered: Participation is allowed at the market price per share, or in amounts to be set by the board. Payment for the securities purchased may only be in cash or through services. Employees are not required to contribute to the 2011 Plan. Employees and the registrant are not required to contribute to the 2011 Plan. Reports are not made to employees participating in the 2011 Plan, and the Plan does not hold assets for employees accounts. Securities will not be purchased for the 2011 Plan in either the open market or through private transactions. Resale Restrictions: There are no resale restrictions on plan participants, except in the event the participant is an officer, director or affiliate, or in the event that the 2011 Plan contains a repurchase right of issuer, for any stock, or options, as a pre-condition of resale. Tax Effects of 2011 Plan Participation: Participants will be taxed upon any shares issued for services provided or for awards. Participants will not be taxable on stock options issued to employees at the market price on date of grant. Investment of Funds: No assets are held under the 2011 Plan. Withdrawal from the 2011 Plan; Assignment of Interest: Employees may refuse to accept compensation or options. No assignment of an interest in the 2011 Plan is possible; stock or options received under the 2011 Plan may be assigned, subject to the terms of the 2011 Plan, including the Right to repurchase as defined therein. Forfeitures and Penalties: Except as otherwise determined by the 2011 Plan administrator, at the time of the award, upon termination of a participant s continuous service during the applicable restriction period, the participant s restricted stock, that is at that time subject to restrictions shall be forfeited and reacquired by us; provided that the 2011 Plan administrator may provide, by rule or regulation or in any award agreement, or may determine in any individual case, that restrictions or forfeiture conditions relating to restricted stock shall be waived in whole or in part in the event of terminations resulting from specified causes, and the 2011 Plan administrator may in other cases waive in whole or in part the forfeiture of restricted stock. Term, Termination and Amendment of 2011 Plan. Unless terminated earlier by the board of directors, the 2011 Plan will terminate, and no further awards may be granted, ten years after the date on which it is approved by our shareholders. The board may amend, suspend or terminate the 2011 Plan at any time, except that, if required by applicable law, regulation or stock exchange rule, shareholder approval will be required for any amendment. The amendment, suspension or termination of the 2011 Plan or the amendment of an outstanding award generally may not, without a participant s consent, materially impair the participant s rights under an outstanding award. 2005 Stock Option Plan On May 6, 2005, the board of directors adopted the 2005 Stock Option Plan, the 2005 Plan, pursuant to which the board may grant options to purchase a maximum of 5,000,000 shares of common stock to key employees, directors and consultants. The option plan only provides for the grant of nonqualified stock options. The 2005 Plan was superseded by the 2011 Plan. The board of directors adopted our 1998 Stock Option Plan, or the 1998 Plan, in April 1998We previously adopted our 2005 Stock Option Plan, or the 2005 Plan. The 2005 Plan was superseded by the 2011 Plan. The 1998 Plan was amended by the board in May 1999, December 2001 and March 2004, and those amendments were approved by our shareholders. No additional options may be granted pursuant to the 1998 2005 Plan, but the 1998 2005 Plan will continue to govern the terms and conditions of the outstanding options previously granted thereunder. RELATED-PARTY TRANSACTIONS The following is a description of transactions since January 1, 2017 to which we have been a party, in which the amount involved exceeded or will exceed $120,000, and in which any of our directors, executive officers or beneficial owners of more than 5% of any series or class of our preferred or common stock, or an affiliate or immediate family member thereof, had or will have a direct or indirect material interest, other than compensation, termination and change-in-control arrangements. Since January 1, 2017 there have been the following related-party transactions, except for the compensation arrangements described under "Executive Compensation" and "Director Compensation": With respect to Wayne Harding, our Chief Executive Officer and Interim Chief Financial Officer: Mr. Harding provided a 12% short term loan to us of $25,000, which loan was secured by land assets and paid off. Mr. Harding provided a short-term loan to the Company of $12,500 in the third quarter of 2017 , which loan is initially unsecured but will become secured by land assets if not paid within 30 days of the note by land assets. Mr. Harding provided an 18% long-term loan to us of $50,000, which loan is secured by land assets. With respect to Johnny Cannaseed, LLC, which is majority owned by our former Chief Executive Officer John McKowen: We lease our former corporate headquarters office space to Johnny Cannaseed. Total lease payments are $47,000 per year. We made advances to Johnny Cannaseed, LLC totaling $34,400 in 2017, resulting in a cumulative total of $72,999, for greenhouse expenses. We recorded revenue totaling $620,000for leasing income from Johnny Cannaseed for 2017. At December 31, 2017, we had accounts receivable due from Johnny Cannaseed of $19,000. With respect to McGrow, LLC, which is partially owned by our former Chief Executive Officer John McKowen, we made advances to McGrow, LLC totaling $26,957, resulting in a cumulative total of $43,798 for greenhouse expenses. With respect to MCG Services, LLC, which is majority owned by our former Chief Executive Officer John McKowen: GrowCo made payments totaling $335,531 to MCG Services, LLC for costs associated with a services agreement. We made advances to MCG Services, LLC totaling $13,295. We made payments totaling $11,210 to John McKowen, our former Chief Executive Officer, for interest expense on a loan made by Mr. McKowen to GrowCo. A trust affiliated with Thomas Prasil, who then beneficially owned more than five percent of the common stock, invested $11.0M in GrowCo securities. PRINCIPAL AND SELLING SHAREHOLDERS Transactions with Selling Shareholder On February 9, 2018, we entered into a securities purchase agreement with Powderhorn I, LP, or Powderhorn, pursuant to which we issued to Powderhorn a 12.5% original issue discount convertible promissory note, or the Note, in the principal amount of $675,000 in exchange for $600,000 in cash. We have filed the registration statement of which this prospectus is a part in order to register the resale of up to 8,000,000 shares of common stock by Powderhorn that may be issued upon conversion of the Note. Under the securities purchase agreement, we initially agreed to use our reasonable best efforts to have the registration statement declared effective by the Securities and Exchange Commission, or SEC, by April 11, 2018. On April 2, 2018, Powderhorn agreed, effective upon a specified amortization payment we made on April 9, 2018, to defer our obligation to have the registration statement declared effective until May 8, 2018. Subject to certain permitted exceptions, if the SEC does not declare the registration statement effective by May 8, 2018 or if we fail to keep the registration statement effective, we will be required to pay liquidated damages to Powderhorn. The Note, which is due on February 9, 2019, bears interest at the rate of 12.5% per annum. The Note is subordinated in payment. All principal of, and accrued interest on, the Note is convertible at any time, at Powderhorn s election, into shares of common stock at a conversion price equal to $0.30. We have the right to prepay all or any portion of the Note at any time upon ten days written notice to Powderhorn. For the purpose of securing our obligations under the Note, TR El Paso Land, LLC, our wholly owned subsidiary, granted a deed of trust conveying certain property to Powderhorn and a limited recourse guarantee in favor of Powderhorn. The Note contains customary default events that, if triggered and not timely cured, will result in default interest and penalties. Beginning on March 6, 2018 and on the same day of each and every calendar month thereafter for a period of twelve months, or each an Amortization Payment Date, we make monthly payments under the Note to Powderhorn in the amount of $63,000, consisting of one-twelfth of the principal balance and all accrued but unpaid interest under the Note, or each an Amortization Payment. Each Amortization Payment shall be made, at our option, (a) in cash in an amount equal to 1.05 multiplied by the Amortization Payment, or Cash Amortization Payment Rate, or (b) subject to our complying with the Equity Conditions (as defined in the Note), in common stock, in whole or in part at the sole discretion of Powderhorn, by applying the Amortization Conversion Price (as defined below) as of the date of issuance of the common stock. In the event that Powderhorn is receiving any Amortization Payment in the form of common stock, the common stock issuable in satisfaction of such Amortization Payment will not be issued until such time as Powderhorn has requested such issuance, and the Amortization Conversion Price will be applied as of the date of such request by Powderhorn for issuance of common stock. Powderhorn may request an unlimited amount of issuances of common stock as partial payment totaling the sum of such Amortization Payment. Notwithstanding the foregoing, Powderhorn may (i) by delivering written notice to the Company at least ten Trading Days prior to an Amortization Payment Date, or Acceleration Notice, require that up to a total of three Amortization Payments be made on such Amortization Payment Date (including the Amortization Payment scheduled to be made on such Amortization Payment Date), each of which Amortization Payments severally shall be payable, at the option of the Company, in cash at the Cash Amortization Payment Rate or, subject to the Company complying with the Equity Conditions, in common stock by applying the Amortization Conversion Price or (ii) in Powderhorn s sole discretion, Powderhorn may at any time after an Amortization Payment Date, require that up to two additional Amortization Payments be made, provided that the entire amount of such two additional Amortization Payments will be made in common stock, in such amounts and at such times as Powderhorn will request in its sole discretion, by applying the applicable Amortization Conversion Price at the time of issuance, in accordance with the foregoing. Powderhorn may exercise its rights set forth in the preceding sentence with respect to an unlimited number of Amortization Payment Dates, until all Amortization Payments have been made, and any Amortization Payment or Payments for which payment is accelerated pursuant to the preceding sentence shall be deemed to apply to the latest Amortization Payment Date. Any amount of principal or interest on the Note that is not paid by the maturity date shall be repaid at 110% of such unpaid amount. Interest shall commence accruing on the date that the Note is issued and shall be computed on the basis of a 360-day year and the actual number of days elapsed. In no event shall Powderhorn be entitled to convert any portion of the Note if such conversion would result in beneficial ownership by Powderhorn and its affiliates of more than 4.99% of the outstanding shares of the common stock. For purposes of the preceding sentence, beneficial ownership shall be determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, except that the limitations on conversion may be waived (up to a maximum of 9.99%) by Powderhorn upon not less than 61 days prior notice to us, and the provisions of the conversion limitation shall continue to apply until such sixty-first day. Beneficial Ownership The following table sets forth information regarding the beneficial ownership of common stock as of March 31, 2018, by: each person, or group of affiliated persons, who is known by us to own beneficially more than five percent of the outstanding shares of common stock; each of our directors; each of our executive officers; all of our directors and executive officers as a group; and Powderhorn, the selling shareholder. The following table lists the percentage of shares beneficially owned as of January 22, 2018, based on 32,937,045 shares of common stock outstanding. Beneficial ownership is determined in accordance with the rules of the SEC, and thus it represents sole or shared voting or investment power with respect to shares of common stock. Shares of common stock subject to options currently exercisable or exercisable by May 30, 2018 (sixty days after March 31, 2018) are deemed outstanding and beneficially owned by the person holding such options for purposes of computing the number of shares and percentage beneficially owned by such person, but are not deemed outstanding for purposes of computing the percentage beneficially owned by any other person. Except as indicated in the footnote to the below table, and subject to applicable community property laws, the persons named have sole voting and investment power with respect to all shares of common stock shown as beneficially owned by them. Shares Beneficially Owned Before this Offering Shares Beneficially Owned After this Offering Name of Beneficial Owner Number Percentage Number Percentage 5% Shareholder John R. McKowen 456 Madison Street Denver, Colorado 80206 3,515,568 10.7% 3,515,568 8.6% Directors and Executive Officers Wayne Harding(1) 1,204,518 3.7 1,204,518 2.9 Samuel Morris 466,435 1.4 466,435 1.1 Michael Harnish 221,786 * 221,786 * James Cochran 406,502 1.2 406,502 1.0 T. Keith Wiggins 429,403 1.3 429,403 1.0 Christopher Bragg 140,787 * 140,787 * All directors and executive officers as a group (6 persons)(1) 2,869,431 8.7 2,869,431 7.0 Selling Shareholder Powderhorn I, LP(2) - - 8,000,000 19.5 * Less than 1%. (1) Includes (a) 6,666 shares owned by an individual retirement account for the benefit of Mr. Harding s spouse and (b) shares that may be acquired by Mr. Harding pursuant to options vested as of May 30, 2018. (2) Powderhorn is a Delaware limited partnership. Marc Manuel is the managing member of R3 Equity LLC, ,the manager of Powderhorn, and has sole power to vote or to direct the vote and sole power to dispose or to direct the disposition of all securities owned directly by Powderhorn. The business address of Powderhorn is c/o Lucosky Brookman LLP, 101 Wood Avenue South 5th Floor, Iselin, NJ. The 8,000,000 shares consist of common stock issuable to Powderhorn upon conversion of the Note. The Note is subject to a blocker provision that prevents Powderhorn from converting the note into shares of common stock if its beneficial ownership of the common stock would exceed 4.99% (subject to adjustment not to exceed 9.99%) of the common stock outstanding. As of March 31, 2018, Powderhorn would beneficially own 19.5% of our issued and outstanding common stock without giving effect to this blocker. For purposes of the table above, the address of each of our directors and executive officers is in care of Two Rivers Water & Farming Company, 3025 S. Parker Road, Suite 140, Aurora, Colorado 80014. DESCRIPTION OF CAPITAL STOCK General Our authorized capital stock consists of 200,000,000 shares of common stock, $0.001 par value per share. The following description does not purport to be complete. As of March 31, 2018, 32,937,045 shares of common stock were outstanding. As of that date, up to 57,505,526 additional shares of common stock could be issued, as follows: up to 8,000,000 shares of common stock were issuable upon conversion of a 12.5% original issue discount convertible promissory note issued to Powderhorn I, LP, or Powderhorn, which shares may be offered and sold pursuant to this prospectus from time to time; up to 29,881,698 shares of common stock were issuable upon conversion of preferred units of TR Capital Partners, LLC; up to 118,000 shares of common stock were issuable pursuant to restricted stock units vesting without an exercise price; up to 16,469,328 shares of common stock were issuable upon exercises of outstanding warrants (for additional details, please see the description under "Warrants" in Note 7, Equity Transactions, to the consolidated financial statements included elsewhere herein); and up to 3,036,500 shares of common stock were issuable upon the exercise of outstanding options. Common Stock Voting Rights: Each share of common stock is entitled to one vote on all matters presented to shareholders. Shareholders do not have the ability to cumulate votes for the election of directors. Dividends. Subject to preferences that may be applicable to any then-outstanding preferred stock, the holders of our outstanding shares of common stock are entitled to receive dividends, if any, as may be declared from time to time by the board of directors out of legally available funds. At present, we have no plans to issue dividends. See "Dividend Policy." Liquidation. In the event of our liquidation, dissolution or winding up, holders of common stock will be entitled to share ratably in the net assets legally available for distribution to shareholders after the payment of all of our debts and other liabilities, subject to the satisfaction of any liquidation preference granted to the holders of any outstanding shares of preferred stock. Other Rights and Preferences. Other than as described above, holders of common stock have no preemptive, conversion or subscription rights, and there are no redemption or sinking fund provisions applicable to common stock. The rights, preferences and privileges of the holders of common stock are subject to, and may be adversely affected by, the rights of the holders of shares of any series of preferred stock that we may designate and issue in the future. Fully Paid and Nonassessable. All of our outstanding shares of common stock are fully paid and nonassessable. Registration Rights Under the exchange agreement dated as of January 31, 2014 that we entered into with TR Capital Partners, LLC, or TR Capital, we granted holders of preferred units in TR Capital a one-time demand registration rights under which we may be required to file a registration statement covering shares of common stock (including shares subject to warrants) issued or issuable upon exchanges of TR Capital preferred units. As of March 31, 2018, we could be required to issue and deliver to holders of outstanding TR Capital preferred units, upon exchange, up to 29,963,378 shares of common stock together with warrants to purchase up to an additional 14,168,944 shares of common stock. We have filed the registration statement of which this prospectus is a part in order to register the resale of up to 8,000,000 shares of common stock by Powderhorn that may be issued upon conversion of the Note. Under our securities purchase agreement with Powderhorn, we initially agreed to use our reasonable best efforts to have the registration statement declared effective by the SEC by April 11, 2018. On April 2, 2018, Powderhorn agreed, effective upon a specified amortization payment we made on April 9, 2018, to defer our obligation to have the registration statement declared effective until May 8, 2018. Subject to certain permitted exceptions, if the SEC does not declare the registration statement effective by May 8, 2018 or if we fail to keep the registration statement effective, we will be required to pay liquidated damages to Powderhorn. Anti-Takeover Effects of Certain Provisions of Colorado Law, Our Articles of Incorporation and Bylaws Colorado corporation law, our Articles of Incorporation and our Bylaws contain a number of provisions that could make our acquisition by means of a tender or exchange offer, a proxy contest or otherwise more difficult. These provisions are summarized below. Shareholder Action by Written Consent. Our Bylaws provide that shareholders may take action in writing only by unanimous written consent, which has the same practical effect as a prohibition on shareholder written actions. This means that shareholders can only take action at an annual or special shareholders meeting. Removal of Directors. Our Bylaws provide that our directors may only be removed by the affirmative vote of two-thirds of the shares entitled to vote at an election of directors, with or without cause. Special Meetings. Special meetings of shareholders can only be called by the board of directors or at the request of holders of at least 10% of the shares outstanding and entitled to vote. Undesignated Preferred Stock. The ability to authorize undesignated preferred stock makes it possible for our board to issue preferred stock with voting or other rights or preferences that could impede the success of any attempt to acquire us. These and other provisions may have the effect of deferring hostile takeovers or delaying changes in control or management of our Company. These provisions of Colorado corporation law, our articles of incorporation and our bylaws could have the effect of discouraging others from attempting hostile takeovers and, as a consequence, they may also inhibit temporary fluctuations in the market price of our common stock that often result from actual or rumored hostile takeover attempts. These provisions may also have the effect of preventing changes in our management. It is possible that these provisions could make it more difficult to accomplish transactions that shareholders may otherwise deem to be in their best interests. Transfer Agent and Registrar The transfer agent and registrar for our common stock is Broadridge Financial Solutions, 1717 Arch St., Suite 1300, Philadelphia, Pennsylvania 19103, phone: (215) 553-5400. PLAN OF DISTRIBUTION The selling shareholder may, from time to time, sell, transfer or otherwise dispose of any or all of its shares of common stock offered by this prospectus, or interests in such shares of common stock, on any stock exchange, market or trading facility on which the shares are traded or in private transactions. As used in this prospectus, the "selling shareholder" refers to Powderhorn I, LP and any donees, pledgees, transferees or other successors-in-interest selling shares of common stock or interests in shares of common stock received after the date of this prospectus from a selling shareholder as a gift, pledge, partnership distribution or other transfer. The selling shareholder may use any one or more of the following methods when disposing of shares or interests therein: ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers; block trades in which the broker-dealer will attempt to sell the shares as agent, but may position and resell a portion of the block as principal to facilitate the transaction; purchases by a broker-dealer as principal and resale by the broker-dealer for its account; privately negotiated transactions; short sales; through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise; broker-dealers may agree with the selling shareholder to sell a specified number of such shares at a stipulated price per share; a combination of any such methods of sale; and any other method permitted pursuant to applicable law. The selling shareholder may, from time to time, pledge or grant a security interest in some or all of the shares of common stock owned by it and, if it defaults in the performance of its secured obligations, the pledgees or secured parties may offer and sell the shares of common stock, from time to time, under this prospectus, or under an amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act amending the identities of selling shareholders to include the pledgee, transferee or other successors in interest as the selling shareholder under this prospectus. The selling shareholder also may transfer the shares of common stock in other circumstances, in which case the transferees, pledgees or other successors in interest will be the selling beneficial owners for purposes of this prospectus; provided, however, that prior to any such transfer the following information (or such other information as may be required by the federal securities laws from time to time) with respect to each such selling beneficial owner must be added to the prospectus by way of a prospectus supplement or post-effective amendment, as appropriate: (1) the name of the selling beneficial owner; (2) any material relationship the selling beneficial owner has had within the past three years with us or any of our predecessors or affiliates; (3) the amount of securities of the class owned by such beneficial owner before the offering; (4) the amount to be offered for the beneficial owner s account; and (5) the amount and (if one percent or more) the percentage of the class to be owned by such beneficial owner after the offering is complete. In connection with the sale of common stock or interests therein, the selling shareholder may enter into hedging transactions with broker-dealers or other financial institutions, which may in turn engage in short sales of the common stock in the course of hedging the positions they assume. The selling shareholder may also sell shares of common stock short and deliver these securities to close out its short positions, or loan or pledge the common stock to broker-dealers that in turn may sell these securities. The selling shareholder may also enter into option or other transactions with broker-dealers or other financial institutions or the creation of one or more derivative securities which require the delivery to such broker-dealer or other financial institution of shares offered by this prospectus, which shares such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction). The aggregate proceeds to the selling shareholder from the sale of the common stock offered by it will be the purchase price of the common stock less discounts or commissions, if any. The selling shareholder reserves the right to accept and, together with its agents from time to time, to reject, in whole or in part, any proposed purchase of common stock to be made directly or through agents. We will not receive any of the proceeds from this offering. The selling shareholder also may resell all or a portion of the shares in open market transactions in reliance upon Rule 144 under the Securities Act of 1933, or the Securities Act, provided that it meets the criteria and conform to the requirements of that rule. The selling shareholder and any underwriters, broker-dealers or agents, or their affiliates, that participate in the sale of the common stock or interests therein are "underwriters" within the meaning of Section 2(11) of the Securities Act. Any discounts, commissions, concessions or profit they earn on any resale of the shares may be underwriting discounts and commissions under the Securities Act. Any selling shareholder that is an "underwriter" within the meaning of Section 2(11) of the Securities Act will be subject to the prospectus delivery requirements of the Securities Act. To the extent required, the shares of common stock to be sold, the name of the selling shareholder, the respective purchase prices and public offering prices, the names of any agents, dealer or underwriter, any applicable commissions or discounts with respect to a particular offer will be set forth in an accompanying prospectus supplement or, if appropriate, a post-effective amendment to the registration statement that includes this prospectus. The maximum amount of compensation to be received by any Financial Industry Regulatory Authority member or independent broker-dealer for the sale of any securities registered under this prospectus will not be greater than 8.0% of the gross proceeds from the sale of such securities. In order to comply with the securities laws of some states, if applicable, the common stock may be sold in these jurisdictions only through registered or licensed brokers or dealers. In addition, in some states the common stock may not be sold unless it has been registered or qualified for sale or an exemption from registration or qualification requirements is available and is complied with. Expenses; Indemnification We will not receive any of the proceeds from the sale of resale shares by the selling shareholder and will bear all expenses related to the registration of this offering, but will not pay for any commissions, fees or discounts, if any, relating to the sale of resale shares by the selling shareholder. We have agreed to indemnify the selling shareholder against certain losses, claims, damages and liabilities, including liabilities under the Securities Act. Supplements In the event of a material change in the plan of distribution disclosed in this prospectus, the selling shareholder will not be able to effect transactions in the resale shares pursuant to this prospectus until such time as a post-effective amendment to the registration statement is filed with, and declared effective by, the SEC. Regulation M We have informed Powderhorn that it is required to comply with Regulation M promulgated under the Securities Exchange Act of 1934, or the Exchange Act, with respect to any purchase or sale of the common stock. In general, Rule 102 under Regulation M prohibits any person connected with a distribution of common stock from directly or indirectly bidding for, or purchasing for any account in which it has a beneficial interest, any of the resale shares or any right to purchase the resale shares, for a period of one trading day before and after completion of its participation in the distribution. During any distribution period, Regulation M prohibits the selling shareholder and any other persons engaged in the distribution from engaging in any stabilizing bid or purchasing the common stock except for the purpose of preventing or retarding a decline in the open market price of the common stock. None of these persons may affect any stabilizing transaction to facilitate any offering at the market. We have also advised Powderhorn that it should be aware that the anti-manipulation provisions of Regulation M under the Exchange Act will apply to purchases and sales of common stock by such selling shareholder, and that there are restrictions on market-making activities by persons engaged in the distribution of the resale shares. Under Regulation M, neither the selling shareholder nor its agents may bid for, purchase, or attempt to induce any person to bid for or purchase, shares of common stock while distributing resale shares. Regulation M may prohibit the selling shareholder from covering short sales by purchasing resale shares while the distribution is taking place, despite any contractual rights to do so pursuant to conversion of the Note. We have advised Powderhorn that it should consult with its own legal counsel to ensure compliance with Regulation M. LEGAL MATTERS The validity of the shares of common stock being offered is being passed upon for us by Faegre Baker Daniels LLP, Denver, Colorado.
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. You should read the following summary together with the more detailed information appearing in this prospectus, including our consolidated financial statements and related notes, and the risk factors beginning on page 11, before deciding whether to purchase shares of our common stock. Unless the context otherwise requires, we use the terms Casa Systems, Casa, our company, we, us and our in this prospectus to refer to Casa Systems, Inc. and its subsidiaries. CASA SYSTEMS, INC. Our Vision Our products help our customers provide and manage broadband connectivity. We believe consumers and enterprises should be able to enjoy ultra-fast speeds and enhanced digital content experiences through their phones, tablets, computers, TVs and other connected devices at home or on the go. We believe that connectivity should be ubiquitous and seamless; it should not matter whether the user is accessing the Internet through wireless or fixed connections, and it should not matter whether that service is being provided by a cable operator, fixed telecom carrier or wireless services provider. Our innovative, software-centric products are designed to help achieve this vision. Overview We offer solutions for next-generation centralized, distributed and virtualized architectures for cable broadband, fixed-line broadband and wireless networks. Our innovative solutions enable customers to cost-effectively and dynamically increase network speed, add bandwidth capacity and new services for consumers and enterprises, reduce network complexity and reduce operating and capital expenditures. Our solutions include a suite of software-centric infrastructure solutions that allow cable service providers to deliver voice, video and data services over a single platform at multi-gigabit speeds. We focus our development efforts on innovation and being the first to market with new products at each generational shift in network technology. For example, we pioneered the use of a software-centric approach to leverage the programmability of FPGAs and general purpose processors for use in the cable industry. In addition, we believe we were the first to provide each of the following to our customers: a solution enabling cable service providers to deliver Internet Protocol, or IP, voice, digital video and data over a single port; a solution enabling cable service providers to deliver multi-gigabit speeds to their subscribers; and a remote node solution to enable distributed broadband cable access at gigabit speeds. We have created a software-centric, multi-service portfolio that enables a broad range of core and access network functions for fixed and wireless networks. These networks share a common set of core and access network functions that enable network services such as subscriber management, session management, transport security and radio frequency, or RF, management. Our Axyom software architecture allows each of these network functions to be provided and controlled by a distinct segment of software, which can be integrated or combined together in a building block-style fashion with the segments of software responsible for each other network function. This allows us to offer network architectures that can be efficiently tailored to meet each customer s specific requirements, both as they exist at the time of initial implementation and as they evolve over time. While we initially focused on providing solutions for cable service providers due to our founders Table of Contents CALCULATION OF REGISTRATION FEE Title of Each Class of Securities To Be Registered Amount to be Registered(1) Proposed Maximum Offering Price Per Share Proposed Maximum Aggregate Offering Price(2) Amount of Registration Fee Common Stock, $0.001 par value per share 8,452,500 $30.38 $256,786,950.00 $31,969.98 (1) Includes shares the underwriters have the option to purchase. (2) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(c) under the Securities Act on the basis of the average of the high and low prices of the Registrant s Common Stock as reported on the Nasdaq Global Select Market on April 16, 2018. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. Table of Contents experience in the cable industry, the commonalities between fixed and wireless network architectures have allowed us to expand our solutions into the wireless market as cable service providers have increasingly sought to add wireless capabilities to their service offerings. We offer a scalable solution that can meet the evolving bandwidth needs of our customers and their subscribers. Our first installation in a service provider s network frequently involves deploying our broadband products in only a portion of the provider s network and with only a fraction of the capacity of our products enabled at the time of initial installation. Over time, our customers have generally expanded the use of our solutions to other areas of their networks to increase network capacity. Capacity expansions are accomplished either by deploying additional systems or line cards, or by our remote enablement of additional channels through the use of software. Sales of additional line cards and software-based capacity expansions generate higher gross margins than our initial hardware-based deployments. Our solutions are commercially deployed in over 70 countries by more than 450 customers, including regional service providers as well as some of the largest Tier 1 broadband service providers, serving millions of subscribers. Our principal customers include Charter/Time Warner Cable, Rogers, Sprint and Mediacom in North America; Televisa/IZZI Mexico, Megacable Mexico and Claro Telmex Colombia in Latin America; Liberty Global, Vodafone and DNA Oyj in Europe; and Jupiter Communications, Beijing Gehua CATV Networks and China Mobile in Asia-Pacific. We have achieved significant growth and profitability. For the year ended December 31, 2017, we generated revenue of $351.6 million, net income of $88.5 million, non-GAAP net income of $110.2 million and adjusted EBITDA of $153.1 million, representing an increase of 11.2%, a decrease of 0.2%, an increase of 16.0% and an increase of 18.6%, respectively, from the corresponding amounts for the year ended December 31, 2016.1 For the year ended December 31, 2016, we generated revenue of $316.1 million, net income of $88.7 million, non-GAAP net income of $95.0 million and adjusted EBITDA of $129.1 million, representing increases of 16.0%, 30.5%, 30.5% and 11.7%, respectively, from the corresponding amounts for the year ended December 31, 2015. For the year ended December 31, 2015, we generated revenue of $272.5 million, net income of $67.9 million, non-GAAP net income of $72.8 million and adjusted EBITDA of $115.5 million, representing increases of 29.0%, 13.8%, 17.2% and 22.1%, respectively, from the corresponding amounts for the year ended December 31, 2014. Industry Background We believe broadband service providers are facing several key challenges, including: Rapidly increasing bandwidth demand. Bandwidth demand has grown substantially and is expected to continue to increase, caused by more users with more connected devices and applications, increased use of bandwidth-intensive streaming media services, and the increasing prevalence of Internet of Things, or IoT, solutions, among other factors. Competition fueled by increasing breadth of service offerings. With increased consumer and enterprise choice for access to broadband, broadband service providers are increasingly coming into competition with each other, and must develop differentiated service offerings with higher levels of performance at lower cost. 1 Non-GAAP net income and adjusted EBITDA are non-GAAP financial measures. Please see Selected Consolidated Financial Data Non-GAAP Financial Measures for information regarding the limitations of using non-GAAP net income and adjusted EBITDA and for a reconciliation of each of non-GAAP net income and adjusted EBITDA to net income, the most directly comparable financial measure calculated and presented in accordance with GAAP. Table of Contents The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. PROSPECTUS (Subject to Completion) Issued April 23, 2018 7,350,000 Shares Common Stock The selling stockholders identified in this prospectus, including our Chief Executive Officer and other officers and directors, are offering 7,350,000 shares of our common stock. We are not selling any shares of common stock under this prospectus, and we will not receive any proceeds from the sale of shares by the selling stockholders. Our common stock is listed on the Nasdaq Global Select Market under the symbol CASA. On April 20, 2018, the last reported sale price of our common stock as reported on the Nasdaq Global Select Market was $30.12 per share. We are an emerging growth company under applicable federal securities laws and are subject to reduced public company reporting requirements. Investing in our common stock involves risks. See Risk Factors beginning on page 11. PRICE $ A SHARE Price to Public Underwriting Discounts and Commissions(1) Proceeds to Selling Stockholders Per Share $ $ $ Total $ $ $ (1) See Underwriters beginning on page 136 for additional information regarding underwriting compensation. The selling stockholders have granted the underwriters the right to purchase up to an additional 1,102,500 shares of common stock. The Securities and Exchange Commission and state securities regulators have not approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The underwriters expect to deliver the shares on , 2018. MORGAN STANLEY BARCLAYS RAYMOND JAMES STIFEL Macquarie Capital Northland Capital Markets William Blair , 2018 Table of Contents Increasing network complexity. As the diversity of service offerings has grown, network complexity has increased. Need to control operating and capital expenditures. The operation of network infrastructure is space, power and personnel intensive. In addition, broadband service providers are frequently required to incur significant capital expenditures to upgrade existing equipment. Opportunity to Transform Broadband Networks Given the challenges they face, broadband service providers are undertaking three key technology initiatives to help build next-generation networks: Densification. Broadband service providers are shifting from centralized to more distributed architectures, a process referred to as densification. Densification requires extending network connectivity and distributing access aggregation solutions closer to end users. Network convergence. As fixed and wireless providers continue to consolidate and integrate their service offerings, which is referred to as convergence, these service providers are seeking to integrate their separate delivery modes with all-IP architectures, shared transport and a common suite of software-centric core and access network functions. Virtualization. Software-enabled architectures that are decoupled from underlying hardware allow for increased efficiencies, upgradability, configuration flexibility, service agility and scalability not feasible with hardware-centric approaches. Our Solutions We offer solutions for fixed and wireless networks. Our software-centric, multi-service broadband platform, Axyom, enables ultra-broadband delivery and convergence. We engineered our platform from the ground-up to be high performance, flexible and adaptable, and to allow our customers to seamlessly address the growing demand for bandwidth and connectivity and competitive need for service agility. Our platform provides the following key benefits to broadband service providers: Addition of critical bandwidth capacity. Our solutions enable broadband service providers to offer multi-gigabit speeds and to expand capacity seamlessly to meet the growing demand for bandwidth. Flexibility to add new and expand existing services. Our platform provides us with the flexibility to adapt to changing industry standards and customer needs. Ability to upgrade networks remotely. Our programmable architecture allows us to deploy technology updates to our customers remotely without the expense, disruption or network downtime caused by hardware replacements or field visits by personnel. Reduced network complexity, operating costs and capital expenditures. Our converged software platform allows broadband service providers to significantly reduce the complexity and costs of their networks by reducing parallel and otherwise redundant network architectures. Ability to densify networks. Our products help broadband service providers deploy more capacity at the network edge, closer to where end users and devices are accessing the network, increasing available bandwidth and reducing latency to improve quality of service. Table of Contents Table of Contents Common platform capabilities to address the needs of both fixed and wireless networks. Our software-centric, multi-service platform enables a broad range of network services for fixed and wireless networks allowing for the delivery of diverse consumer and enterprise applications. Our primary product line is our portfolio of converged cable access platform, or CCAP, solutions, which enable the provision of voice, video and data over a single port. Our Competitive Strengths The following competitive strengths have helped us become a market leader: Highly flexible, software-centric architecture. We have designed our product portfolio from the ground up to be software-centric and modular in nature. Our proprietary software is at the heart of our products. Our software-centric architecture enables us to virtualize core network and access functions allowing these functions to be decoupled from underlying hardware, which is not feasible with hardware-centric approaches and allows for increased efficiencies, upgradability, configuration flexibility, service agility and scalability. Our software allows us to leverage the programmability of FPGAs and general purpose processors in our solutions. Proven engineering and product development track record. We have a proven history of anticipating network evolutions and developing solutions that enable next-generation networks. Our forward-looking design and investment approach, coupled with our proven product development track record, has enabled us to deliver fully featured next-generation solutions in advance of competitors. For example, we believe we were first to market with (1) a software-centric cable solution leveraging the programmability of FPGAs and general purpose processors, (2) a commercially deployed, fully qualified DOCSIS 3.0 CMTS, (3) a commercially deployed CCAP delivering IP voice, digital video and data over a single port, (4) commercially deployed DOCSIS 3.1-compliant solutions supporting speeds of up to 10 gigabits per second and (5) a commercially deployable remote-PHY solution. Strong management and engineering team with a culture of innovation. We pride ourselves on our culture of innovation, which is driven by our management team of experienced executives and engineers with deep industry expertise. As of December 31, 2017, approximately 86% of our employees were engineers or had other technical backgrounds. Customer focus. We have a passion to serve our customers and the agility and flexibility to offer solutions to meet their evolving requirements. Diversified and established customer base. Our solutions are commercially deployed in over 70 countries by more than 450 customers, including some of the world s largest Tier 1 broadband service providers. Market Opportunity We believe that the shift to software-centric ultra-broadband networks and fixed and wireless convergence presents us with a compelling market opportunity. According to S&P Global Market Intelligence, the global CCAP market, which currently accounts for the majority of our revenue, was $1.5 billion in 2017. In addition, we believe that new wireless communications and network infrastructure segments that we have entered offer substantial additional market opportunities. Table of Contents Table of Contents Our Growth Strategy The key elements of our growth strategy are: Continue to innovate and extend technology leadership through R&D investment. Further penetrate existing customers. Expand our customer base. Expand the breadth of solutions sold to customers, with particular focus on the development of new software-based and virtualized products. Leverage our core technology for the cable industry into adjacent wireless markets. Invest in our platform through selective acquisitions. Risks Associated with Our Business You should consider carefully the risks described under the Risk Factors section beginning on page 11 and elsewhere in this prospectus. These risks, which include the following, could materially and adversely affect our business, financial condition, operating results, cash flow and prospects, which could cause the trading price of our common stock to decline and could result in a partial or total loss of your investment: If we do not successfully anticipate technological shifts, market needs and opportunities, and develop new products and product enhancements that meet those technological shifts, needs and opportunities, we may not be able to compete effectively. Our success depends in large part on broadband service providers continued deployment of, and investment in, ultra-broadband network capabilities that make use of our solutions. We expect certain of our customers will continue to account for a substantial portion of our revenue. Timing of large orders and seasonality in our revenue may cause our quarterly revenue and results of operations to fluctuate and possibly decline materially from quarter to quarter. Our sales to the broadband service provider market are volatile and our sales cycles can be long and unpredictable. As a result, our sales and revenue are difficult to predict and may vary substantially from period to period, which may cause our revenue and results of operations to fluctuate and possibly decline significantly. We may not generate positive returns on our research and development investments. Our CCAP solutions currently represent a significant majority of our product sales; this concentration may limit our ability to increase our revenue. We have invested heavily in developing wireless solutions, and we face risks in seeking to expand our platform into the wireless market. We believe the broadband service provider industry is in the early stages of a major architectural shift toward the virtualization of networks and the use of networks with distributed architectures. If the architectural shift does not occur, if it does not occur at the pace we predict, or if the products and services we have developed are not attractive to our customers after such shift takes place, our revenues could decline. We face intense competition, including from larger, well-established companies, and we may lack sufficient financial or other resources to maintain or improve our competitive position. Table of Contents Table of Contents If we are unable to sell additional products to our existing customers, our revenue growth will be adversely affected and our revenue could decline. We may have difficulty attracting new large customers or acquiring new customers due to the high costs of switching broadband equipment. Our results of operations are likely to vary significantly from period to period and be unpredictable. If we fail to meet the expectations of analysts or investors, the market price of our common stock could decline substantially. Initial Public Offering On December 19, 2017, we closed our initial public offering of 6,900,000 shares of our common stock, which included 900,000 shares of our common stock pursuant to the full exercise by the underwriters of an option to purchase additional shares, at a public offering price of $13.00 per share for aggregate gross proceeds of $89.7 million. Recent Developments (preliminary and unaudited) Our consolidated financial statements for our fiscal quarter ended March 31, 2018 are not yet available. Accordingly, the financial results we present below are preliminary and subject to the completion of our financial closing procedures and any adjustments that may result from the completion of the quarterly review of our consolidated financial statements. As a result, these preliminary results may differ from the actual results that will be reflected in our consolidated financial statements for the quarter when they are completed and publicly disclosed. These preliminary results may change and those changes may be material. Our expectations with respect to our unaudited results for the period discussed below are based upon management estimates and are the responsibility of management. Our independent registered public accounting firm has not audited, reviewed or performed any procedures with respect to these preliminary results and, accordingly, does not express an opinion or any other form of assurance about them. Although the results of our fiscal quarter ended March 31, 2018 are not yet finalized, the following information reflects our preliminary expectations with respect to such results based on currently available information: Revenue is expected to be between $88.0 million and $89.0 million, representing an increase of 21.0% to 22.4% as compared to revenue of $72.7 million for the three months ended March 31, 2017. The year-over-year quarterly increase was primarily attributable to an increase in sales of our broadband products to existing customers in North America and Asia-Pacific. Net income is expected to be between $17.2 million and $17.7 million, representing a decrease of 5.5% to 2.7% as compared to net income of $18.2 million for the three months ended March 31, 2017. The year-over-year quarterly decrease in net income was primarily attributable to a reduction in gross margin, due to an increase in sales of our hardware-based broadband products, and an increase in operating expenses due to an increase in headcount, stock-based compensation and expenditures for new product development. Non-GAAP net income is expected to be between $21.0 million and $21.5 million, representing an increase of 5.5% to 8.0% as compared to non-GAAP net income of $19.9 million for the three months ended March 31, 2017. The year-over-year quarterly increase in non-GAAP net income was primarily attributable to an increase in sales of our broadband products, partially offset by a reduction in gross margin, due to an increase in sales of our hardware-based broadband products, and an increase in operating expenses due to an increase in headcount and expenditures for new product development. Table of Contents TABLE OF CONTENTS Page Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2018/CIK0001347491_alexander_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001347491_alexander_prospectus_summary.txt
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+PROSPECTUS SUMMARY THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED DESCRIPTIVE INFORMATION APPEARING ELSEWHERE IN THIS PROSPECTUS. PROSPECTIVE INVESTORS SHOULD CAREFULLY READ THE ENTIRE PROSPECTUS AND SHOULD CONSIDER, AMONG OTHER FACTORS, THE MATTERS SET FORTH UNDER THE "RISK FACTORS." Implications of Being an Emerging Growth Company We qualify as an emerging growth company as that term is used in the JOBS Act. An emerging growth company may take advantage of specified reduced reporting and other burdens that are otherwise applicable generally to public companies. These provisions include: o a requirement to have only two years of audited financial statements and only two years of related MD & A; o reduced disclosure concerning executive compensation arrangements; o exemption from the auditor attestation requirement in the assessment of the emerging growth company's internal control over financial reporting under Section 404 of the Sarbanes-Oxely Act of 2002; and o No non-binding advisory votes on executive compensation or golden parachute arrangements. We have taken advantage of some of these exemptions in this prospectus, which are also available to us as a smaller reporting company as defined under Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). In addition, Section 107 of the JOBS act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(b) of the Securities Act of 1933, as amended (the "Securities Act") for complying with new or revised accounting standards. We are choosing to "opt out" of such extended transition period, and as a result, we will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. Section 107 of the JOBS Act provides that our decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable. We could remain an emerging growth company for up to five years, or until the earliest of (i) the last day of the first fiscal year in which annual gross revenue exceeds $1 billion, (ii) the date that we become a "large accelerated filer" as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our common stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter, or (iii) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three year period. General We are a Blank Check Company formed in Delaware on August 17, 2005, with plans for effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses, which we refer to throughout this prospectus as a business combination. We have not identified any business combination target and we have not, nor has anyone on our behalf, initiated any substantive discussions, directly or indirectly, with any business combination target. The Offering By means of this prospectus we are offering up to 3,000,000 shares of our common stock to the owners of one or more business that we may acquire. As of the date of this prospectus we had not identified any business that we may attempt to acquire. The acquisition of the securities offered by this prospectus involves a high degree of risk. Risk factors include the lack of any relevant operating history, losses since we were incorporated, the possible need for us to sell shares of our common stock to raise capital and our auditors, in their report on our financial statements for the year ended April 30, 2017 and 2016, expressed substantial doubt as to our ability to continue in business. See the "Risk Factors" section of this prospectus below for additional Risk Factors. As of the date of this prospectus, we had 895,750 outstanding shares of common stock. Forward-Looking Statements This prospectus contains or incorporates by reference forward-looking statements, concerning our financial condition, results of operations and business. These statements include, among others: o statements concerning the benefits that we expect will result from the business activities that we contemplate; and o statements of our expectations, beliefs, future plans and strategies, anticipated developments and other matters that are not historical facts. You can find many of these statements by looking for words such as "believes", "expects", "anticipates", "estimates" or similar expressions used in this prospectus. These forward-looking statements are subject to numerous assumptions, risks and uncertainties that may cause our actual results to be materially different from any future results expressed or implied in those statements. Because the statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied. We caution you not to put undue reliance on these statements, which speak only as of the date of this prospectus. To the extent, the information contained in this prospectus, changes in any material respect, we will amend this prospectus.
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diff --git a/parsed_sections/prospectus_summary/2018/CIK0001353616_invesco_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001353616_invesco_prospectus_summary.txt
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+Prospectus Summary This is a summary of the prospectus. You should read the entire prospectus, including Risk Factors beginning on page 7 and the information incorporated by reference in this prospectus, before making an investment decision about the Shares. See Glossary of Terms beginning on page 12 for a description of certain terms used in this prospectus. TRUST STRUCTURE The Trust is a grantor trust formed under the laws of the State of New York pursuant to the Depositary Trust Agreement. The Trust holds Swedish Kronor and from time to time issues Baskets in exchange for deposits of Swedish Kronor and distributes Swedish Kronor in connection with redemptions of Baskets. The investment objective of the Trust is for the Shares to reflect the price in USD of the Swedish Krona. Earning income for Shareholders is not the objective of the Trust. Whether investors earn income primarily depends on the relative value of the Swedish Krona and the USD. If the Swedish Krona appreciates relative to the USD and a Shareholder sells Shares, the Shareholder will earn income. If the Swedish Krona depreciates relative to the USD and a Shareholder sells Shares, the Shareholder will incur a loss. The Sponsor believes that, for many investors, the Shares represent a cost-effective investment in Swedish Kronor. The Shares represent units of fractional undivided beneficial interest in, and ownership of, the Trust. The Shares are listed and trade on NYSE Arca under the symbol FXS. The Shares may also trade in other markets, but the Sponsor has not sought to have the Shares listed by any other market. The Sponsor, Invesco Specialized Products, LLC, a Delaware limited liability company, established the Trust and is responsible for registering the Shares. The Sponsor generally oversees the performance of the Trustee and the Trust s principal service providers, but does not exercise day-to-day oversight over the Trustee or the Trust s service providers. The Sponsor may remove the Trustee if any of various events occur. See Description of the Depositary Trust Agreement The Trustee Resignation, discharge or removal of trustee; successor trustees for more information. The Sponsor maintains a public website on behalf of the Trust containing information about the Trust and the Shares. The internet address of the Trust s website is www.invesco.com/etfs. This internet address is provided here only as a convenience to you; the information contained on or connected to the Trust s website is not considered part of this prospectus. The general role and responsibilities of the Sponsor are discussed further under The Sponsor. The Trustee is The Bank of New York Mellon, a banking corporation formed under the laws of the State of New York with trust powers. The Trustee is generally responsible for the day-to-day administration of the Trust. This includes calculating the NAV of the Trust and the NAV per Share each business day, paying the Trust s expenses (which are accrued daily but paid monthly), including withdrawing the Trust s Swedish Kronor, if needed, receiving and processing orders from Authorized Participants to create and redeem Baskets and coordinating the processing of such orders with the Depository and DTC. The general role, responsibilities and regulation of the Trustee are further described under The Trustee. The Depository is JPMorgan Chase Bank, N.A., London Branch. The Depository and the Trustee have elected the laws of England to govern the Deposit Account Agreement between them. The Depository accepts Swedish Kronor deposited with it by Authorized Participants in connection with the creation of Baskets. The Depository facilitates the transfer of Swedish Kronor into and out of the Trust through the two deposit accounts maintained with it by the Trust. The Depository may pay interest on the primary deposit account but does not pay interest on the secondary deposit account. Interest on the primary deposit account, if any, accrues daily and is paid monthly. The material terms of the Depositary Trust Agreement are discussed in greater detail in Description of the Depositary Trust Agreement. The general role, responsibilities and regulation of the Depository and the two deposit accounts are further described under The Depository and Description of the Deposit Account Agreement. Detailed descriptions of certain specific rights and duties of the Trustee and the Depository are set forth under Description of the Shares, Description of the Depositary Trust Agreement and Description of the Deposit Account Agreement. The Distributor, Invesco Distributors, Inc., is a corporation formed under the laws of the State of Delaware. The Distributor assists the Sponsor in marketing the Shares. Specifically, the Distributor prepares marketing materials regarding the Shares, including the content of the Trust s website, executes the marketing plan for the Trust and The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and the Sponsor and the Trust are not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. Preliminary Prospectus Subject to Completion June 7, 2018 5,750,000 Shares Swedish Krona Shares The Invesco CurrencyShares Swedish Krona Trust (Trust) issues Swedish Krona Shares (Shares) that represent units of fractional undivided beneficial interest in, and ownership of, the Trust. Invesco Specialized Products, LLC is the sponsor of the Trust (Sponsor) and may be deemed the issuer of the Shares pursuant to Section 2(a)(4) of the Securities Act of 1933, as amended (the Securities Act). The Bank of New York Mellon is the trustee of the Trust (Trustee), JPMorgan Chase Bank, N.A., London Branch, is the depository for the Trust (Depository), and Invesco Distributors, Inc. is the distributor for the Trust (Distributor). The Trust intends to issue additional Shares on a continuous basis through the Trustee. The Shares may be purchased from the Trust only in one or more blocks of 50,000 Shares, as described in Creation and Redemption of Shares. A block of 50,000 Shares is called a Basket. The Trust issues Shares in Baskets on a continuous basis to certain authorized participants (Authorized Participants) as described in Plan of Distribution. Each Basket, when created, is offered and sold to an Authorized Participant at a price in Swedish Kronor equal to the net asset value (NAV) of 50,000 Shares on the day that the order to create the Basket is accepted by the Trustee. The Shares are offered and sold to the public by Authorized Participants at varying prices in U.S. Dollars (USD) determined by reference to, among other things, the market price of the Swedish Krona and the trading price of the Shares on NYSE Arca, Inc. (NYSE Arca) at the time of each sale. Authorized Participants will not receive from the Trust, the Sponsor or any of their affiliates, any fee or other compensation in connection with the sale of Shares. Authorized Participants may receive commissions or fees from investors who purchase Shares through their commission- or fee-based brokerage accounts. The Shares are listed and trade on NYSE Arca under the symbol FXS. The Shares may also trade in other markets, but the Sponsor has not sought to have the Shares listed by any other market. Investing in the Shares involves significant risks. See Risk Factors, starting on page 7. Neither the Securities and Exchange Commission (SEC) nor any state securities commission has approved or disapproved of the securities offered in this prospectus, or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The Shares are neither interests in nor obligations of the Sponsor, the Trustee, the Depository or the Distributor. Neither the Shares nor the Trust s two deposit accounts maintained at the Depository and the Swedish Kronor deposited in them are deposits insured against loss by the Federal Deposit Insurance Corporation (FDIC), any other federal agency of the United States or the Financial Services Compensation Scheme of England. The date of this prospectus is [ ], 2018. provides strategic and tactical research on the foreign exchange markets, in each case in compliance with applicable laws and regulations. The Distributor and the Sponsor are affiliates of one another. There is no written agreement between them, and no compensation is paid by the Sponsor to the Distributor in connection with services performed by the Distributor for the Trust. See The Distributor for more information. INVESTMENT ATTRIBUTES OF THE TRUST The investment objective of the Trust is for the Shares to reflect the price in USD of the Swedish Kronor. The Shares are intended to provide institutional and retail investors with a simple, cost-effective means of gaining investment benefits similar to those of holding Swedish Kronor. The costs of purchasing Shares should not exceed the costs associated with purchasing any other publicly-traded equity securities. The Shares are an investment that is: Easily Accessible. Investors are able to access the market for Swedish Kronor through a traditional brokerage account. The Shares are bought and sold on NYSE Arca like any other exchange-listed security. Exchange-Traded. Because they are traded on NYSE Arca, the Shares will provide investors with an efficient means of implementing investment tactics and strategies that involve Swedish Kronor. NYSE Arca-listed securities are eligible for margin accounts. Accordingly, investors are able to purchase and hold Shares with borrowed money to the extent permitted by law. Transparent. The Shares are backed by the assets of the Trust, which does not hold or use derivative products. The value of the holdings of the Trust is reported on the Trust s website, www.invesco.com/etfs, every business day. Investing in the Shares will not insulate the investor from price volatility or other risks. Further, the ratio of Swedish Krona to Shares may decrease due to withdrawals made to pay Trust expenses in the event that the interest income of the Trust is not sufficient to cover the entirety of the Trust expenses. See Risk Factors and The Depository. PRINCIPAL OFFICES The principal offices of the Sponsor and the Trust are the offices of Invesco Specialized Products, LLC at 3500 Lacey Road, Suite 700, Downers Grove, Illinois 60515, and the principal offices of the Distributor are the offices of Invesco Distributors, Inc. at 11 Greenway Plaza, Suite 1000, Houston, Texas 77046. The telephone number of Invesco Specialized Products, LLC at its address is (800) 983-0903. None of the Sponsor, the Trust or the Distributor owns or leases any other real estate. The Trustee has an office at 2 Hanson Place, Brooklyn, New York 11217. The Depository is located at 125 London Wall, London, EC2Y 5AJ, United Kingdom.
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diff --git a/parsed_sections/prospectus_summary/2018/CIK0001361937_harvest_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001361937_harvest_prospectus_summary.txt
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+Prospectus Summary This summary description about us and our business highlights selected information contained elsewhere in this prospectus or incorporated by reference into this prospectus. It does not contain all the information you should consider before making an investment decision. Important information is incorporated by reference into this prospectus. To understand this offering fully, you should read carefully the entire prospectus,
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diff --git a/parsed_sections/prospectus_summary/2018/CIK0001366527_carbon_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001366527_carbon_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
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+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2018/CIK0001366561_smartsheet_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001366561_smartsheet_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..dbf994100a78f1d9be60403e15dad8fd4c315b86
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+Table of Contents EXECUTIVE COMPENSATION The following tables and accompanying narrative disclosure set forth information about the compensation provided to our executive officers during the fiscal year ended January 31, 2018. These executive officers, who include our principal executive officer and the two most highly-compensated executive officers (other than our principal executive officer) who were serving as executive officers on January 31, 2018, were: Mark P. Mader, President, Chief Executive Officer and Director; Gene M. Farrell, Senior Vice President of Product; and Kara Hamilton, Senior Vice President of People Operations. We refer to these individuals as our named executive officers. Summary Compensation Table The following table provides information regarding the compensation of our named executive officers. Name and Principal Position Fiscal Year Salary Option Awards(1) Non-Equity Incentive Plan Compensation(2) Total Mark P. Mader 2018 $ 325,000 $ 1,419,923 $ 153,200 $ 1,898,123 President and Chief Executive Officer 2017 263,818 75,945 339,763 Gene M. Farrell 2018 216,667(3) 2,382,577 90,625 2,689,869 Senior Vice President of Product Kara Hamilton 2018 230,000 642,878 54,000 926,878 Senior Vice President of People Operations (1) The amounts reported in this column represent the aggregate grant date fair value of the stock options granted to our named executive officers during the year ended January 31, 2018 as computed in accordance with Accounting Standards Codification Topic 718. The assumptions used in calculating the aggregate grant date fair value of the stock options reported in this column are set forth in Note 12 to our consolidated financial statements included in this prospectus. The amounts reported in this column reflect the accounting cost for these stock options, and do not correspond to the actual economic value that may be received by our named executive officers from the stock options. (2) For additional information regarding non-equity incentive plan compensation, see the section titled Non-Equity Incentive Plan Compensation. (3) Mr. Farrell was hired in June 2017 with an annual salary of $325,000. Non-Equity Incentive Plan Compensation For the year ended January 31, 2018, each of our named executive officers was eligible to receive a cash bonus based on our achievement of certain performance metrics established by the compensation committee of our board of directors, including certain booking targets and our cash burn rate. The compensation committee established target and maximum levels of performance for each metric and following the year ended January 31, 2018, reviewed the level of achievement of each performance goal against the pre-established targets, and approved the payment of the bonuses set forth in the Summary Compensation Table above. Equity Awards From time to time, we grant equity awards in the form of stock options to our named executive officers, which are generally subject to vesting based on each of our named executive officer s continued service with us. Each of our named executive officers currently holds outstanding stock options to purchase shares of our Class B common Table of Contents stock that were granted under our 2005 Stock Option/Restricted Stock Plan, or the 2005 Plan, and our 2015 Equity Incentive Plan, as amended, or the 2015 Plan, as set forth in the Outstanding Equity Awards at Year-End Table below. Offer Letters Each of our named executive officers has entered into an offer letter that provides for at-will employment and generally includes the named executive officer s initial base salary, an indication of eligibility for an annual cash incentive award opportunity, and equity awards. In addition, each of our named executive officers has executed a form of our standard confidential information and invention assignment agreement. Any potential payments and benefits due upon a termination of employment in connection with a change in control of us are described below in Potential Payments upon Termination or Change in Control. Mark P. Mader We entered into an offer letter with Mr. Mader, our President and Chief Executive Officer, on January 11, 2006. Pursuant to the offer letter, Mr. Mader s initial base salary was established at $112,500 per year. On January 17, 2006, in accordance with the terms of his offer letter, Mr. Mader purchased (1) 1,250,000 shares of our common stock at a purchase price of $0.016 per share, which was equal to the fair market value of our common stock on the date it was sold as determined by our board of directors and (2) 500,000 shares of our Series A-1 Preferred Stock at a purchase price of $0.16 per share. Gene M. Farrell We entered into an offer letter with Mr. Farrell, our Senior Vice President of Product, on May 1, 2017. Pursuant to the offer letter, Mr. Farrell s initial base salary was established at $325,000 per year. In addition, Mr. Farrell was eligible to receive an annual cash bonus of up to $100,000 based on the achievement of mutually agreed-upon objectives. On August 8, 2017, in accordance with the terms of his offer letter, Mr. Farrell was granted a stock option to purchase 1,000,000 shares of our common stock at an exercise price of $5.28 per share, which was equal to the fair market value of our common stock on the date the option was granted as determined by our board of directors. Kara Hamilton We entered into an offer letter with Ms. Hamilton, our Senior Vice President of People Operations, on August 9, 2012. Pursuant to the offer letter, Ms. Hamilton s initial base salary was established at $130,000 per year. On February 20, 2013, in accordance with the terms of her offer letter, Ms. Hamilton was granted a stock option to purchase 100,000 shares of our common stock at an exercise price of $0.712 per share, which was equal to the fair market value of our common stock on the date the option was granted as determined by our board of directors. Potential Payments upon Termination or Change in Control We have entered into change in control severance agreements, or Change in Control Agreements, with each of our named executive officers. These agreements provide for each of these named executive officers to receive the benefits described below upon either a termination by us of the named executive officer s employment without cause or a voluntarily resignation by the named executive officer from his or her employment for good reason (each, as defined in the Change in Control Agreement) during the period three months before a change in control (as defined in the Change in Control Agreement) and ending 12 months after a change in control of our company. We refer to either of these terminations as a qualifying termination. These benefits are contingent upon the consummation of the change in control of our company. These benefits are also contingent upon the named executive officer executing a customary release of claims. If a change in control occurs and our successor or acquirer refuses to assume, convert, replace or substitute the then-outstanding and unvested equity awards held by these named executive officers, then those awards will accelerate in full, except that awards subject to the satisfaction of performance criteria will accelerate if, and only to the extent, set forth in the applicable award agreement. Table of Contents In the event of qualifying termination that occurs during the period from three months before a change in control to 12 months after a change in control, each of these named executive officers are entitled to: (1) a lump-sum payment equal to six months of base salary or, in the case of Mr. Mader, 12 months of base salary, (2) a lump-sum payment equal to the named executive officer s annual bonus for the then-current fiscal year, based on 100% of target performance and prorated for the portion of the applicable bonus year actually worked by such executive prior to such termination, and (3) acceleration of 100% of the time-based vesting of each then-outstanding and unvested equity award, provided, that awards subject to the satisfaction of performance criteria will accelerate if, and only to the extent, set forth in the applicable award agreement. The Change in Control Agreements with each of the named executive officers will be in effect for three years, unless renewed, or earlier terminated, subject to certain limitations. The benefits under the Change in Control Agreements will supersede all other agreements and understandings between us and each of the named executive officers with respect to severance and vesting acceleration, if any. Outstanding Equity Awards at Year-End Table The following table presents, for each of our named executive officers, information regarding outstanding stock options and other equity awards held as of January 31, 2018. Option Awards Vesting Commencement Date Number of Securities Underlying Unexercised Options Exercisable Number of Securities Underlying Unexercised Options Unexercisable Option Exercise Price Option Expiration Date Name Mark P. Mader 1/1/2014(1) 51,654 $ 0.980 2/21/2024 1/1/2015(1) 47,916 25,000(3)(6) 1.380 2/18/2025 2/1/2017(2) 800,000(4)(6) 3.730 3/16/2027 Gene M. Farrell 6/1/2017(2) 1,000,000(5)(6) 5.280 8/8/2027 Kara Hamilton 9/1/2012(1) 69,928 0.712 2/20/2023 1/1/2014(1) 15,000 0.980 2/21/2024 1/1/2015(1) 7,500 2,500(3)(6) 1.380 2/18/2025 2/1/2016(2) 4,072 4,428(3)(6) 2.460 3/30/2026 2/1/2017(2) 65,000(5)(6) 3.730 3/16/2027 1/1/2018(2) 125,000(5)(6) 7.400 1/29/2028 (1) These outstanding equity awards were granted under our 2005 Plan. (2) These outstanding equity awards were granted under our 2015 Plan. (3) Vests with respect to 25% of the shares underlying the option on the one-year anniversary of the vesting commencement date and the remaining 75% of the shares underlying the option vest in equal monthly installments over three years. (4) Vests with respect to 25% of the shares underlying the option on the one-year anniversary of the vesting commencement date and the remaining 75% of the shares underlying the option vest in equal monthly installments over three years. (5) Vests with respect to 20% of the shares underlying the option on the one-year anniversary of the vesting commencement date, and the remaining 80% of the shares vest (a) 2.0833% monthly during the second and fourth years of vesting and (b) 2.5% monthly during the third year of vesting. (6) Subject to acceleration in the event of a qualifying termination or change of control of our company under each named executive officer s Change in Control Agreement, as discussed in Potential Payments upon Termination or Change in Control above. Employee Benefit Plans 2005 Plan Our 2005 Plan was adopted by our board of directors on July 9, 2005, approved by our shareholders on July 11, 2005, and was last amended and restated on April 16, 2014. As of the effective date of our 2015 Plan, described Table of Contents below, we ceased issuing awards under our 2005 Plan. However, any outstanding options granted under the 2005 Plan will remain outstanding, subject to the terms of our 2005 Plan and stock option agreements, until such outstanding options are exercised or until they terminate or expire by their terms. As of January 31, 2018, options to purchase 9,280,807 shares had been exercised, options to purchase 3,779,990 shares remained outstanding, and no shares remained available for grant. The options outstanding as of January 31, 2018 had a weighted-average exercise price of $0.82 per share. The material terms of the 2005 Plan are summarized below. Administration Our 2005 Plan is administered by our board of directors or a committee thereof. Eligibility The 2005 Plan provides for the grant of incentive stock options, which qualify for favorable tax treatment to their recipients under Section 422 of the Code, to our employees and employees of any parent or subsidiary of ours and for the grant of nonstatutory stock options, as well as for the issuance of shares of restricted stock to, our employees, directors, and consultants, and employees and consultants of any parent, subsidiary, or affiliate of ours. We have only granted stock options under our 2005 Plan. Options The exercise price of each nonstatutory stock option must be at least equal 85% of the fair market value of our Class B common stock on the date of grant (to the extent required by applicable law). The exercise price of each incentive stock option must be at least equal to the fair market value of our Class B common stock on the date of grant. The exercise price of stock options, whether nonstatutory or incentive stock options, granted to 10% shareholders must be at least equal to 110% of the fair market value of our Class B common stock on the date of grant. The maximum permitted term of incentive stock options (and to the extent required by applicable laws, nonstatutory stock options) granted under our 2005 Plan is 10 years, except that the maximum permitted term of incentive stock options granted to 10% shareholders is five years. After the termination of a participant s service, he or she may exercise the vested portion of his or her option for the period of time in his or her stock option agreement. However, in no event may an option be exercised later than the expiration of its term. Limited transferability Options granted under our 2005 Plan may not be transferred in any manner other than by will or by the laws of descent and distribution or as determined by the administrator. Unless otherwise permitted by the administrator, stock options may be exercised during the lifetime of the optionee only by the optionee or the optionee s guardian or legal representative. Change in control In the event we are party to a merger, reorganization, or other corporate transaction, our 2005 Plan provides that awards shall be subject to the agreement providing for such merger, reorganization, or corporate transaction, which need not provide for uniform treatment of awards, or portions thereof, and which may provide, without limitation, for the assumption of outstanding awards by the surviving corporation or its parents, for their continuation by us (if we are the surviving corporation), for accelerated vesting or for their cancellation with or without consideration, in all cases without the consent of the participant. Except as determined by the administrator in the applicable stock option agreement or restricted stock agreement, if the agreement providing for the merger, reorganization, or corporate transaction provides for the assumption or continuation of awards, then no acceleration of vesting shall occur. If any surviving or acquiring corporation fails to assume or continue such stock awards, stock awards held by participants whose continuous service has not terminated will accelerate vesting in full prior to the corporate transaction. Adjustments In the event of a subdivision, reclassification, combination, or consolidation of the outstanding shares of our Class B common stock, a declaration of a dividend payable in shares of our Class B common stock or any other Table of Contents dividend that has a material effect on the price of our Class B common stock, or a recapitalization, reorganization, merger, liquidation, spin-off, split-up, distribution, stock split or reverse stock split, exchange of shares, repurchase of shares, change in corporate structure, or other similar occurrence, the administrator will make appropriate adjustments to (1) the number and class of shares covered by each outstanding award and (2) the exercise price of each outstanding option. 2015 Equity Incentive Plan We currently maintain the 2015 Plan. Our 2015 Plan was adopted by our board of directors on June 17, 2015 and was approved by our shareholders on October 7, 2015. Our 2015 Plan has been amended from time to time. We will not grant any additional awards under the 2015 Plan following the completion of this offering. Instead, we will grant equity awards under our 2018 Equity Incentive Plan, described below. However, any outstanding awards granted under the 2015 Plan will remain outstanding, subject to the terms of the 2015 Plan and applicable award agreements, until they are exercised or settled or until they terminate or expire by their terms. The material terms of the 2015 Plan are summarized below. Share reserve As of January 31, 2018, we had 10,826,561 shares of our Class B common stock reserved for issuance pursuant to grants under our 2015 Plan, which number includes the number of shares that were: (1) previously reserved for issuance under our 2005 Plan but not issued or subject to outstanding grants under the 2005 Plan on the date the 2015 Plan was adopted by our board of directors; (2) subject to issuance under our 2005 Plan that cease to be subject to an award for any reason other than exercise of an option after the date the 2015 Plan was adopted by our board of directors; and (3) issued under our 2005 Plan that are repurchased by us or which are forfeited or used to pay withholding obligations or pay the exercise price of an option. As of January 31, 2018, options to purchase 324,934 of these shares had been exercised, options to purchase 9,575,449 of these shares remained outstanding, a stock award for 500,000 of these shares had been granted and purchased, 130,000 of these shares were issuable upon the settlement of restricted stock units, or RSUs, and 296,178 of these shares remained available for grant. The options outstanding as of January 31, 2018 had a weighted-average exercise price of $3.73 per share. Administration Our 2015 Plan is administered by our board of directors or a committee thereof. Eligibility Pursuant to the 2015 Plan, we may grant incentive stock options only to our employees and employees of any parent or subsidiary of ours (in each case including officers and directors who are also employees). We may grant non-statutory stock options, as well as shares of restricted stock, RSUs, and stock appreciation rights to our employees (including officers and directors who are also employees), non-employee directors and consultants and, employees (including officers and directors who are also employees) and consultants of any parent or subsidiary of ours. As of January 31, 2018, we have only granted stock options, restricted stock, and RSUs under our 2015 Plan. Options The exercise price of each stock option must be at least equal to the fair market value of our Class B common stock on the date of grant unless expressly determined in writing by the administrator on the date of grant. However, the exercise price of any incentive stock option granted to an individual who owns more than 10% of the total combined voting power of all classes of our capital stock must be at least equal to 110% of the fair market value of our Class B common stock on the date of grant. The maximum permitted term of options granted under our 2015 Plan is 10 years from the date of grant, except that the maximum permitted term of incentive stock options granted to an individual who owns more than 10% of the total combined voting power of all classes of our capital stock is five years from the date of grant. After the termination of a participant s service, he or she may exercise the vested portion of his or her option for the period of time stated in his or her stock option agreement. If the stock option agreement does not specify such a period, the option (1) will immediately be forfeited if the participant s service is terminated for cause, (2) will Table of Contents remain exercisable for 12 months after termination of the participant s service if the participant s service terminates due to death or disability or the participant dies within three months after any termination of participant s service for any reason other than cause, or (3) will remain exercisable for three months after termination of the participant s service for any other reason. However, in no event may an option be exercised later than the expiration of its term. Restricted stock awards A restricted stock award under the 2015 Plan is an offer by us to sell shares of our Class B common stock subject to restrictions, which may lapse based on the satisfaction of service or achievement of performance conditions. The price, if any, of a restricted stock award will be determined by the administrator. Holders of unvested shares acquired pursuant to a restricted stock award, unlike holders of options, will have the right to vote and any dividends or stock distributions paid pursuant to such unvested shares will be accrued and paid when the restrictions on such shares lapse. Restricted stock units Restricted stock units, or RSUs, represent the right to receive shares of our Class B common stock at a specified date in the future, subject to forfeiture of that right due to termination of employment or failure to achieve other conditions. Generally, the vesting of our RSUs occurs upon satisfaction of both a liquidity-event vesting condition and a time-based vesting schedule on or before the expiration date of such RSUs. RSUs will be forfeited in case of a termination of employment or service before the satisfaction of both the liquidity-event vesting condition and the time-based vesting schedule or, otherwise, generally in case of non-satisfaction of either the liquidity-event vesting condition or the time-based vesting schedule. Following the satisfaction of the liquidity-event vesting condition, RSUs that remain unvested as of the date of such liquidity event due to the RSUs time-based vesting schedule will continue to vest after the liquidity-event vesting condition for so long as the holder remains in continuous service status through each such time-based vesting date. Limited transferability Unless otherwise determined by the administrator, awards granted under our 2015 Plan may not be transferred in any manner other than by will or by the laws of descent and distribution, except that nonstatutory stock options may be transferred to certain trusts or by gift to certain family members. Unless otherwise permitted by the administrator, awards may be exercised during the lifetime of the participant only by the participant or the participant s guardian or legal representative. Change in control In the event of an acquisition or other combination (as defined in the 2015 Plan) any or all outstanding awards may be assumed or replaced by the successor corporation, which assumption or replacement will be binding on all plan participants. In the alternative, the successor corporation may substitute equivalent awards or provide substantially similar consideration to plan participants as was provided to shareholders (after taking into account the existing provisions of the awards). The successor corporation may also issue, in place of outstanding shares held by the plan participant, substantially similar shares or other property subject to repurchase restrictions no less favorable to the plan participant. In the event such successor or acquiring corporation (if any) refuses to assume, convert, replace or substitute awards, as provided above, pursuant to an acquisition or other combination, then notwithstanding any other provision in the 2015 Plan to the contrary, such awards will have their vesting accelerate as to all shares subject to such award (and any applicable right of repurchase fully lapse) immediately prior to the acquisition or other combination. In addition, in the event such successor or acquiring corporation (if any) refuses to assume, convert, replace or substitute awards, as provided above, pursuant to an acquisition or other combination, the plan participants will be notified in writing or electronically that such award will be exercisable for a period of time determined by the board of directors or compensation committee in its sole discretion, and such award will terminate upon the expiration of such period. Awards need not be treated similarly in an acquisition or other combination. Table of Contents Adjustments In the event that the number of outstanding shares of our Class B common stock is changed by a stock dividend, recapitalization, stock split, reverse stock split, subdivision, combination, reclassification, or other change in our capital structure affecting shares of Class B common stock issued under our 2015 Plan without consideration, then in order to prevent diminution or enlargement of the benefits or potential benefits intended to be made available under our 2015 Plan, (1) the number of shares of Class B common stock reserved for issuance under our 2015 Plan, (2) the exercise prices of and number of shares subject to outstanding options and stock appreciation rights, and (3) the purchase prices of or number of shares subject to other outstanding awards will (to the extent appropriate) be proportionally adjusted, subject to any required action by our board of directors or shareholders and compliance with applicable securities laws. Dissolution or liquidation Our 2015 Plan provides that our board of directors may at any time terminate any and all outstanding options or stock appreciation rights upon our dissolution or liquidation. Termination We expect to terminate the 2015 Plan and will cease issuing awards thereunder upon the effective date of our 2018 Equity Incentive Plan (described below), which is the date immediately prior to the date of the effectiveness of the registration statement of which prospectus this forms a part. Any outstanding options, restricted stock and RSUs granted under the 2015 Plan will remain outstanding, subject to the terms of our 2015 Plan and stock option agreements, restricted stock agreements and RSUs agreements, until such awards are exercised, as applicable, or until they terminate or expire by their terms. 2018 Equity Incentive Plan We intend to adopt a 2018 Equity Incentive Plan, or the 2018 Plan, that will become effective on the date immediately prior to the date of the effectiveness of the registration statement of which this prospectus forms a part and will serve as the successor to our 2015 Plan. Our 2018 Plan authorizes the award of stock options, restricted stock awards, or RSAs, stock appreciation rights, or SARs, RSUs, performance awards, and stock bonus awards. We intend to initially reserve 6,700,000 shares of our Class A common stock, plus an additional number of shares of Class A common stock equal to any shares reserved but not issued or subject to outstanding grants under the 2015 Plan on the effective date of the 2018 Plan, for issuance pursuant to awards granted under our 2018 Plan. The number of shares reserved for issuance under our 2018 Plan will increase automatically on February 1 of each of the first 10 calendar years after the effective date by the number of shares equal to the lesser of 5% of the aggregate number of outstanding shares of our Class A and Class B common stock as of the immediately preceding January 31, or such lesser number as may be determined by our board of directors. In addition, the following shares will again be available for issuance pursuant to awards granted under our 2018 Plan: shares subject to options or SARs granted under our 2018 Plan that cease to be subject to the option or SAR for any reason other than exercise of the option or SAR; shares subject to awards granted under our 2018 Plan that are subsequently forfeited or repurchased by us at the original issue price; shares subject to awards granted under our 2018 Plan that otherwise terminate without such shares being issued; shares subject to awards granted under our 2018 Plan that are surrendered, canceled, or exchanged for cash or a different award (or a combination thereof); Table of Contents shares subject to awards granted under our 2005 Plan and our 2015 Plan prior to the termination of the 2005 Plan and 2015 Plan, respectively, that cease to be subject to such awards by forfeiture or otherwise after the termination of the 2005 Plan and 2015 Plan, respectively; shares issued under our 2005 Plan and our 2015 Plan before or after the termination of the 2005 Plan and 2015 Plan, respectively, pursuant to the exercise of stock options that are forfeited after the termination of the 2005 Plan and 2015 Plan, respectively; shares issued under our 2005 Plan and our 2015 Plan that are repurchased by us at the original issue price; and shares subject to awards under our 2005 Plan, our 2015 Plan or our 2018 Plan that are used to pay the exercise price of an option or withheld to satisfy the tax withholding obligations related to any award. shares of our Class B common stock that were either reserved, but not issued under the 2015 Plan as of the date of this prospectus, or issued under the 2005 Plan or 2015 Plan and later become available for grant under our 2018 Plan, either as set forth above, shall be issued under the 2018 Plan only as shares of Class A common stock. Administration Our 2018 Plan is expected to be administered by our compensation committee or by our board of directors acting in place of our compensation committee. Subject to the terms and conditions of the 2018 Plan, the compensation committee will have the authority, among other things, to select the persons to whom awards may be granted, construe and interpret our 2018 Plan, determine the terms of such awards, and prescribe, amend, and rescind the rules and regulations relating to the plan or any award granted thereunder. The 2018 Plan provides that the board of directors or compensation committee may delegate its authority, including the authority to grant awards, to one or more executive officers to the extent permitted by applicable law, provided that awards granted to non-employee directors may only be determined by our board of directors. Eligibility Our 2018 Plan will provide for the grant of awards to our employees, directors, consultants, independent contractors, and advisors. No non-employee director may receive awards under the 2018 Plan that, when combined with cash compensation received for service as a non-employee director, exceeds $750,000 in value (as described in the 2018 Plan) in any calendar year, increased to $1,000,000 in value (as described in the 2018 Plan) in the calendar year of his or her initial services as a non-employee director. Options The 2018 Plan provides for the grant of both incentive stock options intended to qualify under Section 422 of the Code, and non-statutory stock options to purchase shares of our Class A common stock at a stated exercise price. Incentive stock options may only be granted to employees, including officers and directors who are also employees. The exercise price of stock options granted under the 2018 Plan must be at least equal to the fair market value of our Class A common stock on the date of grant. Incentive stock options granted to an individual who holds, directly or by attribution, more than 10% of the total combined voting power of all classes of our capital stock must have an exercise price of at least 110% the fair market value of our Class A common stock on the date of grant. Subject to stock splits, dividends, recapitalizations or similar events, no more than 60,000,000 shares may be issued pursuant to the exercise of incentive stock options granted under the 2018 Plan. Options may vest based on service or achievement of performance conditions. Our compensation committee may provide for options to be exercised only as they vest or to be immediately exercisable, with any shares issued on exercise being subject to our right of repurchase that lapses as the shares vest. The maximum term of options granted under our 2018 Plan is 10 years from the date of grant, except that the maximum permitted term of incentive stock options granted to an individual who holds, directly or by attribution, more than 10% of the total combined voting power of all classes of our capital stock is five years from the date of grant. Table of Contents Restricted stock awards A RSA is an offer by us to sell shares of our Class A common stock subject to restrictions, which may lapse based on the satisfaction of service or achievement of performance conditions. The price, if any, of a RSA will be determined by the compensation committee. Holders of unvested shares acquired through RSAs, unlike holders of options, will have the right to vote and any dividends or stock distributions paid pursuant to such unvested shares will be accrued and paid when the restrictions on such shares lapse. Unless otherwise determined by the compensation committee at the time of award, vesting will cease on the date the participant no longer provides services to us and unvested shares will be forfeited to or repurchased by us. Stock appreciation rights A SAR provides for a payment, in cash or shares of our Class A common stock (up to a specified maximum of shares, if determined by our compensation committee), to the holder based upon the difference between the fair market value of our common stock on the date of exercise and a predetermined exercise price, multiplied by the number of shares. The exercise price of a SAR must be at least the fair market value of a share of our common stock on the date of grant. SARs may vest based on service or achievement of performance conditions, and may not have a term that is longer than 10 years from the date of grant. Restricted stock units RSUs represent the right to receive shares of our Class A common stock at a specified date in the future, and may be subject to vesting based on service or achievement of performance conditions. Payment of earned RSUs will be made as soon as practicable on a date determined at the time of grant, and may be settled in cash, shares of our Class A common stock or a combination of both. No RSU may have a term that is longer than 10 years from the date of grant. Performance awards Performance awards granted to pursuant to the 2018 Plan may be in the form of a cash bonus, or an award of performance shares or performance units denominated in shares of our Class A common stock, that may be settled in cash, property, or by issuance of those shares subject to the satisfaction of achievement of specified performance conditions. Stock bonus awards A stock bonus award provides for payment in the form of cash, shares of our Class A common stock, or a combination thereof, based on the fair market value of shares subject to such award as determined by our compensation committee. The awards may be granted as consideration for services already rendered, or at the discretion of the compensation committee, may be subject to vesting restrictions based on continued service or performance conditions. Change in control In the event of a change in control any or all outstanding awards may be assumed or replaced by the successor corporation, which assumption or replacement will be binding on all plan participants. In the alternative, the successor corporation may substitute equivalent awards or provide substantially similar consideration to plan participants as was provided to shareholders (after taking into account the existing provisions of the awards). The successor corporation may also issue, in place of outstanding shares held by the plan participant, substantially similar shares or other property subject to repurchase restrictions no less favorable to the plan participant. In the event such successor or acquiring corporation (if any) refuses to assume, convert, replace or substitute awards, as provided above, pursuant to a change in control, then notwithstanding any other provision in the 2018 Plan to the contrary, such awards will have their vesting accelerate as to all shares subject to such award (and any applicable right of repurchase fully lapse) immediately prior to the change in control. In addition, in the event such successor or acquiring corporation (if any) refuses to assume, convert, replace or substitute awards, as provided above, pursuant to a change in control, the plan participants will be notified in writing or electronically that such award will be exercisable for a period of time determined by the board of directors or compensation committee in its sole Table of Contents discretion, and such award will terminate upon the expiration of such period. Awards need not be treated similarly in a change in control. Pursuant to the terms of the 2018 Plan, the vesting of all awards granted to non-employee directors will accelerate and such awards shall become exercisable (as applicable) in full prior to the consummation of such transaction. Adjustment In the event of a change in the number of outstanding shares of our Class A common stock without consideration by reason of a stock dividend, extraordinary dividend or distribution, recapitalization, stock split, reverse stock split, subdivision, combination, consolidation reclassification, spin-off or similar change in our capital structure, appropriate proportional adjustments will be made to the number of shares reserved for issuance under our 2018 Plan; the exercise prices, number, and class of shares subject to outstanding options or SARs; the number and class of shares subject to other outstanding awards; and any applicable maximum award limits with respect to incentive stock options or individual participant grants. Clawback; transferability All awards will be subject to clawback or recoupment pursuant to any compensation clawback or recoupment policy adopted by our board of directors or required by law during the term of service of the award holder, to the extent set forth in such policy or applicable agreement. Except in limited circumstances, awards granted under our 2018 Plan may generally not be transferred in any manner prior to vesting other than by will or by the laws of descent and distribution. Amendment and termination Our board of directors may amend our 2018 Plan at any time, subject to shareholder approval as may be required. Our 2018 Plan will terminate 10 years from the date our board of directors adopts the plan, unless it is terminated earlier by our board of directors. No termination or amendment of the 2018 Plan may adversely affect any then-outstanding award without the consent of the affected participant, except as is necessary to comply with applicable laws. 2018 Employee Stock Purchase Plan We intend to adopt a 2018 Employee Stock Purchase Plan, or ESPP, that will become effective upon the effectiveness of the registration statement of which this prospectus forms a part in order to enable eligible employees to purchase shares of our Class A common stock with accumulated payroll deductions. Our ESPP is intended to qualify under Section 423 of the Code. Shares available We intend to initially reserve 2,040,000 shares of our Class A common stock for sale under our ESPP. The aggregate number of shares reserved for sale under our ESPP will increase automatically on February 1 of each of the first 10 calendar years after the first offering date under the ESPP by the number of shares equal to 1% of the total outstanding shares of our Class A common stock and Class B common stock as of the immediately preceding January 31 (rounded to the nearest whole share) or such lesser number of shares as may be determined by our board of directors in any particular year. The aggregate number of shares issued over the term of our ESPP, subject to stock-splits, recapitalizations or similar events, may not exceed 20,400,000 shares of our Class A common stock. Administration Our compensation committee is expected to administer our ESPP subject to the terms and conditions of the ESPP. Among other things, the compensation committee will have the authority to determine eligibility for participation the ESPP, designate separate offerings under the plan, and construe, interpret, and apply the terms of the plan. Table of Contents Eligibility Employees eligible to participate in any offering pursuant to the ESPP generally include any employee that is employed by us or certain of our designated subsidiaries at the beginning of the offering period. However, employees who are customarily employed for 20 hours or less per week or for five months or less in a calendar year are not eligible to participate in the ESPP. In addition, any employee who owns (or is deemed to own as a result of attribution) 5% or more of the total combined voting power or value of all classes of our capital stock, or the capital stock of one of our qualifying subsidiaries, or who will own such amount as a result of participation in the ESPP, will not be eligible to participate in the ESPP. The compensation committee may impose additional restrictions on eligibility from time to time. Offerings Under our ESPP, eligible employees will be offered the option to purchase shares of our Class A common stock at a discount over a series of offering periods. Each offering period may itself consist of one or more purchase periods. The compensation committee will determine the duration and commencement date of each offering and purchase period, provided that generally no offering period may be longer than 27 months. The first offering period and purchase period under our ESPP will begin and end upon a date to be approved by our board of directors or our compensation committee. Each subsequent offering period will be for six months and will consist of one six month purchase period, unless otherwise determined by our board of directors or our compensation committee Participation Participating employees will be able to purchase the offered shares of our Class A common stock by accumulating funds through payroll deductions. Participants may select a rate of payroll deduction between 1% and 15% of their compensation. However, a participant may not purchase more than 2,500 shares during any one purchase period, and may not subscribe for more than $25,000 in fair market value of shares of our Class A common stock (determined as of the date the offering period commences) in any calendar year in which the offering is in effect. Our compensation committee, in its discretion, may set a different maximum amount of shares which may be purchased by any one participant in a subsequent periods. The purchase price for shares of our Class A common stock purchased under the ESPP will be 85% of the lesser of the fair market value of our Class A common stock on (1) the first trading day of the applicable offering period or (2) the last trading day of each purchase period in the applicable offering period. Once an employee becomes a participant in an offering period, the participant will be automatically enrolled in each subsequent offering period at the same contribution level. A participant may reduce his or her contribution in accordance with procedures set forth by the compensation committee and may withdraw from participation in the ESPP at any time prior the end of an offering period, or such other time as may be specified by the compensation committee. Upon withdrawal, the accumulated payroll deductions will be returned to the participant without interest. Adjustments upon recapitalization or change in control If the number of outstanding shares of our Class A common stock is changed by stock dividend, recapitalization, stock split, reverse stock split, subdivision, combination, reclassification, or similar change in our capital structure without consideration, then our compensation committee will proportionately adjust the number and class of Class A common stock that is available under the ESPP, the purchase price and number of shares any participant has elected to purchase as well as the maximum number of shares which may be purchased by participants. If we experience a change in control transaction, each outstanding right to purchase shares under our ESPP may be assumed or substituted by an equivalent option to purchase shares of the successor corporation. In the event that the successor corporation refuses to assume or substitute the outstanding purchase rights, any offering period that commenced prior to the closing of the proposed change in control transaction will be shortened such that the new Table of Contents purchase date will occur prior to the closing of the proposed change in control transaction and our ESPP will then terminate on the closing of the proposed change in control. Transferability A participant may not assign, transfer, pledge, or otherwise dispose of payroll deductions credited to his or her account, or any rights with regard to an election to purchase shares pursuant to the ESPP other than by will or the laws of descent or distribution. Amendment; termination The compensation committee may amend, suspend or terminate the ESPP at any time without shareholder consent, except as required by law. Our ESPP will terminate by its terms on the tenth anniversary of the last day of the first purchase period, unless it is terminated earlier by our board of directors. 401(k) Plan We sponsor a retirement plan intended to qualify for favorable tax treatment under Section 401(a) of the Code, containing a cash or deferred feature that is intended to meet the requirements of Section 401(k) of the Code. U.S. employees who have attained at least 18 years of age are generally eligible to participate in the plan on the first day of the calendar month following the employees date of hire, subject to certain eligibility requirements. Participants may make pre-tax or post-tax contributions to the plan from their eligible earnings up to the statutorily prescribed annual limit on contributions under the Code. Participant contributions are held in trust as required by law. No minimum benefit is provided under the plan. An employee s interest in his or her deferrals is 100% vested when contributed. Although the plan provides for a discretionary employer matching contribution, to date we have not made such a contribution on behalf of employees. Limitations on Liability and Indemnification Matters Our amended and restated articles of incorporation that will become effective immediately prior to the completion of this offering contain a provision eliminating the personal liability of our directors for monetary damages to the fullest extent permitted by Washington law. Under Washington law, this provision eliminates the liability of a director for breach of fiduciary duty, but does not eliminate the personal liability of any director for (1) acts or omissions that involve intentional misconduct or a knowing violation of law, (2) conduct violating Section 23B.08.310 of the WBCA, or (3) any transaction from which the director personally received a benefit in money, property, or services to which the director is not legally entitled. Section 23B.08.510 of the WBCA authorizes Washington corporations to indemnify their officers and directors under certain circumstances against expenses and liabilities incurred in legal proceedings involving them as a result of their service as an officer or director. Section 23B.08.560 of the WBCA authorizes a corporation by provision in its articles of incorporation to agree to indemnify a director or officer and obligate itself to advance or reimburse expenses without regard to the provisions of Sections 23B.08.510 through .550; provided, however, that no such indemnity shall be made for or on account of any (1) acts or omissions of a director or officer that involve intentional misconduct or a knowing violation of law, (2) conduct in violation of Section 23B.08.310 of the WBCA (relating to unlawful distributions), or (3) any transaction from which a director or officer personally received a benefit in money, property, or services to which such director or officer is not legally entitled. Our amended and restated articles of incorporation that will become effective immediately prior to the completion of this offering require indemnification of our officers and directors and advancement of expenses to the fullest extent not prohibited by applicable law. In connection with this offering, we intend to enter into amended and restated indemnification agreements with each of our current directors and executive officers to provide these directors and executive officers additional contractual assurances regarding the scope of the indemnification set forth in our amended and restated articles of incorporation and amended and restated bylaws and to provide additional procedural protections. At present, there is no pending litigation or proceeding involving a director, executive officer, or employee of us regarding which indemnification is sought. Table of Contents We believe that these charter provisions and indemnification agreements are necessary to attract and retain qualified persons such as directors and officers. We also maintain directors and officers liability insurance. The limitation of liability and indemnification provisions in our amended and restated articles of incorporation and amended and restated bylaws may discourage shareholders from bringing a lawsuit against our directors and officers for breach of their fiduciary duty. They may also reduce the likelihood of derivative litigation against our directors and officers, even though an action, if successful, might benefit us and other shareholders. Further, a shareholder s investment may be adversely affected to the extent that we pay the costs of settlement and damage awards against directors and officers as required by these indemnification provisions. The indemnification provisions in our amended and restated articles of incorporation and amended and restated bylaws and the indemnification agreements entered into or to be entered into between us and each of our directors and executive officers may be sufficiently broad to permit indemnification of our directors and executive officers for liabilities arising under the Securities Act. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, executive officers or persons controlling us, we have been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable. Table of Contents CERTAIN RELATIONSHIPS AND RELATED-PARTY TRANSACTIONS In addition to the executive officer and director compensation as set forth elsewhere in this prospectus, below we describe transactions since January 1, 2015 that we have been or will be a party to, in which the amount involved in such transaction exceeds or will exceed $120,000 and in which any of our directors, executive officers, or beneficial holders of more than 5% of any class of our capital stock, or any immediate family member of, or person sharing the household with, any of these individuals, had or will have a direct or indirect material interest. 2017 Tender Offer In June 2017, we entered into a letter agreement with certain holders of our capital stock pursuant to which we agreed to waive certain transfer restrictions in connection with, and assist in the administration of, a tender offer that such holders proposed to commence. In June 2017, these holders commenced a tender offer to purchase shares of our outstanding capital stock at an as-converted to Class B common stock price per share of $8.3035, less transaction costs, pursuant to an offer to purchase to which we were not a party. Brent Frei, who is a member of our board of directors, and Mark P. Mader, Kara Hamilton, and Andrew Lientz, each of whom is an executive officer, sold shares of our capital stock in the tender offer, which closed in July 2017. An aggregate of 6,477,843 shares of our capital stock were tendered pursuant to the tender offer, of which certain investment funds affiliated with Insight Venture Management, LLC, or Insight, purchased 5,300,043 shares for a total price of approximately $45.0 million. Certain entities affiliated with Insight are beneficial holders of more than 5% of our outstanding capital stock. In addition, Ryan Hinkle, a member of our board of directors, is a Managing Director of Insight. Series F Convertible Preferred Stock Financing In multiple closings in May and November 2017, we sold an aggregate of 6,334,674 shares of our Series F convertible preferred stock at a purchase price of $8.3035 per share, for an aggregate purchase price of approximately $52.6 million. Each share of our Series F convertible preferred stock will convert automatically into one share of our Class B common stock immediately upon the completion of this offering. The following table summarizes purchases of our Series F convertible preferred stock by related parties: Name of Related Party Shares of Series F Convertible Preferred Stock Total Purchase Price Affiliates of Insight(1) 3,612,934 $ 29,999,997 Affiliates of Madrona Venture Fund IV, L.P.(2) 782,802 6,499,996 Sutter Hill Ventures, a California Limited Partnership(3) 312,000 2,590,692 Jennifer E. Ceran(4) 120,431 1,000,000 Michael Arntz(5) 48,172 399,996 The Juan L. Gomez and Elena C. Gomez Declaration of Trust Dated April 2, 2009, Juan L. Gomez and Elena C. Gomez, Trustee(6) 30,107 249,993 Magdalena Yesil, Trustee of the Justin Yeshil Wickett Trust dated December 10, 1990(7) 15,053 124,993 Magdalena Yesil, Trustee of the Troy Kevork Wickett Trust dated December 10, 1990(8) 15,054 125,001 RoseTime Partners, L.P.(9) 14,700 122,061 James N. White and Patricia A. O Brien, Co-Trustees of The White Revocable Trust U/A/D 4/3/97(10) 12,008 99,708 (1) Certain entities affiliated with Insight beneficially own more than 5% of our capital stock. Ryan Hinkle, a member of our board of directors, is a Managing Director of Insight. Table of Contents (2) Madrona Venture Fund IV, L.P., or Madrona, and its affiliates beneficially own more than 5% of our capital stock. Matthew McIlwain, a member of our board of directors, is a Managing Director of Madrona. (3) Sutter Hill Ventures, or Sutter Hill, beneficially own more than 5% of our capital stock. James N. White, a member of our board of directors, is a Managing Director of Sutter Hill. (4) Ms. Ceran is our Chief Financial Officer. (5) Mr. Arntz is our Senior Vice President of Worldwide Field Operations. (6) Elena Gomez, a member of our board of directors, is a Trustee for The Juan L. Gomez and Elena C. Gomez Declaration of Trust Dated April 2, 2009, Juan L. Gomez and Elena C. Gomez, Trustee. (7) Magdalena Yesil, a member of our board of directors, is a Trustee for Magdalena Yesil, Trustee of the Justin Yeshil Wickett Trust dated December 10, 1990. (8) Ms. Yesil, a member of our board of directors, is a Trustee for Magdalena Yesil, Trustee of the Troy Kevork Wickett Trust dated December 10, 1990. (9) James N. White, a member of our board of directors, is a co-trustee of a trust which is the general partner of RoseTime Partners, L.P. (10) Mr. White, a member of our board of directors, is a co-trustee of The White Revocable Trust U/A/D 4/3/97. Investors Rights Agreement We are party to an amended and restated investors rights agreement which provides, among other things, that certain holders of our capital stock are entitled to certain rights with respect to the registration of their shares following this offering. These holders include entities affiliated with Madrona, Insight and Sutter Hill, each of whom are beneficial holders of more than 5% of our outstanding capital stock and with which certain of our directors are affiliated, as well as Geoffrey T. Barker, Brent Frei, Elena Gomez, James N. White, and Magdalena Yesil, each of whom is a member of our board of directors, and Mark P. Mader, Jennifer E. Ceran, and Michael Arntz, each of whom is an executive officer. For more information regarding these registration rights, see the section titled Description of Capital Stock Registration Rights. Indemnification Agreements In connection with this offering, we intend to enter into amended and restated indemnification agreements with each of our directors and executive officers. The indemnification agreements, our amended and restated articles of incorporation, and our amended and restated bylaws, which will become effective immediately prior to the completion of this offering, will require us to indemnify our directors to the fullest extent permitted by Washington law. Subject to certain limitations, our amended and restated bylaws will also require us to advance expenses incurred by our directors and officers. For more information regarding these agreements, see the section titled Executive Compensation Limitations on Liability and Indemnification Matters. Policies and Procedures for Related-Party Transactions Our written related-party transactions policy and the charters of our audit committee and nominating and corporate governance committee require that any transaction with a related party that must be reported under applicable rules of the SEC must be reviewed and approved or ratified by our audit committee, unless the related party is, or is associated with, a member of that committee, in which event the transaction must be reviewed and approved by our nominating and corporate governance committee. Prior to this offering we had no formal, written policy or procedure for the review and approval of related-party transactions. However, our practice has been to have all related-party transactions reviewed and approved by a majority of the disinterested members of our board of directors, including the transactions described above. Table of Contents PRINCIPAL AND SELLING SHAREHOLDERS The following table sets forth certain information with respect to the beneficial ownership of our common stock as of March 31, 2018, as adjusted to reflect the sale of Class A common stock offered by us and the selling shareholders in this offering, assuming no exercise of the underwriters option to purchase additional shares of Class A common stock to cover over-allotments, for: each of our named executive officers; each of our directors; all of our directors and executive officers as a group; each person known by us to be the beneficial owner of more than 5% of our outstanding shares of Class A or Class B common stock; and each selling shareholder. We have determined beneficial ownership in accordance with the rules of the SEC. Unless otherwise indicated below, to our knowledge, based on information furnished to us, the persons and entities named in the table have sole voting and investment power with respect to all shares that they beneficially own, subject to applicable community property laws. We have deemed shares of our Class B common stock subject to options that are currently exercisable or exercisable within 60 days of March 31, 2018 to be outstanding and to be beneficially owned by the person holding the option for the purpose of computing the percentage ownership of that person but have not treated them as outstanding for the purpose of computing the percentage ownership of any other person. The percentage ownership information shown in the table prior to this offering is based upon no shares of our Class A common stock and 89,930,825 shares of our Class B common stock outstanding as of March 31, 2018, which includes 68,479,732 shares of Class B common stock resulting from the conversion of all outstanding shares of our convertible preferred stock, which will occur upon the completion of this offering, as if this conversion had occurred as of March 31, 2018. The percentage ownership and voting power information shown in the table after this offering assumes the sale of 10,000,000 shares of Class A common stock by us and the sale 1,633,510 shares of Class B common stock by the selling shareholders in this offering (including the shares that are issued upon the net exercise of warrants to purchase shares of our Class B common stock and sold in this offering). Unless otherwise indicated, the address of each beneficial owner listed in the table below is c/o Smartsheet Inc., 10500 NE 8th Street, Suite 1300, Bellevue, Washington 98004 . Table of Contents Beneficial Ownership Prior to this Offering Number of Shares Being Offered Beneficial Ownership After this Offering Percent of Total Voting Power After this Offering(1) Name of Beneficial Owner Number Percent Number Percent Directors and Named Executive Officers: Mark P. Mader(2) 2,029,657 2.3 % 2,029,657 2.0 % 2.3 % Gene M. Farrell Kara Hamilton(3) 118,354 * 118,354 * * Geoffrey T. Barker(4) 1,756,580 2.0 1,756,580 1.8 2.0 Brent Frei(5) 7,919,560 8.8 500,000 7,419,560 7.4 8.3 Elena Gomez(6) 55,384 * 55,384 * * Ryan Hinkle(7) Matthew McIlwain(8) 25,367,517 28.2 25,367,517 25.4 28.3 James N. White(9) 5,260,573 5.9 5,260,573 5.3 5.9 Magdalena Yesil(10) 107,623 * 107,623 * * All executive officers and directors as a group (14 persons)(11) 44,071,898 47.9 43,571,898 42.7 48.6 Other 5% Shareholders: Entities affiliated with Insight Ventures(12) 28,731,007 32.0 28,731,007 28.7 32.1 Entities affiliated with Madrona Ventures(8) 25,367,517 28.2 25,367,517 25.4 28.3 Sutter Hill Ventures, a California Limited Partnership(13) 4,802,017 5.3 4,802,017 4.8 5.4 Other Selling Shareholders: William Eric Browne(14) 1,849,837 2.1 999,317 850,520 * * SVB Financial Group(15) 137,270 * 134,193 * Less than 1%. (1) Percentage of total voting power represents voting power with respect to all shares of our Class A common stock and Class B common stock, as a single class. The holders of our Class B common stock are entitled to 10 votes per share, and the holders of our Class A common stock are entitled to one vote per share. See the section titled Description of Capital Stock Common Stock for additional information about the voting rights of our Class A common stock and Class B common stock. (2) Represents (a) 1,419,254 shares of Class B common stock, (b) 126,250 shares of Class B common stock held by each of the (i) T77A Trust dated January 30, 2018, Michael Mader, Trustee and (ii) T49C Trust dated January 30, 2018, Michael Mader, Trustee, trusts for the benefit of Mr. Mader s children, and (c) 357,903 shares underlying options to purchase Class B common stock that are exercisable within 60 days of March 31, 2018. (3) Represents 118,354 shares underlying options to purchase Class B common stock that are exercisable within 60 days of March 31, 2018. (4) Represents (a) 1,531,580 shares of Class B common stock and (b) 225,000 shares underlying options to purchase Class B common stock that are exercisable within 60 days of March 31, 2018. (5) Represents (a) 7,286,227 shares of Class B common stock, of which 1,755,805 shares are subject to a pledge agreement to secure certain obligations of Mr. Frei, (b) 25,000 shares of Class B common stock held by each of the (i) Samantha Frei Irrevocable Trust dated January 7, 2018, Mark A. Frei, Trustee, (ii) Sofia Frei Irrevocable Trust dated January 7, 2018, Mark A. Frei, Trustee, (iii) Tessa Frei Irrevocable Trust dated January 7, 2018, Mark A. Frei, Trustee, (iv) Thomas Frei Irrevocable Trust dated January 7, 2018, Mark A. Frei, Trustee, and (v) Tucker Frei Irrevocable Trust dated January 7, 2018, Mark A. Frei, Trustee, trusts for the benefit of Mr. Frei s children, (c) 100,000 shares of Class B common stock held by each of the (i) CC GRAT of 2017, Brent Frei, Trustee, (ii) KF GRAT of 2017, Brent Frei, Trustee, (iii) MF GRAT of 2017, Brent Frei, Trustee, (iv) SD GRAT of 2017, Brent Frei, Trustee, and (v) Frei GRAT of 2017, Brent Frei, Trustee, grantor annuity trusts for the benefit of Mr. Frei, and (d) 8,333 shares underlying options to purchase Class B common stock that are exercisable within 60 days of March 31, 2018. (6) Represents (a) 30,107 shares of Class B common stock held by The Juan L. Gomez and Elena C. Gomez Declaration of Trust Dated April 2, 2009, Juan L. Gomez and Elena C. Gomez, Trustees, and (b) 25,277 shares underlying options to purchase Class B common stock that are exercisable within 60 days of March 31, 2018. (7) Mr. Hinkle is a Managing Director of Insight Venture Management, LLC, an entity affiliated with the Insight Funds described in note (12) below, but does not hold voting or dispositive power over the shares held of record by the Insight Funds. See note (12) below for more information regarding the Insight Funds. Table of Contents (8) Represents (a) 20,221,505 shares of Class B common stock held by Madrona Venture Fund III, L.P., or Madrona Fund III, (b) 807,816 shares of Class B common stock held by Madrona Venture Fund III-A, L.P., or Madrona Fund III-A, (c) 4,230,382 shares of Class B common stock held by Madrona Venture Fund IV, L.P., or Madrona Fund IV, and (d) 107,814 shares of Class B common stock held by Madrona Venture Fund IV-A, L.P., or Madrona Fund IV-A. Matthew McIlwain, a member of our board of directors, Tom Alberg, Paul Goodrich Tim Porter, Scott Jacobson, and Len Jordan are the managing directors of Madrona III General Partner, LLC, or Madrona III LLC, which is the general partner of Madrona Investment Partners III, L.P., or Madrona Partners III, which in turn is the general partner of each of Madrona Fund III and Madrona Fund III-A. In addition, Messrs. Goodrich, Alberg, McIlwain, Porter, Jacobson, and Jordan are the managing directors of Madrona IV General Partner, LLC, or Madrona IV LLC, which is the general partner of Madrona Investment Partners IV, L.P., or Madrona Partners IV, which in turn is the general partner of each of Madrona Fund IV and Madrona Fund IV-A. Messrs. Goodrich, Alberg, McIlwain, Porter, Jacobson, and Jordan may be deemed to have shared voting and dispositive power over the shares held by Madrona Fund III, Madrona Fund III-A, Madrona Fund IV, and Madrona Fund IV-A. The address of Madrona Venture Group is 999 Third Avenue, 34th Floor, Seattle, Washington 98104. (9) Represents (a) 330,047 shares of Class B common stock held by The White Revocable Trust U/A/D 4/3/97, or The White Trust, of which James N. White, a member of our board of directors, and his wife are co-trustees, (b) 128,509 shares of Class B common stock held by RoseTime Partners L.P., or RoseTme, the general partner of which is The White Trust and (c) 4,802,017 shares of Class B common stock held by Sutter Hill Ventures, a California Limited Partnership, or Sutter Hill. Mr. White, together with Jeffrey Bird, Tench Coxe, Stefan Dyckerhoff, Samuel Pullara III, and Michael Speiser are managing directors and members of the management committee of Sutter Hill Ventures, L.L.C., which is the general partner of Sutter Hill, and share voting and dispositive power over the shares held by Sutter Hill. The address of Sutter Hill is 755 Page Mill Road, Suite A-200, Palo Alto, California 94304. (10) Represents (a) 35,755 shares of Class B common stock held by Magdalena Yesil, Trustee of the Justin Yeshil Wickett Trust dated December 10, 1990, (b) 35,757 shares of Class B common stock held by Magdalena Yesil, Trustee of the Troy Kevork Wickett Trust dated December 10, 1990, and (c) 36,111 shares underlying options to purchase Class B common stock that are exercisable within 60 days of March 31, 2018. (11) Represents (a) 42,068,387 shares of Class B common stock and (b) 2,003,511 shares underlying options to purchase Class B common stock that are exercisable within 60 days of March 31, 2018. (12) Represents (a) 13,906,902 shares of Class B common stock held by Insight Venture Partners VII, L.P. ( IVP VII ), (b) 6,122,102 shares of Class B common stock held by Insight Venture Partners (Cayman) VII, L.P. ( IVP Cayman VII ), (c) 321,875 shares of Class B common stock held by Insight Venture Partners VII (Co-Investors), L.P. ( IVP Co-Investors VII ), (d) 879,649 shares of Class B common stock held by Insight Venture Partners (Delaware) VII, L.P. ( IVP Delaware VII and together with IVP VII, IVP Cayman VII, and IVP Co-Investors VII, the IVP VII Funds ), and (e) 7,500,479 shares of Class B common stock held by Insight Venture Partners Coinvestment Fund II, L.P. ( IVP Coinvestment II and, together with the IVP VII Funds, the Insight Funds ). Insight Venture Associates VII, Ltd. ( IVA Ltd ) is the general partner of Insight Venture Associates VII, L.P., which in turn is the general partner of each of the IVP VII Funds. Insight Venture Associates Coinvestment II, L.P. ( IVA Coinvestment II ) is the general partner of IVP Coinvestment II. Insight Holdings Group, LLC ( Insight Holding ) is the sole shareholder of IVA Ltd. and the general partner of IVA Coinvestment II. Each of Jeffrey L. Horing, Deven Parekh, Peter Sobiloff, Jeffrey Lieberman, and Michael Triplett is a member of the board of managers of Insight Holdings and as such may be deemed to have shared voting and dispositive power over the shares held by each of the Insight Funds. The address of each of the foregoing entities and persons is c/o Insight Venture Partners, 1114 Avenue of the Americas, 36th Floor, New York, New York 10036. (13) Represents 4,802,017 shares of Class B common stock held by Sutter Hill. Mr. White, Jeffrey Bird, Tench Coxe, Stefan Dyckerhoff, Samuel Pullara III, and Michael Speiser are managing directors and members of the management committee of Sutter Hill Ventures, L.L.C., which is the general partner of Sutter Hill, and share voting and dispositive power over the shares held by Sutter Hill. The address of Sutter Hill is 755 Page Mill Road, Suite A-200, Palo Alto, California 94304. (14) Represents 1,849,837 shares of Class B common stock. Mr. Browne was employed by us from November 2005 to March 2018. (15) Consists of 137,270 shares of Class B common stock subject to a warrant held by SVB Financial Group. The shares beneficially owned after this offering, assuming no exercise and full exercise of the underwriters over-allotment option, reflect the forfeiture of 3,077 shares of Class B common stock as a result of the net exercise of the warrant to purchase 137,270 shares of Class B common stock at an assumed initial public offering price of $13.00 per share, which is the midpoint of the price range set forth on the cover page of this prospectus. SVB Financial Group is a reporting company listed on the Nasdaq Global Market. Through the authority delegated by SVB Financial Group s Finance Committee of the Board of Directors, Michael D. Kruse, Treasurer of SVB Financial Group, has voting and dispositive power over the warrant and underlying shares held by SVB Financial Group. SVB Financial Group is an affiliate of a broker-dealer. At the time of issuance, SVB Financial Group represented to the company that it acquired the securities as an investment, purchased the shares to be sold in the ordinary course of business and, at the time of the purchase, had no agreements or understandings, directly or indirectly, with any person to distribute the shares. The address of SVB Financial Group is 3003 Tasman Drive, Santa Clara, California 95054. Table of Contents DESCRIPTION OF CAPITAL STOCK The following description summarizes the most important terms of our capital stock, as they will be in effect upon the completion of this offering. Because it is only a summary, it does not contain all the information that may be important to you. We expect to adopt amended and restated articles of incorporation and amended and restated bylaws that will become effective immediately prior to the completion of this offering, and this description summarizes provisions that are expected to be included in these documents. For a complete description, you should refer to our amended and restated articles of incorporation and amended and restated bylaws, which are included as exhibits to the registration statement of which this prospectus forms a part, and to the applicable provisions of Washington law. Upon the completion of this offering, our authorized capital stock will consist of 500,000,000 shares of Class A common stock, no par value per share, 500,000,000 shares of Class B common stock, no par value per share, and 10,000,000 shares of undesignated preferred stock, no par value per share. Assuming the conversion of all outstanding shares of our convertible preferred stock into shares of our Class B common stock, which will occur upon the completion of this offering, as of January 31, 2018, there were outstanding: no shares of our Class A common stock; 88,760,473 shares of our Class B common stock, held by approximately 189 shareholders of record; 13,355,439 shares of our Class B common stock issuable upon exercise of outstanding stock options; and 137,270 shares of our Class B common stock issuable upon exercise of a warrant. Common Stock Dividend rights Subject to preferences that may apply to any shares of preferred stock outstanding at the time, the holders of our common stock are entitled to receive dividends out of funds legally available if our board of directors, in its discretion, determines to issue dividends and then only at the times and in the amounts that our board of directors may determine. See the section titled Dividend Policy for additional information. Voting rights Holders of our Class A common stock are entitled to one vote for each share of Class A common stock held on all matters submitted to a vote of shareholders and holders of our Class B common stock are entitled to 10 votes for each share of Class B common stock held on all matters submitted to a vote of shareholders. Holders of shares of our Class A common stock and Class B common stock vote together as a single class on all matters (including the election of directors) submitted to a vote of shareholders, unless otherwise required by law. Under Washington law and our amended and restated articles of incorporation, holders of our Class A common stock and holders of our Class B common stock may each be entitled to vote as a separate voting group, or as a separate voting group with other classes that are affected in the same or a substantially similar way, on a proposed amendment to our amended and restated articles of incorporation that would: effect an exchange or reclassification of shares of the class into shares of another class that would adversely affect the holders of the exchanged or reclassified class; change the issued and outstanding shares of the class into a different number of shares of the same class, that would adversely affect the holders of the class; limit or deny an existing preemptive right of all or part of the shares of the class; Table of Contents cancel or otherwise adversely affect rights to distributions or dividends that have accumulated but have not yet been declared on all or part of the shares of the class; or effect a redemption or cancellation of all or part of the shares of the class in exchange for cash or any other form of consideration other than shares of our capital stock. Our amended and restated articles of incorporation that will become effective immediately prior to the completion of this offering provide that shareholders are not entitled to cumulative voting for the election of directors. As a result, the holders of a majority of our voting shares can elect all of the directors then standing for election. Our amended and restated articles of incorporation that will become effective immediately prior to the completion of this offering will establish a classified board of directors, to be divided into three classes with staggered three-year terms. Only one class of directors will be elected at each annual meeting of our shareholders, with the other classes continuing for the remainder of their respective three-year terms. No preemptive or similar rights Our amended and restated articles of incorporation that will become effective immediately prior to the completion of this offering provide that the holders of our common stock are not entitled to preemptive rights and our common stock is not subject to redemption or sinking fund provisions. Right to receive liquidation distributions Upon our liquidation, dissolution or winding-up, the assets legally available for distribution to our shareholders would be distributable ratably among the holders of our common stock and any participating preferred stock outstanding at that time, subject to prior satisfaction of all outstanding debt and liabilities and the preferential rights of and the payment of liquidation preferences, if any, on any outstanding shares of preferred stock. Conversion Each outstanding share of Class B common stock is convertible at any time at the option of the holder into one share of Class A common stock. In addition, each share of Class B common stock will convert automatically into one share of Class A common stock upon any transfer, whether or not for value, which occurs after the completion of this offering, except for certain permitted transfers described in our amended and restated articles of incorporation, including transfers to family members, trusts solely for the benefit of the shareholder or their family members, and partnerships, corporations, and other entities exclusively owned by the shareholder or their family members. Once converted or transferred and converted into Class A common stock, the Class B common stock will not be reissued. All outstanding shares of Class B common stock will convert automatically into shares of Class A common stock upon the date that is the earliest of (1) the date specified by a vote of the holders of not less than a majority of the outstanding shares of Class B common stock, (2) seven years from the effective date of this offering, and (3) the date that the total number of shares of Class B common stock outstanding cease to represent at least 15% of all outstanding shares of our common stock. Following such conversion, each share of Class A common stock will have one vote per share and the rights of the holders of all outstanding common stock will be identical. Once converted into Class A common stock, the Class B common stock may not be reissued. Preferred Stock Pursuant to the provisions of our current articles of incorporation, each currently-outstanding share of convertible preferred stock will automatically be converted into one share of Class B common stock upon the completion of this offering, except for each share of our Series A-2 convertible preferred stock, Series A-3 convertible preferred stock and Series A-4 convertible preferred stock, which will convert into 1.02336, 1.05552 and 1.06949 shares of Class B common stock, respectively. No fractional shares of Class B common stock will be issued upon the conversion of our Series A-2 convertible preferred stock, Series A-3 convertible preferred stock, and Series A-4 convertible preferred stock. Following this offering, no shares of convertible preferred stock will be outstanding. Table of Contents Pursuant to our amended and restated articles of incorporation that will become effective immediately prior to the completion of this offering, our board of directors will be authorized, subject to limitations prescribed by Washington law, to issue preferred stock in one or more series, to establish from time to time the number of shares to be included in each series, and to fix the designation, powers, preferences, and rights of the shares of each series and any of its qualifications, limitations, or restrictions, in each case without further vote or action by our shareholders. Our board of directors can also increase or decrease the number of shares of any series of preferred stock, but not below the number of shares of that series then outstanding, without any further vote or action by our shareholders. Our board of directors may authorize the issuance of preferred stock with voting or conversion rights that could adversely affect the voting power or other rights of the holders of our common stock. The issuance of preferred stock, while providing flexibility in connection with possible acquisitions and other corporate purposes, could, among other things, have the effect of delaying, deferring, or preventing a change in our control and might adversely affect the market price of our Class A common stock and the voting and other rights of the holders of our common stock. We have no current plan to issue any shares of preferred stock. Stock Options As of January 31, 2018, we had outstanding options to purchase an aggregate of 13,355,439 shares of our Class B common stock, with a weighted-average exercise price of $2.91 per share, pursuant to our 2015 Equity Incentive Plan and 2005 Stock Option/Restricted Stock Plan. Restricted Stock Units As of January 31, 2018, we had outstanding 130,000 restricted stock units under our 2015 Plan that may be settled for shares of our Class B common stock. Warrant As of January 31, 2018, we had outstanding a warrant to purchase 137,270 shares of our Series C convertible preferred stock at an exercise price of $0.29139 per share, which expires in November 2021. The warrant has a cashless exercise provision pursuant to which the holder, in lieu of paying the exercise price in cash, can surrender the warrant and receive a net number of shares based on the fair market value of such shares at the time of exercise, after deducting the aggregate exercise price. In connection with this offering, the warrant will be net exercised for 134,193 shares of our Class B common stock and converted into an equivalent number of shares of Class A common stock upon their sale by the selling shareholder at the initial public offering price of $13.00 per share, which is the midpoint of the offering price range set forth on the cover page of this prospectus . Registration Rights Following the completion of this offering, the holders of an aggregate of 88,193,304 shares of our Class B common stock, or their permitted transferees, will be entitled to rights with respect to the registration of these shares pursuant to the Securities Act of 1933, as amended, or the Securities Act. These shares are referred to as registrable securities. Pursuant to the terms of our Amended and Restated Investors Rights Agreement dated as of May 19, 2017, as amended by the First Amendment to Amended and Restated Investors Rights Agreement dated as of October 26, 2017, or IRA, between us and the holders of these registrable securities, the holders of 71,305,114 shares of those registrable securities are entitled to demand registration rights and Form S-3 registration rights. All of the holders of registrable securities are entitled to piggyback registration rights. All fees, costs, and expenses incurred in connection with the registration of registrable securities, including reasonable fees and disbursements of one counsel to the selling shareholders selected by them with approval by us, such approval shall not be unreasonably withheld, will be borne by us and all selling expenses, including underwriting discounts and selling commissions, will be borne by the holders of the shares being registered. The registration rights terminate upon the earliest of (1) five years following the completion of this offering; (2) as to each holder of registration rights, when such holder can sell all of such holder s registrable securities during a three-month period pursuant to Rule 144 promulgated under the Securities Act or another similar exemption under the Securities Act; and (3) when the IRA is terminated pursuant to its terms. Table of Contents Demand registration rights Under the terms of the IRA, if we receive a written request, at any time after six months following the effective date of this offering, from the holders of a majority of the registrable securities, that we file a registration statement pursuant to the Securities Act registering the offering and sale of registrable securities having an anticipated aggregate offering price, net of underwriting discounts and commissions, of at least $10.0 million, then we will be required to use our best efforts to file as soon as practicable, and in any event no later than 90 days following such request, a registration statement registering the offer and sale of all registrable securities requested to be registered for public resale. We are required to effect only three registrations pursuant to this provision of the IRA, and may postpone the filing of a registration statement for up to 120 days once in any 12-month period if our board of directors determines that the filing would be seriously detrimental to us and our shareholders. We are also not required to effect a demand registration under certain additional circumstances specified in the IRA, including at any time during the 180-day period after the effective date of this offering. Form S-3 registration rights The holders of registrable securities can request that we register the offer and sale of all or part of their shares on Form S-3 if we are eligible to file a registration statement on Form S-3 and if the aggregate price to the public of the shares offered (net of any underwriters discounts or commissions) is at least $1.0 million. We are required to effect no more than two registrations on Form S-3 in any 12-month period, and may postpone the filing of a registration statement on Form S-3 for up to 120 days once in any 12-month period if our board of directors determines that the filing would be seriously detrimental to us and our shareholders. We are not required to file a registration statement on Form S-3 under certain additional circumstances specified in our IRA. Piggyback registration rights If we register any of our securities for public sale, each holder of registrable securities has a right to request the inclusion of any then-outstanding registrable securities held by them on our registration statement. However, this right does not apply to a registration relating solely to employee benefit plans, a corporate reorganization, or stock issuable upon conversion of debt securities. If the total number of securities, including registrable securities, requested by the holders to be included in such offering exceeds the number of securities to be sold (other than by us) that the underwriters determine in their sole discretion is compatible with the success of the offering, then we will be required to include in the offering only that number of securities, including registrable securities, the underwriters determine in their sole discretion will not jeopardize the success of the offering (the securities so included to be appropriated pro rata among these holders based on the number of registrable securities held by each holder or in such other proportions as mutually agreed to by such holders). However, the number of registrable securities to be registered cannot be reduced below 30% of the total shares covered by the registration statement, other than in an initial public offering. Anti-Takeover Provisions The provisions of Washington law, our amended and restated articles of incorporation and our amended and restated bylaws, which will become effective immediately prior to the completion of this offering, could have the effect of delaying, deferring, or discouraging another person from acquiring control of our company. These provisions, which are summarized below, may have the effect of discouraging takeover bids. They are also designed, in part, to encourage persons seeking to acquire control of us to negotiate first with our board of directors. We believe that the benefits of increased protection of our potential ability to negotiate with an unfriendly or unsolicited acquirer outweigh the disadvantages of discouraging a proposal to acquire us because negotiation of these proposals could result in an improvement of their terms. Washington law We are subject to the Washington Business Corporations Act, or WBCA, which imposes restrictions on certain transactions between a corporation and certain significant shareholders. The WBCA generally prohibits a target corporation (as defined in the WBCA) from engaging in certain significant business transactions with an acquiring person, which is defined as a person or group of persons that beneficially owns 10% or more of the voting Table of Contents securities of the target corporation, for a period of five years after such acquisition, unless the transaction or acquisition of shares is approved (1) prior to the time of the acquisition, by a majority of the members of the target corporation s board of directors or (2) at or subsequent to the acquiring person s share acquisition time, by a majority of the members of the target corporation s board of directors and authorized at an annual or special meeting of shareholders, and not by written consent, by the affirmative vote of at least 66-2/3% of the outstanding voting shares, except for shares beneficially owned by or under the voting control of the acquiring person. Such prohibited transactions include, among other things: a merger or consolidation with, disposition of assets to, or issuance or redemption of stock to or from the acquiring person; termination of 5% or more of the employees of the target corporation employed in Washington, whether at one time or over a five-year period as a result of the acquiring person s acquisition of 10% or more of the shares; or allowing the acquiring person to receive any disproportionate benefit as a shareholder. After the five-year period, a significant business transaction may occur if it complies with fair price provisions specified in the statute or are approved at an annual or special meeting of shareholders by a majority of the outstanding shares other than those of which the acquiring person has beneficial ownership. As a result, Chapter 23B.19 of the WBCA could have the effect of delaying, deferring, or preventing a change in control. Amended and Restated Articles of Incorporation and Amended and Restated Bylaws provisions Our amended and restated articles of incorporation and our amended and restated bylaws will include a number of provisions that could deter hostile takeovers or delay or prevent changes in control of our management team, including the following: Dual class common stock As described above in Common Stock Voting Rights, our amended and restated articles of incorporation will provide for a dual class common stock structure pursuant to which holders of our Class B common stock will have the ability to control the outcome of matters requiring shareholder approval, even if they own significantly less than a majority of the shares of our outstanding Class A common stock and Class B common stock, including the election of directors and significant corporate transactions, such as a merger or other sale of our company or its assets. Current investors, executives, and employees will have the ability to exercise significant influence over those matters. Board of directors vacancies Our amended and restated articles of incorporation and amended and restated bylaws will authorize only our board of directors to fill vacant directorships, including newly created seats. In addition, the number of directors constituting our board of directors is permitted to be set only by a resolution adopted by a majority vote of our entire board of directors. These provisions would prevent a shareholder from increasing the size of our board of directors and then gaining control of our board of directors by filling the resulting vacancies with its own nominees. This makes it more difficult to change the composition of our board of directors but promotes continuity of management. Classified board Our amended and restated articles of incorporation and amended and restated bylaws will provide that our board of directors will be classified into three classes of directors. The existence of a classified board of directors could discourage a third-party from making a tender offer or otherwise attempting to obtain control of us as it is more difficult and time consuming for shareholders to replace a majority of the directors on a classified board of directors. See the section titled Management Classified Board of Directors for additional information. Table of Contents Shareholder action; special meeting of shareholders Our amended and restated articles of incorporation and amended and restated bylaws provide that special meetings of our shareholders may be called only by a majority of our board of directors, the chair of our board of directors, our chief executive officer, or our president, thus prohibiting a shareholder from calling a special meeting. Further, under Washington law, shareholders of public companies can act by written consent only by obtaining unanimous written consent in order for the action to be effective. This limit on the ability of our shareholders to act by less than unanimous written consent may increase the amount of time required to take shareholder action. These provisions might delay the ability of our shareholders to force consideration of a proposal or for shareholders to take any action, including the removal of directors. Advance notice requirements for shareholder proposals and director nominations Our amended and restated bylaws provide advance notice procedures for shareholders seeking to bring business before our annual meeting of shareholders or to nominate candidates for election as directors at our annual meeting of shareholders. Our amended and restated bylaws also specify certain requirements regarding the form and content of a shareholder s notice. These provisions might preclude our shareholders from bringing matters before our annual meeting of shareholders or from making nominations for directors at our annual meeting of shareholders if the proper procedures are not followed. We expect that these provisions might also discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer s own slate of directors or otherwise attempting to obtain control of our company. No cumulative voting Washington law provides that shareholders are entitled to cumulative voting in the election of directors unless a corporation s article of incorporation provides otherwise. Our amended and restated articles of incorporation and amended and restated bylaws will provide that shareholders are not entitled to cumulative voting. Directors removed only for cause Our amended and restated articles of incorporation will provide that shareholders may remove directors only for cause and only by the affirmative vote of the holders of at least two-thirds of the voting power of our capital stock. Supermajority requirements for amendments of our Amended and Restated Articles of Incorporation and Amended and Restated Bylaws Our amended and restated articles of incorporation will further provide that the affirmative vote of holders of at least two-thirds of the voting power of all the then outstanding shares of voting stock will be required to amend certain provisions of our amended and restated articles of incorporation, including provisions relating to the classified board, the size of the board, removal of directors, special meetings, actions by written consent, and designation of our preferred stock. In addition, the affirmative vote of holders of 75% of the voting power of each of our Class A common stock and Class B common stock, voting separately by class, will be required to amend the provisions of our amended and restated articles of incorporation relating to the terms of our Class B common stock. The affirmative vote of holders of at least two-thirds of the voting power of all of the then outstanding shares of voting stock will be required to amend or repeal our amended and restated bylaws, although our amended and restated bylaws may be amended by a simple majority vote of our board of directors. Issuance of undesignated preferred stock After the filing of our amended and restated articles of incorporation, our board of directors will have the authority, without further action by the shareholders to issue up to 10,000,000 shares of undesignated preferred stock with rights and preferences, including voting rights, designated from time to time by our board of directors. The existence of authorized but unissued shares of preferred stock enables our board of directors to render more difficult or to discourage an attempt to obtain control of us by means of a merger, tender offer, proxy contest, or other means. Table of Contents Choice of Forum Our amended and restated articles of incorporation will provide that the federal courts located in the state of Washington will be the exclusive forum for any claims arising out of the Securities Act and the federal and state courts located within the State of Washington will be the exclusive forum for any internal corporate proceedings (as defined in the WBCA). Listing We have been approved to list our Class A common stock on the New York Stock Exchange under the symbol SMAR. Transfer Agent and Registrar The transfer agent and registrar for our Class A common stock is American Stock Transfer & Trust Company, LLC. The transfer agent s address is Operations Center, 6201 15th Avenue, Brooklyn, NY 11219, and its telephone number is (800) 937-5449. Table of Contents SHARES ELIGIBLE FOR FUTURE SALE Prior to this offering, there has been no public market for shares of our Class A common stock, and we cannot predict the effect, if any, that market sales of shares of our Class A common stock or the availability of shares of our Class A common stock for sale will have on the market price of our Class A common stock prevailing from time to time. Nevertheless, sales of substantial amounts of our Class A common stock, including shares issued upon exercise of outstanding stock options or warrant, in the public market following this offering could adversely affect market prices prevailing from time to time and could impair our ability to raise capital through the sale of our equity securities. Upon the completion of this offering, based on the number of shares of our capital stock outstanding as of January 31, 2018, we will have a total of 11,633,510 shares of our Class A common stock outstanding and 87,261,156 shares of our Class B common stock outstanding. Of these outstanding shares, all of the shares of Class A common stock sold in this offering will be freely tradable, except that any shares purchased in this offering by our affiliates, as that term is defined in Rule 144 under the Securities Act of 1933, as amended, or the Securities Act, would only be able to be sold in compliance with the Rule 144 limitations described below. Shares of our Class B common stock are convertible into an equivalent number of shares of our Class A common stock and generally convert into shares of our Class A common stock upon transfer. The remaining outstanding shares of our common stock will be deemed restricted securities as defined in Rule 144 under the Securities Act. Restricted securities may be sold in the public market only if they are registered under the Securities Act or if they qualify for an exemption from registration under Rule 144 or Rule 701 promulgated pursuant to the Securities Act, which rules are summarized below. In addition, most of our security holders have entered into agreements with us containing market stand-off provisions or lock-up agreements with the underwriters pursuant to which they have agreed, subject to specific exceptions, not to sell any of our stock for at least 180 days following the date of this prospectus, as described below. As a result of these agreements, subject to the provisions of Rule 144 or Rule 701, shares will be available for sale in the public market as follows: beginning on the date of this prospectus, all of the shares sold in this offering will be immediately available for sale in the public market; beginning 181 days after the date of this prospectus, 87,261,156 additional shares will become eligible for sale in the public market, of which 70,239,180 shares will be held by affiliates and subject to the volume and other restrictions of Rule 144, as described below; and the remainder of the shares will be eligible for sale in the public market from time to time thereafter upon subject to vesting and, in some cases, to the volume and other restrictions of Rule 144, as described below. Lock-Up Agreements and Market Stand-off Provisions All of our directors, officers, and substantially all of our security holders are subject to lock-up agreements or market stand-off provisions that, subject to exceptions described under Underwriters below, prohibit them from offering for sale, selling, contracting to sell, pledging, granting any option for the sale of, making any short sale of, transferring or otherwise disposing of any shares of our common stock, stock options, or any security or instrument related to our common stock or stock options for a period of at least 180 days following the date of this prospectus, without the prior written consent of the underwriters. These agreements are subject to certain customary exceptions. See the section titled Underwriters for additional information. Rule 144 In general, under Rule 144, as currently in effect, once we have been subject to the public company reporting requirements for at least 90 days, a person who is not deemed to have been one of our affiliates for purposes of the Securities Act at any time during the 90 days preceding a sale and who has beneficially owned the shares proposed to be sold for at least six months, including the holding period of any prior owner other than our affiliates, is entitled to sell those shares without complying with the manner of sale, volume limitation, or notice provisions of Rule 144, subject to compliance with the public information requirements of Rule 144. If such a person has beneficially owned Table of Contents the shares proposed to be sold for at least one year, including the holding period of any prior owner other than our affiliates, then that person would be entitled to sell those shares without complying with any of the requirements of Rule 144. In general, under Rule 144, as currently in effect, our affiliates or persons selling shares on behalf of our affiliates are entitled to sell upon expiration of the lock-up and market stand-off provisions described above, within any three-month period, a number of shares that does not exceed the greater of: one percent of the number of shares of our Class A common stock then outstanding, which will equal approximately 116,335 shares immediately after this offering; and the average weekly trading volume of our Class A common stock during the four calendar weeks preceding the filing of a notice on Form 144 with respect to that sale. Sales under Rule 144 by our affiliates or persons selling shares on behalf of our affiliates are also subject to certain manner of sale provisions and notice requirements and to the availability of current public information about us. Rule 701 Rule 701 generally allows a shareholder who purchased shares of our capital stock pursuant to a written compensatory plan or contract and who is not deemed to have been an affiliate of our company during the immediately preceding 90 days to sell these shares in reliance upon Rule 144, but without being required to comply with the public information, holding period, volume limitation, or notice provisions of Rule 144. Rule 701 also permits affiliates of our company to sell their Rule 701 shares under Rule 144 without complying with the holding period requirements of Rule 144. All holders of Rule 701 shares, however, are required by that rule to wait until 90 days after the date of this prospectus before selling those shares pursuant to Rule 701. Moreover, all Rule 701 shares are subject to lock-up agreements or market stand-off provisions as described above and under the section titled Underwriters and will not become eligible for sale until the expiration of those agreements. Registration Statement In connection with this offering, we intend to file a registration statement on Form S-8 under the Securities Act registering the issuance and sale of all of the shares of our Class B common stock subject to outstanding options and the shares of our Class A common stock reserved for issuance under our equity incentive plans. We expect to file this registration statement as soon as permitted under the Securities Act. However, the shares registered on Form S-8 may be subject to the volume limitations and the manner of sale, notice, and public information requirements of Rule 144 and will not be eligible for resale until expiration of the lock-up and market stand-off agreements to which they are subject. Registration Rights We have granted demand, Form S-3, and piggyback registration rights to certain of our shareholders to sell our common stock. Registration of the sale of these shares under the Securities Act would result in these shares becoming freely tradable without restriction under the Securities Act immediately upon the effectiveness of the related registration statement, except for shares purchased by affiliates. See the section titled Description of Capital Stock Registration Rights for additional information. Table of Contents MATERIAL U.S. FEDERAL TAX CONSEQUENCES TO NON-U.S. HOLDERS OF OUR CLASS A COMMON STOCK The following summary describes the material U.S. federal income tax consequences of the acquisition, ownership, and disposition of our Class A common stock acquired in this offering by Non-U.S. Holders (as defined below). This discussion does not address all aspects of U.S. federal income taxes, does not discuss the potential application of the alternative minimum tax or Medicare Contribution tax, and does not deal with state or local taxes, U.S. federal gift and estate tax laws, except to the limited extent provided below, or any non-U.S. tax consequences that may be relevant to Non-U.S. Holders in light of their particular circumstances. Special rules different from those described below may apply to certain Non-U.S. Holders that are subject to special treatment under the Internal Revenue Code of 1986, as amended, or Code, such as: insurance companies, banks and other financial institutions; tax-exempt organizations (including private foundations) and tax-qualified retirement plans; foreign governments and international organizations; broker-dealers and traders in securities; U.S. expatriates and certain former citizens or long-term residents of the United States; persons that own, or are deemed to own, more than 5% of our capital stock; controlled foreign corporations, passive foreign investment companies, and corporations that accumulate earnings to avoid U.S. federal income tax; persons that hold our Class A common stock as part of a straddle, hedge, conversion transaction, synthetic security or integrated investment or other risk reduction strategy; persons who do not hold our Class A common stock as a capital asset within the meaning of Section 1221 of the Code (generally, for investment purposes); and partnerships and other pass-through entities, and investors in such pass-through entities (regardless of their places of organization or formation). Such Non-U.S. Holders are urged to consult their own tax advisors to determine the U.S. federal, state, local and other tax consequences that may be relevant to them. Furthermore, the discussion below is based upon the provisions of the Code, and Treasury regulations, rulings and judicial decisions thereunder as of the date hereof, and such authorities may be repealed, revoked, or modified, possibly retroactively, and are subject to differing interpretations which could result in U.S. federal income tax consequences different from those discussed below. We have not requested a ruling from the Internal Revenue Service, or IRS, with respect to the statements made and the conclusions reached in the following summary, and there can be no assurance that the IRS will agree with such statements and conclusions or will not take a contrary position regarding the tax consequences described herein, or that any such contrary position would not be sustained by a court. PERSONS CONSIDERING THE PURCHASE OF OUR CLASS A COMMON STOCK PURSUANT TO THIS OFFERING SHOULD CONSULT THEIR OWN TAX ADVISORS CONCERNING THE U.S. FEDERAL INCOME TAX CONSEQUENCES OF ACQUIRING, OWNING, AND DISPOSING OF OUR CLASS A COMMON STOCK IN LIGHT OF THEIR PARTICULAR SITUATIONS AS WELL AS ANY CONSEQUENCES ARISING UNDER THE LAWS OF ANY OTHER TAXING JURISDICTION, INCLUDING ANY STATE, LOCAL, OR NON-U.S. TAX CONSEQUENCES OR ANY U.S. FEDERAL NON-INCOME TAX CONSEQUENCES, AND THE POSSIBLE APPLICATION OF TAX TREATIES. Table of Contents For the purposes of this discussion, a Non-U.S. Holder is, for U.S. federal income tax purposes, a beneficial owner of Class A common stock that is not a U.S. Holder or a partnership for U.S. federal income tax purposes. A U.S. Holder means a beneficial owner of our Class A common stock that is for U.S. federal income tax purposes (1) an individual citizen or resident of the United States, (2) a corporation (or other entity taxable as a corporation for U.S. federal income tax purposes), created or organized in or under the laws of the United States, any state thereof or the District of Columbia, (3) an estate the income of which is subject to U.S. federal income taxation regardless of its source, or (4) a trust if it (a) is subject to the primary supervision of a court within the United States and one or more U.S. persons (within the meaning of Section 7701(a)(30) of the Code) have the authority to control all substantial decisions of the trust or (b) has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person. If you are an individual non-U.S. citizen, you may, in some cases, be deemed to be a resident alien (as opposed to a nonresident alien) by virtue of being present in the United States for at least 31 days in the calendar year and for an aggregate of at least 183 days during a three-year period ending in the current calendar year. Generally, for this purpose, all the days present in the current year, one-third of the days present in the immediately preceding year, and one-sixth of the days present in the second preceding year, are counted. Resident aliens are generally subject to U.S. federal income tax as if they were U.S. citizens. Individuals who are uncertain of their status as resident or nonresident aliens for U.S. federal income tax purposes are urged to consult their own tax advisors regarding the U.S. federal income tax consequences of the ownership or disposition of our Class A common stock. Distributions We do not expect to make any distributions on our Class A common stock in the foreseeable future. If we do make distributions on our Class A common stock, however, such distributions made to a Non-U.S. Holder of our Class A common stock will constitute dividends for U.S. tax purposes to the extent paid out of our current or accumulated earnings and profits (as determined under U.S. federal income tax principles). Distributions in excess of our current and accumulated earnings and profits will constitute a return of capital that is applied against and reduces, but not below zero, a Non-U.S. Holder s adjusted tax basis in our Class A common stock. Any remaining excess will be treated as gain realized on the sale or exchange of our Class A common stock as described below under the section titled Gain on Disposition of Our Class A Common Stock. Any distribution on our Class A common stock that is treated as a dividend paid to a Non-U.S. Holder that is not effectively connected with the holder s conduct of a trade or business in the United States will generally be subject to withholding tax at a 30% rate or such lower rate as may be specified by an applicable income tax treaty between the United States and the Non-U.S. Holder s country of residence. To obtain a reduced rate of withholding under a treaty, a Non-U.S. Holder generally will be required to provide the applicable withholding agent with a properly executed IRS Form W-8BEN, IRS Form W-8BEN-E or other appropriate form, certifying the Non-U.S. Holder s entitlement to benefits under that treaty. Such form must be provided prior to the payment of dividends and must be updated periodically. If a Non-U.S. Holder holds stock through a financial institution or other agent acting on the holder s behalf, the holder will be required to provide appropriate documentation to such agent. The holder s agent may then be required to provide certification to the applicable withholding agent, either directly or through other intermediaries. If you are eligible for a reduced rate of U.S. withholding tax under an income tax treaty, you should consult with your own tax advisor to determine if you are able to obtain a refund or credit of any excess amounts withheld by timely filing an appropriate claim for a refund with the IRS. We generally are not required to withhold tax on dividends paid to a Non-U.S. Holder that are effectively connected with the holder s conduct of a trade or business within the United States (and, if required by an applicable income tax treaty, are attributable to a permanent establishment that the holder maintains in the United States) if a properly executed IRS Form W-8ECI, stating that the dividends are so connected, is furnished to us (or, if stock is held through a financial institution or other agent, to the applicable withholding agent). In general, such effectively connected dividends will be subject to U.S. federal income tax on a net income basis at the regular graduated rates applicable to U.S. persons. A corporate Non-U.S. Holder receiving effectively connected dividends may also be subject to an additional branch profits tax, which is imposed, under certain circumstances, at a rate of 30% (or Table of Contents such lower rate as may be specified by an applicable treaty) on the corporate Non-U.S. Holder s effectively connected earnings and profits, subject to certain adjustments. See also the section titled Foreign Accounts for additional withholding rules that may apply to dividends paid to certain foreign financial institutions or non-financial foreign entities. Gain on Disposition of Our Class A Common Stock Subject to the discussions below under the sections titled Backup Withholding and Information Reporting and Foreign Accounts, a Non-U.S. Holder generally will not be subject to U.S. federal income or withholding tax with respect to gain realized on a sale or other disposition of our Class A common stock unless (1) the gain is effectively connected with a trade or business of the holder in the United States (and, if required by an applicable income tax treaty, is attributable to a permanent establishment that the holder maintains in the United States), (2) the Non-U.S. Holder is a nonresident alien individual and is present in the United States for 183 or more days in the taxable year of the disposition and certain other conditions are met; or (3) we are, or have been, a United States real property holding corporation within the meaning of Code Section 897(c)(2) at any time within the shorter of the five-year period preceding such disposition or the holder s holding period in the Class A common stock. If you are a Non-U.S. Holder described in (1) above, you will be required to pay tax on the net gain derived from the sale at the regular graduated U.S. federal income tax rates applicable to U.S. persons. Corporate Non-U.S. Holders described in (1) above may also be subject to the additional branch profits tax at a 30% rate or such lower rate as may be specified by an applicable income tax treaty. If you are an individual Non-U.S. Holder described in (2) above, you will be required to pay a flat 30% tax on the gain derived from the sale, which gain may be offset by U.S. source capital losses (even though you are not considered a resident of the United States); provided you have timely filed U.S. federal income tax returns with respect to such losses. With respect to (3) above, in general, we would be a United States real property holding corporation if U.S. real property interests as defined in the Code and the Treasury Regulations comprised (by fair market value) at least half of our assets. We believe that we are not, and do not anticipate becoming, a United States real property holding corporation. However, there can be no assurance that we will not become a United States real property holding corporation in the future. Even if we are treated as a U.S. real property holding corporation, gain realized by a Non-U.S. Holder on a disposition of our Class A common stock will not be subject to U.S. federal income tax so long as (a) the Non-U.S. Holder owned, directly, indirectly or constructively, no more than 5% of our Class A common stock at all times within the shorter of (i) the five-year period preceding the disposition or (ii) the holder s holding period and (b) our Class A common stock is regularly traded on an established securities market. There can be no assurance that our Class A common stock will qualify as regularly traded on an established securities market. See the section titled Foreign Accounts for additional information regarding withholding rules that may apply to proceeds of a disposition of our Class A common stock paid to foreign financial institutions or non-financial foreign entities. U.S. Federal Estate Tax The estates of nonresident alien individuals generally are subject to U.S. federal estate tax on property with a U.S. situs. Because we are a U.S. corporation, our Class A common stock will be U.S. situs property and, therefore, will be included in the taxable estate of a nonresident alien decedent, unless an applicable estate tax treaty between the United States and the decedent s country of residence provides otherwise. The terms resident and nonresident are defined differently for U.S. federal estate tax purposes than for U.S. federal income tax purposes. Investors are urged to consult their own tax advisors regarding the U.S. federal estate tax consequences of the ownership or disposition of our Class A common stock. Backup Withholding and Information Reporting Generally, we or certain financial middlemen must report information to the IRS with respect to any dividends we pay on our Class A common stock including the amount of any such dividends, the name and address of the recipient, and the amount, if any, of tax withheld. A similar report is sent to the holder to whom any such dividends Table of Contents are paid. Pursuant to tax treaties or certain other agreements, the IRS may make its reports available to tax authorities in the recipient s country of residence. Dividends paid by us (or our paying agents) to a Non-U.S. Holder may also be subject to U.S. backup withholding. U.S. backup withholding generally will not apply to a Non-U.S. Holder who provides a properly executed IRS Form W-8BEN or IRS Form W-8BEN-E, as applicable, or otherwise establishes an exemption, provided that the applicable withholding agent does not have actual knowledge or reason to know the holder is a U.S. person. Under current U.S. federal income tax law, U.S. information reporting and backup withholding requirements generally will apply to the proceeds of a disposition of our Class A common stock effected by or through a U.S. office of any broker, U.S. or non-U.S., unless the Non-U.S. Holder provides a properly executed IRS Form W-8BEN or IRS Form W-8BEN-E, as applicable, or otherwise meets documentary evidence requirements for establishing non-U.S. person status or otherwise establishes an exemption. Generally, U.S. information reporting and backup withholding requirements will not apply to a payment of disposition proceeds to a Non-U.S. Holder where the transaction is effected outside the United States through a non-U.S. office of a non-U.S. broker. Information reporting and backup withholding requirements may, however, apply to a payment of disposition proceeds if the broker has actual knowledge, or reason to know, that the holder is, in fact, a U.S. person. For information reporting purposes, certain brokers with substantial U.S. ownership or operations will generally be treated in a manner similar to U.S. brokers. Backup withholding is not an additional tax. If backup withholding is applied to you, you should consult with your own tax advisor to determine whether you have overpaid your U.S. federal income tax, and whether you are able to obtain a tax refund or credit of the overpaid amount. Foreign Accounts In addition, U.S. federal withholding taxes may apply under the Foreign Account Tax Compliance Act, or FATCA, on certain types of payments, including dividends and, on or after January 1, 2019, the gross proceeds of a disposition of our Class A common stock, made to non-U.S. financial institutions and certain other non-U.S. entities. Specifically, a 30% withholding tax may be imposed on dividends on, or, on or after January 1, 2019, gross proceeds from the sale or other disposition of, our Class A common stock paid to a foreign financial institution or a non-financial foreign entity (each as defined in the Code), unless (1) the foreign financial institution agrees to undertake certain diligence and reporting obligations, (2) the non-financial foreign entity either certifies it does not have any substantial United States owners (as defined in the Code) or furnishes identifying information regarding each substantial United States owner, or (3) the foreign financial institution or non-financial foreign entity otherwise qualifies for an exemption from these rules. The 30% federal withholding tax described in this paragraph cannot be reduced under an income tax treaty with the United States. If the payee is a foreign financial institution and is subject to the diligence and reporting requirements in (1) above, it must enter into an agreement with the U.S. Department of the Treasury requiring, among other things, that it undertake to identify accounts held by certain specified United States persons or United States-owned foreign entities (each as defined in the Code), annually report certain information about such accounts, and withhold 30% on certain payments to non-compliant foreign financial institutions and certain other account holders. Foreign financial institutions located in jurisdictions that have an intergovernmental agreement with the United States governing FATCA may be subject to different rules. Prospective investors should consult their tax advisors regarding the potential application of withholding under FATCA to their investment in our Class A common stock. EACH PROSPECTIVE INVESTOR SHOULD CONSULT ITS OWN TAX ADVISOR REGARDING THE TAX CONSEQUENCES OF PURCHASING, HOLDING AND DISPOSING OF OUR CLASS A COMMON STOCK, INCLUDING THE CONSEQUENCES OF ANY PROPOSED CHANGE IN APPLICABLE LAW, AS WELL AS TAX CONSEQUENCES ARISING UNDER ANY STATE, LOCAL, NON-U.S. OR U.S. FEDERAL NON-INCOME TAX LAWS SUCH AS ESTATE AND GIFT TAX. Table of Contents UNDERWRITERS Under the terms and subject to the conditions in an underwriting agreement dated the date of this prospectus, the underwriters named below, for whom Morgan Stanley & Co. LLC and J.P. Morgan Securities LLC are acting as representatives, have severally agreed to purchase, and we and the selling shareholders have agreed to sell to them, severally, the number of shares of Class A common stock indicated below: Name Number of Shares Morgan Stanley & Co. LLC J.P. Morgan Securities LLC Jefferies LLC RBC Capital Markets, LLC Canaccord Genuity LLC William Blair & Company, L.L.C. SunTrust Robinson Humphrey, Inc. Total 11,633,510 The underwriters and the representatives are collectively referred to as the underwriters and the representatives, respectively. The underwriters are offering the shares of Class A common stock subject to their acceptance of the shares from us and the selling shareholders and subject to prior sale. The underwriting agreement provides that the obligations of the several underwriters to pay for and accept delivery of the shares of Class A common stock offered by this prospectus are subject to the approval of certain legal matters by their counsel and to certain other conditions. The underwriters are obligated to take and pay for all of the shares of Class A common stock offered by this prospectus if any such shares are taken. However, the underwriters are not required to take or pay for the shares covered by the underwriters over-allotment option described below. The underwriters initially propose to offer part of the shares of Class A common stock directly to the public at the offering price listed on the cover page of this prospectus and part to certain dealers. After the initial offering of the shares of Class A common stock, the offering price and other selling terms may from time to time be varied by the representatives. We have granted to the underwriters an option, exercisable for 30 days from the date of this prospectus, to purchase up to 1,745,026 additional shares of Class A common stock at the public offering price listed on the cover page of this prospectus, less underwriting discounts and commissions. The underwriters may exercise this option solely for the purpose of covering the over-allotments, if any, made in connection with the offering of the shares of Class A common stock offered by this prospectus. To the extent the option is exercised, each underwriter will become obligated, subject to certain conditions, to purchase about the same percentage of the additional shares of Class A common stock as the number listed next to the underwriter s name in the preceding table bears to the total number of shares of Class A common stock listed next to the names of all underwriters in the preceding table. The following table shows the per share and total public offering price, underwriting discounts and commissions, and proceeds before expenses to us and the selling shareholders. These amounts are shown assuming both no exercise and full exercise of the underwriters over-allotment option. Table of Contents Total Per Share No Exercise Full Exercise Public offering price $ $ $ Underwriting discounts and commissions to be paid by: Us $ $ $ The selling shareholders $ $ $ Proceeds, before expenses, to us $ $ $ Proceeds, before expenses, to the selling shareholders $ $ $ The estimated offering expenses payable by us, exclusive of the underwriting discounts and commissions, are approximately $3.0 million. We have agreed to reimburse the underwriters for their expenses relating to clearance of this offering with the Financial Industry Regulatory Authority, or FINRA, up to $30,000. The underwriters have informed us that they do not intend sales to discretionary accounts to exceed 5% of the total number of shares of Class A common stock offered by them. We have been approved to list our Class A common stock on the New York Stock Exchange under the trading symbol SMAR. In connection with this offering, we and all directors and officers and the holders of substantially all of our outstanding stock and equity securities have agreed that, subject to certain exceptions, without the prior written consent of Morgan Stanley & Co. LLC and J.P. Morgan Securities LLC on behalf of the underwriters, we and they will not, during the period ending 180 days after the date of this prospectus, or the restricted period: offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend or otherwise transfer or dispose of, directly or indirectly, any shares of common stock or any securities convertible into or exercisable or exchangeable for shares of common stock or publicly announce the intention to enter into any such transaction; file any registration statement with the SEC relating to the offering of any shares of common stock or any securities convertible into or exercisable or exchangeable for common stock; or enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the common stock; whether any such transaction described above is to be settled by delivery of common stock or such other securities, in cash or otherwise. In addition, we and each such person agrees that, without the prior written consent of Morgan Stanley & Co. LLC and J.P. Morgan Securities LLC on behalf of the underwriters, we or such other person will not, during the restricted period, make any public announcement regarding the exercise of any right with respect to the registration of any shares of common stock or any security convertible into or exercisable or exchangeable for common stock. The restrictions described in the immediately preceding paragraph do not apply under certain circumstances to our directors, officers and security holders, including: the sale of shares of Class A common stock pursuant to the underwriting agreement; transfers of shares of common stock or any security convertible into or exercisable or exchangeable for common stock (1) as a bona fide gift, or gifts, or for bona fide estate planning purposes; (2) upon death or by will, testamentary document or intestate succession; (3) to an immediate family member or a trust for the direct or indirect benefit of the security holder or one or more immediate family members of the security holder; (4) not involving a change in beneficial ownership; or (5) if the security holder is a trust, to a trustor, trustee or beneficiary of the trust or to the estate of a trustor, trustee or beneficiary of such trust; Table of Contents transfers, distributions or dispositions of shares of common stock or any security convertible into or exercisable or exchangeable for common stock by a security holder that is a corporation, partnership, limited liability company or other business entity (1) to another corporation, partnership, limited liability company or other business entity that controls, is controlled by or managed by or is under common control with such security holder or (2) as part of a distribution, transfer or disposition without consideration by such security holder to its shareholders, partners, members or other equityholders; the exercise of options or other equity awards under an equity award plan described in this prospectus or the exercise of warrants outstanding as of the date of this prospectus and described in this prospectus, in each case by a security holder, provided that no filing under Section 16(a) of the Exchange Act is required or voluntarily made in connection with such transfer or disposition within 60 days after the date of this prospectus, and after such 60th day, any filing under Section 16(a) of the Exchange Act shall clearly indicate in the footnotes thereto that (1) the filing relates to the transfer or disposition described in this paragraph, (2) no shares were sold by the reporting person, and (3) the shares are subject to a lock-up agreement; transfers of shares of common stock or any securities convertible into common stock by a security holder to us upon a vesting event of our securities or upon the exercise of options or warrants to purchase our securities, in each case on a cashless exercise or net exercise basis to the extent permitted by the instruments representing such options or warrants so long as such cashless exercise or net exercise is effected solely by the surrender of outstanding options or warrants to us and our cancellation of all or a portion thereof to pay the exercise price or withholding tax and remittance obligations, provided that no filing under Section 16(a) of the Exchange Act is required or voluntarily made in connection with such transfer or disposition within 60 days after the date of this prospectus, and after such 60th day, any filing under Section 16(a) of the Exchange Act shall clearly indicate in the footnotes thereto that (1) the filing relates to the transfer or disposition described in this paragraph and (2) no shares were sold by the reporting person; transfers of shares of common stock or any securities convertible into or exercisable or exchangeable for common stock that occurs by operation of law pursuant to a qualified domestic order in connection with a divorce settlement or other court order; provided that the transferee shall sign and deliver a lock-up agreement and provided further, that no filing under Section 16(a) of the Exchange Act is voluntarily made and, if required to file a report under Section 16(a) of the Exchange Act, such filing shall clearly indicate in the footnotes thereto the nature and conditions of such transfer and that such transfer occurred by operation of law, court order, or in connection with a divorce settlement, as the case may be; transfers by a security holder of shares of our common stock to us, pursuant to arrangements under which we have the option to repurchase such shares at the lower of cost or fair market value or a right of first refusal with respect to transfers of such shares, in each case upon termination of employment or service of such shareholder with us provided, that, no filing under Section 16(a) of the Exchange Act is voluntarily made and, if required to file a report under Section 16(a) of the Exchange Act, such filing shall clearly indicate in the footnotes thereto that the filing relates to the transfer of shares in connection with the repurchase of the shareholder s shares or exercise of our right of first refusal in connection with the termination of the shareholder s service with us pursuant to contractual agreements with us, as applicable; the conversion or reclassification of the outstanding convertible preferred stock or other classes of our common stock into shares of Class B common stock in connection with the consummation of the offering and the conversion of Class B common stock to Class A common stock in accordance with our amended and restated articles of incorporation, provided that any such shares of common stock received upon such conversion or reclassification shall remain subject to the restrictions described above; transfers of shares of our common stock or any security convertible into or exercisable or exchangeable for common stock by a security holder pursuant to a bona fide tender offer, merger, consolidation or other similar transaction that is approved by our board of directors, made to all holders of our common stock involving a change of control; provided that in the event that the tender offer, merger, consolidation or other Table of Contents such transaction is not completed, the common stock or security held by the security holder shall remain subject to the restrictions described above; transactions by any person other than us relating to shares of Class A common stock or other securities acquired in this offering or in open market transactions after the completion of this offering, provided that no filing under Section 16(a) of the Exchange Act is required or voluntarily made during the restricted period in connection with subsequent sales of the Class A common stock or other securities acquired in this offering or in such open market transactions; or the establishment of a trading plan pursuant to Rule 10b5-1 under the Exchange Act for the transfer of shares of common stock; provided that (1) such plan does not provide for the transfer of common stock during the restricted period and (2) to the extent a public announcement or filing under the Exchange Act, if any, is required or voluntarily made regarding the establishment of such plan, such announcement or filing shall include a statement to the effect that no transfer of common stock may be made under such plan during the restricted period; provided that in the case of any transfer or distribution pursuant to the second and third bullets above, it shall be a condition of the transfer or distribution that each transferee, donee or distributee shall sign and deliver a copy of the lock-up agreement prior to or upon such transfer and no filing under Section 16(a) of the Exchange Act (other than, in the case of the second bullet above, a Form 5) reporting a reduction in beneficial ownership of shares of common stock shall be required or shall be made voluntarily during the applicable restricted period. Morgan Stanley & Co. LLC and J.P. Morgan Securities LLC, in their sole discretion, may release the common stock and other securities subject to the lock-up agreements described above in whole or in part at any time, provided that, if the shareholder is one of our officers or directors, Morgan Stanley & Co. LLC and J.P. Morgan Securities LLC will notify us of the impending release or waiver at least three business days before the release or waiver, and when and as required by FINRA Rule 5131, we have agreed to announce the impending release or waiver at least two business days before the release or waiver, except where the release or waiver is effected solely to permit a transfer of securities that is not for consideration and where the transferee has agreed in writing to be bound by the same lock-up agreement terms in place for the transferor. In order to facilitate the offering of the Class A common stock, the underwriters may engage in transactions that stabilize, maintain, or otherwise affect the price of the Class A common stock. Specifically, the underwriters may sell more shares than they are obligated to purchase under the underwriting agreement, creating a short position. A short sale is covered if the short position is no greater than the number of shares available for purchase by the underwriters under the over-allotment option. The underwriters can close out a covered short sale by exercising the over-allotment option or purchasing shares in the open market. In determining the source of shares to close out a covered short sale, the underwriters will consider, among other things, the open market price of shares compared to the price available under the over-allotment option. The underwriters may also sell shares in excess of the over-allotment option, creating a naked short position. The underwriters must close out any naked short position by purchasing shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of the Class A common stock in the open market after pricing that could adversely affect investors who purchase in this offering. As an additional means of facilitating this offering, the underwriters may bid for, and purchase, shares of Class A common stock in the open market to stabilize the price of the Class A common stock. These activities may raise or maintain the market price of the Class A common stock above independent market levels or prevent or retard a decline in the market price of the Class A common stock. The underwriters are not required to engage in these activities and may end any of these activities at any time. We, the selling shareholders, and the underwriters have agreed to indemnify each other against certain liabilities, including liabilities under the Securities Act. A prospectus in electronic format may be made available on websites maintained by one or more underwriters, or selling group members, if any, participating in this offering. The representatives may agree to allocate a number of shares of Class A common stock to underwriters for sale to their online brokerage account holders. Internet Table of Contents distributions will be allocated by the representatives to underwriters that may make Internet distributions on the same basis as other allocations. The underwriters and their respective affiliates are full service financial institutions engaged in various activities, which may include securities trading, commercial and investment banking, financial advisory, investment management, investment research, principal investment, hedging, financing, and brokerage activities. Certain of the underwriters and their respective affiliates have, from time to time, performed, and may in the future perform, various financial advisory and investment banking services for us, for which they received or will receive customary fees and expenses. In addition, in the ordinary course of their various business activities, the underwriters and their respective affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers and may at any time hold long and short positions in such securities and instruments. Such investment and securities activities may involve our securities and instruments. The underwriters and their respective affiliates may also make investment recommendations or publish or express independent research views in respect of such securities or instruments, and may at any time hold, or recommend to clients that they acquire, long or short positions in such securities and instruments. In the ordinary course of business, we have sold, and may in the future sell, our platform and solutions to one or more of the underwriters or their respective affiliates in arm s-length transactions on market competitive terms. Pricing of the Offering Prior to this offering, there has been no public market for our Class A common stock. The initial public offering price will be determined by negotiations between us, the selling shareholders, and the representatives. Among the factors to be considered in determining the initial public offering price will be our future prospects and those of our industry in general, our sales, earnings and certain other financial and operating information in recent periods, and the price-earnings ratios, price-sales ratios, market prices of securities, and certain financial and operating information of companies engaged in activities similar to ours. Selling Restrictions European Economic Area In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive or, each, a Relevant Member State an offer to the public of any shares of our Class A common stock may not be made in that Relevant Member State, except that an offer to the public in that Relevant Member State of any shares of our Class A common stock may be made at any time under the following exemptions under the Prospectus Directive, if they have been implemented in that Relevant Member State: (a) to any legal entity which is a qualified investor as defined in the Prospectus Directive; (b) to fewer than 100 or, if the Relevant Member State has implemented the relevant provision of the 2010 PD Amending Directive, 150, natural or legal persons (other than qualified investors as defined in the Prospectus Directive), as permitted under the Prospectus Directive, subject to obtaining the prior consent of the representatives for any such offer; or (c) in any other circumstances falling within Article 3(2) of the Prospectus Directive, provided that no such offer of shares of our Class A common stock shall result in a requirement for the publication by us or any underwriter of a prospectus pursuant to Article 3 of the Prospectus Directive. For the purposes of this provision, the expression an offer to the public in relation to any shares of our Class A common stock in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and any shares of our Class A common stock to be offered so as to enable an investor to decide to purchase any shares of our Class A common stock, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State, the expression Prospectus Table of Contents Directive means Directive 2003/71/EC (and amendments thereto, including the 2010 PD Amending Directive, to the extent implemented in the Relevant Member State), and includes any relevant implementing measure in the Relevant Member State, and the expression 2010 PD Amending Directive means Directive 2010/73/EU. United Kingdom Each underwriter has represented and agreed that: (a) it has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the Financial Services and Markets Act 2000, or FSMA, received by it in connection with the issue or sale of the shares of our Class A common stock in circumstances in which Section 21(1) of the FSMA does not apply to us; and (b) it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the shares of our Class A common stock in, from or otherwise involving the United Kingdom. Switzerland The shares of Class A common stock may not be publicly offered in Switzerland and will not be listed on the SIX Swiss Exchange, or SIX, or on any other stock exchange or regulated trading facility in Switzerland. This document has been prepared without regard to the disclosure standards for issuance prospectuses under art. 652a or art. 1156 of the Swiss Code of Obligations or the disclosure standards for listing prospectuses under art. 27 ff. of the SIX Listing Rules or the listing rules of any other stock exchange or regulated trading facility in Switzerland. Neither this document nor any other offering or marketing material relating to the shares or the offering may be publicly distributed or otherwise made publicly available in Switzerland. Neither this document nor any other offering or marketing material relating to the offering, us, or the shares have been or will be filed with or approved by any Swiss regulatory authority. In particular, this document will not be filed with, and the offer of shares will not be supervised by, the Swiss Financial Market Supervisory Authority FINMA, or FINMA, and the offer of shares has not been and will not be authorized under the Swiss Federal Act on Collective Investment Schemes, or CISA. The investor protection afforded to acquirers of interests in collective investment schemes under the CISA does not extend to acquirers of shares. Dubai International Financial Centre This prospectus relates to an Exempt Offer in accordance with the Offered Securities Rules of the Dubai Financial Services Authority, or DFSA. This prospectus is intended for distribution only to persons of a type specified in the Offered Securities Rules of the DFSA. It must not be delivered to, or relied on by, any other person. The DFSA has no responsibility for reviewing or verifying any documents in connection with Exempt Offers. The DFSA has not approved this prospectus nor taken steps to verify the information set forth herein and has no responsibility for the prospectus. The shares to which this prospectus relates may be illiquid or subject to restrictions on their resale. Prospective purchasers of the shares offered should conduct their own due diligence on the shares. If you do not understand the contents of this prospectus you should consult an authorized financial advisor. Australia No placement document, prospectus, product disclosure statement or other disclosure document has been lodged with the Australian Securities and Investments Commission, or ASIC, in relation to the offering. This prospectus does not constitute a prospectus, product disclosure statement or other disclosure document under the Corporations Act 2001, or the Corporations Act, and does not purport to include the information required for a prospectus, product disclosure statement or other disclosure document under the Corporations Act. Any offer in Australia of the shares may only be made to persons, or the Exempt Investors, who are sophisticated investors (within the meaning of section 708(8) of the Corporations Act), professional investors (within the meaning of section 708(11) of the Corporations Act) or otherwise pursuant to one or more Table of Contents exemptions contained in section 708 of the Corporations Act so that it is lawful to offer the shares without disclosure to investors under Chapter 6D of the Corporations Act. The shares applied for by Exempt Investors in Australia must not be offered for sale in Australia in the period of 12 months after the date of allotment under the offering, except in circumstances where disclosure to investors under Chapter 6D of the Corporations Act would not be required pursuant to an exemption under section 708 of the Corporations Act or otherwise or where the offer is pursuant to a disclosure document which complies with Chapter 6D of the Corporations Act. Any person acquiring shares must observe such Australian on-sale restrictions. This prospectus contains general information only and does not take into account the investment objectives, financial situation or particular needs of any particular person. It does not contain any securities recommendations or financial product advice. Before making an investment decision, investors need to consider whether the information in this prospectus is appropriate for their needs, objectives and circumstances, and, if necessary, seek expert advice on those matters. New Zealand The shares of Class A common stock offered hereby have not been offered or sold, and will not be offered or sold, directly or indirectly in New Zealand and no offering materials or advertisements have been or will be distributed in relation to any offer of shares in New Zealand, in each case other than: to persons whose principal business is the investment of money or who, in the course of and for the purposes of their business, habitually invest money; to persons who in all the circumstances can properly be regarded as having been selected otherwise than as members of the public; to persons who are each required to pay a minimum subscription price of at least NZ$500,000 for the shares before the allotment of those shares (disregarding any amounts payable, or paid, out of money lent by the issuer or any associated person of the issuer); or in other circumstances where there is no contravention of the Securities Act 1978 of New Zealand (or any statutory modification or re-enactment of, or statutory substitution for, the Securities Act 1978 of New Zealand). Canada The shares of Class A common stock may be sold only to purchasers purchasing, or deemed to be purchasing, as principal that are accredited investors, as defined in National Instrument 45-106 Prospectus Exemptions or subsection 73.3(1) of the Securities Act (Ontario), and are permitted clients, as defined in National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations. Any resale of the shares of Class A common stock must be made in accordance with an exemption from, or in a transaction not subject to, the prospectus requirements of applicable securities laws. Securities legislation in certain provinces or territories of Canada may provide a purchaser with remedies for rescission or damages if this prospectus (including any amendment thereto) contains a misrepresentation, provided that the remedies for rescission or damages are exercised by the purchaser within the time limit prescribed by the securities legislation of the purchaser s province or territory. The purchaser should refer to any applicable provisions of the securities legislation of the purchaser s province or territory for particulars of these rights or consult with a legal advisor. Pursuant to section 3A.3 (or, in the case of securities issued or guaranteed by the government of a non-Canadian jurisdiction, section 3A.4) of National Instrument 33-105 Underwriting Conflicts (NI 33-105), the underwriters are not required to comply with the disclosure requirements of NI 33-105 regarding underwriter conflicts of interest in connection with this offering. Table of Contents Hong Kong The shares of Class A common stock have not been offered or sold and will not be offered or sold in Hong Kong, by means of any document, other than (a) to professional investors as defined in the Securities and Futures Ordinance (Cap. 571) of Hong Kong and any rules made under that Ordinance; or (b) in other circumstances which do not result in the document being a prospectus as defined in the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32) of Hong Kong or which do not constitute an offer to the public within the meaning of that Ordinance. No advertisement, invitation or document relating to the shares of Class A common stock has been or may be issued or has been or may be in the possession of any person for the purposes of issuance, whether in Hong Kong or elsewhere, which is directed at, or the contents of which are likely to be accessed or read by, the public of Hong Kong (except if permitted to do so under the securities laws of Hong Kong) other than with respect to shares of Class A common stock which are or are intended to be disposed of only to persons outside Hong Kong or only to professional investors as defined in the Securities and Futures Ordinance and any rules made under that Ordinance. Japan No registration pursuant to Article 4, paragraph 1 of the Financial Instruments and Exchange Law of Japan (Law No. 25 of 1948, as amended), or the FIEL, has been made or will be made with respect to the solicitation of the application for the acquisition of the shares of Class A common stock. Accordingly, the shares of Class A common stock have not been, directly or indirectly, offered or sold and will not be, directly or indirectly, offered or sold in Japan or to, or for the benefit of, any resident of Japan (which term as used herein means any person resident in Japan, including any corporation or other entity organized under the laws of Japan) or to others for re-offering or re-sale, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan except pursuant to an exemption from the registration requirements, and otherwise in compliance with, the FIEL and the other applicable laws and regulations of Japan. For Qualified Institutional Investors, or QII Please note that the solicitation for newly-issued or secondary securities (each as described in Paragraph 2, Article 4 of the FIEL) in relation to the shares of Class A common stock constitutes either a QII only private placement or a QII only secondary distribution (each as described in Paragraph 1, Article 23-13 of the FIEL). Disclosure regarding any such solicitation, as is otherwise prescribed in Paragraph 1, Article 4 of the FIEL, has not been made in relation to the shares of Class A common stock. The shares of Class A common stock may only be transferred to QIIs. For Non-QII Investors Please note that the solicitation for newly-issued or secondary securities (each as described in Paragraph 2, Article 4 of the FIEL) in relation to the shares of Class A common stock constitutes either a small number private placement or a small number private secondary distribution (each as is described in Paragraph 4, Article 23-13 of the FIEL). Disclosure regarding any such solicitation, as is otherwise prescribed in Paragraph 1, Article 4 of the FIEL, has not been made in relation to the shares of Class A common stock. The shares of Class A common stock may only be transferred en bloc without subdivision to a single investor. Singapore This prospectus has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this prospectus and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the shares of Class A common stock may not be circulated or distributed, nor may the shares of Class A common stock be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore, or the SFA, (ii) to a relevant person pursuant to Section 275(1), or any person pursuant to Section 275(1A), and in accordance with the conditions specified in Table of Contents Section 275, of the SFA, or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA. Where the shares of Class A common stock are subscribed or purchased under Section 275 of the SFA by a relevant person which is: (a) a corporation (which is not an accredited investor (as defined in Section 4A of the SFA)) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or (b) a trust (where the trustee is not an accredited investor) the sole purpose of which is to hold investments and each beneficiary of the trust is an individual who is an accredited investor, securities (as defined in Section 239(1) of the SFA) of that corporation or the beneficiaries rights and interest (howsoever described) in that trust shall not be transferred within six months after that corporation or that trust has acquired the shares of Class A common stock pursuant to an offer made under Section 275 of the SFA except: (1) to an institutional investor or to a relevant person defined in Section 275(2) of the SFA, or to any person arising from an offer referred to in Section 275(1A) or Section 276(4)(i)(B) of the SFA; (2) where no consideration is or will be given for the transfer; (3) where the transfer is by operation of law; (4) as specified in Section 276(7) of the SFA; or (5) as specified in Regulation 32 of the Securities and Futures (Offers of Investments) (Shares and Debentures) Regulations 2005 of Singapore. Table of Contents LEGAL MATTERS Fenwick & West LLP, Seattle, Washington, has acted as our counsel in connection with this offering and will pass upon the validity of the issuance of the shares of our Class A common stock offered by this prospectus. As of the date of this prospectus, individuals and entities associated with Fenwick & West LLP beneficially own an aggregate of 60,450 shares of our Series C convertible preferred stock which will convert to Class B common stock in connection with the completion of this offering, representing approximately 0.07% of our outstanding shares of capital stock as of January 31, 2018. Wilson Sonsini Goodrich & Rosati, Professional Corporation, Seattle, Washington, is representing the underwriters in connection with this offering. Table of Contents EXPERTS The consolidated financial statements as of January 31, 2017 and 2018 and for each of the three years in the period ended January 31, 2018 included in this prospectus have been so included in reliance on the report of PricewaterhouseCoopers LLP, an independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting. Table of Contents WHERE YOU CAN FIND ADDITIONAL INFORMATION We have filed with the Securities and Exchange Commission, or SEC, a registration statement on Form S-1 under the Securities Act of 1933, as amended, with respect to the shares of Class A common stock offered by this prospectus. This prospectus, which constitutes a part of the registration statement, does not contain all of the information set forth in the registration statement, some of which is contained in exhibits to the registration statement as permitted by the rules and regulations of the SEC. For further information with respect to us and our Class A common stock, we refer you to the registration statement, including the exhibits filed as a part of the registration statement. Statements contained in this prospectus concerning the contents of any contract or any other document are not necessarily complete. If a contract or document has been filed as an exhibit to the registration statement, please see the copy of the contract or document that has been filed. Each statement in this prospectus relating to a contract or document filed as an exhibit is qualified in all respects by the filed exhibit. A copy of the registration statement and the exhibits filed therewith may be inspected without charge at the public reference room maintained by the SEC, located at 100 F Street, NE, Washington, D.C. 20549, and copies of all or any part of the registration statement may be obtained from that office. Please call the SEC at 1-800-SEC-0330 for further information about the public reference room. SEC also maintains an Internet website that contains reports, proxy statements, and other information about issuers, like us, that file electronically with the SEC. The address of that website is www.sec.gov. We currently do not file periodic reports with the SEC. As a result of this offering, we will become subject to the information and reporting requirements of the Exchange Act of 1934, as amended, and, in accordance with this law, will file periodic reports, proxy statements, and other information with the SEC. These periodic reports, proxy statements and other information will be available for inspection and copying at the SEC s public reference facilities and the website of the SEC referred to above. We also maintain a website at www.smartsheet.com. Upon completion of this offering, you may access these materials free of charge as soon as reasonably practicable after they are electronically filed with or furnished to the SEC. Information contained on our website is not a part of this prospectus and the inclusion of our website address in this prospectus is an inactive textual reference only. Table of Contents PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 13. Other Expenses of Issuance and Distribution. The following table sets forth the costs and expenses to be paid by the Registrant, other than the estimated underwriting discounts and commissions, in connection with the sale of the shares of Class A common stock being registered hereby. All amounts are estimates except for the Securities and Exchange Commission, or SEC, registration fee, the Financial Industry Regulatory Authority, or FINRA, filing fee, and the New York Stock Exchange listing fee. SEC registration fee $ 23,325 FINRA filing fee 28,603 New York Stock Exchange listing fee 295,000 Printing and engraving expenses 213,500 Legal fees and expenses 1,400,000 Accounting fees and expenses 850,000 Transfer agent and registrar fees and expenses 3,500 Miscellaneous fees and expenses 186,072 Total $ 3,000,000 ITEM 14. Indemnification of Directors and Officers. The Registrant s amended and restated articles of incorporation that will become effective immediately prior to the completion of this offering contain a provision eliminating the personal liability of its directors for monetary damages to the fullest extent permitted by Washington law. Under Washington law, this provision eliminates the liability of a director for breach of fiduciary duty, but does not eliminate the personal liability of any director for (1) acts or omissions that involve intentional misconduct or a knowing violation of law, (2) conduct violating Section 23B.08.310 of the WBCA, or (3) any transaction from which the director personally received a benefit in money, property, or services to which the director is not legally entitled. Section 23B.08.510 of the WBCA authorizes Washington corporations to indemnify their officers and directors under certain circumstances against expenses and liabilities incurred in legal proceedings involving them as a result of their service as an officer or director. Section 23B.08.560 of the WBCA authorizes a corporation by provision in its articles of incorporation to agree to indemnify a director or officer and obligate itself to advance or reimburse expenses without regard to the provisions of Sections 23B.08.510 through .550; provided, however, that no such indemnity shall be made for or on account of any (1) acts or omissions of a director or officer that involve intentional misconduct or a knowing violation of law, (2) conduct in violation of Section 23B.08.310 of the WBCA (relating to unlawful distributions), or (3) any transaction from which a director or officer personally received a benefit in money, property, or services to which such director or officer is not legally entitled. The Registrant s amended and restated articles of incorporation that will become effective immediately prior to the completion of this offering require indemnification of the Registrant s officers and directors and advancement of expenses to the fullest extent not prohibited by applicable law. In connection with this offering, the Registrant intends to enter into amended and restated indemnification agreements with each of its current directors and executive officers to provide these directors and executive officers additional contractual assurances regarding the scope of the indemnification set forth in the Registrant s amended and restated articles of incorporation and amended and restated bylaws and to provide additional procedural protections. At present, there is no pending litigation or proceeding involving a director, executive officer, or employee of the Registrant regarding which indemnification is sought. Reference is also made to the underwriting agreement filed as Exhibit 1.1 to this Registration Statement, which provides for the indemnification of executive officers, directors, and controlling persons of the Registrant against certain liabilities. The indemnification II-1 Table of Contents provisions in the Registrant s amended and restated articles of incorporation and amended and restated bylaws and the indemnification agreements entered into or to be entered into between the Registrant and each of its directors and executive officers may be sufficiently broad to permit indemnification of the Registrant s directors and executive officers for liabilities arising under the Securities Act. The Registrant has directors and officers liability insurance for its directors and officers. Certain of the Registrant s directors are also indemnified by their employers with regard to their service on the Registrant s board of directors. Reference is made to the following documents filed as exhibits to this Registration Statement regarding relevant indemnification provisions described above and elsewhere herein: Exhibit Document Number Form of Underwriting Agreement 1.1 Form of Amended and Restated Articles of Incorporation to be effective immediately prior to the completion of this offering 3.2 Form of Amended and Restated Bylaws to be effective immediately prior to completion of this offering 3.4 Amended and Restated Investors Rights Agreement by and among the Registrant and certain security holders of the Registrant dated May 19, 2017, as amended by the First Amendment to Amended and Restated Investors Rights Agreement October 26, 2017 4.2 Form of Indemnification Agreement 10.1 ITEM 15. Recent Sales of Unregistered Securities. From April 23, 2015 through April 23, 2018, the Registrant has issued the following securities: 1. Options to employees, directors, consultants, and other service providers to purchase an aggregate of 14,044,825 shares of Class B common stock under its 2005 Stock Option/Restricted Stock Plan and 2015 Equity Incentive Plan, with per share exercise prices ranging from $0.712 to $9.53. 2. A stock award for 500,000 shares of Class B common stock granted under its 2015 Equity Incentive Plan to a director of the Registrant, with a purchase price of $0.042 per share. 3. 8,778,288 shares of Class B common stock to its employees, directors, consultants, and other service providers upon exercise of options or purchase of stock awards granted under its 2 005 Stock Option/Restricted Stock Plan and 2015 Equity Incentive Plan, with purchase prices ranging from $0.038 to $5.28 per share, for an aggregate purchase price of $5,453,094.75. 4. On December 27, 2017, in connection with an acquisition, the Registrant granted 130,000 RSUs to certain service providers to be settled in shares of Class B common stock under its 2015 Equity Incentive Plan. 5. Between May and November 2017, the Registrant issued and sold to 44 accredited investors an aggregate of 6,334,674 shares of Series F convertible preferred stock, at a purchase price of $8.3035 per share, for an aggregate purchase price of $52,599,965.56. Upon the completion of this offering, these shares of Series F convertible preferred stock will convert into 6,334,674 shares of Class B common stock. Unless otherwise stated, the sales of the above securities were deemed to be exempt from registration under the Securities Act in reliance upon Section 4(a)(2) of the Securities Act (or Regulation D or Regulation S promulgated thereunder), or Rule 701 promulgated under Section 3(b) of the Securities Act as transactions by an issuer not involving any public offering or pursuant to benefit plans and contracts relating to compensation as provided under Rule 701. The recipients of the securities in each of these transactions represented their intentions to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof, and appropriate legends were placed upon the stock certificates issued in these transactions. II-2 Table of Contents ITEM 16. Exhibits and Financial Statement Schedules. (a) Exhibits. Exhibit Number Exhibit Title 1.1 Form of Underwriting Agreement. 3.1 Amended and Restated Articles of Incorporation, as currently in effect. 3.2 Form of Amended and Restated Articles of Incorporation to be effective immediately prior to the completion of this offering. 3.3 Bylaws, as currently in effect. 3.4 Form of Amended and Restated Bylaws to be effective immediately prior to the completion of this offering. 4.1 Form of Class A common stock certificate. 4.2 Amended and Restated Investors Rights Agreement by and among the Registrant and certain security holders of the Registrant dated May 19, 2017, as amended by the First Amendment to Amended and Restated Investors Rights Agreement dated on October 26, 2017. 4.3 Warrant to Purchase Stock issued to Silicon Valley Bank, dated November 16, 2011. 5.1 Opinion of Fenwick & West LLP. 10.1 Form of Indemnification Agreement. 10.2 2005 Stock Option/Restricted Stock Plan, and forms of award agreements thereunder. 10.3 2015 Equity Incentive Plan, and forms of award agreements thereunder. 10.4 2018 Equity Incentive Plan, and forms of award agreements thereunder. 10.5 2018 Employee Stock Purchase Plan, and form of offering document thereunder. 10.6 Offer Letter by and between the Registrant and Mark P. Mader, dated January 11, 2006. 10.7 Offer Letter by and between the Registrant and Jennifer E. Ceran, dated July 25, 2016. 10.8 Offer Letter by and between the Registrant and Michael Arntz, dated September 5, 2016. 10.9 Offer Letter by and between the Registrant and Andrew Lientz, dated October 30, 2015. 10.10 Offer Letter by and between the Registrant and Gene M. Farrell, dated May 1, 2017. 10.11 Offer Letter by and between the Registrant and Kara Hamilton, dated August 9, 2012. 10.12 Offer Letter by and between the Registrant and Paul Porrini, dated February 19, 2018. 10.13 Form of Change in Control Severance Agreement. 10.14 Bank of America Building Office Lease by and between Registrant and Bellevue Place Office, LLC dated October 27, 2014, as amended. 21.1 List of Subsidiaries. 23.1 Consent of Fenwick & West LLP (included in Exhibit 5.1). 23.2 Consent of PricewaterhouseCoopers LLP, independent registered public accounting firm. 24.1 Power of Attorney. Previously filed. (b) Financial Statement Schedule. All financial statement schedules are omitted because they are not applicable or the information is included in the Registrant s consolidated financial statements or related notes. II-3 Table of Contents ITEM 17. Undertakings. The undersigned Registrant hereby undertakes to provide to the underwriters at the closing specified in the underwriting agreement certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers, and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. The undersigned Registrant hereby undertakes that: (1) For purposes of determining any liability under the Securities Act of 1933 the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective. (2) For the purpose of determining any liability under the Securities Act of 1933 each post effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. II-4 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Bellevue, State of Washington, on April 24, 2018. SMARTSHEET INC. By: /s/ Mark P. Mader Mark P. Mader President and Chief Executive Officer Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed by the following persons in the capacities and on the date indicated: Signature Title Date /s/ Mark P. Mader President, Chief Executive Officer and Director (Principal Executive Officer) April 24, 2018 Mark P. Mader /s/ Jennifer E. Ceran Chief Financial Officer (Principal Financial and Accounting Officer) April 24, 2018 Jennifer E. Ceran * Chair of the Board of Directors April 24, 2018 Geoffrey T. Barker * Director April 24, 2018 Brent Frei * Director April 24, 2018 Elena Gomez * Director April 24, 2018 Ryan Hinkle * Director April 24, 2018 Matthew McIlwain * Director April 24, 2018 James N. White * Director April 24, 2018 Magdalena Yesil *By: /s/ Mark P. Mader Mark P. Mader Attorney-in-fact II-5 Table of Contents SMARTSHEET INC. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page Report of Independent Registered Public Accounting Firm F-2 Consolidated Statements of Operations F-3 Consolidated Statements of Comprehensive Loss F-4 Consolidated Balance Sheets F-5 Consolidated Statements of Convertible Preferred Stock and Shareholders Deficit F-7 Consolidated Statements of Cash Flows F-8 Notes to Consolidated Financial Statements F-9 Report of Independent Registered Public Accounting Firm To the Board of Directors and Shareholders of Smartsheet Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Smartsheet Inc. and its subsidiaries as of January 31, 2018 and 2017, and the related consolidated statements of operations, statements of comprehensive loss, statements of changes in convertible preferred stock and shareholders deficit, and statements of cash flows for each of the three years in the period ended January 31, 2018, including the related notes (collectively referred to as the consolidated financial statements ). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of January 31, 2018 and 2017, and the results of their operations and their cash flows for each of the three years in the period ended January 31, 2018 in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These consolidated financial statements are the responsibility of the Company s management. Our responsibility is to express an opinion on the Company s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ( PCAOB ) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. /s/ PricewaterhouseCoopers LLP Seattle, Washington March 26, 2018 We have served as the Company s auditor since 2012. Table of Contents SMARTSHEET INC. Consolidated Statements of Operations (in thousands, except per share data) Year Ended January 31, 2016 2017 2018 Revenue Subscription $ 39,568 $ 62,416 $ 100,368 Professional services 1,183 4,548 10,885 Total revenue 40,751 66,964 111,253 Cost of revenue Subscription 6,961 10,117 13,008 Professional services 1,636 4,016 8,674 Total cost of revenue 8,597 14,133 21,682 Gross profit 32,154 52,831 89,571 Operating expenses Research and development 12,900 19,640 37,590 Sales and marketing 28,440 40,071 72,925 General and administrative 5,163 8,275 28,034 Total operating expenses 46,503 67,986 138,549 Loss from operations (14,349 ) (15,155 ) (48,978 ) Interest expense and other, net (29 ) (435 ) Net loss before provision (benefit) for income taxes (14,349 ) (15,184 ) (49,413 ) Provision (benefit) for income taxes (307 ) Net loss $ (14,349 ) $ (15,184 ) $ (49,106 ) Deemed dividend (4,558 ) Net loss attributable to common shareholders $ (14,349 ) $ (15,184 ) $ (53,664 ) Net loss per share attributable to common shareholders, basic and diluted $ (1.03 ) $ (1.00 ) $ (2.94 ) Weighted-average shares outstanding used to compute net loss per share attributable to common shareholders, basic and diluted 13,877 15,241 18,273 Pro forma net loss per share attributable to common shareholders, basic and diluted (unaudited) $ (0.62 ) Weighted-average shares used to compute pro forma net loss per share attributable to common shareholders, basic and diluted (unaudited) 84,868 See notes to consolidated financial statements. Table of Contents SMARTSHEET INC. Consolidated Statements of Comprehensive Loss (in thousands) Year Ended January 31, 2016 2017 2018 Net loss $ (14,349 ) $ (15,184 ) $ (49,106 ) Other comprehensive loss Unrealized gain (loss) on investments in available-for-sale securities, net of tax 19 (18 ) (1 ) Comprehensive loss $ (14,330 ) $ (15,202 ) $ (49,107 ) See notes to consolidated financial statements. Table of Contents SMARTSHEET INC. Consolidated Balance Sheets (in thousands, except share data) January 31, Pro Forma January 31, 2017 2018 2018 (unaudited) Assets Current assets Cash and cash equivalents $ 22,086 $ 58,158 Short-term investments 10,149 Accounts receivable, net of allowances of $104 and $457 at January 31, 2017 and January 31, 2018, respectively 5,410 14,870 Prepaid expenses and other current assets 2,224 4,628 Total current assets 39,869 77,656 Long-term assets Restricted cash 1,927 2,901 Deferred commissions 5,577 15,291 Property and equipment, net 8,812 17,237 Intangible assets, net 43 1,547 Goodwill 445 Other long-term assets 25 1,527 Total assets $ 56,253 $ 116,604 Liabilities, convertible preferred stock, and shareholders deficit Current liabilities Accounts payable $ 1,985 $ 2,641 Accrued compensation and related benefits 6,787 13,253 Other accrued liabilities 887 3,061 Capital lease payable 1,810 2,833 Deferred revenue 32,646 57,102 Total current liabilities 44,115 78,890 Capital lease payable, non-current 3,932 3,713 Deferred revenue, non-current 66 179 Convertible preferred stock warrant liability 477 1,272 $ Other long-term liabilities 146 604 Total liabilities 48,736 84,658 83,386 Commitments and contingencies (Note 14) Table of Contents Convertible preferred stock Convertible preferred stock, no par value; 61,421,973 shares authorized as of January 31, 2017, and 67,756,647 shares authorized as of January 31, 2018; 61,284,703 shares issued and outstanding with aggregate liquidation preference of $60,617 as of January 31, 2017, and 67,619,377 shares issued and outstanding with aggregate liquidation preference of $113,217 as of January 31, 2018; no shares issued and outstanding as of January 31, 2018, pro forma (unaudited) 60,260 112,687 Shareholders equity (deficit): Common stock, no par value; 96,000,000 shares authorized as of January 31, 2017, and 107,679,381 shares authorized as of January 31, 2018; 16,278,895, and 20,280,741 shares issued and outstanding as of January 31, 2017 and 2018, respectively; no shares issued and outstanding as of January 31, 2018, pro forma (unaudited) Class A common stock, no par value; shares authorized as of January 31, 2018 pro forma (unaudited); no shares issued and outstanding as of January 31, 2018 pro forma (unaudited) Class B common stock, no par value; shares authorized as of January 31, 2018 pro forma (unaudited); 88,760,473 shares issued and outstanding as of January 31, 2018 pro forma (unaudited) Additional paid-in capital 4,783 25,892 139,851 Accumulated other comprehensive income 1 Accumulated deficit (57,527 ) (106,633 ) Total shareholders equity (deficit) (52,743 ) (80,741 ) 33,218 Total liabilities, convertible preferred stock and shareholders deficit $ 56,253 $ 116,604 $ 116,604 See notes to consolidated financial statements. Table of Contents SMARTSHEET INC. Consolidated Statements of Changes in Convertible Preferred Stock and Shareholders Deficit (dollars in thousands) Convertible Preferred Stock Common Stock Additional Paid-in Capital Accumulated Deficit Accumulated Other Comprehensive Income (Loss) Total Shareholders Deficit Shares Amount Shares Amount Balances at January 31, 2015 61,284,703 $ 60,260 13,223,562 $ $ 818 $ (27,994 ) $ $ (27,176 ) Stock option exercises 1,540,540 222 222 Share-based compensation expense 1,679 1,679 Comprehensive loss (14,349 ) 19 (14,330 ) Balances at January 31, 2016 61,284,703 60,260 14,764,102 2,719 (42,343 ) 19 (39,605 ) Stock option exercises 1,514,793 930 930 Share-based compensation expense 1,134 1,134 Comprehensive loss (15,184 ) (18 ) (15,202 ) Balances at January 31, 2017 61,284,703 60,260 16,278,895 4,783 (57,527 ) 1 (52,743 ) Issuance of convertible preferred stock 6,334,674 52,427 Stock option exercises 4,001,846 2,645 2,645 Share-based compensation expense 18,464 18,464 Comprehensive loss (49,106 ) (1 ) (49,107 ) Balances at January 31, 2018 67,619,377 $ 112,687 20,280,741 $ $ 25,892 $ (106,633 ) $ $ (80,741 ) See notes to consolidated financial statements. Table of Contents SMARTSHEET INC. Consolidated Statements of Cash Flows (in thousands) Year Ended January 31, 2016 2017 2018 Cash flows from operating activities Net loss $ (14,349 ) $ (15,184 ) $ (49,106 ) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Share-based compensation expense 1,679 1,134 18,464 Remeasurement of convertible preferred stock warrant liability 127 194 795 Depreciation of property and equipment 563 978 4,019 Amortization of deferred commission costs 995 2,076 4,989 Gain/loss on disposal of assets 3 2 Amortization of intangible assets 4 11 57 Amortization of premiums, accretion of discounts and gain on investments 72 137 26 Changes in operating assets and liabilities: Accounts receivable (1,270 ) (2,829 ) (9,455 ) Prepaid expenses and other current assets (179 ) (828 ) (1,856 ) Other long-term assets (33 ) 9 (1,022 ) Accounts payable 522 578 704 Other accrued liabilities 246 469 2,014 Accrued compensation and related benefits 1,346 5,052 6,466 Deferred commissions (2,370 ) (4,908 ) (14,704 ) Other long-term liabilities 63 26 457 Deferred revenue 7,924 13,140 24,569 Net cash provided by (used in) operating activities (4,660 ) 58 (13,581 ) Cash flows from investing activities Purchases of letters of credit (612 ) (1,000 ) Reduction of letters of credit 335 252 Purchases of property and equipment (1,026 ) (1,820 ) (6,006 ) Purchases of investments (21,820 ) (5,094 ) Capitalized internal-use software development costs (3,350 ) Proceeds from sales of investments 3,655 900 Proceeds from maturity of investments 12,900 9,222 Payment for business acquisition, net of cash acquired (1,464 ) Proceeds from sale of computer equipment 1 Purchases of intangible assets (58 ) (125 ) Payments for security deposits 4 (309 ) (213 ) Net cash provided by (used in) investing activities (22,900 ) 9,055 (1,783 ) Cash flows from financing activities Payments on principal of capital lease (303 ) (2,326 ) Payments of deferred offering costs (829 ) Proceeds from issuance of convertible preferred stock 52,427 Proceeds from exercise of stock options 222 930 2,164 Net cash provided by financing activities 222 627 51,436 Net increase (decrease) in cash and cash equivalents (27,338 ) 9,740 36,072 Cash and cash equivalents Beginning of period 39,684 12,346 22,086 End of period $ 12,346 $ 22,086 $ 58,158 Supplemental disclosures Cash paid for interest $ $ 187 $ 312 Purchase of fixed assets under capital lease 6,045 3,130 Accrued purchases of property and equipment 1 227 181 Deemed dividends on convertible preferred stock (4,558 ) Deferred offering costs, accrued but not yet paid 648 See notes to consolidated financial statements. Table of Contents SMARTSHEET INC. Notes to Consolidated Financial Statements 1. Overview and Basis of Presentation Description of business Smartsheet Inc. (the Company ) was incorporated in the State of Washington on June 1, 2005. The Company is headquartered in Bellevue, Washington. The Company is a leading cloud-based platform for work execution, enabling teams and organizations to plan, capture, manage, automate, and report on work at scale. Customers access their accounts online via a web-based interface or a mobile application. Some customers also purchase the Company s professional services, which primarily consist of consulting and training services. The Company s fiscal year end is January 31. Basis of presentation The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America ( GAAP ). The Company s fiscal year ends on January 31. Unaudited pro forma balance sheet and net loss per share Prior to the closing of the Company s initial public offering ( IPO ), the Company had one class of common stock. Upon the closing of the IPO, the Company will have authorized Class A common stock and Class B common stock. All currently outstanding shares of common stock and convertible preferred stock will automatically convert into shares of Class B common stock and warrants to purchase shares of convertible preferred stock will automatically convert into warrants to purchase shares of the Company s Class B common stock. The unaudited pro forma balance sheet information shows the effect of the conversion of the convertible preferred stock and the conversion of the convertible preferred stock warrant as of January 31, 2018. The effect of this conversion on the pro forma balance sheet will reduce shareholders deficit by $114.0 million. Additionally, the Company has calculated unaudited pro forma basic and diluted loss per share to give effect to the convertible preferred stock, including the impacts of the warrant to purchase convertible preferred stock, as though such shares had been converted to common stock as of the beginning of the period. Use of estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates, judgments, and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenue and expenses during the reporting periods. The Company bases its estimates on historical experience and on other assumptions that its management believes are reasonable under the circumstances. Actual results could differ from those estimates. The Company s most significant estimates and judgments involve revenue recognition with respect to the allocation of transaction consideration for the Company s offerings; determination of the amortization period for capitalized sales commission costs; valuation of the Company s share-based compensation, including the underlying deemed fair value of common stock; useful lives of property and equipment including useful lives of internal-use software development costs; calculation of allowance for doubtful accounts; inputs in revaluation of convertible preferred stock warrant; and valuation of deferred income tax assets and uncertain tax positions, among others. Liquidity The Company continues to be subject to the risks and challenges associated with companies at a similar stage of development, including the ability to raise additional capital to support future growth. Since inception through January 31, 2018, the Company had incurred losses from operations and accumulated a deficit of $106.6 million. Historically, the Company has financed its operations primarily through private sales of equity securities and customer payments. The Company believes its existing cash will be sufficient to meet its working capital and capital expenditure needs for at least the next 12 months. Table of Contents SMARTSHEET INC. Notes to Consolidated Financial Statements 2. Summary of Significant Accounting Policies Segment information The Company operates as one operating segment. The Company s chief operating decision maker is its chief executive officer, who reviews financial information for purposes of making operating decisions, assessing financial performance, and allocating resources. Revenue recognition The Company derives its revenue primarily from subscription services and professional services. Revenue is recognized when control of these services is transferred to the Company s customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services, net of any sales taxes. The Company determines revenue recognition through the following steps: identification of the contract, or contracts, with a customer; identification of the performance obligations in the contract; determination of the transaction price; allocation of the transaction price to the performance obligations in the contract; and recognition of revenue when, or as, the Company satisfies a performance obligation. Subscription revenue Subscription revenue primarily consists of fees from customers for access to the Company s cloud-based platform. Subscription revenue is recognized on a ratable basis over the subscription contract term, beginning on the date the access to the Company s platform is provided, as no implementation work is required, if consideration the Company is entitled to receive is probable of collection. Subscription contracts generally have terms of one year or one month, are billed in advance, and are non-cancelable. The subscription arrangements do not allow the customer the contractual right to take possession of the platform; as such, the arrangements are considered to be service contracts. Certain of the Company s subscription contracts contain performance guarantees related to service continuity. To date, refunds related to such guarantees have been immaterial in all periods presented. Professional services revenue Professional services revenue primarily includes revenue recognized from fees for consulting and training services. The Company s consulting services consist of platform configuration and use case optimization, and are primarily invoiced on a time and materials basis, monthly in arrears. Services revenue is recognized over time, as service hours are delivered. Smaller consulting engagements are, on occasion, provided for a fixed fee. These smaller consulting arrangements are typically of short duration (less than three months). In these cases, revenue is recognized over time, based on the proportion of hours of work performed, compared to the total hours expected to complete the engagement. Configuration and use case optimization services do not result in significant customization or modification of the software platform or user interface. Training services are billed in advance, on a fixed-fee basis, and revenue is recognized after the training program is delivered, or after customer s right to receive training services expires. Associated out-of-pocket travel expenses related to the delivery of professional services are typically reimbursed by the customer. Out-of-pocket expense reimbursements are recognized as revenue at the point in time, or as the distinct performance obligation to which they relate is delivered. Out-of-pocket expenses are recognized as cost of professional services as incurred. Table of Contents SMARTSHEET INC. Notes to Consolidated Financial Statements On occasion, the Company sells its subscriptions to third-party resellers. The price at which the Company sells to the reseller is typically discounted, as compared to the price at which the Company would sell to an end customer, in order to enable the reseller to realize a margin on the eventual sale to the end customer. As the Company retains a fixed amount of the contract from the reseller, and does not have visibility into the pricing provided by the reseller to the end customer, the revenue is recorded net of any reseller margin. Contracts with multiple performance obligations Some of the Company s contracts with customers contain multiple performance obligations. The Company accounts for individual performance obligations separately, as they have been determined to be distinct, i.e., the services are separately identifiable from other items in the arrangement and the customer can benefit from them on its own or with other resources that are readily available to the customer. The transaction price is allocated to the distinct performance obligations on a relative standalone selling price basis. Stand-alone selling prices are determined based on the prices at which the Company separately sells subscription, consulting, and training services, and based on the Company s overall pricing objectives, taking into consideration market conditions, value of the Company s contracts, the types of offerings sold, customer demographics, and other factors. Accounts receivable Accounts receivable are primarily comprised of trade receivables that are recorded at the invoice amount, net of an allowance for doubtful accounts. Subscription fees billed in advance of the related subscription term represent contract liabilities and are presented as accounts receivable and deferred revenues upon establishment of the unconditional right to invoice, typically upon signing of the non-cancelable service agreement. Our typical payment terms provide for customer payment within 30 days of the date of the contract. The allowance for doubtful accounts is based on the Company s assessment of the collectability of accounts by considering the composition of the accounts receivable aging and historical bad debt expense trends. Amounts deemed uncollectible are recorded to the allowance for doubtful accounts with an offsetting charge in the statement of operations. Activity related to the Company s provision for doubtful accounts was as follows (in thousands): Year ended January 31, 2016 2017 2018 Balance at beginning of period $ 12 $ 24 $ 104 Charges, net of reversals 12 80 353 Balance at end of period $ 24 $ 104 $ 457 Deferred revenue Deferred revenue is recorded for subscription services contracts upon establishment of unconditional right to payment under a non-cancelable contract before transferring the related services to the customer. Deferred revenue for such services is amortized into revenue over time, as those subscription services are delivered. Similarly, the Company records deferred revenue for fixed-fee professional services upon establishment of an unconditional right to payment under a non-cancelable contract. Deferred revenue for training services is recognized as revenue upon delivery of training services or upon expiration of customer s right to receive such services. Deferred revenue for consulting services is recognized as hours of service are delivered to the customer. Deferred commissions The majority of sales commissions earned by the Company s sales force are considered incremental and recoverable costs of obtaining a contract with a customer. Sales commissions are paid on initial contracts and on any upsell contracts with a customer. No sales commissions are paid on customer renewals. Sales commissions are deferred and then amortized on a straight-line basis over a period of benefit that the Company has determined to be three years. The Company determined the period of benefit by taking into consideration its customer contracts, Table of Contents SMARTSHEET INC. Notes to Consolidated Financial Statements expected customer life, the expected life of its technology, and other factors. Amortization expense is included in sales and marketing expenses in the accompanying statements of operations. Overhead allocations The Company allocates shared costs, such as facilities (including rent, utilities, and depreciation on equipment shared by all departments), and information technology costs to all departments based on headcount. As such, allocated shared costs are reflected in each cost of revenue and operating expense category. Cash and cash equivalents The Company considers all highly liquid investments with an original maturity of three months or less from date of purchase to be cash equivalents. Cash and cash equivalents are recorded at cost, which approximates fair value. Restricted cash Restricted cash as of January 31, 2017 and 2018 included $1.6 million and $2.4 million, respectively, related to letters of credit for the Company s Bellevue and Boston leases and $0.3 million, and $0.5 million, respectively, related to a security deposit for the Company s Boston lease. Investments The Company classifies its investments as available-for-sale securities recorded at fair value. Any unrealized gains or losses are included as a component of accumulated other comprehensive loss in shareholders deficit and are periodically assessed for other-than-temporary impairment. The cost of investments for purposes of computing realized and unrealized gains and losses is based on the specific identification method. Investments in securities with maturities of less than one year, or where management s intent is to use the investments to fund current operations, are classified as short-term investments. Investments with maturities of greater than one year are classified as long-term investments. Property and equipment Property and equipment are recorded at cost, net of accumulated depreciation and amortization. Depreciation is computed using the straight-line method over the following estimated useful lives: Computer equipment 3 years Computer software 3 years Furniture and fixtures 5-7 years Leasehold improvements are amortized over the shorter of the expected useful lives of the assets or the related lease term. Maintenance and repairs that do not improve or extend the lives of the respective assets are expensed as incurred. Software development costs The Company capitalizes certain qualifying costs incurred during the application development stage in connection with the development of internal-use software. Costs related to preliminary project activities and post-implementation activities are expensed as incurred. To date, qualifying costs incurred during the application development stage of software development for the Company s platform to which subscriptions are sold have not been significant. All such costs have been charged to research and development expense in the statements of comprehensive loss. Qualifying costs for software developed for internal use, such as for internal administration, sales lead generation, finance, and accounting systems, were not significant during the years ended January 31, 2016 and 2017, Table of Contents SMARTSHEET INC. Notes to Consolidated Financial Statements and were expensed as incurred. For the year ended January 31, 2018, $3.4 million of internal-use software costs were capitalized. Capitalized software development costs are included within property and equipment on the balance sheets, and are amortized over the estimated useful life of the software, which is typically three years. The related amortization expense is recognized in the statements of comprehensive loss within the department that receives the benefit of the developed software. The Company evaluates the useful lives of these assets and tests for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets. Impairment of long-lived assets Long-lived assets, such as property and equipment and intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. Recoverability of an asset group is measured by comparing the carrying amount to the estimated undiscounted future cash flows expected to be generated. If the carrying amount exceeds the undiscounted cash flows, the assets are determined to be impaired and an impairment charge is recognized as the amount by which the carrying amount exceeds its fair value. No impairments of long-lived assets were recorded during any of the periods presented. Goodwill The Company evaluates goodwill for impairment at the reporting unit level on an annual basis (September 1), or whenever events or changes in circumstances indicate that impairment may exist. When evaluating goodwill for impairment, the Company may first perform a qualitative assessment to determine whether it is more likely than not that a reporting unit is impaired. If the Company does not perform a qualitative assessment, or if the Company determine that it is not more likely than not that the fair value of the reporting unit exceeds its carrying amount, the Company calculates the estimated fair value of the reporting unit. Fair value is the price a willing buyer would pay for the reporting unit and is typically calculated using a discounted cash flow model. If the carrying amount of the reporting unit exceeds the estimated fair value, an impairment charge is recorded to reduce the carrying value to the estimated fair value. Leases and deferred rent Leases are categorized at their inception as either operating or capital leases. Some lease agreements include incentives. Rent expense on the Company s operating leases for office space is recognized using the straight-line method, over the term of the agreement generally beginning once control of the space is achieved, without regard to payment terms that defer the commencement date of required rent payments. Additionally, incentives received are treated as a reduction of expense over the term of the agreement. The difference between the rent payments and the calculated rent expense using the straight-line methodology is recorded as a deferred rent liability within the other accrued liabilities and other long-term liabilities captions in the accompanying balance sheets, based on the terms of the lease. Deferred rent as of January 31, 2017 and 2018 was $0.1 million, and $0.6 million, respectively. The Company begins to depreciate its capital lease assets, which mainly relate to leased computer equipment, once such equipment is received and ready for its intended use. Self-Funded Health Insurance In December 2017, the Company elected to partially self-fund its health insurance plan. To reduce its risk related to high-dollar claims, the Company maintains individual and aggregate stop-loss insurance. The Company estimates its exposure for claims incurred but not paid at the end of each reporting period and uses historical claims data to estimate its self-funded insurance liability. As of January 31, 2018, the Company s net self-insurance reserve estimate was $0.6 million, included in other accrued liabilities in the accompanying consolidated balance sheets. Advertising expenses Advertising and marketing costs are expensed as incurred, and are included in sales and marketing expense in the statements of operations. Advertising and marketing expenses were $10.1 million, $10.5 million, and $14.8 million for the years ended January 31, 2016, 2017, and 2018, respectively. Table of Contents SMARTSHEET INC. Notes to Consolidated Financial Statements Deferred offering costs Deferred offering costs consist primarily of accounting, legal, and other fees related to the proposed IPO. The deferred offering costs will be offset against IPO proceeds upon the consummation of the IPO. If the IPO is aborted, deferred offering costs will be expensed. As of January 31, 2017, the Company had no deferred offering costs that were capitalized. As of January 31, 2018, the Company capitalized $1.5 million of deferred offering costs, which are included in other long-term assets in the accompanying consolidated balance sheets. Convertible preferred stock warrant liability The Company classifies its warrant to purchase convertible preferred stock as a liability. The Company adjusts the carrying value of the warrant liability to fair value at the end of each reporting period utilizing the Black-Scholes option pricing model. The convertible preferred stock warrant liability is included on the Company s balance sheets and its warrant revaluation is recorded as an expense in interest income (expense) and other, net. Upon exercise or IPO, the related warrant liability will be reclassified to additional paid-in capital. Share-based compensation The Company measures and recognizes compensation expense for all share-based awards granted to employees and directors, based on the estimated fair value of the award on the date of grant. Expense is recognized on a straight-line basis over the vesting period of the award based on the estimated portion of the award that is expected to vest. The Company uses the Black-Scholes option pricing model to measure the fair value of stock option awards when they are granted. The Company makes several estimates in determining share-based compensation and these estimates generally require significant analysis and judgment to develop. Income taxes Income taxes are accounted for using the asset and liability method. Under this method, the Company recognizes deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax basis of assets and liabilities. Deferred tax assets and liabilities are measured using the enacted tax rates expected to apply to taxable income in the years in which the temporary differences are expected to be recovered or settled. The Company records a valuation allowance to reduce deferred tax assets to an amount for which realization is more likely than not. The Company evaluates and accounts for uncertain tax positions using a two-step approach. The first step is to evaluate if the weight of available evidence indicates that it is more likely than not that the tax position will be sustained in an audit. The second step is to measure the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement. No liability was recorded for uncertain tax positions, or related interest or penalties, as of January 31, 2017 and 2018. As of January 31, 2018, the Company did not record a deferred tax asset for uncertain tax positions of $0.7 million related to research and development credits. In the U.S., the Company s tax years from 2005 to present remain effectively open to examination by the Internal Revenue Service, as well as various state and foreign jurisdictions. Concentrations of risk and significant customers Financial instruments that potentially subject the Company to concentrations of credit risk are primarily cash, cash equivalents, investments, and accounts receivable. The Company maintains its cash accounts with financial institutions where deposits, at times, exceed the Federal Deposit Insurance Corporation ( FDIC ) limits. The Company has credit risk regarding trade accounts receivable. No individual customers represented more than 10% of accounts receivable as of January 31, 2017 and 2018. No individual customers represented more than 10% of revenue during the years ended January 31, 2016, 2017 and 2018. Table of Contents SMARTSHEET INC. Notes to Consolidated Financial Statements Net loss per share Holders of the Company s convertible preferred stock participate in dividends with holders of the Company s common stock, but they are not contractually required to share in net losses. Accordingly, during periods of income, the Company is required to use the two-class method of calculating earnings per share. The two-class method requires that earnings per share be calculated separately for each class of security. As the Company incurred losses during the periods presented, the Company used the methods described below to calculate net loss per share. The Company calculates basic net loss per share by dividing net loss attributable to common shareholders by the weighted-average number of the Company s common stock shares outstanding during the respective period. Net loss attributable to common shareholders is net loss minus convertible preferred stock dividends declared, of which there were none during the periods presented. The Company calculates diluted net loss per share using the treasury stock and if-converted methods, which consider the potential impacts of outstanding stock options, warrants, and convertible preferred stock. Under these methods, the numerator and denominator of the net loss per share calculation are adjusted for these securities if the impact of doing so increases net loss per share. During the periods presented, the impact is to decrease net loss per share and therefore the Company is precluded from adjusting its calculation for these securities. As a result, diluted net loss per share is calculated using the same formula as basic net loss per share. Recently adopted accounting pronouncements In March 2018, the Financial Account Standards Board ( FASB ) issued ASU 2018-05, "Income Taxes (Topic 740) - Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118". This ASU adds SEC paragraphs pursuant to the SEC Staff Accounting Bulletin No. 118, which expresses the view of the staff regarding application of Topic 740, Income Taxes, in the reporting period that includes December 22, 2017 - the date on which the Tax Cuts and Jobs Act (H.R.1, An Act to Provide for Reconciliation Pursuant to Titles II and V of the Concurrent Resolution on the Budget for Fiscal Year 2018) was signed into law. The Company has completed its analysis of the Tax Cuts and Jobs Act and the effects have been reflected in its financial statements. In April 2015, the FASB issued ASU No. 2015-05, Subtopic 350-40, Customer s Accounting for Fees Paid in a Cloud Computing Arrangement ( ASU 2015-05 ), which provides guidance to customers about whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, then the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. ASU 2015-05 is effective for fiscal years, including interim periods within those fiscal years, beginning after December 15, 2015. The Company adopted ASU 2015-05 effective February 1, 2016 and the adoption had no impact on the Company s consolidated financial statements. In August 2014, the FASB issued Accounting Standards Update ( ASU ) No. 2014-15, Presentation of Financial Statements Going Concern (Subtopic 205-40), related to the disclosures around going concern. The new standard provides guidance around management s responsibility to evaluate whether there is substantial doubt about an entity s ability to continue as a going concern and to provide related footnote disclosures. The Company adopted the requirements of the new standard as of February 1, 2017 and did not identify any uncertainties about the Company's ability to continue as a going concern. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers ( ASC 606 ). ASC 606 supersedes the revenue recognition requirements in Accounting Standards Codification Topic 605, Revenue Recognition ( Topic 605 ), and requires the recognition of revenue when promised goods or services are transferred to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASC 606 also includes Subtopic 340-40, Other Assets and Deferred Costs Contracts with Customers ( Subtopic 340-40 and together with ASC 606, the new standard ), which requires the deferral of incremental costs of obtaining a contract with a customer. The Company early adopted the requirements of the new standard as of February 1, 2017, utilizing the full retrospective method of transition. Adoption of the new standard primarily resulted in changes to the treatment of sales commissions. Under Topic 605, the Company expensed commission costs to obtain a contract as incurred. Under the new standard, the Company defers all incremental Table of Contents SMARTSHEET INC. Notes to Consolidated Financial Statements commission costs to obtain the contract. The Company amortizes these costs over a period of benefit that it has determined to be three years. In addition, the adoption of the new standard resulted in changes in the Company s accounting policies for revenue recognition, trade and other receivables, the effect of which was insignificant on a cumulative basis, and for each of the periods presented in the Company s statements of operations and statements of cash flows, and as of the dates presented in the Company s balance sheets. The impact of adopting the new standard was a cumulative improvement to the opening accumulated deficit balance (decrease to the deficit) as of February 1, 2015 of $1.4 million. The primary impact of adopting the new standard on the fiscal years ended January 31, 2016, 2017 and 2018 was to commissions expense, which is recognized in sales and marketing on the statements of operations. The sales commissions expense decreased by $1.4 million, $2.8 million and $9.7 million for the fiscal years ended January 31, 2016, 2017 and 2018, respectively. Total assets on the balance sheets as of January 31, 2017 and 2018 increased by $5.6 million and $15.3 million, respectively. Recent accounting pronouncements not yet adopted In March 2018, the FASB issued ASU 2018-04, Investments-Debt Securities (Topic 320) and Regulated Operations (Topic 980). Amendments to SEC paragraph Pursuant to SEC Staff Accounting Bulletin No. 177 and SEC Release No 33-9273, the amendment of ASU 2018-04 adds, amends and supersedes variance paragraphs that contain SEC guidance in ASC 320, Investments-Debt Securities and ASC 980, Regulated Operations. The Company does not anticipate the adoption of ASU 2018-04 will have a material impact on its consolidated financial statements. In May 2017, the FASB issued ASU 2017-09, Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting, which clarifies when changes to the terms or conditions of a share-based payment award must be accounted for as modifications. The guidance is effective prospectively for interim and annual periods beginning after December 15, 2017 and early adoption is permitted. The Company will adopt this guidance upon its effective date. The Company does not expect the adoption of this guidance to have any material impact on the Company s financial position, results of operations, or cash flows. In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, which simplifies the measurement of goodwill impairment. Under this new guidance, an impairment charge, if triggered, is calculated as the difference between a reporting unit s carrying value and fair value, but it is limited to the carrying value of goodwill. The guidance is effective prospectively for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019 and early adoption is permitted. The Company will early adopt this guidance during the fiscal year ending January 31, 2019, applying the new guidance when it evaluates goodwill for impairment on September 1, 2018. In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. This guidance is intended to clarify how entities present restricted cash in the statement of cash flows. The guidance requires entities to show the changes in the total of cash and cash equivalents and restricted cash in the statement of cash flows. When cash and cash equivalents and restricted cash are presented in more than one line item on the balance sheet, the new guidance requires a reconciliation of the totals in the statement of cash flows to the related captions in the balance sheet. The reconciliation can be presented either on the face of the statement of cash flows or in the notes to the consolidated financial statements. ASU 2016-18 is effective for fiscal years beginning after December 15, 2018, but early adoption is permitted. The Company will adopt this ASU beginning with the interim periods in the fiscal year ending January 31, 2019. The Company s balance sheets as of January 31, 2017 and 2018 included restricted cash in the amount of $1.9 million and $2.9 million, respectively. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which aims to reduce the existing diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. ASU 2016-15 will require adoption on a retrospective basis unless it is impracticable to apply, in which case the Company would be required to apply the amendments prospectively as of the earliest date practicable. ASU 2016-15 is effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019. Table of Contents SMARTSHEET INC. Notes to Consolidated Financial Statements Early adoption is permitted. The Company is currently evaluating the impacts that adoption of this ASU will have on its consolidated financial statements. In March 2016, the FASB issued ASU No. 2016 09, Compensation Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, ( ASU 2016 09 ), which simplifies the accounting and reporting of share-based payment transactions, including adjustments to how excess tax benefits and payments for tax withholdings should be classified and provides the election to eliminate the estimate for forfeitures. For the Company, this standard is effective for annual reporting periods beginning after December 15, 2017, and interim periods within annual periods beginning after December 15, 2018. The Company is currently evaluating the impacts that adoption of this ASU will have on its consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, Leases: Topic (842) and has modified the standard thereafter. This standard requires the recognition of a right-of-use asset and lease liability on the balance sheet for all leases. This standard also requires more detailed disclosures to enable users of financial statements to understand the amount, timing, and uncertainty of cash flows arising from leases. This guidance is effective for interim and annual reporting periods beginning after December 15, 2018 and should be applied through a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, and early adoption is permitted. The Company expects to adopt this guidance on February 1, 2019. The Company anticipates this standard will have a material impact on the Company s financial position, primarily due to the office space operating leases, as the Company will be required to recognize lease assets and lease liabilities on the balance sheet. The Company continues to assess the potential impacts of this standard, including the impact the adoption of this guidance will have on its results of operations or cash flows, if any. In January 2016, the FASB issued ASU 2016-01, Financial Instruments Overall (825-10): Recognition and Measurement of Financial Assets and Financial Liabilities ( ASU 2016 01 ). The main objective of this guidance is to enhance the reporting model for financial instruments and providing users of financial statements with more decision-useful information. ASU 2016-01 requires equity investments to be measured at fair value, simplifies the impairment assessment of equity investment without readily determinable fair value, eliminates the requirements to disclose the fair value of financial instruments measured at amortized cost, and requires public business entities to use the exit price notion when measuring the fair value of financial instruments. The update, as amended, is effective for fiscal years beginning after December 15, 2017. The Company is evaluating the impacts, if any, that this guidance will have on its consolidated financial statements. 3. Revenue from Contracts with Customers During the years ended January 31, 2016, 2017, and 2018, the Company recognized $11.5 million, $19.2 million and $32.0 million of subscription revenue, respectively and $0.1 million, $0.3 million and $0.6 million of professional services revenue, respectively, which were included in the deferred revenue balance as of January 31, 2015, 2016, and 2017, respectively. As of January 31, 2018, the Company s total deferred revenue balance was $57.3 million, of which $55.8 million represented deferred balances for subscription services revenue and $1.5 million represented deferred balances for professional services revenue. A total of $57.1 million of total deferred revenue is expected to be recognized as revenue over the next 12 months. 4. Deferred Commissions Deferred commissions were $5.6 million and $15.3 million as of January 31, 2017 and 2018, respectively. Amortization expense for the deferred commissions was $1.0 million, $2.1 million, and $5.0 million for the years ended January 31, 2016, 2017 and 2018, respectively. Amortization expense for the deferred commissions is recorded in sales and marketing on the Company s statements of operations. Table of Contents SMARTSHEET INC. Notes to Consolidated Financial Statements 5. Net Loss Per Share and Unaudited Pro Forma Net Loss Per Share The following table presents the calculations for basic and diluted net loss per share (in thousands, except for the per share data): Year Ended January 31, 2016 2017 2018 Numerator: Net loss attributable to common shareholders $ (14,349 ) $ (15,184 ) $ (53,664 ) Denominator: Weighted-average common stock shares outstanding 13,877 15,241 18,273 Net loss per share, basic and diluted $ (1.03 ) $ (1.00 ) $ (2.94 ) The following outstanding shares of common stock equivalents (in thousands) as of the periods presented were excluded from the computation of diluted net loss per share attributable to common shareholders for the periods presented because the impact of including them would have been anti-dilutive: As of January 31, 2016 2017 2018 Convertible preferred shares (as converted) 62,145 62,145 68,480 Convertible preferred stock warrant 137 137 137 Options to purchase common stock 11,610 13,052 13,355 Total potentially dilutive shares 73,892 75,334 81,972 Unaudited pro forma net loss per share The Company has provided pro forma basic and diluted net loss per share to give effect to the anticipated conversion of the convertible preferred stock as though the conversion had occurred as of the beginning of the first period presented or the original date of issuance, if later. The following table presents the calculations for unaudited pro forma basic and diluted net loss per share (in thousands, except for the per share data): Year Ended January 31, 2018 (unaudited) Numerator: Net loss attributable to common shareholders $ (53,664 ) Remeasurement of convertible preferred stock warrant liability 795 Pro forma net loss attributable to common shareholders $ (52,869 ) Denominator: Weighted-average common stock shares outstanding 18,273 Pro forma adjustment to reflect assumed conversion of convertible preferred stock upon completion of the Company s anticipated initial public offering 66,595 Pro forma weighted-average common stock shares outstanding 84,868 Pro forma net loss per share, basic and diluted $ (0.62 ) Table of Contents SMARTSHEET INC. Notes to Consolidated Financial Statements The following outstanding shares of common stock equivalents (in thousands) as of the periods presented were excluded from the computation of diluted unaudited pro forma net loss per share attributable to common shareholders for the periods presented because the impact of including them would have been antidilutive: As of January 31, 2018 (unaudited) Common stock warrant 137 Options to purchase common shares 13,355 Total potentially dilutive shares 13,492 6. Investments As of January 31, 2018, the Company did not hold any available-for-sale investments. The amortized costs, unrealized gains and losses, and estimated fair values of the Company s investments as of January 31, 2017 were as follows (in thousands): As of January 31, 2017 Amortized Cost Unrealized Gain Unrealized Loss Estimated Fair Value Asset-backed securities $ 903 $ $ (1 ) $ 902 Commercial paper 1,799 1,799 Corporate debt securities 7,446 3 (1 ) 7,448 Total available-for-sale investments $ 10,148 $ 3 $ (2 ) $ 10,149 The following tables present the contractual maturities of the Company s short-term investments (in thousands) as of January 31, 2017: As of January 31, 2017 Amortized Cost Estimated Fair Value Due within one year $ 10,148 $ 10,149 Due between one to five years $ 10,148 $ 10,149 As of January 31, 2017, the Company did not consider any of the unrealized losses on its investments to be other-than-temporarily impaired based on its evaluation of available evidence. None of the investments held as of January 31, 2017 were in a continuous unrealized loss position for over 12 months. Realized gains and losses on sales of available-for-sale securities were immaterial for the period presented. 7. Fair Value Measurements Assets and liabilities recorded at fair value in the consolidated financial statements are categorized based upon the level of judgment associated with the inputs used to measure their fair value. The lowest level of significant input determines the placement of the fair value measurement within the following hierarchal levels: Level 1: Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. Table of Contents SMARTSHEET INC. Notes to Consolidated Financial Statements Level 2: Observable inputs, other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3: Unobservable inputs that are supported by little or no market activity. The following table presents information about the Company s financial assets and liabilities that are measured at fair value and indicates the fair value hierarchy of the valuation inputs used (in thousands): Fair Value Measurement January 31, 2017 Level 1 Level 2 Level 3 Total Assets: Cash equivalents: Money market funds $ 18,947 $ $ $ 18,947 Investments: Asset-backed securities 902 902 Commercial paper 1,799 1,799 Corporate debt securities 7,448 7,448 Total investments: 10,149 10,149 Total cash equivalents and investments $ 18,947 $ 10,149 $ $ 29,096 Liabilities: Convertible preferred stock warrant liability $ $ $ 477 $ 477 Fair Value Measurement January 31, 2018 Level 1 Level 2 Level 3 Total Assets: Cash equivalents: Money market funds $ 55,702 $ $ $ 55,702 Liabilities: Convertible preferred stock warrant liability $ $ $ 1,272 $ 1,272 The carrying amounts of certain financial instruments, including cash held in banks, accounts receivable, and accounts payable, approximate fair value due to their short-term maturities and are excluded from the fair value table above. Level 3 instruments consist solely of the Company s Series C convertible preferred stock warrant (see Note 11). The Series C convertible preferred stock warrant liability was estimated using assumptions related to the remaining contractual term of the warrant, the risk-free interest rate, the volatility of comparable public companies over the remaining term, and the fair value of underlying shares. The significant unobservable inputs used in the fair value measurement of the Series C convertible preferred stock warrant liability are the fair value of the underlying stock at the valuation date and the estimated term of the warrant. Generally, increases in the fair value of the underlying stock and estimated term would result in a directionally similar impact to the fair value measurement, as recognized in other income, net in the statements of operations. Table of Contents SMARTSHEET INC. Notes to Consolidated Financial Statements The change in the fair value of the convertible preferred stock warrant liability measured at fair value using significant unobservable inputs was as follows (in thousands): Balance as of January 31, 2016 $ 283 Increase in fair value of convertible preferred stock warrant 194 Balance as of January 31, 2017 477 Increase in fair value of convertible preferred stock warrant 795 Balance as of January 31, 2018 $ 1,272 8. Property and Equipment, Net As of the dates specified below, property and equipment (in thousands) consisted of the following: January 31, 2017 2018 Computer equipment $ 7,903 $ 12,539 Computer software, purchased and developed 95 3,415 Furniture and fixtures 1,793 3,797 Leasehold improvements 666 2,659 Total property and equipment 10,457 22,410 Less: accumulated depreciation (1,645 ) (5,173 ) Total property and equipment, net $ 8,812 $ 17,237 Depreciation expense was $0.6 million, $1.0 million, and $4.0 million for the years ended January 31, 2016, 2017, and 2018, respectively. Property and equipment includes $6.0 million and $9.2 million of capital leases at January 31, 2017 and 2018, respectively. Accumulated depreciation related to these leased assets was $0.2 million and $2.4 million at January 31, 2017 and 2018, respectively. Depreciation expense on capital leases, which is included in total depreciation expense described immediately above, was $0, $0.2 million and $2.2 million for the years ended January 31, 2016, 2017, and 2018, respectively. These leased assets are included in the computer equipment category in the table above 9. Goodwill and Net Intangible Assets On December 28, 2017, Smartsheet Inc. purchased 100% of the issued and outstanding capital stock of Converse.AI, Inc. ( Converse.AI ) for a total purchase price of $1.6 million. As a result of this acquisition, the Company recorded goodwill of $0.4 million, identifiable intangible assets of $1.4 million, and other net liabilities of $0.2 million, inclusive of deferred tax liabilities recorded in purchase accounting of $0.3 million. The goodwill recognized in connection with the acquisition is primarily attributable to anticipated automation within the Company s platform, and is not expected to be deductible for tax purposes. The intangible assets are finite-lived and include Converse.AI s software technology and customer relationships. These assets will be amortized on a straight-line basis over their estimated useful lives which were determined to be three years. Converse.AI has been included in the Company s consolidated results of operations since the acquisition date. Converse.AI s results were immaterial to the Company s consolidated results for the year ended January 31, 2018. Table of Contents SMARTSHEET INC. Notes to Consolidated Financial Statements The following table presents changes in the carrying amount of goodwill (in thousands) during the year ended January 31, 2018: Goodwill balance as of January 31, 2017 $ Addition - acquisition of Converse.AI 445 Goodwill balance as of January 31, 2018 $ 445 The following table presents the components of net intangible assets (in thousands) as of January 31, 2017 and 2018: January 31, 2017 2018 Acquired software technology $ $ 1,366 Acquired customer relationships 70 Patents 45 170 Domain name 13 13 Total intangible assets 58 1,619 Less: accumulated amortization (15 ) (72 ) Total intangible assets, net $ 43 $ 1,547 Amortization expense was $4 thousand, $11 thousand, and $57 thousand for the years ended January 31, 2016, 2017, and 2018, respectively. 10. Convertible Preferred Stock As of January 31, 2017, the Company had the following convertible preferred stock: Series Shares Authorized Shares Issued and Outstanding Aggregate Liquidation Preference (in thousands) Carrying Value (in thousands) Liquidation Preference Prices per Share Conversion Price per Share Annual Dividend per Share (if declared) Liquidation Participation Cap per Share A 6,075,000 6,075,000 $ 486 $ 480 $ 0.08 $ 0.08 $ 0.0064 $ 0.16 A-1 500,000 500,000 80 80 0.16 0.16 0.0128 0.32 A-2 2,750,000 2,750,000 550 550 0.20 0.195434 0.016 0.40 A-3 2,000,000 2,000,000 500 500 0.25 0.23685 0.02 0.50 A-4 9,859,270 9,859,270 2,751 2,751 0.279 0.260872 0.0224 0.558 Total Series A 21,184,270 21,184,270 $ 4,367 $ 4,361 B 7,208,430 7,208,430 1,250 1,218 0.173408 0.173408 0.0138 0.346816 C 5,284,990 5,147,720 $ 1,500 $ 1,476 0.29139 0.29139 0.0234 0.58278 C-1 1,531,580 1,531,580 1,000 977 0.65292 0.65292 0.0522 1.30584 Total Series C 6,816,570 6,679,300 $ 2,500 $ 2,453 D 14,780,400 14,780,400 $ 17,500 $ 17,342 1.184 1.184 0.0948 N/A E 11,432,303 11,432,303 $ 35,000 $ 34,886 3.0615 3.0615 0.2449 N/A Total all series 61,421,973 61,284,703 $ 60,617 $ 60,260 Table of Contents SMARTSHEET INC. Notes to Consolidated Financial Statements On May 19, 2017, the Company issued 6,274,460 shares of Series F convertible preferred stock. The Company issued an additional 60,214 shares of Series F convertible preferred stock on November 1, 2017. Details for this issuance as well as for total convertible preferred stock outstanding as of January 31, 2018 inclusive of the table above are shown in the table below. Series Shares Authorized Shares Issued and Outstanding Aggregate Liquidation Preference (in thousands) Carrying Value (in thousands) Liquidation Preference Prices per Share Conversion Prices per Share Annual Dividends per Share (if declared) Liquidation Participation Cap per Share F 6,334,674 6,334,674 $ 52,600 $ 52,427 $ 8.3035 $ 8.3035 $ 0.66428 N/A Total all series 67,756,647 67,619,377 $ 113,217 $ 112,687 Dividends and losses The holders of convertible preferred stock are entitled to receive annual non-cumulative dividends payable quarterly when, as, and if declared by the board of directors in the amounts shown in the table above. The holders of Series F, Series E, and Series D convertible preferred stock are entitled to the payment of dividends prior to all other series of convertible preferred stock. Following such full payment, seniority with respect to the payment of dividends shall be in the following order from most senior to least senior: (1) Series C and Series C-1, (2) Series B, and (3) Series A convertible preferred stock, with each senior class of preferred stock required to be paid in full prior to any dividends being paid to any junior series of preferred stock. After payment of all dividends to the convertible preferred stock, any remaining dividends shall be distributed among the holders of convertible preferred stock and common stock pro rata based on the number of shares of common stock then held by each holder. If dividends are paid on the Company s common stock, convertible preferred shareholders are entitled to participate as if they were holders of common stock, at a proportionate amount determined on an if-converted basis. Through the years ended January 31, 2017 and 2018, no dividends have been declared or paid by the Company. Holders of convertible preferred stock do not have a contractual obligation to share in the losses of the Company. Conversion Each share of convertible preferred stock is, at any time and at the option of the holder, convertible for no fee into one share of common stock, subject to adjustment as described in the Company s articles of incorporation. The conversion ratios for Series A-2, A-3, and A-4 convertible preferred stock have been adjusted for anti-dilution, such that each share is convertible into 1.02336, 1.05552, and 1.06949 shares, respectively, of common stock. Conversion is automatic upon (1) the closing of an initial public offering with an aggregate offering price to the public of greater than $50 million of the common stock, in which the public offering price per share is no less than $4.00 for Series F convertible preferred stock and no less than $3.00 for all other series of convertible preferred stock, or (2) with the approval of the holders of a majority of the outstanding shares of convertible preferred stock together with a majority of Series B, Series D, Series E, and Series F convertible preferred stock. Liquidation preferences In the event of any liquidation, dissolution, or winding-up of the Company, the holders of shares of Series D, Series E, and Series F convertible preferred stock shall be entitled to receive, prior and in preference to any distribution of proceeds to the holders of (1) Series A, Series A-1, Series A-2, Series A-3, Series A-4 (collectively, Class A Preferred ); (2) Series B; (3) Series C and Series C-1 (collectively, Class C Preferred ) convertible preferred stock; and (4) common stock, an amount per share equal to the applicable original issuance price for such series of convertible preferred stock, plus declared but unpaid dividends on such share. If upon the occurrence of such event, the proceeds distributed among the holders of the Series D, Series E, and Series F convertible preferred stock are insufficient to permit the payment to such holders of the full aforesaid preferential amounts, then the proceeds shall be distributed ratably among the holders of Series D, Series E, and Series F convertible preferred stock in proportion to the full preferential amount that each such holder is otherwise entitled to receive. Table of Contents SMARTSHEET INC. Notes to Consolidated Financial Statements Upon the completion of the distribution to the holders of Series D, Series E, and Series F convertible preferred stock, the holders of Class C Preferred convertible preferred stock shall be entitled to receive, prior and in preference to any distribution of the proceeds to the holders of Class A Preferred, Series B convertible preferred stock, and common stock, an amount per share equal to the applicable original issuance price for such series of convertible preferred stock, plus declared but unpaid dividends on such share. If, upon the occurrence of such event, the proceeds distributed among the holders of Class C Preferred convertible preferred stock are insufficient to permit the payment to such holders of the full aforesaid preferential amounts, then the proceeds shall be distributed ratably among the holders of shares of Class C Preferred convertible preferred stock in proportion to the full preferential amount that each such holder is otherwise entitled to receive. Upon the completion of the distribution to the holders of Class C Preferred convertible preferred stock shares, the holders of shares of Series B convertible preferred stock shall be entitled to receive, prior and in preference to any distribution of the proceeds to the holders of Class A Preferred convertible preferred stock and common stock, an amount per share equal to the applicable original issuance price for such series of convertible preferred stock, plus declared but unpaid dividends on such share. If, upon the occurrence of such event, the proceeds distributed among the holders of shares of Class B convertible preferred stock are insufficient to permit the payment to such holders of the full aforesaid preferential amounts, then the proceeds shall be distributed ratably among the holders of shares of Series B convertible preferred stock in proportion to the full preferential amount that each such holder is otherwise entitled to receive. Upon the completion of the distribution to the holders of Series B convertible preferred stock shares, the holders of shares of Class A Preferred convertible preferred stock shall be entitled to receive, prior and in preference to any distribution of the proceeds to the holders of common stock, an amount per share equal to the applicable original issuance price for such series of convertible preferred stock, plus declared but unpaid dividends on such share. If, upon the occurrence of such event, the proceeds distributed among the holders of shares of Class A Preferred convertible preferred stock are insufficient to permit the payment to such holders of the full aforesaid preferential amounts, then the proceeds shall be distributed ratably among the holders of shares of Class A Preferred convertible preferred stock in proportion to the full preferential amount that each such holder is otherwise entitled to receive. Thereafter, the remaining proceeds, if any, shall be distributed to the holders of shares of Class A Preferred, Series B, and Class C Preferred convertible preferred stock, and common stock pro rata based on the number of shares of common stock held by each, on an as-converted basis (as if such conversion happened immediately prior to such liquidation event, but following the payments described above); provided, however, that if the aggregate amount per share that the holders of Class A Preferred, Series B and Class C Preferred convertible preferred stock shall not exceed the greater of (1) the liquidation participation cap per share as set forth in the table above (including the applicable liquidation preference amount), and (2) the amount such holder would have received if all shares of convertible preferred stock had been converted into common stock immediately prior to such liquidation event. Any remaining assets shall be distributed pro rata among the holders of common stock of the Company. Redemption The convertible preferred stock is not redeemable at any future certain date. Voting rights Holders of convertible preferred stock are entitled to the number of votes equal to the number of shares of common stock into which their stock could be converted and have voting rights equal to holders of common stock. 11. Convertible Preferred Stock Warrant In 2011, the Company issued a warrant to purchase 137,270 shares of Series C convertible preferred stock in connection with a loan and security agreement with Silicon Valley Bank. The warrant has a 10-year term and an exercise price of $0.29139 per share. The fair value was determined using the Black-Scholes model. The fair value at January 31, 2017 and 2018 was $0.5 million and $1.3 million, respectively. This warrant is subject to remeasurement at each reporting period. The warrant expires on November 16, 2021. Table of Contents SMARTSHEET INC. Notes to Consolidated Financial Statements 12. Share-based Compensation The Company has issued incentive and non-qualifying stock options to employees and non-employees under the 2005 Stock Option/Restricted Stock Plan, or the 2005 Plan, and the 2015 Equity Incentive Plan, or the 2015 Plan. During the year ended January 31, 2018, the Company also issued restricted stock units ( RSUs ) to employees pursuant to the 2015 Plan. As of January 31, 2016, 2017, and 2018, an aggregate of 1,237,655, 2,280,609, and 296,178, respectively, shares of common stock were available for issuance under the 2015 Plan. Stock options are granted with exercise prices at the fair value of the underlying common stock on the grant date, and in general vest based on continuous employment over four years, and expire 10 years from the date of grant. RSUs are measured based on the grant date fair value of the awards, and in general vest based on continuous employment over four years and expire 10 years from the date of grant. A summary of the option activity during the years ended January 31, 2017 and 2018 follows: Options Outstanding Weighted-Average Exercise Price Weighted- Average Remaining Contractual Term (years) Aggregate Intrinsic Value (in thousands) Outstanding at January 31, 2017 13,052,182 $ 1.46 7.27 $ 29,681 Granted 4,724,155 4.97 Exercised and awarded (4,001,846 ) 0.66 Forfeited or canceled (419,052 ) 2.46 Outstanding at January 31, 2018 13,355,439 2.91 7.90 88,468 Exercisable at January 31, 2018 5,549,241 1.43 6.40 44,957 Vested and expected to vest at January 31, 2018 10,870,217 3.14 8.35 69,505 The weighted-average grant date fair value per share of stock options granted during the years ended January 31, 2016, 2017, and 2018 was $0.54, $1.28, and $2.36, respectively. The intrinsic value of options exercised was $3.2 million, $3.1 million, and $17.8 million during the years ended January 31, 2016, 2017, and 2018, respectively. A summary of the RSU activity during the year ended January 31, 2018 follows: Number of Shares Underlying Outstanding RSUs Weighted-Average Grant-Date Fair Value per RSU Outstanding at January 31, 2017 Granted 130,000 $ 9.45 Vested Forfeited or canceled Outstanding at January 31, 2018 130,000 9.45 An RSU award entitles the holder to receive shares of the Company s common stock as the award vests, which is based on continued service. Non-vested RSUs do not have nonforfeitable rights to dividends or dividend equivalents. The weighted-average grant date fair value of RSUs granted during the year ended January 31, 2018 was $9.45. Table of Contents SMARTSHEET INC. Notes to Consolidated Financial Statements The fair value of stock options granted was estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions: Year Ended January 31, 2016 2017 2018 Risk-free interest rate 1.5%-1.9% 1.4%-2.3% 1.8%-2.6% Expected volatility 54.0 % 49.0 % 41.7%-46.0% Expected term (in years) 6.25 6.25 6.25 Expected dividend yield % % %
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diff --git a/parsed_sections/prospectus_summary/2018/CIK0001381240_gsrx_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001381240_gsrx_prospectus_summary.txt
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+PROSPECTUS SUMMARY The following summary highlights information contained elsewhere in this prospectus. This summary may not contain all of the information that may be important to you. You should read this entire prospectus carefully, including the sections entitled "Risk Factors" and "Management s Discussion and Analysis or Plan of Operations" and our historical financial statements and related notes included elsewhere in this prospectus. In this prospectus, unless the context provides otherwise, the terms "Green Spirit", "GSRX", "the Company", "we", "us", and "our" refer to Green Spirit Industries Inc. and its wholly-owned subsidiary, Project 1493, LLC ("1493"). Green Spirit Industries Inc. is a Nevada corporation (the "Company") formed under the name Cyberspace Vita, Inc. ("Cyberspace") on November 7, 2006. Our initial business plan was related to the online sale of vitamins and supplements. On May 11, 2017, we entered into a share exchange agreement (the "Exchange Agreement") with Peter Zachariou, the majority shareholder of the Company (the "Shareholder"), Project 1493, LLC, a limited liability company organized under the laws of the Commonwealth of Puerto Rico ("1493"), and the sole member of 1493 (the "Member"), pursuant to which the Member transferred all of the outstanding membership interests of 1493 to the Company in exchange for 16,690,912 restricted shares of common stock of the Company (the "Exchange Shares"), warrants to purchase up to 3,000,000 shares of common stock at an exercise price of $0.50 per share for a period of three (3) years from the date of issuance (the "Exchange Warrants") and 1,000 shares of Series A Preferred Stock that grants the holders thereof fifty-one percent (51%) voting power (the "Preferred Shares" and together with the Exchange Shares, and the Exchange Warrants, the "Exchange Securities"). As a result of the Exchange Agreement, 1493 became a wholly-owned subsidiary of the Company, and the business of 1493 became the business of the Company. At the time of the Exchange Agreement, the Company was not actively engaged in any business activity. Presently, the Company, through its wholly-owned subsidiary, 1493, is in the business of acquiring, developing and operating medical cannabis dispensaries in Puerto Rico. As of the date of this prospectus, the Company has acquired all of the legal rights, permits, licenses, leasing contracts and assets pertaining to five medical cannabis dispensaries. The Company intends to continue identifying and acquiring additional dispensaries with plans to operate a total of 10 dispensaries in the next 12 months, and up to a total of 15 locations by the end of 2018. The five dispensaries are located in the following cities: (1) Fajardo, which is a hub for boating and fishing and a launching port for islands Vieques, Culebra, the U.S. Virgin Islands and the British Virgin Islands; (2) Carolina, which is tourist center near Puerto Rico s international airport and home of top luxury hotels and casinos; (3) Dorado, which is deemed to be an affluent residential area in Puerto Rico; (4) San Juan, the capital of Puerto Rico and among the largest cruise destination ports; and lastly (5) Hato Rey, San Juan, which is the city s most densely populated district and in close proximately to a large concentration of doctors offices and medical practices. The dispensaries will not be fully licensed until construction is completed, and the Department of Health of Puerto Rico issues the requisite operating permit for each of the dispensaries. The Company has also entered into an agreement to lease property located in Isla Verde, Carolina, Puerto Rico, for the location of a sixth dispensary for which the Company is in the process of seeking pre-qualification for a cannabis dispensary license. The Company plans to begin construction of its sixth dispensary at its Isla Verde location once it receives pre-qualification from the Department of Health of Puerto Rico. However, there can be no assurance that the Company will be successful in receiving this pre-qualification. As of the date of this prospectus, the Company s application is still under review. As of the date of this prospectus, the Company has completed construction at its Dorado dispensary location and has begun construction at its dispensary locations in Carolina, Fajardo, Andalucia and Hato Rey. The Company anticipates applying for occupancy permits by the end of its first quarter of 2018. The Company plans to begin construction at its other locations within the next three months. Further, the Company expects that the dispensaries located in Dorado, Carolina and Fajardo will be fully operational during the first quarter of 2018, and expects the dispensaries located in Andalucia and Hato Rey will be fully operational during the second quarter of 2018, provided that the Department, Health of prier to Rico issues the requisite operating permits. The Company anticipates earning revenue by selling medical cannabis, edibles, pills, creams, patches and oral drops, and paraphernalia such as vaporizes, The average net profit for medical cannabis dispensaries is 20% in the U.S., according to a study conducted by Marijuana Business Daily and the media annual revenue is $1,200,000. We aim to undercut our competition by acquiring our goods at a lower than average cost which we anticipate will allow us to achieve 30% net margins, 50% higher than the industry average. Private Placement Financing On May 11, 2017, the Company entered into a subscription agreement (the "Subscription Agreement") with selected accredited investors (each, an "Investor" and, collectively, the "Investors"). Pursuant to the terms of the Subscription Agreement, the Company offered in a private placement (the "Offering") a minimum of $1,000,000 and up to a maximum of $3,300,000 of its securities, consisting of (i) shares of its common stock ("Shares"); and (ii) warrants to purchase shares of the Company s common stock (the "Warrants"). Each Warrant shall be exercisable at any time on or after the date of issuance for a period of three (3) years at an exercise price per share equal to $0.50 per share, subject to adjustment as provided in the agreement evidencing the Warrants. The number of shares of common stock underlying the Warrants is equal to 30% of the number of Shares issued to each Investor in the Offering (the "Warrant Shares"). The Offering closed on May 11, 2017. The Company issued a total of 8,461,538 Shares and 2,538,462 Warrants to purchase up to 2,538,462 shares of the Company s common stock, for total gross proceeds of $3,300,000. Shares Issued for Services In connection with the Exchange Agreement and the Offering, the Company issued to certain consultants an aggregate of 3,000,000 shares of common stock and warrants to purchase up to an aggregate of 500,000 shares of common stock at an exercise price of $0.50 per share for a period of three (3) years from the date of issuance. Recent Developments Healing Herbs Dispensary On December 27, 2017, the Company, through 1493, entered into a final purchasing agreement with Healing Herbs Corporation, a corporation organized under the laws of the Commonwealth of Puerto Rico ("HHC"), pursuant to which 1493 acquired all of the legal rights, permits, licenses, leading contracts and assets pertaining to a medical marijuana dispensary in Hato Rey, San Juan (the "Hato Rey Dispensary"), in exchange for $128,000 cash consideration. The Hato Rey Dispensary was pre-qualified by the DHPR on October 24, 2016, and it will not be fully licensed until the DHPR issues the requisite operating permit. On the same date and in connection with the agreement, 1493, HHC and the landlord of the location of the Hato Rey Dispensary entered into an assignment of lease, which transfers and/or assigns the rights under the lease agreement for the location of the Hato Rey Dispensary to 1493. HHC entered into such lease agreement with the landlord on October 6, 2016, to lease approximately 1,150 square feet. The lease is for a term of three (3) years, commencing on November 1, 2016, with an option to renew as well as the first option to purchase the property should the landlord choose to sell it. The lease payments for such location are $1,600 per month, with an increase of 5% every two years. In addition, the tenant must maintain public liability insurance which shall include the landlord for up to $1,000,000. December Offering On December 28, 2017, the Company entered into a subscription agreement (the "December Agreement") with selected accredited investors (each, an "Investor" and, collectively, the "Investors"). Pursuant to the terms of the December Agreement, the Company offered in a private placement (the "December Offering") up to Five Million Dollars ($5,000,000) of shares of its Common Stock. The Offering closed on December 28, 2017. The Company issued a total of 7,075,293 shares of Common Stock for total gross proceeds of $5,000,000. Board Advisory Consultant Effective December 28, 2017, the Company appointed Alexander Zhilenkov as a board advisory consultant of the Company. In this capacity, Mr. Zhilenkov will provide support and strategic advice to the Company in identifying new business opportunities and expanding its operations geographically. In consideration for the services to be provided, the Company agreed to issue Mr. Zhilenkov an aggregate of 2,358,431 shares of common stock, par value $0.001 per share, payable annually over a three-year period, subject to continuous service as a board advisory consultant. The annual fee is subject to vesting as follows: (i) one-third on December 28, 2017; (ii) one-third on December 28, 2018; and (iii) one-third on December 28, 2019. In connection with the foregoing issuances, the Company relied upon the exemption from securities registration provided by Section 4(a)(2) under the Securities Act of 1933, as amended (the "Securities Act") for transactions not involving a public offering. The Offering Common Stock offered by selling stockholders: 9,331,437 shares of our common stock Common Stock outstanding before and after the offering: 41,027,870 shares (1) Use of proceeds: We will not receive any proceeds from the sale of shares of our Common Stock by the Selling Stockholders pursuant to this prospectus. Terms of the Offering: The Selling Stockholders will determine when and how they will sell the common stock offered in this prospectus. Risk Factors: You should carefully consider the information set forth in this prospectus and, in particular, the specific factors set forth in the "Risk Factors" section beginning on page 7 of this prospectus before deciding whether or not to invest in our Common Stock. OTC Pink Trading Symbol: GSRX (1) Based on the total number of shares of Common Stock issued and outstanding as of January 22, 2018. Business Address and Telephone Number Our address is Cond. Madrid Suite 304, 1760 Loiza Street, San Juan, Puerto Rico 00911, and our telephone number at such address is (787) 641-8447. SPECIAL
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diff --git a/parsed_sections/prospectus_summary/2018/CIK0001381871_bowmo-inc_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001381871_bowmo-inc_prospectus_summary.txt
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+PROSPECTUS SUMMARY 1 RISK FACTORS 3 CAUTIONARY STATEMENT ON FORWARD-LOOKING STATEMENTS 9 USE OF PROCEEDS 9 THE OFFERING 9 SELLING STOCKHOLDERS 12 PLAN OF DISTRIBUTION 13 DESCRIPTION OF SECURITIES 14 EXPERTS 20 LEGAL MATTERS 20 INTERESTS OF NAMED EXPERTS AND COUNSEL 20 BUSINESS 20 LEGAL PROCEEDINGS 25 MARKET PRICE OF AND DIVIDENDS ON OUR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS 26 MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 27 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE 30 DIRECTORS AND EXECUTIVE OFFICERS 31 EXECUTIVE COMPENSATION 33 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 34 TRANSACTIONS WITH RELATED PERSONS, PROMOTERS AND CERTAIN CONTROL PERSONS AND CORPORATE GOVERNANCE 35 WHERE YOU CAN FIND MORE INFORMATION 35 DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES 35 INDEX TO FINANCIAL STATEMENTS F-1 You should rely only on the information contained in this prospectus or in any free writing prospectus we may authorize to be delivered or made available to you. We have not authorized anyone to provide you with different information. We are offering to sell, and seeking offers to buy, shares of common stock only in jurisdictions where offers and sales are permitted. The information in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of shares of our common stock. Our business, financial condition, operating results and prospects may have changed since that date. Cruzani, Inc., the Cruzani logo, and other trademarks or service marks of Cruzani, Inc. appearing in this prospectus are the property of Cruzani, Inc. This prospectus also includes trademarks, tradenames and service marks that are the property of other organizations. Solely for convenience, trademarks and tradenames referred to in this prospectus appear without the and symbols, but those references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights, or that the applicable owner will not assert its rights, to these trademarks and tradenames. Table of Contents PROSPECTUS SUMMARY The following summary highlights information contained elsewhere in this prospectus and does not contain all of the information that you should consider in making your investment decision in our common stock. Before investing in our common stock, you should carefully read this entire prospectus, including our financial statements and the related notes included in this prospectus and the information set forth under the headings "Risk Factors" and "Management s Discussion and Analysis of Financial Condition and Results of Operations." As used in this prospectus, unless the context otherwise requires, references to "we," "us," "our," "Company," "Cruzani" refer to Cruzani, Inc., together with its subsidiaries. Our Business Cruzani, Inc. is a franchise development company that builds and represents popular franchise concepts, and other related businesses, throughout the United States as well as international markets. Cruzani, Inc. was originally formed as a limited liability company on February 5, 1999 under the name The Powerhouse, L.L.C. pursuant to the laws of the State of Oklahoma. On November 9, 2006, Powerhouse Productions, L.L.C. filed Articles of Conversion changing the entity from a limited liability company to a corporation under the name Harcom Productions, Inc. On January 25, 2010, Articles of Merger were filed with the State of Oklahoma merging U.S. Highland, Inc., an Oklahoma corporation into Harcom Productions, Inc. and the name of the corporation was changed to US Highland, Inc. US Highland, Inc. was a recreational power sports Original Equipment Manufacturer ("OEM"), developing motorcycles, quads, single cylinder engines, and v-twin engines under its own brand and for other OEMs. During 2017, the Company exited the recreational power sports OEM and leisure activity vehicles markets. On June 29, 2018, the Company filed Amended and Restated Articles of Incorporation with the State of Nevada to change its name to Cruzani, Inc. The name change is subject to approval by the Financial Industry Regulatory Authority (known as "FINRA") to reflect the Company s change of its business direction. Supreme Sweets Acquisition Corp., a subsidiary of the Company, was renamed Oventa, Inc. ("Oventa"). Oventa operates in a 39,000 sq. foot, commercial bakery located in Toronto, Ontario, Canada, which was established in March 2015 by Mario Parravano and Barbara Parravano (collectively, the "Founders"). The Founders have been a successful and innovative force in the baked goods industry since the early 1980 s. Oventa is operating and ideally situated in west-end Toronto at the junction of two major Toronto highways, fronting the Q.E.W. corridor, 10 minutes from downtown Toronto, and only 10 minutes from Pearson International Airport. Oventa s high speed bread, pastry and donut lines, spiral and walk-in coolers and freezers, tunnel, revolving, and deck ovens, and equipment to produce virtually any bakery or snack product are in place and operational. There is considerable room to expand on the property. The current gross annual revenue for Oventa is approximately CAD $1 million. Oventa services local coffee shops and manufactures private label products for customers in Canada and the U.S. Oventa will be the second, major operational focus of the Company. The acquisition of Oventa is in addition to the acquisition of TruFood Provisions Co., which is being rebranded and will launch in 2019. Additionally, on September 7, 2018, the Company entered into a binding letter of intent (the "LOI") with Recipe Food Co. ("RFC") for the proposed acquisition by the Company of 80% of the shares of common stock of RFC on a fully-diluted basis (the "Acquisition"). Our principal executive office is located at 3500 Lennox Road, Suite 1500, Atlanta, GA 30309. Our telephone number is (404) 419-2253 and our website is www.cruzani.com. Unless expressly noted, none of the information on our website is part of this prospectus or any prospectus supplement. Our common stock is quoted on the OTC Marketplace operated by the OTC Markets Group, Inc., or "OTC," under the ticker symbol "CZNI." CALCULATION OF REGISTRATION FEE Title of Each Class of Securities to be Registered Amount to be Registered (1) Proposed Maximum Offering Price Per Share (3)(4) Proposed Maximum Aggregate Offering Price Amount of Registration Fee Common Stock, $0.00001 par value per share 22,500,000 $ 0.009 $ 202,500 $ 24.54 Total: 22,500,000 0.009 $ 202,500 $ 24.54 (4) (1) An indeterminate number of additional shares of common stock shall be issuable pursuant to Rule 416 under the Securities Act of 1933, as amended (the "Securities Act") to prevent dilution resulting from stock splits, stock dividends or similar transactions and in such an event the number of shares registered shall automatically be increased to cover the additional shares in accordance with Rule 416. The amount of shares of common stock to be registered reflects the assumed 1-for-20 reverse stock split of our common stock, which will be effected prior to the effectiveness of this registration statement. (2) Estimated solely for the purpose of calculating the amount of the registration fee in accordance with Rule 457(c) under the Securities Act. (3) Based on the average of the high and low sales prices for the registrant s common stock on November 29, 2018, adjusted to reflect the assumed 1-for-20 reverse stock split of our common stock, which will be effected prior to the effectiveness of this registration statement. (4) $54.11 previously paid. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission acting pursuant to said Section 8(a), may determine. Table of Contents OFFERING SUMMARY Common stock that may be offered by selling stockholders 22,500,000 shares (1) Common stock outstanding before this offering 68,441,657 shares (1) Common stock to be outstanding after this offering 90,941,657 shares (1)(2) Use of proceeds We will not receive any proceeds from the resale or other disposition of the shares covered by this prospectus by the selling stockholders. We will receive proceeds from the sale of shares to L2 Capital. L2 Capital has committed to purchase up to $5,000,000 worth of shares of our common stock over a period of time terminating on the earlier of (i) the date on which L2 Capital shall have purchased shares under the Equity Purchase Agreement for an aggregate purchase price of $5,000,000, (ii) July 23, 2020, or (iii) written notice of termination by the Company to L2 Capital (which shall not occur at any time that L2 Capital holds any of the Put Shares). L2 Capital will pay a purchase price equal to 85% of the "Market Price," which is defined as the lowest one (1) traded price of the common stock on the OTC Marketplace, as reported by Bloomberg Finance L.P., during the five consecutive trading days following the date on which the put shares are delivered to L2 Capital (the "Clearing Date"), or beginning on the Clearing Date if the respective Put Shares are received as DWAC Shares in L2 Capital s brokerage account prior to 11:00 a.m. ET (the "Valuation Period"). In order to exercise the put, certain conditions must be met at each put notice date including, but not limited to: (i) we must have an effective registration statement, (ii) our common stock must be deposit/withdrawal at custodian ("DWAC") eligible, (iii) the minimum price must exceed $0.0005, and (iv) the number of shares to be purchased by L2 Capital may not exceed the number of shares that, when added to the number of shares of our common stock then beneficially owned by L2 Capital, would exceed 9.99% of our shares of common stock outstanding. For further information, see "The Offering" beginning on page 9. Plan of Distribution The selling stockholders may, from time to time, sell any or all of their shares of common stock on the stock exchange, market or trading facility on which the shares are traded or in private transactions. These sales may be at fixed or negotiated prices. For further information, see "Plan of Distribution" beginning on page 13. Risk factors You should read the "Risk Factors" section of this prospectus and the other information in this prospectus for a discussion of factors to consider carefully before deciding to invest in shares of our common stock. (1) Adjusted to reflect the assumed 1-for-20 reverse stock split of our common stock, which will be effected prior to the effectiveness of this registration statement. (2) Assumes the issuance of 22,500,000 shares offered hereby that are issuable under our Equity Purchase Agreement with L2 Capital. The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED DECEMBER 6, 2018 PRELIMINARY PROSPECTUS Cruzani, Inc. 22,500,000 Shares of Common Stock This prospectus relates to the offer and resale of up to 22,500,000 shares of our common stock, par value $0.00001 per share, by the selling stockholder identified on page 12. If issued presently, the 22,500,000 shares of common stock registered for resale by L2 Capital would represent approximately 25% of our issued and outstanding shares of common stock as of November 29, 2018. Additionally, the 22,500,000 shares of our common stock registered for resale herein would represent approximately 26% of the Company s public float. The shares of Common Stock being registered hereunder represent shares that L2 Capital, LLC ("L2 Capital") has agreed to purchase from us pursuant to the terms and conditions of an Equity Purchase Agreement we entered into with them on July 23, 2018 (the "Equity Purchase Agreement"). Subject to the terms and conditions of the Equity Purchase Agreement, we have the right to "put," or sell, up to $5,000,000 worth of shares of our common stock to L2 Capital. This arrangement is also sometimes referred to herein as the "Equity Line." For more information about the selling stockholder, please see the section of this prospectus entitled "Selling Stockholders" beginning on page 12. The selling stockholders may sell any shares offered under this prospectus at fixed prices, prevailing market prices at the time of sale, at varying prices or negotiated prices. L2 Capital is an "underwriter" within the meaning of the Securities Act of 1933, as amended (the "Securities Act"), in connection with the resale of our common stock under the Equity Line, and any broker-dealers or agents that are involved in such resales may be deemed to be "underwriters" within the meaning of the Securities Act in connection therewith. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. For more information, please see the section of this prospectus titled "Plan of Distribution" beginning on page 13. We will not receive any proceeds from the sale of the shares of our common stock by L2 Capital. However, we will receive proceeds from our initial sale of shares to L2 Capital pursuant to the Equity Purchase Agreement. We will sell shares to L2 at a price equal to 85% of the lowest one (1) traded price of the common stock on the OTC Marketplace, as reported by Bloomberg Finance L.P., during the five consecutive trading days following the date on which the put shares are delivered to L2 Capital (the "Clearing Date"), or beginning on the Clearing Date if the respective Put Shares are received as DWAC Shares in L2 Capital s brokerage account prior to 11:00 a.m. ET (the (the "Market Price"). There will be a minimum of ten (10) trading days between purchases. Our common stock is quoted on the OTC Marketplace operated by the OTC Markets Group, Inc., or "OTC," under the ticker symbol "CZNI." On November 29, 2018, the average of the high and low sales prices of our common stock was $0.045 per share, adjusted to reflect the assumed 1-for-20 reverse stock split of our common stock, which will be effected prior to the effectiveness of this registration statement. We will be applying to have our securities quoted on the OTCQB marketplace, which will be effected prior to the effectiveness of this registration statement. Investing in our common stock involves risks that are described in the "Risk Factors" section beginning on page 3 of this prospectus. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The date of this prospectus is December 6, 2018. Table of Contents RISK FACTORS Investing in our common stock involves a high degree of risk. You should carefully consider the risks described below, as well as the other information in this prospectus, including our financial statements and the related notes and "Management s Discussion and Analysis of Financial Condition and Results of Operations," before deciding whether to invest in our common stock. The occurrence of any of the events or developments described below could harm our business, financial condition, operating results, and growth prospects. In such an event, the market price of our common stock could decline, and you may lose all or part of your investment. Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our business operations. Risks Related to Our Business Our operating and financial results and growth strategies are closely tied to the success of our franchise concepts. Substantially all of our operations are tied to our franchise concepts which makes us dependent on the financial success and cooperation of our franchise partners. If a significant franchise concept or a significant number of our franchise partners become financially distressed, our operating and financial results could be impacted through reduced or delayed revenues. Our success also depends on the willingness and ability of our franchise partners to implement major initiatives, which may include financial investment. Our franchise partners may be unable to successfully implement strategies that we believe are necessary for their further growth, which in turn may harm the growth prospects and financial condition of the company. Additionally, the failure of our franchise partners to focus on the fundamentals of restaurant operations or food production could have a negative impact on our business. If we fail to identify, recruit and contract with a sufficient number of qualified franchise concepts, our ability to pursue and build new franchise concepts and increase our revenues could be materially adversely affected. The opening of additional franchise concepts depends, in part, upon the availability of prospective concepts who meet our criteria. Our growth strategy requires us to identify, recruit and contract with a growing number of new franchise concepts. We may not be able to identify, recruit or contract with suitable franchises in our target markets on a timely basis or at all. If we are unable to recruit suitable concepts or if such suitable franchises are unable or unwilling to open new restaurants as planned, our growth may be slower than anticipated, which could materially adversely affect our ability to increase our revenues and materially adversely affect our business, financial condition and results of operations. We may experience difficulties in integrating acquired businesses with our existing business. The completed and pending acquisitions of TruFood and Oventa involve the integration of these brands and their related operations with our existing business and financial accounting and reporting systems. The difficulties of integration include: coordinating and consolidating geographically separated systems and facilities; integrating the management and personnel of the acquired brands, maintaining employee morale and retaining key employees; implementing our management information systems and financial accounting and reporting systems; establishing and maintaining effective internal control over financial reporting; and implementing operational procedures and disciplines to control costs and increase profitability. The process of integrating operations could cause an interruption of, or loss of momentum in, the activities of our business and that of our acquired franchise concepts, and the loss of key personnel. The diversion of management s attention and any delays or difficulties encountered in connection with the acquisition and the integration of the these operations could have an adverse effect on our business, results of operations and financial condition after the acquisition. Table of Contents Achieving the anticipated benefits of these acquisitions will depend in part upon whether we can integrate them in an efficient and effective manner. We may not accomplish this integration process smoothly or successfully. If management is unable to successfully integrate the acquired brands, the anticipated benefits of the acquisition may not be realized. Our strategy includes pursuing opportunistic acquisitions of additional franchise concepts, and we may not find suitable acquisition candidates or successfully operate or integrate any brands that we may acquire. As part of our strategy, we intend to opportunistically acquire new franchises and restaurant concepts. Although we believe that opportunities for future acquisitions may be available from time to time, competition for acquisition candidates may exist or increase in the future. Consequently, there may be fewer acquisition opportunities available to us as well as higher acquisition prices. There can be no assurance that we will be able to identify, acquire, manage or successfully integrate additional franchises or restaurant concepts without substantial costs, delays or operational or financial problems. In the event we are able to acquire additional franchises or restaurant concepts, the integration and operation of such acquisitions may place significant demands on our management, which could adversely affect our ability to manage our existing restaurant concepts. We may be required to obtain additional financing to fund future acquisitions. There can be no assurance that we will be able to obtain additional financing on acceptable terms or at all. We may not achieve our target development goals and the addition of new franchise concepts may not be profitable. Our growth strategy depends in part on our ability to add franchise concepts. The successful development and retention of new franchise concepts depends in large part on our ability to attract capital and the ability of our franchise concepts to operate these concepts profitably. We cannot guarantee that we or our current or future franchise partners will be able to achieve our expansion goals or that new concepts will be operated profitably. Further, there is no assurance that any new franchise concept will produce operating results similar to our expectations. Failure to protect our service marks or other intellectual property could harm our business. We regard our service marks and trademarks related to our franchise concepts, as having tangible value and being important to our marketing efforts. We rely on a combination of protections provided by contracts, copyrights, patents, trademarks, service marks and other common law rights, such as trade secret and unfair competition laws, to protect our franchise concepts and related businesses from infringement. Effective intellectual property protection may not be available in every country in which our franchise concepts operate or intend to operate. There can be no assurance that these protections will be adequate and defending or enforcing our service marks and other intellectual property could result in the expenditure of significant resources. We may also face claims of infringement that could interfere with the use of the proprietary knowhow, concepts, recipes, or trade secrets used in our businesses. Defending against such claims may be costly, and we may be prohibited from using such proprietary information in the future or forced to pay damages, royalties, or other fees for using such proprietary information, any of which could negatively affect our business, reputation, financial condition, and results of operations. If our franchise concepts are unable to protect their customers credit card data and other personal information, our franchise concepts could be exposed to data loss, litigation, and liability, and our reputation could be significantly harmed. Privacy protection is increasingly demanding, and the use of electronic payment methods and collection of other personal information expose our franchise concepts to increased risk of privacy and/or security breaches as well as other risks. The majority of our restaurant sales are by credit or debit cards. In connection with credit or debit card transactions in-restaurant, our franchise concepts collect and transmit confidential information by way of secure private retail networks. Additionally, our franchises collect and store personal information from individuals, including their customers and employees. Although our franchises use secure private networks to transmit confidential information and debit card sales, our security measures and those of technology vendors may not effectively prohibit others from obtaining improper access to this information. The techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently and are often difficult to detect for long periods of time, which may cause a breach to go undetected for an extensive period of time. Advances in computer and software capabilities, new tools, and other developments may increase the risk of such a breach. Further, the systems currently used for transmission and approval of electronic payment transactions, and the technology utilized in electronic payment themselves, all of which can put electronic payment at risk, are determined and controlled by the payment card industry, not by us. Our franchises must abide by the payment card industry standards, as modified from time to time, in order to accept electronic payment transactions. Table of Contents If a person is able to circumvent our franchises security measures or those of third parties, he or she could destroy or steal valuable information or disrupt our operations. Our franchises may become subject to claims for purportedly fraudulent transactions arising out of the actual or alleged theft of credit or debit card information, and our franchises may also be subject to lawsuits or other proceedings relating to these types of incidents. Any such claim or proceeding could cause our franchises to incur significant unplanned expenses, which could have an adverse impact on our financial condition, results of operations and cash flows. We and our franchise concepts rely on computer systems to process transactions and manage our business, and a disruption or a failure of such systems or technology could harm our ability to effectively manage our business. Network and information technology systems are integral to our business. Our operations depend upon our ability to protect our computer equipment and systems against damage from physical theft, fire, power loss, telecommunications failure or other catastrophic events, as well as from internal and external security breaches, viruses, worms and other disruptive problems. Any damage or failure of our computer systems or network infrastructure that causes an interruption in our operations could have a material adverse effect on our business and subject us to litigation or actions by regulatory authorities. Despite the implementation of protective measures, our systems are subject to damage and/or interruption as a result of power outages, computer and network failures, computer viruses and other disruptive software, security breaches, catastrophic events, and improper usage by employees. Such events could result in a material disruption in operations, a need for a costly repair, upgrade or replacement of systems, or a decrease in, or in the collection of, royalties and advertising fund contributions paid to us by our franchisees. To the extent that any disruption or security breach were to result in a loss of, or damage to, our data or applications, or inappropriate disclosure of confidential or proprietary information, we could incur liability which could materially affect our results of operations. It is also critical that we establish and maintain certain licensing and software agreements for the software we use in our day-to-day operations. A failure to procure or maintain these licenses could have a material adverse effect on our business operations. The retail food industry in which we operate is highly competitive. The retail food industry in which our franchise concepts operate is highly competitive with respect to price and quality of food products, new product development, advertising levels and promotional initiatives, customer service, reputation, restaurant location, and attractiveness and maintenance of properties. If consumer or dietary preferences change, if our marketing efforts are unsuccessful, or if our franchise concepts are unable to compete successfully with other retail food outlets in new and existing markets, our business could be adversely affected. We also face growing competition as a result of convergence in grocery, convenience, deli and restaurant services. Competition from delivery aggregators and other food delivery services has also increased in recent years, particularly in urbanized areas. Increased competition could have an adverse effect on our sales, profitability or development plans, which could harm our financial condition and operating results. Shortages or interruptions in the availability and delivery of food and other supplies may increase costs or reduce revenues. The food products sold by our franchises are sourced from a variety of domestic and international suppliers. We, along with our franchises, are also dependent upon third parties to make frequent deliveries of food products and supplies that meet our specifications at competitive prices. Shortages or interruptions in the supply of food items and other supplies to our franchises restaurants and customers could adversely affect the availability, quality and cost of items we use and the operations of our franchises restaurants. Such shortages or disruptions could be caused by inclement weather, natural disasters, increased demand, problems in production or distribution, restrictions on imports or exports, the inability of vendors to obtain credit, political instability in the countries in which suppliers and distributors are located, the financial instability of suppliers and distributors, suppliers or distributors failure to meet our standards, product quality issues, inflation, the price of gasoline, other factors relating to the suppliers and distributors and the countries in which they are located, food safety warnings or advisories or the prospect of such pronouncements, the cancellation of supply or distribution agreements or an inability to renew such arrangements or to find replacements on commercially reasonable terms, or other conditions beyond our control or the control of our franchisees. An increase in food prices may have an adverse impact on our franchise concepts profit margins. Our franchise concepts depend on reliable sources of large quantities of raw materials such as protein (including beef and poultry), cheese, oil, flour (for baked goods and other desserts) and vegetables (including potatoes and lettuce). Raw materials purchased for use in our franchises are subject to price volatility caused by any fluctuation in aggregate supply and demand, or other external conditions, such as weather conditions or natural events or disasters that affect expected harvests of such raw materials. As a result, the historical prices of raw materials used in the operation of our franchise concepts have fluctuated. We cannot assure you that our franchise concepts will continue to be able to purchase raw materials at reasonable prices, or that prices of raw materials will remain stable in the future. Table of Contents We depend on key executive management. We depend on the leadership and experience of our relatively small number of key executive management personnel, and in particular key executive management, particularly our Chief Executive Officer, Everett M. Dickson. The loss of the services of any of our executive management members could have a material adverse effect on our business and prospects, as we may not be able to find suitable individuals to replace such personnel on a timely basis or without incurring increased costs, or at all. We do not maintain key man life insurance policies on any of our executive officers. We believe that our future success will depend on our continued ability to attract and retain highly skilled and qualified personnel. There is a high level of competition for experienced, successful personnel in our industry. Our inability to meet our executive staffing requirements in the future could impair our growth and harm our business. We could be party to litigation that could adversely affect us by increasing our expenses, diverting management attention or subjecting us to significant monetary damages and other remedies. We may become involved in legal proceedings involving consumer, employment, real estate related, tort, intellectual property, breach of contract, securities, derivative and other litigation. Plaintiffs in these types of lawsuits often seek recovery of very large or indeterminate amounts, and the magnitude of the potential loss relating to such lawsuits may not be accurately estimated. Regardless of whether any such claims have merit, or whether we are ultimately held liable or settle, such litigation may be expensive to defend and may divert resources and management attention away from our operations and negatively impact reported earnings. With respect to insured claims, a judgment for monetary damages in excess of any insurance coverage could adversely affect our financial condition or results of operations. Any adverse publicity resulting from these allegations may also adversely affect our reputation, which in turn could adversely affect our results of operations. In addition, the restaurant industry around the world has been subject to claims that relate to the nutritional content of food products, as well as claims that the menus and practices of franchise concepts have led to customer health issues, including weight gain and other adverse effects. These concerns could lead to an increase in the regulation of the content or marketing of our products. We may also be subject to such claims in the future and, even if we are not, publicity about these matters (particularly directed at the quick service and fast casual segments of the retail food industry) may harm our reputation and adversely affect our business, financial condition and results of operations. Risks Related to Our Common Stock Our common stock is thinly traded, and there is no guarantee of the prices at which the shares will trade. Trading of our common stock is conducted on the OTC Marketplace operated by the OTC Markets Group, Inc., or "OTC," under the ticker symbol "CZNI." Not being listed for trading on an established securities exchange has an adverse effect on the liquidity of our common stock, not only in terms of the number of shares that can be bought and sold at a given price, but also through delays in the timing of transactions and reduction in security analysts and the media s coverage of the Company. This may result in lower prices for your common stock than might otherwise be obtained and could also result in a larger spread between the bid and asked prices for our common stock. Historically, our common stock has been thinly traded, and there is no guarantee of the prices at which the shares will trade, or of the ability of stockholders to sell their shares without having an adverse effect on market prices. We have never paid dividends on our common stock and we do not anticipate paying any dividends in the foreseeable future. We have not paid dividends on our common stock to date, and we may not be in a position to pay dividends in the foreseeable future. Our ability to pay dividends depends on our ability to successfully develop our franchise concept business and generate revenue from future operations. Further, our initial earnings, if any, will likely be retained to finance our growth. Any future dividends will depend upon our earnings, our then-existing financial requirements and other factors and will be at the discretion of our Board of Directors. Because our common stock is a "penny stock," it may be difficult to sell shares of our common stock at times and prices that are acceptable. Our common stock is a "penny stock." Broker-dealers who sell penny stocks must provide purchasers of these stocks with a standardized risk disclosure document prepared by the SEC. This document provides information about penny stocks and the nature and level of risks involved in investing in the penny stock market. A broker must also give a purchaser, orally or in writing, bid and offer quotations and information regarding broker and salesperson compensation, make a written determination that the penny stock is a suitable investment for the purchaser, and obtain the purchaser s written agreement to the purchase. The penny stock rules may make it difficult for you to sell your shares of our common stock. Because of these rules, many brokers choose not to participate in penny stock transactions and there is less trading in penny stocks. Accordingly, you may not always be able to resell shares of our common stock publicly at times and prices that you feel are appropriate. Table of Contents In addition to the "penny stock" rules described above, FINRA has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer s financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common shares, which may limit your ability to buy and sell our stock and have an adverse effect on the market for our shares. Our management concluded that our internal control over financial reporting was not effective as of June 30, 2018. Compliance with public company regulatory requirements, including those relating to our internal control over financial reporting, have and will likely continue to result in significant expenses and, if we are unable to maintain effective internal control over financial reporting in the future, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our common stock may be negatively affected. As a public reporting company, we are subject to the Sarbanes-Oxley Act of 2002, or Sarbanes-Oxley, as well as to the information and reporting requirements of the Securities Exchange Act of 1934, as amended, or the Exchange Act, and other federal securities laws. As a result, we incur significant legal, accounting, and other expenses, including costs associated with our public company reporting requirements and corporate governance requirements. As an example of public reporting company requirements, we evaluate the effectiveness of disclosure controls and procedures and of our internal control over financing reporting in order to allow management to report on such controls. Our management concluded that our internal control over financial reporting was not effective as of June 30, 2018 due to various inherent limitations, including cost limitations, judgments used in decision making, assumptions about the likelihood of future events, the soundness of our systems, the possibility of human error, and the risk of fraud. If significant deficiencies or other material weaknesses are identified in our internal control over financial reporting that we cannot remediate in a timely manner, investors and others may lose confidence in the reliability of our financial statements and the trading price of our common stock and ability to obtain any necessary equity or debt financing could suffer. This would likely have an adverse effect on the trading price of our common stock and our ability to secure any necessary additional equity or debt financing. Risks Relating to our Equity Line with L2 Capital Resales of shares purchased by L2 Capital under the Equity Purchase Agreement may cause the market price of our common stock to decline. Subject to the terms and conditions of the Equity Purchase Agreement, we have the right to "put," or sell, up to $5,000,000 worth of shares of our common stock to L2 Capital. Unless terminated earlier, L2 Capital s purchase commitment will automatically terminate on the earlier of (i) the date on which L2 Capital shall have purchased shares under the Equity Purchase Agreement for an aggregate purchase price of $5,000,000, (ii) July 23, 2020, or (iii) written notice of termination by the Company to L2 Capital (which shall not occur at any time that L2 Capital holds any of the Put Shares). This arrangement is also sometimes referred to herein as the "Equity Line." The common stock to be issued to L2 Capital pursuant to the Equity Purchase Agreement will be purchased at a price equal to L2 Capital will pay a purchase price equal to 85% of the "Market Price," which is defined as the lowest one (1) traded price of the common stock on the OTC Marketplace, as reported by Bloomberg Finance L.P., during the five consecutive trading days following the date on which the put shares are delivered to L2 Capital (the "Clearing Date"), or beginning on the Clearing Date if the respective Put Shares are received as DWAC Shares in L2 Capital s brokerage account prior to 11:00 a.m. ET (the "Valuation Period"). L2 Capital will have the financial incentive to sell the shares of our common stock issuable under the Equity Purchase Agreement in advance of or upon receiving such shares and to realize the profit equal to the difference between the discounted price and the current market price of the shares. This may cause the market price of our common stock to decline. The foregoing description of the terms of the Equity Purchase Agreement does not purport to be complete and is subject to and qualified in its entirety by reference to the Equity Purchase Agreement itself. Table of Contents Puts under Equity Purchase Agreement may cause dilution to existing stockholders. From time to time during the term of the Equity Purchase Agreement, and at our sole discretion, we may present L2 Capital with a put notice requiring L2 Capital to purchase shares of our common stock. As a result, our existing stockholders will experience immediate dilution upon the purchase of any of the shares by L2 Capital. L2 Capital may resell some, if not all, of the shares that we issue to it under the Equity Purchase Agreement and such sales could cause the market price of our common stock to decline significantly. To the extent of any such decline, any subsequent puts would require us to issue and sell a greater number of shares to L2 Capital in exchange for each dollar of the put amount. Under these circumstances, the existing stockholders of our company will experience greater dilution. The effect of this dilution may, in turn, cause the price of our common stock to decrease further, both because of the downward pressure on the stock price that would be caused by a large number of sales of our shares into the public market by L2 Capital, and because our existing stockholders may disagree with a decision to sell shares to L2 Capital at a time when our stock price is low, and may in response decide to sell additional shares, further decreasing our stock price. If we draw down amounts under the Equity Line when our share price is decreasing, we will need to issue more shares to raise the same amount of funding. There is no guarantee that we will satisfy the conditions to the Equity Purchase Agreement. Although the Equity Purchase Agreement provides that we can require L2 Capital to purchase, at our discretion, up to $5,000,000 worth of shares of our common stock in the aggregate, our ability to put shares to L2 Capital and obtain funds when requested is limited by the terms and conditions of the Equity Purchase Agreement, including restrictions on when we may exercise our put rights, restrictions on the amount we may put to L2 Capital at any one time, which is determined in part by the trading volume of our common stock, and a limitation on our ability to put shares to L2 Capital to the extent that it would cause L2 Capital to beneficially own more than 9.99% of the outstanding shares of our common stock. We may not have access to the full amount available under the Equity Purchase Agreement with L2 Capital. Our ability to draw down funds and sell shares under the Equity Purchase Agreement requires that a registration statement be declared effective and continue to be effective registering the resale of shares issuable under the Equity Purchase Agreement. The registration statement of which this prospectus is a part registers the resale of 22,500,000 shares of our common stock issuable under the Equity Line. Our ability to sell any additional shares under the Equity Purchase Agreement will be contingent on our ability to prepare and file one or more additional registration statements registering the resale of such additional shares. These registration statements (and any post-effective amendments thereto) may be subject to review and comment by the staff of the Securities and Exchange Commission, and will require the consent of our independent registered public accounting firm. Therefore, the timing of effectiveness of these registration statements (and any post-effective amendments thereto) cannot be assured. Even if we are successful in causing one or more registration statements registering the resale of some or all of the shares issuable under the Equity Purchase Agreement to be declared effective by the Securities and Exchange Commission in a timely manner, we may not be able to sell the shares unless certain other conditions are met. For example, we might have to increase the number of our authorized shares in order to issue the shares to L2 Capital. Increasing the number of our authorized shares will require board and stockholder approval. Accordingly, because our ability to draw down any amounts under the Equity Purchase Agreement with L2 Capital is subject to a number of conditions, there is no guarantee that we will be able to draw down all of the proceeds of $5,000,000 under the Equity Purchase Agreement. Table of Contents CAUTIONARY STATEMENT ON FORWARD-LOOKING STATEMENTS This prospectus may contain certain "forward-looking" statements as such term is defined by the Securities and Exchange Commission in its rules, regulations and releases, which represent the registrant s expectations or beliefs, including but not limited to, statements concerning the registrant s operations, economic performance, financial condition, growth and acquisition strategies, investments, and future operational plans. For this purpose, any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the generality of the foregoing, words such as "may," "will," "expect," "believe," "anticipate," "intent," "could," "estimate," "might," "plan," "predict" or "continue" or the negative or other variations thereof or comparable terminology are intended to identify forward-looking statements. These statements by their nature involve substantial risks and uncertainties, certain of which are beyond the registrant s control, and actual results may differ materially depending on a variety of important factors, including uncertainty related to acquisitions, governmental regulation, managing growth, the operations of the company, volatility of stock price, commercial viability of our business and any other factors discussed in this and other registrant filings with the Securities and Exchange Commission. These risks and uncertainties and other factors include, but are not limited to those set forth under "Risk Factors" of this prospectus. Given these risks and uncertainties, readers are cautioned not to place undue reliance on our forward-looking statements. All subsequent written and oral forward-looking statements attributable to us or to persons acting on our behalf are expressly qualified in their entirety by these cautionary statements. Except as otherwise required by applicable law, we undertake no obligation to publicly update or revise any forward-looking statements or the risk factors described in this prospectus or in the documents we incorporate by reference, whether as a result of new information, future events, changed circumstances or any other reason after the date of this prospectus. Actual events or results may differ materially from those discussed in forward-looking statements as a result of various factors, including, without limitation, the risks outlined under "Risk Factors" and matters described in prospectus generally. In light of these risks and uncertainties, there can be no assurance that the forward-looking statements contained in this prospectus will in fact occur. We caution you not to place undue reliance on these forward-looking statements. In addition to the information expressly required to be included in this prospectus, we will provide such further material information, if any, as may be necessary to make the required statements, in light of the circumstances under which they are made, not misleading. These
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+PROSPECTUS SUMMARY 1
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+This summary of material information contained or incorporated by reference in this Prospectus is intended for quick reference only and does not contain all of the information that may be important to you. For ease of reference, any references throughout this Prospectus to various actions taken by each of the Funds are actually actions that the Trust has taken on behalf of such respective Funds. The remainder of this Prospectus contains more detailed information. You should read the entire Prospectus, including the information incorporated by reference in this Prospectus, before deciding whether to invest in Shares of any Fund. Please see the section Incorporation by Reference of Certain Documents for information on how you can obtain the information that is incorporated by reference in this Prospectus. This Prospectus is dated November 15, 2018. The Trust and the Funds Invesco DB Multi-Sector Commodity Trust (the Trust ) was formed as a Delaware statutory trust, in seven separate series ( Funds ) on August 3, 2006. Each Fund issues common units of beneficial interest ( Shares ) which represent units of fractional undivided beneficial interest in and ownership of such Fund. The term of the Trust and each Fund is perpetual (unless terminated earlier in certain circumstances). The principal executive offices of the Trust and each Fund are located at c/o Invesco Capital Management LLC, 3500 Lacey Road, Suite 700, Downers Grove, IL 60515, and its telephone number is (800) 983-0903. As of the date of this Prospectus, the Trust consists of the following seven series Invesco DB Energy Fund, Invesco DB Oil Fund, Invesco DB Precious Metals Fund, Invesco DB Gold Fund, Invesco DB Silver Fund, Invesco DB Base Metals Fund and Invesco DB Agriculture Fund. This Prospectus is for each of the Funds listed in the prior sentence, except for Invesco DB Silver Fund and Invesco DB Agriculture Fund. Information regarding the offered Funds (including any other additional series of the Trust) and both Invesco DB Silver Fund and Invesco DB Agriculture Fund (neither of which is offered by this Prospectus) is available at www.invesco.com/ETFs. Shares Listed on the NYSE Arca The Shares of each Fund are listed on the NYSE Arca under the following symbols: Invesco DB Energy Fund DBE; Invesco DB Oil Fund DBO; Invesco DB Precious Metals Fund DBP; Invesco DB Gold Fund DGL; and Invesco DB Base Metals Fund DBB. Secondary market purchases and sales of Shares are subject to ordinary brokerage commissions and charges. Purchases and Sales in the Secondary Market on the NYSE Arca Individual Shares of each Fund may be purchased and sold only on the NYSE Arca. Because the Shares will trade at market prices, rather than the net asset value ( NAV ) of a Fund, Shares may trade at prices greater than NAV of such Fund (at a premium), at NAV, or less than NAV (at a discount). Baskets may be created or redeemed directly with each Fund only by Authorized Participants. It is expected that Baskets in a Fund will be created when the market price per Share in such Fund is at a premium to the NAV per Share. Similarly, it is expected that Baskets in a Fund will be redeemed when the market price per Share of such Fund is at a discount to the NAV per Share. Retail investors seeking to purchase or sell Shares on any day are expected to effect such transactions in the secondary market, on the NYSE Arca, at the market price per Share. The market price of the Shares of a Fund may not be identical to the NAV per Share, but these valuations are expected to be very close. Investors are able to use the intra-day indicative value ( IIV ) per Share to determine if they want to purchase in the secondary market via the NYSE Arca. The IIV per Share of each Fund is based on the prior day s final Table of Contents Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of large accelerated filer , accelerated filer , smaller reporting company and emerging growth company in Rule 12b-2 of the Exchange Act. (check one). Invesco DB Energy Fund Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company Emerging growth company If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. Invesco DB Oil Fund Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company Emerging growth company If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. Invesco DB Precious Metals Fund Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company Emerging growth company If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. Invesco DB Gold Fund Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company Emerging growth company If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. Invesco DB Base Metals Fund Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company Emerging growth company If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. CALCULATION OF REGISTRATION FEE Title of Securities being included in this registration statement Earlier Registration Statements Numbers Unsold Number of Shares from Earlier Registration Statement Offered1, Filing Fee paid for Unsold Shares1 Invesco DB Energy Fund Common Units of Beneficial Interest 333-209437-05 22,000,000 $31,635.25 Invesco DB Oil Fund Common Units of Beneficial Interest 333-209437-04 81,600,000 $75,270.06 Invesco DB Precious Metals Fund Common Units of Beneficial Interest 333-209437-01 22,400,000 $50,434.28 Invesco DB Gold Fund Common Units of Beneficial Interest 333-209437-02 15,400,000 $35,893.79 Invesco DB Base Metals Fund Common Units of Beneficial Interest 333-209437-03 27,000,000 $37,292.48 (1) Pursuant to the provisions of Rule 415(a)(6) under the Securities Act of 1933, as amended, the issuer is including on this new registration statement both the unsold Shares and the filing fees paid in connection with such unsold Shares that was covered by the earlier registration statements, as provided in the table above. The filing fees in the above table will continue to be applied to such unsold Shares. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. Table of Contents Shares will trade at market prices, rather than the NAV of each Fund, Shares may trade at prices greater than NAV (at a premium), at NAV, or less than NAV (at a discount). Authorized Participants will not receive from any Fund, the Managing Owner or any of their affiliates, any fee or other compensation in connection with their sale of Shares to the public. An Authorized Participant may receive commissions or fees from investors who purchase Shares through their commission or fee-based brokerage accounts. In addition, the Managing Owner pays a distribution services fee to Invesco Distributors, Inc. and pays a marketing services fee to Deutsche Investment Management Americas Inc. ( DIMA ) without reimbursement from the Trust or any Fund. For more information regarding items of compensation paid to Financial Industry Regulatory Authority, Inc. ( FINRA ) members, please see the Plan of Distribution section on page 128. These securities have not been approved or disapproved by the U.S Securities and Exchange Commission ( SEC ) or any state securities commission nor has the SEC or any state securities commission passed upon the accuracy or adequacy of this Prospectus. Any representation to the contrary is a criminal offense. None of the Funds is a mutual fund or any other type of investment company within the meaning of the Investment Company Act of 1940, as amended, and is not subject to regulation thereunder. THE COMMODITY FUTURES TRADING COMMISSION HAS NOT PASSED UPON THE MERITS OF PARTICIPATING IN THESE POOLS NOR HAS THE COMMISSION PASSED ON THE ADEQUACY OR ACCURACY OF THIS DISCLOSURE DOCUMENT. November 15, 2018 Table of Contents NAV, adjusted four times per minute throughout the trading day to reflect the price changes of the Fund s holdings. As a result, the IIV provides a continuously updated estimate of each Fund s NAV per Share. Retail investors may purchase and sell Shares through traditional brokerage accounts. Purchases or sales of Shares may be subject to brokerage commissions. Investors are encouraged to review the terms of their brokerage accounts for applicable charges. Pricing Information Available on the NYSE Arca and Other Sources The intra-day data, including the IIV, is published once every fifteen seconds throughout each trading day. The Index Sponsor (as defined herein) calculates and publishes the closing level of the Indexes daily. The Managing Owner publishes the NAV of each Fund and the NAV per Share of each Fund daily. All of the foregoing information is published as follows: Intra-Day Index Level Symbols and IIVs Per Share Symbols Invesco DB Energy Fund. The intra-day index level of the DBIQ-OY Energy ER is published under the symbol DBENIX. The IIV per Share of Invesco DB Energy Fund is published under the symbol DBE.IV. Invesco DB Oil Fund. The intra-day index level of the DBIQ-OY CL ER is published under the symbol DBOLIX. The IIV per Share of Invesco DB Oil Fund is published under the symbol DBO.IV. Invesco DB Precious Metals Fund. The intra-day index level of the DBIQ-OY Precious Metals ER is published under the symbol DBPMIX. The IIV per Share of Invesco DB Precious Metals Fund is published under the symbol DBP.IV. Invesco DB Gold Fund. The intra-day index level of the DBIQ-OY GC ER is published under the symbol DGLDIX. The IIV per Share of Invesco DB Gold Fund is published under the symbol DGL.IV. Invesco DB Base Metals Fund. The intra-day index level of the DBIQ-OY Industrial Metals ER is published under the symbol DBBMIX. The IIV per Share of Invesco DB Base Metals Fund is published under the symbol DBB.IV. The current trading price per Share of each Fund (quoted in U.S. dollars) is published continuously under its ticker symbol as trades occur throughout each trading day on the consolidated tape, Reuters and/or Bloomberg and on the Managing Owner s website at www. invesco.com/ETFs, or any successor thereto. The most recent end-of-day closing level of each Index is published under its own symbol as of the close of business for the NYSE Arca each trading day on the consolidated tape, Reuters and/or Bloomberg and on the Managing Owner s website at www.invesco.com/ETFs, or any successor thereto. The most recent end-of-day NAV of each Fund is published under its own symbol as of the close of business on Reuters and/or Bloomberg and on the Managing Owner s website at www.invesco.com/ETFs, or any successor thereto. In addition, the most recent end-of-day NAV of each Fund is published under its own symbol the following morning on the consolidated tape. End-of-Day Index Closing Level Symbols; End-of-Day NAV Symbols Invesco DB Energy Fund. The end-of-day closing level of the DBIQ-OY Energy ER is published under the symbol DBCMYEEN. The end-of-day NAV of Invesco DB Energy Fund is published under the symbol DBE.NV. Invesco DB Oil Fund. The end-of-day closing level of the DBIQ-OY CL ER is published under the symbol DBCMOCLE. The end-of-day NAV of Invesco DB Oil Fund is published under the symbol DBO.NV. Invesco DB Precious Metals Fund. The end-of-day closing level of the DBIQ-OY Precious Metals ER is published under the symbol Table of Contents COMMODITY FUTURES TRADING COMMISSION RISK DISCLOSURE STATEMENT YOU SHOULD CAREFULLY CONSIDER WHETHER YOUR FINANCIAL CONDITION PERMITS YOU TO PARTICIPATE IN A COMMODITY POOL. IN SO DOING, YOU SHOULD BE AWARE THAT COMMODITY INTEREST TRADING CAN QUICKLY LEAD TO LARGE LOSSES AS WELL AS GAINS. SUCH TRADING LOSSES CAN SHARPLY REDUCE THE NET ASSET VALUE OF THE POOL AND CONSEQUENTLY THE VALUE OF YOUR INTEREST IN THE POOL. IN ADDITION, RESTRICTIONS ON REDEMPTIONS MAY AFFECT YOUR ABILITY TO WITHDRAW YOUR PARTICIPATION IN THE POOL. FURTHER, COMMODITY POOLS MAY BE SUBJECT TO SUBSTANTIAL CHARGES FOR MANAGEMENT, AND ADVISORY AND BROKERAGE FEES. IT MAY BE NECESSARY FOR THOSE POOLS THAT ARE SUBJECT TO THESE CHARGES TO MAKE SUBSTANTIAL TRADING PROFITS TO AVOID DEPLETION OR EXHAUSTION OF THEIR ASSETS. THIS DISCLOSURE DOCUMENT CONTAINS A COMPLETE DESCRIPTION OF EACH EXPENSE TO BE CHARGED THESE POOLS AT PAGE 81 AND A STATEMENT OF THE PERCENTAGE RETURNS NECESSARY TO BREAK EVEN, THAT IS, TO RECOVER THE AMOUNT OF YOUR INITIAL INVESTMENT, AT PAGE 31. THIS BRIEF STATEMENT CANNOT DISCLOSE ALL THE RISKS AND OTHER FACTORS NECESSARY TO EVALUATE YOUR PARTICIPATION IN ANY OF THESE COMMODITY POOLS. THEREFORE, BEFORE YOU DECIDE TO PARTICIPATE IN ANY OF THESE COMMODITY POOLS, YOU SHOULD CAREFULLY STUDY THIS DISCLOSURE DOCUMENT, INCLUDING A DESCRIPTION OF THE PRINCIPAL RISK FACTORS OF THIS INVESTMENT, AT PAGES 15 THROUGH 29. YOU SHOULD ALSO BE AWARE THAT THIS COMMODITY POOL MAY TRADE FOREIGN FUTURES OR OPTIONS CONTRACTS. TRANSACTIONS ON MARKETS LOCATED OUTSIDE THE UNITED STATES, INCLUDING MARKETS FORMALLY LINKED TO A UNITED STATES MARKET, MAY BE SUBJECT TO REGULATIONS WHICH OFFER DIFFERENT OR DIMINISHED PROTECTION TO THE POOL AND ITS PARTICIPANTS. FURTHER, UNITED STATES REGULATORY AUTHORITIES MAY BE UNABLE TO COMPEL THE ENFORCEMENT OF THE RULES OF REGULATORY AUTHORITIES OR MARKETS IN NON-UNITED STATES JURISDICTIONS WHERE TRANSACTIONS FOR THE POOL MAY BE EFFECTED. THIS PROSPECTUS DOES NOT INCLUDE ALL OF THE INFORMATION OR EXHIBITS IN THE REGISTRATION STATEMENT OF THE TRUST OR FUNDS. YOU CAN READ AND COPY THE ENTIRE REGISTRATION STATEMENT AT THE PUBLIC REFERENCE FACILITIES MAINTAINED BY THE SEC IN WASHINGTON, D.C. THE FUNDS FILE QUARTERLY AND ANNUAL REPORTS WITH THE SEC. YOU CAN READ AND COPY THESE REPORTS AT THE SEC PUBLIC REFERENCE FACILITIES IN WASHINGTON, D.C. PLEASE CALL THE SEC AT 1-800-SEC-0330 FOR FURTHER INFORMATION. THE FILINGS OF THE TRUST AND FUNDS ARE POSTED AT THE SEC WEBSITE AT HTTP://WWW.SEC.GOV. REGULATORY NOTICES NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATION Table of Contents DBCMYEPM. The end-of-day NAV of Invesco DB Precious Metals Fund is published under the symbol DBP.NV. Invesco DB Gold Fund. The end-of-day closing level of the DBIQ-OY GC ER is published under the symbol DBCMOGCE. The end-of-day NAV of Invesco DB Gold Fund is published under the symbol DGL.NV. Invesco DB Base Metals Fund. The end-of-day closing level of the DBIQ-OY Industrial Metals ER is published under the symbol DBCMYEIM. The end-of-day NAV of Invesco DB Base Metals Fund is published under the symbol DBB.NV. All of the foregoing information with respect to each Index, including each Index s history, is also published at https://index.db.com. The Index Sponsor obtains information for inclusion in, or for use in the calculation of, the Indexes from sources the Index Sponsor considers reliable. None of the Index Sponsor, the Managing Owner, the Funds or any of their respective affiliates accepts responsibility for or guarantees the accuracy and/or completeness of any of the Indexes or any data included in any of the Indexes. Information on the Managing Owner s website shall not be deemed to be a part of this Prospectus or incorporated by reference herein unless otherwise expressly stated. CUSIP Numbers The CUSIP number of Invesco DB Energy Fund is 46140H304. The CUSIP number of Invesco DB Oil Fund is 46140H403. The CUSIP number of Invesco DB Precious Metals Fund is 46140H502. The CUSIP number of Invesco DB Gold Fund is 46140H601. The CUSIP number of Invesco DB Base Metals Fund is 46140H700.
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+S-1/A 1 consorteum_s1a2.htm FORM S-1 AMENDMENT 2 Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM S-1/A AMENDMENT NO. 2 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 CONSORTEUM HOLDINGS, INC. (Exact name of registrant as specified in its charter) Nevada 7829 45-2671583 (State or jurisdiction of incorporation or organization) Primary Standard Industrial Classification Code Number IRS Employer Identification Number 1870 The Exchange, Suite 100, Atlanta, Georgia 30339-2021 Telephone: (888) 603-5161 (Address and telephone number of principal executive offices) Resident Agency National Incorporated 4650 Wedekind Road, Suite 2 Sparks, NV 89431-7722 Telephone: 775-882-7549 (Name, address and telephone number of agent for service) with a copy to: Matheau J. W. Stout, Esq. 400 E. Pratt Street, 8 th Floor Baltimore, Maryland 21202 Telephone: (410) 429-7076 Facsimile: (888) 907-1740 Approximate date of proposed sale to the public: as soon as practicable after the effective date of this Registration Statement. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. x If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer o Accelerated filer o Non-accelerated filer o (Do not check if a smaller reporting company) Smaller reporting company Emerging growth company o If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. o CONSORTEUM HOLDINGS, INC. Prospectus Table of Contents PAGE Summary 1
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+PROSPECTUS SUMMARY The items in the following summary are described in more detail later in this prospectus. This summary provides an overview of selected information and does not contain all of the information you should consider in making your investment decision. Therefore, you should read the entire prospectus carefully before investing in our securities. Investors should carefully consider the information set forth under "Risk Factors" beginning on page 9 of this prospectus. Except where the context otherwise requires, the terms, "we," "us," "our," " Generation Alpha " or "the Company," refer to the business of Generation Alpha , Inc., a Nevada corporation and its wholly-owned subsidiaries. Overview We are focused on the research, design, development and manufacturing of advanced, energy efficient indoor horticulture lighting, plant nutrient products, and ancillary equipment. Our vision is to apply the latest advances in high efficiency lighting and controls technology as well as effective manufacturing techniques to deliver highly differentiated lighting and nutrient products with benefits at competitive prices to the greenhouse and indoor horticulture markets. Our subsidiary, Solis Tek , Inc., a California corporation, was formed in June of 2010. Its operations consist of designing, developing and sourcing of a line of Solis Tek Digital Ballasts intended for use in high intensity lighting systems used for horticulture. An electrical ballast is a device intended to limit the amount of current in an electric circuit. A familiar and widely used example is the inductive ballast used in fluorescent lamps, which limits the current through the tube, which would otherwise rise to destructive levels due to the tube s negative resistance characteristic. Since the commencement of operations, our product line has evolved from digital ballasts to a line of lighting products including a line of specialty ballasts ranging from 400 watts to 1,000 watts with various features, a line of specialty metal halide digital lamps, or our Lamp Products, a line of reflectors, high intensity lighting accessories and a new line of light emitting diode, or LED, lighting technologies. We sell our products primarily to retailers in the United States and international markets who specialize in hydroponic horticulture. Currently, we have approximately 500 retail stores in the United States as well as various ecommerce websites that sell our products. We have six full time sales employees and four wholesale distributors who cover U.S., Canada, Spain and the United Kingdom for both retail customers as well as commercial growers in cannabis legal states and countries. We believe that almost all of the end users that use our products are using the equipment for the growing of cannabis. However, our products can be, and are used for, the hydroponic and indoor growing of other horticultural products, such as hothouse vegetables, decorative plant nurseries, indoor aquariums, and industrial painting facilities. We intend to continue to expand and improve our products for use in as many applications as possible and to market our products to the entire indoor horticultural industry as well as other industrial applications that require artificial lighting. In 2014, Solis Tek East, Corporation, or STE, was incorporated in the State of New Jersey as our wholly-owned subsidiary. STE was formed for the purpose of commencing its operations and servicing and supplying the Eastern part of North America with our products. In September 2014, STE leased a 10,160 square foot office and warehouse facility in South Hackensack, New Jersey. The South Hackensack facility was closed in June 2018 as part of our effort to consolidate distribution out of our warehouse in Carson, California. In 2014, GrowPro Solutions, Inc., or GrowPro Solutions , was incorporated in the State of California as our wholly-owned subsidiary. GrowPro Solutions was formed to develop and sell plant nutrients to help expand our market reach and maximize our revenue potential. In July 2017, we changed the name of GrowPro Solutions to Zelda Horticulture, Inc., or Zelda. Zelda shares our facility in Carson, California Our ballast products are produced in China under a proprietary manufacturing agreement. Our Lamp Products including lamps and ancillary products and equipment are manufactured to our specifications under proprietary product control and to our designs, in China. License Agreement In May of 2015, we entered into an Amended and Restated License Agreement with GAS Technologies, Incorporated of Kapolei Hawaii, or GAST, pursuant to which we agreed to pay GAST a minimum royalty of $100,000 per year plus 7% of sales of products licensed by GAST to us over a fixed amount of licensed products sale per calendar year. In 2017 and 2016, we owed an additional $45,595 and $41,490, respectively under the amended agreement. The License grants us an exclusive world-wide license to produce, manufacture, have manufactured, use, import, sell, market, distribute and sell the products and systems and any further products and systems that may be developed by the Licensor for use in the horticulture and hydroponic industries. Such products include our "Single Ended: and "Double Ended" metal halide digital lamps. The Cannabis Industry and Government Regulation Currently, there are thirty- one (31) States plus the District of Columbia, Guam, and Puerto Rico that have laws and/or regulation that recognize in one form or another legitimate medical uses for cannabis and consumer use of cannabis in connection with medical treatment. In addition, the States of Colorado, Washington, Alaska, Oregon, California, Massachusetts, Nevada, Vermont, Maine and the District of Columbia, have approved the recreational use of cannabis. The State laws are in conflict with the Federal Controlled Substances Act, which makes cannabis use and possession illegal on a national level. The Trump Administration has effectively stated that it is not an efficient use of resources to direct law federal law enforcement agencies to prosecute those lawfully abiding by State-designated laws allowing the use and distribution of medical cannabis and we do not have a clear reading from possible changes in the Trump Administration. Additionally, any new administration that follows could change this policy and decide to enforce the federal laws strongly. Any such change in the federal government s enforcement of current federal laws could cause significant financial damage to us and our shareholders. Our Business Strategy Due to the expected increase in the number of States where the use of cannabis, both for medical and recreational use is being legalized, we intend to take advantage of what we believe is our premium brand image within the cannabis farming and growing community. We believe that as participation in the cannabis farming industry grows, in order to supply increasing demand caused by legalization, our Solis Tek brand equipment will be sought out by existing and new cannabis farms and commercial businesses. Our strategy is to maintain and increase our market share by expanding our marketing efforts and by introducing new and improved lighting technology to help the industry become more efficient. In addition, we have started to market and sell a new line of plant nutrients and fertilizers through our wholly-owned subsidiary, Zelda, to help expand our market reach and maximize our revenue potential. Additionally, we are aggressively pursuing opportunities within the cannabis sector for expansion of our product offerings, as well as compatible opportunities to represent other products to the retail and commercial trade. Our Product Pipeline Digital Lighting Controller The Solis Tek Digital Lighting Controller is a temperature monitoring control system which was specifically designed for commercial cultivation. A single controller can run up to 300 lights with 150 lights per zone and contains such features integrated temperature sensors, custom sunrise and sunset modes, data log tracking, and cloud cover simulation. The controller has been rigorously tested in multiple garden environments and has been specifically designed for both commercial grows and large gardens. The data log tracks garden activity and events with options to run up to two independent light zones, each with their own customized sunrise, sunset, and cloud modes. The controller includes high temperature auto-dim and shut off prevention systems to prevent systems from overheating. Ballasts Ballasts provide the proper starting voltage, operating voltage and current to the lamp to initiate and sustain its arc. High Intensity Discharge, or HID, lamps have negative resistance, which causes them to draw an increasing amount of current; hence, they require a current-limiting device. The ballast provides the following functions: It provides starting voltage and, in some cases, ignition pulses. All ballasts must provide some specific minimum voltage to ignite the lamp. In the case of pulse start lamps, an additional high voltage pulse is needed to ionize the gases within the lamp. These pulses are superimposed near the peak starting voltage waveform; it regulates the lamp s current and power. The ballast limits the current through the lamp once it has started. The ballast s current is set to a level that delivers the proper power to the lamp. In addition, the ballast regulates the lamp s current through the range of typical line voltage variations, thereby keeping the lamp s power fairly stable to maximize the lamp s life and performance and; it provides appropriate sustaining voltage and current wave shape to achieve the lamp s rated life. The ballast provides sufficient voltage to sustain the lamp as it ages. Solis Tek ballasts come in a variety of voltage settings to conform to the consumer needs. Solis Tek Digital Ballasts were designed to work with our exclusive "Ignition Control" sequential lamp ignition, and "SenseSmart", self- diagnostic safety systems. Solis Tek digital ballasts are software based, that makes our ballasts more versatile and enables us to incorporate special features such as sequential ballast ignition technology and SenseSmart technologies that ignites metal halide lamps one at a time based on load stability. Ignition Control is a main feature of our ballasts that comes as a standard feature in all of our ballasts. The exclusive Ignition Control assures that no matter how many lamps are contained in a lighting array attached to one power source, only one lamp will turn on at a predetermined time. This technology (not a randomized ignition startup) detects the voltage and amperage frequencies of the electrical circuit and ignites an array of metal halide or sodium lamps when the load for each lamp is most stable. The use of our technology prevents surges and spikes in electrical environment in which an array of ballasts operates and also prevents the overloading of circuit breakers. Our SenseSmart self-diagnosing system feature, enables our ballasts to internally safety check for over/under voltage, overheating, open circuits, short circuits and more. SenseSmart will recognize an unsafe condition and take pre-determined actions to alleviate the safety issue. We offer a line of remote ballasts that include: 400W 120/240V, 600W 120/240V, 1000W 120/240V, 1000W 120/240V with remote control and timer, 1000W 240V only, and 1000W 277V. Digital Lamps Metal halide lamps are a type of HID lamp; mercury vapor and high-pressure sodium lamps are also HID lamps. Light is generated by creating an arc between the two electrodes located inside the inner arc tube. The inner arc tube is typically made of quartz, and this is a very harsh environment, with high temperatures approaching 1000 C and pressures of 3 or 4 atmospheres. To start a metal halide lamp, a high starting voltage is applied to the lamp s electrodes to ionize the gas before current can flow and start the lamp. Solis Tek Digital Lamps are designed to be specifically tuned and matched with Solis Tek Digital Ballasts. Our lamps feature color enhanced full balanced spectrums, prolonged lamp life, less depreciation of lumen output over time, and precise gas combinations for increased blues, reds, and ultra violet output. Our lamps emit a full spectrum of light tuned specifically for particular types of plants. As well, our lamps provide ample UV light that plants thrive upon. We have designed our lamps using special low iron glass envelopes so as to prevent the blockage of the full spectrum of light that our lamps are designed to provide. According to a 2017 light study conducted by Light Laboratory Inc., an independent photometric testing laboratory, growers using Solis Tek lamps can expect enhanced photosynthetic photon flux density of leading tested competitors in additional to proper UV balance, and advanced HID lamp designed especially for plant growth, plant quality, and plant yield. We offer a select variety of light color spectrums in High Pressure Sodium, or HPS, Metal Halides, or MH, and Ceramic Metal Halides, or CMH. LED Technology LED (light emitting diode) lighting supports sustainable design in several ways. It uses less energy than most other types of lamps, produces less heat, lasts longer (which means less frequent replacement and therefore reduced waste), is mercury-free, and is housed in special semi-conductor "chips" designed for easier configuration, disassembly, and recycling. In our ongoing research and development program, we have designed and are developing our next generation of high intensity lighting. Our LED technology, unlike other LED lighting sources, uses an advanced UV (Ultra Violet) diode phosphor combination to make our high intensity LED based lighting systems. Our LED systems should be available in the same light spectrums as our current HID lamps. Our design will emit lighting equivalent to the high-pressure sodium spectrum and ultra-violet spectrums and eliminate the inadequacies of current LED offerings to the horticultural industry i.e.: a) low intensity; b) lack of proper spectrum for particular plants; and c) longevity. Our LED "chips" will provide, from one LED, a full spectrum of light that mimics sunlight, as compared to other LED manufacturers of LEDs who provide arrays of several color specific LEDs in an attempt to cover the full light spectrum. LED lighting produces significantly less heat than conventional HID and HPS lamps, so growers can control their greenhouse climate more accurately. Less heat also means more effective use of light, for example by increasing light levels, extending lighting periods, or by using LED light in greenhouses on warmer days without having to ventilate. Less heat also means you can place the light source closer to plants, reducing light loss. We intend to bring our LED lighting solutions to market in 2018. Solis Tek Reflectors Our line of "Reflectors" is designed for use with our digital ballasts and lamps. However, they additionally have standard sockets so that lamps and ballasts manufactured by others may also be used. Each Reflector features air cooling, heavily tinned wiring, low iron glass for less filtering of light, and utilize highly reflective aluminum to reflect light in the desired direction. Plant Nutrients and Fertilizers Zelda has developed "Terpenez " which is a proprietary product formulated from all organic botanical extracts and is designed to assist plants with processes associated with oil and resin production. Terpenez is all natural and has organic inputs aimed at enhancing the aromatics of cannabis cultivation. Zelda commenced test marketing Terpenez in late 2016 and had rolled out the product regionally across the USA in 2017. In 2017, Zelda had almost doubled sales over 2016 in nutrient sales. Terpenez, the first product in our launch into the nutrient/additive sector of the greenhouse and growing business, leads a new class of horticultural products aimed at enhancing the cannabis aromatic experience and intensity. It does not contain cannabis derived terpenes within, instead it is made from natural components available and is specifically formulated to assist the cannabis plant with processes associated with oil and resin production and naturally enhances the cannabis plant s terpene profile. The formula provides essential oil-bearing plants with both precursors (i.e. metabolic building blocks, trace elements, etc.) and readily available bio-identical plant compounds aiming to increase overall essential oil production and intensity. It is, to our knowledge, the first product of its kind to deliver plant nutrients to cannabis cultivating customers with a fully plant derived 0-0-0 (Nitrogen, Phosphate, and Potassium free) product. In July 2017, independent bioanalytical testing laboratory analysis was conducted by A&L Western Agricultural Laboratories, Inc., who determined the level of heavy metals to be below the EPA s detection limit. Terpenez is used to increase the value of cannabis crops through the intensification of oil production, which has results in a significant improvement in flavor and aroma. Terpenez is unique to our family of products in that it is intended for daily use as a nutrient additive to the cannabis grow, and is available through the over 500+ retail hydroponic stores and online retailers throughout the USA and Europe. We plan to extensively develop additional nutrient products within the Zelda line and expect these products to flourish in an environment of lighter regulatory controls at both the State and Federal level. We are in discussions to add to the product line via custom blending in third-party laboratories under our proprietary formulations. Additionally, we signed an exclusive Distributor Agreement in March 2018 with Torus Hydro, a California-based manufacturer of a pH stabilizer that automatically balances the pH of a hydroponic nutrient feed. Their proprietary capsule keeps the ideal range of pH in a growers feed system for optimal nutrient absorption. This capsule uses next generation ionization technology to eliminate pH swing that inhibits plant growth and weakens the plants immune system. We believe this is the perfect "razor and blades model", since a customer who purchases the capsule will necessarily need to repurchase the complementary recharging solution for each new grow (approximately 12 weeks). Corporate Information We were incorporated on March 2, 2007 under the laws of the State of Nevada as Cinjet Inc. On September 1, 2015, we changed our name to Solis Tek Inc. Effective September 25, 2018, we changed our name to Generation Alpha, Inc. Our principal executive offices are located at 853 Sandhill Avenue, Carson, California 90746, and our telephone number is (888) 998-8881. Our website address is www.solis-tek.com. The information on our website is not part of this prospectus. We have included our website address as a factual reference and do not intend for it to be an active link to our website. The Offering Common stock offered by the Selling Stockholder 4,910,162 shares of common stock, par value $0.001 per share, consisting of: 500,000 Shares issued to the Selling Stockholder pursuant to the Purchase Agreement; 1,000,000 Warrant Shares issuable upon exercise of warrants issued to the Selling Stockholder in connection with the Purchase Agreement; 1,000,000 Commitment Fee Shares issued upon exercise of Fee Warrants issued to the Selling Stockholder as a commitment fee upon execution of the SEDA; and 2,410,162 SEDA Shares issuable pursuant to a "put right" under the SEDA, which permits us to "put" up to $25,000,000 of shares of Common Stock to the Selling Stockholder in installments, the maximum of each of which is limited to $1,000.000. Common
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. This summary does not contain all of the information you should consider before investing in our common stock. You should read the entire prospectus carefully, including the section describing the risks of investing in our common stock under the caption Risk Factors, and the documents and financial statements incorporated by reference in the section entitled Incorporation of Certain Documents by Reference before making an investment decision. Some of the statements in this summary constitute forward-looking statements. For more information, please see Cautionary Note Regarding Forward-Looking Statements. Our Company Nuverra is a leading provider of comprehensive, full-cycle environmental solutions to customers focused on the exploration, development, and ongoing production of oil and natural gas from shale formations in the United States. We provide one-stop, total environmental solutions, including delivery, collection, treatment, and disposal of water, wastewater, waste fluids, hydrocarbons, and restricted solids that are part of the drilling, completion, and ongoing production of shale oil and natural gas. To meet our customers environmental needs, we utilize a broad array of assets to provide comprehensive environmental solutions. Our logistics assets include trucks and trailers, temporary and permanent pipelines, temporary and permanent storage facilities, ancillary rental equipment, treatment and processing facilities, and liquid and solid waste disposal sites. We provide a suite of solutions to customers who demand environmental compliance and accountability from their service providers. We currently operate in select shale areas in the United States, including the predominantly oil-rich Bakken area and the predominantly gas-rich Haynesville, Marcellus, and Utica areas. Our business serves customers seeking fresh water acquisition, temporary water transmission and storage, transportation, treatment, or disposal of liquid wastes, such as flowback and produced brine water, and solid wastes such as drill cuttings, and management of other environmental products in connection with shale oil and natural gas drilling completion and production operations. Additionally, we rent equipment to customers, including providing for delivery and pickup. Our business is divided into three operating divisions: (1) the Northeast division comprising the Marcellus and Utica Shale areas, (2) the Southern division comprising the Haynesville Shale area and (3) the Rocky Mountain division comprising the Bakken Shale area. General Company Information Headquartered in Scottsdale, Arizona, Nuverra Environmental Solutions, Inc. was incorporated in Delaware on May 29, 2007 as Heckmann Corporation. On May 16, 2013, we changed our name to Nuverra Environmental Solutions, Inc. Our address is 6720 N. Scottsdale Road, Suite 190, Scottsdale, Arizona 85253, and our website is http://www.nuverra.com. The content of our website is not a part of this prospectus. Recent Developments The Company entered into an Equity Purchase Agreement ( Purchase Agreement ) among Nuverra Ohio Disposal LLC, a wholly owned subsidiary of the Company (as Buyer) and David Niederst Trust and Stillwater Seven LLC (as Sellers) dated October 5, 2018, pursuant to which Buyer has acquired from the Sellers all of the outstanding membership interests in the Clearwater Companies for $41.9 million, subject to customary purchase price adjustments. The Clearwater Companies and their subsidiaries own and operate saltwater disposal wells Table of Contents located in the State of Ohio servicing the Marcellus and Utica Shale areas. In order to consummate the Clearwater acquisition and generate certain of the requisite funds to pay the purchase price and other amounts payable under the Purchase Agreement, we borrowed $32.5 million from the Majority Stockholders through a bridge loan facility, borrowed $10 million under an amendment to our First Lien Credit Facility and used $9.4 million in funds available under our existing First Lien Credit Facility and from available cash funds. The proceeds from the Rights Offering will be used to pay off the Bridge Loan which was for a total of $32.5 million. In connection with the Clearwater acquisition, the Company entered into the Bridge Loan with its Majority Stockholders for $32.5 million. The proceeds of the Bridge Loan were used to fund $22.5 million of the purchase price in the Clearwater acquisition and to pay down $10 million under our Second Lien Credit Facility, the lenders under which are our Majority Stockholders and certain of their Affiliates. The Bridge Loan bears interest at 11% per annum. The Bridge Loan is due and payable on April 5, 2019, provided the Company must prepay the Bridge Loan upon completion of the Rights Offering. Provided that no insolvency proceeding has been commenced by or against us, the Bridge Loan may be repaid in cash or in a number of shares of common stock having a value equal to the amount of such principal or interest payment (with the value of such common stock determined based on the Subscription Price in the Rights Offering. Concurrently with the completion of the Rights Offering, we must prepay the outstanding principal amount of the Bridge Loan, plus accrued and unpaid interest thereon and all fees, costs, expenses and other amounts related thereto. On October 5, 2018, in connection with the Clearwater acquisition, the Company entered into an amendment to its existing First Lien Credit Agreement, dated August 7, 2017 (the First Lien Credit Agreement ), by and among the lenders party thereto, and ACF FinCo I LP, as administrative agent, to provide the Company with an additional term loan under the First Lien Credit Agreement in the amount of $10 million, which was used to finance a portion of the acquisition. This amendment also amended the First Lien Credit Agreement to allow for the Clearwater acquisition and to provide the Company with additional flexibility under the First Lien Credit Agreement, including certain availability, mandatory prepayment and financial reporting provisions thereunder. The Company on October 5, 2018 also entered into an amendment to its existing Second Lien Term Loan Credit Agreement, dated August 7, 2017 (the Second Lien Credit Agreement ), by and among the Company, the lenders party thereto, and Wilmington Savings Fund Society, FSB, as administrative agent, which amends the Second Lien Term Loan Credit Agreement to make certain amendments to conform to the amendments to the First Lien Credit Agreement, including to allow for the funding of the additional term loan in the amount of $10 million under the First Lien Credit Agreement and the term loan pursuant to the Bridge Term Loan Credit Agreement. See Reports on Form 8-K filed on October 11, 2018 with respect to the foregoing recent developments.
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+PROSPECTUS SUMMARY This summary highlights selected information contained in this prospectus. It does not contain all the information that you should consider before making an investment decision. You should read the entire prospectus carefully, including the "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections, and the historical financial statements and accompanying notes. Company Overview Level One Bancorp, Inc. is the bank holding company for Level One Bank, headquartered in Farmington Hills located in Oakland County, Michigan. We have grown rapidly since our founding in 2007, and Level One Bank is one of the largest locally-headquartered commercial banks in southeastern Michigan. This growth has been driven primarily by our entrepreneurial culture, our experienced management team and by the economic strength of our core market area in Oakland County, which has the twelfth highest median income in the United States of counties with over one million residents. As of December 31, 2017, we had $1.30 billion in assets, $1.03 billion in loans, $1.12 billion in deposits and total shareholders' equity of $108.0 million. We generated net income of $9.8 million for the year ended December 31, 2017, or $1.49 per diluted common share, and $11.0 million for the year ended December 31, 2016, or $1.69 per diluted common share. In our ten years of operation, we have grown to 14 offices, including 10 banking centers (our full-service branches) in Oakland County, one banking center in each of Detroit and Grand Rapids, Michigan's two largest cities, one banking center in Sterling Heights, and one mortgage loan production office in Ann Arbor. In addition to our organic growth, we have completed four acquisitions since 2009, including two FDIC-assisted transactions and two whole-bank acquisitions. Our vision is to continue that growth, primarily through organic growth, but supplemented by opportunistic acquisitions that are additive to our franchise value, and we believe we have the management team, systems and culture to achieve that goal. As we build our market presence, we regularly evaluate the appropriate number and locations of our banking centers, and have recently determined to close one of our three locations in Farmington Hills in June 2018, due to overlapping market areas. Our organic loan growth is reflected in the chart below, which depicts total loans outstanding at each period end, including both originated loans and acquired loans, representing a compound annual growth rate, or CAGR, of 28.8% for originated loans and 24.2% for total loans from December 31, 2012 through December 31, 2017. LEVEL ONE BANCORP, INC. (Exact name of registrant as specified in its charter) Michigan (State or other jurisdiction of incorporation or organization) 6022 (Primary Standard Industrial Classification Code Number) 71-1015624 (I.R.S. Employer Identification No.) 32991 Hamilton Court Farmington Hills, Michigan 48334 (248) 737-0300 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) Table of Contents believed to be reliable, although they do not guarantee the accuracy or completeness of such information. Although we believe that the market position, market opportunity and market size information included in this prospectus is generally reliable, we have not verified the data, which is inherently imprecise. The forward-looking statements included in this prospectus related to industry, market and competitive data position may be materially different than actual results. Implications of Being an Emerging Growth Company As a company with less than $1.07 billion in revenue during our last fiscal year, we qualify as an "emerging growth company" under the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. An emerging growth company may take advantage of reduced reporting requirements and is relieved of certain other significant requirements that are otherwise generally applicable to public companies. As an emerging growth company: we may present as few as two years of audited financial statements and two years of related management discussion and analysis of financial condition and results of operations; we are exempt from the requirement to obtain an attestation and report from our auditors on management's assessment of our internal control over financial reporting under the Sarbanes-Oxley Act of 2002; we are permitted to have an extended transition period for adopting any new or revised accounting standards that may be issued by the Financial Accounting Standards Board, or FASB, or the Securities and Exchange Commission, or SEC; we are permitted to provide less extensive disclosure about our executive compensation arrangements; and we are not required to give our shareholders non-binding advisory votes on executive compensation or golden parachute arrangements. In this prospectus we have elected to take advantage of the reduced disclosure requirements and other relief described above, and in the future we may take advantage of any or all of these exemptions for so long as we remain an emerging growth company. We will remain an emerging growth company until the earliest of (i) the end of the fiscal year during which we have total annual gross revenues of $1.07 billion or more, (ii) the end of the fiscal year following the fifth anniversary of the completion of this offering, (iii) the date on which we have, during the previous three-year period, issued more than $1.0 billion in non-convertible debt and (iv) the date on which we are deemed to be a "large accelerated filer" under the Securities Exchange Act of 1934, as amended, or the Exchange Act. In addition to the relief described above, the JOBS Act permits us an extended transition period for complying with new or revised accounting standards affecting public companies. We have elected to use this extended transition period, which means that the financial statements included in this prospectus, as well as any financial statements that we file in the future, will not be subject to all new or revised accounting standards generally applicable to public companies for the transition period for so long as we remain an emerging growth company or until we affirmatively and irrevocably opt out of the extended transition period under the JOBS Act. As a result, our financial statements may not be comparable to the financial statements of public companies that comply with such new or revised accounting standards on a non-delayed basis. Table of Contents Loan Growth We have supplemented our organic loan growth with acquisitions, including the purchase of certain assets and liabilities of Michigan Heritage Bank in 2009 and Paramount Bank in 2010, which helped strengthen our foundation in commercial banking, retail banking and mortgage lending while expanding our product suite and staffing levels. Most recently, we acquired Lotus Bank in the first quarter of 2015 and Bank of Michigan in the first quarter of 2016, enhancing our footprint in our core market. We also recently opened new banking centers in market areas where we see long-term strategic opportunity, including the 2016 opening of our banking center in downtown Detroit, where we believe we will have the opportunity to capture a share of the city's economic redevelopment and to enhance the Level One brand, and our November 2016 opening of our Grand Rapids banking center, marking our expansion into western Michigan and the second largest metropolitan area in Michigan. Our commitment to the Grand Rapids market is demonstrated by our hiring of three senior commercial lenders, a small business lender and a mortgage origination officer in 2017. Most recently, in the third quarter of 2017, we opened our second location in Bloomfield Township located in Oakland County. We plan to use the net proceeds from this offering for general corporate purposes, including to increase capital levels to support further organic growth, including the planned opening of two new banking centers in 2019 and 2020, and, potentially, to fund future acquisitions (although we do not have any current plans, arrangements or understandings to make any such acquisitions at this time). See "Use of Proceeds." Level One Products and Services We offer a broad and growing set of lending products and related services, including commercial mortgages; commercial and industrial loans with lines of credit, term loans and owner occupied mortgages to small businesses; loans under the U.S. Small Business Administration (SBA) lending program; residential real estate loans; construction and land development loans; and consumer loans including home equity loans, automobile loans and credit card services. We target our services to owner-managed businesses, professional firms, real estate professionals, not-for-profit businesses and consumers within our geographic markets who meet our underwriting standards. We focus primarily on originating commercial and industrial loans, owner occupied commercial real estate loans and, to a lesser extent, non-owner occupied commercial real estate loans in our primary market areas, which include Oakland County, the Detroit metropolitan area and the Grand Rapids metropolitan area. We have lenders dedicated to targeting mid-sized businesses with between David C. Walker Executive Vice President and Chief Financial Officer Level One Bancorp, Inc. 32991 Hamilton Court Farmington Hills, Michigan 48334 (248) 737-0300 (Name, address, including zip code and telephone number, including area code, of agent for service) Table of Contents $5.0 million and $50.0 million of annual revenue, but we also target small businesses with revenue of less than $5.0 million. The following chart summarizes the composition of our loan portfolio as of December 31, 2017. Loan Portfolio Composition In addition to our lending business, we generate non-interest income through the sale of one- to four-family residential mortgages on the secondary market, which contributed revenues of $1.7 million and $2.2 million for the years ended December 31, 2017 and 2016, respectively. In addition, we generate depository service fees, which contributed revenues of $2.5 million and $1.9 million for the years ended December 31, 2017 and 2016, respectively. A growing component of this fee income is through our money services business (MSB) which provides cash management services for small, locally-owned cash intensive businesses. We intend to continue to grow this line of business, which we acquired in 2016 in our Bank of Michigan acquisition. We offer commercial depository (treasury management) services, specialty deposit accounts and other solutions to serve the needs of our institutional depositors, and offer mobile banking services, savings and checking accounts, money market accounts, certificates of deposit and other customary products and services to our retail depositors. Copies to: John E. Freechack William C. Fay Barack Ferrazzano Kirschbaum & Nagelberg LLP 200 West Madison Street Chicago, Illinois 60606 (312) 984-3100 Dave M. Muchnikoff Silver, Freedman, Taff & Tiernan LLP 3299 K Street, N.W. Suite 100 Washington, DC 20007 (202) 295-4500 Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definition of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act. Large accelerated filer Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company Emerging growth company If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. Table of Contents The following chart summarizes the composition of our deposits as of December 31, 2017. Deposit Composition Our Market Areas Our primary market is Oakland County, which is the second-largest county in Michigan with a total population of over 1.2 million people and a median household income of over $76 thousand, according to S&P Global Market Intelligence. Because we have few locally-based competitors in Oakland County, with our regional banking expertise, local credit decision making and high touch service, we are able to compete with larger regional and national banking competitors to increase our market share and grow our loan portfolio. Oakland County benefits from a skilled workforce, including both engineering and research and development employees related to the automotive industry, and nearly 4,700 life science and health care firms employing over 100,000 individuals, according to Oakland County. We also serve the Detroit metropolitan area, which is the largest metropolitan statistical area (MSA) in Michigan with a population of over 4.2 million people, according to S&P Global Market Intelligence, a major center of the U.S. automotive industry and a regional healthcare hub. With our new banking center that opened in 2016, our market area also includes the Grand Rapids metropolitan area, which is the second largest MSA in Michigan with a population of over 1.0 million people, according to S&P Global Market Intelligence. CALCULATION OF REGISTRATION FEE Title of each class of securities to be registered Amount to be registered(1) Proposed maximum offering price per share(2) Proposed maximum aggregate offering price(1)(2) Amount of registration fee(3) Common Stock, no par value per share 1,150,000 $29.00 $33,350,000 $4,152.08 (1)Includes 150,000 of additional shares of common stock that the underwriters have the option to purchase from the registrant. (2)Estimated solely for the purpose of calculating the amount of the registration fee in accordance with Rule 457(a) under the Securities Act of 1933, as amended. (3)Of this amount, $3,112.50 has been previously paid. The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. Table of Contents We believe the demographics of our market areas provide strong growth opportunities for our loan portfolio and deposits. We prefer the larger urban market centers and surrounding communities in which our market share is small but growing. This strategy provides abundant opportunity to expand where our brand messaging is strongest. The following chart, which is based on data from S&P Global Market Intelligence, shows our share of the deposits in our market areas as of June 30, 2017, which is the most recent data available. Key Strengths As we look to continue our growth trajectory, we believe we will benefit from the following strengths: Entrepreneurial Culture. Since starting our bank in 2007, we believe the experience, relationships and entrepreneurial culture of our management team, our customer-focused commercial lending team, as well as our board of directors have been and will continue to be key drivers of our growth. In August 2017, we were named to American Banker's list of the 60 "Best Banks to Work For" for the second year in a row. In 2017, we were also named by the National Association of Business Resources as one of the "101 Best and Brightest Companies to Work For" in metro Detroit for the fifth year in a row and by the SBA as "Export Lender of the Year" for the third year. We believe these attributes are hallmarks of many leaders in the financial services industry, and have deliberately built our lending and operations teams and systems to achieve excellence in these areas. While our future growth plans can be expected to introduce new complexities and challenges for our business, we intend to continue to focus on refining our business model to help ensure a solid foundation for success. Experienced, Growth-Oriented Management Team. Our executive leadership team averages 30 years of financial industry experience, including experience at leading national and regional banks. Further, the leaders of our lending team have an average of over 20 years serving the Michigan communities in which we operate. We believe the combination of this leadership experience and our start-up profile has allowed us to build the right bank, with the right team, the right way. Together, our management team has overseen our recent bank acquisitions and integration, led the Company through our prior rounds of capital raising, and achieved earnings growth from $0.97 per diluted common share for the year ended December 31, 2012 to $1.49 for the year ended December 31, 2017, representing a CAGR of 9.0%. Table of Contents The information in this preliminary prospectus is not complete and may be changed. We and the selling shareholders may not sell these securities until the Registration Statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED APRIL 12, 2018 PROSPECTUS 1,000,000 Shares Common Stock This is the initial public offering of shares of common stock of Level One Bancorp, Inc. We are the bank holding company of Level One Bank, a Michigan state-chartered bank headquartered in Farmington Hills, Michigan. We are offering 770,765 shares of our common stock and the selling shareholders named herein are offering 229,235 shares of our common stock. We will not receive any proceeds from the sales of shares by the selling shareholders. Prior to this offering, there has been no established public market for our common stock. We anticipate that the public offering price of our common stock will be between $27.00 and $29.00 per share. We have applied to list our common stock on the Nasdaq Global Select Market under the symbol "LEVL." Investing in our common stock involves risk. See "Risk Factors" beginning on page 13. We are an "emerging growth company" under the federal securities laws and will be subject to reduced public company reporting requirements. See "Implications of Being an Emerging Growth Company." Per Share Total Public offering price $ $ Underwriting discounts(1) Proceeds to us, before expenses Proceeds to the selling shareholders, before expenses (1)See "Underwriting" for additional information regarding underwriting compensation. The underwriters have an option to purchase up to an additional 150,000 shares from us at the public offering price, less the underwriting discount, within 30 days from the date of this prospectus. Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense. Shares of our common stock are not savings accounts or deposits and are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The shares of common stock will be ready for delivery on or about , 2018. RAYMOND JAMES Keefe, Bruyette & Woods A Stifel Company Piper Jaffray The date of this prospectus is , 2018. Table of Contents As we prepare for the next phase of our growth, we believe the following members of our management team will be critical to our success: Patrick J. Fehring President and Chief Executive Officer. Prior to founding the Bank, Mr. Fehring spent 27 years with Fifth Third Bancorp or its affiliates, most recently as President of Fifth Third Bank, Eastern Michigan. Gregory A. Wernette Executive Vice President and Chief Lending Officer. Prior to joining the Bank at inception, Mr. Wernette spent 21 years with Comerica Bank, most recently as First Vice President and Group Manager in Middle Market Banking. David C. Walker Executive Vice President and Chief Financial Officer. Mr. Walker, who joined us in October 2009, previously served as Group Vice President of Detroit-based GMAC LLC, where he spent 24 years in various financial disciplines, including seven years as Chief Financial Officer of GMAC's Mortgage Group and two years as GMAC's Treasurer. Timothy R. Mackay Executive Vice President, Consumer Banking Officer. With 26 years of experience in bank leadership, including 21 years in various capacities at Fifth Third Bank in Michigan and Florida, Mr. Mackay joined us in February 2013. Prior to joining Level One Bank Mr. Mackay was Senior Vice President- Retail Executive with direct oversight of 63 banking centers in South Florida. Mr. Mackay is responsible for the strategic leadership of the Consumer Banking Division, including branch banking, small business banking, residential mortgage and marketing. Eva D. Scurlock Executive Vice President, Risk Management Officer. With over 17 years of experience in the banking industry, including most recently as Credit Training Manager and Commercial Lender at LaSalle Bank and its predecessors, Ms. Scurlock, who joined us at inception, is responsible for the strategic leadership of enterprise risk management, including credit and compliance risk. Ms. Scurlock was selected by Crain's Detroit Business as a "40 Under 40" honoree in 2013. Melanie C. Barrett Executive Vice President and Chief Human Resources Officer. With 38 years of experience in banking at Comerica Bank and Flagstar Bank, Ms. Barrett, who joined us in January 2018, is responsible for human resources activity including staffing, compensation, training, leadership development, and team member benefits. Platform for Organic and Acquisition-Driven Growth. Prior to the fourth quarter of 2014, we were, as a de novo bank, subject to operational restrictions on our business plan. While these restrictions limited our ability to grow, we took the opportunity to invest in the leaders, technology, systems and facilities for the next stage of our growth, including our new corporate headquarters. We believe these investments are capable of supporting a bank several times our current size with relatively modest incremental expense, and will help us achieve operational efficiencies with any future acquisitions that we complete. We have demonstrated our ability to leverage this platform with the four acquisitions we completed and the three new banking center locations we introduced since inception. Strategies for Growth Our primary objective is to achieve quality long-term returns for our shareholders by focusing on being a well-capitalized, profitable community banking organization, with balanced growth. In particular, we intend to focus on the following: Continue to Drive Organic Growth in Loans, Core Deposits and Earnings. While we expect to be able to grow our loan portfolio, earnings and deposit base within our existing footprint, we intend to continue opening new full-service banking centers in communities with favorable economic and demographic characteristics to help drive long-term growth. In addition to our recently opened banking Table of Contents Table of Contents centers in Grand Rapids, Detroit and Bloomfield Township, we plan to open a total of two new banking centers in 2019 and 2020. We believe our recently completed investments in information technology and personnel provide us with the foundation upon which we can significantly grow our operations. Pursue Acquisitions in Existing and Adjacent Markets. We believe that consolidation of community banks will continue and that, with the additional capital from this offering and our approach to credit management, we will be well-positioned to take advantage of opportunities in our market areas and in adjacent markets within Michigan. We believe that our entry into new adjacent markets will help diversify our loan portfolio, our funding base and our overall risk exposure. We have successfully completed four acquisitions to date, including two FDIC-assisted transactions and two whole-bank acquisitions that expanded our footprint, were accretive to earnings, and generated many new clients for our bank. We continue to evaluate opportunities for acquisitions but do not have any current plans, arrangements or understandings to make any acquisitions at this time. Leverage Our Entrepreneurial Bank Philosophy. We operate with a community banking philosophy in metropolitan areas where we seek to develop broad customer relationships based on service and convenience while maintaining a conservative approach to lending which results in strong asset quality. We are a full-service commercial bank with an emphasis on providing commercial and private banking services for businesses, professionals and individuals. Due to large banking organizations moving their focus to large corporate clients rather than customers in our local communities, we believe that our emphasis on personal service and our willingness to lend will enhance our ability to compete successfully and capitalize on dissatisfaction among customers of larger financial institutions. Maintain Strong Asset Quality. We strive to maintain the quality of our assets, and have developed a credit approval structure that has enabled us to maintain strong asset quality while achieving our investment objectives. As a result of our underwriting standards, loan approval authority levels and procedures, experienced loan officers (averaging over 15 years of experience per loan officer) with an intimate knowledge of the local market, and diligent monitoring of the loan portfolio, our asset quality continues to remain well-controlled. Our nonperforming assets as a percentage of total assets were 1.1% and 1.4% as of December 31, 2017 and 2016, respectively. We had net charge-offs on loans of $792 thousand and $726 thousand for the years ended December 31, 2017 and 2016, respectively, which represented 0.08% of average loans in each such period. Growth History Our organic growth has focused on expanding market share in our existing and contiguous markets by attracting new customers with our personalized service and our ability to tailor commercial, consumer and specialized loans closely to local needs, particularly with respect to loan structure. We can then generate stable core deposits from these customers. We believe that our focus on and strong relationships in our market areas will provide long-term opportunities for organic growth, particularly in an improving economic environment. Our acquisition activity complements our organic growth strategy and has primarily focused on strategic acquisitions in or around our core market. As we evaluate potential acquisition opportunities in the future, we believe there are many banking institutions that would benefit by partnering with Level One to enhance operating scale, solve capital or liquidity issues, and broaden management expertise to continue to compete effectively in the marketplace. Our management team has a long history of identifying targets, assessing and pricing risk, and executing acquisitions in a creative, yet disciplined, manner. We seek acquisitions that provide meaningful financial benefits, long-term organic growth opportunities and expense reductions, without compromising our risk profile. Additionally, we seek to enter banking markets with favorable competitive dynamics and potential consolidation opportunities. Table of Contents TABLE OF CONTENTS Table of Contents Since inception, Level One Bank has experienced significant growth, both organically and through acquisitions. Below are a few of our notable milestones: October 2007 Chartered as a de novo financial institution with an initial capitalization of $16.2 million from local investors and sophisticated institutional investors. April 2009 Completed the FDIC-assisted acquisition of $13.5 million in assets and $95.9 million in liabilities of Michigan Heritage Bank, strengthening and expanding the Bank's deposit market position and providing funds for loan growth. June and December 2010 Raised $21.0 million in capital primarily from local investors and sophisticated institutional investors. December 2010 Completed the FDIC-assisted acquisition of certain assets and liabilities of Paramount Bank assuming approximately $173.0 million in deposits and purchasing approximately $206.4 million in loans and other assets. This acquisition strengthened and expanded the Bank's position within the desirable and competitive market of Oakland County with the addition of more than 6,000 new customers. September 2012 Raised $14.0 million in capital primarily from sophisticated institutional investors. March 2015 Acquired Lotus Bank in Novi, Michigan for $17.1 million, expanding our reach to western Oakland County. At the time of our acquisition, we acquired $78.0 million in loans and $96.8 million of deposits. March 2016 Completed the acquisition of Bank of Michigan for $16.5 million, acquiring $94.6 million in deposits and $91.7 million in loans. We also acquired Bank of Michigan's MSB operations, which significantly increased our depository fee service income. Summary Risk Factors There are a number of risks that you should consider before investing in our common stock. These risks are discussed more fully in the section titled "Risk Factors," beginning on page 13, and include, but are not limited to, the following: if general business and economic conditions do not continue to improve, particularly within our market area, our growth and results of operations could be adversely affected; economic, market, operational, liquidity, credit and interest rate risks associated with our business could adversely affect our business, results of operations and financial condition; competition within the financial services industry, nationally and within our market area, both for customers and employees, could limit our ability to grow and could adversely affect the pricing and terms that we are able to offer to our customers; if we do not effectively manage our credit risk, we may experience increased levels of delinquencies, nonperforming loans and charge-offs, which could require increases in our provision for loan losses; and we are subject to extensive state and federal financial regulation, and compliance with changing requirements may restrict our activities or have an adverse effect on our results of operations. Corporate Information Our principal executive office is located at 32991 Hamilton Court, Farmington Hills, Michigan, and our telephone number is (248) 737-0300. Our website address is www.levelonebank.com. The information contained on our website is not a part of, nor incorporated by reference into, this prospectus. Table of Contents
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus, and does not contain all the information that you should consider in making your investment decision. Before investing in our common stock, you should carefully read this entire prospectus,
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+prospectus summary contains a summary of information contained elsewhere in this prospectus. You should carefully read all information in the prospectus, including the financial statements and the notes to the financial statements under the Financial Statements section beginning on page F-1 prior to making an investment decision.
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+Our Business
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+History
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+We were incorporated in Nevada in October 2007 under the name SMACK Sportswear under which we manufactured and sold performance and lifestyle based indoor and sand volleyball apparel and accessories. As a result of the sale of certain inventory from the Company to Mr. Sigler in July 2015, the Company became a shell company (as such term is defined in Rule 12b-2 of the Securities Exchange Act of 1934, as amended). As a result of the Share Exchange, we acquired the proposed business of Almost Never.
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+Almost Never, our wholly-owned subsidiary upon the closing of Share Exchange, was incorporated in the State of Indiana on July 8, 2015. As a result of the Share Exchange, the Company amended its Articles of Incorporation to change its name from Smack Sportswear to Almost Never Films Inc. to more accurately reflect its new business. 
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+We currently have authorized 30,000,000 shares of capital stock, consisting of (i) 25,000,000 shares of Common Stock, and (ii) 5,000,000 shares designated as preferred stock, with 2,000,000 being designated as Series A Preferred Stock, containing such rights, privileges and designations as our Board of directors may, from time to time, determine. As of April 19, 2018, an aggregate of 5,203,765 shares of our Common Stock and 0 shares of our preferred stock are issued and outstanding.
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+Business Development 
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+Almost Never Films Inc. (the Company ) was originally incorporated in Nevada in October 2007 as Smack Sportswear ( Smack ), which originally manufactured and sold performance and lifestyle based indoor and sand volleyball apparel and accessories. The Company is now an independent film company focused on film production and production related services in connection with genre specific motion pictures with production costs in the $5.0 million to $50.0 million range. 
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+On January 15, 2016, pursuant to a share exchange agreement, among Almost Never Films Inc. f/k/a Smack Sportswear (the Company , we, our or us ), Almost Never Films Inc. ( ANF ), an Indiana corporation, and the two shareholders of ANF (the ANF Shareholders ), we issued to the ANF Shareholders, 1,000,000 shares of our Series A Convertible Preferred Stock (the Series A Preferred Stock ), par value $0.001 per share in exchange for all 100,000,000 shares of the issued and outstanding common stock of ANF (the Share Exchange ). As a result of the Share Exchange, ANF became our wholly-owned subsidiary, and our business has become the business of ANF, effective January 15, 2016. 
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+The share exchange was accounted for as a "reverse acquisition," and resulted in a recapitalization. Almost Never Films Inc. (Indiana) is deemed to be the acquirer for accounting purposes. The assets acquired and liabilities assumed were $6,566 and $598,869, respectively. Consequently, the assets and liabilities and the historical operations that will be reflected in the financial statements prior to the share exchange will be those of Almost Never Films Inc. (Indiana) and will be recorded at the historical cost basis of Almost Never Films Inc. (Indiana), and the combined financial statements after completion of the share exchange include the assets and liabilities of Almost Never Films Inc. (Indiana), historical operations of Almost Never Films Inc. (Indiana), and operations of Almost Never Films Inc. (Indiana) from the closing date of the share exchange. As a result of the issuance of the shares of our Series A Convertible Preferred Stock pursuant to the share exchange, a change in control of the Company occurred as of the date of consummation of the share exchange. All share and per share information in the accompanying consolidated financial statements and footnotes has been retroactively restated to reflect the recapitalization. The Company has not yet generated any revenue since the reverse acquisition. 
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+On February 29, 2016, the stockholders of Smack voted to amend the Articles of Incorporation of the Company to (i) increase the authorized capital of the Company to 5,000,000 shares of common stock and (ii) to change the name of the Company to Almost Never Films Inc. which took effect on March 2, 2017. 
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+The Company has 5,000,000 authorized preferred shares with no par value. 
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+Smack issued 1,000,000 shares of our Series A Convertible Preferred Stock to the Mr. Chan and Mr. Williams in exchange for all 2,500,000 shares of issued and outstanding common stock of Almost Never Films Inc. (Indiana), with a value of $10,000. 
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+On March 4, 2016, all 1,000,000 preferred shares were converted into 2,500,000 common shares. 
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+There were no shares of preferred stock issued and outstanding as of March 31, 2018. 
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+On March 8, 2016, the Company executed a Stock Purchase Agreement with a shareholder. Pursuant to the Stock Purchase Agreement, the Company sold, and said shareholder purchased, an aggregate of 1,243,000 shares of the Company s Common Stock at a price of $0.20 per share in exchange for the cancellation of and discharge of certain promissory notes issued by the Company and payable to said shareholder. The foregoing issuance was deemed to be exempt from registration under Section 4(a)(2) of the Securities Act as not involving any public offering and/or Regulation D promulgated thereunder and in reliance on similar exemptions under applicable state laws. 
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+In March through November 2016, the Company entered into four share purchase agreements with four investors for 312,500 common shares at $0.80 per share for total proceeds of $250,000 
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+On November 16, 2016, the company entered into a collaboration agreement (the KBM Agreement ) with Konwiser Brothers Media ( KBM , and together with ANF, the Parties). Pursuant to the Agreement, the Parties will create an LLC or other entity (the Company ), for the purpose of developing, producing and exploiting proposed motion picture project currently entitled Field Trip (the Picture ). KBM will contribute its development and producing services to the Company and all rights to the Screenplay, and ANF will make financial contributions, assist in the raising of additional financing and participate in the development and production process as set forth more fully herein. The Company will own 100% of the copyright to the Picture and all other ancillary and related rights, and each of KBM and ANF will own an undivided 50% interest in the Company. KBM will be the managing member of the Company. The operating agreement for the Company will be consistent with the terms of this Agreement. This transaction, and the ones mentioned below, removed the Company from its prior shell status. On September 27, 2017, KBM informed the Company of its intent to terminate the KBM Agreement. 
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+On December 1, 2016, the Company filed a registration statement on Form S-1, registering 250,000 shares for certain selling shareholders. The Form S-1 was declared effective on December 9, 2016. 
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+On December 12, 2016, the Company entered into a collaboration agreement (the SAE Agreement ) with Saisam Entertainment, LLC ( SAE , and together with the Company, the Parties). Pursuant to the Agreement, the Parties will create an LLC or other entity (the Company ), for the purpose of developing, producing and exploiting proposed motion picture project currently entitled Love is not Easy (the Picture ). The Company owns and controls the rights to the screenplay for the Picture. 
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+On June 6, 2017, the Company issued a 2.5% promissory note (the ANF Note ) to Weirong Zhang (the Investor ). Pursuant to the ANF Note, the Company received $200,000, which is due to the Lender ninety (90) days from the date the purchase price of $200,000 was paid. The ANF Note accrues interest at 2.5% per 90 days. Thereafter, on June 7, 2017, The Money Pool, LLC ( Money Pool ) issued a non-transferable promissory note to the Company for $200,000 (the Money Pool Note ). The Company funded the Money Pool Note with the funds received from the Investor. Money Pool shall use the funds from the Money Pool Note, along with its own funds, in order to provide a bridge loan to Blue Rider San Juan, LLC ( Blue Rider ), in connection with the production of a motion picture known as Speed Kills . Blue Rider is the international sales agent for Speed Kills. The Money Pool Notes accrues interest of a flat 2.5% for the first 45 days from funding. In the event the Money Pool Note is not paid in full within 45 days, the flat interest rate will increase to 3.5% for each 45-day period any balance or accrued interest remains unpaid. The principal and interest shall be payable by Money Pool to the Company from payments made by Blue Rider on the bridge loan provided by Money Pool. On June 9, 2017, the Company issued a 2.5% promissory note (the Kruse Note ) to William R. Kruse (the Kruse ). Pursuant to the Kruse Note, the Company received $200,000, which is due to Kruse ninety (90) days from the date the purchase price of $200,000 was paid. The Kruse Note accrues interest at 2.5% per annum. Thereafter, on June 12, 2017, Money Pool issued a non-transferable promissory note to the Company for $200,000 (the Pool Note ). The Company shall fund the Pool Note with the funds received from Kruse. Money Pool shall use the funds from the Pool Note, along with its own funds, in order to provide a bridge loan to Blue Rider, in connection with the production of a motion picture known as Ana . Blue Rider is the international sales agent for Ana. The Pool Notes accrues interest of a flat 2.5% for the first 45 days from funding. In the event the Pool Note is not paid in full within 45 days, the flat interest rate will increase to 3.5% for each 45-day period any balance or accrued interest remains unpaid. The principal and interest shall be payable by Money Pool to the Company from payments made by Blue Rider on the bridge loan provided by Money Pool. 
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+ On August 2, 2017, Derek Williams presented the Board of Directors of the Company with his resignation as Chief Operating Officer and a member of the Board of Directors of the Company. Mr. William s decision to resign was not due to any disagreement with the Company. 
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+On August 24, 2017, the Board of Directors of the Company appointed Daniel Roth as Chief Creative Officer of the Corporation and Damiano Tucci as Chief Operating Officer of the Corporation. 
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+On September 13, 2017, the Company completed a 1 for 40 reverse stock split and changed the authorized capital of the Company to 25,000,000 shares of common stock, par value $.001 per share and kept the authorized preferred shares at 5,000,000. 
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+On November 10, 2017 the Company executed a First Amendment Agreement to its 6x picture Production and Distribution Agreement between Big Film Factory LLC ( Big Film or Prodco ) and Pure Flix Entertainment LLC ( PFE ), (the Agreement ). The Agreement memorializes the understanding with respect to the development, packaging, production, post-production and worldwide distribution of the films intended for initial and primary worldwide exhibition. The Company, a Nevada corporation, will be added as a party to the initial agreement by and between Big Film and PFE, wherever Big Film is referenced in connection with providing production services in conjunction with Big Film as well as providing production capital and cash following each of the first six (6) films produced under the Agreement ( 6 Pictures ). Both Prodco and PFE agree to expand the defined role of Prodco in the Agreement, to add the Company to that definition, and grant the Company equally the same role and responsibilities heretofore only held by Big Film in connection with the 6 Pictures.
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+The Company will be accorded a company credit and producer credits equal to those of Big Film. Furthermore, Prodco will provide the Company, Big Film and PFE with Producer s E & O Insurance for a term of not less than three (3) years from delivery of any such Picture to PFE, and with limits of $1 million/$3 million/ $25K SIR as are common to the television/SVOD industry.
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+Table of Contents
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+Criteria 
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+We are an independent film company focused on film production and production related services in connection with genre specific motion pictures with production costs under $35 million.
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+History 
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+As described above, we were incorporated in Nevada in October 2007 under the name SMACK Sportswear under which we manufactured and sold performance and lifestyle based indoor and sand volleyball apparel and accessories. As a result of the sale of certain inventory from the Company to Mr. Sigler in July 2015, the Company became a shell company (as such term is defined in Rule 12b-2 of the Securities Exchange Act of 1934, as amended). As a result of the Share Exchange, we acquired the proposed business of Almost Never. 
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+Almost Never, our wholly-owned subsidiary upon the closing of Share Exchange, was incorporated in the State of Indiana on July 8, 2015. As a result of the Share Exchange, the Company amended its Articles of Incorporation to change its name from Smack Sportswear to Almost Never Films Inc. to more accurately reflect its new business. We also request changed the Company s OTCQB trading symbol to "HLWD". 
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+We have authorized 30,000,000 shares of capital stock, consisting of (i) 25,000,000 shares of Common Stock, and (ii) 5,000,000 shares designated as preferred stock containing such rights, privileges and designations as our Board of directors may, from time to time, determine. On September 13, 2017, the Company completed a 1 for 40 reverse stock split and changed the authorized capital of the Company to 25,000,000 shares of common stock, par value $.001 per share. As of the date of this Report, an aggregate of 5,203,765shares of our Common Stock. 
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+On March 4, 2016, all 1,000,000 preferred shares were converted into 2,500,000 common shares. 
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+Our principal executive office is now located at 8605 Santa Monica Blvd #98258, West Hollywood, CA 90069-4109. 
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+Our Business 
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+The Company is an independent film company focused on film production, finance and production related services for movies under budgets of $35 million.
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+Our proposed business is to facilitate relationships (and as such, provide production related services) between creative talent (including writers, actors and directors) and companies who produce, finance and distribute motion pictures. We intend to acquire or license rights to materials upon which we believe motion pictures can be based (screenplays, books, short stories etcetera, which are referred to within the entertainment industry as the underlying property ). We may further develop an underlying property by contracting for additional writing services and/or by bringing in new writers to perform polishes or rewrites on a particular underlying property. 
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+If we are satisfied with the creative state of the underlying property, we then intend to make offers to directors and/or actors, to perform services in connection with a particular motion picture based on that underlying property. These offers are very often contingent and subject to the satisfaction of certain production elements, such as financier approval of the screenplay and the financier s selection of a start date for principal photography. 
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+If a director or actors accepts one of our offers, the director or actors are said to be attached to the motion picture project. Armed with the underlying property and the attached creative element(s) (these elements are often called the package in Hollywood), we may then approach third party financiers seeking financing as well as distribution for the potential motion picture. Another approach that we may take is to contact the financiers first, seeking first to produce the film, and then with a finished (or nearly finished) motion picture product, obtain distribution for the picture. 
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+Motion Picture Property Acquisition Process 
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+Our acquisition process is the process by which we intend to acquire or license underlying properties . In turn, we expect to use those properties to attract creative talent (including writers, actors and directors) to the potential motion picture project. If successful, we will then grant or license out those rights to third party financiers of motion pictures, who will then contract with the creative talent we have attracted to the property as well as finance, produce and distribute/exploit the motion picture. 
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+Almost Never Feature Film Production 
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+Our initial primary involvement with feature film production is in the area of the development of underlying properties . We intend to engage third parties to produce, finance and exploit/distribute the motion picture packages we put together. We may also provide production expertise (i.e. production services ) to the third party producer and/or financier of the motion picture in question. If we do provide production expertise, we, or members of our executive team, Danny Chan, Daniel Roth, and Damiano Tucci, may be credited as producers or executive producers of the particular film in question. We expect to primarily derive our income from producer fees, consulting and service fees as well as our participation in the profits of the various pictures produced by third parties, that were developed and/or packaged by us. 
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+Our feature film strategy generally is to perform production services, develop and/or produce feature films when the production budgets for the films are expected to be entirely or substantially covered by a third party. In this way, we believe our risk is, by in large, only the capital required, if any, to develop and package the motion picture project. The entirety of the production budget, as well as any costs associated with distributing and/or exploiting the motion pictures in question, will be expected to be borne by a third party or parties who have the resources and expertise to produce and/or distribute motion pictures. 
+
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+
+Distributing Almost Never Motion Pictures 
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+ 
+
+Currently, we do not intend to directly distribute motion pictures. Instead, when we seek financing for our motion picture packages, the distribution rights are often obtained by the financier as collateral for their investment; in other words, third parties purchase the world-wide exploitation and distribution rights to a motion picture for the cost it takes to produce the motion picture. 
+
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+
+Foreign Markets 
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+
+In general, a very important portion of the financing for independent (i.e., not produced by a major studio or one of their subsidiaries) motion pictures comes from the foreign markets (i.e., those markets outside of the United States and English-speaking Canada). With respect to productions we are associated with, the third party financier owns and/or controls the production rights and uses these rights as collateral or purchases the rights outright in connection with the funding of the pictures we develop. 
+
+ 
+
+ 
+
+9
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+ 
+
+Table of Contents
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+ 
+
+Profit Participation 
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+ 
+
+Our profit participation in motion picture projects will be determined by a calculation that assumes that all negative costs (production costs) of the picture (including, but not limited to, costs for development, principal photography and post-production) and distribution expenses (including, but not limited to, costs for marketing the film at various international film markets as well as costs associated with the delivery of the film and the physical elements to the various licensees of the film) are recovered by the financier plus interest thereon. After repayment of all negative costs, distribution expenses and interest thereon, the financier/distributor will charge a distribution fee (often a percentage of the gross income) for performing any sales or distribution services in connection with the picture. Following the payment of distribution fees and other costs, any amounts payable to creative elements that are contingent compensation (including, but not limited to, deferred compensation and bonuses) are paid to those third parties. Any money remaining is considered net profits from which profit participation is derived. 
+
+ 
+
+ Competition 
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+ 
+
+The motion picture industry is intensely competitive. In addition to competing with the major film studios that dominate the motion picture industry, we will also compete with numerous independent motion picture production companies, television networks, pay television systems, and online streaming media companies such as Netflix, Hulu, and Amazon Prime. Virtually all of our competitors are significantly larger than we are, have been in business much longer than we have, and have significantly more resources at their disposal. Our competitors range from small independent producers to well financed established film studios, particularly, major U.S. film studios. 
+
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+
+Intellectual Property 
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+ 
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+We believe that intellectual property will be material to our business and we will expend cost and effort in an attempt to develop and protect our intellectual property and to maintain compliance vis- -vis other parties' intellectual property. Our ability to protect and enforce our intellectual property rights is subject to certain risks. Enforcement of intellectual property rights is costly and time consuming. 
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+From time to time, we may encounter disputes over rights and obligations concerning intellectual property. We cannot offer any assurances that we will prevail in any intellectual property dispute. 
+
+ 
+
+Industry Background
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+ 
+
+The Feature Film Industry. The feature film industry encompasses the development, production and exhibition of feature-length motion pictures and their subsequent distribution in the online, DVD, television, video on demand and other ancillary markets. The major studios dominate the industry, some of which have divisions that are promoted as "independent" distributors of motion pictures, including Universal Pictures, Warner Bros Entertainment (also known as Warner Bros. Studios, Inc., Warner Bros. Pictures, Inc. commonly called Warner Bros., or simply WB) including subsidiaries New Line Cinema and Castle Rock Entertainment & DC Entertainment, Twentieth Century Fox, Sony Pictures Entertainment (including Columbia Pictures and Tristar Pictures), Paramount Pictures, Walt Disney Studios, MGM Holdings and Lions Gate Entertainment. In recent years, however, true "independent" motion picture production and distribution companies have played an important role in the production of motion pictures for the worldwide feature film market.
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+Independent Feature Film Production and Financing. Generally, independent production companies do not have access to the extensive capital required to make big budget motion pictures, such as the "blockbuster" product produced by the major studios. They also do not have the capital necessary to maintain the substantial overhead that is typical of such studios' operations. Independent producers target their product at specialized markets and usually produce motion pictures with budgets of less than $25 million. Generally, independent producers do not maintain significant infrastructure. They instead hire only creative and other production personnel and retain the other elements required for development, pre-production, principal photography and post-production activities on a project-by-project basis. Also, independent production companies typically finance their production activities from bank loans, pre-sales, equity offerings, co-productions and joint ventures rather than out of operating cash flow. They generally complete financing of an independent motion picture prior to commencement of principal photography to minimize risk of loss.
+
+ 
+
+ 
+
+10
+
+ 
+
+Table of Contents
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+ 
+
+Independent Feature Film Distribution. Motion picture distribution encompasses the exploitation of motion pictures in theatres and in markets, such as the DVD, pay-per-view, pay television, free television and ancillary markets, such as hotels, airlines and streaming films on the Internet. Independent producers do not typically have distribution capabilities and rely instead on pre-sales to North American and international distributors. Generally, the local distributor will acquire distribution rights for a motion picture in one or more of the aforementioned distribution channels from an independent producer. The local distributor will agree to advance the producer a non-refundable minimum guarantee. The local distributor will then generally receive a distribution fee of between 20% and 35% of receipts, while the producer will receive a portion of gross receipts in excess of the distribution fees, distribution expenses and monies retained by exhibitors. The local distributor and theatrical exhibitor generally will enter into an arrangement providing for the exhibitor's payment to the distributor of a percentage (generally 40% to 50%) of the box-office receipts for the exhibition period, depending upon the success of the motion picture.
+
+ 
+
+Government Regulation
+
+ 
+
+The Company is not currently subject to any direct government regulations, other than the securities laws and the regulations thereunder applicable to all publicly owned companies and laws and regulations applicable to general businesses. It is possible that certain laws and regulations may be adopted at the local, state, national and international level that could affect the Company's operations. Changes to such laws could create uncertainty in the marketplace which could reduce demand for the Company's products or increase the cost of doing business as a result of costs of litigation or a variety of other such costs, or could in some other manner have a material adverse effect on the Company's business, financial condition, results of operations and prospects. If any such law or regulation is adopted it could limit the Company's ability to operate and could force the business operations to cease, which would have a significantly negative effect on the Company.
+
+ 
+
+Employees
+
+ 
+
+The Company employees are Danny Chan, our Chief Executive Officer and Chief Financial Officer, Daniel Roth as Chief Creative Officer of the Company and Damiano Tucci as Chief Operating Officer of the Company.
+
+ 
+
+How to Obtain our SEC Filings
+
+ 
+
+We file annual, quarterly, and special reports, proxy statements, and other information with the Securities Exchange Commission (SEC). Reports, proxy statements and other information filed with the SEC can be inspected and copied at the public reference facilities of the SEC at 100 F Street N.E., Washington, DC 20549. Such material may also be accessed electronically by means of the SEC s website at www.sec.gov.
+
+ 
+
+Our principal executive office is now located at 8605 Santa Monica Blvd #98258, West Hollywood, CA 90069-4109. 
+
+ 
+
+Selling Shareholders
+
+ 
+
+514,822 shares of the Company s common stock were (i) sold or issued to the Selling Shareholders, pursuant to stock purchase agreements, dated September 15, 2017, September 25, 2017, November 14, 2017, and April 5, 2018 respectively, each by and between the Company and the applicable Selling Shareholder or (ii) issued to a Selling Shareholder for debt owed by the Company. Each Selling Shareholder paid $1.00 or was issued shares at $1.00 per share. The 514,822 shares held by the Selling Shareholders are included herein for registration.
+
+ 
+
+ 
+
+11
+
+ 
+
+Table of Contents
+
+ 
+
+The Terms of the Offering
+
+ 
+
+Securities Being Offered:
+
+ 
+
+514,822 shares of common stock being registered on behalf of the Selling Shareholders.
+
+ 
+
+Offering Period:
+
+ 
+
+Until all shares are sold by the Shareholders or until 36 months from the date that the registration statement becomes effective, whichever comes first.
+
+ 
+
+Risk of Factors:
+
+ 
+
+The Securities offered hereby involve a high degree of risk and should not be purchased by investors who cannot afford the loss of their entire investment. See
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+Prospectus Summary 1
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+PROSPECTUS SUMMARY The following summary highlights information contained elsewhere in this prospectus. It may not contain all the information that may be important to you. You should read this entire prospectus carefully, including the sections entitled "Risk Factors" and "Management s Discussion and Analysis of Financial Condition and Results of Operation," and our historical financial statements and related notes included in this prospectus. As used in this prospectus, unless otherwise specified, references to the "Company," "we," "our" and "us" refer to Pershing Gold Corporation and, unless otherwise specified, its subsidiaries. Overview We are a gold and precious metals exploration company pursuing exploration, development and mining opportunities primarily in Nevada. We are currently focused on exploration at our Relief Canyon properties in Pershing County in northwestern Nevada and, if economically feasible, commencing mining at the Relief Canyon Mine. None of our properties contain proven and probable reserves, and our activities on all of our properties are exploratory in nature. Business Strategy Our business strategy is to acquire and advance precious metals exploration properties. We seek properties with known mineralization that are in an advanced stage of exploration and have previously undergone drilling but are under-explored, which we believe we can advance quickly to increase value. We are currently focused on exploration of the Relief Canyon properties and, if economically feasible, commencing mining at the Relief Canyon Mine. We also are reviewing strategic opportunities, focused primarily in Nevada. Relief Canyon Mine Property Our Relief Canyon property rights currently total approximately 27,000 acres and are comprised of approximately 1,056 owned unpatented mining claims, 120 owned millsite claims, 100 leased unpatented mining claims, and 2,228 acres of leased and 3,739 acres of subleased private lands. As currently defined by exploration drilling, most of the Relief Canyon deposit is located on property that is subject to a 2% net smelter return production royalty, with a portion of the deposit located on property subject to net smelter return production royalties totaling 4.5%. The rest of the property is subject, under varying circumstances, to net smelter return production royalties ranging from 2% to 5%. Since our acquisition of the Relief Canyon Mine property in 2011, our exploration efforts have been focused primarily on expanding the known Relief Canyon Mine deposit. During the year ended December 31, 2017, we focused primarily on engineering and other work related to the potential commencement of mining at the Relief Canyon Mine; continuing permitting and bonding; and financing efforts. An overview of certain significant events follows: We drilled 14 holes, totaling approximately 5,800 feet, at our Blackjack Project Area, located approximately nine miles south of our Relief Canyon Mine. In May 2017, Mine Development Associates of Reno, Nevada ("MDA") completed a preliminary feasibility study ("PFS") on the Relief Canyon Mine. The PFS indicates the possibility of a viable mine and recommended work should continue on advancing the Relief Canyon Mine to a production decision. During the quarter ended March 31, 2017, we successfully completed the environmental permitting process and have secured all necessary permits to restart and expand the Relief Canyon Mine. As part of the permitting process we increased our statewide surface management surety bonds with the United States Department of the Interior Bureau of Land Management ("BLM") as required by the State of Nevada from approximately $5.6 million to approximately $12.3 million. On March 29, 2017, we entered into a Mining Sublease with Newmont USA Ltd. ("Newmont") granting us the exclusive right to prospect, explore for, develop, and mine minerals on certain lands within the Pershing Pass area south of the Relief Canyon Mine. Corporate Information We were incorporated in Nevada on August 2, 2007 under the name "Excel Global, Inc." and operated as a web-based service provider and consulting company. On September 27, 2010, we changed our name to "The Empire Sports & Entertainment Holdings Co." and commenced the promotion and production of sports and entertainment events as our sole line of business which we operated until September 1, 2011 when we exited the sports and entertainment business. We began acquiring mining exploration properties in May 2011, and on May 16, 2011, we changed our name to "Sagebrush Gold Ltd." and on February 27, 2012 to "Pershing Gold Corporation" due to our focus on exploration for gold in Pershing County, Nevada. Our principal executive offices are located at 1658 Cole Boulevard, Building 6-Suite 210, Lakewood, CO 80401 and our telephone number is 720-974-7254. We maintain a website at www.pershinggold.com, which contains information about us. Our website and the information contained in and connected to it are not a part of this prospectus. THE OFFERING The following summary describes the principal terms of the offering, but is not intended to be complete. See "Selling Stockholders" and "Plan of Distribution" in this prospectus for a more detailed description of the selling stockholders, the terms and conditions of the distribution of the shares of common stock and the shares of common stock issuable upon the exercise of warrants, and the offering. For a more detailed description of our common stock and warrants to purchase our common stock, see "Description of Securities." Common stock offered by the selling stockholders: 3,286,127 shares of common stock, all of which were issued or are issuable to the selling stockholders in the Private Placement. Common stock assumed outstanding on January 16, 2018 and after this offering: 33,544,125(1) Use of proceeds: We will not receive any proceeds from the sale of shares in this offering by the selling stockholders. Nasdaq and TSX symbol: PGLC Risk factors: You should carefully consider the information set forth in this prospectus and, in particular, the specific factors set forth in the "Risk Factors" section beginning on page 6 of this prospectus before deciding whether or not to invest in shares of our common stock. (1)The number of outstanding shares before and after the offering includes the 938,891 shares issuable upon exercise of the warrants issued to the selling stockholders in the Private Placement and excludes the following shares of common stock, none of which are being offered by this prospectus: 3,163,051 shares of common stock issuable upon conversion of the Series E Convertible Preferred Stock based on a conversion price of $353.571; 1,794,453 shares of common stock issuable upon the exercise of outstanding options; 3,495,376 shares of common stock issuable upon the exercise of outstanding warrants; and 1,052,850 shares of common stock issuable pursuant to restricted stock units. RISK FACTORS Investing in our common stock involves a high degree of risk. Before investing in our common stock you should carefully consider the following risks, together with the financial and other information contained in this prospectus, before making an investment decision. The risks and uncertainties described below are not the only risks and uncertainties that we face. Additional risks and uncertainties not presently known to us or which we currently consider to be immaterial may also impair our business. If any of the following risks actually occurs, our business, prospects, financial condition and results of operations could be adversely affected. In that case, the value of our securities would likely decline and you may lose all or a part of your investment. The risks discussed below also include forward-looking statements, and our actual results may differ substantially from those discussed in these forward-looking statements. Please see the section entitled "Cautionary Statement Regarding Forward-Looking Statements" in this prospectus. Risks Related to Our Business We have no proven or probable reserves on our properties and we do not know if our properties contain any gold or other minerals that can be mined at a profit. The properties on which we have the right to explore for gold and other minerals do not contain mineral reserves and we do not know if any deposits of gold or other minerals can be mined at a profit. Whether a gold or other mineral deposit can be mined at a profit depends upon many factors. Some but not all of these factors include: the particular attributes of the deposit, such as size, grade and proximity to infrastructure; operating costs and capital expenditures required to start mining a deposit; the availability and cost of financing; the price of the gold or other minerals which is highly volatile and cyclical; and government regulations, including regulations relating to prices, taxes, royalties, land use, importing and exporting of minerals and environmental protection. We are also obligated to pay production royalties on certain of our mineral production, including a net smelter royalty of 2% on production from most of our Relief Canyon Mine property, with a portion of the deposit located on property subject to net smelter return production royalties totaling 4.5%, which would increase our costs of production and make our ability to operate profitably more difficult. We are also obligated to pay a net smelter royalty of up to 5% on production from some of our claims and lands. We are an exploration stage company and have conducted exploration activities only since 2011. We reported a net loss for the year ended December 31, 2016 and in the subsequent fiscal quarters ending with the September 30, 2017 fiscal quarter, and expect to incur operating losses for the foreseeable future. Our evaluation of our Relief Canyon Mine property is primarily based on historical production data and on new exploration data that we have developed since 2011, supplemented by historical exploration data. Our plans for recommencing mining and processing activities at the Relief Canyon Mine property are still being developed, as are our exploration programs on the Relief Canyon expansion properties. Accordingly, we are not yet in a position to estimate expected amounts of minerals, yields or values or evaluate the likelihood that our business will be successful. We have not earned any revenues from mining operations. The likelihood of success must be considered in light of the problems, expenses, difficulties, complications and delays encountered in connection with the exploration of the mineral properties and commencement of mining activities that we plan to undertake. These potential problems include, but are not limited to, unanticipated problems relating to exploration, costs and expenses that may exceed current estimates and the requirement for external funding to continue our business. Prior to completion of our exploration stage, we anticipate that we will incur increased operating expenses without realizing any revenues. We reported a net loss of approximately $15.6 million for the year ended December 31, 2016 and a net loss of approximately $9.1 million for the nine months ended September 30, 2017. We expect to incur significant losses into the foreseeable future. Our monthly burn rate for all costs during the nine months ended September 30, 2017 was approximately $0.7 million, including $0.6 million for general and administrative costs (including all employee salaries, public company expenses, consultants, and land holdings costs) and $0.1 million for exploration activities. If we are unable to raise sufficient additional external funding to commence mining and processing at Relief Canyon, including in this offering and future offerings and financings, we will not be able to earn profits or continue operations. We have no production history upon which to base any assumption as to the likelihood that we will prove successful, and it is uncertain that we will generate any operating revenues or ever achieve profitable operations. If we are unsuccessful in addressing these risks, our business will most likely fail. Exploring for gold and other minerals is inherently speculative, involves substantial expenditures, and is frequently non-productive. Mineral exploration (currently our only business), and gold exploration in particular, is a business that by its nature is very speculative. We may not be able to establish mineral reserves on our properties or be able to mine any gold or any other minerals on a profitable basis. Few properties that are explored are ultimately developed into producing mines. Unusual or unexpected geological conditions, fires, flooding, explosions, cave-ins, landslides and the inability to obtain suitable or adequate machinery, equipment or labor are just some of the many risks involved in mineral exploration programs and the subsequent development of gold deposits. The mining industry is capital intensive and we may be unable to raise necessary funding. We spent approximately $11.3 million on our business and exploration during the year ended December 31, 2016. Our total costs for business and exploration in 2017 was $10.1 million. In addition to anticipated G&A and exploration costs in 2018, in order to commence mining at Relief Canyon, based on the estimates contained in the PFS, we currently expect to incur capital expenditures and working capital expenditures of approximately $35 million. To pursue the commencement of production at Relief Canyon, additional external financing would be required. Such additional financing could include streaming, royalty financing, forward sale arrangements, debt offerings (including convertible debt), additional equity financing or other alternatives. We may be unable to secure additional financing on terms acceptable to us, or at all. Our inability to raise additional funds would prevent us from achieving our business objectives and would have a negative impact on our business, financial condition, results of operations and the value of our securities. If we raise additional funds by issuing additional equity or convertible debt securities, the ownership of existing stockholders may be diluted and the securities that we may issue in the future may have rights, preferences or privileges senior to those of the current holders of our common stock. Such securities may also be issued at a discount to the market price of our common stock, resulting in possible further dilution to the book value per share of common stock. If we raise additional funds by issuing debt, we could be subject to debt covenants that could place limitations on our operations and financial flexibility. Although we entered into a non-binding term sheet with Sprott Resource Lending ("Sprott"), as discussed in "Management s Discussion and Analysis of Financial Condition and Results of Operation – Liquidity and Capital Resources," in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016, after further negotiations, the Company and Sprott decided not to enter into a binding agreement. Unanticipated problems or delays may negatively affect our ability to commence mining and processing activities at Relief Canyon. If we were to decide to pursue the commencement of mining and processing activities at Relief Canyon, additional external financing, in addition to this offering and the Private Placement, would be required. Although the Relief Canyon Mine currently has an available leach pad and processing facility and we have senior mine and processing personnel in place, we would be required to obtain mining equipment (which could be through purchase, lease, contract mining or a combination of these), hire employees for the mine and the processing plant, purchase materials and supplies, commence mining, leaching and processing activities, and continue these activities as well as the corporate activities currently conducted for a number of months until sufficient positive cash flow is produced by gold sales to fund all of these ongoing activities. We may suffer significant delays or cost overruns as a result of a variety of factors, such as increases in the prices of materials, mining or processing problems, unanticipated variations in mined materials, shortages of workers or materials, transportation constraints, adverse weather, equipment failures, fires, damage to or destruction of property and equipment, environmental problems, unforeseen difficulties or labor issues, any of which could delay or prevent us from commencing or ramping up mining and processing. If our start-up were prolonged or delayed or our costs were higher than anticipated, we could be unable to obtain sufficient funds to cover the additional costs, and our business could experience a substantial setback. Prolonged problems could have a material adverse effect on our business, consolidated financial condition or results of operations and threaten our viability. We are a junior exploration company with no mining activities and we may never have any mining activities in the future. Our primary business is exploring for gold and, to a lesser extent, other minerals. If we discover commercially exploitable gold or other deposits, we will not be able to make any money from mining activities unless the gold or other deposits are actually mined, or we sell our interest. Accordingly, we will need to seek additional capital through debt or equity financing, streaming, royalty financing, forward sale arrangements, or other alternatives, find some other entity to mine our properties or operate our facilities on our behalf, enter into joint venture or other arrangements with a third party, or sell or lease the property or rights to mine to third parties. Mine development projects typically require a number of years and significant expenditures during the development phase before production is possible. Such projects could experience unexpected problems and delays during development, construction and mine start up. Mining operations in the United States are subject to many different federal, state and local laws and regulations, including stringent environmental, health and safety laws. If and when we assume operational responsibility for mining on our properties, we must demonstrate that we will be able to comply with current or future laws and regulations, which can change at any time. It is possible that changes to these laws will be adverse to any potential mining operations. Moreover, compliance with such laws may cause substantial delays and require capital outlays in excess of those anticipated, adversely affecting any potential mining operations. Our future mining operations, if any, may also be subject to liability for pollution or other environmental damage. It is possible that we will choose to not be insured against this risk because of high insurance costs or other reasons. We must make annual lease payments, advance royalty and royalty payments and claim maintenance payments or we will lose our rights to our property. We are required under the terms of the leases covering some of our property interests to make annual lease payments and advance royalty and royalty payments each year. We are also required to make annual claim maintenance payments to the BLM and pay a fee to Pershing County in order to maintain our rights to explore and, if warranted, to develop our unpatented mining claims. If we fail to meet these obligations, we will lose the right to explore for gold and other minerals on our property. Our total annual property maintenance costs payable to the BLM and Pershing County for all of the unpatented mining claims and millsites in the Relief Canyon area in 2017 were approximately $213,000, and we expect our annual maintenance costs to be approximately $213,000 in 2018. Our lease payments, advance royalty and royalty payments and claim maintenance payments are described under "BUSINESS AND PROPERTIES—Business Strategy" on page 27. Our business is subject to extensive environmental regulations that may make exploring, mining or related activities prohibitively expensive, and which may change at any time. All of our operations are subject to extensive environmental regulations that can substantially delay exploration and mine development and make exploration and mine development expensive or prohibit it altogether. We may be subject to potential liabilities associated with the pollution of the environment and the disposal of waste products that may occur as the result of exploring and other related activities on our properties, including our plan to process gold at our processing facility. We may have to pay to remedy environmental pollution, which may reduce the amount of money that we have available to use for exploration, mine development, or other activities, and adversely affect our financial position. If we are unable to fully remedy an environmental problem, we might be required to suspend operations or to enter into interim compliance measures pending the completion of the required remedy. If a decision is made to mine our properties and we retain any operational responsibility for doing so, our potential exposure for remediation may be significant, and this may have a material adverse effect upon our business and financial position. We have not purchased insurance for potential environmental risks (including potential liability for pollution or other hazards associated with the disposal of waste products from our exploration activities) and such insurance may not be available to us on reasonable terms or at a reasonable price. All of our exploration and, if warranted, development activities will be subject to regulation under one or more local, state and federal environmental impact analyses and public review processes. It is possible that future changes in applicable laws, regulations and permits or changes in their enforcement or regulatory interpretation could have significant impact on some portion of our business, which may require our business to be economically re-evaluated from time to time. These risks include, but are not limited to, the risk that regulatory authorities may increase bonding requirements beyond our financial capability. Inasmuch as posting of bonding in accordance with regulatory determinations is a condition to the right to operate under specific federal and state operating permits, increases in bonding requirements could prevent operations even if we are in full compliance with all substantive environmental laws. We have been required to post a substantial bond under various laws relating to mining and the environment and may in the future be required to post a larger bond to pursue additional activities. For example, we must provide BLM and the Nevada Division of Environmental Protection Bureau of Mining Regulation and Reclamation ("NDEP") additional financial assurance (reclamation bonds) to guarantee reclamation of any new surface disturbance required for drill roads, drill sites, or mine expansion. In March 2017, we increased the amount of our reclamation bond with BLM and the NDEP to approximately $12.3 million. Approximately $12.2 million of our reclamation bond covers both exploration and mining at the Relief Canyon Mine property, including the three open-pit mines and associated waste rock disposal areas, the mineral processing facilities, ancillary facilities, and the exploration roads and drill pads. Approximately $22,000 covers exploration on the Relief Canyon expansion properties. The reclamation bond was collateralized by approximately 30% of the $12.3 million bond amount, or about $3.7 million. Approximately $65,000 of the reclamation bond remains available for future mining or exploration operations. Our preliminary estimate of the likely amount of additional financial assurance for future exploration is approximately $100,000, although we expect periodic increases due to effects of inflation. The government licenses and permits which we need to explore on our property may take too long to acquire or cost too much to enable us to proceed with exploration. In the event that we conclude that the Relief Canyon Mine deposit can be profitably mined, or we discover other commercially exploitable deposits, we may face substantial delays and costs associated with securing the additional government licenses and permits that could preclude our ability to develop the mine. Exploration activities usually require the granting of permits from various governmental agencies. For example, exploration drilling on unpatented mining claims requires a permit to be obtained from the BLM, which may take several months or longer to grant the requested permit. Depending on the size, location and scope of the exploration program, additional permits may also be required before exploration activities can be undertaken. Prehistoric or Indian graves, threatened or endangered species, archeological sites or the possibility thereof, difficult access and excessive dust may all result in the need for additional permits before exploration activities can commence. If we conclude that the Relief Canyon deposit can be profitably mined and the minable material exceeds 21 million tons, the current capacity of the leach pad, we would also need to seek an amendment of the processing facility permit to expand the capacity of the leach pad and ponds to accommodate additional material. As with all permitting processes, there is substantial uncertainty about when and if the permits will be issued. There is the risk that unexpected delays and excessive costs may be experienced in obtaining required permits. The needed permits may not be granted or could be challenged by third parties, which could result in protracted litigation that could cause substantial delays, or may be granted in an unacceptable timeframe or cost too much. While permitting efforts have not encountered opposition to date, proposed mineral exploration and mining projects can become controversial and be opposed by nearby landowners and communities, which can substantially delay and interfere with the permitting process. Additional permitting would also be required in the future to mine below the water table, and the BLM may require an Environmental Impact Statement to evaluate the associated impacts. Delays in or inability to obtain the necessary permits discussed above would result in unanticipated costs, which may result in serious adverse effects upon our business. The value of our property and any other deposits we may seek or locate is subject to volatility in the price of gold. Our ability to obtain additional and continuing funding, and our profitability if and when we commence mining or sell our rights to mine, will be significantly affected by changes in the market price of gold and other mineral deposits. Gold and other minerals prices fluctuate widely and are affected by numerous factors, all of which are beyond our control. The price of gold may be influenced by: fluctuation in the supply of, demand and market price for gold; mining activities of our competitors; sale or purchase of gold by central banks and for investment purposes by individuals and financial institutions; interest rates; currency exchange rates; inflation or deflation; fluctuation in the value of the United States dollar and other currencies; global and regional supply and demand, including investment, industrial and jewelry demand; and political and economic conditions of major gold or other mineral-producing countries. The price of gold and other minerals have fluctuated widely in recent years, and a decline in the price of gold or other minerals could cause a significant decrease in the value of our property, limit our ability to raise money, and render continued exploration and development of our property impracticable. If that happens, then we could lose our rights to our property or be compelled to sell some or all of these rights. Additionally, the future development of our mining properties beyond the exploration stage is heavily dependent upon gold prices remaining sufficiently high to make the development of our property economically viable. Our property title may be challenged. We are not insured against any challenges, impairments or defects to our mining claims or title to our other properties. Our property is comprised primarily of unpatented lode mining claims and millsites located and maintained in accordance with the federal General Mining Law of 1872 (the "General Mining Law"). Unpatented lode mining claims and millsites are unique U.S. property interests and are generally considered to be subject to greater title risk than other real property interests because the validity of unpatented mining claims and millsites is often uncertain. This uncertainty arises, in part, out of the complex federal and state laws and regulations with which the owner of an unpatented mining claim or millsite must comply in order to locate and maintain a valid claim. Moreover, if we discover mineralization that is close to the claim boundaries, it is possible that some or all of the mineralization may occur outside the boundaries on lands that we do not control. In such a case we would not have the right to extract those minerals. We do not have title reports or opinions covering all of our Relief Canyon properties. The uncertainty resulting from not having title opinions for all of our Relief Canyon properties or having detailed claim surveys on all of our properties leaves us exposed to potential title defects. Defending challenges to our property title would be costly, and may divert funds that could otherwise be used for exploration activities and other purposes. In addition, unpatented lode mining claims and millsites are always subject to possible challenges by third parties or contests by the federal government, which, if successful, may prevent us from exploiting any discovery of commercially extractable gold. Challenges to our title may increase our costs of operation or limit our ability to explore on certain portions of our property. We are not insured against challenges, impairments or defects to our property title. Possible amendments to the General Mining Law and other environmental regulations could make it more difficult or impossible for us to execute our business plan. In recent years, the U.S. Congress has considered a number of proposed amendments to the General Mining Law, as well as legislation that would make comprehensive changes to the law. Although no such comprehensive legislation has been adopted to date, there can be no assurance that such legislation will not be adopted in the future. If adopted, such legislation, if it includes concepts that have been part of previous legislative proposals, could, among other things, (i) limit on the number of millsites that a claimant may use, discussed below, (ii) impose time limits on the effectiveness of plans of operation that may not coincide with mine life, (iii) impose more stringent environmental compliance and reclamation requirements on activities on unpatented mining claims and millsites, (iv) establish a mechanism that would allow states, localities and Native American tribes to petition for the withdrawal of identified tracts of federal land from the operation of the General Mining Law, (v) allow for administrative determinations that mining would not be allowed in situations where undue degradation of the federal lands in question could not be prevented, (vi) impose royalties on gold and other mineral production from unpatented mining claims or impose fees on production from patented mining claims, and (vii) impose a fee on the amount of material displaced at a mine. Further, such legislation, if enacted, could have an adverse impact on earnings from our operations, could reduce estimates of any reserves we may establish and could curtail our future exploration and development activity on our unpatented claims. Our ability to conduct exploration, development, mining and related activities may also be impacted by administrative actions taken by federal agencies. With respect to unpatented millsites, for example, the ability to use millsites and their validity has been subject to greater uncertainty since 1997. In November of 1997, the Secretary of the Interior (appointed by President Clinton) approved a Solicitor s Opinion that concluded that the General Mining Law imposed a limitation that only a single five-acre millsite may be claimed or used in connection with each associated and valid unpatented or patented lode mining claim. Subsequently, however, on November 7, 2003, the new Secretary of the Interior (appointed by President Bush) approved an Opinion by the Deputy Solicitor which concluded that the mining laws do not impose a limitation that only a single five-acre millsite may be claimed in connection with each associated unpatented or patented lode mining claim. Current federal regulations do not include the millsite limitation. There can be no assurance, however, that the Department of the Interior will not seek to re-impose the millsite limitation at some point in the future. In addition, a consortium of environmental groups has filed a lawsuit in the United District Court for the District of Columbia against the Department of the Interior, the Department of Agriculture, the BLM, and the U.S. Forest Service ("USFS"), asking the court to order the BLM and USFS to adopt the five-acre millsite limitation. That lawsuit also asks the court to order the BLM and the USFS to require mining claimants to pay fair market value for their use of the surface of federal lands where those claimants have not demonstrated the validity of their unpatented mining claims and millsites. If the plaintiffs in that lawsuit were to prevail, that could have an adverse impact on our ability to use our unpatented millsites for facilities ancillary to our exploration, development and mining activities, and could significantly increase the cost of using federal lands at our properties for such ancillary facilities. In 2009, the U.S. Environmental Protection Agency ("EPA") announced that it would develop financial assurance requirements under CERCLA Section 108(b) for the hard rock mining industry. On January 29, 2016, the U.S. District Court for the District of Columbia issued an order requiring that if the EPA intended to prepare such regulations, it had to do so by December 1, 2016. The EPA did comply with that order by issuing draft proposed regulations on December 1, 2016. The EPA subsequently issued its proposed rule on January 11, 2017. Under the proposed rule, owners and operators of facilities subject to the rule would have been required, among other things, to (i) notify the EPA that they are subject to the rule; (ii) calculate a level of financial responsibility for their facility using a formula provided in the rule; (iii) obtain a financial responsibility instrument, or qualify to self-assure, for the amount of financial responsibility; (iv) demonstrate that they had obtained such evidence of financial responsibility; and (v) update and maintain financial responsibility until the EPA released the owner or operator from the CERCLA Section 108(b) regulations. As drafted, those additional financial assurance obligations could have been in addition to the reclamation bonds and other financial assurances the Company has and would be required to have in place under current federal and state laws. If such requirements had been retained in the final rule, they could have required significant additional expenditures on financial assurance, which could have had a material adverse effect on the Company s future business operations. However, after an extended public comment period, the EPA decided on December 1, 2017 not to adopt the proposed rule, and not to impose additional financial assurance obligations on the hard rock mining industry. It is possible that one or more non-governmental organizations will file lawsuits challenging that decision. Market forces or unforeseen developments may prevent us from obtaining the supplies and equipment necessary to explore for gold and other minerals. Gold exploration, and mineral exploration in general, is a very competitive business. Competitive demands for contractors and unforeseen shortages of supplies and/or equipment could result in the disruption of our planned exploration activities. Current demand for exploration drilling services, equipment and supplies is robust and could result in suitable equipment and skilled manpower being unavailable at scheduled times for our exploration program. Fuel prices are extremely volatile as well. We will attempt to locate suitable equipment, materials, manpower and fuel if sufficient funds are available. If we cannot find the equipment and supplies needed for our various exploration programs, we may have to suspend some or all of them until equipment, supplies, funds and/or skilled manpower become available. Any such disruption in our activities may adversely affect our exploration activities and financial condition. Our directors and executive officers lack significant experience or technical training in exploring for precious and base metal deposits and in developing mines. Most of our directors and executive officers lack significant experience or technical training in exploring for precious and base metal deposits and in developing mines. Accordingly, although our Senior Vice President has significant experience and expertise in environmental permitting and regulatory matters for developing and operating mines and our Chief Operating Officer has significant experience with mine operations, our management may not be fully aware of many of the other specific requirements related to working within this industry. Their decisions and choices may not take into account standard engineering or managerial approaches that mineral exploration companies commonly use. Consequently, our operations, earnings, and ultimate financial success could suffer irreparable harm due to some of our management s lack of experience in the mining industry. We may not be able to maintain the infrastructure necessary to conduct exploration activities. Our exploration activities and any future mine development activities depend upon adequate infrastructure. Reliable roads, bridges, power sources and water supply are important factors that affect capital and operating costs. Unusual or infrequent weather phenomena, sabotage, government or other interference in the maintenance or provision of such infrastructure could adversely affect our exploration activities and financial condition. Our exploration activities and any future mine development may be adversely affected by the local climate or seismic events, which could prevent us from gaining access to our property year-round. Earthquakes, heavy rains, snowstorms, and floods could result in serious damage to or the destruction of facilities, equipment or means of access to our property, or may otherwise prevent us from conducting exploration activities on our property. There may be short periods of time when the unpaved portion of the access road is impassible in the event of extreme weather conditions or unusually muddy conditions. During these periods, it may be difficult or impossible for us to access our property, make repairs, or otherwise conduct exploration or mine development activities on them. Risks Relating to Our Organization and Our Common Stock The trading price of the common stock may experience substantial volatility. The trading price of our common stock may experience substantial volatility that is unrelated to our financial condition or operations. The trading price of our common stock may also be significantly affected by short-term changes in the price of gold and other minerals. The market price of our securities is affected by many other variables which may be unrelated to its success and are, therefore, not within our control. These include other developments that affect the market for all resource sector-related securities, the breadth of the public market for the common stock and the attractiveness of alternative investments. The effect of these and other factors on the market price of the common stock is expected to make the price of the common stock volatile in the future, which may result in losses to investors. We have relied on certain stockholders to provide significant investment capital to fund our operations. We have in the past relied on cash infusions primarily from Frost Gamma Investments Trust ("Frost Gamma") and one of the Company s directors, Barry Honig. During the year ended December 31, 2012, Frost Gamma provided approximately $4.6 million in consideration for the issuance of certain of our securities. In the year ended December 31, 2013, Mr. Honig provided approximately $5.6 million to us in consideration for the issuance of shares of the Company s Series E Preferred Stock. Additionally, Mr. Honig and Frost Gamma provided approximately $1.9 million and $150,000, respectively, to us in consideration for the issuance of shares of common stock and warrants to purchase shares of common stock in July 2014 private placements. Mr. Honig invested $150,000 in a private placement of our common stock in October 2014, $2.5 million in an April 2015 private placement, $1.25 million in a February 2016 private placement, and $3.0 million in the Private Placement. Donald Smith invested $6 million in a March 2016 private placement. Curtailment of cash investments by significant investors could detrimentally impact our cash availability and our ability to fund our operations. Our principal stockholders, officers and directors own a substantial interest in our voting securities, and investors may have limited voice in our management. Our principal stockholders, Barry Honig, Donald Smith, and Levon Resources Ltd. ("Levon Resources"), as well as our officers and directors, own, in the aggregate, in excess of approximately 47.0% of our voting securities, including shares of common stock issuable upon the conversion of our Series E Preferred Stock. As of January 16, 2018, Mr. Honig, who is a director, owned 10,890,576 or approximately 29.7%, of our voting securities, Mr. Smith owned 3,251,500, or approximately 8.9%, of our voting securities, and Levon Resources owned 1,954,366, or approximately 5.3%, of our voting securities. As of that date, our officers and directors, including Mr. Honig, owned 12,030,100, or approximately 32.8%, of our voting securities. Additionally, the holdings of our officers and directors may increase in the future upon exercise of options, warrants or convertible securities they may hold or be granted in the future or if they otherwise acquire additional shares of our common stock, including through grants under our employee benefit plans. As a result of their ownership and positions, our principal stockholder, directors and executive officers collectively may be able to influence all matters requiring stockholder approval, including the following matters: election of our directors; amendment of our articles of incorporation or bylaws; and effecting or preventing a merger, sale of assets or other corporate transaction. In addition, their stock ownership may discourage a potential acquirer from making a tender offer or otherwise attempting to obtain control of the Company, which in turn could reduce our stock price or prevent our stockholders from realizing a premium over our stock price. We are subject to the information and reporting requirements of the Securities and Exchange Act of 1934, as amended (the "Exchange Act"), and other federal securities laws, as well as the listing rules of Nasdaq and the TSX. The costs of preparing and filing annual and quarterly reports and other information with the SEC and furnishing audited reports to stockholders will cause our expenses to be higher than they would have been if we were privately held. These costs for the years ended December 31, 2016 and December 31, 2017 were approximately $850,000 and $650,000 respectively. We estimate that these costs will be approximately $650,000 for the year ending 2018. It may be time consuming, difficult and costly for us to develop, implement and maintain the internal controls and reporting procedures required by the Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act"). We may need to hire additional financial reporting, internal controls and other finance personnel in order to develop and implement appropriate internal controls and reporting procedures. If we fail to establish and maintain an effective system of internal control, we may not be able to report our financial results accurately or to prevent fraud. Any inability to report and file our financial results accurately and timely could harm our reputation and adversely impact the trading price of our common stock and our ability to file registration statements pursuant to registration rights agreements and other commitments. Effective internal control is necessary for us to provide reliable financial reports and prevent fraud. If we cannot provide reliable financial reports or prevent fraud, we may not be able to manage our business as effectively as we would if an effective control environment existed, and our business and reputation with investors may be harmed. As a result of our small size, any current internal control deficiencies may adversely affect our financial condition, results of operation and access to capital. Public company compliance may make it more difficult to attract and retain officers and directors. The Sarbanes-Oxley Act and rules implemented by the SEC have required changes in corporate governance practices of public companies. As a public company, we expect these rules and regulations to further increase our compliance costs and to make certain activities more time consuming and costly. As a public company, we also expect that these rules and regulations may make it more difficult and expensive for us to obtain director and officer liability insurance and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a result, it may be more difficult for us to attract and retain qualified persons to serve on our board of directors or as executive officers, and to maintain insurance at reasonable rates, or at all. Our stock price may be volatile. The market price of our common stock is likely to be highly volatile and could fluctuate widely in price in response to various factors, many of which are beyond our control, including the following: results of our operations and exploration efforts; fluctuation in the supply of, demand and market price for gold; our ability to obtain working capital financing; additions or departures of key personnel; limited "public float" in the hands of a small number of persons whose sales or lack of sales could result in positive or negative pricing pressure on the market price for our common stock; our ability to execute our business plan; sales of our common stock and decline in demand for our common stock; regulatory developments; economic and other external factors; investor perception of our industry or our prospects; and period-to-period fluctuations in our financial results. In addition, the securities markets have from time to time experienced significant price and volume fluctuations that are unrelated to the operating performance of particular companies. These market fluctuations may also materially and adversely affect the market price of our common stock. As a result, you may be unable to resell your shares of our common stock at a desired price. Volatility in the price of our common stock may subject us to securities litigation. As discussed above, the market for our common stock is characterized by significant price volatility when compared to seasoned issuers, and we expect that our share price will continue to be more volatile than a seasoned issuer for the indefinite future. In the past, plaintiffs have often initiated securities class action litigation against a company following periods of volatility in the market price of its securities. We may in the future be the target of similar litigation. Securities litigation could result in substantial costs and liabilities and could divert management s attention and resources. We have not paid cash dividends in the past and do not expect to pay dividends in the future. Any return on investment may be limited to the value of our common stock. We have never paid cash dividends on our common stock and do not anticipate doing so in the foreseeable future. The payment of dividends on our common stock will depend on earnings, financial condition and other business and economic factors affecting us at such time as our board of directors may consider relevant. If we do not pay dividends, our common stock may be less valuable because a return on your investment will only occur if our common stock price appreciates. There is currently a limited trading market for our common stock and we cannot ensure that one will ever develop or be sustained. Although the Company s common stock is currently quoted on Nasdaq, the TSX, and Frankfurt Stock Exchange, there is limited trading activity. The Company can give no assurance that an active market will develop, or if developed, that it will be sustained. If an investor acquires shares of the Company s common stock, the investor may not be able to liquidate the Company s shares should there be a need or desire to do so. Only a small percentage of our common stock is available to be traded and is held by a small number of holders and the price, if traded, may not reflect our actual or perceived value. There can be no assurance that there will be an active market for our shares of common stock either now or in the future. The market liquidity of our common stock is limited and may be dependent on the market perception of our business, among other things. We may, in the future, take certain steps, including utilizing investor awareness campaigns, press releases, road shows and conferences to increase awareness of our business and any steps that we might take to bring us to the awareness of investors may require we compensate consultants with cash and/or stock. There can be no assurance that there will be any awareness generated or the results of any efforts will result in any impact on our trading volume. Consequently, investors may not be able to liquidate their investment or liquidate it at a price that reflects the value of the business and trading may be at an inflated price relative to the performance of our Company due to, among other things, availability of sellers of our shares. If a market should develop, the price may be highly volatile. Because there may be a low price for our shares of common stock, many brokerage firms or clearing firms may not be willing to effect transactions in the securities or accept our shares for deposit in an account. Even if an investor finds a broker willing to effect a transaction in the shares of our common stock, the combination of brokerage commissions, transfer fees, taxes, if any, and any other selling costs may exceed the selling price. Further, many lending institutions will not permit the use of low priced shares of common stock as collateral for any loans. Sales, offers or availability for sale of a substantial number of shares of our common stock may cause the price of our common stock to decline. Sales of substantial amounts of the common stock, or the availability of such securities for sale, could adversely affect the prevailing market prices for the common stock. A decline in the market prices of the common stock could impair our ability to raise additional capital through the sale of securities should we desire to do so. If we were to decide to pursue the commencement of production at Relief Canyon, additional external financing would be required in addition to the amounts raised in this offering and the Private Placement. Such external financing could include streaming, royalty financing, forward sale arrangements, debt offerings (including convertible debt), additional equity financing or other alternatives, and may result in additional dilution to existing holders of our common stock. In addition, if our stockholders sell substantial amounts of our common stock in the public market or upon the expiration of any statutory holding period, under Rule 144, or upon the exercise of outstanding options or warrants, it could create a circumstance commonly referred to as an "overhang" in anticipation of which the market price of our common stock could decline. The existence of an overhang, whether or not sales have occurred or are occurring, also could make it more difficult for us to raise additional financing through the sale of equity or equity-related securities in the future at a time and price that we deem reasonable or appropriate. The conversion of preferred stock, a change in the conversion rate of preferred stock and exercise of options or warrants may result in substantial dilution to existing stockholders. Conversions of our Series E Preferred Stock presently owned by our principal shareholders and others and exercise of options and warrants would have a dilutive effect on our common stock. As of January 16, 2018, we have reserved (i) 3,163,051 shares of our common stock that are issuable upon conversion of our Series E Preferred Stock at a conversion rate of one share of Series E Preferred Stock for approximately 353.571 shares of common stock (following an adjustment in the conversion ratio effective December 19, 2017), (ii) 1,794,453 shares of our common stock that are issuable upon exercise of options to purchase our common stock, (iii) 4,434,267 shares of our common stock that are issuable upon exercise of warrants to purchase our common stock, and (iv) 1,052,850 shares of our common stock that are issuable pursuant to restricted stock units upon vesting and/or upon termination of service or in connection with a change of control. In the event that we sell or otherwise dispose of our common stock an effective price less than $2.80, the conversion rate will be adjusted and the number of shares of common stock issuable upon conversion of outstanding Series E Preferred Stock will increase. Further, any additional financing that we secure is likely to require the sale of additional common stock and the granting of rights, preferences or privileges senior to those of our common stock and will result in additional dilution of the existing ownership interests of our common stockholders. Our issuance of additional shares of common stock or securities convertible into common stock in exchange for services or to repay debt would dilute the proportionate ownership and voting rights of existing stockholders and could have a negative impact on the market price of our common stock. Our board of directors may generally issue shares of common stock or securities convertible into common stock to pay for debt or services, without further approval by our stockholders, based upon such factors that our board of directors may deem relevant at that time. We have, in the past, issued securities for debt to reduce our obligations. We have also issued securities as payment for services. It is likely that we will issue additional securities to pay for services and reduce debt in the future. We cannot give you any assurance that we will not issue additional shares of common stock or securities convertible into common stock under circumstances we may deem appropriate at the time. Our articles of incorporation allow for our board to create new series of preferred stock without further approval by our stockholders, which could adversely affect the rights of the holders of our common stock. Our board of directors has the authority to fix and determine the relative rights and preferences of preferred stock. Our board of directors also has the authority to issue preferred stock without further stockholder approval. As a result, our board of directors could authorize the issuance of a series of preferred stock that would grant to holders the preferred right to our assets upon liquidation, the right to receive dividend payments before dividends are distributed to the holders of our common stock and the right to the redemption of the shares, together with a premium, prior to the redemption of our common stock. In addition, our board of directors could authorize the issuance of a series of preferred stock that has greater voting power than our common stock or that is convertible into our common stock, which could decrease the relative voting power of our common stock or result in dilution to our existing stockholders. The elimination of monetary liability against our directors, officers and employees under our articles of incorporation and the existence of indemnification rights to our directors, officers and employees may result in substantial expenditures by our Company and may discourage lawsuits against our directors, officers and employees. Our articles of incorporation contain provisions which eliminate the liability of our directors for monetary damages to our Company and stockholders. Our bylaws also require us to indemnify our officers and directors. We may also have contractual indemnification obligations under our agreements with our directors, officers and employees. The foregoing indemnification obligations could result in our Company incurring substantial expenditures to cover the cost of settlement or damage awards against directors, officers and employees that we may be unable to recoup. These provisions and resultant costs may also discourage our Company from bringing a lawsuit against directors, officers and employees for breaches of their fiduciary duties, and may similarly discourage the filing of derivative litigation by our stockholders against our directors, officers and employees even though such actions, if successful, might otherwise benefit our Company and stockholders. Anti-takeover provisions may impede the acquisition of our Company. Certain provisions of the Nevada General Corporation Law have anti-takeover effects and may inhibit a non-negotiated merger or other business combination. These provisions are intended to encourage any person interested in acquiring us to negotiate with, and to obtain the approval of, our board of directors in connection with such a transaction. However, certain of these provisions may discourage a future acquisition of us, including an acquisition in which the stockholders might otherwise receive a premium for their shares. As a result, stockholders who might desire to participate in such a transaction may not have the opportunity to do so. Non-U.S. holders of our common stock, in certain situations, could be subject to U.S. federal income tax upon sale, exchange or disposition of our common stock. It is likely that we are, and will remain for the foreseeable future, a U.S. real property holding corporation for U.S. federal income tax purposes because our assets consist primarily of "United States real property interests" as defined in the Internal Revenue Code of 1986, as amended, or the Code, and applicable Treasury regulations. As a result, under the Foreign Investment in Real Property Tax Act, or FIRPTA, certain non-U.S. investors may or may in the future be subject to U.S. federal income tax on any gain from the disposition of shares of our common stock, in which case they would also be required to file U.S. tax returns with respect to such gain. In general, whether these FIRPTA provisions apply depends on the amount of our common stock that such non-U.S. investors hold. In addition, such non-U.S. investors may or may in the future be subject to withholding if, at the time they dispose of their shares, our common stock is not regularly traded on an established securities market within the meaning of the applicable Treasury regulations. So long as our common stock continues to be regularly traded on an established securities market, only a non-U.S. investor who has owned, actually or constructively, more than 5% of our common stock at any time during the shorter of (i) the five-year period ending on the date of disposition and (ii) the non-U.S. investor s holding period for its shares may or may in the future be subject to U.S. federal income tax on the disposition of our common stock under FIRPTA. FORWARD LOOKING STATEMENTS Some information contained in this registration statement on Form S-1 may contain forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995. These statements include, without limitation, statements relating to our planned expenditures and cash position, business goals, planned exploration and metallurgical work, our drilling program, business strategy, planned permitting activities, geographic surveys, plans with respect to an environmental studies to expand the Relief Canyon open-pit mines, our liquidity and capital resources outlook and future financing requirements, and estimates and assumptions required under our financial statements. We use the words "anticipate," "continue," "likely," "estimate," "expect," "may," "could," "will," "project," "should," "believe" and similar expressions to identify forward-looking statements. Statements that contain these words discuss our future expectations and plans, or state other forward-looking information. Although we believe the expectations and assumptions reflected in those forward-looking statements are reasonable, we cannot assure you that these expectations and assumptions will prove to be correct. Our actual results could differ materially from those expressed or implied in these forward-looking statements as a result of various factors described in this registration statement on Form S-1, including: Risks relating to the future exploration efforts to expand the Relief Canyon deposit, our ability to fund future exploration costs or purchase additional equipment, and our ability to obtain or amend the necessary permits, consents, or authorizations needed to advance expansion of the deposit, or recommissioning of the gold processing facility; Our ability to acquire additional mineral targets; Our ability to achieve any meaningful revenue; Our ability to engage or retain geologists, engineers, consultants and other key management and mining personnel necessary to successfully operate and grow our business; The volatility of the market price of our common stock or our intention not to pay any cash dividends in the foreseeable future; Changes in any federal, state or local laws and regulations or possible challenges by third parties or contests by the federal government that increase costs of operation or limit our ability to explore on certain portions of our property; Decreases in the market price for gold and economic and political events affecting the market prices for gold and other minerals which may be found on our exploration properties; The factors set forth under "Risk Factors" beginning on page 6 of this registration statement on Form S-1; and Other factors described elsewhere in this registration statement on Form S-1. Many of these factors are beyond our ability to control or predict. Although we believe that the expectations reflected in our forward-looking statements are based on reasonable assumptions, such expectations may prove to be materially incorrect due to known and unknown risk and uncertainties. You should not unduly rely on any of our forward-looking statements. These statements speak only as of the date of this registration statement on Form S-1. Except as required by law, we are not obligated to publicly release any revisions to these forward-looking statements to reflect future events or developments. All subsequent written and oral forward-looking statements attributable to us and persons acting on our behalf are qualified in their entirety by the cautionary statements contained in this section and elsewhere in this registration statement on Form S-1. USE OF PROCEEDS The selling stockholders will receive all of the proceeds from the sale of the shares offered by them under this prospectus. We will not receive any proceeds from the sale of the shares by the selling stockholders covered by this prospectus. MARKET FOR OUR COMMON STOCK AND RELATED STOCKHOLDER MATTERS Our common stock commenced trading on August 20, 2009 and was quoted on the OTC Bulletin Board under the symbol EXCX.OB from June 23, 2009 through May 31, 2011. Prior to August 20, 2009, there was no active market for our common stock. Our common stock traded under the symbol SAGE.OB from June 1, 2011 until March 26, 2012. On March 26, 2012, our symbol was changed to PGLC.OB. On June 18, 2015 our stock underwent a 1-for-18 reverse stock split. On July 6, 2015, our stock began trading on Nasdaq under the symbol PGLC. On November 17, 2016, our stock began trading on the TSX under the symbol PGLC. The following table sets forth the intraday high and low sales prices in U.S. dollars or Canadian dollars for each of the quarterly periods indicated as reported on Nasdaq (as reported by Bloomberg) and the TSX (as reported by Bloomberg), respectively. Nasdaq TSX (C$) High Low High Low Year Ended December 31, 2016 First Quarter 4.99 3.12 N/A N/A Second Quarter 4.65 3.62 N/A N/A Third Quarter 5.02 3.77 N/A N/A Fourth Quarter 4.58 3.10 5.50 4.20 Year Ending December 31, 2017 First Quarter 3.49 2.67 4.74 3.66 Second Quarter 3.10 2.60 4.15 3.55 Third Quarter 3.23 2.70 4.05 3.44 Fourth Quarter 3.23 2.26 4.02 2.90 Year Ending December 31, 2018 First Quarter (through January 17, 2018) 2.58 2.37 3.20 2.95 The last reported sales price of our common stock on Nasdaq on January 17, 2018, was $2.43 per share. The last reported sales price of our common stock on TSX on January 17, 2018, was CDN$3.06 per share. Holders As of January 16, 2018, there were 505 holders of record of our common stock. Dividend Policy In the past, we have not declared or paid cash dividends on our common stock, and we do not intend to pay any cash dividends on our common stock. Rather, we intend to retain future earnings (if any) to fund the operation and expansion of our business and for general corporate purposes. Subject to legal and contractual limits, our board of directors will make any decision as to whether to pay dividends in the future. MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION The following discussion and analysis should be read in conjunction with our consolidated financial statements and related notes included in this prospectus. In addition to historical information, this discussion and analysis contains forward-looking statements that involve risks, uncertainties, and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors, including but not limited to those set forth under "Risk Factors," "Forward-Looking Statements," and in other parts of this prospectus. Overview During the year ended December 31, 2016 and the nine months ended September 30, 2017, we focused primarily on the development and commencement of our 2016 drilling program to expand the Relief Canyon Mine deposit; continuing permitting and bonding; engineering and other work related to the potential commencement of mining at the Relief Canyon Mine; and financing efforts. An overview of certain significant events, including certain material events subsequent to September 30, 2017, follows: In December 2017, we completed an underwritten public offering of 2,794,500 shares of our common stock and associated warrants to purchase up to 1,117,800 shares of our common stock under our shelf registration statement at a price to the public of $2.80 per share and associated warrant for gross proceeds of approximately $7.8 million. Concurrently, we completed the Private Placement for gross proceeds of approximately $6.8 million. We intend to use the net proceeds from the offerings for advancing the Relief Canyon project and/or for general corporate purposes. For the nine months ended September 30, 2017, we drilled 14 holes, totaling approximately 5,800 feet, at our Blackjack Project Area, located approximately nine miles south of our Relief Canyon Mine. In May 2017, we completed the PFS of the Relief Canyon Mine. The PFS indicates the possibility of a viable mine and recommended work should continue on advancing the Relief Canyon Mine to a production decision. During the quarter ended March 31, 2017, we successfully completed the environmental permitting process and have secured all necessary permits to restart and expand the Relief Canyon Mine. As part of the permitting process we increased our statewide surface management surety bonds with the BLM as required by the State of Nevada from approximately $5.6 million to approximately $12.3 million. On March 29, 2017, we entered into a Mining Sublease with Newmont granting us the exclusive right to prospect, explore for, develop, and mine minerals on certain lands within the Pershing Pass area south of the Relief Canyon Mine. In December 2016, we completed an underwritten public offering for 2,205,883 shares of our common stock under our shelf registration statement at a price to the public of $3.40 per share for gross proceeds of approximately $7.5 million. In December 2016, we hired Timothy Arnold as Vice President Operations for the Company. In November 2016, our common stock began trading on the TSX. In November 2016, we completed our 2016 Phase 1 Drilling Campaign which focused on increasing the resource at the Relief Canyon Mine and continuing to upgrade the Relief Canyon Mine pit economics. In August 2016, the BLM approved our Environmental Assessment and Plan of Operations Modification for the Relief Canyon Mine expansion. This approval expands our pit boundary and deepening of the pit and also increases permissible drilling areas around the existing pits. In June 2016, MDA completed a PEA for our Relief Canyon Mine property. The work done to date as presented in the PEA prepared by MDA provides the economic data to support further efforts to advance the project. In June 2016, we filed a shelf registration statement on Form S-3, which was subsequently declared effective, and on which we registered for sale up to $100.0 million of certain of our securities from time to time and at prices and on terms that we may determine. In March 2016, we completed a private placement and raised approximately $6.0 million in net proceeds, after expenses and legal fees, through the issuance of a total of 1,850,000 shares of our common stock and warrants to purchase 925,000 shares of our common stock at an exercise price of $4.35 per share. In February 2016, we completed two private placements and raised approximately $8.1 million in gross proceeds, or $7.4 million in net proceeds after commissions, expenses and legal fees, through the issuance of a total of 2,488,529 shares of our common stock and warrants to purchase 1,322,019 shares of our common stock at an exercise price of $5.06 per share. Preliminary Feasibility Study and Mineralized Material Estimate On May 26, 2017, MDA completed a PFS on the Relief Canyon Mine. The PFS included an estimate of mineralized material at the Relief Canyon Mine deposit, calculated at a cut-off grade of 0.005 ounces of gold per ton for oxide material, 0.01 ounces of gold per ton for mixed material and 0.02 ounces of gold per ton for sulfide material. Silver grades were only available for a portion of the deposit. The database used for the mineralized material estimate described below includes 419 core holes and 676 reverse circulation holes for a total of 482,755 feet, of which 415 core holes and 89 reverse circulation holes were drilled by the Company from 2011 to September 2016. Tons Average gold grade (ounces per ton) 41,876,000 0.019 Tons Average silver grade (ounces per ton) 17,576,000 0.117 "Mineralized material" as used in this registration statement on Form S-1, although permissible under the Securities and Exchange Commission ("SEC") Guide 7, does not indicate "reserves" by SEC standards. We cannot be certain that any part of the Relief Canyon deposit will ever be confirmed or converted into SEC Industry Guide 7 compliant "reserves." Investors are cautioned not to assume that all or any part of the mineralized material will be confirmed or converted into reserves or that mineralized material can be economically or legally extracted. The PFS indicates the possibility of a viable mine and recommended work should continue on advancing the project to a production decision. The recommended advancement work would include additional drilling to improve the knowledge of the deposit, and obtaining silver assays for continuous mineralized intervals from past core drilling and new drilling so that more silver values can be added to the economic analysis for the mine. We would also need to arrange financing for the project before any production decision could be made. See "Liquidity and Capital Resources" below. Permitting We have all of the state and federal permits necessary to start mining and heap-leach processing operations. We have planned a two-phase permitting and development scenario for the project. Phase I, which has been fully authorized under our permits, is the re-purposing of previously approved disturbance for expanded mining to a pit bottom elevation of 5,080 feet, partial backfilling of the Phase I pit to approximately 20 feet above the historical groundwater elevation to eliminate a pit lake, expanded exploration operations, full build-out of the heap leach pad to accommodate leaching of the Phase I ore, and construction of a new waste rock storage facility. Phase II would include additional mine expansion activities and would allow mining further below the water table. We will use the mine plan in the PFS as the basis for the Phase II permit applications, and anticipate we will submit the Phase II permit applications in the first quarter of 2018. Results of Operations Three and Nine months ended September 30, 2017 and 2016 Net Revenues We are an exploration stage company with no operations, and we generated no revenues for the three and nine months ended September 30, 2017 and 2016. Operating Expenses Total operating expenses for the nine months ended September 30, 2017 as compared to the nine months ended September 30, 2016 were approximately $9.1 million and $10.0 million, respectively. The $0.9 million decrease in operating expenses for the nine months ended September 30, 2017 is comprised of a $0.8 million decrease in exploration expenses on our Relief Canyon properties to approximately $1.0 million from $1.8 million in the prior period due to decreased direct drilling activities during the current period; a decrease of approximately $0.4 million in compensation to approximately $3.1 million from $3.5 million in the prior period as a result of decreased stock-based compensation offset by increases in consulting fees of approximately $0.2 million to approximately $1.7 million from $1.5 million as a result of consulting costs associated with the completion of the PFS and increased consulting in connection with services related to permitting; an increase of $0.1 million in general and administrative expenses to approximately $3.2 million from $3.1 million in the prior period, primarily due to increased public company expenses and legal costs. Total operating expenses for the three months ended September 30, 2017 as compared to the three months ended September 30, 2016 were approximately $2.5 million and $3.6 million, respectively. The $1.1 million decrease in operating expenses for the three months ended September 30, 2017 is comprised of a $1.1 million decrease in exploration expenses on our Relief Canyon properties to approximately $0.2 million from $1.3 million in the prior period due to decreased direct drilling activities during the current period; a decrease in compensation of approximately $0.1 million to approximately $0.8 million from $0.9 million due to decreased stock-based compensation offset by an increase in consulting fees of approximately of $0.1 million to approximately $0.5 million from $0.4 million as a result of consulting costs associated with the completion of the PFS. Loss from Operations We reported a loss from operations of $9.1 million and $10.0 million for the nine months ended September 30, 2017 and 2016, respectively. The increase in operating loss was due primarily to the increase in operating expenses described above. We reported a loss from operations of $2.5 million and $3.6 million for the three months ended September 30, 2017 and 2016, respectively. Other Income (Expenses) Total other income (expense) was approximately ($800) and ($4,200) for the nine months ended September 30, 2017 and 2016, respectively. The change in other income (expense) is primarily attributable to an increase in foreign currency loss offset by an increase in other income. Total other income (expense) was approximately $2,600 and ($280) for the three months ended September 30, 2017 and 2016, respectively. The change in other income (expense) is primarily attributable to an increase in interest income. Net Loss As a result of the operating expense and other income (expense) discussed above, we reported a net loss of approximately ($9.1) million for the nine months ended September 30, 2017 as compared to a net loss of ($10.0) million for the nine months ended September 30, 2016. As a result of the operating expense and other income (expense) discussed above, we reported a net loss of approximately ($2.5) million for the three months ended September 30, 2017 as compared to a net loss of ($3.6) million for the three months ended September 30, 2016. Years Ended December 31, 2016 and December 31, 2015 Net Revenues We are an exploration stage company with no operations, and we generated no revenues for the years ended December 31, 2016 and 2015. Operating Expenses Total operating expenses for the year ended December 31, 2016 as compared to the year ended December 31, 2015, were $15.6 million and $19.1 million, respectively. The $3.5 million decrease in operating expenses for the year ended December 31, 2016 is comprised largely of (i) a $3.8 million decrease in exploration expenses on our Relief Canyon properties to approximately $4.8 million from $8.6 million in the prior period due to less direct drilling activities during the current year, (ii) a decrease of $0.6 million in general and administrative expenses to approximately $4.1 million from $4.7 million in the prior period, primarily due to decrease in travel, insurance and marketing expenses, (iii) a $0.1 million increase in consulting fees to approximately $1.4 million from $1.3 million in the prior period primarily due to an increase in investor relations services, and (iv) an increase of $0.7 million in compensation and related taxes to approximately $5.3 million from $4.6 million primarily due to an increase in stock based compensation in connection with restricted stock grants to employees and an increase in salary levels of certain employees. Loss from Operations We reported loss from operations of $15.6 million and $19.1 million for the year ended December 31, 2016 and 2015, respectively. The decreases in operating loss were due primarily to the decreases in operating expenses described above. Other Expenses Total other expense, net was approximately ($2,600) and ($2,600) for the year ended December 31, 2016 and 2015, respectively. Net Loss As a result of the operating expense and other income (expense) discussed above, we reported a net loss of ($15.6) million for the year ended December 31, 2016 as compared to a net loss of ($19.1) million for the year ended December 31, 2015. Liquidity and Capital Resources On December 19, 2017, we completed an underwritten public offering for 2,794,500 shares of our common stock and associated warrants to purchase up to 1,117,800 shares of our common stock under our shelf registration statement, at a price to the public of $2.80 per share and associated warrant, for gross proceeds of approximately $7.8 million. Concurrently, we completed the Private Placement of 2,347,236 shares of our common stock and associated warrants to purchase 938,891 shares of our common stock for gross proceeds of approximately $6.8 million. After expenses, the net proceeds to the Company from the public offering and Private Placement were approximately $13.4 million. At September 30, 2017, our cash, cash equivalents and restricted cash equivalents totaled $5.7 million. Our cash, cash equivalents and restricted cash equivalents decreased during the nine months ended September 30, 2017 by $8.3 million from our cash, cash equivalents and restricted cash equivalents balance at December 31, 2016 of $14.0 million. The decrease in cash and cash equivalents was primarily the result of cash used in operations of $8.2 million that was comprised of costs to complete the PFS, exploration expenditures on our Relief Canyon properties, and general and administrative expenses, including consultant fees, compensation costs, legal fees and public company expenses. Our cash, cash equivalents and restricted cash equivalents increased in the period subsequent to September 30, 2017 due to the following: $13.4 million in net proceeds from the December 2017 equity financings; $2.4 million on general and administrative expenses (including employee salaries, public company expenses, consultants, land holding costs and annual insurance premium renewals); $0.1 million on permitting and the continuation of studies to evaluate mining the Relief Canyon Mine below the water table. At the end of fiscal year 2017, we had approximately 12.9 million in cash and cash equivalents and $3.7 million in restricted cash equivalents. We expect to require additional financing to fund our current operations in the first fiscal quarter of 2019. There is no assurance that we will be able to obtain additional financing on acceptable terms or at all. The actual amount we spend for fiscal year 2018 may vary significantly from the amounts specified above if we decide to advance the Relief Canyon Mine toward production in 2018. Based on the estimates contained in the PFS, we currently expect to incur capital expenditures and working capital expenses of approximately $35 million. The Company is evaluating various sources of additional financing. No development decision with respect to the Relief Canyon Mine is expected to be made unless and until the Company is able to solidify its financing plans. Our ability to raise additional funds will depend on financial, economic and other factors, many of which are beyond our control. The additional funds necessary to fund the development of the Relief Canyon Mine may not be available to us on acceptable terms or at all. Recent Accounting Pronouncements In February 2016, FASB issued ASU 2016-02, "Leases (Topic 842)". The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases. The new guidance will be effective for fiscal years beginning after December 15, 2018, and interim periods within those annual periods and is applied retrospectively. Early adoption is permitted. We do not believe the guidance will have a material impact on our consolidated financial statements. In March 2016, FASB issued ASU 2016-09, "Compensation - Stock Compensation (Topic 718)" ("ASU 2016-09") as part of FASB's simplification initiative focused on improving areas of GAAP for which cost and complexity may be reduced while maintaining or improving the usefulness of information disclosed within the financial statements. ASU 2016-09 focuses on simplification specifically with regard to share-based payment transactions, including income tax consequences, classification of awards as equity or liabilities and classification on the statement of cash flows. The guidance in ASU 2016-09 is effective for fiscal years beginning after December 15, 2016, and interim periods within those annual periods. Early adoption is permitted. Our adoption did not have a material impact on our consolidated results of operations, financial position and related disclosures. In August 2016, FASB issued ASU 2016-15, "Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (a consensus of the FASB Emerging Issues Task Force)" ("ASU 2016-15"). ASU 2016-15 addresses the following eight specific cash flow issues: Debt prepayment or debt extinguishment costs; settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing; contingent consideration payments made after a business combination; proceeds from the settlement of insurance claims; proceeds from the settlement of corporate-owned life insurance policies (including bank-owned life insurance policies); distributions received from equity method investees; beneficial interests in securitization transactions; and separately identifiable cash flows and application of the predominance principle. This guidance became effective for us beginning on January 1, 2018. We do not believe the guidance will have a material impact on our consolidated financial statements. In November 2016, the FASB issued ASU 2016-18, "Statement of Cash Flows (Topic 230): Restricted Cash," or "ASU 2016-18". ASU 2016-18 is intended to clarify how entities present restricted cash in the statement of cash flows. The guidance requires entities to show the changes in the total of cash and cash equivalents and restricted cash in the statement of cash flows. As a result, entities will no longer present transfers between cash and cash equivalents and restricted cash in the statement of cash flows. When cash and cash equivalents and restricted cash are presented in more than one line item on the balance sheet, the new guidance requires a reconciliation of the totals in the statement of cash flows to the related captions in the balance sheet. This reconciliation can be presented either on the face of the statement of cash flows or in the notes to the financial statements. ASU 2016-18 is effective for fiscal years beginning after December 15, 2017 and is to be applied retrospectively. Early adoption is permitted, including adoption in an interim period. We adopted ASU 2016-18 for the three-month period ended September 30, 2017 and our adoption did not have a material impact on our consolidated financial statements. In January 2017, the FASB issued ASU 2017-04, "Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment", which eliminates Step 2 from the goodwill impairment test. When an indication of impairment was identified after performing the first step of the goodwill impairment test, Step 2 required that an entity determine the fair value at the impairment testing date of its assets and liabilities (including unrecognized assets and liabilities) using the same procedure that would be required in determining the fair value of assets acquired and liabilities assumed in a business combination. Under the amendments in ASU No. 2017-04, an entity would perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying value. An entity would recognize an impairment charge for the amount by which the carrying value exceeds the reporting unit s fair value. In addition, an entity must consider income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. A public business entity that is a SEC filer should adopt the amendments in ASU No. 2017-04 for its annual, or any interim, good will impairment tests in fiscal years beginning after December 15, 2019. We do not believe the guidance will have a material impact on our consolidated financial statements. In May 2017, the FASB issued ASU 2017-09, "Compensation - Stock Compensation". The update provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in ASC Topic 718. An entity shall account for the effects of a modification described in ASC paragraphs 718-20-35-3 through 35-9, unless all the following are met: (1) The fair value of the modified award is the same as the fair value of the original award immediately before the original award is modified; (2) The vesting conditions of the modified award are the same as the vesting conditions of the original award immediately before the original award is modified; and (3) The classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the original award is modified. The provisions of this update become effective for annual periods and interim periods within those annual periods beginning after December 15, 2017. We do not believe the guidance will have a material impact on our consolidated financial statements. In July 2017, the FASB issued ASU 2017-11 "Earnings Per Share (Topic 260)". The amendments in the update change the classification of certain equity-linked financial instruments (or embedded features) with down round features. The amendments also clarify existing disclosure requirements for equity-classified instruments. For freestanding equity-classified financial instruments, the amendments require entities that present earnings per share ("EPS") in accordance with Topic 260, Earnings Per Share, to recognize the effect of the down round feature when it is triggered. That effect is treated as a dividend and as a reduction of income available to common shareholders in basic EPS. Convertible instruments with embedded conversion options that have down round features would be subject to the specialized guidance for contingent beneficial conversion features (in Subtopic 470-20, Debt—Debt with Conversion and Other Options), including related EPS guidance (in Topic 260). For public business entities, the amendments in Part I of this update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. We do not believe the guidance will have a material impact on our consolidated financial statements. Other accounting standards that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption. We do not discuss recent pronouncements that are not anticipated to have an impact on or are unrelated to our financial condition, results of operations, cash flows or disclosures. Critical Accounting Policies and Estimates The discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of our financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. Management believes the following critical accounting policies affect the significant judgments and estimates used in the preparation of the financial statements. Principles of Consolidation The consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles and present the financial statements of the Company and our wholly-owned subsidiaries. In the preparation of our consolidated financial statements, intercompany transactions and balances are eliminated. Use of Estimates In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the consolidated balance sheet, and revenues and expenses for the period then ended. Actual results may differ significantly from those estimates. Significant estimates made by management include, but are not limited to, the useful life of property and equipment, amounts and timing of closure obligations, the assumptions used to calculate fair value of restricted stock units, options and warrants granted, stock-based compensation, beneficial conversion on preferred stock, capitalized mineral rights, asset valuations, timing of the performance criteria of restricted stock units and the fair value of common stock issued. Stock-Based Compensation Stock-based compensation is accounted for based on the requirements of the Share-Based Payment Topic of ASC 718 which requires recognition in the financial statements of the cost of employee and director services received in exchange for an award of equity instruments over the period the employee or director is required to perform the services in exchange for the award (presumptively, the vesting period). ASC 718 also requires measurement of the cost of employee and director services received in exchange for an award based on the grant-date fair value of the award. Pursuant to ASC Topic 505-50, for share-based payments to consultants and other third parties, compensation expense is determined at the "measurement date." The expense is recognized over the vesting period of the award. Until the measurement date is reached, the total amount of compensation expense remains uncertain. Effective for the fiscal year-ended December 31, 2016, we early adopted ASU 2016-09, "Compensation - Stock Compensation (Topic 718)" ("ASU 2016-09"), which makes several modifications to Topic 718. Upon adoption of ASU 2016-09, we recognize the effect of forfeitures in compensation cost as they occur, rather than estimating forfeitures as of the award date. Any previously recognized compensation cost will be reversed in the period of forfeiture. Property and Equipment Property and equipment are carried at cost. The cost of repairs and maintenance is expensed as incurred; major replacements and improvements are capitalized. When assets are retired or disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses are included in income in the year of disposition. We examine the possibility of decreases in the value of fixed assets when events or changes in circumstances reflect the fact that their recorded value may not be recoverable. Depreciation is calculated on a straight-line basis over the estimated useful life of the assets, generally from one to twenty-five years. Mineral Property Acquisition and Exploration Costs Costs of lease, exploration, carrying and retaining unproven mineral lease properties are expensed as incurred. We have chosen to expense all mineral exploration costs as incurred given that we are still in the exploration stage. Once we have identified proven and probable reserves in our investigation of our properties and upon development of a plan for operating a mine, we would enter the development stage and capitalize future costs until production is established. When a property reaches the production stage, the related capitalized costs will be amortized, using the units-of-production method over proven and probable reserves. When we have capitalized mineral properties, these properties will be periodically assessed for impairment of value and any diminution in value. To date, we have not established the commercial feasibility of any exploration prospects; therefore, all costs are being expensed. ASC 930-805 states that mineral rights consist of the legal right to explore, extract, and retain at least a portion of the benefits from mineral deposits. Mining assets include mineral rights. Acquired mineral rights are considered tangible assets under ASC 805. ASC 805 requires that mineral rights be recognized at fair value as of the acquisition date. As a result, our direct costs to acquire mineral rights are initially capitalized as tangible assets. Mineral rights include costs associated with acquiring patented and unpatented mining claims and mill sites. If proven and probable reserves are established for the property and it has been determined that a mineral property can be economically developed, costs will be amortized using the units-of-production method over proven and probable reserves. For mineral rights in which proven and probable reserves have not yet been established, we assess the carrying values for impairment at the end of each reporting period and whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Long-Lived Assets We review for impairment whenever events or circumstances indicate that the carrying amount of assets may not be recoverable, pursuant to guidance established in ASC 360-10-35-15, "Impairment or Disposal of Long-Lived Assets". An impairment is considered to exist when the sum of expected undiscounted future cash flows is less than the carrying amount of the asset. The amount of impairment is measured as the difference between the asset s estimated fair value and its carrying amount. Asset Retirement Obligations Asset retirement obligations, consisting primarily of estimated mine reclamation and closure costs at our Relief Canyon property, are recognized in the period incurred and when a reasonable estimate can be made, and recorded as liabilities at fair value. Such obligations, which are initially estimated based on discounted cash flow estimates, are accreted to full value over time through charges to accretion expense. Corresponding asset retirement costs are capitalized as part of the carrying amount of the related long-lived asset and depreciated over the asset s remaining useful life. Asset retirement obligations are periodically adjusted to reflect changes in the estimated present value resulting from revisions to the estimated timing or amount of reclamation and closure costs. We review and evaluate the asset retirement obligations annually or more frequently at interim periods if deemed necessary. Off-Balance Sheet Arrangements Since our inception, we have not engaged in any off-balance sheet arrangements, including the use of structured finance, special purpose entities or variable interest entities. Contractual Obligations Not applicable. BUSINESS AND PROPERTIES Overview We are a gold and precious metals exploration company pursuing exploration, development and mining opportunities primarily in Nevada. We are currently focused on exploration at our Relief Canyon properties in Pershing County in northwestern Nevada and, if economically feasible, commencing mining at the Relief Canyon Mine. None of our properties contain proven and probable reserves, and our activities on all of our properties are exploratory in nature. Our principal offices are located in Lakewood, Colorado at 1658 Cole Boulevard, Building No. 6, Suite 210, Lakewood, Colorado 80401 and we have an exploration office at 1055 Cornell, Lovelock, Nevada 89419. Our telephone number is 720-974-7254. Corporate Structure We were incorporated in Nevada on August 2, 2007 under the name Excel Global, Inc., and we changed our name to Pershing Gold Corporation on February 27, 2012. We operate our business directly and also through our wholly-owned subsidiary, Gold Acquisition Corp., a Nevada corporation. Gold Acquisition Corp. owns and is conducting exploration on the Relief Canyon Mine property in northwestern Nevada. Pershing Gold Corporation owns directly and is conducting exploration on the Relief Canyon properties adjacent to the Relief Canyon Mine property, which we refer to as the "Relief Canyon expansion properties". We also have a subsidiary that holds a royalty interest and a wholly-owned subsidiary formed for potential purchases of exploration targets. Business Strategy Our business strategy is to acquire and advance precious metals exploration properties. We seek properties with known mineralization that are in an advanced stage of exploration and have previously undergone drilling but are under-explored, which we believe we can advance quickly to increase value. We are currently focused on exploration of the Relief Canyon properties and, if economically feasible, commencing mining at the Relief Canyon Mine. We also are reviewing strategic opportunities, focused primarily in Nevada. Relief Canyon Mine Properties We acquired the Relief Canyon Mine property in August 2011. The property then consisted of approximately 1,100 acres of unpatented mining claims and millsites and included three open-pit mines and a processing plant that could be used to process material from the Relief Canyon Mine or from other mining operations. We refer to this property as the "Relief Canyon Mine" property. We significantly expanded our Relief Canyon property position in 2012 with the acquisition of approximately 23,000 additional acres of unpatented mining claims and leased and subleased lands around the Relief Canyon Mine and south of the Relief Canyon Mine. We refer to our current expanded property position as the "Relief Canyon properties." In early 2015, we acquired 74 mining claims near the Relief Canyon Mine and on which the processing facilities are located that we had previously leased from Newmont, and entered into a new mining lease directly with the owner of approximately 1,600 acres that we had previously subleased from Newmont. See "Relief Canyon Properties – Property History – Title and Ownership Rights" and "–Newmont Leased Property." Most of the property on which the mine and processing facilities are located is subject to a 2% net smelter return royalty payable to Battle Mountain Gold (now RG Royalties, LLC) or Newmont. In March 2017, we entered into a mining sublease with Newmont which further consolidated our land holdings in the Pershing Pass area south of the Relief Canyon Mine. Since we acquired the Relief Canyon Mine property in 2011, we have drilled a total of 496 drill holes comprising approximately 282,000 feet at the Relief Canyon properties. Our exploration efforts have been focused primarily on expanding the known Relief Canyon Mine deposit. Our 2011-2013 exploration drilling programs expanded the deposit. We began a drilling program in 2014 which we completed in early 2015. In this program, we drilled a total of 134 core holes, for approximately 74,000 feet, for the purpose of extending and upgrading the current deposit. The 2014 drill results included some gold intercepts at significantly higher grades than the average historic grade of the Relief Canyon Mine deposit of approximately one gram of gold per ton. We conducted the 2015 drilling program from May 2015 through December 2015, which demonstrated that the high-grade zone in the North Target Area has continued south under the North Pit and that the higher-grade L Zone of the Relief Canyon Mine deposit is geologically open to the west, south and southwest. In July 2016, we commenced Phase 1 of our 2016 drilling program at the Relief Canyon Mine property. Phase 1 was completed in November 2016, and included 22 core holes, totaling approximately 15,000 feet. In November 2016, we commenced Phase 2 drilling and completed this drilling in December 2016, which included nine core holes totaling approximately 8,000 feet. Preliminary Feasibility Study and Mineralized Material Estimate On May 26, 2017, MDA completed a PFS on the Relief Canyon Mine. The PFS included an estimate of mineralized material at the Relief Canyon Mine deposit, calculated at a cut-off grade of 0.005 ounces of gold per ton for oxide material, 0.01 ounces of gold per ton for mixed material and 0.02 ounces of gold per ton for sulfide material. Silver grades were only available for a portion of the deposit. The database used for the mineralized material estimate described below includes 419 core holes and 676 reverse circulation holes for a total of 482,755 feet, of which 415 core holes and 89 reverse circulation holes were drilled by the Company from 2011 to September 2016. Tons Average gold grade (ounces per ton) 41,876,000 0.019 Tons Average silver grade (ounces per ton) 17,576,000 0.117 "Mineralized material" as used in this registration statement on Form S-1, although permissible under the Securities and Exchange Commission ("SEC") Guide 7, does not indicate "reserves" by SEC standards. We cannot be certain that any part of the Relief Canyon deposit will ever be confirmed or converted into SEC Industry Guide 7 compliant "reserves." Investors are cautioned not to assume that all or any part of the mineralized material will be confirmed or converted into reserves or that mineralized material can be economically or legally extracted. The PFS indicates the possibility of a viable mine and recommended work should continue on advancing the project to a production decision. The recommended advancement work would include additional drilling to improve the knowledge of the deposit, and obtaining silver assays for continuous mineralized intervals from past core drilling and new drilling so that more silver values can be added to the economic analysis for the mine. Permitting We have all of the state and federal permits necessary to start mining and heap-leach processing operations. We have planned a two-phase permitting and development scenario for the project. Phase I, which has been fully authorized under our permits, is the re-purposing of previously approved disturbance for expanded mining to a pit bottom elevation of 5,080 feet, partial backfilling of the Phase I pit to approximately 20 feet above the historical groundwater elevation to eliminate a pit lake, expanded exploration operations, full build-out of the heap leach pad to accommodate leaching of the Phase I ore, and construction of a new waste rock storage facility. Phase II would include additional mine expansion activities and would allow mining further below the water table. We will use the mine plan in the PFS as the basis for the Phase II permit applications, and anticipate we will submit the Phase II permit applications in the first quarter of 2018. Production Decision and Financing We are considering two alternative mining scenarios in our economic assessment of advancing the project to production: self-mining, with our own manpower and equipment, and contract mining by mining contractors who supply the manpower and equipment to deliver material to the Company s processing facilities. If we were to decide to pursue the commencement of production at the Relief Canyon Mine property, additional external financing would be required. Although the Relief Canyon Mine currently has an available leach pad and processing facility and we have senior mine and processing personnel in place, we would be required to obtain mining equipment (which could be through purchase, lease, contract mining or a combination of these), hire employees for the mine and the processing plant, purchase materials and supplies, commence mining, leaching and processing activities, and continue these activities as well as the corporate activities currently conducted for a number of months until sufficient positive cash flow is produced by gold sales to fund all of these ongoing activities. We are actively pursuing discussions with potential counterparties for the remaining financing that will be needed to commence production at Relief Canyon. This additional external financing could include streaming, royalty financing, forward sale arrangements, debt offerings (including convertible debt), or other similar arrangements. It may also include further sales of equity securities. There are no assurances that we will be successful in raising sufficient financing to commence production at Relief Canyon. We would also need to arrange financing for the project before any production decision could be made. See "Liquidity and Capital Resources" above. If approved by the Board of Directors, we would expect to move forward financing for the project. We currently anticipate that initial gold production may occur within approximately six to nine months from investment decision and obtaining full financing for the project, although the actual time period required will be dependent on various factors outlined in the pre-feasibility study. Relief Canyon Properties Location, Access and Facilities The Relief Canyon properties are located about 100 miles northeast of Reno, Nevada. The nearest town is Lovelock, Nevada, approximately 15 miles west-southwest of the Relief Canyon Mine property, which can be reached from both Reno and Lovelock on U.S. Interstate 80. The Relief Canyon Mine property is reached from Lovelock by travelling approximately seven miles northeast on I-80 to the Coal Canyon Exit (Exit No. 112), then about 10 miles southeast on Coal Canyon Road (State Route 857, a paved road maintained by Pershing County) to Packard Flat, and then north on a gravel road for two miles. All of the Relief Canyon properties can be accessed by unpaved roads from the Relief Canyon Mine property. Through our wholly-owned subsidiary, Gold Acquisition Corp., we own 254 unpatented mining claims and 120 millsite claims, and lease approximately 1,600 acres of fee land, at the Relief Canyon Mine property. The Relief Canyon Mine property includes the Relief Canyon Mine and gold processing facility, currently on care and maintenance status. The Relief Canyon Mine includes three open pit mines, heap leach pads comprised of six cells, two solution ponds and a cement block constructed adsorption desorption-recovery ("ADR") solution processing circuit. The ADR type process plant consists of four carbon columns, an acid wash system, a stripping vessel, and electrowinning cells. The process facility was completed in 2008 and Firstgold Corp. produced a small amount of gold there in 2009. See "Relief Canyon Properties – Property History." The facilities are generally in good condition. When the Relief Canyon Mine was in production in the late 1980s and early 1990s, previous operators used conventional heap leach processing methods in which ore removed from the open-pit mines was crushed, stacked on heap leach pads and sprinkled with a dilute sodium cyanide solution to dissolve gold and silver from the ore. The "pregnant" gold and silver bearing solution was piped to the gold recovery plant and processed using a conventional ADR gold and silver recovery system. In the ADR system, the pregnant solution flowed through a series of carbon columns where the gold and silver were adsorbed onto activated carbon. The next step in the process involved stripping the gold from the gold-bearing carbon in electrowinning cells and then recovering the gold in an on-site refinery. The resulting gold and silver dor was then sent to a third party facility for further processing into saleable gold and silver products. Following removal of the gold and silver, the cyanide solution was recycled to the heap leach pads in a closed-loop system. The Company plans to add mercury pollution control equipment to the process plant to allow for onsite stripping of the gold-bearing carbon, which would require additional environmental permits and additional capital. If the Company elects not to add the mercury pollution control equipment, or if there are permitting problems or delays, the Company could ship gold-laden carbon from the carbon columns to a third-party refinery for further processing. Adequate line power is available to the site to operate the existing process facility and ancillary facilities. There is a backup generator onsite that could provide the required power for the heap leach pumping system in the event of power outages. Another generator will be used to provide power for the crushing and conveying system. Sufficient water rights to operate the facility have been appropriated with two operating and permitted wells. The maps below show the location of the Relief Canyon properties: Figure 1: Relief Canyon properties, excluding the Coal Canyon project Figure 2: Coal Canyon Project Rock Formation and Mineralization The Relief Canyon properties are located in Pershing County, Nevada at the southern end of the Humboldt Range. The range is underlain by a sequence of late Paleozoic to Mesozoic-aged volcanic and sedimentary rocks. Gold-bearing rocks at the Relief Canyon properties are primarily developed within breccia zones along the contact between the Grass Valley and Cane Springs Formations. Property History Gold was first discovered on the property by the Duval Corp. in 1979. Subsequent exploration was performed by various companies including Lacana Mining, Santa Fe Gold Corp., and Pegasus Gold Inc., and gold was produced from the property during the late 1980s and early 1990s. Firstgold Corp. acquired the property in 1995, explored periodically from 1995 until 2009, and produced a small amount of gold in 2009. Firstgold Corp. filed for bankruptcy protection in January 2010, and in August 2011, pursuant to an order of the bankruptcy court, the Company (through our wholly owned subsidiary, Gold Acquisition Corp.) purchased 100% of the Relief Canyon Mine property and related assets. Title and Ownership Rights Our property rights currently total approximately 29,000 acres and are comprised of approximately 1,056 owned unpatented mining claims, 120 owned millsite claims, 143 leased unpatented mining claims, and 4,127 acres of leased and 3,739 acres of subleased private lands. In January 2015, we acquired certain mining claims from Newmont, entered into a new mining lease on private, or fee, lands that we previously subleased from Newmont, and amended the 2006 Minerals Lease and Sublease with Newmont with respect to certain other portions of the Relief Canyon properties. These transactions, which did not increase the size of our Relief Canyon property position, are described below. In March 2017, we entered into a mining sublease with Newmont which added 960 acres of land in the Pershing Pass area. In July 2017, 36 additional unpatented claims were located in the Pershing Pass area, adding 640 acres to our holdings. We also control options to purchase two 40 acre parcels of fee land in the same vicinity. In order to maintain ownership of the unpatented mining claims and millsites at the Relief Canyon properties, we are required to make annual claim maintenance payments of $155 per mining claim or millsite to the BLM and to record in the county records an affidavit of payment of claim maintenance fees and notice of intent to hold and pay state and county fees of $10.50 per claim or millsite. Our total property maintenance costs for all of the unpatented mining claims and millsites for the Relief Canyon properties in 2017 was approximately $211,000, and we expect our costs to be approximately $220,000 in 2018, which covers the cost of the additionally acquired claims noted above and an increase in the state and county fee to $12.00 per claim. The BLM is required by statute to adjust the claim maintenance fees for inflation every five years, or more frequently if the Secretary of Interior determines an adjustment to be reasonable. Those fees were most recently adjusted in 2014. January 2015 Acquisition In January 2015, we acquired 74 unpatented mining claims totaling approximately 1,300 acres that we had previously leased from Newmont. We also entered into a new mining lease directly with New Nevada Resources, LLC and New Nevada Lands, LLC for approximately 1,600 acres of fee, or private, land that we had previously subleased from Newmont. The new lease has a primary term of twenty years that can be extended for so long thereafter as mining, development or processing operations are being conducted on the land on a continuous basis. The lease contains customary terms and conditions, including annual advance royalty payments commencing at $1.00 per acre and increasing after five years by the greater of five percent or an amount determined from the Consumer Price Index, and a 2.5% net smelter returns production royalty. The claims that we acquired from Newmont and the fee land subject to our new lease are located near, and include portions of, the pit and the land on which the Relief Canyon Mine property processing facilities are located. These areas are shown in the map above as owned claims and leased fee. These properties also include lands to the south and west of the current mine pits that the Company believes are prospective for potential expansion of the Relief Canyon Mine deposit, and lands that could in the future be used for new or expanded mine support facilities, including potential waste rock storage. As a result of these transactions, the claims we purchased from Newmont and the private lands we leased from New Nevada Resources, LLC and New Nevada Lands, LLC are no longer subject to Newmont s joint venture rights discussed below. Newmont Leased Property Pursuant to a 2006 Mineral Lease and Sublease with Newmont, we hold 137 unpatented lode mining claims owned by Newmont, comprising approximately 2,235 acres, and approximately 2,770 acres of privately-owned fee minerals leased by Newmont. We refer to this as the "Newmont Leased" property. As part of the January 2015 transactions with Newmont, Newmont and the Company entered into an amendment (the "Third Amendment") of the 2006 Minerals Lease and Sublease. The amendment removed from the 2006 Minerals Lease and Sublease the claims we purchased from Newmont and the private lands we leased directly from New Nevada Resources, LLC and New Nevada Lands, LLC. Pursuant to the Third Amendment the Company agreed to a $2.6 million work commitment on the properties remaining subject to the 2006 Minerals Lease and Sublease to be expended by January 2022. As of December 15, 2016, the most recent cost reporting date, the Company had incurred and can credit approximately $2.6 million in exploration expenditures against the remaining $2.5 million work commitment and future rental payment obligations. Because we have satisfied the work commitment through 2022, we are not required to make annual rental payments for those years. Starting in 2023, if we elect not to, or fail to, incur at least $0.5 million in exploration expenditures per year, the annual rental payment to Newmont would be approximately $0.1 million. We are also required to reimburse Newmont for advance royalty payments made by Newmont to the lessor each year under Newmont s underlying lease with New Nevada Resources. The reimbursement amount was approximately $2,500 for each of 2013 through 2016. In connection with the January 2015 transactions with Newmont, Newmont and New Nevada Resources, LLC entered into a new Mining Lease (the "2015 Newmont Lease") covering about 2,770 acres of private lands included in the Company s Relief Canyon properties, shown on the map above as subleased fee land. The 2015 Newmont Lease has a primary term of twenty years that can be extended for as long thereafter as mining, development or processing operations are being conducted on a continuous basis. The 2015 Newmont Lease contains customary terms and conditions, including an advance royalty and a 2.5% net smelter returns production royalty payable to New Nevada Resources LLC. We continue to hold our rights to the private lands covered by the 2015 Newmont Lease pursuant to our 2006 Minerals Lease and Sublease with Newmont. Newmont Joint Venture Rights Under the 2006 Minerals Lease and Sublease, if we decide to commence mine construction activities in anticipation of mining on any portion of the properties covered thereby, we are required to notify Newmont and provide Newmont with a copy of a positive feasibility study covering the property on which we intend to commence production, as well as additional information. Newmont has the right at any time until we deliver a positive feasibility study on the Newmont Leased property that is subject to the Newmont area of interest, as shown on the map above, and for a period of 90 days thereafter either (i) to elect to enter into a joint venture agreement with us covering all of the Newmont Leased properties and governing the development of the Newmont Leased properties going forward, which we refer to as the "Venture Option", in which case Newmont is required to reimburse us for 250% of the expenditures incurred since March 29, 2006, and with respect to which Newmont would have a 51% participating interest and we would have a 49% participating interest, or (ii) if Newmont does not elect the Venture Option, to convey the Newmont Leased properties to us, reserving the 3% to 5% sliding scale net smelter returns royalty tied to gold price, and to receive a $1.5 million production bonus on the commencement of commercial production. The 5% net smelter royalty would apply if the monthly average gold price is equal to or greater than $400 per ounce. In addition, we would also be required pay a 2.5% net smelter returns royalty to the underlying lessor, New Nevada Resources, LLC on approximately 2,770 acres of the Newmont Leased properties. Coal Canyon Project In December 2017, we entered into two mining leases at Coal Canyon, which is west of the Relief Canyon Mine (see Figure 2, above). One such mining lease with Good Springs Exploration, LLC and Clancy Wendt (collectively "Lessor") covers 43 unpatented mining claims which added 800 acres to our property holdings. The lease contains customary terms and conditions, with a primary term of ten years, which may be extended, annual advance royalty payments to Lessor starting at $20,000 per year, capping at $50,000, which payments are recoupable against a 3% net smelter return production royalty, which royalty can be bought down by one percent point of net smelter return for a payment of one million dollars, and also includes a conditional purchase option for $350,000. A second mining lease with New Nevada Resources, LLC and New Nevada Lands, LLC (collectively "Owner") covers 1,899 acres of fee land. The lease contains customary terms and conditions, with a primary term of twenty years, which may be extended, with annual advance royalty payments to Owner starting at $10 per acre capping at $25 per acre, which payments are recoupable against a 3% net smelter return production royalty. This royalty can be reduced by one percent of net smelter return in exchange for a payment of $1 million, and also includes a conditional purchase option at a price of $500 per acre. Royalties As currently defined by exploration drilling, most of the Relief Canyon deposit is located on property that is subject to a 2% net smelter return production royalty, with a portion of the deposit located on property subject to net smelter return production royalties totaling 4.5%. The rest of the property is subject, under varying circumstances, to net smelter return production royalties ranging from 2% to 5%. The map below shows the royalties payable on the properties on which the current Relief Canyon Mine pits and processing facilities are located and the surrounding properties the Company now owns or leases directly from New Nevada Resources, LLC and New Nevada Lands, LLC, as the result of the transactions with Newmont described above. Figure 3: Relief Canyon royalties. Pershing Pass Property With the various noted property additions, the Pershing Pass property consists of over 765 unpatented mining claims (746 owned, 19 leased) covering approximately 12,900 acres, and a mining lease covering approximately 635 acres of fee land. The Pershing Pass property includes approximately 490 unpatented lode mining claims covering approximately 9,700 acres that we acquired from Silver Scott Mines in March 2012 and approximately 283 unpatented lode mining claims covering about 5,660 acres owned directly by Victoria Resources (US) Inc., a wholly-owned subsidiary of Victoria Gold Corp., prior to our purchase (collectively, "Victoria"). Victoria has reserved a 2% net smelter return production royalty on the 221 claims that are located outside the area of interest related to the Newmont Leased property, discussed above. The Pershing Pass property also includes 17 unpatented mining claims acquired from a third party in April 2012 subject to a 2% net smelter return royalty, 17 unpatented mining claims that we located in mid-2012, and approximately 635 acres of private lands that we leased in December 2012. The primary term of the lease is ten years, ending in December 2022, which may be extended as long as mineral exploration, development or mining work continues on the property. Production from the private lands covered by the lease is subject to a 2% net smelter return royalty on all metals produced other than gold, and to a royalty on gold indexed to the gold price, ranging from 2% at gold prices of less than $500 per ounce to 3.5% at gold prices over $1,500 per ounce. Prior to one year after commencement of commercial production, we can repurchase up to 3% of the royalty on gold production at the rate of $600,000 for each 1%. In September 2013, we entered into a lease agreement and purchase option for 19 unpatented mining claims (approximately 400 acres) in the Pershing Pass property. The lease grants us exclusive rights to conduct mineral exploration, development and mining and an exclusive option to purchase the claims. The primary term of the lease is ten years, which may be extended as long as mineral exploration, development, or mining work continues on the property. Production from the lease is subject to a 1% net smelter return royalty on precious metals and a one-half percent net smelter royalty on all other metals produced from the lease. Prior to production, we are required to pay a $10,000 annual advance minimum royalty payment to Nevada Select Royalties, Inc. The advance minimum royalty remains at $10,000 per year until September 2023 when the advance royalty payment increases to $12,500 per year. The advance royalty payment increases to $15,000 per year in September 2028 and then $20,000 per year in September 2033. The advance minimum royalty payments are due on or before the anniversary dates of the lease agreement. If we decide to exercise the purchase option, which is exercisable at any time, we can acquire the 19 unpatented mining claims for $250,000. Newmont Pershing Pass Sublease The March 2017 mining sublease with Newmont added 960 acres of fee land to our property holdings at Pershing Pass. Under the terms of the sublease, Pershing Gold has the exclusive right to prospect, explore for, develop, and mine minerals on these areas. The sublease has an initial term of ten years and may be extended by Pershing Gold until December 3, 2034 and so long thereafter as any mining, development, or processing operations are being conducted continuously. The subleased fee lands are owned by New Nevada Resources, LLC ("NNR") and New Nevada Lands, LLC ("NNL"), and leased by Newmont under a December 2014 Mining Lease. The underlying 2014 lease contains customary terms and conditions, with a primary term of twenty years, which may be extended, annual advance royalty payments to NNR and NNL, which payments are recoupable against a 2.125% NSR production royalty payable to NNR and NNL. The sublease calls for Pershing Gold to make minimum work expenditures for the first four years of the sublease, followed by annual advance minimum royalty payments to Newmont to maintain the sublease in good standing. The sublease may be terminated any time after the required minimum work commitment of $500,000 has been satisfied within the first two years of the sublease. The sublease creates a 2.0% net smelter return production royalty on all minerals, excluding industrial minerals, which have a 0.875% net smelter return produced from the subleased fee lands in favor of Newmont. The Newmont 2.0% net smelter return is in addition to the 2.125% net smelter return payable to NNR and NNL. The sublease also creates a 2.0% NSR royalty in favor of Newmont on minerals (excepting industrial minerals) produced from our claims located in Section 10 and 16 adjacent to the subleased fee lands. Environmental Permitting Requirements Various levels of governmental controls and regulations address, among other things, the environmental impact of mineral mining and exploration operations and establish requirements for reclamation of mineral mining and exploration properties after exploration operations have ceased. With respect to the regulation of mineral mining and exploration, legislation and regulations in various jurisdictions establish performance standards, air and water quality emission limits and other design or operational requirements for various aspects of the operations, including health and safety standards. Legislation and regulations also establish requirements for reclamation and rehabilitation of mining properties following the cessation of operations and may require that some former mining properties be managed for long periods of time after mining activities have ceased. Our activities are subject to various levels of federal and state laws and regulations relating to protection of the environment, including requirements for closure and reclamation of mineral exploration properties. Some of the laws and regulations include the Clean Air Act, the Clean Water Act, the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"), the Emergency Planning and Community Right-to-Know Act, the Endangered Species Act, the Federal Land Policy and Management Act, the National Environmental Policy Act, the Resource Conservation and Recovery Act, and related state laws in Nevada. Additionally, much of our property is subject to the federal General Mining Law of 1872, which regulates how mining claims on federal lands are located and maintained. The State of Nevada, where we focus our mineral exploration efforts, requires mining projects to obtain a Nevada State Reclamation Permit pursuant to the Mined Land Reclamation Act (the "Nevada MLR Act"), which establishes reclamation and financial assurance requirements for all mining operations in the state. New and expanding facilities are required to provide a reclamation plan and financial assurance to ensure that the reclamation plan is implemented upon completion of operations. The Nevada MLR Act also requires reclamation plans and permits for exploration projects that will result in more than five acres of surface disturbance on private lands. We have an approved Plan of Operations from the BLM and a Reclamation Permit from the NDEP that authorizes exploration drilling at the Relief Canyon Mine property. These permits also authorize commencement of mining within the existing open pits and in a previously disturbed area around the north end of the pits, and use of the heap leach mineral processing facilities. In March 2015, we submitted requests to the BLM and the NDEP to amend the Plan of Operations and the Reclamation Permit to allow us to expand the mine above the water table. In August 2016, the BLM approved our Environmental Assessment and Plan of Operations Modification, authorizing us to expand the pit boundary, deepen the pit, and increase the permissible drilling areas around the existing pits at the Relief Canyon Mine property. In December 2016, the NDEP approved our reclamation permit. Like the Plan of Operations, the state reclamation permit authorizes expansion and deepening of the pit and increases the permitted area of drilling. We estimate the annual cost of holding these permits to total approximately $40,000. NDEP issued the Water Pollution Control Permit Major Modification and Renewal, the Class I Air Quality Operating Permit to Construct, and the revised Class II air quality operating permits in February 2017. With the approval of the Environmental Assessment and Plan of Operations Modification, we were required to increase our reclamation bond with BLM and the NDEP from approximately $5.6 million to approximately $12.3 million, which is currently approximately $76,000 in excess of the current requirement to cover reclamation of land disturbed in our exploration and mining operations. This bond is provided through third-party insurance underwriters, collateralized by approximately 30% of the $12.3 million bond amount, or about $3.7 million. Approximately $12.2 million of our reclamation bond with BLM and the NDEP covers both exploration and mining at the Relief Canyon Mine property, including the three open-pit mines and associated waste rock disposal areas, the mineral processing facilities, ancillary facilities, and the exploration roads and drill pads, with an additional $10,500 covering generative exploration properties located away from the Relief Canyon Mine. The remaining approximately $76,000 can be used to satisfy, or partially satisfy, future bonding requirements for exploration or mining. Our preliminary estimate of the likely amount of additional financial assurance for future exploration is approximately $100,000, although we expect periodic increases due to effects of inflation. Additional permitting would be required in the future to mine below the water table. BLM may require an Environmental Impact Statement to evaluate the impacts associated with mining below the water table. In fiscal year 2017, we plan to spend approximately $2.1 million on permitting and bonding to expand the open-pit mines at the Relief Canyon Mine property above the water table and the continuation of studies for expansion below the water table (this includes the $1.4 million already contributed to increase the reclamation bond collateral in March 2017). As discussed above, we have an authorized Plan of Operations from the BLM and a Reclamation Permit from the NDEP, which authorize expansion of the pit, mineral processing, and our 2017 drilling program at Relief Canyon. We may need to secure a new or modified NDEP Reclamation Permit in order to conduct exploration activities on some of the private lands subleased from Newmont. We plan to apply for additional required permits to conduct our exploration programs as necessary. These permits would be obtained from either the BLM or the NDEP. Obtaining such permits will require the posting of additional bonds for subsequent reclamation of disturbances caused by exploration. Delays in the granting of permits or permit amendments are not uncommon, and any delays in the granting of permits may adversely affect our exploration activities. Our current exploration permit costs are minimal, although future exploration activities may require amendments to these permits. We have a Notice of Intent from BLM for exploration drilling on our unpatented mining claims in the Pershing Pass area of the Relief Canyon expansion properties, located to the south of the Relief Canyon Mine property. A Notice of Intent includes information regarding the company submitting the notice, maps of the proposed disturbance, equipment to be utilized, the general schedule of operations, a calculation of the total disturbance anticipated, and a detailed reclamation plan and budget. We have provided a $10,500 reclamation bond to ensure reclamation of our Pershing Pass exploration activities on public lands based on the estimated third-party costs to reclaim and re-vegetate the disturbed acreage. It is not necessary to file a Notice of Intent prior to work on private land. Measurement of land disturbance is cumulative, and once five acres total of public lands have been disturbed and remain unreclaimed in one project area, a Plan of Operations must be filed and approved by the BLM before additional work can take place, and a Reclamation Permit must be obtained from the NDEP. Both the Plan of Operations and the NDEP Reclamation Permit require a cash bond and a reclamation plan. Future exploration at Pershing Pass could require a Plan of Operations and a NDEP Reclamation Permit. We do not anticipate discharging water into active streams, creeks, rivers and lakes because there are no bodies of water near the Relief Canyon project area. We also do not anticipate disturbing any endangered species or archaeological sites or causing damage to our property. Re-contouring and re-vegetation of disturbed surface areas would be completed pursuant to the applicable permits. The cost of reclamation work varies according to the degree of physical disturbance. It is difficult to estimate the future cost of compliance with environmental laws since the full nature and extent of our future activities cannot be determined at this time. Other Exploration We conducted generative exploration on the Relief Canyon expansion properties in 2012 and 2013. Since then, we have generated geological mapping over approximately three-quarters of our broader land holdings and conducted other exploratory work, including exploratory drilling at three targets in the expansion properties: Buffalo, Buffalo Pediment and the Blackjack Project Area. We intend to continue to focus our expenditures on the Relief Canyon Mine property. Because the Relief Canyon expansion properties are at an early stage of exploration, it would take at least several years to perform sufficient exploration drilling to determine whether these properties contain mineable reserves that could be put into production in the future. Although we are not currently planning to resume exploration efforts with respect to the Relief Canyon expansion properties, we may in the future increase our exploration efforts depending on results and available funding. We intend to continue to acquire additional mineral targets in Nevada and elsewhere in locations where we believe we have the potential to quickly expand and advance known mineralization and the potential to discover new deposits. If, through our exploration program, we discover an area that potentially may be profitably mined for gold, we would focus on determining whether that is feasible, including further delineation of the location, size and economic feasibility of a potential orebody. We will require external funding to pursue our exploration programs. There is no assurance we will be able to raise capital on acceptable terms or at all. Employees We currently have 19 full-time employees and one part-time employee. We believe that our relations with our employees are good. In the future, if our activities grow, we may hire personnel on an as-needed basis. For the foreseeable future, we plan to engage geologists, engineers and other consultants as necessary. Competition We compete with other exploration companies for the acquisition of a limited number of exploration rights, and many of the other exploration companies possess greater financial and technical resources than we do. The mineral exploration industry is highly fragmented, and we are a very small participant in this sector. Many of our competitors explore for a variety of minerals and control many different properties around the world. Many of them have been in business longer than we have and have established more strategic partnerships and relationships. We also compete with other exploration companies for the acquisition and retention of skilled technical personnel. Our competitive position depends upon our ability to acquire and explore new and existing gold properties. However, there is significant competition for properties suitable for gold exploration. Failure to achieve and maintain a competitive position could adversely impact our ability to obtain the financing necessary for us to acquire gold properties. As a result, we may be unable to continue to acquire interests in attractive properties on terms that we consider acceptable. We will be subject to competition and unforeseen limited sources of supplies in the industry in the event spot shortages arise for supplies such as explosives, and certain equipment such as drill rigs, bulldozers and excavators that we will need to conduct exploration. If we are unsuccessful in securing the products, equipment and services we need we may have to suspend our exploration plans until we are able to secure them. Market for Gold In the event that gold is produced from our property, we believe that wholesale purchasers for the gold would be readily available. Readily available wholesale purchasers of gold and other precious metals exist in the United States and throughout the world. Among the largest are Handy & Harman, Engelhard Industries and Asahi Refining. Historically, these markets are liquid and volatile. In 2017 and through January 17, 2018, the London Fix AM high and low gold fixes were $1,343 and $1,149 per troy ounce, respectively, which represents an approximate 2% decrease and 7% increase in gold prices as compared to the high and low gold price in 2016, respectively. Wholesale purchase prices for precious metals can be affected by a number of factors, all of which are beyond our control, including but not limited to: fluctuation in the supply of, demand and market price for gold; mining activities of our competitors; sale or purchase of gold by central banks and for investment purposes by individuals and financial institutions; interest rates; currency exchange rates; inflation or deflation; fluctuation in the value of the United States dollar and other currencies; and political and economic conditions of major gold or other mineral-producing countries. Gold ore is typically mined and leached to produce pregnant solutions, which are processed through a series of steps to recover gold and produce dor . Gold dor is then sold to refiners and smelters for the value of the minerals that it contains, less the cost of further refining and smelting. Refiners and smelters then sell the gold on the open market through brokers who work for wholesalers including the major wholesalers listed above. Financial Results We reported a net loss of approximately $(15.6) million for the year ended December 31, 2016. We reported a net loss of approximately $(9.1) million for the nine months ended September 30, 2017. We expect to incur significant losses into the foreseeable future and our monthly "burn rate" for 2018 is expected to be approximately $0.9 million (including approximately $6.6 million for general and administrative costs and $4.4 million for exploration, permitting and additional work at the Relief Canyon Mine). In February 2016 we completed private placements of units comprised of our common stock and warrants for a total of approximately $8.1 million in gross proceeds, in December 2016 we completed a public offering for gross proceeds of $7.5 million, in March 2016 we completed a private placement for gross proceeds of $6 million, and in December 2017 we completed a concurrent public offering and the Private Placement of units comprised of common stock and warrants for gross proceeds of approximately $14.6 million. We will require additional external financing to fund operations and exploration of the Relief Canyon Project. If we are unable to raise external funding, and eventually generate significant revenues from our claims and properties, we will not be able to earn profits or continue operations. We have no production history upon which to base any assumption as to the likelihood that we will prove successful, and it is uncertain that we will generate any operating revenues or ever achieve profitable operations. If we are unsuccessful in addressing these risks, our business will most likely fail. Legal Proceedings None. MANAGEMENT The following table sets forth information regarding the members of our Board of Directors and our executive officers. All directors hold office for one-year terms until the election and qualification of their successors. Officers are appointed by the Board of Directors and serve at the discretion of the Board. Name Age Position Stephen Alfers 72 Chief Executive Officer, President and Chairman Debra Struhsacker 64 Senior Vice President Timothy Janke 66 Chief Operating Officer Eric Alexander 51 Vice President Finance and Controller Barry Honig 46 Director Edward Karr 48 Director Alex Morrison 54 Director Pamela Saxton 65 Director Stephen Alfers. Mr. Alfers has served as our Chief Executive Officer and Chairman since February 2012 and as our President since August 2012. Mr. Alfers served as the President and Chief of U.S. Operations of Franco-Nevada Corporation from January 2010 to September 2011 and its Vice President (Legal) from December 2007 to December 2009. Mr. Alfers is the founder and, since 2007, the President of Alfers Mining Consulting, which performs consulting services from time to time for mining and exploration companies and investors in these industries, including providing continuing services from time to time for Franco-Nevada Corporation, with Mr. Alfers serving as an officer and director of certain of the U.S. subsidiaries of Franco-Nevada Corporation. Mr. Alfers served as the President and Chief Executive Officer of NewWest Gold Corporation, a publicly traded Canadian corporation listed on the Toronto Stock Exchange, from 2006 to 2007. Mr. Alfers also served on the board of directors of NewWest Gold Corporation from 2005 to 2007. Mr. Alfers served as President and Chief Executive Officer of the NewWest Resources Group from 2001 to 2005 and as President and Chief Executive Officer of NewWest Gold Corporation, a privately-held Delaware Corporation, from 2005 to 2006. Mr. Alfers founded Alfers & Carver LLC, a boutique natural resources law firm, in 1995, and served as its managing partner from 1995 to 2001. Mr. Alfers received a J.D. from the University of Virginia, an M.A. in Monetary Policy and Public Finance from the University of Denver and a B.A. in Economics from the University of Denver. Mr. Alfers was chosen to be a director of the Company based on his extensive mining industry and operational experience, and his mining industry legal expertise. Mr. Alfers is currently the chair of the Technical Committee. Debra Struhsacker. Ms. Struhsacker joined the Company in September 2013 as its Corporate Vice President and was named Senior Vice President in September 2014. From June 2006 until joining the Company, Ms. Struhsacker was the principal of her own consulting business, providing management, coordination and execution of environmental permitting strategies and other environmental, regulatory, governmental and community relations issues consulting services to mining companies. She has provided consulting services to the Company at the Relief Canyon Project since October 2011. She served as Vice President, U.S. Governmental and Regulatory Affairs for Kinross Gold USA, Inc., a subsidiary of Kinross Gold Corporation, from July 2003 to May 2006, and was engaged in her own consulting business from April 1991 until June 2003. Ms. Struhsacker has over 25 years of experience in hardrock mining and environmental issues, including related public policy issues, permitting and reclamation. She has a B.A. in Geology and French from Wellesley College and a M.S. in Geology from the University of Montana. Ms. Struhsacker is a certified professional geologist (Wyoming and American Institute of Professional Geologists). Timothy Janke. Mr. Janke joined the Company in August 2014 as its Chief Operating Officer. Since November 2010, Mr. Janke has been the president of his own consulting business, providing mine operating and evaluation services to several mining companies. Beginning in July 2012, he provided consulting services at the Relief Canyon Project, advising the Company on mine start-up plans and related activities. From June 2010 to August 2014, Mr. Janke served as Vice President and Chief Operating Officer of Renaissance Gold, Inc. and its predecessor, Auex Ventures, Inc. He was General Manager-Projects for Goldcorp Inc. and its predecessor Glamis Gold, Inc. from July 2009 to May 2010, Vice President and General Manager of the Marigold Mine from February 2006 to June 2009, and its Manager of Technical Services from September 2004 to January 2006. Mr. Janke has served as a director for Renaissance Gold since August 2011 and as a director for US Gold since April 2016. Mr. Janke has over 40 years of engineering and operational experience in the mining industry. He has a B.S. in Mining Engineering from the Mackay School of Mines. Eric Alexander. Mr. Alexander joined the Company in September 2012 as its Vice President Finance and Controller and was appointed as the Company s principal financial officer and principal accounting officer in November 2012. Prior to joining the Company, Mr. Alexander was the Corporate Controller for Sunshine Silver Mines Corporation, a privately held mining company with exploration and pre-development properties in Idaho and Mexico, from March 2011 to August 2012. He was a consultant to Hein & Associates LLP from August 2012 to September 2012 and a Manager with Hein & Associates LLP from July 2010 to March 2011. He served from July 2007 to May 2010 as the Corporate Controller for Golden Minerals Company (and its predecessor, Apex Silver Mines Limited), a publicly traded mining company with operations and exploration activities in South America and Mexico. He has over 25 years of corporate, operational and business experience, and 12 years of mining industry experience. In addition to working in the industry, he has also held the position of Senior Manager with the public accounting firm KPMG LLP, focusing on mining and energy clients. Mr. Alexander has a B.S. in Business Administration (concentrations in Accounting and Finance) from the State University of New York at Buffalo and is also a licensed CPA. Barry Honig. Mr. Honig has served as a director since September 2010, serving as Co-Chairman from September 2010 to September 2011 and as Chairman from September 2011 to February 2012. Since January 2004, Mr. Honig has been the President of GRQ Consultants, Inc., acting as a private investor and consultant to early stage companies. Mr. Honig s expertise includes early stage company capital restructuring, debt financing, capital introductions, and mergers and acquisitions. In addition, Mr. Honig served as director and co-Chairman of Chromadex Corporation from October 2011 to February 2015, and as director and co-Chairman of InterCLICK, Inc. from August 2007 through December 2011. Mr. Honig also served as CEO and Chairman of the board of directors of Majesco Entertainment from September 2015 to December 2016, and has served on the board of directors of Levon Resources Ltd. from July 2015 to November 2017. Mr. Honig was selected to serve as a director due to his extensive knowledge of the capital markets, his judgment in assessing business strategies and accompanying risks, and his expertise with emerging growth companies. Mr. Honig is a member of the Compensation Committee and the Technical Committee. Edward Karr. Mr. Karr was appointed to the Board of Directors in June 2015. Mr. Karr is an international entrepreneur and the founder of several investment management and investment banking firms based in Geneva, Switzerland. Since April 2016, he has been President and CEO of U.S. Gold Corp., a junior exploration company. From 2005 to June 2015, Mr. Karr was the Chief Executive Officer of RAMPartners SA, an investment advisory firm based in Geneva, Switzerland. Mr. Karr was also Managing Director of Strategic Asset Management SA and Managing Director of Strategic Swiss Advisors S rl, both Swiss asset management companies, from February 2013 to December 2015. Mr. Karr served as a director of Spherix Corporation from November 2012 to December 2014 and he served as a Director of Majesco Entertainment from September 2015 to December 2016. He is currently on the boards of Levon Resources Ltd. and U.S. Gold Corp. (formerly Dataram Corporation), and serves as chairman of the audit committee of Levon Resources Ltd. Mr. Karr previously worked for Prudential Securities in the United States. He has been in the financial services industry for over twenty years. Before his entry into the financial services arena, Mr. Karr was affiliated with the United States Antarctic Program and spent thirteen consecutive months working in Antarctica, receiving the Antarctic Service Medal. Mr. Karr studied at Embry-Riddle Aeronautical University, Lansdowne College in London, England and received a B.S. in Economics/Finance with Honors (magna cum laude) from Southern New Hampshire University. He is an Executive Committee member, past President and current Nominating Committee Chair of the American International Club of Geneva. Mr. Karr was selected to serve as a director due to his experience in capital markets and financial expertise. Mr. Karr is currently a member of the Audit Committee, the Compensation Committee and the Corporate Governance and Nominating Committee. Alex Morrison. Mr. Morrison has served as a director since November 2012. Mr. Morrison is a mining executive, chartered professional accountant (chartered accountant) and certified public accountant with over 30 years of experience in the mining industry. He currently serves on the boards of Detour Gold Corporation, Gold Resource Corporation, Gold Standard Ventures Corp., and Taseko Mines Limited. Mr. Morrison has held senior executive positions at a number of mining companies, most recently serving as Vice President and Chief Financial Officer of Franco-Nevada Corporation from 2007 to 2010. From 2002 to 2007, Mr. Morrison held increasingly senior positions at Newmont Mining Corporation, including Vice President, Operations Services and Vice President, Information Technology. Prior to 2002, Mr. Morrison was Vice President and Chief Financial Officer of NovaGold Resources, Inc. and Vice President and Controller of Homestake Mining Company and held senior financial positions at Phelps Dodge Corporation and Stillwater Mining Company. In addition, from time to time between 2007 and the present, Mr. Morrison has performed financial consulting services for mining companies. Mr. Morrison began his career with PricewaterhouseCoopers LLP after obtaining his B.A. in Business Administration from Trinity Western University. Mr. Morrison was selected to serve as a director due to his extensive mining resource and business experience and his financial expertise. Mr. Morrison is currently the chair of the Audit Committee, the Compensation Committee, and the Corporate Governance and Nominating Committee and a member of the Technical Committee. Pamela Saxton. Ms. Saxton has served as a director since October 2017. Ms. Saxton is a business executive with over 35 years of experience in domestic and international public company finance roles, primarily in mining, software and oil and gas. Ms. Saxton has held senior executive finance positions at several mining and oil and gas companies, most recently serving as Executive Vice President and Chief Financial Officer of Thompson Creek Metals Company Inc. from August 2008 to October 2016. Prior to 2008, Ms. Saxton was Vice President Finance—U.S. Operations of Franco-Nevada Corporation, Vice President and Chief Financial Officer of New West Gold Corporation, Vice President and Controller of Amax Gold Inc. and Assistant Controller of Cyprus Amax Minerals Inc. Ms. Saxton also was the Vice President and Controller-Payments Division of Western Union/First Data Corporation and served as Vice President of Finance, Corporate Controller and Chief Accounting Officer for J.D. Edwards & Company. Ms. Saxton began her career with Arthur Andersen & Company after receiving her Bachelor of Science in Accounting from the University of Colorado. Since September 1987, she has served as a Trustee and since January 2017 serves as Vice President for the Viola Vestal Coulter Foundation, which provides scholarships to various colleges and universities, with a focus on mining. She is also the Past Chair of the Board for the Colorado Association of Commerce and Industry, a state chamber of commerce. Ms. Saxton was selected to serve as a director due to her extensive mining, financial and governance and compliance expertise. Ms. Saxton serves as a member of the Audit Committee and Corporate Governance and Nominating Committee. Director or Officer Involvement in Certain Legal Proceedings Our directors and executive officers were not involved in any legal proceedings as described in Item 401(f) of Regulation S-K in the past ten years. Family Relationships There are no family relationships among the executive officers and directors. EXECUTIVE COMPENSATION Summary Compensation Table The following table summarizes the compensation through December 31, 2017 of each of our named executive officers. Name and Principal Position Year Salary ($) Bonus ($)(1) Option Awards ($) Stock Awards ($) All Other Compensation ($) Total ($) Stephen Alfers Chief Executive Officer, President and Chairman 2016 425,000 324,500(2) — — — 749,500 2017 425,000 50,000 — — — 475,000 Debra Struhsacker Senior Vice President 2016 241,875(3) 129,051(4) — — — 370,926 2017 270,000 25,313 — — — 295,313 Eric Alexander Vice President Finance and Controller 2016 183,750 90,288(5) — — — 274,038 2017 183,750 23,888 — — — 207,638 (1) Bonuses in 2016 reflect bonuses earned in 2016 but paid in 2017. Bonuses in 2017 reflect bonuses earned in 2017 but paid in 2018. (2) Mr. Alfers bonus consists of (a) $175,000 in cash, and (b) the grant date fair market value of 50,000 restricted stock units when granted on March 21, 2017 and valued at $149,500, calculated in accordance with FASB ASC Topic 718. (3) Reflects an increase in Ms. Struhsacker s base salary from $225,000 per year to $270,000 per year on August 16, 2016. (4) Ms. Struhsacker s bonus consists of (a) $57,000 in cash, and (b) the grant date fair market value of 21,900 restricted stock units when granted on February 3, 2017 and valued at $72,051, calculated in accordance with FASB ASC Topic 718. (5) Mr. Alexander s bonus consists of (a) $35,500 in cash, and (b) the grant date fair market value of 16,653 restricted stock units when granted on February 3, 2017 and valued at $54,788, calculated in accordance with FASB ASC Topic 718. Agreements with Executive Officers Stephen Alfers We entered into an amended and restated employment agreement (the "Alfers Employment Agreement") with Mr. Alfers on June 28, 2015 that provides that Mr. Alfers will serve as our Chief Executive Officer until December 31, 2018, subject to renewal. Pursuant to the terms of the agreement, Mr. Alfers will be entitled to a base salary of $425,000 per year, subject to adjustment by the Board of Directors. Mr. Alfers will also receive an annual bonus if the Company meets or exceeds certain criteria adopted by the Board of Directors. The annual target bonus amount for Mr. Alfers shall equal 100% of his annualized base salary for that year if target levels of performance for that year are achieved, with greater or lesser amounts paid for performance above and below such target. Upon Mr. Alfers termination without "Cause" or upon Mr. Alfers resignation for "Good Reason", in either case where such termination is outside of a "Change in Control Period", the Company shall pay to Mr. Alfers, in addition to any "Accrued Obligations" (in each case, as defined in the Alfers Employment Agreement), a lump sum payment in an amount equal to two times the sum of (i) Mr. Alfers base salary plus (ii) the average of the actual bonus amounts paid to Mr. Alfers in the two years prior to termination. Additionally, any remaining unvested restricted shares of Company common stock granted to Mr. Alfers on February 9, 2012 in conjunction with his Original Employment Agreement (as defined below) would fully and immediately vest. Any other unvested equity awards shall be forfeited as of the date of termination (unless otherwise provided in the applicable award agreement or equity plan), and vested equity awards shall be treated as provided in the applicable award agreement or equity plan. Upon Mr. Alfers termination without Cause within six months prior to or twenty-four months following a Change in Control (as defined in the Alfers Employment Agreement and with such period to be referred to as a "Change in Control Period") or upon Mr. Alfers resignation for Good Reason during a Change in Control Period, the Company shall pay to Mr. Alfers, in addition to any Accrued Obligations, a lump sum payment in an amount equal to two times the sum of (i) Mr. Alfers base salary plus (ii) the average of the actual bonus amounts paid to Mr. Alfers in the two years prior to termination. Additionally, any unvested equity awards that were granted prior to such Change in Control shall fully and immediately vest (unless otherwise provided in the applicable award agreement or equity plan). Mr. Alfers bonus amounts are subject to claw-back rights in the event of certain restatements of the Company s financial information for a period of three years. In connection with the Alfers Employment Agreement, Mr. Alfers was awarded restricted stock units pursuant to a Restricted Stock Unit Grant Agreement dated June 28, 2015 (the "2015 RSU Agreement"). Under the terms of the 2015 RSU Agreement, Mr. Alfers was granted a total of 700,000 restricted stock units. 300,000 restricted stock units are time-based units (the "Time-Based RSUs") that are subject to vesting upon Mr. Alfers continuous employment through December 31, 2018 ("Employment Term End Date"). If Mr. Alfers employment is terminated prior to the Employment Term End Date (i) by the Company other than for Cause, (ii) by Mr. Alfers resignation for Good Reason, or (iii) as a result of Mr. Alfers death or Disability (as defined in the Alfers Employment Agreement), all Time-Based RSUs shall become fully vested immediately prior to such termination. Such Time-Based RSUs shall also become fully vested upon a Change in Control (as defined in the Company s 2013 Equity Incentive Plan). Each Time-Based RSU that becomes fully vested will entitle Mr. Alfers to receive one share of common stock as soon as practicable following the vesting event. The remaining 400,000 restricted stock units (the "Performance RSUs") are subject to vesting upon the attainment of certain performance-based milestones set forth in the 2015 RSU Agreement and shall become fully vested upon a Change in Control. For each fully vested Performance RSU, Mr. Alfers will be entitled to receive one share of common stock upon the earlier of December 31, 2018, Mr. Alfers separation from service or death, or a 409A Change in Control (as defined in the 2015 RSU Agreement), all as set forth in the RSU Agreement. In June 2016, 120,000 Performance RSUs vested upon the attainment of certain performance-based milestones and in March 2017, 60,000 additional Performance RSUs vested upon the attainment of certain other performance-based milestones. On February 5, 2015, the Company and Mr. Alfers entered into a Third Amendment to the Restricted Stock Agreement dated May 13, 2013, as amended on December 23, 2013 and June 11, 2014 (as amended, the "Alfers 2013 RS Agreement"). Pursuant to this amendment, the vesting of 72,098 shares of restricted stock, of a total of 216,251 restricted shares that were granted pursuant to the Alfers 2013 RS Agreement, was deferred from June 18, 2015 to March 14, 2016. On February 5, 2015, the Company and Mr. Alfers entered into a Third Amendment to the Amended and Restated Restricted Stock Agreement dated May 13, 2013, as amended on December 23, 2013 and June 11, 2014 (as amended, the "Alfers 2013 A&R RS Agreement"). Pursuant to this amendment, the vesting of 20,514 shares of restricted stock, of a total of 61,527 restricted shares that were granted pursuant to the Alfers 2013 A&R RS Agreement, was deferred from June 18, 2015 to March 14, 2016. On February 5, 2015, the Company and Mr. Alfers entered into a Third Amendment to the Executive Employment Agreement dated February 9, 2012, as amended on February 8, 2013 and December 23, 2013 (as amended, the "Alfers Original Employment Agreement"). Pursuant to this amendment, the vesting of 166,667 shares of restricted stock, of a total of 666,667 restricted shares that were granted pursuant to the Alfers Original Employment Agreement, was deferred from February 9, 2015 to February 9, 2016. The Alfers Original Employment Agreement was superseded by the Alfers Employment Agreement. The Company and Mr. Alfers entered into a Restricted Stock Unit Grant Agreement dated March 21, 2017 (the "Alfers Bonus RSU Agreement") pursuant to which Mr. Alfers was awarded 50,000 restricted stock units (the "Bonus RSUs") as a discretionary bonus for his performance in 2016. The Bonus RSUs were fully vested on the date of grant. The common stock underlying the Bonus RSUs will be issued upon the earlier of December 31, 2018, Mr. Alfers separation from service or death, or a 409A Change in Control (as defined in the Alfers Bonus RSU Agreement). Each Bonus RSU entitles Mr. Alfers to receive one share of common stock within 30 days of the aforementioned events. Debra Struhsacker We entered into an offer letter with Ms. Struhsacker on September 23, 2013 pursuant to which Ms. Struhsacker was hired to serve as the Company s Corporate Vice President and is entitled to an annual base salary, subject to adjustment at the sole discretion of the Chief Executive Officer with the approval of the Board of Directors (the "Struhsacker Offer Letter"). In September 2014, Ms. Struhsacker was promoted to Senior Vice President. In connection with the Struhsacker Offer Letter, we also entered into a severance compensation agreement with Ms. Struhsacker on September 19, 2013 (the "Struhsacker Severance Compensation Agreement"). Upon a Qualifying Termination (as defined in the Struhsacker Severance Compensation Agreement) occurring on or within twelve months following a Change in Control (as defined in the Struhsacker Severance Compensation Agreement), we are required to pay Ms. Struhsacker a lump-sum severance payment equal to one and a half times the sum of (i) Ms. Struhsacker s base salary, plus (ii) the greater of Ms. Struhsacker s Annual Bonus Amount or Ms. Struhsacker s Assumed Bonus Amount (both as defined in the Struhsacker Severance Compensation Agreement). On August 15, 2016, the Company and Ms. Struhsacker entered into an Extension Severance Compensation Agreement extending the term of the Struhsacker Severance Compensation Agreement to March 18, 2017 and increasing Ms. Struhsacker s salary to $270,000. On January 11, 2017, the Company and Ms. Struhsacker entered into a Second Extension Severance Compensation Agreement extending the term of the Struhsacker Severance Compensation Agreement to December 31, 2017. On February 6, 2015, the Company and Ms. Struhsacker entered into a First Amendment to the Restricted Stock Grant Agreement dated February 12, 2013 (the "Struhsacker February 2013 RSG Agreement"). Pursuant to this amendment, the vesting of 13,889 shares of restricted stock, of a total of 41,667 restricted shares that were granted pursuant to the Struhsacker February 2013 Restricted Stock Grant Agreement, was deferred from February 12, 2015 to February 12, 2016. On December 10, 2015, the Company and Ms. Struhsacker entered into a Second Amendment to the Struhsacker February 2013 RSG Agreement, pursuant to which the vesting of 13,889 shares of restricted stock, of a total of 41,667 restricted shares that were granted pursuant to the Struhsacker February 2013 RSG Agreement, was deferred from February 12, 2016 to February 12, 2017. On December 10, 2015, the Company and Ms. Struhsacker entered into a First Amendment to the Restricted Stock Grant Agreement dated December 16, 2013 (the "Struhsacker December 2013 RSG Agreement"). Pursuant to this amendment, the vesting of 1,852 shares of restricted stock, of a total of 5,556 restricted shares that were granted pursuant to the Struhsacker December 2013 RSG Agreement, was deferred from December 16, 2015 to March 14, 2016. On December 10, 2015, the Company and Ms. Struhsacker entered into a First Amendment to the Restricted Stock Grant Agreement dated December 11, 2014 (the "Struhsacker December 2014 RSG Agreement"). Pursuant to this amendment, the vesting of 4,908 shares of restricted stock, of a total of 14,723 restricted shares that were granted pursuant to the Struhsacker December 2014 RSG Agreement, was deferred from December 11, 2015 to March 14, 2016. Eric Alexander We entered into a revised offer letter with Mr. Alexander on November 21, 2012, amended on February 8, 2013, pursuant to which Mr. Alexander joined the Company as our Vice President Finance and Controller and is entitled to an annual base salary of $175,000, subject to adjustments at the sole discretion of the Chief Executive Officer with the approval of the Board of Directors (the "Alexander Offer Letter"). In addition, in connection with his appointment as the Company s principal financial officer and principal accounting officer, the Company granted Mr. Alexander 11,112 shares of restricted stock, vesting over three years. The amendment deferred vesting of certain of the restricted shares, of which 3,704 vested in equal tranches on March 14, 2014 and November 30, 2014, and a final tranche of 3,704 shares vested on November 30, 2015, subject to acceleration under certain events, including upon a Change in Control as defined in the Company s 2012 Equity Incentive Plan. In connection with the Alexander Offer Letter, we also entered into a severance compensation agreement with Mr. Alexander on November 21, 2012 that was amended on November 19, 2015 (as amended, the "Alexander Severance Compensation Agreement"). Pursuant to the Alexander Severance Compensation Agreement, Mr. Alexander will be entitled to receive certain benefits if he incurs a separation from service (as defined in the Alexander Severance Compensation Agreement) during the term of the agreement which is initiated by the Company for any reason other than Cause, death, or Disability (as such terms are defined in the Alexander Severance Compensation Agreement) or is initiated by Mr. Alexander for Good Reason (as defined in the Alexander Severance Compensation Agreement). These benefits depend on whether the separation occurs prior to or after a Change in Control (as defined in the Alexander Severance Compensation Agreement). If the separation occurs prior to a Change in Control, the Company shall pay Mr. Alexander a lump-sum severance payment equal to Mr. Alexander s base salary plus the average of the annual cash bonuses paid to Mr. Alexander in the two years prior to separation. If the separation occurs within 12 months following a Change in Control, the Company shall pay Mr. Alexander a lump-sum severance payment equal to (x) 1.125 times (y) the sum of (a) Mr. Alexander s base salary plus (b) the greater of (i) the average annual cash bonus paid to Mr. Alexander in the two years prior to separation or (ii) the target bonus amount established for Mr. Alexander in the fiscal year in which the separation occurs or, if none, an amount equal to 80% of Mr. Alexander s base salary. On September 15, 2016, the Company and Mr. Alexander entered into a Second Amended Severance Compensation Agreement extending the term of the Alexander Severance Compensation Agreement to March 18, 2017. On January 11, 2017, the Company and Mr. Alexander entered into a Third Amended Severance Compensation Agreement further extending the term of the Alexander Severance Compensation Agreement to December 31, 2017. On December 21, 2017, the Company and Mr. Alexander entered into a Fourth Amended Severance Compensation Agreement further extending the term of the Alexander Severance Compensation Agreement to December 31, 2018. On February 6, 2015, the Company and Mr. Alexander entered into a First Amendment to the Restricted Stock Grant Agreement dated February 12, 2013 (the "Alexander February 2013 RSG Agreement"). Pursuant to this amendment, the vesting of 18,519 shares of restricted stock, of a total of 55,556 restricted shares that were granted pursuant to the Alexander February 2013 RSG Agreement, was deferred from February 12, 2015 to February 12, 2016. On December 10, 2015, the Company and Mr. Alexander entered into a Second Amendment to the Alexander February 2013 RSG Agreement, pursuant to which the vesting of 18,518 shares of restricted stock, of a total of 55,556 restricted shares that were granted pursuant to the Alexander February 2013 RSG Agreement, was deferred from February 12, 2016 to February 12, 2017. On December 10, 2015, the Company and Mr. Alexander entered into a First Amendment to the Restricted Stock Grant Agreement dated December 16, 2013 (the "Alexander December 2013 RSG Agreement"). Pursuant to this amendment, the vesting of 3,704 shares of restricted stock, of a total of 11,112 restricted shares that were granted pursuant to the Alexander December 2013 RSG Agreement, was deferred from December 16, 2015 to March 14, 2016. On December 10, 2015, the Company and Mr. Alexander entered into a First Amendment to the Restricted Stock Grant Agreement dated December 11, 2014 (the "Alexander December 2014 RSG Agreement"). Pursuant to this amendment, the vesting of 1,667 shares of restricted stock, of a total of 5,000 restricted shares that were granted pursuant to the Alexander December 2014 RSG Agreement, was deferred from December 11, 2015 to March 14, 2016. Indemnification Agreements The Company has entered into indemnification agreements with its directors and executive officers providing for indemnification against all expenses, judgments, fines and amounts paid in settlement incurred by such indemnitee in connection with any threatened, pending or completed action, suit, alternative dispute resolution mechanism or proceeding to which indemnitee was or is a party or is threatened to be made a party by reason of the fact that indemnitee is or was a director, officer, employee or agent of the Company, or is or was serving at the request of the Company as a director, officer, employee or agent of another enterprise, to the fullest extent permitted by Nevada law. The indemnification agreements also provide for the advancement of expenses (including attorneys fees) incurred by the indemnitee in connection with any action, suit, alternative dispute resolution mechanism or proceeding (subject to the terms and conditions set forth therein). The indemnification agreements contain certain exclusions, including proceedings initiated by the indemnitee unless such advancement is specifically approved by a majority of our disinterested directors. The Company expects that it will enter into similar indemnification agreements with any new directors and executive officers. Outstanding Equity Awards at Fiscal Year-End The following table provides information on the holdings of equity awards of our named executive officers at December 31, 2017. This table includes unexercised and unvested options and equity awards. Vesting schedules are subject to acceleration or forfeiture in certain circumstances, including a change of control. Option awards Stock awards Name Number of securities underlying unexercised options (#) Exercisable Number of securities underlying unexercised options (#) Unexercisable Equity incentive plan awards: number of securities underlying unexercised unearned options (#) Option exercise price ($) Option expiration date Number of shares or units of stock that have not vested (#) Market value of shares or units of stock that have not vested ($) (1) Equity incentive plan awards: number of unearned shares, units or other rights that have not vested (#) Equity incentive plan awards: market or payout value of unearned shares, units or other rights that have not vested ($) (1) Stephen Alfers 555,556 — — $8.82 2/9/22 300,000(2) $720,000 220,000(3) $528,000 277,778 — — $6.12 6/18/22 — — — — Debra Struhsacker 22,223 — — $8.10 3/6/22 10,950(4) $26,280 — — 22,223 — — $6.12 6/18/22 — — — — Eric Alexander — — — — — 8,327(5) $19,985 — — (1) The market value of stock awards is calculated at $2.40 per share, the closing price of our common stock on December 29, 2017. (2) Includes 300,000 restricted stock units which vest on December 31, 2018. (3) Includes 220,000 restricted stock units which vest upon the attainment of certain performance-based milestones. (4) Includes 10,950 restricted stock units which vest on February 3, 2018. (5) Includes 8,327 restricted stock units which vest on February 3, 2018. Director Compensation The following table sets forth compensation paid to our non-employee directors in 2017. Name Fees Earned or Paid in Cash ($) Stock Awards ($) Option Awards ($) Non-Equity Incentive Plan Compensation ($) Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) All Other Compensation ($) Total ($) Barry Honig $33,000(1) $ — $— $— $— $— $33,000 Edward Karr $35,000(2) $— $— $— $— $— $ 35,000 Alex Morrison $70,500(3) $— $— $— $— $— $ 70,500 Pamela Saxton $6,167 (4) $— $— $— $— $— $6,167 (1) Amount represents Mr. Honig s $25,000 annual retainer for service on the Board of Directors and $8,000 for attendance at eight Board of Director and committee meetings. Mr. Honig elected to receive such payments in the form of restricted stock units. In satisfaction of these fees, the Company issued an aggregate of 11,989 fully-vested restricted stock units (the "Honig Retainer RSUs") on April 28, 2017, June 30, 2017, September 29, 2017, December 29, 2017 calculated based on (x) the dollar amount of the director fees earned for the relevant fiscal quarter, divided by (y) the fair market value of one share of the Company s stock as of the end of the relevant fiscal quarter, with the result rounded up to the nearest whole number. The Honig Retainer RSUs were granted as follows: (a) 3,610 units for director services rendered between January 1, 2017 and March 31, 2017, (b) 3,316 units for director services rendered between April 1, 2017 and June 30, 2017, (c) 2,458 units for director services rendered between July 1, 2017 and September 30, 2017, and (d) 2,605 units for director services rendered between on October 1, 2017 and December 31, 2017. Amount does not reflect the value of 2,351 shares of restricted common stock and 7,618 restricted stock units issued to Mr. Honig on April 28, 2017 for service to the Board of Directors and committees in the fourth quarter of fiscal year 2015 and fiscal year 2016, respectively. See footnote (2) to the Summary Compensation Table on page 43 of this prospectus for additional information regarding these calculations. (2) Amount represents Mr. Karr s $25,000 annual retainer for service on the Board of Directors and $10,000 for attendance at ten Board of Director and committee meetings. Mr. Karr elected to receive such payments in the form of restricted stock units. In satisfaction of these fees, the Company issued an aggregate of 12,744 fully vested restricted stock units (the "Karr Retainer RSUs") on April 28, 2017, June 30, 2017, September 29, 2017, December 29, 2017 calculated based on (x) the dollar amount of the director fees earned for the relevant fiscal quarter, divided by (y) the fair market value of one share of the Company s stock as of the end of the relevant fiscal quarter, with the result rounded up to the nearest whole number. The Karr Retainer RSUs were granted as follows: (a) 3,610 units for director services rendered between January 1, 2017 and March 31, 2017, (b) 3,316 units for director services rendered between April 1, 2017 and June 30, 2017, (c) 2,797 units for director services rendered between July 1, 2017 and September 30, 2017, and (d) 3,021 units for director services rendered between on October 1, 2017 and December 31, 2017. Amount does not reflect the value of 8,850 restricted stock units issued to Mr. Karr on April 28, 2017 for service to the Board of Directors and committees in earned in fiscal year 2016. See footnote (2) to the Summary Compensation Table on page 43 of this prospectus for additional information regarding these calculations. (3) Amount represents Mr. Morrison s $25,000 annual retainer for service on the Board of Directors, $15,000 retainer as the chair of the Audit Committee, $10,000 retainer as chair of the Compensation Committee, $7,500 retainer as chair of the Corporate Governance and Nominations Committee, $13,000 for attendance at 13 Board of Director and committee meetings. (4) Amount represents the pro-rated portion of Ms. Saxton s $25,000 annual retainer for two months of service on the Board of Directors in 2017 and $2,000 for attendance at two Board of Director and committee meetings. Our directors who are also our employees receive no fees for board service. Mr. Alfers is the only director who is also an employee. The compensation for all non-employee directors includes a $25,000 annual cash retainer and a $1,000 cash fee for attendance at each Board of Directors meeting. Directors receive a $1,000 cash fee for attendance at all committee meetings, and the chairs of the Technical, Audit, Compensation and Corporate Governance and Nominating committees receive annual cash retainers of $15,000, $15,000, $10,000 and $7,500 respectively. Non-employee directors on the Technical Committee receive a fee of $150 per hour up to a maximum of $1,000 per day for Technical Committee service that occurs other than at a meeting of the Technical Committee. As an employee director, Mr. Alfers will not receive an annual cash retainer or hourly fees for his role as chairman of the Technical Committee. Directors may elect to receive restricted stock units in lieu of cash. Non-employee directors are also eligible to receive annual grants of restricted stock units in such amounts and with such vesting provisions as are determined annually by the Compensation Committee and the Board of Directors. These equity grants related to 2017 service have not yet been granted. For each vested restricted stock unit, the non-employee director is entitled to receive one unrestricted share of common stock upon termination of the director s service on our Board of Directors. Our directors are also eligible to receive other equity awards, including stock options, under our equity incentive plans, as determined from time to time by the Board of Directors. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth information with respect to the beneficial ownership of our voting securities as of January 16, 2018 by: each person known by us to beneficially own more than 5.0% of any class of our voting securities; each of our directors; each of our named executive officers; and all of our directors and executive officers as a group. All information is taken from or based upon ownership filings made by such persons with the SEC or upon information provided by such persons to us. Except as indicated in the footnotes to this table, each beneficial owner named in the table below has sole voting and sole investment power with respect to all shares beneficially owned. Percentage computations are based on 33,544,125 shares of our common stock outstanding as of January 16, 2018. Common Stock (1) Name of Beneficial Owner (2) Shares Beneficially Owned Percent of Class 5% Owners Levon Resources Ltd. (3) 1,954,366 5.8% Donald Smith Value Fund, L.P. (4) 4,176,500 12.1% Named Executive Officers and Directors Stephen Alfers 1,605,870(5) 4.7% Debra Struhsacker 101,369(6) *% Eric Alexander 73,809(7) *% Barry Honig 12,070,247(8) 32.2% Alex Morrison 56,617(9) *% Edward Karr 233,114(10) *% Pamela Saxton —(11) *% Executive Officers and Directors as a Group (eight** persons) 14,121,236 36.9% * Less than one percent (1.0%). ** Group of executive officers and directors includes Tim Janke. Mr. Janke beneficially owns 75,836 shares. (1)Shares of common stock beneficially owned and the respective percentages of beneficial ownership of common stock includes for each person or entity shares issuable on the exercise of all options and warrants and the conversion of other convertible securities beneficially owned by such person or entity that are currently exercisable or can, at the option of the holder, become exercisable or convertible within 60 days following January 16, 2018. Such shares, however, are not included for the purpose of computing the percentage ownership of any other person. (2)The address of these persons, unless otherwise noted, is c/o Pershing Gold Corporation, 1658 Cole Blvd., Bldg. 6, Suite 210, Lakewood, CO 80401. (3)The address of Levon Resources Ltd. is Suite 900, 570 Granville St., Vancouver, British Columbia, Canada V6C 3P1. (4)The address of Donald Smith Value Fund, L.P. is 152 West 57th Street, 22nd Floor, New York, NY 10019. (5)Includes: (i) 737,178 unrestricted shares of common stock; (ii) options to purchase 555,556 shares of common stock with an exercise price of $8.82 per share, which are fully vested; (iii) options to purchase 277,778 shares of common stock with an exercise price of $6.12 per share, which are fully vested; and (iv) 100 shares of Series E Preferred Stock, which are convertible into 35,358 shares of common stock. Excludes: (i) 180,000 shares of common stock underlying vested restricted stock units granted in June 2015 which are issuable upon the earlier of Mr. Alfers separation from service or December 31, 2018; (ii) 50,000 shares of common stock underlying vested restricted stock units granted in March 2017 which are issuable upon the earlier of Mr. Alfers separation from service or December 31, 2018; (iii) 300,000 shares of common stock underlying unvested restricted stock units granted to Mr. Alfers which are issuable upon Mr. Alfers continued employment through December 31, 2018; and (iv) 220,000 unvested restricted stock units granted to Mr. Alfers which vest upon the satisfaction of certain performance vesting conditions or Mr. Alfers continued employment through December 31, 2018 and, once vested, are issuable upon the earlier of Mr. Alfers separation from service or December 31, 2018, in each case subject to acceleration and forfeiture in certain circumstances. Mr. Alfers has no voting rights with respect to the restricted stock units until the underlying shares are issued. (6)Includes: (i) 56,923 unrestricted shares of common stock; and (ii) options to purchase 44,446 shares of common stock, which are fully vested. Excludes: (i) 26,950 shares of common stock underlying vested restricted stock units which are issuable upon Ms. Struhsacker s resignation from the Company (subject to acceleration and forfeiture in certain circumstances); and (ii) 10,950 shares of common stock underlying unvested restricted stock units granted to Ms. Struhsacker which are issuable upon Ms. Struhsacker s resignation from the Company (subject to acceleration and forfeiture in certain circumstances). Ms. Struhsacker has no voting rights with respect to the restricted stock units until the underlying shares are issued. (7)Includes: (i) 73,809 unrestricted shares of common stock. Excludes: (i) 15,076 shares of common stock underlying vested restricted stock units which are issuable upon Mr. Alexander s resignation from the Company (subject to acceleration and forfeiture in certain circumstances); and (ii) 8,327 shares of common stock underlying unvested restricted stock units granted to Mr. Alexander which are issuable upon Mr. Alexander s resignation from the Company (subject to acceleration and forfeiture in certain circumstances). Mr. Alexander has no voting rights with respect to the restricted stock units until the underlying shares are issued. (8)Includes: (i) 2,339,781 unrestricted shares of common stock, options to purchase 744,446 shares of common stock, which are fully vested, and 854 shares of Series E Preferred Stock, which are convertible into 301,950 shares of common stock, and 39,186 shares of common stock underlying vested restricted stock units which are deemed beneficially owned by Mr. Honig and are issuable upon Mr. Honig s resignation from the Board of Directors (including (i) 9,579 units which vested on December 11, 2015; (ii) 5,000 units which vested on February 3, 2017; (iii) 11,228 units which vested on April 28, 2017; (iv) 3,316 units which vested on June 30, 2017; (v) 2,458 units which vested September 30, 2017; (vi) 2,605 units which vested December 29, 2017; and (vii) 5,000 restricted stock units which vest on February 3, 2018), all of which are held directly by Mr. Honig; (ii) 3,888,034 unrestricted shares of common stock, 4,230 shares of Series E Preferred Stock convertible into 1,495,608 shares of common stock, and 396,039 warrants, all of which are held by GRQ Consultants, Inc. 401K ("GRQ 401K"); (iii) 75,218 unrestricted shares of common stock held by GRQ Consultants, Inc. ("GRQ Consultants"); (iv) 1,763,522 unrestricted shares of common stock and 2,070 shares of Series E Preferred Stock, which are convertible into 731,892 shares of common stock, all of which are held by GRQ Consultants, Inc. Roth 401K FBO Barry Honig ("GRQ Roth 401K"); and (v) 89,148 unrestricted shares of common stock and 581 shares of Series E Preferred Stock, which are convertible into 205,425 shares of common stock, all of which are held by GRQ Consultants, Inc. Defined Benefit Plan ("GRQ Defined"). (vi) Mr. Honig is the trustee of GRQ 401K, GRQ Roth 401K and GRQ Defined and President of GRQ Consultants, and, in such capacities, has voting and dispositive power over the securities held by GRQ 401K, GRQ Roth 401K, GRQ Defined and GRQ Consultants. (9)Includes 56,617 shares of common stock underlying vested restricted stock units which are deemed beneficially owned by Mr. Morrison and are issuable upon Mr. Morrison s resignation from the Board of Directors (subject to acceleration and forfeiture in certain circumstances). Excludes 18,518 shares of common stock underlying unvested restricted stock units granted to Mr. Morrison which are issuable upon Mr. Morrison s resignation from the Board of Directors (subject to acceleration and forfeiture in certain circumstances). Mr. Morrison has no voting rights with respect to the restricted stock units until the underlying shares are issued. (10)Includes: (i) 185,316 unrestricted shares of common stock; and (ii) 47,798 shares of common stock underlying vested restricted stock units which are deemed beneficially owned by Mr. Karr and issuable upon Mr. Karr s resignation from the Board of Directors (subject to acceleration and forfeiture in certain circumstances). Excludes 1,852 shares of common stock underlying unvested restricted stock units granted to Mr. Karr which are issuable upon Mr. Karr s resignation from the Board of Directors (subject to acceleration and forfeiture in certain circumstances). Mr. Karr has no voting rights with respect to the restricted stock units until the underlying shares are issued. (11)Excludes 8,621 shares of common stock underlying unvested restricted stock units granted to Ms. Saxton which are issuable upon Ms. Saxton s resignation from the Board of Directors (subject to acceleration and forfeiture in certain circumstances). Ms. Saxton has no voting rights with respect to the restricted stock units until the underlying shares are issued. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Review of Related Person Transactions Our Audit Committee is responsible for assisting the Board of Directors with the review and approval of transactions with related parties. We annually request each of our directors and executive officers complete a directors or officers questionnaire, respectively, that elicits information about related party transactions. The Audit Committee and legal counsel annually review all transactions and relationships disclosed in the directors and officers questionnaires, and the Board of Directors makes a formal determination regarding each director s independence. If a transaction were to present a conflict of interest, the Board of Directors would determine the appropriate response. Related Person Transactions We have entered into agreements and arrangements with our executive officers and directors that are more fully described above under "Executive Compensation — Agreements with Executive Officers", "Executive Compensation — Indemnification Agreements", and "Director Compensation". Transactions or Relationships with or involving Mr. Honig In April 2015, we sold to Mr. Honig 427,351 units of the Company s securities for a purchase price of $5.85 per unit, or $2,500,000 in the aggregate, as part of a private placement, with each unit comprised of one share of common stock and a 24-month warrant to purchase 0.4 of a share of the Company s common stock. The sale was completed on equivalent terms to other investors purchasing in the private placement. In February 2016, we sold to Mr. Honig 367,647 shares of our common stock for a purchase price of $3.40 per share, or approximately $1,250,000 in the aggregate, as part of a private placement. The terms of the private placement were reviewed and approved by the Audit Committee. In December 2017, we sold to Mr. Honig 990,099 units of the Company s securities for a purchase price of $3.03 per unit, or $3,000,000 in the aggregate, as part of the Private Placement, with each unit comprised of one share of common stock and a 24-month warrant to purchase 0.4 of a share of the Company s common stock. The sale was completed on equivalent terms to other investors purchasing in the Private Placement, except that the unit price for all other investors in the Private Placement was $2.80. The terms of Mr. Honig s participation in the Private Placement were reviewed and approved by the Audit Committee. Transactions or Relationships with or involving Mr. Smith On March 24, 2016, the Company entered into a subscription agreement with the Donald Smith Value Fund, L.P. The Subscription Agreement provided for the sale to Donald Smith Value Fund, L.P. of 1,850,000 units for $3.25 per unit, with each unit consisting of one share of common stock and one thirty-month warrant to purchase 0.5 of a share of common stock at an exercise price of $4.35. The transaction was completed and the shares were issued on March 28, 2016. Immediately following the sale, Mr. Smith beneficially owned approximately 7.1% of our outstanding common stock. No other investors purchased shares in the private placement. Transactions or Relationships with or involving Jonathan Honig In December 2017, we sold to Jonathan Honig 535,714 units of the Company s securities for a purchase price of $2.80 per unit, or $1,500,000 in the aggregate, as part of the Private Placement, with each unit comprised of one share of common stock and a 24-month warrant to purchase 0.4 of a share of the Company s common stock. The sale was completed on equivalent terms to other investors purchasing in the Private Placement except for Barry Honig, as discussed above. The terms of Jonathan Honig s participation in the Private Placement were reviewed and approved by the Audit Committee. Jonathan Honig is a sibling of Barry Honig. Director Independence We currently have five directors serving on our Board of Directors: Messrs. Alfers, Honig, Karr, and Morrison, and Ms. Saxton. Mr. Barr served on the Board of Directors from June 24, 2016 until his death on April 9, 2017. We have determined Messrs. Morrison, Honig, Karr, and Ms. Saxton are, and Mr. Barr was, independent in accordance with the definition of independence set forth in the rules of Nasdaq. Each director who is a member of a committee subject to independence standards under the rules of Nasdaq is independent under such standards. In reaching these determinations, the Board of Directors considered payments for consulting services made to Mr. Barr and Mr. Karr prior to their appointments to the Board of Directors, a grant of 12,500 restricted stock units to Mr. Karr in December 2015, payments for consulting services made to Mr. Morrison prior to the formation of the Audit Committee and the Company s uplisting to Nasdaq, fees paid to Mr. Morrison and Mr. Barr for their service on the Technical Committee, Mr. Honig s status as a significant stockholder, Mr. Karr s position and Mr. Honig s former position on the board of directors of Levon Resources, a significant stockholder of the Company, and Mr. Karr s role as president and chief executive officer of U.S. Gold Corp. Tim Janke, one of the Company s executive officers, is a director of U.S. Gold Corp. and has represented to the Company he is not a member of the compensation committee or similar body of U.S. Gold Corp. SELLING STOCKHOLDERS Up to 3,286,127 shares of common stock are being offered by this prospectus, all of which are being registered for sale for the account of the selling stockholders and all of which were issued to the selling stockholders in the Private Placement. These shares consist of the following: 2,347,236 shares issued to the selling stockholders in the Private Placement; and 938,891 shares issuable upon exercise of the warrants issued to the selling stockholders in the Private Placement. The Private Placement was exempt under the registration provisions of the Securities Act. The 3,286,127 shares of common stock referred to above are being registered to permit public sales of the shares, and the selling stockholders may offer the shares for resale from time to time pursuant to this prospectus. The selling stockholders may also sell, transfer or otherwise dispose of all or a portion of their shares in transactions exempt from the registration requirements of the Securities Act or pursuant to another effective registration statement covering those shares. We may from time to time include additional selling stockholders in supplements or amendments to this prospectus. The table below sets forth certain information regarding the selling stockholders and the shares of our common stock offered by them in this prospectus. Unless otherwise indicated in the footnotes to the table below: (i) subject to community property laws where applicable, the selling stockholders, to our knowledge, have sole voting and investment power with respect to the shares beneficially owned by them; (ii) none of the selling stockholders are broker-dealers, or are affiliates of a broker-dealer; and (iii) the selling stockholders have not had a material relationship with us within the past three years. Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission. The selling stockholders percentage of ownership of our outstanding shares in the table below is based upon 33,544,125 shares of common stock assumed to be outstanding as of January 16, 2018, and includes the 938,891 shares issuable upon exercise of the warrants and registered for resale in this registration statement on Form S-1. Ownership Before Offering Ownership After Offering (+) SELLING STOCKHOLDER Number of shares of common stock beneficially owned Total number of shares offered Shares of common stock offered Warrant shares offered Number of shares of common stock beneficially owned Percentage of common stock beneficially owned Stetson Capital Investments, Inc. (1) 297,999 249,999 178,571 71,428 48,000 *% GRQ Consultants, Inc. 401K (2) 5,779,681 1,386,138 990,099 396,039 4,393,543 13.1% Andrew Schwartzberg 124,999 124,999 89,285 35,714 0 *% ATG Capital LLC (3) 174,999 124,999 89,285 35,714 50,000 *% Jonathan Honig 1,749,999 749,000 535,714 214,285 1,000,000 *% Richard Molinsky 71,389 49,999 35,714 14,285 21,390 *% Moishe Hartstein (4) 49,999 49,999 35,714 14,285 0 *% Erick Richardson 124,999 124,999 89,285 35,714 0 *% Brian M. Herman (5) 56,999 49,999 35,714 14,285 7,000 *% Melechdavid Inc. (6) 274,999 124,999 89,285 35,714 150,000 *% Alpha Capital Anstalt (7) 124,999 124,999 89,285 35,714 0 *% Newport Vacations Manager, LLC (8) 124,999 124,999 89,285 35,714 0 *% TOTAL — 3,286,127 2,347,236 938,891 — — * represents less than 1%. (+) Represents the amount of shares that will be held by the selling stockholders after completion of this offering based on the assumptions that (a) all shares registered for sale by the registration statement of which this prospectus is part will be sold and (b) that no other shares of our common stock beneficially owned by the selling stockholders are acquired or are sold prior to completion of this offering by the selling stockholders. (1)As the president of Stetson Capital Investments, Inc., John Stetson has voting and investment power over shares of the Company held by this selling stockholder. (2)Barry Honig (a director of the Company) has voting and investment power over shares of the Company held by this selling stockholder. For additional information on the beneficial ownership of GRQ Consultants Inc. 401K and Mr. Honig, please see the section —"Security Ownership of Certain Beneficial Owners and Management". (3)As the managing member of ATG Capital LLC, John O Rourke has voting and investment power over shares of the Company held by this selling stockholder. (4)Moishe Hartstein is an affiliate of a broker-dealer; however, Mr. Hartstein represented that he purchased these shares of common stock in the ordinary course of business, not for resale, and, at the time of purchase, had no agreements or understandings, directly or indirectly, with any person to distribute such shares of common stock. (5)Brian Herman is an affiliate of a broker-dealer; however, Mr. Herman represented that he purchased these shares of common stock in the ordinary course of business, not for resale, and, at the time of purchase, had no agreements or understandings, directly or indirectly, with any person to distribute such shares of common stock. (6)As the sole owner of Melechdavid, Inc., Mark Groussman has voting and investment power over shares of the Company held by this selling stockholder. (7)As the controlling director of Alpha Capital Anstalt, Konrad Ackermann has voting and investment power over shares of the Company held by this selling stockholder. (8)As the manager of Newport Vacations Manager, LLC, Dr. Robert M. Cornfeld has voting and investment power over shares of the Company held by this selling stockholder. DESCRIPTION OF SECURITIES We are authorized to issue 200,000,000 shares of common stock, par value $0.0001 per share, and 50,000,000 shares of preferred stock. As of January 16, 2018, we have the following issued and outstanding securities on a fully diluted basis: 33,544,125 shares of common stock; 8,946 shares of Series E Convertible Preferred Stock, which are convertible into 3,163,501 shares of common stock; Warrants to purchase 4,434,267 shares of common stock; Options to purchase 1,794,453 shares of common stock; and Restricted stock units, which entitle the holders to receive 1,052,850 shares of common stock upon vesting and upon the satisfaction of certain specified conditions. Common Stock The holders of our common stock are entitled to one vote per share. In addition, the holders of our common stock will be entitled to receive ratably such dividends, if any, as may be declared by our board of directors out of legally available funds; however, the current policy of our board of directors is to retain earnings, if any, for operations and growth. Upon liquidation, dissolution or winding-up, the holders of our common stock will be entitled to share ratably in all assets that are legally available for distribution. The holders of our common stock will have no preemptive, subscription, redemption or conversion rights. The rights, preferences and privileges of holders of our common stock will be subject to, and may be adversely affected by, the rights of the holders of any series of preferred stock, which may be designated solely by action of our board of directors. Our common stock is listed on Nasdaq and on the TSX under the symbol "PGLC." Warrants We currently have issued and outstanding warrants to purchase 4,434,267 shares of common stock, all currently exercisable, as follows: Warrants to purchase 22,223 shares at $8.10 per share, expiring March 6, 2022; Warrants to purchase 8,334 shares at $5.40 per share, expiring November 7, 2018; Warrants to purchase 1,060,429 shares at $5.06 per share, expiring August 25, 2018; Warrants to purchase 261,590 shares at $5.06 per share, expiring August 25, 2018; Warrants to purchase 925,000 shares at $4.35 per share, expiring September 28, 2018; Warrants to purchase 100,000 shares at $3.45 per share, expiring January 16, 2019; Warrants to purchase 938,891 shares at $3.40 per share, expiring December 19, 2019(1); and Warrants to purchase 1,117,800 shares at $3.40 per share, expiring December 19, 2019. (1) The shares issuable upon exercise of these warrants are offered pursuant to this prospectus. The selling stockholders may exercise the warrants included in this prospectus on a cashless basis if the shares of common stock underlying the warrants are not then registered pursuant to an effective registration statement. Registration Rights In connection with the Private Placement, we entered into registration rights agreements with the selling stockholders dated December 11, 2017 providing for the registration of the resale of those shares. Transfer Agent The transfer agent for our common stock in the United States is Computershare Investor Services, Inc. located at 462 South 4th Street, Suite 1600, Louisville, Kentucky 40233-5000. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure There have been no changes in or disagreements with our accountants since our formation that are required to be disclosed pursuant to Item 304 of Regulation S-K, except those that have been previously reported in our filings with the Securities and Exchange Commission. Indemnification of Directors and Officers Nevada Revised Statutes Sections 78.7502 and 78.751 provide us with the power to indemnify any of our directors and officers. The director or officer must have conducted himself/herself in good faith and reasonably believe that his/her conduct was in, or not opposed to, our best interests. In a criminal action, the director, officer, employee or agent must not have had reasonable cause to believe his/her conduct was unlawful. Under Revised Statutes Section 78.751, advances for expenses may be made by agreement if the director or officer affirms in writing that he/she believes he/she has met the standards and will personally repay the expenses if it is determined such officer or director did not meet the standards. Our Articles of Incorporation provide that our officers and directors shall be indemnified and held harmless to the fullest extent legally permissible under the laws of the State of Nevada against all expenses, liability and loss (including attorneys fees, judgments, fines and amounts paid or to be paid in settlement) reasonably incurred or suffered by them in connection with any civil, criminal, administrative or investigative action, suit or proceeding related to their service as an officer or director. Such right of indemnification shall be a contract right which may be enforced in any manner desired by such person. We must pay the expenses of officers and directors incurred in defending a civil or criminal action, suit or proceeding as they are incurred and in advance of the final disposition of the action, suit or proceeding, upon receipt of an undertaking by or on behalf of the director or officer to repay the amount if it is ultimately determined by a court of competent jurisdiction that he is not entitled to be indemnified by us. Such right of indemnification shall not be exclusive of any other right which such directors or officers may have or hereafter acquire. Our Articles of Incorporation provide that we may adopt bylaws to provide at all times the fullest indemnification permitted by the laws of the State of Nevada, and may purchase and maintain insurance on behalf of any of officers and directors. The indemnification provided in our Articles of Incorporation shall continue as to a person who has ceased to be a director, officer, employee or agent, and shall inure to the benefit of the heirs, executors and administrators of such person. Our Bylaws provide that a director or officer shall have no personal liability to us or our stockholders for damages for breach of fiduciary duty as a director or officer, except for damages for breach of fiduciary duty resulting from (a) acts or omissions which involve intentional misconduct, fraud, or a knowing violation of law, or (b) the payment of dividends in violation of Nevada Revised Statutes Section 78.3900. The Company has entered into indemnification agreements with its directors and executive officers providing for indemnification against all expenses, judgments, fines and amounts paid in settlement incurred by such indemnitee in connection with any threatened, pending or completed action, suit, alternative dispute resolution mechanism or proceeding to which indemnitee was or is a party or is threatened to be made a party by reason of the fact that indemnitee is or was a director, officer, employee or agent of the Company, or is or was serving at the request of the Company as a director, officer, employee or agent of another enterprise, to the fullest extent permitted by Nevada law. These agreements are more fully described herein under "Executive Compensation — Indemnification Agreements". Disclosure of Commission Position on Indemnification for Securities Act Liabilities Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers and persons controlling us, we have been advised that it is the Securities and Exchange Commission s opinion that such indemnification is against public policy as expressed in the Securities Act, and is, therefore, unenforceable. PLAN OF DISTRIBUTION This prospectus relates to the sale by the selling stockholders identified in this prospectus of up to 3,286,127 shares of our common stock, par value $0.0001 per share, which includes (i) 2,347,236 shares issued to the selling stockholders in the Private Placement and (ii) 938,891 shares issuable upon exercise of the warrants issued to the selling stockholders in the Private Placement. Each selling stockholder of the securities and any of their pledgees, assignees and successors-in-interest may, from time to time, sell any or all of their securities covered hereby on the Nasdaq or any other stock exchange, market or trading facility on which the securities are traded or in private transactions. These sales may be at fixed or negotiated prices. A selling stockholder may use any one or more of the following methods when selling securities: ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers; block trades in which the broker-dealer will attempt to sell the securities as agent but may position and resell a portion of the block as principal to facilitate the transaction; purchases by a broker-dealer as principal and resale by the broker-dealer for its account; an exchange distribution in accordance with the rules of the applicable exchange; privately negotiated transactions; settlement of short sales entered into after the effective date of the registration statement of which this prospectus is a part; in transactions through broker-dealers that agree with the selling stockholders to sell a specified number of such securities at a stipulated price per security; through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise; a combination of any such methods of sale; or any other method permitted pursuant to applicable law. The selling stockholders may also sell securities under Rule 144 under the Securities Act, if available, rather than under this prospectus. Broker-dealers engaged by the selling stockholders may arrange for other broker-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the Selling Stockholders (or, if any broker-dealer acts as agent for the purchaser of securities, from the purchaser) in amounts to be negotiated, but, except as set forth in a supplement to this prospectus, in the case of an agency transaction not in excess of a customary brokerage commission in compliance with FINRA Rule 2440; and in the case of a principal transaction a markup or markdown in compliance with FINRA IM-2440. In connection with the sale of the securities or interests therein, the selling stockholders may enter into hedging transactions with broker-dealers or other financial institutions, which may in turn engage in short sales of the securities in the course of hedging the positions they assume. The selling stockholders may also sell securities short and deliver these securities to close out their short positions, or loan or pledge the securities to broker-dealers that in turn may sell these securities. The selling stockholders may also enter into option or other transactions with broker-dealers or other financial institutions or create one or more derivative securities which require the delivery to such broker-dealer or other financial institution of securities offered by this prospectus, which securities such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction). The selling stockholders and any broker-dealers or agents that are involved in selling the securities may be deemed to be "underwriters" within the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the securities purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. Each selling stockholder has informed the Company that it does not have any written or oral agreement or understanding, directly or indirectly, with any person to distribute the securities. In no event shall any broker-dealer receive fees, commissions and markups which, in the aggregate, would exceed eight percent (8%). The Company is required to pay certain fees and expenses incurred by the Company incident to the registration of the securities. The Company has agreed to indemnify the selling stockholders against certain losses, claims, damages and liabilities, including liabilities under the Securities Act. Because selling stockholders may be deemed to be "underwriters" within the meaning of the Securities Act, they will be subject to the prospectus delivery requirements of the Securities Act including Rule 172 thereunder. In addition, any securities covered by this prospectus which qualify for sale pursuant to Rule 144 under the Securities Act may be sold under Rule 144 rather than under this prospectus. The selling stockholders have advised us that there is no underwriter or coordinating broker acting in connection with the proposed sale of the resale securities by the selling stockholders. The Company has agreed to keep this prospectus effective until the earlier of (i) the date on which the securities may be resold by the selling stockholders without registration and without regard to any volume or manner-of-sale limitations by reason of Rule 144, without the requirement for the Company to be in compliance with the current public information under Rule 144(c) under the Securities Act or any other rule of similar effect or (ii) all of the securities have been sold pursuant to this prospectus or Rule 144 under the Securities Act or any other rule of similar effect. The resale securities will be sold only through registered or licensed brokers or dealers if required under applicable state securities laws. In addition, in certain states, the resale securities covered hereby may not be sold unless they have been registered or qualified for sale in the applicable state or an exemption from the registration or qualification requirement is available and is complied with. Under applicable rules and regulations under the Exchange Act, any person engaged in the distribution of the resale securities may not simultaneously engage in market making activities with respect to the common stock for the applicable restricted period, as defined in Regulation M, prior to the commencement of the distribution. In addition, the selling stockholders will be subject to applicable provisions of the Exchange Act and the rules and regulations thereunder, including Regulation M, which may limit the timing of purchases and sales of securities of the common stock by the selling stockholders or any other person. We will make copies of this prospectus available to the selling stockholders and have informed them of the need to deliver a copy of this prospectus to each purchaser at or prior to the time of the sale (including by compliance with Rule 172 under the Securities Act). LEGAL MATTERS Davis Graham & Stubbs LLP will pass upon the validity of the shares of common stock offered by the selling stockholders under this prospectus. EXPERTS The consolidated financial statements of Pershing Gold for the fiscal years ended December 31, 2015 and December 31, 2016 included in this prospectus have been so included in reliance on the report of KBL, LLP, an independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting. The estimates of our mineralized material with respect to the Relief Canyon Mine deposit included in this prospectus have been so included in reliance upon the preliminary feasibility study prepared by Mine Development Associates Inc. WHERE YOU CAN FIND ADDITIONAL INFORMATION We have filed with the Securities and Exchange Commission a registration statement on Form S-1, together with any amendments and related exhibits, under the Securities Act, with respect to our shares of common stock offered by this prospectus. The registration statement contains additional information about us and our shares of common stock that the selling stockholders are offering in this prospectus. We file annual, quarterly and current reports and other information with the Securities and Exchange Commission under the Securities Exchange Act. Our Securities and Exchange Commission filings are available to the public over the Internet at the Securities and Exchange Commission s website at http://www.sec.gov. Access to these electronic filings is available as soon as practicable after filing with the Securities and Exchange Commission. You may also read and copy any document we file at the Securities and Exchange Commission s public reference room located at 100 F Street, N.E., Washington, D.C. 20549. Please call the Securities and Exchange Commission at 1-800-SEC-0330 for further information on the public reference rooms and their copy charges. You may also request a copy of those filings, excluding exhibits, from us at no cost. Any such request should be addressed to us at: Pershing Gold Corporation, 1658 Cole Blvd., Bldg. 6, Suite 210, Lakewood, CO 80401, Attention: Corporate Secretary or by calling 720-974-7254. Our SEC filings are also available through the "Investor Relations" section of our website at www.pershinggold.com. GLOSSARY OF SELECTED MINING TERMS The following is a glossary of selected mining terms used in this registration statement on Form S-1 that may be technical in nature: "Base metal" means a classification of metals usually considered to be of low value and higher chemical activity when compared with the precious metals (gold, silver, platinum, etc.). This nonspecific term generally refers to the high-volume, low-value metals copper, lead, tin, and zinc. "Deposit" means an informal term for an accumulation of mineral ores. "Dor " means a mixture of gold and silver that is produced from the refinery furnace. "Exploration stage" means a U.S. Securities and Exchange Commission descriptive category applicable to public mining companies engaged in the search for mineral deposits and ore reserves and which are not either in the mineral development or the ore production stage. "Feasibility study" means an engineering study designed to define the technical, economic, and legal viability of a mining project with a high degree of reliability. "Formation" means a distinct layer of sedimentary rock of similar composition. "Grade" means the metal content of ore, usually expressed in troy ounces per ton (2,000 pounds) or in grams per ton or metric tonnes that contain 2,204.6 pounds or 1,000 kilograms. "Heap leach" means a mineral processing method involving the crushing and stacking of an ore on an impermeable liner upon which solutions are sprayed to dissolve metals, i.e. gold, copper, etc.; the solutions containing the metals are then collected and treated to recover the metals. "Lode" means a classic vein, ledge, or other rock in place between definite walls. "Millsite" means a specific location of five acres or less on public lands that are non-mineral in character. Millsites may be located in connection with a placer or lode claim for mining and milling purposes or as an independent/custom mill site that is independent of a mining claim. "Mineralization" means the concentration of metals within a body of rock. "Mineralized material" is a body that contains mineralization which has been delineated by appropriately spaced drilling and/or underground sampling to estimate a sufficient tonnage and average grade of metal(s). Such a deposit does not qualify as a reserve until a comprehensive evaluation based upon unit cost, grade, recoveries, and other material factors concludes legal and economic feasibility of extraction at the time of reserve determination. "Mining" means the process of extraction and beneficiation of mineral reserves or mineral deposits to produce a marketable metal or mineral product. Exploration continues during the mining process and, in many cases, mineral reserves or mineral deposits are expanded during the life of the mine operations as the exploration potential of the deposit is realized. "Mining claim" means a mining interest giving its holder the right to prospect, explore for and exploit minerals within a defined area. "Net smelter return royalty" means a defined percentage of the gross revenue from a resource extraction operation, less a proportionate share of transportation, insurance, and smelting/refining costs. "Open pit" means a mine working or excavation open to the surface. "Ore" means material containing minerals that can be economically extracted. "Outcrop" means that part of a geologic formation or structure that appears at the surface of the earth. "Precious metal" means any of several relatively scarce and valuable metals, such as gold, silver, and the platinum-group metals. "Probable reserves" means reserves for which quantity and grade and/or quality are computed from information similar to that used for proven reserves, but the sites for inspection, sampling and measurement are farther apart or are otherwise less adequately spaced. The degree of assurance, although lower than that for proven reserves, is high enough to assume continuity between points of observation. "Production stage" means a project that is actively engaged in the process of extraction and beneficiation of mineral reserves or mineral deposits to produce a marketable metal or mineral product. "Proven reserves" means reserves for which (a) quantity is computed from dimensions revealed in outcrops, trenches, workings or drill holes; grade and/or quality are computed from the results of detailed sampling and (b) the sites for inspection, sampling and measurement are spaced so closely and the geologic character is so well defined that size, shape, depth and mineral content of reserves are well-established. "Reclamation" means the process of returning land to another use after mining is completed. "Recovery" means that portion of the metal contained in the ore that is successfully extracted by processing, expressed as a percentage. "Reserves" means that part of a mineral deposit that could be economically and legally extracted or produced at the time of reserve determination. "Sampling" means selecting a fractional part of a mineral deposit for analysis. "Sediment" means solid fragmental material that originates from weathering of rocks and is transported or deposited by air, water, or ice, or that accumulates by other natural agents, such as chemical precipitation from solution or secretion by organisms, and that forms in layers on the Earth s surface at ordinary temperatures in a loose, unconsolidated form. "Sedimentary" means formed by the deposition of sediment. "Unpatented mining claim" means a mineral claim staked on federal or, in the case of severed mineral rights, private land (where the U.S. government has retained ownership of the locatable minerals) to which a deed from the U.S. government has not been received by the claimant. Unpatented claims give the claimant the exclusive right to explore for and to develop the underlying minerals and the right to use the surface for such purpose. However, the claimant does not own title to either the minerals or the surface, and the claim must include a discovery of valuable minerals to be valid and is subject to the payment of annual claim maintenance fees that are established by the governing authority of the land on which the claim is located. "Vein" means a fissure, fault or crack in a rock filled by minerals that have traveled upwards from some deep source. "Waste" means rock lacking sufficient grade and/or other characteristics of ore. 3,286,127 Shares PERSHING GOLD CORPORATION Common Stock PROSPECTUS PART II - INFORMATION NOT REQUIRED IN PROSPECTUS Item 13. Other Expenses of Issuance and Distribution. We are paying all of the selling stockholders expenses related to this offering, except that the selling stockholders will pay any applicable underwriting discounts and commissions. The fees and expenses payable by us in connection with this Registration Statement are estimated as follows: Securities and Exchange Commission Registration Fee $985.99 Accounting Fees and Expenses $2,500 Legal Fees and Expenses $30,000 Miscellaneous Fees and Expenses $25,000 Total $58,485.99 Item 14. Indemnification of Directors and Officers. Nevada Revised Statutes Sections 78.7502 and 78.751 provide us with the power to indemnify any of our directors and officers. The director or officer must have conducted himself/herself in good faith and reasonably believe that his/her conduct was in, or not opposed to, our best interests. In a criminal action, the director, officer, employee or agent must not have had reasonable cause to believe his/her conduct was unlawful. Under Revised Statutes Section 78.751, advances for expenses may be made by agreement if the director or officer affirms in writing that he/she believes he/she has met the standards and will personally repay the expenses if it is determined such officer or director did not meet the standards. Our Articles of Incorporation provide that our officers and directors shall be indemnified and held harmless to the fullest extent legally permissible under the laws of the State of Nevada against all expenses, liability and loss (including attorneys fees, judgments, fines and amounts paid or to be paid in settlement) reasonably incurred or suffered by them in connection with any civil, criminal, administrative or investigative action, suit or proceeding related to their service as an officer or director. Such right of indemnification shall be a contract right which may be enforced in any manner desired by such person. We must pay the expenses of officers and directors incurred in defending a civil or criminal action, suit or proceeding as they are incurred and in advance of the final disposition of the action, suit or proceeding, upon receipt of an undertaking by or on behalf of the director or officer to repay the amount if it is ultimately determined by a court of competent jurisdiction that he is not entitled to be indemnified by us. Such right of indemnification shall not be exclusive of any other right which such directors or officers may have or hereafter acquire. Our Articles of Incorporation provide that we may adopt bylaws to provide at all times the fullest indemnification permitted by the laws of the State of Nevada, and may purchase and maintain insurance on behalf of any of officers and directors. The indemnification provided in our Articles of Incorporation shall continue as to a person who has ceased to be a director, officer, employee or agent, and shall inure to the benefit of the heirs, executors and administrators of such person. Our Bylaws provide that a director or officer shall have no personal liability to us or our stockholders for damages for breach of fiduciary duty as a director or officer, except for damages for breach of fiduciary duty resulting from (a) acts or omissions which involve intentional misconduct, fraud, or a knowing violation of law, or (b) the payment of dividends in violation of Nevada Revised Statutes Section 78.3900. The Company has entered into indemnification agreements with its directors and executive officers providing for indemnification against all expenses, judgments, fines and amounts paid in settlement incurred by such indemnitee in connection with any threatened, pending or completed action, suit, alternative dispute resolution mechanism or proceeding to which indemnitee was or is a party or is threatened to be made a party by reason of the fact that indemnitee is or was a director, officer, employee or agent of the Company, or is or was serving at the request of the Company as a director, officer, employee or agent of another enterprise, to the fullest extent permitted by Nevada law. These agreements are more fully described in the prospectus under "Executive Compensation — Indemnification Agreements". II-1 Item 15. Recent Sales of Unregistered Securities. On January 28, 2015, the Company issued four-year warrants to purchase 8,334 shares of common stock to a consultant. The warrants vested on March 1, 2015 and are exercisable at $5.40 per share. The issuance of these securities was deemed to be exempt from the registration requirements of the Securities Act of 1933 by virtue of Section 4(a)(2) thereof, as a transaction by an issuer not involving a public offering. On April 10, 2015, in connection with a private placement, we issued 1,652,268 shares of common stock and warrants to acquire an aggregate of 660,934 shares of common stock to certain accredited investors, for aggregate gross proceeds of approximately $9.6 million. The Company relied on the exemptions from registration under Section 4(a)(2) of the Securities Act, or Rule 506 of Regulation D, as a transaction by an issuer not involving a public offering, or Regulation S, for purposes of the private placement. On April 10, 2015, in connection with the aforementioned private placement, we issued warrants to acquire an aggregate of 89,164 shares of common stock to a placement agent as consideration for certain placement agent services. The issuance of these securities was deemed to be exempt from the registration requirements of the Securities Act of 1933, as amended, by virtue of Section 4(a)(2) thereof, as a transaction by an issuer not involving a public offering. On April 21, 2015, in connection with a private placement, we issued 310,233 shares of common stock and warrants to acquire an aggregate of 124,111 shares of common stock to certain accredited investors, for aggregate gross proceeds of approximately $1.8 million. The Company relied on the exemption from registration under Section 4(a)(2) of the Securities Act or Rule 506 of Regulation D, as a transaction by an issuer not involving a public offering, or Regulation S, for purposes of the private placement. On April 21, 2015, in connection with the aforementioned private placement, we issued warrants to acquire an aggregate of 31,023 shares of common stock to a placement agent as consideration for certain placement agent services. The issuance of these securities was deemed to be exempt from the registration requirements of the Securities Act of 1933, as amended, by virtue of Section 4(a)(2) thereof, as a transaction by an issuer not involving a public offering. On June 8, 2015 and June 9, 2015, the Company granted 55,556 and 11,112 restricted stock units, respectively, to certain of the Company s non-employee directors pursuant to the Company s 2013 Equity Incentive Plan. The restricted stock units vest over a three year period. The issuance of these securities was deemed to be exempt from the registration requirements of the Securities Act by virtue of Section 4(a)(2) thereof, as a transaction by an issuer not involving a public offering. On June 28, 2015, the Company granted 700,000 restricted stock units to an executive of the Company pursuant to the Company s 2013 Equity Incentive Plan. The issuance of these securities was deemed to be exempt from the registration requirements of the Securities Act by virtue of Section 4(a)(2) thereof, as a transaction by an issuer not involving a public offering. On September 18, 2015, the Company issued 5,556 shares of common stock in connection with the death of one of the non-employee members of the board of directors. The issuance of these securities was deemed to be exempt from the registration requirements of the Securities Act by virtue of Section 4(a)(2) thereof, as a transaction by an issuer not involving a public offering. On September 24, 2015, a certain holder of the Company s Series E Preferred Stock converted 50 shares into 9,822 shares of common stock of the Company in accordance with the Series E Preferred Stock certificate of designation. The issuance of these securities was deemed to be exempt from the registration requirements of the Securities Act by virtue of Section 4(a)(2) thereof, as a transaction by an issuer not involving a public offering. II-2 On December 9, 2015, the Company issued 12,500 restricted stock units to director Edward Karr. For each restricted stock unit, Mr. Karr will be entitled to receive one share of common stock upon the Reporting Person's termination of service on the Issuer's board of directors or in connection with a change of control. The issuance of these securities was deemed to be exempt from the registration requirements of the Securities Act of 1933, as amended, by virtue of Section 4(a)(2) thereof, as a transaction by an issuer not involving a public offering. On December 23, 2015, the Company issued 50,000 restricted stock units to certain employees and officers, 18,000 of which were not reported, and were not required to be reported, under the Exchange Act. For each fully vested restricted stock unit, the recipient will be entitled to receive one share of common stock upon termination of employment or in connection with a change of control or under certain other circumstances. The issuance of these securities was deemed to be exempt from the registration requirements of the Securities Act of 1933, as amended, by virtue of Section 4(a)(2) thereof, as a transaction by an issuer not involving a public offering. On February 4, 2016 in connection with a private placement, the Company issued 367,467 shares of common stock to certain accredited investors for aggregate gross proceeds of approximately $1.25 million. The Company relied on the exemption from registration under Section 4(a)(2) of the Securities Act or Rule 506 of Regulation D, as a transaction by an issuer not involving a public offering, for purposes of the private placement. On February 15, 2016, a stockholder converted 1 share of the Company s Series E Preferred Stock into 292 shares of common stock of the Company in accordance with the Series E Preferred Stock certificate of designation. The issuance of these securities was deemed to be exempt from the registration requirements of the Securities Act by virtue of Section 4(a)(2) thereof, as a transaction by an issuer not involving a public offering. On February 25, 2016, in connection with a private placement, the Company issued 2,120,882 shares of common stock and warrants to acquire an aggregate of 1,060,429 shares of common stock, for aggregate gross proceeds of approximately $6.9 million and net proceeds of approximately $6.1 million after commissions. A placement agent acted on behalf of the Company and was issued 30 month warrants (exercisable six months and one day after issuance) to purchase an aggregate of 261,590 shares of common stock at an exercise price of $5.06, subject to adjustment in the event of stock dividends, recapitalizations or certain other transactions. The Company relied on the exemption from registration under Section 4(a)(2) of the Securities Act or Rule 506 of Regulation D, as a transaction by an issuer not involving a public offering, or Regulation S, for purposes of the private placement. On March 9, 2016, a stockholder converted 100 shares of the Company s Series E Preferred Stock into 30,461 shares of common stock of the Company in accordance with the Series E Preferred Stock certificate of designation. The issuance of these securities was deemed to be exempt from the registration requirements of the Securities Act by virtue of Section 4(a)(2) thereof, as a transaction by an issuer not involving a public offering. On March 23, 2016, the Company issued 5,480 shares of common stock and 4,000 shares of common stock, respectively, to two consultants in exchange for services provided to the Company. The issuance of these securities was deemed to be exempt from the registration requirements of the Securities Act of 1933 by virtue of Section 4(a)(2) thereof, as a transaction by an issuer not involving a public offering. On March 28, 2016, in a private placement, the Company issued 1,850,000 shares of common stock and warrants to acquire an aggregate of 925,000 shares of common stock for aggregate gross proceeds of approximately $6.0 million. The Company relied on the exemption from registration under Section 4(a)(2) of the Securities Act, as a transaction by an issuer not involving a public offering, for purposes of the private placement. On May 4, 2016, the Company issued 4,843 shares of common stock to a consultant in exchange for services provided to the Company. The issuance of these securities was deemed to be exempt from the registration requirements of the Securities Act of 1933 by virtue of Section 4(a)(2) thereof, as a transaction by an issuer not involving a public offering. On June 7, 2016, a stockholder converted 98 shares of the Company s Series E Preferred Stock into 29,853 shares of common stock of the Company in accordance with the Series E Preferred Stock certificate of designation. The issuance of these securities was deemed to be exempt from the registration requirements of the Securities Act by virtue of Section 4(a)(2) thereof, as a transaction by an issuer not involving a public offering. On June 21, 2016, a stockholder converted 150 shares of the Company s Series E Preferred Stock into 45,693 shares of common stock of the Company in accordance with the Series E Preferred Stock certificate of designation. The issuance of these securities was deemed to be exempt from the registration requirements of the Securities Act by virtue of Section 4(a)(2) thereof, as a transaction by an issuer not involving a public offering. On June 24, 2016, the Company issued 5,995 restricted stock units to a director upon the director s appointment to the board. The issuance of these securities was deemed to be exempt from the registration requirements of the Securities Act by virtue of Section 4(a)(2) thereof, as a transaction by an issuer not involving a public offering. On June 30, 2016, a stockholder converted 80 shares of the Company s Series E Preferred Stock into 24,370 shares of common stock of the Company in accordance with the Series E Preferred Stock certificate of designation. The issuance of these securities was deemed to be exempt from the registration requirements of the Securities Act by virtue of Section 4(a)(2) thereof, as a transaction by an issuer not involving a public offering. II-3 On December 29, 2016, the Company issued 1,000 shares of common stock to an employee upon conversion of 1,000 vested restricted stock units in conjunction with the termination of an employment agreement. The issuance of these securities was deemed to be exempt from the registration requirements of the Securities Act by virtue of Section 4(a)(2) thereof, as a transaction by an issuer not involving a public offering. On February 3, 2017, the Company granted 100,000 24-month warrants to purchase shares of common stock at an exercise price of $3.45 per share in connection with a contract for future services. The issuance of these securities was deemed to be exempt from the registration requirements of the Securities Act by virtue of Section 4(a)(2) thereof, as a transaction by an issuer not involving a public offering. On February 3, 2017, the Company granted an aggregate of 116,229 restricted stock units to employees and directors of the Company in connection with employee bonus compensation and annual equity awards to non-employee directors for fiscal year 2016. The issuance of these securities was deemed to be exempt from the registration requirements of the Securities Act by virtue of Section 4(a)(2) thereof, as a transaction by an issuer not involving a public offering. On February 16, 2017, the Company granted 25,000 restricted stock units to new employees of the Company. The issuance of these securities was deemed to be exempt from the registration requirements of the Securities Act by virtue of Section 4(a)(2) thereof, as a transaction by an issuer not involving a public offering. On February 27, 2017, the Company issued 3,666 shares of common stock upon the vesting of 3,666 restricted stock units to a former employee. The issuance of these securities was deemed to be exempt from the registration requirements of the Securities Act by virtue of Section 4(a)(2) thereof, as a transaction by an issuer not involving a public offering. On March 21, 2017, the Company granted 50,000 restricted stock units to the Company s chief executive officer in connection with bonus compensation for fiscal year 2016. The issuance of these securities was deemed to be exempt from the registration requirements of the Securities Act by virtue of Section 4(a)(2) thereof, as a transaction by an issuer not involving a public offering. On March 31, 2017, the Company issued 1,925 shares of common stock upon the vesting of 1,925 restricted stock units to a former employee. The issuance of these securities was deemed to be exempt from the registration requirements of the Securities Act by virtue of Section 4(a)(2) thereof, as a transaction by an issuer not involving a public offering. On April 9, 2017, the Company issued 15,995 shares of common stock upon the vesting of 15,995 restricted stock units to a former director of the Company. The issuance of these securities was deemed to be exempt from the registration requirements of the Securities Act by virtue of Section 4(a)(2) thereof, as a transaction by an issuer not involving a public offering. On June 30, 2017, the Company granted 30,320 restricted stock units to two directors of the Company for payment in lieu of cash for retainer and meeting fees earned. The issuance of these securities was deemed to be exempt from the registration requirements of the Securities Act by virtue of Section 4(a)(2) thereof, as a transaction by an issuer not involving a public offering. On July 7, 2017, the Company issued 2,351 shares of common stock to a director of the Company for payment in lieu of cash for retainer and meeting fees earned. The issuance of these securities was deemed to be exempt from the registration requirements of the Securities Act by virtue of Section 4(a)(2) thereof, as a transaction by an issuer not involving a public offering. On September 30, 2017, the Company granted 5,255 restricted stock units to two directors of the Company for payment in lieu of cash for retainer and meeting fees earned. The issuance of these securities was deemed to be exempt from the registration requirements of the Securities Act by virtue of Section 4(a)(2) thereof, as a transaction by an issuer not involving a public offering. On December 11, 2017, in connection with a private placement, the Company issued 2,347,236 shares of common stock and warrants to acquire an aggregate of 938,891 shares of common stock. The Company relied on the exemption from registration under Section 4(a)(2) of the Securities Act, as a transaction by an issuer not involving a public offering, for purposes of the private placement. On December 29, 2017, the Company granted 5,626 restricted stock units to two directors of the Company for payment in lieu of cash for retainer and meeting fees earned. The issuance of these securities was deemed to be exempt from the registration requirements of the Securities Act by virtue of Section 4(a)(2) thereof, as a transaction by an issuer not involving a public offering. II-4 Item 16. Exhibits and Financial Statement Schedules Exhibit No. Description 2.1 Share Exchange Agreement dated as of September 29, 2010, by and among The Empire Sports & Entertainment Holdings Co., The Empire Sports & Entertainment, Co. and the shareholders of The Empire Sports & Entertainment Co. (Incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on October 5, 2010) 3.1 Amended and Restated Articles of Incorporation, as amended by certificates of amendment dated May 16, 2011, February 27, 2012, December 11, 2014 and June 17, 2015 (Incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on October 4, 2010) 3.2 Certificate of Amendment to the Amended and Restated Articles of Incorporation of Pershing Gold Corporation, as filed with the Nevada Secretary of State on June 17, 2015 (Incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on June 22, 2015) 3.3 Certificate of Designation for Series E (Incorporated by reference to Exhibit 3.1 to the Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on August 14, 2013) 3.4 Second Amended and Restated Bylaws (Incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on March 24, 2017) 4.1 Form of Investor Warrant (Incorporated by reference to Exhibit 4.1 to the Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on May 15, 2015) 4.2 Form of Placement Agent Warrant (Incorporated by reference to Exhibit 4.2 to the Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on May 15, 2015) 4.3 Form of Investor Warrant (Incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on March 2, 2016) 4.4 Form of Placement Agent Warrant (Incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on March 2, 2016) 4.5 Warrant, dated March 28, 2016 (Incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on March 30, 2016) 4.6 Form of Warrant (Incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on December 14, 2017) 4.7 Form of Private Placement Warrant (Incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on December 14, 2017) 5.1 Opinion of Davis Graham & Stubbs LLP* 10.1 The Empire Sports & Entertainment Holdings Co. 2010 Equity Incentive Plan (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on October 5, 2010)+ 10.2 Form of 2010 Incentive Stock Option Agreement (Incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on October 5, 2010) + 10.3 Form of 2010 Non-Qualified Stock Option Agreement (Incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on October 5, 2010) + 10.4 Indemnification Agreement (Incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on February 13, 2012) 10.5 2012 Equity Incentive Plan (Incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on February 13, 2012) + 10.6 Consulting Agreement with Barry Honig (Incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on April 11, 2012) + 10.7 Revised Offer Letter, dated November 21, 2012, between the Company and Eric Alexander (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on November 26, 2012) + 10.8 Severance Compensation Agreement, dated November 21, 2012, between the Company and Eric Alexander (Incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on November 26, 2012) + 10.9 Form of the 2012 Equity Incentive Plan Restricted Stock Agreement (Incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on February 15, 2013) + 10.10 Form of Indemnification Agreement (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on February 19, 2013) + 10.11 Pershing Gold Corporation 2013 Equity Incentive Plan (Incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on February 19, 2013) + 10.12 Form of 2012 Equity Incentive Plan Amended and Restated Nonqualified Stock Option Agreement (Incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on May 15, 2013) + 10.13 Form of 2012 Equity Incentive Plan Nonqualified Stock Option Agreement (Incorporated by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on May 15, 2013) + II-5 10.14 Form of 2012 Equity Incentive Plan Amended and Restated Restricted Stock Agreement (Incorporated by reference to Exhibit 10.3 to the Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on May 15, 2013) + 10.15 Form of Restricted Stock Agreement (Incorporated by reference to Exhibit 10.4 to the Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on May 15, 2013) + 10.16 Registration Rights Agreement (Incorporated by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on August 14, 2013) 10.17 Registration Rights Agreement, dated July 2, 2014 and July 18, 2014, among the Company and certain accredited investors (Incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on July 18, 2014) 10.18 Registration Rights Agreement, dated July 30, 2014, among the Company and certain accredited investors (Incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on July 30, 2014) 10.19 Offer Letter between the Company and Timothy Janke dated August 27, 2014 (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on September 4, 2014) + 10.20 Registration Rights Agreement, dated October 15, 2014, among the Company and certain accredited investors (Incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on October 21, 2014) 10.21 Asset Purchase Agreement dated effective January 13, 2015 among Newmont USA Limited, Pershing Gold Corporation and Gold Acquisition Corporation (Incorporated by reference to Exhibit 10.31 to the Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 5, 2015) 10.22 Mining Lease dated January 15, 2015, between New Nevada Resources, LLC and New Nevada Lands, LLC, as lessor, and Gold Acquisition Corp., as lessee (Incorporated by reference to Exhibit 10.32 to the Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 5, 2015) 10.23 Third Amendment to Restricted Stock Agreement, dated February 5, 2015, between Pershing Gold Corporation and Stephen Alfers (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on February 10, 2015) + 10.24 Third Amendment to Amended and Restated Restricted Stock Agreement, dated February 5, 2015, between Pershing Gold Corporation and Stephen Alfers (Incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on February 10, 2015) + 10.25 First Amendment to Restricted Stock Grant Agreement, dated February 6, 2015, between Pershing Gold Corporation and Alexander Morrison (Incorporated by reference to Exhibit 10.4 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on February 10, 2015) + 10.26 First Amendment to Restricted Stock Grant Agreement, dated February 6, 2015, between Pershing Gold Corporation and Timothy Janke (Incorporated by reference to Exhibit 10.7 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on February 10, 2015) + 10.27 Form of Subscription Agreement among the Company and certain accredited investors (Incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on May 15, 2015) 10.28 Form of Registration Rights Agreement among the Company and certain accredited investors (Incorporated by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on May 15, 2015) 10.29 Amended and Restated Executive Employment Agreement, dated June 28, 2015, between Pershing Gold Corporation and Stephen Alfers (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on June 29, 2015) + 10.30 Restricted Stock Unit Grant Agreement, dated June 28, 2015, between Pershing Gold Corporation and Stephen Alfers (Incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on June 29, 2015) + 10.31 Form of the 2013 Equity Incentive Plan Restricted Stock Grant Agreement (Incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on August 13, 2015) + 10.32 Form of 2013 Equity Incentive Plan Restricted Stock Unit Grant Agreement (Incorporated by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on August 13, 2015) + II-6 10.33 Offer Letter between the Company and Debra Struhsacker dated September 19, 2013 (Incorporated by reference to Exhibit 10.3 to the Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on August 13, 2015) + 10.34 Severance Compensation Agreement, dated September 19, 2013, between the Company and Debra Struhsacker (Incorporated by reference to Exhibit 10.4 to the Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on August 13, 2015) + 10.35 Amended Severance Compensation Agreement, dated November 19, 2015, between Pershing Gold Corporation and Eric Alexander (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on November 24, 2015) + 10.36 First Amendment to Restricted Stock Grant Agreement, dated December 10, 2015, between Pershing Gold Corporation and Eric Alexander (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on December 16, 2015) + 10.37 First Amendment to Restricted Stock Grant Agreement, dated December 10, 2015, between Pershing Gold Corporation and Eric Alexander (Incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on December 16, 2015) + 10.38 Second Amendment to Restricted Stock Grant Agreement, as amended, dated December 10, 2015, between Pershing Gold Corporation and Eric Alexander (Incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on December 16, 2015) + 10.39 First Amendment to Restricted Stock Grant Agreement, dated December 10, 2015, between Pershing Gold Corporation and Timothy Janke (Incorporated by reference to Exhibit 10.4 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on December 16, 2015) + 10.40 First Amendment to Restricted Stock Grant Agreement, dated December 10, 2015, between Pershing Gold Corporation and Timothy Janke (Incorporated by reference to Exhibit 10.5 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on December 16, 2015) + 10.41 Second Amendment to Restricted Stock Grant Agreement, as amended, dated December 10, 2015, between Pershing Gold Corporation and Timothy Janke (Incorporated by reference to Exhibit 10.6 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on December 16, 2015) + 10.42 First Amendment to Restricted Stock Grant Agreement, dated December 10, 2015, between Pershing Gold Corporation and Debra Struhsacker (Incorporated by reference to Exhibit 10.7 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on December 16, 2015) + 10.43 First Amendment to Restricted Stock Grant Agreement, dated December 10, 2015, between Pershing Gold Corporation and Debra Struhsacker (Incorporated by reference to Exhibit 10.8 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on December 16, 2015) + 10.44 Second Amendment to Restricted Stock Grant Agreement, as amended, dated December 10, 2015, between Pershing Gold Corporation and Debra Struhsacker (Incorporated by reference to Exhibit 10.9 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on December 16, 2015) + 10.45 Form of Registration Rights Agreement, dated February 4, 2016, among the Company and certain accredited investors (Incorporated by reference to Exhibit 10.57 to the Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 22, 2016) 10.46 Form of Subscription Agreement, dated February 4, 2016, among the Company and certain accredited investors (Incorporated by reference to Exhibit 10.58 to the Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 22, 2016) 10.47 Form of Subscription Agreement, dated February 25, 2016, among the Company and certain accredited investors (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on March 2, 2016) 10.48 Form of Unit Purchase Agreement, dated February 25, 2016, among the Company and certain accredited investors (Incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on March 2, 2016) 10.49 Form of Registration Rights Agreement, dated February 25, 2016, among the Company and certain accredited investors (Incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on March 2, 2016) II-7 10.50 Form of Subscription Agreement, dated March 24, 2016 (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on March 30, 2016) 10.51 Registration Rights Agreement, dated March 28, 2016 (Incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on March 30, 2016) 10.52 Extension Severance Compensation Agreement, dated August 15, 2016, between Pershing Gold Corporation and Debra Struhsacker (Incorporated by reference to Exhibit 10.52 to the Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 29, 2017) + 10.53 Second Amended Severance Compensation Agreement, dated September 15, 2016, between Pershing Gold Corporation and Eric Alexander (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on September 21, 2016) + 10.54 Amendment No. 1 to the Pershing Gold Corporation 2013 Equity Incentive Plan, dated October 7, 2016 (Incorporated by reference to Exhibit 10.54 to the Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 29, 2017) + 10.55 Third Amended Severance Compensation Agreement, dated January 11, 2017, between Pershing Gold Corporation and Eric Alexander (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on January 18, 2017) + 10.56 Amendment to Offer of Employment, dated January 11, 2017, between Pershing Gold Corporation and Timothy Janke (Incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on January 18, 2017) + 10.57 Second Extension Severance Compensation Agreement, dated January 11, 2017, between Pershing Gold Corporation and Debra Struhsacker (Incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on January 18, 2017) + 10.58 Restricted Stock Unit Grant Agreement, dated March 21, 2017, between Pershing Gold Corporation and Stephen Alfers (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on March 24, 2017) + 10.59 Amendment No. 1 to the Pershing Gold Corporation 2013 Equity Incentive Plan, dated October 7, 2016 (incorporated by reference to Exhibit 10.54 to the Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 29, 2017) 10.60 Indemnification Agreement between the Company and Edward Karr, dated March 24, 2017 (Incorporated by reference to Exhibit 10.6 of the Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on May 10, 2017)+ 10.61 Form of Employee Restricted Stock Unit Grant Agreement (Incorporated by reference to Exhibit 10.7 of the Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on May 10, 2017) + 10.62 Form of Non-Employee Director Restricted Stock Unit Grant Agreement (Incorporated by reference to Exhibit 10.8 of the Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on May 10, 2017)+ 10.63 Form of Restricted Stock Unit Grant Agreement for Restricted Stock Units in Lieu of Director Fees (Incorporated by reference to Exhibit 10.9 of the Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on May 10, 2017)+ 10.64 Form of Subscription Agreement (Incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K, filed with the Securities and Exchange Commission on December 14, 2017) II-8 10.65 Form of Registration Rights Agreement (Incorporated by reference to Exhibit 10.2 of the Current Report on Form 8-K, filed with the Securities and Exchange Commission on December 14, 2017) 10.66 Fourth Amended Severance Compensation Agreement, dated December 21, 2017, between Pershing Gold Corporation and Eric Alexander (Incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K, filed with the Securities and Exchange Commission on December 28, 2017) + 21.1 List of Subsidiaries (Incorporated by reference to Exhibit 21.1 of the Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 29, 2017) 23.1 Consent of KBL, LLP* 23.2 Consent of Davis Graham & Stubbs LLP (included in Exhibit 5.1)* 23.3 Consent of Mine Development Associates Inc.* 24.1 Powers of Attorney (included on signature page)* 101.ins XBRL Instance Document* 101.sch XBRL Taxonomy Schema Document* 101.cal XBRL Taxonomy Calculation Document* 101.def XBRL Taxonomy Linkbase Document* 101.lab XBRL Taxonomy Label Linkbase Document* 101.pre XBRL Taxonomy Presentation Linkbase Document* * Filed herewith. + Management contract or compensatory plan or arrangement. Item 17. Undertakings. (a) The undersigned registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (i) To include any prospectus required by Section 10(a)(3) of the Securities Act; (ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Securities and Exchange Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; and (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement. (2) That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of the securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a
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diff --git a/parsed_sections/prospectus_summary/2018/CIK0001434418_constellat_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001434418_constellat_prospectus_summary.txt
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@@ -0,0 +1 @@
+Prospectus summary 1
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diff --git a/parsed_sections/prospectus_summary/2018/CIK0001439397_northsight_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001439397_northsight_prospectus_summary.txt
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@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights selected information contained elsewhere in this prospectus. This summary does not contain all of the information that you should consider before investing in the common stock. You should read the entire prospectus carefully, including "Risk Factors" and the financial statements and notes thereto, before making an investment decision. NORTHSIGHT CAPITAL, INC. The Company intends to build a variety of websites/portals around the approximately 1,276 domain names it currently owns. These websites/portals will serve as directories for businesses engaged in the lawful sale and distribution of cannabis and hemp related products. The Company s principal business is to provide a wide variety of online directories for a broad range of businesses engaged in the lawful sale and distribution of cannabis and hemp related products. The following constitute the Company s major product categories: a monthly listing in one or more of the Company s online directories, paid advertising in one or more of the Company s online directories and leasing to customers one or more Internet domain names for the customer s exclusive use. The Company has not yet realized meaningful sales revenue. The principal markets for the Company s products are businesses that are engaged in the lawful sale and distribution of cannabis and cannabis related products and wish to (i) be included in one or more of the Company s state based online directories, (ii) advertise in the Company s online directories or (iii) lease one or more internet domain names from the Company. A list of the approximate 7,500 domain names we acquired in June, 2014 from Kae Yong Park, is filed as Exhibit 99.3 to our Current Report on Form 8-K filed with the Commission on June 25, 2014. We currently own approximately 1,276 cannabis related internet domain names. Domain names we do not lease to customers will point to one or more of our websites based on the relevance of the internet domain name to the particular website. We have already completed and launched the following websites: WeedDepot.com RateMyStrain.com 420Careers.com MJBizWire.com MarijuanaRecipes.com WikiWeed.com MarijuanaMD.com TheMarijuanaCompanies.com Weed Depot is a smart phone and internet platform directory with geo-mapping for dispensaries, doctors and clinics, head shops, tattoo parlors, and vape lounges. For mobile use, www.WeedDepot.com can be downloaded at Apple Apps and Google Play. RateMyStrain.com - A site on which individuals or dispensaries can rate or insert new strains commenting on their use and effect. The site contains over 800 strains and descriptions. 420Careers.com - for anyone looking to hire or seeking a job in the cannabis space. MJBizWire.com - Distribution of new events for companies in the cannabis space. Similar to PR Newswire, etc. MarijuanaRecipes.com - A web site where subscribers can find hundreds of recipes and ingredients for creating snacks, meals and deserts using infused cannabis. THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THE SECURITY HOLDERS IDENTIFIED IN THIS PROSPECTUS MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED. PROSPECTUS Dated October , 2018 NORTHSIGHT CAPITAL, INC. 39,286,533 shares of Common Stock This prospectus covers the sale of an aggregate of up to 39,286,533 shares of our common stock, $0.001 par value per share (the Common Stock ), by the selling security holders identified in this prospectus (collectively with any such holder s transferee, pledgee, donee or successor, referred to below as the Selling Stockholders ). The shares of Common Stock covered by this prospectus are comprised of 39,286,533 shares of Common Stock which were issued primarily pursuant to private offerings with selected accredited investors and in connection with our acquisition of approximately 7,500 internet domain names. We will not receive any proceeds from the sale by the Selling Stockholders of the shares covered by this prospectus. We are paying the cost of registering the shares covered by this prospectus, as well as various related expenses. The Selling Stockholders are responsible for all selling commissions, transfer taxes and other costs related to the offer and sale of their shares under this prospectus. If required, the number of shares to be sold, the public offering price of those shares, the names of any broker-dealers and any applicable commission or discount will be included in a supplement to this prospectus, called a prospectus supplement. Our Common Stock is quoted in the OTCQB Market (OTCQB) under the symbol NCAP . On October 24 , 2018, the last reported sale price per share of our Common Stock on the OTCQB was $0.00 8 . Our principal executive offices are located at 7580 East Gray Rd. Suite 103 Scottsdale, AZ 85260, and our telephone number is (480) 385-3893. If all of the 39,286,533 shares of common stock offered hereby were sold by the Selling Shareholders at the last quoted price on October 24 , 2018, the Selling Shareholders would realize aggregate gross proceeds before commissions of $ 314,292 . Investing in our common stock involves a high degree of risk. Review the risk factors beginning on page 11 of this prospectus carefully before you make an investment in our securities. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. The date of this prospectus is October , 2018 PROSPECTUS SUMMARY This summary highlights selected information contained elsewhere in this prospectus. This summary does not contain all of the information that you should consider before investing in the common stock. You should read the entire prospectus carefully, including "Risk Factors" and the financial statements and notes thereto, before making an investment decision. NORTHSIGHT CAPITAL, INC. The Company intends to build a variety of websites/portals around the approximately 1,276 domain names it currently owns. These websites/portals will serve as directories for businesses engaged in the lawful sale and distribution of cannabis and hemp related products. The Company s principal business is to provide a wide variety of online directories for a broad range of businesses engaged in the lawful sale and distribution of cannabis and hemp related products. The following constitute the Company s major product categories: a monthly listing in one or more of the Company s online directories, paid advertising in one or more of the Company s online directories and leasing to customers one or more Internet domain names for the customer s exclusive use. The Company has not yet realized meaningful sales revenue. The principal markets for the Company s products are businesses that are engaged in the lawful sale and distribution of cannabis and cannabis related products and wish to (i) be included in one or more of the Company s state based online directories, (ii) advertise in the Company s online directories or (iii) lease one or more internet domain names from the Company. A list of the approximate 7,500 domain names we acquired in June, 2014 from Kae Yong Park, is filed as Exhibit 99.3 to our Current Report on Form 8-K filed with the Commission on June 25, 2014. We currently own approximately 1,276 cannabis related internet domain names. Domain names we do not lease to customers will point to one or more of our websites based on the relevance of the internet domain name to the particular website. We have already completed and launched the following websites: WeedDepot.com RateMyStrain.com 420Careers.com MJBizWire.com MarijuanaRecipes.com WikiWeed.com MarijuanaMD.com TheMarijuanaCompanies.com Weed Depot is a smart phone and internet platform directory with geo-mapping for dispensaries, doctors and clinics, head shops, tattoo parlors, and vape lounges. For mobile use, www.WeedDepot.com can be downloaded at Apple Apps and Google Play. RateMyStrain.com - A site on which individuals or dispensaries can rate or insert new strains commenting on their use and effect. The site contains over 800 strains and descriptions. 420Careers.com - for anyone looking to hire or seeking a job in the cannabis space. MJBizWire.com - Distribution of new events for companies in the cannabis space. Similar to PR Newswire, etc. MarijuanaRecipes.com - A web site where subscribers can find hundreds of recipes and ingredients for creating snacks, meals and deserts using infused cannabis. WikiWeed.com - WikiWeed.com is an informational, user-driven Wiki focused on both recreational and medical marijuana topics and information that allows collaborative editing of its content and structure by its users. MarijuanaMD.com A directory of medical doctors who are willing to issue medical marijuana cards to patients TheMarijuanaCompanies.com a directory of the company s websites Having completed the launch of the above-described websites, subject to the receipt of sufficient funding, which we currently do not have, our plan is to expand our sales and marketing activities with respect to these websites with a view to driving significant traffic to these websites, which in turn should make our directories more attractive to cannabis related enterprises that are trying to promote and advertise their business. We anticipate that it will cost approximately $35,000 per month ($420,000 per year) to effectively implement our sales and marketing plan. Currently, we do not have the requisite funds to implement our sales and marketing plan. Through our joint venture with Tumbleweed, which has since been terminated, we were developing as a website/mobile dating application. At this time, due to a lack of funding, we are not pursuing further development of the JointLovers.com app. Subject to the receipt of sufficient funding, which we currently do not have, we intend to construct the following websites: WeedMedia.com MarijuanaAds.com Once we commence development of these sites, we anticipate that it will take about six months and cost approximately $150,000 to construct and launch the foregoing websites. Currently, we do not have the requisite funds to build these websites. When and if these websites are constructed, we will also focus on the marketing these sites as well. We believe that the incremental marketing costs associated with the promotion of these planned websites will not be material in relation to our total marketing budget. In May 2017, we signed a non-binding memorandum of terms to acquire Crush Mobile. On August 8, 2017, the company entered into a definitive agreement to acquire all the outstanding membership interests of Crush Mobile, LLC, which was amended by Amendment No. 1 dated January 4, 2018 (as amended, the Agreement ). As reported in the Company s form 8-K filed with the SEC on January 10, 2018, the Crush acquisition was closed January 8, 2018. Under the terms of the Agreement, the company acquired all the outstanding membership interests of Crush Mobile, in exchange for an aggregate of approximately 8 million shares of common stock, plus $80,000 in cash, payable within one year of closing. The Company also agreed to piggy-back registration rights with respect to the shares of common stock issuable to the sellers in connection with the acquisition. Effective February 1, 2018, the company has engaged Crush Mobile current CEO, Sonya Kreizman, and Yosi Shemesh, as consultants. Ms. Kreizman and Mr. Shemesh will be paid $7,000 and $6,500 per month, respectively for their services. In connection with Amendment No. 1 to the Agreement, the parties waived the condition that the Company complete a funding of at least $500,000. Crush Mobile s assets consist primarily of trademarks, domain names, mobile dating applications and related software and intellectual property. Crush Mobile, with approximately nine hundred thousand members, has developed a group of dating sites with a presence in the Latino, Israeli and African American communities. Crush will also be incorporating Northsight s "Joint Lovers" dating app, which concentrates on the Cannabis space, into its dating applications suite. On November 11, 2017, the Company entered into a preliminary agreement ("Preliminary Agreement") to acquire (i) 80% of Westcliff Technologies ("Westcliff"), a company engaged in the business of operating ATM's that dispense Bitcoins, and (ii) 49% of a company to be formed by Westcliff which will is developing its own cryptocurrency (collectively, the "Business"). The Preliminary Agreement contemplated that the Company would acquire the Business in exchange for (i) 18 million shares of Company restricted stock at closing, with a guaranteed value of $36 million on the first anniversary of the closing (as described below), (ii) $3 million to be paid in 36 equal monthly installments of $83,333, commencing on the closing date, and (iii) $3 million of funding at closing, as part of the purchase price, of which half will be invested into each of the companies being acquired. The Company had also agreed, subject to the Business' attainment of milestones to be negotiated, that if the Company's common stock were quoted at less than $2 per share on the twelve-month anniversary of the closing, the Company would issue the sellers of the Business that number of additional shares of company common stock, such that the aggregate value of the shares issued to the sellers of the Business will be $36 million (the guaranteed value). The foregoing transactions were subject to board approval and the negotiation, execution and delivery of definitive agreements. As reported in the Company s Form 8-K filed with the SEC January 10, 2018, due to regulatory considerations, the Company has determined not to proceed with the acquisition of the Business. The Company is having discussions with Westcliff regarding possible business collaborations going forward, but no agreement has been reached. Our business faces numerous and substantial risks. We have a history of incurring significant net losses and negative operating cash flow. We incurred net losses of $416,037 and $898,260 during the three months and six months ended June 30, 2018, respectively. As of June 30, 2018, we had an accumulated deficit of $22,824,555. Please see the Section captioned Risk Factors, beginning on page 8. Cash used in operating activities during the six months ended June 30, 2018 (all numbers approximate) was $533,000 (about $89,000 per month), an increase of approximately $314,000 from the $219,000 used during the comparable prior period. The $314,000 increase in cash used by operations was due primarily to a $519,000 increase in net loss, a $105,000 decrease in the change (increase) in accounts payable and accrued expenses and accounts payable related party, and a $72,000 increase in gain on settlement of debt (non-cash), partially offset by a $225,000 increase in stock issued for consulting (non-cash), and a $23,000 increase in stock issued for debt (non-cash). Cash provided by financing activities for the six months ended June 30, 2018 was approximately $533,000 as compared to approximately $207,000 in the prior comparable period. The (all numbers are approximate) $325,000 increase is due primarily to an increase of $140,000 from the issuance of convertible notes, an increase of $165,000 in proceeds from the issuance of notes payable related party, a decrease of $15,000 in repayments of notes payable related party and a $30,000 increase in proceeds from equity receivable. The Company is experiencing ever increasing difficulty raising equity capital from third parties. Cash provided by financing activities is insufficient to fund the Company s basic operating activities. If we are able to obtain additional funding and ramp up our operations, our operations will use increasing amounts of cash in coming quarters, unless and until we are able to generate revenue from our operating activities. Based on our current business plan, we anticipate that our operating and website development activities will use approximately $100,000 in cash per month over the next twelve months, or $1.2 million. Currently we have virtually no cash on hand, and consequently, we are unable to implement our current business plan, even on a scaled back basis. We believe that our operations will not begin to generate positive cash flows until at least the second quarter of 2019 (assuming we secure sufficient funding in the near term to implement our business plan, which we currently do not have). Accordingly, we have an immediate and extremely urgent need for capital to fund our operating activities. In order to remedy this liquidity deficiency, we are actively seeking to raise additional funds through the sale of equity and debt securities, and ultimately we will need to generate substantial positive operating cash flows. Our internal sources of funds will consist of cash flows from operations, but not until we begin to realize substantial revenues from the sale of services. As previously stated, we currently have only minimal revenue, and our operations are generating negative cash flows, and thus adversely affecting our liquidity. Although we are attempting to raise additional funds through equity and/or debt financing, we are having great difficulty in securing any significant funding from unrelated third parties. If we are able to secure sufficient funding in the near term to implement our business plan, of which there is no assurance, we expect that our operations could begin to generate significant revenues during the second quarter 2019, which should ameliorate our liquidity deficiency. If we are unable to raise additional funds in the near term, we will not be able to implement our business plan, and it is unlikely that we will be able to continue as a going concern. We maintain Web sites at www.weeddepot.com and www.themarijuanacompanies.com. Information contained on our Web site does not constitute part of this prospectus. Our principal executive offices are located at 7580 E Gray Rd., Ste 103, Scottsdale, AZ 85260, and our telephone number is (480) 385-3893.
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diff --git a/parsed_sections/prospectus_summary/2018/CIK0001446152_sauer_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001446152_sauer_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..ca44affaa06e0fab004a936e2312efb9e7ee3171
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@@ -0,0 +1,17 @@
+PROSPECTUS SUMMARY
+
+This summary highlights information contained elsewhere in this prospectus; it does not contain all of the information you should consider before investing in our common stock. You should read the entire prospectus before making an investment decision. Throughout this prospectus, the terms, the "Company," "Sauer Energy," "we," "us," "our," and "our company" refer to Sauer Energy, Inc., a Nevada corporation. 
+
+Company Overview
+
+The Offering
+
+Common stock 20,200,000 shares that may be offered by the selling stockholder.
+
+Shares Outstanding:
+
+Common stock 87,408,168 shares outstanding as of the date of this prospectus.
+
+Total proceeds
+
+We will not receive any proceeds from the resale or other disposition of the shares covered by this prospectus by the selling shareholder. We will receive proceeds from our sale of shares to GHS. GHS has committed to purchase up to $7,000,000 worth of shares of our common stock over a period of time terminating on the earlier of: (i) 24 months from the effective date of the Equity Purchase Agreement (the EPA ); or (ii) the date on which GHS has purchased shares of our common stock pursuant to the EPA for an aggregate maximum purchase price of $7,000,000. The purchase price to be paid by GHS will be equal to 80% of the Market Price of the common stock as determined under the EPA. We will be entitled to put to GHS on each put date such number of shares of common stock as equals 200% of the average of the dollar volume on the principal trading exchange for our common stock for the 10 trading days preceding the put date; provided that the number of shares to be purchased by GHS shall not exceed the number of such shares that, when added to the number of shares of our common stock then beneficially owned by GHS, would exceed 9.99% of the number of shares of our common stock outstanding. There are certain limited circumstances where we may be required to deliver additional shares ( Trading Period Shares ) of our common stock to GHS after the amount delivered with the put. No Trading Period Shares shall be issued unless, a holder of variably priced instruments issued by the Company has converted any portion of said instrument into shares of the Company during the relevant Trading Period.
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+PROSPECTUS SUMMARY Except as otherwise indicated, as used in this prospectus, references to the Company, we, us, or our refer to Plantation Corp. The following summary highlights selected information contained in this prospectus, and it may not contain all of the information that is important to you. Before making an investment decision, you should read the entire prospectus carefully, including Risk Factors and our financial statements and related notes, included elsewhere in, or incorporated by reference into, this prospectus. Corporate Background Plantation Corp. (the "Company") was incorporated in the State of Wyoming on April 27, 2017. Effective July 27, 2017, Plantation Lifecare Developers, Inc., a Delaware corporation ("Plantation Delaware"), and Epic Events Corp., a Wyoming corporation ("Epic Wyoming") merged with and into the Company. Plantation Delaware was historically engaged in providing payphones and related equipment to its customers, and Epic Wyoming was focused on developing novel packaging to protect, preserve and extend the life of marijuana in those U.S. States where consumption of marijuana is legal for medicinal purposes. As the payphone business had limited prospects for expansion and profitability, management observed increasing demand for marijuana packaging accompanying increasing state legalization of medical and recreational marijuana and determined to focus its primary efforts on marijuana packaging. Accordingly, the Company currently has both payphone operations and packaging operations, and the Company intends to continue both its marijuana packaging operations and payphone operations while primarily focusing on its packaging operations. Plantation Delaware, originally named "Continental Exchange Corporation," incorporated on October 26, 1927, under the laws of the State of Delaware. It changed its name to "Northern Exchange Corporation," and it ceased operations and became dormant in 1943. On or about December 31, 1980, Plantation Delaware was reinstated in the State of Delaware, and its name was changed to "Everest International Incorporated." In 1988, its name was changed to "Comstock Resources Corporation," and then to "Comstock International, Inc." In 2000, its name was changed to "Copernicus International, Inc." In 2001, it merged with Plantation Lifecare Developers, Inc., a Delaware corporation, and the surviving corporation was named "Plantation Lifecare Developers, Inc." On September 1, 2010, one of the Company s officers contributed payphones and payphone equipment assets to Plantation Delaware. On January 30, 2017, Robert McGuire Sr. ("McGuire), President of Epic Wyoming, acquired a license from FreshTec, Inc. ("FreshTec"), a Delaware corporation controlled by our CFO and Director, Adrian Bray (and therefore a related party of the Company), to use FreshTec s modified atmosphere packaging technology for marijuana packaging. FreshTec s technology is protected by patents in the United States and several foreign countries. The principals of Epic Wyoming commenced the development of the Company s marijuana packaging products. On May 17, 2017, this license was assigned by McGuire to Epic Wyoming, and in consideration of consenting to the assignment, the parties agreed that FreshTec would receive 11,650,347 shares of Epic Wyoming s common stock. The parties subsequently negotiated a reduction in the number of shares issued to FreshTec, and 11,044,335 shares were ultimately issued in consideration of the license assignment. The license granted Epic Wyoming exclusive worldwide rights to use FreshTec s technology for marijuana packaging. Following the effective date of the merger of Plantation Corp., Epic Wyoming and Plantation Delaware, the Company continued development of its marijuana packaging technology pursuant to the license obtained by Epic Wyoming and has now developed and owns a number prototypes of the first product, the BudLife container. The merger was accounted for as an acquisition by related party entities due to the fact that Plantation Corp. and Epic Wyoming were and continue to be managed and controlled by Plantation Delaware and its affiliates. The Company has incurred net losses of approximately $1,332,271 since inception, has limited revenues and requires additional financing in order to finance its business activities on an ongoing basis. At December 31, 2017, we only had $550 in cash on hand, and an accumulated deficit of $1,332,271, and we will need to raise capital to implement our planned operations. If we are unable to do so, an entire investment in our stock could be lost. Our independent public accounting firm has issued an audit opinion, which includes a statement that the results of our operations and our financial condition raise substantial doubt about our ability to continue as a going concern. Where You Can Find Us The mailing address is currently 514 Grand Avenue, Suite 161, Laramie, Wyoming, 82070 (a rented mailbox at The UPS Store). We conduct our operations from the office space of our CEO and Director, Robert McGuire, Sr., located at 4430 Haskell Avenue, Encino, California, 91436. Our telephone number is (307) 370-1717. Summary of the Offering Securities being registered by the Selling Security Holders pursuant to the Secondary Offering: 9,763,896 shares of common stock Secondary Offering price: $1.00 per share until a market develops and our shares are quoted on the OTCQB or another quotation board and thereafter at market prices or prices negotiated in private transactions Secondary Offering period: From the date of this prospectus until _____, 2020 Newly issued common stock being registered pursuant to the Primary Offering: 8,000,000 shares of common stock Primary Offering price: $1.00 per share Primary Offering period: From the date of this prospectus until _____, 2020 Number of shares outstanding after the offering: 54,330,477 shares of common stock Market for the common stock: There has been no market for our securities. Our common stock is not traded on any exchange or on the Over-The-Counter market. After the effective date of the registration statement relating to this prospectus, we hope to have a market maker file an application with FINRA for our common stock to eligible for trading on the OTCQB or another quotation board. We do not yet have a market maker who has agreed to file such application. There is no assurance that a trading market will develop, or, if developed, that it will be sustained. Consequently, purchasers of our common stock may find it difficult to resell the securities offered herein should the purchasers desire to do so when eligible for public resale. Our officers and directors are not purchasing shares in this offering. Use of proceeds: We will receive approximately $8,000,000 in gross proceeds if we sell all of the shares in the Primary Offering, and we will receive estimated net proceeds (after paying offering expenses) of approximately $7,900,000 if we sell all of those shares. We will receive none of the proceeds from the sale of shares by the Selling Security Holders. See Use of Proceeds for a more detailed explanation of how the proceeds from the Primary Offering will be used.
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diff --git a/parsed_sections/prospectus_summary/2018/CIK0001463361_unity_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001463361_unity_prospectus_summary.txt
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@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2018/CIK0001471968_enzymebios_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001471968_enzymebios_prospectus_summary.txt
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+PROSPECTUS SUMMARY This summary does not contain all of the information that should be considered before investing in our common stock. Investors should read the entire prospectus carefully, including the more detailed information regarding our business, the risks of purchasing our common stock discussed in this prospectus under "Risk Factors" beginning on page 8 of this prospectus and our financial statements and the accompanying notes beginning on page F-1 of this prospectus. As used in this prospectus, unless the context requires otherwise, the "Company, "we," "us," and "our" refer to EnzymeBioSystems, a Nevada corporation. Our Company EnzymeBioSystems was organized June 26, 2009 (Date of Inception) under the laws of the State of Nevada, as EnzymeBioSystems. We manufacture specialty enzymes and enzyme related products. We utilize enzyme technologies to develop commercial solutions for a broad range of applications within the specialty chemical industry. See "EnzymeBioSystems Business Plan" under Description of Business. Our principal offices are currently located at: 8250 W. Charleston Blvd., Suite 120, Las Vegas, NV 89117. Our telephone number is: (702) 907-0615. . TERMS OF THE OFFERING The selling stockholders named in this Prospectus are offering common stock units, shares of common stock, Series A, Series B, Series C and Series D warrants as well as the common stock underlying such units and warrants. We are not selling any securities covered by this prospectus and will not receive any of the proceeds from the sale of such shares by the selling stockholders. However, in the event that the warrants are exercised for cash, we may receive up to a total of approximately $4,691,618 in proceeds . These shares were issued in reliance on the exemption under Section 4(2) of the Securities Act of 1933, and/or Regulation D and Rule 506 promulgated thereunder, as this transaction not involve a public offering. The selling stockholders may sell their some or all of their Unit(s) from time-to-time at a fixed price of $1.11 for the duration of this Offering. Although our stock is currently quoted on the OTC Pink Sheets, there is no assurance that a trading market will develop, or, if developed, that it will be sustained. Consequently, a purchaser of the Common Stock Units may find it difficult to resell the securities offered herein should the purchaser desire to do so. The Offering Securities Being Offered: Units which consists of 2,759,775 shares of common stock and Series A warrants to purchase 2,759,775 shares at an exercise price of $0.30 per share; and Series B warrants to purchase 2,759,775shares of common stock at an exercise price of $0.40 per share; and Series C warrants to purchase 2,759,775 shares of common stock at an exercise price of $0.60 per share and upon the exercise of the Class C Warrants, the selling shareholder is entitled to Class D cashless warrant of $0.40 per share to purchase 2,759,775 common shares. Offering Price: The offering of the Common Stock Unit is at a fixed price of $1.11 for the entire duration of the offering. Terms of the Offering: The selling stockholders will determine when and how they will sell their Units, shares of common stock, A, B, C and D warrants and common shares issuable upon exercise of the warrants offered in this prospectus. Securities Issued and to be Issued 5,592,010 shares of our common stock are issued and outstanding as of the date of this Prospectus. The Units, shares of common stock, A, B, C and D warrants and common shares issuable upon exercise of the warrants to be sold under this Prospectus will be sold by existing Selling Stockholders. The Selling Stockholders are underwriters as defined under the Securities Act of 1933. Use of proceeds We will not receive any proceeds from the sale of common stock units, shares of common stock, Series A, Series B, Series C and Series D warrants as well as the common stock underlying such units and warrants by the Selling Stockholders. We would, however, receive approximately $4,691,618 from the Selling Stockholders if they exercise their warrants in full on a cash basis, which we will use primarily for working capital purposes. There are no assurances that the Selling Stockholders will exercise their warrants. OTC Pink Sheet Symbol ENZB Risk Factors You should carefully consider the information set forth in this prospectus and, in particular, the specific factors set forth in the "Risk Factors" section beginning on page 8 of this prospectus before deciding whether or not to invest in our common stock. SUMMARY FINANCIAL DATA The following summary financial data should be read in conjunction with "Management s Discussion and Analysis," "Plan of Operation" and the Financial Statements and Notes thereto, included elsewhere in this Prospectus. The statement of operations and balance sheet data for the year ended June 30, 2017 (audited) and the three months ended September 30, 2017 (unaudited) are derived from our financial statements. Balance Sheet Data September 30, 2017 (unaudited) Year ended June 30, 2017 (audited) Total cash and equivalents $213,259 $41,249 Prepaid Expense 6,000 3,000 Total current assets 219,259 44,249 Total Assets $219,259 $44,249 Total current liabilities 4,100 4,100 Total liabilities $4,100 $4,100 Income Statement Data For the three months ended June 30, 2017 (unaudited) Year ended June 30, 2017 (audited) Revenues $- $- Total expenses 25,845 110,793 Net loss $(25,445) $(95,793) Net loss per share – basic $(0.03) $(0.12)(A) (A)As adjusted for the October 19, 2017 1-for-20 reverse stock split. RISK FACTORS The following risk factors should be considered carefully in addition to the other information contained in this prospectus. This prospectus contains forward-looking statements. Our business, financial condition, results of operations and stock price could be materially adversely affected by any of these risks. RISK FACTORS RELATING TO OUR FINANCIAL CONDITION 1. We have a limited historical financial information upon which you may evaluate our performance. We have a limited history and we are subject to all risks inherent in a developing business enterprise. Our likelihood of success must be considered in light of the problems, expenses, difficulties, complications, and delays frequently encountered in connection with manufacturing specialty enzymes and the competitive and regulatory environment in which we operate. You should consider, among other factors, our prospects for success in light of the risks and uncertainties encountered by companies that, like us, are in their early stages of research. We may not successfully address these risks and uncertainties or successfully implement our operating and acquisition strategies. If we fail to do so, it could materially harm our business to the point of having to cease operations and could impair the value of our common stock to the point investors may lose their entire investment. Even if we accomplish these objectives, we may not generate positive cash flows or profits we anticipate in the future. 2. As we have HAD minimal revenues since our inception, there is no assurance that we will be able to continue as a going concern. Our financial statements included with this Form S-1 for the year ended June 30, 2017, have been prepared assuming that we will continue as a going concern. Our auditors have made reference to the substantial doubt as to our ability to continue as a going concern in their audit report on our audited financial statements for the year ended June 30, 2017. Because the Company has been issued an opinion by its auditors that substantial doubt exists as to whether the Company can continue as a going concern, it may be more difficult for the Company to attract investors. Since our auditors have raised a substantial doubt about our ability to continue as a going concern, this typically results in greater difficulty to obtain loans than businesses that do not have a qualified auditors opinion. Additionally, any loans we might obtain may be on less advantageous terms. Our future is dependent upon our ability to obtain financing and upon future profitable operations from the sale of our future enzyme products. We plan to seek additional funds through private placements of our common stock. You may be investing in a company that will not have the funds necessary to continue to deploy its business strategies. If we are not able to achieve revenues or find financing, then we likely will be forced to cease operations and investors will likely lose their entire investment. 3. WE MAY NOT BE ABLE TO ATTAIN PROFITABILITY WITHOUT ADDITIONAL FUNDING, WHICH MAY BE UNAVAILABLE. At June 30, 2017 and September 30, 2017, we had cash and cash equivalents of $41,249 and $213,259 respectively. Our ability to continue to operate as a going concern is fully dependent upon the Company obtaining sufficient financing to continue its development and operational activities. The ability to achieve profitable operations is in direct correlation to our ability to generate revenues or raise sufficient financing. It is important to note that even if the appropriate financing is received, there is no guarantee that we will ever be able to operate profitably or derive any significant revenues from its operation. Management believes, for the next twelve months, it has sufficient funds available to implement its business, on a limited basis. 4. IF WE ARE NOT ABLE TO COMPETE EFFECTIVELY AGAINST LARGER BIOMEDICAL MANUFACTURERS WITH GREATER RESOURCES, OUR PROSPECTS FOR FUTURE SUCCESS WILL BE JEOPARDIZED. We will face intense competition from larger and better-established biomedical manufacturers that may prevent us from ever becoming a significant company. Management expects the competition to intensify in the future. Pressures created by our future competitors could negatively impact our business, results of operations and financial condition. Many of our potential competitors have longer operating histories, larger customer bases, greater brand recognition and significantly greater financial, marketing, technical and other resources. In addition, our competitors may acquire or be acquired by, receive investments from or enter into other commercial relationships with larger, well-established and well-financed competitors. Therefore, some of our competitors with other revenue sources may be able to devote greater resources to marketing and promotional campaigns, adopt more aggressive pricing policies and devote substantially more resources to product development. There can be no assurance that we will be able to compete successfully against current and future competitors. COMPANY RISK FACTORS 5. IF WE ARE UNABLE TO RESPOND EFFECTIVELY AS TECHNOLOGIES AND MARKET TRENDS EMERGE, OUR COMPETITIVE POSITION AND OUR ABILITY TO GENERATE REVENUES AND PROFITS MAY BE HARMED. To be successful, we must keep pace with rapid changes in enzyme research and technology, changing customer requirements, new innovations by competitors and evolving industry standards, any of which could render our existing products obsolete if we fail to respond in a timely manner. For example, if new enzyme applications are introduced by our competitors not part of our technology, or if effective new sources of enzymes are discovered, our future products and technology could become less competitive or obsolete. If competitors develop innovative applications and technology that is superior to ours or if we fail to accurately anticipate market trends and respond on a timely basis with our own innovations, our potential competitive position may be harmed and we may not achieve sufficient growth in our revenues to attain, or sustain, profitability. 6. THERE MAY BE A POSSIBLE INABILITY TO FIND SUITABLE EMPLOYEES. In order to implement our business plan, management recognizes that additional staff will be required. No assurances can be given that we will be able to find suitable employees that can support our needs or that these employees can be hired on favorable terms. We do not plan to hire any additional employees until our cash flows can justify the expense. When we are ready to hire new employees, we will most likely look for people who have some type of chemistry experience or a working knowledge of chemical engineering, which may be difficult to find. 7. WE MAY BE LIABLE FOR THE PRODUCTS WE PLAN TO PRODUCE. There is no guarantee that the level of insurance coverage we secure will be adequate to protect us from risks associated with claims that exceed the level of coverage maintained. As a result of our limited operations to date, no threatened or actual claims have been made upon us for product liability. 8. THE ENZYME COMPOUND INDUSTRY IS SUBJECT TO PRICING PRESSURES THAT MAY CAUSE US TO REDUCE THE FUTURE GROSS MARGINS FOR OUR PRODUCTS. If we are able to become operational, management believes to be competitive, we might be required to adjust our prices in response to industry-wide pricing pressures. Our competitors may possibly source from regions with lower costs than those of our sourcing partners and those competitors may apply such additional cost savings to further reduce prices. We are not currently operational. If we are able to become operational, management believes increased customer demands for markdown allowances, incentives and other forms of economic support might reduce our gross margins and affect our profitability. Our financial performance may be negatively affected by these pricing pressures if we are forced to reduce our prices without being able to correspondingly reduce our costs for finished goods or if our costs for finished goods increase and we cannot increase our prices. Management wants investors to know that there are no assurances that we may ever achieve acceptable operating margins, we may never obtain any share of the market, or be able to establish any value for our enzyme products. 9. THE LOSS OF ONE OR MORE OF OUR FUTURE SUPPLIERS OF RAW MATERIALS MAY INTERRUPT OUR SUPPLIES. We plan to purchase our raw materials from a limited number of third-party suppliers. We do not have any material or long-term contracts in place with any suppliers at this time. Furthermore, our future suppliers also purchase the components of our products from a limited number of suppliers. The loss of one or more of these vendors could interrupt our supply chain and impact our ability to deliver products to our customers, which would have a material adverse effect on our future net sales and profitability. 10. INCREASES IN THE PRICE OF RAW MATERIALS USED TO MANUFACTURE OUR ENZYME PRODUCTS COULD MATERIALLY INCREASE OUR COSTS AND DECREASE OUR PROFITABILITY. The prices for enzyme components are dependent on the market price for the raw materials used to produce them. There can be no assurance that prices for these and other raw materials will not increase in the near future. These raw materials are subject to price volatility caused by supply conditions, power outages, government regulations, economic climate and other unpredictable factors. Any raw material price increase would increase our cost of sales and decrease our future profitability unless we are able to pass higher prices on to our customers. In addition, if one or more of our competitors is able to reduce its production costs by taking advantage of any reductions in raw material prices or favorable sourcing agreements, we may face pricing pressures from those competitors and may be forced to reduce our prices or face a decline in net sales, either of which could have a material and adverse effect on our business, results of operations and financial condition. 11. We do not own equipment with the capacity to manufacture products on a commercial scale. If we are unable to access the capacity to manufacture products in sufficient quantity, we may not be able to commercialize our products or generate significant sales. We have only limited experience in enzyme manufacturing, and we do not have our own internal capacity to manufacture specialty enzyme products on a commercial scale. We expect to be dependent to a significant extent on third parties for commercial scale manufacturing of our specialty enzyme products. We do not have any arrangements with third parties that have the required manufacturing equipment and available capacity to manufacture our commercial enzymes. While we plan to build our own pilot development facility, we will continue to depend on third parties for large-scale commercial manufacturing. Any difficulties or interruptions of service with our third party manufacturers or our own pilot manufacturing facility could disrupt our research and development efforts, delay our commercialization of specialty enzyme products, and harm our relationships with our specialty enzyme strategic partners, collaborators, or customers. 12. We may pursue specialty enzyme products that ultimately require more resources than we anticipate or which may be technically unsuccessful. We currently have only limited resources and capability to develop, manufacture, market, sell, or distribute specialty enzyme products on a commercial scale. We will determine which specialty enzyme products to pursue independently based on various criteria, including: investment required, estimated time to market, regulatory hurdles, infrastructure requirements, and industry-specific expertise necessary for successful commercialization. At any time, we may modify our strategy and pursue collaborations for the development and commercialization of some specialty enzyme products that we had intended to pursue independently. We may pursue specialty enzyme products that ultimately require more resources than we anticipate or which may be technically unsuccessful. In order for us to commercialize more specialty enzyme products directly, we would need to establish or obtain through outsourcing arrangements additional capability to develop, manufacture, market, sell, and distribute such products. If we are unable to successfully commercialize specialty enzyme products resulting from our internal product development efforts, we will continue to incur losses in our specialty enzymes business, as well as in our business as a whole. Even if we successfully develop a commercial specialty enzyme product, we may not generate significant sales and achieve profitability in our specialty enzymes business, or in our business as a whole. 13. We may not be able to develop manufacturing capacity sufficient to meet demand in an economical manner or at all. If demand for enzyme products increases beyond the scope of our future production facilities, we may incur significant expenses in the expansion and/or construction of production facilities and increases in personnel in order to increase production capacity. Any unanticipated expansion requirements may cause complications for delays in production, which could result in a loss of business and customers. To finance the expansion of a commercial-scale production facility is complex and expensive. We cannot assure you that we will have the necessary funds to finance the development of production facilities, or that we will be able to develop this infrastructure in a timely or economical manner, or at all. 14. Our officers have no experience in operating an operational specialty enzyme company, and have no experience in evaluating the success of future products. Our executive officers, who have pharmaceutical and legal background, have no experience in operating a specialty enzyme Company. They have no experience in independently developing, manufacturing, marketing, selling, and distributing commercial specialty enzyme products. Due to their lack of experience, our executive officers may make wrong decisions and choices regarding selection of products to pursue on behalf of the Company. Consequently, our Company may suffer irreparable harm due to management s lack of experience in this industry. As a result we may have to suspend or cease operations, which will result in the loss of your investment. 15. We expect that certain enzyme development will require us to use hazardous materials in our business. Any claims relating to improper handling, storage, or disposal of these materials could be time consuming and costly and could adversely affect our business and results of operations. Our research and development processes may involve the controlled use of hazardous materials, including chemical, and biological materials. We cannot eliminate entirely the risk of accidental contamination or discharge and any resultant injury from these materials. Federal, state, and local laws and regulations govern the use, manufacture, storage, handling, and disposal of these materials. We may be sued for any injury or contamination that results from our use or the use by third parties of these materials, and our liability may exceed our total assets. In addition, compliance with applicable environmental laws and regulations may be expensive, and current or future environmental regulations may impair our research, development, or production efforts. We plan to purchase insurance to protect us from potential losses; however, at this time, we do not have any insurance coverage for accidental contamination, discharge or any resultant injury from these hazardous materials. 16. We are subject to all governmental rules, laws and regulations relating to the biomedicals industry in the U.S. We are subject to all governmental rules, laws and regulations relating to the biomedical industry in the U.S., and we fully intend to comply therewith. Biologically derived enzyme products are regulated in the United States based on their application, by either the United States Food and Drug Administration ("FDA"), or the Environmental Protection Agency ("EPA"), or, in the case of plants and animals, the United States Department of Agriculture ("USDA"). In addition to regulating drugs, the FDA also regulates food and food additives, feed and feed additives, and GRAS (Generally Recognized As Safe) substances used in the processing of food. The EPA regulates biologically derived chemicals not within the FDA s jurisdiction. Under current FDA policy, our future products will most likely come within the FDA s jurisdiction, may be subject to lengthy FDA reviews and unfavorable FDA determinations if they raise safety questions which cannot be satisfactorily answered, if results do not meet regulatory requirements or if they are deemed to be food additives whose safety cannot be demonstrated. An unfavorable FDA ruling could be difficult to resolve and could prevent a product from being commercialized. Even after investing significant time and expenditures, we may not obtain regulatory approval for any drug products that incorporate our technologies or inventions. The EPA regulates biologically derived chemical substances not within the FDA s jurisdiction. An unfavorable EPA ruling could delay commercialization or require modification of the production process resulting in higher manufacturing costs, thereby making the product uneconomical. In addition, the USDA may prohibit genetically engineered plants from being grown and transported except under an exemption, or under controls so burdensome that commercialization becomes impracticable. Our future products may not be exempted by the USDA. Further, there is no assurance the governmental agencies having jurisdiction over us, our operations and properties, will not enact laws, rules and/or regulations in the future which may have an adverse impact on us and our operations. 17. Our results of operations may be adversely affected by environmental, health and safety laws, regulations and liabilities. We are subject to various federal, state and local environmental laws and regulations, including those relating to the discharge of materials into the air, water and ground, the generation, storage, handling, use, transportation and disposal of hazardous materials, and the health and safety of our employees. We will need to meet a significant number of environmental and other regulations and standards established by various federal, state and local regulatory agencies. In addition, some of these laws and regulations require our contemplated facilities to operate under permits that are subject to renewal or modification. These laws, regulations and permits can often require expensive pollution control equipment or operational changes to limit actual or potential impacts to the environment. As these regulations and standards evolve, and if new regulations or standards are implemented, we may be required to modify our proposed facilities and processes or develop and support new facilities or processes and this will increase our costs. Any failure to comply, or delays in compliance, with the various existing and evolving industry regulations and standards could prevent or delay our production of specialty enzyme products. Any inability to address these requirements and any regulatory changes could have a material adverse effect on our specialty enzyme business, financial condition and operating results. A violation of these laws and regulations or permit conditions can result in substantial fines, natural resource damages, criminal sanctions, permit revocations and/or facility shutdowns. 18. BERKELEY CLINIC, LC controls 78.4% OF THE TOTAL VOTING POWER OF OUR CAPITAL that will allow them to control the Company. As of January 9, 2018, Berkeley Clinic, LC ("Berkeley") controls approximately 78.4% of the total voting power of our outstanding capital stock. As a result, Berkeley will have the ability to control substantially all matters submitted to our stockholders for approval including: a) election of our board of directors; b) removal of any of our directors; c) amendment of our Articles of Incorporation or bylaws; and d) adoption of measures that could delay or prevent a change in control or impede a merger, takeover or other business combination involving us. As a result of its ownership of all of the 2,125,000 outstanding shares of Series A Preferred Stock, Berkeley has the ability to influence all matters requiring shareholder approval, including the election of directors and approval of significant corporate transactions. In addition, the future prospect of sales of significant amounts of shares held by our officers, directors and 5% stockholders could affect the market price of our common stock if the marketplace does not orderly adjust to the increase in shares in the market and the value of your investment in the Company may decrease. Berkeley s stock ownership may discourage a potential acquirer from making a tender offer or otherwise attempting to obtain control of us, which in turn could reduce our stock price or prevent our stockholders from realizing a premium over our stock price. 19. Some of our officers and directors have other business ventures. As disclosed in their biographies contained herein, some of our officers and directors work with other companies in addition to their work for us. John Dean Harper, Esq., our CEO, Corporate Secretary and Treasurer, has his own law practice. Therefore, it is possible that a conflict of interest with regard to his time may arise based on his involvement in other activities. Although none of our officers and directors are currently working for any other companies in the biomedical industry, they are not prohibited from doing so. If one or more of our officers or directors began working for another biomedical company it could take away from the time they currently spend working on our business affairs and could create a potential conflict of interest. We do not have any employment agreements with any of our officers, which means they are not obligated to continue to work for the Company and can resign their positions whenever they are inclined to do so. RISK FACTORS RELATING TO OUR COMMON STOCK AND THIS OFFERING 20. We have never declared dividends on our common stock and do not plan to do so in the foreseeable future. We intend to retain any future earnings to finance the operation and expansion of its business and do not anticipate paying any cash dividends in the foreseeable future. As a result, stockholders will need to sell shares of common stock in order to realize a return on their investment, if any. You should not rely on an investment in our company if you require dividend income. The only possibility of any income to investors would come from any rise in the market price of your stock, which is uncertain and unpredictable. A holder of common stock will be entitled to receive dividends only when, as, and if declared by the Board of Directors out of funds legally available therefore. We have never issued dividends on our common stock. Our Board of Directors will determine future dividend policy based upon our results of operations, financial condition, capital requirements, and other circumstances. 21. Holders of our common stock have a risk of potential dilution if we issue additional shares of common stock in the future. Although our Board of Directors intends to utilize its reasonable business judgment to fulfill its fiduciary obligations to our existing stockholders in connection with any future issuance of our common stock, the future issuance of additional shares of our common stock would cause immediate, and potentially substantial, dilution to the net tangible book value of those shares of common stock that are issued and outstanding immediately prior to such transaction. Any future decrease in the net tangible book value of our issued and outstanding shares could have a material effect on the market value of the shares. 22. We do not have insurance and, therefore, liability we incur could have substantial impact on our ability to continue as a going concern. We have limited capital and, therefore, we do not currently have a policy of insurance against liabilities arising out of the negligence of our officers and directors and/or arising from deficiencies in any of our business operations. Even assuming we obtained insurance, there is no assurance that such insurance coverage would be adequate to satisfy any potential claims made against us, our officers and directors, or our business operations or assets. Any such liability which might arise could be substantial and would likely exceed our total assets. However, our Bylaws provide for indemnification of officers and directors to the fullest extent permitted under Nevada law. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officer and controlling persons, it is the opinion of the U. S. Securities and Exchange Commission that such indemnification is against public policy, as expressed in the Act, and is therefore, unenforceable. 23. If we fail to maintain an effective system of internal controls, we may not be able to accurately report our financial results or prevent fraud and as a result, investors may be misled and lose confidence in our financial reporting and disclosures, and the price of our common stock may be negatively affected. The Sarbanes-Oxley Act of 2002 requires that we report annually on the effectiveness of our internal control over financial reporting. A "significant deficiency" means a deficiency or a combination of deficiencies, in internal control over financial reporting that is less severe than a material weakness yet important enough to merit attention by those responsible for oversight of the Company s financial reporting. A "material weakness" is a deficiency or a combination of deficiencies in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis. As of June 30, 2017 management assessed the effectiveness of our internal control over financial reporting based on the criteria for effective internal control over financial reporting. The matters involving internal controls and procedures that our management considered to be material weaknesses under the standards of the Public Company Accounting Oversight Board were: (1) lack of a functioning audit committee due to a lack of a majority of independent members and a lack of a majority of outside directors on our board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures; and (2) inadequate segregation of duties consistent with control objectives. In addition, in connection with our on-going assessment of the effectiveness of our internal control over financial reporting, we may discover "material weaknesses" in our internal controls as defined in standards established by the Public Company Accounting Oversight Board, or the PCAOB. A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected. Failure to provide effective internal controls may cause investors to lose confidence in our financial reporting and may negatively affect the price of our common stock. Moreover, effective internal controls are necessary to produce accurate, reliable financial reports and to prevent fraud. If we have deficiencies in our internal controls over financial reporting, these deficiencies may negatively impact our business and operations. 24. LOW-PRICED STOCKS MAY AFFECT THE RESELL OF OUR SHARES. Penny Stock Regulation Broker-dealer practices in connection with transactions in "Penny Stocks" are regulated by certain penny stock rules adopted by the Securities and Exchange Commission. Penny stocks generally are equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on the NASDAQ system). The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document that provides information about penny stocks and the risk associated with the penny stock market. The broker-dealer must also provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, and monthly account statements showing the market value of each penny stock held in the customer s account. In addition, the penny stock rules generally require that prior to a transaction in a penny stock; the broker-dealer must make a written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser s written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for a stock that becomes subject to the penny stock rules. Since the Company s common stock has a trading price of less than $5.00 per share and is not traded on any exchange, it is subject to the penny stock rules and investors may find it more difficult to sell their securities, should they desire to do so. 25. IN THE FUTURE, WE WILL INCUR INCREMENTAL COSTS AS A RESULT OF OPERATING AS A PUBLIC COMPANY, AND OUR MANAGEMENT WILL BE REQUIRED TO DEVOTE SUBSTANTIAL TIME TO COMPLIANCE INITIATIVES. Because we are a fully reporting company with the SEC, we will incur additional legal, accounting and other expenses. Moreover, the Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act"), as well as new rules subsequently implemented by the SEC, have imposed various new requirements on public companies, including requiring changes in corporate governance practices. Our management will need to devote a substantial amount of time to these new compliance initiatives. Moreover, these rules and regulations will increase our legal and financial compliance costs and will make some activities more time-consuming and costly. SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS Information contained in this prospectus may contain forward-looking statements. Except for the historical information contained in this discussion of the business and the discussion and analysis of financial condition and results of operations, the matters discussed herein are forward looking statements. This information may involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by any forward-looking statements. Forward-looking statements, which involve assumptions and describe our future plans, strategies and expectations, are generally identifiable by use of the words "may," "will," "should," "expect," "anticipate," "estimate," "believe," "intend" or "project" or the negative of these words or other variations on these words or comparable terminology. In addition to the risks and uncertainties described in "Risk Factors" above and elsewhere in this prospectus, these risks and uncertainties may include risks related to: General economic and business conditions; Our ability to continue as a going concern; Our ability to obtain financing necessary to operate our business; Our limited operating history; Our ability to recruit and retain qualified personnel; Our ability to manage future growth; Our ability to research and successfully develop our planned products; Our ability to successfully complete potential acquisitions and collaborative arrangements; and Other factors discussed under the section entitled "Risk Factors". Forward-looking statements are based on assumptions that may be incorrect, and there can be no assurance that any projections or other expectations included in any forward-looking statements will come to pass. Our actual results could differ materially from those expressed or implied by the forward-looking statements as a result of various factors. Except as required by applicable laws, we undertake no obligation to update publicly any forward-looking statements for any reason, even if new information becomes available or other events occur in the future. SELLING STOCKHOLDERS This prospectus covers the resale from time-to-time by the selling stockholders identified in the table below of: 2,759,775 Units, which consists of: 2,759,775 shares of our common stock, and Series A warrants to purchase 2,759,775 shares of common stock at an exercise price of $0.30 per share; and Series B warrants to purchase 2,759,775 shares of common stock at an exercise price of $0.40 per share; and Series C warrants to purchase 2,759,775 shares of common stock at an exercise price of $0.60 per share, and Upon the exercise of the Class C Warrants, the selling shareholder is entitled to Class D cashless warrants at an exercise price of $0.40 per share representing 2,759,775 shares of common stock. The Selling Stockholder may from time-to-time offer and sell any or all of their Common Stock Unit(s) during the duration of this Offering at a fixed price of $1.11 per Unit. We have agreed to cause such registration statement to become effective, and to keep such registration statement effective. Our failure to satisfy the deadlines set forth in the Registration Rights Agreement may subject us to payment of certain monetary penalties pursuant to the terms of the Registration Rights Agreement. The selling stockholders identified in the table below may from time to time offer and sell under this prospectus any or all of the shares of common stock Units described in the table below at a fixed price of $1.11 per Unit. The table below has been prepared based upon the information furnished to us by the selling stockholders. Information concerning the selling stockholders may change from time to time and, if necessary, we will amend or supplement this prospectus accordingly. The following table and disclosure following the table sets forth the name of each selling stockholder, the nature of any position, office or other material relationship, if any, which the selling stockholder has had, within the past three years, with us or with any of our predecessors or affiliates, and the number of shares of our common stock beneficially owned by the stockholder before this offering. The number of shares owned are those beneficially owned, as determined under the rules of the Securities and Exchange Commission, and the information is not necessarily indicative of beneficial ownership for any other purpose. Under these rules, beneficial ownership includes any shares of common stock as to which a person has sole or shared voting power or investment power and any shares of common stock which the person has the right to acquire within 60-days through the exercise of any option, warrant or right, through conversion of any security or pursuant to the automatic termination of a power of attorney or revocation of a trust, discretionary account or similar arrangement. Unless otherwise indicated in the footnotes to this table and subject to community property laws where applicable, we believe that each of the selling stockholders named in this table has sole voting and investment power with respect to the shares indicated as beneficially owned. No selling stockholder is a registered broker-dealer or an affiliate of a broker-dealer. In addition, the selling stockholders purchased the stock from us in the ordinary course of business. At the time of the purchase of the stock to be resold, none of the selling stockholders had any agreements or understandings with us, directly or indirectly, with any person to distribute the stock. The following table sets forth, with respect to the selling stockholders (i) the number of shares of common stock beneficially owned as of January 9, 2018; (ii) the total percentage of shares beneficially owned prior to the offering; (iii) the maximum number of shares of common stock which may be sold by the selling stockholders under this prospectus; (iv) the number of shares of common stock which will be owned after the offering by the selling stockholders; and (v) the total percentage of shares beneficially owned upon completion of the offering. All shareholders listed below are eligible to sell their shares. The Common Stock percentage ownerships set forth below are based on 5,592,010 shares outstanding, as of the date of this prospectus. Name of Selling Stockholder Total Number of Units, which consists of Common Shares, and Series A, B, C and D Warrants Beneficially Owned Prior to Offering Total Percentage of Common Shares Units Beneficially Owned Prior to Offering Maximum Number of Units which consists of Common Shares, and Series A, B, C and D Warrants to be Sold Number of Units which consists of Common Shares, and Series A, B, C and D Warrants Owned After Offering Total Percentage of Common Shares Units Beneficially Owned Upon Completion of Offering Andresen, Kristian 25,000 0.4% 25,000 0 -% Bingtag Consulting(1) 199,775 3.6% 199,775 0 -% Chedwick Marketing(2) 175,000 3.1% 175,000 0 -% Dickhout, Craig 200,000 3.6% 200,000 0 -% Earl, Ryan 175,000 3.1% 175,000 0 -% Fisher, Hayden 125,000 2.2% 125,000 0 -% Holly Park Investments(3) 185,000 3.3% 185,000 0 -% Houlden, Kevin N 200,000 3.6% 200,000 0 -% Jha, Nikhil 25,000 0.4% 25,000 0 -% Oceanside Strategies(4) 400,000 7.1% 400,000 0 -% Pigeon Rock Group(5) 150,000 2.6% 150,000 0 -% Ralla, Leslie M 200,000 3.6% 200,000 0 -% Rypien, Brian 150,000 2.7% 150,000 -% Strebinger, Judith 150,000 2.7% 150,000 -% Uppal, Brian 200,000 3.6% 200,000 0 -% Wong, Justin P 200,000 3.6% 200,000 0 -% 1) Bintag Consulting, Route Du Village II, Finhaut 1925, Switzerland. R. Taragett-Adams is the beneficial owner who has the ultimate voting control over the shares held by this entity. Bintag Consulting purchased these shares utilizing its investment funds from its corporate bank account. 2) Chedwick Marketing, Sussex House 128 Elgin Ave Grand Cayman, Cayman Islands KY1-9006. Rodney Verma is the beneficial owner who has the ultimate voting control over the shares held by this entity. Chedwick Marketing purchased these shares utilizing its investment funds from its corporate bank account. 3) Holly Park Investments, 31 The Strand, 46 Canal Point Dr Grand Cayman, Cayman Islands KY1-1105, Jessica McRae is the beneficial owner who has the ultimate voting control over the shares held by this entity. Holly Park Investments purchased these shares utilizing its investment funds from its corporate bank account. 4) Oceanside Strategies, 10 Market St #684 Grand Cayman, Cayman Islands KY1-9006, Dain Currie, is the beneficial owner who has the ultimate voting control over the shares held by this entity. Oceanside Strategies, Inc. purchased these shares utilizing its investment funds from its corporate bank account. 5) Pigeon Rock Group, 10th Floor Adonis Building Bohara Al Khoury Rd, Beirut, Lebanon. A. K. Samer is the beneficial owner who has the ultimate voting control over the shares held by this entity. Pigeon Rock Group purchased these shares utilizing its investment funds from its corporate bank account. Other than as described in the above table and accompanying footnotes or as further described below, (a) we have not made, and are not required to make, any potential payments to any selling stockholder, any affiliate of a selling stockholder, or any person with whom any selling stockholder has a contractual relationship regarding the Financing and (b) other than in connection with the financing, the selling stockholders have not had, and do not have, any material relationship with us except for their ownership of our common stock. PLAN OF DISTRIBUTION The Selling Stockholders are underwriters as defined under the Securities Act of 1933. The offering of the Common Stock Unit is at a fixed price of $1.11 per Unit for the entire duration of the offering. Each Selling Stockholder of the securities and any of their pledgees, assignees and successors-in-interest may, from time-to-time, sell any or all of their securities covered hereby at a fixed price of $1.11 per Unit for the entire duration of the offering. The Selling Stockholders may also sell securities under Rule 144 under the Securities Act of 1933, as amended (the "Securities Act"), if available, rather than under this prospectus. The Selling Stockholders and any broker-dealers or agents that are involved in selling the securities may be deemed to be "underwriters" within the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the securities purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. Each Selling Stockholder has informed the Company that it does not have any written or oral agreement or understanding, directly or indirectly, with any person to distribute the securities. The Company is required to pay certain fees and expenses incurred by the Company incident to the registration of the securities. The resale securities will be sold only through registered or licensed brokers or dealers if required under applicable state securities laws. In addition, in certain states, the resale securities covered hereby may not be sold unless they have been registered or qualified for sale in the applicable state or an exemption from the registration or qualification requirement is available and is complied with. Under applicable rules and regulations under the Exchange Act, any person engaged in the distribution of the resale securities may not simultaneously engage in market making activities with respect to the common stock for the applicable restricted period, as defined in Regulation M, prior to the commencement of the distribution. In addition, the Selling Stockholders will be subject to applicable provisions of the Exchange Act and the rules and regulations thereunder, including Regulation M, which may limit the timing of purchases and sales of the common stock by the Selling Stockholders or any other person. We will make copies of this prospectus available to the Selling Stockholders and have informed them of the need to deliver a copy of this prospectus to each purchaser at or prior to the time of the sale (including by compliance with Rule 172 under the Securities Act). USE OF PROCEEDS We will not receive proceeds from the sale of common stock units, shares of common stock, Series A, Series B, Series C and Series D warrants as well as the common stock underlying such units and warrants under this prospectus. We would, however, receive approximately $4,691,618 from the selling stockholders if they exercise their warrants in full on a cash basis, which we will use primarily for working capital purposes. The warrant holders may exercise their warrants at any time in accordance with the terms thereof until their expiration, as further described under "Description of Securities." Additionally, the warrant holders are under no obligation to exercise their warrants. If they do not exercise their warrants, we will not receive any additional proceeds. Because the warrant holders may exercise the warrants largely in their own discretion, if at all, we cannot plan on specific uses of proceeds beyond application of proceeds to the purposes herein described. We have agreed to bear the expenses (other than any underwriting discounts or commissions or agent s commissions) in connection with the registration of the common stock Units being offered hereby by the selling stockholders. DETERMINATION OF OFFERING PRICE The offering of the Common Stock Unit consists of one share of common stock, $0.001 par value per share, and rights entitling the holder to receive Series A warrants, Series B warrants, Series C warrants, and Series D warrants, where each warrant can be exercised to allow the holder the right to purchase additional shares of common stock by the Selling Stockholders at a fixed price of $1.11 per Unit for the entire duration of the offering. The price of the Common Unit was established on basis of the average of the high and low prices of the Common Stock on the OTC Pink Sheets on January 10, 2018 within five business days prior to our original Registration Statement filing. DESCRIPTION OF SECURITIES TO BE REGISTERED Description Securities to be Registered The Securities to be Registered include: Units, each consists of one share of common stock, $0.001 par value per share, and rights entitling the holder to receive Series A warrants, Series B warrants, Series C warrants, and Series D warrants, where each warrant can be exercised to allow the holder the right to purchase additional of common stock. These warrants have the same terms and provisions as each other, except that (a) the Series A warrants have an exercise price of $0.30 per share and expire on August 31, 2022; (b) the Series B warrants have an exercise price of $0.40 per share and expire on August 31, 2022; (c) the Series C warrants have an exercise price of $0.60 per share and expire on August 31, 2022; and (d) upon the exercise of the Class C Warrants, the Class D is cashless warrant of $0.40 and expires on August 31, 2022. Each warrant is exercisable on January 1, 2018. The exercise of the warrants is subject to certain exercise limitations, such that the holder may not exercise the warrants if such exercise results in the holder becoming the beneficial owner of more than 4.99% of the number of shares of common stock outstanding immediately after giving effect to such exercise. The warrants provide for the adjustment of the exercise price and number of shares issuable upon exercise of the warrants in connection with stock dividends and splits, such that the number of shares issuable upon exercise of the warrant is adjusted in proportion to the change in the number of shares outstanding and the aggregate exercise price of the warrant remains unchanged. If we directly or indirectly sell or grant any right with respect to our common stock or common stock equivalents at an effective price lower than the current exercise price of any of the Series A warrants, then the exercise price of the applicable warrants will be reduced to such lower price. In addition, if we grant, issue or sell any common stock equivalents or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of shares of common stock (and not the holder of the warrant), then each warrant holder will be entitled to acquire, upon the terms applicable to such purchase rights, the aggregate purchase rights which the holder could have acquired if the holder had held the number of shares of common stock acquirable upon complete exercise of the warrant. If we declare or make any dividend or other distribution of our assets to holders of our common stock, each warrant holder shall be entitled to participate in the distribution to the same extent that the holder would have participated therein if the holder had held the number of shares of stock acquirable upon complete exercise of the warrant. Other than as described above, the warrants do not contain anti-dilution provisions. Upon the reclassification, reorganization or recapitalization of our common stock, our merger or consolidation with or into another entity, the consummation of a stock purchase agreement whereby more than 50% of the outstanding shares of the common stock are acquired by another person or entity, or a sale or other disposition of substantially all of our assets, the holder of each of the warrants is entitled to receive the number of shares of our common stock or the common stock of our successor or acquirer that such holder would have been entitled to receive immediately prior to such transaction, and the exercise price for such shares shall be adjusted based on the amount of any alternate consideration receivable as a result of such transaction by a holder of the number of shares of common stock for which the warrant is exercisable immediately prior to such transaction. The holder of the warrant may also require us or any successor entity to purchase the warrant from the holder by paying to the holder an amount of cash equal to the Black Scholes value of the remaining unexercised portion of the warrant on the date of the consummation of the transaction. Authorized Capital Stock Our authorized capital is 195,000,000 shares of common stock with a par value of $0.001 and 5,000,000 shares of preferred stock with a par value of $0.001. Securities Issued and Outstanding As of January 9, 2018, including the shares to be registered hereunder, there were issued and outstanding (i) 5,592,010 shares of common stock; (ii) warrants to purchase up to 11,039,100 shares of our common stock at exercise prices ranging from $0.30 to $0.60 per share; and (iii) 2,125,000 Series A Preferred Shares. Description of Common Stock The holders of our common stock are entitled to one vote per share on all matters submitted to a vote of the stockholders, including the election of directors. Our articles of incorporation do not provide for cumulative voting in the election of directors. The holders of our common stock will be entitled to cash dividends as may be declared, if any, by our Board of Directors from funds available. Upon liquidation, dissolution or winding up of our company, the holders of our common stock will be entitled to receive pro rata all assets available for distribution to the holders. Description of Preferred Stock The Series A Preferred Shares carry a voting weight equal to ten (10) Common Shares. The shares of Series A Preferred Stock are not redeemable and cannot be converted into Common Shares, unless it is approved by the Board of Directors and agreed upon by the Series A Preferred Shareholders. Transfer Agent The transfer agent and registrar for our common and preferred stock is: Globex Transfer, LLC, 780 Deltona Blvd., Suite 202, Deltona, FL 32725. Anti-Takeover Provisions of Nevada State Law Some features of the Nevada Revised Statutes, which are further described below, may have the effect of deterring third parties from making takeover bids for control of us or may be used to hinder or delay a takeover bid. This would decrease the chance that our stockholders would realize a premium over market price for their shares of common stock as a result of a takeover bid. Acquisition of Controlling Interest The Nevada Revised Statutes contain provisions governing acquisition of a controlling interest of a Nevada corporation. These provisions provide generally that any person or entity that acquires a certain percentage of the outstanding voting shares of a Nevada corporation may be denied voting rights with respect to the acquired shares, unless the holders of a majority of the voting power of the corporation, excluding shares as to which any of such acquiring person or entity, an officer or a director of the corporation, and an employee of the corporation exercises voting rights, elect to restore such voting rights in whole or in part. These provisions apply whenever a person or entity acquires shares that, but for the operation of these provisions, would bring voting power of such person or entity in the election of directors within any of the following three ranges: 20% or more but less than 33 1/3%; 33 1/3% or more but less than or equal to 50%; or more than 50%. The stockholders or board of directors of a corporation may elect to exempt the stock of the corporation from these provisions through adoption of a provision to that effect in the articles of incorporation or bylaws of the corporation. Our articles of incorporation and bylaws do not exempt our common stock from these provisions. These provisions are applicable only to a Nevada corporation that: has 200 or more stockholders of record, at least 100 of whom have addresses in Nevada appearing on the stock ledger of the corporation; and does business in Nevada directly or through an affiliated corporation. These provisions may discourage companies or persons interested in acquiring a significant interest in or control of our company, regardless of whether such acquisition may be in the interest of our stockholders. Combination with Interested Stockholder The Nevada Revised Statutes contain provisions governing combination of a Nevada corporation that has 200 or more stockholders of record with an interested stockholder. A corporation affected by these provisions may not engage in a combination within three years after the interested stockholder acquires his, her or its shares unless the combination or purchase is approved by the board of directors before the interested stockholder acquired such shares. Generally, if approval is not obtained, then after the expiration of the three-year period, the business combination may be consummated with the approval of the board of directors before the person became an interested stockholder or a majority of the voting power held by disinterested stockholders, or if the consideration to be received per share by disinterested stockholders is at least equal to the highest of: the highest price per share paid by the interested stockholder within the three years immediately preceding the date of the announcement of the combination or within three years immediately before, or in, the transaction in which he, she or it became an interested stockholder, whichever is higher; the market value per share on the date of announcement of the combination or the date the person became an interested stockholder, whichever is higher; or if higher for the holders of preferred stock, the highest liquidation value of the preferred stock, if any. Generally, these provisions define an interested stockholder as a person who is the beneficial owner, directly or indirectly of 10% or more of the voting power of the outstanding voting shares of a corporation, and define combination to include any merger or consolidation with an interested stockholder, or any sale, lease, exchange, mortgage, pledge, transfer or other disposition, in one transaction or a series of transactions with an interested stockholder of assets of the corporation having: an aggregate market value equal to 5% or more of the aggregate market value of the assets of the corporation; an aggregate market value equal to 5% or more of the aggregate market value of all outstanding shares of the corporation; or representing 10% or more of the earning power or net income of the corporation. MARKET PRICE OF AND DIVIDENDS ON COMMON STOCK AND RELATED MATTERS Market Information Our common stock is quoted on the OTC Pink Sheets under the symbol "ENZB." There is no established public trading market for our common stock. The liquidity of our shares on the OTC Pink Sheets market is extremely limited, and prices quoted may not be a reliable indication of the value of our common stock. EnzymeBioSystems Common Stock, $0.001 par value, was cleared for quotation on November 4, 2010, under the symbol: ENZB. The range of high and low closing trading price information for each quarter in the past two years is set forth below. These quotations reflect inter-dealer prices without retail mark-up, mark-down or commission. The prices have been adjusted to reflect the October 19, 2017, 1-for-20 reverse stock split of its stock. Year ended June 30, 2017 High Low First Quarter $ 1.26 $ 0.30 Second Quarter $ 4.48 $ 0.228 Third Quarter $ 4.00 $ 0.248 Fourth Quarter $ 1.00 $ 0.20 Year ended June 30, 2016 High Low First Quarter $ 47.80 $ 4.00 Second Quarter $ 7.94 $ 3.00 Third Quarter $ 3.00 $ 1.20 Fourth Quarter $ 2.00 $ 0.40 Holders of Common Stock As of January 9, 2018, there were approximately 49 holders of record of our common stock. Dividends We have never declared or paid any cash dividends or distributions on our capital stock. We currently intend to retain our future earnings, if any, to support operations and to finance expansion and we do not anticipate paying any cash dividends on our common stock in the foreseeable future. MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion should be read in conjunction with the financial statements and the related notes contained elsewhere in this prospectus. In addition to historical information, the following discussion contains forward looking statements based upon current expectations that are subject to risks and uncertainties. Actual results may differ substantially from those referred to herein due to a number of factors, including but not limited to risks described in the section entitled "Risk Factors" and elsewhere in this prospectus. Company Overview EnzymeBioSystems researches specialty enzymes and enzyme related products. We utilize enzyme technologies to develop commercial solutions for a broad range of applications within the specialty chemical industry. These markets are largely served by a small number of large, well-established businesses and research university centers. We plan to work collaboratively with those industrial companies to develop differentiated, high performance enzyme solutions for their target markets, and to leverage their well-developed distribution capabilities to better exploit commercial opportunities. Our enzyme technology will tie-in with development of new commercial biological active compounds. We hope we can develop specialty enzymes to eliminate the side effects and toxicity of the new commercially developed products. Our lead product is Amooranin where are pre-clinical studies suggest that Amooranin suppresses growth factor signaling, induces cell cycle arrest, and promotes apoptosis. Management wants to continue its research with Amooranin that will lead to the filing of an Investigational New Drug Application ("IND") with the U. S. Food and Drug Administration. It is still too early to determine if this project has any potential value for the Company, and there are no assurances that the Company will ever be able to obtain an IND for this compound. Results of Operations Results of Operations for the year ended June 30, 2017 (audited) We are presently in the development stage of our business and we can provide no assurance that we will be successful in finding a market for our specialty enzyme products. We do not anticipate earning any significant revenues until such time as we can produce and market specialty enzyme products. For the year ended June 30, 2017, we had a net loss of $(95,793) as compared to a loss of $(125,359) for the same period last year. Our loss for the year ended June 30, 2017 was primarily attributable to officer compensation of $71,000, professional fees of $31,925, and other operating expenses of $7,868. Results of Operations for the three months ended September 30, 2017 (unaudited) During the three month period ended September 30, 2017, the Company did not generate any revenues. In addition, the Company does not expect to generate any profit for the next twelve months. For the three months ending September 30, 2017, we experienced a net loss of $(25,445) or $(0.03) per share as compared to a net loss of $(20,699) or $(0.02) per share for the same period last year. The net loss for the three months ending September 30, 2017 was attributed to $16,500 in officers compensation, $7,500 in audit fees, and $1,845 in other general and administrative expense. Revenues The Company has generated no revenues since its inception. As of September 30, 2017, the Company had an accumulated deficit of $(1,247,796). There can be no assurances that the Company can achieve or sustain profitability or that the Company s operating losses will not increase in the future. Liquidity and Capital Resources The Company is authorized to issue 195,000,000 shares of its $0.001 par value common stock and 5,000,000 shares of its $0.001 par value preferred stock. As of January 9, 2018, the Company has 5,592,010 shares of common stock issued and outstanding and 2,125,000 of its Series A Preferred Shares issued and outstanding. As of September 30, 2017, the Company had current assets of $219,259 and current liabilities of $4,100. The Company has limited financial resources available, which has had an adverse impact on the Company s liquidity, activities and operations. In order for the Company to remain a Going Concern it will need to find additional capital or generate revenues. Additional working capital may be sought through additional debt or equity private placements, additional notes payable to banks or related parties (officers, directors or stockholders), or from other available funding sources at market rates of interest, or a combination of these. The ability to raise necessary financing will depend on many factors, including the nature and prospects of any business to be acquired and the economic and market conditions prevailing at the time financing is sought. No assurances can be given that any necessary financing can be obtained on terms favorable to the Company, or at all. Sources of Capital In September, 2017, the Company began conducting a Private Offering, with accredited investors to help fund the Company. By the end of December, 2017, the Company sold 2,759,775 Common Units at a price of $0.20 per Unit. Each Unit consists of one share of post reverse stock split common stock, one Class A warrant exercisable at $0.30 per share of post reverse stock split common stock, one Class B warrant exercisable at $0.40 per share of post reverse stock split common stock and one Class C warrant exercisable at $0.60 per share of post reverse stock split common stock. The Offering provides that Berkeley Clinic, L.C. will maintain the same voting control of the Company that it held prior to the Offering. The offering and sale of the Units in this Offering are intended to be exempt from registration under the Act by virtue of Section 4(2) of the Act, and Rule 506. Net Cash Provided By Financing Activities During the three months ended September 30, 2017, net cash provided by financing activities was $200,455 compared to net cash provided by financing activities of $0 for the fiscal year ended June 30, 2017. Net cash provided by financing activities through the three months ended September 30, 2017 consisted of $200,455 from the sale of Common Units received from our Offering, for the issuance and sale of common stock and warrants to purchase common stock. Off-Balance Sheet Arrangements We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that would be material to stockholders. Going Concern Our independent auditors included an explanatory paragraph in their report on the June 30, 2017 audited financial statements regarding concerns about our ability to continue as a going concern. Our financial statements contain additional note disclosures describing the circumstances that lead to this disclosure by our independent auditors. Our ability to continue as a going concern is contingent upon the successful completion of additional financing arrangements and our ability to achieve and maintain profitable operations. Therefore, management plans to raise equity capital to finance the operating and capital requirements of the Company. While the Company is devoting its best efforts to achieve the above plans, there is no assurance that any such activity will generate funds that will be available for operations. These conditions raise substantial doubt about the Company s ability to continue as a going concern. INTEREST OF NAMED EXPERTS AND COUNSEL No expert or counsel named in this Prospectus as having prepared or certified any part thereof or having given an opinion upon the validity of the securities being registered or upon other legal matters in connection with the registration or offering of our Common Stock was employed on a contingency basis. Additionally, no such expert or counsel was connected with us as a promoter, managing or principal underwriter, voting trustee, director, officer or employee. Pursuant to Item 509 of Regulation S-K the interest of counsel is deemed substantial and needs to be disclosed if the fair market value of all securities of the registrant owned and received by counsel exceeds $50,000. Counsel is the Managing Member and owns 50% of Berkeley Clinic, LC, an Arizona limited liability company. Berkeley Clinic, LC owns 75,000 unregistered restricted common shares and 2,125,000 Series A Voting unregistered restricted Preferred shares of EnzymeBioSystems. Based on the number of shares owned, the interests of counsel is deemed substantial. AUDITING MATTER Our financial statements for the fiscal years ended June 30, 2017 and June 30, 2016 have been audited by Michael T. Studer CPA P.C., an independent registered public accounting firm located at 111 West Sunrise Highway, Second Floor East, Freeport, NY 11520 and have been included in reliance upon such report given upon the authority of said firm as experts in accounting and auditing. LEGAL MATTERS Certain legal matters in connection with this Registration Statement will be passed upon the validity of the Common Stock offered under this Prospectus by The Law Offices of T. J. Jesky, 200 West Madison Suite 2100, Chicago, IL 60606. T. J. Jesky is a shareholder of the Registrant. This plan does not register any of his shares. ORGANIZATION WITHIN THE LAST FIVE YEARS The Company was organized June 26, 2009 (Date of Inception) under the laws of the State of Nevada, as EnzymeBioSystems. The Company became a fully reporting Company on December 18, 2009. The Company was cleared for quotation on the OTC-Pink Sheets on November 4, 2010, under the symbol: ENZB. In the past five years, there has been changes in management; however, the Company s business plan has not changed since inception. SHARES ELIGIBLE FOR FUTURE SALE Future sales of a substantial number of shares of our common stock in the public market could adversely affect market prices prevailing from time to time. The shares of our common stock offered may be resold without restriction or further registration under the Securities Act, except that any shares purchased by our "affiliates," as that term is defined under the Securities Act, may generally only be sold in compliance with Rule 144 under the Securities Act. Rule 144 In general, Rule 144 promulgated by the Securities and Exchange Commission pursuant to the Securities Act, provides: If the issuer of the securities is, and has been for a period of at least 90 days immediately before the sale, subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, a minimum of six months must elapse between the later of the date of the acquisition of the securities from the issuer, or from an affiliate of the issuer, and any resale of such securities in reliance on this section for the account of either the acquirer or any subsequent holder of those securities. If the issuer of the securities is not, or has not been for a period of at least 90 days immediately before the sale, subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, a minimum of one year must elapse between the later of the date of the acquisition of the securities from the issuer, or from an affiliate of the issuer, and any resale of such securities in reliance on this section for the account of either the acquirer or any subsequent holder of those securities. Except as provided in Rule 144, the amount of securities sold for the account of an affiliate of the issuer in reliance upon this section shall be determined as follows: If any securities are sold for the account of an affiliate of the issuer, regardless of whether those securities are restricted, the amount of securities sold, together with all sales of securities of the same class sold for the account of such person within the preceding three months, shall not exceed the greatest of: (A) one percent of the shares or other units of the class outstanding as shown by the most recent report or statement published by the issuer, or (B) the average weekly reported volume of trading in such securities on all national securities exchanges and/or reported through the automated quotation system of a registered securities association during the four calendar weeks preceding the filing of notice required by paragraph (h) of Rule 144, or if no such notice is required the date of receipt of the order to execute the transaction by the broker or the date of execution of the transaction directly with a market maker, or (C) the average weekly volume of trading in such securities reported pursuant to an effective transaction reporting plan or an effective national market system plan during the four-week period specified in paragraph (e)(1)(ii) of Rule 144. Special provisions for "Shell Companies" The provisions of Rule 144 are not available for the resale of securities initially issued by a "shell company" which is defined as an issuer, other than a business combination related shell company, as defined in Rule 405, or an asset-backed issuer, as defined in Item 1101(b) of Regulation AB, that has no or nominal operations; and either no or nominal assets; assets consisting solely of cash and cash equivalents; or assets consisting of any amount of cash and cash equivalents and nominal other assets; or an issuer that has been at any time previously an issuer described in paragraph (i)(1)(i) of Rule 144. Another important factor to be considered while being deemed a "shell company" is that we could not file registration statements under Section 5 of the Securities Act using a Form S-8, a short form of registration to register securities issued to employees and consultants under an employee benefit plan. There can be no assurance that we will be able to obtain any financing if or when it is needed on terms we deem acceptable due to being deemed a "shell company." Any additional financing may not be available to us, or if available, may not be on terms favorable to us due to being deemed a "shell company." Notwithstanding paragraph (i)(1) of Rule 144, if the issuer of the securities previously had been an issuer described in paragraph (i)(1)(i) but has ceased to be an issuer described in paragraph (i)(1)(i); is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act; has filed all reports and other materials required to be filed by Section 13 or 15(d) of the Exchange Act, as applicable, during the preceding 12 months (or for such shorter period that the issuer was required to file such reports and materials), other than Form 8-K reports, and has filed current "Form 10 information" with the SEC reflecting its status as an entity that is no longer an issuer described in paragraph (i)(1)(i), then those securities may be sold subject to the requirements of Rule 144 after one year has elapsed from the date that the issuer filed "Form 10 information" with the SEC. The term "Form 10 information" means the information that is required by SEC Form 10, to register under the Exchange Act each class of securities being sold under Rule 144. The Form 10 information is deemed filed when the initial filing is made with the SEC. In order for Rule 144 to be available, EnzymeBioSystems must have certain information publicly available. We plan to publish information necessary to permit transfer of shares of our common stock in accordance with Rule 144 of the Securities Act, in as much as we have filed the registration statement with respect to this prospectus. DESCRIPTION OF THE BUSINESS History and Organization The Company was organized June 26, 2009 (Date of Inception) under the laws of the State of Nevada, as EnzymeBioSystems. On September 17, 2017, the Company incorporated LCNS in Nevada, as a wholly owned subsidiary to conduct a marketing and licensing business operations for the Company. Our Business EnzymeBioSystems researches specialty enzymes and enzyme related products. We utilize enzyme technologies to develop commercial solutions for a broad range of applications within the specialty chemical industry. These markets are largely served by a small number of large, well-established businesses and research university centers. We plan to work collaboratively with those industrial companies to develop differentiated, high performance enzyme solutions for their target markets, and to leverage their well-developed distribution capabilities to better exploit commercial opportunities. Our enzyme technology will tie-in with development of new commercial biological active compounds. We hope we can develop specialty enzymes to eliminate the side effects and toxicity of the new commercially developed products. Enzyme Industry Enzymes can be categorized as "enzyme inhibitors" and "enzyme activators." Enzyme inhibitors are molecules that bind to enzymes and decrease their activity. Since blocking an enzyme s activity can kill a pathogen or correct a metabolic imbalance, many drugs are enzyme inhibitors. Enzyme activators are molecules that bind to enzymes and increase their activity. These molecules are often involved in the allosteric [defined as having to do with a protein with a structure that is altered reversibly by a small molecule so that its original function is modified] regulation of enzymes in the control of metabolism. Both enzyme inhibitors and enzyme activators are currently used by many pharmaceutical and biotechnology companies in research and development of new drug compounds. Enzymes also can be used as pharmaceutical products. Enzymes as pharmaceuticals have two important features that distinguish them from all other types of pharmaceutical products. First, enzymes often bind and act on their targets with great affinity and specificity. Second, enzymes are catalytic and convert multiple target molecules to the desired products. These two features make for what are considered specialized enzymes that can accomplish therapeutic biochemistry in the body that small molecules cannot. These characteristics have resulted in the development of many enzyme drugs for a wide range of disorders, e.g. insulin and interferon. Business Strategy We foresee that our two areas of business opportunity, include: 1) buying raw materials to produce specialty enzymes in contract lab facilities; 2) contracting with CRO s with the goal to obtain FDA approval to further test the enzymes. We plan to deploy our enzyme technologies across diverse markets that represent commercial opportunities in helping us build visibility for EnzymeBioSystems. This includes building our reputation in the scientific community through trade publications and protecting our intellectual property and technology through the patent process. We plan to use enzyme technologies to develop commercial solutions for a broad range of applications within the specialty chemical industry. These markets are largely served by a small number of large, well-established businesses and research university centers. Through contract laboratories we currently have only limited resources and capability to develop, manufacture, or distribute specialty enzyme products on a limited scale. We will determine which specialty enzyme products to pursue independently based on various criteria, including: investment required, estimated time to market, regulatory hurdles, infrastructure requirements, and industry-specific expertise necessary for successful commercialization. At any time, we may modify our strategy and pursue collaborations for the development and commercialization of some specialty enzyme products that we had intended to pursue independently. In order for us to commercialize more specialty enzyme products directly, we plan to establish or obtain through outsourcing arrangements additional capability to develop, manufacture, market, sell, and distribute such products. Our Business Strategy Management is evaluating an enzyme compound which it believes has a specific therapeutic value in fighting tumors, specifically breast tumors. Management has undertaken research to study its synthetic Amooranin compound, which the Company has developed in-house. Studies of Amooranin have already been completed in rats. Further, research is required to study Amooranin in a different animal species. Amooranin is a triterpene acid with a novel structure isolated from the stem bark of Amoora rohituka, a tropical tree growing wild in India. Studies have demonstrated that multiple breast cancer cell lines respond to Amooranin in growth suppression assays. Mechanistic studies suggest that Amooranin suppresses growth factor signaling, induces cell cycle arrest, and promotes apoptosis. This is because the anti-neoplastic activity of the plant-derived compound of Amooranin is relatively weak. Our founder developed a new synthetic analogue of this molecule by chemical transformations in an attempt to identify a more potent agent. One of these analogues, Amooranin-Me, was found to inhibit proliferation of several breast cancer cells with greater potency than the parent compound of Amooranin. Preliminary screening of Amooranin-Me in in-vitro experiments revealed some potenecy against breast cancer MCF-7 cells with concentrations down to the nanomolar range. All these studies indicate that Amooranin-Me is a promising drug with potential to be used for human breast cancer prevention. The Company has moved further along with the process of evaluating an enzyme compound which they believe has specific therapeutic value in fighting tumors. In an effort to evaluate this compound, management has had a series of meetings with various contract research organizations to enlist their expertise in performing animal studies. The research will study the use of an antitumor natural product called amooranin. Specifically, the two areas of this study will include: 1) an exam of the in vitro cytotoxicity of amooranin against hepatocellular carcinoma cells, and 2) investigate the dose responsive antitumor actions of amooranin against chemically induced hepatic tumorgenesis in rats and dogs. Management wants to continue its research with Amooranin that will lead to the filing of an Investigational New Drug Application ("IND") with the U. S. Food and Drug Administration. It is still too early to determine if this project has any potential value for the Company, and there are no assurances that the Company will ever be able to obtain an IND for this compound. As of the date of this report, management of the Company has identified an independent chemical laboratory that can produce sufficient quantities of amooranin to proceed with the required animal studies. A small preclinical batch of methyl amooranin has been manufactured by the independent chemical laboratory. This preclinical batch is not large enough to sufficiently test in several animal studies needed to obtain an IND. Competition Our competitors have substantially greater financial, technical, and marketing resources than we do and may succeed in developing products that would render our products obsolete or noncompetitive. In addition, many of these competitors have significantly greater experience than we do in their respective fields. Our ability to compete successfully will depend on our ability to develop proprietary products that reach the market in a timely manner and are technologically superior to, and/or are less expensive than, other products on the market. Current competitors or other companies may develop technologies and products that are more effective than ours. Our technologies and products may be rendered obsolete or uneconomical by technological advances or entirely different approaches developed by one or more of our competitors. The existing approaches of our competitors or new approaches or technology developed by our competitors may be more effective than those developed by us. Any enzyme products that we develop will compete in multiple, highly competitive markets. For example, Codexis, Maxygen, Inc., Evotec, and Xencor have alternative evolution technologies. Integrated Genomics Inc., Myriad Genetics, Inc., and ArQule, Inc. perform screening, sequencing, and/or bioinformatics services. Novozymes A/S, Verenium Corporation, Genencor International Inc. and MPBiomedicals are involved in development, over expression, fermentation, and purification of enzymes. Many of these competitors have significantly greater financial and human resources than we do. We believe that the principal competitive factors in our market are access to genetic material, technological experience and expertise, and proprietary position. EnzymeBioSystems Funding Requirements Future funding could result in potentially dilutive issuances of equity securities, the incurrence of debt, contingent liabilities and/or amortization expenses related to goodwill and other intangible assets, which could materially adversely affect the Company s business, results of operations and financial condition. Any future acquisitions of other businesses, technologies, services or product(s) might require the Company to obtain additional equity or debt financing, which might not be available on terms favorable to the Company, or at all, and such financing, if available, might be dilutive. Patent, Trademark, License and Franchise Restrictions and Contractual Obligations and Concessions We do not have any trademarks. In 2012, the two founders of the Company, along with a third party, as inventors, filed Patent Application # 14/369339 entitled "Amooranin Compounds and Analogs Thereof and Related Methods of Use." The U.S. Patent Office informed us that they published the aforementioned pending Patent on December 4, 2014 (Publication No. 2014-0357711A1). On November 28, 2017, we received from the U.S. Patent Office, Patent No. 9828326. We plan to rely on trade secrets, technical know-how, and continuing invention to develop and maintain our competitive position. We will take security measures to protect our trade secrets, proprietary know-how and technologies, and confidential data and continue to explore further methods of protection. Our policy is to execute confidentiality agreements with our employees and consultants upon the commencement of an employment or consulting arrangement with us. These agreements generally require that all confidential information developed or made known to the individual by us during the course of the individual s relationship with us be kept confidential and not disclosed to third parties. These agreements also generally provide that inventions conceived by the individual in the course of rendering services to us shall be our exclusive property. Research and Development Activities and Costs Research and development expenses related to our specialty enzyme business include costs related to ongoing bioprocess development and manufacturing process yield improvements. For the fiscal years ended June 30, 2017 and 2016, the Company spent $0 and $11,080, respectively, in product research and development. Effect of Government Regulation on Business We are subject to various federal, state and local environmental laws and regulations, including those relating to the discharge of materials into the air, water and ground, the generation, storage, handling, use, transportation and disposal of hazardous materials, and the health and safety of our employees. Non-drug biologically derived products, such as the specialty enzymes we plan to produce are regulated in the United States based on their application, by either the United States Food and Drug Administration, ("FDA"), the Environmental Protection Agency, ("EPA") in the case of plants and animals, or the United States Department of Agriculture ("USDA"). In addition to regulating drugs, the FDA also regulates food and food additives, feed and feed additives, and Generally Recognized As Safe substances used in the processing of food. The EPA regulates biologically derived chemicals not within the FDA s jurisdiction. Although the food and industrial regulatory process can vary significantly in time and expense from application to application, the timelines generally are shorter in duration than the drug regulatory process. In the United States, transgenic agricultural products may be reviewed by the FDA, EPA, and USDA, depending on the plant and the trait engineered into it. The regulatory process for these agricultural products can take up to five years of field testing under USDA oversight, and up to another two years for applicable agencies to complete their reviews. At this time, we do not anticipate producing any enzymes that would require FDA approval. Our processes would include combining enzymes that have already been approved the FDA. Even after investing significant time and expenditures, we may not obtain regulatory approval for our enzyme products that incorporate technologies that have not been approved for commercialization in the United States or elsewhere. For example, the EPA regulates biologically derived chemical substances not within the FDA s jurisdiction. An unfavorable EPA ruling could delay commercialization or require modification of the production process resulting in higher manufacturing costs, thereby making the product uneconomical. In addition, the USDA may prohibit genetically engineered plants from being grown and transported except under an exemption, or under controls so burdensome that commercialization becomes impracticable. Our future products may not be exempted by the USDA. In addition, new laws, new interpretations of existing laws, increased governmental enforcement of environmental laws, or other developments could require us to make additional significant expenditures. We will be subject to various federal, state and local environmental laws and regulations, including those relating to the discharge of materials into the air, water and ground, the generation, storage, handling, use, transportation and disposal of hazardous materials, and health and safety issues. Outside of the United States, scientifically-based standards, guidelines and recommendations pertinent to transgenic and other products intended for the international marketplace are being developed by, among others, the representatives of national governments within the jurisdiction of the standard-setting bodies, including Codex Alimentarius, the International Plant Protection Convention, and the Office des International Epizooties. The use of the existing standard-setting bodies to address concerns about products of biotechnology is intended to harmonize risk-assessment methodologies and evaluation of specific products or classes of products. In the future we may be subject to additional laws, regulations, policies, approvals and the like of federal, state, local, municipal, foreign and other bodies. Compliance With Environmental Laws We seek to comply with all applicable statutory and administrative requirements concerning environmental quality. We have made, and will continue to make, expenditures for environmental compliance and protection. Expenditures for compliance with environmental laws have not had, and are not expected to have, a material effect on our capital expenditures, results of operation or competitive position. Employees John Dean Harper is the sole officer and director for the Company. Mr. Harper performs all of the job functions for the Company. The Company has no intention at this time to add employees until it can become a profitable entity. The Company from time to time may retain independent consultants in connection with its operations. (i) The Company s performance is dependent on the performance of its officers. In particular, the Company s success depends on their ability to develop a business strategy which will be successful for the Company. (ii) The Company does not carry key person life insurance on any of its personnel. The loss of the services of any of its executive officers or other key employees could have a material adverse effect on the business, results of operations and financial condition of the Company. The Company s future success also depends on its ability to retain and attract highly qualified technical and managerial personnel. (iii) There can be no assurance that the Company will be able to retain its key managerial and technical personnel or that it will be able to attract and retain additional highly qualified technical and managerial personnel in the future. The inability to attract and retain the technical and managerial personnel necessary to support the growth of the Company s business, due to, among other things, a large increase in the wages demanded by such personnel, could have a material adverse effect upon the Company s business, results of operations and financial condition. Properties We currently lease office space at 8250 W. Charleston Blvd., Suite 120, Las Vegas, NV 89117. Our current sublease agreement for that space, expires on December 31, 2017 and our rent payments thereunder are $1,000 per month. We believe that our current facilities will be adequate for our needs for the next 12 months, although we may lease additional property for additional research and development space. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE The following table sets forth certain information regarding our current director and executive officers. Our executive officers serve one-year terms. Set forth below are the names, ages and present principal occupations or employment, and material occupations, positions, offices or employments for the past five years of our current director and executive officers. Name Age Position & Offices Held John Dean Harper 55 CEO/Corporate Secretary/Chief Financial Officer (Treasurer)/Director All directors hold office until the next annual meeting of stockholders of the Company and until their successors have been elected and qualified. Directors currently receive no fees for services provided in that capacity. Set forth below is a brief description of the background and business experience of our officers and directors. John Dean Harper, Esq., CEO/Corporate Secretary/Chief Financial Officer/Director Mr. John Dean Harper, Esq., is a practicing attorney in Las Vegas, NV. He was appointed as Corporate Secretary and Interim Accounting Officer because of his years of experience as general counsel for the Las Vegas Police Protective Association. Metro, Inc. and his experience forming and running public companies. Mr. Harper currently has a private law practice focusing primarily on corporate law, labor/employment and litigation. Work Experience: Dates Name of Organization Job Title 2015-Present Thunderhill Consulting Limited, Owner 2014-Present RD Heritage Group, LLC, Manager 1996-Present Las Vegas Police Protective Assoc. Civilian Employees, Inc., Outside General Counsel 1996-Present John Dean Harper, Harper Law Office 1996-2013 Nevada Conf. of Police and Sheriffs, General Counsel 1999-2013 Las Vegas Police Protective Assoc., Chief General Counsel 2007-2010 Tone in Twenty, President, Treasurer, Director 2001-2005 Absolute Glass Protection, Inc., Pres., Treasurer, Director 1999-Present Injured Police Officers Fund, General Counsel 2000-2002 Lock-Gun.com, President 1999-2002 Starbase-1 Coffee Co. Ltd., President 1996-1998 Gugino & Schwartz, Assoc. Attorney 1991-1995 Redmon & Harper, Partner 1989-1991 Schottenstein, Zox and Dunn, Assoc. Attorney 1986-1989 Univ. of Cincinnati, College of Law, Law Student Education: Mr. Harper is a graduate of Ohio University in Athens, Ohio with a Bachelors of Business Administration Degree, and a double major in Business Pre-Law and General Business. He is also a graduate of the University of Cincinnati, College of Law with a Juris Doctor. Involvement in Certain Legal Proceedings Our director, executive officer and control persons have not been involved in any of the following events during the past ten years and which is material to an evaluation of the ability or the integrity of our director or executive officer: 1. any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time; 2. any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offences); 3. being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; and 4. being found by a court of competent jurisdiction (in a civil action), the SEC or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated. 5. was found by a court of competent jurisdiction in a civil action or by the Commission to have violated any Federal or State securities law, and the judgment in such civil action or finding by the Commission has not been subsequently reversed, suspended, or vacated; 6. was found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any Federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated; 7. was the subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of: a. Any Federal or State securities or commodities law or regulation; or b. Any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or c. Any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or 8. was the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member. Term of Office In accordance with our Bylaws, our directors are elected at each annual meeting of stockholders and serve until the next annual meeting of stockholders or until their successor has been duly elected and qualified, or until their earlier death, resignation or removal. Audit Committee The company does not presently have an Audit Committee. No qualified financial expert has been hired because the company is too small to afford such expense. Committees and Procedures (1) The registrant has no standing audit, nominating and compensation committees of the Board of Directors, or committees performing similar functions. The Board acts itself in lieu of committees due to its small size. (2) The view of the board of directors is that it is appropriate for the registrant not to have such a committee because its director participate in the consideration of director nominees and the board and the company are so small. (3) The members of the Board who acts as nominating committee is not independent, pursuant to the definition of independence of a national securities exchange registered pursuant to section 6(a) of the Act (15 U.S.C. 78f(a). (4) The nominating committee has no policy with regard to the consideration of any director candidates recommended by security holders, but the committee will consider director candidates recommended by security holders. (5) The basis for the view of the board of directors that it is appropriate for the registrant not to have such a policy is that there is no need to adopt a policy for a small company. (6) The nominating committee will consider candidates recommended by security holders, and by security holders in submitting such recommendations. (7) There are no specific, minimum qualifications that the nominating committee believes must be met by a nominee recommended by security holders except to find anyone willing to serve with a clean background. (8) The nominating committee s process for identifying and evaluation of nominees for director, including nominees recommended by security holders, is to find qualified persons willing to serve with a clean backgrounds. There are no differences in the manner in which the nominating committee evaluates nominees for director based on whether the nominee is recommended by a security holder, or found by the board. Code of Ethics We have not adopted a Code of Ethics for the Board and any salaried employees. Family Relationships No family relationships exist between our sole directors or executive officers of the Company. EXECUTIVE COMPENSATION The following table sets forth certain compensation information for: (i) each person who served as the chief executive officer of
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+PROSPECTUS SUMMARY
+
+ 
+
+This
+summary highlights information contained elsewhere in this
+prospectus or incorporated by reference herein. This summary is not
+complete and may not contain all of the information that you should
+consider before deciding whether or not you should purchase the
+securities offered hereunder. You should read this entire
+prospectus carefully, including the section entitled Risk
+Factors beginning on page 7 of this prospectus and the
+section entitled Risk Factors in our annual report on
+Form 20-F for the fiscal year ended November 30, 2017, and all
+other information included or incorporated herein by reference in
+this prospectus before you decide whether to purchase our
+securities.
+
+ 
+
+Our Company
+
+ 
+
+We are
+a pharmaceutical company specializing in the research, development
+and manufacture of novel and generic controlled-release and
+targeted-release oral solid dosage drugs. Our patented
+Hypermatrix technology
+is a multidimensional controlled-release drug delivery platform
+that can be applied to the efficient development of a wide range of
+existing and new pharmaceuticals. Based on this technology
+platform, we have developed several drug delivery systems and a
+pipeline of products (some of which have received U.S. Food and
+Drug Administration, or FDA, approval) and product candidates in
+various stages of development, including abbreviated new drug
+applications, or ANDAs, filed with the FDA (and one Abbreviated New
+Drug Submission, or ANDS, filed with Health Canada) in therapeutic
+areas that include neurology, cardiovascular, gastrointestinal
+tract, or GIT, diabetes and pain.
+
+ 
+
+We also
+have a new drug application, or NDA, 505(b)(2) specialty drug
+product candidate in our development pipeline for our oxycodone
+hydrochloride extended-release tablets (previously referred to as
+Rexista ), or Oxycodone
+ER, an abuse deterrent oxycodone based on our proprietary
+nPODDDS novel Point Of
+Divergence Drug Delivery System (for which an NDA has been filed
+with the FDA). The NDA 505(b)(2) pathway (which relies in part upon
+the approving agency s
+findings for a previously approved drug) both accelerates
+development timelines and reduces costs in comparison to NDAs for
+new chemical entities. An advantage of our strategy for development
+of NDA 505(b)(2) drugs is that our product candidates can, if
+approved for sale by the FDA, potentially enjoy an exclusivity
+period which may provide for greater commercial opportunity
+relative to the generic ANDA route.
+
+ 
+
+Recent Developments
+
+ 
+
+Preliminary Results for the Quarter Ended August 31,
+2018
+
+ 
+
+Although our
+financial statements as of and for the quarter ended August 31,
+2018 are not yet available, the following information reflects our
+estimates of our results based on currently available
+information.
+
+ 
+
+ 
+
+2
+
+ 
+
+ 
+
+For the
+quarter ended August 31, 2018, we expect to report the following
+results:
+
+ 
+
+(in
+thousands, except for per share amounts)
+
+ 
+
+Balance Sheet Data
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+ 
+
+ 
+
+ Cash and cash
+equivalents
+
+ $57 
+
+ Total
+assets
+
+ $5,634 
+
+ Total
+liabilities
+
+ $10,593 
+
+ Net
+equity
+
+ $(4,959)
+
+ 
+
+ 
+
+Statement of
+Operations
+
+ 
+
+ 
+
+ Three
+month period 
+
+Revenue
+
+ $414 
+
+Net
+loss
+
+ $(3,954)
+
+Net loss per share
+ basic and diluted
+
+ $(0.91)
+
+ 
+
+Revenues represent
+quarterly profit share payments from our commercial partners.
+Operating expenses, consisting primarily of research and
+development and general and administrative expenses were
+significantly higher in the third quarter due to clinical studies
+related to Oxycodone ER as well as higher patent litigation
+expenses.
+
+ 
+
+The
+foregoing constitute forward-looking statements and should be read
+in light of the section of this prospectus entitled
+ Cautionary Note Regarding Forward-Looking
+Information. These preliminary results are unaudited and
+represent our estimates only, and our actual results could differ
+materially from those set forth above as a result of various
+factors, including those listed under Risk Factors in
+this prospectus. In addition, these factors include, without
+limitation, the risk that additional information may arise during
+our close process or as a result of subsequent events that would
+require us to make adjustments to the financial information, as
+well as the risk that adjustments to our financial statements may
+be identified through the course of our independent registered
+public accounting firm completing its review of our financial
+statements.
+
+ 
+
+Reverse Stock Split
+
+ 
+
+As more
+fully described below (under Nasdaq Notices and Nasdaq
+Hearings Panel Grant of Request for Continued
+Listing ), in
+order to qualify for continued listing on Nasdaq, we have to meet
+certain continued listing criteria, including a closing bid price
+of at least $1.00 for a minimum of 10 consecutive business days. In
+connection with the minimum bid price requirement, at a special
+meeting of shareholders held on August 15, 2018, our shareholders
+granted our Board of Directors discretionary authority to implement
+a reverse split of our outstanding Common Shares, on the basis of a
+ratio to be selected by the Board within a range between five
+pre-consolidation Common Shares for one post-consolidation Common
+Share and fifteen pre-consolidation Common Shares for one
+post-consolidation Common Share.
+
+ 
+
+On
+September 10, 2018, the Board of Directors fixed a reverse split
+ratio of ten pre-consolidation shares for one post-consolidation
+Common Share. On September 12, 2018, we filed articles of amendment
+with the Director under the CBCA to effectuate the reverse split,
+and our Common Shares began trading on each of Nasdaq and TSX on a
+post-reverse split basis under our existing trade symbol
+ IPCI at the open of market on September
+14, 2018.
+
+ 
+
+Nasdaq Notices and Nasdaq Hearings Panel Grant of Request for
+Continued Listing
+
+ 
+
+While
+we are currently not in compliance with the requirements for the
+continued listing of our Common Shares on Nasdaq, as described
+below, we currently have until October 17, 2018 to satisfy those
+requirements. This offering and the reverse split are important
+parts of our plan to regain compliance with Nasdaq s requirements for the continued
+listing of our Common Shares.
+
+ 
+
+In
+September 2017, we were notified by Nasdaq that we were not in
+compliance with the minimum market value of listed securities
+required for continued listing on Nasdaq. Nasdaq Listing Rule
+5550(b) requires listed securities to maintain a minimum market
+value of $35.0 million, among other alternatives, including minimum
+shareholders equity of
+$2.5 million. A failure to meet the minimum market value
+requirement exists if the deficiency continues for a period of 30
+consecutive business days. Based on the market value of our Common
+Shares for the 30 consecutive business days from August 8, 2017, we
+did not satisfy the minimum market value of listed securities
+requirement. By rule, we were provided 180 calendar days, or until
+March 19, 2018, to regain compliance with that requirement. To
+regain compliance, our Common Shares were required to have a market
+value of at least $35.0 million for a minimum of 10 consecutive
+business days prior to March 19, 2018, which we were unable to
+satisfy. In the alternative, if the minimum market value
+requirement for continued listing is not met, an issuer may
+maintain continued listing under Nasdaq Listing Rule 5550(b) if it
+has shareholders equity
+of at least $2.5 million.
+
+ 
+
+ 
+
+3
+
+ 
+
+ 
+
+On
+April 20, 2018, we received notice that the Nasdaq Listings
+Qualification staff (the Nasdaq Staff ) had determined to delist our
+Common Shares as a result of our failure to meet either the minimum
+market value of listed securities requirement or the minimum
+shareholders equity
+requirement for continued listing. However, any delisting action by
+the Nasdaq Staff was stayed pending the ultimate conclusion of the
+Company s hearing before
+a Nasdaq Hearings Panel (the Panel ).
+
+ 
+
+In
+addition to not meeting the minimum market value of listed
+securities or minimum shareholders equity requirements, we were
+separately notified in December 2017 that our Common Shares no
+longer satisfied the minimum $1.00 per share bid requirement under
+Nasdaq Listing Rule 5550(a)(2).
+
+ 
+
+We
+attended a hearing before the Panel on May 17, 2018, and
+subsequently received formal notice that the Panel had granted our
+request for continued listing provided that by September 28, 2018,
+we (i) comply with Nasdaq s $1.00 bid price requirement by
+having a closing bid price of over $1.00 for ten consecutive
+trading days, (ii) have a stockholders equity position of over $2.5
+million and (iii) provide the Panel with updated financial
+projections demonstrating our ability to maintain compliance with
+the stockholders equity
+rule for the coming year. Following receipt of shareholder approval
+for a reverse stock split (known as a share consolidation under
+Canadian law) at the Company s August 15, 2018 shareholders
+meeting, on September 12, 2018, the Company filed articles of
+amendment to effectuate a 1-for-10 reverse split, and the
+Company s Common Shares
+began trading on each of Nasdaq and the Toronto Stock Exchange on a
+post-reverse split basis on September 14, 2018. As a result of
+the closing bid price of the Company s common shares exceeding $1.00 for
+the period from September 14, 2018 to September 27, 2018, the
+Company regained compliance with Nasdaq s minimum bid price requirement. On
+September 29, 2018, the Company was advised that the Panel granted
+an extension through October 17, 2018 for the Company to regain
+compliance with Nasdaq s
+stockholders equity
+requirement. There is no assurance that the Company will be able to
+regain compliance with Nasdaq s stockholders equity requirements, or if it does,
+that the Company will be able to maintain compliance with
+Nasdaq s listing
+requirements.
+
+ 
+
+There
+is no assurance that we will be able to regain or maintain
+compliance with the Nasdaq listing requirements or, if we do regain
+compliance, that we will be able to maintain such compliance over
+the long term. If we are unable to do so, our Common Shares may be
+delisted from Nasdaq and the liquidity and market price of our
+Common Shares may be adversely impacted as a result. If our Common
+Shares are delisted from Nasdaq, they may trade in the
+over-the-counter system, which may be a less liquid market. In such
+case, our shareholders 
+ability to trade, or obtain quotations of the market value of, our
+Common Shares could be severely limited because of lower trading
+volumes and transaction delays. See Risk Factors--Our Common
+Shares will be delisted from the Nasdaq Capital Market if we do not
+satisfy certain requirements of the Nasdaq Hearing Panel by October
+17, 2018. 
+
+ 
+
+FDA Meeting
+
+ 
+
+In
+February 2018, we and the FDA discussed a previously-announced
+Complete Response Letter for Oxycodone ER, including issues related
+to the blue dye in the product candidate. Based on the meeting, the
+product candidate will no longer include the blue dye. The blue dye
+was intended to act as an additional deterrent if Oxycodone ER is
+abused and serve as an early warning mechanism to flag potential
+misuse or abuse. The FDA confirmed that the removal of the blue dye
+is unlikely to have any impact on formulation quality and
+performance. As a result, we will not be required to repeat in vivo
+bioequivalence studies and pharmacokinetic studies submitted in the
+Oxycodone ER NDA. The FDA also indicated that, from an abuse
+liability perspective, Category 1 studies will not have to be
+repeated on Oxycodone ER with the blue dye removed.
+
+ 
+
+In May
+2018, we announced that we had commenced our Category 2 and 3 human
+abuse liability studies for our Oxycodone ER product candidate to
+support its abuse-deterrent label claims for the intranasal route
+of administration. We also announced that planned studies to
+support abuse-deterrent label claims for the oral route of abuse
+were scheduled to commence.
+
+ 
+
+In
+October 2018, we completed the clinical portion of both the
+intranasal and oral abuse studies. Bioanalytical samples and
+statistical analysis for such studies are pending. Results from the
+studies will be included in our response to the FDA Complete
+Response Letter which is due no later than February 28,
+2019.
+
+ 
+
+There
+can be no assurance that our products will be successfully
+commercialized or produce significant revenues for us. Also, there
+can be no assurance that we will not be required to conduct further
+studies for our Oxycodone ER product candidate, that the FDA will
+approve any of our requested abuse-deterrence label claims or that
+the FDA will ultimately approve the NDA for the sale of our
+Oxycodone ER product in the U.S. market, or that it will ever be
+successfully commercialized, that we will be successful in
+submitting any additional ANDAs or NDAs with the FDA or ANDSs with
+Health Canada, that the FDA or Health Canada will approve any of
+our current or future product candidates for sale in the U.S.
+market and Canadian market, or that they will ever be successfully
+commercialized and produce significant revenue for us.
+
+ 
+
+ 
+
+4
+
+ 
+
+ 
+
+Our Corporate Information
+
+ 
+
+We were
+formed under the CBCA by certificate and articles of arrangement
+dated October 22, 2009. Our registered principal office is located
+at 30 Worcester Road, Toronto, Ontario, Canada M9W 5X2. Our
+telephone number is (416) 798-3001 and our facsimile number is
+(416) 798-3007. Our website address is
+http://www.intellipharmaceutics.com. Information on or accessed
+through our website is not incorporated into this prospectus and is
+not a part of this prospectus. Our Common Shares are listed for
+trading on the TSX and on Nasdaq under the symbol IPCI. 
+
+ 
+
+THE
+OFFERING
+
+ 
+
+Units offered by us in this offering:
+
+Up to
+8,695,652 Units, each consisting of one Common Share and one
+Warrant to purchase one Common Share
+
+ 
+
+Pre-Funded
+Units offered by us in this offering:
+
+ We are also
+offering to each purchaser whose purchase of Units in this offering
+would otherwise result in the purchaser, together with its
+affiliates and certain related parties, beneficially owning more
+than 4.99% of our outstanding Common Shares immediately following
+the consummation of this offering, the opportunity to purchase, if
+the purchaser so chooses, Pre-Funded Units (each Pre-Funded Unit
+consisting of one Pre-Funded Warrant to purchase one Common Share
+and one Warrant to purchase one Common Share) in lieu of Units that
+would otherwise result in the purchaser s beneficial
+ownership exceeding 4.99% of our outstanding Common Shares (or at
+the election of the purchaser, 9.99%). Each Pre-Funded Warrant
+contained in a Pre-Funded Unit will be exercisable for one Common
+Share. The purchase price of each Pre-Funded Unit will equal the
+price per Unit being sold to the public in this offering minus
+$0.01, and the exercise price of each Pre-Funded Warrant included
+in the Pre-Funded Unit will be $0.01 per Common Share. The
+Pre-Funded Warrants will be exercisable immediately and expire when
+exercised in full. This offering also relates to the Common Shares
+issuable upon exercise of any Pre-Funded Warrants contained in the
+Pre-Funded Units sold in this offering. For each Pre-Funded Unit we
+sell, the number of Units we are offering will be decreased on a
+one-for-one basis. Because we will issue a Warrant as part of each
+Unit or Pre-Funded Unit, the number of Warrants sold in this
+offering will not change as a result of a change in the mix of the
+Units and Pre-Funded Units sold.
+
+ 
+
+ 
+
+Warrants offered by us in this offering:
+
+ 
+
+Warrants
+to purchase an aggregate of up to 8,695,652 Common Shares. Each
+Unit and each Pre-Funded Unit includes a Warrant to purchase one
+Common Share. Each Warrant contained in a Unit or Pre-Funded Unit
+has an exercise price of $ per Common Share, will be immediately
+separable from the Common Shares or Pre-Funded Warrant, as the case
+may be, will be exercisable immediately and will expire.
+
+ 
+
+Offering
+price:
+
+$ per
+Unit
+
+$ per
+Pre-Funded Unit
+
+ 
+
+ 
+
+Option
+to purchase additional securities:
+
+ The underwriter has
+the option to purchase up to 1,304,347 additional Common Shares at
+a purchase price of
+$ per
+share and/or Warrants to purchase up to an aggregate of Common
+Shares at a purchase price of $0.01 per Warrant with an exercise
+price of
+$ per
+Common Share, less the underwriting discounts and commissions. The
+underwriter may exercise its option at any time and from time to
+time within 30 days from the date of this prospectus.
+
+ 
+
+Common
+Shares outstanding before this offering:
+
+ 4,353,678 Common
+Shares
+
+ 
+
+Common
+Shares to be outstanding after this offering:
+
+ 13,049,330 Common
+Shares (assuming no sale of any Pre-Funded Units), or 14,353,677
+Common Shares if the underwriter exercises its option to purchase
+additional Units in full (assuming no sale of any Pre-Funded
+Units).
+
+ 
+
+ 
+
+ 
+
+5
+
+ 
+
+ 
+
+Use of proceeds:
+
+ 
+
+We
+estimate that the net proceeds to us from this offering will be
+approximately $10.3 million ($11.9 million if the
+underwriter s option to purchase additional Units is
+exercised in full), based on an assumed public offering price per
+Unit of $1.38, the last reported sale price of our Common Shares on
+Nasdaq on October 8, 2018, and after deducting estimated
+underwriting discounts and commissions and estimated offering
+expenses payable by us. We currently intend to use the net proceeds
+from this offering for general corporate purposes, which may
+include working capital, capital expenditures, research and
+development, accounts payable, and other commercial expenditures.
+We expect from time to time to evaluate the acquisition of products
+and technologies for which a portion of the net proceeds may be
+used, although we currently are not planning or negotiating any
+such transactions. See Use of Proceeds beginning on
+page 48.
+
+ 
+
+Nasdaq and TSX symbol/listing:
+
+Our
+Common Shares are listed under the symbol IPCI. We do not intend to apply for
+listing of the Pre-Funded Warrants or the Warrants on any
+securities exchange or other nationally recognized trading system.
+There is no established public trading market for the Pre-Funded
+Warrants or the Warrants, and we do not expect a market to develop.
+See Recent
+Developments above for
+important information about the listing of our Common Shares on
+Nasdaq.
+
+ 
+
+Risk Factors:
+
+ 
+
+Investing
+in our securities involves substantial risks. You should carefully
+review and consider the Risk Factors section of this
+prospectus for a discussion of factors to consider before deciding
+to invest in our securities.
+
+ 
+
+The
+number of Common Shares shown above to be outstanding after this
+offering is based on 4,353,678 shares outstanding as of October 8,
+2018 and excludes, as of that date:
+
+ 
+
+ 
+
+an aggregate of
+558,484 Common Shares issuable upon the exercise of outstanding
+options, with a weighted average exercise price of U.S. $31.60 per
+Common Share;
+
+ 
+
+ 
+
+up to 153,277
+additional Common Shares that have been reserved for issuance in
+connection with future grants under our stock option
+plan;
+
+ 
+
+ 
+
+an aggregate of
+824,570 Common Shares issuable upon the exercise of outstanding
+Common Share purchase warrants, with a weighted average exercise
+price of U.S. $9.92 per Common Share;
+
+ 
+
+ 
+
+an aggregate of
+10,279 deferred share units granted to non-management directors (to
+defer receipt of all or a portion of their Board fees until
+termination of the Board service and to receive such fees in the
+form of Common Shares at that time);
+
+ 
+
+ 
+
+an aggregate of
+45,000 Common Shares issuable upon the conversion of an unsecured
+convertible debenture in the principal amount of U.S. $1.5 million
+(the 2013
+Debenture ), of which
+U.S. $1.35 million remains outstanding, held by Drs. Isa and Amina
+Odidi, who are directors, executive officers and principal
+shareholders of our Company;
+
+ 
+
+ 
+
+an aggregate of
+166,666 Common Shares issuable upon the conversion of an unsecured
+convertible debenture in the principal amount of $500,000 (the
+ 2018
+Debenture ), all of which
+remains outstanding, held by Drs. Isa and Amina Odidi, who are
+directors, executive officers and principal shareholders of our
+Company;
+
+ 
+
+ 
+
+Common Shares
+issuable upon exercise of the Pre-Funded Warrants offered hereby at
+an exercise price of $0.01 per share;
+
+ 
+
+ 
+
+8,695,652 Common
+Shares issuable upon exercise of the Warrants offered hereby at an
+exercise price of $ per share; and
+
+ 
+
+ 
+
+6
+
+ 
+
+ 
+
+ 
+
+521,739 Common
+Shares issuable upon exercise of the Underwriter s Warrants offered hereby at an
+exercise price of $ per share.
+
+ 
+
+Unless
+otherwise indicated, all information contained in this prospectus
+(i) assumes no exercises by the underwriter of its option to
+purchase additional securities, and no sale of any Pre-Funded
+Warrants; and (ii) reflects a 1-for-10 reverse split of our issued
+and outstanding Common Shares effected on September 12, 2018, and
+the corresponding adjustment of Common Share prices and related
+exercise prices and conversion prices.
+
+ 
+
+RISK
+FACTORS
+
+ 
+
+Our
+past experience may not be indicative of future performance, and as
+noted elsewhere in this prospectus and documents incorporated by
+reference into this prospectus, we have included forward-looking
+statements about our business, plans and prospects that are subject
+to change. In addition to the other risks or uncertainties
+contained in this prospectus and documents incorporated by
+reference into this prospectus, the following risks may affect our
+operating results, financial condition and cash flows. If any of
+these risks occurs, either alone or in combination with other
+factors, our business, financial condition or operating results
+could be adversely affected. Moreover, readers should note this is
+not an exhaustive list of the risks we face. Some risks are unknown
+or not quantifiable, and other risks that we currently perceive as
+immaterial may ultimately prove more significant than expected.
+Statements about plans, predictions or expectations should not be
+construed to be assurances of performance or promises to take a
+given course of action. Before making an investment decision, you
+should carefully consider these risks, including those set forth
+below and those described in the Risk Factors section
+of our Annual Report on Form 20-F, as filed with the SEC on March
+1, 2018, which is incorporated by reference into this prospectus,
+as well as any amendment or update to our risk factors reflected in
+subsequent filings with the SEC, and you should also carefully
+consider any other information we include or incorporate by
+reference in this prospectus.
+
+ 
+
+Any of
+the risks we describe below or in the information incorporated
+herein by reference in this prospectus could cause our business,
+financial condition or operating results to suffer. The market
+price of our Common Shares could decline if one or more of these
+risks and uncertainties develop into actual events. You could lose
+all or part of your investment.
+
+ 
+
+Risks Relating to our Company
+
+ 
+
+Our business is capital intensive and requires significant
+investment to conduct research and development, clinical and
+regulatory activities necessary to bring our products to market,
+which capital may not be available in amounts or on terms
+acceptable to us, if at all.
+
+ 
+
+Our
+business requires substantial capital investment in order to
+conduct the research and development ( R&D ), clinical and regulatory
+activities necessary and to defend against patent litigation claims
+in order to bring our products to market and to establish
+commercial manufacturing, marketing and sales capabilities. As of
+November 30, 2017, we had a cash balance of $1.9 million. As of May
+31, 2018, our cash balance was $1.4 million. While we expect to
+satisfy certain short term capital needs from cash on hand and
+profit transfer payments from our commercial partners, we need to
+obtain additional funding as we further the development of our
+product candidates. Potential sources of capital may include
+payments from licensing agreements, cost savings associated with
+managing operating expense levels, other equity and/or debt
+financings, and/or new strategic partnership agreements which fund
+some or all costs of product development. We intend to utilize the
+equity markets to bridge any funding shortfall and to provide
+capital to continue to advance our most promising product
+candidates. Our future operations are highly dependent upon our
+ability to source additional capital to support advancing our
+product pipeline through continued R&D activities and to fund
+any significant expansion of our operations. Our ultimate success
+will depend on whether our product candidates receive approval by
+the FDA or Health Canada and whether we are able to successfully
+market our approved products. We cannot be certain that we will
+receive FDA or Health Canada approval for any of our current or
+future product candidates, that we will reach the level of sales
+and revenues necessary to achieve and sustain profitability or that
+we can secure other capital sources on terms or in amounts
+sufficient to meet our needs, or at all. Our cash requirements for
+R&D during any period depend on the number and extent of the
+R&D activities we focus on. At present, we are working
+principally on our Oxycodone ER 505(b)(2), PODRAS technology, additional 505(b)(2)
+product candidates for development in various areas, and selected
+generic product candidate development projects. Our development of
+Oxycodone ER will require significant expenditures, including costs
+to defend against the Purdue litigation (as described in the
+ Legal
+Proceedings section).
+For our Regabatin XR
+505(b)(2) product candidate, Phase III clinical trials can be
+capital intensive, and will only be undertaken consistent with the
+availability of funds and a prudent cash management strategy. We
+anticipate some investment in fixed assets and equipment over the
+next several months, the extent of which will depend on cash
+availability.
+
+ 
+
+Effective September
+28, 2017, the maturity date for the 2013 Debenture was extended to
+October 1, 2018. Effective October 1, 2018, the maturity date for
+the 2013 Debenture was further extended to April 1, 2019. The
+Company currently expects to repay the current outstanding
+principal amount of $1,350,000 on or about April 1, 2019, if the
+Company then has cash available.
+
+ 
+
+ 
+
+7
+
+ 
+
+ 
+
+The
+availability of equity or debt financing will be affected by, among
+other things, the results of our R&D, our ability to obtain
+regulatory approvals, our success in commercializing approved
+products with our commercial partners and the market acceptance of
+our products, the state of the capital markets generally, strategic
+alliance agreements and other relevant commercial considerations.
+In addition, if we raise additional funds by issuing equity
+securities, our then-existing security holders will likely
+experience dilution, and the incurring of indebtedness would result
+in increased debt service obligations and could require us to agree
+to operating and financial covenants that would restrict our
+operations. In the event that we do not obtain sufficient
+additional capital, it will raise substantial doubt about our
+ability to continue as a going concern, realize our assets, and pay
+our liabilities as they become due. Our cash outflows are expected
+to consist primarily of internal and external R&D, legal and
+consulting expenditures to advance our product pipeline and
+selling, general and administrative expenses to support our
+commercialization efforts. Depending upon the results of our
+R&D programs, the impact of the Purdue litigation and the
+availability of financial resources, we could decide to accelerate,
+terminate, or reduce certain projects, or commence new ones. Any
+failure on our part to successfully commercialize approved products
+or raise additional funds on terms favorable to us, or at all, may
+require us to significantly change or curtail our current or
+planned operations in order to conserve cash until such time, if
+ever, that sufficient proceeds from operations are generated, and
+could result in us not taking advantage of business opportunities,
+in the termination or delay of clinical trials or us not taking any
+necessary actions required by the FDA or Health Canada for one or
+more of our product candidates, in curtailment of our product
+development programs designed to identify new product candidates,
+in the sale or assignment of rights to our technologies, products
+or product candidates, and/or our inability to file ANDAs, ANDSs or
+NDAs, at all or in time to competitively market our products or
+product candidates.
+
+ 
+
+We have a history of operating losses, which may continue in the
+foreseeable future.
+
+ 
+
+We have
+incurred net losses from inception through May 31, 2018 and had an
+accumulated deficit of $77,882,323 as of such date and have
+incurred additional losses since such date. As we engage in the
+development of products in our pipeline, we may continue to incur
+further losses. There can be no assurance that we will ever be able
+to achieve or sustain profitability or positive cash flow. In
+addition to the other factors described in this prospectus, our
+ultimate success will depend on how many of our product candidates
+receive approval by the FDA or Health Canada and whether we are
+able to successfully market approved products. We cannot be certain
+that we will be able to receive FDA or Health Canada approval for
+any of our current or future product candidates, or that we will
+reach the level of sales and revenues necessary to achieve and
+sustain profitability. If we are unsuccessful in commercializing
+our products and/or securing sufficient financing, we may need to
+cease or curtail our operations.
+
+ 
+
+Approvals for our product candidates may be delayed or become more
+difficult to obtain if the FDA changes its approval
+requirements.
+
+ 
+
+The FDA
+may institute changes to its ANDA approval requirements, which may
+make it more difficult or expensive for us to obtain approval for
+our new generic products. For instance, in July 2012, the Generic
+Drug User Fee Amendments of 2012, or GDUFA, were enacted into law.
+The GDUFA legislation implemented substantial fees for new ANDAs,
+Drug Master Files, product and establishment fees. In return, the
+program is intended to provide faster and more predictable ANDA
+reviews by the FDA and more timely inspections of drug facilities.
+For the FDA s fiscal year
+2018, the user fee rate is $171,823 for new ANDAs. For the
+FDA s fiscal year 2018,
+the FDA will also charge an annual facility user fee of $226,087
+plus a new general program fee of $159,079. Under GDUFA, generic
+product companies face significant penalties for failure to pay the
+new user fees, including rendering an ANDA not substantially complete until the fee is paid. It is
+currently uncertain the effect the new fees will have on our ANDA
+process and business. However, any failure by us or our suppliers
+to pay the fees or to comply with the other provisions of GDUFA may
+adversely impact or delay our ability to file ANDAs, obtain
+approvals for new generic products and generate revenues and thus
+may have a material adverse effect on our business, results of
+operations and financial condition.
+
+ 
+
+We operate in a highly litigious environment.
+
+ 
+
+From
+time to time, we may be exposed to claims and legal actions in the
+normal course of business. There has been substantial litigation in
+the pharmaceutical industry concerning the manufacture, use and
+sale of new products that are the subject of conflicting patent
+rights. When we file an ANDA or 505(b)(2) NDA for a bioequivalent
+version of a drug, we may, in some circumstances, be required to
+certify to the FDA that any patent which has been listed with the
+FDA as covering the branded product has expired, the date any such
+patent will expire, or that any such patent is invalid or will not
+be infringed by the manufacture, sale or use of the new drug for
+which the application is submitted. Approval of an ANDA is not
+effective until each listed patent expires, unless the applicant
+certifies that the patents at issue are not infringed or are
+invalid and so notifies the patent holder and the holder of the
+branded product. A patent holder may challenge a notice of
+non-infringement or invalidity by suing for patent infringement
+within 45 days of receiving notice. Such a challenge prevents FDA
+approval for a period which ends 30 months after the receipt of
+notice, or sooner if an appropriate court rules that the patent is
+invalid or not infringed. From time to time, in the ordinary course
+of business, we face and have faced such challenges and may
+continue to do so in the future.
+
+ 
+
+ 
+
+8
+
+ 
+
+ 
+
+As of
+the date of this prospectus, we are not aware of any pending or
+threatened material litigation claims against us, other than as
+described in this prospectus under the caption Legal Proceedings . Litigation to which we are, or may
+be, subject could relate to, among other things, our patent and
+other intellectual property rights or such rights of others,
+business or licensing arrangements with other persons, product
+liability or financing activities. Such litigation could include an
+injunction against the manufacture or sale of one or more of our
+products or potential products or a significant monetary judgment,
+including a possible punitive damages award, or a judgment that
+certain of our patent or other intellectual property rights are
+invalid or unenforceable or infringe the intellectual property
+rights of others. If such litigation is commenced, our business,
+results of operations, financial condition and cash flows could be
+materially adversely affected.
+
+ 
+
+We may be subject to intellectual property claims that could be
+costly and could disrupt our business.
+
+ 
+
+Third
+parties may claim we have infringed their patents,
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2018/CIK0001475430_joshua_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001475430_joshua_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..e70a3626a7f49d772b758d83c54da2a8acdd4a66
--- /dev/null
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@@ -0,0 +1 @@
+PROSPECTUS SUMMARY As used in this prospectus, references to the "Company", "we", "our", "us refer to Joshua Gold Resources Inc., a Nevada corporation, unless the context otherwise indicates. The following summary highlights selected information contained in this prospectus. Before making an investment decision, you should read the entire prospectus carefully, including the "Risk Factors" section, the financial statements, and the notes to the financial statements. OUR COMPANY Corporate Background and Business Overview Joshua Gold Resources Inc. was incorporated in the State of Nevada on July 10, 2009. The Company operates as a mineral exploration business headquartered in Woodstock, Ontario, Canada. Its principal business activity is the acquisition, exploration and development of mineral property interests in Canada. The Company is considered to be in the exploration stage and substantially all of the Company s efforts are devoted to financing and developing these property interests. The Company has the rights to six mineral properties: (i) the Kenty Property in Ontario Canada; (ii) the Janes Reef Property in Ontario, Canada; (iii) the Asquith Property in Ontario, Canada; (iv) the C1-Mortimer Property in Ontario, Canada; (v) the Rollo Property in Ontario, Canada; and (vi) the Carson Property in Nunavut (formerly The North West Territories), Canada. There has been no determination whether the Company s interests in unproven mineral properties contain mineral reserves, which are economically recoverable. Emerging Growth Company We are and we will remain an "emerging growth company" as defined under The Jumpstart Our Business Startups Act (the JOBS Act ), until the earliest to occur of (i) the last day of the fiscal year during which our total annual revenues equal or exceed $1 billion (subject to adjustment for inflation), (ii) the last day of the fiscal year following the fifth anniversary of our initial public offering, (iii) the date on which we have, during the previous three-year period, issued more than $1 billion in non-convertible debt securities, or (iv) the date on which we are deemed a "large accelerated filer" (with at least $700 million in public float) under the Exchange Act. As an "emerging growth company", we may take advantage of specified reduced disclosure and other requirements that are otherwise applicable generally to public companies. These provisions include: only two years of audited financial statements in addition to any required unaudited interim financial statements with correspondingly reduced Management s Discussion and Analysis disclosure; reduced disclosure about our executive compensation arrangements; no requirement that we hold non-binding advisory votes on executive compensation or golden parachute arrangements; and exemption from the auditor attestation requirement in the assessment of our internal control over financial reporting. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of large accelerated filer, accelerated filer, and smaller reporting company and emerging growth company in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company x (Do not check if a smaller reporting company) Emerging growth company x If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided to Section 7(a)(2)(B) of the Securities Act. CALCULATION OF REGISTRATION FEE Title of Each Class of Securities to be Registered Amount to Be Registered (1) Proposed Maximum Offering Price per Share Proposed Maximum Aggregate Offering Price Amount of Registration Fee Common Stock, par value $0.001 per share, to be registered as part of the Primary Offering (as hereinafter defined) 5,000,000 (2) $ 0.15 (2) $ 750,000 $ 93.37 Common Stock, par value $0.001 per share, to be registered as part of the Secondary Offering by Selling Stockholders (as hereinafter defined) 62,912,797 (3) $ 0.15 (3) $ 9,436,919.55 $ 1,174.90 TOTAL 67,912,797 $ 0.15 $ 10,186,919.55 $ 1,268.27 (1) In the event of a stock split, stock dividend or similar transaction involving our common stock, the number of shares registered shall automatically be increased to cover the additional shares of common stock issuable pursuant to Rule 416 under the Securities Act of 1933, as amended. (2) The registration fee for securities to be offered by the Registrant is based on an estimate of the proposed maximum aggregate offering price of the securities, and such estimate is solely for the purpose of calculating the registration fee pursuant to Rule 457(c). (3) This offering price has been arbitrarily valued and bears no relationship to any objective criterion of value. There is no current public market for the securities. Therefore the Registrant believes that it is impossible to estimate the filing fee in accordance with Rule 457(c) under the Securities Act of 1933. As such, for the purposes of calculating the registration fee under Rule 457(a), the Registrant has valued the common stock to be offered and sold by the sell Stockholders at the same price as the Primary Offering price. THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(A), MAY DETERMINE. The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the U.S. Securities and Exchange Commission (the "SEC") is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. We have taken advantage of some of these reduced burdens, and thus the information we provide stockholders may be different from what you might receive from other public companies in which you hold shares. In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. However, we are choosing to opt out of such extended transition period, and as a result, we will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. Section 107 of the JOBS Act provides that our decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable. Notwithstanding the above, we are also currently a smaller reporting company , meaning that we are not an investment company, an asset-backed issuer, or a majority-owned subsidiary of a parent company that is not a smaller reporting company and have a public float of less than $75 million and annual revenues of less than $50 million during the most recently completed fiscal year. In the event that we are still considered a smaller reporting company , at such time as we cease being an emerging growth company , the disclosure we will be required to provide in our SEC filings will increase, but will still be less than it would be if we were not considered either an emerging growth company or a smaller reporting company . Specifically, similar to emerging growth companies , smaller reporting companies are able to provide simplified executive compensation disclosures in their filings; are exempt from the provisions of Section 404(b) of the Sarbanes-Oxley Act ( SOX ) requiring that independent registered public accounting firms provide an attestation report on the effectiveness of internal control over financial reporting; and have certain other decreased disclosure obligations in their SEC filings, including, among other things, only being required to provide two years of audited financial statements in annual reports. Certain Information about this Offering Offering Price Per Share Commissions Proceeds to Company Before Expenses if 10% of the shares are sold Proceeds to Company Before Expenses if 50% of the shares are sold Proceeds to Company Before Expenses if 100% of the shares are sold Common Stock $ 0.15 Not Applicable $ 75,000 $ 375,000 $ 750,000 Totals $ 0.15 Not Applicable $ 75,000 $ 375,000 $ 750,000 In the resale by certain Selling Stockholders, the Selling stockholders will be offering our shares of common stock at a fixed price of $0.15 per share, for the duration of the offering, until our shares are listed on a national securities exchange or quoted on the OTC Bulletin Board, OTCQX or OTCQB and thereafter at prevailing market prices or privately negotiated prices. Each of the Selling Stockholders may be deemed to be an "underwriter" as such term is defined in the Securities Act of 1933, as amended (the "Securities Act"). The net proceeds to be received by the Selling Stockholders is $9,436,919.55 assuming that the selling shareholders sell all 62,912,797 shares they are collectively offering. Benedetto Fuschino serves as our President and Director. Dino Micacchi serves as our Chief Financial Officer and Director. For the year ended December 31, 2017, we incurred a net loss of $1,289,639 and an accumulated deficit of $11,568,937. As of December 31, 2017 we had total assets of $63,731 and total liabilities of $833,003. We have sold and issued an aggregate of 121,502,276 shares of our common stock since our inception through the date of this Prospectus. Due to the uncertainty of our ability to meet our current operating and capital expenses, our independent auditors have included a going concern opinion in their report on our audited financial statements as of December 31, 2017. The notes to our financial statements contain additional disclosure describing the circumstances leading to the issuance of a going concern opinion by our auditors. PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION 5,000,000 SHARES OF COMMON STOCK OFFERED BYJOSHUA GOLD RESOURCES INC. 62,912,797 SHARES OF COMMON STOCK OFFERED BY SELLING STOCKHOLDERS This prospectus relates to both (i) the initial public offering of the common stock of Joshua Gold Resources Inc, a Nevada corporation ( Joshua Gold, the Company, we, us, our and words of similar import), in which we are offering a maximum of 5,000,000 of our common stock, and (ii) the resale by certain Selling Stockholders of Joshua Gold of up to 62,912,797 shares of common stock held by Selling Stockholders of Joshua Gold. While we will receive proceeds from our own sale of our common stock, we will not receive any of the proceeds from the sale of the shares by the Selling Stockholders. Any purchaser of common stock in the offerings may be the only purchaser, given the lack of a minimum offering amount. In our initial public offering, we are offering for sale a total of 5,000,000 shares of common stock at a fixed price of $0.15 per share for the duration of the offering. There is no minimum number of shares that must be sold by us for the offering to proceed, and we will retain the proceeds from the sale of any of the offered shares. The offering is being conducted on a self-underwritten, best efforts basis, which means our management will attempt to sell the shares. This prospectus will permit our President, Benedetto Fuschino to sell the shares directly to the public, with no commission or other remuneration payable to him for any shares he may sell. Mr. Fuschino will sell the shares and intends to offer them to friends, family members and business acquaintances. Mr. Fuschino will not sell any of his shares until the Company sells all of the 5,000,000 shares in its offering. In offering the securities on our behalf, Mr. Fuschino will rely on the safe harbor from broker-dealer registration set out in Rule 3a4-1 under the Securities Exchange Act of 1934, as amended (the Exchange Act ). The shares will be offered at a fixed price of $0.15 per share for the duration of the offering, which is a period of 16 months from the effective date of this prospectus. We have not made any arrangements to place funds received from share subscriptions in an escrow, trust or similar account. Any funds raised from the offering will be immediately available to us for our immediate use. Accordingly, if we file for bankruptcy protection or a petition for involuntary bankruptcy is filed by creditors against us, your funds will become part of the bankruptcy estate and administered according to the bankruptcy laws. If a creditor sues us and obtains a judgment against us, the creditor could garnish the bank account and take possession of the subscriptions. As such, it is possible that a creditor could attach your subscription. If that happens, you will lose your investment and your funds will be used to pay creditors. As there is no existing market for our common stock, the Selling Stockholders will sell their shares of common stock at the fixed price of $0.15 per share until our shares are listed on a national securities exchange or quoted on the OTC Bulletin Board, OTCQX or OTCQB, at which time they may sell the shares at the prevailing market prices or at privately negotiated prices. If the Selling Stockholders were to sell all 62,912,797 Secondary Offering shares at the fixed price of $0.15 per share, the Selling Stockholders would realize gross proceeds of $9,436,919.55. Because it is impossible to estimate the total amount of any sales commissions or other costs associated with such sales, it is impossible to estimate the net proceeds to be received by the Selling Stockholders in such a case. Thereafter, the Selling Stockholders may offer their shares at prevailing market prices or at privately negotiated prices. Because such prices are currently unknown, it is impossible to determine the Selling Stockholders' net proceeds of all of their shares of common stock are sold. Each of the Selling Stockholders may be deemed to be an "underwriter" as such term is defined in the Securities Act of 1933, as amended (the "Securities Act"). Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. We are an emerging growth company under federal securities laws and will be subject to reduced public company reporting requirements. Investing in our common stock involves a high degree of risk. Before buying any shares, you should carefully read the discussion of material risks of investing in our common stock in "Risk Factors" beginning on page 7 of this prospectus. We may amend or supplement this prospectus from time to time by filing amendments or supplements as required and will provide investors with all such subsequent material information. You should read the entire Prospectus and any amendments or supplements we provide carefully. THE OFFERING The Offering Securities offered: We are offering up to 5,000,000 shares of our common stock (the Primary Offering ). The Selling Stockholders are hereby offering up to 62,912,797 shares of our common stock (the Secondary Offering ). Offering price: We will offer our shares of common stock at a price of $0.15 per share. The Selling Stockholders will offer and sell their shares of common stock at a fixed price of $0.15 per share for the duration of the offering until our shares are listed on a national securities exchange or quoted on the OTC Bulletin Board, OTCQX or OTCQB. Shares outstanding prior to offering: 121,502,276* * Unless indicated otherwise, all outstanding share figures in this prospectus and the registration statement of which it is a part include 133,333 shares that were inadvertently over-issued and which the Company will take steps to have removed on its books and records. Shares outstanding after offering: 126,502,276 assuming the sale of all 5,000,000 shares being offered in the Primary Offering. Market for the common shares: Our common stock is not quoted on any public market. There is no assurance that a significant trading market will develop, or, if developed, that it will be sustained. Consequently, a purchaser of our common stock may find it difficult to resell the securities offered herein should the purchaser desire to do so when eligible for public resale. Use of proceeds: We intend to use the net proceeds from the sale of our 5,000,000 shares (after deducting estimated offering expenses payable by us) for exploration development, professional fees, employee salaries, administration expenses, and marketing and advertising. See "Use of Proceeds" on page 13 for more information on the use of proceeds. We will not receive any proceeds from the sale of shares of common stock by the Selling Stockholders who are simultaneously offering 62,912,797 shares of common stock under this prospectus. SUMMARY FINANCIAL INFORMATION The tables and information below are derived from our audited financial statements for the year ended December 31, 2017, and our unaudited financial statements for the quarterly period ended March 31, 2018. Our accumulated deficit as at December 31, 2017, and March 31, 2018, was $11,568,937, and $11,607,203, respectively. Financial Summary December 31, 2017 Cash and Deposits $ 4,105 Total Assets $ 63,731 Total Liabilities $ 833,003 Total Stockholders Equity (Deficit) $ ( 769,272) Financial Summary March 31, 2018 Cash and Deposits $ 7,228 Total Assets $ 52,864 Total Liabilities $ 838,230 Total Stockholders Equity (Deficit) $ ( 785,366) The date of this prospectus is ____________, 2018 The following table of contents has been designed to help you find information contained in this prospectus. We encourage you to read the entire prospectus. TABLE OF CONTENTS Page Prospectus Summary 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2018/CIK0001477425_sendgrid_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001477425_sendgrid_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..ff671cd6f39d34b04626e343cbb48120b24eae82
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/CIK0001477425_sendgrid_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights information contained in greater detail elsewhere in this prospectus and in the documents incorporated by reference. This summary is not complete and does not contain all of the information you should consider in making your investment decision. You should read the entire prospectus and the documents incorporated by reference carefully before making an investment in our common stock. You should carefully consider, among other things, our consolidated financial statements and related notes incorporated by reference in this prospectus from our Annual Report on Form 10-K for the year ended December 31, 2017, or our 2017 Annual Report, and the sections titled "Risk Factors" included in this prospectus and incorporated by reference from our 2017 Annual Report and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in our 2017 Annual Report and incorporated by reference in this prospectus. Unless the content otherwise requires, the terms "SendGrid," "company," "our," "us," and "we" in this prospectus refer to SendGrid, Inc. and where appropriate our consolidated subsidiaries. SENDGRID, INC. Overview We are a leading digital communication platform, enabling businesses to engage with their customers via email reliably, effectively and at scale. Our cloud-based platform allows for frictionless adoption and immediate value creation for businesses, providing their developers and marketers with the tools to seamlessly and effectively reach their customers using email. Since our inception we have processed more than one trillion emails. Increasingly, today's transactions are digital. They happen online and are often automatic and recurring. Consumers want a seamless experience and have come to expect that their online activity will be recorded in their email inbox. Email serves as the system of record for a consumer's digital life, delivering purchase receipts, shipping notifications, account information, social media updates, reservations and website login data. Email is the primary communication channel in the digital world, with an estimated 125 billion commercial emails sent every day, according to a 2017 Radicati Group report. Email is also a trusted marketing tool for businesses. An email-based promotion can reach the right user at the right time, with a high degree of certainty that the user will see it. According to The Inbox Report 2017, in 2016 nearly 80% of Americans checked their email daily. According to a 2015 Direct Marketing Association report, email demonstrated the highest return on investment among all forms of digital communication, generating $38 in revenue for every $1 invested. While email offers a compelling value proposition for businesses, effective email delivery at scale is complex and difficult. Inbox service providers, including Google Gmail, Microsoft Outlook and Yahoo! Mail, evaluate incoming email and block the delivery of harmful or unwanted email. However, these filters can also prevent the delivery of wanted email. According to a 2017 Return Path report, only 80% of wanted email reached its intended recipient. To manage email delivery on their own, businesses must understand the complexities associated with both sending millions or billions of transactional and marketing emails and the unique dynamics of numerous inbox service providers. Dedicated servers and databases, domain expertise, continuous monitoring of email protocols, and a team of people are all necessary to maintain a robust internally-developed email communications system. The use of developer resources in this effort can reduce businesses' investment in product innovation and other priorities. Without an effective, easy to use system, marketers seeking to reach customers via email can also expend significant time and resources without accomplishing their marketing goals. SendGrid was founded by developers who were frustrated with their own experiences in managing email delivery. They wanted to build a system "that just worked" for developers and allowed them to focus on strategic business activities. They developed a robust technology platform incorporating their domain expertise and created an application programming interface, or API, that allowed for easy integration by businesses. We built our business model around serving the developer, including self-service adoption and FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Table of Contents a frictionless user experience. We have extended this platform over time to serve the similar email delivery needs of marketers. We offer our customers three services: our Email API; Marketing Campaigns; and Expert Services. Our Email API service allows developers to use our API in their preferred development framework to leverage our platform to add email functionality to their applications within minutes. This service enables businesses to send thousands or billions of emails, all with the same high level of service and reliability, and incorporates proprietary technology and domain expertise to significantly improve deliverability rates. Our Marketing Campaigns service allows marketers to upload and manage customer contact lists, create and test email templates, and then execute and analyze multi-faceted email campaigns that engage customers and drive growth. Our Expert Services help businesses further optimize their email delivery. With our platform, businesses can achieve industry leading email deliverability that translates into higher brand engagement with their customers. Our category leadership, self-service model and company culture have enabled us to attract and retain customers and employees, and continue to develop innovative solutions for email delivery. We deliver our services through a self-service cloud-based subscription model, where businesses primarily sign up for our services through our website. We offer transparent and affordable pricing, generally on a per month basis by volume of email and typically paid by credit card. In addition, we have robust documentation for onboarding and ongoing usage. This self-service delivery model has enabled us to rapidly attract customers while operating our business efficiently. Businesses of all sizes and across industries depend on our digital communication platform. As of December 31, 2017, we had over 63,000 customers globally, an increase of 39% year over year. We believe a relatively small number of businesses have more than one unique paying account with us, and we count each of these accounts as a separate customer. While we serve large enterprises, we primarily serve small and midmarket businesses, or SMBs, that rely on email to power their businesses and are rapidly adopting cloud services. Our self-service model has allowed us to efficiently acquire SMB customers that historically have not been a focus for companies that depend on large enterprise sales forces. Our robust platform and the increasing breadth of our services allow us to scale with our customers as they grow. Industry Trends Email Is the Primary Commercial Communications Channel in the Digital World Businesses increasingly interact with their customers through digital channels. Many emerging businesses are digital first. They primarily engage with customers through online and mobile channels. Customers of these businesses rarely interact with sales people, collect paper receipts, track orders over the phone or mail in their bills. These customers depend on automatic email notification of their transactions and rely on email as their system of record for their transactions. Businesses engage with their customers through email because they can reach a wide audience and personalize interactions, while trusting emails will reach their target recipients. Businesses now analyze demographic information, buying behavior and preferences generated by the digital footprints of consumers in order to create unique digital experiences. These dynamics have created the opportunity for more frequent customer engagement through more personalized, targeted marketing. Email Is Highly Effective at Driving Customer Engagement and Revenue Email accounts are widespread and each is personal to its owner and consistent across time, making email a highly effective method of communication between businesses and consumers. Individuals with email accounts check their email throughout the day, every day. The use of smartphones for always-on access has only increased this effectiveness. SendGrid, Inc. (Exact name of registrant as specified in its charter) Table of Contents Effective Email Delivery Is Difficult While email offers a compelling value proposition, businesses struggle to achieve effective email delivery due to a number of factors. The Email Recipient's Side Inbox service providers, including Google Gmail, Microsoft Outlook and Yahoo! Mail, use sophisticated filters to analyze incoming email and prevent the delivery of harmful or unwanted email, often blocking wanted email as well. The cost of delivery failure includes not only the infrastructure expense associated with processing the email, but more importantly, the lost revenue for a business from a new or existing customer. The Email Sender's Side Maintaining an email delivery system is complex. Domain expertise, dedicated resources and the need to satisfy complex technical requirements are all required to operate an effective email delivery system, particularly at scale. To deliver email at scale, businesses need expertise and dedicated resources. The complexities of email delivery include building and maintaining a sender reputation and navigating that reputation across inbox service providers, spam houses, blacklist managers and industry watchdogs. Email delivery at scale also requires dedicated infrastructure and management of contact lists as well as an understanding of protocols to communicate with the recipient servers. Businesses Are Adopting Cloud Services to Reduce Complexity and Focus on Core Functions Technological innovation has enabled businesses to improve efficiency, but it has also lowered barriers to entry. Businesses of all sizes must adapt quickly to changing market needs in order to grow and compete. As a result, businesses are turning to cloud services to manage complex and costly parts of their IT infrastructure and operations. Cloud services can seamlessly provide many of the critical, but non-core, components for a business, allowing it to maximize the value of internal resources by focusing on its core differentiating competencies. Frictionless, Self-Service Models Are Driving High Adoption of Cloud Services The ease of cloud service delivery is driving a move from multi-million-dollar capital purchases of on-premises IT infrastructure to recurring lower-cost subscriptions for cloud services. This change has increased the influence of line of business owners, developers and marketers in technology purchasing decisions compared to a traditional CIO-led purchasing process. With cloud services, developers and marketers exert greater control over how they allocate their resources. Businesses Need to Effectively and Efficiently Send Wanted Email at Scale Email is critical to building and growing customer relationships but requires significant resources and expertise to manage the complex underlying infrastructure. The developers and marketers who are driving purchasing decisions of cloud services need a transactional and marketing email solution that possesses the following characteristics: Reliability: continuous uptime to send secure emails at any time Effectiveness: high delivery rates and high consumer engagement Scalability: ability to send billions of emails across a range of customer use cases, with the same level of effectiveness Table of Contents Ease of Adoption and Integration: self-service onboarding and integration Affordability: lower, predictable cost versus an internal system and accessible to businesses of all sizes Platform Extensibility: integrated transactional and marketing email capabilities Services and Support: expert help to obtain desired outcomes and enhance email marketing capabilities Our Market Opportunity We estimate our total addressable market for both transactional and marketing emails was $11 billion in 2017. See the sections titled "Market and Industry Data" and "Our Market Opportunity". Benefits of Our Solution Key benefits of our solution include: Platform Reliability Businesses rely on our platform to power their customer email communications. We utilize a robust global infrastructure that includes multiple co-located data centers and public cloud resources to host our platform. In 2017, our platform was available for our customers to send email 99.995% of the time. Proprietary Technology and Domain Expertise Enables Effective Email Delivery We significantly improve email deliverability through embedded intellectual property in our platform and industry-leading domain expertise. Our platform is designed to operate at scale across multiple inbox service providers. In 2017, we estimate that we achieved a delivery rate of 94%, as compared to a general delivery rate for wanted email of 80% for the 12-month period ended June 30, 2017, as reported by Return Path in 2017. Our delivery rates for 2015 and 2016 were consistent with our delivery rate for 2017. We also offer Expert Services to help our customers achieve the best outcomes for their individual needs. Ability to Scale With Customers As They Grow Our communication platform provides the same high-quality service to a wide range of businesses, from startups to large enterprises that send significant email volumes. Our Email API service starts with entry-level pricing that supports up to 40,000 emails per month and scales up from there. Our largest customers send more than one billion emails per month. Frictionless Adoption for Developers and Marketers We make it easy for developers and marketers to adopt our platform using a self-service model. We provide a flexible API setup to easily add email functionality to their applications, as well as comprehensive documentation to help developers write code in their preferred development framework. We have a community of over 2.9 million active users that serves as a resource for questions about our platform. Once a business is using our API for transactional email delivery, it is simple for that business to also use our platform for promotional and personalized email marketing. Affordable and Accessible to Businesses of All Sizes We offer our Email API service as a monthly subscription, with pricing based on email volume. Businesses can tailor the use of our services for their individual needs, without the need to commit to expensive, multi-year contracts. Our cloud-based services generally provide significant cost savings compared to an internally-developed system and free up internal resources for other tasks. 1801 California Street, Suite 500 Denver, CO 80202 (888) 985-7363 (Address, including zip code, and telephone number, including area code, of Registrant's principal executive offices) Table of Contents Extensible Communications Platform Our platform incorporates extensible technology that allows our customers to expand their use cases to improve their customer communications. Our customers benefit from having a single platform for transactional and marketing email, enabling them to manage their customer contact data in a single place, leverage universal design templates and testing systems, and ensure high email deliverability. Competitive Strengths Our competitive strengths include: Easy to Adopt, Self-Service Model Our Email API and Marketing Campaigns services are designed to be accessed from our website and immediately useable. By reducing the friction that typically accompanies the purchase of business software and eliminating the need for complicated and costly implementation and training, we believe we attract more customers to try, buy and derive value from our platform. Our self-service model has allowed us to grow our customer base while avoiding the expensive customer acquisition costs typical of high-touch enterprise sales models. Market Leadership in Email Service with Strong Brand Association We pioneered the market for a cloud-based email API service and continue to invest significant resources to extend our technology leadership and brand awareness in our industry. We believe that the SendGrid brand has become synonymous with email delivery and is recognized as the industry standard for scalability, reliability and deliverability. Significant Domain Expertise Around Email We have processed over one trillion emails since inception, including over 450 billion emails in 2017. We have longstanding relationships and integrations with all major inbox service providers and email industry organizations. These relationships provide us with real-time intelligence and performance feedback that enable us to optimize the deliverability of the emails that we send and anticipate changes in email handling policies. Large, Growing and Happy Global Customer Base As of December 31, 2017, we had over 63,000 customers globally. Our broad customer base provides us with insight into digital communication trends and activity and results in word-of-mouth recognition that drives traffic to our website. Our Growth Strategies Key components of our growth strategy include: Continue to Add Customers to Our Platform We believe there is substantial opportunity to expand our customer base both in the United States and internationally as the ubiquity of email and the digital transformation of businesses continue to drive market adoption of our services. Expand Platform Features and Functionality and Grow Our Marketing Campaigns Service We intend to grow our Marketing Campaigns service by cross-selling into our existing Email API service customer base, acquiring new customers and adding new capabilities and features. Furthermore, Sameer Dholakia Chief Executive Officer 1801 California Street, Suite 500 Denver, CO 80202 (888) 985-7363 (Name, address, including zip code and telephone number, including area code, of agent for service) Copies to: Michael L. Platt Eric C. Jensen Matthew P. Dubofsky Cooley LLP 380 Interlocken Crescent, Suite 900 Broomfield, CO 80021 (720) 566-4000 Michael Tognetti General Counsel SendGrid, Inc. 1801 California Street, Suite 500 Denver, CO 80202 (888) 985-7363 Sarah K. Solum Davis Polk & Wardwell LLP 1600 El Camino Real Menlo Park, CA 94025 (650) 752-2000 Table of Contents while we do not currently provide services in other emerging communications channels, such as messaging/chat platforms, in-app messages, online ads, browser and push notifications, and SMS, we believe that the proliferation of these channels creates further potential growth opportunities over time for us to help our customers optimize their communications across those channels. Expand our Strategic Partner Channel We have built and plan to continue investing in channel relationships with our strategic partners in order to complement the reach of our own customer acquisition efforts. Continue to Grow Internationally We generated more than 36% of our revenue in each of the last three years from customers located in international geographies despite having limited international infrastructure and no product localization. We intend to add more physical infrastructure as well as localized platform content and support that will enhance our attractiveness to international customers. Pursue Select Acquisitions to Augment Our Features and Functionality We intend to continue pursuing acquisitions that we believe will be complementary. For example, we may pursue acquisitions that we believe will enhance our services, accelerate customer acquisition, introduce different distribution channels and add talent and expertise to our organization. Selected Risks Affecting Our Business Investing in our common stock involves risk. You should carefully consider all of the information in this prospectus and in the documents incorporated by reference prior to investing in our common stock. These risks are discussed more fully in the section titled "Risk Factors" beginning on page 13 immediately following this prospectus summary and in our 2017 Annual Report, which is incorporated by reference in this prospectus. These risks and uncertainties include, but are not limited to, the following: Our recent growth may not be indicative of our future growth and, if we continue to grow, we may not be able to manage our growth effectively. If we are unable to sustain our revenue growth rate, we may not achieve or maintain profitability in the future. If we are unable to attract new customers, retain existing customers or increase sales both to new and existing customers, our business and results of operations will be affected adversely. Our limited operating history in new and developing markets and our rapid growth make it difficult to evaluate our current business and future prospects. If we are unable to increase adoption of our platform through our self-service model, our business, results of operations and financial condition may be adversely affected. Our growth depends in part on the success of our strategic relationships with third parties to sell our services. Our future success depends in part on our ability to continue to drive adoption of our platform and services by international customers, and our international operations and sales to customers with international operations expose us to risks inherent in international sales. If we are not able to maintain and enhance our brand and maintain and increase market awareness of our company and services, then our business, results of operations and financial condition may be adversely affected. Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement. Table of Contents The market in which we participate is highly competitive and, if we do not compete effectively, our operating results could be harmed. If our security measures are breached or unauthorized access to our or our customers' private or proprietary data is otherwise obtained, our platform or services may be perceived as not being secure, our reputation may be severely harmed, customers may reduce the use of or stop using our platform or services, we may incur significant liabilities and we may lose the ability to offer our customers a credit card payment option. Our customers' and other users' violation of our policies or other misuse of our platform to transmit offensive or illegal messages, spam, website links to harmful applications or for other fraudulent activity could damage our reputation, and we may face liability for unauthorized, inaccurate or fraudulent information distributed via our platform. We have experienced losses in the past, and we may not achieve or sustain profitability in the future. Our quarterly results may fluctuate significantly, and if we fail to meet the expectations of analysts or investors, our stock price could decline substantially. SendGrid.org SendGrid.org is a division of SendGrid and not a separate legal entity. Its mission is to support nonprofit organizations. To that end, we have reserved 466,571 shares of our common stock to fund and support operations of SendGrid.org, which represented 1% of our outstanding capital stock on the date it was approved by our board of directors. In this offering, we are selling 46,657 shares of our common stock to fund and support the operations of SendGrid.org, and the number of reserved shares will be reduced accordingly. Corporate Information We were incorporated in Delaware in July 2009. Our principal executive offices are located at 1801 California Street, Suite 500, Denver, CO 80202, and our telephone number is (888) 985-7363. Our website address is http://sendgrid.com. The information contained on our website is not incorporated by reference into this prospectus, and you should not consider any information contained on, or that can be accessed through, our website as part of this prospectus. "SendGrid," the SendGrid logo and other trademarks or service marks of SendGrid appearing in this prospectus are our property. This prospectus contains additional trade names, trademarks, and service marks of other companies, which are the property of their respective owners. We do not intend our use or display of other companies' trade names, trademarks, or service marks to imply a relationship with, or endorsement or sponsorship of us by, these other companies. Our Initial Public Offering In November 2017, we completed an initial public offering, or IPO, in which we sold 9,430,000 shares of our common stock at public offering price of $16.00 per share. We received net proceeds of $136.3 million after deducting underwriting discounts and offering expenses. Our common stock began trading on the New York Stock Exchange on November 15, 2017. In connection with the closing of our IPO, (1) all shares of our convertible preferred stock were converted into common stock at a ratio of one to one and (2) a warrant to purchase shares of our convertible preferred stock was converted into a warrant to purchase shares of our common stock. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box: If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act. Large accelerated filer Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company Emerging growth company If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. Table of Contents Implications of Being an Emerging Growth Company The Jumpstart Our Business Startups Act, or the JOBS Act, was enacted in April 2012 with the intention of encouraging capital formation in the United States and reducing the regulatory burden on newly public companies that qualify as "Emerging Growth Companies." We are an emerging growth company within the meaning of the JOBS Act. As an emerging growth company, we may take advantage of certain exemptions from various public reporting requirements, including the requirement that our internal control over financial reporting be audited by our independent registered public accounting firm pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, certain requirements related to the disclosure of executive compensation in this prospectus and in our periodic reports and proxy statements, and the requirement that we hold a nonbinding advisory vote on executive compensation and any golden parachute payments. We may take advantage of these exemptions until we are no longer an emerging growth company. Section 107 of the JOBS Act provides that an "emerging growth company" can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended, or the Securities Act, for complying with new or revised accounting standards. In other words, an "emerging growth company" can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the extended transition period to comply with new or revised accounting standards and to adopt certain of the reduced disclosure requirements available to emerging growth companies. As a result of the accounting standards election, we are not subject to the same implementation timing for new or revised accounting standards as other public companies that are not emerging growth companies, which may make comparison of our financials to those of other public companies more difficult. Additionally, because we have taken advantage of certain reduced reporting requirements, the information contained herein may be different from the information you receive from other public companies in which you hold stock. We will remain an emerging growth company until the earliest to occur of (i) the last day of the fiscal year in which we have more than $1.07 billion in annual revenue; (ii) the date we qualify as a "large accelerated filer," with at least $700 million of equity securities held by non-affiliates; (iii) the date on which we have issued, in any three-year period, more than $1.0 billion in non-convertible debt securities; and (iv) the last day of the fiscal year ending after the fifth anniversary of the completion of our initial public offering. CALCULATION OF REGISTRATION FEE Title of Each Class of Securities to be Registered Amount to be Registered(1) Proposed Maximum Offering Price Per Share(2) Proposed Maximum Aggregate Offering Price(2)(3) Amount of Registration Fee Common Stock, $0.001 par value per share 7,188,650 $28.00 $201,282,200 $25,060 (1)Includes shares the underwriters have the option to purchase from certain of the selling stockholders. (2)Estimated solely for purposes of computing the amount of the registration fee pursuant to Rule 457(c) under the Securities Act, as amended, on the basis of the average high and low sales price of the Registrant's common stock as reported by The New York Stock Exchange on March 29, 2018. (3)Includes the aggregate offering price of additional shares that the underwriters have the option to purchase from certain of the selling stockholders. Table of Contents THE OFFERING Common stock offered by us 600,000 shares Common stock offered by the selling stockholders 5,651,000 shares Underwriters' over-allotment option to purchase additional shares offered by certain of the selling stockholders Certain of the selling stockholders have granted the underwriters an option to purchase up to an additional 937,650 shares to cover over-allotments. Common stock to be outstanding after this offering 43,365,378 shares Use of proceeds We estimate that the net proceeds from the sale of shares of our common stock that we are selling in this offering will be approximately $15.2 million, based on an assumed public offering price of $28.14 per share, the last reported sale price of our common stock on the New York Stock Exchange on March 29, 2018, and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. In addition, selling stockholders are selling 5,651,000 shares of common stock, assuming the underwriters do not exercise their over-allotment option to purchase the additional shares. We will not receive any of the proceeds from the sale of shares to be offered by the selling stockholders. The principal purposes of this offering are to increase our capitalization and financial flexibility, facilitate an orderly distribution of shares for the selling stockholders and increase our public float. We intend to use the net proceeds we receive from this offering for working capital and other general corporate purposes. We may also use a portion of the net proceeds to make acquisitions or strategic investments, although we do not have any agreements or commitments for such acquisitions or investments. We will also reserve the net proceeds from the sale of 46,657 shares to fund and support the operations of SendGrid.org. See the section titled "Use of Proceeds" for additional information. Concentration of Ownership Our officers, directors and their affiliated funds and each of our stockholders who own greater than 5% of our outstanding common stock and their affiliates, in the aggregate, will beneficially own an aggregate of approximately 52.64% of our outstanding common stock following this offering, assuming no exercise of the underwriters' option to purchase additional shares. As a result, if some of these persons or entities act together, they will have significant influence over the outcome of matters submitted to our stockholders for approval. New York Stock Exchange symbol "SEND" The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment that specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. Table of Contents The number of shares of our common stock that will be outstanding after this offering is based on 42,175,647 shares of our common stock outstanding as of December 31, 2017, and excludes: 12,217,721 shares of our common stock issuable upon the exercise of stock options outstanding as of December 31, 2017 under our equity incentive plans, with a weighted average exercise price of $4.79 per share, of which 589,731 shares will be issued upon the exercise of options by some of the selling stockholders and will be sold in this offering and are included in shares of our common stock to be outstanding after this offering; 5,000 shares of our common stock issuable upon the exercise of a non-plan option grant outstanding as of December 31, 2017, with an exercise price of $2.18 per share; 466,571 shares of our common stock reserved for issuance to fund and support the operations of SendGrid.org, of which none were issued and outstanding as of December 31, 2017, and of which 46,657 shares are being sold by us in this offering and are included in shares of our common stock to be outstanding after this offering; 656,854 shares of our common stock issuable upon the vesting and settlement of Restricted Stock Units, or RSUs, outstanding as of December 31, 2017; 3,503,521 shares of our common stock reserved and available for future issuance under our 2017 Equity Incentive Plan, or 2017 Plan, as of December 31, 2017, as well as: any shares of our common stock issuable upon the exercise or settlement of outstanding stock awards under our 2012 Equity Incentive Plan, or 2012 Plan, and our 2009 Equity Incentive Plan, or 2009 Plan, that will be added to our 2017 Plan available reserve upon expiration or termination of such awards, plus any automatic increases in the number of shares of our common stock reserved for future issuance under our 2017 Plan, including the additional 2,108,782 shares of our common stock that were automatically added to our 2017 Plan share reserve on January 1, 2018; and 791,833 shares of our common stock reserved for issuance under our 2017 Employee Stock Purchase Plan, or 2017 ESPP, as of December 31, 2017, as well as any automatic increases in the number of shares of common stock reserved for issuance thereunder, including the additional 421,756 shares of our common stock that were automatically added to our 2017 ESPP share reserve on January 1, 2018. Except as otherwise indicated, all information in this prospectus assumes: no exercise of outstanding stock options and no settlement of outstanding RSUs after December 31, 2017, except for the shares of our common stock to be issued upon the exercise of options by some of the selling stockholders and sold in this offering; and no exercise by the underwriters of their option to purchase up to an additional 937,650 shares of our common stock from certain of the selling stockholders to cover over-allotments. Table of Contents Incorporated by Reference Filed Herewith Number Description of Document Form File No. Exhibit Filing Date 10.13 + Leandra Fishman 2017 Sales Commission Plan. S-1 333-221003 10.12 10/18/2017 10.14 + SVP Sales & Customer Success Incentive Plan. 8-K 001-38275 10.1 3/28/2018 10.15 + Separation Agreement by and between the Registrant and Scott Heimes dated March 2, 2018. X 21.1 Subsidiaries of the Registrant. S-1 333-221003 21.1 10/18/2017 23.1 Consent of KPMG US LLP, independent registered public accounting firm. X 23.2 Consent of Cooley LLP (included in Exhibit 5.1). X 24.1 Power of Attorney (included in signature pages). Table of Contents The information in this prospectus is not complete and may be changed. Neither we nor the selling stockholders may sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and we are not soliciting offers to buy these securities in any jurisdiction where the offer or sale is not permitted. PROSPECTUS (Subject to Completion) Issued April 3, 2018 6,251,000 Shares COMMON STOCK (1)See Note 13 to our consolidated financial statements in our 2017 Annual Report, which is incorporated by reference in this prospectus, for an explanation of the method used to calculate basic and diluted net loss per common share attributable to common stockholders. SendGrid, Inc. is offering 600,000 shares of its common stock and the selling stockholders identified in this prospectus are offering 5,651,000 shares of our common stock. We will not receive any of the proceeds from the shares of common stock sold by the selling stockholders. (1)The as adjusted column in the consolidated balance sheet data table above reflects the receipt of (i) $15.2 million in net proceeds from our sale of 600,000 shares of common stock in this offering at an assumed public offering price of $28.14 per share, the last reported sale price of our common stock on the New York Stock Exchange on March 29, 2018, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us and (ii) $1.2 million in aggregate net proceeds received by us in connection with the exercise of options to purchase an aggregate of 589,731 shares of our common stock by certain of the selling stockholders in order to sell those shares in this offering. The net proceeds we will receive in this offering from the sale of 46,657 shares will be reserved to fund and support the operations of SendGrid.org, and the number of shares of our common stock that are reserved for that purpose will be reduced by 46,657. (2)A $1.00 increase or decrease in the assumed public offering price of $28.14 per share; the last reported sale price of our common stock on the New York Stock Exchange on March 29, 2018, would increase or decrease our as adjusted amount of each of cash and cash equivalents, working capital, total assets, and total stockholders' equity (deficit) by approximately $0.6 million, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. We may also increase or decrease the number of shares we are offering. Each 1,000,000 share increase or decrease in the number of shares offered by us would increase or decrease the as adjusted amount of each of cash and cash equivalents, working capital, total assets, and total stockholders' equity (deficit) by approximately $26.8 million, assuming that the assumed offering price of $28.14 remains the same, and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. Our common stock is listed on the New York Stock Exchange under the symbol "SEND." On March 29, 2018, the last reported sale price of our common stock as reported on the New York Stock Exchange was $28.14 per share. Table of Contents
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+S-1 1 vivas1.htm As filed with the Securities and Exchange Commission on January 5, 2018 Registration No. 333-198828 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 VIVA ENTERTAINMENT GROUP INC. (F/K/A Black River Petroleum Corp.) (Exact name of registrant as specified in its charter) Nevada (State or other jurisdiction of incorporation) 1311 (Primary Standard Industrial Classification Code Number) 98-0642409 (IRS Employer Identification No.) 143-41 84th Drive, Briarwood, New York 11435 (347) 681-1668 (Address and telephone number of registrant s principal executive offices) VCORP SERVICES, LLC 1645 Village Center Circle, STE 170, Las Vegas, NV. 89134 (888) 528-2677 (Name, address and telephone number of agent for service) Copies of all communications to: Chonillo Law Group, LLC 2525 Ponce de Leon Blvd, STE 300, Coral Gables, FL. 33134 (786) 441-5234 Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act Registration Statement number of the earlier effective Registration Statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act Registration Statement number of the earlier effective Registration Statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act Registration Statement number of the earlier effective Registration Statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. Large accelerated filer Accelerated Filer Non-accelerated filer Smaller reporting company Emerging Growth Company If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(b) of the Securities Act. CALCULATION OF REGISTRATION FEE Title of Each Class Of Securities to be Registered Amount to be Registered Proposed Maximum Aggregate Offering Price per share (2) Proposed Maximum Aggregate Offering Price Amount of Registration fee (1) Common Stock (3) 1,353,982,316 $0.00185 $5,000,000 $622.50 _________________ (1) Registration Fee has been paid via Fedwire. (2) Offering price computed in accordance with Rule 457(c). (3) Represents shares issuable to Ignition Capital, LLC of Tampa, Florida under an Investment Agreement. In the event of a stock split, stock dividend or similar transaction involving our common stock, the number of shares registered shall automatically be increased or decreased, as applicable, to cover the shares of common stock issuable pursuant to Rule 416 under the Securities Act of 1933, as amended. THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SUCH SECTION 8(A), MAY DETERMINE. The information in this prospectus is not complete and may be changed. The Company may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities, and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. The date of this Prospectus is January 5, 2018 Prospectus VIVA ENTERTAINMENT GROUP INC. (F/K/A Black River Petroleum Corp.) Common Stock This prospectus may be used only in connection with sales of shares of our common stock by Ignition Capital, LLC, of Tampa, Florida ("Ignition"). Ignition will sell shares of common stock purchased from us under an Investment Agreement. In connection with the sale of these shares, Ignition will be an "underwriter" as that term is defined in the Securities Act of 1933. The number of shares to be sold by Ignition in this offering will vary from time-to-time and will depend upon the number of shares purchased from us pursuant to the terms of the Investment Agreement. See the section of this prospectus captioned "Investment Agreement" for more information. Our common stock is quoted on the over-the-counter market under the symbol "OTTV". On December 29, 2017 the closing price for one share of our common stock was $0.0017. Investing in our common stock is highly speculative and involves a high degree of risk. You should carefully consider the risks and uncertainties in the section entitled "Risk Factors" beginning on page 3 of this prospectus before making a decision to purchase our stock. We may amend or supplement this prospectus from time to time by filing amendments or supplements as required. You should read the entire prospectus and any amendments or supplements carefully before you make your investment decision. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. BEFORE INVESTING, YOU SHOULD CAREFULLY READ THIS PROSPECTUS AND, PARTICULARLY, THE RISK FACTORS SECTION, BEGINNING ON PAGE 07. Neither the U.S. Securities and Exchange Commission nor any state securities division has approved or disapproved these securities, or passed upon the accuracy or adequacy of the disclosures in the prospectus. Any representation to the contrary is a criminal offense. VIVA ENTERTAINMENT GROUP, INC. SUMMARY OF PROSPECTUS The following summary highlights information contained elsewhere in this prospectus. It may not contain all the information that may be important to you. You should read this entire prospectus carefully, including the sections entitled "Risk Factors" and "Management s Discussion and Analysis of Financial Condition and Results of Operations," and our historical financial statements and related notes included elsewhere in this prospectus or any accompanying prospectus supplement before making an investment decision. In this prospectus, unless the context otherwise denotes, references to "we," "us," "our," the "Company", "Viva Entertainment Group, Inc.", and "Viva Entertainment Group" refer to Viva Entertainment Group, Inc. General Information about Our Company The Company was incorporated on October 26, 2009 in the State of Nevada. The Company originally engaged in the development of a website and also the design and development of a catalogue to sell over the counter and prescription medications, and supplements. In 2012, the Company undertook a change in focus to the natural resources sector where it was engaged in the acquisition and exploration of base metals and mineral mining properties. On April 5, 2016, the Company completed the purchase of Viva Entertainment Group, Inc. ("Viva Entertainment"), a Delaware corporation, from EMS Find, Inc. ("EMS") pursuant to a stock purchase agreement. Viva Entertainment s Chief Executive Officer, Johnny Falcones, was appointed as the Company s sole director, President and Chief Executive Officer to manage the development and marketing of Viva Entertainment s over the top (IPTV/OTT) application for connected TV s, desktop computers, tablets, and smart phones. Pursuant to the stock purchase agreement, the Company and EMS agreed to transfer control of Viva Entertainment to the Company through the purchase of all outstanding shares of stock of Viva Entertainment by the Company in exchange for the issuance to EMS of a 10% promissory note in the principal amount of $100,000, due six months from the Closing (the "EMS Note"), and the issuance of 22,000,000 shares of common stock to Johnny Falcones. For accounting purposes, the transaction was treated as a reverse merger since the acquired entity now forms the basis for operations and the transaction resulted in a change in control, with the acquired company electing to become the successor issuer for reporting purposes. The accompanying financial statements have been prepared to reflect the assets, liabilities and operations of Viva Entertainment Group, Inc. exclusive of Black River Petroleum since all predecessor operations were discontinued. As part of the transaction, stock payable and amounts due to former officers were forgiven, with the balances recorded as Contributed Capital. For equity purposes, additional paid-in capital and retained deficit shown are those of Viva, exclusive of Black River Petroleum. Viva had no operations prior to the quarter ended April 30, 2016. In management s opinion, all adjustments necessary for a fair statement of the results for the presented periods have been made. All adjustments made were of a normal recurring nature. Viva Entertainment Group Inc. (the "Company") develops and markets Viva Entertainment s over the top (IPTV/OTT) application for connected TV s, desktop computers, tablets, and smart phones. The Company is based in Briarwood, New York. (1) Table of Contents The Offering Following is a brief summary of this offering. Please see the "Plan of Distribution" section for a more detailed description of the terms of the offering. In order to provide a possible source of funding for our operations, we have entered into an Investment Agreement with Ignition Capital, LLC of Tampa, Florida Under the Investment Agreement, Ignition has agreed to provide us with up to $5,000,000 of funding during the period ending on the date which is two years after the date of this prospectus. During this period, we may sell shares of our common stock to Ignition, and Ignition will be obligated to purchase the shares. These shares may be offered for sale from time to time by means of this prospectus by or for the account of Ignition. The minimum amount we can raise at any one time is $25,000, and the maximum amount we can raise at any one time is $250,000. We are under no obligation to sell any shares under the Investment Agreement. As of December 21, 2017, we had 4,376,418,183 outstanding shares of common stock. The number of outstanding shares does not give effect to shares which may be issued pursuant to the Investment Agreement or upon the exercise and/or conversion of options, warrants or convertible notes. We will not receive any proceeds from the sale of the shares by Ignition. However, we will receive proceeds from any sale of common stock to Ignition under the Investment Agreement. We expect to use substantially all the net proceeds for our operations. Risk Factors: The purchase of the securities offered by this prospectus involves a high degree of risk. Risk factors include our history of loss and need for additional capital. See the "Risk Factors" section of this prospectus for additional Risk Factors. Trading Symbol: OTTV (2) Table of Contents
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@@ -0,0 +1,7169 @@
+PROSPECTUS SUMMARY
+ 
+ The following summary does not contain all of the information that should be considered before investing in our Common Stock. Investors should read this entire prospectus carefully, including the more detailed information regarding our business and management, our financial statements and accompanying notes, and particularly the many risks of investing in our common stock discussed under the caption Risk Factors. 
+ 
+ Our Business
+ 
+ We are an Internet platform technology company providing cloud-based software solutions to enhance and automate the marketing functions and activities of our customers. Our focus is to develop and offer software technology tools through our Fision platform to enable our customers to maximize their marketing assets and initiatives. Our business operations are conducted from Minneapolis through our wholly owned Minnesota subsidiary, Fision Holdings, Inc.
+ 
+ We derive our revenues primarily from recurring payments from customers who have entered into software licensing contracts with us having terms of one to three years, and secondarily from set-up and implementation fees paid by new customers during the initial stage of their license contract. We also obtain revenues from one-time contracted software or email services provided to our customers. Our typical customer implementation process includes integrating our cloud-based Fision platform into the marketing infrastructure of the customer, initiating and conducting customer training, and providing marketing development support while our Fision platform is being actively launched by the customer. We also continue to offer technical and maintenance support after implementation. As of the date of this prospectus, we have license contracts with 14 customers actively using our Fision platform for their marketing activities.
+ 
+ Our current and targeted customer base ranges across diverse industries of various sizes, including banks and other financial enterprises, insurance companies, hotels and other hospitality businesses, manufacturers, healthcare and fitness companies, software and other technology companies, telecommunications companies, and other companies selling established branded products or services.
+ 
+ We believe that our market potential is virtually unlimited, since our proprietary Fision platform provides significant benefits to the marketing and sales departments and personnel of any commercial enterprise, regardless of size. We market and license our proprietary software platform primarily through direct sales obtained by our management and in-house sales personnel. During the past couple years, we have also implemented a secondary sales channel utilizing experienced independent technology sales agencies, which we refer to as our channel partners. 
+ 
+ Our Fision platform enables our customers to easily and quickly create and implement marketing campaigns to support their sales personnel while still emphasizing, enhancing and protecting their valuable brand assets. We believe that the software marketing solutions of our Fision platform provide three major benefits to our customers, which are (i) accelerating their revenues, (ii) improving their marketing and brand effectiveness, and (iii) significantly reducing their marketing and sales costs.
+ 
+ 
+ 5
+ 
+ 
+ Table of Contents
+
+ 
+ Corporate information
+ 
+ Our executive, sales and marketing, and operational offices, as well as our software development spaces and equipment, are located in downtown Minneapolis in the Butler Building, 100 N. Sixth Street Suite 308 B, Minneapolis, Minnesota 55403, our telephone number is (612) 927-3700, and our website address is www.FisionOnline.com. No information contained in our website should be considered as any part of this prospectus.
+ 
+ Summary of the offering
+ 
+ Common stock offered
+ 41,000,000 shares of our common stock, all being offered for resale by the Selling Stockholders
+
+ 
+ Offering price per share
+ Prevailing market prices or otherwise negotiated transactions
+
+ 
+ Total offering proceeds to us
+ None 
+
+ 
+ Common stock outstanding prior to offering
+ 66,811,453 shares (1)
+
+ 
+ Common stock to be outstanding after offering
+ 69,836,453 shares (1)(2) 
+
+ 
+ Use of proceeds
+ We will not receive any proceeds from any sales by Selling Stockholders. See Use of Proceeds. 
+
+ 
+ Offering plan
+ Selling Stockholders may sell the Shares from time to time in various ways and at different prices, including prevailing prices in the public market or in negotiated transactions. See Plan of Distribution. 
+
+ 
+ Risk factors
+ Investing in our securities is speculative and involves a high degree of risk, and you should carefully read and consider the information in this prospectus entitled Risk Factors. 
+
+ _______
+ (1) Not including 19,664,069 shares issuable on exercise of outstanding stock options and warrants, and 2,977,500 shares reserved for future issuance under our Stock Incentive Plans.
+ (2) Including shares to be issued to Selling Stockholders who have not yet acquired the second tranche of Common Shares and Advisory Shares, but not including any potential issuance of True-Up Shares.
+
+ 
+ 
+ 6
+ 
+ 
+ Table of Contents
+
+ 
+ PENDNG MERGER AGREEMENT
+ 
+ On August 3, 2018, we entered into an Agreement and Plan of Merger (the Agreement) with Continuity Logic, L.L.C., a New Jersey limited liability company ( Continuity Logic ) for the purpose of combining Fision s business, technology and assets with those of Continuity Logic. The Agreement was amended and restated on December 21, 2018. Continuity Logic is headquartered in Tampa, Florida, and has developed and markets a comprehensive business continuity management (BCM) software platform. This proprietary innovative cloud-based software platform automates many enterprise risk management functions and other key operational tasks of a business enterprise, and can be readily customized to suit any type or size of client. 
+ 
+ The terms of this merger agreement as amended provide for a wholly owned subsidiary of ours to merge with and into Continuity Logic pursuant to New Jersey law, resulting in Continuity Logic being the surviving entity of the Merger and concurrently becoming our wholly owned subsidiary. The Merger will become effective upon filing a Certificate of Merger with the Secretary of State of New Jersey. The Closing Date for the Merger will be as soon as practicable after satisfaction or waiver of all conditions required by the Agreement, although after December 31, 2018 either Fision or Continuity Logic have the right to terminate the Agreement if it has not been completed by then. 
+ 
+ Consideration to be given by Fision to close this merger acquisition will consist solely of our common stock and stock purchase warrants, which will be issued to the holders of all equity membership units of Continuity Logic pursuant to the terms of the Agreement. The current holders of membership units of Continuity Logic will receive on the closing of the Merger a total amount of securities of Fision resulting in the pre-merger shareholders of Fision as a group and the holders of membership units of Continuity Logic as a group each owning 50% of the post-merger outstanding securities of Fision. Securities of Fision issued in the Merger will consist of unregistered restricted securities exempt from registration under relevant federal and state securities laws, and accordingly these securities will be restricted from further resale or transfer unless registered under relevant securities laws or exempt from such registration. 
+ 
+ A major contingency required by the Agreement as amended is that Fision shall have completed a private equity offering of securities resulting in cash proceeds in an amount acceptable to provide growth capital for the combined companies. 
+ 
+ Completion of the Merger will result in Fision owning all assets and assuming all liabilities of Continuity Logic. Concurrent with the Merger becoming effective, the Agreement as amended provides for Fision to have four directors including Michael Brown and John Bode (both current Fision directors), Laurence Mascera (a current Continuity Logic director) and Daniel Dorsey. Prior to entering into the Agreement, there were no material relationships between Fision or its affiliates and Continuity Logic or its affiliates.
+ 
+ In the Agreement as amended, the parties to the Merger made customary representations, warranties, covenants and commitments regarding the Merger, including required submissions of many disclosure schedules, confidentiality provisions, title to or ownership of IP and other assets, respective liabilities, employment agreements, standard termination and indemnification provisions, conducting their respective businesses in the ordinary course until completion of the Merger, prohibitions against engaging in certain material transactions until completion of the Merger, and obtaining all consents, approvals or waivers necessary to complete and consummate the Merger. The complete text of the Agreement and Plan of Merger is included as an exhibit with our Current Report on Form 8-K filed with the SEC on August 9, 2018, and the complete text of the amended and restated Agreement and Plan of Merger is included as an exhibit with our Current Report on Form 8-K filed with the SEC on December 26, 2018.
+ 
+ 
+ 7
+ 
+ 
+ Table of Contents
+
+ 
+ SELECTED FINANCIAL DATA
+ 
+ The following summary of selected financial information from our statements of operations and balance sheets as of and for the following periods have been derived from, and should be read in conjunction with, our financial statements included in this prospectus.
+ 
+ 
+ 
+ Nine Months Ended
+ September 30,
+ 
+ 
+ Fiscal Year Ended
+ December 31,
+ 
+
+ 
+ 
+ 2018
+ 
+ 
+ 2017
+ 
+ 
+ 2017
+ 
+ 
+ 2016
+ 
+
+ 
+ 
+ (unaudited)
+ 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Statement of Operations Data:
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Revenues
+ 
+ $ 391,037 
+ 
+ $ 409,980 
+ 
+ $ 558,222 
+ 
+ $ 425,198 
+
+ Cost of revenues
+ 
+ 
+ 63,104 
+ 
+ 
+ 53,012 
+ 
+ 
+ 65,114 
+ 
+ 
+ 96,315 
+
+ Gross margin
+ 
+ 
+ 117,701 
+ 
+ 
+ 358,282 
+ 
+ 
+ 493,108 
+ 
+ 
+ 328,883 
+
+ Gross margin as a percentage of revenues
+ 
+ 
+ 83.9 % 
+ 
+ 87.1 % 
+ 
+ 88.3 % 
+ 
+ 77.3 %
+ Total operating expenses
+ 
+ 
+ 2,276,116 
+ 
+ 
+ 3,087,715 
+ 
+ 
+ 3,987,501 
+ 
+ 
+ 2,973,495 
+
+ Other expenses (interest and derivatives expenses)
+ 
+ 
+ 671,944 
+ 
+ 
+ 962,742 
+ 
+ 
+ 1,589,159 
+ 
+ 
+ 173,387 
+
+ Net (loss) 
+ 
+ $ (2,620,127 ) 
+ $ (3,693,489 ) 
+ $ (5,083,552 ) 
+ $ (2,817,999 )
+ 
+ 
+ September 30,
+ 
+ 
+ December 31,
+ 
+
+ 
+ 
+ 2018 
+ 
+ 
+ 2017 
+ 
+ 
+ 2016
+ 
+
+ 
+ 
+ (unaudited)
+ 
+ 
+ 
+ 
+ 
+
+ Balance Sheet Data:
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Working capital (deficiency)
+ 
+ $ (3,717,568 )) 
+ $ (2,602,166 ) 
+ $ (715,562 ))
+ Current assets
+ 
+ $ 632,576 
+ 
+ $ 271,953 
+ 
+ $ 751,853 
+
+ Total assets
+ 
+ $ 871,745 
+ 
+ $ 479,109 
+ 
+ $ 766,636 
+
+ Accounts payable/accrued expenses
+ 
+ $ 845,914 
+ 
+ $ 770,598 
+ 
+ $ 536,688 
+
+ Total notes payable - including related parties
+ 
+ $ 1,200,458 
+ 
+ $ 900,040 
+ 
+ $ 930,726 
+
+ Total current liabilities
+ 
+ $ 4,350,144 
+ 
+ $ 2,874,119 
+ 
+ $ 1,467,415 
+
+ Derivative liability
+ 
+ $ 2,572,376 
+ 
+ $ 1,243,788 
+ 
+ $ -0- 
+
+ Long-term liabilities (convertible notes payable) 
+ 
+ $ 501,129 
+ 
+ $ 300,000 
+ 
+ $ -0- 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Total stockholders equity (deficit)
+ 
+ $ (3,979,528 ) 
+ $ (2,695,010 ) 
+ $ (700,779 )
+
+ 
+ 
+ 8
+ 
+ 
+ Table of Contents
+
+ 
+ RISK FACTORS
+ 
+ An investment in our common stock is speculative and involves a high degree of risk, and you should not invest in our common stock unless you can afford to lose your entire investment. You should consider carefully the following risk factors and other information in this prospectus before you invest in our common stock. These risks could cause our future results to differ materially from our historical results and from any guidance we may provide regarding our expectations of future financial performance.
+ 
+ Risks Related to our Company 
+ 
+ Our operations and business are subject to the risks of an early stage company with limited revenue at this time.
+ 
+ Our business is subject to the many risks inherent in the establishment of a new enterprise and the uncertainties arising from the absence of a significant operating history. We cannot project whether or when we will become profitable because of the significant uncertainties regarding our future ability to generate and achieve growing revenues. One of the principal challenges we face is gaining customer acceptance. Moreover, we face substantial competition from well-established companies with far greater resources than we possess, and accordingly our potential customers may be more familiar with our competitors and their capabilities.
+ 
+ Our future success will depend upon many factors and variables facing a new business, including factors which may be beyond our control or which cannot be predicted at this time. We have formulated our business plans and strategies based on certain assumptions regarding the acceptance of our business model and the marketing and customer acceptance of our Fision platform software services. Nevertheless, our assumptions and assessments regarding market size, market share, market acceptance of our products and services or other factors may prove incorrect materially. We are a relatively new commercial enterprise in our chosen market, and we may be unable to successfully implement our business plan to become profitable. Any such failure will have a materially adverse effect on our business and prospects and the value of any investment in our Company. 
+ 
+ We have a limited operating history.
+ 
+ Our limited operating history means there is a high degree of uncertainty in our ability to execute our business plan effectively, to obtain customers, to develop new products and services, and to respond to competition. Our inability to achieve any of the foregoing could materially and adversely affect our business, financial condition, and results of operations.
+ 
+ We have a history of substantial losses, and there are no assurances we will report profitable operations in the foreseeable future. 
+ 
+ We incurred net losses of $2,817,999 for the year ended December 31, 2016, $3,987,501 for the year ended December 31, 2017, and $2,620,127 for the nine-month period ended September 30, 2018. Since our inception in 2010, we have an accumulated deficit of $(21,141,992) as of September 30, 2018. Moreover, we expect to continue operating at a loss until at least 2020. There is no assurance based on our past business operations to support our belief that we can become profitable or sustain profitability in the future. There can be no assurance that we can generate significant revenue growth, or that any revenue growth that we achieve can be sustained.
+ 
+ If we are unable to obtain significant future financing from time to time, our development and operations will encounter serious delays or could even result in the complete failure of our business. Additional financing also most likely will dilute our existing stockholders.
+ 
+ Our ability to become commercially successful and profitable will depend largely on our being able to continue raising significant additional financing from time to time in the future. If we are unable to raise additional financing through equity and/or debt sources as needed, we would not be able to succeed in our commercial operations, which eventually could result in our failure. There is no assurance any such additional funds will be available on terms satisfactory to us, if at all. Moreover, any future equity or equity-based financing we may obtain most likely would be dilutive to our existing stockholders.
+ 
+ Our registered public accounting firm has expressed substantial doubt about our ability to continue as a going concern and accordingly we may not be able to continue as a going concern. 
+ 
+ The report of our independent registered public accounting firm accompanying our audited financial statements for the fiscal years ended December 31, 2017 and 2016 stated the financial statements were prepared assuming that we would continue as a going concern. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should we be unable to continue as a going concern. The issue of our ability to continue as a going concern is primarily due to our losses suffered since our inception, which losses we continue to incur. This opinion from our auditor may make it more difficult for us to attract investors for equity financing, or to secure debt financing or bank loans on acceptable terms, if at all.
+ 
+ 
+ 9
+ 
+ 
+ Table of Contents
+
+ 
+ For the past few years, our operating expenses have been funded by various sources including sales of our common stock and convertible debt, limited revenues from customer contracts, deferral and conversion to equity of management compensation, and stock-based payments or awards to management and various service providers. If we are unable to generate sufficient revenue or obtain substantial additional financing to support our operations, we could be forced to cease operations and investors could lose their entire investments. We can give no reliable assurance as to our ability to generate adequate revenue and raise sufficient capital to enable us to continue as a going concern. Moreover, concerns about our financial viability could adversely affect current and potential customers willingness to enter into licensing agreements with us
+ 
+ We have a significant amount of secured and unsecured debt, much of which has matured or will soon mature, and this could limit or even eliminate recovery of your investment if we fail to reach substantial profitability or otherwise resolve or satisfy our outstanding debt.
+ 
+ We have a significant amount of indebtedness in the form of various Notes Payable. As of September 30, 2016, we had $3,642,175 of Notes Payable including accrued interest, of which a substantial amount is past due or due on demand. From time to time, we have converted material amounts of our Notes Payable into our common stock. There is no assurance, however, that we will be able to convert our remaining overdue debt into common stock, or to satisfy this debt through new financing or refinancing, or to achieve profitability sufficient to make future payments to satisfy this debt. If we cannot satisfy or resolve our substantial indebtedness, such failure would have a significant adverse effect on our business and financial condition, and could even cause a total failure of our business.
+ 
+ Moreover, any future issuances of common shares for debt conversion will have substantial dilutive effect upon our existing stockholders, and the overhang from the resale or even potential resale of these debt conversion shares on any public market for our common stock could have a material adverse effect on the price of our common stock. 
+ 
+ Our ability to generate future material revenues will depend upon a number of factors, some of which are beyond our control.
+ 
+ These factors include the rate of acceptance of our software products, competitive pressures in our industry, effectiveness of our sales force, adapting to changes in technology in our industry, and general economic trends. We are unable to forecast accurately what our revenues will be in future periods.
+ 
+ Our operating results have fluctuated and been difficult to predict, and our results could continue to fluctuate and be unpredictable in the future.
+ 
+ Our operating results have been difficult to predict, have historically fluctuated, and may vary significantly from quarter to quarter due to a variety of factors, many of which are beyond our control. Accordingly, comparing our operating results on a period-to-period basis may not be meaningful. Factors that may affect our quarterly operating results may include: any material changes in demand for our software solutions; the introduction of new technologies by competitors; the nature of our variable and unpredictable sales cycle; changes in the number, availability and quality of competing products; the timing and amount of sales and marketing expenses incurred by us to attract new customers; changes in the economic or business prospects of our customers or the economy generally; changes in our pricing policies or the pricing policies of our competitors; changes in governmental regulation of the Internet, wireless networks and mobile platforms; unforeseen costs necessary to improve and maintain our technologies; and costs related to any acquisitions undertaken by us.
+ 
+ 
+ 10
+ 
+ 
+ Table of Contents
+
+ 
+ We face significant challenges in obtaining market acceptance of our products and establishing our Fision brand.
+ 
+ Our success depends primarily upon the acceptance of our Fision software platform and brand by new customers, most of whom will not be familiar with and have not used our products, and also do not recognize our brand and corporate identity. Acceptance of our marketing software solutions by new customers will depend on many factors including price, reliability, performance, service accessibility and effectiveness, and our ability to overcome existing loyalties to established brands. There is no assurance we will be able to satisfy these market acceptance challenges successfully.
+ 
+ If our products have or develop product defects, or we fail to provide timely agreed upon services to our customers, it could materially damage our reputation, sales and profitability and also result in substantial remedial costs.
+ 
+ The Fision products and services we provide to our customers are regularly being modified and enhanced, and accordingly could contain or develop unknown defects or errors when first introduced or when new versions are released. As a result, we could incur future losses or delays in recognition of revenues from any software or product errors or defects, which would have a material adverse effect upon our business, operating results and financial condition.
+ 
+ We depend on a relatively small number of customers for a substantial portion of our revenues, and any material reduction in the use of our Fision software platform by one or more of our major customers could reduce our revenues significantly.
+ 
+ A relatively small number of customers provide a substantial majority of our revenues, although no one customer is dominant. A significant reduction or termination for any reason in the use of our Fision platform by one or more of our major customers could harm our business materially.
+ 
+ 
+ 11
+ 
+ 
+ Table of Contents
+
+ 
+ Our success is dependent upon our current key personnel as well as our ability to attract, recruit and retain additional key employees.
+ 
+ We believe that our success will depend significantly on continued employment of our management and key technology and sales personnel, and the loss of the services of one or more of them could harm our business substantially. Our future business also will be dependent on hiring additional qualified key personnel, and if they are not available when needed, our future growth and prospects could suffer materially. 
+ 
+ Our industry involves rapid technological change. If we are unable to adapt our products and develop new products to reflect or incorporate these rapid changes, our business will be harmed substantially.
+ 
+ The market for our Fision products and services is characterized by rapidly changing technology and industry standards. Some of our competitors have much greater resources to develop and test new technology more rapidly than we can accomplish. We must respond to changing technology and industry standards in a timely and cost-effective manner, which there is no assurance will happen. Our adaption to changing technology and industry standards may require substantial time and expense, and there is no assurance we will succeed in adapting our Fision products and services effectively to new technologies as they emerge. 
+ 
+ We operate in a highly competitive industry, and we may not be able to compete successfully.
+ 
+ Our market is highly competitive, with many companies providing marketing solutions competing with our Fision software platform. Well-known and established competitors include Marketo, Eloqua (Oracle), Unica (IBM), Hubspot, ExactTarget (Salesforce), Aprimo, SAP, Responsys and Silverpop. We expect additional strong competitors to emerge in the future from time to time.
+ 
+ Most of our current and potential competitors have significantly more personnel, financial, technical, marketing and other resources than we possess, and accordingly they are able to devote substantially greater resources than us to development, marketing, sales, and support of their products and services. We lack many things which most of our competitors have, including an established brand and name recognition, existing relationships with a large customer base, the ability to undertake costly and extensive marketing campaigns, and large customer support teams.
+ 
+ Our current and potential competitors may develop and offer new software technologies that render our products less competitive, unmarketable or even obsolete. In addition, if any competitors develop products with similar or better functionality than our solutions, we may need to decrease the prices for our products to remain competitive, which could result in a material reduction in our margins and a corresponding material negative effect on our operating results and financial condition.
+ 
+ We may not be able to address and solve satisfactorily the many competitive pressures and challenges facing us in our industry, and our failure to do so could seriously harm our business.
+ 
+ Our market may develop more slowly than we expect, which could harm our business.
+ 
+ Development of marketing software solutions is an emerging market, and our current and future customers may ultimately find our Fision software platform to be less effective than anticipated for promoting and marketing their products or services, which could cause them to reduce their spending on our software solutions. If the market for our products develops more slowly than we expect, we may not be able to increase our revenues effectively and our business would suffer materially.
+ 
+ 
+ 12
+ 
+ 
+ Table of Contents
+
+ 
+ Failure to manage our growth effectively could harm our business seriously.
+ 
+ Based on current procurement transactions for potential new customers, we expect our growth to increase materially. If we do not effectively manage any substantial growth when it occurs, the perceived quality of our business may suffer materially, which could negatively affect our reputation and the demand for our products. Any substantial growth of our business will place an increasing strain on our resources and infrastructure, and our future success will in large part depend on the ability of our senior management to manage our growth effectively. Any failure by our senior management or other key personnel to manage our future growth properly could impair our ability to deliver our software solutions in a timely fashion, to fulfill existing customer commitments, or to attract and retain new customers.
+ 
+ Interruption or failure of our information technology and communications systems could hurt our ability to provide our services effectively, which could damage our reputation and harm our operating results.
+ 
+ The availability to our customers of our products and services depends on the continuing and efficient operation of our information technology and communications systems and infrastructure, and most particularly on the cloud-based service provider facility which hosts our Fision software platform. These electronic systems are vulnerable to damage or interruption from earthquakes, vandalism, sabotage, terrorist attacks, floods, fires, power outages, telecommunications failures, and computer viruses or other deliberate attempts to harm the systems. The occurrence of a natural or intentional disaster, any decision to close a facility we are using without adequate notice, or particularly an unanticipated problem at our cloud-based virtual server facility, could result in harmful interruptions in our service, resulting in damage to our customers and brand and likely a reduction to our revenues.
+ 
+ We may not be able to adequately protect or enforce our intellectual property (IP) rights, which could cause our business to suffer substantially.
+ 
+ Our success and competitive position will depend substantially on our ability to protect our intellectual property (IP), including trademarks, trade names, patent rights and trade secrets. We rely on patent, trademark and copyright law, trade secret protection and confidentiality agreements to protect our proprietary rights. Despite our efforts to protect these proprietary rights, unauthorized parties may attempt to copy aspects of our intellectual property or to wrongly obtain and use our information technology. In addition, competitors may independently develop substantially equivalent intellectual property. If we do not effectively protect our intellectual property, or our IP assets become marginalized or valueless due to developments by a competitor, our business could suffer materially. Moreover, litigation may be necessary to enforce our intellectual property rights, to protect our trade secrets, or to determine the validity and scope of the proprietary rights of others. Any such litigation could result in substantial costs and diversion of our resources, which could cause serious harm to our business, operating results and financial condition.
+ 
+ We have obtained three patents from the United States Trademark and Patent Office (USTPO) covering certain technological aspects of our Fision software platform, which we regard as valuable to our business and brand. We also expect to receive further patent protection regarding pending application claims. Although we regard the proprietary software technology covered by our patents to be material to our future business, there is no assurance that the patents we have received or pending claims we have filed will provide us with any significant proprietary protection.
+ 
+ We could incur substantial costs and disruption to our business as a result of any infringement claim brought against us involving intellectual property of another party, which could harm our business and operating results, or even prevent us from selling our products.
+ 
+ We cannot predict whether any third party claims will occur alleging that we have infringed their intellectual property rights, and if any such claims occur whether they will substantially harm our business and operating results. If we are forced to defend any infringement claims, whether with or without merit or even if determined in our favor, we may face costly litigation and diversion of our management and other personnel. Moreover, any outcome of a claim resulting in our having infringed another s intellectual property rights may require us to pay significant damages and attorney fees; to cease licensing our Fision software platform; to expend substantial development resources to redesign our products; or to enter into potentially unfavorable royalty or license agreements to use third-party technologies, which may not be available on terms acceptable to us, if at all. The time and resources required from us to resolve any such disputes or litigation, even if resolved in our favor, could harm our business, operating results, financial condition, brand and reputation.
+ 
+ 
+ 13
+ 
+ 
+ Table of Contents
+
+ 
+ Risks Related to Our Common Stock
+ 
+ Being a public company results in additional expenses and diverts management s attentions.
+ 
+ Our business must bear the expenses associated with being a public company including being subject to the reporting requirements of the Securities Exchange Act of 1934. These requirements generate significant accounting, legal and financial compliance costs, and may place significant strain on our personnel and resources. As a result, management s attention may be diverted from other significant business concerns, which could have an adverse material effect on our business, financial condition and results of operations.
+ 
+ Applicable and extensive regulatory requirements, including those of the Sarbanes-Oxley Act and the Dodd-Frank Act, may make it difficult for the Company to retain or even attract qualified officers and directors, which could adversely affect our business and our future relationships in the investment community.
+ 
+ Because of the many and ever increasing rules and regulations governing publicly-held companies, it may be difficult for us to attract and retain those qualified officers and directors necessary for effective management. The Sarbanes-Oxley Act particularly added demanding new rules and regulations and the expansion and strengthening of existing rules and regulations, including required certifications by our principal executive officers. The SEC, FINRA and the stock exchanges also continue to add to or expand their rules frequently. This extensive and ongoing regulatory situation regarding the adoption of new rules and regulations by these various agencies has created a real, or at least perceived, increased personal risk to members of management of public companies, which may deter qualified candidates from accepting roles as directors or officers of our Company. If we are unable to attract and retain future qualified officers and directors as needed, the management of our business and our future ability to obtain a listing of our securities on a national stock exchange could be adversely affected materially.
+ 
+ If we fail to establish and maintain an effective system of internal controls over financial reporting, we may not be able to report our financial results accurately or detect fraud. In that event, investors and the financial community could lose confidence in our financial reporting, which in turn may result in a decline in the trading price of our stock, or otherwise harm our operating results and financial condition.
+ 
+ Internal controls over financial reporting are processes designed to provide reasonable assurances regarding the reliability of financial reporting and the proper preparation of financial statements. We must maintain effective internal controls over financial reporting to provide reliable financial reports, avoid misstatements in our financial statements, and detect any fraud or material weaknesses in our internal controls. We are in the process of assessing our internal controls to identify changes needed to be implemented by us to remedy our material weaknesses. Any failure by us to implement the changes necessary to maintain an effective system of internal controls could harm our operating results materially and also cause investors and financial analysts to lose confidence in our reported financial information. Any such loss of confidence in the investment community would have a negative effect on the trading and price of our common stock. 
+ 
+ Even if we resolve effectively any material weaknesses in our internal controls, this still may not prevent all potential errors, since any control system, regardless of its design, can provide only reasonable and not absolute assurance that the objectives of the control system will be achieved.
+ 
+ Ownership and control of our Company is substantially concentrated in our management.
+ 
+ Our officers and directors beneficially own or control approximately 30% of our outstanding shares of common stock, which concentrated ownership and control by our management could affect our common stock. Any material sales of our common stock by our management, for example, could adversely affect the price of our common stock. 
+ 
+ This substantial concentration of stock ownership most likely affords our management the ability to control all matters requiring stockholder approval including the election of all directors, the approval of mergers or acquisitions, and other significant corporate transactions. Any person acquiring our common stock most likely will have no effective voice in the management of our company. This ownership concentration also could delay or prevent a change of control of the Company, which could deprive our stockholders from receiving a premium for their common shares.
+ 
+ 
+ 14
+ 
+ 
+ Table of Contents
+
+ 
+ We do not anticipate paying any dividends on our common stock for the foreseeable future.
+ 
+ We have not paid any dividends on our common stock to date, and we do not anticipate paying any such dividends in the foreseeable future. We anticipate that any earnings experienced by us will be retained to finance the implementation of our operational business plan and expected future growth.
+ 
+ The elimination of monetary liability against our directors and executive officers under Delaware law and the existence of indemnification rights held by them granted by our bylaws may result in substantial expenditures by us and may discourage lawsuits against our directors and officers.
+ 
+ Our articles of incorporation eliminate the personal liability of our directors and officers to the Company and its stockholders for damages for breach of fiduciary duty to the maximum extent permissible under Delaware law. These provisions and resultant costs may discourage us, or our stockholders through derivative litigation, from bringing a lawsuit against any of our current or former directors or officers for any breaches of their fiduciary duties, even if such legal actions, if successful, might benefit us or our stockholders.
+ 
+ In addition, our bylaws provide that we are obligated to indemnify our directors or officers to the fullest extent authorized by Delaware law for costs or damages incurred by them involving legal proceedings brought against them relating to their positions with the Company. These indemnification obligations could result in our incurring substantial expenditures to cover the cost of settlement or damage awards against our directors or officers.
+ 
+ Delaware law contains anti-takeover provisions which could deter or even prevent acquisition attempts of our company that may be beneficial to our stockholders.
+ 
+ Provisions of Delaware law could make it more difficult for a third party to obtain control of us. Section 203 of the Delaware General Corporation Law, for example, may make the acquisition of our company and the removal of our incumbent officers and directors more difficult by prohibiting stockholders holding 15% or more of our outstanding common stock from acquiring us, without the consent of our board of directors, for at least three years from the date they first owned at least 15% of our common stock. The anti-takeover effect of provisions of Delaware law could discourage, delay or prevent a change in control, even when such a change in control may be beneficial to our existing stockholders.
+ 
+ Our Articles of Incorporation allow for our Board of Directors to create and designate new series of our preferred stock without any approval of our shareholders, which could diminish the rights of holders of our common stock.
+ 
+ We have no outstanding preferred stock and no present intention to designate or issue any series of our preferred stock. Our Board of Directors, however, has the authority to fix and determine the relative rights and preferences of our authorized preferred stock without further common stockholder approval for issuance. Accordingly, our directors could authorize preferred shares, for example, that would grant a preference over common shareholders to our assets upon liquidation, or grant voting power and rights superior to those of common shares, or grant rights to preferred stock to accumulate and receive dividend payments before any dividend or other distribution to common shareholders, or grant special redemption terms and rights prior to any redemption of common shares, or grant rights convertible at favorable terms into common stock. Granting one or more of these or other preference rights to preferred stock could adversely affect the rights of our common stockholders such as decreasing the relative voting power of our common stock or causing substantial dilution to our common stockholders. 
+ 
+ 
+ 15
+ 
+ 
+ Table of Contents
+
+ 
+ Risks Related to This Offering
+ 
+ The over-the-counter (OTC) trading market for our common stock has fluctuated widely, and could continue to fluctuate substantially in the future.
+ 
+ There are significant risks that our common stock price may fluctuate substantially in the future in response to various factors including the following:
+ 
+ 
+ substantial variations in our operating results.
+
+ 
+ 
+ departures or additions of management or other key personnel
+
+ 
+ 
+ announcements of acquisitions or strategic joint ventures.
+
+ 
+ 
+ announcements of significant capital commitments or transactions.
+
+ 
+ 
+ announcements of significant patent or other technological matters.
+
+ 
+ 
+ substantial sales of our common stock in the open market.
+
+ 
+ 
+ any significant litigation matters.
+
+ 
+ 
+ announcements of new product developments.
+
+ 
+ 
+ gain or loss of significant customers.
+
+ 
+ 
+ general market conditions or specific political and economic conditions.
+
+ 
+ Our common stock is subject to the penny stock rules of the Securities and Exchange Commission, which may make it more difficult for our stockholders to sell their common stock.
+ 
+ Under SEC rules, a penny stock generally includes any equity security having a market price of less than $5.00 per share. Incident to any transaction involving a penny stock, these SEC rules require a broker or dealer to approve a person s account for transactions in penny stocks, and also to receive from the person a written consent to the transaction and its terms. The broker or dealer also must obtain financial information and investment experience objectives of the person, and make a reasonable determination that transactions in penny stocks are suitable for that person and that the person is competent to evaluate the risks of penny stocks. Prior to the transaction, the broker or dealer also must deliver a disclosure schedule containing the rights and remedies available to the person, the basis on which the broker or dealer made the suitability determination, and the receipt of the related signed agreement from the person.
+ 
+ Due to these penny-stock rules, brokers and dealers may be less willing to execute transactions in penny stock securities, and this may make it more difficult for shareholders to dispose of our common stock in the public market, which could cause a decline in the market value of our common stock.
+ 
+ 
+ 16
+ 
+ 
+ Table of Contents
+
+ 
+ It may be difficult for us to attract the attention of brokerage firms and financial analysts. 
+ 
+ We currently have no material relationship with any brokerage firm, underwriter or financial analyst, and due to our limited operating history, continued losses and lack of revenue growth, there may be little or no incentive for securities analysts of brokerage and other financial firms to provide investment coverage of us or to recommend the purchase of our common stock. 
+ 
+ If there are substantial sales or even perceived substantial sales of our common stock by Selling Stockholders or any others, the price of our common stock in any trading market could decline materially.
+ 
+ The market price of our common stock could decline materially due to any substantial sales, or even perceived substantial sales, of our common stock by current stockholders, particularly sales by our officers, directors, employees or significant stockholders.
+ 
+ Moreover, since the Selling Stockholders may offer for sale up to all of their shares included in this prospectus, they could sell a significant number of their shares at the same time. Any such sales at the same time, or even the perception it is occurring or will occur, may depress the market price of our common stock. 
+ 
+ CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
+ 
+ There are many statements in this prospectus that are not historical facts. These forward-looking statements can be identified by terminology such as believe, could, may, intend, plan, will, expect, anticipate, estimate, strategy, and similar expressions. These forward-looking statements are subject to material risks and uncertainties that are beyond our control, and many of these risks are discussed in the section of this prospectus entitled Risk Factors. Although our management believes that the assumptions underlying these forward-looking statements are reasonable, they do not assure or guarantee our future performance. Our actual results could differ materially from those contemplated by these forward-looking statements. The assumptions used for these forward-looking statements require considerable exercise of judgment, since they represent estimates of future events and are thus subject to material uncertainties involving possible changes in economic, governmental, industry, marketplace, and other circumstances. To the extent any assumed events or conditions do not occur, the outcome may vary materially from our anticipated or projected events or results. In light of these risks and uncertainties, there can be no assurance that the results and events contemplated by these forward-looking statements will in fact transpire. You are cautioned to not place undue reliance on these forward-looking statements. Moreover, these forward-looking statements represent our expectations only as of the date of this prospectus, and except as required by law, we assume no obligation to update or revise any of these forward-looking statements.
+ 
+ 
+ 17
+ 
+ 
+ Table of Contents
+
+ 
+ USE OF PROCEEDS
+ 
+ This prospectus relates only to the Shares that may be offered and sold from time to time by the Selling Stockholders. We will not receive any proceeds from the sale of Shares in this offering by the Selling Stockholders. We will receive gross proceeds of $600,000 from Selling Stockholders who have not yet purchased the second tranche of Common Shares under the Private Placement, or for any future cash exercise of Warrants held by the Selling Stockholders. 
+ 
+ DIVIDEND POLICY
+ 
+ We have never paid or declared cash dividends on our common stock. Since we currently intend to retain any future earnings for use to support the operations and growth of our business, we do not intend to declare or pay any cash dividends in the foreseeable future. Any future determination to pay dividends on our common stock will be made at the discretion of our board of directors, and will depend on our financial condition, results of operations, capital requirements, general business conditions, and other factors considered relevant by our board of directors.
+ 
+ DETERMINATION OF OFFERING PRICE
+ 
+ This offering is being made solely to allow the Selling Stockholders to offer and sell the Shares to the public. The Selling Stockholders may offer for resale some or all of their securities at the time and price that they choose pursuant to the Plan of Distribution. On any given day, the price of our common shares will be based on their market price as quoted on the OTCQB under the symbol FSSN. 
+ 
+ 
+ 18
+ 
+ 
+ Table of Contents
+
+ 
+ MARKET FOR COMMON STOCK AND RELATED STOCKHOLDER MATTERS
+ 
+ Market Information
+ 
+ Our common stock has been publicly traded in the over-the-counter market since January 11, 2017, and is quoted and traded on the OTCQB Tier of OTC Markets Group, Inc. under the symbol FSSN. 
+ 
+ Since becoming publicly traded in January 2017, the high and low sale prices per share for our common stock are shown below, which quotations do not reflect retail mark-up, markdown or commission: 
+ 
+ 
+ 
+ High
+ Price
+ 
+ 
+ Low
+ Price
+ 
+
+ Period from January 11 to March 31, 2017
+ 
+ $ 0.86 
+ 
+ $ 0.65 
+
+ April--June, 2017
+ 
+ 
+ 0.81 
+ 
+ 
+ 0.21 
+
+ July September, 2017
+ 
+ 
+ 0.39 
+ 
+ 
+ 0.09 
+
+ October December, 2017
+ 
+ 
+ 0.25 
+ 
+ 
+ 0.13 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ January March, 2018
+ 
+ 
+ 0.24 
+ 
+ 
+ 0.11 
+
+ April June, 2018
+ 
+ 
+ 0.20 
+ 
+ 
+ 0.10 
+
+ July September, 2018
+ 
+ 
+ 0.21 
+ 
+ 
+ 0.13 
+
+ October December, 2018
+ 
+ 
+ 0.19 
+ 
+ 
+ 0.11 
+
+ 
+ The last sale price of our common stock as reported on the OTCQB on December 21, 2018 was $.14 per share.
+ 
+ Stockholders
+ 
+ As of December 20, 2018, there were 357 holders of record of our common stock.
+ 
+ Transfer Agent
+ 
+ Our transfer agent is Globex Transfer, LLC, 780 Deltona Blvd., Suite 202, Deltona, FL 32725, phone number (813) 344-4490. Our transfer agent is registered under the Securities Exchange Act of 1934.
+ 
+ 
+ 19
+ 
+ 
+ Table of Contents
+
+ 
+ Rule 144
+ 
+ In general, under Rule 144 of the Securities Act of 1933, as amended, any person (or persons who are aggregated) including persons who are affiliates, whose restricted common stock has been fully paid for and held for at least six months from the later of the date acquired from us or from an affiliate of us, may sell such common stock in broker s transactions or directly to market makers, provided the number of shares sold in any three-month period may not exceed one percent of our then outstanding shares of common stock. Sales under Rule 144 are also subject to certain notice requirements and the availability of current public information about us. After one year has elapsed since the date of purchase of such common shares from us or an affiliate of us, persons who are not affiliates of us may sell their shares under Rule 144 without any limitation.
+ 
+ Future sales of our common stock under Rule 144 or otherwise could negatively impact the price of our common stock in any public market where it is traded. We cannot estimate the number of shares that may be sold in the future by the Selling Stockholders or our other shareholders or the effect, if any, that sales of shares by our stockholders will have on the market price of our common stock prevailing from time to time. 
+ 
+ Securities Authorized for Issuance Under Equity Compensation Plans
+ 
+ The following table sets forth, as of December 31, 2017, our securities authorized for issuance under both any equity compensation plans approved by our stockholders and any equity compensation plans not approved by our stockholders. 
+ 
+ 
+ 
+ Number of securities
+ to be issued upon exercise of
+ outstanding options,
+ warrants and rights
+ column (a)
+ 
+ 
+ Weighted-average exercise
+ price of outstanding
+ options, warrants and rights
+ column (b)
+ 
+ 
+ Number of securities remaining 
+ available for future issuance 
+ under equity 
+ compensation plans (excluding
+column (a)) column (c)
+ 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Equity compensation
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ plans approved by
+ 
+ 
+ 3,797,500 
+ 
+ $ .38 
+ 
+ 
+ 2,677,500 
+
+ security holders 
+ 
+ shares
+ 
+ 
+ share
+ 
+ 
+ shares
+ 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Equity compensation
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ plans not approved by
+ 
+ 
+ 6,866,352 
+ 
+ $ .39 
+ 
+ 
+ 300,000 
+
+ security holders (1)
+ 
+ shares
+ 
+ 
+ share
+ 
+ 
+ shares 
+ 
+
+ _________
+ (1) Represents options and warrants granted on a one-time basis to officers and directors, and consultants and advisors, under individual contract, bonus, or award arrangements. These individual grants vary in term, number of shares, and exercise price as determined by the Board of Directors to be in the best interests of the Company at the effective date of the grant of each award.
+
+ 
+ 
+ 20
+ 
+ 
+ Table of Contents
+
+ 
+ MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
+ 
+ The financial data referred to in the following discussion and analysis is derived from our audited financial statements for the fiscal years ended December 31, 2016 and 2017, and our unaudited financial statements for the nine months ended September 30, 2017 and 2018, which are included in this prospectus. These financial statements have been prepared and presented in accordance with generally accepted accounting principles (GAAP) in the United States. The following discussion and analysis of our financial data is only a summary and you should read and consider it in conjunction with our financial statements and their related notes. This discussion contains forward-looking statements reflecting our current expectations that involve risks and uncertainties. Our actual results and the timing of events may differ materially from those contained in our forward-looking statements due to a number of factors, including those discussed in the section entitled Risk Factors and elsewhere in this prospectus.
+ 
+ Overview
+ 
+ We are an Internet platform technology company providing proprietary cloud-based software solutions to automate and improve the marketing and sales enablement functions and activities of our customers. Our mission and focus is to develop and offer software technology tools through our agile marketing Fision platform to enable our customers to maximize their marketing assets and initiatives. 
+ 
+ We have developed and successfully commercialized our unique cloud-based marketing software platform for use by any type or size of business entity. Our Fision platform provides agile marketing software solutions which automate and integrate all digital marketing assets and sales resources of our customers. Our software solutions supported by their cloud-based delivery are readily scalable to adapt to any rapid business growth of our existing or potential customers, regardless of their size.
+ 
+ Our Fision platform enables the marketing department of our customers to easily and quickly create and implement professional marketing campaigns and other presentations for distribution to and support of their sales force personnel regardless of their location. Use of our software reduces substantially the time and cost incurred by our customers for their marketing functions and activities, while still emphasizing, protecting and enhancing their valuable brand assets. 
+ 
+ Our current and targeted customer base is global and ranges across diverse industries and companies of all sizes, particularly large enterprises selling familiar branded products or services. The agile marketing software solutions of our Fision platform offer three major benefits to our customers, (i) accelerating their revenues, (ii) improving and protecting their marketing and brand effectiveness, and (iii) reducing significantly their marketing and sales costs.
+ 
+ Our proprietary Fision platform enables every member of the marketing and sales teams of our customers, by having easy and automated access to all their digital marketing and media assets, to leverage the full power of their distinctive brands in every interaction with their customers or buyers. 
+ 
+ Our software technology and solutions offer three major benefits to our customers, (i) accelerating their revenues, (ii) improving and protecting their marketing and brand effectiveness, and (iii) significantly reducing their marketing and sales costs.
+ 
+ We believe that our innovative cloud-based Fision platform, proprietary developed technology, forward-looking strategy, and experienced management have now positioned us to become a leader in the rapidly growing agile marketing/sales enablement segment of the broad software-as-a-service (SaaS) industry. 
+ 
+ Revenue Model
+ 
+ We derive our revenues primarily through recurring monthly payments from customers having written licensing agreements with us for terms of one to three years. We consistently commit substantial expenses and sales personnel toward targeting, negotiating and procuring licensing agreements with new customers. Because of the long-term nature and the substantial expense commitment required by each new customer to enter into a binding licensing agreement with us, the sales cycle involved in our revenue model is quite lengthy. Accordingly, the unpredictable and different timing involved from customer to customer to procure our licensing contracts currently prevents us from receiving consistent revenues or accurately forecasting our future revenue stream. 
+ 
+ Our customers having written contracts with us maintain a license to access and use our proprietary marketing software platform, for which they pay monthly fees based on their use of the Fision platform and they also pay prescribed one-time set-up and integration fees at the outset of the license. We also receive certain other non-recurring fees from time to time for customized software development projects ordered from us, and for processing emails for our customers.
+ 
+ A majority of our revenues have been and are sticky and thus of a recurring nature. Our customers typically have remained with and continued using our marketing software solutions once they have integrated it into their digital marketing model and experienced the beneficial features provided by our Fision platform.
+ 
+ 
+ 21
+ 
+ 
+ Table of Contents
+
+ 
+ Marketing Model 
+ 
+ We have marketed, sold and licensed our proprietary software products through our direct sales force including management and other direct sales personnel, and also through independent national sales agencies who sell (license) our branded software products as agents being paid commissions based on their actual sales. We regard and refer to these experienced sales agencies as our channel partners. We currently use three significant channel partners which are recognized technology sales agencies, and we have realized material sales from their efforts. 
+ 
+ A substantial majority of our past revenues have been generated from software licensing contracts, which written and binding contracts typically have terms of one to three years and require prescribed monthly fees based on the customer s number of end users and locations where used. We have outstanding licensing contracts with fourteen (14) customers including certain significant contracts we closed within the past year, and we currently are engaged in various stages of contract negotiation with or procurement of several prospective new customers.
+ 
+ We operate and sell our products and services in the marketing software segment of the broad software-as-a-service (SaaS) industry, with most of our revenues derived from our proprietary cloud-based Fision marketing software platform. 
+ 
+ Intellectual Property (IP) Protection
+ 
+ We commit substantial attention and resources toward obtaining patent and trademark rights and otherwise protecting our trade secrets, development know-how technology, trademarks, trade names, patent rights and other proprietary intellectual property (IP). Our IP protection includes written provisions relating to non-compete, non-recruit, confidentiality, and invention assignments as applicable with employees, vendors, sales agents, consultants and others.
+ 
+ In 2017 we were granted Patent No. US 9,639,551 B2 from the United States Patent and Trademark Office (USPTO) entitled Computerized Sharing of Digital Asset Localization Between Organizations. And in 2018 we were granted two additional patents from the USPTO including Patent No. US 9,984,094 B2 entitled Computerized Sharing of Digital Assets. We also have a couple additional patent claims pending with the USPTO, and we expect to obtain patent grants for them. We regard our patents as being very valuable to our technology and brand. 
+ 
+ Inflation and Seasonality
+ 
+ We do not consider our operations and business to be materially affected by either inflation or seasonality.
+ 
+ Significant Accounting Policies and Estimates 
+ 
+ Principles of Consolidation
+ 
+ Regarding our wholly-owned Minnesota Fision subsidiary, as well as any future acquisition that may become our subsidiary, our financial statements will be presented on a consolidated basis with all intercompany transactions and balances eliminated in consolidation.
+ 
+ 
+ 22
+ 
+ 
+ Table of Contents
+
+ 
+ Use of Estimates
+ 
+ The preparation of financial statements in conformity with generally accepted accounting principles (GAAP) requires management to make certain material estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements as well as the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates materially. These accounting estimates and assumptions may be material to us and our financial statements due to the levels of subjectivity and judgment involved.
+ 
+ Certain material estimates made in connection with our accompanying financial statements include our estimated reserve for doubtful accounts receivable, valuations used for stock-based compensation, fair value determinations in connection with our analysis of long-lived assets for impairment, estimated useful lives for intangible assets and property and equipment, and our accounting for convertible debt and other derivative securities.
+ 
+ Accounts Receivable
+ 
+ We maintain allowances for potential credit losses on accounts receivable. In connection with the preparation of our financial statements, management reviews the composition of accounts receivable and analyzes historical bad debts, customer concentrations, customer credit worthiness, changes in customer payment patterns, and current economic trends in order to evaluate the adequacy of these allowances. Accounts determined to be uncollectible are charged to operations when that determination is made.
+ 
+ Research and Development
+ 
+ We expense all our research and development operations and activities as they occur. Our development activities are conducted both from our Minneapolis headquarters facility by our development personnel, and also externally through outsourced contracts with independent software development companies and individuals. We own servers and other computer equipment located at our Minneapolis facility, which are used by our development personnel to further develop or to enhance our marketing software platform. 
+ 
+ Property and Equipment
+ 
+ Property and equipment are capitalized and stated at cost, and any additions, renewals or betterments are also capitalized. Expenditures for maintenance and repairs are charged to earnings as incurred. If property and equipment are retired or otherwise disposed of, the related cost and accumulated depreciation are removed from our accounts, and any gain or loss is included in operations. Depreciation of property and equipment is provided using the straight-line method with estimated lives as follows:
+ 
+ Furniture and fixtures 
+ 5 years 
+ 
+ Computer and office equipment 
+ 5 years
+ 
+
+ 
+ Derivative Securities
+ 
+ We evaluate all of our agreements and financial instruments to determine if they contain features that qualify as embedded derivatives. For any derivative financial instruments accounted for as liabilities, they initially will be accounted for at fair value and if necessary revalued at each reporting date, with any changes in fair value reported in our statements of operations. For any stock-based derivative financial instruments or securities, we use an option pricing model to value them at inception and on any subsequent valuation dates. The classification of derivative instruments, including whether they should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in our balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date.
+ 
+ 
+ 23
+ 
+ 
+ Table of Contents
+
+ 
+ Fair Value of Financial Instruments
+ 
+ FASB ASC Topic 820 requires disclosure of and defines fair value of financial instruments, and also establishes a three-level valuation hierarchy for these disclosures. The carrying amounts reported in a balance sheet for receivables and current liabilities qualify as financial instruments and are a reasonable estimate of their fair values because of the short period of time between their origination and their expected realization and their current market rate of interest. The three levels of valuation hierarchy for fair value determinations are defined as follows: 
+ 
+ Level 1 inputs include quoted prices for identical assets or liabilities in active markets. 
+ 
+ Level 2 inputs include observable quoted prices for similar assets and liabilities in active markets, and quoted prices for identical assets or liabilities in inactive markets. 
+ 
+ Level 3 inputs include one or more unobservable inputs which we have assessed and assumed that market participants would use in pricing the asset or liability.
+ 
+ Revenue Recognition
+ 
+ A majority of our revenues are derived from our customers having written licensing agreements with us, which revenues are recognized by us on a one-time or monthly basis as specified in these written contracts. Regarding any secondary non-recurring revenues such as one-time custom software projects or bulk email delivery for our customers, we recognize revenue when the specific project or service is completed.
+ 
+ Revenue is recognized in the period the services are provided over the contract period, normally one to three years. We invoice one-time startup and implementation costs, such as consolidating and uploading digital assets of the customer, upon completion of these services. Monthly services such as internet access, hosting and weekly backups are invoiced monthly.
+ 
+ Upon receipt of any prepayment from a customer, we recognize a contract liability for our performance obligation to transfer goods and services in the future. When we transfer the goods and services, thus satisfying the performance obligation, we will then recognize the revenue.
+ 
+ The Company recognizes revenues based on these policies because the services have been provided by us, our fees are fixed or determinable, persuasive evidence of the arrangement for our services exists, and collectibility of revenues is reasonably assured.
+ 
+ Cost of Revenue
+ 
+ Cost of revenue primarily represents third-party hosting, data storage and other services provided by our cloud service provider, as well as certain other expenses directly related to customer access and use of our marketing software platform. Cost of revenue relating to our cloud services is recognized monthly. 
+ 
+ Stock-Based Compensation
+ 
+ We record stock-based compensation in accordance with FASB ASC Topic 718, which requires us to measure the cost for any stock-based compensation at fair value at the grant date and recognize the expense over the related service period. In our statement of operations, we recognize the fair value of stock options and other equity-based compensation issued to employees and non-employees as of the grant date. Our valuations for stock-based compensation grants are based primarily on the quoted prices for our common stock in the public trading market. 
+ 
+ Income Taxes 
+ 
+ We account for income taxes in accordance with the asset and liability method of accounting for income taxes, whereby any deferred tax assets are recognized for deductible temporary differences and any deferred tax liabilities are recognized for taxable temporary differences. Deferred tax assets are reduced by a valuation allowance when, in the opinion of our management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.
+ 
+ 
+ 24
+ 
+ 
+ Table of Contents
+
+ 
+ Basic and Diluted Earnings Per Share
+ 
+ Earnings per share is calculated in accordance with ASC Topic 260, which provides that basic earnings per share is based on the weighted average number of common shares outstanding, and diluted earnings per share is based on the assumption that all dilutive convertible shares, options, and warrants were exercised. Dilution is computed by applying the treasury stock method, which provides that options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if the funds obtained thereby are used to purchase common stock at the average market price during the period.
+ 
+ Long-Lived Assets
+ 
+ We evaluate the recoverability of our identifiable intangible assets and other long-lived assets when events or circumstances indicate a potential impairment exists. In determining if impairment exists, we estimate the undiscounted cash flows to be generated from the use and ultimate disposition of these assets. If impairment is indicated based on a comparison of the assets carrying values and the undiscounted cash flows, the impairment loss is measured as the amount by which the carrying amount of the assets exceeds their fair value. 
+ 
+ Segment Reporting
+ 
+ The Company has determined that it operates in only one segment of its industry.
+ 
+ Recently Issued Accounting Pronouncements
+ 
+ In May 2014, the FASB issued ASU No. 2014-09, "Revenue from Contracts with Customers (Topic 606)," which supersedes the revenue recognition requirements in ASC 605, Revenue Recognition. This ASU is based on the principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The ASU also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. The update is effective in fiscal year 2019 using one of two retrospective application methods. The Company is in the process of analyzing the impact of adopting this guidance but does not anticipate that it will have a material impact on its financial position, results of operations, or cash flow disclosures..
+ 
+ In February 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases (Topic 842) ( ASU 2016-02 ), which requires lessees to put most leases on their balance sheets but recognize the expenses on their income statements in a manner similar to current practice. ASU 2016-02 states that a lessee would recognize a lease liability for the obligation to make lease payments and a right-to-use asset for the right to use the underlying asset for the lease term. The new standard is effective for interim and annual periods beginning after December 15, 2018 and early adoption is permitted. We are currently evaluating the impact of ASU 2016-02 to our future consolidated financial statements.
+ 
+ Other recent accounting pronouncements issued by the FASB, the AICPA, and the SEC did not or are not believed by our management to have a material impact on our present or future financial statements.
+ 
+ 
+ 25
+ 
+ 
+ Table of Contents
+
+ 
+ Results of Operations for the Nine Months Ended September 30, 2018 and 2017
+ 
+ Revenue -- Revenue was $391,037 for the nine months ended September 30, 2018 compared to $409,980 for the nine months ended September 30, 2017, which revenues for these two nine-month periods were basically the same.
+ 
+ Cost of Sales -- Cost of sales for the nine months ended September 30, 2018 was $63,104 (16% of revenue) compared to cost of sales of $53,012 (13% of revenue) for the nine months ended September 30, 2017, which small increase in the percentage of cost of sales in the 2018 nine-month period was due primarily to decreased revenues.
+ 
+ Gross Margin -- Gross margin for the nine months ended September 30, 2018 was $327,933 compared to $356,968 for the nine months ended June 30, 2017. Gross margin as a percentage of revenue was 84% for the 2018 nine-month period compared to 87% of revenue for the 2017 nine-month period.
+ 
+ Operating Expenses -- Operating expenses for the nine-month period ended September 30, 2018 were $2,197,358 compared to $3,058,352 for the nine-month period ended September 30, 2017, which decrease of $860,994 for the 2018 nine-month period was due primarily to substantial one-time marketing support expenses incurred in 2017 related to our enhanced marketing program directed to large enterprises. Sales and marketing expenses for the nine-month period ended September 30, 2018 were $536,164 compared to $1,296,922 for the nine-month period ended September 30, 2017, which large decrease of $760,758 for the 2018 nine-month period was due primarily to the one-time marketing support expenses incurred in 2017. Development and support expenses for the nine-month period ended September 30, 2018 were $531,359 compared to $763,168 for the nine-month period ended September 30, 2017, which decrease of $231,809 for the 2018 nine-month period was due primarily to development of our software platform being essentially completed by early 2018. General and administrative expenses for the nine-month period ended September 30, 2018 were $1,129,835 compared to $998,262 for the nine-month period ended September 30, 2017, which increase of $131,573 for the 2018 nine-month period was due primarily to certain one-time stock-based consulting and advisory expenses incurred in early 2018.
+ 
+ Operating Loss -- Operating loss for the nine months ended September 30, 2018 was $1,869,425 compared to $2,701,384 for the nine months ended September 30, 2017, which decrease for the 2018 nine-month period was due to the reasons described in the foregoing paragraph.
+ 
+ Other Income/(Expenses) -- Other income/(expenses) for the nine-month period ended September 30, 2018 were $(324,638) compared to $(992,105) for the nine-month period ended September 30, 2017, which large decrease for the 2018 nine-month period was due primarily to the accounting treatment for amortization and changes in fair value of our derivative convertible debt. Other income/expenses for the 2018 nine-month period consisted of interest, debt discount amortization and other debt-related expenses of $1,446,929, offset by a positive change in the value of derivatives of $696,997, a gain on settlement of debt of $424,650 and $644 in non-operating income. In comparison, other income/expenses for the 2017 nine-month period consisted of interest, debt discount amortization and other debt-related expenses of $928,283 and settlement of debt expense of $121,854, offset by a positive change in the value of derivatives of $57,847 and $185 in non-operating income. 
+ 
+ Net Loss Our net loss for the nine months ended September 30, 2018 was $2,194,043 compared to a net loss of $3,693,489 for the nine months ended September 30, 2017, which smaller loss in the 2018 nine-month period was due to the foregoing reasons. 
+ 
+ Results of Operations Fiscal Years Ended December 31, 2017 and December 31, 2016 
+ 
+ Revenue -- Revenue totaled $577,022 for the fiscal year ended December 31, 2017 compared to revenue of $425,198 for the comparable fiscal year 2016, an increase of $151,824, or 35.7%, which increase was due primarily to increasing revenues from our recent significant large enterprise clients. 
+ 
+ Of fiscal year 2017 revenue, $443,386 (77%) represented recurring revenues from customer licensing fees, and the balance of $133,636 primarily represented one-time setup and integration fees pursuant to new customer licensing agreements. As for fiscal year 2016 revenue, $316,400 (74%) represented recurring license fee revenues, and the balance of $108,798 primarily represented one-time setup and integration fees related to new customer contracts. 
+ 
+ 
+ 26
+ 
+ 
+ Table of Contents
+
+ 
+ Cost of Revenue Cost of revenue in fiscal year 2017 was $73,514 (12.7% of revenue) compared to cost of revenue in fiscal year 2016 of $96,315 (22.7% of revenue). 
+ 
+ Gross Margin Gross margin for fiscal year 2017 was $503,508 compared to $328,884 for fiscal year 2016, an increase of $174,624 attributable primarily to higher revenue in 2017 and better efficiencies related to our change in cloud service provider. Gross margin as a percentage of revenue was 87% for fiscal year 2017 compared to 77% for fiscal year 2016. In future years, we expect our gross margin will continue to remain in a high range similar to fiscal year 2017.
+ 
+ Operating Expenses Operating expenses totaled $4,189,394 for fiscal year 2017 compared to $2,973,495 for fiscal year 2016. These comparable operating expenses included:
+ 
+ (i)
+ selling and marketing expenses of $1,597,104 in 2017 compared to $1,046,806 in 2016, which increase of $550,298 in 2017 was due primarily to substantial increased sales personnel, stock-based grants, travel and other expenses necessary to focus our marketing and sales strategy toward large enterprise clients;
+
+ 
+ (ii)
+ development and support expenses of $957,274 in 2017 compared to $595,115 in 2016, which increase of $362,159 in 2017 was due primarily to software enhancement development of our Fision platform to support and improve its use and functions by large enterprise customers, and adding personnel experienced in developing and providing software services to large enterprise customers; and
+
+ 
+ (iii)
+ general and administrative expenses of $1,635,016 in 2017 compared to $1,331,574 in 2016, which increase of $303,442 was primarily due to a substantial increase of stock-based compensation for financing and consulting services as well as increased costs of being a public company. 
+
+ 
+ Other Expenses Other expenses for fiscal year 2017 were $1,073,933 including loan interest and debt discount expenses of $976,426, loss on a debt settlement of $121,854, amortization and OID loan expenses of $55,387, offset primarily by a change in fair value of loan derivatives of $76,235. In comparison, other expenses for fiscal year 2016 were $173,387 and consisted of interest and debt discount expenses. 
+ 
+ Net (Loss) Our net (loss) for fiscal year 2017 was $(4,189,394) compared to $(2,817,998) for fiscal year 2016, which increased loss in 2017 was due to increased marketing, selling, software development/implementation, and administrative expenses necessary to support our expanded business model to target and focus on large enterprise customers.
+ 
+ 
+ 27
+ 
+ 
+ Table of Contents
+
+ 
+ Liquidity and Capital Resources
+ 
+ Our financial condition and future prospects critically depend on our access to financing in order to continue funding our operations. Much of our cost structure is based on costs related to personnel and facilities, and is not subject to significant variability. In order to fund our operations and working capital needs, we have historically utilized loans from accredited investors (including management), equity sales of our common stock or convertible debt, and issuances of common stock to satisfy outstanding debt and to pay for development, marketing, management, financial, professional and other services. 
+ 
+ We will need to raise substantial additional capital through private or public offerings of equity or debt securities, or a combination thereof, and we may have to use a material portion of the capital raised to repay past due debt obligations. To the extent any capital raised is insufficient to satisfy operational working capital needs and meet any required debt payments, we will need to either extend, refinance or convert to equity our past due indebtedness, which there is no assurance we will accomplish. 
+ 
+ As of September 30, 2018, we had total current liabilities of $4,350,144 including Notes Payable of $699,329 and $2,572,376 of related derivative liabilities. We also had long-term liabilities of $501,129 as of September 30, 2018, consisting of Convertible Notes Payable having varying maturity dates. A summary of our outstanding Notes Payable indebtedness including accrued interest thereon as of September 30, 2018 is set forth in Note 4 of our unaudited financial statements for the nine-month period ended September 30, 2018. 
+ 
+ Currently we have approximately $___________ in cash, which we believe along with our projected revenues and accounts and notes receivable will last until _____________, 2019. Our management estimates that based on our current and projected expenses, we need to raise approximately $2,500,000 in additional capital to support our operations and satisfy certain debt payments for the next twelve months. Such financing may be sought from various sources including sales of equity or debt securities (including convertible debt) or loans from financial institutions or others. We may not be able to obtain such financing when needed on terms acceptable to us, if at all. If further substantial financing is not available to us as needed
+ 
+ Convertible Note Financing
+ 
+ A majority of our financing during the past couple years has consisted of Convertible Notes sold to various accredited investors. We raised a total of $1,020,000 from such convertible debt financing in 2017, and we raised a total of $2,518,500 from such convertible debt financing in 2018.
+ 
+ Recent Securities Financing 
+ 
+ During November--December 2018 we obtained an aggregate of $1,400,000 in financing from our sale of Common Shares with accompanying Advisory Shares, Warrants and potential True-Up Shares. See The Private Placement. 
+ 
+ Net Cash Used in Operating Activities
+ 
+ We used $1,808,220 of net cash in operating activities for the nine months ended September 30, 2018 compared to $665,286 of net cash used in operating activities for the nine months ended September 30, 2017. This increase of $1,142,934 of net cash used in operating activities in the 2018 nine-month period was due primarily to the accounting treatment of our substantially increased convertible debt for changes in derivative liability, debt discount amortization and other debt-related expenses.
+ 
+ We used $1,210,787 of net cash in operating activities for the fiscal year ended December 31, 2017 compared to $1,200,674 of net cash used in operating activities for the fiscal year ended December 31, 2016, which was virtually the same for these two years.
+ 
+ Net Cash (Used in) Provided By Investing Activities
+ 
+ During the nine months ended September 30, 2018, we used net cash in investing activities of $5,000 for an equipment purchase compared to net cash provided by investing activities of $51,500 (acquired incident to our Volerro acquisition) during the nine months ended September 30, 2017. 
+ 
+ We were provided by net cash in investing activities in fiscal year 2017 of $51,500 from our Volerro assets acquisition, compared to net cash used in investing activities in fiscal year 2016 of $6,531 for an equipment purchase. 
+ 
+ 
+ 28
+ 
+ 
+ Table of Contents
+
+ 
+ Net Cash Provided by Financing Activities
+ 
+ During the nine months ended September 30, 2018 we were provided net cash by financing activities of $2,021,824 including proceeds from notes payable of $2,448,450 offset by repayments on notes payable of $417,526 and a $9,100 payment on our line of credit. In comparison, during the nine months ended September 30, 2017 we were provided net cash by financing activities of $612,108 including sales of common stock of $300,000, issuance of notes payable of $424,300 offset by $104,667 for repayments on notes payable and a $7,525 payment on our line of credit.
+ 
+ During fiscal year 2017, we were provided by financing activities with net cash of $1,161,888 including proceeds from sales of common stock of $300,000 and net proceeds (after repayments) from notes payable of $861,888. In comparison, during fiscal year 2016, we were provided by financing activities with net cash of $1,206,903 including proceeds from sales of common stock of $1,225,000 offset by net payments of $18,097 on short-term loans.
+ 
+ Going Concern
+ 
+ Our financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. Our ability to continue as a going concern is contingent upon our future ability to achieve and maintain profitable operations, and to raise substantial additional capital as required until we attain profitable operations.
+ 
+ At September 30, 2018 we had a working capital deficiency of approximately $3.7 million and an accumulated deficit of approximately $21 million. These conditions raise substantial doubt about our ability to continue as a going concern. Our financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might result from this uncertainty.
+ 
+ We are in the process of raising funds, increasing our marketing and sales activities to obtain materially increased revenues, and otherwise addressing our ability to continue as a going concern, and our management believes that our actions being taken to raise needed capital and implement our business plan for increased revenues will enable us to continue as a going concern.
+ 
+ 
+ 29
+ 
+ 
+ Table of Contents
+
+ 
+ Off-Balance Sheet Arrangements
+ 
+ We have no off-balance sheet items as of September 30, 2018 or as of the date of this prospectus.
+ 
+ OUR BUSINESS
+ 
+ Our business is conducted through our operating Minnesota subsidiary which is based in Minneapolis. Our Minnesota subsidiary was founded and incorporated in Minnesota in 2010 by our current management to develop and create proprietary software solutions to support marketing and sales operations of both private and public companies. Since then, we have developed and successfully commercialized a cloud-based software platform which automates and integrates digital marketing assets and marketing communications and thus bridges the gap between marketing and sales of an enterprise. 
+ 
+ We are a software development and licensing company offering our proprietary Fision software platform to enhance and automate many marketing functions and activities of a business, in order to promote and improve sales enablement of any commercial entity. Our Fision software system is readily scalable to adapt to fast business growth of any customer, regardless of size. Since our founding, we have been engaged primarily in the development of our software platform along with commercializing, servicing and supporting our initial customers. Except for future customary software enhancements and periodic upgrades, the development of our marketing software platform has been completed.
+ 
+ Our Fision software platform and its agile marketing solutions enables our customers to easily and quickly create and implement marketing campaigns to support their sales personnel while still emphasizing, protecting and enhancing their valuable brand assets. Use of our software solutions by our customers reduces substantially the time and cost incurred by them to produce and present marketing and sales campaigns and presentations for specific products or services.
+ 
+ Our proprietary marketing software enables every member of our customers marketing and sales teams, by having easy and automated access to all their digital marketing and media assets, to leverage the full power of their distinctive brands and marketing assets in every interaction with their consumers or buyers, while at the same time assuring that central marketing maintains control of the brands and related corporate integrity.
+ 
+ Our current and targeted customer base ranges across diverse industries of all sizes, including banks and other financial institutions, insurance companies, hotels and other hospitality enterprises, manufacturers, healthcare and fitness companies, software and other technology companies, telecommunications companies, and other companies selling established branded products or services. 
+ 
+ We generate our revenues primarily from software licensing contracts typically having terms of one to three years and requiring monthly subscription fees based on the customer s number of users and locations where used. The majority of our revenues are recurring, due to the long-term nature of our contracts.
+ 
+ We have licensed our proprietary software platform primarily through direct sales obtained by our management and other direct sales personnel. During the past couple years, we also have implemented a secondary sales channel utilizing experienced independent sales agencies, which we refer to as our channel partners. We have realized material revenues from the efforts of our channel partners.
+ 
+ Our Fision Platform
+ 
+ Our Fision marketing software centrally collects, stores, prioritizes, organizes, streamlines, integrates and distributes the numerous digital marketing assets of our customers including videos, images, logos and other brand materials, presentations, social content and any other material digital marketing assets. Using Fision s proprietary software technology, these digital assets then become readily available for user access as determined by our customers. Our system is designed to allow any corporate marketing department the ability to instantly and seamlessly update its users with the latest digital marketing content and materials, while providing them with a simple, intuitive software interface to quickly find what they need on any digital device, anytime and anywhere. 
+ 
+ Even customers having extensive global sales networks have the ability using our cloud-based platform to quickly and efficiently create and deliver customized sales campaigns or presentations to selectively targeted consumer audiences while conveying a positive, personalized and consistent brand experience. We believe that the use of our software marketing solutions by our customers results in a substantial increase in their return on investment (ROI) and their profitability.
+ 
+ 
+ 30
+ 
+ 
+ Table of Contents
+
+ 
+ We believe that our Fision platform provides many beneficial functions to our customers, including the following: 
+ 
+ 
+ Reducing the time and cost to localize marketing content, resulting in shortening the sales cycle for faster speed to market.
+
+ 
+ 
+ Responding quickly to changing consumer market conditions.
+
+ 
+ 
+ Enhancing the effectiveness of digital distribution to targeted consumers or buyers whether through print, email, mobile, website or social media.
+
+ 
+ 
+ Providing autonomy to scattered sales force personnel to enable them to independently and quickly create locally relevant content and launch their own selling campaigns.
+
+ 
+ 
+ Distributing specialized content to selected consumer or buyer groups.
+
+ 
+ 
+ Maintaining corporate reputation and brand integrity.
+
+ 
+ 
+ Facilitating regulatory compliance.
+
+ 
+ 
+ Improving marketing and sales performance analytics.
+
+ 
+ Our Customers
+ 
+ Our potential customer base is global and virtually unlimited, since our automated marketing software solutions are totally cloud-based and scalable, and provide a multitude of digital tools and solutions which we believe can benefit the marketing activities of any company selling products or services, regardless of their size. 
+ 
+ We have written licensing agreements with fourteen (14) customers using our agile marketing software solutions platform. Our customers typically stick with us and our Fision platform, and accordingly we generally receive recurring revenues from them on a consistent basis. We regard our substantial percentage of recurring revenues to be particularly significant to our marketing strategy which emphasizes long-term relationships with our customers under written contracts. We believe that our ability to realize material recurring revenues from our customers is a keystone feature of our business model. Certain key customers have maintained written contracts with us for several years, including Renewal by Andersen, PostNet, Grand Casino, IronPlanet, Full Circle Group/RAZR, Summit Reinsurance, Frontier Communications, and VitalityHealth/PruHealth.
+ 
+ 
+ 31
+ 
+ 
+ Table of Contents
+
+ 
+ Strategic Marketing Change
+ 
+ During the years prior to 2017 while we were primarily engaged in designing and developing our Fision software platform, our limited marketing and sales efforts were directed toward local or regional small-to-medium sized companies whose operational, management and commercial activities are conducted from one local or a couple regional facilities. Since our Fision platform and its cloud-based marketing software were designed and developed to be readily adaptable to and scalable for any size company, however, during late 2016 and early 2017 we revised our marketing strategy and activities to target and sell our agile marketing software products primarily to large global enterprise corporations having many and widespread national and international branches and operations. 
+ 
+ We believe that our enhanced marketing focus now targeted toward large enterprises has been effective, since during the past couple years we have closed and implemented material contracts with, and are receiving recurring revenues from, several large enterprise companies. Moreover, we currently are in the process of procuring material key contracts with certain additional large enterprise companies.
+ 
+ The increased length of our sales cycle necessary to sell our products to large enterprises, however, has been considerably longer than we earlier incurred while marketing our Fision platform to local and regional sized companies. This substantial increase in our sales cycle to negotiate and close contracts with new large enterprise customers resulted in a material decline in our revenues during the past couple years. We now believe this period of declining revenues due to our change in marketing strategy has ended, and that due to the large enterprise contracts we have recently closed and those we are now in the process of procuring, our revenues will appreciate substantially during 2019 and following years.
+ 
+ Recent Marketing Achievements 
+ 
+ Our primary marketing strategy focused toward large enterprise companies has succeeded in various industries. We believe that significant recent clients acquired by us will result in substantial increases in our future recurring revenues from our cloud-based Fision software platform. Our recent large enterprise customers include:
+ 
+ 
+ a worldwide provider of SaaS software services for procurement and contract management.
+
+ 
+ a Fortune 50 global provider of aerospace and building systems.
+
+ 
+ a nationwide leading provider of accredited online higher education courses and degrees.
+
+ 
+ the world s largest RV dealership with retail operations in Florida, Colorado and Arizona.
+
+ 
+ a national insurance and financial company having more than 20,000 employees and advisors.
+
+ 
+ an operator of the world s largest business network.
+
+ 
+ a leading healthcare innovator led by former key executives of Amazon, Google and 2d.MD.
+
+ 
+ 
+ 32
+ 
+ 
+ Table of Contents
+
+ 
+ Full Year 2019 Revenue Guidance
+ 
+ Based on the recent integration and implementation of our Fision platform with the marketing/sales operations of several of our new large enterprise customers and their initial commercial use of Fision agile marketing software, we believe our revenues for the upcoming 2019 year will exceed our 2018 revenues materially.
+ 
+ Cloud-Based Platform
+ 
+ Storage and operation of our agile marketing software solutions along with the digital marketing assets and related data of our customers are outsourced by us to reside and function in the digital cloud. Providers of cloud services are typically referred to as virtual servers since they provide all digital data storage and related software application services to their clients. Our cloud service provider is Microsoft s Azure Cloud, which leading provider offers readily scalable, high quality and secure cloud services capable of satisfying any increasing demand or changing circumstances in the needs of our customers or us. 
+ 
+ We regard the hosting of our software applications, the ready digital interface with our customers, the storage of unlimited customer data with our premier cloud provider, and the overall flexibility of the cloud model as being crucial to our operating strategy. Our major savings in expensive computer equipment, high salaried technology personnel, and costly security measures through our use of Microsoft s cloud is vital to our cost of doing business. Moreover, we believe that our leading and experienced cloud provider is more effective in delivering our agile marketing software solutions to our customers than we could perform in any event
+ 
+ Research and Development
+ 
+ Since our inception, we have committed substantial financial, personnel and computer equipment resources toward research and development efforts and activities relating to the integration, commercialization and improvement of our proprietary Fision software platform. 
+ 
+ Our development activities are conducted both in-house from our Minneapolis headquarters facility by our experienced and well-qualified development programmers, and externally from outsourced contracts with experienced independent software development companies and individuals. We own considerable servers and other computer equipment located at our Minneapolis facility, which are used by our development personnel to develop and enhance our Fision software platform.
+ 
+ 
+ 33
+ 
+ 
+ Table of Contents
+
+ 
+ Our Industry
+ 
+ We are positioned and conduct our business in the agile marketing segment of the broad software-as-a-service (SaaS) industry, which segment we believe now represents annual revenues of at least $20 Billion.
+ 
+ Corporate spending on computer software applications and other intellectual technology (IT) has been growing at a rapid pace for many years in order to capitalize on the benefits of digital information technology. Moreover, a substantial amount of IT spending is now being directed to support and enhance corporate marketing and sales efforts and activities. We believe that for many corporations, agile marketing software technologies have become a fundamental driver of their IT purchasing. 
+ 
+ Marketing
+ 
+ We market and sell licensing rights to our Fision software platform under written contracts with our customers which typically have one to three-year terms. Our historical customers and revenues were procured primarily through direct sales obtained by our management and direct sales force.
+ 
+ Our marketing and related sales efforts and activities include generating sales leads and contract proposals with customers through our direct sales force and management and other persons affiliated or associated with us. Our direct marketing and sales efforts are supported by various product promotional activities including participation in selected industry trade shows and conventions, certain print and digital media advertising and promotion, and marketing solution overviews and presentations posted on our website. 
+ 
+ A couple years ago, we implemented a secondary sales channel which involves targeting independent national technology sales agencies to sell (license) our branded software products as agents paid based on their actual sales. We regard and refer to these sales agencies as our channel partners. To date we have entered into three significant channel partner arrangements with experienced and reputable agencies, and we have already realized material revenues from their sales efforts in representing us. 
+ 
+ 2017 Strategic Acquisition
+ 
+ In May 2017 we acquired substantially all the assets of Volerro Corporation ( Volerro ), a Minneapolis-based company, including its unique cloud-based proprietary software and development technology and its customer base. Volerro has developed and marketed content collaboration software services to enhance and improve the overall sales and marketing activities of its clients. We acquired these Volerro assets in consideration for 600,000 shares of our unregistered common stock issued to Volerro.
+ 
+ Volerro software enables the marketing, sales and brand personnel of its clients to collaborate in real time in the creation, refinement, and distribution of all types of their strategic content including print, packaging, high quality image and video content. For example, Volerro s primary application allows all product, brand, marketing and creative teams of a business enterprise the ability to work on and create a document in real-time with integrated chat and voice conferencing.
+ 
+ Marketing of Volerro cloud-based software solutions has been primarily focused on large financial and retail enterprises. The two principal clients of Volerro are U.S. Bank, a leading national banking institution having numerous branches throughout the USA, and Shopko Stores, a $3.2 billion retailer selling many kinds of quality name-brand merchandise through its 363 operated retail stores in 24 states.
+ 
+ Volerro content collaboration software services and technology are particularly complementary with and readily adaptable to integrate into the SaaS marketing software services currently available on our Fision platform. Accordingly, we believe our acquisition of these Volerro software applications will both increase our revenues materially and also attract new customers to our Fision platform.
+ 
+ Our Employees
+ 
+ We currently have ten (10) full-time employees, including our Chief Executive Officer, Chief Financial Officer, Chief Revenue Officer, Controller/Office Manager, Customer Support Specialist, Marketing Manager, Client Service Manager, and three Programmer/Developers. None of our employees are subject to a collective bargaining agreement and we believe that our relations with our employees are good. 
+ 
+ Legal Proceedings
+ 
+ From time to time, we become subject to legal proceedings, claims and litigation arising in the ordinary course of business. We currently are not a party to any material legal proceedings, nor are we aware of any material pending or threatened litigation against or involving us.
+ 
+ 
+ 34
+ 
+ 
+ Table of Contents
+
+ 
+ Our Facilities
+ 
+ Our corporate headquarters and development and operational facilities are located at Butler Square, a large office building complex in downtown Minneapolis, Minnesota, where we occupy 5,229 square feet of office and development spaces. We lease these facilities under a two-year lease expiring in December 2019 for $8,323 monthly including rent, utilities, and maintenance. We do not own any real estate. 
+ 
+ Our computer hardware servers and other technology development equipment as well as considerable office and administrative equipment, furniture and supplies are also located in our Minneapolis facility. We believe that our current facilities and equipment are adequate to satisfy our current operations and to support substantial future growth.
+ 
+ MANAGEMENT
+ 
+ Our directors and executive officers are as follows:
+ 
+ Name
+ Age
+ Position
+
+ Michael Brown 
+ 60
+ Chief Executive Officer, Board Chairman and Director
+
+ Garry Lowenthal 
+ 59
+ Executive Vice President, Chief Financial Officer and Director 
+
+ John Bode
+ 43
+ Director
+
+ Jason Mitzo
+ 42
+ Chief Revenue Officer 
+
+ 
+ Michael Brown, co-founder of the Company, has been a director and Chief Executive Officer of the Company since our inception in 2010. Mr. Brown has been an accomplished corporate executive for over 20 years while serving in various senior operations, sales and executive positions. His extensive senior management experience includes having been Senior Vice President of Operations, Sales and Marketing at Life Time Fitness from 1997 to 2007, where he successfully managed and oversaw annual revenue growth from $7 Million to $689 Million. In 2001, he attended the Executive MBA course at the University of St. Thomas, and he has also served as a nuclear submarine diver in the United States Navy.
+ 
+ Garry Lowenthal, co-founder of the Company, has been a director, Executive Vice President and Chief Financial Officer of the Company since our inception in 2010. Mr. Lowenthal has over 20 years extensive experience in senior operations and key finance management positions, both with private and public companies. He has developed a substantial background with equity capital raising transactions while managing both private placements and public offerings for various corporations. Mr. Lowenthal has served on the national board of Financial Executives International (FEI), the premier professional association for CFOs and other senior financial executives. He also served as past chairman of FEI s national technology committee. Mr. Lowenthal is on the Alumni Advisory Board of the Carlson School of Management/University of Minnesota where he graduated with a Master s Degree in Business Taxation and Finance and a Bachelor s Degree in Accounting. He also serves as a District Chairman for the Boy Scouts of America.
+ 
+ John Bode has been a director of the Company since March 2018. Mr. Bode s past corporate experience includes many years serving as a key executive and/or financial officer for leading public companies. He currently is the managing director of Aerie Investments where he is primarily involved with creating strategic initiatives with companies ranging from legacy media enterprises to digital start-ups. Prior thereto, Mr. Bode was Chief Financial Officer (CFO) of the Tribune Publishing Company (now tronc, Inc, (NASDAQ: TRNC). Mr. Bode also served as the CFO of Source Interlink Companies, one of the largest enthusiast media companies in the USA and a leading distributor of periodicals. His extensive past accounting/auditing career also included being employed as a Certified Public Accountant (CPA) for BDO Seidman. Mr. Bode qualifies as an independent director under the rules of FINRA, the SEC, and all national stock exchanges. 
+ 
+ Jason Mitzo has been Chief Revenue Officer of the Company since June 2017, and prior thereto he was our Senior Vice President of Sales and Marketing since February 2012. From 2008 to February 2012, Mr. Mitzo was a Sales Director of Oracle, a Fortune 50 public technology company, where he was the developer and leader of various successful Oracle sales and marketing teams. He has more than 15 years of sales and marketing leadership experience with various software and other technology companies, and he has worked with a wide array of clients on B2C and B2B programs across a broad spectrum of industries. His worldwide business client experience has included InterContinental Hotels Group, Mitsubishi Motors, ECCO, Trek Bicycle Corporation, Alticor/Amway and others. He also is founder of The Social 360, an online marketing agency based in Minneapolis/St. Paul.
+ 
+ 
+ 35
+ 
+ 
+ Table of Contents
+
+ 
+ Director Relationships
+ 
+ There are no family relationships among or between any of our officers and directors.
+ 
+ None of our directors is a director of any other company having a class of securities registered pursuant to Section 12 of the Securities Exchange Act or subject to the requirements of Section 15(d) of the Securities Exchange Act, or of any company registered as an investment company under the Investment Company Act of 1940.
+ 
+ Director Compensation
+ 
+ No director compensation was paid or awarded to any of our directors for our fiscal year ended December 31, 2017. Our executive officers who are also directors do not receive any compensation for serving in their role and capacity as a director of the Company.
+ 
+ John Bode began serving as an independent director of the Company in March 2018, and he was granted 250,000 shares of our restricted common stock as consideration for serving on our Board of Directors for a year.
+ 
+ Director Committees 
+ 
+ Due to the small size of our Board of Directors, currently we do not have any designated director committees. Our entire Board of Directors performs the functions of a compensation committee, a nominating committee, and an audit committee including approving the annual selection of our independent auditing firm. 
+ 
+ Code of Ethics 
+ 
+ We currently are in the process of developing a Code of Ethics which when adopted will apply to all our executive officers and directors as well as any other employees who perform any accounting or financial functions or operations for us.
+ 
+ Involvement in Certain Legal Proceedings
+ 
+ To the best of our knowledge, our directors and executive officers have not been involved in any of the following legal proceedings during the past ten years:
+ 
+ i)
+ any bankruptcy petition filed by or against such person or any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;
+
+ 
+ ii)
+ any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);
+
+ 
+ iii)
+ being subject to any order, judgment, or decree, not subsequently reversed, suspended, or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining or otherwise limiting the involvement of the person from any type of business, securities or banking activities or to be associated with any person practicing in banking or securities activities;
+
+ 
+ iv)
+ being found by a court of competent jurisdiction in a civil action, the SEC or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated;
+
+ 
+ v)
+ being subject of, or a party to, a federal or state judicial or administrative order, judgment, or decree or finding, not subsequently suspended, reversed or vacated, relating to an alleged violation of any federal or state securities or commodities laws or regulation, any law or regulation respecting financial institutions or insurance companies, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or
+
+ 
+ vi)
+ being subject of or party to any sanction or order, not subsequently suspended, reversed or vacated, of any self-regulatory organization, any registered entity or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.
+
+ 
+ 
+ 36
+ 
+ 
+ Table of Contents
+
+ 
+ EXECUTIVE COMPENSATION
+ 
+ Summary Compensation Table
+ 
+ The following table presents information for our last two fiscal years ended December 31, 2017 and 2016 regarding all compensation paid to, awarded to, and earned by each individual who served as our chief executive officer or in any other executive officer position with the Company. 
+ 
+ Name and Position
+ 
+ Year
+ 
+ Salary
+ 
+ 
+ Bonus
+ 
+ 
+ Option
+ Awards
+ 
+ 
+ Stock
+ Awards
+ 
+ 
+ Total
+ 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Michael P. Brown
+ 
+ 2017
+ 
+ $ 240,000 
+ 
+ 
+ - 
+ 
+ 
+ - 
+ 
+ $ - 
+ 
+ $ 240,000 
+
+ Chief Executive Officer
+ 
+ 2016
+ 
+ $ 240,000 
+ 
+ 
+ - 
+ 
+ 
+ - 
+ 
+ $ - 
+ 
+ $ 240,000 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Garry N. Lowenthal
+ 
+ 2017
+ 
+ $ 165,000 
+ 
+ 
+ - 
+ 
+ 
+ - 
+ 
+ $ 35,000 (1)
+ 
+ $ 200,000 
+
+ Executive Vice President and
+ Chief Financial Officer
+ 
+ 2016
+ 
+ $ 150,000 
+ 
+ 
+ - 
+ 
+ 
+ - 
+ 
+ $ 296,250 (2)
+ 
+ $ 446,250 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Wade Anderson (3)
+ 
+ 2017
+ 
+ $ 200,000 
+ 
+ 
+ - 
+ 
+ 
+ - 
+ 
+ $ 125,000 (4)
+ 
+ $ 325,000 
+
+ Chief Technology Officer 
+ 
+ 2016
+ 
+ 
+ 133,333 
+ 
+ 
+ - 
+ 
+ $ 208,000 (5)
+ 
+ $ 26,250 (6)
+ 
+ $ 367,583 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Jason Mitzo 
+ 
+ 2017
+ 
+ $ 172,000 
+ 
+ 
+ -
+ 
+ 
+ $ 96,000 (8)
+ 
+ $ 70,000 (9)
+ 
+ $ 338,500 
+
+ Chief Revenue Officer
+ 
+ 2016
+ 
+ $ 145,000 
+ 
+ $ 20,820 
+ 
+ $ 40,000 (7)
+ 
+ $ 26,250 (10)
+ 
+ $ 232,070 
+
+ ___________ 
+ (1)
+ Represents the value of stock award of 250,000 common shares.
+
+ (2)
+ Represents the value of stock awards of 725,000 common shares.
+
+ (3)
+ Mr. Anderson commenced his employment with the Company in April, 2016, and he resigned as an officer
+ of the Company in June 2018.
+
+ (4)
+ Represents the value of stock awards of 850,000 common shares. 
+
+ (5) 
+ Represents the value of stock options for 1,600,000 common shares.
+
+ (6)
+ Represents the value of stock award of 50,000 common share
+
+ (7)
+ Represents the value of stock options and warrants to purchase 500,000 common shares.
+
+ (8)
+ Represents the value of stock options to purchase 1,000,000 common shares.
+
+ (9) 
+ Represents the value of stock award of 500,000 common shares.
+
+ (10)
+ Represents the value of stock award of 50,000 common shares.
+
+ 
+ 
+ 37
+ 
+ 
+ Table of Contents
+
+ 
+ Executive Compensation Overview
+ 
+ Our executive compensation program historically has consisted of a combination of base salary and stock-based compensation in the form of common stock awards or options. Our executive officers and other salaried employees are also eligible to receive health and certain other fringe benefits.
+ 
+ We will evaluate our compensation values, philosophy, plans and arrangements as circumstances require. At a minimum, we expect to review executive compensation annually with input from our Board of Directors and any future compensation committee established by our Board of Directors. Incident to considering the compensation levels needed to ensure our executive compensation program remains competitive, we also will review whether we are satisfying our retention objectives and the potential costs of replacing key employees.
+ 
+ Employment Agreements With Our Current Executive Officers
+ 
+ Michael Brown and Garry Lowenthal
+ 
+ On July 1, 2014 the Company entered into three-year term Employment Agreements with Michael P. Brown to serve as our Chief Executive Officer, and with Garry N. Lowenthal to serve as our Executive Vice President and Chief Financial Officer. Mr. Brown s base salary was $15,000 monthly during 2014 and increased to $20,000 monthly on January 1, 2015, and Mr. Lowenthal s base salary was $10,000 monthly during 2014 and increased to $12,500 monthly on January 1, 2015. At the end of these three-year terms in July 2017, these employment contracts were extended for an additional three years and also Mr. Lowenthal s base salary was increased to $15,000 monthly. 
+ 
+ If either Mr. Brown or Mr. Lowenthal voluntarily terminate their employment with us or are terminated by the Company without cause as defined in the Employment Agreements, they would be entitled to receive severance payments of 12 months of their prevailing base salary, which severance payments would increase to 15 months of their prevailing base salary in the event of any termination other than for cause within one year from a change in control of the Company.
+ 
+ These written employment agreements with Messrs. Brown and Lowenthal provide for the employee to participate in any bonus, health or other benefit plans established by the Board of Directors, and to receive annually a grant of 20 days paid personal time off (PTO) for vacation and sick leave or other absences. These agreements also contain customary clauses governing confidentiality, non-solicitation, invention/IP assignment, arbitration and other matters.
+ 
+ Jason Mitzo
+ 
+ In September 2017, we entered into an Employment Agreement with Jason Mitzo to serve as our Chief Revenue Officer for the term of the agreement. Mr. Mitzo s compensation under this agreement includes a base monthly salary of $15,000, an annual paid-off-time (PTO) benefit of twenty-one (21) days, commissions of a maximum of 15% of Fision product sales made directly and solely by Mr. Mitzo, and participation in any fringe benefit programs provided by Fision. The term of this agreement is twelve months, with automatic renewals for successive twelve-month periods unless terminated by either party. Such automatic renewal for the second year occurred in September 2018. In the event of termination, Mr. Mitzo would receive one month of severance pay for every year employed by Fision since 2012, and he would have up to 60 days to execute any vested stock options. This employment agreement also includes customary terms governing confidentiality of proprietary information, non-solicitation of customers or employees, inventions and intellectual property (IP) developed during employment being solely owned by Fision, mandatory arbitration of any disputes, and other matters.
+ 
+ Concurrent with Mr. Mitzo s employment agreement, we granted him a three-year stock option to purchase 1,000,000 common shares of the Company with 375,000 shares vested immediately and 625,000 shares vesting quarterly over the three-year term. We also granted Mr. Mitzo a stock award of 500,000 common shares to be vested annually over four years.
+ 
+ 
+ 38
+ 
+ 
+ Table of Contents
+
+ 
+ Equity Compensation Plans 
+ 
+ Our 2011 Plan
+ 
+ In 2011 the Board of Directors and shareholders of our Minnesota Fision subsidiary adopted and approved our 2011 Stock Option and Compensation Plan, as amended on July 18, 2013 and on December 30, 2014 (the Plan ), which is our only equity compensation plan approved by stockholders. The purpose of the Plan is to advance the interests of the Company and our stockholders by attracting, retaining and rewarding our employees and key consultants performing services for us, and to motivate them to contribute to our growth and profitability.
+ 
+ Issuance of Awards. Under the Plan, the issuance of awards and the persons, terms and conditions regarding any award are determined by our Board of Directors. We have reserved up to 4,600,000 shares of our common stock to satisfy any awards under the Plan which can include one or a combination of stock options, stock appreciation rights (SARs), stock awards, restricted stock, performance shares, or cash. 
+ 
+ To date, we have only granted stock option awards under the Plan, and as of December 15, 2018 we had outstanding options under the Plan for a total of 1,922,500 common shares.
+ 
+ Term and Vesting of Options. Incident to granting an option award, the Board of Directors must fix the term, exercise price, number of option shares, and any applicable vesting conditions or schedule. The Board of Directors retains the right to accelerate vesting of an option anytime for any reason. The maximum term of an option under the Plan is ten years.
+ 
+ Exercise Price and Manner of Exercise. The exercise price for any option granted under the Plan is determined by the Board of Directors, provided that the option price for any Incentive Stock Options intended to qualify under Section 422A of the Internal Revenue Code of 1986 shall not be less than the Fair Market Value of our common stock as of the date of grant. The exercise price may be paid in cash or check, cashless exercise, or tender of our shares already owned by the option holder, with any cashless exercise or tender of shares being based on the fair market value of our common shares on the date of exercise.
+ 
+ Transferability of Awards. Grants of options under the Plan are not transferable other than by will or laws of descent, and can only be exercised by the grantee during his or her lifetime.
+ 
+ Immediate Acceleration. The Plan provides that all options and awards not yet vested will be fully vested, and all performance conditions for restricted stock or performance share awards shall be deemed satisfied, in the event of (i) a change of control wherebya person or related group obtains 40% or more of our common stock, or (ii) a majority of our directors is replaced within 24 months without approval of the existing Board of Directors, or (iii) our stockholders approve a merger or the sale or other disposition of substantially all our assets.
+ 
+ 
+ 39
+ 
+ 
+ Table of Contents
+
+ 
+ Our 2016 Plan 
+ 
+ On March 28, 2016, our Board of Directors adopted our 2016 Equity Incentive Plan ( 2016 Plan ) which was registered with the SEC pursuant to a Form S-8 effective on March 30, 2016. This 2016 Plan reserved 2,500,000 shares of our common stock for future grants from time to time under awards administered by our Board of Directors. The purpose of the 2016 Plan is to provide incentives to participants in order to generate positive returns for our shareholders, and also to provide us with flexibility to motivate, attract and retain the services of employees, directors and certain consultants who are eligible to participate in this plan. There are three types of awards which can be granted under the 2016 Plan, which are stock payment awards, stock option awards, or restricted stock awards.
+ 
+ Stock payment awards may be granted by our Board of Directors to any eligible participant for employee or other bonus compensation, director services, or payment for services to eligible consultants. When granted, these awards must be valued for services or compensation based on no less than 100% of the fair market value of our common stock
+ 
+ Awards of stock option grants also are administered by our Board of Directors who will set the number of option shares, any vesting terms, the length of term of any option, and the exercise price. The exercise price must be no less than 100% of the fair market value of our common stock at the date of any option grant. . Such stock options must be exercised only by the participant receiving the option, and are only otherwise transferable or exercisable by will or laws of descent.
+ 
+ Any restricted stock awards are also determined by the Board of Directors, who determine the purchase price and number of restricted shares subject to the award, the length of any restriction period, and the terms of performance or restrictions applicable during the restriction period. If the employee is terminated prior to satisfying the restriction period or requirements, any shares still subject to restriction are forfeited by the participant.
+ 
+ Regarding vesting of stock options and restrictive stock covenants, all stock options not yet vested will become vested and all restrictions on restricted stock will lapse upon any of the following events occurring:
+ 
+ (i) if any person or group of persons becomes the beneficial owner of at least 40% of our common stock; 
+ (ii) if a majority of the members of our Board of Directors are replaced within any 24-month period by directors not approved by our existing directors; and 
+ (iii) if a merger or sale of our assets is approved by our shareholders.
+ 
+ Our Board of Directors has the right to amend or terminate our 2016 Plan at any time, but any such amendment or termination does not diminish or otherwise affect the terms of any outstanding awards granted prior thereto. No awards can be granted under the 2016 Plan after its tenth anniversary.
+ 
+ The only type of award granted to date under our 2016 Plan are stock payment awards, and since inception of our 2016 Plan, our Board of Directors has granted stock payment awards to eligible participants for an aggregate of 2,280,000 shares of our common stock.
+ 
+ 
+ 40
+ 
+ 
+ Table of Contents
+
+ 
+ Outstanding Equity Awards at Fiscal Yearend
+ 
+ The following table sets forth as of the end of fiscal year 2017 all outstanding equity awards held by our current executive officers:
+ 
+ 
+ 
+ Number of securities underlying unexercised options (#) exercisable 
+ 
+ 
+ Number of securities 
+ underlying unexercised options (#) unexercisable 
+ 
+ 
+ Option 
+ exercise price
+($) 
+ 
+ Option expiration date
+ 
+
+ Michael P. Brown 
+ 
+ None
+ 
+ 
+ None
+ 
+ 
+ 
+ --- 
+ 
+ ---
+ 
+
+ Garry N. Lowenthal 
+ 
+ None
+ 
+ 
+ None
+ 
+ 
+ 
+ --- 
+ 
+ ---
+ 
+
+ Jason Mitzo
+ 
+ 
+ 202,500 
+ 
+ 
+ 1,125,000 (1) 
+ 
+ $ .35-.50
+ 
+ 
+ 6/30/18 to 9/30/21
+ 
+
+ _________
+ (1)
+ Primarily vesting quarterly over four years.
+
+ 
+ PRINCIPAL AND MANAGEMENT STOCKHOLDERS 
+ 
+ The following table sets forth certain information regarding the beneficial ownership of our common stock as of the date of this prospectus, by each of our directors and executive officers, each person known by us to own beneficially 5% or more of our common stock, and all directors and executive officers as a group. The amounts and percentages of common stock beneficially owned in this table are based on our 66,536,453 outstanding common shares as of December 20, 2018, and are reported on the basis of regulations of the Securities and Exchange Commission. To the best of our knowledge, each beneficial owner listed in this table has sole voting and sole investment power with respect to these shares. Unless stated otherwise, the address of each beneficial owner in this table is c/o Fision Holdings, Inc., 100 N. Sixth Street, Suite 308 B, Minneapolis, MN 55403.
+ 
+ 
+ 
+ Amount of
+ 
+ 
+ Percent of
+ 
+
+ Name
+ 
+ Common Stock
+ 
+ 
+ Common Stock
+ 
+
+ Michael P. Brown
+ 
+ 
+ 14,976,348 
+ 
+ 
+ 22.51 %
+ Garry N. Lowenthal
+ 
+ 
+ 2,465,091 
+ 
+ 
+ 3.71 %
+ John Bode
+ 
+ 
+ 250,000 (2) 
+ 
+ 0.38 %
+ Jason Mitzo 
+ 
+ 
+ 1,827,500 (1) 
+ 
+ 2.68 %
+ All directors and officers as a group (4 persons) 
+ 
+ 
+ 19,518,939 
+ 
+ 
+ 29.28 %
+ Daniel Magless (over 5% stockholder) 
+ 
+ 
+ 6,310,000 (3) 
+ 
+ 9.48 %
+ 2146 Swanstone Circle De Pere, WI 54115
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ _________
+ (1) Includes 125,000 shares owned by him, 375,000 shares vesting over 4 years, and 1,327,500 shares pursuant to stock options.
+ (2) Includes 187,500 shares owned by him and 62,500 shares yet vesting during his first year service as a director.
+ (3) Includes 3,310,000 shares owned by him and 3,000,000 shares underlying Warrants.
+
+ 
+ 
+ 41
+ 
+ 
+ Table of Contents
+
+ 
+ CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
+ 
+ Transactions With Related Persons
+ 
+ Since January 1, 2016 we have been involved in the following transactions with related persons, and we believe these transactions occurred on terms as favorable to us as could have been obtained from unrelated third parties. 
+ 
+ For Information regarding the employment agreements and compensation of our executive officers during 2017 and 2016, see Executive Compensation. 
+ 
+ To secure the employment of our former Chief Technology Officer, Wade Anderson, in March 2016 we granted him a five-year incentive stock option to purchase a total of 1,600,000 common shares at $.35 per share, vesting ratably over a four-year period after the first 6 months of his employment. He resigned in June 2018, and accordingly 700,000 shares vested incident to this option. In April 2016 we also issued Mr. Anderson a stock award under our 2016 Plan of 25,000 common shares, and in August 2016 we also issued 25,000 common shares to him as a bonus award.
+ 
+ In March 2016, as bonus compensation we issued 375,000 common shares to Mr. Brown and 225,000 common shares to Mr. Lowenthal; and in December 2016, as bonus compensation we issued 80,000 common shares to Mr. Brown and 150,000 common shares to Mr. Lowenthal, and in September 2017 as bonus compensation we issued 250,000 common shares to Mr. Lowenthal. 
+ 
+ In December 2016 we granted stock awards to Messrs. Brown and Lowenthal from our 2016 Plan in the aggregate amount of 700,000 common shares (350,000 shares apiece) and valued at $.30 per share, pursuant to stock award agreements requiring them to continue to serve in their respective management roles as set forth in the award agreements.
+ 
+ In August 2016, we granted a four-year warrant to our Chief Revenue Officer, Jason Mitzo, to purchase 250,000 shares of our common stock exercisable at $0.30 per share, after which Mr. Mitzo transferred and assigned this warrant to a significant shareholder of our company to satisfy an outstanding obligation owed to this shareholder. In August 2016, we also issued a bonus award of 25,000 shares of our common stock to Jason Mitzo and granted him a four-year incentive stock option to purchase 250,000 common shares at $0.50 per share. 
+ 
+ In December 2017, we obtained a working capital loan of $76,000 from our Chief Executive Officer, with an interest rate of 6% per annum and payable upon demand.
+ 
+ In February 2018 we granted a new independent director, John Bode, a stock award of 250,000 restricted common shares for joining our Board of Directors, which shares vest quarterly over a one-year period.
+ 
+ Since the Company has been unable to compensate its two principal officers in cash under the terms of their respective employment agreements, their accrued compensation from time to time has been converted to notes payable bearing interest at 6% per annum. Effective December 31, 2015, Mr. Brown converted $925,000 of his outstanding note payable into 1,423,077 shares of our common stock at $.65 per share; effective in December 2016, Mr. Brown and Mr. Lowenthal each converted $25,000 of their outstanding Notes into shares of our common stock at $.30 per share; and effective in September 2017, Messrs. Brown and Lowenthal converted a total of $330,168 of their Notes into a total of l,l00,562 common shares including 850,562 shares to Mr. Brown and 250,000 shares to Mr. Lowenthal. As of September 30, 2018, Mr. Brown was owed $89,521 on his Notes and Mr. Lowenthal was owed $133,843 on his Notes.
+ 
+ 
+ 42
+ 
+ 
+ Table of Contents
+
+ 
+ Related Party Transaction Policy
+ 
+ Our Board of Directors has no formal written policy regarding related-party transactions, but rather follows the requirements of state corporate law applicable to such transactions. In particular, after full disclosure of all material facts, review and discussion, our Board of Directors approves or disapproves such transactions. No director is allowed to vote for approval of a related-party transaction for which he or she is the related party, but shall before a vote is taken on any such matter, provide all material information concerning the related-party transaction and the director s interest in the transaction. 
+ 
+ Director Independence 
+ 
+ We currently have only one independent director, Mr. John Bode. 
+ 
+ DESCRIPTION OF SECURITIES
+ Common Stock
+ 
+ Our Board of Directors is authorized to issue up to 500,000,000 shares of common stock, par value $.0001 per share. As of December 20, 2018, there were 66,536,453 shares of common stock issued and outstanding. Holders of our common stock are entitled to one vote per share on all matters to be voted upon by stockholders. Holders of common stock are entitled to receive ratably such dividends, if any, as may be declared by our Board of Directors out of funds legally available for dividends. Upon the liquidation, dissolution or winding up of the Company, holders of common stock are entitled to share ratably in all our assets legally available for distribution after payment of all our debts and liabilities and liquidation preference of any outstanding preferred stock. Holders of common stock have no preemptive, subscription, redemption or conversion rights, and they have no rights for cumulative voting 
+ 
+ Preferred Stock
+ 
+ The Company is also authorized to issue up to 20,000,000 shares of Preferred Stock, par value $.0001 per share. Our Board of Directors has the authority, without stockholder approval, to issue these preferred shares in one or more designated series, to establish the number of shares in each series, and to fix the preferences, powers, dividends, and voting or conversion rights of any preferred shares, which could dilute the voting power or other rights of holders of our common stock. We have no outstanding shares of Preferred Stock. 
+ 
+ Stock Purchase Warrants
+ 
+ As of the date of this prospectus, we have warrants outstanding for the purchase of 17,741,569 shares of our common stock at various exercise prices with the average exercise price being $.302 per share, which warrants include Warrants from the Private Placement to purchase a total of 10,000,000 shares at $.20 per share. See The Private Placement. 
+ 
+ Stock Options
+ 
+ As of the date of this prospectus, we have stock options outstanding for the purchase of 1,922,500 shares of our common stock at various exercise prices with the average exercise price being $.243 per share.
+ 
+ 
+ 43
+ 
+ 
+ Table of Contents
+
+ 
+ THE PRIVATE PLACEMENT
+ 
+ During November-December 2018, we entered into a Securities Purchase Agreement (the Agreement ) with each of the Selling Stockholders pursuant to which we sold an aggregate total of 10,000,000 shares of our Common Stock ( Common Shares ) at $.20 per share, and the Selling Stockholders purchased these Common Shares in two equal tranches, with the first tranche paid for upon entering into the Agreement, and the second tranche payable on or before that date which is three days after the effectiveness of the registration statement that includes this prospectus. Incident to the Private Placement, we have so far received payments for an aggregate of 7,000,000 Common Shares for gross proceeds of $1,400,000 including $400,000 from certain Selling Stockholders who have already purchased the second tranche. We will receive additional gross proceeds of $600,000 when all Selling Stockholders have purchased their second tranche, then resulting in total gross proceeds of $2,000,000 from the Private Placement. No commissions or offering expenses were paid incident to this Private Placement other than our payment of legal fees for the Selling Stockholders in the total amount of $11,933.
+ 
+ The Agreements with the Selling Stockholders also provided them with additional and potential securities from us including Advisory Shares, Warrants and True-Up Shares.
+ 
+ Advisory Shares
+ 
+ Each Selling Stockholder also will receive Advisory Shares in an amount of 10% of the Common Shares purchased in the Private Placement, which applies both to the purchased first tranche and also to the future purchase of the second and equal tranche. After all Selling Stockholders purchase the second tranche, we will have issued a total of 1,000,000 Advisory Shares.
+ 
+ Warrants
+ 
+ The Agreement also provided for our issuance of Warrants to all Selling Stockholders of the Private Placement, which Warrants are for a three-year term and grant each Selling Stockholder the right to purchase an amount of shares of our Common Stock equal to both tranches of Common Shares purchased in the Private Placement at an exercise price of $.20 per share (the Warrant Shares ). These Warrants also include a cashless exercise provision, are subject to adjustment of the exercise price in
+ the event of stock dividends or splits, mergers, reorganizations and similar transactions, and are further subject to a True-Up Price adjustment the same as that for the purchased Common Shares.
+ 
+ True-Up Shares
+ 
+ The Agreement also provides for the potential future issuance to Selling Stockholders of True-Up Shares in the event the following True-Up Price is lower than the $.20 per share price of the Private Placement. The True-Up Price represents the average of the fifteen (15) lowest closing trading prices for our Common Stock during the 90-day period after the date of effectiveness of the registration statement which includes this prospectus. If the True-Up Price is less than $.20 per share, we will issue additional True-Up Shares to the Selling Stockholders, with a floor of $.10 per share, under the following formula:
+ 
+ 
+ X = Y (AxB)
+ X = number of True-Up Shares 
+
+ 
+ B
+ Y = dollar ($) amount of investment
+
+ 
+ 
+ A = number of shares purchased
+
+ 
+ 
+ B = True-Up Price
+
+ 
+ For example, assuming an investment of $100,000 and a True-Up Price of $.15 per share, the additional True-Up Shares would be 166,667 shares.
+ 
+ Registration Rights Agreement
+ 
+ The Selling Stockholders also entered into a Registration Rights Agreement with us which granted them the right to register under the Securities Act of 1933, as amended, all their securities issued or to be issued incident to the Private Placement, including their Purchased Shares, their Advisory Shares, any Warrant Shares related to exercise of their Warrants, and their potential True-Up Shares related to shares purchased in the Private Placement as well as Warrant Shares subject to True-Up Price adjustments.
+ 
+ 
+ 44
+ 
+ 
+ Table of Contents
+
+ 
+ Pursuant to the Registration Rights Agreement, we must prepare and file the registration statement on SEC Form S-1 (the Filing Deadline ) on the later of (i) the date that is 105 days after the date of the Securities Purchase Agreement with the Selling Stockholders, or (ii) within 45 days after closing of the Continuity Logic merger. And the registration statement must be declared effective by the SEC within 60 days of the Filing Deadline. 
+ 
+ In the event we fail to timely file or obtain effectiveness of the registration statement, either such failure will require us to pay liquidated damage of additional common shares to Selling Stockholders, in an amount equal to 1% of their investment in the Private Placement shares per delinquent month, which damages increase to 5% per month of such investment after the first two months of default. 
+ 
+ SELLING STOCKHOLDERS
+ 
+ This prospectus relates to and covers the resale of up to a maximum of 41,000,000 shares of our Common Stock by the Selling Stockholders listed in the following table. Pursuant to registration rights which were granted to the Selling Stockholders incident to the Private Placement, we have filed a registration statement with the SEC which includes this prospectus. Selling stockholders may, from time to time, offer and sell their shares designated for sale in this table, and they may sell some, all or none of these shares. We do not know when, if ever, and in what amounts they will offer and sell their shares, and we have no agreements, arrangements or understandings with any Selling Stockholder regarding any sale of their shares. Accordingly, no estimate can be given as to the number of shares that will actually be sold in this offering by Selling Stockholders. The shares of our Common Stock being registered for the Selling Stockholders in this offering were obtained from us incident to private placement transactions occurring in November and December, 2018.
+ 
+ The following table and related footnotes include information identifying the Selling Stockholders and the shares they may offer and sell from time to time under this prospectus. As used in this prospectus, the term Selling Stockholder includes the following named persons and also any of their donees, pledgees, transferees or other successors in interest selling shares received from a Selling Stockholder after the date of this prospectus. Beneficial ownership is determined in accordance with rules promulgated by the SEC pursuant to the Securities Exchange Act. The percentage of shares beneficially owned by each selling stockholder prior to this offering is based on 66,536,453 shares of our common stock outstanding as of December 20, 2018.
+ 
+ None of the Selling Stockholders are broker-dealers or affiliates of broker-dealers, nor have any of them at any time had or held any position, office, or other material relationship with us or any of our affiliates.
+ 
+ 
+ 
+ Shares
+ Owned
+ 
+ 
+ 
+ %
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ Shares
+ 
+ % 
+
+ 
+ 
+ 
+ Beneficially 
+ 
+ 
+ 
+ Owned
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ Owned 
+ 
+ Owned 
+
+ Name of Selling Stockholder
+ 
+ 
+ Before
+ Offering
+ 
+ 
+ 
+ Before
+ Offering
+ 
+ 
+ 
+ Registered
+ Shares
+ 
+ 
+ 
+ After
+ Offering(1) 
+ 
+ After
+ Offering 
+
+ Raymond M. Bennett 
+ 
+ 
+ 1,068,000 (2) 
+ 
+ 1.61 % 
+ 
+ 2,050,000 (3) 
+ 
+ 18,000 
+ *
+
+ Thomas W. Bibb 
+ 
+ 
+ 1,200,000 (4) 
+ 
+ 1.80 % 
+ 
+ 2,050,000 (3) 
+ 
+ 150,000 
+ *
+
+ Joseph Dopico III
+ 
+ 
+ 1,083,333 (5) 
+ 
+ 1.63 % 
+ 
+ 2,050,000 (3) 
+ 
+ 33,333 
+ *
+
+ Nicholas Karant
+ 
+ 
+ 1,051,000 (6) 
+ 
+ 1.58 % 
+ 
+ 2,050,000 (3) 
+ 
+ 1,000 
+ *
+
+ Angel Lebowitz 
+ 
+ 
+ 1,055,000 (7) 
+ 
+ 1.59 % 
+ 
+ 2,050,000 (3) 
+ 
+ 5,000 
+ *
+
+ Albert Mallah
+ 
+ 
+ 1,055,000 (7) 
+ 
+ 1.59 % 
+ 
+ 2,050,000 (3) 
+ 
+ 5,000 
+ *
+
+ Daniel Mangless
+ 
+ 
+ 6,310,000 (8) 
+ 
+ 9.48 % 
+ 
+ 12,300,000 (14) 
+ 
+ 10,000 
+ *
+
+ Lita Mitchell 
+ 
+ 
+ 2,105,000 (9) 
+ 
+ 3.16 % 
+ 
+ 4,100,000 (15) 
+ 
+ 5,000 
+ *
+
+ Robert Mitchell
+ 
+ 
+ 3,155,000 (10) 
+ 4.74
+ % 
+ 
+ 
+ 6,150,000 (11) 
+ 
+ 5,000 
+ *
+
+ Joy Pipe USA LP
+ 
+ 
+ 1,200,000 (4) 
+ 
+ 1.80 % 
+ 
+ 2,050,000 (3) 
+ 
+ 150,000 
+ *
+
+ Todd Sabo 
+ 
+ 
+ 1,050,000 (12) 
+ 
+ 1.58 % 
+ 
+ 2,050,000 (3) 
+ -
+ 
+ *
+
+ Marie H. West 
+ 
+ 
+ 1,060,000 (13) 
+ 
+ 1.59 % 
+ 
+ 2,050,000 (3) 
+ 
+ 10,000 
+ *
+
+ 
+ 
+ 45
+ 
+ 
+ Table of Contents
+
+ _______
+ *
+ Less than one percent.
+
+ 
+ (1) Assuming all shares registered for sale in this table are sold in this distribution, and that the Selling Stockholders have not acquired any more of our securities after the date of this prospectus
+ (2) Includes (i) 275,000 Common Shares and Advisory Shares issued for the first tranche of the Private Placement, (ii) 275,000 Common Shares and Advisory Shares to be issued upon payment for the second tranche, (iii) up to 500,000 Warrant Shares for Warrants issued in the Private Placement, and (iv) 18,000 common shares owned by this Selling Stockholder prior to the Private Placement.
+ (3) Includes 1,050,000 shares from the first column and a potential maximum of 1,000,000 True-Up Shares related to both the Common Shares and Warrant Shares issued or to be issued in the Private Placement.
+ (4) Includes (i) 550,000 Common Shares and Advisory Shares issued for both tranches of the Private Placement, (ii) up to 500,000 Warrant Shares for Warrants issued in the Private Placement, and (iii) 150,000 common shares owned by this Selling Stockholder prior to the Private Placement.
+ (5) Includes (i) 275,000 Common Shares and Advisory Shares issued for the first tranche of the Private Placement, (ii) 275,000 Common Shares and Advisory Shares to be issued upon payment for the second tranche, (iii) up to 500,000 Warrant Shares for Warrants issued in the Private Placement, and (iv) 33,333 common shares owned by this Selling Stockholder prior to the Private Placement.
+ (6) Includes (i) 275,000 Common Shares and Advisory Shares issued for the first tranche of the Private Placement, (ii) 275,000 Common Shares and Advisory Shares to be issued upon payment for the second tranche, (iii) up to 500,000 Warrant Shares for Warrants issued in the Private Placement, and (iv) 1,000 common shares owned by this Selling Stockholder prior to the Private Placement.
+ (7) Includes (i) 275,000 Common Shares and Advisory Shares issued for the first tranche of the Private Placement, (ii) 275,000 Common Shares and Advisory Shares to be issued upon payment for the second tranche, (iii) up to 500,000 Warrant Shares for Warrants issued in the Private Placement, and (iv) 5,000 common shares owned by this Selling Stockholder prior to the Private Placement.
+ (8) Includes (i) 3,300,000 Common Shares and Advisory Shares issued for both tranches of the Private Placement, (ii) up to 3,000,000 Warrant Shares for Warrants issued in the Private Placement, and (iii) 10,000 common shares owned by this Selling Stockholder prior to the Private Placement.
+ (9) Includes (i) 550,000 Common shares and Advisory Shares issued for the first tranche of the Private Placement, (ii) 550,000 Common Shares and Advisory Shares to be issued upon payment for the second tranche, (iii) up to 1,000,000 Warrant Shares for Warrants issued in the Private Placement, and (iv) 5,000 common shares owned by this Selling Stockholder prior to the Private Placement.
+ (10) Includes (i) 825,000 Common Shares and Advisory Shares issued for the first tranche of the Private Placement, (ii) 825,000 Common Shares and Advisory Shares to be issued upon payment for the second tranche, (iii) up to 1,500,000 Warrant Shares for Warrants issued in the Private Placement, and (iv) 5,000 common shares owned by this Selling Stockholder prior to the Private Placement.
+ (11) Includes 3,150,000 shares from the first column and a potential maximum 3,000,000 True-Up Shares related to both the Common Shares and Warrants issued or to be issued in the Private Placement.
+ (12) Includes (i) 275,000 Common Shares and Advisory Shares issued for the first tranche of the Private Placement, (ii) 275,000 common Shares and Advisory Shares to be issued upon payment for the second tranche, and (iii) up to 500,000 Warrant Shares for Warrants issued in the Private Placement.
+ (13) Includes (i) 275,000 Common Shares and Advisory Shares issued for the first tranche of the Private Placement, (ii) 275,000 Common Shares and Advisory Shares to be issued upon payment for the second tranche, iii) up to 500,000 Warrant Shares for Warrants issued in the Private Placement, and (iv) 10,000 common shares owned by this Selling Stockholder prior to the Private Placement.
+ (14) Includes 6,300,000 shares from the first column and a potential 6,000,000 True-Up Shares related to both the Common Shares and Warrants issued or to be issued in the Private Placement.
+ (15) Includes 2,100,000 shares from the first column and a potential 2,000,000 True-Up Shares related to both the Common Shares and Warrants issued or to be issued in the Private Placement.
+
+ 
+ 
+ 46
+ 
+ 
+ Table of Contents
+
+ 
+ PLAN OF DISTRIBUTION 
+ 
+ We are registering a total of 41,000,000 shares of our common stock held by the Selling Stockholders in order to permit resale of these shares after the date of this prospectus. We will not receive any proceeds from any sales of shares by the Selling Stockholders. We have agreed to pay all offering fees and expenses incident to sales of shares by the Selling Stockholders, included those related to preparation, filing, printing and mailing the registration statement and prospectus. We will not pay any commissions or other expenses incurred by the Selling Stockholders associated with sales of their shares.
+ 
+ The Selling Stockholders may sell all or a portion of their shares being offered under this prospectus directly to purchasers or through one or more broker-dealers, underwriters or agents. Regarding any of these shares sold through underwriters, broker-dealers or other agents, the Selling Stockholders will be responsible for any underwriting discounts or agency commissions. These shares may be sold in one or more transactions at fixed prices, at any prevailing market prices, at varying prices determined at the time of sale, or at negotiated prices. There is no assurance that any Selling Stockholder will offer or sell any or all of their shares registered under this offering.
+ 
+ Sales by the Selling Stockholders may be effected from time to time in one or more of the following methods, which may involve crosses or block transactions:
+ 
+ 
+ ordinary brokerage transactions including those where purchasers are solicited;
+
+ 
+ 
+ at the market prices into an existing trading market for the shares;
+
+ 
+ 
+ purchases by a broker-dealer as principal and resale by the broker-dealer for its own account;
+
+ 
+ 
+ privately negotiated sales including direct sales to purchasers or through agents;
+
+ 
+ 
+ transactions through broker-dealers or others at a fixed price per share;
+
+ 
+ 
+ settlement of short sales entered into after the date of this prospectus;
+
+ 
+ 
+ a combination of the foregoing methods of sale; or
+
+ 
+ 
+ any other method permitted under applicable law.
+
+ 
+ The Selling Stockholders also may sell their shares under Rule 144 of the Securities Act, if available, rather than under this prospectus.
+ 
+ Any broker-dealer or underwriter participating in this distribution may receive negotiated commissions or discounts from the Selling Stockholders or from purchasers if acting as agent for the purchasers, in amounts not exceeding FINRA rules. Neither we nor the Selling Stockholders can presently estimate the amount of commissions or other compensation that any broker-dealers or agents will receive from the Selling Stockholders. We are not aware of any existing arrangements between any Selling Stockholder and broker-dealer, underwriter, agent or other person relating to the sale or distribution of the shares of Selling Stockholders being offered under this prospectus.
+ 
+ 
+ 47
+ 
+ 
+ Table of Contents
+
+ 
+ The Selling Stockholders and any broker-dealers or agents participating in this distribution may be deemed to be underwriters within the meaning of Section 2(a)(11) of the Securities Act. Accordingly, any commissions, discounts or other compensation received by broker-dealers or agents may be deemed to be underwriting discounts or commissions under the Securities Act. In addition, all persons who may be deemed to be underwriters will be subject to the prospectus delivery requirements of the Securities Act.
+ 
+ Under the securities laws of some states, these shares of the Selling Shareholders may only be sold through registered or licensed broker-dealers. Moreover, in certain states, these shares may not be sold unless they have been registered or qualified for sale under state laws or regulations, or an exemption from registration or qualification is available.
+ 
+ The Selling Stockholders and any other persons participating in this distribution will be subject to certain provisions and rules of the Securities Exchange Act of 1934 including Regulation M. Regulation M may limit the timing of purchases and sales of shares by the Selling Stockholders, broker-dealers or other persons participating in this distribution. Regulation M also restricts the ability of any broker-dealer or other person engaged in this distribution to conduct market-making activities with respect to our common stock, and further prohibits any bids or purchases to be made for the purpose of stabilizing the price of our common stock during the distribution. These Exchange Act provisions and rules may affect the marketability of our common stock and the ability of any person to engage in market-making activities with respect to our common stock. 
+ 
+ LEGAL MATTERS
+ 
+ Certain legal matters in connection with this offering, including the legality of the shares offered under this prospectus, will be passed upon for us by the law offices of Robert O. Knutson located in suburban Minneapolis, Minnesota.
+ 
+ EXPERTS
+ 
+ Our consolidated financial statements as of and for the years ended December 31, 2017 and 2016 included in this prospectus and in the related registration statement have been audited by Soles, Heyn & Company, LLP, an independent registered public accounting firm. As indicated in the report of this firm with respect thereto, these financial statements are included in this prospectus in reliance upon the authority of such firm as experts in auditing and accounting.
+ 
+ WHERE YOU CAN FIND MORE INFORMATION
+ 
+ We file annual, quarterly and current reports, and certain other information, with the SEC. You may read and copy this information at the public reference room of the SEC located at 100 F Street, N.E., Washington, D.C. 20549. For further information on operation of the public reference room, please call the SEC at 1-800-SEC-0330. Our public filings also are available to the public at the SEC s Internet website at http://www.sec.gov. This prospectus is part of a registration statement on Form S-1 that we have filed with the SEC under the Securities Act of 1933, as amended. This prospectus does not contain all of the information in the registration statement. You may inspect and copy the registration statement, including exhibits, at the SEC s public reference room or at its Internet website.
+ 
+ 
+ 48
+ 
+ 
+ Table of Contents
+
+ 
+ FISION CORPORATION
+ 
+ INDEX TO FINANCIAL STATEMENTS
+ 
+ 
+ Page No.
+ 
+
+ Balance Sheets at September 30, 2018 (unaudited) and December 31, 2017
+ 
+ F-2 
+ 
+
+ Statements of Operations (unaudited) for the three and nine months ended September 30, 2018 and 2017
+ 
+ F-3
+ 
+
+ Statements of Cash Flows (unaudited) for the nine months ended September 30, 2018 and 2017 
+ 
+ F-4
+ 
+
+ Notes to Unaudited Financial Statements September 30, 2018 and 2017
+ 
+ F-5
+ 
+ 
+
+ Report of Independent Registered Public Accounting Firm
+ F-14
+ 
+
+ Balance Sheets at December 31, 2017 and 2016
+ F-15
+ 
+
+ Statements of Operations for the years ended December 31, 2017 and 2016
+ F-16
+ 
+
+ Statements of Stockholders Equity (Deficit) for the years ended December 31, 2017 and 2016
+ F-17
+ 
+
+ Statements of Cash Flows for the years ended December 31, 2017 and 2016
+ F-18
+ 
+
+ Notes to Financial Statements December 31, 2017 and 2016
+ F-19
+ 
+ 
+ 
+ F-1
+ 
+ 
+ 
+
+ 
+ FISION CORPORATION
+ CONDENSED CONSOLIDATED BALANCE SHEET
+ (Unaudited)
+ 
+ 
+ 
+ September 30,
+ 
+ 
+ December 31,
+ 
+
+ 
+ 
+ 2018
+ 
+ 
+ 2017
+ 
+
+ ASSETS
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Current Assets:
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Cash
+ 
+ $ 219,377 
+ 
+ $ 10,773 
+
+ Accounts receivable, net
+ 
+ 
+ 28,982 
+ 
+ 
+ 39,764 
+
+ Notes Receivable
+ 
+ 
+ 295,664 
+ 
+ 
+ - 
+
+ Deferred customer costs associated with contract liabilities
+ 
+ 
+ - 
+ 
+ 
+ 11,924 
+
+ Work In Process
+ 
+ 
+ 8,400 
+ 
+ 
+ 8,400 
+
+ Prepaid Expenses
+ 
+ 
+ 80,153 
+ 
+ 
+ 201,092 
+
+ Total Current Assets
+ 
+ 
+ 632,576 
+ 
+ 
+ 271,953 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Property and equipment, net
+ 
+ $ 7,379 
+ 
+ $ 4,719 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Other Assets:
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Goodwill
+ 
+ 
+ 132,000 
+ 
+ 
+ 132,000 
+
+ Intellectual property/software code, net of accumulated amortization
+ 
+ 
+ 91,737 
+ 
+ 
+ 62,384 
+
+ Deposits
+ 
+ 
+ 8,053 
+ 
+ 
+ 8,053 
+
+ Total Assets
+ 
+ $ 871,745 
+ 
+ $ 479,109 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ LIABILITIES AND STOCKHOLDERS' EQUITY
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Current Liabilities:
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Accounts payable, accrued expenses
+ 
+ $ 845,914 
+ 
+ $ 770,598 
+
+ Contract liability
+ 
+ 
+ - 
+ 
+ 
+ 10,424 
+
+ Customer advances
+ 
+ 
+ 232,525 
+ 
+ 
+ 249,269 
+
+ Derivative liability
+ 
+ 
+ 2,572,376 
+ 
+ 
+ 1,243,788 
+
+ Note payable and accrued interest - related party
+ 
+ 
+ 223,364 
+ 
+ 
+ 270,639 
+
+ Convertible notes payable, net of debt discount of $1,559,774 and $753,437 respectively
+ 
+ 
+ 475,965 
+ 
+ 
+ 329,401 
+
+ Total Current Liabilities
+ 
+ 
+ 4,350,144 
+ 
+ 
+ 2,874,119 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Long-Term Liabilities:
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Long-Term Convertible Notes Payable, net of debt discount of $544,871 and $0 respectively
+ 
+ 
+ 501,129 
+ 
+ 
+ 300,000 
+
+ Total Long-Term Liabilities
+ 
+ 
+ 501,129 
+ 
+ 
+ 300,000 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Total Liabilities
+ 
+ 
+ 4,851,273 
+ 
+ 
+ 3,174,119 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Contingencies and Commitments
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Stockholders' Equity:
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Preferred Stock, $0.0001 Par value, 20,000,000 shares authorized, no shares issued and outstanding
+ 
+ 
+ - 
+ 
+ 
+ - 
+
+ Common Stock, $0.0001 Par value, 500,000,000 shares authorized 57,661,453 and 45,935,369 shares issued and outstanding, respectively
+ 
+ 
+ 5,766 
+ 
+ 
+ 4,594 
+
+ Additional paid in capital
+ 
+ 
+ 17,156,698 
+ 
+ 
+ 15,822,261 
+
+ Accumulated deficit
+ 
+ 
+ (21,141,992 ) 
+ 
+ (18,521,865 )
+ Total Stockholders' Equity
+ 
+ 
+ (3,979,528 ) 
+ 
+ (2,695,010 )
+ Total Liabilities and Stockholders' Equity
+ 
+ $ 871,745 
+ 
+ $ 479,109 
+
+ 
+ The accompanying notes are an integral part of these unaudited consolidated condensed financial statements. 
+ 
+ 
+ F-2
+ 
+ 
+ Table of Contents
+
+ 
+ FISION CORPORATION
+ CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
+(Unaudited) 
+ 
+ 
+ Three Months Ended 
+ September 30,
+ 
+ 
+ Nine Months Ended 
+ September 30,
+ 
+
+ 
+ 
+ 2018
+ 
+ 
+ 2017
+ 
+ 
+ 2018
+ 
+ 
+ 2017
+ 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ REVENUE
+ 
+ $ 134,818 
+ 
+ $ 124,553 
+ 
+ $ 391,037 
+ 
+ $ 409,980 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ COST OF SALES
+ 
+ 
+ 17,117 
+ 
+ 
+ 23,632 
+ 
+ 
+ 63,104 
+ 
+ 
+ 53,012 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ GROSS MARGIN
+ 
+ $ 117,701 
+ 
+ $ 100,921 
+ 
+ $ 327,933 
+ 
+ $ 356,968 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ OPERATING EXPENSES
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Sales and Marketing
+ 
+ 
+ 158,193 
+ 
+ 
+ 513,121 
+ 
+ 
+ 536,164 
+ 
+ 
+ 1,296,921 
+
+ Development and Support
+ 
+ 
+ 124,550 
+ 
+ 
+ 340,620 
+ 
+ 
+ 531,359 
+ 
+ 
+ 763,168 
+
+ General and Administrative
+ 
+ 
+ 409,700 
+ 
+ 
+ 652,152 
+ 
+ 
+ 1,208,593 
+ 
+ 
+ 1,027,626 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ TOTAL OPERATING EXPENSES
+ 
+ $ 692,443 
+ 
+ $ 1,505,893 
+ 
+ $ 2,276,116 
+ 
+ $ 3,087,715 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ OPERATING LOSS
+ 
+ $ (574,742
+ ) 
+ $ (1,404,972 ) 
+ $ (1,948,183 ) 
+ $ (2,730,747 )
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ OTHER INCOME / (EXPENSES)
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Interest expense and amortization of debt discount
+ 
+ 
+ (210,294 ) 
+ 
+ (316,793 ) 
+ 
+ (562,448 ) 
+ 
+ (898,735 )
+ Amortization expense
+ 
+ 
+ (263,601 ) 
+ 
+ 0 
+ 
+ 
+ (826,534 ) 
+ 
+ 0 
+
+ OID and other expenses
+ 
+ 
+ (53,836 ) 
+ 
+ 0 
+ 
+ 
+ (118,836 ) 
+ 
+ 0 
+
+ Change in fair value of derivatives
+ 
+ 
+ 739,449
+ 
+ 
+ 
+ 141,216 
+ 
+ 
+ 1,069,175
+ 
+ 
+ 
+ 57,847 
+
+ Loss on settlement of debt, net
+ 
+ 
+ (545,259
+ ) 
+ 
+ (56,066 ) 
+ 
+ (233,301
+ )
+ 
+ 
+ (121,854 )
+ TOTAL OTHER INCOME / (EXPENSES)
+ 
+ $ (333,541 ) 
+ $ (231,643 ) 
+ $ (671,944 ) 
+ $ (962,742 )
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ NET LOSS
+ 
+ $ (908,283 ) 
+ $ (1,636,615 ) 
+ $ (2,620,127 ) 
+ $ (3,693,489 )
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Net loss per common share - basic and diluted
+ 
+ $ (0.02 ) 
+ $ (0.04 ) 
+ $ (0.05 ) 
+ $ (0.09 )
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Weighted average common shares outstanding:
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Basic and diluted
+ 
+ 
+ 56,031,314 
+ 
+ 
+ 43,026,419 
+ 
+ 
+ 51,691,263 
+ 
+ 
+ 41,243,255 
+
+ 
+ The accompanying notes are an integral part of these unaudited consolidated condensed financial statements. 
+ 
+ F-3
+ 
+ 
+ Table of Contents
+
+ 
+ FISION CORPORATION
+ CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
+ (Unaudited)
+ 
+ 
+ 
+ Nine Months Ended
+ 
+
+ 
+ 
+ September 30,
+ 
+
+ 
+ 
+ 2018
+ 
+ 
+ 2017
+ 
+
+ CASH FLOWS FROM OPERATING ACTIVITIES:
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Net Loss for the Period
+ 
+ $ (2,620,127 ) 
+ $ (3,693,489 )
+ Net cash used in operating activities:
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Common stock issued for services
+ 
+ 
+ 438,770 
+ 
+ 
+ 1,518,443 
+
+ Depreciation and Amortization
+ 
+ 
+ 16,711 
+ 
+ 
+ 14,715 
+
+ Stock warrants/Stock Options issued for services
+ 
+ 
+ 250,329 
+ 
+ 
+ 206,360 
+
+ Change in Derivative Liabilities
+ 
+ 
+ (1,069,175 ) 
+ 
+ (57,847 )
+ Loss on Settlement of Debt
+ 
+ 
+ 233,301 
+ 
+ 
+ 121,854 
+
+ Amortization of BCF Discount
+ 
+ 
+ 812,164 
+ 
+ 
+ 58,195 
+
+ Changes in Operating Assets and Liabilities
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ (Increase) decrease in:
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Accounts receivable
+ 
+ 
+ 10,782 
+ 
+ 
+ (10,987 )
+ Customer Contracts Contract Liability
+ 
+ 
+ 11,924 
+ 
+ 
+ (23,847 )
+ Prepaid expenses
+ 
+ 
+ 120,939 
+ 
+ 
+ 377,134 
+
+ Increase (decrease) in:
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Accounts payable & accrued expenses 
+ 
+ 
+ (13,838 ) 
+ 
+ 824,183 
+
+ Net Cash Used in Operating Activities
+ 
+ 
+ (1,808,220 ) 
+ 
+ (665,286 )
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ CASH FLOWS FROM INVESTING ACTIVITIES:
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Purchase of Property and Equipment
+ 
+ 
+ (5,000 ) 
+ 
+ - 
+
+ Cash acquired in acquisition
+ 
+ 
+ - 
+ 
+ 
+ 51,500 
+
+ Net Cash (Used In) Provided By Investing Activities
+ 
+ 
+ (5,000 ) 
+ 
+ 51,500 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ CASH FLOWS FROM FINANCING ACTIVITIES:
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Repayments on note payable
+ 
+ 
+ (385,513 ) 
+ 
+ (104,667 )
+ Proceeds from note payable
+ 
+ 
+ 2,422,325 
+ 
+ 
+ 410,000 
+
+ Proceeds from related party notes
+ 
+ 
+ 26,125 
+ 
+ 
+ 14,300 
+
+ Repayments of related party notes
+ 
+ 
+ (32,013 ) 
+ 
+ 0 
+
+ Repayments on line of credit
+ 
+ 
+ (9,100 ) 
+ 
+ (7,525 )
+ Proceeds from issuance of common stock
+ 
+ 
+ - 
+ 
+ 
+ 300,000 
+
+ Net Cash Provided by Financing Activities
+ 
+ 
+ 2,021,824 
+ 
+ 
+ 612,108 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Net Increase (Decrease) in Cash
+ 
+ 
+ 208,604 
+ 
+ 
+ (1,678 )
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Cash at Beginning of Period 
+ 
+ 
+ 10,773 
+ 
+ 
+ 8,172 
+
+ Cash at End of Period
+ 
+ $ 219,377 
+ 
+ $ 6,494 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
+ 
+ $ - 
+ 
+ 
+ 
+ 
+
+ Cash paid during period:
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Interest
+ 
+ $ 75,860 
+ 
+ $ 30,537 
+
+ Noncash operating and financing activities:
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Common Stock Issued for Services
+ 
+ $ 438,770 
+ 
+ $ 1,518,443 
+
+ Stock warrants/Stock Options issued for services
+ 
+ $ 250,329 
+ 
+ $ 206,360 
+
+ Conversion of debt and accrued interest to common stock
+ 
+ $ 614,710 
+ 
+ $ 541,685 
+
+ Acquisition of Volerro
+ 
+ $ 31,800 
+ 
+ $ 252,000 
+
+ 
+ The accompanying notes are an integral part of these unaudited consolidated condensed financial statements.
+ 
+ 
+ F-4
+ 
+ 
+ Table of Contents
+
+ 
+ FISION CORPORATION 
+ NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
+ SEPTEMBER 30, 2018 AND 2017
+ (Unaudited)
+ 
+ NOTE 1 -- ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
+ 
+ FISION Corporation, (formerly DE 6 Acquisition, Inc.), a Delaware corporation (the Company ) was incorporated on February 24, 2010, and was inactive until December 2015 when it merged with Fision Holdings, Inc., an operating business based in Minneapolis, Minnesota. As a result of this reverse merger, Fision Holdings, Inc. became a wholly-owned subsidiary of the Company. Fision Holdings, Inc. was incorporated under the laws of the State of Minnesota in 2010, and has developed and successfully commercialized a proprietary cloud-based software platform which automates and integrates digital marketing assets and marketing communications to bridge the gap between marketing and sales of any enterprise. The Company generates its revenues primarily from software licensing contracts typically having terms of from one to three years and requiring monthly subscription fees based on the customer s number of users and the locations where used. The Company s business model provides it with a high percentage of recurring revenues.
+ 
+ The terms Fision, we, us, and our, refer to FISION Corporation, a Delaware corporation and its wholly-owned operating subsidiary Fision Holdings, Inc., a Minnesota corporation (including our Volerro software services). 
+ 
+ Basis of Presentation 
+ 
+ The accompanying condensed consolidated financial statements are unaudited. These interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States ( GAAP ) and pursuant to the rules and regulations of the SEC. Certain information and note disclosures which are included in annual financial statements have been omitted pursuant to these rules and regulations. We believe the disclosures made in these interim financial statements are adequate to make the information not misleading.
+ 
+ Although these interim financial statements for the three and nine month periods ended September 30, 2018 and 2017 are unaudited, in the opinion of our management, such statements include all adjustments, consisting of normal and recurring accruals, necessary to present fairly our financial position, results of operations and cash flows for the periods presented. The results for this 2018 interim period are not necessarily indicative of the results to be expected for the year ended December 31, 2018 or for any future period.
+ 
+ These interim financial statements should be read and considered in conjunction with our audited financial statements and the notes thereto for the year ended December 31, 2017, included in our annual report on Form 10-K filed with the SEC on April 2, 2018.
+ 
+ Principles of Consolidation 
+ 
+ These condensed consolidated interim financial statements include the accounts of FISION Corporation, a Delaware corporation, and its wholly-owned Minnesota subsidiary Fision Holdings, Inc. All material intercompany transactions and balances have been eliminated in consolidation.
+ 
+ Use of Estimates
+ 
+ GAAP accounting principles require our management to make estimates and assumptions in the preparation of these interim financial statements that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from these estimates and assumptions.
+ 
+ 
+ F-5
+ 
+ 
+ Table of Contents
+
+ 
+ The most significant areas requiring management judgment and which are susceptible to possible later change include our revenue recognition, cost of revenue, allowance for doubtful accounts, valuations of property and equipment and intangible assets, stock-based compensation, fair value of financial instruments, derivative securities, research and development, impairment of long-lived assets, and income taxes.
+ 
+ Cash and Cash Equivalents 
+ 
+ We consider all short-term highly liquid investments with a remaining maturity at the date of purchase of three months or less to be cash equivalents. At September 30, 2018 and December 31, 2017, we had no cash equivalents.
+ 
+ Concentration of Credit Risk and Customers
+ 
+ Financial instruments that potentially subject us to concentrations of credit risk consist principally of cash and accounts receivable. During the quarter ended September 30, 2018, we may have had cash deposits in our bank that exceeded FDIC insurance limits. We maintain our bank accounts at high quality institutions and in demand accounts to mitigate this risk. Regarding our customers, we perform ongoing credit evaluations of them, and generally we do not require collateral from them to do business with us.
+ 
+ For the nine months ended September 30, 2018, three customers each exceeded 10% of our revenues, including one for 18% of revenues, one for 16% of revenues, and one for 13% of revenues. We do not believe that we face any material customer concentration risks currently, although a significant reduction for any reason in the use of our software solutions by one or more of our major customers could harm our business materially. 
+ 
+ Revenue recognition
+ 
+ In May 2014, the Financial Accounting Standards Board ( FASB ) issued Accounting Standards Codification ( ASC ) 606, Revenue From Contracts With Customers, originally effective for public business entities with annual reporting periods beginning after December 15, 2016. On August 12, 2015, the FASB issued an Accounting Standards Update ( ASU ), Revenue From Contracts With Customers (Topic 606): Deferral of the Effective Date, which deferred the effective date of ASC 606 for one year. ASC 606 provides accounting guidance related to revenue from contracts with customers. For public business entities, ASC 606 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. This new revenue recognition standard (new guidance) has a five-step process: a) Determine whether a contract exists b) Identify the performance obligations c) Determine the transaction price d) Allocate the transaction price and e) Recognize revenue when (or as) performance obligations are satisfied. The Company has already implemented the five-step process in determining revenue recognition from contracts with customers, in accordance with ASC 606.
+ 
+ Revenue is recognized in the period the services are provided over the contract period, normally one (1) to three (3) years. We invoice one-time startup and implementation costs, such as consolidating and uploading digital assets of the customer, upon completion of those services as one performance obligation and recorded as revenue when completed. Monthly services, such as internet access to software as a service (SaaS), hosting and weekly backups are invoiced monthly as another performance obligation and recorded as revenue over time.
+ 
+ Company Recognizes Contract Liability for Its Performance Obligation 
+ 
+ Upon receipt of a prepayment from a customer, the Company recognizes a contract liability in the amount of the prepayment for its performance obligation to transfer goods and services in the future. When the Company transfers those goods and services and, therefore, satisfies its performance obligation to the customer, the Company will then recognize the revenue.
+ 
+ 
+ F-6
+ 
+ 
+ Table of Contents
+
+ 
+ Lease Accounting 
+ 
+ In February 2016, the FASB issued Accounting Standards Update (ASU) No. 2016-02, Leases. ASU 2016-02 requires a lessee to record a right of use asset and a corresponding lease liability on the balance sheet for all leases with terms longer than 12 months. ASU 2016-02 is effective for all interim and annual reporting periods beginning after December 15, 2018. Early adoption is permitted. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company is in the process of evaluating the impact of ASU 2016-02 on the Company s financial statements and disclosures.
+ 
+ Loss Per Common Share
+ 
+ Basic net loss per common share is computed by dividing the net loss by the weighted average number of common shares outstanding for the period. Diluted net loss per common share is computed by dividing the net loss by the weighted average number of common shares outstanding and potential common shares under the treasury stock method. Diluted net loss per common share is not shown, since the assumed exercise of stock options and warrants using the treasury stock method are anti-dilutive. For the period ending September 30, 2018 and December 31, 2017, there were 9,914,069 and 9,988,069 respectively, potentially dilutive securities not included in the calculation of weighted-average common shares outstanding since they would be anti-dilutive.
+ 
+ Property and Equipment 
+ 
+ Property and equipment are capitalized and stated at cost, and any additions, renewals or betterments are also capitalized. Expenditures for maintenance and repairs are charged to earnings as incurred. If property or equipment are retired or otherwise disposed of, the related cost and accumulated depreciation are removed from our accounts, and any gain or loss is included in operations. Depreciation of property and equipment is provided using the straight-line method with estimated lives as follows:
+ 
+ Furniture and fixtures
+ 5 years
+
+ 
+ Computer and office equipment
+ 5 years
+
+ 
+ Stock-Based Compensation
+ 
+ We record stock-based compensation in accordance with Financial Accounting Standards Board ( FASB ) Accounting Standards Codification ( ASC ) Topic 718, which requires us to measure the cost for any stock-based employee compensation at fair value and recognize the expense over the related service period. We recognize the fair value of stock options, warrants and any other equity-based compensation issued to employees and non-employees as of the grant date. We use the Black-Scholes model to measure the fair value of options and warrants.
+ 
+ Reclassifications
+ 
+ Certain reclassifications have been made to the prior years financial statements to conform to the current year presentation. These reclassifications had no effect on previously reported results of operations or retained earnings.
+ 
+ Recently Issued Accounting Pronouncements
+ 
+ In February 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases (Topic 842) ( ASU 2016-02 ), which requires lessees to put most leases on their balance sheets but recognize the expenses on their income statements in a manner similar to current practice. ASU 2016-02 states that a lessee would recognize a lease liability for the obligation to make lease payments and a right-to-use asset for the right to use the underlying asset for the lease term. The new standard is effective for interim and annual periods beginning after December 15, 2018 and early adoption is permitted. We are currently evaluating the impact of ASU 2016-02 to our future consolidated financial statements. 
+ 
+ Other recent accounting pronouncements issued by the FASB, the AICPA ( American Institute of Certified Public Accountants ), and the Securities and Exchange Commission did not or are not believed by management to have a material impact on our present or future financial statements.
+ 
+ 
+ F-7
+ 
+ 
+ Table of Contents
+
+ 
+ NOTE 2 -- GOING CONCERN
+ 
+ Our financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. Our ability to continue as a going concern is contingent upon our future ability to achieve and maintain profitable operations, and to raise substantial additional capital as required until we attain profitable operations.
+ 
+ At September 30, 2018 we had a working capital deficiency of approximately $3.7 million and an accumulated deficit of approximately $21.1 million. These conditions raise substantial doubt about our ability to continue as a going concern. These unaudited interim financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might result from this uncertainty.
+ 
+ We are in the process of raising funds, increasing our marketing and sales activities to obtain materially increased revenues, and otherwise addressing our ability to continue as a going concern, and our management believes that our actions being taken to raise needed capital and implement our business plan for increased revenues will enable us to continue as a going concern.
+ 
+ NOTE 3 -- FAIR VALUE OF FINANCIAL INSTRUMENTS 
+ 
+ FASB ASC Topic 820 requires disclosure of and defines fair value of financial instruments, and also establishes a three-level valuation hierarchy for these disclosures. The carrying amounts reported in a balance sheet for receivables and current liabilities qualify as financial instruments and are a reasonable estimate of their fair values because of the short period of time between their origination and their expected realization and their current market rate of interest. The three levels of valuation hierarchy for fair value determinations are defined as follows: 
+ 
+ Level 1 inputs include quoted prices for identical assets or liabilities in active markets.
+ Level 2 inputs include observable quoted prices for similar assets and liabilities in active markets, and quoted prices for identical assets or liabilities in inactive markets. 
+ Level 3 inputs include one or more unobservable inputs which we have assessed and assumed that market participants would use in pricing the asset or liability.
+ 
+ The following table represents the Company s assets and liabilities by level measured at fair value on a recurring basis at September 30, 2018:
+ 
+ 
+ 
+ Level 1
+ 
+ 
+ Level 2
+ 
+ 
+ Level 3
+ 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Derivative liability
+ 
+ $ - 
+ 
+ $ - 
+ 
+ $ 2,572,376 
+
+ 
+ The following assets and liabilities are measured on the consolidated balance sheets at fair value on a recurring basis utilizing significant unobservable inputs or Level 3 assumptions in their valuation. The following table provide a reconciliation of the beginning and ending balances of the liabilities:
+ 
+ 
+ 
+ 
+ Fair Value
+ January 1,
+ 2018
+ 
+ 
+ Convertible
+ Notes
+ 
+ 
+ Change in fair
+ Value
+ 
+ 
+ Conversions
+ 
+ 
+ Fair Value
+ Sept. 30,
+ 2018
+ 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Derivative liability
+ 
+ $ 1,243,788 
+ 
+ $ 3,572,514 
+ 
+ $ (1,069,175 ) 
+ $ (1,174,751 ) 
+ $ 2,572,376 
+
+ 
+ All gains and losses on assets and liabilities measured at fair value on a recurring basis and classified as Level 3 within the fair value hierarchy are recognized in other interest income and expense in these financial statements.
+ 
+ 
+ F-8
+ 
+ 
+ Table of Contents
+
+ 
+ The significant unobservable inputs used in the fair value measurement of the liabilities described above are as follows;
+ 
+ Exercise price
+ $.01 - $.152
+ 
+ Expected Volatility
+ 90%
+ 
+
+ Expected Term
+ 6 mos.
+ 
+ Risk free interest rate
+ 0.91 2.59%
+ 
+
+ Expected dividends 
+ -
+ 
+ 
+ Derivative Instruments
+ 
+ The Company accounts for derivative instruments in accordance with Accounting Standards Codification 815, Derivatives and Hedging ( ASC 815 ), which establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. They require that an entity recognize all derivatives as either assets or liabilities in the balance sheet and measure those instruments at fair value.
+ 
+ If certain conditions are met, a derivative may be specifically designated as a hedge, the objective of which is to match the timing of gain or loss recognition on the hedging derivative with the recognition of (i) the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk or (ii) the earnings effect of the hedged forecasted transaction. For a derivative not designated as a hedging instrument, the gain or loss is recognized in income in the period of change.
+ 
+ NOTE 4 -- NOTES PAYABLE
+ 
+ At September 30, 2018 we were indebted under various Notes Payable in the total amount of $3,642,175 including accrued interest. Following is a summary of our outstanding Notes Payable indebtedness as of September 30, 2018:
+ 
+ Summary Description
+ 
+ Amount* 
+ 
+
+ Decathlon LLC - Senior Secured Note, due 9/30/18, interest at 15%
+ 
+ $ 115,891 
+
+ Finquest Capital Inc.- Secured Note, due 4/15/18, interest at 15%
+ 
+ 
+ 65,130 
+
+ Brajoscal, LLC - Secured Note, due 12/31/18 interest at 15%
+ 
+ 
+ 40,938 
+
+ Nottingham Securities Inc., monthly settlement payments
+ 
+ 
+ 67,742 
+
+ Greentree Financial Group, Inc., due 4/24/19 5/14/19, interest at 8% 
+ 
+ 
+ 308,252 
+
+ L&H, Inc., due 5/14/19 6/26/19, interest at 8%
+ 
+ 
+ 75,298 
+
+ Crossover Capital Fund II LLC, due 11/12/18, interest at 12%
+ 
+ 
+ 105,972 
+
+ Power Up Lending Group, due 10/12/19 10/20/19, interest at 12%
+ 
+ 
+ 173,071 
+
+ Ignition Capital LLC, due 11/30/18, interest at 6%
+ 
+ 
+ 103,833 
+
+ 2 PLUS 2, LLC, due 4/29/19, interest at 8%
+ 
+ 
+ 25,333 
+
+ JSJ Investments, Inc., due 4/11/19, interest at 12%
+ 
+ 
+ 79,290 
+
+ Crown Bridge Partners, due 5/21/19 9/28/19, interest at 10%
+ 
+ 
+ 122,000 
+
+ Peak One Opportunity Fund, due 6/5/21, no interest
+ 
+ 
+ 75,000 
+
+ LG Capital LLC, due 6/25/19 9/12/19, interest at 10%
+ 
+ 
+ 202,938 
+
+ Adair Bays LLC, due 6/25/19 9/21/19, interest at 10%
+ 
+ 
+ 202,747 
+
+ Intellicash GA, LLC, due 11/16/18, interest at 18%
+ 
+ 
+ 55,647 
+
+ The Thomas Group, due 5/14/18, interest at 8%
+ 
+ 
+ 80,800 
+
+ Notes payable to individual investors, due 12/31/18, interest at 6%
+ 
+ 
+ 22,172 
+
+ Note payable to individual investor, monthly settlement payments
+ 
+ 
+ 43,000 
+
+ Notes payable to individual investors, due 12/13/18, interest at 12%
+ 
+ 
+ 291,163
+ 
+
+ Notes payable to individual investors, due October 2019, interest at 12 %
+ 
+ 
+ 330,875 
+
+ Note payable to individual investor, due 3/9/19, interest at 12%
+ 
+ 
+ 78,750 
+
+ Notes payable to individual investors, due 5/25/19 6/21/19, no interest
+ 
+ 
+ 176,000 
+
+ Note payable to individual investor, due 1/5/20, interest at 12%
+ 
+ 
+ 51,500 
+
+ Notes payable to individual investors, due 3/9/20 5/1/20, interest at 12%
+ 
+ 
+ 159,534 
+
+ Note payable to individual investors, due 9/20/20, interest at 6%
+ 
+ 
+ 365,935 
+
+ Notes payable to two principal officers, due on demand, interest at 6%
+ 
+ 
+ 223,364 
+
+ Total
+ 
+ $ 3,642,175
+ 
+
+ _____________
+ * Includes accrued interest
+ 
+ 
+ F-9
+ 
+ 
+ Table of Contents
+
+ 
+ NOTE 5 -- CONVERTIBLE NOTES
+ 
+ The Company has entered into various convertible notes at face value less debt discounts relating to fees and certain expenses paid in connection with the convertible debt transactions. The conversion provisions are a derivative that qualifies for an exemption from bifurcation and liability accounting as provided for in ASC 815, Derivatives and Hedging Contracts in Entity s Own Equity ( ASC 815 ). 
+ 
+ During the first nine months of 2018, the Company issued convertible notes in the total amount of $2,518,500 (excluding $119,500 of Original Issue Discounts and $65,900 legal fees and broker-dealer commissions) including $1,592,625 of short-term debt and $872,000 of long-term debt as follows:
+ 
+ Short-Term Convertible Notes 
+ 
+ In January 2018 we issued a $50,000 Convertible Note to an accredited investor bearing interest at 12% per annum, maturing on December 31, 2018, and convertible into our common stock at a conversion price of $.15 per share.
+ 
+ In February 2018 we issued a total of $250,000 of Convertible Notes to accredited investors convertible into our common stock at conversion prices varying from 50-55% of the average of the lowest trading prices for the 10 trading days prior to conversion, including (i) $150,000 of Convertible Notes bearing interest at 11% per annum and maturing on August 28, 2018, and (ii) a $100,000 Convertible Note bearing interest at 11% per annum and maturing on November 16, 2018. We paid a $3,000 legal fee for this note.
+ 
+ In April 2018 we issued a $75,000 Convertible Note to an accredited investor bearing interest at 12% per annum, maturing on April 11, 2019, and convertible into our common stock at a conversion price equal to 42.5% of the lowest trading price for the 10 trading days prior to conversion. We paid a $2,000 legal fee for this note.
+ 
+ In May 2018 we issued a total of $135,000 of Convertible Notes to accredited investors convertible into our common stock at conversion prices at 55% of the lowest trading price for the 10 trading days prior to conversion, including (i) $75,000 of Convertible Notes bearing interest at 12% per annum and maturing on May 9, 2019, and (ii) a $60,000 Convertible Note bearing interest at 10% per annum and maturing on May 21, 2019. We paid a $3,000 legal fee for this note.
+ 
+ In June 2018 we issued a total of $200,000 of Convertible Notes to accredited investors convertible into our common stock at conversion prices at $0.16 per share and after six months, 55% of the lowest trading price for the 10 trading days prior to conversion, including: (i) $100,000 of Convertible Notes bearing interest at 10% per annum and maturing on June 25, 2019, and (ii) a $100,000 Convertible Note bearing interest at 10% per annum and maturing on June 27, 2019. We paid $10,000 legal fees for these two notes.
+ 
+ In June 2018 we issued a total of $176,000 of Convertible Notes to accredited investors convertible into our common stock at conversion prices at $0.10 per share, along with 480,000 warrants to purchase common stock at $0.20 per share for three years.
+ 
+ In July 2018 we issued a total of $275,000 of Convertible Notes to three accredited investors convertible into our common stock at conversion prices at 50% of the lowest trading prices for the 10 trading days prior to conversion, bearing interest at 8% per annum and maturing on April 19, 2019. No legal or due diligence fees were paid on these notes.
+ 
+ In August 2018 we issued a total of $160,000 of Convertible Notes to two accredited investors convertible into our common stock at conversion prices at 50% of the lowest trading prices for the 10 trading days prior to conversion, bearing interest at 8% per annum and maturing on May 14, 2019. No legal or due diligence fees were paid on these notes.
+ 
+ In September 2018 we issued a total of $25,000 of Convertible Notes to an accredited investor convertible into our common stock at conversion prices at 50% of the lowest trading prices for the 10 trading days prior to conversion, bearing interest at 8% per annum and maturing on June 23, 2019. No legal or due diligence fees were paid on these notes.
+ 
+ In September 2018 we issued a total of $60,000 of Convertible Notes to an accredited investor convertible into our common stock at conversion prices at 55% of the lowest trading price for the 10 trading days prior to conversion. We paid a $2,000 legal fee for this note.
+ 
+ In September 2018 we issued a total of $200,000 of Convertible Notes to accredited investors convertible into our common stock at conversion prices at $0.16 per share and after six months, 55% of the lowest trading price for the 10 trading days prior to conversion, including: (i) $100,000 of Convertible Notes bearing interest at 10% per annum and maturing on September 12, 2019, and (ii) a $100,000 Convertible Note bearing interest at 10% per annum and maturing on September 21, 2019. We paid $10,000 legal and due diligence fees for these two notes.
+ 
+ 
+ F-10
+ 
+ 
+ Table of Contents
+
+ 
+ Long-Term Convertible Notes
+ 
+ In January 2018 we issued a $63,000 Convertible Note to an accredited investor bearing interest at 12% per annum, maturing on December 31, 2018, and convertible into our common stock at a conversion price equal to 42% of the average of the lowest trading prices for the 10 trading days prior to conversion. We paid a $3,000 legal fee for this note.
+ 
+ During January-February 2018 we issued a total of $150,000 of Convertible Notes to accredited investors, bearing interest at 12% per annum, maturing two years after their respective purchase dates, and convertible into our common stock at a conversion price equal to the lower of $.20 per share or the Volume Weighted Average Price (VWAP) for the 10 trading days prior to conversion. We paid $18,000 commissions on these long term notes.
+ 
+ In March 2018 we issued a $63,000 Convertible Note to an accredited investor, bearing interest at 12% per annum, maturing on June 26, 2019, and convertible into our common stock at a conversion price equal to 42% of the average of the lowest trading prices for the 10 trading days prior to conversion. We paid a $3,000 legal fee for this note.
+ 
+ In April and May 2018 we issued a total of $53,000 in Long Term Convertible Notes as follows: Company issued a total of $53,000 in Convertible Notes sold to four accredited individual investors who purchased these notes from our 2018 private placement of $25,000 Notes bearing interest at 12% per annum and maturing two years from their purchase with the noteholders having the right to convert the notes into our common stock at a conversion price equal to the lower of $.20 per share or the Volume Weighted Average Price (VWAP) of our common shares for the ten days prior to conversion. Incident thereto, we also issued 53,000 warrants to purchase our common stock at $0.01 per share for three years to the purchaser of this Note and 53,000 warrants to purchase our common stock at $0.01 per share for three years to the broker-dealer placement agent of this Note.
+ 
+ In June 2018 we issued a $75,000 Convertible Note to an accredited investor, bearing interest at 0% per annum, maturing on June 5, 2021, and convertible into our common stock at a conversion price equal to 55% of the lowest trading prices for the 10 trading days prior to conversion.
+ 
+ In July 2018, we issued a $103,000 convertible promissory note bearing an interest rate of 12% per annum to an accredited investor, payable on October 12, 2019 plus accrued interest, and convertible into our common stock at a conversion price equal to 42% of the lowest trading price during the 10-day trading period prior to conversion. We paid a $3,000 legal and due diligence fee for this note.
+ 
+ In September 2018 we issued a total of $365,000 Convertible Notes to seven accredited investors, bearing interest at 6% per annum, maturing on September 20, 2020, and convertible into our common stock at a conversion price equal to $0.20 per share. We paid no legal fee for these notes.
+ 
+ In September 2018 we issued a $68,000 Convertible Note to an accredited investor bearing interest at 12% per annum, maturing on December 20, 2019, and convertible into our common stock at a conversion price equal to 42% of the lowest trading price for the 10 trading days prior to conversion. We paid a $3,000 legal and due diligence fee for this note.
+ 
+ We evaluated the terms of the convertible notes in accordance with ASC 815-40, Contracts in Entity s Own Equity, and concluded that the Convertible Notes resulted in a derivative with a beneficial conversion feature since the convertible notes were convertible into shares of common stock at a discount to the market value of the common stock. The discount related to the beneficial conversion feature on the notes was based on the Black-Scholes Model, and is being amortized over the term of the debt. For the nine months ended September 30, 2018, we recognized interest expense of $826,534 related to the amortization of the debt discount.
+ 
+ The derivative liability relating to the beneficial conversion rights was $2,572,376 at September 30, 2018 and was computed using the following variables:
+ 
+ Exercise price
+ $.01 - $.152
+ 
+ Expected Volatility
+ 90%
+ 
+
+ Expected Term
+ 6 mos.
+ 
+ Risk free interest rate
+ 0.91 2.59%
+ 
+
+ Expected dividends 
+ -
+ 
+ 
+ Short-Term Non-Convertible Note
+ 
+ From January through September 2018, we issued a $26,125 notes to our CEO, a related party, bearing interest at 6% per annum, due on demand.
+ 
+ NOTE 6 -- STOCKHOLDERS EQUITY
+ 
+ The Company is authorized to issue 500,000,000 shares of common stock and 20,000,000 shares of preferred stock, both having $.0001 par value per share. At September 30, 2018 there were 57,661,453 outstanding shares of common stock and no outstanding shares of preferred stock. 
+ 
+ Common Shares Issued 
+ 
+ In January--February 2018 we issued a total of 800,000 unregistered common shares valued at $134,000 to two consultants for investor relations and shareholder communications services.
+ 
+ During January- March 2018 we issued a total of 2,012,957 unregistered common shares to three holders of Convertible Notes who converted their Notes to $130,433 of common stock, which conversion prices were based on specific provisions contained in their Convertible Notes.
+ 
+ 
+ F-11
+ 
+ 
+ Table of Contents
+
+ 
+ In February 2018 we granted 250,000 unvested shares of our common stock to John Bode in consideration for his agreement to serve for a year as an independent director on our Board of Directors, of which 62,500 shares vest quarterly on May 31, 2018, August 31, 2018, November 30, 2018 and February 28, 2019 provided he continues to serve as a director.
+ 
+ In April 2018 we issued 660,000 unregistered common shares to a holder of a Convertible Note who converted $47,248 of the Note into common stock with the conversion price based on specific provisions in the Note. 
+ 
+ During April-May 2018 we issued a total of 779,960 unregistered common shares valued at $109,770 to three consultants for investor relations and shareholder communications services.
+ 
+ During April-June 2018 we issued a total of 3,861,843 unregistered common shares to three holders of Convertible Notes who converted their Notes to $256,086 of common stock, which conversion prices were based on specific provisions contained in these Notes.
+ 
+ During June 2018, we issued 500,000 shares of restricted common stock, valued at $80,000 to our former Chief Technology Officer.
+ 
+ During July-August, 2018, we issued 712,500 shares of restricted common stock valued at $102,500 to two consultants and a Noteholder for investor relations and shareholder communications services.
+ 
+ During July-September 2018, we issued a total of 2,765,491 unregistered shares of our common stock valued at $228,191 for debt conversions from four noteholders, which conversion prices were based on specific provisions contained in their convertible Notes
+ 
+ During September 2018, we issued 93,333 shares of unregistered common stock valued at $14,000 to an accredited investor for exercise of a warrant with a cashless exercise provision.
+ 
+ During September 2018 we issued 200,000 shares of unregistered common stock valued at $31,800 to Volerro Corporation as bonus shares pursuant to terms of the 2017 acquisition agreement.
+ 
+ Stock Options and Warrants
+ 
+ No stock options were granted by us during the nine-month period ended September 30, 2018.
+ 
+ During the three-month period ended March 31, 2018, we granted warrants to purchase a total of 450,000 shares of our common stock, valued at $84,875 using Black-Scholes, as follows:
+ 
+ (i) warrants for 100,000 shares granted to a Noteholder incident to the purchase of a $100,000 Convertible Note, fully vested, and exercisable at $.30 per share anytime during a five-year term;
+ (ii) warrants for 150,000 shares granted to a Noteholder incident to purchase of a $150,000 Convertible Note, fully vested, and exercisable at $.01 per share anytime during a three-year term; and
+ (iii) warrants for 200,000 shares granted incident to the purchase of $100,000 of convertible debt in our private placement, fully vested, and exercisable at $.01 per share anytime during a three-year term, and which included warrants for 100,000 shares issued to the Noteholders and warrants for 100,000 shares issued to the placement agent. 
+ 
+ During the three-month period ended June 30, 2018, we granted warrants to purchase a total of 686,000 shares of our common stock, valued at $82,407 using Black-Scholes, as follows:
+ 
+ (i) warrants for 100,000 shares granted to a Noteholder incident to the purchase of a $75,000 Convertible Note, fully vested, and exercisable at $.135 per share anytime during a two-year term;
+ (ii) warrants for 480,000 shares granted to a Noteholder incident to purchase of a $176,000 Convertible Note, fully vested, and exercisable at $.20 per share anytime during a three-year term; and
+ (iii) warrants for 106,000 shares granted incident to the purchase of $53,000 of convertible debt in our private placement, fully vested, and exercisable at $.01 per share anytime during a three-year term, including warrants for 53,000 shares issued to the Noteholders and warrants for 53,000 shares issued to the placement agent
+ 
+ During the three-month period ended September 30, 2018, we granted warrants to purchase a total of 540,000 shares of our common stock, valued at $33,656 using Black-Scholes , as follows:
+ 
+ (i) warrants for 100,000 shares granted to two Noteholders incident to their purchase of $100,000 Convertible Notes, fully vested, and exercisable at $.01 per share anytime during a two-year term; 
+ (ii) warrants for 50,000 shares vested to two consultants incident to a Consulting Agreement, vesting at 25,000 warrants each, per year, vested during the period, with a strike price of $0.25 per share, exercisable over a two year term; and
+ (iii) warrants for 390,000 shares granted to Noteholders incident to their purchase of $390,000 Convertible Notes, fully vested, and exercisable at $.01 per share anytime during a two-year term. 
+ 
+ 
+ F-12
+ 
+ 
+ Table of Contents
+
+ 
+ 
+ 
+ Number of 
+ Shares
+ 
+ 
+ Exercise 
+ Price
+ 
+ 
+ Weighted Average Exercise price
+ 
+ 
+ Average Grant Date
+ Fair value
+ 
+
+ Balance December 31, 2016
+ 
+ 
+ 4,206,444 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Granted
+ 
+ 
+ 2,652,097 
+ 
+ 0.15-0.40
+ 
+ 
+ 
+ 0.40 
+ 
+ 
+ 0.39 
+
+ Forfeited or cancelled
+ 
+ 
+ (640,722 ) 
+ 
+ - 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Balance December 31, 2017 
+ 
+ 
+ 6,217,819 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Granted
+ 
+ 
+ 1,626,000 
+ 
+ 0.01-0.30
+ 
+ 
+ 
+ 0.07 
+ 
+ 
+ 0.07 
+
+ Forfeited or cancelled
+ 
+ 
+ (102,250 ) 
+ 
+ - 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Balance September 30, 2018
+ 
+ 
+ 7,741,569 
+ 
+ 0.01-1.00
+ 
+ 
+ 
+ 0.28 
+ 
+ 
+ 0.27 
+
+ 
+ NOTE 7 -- RELATED PARTY TRANSACTIONS
+ 
+ From January through September 2018, we issued $26,125 notes to our CEO, a related party, bearing interest at 6% per annum, due on demand, with no conversion provision.
+ 
+ Our Notes Payable as of September 30, 2018 include $89,521 owed to our CEO, Michael Brown, and $133,843 owed to our CFO, Garry Lowenthal, for unpaid past salary compensation, payable on demand with an interest rate of 6% per annum. Messrs. Brown and Lowenthal each have the option to convert their respective outstanding Notes any time over a four-year period into unregistered common shares at a conversion rate of $.30 per share.
+ 
+ In February 2018 we granted 250,000 common shares, vesting quarterly, to a new director for agreeing to serve on our Board of Directors for one year. The foregoing Note 6 further describes this transaction.
+ 
+ NOTE 8 -- SUBSEQUENT EVENTS
+ 
+ In October 2018, the company issued a $53,000 convertible promissory note bearing an interest rate of 12% per annum to an accredited investor, payable on January 10, 2020 plus accrued interest. The noteholder has the right to convert the note into common stock of the Company at a conversion price equal to 58% of the average of the lowest trading price during the 10-day period ending on the latest complete trading day prior to the conversion date.
+ 
+ In October 2018, the company issued a $108,000 convertible promissory note bearing an interest rate of 8% per annum to two accredited investors, payable on July 5, 2019 plus accrued interest. The noteholders have the right to convert the note into common stock of the Company at a conversion price equal to 50% of the lowest trading price during the 10-day period ending on the latest complete trading day prior to the conversion date.
+ 
+ In October 2018, the company issued an $82,500 promissory note bearing an interest rate of 8% per year to an accredited investor, payable on November 26, 2018 with no conversion rights.
+ 
+ In October 2018 we issued a total of $50,000 Convertible Note to an accredited investor, bearing interest at 6% per annum, maturing on September 20, 2020, and convertible into our common stock at a conversion price equal to $0.20 per share. We paid no legal fee for these notes. We also issued warrants for 50,000 shares granted to this Noteholder incident to their purchase of $50,000 Convertible Note, fully vested, and exercisable at $.01 per share anytime during a two-year term. 
+ 
+ In October 2018 we issued a total of $50,000 Convertible Note to an accredited investor, bearing interest at 6% per annum, maturing on September 20, 2020, and convertible into our common stock at a conversion price equal to $0.15 per share. We paid no legal fee for these notes.
+ 
+ In October 2018, we issued a total of 400,000 unregistered shares of our common stock valued at $62,000 to two consultants and a noteholder for investor relations and shareholder communications services.
+ 
+ In November 2018, we issued 2,250,000 unregistered shares in a private placement with five accredited investors for proceeds of $450,000 ($.20 per share), which proceeds were used for working capital purposes and certain debt retirement, along with 225,000 unregistered advisory shares. The Company also granted these five accredited investors a vested three-year warrant to purchase 4,500,000 common shares at $.20 per share along with the rights to purchase an additional 2,250,000 shares for an additional $450,000 ($.20 per share), which proceeds will be used for working capital purposes and certain debt retirement.
+ 
+ 
+ F-13
+ 
+ 
+ Table of Contents
+
+ 
+ 
+ 
+ REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
+ 
+ To the Board of Directors and 
+Stockholders of Fision Corporation
+ 
+ Opinion on the Financial Statements
+ 
+ We have audited the accompanying balance sheets of Fision Corporation (the Company) as of December 31, 2017 and 2016, and the related statements of operations, changes in stockholders equity, and cash flows for each of the years in the two-year period ended December 31, 2017 and 2016, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2017 and 2016, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2017, in conformity with accounting principles generally accepted in the United States of America.
+ 
+ Going Concern
+ 
+ The accompanying financials have been prepared assuming the Company will continue as a going concern. As of December 31, 2017, the Company had accumulated losses of approximately $18,500,000, has $2.6 million working capital deficit and has generated limited profit, and may experiences losses in the near term. These factors and the need for additional financing in order for the Company to meet its business plan, raise substantial doubt about its ability to continue as a going concern. Management's plan to continue as a going concern is also described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
+ 
+ Basis for Opinion
+ 
+ These financial statements are the responsibility of the Company s management. Our responsibility is to express an opinion on the Company s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
+ 
+ We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company s internal control over financial reporting. Accordingly, we express no such opinion.
+ 
+ Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
+ 
+ We have served as the Company s auditor since 2014.
+ 
+
+ 
+ /s/ Soles, Heyn & Company, LLP
+ Soles, Heyn & Company, LLC
+ West Palm Beach, Florida
+ April 2, 2018
+ 
+ 
+ 
+ 
+ F-14
+ 
+ 
+ Table of Contents
+
+ 
+ FISION CORPORATION
+ CONSOLIDATED BALANCE SHEET
+ 
+ 
+ 
+ December 31,
+ 
+ 
+ December 31,
+ 
+
+ 
+ 
+ 2017
+ 
+ 
+ 2016
+ 
+
+ 
+ 
+ 
+ 
+ 
+ 
+
+ ASSETS
+ 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Current Assets:
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Cash
+ 
+ $ 10,773 
+ 
+ $ 8,172 
+
+ Accounts receivable, net
+ 
+ 
+ 39,764 
+ 
+ 
+ 9,045 
+
+ Deferred Customer Costs Associated with Deferred Revenue
+ 
+ 
+ 11,924 
+ 
+ 
+ 0 
+
+ Work In Process
+ 
+ 
+ 8,400 
+ 
+ 
+ 0 
+
+ Prepaid Expenses
+ 
+ 
+ 201,092 
+ 
+ 
+ 734,636 
+
+ Total Current Assets
+ 
+ 
+ 271,953 
+ 
+ 
+ 751,853 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Property and equipment, net
+ 
+ 
+ 4,719 
+ 
+ 
+ 8,326 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Other Assets:
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Goodwill
+ 
+ 
+ 132,000 
+ 
+ 
+ 0 
+
+ Intellectual Property/Software Code, net of Accumulated Amortization
+ 
+ 
+ 62,384 
+ 
+ 
+ 0 
+
+ Deposits
+ 
+ 
+ 8,053 
+ 
+ 
+ 6,456 
+
+ Total Assets
+ 
+ $ 479,109 
+ 
+ $ 766,636 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ LIABILITIES AND DEFICIENCY IN STOCKHOLDERS' EQUITY
+
+ Current Liabilities:
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Accounts payable, accrued expenses
+ 
+ $ 770,598 
+ 
+ $ 536,688 
+
+ Deferred Revenue
+ 
+ 
+ 10,424 
+ 
+ 
+ 0 
+
+ Customer Advances
+ 
+ 
+ 249,269 
+ 
+ 
+ 0 
+
+ Derivative Liability
+ 
+ 
+ 1,243,788 
+ 
+ 
+ 0 
+
+ Note payable and accrued interest - related party
+ 
+ 
+ 270,639 
+ 
+ 
+ 405,176 
+
+ Notes Payable, net of debt discount of $753,437 and $0, respectively
+ 
+ 
+ 329,401 
+ 
+ 
+ 525,550 
+
+ Total Current Liabilities
+ 
+ 
+ 2,874,119 
+ 
+ 
+ 1,467,415 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Long-Term Liabilities:
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Long-Term Notes Payable
+ 
+ 
+ 300,000 
+ 
+ 
+ - 
+
+ Total Long-Term Liabilities
+ 
+ 
+ 300,000 
+ 
+ 
+ - 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Total Liabilities
+ 
+ 
+ 3,174,119 
+ 
+ 
+ 1,467,415 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Contingencies and Commitments
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Stockholders' Equity:
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Preferred Stock, $0.0001 Par value, 20,000,000 shares authorized, No shares issued and outstanding
+ 
+ 
+ - 
+ 
+ 
+ - 
+
+ Common Stock, $0.0001 Par value, 500,000,000 shares authorized 45,935,369 and 38,302,720 shares issued and outstanding, respectively
+ 
+ 
+ 4,594 
+ 
+ 
+ 3,830 
+
+ Additional paid in capital
+ 
+ 
+ 15,822,261 
+ 
+ 
+ 12,733,704 
+
+ Accumulated deficit
+ 
+ 
+ (18,521,865 ) 
+ 
+ (13,438,313 )
+ Total Deficiency in Stockholders' Equity
+ 
+ 
+ (2,695,010 ) 
+ 
+ (700,779 )
+ Total Liabilities and Stockholders' Equity
+ 
+ $ 479,109 
+ 
+ $ 766,636 
+
+ 
+ The accompanying notes are an integral part of these audited financial statements.
+ 
+ 
+ F-15
+ 
+ 
+ Table of Contents
+
+ 
+ FISION CORPORATION
+ CONSOLIDATED STATEMENTS OF OPERATIONS
+ 
+ 
+ 
+ Twelve Months Ended 
+ December 31,
+ 
+
+ 
+ 
+ 2017
+ 
+ 
+ 2016
+ 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ REVENUE
+ 
+ $ 558,222 
+ 
+ $ 425,198 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ COST OF SALES
+ 
+ 
+ 65,114 
+ 
+ 
+ 96,315 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ GROSS MARGIN
+ 
+ 
+ 493,108 
+ 
+ 
+ 328,883 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ OPERATING EXPENSES
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Sales and Marketing
+ 
+ 
+ 1,548,604 
+ 
+ 
+ 1,046,806 
+
+ Development and Support
+ 
+ 
+ 957,274 
+ 
+ 
+ 595,115 
+
+ General and Administrative
+ 
+ 
+ 1,481,623 
+ 
+ 
+ 1,331,574 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ TOTAL OPERATING EXPENSES
+ 
+ 
+ 3,987,501 
+ 
+ 
+ 2,973,495 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ OPERATING LOSS
+ 
+ 
+ (3,494,393 ) 
+ 
+ (2,644,612 )
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ OTHER EXPENSES
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Interest Expense and Debt Discount
+ 
+ 
+ (1,235,290 ) 
+ 
+ (173,387 )
+ Amortization Expense
+ 
+ 
+ (68,042 ) 
+ 
+ 0 
+
+ OID and Other Expenses
+ 
+ 
+ (13,976 ) 
+ 
+ 0 
+
+ Change in fair value of derivatives
+ 
+ 
+ (143,697 ) 
+ 
+ 0 
+
+ Loss on settlement of debt, net
+ 
+ 
+ (128,154 ) 
+ 
+ 0 
+
+ TOTAL OTHER (EXPENSES)
+ 
+ 
+ (1,589,159 ) 
+ 
+ (173,387 )
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ NET LOSS
+ 
+ $ (5,083,552 ) 
+ $ (2,817,999 )
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Net loss per common share - basic and diluted
+ 
+ $ (0.12 ) 
+ $ (0.09 )
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Weighted average common shares outstanding:
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Basic and diluted
+ 
+ 
+ 42,365,892 
+ 
+ 
+ 31,654,279 
+
+ 
+ The accompanying notes are an integral part of these audited financial statements.
+ 
+ 
+ F-16
+ 
+ 
+ Table of Contents
+
+ 
+ FISION CORPORATION
+ CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ Additional 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+ Preferred
+ 
+ 
+ Preferred 
+ 
+ 
+ Common 
+ 
+ 
+ Common 
+ 
+ 
+ Paid in
+ 
+ 
+ Accumulated
+ 
+ 
+ 
+ 
+
+ 
+ 
+ Shares
+ 
+ 
+ Stock
+ 
+ 
+ Shares
+ 
+ 
+ Stock
+ 
+ 
+ Capital
+ 
+ 
+ (Deficit)
+ 
+ 
+ Total
+ 
+
+ Balance, December 31, 2015
+ 
+ 
+ - 
+ 
+ 
+ - 
+ 
+ 
+ 27,797,950 
+ 
+ $ 2,780 
+ 
+ $ 9,071,663 
+ 
+ $ (10,620,765 ) 
+ $ (1,546,322 )
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Common stock issued for cash
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 3,367,950 
+ 
+ 
+ 337 
+ 
+ 
+ 1,224,663 
+ 
+ 
+ - 
+ 
+ 
+ 1,225,000 
+
+ Stock issued for services
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 3,487,288 
+ 
+ 
+ 349 
+ 
+ 
+ 1,605,109 
+ 
+ 
+ - 
+ 
+ 
+ 1,605,458 
+
+ Warrants/Options granted for services
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 62,468 
+ 
+ 
+ - 
+ 
+ 
+ 62,468 
+
+ Conversion of notes payable and accrued interest/expenses
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 2,431,551 
+ 
+ 
+ 242 
+ 
+ 
+ 769,623 
+ 
+ 
+ - 
+ 
+ 
+ 769,865 
+
+ Acquisition of the net assets and liabilities DE Acquisition
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 1,217,981 
+ 
+ 
+ 122 
+ 
+ 
+ 178 
+ 
+ 
+ - 
+ 
+ 
+ 300 
+
+ Net loss 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ (2,817,548 ) 
+ 
+ (2,817,548 )
+ Balance, December 31, 2016
+ 
+ 
+ - 
+ 
+ 
+ - 
+ 
+ 
+ 38,302,720 
+ 
+ $ 3,830 
+ 
+ $ 12,733,704 
+ 
+ $ (13,438,313 ) 
+ $ (700,779 )
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Common stock issued for cash
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 842,857 
+ 
+ 
+ 84 
+ 
+ 
+ 299,916 
+ 
+ 
+ - 
+ 
+ 
+ 300,000 
+
+ Stock issued for services
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 3,555,596 
+ 
+ 
+ 356 
+ 
+ 
+ 1,415,818 
+ 
+ 
+ - 
+ 
+ 
+ 1,416,174 
+
+ Warrants/Options granted for services
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 294,234 
+ 
+ 
+ - 
+ 
+ 
+ 294,234 
+
+ Conversion of notes payable and accrued interest/expenses
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 2,534,196 
+ 
+ 
+ 253 
+ 
+ 
+ 579,232 
+ 
+ 
+ - 
+ 
+ 
+ 579,485 
+
+ Acquisition of the net assets Volerro
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 400,000 
+ 
+ 
+ 40 
+ 
+ 
+ 251,960 
+ 
+ 
+ - 
+ 
+ 
+ 252,000 
+
+ BCF from Debt Agreements
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 247,228 
+ 
+ 
+ - 
+ 
+ 
+ 247,228 
+
+ Shares sold to Caro Partners LLC
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 300,000 
+ 
+ 
+ 30 
+ 
+ 
+ 170 
+ 
+ 
+ - 
+ 
+ 
+ 200 
+
+ Net loss 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ (5,083,552 ) 
+ 
+ (5,083,552 )
+ Balance, December 31, 2017
+ 
+ 
+ - 
+ 
+ 
+ - 
+ 
+ 
+ 45,935,369 
+ 
+ $ 4,593 
+ 
+ $ 15,822,262 
+ 
+ $ (18,521,865 ) 
+ $ (2,695,010 )
+
+ 
+ The accompanying notes are an integral part of theses audited financial statements.
+ 
+ 
+ F-17
+ 
+ 
+ Table of Contents
+
+ 
+ FISION CORPORATION
+ CONSOLIDATED STATEMENTS OF CASH FLOWS
+ 
+ 
+ 
+ Twelve Months Ended
+ 
+
+ 
+ 
+ December 31,
+ 
+
+ 
+ 
+ 2017
+ 
+ 
+ 2016
+ 
+
+ CASH FLOWS FROM OPERATING ACTIVITIES:
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Net Income (Loss) for the Period
+ 
+ $ (5,083,551 ) 
+ $ (2,817,548 )
+ Net cash provided by operating activities:
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Common stock issued for services
+ 
+ 
+ 1,416,173 
+ 
+ 
+ 1,605,457 
+
+ Depreciation and Amoritization
+ 
+ 
+ 71,649 
+ 
+ 
+ 5,959 
+
+ Stock warrants/Stock Options issued for services
+ 
+ 
+ 294,234 
+ 
+ 
+ 62,468 
+
+ Change in Derivative Liabilities
+ 
+ 
+ 143,697 
+ 
+ 
+ - 
+
+ Interest Expense for Derivatives and Debt Discount
+ 
+ 
+ 1,184,886
+ 
+ 
+ 
+ -
+ 
+
+ Amortization of BCF Discount
+ 
+ 
+ 68,042 
+ 
+ 
+ - 
+
+ Changes in Operating Assets and Liabilities
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ (Increase) decrease in:
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Accounts receivable
+ 
+ 
+ (30,720 ) 
+ 
+ 23,089 
+
+ Deferred Customer Costs Associated with Deferred Revenue
+ 
+ 
+ (11,924 ) 
+ 
+ - 
+
+ Prepaid expenses
+ 
+ 
+ 533,545 
+ 
+ 
+ (431,615 )
+ Work In Process
+ 
+ 
+ (8,400 ) 
+ 
+ - 
+
+ Increase in:
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Accounts payable & accrued expenses 
+ 
+ 
+ 271,282 
+ 
+ 
+ 351,516 
+
+ Net Cash Used in Operating Activities
+ 
+ 
+ (1,151,087 ) 
+ 
+ (1,200,674 )
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ CASH FLOWS FROM INVESTING ACTIVITIES:
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Proceeds from Disposal of property and equipment 
+ 
+ 
+ - 
+ 
+ 
+ (6,531 )
+ Cash acquired in acquisition
+ 
+ 
+ 51,500 
+ 
+ 
+ 
+ 
+
+ Net Cash Provided by Investing Activities
+ 
+ 
+ 51,500 
+ 
+ 
+ (6,531 )
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ CASH FLOWS FROM FINANCING ACTIVITIES:
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Repayments on note payable
+ 
+ 
+ (300,387 ) 
+ 
+ (227,699 )
+ Proceeds from note payable
+ 
+ 
+ 1,020,000 
+ 
+ 
+ 165,000 
+
+ Proceeds from related party notes
+ 
+ 
+ 92,600 
+ 
+ 
+ 37,300 
+
+ Repayments on line of credit
+ 
+ 
+ (10,025 ) 
+ 
+ 7,302 
+
+ Proceeds from issuance of common stock
+ 
+ 
+ 300,000 
+ 
+ 
+ 1,225,000 
+
+ Net Cash Provided by Financing Activities
+ 
+ 
+ 1,102,188 
+ 
+ 
+ 1,206,903 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Net (Decrease) Increase in Cash
+ 
+ 
+ 2,601 
+ 
+ 
+ (320 )
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Cash at Beginning of Year
+ 
+ 
+ 8,172 
+ 
+ 
+ 8,492 
+
+ Cash at End of Year
+ 
+ $ 10,773 
+ 
+ $ 8,172 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Cash paid during period:
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Interest
+ 
+ $ (50,404 ) 
+ $ (39,552 )
+ Noncash operating and financing activities:
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Common Stock Issued for Services
+ 
+ $ 1,416,173 
+ 
+ $ 1,605,457 
+
+ Stock warrants/Stock Options issued for services
+ 
+ $ 294,234 
+ 
+ $ 62,468 
+
+ Conversion of debt and accrued interest to common stock
+ 
+ $ 573,185 
+ 
+ $ 769,867 
+
+ Acquisition of Volerro
+ 
+ $ 252,000 
+ 
+ $ - 
+
+ 
+ The accompanying notes are an integral part of these audited financial statements.
+ 
+ 
+ F-18
+ 
+ 
+ Table of Contents
+
+ 
+ FISION CORPORATION
+ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+ 
+ NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
+ 
+ FISION Corporation (formerly DE Acquisition, Inc.), a Delaware corporation (the Company ) was incorporated on February 24, 2010 and was inactive until 2015 when it merged with Fision Holdings, Inc., a Minnesota corporation, an operating software development business based in Minneapolis, Minnesota. As a result of this merger, Fision Holdings, Inc. became a wholly-owned subsidiary of the Company. Fision Holdings, Inc. was incorporated in Minnesota in 2010, and has developed and successfully commercialized a unique proprietary cloud-based software platform which automates and integrates digital marketing asses and marketing communications in order to bridge the gap between the marketing and sales functions of any enterprise. The Company generates its revenues primarily from software licensing contracts typically having terms of one to three years and requiring monthly subscription fees based on the customer s number of users and locations where used. The Company s business model provides it with a high percentage of recurring revenues.
+ 
+ The terms Fision, we, us, and our, refer to FISION Corporation, a Delaware corporation and its wholly-owned operating subsidiary Fision Holdings, Inc., a Minnesota corporation.
+ 
+ NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
+ 
+ Use of estimates
+ 
+ The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Accordingly, actual results could differ materially from those estimates and assumptions. Such estimates include management s assessments of the carrying value of certain assets, useful lives of assets, derivative securities, fair value of financial instruments, and related depreciation and amortization methods applied.
+ 
+ Concentration of Credit Risk 
+ 
+ Financial instruments that potentially subject us to concentrations of credit risk consist principally of cash and accounts receivable. During the year ended December 31, 2017, we may have had cash deposits that exceeded Federal Deposit Insurance Corporation ( FDIC ) insurance limits. We maintain cash balances at high quality financial institutions to mitigate this risk. We perform ongoing credit evaluations of our customers and generally do not require collateral from them to do business with us.
+ 
+ Cash equivalents
+ 
+ We consider all highly liquid investments with an original maturity of three months or less when purchased to be 
+ cash equivalents. At December 31, 2017, the Company had no cash equivalents.
+ 
+ Fair value of financial instruments
+ 
+ The Company adopted the provisions of Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 820 (the Fair Value Topic ) which defines fair value, establishes a framework for measuring fair value under Generally Accepted Accounting Principles (GAAP), and expands disclosures about fair value measurements.
+ 
+ The Fair Value Topic defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. It requires that valuation techniques maximize the use of observable inputs and minimize the use of unobservable inputs. It also establishes a fair value hierarchy, which prioritizes the valuation inputs into six broad levels.
+ 
+ 
+ F-19
+ 
+ 
+ Table of Contents
+
+ 
+ FISION CORPORATION
+ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+ 
+ The following fair value hierarchy is used to classify assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:
+ 
+ A) Market approach Uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. Prices may be indicated by pricing guides, sale transactions, market trades, or other sources;
+ 
+ B) Cost approach Based on the amount that currently would be required to replace the service capacity of an asset (replacement cost); and
+ 
+ C) Income approach Uses valuation techniques to convert future amounts to a single present amount based on current market expectations about the future amounts (includes present value techniques, and option-pricing models). Net present value is an income approach where a stream of expected cash flows is discounted at an appropriate market interest rate.
+ 
+ Level 1: Quoted market prices available in active markets for identical assets or liabilities as of the reporting date. An active market for an asset or liability is a market in which transactions for the asset or liability occur with significant frequency and volume to provide pricing information on an ongoing basis.
+ 
+ Level 2: Observable inputs other than Level 1 inputs. Example of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active.
+ 
+ Level 3: Unobservable inputs based on the Company s assessment of the assumptions that are market participants would use in pricing the asset or liability.
+ 
+ The carrying amount of the Company s financial assets and liabilities, such as cash, accounts receivable, accounts payable, accrued expenses, and notes payable approximate their fair value because of the short maturity of those instruments. 
+ 
+ The following table represents our assets and liabilities by level measured at fair value on a recurring basis at December 31, 2017.
+ 
+ 
+ 
+ Level 1 
+ 
+ 
+ Level 2 
+ 
+ 
+ Level 3
+ 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Derivative Liability
+ 
+ $ - 
+ 
+ $ - 
+ 
+ $ 1,243,788 
+
+ 
+ 
+ F-20
+ 
+ 
+ Table of Contents
+
+ 
+ FISION CORPORATION
+ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+ 
+ The following assets and liabilities are measured on the consolidated balance sheets at fair value on a recurring basis utilizing significant unobservable inputs or Level 3 assumptions in their valuation. The following table provides a reconciliation of the beginning and ending balances of the liabilities 
+ 
+ 
+ 
+ Fair Value
+ 
+ 
+ Convertible
+ 
+ 
+ Change in
+ 
+ 
+ 
+ 
+ Fair Value
+ 
+
+ 
+ 
+ January 1,
+ 
+ 
+ Notes
+ 
+ 
+ fair
+ 
+ 
+ 
+ 
+ December 30,
+ 
+
+ 
+ 
+ 2017 
+ 
+ Addition
+ 
+ 
+ Value 
+ 
+ 
+ Conversions
+ 
+ 
+ 2017
+ 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Derivative Liability 
+ 
+ $ -- 
+ 
+ $ 1,225,906 
+ 
+ $ -143,697 
+ 
+ $ 161,579 
+ 
+ $ 1,243,788 
+
+ 
+ All gains and losses on assets and liabilities measured at fair value on a recurring basis and classified as Level 3 within the fair value hierarchy are recognized in other interest and expense in the accompanying financial statements.
+ 
+ The derivative liability relating to the beneficial conversion interest of our convertible notes payable was $1,243,788 at December 31, 2017 and was computed using the following variables:
+ 
+ Exercise price 
+ 
+ $ .15-$.174 
+ 
+
+ Expected volatility 
+ 
+ 
+ 216 %
+ Expected term 
+ 
+ 6 mos.
+ 
+
+ Risk free interest rate 
+ 
+ 0.91 1.13
+ % 
+
+ Expected dividends 
+ 
+ 
+ - 
+
+ 
+ Derivative Instruments
+ 
+ We account for derivative instruments in accordance with Accounting Standards Codification 815, Derivatives and Hedging ( ASC 815 ), which establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. They require that an entity recognize all derivatives as either assets or liabilities in the balance sheet and measure those instruments at fair value.
+ 
+ If certain conditions are met, a derivative may be specifically designated as a hedge, the objective of which is to match the timing of gain or loss recognition on the hedging derivative with the recognition of (i) the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk or (ii) the earnings effect of the hedged forecasted transaction. For a derivative not designated as a hedging instrument, the gain or loss is recognized in income in the period of change.
+ 
+ Accounts Receivable and Allowance for Doubtful Accounts
+ 
+ Accounts receivable related to the products and services sold are recorded at the time revenue is recognized and are presented on the balance sheet net of allowance for doubtful accounts. The ultimate collection of the receivable may not be known for several months after services have been provided and billed. We have established an allowance for doubtful accounts based upon factors pertaining to the credit risk of specific customers, analyses of current and historical cash collections, and the aging of receivables. Delinquent accounts are written-off when the likelihood for collection is remote and/or when we believe collection efforts have been fully exhausted and we do not intend to devote any additional efforts in an attempt to collect the receivable. We adjust our allowance for doubtful accounts balance on a quarterly basis.
+ 
+ 
+ F-21
+ 
+ 
+ Table of Contents
+
+ 
+ FISION CORPORATION
+ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+ 
+ Property and Equipment
+ 
+ Property and equipment are recorded at cost. Expenditures for major additions and betterments are capitalized. Maintenance and repairs are charged to operations as incurred. Depreciation is computed by the straight-line method over the assets estimated useful life of five (5) years for equipment, furniture and fixtures. Upon sale or retirement of property and equipment, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in statements of operations.
+ 
+ Impairment of long-lived assets
+ 
+ We follow paragraph 360-10-05-4 of the FASB Accounting Standards Codification for long-lived assets. Our long-lived assets are required to be reviewed for impairment annually, or whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable.
+ 
+ We assess the recoverability of our long-lived assets by comparing the projected undiscounted net cash flows associated with the related long-lived asset or group of long-lived assets over their remaining estimated useful lives against their respective carrying amounts. Impairment, if any, is based on the excess of the carrying amount over the fair value of those assets. Fair value is generally determined using the asset s expected future discounted cash flows or market value, if readily determinable. If long-lived assets are determined to be recoverable, but the newly determined remaining estimated useful lives are shorter than originally estimated, the net book values of the long-lived assets are depreciated over the newly determined remaining estimated useful lives. We determined that there were no impairments of long-lived assets as of December 31, 2017.
+ 
+ Revenue recognition
+ 
+ We follow paragraph 605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition, and accordingly we recognize revenue when it is realized or realizable and earned. We consider revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the product has been shipped or the services have been rendered to the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured. 
+ 
+ Revenue is recognized in the period the services are provided over the contract period, normally one (1) to three (3) years. We invoice one-time startup and implementation costs, such as consolidating and uploading digital assets of the customer, upon completion of those services. Monthly services, such as internet access to software as a service (SaaS), hosting and weekly backups are invoiced monthly.
+ 
+ Income taxes
+ 
+ We follow Section 740-10-30 of the FASB Accounting Standards Codification, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the fiscal year in which the temporary differences are expected to be recovered or settled. Deferred tax assets are reduced by a valuation allowance to the extent our management concludes it is more likely than not that the assets will not be realized. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
+ 
+ 
+ F-22
+ 
+ 
+ Table of Contents
+
+ 
+ FISION CORPORATION
+ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+ 
+ We adopted section 740-10-25 of the FASB Accounting Standards Codification ( Section 740-10-25 ) with regards to uncertainty in income taxes. Section 740-10-25 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under Section 740-10-25, we may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent (50%) likelihood of being realized upon ultimate settlement. Section 740-10-25 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. We had no material adjustments to our assets and/or liabilities for unrecognized income tax benefits according to the provisions of Section 740-10-25. 
+ 
+ Stock-Based Compensation
+ 
+ In December 2004, the FASB issued FASB Accounting Standards Codification No. 718, Compensation Stock Compensation. Under FASB Accounting Standards Codification No. 718, companies are required to measure the compensation costs of share-based compensation arrangements based on the grant-date fair value and recognize the costs in the financial statements over the period during which employees are required to provide services. Share-based compensation arrangements include stock options, restricted share plans, performance-based awards, share appreciation rights and employee share purchase plans. As such, compensation cost is measured on the date of grant at their fair value. Such compensation amounts, if any, are amortized over the respective vesting periods of the option grant. We apply this statement prospectively.
+ 
+ Equity instruments ( instruments ) issued to other than employees are recorded on the basis of the fair value of the instruments, as required by FASB Accounting Standards Codification No. 718. FASB Accounting Standards Codification No. 505-50, Equity Based Payments to Non-Employees defines the measurement date and recognition period for such instruments. In general, the measurement date is when either a (a) performance commitment, as defined, is reached or (b) the earlier of (i) the non-employee performance is complete or (ii) the instruments are vested. The measured value related to the instruments is recognized over a period based on the facts and circumstances of each particular grant as defined in the FASB Accounting Standards Codification.
+ 
+ Fair Value
+ 
+ The closing price of our common stock on the date of grant is used as the fair value for the issuances of restricted stock. The fair value of stock options or warrants granted is estimated as of the grant date using the Black-Scholes option pricing model. The following range of assumptions in the Black- Scholes option pricing model was used to determine fair value at the years ended below:
+ 
+ 
+ 
+ Twelve months ended
+ December 31,
+ 
+
+ 
+ 
+ 2017
+ 
+ 
+ 2016
+ 
+
+ Weighted-average volatility 
+ 
+ 
+ 216.3 % 
+ 
+ 29.1 %
+ Expected term (in years) 
+ 
+ 
+ 3.8 
+ 
+ 
+ 3.7 
+
+ Risk-free interest rate
+ 
+ 1.43
+ % 
+ 
+ 1.03%-1.28
+ % 
+
+ 
+ Expected volatilities used for award valuation in 2017 and 2016 are based on the peer group volatility.
+ 
+ The risk-free interest rate for periods equal to the expected term of an award is based on a blended historical rate using Federal Reserve rates for U.S. Treasury securities.
+ 
+ Net income (loss) per share
+ 
+ We compute basic and diluted earnings per share amounts pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Basic earnings per share is computed by dividing net income (loss) available to common shareholders, by the weighted average number of shares of common stock outstanding during the period, excluding the effects of any potentially dilutive securities. Diluted earnings per share is computed by dividing net income (loss) available to common shareholders by the diluted weighted average number of shares of common stock during the period. The diluted weighted average number of common shares outstanding is the basic weighted number of shares adjusted as of the first day of the year for any potentially diluted debt or equity.
+ 
+ For the years ended December 31, 2017 and 2016, there were 10,015,319 and 5,142,729 respectively, potentially dilutive securities not included in the calculation of weighted-average common shares outstanding since they would be anti-dilutive.
+ 
+ Research and Development
+ 
+ We expense all our research and development operations and activities as they occur. During the fiscal year ended December 31, 2017 we incurred total expenses of $957,274 for research and development. In comparison, during the fiscal year ended December 31, 2016 we incurred total expenses of $595,115 for research and development. Such costs related to software development are included in research and development expense until the point that technological feasibility is reached, which for our software products, is generally shortly before the products are released to manufacturing. Once technological feasibility is reached, such costs are capitalized and amortized to cost of revenue over the estimated lives of the products
+ 
+ 
+ F-23
+ 
+ 
+ Table of Contents
+
+ 
+ FISION CORPORATION
+ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+ 
+ Advertising Costs 
+ 
+ We expense marketing and advertising costs as incurred. Marketing and advertising expenses for the years ended December 31, 2017 and 2016 were $17,319 and $45,316, respectively. The costs are included in the consolidated selling and marketing expenses.
+ 
+ Recently Issued Accounting Pronouncements
+ 
+ We regularly monitor our compliance with applicable financial reporting standards and review new pronouncements and drafts thereof that are relevant to us. As a result of new standards, changes to existing standards and changes in their interpretation, we might be required to change our accounting policies, particularly concerning revenue recognition, the capitalized incremental costs to obtain a customer contract and lease accounting, to alter our operational policies and to implement new or enhance existing systems so that they reflect new or amended financial reporting standards, or to restate our published financial statements. Such changes may have an adverse effect on our business, financial position, and operating results, or cause an adverse deviation from our revenue and operating profit target, which may negatively impact our financial results.
+ 
+ In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers. ASU 2014-09 is a comprehensive revenue recognition standard that will supersede nearly all existing revenue recognition guidance under current U.S. GAAP and replace it with a principle based approach for determining revenue recognition. ASU 2014-09 will require that companies recognize revenue based on the value of transferred goods or services as they occur in the contract. The ASU also will require additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. ASU 2014-09 is effective for interim and annual periods beginning after December 15, 2017. Early adoption is permitted only in annual reporting periods beginning after December 15, 2016, including interim periods therein. Entities will be able to transition to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption. We do not expect that the adoption of ASU 2014-09 will have any significant impact on our operating cash flows. 
+ 
+ In February 2016, the FASB issued Accounting Standards Update (ASU) No. 2016-02, Leases. ASU 2016-02 requires a lessee to record a right of use asset and a corresponding lease liability on the balance sheet for all leases with terms longer than 12 months. ASU 2016-02 is effective for all interim and annual reporting periods beginning after December 15, 2018. Early adoption is permitted. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company is in the process of evaluating the impact of ASU 2016-02 on the Company s financial statements and disclosures. 
+ 
+ Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company's present or future consolidated financial statements. 
+ 
+ NOTE 3 - GOING CONCERN
+ 
+ These financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. Our ability to continue as a going concern is contingent upon our ability to achieve and maintain profitable operations, and our ability to raise additional capital as required.
+ 
+ At December 31, 2017 we had a working capital deficiency of approximately $2.6 Million and an accumulated deficit of approximately $18.5 million. These conditions raise substantial doubt about our ability to continue as a going concern within one year after issuance date of the financial statements. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might result from this uncertainty.
+ 
+ Management intends to raise additional significant funds through private placements and/or through public offerings of its equity or debt (including convertible debt) securities. Management believes that the actions presently being taken to raise capital and further implement its business plan will enable us to continue as a going concern. While we believe in the viability to raise additional funds, there can be no assurances to that effect. Our ability to continue as a going concern is dependent upon our ability to further implement our business plan and generate substantial funds.
+ 
+ NOTE 4 - ACCOUNTS RECEIVABLE
+ 
+ Our accounts receivable at December 31, 2017 and December 31, 2016 consisted of the following:
+ 
+ 
+ 
+ December 31,
+ 2017
+ 
+ 
+ December 31,
+ 2016
+ 
+
+ Accounts receivable
+ 
+ $ 39,764 
+ 
+ $ 15,103 
+
+ Less: Allowance for doubtful accounts
+ 
+ 
+ -0- 
+ 
+ 
+ 6,058 
+
+ 
+ 
+ $ 39,764 
+ 
+ $ 9,045 
+
+ 
+ 
+ F-24
+ 
+ 
+ Table of Contents
+
+ 
+ FISION CORPORATION
+ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+ 
+ NOTE 5 - PROPERTY AND EQUIPMENT 
+ 
+ Fixed assets, stated at cost, less accumulated depreciation, consists of the following at December 31, 2017 and December 31, 2016: 
+ 
+ 
+ 
+ December 31,
+ 2017
+ 
+ 
+ December 31,
+ 2016
+ 
+
+ Equipment
+ 
+ $ 27,119 
+ 
+ $ 84,716 
+
+ Furniture & Fixtures
+ 
+ 
+ 6,641 
+ 
+ 
+ 29,647 
+
+ Less: Accumulated Depreciation
+ 
+ 
+ (29,041 ) 
+ 
+ (106,036 )
+ Net Fixed Assets
+ 
+ $ 4,719 
+ 
+ $ 8,327 
+
+ 
+ Depreciation expense
+ 
+ Depreciation expense for the years ended December 31, 2017 and 2016 were $3,608 and $5,959, respectively.
+ 
+ NOTE 6 - OTHER BALANCE SHEET ACCOUNTS - PREPAID EXPENSES 
+ 
+ Prepaid expenses consisted of the following:
+ 
+ 
+ 
+ December 31,
+ 
+
+ 
+ 
+ 2017
+ 
+ 
+ 2016
+ 
+
+ Prepaid Expenses:
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Technology Vendor Deposit
+ 
+ $ 0 
+ 
+ $ 9,404 
+
+ Rent deposit 
+ 
+ 
+ 17,340 
+ 
+ 
+ 0 
+
+ Sales Commissions Advances
+ 
+ 
+ 0 
+ 
+ 
+ 4,920 
+
+ Unvested Stock Grants
+ 
+ 
+ 183,752 
+ 
+ 
+ 720,313 
+
+ Total Prepaid Expenses
+ 
+ $ 201,092 
+ 
+ $ 734,637 
+
+ 
+ NOTE 7 - NOTES PAYABLE 
+ 
+ At December 31, 2017 the Company was indebted under various Notes Payable in the total amount of $1,835,160 including accrued interest. Following is a summary of our outstanding Notes Payable indebtedness as of December 31, 2017:
+ 
+ Summary Description of Notes Payable
+ 
+ 
+ Amount Owed*
+ 
+
+ Decathlon LLC - Senior Secured Note, due 9/30/18, interest at 15%
+ 
+ 
+ $ 143,864 
+
+ Finquest Capital Inc.- Secured Note, due 4/15/18, interest at 15%
+ 
+ 
+ 
+ 43,269 
+
+ Brajoscal, LLC - Secured Note, due 12/31/18 interest at 15%
+ 
+ 
+ 
+ 38,125 
+
+ Nottingham Securities Inc., monthly settlement payments
+ 
+ 
+ 
+ 75,941 
+
+ Note payable to individual investor, due 12/31/18, interest at 12%
+ 
+ 
+ 
+ 123,070 
+
+ Note payable to individual investor, due 12/31/18, interest at 12%
+ 
+ 
+ 
+ 57,500 
+
+ Greentree Financial Group, Inc., due 9/9/18, interest at 11%
+ 
+ 
+ 
+ 100,663 
+
+ L&H, Inc., due 9/9/18, interest at 11%
+ 
+ 
+ 
+ 50,331 
+
+ Crossover Capital Fund II LLC., due 4/26/2018 and 8/17/18, interest at 12%
+ 
+ 
+ 
+ 177,177 
+
+ Power Up Lending Group, due 3/18/2019, interest at 12%
+ 
+ 
+ 
+ 63,244 
+
+ Ignition Capital, LLC, due 11/30/2018, interest at 6%
+ 
+ 
+ 
+ 100,167 
+
+ JSJ Investments, Inc., due 5/1/2018, interest at 12%
+ 
+ 
+ 
+ 59,850 
+
+ Note payable to individual investor, due 4/18/18, 7/18/18 and 10/18/18, interest at 12%
+ 
+ 
+ 
+ 178,219 
+
+ Note payable to individual investor, monthly settlement payments
+ 
+ 
+ 
+ 43,000 
+
+ Note payable to individual investor, due 12/31/18, interest at 6%
+ 
+ 
+ 
+ 1,726 
+
+ Notes payable to four individual investors, due October 2019, interest at 12%
+ 
+ 
+ 
+ 308,375 
+
+ Note payable to two principal officers, due on demand, interest at 6%
+ 
+ 
+ 
+ 270,639 
+
+ Total accrued interest and notes payable
+ 
+ 
+ $ 1,835,160 
+
+ _____ 
+ * Includes accrued interest
+ 
+ 
+ F-25
+ 
+ 
+ Table of Contents
+
+ 
+ FISION CORPORATION
+ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+ 
+ NOTE 8 - CONVERTIBLE NOTES
+ 
+ During the fiscal year ended December 31, 2017, we issued a total of $1,020,000 in notes, whereby $969,600 was in convertible notes as follows:
+ 
+ March 13, 2017 Convertible Note -- On March 13, 2017, we issued a $25,000 convertible promissory note bearing interest at 12.0% per annum to an accredited investor, payable September 13, 2017 plus accrued interest. The holder has the right to convert the note into our common stock at a conversion price equal to 50% of the average of the lowest trading prices during the 10-day period ending on the latest complete trading day prior to the conversion date. In September 2017, this note was converted incident to its terms into 560,660 shares of our common stock.
+ 
+ April 18, 2017 Convertible Note On April 18, 2017, we issued a $50,000 convertible promissory note bearing interest at 12% per annum to an accredited investor, payable April 18, 2018 plus accrued interest. The holder has the right to convert the note into our common stock at a conversion price equal to 50% of the average of the lowest trading prices during the 10-day period ending on the latest complete trading day prior to the conversion date.
+ 
+ June 8, 2017 Convertible Note On June 8, 2017, we issued a $53,000 Convertible Note bearing interest at 12% per annum to an accredited investor, payable March 20, 2018 plus accrued interest. The holder has the right to convert the note into our common stock at a conversion price equal to 42% of the average of the lowest trading prices during the 10-day period ending on the latest complete trading day prior to the conversion date.
+ 
+ June 9, 2017 Convertible Notes -- On June 9, 2017 we issued a $50,000 Convertible Note to an accredited investor and a $100,000 Convertible Note to another accredited investor, with both these notes bearing interest at 12% per annum and payable March 9, 2018 plus accrued interest. The holders of these two notes have the right to convert them into our common stock at a conversion price equal to 50% of the average of the lowest trading prices during the 10-day period ending on the latest complete trading day prior to the conversion date.
+ 
+ July 2017 Convertible Note -- In July 2017 we issued a $85,800 Convertible Note to an accredited investor bearing interest at 12% per annum and payable April 26, 2018 plus accrued interest. The noteholder has the right to convert the note into our common stock at a conversion price equal to the lesser of $0.20 per share or 62.5% of the average of the lowest trading prices during the 10-day period ending on the latest complete trading day prior to the conversion date.
+ 
+ August 2017 Convertible Note In August 2017 we issued a $57,000 Convertible Note to an accredited investor bearing interest at 12% per annum and payable May 1, 2018 plus accrued interest. The noteholder has the right to convert the note into our common stock at a conversion price equal to the lesser of $0.24 per share or 55% of the average of the lowest trading prices during the 10-day period ending on the latest complete trading day prior to the conversion date.
+ 
+ November 2017 Convertible Notes In November 2017 we issued a $85,800 Convertible Note to a private lending fund bearing interest at 12% per annum and maturing in nine months with the noteholder having the right to convert the note into our common stock at a conversion price equal to a 45% discount to its trading price during the 10-day period prior to conversion. Also, in November 2017, we issued a $100,000 Convertible Note to another private lending fund bearing interest at 6% per annum and maturing November 30, 2018 with the noteholder having the right to convert the note into our common stock at a conversion price equal to the lower of $.30 per share or that price per share representing a 25% discount to the price of a future registered public offering. 
+ 
+ December 2017 Convertible Notes -- In December 2017 we issued a total of $363,000 in Convertible Notes as follows:
+ 
+ (i) $63,000 Convertible Note to a private lending group bearing interest at 12% per annum and maturing March 19, 2019 with the noteholder having the right to convert the note into our common stock at a conversion price equal to a 42% discount to the average of its three lowest daily trading prices during the ten days prior to conversion.,
+ 
+ (ii) A total of $300,000 in Convertible Notes sold to four accredited individual investors who purchased these notes from our 2017 private placement of $50,000 Notes bearing interest at 12% per annum and maturing two years from their purchase with the noteholders having the right to convert the notes into our common stock at a conversion price equal to the lower of $.20 per share or the Volume Weighted Average Price (VWAP) of our common shares for the ten days prior to conversion. 
+ 
+ We evaluated the terms of the convertible notes in accordance with ASC 815-40, Contracts in Entity's Own Equity, and concluded that the Convertible Note resulted in a derivative with a beneficial conversion feature since the convertible notes were convertible into shares of common stock at a discount to the market value of the common stock. The discount related to the beneficial conversion feature on the notes was based on the Black Scholes Model, and is being amortized over the term of the debt. For the year ended December 31, 2017, we recognized interest expense of $68,042 related to the amortization of the discount.
+ 
+ 
+ F-26
+ 
+ 
+ Table of Contents
+
+ 
+ FISION CORPORATION
+NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+ 
+ NOTE 9 - COMMITMENTS & CONTINGENCIES
+ 
+ Lease
+ 
+ We currently occupy 5,229 square feet of office space in downtown Minneapolis Minnesota. We lease this facility under a two-year lease expiring in December 2019 and requiring monthly rental payments of $8,323 which includes rent, utilities and maintenance. The lease commitments over the two-year period is $13.00 per rentable square foot for months 1-12 and $13.50 per square foot for months 13-24. The total lease commitments, per the lease is $106,000 base rent, plus Common Area Maintenance costs.
+ 
+ NOTE 10 - INCOME TAXES
+ 
+ At December 31, 2017 and 2016, we had available Federal and state net operating loss carryforwards to reduce future taxable income. The amounts available were approximately $12,605,339 and $8,631,157 for Federal and state purposes, respectively. The Federal carryforward expires in 2037 and the state carryforward expires in 2022. Given our history of net operating losses, our management has determined that it is more likely than not that we will not be able to realize the tax benefit of the carryforwards. Accordingly, we have not recognized a deferred tax asset for this benefit.
+ 
+ Effective January 1, 2007, we adopted FASB guidelines that address the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under this guidance, we may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. This guidance also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. At the date of adoption, and as of December 31, 2017 and 2016, we did not have a liability for unrecognized tax benefits, and no adjustment was required at adoption.
+ 
+ Our policy is to record interest and penalties on uncertain tax provisions as income tax expense. As of December 31, 2017 and 2016, we have not accrued interest or penalties related to uncertain tax positions. Additionally, tax years 2014 through 2016 remain open to examination by the major taxing jurisdictions to which we are subject.
+ 
+ Upon the attainment of taxable income by us, our management will assess the likelihood of realizing the tax benefit associated with the use of the carryforwards and will recognize a deferred tax asset at that time.
+ 
+ The items accounting for the difference between income taxes computed at the federal statutory rate and the provision for income taxes are as follows:
+ 
+ 
+ 
+ 2017
+ 
+ 
+ 2016
+ 
+
+ Income tax at federal Statutory rate
+ 
+ 
+ 34.0 % 
+ 
+ 34.0 %
+ Effects of permanent differences
+ 
+ 
+ (8.4 )% 
+ 
+ (18.9 )%
+ Effect of temporary differences
+ 
+ 
+ 1.3 % 
+ 
+ 0
+ % 
+
+ Adjustment of prior year NOL s
+ 
+ 
+ (3.8 )% 
+ 
+ 0
+ % 
+
+ Effects of state taxes (net of federal taxes)
+ 
+ 
+ 0 % 
+ 
+ 0 %
+ Change in valuation allowance
+ 
+ 
+ (23.1 )% 
+ 
+ (15.1 )%
+ 
+ 
+ 
+ 0.0 % 
+ 
+ 0.0 %
+ 
+ Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.
+ 
+ 
+ F-27
+ 
+ 
+ Table of Contents
+
+ 
+ FISION CORPORATION
+ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+ 
+ As of December 31, 2017 and 2016, our only significant deferred income tax asset was a cumulative estimated net tax operating loss of $12,605,339 and $8,631,157, respectively, that is available to offset future taxable income, if any, in future periods, subject to expiration and other limitations imposed by the Internal Revenue Service. Management has considered our operating losses incurred to date and believes that a full valuation allowance against the deferred tax assets is required as of December 31, 2017 and 2016. For the year ended December 31 2017, the change in valuation allowance was $1,198,842.
+ 
+ Utilization of our net operating losses may be subject to substantial limitations if the Company experiences a 50% change in ownership, as provided by the Internal Revenue Code and similar state provisions.
+ 
+ NOTE 11 - RELATED PARTY TRANSACTIONS
+ 
+ Employment Agreements We have four employment agreements in effect with our chief executive officer, executive vice president, chief technology officer, and chief revenue officer. The terms of the agreements include base salaries of $51,667 per month in 2016 increasing to $66,667 per month in 2017.
+ 
+ Included in our notes payable are amounts due to officers for notes payable which were accepted by them for past due compensation or for working capital loans made to us. At December 31, 2017 and 2016, the amounts of such notes due to our officers was $270,639 and $405,176, respectively, payable on demand and having an interest rate of 6% per annum.
+ 
+ In April 2017 we issued a total of 1,100,562 shares of our common stock to our two principal officers in consideration for their conversion of a total of $330,168 of Notes they held for past due compensation into equity at $.30 per share.
+ 
+ In September 2017, we issued 250,000 shares of our common stock as a bonus to our Chief Financial Officer and 600,000 shares as a bonus to our Chief Technology Officer. Also, in September 2017, we provided contingent future grants for the future issuance of a total of 750,000 shares of our common stock which will vest annually over a four-year term commencing in September 2018 providing they remain employed by us, including 500,000 shares for our Chief Revenue Officer and 250,000 shares for our Chief Technology Officer.
+ 
+ In September 2017, we granted four-year stock options to purchase a total of 1,150,000 shares of our common stock, of which (i) options for 1,000,000 shares were granted to our Chief Revenue Officer having an exercise price of $.35 per share with 375,000 shares vested immediately and the balance of 625,000 shares vesting quarterly over its four-year term, and (ii) options for 150,000 shares were granted to a newly-hired software development employee having an exercise price of $.20 per share vesting quarterly over its four-year term.
+ 
+ In December 2017, we obtained a working capital loan for $76,000 from our Chief Executive Officer, which is due on demand and bears an interest rate of 6% per annum.
+ 
+ NOTE 12 - STOCKHOLDERS EQUITY
+ 
+ We are authorized to issue 500,000,000 shares of common stock and 20,000,000 shares of preferred stock, both having $.0001 par value per share. At December 31, 2017, there were 45,935,369 outstanding shares of common stock and no outstanding shares of preferred stock. 
+ 
+ Common Shares Issued in 2017
+ 
+ In January 2017, we issued 142,857 unregistered common shares in a private placement to an accredited investor in consideration for $50,000 or $0.35 per share, which proceeds were used for working capital purposes. Also, in January 2017, we issued 133,333 unregistered common shares to a Noteholder to satisfy and convert into equity $40,000 of a Note Payable.
+ 
+ In February 2017, we issued a total of 650,000 unregistered common shares valued at $0.68 per share or $442,000 for consulting services, including 400,000 common shares for investment relations and financial communications services, and 250,000 common shares for technical and software advisory services. Also, In February 2017, we sold and issued 300,000 unregistered shares for total consideration of $200 incident to a consulting contract to provide us with public relations services. 
+ 
+ In March 2017, we issued a total of 296,999 shares of our common stock, including (i) 200,000 shares sold for $100,000 ($.50 per share) to two investors in a public offering under our S-1 Registration Statement for, which proceeds were used for working capital purposes, and (ii) 96,999 shares valued at $29,100 for marketing support services.
+ 
+ In April 2017 (effective March 31, 2017), we issued 1,100,562 unregistered common shares to convert debt owed to its two principal officers into equity incident to the transaction described in the foregoing Note 11.
+ 
+ 
+ F-28
+ 
+ 
+ Table of Contents
+
+ 
+ FISION CORPORATION 
+NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+ 
+ In April-May 2017, we issued a total of 1,300,000 unregistered common shares as follows:
+ 
+ i)
+ 500,000 common shares in a private placement with an accredited investor for proceeds of $150,000 ($.30 per share), which proceeds were used for working capital purposes;
+
+ ii)
+ 200,000 common shares valued at $.30 per share to a financial advisor under a consulting agreement; and
+
+ iii)
+ 400,000 shares to Volerro Corporation valued at $168,000 upon closing our purchase of the assets of Volerro Corporation, a privately-held corporation based in Minneapolis which developed and marketed content collaboration software services.
+
+ 
+ In June 2017, we issued a total of 548,215 unregistered common shares as follows:
+ 
+ i)
+ 300,000 shares valued at $.25 per share to a financial adviser under a consulting agreement;
+
+ ii)
+ 96,999 shares valued at $29,100 to a marketing support adviser under an outstanding agreement; and
+
+ iii)
+ 151,216 shares issued to a note holder to convert debt in the amount of $30,243.
+
+ 
+ In July 2017, we issued 200,000 unregistered common shares valued at $40,000 to a financial adviser incident to an outstanding consulting agreement.
+ 
+ In September 2017, we issued or granted a total of 1,911,684 shares of our common stock as follows:
+ 
+ i) We issued a debtholder who is an accredited investor 336,425 unregistered common shares to convert notes payable of $42,053 into equity.
+ ii) We issued another debtholder who is an accredited investor 560,660 unregistered common shares to convert notes payable of $28,033 into equity.
+ iii) Pursuant to an advisory agreement to provide marketing support related to obtaining new customers, we issued 96,999 unregistered common shares to a consultant valued at $13,580.
+ iv) We granted a total of 1,667,600 shares of our common stock to employees as performance bonuses (of which 750,000 are unissued shares vesting over a four-year period), including 850,000 shares valued at $132,500 to our Chief Technology Officer, 500,000 shares valued at $85,000 to our Chief Revenue Officer, 250,000 shares valued at $35,000 to our Chief Financial Officer under the Company s S-8 registered 2016 Equity Incentive Plan, and 67,600 shares valued at $10,140 to our Controller.
+
+ 
+ In October 2017, we issued 200,000 unregistered common shares valued at $46,000 to a financial adviser pursuant to a consulting agreement.
+ 
+ In December 2017, we issued a total of 1,048,999 unregistered common shares as follows:
+ 
+ i) 100,000 common shares valued at $19,000 to a debt holder who extended past due loans to December 31, 2018 and also reduced the interest rate on the loans from 24% to 12%.
+ ii) 96,999 common shares valued at $18,430 to a consultant for marketing support services.
+ iii) a total of 300,000 common shares valued at $44,500 to various accredited investors who purchased convertible debt in our 2017 private placement.
+ iv) 300,000 common shares valued at $44,500 to a licensed broker-dealer who represented us in placing our 2017 private offering of convertible debt.
+ v) 252,000 common shares to convert debt in the amount of $31,500 from an outstanding convertible note, which conversion price was based on specific provisions of this convertible note.
+
+ 
+ 
+ F-29
+ 
+ 
+ Table of Contents
+
+ 
+ FISION CORPORATION 
+NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+ 
+ Stock Option Grants
+ 
+ In September 2017, we granted four-year stock options to purchase a total of 1,150,000 shares of our common stock, of which (i) options for 1,000,000 shares were granted to the Chief Revenue Officer (CRO) of the Company with an exercise price of $.35 per share, with 375,000 shares vested immediately and the remainder of 625,000 shares vesting quarterly over the four-year term, and (ii) options for 150,000 shares were granted to a newly-hired software developer with an exercise price of $.20 per share and vesting quarterly over the four-year term.
+ 
+ In December 2017, we granted a four-year stock option to purchase 100,000 shares of our common stock to a newly-hired software developer with an exercise price of $.25 per share and vesting quarterly over the four-year term.
+ 
+ The weighted average strike price for the stock options granted in 2017 was $0.324 and the weighted average fair value for the options, at the grant dates, was $166,912 for the vested options in 2017.
+ 
+ During 2017 and 2016, the stock option expense issued for services was $166,912 and $37,318 respectively.
+ 
+ Warrant Grants
+ 
+ During the year ended December 31, 2017, we granted warrants to purchase a total of 2,652,097 unregistered common shares as follows:
+ 
+ (i)
+ warrants for 41,667 shares granted for financial services, fully vested, and exercisable at $.30 per share anytime during a four-year term;
+
+ (ii)
+ warrants for 200,000 shares granted for investor relations services, exercisable when vested at $.40 per share anytime during a three-year term and vesting at 20,000 shares per month over a ten-month period, 
+
+ (iii) 
+ warrants for 250,000 shares granted to an accredited investor who purchased common shares in a private placement, which warrants are fully vested and exercisable at $.30 per share during a four-year term;
+
+ (iv)
+ warrants for 142,857 shares to an accredited investor purchasing a Convertible Note, which warrants are fully vested and exercisable any time at $.35 per share over a four-year term;
+
+ (v)
+ warrants for a total of 1,250,000 to two accredited investors purchasing Convertible Notes, which warrants are fully vested and exercisable any time at $.20 per share during a three-year term.
+
+ (vi)
+ warrants for 167,573 shares granted to a secured creditor for a loan extension, fully vested and exercisable at $.30 per share any time during a three-year term.
+
+ (vii)
+ warrants for 100,000 shares granted for legal services provided to us, fully vested and exercisable at $.25 per share any time during a four-year term.
+
+ (viii)
+ warrants for 200,000 shares granted to two independent software developers (100,000 shares apiece), and exercisable at $.25 per share and vesting over four-year terms.
+
+ (ix)
+ warrants for 100,000 shares granted in to an adviser for financial services, fully vested and exercisable at $.30 per share any time over a five-year term. 
+
+ (x)
+ warrants for 50,000 shares granted to a shareholder in consideration for marketing services, fully vested and exercisable at $.17 per share any time over a four-year term.
+
+ (xi)
+ warrants for 150,000 shares granted to a secured lender in consideration primarily for a loan extension to September 30, 2018, fully vested and exercisable at $.15 per share over a four-year term. Concurrently the exercise price of this lender s 2015 warrant to purchase 1,347,185 shares was reduced from $0.65 to $.30 per share until its expiration in December 27, 2019. 
+
+ 
+ 
+ F-30
+ 
+ 
+ Table of Contents
+
+ 
+ FISION CORPORATION
+ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+ 
+ NOTE 13 WARRANT INFORMATION
+ 
+ We have the following outstanding warrants to purchase our common stock at December 31, 2016 and 2017:
+ 
+ 
+ 
+ Number of
+ Shares
+ 
+ 
+ Exercise
+ Price
+ 
+ 
+ Weighted Average
+ Exercise price
+ 
+ 
+ Average
+ Grant
+ Date
+ Fair value
+ 
+
+ Balance December 31, 2015
+ 
+ 
+ 3,766,444 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Granted
+ 
+ 
+ 470,000 
+ 
+ 0.30-0.50
+ 
+ 
+ 
+ 0.40 
+ 
+ 
+ 0.39 
+
+ Forfeited or cancelled
+ 
+ 
+ (30,000 ) 
+ 
+ - 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Balance December 31, 2016
+ 
+ 
+ 4,206,444 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Granted
+ 
+ 
+ 2,652,097 
+ 
+ 0.15-0.40
+ 
+ 
+ 
+ 0.40 
+ 
+ 
+ 0.39 
+
+ Forfeited or cancelled
+ 
+ 
+ (640,722 ) 
+ 
+ - 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Balance December 31, 2017
+ 
+ 
+ 6,217,819 
+ 
+ 0.15-$1.00
+ 
+ 
+ 
+ 0.28 
+ 
+ 
+ 0.29 
+
+ 
+ During 2017 and 2016, the warrant expense issued for services was $127,322 and $25,150 respectively.
+ 
+ NOTE 14 2017 BUSINESS ACQUISITION
+ 
+ The Company operates in a high growth industry. A key component of the Company s strategy is growth through acquisition that expands its technology offering, provides complementary lines of business and increases its market share.
+ 
+ The Company has accounted for all business combinations using the purchase method to record a new cost basis for the assets acquired, and in some cases, liabilities assumed. The Company recorded, based on purchase price allocations, intangible assets representing customer relationships, tradenames, software code, domain names, and excess of purchase price over the estimated fair values of the net assets acquired as Goodwill in the accompanying Consolidated Financial Statements. The goodwill is attributable to synergies achieved through the streamlining of operations combined with improved margins attainable through increased market presence and the acquisition of a large customer (a nation-wide bank) and is all attributed to our one operating reportable segment. The results of operations are reflected in the Consolidated Financial Statements of the Company from the date of acquisition.
+ 
+ (a) 2017 Acquisition
+ 
+ In fiscal 2017, the Company completed the following acquisitions, with an aggregate purchase price of $252,000 payable in the form of 400,000 shares of Common Stock of the Company in 2017, and upon future performance, up to an additional 200,000 shares of Common Stock of the Company in future years, for the assets of Volerro Corporation. The allocation of consideration for this acquisition is summarized as follows:
+ 
+ Checking and cash equivalents
+ 
+ $ 51,500 
+
+ Intellectual Property and Software Code
+ 
+ 
+ 68,500 
+
+ Intangible Asset-Goodwill
+ 
+ 
+ 132,000 
+
+ 
+ 
+ 
+ 
+ 
+
+ Purchase Price
+ 
+ $ 252,000 
+
+ 
+ Goodwill of $132,000 and intellectual property of $68,500 are expected to be deductible for U.S. federal income tax purposes. The Company believes that information gathered to date provides a reasonable basis for estimating the fair values of the assets acquired.
+ 
+ Pursuant to this acquisition, the Company acquired a new top 5 bank in the United States, with a customer contract remaining of $11,923 as of December 31, 2017.
+ 
+ 
+ F-31
+ 
+ 
+ Table of Contents
+
+ 
+ FISION CORPORATION 
+NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+ 
+ NOTE 15 - CONCENTRATIONS 
+ 
+ For the year ended December 31, 2016 four customers each accounted for more than 10% of our revenues, and also and alike for the year ended December 31, 2017 three customers each accounted for more than 10% of our revenues. Combined, these customers represented less than 50% of our revenues during each of 2016 and 2017. A significant reduction for any reason in the use of our software solutions by one or more of our major customers could harm our business materially.
+ 
+ NOTE 16 - SUBSEQUENT EVENTS
+ 
+ On January 5, 2018, we issued a $50,000 Convertible Note to an individual accredited investor incident to our 2017 private placement of $50,000 Notes. Incident thereto, we also issued 50,000 shares of our common stock to the purchaser of this Note and 50,000 common shares to the broker-dealer placement agent of this Note.
+ 
+ In January 2018, we also issued $213,000 of convertible debt notes for working capital in three separate transactions, including (i) $100,000 convertible note to a lending fund with a maturity of nine months, interest rate of 12% per annum, and the noteholder having the right after 180 days to convert the note into common shares at a 45% discount to the lowest trading price of the shares during the 10-day period prior to conversion, (ii) $63,000 convertible note to another lending fund with a maturity of April 29, 2019, 12% interest rate, and having the right after 180 days to convert the note into common shares at a 42% discount to the lowest trading price of the shares during the 10-day period prior to conversion, and (iii) $50,000 convertible note to an individual accredited investor with a maturity in December 2018, 12% interest rate, and the noteholder having the right to convert the note any time into our common stock at the lower of $.15 per share or the offering price of a future registered public offering of our common stock.
+ 
+ In February 2018 we issued 200,000 unregistered shares of our common stock valued at $32,000 to a consultant for investor relations and shareholder communications services.
+ 
+ In March 2018, we issued at total of $138,000 of our $10,000 Convertible Notes from our 2018 private placement of convertible debt and accompanying each $10,000 Note we also issued the Noteholder a Warrant to purchase 10,000 unregistered common shares exercisable at $.01 per share over a four-year term. We also issued the broker-dealer who placed these notes an identical Warrant for each $10,000 Note as issued to the Noteholder.
+ 
+ During January-March 2018, two Noteholders of convertible debt who are accredited investors converted $100,750 of their notes into a total of 1,503,246 shares of our unregistered common stock, which conversion prices were based on specific provisions contained in these convertible notes.
+ 
+ 
+ F-32
+ 
+ 
+ 
+
+ 
+ No dealer, broker, sales representative or any other person has been authorized to give any information or to make any representations other than those contained in this prospectus and, if given or made, such information or representations must not be relied upon as having been authorized by the Company or any selling agents participating in this offering. This prospectus does not constitute an offer of any securities other than those to which it relates or an offer to sell, or a solicitation of any offer to buy, to any person in any jurisdiction where such an offer or solicitation would be unlawful. Neither the delivery of this prospectus nor any sale made hereunder shall, under any circumstances, create an implication that the information set forth herein is correct as of any time subsequent to the date hereof.
+ 
+ TABLE OF CONTENTS
+ 
+ 
+ Page
+ 
+
+ 
+ 
+ 
+ 
+ 
+
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+PROSPECTUS SUMMARY As used in this prospectus, references to the "Company," "we," "our", "us", "Alpha Network" or "Alpha Network Alliance Ventures Inc." refer to Alpha Network Alliance Ventures Inc. unless the context otherwise indicates. The following summary highlights selected information contained in this
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+PROSPECTUS SUMMARY This summary highlights information contained in greater detail elsewhere in this prospectus and in the documents incorporated by reference in this prospectus. This summary does not contain all of the information that you should consider in making your investment decision. You should read the entire prospectus and the documents incorporated by reference carefully before making an investment in our common stock. You should carefully consider, among other things, our consolidated financial statements and related notes incorporated by reference in this prospectus from our Annual Report on Form 10-K for the year ended December 31, 2017, or our 2017 Annual Report, and our Quarterly Report on Form 10-Q for the three months ended March 31, 2018, or our 2018 Quarterly Report, and the sections titled Risk Factors and Management s Discussion and Analysis of Financial Condition and Results of Operations included in our 2017 Annual Report and 2018 Quarterly Report and incorporated by reference in this prospectus. Unless the context otherwise requires, we use the terms Optinose, Company, we, us, our and similar designations in this prospectus to refer to OptiNose, Inc. and, where appropriate, our subsidiaries. Company Overview We are a specialty pharmaceutical company focused on the development and commercialization of products for patients treated by ear, nose and throat, or ENT, and allergy specialists. Our lead product, XHANCE (fluticasone propionate) nasal spray, 93 mcg, is a therapeutic utilizing our proprietary Optinose Exhalation Delivery System, or EDS, that delivers a topically-acting and potent anti-inflammatory corticosteroid for the treatment of chronic rhinosinusitis with nasal polyps and, if approved, chronic rhinosinusitis without nasal polyps. Chronic rhinosinusitis is a serious nasal inflammatory disease that is currently treated using therapies, such as intranasal steroids, or INS, that have significant limitations. We believe XHANCE has a differentiated clinical profile with the potential to become part of the standard of care for this disease because it is able to deliver medication to the primary site of inflammation high and deep in the nasal passages in regions not adequately reached by current INS. We also believe that payors will respond favorably to XHANCE s clinical, cost, and quality-of-care profile, as compared to current and potential future costly drug therapy and surgical treatment options. On September 18, 2017, the U.S. Food and Drug Administration, or FDA, approved our new drug application, or NDA, for XHANCE for the treatment of nasal polyps in patients 18 years of age or older. Based upon our research of over 300 pharmaceutical product launches between 2010 and 2016, we believe the evidence suggests that the success of a launch is highly dependent upon four critical factors: level of unmet need that exists within the market, level of clinical differentiation of a brand, market access and brand awareness. Therefore, rather than rushing our product to the market immediately following FDA approval, we employed a unique, purposeful launch model that would enable our commercial team to build market access for XHANCE and achieve critical levels of customer awareness to facilitate adoption upon making XHANCE available in the market. XHANCE Commercialization Update Since FDA approval of our NDA for XHANCE, we have been focused on executing our integrated launch plan with the objective of making XHANCE widely available through retail pharmacies in the second quarter of 2018; we achieved that objective in early April 2018. The key strategies in our integrated launch plan include: (i) build a robust commercial supply chain network and quality management system, (ii) drive awareness and appreciation of the clinical differentiation of XHANCE, (iii) design and deploy our customer facing model, (iv) engage commercial payors with the objective of securing tier 3 coverage, and (v) develop our internal capabilities (e.g., Finance, HR, IT, Data Analytics and Compliance) to support a commercial stage company. We have made progress in each of these key strategic areas: Commercial Supply Chain. We have entered into commercial supply agreements with our key suppliers, spent significant time with our suppliers to oversee product production and quality management, and manufactured our initial commercial supply of XHANCE. We have contracted with a third-party logistics partner and our distribution partners. Brand Awareness. We have executed a broad, multi-channel awareness campaign leveraging digital, non-personal promotion and journal advertising and have already reached over 10,000 ENT physicians The information in this preliminary prospectus is not complete and may be changed. Neither we nor the selling stockholders may sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting offers to buy these securities in any state or other jurisdiction where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED JUNE 4, 2018 PRELIMINARY PROSPECTUS 4,500,000 Shares Common Stock We are offering 2,250,000 shares of our common stock and the selling stockholders identified in this prospectus are offering 2,250,000 shares of our common stock. We will not receive any of the proceeds from the shares of common stock sold by the selling stockholders. Our common stock is listed on the Nasdaq Global Select Market under the trading symbol OPTN. On June 1, 2018, the last reported sale price of our common stock on the Nasdaq Global Select Market was $22.40 per share. The final public offering price will be determined through negotiation among us, the selling stockholders and the lead underwriters in the offering, and the recent market price used throughout the prospectus may not be indicative of the final offering price. We are an emerging growth company as defined by the Jumpstart Our Business Startups Act of 2012 and, as such, we are subject to reduced public company reporting requirements for this prospectus and future filings. See Implications of Being an Emerging Growth Company on page 15 of this prospectus. Investing in our common stock involves a high degree of risk. Please read Risk Factors beginning on page 9 of this prospectus, as well as in the documents incorporated by reference into this prospectus, for a discussion of the factors you should carefully consider before deciding to purchase our common stock. PER SHARE TOTAL Public offering price $ $ Underwriting discounts and commissions (1) $ $ Proceeds to OptiNose, Inc., before expenses $ $ Proceeds to selling stockholders, before expenses $ $ (1) See Underwriting beginning on page 46 of this prospectus for information regarding compensation payable to the underwriters. We and the selling stockholders have granted the underwriters an option for a period of 30 days to purchase up to an additional 675,000 shares of common stock at the public offering price, less the underwriting discounts and commissions. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The underwriters expect to deliver the shares of common stock to investors on or about , 2018. Jefferies Piper Jaffray BMO Capital Markets RBC Capital Markets Cantor The date of this prospectus is , 2018. and allergists with disease state and branded messages. From November 2017 through April 2018, we deployed a nurse educator team of approximately 85 nurse professionals who called on approximately 5,000 ENT physicians and allergists and delivered over 16,000 presentations. The focus of their interactions with healthcare professionals included: (i) introducing Optinose and highlighting the unmet medical need and limitations of current treatments, (ii) increasing awareness about XHANCE along with providing education on the mechanism of action and the differences associated with the Optinose EDS, and (iii) familiarizing healthcare professionals with the proper administration of XHANCE. Based on our market research, aided brand awareness (meaning awareness of XHANCE or Optinose when specifically asked) amongst a survey of ENT and allergy physicians is 87 percent, which achieves our objective of 85 percent brand awareness during the launch phase. Customer Model. We have defined a sales force footprint of approximately 120 territories targeting approximately 14,000 ENT physicians, allergists and specialty like primary care physicians and are deploying a hybrid sales model that combines an internal sales leadership team with a fully dedicated contract sales force to call on our target customer universe. We prioritized approximately 80 territories within our sales force footprint to deploy at launch based upon an expectation that we will achieve an estimated 65% commercial market access within each of those territories. The initial 80 territory managers completed training and were deployed in March 2018 engaging approximately 8,000 ENTs, allergists and primary care physician targets to promote XHANCE for the treatment of nasal polyps. XHANCE Xperience Program. In March 2018, we introduced the XHANCE Xperience program to offer physicians and their patients an opportunity to gain initial experience with XHANCE. As part of this program, patients receive up to two XHANCE prescriptions at no out-of-pocket cost to them ($0 co-pay). In order to receive the second prescription, patients are required to complete a brief survey regarding their use of XHANCE. Initial survey results have been encouraging and provide physicians with the opportunity to receive feedback on early patient responses to treatment. We believe that a positive physician and patient experience in the Xperience program will accelerate demand for XHANCE during the retail launch. The program launched on March 5, 2018, and, as of June 1, 2018, more than 1,750 unique physicians have written at least one prescription and approximately 9,200 units have been sent to patients. Almost all of the prescriptions dispensed since March 31, 2018 have been through the Xperience program and this program is expected to continue to be the primary source of demand for XHANCE for the remainder of the second quarter of 2018. The average selling price (ASP) of product dispensed under the Xperience program is significantly lower than the ASP for the retail channel. Our ability to generate net revenue and become profitable depends largely upon our ability to successfully commercialize XHANCE without the support provided by the Xperience program as well as our ability to broaden our market opportunity by successfully developing XHANCE for the treatment of chronic sinusitis. Based on results, we will evaluate whether or not to continue enrolling patients in the Xperience program after the second quarter of 2018. Market Access. Payers leverage various strategies to manage utilization of branded pharmaceutical products. An increasing number of payers are employing new-to-market blocks for launch brands until they have the opportunity to make a coverage decision based upon their internal review the product s clinical and pharmacoeconomic data. When a product is not covered, the patient is responsible to pay the full price for the medication which significantly limits utilization of the product. If a payer decides to cover a medication, payers will classify products based upon Tiers. Tiers determine the out-of-pocket costs for a patient. For example, a product that is covered on Tier 2 typically requires a co-pay by the patient of between $20 - $40 while a product that is covered on Tier 3 typically requires a co-pay by the patient of between $60 to $80. Payers will also use controls to manage the prescribing of products that they cover. These tools include passive management techniques, such as step edits, which minimize the internal resources payers need to apply to ensure a medication is primarily used in the intended manner. A step edit requires prior use of another medication, usually a generic or preferred brand, prior to approving coverage for the product in question. This confirmation can be performed at the pharmacy level and includes an electronic look back. If the pharmacist is unable to confirm prior utilization of the step medication, the pharmacist will need to contact the physician to obtain either a verbal or written confirmation of prior use of the step medication. Payers will also use more active, aggressive management techniques TABLE OF CONTENTS Page PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2018/CIK0001499453_spirit-of_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001499453_spirit-of_prospectus_summary.txt
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+This summary provides an overview of selected information contained elsewhere in this prospectus and does not contain all the information that may be important to you. Before making an investment decision to purchase shares of our common stock, you should carefully read this prospectus and the registration statement of which this prospectus is a part in their entirety, including the information discussed under Risk Factors and Management s Discussion and Analysis of Financial Condition and Results of Operations, along with our consolidated financial statements and notes thereto that are included herein. Unless we state otherwise or the context otherwise requires, references in this prospectus to we, our, us and our company refer to Spirit of Texas Bancshares, Inc., a Texas corporation, and our wholly-owned banking subsidiary, Spirit of Texas Bank SSB, a Texas state savings bank. References in this prospectus to Bank refer to Spirit of Texas Bank SSB. References in this prospectus to Houston metropolitan area, Dallas/Fort Worth metropolitan area and Bryan/College Station metropolitan area refer to the Houston-The Woodlands-Sugar Land Metropolitan Statistical Area, the Dallas-Fort Worth- Arlington Metropolitan Statistical Area and the College Station-Bryan Metropolitan Statistical Area, respectively. Our Company We are a Texas corporation and a registered bank holding company located in the Houston metropolitan area with headquarters in Conroe, Texas. We offer a broad range of commercial and retail banking services through our wholly-owned bank subsidiary, Spirit of Texas Bank SSB. We operate through 15 full-service branches located primarily in the Houston and Dallas/Fort Worth metropolitan areas. As of December 31, 2017, we had total assets of $1.03 billion, loans held for investment of $869.1 million, total deposits of $835.4 million and total stockholders equity of $99.1 million. We are a business-focused bank that delivers relationship-driven financial services to small and medium-sized businesses and individuals in our market areas. Our philosophy is to target commercial customers whose businesses generate between $3 $30 million of annual revenue. Our product offerings consist of a wide range of commercial products, including term loans and operating lines of credit to commercial and industrial companies; commercial real estate loans; construction and development loans; SBA loans; commercial deposit accounts; and treasury management services. In addition, our retail offerings include consumer loans, 1-4 single family residential real estate loans and retail deposit products. We pride ourselves on our strong credit culture and responsiveness to our customers banking needs. We are guided by an experienced and proven executive management team, led by founder Dean O. Bass, our Chairman and Chief Executive Officer, and David M. McGuire, our President and the Bank s President and Chief Lending Officer. Since our inception in 2008, we have implemented a growth strategy that includes organic loan and deposit generation through the establishment of de novo branches, as well as strategic acquisitions that have either strengthened our presence in existing markets or expanded our operations into new markets with attractive business prospects. We operate in one reportable segment of business, Community Banking, which includes Spirit of Texas Bank SSB, our sole banking subsidiary. Our History and Growth Dean O. Bass founded our company after successfully establishing, operating and selling, Royal Oaks Bank, a high growth de novo institution in the Central Houston area. We began operations in November 2008 with the acquisition of First Bank of Snook, a community bank with two branches, one in the Bryan/College Station metropolitan area and one in Snook, Texas. Immediately following this initial acquisition, we opened a business banking office with an established commercial lending team and SBA team with whom our management group worked at Royal Oaks Bank. We quickly expanded into the Central Houston and North Houston markets through de novo branching and branch acquisitions. Early in our development, we identified the Dallas/Fort Worth metropolitan area as a strategic opportunity for expansion and an area with strong growth potential based on Table of Contents The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED APRIL 26, 2018 PRELIMINARY PROSPECTUS 1,905,000 Shares Spirit of Texas Bancshares, Inc. COMMON STOCK This is the initial public offering of shares of common stock of Spirit of Texas Bancshares, Inc., the holding company for Spirit of Texas Bank SSB, a Texas state savings bank headquartered in Conroe, Texas. We are offering 1,905,000 shares of our common stock. Prior to this offering, there has been no established public market for our common stock. We currently estimate the public offering price per share of our common stock will be between $20.00 and $22.00. We have applied to list our common stock on the NASDAQ Global Market under the symbol STXB. Investing in our common stock involves risks. See Risk Factors beginning on page 16 of this prospectus to read about factors you should consider before investing in our common stock. We are an emerging growth company as defined in the Jumpstart Our Business Startups Act of 2012, and are subject to reduced public company disclosure standards. Per share Total Initial public offering price $ $ Underwriting discounts and commissions(1) Proceeds, before expenses, to us (1) See Underwriting for additional information regarding the underwriting discounts and commissions and certain expenses payable to the underwriters by us. We have granted the underwriters the option to purchase up to an additional 285,750 shares of our common stock from us within 30 days of the date of this prospectus on the same terms and conditions set forth above, to cover over allotments, if any. See Underwriting. The shares of our common stock that you purchase in this offering will not be savings accounts, deposits or other obligations of any of our bank or non-bank subsidiaries and are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other governmental agency and are subject to investment risks, including the possible loss of the entire amount you invest. None of the Securities and Exchange Commission, any state securities commission, the Federal Deposit Insurance Corporation, the Board of Governors of the Federal Reserve System, the Texas Department of Savings and Mortgage Lending or any other regulatory authority has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense. The underwriters expect to deliver the shares to purchasers on or about , 2018, subject to customary closing conditions. Stephens Inc. Keefe, Bruyette & Woods A Stifel Company Piper Jaffray Sandler O Neill + Partners, L.P. The date of this prospectus is , 2018 Table of Contents Unless we state otherwise or the context otherwise requires, references in this prospectus to we, our, us and our company refer to Spirit of Texas Bancshares, Inc., a Texas corporation, and our wholly-owned banking subsidiary, Spirit of Texas Bank SSB, a Texas state savings bank. References in this prospectus to Bank refer to Spirit of Texas Bank SSB. Note Regarding Reverse Stock Split and Preferred Stock Conversion and Restatement On February 23, 2017, we issued 170,236 shares of common stock to our holders of Series A preferred stock in connection with the conversion of 170,236 shares of our issued and outstanding Series A preferred stock into common stock. Our Series A preferred stock was economically equivalent to our common stock. On March 16, 2017, we effected a one-for-two reverse stock split. See Management s Discussion and Analysis of Financial Condition and Results of Operations Charter Amendments. This prospectus reflects the impact of the foregoing preferred stock conversion and reverse stock split at the dates and for the periods presented unless otherwise noted. As further discussed in Note 20, Correction of Errors and Restatement, in the notes to our consolidated financial statements included elsewhere in this prospectus, we identified prior period accounting errors which resulted in a restatement of certain prior period amounts within our consolidated financial statements as of and for the year ended December 31, 2017. All financial information as of and for the years ended December 31, 2016 and 2015 presented in this prospectus has been restated to reflect these changes. Market Data This prospectus includes industry and trade association data, forecasts and information that we have prepared based, in part, upon data, forecasts and information obtained from independent trade associations, industry publications and surveys, government agencies and other information available to us, which information may be specific to particular markets or geographic locations. Some data is also based on our good faith estimates, which are derived from management s knowledge of the industry and independent sources. Industry publications and surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable. Although we believe these sources are reliable, we have not independently verified the information. Statements as to our market position are based on market data currently available to us. While we are not aware of any misstatements regarding our industry data presented herein, our estimates involve risks and uncertainties and are subject to change based on various factors, including those discussed under the heading Risk Factors in this prospectus. Similarly, we believe our internal research is reliable, even though such research has not been verified by any independent sources. Implications of Being an Emerging Growth Company As a company with less than $1.07 billion in revenue during our last fiscal year, we qualify as an emerging growth company as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. We will continue to be an emerging growth company until the earliest to occur of: (1) the last day of the fiscal year following the fifth anniversary of this offering; (2) the last day of the fiscal year in which we have more than $1.07 billion in annual revenues; (3) the date on which we are deemed to be a large accelerated filer under the Securities Exchange Act of 1934, as amended, or the Exchange Act; or (4) the date on which we have, during the previous three-year period, issued more than $1.0 billion in non-convertible debt securities. Until we cease to be an emerging growth company, we may take advantage of specified reduced reporting and other regulatory requirements generally unavailable to other public companies. Those provisions allow us to present only two Table of Contents attractive demographics and market characteristics. In 2012, we expanded into Dallas with a team of bankers with whom our management team had previously worked, by establishing two loan production offices, or LPOs. We further expanded our presence in the Dallas/Fort Worth metropolitan area in 2013 through a whole-bank acquisition and subsequently converted the LPOs into two full-service de novo branches. At the end of 2013, we acquired a bank in The Woodlands, which is located in North Houston, in a FDIC-assisted transaction. Most recently, in 2016, we acquired an additional branch in a strategic location in The Woodlands. Today, we have 15 full-service branches located in three Texas markets the Houston, Dallas/Fort Worth and Bryan/College Station metropolitan areas. We believe our exposure to these dynamic and complementary markets provides us with economic diversification and the opportunity for expansion across Texas. We have experienced significant growth since our formation while maintaining strong credit metrics, as demonstrated by: Our balance sheet growth, with a compound annual growth rate, or CAGR, of 10.5% in assets, 12.3% in loans held for investment and 12.4% in deposits from December 31, 2015 to December 31, 2017; Our noninterest bearing deposit growth, with a CAGR of 24.1% from December 31, 2015 to December 31, 2017; and Our earnings growth, with a CAGR of 9.8% in net income and 10.1% in diluted earnings per common share for the twelve months ended December 31, 2015 to the twelve months ended December 31, 2017. The decrease in net income and diluted earnings per common share for the twelve months ended December 31, 2016 compared to the twelve months ended December 31, 2015 was partially as a result of expenditures for additional personnel and infrastructure as part of and to support our growth efforts. Table of Contents Table of Contents years of audited financial statements, discuss only our results of operations for two years in related Management s Discussions and Analyses and provide less than five years of selected financial data in an initial public offering registration statement; not to provide an auditor attestation of our internal control over financial reporting; to choose not to comply with any new requirements adopted by the Public Company Accounting Oversight Board, or the PCAOB, requiring mandatory audit firm rotation or a supplement to the auditor s report providing additional information about the audit and our audited financial statements; to provide reduced disclosure regarding our executive compensation arrangements pursuant to the rules applicable to smaller reporting companies, which means we do not have to include a compensation discussion and analysis and certain other disclosure regarding our executive compensation; and not to seek a non-binding advisory vote on executive compensation or golden parachute arrangements. We may choose to take advantage of some or all of these reduced reporting and other regulatory requirements. We have elected in this prospectus to take advantage of scaled disclosure related to the presentation of financial information and the reduced disclosure requirements relating to executive compensation arrangements. The JOBS Act also permits an emerging growth company to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies. Table of Contents We have supplemented our strong organic growth through strategic bank acquisitions. Since our formation, we have completed three whole-bank acquisitions, three branch acquisitions consisting of six branches, and one FDIC-assisted acquisition. These transactions result in us being the most active acquirer among private Texas-based banks and third most active acquirer among Texas-based banks (in each case, based on number of transactions) since 2008, according to data obtained through S&P Global. These acquisitions demonstrate our ability to identify acquisition targets, negotiate and execute definitive agreements, and integrate different systems and cultures into our own. In addition, we have proven our ability to leverage the new capabilities obtained through these acquisitions as evidenced by strong organic growth in acquired markets and continuously enhanced product offerings for our customers. We evaluate acquisitions based on a defined set of criteria, including earnings per share accretion, reasonable tangible book value per share earn back periods and enhanced shareholder value. The following table summarizes the acquisitions that we have completed since our inception and excludes cash received and paid and other acquired liabilities: Target Company / Seller Acquisition Type Market Area Completion Date Acquired Assets Acquired Deposits (Dollars in Millions) Snook Bancshares Whole-Bank College Station 11/17/2008 $ 38.6 $ 35.9 Third Coast Bank, SSB 2 Branches Houston 10/23/2009 9.2 18.6 Texas Community Bank, N.A. 3 Branches Houston 10/29/2011 42.9 58.9 Oasis Bank, SSB Whole-Bank Houston 11/30/2012 79.3 69.0 Peoples Bank Whole-Bank Dallas/Fort Worth 7/13/2013 70.8 60.8 Texas Community Bank, N.A. FDIC-Assisted Houston 12/13/2013 134.1 118.7 PlainsCapital Bank 1 Branch Houston 6/24/2016 4.4 36.7 Our Banking Strategy We are a business-focused bank that delivers relationship-driven financial services to small and medium-sized businesses as well as individuals in our market areas. The following further articulates our banking strategy: Diverse Lending Platform. Our strategy is to provide a broad array of financial services, which results in a diverse loan portfolio that consists primarily of: commercial and industrial loans; 1-4 single family residential real estate loans; construction, land and development loans; and commercial real estate loans. We focus on delivering superior customer service, responsive decision-making and personal customer relationships. We believe our target customer base is underserved by larger financial institutions, and our ability to execute our relationship banking model and respond quickly to customers gives us an advantage over our competition. Our approach is to equip commercial lenders Table of Contents CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS Information set forth in this prospectus may contain various forward-looking statements. These forward-looking statements describe our future plans, results, strategies and expectations and are subject to business, economic, and other risks and uncertainties, both known and unknown, that could cause our actual operating results and financial position to differ materially from the forward-looking statements. Such forward-looking statements can be identified by the use of forward-looking terminology such as may, will, should, could, would, goal, plan, potential, expect, anticipate, estimate, project, target, aim, believe, or continue, or the negative thereof or other variations thereof or comparable terminology. We have made the forward-looking statements in this prospectus based on assumptions and estimates that we believe to be reasonable in light of the information available to us at this time. However, these forward-looking statements are subject to significant risks and uncertainties, and could be affected by many factors. These factors include, but are not limited to, the following: risks related to the concentration of our business in Texas, and in the Houston and Dallas/Fort Worth metropolitan areas in particular, including risks associated with any downturn in the real estate sector and risks associated with a decline in the values of single family homes in our Texas markets; general market conditions and economic trends nationally, regionally and particularly in our Texas markets, including a decrease in or the volatility of oil and gas prices; risks related to our concentration in our primary markets, which are susceptible to severe weather events that could negatively impact the economies of our markets, our operations or our customers, any of which could have a material adverse effect on our business, financial condition and results of operations; our ability to implement our growth strategy, including identifying and consummating suitable acquisitions; risks related to the integration of any acquired businesses, including exposure to potential asset quality and credit quality risks and unknown or contingent liabilities, the time and costs associated with integrating systems, technology platforms, procedures and personnel, the need for additional capital to finance such transactions, and possible failures in realizing the anticipated benefits from acquisitions; changes in Small Business Administration, or SBA, loan products, including specifically the Section 7(a) program and Section 504 loans, or changes in SBA standard operating procedures; risks associated with our loans to and deposit accounts from foreign nationals; our ability to develop, recruit and retain successful bankers that meet our expectations in terms of customer relationships and profitability; our dependence on our management team, including our ability to retain executive officers and key employees and their customer and community relationships; risks associated with the relatively unseasoned nature of a significant portion of our loan portfolio; risks related to our strategic focus on lending to small to medium-sized businesses; the accuracy and sufficiency of the assumptions and estimates we make in establishing reserves for potential loan losses and other estimates; the risk of deteriorating asset quality and higher loan charge-offs; the time and effort necessary to resolve nonperforming assets; risks associated with our commercial loan portfolio, including the risk for deterioration in value of the general business assets that generally secure such loans; Table of Contents with the tools and support necessary to serve their clients, including advanced training, treasury management support, quick access to lending management and timely credit decisions. Our lenders are evaluated on their ability not only to originate loans but also to gather deposits and maintain a portfolio with sound credit quality. Small Business Administration (SBA) Lending. During the SBA s fiscal year ended September 30, 2017, the Bank was the leading SBA lender among community banks in Texas, based on the number of loans closed. We primarily lend through the SBA 7(a) program and we have a dedicated team focused on origination, documentation and closing of SBA loans. SBA lending has been a core competency since our inception, and our SBA leadership team has an average of 15 years of experience dedicated to the program. Our strategy is to sell the government-guaranteed portion of the loan (generally 75% to 85% of the principal balance), on which we generate an up-front premium. In addition to selling the guaranteed portion of the loan, we retain the servicing rights to the loans that we sell, and we collect the associated servicing fees, which are typically 1% of the principal balance of the loan. For the years ended December 31, 2015 through 2017, we originated 243, 202 and 270 SBA loans totaling $53.9 million, $46.7 million and $71.2 million, respectively. During these periods, we generated gains on sales of SBA loans of $4.4 million, $4.4 million and $5.7 million, respectively. As of December 31, 2017, we had SBA loans on our balance sheet of $67.1 million, and we serviced $275.2 million of SBA loans. We maintain strict underwriting guidelines in our SBA program, which has contributed to our success. More than 75% of our SBA customers are national franchisees, which we believe leads to fewer losses because we are able to mitigate risk by analyzing loss histories of similar businesses and the national franchise provides greater support to our borrowers. Additionally, our SBA loans are subject to the same credit review process as our conventional lending customers. We believe these factors have contributed to our SBA portfolio performing better than the national SBA three year average loss rate. We are a Preferred Lenders Program participant with the SBA, which allows us to accelerate the SBA documentation process. To date, we have not been notified of any denial or repair of the SBA guaranty on any loan submitted for liquidation. An annual review by an independent third party validates the performance of the portfolio and the integrity of the documentation. This lending channel provides us with a competitive advantage and opportunity to earn a borrower s banking relationship early in the business s life cycle. Once we have originated an SBA loan, we believe we are optimally positioned to continue to service the customer as the customer s business matures. Deposit Gathering Focus. We are focused on generating core deposits from our business customers. We improved our treasury management services by hiring additional personnel and offering more products to enable us to more effectively attract and service the operating accounts of larger, more sophisticated businesses. These efforts have produced desirable results, as evidenced by our growth in non-interest bearing deposits from $114.8 million at December 31, 2015 to $176.7 million at December 31, 2017, a 53.9% increase. We believe that over time we will continue to successfully grow our core deposit base through commercial customers as well as our strategically located retail branches. In addition to our organic deposit efforts, we will continue to place an emphasis on the acquisition of banks with high-quality funding profiles to enhance our core deposit base. Scalable Infrastructure. Throughout our history, we have been strategic in the hiring of key personnel and implementation of systems and processes that we believe are advanced for a bank of our size, which we expect will allow us to scale our business model without significant additional noninterest expense going forward. This includes a sophisticated loan review process, dedicated senior credit and compliance officers, and robust internal and external loan review programs. As we are able to leverage our current expense base as a larger company, we expect to experience enhanced shareholder returns through operational efficiencies. Table of Contents risks associated with our nonfarm nonresidential and construction loan portfolios, including the risks inherent in the valuation of the collateral securing such loans; potential changes in the prices, values and sales volumes of commercial and residential real estate securing our real estate loans; risks related to the significant amount of credit that we have extended to a limited number of borrowers and in a limited geographic area; our ability to maintain adequate liquidity and to raise necessary capital to fund our acquisition strategy and operations or to meet increased minimum regulatory capital levels; material decreases in the amount of deposits we hold, or a failure to grow our deposit base as necessary to help fund our growth and operations; changes in market interest rates that affect the pricing of our loans and deposits and our net interest income; potential fluctuations in the market value and liquidity of our investment securities; the effects of competition from a wide variety of local, regional, national and other providers of financial, investment and insurance services; our ability to maintain an effective system of disclosure controls and procedures and internal controls over financial reporting; risks associated with fraudulent, negligent, or other acts by our customers, employees or vendors; our ability to keep pace with technological change or difficulties when implementing new technologies; risks associated with system failures or failures to protect against cybersecurity threats, such as breaches of our network security; risks associated with data processing system failures and errors; potential impairment on the goodwill we have recorded or may record in connection with business acquisitions; the initiation and outcome of litigation and other legal proceedings against us or to which we become subject; our ability to comply with various governmental and regulatory requirements applicable to financial institutions, including regulatory requirements to maintain minimum capital levels; the impact of recent and future legislative and regulatory changes, including changes in banking, securities and tax laws and regulations and their application by our regulators, such as further implementation of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, or the Dodd-Frank Act; governmental monetary and fiscal policies, including the policies of the Board of Governors of the Federal Reserve System, or the Federal Reserve, as well as legislative and regulatory changes, including as a result of initiatives of the administration of President Donald J. Trump; our ability to comply with supervisory actions by federal and state banking agencies; changes in the scope and cost of Federal Deposit Insurance Corporation, or the FDIC, insurance and other coverage; and systemic risks associated with the soundness of other financial institutions. Table of Contents Our Growth Strategy We believe we have managed our growth successfully since inception, and plan to continue our strategy of organic and acquisitive growth, as outlined below: Organic Growth. Our organic growth strategy involves building upon the relationships of our 41 commercial lenders and SBA lenders as of December 31, 2017, who we believe have additional capacity to grow the loan portfolio. We have designed our incentive plans to emphasize strong credit quality, loan growth and deposit growth. From December 31, 2015 to December 31, 2017, we have grown loans held for investment and deposits by $180.3 million and $174.0 million, or 26.2% and 26.3%, respectively. With the exception of the acquisition of one branch in June 2016 with $36.7 million in deposits and no loans, we achieved our loan and deposit growth since January 2014 organically. We intend to further penetrate our current market areas by leveraging our lending relationships and continuing to hire additional junior and senior lenders. Our senior lenders typically have 15 30 years of experience and are supported by our junior lenders. We hire junior lenders, initially in a credit analyst support capacity, so that we may conduct training in-house and in accordance with our lending methodologies. We incentivize our senior lenders to incorporate our junior lenders into their book of business by compensating our senior lenders, in part, based on region-wide performance, as opposed to compensation based entirely on the senior lender s individual portfolio. This program is an integral part of our lending and credit culture. During 2018, to expand our lending capacities, we hired six senior lenders in the Houston and Dallas/Fort Worth metropolitan areas. Collectively, they have 132 years of banking experience in their respective markets. Additionally, we hired a deposit sourcing specialist in the Bryan/College Station market. We expect these professionals will generate and maintain meaningful portfolios, while also continuing our focus on increasing core deposits to fund loan growth. We intend to continue to seek out talented bankers that are a good cultural fit and have long standing business relationships in our markets. In addition to leveraging our current platform and hiring key personnel to drive organic growth, we also look for opportunities to open de novo branches in existing and new markets. Before entering a new market, we have historically identified a lending team that is experienced and seasoned in that market and opened an LPO, with the ultimate goal of establishing a full-service branch. Growth Through Acquisitions. Throughout our history, we have supplemented our organic growth through both whole-bank and branch acquisitions, as well as an FDIC-assisted acquisition, and we intend to continue our strategy of opportunistically acquiring Texas-based community banks and branches within and outside our current footprint. We believe having a publicly traded stock and enhanced access to the capital markets will improve our ability to compete for quality acquisitions. We seek acquisitions that provide meaningful financial and strategic benefits, long-term organic growth opportunities and expense reductions, without compromising our risk profile. When evaluating acquisition targets, we focus our efforts on banks with successful operating histories, stable core deposits, sound asset quality, and strong banking talent. We seek banking markets with attractive demographics, favorable competitive dynamics and potential consolidation opportunities. We are currently focused on acquisitions in and surrounding the four major Texas metropolitan areas of Houston, Dallas/Fort Worth, San Antonio and Austin. In an effort to source future potential acquisitions, our management team maintains an active calling effort with banks that fit our acquisition criteria. With approximately 370 banks headquartered in Texas with total assets less than $1 billion, we believe we will have opportunities for acquisitions both within and outside our current footprint. Our Competitive Strengths We believe the following competitive strengths support our banking and growth strategies: Management Depth and Experience. Our executive management team has more than 39 years of banking experience on average with proven track records, experience and deep customer relationships Table of Contents
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+PROSPECTUS SUMMARY This summary highlights selected information contained elsewhere in this Prospectus. This summary does not contain all the information that you should consider before investing in the common stock of Rich Pharmaceuticals, Inc. (referred to herein as the "Company," "Rich," "we," "our," and "us"). You should carefully read the entire Prospectus, including "Risk Factors," "Management s Discussion and Analysis of Financial Condition and Results of Operations" and the financial statements before making an investment decision. Business Overview We were incorporated under the laws of the State of Nevada on August 9, 2010 under the name "Nepia Inc." From August 9, 2010 to July 18, 2013, the Company was in the business of developing, manufacturing, and selling small boilers aimed at farmers primarily in Southeast Asia. Beginning on July 19, 2013, the Company acquired bio-pharmaceutical intellectual property for the treatment of acute myeloid leukemia (AML) and is entering into Phase II clinical trials. The goal is to perfect this indication for marketing purposes for distribution world-wide. On August 26, 2013, as a consequence of our new business direction, the Company changed its name to Rich Pharmaceuticals, Inc. ("Rich" or "the Company"). Investment Agreement with GHS On February 22, 2017, we entered into an investment agreement with GHS Investments, LLC, a Nevada limited liability company ("GHS"). Pursuant to the terms of the GHS Purchase Agreement, GHS committed to purchase up to $2,000,000 of our common stock over a period of up to twenty-four (24) months. From time to time during the twenty-four (24) months period commencing from the effectiveness of the registration statement, we may deliver a drawdown notice ("Drawdown Notice") to GHS which states the dollar amount that we intend to sell to GHS on a date specified in the drawdown notice ("Drawdown Amount"). The maximum amount that the Company shall be entitled to drawdown to GHS shall be two hundred percent (200%) of average daily trading volume (U.S. market only) of the Common Stock during the ten (10) days preceding the Drawdown Notice, so long as such amount does render the Investor a holder of more than 4.99% of the outstanding Shares of the Company. The purchase price per share to be paid by GHS shall be calculated as a twenty percent (20%) discount to the lowest traded price of the Company Common Stock during the ten (10) consecutive trading days prior to the date the Drawdown Notice was submitted. We initially reserved 334,000,000 shares of our common stock for issuance under the GHS Purchase Agreement. The GHS Purchase Agreement is not transferable and any benefits attached thereto may not be assigned. In connection with the GHS Purchase Agreement, we also entered into a registration rights agreement with GHS, pursuant to which we are obligated to file a registration statement with the Securities and Exchange Commission (the "SEC") covering shares of our common stock underlying the GHS Purchase Agreement within 30 days after the date of the GHS Purchase Agreement. In addition, we are obligated to use all commercially reasonable efforts to have the registration statement declared effective by the SEC within 90 days after filing and maintain the effectiveness of such registration statement until termination of the GHS Purchase Agreement. The Company previously filed a Form S-1 Registration Statement pursuant to the terms of the registration rights agreement on April 14, 2017 and the previously filed Form S-1 Registration Statement was declared effective by the SEC on April 24, 2017. The Company did not sell any shares under the previously filed Form S-1 Registration Statement and withdrew the registration statement on January 24, 2018. The 334,000,000 shares to be registered herein represent 33.31% of the shares then issued and outstanding, assuming that the selling stockholder will sell all of the shares offered for sale. The 334,000,000 shares to be registered herein represent 33.3% of the shares issued and outstanding held by non-affiliates of the Company. At an assumed purchase price of $0.0004 (equal to 80% of the closing price of our common stock of $0.0005 on January 12, 2018), we will be able to receive up to $133,600 in gross proceeds, assuming the sale of the entire 334,000,000 shares being registered hereunder pursuant to the GHS Purchase Agreement. Accordingly, we would be required to register 4,666,000,000 additional shares to obtain the balance of $1,866,400 under the GHS Purchase Agreement at an assumed purchase price of $0.0004 per share. We are currently authorized to issue 2,000,000,000 shares of our common stock. We may be required to increase our authorized shares in order to receive the entire purchase price in the even our share price decreases. GHS has agreed to refrain from holding an amount of shares which would result in GHS owning more than 4.99% of the then-outstanding shares of our common stock at any one time. There are substantial risks to investors as a result of the issuance of shares of our common stock under the GHS Purchase Agreement. These risks include dilution of stockholders percentage ownership, significant decline in our stock price and our inability to draw sufficient funds when needed. GHS will periodically purchase our common stock under the GHS Purchase Agreement and will, in turn, sell such shares to investors in the market at the market price. This may cause our stock price to decline, which will require us to issue increasing numbers of common shares to GHS to raise the same amount of funds, as our stock price declines. Because our ability to draw down any amounts under the GHS Purchase Agreement is subject to a number of conditions, there is no guarantee that we will be able to draw down any portion or all of the proceeds of $2,000,000 under the GHS Purchase Agreement. As such, we cannot make any guarantee that we will be successful in accessing the full amount under the GHS Purchase Agreement. Table of Contents Where You Can Find Us Our principal office is located at 9595 Wilshire Blvd., Suite 900, Beverly Hills, California 90212. Our telephone number is (424) 230-7001. THE OFFERING Common stock offered by Selling Stockholder 334,000,000 shares of common stock. Common
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+S-1/A 1 d575899ds1a.htm S-1/A S-1/A Table of Contents As filed with the Securities and Exchange Commission on September 13, 2018. Registration No. 333-226922 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Amendment No. 3 to FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Principia Biopharma Inc. (Exact name of Registrant as specified in its charter) Delaware 2834 26-3487603 (State or other jurisdiction of incorporation or organization) (Primary Standard Industrial Classification Code Number) (I.R.S. Employer Identification Number) 400 East Jamie Court, Suite 302 South San Francisco, CA 94080 (650) 416-7700 (Address, including zip code, and telephone number, including area code, of Registrant s principal executive offices) Martin Babler Chief Executive Officer Principia Biopharma Inc. 400 East Jamie Court, Suite 302 South San Francisco, CA 94080 (650) 416-7700 (Name, address, including zip code, and telephone number, including area code, of agent for service) Copies to: David Peinsipp Drew Williamson Barbara Kosacz Amanda Coleman Busch Cooley LLP 101 California Street, 5th Floor San Francisco, California 94111 (415) 693-2000 Christopher Y. Chai Chief Financial Officer Roy Hardiman Chief Business Officer Principia Biopharma Inc. 400 East Jamie Court, Suite 302 South San Francisco, CA 94080 (650) 416-7700 B. Shayne Kennedy Brian Cuneo Latham & Watkins LLP 20th Floor 650 Town Center Dr. Costa Mesa, CA 92626 (714) 540-1235 Approximate date of commencement of proposed sale to the public: As soon as practicable after this registration statement becomes effective. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of large accelerated filer, accelerated filer, smaller reporting company and emerging growth company in Rule 12b-2 of the Exchange Act. Large accelerated filer Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company Emerging growth company If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. CALCULATION OF REGISTRATION FEE Title of each Class of Securities to be Registered Amount to be Registered(1) Proposed Maximum Aggregate Offering Price Per Share Proposed Maximum Aggregate Offering Price(1)(2)(3) Amount Of Registration Fee(2)(4) Common stock, $0.0001 par value per share 7,187,500 $17.00 $122,187,500 $15,212.34 (1) Includes 937,500 shares that the underwriters will have the option to purchase to cover over-allotments, if any. (2) Estimated solely for the purposes of computing the amount of the registration fee pursuant to Rule 457(a) under the Securities Act of 1933, as amended. Includes the offering price of additional shares that the underwriters have the option to purchase to cover over-allotments, if any. (3) Pursuant to Rule 416 under the Securities Act, the shares registered hereby also include an indeterminate number of additional shares as may from time to time become issuable by reason of share splits, share dividends, recapitalizations or other similar transactions. (4) The registrant previously paid $11,409.26 in connection with the initial filing of this Registration Statement and Amendment No. 1. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant will file a further amendment which specifically states that this Registration Statement will thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement will become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine. Table of Contents disorders. The second drug candidate in our BTK franchise is PRN2246, an irreversible covalent BTK inhibitor that we designed to cross the blood-brain barrier and modulate immune cell function in the brain for the treatment of multiple sclerosis, or MS, and other central nervous system, or CNS, diseases. BTK Inhibitor for Immunology: PRN1008 We are developing PRN1008 for the treatment of multiple autoimmune diseases, the first of which is pemphigus, a rare, chronic skin disease with a considerable unmet medical need for safe, rapidly acting, and effective treatments that do not rely on significant use of corticosteroids, or CS. There are two common types of pemphigus: pemphigus vulgaris, or PV, and pemphigus foliaceus, or PF. PV represents approximately 80% of the pemphigus population in most countries. The current standard of care for PV typically consists of CS in high doses. It is well documented that CS have serious and often long-term morbidities including infections, type II diabetes, osteoporosis and cardiovascular effects, and CS can be associated with mortality as well. We elected to develop PRN1008 for pemphigus in part because it is a generalizable model for other autoantibody-driven diseases. We have completed enrollment for our Phase 2 clinical trial for pemphigus with data currently available from an interim analysis performed in April 2018 on a set of 27 patients, 26 of whom were evaluable for one or more efficacy endpoints and one of whom withdrew early due to a non-treatment related adverse event. As of April 2018, PRN1008 achieved the primary endpoint of Control of Disease Activity, or CDA, by the Day 29 visit, in 14 of 26 (54%) evaluable patients on zero or low-dose CS, which is defined in this trial as 0.5 mg/kg. By the Day 85 visit, 16 of 20 (80%) patients for whom clinical status had been determined, achieved CDA on low-dose CS. Five of these 20 (25%) patients also achieved a complete remission, or CR, by the Day 85 visit. CR is defined as the absence of new lesions and complete healing of existing lesions on low-dose CS. PRN1008 has been well tolerated in all patients and was observed to lower levels of both anti-desmoglein 1, or anti-dsg1, and anti-desmoglein 3, or anti-dsg3, two of the most prevalent pathogenic autoantibodies in patients with PV. Low levels of disease activity continued for the 12-week untreated follow-up period in seven of 12 (58%) patients who completed the study to date. In five patients who experienced disease recurrence during the follow-up period, rebound levels of higher disease activity, compared to pre-treatment levels, were not seen. We expect final results from this trial by the end of 2018. We have initiated a Phase 2 clinical trial extension that will increase the active treatment period with PRN1008 from 12 to 24 weeks and expect the top-line results from this trial extension to be available in 2019. We plan to initiate a randomized, double-blind, placebo-controlled, pivotal Phase 3 clinical trial in PV patients, and a smaller number of PF patients, by the end of 2018. PRN1008 has been granted orphan drug designation by the U.S. Food and Drug Administration, or FDA, for the treatment of patients with PV and by the European Commission, for treatment of pemphigus (including both PV and PF). Regulatory approvals for pemphigus will be sought in all territories apart from the United States, where an approval for the treatment of PV alone will be sought. Our second clinical program is PRN1008 for the treatment of immune thrombocytopenic purpura, or ITP, a rare and often chronic autoimmune disease in which the blood levels of platelets, a key component to normal blood clotting, drop to unsafe levels. We have initiated a Phase 2 clinical trial in ITP, with top-line data expected to be announced in 2019. We presented preclinical data in 2017 which indicated that the addition of therapeutically relevant concentrations of PRN1008 did not interfere with normal platelet aggregation responses in blood samples from both healthy volunteers and ITP patients. These results contrast with ibrutinib, the leading marketed BTK inhibitor, which demonstrated in the same preclinical study a significant reduction in platelet aggregation responses in blood samples from healthy volunteers. Beyond pemphigus and ITP, we believe there are numerous immunological disorders for which PRN1008 may demonstrate therapeutic benefit. The collective data thus far suggest that PRN1008 has the potential to reshape the treatment of a wide range of autoimmune and inflammatory diseases. Table of Contents TABLE OF CONTENTS Prospectus PROSPECTUS SUMMARY 1
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+This summary highlights information included or incorporated by reference into this prospectus. Because it is abbreviated, this summary does not contain all of the information that you should consider before investing in the Series F Preferred Units. You should read this prospectus and the documents incorporated herein by reference and other documents to which we refer for a more complete understanding of this offering. You should read Risk Factors beginning on page 13 of this prospectus, as well as those included in our Annual Report on Form 10-K for the year ended December 31, 2017 and in other filings we make with the Securities and Exchange Commission that are incorporated by reference herein and elsewhere herein and therein, for more information about important risks that you should consider carefully before investing in the Series F Preferred Units. In this prospectus, unless the context requires otherwise or we specifically state otherwise, references to American Midstream, AMID, and the Partnership, as well as we, our, us or like terms, refer to American Midstream Partners, LP and its direct and indirect subsidiaries and unconsolidated affiliates. References in this prospectus to our general partner or AMID GP refer to American Midstream GP, LLC, a Delaware limited liability company and our general partner. References to ArcLight Capital refer to ArcLight Capital Partners, LLC and references to ArcLight Fund V refer to ArcLight Energy Partners Fund V, L.P. References to ArcLight refer collectively to ArcLight Capital and ArcLight Fund V. ArcLight Capital manages ArcLight Fund V, which is the principal owner of our general partner. Unless expressly stated otherwise, information about AMID in this prospectus does not give effect to SXE Transactions (as defined below). Unless we indicate otherwise, the information presented in this prospectus assumes that the underwriters do not exercise their option to purchase additional Series F Preferred Units. Overview We are a growth-oriented Delaware limited partnership that was formed in 2009 to own, operate, develop and acquire a diversified portfolio of midstream energy assets. We provide critical midstream infrastructure that links producers of natural gas, crude oil, NGLs, condensate and specialty chemicals to numerous intermediate and end-use markets. Our business strategies continue to focus on maintaining stable cash flows from our existing assets and executing on growth opportunities to increase our long-term cash flows on a per unit basis. We believe the key elements to stable cash flows are the diversity of our asset portfolio and our fee-based business which represents a significant portion of our estimated margins, the objective of which is to protect against downside risk in our cash flows. The following business strategies outline our focused objectives: Utilize our strategically located and integrated assets to maximize value for our customers. We own and operate a portfolio of midstream assets strategically located in some of the most prolific natural gas and crude oil producing regions and key demand markets in the United States and offshore in the deepwater Gulf of Mexico. Through our diversified and integrated asset base, we provide critical infrastructure that links producers of natural gas, crude oil, NGLs, condensate and specialty chemicals to numerous intermediate and end-use markets while allowing us to generate revenue and service the same energy molecules at various stages along the midstream value chain. Enhance existing assets and realize operating efficiencies. We intend to enhance the profitability of our assets by increasing utilization, realizing operating efficiencies and providing additional midstream services desired by our customers. We continually seek to attract new volumes from existing and new customers through superior customer service and asset optimization. In addition, we expect to be able Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED APRIL 20, 2018 PROSPECTUS AMERICAN MIDSTREAM PARTNERS, LP % Series F Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units (Liquidation Preference $25.00 per Series F Preferred Unit) We are offering of our % Series F Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units, liquidation preference $25.00 per unit (the Series F Preferred Units ). Distributions on the Series F Preferred Units are cumulative from the date of original issue and will be payable quarterly in arrears on the 15th day of , , and of each year, when, as and if declared by our general partner. The initial distribution on the Series F Preferred Units offered hereby will be payable on , 2018 in an amount equal to $ per Series F Preferred Unit. Distributions on the Series F Preferred Units will be payable out of amounts legally available therefor from and including the date of original issue to, but not including, , 2023 at a rate equal to % per annum of the stated liquidation preference. On and after , 2023, distributions on the Series F Preferred Units will accumulate for each quarterly distribution period at a percentage of the $25.00 liquidation preference equal to an annual floating rate of the three-month LIBOR plus a spread of %. At any time on or after , , we may redeem the Series F Preferred Units, in whole or in part, out of amounts legally available therefor, at a redemption price of $25.00 per Series F Preferred Unit plus an amount equal to all accumulated and unpaid distributions thereon to, but not including, the date of redemption, whether or not declared. We may also redeem the Series F Preferred Units in the event of a Change of Control. See Description of Series F Preferred Units Change of Control Optional Redemption upon a Change of Control. We intend to apply to have the Series F Preferred Units listed for trading on the New York Stock Exchange, or NYSE, under the symbol . If the application is approved, we expect trading of the Series F Preferred Units on the NYSE to begin within 30 days after their original issue date. Currently, there is no public market for the Series F Preferred Units. Investing in our securities involves a high degree of risk. Limited partnerships are inherently different from corporations. For a discussion of certain risk factors you should consider before deciding to purchase our securities, please see Risk Factors , beginning on page 13 of this prospectus. Per Series F Preferred Unit Total Public Offering Price $ $ Underwriting Discount $ $ Proceeds to Us (before expenses) $ $ We have granted the underwriters a 30-day option to purchase up to an additional Series F Preferred Units on the same terms and conditions set forth above solely to cover over-allotments, if any. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The underwriters expect to deliver the Series F Preferred Units on or about , 2018. , 2018 Table of Contents to provide additional midstream services to our customers by cross-selling complementary services. We can accommodate these additional volumes at minimal incremental cost, which provides highly attractive economics. Capitalize on organic growth opportunities. We continually seek to identify and evaluate economically attractive organic expansion opportunities that leverage our asset footprint and strategic relationships with our customers. These organic projects include new interconnects, repurposing underutilized assets and adding additional capacity to meet increased demand from our customers. Pursue accretive acquisitions. We plan to pursue accretive acquisitions of complementary midstream assets that will allow us to increase market share and density in our core operating areas and realize operational efficiencies and commercial synergies. Future acquisition opportunities may include bolt-on acquisitions within our asset footprint, consolidation of third party interests in our joint ventures and strategic acquisitions. For example, we have completed or signed up a total of $1.8 billion of transactions over the past 12 months to bolster our onshore and offshore businesses. Our partnership with ArcLight may present us with future drop-down opportunities and the ability to jointly pursue third party acquisitions that may not otherwise be feasible on a stand-alone basis. Maintain focus on stable, fee-based and fixed-margin cash flow with minimal direct exposure to commodity prices. We seek to minimize our direct commodity price exposure and maintain stable cash flow by generating a substantial portion of our total gross margin pursuant to fee-based and fixed-margin contracts. We have been successful executing on this strategy and have increased the percentage of gross margin generated from fee-based and fixed-margin contracts for the fiscal years ended December 31, 2017 and 2016, respectively. Maintain a conservative and flexible capital structure. We plan to pursue a disciplined financial policy and maintain a conservative capital structure to allow us to pursue additional organic growth projects and acquisitions, with a conservative mix of debt and equity, even in challenging market environments. We believe we are well-positioned to successfully execute our strategy because of the following competitive strengths: Stable and predictable cash flows supported by fee-based and fixed-margin contracts. Substantially all of our transmission and terminal assets are contracted on a firm transportation or take-or-pay basis and a majority of our offshore assets are contracted under long-term, life-of-lease dedications. We believe that the nature of our contracts minimizes our direct commodity price exposure and enhances the stability of our business and the predictability of our financial performance. Diversified and strategically located portfolio of midstream assets. Our assets are diversified geographically and by business line, which contribute to the stability of our cash flows. We operate throughout many of the most prolific crude oil and natural gas producing regions in the United States and offshore Gulf of Mexico. We have access to multiple sources of crude oil, natural gas and liquids and are in close proximity to various interstate and intrastate pipelines as well as utility, industrial and other commercial end users. Our diverse and creditworthy customer base includes several large producers, refiners and marketers. Significant scale and capability. As of December 31, 2017, we have approximately $1.9 billion in total assets across the midstream value chain providing onshore and offshore crude oil and natural gas gathering, processing, transmission and storage as well as hydrocarbon and refined product terminal assets and NGL fractionation, distribution and sales. Strategically located offshore position with high barriers to entry. We have a substantial footprint in the deepwater Gulf of Mexico with our ownership interest in the Delta House platform and associated Table of Contents assets. This state-of-the-art floating, production and storage facility is located in one of the most active parts of the deep-water Gulf of Mexico and we have well-established relationships and long-term agreements with key participants along the entire value chain in the region. We believe producers in the areas of the Gulf of Mexico in which we operate are motivated to connect their production to our existing pipelines as construction of new pipelines is often not feasible due to cost and timing considerations. In addition, we have acquired additional strategic assets that provide us with substantial operational flexibility including multiple delivery and offload points as we move hydrocarbons from source to market, allowing us to provide a valuable and differentiated service to our customers. We own or have an ownership interest in approximately 5,100 miles of onshore and offshore natural gas, crude oil, NGL and saltwater pipelines across 17 gathering systems, seven interstate pipelines and nine intrastate pipelines; eight natural gas processing plants; four fractionation facilities; an offshore semi-submersible floating production system with nameplate processing capacity of 90 MBbl/d of crude oil and 220 MMcf/d of natural gas; six marine terminal sites with approximately 6.7 MMBbls of above-ground storage capacity; and 90 transportation trucks and a total trailer fleet of 130, of which 35 are LPG trailers and 95 are crude oil trailers. We believe our size, scale and capabilities enhance our ability to serve our customers and provide financial flexibility and an increased ability to access the capital markets. Our Operating Segments Include: Gas Gathering and Processing Services. Our Gas Gathering and Processing Services segment provides wellhead-to- market services to producers of natural gas and NGLs, which include transporting raw natural gas from various receipt points through gathering systems, treating the raw natural gas, processing raw natural gas to separate the NGLs from the natural gas, fractionating NGLs, and selling or delivering pipeline quality natural gas and NGLs to various markets and pipeline systems. Liquid Pipelines and Services. Our Liquid Pipelines and Services segment provides transportation, purchase and sales of crude oil from various receipt points including lease automatic customer transfer facilities and deliveries to various markets. Natural Gas Transportation Services. Our Natural Gas Transportation Services segment transports and delivers natural gas from producing wells, receipt points or pipeline interconnects for shippers and other customers, which include local distribution companies, utilities and industrial, commercial and power generation customers. Offshore Pipelines and Services. Our Offshore Pipelines and Services segment gathers and transports natural gas and crude oil from various receipt points to other pipeline interconnects, onshore facilities and other delivery points. Terminalling Services. Our Terminalling Services segment provides above-ground leasable storage operations at our marine terminals that support various commercial customers, including commodity brokers, refiners and chemical manufacturers to store a range of products and also includes crude oil storage in Cushing, Oklahoma and refined products terminals in Texas and Arkansas. A portion of our cash flow is derived from our investments in unconsolidated affiliates, including a 66.67% operated interest in Destin Pipeline Company, L.L.C., a natural gas pipeline; a 35.7% non-operated interest in the Class A units of Delta House FPS LLC and of Delta House Oil and Gas Lateral LLC, which is a floating production system platform and related pipeline infrastructure; a 16.7% non-operated interest in Tri- States NGL Pipeline, L.L.C., an NGL pipeline; a 66.7% operated interest in Okeanos Gas Gathering Company, LLC, a natural gas pipeline; and a 25.3% non-operated interest in Wilprise Pipeline Company, L.L.C., an NGL pipeline. The acquisition of Southcross Holdings, LP and merger with Southcross Energy Partners, L.P. discussed under Recent Developments offers strategic opportunities that align with the Partnership s strategies and Table of Contents competitive strengths discussed above. The transaction accelerates our transformation into a fully integrated gathering, processing and transmission company focused in our strategic core operating areas. The Southcross assets provide us with the unique opportunity to capture the full midstream value chain in the prolific Eagle Ford basin and to expand our core business by linking supply from economically attractive producing regions to high demand growth markets along the Gulf Coast. The transaction is expected to benefit the Partnership through increased scale, greater financial flexibility and operational density. The Southcross assets provide the foundation for significant organic growth opportunities, while maintaining our commitment to a fee-based business that is designed to offer greater cash flow predictability. Recent Developments Pending Southcross Energy Partners, L.P. Merger On October 31, 2017, we, our General Partner, our wholly owned subsidiary, Cherokee Merger Sub LLC ( Merger Sub ), Southcross Energy Partners, L.P. ( SXE ), and Southcross Energy Partners GP, LLC ( SXE GP ), entered into an Agreement and Plan of Merger (the SXE Merger Agreement ). Upon the terms and subject to the conditions set forth in the SXE Merger Agreement, SXE will merge with Merger Sub (the SXE Merger ), with SXE continuing its existence under Delaware law as the surviving entity in the SXE Merger and wholly owned subsidiary of us. At the effective time of the SXE Merger (the Effective Time ), each common unit of SXE (each, an SXE Common Unit ) issued and outstanding or deemed issued and outstanding as of immediately prior to the Effective Time will be converted into the right to receive 0.160 (the Exchange Ratio ) of a common unit (each, an AMID Common Unit ) representing limited partner interests in us (the Merger Consideration ), except for those SXE Common Units held by affiliates of SXE and SXE GP, which will be canceled for no consideration. Each SXE Common Unit, Subordinated Unit (as defined in the SXE Merger Agreement) and Class B Convertible Unit (as defined in the SXE Merger Agreement) held by Southcross Holdings LP ( Holdings LP ) or any of its subsidiaries and the SXE Incentive Distribution Rights (as defined in the SXE Merger Agreement) outstanding immediately prior to the Effective Time will be canceled in connection with the closing of the SXE Merger. In connection with the SXE Merger Agreement, on October 31, 2017, we and our General Partner entered into a Contribution Agreement (the SXE Contribution Agreement and, together with the SXE Merger Agreement, the SXE Transaction Agreements ) with Holdings LP. Upon the terms and subject to the conditions set forth in the SXE Contribution Agreement, Holdings LP will contribute its equity interests in its new wholly owned subsidiary, which will hold substantially all the current subsidiaries (Southcross Holdings Intermediary LLC, Southcross Holdings Guarantor GP LLC and Southcross Holdings Guarantor LP) and business of Holdings LP, to us and our General Partner in exchange for (i) the number of AMID Common Units with a value equal to $185,697,148, subject to certain adjustments for cash, indebtedness, working capital and transaction expenses contemplated by the SXE Contribution Agreement, divided by $13.69 per AMID Common Unit, (ii) 4,500,000 AMID Preferred Units (as defined in the SXE Contribution Agreement), (iii) options to purchase 4,500,000 AMID Common Units (the Options ), and (iv) 3,000 AMID GP Class D Units (as defined in the SXE Contribution Agreement) (the transactions contemplated thereby and the agreements ancillary thereto, the SXE Contribution and together with the SXE Merger, the SXE Transactions ). A portion of the consideration will be deposited into escrow in order to secure certain post-closing obligations of Holdings LP. Concurrently with the closing of the transaction, our agreement of limited partnership will be amended to reflect the issuance of AMID Preferred Units, and the GP LLC Agreement will be amended to reflect the issuance of such AMID GP Class D Units. The SXE Transactions are expected to close in the second quarter of 2018, subject to customary closing conditions. The completion of the SXE Merger is conditioned upon, among other things: (i) expiration or Table of Contents termination of any applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the HSR Act ), (ii) there being no law or injunction prohibiting the consummation of the SXE Merger, (iii) approval for listing of the AMID Common Units issuable as part of the Merger Consideration on the New York Stock Exchange (the NYSE ) and (iv) closing of the SXE Contribution in accordance with the terms of the Contribution Agreement. The closing under the Contribution Agreement is conditioned upon, among other things: (i) expiration or termination of any applicable waiting period under the HSR Act, (ii) the absence of certain legal impediments prohibiting the transactions and (iii) the conditions precedent contained in the Merger Agreement having been satisfied and the SXE Merger having become effective substantially concurrently with the closing of the Contribution Agreement. Please see Risk Factors. This offering is not contingent on the closing of the SXE Transactions. There can be no assurance that the SXE Transactions will close as expected or at all, that we will realize any of the expected benefits, or that such transactions will not expose us to risks and liabilities. Purchasers of the Series F Preferred Units offered hereby will not be afforded a special redemption right with respect to the Series F Preferred Units or other similar right if the SXE Transactions do not close. Because the closing of this offering is not conditioned on the consummation of the SXE Transactions, if you decide to purchase the Series F Preferred Units in this offering, you should be willing to do so whether or not we complete the SXE Transactions. If the SXE Transactions are delayed, not consummated or consummated on terms different from those described herein, the market price of Series F Preferred Units may decline. Further, a failed transaction may result in negative publicity or a negative impression of us in the investment community and may affect our relationships with our business partners. Please read Risk Factors. Our Relationship with ArcLight ArcLight Fund V, a fund managed by ArcLight Capital, a leading energy-focused investment firm formed in 2001, has been the principal owner of AMID s general partner since 2013. Founded in 2001, ArcLight has helped pioneer an asset-based private equity approach to investing in the dynamic energy sector. ArcLight has invested over $19 billion in more than 100 transactions since inception. Based in Boston, the firm s investment team employs a hands-on value creation strategy that utilizes its in-house technical, operational and commercial specialists as well as its 850-person asset management affiliate. Our Principal Executive Offices and Internet Address Our principal executive offices are located at 2103 CityWest Blvd., Bldg. 4, Suite 800, Houston, TX 77042, and our telephone number is (346) 241-3400. Our website is located at www.americanmidstream.com. We make available our periodic reports and other information filed with or furnished to the SEC free of charge through our website, as soon as reasonably practicable after those reports and other information are electronically filed with or furnished to the SEC. Information on our website or any other website is not incorporated by reference herein and does not constitute a part of this prospectus. Table of Contents
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+PROSPECTUS SUMMARY This summary highlights selected information contained elsewhere in this Prospectus. This summary does not contain all the information that you should consider before investing in the common stock of SkyWolf Wind Turbine Corp. (referred to herein as the "Company," "we," "our," and "us"). You should carefully read the entire Prospectus, including "Risk Factors," "Management s Discussion and Analysis of Financial Condition and Results of Operations" and the accompanying financial statements and notes before making an investment decision. Corporate History and General Information about the Company SkyWolf Wind Turbine Corp. (the "Company" or "SkyWolf") was incorporated under the laws of the State of New York on August 3, 2010 and was formerly known as Brock Renewable Energy Research & Development Corporation. The Company is the designer, manufacturer, and supplier of a patented Solar Hybrid Diffused Augmented Wind Turbine aka "The Hybrid," which uses wind and solar energy sources combined in one unit. The Company currently has six full-time employees/consultants along with several independent sales representatives. The manufacturing facility and administrative offices are located in a single 5,000 sq. ft. building where products are developed, manufactured, marketed and sold along with feasibility studies which are conducted to determine optimum site location. The Company has not filed for bankruptcy, receivership or any similar proceedings nor is in the process of filing for bankruptcy, receivership or any similar proceedings. The Company is located at 156 Court Street, Geneseo, New York 14454. The Company s main phone number is (585) 447-9135. The Company s fiscal year end is December 31. The Company has not filed for bankruptcy, receivership or any similar proceedings nor is in the process of filing for bankruptcy, receivership or any similar proceedings.
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+PROSPECTUS SUMMARY This summary highlights some of the information contained in this prospectus. This summary does not contain all of the information you should consider before investing in the Shares. You should carefully read this entire prospectus, including "Risk Factors" starting on page 15, and "Where You Can Find More Information; Incorporation of Certain Information by Reference" on page 84 before making a decision to invest in the Shares. This prospectus is intended to be used beginning April 13, 2018. Structure of the Trust The iShares Commodity Optimized Trust, or the "Trust," was formed as a Delaware statutory trust on December 7, 2011. The Trust is governed by an Amended and Restated Trust Agreement, or the "Trust Agreement," dated as of July 1, 2014, among iShares Delaware Trust Sponsor LLC, as "Sponsor," BlackRock Institutional Trust Company, N.A., as "Trustee," and Wilmington Trust, National Association, as "Delaware Trustee." The Trust intends to continuously offer units of beneficial interest in the Trust, or "Shares," to the public but may suspend issuances of Shares at any time. The Sponsor maintains a limited equity interest in the Trust in connection with its role as Tax Matters Partner of the Trust. Each Share represents a unit of fractional undivided beneficial interest in the net assets of the Trust. The Trust s assets consist of long positions in exchange-traded index futures contracts of various expirations, called "Index Futures," on the Bloomberg Roll Select CI, together with "Collateral Assets" consisting of cash, U.S. Treasury securities or other short-term securities and similar securities that are eligible as margin deposits for those Index Futures positions. The Trust seeks to track the results of a fully collateralized investment in futures contracts on an index composed of a diversified group of commodities futures which attempts to minimize contango and maximize backwardation. The Trust seeks to track the investment returns of the Index, before payment of the Trust s expenses and liabilities. As of the date of this prospectus, the Index Futures held by the Trust are subject to the rules of the Board of Trade of the City of Chicago, Inc., or "CBOT," which is owned and operated by the CME Group, Inc., or the "CME Group." These Index Futures have serial month expirations for the four closest months. Subsequent Index Futures held by the Trust may have longer or shorter expirations, different terms, and may be listed on other futures exchanges, referred to as "Exchanges." In order to collateralize its Index Futures positions and to reflect the U.S. Treasury component of the Index, the Trust also holds Collateral Assets, from which it posts margin to its clearing futures commission merchant, or its "Clearing FCM," in an amount equal to the margin required by the Chicago Mercantile Exchange, Inc., the clearing house for the Index Futures, and transfer to its Clearing FCM any additional amounts that may be separately required by the Clearing FCM. As of the date of this prospectus, the Trust s sole Clearing FCM is UBS Securities LLC, or "UBS Securities." Any Collateral Assets not required to be posted as margin with the Clearing FCM are held in the Trust s accounts established at its "Trust Administrator," which as of the date of this prospectus is State Street Bank and Trust Company. The term of the Trust is perpetual, unless it is earlier dissolved under the circumstances described under "Description of the Shares and the Trust Agreement—Amendment and Dissolution." The principal offices of the Trust are located at 400 Howard Street, San Francisco, CA 94105, and the Trust s telephone number is (415) 670-2000. The Trust is a commodity pool as defined in the Commodity Exchange Act, as amended, or the "CEA," and the regulations of the Commodity Futures Trading Commission, or the "CFTC." The Trust is operated by the Sponsor, which is a commodity pool operator registered with the CFTC and is an indirect subsidiary of BlackRock, Inc. BlackRock Institutional Trust Company, N.A., an affiliate of the Sponsor, is the Trustee of the Trust. BlackRock Fund Advisors, or "BFA," an indirect subsidiary of BlackRock, Inc., serves as the commodity trading advisor, or the "Advisor," of the Trust and is registered with the CFTC. The Trust is not an investment company registered under the Investment Company Act of 1940, as amended, or the "Investment Company Act," and is not required to register under the Investment Company Act. Other Information "iShares" is a registered trademark of BlackRock Fund Advisors or its affiliates. The Bloomberg Commodity IndexesSM are a joint product of Bloomberg Finance L.P. (referred to collectively with its affiliates as "Bloomberg"), UBS Securities LLC (referred to collectively with its affiliates as "UBS Securities") and have been licensed for use by the Trust. Bloomberg is a trademark of Bloomberg and has been licensed for use for certain purposes by the Trust. Although the performance of the Shares is intended to correspond generally, but not necessarily be identical, to the performance of the Bloomberg Roll Select Commodity Total Return Index, before payment of the Trust s expenses and liabilities, the Shares are not sponsored, endorsed, sold or promoted by Bloomberg, UBS Securities or any of their respective subsidiaries or affiliates, and none of Bloomberg, UBS Securities or any of their respective affiliates, makes any representation regarding the advisability of investing in the Shares. Table of Contents The Trust is an "emerging growth company" subject to reduced public company reporting requirements under U.S. federal securities laws. The Trust has not elected to make use of the extended transition period for complying with new or revised accounting standards pursuant to Section 107(b) of the Jumpstart Our Business Startups Act of 2012, as amended, or the "JOBS Act." This election is irrevocable. However, under the JOBS Act, emerging growth companies like the Trust are subject to reduced public company reporting requirements, as more fully described in "Risk Factors—Risk Factors Relating to the Trust—The Trust is an emerging growth company subject to reduced public company reporting requirements." The Trust expects to remain an emerging growth company until the earliest of (i) the last day of the fiscal year on which the fifth anniversary of its initial public offering of Shares occurs, (ii) the last day of the fiscal year on which the Trust has annual gross revenues of $1.07 billion or more or (iii) the Trust becoming a "large accelerated filer" within the meaning of the United States Securities Exchange Act of 1934, as amended, or the "Exchange Act." Other conditions that may trigger a loss of "emerging growth company" status, such as certain issuances of nonconvertible debt, are not expected to apply to the Trust due to the limited nature of its operations. The material terms of the agreements governing the Trust are discussed in greater detail under "Description of the Shares and the Trust Agreement." Creations and Redemptions The Trust issues Shares only in one or more blocks of 50,000 Shares, called "Baskets," in exchange for Index Futures and cash (or, in the discretion of the Sponsor, other Collateral Assets) in the "Basket Amount." The "Basket Amount" is the amount of Index Futures and cash (or, in the discretion of the Sponsor, other Collateral Assets), that an Authorized Participant must deliver in exchange for one Basket, or that an Authorized Participant is entitled to receive in exchange for each Basket surrendered for redemption. The Trust redeems Shares only in Baskets in exchange for Index Futures and cash (or, in the discretion of the Sponsor, other Collateral Assets) in the Basket Amount. The Trust does not redeem individual Shares. The specific assets constituting the Basket Amount must have a value equal to the aggregate NAV of the Shares constituting a Basket, and such assets are determined by the Sponsor on each Business Day in accordance with the terms of the Trust Agreement. The value of the assets to be included in the Basket Amounts for creations and redemptions is determined at the end of each Business Day based on the daily settlement value of the Index Futures and the value of the Collateral Assets, as calculated for purposes of determining NAV. The value of such assets must equal the NAV of the Shares constituting a Basket as determined for such Business Day, but any changes to NAV that may result from creation and redemption activity are not reflected in the NAV calculations for the Business Day on which they occur. Creation and redemption orders received prior to the order cut-off time (currently 2:40 p.m. (New York time)) are deemed to have been received on such Business Day, while orders received after the order cut-off time are deemed to have been received on the next Business Day. Subject to the approval of the Trustee, Baskets may be created for cash equal to the NAV of the Shares constituting a Basket as determined on the date the related creation order was received, plus the costs incurred by the Trust in establishing the corresponding Index Futures positions and acquiring the related Collateral Assets. Creation orders for Baskets paid for solely in cash that are received after 10:00 a.m. (New York time) will be deemed received as of the following Business Day. In each case, subject to the Trustee s right to suspend or reject orders, creations and redemptions are deemed to occur on the Business Day on which they are received and are expected to settle the following Business Day by 11:00 a.m. (New York time). Information relating to the Basket Amounts and the assets constituting such Basket Amount is published by the Trustee on each Business Day after it has calculated the net asset value of the Trust for such Business Day at 4:00 p.m. (New York time). Breakeven Point Per Unit of Initial Investment The estimated amount of all fees and expenses which are anticipated to be incurred by a new investor during the first twelve months is 0.75% of the per Share price of $37.25 as of February 28, 2018 (or expressed as a dollar amount, $0.28 of the price of $37.25 per Share). Based on certain interest rate, expense and other assumptions, the sum of expenses and interest income is a negative number (i.e., interest income will exceed expenses by 0.85% of the per Share price of $37.25 as of February 28, 2018, or expressed as a dollar amount, $0.31 of the price of $37.25 per Share), implying a negative amount for the 12-Month Break Even. As a result the 12-Month Break Even has accordingly been set to zero. See "Breakeven Analysis" on page 14. UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Table of Contents The Sponsor The Sponsor of the Trust is iShares Delaware Trust Sponsor LLC, a Delaware limited liability company. The sole member and manager of the Sponsor is BlackRock Asset Management International Inc., a Delaware corporation and an indirect subsidiary of BlackRock, Inc. The Sponsor s primary business function in connection with the Trust is to direct the actions of the Trustee in the management of the Trust and to act as commodity pool operator of the Trust. The Sponsor has been registered under the CEA as a commodity pool operator and has been a member of the National Futures Association, or the "NFA," since June 2009. The Sponsor may also act, currently or in the future, as the sponsor for certain other investment vehicles. The Sponsor arranged for the creation of the Trust, the registration of the Shares for their public offering and the listing of the Shares on NYSE Arca. The Sponsor has agreed under the Trust Agreement to pay the following administrative, operational and marketing expenses: (1) the fees of the Trustee, the Delaware Trustee, the Advisor and their respective agents, (2) NYSE Arca listing fees, (3) printing and mailing costs, (4) audit fees, (5) fees for registration of the Shares with the SEC, (6) tax reporting costs, (7) license fees and (8) legal expenses relating to the Trust of up to $100,000 annually. In recognition of its paying these expenses, the Sponsor is entitled to an allocation that accrues daily at an annualized rate of up to 0.75% of the "Adjusted Net Asset Value" of the Trust, or its net asset value as calculated before deducting fees and expenses based on the value of the Trust s assets, and is payable by the Trust monthly in arrears. That allocation to the Sponsor is referred to in this prospectus as the "Sponsor s Fee," and is subject to adjustment from time to time, except that the Sponsor s Fee may not be adjusted to above 0.75% of the Adjusted Net Asset Value absent an amendment to the Trust Agreement and thirty days prior notice to registered holders of the Shares. For a description of how the net asset value of the Trust is calculated, see "Business of the Trust—Valuation of Index Futures; Computation of the Trust s Net Asset Value." The Sponsor is responsible for oversight and overall management of the Trust but has delegated day-to-day administration of the Trust to the Trustee under the Trust Agreement. The Sponsor may remove the Trustee and appoint a successor Trustee, if the Trustee ceases to meet certain objective requirements or if, having received written notice of a material breach of its obligations under the Trust Agreement, the Trustee has not cured the breach within thirty days. The Sponsor may also replace the Trustee during the 90 days following any merger, consolidation or conversion in which the Trustee is not the surviving entity or, in its discretion, at any time following the first anniversary of the creation of the Trust. The principal office of the Sponsor is located at 400 Howard Street, San Francisco, CA 94105, and its telephone number is (415) 670-2000. The Advisor The Advisor is BlackRock Fund Advisors, a California corporation. The Advisor is the commodity trading advisor for the Trust and has discretionary authority to make all determinations with respect to the Trust s assets, subject to specified limitations. The Advisor does not engage in any activities designed to obtain a profit from, or to ameliorate losses caused by, changes in the level of the Index or the Bloomberg Roll Select CI or the value of the Collateral Assets. The Advisor has been registered as a commodity trading advisor under the CEA since April 5, 1993 and has been a member of the NFA since 1993. The Advisor may also act, currently or in the future, as the advisor for certain other investment vehicles. The Advisor and the Trust may each terminate the Advisory Agreement at any time upon thirty days prior written notice. The Sponsor may terminate the Advisory Agreement in its discretion. Form S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Table of Contents The Trustee The Trustee is BlackRock Institutional Trust Company, N.A., a national banking association affiliated with the Sponsor. Subject to the Sponsor s oversight, the Trustee is generally responsible for the day-to-day administration of the Trust. Day-to-day administration includes (1) processing orders for the creation and redemption of Baskets, (2) coordinating with the Sponsor with respect to the receipt and delivery of consideration transferred to, or by, the Trust in connection with each issuance and redemption of Baskets, and (3) calculating the net asset value of the Trust on each Business Day. Under the Trust Agreement, the Trustee may delegate all or a portion of its duties to any agent, and has delegated the bulk of the day-to-day responsibilities to the Trust Administrator, certain tax-related services to PricewaterhouseCoopers LLP, as "Tax Administrator," and certain other administrative and record-keeping functions to its affiliates and other agents. The Tax Administrator and the Trust Administrator are not affiliated with the Sponsor or the Trustee. The Shares are not deposits or other obligations of BlackRock Institutional Trust Company, N.A. or any of its subsidiaries or affiliates or any other bank, are not guaranteed by BlackRock Institutional Trust Company, N.A. or any of its subsidiaries or affiliates or any other bank and are not insured by the Federal Deposit Insurance Corporation or any other governmental agency. An investment in the Shares is speculative and involves a high degree of risk. For a more detailed description of the role and responsibilities of the Trustee and the Trust Administrator, see "Description of the Shares and the Trust Agreement" and "The Trustee." The Trust Administrator State Street Bank and Trust Company serves as the Trust Administrator, and has been delegated certain day-to-day administrative functions of the Trustee, including calculating the value of certain of the Trust s assets, maintaining custody of Collateral Assets not posted as margin, transferring Collateral Assets in satisfaction of applicable margin requirements, and maintaining certain records and accounts. The Trust Administrator s services are governed under a "Master Services Agreement," dated as of April 21, 2011, as supplemented by related service modules, each between the Trust Administrator and the Trust. The Trust Administrator is exculpated and indemnified by the Trust under the terms of the Trust Agreement and the Master Services Agreement. Under the applicable service modules, the Trust Administrator has agreed to provide its services for a term ending on May 15, 2018. The Trust anticipates entering into a new master services agreement with the Trust Administrator to continue its services through 2025. In addition, the Trust Administrator may terminate its services for certain material breaches of the Master Services Agreement or for failure to pay fees within a specified grace period. The Trust may terminate the Master Services Agreement for cause, certain enduring force majeure events, terminations as may be required or occasioned by law, and for certain corporate events affecting the Trust Administrator. The Clearing FCM UBS Securities is the Clearing FCM through which the Trust will transact in Index Futures. The Trust s Index Futures positions, together with related margin, are held at its accounts established at the Clearing FCM. The Trust s relationship with its Clearing FCM is governed by an Institutional Futures Customer Agreement, or "FCM Agreement," dated as of August 1, 2013, between the Trust and the Clearing FCM. The Clearing FCM is exculpated and indemnified by the Trust under the terms of the FCM Agreement. The Delaware Trustee Wilmington Trust, National Association,, a national banking association, serves as the Delaware Trustee of the Trust. The Delaware Trustee is not entitled to exercise any of the powers, or have any of the duties or responsibilities, of the Trustee. The Delaware Trustee is a trustee of the Trust for the sole and limited purpose of fulfilling the requirements of the Delaware Statutory Trust Act. Investment Objective The Trust seeks to track the results of a fully collateralized investment in futures contracts on an index composed of a diversified group of commodity futures which attempts to minimize contango and maximize backwardation. The Trust seeks to track the investment results of the Index before fees and expenses of the Trust. The Trust holds long positions in Index Futures whose settlement value at expiration is determined based on the value of the Bloomberg Roll Select CI at that time. The Trust also earns interest on its non-cash Collateral Assets. iSHARES COMMODITY OPTIMIZED TRUST (Exact name of registrant as specified in its charter) Table of Contents The Bloomberg Roll Select CI incorporates the economic effect of "rolling" the contracts included in the applicable index. "Rolling" a futures contract means closing out a position in an expiring futures contract and establishing an equivalent position in a replacement futures contract on the same commodity. Markets for futures contracts can be in "backwardation," which means that futures contracts with distant delivery months are priced lower than those with nearer delivery months, or can exhibit "contango," which means that futures contracts with distant delivery months are priced higher than those with nearer delivery months. The Bloomberg Roll Select CI employs a "rolling" methodology that seeks to minimize the effect of contango and maximize the effect of backwardation by selecting replacement futures contracts that exhibit the most backwardation or least contango, relative to its preceding contract, among those eligible futures contracts with delivery months of up to 273 calendar days until expiration. The Index, in turn, reflects the return of the Bloomberg Roll Select CI, together with the return on specified U.S. Treasury securities that are deemed to have been held to collateralize a hypothetical long position in the futures contracts comprising the Bloomberg Roll Select CI. The Index and the Bloomberg Roll Select CI are calculated based on the same commodities, though not always the same futures contracts, that are included in the Bloomberg Commodity Index, or the "Bloomberg CI," which is a liquidity- and production-weighted index of the prices of a diversified group of futures contracts on physical commodities. The Bloomberg CI, the Bloomberg Roll Select CI and the Index are administered, calculated and published by Bloomberg, who is also referred to in this prospectus as the "Index Administrator" of the Bloomberg CI, the Bloomberg Roll Select CI and the Index. Certain intellectual property and other rights relating to the Bloomberg CI and related indices are owned by UBS Securities including the right to remove Bloomberg as Index Administrator, and Bloomberg and UBS Securities are collectively referred to as the "Index Providers." If the Index Providers cease to maintain the Index, the Bloomberg CI or the Bloomberg Roll Select CI, the Trust may seek investment results that correspond generally, but are not necessarily identical, to the performance of a fully collateralized investment in a successor index or any other index that, in the opinion of the Sponsor, is reasonably similar to the Index. When establishing positions in Index Futures, the Advisor estimates as of the date of this prospectus that the Trust will be required to deposit initial margin with a value of approximately 3% to 10% of the value of each Index Futures position at the time it is established. These margin requirements are subject to change from time to time by the Exchange or the Clearing FCM. Margin requirements established by the Clearing FCM may exceed minimum levels established by the Exchange. On a daily basis, the Trust will be obligated to pay, or entitled to receive, variation margin in an amount equal to the change in the daily settlement level of its Index Futures positions. If the daily settlement level causes the value of the Trust s Index Futures positions to decrease, the Trust is required to post variation margin with the Clearing FCM. Conversely, if the daily settlement level causes the value of the Trust s Index Futures positions to increase, the Trust s account with the Clearing FCM receives variation margin in an amount equal to the increase. Whenever Index Futures of different types or expirations are available for investment, the Sponsor determines, pursuant to the terms of the Trust Agreement, which Index Futures are to be transferred in connection with either the creation or redemption of Baskets. The Trust does not engage in any activities designed to obtain a profit from, or to ameliorate losses caused by, changes in the level of the Index or the Bloomberg Roll Select CI or the value of the Collateral Assets. The profit or loss on the Trust s Index Futures positions should correlate with increases and decreases in the value of the Bloomberg Roll Select CI, although this correlation is not expected to be exact. The return on the Index Futures, together with interest on the non-cash Collateral Assets, is expected to result in a total return that corresponds generally, but is not identical, to the Index. Differences between the returns on the Shares and the performance of the Index may be based on, among other factors, differences between the return on the Collateral Assets and the U.S. Treasury rate used to calculate the U.S. Treasury return component of the Index, timing differences, differences between the portion of the Trust s assets invested in Index Futures versus the portion of the return of the Index contributed by the Bloomberg Roll Select CI, differences between the settlement price of Index Futures and the closing level of the Bloomberg Roll Select CI and the payment of expenses and liabilities by the Trust. Delaware (State of Organization) 6799 (Primary Standard Industrial Classification No.) 46-2428725 (I.R.S. Employer Identification Number) c/o iShares Delaware Trust Sponsor LLC 400 Howard Street San Francisco, CA 94105 Attn: Product Management Team iShares Research & Development (415) 670-2000 (Address, including zip code, and telephone number including area code, of registrant s principal executive offices) Table of Contents The Advisor acts as the commodity trading advisor for the Trust. The Advisor, on behalf of the Trust, is authorized to invest all of the Trust s assets in long positions in Index Futures and in Collateral Assets in order to satisfy applicable margin requirements on those Index Futures positions. Any cash that the Trust accepts in connection with the creation of Shares is used to purchase additional Index Futures or Collateral Assets in an amount that the Advisor determines will enable the Trust to achieve investment results that correspond with the Index before the payment of the Trust s expenses and liabilities. The Advisor does not engage in any activities designed to obtain a profit from, or to ameliorate losses caused by, changes in the level of the Index or the Bloomberg Roll Select CI or the value of the Collateral Assets. The Shares are intended to constitute an alternative means for investors to achieve investment exposure to the performance of the Index. Although the Shares are not the exact equivalent of an investment in the underlying futures contracts and Treasury securities represented by the Index, the Shares are intended to provide investors with an alternative method of participating in the commodities market. In addition, retail investors can gain exposure to the commodities underlying the Bloomberg Roll Select CI by purchasing individual or small lots of Shares through traditional brokerage accounts, without being subject to the significantly higher minimum contract sizes required for directly establishing a position in the underlying commodities or futures contracts. The Shares are eligible for margin accounts.
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2018/CIK0001540755_anaplan_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001540755_anaplan_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..d4feceb71a762f8bbda5ceb08a5ac22c715cbc55
--- /dev/null
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@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights certain information contained elsewhere in this prospectus. This summary is not complete and does not contain all of the information you should consider in making your investment decision. You should read the entire prospectus carefully before making an investment in our common stock. You should carefully consider, among other things, our consolidated financial statements and the related notes and the sections titled Risk Factors and Management s Discussion and Analysis of Financial Condition and Results of Operations included elsewhere in this prospectus. Overview Anaplan is pioneering the category of Connected Planning, which allows organizations to transform their businesses by making better and faster decisions. We believe Connected Planning is the next essential cloud category. It fundamentally transforms planning by connecting all of the people, data, and plans needed to accelerate business value and enable real-time planning and decision-making in rapidly changing business environments. Connected Planning accelerates business value by transforming the way organizations make decisions and placing the power of planning in the hands of every individual at every level within and between organizations. Connected Planning represents a fundamental shift from the legacy approach to planning, which is typically confined to the finance department and uses a patchwork of outdated and disconnected tools and manual processes that are often overly complex, slow, inefficient, and static. Connected Planning enables dynamic, collaborative, and intelligent planning across all areas of an organization, including finance, sales, and supply chain, and other corporate functions such as marketing, human resources, and operations. Our cloud platform is a complete end-to-end solution that addresses the Connected Planning needs of all organizations with a focus on the largest global enterprises. We define large global enterprises as companies included in the Forbes Global 2000, or the Global 2000, an annual ranking of the largest public companies in the world by Forbes magazine. We empower customers to quickly and easily build models to address their most complex business challenges. Our powerful modeling engine, which is based on our proprietary Hyperblock technology, enables thousands of concurrent users to access a centralized single source of information for planning, ensuring the consistency, quality, and integrity of the data. Our innovative in-memory architecture allows customers to rapidly run alternative scenarios to understand the impact of changes in business assumptions. This functionality allows users to view and assess the impact of assumptions on plans and key performance indicators in real time. Our platform also leverages predictive analytics to produce actionable intelligence that gives our customers a competitive advantage. We are investing in artificial intelligence, including machine learning, to further enhance the predictive capabilities of our platform. Our proprietary Hyperblock technology is at the core of our platform and was purpose-built for Connected Planning. This powerful in-memory modeling engine leverages 64-bit multi-core parallel processors to deliver calculations on a massive amount of data at very high speed in real time. Our platform unites traditionally distinct or disconnected database structures, including relational, columnar, and online analytical processing, or OLAP, with in-memory data storage and calculation. Our flexible data structure enables users to easily build and modify complex multi-dimensional models in a single modeling environment, scaling to thousands of concurrent users. Together, these technologies enable flexible modeling, widespread collaboration, and rapid calculation and iteration. As a result, our platform provides insights that were previously unavailable. Table of Contents The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. Subject to Completion. Dated October 10, 2018. 15,500,000 Shares Anaplan, Inc. Common Stock This is an initial public offering of shares of common stock of Anaplan, Inc. All of the 15,500,000 shares of common stock are being sold by the company. Prior to this offering, there has been no public market for the common stock. It is currently estimated that the initial public offering price per share will be between $15.00 and $17.00. Our common stock has been approved for listing on the New York Stock Exchange under the symbol PLAN. We are an emerging growth company as defined under the federal securities laws and, as such, we have elected to comply with reduced reporting requirements for this prospectus and may elect to do so in future filings. Affiliates of Premji Invest, all of which are affiliates of certain of our existing stockholders and a member of our board of directors, have agreed to purchase up to $20 million of shares of our common stock in a private placement at a price per share equal to the initial public offering price. The shares purchased in the private placement will be subject to a lock-up agreement with the underwriters for a period of up to 180 days after the date of this prospectus. This transaction is contingent upon, and is scheduled to close concurrently with, the closing of this offering. See Risk Factors beginning on page 17 to read about factors you should consider before buying shares of the common stock. Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense. Per Share Total Initial public offering price $ $ Underwriting discount(1) $ $ Proceeds, before expenses, to Anaplan $ $ (1) See Underwriting for a description of the compensation payable to the underwriters. To the extent that the underwriters sell more than 15,500,000 shares of common stock, the underwriters have the option to purchase up to an additional 2,325,000 shares from us at the initial public offering price less the underwriting discount. The underwriters expect to deliver the shares against payment in New York, New York on , 2018. Goldman Sachs & Co. LLC Morgan Stanley Barclays KeyBanc Capital Markets Canaccord Genuity Evercore ISI JMP Securities Needham & Company Piper Jaffray SunTrust Robinson Humphrey Prospectus dated , 2018. Table of Contents We put the success of our customers at the center of our culture, strategy, and investments. As thought leaders in Connected Planning, we have developed deep domain expertise and best practices that are crucial in addressing our customers planning challenges. By aligning our thought leadership, worldwide development and delivery capabilities, and local sales and service resources, our Customer First strategy drives exceptional value throughout our customers Connected Planning journeys. We view our Customer First strategy as core to capturing our Connected Planning vision and driving continued expansion in the use of our platform. We focus our selling efforts on executives of large enterprises, who are often making a strategic purchase of our platform with the potential for broad use throughout their organizations. We use a land and expand sales strategy to capitalize on this potential. Our platform is often initially adopted within a specific line of business, including in finance, sales, and supply chain, and other corporate functions such as marketing, human resources, and operations, for one or more planning use cases. Once customers see the benefits of our platform for their initial use cases, they often increase the number of users, add new use cases, and expand to additional lines of business, divisions, and geographies. This expansion often generates a natural network effect in which the value of our platform increases as more use cases are adopted, more users are connected, and greater amounts of data are incorporated in our platform. We have been recognized for our single, enterprise-wide Connected Planning platform by Gartner in the July 2018 Magic Quadrant for Cloud Financial Planning and Analysis Solutions, the January 2018 Magic Quadrant for Sales Performance Management, the August 2018 Hype Cycle for Human Capital Management Technology, 2018, and included in the May 2018 The Gartner CRM Vendor Guide, 2018. As of July 31, 2018, 979 customers were using our platform. Of these, 220, including 23 of our top 25 customers, were members of the Global 2000, which we believe presents our greatest growth opportunity. We had 101, 148, and 196 customers that were members of the Global 2000 as of the end of fiscal 2016, 2017, and 2018, respectively. The revenue generated from our Global 2000 customers represented 56%, 54%, 55%, and 56% of our total revenue in fiscal 2016, 2017, and 2018, and the six months ended July 31, 2018, respectively. The success of our land and expand strategy is validated by the expansion we have experienced in the use of our platform by our largest customers and by our dollar-based net expansion rates. Our top 25 customers by average annual recurring revenue as of July 31, 2018, 23 of which are large enterprise customers included in the Global 2000, had average annual recurring revenue of approximately $2.3 million, compared to the average annual recurring revenue represented by their initial purchase of approximately $360,000. The revenue from these 25 customers made up 29% of our total revenue in fiscal 2018 and 26% of our total revenue in the six months ended July 31, 2018. In addition, our annual dollar-based net expansion rate for Anaplan as a whole was approximately 135%, 123%, 122%, and 123% as of the end of fiscal 2016, 2017, and 2018, and July 31, 2018, respectively. See Market, Industry, and Other Data for a description of how we calculate our dollar-based net expansion rate. The number of customers with greater than $250,000 of annual recurring revenue was 59, 113, 181, and 213 as of the end of fiscal 2016, 2017, and 2018, and July 31, 2018, respectively. While achieving and maintaining incremental sales to existing customers requires increasingly sophisticated and costly sales efforts, the introduction of new features and functionality to our platform, and customers realizing benefits through their initial adoption of our platform, we believe we have significant opportunities to further expand the use of our platform by our existing customers as well as to attract additional large customers. We sell our cloud platform primarily through our direct sales team. We also have a broad network of consulting and implementation partners to extend our customer reach and help accelerate the sale and delivery of our platform as a supplement to our direct sales force. Our global partners, including global strategic consulting firms and global systems integrators, often promote our platform as their clients examine how to plan more effectively to achieve organizational transformation or improve business Table of Contents Anaplan connects all the people, plans and data needed to accelerate business value. Coca-Cola With Anaplan, after implementing the platform in less than 12 weeks in 2017, Coca-Cola North America successfully executed to launch 70+ new products to market, all within the first quarter of 2018. The Anaplan platform connects Coca-Cola s supply chain forecasting across 67 independent bottlers in the United States. VMware With Anaplan, VMware reduced its three-month long sales territory planning process to a single day. The Anaplan platform drives sales territory planning efficiency, and provides users across the sales department with a single view of the data, so that both sales reps and managers have visibility into their accounts on the first day of each planning cycle. RSA Group With Anaplan, RSA has been able to reduce its complex planning process from five months to two months, and workforce planning has experienced a 50 percent improvement in productivity within 12 months. RSA has expanded its use of the Anaplan platform over the past four years to encompass expense planning, workforce planning in contact centers, and Group wide FP&A consolidation for monthly reporting. HP Inc. With Anaplan, HP Inc. has created a single global quota process and workflow while generating significant savings. The Anaplan platform improves its sales quota readiness cycle and territory management for 30,000 salespeople. HP Inc. is expanding their use of the Anaplan platform to support their channel quota deployment process end-to-end, including more than 200,000 partners globally. Table of Contents processes. We also partner with leading regional consulting firms and implementation partners. These highly skilled regional partners not only provide subject-matter expertise in the implementation of specific use cases, but they also act as an extension of our direct sales force by identifying and referring opportunities to us. We and our partners create pre-packaged applications that are available on our App Hub marketplace to further accelerate the adoption and expansion of our platform. In the trailing twelve months ended July 31, 2018, 41% of our total revenue was generated through leads originated from our partners, and as of July 31, 2018, we had 285 applications on App Hub. We also offer professional services, including consulting, implementation, and training, but are increasingly leveraging our partners to provide these services. This evolving model of service delivery has enabled us to reduce our services revenue from $29.1 million to $24.8 million in fiscal 2017 and 2018, respectively, while increasing subscription revenue from $91.4 million to $143.5 million during the same periods. As a result of this strategy, our subscription revenue as a percentage of total revenue increased from 76% in fiscal 2017 to 85% in fiscal 2018. Our services revenue increased from $14.0 million to $14.8 million in the six months ended July 31, 2017 and 2018, respectively, while subscription revenue increased from $63.8 million to $94.5 million during the same periods, representing a period-over-period subscription revenue growth rate of 48%. As a result of this strategy, our subscription revenue as a percentage of total revenue increased from 82% in the six months ended July 31, 2017 to 86% in the six months ended July 31, 2018. We have grown rapidly in recent periods. For fiscal 2016, 2017, and 2018, and the six months ended July 31, 2017 and 2018, our revenue was $71.5 million, $120.5 million, $168.3 million, $77.8 million, and $109.4 million, respectively, and our subscription revenue for fiscal 2016, 2017, and 2018 was $50.8 million, $91.4 million, and $143.5 million, representing a year-over-year subscription revenue growth rate of 80% and 57%, respectively. We have a strong and growing international presence with approximately 41% and 43% of our revenue generated from outside of the United States in fiscal 2018 and the six months ended July 31, 2018, respectively. No individual customer represented more than 5% of our revenue in fiscal 2018 or the six months ended July 31, 2018. For fiscal 2016, 2017, and 2018, and the six months ended July 31, 2017 and 2018, our net loss was $54.2 million, $40.2 million, $47.6 million, $16.0 million, and $47.2 million, respectively. Industry Background Existing planning processes are broken in a number of fundamental ways: Planning Has Been Centralized. Traditionally, planning has been confined to dedicated planners within the finance department. Organizations are now decentralizing decision-making by empowering departmental leaders, regional heads, and individual employees to make decisions based on the corporate strategy and business realities they observe. It has become critically important to have visibility and collaboration across the whole organization to facilitate quicker, more informed, and more effective decision-making. Planning Has Been Backward-Looking. One of the major limitations of effective planning has been its focus on the past rather than the future. Organizations have often attempted to plan and iterate future scenarios but have been constrained by their inability to incorporate current, consistent, and accurate data in a timely manner. Planning Processes Have Been Manual and Slow, Relying on Stale and Inaccurate Information. Many organizations are still using a patchwork of outdated tools, including decentralized manual processes managed through spreadsheets and other point products. These processes often rely on contradictory and stale data and cannot deliver real-time insights across organizations. Table of Contents TABLE OF CONTENTS Page Prospectus Summary 1
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index 0000000000000000000000000000000000000000..f4097f22ab8825c7195b8a485918805f924b3c45
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+PROSPECTUS SUMMARY
+
+ 
+
+This summary highlights information
+contained elsewhere in this prospectus; it does not contain all of the information you should consider before investing in our
+common stock. You should read the entire prospectus before making an investment decision.
+
+ 
+
+As used
+in this prospectus, the terms "we," "us," the "Company" and "AIM Energy" mean AIM
+Exploration Inc., and our consolidated subsidiaries. All dollar amounts refer to U.S. dollars unless otherwise indicated.
+
+ 
+
+Our Business
+
+ 
+
+We are an exploration stage company
+engaged in the acquisition and exploration of mineral properties with the intent to take properties into production. We were
+incorporated as a Nevada state corporation on February 18, 2010. We acquired mining concession properties in Peru during
+the fiscal year ended August 31, 2014.
+
+ 
+
+We are considered an exploratory
+stage company, as we are involved in the examination and investigation of land that we believe may contain valuable minerals, for
+the purpose of discovering the presence of ore, if any, and its extent. There is no assurance that a commercially viable mineral
+deposit exists on the Peruvian properties, and further exploration will be required before a final evaluation as to the economic
+and legal feasibility for our future exploration is determined. We have no known reportable reserves of any type of mineral.
+ To date, we have not discovered an economically viable mineral deposit on the property, and there is no assurance that we
+will discover one.
+
+ 
+
+As of August 31, 2017, we had
+cash reserves of $802 and a working capital deficit of $2,273,317. We do not have sufficient funds to
+enable us to complete the initial phase of our exploration programs for the mining claims, and will require additional
+financing in order to do so. There is no assurance that we will be able to obtain additional financing. Both
+advanced exploration and an economic determination will be contingent upon the results of our preliminary exploration
+programs and our ability to raise additional financing in order to proceed with advanced exploration and an economic
+evaluation. There is no assurance that we will be able to obtain any additional financing to fund our exploration
+activities. 
+
+ 
+
+Our principal executive office is
+located at 170 S Green Valley Pkwy, Suite 300 Henderson, Nevada 89012. Our telephone number is (844) 246-7378 and our internet
+address is http://www.aimexploration.com/. Unless expressly noted, none of the information on our website is part of this prospectus
+or any prospectus supplement.
+
+ 
+
+The Offering
+
+ 
+
+ Common
+stock that may be offered by selling stockholders
+ 
+ 115,000,000 shares
+
+ 
+ 
+ 
+
+ Common
+stock outstanding before the offering
+ 
+ 982,959,893
+ shares as of January 22, 2018 
+
+ 
+ 
+ 
+
+ Common
+stock outstanding after the offering
+ 
+ 1,097,959,893
+ shares (1) 
+
+ 
+ 
+ 
+
+ 5 
+
+ Table of Contents 
+
+ 
+
+ Total proceeds raised by offering
+ 
+ 
+ We will not receive any proceeds from the resale or other
+ disposition of the shares covered by this prospectus by the selling stockholder. We will receive proceeds from the sale of shares
+ to L2 Capital. L2 Capital has committed to purchase up to $5,000,000 worth of shares of our common stock over a period
+ of time terminating on the earlier of the date on which L2 Capital shall have purchased shares under the Equity Purchase Agreement
+ for an aggregate purchase price of $5,000,000 or September 11, 2020.
+
+ 
+
+ L2 Capital will pay a purchase price equal to 75% of the
+ "Market Price," which is defined as the lowest trading price on the Principal Market, as reported by Bloomberg Finance
+ L.P., during the five consecutive trading days including and immediately prior to the "Put Date," or the date on which
+ the applicable put notice is delivered to L2 Capital. The number of shares to be purchased by L2 Capital may not exceed the number
+ of shares that, when added to the number of shares of our common stock then beneficially owned by L2 Capital, would exceed 9.99%
+ of our shares of common stock outstanding.
+
+ 
+
+ For further information, see "The Offering"
+ beginning on page 14.
+
+ 
+ 
+ 
+
+ Plan of Distribution
+ 
+ The sale of shares may be at fixed or negotiated
+ prices; provided, however, until such time that our common stock is listed on a national securities exchange or is quoted
+ on the OTCQB or OTCQX Marketplace, the selling stockholder may only sell the shares at prices between $0.0005 and $0.01
+ per share. 
+
+ 
+
+ For further information, see "Plan of Distribution"
+ beginning on page 17.
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diff --git a/parsed_sections/prospectus_summary/2018/CIK0001560241_g1_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001560241_g1_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..4ef2217b0dcc2c19ffc065aa4aca92edf5d7eb8a
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@@ -0,0 +1 @@
+Prospectus summary This summary highlights selected information contained elsewhere in this prospectus and does not contain all of the information that you should consider in making your investment decision. Before investing in our common stock, you should carefully read this entire prospectus, including our financial statements and the related notes thereto and the information set forth under the Risk Factors and Management s Discussion and Analysis of Financial Condition and Results of Operations sections of this prospectus. Unless the context otherwise requires, we use the terms G1, G1 Therapeutics, Company, we, us and our in this prospectus to refer to G1 Therapeutics, Inc. Overview We are a clinical-stage biopharmaceutical company focused on the discovery, development and commercialization of novel small molecule therapeutics for the treatment of patients with cancer. Our product portfolio is built on a drug discovery platform that targets key cellular pathways with proprietary medicinal chemistry. Our therapies are designed to enable more effective combination treatment strategies and improve outcomes for patients across multiple oncology indications. Product Pipeline Our product pipeline includes several product candidates with the potential to significantly improve the treatment of patients with cancer. Our two clinical candidates, trilaciclib and G1T38, are based on our core understanding of cyclin-dependent kinases 4 and 6, or CDK4/6, a pair of proteins that play an important role in the growth and proliferation of all human cells. G1T48 is a potential first-in-class oral Selective Estrogen Receptor Degrader, or SERD, which we plan to develop as a single agent and in combination with other agents, including G1T38 for the treatment of ER-positive, or ER , HER2- breast cancer. We own the global rights to all our product candidates. G1 Therapeutics Product Pipeline Candidate Target MOA Clinical Status Global Rights trilaciclib CDK4/6 Short-acting IV CDK4/6 inhibitor Preserves HSPCs, enhances immune system function Phase 2 G1T38 CDK4/6 Oral CDK4/6 inhibitor Stops tumor proliferation and growth Phase 1/2 G1T48 Estrogen Receptor Oral Selective Estrogen Receptor Degrader (SERD) Inhibits estrogen receptor driven tumor proliferation Open IND Our CDK4/6 Inhibitor Product Candidates CDK4 and CDK6, collectively known as CDK4/6, are key cell signaling proteins that regulate cell growth and proliferation. The CDK4/6 pathway is critical for cell cycle regulation of both healthy normal cells and certain tumor cells, representing a validated and promising class of targets for anti-cancer therapeutics. An example of normal cells whose growth and proliferation are regulated by CDK4/6, are hematopoietic stem and progenitor Table of Contents cells, or HSPCs. HSPCs reside in the bone marrow and are the reservoir from which all blood and immune system cells are formed. Additionally, CDK4/6 plays an integral role in the growth and proliferation of certain types of tumors. We have leveraged our deep knowledge in CDK4/6 biology to discover and develop two highly potent and selective CDK4/6 inhibitors that may have broad applicability across multiple cancer indications. We believe we are the only company with two distinct clinical-stage CDK4/6 inhibitors, trilaciclib and G1T38, each of which has the potential to be the backbone therapy of multiple combination regimens. Our two CDK4/6 inhibitors were rationally designed to treat distinct patient populations with different combination regimens. Trilaciclib, a short-acting IV therapy, is in development for combinations with chemotherapy and chemotherapy/checkpoint inhibitor regimens. G1T38, an oral therapy, is in development for combinations with other oral targeted therapies. Trilaciclib: our novel approach to preserve HSPCs from damage by chemotherapy Trilaciclib is a potential first-in-class, short-acting CDK4/6 inhibitor which we are developing to be administered intravenously prior to chemotherapy. In preclinical studies, administration of trilaciclib prior to chemotherapy has been shown to induce transient cell-cycle arrest of HSPCs, protect HSPCs from chemotherapy-induced damage, preserve bone marrow and immune system function, protect against bone marrow exhaustion, improve complete blood counts (CBC) recovery, prevent myeloid skewing and consequent lymphopenia, and enhance T-cell effector function in the tumor microenvironment. Following evaluation of trilaciclib in a Phase 1 trial in healthy volunteers, we initiated two Phase 1b/2a trials in patients with extensive-stage small cell lung cancer (SCLC); one in a first-line setting (in combination with carboplatin/etoposide) and the other in a second-/third-line setting (in combination with topotecan). Enrollment in the open label Phase 1b portions of both trials has been completed and preliminary data were reported in 2016 and 2017; response rates and tolerability compared favorably to historical chemotherapy-only trials. Based on these encouraging preliminary data, we advanced both SCLC trials into the randomized, placebo-controlled, double-blind Phase 2a parts. Enrollment in the first-line SCLC Phase 2a trial was completed in the second quarter of 2017. On March 5, 2018, we announced positive topline data from the first-line SCLC Phase 2a trial, showing robust myelopreservation benefits. Data from this trial demonstrated that trilaciclib reduced clinically relevant consequences of chemotherapy-induced myelosuppression, when compared to placebo. The data included statistically significant results showing the benefits of trilaciclib in several prospectively defined parameters, including Grade 4 neutropenia, the use of granulocyte colony-stimulating factor, or G-CSF, as a treatment for myelosuppression, and chemotherapy dose reductions and dose delays. In addition, the data showed clinically meaningful results favoring trilaciclib compared to placebo, including febrile neutropenia, Grade 3/4 anemia, and red blood cell transfusions. Table of Contents Table of contents Page Prospectus summary 1
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diff --git a/parsed_sections/prospectus_summary/2018/CIK0001560449_phmc-inc_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001560449_phmc-inc_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..5716d63c68ccb6719e84ed6f822627188a43fc78
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@@ -0,0 +1 @@
+PROSPECTUS SUMMARY The following summary highlights selected information contained in this prospectus. This summary does not contain all the information you should consider before investing in our common stock. You should read the entire prospectus carefully, including the "Risk Factors" beginning on page 5, and our financial statements and the notes to the financial statements included elsewhere in this prospectus. As used throughout this prospectus, the terms "U-Mind ", the "Company", "we," "us," or "our" refer to U-Mind Space, Inc. General Universal Mind ("U-Mind") is a project created to take advantages of the recent prosperous advancements in Information Communication Technology ("ICT"), to create a global society of the like-minded communities. The Company calls it the "U-Mind Space." Company Information Organization U-Mind Space, Inc., a Wyoming corporation, was incorporated on March 26, 2012, under the name Orion Financial Group, Inc. ("Orion"). Orion originally sought to provide strategic financial consulting services to companies requiring advice in the area of corporate growth strategies. Additionally, Orion sought to provide financing alternatives to executives that seek to purchase (buy-side), divest (sell-side), or recapitalize their public or private company. More specifically, Orion intended to provide consulting services across industry sectors to companies that have revenues between $2.5 million and $100 million. On November 25, 2013, Orion filed Articles of Amendment with the Secretary of State of Wyoming, increasing the number of authorized shares of Common Stock from 100,000,000 to 250,000,000. Subsequently, on April 25, 2014, Orion filed Articles of Amendment with the Secretary of State of Wyoming, authorizing 5,000,000 shares of Preferred Stock, par value $0.001 per share, designated as Series A Voting Preferred Stock. On May 9, 2017, Orion filed Articles of Amendment with the Secretary of State of Wyoming, increasing the number of authorized shares of Common Stock from 250,000,000 to 255,000,000 and decreasing authorized shares of Preferred Stock from 5,000,000 to none. Between inception and August 2017, Orion had limited operations. Change of Control; U-Mind Club; Sehee Lee On August 21, 2017, Joshua Nadav, the Chief Executive Officer, Chief Financial Officer, and majority controlling stockholder of Orion, entered into a Share Purchase Agreement (the "SPA") with U-Mind Club, Inc., a California corporation ("Club"). The SPA was a result of a privately negotiated transaction and on August 31, 2017, in connection with the closing of the SPA, the control block of voting stock of Orion Financial Group, Inc., represented by Mr. Nadav's 93,522,000 shares of common stock (the "Shares") was transferred to Sehee Lee, Chairman of the Board of Directors of Club for $275,000 which resulted in a change of control of Orion. The source of the cash consideration for the Shares was corporate funds from Club. Effective upon the closing date of the SPA, Joshua Nadav resigned from his positions as President, CEO, CFO, Secretary, Treasurer, and Chairman of the Board of Directors, and released Orion from all accounts payable and loans due to related parties. Further, effective as of the same closing date, Joshua Nadav appointed Sehee Lee as Chairman of the Board of Directors and Jae Yoon Chung as President, Chief Executive Officer, Chief Financial Officer, Secretary, Treasurer and Director of Orion Financial Group, Inc. On September 12, 2017, the newly appointed board of directors adopted a resolution approving Articles of Amendment effectuating (i) a name change from Orion to U-Mind Space, Inc. ("U-Mind" or the "Company"); (ii) a decrease in the number of shares of common stock that the Company is authorized to issue from Two Hundred Fifty Five Million (255,000,000) to Two Hundred Fifty Million (250,000,000); (iii) an increase in the number of shares of Preferred Stock that the Company is authorized to issue from zero (0) to Five Million (5,000,000); (iv) a change in the par value of Common Stock from $0.001 to $0.0001; and (v) a one (1) for forty (40) reverse stock split of the Corporation's outstanding Common Stock to which every forty (40) shares of outstanding old Common Stock of the Corporation were converted into one (1) share of new Common Stock. Subsequently, on September 13, 2017, pursuant to majority stockholder consent, the Company filed Articles of Amendment with the Wyoming Secretary of State, to effectuate (i) a name change of the Corporation to U-Mind Space, Inc., (ii) a decrease in the number of shares of common stock that the Corporation is authorized to issue from Two Hundred Fifty Five Million (255,000,000) to Two Hundred Fifty Million (250,000,000), (iii) an increase in the number of shares of Preferred Stock that the Corporation is authorized to issue from none (0) to Five Million (5,000,000), (iv) a change in the par value of Common Stock from $0.001 to $0.0001 and (v) a one (1) for forty (40) reverse stock split of the Corporation's outstanding Common Stock to which every forty (40) shares of outstanding old Common Stock of the Corporation was converted into one (1) share of new Common Stock, effective September 28, 2017. Our principal executive offices are located at 3699 Wilshire Blvd., Suite 1210, Los Angeles, CA 90010, and our telephone number is 408-402-1573. Our website address is www.u-mind.space. PLEASE NOTE: The contents of our website are not part of this prospectus, and the reference to our website does not constitute incorporation by reference into this prospectus of the information contained at that site.
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2018/CIK0001563536_e-qure_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001563536_e-qure_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..1c241ac73e2139a994c41616a17ac48e1ca75ef6
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/CIK0001563536_e-qure_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights selected information contained elsewhere in this Prospectus. This summary does not contain all the information that you should consider before investing in the Common Stock. You should carefully read the entire Prospectus, including "Risk Factors", "Management s Discussion and Analysis of Financial Condition and Results of Operations" and the Financial Statements, before making an investment decision. In this Prospectus, the terms "E-Qure," "Company," "Registrant," "we," "us" and "our" refer to E-Qure Corp., a Delaware corporation. Plan We are a medical device Company planning to commercialize our Bioelectrical Signal Therapy device ("BST Device," or "Device"). Our BST Device treats wounds via electrical stimulation, which is believed to result in accelerated wound healing by imitating the natural electrical current that occurs in injured skin on the human body. Our BST Device stimulates renewed blood flow and oxygen in order to induce local cell regeneration and therefore promote wound healing. Our mission is to improve non-invasive wound care treatments and to become a leading provider of non-invasive wound and ulcer healing treatment. Our device is designed to specifically address many of the limitations associated with other invasive and non-invasive wound care devices. We believe our BST Device is a simple and effective wound heal method that can be used in and incorporated as an adjunctive therapy in wound healing. Treatment is safe, effective, and well-tolerated. Our BST Device had the Communaute Europeenne ("CE") mark which is now being renewed, and was approved to be sold in the EU market. We are in the initial clinical trial process for the purpose of obtaining approval from the United States Food and Drug Administration (the "FDA"). The Company s success is dependent upon the successful FDA clinical trial of its BST Device. The Device may need additional development and may never achieve the requisite safety and efficacy, prerequisites for FDA approval. The Company believes that the BST Device s design and procedure is safe and effective, but the path to commercial success in the US, even if FDA approval is granted, may take more time and may be more costly that we expect or for which we have sufficient resources. Our BST Device is designed to treat chronic wounds – primarily Stage III and Stage IV ulcers, which we believe comprises about 11% and 7% of all chronic wounds, respectively, and severe Stage II wounds. We plan to sell the BST Device commercially in the United States only after we receive the requisite FDA approvals, which we expect by the end of 2019. We have not generated any revenues from our BST Device to date. Our independent registered public accounting firm has expressed substantial doubt as to our ability to continue as a going concern. Summary of Risk Factors This offering involves substantial risk. Our ability to execute our strategy is also subject to certain risks. The risks described under the heading "Risk Factors" included elsewhere in this prospectus may cause us not to realize the full benefits of our business plan and strategy or may cause us to be unable to successfully execute all or part of our strategy. Some of the most significant challenges and risks include the following: We Have Limited Operating History And Face Many Of The Risks And Difficulties Frequently Encountered By Start-Up Companies. If The Clinical Trial Studies Of Our Current Patented Device Does Not Produce Results Necessary To Support Regulatory Clearance Or Approval In The United States, We Will Be Unable To Commercialize Our Device. We May Face Product Liability Claims That Could Result In Costly Litigation And Significant Liabilities. You Shareholders Who Decide Not To Participate In This Rights Offering Will Experience Dilution Of Their Ownership Interest. Our Independent Registered Public Accounting Firm Has Expressed Substantial Doubt As To Our Ability To Continue As A Going Concern. Before you invest in our Common Stock through your subscription of Units, you should carefully consider all the information in this prospectus, including matters set forth under the heading "Risk Factors." Where You Can Find Us We presently maintain our principal offices at 20 West 64th Street, Suite 39G, New York, NY 10023. Our telephone number is (972) 54 427777. Implications of Being an Emerging Growth Company We qualify as an emerging growth company as that term is used in the JOBS Act. An emerging growth company may take advantage of specified reduced reporting and other burdens that are otherwise applicable generally to public companies. These provisions include: A requirement to have only two years of audited financial statements and only two years of related MD Exemption from the auditor attestation requirement in the assessment of the emerging growth company s internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act of 2002 ("SOX"); Reduced disclosure about the emerging growth company s executive compensation arrangements; and No non-binding advisory votes on executive compensation or golden parachute arrangements. We have already taken advantage of these reduced reporting burdens in this Prospectus, which are also available to us as a smaller reporting company as defined under Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended (the "Act") for complying with new or revised accounting standards. We have elected to take advantage of the extended transition period for complying with new or revised accounting standards, which allows us to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies. As a result of this election, our financial statements contained in this Form S-1 may not be comparable to companies that comply with public company effective dates. The existing scaled executive compensation disclosure requirements for smaller reporting companies will continue to apply to our filings for so long as our Company is an emerging growth company, regardless of whether the Company remains a smaller reporting company. We could remain an emerging growth company for down to five years, or until the earliest of (i) the last day of the first fiscal year in which our annual gross revenues exceed $1 billion, (ii) the date that we become a "large accelerated filer" as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our Common Stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter, or (iii) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three year period. For more details regarding this exemption, see "Management s Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies." The Offering Common Stock offered Subject to the conditions described in this prospectus, we are distributing, at no charge to our stockholders non-transferable subscription rights for each four (4) shares of Common Stock owned at 5:00 p.m., Eastern Time, as of the Record Date as defined herein below. Each whole subscription right has the right to purchase one (1) Unit, each consisting of: (i) one (1) share of our Common Stock; (ii) a Class A Warrant exercisable for a period of 24 months to purchase &frac12; share of Common Stock; and (iii) a Callable Class B Warrant exercisable for a period of 36 months to purchase &frac12; share of Common Stock, at a price of $0.10 per Unit. Record Date 5:00 p.m., Eastern Time, September 6, 2017 Expiration of the Rights Offering The rights offering will expire at 5:00 p.m., Eastern Time, on the date that is thirty (30) days after the effectiveness of the Registration Statement registering the shares of Common Stock as well as the shares underlying the Class A and Callable Class B Warrants issuable pursuant to this Unit Rights Offering. The Unit Rights Offering is currently expected to expire at 5:00 p.m., Eastern Time, on _____ __, 2018. We may extend the expiration of the rights offering in our sole discretion. If your required subscription exercise documentation is received by the rights agent after the expiration of the Subscription Rights Offering Period, we may, in our sole discretion, choose to accept your subscription, but we shall be under no obligation to do so. Subscription Price $0.10 per each Unit, payable in cash. To be effective, any payment related to the exercise of a right must clear prior to the expiration of the rights offering. Trading Market Our Common Stock is subject to quotation on the OTCQB Market under the symbol "EQUR". Use of Proceeds We intend to use the net proceeds of this offering for general corporate purposes, including working capital, capital expenditures, as well as acquisitions and other strategic purposes. See "Use of Proceeds." Basic Subscription Right Holders of our Common Stock will receive a subscription right to purchase one (1) Unit for a price of $0.10 per Unit, for each four (4) shares of Common Stock owned as of the Record Date. The number of subscription rights you may exercise appears on your subscription rights certificate or beneficial owner election form. Over-Subscription Privilege If you exercise your basic subscription rights in full, you may also choose to purchase a number of Units that are not purchased by our other rights holders through the exercise of their basic subscription rights, subject to proration and stock ownership limitations described elsewhere. Non-Transferability of Rights The subscription rights may not be sold, transferred, assigned or given away to anyone. The subscription rights will not be listed for trading on any stock exchange or subject to quotation on any market. No Board Recommendation Our Board of Directors is not making a recommendation regarding your exercise of the subscription rights. You are urged to make your decision based on your own assessment of our business and the rights offering. Please see "Risk Factors" for a discussion of some of the risks involved in investing in our securities. Conditions/No Revocation We are not requiring a minimum subscription to complete the rights offering. All exercises of subscription rights are irrevocable, even if you later learn information that you consider to be unfavorable to the exercise of your subscription rights and even if we extend the expiration of the rights offering. You should not exercise your subscription rights unless you are certain that you wish to purchase additional Units at a subscription price of $0.10 per each whole share. U.S. Federal Income Tax Considerations We believe and intend to take the position that you generally should not recognize income or loss in connection with the receipt or exercise of subscription rights for U.S. federal income tax purposes. However, the rules applicable to the receipt and exercise of subscription rights are complicated and unclear in certain respects, and it is possible that the Internal Revenue Service ("IRS") could challenge our position. You are urged to consult your own tax advisor as to your particular tax consequences resulting from the receipt and exercise of subscription rights and the receipt, ownership and disposition of shares of our Common Stock following exercised of the Unit Subscription Rights. For further information, please see "Risk Factors - The tax treatment of the rights offering may be treated as a taxable event to you" and "Material U.S. Federal Income Tax Consequences." Extension, Amendment, Withdrawal and Termination The period for exercising your subscription rights may be extended by us in our sole discretion. We may extend the expiration date of the rights offering by giving oral or written notice to the rights agent on or before the scheduled expiration date. If we elect to extend the expiration of the rights offering, we will issue a press release announcing such extension no later than 9:00 a.m., Eastern Time, on the next business day after the most recently announced expiration date. Procedures for Exercising Rights To exercise your subscription rights, a holder of record must complete the subscription rights certificate and deliver it to the rights agent, Transfer Online, Inc., 12 SE Salmon Street, Portland, OR 97214, together with full payment for all the subscription rights and any over-subscription privilege you elect to exercise under the subscription right. A beneficial owner must complete the beneficial owner election form and deliver it to their broker, dealer, bank or nominee, together will full payment for all subscription rights and any over-subscription privilege you elect to exercise under the subscription right. You may deliver such subscription documents and payments by mail or commercial carrier. If regular mail is used for this purpose, we recommend using registered mail, properly insured, with return receipt requested or, if you are not a record holder and if you cannot deliver your subscription rights certificate to the rights agent prior to the expiration of the rights offering, you may follow the guaranteed delivery procedures described under "The Unit Rights Offering - Guaranteed Delivery Procedures." Transfer Online, Inc., 12 SE Salmon Street, Portland, OR 97214 Shares Outstanding Before the Record Date Approximately 22,237,745 shares of our Common Stock are issued and outstanding as of the Record Date of September 6, 2017. Shares Outstanding After Completion of the Rights Offering If the rights offering is fully subscribed, meaning that we issue the maximum possible number of shares of Common Stock upon exercise of the Unit Subscription Rights, we will issue an aggregate of 5,559,436 shares in connection with the rights offering in exchange for an aggregate exercise price of $555,943.60. This does not include any issuance of shares upon the exercise of any Class A and Class B Warrants, of which there can be no assurance, or the receipt of proceeds from the exercise of the subject warrants. Post rights Offering, the Company will have approximately 27,796,998 shares of Common Stock issued and outstanding, excluding any shares that may be issued upon exercise of the Class A and Class B Warrants. Risk Factors Stockholders considering making an investment by exercising subscription rights in the rights offering or by purchasing rights in the open market or otherwise should carefully read and consider the information set forth in "Risk Factors" beginning on page of this prospectus, the documents incorporated by reference herein and the risks that we have highlighted in other sections of this prospectus. (1) Based on 22,237,562 shares of Common Stock outstanding as of April __, 2018 and the date of this Prospectus.
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2018/CIK0001564824_allakos_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001564824_allakos_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/CIK0001564824_allakos_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2018/CIK0001567388_nami-corp_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001567388_nami-corp_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..43ea63eb1cae282b1ce931b64cf8be28b902f0c1
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/CIK0001567388_nami-corp_prospectus_summary.txt
@@ -0,0 +1,47 @@
+PROSPECTUS SUMMARY
+ 
+ The following summary highlights selected information from this prospectus and may not contain all the information that is important to you. To understand our business and this offering fully, you should read this entire prospectus carefully, including the financial statements and the related notes beginning on page F-1. When we refer in this prospectus to NINK, the Company, our company, we, us and our, we mean Nami Corp., a Nevada corporation. This prospectus contains forward-looking statements and information relating to the Company. See Cautionary Note Regarding Forward Looking Statements on page 14.
+ 
+ Our Company
+ 
+ The Company was incorporated in the State of Nevada on September 5, 2012. November 30th was established as the Company s fiscal year end. On July 4, 2018, our Board of Directors approved changing our fiscal year-end from November 30 to June 30 as a result of the Acquisition of SBS Mining Corp. Malaysia Sdn. Bhd. (hereinafter referred to as SBS ). We were initially created to engage in developing a built in safe with a combination lock that can store personal and/or valuable items, inside of backpacks, carry-on luggage and suitcases. Since its inception and until the acquisition of SBS, the Company was a development stage company without significant assets or revenue.
+ 
+ On October 31, 2016, a change in control of the Company occurred by virtue of the fact that our largest shareholder sold 60,750,000 shares of our common stock to our current Chairman, Ong Tee Keat, an individual residing in Malaysia, which represented 60.22% of our total issued and outstanding shares of common stock at that time. The 60,750,000 shares sold represented all of the shares of our common stock owned by such prior shareholder.
+ 
+ On October 31, 2016, we filed a Certificate of Amendment with the Nevada Secretary of State (the Nevada SOS ) whereby we amended our Articles of Incorporation by (a) increasing our authorized number of shares of common stock from 200 million to 5 billion; and (b) increasing all of our issued and outstanding shares of common stock at a ratio of seven (7) shares for every one (1) share held. Our Board of Directors approved this amendment on October 26, 2016.
+ 
+ On November 3, 2016, we filed Articles of Merger with the Nevada SOS whereby we entered into a statutory merger with our wholly-owned subsidiary, NAMI Corp. pursuant to Nevada Revised Statutes 92A.200 et. seq. The effect of such merger is that NAMI Corp. was the surviving entity and we changed our name to NAMI Corp. 
+ 
+ Acquisition of SBS 
+ 
+ On July 12, 2018, we completed a reverse acquisition transaction through a share exchange with GMCI Corp ( GMCI ), the sole SBS shareholder, whereby we acquired 100% of the outstanding common shares of SBS from GMCI in exchange for the issuance of a total of 720,802,346 shares of our common stock to GMCI, representing 102.08% of our pre-merger issued and outstanding shares of common stock. As a result of the reverse acquisition, SBS became our wholly-owned subsidiary and the former SBS Shareholder, GMCI, became our controlling stockholder. The share exchange transaction was treated as a recapitalization, with SBS as the acquirer and the Company as the acquired party for accounting purposes. Unless the context suggests otherwise, when we refer in this report to business and financial information for periods prior to the consummation of the reverse acquisition, we are referring to the business and financial information of SBS. SBS, founded on August 14, 2008, is a Malaysian corporation primarily engaged in bauxite financing, shipping, and trading activities for certain other mineral ores and mining and exploration of properties located in Malaysia.
+ 
+ Immediately prior to the Share Exchange, GMCI owned all of the issued and outstanding common stock of SBS. As a result of our acquisition of SBS, we now own all of the issued and outstanding common stock of SBS. Subsequent to the closing of the Share Exchange Agreement, we conduct our operations through our controlled consolidated subsidiary SBS. SBS is primarily engaged in mining and exploration of properties located in Malaysia.
+ 
+ On July 19, 2018, the Company was notified that the Board of GMCI deemed it to be in the best interests of GMCI and its stockholders for GMCI to approve and declare a dividend of restrictive shares of Nami to the stockholders of GMCI, on a pro rata basis, determined in accordance with the number of shares of capital stock of GMCI held by such stockholders, thereby transferring ownership of 100% of the outstanding restricted shares of Nami owned directly by GMCI to the stockholders of GMCI (collectively, the Nami Stock Dividend ). The Nami Stock Dividend was completed on August 21, 2018. 
+ 
+ 
+ 6
+ 
+ 
+ Table of Contents
+
+ 
+ JOBS Act
+ 
+ Recently the United States Congress passed the Jumpstart Our Business Startups Act of 2012 (the JOBS Act ), which provides for certain exemptions from various reporting requirements applicable to public companies that are reporting companies and are also emerging growth companies. We are an emerging growth company as defined in Section 3(a) of the Exchange Act (as amended by the JOBS Act, enacted on April 5, 2012), and we will continue to qualify as an emerging growth company until the earliest to occur of: (a) the last day of the fiscal year during which we have total annual gross revenues of $1,000,000,000 (as such amount is indexed for inflation every five years by the SEC) or more; (b) the last day of our fiscal year following the fifth anniversary of the date of the first sale of our common equity securities pursuant to an effective registration statement under the Securities Act; (c) the date on which we have, during the previous three-year period, issued more than $1,000,000,000 in non-convertible debt; or (d) the date on which we are deemed to be a large accelerated filer, as defined in Exchange Act Rule 12b 2. Therefore, we expect to continue to be an emerging growth company for the foreseeable future.
+ 
+ Generally, a registrant that registers any class of its securities under Section 12 of the Exchange Act is required to include in the second and all subsequent annual reports filed by it under the Exchange Act a management report on internal control over financial reporting and, subject to an exemption available to registrants that meet the definition of a smaller reporting company in Exchange Act Rule 12b-2, an auditor attestation report on management s assessment of internal control over financial reporting. However, for so long as we continue to qualify as an emerging growth company, we will be exempt from the requirement to include an auditor attestation report in our annual reports filed under the Exchange Act, even if we do not qualify as a smaller reporting company . In addition, as an emerging growth company, we are able to avail ourselves to the reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and to not present to our stockholders a nonbinding advisory vote on executive compensation, obtain approval of any golden parachute payments not previously approved or present the relationship between executive compensation actually paid and our financial performance. We have irrevocably elected to comply with new or revised accounting standards even though we are an emerging growth company.
+ 
+ 
+ 7
+ 
+ 
+ Table of Contents
+
+ 
+ The Offering
+ 
+ This prospectus covers shares being offered for resale by the selling stockholders, which shares were issued by us in private placements that we effected from April to September 2017 and in distribution of stock dividend that we effected in August 2018. The holders of shares of our common stock described in this paragraph are the selling stockholders under this prospectus.
+ 
+ <a name="
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2018/CIK0001569329_youngevity_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001569329_youngevity_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..73dd27fdbabee74f7969f346a455ac4d254aede2
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/CIK0001569329_youngevity_prospectus_summary.txt
@@ -0,0 +1,176 @@
+Prospectus Summary Implications of Being an Emerging
+Growth Company. 
+
+ 
+
+Investing in our securities involves risk. See
+ Risk Factors beginning on page 15 of this prospectus for a discussion of
+information that should be considered in connection with an
+investment in our securities.
+
+ 
+
+Neither
+the Securities and Exchange Commission nor any state securities
+commission has approved or disapproved of these securities or
+determined if this prospectus is truthful or complete. Any
+representation to the contrary is a criminal offense.
+
+ 
+
+ 
+
+ 
+
+Table of Contents
+
+ 
+
+ 
+
+ 
+
+ 
+
+Per Share
+
+ 
+
+ 
+
+Total
+
+ 
+
+Public
+offering price
+
+ $ 9.50 
+
+ $ 10,000,000 
+
+Selling agent s fee's (1)
+
+ $ 0.38
+ 
+
+ $ 400,000 
+
+Proceeds, before expenses, to us
+(2)(3)
+
+ $ 9.12
+ 
+
+ $9,600,000 
+
+ 
+
+ 
+
+ 
+
+(1)
+
+We have also agreed
+to reimburse the selling agent for certain expenses. In addition,
+we have agreed to issue to the selling agent warrants, to purchase
+up to 105,263 shares of our common stock equal to five percent (5.0%) of the shares of
+common stock underlying the Series B Convertible Preferred Stock
+that is sold in the offering at an exercise price of $5.70
+per share of our common stock as additional compensation, see the
+ Plan of Distribution .
+
+(2)
+
+We estimated that
+our total expenses for this offering including the 10% merchandise
+credit (which based on the average cost of sales of our products is
+estimated to be $350,000), excluding selling agent commissions,
+will be approximately $600,000.
+
+(3)
+
+Assumes that all of
+the securities offered are sold.
+
+ 
+
+ The selling agent
+is not required to sell any specific number or dollar amount of
+securities but will use best efforts to sell the maximum number of
+securities offered. All funds received from subscribers will be
+deposited in escrow in a non-interest bearing account (the
+ Escrow Account ) at Wilmington Trust, National
+Association except
+with respect to those investors who choose to invest through the
+BANQ online platform. We expect that delivery of the
+Series B Convertible Preferred Stock offered hereby against payment
+will be made on or about ________, 2018 after release of the funds
+from escrow.
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+Sole Book Running Manager
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+The date of this
+prospectus is ____________, 2018
+
+ 
+
+ 
+
+Table of Contents
+
+ 
+
+ 
+
+ 
+
+ 
+
+Table of Contents
+
+ 
+
+ 
+
+ 
+
+ 
+
+Table of Contents
+
+ 
+
+ 
+
+ 
+
+TABLE OF CONTENTS
+
+ 
+
+ 
+
+Page
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2018/CIK0001572565_indoor_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001572565_indoor_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..5dc7c42259aa8eaef86e3dca51d236764c345eaf
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/CIK0001572565_indoor_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this Prospectus and does not contain all of the information that you should consider in making your investment decision. Before investing in our securities, you should carefully read this entire Prospectus, including our financial statements and the documents to which we refer you. The following summary is qualified in its entirety by reference to the detailed information appearing elsewhere in this Registration Statement on Form S-1 (the "Registration Statement") of which this Prospectus is a part. Unless the context indicates or suggests otherwise, references to "we," "our," "us," the "Company," "Indoor Harvest," or the "Registrant" refer to Indoor Harvest Corp, a Texas corporation, and Alamo CBD, LLC, our wholly owned subsidiary. Business Overview We, under our brand name Indoor Harvest , are a technology company focused on enabling the production of bio pharma grade cannabis for research and development of true pharma grade personalized medicines. We are also a provider of advanced cultivation methods and processes for the cannabis industry. Our integrated technology platform design allows us to manipulate the environment of the plant to influence its phenotypic expression. Among other things, we are also seeking to use the proprietary technology we have developed to become a registered producer and seller under the federal Controlled Substances Act ("CSA") of pharmaceutical grade cannabis for research and targeted treatment of specific medical symptoms by third parties. We have developed a patent pending high pressure aeroponic process of growing cultivars in an air or mist environment without the use of soil or an aggregate growing medium. Aeroponic production differs from both conventional hydroponics and in-vitro (plant tissue culture) growing. Unlike hydroponics, which uses water as a growing medium and essential minerals to sustain plant growth, aeroponics is conducted by suspending plant roots in the air and spraying them with a nutrient-laden mist. Because water is used in aeroponics to transmit nutrients, it is sometimes considered a type of hydroponics. Our high pressure aeroponic process and production methods provide an ability to test the phenotypic plasticity of cannabis and to test and develop specific phenotypic response. Phenotypic plasticity refers to the changes in cannabis morphology and physiology due to its adaption to a unique environment and its impact on phytochemical production. We have also developed a significant set of industry partnerships and relationships over the last 7 years uniquely positioning us to create fully integrated facilities designs for fully controlled and automated growing environments that would include not only our patent pending high pressure aeroponic systems but also a patent pending HVAC system design, leading LED lighting technology plus controls and sensors. We, through our wholly owned subsidiary Alamo CBD, have applied to produce and dispense low-tetrahydrocannabinol ("THC") cannabis under the Texas Compassionate Use Program ("TCUP"). THC is a psychotropic cannabinoid and is the principal psychoactive constituent of cannabis. We have signed a binding Letter of Intent ("LOI") with Zoned Properties, Inc. ("Zoned Properties") outlining three independent pending agreements to complete research and development projects for licensed medical cannabis facilities to be located in Tempe, Arizona, Parachute, Colorado and Stockdale, Texas or other locations to be determined after approval of a provisional license under the TCUP. At the same time, we continue to explore other avenues of opportunity to deploy our technology in partnership with license holders in attractive jurisdictions. The Company intends to generate revenue from the manufacture or co-manufacturing and sales of pharma grade cannabis to research and development organizations through related engineering, project management, equipment leasing and technology licensing from constructed facilities in Tempe, Arizona and Parachute, Colorado and through the development and licensing of related environmental and climate recipes. Our operational expenditures are primarily related to further developing our technology, launching and completing test trials, developing research partnerships and collaborations related to perfecting precise expressions of personalized medicine and the costs related to being a fully reporting company with the SEC. The information in this prospectus is not complete and may be changed. The Selling Stockholder may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. Subject to Completion, Dated May_____, 2018 PRELIMINARY PROSPECTUS This prospectus (this "Prospectus") relates to the offer and sale of up to 5,000,000 shares of common stock, par value $0.001 of Indoor Harvest Corp, a Texas corporation, by Tangiers Global, LLC (the "Selling Stockholder" or "Tangiers"). We are registering the resale of up to 5,000,000 shares of common stock issuable under an equity line in the amount of $2,000,000 (the "Equity Line") established by the Investment Agreement, as more fully described in this Prospectus. The resale of such shares by the Selling Stockholder pursuant to this Prospectus is referred to as the "Offering." We are not selling any securities under this Prospectus and will not receive any of the proceeds from the sale of shares of common stock by the Selling Stockholder. We will, however, receive proceeds from our sale of our shares of common stock under the Equity Line to the Selling Stockholder. The Selling Stockholder is an "underwriter" within the meaning of Section 2(a)(11) of the Securities Act of 1933, as amended (the "Securities Act"). The Selling Stockholder may sell the shares of common stock described in this Prospectus in a number of different ways and at varying prices. See "Plan of Distribution" for more information about how the Selling Stockholder may sell the shares of common stock being registered pursuant to this Prospectus. We will pay the expenses incurred in registering the shares, including legal and accounting fees. See "Plan of Distribution." Our common stock is currently quoted on the OTC Market Group, Inc. s OTCQB tier under the symbol "INQD." On May 30, 2018, the last reported sale price of our common stock was $0.17. Our principal executive offices are located at 5300 East Freeway Suite A, Houston, Texas 77020. Investing in our common stock involves a high degree of risk. See "Risk Factors" beginning on page 5 of this Prospectus. Neither the Securities and Exchange Commission (the "SEC") nor any state securities commission has approved or disapproved of these securities or determined if this Prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The date of this Prospectus is ________________, 2018. Government Regulation of Cannabis The United States federal government regulates drugs through the CSA (21 U.S.C. 811), which places controlled substances, including cannabis, in a schedule. Cannabis is classified as a Schedule I drug, which is viewed as highly addictive and having no medical value. The United States Federal Drug Administration ("FDA") has not approved the sale of cannabis for any medical application. Doctors may not prescribe cannabis for medical use under federal law, however, they can recommend its use under the First Amendment. In 2010, the United States Veterans Affairs Department clarified that veterans using medicinal cannabis will not be denied services or other medications that are denied to those using illegal drugs. State legalization efforts conflict with the CSA, which makes cannabis use and possession illegal on a national level. On August 29, 2013, the U.S. Department of Justice ("DOJ") issued a memorandum ("Cole Memo") providing that where states and local governments enact laws authorizing cannabis-related use, and implement strong and effective regulatory and enforcement systems, the federal government will rely upon states and local enforcement agencies to address cannabis activity through the enforcement of their own state and local narcotics laws. The memorandum further stated that the DOJ s limited investigative and prosecutorial resources will be focused on eight priorities (the "Eight Priorities") to prevent unintended consequences of the state laws, as follows: Preventing the distribution of marijuana to minors; Preventing revenue from the sale of marijuana from going to criminal enterprises, gangs, and cartels; Preventing the diversion of marijuana from states where it is legal under state law in some form to other states; Preventing state-authorized marijuana activity from being used as a cover or pretext for the trafficking or other illegal drugs or other illegal activity; Preventing violence and the use of firearms in the cultivation and distribution of marijuana; Preventing drugged driving and the exacerbation of other adverse public health consequences associated with marijuana use; Preventing the growing of marijuana on public lands and the attendant public safety and environmental dangers posed by marijuana production on public lands, and Preventing marijuana possession or use on federal property. On December 11, 2014, the DOJ issued another memorandum about its position and enforcement protocol with regard to Indian Country, stating that the Eight Priorities in the Cole Memo would guide the United States Attorneys cannabis enforcement efforts in Indian Country. On December 16, 2014, as a component of the federal spending bill, the Obama administration enacted regulations that prohibit the DOJ from using funds to prosecute state-based legal medical cannabis programs. On January 4, 2018, the DOJ suspended the Cole Memo and replaced it with a new Memorandum titled with the subject "Marijuana Enforcement" from Attorney General Jeff Sessions which provides that each U.S. Attorney has the discretion to determine which types of cannabis-related cases should be federally prosecuted, thus ending the broad safe harbor provided under the Cole Memo. On April 9, 2018, the Food and Drug Administration requested interested persons to submit comments concerning abuse potential, actual abuse, medical usefulness, trafficking, and impact of scheduling changes on availability for medical use of Psychotropic Substances; Single Convention on Narcotic Drugs; Cannabis Plant and Resin; Extracts and Tinctures of Cannabis; Delta-9-Tetrahydrocannabinol; Stereoisomers of Tetrahydrocannabinol; Cannabidiol. These comments will be considered in preparing a response from the United States to the World Health Organization (WHO) regarding the abuse liability and diversion of these drugs. WHO will use this information to consider whether to recommend that certain international restrictions be placed on these drugs. This notice requesting comments is required by the Controlled Substances Act (the CSA). On April 13, 2018, it was announced that the Trump administration had provided assurances to Colorado Sen. Cory Gardner, that the Trump administration would support federalism-focused legislation that will allow U.S. states to decide how they want to regulate cannabis without fear of federal interference. However, there can be no assurance that this position will not change. Table of Contents Page Number Prospectus Summary 1
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. This summary does not contain all of the information that you should consider before deciding to invest in our Class A common stock. You should read this entire prospectus carefully, including the section titled "Risk Factors" and our consolidated financial statements and related notes. Our fiscal year is the 52- or 53-week period ending on the Friday nearest January 31. Our 2016 fiscal year ("fiscal 2016") ended on January 29, 2016, our 2017 fiscal year ("fiscal 2017") ended on February 3, 2017, and our 2018 fiscal year ("fiscal 2018") ended on February 2, 2018. PIVOTAL SOFTWARE, INC. We are transforming how the world builds software. Overview We provide a leading cloud-native platform that makes software development and IT operations a strategic advantage for our customers. Our cloud-native platform, Pivotal Cloud Foundry ("PCF"), accelerates and streamlines software development by reducing the complexity of building, deploying and operating new cloud-native applications and modernizing legacy applications. This enables our customers' development and IT operations teams to spend more time writing code, waste less time on mundane tasks and focus on activities that drive business value building and deploying great software. PCF customers can accelerate their adoption of a modern software development process and their business success using our platform through our complementary strategic services, Pivotal Labs ("Labs"). Enterprises across industries have adopted our platform to build, deploy and operate software, including enterprises in the automotive and transportation, industrial and business services, financial services, healthcare and insurance, technology and media, consumer and communications and government sectors. Cloud-native software is reshaping businesses across all industries, empowering enterprises to innovate at a higher velocity and become more digital, mobile, data-driven and always-connected. Cloud-native software is designed to be highly available, scalable and modular to allow for frequent iteration and feature releases. Despite the widespread availability of private and public cloud infrastructure, many organizations are burdened by legacy technologies and software development processes that prevent them from fully realizing the benefits of cloud-native software. As a result, organizations require a modern agile development process and a cloud-native platform that can be deployed on every major private and public cloud. Our offering, which includes PCF and Labs, enables organizations to build cloud-native software and compete in today's business environment. PCF accelerates and streamlines software development by reducing the complexity of building, deploying and operating modern applications. PCF integrates an expansive set of critical, modern software technologies to provide a turnkey cloud-native platform. PCF combines leading open-source software with our robust proprietary software to meet the exacting enterprise-grade requirements of large organizations, including the ability to operate and manage software across private and public cloud environments, such as Amazon Web Services, Microsoft Azure, Google Cloud Platform, VMware vSphere and OpenStack. PCF is sold on a subscription basis. Labs software development experts deliver strategic services that transfer the expertise for enterprises to accelerate their cloud-native transformation by implementing modern agile development practices. With Labs, we help customers co-develop new applications and Amendment No. 3 to FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Table of Contents transform existing ones while accelerating software development, streamlining IT operations and ultimately driving self-sustaining business transformation. Our customers realize measurable improvement in developer productivity, software quality, security, time-to-market and IT operational efficiency. Some of our larger customers have achieved substantial structural efficiencies by leveraging our platform, such as significantly improving the ratio of developers to operators toward 200:1 or greater and increasing developer productivity, as measured by the amount of time developers are able to spend writing software code or by the frequency of meaningful improvements to the software they are developing, by 50% or more. We market and sell PCF and Labs through our sales force and ecosystem partners. We leverage our mutually beneficial commercial and go-to-market relationships with Dell Technologies and VMware, Inc. ("VMware") to win new customers and to expand our customer footprint. We also work closely with large public cloud providers, including Google and Microsoft, to bring our customers' workloads to their cloud infrastructure. We have received numerous industry awards, including in 2017 the Google Cloud Technology Partner of the Year for 2016 and an Azure consumption partner of the year award from Microsoft for 2016. We intend to prioritize the growth of PCF, while leveraging our strategic services and increasingly relying on global systems integrators ("SI"), such as Accenture and Cognizant, and boutique consulting firms that are building focused practices around Pivotal technology implementation, application migration and cloud-native development. Our complementary PCF and Labs offering enables organizations to effectively build cloud-native software and compete in today's business environment. Our customers often start with smaller PCF deployments in specific groups or departments and then expand their subscriptions as they seek to deploy and manage more applications and other workloads. At the end of fiscal 2018, our trailing four-quarter dollar-based net expansion rate was 158%. Some of our customers use Labs to drive successful outcomes in their organization using our platform as they learn and adopt our modern software development practices. There is a positive correlation between customers using Labs and the expansion of their PCF subscriptions, with the differential in customers who have used Labs expanding their PCF usage 1.5x more than those who have not used Labs. Optimizing this synergy, by leveraging our Labs offering and increasingly relying on our SI partners to deliver platform-related services to our customers, is a key aspect of our overall business strategy. We are focused on subscription sales of our platform. Since announcing PCF in November 2013, our subscription customer count has grown rapidly to 319 as of the end of fiscal 2018. Our subscription revenue was $95.0 million, $150.0 million and $259.0 million for fiscal 2016, fiscal 2017 and fiscal 2018, respectively, representing year-over-year growth of 58% and 73% for our two most recent fiscal years. Our total revenue was $280.9 million, $416.3 million and $509.4 million for fiscal 2016, fiscal 2017 and fiscal 2018, respectively, representing year-over-year growth of 48% and 22% for our two most recent fiscal years. Fiscal 2018 was the first year in which subscription revenue exceeded our services revenue, and we expect that over time subscription revenue will become a larger percentage of our total revenue as customers continue to adopt PCF and as our SI partner ecosystem ramps to directly deliver strategic services to our customers. Our net loss was $282.7 million, $232.9 million and $163.5 million for fiscal 2016, fiscal 2017 and fiscal 2018, respectively. Industry Background Cloud-native software is reshaping businesses across all industries, empowering enterprises to innovate at a higher velocity and become more digital, mobile, data-driven and always-connected. Cloud-native software is designed to be highly available, scalable and modular to allow for frequent iteration and feature releases. Despite the widespread availability of private and public cloud infrastructure, many organizations are burdened by legacy technologies and software development processes that prevent them from fully realizing the benefits of cloud-native software. As a result, Pivotal Software, Inc. (Exact Name of Registrant as Specified in Its Charter) Delaware (State or Other Jurisdiction of Incorporation or Organization) 7372 (Primary Standard Industrial Classification Code Number) 94-3094578 (I.R.S. Employer Identification Number) 875 Howard Street, Fifth Floor San Francisco, California 94103 (415) 777-4868 (Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant's Principal Executive Offices) Table of Contents organizations require an agile development process and a cloud-native platform that can be deployed on every major private and public cloud. Enterprises can revolutionize their customer experiences, help create new revenue streams and improve the cost and speed of business operations by building and deploying cloud-native software. To build and deploy cloud-native software and adopt cloud infrastructure, enterprises require new technology and process. "Technology" consists of the platform and tools necessary to develop and efficiently operate cloud-native software and its associated infrastructure. "Process" refers to the development and operational processes that consistently deliver high-quality software in a culture that embraces change. Approaches to Becoming Cloud Native In order to effectively develop cloud-native software, enterprises need to recognize three fundamental imperatives: (1) the need for cloud infrastructure software optimized for continuous delivery and highly efficient IT operations, (2) the need for agile software development methodologies and (3) the need to leverage open-source software. Cloud Infrastructure Software. To drive developer and operations efficiency gains, enterprises need to (1) implement software-defined data center infrastructure, server virtualization and application containers on modern hardware, (2) develop next-generation operational software and middleware enabling IT infrastructure to become more automated and programmatic, (3) break down the traditional monolithic software architecture into "microservices," integrated development frameworks and automated releases and (4) facilitate continuous delivery, lifecycle management and monitoring. Agile Software Development Methodologies. To facilitate continuous delivery and efficient IT operations and to closely align with business objectives, enterprises need to adopt agile development and DevOps techniques to rapidly deploy and manage new software in shorter development cycles, with faster deployment frequency and more dependable releases. These techniques are increasingly becoming the modern way for enterprises to develop cloud-native software. Open Source. Some of the most innovative technologies, including application containers, big data stores, developer frameworks and machine learning libraries, are open source. Enterprises need to leverage powerful open-source software technologies. Robert Mee Chief Executive Officer Pivotal Software, Inc. 875 Howard Street, Fifth Floor San Francisco, California 94103 (415) 777-4868 (Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent For Service) Table of Contents Legacy IT Challenges: Our Opportunity Despite the availability of these cloud technology and agile process advancements, many enterprises remain deeply invested in legacy technology and process that differ significantly from cloud-native approaches to software development and operations. These enterprises are seeking to leverage private and public cloud technologies and to use cloud-native software to transform their businesses. They continue to deploy monolithic software built on custom silos of supporting infrastructure. When changes to software become necessary, many manual steps and serial reviews and approvals by different functional teams are required, which can often lead to instability and downtime. For a large enterprise with hundreds or thousands of applications and large numbers of disparate hardware components in multiple data centers, the operational challenges can be daunting as hundreds or thousands of people in operations may be required just to support a small number of developers and to keep existing applications running. This complexity can create ingrained processes and cultures that are resistant to change, given the level of investment in legacy infrastructure and inefficient IT operations, which constrain innovation and new software development initiatives. In addition to these technology challenges, many enterprises implement legacy software development approaches such as the "waterfall" process, in which software development proceeds in a strict sequence from conception to analysis, design, construction, testing, implementation and maintenance. By the time such software is ready to be released, requirements and business priorities often have changed. The waterfall process is ill-suited for software development and IT operations where the code and user requirements are constantly changing. These legacy technologies and processes have created a number of challenges, including: Protracted development cycles and low developer productivity. A Forrester study found that 72% of developers spend less than three hours a day productively writing code. Operational inefficiencies. An International Data Corporation ("IDC") survey showed that IT personnel devote over 70% of their time to routine service request approval, monitoring, troubleshooting, provisioning, security patching and configuration management. Lack of flexibility to use multiple clouds. Enterprises want the flexibility to choose between different clouds without having to rearchitect their software. However, if they deploy workloads to a single public cloud environment, they face difficulty moving those workloads to other public cloud environments. IDC expects more than 90% of enterprise IT organizations will commit to multi-cloud architectures by 2020. Integration complexity. Legacy approaches to software development and IT operations have resulted in a patchwork of third-party tools, middleware, software components and operating systems that need to be regularly integrated and maintained. Difficulty in securing legacy IT infrastructure. The silos and custom architecture found in legacy IT infrastructure are not designed to address evolving security threats. Lack of enterprise-grade platform to leverage open-source software. Given the complexity and risk in adopting, integrating and maintaining an array of open-source technologies at enterprise scale, organizations need a single, secure and stable platform in order to leverage open-source software effectively. Our Solution We provide a leading cloud-native platform that makes software development and IT operations a strategic advantage for our customers. PCF customers can accelerate their adoption of modern software development practices through Labs, our complementary strategic services. Our customers realize measurable improvement in developer productivity, software quality, security, time-to-market and IT operational efficiency. Our offering helps make developing and operating software a strategic advantage for our customers, empowering them to revolutionize their customer experiences, helping create new revenue streams and improving the speed and cost of business operations through software. Copies to: Alan F. Denenberg Sarah K. Solum Davis Polk & Wardwell LLP 1600 El Camino Real Menlo Park, California 94025 (650) 752-2000 Andrew M. Cohen General Counsel Christopher Ing Associate General Counsel Pivotal Software, Inc. 875 Howard Street, Fifth Floor San Francisco, California 94103 (415) 777-4868 Jeffrey R. Vetter James D. Evans Fenwick & West LLP 801 California Street Mountain View, California 94041 (650) 988-8500 Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement. If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act. Large accelerated filer Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company Emerging growth company If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine. Table of Contents Pivotal Customers Can Reallocate Spend from Infrastructure Operations to Software Development Together, PCF and Labs provide the technology and the process to enable the operational efficiency and developer productivity needed to develop, deploy and manage cloud-native software. PCF is a cloud-native platform that accelerates and streamlines software development by reducing the complexity of building, deploying and operating modern applications. PCF integrates an expansive set of critical, modern open-source and proprietary software technologies to provide a turnkey cloud-native platform. Our platform allows developers and IT operators to focus on activities that drive business value building and deploying great software. From our single platform, PCF enables the continuous delivery of any application to every major private and public cloud. PCF combines a set of key platform components which include: a multi-cloud orchestration foundation, an embedded operating system, a central security and credential framework, a built-in advanced container networking and security engine, a complete and scalable application middleware environment and leading application and data microservices technologies. PCF also fosters a robust ecosystem of many first- and third-party cloud services and technologies which can be accessed on our platform through Pivotal Services Marketplace (the "Marketplace"). Table of Contents The information in this prospectus is not complete and may be changed. We and the selling stockholder may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and we and the selling stockholder are not soliciting offers to buy these securities in any jurisdiction where the offer or sale is not permitted. PROSPECTUS (Subject to Completion) Issued April 18, 2018 37,000,000 Shares CLASS A COMMON STOCK Table of Contents Labs software development experts deliver strategic services that transfer the expertise for enterprises to accelerate their cloud-native transformation by implementing modern agile development practices. With Labs, we help customers co-develop new applications and transform existing ones while accelerating software development, streamlining IT operations and ultimately driving self-sustaining business transformation. Key benefits of our offering include: Enhanced developer productivity. PCF dramatically increases developer productivity by providing a standard development platform, frameworks and architectural patterns, so that developers can spend more time writing software that drives value to the business and its customers. In addition, Labs enables enterprises to evolve beyond traditional waterfall processes through co-development projects. Many of our customers have increased developer productivity by 50% or more and dramatically increased the frequency of software releases, sometimes moving from a semi-annual to a weekly (or even daily) production release cadence. Greater operational efficiency. PCF enables our customers to standardize and automate common IT processes across public and private cloud environments related to IT environment builds, software testing and release and infrastructure and application updates. Some of our larger customers have achieved substantial structural efficiencies by leveraging our platform, such as significantly improving the ratio of developers to operators toward 200:1 or greater and increasing developer productivity by 50% or more. Flexibility to run software across private, public and multi-cloud environments. PCF gives our customers a consistent developer interface for application deployment and operation across private, public and multi-cloud environments. Integrated by design. From our single platform, PCF integrates an expansive set of critical, modern open-source and proprietary software technologies to provide a turnkey cloud-native platform that enables the continuous delivery of any application to every major private and public cloud. In addition, PCF fosters a robust ecosystem integrated through our Marketplace to extend the capabilities of the platform with many first- and third-party cloud services and technologies such as data persistence, caching, messaging, continuous integration and security. Unique infrastructure-native approach to security. Our approach to security is designed to enable automatic updates to the platform without application downtime, eliminating the compromise between security and availability associated with legacy approaches to IT operations. Enterprise-grade platform. Our platform is built to meet the exacting performance, availability, security and management requirements of large organizations. We combine the latest innovations from open-source projects such as application containers, big data stores and developer frameworks with our robust proprietary software components, such as platform management and monitoring, developer experience and authentication, to form an enterprise-grade platform. We enable large enterprises to leverage the benefits of cutting-edge open-source technologies built into PCF, our enterprise-grade platform, for their mission-critical operations and applications. Competitive Strengths Our competitive strengths include: First mover in cloud-native transformations. Enterprise-grade software platform integrating open source. Blue-chip customer adoption. Large and growing PCF ecosystem. Leading cloud-native platform with strategic services. Viral adoption together with C-level focus. Pivotal Software, Inc. is offering 33,117,000 shares of its Class A common stock. The selling stockholder identified in this prospectus is offering an additional 3,883,000 shares of Class A common stock. We will not receive any proceeds from the sale of Class A common stock by the selling stockholder. This is our initial public offering, and no public market currently exists for our Class A common stock. We anticipate that the initial public offering price will be between $14.00 and $16.00 per share. We have two classes of common stock: Class A common stock and Class B common stock. The rights of the holders of the Class A common stock and Class B common stock will be identical, except with respect to voting and conversion. Each share of Class A common stock is entitled to one vote and each share of Class B common stock is entitled to ten votes. Each share of Class B common stock is convertible at the holder's option into one share of Class A common stock and will automatically convert into Class A common stock on a share-for-share basis under circumstances specified in our amended and restated certificate of incorporation in effect prior to the closing of this offering. Dell Technologies Inc. is currently our majority stockholder. Following this offering, Dell Technologies will own, indirectly through its subsidiaries (including VMware, Inc.), 175,514,272 shares of our outstanding Class B common stock, which will represent approximately 70.1% of our total outstanding shares of common stock and approximately 95.9% of our combined voting power immediately after this offering (or approximately 95.6% if the underwriters exercise their over-allotment option in full). We will be a "controlled company" within the meaning of the corporate governance rules of the New York Stock Exchange. Table of Contents Market Opportunity Our cloud-native software addresses IT spending across the rapidly growing market for public cloud workloads, sometimes referred to as Platform-as-a-service ("PaaS"), and the market for application infrastructure, middleware and development software. We believe our cloud-native platform opportunity is the aggregate of these two markets, with spending today estimated at over $50 billion. According to Gartner, spending on cloud application infrastructure services (PaaS) is expected to be $16.0 billion in 2018, growing to $29.0 billion by 2021, representing a 22% compound annual growth rate ("CAGR"). According to Gartner, spending on application infrastructure, middleware and development solutions is expected to be $43.2 billion in 2018, growing to $51.4 billion by 2021, representing a 6% CAGR. Growth Strategy Key elements of our growth strategy include our plans to: Extend technology lead of our cloud-native platform. Maintain open cloud-native platform advantage. Continue to drive new customer adoption. Expand adoption within existing customers. Continue to capitalize upon our relationships with our strategic partners. Further leverage partnerships with public cloud vendors. Continue to leverage the combined strengths of PCF and Labs to drive PCF expansion. Culture We believe our culture is unique and critical to our mission of transforming how the world builds software. Our culture reflects the learnings of our agile development roots and applies those insights to all aspects of our business. We have three core values: Do the right thing. Do what works. Be kind.
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+Table of Contents SUMMARY The following summary highlights selected information contained elsewhere in this prospectus and in the documents incorporated by reference in this prospectus and does not contain all the information you will need in making your investment decision. You should read carefully this entire prospectus and the documents incorporated by reference in this prospectus before making an investment decision, especially the information
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+CALCULATION OF REGISTRATION FEE Title of Each Class of Securities to be Registered Amount Registered (1) Proposed Maximum Offering Price Per Share (2) Proposed Maximum Aggregate Offering Price Amount of Registration Fee Common Stock, $0.0001 par value per share, issued as Commitment Shares (as defined below) 2,793,296 $ 0.11 $ 307,262.56 $ 38.26 Common Stock, $0.0001 par value per share, issuable upon conversion of the Notes (as defined below) 48,400,470 (3) $ 0.11 $ 5,324,051.70 $ 662.84 Common Stock, $0.0001 par value per share, issuable upon exercise of the November Warrant (as defined below) 7,894,737 (3) $ 0.11 $ 864,421.07 $ 108.12 Common Stock, $0.0001 par value per share, issuable upon exercise of the FA Warrant (as defined below) 560,717 (3) $ 0.11 $ 61,678.87 $ 7.68 Common Stock, $0.0001 par value per share, issuable upon exercise of the April Warrants (as defined below) 85,000,000 (3) $ 0.11 $ 9,350,000 $ 1,164.08 Total 144,649,220 $ 0.11 $ 15,911,414.20 $ 1,980.98 (1) All shares registered pursuant to this registration statement are to be offered by the Selling Security Holder. Pursuant to Rule 416 under the Securities Act of 1933, as amended (the "Securities Act"), this registration statement also covers such indeterminate number of additional shares of the registrant s Common Stock, $0.0001 par value per share, issued to prevent dilution resulting from stock splits, stock dividends or similar events. (2) Estimated solely for purposes of calculating the amount of the registration fee in accordance with Rule 457(c) under the Securities Act based on the average of the high and low sales prices of the registrant s Common Stock on the NASDAQ Capital Market on April 19, 2018, which date is within five (5) business days of the filing of this registration statement. (3) Represents shares of the registrant s Common Stock issuable upon conversion or exercise of notes and warrants to purchase shares of Common Stock, respectively. Such notes and warrants have been issued to the Selling Security Holders named in this registration statement. The registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with section 8(A) of the Securities Act or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said section 8(A), may determine. The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting offers to buy these securities in any jurisdiction where the offer or sale is not permitted. PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION DATED APRIL [__], 2018 BLACK CACTUS GLOBAL, INC. 144,649,220 Shares of Common Stock This prospectus relates to the offer and resale of up to: (i) 2,793,296 shares of our common stock, par value $0.0001 per share (the "Common Stock") issued to Bellridge Capital, L.P. ("Bellridge") as a commitment fee (the "Commitment Shares"); (ii) 48,400,470 shares of Common Stock underlying those certain Senior Secured Convertible Promissory Notes (the "Notes") issuable to Bellridge; (iii) 7,894,737 shares of Common Stock underlying that certain common stock purchase warrant (the "November Warrant") issued to Bellridge; (iv) 560,717 shares of Common Stock underlying that certain financial advisor warrant to purchase common stock (the "FA Warrant") issued to Aegis Capital Corp., the exclusive financial advisor to the Company ("Aegis"), as part of Aegis financial advisory fee; (v) 28,339,000 shares of Common Stock underlying that certain common stock purchase warrant (the "First April Warrant") issued to Bellridge; (vi) 28,330,500 shares of Common Stock underlying that certain common stock purchase warrant (the "Second April Warrant") issued to Bellridge; and (vii) 28,330,500 shares of common stock underlying that certain Common Stock purchase warrant (the "Third April Warrant"; together with the First April Warrant and the second April Warrant, the "April Warrants") issued to Bellridge. The Commitment Shares, the Notes, and the November Warrant were issued and/or will be issued to Bellridge pursuant to that that certain Securities Purchase Agreement, dated November 27, 2017, as amended by that certain Amendment to Securities Purchase Agreement, dated April 5, 2018 (collectively, the "November Purchase Agreement"), between the Company and Bellridge. The FA Warrant was issued to Aegis pursuant to that certain Financial Advisory Agreement, dated November 8, 2017 (the "FA Agreement), between the Company and Aegis. The April Warrants were issued to Bellridge pursuant to that certain Securities Purchase Agreement, dated April 5, 2018, as amended by that certain Amendment to Securities Purchase Agreement, dated April 13, 2018 (collectively, the "April Purchase Agreement"), between the Company and Bellridge. The November Warrant, the FA Warrant, and the April Warrants, are collectively referred to herein in the "Warrants". Bellridge and Aegis are collectively referred to herein as the "Selling Security Holders" and each a "Selling Security Holder". We will not receive any of the proceeds from the sale of the Common Stock by the Selling Security Holders; however, we will receive the proceeds from any warrants exercised (if not on a cashless basis) as described herein. The Selling Security Holders identified in this prospectus may offer the shares of Common Stock from time to time through public or private transactions at prevailing market prices or at privately negotiated prices. The Selling Security Holders can offer all, some or none of its shares of Common Stock, thus we have no way of determining the number of shares of Common Stock it will hold after this offering. See "Plan of Distribution." Our Common Stock is currently quoted on the OTCQB under the symbol "BLGI". On April 19, 2018, the last reported sale price of our Common Stock on the OTCQB was $0.11. We are an "emerging growth company" as the term is used in the Jumpstart Our Business Startups Act of 2012 (the "JOBS Act") and, as such, have elected to comply with certain reduced public company reporting requirements for this and future filings. Investing in our Common Stock involves a high degree of risk. You should review carefully the risks and uncertainties described under the heading "Risk Factors" beginning on page 5 of this prospectus, and under similar headings in any amendments or supplements to this prospectus. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. The date of this prospectus is _______________, 2018 TABLE OF CONTENTS Page ABOUT THIS PROSPECTUS 1 PROSPECTUS SUMMARY 2
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diff --git a/parsed_sections/prospectus_summary/2018/CIK0001576724_vilacto_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001576724_vilacto_prospectus_summary.txt
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@@ -0,0 +1 @@
+Table of Contents SUMMARY The following summary highlights selected information contained elsewhere in this prospectus and in the documents incorporated by reference in this prospectus and does not contain all the information you will need in making your investment decision. You should read carefully this entire prospectus and the documents incorporated by reference in this prospectus before making an investment decision, especially the information
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diff --git a/parsed_sections/prospectus_summary/2018/CIK0001580276_fraud_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001580276_fraud_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..7cd9c0054ba2deeea5d0df90f2a320ac8ffa5574
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. This summary does not contain all of the information you
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diff --git a/parsed_sections/prospectus_summary/2018/CIK0001582636_alzheon_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001582636_alzheon_prospectus_summary.txt
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus and does not contain all of the information that you should consider in making your investment decision. Before investing in our common stock, you should carefully read this entire prospectus, including our financial statements and the related notes thereto and the information set forth in the sections titled Risk Factors and Management s Discussion and Analysis of Financial Condition and Results of Operations. Unless the context otherwise requires, we use the terms company, we, us and our in this prospectus to refer to Alzheon, Inc. Overview We are a clinical stage biopharmaceutical company with a late-stage program in Alzheimer s disease and a discovery platform of small molecules for the inhibition of protein misfolding and aggregation in neurodegenerative disorders. Protein misfolding is an abnormal process in which a protein fails to fold in its normal configuration, rendering the protein toxic or inactive. Our goal is to develop disease modifying treatments for patients with Alzheimer s and other neurological disorders by leveraging our expertise in inhibiting protein misfolding and aggregation. Our lead product candidate, ALZ-801, is an orally administered inhibitor of beta amyloid misfolding. Beta amyloids are protein fragments that, when they misfold and aggregate with other misfolded beta amyloid monomers, form small neurotoxic aggregates, or oligomers. We believe that we are the only company developing a clinical stage small molecule with a mechanism of action designed to prevent the misfolding and aggregation of beta amyloid protein into neurotoxic oligomers. If ALZ-801 is approved, we believe it has the potential to be among the first drugs to intervene in a key underlying mechanism of Alzheimer s disease, or AD. The active ingredient of ALZ-801, tramiprosate, was evaluated in 16 clinical trials conducted by Bellus Health, Inc. (formerly Neurochem), or Bellus, including trials in AD, with over 2,000 patients. In our post hoc analyses of data from these trials, we observed promising clinical signals in a subset of patients with two copies of the APOE4 gene, or APOE4/4 homozygotes, who have greater beta amyloid burden and develop AD earlier. In October 2017, ALZ-801 was granted Fast Track designation by the U.S. Food and Drug Administration, or FDA, for the treatment of AD. To our knowledge, of the 78 product candidates currently in clinical development for AD, nine, including ALZ-801, have received Fast Track designation. We plan to commence a Phase 2b trial of ALZ-801 in the first half of 2019 in the United States and, possibly, internationally. We have commenced a Phase 1b trial of ALZ-801 in the United States in AD patients who possess one or two copies of the APOE4 gene, and we dosed the first patient in this trial in October 2018. We have designed our Phase 2b trial by applying recent advances in the understanding of the role of beta amyloid in AD, our elucidation of ALZ-801 s mechanism of action and insights into optimizing clinical trial designs for AD. APOE4/4 homozygotes have shown the highest rate of diagnostic accuracy for AD. In addition, APOE4/4 homozygotes carry a higher burden of beta amyloid, or A , oligomer pathology that plays an early role in the pathogenesis of AD and is specifically targeted by ALZ-801 s mechanism of action. Using a precision medicine approach in our Phase 2b trial, we intend to enroll APOE4/4 homozygous patients with early to mild AD. AD is a progressive neurodegenerative disorder caused by protein misfolding of beta amyloid and tau, a microtubule-associated protein in neurons, that leads to patients losing memory, cognitive and intellectual capabilities, and the ability to perform normal daily activities, resulting in the need for a full-time caretaker or nursing home placement and, ultimately, death. The cognitive loss caused by AD affects not only the patients, but it also has a profound impact on patients families and loved ones. Family members of AD patients experience enormous emotional, financial and physical strain that is associated with poorer health and well-being. Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and we are not soliciting offers to buy these securities in any state where the offer or sale is not permitted. PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION DATED NOVEMBER 1, 2018 6,000,000 Shares Common Stock ALZHEON, INC. This is a firm commitment initial public offering of 6,000,000 shares of common stock of Alzheon, Inc. No public market currently exists for our shares. We anticipate that the initial public offering price of our shares will be between $4.00 and $6.00 and for calculation purposes herein, we assume a mid-point of $5.00 per share. We have applied to list our shares of common stock for trading on the Nasdaq Capital Market under the symbol ALZH. No assurance can be given that our application will be approved. We are an emerging growth company under the Jumpstart our Business Startups Act of 2012, or JOBS Act, and, as such, may elect to comply with certain reduced public company reporting requirements for future filings. Investing in our common stock is highly speculative and involves a high degree of risk. See Risk Factors beginning on page 12 of this prospectus for a discussion of information that should be considered in connection with an investment in our common stock. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense. Per Share Total Initial public offering price $ $ Underwriting discounts and commissions(1) $ $ Proceeds to Alzheon, Inc. (before expenses) $ $ (1) Underwriting discounts and commissions do not include a non-accountable expense allowance equal to 1.0% of the public offering price payable to the underwriters. In addition, the representatives of the underwriters may, under certain circumstances, receive warrants to purchase 120,000 shares of our common stock as compensation for this offering. We refer you to Underwriting beginning on page 155 for additional information regarding underwriters compensation. We have granted the underwriters a 30-day over-allotment option to purchase up to 900,000 additional shares of common stock at the initial public offering price less underwriting discounts and commissions. The underwriters expect to deliver our shares to purchasers in the offering on or about , 2018 Joint Book-Running Managers ThinkEquity H.C. Wainwright & Co. a division of Fordham Financial Management, Inc. Co-Manager The Benchmark Company The date of this prospectus is , 2018 Table of Contents According to the Alzheimer s Association, AD affects an estimated 5.7 million people in the United States, of whom 5.5 million are over the age of 65. With the aging U.S. population, the number is expected to increase to nearly 14 million by 2050. Alzheimer s Disease International estimates the Western European dementia population at 7.5 million and worldwide dementia population at 46.8 million, of whom 60-70% have AD. The Alzheimer s Association estimates the direct costs of AD and other dementias in the United States in 2018 to be $277 billion. Despite the far-reaching effects of AD, there are no FDA-approved disease modifying treatments for these patients. Clinical trials in AD have failed for multiple reasons including misdiagnosis of AD patients, poor safety and tolerability, intervention at an inappropriate disease stage, suboptimal dose regimens and insufficient brain levels of active drug. We believe our novel mechanism of action and optimized clinical trial design have the potential to overcome these challenges. Recent Developments We conducted two separate clinical investigations using cerebrospinal fluid samples from patients with AD, Mild Cognitive Impairment, or MCI, and other dementias. Based on integrated analyses, we have discovered that the major metabolite of tramiprosate, 3-SPA, is endogenously present in the human brain. Samples from 64 drug-na ve patients with cognitive deficits and 12 patients with AD treated with tramiprosate for 78 weeks in the Phase 3 trial conducted by Bellus in North America were investigated. In addition, we conducted separate preclinical animal studies using oral and intravenous doses of tramiprosate to characterize the pharmacokinetic, or PK, properties and brain penetration of 3-SPA. We also observed in an in vitro study conducted in an independent laboratory that 3-SPA had potent anti-A oligomer activity and inhibited aggregation of A 42 into small oligomers at a 3-SPA:A 42 concentration ratio comparable to tramiprosate. We believe these data indicate that 3-SPA may constitute a protective endogenous anti-A oligomer pathway within the human brain. In the 12 patients with AD who were receiving either 100 mg or 150 mg twice a day of tramiprosate in the Phase 3 trial, the levels of 3-SPA in the cerebrospinal fluid were approximately 10-fold greater than in the 64 drug-na ve patients with AD, MCI or other dementias whose samples were acquired as part of an investigative collaboration with an academic institution. In animal studies, exogenously administered 3-SPA displayed excellent brain penetration. In summary, we believe that these integrated data indicate that after oral administration of ALZ-801, 3-SPA resulting from the metabolism of ALZ-801 penetrates into the brain and exerts a neuroprotective effect. In addition, we believe that the clinical improvements observed in APOE4 positive AD patients in the Phase 3 trials of tramiprosate conducted by Bellus can, in part, be explained by the potential therapeutic effects of increased levels of 3-SPA in the brains of these patients. Based on the safety data from clinical trials of tramiprosate and ALZ-801, it was observed that 3-SPA was well tolerated in humans, and we believe its endogenous nature helps explain the excellent brain penetration of tramiprosate. Beta Amyloid in Alzheimer s Disease Although the precise events that trigger AD are unknown, there is a large body of scientific evidence suggesting that A peptides, particularly soluble aggregated forms, or A oligomers, cause neuronal damage and cell death leading to the disease. Pathologically, AD is defined by the presence in the brain of insoluble extracellular A plaques and intracellular neurofibrillary tangles that are composed primarily of tau protein. Recent research and clinical trials support the importance of targeting amyloid oligomers early in disease progression, including the following findings: A oligomer formation begins in AD patients years before clinical signs of the disease appear. Accumulation of A oligomers in the brain correlates with AD progression. Patients with APOE4 have higher levels of A oligomers compared to non-carriers, which predisposes them to increased risk and early onset of AD. Table of Contents ALZ-801 Pill Inhibits Formation of Toxic Amyloid Oligomers, Key Driver of Alzheimer s Disease (AD) Aducanumab (Positive results in early AD P1) Toxic amyloid oligomers, fibrils & plaque Dose-dependent clinical activity; high brain edema rates [Anti-amyloid antibody] BAN2401 (Positive results in early AD P2) Toxic amyloid oligomers Clearance of large amyloid oligomers called proto-fibrils led to clinical benefit; brain edema side effects [Anti-amyloid antibody] Bapineuzumab (Negative P3) Amyloid plaque Plaque clearance from vessels associated with brain edema and microbleeds [Anti-amyloid antibody] Verubecestat Lanabecestat (Negative P3) Amyloid monomers Lowering amyloid production led to neuropsychiatric side effects [Oral beta-secretase inhibitors] Toxic amyloid oligomers AD brain Alzheon Pill ALZ-801 (Potential in early to mild AD) Toxic amyloid oligomers Inhibition of formation of small oligomers reduces neurotoxicity and cognitive decline; well tolerated [Oral small molecule] Results from clinical trials of injectable anti-amyloid antibodies BAN2401 and aducanumab that target toxic amyloid oligomers showed slowing of cognitive decline in early Alzheimer s patients. Results from Alzheimer s clinical trials of agents that don t target amyloid oligomers have failed to show clinical efficacy. Table of Contents Results from clinical trials of aducanumab in development by Biogen, Inc., or Biogen, and BAN2401 in development by Biogen and Eisai Co., Ltd., both injectable monoclonal antibodies that target A oligomers, showed reduced amyloid plaque in the brain and slowing of cognitive decline in mild AD patients. APOE4 Genotype Marker and Beta-Amyloid Pathology Apolipoprotein E plays a key role in A clearance, neuronal maintenance and repair. The APOE4 variant of the gene that codes for apolipoprotein E is the most important genetic risk factor for AD and an important biomarker for A pathology. APOE4 increases A production and decreases A clearance thereby contributing to a higher burden of neurotoxic A oligomers. Epidemiological studies and clinical trials have shown that among AD patients in North America and Europe, 50%-65% possess either one or two copies of the APOE4 gene and 10%-15% have the APOE4/4 homozygous genotype, representing at least 550,000 APOE4/4 homozygous patients in North America and 500,000 in Europe. APOE4 carriers, individuals with one or two copies of the allele, have a four to 12-fold increased risk of developing AD, and an earlier onset of disease, when compared with APOE4 non-carriers. Studies in clinically diagnosed AD patients have shown that amyloid plaque, as measured by positron emission tomography, or PET, imaging or post-mortem pathology, is present in 95% of APOE4 carriers compared with 77% of non-carriers. In subjects with MCI, a noticeable form of cognitive decline that can lead to AD, PET imaging studies have shown that approximately 80% of APOE4/4 homozygous subjects had a high rate of A accumulation by age 60, compared to approximately 50% of APOE4 heterozygous subjects, who have one copy of APOE4, and 26% of APOE4 non-carriers. In clinical trials of a potential disease modifying treatment for mild or moderate AD patients, the correlation of APOE4 with abnormal amyloid PET scans was 98% in APOE4/4 homozygotes and 88% in APOE4 heterozygotes, compared to 62% in non-carriers. These findings support the use of APOE4 genotyping as a predictive biomarker to enable identification of AD patients, reduce the potential for clinical misdiagnosis and provide a rationale for conducting clinical trials in APOE4/4 homozygotes with an inhibitor of A misfolding and A oligomer formation. Our Solution: ALZ-801, A Novel Beta Amyloid Aggregation Inhibitor Our lead product candidate, ALZ-801, is a patented, orally administered prodrug of tramiprosate that is designed to inhibit A oligomer formation. We believe ALZ-801 has the potential to be differentiated from other emerging therapies targeting AD pathology due to its novel mechanism of action, oral mode of administration and potential efficacy in a genetically-targeted population. Based on our preclinical studies with tramiprosate, we believe that chronic tramiprosate treatment exerts amyloid anti-aggregation activity that is neuroprotective and, over time, may result in a reduction in amyloid neurotoxicity, synaptic dysfunction, neuronal loss and cognitive decline. In October 2013, FB Health S.p.A., or FB Health, granted us an exclusive, worldwide (excluding Italy), sublicensable license to develop, manufacture and commercialize a group of related compounds that includes ALZ-801. FB Health obtained its rights to the patents, data and know-how that it licensed to us through an exclusive, worldwide, sublicensable license granted by BHI Limited Partnership, an affiliate of Bellus, to FB Health under a separate agreement. Our license from FB Health permits us to develop and commercialize ALZ-801 for all purposes other than the diagnosis or treatment of AA amyloidosis. We also received the exclusive right to use and reference in our regulatory submissions, preclinical and clinical data, including the data from two large Phase 3 trials conducted by Bellus in tramiprosate. Bellus conducted a Phase 3 trial of tramiprosate in AD in North America, or the North American trial, and initiated a Phase 3 trial in the European Union. Following efficacy results in the North American trial that did not meet the primary endpoints, Bellus terminated its Phase 3 clinical program for oral tramiprosate. We conducted post hoc analyses of the results from the North American trial that suggested tramiprosate had potential efficacy in Table of Contents TABLE OF CONTENTS Page PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2018/CIK0001582919_flitways_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001582919_flitways_prospectus_summary.txt
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+PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2018/CIK0001584754_atech_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001584754_atech_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad
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+PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2018/CIK0001586372_dthera_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001586372_dthera_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
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+++ b/parsed_sections/prospectus_summary/2018/CIK0001586372_dthera_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2018/CIK0001586654_american_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001586654_american_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..3dd2893ee41937af70d96deb243a7a5386eab78b
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+PROSPECTUS SUMMARY This summary highlights material information concerning our business and this offering. This summary does not contain all of the information that you should consider before making your investment decision. You should carefully read the entire prospectus and the information incorporated by reference into this prospectus, including the information presented under the section entitled Risk Factors and the financial data and related notes, before making an investment decision. This summary contains forward-looking statements that involve risks and uncertainties. Our actual results may differ significantly from future results contemplated in the forward-looking statements as a result of factors such as those set forth in Risk Factors and Cautionary Statement Regarding Forward-Looking Statements. In this prospectus, unless the context indicates otherwise, American-Swiss the Company, we, our, ours or us refer to American-Swiss Capital, Inc., a Delaware corporation. Our Company Our business is to seek under-valued distressed properties worldwide, with current focus on the European market. We propose to renovate, develop, add value, and then generate high rates of return on these investments. We have located an initial property and transaction pursuant to this business plan. Our principal office is located at 1110 Brickell Avenue, Suite 430, Miami, Florida 33131 and our telephone number is (305) 853-8178. Our corporate website address is www.as-capital.com. Information contained on, or accessible through, our website is not a part of, and is not incorporated by reference into, this prospectus. Emerging Growth Company Status We are an emerging growth company as defined in Section 2(a)(19) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the JOBS Act ). As such, we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002 (the Sarbanes-Oxley Act ), reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. We intend to take advantage of all of these exemptions. In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards, and delay compliance with new or revised accounting standards until those standards are applicable to private companies. We have elected to take advantage of the benefits of this extended transition period. We could be an emerging growth company until the last day of the first fiscal year following the fifth anniversary of our first common equity offering, although circumstances could cause us to lose that status earlier if our annual revenues exceed $1.0 billion, if we issue more than $1.0 billion in non-convertible debt in any three-year period or if we become a large accelerated filer as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the Exchange Act ). Smaller Reporting Company. We also qualify as a smaller reporting company under Rule 12b-2 of the Exchange Act, which is defined as a company with a public equity float of less than $75 million. To the extent that we remain a smaller reporting company at such time as we are no longer an emerging growth company, we will still have reduced disclosure requirements for our public filings some of which are similar to those of an emerging growth company, including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act and the reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements. The information in this Prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission becomes effective. This Prospectus is not an offer to sell these securities and we are not soliciting offers to buy these securities in any state where the offer or sale is not permitted. Subject to Completion, Dated April 4, 2018 PRELIMINARY PROSPECTUS A Minimum of 1,250,000 and a Maximum of 5,000,000 Shares of Common Stock American-Swiss Capital, Inc. Purchase Price: $1.00 per share Minimum Offering: $1,250,000 Maximum Offering: $5,000,000 This is the initial public offering of our shares of our common stock. We are offering for sale a minimum of 1,250,000 and a maximum of 5,000,000 shares of common stock at a fixed price of $1.00 per share for the duration of this offering (the Offering ). Prior to this Offering, no public market has existed for our common stock. Upon completion of this Offering, we will attempt to have the shares quoted on the OTCQB operated by the OTC Markets Group. There is no assurance that the shares will ever be quoted on the OTCQB. To be quoted on the OTCQB, a market maker must apply to make a market in our common stock. As of the date of this prospectus, we have not made any arrangement with any market makers to quote our shares. The Offering is a direct public offering being conducted on a self-underwritten, best efforts, minimum-maximum basis which means (i) we will not use the services of an underwriter and our executive officer and directors will attempt to sell the shares directly to investors; and (ii) the Offering will be terminated in the event the minimum number of subscriptions set forth herein are not received and accepted by the Company. The intended methods of communication with potential investors include, without limitation, telephone and personal contacts. Our executive officer and directors may also reach out to personal contacts such as family, friends and acquaintances and may conduct investment presentations in the form of a roadshow at various investor conferences. Our executive officer and directors will not receive commissions or any other remuneration from any sales of shares under this Offering. Until the Company has received subscriptions and payment for a minimum of 1,250,000 shares ($1,250,000) subscription proceeds will be deposited in a non-interest bearing escrow account with and held in escrow by Broadridge, as escrow agent. After closing on the minimum offering, subscription proceeds will not be deposited into the escrow account and held in escrow, but rather, will be paid directly to us. The shares will be offered for sale for a period of 180 days from the date of this prospectus, unless extended by our board of directors for a period or periods of up to an aggregate of an additional 180 days. If a minimum of 1,250,000 shares is not sold within the time period established by our board of directors, we will terminate this offering and all money received will be promptly refunded to investors without deduction. We will not charge fees on funds returned if the minimum offering is not reached. Once the minimum of 1,250,000 shares is reached, any subsequent subscription proceeds will be paid directly to us and will not be held in a segregated or escrow account. We are an emerging growth company under the Jumpstart Our Business Startups Act of 2012 (the JOBS Act ) and as such, may elect to comply with certain reduced public company reporting requirements for future filings. The purchase of the shares of common stock offered through this prospectus involves a high degree of risk. See the section of this prospectus entitled Risk Factors beginning at page 8. 1 Does not include up to 61,350 shares issuable upon conversion of certain promissory notes. See Certain Relationships and Related Transactions. THE SECURITIES BEING OFFERED ARE SPECULATIVE AND INVOLVE A HIGH DEGREE OF RISK. THEY SHOULD BE CONSIDERED ONLY BY PERSONS WHO CAN AFFORD THE LOSS OF THEIR ENTIRE INVESTMENT. SEE RISK FACTORS BEGINNING ON PAGE 8 OF THIS PROSPECTUS FOR A DISCUSSION OF INFORMATION THAT SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN OUR SECURITIES. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE WILL NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION HAS BEEN CLEARED OF COMMENTS AND IS DECLARED EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OF SALE IS NOT PERMITTED. The date of this prospectus is ____________, 2018. The Company Organization We were incorporated under the laws of the State of Delaware on July 2, 2013. Our principal office is located at 1110 Brickell Avenue, Suite 430, Miami, Florida 33131. Our telephone number is (305) 853-8178. Capitalization Our certificate of incorporation provides for the issuance of up to 100,000,000 shares of common stock, par value $0.0001, and 20,000,000 shares of preferred stock, par value $0.0001. As of the date of this prospectus there are 4,775,666 shares of our common stock issued and outstanding. No shares of preferred stock have been issued. Management Our Chief Executive Officer, Secretary and Treasurer is John Karatzaferis. Mr. Karatzaferis and Robert Sultani serve as our Board of Directors. Dividend policy We have never paid cash dividends on our common stock and we do not anticipate paying any cash dividends in the foreseeable future. See Dividend Policy. Going concern Management has expressed substantial doubt about our ability to continue as a going concern given our lack of operating history and the fact that to date we have had no revenues. Potential investors should be aware that there are difficulties associated with being a new venture, and the high rate of failure associated with this fact. We have an accumulated deficit of $425,253 at December 31, 2017 and have had no revenues to date. Our future is dependent upon our ability to obtain financing and upon future profitable operations. These factors raise substantial doubt that we will be able to continue as a going concern. Our business We were originally incorporated in July 2013 under the name Rock Run Acquisition Corporation for the purpose of engaging in any lawful corporate undertaking, including, but not limited to, selected mergers and acquisitions. In March 2015, a group of investors effected a change of control, changed the name of the Company to American-Swiss Capital, Inc. and John Karatzaferis as appointed the sole officer and director of the Company. We have decided to seek undervalued distressed properties and are currently focusing on the European market. In February 2017, we entered into an agreement to acquire an apartment complex in Tivat, Montenegro, by acquiring its owner, Indego D.O.O. Tivat, a Montenegro company ( Indego ). We have negotiated with the bank that owns the mortgage on the property to restructure the debt from approximately $4.8 million to approximately $1.9 million. The proceeds from this Offering will be used to pay the restructured debt. We also have an opportunity to acquire land on the Tivat Bay in Montenegro, for the purpose of building villas in a gated community development (the Kovac Gated Community ). Use of proceeds We expect to receive proceeds from our direct public offering of a minimum of $1,250,000 and a maximum of $5,000,000, based upon a public offering price of $1.00 per share of common stock. We intend to use the net proceeds for the following purposes in the following order: (a) first towards the fees and expenses associated with this offering of up to $85,000, including legal, auditing, accounting, escrow agent, transfer agent, financial printer and other professional fees; (b) the next $153,000 to repay notes to related parties; (c) the next $1,000,000 to purchase the land for the Kovac Gated Community; (d) the next $676,000 for roads and infrastructure, the construction and furnishing of a prototype villa, and marketing costs for the Kovac Gated Community project; (e) the next $1,920,000 toward the satisfaction of debt owed on the real estate property owned by Indego; and the balance of capital raised toward additional working capital and general corporate purposes. See Use of Proceeds. Risk factors See Risk Factors beginning on page 8 of this prospectus for a discussion of some of the factors you should carefully consider before deciding to invest in our common stock.
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2018/CIK0001587221_zosano_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001587221_zosano_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/CIK0001587221_zosano_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2018/CIK0001593772_sarvik_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001593772_sarvik_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..f480110f718edb41f02ac8b9aa72f0d76c8c5aac
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/CIK0001593772_sarvik_prospectus_summary.txt
@@ -0,0 +1,61 @@
+PROSPECTUS SUMMARY
+ 
+ AS USED IN THIS PROSPECTUS, UNLESS THE CONTEXT OTHERWISE REQUIRES, WE, US, OUR, AND SARVIK CORP. REFERS TO SARVIK CORP. THE FOLLOWING SUMMARY IS NOT COMPLETE AND DOES NOT CONTAIN ALL OF THE INFORMATION THAT MAY BE IMPORTANT TO YOU. YOU SHOULD READ THE ENTIRE PROSPECTUS BEFORE MAKING AN INVESTMENT DECISION TO PURCHASE OUR COMMON STOCK.
+ 
+ SARVIK CORP.
+ 
+ We are a development stage company which is in the business of event organizing and promoting. Being a development stage company, we have no revenues and have no operating history. SARVIK CORP. was incorporated in Nevada on August 28, 2013. Our principal executive office is located at 4952 S. Rainbow Blvd. #255 Las Vegas, NV, 89118, United States. Our phone number is: 702-475-5770. We intend to use the net proceeds from this offering to develop our business operations (See Description of Business and Use of Proceeds ). We are in the business of organizing events and promoting. To date, we have not yet organized any parties or events anywhere. Most of our revenue would come from selling entrance tickets to the events that we will be organizing in Estonia. . Until our operations expand, our sole officer and director has agreed to spend only an hour per day on our business.
+ From inception until the date of this filing, we have not started any substantial operating activities. Our financial statements from inception (August 28, 2013) through May 31, 2018, reports $9,990 of revenues and a net loss of $18,425. As of May 31, 2018 the company had $4,175 of cash in hand, we estimate our monthly burnout rate to be around $560, therefore we would run out of funds without the addition of capital by December 31, 2018. 
+ SARVIK CORP. anticipates that it will derive its income from organizing events and promoting. We plan to organize events such as music/dance, night clubbing events by hiring DJs, performers and bands. To promote such events, we need to locate the venues, hire the DJs, make sure all the venue s equipments are operational, create and print the advertisement banners, flyers and tickets, supervise the event, return the rental equipment, if we rent any, pay the salaries and review the accounting.
+ We do not anticipate earning revenues until we enter into commercial operation. Since we are presently in the development stage of our business, we cannot provide any assurance that we will be able to successfully organize and promote any events related to our planned activities; and the likelihood of finding an investor or receiving advances from our director is close to nil.
+ Also, our sole officer and director, Mr. Karamkov, has been working as a promoter and engaged in activities similar to those conducted by us. Potential conflict of interest may arise in future that may cause our business to fail, including conflict of interest in allocating Mr. Karamkov s time to our company as well as additional conflict of interests over determining to who a particular business opportunity should be presented.
+ As of the date of this prospectus, there is no public trading market for our common stock and no assurance that a trading market for our securities will ever develop.
+ 
+ Sarvik Corp. is an Emerging Growth Company as defined in the Jumpstart Our Business Start-ups Act.
+ 
+ We shall continue to be deemed an emerging growth company until the earliest of: 
+ (A) the last day of the fiscal year of the issuer during which it had total annual gross revenues of $1,000,000,000 (as such amount is indexed for inflation every 5 years by the Commission to reflect the change in 
+ Page | 6
+ the Consumer Price Index for All Urban Consumers published by the Bureau of Labor Statistics, setting the threshold to the nearest 1,000,000) or more; 
+ (B) the last day of the fiscal year of the issuer following the fifth anniversary of the date of the first sale of common equity securities of the issuer pursuant to an effective registration statement under this title; 
+ (C) the date on which such issuer has, during the previous 3-year period, issued more than $1,000,000,000 in non-convertible debt; or 
+ (D) the date on which such issuer is deemed to be a large accelerated filer , as defined in section 240.12b-2 of title 17, Code of Federal Regulations, or any successor thereto.
+ 
+ As an emerging growth company we are exempt from Section 404(b) of Sarbanes Oxley. Section 404(a) requires Issuers to publish information in their annual reports concerning the scope and adequacy of the internal control structure and procedures for financial reporting. This statement shall also assess the effectiveness of such internal controls and procedures. 
+ Section 404(b) requires that the registered accounting firm shall, in the same report, attest to and report on the assessment on the effectiveness of the internal control structure and procedures for financial reporting. 
+ As an emerging growth company we are exempt from Section 14A and B of the Securities Exchange Act of 1934 which require the shareholder approval of executive compensation and golden parachutes. 
+ 
+ We have irrevocably opted out of the extended transition period for complying with new or revised accounting standards pursuant to Section 107(b) of the Act.
+ 
+ THE OFFERING
+ 
+ The Issuer:
+ 
+ SARVIK CORP.
+
+ Securities Being Offered:
+ 
+ 5,000,000 shares of common stock
+
+ Price Per Share:
+ 
+ $0.02
+
+ Duration of the Offering:
+ 
+ The offering shall terminate on the earlier of:
+ (i) the date when the sale of all 5,000,000 common shares is completed;
+ (ii) one year from the date of this prospectus; or
+ (iii) prior to one year at the sole determination of the board of directors.
+ 
+
+ Net Proceeds
+ 
+ $100,000
+
+ Securities Issued and Outstanding:
+ There are 5,000,000 shares of common stock issued and outstanding as of the date of this prospectus, held solely by our President, Secretary, Jevgeni Karamkov
+ 
+
+ Registration Costs
+ We estimate our total offering registration costs to be approximately $9,000.
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2018/CIK0001593812_vaulted_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001593812_vaulted_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..1f040484eda3b7a629bc76cb2caf12ba621772a3
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/CIK0001593812_vaulted_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY The following is a summary of information pertaining to the Trust and does not contain all of the information about the Trust that may be important to you. Before making an investment decision about the Gold Deposit Receipts, you should read this entire prospectus carefully, including Risk Factors beginning on page 7 as well as our filings incorporated by reference herein to which we have referred you in the sections Where You Can Find Additional Information and Information Incorporated by Reference. Overview The Vaulted Gold Bullion Trust (the Trust ) was initially formed on December 10, 2013. The Trust is governed by the Second Amended and Restated Depositary Trust Agreement, dated May 11, 2017 by and among The Bank of New York Mellon, as trustee, BNY Trust of Delaware, as Delaware trustee, Bank of Montreal, as initial depositor, and BMO Capital Markets Corp., as underwriter, as amended from time to time (the Depositary Trust Agreement ). The Trust has no assets or liabilities. The Trust is not a registered investment company under the 1940 Act. At all times, the Trust holds a fixed quantity of unencumbered, allocated, physical gold bullion ( Gold Bullion ) that corresponds to the outstanding Gold Deposit Receipts. The Gold Bullion is held for the benefit of holders of Gold Deposit Receipts in an account operated by Bank of Montreal at the Royal Canadian Mint (the Mint ). One troy ounce of Gold Bullion corresponds to each Gold Deposit Receipt as specified under
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2018/CIK0001599947_terraform_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001599947_terraform_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/CIK0001599947_terraform_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2018/CIK0001603756_axonics_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001603756_axonics_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/CIK0001603756_axonics_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2018/CIK0001604643_evoqua_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001604643_evoqua_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/CIK0001604643_evoqua_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2018/CIK0001607549_applied_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001607549_applied_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..f59c9e90fb2f452408b51b3262f7a3a63c9bbac3
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/CIK0001607549_applied_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary 5
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2018/CIK0001607721_arazu-inc_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001607721_arazu-inc_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..f7bb1a78c55137ba965e1be60764cc44b684fbbe
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/CIK0001607721_arazu-inc_prospectus_summary.txt
@@ -0,0 +1,810 @@
+PROSPECTUS
+SUMMARY
+
+ 
+
+This summary
+highlights some of the information in this prospectus. It is not complete and may not contain all of the information that you may
+want to consider. You should read carefully the more detailed information set forth under "Risk Factors" and the other
+information included in this prospectus. Except where the context suggests otherwise, the terms "we," "us,"
+"our," "Arazu" and the "Company" refer to Arazu Incorporated. We refer in this prospectus to
+our executive officers and other members of our management team, collectively, as "Management."
+
+ 
+
+Company Organization
+
+ 
+
+Arazu Incorporated,
+a Florida corporation, was formed on March 3, 2014, by our sole officer and director, Paul Clewlow, to market and distribute motorcycle
+parts in the U.S. for ExactRep Limited, a designer and creator of aftermarket motorcycle parts located in the United Kingdom. We
+sell ExactRep parts and accessories designed to make aesthetic modifications for motorcycle enthusiasts seeking to customize their
+bikes. Our business office and mailing address is The Office, 23 Barton Road, Market Bosworth, Warwickshire, England CV13 0LQ U.K.,
+and our telephone number is 01455-290363. Our website is www.arazuinc.com and is not part of this prospectus.
+
+ 
+
+Business
+
+ 
+
+Our operations to
+date have been devoted primarily to start-up and development activities, which include: (i) founding the company; (ii) developing
+our business plan; (iii) identifying our portfolio of motorcycle related aftermarket products; (iv) entering into an agreement
+with ExactRep Limited to become the exclusive distributor of their parts in the U.S.; and (v) creating the U.S. branding campaign
+for the ExactRep products we will sell.
+
+ 
+
+Initially, the Company s
+sole executive officer Paul Clewlow who resides in the United Kingdom, will manage the Company s day-to-day operations which
+initially will be primarily online. In addition, the Company will utilize the services of (4) part-time employees and various contractors
+who assist Mr. Clewlow in the United States and the United Kingdom.
+
+ 
+
+During the fiscal
+years ending April 30, 2017 and 2016, we had limited operating activities. Also during the fiscal years ending April 30, 2017 and
+2016, we had revenues of $8,694 and $9,035, respectively. For the fiscal years ended April 30, 2017 and 2016, we had a net loss
+of $147,934 and $127,631, respectively.
+
+ 
+
+We believe that
+our capital resources are insufficient for ongoing operations, with minimal current cash reserves, particularly given the resources
+necessary to expand our business. We will likely require considerable amounts of financing to make any significant advancement
+in our business strategy. There is presently no agreement in place that will guarantee financing for our Company, and we cannot
+assure you that we will be able to raise any additional funds, or that such funds will be available on acceptable terms. Funds
+raised through future equity financing will likely be substantially dilutive to current shareholders. Lack of additional funds
+will materially affect our Company and our business, and may cause us to substantially curtail or even cease operations. Consequently,
+you could incur a loss of your entire investment in the Company. Since inception, our monthly burn rate has been approximately
+$8,500 per month. Upon approval of this registration statement, and as we further implement our business plan, we estimate our
+burn rate will significantly increase to approximately $35,000 per month. The increase in our burn rate is expected to be due to
+increased regulatory compliance costs, and operations and marketing costs associated with the further implementation of our business
+plan. We estimate that without related party loans or sales of the Company s securities to fund operations, existing cash
+and cash equivalents are insufficient to fund current operations beyond April 30, 2018.
+
+ 
+
+Neither management
+nor our shareholders have had preliminary contact or discussions with, nor do we have any present plans, proposals, arrangements
+or understandings with, any representatives of the owners of any business or company regarding the possibility of an acquisition
+or merger, change of control, or similar transaction.
+
+ 
+
+ 2 
+
+ Table of Contents 
+
+ 
+
+ 
+
+Emerging Growth Company
+
+ 
+
+We are an emerging
+growth company under the JOBS Act. We shall continue to be deemed an emerging growth company until the earliest of:
+
+ 
+
+ 
+ 
+ The last day of the fiscal year of the issuer during which it had total annual gross revenues of $1,000,000,000 (as such amount is indexed for inflation every 5 years by the Commission to reflect the change in the Consumer Price Index for All Urban Consumers published by the Bureau of Labor Statistics, setting the threshold to the nearest 1,000,000) or more;
+
+ 
+
+ 
+ 
+ The last day of the fiscal year of the issuer following the fifth anniversary of the date of the first sale of common equity securities of the issuer pursuant to an effective IPO registration statement;
+
+ 
+
+ 
+ 
+ The date on which such issuer has, during the previous 3-year period, issued more than $1,000,000,000 in non-convertible debt; or
+
+ 
+
+ 
+ 
+ The date on which such issuer is deemed to be a , ' ': large accelerated filer , as defined in section 240.12b-2 of title 17, Code of Federal Regulations, or any successor thereto.
+
+ 
+
+As an emerging growth
+company we are exempt from Section 404(b) of Sarbanes Oxley. Section 404(a) requires Issuers to publish information in their annual
+reports concerning the scope and adequacy of the internal control structure and procedures for financial reporting. This statement
+shall also assess the effectiveness of such internal controls and procedures. Section 404(b) requires that the registered accounting
+firm shall, in the same report, attest to and report on the assessment and the effectiveness of the internal control structure
+and procedures for financial reporting.
+
+ 
+
+As an emerging growth
+company we are also exempt from Section 14A (a) and (b) of the Securities Exchange Act of 1934 which require the shareholder approval
+of executive compensation and golden parachutes. These exemptions are also available to us as a Smaller Reporting Company.
+
+ 
+
+The Offering
+
+ 
+
+As of the date of
+this prospectus we had 31,209,000 shares of common stock outstanding.
+
+ 
+
+Selling
+shareholders are offering up to 11,209,000 shares of common stock. Our selling shareholders will sell their shares at the price
+of $0.05 per share until the price of our shares is quoted on the OTCQB marketplace or on the OTC Bulletin Board, and thereafter
+at prevailing market prices or privately negotiated prices.
+
+ 
+
+We will pay all
+expenses of registering the securities, estimated at approximately $48,000. We will not receive any proceeds of the sale of these
+securities.
+
+ 
+
+To be quoted on
+OTCQB marketplace or on the OTC Bulletin Board, a market maker must file an application on our behalf in order to make a market
+for our common stock. The current absence of a public market for our common stock may make it more difficult for you to sell shares
+of our common stock that you own.
+
+ 
+
+ 3 
+
+ Table of Contents 
+
+ 
+
+ 
+
+Financial Summary
+
+ 
+
+The tables and information
+below are derived from our audited financial statements for the fiscal years ended April 30, 2017 and 2016, and unaudited financial
+statements for the six months ended October 31, 2017 and 2016. Our working capital as of April 30, 2017 and 2016
+was a deficit of $408,512 and $283,078, respectively. As of April 30, 2017 we had cash on hand of $157.
+
+ 
+ 
+ 
+ At 
+
+ April 30, 2017
+
+ Audited
+
+ 
+ 
+ At 
+
+ April 30, 2016
+
+ Audited
+
+ 
+ 
+ At
+
+ January 31, 2018
+
+ Unaudited
+
+ Financial Summary
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Cash
+ 
+ $
+ 157
+ 
+ 
+ $
+ 348
+ 
+ 
+ $
+ 2,121
+ 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Total Assets
+ 
+ $
+ 157
+ 
+ 
+ $
+ 348
+ 
+ 
+ $
+ 2,121
+ 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Total Liabilities
+ 
+ $
+ 408,669
+ 
+ 
+ $
+ 283,426
+ 
+ 
+ $
+ 730,509
+ 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Total Stockholders Equity (Deficit)
+ 
+ $
+ (408,512)
+ 
+ 
+ $
+ (283,078)
+ 
+ 
+ $
+ (728,388)
+ 
+
+ 
+
+ 
+ 
+ 
+ Year Ended
+
+ April 30, 2017
+
+ Audited
+
+ 
+ 
+ Year Ended
+
+ April 30, 2016
+
+ Audited
+
+ 
+ 
+ Nine Months Ended 
+
+ January 31, 2018
+
+ Unaudited
+
+ Statement of Operations
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Revenue
+ 
+ $
+ 8,694
+ 
+ 
+ $
+ 9,035
+ 
+ 
+ $
+ 9,661
+ 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Cost of Sales and Operating Expenses
+ 
+ $
+ 150,825
+ 
+ 
+ $
+ 133,249
+ 
+ 
+ $
+ 400,192
+ 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Net Loss for the Period
+ 
+ $
+ 147,934
+ 
+ 
+ $
+ 127,631
+ 
+ 
+ $
+ 430,126
+ 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Net Loss per Common Share
+ 
+ $
+ (0.01)
+ 
+ 
+ $
+ (0.01)
+ 
+ 
+ $
+ (0.01)
+ 
+
+ 
+
+ 
+
+RISK
+FACTORS
+
+ 
+
+An investment
+in our securities involves certain risks relating to our business and operations. You should carefully consider these risks, together
+with all of the other information included in this prospectus, before you decide whether to purchase shares of our Company. If
+any of the following risks actually occur, our business, financial condition or results of operations could be materially adversely
+affected. If that happens, the trading price of our common stock could decline and you may lose all or part of your investment.
+
+ 
+
+Risks Related to Our Business
+
+ 
+
+Our auditors
+have expressed substantial doubt about our ability to continue as a going concern.
+
+ 
+
+Our audited financial
+statements for the fiscal years ended April 30, 2017 and 2016 were prepared assuming that we will continue our operations as a
+going concern. We do not, however, have a history of operating profitably. Consequently, our independent accountants in their audit
+report have expressed substantial doubt about our ability to continue as a going concern. Our continued operations are highly dependent
+upon our ability to increase revenues, decrease operating costs, and complete equity and/or debt financings. Such financings may
+not be available or may not be available on reasonable terms. Our financial statements do not include any adjustments that may
+result from the outcome of this uncertainty. We estimate that we will not be able to continue as a going concern after December
+31, 2018 unless we are able to secure capital from one of these sources of financing. If we are unable to secure such financing,
+we may cease operations and investors in our common stock could lose all of their investment.
+
+ 4 
+
+ Table of Contents 
+
+ 
+
+ 
+
+We have not
+voluntarily implemented various corporate governance measures, in the absence of which, shareholders may have more limited protections
+against interested director transactions, conflicts of interest and similar matters.
+
+ 
+
+Federal legislation,
+including the Sarbanes-Oxley Act of 2002, has resulted in the adoption of various corporate governance measures designed to promote
+the integrity of the corporate management and the securities markets. Some of these measures have been adopted in response to legal
+requirements. Others have been adopted by companies in response to the requirements of national securities exchanges, such as the
+NYSE or the Nasdaq Stock Market, on which their securities are listed. Among the corporate governance measures that are required
+under the rules of national securities exchanges are those that address board of directors' independence, and audit committee oversight.
+We have not yet adopted any of these corporate governance measures and, since our securities are not yet listed on a national securities
+exchange, we are not required to do so. It is possible that if we were to adopt some or all of these corporate governance measures,
+stockholders would benefit from somewhat greater assurances that internal corporate decisions were being made by disinterested
+directors and that policies had been implemented to define responsible conduct. Prospective investors should bear in mind our current
+lack of corporate governance measures in formulating their investment decisions.
+
+ 
+
+We are an
+"emerging growth company," and we cannot be certain if the reduced reporting requirements applicable to emerging growth
+companies will make our common stock less attractive to investors.
+
+ 
+
+We are an "emerging
+growth company," as defined in the Jumpstart Our Business Startups Act, or the JOBS Act. For as long as we continue to be
+an emerging growth company, we may take advantage of exemptions from various reporting requirements that are applicable to other
+public companies that are not emerging growth companies, including not being required to comply with the auditor attestation requirements
+of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports
+and proxy statements and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder
+approval of any golden parachute payments not previously approved. We could be an emerging growth company for up to five years,
+although we could lose that status sooner if our revenues exceed $1,000,000,000, if we issue more than $1,000,000,000 in non-convertible
+debt in a three year period, or if the market value of our common stock held by non-affiliates exceeds $100,000,000 as of any June
+30 before that time, in which case we would no longer be an emerging growth company as of the following June 30. We cannot predict
+if investors will find our common stock less attractive because we may rely on these exemptions. If some investors find our common
+stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more
+volatile.
+
+ 
+
+We have elected
+to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(2) of the Jobs
+Act, that allows us to delay the adoption of new or revised accounting standards that have different effective dates for public
+and private companies until those standards apply to private companies. As a result of this election, our financial statements
+may not be comparable to companies that comply with public company effective dates.
+
+ 
+
+If we are
+unable to retain our staff, our business and results of operations could be harmed. 
+
+ 
+
+Our ability to compete
+with other motorcycle parts distributors, and develop our business is largely dependent on the services of Paul Clewlow, our Chief
+Executive Officer, and other employees and contractors which assist him in management and operation of the business. If we are
+unable to retain Mr. Clewlow services and to attract other qualified senior management and key personnel on terms satisfactory
+to us, our business will be adversely affected. We do not have key man life insurance covering the life of Mr. Clewlow and, even
+if we are able to afford such a key man policy, our coverage levels may not be sufficient to offset any losses we may suffer as
+a result of Mr. Clewlow death, disability, or other inability to perform services for us.
+
+ 
+
+ 5 
+
+ Table of Contents 
+
+ 
+
+ 
+
+There are
+significant operational and logistical risks associated with our primary operations being in the United States, and our sole executive
+officer Paul Clewlow residing in the United Kingdom. 
+
+ 
+
+The Company s
+sole executive officer Paul Clewlow resides in the United Kingdom. However, the bulk of the Company s operations, though
+primarily online, will be in the United States market. Management and expansion of our business will be subject to risks associated
+with the Company s management abroad.
+
+ 
+
+Some of the challenges
+to managing the Company abroad will be:
+
+ 
+
+ Managing and staffing
+operations;
+
+ 
+
+ Adapting the Company s
+online platform to meet the changing needs of the marketplace including varying levels of Internet, e-commerce and mobile technology
+adoption and infrastructure;
+
+ 
+
+ Complying with United
+States regulatory standards, including those related to the use of personal information in the United States; 
+
+ 
+
+ Protecting the Company
+from and resolving fraudulent transactions; and
+
+ 
+
+ Enforcing contracts and
+intellectual property rights in the United States; and.
+
+ 
+
+ Expanding the Company s
+market presence in the United States. 
+
+ 
+
+Failure of Paul
+Clewlow to effectively manage abroad all aspects of the Company, could have a material adverse effect on our results of operations
+and financial condition, and future growth prospects could be harmed.
+
+ 
+
+Because Arazu
+Incorporated s principle office is located in the London, England, and Paul Clewlow, the Company s sole executive officer
+and director resides in London, England, it may be difficult for you to effect service of process on either the Company or Paul
+Clewlow, or to enforce any judgment you may receive against them from a U.S. court. In addition, any judgment against the Company
+obtained in the England, would be in British pounds exposing you to exchange rate risk.
+
+ 
+
+Arazu Incorporated,
+a Florida corporation s principle office is located at The Office, 23 Barton Road, Market Bosworth, Warwickshire, England
+CV13 0LQ. Additionally, Paul Clewlow, the Company s sole executive officer and director resides in London, England. All or
+a substantial portion of the Company s assets may be located outside the United States. As a result, it may be difficult
+for investors to effect service of process within the United States upon Mr. Clewlow or the Company or to enforce in United States
+courts judgments obtained against Mr. Clewlow or the Company in United States courts and predicated upon the civil liability provisions
+of the United States federal securities laws. In addition, any judgment against the Company, obtained in England, would be in British
+pounds exposing you to exchange rate risk.
+
+ 
+
+In addition, the
+Company has been advised by counsel, that there is doubt as to (i) the enforceability, in original actions in the English courts,
+of liabilities predicated solely upon the United States federal securities laws and (ii) the enforceability in English courts of
+judgments of United States courts obtained in actions predicated upon the civil liability provisions of the United States federal
+securities laws.
+
+ 
+
+Paul Clewlow,
+our sole officer and director has conflicts of interest arising from his relationship with ExactRep, our sole source of revenues,
+which may not be resolved in our favor.
+
+ 
+
+Our sole source
+of revenue is from our agreement with ExactRep, a company that has employed the accounting services of our sole officer and director
+Paul Clewlow. Accordingly, the personal interests of Mr. Clewlow may come into conflict with our interests and those of our minority
+stockholders. Mr. Clewlow, personally, may be presented with certain business opportunities through his relationship with ExactRep,
+which could simultaneously benefit the Company. Additionally, we may compete with ExactRep for technical resources, personnel,
+and other things. You should carefully consider these potential conflicts of interest before deciding whether to invest in shares
+of our common stock. We have not yet adopted a policy for resolving such conflicts of interests.
+
+ 6 
+
+ Table of Contents 
+
+ 
+
+ 
+
+We may acquire
+businesses and enter into joint ventures that will expose us to increased operating risks. 
+
+ 
+
+As part of our growth
+strategy, we intend to acquire other motorcycle parts distributors. We cannot provide any assurance that we will find attractive
+acquisition candidates in the future, that we will be able to acquire such candidates on economically acceptable terms or that
+we will be able to finance acquisitions on economically acceptable terms. Even if we are able to acquire new businesses in the
+future, they could result in the incurrence of substantial additional indebtedness and other expenses or potentially dilutive issuances
+of equity securities and may affect the market price of our common stock or restrict our operations. We have also entered into
+joint venture arrangements intended to complement or expand our business and will likely continue to do so in the future. These
+joint ventures are subject to substantial risks and liabilities associated with their operations, as well as the risk that our
+relationships with our joint venture partners do not succeed in the manner that we anticipate.
+
+ 
+
+We face intense
+competition and, if we are not able to effectively compete in our markets, our revenues may decrease.
+
+ 
+
+Competitive pressures
+in our markets could adversely affect our competitive position, leading to a possible loss of customers or a decrease in prices,
+either of which could result in decreased revenues and profits. Our competitors are numerous, ranging from large multinational
+corporations, which have significantly greater capital resources than us, to relatively small and specialized firms. We also compete
+with the major manufacturers. Our business could be adversely affected because of increased competition from these motorcycle parts
+manufacturers and distributors.
+
+ 
+
+Current and
+future litigation could adversely affect us. 
+
+ 
+
+We are not currently
+involved in any legal proceedings. However, we may become involved in other legal proceedings in our ordinary course of business.
+Lawsuits and other legal proceedings can involve substantial costs, including the costs associated with investigation, litigation
+and possible settlement, judgment, penalty or fine. As a smaller company, the collective costs of litigation proceedings can represent
+a drain on our cash resources, as well as an inordinate amount of our Management s time and addition. Moreover, an adverse
+ruling in respect of certain litigation could have a material adverse effect on our results of operation and financial condition.
+
+ 
+
+We have limited
+the liability of our board of directors and management.
+
+ 
+
+We have adopted
+provisions in our Articles of Incorporation which limit the liability of our directors and officers and have also adopted provisions
+in our bylaws which provide for indemnification by the Company of our officers and directors to the fullest extent permitted by
+Florida corporate law. Our Articles of Incorporation generally provide that our directors shall have no personal liability to the
+Company or its stockholders for monetary damages for breaches of their fiduciary duties as directors, except for breaches of their
+duties of loyalty, acts or omissions not in good faith or which involve intentional misconduct or knowing violation of law, acts
+involving unlawful payment of dividends or unlawful stock purchases or redemptions, or any transaction from which a director derives
+an improper personal benefit. Such provisions substantially limit our shareholders ability to hold directors liable for
+breaches of fiduciary duty.
+
+ 
+
+Our share
+structure could impede a non-negotiated change of control of the Company.
+
+ 
+
+On March 3, 2014,
+and June 15, 2017 respectively, the Company issued an aggregate of 20,000,000 common shares of the Company to Mr. Clewlow, our
+Chief Executive Officer, in exchange for services provided to the Company. Additionally, on July 18, 2014, we issued 1,000,000
+Series A Preferred shares of the Company to Mr. Clewlow in exchange for services rendered the Company. While shares of our common
+stock hold one vote per share, each share of Series A Preferred Stock holds 200 votes. Consequently, any attempt to take over the
+Company without the consent of Mr. Clewlow would be extremely difficult to achieve. Because of the disproportionate voting control
+of Mr. Clewlow, he alone could inhibit, delay, or frustrate entirely an attempt by others to take over control of our Company and
+could prevent our shareholders from obtaining a premium for their shares.
+
+ 
+
+ 7 
+
+ Table of Contents 
+
+ 
+
+ 
+
+Existing cash
+and cash equivalents are insufficient to fund operations.
+
+ 
+
+The Company s
+existing cash and cash equivalents are insufficient to fund current operations beyond April 30, 2018. To date, we have relied upon
+related party loans and sales of the Company s securities to fund operations. Additionally, we have incurred negative cash
+flows from operations since inception and have expended, and expect to continue to expend, substantial funds to grow our business.
+As a result, the Company will need to continue to rely primarily on related party loans, and further sales of equity, equity-linked
+or debt securities of the Company s to fund its operations for the foreseeable future. However, we cannot guarantee that
+we will secure the needed capital to fund operations, and to the extent that we raise additional capital through the sale of the
+Company s securities, the ownership interest of our stockholders could be diluted, and the terms of these securities may
+include liquidation or other preferences that adversely affect the rights of our common stockholders. Debt financing, if available,
+may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional
+debt, making capital expenditures or declaring dividends. If we are unable to raise additional funds through related party loans,
+or equity or debt financings when needed, we may be required to delay, limit, reduce or terminate the implementation of our business
+plan.
+
+ 
+
+Risks Relating To This Offering and
+Our Common Stock
+
+ 
+
+If the selling
+shareholders sell a large number of shares all at once or in blocks, the market price of our shares would most likely decline.
+
+ 
+
+Holders holding
+11,209,000 shares of common stock may resell their shares of Common stock through this prospectus. Should the
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2018/CIK0001609727_synthorx_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001609727_synthorx_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/CIK0001609727_synthorx_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2018/CIK0001612188_teo-foods_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001612188_teo-foods_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..3fd89169980b333b93a8fcacce3ac9dae7afaa91
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/CIK0001612188_teo-foods_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 3
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2018/CIK0001614184_cadence_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001614184_cadence_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/CIK0001614184_cadence_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2018/CIK0001624826_mpm_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001624826_mpm_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/CIK0001624826_mpm_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2018/CIK0001625288_nexien_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001625288_nexien_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..86c3ec9a1188fda280facc470a20b0ace0171cad
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/CIK0001625288_nexien_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights selected information contained elsewhere in this Prospectus. This summary does not contain all the information that you should consider before investing in the Common Stock. You should carefully read the entire Prospectus, including "Risk Factors", "Management s Discussion and Analysis of Financial Condition and Results of Operations" and the Financial Statements, before making an investment decision. In this Prospectus, the terms "Intiva", "BioPharma", "Company," "Registrant," "we," "us" and "our" refer to Intiva BioPharma Inc., a Delaware corporation. Business Plan The Company was incorporated on November 10, 1952 in Michigan as Gantos, Inc. On July 21, 2008, the Company completed its change in domicile to Delaware and subsequently changed its name to Kinder Holding Corp. Since bankruptcy liquidation in June 2000, the Company has not had any operations and adopted "fresh-start" accounting as of June 21, 2000 in accordance with procedures specified by AICPA Statement of Position No. 90-7, "Financial Reporting by Entities in Reorganization under the Bankruptcy Code." As of October 13, 2017, the Company completed a reverse acquisition of Intiva BioPharma Inc., a private Colorado corporation (the "Share Exchange Transaction"). In connection with the completion of the reverse merger the Company changed its name to Intiva BioPharma Inc. on November 8, 2017. Intiva BioPharma Inc. was formed under the laws of the State of Colorado in March 2017 as a wholly-owned subsidiary of Intiva USA Inc. and is a start-up company engaged in the business of developing drugs containing cannabinoids and/or terpenes for the treatment of various diseases, disorders and medical conditions; the development or licensing of proprietary delivery systems for cannabinoid-based medications; and the investment in companies and the acquisition of technologies or medications, focused on cannabinoid-based science through special purpose vehicles, discussed more fully below. Intiva USA Inc. is a wholly-owned subsidiary of Kanativa Inc., formerly Intiva Inc., an Ontario, Canada corporation. Our business objective is to pursue the formulation and development of cannabinoid-based drugs for diseases, disorders and medical conditions. At present, we have two exclusive licenses covering certain intellectual property, including certain patent applications. We have also filed one utility and five provisional patent applications with the U.S. Patent Office covering formulations that include cannabinoids and/or other substances, including terpenes, formulated for the purpose of treating various medical conditions and disorders. Terpenes are a large and diverse class of organic compounds, produced by a variety of plants. The name "terpene" is derived from the word "turpentine". In addition to their roles as end-products in many organisms, terpenes are major biosynthetic building blocks within nearly every living creature. Terpenes are the primary constituents of the essential oils of many types of medical plants and flowers. Essential oils are used widely in, among other things, medicine and alternative medicines. Terpenes are also constituents of cannabis plants, which contain an estimated 111 cannabinoids, compounds unique to the cannabis plant. We plan to invest significant capital and professional efforts in the development of both synthetic and plant-derived cannabinoid-based pharmaceuticals with the objective of obtaining approval by the U.S. Food and Drug Administration ("FDA") and/or from pharmaceutical and other regulatory authorities in other countries and regions. We operate in a highly-controlled regulatory environment with strict regulations and established requirements by the FDA, U.S. federal and state drug regulatory agencies, and agencies and authorities in other countries and jurisdictions, relating to analytical, toxicological and clinical standards and protocols with respect to the research and development of pharmaceuticals. Regulations specifically cover research, development, manufacturing and reporting procedures, both pre- and post-approval. Governmental authorities in many countries require that a new pharmaceutical product be approved or exempted from approval before any such pharmaceutical product can be marketed. The time to obtain approval varies by country and some pharmaceutical drugs may fail in pre-clinical or clinical trials and therefore may never be approved. The approval process is typically a lengthy process that requires conducting pre-clinical studies and clinical trials to seek and then hopefully receive regulatory approval, in compliance with applicable statutes and regulations and the expenditure of substantial capital resources. The emerging markets for cannabinoid-based drug research and development is and will likely remain competitive. In general, the biotechnology and pharmaceutical industries are characterized by rapidly advancing technologies, intense competition, and a strong emphasis on proprietary drugs. We also intend to develop or license proprietary delivery systems for cannabinoid-based medications. We envision that these delivery systems may be utilized for some of the drugs that we seek to develop, and that we may also license them to third-parties. There is no assurance that we will be able to develop or license any delivery system. We also intend to invest in companies or acquire technologies or medications based on cannabinoid-based science, possibly through special purpose vehicles formed or controlled by the Company. There is no assurance that we will be able to invest in any of these companies or acquire any technology or medication, nor that we will be successful in forming or acquiring capital for any special purpose vehicle for these purposes. We expect that we will be required to compete with a variety of multinational pharmaceutical companies and specialized biotechnology companies, as well as drugs and processes being developed at universities and other research institutions. Our competitors may develop or may already have developed drugs comparable or competitive with our drug candidates. Competitive therapeutic treatments for diseases, disorders and medical conditions that are included in our drug development projects may have already been approved and accepted by the medical community and any new treatments that may enter the market may face fierce competition. Through March 2018, we have raised approximately $1.8 million in equity under private placement offerings and we may be expected to require up to an additional $1 million in capital during the next 12 months to fully implement our business plan and fund our operations for that period. Summary of Risk Factors This offering involves substantial risk. Our ability to execute our business strategy is also subject to certain risks. The risks described under the heading "Risk Factors" included elsewhere in this Prospectus may cause us not to realize the full benefits of our business plan and strategy or may cause us to be unable to successfully execute all or part of our strategy. Some of the most significant challenges and risks include the following: Our Auditor has expressed substantial doubt as to our ability to continue as a going concern. Our limited operating history does not afford investors a sufficient history on which to base an investment decision. As of the date of this prospectus, we have no revenues and will not have revenues until we have developed and brought to market products. This may take several years. Our sustained revenue generating ability will be dependent upon the regulatory approval of our drug development projects. The failure of such approval will cause us to curtail or cease our research and development operations. We face substantial and increasing competition in the drug development market. We cannot be certain that we will obtain patents for our cannabinoid-based drug research and development projects and that such patents will protect us. The availability of a large number of authorized but unissued shares of Common Stock may, upon their issuance, lead to dilution of existing stockholders. Our stock is thinly traded, resulting in the sale of any investor s holdings likely taking a considerable amount of time. Before you invest in our common stock, you should carefully consider all the information in this Prospectus, including matters set forth under the heading "Risk Factors." Where You Can Find Us The Company s principal executive office and mailing address is at 4340 East Kentucky Avenue, Suite 206, Glendale, CO, 80246 Phone: (303) 495-7583. Implications of Being an Emerging Growth Company We qualify as an emerging growth company as that term is used in the JOBS Act. An emerging growth company may take advantage of specified reduced reporting and other burdens that are otherwise applicable generally to public companies. These provisions include: A requirement to have only two years of audited financial statements and only two years of related MD Exemption from the auditor attestation requirement in the assessment of the emerging growth company s internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act of 2002 ("SOX"); Reduced disclosure about the emerging growth company s executive compensation arrangements; and No non-binding advisory votes on executive compensation or golden parachute arrangements. We have already taken advantage of these reduced reporting burdens in this Prospectus, some of which are also available to us as a smaller reporting company as defined under Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Act for complying with new or revised accounting standards. We have elected to take advantage of the extended transition period for complying with new or revised accounting standards, which allows us to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies. As a result of this election, our financial statements contained in this Form S-1 may not be comparable to other public reporting companies. The existing scaled executive compensation disclosure requirements for smaller reporting companies will continue to apply to our filings for so long as our Company is an emerging growth company, regardless of whether the Company remains a smaller reporting company. We could remain an emerging growth company for up to five years, or until the earliest of (i) the last day of the first fiscal year in which our annual gross revenues exceed $1 billion, (ii) the date that we become a "large accelerated filer" as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our Common Stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter, or (iii) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three year period. For more details regarding this exemption, see "Management s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies." The Offering Common Stock offered by Selling Security Holders We are registering 2,463,466 shares of Common Stock. Common stock outstanding before and after the Offering 43,880,896 shares of Common Stock before and after the offering Terms of the Offering The Selling Security Holders will determine when and how they will sell the Common Stock offered in this Prospectus. The prices at which the Selling Security Holders may sell the shares of Common Stock in this Offering will be determined by the prevailing market price for the shares of Common Stock or in negotiated transactions. Trading Market Our Common Stock is quoted on the OTC Pink Market under the symbol "NTVA". Use of proceeds The Company is not selling any shares of the Common Stock covered by this Prospectus. As such, we will not receive any of the Offering proceeds from the sale of the shares of Common Stock covered by this Prospectus. Risk Factors The Common Stock offered hereby involves a high degree of risk and should not be purchased by investors who cannot afford the loss of his/her/its entire investment. See "Risk Factors".
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2018/CIK0001627469_photozou_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001627469_photozou_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..ac26eed300d5ab790e90f0662e51509962c60653
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/CIK0001627469_photozou_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 2
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2018/CIK0001627611_12-retech_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001627611_12-retech_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a5376d350fe2eacec2b0e3a4e3575873f4d1b4c4
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/CIK0001627611_12-retech_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary The following summary highlights information contained elsewhere in this prospectus and does not contain all of the information that you should consider in making your investment decision in our common stock. Before investing in our common stock, you should carefully read this entire prospectus, including our financial statements and the related notes included in this prospectus and the information set forth under the headings "Risk Factors" and "Management s Discussion and Analysis of Financial Condition and Results of Operations." As used in this prospectus, unless the context otherwise requires, references to "we," "us," "our," "Company," "12 ReTech," or "RETC" refer to 12 ReTech Corporation. Our Business 12 ReTech Corporation, a Nevada corporation, is a software company whose technology allows retailers to combat the dual threats of Walmart and Amazon — both online and in physical stores. Our microbrand rollup acquisition strategy allows us to demonstrate the effectiveness of our software, devise and test new products, while achieving revenue and earnings growth. The Company operates through our subsidiaries on three continents: 12 Hong Kong, Limited ("12HK", "12 Hong Kong, Ltd."), 12 Japan, Limited ("12JP", "12 Japan, Ltd."), 12 Europe A.G. ("12EU", "12 Europe AG"), and 12 Retail Corporation ("12 Retail") (and its subsidiary, E-Motion Apparel, Incorporated ("EAI", "E-Motion Apparel, Inc.") in North America. The Subsidiaries: 12 Hong Kong, Ltd. a corporation organized in the special economic region of Hong Kong. On June 27, 2017 the Company acquired 12 Hong Kong, Ltd. in a share exchange transaction (see "Management s Discussion & Analysis of Financial Condition and Results of Operations"). This is the technology company that manages all the Company s proprietary and licensed technology that is utilized and sold by the other subsidiaries. In addition, this subsidiary serves as an additional marketing and sales hub for Asia, particularly the Chinese market, excluding Japan. 12 Japan, Ltd. a corporation organized in Japan. The Company acquired 12 Japan, Ltd, located in Tokyo, Japan on July 31, 2017 in a share exchange (see "Management s Discussion & Analysis of Financial Condition and Results of Operations"). This subsidiary operates in the country of Japan. It is this subsidiary that services our first customer, Itoya Ltd., where our technology was successfully implemented and proven. 12 Europe A.G. a corporation organized in Switzerland. The Company acquired 12 Europe A.G. on October 26, 2017 in a share exchange transaction (see "Management s Discussion & Analysis of Financial Condition and Results of Operations"). This subsidiary markets, sells, and services the Company s proprietary and licensed technology to retailers in the European market from its base in Zurich, Switzerland. Since its acquisition, this subsidiary has already signed agreements with 4 retailers, 1 department store and 3 local businesses, to deploy our technology and 12Sconti app (see Our Technology). 12 Retail Corporation was formed in the state of Arizona, USA and maintains an office in Scottsdale, Arizona. This subsidiary was formed on Sept. 18, 2017 to execute the Company s microbrand roll up acquisition strategy as well as to penetrate the North American market with our technology to select retailers. All of the microbrands that are acquired will retain their own brand name and identity although they will share some economies of scale and benefit from the management expertise, resources and capital allocation available as a subsidiary of the Company. The microbrands will become subsidiaries of 12 Retail Corporation. E-motion Apparel, Inc. ("EAI") On May 1, 2018, the Company acquired 100% of the equity in E-motion Apparel, Inc, a California corporation, though the 12 Retail subsidiary, pursuant to a Share Exchange Agreement (see "Subsequent Events"), which itself owns four other microbrands that target specific niche markets: Lexi-Luu Dancewear, Punkz Gear, Cleo VII and Skipjack Dive & Dance Wear. This company, now located in Salt Lake City, Utah, operates its own production and fulfillment facility that management believes can be utilized by all of the Company s future microbrand acquisitions as a competitive advantage to quickly produce, market, sell and deliver many smaller quantities of garments, keeping online sales channels fresh. The Company s Current Reports on Form 8–K dated March 15, 2018 and April 27, 2018, respectively, provide more detailed information on transactions with EAI. Our principal executive office is located at 701 S. Carson, Suite 200, Carson City, NV 89701. Our telephone number is (530) 539-4329 and our website is www.12retech.com. Unless expressly noted, none of the information on our website is part of this prospectus or any prospectus supplement. Our common stock is quoted on the OTC Marketplace operated by the OTC Markets Group, Inc., or "OTC," under the ticker symbol "RETC." The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED JULY 2, 2018 PRELIMINARY Prospectus 12 ReTech Corporation 20,000,000 Shares of Common Stock This prospectus relates to the offer and resale of up to 20,000,000 shares of our common stock, par value $0.00001 per share, by the selling stockholders identified on page 11. All such shares represent shares that Oasis Capital, LLC ("Oasis Capital") has agreed to purchase from us pursuant to the terms and conditions of an Equity Purchase Agreement we entered into with them as of June 22, 2018 (the "Equity Purchase Agreement"). Subject to the terms and conditions of the Equity Purchase Agreement, we have the right to "put," or sell, up to $12,000,000 worth of shares of our common stock to Oasis Capital. This arrangement is also sometimes referred to herein as the "Equity Line." For more information about the selling stockholders, please see the section of this prospectus entitled "Selling Stockholders" beginning on page 11. The selling stockholders may sell any shares offered under this prospectus at fixed prices, prevailing market prices at the time of sale, at varying prices or negotiated prices. Oasis Capital is an "underwriter" within the meaning of the Securities Act of 1933, as amended (the "Securities Act"), in connection with the resale of our common stock under the Equity Line, and any broker-dealers or agents that are involved in such resales may be deemed to be "underwriters" within the meaning of the Securities Act in connection therewith. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. For more information, please see the section of this prospectus titled "Plan of Distribution" beginning on page 12. We will not receive any proceeds from the resale of shares of common stock by the selling stockholders. We will, however, receive proceeds from the sale of shares directly to Oasis Capital pursuant to the Equity Line. Our common stock is quoted on the OTC Marketplace operated by the OTC Markets Group, Inc., or "OTC," under the ticker symbol "RETC." On June 28, 2018, the average of the high and low sales prices of our common stock was $0.07 per share. Investing in our common stock involves risks that are described in the "Risk Factors" section beginning on page 3 of this prospectus. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The date of this prospectus is , 2018. Offering SUMMARY Common stock that may be offered by selling stockholders 20,000,000 shares Common stock outstanding before this offering 82,968,338 shares Common stock to be outstanding after this offering 102,968,338 shares (1) Use of proceeds We will not receive any proceeds from the resale or other disposition of the shares covered by this prospectus by the selling stockholders. We will receive proceeds from the sale of shares to Oasis Capital. Oasis Capital has committed to purchase up to $12,000,000 worth of shares of our common stock over a period of time terminating on the earlier of (i) the date on which Oasis Capital shall have purchased shares under the Equity Purchase Agreement for an aggregate purchase price of $12,000,000, (ii) June 1, 2020, or (iii) written notice of termination by the Company to Oasis Capital (which shall not occur at any time that the Investor holds any of the put shares). Oasis Capital will pay a purchase price equal to 85% of the "Market Price," which is defined as the lowest one (1) traded price on the OTC Marketplace, as reported by Bloomberg Finance L.P., during the five trading days following the date on which the applicable put shares are delivered to Oasis Capital (the "Pricing Period"). In order to exercise the put, certain conditions must be met at each put notice date including, but not limited to: (i) we must have an effective registration statement, (ii) our common stock must be deposit/withdrawal at custodian ("DWAC") eligible, (iii) the minimum price must exceed $0.0005, and (iv) the number of shares to be purchased by Oasis Capital may not exceed the number of shares that, when added to the number of shares of our common stock then beneficially owned by Oasis Capital, would exceed 4.99% of our shares of common stock outstanding. For further information, see "The Offering" beginning on page 10. Plan of Distribution The selling stockholders may, from time to time, sell any or all of their shares of common stock on the stock exchange, market or trading facility on which the shares are traded or in private transactions. These sales may be at fixed or negotiated prices. For further information, see "Plan of Distribution" beginning on page 12. Risk factors You should read the "Risk Factors" section of this prospectus and the other information in this prospectus for a discussion of factors to consider carefully before deciding to invest in shares of our common stock. (1) Assumes the issuance of 20,000,000 shares offered hereby that are issuable under our Equity Purchase Agreement with Oasis Capital. Table of Contents PROSPECTUS SUMMARY 1 RISK FACTORS 3 CAUTIONARY STATEMENT ON FORWARD-LOOKING STATEMENTS 9 USE OF PROCEEDS 9 THE OFFERING 10 SELLING STOCKHOLDERS 11 PLAN OF DISTRIBUTION 12 DESCRIPTION OF SECURITIES 13 EXPERTS 19 LEGAL MATTERS 20 INTERESTS OF NAMED EXPERTS AND COUNSEL 20 BUSINESS 20 LEGAL PROCEEDINGS 26 MARKET PRICE OF AND DIVIDENDS ON OUR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS 26 MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 27 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE 33 DIRECTORS AND EXECUTIVE OFFICERS 34 EXECUTIVE COMPENSATION 37 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 39 TRANSACTIONS WITH RELATED PERSONS, PROMOTERS AND CERTAIN CONTROL PERSONS AND CORPORATE GOVERNANCE 39 WHERE YOU CAN FIND MORE INFORMATION 41 DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES 41 INDEX TO FINANCIAL STATEMENTS F-1 You should rely only on the information contained in this prospectus or in any free writing prospectus we may authorize to be delivered or made available to you. We have not authorized anyone to provide you with different information. We are offering to sell, and seeking offers to buy, shares of common stock only in jurisdictions where offers and sales are permitted. The information in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of shares of our common stock. Our business, financial condition, operating results and prospects may have changed since that date. 12 ReTech Corporation, the 12 ReTech Corporation logo, and other trademarks or service marks of 12 ReTech Corporation appearing in this prospectus are the property of 12 ReTech Corporation. This prospectus also includes trademarks, tradenames and service marks that are the property of other organizations. Solely for convenience, trademarks and tradenames referred to in this prospectus appear without the and symbols, but those references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights, or that the applicable owner will not assert its rights, to these trademarks and tradenames. Risk Factors An investment in our common stock involves a high degree of risk, and should not be made by anyone who cannot afford to lose their entire investment. You should consider carefully the risks set forth in this section, together with the other information contained in this report, before making a decision to invest in our common stock. Our business, operating results and financial condition could be seriously harmed and you could lose your entire investment if any of the following risks were to occur. This document is not intended to be an offer of any securities nor a solicitation of any offer to buy or sell. Risks Related to Our Business Until the acquisition of our microbrands, we are a company with limited operating history, little revenue and still have to rely on our ability to raise capital to fund operations and there can be no assurance we will ever reach profitability or be able to continue to raise capital to fund operations. The Company commenced limited operations in June of 2017, with the acquisition of 12 Hong Kong, Ltd. The Company then acquired 12 Japan, Ltd in August 2017 followed by 12 Europe A.G. in October 2017. 12 Japan, Ltd brought a small portion of revenue, insufficient to fund operations while 12 Europe A.G. brought no revenue but brought a base of operations whereby the Company was able to secure retail customers in Europe that may begin to provide significant revenue in May 2018. The microbrand acquisitions are too new to provide sufficient working capital to the Company. Therefore, we have limited operating history on which to make an investment decision. Accordingly, the Company has a limited operating history and the business strategy while promising may not be successful. Failure to implement the business strategy could materially adversely affect our business, financial condition and results of operations. Through December 31, 2017, the Company s business has not shown a profit in operations and has generated little revenues. There can be no assurance we will achieve or attain profitability or be able to raise sufficient capital to stay in business. If we cannot achieve operating profitability or raise capital, we may not be able to meet our working capital requirements, which could have a material adverse effect on our business operating results and financial condition resulting in the loss of an investors entire investment in us. We need substantial additional capital to grow and fund our present and planned business and business strategy. Until we have made significant microbrand acquisitions, the Company s working capital may not be sufficient for our needs. Our current and planned operations contemplate funding in the future. Failure to meet funding milestones may have a significant adverse effect on our growth and anticipated revenues and we may have to curtail our business strategy. If we receive less funding than planned, we will have to revise our business model and reduce proposed plans. Without significant funding, we will not be able to execute on our business operations and may be forced to cease operations. At this time, there can be no assurance we will be able to obtain the funding we need and even if we obtain such funding that it will be on terms and conditions favorable to us and our existing shareholders. Without funding we will not be able to proceed with planned operations or meet existing obligations. Our independent registered public accounting firm s report states that there is substantial doubt that we will be able to continue as a going concern. Our possible inability to stay in business could result in a total loss on investment by our shareholders. Our accompanying financial statements have been prepared assuming that we will continue as a "going concern." As discussed in Note 2 to the Company s December 31, 2017 consolidated financial statements, we had little revenues, have minimal business operations, have recurring losses and have negative working capital and a stockholders deficit. These issues raise substantial doubt about our ability to continue as a "going concern." Our ability to stay in business will, in part, depend on our ability to raise additional funding or continue to make microbrand acquisitions similar to the ones we have completed subsequent to year end. Our financial statements do not include any adjustment that might result from the outcome of this uncertainty. We may experience service failures or interruptions due to defects in the software, infrastructure or processes that comprise our Apps and other software, any of which could adversely affect our business. Our software may contain undetected defects in the software, infrastructure or processes. If these defects lead to failures in our Apps, we could experience delays or lost revenues during the period required to correct the cause of the defects. Furthermore, we cannot be certain that defects will not be found in new software or upgraded existing software or that service disruptions will not occur in the future, resulting in loss of, or delay in, market acceptance, which could have an adverse effect on our business, results of operations and financial condition. If we do not successfully maintain the 12 ReTech brand in our existing markets or successfully market the 12 ReTech brand in new markets, our revenues and earnings could be materially and adversely affected. We believe that developing, maintaining and enhancing the 12 ReTech brand in a cost-effective manner is critical in expanding our customer base. Promotion of our brand will depend largely on continuing our sales and marketing efforts and providing high-quality products and App software to our customers. We cannot be assured that these efforts will be successful in marketing the 12 ReTech brand. If we are unable to successfully promote our brand, or if we incur substantial expenses in attempting to do so, our revenues and earnings could be materially and adversely affected. Our internal systems and operations are untested and may not be adequate and could adversely affect our ability to continue our planned business. Our internal systems and operations are new and unproven at scale. On the technology portion of our business we have not demonstrated the ability to make the large-scale deployments necessary if a large retailer would indicate they wanted to fully implement our solutions. We may need to find an installation partner with the necessary experience to perform these large-scale installations. Our inability to scale or find that experienced partner or vendor could have a material adverse effect upon our business, results of operations and financial condition and could force us to halt our planned operations or continued expansion of those planned operations, causing us to lose any opportunity to gain significant anticipated market share in our industry. Our ability to compete effectively and to manage future growth will require us to continue to improve our operational systems, our organization and our financial and management controls, reporting systems and deployment procedures. We may fail to make these improvements effectively. Additionally, our efforts to make these improvements may divert the focus of our personnel and we may not be able to effectively continue our planned operations, which may materially and adversely affect our business, results of operations and financial condition. Our inability to attract and maintain key personnel required to implement our business strategy could adversely affect our ability to continue our current and planned business resulting in slower growth. While we have so far been able to attract high caliber people, we are competing with many other entities for these services some of whom are better funded then we are. We are trying to grow our effort to provide services and we are still hiring key positions and integrating personnel at all levels into a cohesive team. If executives or other new hires integrate poorly, perform badly, or do not have the anticipated experience or skill sets required, our current and planned business endeavors could be harmed. Planned personnel, management practices and controls may also prove to be inadequate to provide services, acquire customers and partners and operate the business, and any gaps or failures may have a material adverse effect on our business, financial condition and results of operations. Increased competition may have an adverse effect on our ability to continue our current and planned business operations and result in our going out of business and may have a material adverse effect on our business, financial condition and results of operations. We may see increased competition in our markets. On the technology side of our business many players are entering the market place including Hitachi, IBM, and others. While we believe that our solutions are better due to our experience as retailers our competitors are entrenched and very well-funded. The competitors may be able to respond more quickly to new or emerging technologies and changes in customer requirements and devote greater resources to develop, promote and sell their products or services. In addition, increased competition could result in reduced fees, reduced margins and loss of market share, any of which could harm our business. We cannot guarantee that we can compete successfully against current or future competitors, many of which have substantially more capital, existing brand recognition, resources and access to additional financing. All these competitive pressures may result in increased marketing costs, or loss of market share or otherwise may materially and adversely affect our business, results of operations and financial condition. We may be unable to protect our patents, may be unable to patent future improvements and/or update our technology. We use technology advancements of our own and from suppliers to provide more advanced services with more efficient economics for our customers. Technology advancement is very fast paced in today s digital world and can lead to changing standards and new modes of providing services. The advancement of other technology not available to us or within our financial ability to adopt that may make our products or future products unsaleable. Keeping pace with the introduction of new standards, customer requirements or the advancement of other technology may make our products un-competitive or obsolete. The failure to keep pace with these changes and to continue to enhance and improve our products and features could harm our ability to attract and retain customers for our technology. The retail industry is changing rapidly and management s strategy to address the changes may not be successful. The retail industry in general is changing. More people are shopping online and there is a general consolidation of major brands and a large number of well-known brands are stressed, including former industry giants like Sears, K-Mart and J.C. Penney. As of the writing of this filing Abercrombie & Fitch is closing 60 more stores, American Apparel has filed for Bankruptcy, BCBG closed 118 stores, Bebe has closed all their stores, Bon-ton has filed Chapter 11, HHGregg is closing 22 stores, the Limited has closed all of their stores, Sports Authority has closed, Toys R Us is liquidating all of their assets and closing all of their American stores, and many more are announcing closings or filing for bankruptcy. While this provides opportunity for new brands or microbrands, it also provides risk as many of our microbrands also sell to well-known retailers and any one of them may announce closings or even a Chapter 11 filing. Therefore, there is no guarantee that the changes sweeping the retail industry today may negatively affect our business. With a changing retail environment like we are in today there are no guarantees that management s strategy will be successful. Further the creditworthiness of many of the retailers most needing our technology products may be suspect and we may be negatively impacted by adverse credit risks associated with our future best customers. Our operating results may be substantially different than that which management projects. The creditworthiness of our customers, changes in the availability of capital due to a downturn in the economy undue regulation and legal uncertainties, all of which would increase our cash requirements which may materially and adversely affect our business, results of operations and financial condition. An increase in laws and regulations could contribute to a decline in the growth of the industry and could decrease demand for our products and services and increase our cost of doing business. Moreover, the applicability of existing laws is uncertain with regard to many issues. Our business, financial condition and results of operations could be seriously impaired by any new legislation or regulation. The application of laws and regulations from jurisdictions whose laws do not currently apply to our business, or the application of existing laws and regulations and to other services which may materially and adversely affect our business, results of operations and financial condition. Therefore, financial results could materially differ from that projected by management. Projections are less and less reliable the further out those projections are made based on all of the above reasons. Planned acquisitions come with various risks, along with dilution to our shareholders, which could negatively affect our stock prices and may materially and adversely affect our business, results of operations and financial condition. Acquisitions, mergers, and joint ventures entered into by us may have an adverse effect on our business. We expect to engage in acquisitions, mergers, or joint ventures as part of our long-term business strategy. These transactions involve significant challenges and risks including that the transaction does not advance our business strategy, that we do not realize a satisfactory return on our investment, or that we experience difficulty in the integration of new assets, employees, business systems, and technology, or diversion of management s attention from our other businesses. These events may materially and adversely affect our business, results of operations and financial condition. Risks related to the competition of our current and future microbrands acquired or to be acquired by our subsidiary, 12 Retail Corporation. Our current and planned microbrand acquisitions are in the highly competitive fashion industry. Many of those acquisitions will compete directly with better funded and better-known brands. While Management believes that it can compete directly with these larger brands, gambling on the public s changing attitudes towards "looking the same as everyone else" and wanting individuality and on the Company s proprietary technology to provide positive results there are no guarantees that the Company will be able to compete effectively. The current and future state of the economy may materially and adversely affect our business, results of operations and financial condition. Our business may be adversely affected by changes in domestic economic conditions, including inflation or deflation, changes in consumer preferences, changes in consumer spending rates, personal bankruptcy and the ability to collect our customer accounts. Changes in economic conditions may adversely affect the demand for our products and make it more difficult to collect customer accounts, thereby negatively affecting our business, operating results and financial condition. The recent disruptions in credit and other financial markets and deterioration of national and global economic conditions could, among other things, impair the financial condition of some of our customers and suppliers, thereby increasing customer bad debts or non-performance by suppliers. If we experience bad debts or slow paying customers in significant quantities, our cash flow will be limited and our ability to pay our own obligations will be questionable. As a small business these issues will affect us more than our larger competitors putting financial strain on our business and threatening our survival particularly since we have limited capital to rely on to overcome cash flow issues of slow paying customers. If our customers are unable to pay or pay slowly it may materially and adversely affect our business, results of operations and financial condition. Future stock issuances could severely dilute our current shareholders interests. Our Board of Directors has the authority to issue up to 1,000,000,000 authorized shares of our common stock or stock warrants and options to acquire such common stock. Our Board of Directors has the authority to issue up to 50,000,000 shares of preferred shares that have various rights of conversion to common stock. Refer to Description of Registrant s Securities below for full details of Series A, Series B, Series C, and Series D Preferred Shares. The future issuance of common stock may result in dilution in the percentage of our common stock held by our existing stockholders. Also, any stock we sell in the future may be valued on an arbitrary basis by us and the issuance of shares of common stock for future services, acquisitions or other corporate actions may have the effect of diluting the value of the shares held by our existing stockholders. We do not expect to pay dividends on our common shares in the near future. We do not expect to declare or pay any dividends on our common stock in the foreseeable future. The declaration and payment in the future of any cash or stock dividends on the common stock will be at the discretion of our Board of Directors and will depend upon a variety of factors, including our ability to service our outstanding indebtedness, if any, and to pay dividends on securities ranking senior to the common stock, our future earnings, if any, capital requirements, financial condition and such other factors as our Board of Directors may consider to be relevant from time to time. Our earnings, if any, are expected to be retained for use in expanding our business. Risks Related to Our Common Stock Our common stock is classified as a "penny stock" under SEC Rules and Regulations, which means there may be very limited trading market for our shares. Our common stock is deemed to be "penny stock" as that term is defined in Rule 3a51-1 of the Securities Exchange Act of 1934, as amended ("the Exchange Act"). Penny stocks are stocks (i) with a price of less than five dollars per share; (ii) that are not traded on a "recognized" national exchange; (iii) whose prices are not quoted on an automated quotation system sponsored by a registered national securities association; or (iv) whose issuer has net tangible assets less than $2,000,000 (if the issuer has been in continuous operation for at least three years); or $5,000,000 (if in continuous operation for less than three years); or with average revenues of less than $6,000,000 for the last three years. Section 15(g) of the Exchange Act and Rule 15g-2 promulgated thereunder require broker dealers dealing in penny stocks to provide potential investors with a document disclosing the risks of penny stocks and to obtain a manually signed and dated written receipt of the document before effecting any transaction in a penny stock for the investor s account. Potential investors in our common stock are urged to obtain and read such disclosure carefully before purchasing any shares that are deemed to be "penny stock." Moreover, Rule 15g-9 of the Exchange Act requires broker dealers in penny stocks to approve the account of any investor for transactions in such stocks before selling any penny stock to that investor. This procedure requires the broker dealer to (i) obtain from the investor information concerning his, her or its financial situation, investment experience and investment objectives; (ii) reasonably determine, based on that information, that transactions in penny stocks are suitable for the investor, and that the investor has sufficient knowledge and experience as to be reasonably capable of evaluating the risks of penny stock transactions; (iii) provide the investor with a written statement setting forth the basis on which the broker dealer made the determination in (ii) above; and (iv) receive a signed and dated copy of such statement from the investor, confirming that it accurately reflects the investor s financial situation, investment experience and investment objectives. Compliance with these requirements may make it more difficult for investors in our common stock to resell their shares to third parties or to otherwise dispose of such shares. Due to the substantial instability in our common stock price, you may not be able to sell your shares at a profit or at all, and as a result, any investment in our shares could be totally lost. The public market for our common stock is very limited. As with the market for many other small companies, any market price for our shares is likely to continue to be very volatile. Our common stock has very limited volume and as a "penny stock," many brokers will not trade in our stock limiting our stocks liquidity. As such it may be difficult to sell shares of our common stock. Our common stock has a limited trading history, and it will be difficult to determine any market trends or prices for our shares and additional shares that become available under Rule 144 could cause the price of our stock to decrease. Our common stock currently is quoted on the OTC Pink Sheets under the symbol "RETC". However, with very little trading history, a trading market that does not represent an "established trading market", volatility in the bid and asked prices and the fact that our common stock is very thinly traded, you could lose all or a substantial portion of your funds if you make an investment in us. Additionally, as more shares become available for resale, it is likely there will be negative pressures on our stock price. The sale or potential sale of shares of our common stock that may become publicly tradable under Rule 144 in the future may have a severe adverse impact on any market that develops for our common stock, and you may lose your entire investment or be unable to resell any shares in us that you purchase. Risks Related to Our International Operations Certain risks of loss arise from our need to conduct transactions in foreign currencies. Our business activities outside the United States and its territories may be conducted in foreign currencies. In the future, our capital costs and financial results may be affected by fluctuations in exchange rates between the applicable currency and the dollar. Other currencies used by us may not be convertible at satisfactory rates. In addition, the official conversion rates between a particular foreign currency and the U.S. dollar may not accurately reflect the relative value of goods and services available or required in other countries. Further, inflation may lead to the devaluation of such other currencies. Foreign governmental entities may have the authority to alter the terms of our rights or agreements if we do not comply with the terms and obligations indicated in such agreements. Pursuant to the laws in some jurisdictions in which we may develop or operate our business, foreign governmental entities may have the authority to alter the terms of our contractual or financial rights or override the terms of privately negotiated agreements. In extreme circumstances, some foreign governments have taken the extreme step of confiscating private property on the assertion that such action is necessary in the public interest of such country. If this were to occur, we may not be compensated fairly or at all. We cannot assure that we have complied, and will comply, with all the terms and obligations imposed on us under all foreign laws to which one or more of our operations and assets may be subject. Our operations will require our compliance with the Foreign Corrupt Practices Act. We must conduct our activities in or related to foreign companies in compliance with the U.S. Foreign Corrupt Practices Act, or FCPA, and similar anti-bribery laws that generally prohibit companies and their intermediaries from making improper payments to foreign government officials for the purpose of obtaining or retaining business. Enforcement officials interpret the FCPA s prohibition on improper payments to government officials to apply to officials of state-owned enterprises, including state-owned enterprises with which we may develop or operate or businesses. While our employees and agents are required to acknowledge and comply with these laws, we cannot assure that our internal policies and procedures will always protect us from violations of these laws, despite our commitment to legal compliance and corporate ethics. The occurrence or allegation of these types of risks may adversely affect our business, performance, prospects, value, financial condition, reputation, and results of operations. Our competitors may not be subject to laws similar to the FCPA, which may give them an advantage in negotiating with underdeveloped countries and the government agencies. Our competitors outside the United States may not be subject to anti-bribery or corruption laws as encompassing or stringent as the U.S. laws to which we are subject, which may place us at a competitive disadvantage. We may encounter difficulties repatriating income from foreign jurisdictions. As we develop and place our businesses into operation, we intend to enter into only revenue-generating agreements in which we are paid in U.S. dollars directly to our U.S. banks or through countries in which repatriation of the funds to our U.S. accounts is unrestricted. However, situations could arise in which we agree to accept payment in foreign jurisdictions and for which restrictions make it difficult or costly to transfer these funds to our U.S. accounts. In this event, we could incur costs and expenses from our U.S. assets for which we cannot recover income directly. This could require us to obtain additional working capital from other sources, which may not be readily available, resulting in increased costs and decreased profits, if any. Risks Relating to our Equity Line with Oasis Capital Resales of shares purchased by Oasis Capital under the Equity Purchase Agreement may cause the market price of our common stock to decline. Subject to the terms and conditions of the Equity Purchase Agreement, we have the right to "put," or sell, up to $12,000,000 worth of shares of our common stock to Oasis Capital. Unless terminated earlier, Oasis Capital s purchase commitment will automatically terminate on the earlier of (i) the date on which Oasis Capital shall have purchased shares under the Equity Purchase Agreement for an aggregate purchase price of $12,000,000, (ii) June 1, 2020, or (iii) written notice of termination by the Company to Oasis Capital (which shall not occur at any time that the Investor holds any of the put shares). This arrangement is also sometimes referred to herein as the "Equity Line." The common stock to be issued to Oasis Capital pursuant to the Equity Purchase Agreement will be purchased at a price equal to 85% of the "Market Price," which is defined as the lowest one (1) traded price on the OTC, as reported by Bloomberg Finance L.P., during the five trading days following the date on which the applicable put shares are delivered to Oasis Capital. Oasis Capital will have the financial incentive to sell the shares of our common stock issuable under the Equity Purchase Agreement in advance of or upon receiving such shares and to realize the profit equal to the difference between the discounted price and the current market price of the shares. This may cause the market price of our common stock to decline. The foregoing description of the terms of the Equity Purchase Agreement does not purport to be complete and is subject to and qualified in its entirety by reference to the Equity Purchase Agreement itself. Puts under Equity Purchase Agreement may cause dilution to existing stockholders. From time to time during the term of the Equity Purchase Agreement, and at our sole discretion, we may present Oasis Capital with a put notice requiring Oasis Capital to purchase shares of our common stock. As a result, our existing stockholders will experience immediate dilution upon the purchase of any of the shares by Oasis Capital. Oasis Capital may resell some, if not all, of the shares that we issue to it under the Equity Purchase Agreement and such sales could cause the market price of our common stock to decline significantly. To the extent of any such decline, any subsequent puts would require us to issue and sell a greater number of shares to Oasis Capital in exchange for each dollar of the put amount. Under these circumstances, the existing stockholders of our company will experience greater dilution. The effect of this dilution may, in turn, cause the price of our common stock to decrease further, both because of the downward pressure on the stock price that would be caused by a large number of sales of our shares into the public market by Oasis Capital, and because our existing stockholders may disagree with a decision to sell shares to Oasis Capital at a time when our stock price is low, and may in response decide to sell additional shares, further decreasing our stock price. If we draw down amounts under the Equity Line when our share price is decreasing, we will need to issue more shares to raise the same amount of funding. There is no guarantee that we will satisfy the conditions to the Equity Purchase Agreement. Although the Equity Purchase Agreement provides that we can require Oasis Capital to purchase, at our discretion, up to $12,000,0000 worth of shares of our common stock in the aggregate, our ability to put shares to Oasis Capital and obtain funds when requested is limited by the terms and conditions of the Equity Purchase Agreement, including restrictions on when we may exercise our put rights, restrictions on the amount we may put to Oasis Capital at any one time, which is determined in part by the trading volume of our common stock, and a limitation on our ability to put shares to Oasis Capital to the extent that it would cause Oasis Capital to beneficially own more than 4.99% of the outstanding shares of our common stock. We may not have access to the full amount available under the Equity Purchase Agreement with Oasis Capital. Our ability to draw down funds and sell shares under the Equity Purchase Agreement requires that a registration statement be declared effective and continue to be effective registering the resale of shares issuable under the Equity Purchase Agreement. The registration statement of which this prospectus is a part registers the resale of 20,000,000 shares of our common stock issuable under the Equity Line. Our ability to sell any additional shares under the Equity Purchase Agreement will be contingent on our ability to prepare and file one or more additional registration statements registering the resale of such additional shares. These registration statements (and any post-effective amendments thereto) may be subject to review and comment by the staff of the Securities and Exchange Commission, and will require the consent of our independent registered public accounting firm. Therefore, the timing of effectiveness of these registration statements (and any post-effective amendments thereto) cannot be assured. Even if we are successful in causing one or more registration statements registering the resale of some or all of the shares issuable under the Equity Purchase Agreement to be declared effective by the Securities and Exchange Commission in a timely manner, we may not be able to sell the shares unless certain other conditions are met. For example, we might have to increase the number of our authorized shares in order to issue the shares to Oasis Capital. Increasing the number of our authorized shares will require board and stockholder approval. Accordingly, because our ability to draw down any amounts under the Equity Purchase Agreement with Oasis Capital is subject to a number of conditions, there is no guarantee that we will be able to draw down all of the proceeds of $12,000,000 under the Equity Purchase Agreement. CAUTIONARY STATEMENT ON FORWARD-LOOKING STATEMENTS This prospectus may contain certain "forward-looking" statements as such term is defined by the Securities and Exchange Commission in its rules, regulations and releases, which represent the registrant s expectations or beliefs, including but not limited to, statements concerning the registrant s operations, economic performance, financial condition, growth and acquisition strategies, investments, and future operational plans. For this purpose, any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the generality of the foregoing, words such as "may," "will," "expect," "believe," "anticipate," "intent," "could," "estimate," "might," "plan," "predict" or "continue" or the negative or other variations thereof or comparable terminology are intended to identify forward-looking statements. These statements by their nature involve substantial risks and uncertainties, certain of which are beyond the registrant s control, and actual results may differ materially depending on a variety of important factors, including uncertainty related to acquisitions, governmental regulation, managing and maintaining growth, the operations of the company and its subsidiaries, volatility of stock price, commercial viability of our technology and business plan and any other factors discussed in this and other registrant filings with the Securities and Exchange Commission. These
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+CALCULATION OF REGISTRATION FEE Title of Each Class of Security Being Registered Proposed Maximum Aggregate Offering Price (1) Amount of Registration Fee (2) Common Stock, $0.001 par value (3) $ 37,375,000.65 $ 4,653.19 Underwriter Warrants (4) $ - $ - Common Stock Underlying Underwriter Warrants (5) $ 2,335,941.56 $ 290.82 Total $ 39,710,942.21 $ 4,944.01 (1) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended. (2) Calculated pursuant to Rule 457(o) based on an estimate of the proposed maximum aggregate offering price, including the offering price of warrants to be issued to the underwriters and common stock underlying such warrants. Previously paid. (3) Includes common stock that may be issued upon exercise of a 45-day option granted to the underwriters to cover over-allotments, if any. (4) No fee is required pursuant to Rule 457(g) under the Securities Act. Resales of the underwriter warrants on a delayed or continuous basis pursuant to Rule 415 under the Securities Act are registered hereby. (5) Resales of shares of common stock issuable upon exercise of the underwriter warrants on a delayed or continuous basis pursuant to Rule 415 under the Securities Act are also registered hereby. The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. SUMMARY This summary highlights certain information appearing elsewhere in this prospectus. For a more complete understanding of this offering, you should read the entire prospectus carefully, including the information under "Risk Factors" and our financial statements and the related notes included elsewhere in this prospectus before investing in our common stock. Overview We are a holding company that, through our wholly-owned subsidiaries, Benefactum Alliance Holdings Company Limited, a British Virgin Islands company ("Benefactum Alliance"), Benefactum Sino Limited, a Hong Kong company ("Benefactum Sino") and Benefactum Alliance (Shenzhen) Investment Consulting Company Limited, a People s Republic of China company ("Benefactum Shenzhen" or "WFOE") and our contractually controlled and managed company, Benefactum Alliance Business Consultant (Beijing) Co., Ltd., a People s Republic of China company ("Benefactum Beijing"), operate an electronic online financial platform, www.hyjf.com, which is designed to match investors with small and medium-sized enterprises ("SMEs") and individual borrowers in China. We believe our services provide an effective solution for under-served SMEs and individual borrowers who need access to financing. From the launch of our marketplace in December 2013 through March 31, 2018, we have facilitated over $3.36 billion in loans. As of March 31, 2018, we had 390,276 registered investors and 27 cooperative partners who frequently serve as guarantors of loans on our platform. We generate revenue by matching lenders, who we refer to as our investors, with individual and SME borrowers. We typically charge borrowers a loan origination service fee between 1.5% and 3% of the loan amount, depending on the duration of the loan, for each effected loan facilitated by us. Additionally, we charge a separate fee from borrowers for each loan repayment facilitated by us, which is based on an agreed upon percentage of approximately 0.3% of the borrowing times the duration of the loan. In June 2017, we engaged a qualified non-banking financial institution to provide entrusted loans to SMEs and individual borrowers. Through this process we, as the trustor, provide funds to a trustee, who enters into a three-party loan agreement with us and the borrower. The loans are typically short-term and are guaranteed by a third-party financing guarantor. This is one step forward towards our long-term strategy of building a financial ecosystem aimed at providing full service to our SME customers. We intend to expand our business in both online and offline sectors to meet the demands of various customers. On September 1, 2017, Puhui Equity Investment Co., Ltd. ("Puhui"), a wholly owned subsidiary of Benefactum Beijing acquired 4.4538% of equity interests in Shenzhen TouZhiJia Financial Information Service Co., Ltd. ("Shenzhen TouZhiJia Financial") from three individuals with a total cash consideration of $2,935,121 (RMB 19.1 million). The equity interest we acquired was held through three limited partnerships wherein each partnership s sole purpose is to hold the equity interest of Shenzhen TouZhiJia Financial. For the purpose of investment, we acquired 35.1%, 61.7% and 65.54% equity interests of these three limited partnerships, respectively, which represents 1.4259%, 0.7175% and 2.3104% of the ownership interest in Shenzhen TouZhiJia Financial, respectively. Shenzhen TouZhiJia Financial s main businesses include vertical Peer-to-Peer ("P2P") search engine, private wealth management and secondary loan exchange services. Shenzhen TouZhiJia Financial, as a service provider, refers potential investors to the Company through online channels. We believe this investment could offer new opportunities for operational synergies in the financial information service industry. Due to PRC legal restrictions on foreign ownership and investment in, among other areas, value-added telecommunications services, which include Internet Content Providers, or ICPs, we, similar to all other entities with foreign-incorporated holding company structures operating in our industry in China, have to operate our internet businesses and other businesses in which foreign investment is restricted or prohibited in the PRC through wholly foreign-owned enterprises, majority-owned entities and variable interest entities. As a result of the restrictions on foreign investment in this industry, we plan to continue operating our online financial platform in China through Benefactum Beijing, which is wholly-owned by two Chinese shareholders, but is contractually controlled and managed through our wholly-owned WFOE. The contractual arrangements between WFOE and Benefactum Beijing collectively enable us to exercise effective control over, and realize substantially all of the economic risks and benefits arising from, Benefactum Beijing. See "Corporate History and Structure — Contractual Arrangements with Benefactum Beijing." As a result, we include the financial results of Benefactum Beijing in our consolidated financial statements in accordance with generally accepted accounting principles in the United States, or U.S. GAAP, as if it were our wholly-owned subsidiary. The contractual arrangements may not be as effective in providing operational control as direct ownership. See "Risk Factors — Risks Related to Our Corporate Structure." Our Strategy Our mission is to provide SMEs and individual borrowers with easy and effective access to affordable financing and provide investors with a safe and acceptable investment return. To achieve this goal, we have implemented the following strategies, each of which we intend to continue to expand. Expand the base of borrowers on our platform by entering into cooperation agreements with guarantor institutions, pawn shops, micro credit companies and asset management companies We have expanded our base of SMEs and individual borrowers by entering into cooperation agreements with various partners, including, without limitation, guarantor institutions, pawn shops, micro-credit companies and asset management companies, who can provide us with recommendations for new borrowers. Currently, our cooperative partners are located in Shandong, Inner Mongolia and other areas in China. Since the inception of our online platform, approximately 89.6% of the loans facilitated through our platform are for SME borrowers. We will continue to expand the number, type and areas of cooperative partners, and seek cooperation with internet companies, e-commerce companies, telecommunication companies and third-party payment platforms which are located throughout China. Develop new consumer financing products and penetrate niche markets We are promoting new personal consumer financing products to individual borrowers, such as automobile financing and consumer financing. In addition, we will continue to design and develop diversified financing products to satisfy market demand. Our platform also allows investors to diversify their wealth management strategies by providing easy access to various lending opportunities that can be designed with flexible terms. Expand our base of investors to include mutual fund and other institutional investors Currently, all of our investors are individuals. We are introducing mutual fund and other institutional investors to increase our overall number and type of investors. In addition, we have implemented plans to attract more individual and institutional investors by cooperating with institutions so that the cost to the borrowers would be reduced if there are more funds available for loans. Further enhance our risk management capabilities As loan volume in our marketplace grows and consumer financing products expand, we have implemented protocols to enhance our risk management capabilities. As for prospective individual borrowers, we have improved the risk management model for individual credit control so that risk management testing will be more effective and reasonable. For prospective SME borrowers, besides the due diligence process that our cooperative partners undertake, we have enhanced the onsite due diligence process and appointed a risk management team. As we seek to expand our borrower base into other areas of China and diversify our product offerings to offer more consumer financing products to individual borrowers, we have enhanced our cooperation with third-party credit investigators to obtain more accurate information about the credit history of the prospective borrowers so we can make reasonable and accurate assessments of borrower applications to reduce and avoid possible future bad debts. Continue to invest in our technology platform We have made significant investments in our proprietary technologies in the areas of data collection and processing algorithms to increase the precision, speed and scale at which we match the demand and supply of loans. Enhanced data analytics improves our conversion of online leads into successful borrowers and investors. With the further application of big data, we can acquire members of our target borrower and investor groups in a more focused and cost-efficient way. Furthermore, we will continue to leverage technology to further automate our processes and improve the safety and efficiency of matching the loans with investors. At the same time, we will also benefit from the operating leverage associated with our scalable platform as our loan volume increases. We believe these investments will facilitate the long-term growth of our marketplace. Increase our merger and acquisition activities to enhance our competitive advantage in the financing technology ecosystem and to improve the efficiency of our products and services We will expand strategic relationships with internet financing companies, internet companies, technology companies and financing companies, by mergers and acquisitions to enhance our competitive advantage in the financing technology ecosystem and to improve the efficiency of our products and services. Various Product and Service Offerings As a long-term strategy, we are building a financial ecosystem for SME customers that are under-served in China's current financial system. We seek to expand our intermediary and direct lending services, both online and offline, to meet the demands of various customers. As part of this initiative, we announced the launch of entrusted loan services on June 30, 2017, which leverages our improving financial condition and years of experience in providing financing solutions to our customers in China. We believe the new service allows us not only to generate new revenues, but also to expand our scope beyond the existing service of being an intermediary between investors and borrowers through the online platform. We will continue to devise customized product and service offerings to meet customer demands and expand the scale and scope of our operations. Competitive Strengths Significant brand awareness and positive reputation in the China market We are one of the leading online lending intermediary platforms in the PRC. According to information from Wang Dai Zhi Jia (www.wdzj.com), a third-party information platform that specializes in providing information in China s internet finance industry, as of March 2018, there are 1,883 active online lending intermediary platforms in the PRC, and based on loan volume in the month of March 2018, we facilitated RMB 1.08 billion (approximately $172.6 million) in loans and were ranked 27th. Strong and well-developed risk management structure We are highly selective with our cooperative partners and have developed a risk management model and threshold system for such selection. We rely on the method of "experience + data" for the assessment of a loan application. For SME borrowers, besides the due diligence investigation by cooperative partners, we have a system that includes onsite investigation and due diligence on SMEs by a selected risk management team. For individual borrowers, we have a personal credit model for assessment. In addition, we cooperate with third-party credit investigators to evaluate the credit history of borrowers. Stable Channel for Assets The borrowers on our platform are mainly recommended by our cooperative partners. We have built long-term relationships with our cooperative partners; therefore, they have been loyal to our platform. Robust Technology Platform Our technology platform powers our online marketplace, enabling us to connect investors and individual borrowers in a fast and effective way and to efficiently deliver services to them. Our platform covers the entire loan transaction process, including application, verification, offline anti-fraud investigation, credit assessment, approval, listing, funding, after-funding servicing and collections, and provides a flexible, cost-efficient and time-saving mechanism for matching borrowers and investors when compared to traditional banking institutions. Our technology platform also facilitates our user-friendly mobile applications, which allow our users to invest and borrow anytime, anywhere. In addition, we have adopted robust security measures and policies to protect our customer information and proprietary data, and have deployed multiple layers of redundancy to ensure the reliability of our platform. Risk Related to Our Business Our ability to implement our business strategy is subject to numerous risks and uncertainties that you should be aware of before making an investment decision. We face many risks inherent in our business and our industry generally. You should carefully consider all of the information set forth in this prospectus and, in particular, the information under the heading "Risk Factors," prior to making an investment in our common stock. These risks include, among others, the following: We have a limited operating history in a new and evolving market, which makes it difficult to evaluate our future prospects. Fraudulent activity on our platform could negatively impact our operating results, brand and reputation and cause the use of our loan products and services to decrease. We may not be able to collect the payment when a borrower becomes delinquent in the payment of his/her outstanding obligation. The most recent industry regulation has prohibited setting up risk reserve funds, and we have exited all such arrangements. Not being able to utilize the risk reserve fund limits one of the preventive measures we provided to mitigate credit risk for our loan investors and may negatively impact our ability to attract new and recurring loan investors. The laws and regulations governing the online lending information intermediary service industry in China are developing and evolving and are subject to change. If we fail to obtain and maintain requisite approvals, licenses or permits or fail to satisfy related governmental requirements, our business, financial condition and results of operations would be materially and adversely affected. The proper functioning of our technology platform is essential to our internet finance business. Any failure to maintain the satisfactory performance of our website and systems could materially and adversely affect our business and reputation. Changes in the interest rates and spread could have a negative impact on revenues from our new entrusted loan services. If the PRC government deems that the contractual arrangements in relation to our variable interest entity (Benefactum Beijing) do not comply with PRC governmental restrictions on foreign investment, or if these regulations or the interpretation of existing regulations changes in the future, we could be subject to penalties or be forced to relinquish our interests in those operations. Our contractual arrangements with Benefactum Beijing is not as effective in providing control over Benefactum Beijing as direct ownership. We may lose the ability to use, or otherwise benefit from, the licenses, approvals and assets held by our variable interest entity, which would severely disrupt our business, render us unable to conduct some or all of our business operations and constrain our growth. We may be required to obtain a value-added telecommunication business certificate and be subject to foreign investment restrictions. Our Corporate Information We were incorporated on April 18, 2014 in the State of Nevada. We conduct our business primarily in Beijing, Shanghai and Shandong Province, People s Republic of China. Our principal executive offices are located at Rooms 2401, 2402, 2403, 2404 and 2412 on 2299 Yan an West Road, Shanghai, China. Our telephone number is +86 021-2357-0077. We maintain a website at www.hyjf.com. The information contained on our website is not, and should not be interpreted to be, a part of this prospectus. THE OFFERING Offering price per share $5.85 Common stock being offered 5,555,555 shares Shares of common stock outstanding before this offering 72,364,178 shares Shares of common stock outstanding after this offering 77,919,733 shares Over-allotment option We have granted a 45-day option to the underwriters, exercisable one or more times in whole or in part, to purchase up to an additional 833,334 shares of common stock. Use of Proceeds We intend to use the net proceeds from this offering for general corporate purposes, which may include investment in product development, sales and marketing activities, technology upgrades, capital expenditures, improvement of corporate facilities, attracting qualified employees and other general and administrative matters, working capital and other general corporate purposes. We may also use a portion of these proceeds for the acquisition of, or investment in, technologies, solutions or businesses that complement our business, however, we have no present understandings, commitments or agreements to enter into any acquisitions or make any investments. Proposed NASDAQ trading symbol "HYJF" Lock-up agreements See "Underwriting" for more information Risk Factors The securities offered by this prospectus are speculative and involve a high degree of risk and investors purchasing securities should not purchase the securities unless they can afford the loss of their entire investment. See "Risk Factors" beginning on page 8. The number of shares of our common stock to be outstanding after this offering is based on the number of shares outstanding as of March 31, 2018. Unless otherwise noted, the information in this prospectus assumes that the underwriters do not exercise their over-allotment option. Unless otherwise indicated, all information in this prospectus gives effect to a 1-for-5 reverse stock split of our common stock effected on June 20, 2017. SUMMARY FINANCIAL AND OTHER DATA The following tables set forth our summary historical financial data for the periods presented. The following summary financial data for the years ended December 31, 2017 and 2016 are derived from our audited financial statements appearing elsewhere in this prospectus. The following summary financial data for the three-month periods ended March 31, 2018 and 2017 and the selected balance sheet data as of March 31, 2018 are derived from our unaudited financial statements appearing elsewhere in this prospectus. This summary financial data should be read together with the historical financial statements and related notes to those statements, as well as "Management s Discussion and Analysis of Financial Condition and Results of Operations," which are included elsewhere in this prospectus. As of March 31, As of December 31, 2018 2017 2016 (Unaudited) (Audited) (Audited) Selected Consolidated Balance Sheet Data: Cash and cash equivalents $3,588,204 $12,684,370 $8,561,695 Short-term loans receivable 49,914,818 40,492,363 - Prepayments, Deposits and Other Receivable 1,280,387 1,330,555 2,834,718 Total Assets 59,534,050 59,055,384 20,248,910 Total Current Liabilities 7,574,407 17,467,409 9,138,607 Total Liabilities 20,763,571 30,656,573 9,138,607 Total Stockholders equity 38,770,479 28,398,811 11,110,303 Three Months Ended March 31, Year Ended December 31, 2018 2017 2017 2016 (Unaudited) (Unaudited) (Audited) (Audited) Selected Consolidated Statements of Operations Data: Revenues $19,791,359 $7,886,899 $46,497,812 $24,679,249 Cost and Expense Selling, General and Administrative Expenses 9,322,891 5,204,851 28,237,779 19,355,753 Business and related taxes 92,112 44,217 179,347 175,854 Depreciation Expenses 66,699 29,695 128,492 678,991 Income from Operations 10,309,657 2,608,136 17,952,194 4,468,651 Income before Income Tax 10,190,210 2,635,016 17,837,775 4,497,302 Net Income $8,731,355 $1,993,288 $15,274,091 $3,439,205 Net income per common share Basic* $0.12 $0.03 $0.21 $0.05 Diluted* $0.11 $0.03 $0.21 $0.05 * Retroactively restated for the effect of 1-for-5 reverse stock split on June 20, 2017. RISK FACTORS You should carefully consider the risks described below and elsewhere in this prospectus, which could materially and adversely affect our business, results of operations or financial condition. Our business faces significant risks and the risks described below may not be the only risks we face. Additional risks not presently known to us or that we currently believe are immaterial may materially affect our business, results of operations, or financial condition. If any of these risks occur, the trading price of our common stock could decline, and you may lose all or part of your investment. Risks Related to Our Business and Industry We have a limited operating history in a new and evolving market, which makes it difficult to evaluate our future prospects. We launched our online financial platform on December 23, 2013 and have a limited operating history. In addition, the market for China s financial services is new and may not develop as expected, which could substantially harm our earning potential. Further, due to the fact that the industry in which we operate is relatively new, potential borrowers may not be familiar with the services we provide and may have difficulty distinguishing our services from those of our competitors. Convincing potential new borrowers of the value of our services is critical to expand our operations. In addition, we are in a new and evolving market, and the regulatory framework for this may remain uncertain for the foreseeable future. As our business develops in response to new regulatory requirements, or in response to competition, we may introduce new services or make adjustments to our existing services or business model. Any significant change to our business model may not achieve expected results and may have a material and adverse impact on our financial conditions and results of operations. In response to general economic conditions, we may impose more stringent borrower qualifications to ensure the quality of loans on our platform, which may negatively affect the growth of our business. It is therefore difficult to effectively assess our future prospects. You should consider our business and prospects in light of the risks and challenges we encounter or may encounter in this developing and rapidly evolving market. These risks and challenges include our ability to, among other things: navigate an evolving regulatory environment; expand the base of our cooperative companies; expand the base of borrowers and investors served on our market place; enhance our risk management capabilities; improve our operational efficiency; attract, retain and motivate talented employees; maintain the security of our platform and the confidentiality of the information provided and utilized across our platform; and defend ourselves against regulatory, litigation, privacy or other claims. If we fail to educate potential borrowers and investors about the value of our services, if the market for our services does not develop as we expect, or if we fail to address the needs of our target market, or other risks and challenges, our business and results of operations will be harmed. Our historical financial results may not be indicative of our future performance. Our business has achieved rapid growth since our inception. Our net revenue increased from approximately $24.68 million for the year ended December 31, 2016 to approximately $46.50 million for the year ended December 31, 2017, representing an increase of 88%. We recorded net income of approximately $3.44 million for the year ended December 31, 2016 to approximately $15.27 million for the year ended December 31, 2017. Our historically high growth rate and the limited history of business make it difficult to evaluate our prospects. We may not be able to sustain our historically rapid growth or may not be able to grow our business. Our reputation and brand recognition are crucial to our business. Any harm to our reputation or failure to enhance our brand recognition may materially and adversely affect our business, financial condition and results of operations. Our reputation and brand recognition, which depend on earning and maintaining trust and confidence of individuals or enterprises that are current or potential clients, are critical to our business. Our reputation and brand are vulnerable to many threats that can be difficult or impossible to control, and costly or impossible to remediate. Regulatory inquiries or investigations, lawsuits initiated by clients or other third parties, employee misconduct, perceptions of conflicts of interest and rumors, among other things, could substantially damage our reputation, even if they are baseless or are satisfactorily addressed. In addition, any perception that the quality of our internet finance services may not be the same as or better than that of other internet finance service providers can also damage our reputation. Moreover, any misconduct or allegations of misconduct by our third-party cooperative partners could result in negative publicity that could affect our reputation and erode the confidence of our clients. Furthermore, any negative media publicity about the financial service industry in general or service quality problems of other companies in the industry, including our competitors, may also negatively impact our reputation and brand. If we are unable to maintain a good reputation or further enhance our brand recognition, our ability to attract and retain clients and key employees could be harmed and, as a result, our business and revenues would be materially and adversely affected. If we fail to promote and maintain our brand in an effective and cost-efficient way, our business and results of operations may be harmed. We believe that developing and maintaining awareness of our brand effectively are critical to attracting new and retaining existing borrowers and investors to our platform. Successful promotion of our brand and our services depend largely on the effectiveness of our marketing efforts and the success of the channels we use to promote our services. Our efforts to build our brand have caused us to incur significant expenses, and it is likely that our future marketing efforts will require us to incur significant additional expenses. These efforts may not result in increased revenues in the immediate future or at all and, even if they do, any increases in revenues may not offset the expenses incurred. If we fail to successfully promote and maintain our brand while incurring substantial expenses, our results of operations and financial condition would be adversely affected, which may impair our ability to grow our business. Successful strategic relationships with the third-party cooperative partners are important for our future success. Our operations are heavily dependent on the relationship with our third-party cooperative partners. We anticipate that we will continue to leverage our strategic relationships with the existing third-party cooperative partners to grow our business while we will also pursue new relationships with other financial institutions. Identifying, negotiating and documenting relationships with these partners require significant time and resources. Our competitors may be more effective in providing incentives to our partners. Certain types of partners may devote more resources to support their own competing businesses. In addition, we may have disagreements or disputes with such partners, which could adversely affect our brand, reputation and services. If we cannot successfully maintain effective strategic relationships with these third-party cooperative partners, our business will be harmed. Fraudulent activity on our platform could negatively impact our operating results, brand and reputation and cause the use of our loan products and services to decrease. We are subject to the risk of fraudulent activity both on our platform and associated with borrowers, investors and third parties handling borrower and investor information. Our resources, technologies and fraud detection tools may be insufficient to accurately detect and prevent fraud. Significant increases in fraudulent activity involving our platform could negatively impact our brand and reputation, reduce the volume of loan transactions facilitated through our platform and lead us to take additional steps to reduce fraud risk, which could increase our costs. High profile fraudulent activity could even lead to regulatory intervention and may divert our management s attention and cause us to incur additional expenses and costs. Although we have not experienced any material business or reputational harm as a result of fraudulent activities in the past, we cannot rule out the possibility that any of the foregoing may occur causing harm to our business or reputation in the future. If any of the foregoing were to occur, our results of operations and financial conditions could be materially and adversely affected. If we are unable to maintain low default rates for loans facilitated by our platform, our business and results of operations may be materially and adversely affected. Investments in loans on our marketplace involve inherent risks as the return of the principal on a loan investment made through our platform is not guaranteed, although we aim to limit investor losses due to borrower defaults to within an industry acceptable range through various preventive measures we have taken or will take. Our ability to attract borrowers and investors to, and build trust in, our marketplace is significantly dependent on our ability to effectively evaluate a borrower s credit profile and maintain low default rates. To conduct this evaluation, we have employed a series of review and assessment procedures. If our review and assessment procedures contain errors, are ineffective or the data provided by borrowers or third parties is incorrect or stale, our loan pricing and approval process in our platform could be negatively affected, resulting in misclassified or mispriced loans or incorrect approvals or denials of loans. If we are unable to effectively and accurately assess the credit profiles of borrowers, segment borrowers into appropriate grade in the pricing grid, or price loans on our platform appropriately, we may either be unable to offer attractive fee rates to borrowers and returns to investors, or unable to maintain low default rates of loans facilitated by our platform. In addition, if the borrower s financial condition deteriorates after a loan application is approved, we may not be able to take measures to prevent default on the part of the borrower and thereby maintain low default rates for loans facilitated by our platform. If widespread defaults were to occur, investors may still incur losses and lose confidence in our marketplace and our business and results of operations may be materially and adversely affected. Not being able to utilize the risk reserve fund to mitigate credit risk to loan investors may negatively impact our ability to attract new and recurring loan investors, which would have a material adverse effect on our operations and competitive position. As required by Notice for Factual Acknowledge by and Rectification of Online Lending Information Intermediaries in Beijing (the "Notice") issued in March 2017, P2P platform in Beijing are prohibited from setting up a risk reserve fund for the purpose of providing guarantees to loans or promoting such type of funds to investors. To comply with relevant industry regulations, we are currently in the transition period of exiting our previously established risk reserve arrangements and have ceased advertising the establishment of risk reserve fund on our platform. The balance of risk reserve fund on our Consolidated Balance Sheets was approximately $12.1 million and $7.3 million as of December 31, 2017 and 2016, respectively, and it provided approximately $4.2 million and $2.3 million in net operating cash flow for the years ended December 31, 2017 and 2016, respectively. In December 2017, we stopped requiring new contributions from most of the borrowers and guarantors to the risk reserve fund and as of April 27, 2018 all the remaining balance of the risk reserve balance has been returned to borrowers and/or guarantors. Not being able to utilize the risk reserve fund limits one of the preventive measures we provided to mitigate credit risk for our loan investors and could negatively impact our ability to retain existing investors as well as attract new investors. In addition, our standard agreement with borrowers or guarantors does not stipulate the usage of cash deposited with us for the risk reserve fund, other than repaying investors, nor does it levy a restriction on the use of the cash in any way. Stopping new contributions to and returning the balance of the risk reserve fund would negatively affect our net cash flow from operating activities. Hence our competitive position as well as our results of operations could be materially and adversely affected. Credit and other information that we receive from third parties about a borrower may be inaccurate or may not accurately reflect the borrower s creditworthiness, which may compromise the accuracy of our credit assessment. For the purpose of credit assessment, we obtain borrower credit information from third parties, such as financial institutions and e-commerce providers, and assess applicants credit and assign credit scores to borrowers based on such credit information. Although we will conduct due diligence work and assess applicants credit, a credit score assigned to a borrower may not reflect that particular borrower s actual creditworthiness because the credit score may be based on outdated, incomplete or inaccurate consumer reporting data, and our due diligence work may not be sufficient to thoroughly assess an applicant s background information due to our limited resources. Additionally, there is a risk that, following our obtaining a borrower s credit information, the borrower may have: become delinquent in the payment of an outstanding obligation; defaulted on a pre-existing debt obligation; taken on additional debt; or sustained other adverse financial events. Such inaccurate or incomplete borrower credit information could compromise the accuracy of our credit assessment and adversely affect the effectiveness of our control over our default rates, which could in turn harm our reputation and materially and adversely affect our business, financial condition and results of operations. In addition, our business of connecting investors and individual borrowers may constitute an intermediary service, and our contracts with these investors and borrowers may be deemed as intermediation contracts, under the PRC Contract Law. Under the PRC Contract Law, the intermediary should truthfully inform the principal of the relevant contracts being entered into. If the intermediary deliberately conceals material facts pertaining to the contracts being entered into or provides false information concerning the contracts, to the extent harming the principal s interest, the intermediary may not be entitled to compensation from the principal and may be liable for damages to the principal. See "Regulations—Regulations on Loans between Individuals." Therefore, if we fail to provide material information to investors, or if we fail to identify false information received from borrowers or others and in turn provide such information to investors, and in either case if we are also found to be at fault, due to failure or deemed failure to exercise proper care, such as to conduct adequate information verification or employee supervision, we could be held liable for damages caused to investors as an intermediary pursuant to the PRC Contract Law. In addition, if we fail to complete our obligations under the agreements entered into with investors and borrowers, we could also be held liable for damages caused to borrowers or investors pursuant to the PRC Contract Law. On the other hand, we do not assume any liability solely on the basis of failure to correctly assign a loan grade to a particular borrower in the process of facilitating a loan transaction, as long as we do not intentionally conceal any material fact or provide false information and are not found to be at fault otherwise. However, due to the lack of detailed regulations and guidance in the area of peer-to-peer lending services and the possibility that the PRC government authority may promulgate new laws and regulations regulating peer-to-peer lending services in the future, there are substantial uncertainties regarding the interpretation and application of current or future PRC laws and regulations for the peer-to-peer lending service industry, and there can be no assurance that the PRC government authority will ultimately take a view that is consistent with ours. Our business model could be negatively affected by changes and fluctuation in the banking industry. Our business model is premised on the fact that SMEs and microenterprises are generally underserved by the banking industry because commercial banks in China have been reluctant to transact with SMEs and microenterprises that have no credit support, such as third-party guarantees, or adequate collateral of tangible assets, and we believe that these conditions will remain so in the foreseeable future. This has created opportunities for us to develop and expand our business. However, new trends in the banking industry or the applicable regulatory requirements may alleviate the high transaction costs or the lack of collateral and public information generally associated with bank financing to our target clients or otherwise make this business more attractive to banks. In the event that commercial banks begin to compete with us by making loans directly to our target clients without our facilitation, we may experience less demand for and greater competition with respect to our business. Furthermore, any such direct competition with our cooperating banks will undermine our relationship with them and may adversely affect our business, results of operations and prospects. Misconduct or errors by our management and employees and third-party service providers could harm our business and reputation. We are exposed to many types of operational risks, including the risk of misconduct and errors by our management, employees and third-party service providers. Our business depends on our management, employees and third-party service providers interacting with potential borrowers, conducting sufficient due diligence review and collecting borrowers information, all of which involve the use and disclosure of personal information. We could be materially adversely affected if transactions were redirected, misappropriated or otherwise improperly executed, if personal information was disclosed to unintended recipients or if an operational breakdown or failure in the processing of transactions occurred, whether as a result of human error, purposeful sabotage or fraudulent manipulation of our operations or systems. In addition, the manner in which we store and use certain personal information and interact with borrowers and banks is governed by various PRC laws. It is not always possible to identify and deter misconduct or errors by management and employees or third-party service providers, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses. If any of our management and employees or third-party service providers take, convert or misuse funds, documents or data or fail to follow protocol when interacting with borrowers and investors, we could be liable for damages and subject to regulatory actions and penalties. We could also be perceived to have facilitated or participated in the illegal misappropriation of funds, documents or data, or the failure to follow protocol, and therefore be subject to civil or criminal liability. The laws and regulations governing the online lending information intermediary service industry in China are developing and evolving and subject to change. If we fail to obtain and maintain requisite approvals, licenses or permits or fail to satisfy related governmental requirements or our practice is deemed to be in violation of any PRC laws, our business, financial condition and results of operations would be materially and adversely affected. Due to the relatively short history of the online lending information intermediary service industry in China, the PRC government has yet to establish a comprehensive regulatory framework governing our industry. Before any industry-specific regulations were introduced in mid-2015, the PRC government simply relied on general and basic laws and regulations in governing the online lending information intermediary service industry, including the PRC Contract Law, the General Principles of the Civil Law of the PRC, and related judicial interpretations promulgated by the Supreme People s Court. In July 2015, the People s Bank of China, or the PBOC, together with nine other PRC regulatory agencies jointly issued a series of policy measures applicable to the online lending information intermediary service industry entitled the "Guidelines on Promoting the Healthy Development of Online Finance Industry", or the Guidelines. For the first time, the Guidelines formally introduced a regulatory framework and basic principles for administering the online lending information intermediary service industry in China. Based on the core principles of the Guidelines, in August 2016, the China Banking Regulatory Commission ("CBRC") together with three other PRC regulatory agencies jointly issued Interim Measures on Administration of Business Activities of Online Lending Information Intermediaries (the "Interim Measures"). The Interim Measures require online lending information intermediaries and their branch offices to file a record with the local financial regulatory department where its business is registered within ten business days after obtaining the business license. Local financial regulatory departments have the power to assess and classify the online lending information intermediaries and to publicize the record-filing information and the classification results on their official websites. After completion of the records filing, the intermediary must apply for the appropriate telecommunication business license in accordance with the relevant requirements of the telecommunication authorities and is required to explicitly identify itself as an online lending information intermediary in its business scope. The Guidelines and Interim Measures provide that online lending intermediaries shall not engage in or be commissioned to engage in thirteen prohibited activities, including: (i) directly or indirectly financing its own projects; (ii) directly or indirectly receiving or collecting lenders funds; (iii) directly or indirectly offering guarantees to lenders or guaranteeing principal and interest payments; (iv) commissioning or authorizing a third-party to advertise or promote financing projects at any physical locations other than through electronic channels such as the Internet and mobile phones; (v) providing loans (unless otherwise permitted by laws and regulations); (vi) breaking down longer-term financing projects into shorter-term ones; (vii) offering its own wealth management products or other financial products to raise funds or act as a proxy in the selling of banks wealth management products, brokers asset management products, funds, insurance or trust products; (viii) providing services similar to asset-based securitization services or conducting credit assignment activities in the form of asset packaging, asset securitization, asset trusts or fund shares; (ix) mixing with, bundling with or acting as a proxy in relation to investment, sales agent and brokerage services of other businesses (unless permitted by laws and regulations); (x) fabricating or exaggerating the authenticity or earnings outlook of a financing project, concealing its flaws and risks, falsely advertising or promoting a project with intentional ambiguity or other deceptive means, or spreading false or incomplete information to damage the commercial reputation of others, or to mislead lenders or borrowers; (xi) providing intermediary services for loans used to invest in high-risk financing projects such as stocks, over-the-counter margin financing, futures contracts, structured products and other derivatives; (xii) operating equity-based crowd-funding; and (xiii) other activities prohibited by laws and regulations. The Interim Measures also require the intermediaries to strengthen their risk management by enhancing screening and verifying efforts on the borrowers and investors information, and setting up custody accounts with qualified banks to hold customer funds, among other things. We believe the Guidelines and the Interim Measures represent the beginning of the PRC government s measures to regulate the online lending information intermediary service industry, which will be followed by more implementation rules and regulations. For example, in October 2016, several regulations on Internet finance were publicly announced, including but not limited to, the Notice of the General Office of the State Council on the Issuance of Special Rectification Implementation Plan regarding Internet Finance, Special Rectification Implementation Plan regarding Online Marketplace Lending Risks, Special Rectification Implementation Plan for Risks of Asset Management Business through the Internet and Trans-subject Business, Special Rectification Implementation Plan for Risks regarding Non-Bank Payment Institutions, Special Rectification Implementation Plan for Risks of Internet Financing Advertising and Financial Activities in the form of financial investment (together the "Special Rectification Implementation Plans"). The Special Rectification Implementation Plans emphasize principles and rules in related to Internet financial regulations, and stipulate that (i) "look-through" supervision method shall be adopted, and (ii) companies in the same group that hold a number of financial business qualifications shall not violate rules of related party transactions and other related business regulations. In November 2016, the CBRC, the MIIT and the Industry and Commerce Administration Department, jointly issued the Guidance to the Administration of Filing and Registration of Online Lending Information Intermediaries (the "Filing Guideline"), which provides the general filing rules for online lending intermediaries, and delegates the filing authority to local financial authorities. The Guidance of Administration sets forth that online lending intermediaries are approved locally. Under the general filing procedures for online lending intermediaries, before a filing application is submitted to local financial regulators, the online lending intermediaries may be required to: (i) rectify any breach of applicable regulations as required by local financial regulators; and (ii) apply to the Industry and Commerce Administration Department to amend or register such entity s business scope. The CBRC also authorizes local financial regulators to make detailed implementation rules regarding filing procedures. Relevant local financial regulators are in the process of making such implementation rules, which may require us to complete filing records under such future requirements within a specified period. In February 2017, the CBRC issued the Guidelines on Online Lending Funds Custodian Business, or the Custodian Guidelines, which clarify the requirement of setting up custody accounts with commercial banks for the funds of investors held by the online lending platforms. In accordance with the Guidelines and the Interim Measures, the relevant authorities are in the process of making detailed implementation rules regarding, among other things, filing procedures, assessment standards and classification rules, and specific rules and procedures regarding, among other things, the application for an appropriate telecommunication business license. We are unable to predict with certainty the impact, if any, that future legislation, judicial precedents, rules or regulations relating to the online lending information intermediary service industry will have on our business, financial condition and results of operations. According to the Circular of the General Office of the State Council on Issuing the Implementation Plan for Special Rectification on Risks in Internet Finance promulgated in April 2016, competent authorities are in the process of evaluating existing practices of online lending information intermediaries in the market and requesting rectification of those that have been identified during the evaluation as in conflict with the Guidelines and the Interim Measures. In addition, the Office of Task Force Responsible for Special Rectification on Risks in Internet Finance in Beijing issued Notice for Factual Acknowledge by and Rectification of Online Lending Information Intermediaries in Beijing (the "Notice") in March 2017, pursuant to which, P2P platforms in Beijing are prohibited from setting up risk reserve fund or security fund for the purpose of providing guarantees to loans or promoting to investors regarding such types of funds. P2P platforms in Beijing have the same transition period to be compliant with the Notice as set forth in the Interim Measures. While we maintain a risk reserve fund for the protection of investors on our platform, unlike many other P2P platforms, the source of the reserve fund is not set aside from our own capital, but contributed by borrowers (if a guarantor is needed for the borrower, the guarantor) at 2% to 5% of the loan borrowed through our platform. Our risk reverse fund might still be deemed as a violation of applicable regulations. As of December 2017, we no longer required new contributions from most of the borrowers and guarantors to the risk reserve fund. The balance of the risk reserve fund was approximately $12.1 million as of December 31, 2017 and as of April 27, 2018, all funds deposited in the risk reserve fund have been returned to borrowers and/or guarantors. Stopping new contributions to, and returning the balance of the risk reserve fund negatively affects our net cash flow from operating activities. Not being able to utilize the risk reserve fund limits one of the preventive measures we provided to mitigate credit risk for our loan investors, and could negatively impact our ability to retain existing investors and attract new investors. Although the Interim Measures took effect immediately in August 2016, peer-to-peer platforms were given a year to adjust their practices to comply with them. In June 2017, the PBOC together with sixteen other PRC regulatory agencies jointly issued a notice entitled the Notice on Further Improvement of Internet Finance Risk Rectification and Clearance Task, or the Task Notice. The Task Notice, among other things, gave peer-to-peer platforms until the end of June 2018 to adjust their practices to be compliant with the Interim Measures and, in some complicated cases, up to two years for compliance upon approval by the provincial government. During such compliance period, no new non-compliant activities shall be practiced, and existing non-compliant practices shall gradually cease. On August 2, 2017, the State Council issued Administrative Regulations on Supervision of Financing Guarantee Companies ("Financing Guarantee Company Regulation"), which will be effective on October 1, 2017. The Financing Guarantee Company Regulation increases the minimum requirement of registered capital from RMB 5,000,000 to RMB 20,000,000. Financing Guarantee Company Regulation also provides that the balance amount of guarantee liability of a financing guarantee company shall not exceed 10 times the amount of its net assets. Where a financing guarantee company mainly provides services to small and micro enterprises, agriculture sector, rural villages and farmers, the balance amount of guarantee liability may be up to 15 times the amount of its net assets. On August 23, 2017, PBOC issued Disclosure Guideline for Information Regarding Business Activities of Online Lending Information Intermediaries (the "Disclosure Guideline") which clarifies, among other things, the items, timing, frequency and objects of disclosure and gives online lending intermediaries six months to rectify its existing non-compliance business. If online lending intermediaries fail to make the required rectifications, then the related rules set forth in Interim Measures and Guidance of Administration shall govern. In December 2017, the Office of Task Force Responsible for Special Rectification of Risks in P2P Online Lending issued the Notice on Inspection Acceptance of Special Rectification of Risks in P2P Online Lending Intermediaries, or the Circular 57, which requires the Office together with local financial regulatory authorities, local branches of the CBRC and the People's Bank of China, public security bureaus, telecommunication administrative agencies and local administration of industry and commerce ("AIC") to jointly inspect and determine whether a P2P platform complies with the Interim Measures. Circular 57 further clarifies several matters including, among other things, the assignment of creditor s right, the risk reserve fund, the fund depository, the comprehensive return rate of lending amount and cash loan, the registration requirements for P2P company and its branches, offline operation and the scale of businesses for P2P platforms, co-operations between P2P platforms and local financial exchanges, the outsourcing of the business and establishment of branches and disclosure of the information of P2P platforms and its infrastructure etc. Additionally, Circular 57 promulgates that a P2P platform can be registered with the local financial regulatory authority only after passing inspection and receiving an acceptance certificate or document issued jointly by local financial regulatory authority and local counterparts of the CBRC. Circular 57 requires that the registration of major P2P platforms shall be completed before April 2018 and no later than end of June 2018 for highly complicated cases. However, the compliance deadline has been postponed again and as of the date hereof, the financial regulatory agencies have not yet issued the compliance inspection guidelines including an updated schedule. The industry s general expectation is that peer-to-peer platforms will be given until the end of 2019 to adjust their practices to be compliant with the Interim Measures, but no official notice has been issued on such to date. In December 2017, the Office of Task Force Responsible for Special Rectification of Risks in Internet Finance and the Office of Task Force Responsible for Special Rectification of Risks in P2P Online Lending jointly issued the Notice on Rectification of Cash Loan Business, or Circular 141, which requires their local offices to jointly conduct clearance and rectification of cash loan business. Circular 141 clarifies the principles and rules in conducting a cash loan business. No organizations or individuals shall engage in a loan business without a proper license and annualized effective interest rates charged by financial institutions shall not exceed the legal limits. The circular suspended the issuance of new licenses for online micro-lenders and requires increased scrutiny of the business conduct of existing licensees from various perspectives. Circular 141 provides that banking financial institutions participation in the cash loan business shall also be highly regulated. Circular 141 promulgates several measures to be enforced in the event of violation of the regulations and requires periodic rectification reporting by its local offices. While we believe the purpose of Circular 141 is to regulate and rectify the recent surge in the cash loan business conducted by some online micro-lenders, it largely does not apply to us, nor does it affects our qualification to conduct our business as we are an online lending information intermediary ("P2P platform") as per the regulations but not an online micro-lender. Our entrusted loan business is conducted offline and we believe it is not the cash loan with features of no specific consumption financing needs to meet, no designated use of proceeds, no limitation on borrower groups and no collaterals that is governed by Circular 141 neither. Since some P2P platforms may go beyond their business scope and engage in the cash loan businesses without a license and charge an excessive interest rate over the legal limit (including interest in the forms of processing fee, management fee and security deposit etc.) to borrowers with high credit risk, some of the Circular 141 regulations do extend to P2P platforms, such as a regulation that prohibits deducting interest, processing fees, management fees and security deposits from the loan principal in advance, which could result in an effective interest rate over the legal limit. Given the general background of Circular 141 to rectify the cash loan business by online micro-lenders, we are currently evaluating its impact on our service fee schedule as it relates to P2P platforms. There is currently no communication from PRC regulatory agencies regarding such violation and if we determine that our current fee schedule is indeed in violation of the spirit of Circular 141, we will adjust our fee schedule accordingly and recognize revenue and a corresponding accounts receivable for our loan origination service fee in accordance with ASC 605, which would change the timing of our cash inflow from the collection of loan origination service fees and defer it till repayment of the loan at the latest. To comply with existing laws, rules and regulations relating to the online lending information intermediary service industry, we have implemented various policies and procedures, which we believe set the best practice in the industry, including, without limitation, the following: (i) we do not use our own capital to invest in loans facilitated through our online marketplace; (ii) we do not commit to providing guarantees to investors under any agreement for the full return of loan principal and interest; (iii) we do not hold investors funds, and funds loaned through our platform are deposited into and settled by a third-party custody account managed by a qualified bank, Jiangxi Bank; (iv) we strengthen the compliance in information disclosure and disclose on our website all relevant information to investors and borrowers; (v) we have been making strong effort to maintain the security of our platform and the confidentiality of the information provided and utilized across our platform; (vi) we have been gradually reducing the business volume generated under the module of having a third-party cooperative partner s creditor s rights transferred to us, and instead expanding the business directly matching Lenders and Borrowers and increasing the type and amount of small size products within the cap set forth under laws and regulation, such as automobile loans, small portion loans and other consumer financing products; (vii) we no longer maintain a risk reserve fund. However, the laws, rules and regulations are expected to continue to evolve in this emerging industry. The PRC government is expected to provide detailed implementation rules on certain key requirements of the Interim Measures, and the interpretation of the Interim Measures by the local authorities may be different from our understanding. We cannot be certain that our existing practices would not be deemed to violate any existing or future laws, rules and regulations. For instance, our current business includes third-party cooperative partners loan assignment process, which goes beyond the simple one-to-one matching between investors and borrowers and may involve in providing services similar to asset-based securitization services. We might be deemed directly or indirectly to hold investors funds and form a capital pool incidentally by third-party cooperative partners and could be viewed as violating some of these requirements. the Interim Measures set upper limits on the loan balance of a single borrower borrowing both from one online lending intermediary and from all online lending intermediaries. In the case of natural persons, this limit shall not be more than RMB200,000 (approximately $31,844) for one online lending intermediary and not more than RMB1 million (approximately $159,218) in total from all platforms, while the limit for a legal person or organization shall not be more than RMB1 million (approximately $159,218) for one online lending intermediary and not more than RMB5 million (approximately $796,090) in total from all platforms. Although we are in the process of adjusting our relevant policy and plan to stop facilitating loans with principal over the upper limits, certain loans on our platform that have been facilitated in the past have outstanding balance over such limit. In addition, due to lack of industry-wide information sharing arrangement, we cannot assure you that the aggregate amount of loans taken out by a borrower on our platform and other online lending information intermediary platforms at a point in time does not exceed the limit set in the Interim Measures. the Task Notice requires P2P lending platform to complete all rectification before June 2018 and the term is extendable for up to 2 years in certain complicated situations with the approval of provincial level government. During the compliance period, no new non-compliant activities will be practiced, and existing non-compliant practices will gradually drop down to nil. However, the compliance deadline has been postponed and as of the date hereof, the financial regulatory agencies have not yet issued the compliance inspection guidelines, including an updated schedule. The industry s general expectation is that peer-to-peer platforms will be given until the end of 2019 to adjust their practices to be compliant with the Interim Measures, but no official notice has been issued on such to date. If our new business is deemed to new non-compliant activities by the government, the related government authority may order us to stop or gradually phase out certain of our business immediately which may prolong the filing period and have adverse effects on our business. Currently, all the loans in our platform are secured by third-party cooperation institutions, of which certain of our third-party cooperation institution may not be qualified as Financing Guarantee Company under Financing Guarantee Company Regulation. It might violate the law for the provision of guarantee by a non-Financing Guarantee Company. In addition, from October 1, 2017, Financing Guarantee Company shall not provide the guarantee liability in excess of 10 times the amount of its net assets. Although our cooperation institutions have not been subject to penalty, we cannot assure you that our cooperation institutions will fully be in compliance with related laws and not be subject to any penalty. Any penalty of our cooperation institution may adversely affect our business. Currently, our information disclosure has not fully been complied with Disclosure Guideline and we will try our best to rectify our disclosure system. We cannot assure you we will fully comply with Disclosure Guideline after transition period of six months. If we still fail to satisfy all requirements under Disclosure Guideline, we may be subject to the penalty of government authority and our filing procedure with related government authority will be adversely affected, which will adversely affect our current business. We cannot assure you that our practices will not be required to be rectified or that our rectification measures and results will be satisfactory to the relevant authorities, and we cannot assure you that we will be able to successfully make filings, obtain and maintain requisite licenses and meet other regulatory requirements set forth in applicable laws, rules and regulations. To the extent that we fail to conduct our business in a manner required by the relevant authorities or take rectification measures when required by the relevant authorities, or obtain and maintain any requisite approvals, licenses or permits or meet other requirements applicable to our business, our business, financial condition and results of operations would be materially and adversely affected. As of the date of this prospectus, we have not been subject to any material fines or other penalties under any PRC laws or regulations including those governing the online lending information intermediary service industry in China. However, if our practice is deemed to violate any rules, laws or regulations, we may face injunctions, including orders to cease illegal activities, and may be exposed to other penalties as determined by the relevant government authorities as well. If such situations occur, our business, financial condition and prospects would be materially and adversely affected. In addition, given the evolving regulatory environment in which we operate, we cannot rule out the possibility that the PRC government will institute a licensing regime covering our industry. If such a licensing regime were introduced, we cannot assure you that we would be able to obtain any newly required license in a timely manner, or at all, which could materially and adversely affect our business and impede our ability to continue our operations. If we do not compete effectively, our results of operations could be harmed. The internet finance platform industry in China is intensely competitive and evolving. We compete with a large number of internet finance platforms. We also compete with financial products and companies that attract borrowers, investors or both. With respect to borrowers, we primarily compete with traditional financial institutions, such as consumer finance business units in commercial banks, credit card issuers and other consumer finance companies. With respect to investors, we primarily compete with other investment products and asset classes, such as equities, bonds, investment trust products, bank savings accounts, real estate and alternative asset classes. Our competitors operate with different business models, have different cost structures or participate selectively in different market segments. They may ultimately prove more successful or more adaptable to new regulatory, technological and other developments. Some of our current and potential competitors have significantly more financial, technical, marketing and other resources than we do and may be able to devote greater resources to the development, promotion, sale and support of their platforms. Our competitors may also have longer operating histories, more extensive borrower or investor bases, greater brand recognition and brand loyalty and broader partner relationships than us. Additionally, a current or potential competitor may acquire one or more of our existing competitors or form a strategic alliance with one or more of our competitors. Our competitors may be better at developing new products, offering more attractive investment returns or lower fees, responding faster to new technologies and undertaking more extensive and effective marketing campaigns. In response to competition and in order to grow or maintain the volume of loan transactions facilitated through our platform, we may have to offer higher investment return to investors or charge lower transaction fees, which could materially and adversely affect our business and results of operations. If we are unable to compete with such companies and meet the need for innovation in our industry, the demand for our platform could stagnate or substantially decline, we could experience reduced revenues, or our platform could fail to achieve or maintain more widespread market acceptance, any of which could harm our business and results of operations. Our business is subject to risks related to lawsuits and other claims brought by our clients. We are subject to lawsuits and other claims in the ordinary course of our business. In particular, we may face arbitration claims and lawsuits brought by our clients who have bought internet finance products, such as suits alleging misconduct by the managers of our Creditor Partners that we have recommended or made available to our clients. In connection with our facilitating small short-term loans, we may encounter complaints alleging breach of contract or potentially usury claims in our ordinary course of business. We may also encounter complaints alleging misrepresentation on the part of our relationship managers or other employees or that we have failed to carry out a duty owed to our clients. This risk may be heightened during periods when credit, equity or other financial markets are deteriorating in value or are volatile, or when clients or investors are experiencing losses. Actions brought against us may result in settlements, awards, injunctions, fines, penalties or other results adverse to us, including harm to our reputation. Even if we are successful in defending against these actions, we may incur significant expenses in the defense of such matters. Predicting the outcome of such matters is inherently difficult, particularly where claimants seek substantial or unspecified damages, or when arbitration or legal proceedings are at an early stage. A substantial judgment, award, settlement, fine, or penalty could be materially adverse to our operating results or cash flows for a particular future period, depending on our results for that period. Our failure to respond to rapid product innovation in the financial industry in a timely and cost-effective manner may have an adverse effect on our business and operating results. The financial industry is increasingly influenced by frequent new service introductions and evolving industry standards. We believe that our future success will depend on our ability to continue to anticipate service innovations and to offer additional services that meet evolving standards on a timely and cost-effective basis. There is a risk that we may not successfully identify new service opportunities or develop and introduce these opportunities in a timely and cost-effective manner. In addition, products and services that our competitors develop or introduce may render our products and services less competitive. As a result, failure to respond to product and service innovation that may affect our industry in the future may have a material adverse effect on our business and results of operations. Our operating history may not provide an adequate basis to judge our future prospects and results of operations. We commenced our business in 2013 as an online financial platform focusing on online peer-to-peer lending services. We seek to develop new internet finance products, but it is difficult to predict whether our new products will be well-accepted by our customers. Although we recorded net income in the prior year, we cannot assure you that our results of operations will not be adversely affected in any future period. We have limited operating history and as a result limited experience in delivering services, which makes the prediction of future results of operations difficult, and therefore, past results of operations achieved by us should not be taken as indicative of the rate of growth, if any, that can be expected in the future. As a result, you should consider our future prospects in light of the risks and uncertainties experienced by early stage companies in a rapidly evolving and increasingly competitive market in China. The proper functioning of our technology platform is essential to our internet finance business. Any failure to maintain the satisfactory performance of our website and systems could materially and adversely affect our business and reputation. We are constantly upgrading our platform to provide increased scale, improved performance for both PC and mobile version of our internet finance platform. The satisfactory performance, reliability and availability of our technology platform are critical to our success and our ability to attract and retain customers and provide quality customer service. To adapt to new products and upgrade our technology infrastructure requires significant investment of time and resources, including adding new hardware, updating software and recruiting and training new engineering personnel. Maintaining and improving our technology infrastructure require significant levels of investment. Adverse consequences could include unanticipated system disruptions, slower response times, impaired quality of clients experiences and delays in reporting accurate operating and financial information. Any system interruptions caused by telecommunications failures, computer viruses, hacking or other attempts to harm our systems that result in the unavailability or slowdown of our website or reduced performance could reduce the number of loans transacted and the attractiveness of product offerings on our platform. Our servers may also be vulnerable to computer viruses, physical or electronic break-ins and similar disruptions, which could lead to system interruptions, website slowdown or unavailability, delays or errors in transaction processing, loss of data or the inability to accept and fulfill customer orders. Security breaches, computer viruses and hacking attacks have become more prevalent in our industry. We can provide no assurance that our current security mechanisms will be sufficient to protect our IT systems from any third-party intrusions, viruses or hacker attacks, information or data theft or other similar activities. Any such future occurrences could reduce customer satisfaction, damage our reputation and our financial condition, results of operations and business prospects, as well as our reputation, could be materially and adversely affected. Any deficiencies in China s internet infrastructure could impair our ability to consummate loans over our website and mobile apps, which could cause us to lose customers and harm our operating results. Our internet finance business depends on the performance and reliability of the internet infrastructure in China since substantially all of our computer hardware is currently located in China. The availability of our website depends on telecommunications carriers and other third-party providers for communications and storage capacity, including bandwidth and server storage, among other things. If we are unable to enter into or renew agreements with these providers on commercially acceptable terms, or if any of our existing agreements with such providers are terminated as a result of our breach or otherwise, our ability to provide our services to our customers could be adversely affected. Almost all access to the internet in China is maintained through state-owned telecommunication carriers under administrative control, and we obtain access to end-user networks operated by such telecommunications carriers and internet service providers to give customers access to our website. We may experience service interruptions in the future, which are typically caused by service interruptions at the underlying external telecommunications service providers, such as the internet data centers and broadband carriers from which we lease services. Service interruptions prevent consumers from accessing our website and mobile apps and consummating loans, and frequent interruptions could frustrate customers and discourage them from attempting to consummate loans, which could cause us to lose customers and harm our operating results. If we fail to adopt new technologies or adapt our website, mobile apps and systems to changing customer requirements or emerging industry standards, our internet finance business may be materially and adversely affected. To remain competitive in the internet finance business, we must continue to enhance and improve the responsiveness, functionality and features of our website and mobile apps. The internet finance industry in China is characterized by rapid technological evolution, continual changes in customer requirements and preferences, frequent introductions of new products and services embodying new technologies and the emergence of new industry standards and practices, any of which could render our existing technologies and systems obsolete. The success of our internet finance business will depend, in part, on our ability to identify, develop, acquire or license leading technologies useful in our business, and respond to technological advances and emerging industry standards and practices, such as mobile internet, in a cost-effective and timely way. The development of websites, mobile apps and other proprietary technology entails significant technical and business risks. We cannot assure you that we will be able to use new technologies effectively or adapt our website, mobile apps, proprietary technologies and systems to meet evolving customer requirements or emerging industry standards. If we are unable to adapt in a cost-effective and timely manner in response to changing market conditions or customer requirements, whether for technical, legal, financial or other reasons, the overall prospects, financial condition and results of operations of our internet finance business may be materially and adversely affected. A severe or prolonged downturn in the Chinese or global economy could materially and adversely affect our business and financial condition. Any prolonged slowdown in the Chinese or global economy may have a negative impact on our business, results of operations and financial condition. In particular, general economic factors and conditions in China or worldwide, including the general interest rate environment and unemployment rates, may affect borrower willingness to seek loans and investor ability and desire to invest in loans. Economic conditions in China are sensitive to global economic conditions. The global financial markets have experienced significant disruptions since 2008 and the United States, Europe and other economies have experienced periods of recession. The recovery from the lows of 2008 and 2009 has been uneven and there are new challenges. There is considerable uncertainty over the long-term effects of the expansionary monetary and fiscal policies adopted by the central banks and financial authorities of some of the world s leading economies, including the United States and China. There have also been concerns about the economic effect of the tensions in the relationship between China and surrounding Asian countries. Adverse economic conditions could also reduce the number of qualified borrowers seeking loans through us. Should any of these situations occur, the amount of loans facilitated through us and our net revenues will decline, and our business and financial conditions will be negatively impacted. Additionally, continued turbulence in the international markets may adversely affect our ability to access the capital markets to meet liquidity needs. We may not be able to prevent unauthorized use of our intellectual property, which could reduce demand for our products and services, adversely affect our revenues and harm our competitive position. We rely primarily on a combination of copyright, trade secret, trademark and anti-unfair competition laws and contractual rights to establish and protect our intellectual property rights in our research reports, our services and other aspects of our business. We cannot assure you that the steps we have taken or will take in the future to protect our intellectual property or piracy will prove to be sufficient. Implementation of intellectual property-related laws in China has historically been lacking, primarily due to ambiguity in the PRC laws and enforcement difficulties. Accordingly, intellectual property rights and confidentiality protection in China may not be as effective as in the United States or other countries. Current or potential competitors may use our intellectual property without our authorization in the development of products and services that are substantially equivalent or superior to ours, which could reduce demand for our solutions and services, adversely affect our revenues and harm our competitive position. Even if we were to discover evidence of infringement or misappropriation, our recourse against such competitors may be limited or could require us to pursue litigation, which could involve substantial costs and diversion of management s attention from the operation of our business. Confidentiality agreements with employees, product providers and others may not adequately prevent disclosure of our trade secrets and other proprietary information. We require our employees, product providers, cooperating partners and others to enter into confidentiality agreements (or agreements that contain confidentiality terms) in order to protect our trade secrets and other proprietary information and, most importantly, our client information. These agreements might not effectively prevent disclosure of our trade secrets, know-how or other proprietary information and might not provide an adequate remedy in the event of unauthorized disclosure of such confidential information. In addition, others may independently discover trade secrets and proprietary information, and in such cases we could not assert any trade secret rights against such parties. Costly and time-consuming litigation could be necessary to enforce and determine the scope of our proprietary rights, and failure to obtain or maintain trade secret protection could adversely affect our competitive position. We may face intellectual property infringement claims, which could be time-consuming and costly to defend and may result in the loss of significant rights by us. Although we have not been subject to any litigation, pending or threatened, alleging infringement of third parties intellectual property rights, we cannot assure you that such infringement claims will not be asserted against us in the future. We are applying to register nine trademarks, including the one we are currently using as the Company's logo. Although we have conducted searches in trademark retrieval system prior to submitting the trademark registrations, these applications may still be rejected due to potential intellectual property infringement. Intellectual property litigation is expensive and time-consuming and could divert resources and management attention from the operation of our business. If there is a successful claim of infringement, we may be required to alter our services, cease certain activities, pay substantial royalties and damages to, and obtain one or more licenses from, third parties. We may not be able to obtain those licenses on commercially acceptable terms, or at all. Any of those consequences could cause us to lose revenues, impair our client relationships and harm our reputation. Our future success depends on the continuing efforts to retain our existing management team and other key employees as well as to attract, integrate and retain highly skilled and qualified personnel, and our business may be disrupted if we lose their services. Our future success depends heavily on the continued services of our current executive officers and senior management team. We also rely on the skills, experience and efforts of other key employees, including management, marketing, support, research and development, technical and services personnel in our internet finance businesses. Qualified employees are in high demand in the internet finance industries in China, and our future success depends on our ability to attract, train, motivate and retain highly skilled employees and the ability of our executive officers and other members of our senior management to work effectively as a team. If one or more of our executive officers or other key employees are unable or unwilling to continue in their present positions, we may not be able to find replacements easily, which may disrupt our business operations. We do not have key personnel insurance in place. If any of our executive officers or other key employees joins a competitor or forms a competing company, we may lose clients, know-how, key professionals and staff members. In addition, although each of our executive officers has entered into an employment agreement with us, not all of them contain non-competition provisions. Even for those executive officers whose employment agreements contain confidentiality and non-competition provisions, we cannot assure you of the extent to which any of these agreements could be enforced in China if any dispute arises between them and us because of the uncertainties of China s legal system. Our revenues and operating results can fluctuate from period to period, which could cause the price of our common stock to fluctuate. Our revenues and operating results have fluctuated in the past and may fluctuate from period to period in the future due to a variety of factors, many of which are beyond our control. Factors relating to our business that may contribute to these fluctuations include the following factors, as well as other factors described elsewhere in this prospectus: negative public perception and reputation of the internet finance industry; changes in laws or regulatory policy that could impact our ability to provide internet finance services to our clients; failure to enter into contracts with new financial institutions; cancellations or non-renewal of existing contracts with financial institutions; and changes in the number of clients who decide to effectively terminate their relationship with us. As a result of these and other factors, the results of any prior quarterly or annual periods should not be relied upon as indications of our future revenues or operating performance. If we fail to implement and maintain an effective system of internal controls, we may be unable to accurately report our results of operations or prevent fraud, and investor confidence and the market price of our common stock may be materially and adversely affected. As a public company in the United States, we are subject to the Sarbanes-Oxley Act of 2002 ("SOX"). Section 404 of the Sarbanes-Oxley Act of 2002, or Section 404, requires that we include a report from management on the effectiveness of its internal control over financial reporting in our annual report on Form 10-K. As a small reporting company, we currently do not need our independent registered public accounting firm to attest to and report on the effectiveness of our internal control over financial reporting. However, we are required to do so if we become an accelerated filer. During the preparation of our Annual Report on Form 10-K for the fiscal year of 2017, we discovered errors in the expense cutoff procedures and reclassification of a related party balance, which resulted in misstatements in our previously issued consolidated financial statements for the year ended December 31, 2016. As a result of these misstatements, in our Annual Report on Form 10-K for the fiscal year ended December 31, 2017 filed with the SEC on March 19, 2018, we restated our Consolidated Balance Sheet as of December 31, 2016 and the related Statements of Operations and Comprehensive Income (Loss), Consolidated Statements of Changes in Stockholders Equity and Consolidated Statements of Cash Flows for the fiscal year ended December 31, 2016. Annual Report on Form 10-K for the fiscal year ended December 31, 2016 has not been amended. The management discussed the circumstances surrounding the restatement with the Board of Directors and based on its assessment, management has concluded that its internal control over financial reporting was not effective as of December 31, 2017. Our management identified certain matters involving internal control and our operations that it considered to be material weaknesses. Specifically, the material weaknesses identified by our management as of December 31, 2017, are that we did not design, implement, or maintain effective entity-level controls related to our control environment, resulting in the following material weaknesses: Lack of polices and controls on period-end accounting close, including lack of formal policies on expense cutoff and account reconciliation. Specifically, we did not design and maintain effective controls over the completeness and accuracy of the obligations and accurate recognition of receipt of services and the related expenses in the proper period. In addition, we did not maintain effective controls on reviewing the related party transactions with timely disclosure. We lacked sufficiently-trained personnel to provide for adequate segregation of duties within the accounting system and effective oversight of controls over access, change, data and security management; There is insufficient knowledge and experience among our internal accounting personnel regarding the application of US GAAP and SEC reporting requirements; Our management will continue to monitor and evaluate the effectiveness of its disclosure controls and procedures, as well as its internal control over financial reporting, on an ongoing basis, and is committed to taking further action and implementing additional improvements, as necessary and as funds allow. However, our management cannot guarantee that the measures taken or any future measures will remediate the material weaknesses identified or that any additional material weaknesses or significant deficiencies will not arise in the future due to a failure to implement and maintain adequate internal control over financial reporting. As a result, our financial statements could contain material misstatements and we could fail to meet our reporting obligations, which would likely cause investors to lose confidence in our reported financial information. This could in turn limit our access to capital markets, harm our results of operations, and lead to a decline in the trading price of our common stock. We may need additional capital, and financing may not be available on terms acceptable to us, or at all. Although we believe that our anticipated cash flows from operating activities will be sufficient to meet our anticipated working capital requirements and capital expenditures in the ordinary course of business for the next 12 months, we cannot assure you this will be the case. We may need additional cash resources in the future if we experience changes in business conditions or other developments. We may also need additional cash resources in the future if we find and wish to pursue opportunities for investment, acquisition, capital expenditure or similar actions. If we determine that our cash requirements exceed the amount of cash and cash equivalents we have on hand at the time, we may seek to issue equity or debt securities or obtain credit facilities. The issuance and sale of additional equity would result in further dilution to our shareholders. The incurrence of indebtedness would result in increased fixed obligations and could result in operating covenants that would restrict our operations. We cannot assure you that financing will be available in amounts or on terms acceptable to us, if at all. From time to time we may evaluate and potentially consummate strategic investments or acquisitions, which could require significant management attention, disrupt our business and adversely affect our financial results. We may evaluate and consider strategic investments, combinations, acquisitions or alliances to further increase the value of our platform and better serve borrowers and investors. These transactions could be material to our financial condition and results of operations if consummated. If we are able to identify an appropriate business opportunity, we may not be able to successfully consummate the transaction and, even if we do consummate such a transaction, we may be unable to obtain the benefits or avoid the difficulties and risks of such transaction. Strategic investments or acquisitions will involve risks commonly encountered in business relationships, including: difficulties in assimilating and integrating the operations, personnel, systems, data, technologies, products and services of the acquired business; inability of the acquired technologies, products or businesses to achieve expected levels of revenue, profitability, productivity or other benefits; difficulties in retaining, training, motivating and integrating key personnel; diversion of management s time and resources from our normal daily operations; difficulties in successfully incorporating licensed or acquired technology and rights into our platform and loan products; difficulties in maintaining uniform standards, controls, procedures and policies within the combined organizations; difficulties in retaining relationships with customers, employees and suppliers of the acquired business; risks of entering markets in which we have limited or no prior experience; regulatory risks, including remaining in good standing with existing regulatory bodies or receiving any necessary pre-closing or post-closing approvals, as well as being subject to new regulators with oversight over an acquired business; assumption of contractual obligations that contain terms that are not beneficial to us, require us to license or waive intellectual property rights or increase our risk for liability; failure to successfully further develop the acquired technology; liability for activities of the acquired business before the acquisition, including intellectual property infringement claims, violations of laws, commercial disputes, tax liabilities and other known and unknown liabilities; potential disruptions to our ongoing businesses; and unexpected costs and unknown risks and liabilities associated with strategic investments or acquisitions. We may not make any investments or acquisitions, or any future investments or acquisitions may not be successful, may not benefit our business strategy, may not generate sufficient revenues to offset the associated acquisition costs or may not otherwise result in the intended benefits. In addition, we cannot assure you that any future investment in or acquisition of new businesses or technology will lead to the successful development of new or enhanced loan products and services or that any new or enhanced loan products and services, if developed, will achieve market acceptance or prove to be profitable. Competition for employees is intense, and we may not be able to attract and retain the qualified and skilled employees needed to support our business. We believe our success depends on the efforts and talent of our employees, including risk management, software engineering, financial and marketing personnel. Our future success depends on our continued ability to attract, develop, motivate and retain qualified and skilled employees. Competition for highly skilled technical, risk management and financial personnel is extremely intense. We may not be able to hire and retain these personnel at compensation levels consistent with our existing compensation and salary structure. Some of the companies with which we compete for experienced employees have greater resources than we have and may be able to offer more attractive terms of employment. In addition, we invest significant time and expenses in training our employees, which increases their value to competitors who may seek to recruit them. If we fail to retain our employees, we could incur significant expenses in hiring and training their replacements, and the quality of our services and our ability to serve borrowers and investors could diminish, resulting in a material adverse effect to our business. If we cannot maintain our corporate culture as we grow, we could lose the innovation, collaboration and focus that contribute to our business. We believe that a critical component of our success is our corporate culture, which we believe fosters innovation, encourages teamwork and cultivates creativity. As we develop the infrastructure of a public company and continue to grow, we may find it difficult to maintain these valuable aspects of our corporate culture. Any failure to preserve our culture could negatively impact our future success, including our ability to attract and retain employees, encourage innovation and teamwork and effectively focus on and pursue our corporate objectives. We face risks related to natural disasters, health epidemics and other outbreaks, which could significantly disrupt our operations. We are vulnerable to natural disasters and other calamities. Fire, floods, typhoons, earthquakes, power loss, telecommunications failures, break-ins, war, riots, terrorist attacks or similar events may give rise to server interruptions, breakdowns, system failures, technology platform failures or internet failures, which could cause the loss or corruption of data or malfunctions of software or hardware as well as adversely affect our ability to provide products and services on our platform. Our business could also be adversely affected by the effects of Zika virus, Ebola virus disease, H1N1 flu, H7N9 flu, avian flu, Severe Acute Respiratory Syndrome, or SARS, or other epidemics. Our business operations could be disrupted if any of our employees is suspected of having Zika virus, Ebola virus disease, H1N1 flu, H7N9 flu, avian flu, SARS or other epidemic, since it could require our employees to be quarantined and/or our offices to be disinfected. In addition, our results of operations could be adversely affected to the extent that any of these epidemics harms the Chinese economy in general. If our direct lending business is deemed to violate any PRC laws or regulation, our business, financial conditions and results of operations would be materially and adversely affected. We launched our direct lending business, whereby we provide loans to borrowers through a trustee, in June 2017. According to relevant PRC rules and regulations, an entity must obtain a license to provide loans in China. Since we do not currently possess such a license for direct lending, we have engaged a non-banking financial institution to provide entrusted loans to our customers. This channel may not be available in future due to changes in relevant rules and regulations; even if it continues to be available, the cost may be prohibitive. In addition, certain Interim Measures prohibit P2P platforms from providing loans unless otherwise permitted by laws and regulations. Though our entrusted loan business is conducted offline, not via our online platform, our direct lending business may still be deemed to violate relevant regulatory measures. There is currently no communication from PRC regulatory agencies regarding such violation. However, if we were determined to be in violation, we could be subject to monetary fines for these activities, and our reputation and operations may be adversely affected. We may not be able to collect the payment when a borrower becomes delinquent in the payment of his/her outstanding obligation. We launched our direct lending business, whereby we provide loans to borrowers through a trustee, in June 2017. Although we maintain a risk control system which supervises the borrower s financial conditions and the repayment process, we are subject to risks that we may not be able to collect the payment of a loan from the borrower or guarantor. In addition, the value of the collateral provided to the guarantors by the borrowers for the loan may decrease during the loan period and may not be sufficient to cover the payment of the loan when it is due. All of the loan contracts we have entered so far in our direct lending business have a loan term that is no more than six months and as such, we are subject to high risks and pressures to collect those payments of loans within six months. If we failed to do so, it could have a material adverse effect on our financial conditions, results of operations and business operations. A high degree of reliance on the third-party referral service providers as investor sources to our online platform may have material adverse effect on our business and operational results. 67% of loans facilitated through our platform for the year ended December 31, 2016 were extended by investors referred to us by outside referral service providers as a group, of which, 65% were extended by investors referred to us by one service provider. 91% of the loans facilitated through our platform for the year ended December 31, 2017 were extended by investors referred to us by outside referral service providers as a group, of which, 67% were referred by one service provider. 89% of the loans facilitated through our platform for the quarter ended March 31, 2018 were extended by investors referred to us by outside referral service providers as a group, of which, 55% were referred by one service provider. Although we are actively developing our businesses by channeling through other third-party referral service providers and by strengthening our platform's marketing efforts in order to attract more investors, we are exposed to the risk of relying on a major service provider as our investor source, and an untimely or an inadequate number of investors referred by third-party service providers or an increase in commissions by them may have material adverse effects on our business and operational results. We have no insurance coverage for our direct lending business or our bank accounts, which could expose us to significant costs and business disruption. Risks associated with our business and operations include, but are not limited to, borrowers' failure to repay the outstanding principal and interest when due, our loss reserve not being sufficient to cover such failure, loss of key personnel, business interruptions due to power shortages or network failure, and risks posed by natural disasters including storms, floods and earthquakes, any of which may result in significant costs or business disruption. We do not maintain any credit insurance, business interruption insurance, general third-party liability insurance, nor do we maintain key-man life insurance or any other insurance coverage except the mandatory social insurance for the employees of Benefactum Beijing. If we incur any loss that is not covered by our loss reserve, our business, financial condition and results of operations could be materially and adversely affected. We maintain our cash with various banks. Our cash accounts are not insured or otherwise protected. Should any bank or trust company holding our cash deposits become insolvent, or if we are otherwise unable to withdraw funds, we could lose the cash on deposit with that particular bank or trust company. Changes in the interest rates and spread could have a negative impact on the Company s revenues and results of operations. We just launched our direct lending business, whereby we provide loans to borrowers through a trustee, in June 2017. The revenues we will generate from our entrusted loan business depends upon interest income, which is the difference between interest we receive from loans to customers and the interest we pay on borrowings from other financial institutions (to the extent that we rely on debt financing, rather than equity). A narrowing interest rate spread could adversely affect our earnings and financial condition. If we are unable to control our funding costs or adjust our lending interest rates in a timely manner, our interest margin will decline. On August 6, 2015, the Supreme People s Court of the PRC issued the Provisions on Several Issues Concerning Laws Applicable to Trials of Private Lending Cases ("the provisions"), which came into effect on September 1, 2015. The provisions provided that agreements between lenders and borrowers on loans with interest rates below 24% per annum are valid and enforceable; as to loans with interest rates per annum between 24% and 36%, if the interest on the loans has already been paid to the lender, and such payment has not damaged the interest of the state, the community and any third parties, the courts will turn down the borrower s request to demand the return of the interest payment; if the annual interest rate of a private loan is higher than 36%, the excess will not be enforced by the courts. While this generally has the effect of raising the maximum interest rate at which we may lend to borrowers, the provisions are a recent change in regulation and we may not be able to foresee all of the consequences of the provisions. An increase to the provision for loan losses will cause the Company s net income to decrease. In June 2017, we launched our direct lending business, whereby we provide loans to borrowers through a trustee. Our businesses are subject to fluctuations based on local economic conditions. These fluctuations are neither predictable nor within our control and may have a material adverse impact on our operations and financial condition. We may decide to increase our provision for loan losses in light of the lack of clarity in the applicable banking regulations with regard to direct lending companies. The regulatory authority may also require an increase in the provision for loan losses or the recognition of further loan charge-offs, based on judgments different from those of our management. Any increase in the provision for loan losses will result in a decrease in net income and may have a material adverse effect on our financial condition and results of operations. Risks Related to Our Corporate Structure If the PRC government deems that the contractual arrangements in relation to our variable interest entity (Benefactum Beijing) do not comply with PRC governmental restrictions on foreign investment, or if these regulations or the interpretation of existing regulations changes in the future, we could be subject to penalties or be forced to relinquish our interests in those operations. Foreign ownership of certain types of internet businesses, such as internet information services, is subject to restrictions under applicable PRC laws, rules and regulations. For example, foreign investors are generally not permitted to own more than 50% of the equity interests in a value-added telecommunication service provider. Any such foreign investor must also have experience and a good track record in providing value-added telecommunications services overseas. All our revenue is generated by contractually controlled and managed entity, Benefactum Beijing. The contractual arrangements give us effective control over Benefactum Beijing and enable us to obtain substantially all of the economic benefits arising from it as well as consolidate the financial results of it in our results of operations. Although the structure we have adopted is consistent with longstanding industry practice, and is commonly adopted by comparable companies in China, the PRC government may not agree that these arrangements comply with PRC licensing, registration or other regulatory requirements, with existing policies or with requirements or policies that may be adopted in the future. In the opinion of our PRC counsel, the ownership structures of our material wholly-foreign owned enterprise and our material variable interest entity in China, do not and will not violate any applicable PRC law, regulation or rule currently in effect; and the contractual arrangements between our material wholly-foreign owned enterprise, our material variable interest entity and their respective equity holders governed by PRC law are valid, binding and enforceable in accordance with their terms and applicable PRC laws and regulations currently in effect and will not violate any applicable PRC law, rule or regulation currently in effect. However, PRC Counsel has also advised us that there are substantial uncertainties regarding the interpretation and application of current PRC laws, rules and regulations. Accordingly, the PRC regulatory authorities and PRC courts may in the future take a view that is contrary to the opinion of our PRC legal counsel. In January 2015, the PRC Ministry of Commerce ("MOC" or "MOFCOM") published a discussion draft of the PRC Foreign Investment Law soliciting the public s comments, or the draft of PRC Foreign Investment Law, which expands the definition of foreign investment and introduces the principle of "actual control" in determining whether a company is considered a foreign-invested enterprise. Under the draft of PRC Foreign Investment Law, a VIE would be deemed to be a foreign-invested enterprise if it is ultimately "controlled" by foreign investors, and accordingly it would be subject to restrictions on foreign investments. However, the draft of the PRC Foreign Investment Law does not address what actions will be taken with respect to the existing companies with structures similar to VIEs, whether or not these companies are controlled by Chinese parties. It is uncertain when the draft will become law and whether the final version will differ from the draft. If any Contractual Arrangements we may implement are found to be in violation of any existing or future PRC laws or regulations, or if we fail to obtain or maintain any of the required permits or approvals, the relevant governmental authorities would have broad discretion in dealing with such violation, including levying fines, confiscating our income or the income of our PRC subsidiary or consolidated VIE, revoking the business licenses or operating licenses of our PRC subsidiaries or consolidated VIE, prohibiting our use of proceeds from this offering to finance our business and operations in the PRC, and taking any other regulatory or enforcement actions that could be harmful to our business. Any of these actions could cause significant disruption to our operations and adversely affect our business. If any of these occurrences results in our inability to direct the activities of a consolidated VIE and/or our failure to receive economic benefits from a consolidated VIE, we may not be able to consolidate its results into our consolidated financial statements in accordance with U.S. GAAP. Furthermore, it is uncertain whether any new PRC laws, rules or regulations relating to variable interest entity structures will be adopted or if adopted, what they would provide. If we or our variable interest entity are found to be in violation of any existing or future PRC laws, rules or regulations, or fail to obtain or maintain any of the required permits or approvals, the relevant PRC regulatory authorities would have broad discretion to take action in dealing with such violations or failures, including revoking the business and operating licenses of our PRC subsidiary or variable interest entity, requiring us to discontinue or restrict our operations, restricting our right to collect revenue, blocking one or more of our websites, requiring us to restructure our operations or taking other regulatory or enforcement actions against us. The imposition of any of these measures could result in a material adverse effect on our ability to conduct all or any portion of our business operations. In addition, it is unclear what impact the PRC government actions would have on us and on our ability to consolidate the financial results of our variable interest entity in our consolidated financial statements, if the PRC government authorities were to find our legal structure and contractual arrangements to be in violation of PRC laws, rules and regulations. If the imposition of any of these government actions causes us to lose our right to direct the activities of any of our material variable interest entity or otherwise separate from it and if we are not able to restructure our ownership structure and operations in a satisfactory manner, we would no longer be able to consolidate the financial results of our variable interest entity in our consolidated financial statements. Any of these events would have a material adverse effect on our business, financial condition and results of operations. Substantial uncertainties exist with respect to the enactment timetable, interpretation and implementation of draft PRC Foreign Investment Law. The MOFCOM, published a discussion draft of the proposed Foreign Investment Law in January 2015 aiming to, upon its enactment, replace the major existing laws and regulations governing foreign investment in China. While the MOFCOM solicited comments on this draft earlier this year, substantial uncertainties exist with respect to its enactment timetable, interpretation and implementation. The draft Foreign Investment Law, if enacted as proposed, may materially impact the entire legal framework regulating foreign investments in China. Among other things, the draft Foreign Investment Law purports to introduce the principle of "actual control" in determining whether a company is considered a foreign invested enterprise, or an FIE. The draft Foreign Investment Law specifically provides that entities established in China but "controlled" by foreign investors will be treated as FIEs, whereas an entity organized in a foreign jurisdiction, but cleared by the MOFCOM as "controlled" by PRC entities and/or citizens, would nonetheless be treated as a PRC domestic entity for investment in the "restriction category" on the "negative list." In this connection, "control" is broadly defined in the draft law to cover any of the following summarized categories: holding 50% or more of the voting rights or similar equity interest of the subject entity; holding less than 50% of the voting rights or similar equity interest of the subject entity but having the power to directly or indirectly appoint or otherwise secure at least 50% of the seats on the board or other equivalent decision-making bodies, or having the voting power to materially influence the board, the shareholders meeting or other equivalent decision-making bodies; or having the power to exert decisive influence, via contractual or trust arrangements, over the subject entity s operations, financial, staffing and technology matters. Once an entity is determined to be an FIE, and its investment amount exceeds certain thresholds or its business operation falls within a "negative list" purported to be separately issued by the State Council in the future, market entry clearance by the MOFCOM or its local counterparts would be required. The "variable interest entity" structure, or VIE structure, has been adopted by many PRC-based companies, including us, to obtain necessary licenses and permits in the industries that are currently subject to foreign investment restrictions in China. Under the draft Foreign Investment Law, variable interest entities that are controlled via contractual arrangements would also be deemed as FIEs if they are ultimately "controlled" by foreign investors. For any companies with a VIE structure in an industry category that is in the "restriction category" on the "negative list," the existing VIE structure may be deemed legitimate only if the ultimate controlling person(s) is/are of PRC nationality (either PRC state owned enterprises or agencies, or PRC citizens). Conversely, if the actual controlling person(s) is/are of foreign nationalities, then the variable interest entities will be treated as FIEs and any operation in the industry category on the "negative list" without market entry clearance may be considered as illegal. Based on the definition of "control" in the draft Foreign Investment Law as currently proposed, we believe that there is strong basis for a determination that we and our variable interest entity is ultimately controlled by PRC citizens for the following reasons: Hui Ying Financial takes full control of Benefactum Alliance which, in turn, controls Benefactum Sino; Two Seychelles companies owns 93.25% of Hui Ying Financial s common stock and their sole shareholder is a PRC citizen or national; Because Benefactum Alliance, through Benefactum Sino, indirectly controls Benefactum Shenzhen which, in turn, via a series of contractual arrangements, has the right to appoint the Chairman and directors of Benefactum Beijing, Benefactum Alliance effectively controls the board and all management decisions of Benefactum Beijing. Effectively, Benefactum Alliance also has the power to exert decisive influence over its operations, financial, staffing and technology matters. However, there are significant uncertainties as to how the control status of our company, our variable interest entity and our equity investees with a VIE structure would be determined under the enacted version of the Foreign Investment Law. In addition, it is uncertain whether any of the businesses that we currently operate or plan to operate in the future through our consolidated entities and the businesses operated by our equity investees with a VIE structure would be on the to-be-issued "negative list" and therefore be subject to any foreign investment restrictions or prohibitions. We also face uncertainties as to whether the enacted version of the Foreign Investment Law and the final "negative list" would mandate further actions, such as MOFCOM market entry clearance, to be completed by companies with existing VIE structure and whether such clearance can be timely obtained, or at all. If we or our equity investees with a VIE structure were not considered as ultimately controlled by PRC domestic investors under the enacted version of the Foreign Investment Law, further actions required to be taken by us or such equity investees under the enacted Foreign Investment Law may materially and adversely affect our business and financial condition. In addition, our corporate governance practice may be materially impacted, and our compliance costs could increase if we were not considered as ultimately controlled by PRC domestic investors under the enacted version of the Foreign Investment Law. For instance, the draft Foreign Investment Law as proposed purports to impose stringent ad hoc and periodic information reporting requirements on foreign investors and the applicable FIEs. Aside from investment implementation report and investment amendment report that would be required for each investment and alteration of investment specifics, a prospectus would be mandatory, and large foreign investors meeting certain criteria would be required to report on a quarterly basis. Any company found to be non-compliant with these information reporting obligations could potentially be subject to fines and/or administrative or criminal liabilities, and the persons directly responsible could be subject to criminal liabilities. Our contractual arrangements may not be as effective in providing control over the variable interest entities as direct ownership. We rely on contractual arrangements with our variable interest entity to operate our electronic platform in China and other businesses in which foreign investment is restricted or prohibited. For a description of these contractual arrangements, see "History and Corporate Structure — Contractual Arrangements with Benefactum Beijing." These contractual arrangements may not be as effective as direct ownership in providing us with control over our variable interest entity. If we had direct ownership of the variable interest entity, we would be able to exercise our rights as an equity holder directly to effect changes in the boards of directors of the entity, which could effect changes at the management and operational level. Under our contractual arrangements, we would be able to change the members of the boards of directors of the entity only by exclusively exercising the equity holders voting rights and would have to rely on the variable interest entity and the variable interest entity equity holders to perform their obligations in the contractual arrangements in order to exercise our control over the variable interest entity. The variable interest entity equity holders may have conflicts of interest with us or our shareholders, and they may not act in the best interests of our company or may not perform their obligations under these contracts. For example, our variable interest entity and its equity holders could breach their contractual arrangements with us by, among other things, failing to conduct their operations, including maintaining our website and using our domain names and trademarks which the relevant variable interest entity has exclusive rights to use, in an acceptable manner or taking other actions that are detrimental to our interests. Pursuant to the option, we may replace the equity holders of the variable interest entity at any time pursuant to the contractual arrangements. However, if any equity holder is uncooperative and any dispute relating to these contracts or the replacement of the equity holders remains unresolved, we will have to enforce our rights under the contractual arrangements through the operations of PRC law and arbitral or judicial agencies, which may be costly and time-consuming and will be subject to uncertainties in the PRC legal system. See "Any failure by our variable interest entity or its equity holders to perform their obligations under the contractual arrangements would have a material adverse effect on our business, financial condition and results of operations." Consequently, the contractual arrangements may not be as effective in ensuring our control over the relevant portion of our business operations as direct ownership. Any failure by our variable interest entity or its equity holders to perform their obligations under the contractual arrangements would have a material adverse effect on our business, financial condition and results of operations. If our variable interest entity or its equity holders fail to perform their respective obligations under the contractual arrangements, we may have to incur substantial costs and expend additional resources to enforce such arrangements. Although we have entered into an option agreement in relation to our variable interest entity, which provides that we may exercise an option to acquire, or nominate a person to acquire, ownership of the equity in that entity or, in some cases, its assets, to the extent permitted by applicable PRC laws, rules and regulations, the exercise of the option is subject to the review and approval of the relevant PRC governmental authorities. We have also entered into an equity interest pledge agreement with respect to the variable interest entity to secure certain obligations of such variable interest entity or its equity holders to us under the contractual arrangements. However, the enforcement of such agreement through arbitral or judicial agencies may be costly and time-consuming and will be subject to uncertainties in the PRC legal system. Moreover, our remedies under the equity pledge agreement are primarily intended to help us collect debts owed to us by the variable interest entity equity holders under the contractual arrangements and may not help us in acquiring the assets or equity of the variable interest entity. In addition, although the terms of the contractual arrangements provide that they will be binding on the successors of the variable interest entity equity holders, as those successors are not a party to the agreements, it is uncertain whether the successors in case of the death, bankruptcy or divorce of a variable interest entity equity holder will be subject to or will be willing to honor the obligations of such variable interest entity equity holder under the contractual arrangements. If the relevant variable interest entity or its equity holder (or its successor), as applicable, fails to transfer the shares of the variable interest entity according to the relevant call option agreement or equity pledge agreement, we would need to enforce our rights under the call option agreement or equity pledge agreement, which may be costly and time-consuming and may not be successful. The contractual arrangements are governed by PRC law and provide for the resolution of disputes through arbitration or court proceedings in China. Accordingly, these contracts would be interpreted in accordance with PRC law and any disputes would be resolved in accordance with PRC legal procedures. The legal system in the PRC is not as developed as in some other jurisdictions, such as the United States. Moreover, there are very few precedents and little formal guidance as to how contractual arrangements in the context of a variable interest entity should be interpreted or enforced under PRC law, and as a result it may be difficult to predict how an arbitration panel or court would view such contractual arrangements. As a result, uncertainties in the PRC legal system could limit our ability to enforce the contractual arrangements. Under PRC law, if the losing parties fail to carry out the arbitration awards or court judgments within a prescribed time limit, the prevailing parties may only enforce the arbitration awards or court judgments in PRC courts, which would require additional expense and delay. In the event we are unable to enforce the contractual arrangements, we may not be able to exert effective control over the variable interest entities, and our ability to conduct our business, as well as our financial condition and results of operations, may be materially and adversely affected. We may lose the ability to use, or otherwise benefit from, the licenses, approvals and assets held by our variable interest entity, which could severely disrupt our business, render us unable to conduct some or all of our business operations and constrain our growth. Our variable interest entity, Benefactum Beijing, holds licenses and approvals and assets that are necessary for our business operations, to which foreign investments are typically restricted or prohibited under applicable PRC law. The contractual arrangements contain terms that specifically obligate variable interest entity equity holders to ensure the valid existence of the variable interest entities and restrict the disposal of material assets of the variable interest entities. However, in the event the variable interest entity equity holders breach the terms of these contractual arrangements and voluntarily liquidate our variable interest entity or our variable interest entity declares bankruptcy and all or part of its assets become subject to liens or rights of third-party creditors, or are otherwise disposed of without our consent, we may be unable to conduct some or all of our business operations or otherwise benefit from the assets held by the variable interest entity, which could have a material adverse effect on our business, financial condition and results of operations. Furthermore, if our variable interest entity undergoes a voluntary or involuntary liquidation proceeding, its equity holders or unrelated third-party creditors may claim rights to some or all of the assets of such variable interest entity, thereby hindering our ability to operate our business as well as constrain our growth. The equity holders, directors and executive officers of our variable interest entity, as well as our employees who execute other strategic initiatives may have potential conflicts of interest with our company. PRC laws provide that a director and an executive officer owe a fiduciary duty to the company he or she directs or manages. The directors and executive officers of the variable interest entity, Bodang Liu and Wei Zheng, must act in good faith and in the best interests of the variable interest entity and must not use their respective positions for personal gain. On the other hand, as a director of our company, Mr. Liu has a duty of care and loyalty to our company and to our shareholders as a whole under Nevada law. We control our variable interest entity through contractual arrangements and the business and operations of our variable interest entity are closely integrated with the business and operations of our subsidiaries. Nonetheless, conflicts of interests for these individuals may arise due to dual roles both as directors and executive officers of the variable interest entity and as directors or employees of our company. We cannot assure you that these individuals will always act in the best interests of our company should any conflicts of interest arise, or that any conflicts of interest will always be resolved in our favor. We also cannot assure you that these individuals will ensure that the variable interest entity will not breach the existing contractual arrangements. If we cannot resolve any such conflicts of interest or any related disputes, we would have to rely on legal proceedings to resolve these disputes and/or take enforcement action under the contractual arrangements. There is substantial uncertainty as to the outcome of any such legal proceedings. See "Any failure by our variable interest entity or its equity holders to perform their obligations under the contractual arrangements would have a material and adverse effect on our business, financial condition and results of operations." The contractual arrangements with our variable interest entity may be subject to scrutiny by the PRC tax authorities. Any adjustment of related party transaction pricing could lead to additional taxes, and therefore substantially reduce our consolidated net income and the value of your investment. The tax regime in China is rapidly evolving and there is significant uncertainty for taxpayers in China as PRC tax laws may be interpreted in significantly different ways. The PRC tax authorities may assert that we or our subsidiaries or the variable interest entity or their equity holders owe and/or are required to pay additional taxes on previous or future revenue or income. In particular, under applicable PRC laws, rules and regulations, arrangements and transactions among related parties, such as the contractual arrangements with our variable interest entity, may be subject to audit or challenge by the PRC tax authorities. If the PRC tax authorities determine that any contractual arrangements were not entered into on an arm s length basis and therefore constitute a favorable transfer pricing, the PRC tax liabilities of the relevant subsidiaries and/or variable interest entity and/or variable interest entity equity holders could be increased, which could increase our overall tax liabilities. In addition, the PRC tax authorities may impose late payment interest. Our net income may be materially reduced if our tax liabilities increase. Risks Related to Doing Business in the People s Republic of China Changes in the political and economic policies of the PRC government may materially and adversely affect our business, financial condition and results of operations and may result in our inability to sustain our growth and expansion strategies. All of our operations are conducted in the PRC and all of our revenue is sourced from the PRC. Accordingly, our financial condition and results of operations are affected to a significant extent by economic, political and legal developments in the PRC. The PRC economy differs from the economies of most developed countries in many respects, including the extent of government involvement, level of development, growth rate, control of foreign exchange and allocation of resources. Although the PRC government has implemented measures emphasizing the utilization of market forces for economic reform, the reduction of state ownership of productive assets, and the establishment of improved corporate governance in business enterprises, a substantial portion of productive assets in China is still owned by the government. In addition, the PRC government continues to play a significant role in regulating industry development by imposing industrial policies. The PRC government also exercises significant control over China s economic growth by allocating resources, controlling payment of foreign currency-denominated obligations, setting monetary policy, regulating financial services and institutions and providing preferential treatment to particular industries or companies. While the PRC economy has experienced significant growth in the past three decades, growth has been uneven, both geographically and among various sectors of the economy. The PRC government has implemented various measures to encourage economic growth and guide the allocation of resources. Some of these measures may benefit the overall PRC economy, but may also have a negative effect on us. Our financial condition and results of operation could be materially and adversely affected by government control over capital investments or changes in tax regulations that are applicable to us. In addition, the PRC government has implemented in the past certain measures, including interest rate increases, to control the pace of economic growth. These measures may cause decreased economic activity, which in turn could lead to a reduction in demand for our services and consequently have a material adverse effect on our businesses, financial condition and results of operations. There are uncertainties regarding the interpretation and enforcement of PRC laws, rules and regulations. Most of our operations are conducted in the PRC, and are governed by PRC laws, rules and regulations. Our PRC subsidiaries are subject to laws, rules and regulations applicable to foreign investment in China. The PRC legal system is a civil law system based on written statutes. Unlike the common law system, prior court decisions may be cited for reference but have limited precedential value. In 1979, the PRC government began to promulgate a comprehensive system of laws, rules and regulations governing economic matters in general. The overall effect of legislation over the past three decades has significantly enhanced the protections afforded to various forms of foreign investment in China. However, China has not developed a fully integrated legal system, and recently enacted laws, rules and regulations may not sufficiently cover all aspects of economic activities in China or may be subject to significant degree of interpretation by PRC regulatory agencies and courts. In particular, because these laws, rules and regulations are relatively new, and because of the limited number of published decisions and the non-precedential nature of such decisions, and because the laws, rules and regulations often give the relevant regulator significant discretion in how to enforce them, the interpretation and enforcement of these laws, rules and regulations involve uncertainties and can be inconsistent and unpredictable. In addition, the PRC legal system is based in part on government policies and internal rules, some of which are not published on a timely basis or at all, and which may have a retroactive effect. As a result, we may not be aware of our violation of these policies and rules until after the occurrence of the violation. Any administrative and court proceedings in China may be protracted, resulting in substantial costs and diversion of resources and management attention. Since PRC administrative and court authorities have significant discretion in interpreting and implementing statutory and contractual terms, it may be more difficult to evaluate the outcome of administrative and court proceedings and the level of legal protection we enjoy than in more developed legal systems. These uncertainties may impede our ability to enforce the contracts we have entered into and could materially and adversely affect our business, financial condition and results of operations. We may be required to obtain a value-added telecommunication business certificate and be subject to foreign investment restrictions. PRC regulations impose sanctions for engaging in Internet information services of a commercial nature without having obtained an Internet Content Provider, or ICP, certificate. The Interim Measures provide that online lending information intermediaries must apply for value-added telecommunications business licenses in accordance with the relevant provisions of telecommunications authorities after filing with a local financial regulator. If we could not obtain such value-added telecommunication certificates pursuant to the relevant regulations, we may not be able to conduct online lending intermediaries services, our business may be materially and adversely affected. We plan to apply for the corresponding value-added telecommunication business certificates after completing the filing. PRC regulations regarding acquisitions impose significant regulatory approval and review requirements, which could make it more difficult for us to pursue growth through acquisitions. Under the PRC Anti-Monopoly Law, companies undertaking acquisitions relating to businesses in China must notify MOFCOM, in advance of any transaction where the parties revenues in the China market exceed certain thresholds and the buyer would obtain control of, or decisive influence over, the target. In addition, on August 8, 2006, six PRC regulatory agencies, including the MOFCOM, the State-Owned Assets Supervision and Administration Commission, the State Administration of Taxation ("SAT"), the State Administration of Industry & Commerce ("SAIC"), the China Securities Regulatory Commission ("CSRC"), and the State Administration of Foreign Exchange ("SAFE"), jointly adopted the Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, or the M&A Rules, which came into effect on September 8, 2006 and was amended on June 22, 2009. Under the M&A Rules, the approval of MOFCOM must be obtained in circumstances where overseas companies established or controlled by PRC enterprises or residents acquire domestic companies affiliated with such PRC enterprises or residents. Applicable PRC laws, rules and regulations also require certain merger and acquisition transactions to be subject to security review. Our proposed acquisition of control of, or decisive influence over, any company with revenues within China of more than RMB400 million (approximately $60.11 million) in the year prior to any proposed acquisition would be subject to MOFCOM merger control review. Certain transactions we may undertake could be subject to MOFCOM merger review. Complying with the requirements of the relevant regulations to complete such transactions could be time-consuming, and any required approval processes, including approval from MOFCOM, may delay or inhibit our ability to complete such transactions, which could affect our ability to expand our business or maintain our market share. In addition, MOFCOM has not accepted antitrust filings for any transaction involving parties that adopt a variable interest entity structure. If MOFCOM s practice remains unchanged, our ability to carry out our investment and acquisition strategy may be materially and adversely affected and there may be significant uncertainty as to whether transactions that we may undertake would subject us to fines or other administrative penalties and negative publicity and whether we will be able to complete large acquisitions in the future in a timely manner or at all. We may be treated as a resident enterprise for PRC tax purposes under the PRC Enterprise Income Tax Law, and we may therefore be subject to PRC income tax on our global income. Under the PRC Enterprise Income Tax Law and its implementing rules, both of which came into effect on January 1, 2008, enterprises established under the laws of jurisdictions outside of China with "de facto management bodies" located in China may be considered PRC tax resident enterprises for tax purposes and may be subject to the PRC enterprise income tax at the rate of 25% on their global income. "De facto management body" refers to a managing body that exercises substantive and overall management and control over the production and business, personnel, accounting books and assets of an enterprise. The SAT issued the Notice Regarding the Determination of Chinese-Controlled Offshore-Incorporated Enterprises as PRC Tax Resident Enterprises on the Basis of De Facto Management Bodies, or Circular 82, on April 22, 2009. Circular 82 provides certain specific criteria for determining whether the "de facto management body" of a Chinese-controlled offshore-incorporated enterprise is located in China. Although Circular 82 only applies to offshore enterprises controlled by PRC enterprises, not those controlled by foreign enterprises or individuals, the determining criteria set forth in Circular 82 may reflect the State Administration of Taxation s general position on how the "de facto management body" test should be applied in determining the tax resident status of offshore enterprises, regardless of whether they are controlled by PRC enterprises. Currently, we generate no revenues offshore. However, if we generate revenues offshores in the future and if we were to be considered a PRC resident enterprise, we would be subject to PRC enterprise income tax at the rate of 25% on our global income. In such case, our profitability and cash flow may be materially reduced as a result of our global income being taxed under the Enterprise Income Tax Law. We believe that none of our entities outside of China is a PRC resident enterprise for PRC tax purposes. However, the tax resident status of an enterprise is subject to determination by the PRC tax authorities and uncertainties remain with respect to the interpretation of the term "de facto management body." Restrictions on currency exchange may limit our ability to utilize our revenue effectively. Presently all of our revenue is denominated in RMB. The RMB is currently convertible under the "current account," which includes dividends, trade and service-related foreign exchange transactions, but not under the "capital account," which includes foreign direct investment and loans. Currently, our PRC subsidiary, which is a wholly-foreign owned enterprise, may purchase foreign currency for settlement of "current account transactions," including payment of dividends to us, without the approval of SAFE by complying with certain procedural requirements. However, the relevant PRC governmental authorities may limit or eliminate our ability to purchase foreign currencies in the future for current account transactions. Since a significant amount of our future revenue will be denominated in RMB, any existing and future restrictions on currency exchange may limit our ability to utilize revenue generated in RMB to fund our business activities outside of the PRC or pay dividends in foreign currencies to our shareholders, including holders of our common stock, or pay principal and interest in foreign currencies to the holders of the notes. Foreign exchange transactions under the capital account remain subject to limitations and require approvals from, or registration with, SAFE and other relevant PRC governmental authorities. This could affect our ability to obtain foreign currency through debt or equity financing for our subsidiaries and the variable interest entities. Fluctuations in exchange rates could result in foreign currency exchange losses and could materially reduce the value of your investment. The value of the RMB against the U.S. dollar and other currencies may fluctuate and is affected by, among other things, changes in political and economic conditions and the foreign exchange policy adopted by the PRC government. On July 21, 2005, the PRC government changed its policy of pegging the value of the RMB to the U.S. dollar. Following the removal of the U.S. dollar peg, the RMB appreciated more than 20% against the U.S. dollar over the following three years. Between July 2008 and June 2010, this appreciation halted and the exchange rate between the RMB and the U.S. dollar remained within a narrow band. Since June 2010, the PRC government has allowed the RMB to appreciate slowly against the U.S. dollar again, and it has appreciated more than 10% since June 2010. In April 2012, the PRC government announced that it would allow more RMB exchange rate fluctuation. On August 11, 2015, the PRC government set the central parity rate for the RMB nearly 2% lower than that of the previous day and announced that it will begin taking into account previous day s trading in setting the central parity rate. It is difficult to predict how market forces or PRC or U.S. government policy may impact the exchange rate between the RMB and the U.S. dollar in the future. There remains significant international pressure on the PRC government to adopt a more flexible currency policy, which could result in greater fluctuation of the RMB against the U.S. dollar. Substantially all of our revenues and costs are denominated in RMB, and a significant portion of our financial assets and debt are also denominated in RMB. We are a holding company and we rely on dividends paid by our operating subsidiaries in China for our cash needs. Any significant revaluation of the RMB may materially and adversely affect our liquidity and cash flows. To the extent that we need to convert U.S. dollars into RMB for our operations, appreciation of the RMB against the U.S. dollar would have an adverse effect on the RMB amount we would receive. Conversely, if we decide to convert our RMB into U.S. dollars for other business purposes, appreciation of the U.S. dollar against the RMB would have a negative effect on the U.S. dollar amount we would receive. We may be adversely affected by the complexity, uncertainties and changes in PRC regulation of internet-related businesses and companies, and any lack of requisite approvals, licenses or permits applicable to our business may have a material adverse effect on our business and results of operations. The PRC government extensively regulates the internet industry, including foreign ownership of, and the licensing and permit requirements pertaining to, companies in the internet industry. These internet-related laws and regulations are relatively new and evolving, and their interpretation and enforcement involve significant uncertainties. As a result, in certain circumstances it may be difficult to determine what actions or omissions may be deemed to be in violation of applicable laws and regulations. We only have contractual control over our website. We do not directly own the website due to the restriction of foreign investment in businesses providing value-added telecommunication services in China, including internet information provision services. This may significantly disrupt our business, subject us to sanctions, compromise enforceability of related contractual arrangements, or have other harmful effects on us. The evolving PRC regulatory system for the internet industry may lead to the establishment of new regulatory agencies. For example, in May 2011, the State Council announced the establishment of a new department, the State Internet Information Office (with the involvement of the State Council Information Office, the Ministry of Industry & Information Technology, or the MITT, and the Ministry of Public Security). The primary role of this new agency is to facilitate the policy-making and legislative development in this field, to direct and coordinate with the relevant departments in connection with online content administration and to deal with cross-ministry regulatory matters in relation to the internet industry. The interpretation and application of existing PRC laws, regulations and policies and possible new laws, regulations or policies relating to the internet industry have created substantial uncertainties regarding the legality of existing and future foreign investments in, and the businesses and activities of, internet businesses in China, including our business. We cannot assure you that we have obtained all the permits or licenses required for conducting our business in China or will be able to maintain our existing licenses or obtain new ones. If the PRC government considers that we were operating without the proper approvals, licenses or permits or promulgates new laws and regulations that require additional approvals or licenses or imposes additional restrictions on the operation of any part of our business, it has the power, among other things, to levy fines, confiscate our income, revoke our business licenses, and require us to discontinue our relevant business or impose restrictions on the affected portion of our business. Any of these actions by the PRC government may have a material adverse effect on our business and results of operations. We rely on dividends and other distributions on equity paid by our PRC subsidiary to fund any cash and financing requirements we may have, and any limitation on the ability of our PRC subsidiary to make payments to us could have a material adverse effect on our ability to conduct our business. We are a holding company, and we rely on dividends and other distributions on equity paid by our PRC subsidiary for our cash and financing requirements, including the funds necessary to pay dividends and other cash distributions to our shareholders and service any debt we may incur. If our PRC subsidiaries incur debt on their own behalf in the future, the instruments governing the debt may restrict their ability to pay dividends or make other distributions to us. In addition, the PRC tax authorities may require Benefactum Shenzhen to adjust its taxable income under the contractual arrangements it currently has in place with our consolidated variable interest entity in a manner that would materially and adversely affect its ability to pay dividends and other distributions to us. See "Risks Related to Our Corporate Structure—Contractual arrangements in relation to our consolidated variable interest entity may be subject to scrutiny by the PRC tax authorities and they may determine that we or our PRC consolidated variable interest entity owe additional taxes, which could negatively affect our financial condition and the value of your investment." Under PRC laws and regulations, our PRC subsidiary, as a wholly foreign-owned enterprise in China, may pay dividends only out of their respective accumulated after-tax profits as determined in accordance with PRC accounting standards and regulations. In addition, a wholly foreign-owned enterprise is required to set aside at least 10% of its accumulated after-tax profits each year, if any, to fund certain statutory reserve funds, until the aggregate amount of such funds reaches 50% of its registered capital. At its discretion, a wholly foreign-owned enterprise may allocate a portion of its after-tax profits based on PRC accounting standards to staff welfare and bonus funds. These reserve funds and staff welfare and bonus funds are not distributable as cash dividends. Moreover, in November 2016, PBOC issued a Notice of the People s Bank of China on Further Clarification of the Matters concerning the RMB Loans Granted Overseas by Domestic Enterprise ("Circular 306"), pursuant to which the handling bank shall require the lender to register with the local SAFE branch before granting overseas RMB loans. The handling bank shall strictly examine whether the operation scale is compatible with the scale of the loan and the actual purpose of the funds loaned overseas, to ensure the authenticity and the purpose of the loans. Circular 306 also expressly stipulated certain requirements for granting overseas RMB loans, such as the existence of an equity relationship between the borrower and lender. There is no direct equity ownership in our VIE Benefactum Beijing by the Company or its offshore subsidiaries in BVI and Hong Kong. Therefore, Benefactum Beijing may not be able to provide funds directly to the Company or its wholly-owned offshore subsidiaries in BVI and Hong Kong for the purpose of cash dividends or other distributions through extending overseas RMB loans. In addition, although we currently do not operate any overseas RMB loan business, Circular 306 may restrict our ability to expand our business for overseas RMB loans. Any limitation on the ability of our PRC subsidiary to pay dividends or make other distributions to us could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our business, `pay dividends, or otherwise fund and conduct our business. Governmental control of currency conversion may limit our ability to utilize our net revenues effectively and affect the value of your investment. The PRC government imposes controls on the convertibility of the RMB into foreign currencies and, in certain cases, the remittance of currency out of China. We receive substantially all of our net revenues in RMB. Under our current corporate structure, our company in the United States relies on dividend payments from our PRC subsidiary to fund any cash and financing requirements we may have. Under existing PRC foreign exchange regulations, payments of current account items, such as profit distributions and trade and service-related foreign exchange transactions, can be made in foreign currencies without prior approval from SAFE by complying with certain procedural requirements. Therefore, our PRC subsidiary is able to pay dividends in foreign currencies to us without prior approval from SAFE, subject to the condition that the remittance of such dividends outside of the PRC complies with certain procedures under PRC foreign exchange regulation, such as the overseas investment registrations by the beneficial owners of our company who are PRC residents. But approval from or registration with appropriate government authorities is required where RMB is to be converted into foreign currency and remitted out of China to pay capital expenses such as the repayment of loans denominated in foreign currencies. The PRC government may also at its discretion restrict access in the future to foreign currencies for current account transactions. If the foreign exchange control system prevents us from obtaining sufficient foreign currencies to satisfy our foreign currency demands, we may not be able to pay dividends in foreign currencies to our shareholders, including holders of our common stock. Failure to make adequate contributions to various employee benefit plans as required by PRC regulations may subject us to penalties. We are required under PRC laws and regulations to participate in various government sponsored employee benefit plans, including certain social insurance, housing funds and other welfare-oriented payment obligations, and contribute to the plans in amounts equal to certain percentages of salaries, including bonuses and allowances, of our employees up to a maximum amount specified by the local government from time to time at locations where we operate our businesses. The requirement of employee benefit plans has not been implemented consistently by the local governments in China given the different levels of economic development in different locations. Although we have made contributions to some employee benefit plans, such as social security plans, we may have not made adequate employee benefit payments required by PRC regulations. We may be required to make up the contributions for these plans as well as pay late fees and fines. If we are subject to late fees or fines in relation to the underpaid employee benefits, our financial condition and results of operations may be adversely affected. The M&A Rules and certain other PRC regulations establish complex procedures for some acquisitions of Chinese companies by foreign investors, which could make it more difficult for us to pursue growth through acquisitions in China. The M&A Rules and some other regulations and rules concerning mergers and acquisitions established additional procedures and requirements that could make merger and acquisition activities by foreign investors more time consuming and complex, including requirements in some instances that the MOC be notified in advance of any change-of-control transaction in which a foreign investor takes control of a PRC domestic enterprise. Moreover, the Anti-Monopoly Law requires that the MOC shall be notified in advance of any concentration of undertaking if certain thresholds are triggered. In addition, the security review rules issued by the MOC that became effective in September 2011 specify that mergers and acquisitions by foreign investors that raise "national defense and security" concerns and mergers and acquisitions through which foreign investors may acquire de facto control over domestic enterprises that raise "national security" concerns are subject to strict review by the MOC, and the rules prohibit any activities attempting to bypass a security review, including by structuring the transaction through a proxy or contractual control arrangement. In the future, we may grow our business by acquiring complementary businesses. Complying with the requirements of the above-mentioned regulations and other relevant rules to complete such transactions could be time consuming, and any required approval processes, including obtaining approval from the MOC or its local counterparts may delay or inhibit our ability to complete such transactions, which could affect our ability to expand our business or maintain our market share. PRC regulations relating to offshore investment activities by PRC residents may limit our PRC subsidiary ability to increase their registered capital or distribute profits to us or otherwise expose us or our PRC resident beneficial owners to liability and penalties under PRC law. SAFE promulgated the Circular on Relevant Issues Relating to Domestic Resident s Investment and Financing and Roundtrip Investment through Special Purpose Vehicles, or SAFE Circular 37, in July 2014 that requires PRC residents or entities to register with SAFE or its local branch in connection with their establishment or control of an offshore entity established for the purpose of overseas investment or financing. In addition, such PRC residents or entities must update their SAFE registrations when the offshore special purpose vehicle undergoes material events relating to any change of basic information (including change of such PRC citizens or residents, name and operation term), increases or decreases in investment amount, transfers or exchanges of shares, or mergers or divisions. SAFE Circular 37 is issued to replace the Notice on Relevant Issues Concerning Foreign Exchange Administration for PRC Residents Engaging in Financing and Roundtrip Investments via Overseas Special Purpose Vehicles, or SAFE Circular 75. SAFE promulgated the Notice on Further Simplifying and Improving the Administration of the Foreign Exchange Concerning Direct Investment in February 2015, which took effect on June 1, 2015. This notice has amended SAFE Circular 37 requiring PRC residents or entities to register with qualified banks rather than SAFE or its local branch in connection with their establishment or control of an offshore entity established for the purpose of overseas investment or financing. If our shareholders who are PRC residents or entities do not complete their registration as required, our PRC subsidiary may be prohibited from distributing their profits and proceeds from any reduction in capital, share transfer or liquidation to us, and we may be restricted in our ability to contribute additional capital to our PRC subsidiary. Moreover, failure to comply with the SAFE registration described above could result in liability under PRC laws for evasion of applicable foreign exchange restrictions. Namely, if violations of the registration and compliance provisions of the Circular result in capital outflow, violators shown to evade foreign exchange by transferring foreign exchange from China to overseas or by using fraudulent means to transfer domestic funds to overseas may be subject to orders by the SAFE or other governmental authorities to repatriate the foreign exchange within a stipulated period and be subject to a fine of not more than 30% of the amount of evaded foreign exchange; in the most egregious cases, a fine ranging from 30% to the equivalent value of the evaded foreign exchange may be imposed; where the case constitutes a criminal offense, criminal liability may be pursued in accordance with relevant PRC laws. Also, if violations of the registration and compliance provisions result in capital inflow or exchange settlement, violators shown to remit foreign exchange into China may be ordered by the foreign exchange control authorities to make corrections and be subject to a fine of not more than 30% of the illegal remittance; in the most egregious cases, a fine ranging from 30% to the equivalent amount of the illegal remittance may be imposed. Persons who engage in illegal settlement of foreign exchange conversion may be ordered by the foreign exchange control authorities to reverse the illegal conversion and be subject to a fine of not more than 30% of the illegal conversion. Further, persons who fail to complete statistical reporting for international balance of payments for the relevant cross-border income and expenditure between a Chinese resident and a special purpose company pursuant to the provisions may also be punishable pursuant to Foreign Exchange Administration Regulations. The Company has been informed that in October 2017, Bodang Liu, the Company s Chairman and Chief Executive Officer, filed his registration application according to SAFE Circular 37. In January 2018, the SAFE staff informed the Company and Mr. Liu that the staff could not reach a decision on Mr. Liu s registration application in light of the regulatory uncertainty pertaining to the status of the ongoing rectification measures under the Interim Measures. As of the date hereof, Mr. Liu s registration application remains pending and incomplete. We will resume the application for SAFE Circular 37 registration upon consummation of the industry rectification pursuant to the Interim Measures. Should Mr. Liu fail to complete his registration under the Circular, Mr. Liu and/or the Company may be subject to the full range of regulatory sanctions and penalties referenced above, including, among others, corrections, fines, restrictions on the in/outflow of capital, criminal liability, etc. In light of the foregoing, we cannot provide any assurance that all of our record or beneficial owners who are PRC residents or entities have complied to date or will be required to comply with and will in the future make or obtain any applicable registrations or approvals required by, SAFE and/or other applicable rules and regulations. Failure by such shareholders or beneficial owners to comply with SAFE regulations, or failure by us to amend the foreign exchange registrations of our PRC subsidiary, could subject us to fines or legal sanctions, restrict our overseas or cross-border investment activities, limit our PRC subsidiary ability to make distributions or pay dividends to us or affect our ownership structure, which could adversely affect our business, growth and prospects. Enhanced scrutiny over acquisition transactions by the PRC tax authorities may have a negative impact on potential acquisitions we may pursue in the future. The PRC tax authorities have enhanced their scrutiny over the direct or indirect transfer of certain taxable assets, including, in particular, equity interests in a PRC resident enterprise, by a non-resident enterprise by promulgating and implementing SAT Circular 59 and Circular 698, which became effective in January 2008, and a Circular 7 in replacement of some of the existing rules in Circular 698, which became effective in February 2015. Under Circular 698, where a non-resident enterprise conducts an "indirect transfer" by transferring the equity interests of a PRC "resident enterprise" indirectly by disposing of the equity interests of an overseas holding company, the non-resident enterprise, being the transferor, may be subject to PRC enterprise income tax if the indirect transfer is considered to be an abusive use of company structure without reasonable commercial purposes. As a result, gains derived from such indirect transfer may be subject to PRC tax at a rate of up to 10%. Circular 698 also provides that, where a non-PRC resident enterprise transfers its equity interests in a PRC resident enterprise to its related parties at a price lower than the fair market value, the relevant tax authority has the power to make a reasonable adjustment to the taxable income of the transaction. In February 2015, the SAT issued Circular 7 to replace the rules relating to indirect transfers in Circular 698. Circular 7 has introduced a new tax regime that is significantly different from that under Circular 698. Circular 7 extends its tax jurisdiction to not only indirect transfers set forth under Circular 698 but also transactions involving transfer of other taxable assets, through the offshore transfer of a foreign intermediate holding company. In addition, Circular 7 provides clearer criteria than Circular 698 on how to assess reasonable commercial purposes and has introduced safe harbors for internal group restructurings and the purchase and sale of equity through a public securities market. Circular 7 also brings challenges to both the foreign transferor and transferee (or other person who is obligated to pay for the transfer) of the taxable assets. Where a non-resident enterprise conducts an "indirect transfer" by transferring the taxable assets indirectly by disposing of the equity interests of an overseas holding company, the non-resident enterprise being the transferor, or the transferee, or the PRC entity which directly owned the taxable assets may report to the relevant tax authority such indirect transfer. Using a "substance over form" principle, the PRC tax authority may disregard the existence of the overseas holding company if it lacks a reasonable commercial purpose and was established for the purpose of reducing, avoiding or deferring PRC tax. As a result, gains derived from such indirect transfer may be subject to PRC enterprise income tax, and the transferee or other person who is obligated to pay for the transfer is obligated to withhold the applicable taxes, currently at a rate of 10% for the transfer of equity interests in a PRC resident enterprise. We face uncertainties on the reporting and consequences on future private equity financing transactions, share exchange or other transactions involving the transfer of shares in our company by investors that are non-PRC resident enterprises. The PRC tax authorities may pursue such non-resident enterprises with respect to a filing or the transferees with respect to withholding obligation and request our PRC subsidiaries to assist in the filing. As a result, we and non-resident enterprises in such transactions may become at risk of being subject to filing obligations or being taxed, under Circular 59 or Circular 698 and Circular 7, and may be required to expend valuable resources to comply with Circular 59, Circular 698 and Circular 7 or to establish that we and our non-resident enterprises should not be taxed under these circulars, which may have a material adverse effect on our financial condition and results of operations. The PRC tax authorities have the discretion under SAT Circular 59, Circular 698 and Circular 7 to make adjustments to the taxable capital gains based on the difference between the fair value of the taxable assets transferred and the cost of investment. We may pursue acquisitions in the future that may involve complex corporate structures. If we are considered a non-resident enterprise under the PRC Enterprise Income Tax Law and if the PRC tax authorities make adjustments to the taxable income of the transactions under SAT Circular 59 or Circular 698 and Circular 7, our income tax costs associated with such potential acquisitions will be increased, which may have an adverse effect on our financial condition and results of operations. PRC regulations regarding peer-to-peer lending impose significant regulatory restrictions on business scope, lending amount, and registration requirements, which may materially and adversely affect our business, financial condition and results of operations and may result in our inability to sustain our growth. In addition, the implementing regulations have yet to be announced and there is substantial uncertainty over it. The costs and burden of compliance with such regulations may be sufficiently inhibitory to negatively affect our profitability and growth. Under the Interim Measures, peer-to-peer platforms will not be able to accept deposits from the public, nor create asset pools, or provide any form of guarantee for lenders. In addition, according to the Interim Measures, an individual may borrow a maximum of RMB 200,000 (approximately $31,844) from a single peer-to-peer platform and a maximum of RMB 1 million (approximately $159,218) from all peer-to-peer platforms. A company can borrow no more than RMB 1 million (approximately $159,218) from a single peer-to-peer platform, and no more than RMB 5 million (approximately $796,090) from all peer-to-peer platforms. The Interim Measures require a peer-to-peer lending platform to register with the local financial supervisory department, and to apply for related licenses for providing telecommunication services. Based on the review of Beijing Finance Bureau, we are required to rectify our incompliance with certain requirements of the Interim Measures, including that a majority of the loans facilitated through our platform have exceeded the maxim amounts allowed under the Interim Measures. In order to meet the requirements of the Interim Measures as well as other applicable rules and regulations, the Company has taken a series of measures, including: (i) execution of a fund depository agreement with Jiangxi Bank as custodian of investor funds, (ii) strict qualification review of borrowers, investors and financing projects, (ii) strengthening protection of lenders and borrowers; (iii) full information disclosure; (iv) expanding and restructuring loan product offerings and (v) adjustment of loan balances. However, if we fail to comply with the requirements within the transition period, we may not be able to obtain the value-added telecommunication business licenses to continue to operate our current business. Although the Interim Measures took effect immediately on August 17, 2016, peer-to-peer platforms were given a year to adjust their practices to comply with them. In June 2017, the PBOC, together with sixteen other PRC regulatory agencies, jointly issued a notice titled the Notice on Further Improvement of Internet Finance Risk Rectification and Clearance Task, or the Task Notice. The Task Notice, among other things, gave peer-to-peer platforms till end of June 2018 to adjust their practices to be compliant with the Interim Measures and in some complicated cases, up to two years for compliance upon approval by provincial government. During such compliance period, no new non-compliant activities will be practiced, and existing non-compliant practices will gradually drop down to nil. However, the compliance deadline has been postponed again and as of the date hereof, the financial regulatory agencies have not yet issued the compliance inspection guidelines including an updated schedule. The industry s general expectation is that peer-to-peer platforms will be given until the end of 2019 to adjust their practices to be compliant with the Interim Measures, but no official notice has been issued on such to date. We have been advised by our Chinese counsel that regulations and rules regarding registration as an online lending intermediary information agency, apart from the value-added telecommunication business licenses, remain unclear at this moment. There is significant uncertainty as to whether practices that we may undertake would subject us to fines or other administrative penalties. The future development and implementation of anti-money laundering laws in China may increase our obligation to supervise and report transactions with our customers, thereby increasing our compliance efforts and costs and exposing us to criminal measures or administrative sanctions for non-compliance. The Interim Measures provide that an internet lending intermediary information agency is obligated to "fulfill its anti-money laundering and anti-terrorist financing obligations according to relevant laws, such as examining client identification, reporting suspicious transactions and maintaining client identity documents and transaction records". PRC laws and regulations relating to anti-money laundering have evolved significantly in recent years and may continue to develop. In the future, we may be required to supervise and report transactions with our customers for anti-money laundering or other purposes, which may increase our compliance efforts and costs and may expose us to potential criminal measures or administrative sanctions if we fail to establish and implement the required procedures or otherwise fail to comply with the relevant laws and regulations. Increases in labor costs in the PRC may adversely affect our business and results of operations. The economy in China has experienced increases in inflation and labor costs in recent years. As a result, average wages in the PRC are expected to continue to increase. In addition, we are required by PRC laws and regulations to pay various statutory employee benefits, including pension, housing fund, medical insurance, work-related injury insurance, unemployment insurance and maternity insurance to designated government agencies for the benefit of our employees. The relevant government agencies may examine whether an employer has made adequate payments to the statutory employee benefits, and those employers who fail to make adequate payments may be subject to late payment fees, fines and/or other penalties. We expect that our labor costs, including wages and employee benefits, will continue to increase. Unless we are able to control our labor costs or pass on these increased labor costs to our users by increasing the fees of our services, our financial condition and results of operations may be adversely affected. Risks Related to this Offering Prior to this offering, we had a limited public market for our shares of common stock and you may not be able to resell our shares at or above the price you paid, or at all. Prior to this offering, there was a limited public market for our common stock in the OTC Market. We cannot assure you that an active public market for our common stock will develop or that the market price of our shares will not decline below the public offering price. The public
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diff --git a/parsed_sections/prospectus_summary/2018/CIK0001628871_tempus_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001628871_tempus_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..cbc7ea2a193e6720fee8a1156198ab9bd7338224
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/CIK0001628871_tempus_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights certain information appearing elsewhere in this prospectus. For a more complete understanding of this offering, you should read carefully the entire prospectus, including the risk factors, and the documents incorporated herein by reference. Unless the context indicates otherwise, the terms "Tempus Holdings," "the Company," "we," "us" and "our" refer to Tempus Applied Solutions Holdings, Inc., a Delaware corporation, and its subsidiaries. Background On July 31, 2015, pursuant to an Agreement and Plan of Merger, dated as of January 5, 2015, as amended (the "Merger Agreement"), by and among Tempus Applied Solutions Holdings, Inc. ("we", the "Company" or "Tempus Holdings"); Chart Acquisition Corp. ("Chart"); Tempus Applied Solutions, LLC ("Tempus"); the holders of Tempus membership interests named in the Merger Agreement (the "Members"); Benjamin Scott Terry and John G. Gulbin III, together, in their capacity under the Merger Agreement as the representative of the Members for the purposes set forth therein (the "Members Representative"); Chart Merger Sub Inc.; Chart Financing Sub Inc.; TAS Merger Sub LLC; TAS Financing Sub Inc.; Chart Acquisition Group LLC, in its capacity under the Merger Agreement as the representative of the equity holders of Chart and Tempus Holdings (other than the Members and their successors and assigns) in accordance with the terms thereof (the "Chart Representative"); and, for the limited purposes set forth therein, Chart Acquisition Group LLC ("CAG"), Joseph Wright and Cowen Investments LLC ("Cowen"): i. Chart Financing Sub Inc. and Chart Merger Sub Inc. merged with and into Chart, with Chart continuing as the surviving entity, ii. TAS Financing Sub Inc. and TAS Merger Sub LLC merged with and into Tempus, with Tempus continuing as the surviving entity, and iii. each of Chart and Tempus became wholly owned subsidiaries of the Company. We refer to the transactions contemplated by the Merger Agreement as the "Business Combination". The consummation of the Business Combination was preceded by a series of privately negotiated transactions, referred to collectively as the Financing, involving aggregate cash investments of $10.5 million by three outside investor entities (or affiliates thereof) that had not previously invested in Chart or Tempus, whom we refer to as the New Investors; aggregate cash investments of $5.0 million by CAG, Mr. Wright and Cowen, whom we collectively refer to as the Chart Affiliate Investors; and a cash investment of $500,000 by the former Chief Financial Officer of Tempus (through his individual retirement account), whom we refer to in such capacity as the Tempus Affiliate Investor. We refer to the Tempus Affiliate Investor and the Chart Affiliate Investors together as the Affiliate Investors, and we refer to the Affiliate Investors and the New Investors together as the Investors. In the Business Combination, the Members received 3,642,084 shares of our common stock, or the Merger Shares, in exchange for all of the issued and outstanding membership interests of Tempus. The number of Merger Shares received reflected a downward merger consideration adjustment (in accordance with the Merger Agreement) of 57,916 shares of our common stock, based on Tempus estimated working capital and debt as of the closing of the Business Combination. In addition, pursuant to the earn-out provisions of the Merger Agreement, the Members have the right to receive up to an additional 6,300,000 shares of our common stock upon the achievement of certain financial milestones, which shares are referred to as the Earn-out Shares. Additionally in the Business Combination, Chart stockholders and Chart warrant holders received shares of our common stock and warrants to purchase shares of our common stock in exchange for their existing shares of Chart common stock and existing Chart warrants, on a one-for-one basis. We refer to the warrants we issued in exchange for Chart warrants as the "IPO Warrants". The issuance of our common stock and IPO Warrants to former holders of Chart common stock and warrants in connection with the Business Combination was registered under the Securities Act of 1933, as amended, referred to as the Securities Act, pursuant to a registration statement on Form S-4 (File No. 333-201424), referred to as the Form S-4, filed with the United States Securities and Exchange Commission, referred to as the SEC, and declared effective on July 17, 2015. CALCULATION OF REGISTRATION FEE Title of Each Class of Securities to be Registered Amount to be Registered Proposed Maximum Offering Price Per Security Proposed Maximum Aggregate Offering Price Amount of Registration Fee Common Stock $0.0001 per share 5,842,404 N/A $1,110,057(1) $138.20 (1) Pursuant to Rule 457(c) under the Securities Act and solely for the purpose of calculating the registration fee, the proposed maximum aggregate offering price is equal to the product obtained by multiplying (a) $0.19, which represents the closing market price of the registrant s Common Stock on October 19, 2017, by (b) 5,842,404. The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine. TABLE OF CONTENTS Page PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2018/CIK0001632275_cat9_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001632275_cat9_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..9a13c306d62a9a7476314b83424c2eeaaaf95772
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/CIK0001632275_cat9_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY In this Prospectus, CAT9 Group, Inc. the Company, we, us, and our, refer to CAT9 Group, Inc., unless the context otherwise requires. Unless otherwise indicated, the term fiscal year refers to our fiscal year ending December 31. Unless otherwise indicated, the term common stock refers to shares of the Company s common stock. This Prospectus, and any supplement to this Prospectus include forward-looking statements . To the extent that the information presented in this Prospectus discusses
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diff --git a/parsed_sections/prospectus_summary/2018/CIK0001634424_powercomm_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001634424_powercomm_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..6a94aa42df2fa31ac2bb26dc96c4f122787a744f
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/CIK0001634424_powercomm_prospectus_summary.txt
@@ -0,0 +1 @@
+Vincent P. Adams (5) 10,000 * 10,000 0 0 % Michael D. Sharp (5) 10,000 * 10,000 0 0 % Geoffrey M. Bohn (5) 10,000 * 10,000 0 0 % Robert A. Battey (5) 10,000 * 10,000 0 0 % Alan Kwasnik (5) (20) 10,000 * 10,000 0 0 % Vilma Bonilla-Foote (5) (21) 10,000 * 10,000 0 0 % David R. Kiernan (5) 10,000 * 10,000 0 0 % Kathleen M. Griffin (5) 10,000 * 10,000 0 0 % Sherry A. Farless (6) 10,000 * 10,000 0 0 % John Bonilla (6) (22) 10,000 * 10,000 0 0 % Randal D. Henderson (5) 10,000 * 10,000 0 0 % Robert Zagami (5) 10,000 * 10,000 0 0 % John K. Lobley (5) 10,000 * 10,000 0 0 % Laura L Kwasnik (6) (23) 2,000,000 8% 200,000 1,800,000 7 % Arsim Salihu (6) 40,000 * 40,000 0 0 % Louis Burgher (6) 40,000 * 40,000 0 0 % Dwayne Bliss (5) 40,000 * 40,000 0 0 % Steve Cheek (5) 30,000 * 30,000 0 0 % Keith W. Brailsford (5) 30,000 * 30,000 0 0 % Jim Copper (5) 80,000 * 80,000 0 0 % * less than 1% (1) Based upon 23,330,000 Shares outstanding as of the date of this offering. (2) Assumes sale of all 930,000 Shares offered, and 23,330,000 Shares outstanding following the offering. (3) David Kwasnik, Sr. is the sole officer
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diff --git a/parsed_sections/prospectus_summary/2018/CIK0001637736_electramec_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001637736_electramec_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/CIK0001637736_electramec_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2018/CIK0001638688_bioceres_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001638688_bioceres_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..13046535c618c46ac77f8249a42d436605301f90
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/CIK0001638688_bioceres_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary Implications of Being an Emerging Growth Company and a Foreign Private Issuer for additional information. Neither the U.S. Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense. Per ADS Total Public offering price US$ US$ Underwriting discounts and commissions(1) US$ US$ Proceeds to Bioceres S.A., before expenses US$ US$ (1) We have agreed to reimburse the underwriters for certain expenses. See Underwriting. Delivery of the ADSs is expected to be made on or about , 2018. We have granted the international underwriters an option for a period of 30 days to purchase an additional ADSs. If the international underwriters exercise the option in full, the total underwriting discounts and commissions payable by us will be US$ , and the total proceeds to us, before expenses, will be US$ . Sole Global Coordinator Jefferies Joint book-running managers Jefferies Piper Jaffray Santander SunTrust Robinson Humphrey Co-manager Mirabaud Securities Prospectus dated , 2018. TABLE OF CONTENTS TABLE OF CONTENTS TABLE OF CONTENTS Page Special Note Regarding Forward-Looking Statements iii Certain Defined Terms iv Summary 1
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diff --git a/parsed_sections/prospectus_summary/2018/CIK0001643301_avenir_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001643301_avenir_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..6d0ea6ca563688a42cbf1a6bc101c97f7f6a4747
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/CIK0001643301_avenir_prospectus_summary.txt
@@ -0,0 +1,341 @@
+PROSPECTUS SUMMARY
+ 
+ This summary provides a brief overview of the key aspects of our business and our securities. The reader should read the entire prospectus carefully, especially the risks of investing in our common stock discussed under Risk Factors. Some of the statements contained in this prospectus, including statements under Summary and Risk Factors as well as those noted in the documents incorporated herein by reference, are forward-looking statements and may involve a number of risks and uncertainties. Our actual results and future events may differ significantly based upon a number of factors. The reader should not put undue reliance on the forward-looking statements in this document, which speak only as of the date on the cover of this prospectus.
+ 
+ About Our Business 
+ 
+ Company Overview 
+ 
+ We are a drug formulation and delivery technology company established in 2011 that researches and manufactures novel dosage forms to improve drug safety, efficacy and patient adherence. Our mission is to improve lives by redefining how medications are delivered and experienced. Our business strategy is to develop products using our proprietary technology, license the product rights to partners responsible for clinical development, regulatory approval, marketing and sales and retain exclusive manufacturing rights. 
+ 
+ CURE Pharmaceutical Holding Corp. (the Company ) was incorporated in the State of Nevada on May 15, 2014 under the name Makkanotti Group Corp. and engaged in the business of manufacturing food paper bags in Nicosia, Cyprus.
+ 
+ On November 7, 2016, our Board of Directors and the majority stockholder of the then outstanding shares of our common stock executed a written consent to change our name to CURE Pharmaceutical Holdings Corp. from Makkanotti Group Corp. The Certificate of Amendment to Articles of Incorporation was filed with the State of Nevada on November 30, 2016.
+ 
+ Our wholly owned subsidiary and operating business, CURE Pharmaceutical Corporation was originally incorporated in California in July 2011 and operates a 25,000 square feet cGMP manufacturing plant in Oxnard, CA. 
+ 
+ The Company s Board of Directors approved a reverse stock split of the authorized and outstanding Common Stock at a ratio not less than one-for-two (1:2) and not greater than one-for-four (1:4), with the exact ratio to be set within that range at the discretion of the Board of Directors. 
+ 
+ Industry Overview and Trends
+ 
+ The pharmaceutical industry is facing ever-growing R&D expenditure and fewer new drug approvals as a result of increasing regulation, a failure to predict safety problems or a lack of efficacy early in a drug s development, and high investment in new technologies to improve the speed and accuracy of drug development. In addition to these challenges to the industry s operators, many leading drugs are coming off-patent, creating a need to fill revenue gaps. The pharmaceutical industry is also challenged by the many patients who do not adhere to a regime of prescription drugs because of side effects, difficulty in administration or the taste of a drug. According to HealthPrize and Capgemini, the loss of global revenues by drug makers due to non-adherence to medicines is $630 billion every year.
+ 
+ Improved formulations can address these many challenges by cutting down development costs, reducing the time to market, extending product patent protection, improving patient compliance and increasing drug efficacy. For example, reformulation can enable drug repositioning, the process of finding new uses for failed drugs, such as those abandoned for lack of efficacy after Phase II trials, or marketed drugs for which new uses will extend patent life and, therefore, profitability.
+ 
+ The FDA approves more reformulations than new chemical entities (NCEs) each year under Section (505)(b)(2) of the Food, Drug, and Cosmetic Act, ( 505(b)(2) ) the FDA. The number of 2017 NDA approvals that used the 505(b)(2) regulatory pathway rose dramatically from 45 approvals in each of the last two years to an all-time high of 63 in 2017. Under Section (505)(b)(2), the FDA may grant market exclusivity for a term of up to three years of exclusivity following approval of a listed drug that contains previously approved active ingredients but is approved in a new dosage, dosage form, route of administration or indication for use. Taken together, the exclusivity period of a drug and the lower R&D cost for reformulating a drug, have led to pharmaceutical companies taking a keen interest in reformulating their drugs as part of their lifecycle management protocols.
+ 
+ Technology
+ 
+ Our technology platform includes oral dissolving film (ODF) and transdermal formulations. We apply our technology to pharmaceutical drugs and dietary supplements. 
+ 
+ ODF products are about the size of a postage stamp and composed of excipients such as polymers, stabilizers, lipids and surfactants which are all generally recognized as safe. They can be designed to deliver active ingredients to the gastrointestinal tract (GI) when placed on the tongue and swallowed, or directly to the blood stream when placed under the tongue (sublingual) or on the inner lining of the cheek and lip (buccal). 
+ 
+ 8
+ 
+ 
+ Table of Contents
+
+ 
+ Sublingual and buccal drug delivery are non-invasive routes for drug delivery that allows for absorption directly into the vascularized tissue in the mouth, avoiding degradation of the active molecule in the stomach, intestines and liver. These routes can reduce overall drug exposure and toxicities. 
+ 
+ As an ODF, active ingredients are often pre-solubilized within the film matrix which can accelerate the onset of action, whether the GI is targeted of the systemic circulation. Active ingredients can also be encapsulated within the film matrix which can cause a sustained release profile. Combined sustain release and rapid release strategies can be achieved with ODFs.
+ 
+ ODFs can be designed for rapid dissolution or slower dissolution in the case of a buccal patch. In each case, ODFs must mask the taste of the active ingredient if unpalatable, throughout the dissolution process. The self-dissolving nature of ODF means that no water or swallowing are required for administration, improving medication adherence - especially among the elderly, children, and in conditions where patients have difficulty in swallowing.
+ 
+ The CUREfilm platform is a scalable and versatile formulation and drug delivery system for both oral (ODF) and transdermal (skin) delivery. CUREfilm formulations can improve or match the pharmacokinetics of drugs depending on the desired outcome. The platform is compatible with a broad spectrum of molecules and can be applied to investigational and marketed drugs or dietary supplements.
+ 
+ Our CUREfilm transdermal technology has been tested at laboratory scale on approximately a dozen different molecules. Our CUREfilm ODF technology, which is our core focus, has been used to develop hundreds of products at laboratory scale and over 20 dietary supplements at commercial scale in our GMP plant located in Oxnard, CA.
+ 
+ Intellectual Property
+ 
+ The competitive advantages of the CUREfilm platform and products over other ODF technology and products are protected by issued and pending patents, as well as trade secrets such as proprietary equipment design and manufacturing processes which allow us to produce CUREfilm products at commercial scale in a cGMP environment. 
+ 
+ 
+ Filing Date/ 
+ 
+
+ Title 
+ 
+ Serial No. / 
+ Patent No. 
+ 
+ Application 
+ Date 
+ 
+ Type 
+ 
+ Status 
+ 
+ 
+
+ Method and apparatus for minimizing heat, moisture, and shear damage to medicant 
+ 8,840,919 
+ 
+ 23-Sept-14 
+ 
+ Utility 
+ 
+ Issued 
+ 
+
+ Method and apparatus for minimizing heat, moisture, 
+ 
+
+ and shear damage to medicant 
+ 9,155,698 
+ 
+ 13-Oct-15 
+ 
+ Utility 
+ 
+ Issued 
+ 
+
+ Edible films for administration of medicaments to animals 
+ 9,561,182 
+ 
+ 18-Jan-17 
+ 
+ Utility 
+ 
+ Issued 
+ 
+
+ Methods for modulating dissolution, bioavailability, bioequivalence 
+ 8,999,372 
+ 
+ 7-Apr-15 
+ 
+ Utility 
+ 
+ Issued 
+ 
+
+ Pharmaceutical Composition and Method of Manufacturing 
+ 9,044,390 
+ 
+ 2-Jun-15 
+ 
+ Utility 
+ 
+ Issued 
+ 
+
+ Pharmaceutical Composition and Method of Manufacturing 
+ 9,186,386 
+ 
+ 17-Nov-15 
+ 
+ Utility 
+ 
+ Issued 
+ 
+
+ Pharmaceutical Composition and Method of Manufacturing 
+ 9,980,996 
+ 
+ 29-May-18 
+ 
+ Utility 
+ 
+ Issued 
+ 
+
+ Pharmaceutical Composition and Method of Manufacturing 
+ 10,092,611 
+ 
+ 9-Oct-18 
+ 
+ Utility 
+ 
+ Issued 
+ 
+
+ Pharmaceutical Composition and Method of Manufacturing 
+ 
+ 14/934,940 
+ 
+ 6-Nov-15 
+ 
+ Utility 
+ 
+ Pending 
+ 
+
+ Pharmaceutical Composition and Method of Manufacturing 
+ 
+ 16/151,436 
+ 
+ 4-Oct-18 
+ 
+ Utility 
+ 
+ Pending 
+ 
+
+ Pharmaceutical Composition with Ionically Crosslinked 
+ 
+
+ Polymer Encapsulation of Active Ingredient 
+ 
+ 15/315,264 
+ 
+ 30-Nov-16 
+ 
+ Utility 
+ 
+ Pending 
+ 
+
+ Method and Apparatus For Minimizing Heat, Moisture, and Shear Damage To Medicants and Other Compositions During Incorporation of Same with Edible Films 
+ 
+ 15/666,057 
+ 
+ 1-Aug-17 
+ 
+ Utility 
+ 
+ Pending 
+ 
+
+ Thin Film with High Load of Active Ingredient 
+ 
+ 13/890,875 
+ 
+ 9-May-13 
+ 
+ Utility 
+ 
+ Pending 
+ 
+
+ Thin Film with High Load of Active Ingredient 
+ 
+ 14/069,239 
+ 
+ 31-Oct-13 
+ 
+ Utility 
+ 
+ Pending 
+ 
+
+ Thin Film with High Load of Active Ingredient 
+ 2.0148 
+ 
+ 9-May-13 
+ 
+ CN 
+ 
+ Pending 
+ 
+
+ High dosage dissolvable films for oral administration 
+ 
+ PCT/US18/38034 
+ 
+ 18-Jun-18 
+ 
+ PCT 
+ 
+ Pending 
+ 
+
+ 
+ 
+ 9
+ 
+ 
+ Table of Contents
+
+ 
+ Business Strategy
+ 
+ Our commercial strategy seeks to mitigate risk by pursuing a diversified model.
+ 
+ 1. Dietary Supplements. We manufacture select dietary supplements that complement our portfolio and align with our mission which are white labeled and distributed by third parties. Dietary supplements are regulated under the Dietary Supplement Health and Education Act of 1994 (DSHEA) under which supplements are r egulated by the FDA for Good Manufacturing Practices under 21 CFR Part 111 but do not require FDA approval. By developing, manufacturing and selling dietary supplements, we can generate modest short term revenue while improving our production capabilities and generating platform-wide intellectual property. We commercially launched two white-labeled products in this category in the United States. 
+ 
+ 2. Pharmaceuticals. We partner with companies that are responsible for clinical development, regulatory approval, marketing and sales of the products. We provide the Chemistry, Manufacturing, and Controls (CMC) documentation required for regulatory submissions and in some instances, we may conduct preclinical and clinical testing. Deal terms may include upfront licensing fees, development costs, milestone payments, royalties and exclusive manufacturing rights. Within this category, we are further diversifying risk and return by pursuing both competitive differentiation of marketed drugs (product life cycle opportunities) and improved pharmacokinetics of investigational drugs. While we currently commercially manufacture dietary supplements in our facility, we are undertaking steps to scale up manufacturing of pharmaceutical drugs for clinical and commercial use.
+ 
+ 3. Cannabinoids. We are researching and developing drugs in the cannabinoid family of molecules. The oral bioavailability of cannabinoids is very low due to extensive gut and liver metabolism. Consequently, potency and release times are unpredictable and inconsistent. Moreover, cannabinoids don t readily dissolve in water which adds to dosing difficulties and discrepancies. In addition to improving bioavailability, CUREfilm technology enables the loading of combinations of cannabinoids and other plant extracts that, together, may be able to increase therapeutic benefit. Development and manufacturing of cannabinoid drugs are regulated by the FDA and the Drug Enforcement Agency (DEA). A research license filed with the DEA in January 2018 was determined to be submitted in error given our proposed activities. As such, we have applied for a Schedule 1 manufacturer license with the DEA which application was approved on November 21, 2018. 
+ 
+ 4. Underserved Patient Populations. Consistent with our mission of improving the lives of all people in need, regardless of geography or economic status, we licensed our technology to our majority-owned subsidiary, Oak Therapeutics, for the development of novel drug formulations for patients in developing nations such as a rapidly dissolving film to treat tuberculosis.
+ 
+ Growth Strategy
+ 
+ We will pursue growth by (1) securing additional distributors for our dietary supplements, (2) out licensing rights to our drug products in available territories; (3) in-licensing novel drug delivery technologies and cannabinoid related patents and (4) developing additional ODF drug products with biotech and pharmaceutical partners.
+ 
+ 10
+ 
+ 
+ Table of Contents
+
+ 
+ Product Portfolio and Partnerships 
+ Our product portfolio includes dietary supplements and prescription drugs. To manufacture our products, we depend on raw material suppliers and packaging material suppliers. There are several global suppliers of packaging laminate appropriate for dietary supplements and drug product ODFs.
+ 
+ CURE 3068 (Launched) 
+ 
+ This is a melatonin-containing sleep aid CUREfilm ODF that is manufactured and sold as a dietary supplement under the brand name ID Life Sleep Strips . Our non-exclusive distributor is ID Life, a health and wellness company focused on customized nutrition and selling within the United States. We have an open purchase order with ID Life for approximately 3,200,000 units of product in 2018 and we are seeking additional distributors. 
+ 
+ CURE 5079 (Launched) 
+ 
+ This novel sleep aid containing a dietary cannabinoid CUREfilm ODF was launched Q3 2018 by Incubrands under the brand name Sleep Stripzzz . The distribution rights are exclusive through the end of 2018. A purchase order was placed on February 22, 2018. 
+ 
+ CURE 5003
+ 
+ We are developing a sildenafil CUREfilm ODF for oral administration (CUREfilm Blue) . On August 1, 2017, we entered into a development agreement for development and distribution for China, Hong Kong, Japan, Korea, Singapore, Philippines, Taiwan, Vietnam and Thailand. The product which will be launched for the treatment of erectile disorder in the United States and Asia is in late stage development with clinical trials planned in 2019. 
+ 
+ CURE 5067
+ 
+ We are developing a 50,000IU, once per week, vitamin D3 CUREfilm ODF for oral administration (CUREfilm D). On February 18, 2017, we entered into an exclusive 5-year license and distribution agreement with Meroven Limited in the MENA region: Iraq, Saudi Arabia, Yemen, Syria, UAE, Jordan, Palestine, Lebanon, Oman, Kuwait, Qatar, Bahrain, Sudan, Egypt, Tunisia, Morocco, Algeria and Africa. The product is currently in the optimization development stage.
+ 
+ CURE 5198 
+ 
+ We are developing a Palmitoylethanolamine (PEA) & Dronabinol (THC) CUREfilm ODF for buccal administration (CUREfilm Entourage). On October 27, 2017, we entered into a development agreement with Therapix Biosciences for worldwide rights. The product is in formulation development for PEA. With our recently authorized Schedule 1 manufacturing license from the DEA, we will be incorporating THC into the product.
+ 
+ CURE 5200
+ 
+ We are developing a novel CUREfilm ODF substrate with an undisclosed partner. On June 4, 2018, we entered into a development agreement with an undisclosed partner for product development feasibility of CURE 5200. In order to protect CURE s and our partner s competitive advantage, no further details of the product can be disclosed at this stage.
+ 
+ CURE 5209
+ 
+ We are developing a CUREfilm ODF for mood enhancement as a dietary supplement. On May 30, 2018, we entered into a development agreement with an undisclosed partner for product development feasibility of CURE 5209. In order to protect CURE s and our partner s competitive advantage, no further details of the product can be disclosed at this stage.
+ 
+ CURE 5210 
+ 
+ We are developing a dietary cannabinoid ODF using food grade beta-caryophyllene to target the CB2 receptor. We are in early feasibility stages of development of this product and have not yet signed with a distribution partner. 
+ 
+ Partnerships 
+ 
+ On September 4, 2018, CURE entered into its first multi-year licensing agreement (the Licensing Agreement ) with Canopy Growth Corporation, a company that engages in the production and sale of medical cannabis ( Canopy ). Under the terms of the Licensing Agreement, Canopy will have an exclusive license to certain of the Company s intellectual property rights, including the Company s patented, multi-layer ODF CUREfilm technology for use with cannabis extracts and biosynthetic cannabinoids ( Products ) and the Company s trademarks in markets around the world where it is legal for Canopy to sell the Products, excluding Asia. The Company has retained the right to manufacture synthetic cannabinoids for pharmaceutical applications. Canopy will manufacture CUREfilm products that deliver cannabis extracts, expanding the commercialization and monetization of the CUREfilm technology. The parties will collaborate on new products and uses for the products. Canopy shall pay the Company approximately $250,000 for costs associated with a feasibility study and technology transfer as well as certain milestone payments and royalties on product sales by Canopy with minimum royalties starting in 2020. 
+ 
+ 
+ 11
+ 
+ 
+ Table of Contents
+
+ 
+ Convertible Notes 
+ 
+ The Company has the following convertible notes outstanding and , concurrently with this offering, will be registering the shares underlying these convertible n otes which shall be converted upon the successful completion of this offering and listing on the Nasdaq Capital Market : 
+ 
+ Convertible promissory notes, issued from January 30, 2018 to March 28, 2018, totaling $2,025,000 due November 30, 2018, with interest payable at 9% per annum and principal and accrued interest convertible, at the option of the holder, into common stock at either the price per share equal to the average closing price of the Company s common stock on the OTC Markets for the five consecutive trading days prior to the delivery of a notice of conversion, or price per share equal to 75% of the price of the Company s next bona fide sale of its preferred stock or common stock in excess of $4,000,000 in gross proceeds, in one transaction or a series of related transactions, which offering definitively sets a price per share of the Company s common stock or preferred stock and enables the Company to list its common stock on a national securities exchange. 
+ 
+ Convertible promissory note issued on April 24, 2018 ( Therapix Convertible Note ) totaling $500,000 issued to Therapix Biosciences Ltd., ( Therapix ) due April 30, 2019. The Therapix Convertible Note accrues interest at 9% per annum. Unless earlier converted, at the election of Therapix, the entire then outstanding principal amount shall be converted into that number of shares of the most senior class of shares of the Company existing at the time of such conversion, at a price per share equal to 75% of the average of the closing prices of the Company s common stock on the OTC Market (or any other market on which the common stock of the Company is then listed for trading) over the 30 consecutive trading days prior to the delivery of the notice of conversion by Therapix to the Company, or, if at the time of such conversion the shares of the Company s common stock are not listed for trading, then the entire then outstanding Investment Amount shall be converted into that number of shares of the most senior class of shares of the Company existing at the time of such conversion, at a price per share equal to 75% of the fair market value of such common stock as shall be determined by the Board of Directors based on, among others, a valuation prepared by an independent third party and which shall have been submitted to the Company not more than 90 days prior to the date of such determination by the Board of Directors. In the event of the consummation by the Company, on or before April 30, 2019, of a transaction or series of related transactions in which the Company issues equity securities of the Company in consideration of at least US$4,000,000, the then outstanding principal amount not previously converted hereunder shall be automatically converted, immediately prior to (but conditioned upon) the consummation of such financing, into such number of shares issued by the Company in the financing, equal to the outstanding principal amount divided by a price per share equal to 75% of the lowest price per share paid to the Company in the financing. 
+ 
+ Convertible promissory notes, issued between May 18, 2018 and June 29, 2018, totaling $500,000 due December 31, 2018, with interest payable at 9% per annum and principal and accrued interest convertible into common stock at either the price per share equal to the average closing price of the Company s common stock on the OTC Markets for the five consecutive trading days prior to the delivery of a notice of conversion or price per share equal to 75% of the price of the Company s next bona fide sale of its preferred stock or common stock in excess of $4,000,000 in gross proceeds, in one transaction or a series of related transactions, which offering definitively sets a price per share of the Company s common stock or preferred stock and enables the Company to list its common stock on a national securities exchange. 
+ 
+ Convertible promissory notes, issued on September 27, 2018, totaling $575,000 due June 27, 2019 with interest payable at 9% per annum and are convertible into common stock at either a price per share equal to the average closing price of the Company s common stock on the OTC Markets for the five consecutive trading days prior to the delivery of a notice of conversion or a price per share equal to 75% of the price of the Company s next bona fide sale of its preferred stock or common stock in excess of $4,000,000 in gross proceeds, in one transaction or a series of related transactions, which offering definitively sets a price per share of the Company s common stock or preferred stock and enables the Company to list its common stock on a national securities exchange. 
+ 
+ Convertible promissory notes issued on October 15, 2018 and November 15, 2018, totaling $500,000 due October 31, 2019 with interest payable at 9% per annum and are convertible into common stock at a conversion price equal to $7.50 (assuming a 1-for-3 reverse stock split) at the earlier of (1) the investor s discretion or (2) the Company s next bona fide sale of its preferred stock or common stock in excess of $4,000,000 in gross proceeds, in one transaction or a series of related transactions, which offering definitively sets a price per share of the Company s common stock and results in a listing of the Company s common stock on a national securities exchange. 
+ 
+ 
+ 12
+ 
+ 
+ Table of Contents
+
+ 
+ <a name="
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2018/CIK0001647894_internatio_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001647894_internatio_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..c834796b6c13863b9f680a11832f8ec1c607c9c8
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/CIK0001647894_internatio_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary of certain information and specific documents contained in this prospectus may not include all the information that is important to you. To understand fully and for a more complete description of the documents and terms and conditions of the distribution, you should read this prospectus in its entirety and the documents to which you are referred. See "Where You Can Find More Information." In this prospectus, unless the context otherwise requires: "Top Shelf" refers to Top Shelf Brands Holdings Corp. and its consolidated subsidiaries. "Company," "we," "our" and "us" refer to International Spirits and Beverage Group, Inc. and its consolidated subsidiaries, "our business" refers to our vodka and tequila business, and our fiscal year is the calendar year. "Fiscal 2017" means the ended December 31, 2017, "Fiscal 2016" means the year ended December 31, 2016. Unless otherwise indicated, market and industry information contained in this prospectus is based on information provided by the National Alcohol Beverage Control Associations (NABCA) and management estimates of market shares. Our Company ISBG is currently the authorized importer, licensor and marketer of the Besado Tequila and Dziaq Liqueur . The Company s intention is to create an alcohol beverage industry brand incubator. Developing and growing brands through all phases including concept creation, go-to-market strategies, supply chain and logistics technology, sales and integrated marketing. The Company plans to expand its wine and spirit portfolio by building brands both in-house as well as through targeted acquisition. The development of supply chain based technology, through potential acquisitions and partnerships will also be a complimentary focus. We hope to become an acquisition target while seeking listing on a national stock exchange and have our trades reported in the United States on the OTC Markets OTCQX tier. Market Opportunity According to Allied Market Research, a market research and advisory company of Allied Analytics LLP, within their closing 2017 remarks predicted the Global Alcoholic Beverages Market to reach $1.594 billion by 2022, with the distilled spirits segment accounting for over one- third of the global market share. In terms of volume, the distilled spirits held approximately 28% share in the overall market. Consumption of alcoholic beverages in North America is expected to increase due to the growth in young adult population, and change in trend to elevated consumption of high-quality alcoholic beverages. Emerging markets such as China and India, are expected to witness the highest increase in demand for alcoholic beverages during the forecast period in Asia-Pacific. The market opportunity within the alcohol beverage market is vast; however, we face competition from other companies that are much larger than we are and have longer operating histories. We continue to work to develop both our brands and our team to expand both brand awareness and distribution of our products. Plan of Operation Our revenues to date have been limited. However, we have been executing our business plan, developing and launching our website, research and development of products and trial testing of other formulations. We do not have the necessary capital to fully develop our plan of operation until we are able to secure additional financing. There can be no assurance that such financing will be available on suitable terms. We need to raise an additional $500,000 to satisfy our commitments to our joint venture partners over the next twelve months. Our current cash on hand is insufficient to fully commercialize the products of our joint venture partners and fully develop our business strategy. If we are unable to raise adequate additional funds or if those funds are not available on terms that are acceptable to us, we will not be able to execute our business plan and we may cease operations. Our main objections are as follows: Table of Contents Further development of our Besado Tequila brand, moving production to Mexico, launching both a Reposado and Anejo to complement our current offerings, and expanding both domestic and export market distribution; Refresh of the Dziaq Liqueur brand, reformulated to an OTS (wine base) based RTD (ready-to-drink) brand, creating an all natural single serve offering aimed towards LDA-34 market with c store market push; Concentrated core market sales and integrated marketing efforts will be commenced to support our brands. Experiential marketing, social influencer programming, including product placement within music, film and television, will be part of our integrated plan to grow brand awareness that generates and supports sales; Developing supply chain technology will further assist back of house operations, including potential strategic partnerships, acquisitions, and engagement with leading edge distribution ledger technology companies. Within our brand incubator construct is the goal of complete brand creation and objective to maximize efficiencies of go-to-market strategies. Technology that can navigate the alcohol beverage system from regulatory, to supplier sourcing and purchasing, production, shipping, storage, wholesale, taxation, and beyond. Building our management and operations team will be a focus. Emphasis on sourcing and securing experienced and dynamic individuals to strengthen our team; Expand our portfolio through in house brand creation or via targeted acquisition. Financial Support We have entered into an agreement with the Jacqueline Ellam Autry Trust to provide financing in two stages: The first stage was executed on the 27th day of April 2015 when we issued 100,000,000 shares of our common stock in exchange for $961,966.50. The second stage is scheduled for first day of July 2015 when the trust agreed to advance a loan in the amount of an additional $961,966.50. The second stage has not been performed. The second stage also provides for the issuance of the number of shares of our common stock equal to 15% of the number of common shares outstanding at the time of the second closing. The agreement also provides that we will elect Jacqueline Ellam Autry as a member of our board of directors and give her four admission tickets to our season suite for home games on the New York Giants and New York Jets. Our History We were organized as a Nevada for-profit corporation on the 5th day of June 2001 under the name Fishing Buddy, Inc. On May 11, 2007 we changed our corporate name to FIMA, Inc. On the 31st day of December 2014 we acquired 100% of the issued and outstanding shares of capital stock of International Spirits and Beverage Group, Inc., organized as a Texas for-profit corporation September 12, 2014. On the 6th day of May 2015, under our name FIMA, Inc., we entered into a plan and agreement of merger with our wholly owned subsidiary, Texas corporation, International Spirits and Beverage Group, Inc. On March 13, 2015 we filed certificates of merger in Texas and Nevada to merge the Texas International Spirits and Beverage Group, Inc. with and into FIMA, Inc. The merger became effective March 31, 2015. March 17, 2015, we filed amended and restated articles of incorporation in Nevada to become effective March 31, 2015, that, among other things, changed our name from FIMA, Inc. to International Spirits and Beverage Group, Inc. On August 25, 2017 we filed amended and restated articles of incorporation in Nevada that, among other things, changed our name from International Spirits and Beverage Group, Inc. to International Spirits and Beverage Group, Inc. Where You Can Find Us We are a Nevada corporation. Our principal executive offices are located at 8300 FM 1960, Suite 450, Houston, Texas 77070. Our telephone number is (832) 390-2754. Our website address is www.isbg.global. Information contained on, or connected to, our website does not and will not constitute part of this prospectus or the registration statement on Form S-1 of which this prospectus is a part. Table of Contents Implications of Being an Emerging Growth Company We qualify as an emerging growth company as that term is used in the JOBS Act. An emerging growth company may take advantage of specified reduced reporting and other burdens that are otherwise applicable generally to public companies. These provisions include: A requirement to have only two years of audited financial statements and only two years of related MD Exemption from the auditor attestation requirement in the assessment of the emerging growth company s internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act of 2002; Reduced disclosure about the emerging growth company s executive compensation arrangements; and No non-binding advisory votes on executive compensation or golden parachute arrangements. We have already taken advantage of these reduced reporting burdens in this prospectus, which are also available to us as a smaller reporting company as defined under Rule 12b-2 of the Exchange Act. In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended for complying with new or revised accounting standards. We have elected to use the extended transition period provided above and therefore our financial statements may not be comparable to companies that comply with public company effective dates. We could remain an emerging growth company for up to five years, or until the earliest of (i) the last day of the first fiscal year in which our annual gross revenues exceed $1 billion, (ii) the date that we become a "large accelerated filer" as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our common stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter, or (iii) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three year period. Other Considerations Securities offered This prospectus relates to the sale by the company from time to time of up to 14,285,713 shares of our common stock and resale from time to time of up to 507,059 shares of our common stock, par value $0.001 per share, held by Top Shelf and distributed to the stockholders of Top Shelf under this Prospectus. Common stock outstanding 53,416,770 shares of common stock are outstanding as of August 31, 2018. After the registration of 14,792,772 shares hereby, the total outstanding will be 65,286,601. Use of Proceeds The selling stockholders will receive all net proceeds from any sale of the 507,059 common shares distributed by this prospectus and we will not receive any of the proceeds from any sale by the selling stockholders. See "Selling Stockholders" for more information. However, we will receive any proceeds from the sale of all or any part of the 14,285,772 shares offered for sale by this prospectus. See "Use of Proceeds" for more information. Trading Market and Symbol Trading in the International Spirits common stock will continue to be reported by the OTC Markets QB tier under the symbol "ISBG." Relationship with Top after the distribution We will have no legal or contractual relationship with Top Shelf after the distribution. However Mr. Alonzo will continue to hold voting control of both companies. Dividend Policy We do not anticipate paying any cash dividends on our International Spirits common stock in the foreseeable future. See "Dividend Policy" for more information. Transfer Agent Nevada Agency and Trust Company Risk Factors Our business faces both general and specific risks and uncertainties. Our business also faces risks relating to the sale of common stock covered by this prospectus. You should read carefully the information set forth under "Risk Factors." Table of Contents
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2018/CIK0001649584_aqua_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001649584_aqua_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..e08797d3387540252078bcc3063ee1a73675d9c4
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/CIK0001649584_aqua_prospectus_summary.txt
@@ -0,0 +1 @@
+CALCULATION OF REGISTRATION FEE Title of securities to be registered Amount to be registered Proposed maximum offering price per share (2) Proposed maximum aggregate offering price Amount fee (1) Common Stock 10,000,000 $0.10 $1,000,000 $124.50 The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to such section 8(a), may determine Aqua Holdings, Inc 10,000,000 SHARES OF COMMON STOCK $0.10 per share NO MINIMUM This is the initial offering of Common stock of Aqua Holdings, Inc and no public market exists for the securities being offered. Aqua Holdings, Inc is offering for sale a total of 10,000,000 shares of its Common Stock on a "self-underwritten", best effort basis. The shares will be offered at a fixed price of $0.10 per share for a period not to exceed 180 days from the date of this prospectus, unless extended by our Board of Directors for an additional 90 days. There is no minimum number of shares required to be purchased. This offering is on a best effort basis, meaning, no minimum number of shares must be sold. See "Use of Proceeds" and "Plan of Distribution". Aqua Holdings, Inc is a development stage, start-up company. Any investment in the shares offered herein involves a high degree of risk. You should only purchase shares if you can afford a complete loss of your investment. BEFORE INVESTING, YOU SHOULD CAREFULLY READ THIS PROSPECTUS AND, PARTICULARLY, RISK FACTORS SECTION, BEGINNING ON PAGE 7. Aqua Holdings, Inc qualifies as an emerging growth company as defined in the Jumpstart our Business Startups Act (the JOBS Act ). Neither the U.S. Securities and Exchange Commission nor any state securities division has approved or disapproved these securities, or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. Proceeds Offering Price Per Share Total Amount of Offering Underwriting Commissions Proceeds to Us Common Stock $0.10 $1,000,000 $0 $1,000,000 THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED. Subject to Completion September 21, 2018 Aqua Holdings, Inc 622 Pine Ave Whitefish, MT 59937 SUMMARY OF PROSPECTUS You should read the following summary together with the more detailed business information, financial statements and related notes that appear elsewhere in this prospectus. In this prospectus, unless the context otherwise denotes, references to "we," "us," "our" are to denote Aqua Holdings, Inc
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2018/CIK0001649881_markham_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001649881_markham_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..2c62ee37546530e1006b6aecff03350f5f4ad73e
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/CIK0001649881_markham_prospectus_summary.txt
@@ -0,0 +1,3 @@
+PROSPECTUS SUMMARY
+ 
+ This Prospectus and any supplement to this Prospectus include forward-looking statements . To the extent that the information presented in this Prospectus discusses financial projections, information or expectations about our business plans, results of operations, products or markets, or otherwise makes statements about future events, such statements are forward-looking. Such forward-looking statements can be identified by the use of words such as intends , anticipates , believes , estimates , projects , forecasts , expects , plans and proposes . Although we believe that the expectations reflected in these forward-looking statements are based on reasonable assumptions, there are a number of risks and uncertainties that could cause actual results to differ materially from such forward-looking statements. These include, among others, the cautionary statements in the
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2018/CIK0001650205_andes-7_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001650205_andes-7_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..5eae25bc472cdcb00231fa3f97a27f68795e6fe7
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/CIK0001650205_andes-7_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY In this Prospectus, ANDES 7, Inc. the Company, we, us, and our, refer to ANDES 7, Inc., unless the context otherwise requires. Unless otherwise indicated, the term fiscal year refers to our fiscal year ending December 31. Unless otherwise indicated, the term common stock refers to shares of the Company s common stock. This Prospectus, and any supplement to this Prospectus include forward-looking statements . To the extent that the information presented in this Prospectus discusses
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2018/CIK0001651052_focus_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001651052_focus_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..7b730cdc5a59f17e21c2372837d5194e2adb79ef
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/CIK0001651052_focus_prospectus_summary.txt
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. You should read the entire prospectus carefully before making an investment decision, including the information under the headings "Risk Factors," "Special Note Regarding Forward-Looking Statements," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Business" and the historical and pro forma consolidated financial statements and the related notes thereto appearing elsewhere in this prospectus. The information presented in this prospectus assumes (i) an initial public offering price of $37.00 per share of Class A common stock (the midpoint of the price range set forth on the cover of this prospectus) and (ii) unless otherwise indicated, that the underwriters do not exercise their option to purchase additional shares of Class A common stock to cover overallotments, if any. Unless otherwise indicated or the context otherwise requires, all references in this prospectus to "we," "us," "our," the "Company," "Focus" and similar terms refer (i) for periods prior to giving effect to the reorganization transactions described under "Internal Reorganization," to Focus Financial Partners, LLC and its consolidated subsidiaries and (ii) for periods beginning on the date of and after giving effect to such reorganization transactions, to Focus Financial Partners Inc. and its consolidated subsidiaries. Also, unless otherwise indicated or the context otherwise requires, all information in this prospectus gives effect to the reorganization transactions. "Focus LLC" refers to Focus Financial Partners, LLC, a Delaware limited liability company and a consolidated subsidiary of ours following the reorganization transactions. The term "partner firms" refers to our consolidated subsidiaries engaged in wealth management and related services, the businesses of which are typically managed by the principals. The term "principals" refers to the wealth management professionals who manage the businesses of our partner firms pursuant to the relevant management agreement. The term "our partnership" refers to our business and relationship with our partner firms and is not intended to describe a particular form of legal entity or a legal relationship. For explanations of certain terms used in this prospectus, please read "Glossary" beginning on page A-1. Our Company We are a leading partnership of independent, fiduciary wealth management firms operating in the highly fragmented registered investment advisor ("RIA") industry, with a footprint of over 50 partner firms across the country. We have achieved this market leadership by positioning ourselves as the partner of choice for many firms in an industry where a number of secular trends are driving RIA consolidation. Our partner firms primarily service high net worth individuals and families by providing highly differentiated and comprehensive wealth management services. Our partner firms benefit from our intellectual and financial resources, operating in a scaled business model with aligned interests, while retaining their entrepreneurial culture and independence. Our partnership is built on the following principles, which enable us to attract and retain high-quality wealth management firms and accelerate their growth: Entrepreneurship: Emphasis on the entrepreneurial spirit, independence and unique culture of each partner firm. Fiduciary Standard: Partnership with wealth management firms that are held to the fiduciary standard in serving their clients. Alignment of Interests: Alignment of principals' interests with the interests of Focus through our differentiated partnership and economic model. Value-Add Program: Empowerment of our partner firms through collaboration on strategy, growth and acquisition opportunities, marketing, technology and operational expertise, best practices and access to world-class intellectual resources and capital to fund expansion and acquisitions. Amendment No. 2 to Form S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 of any sale of the Class A common stock. Our business, financial condition, results of operations and prospects may have changed since that date. This prospectus contains forward-looking statements that are subject to a number of risks and uncertainties, many of which are beyond our control. Please read "Risk Factors" and "Special Note Regarding Forward-Looking Statements." Industry and Market Data Unless otherwise indicated, industry and market data used throughout this prospectus were obtained through company research, surveys and studies conducted by third parties and industry and general publications. Certain information contained in "Prospectus Summary" and "Business" is based on studies, analyses and surveys prepared by Cerulli Associates, Inc., Capgemini/RBC Wealth Management, IBISWorld Inc. and other third-party sources. The industry data presented herein involves uncertainties and are subject to change based on various factors, including those discussed under the heading "Risk Factors," "Special Note Regarding Forward-Looking Statements" and "Management's Discussion and Analysis of Financial Condition and Results of Operations." Trademarks and Trade Names We own or have rights to various trademarks, service marks and trade names that we use in connection with the operation of our business. This prospectus may also contain trademarks, service marks and trade names of third parties, which are the property of their respective owners. Our use or display of third parties' trademarks, service marks or trade names in this prospectus is not intended to, and does not, imply a relationship with, or endorsement or sponsorship by us. Solely for convenience, the trademarks, service marks and trade names referred to in this prospectus may appear without the , TM or SM symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the right of the applicable licensor to these trademarks, service marks and trade names. Table of Contents We were founded by entrepreneurs and began revenue-generating and acquisition activities in 2006. Since that time, we have: created a partnership of over 50 partner firms, the substantial majority of which are RIAs registered with the Securities and Exchange Commission (the "SEC") pursuant to the Investment Advisers Act of 1940 (the "Advisers Act"); built a business with revenues of $662.9 million for the year ended December 31, 2017 and $196.2 million for the three months ended March 31, 2018; established an attractive revenue model whereby in excess of 90% of our revenues for the year ended December 31, 2017 and the three months ended March 31, 2018 were fee-based and recurring in nature; built a partnership model currently comprised of over 2,800 wealth management-focused principals and employees; and established a national footprint across the United States and expanded our international footprint into the United Kingdom, Canada and Australia. We are in the midst of a fundamental shift in the growing wealth management services industry. According to the Capgemini 2017 World Wealth Report (the "2017 World Wealth Report"), the population of high net worth individuals continues to grow globally and has reached record levels in the United States since 2010, which is driving increased demand for wealth management services. In addition, due to the significant increase in retirees in the United States, the industry is witnessing significant growth in the flow of retirement assets from company-sponsored plans into flexible investment accounts. For example, rollovers, primarily from employer-sponsored retirement plans, to traditional IRAs grew significantly from $114.0 billion in 1996 to $423.9 billion in 2014 according to The IRA Investor Profile: Traditional IRA Investors' Activity, 2007-2015 ICI Research Report (June 2017) by Sarah Holden and Steven Bass (the "June 2017 ICI Report"). Additionally, the delivery of wealth management services is moving from traditional brokerage, commission-based platforms to a fiduciary, open architecture and fee-based structure. This shift has resulted in a significant transfer of client assets and wealth management professionals out of traditional brokerage, commission-based platforms to independent wealth management practices. We believe that our leading partnership of independent, fiduciary wealth management firms positions us to benefit from these trends. The independent wealth management industry, including RIAs, is highly fragmented, which we believe enables us to continue our growth strategy of acquiring high-quality wealth management firms, directly and through acquisitions by our partner firms. We have a track record of enhancing the competitive position of our partner firms by providing them with access to the resources of our large organization. Our scale enables us to help our partner firms achieve operational efficiencies and ensure organizational continuity. Additionally, our scale, resources and value-added services increase our partner firms' ability to achieve growth through a variety of tactical, operational and strategic initiatives, as well as the consummation of their own acquisitions. As our existing partner firms benefit from these growth initiatives, we continue to focus on acquisitions of new partner firms. For the 20 partner firms that have been with us a full five calendar years, the median revenue CAGR was 9.5% after five calendar years, representing a 3.8% increase as compared with the median revenue growth of 5.7% for the first year with Focus for the same firms. Our partnership is comprised of trusted professionals providing comprehensive wealth management services under a largely recurring, fee-based model, which differentiates our partner firms from the traditional brokerage platforms whose revenues are largely derived from commissions. We derive a substantial majority of our revenues from wealth management fees for investment advice, financial and tax planning, consulting, tax return preparation, family office services and other services. We also generate other revenues from recordkeeping and administration service fees, commissions and distribution fees. Focus Financial Partners Inc. (Exact name of registrant as specified in its charter) Delaware (State or other jurisdiction of incorporation or organization) 6282 (Primary Standard Industrial Classification Code Number) 47-4780811 (IRS Employer Identification No.) 825 Third Avenue, 27th Floor New York, NY 10022 (646) 519-2456 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) J. Russell McGranahan General Counsel 825 Third Avenue, 27th Floor New York, NY 10022 (646) 519-2456 (Name, address, including zip code, and telephone number, including area code, of agent for service) Copies to: Robert Seber Brenda K. Lenahan Vinson & Elkins L.L.P. 666 Fifth Avenue, 26th Floor New York, New York 10103 (212) 237-0000 Richard D. Truesdell, Jr. Derek J. Dostal Davis Polk & Wardwell LLP 450 Lexington Avenue New York, NY 10017 (212) 450-4000 Table of Contents For the year ended December 31, 2017, we generated total revenues of $662.9 million, net loss of $48.4 million, Adjusted EBITDA of $145.2 million and Adjusted Net Income of $96.6 million. For the three months ended March 31, 2018, we generated total revenues of $196.2 million, net loss of $12.1 million, Adjusted EBITDA of $44.2 million and Adjusted Net Income of $28.3 million. Over the last three fiscal years, our total revenues, our net income, our Adjusted EBITDA and our Adjusted Net Income have changed at compounded annual growth rates ("CAGR") of 26.7%, (259.2)%, 28.9% and 20.0%, respectively. We expect our growth to continue as a result of the growth of our partner firms, attractive market and industry tailwinds and ongoing acquisition opportunities within the fragmented wealth management industry. For additional information regarding our non-GAAP financial measures, including a reconciliation of Adjusted EBITDA and Adjusted Net Income to the most directly comparable GAAP financial measure, please read "Management's Discussion and Analysis of Financial Condition and Results of Operations How We Evaluate Our Business." Approximate date of commencement of proposed sale of the securities to the public: As soon as practicable after the effective date of this Registration Statement. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box: If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. Large accelerated filer Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company Emerging growth company If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided in Section 7(a)(2)(B) of the Securities Act. CALCULATION OF REGISTRATION FEE Title of Each Class of Securities to be Registered Amount to be Registered(1) Proposed Maximum Aggregate Offering Price Per Share(2) Proposed Maximum Aggregate Offering Price(1)(2) Amount of Registration Fee(3) Class A common stock, par value $0.01 per share 18,648,650 $39.00 $727,297,350 $90,549 (1)Estimated pursuant to Rule 457(a) under the Securities Act of 1933, as amended. Includes 2,432,433 additional shares of Class A common stock that the underwriters have the option to purchase. (2)Estimated solely for the purpose of calculating the registration fee. (3)Includes $12,450 previously paid by the Registrant in connection with previous filings of this Registration Statement. The registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment that specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until this Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine. Table of Contents The following chart shows key aspects of our differentiated business model versus the typical investment manager and broker dealer. Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. Subject to Completion Preliminary Prospectus dated July 16, 2018 P R O S P E C T U S 16,216,217 Shares Focus Financial Partners Inc. Class A Common Stock Table of Contents Our Partnership Model Our differentiated partnership model has allowed us to grow and enhance our leadership position in the wealth management industry. The hallmarks of our model include: Selective Approach. We are highly selective in choosing our partner firms and conduct extensive financial, legal, tax, operational and business due diligence. We evaluate a variety of criteria including the quality of the wealth management professionals, historical revenues and cash flows, the recurring nature of the revenues, compliance policies and procedures and the alignment of interests between wealth management professionals and clients. We focus on firms with owners who are committed to the long-term management and growth of their business. Alignment of Interests. We have to date, with limited exceptions, acquired substantially all of the assets of the firms we chose to partner with but only a portion of the underlying economics in order to align the principals' interests with our own objectives. To determine the acquisition price, we first estimate the operating cash flow of the business based on current and projected levels of revenue and expense, before compensation and benefits to the selling principals or other individuals who become principals. We refer to the operating cash flow of the business as Earnings Before Partner Compensation ("EBPC") and to this estimate as Target Earnings ("Target Earnings"). In economic terms, we typically purchase only 40% to 60% of the partner firm's EBPC. The purchase price is a multiple of the corresponding percentage of Target Earnings and consists of cash and Focus LLC equity and the right to receive contingent consideration and may in the future include our Class A common stock. We refer to the corresponding percentage of Target Earnings on which we base the purchase price as Base Earnings ("Base Earnings"). We create downside protection for ourselves by retaining a cumulative preferred position in Base Earnings, with the excess of Base Earnings up to Target Earnings being retained by the principals via a management agreement as described below. We refer to our cumulative preferred position in Base Earnings as Acquired Base Earnings ("Acquired Base Earnings"). EBPC in excess of the Target Earnings is shared typically in accordance with the same economic percentages, creating an incentive for the principals to grow earnings above the Target Earnings. Entrepreneurial Management. Our partner firms are primarily overseen by the principals who own a new management company formed concurrently with the acquisition. The newly formed operating subsidiary, the management company and the principals enter into a long-term management agreement pursuant to which the management company provides the personnel responsible for overseeing the day-to-day operations of the partner firm. The management company is entitled to management fees typically consisting of all EBPC in excess of Base Earnings up to Target Earnings, plus a percentage of EBPC in excess of Target Earnings. This ownership and management structure allows the principals to maintain an entrepreneurial spirit through autonomous day-to-day decision making, while gaining access to our extensive resources and preserving the principals' long-term economic incentive to continue to grow the business. The management company structure provides both flexibility to us and stability to our partner firms by permitting the principals to continue to build equity value in the management company as the partner firm grows and to control their internal economics and succession plans within the management company. Since 2006 when we began revenue generating and acquisition activities, we have grown to a partnership with over 50 partner firms. Acquisitions of partner firms to date have been structured as illustrated below, with limited exceptions. Subsidiary mergers at the partner firm level have been This is Focus Financial Partners Inc.'s initial public offering. We are offering 16,216,217 shares of our Class A common stock. We expect the initial public offering price to be between $35.00 and $39.00 per share. Currently, no public market exists for our Class A common stock. We have applied to list our shares of Class A common stock on the NASDAQ Global Select Market under the symbol "FOCS." Investing in our Class A common stock involves risks that are described in the "Risk Factors" section beginning on page 31 of this prospectus. We are an "emerging growth company" as defined in the Jumpstart Our Business Startups Act and will therefore be subject to reduced reporting requirements. Please read "Prospectus Summary Emerging Growth Company Status." (1)Focus LLC forms a wholly owned subsidiary. (2)In exchange for a combination of cash and Focus LLC equity and the right to receive contingent consideration, the operating subsidiary acquires substantially all of the assets of the target firm, which is owned by the selling principals, and becomes the successor firm. Following this offering, acquisition consideration may also include our Class A common stock. (3)The selling principals form a management company. In addition to the selling principals, the management company may include non-selling principals who become newly admitted in connection with the acquisition or thereafter. (4)The successor firm, the principals and the management company enter into a management agreement which typically has an initial term of six years subject to automatic renewals for consecutive one-year terms, unless earlier terminated by either the management company or us in certain limited situations. Under the management agreement, the management company is entitled to management fees typically consisting of all future EBPC of the successor firm in excess of Base Earnings up to Target Earnings, plus a percentage of any EBPC in excess of Target Earnings. Pursuant to the management agreement, the management company provides the personnel who conduct the day-to-day operations of the successor firm. Through the management agreement, we create downside protection for ourselves by retaining a cumulative preferred position in Base Earnings. Our Market Opportunity Overview of the Wealth Management Industry The market we serve is significant and expanding. The Financial Planning and Advice market in the United States, as defined by an IBISWorld report dated December 2017, is estimated to have a total revenue pool of $56.0 billion in 2017, up from $37.9 billion in 2012. Furthermore, the total revenue pool for the Financial Planning and Advice market is expected to reach $78.5 billion by 2023. The U.S. wealth management market is generally categorized into six distinct channels, including the RIA channel we focus on and five broker-dealer channels (independent broker-dealer, wirehouse, regional, bank and insurance). We believe that the RIA channel and channels with similar characteristics in other countries provide a superior structure through which to deliver wealth management services, which leads to attractive growth opportunities and a high-quality client base relative to other channels. Per Share Total Initial public offering price $ $ Underwriting discount $ $ Proceeds, before expenses, to us(1) $ $ Table of Contents The high net worth population worldwide grew at a 7.2% annual rate from 2010 to 2016, according to the 2017 World Wealth Report. In addition, globally, the wealth of high net worth individuals is expected to grow at a 5.9% annual rate from 2016 to 2025, according to the same report. We believe this trend is increasing overall demand for wealth management services and provides an attractive underlying growth trajectory for our business. Within the larger wealth management industry, we have focused primarily on the United States to date. Between 2014 and 2016, the U.S. high net worth population increased at an annual rate of approximately 5.0% from 4.4 million to 4.8 million, which represents approximately 29.0% of the global high net worth population, according to the 2017 World Wealth Report. Overview of the RIA Channel in the United States RIAs are generally focused on providing high net worth clients a full suite of wealth management services under a fee-based model. According to the Cerulli U.S. RIA Marketplace 2017 Report (the "Cerulli 2017 RIA Report"), in 2017, advisors in the RIA channel allocated 56% of moderate risk investor's portfolios to equity, 32% to fixed income and cash and 12% to alternatives and other. RIAs are registered with the SEC or a state's securities agency and therefore have a legal obligation to adhere to the fiduciary standard, whereas broker-dealers operate under a client suitability standard of conduct, which requires only that investment recommendations be based on a reasonable inquiry into a client's situation. In addition, while RIAs are required by the fiduciary standard to make full and fair disclosure to clients of all material facts, including any potential conflicts of interest, broker-dealers have more limited disclosure obligations. Lastly, whereas broker-dealers generally operate under a commission-based system, RIAs generally operate under a fee-based system, which leads to more recurring and visible revenue streams. In 2016, RIAs grew 6.5% to 36,959 total advisors, according to the Cerulli U.S. Advisor Metrics 2017 Report (the "Cerulli 2017 Advisor Report"). In addition, from 2007 to 2016, RIAs increased their share of total advisors across all channels from 7.0% to 11.9%. The number of advisors in the RIA channel is expected to reach 42,523 advisors with an advisor headcount share of 14.1% by 2021, based on estimates from the Cerulli 2017 Advisor Report. In addition to a growing number of advisors, the RIA channel is fragmented with 14,693 RIAs as of December 31, 2016, according to the Cerulli 2017 Advisor Report. As a leading partnership of RIAs, we believe this gives us a competitive advantage for further expansion in this growing, yet fragmented, channel. Key Trends Driving Growth of RIAs and Hybrid RIA Firms We believe there are several key factors driving the growth of RIAs and hybrid RIA firms: Advisors Moving Toward Independent Advisor Model. As of December 31, 2016, 20.7% of advisors across all channels worked for RIAs or hybrid RIA firms (those firms that can act either in a fiduciary-based advisory capacity or a suitability-based broker capacity), collectively, and such percentage is expected to grow to 23.2% by the end of 2021, according to the Cerulli 2017 RIA Report. One of the key factors driving the shift of financial advisors to the RIA channel is the ability to garner a greater share of the economics associated with the wealth management services they provide. Advisors also enjoy the increased autonomy associated with running their own firms as they can offer their customers a wider array of investment strategies and services, all of which are aligned with the clients' best interest through the fiduciary standard. From time to time, we offer teams of wealth management professionals at traditional brokerages and wirehouses with attractive track records and books of business access to the Focus Independence program, which is designed to actively help teams of wealth management professionals transition from traditional brokerages and wirehouses to the RIA (1)We have agreed to reimburse the underwriters for certain FINRA-related expenses. Please read "Underwriting (Conflicts of Interest)." The underwriters may also exercise their option to purchase up to an additional 2,432,433 shares of our Class A common stock from us, at the initial public offering price less the underwriting discount, for 30 days after the date of this prospectus to cover overallotments, if any. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The shares of Class A common stock will be ready for delivery on or about , 2018. Table of Contents model by providing assistance with business planning, staffing and transition management to minimize disruption and best position them for future growth. Increased Demand for Independent Advice. Recent market trends indicate a preference by clients for the independent wealth management advice provided by RIAs and hybrid RIA firms. Wirehouse asset market share fell from 42.6% to 36.1% between 2007 and 2016 and is expected to fall further to 32.5% by 2021, according to the Cerulli 2017 Advisor Report. Conversely, RIAs and hybrid RIA firms saw an increase in their collective asset market share from 16.8% to 22.7% between 2007 and 2016 and are expected to have an asset market share of 25.0% by 2021, according to the Cerulli 2017 Advisor Report. As a leading partnership of RIAs, we believe we are poised to benefit from such trends. Lack of Succession Planning in RIA Channel. According to the Cerulli 2017 Advisor Report, 20% of all RIAs are unsure who their practice successor will be. The Cerulli 2017 Advisor Report found that the average age of an RIA advisor was 53.3 years and 24% of RIA advisors planned to exit the industry in the next nine years. We believe we are well-positioned to capture this growing need for RIAs to prepare their firms for the next generation of leadership through Focus Successions, which consists of a standardized agreement pursuant to which an RIA can transition its business upon the retirement of its principal advisors or the occurrence of a key person event to one of our existing partner firms. Projected Growth of Managed Accounts. The United States is in the midst of a generational shift where baby boomers, born between 1946 and 1964, are beginning to retire. The U.S. population aged 65 years and over is expected to increase by 72% from 2015 to 2040, increasing from 14.9% to an estimated 21.7% of the total U.S. population in 2040, according to data from the U.S. Census Bureau. Accompanying this shift is an expected increase in demand for wealth management services as assets are moved out of 401(k) accounts and company-sponsored plans into managed accounts. This influx of retirement assets into flexible investment accounts represents a growth opportunity for the independent wealth management sector, specifically the growing RIA channel. Expanding International Opportunities We believe that there are similar business and regulatory trends in several key international jurisdictions that are driving wealth management professionals toward independent, fee-based business models consistent with our partner firms' approach. In particular, in addition to targeting the RIA-led wealth management industry in the United States, we believe the heightened regulatory scrutiny and proliferating awareness of the fiduciary standard for wealth management as well as the growing population of high net worth clients in various regions globally will provide us with an increasing number of acquisition targets abroad. We have identified Canada, the United Kingdom, Western Europe and Australia as attractive markets where we expect our philosophy of fiduciary alignment and independence to resonate with potential partner firms. We also believe that Asia in the medium term is an attractive market for wealth management services and presents growth opportunities in the future given the growth of the high net worth population in the region. We believe that we are well-positioned to take advantage of the growth opportunities in these and other international markets. International Regulatory Changes Favor Our Model. Regulators across the globe are continuing to focus on, and to increasingly mandate, the provision of independent advice by wealth management professionals. In the United Kingdom, the Retail Distribution Review ("RDR") has created a set of rules clarifying the independence, compensation and professional standards for advisors. In particular, the RDR rules ban the payment of commissions by third-party managers for sales of investment products by advisors. These rules provide a strong incentive for advisors to adopt fee-based models. A similar prohibition is in the process of being adopted across the Joint Book-Running Managers Goldman Sachs & Co. LLC BofA Merrill Lynch KKR Table of Contents European Union with the implementation of the Markets in Financial Instruments Directive II ("MiFID II"), which was entered into law in July 2014 and is in the process of being adopted by member states. A similar regulatory initiative in Australia, the Future of Financial Advice reforms, became mandatory in July 2013 and provides formal guidelines that provide structural tailwinds for the independent wealth management model. Ongoing Wealth Creation in Asia. The Asia-Pacific region experienced 8.2% growth in high net worth wealth in 2016 to a total of $18.8 trillion, according to the 2017 World Wealth Report. The Asia-Pacific region surpassed North America in high net worth wealth in 2015 according to the same study. We believe that the rate of wealth creation in Asia will provide opportunities for fiduciary wealth management that aligns with our model. Additionally, jurisdictions across Asia, including China, are increasingly opening up to international ownership and participation in the provision of wealth management advice. Our future international acquisitions may not be structured like our typical partner firm acquisitions. For example, we have a minority equity investment in Australia. A variety of structures may be used for future international investments and acquisitions. Our Competitive Strengths As a leading partnership of independent, fiduciary wealth management firms led by entrepreneurs, we believe the following strengths provide us with a sustainable competitive advantage: A Leading Partnership of Fiduciary Wealth Management Firms We strategically built a leading partnership of independent, fiduciary wealth management firms led by entrepreneurs through a unique, disciplined and proven acquisition strategy. Our partnership delivers key innovative features that clients are increasingly seeking in today's environment, such as adoption of the fiduciary standard and a lack of dependence on cross-selling and commission-based revenues. Our position as a large-scale partnership of wealth management firms provides significant tangible benefits to our partner firms, including acquisition opportunities. Today, we have over 50 partner firms that operate under the fiduciary standard with open-architecture access. Our model allows our partner firms to use each other as business development resources and drives innovation through Centers of Competence, our program through which we share best practices among our partner firms and provide them with value-added services. We believe we have a proven model for transitioning new wealth management firms into the partnership with minimal disruption to the operations of the firm. Unique Value Proposition for Entrepreneurial Wealth Management Professionals We are actively involved in providing strategic advice and other value-added services to our partner firms without compromising their autonomy, client service or culture. As early as the acquisition due diligence process, we identify areas where we believe we can add value to a potential partner firm, and upon acquisition, we assign a relationship leader to each partner firm who is responsible for collaborating with that firm to drive business strategy and growth. Each relationship leader is tasked with intimately understanding the partner firm, identifying opportunities for growth and coordinating our value-added services to assist that partner firm in accelerating its growth. In the interest of emphasizing the independence of our partner firms, we do not impose business decisions on them but rather consult and advise. Our operating model ensures financial alignment between us and our partner firms allowing each of us to benefit from the adoption of new value add services and growth strategies. We have a team of approximately 70 professionals who support our partner firms by providing value-added services including marketing and business development support, advisor coaching and development and BMO Capital Markets RBC Capital Markets SunTrust Robinson Humphrey Table of Contents structuring compensation and incentive models along with career path planning, succession planning advice, operational and technology expertise, legal and regulatory support and providing negotiating leverage with vendors. Our value-added services also include acquisition opportunities for our partner firms through a proactive outreach program, structuring transactions and providing guidance to partner firms to facilitate their integration into our partnership. Additionally, we offer offsite meetings, seminars and other opportunities for partner firms to learn and adopt best practices. We host semiannual meetings of our partner firms, as well as periodic summits for the chief investment officers, chief compliance officers, chief operating officers and chief marketing officers of our partner firms where our partner firms can gather and share industry expertise and business development practices. Our partner firms are encouraged to share best practices regularly in order to enhance their collective ability to better serve their clients. We believe the strong growth across our partner firms is evidence of the impact of our value-added services. Proven Acquisition Expertise Growth through acquisitions of new partner firms by us and acquisitions by our partner firms is integral to and a core competency of our business. Since 2006, we have completed over 145 acquisitions, both directly and through acquisitions by our partner firms. In the past three years, we have averaged approximately 21 transactions per year. Our senior leadership team, along with all of our other headquarters personnel, spend a significant portion of their time on sourcing and executing acquisitions. Our value-added services professionals have acquisition, legal, financial, tax, compliance and operational experience and are devoted to our acquisition strategy. We are disciplined about both the types of wealth management firms we acquire and the terms at which we are willing to transact. Our areas of expertise include: Sourcing. We have an experienced team of professionals, including our co-founders and our business development associates, who have established deep industry relationships, which were developed through meetings with hundreds of wealth management professionals and attendance at industry events. Over the past 10+ years, through data analysis and research and with the benefit of well-established industry relationships, our co-founders and business development associates have developed a pipeline of potential acquisitions of new partner firms. Our team also assists in identifying potential acquisition targets for our partner firms. In addition, we have relationships with many recruiting and investment banking firms in our industry, which serves as an additional source for acquisition opportunities. Comprehensive due diligence. Having grown to a partnership with over 50 partner firms and conducted due diligence on many more target firms, we have developed expertise in identifying the highest quality wealth management firms. Our comprehensive due diligence process includes distinct qualitative and quantitative factors and, over time, we have developed a number of proprietary parameters to screen acquisition candidates and identify ways to add value to a target firm. Our partner firms benefit from this same level of expertise when we are identifying potential acquisitions on their behalf. Structure. Our acquisition structure aligns our interests with the interests of the principals by sharing EBPC of our partner firms with them. While we have to date, with limited exceptions, acquired substantially all of the assets of the firms we chose to partner with, as a result of the management agreement, the principals oversee the day-to-day operations of the partner firm, which promotes their entrepreneurial mindset. Financing. We benefit from access to significant capital resources which we believe provides us a competitive advantage. As of March 31, 2018, total capacity under our first lien revolving credit facility was $247.5 million, which allows us to execute acquisitions with speed and certainty. Co-Managers Fifth Third Securities Keefe, Bruyette & Woods A Stifel Company MUFG Raymond James Regions Securities LLC William Blair The date of this prospectus is , 2018. Table of Contents We believe that our disciplined acquisition strategy allows us to attract and execute acquisitions of high-quality, fiduciary wealth management firms that continue to support our growth. This is demonstrated by our track record to date, with over 50 partner firms and numerous acquisitions executed by our partner firms. Attractive Financial Model Our attractive, differentiated financial model is evidenced by our proven track record of strong financial performance. Since 2008, we have generated a revenue growth CAGR of approximately 20%, achieved through executing our balanced strategy of acquiring new partner firms and supporting organic growth at our existing partner firms. In our most recent year ended December 31, 2017, our revenue grew by 36.6%, we had a net loss, our Adjusted EBITDA grew by 40.9% and our Adjusted Net Income grew by 24.6%, each as compared to the prior year. Further, our business generated net income (loss) margins of approximately 2.4%, 3.2% and (7.3)% for the years ended December 31, 2015, 2016 and 2017, respectively, and Adjusted EBITDA margins of approximately 20% for each of the years ended December 31, 2015, 2016 and 2017 and is capital light given our limited working and regulatory capital requirements, which together create substantial operating leverage and drive free cash flow generation. We believe our financial profile provides the flexibility to continue to execute our various growth initiatives. Our attractive financial model is further supported by certain elements that insulate our revenue and earnings streams from operational and market volatility: Variable expense nature of management fees. As a result of our contractual arrangements under our management agreements, 100% of management fees are variable expenses. Management fees are one of our largest operating expenses. Additionally, pursuant to the contractual terms of our management agreements, we have a cumulative preferred position in Base Earnings. This structural downside protection serves as a safeguard in our earnings from potential variability in the operating performance of our partner firms. Fee-based and recurring revenues. Our revenues are substantially fee-based and recurring in nature, including greater than 90% of our revenues for the year ended December 31, 2017 and the three months ended March 31, 2018. We believe that this provides us with a high degree of revenue stability and visibility into future earnings, and differentiates us from traditional brokerage-based platforms whose revenues are largely derived from commissions and thus more sensitive to broader market trends. Diversified investment classes. Our clients have portfolios that are allocated across equity, fixed income and other investment classes. Client focus. Clients increase their reliance on our partner firms for advice during times of market volatility. Experienced Management Team with Proven Execution Track Record Our management team, which includes our co-founders, has played a significant role in building the business and has a deep, fundamental understanding of the company. Our executives have strong relationships in the wealth management industry and are actively involved in the day-to-day operations of the business and in sourcing acquisitions. Prior to joining Focus, members of our management team developed financial services and consultative expertise and leadership capabilities at organizations such as McKinsey & Company, The Boston Consulting Group, American Express ("AMEX"), Merrill Lynch, BlackRock and PricewaterhouseCoopers. Our management team is closely aligned with shareholders' interests as a result of its significant equity ownership in us. Table of Contents Table of Contents Our Growth Strategy We believe we are well-positioned to take advantage of favorable trends in the wealth management industry, including the migration of wealth management professionals from traditional brokerage, commission-based platforms to a fiduciary, open-architecture and fee-based structure. We plan to grow our business through the growth of our existing partner firms and expansion of our partnership. Growth of Our Existing Partner Firms High-Quality, Growth-Oriented Partner Firms. Our goal has been and continues to be to acquire high-quality, entrepreneurial wealth management firms that have built their businesses through a proven track record of growth. We believe that our partner firms will continue to take advantage of the shift in the market share of client assets to the RIA space and grow organically through acquisitions of wealth management practices and customer relationships, attracting new clients, additions of new wealth management professionals, increasing the amount of assets from existing clients and market-based growth over time. The economic arrangements put in place at the time of acquisition through our management agreements further incentivize the principals of our partner firms to continue executing on their growth plans. Value-Added Services. We have a team of approximately 70 professionals who support our partner firms by providing value-added services, including marketing and business development support, advisor coaching and development and structuring compensation and incentive models along with career path planning, succession planning advice, operational and technology expertise, legal and regulatory support and providing negotiating leverage with vendors. We assign a relationship leader to each partner firm who is tasked with coordinating our value-added services to assist that partner firm in accelerating its growth. These services are provided to our partner firms at no additional cost. Our partner firms have access to the resources of a large organization, which ultimately enhances their operations, enabling them to better serve their clients. Acquisitions by Our Partner Firms. We support acquisitions of wealth management practices and customer relationships by our partner firms to further expand their businesses. Partner firms pursue acquisitions for a variety of reasons, including geographic expansion, acquisition of new talent and/or specific expertise and succession planning. Acquisitions by our partner firms allow them to add new talent and services to better support their client base while simultaneously capturing synergies from the acquired businesses. We believe there are currently over 5,000 firms in the United States that are suitable targets for our partner firms. We have an experienced team of professionals with deep industry relationships to assist in identifying potential acquisition targets for our partner firms. Through our proprietary in-house sourcing effort, we frequently identify acquisition opportunities for our partner firms. Additionally, many of our partner firms are well-known in the industry and have developed extensive relationships. In recent years, principals and employees of our partner firms have identified attractive merger candidates, and we believe this trend will continue as our partner firms continue to build scale. Succession Planning for Firms Outside of Our Partnership. We enable unaffiliated wealth management firms to better plan for changes in personnel and unanticipated disruptions through Focus Successions, which consists of a standardized agreement for a third-party wealth management firm to transition its business upon retirement or a key person event to one of our existing partner firms. We facilitate this process by identifying and sourcing third-party firms in need of succession planning and matching them with a compatible partner firm within our partnership. Typically, we select an existing partner firm that is in the same geographical region and offers similar client services as the third-party firm. This is a unique opportunity to build acquisition pipelines for our partner firms. Table of Contents Table of Contents Acquisitions of New Partner Firms Since inception, a fundamental aspect of our growth strategy has been the acquisition of high-quality, entrepreneurial wealth management firms to expand our partnership. We believe that there are over 500 firms in the United States that are high-quality targets for future acquisitions. While most of our acquisitions have taken place in the United States, we see opportunities in multiple international locations where market and regulatory trends toward the fiduciary standard and open-architecture access mirror those occurring in the United States. We have already begun expansion into the United Kingdom, Canada and Australia. Risks Related to Our Partnership Model and Growth Strategy We face risks related to our partnership model and growth strategy. You should carefully read the section of this prospectus entitled "Risk Factors" for an explanation of these risks before investing in our Class A common stock. The principal risks we face related to our partnership model and growth strategy include: The wealth management industry is very competitive. Our success depends, in part, on our ability to make successful acquisitions. Acquired businesses may not perform as expected, leading to an adverse effect on our earnings and revenue growth. Our growth strategy depends, in part, upon continued growth from our existing partner firms. However, the significant growth we have experienced may be difficult to sustain in the future. Our acquisition due diligence process may not reveal all facts that are relevant in connection with an acquisition, which could subject us to unknown liabilities. The success of Focus Independence depends upon our ability to lift out teams of wealth management professionals from traditional brokerages and wirehouses. We may encounter complications in implementing Focus Successions related to transitioning and administering client assets and obtaining required client consents. We may face operational risks associated with expanding internationally. Our partner firms' autonomy limits our ability to alter their management practices and policies, and our dependence on the principals who manage the businesses of our partner firms may have an adverse effect on our business. We rely on our key personnel and principals. If a management company terminates its management agreement with us, our financial condition and results could be negatively affected. If our partner firms are unable to maintain their client-oriented, fiduciary-minded culture or compensation levels for wealth management professionals, they may be unable to attract, develop and retain talented wealth management professionals, which could negatively impact their financial results and their ability to grow. Recent Developments From April 1, 2018 to the date of this prospectus, we completed eight business acquisitions (accounted for in accordance with Accounting Standards Codification Topic 805: Business Combinations) consisting of both new partner firms and acquisitions by our partner firms. The Acquired Base Earnings associated with the acquisition of the new partner firms during this period was $25.9 million. Proceeds from borrowings under our credit facilities were used to pay a portion of the cash consideration associated with these business acquisitions. As of the date of this prospectus, we had Table of Contents outstanding borrowings of $1,245.5 million under our credit facilities. Additionally, we have signed definitive purchase agreements to acquire an additional three new partner firms with associated additional Acquired Base Earnings of $9.9 million. Each of these pending transactions is generally on terms and in a structure consistent with past transactions, and the closings are subject to customary closing conditions. Among other risks and uncertainties, there can be no guarantee that these acquisitions will be completed. For additional information regarding Acquired Base Earnings, please read "Management's Discussion and Analysis of Financial Condition and Results of Operations Acquired Base Earnings." To further support our partner firms, in June 2018 we completed a minority investment in Financial Insight Technology, Inc. (known as SmartAsset), a New York-based FinTech company that connects prospective clients with financial advisors and provides tools to help people make financial decisions. We participated in SmartAsset's $28 million series C investment round with certain other third party investors. In June 2018, we entered into an amendment to our credit facilities that will become effective in connection with the closing of this offering. For additional information regarding the pending amendment, please read "Management's Discussion and Analysis of Financial Condition and Results of Operations Credit Facilities." Our Structure and Reorganization Summary of Offering Structure This offering is conducted through an "Up-C" structure, which is often used by partnerships and limited liability companies when they go public. An Up-C structure allows the equity holders in an entity that is treated as a partnership for U.S. federal income tax purposes to retain and realize tax benefits associated with their continued ownership interest following an initial public offering. In connection with the closing of this offering, we will enter into the Fourth Amended and Restated Operating Agreement of Focus LLC (the "Fourth Amended and Restated Focus LLC Agreement"). Following this offering and the reorganization transactions described below, Focus will be a holding company and its sole material asset will be a membership interest in Focus LLC. Focus will be the sole managing member of Focus LLC, will be responsible for all operational, management and administrative decisions of Focus LLC and will consolidate the financial results of Focus LLC and its operating subsidiaries. All other membership interests in Focus LLC will be non-voting. Investors in this offering will purchase shares of our Class A common stock. Focus will use a portion of the proceeds to purchase outstanding Focus LLC units from certain existing owners, not including any affiliates of Stone Point Capital LLC (together with its affiliates, "Stone Point") or Kohlberg Kravis Roberts & Co. L.P. (together with its affiliates, "KKR"). In addition, certain existing owners will exchange all or a portion of their Focus LLC units for shares of our Class A common stock and, in some cases, receive either compensatory stock options or non-compensatory stock options and cash. Certain existing owners will continue to hold Focus LLC units representing economic, non-voting interests in Focus LLC and receive shares of our Class B common stock. Purchasers of our Class A common stock in this offering will experience immediate and substantial dilution in the net tangible book value per share of Class A common stock for accounting purposes. After giving effect to the sale of shares of Class A common stock in this offering and further assuming the receipt of the estimated net proceeds (assuming the midpoint of the price range set forth on the cover of this prospectus and after deducting the underwriting discount and estimated offering expenses payable by us), our adjusted pro forma net tangible book value as of March 31, 2018 would have been approximately $(494.5) million, or $(7.21) per share of Class A common stock. This represents an immediate increase in the net tangible book value of $20.52 per share to our existing owners and immediate dilution (i.e., the difference between the offering price and the adjusted pro forma net Table of Contents tangible book value after this offering) to new investors purchasing shares of Class A common stock in this offering of $44.21 per share. Please read "Risk Factors Risks Relating to the Offering and Our Class A Common Stock Investors in this offering will experience immediate and substantial dilution of $44.21 per share." and "Dilution." The Class A and Class B common stock will generally vote together as a single class on all matters submitted to a vote of shareholders. The Class B common stock will not have any economic rights. Upon completion of this offering (assuming no exercise of the underwriters' option to purchase additional shares), existing owners, including our private equity investors and other shareholders, will own approximately 58.9% of our Class A common stock (representing 58.9% of the economic interest and 38.0% of the voting power). The continuing owners will own 100% of our Class B common stock (representing 0% of the economic interest and 35.5% of the voting power). Reorganization Transactions In connection with this offering, we will effect an internal reorganization, which we refer to as the "reorganization transactions." The existing equity interests in Focus LLC consist of convertible preferred units, common units and incentive units. Each incentive unit has a hurdle amount, which is similar to the exercise price of a stock option. The owners of existing Focus LLC units, whom we refer to as the "existing owners," primarily include (i) affiliates of Stone Point, KKR and Centerbridge Partners, L.P., (together with its affiliates, "Centerbridge") whom we refer to as our "private equity investors," (ii) members of management, (iii) current and former principals and (iv) current and former employees of us and our partner firms. We will implement the following steps in connection with this offering: Focus LLC will purchase, utilizing proceeds from existing working capital, all common units held by existing owners who are not accredited investors, as defined by Rule 501 of Regulation D, at a purchase price per unit equal to 1.25 times the gross IPO price. We refer to the initial public offering price per share of Class A common stock as the "gross IPO price." Focus LLC will accelerate vesting of all unvested incentive units held by existing owners who are not accredited investors and convert the incentive units of each such holder into a number of common units equal to (i) the number of such incentive units times the gross IPO price, minus the aggregate hurdle amount of such incentive units, divided by (ii) the gross IPO price. We refer to the resulting number of common units as the "appropriate conversion number." Focus LLC will then purchase all common units issued upon such conversion at a purchase price per unit equal to 1.25 times the gross IPO price. We refer to existing owners who are accredited investors and hold fewer than 85,000 common units and incentive units in the aggregate as "mandatorily exchanging owners." We will first convert all vested and unvested incentive units of mandatorily exchanging owners into the appropriate conversion number of vested and unvested common units, respectively. Mandatorily exchanging owners may sell up to 100% of their vested common units (after giving effect to such conversion) to Focus at the net IPO price, subject to cut-backs depending on the proceeds available from this offering. We refer to the initial public offering price per share of Class A common stock, less the underwriting discount, as the "net IPO price." Unless a mandatorily exchanging owner elects to sell all of its vested common units (after giving effects to such conversion), such mandatorily exchanging owner must elect to sell at least 10,000 vested common units (after giving effect to such conversion). The remaining vested and unvested common units of a mandatorily exchanging owner will be exchanged for an equal number of shares of vested Class A common stock and unvested Class A common stock, which will vest in three equal installments on December 31, 2018, 2019 and 2020, respectively. Mandatorily exchanging owners of vested common units issued upon conversion of vested incentive units and not sold will also receive (i) vested non-compensatory stock options to purchase a number of Table of Contents shares of Class A common stock equal to (A) the number of vested incentive units that were converted into such vested common units minus (B) the number of shares of vested Class A common stock issued in such exchange and (ii) cash in an amount equal to 65% of the fair market value of such non-compensatory stock options, as determined by us. Mandatorily exchanging owners of unvested common units issued upon conversion of unvested incentive units and not sold will also receive unvested compensatory stock options, which will vest in three equal installments on December 31, 2018, 2019 and 2020, to purchase a number of shares of Class A common stock equal to (i) the number of unvested incentive units that were converted into such unvested common units minus (ii) the number of shares of unvested Class A common stock issued in such exchange. All of the foregoing stock options will have a term of ten (10) years and an exercise price per share of Class A common stock equal to the gross IPO price. Existing owners who are accredited investors and hold 85,000 or more common units and incentive units in the aggregate may sell up to 100% of their vested common units and vested incentive units (after conversion into the appropriate conversion number of common units) to Focus at the net IPO price, subject to cut-backs depending on the proceeds available from this offering. Unless such existing owner elects to sell all of its vested common units and vested incentive units (after conversion into the appropriate conversion number of common units), such existing owner must elect to sell at least 10,000 vested common units and vested incentive units (after conversion into the appropriate conversion number of common units). These existing owners may also elect to exchange all or a portion of their remaining common units and incentive units on the following terms: (i) common units will be exchanged for an equal number of shares of Class A common stock, (ii) vested incentive units will be converted into the appropriate conversion number of vested common units and exchanged for an equal number of shares of vested Class A common stock and (iii) unvested incentive units will be converted into the appropriate conversion number of unvested common units and exchanged for an equal number of shares of unvested Class A common stock, which will vest in three equal installments on December 31, 2018, 2019 and 2020. We refer to existing owners who elect such exchange as "optionally exchanging owners." Optionally exchanging owners may elect to exchange a portion of their common and incentive units only if they exchange at least 25,000 common units and incentive units in the aggregate and, after any elective sale and such exchange, they continue to hold at least 25,000 common units and incentive units in the aggregate in Focus LLC following this offering. These existing owners will continue to hold their common units and incentive units remaining after any such sale or exchange in Focus LLC. We refer to direct or indirect owners of convertible preferred units that are treated as corporations for U.S. federal income tax purposes as "blockers". All outstanding convertible preferred units will be converted into common units on a one-for-one basis. The common units held by certain affiliates of our private equity investors will be distributed to their owners, some of which are blockers. Each blocker will then merge with a separate newly formed subsidiary of Focus, with the blocker as the surviving entity. Each owner of each blocker (a "blocker owner") will, for each common unit held, receive consideration in the merger equal to one share of Class A common stock or, in the case of Centerbridge, the net IPO price for up to 25% of the common units held, assuming an initial offering price of $37.00 per share. Centerbridge may sell up to 25% of their common units not held by blockers at the net IPO price, subject to cut-backs depending on the proceeds available from this offering and assuming an initial offering price of $37.00 per share. The continuing owners affiliated with Centerbridge will transfer all of their common units not sold, and those affiliated with Stone Point and KKR will transfer a portion of their common units, to Focus in exchange for an equal number of shares of Class A common stock. We refer to such private equity investors, solely with respect to the Class A common stock held by them following the reorganization transactions, mandatorily exchanging owners, and optionally exchanging owners together as "exchanging owners." Table of Contents We will not issue any fractional shares of Class A common stock or common units in the reorganization transactions. We refer to existing owners who will hold common units or incentive units in Focus LLC after the reorganization transactions, including common units converted from convertible preferred units, as "continuing owners." In connection with this offering, Focus will issue shares of its Class B common stock to the continuing owners who hold vested common units in exchange for their assignment to Focus of their voting rights in Focus LLC. Each such owner will receive one share of Class B common stock for each vested common unit held. Continuing owners holding unvested common units will receive Class B common stock only upon vesting of such units. Continuing owners holding incentive units will not receive any Class B common stock. Shares of Class B common stock will not entitle their holders to any economic rights. Holders of Class A common stock and Class B common stock will vote together as a single class on all matters presented to our shareholders for their vote or approval, except as otherwise required by applicable law. Each share of Class B common stock will entitle its holder to one vote. We do not intend to list the Class B common stock on any stock exchange. Continuing owners holding unvested common units will not have any voting rights until such units vest. Continuing owners holding incentive units will not have any voting rights. Structure Upon Completion of Offering From the proceeds received in this offering after deducting the underwriting discount and estimated offering expenses payable by us: Focus will pay $22.5 million to mandatorily exchanging owners of vested incentive units and mandatorily exchanging owners who elect to sell their Focus LLC units, pay $73.2 million to other exchanging owners who elect to sell their Focus LLC units and contribute $454.8 million to Focus LLC (or $538.5 million if the underwriters exercise their option to purchase additional shares in full) in exchange for common units. Focus LLC will use $392.5 million of such contribution amount to reduce indebtedness under our credit facilities. The remaining $62.3 million of such contribution amount (or $146.0 million if the underwriters exercise their option to purchase additional shares in full) will be used by Focus LLC for acquisitions and general corporate business purposes and to pay the expenses of this offering. Upon completion of the reorganization transactions and this offering: The outstanding capitalization of Focus will be as follows: 16,216,217 shares of Class A common stock (or 18,648,650 shares of Class A common stock if the underwriters exercise their option to purchase additional shares in full) held by investors in this offering; 23,211,614 shares of Class A common stock held by the exchanging owners and blocker owners; 21,727,198 shares of Class B common stock held by the continuing owners; vested non-compensatory stock options to purchase 329,415 shares of Class A common stock at the gross IPO price issued to mandatorily exchanging owners of vested incentive units; and unvested compensatory stock options to purchase 310,896 shares of Class A common stock at the gross IPO price granted to mandatorily exchanging owners of unvested incentive units. Table of Contents The outstanding capitalization of Focus LLC will be as follows: 39,427,831 common units held by Focus; 21,727,198 common units held by the continuing owners; and 13,076,049 incentive units held by the continuing owners, which will be convertible into 7,413,333 common units (assuming vesting of unvested incentive units and an offering price at the midpoint of the range on the cover of this prospectus) in connection with the exercise of an exchange right, as described below. The combined voting power in Focus will be as follows: 26.5% for investors in this offering (or 29.3% if the underwriters exercise their option to purchase additional shares in full) who will hold shares of Class A common stock; 38.0% for the exchanging owners and blocker owners (or 36.5% if the underwriters exercise their option to purchase additional shares in full) as a result of their holding shares of Class A common stock; and 35.5% for the continuing owners holding vested common units in Focus LLC and a corresponding number of shares of Class B common stock (or 34.2% if the underwriters exercise their option to purchase additional shares in full). Each unitholder of Focus LLC (other than Focus) will, subject to certain limitations, have the right to cause Focus LLC to redeem all or a portion of its vested common units and vested incentive units, which we refer to as an "exchange right." Upon an exercise of an exchange right with respect to vested incentive units, such incentive units will first be converted into a number of common units that takes into account the then-current value of the common units and such incentive units' aggregate hurdle amount. Upon an exercise of an exchange right with respect to vested common units, and immediately after the conversion of vested incentive units into common units as described in the preceding sentence, Focus LLC will acquire each tendered common unit for, at its election, (i) one share of Class A common stock, subject to conversion rate adjustments for stock splits, stock dividends, reclassification and other similar transactions, or (ii) an equivalent amount of cash. In addition, in connection with any redemption of vested common units (other than common units received upon a conversion of incentive units as described in this paragraph), the corresponding shares of Class B common stock will be cancelled. Alternatively, upon the exercise of any exchange right, Focus (instead of Focus LLC) will have the right to acquire each tendered common unit (and corresponding share of Class B common stock, as applicable) from the exchanging unitholder for, at its election, (i) one share of Class A common stock, subject to conversion rate adjustments for stock splits, stock dividends, reclassification and other similar transactions, or (ii) an equivalent amount of cash, which we refer to as our "call right." The exchange rights will be subject to certain limitations and restrictions intended to ensure that Focus LLC will continue to be treated as a partnership for U.S. federal income tax purposes. Please read "Certain Relationships and Related Party Transactions Fourth Amended and Restated Focus LLC Agreement." Liquidity Rights and Limitations All existing owners will, subject to certain exceptions, be restricted from selling or transferring any shares of Class A common stock or any other of our equity securities for 180 days after the date of this prospectus. Please read "Certain Relationships and Related Party Transactions Fourth Amended and Restated Focus LLC Agreement Transfer of Securities" and "Underwriting (Conflicts of Interest) No Sales of Similar Securities." Following the expiration of this 180-day period and except for certain additional liquidity rights provided under the registration rights agreement described below and except as otherwise permitted by the Fourth Amended and Restated Focus LLC Agreement, continuing owners will only be permitted to Table of Contents exercise their exchange rights on quarterly exchange dates and only with respect to up to one-twelfth of the units held by them at the closing of this offering, with an ability to carry forward unused exchange rights to subsequent exchange dates. The foregoing volume restrictions will apply to Stone Point and KKR (the "Continuing PE Holders") as an aggregate limitation on their ability to sell Focus LLC units or the shares of Class A common stock received in connection with the reorganization transactions. Pursuant to a registration rights agreement, we will file a shelf registration statement to permit the resale of shares of Class A common stock held by Continuing PE Holders or issuable upon the exercise of exchange rights by continuing owners as soon as practicable following the one year anniversary of this offering. The Continuing PE Holders will have the right to demand up to three secondary underwritten offerings per year. We may initiate one additional underwritten offering per year for the benefit of the other continuing owners. The Continuing PE Holders and the other continuing owners may have participation rights with respect to any such underwritten offerings. We may also participate on a primary basis and issue and sell shares of our Class A common stock for our own account. We will use the proceeds from any such offering to purchase outstanding Focus LLC units from continuing owners and pay related fees and expenses. In the event of any underwriter cutbacks, all participating holders will be treated equally and included pro rata based on their ownership of registrable shares at the closing of this offering. The Continuing PE Holders and the other continuing owners may also have piggyback registration rights with respect to other underwritten offerings by us under certain circumstances. We expect that future unitholders in certain instances may also be granted registration rights in connection with future acquisitions by Focus LLC, but on terms that are not superior to the registration rights of the continuing owners. Please read "Certain Relationships and Related Party Transactions Registration Rights Agreement." In addition, continuing owners will be subject to certain transfer restrictions under the Fourth Amended and Restated Focus LLC Agreement, which will be entered into in connection with the closing of this offering, intended to ensure that Focus LLC will continue to be treated as a partnership for U.S. federal income tax purposes. Tax Receivable Agreements Focus's acquisition (or deemed acquisition for U.S. federal income tax purposes) of Focus LLC units in connection with this offering or pursuant to an exercise of an exchange right or the call right is expected to result in adjustments to the tax basis of the tangible and intangible assets of Focus LLC and such adjustments will be allocated to Focus. Moreover, following Focus's acquisition or deemed acquisition of Focus LLC units and of the blockers, Focus will be allocated adjustments to the tax basis of the tangible and intangible assets of Focus LLC as a result of the acquisition in July 2017 of convertible preferred units by certain of our private equity investors and certain of the blockers owned by some of our private equity investors. These adjustments would not have been available to Focus absent its acquisition or deemed acquisition of Focus LLC units or its acquisition of the blockers and are expected to reduce the amount of cash tax that Focus would otherwise be required to pay in the future. In connection with the closing of this offering, Focus will enter into two tax receivable agreements (the "Tax Receivable Agreements"), the first of which will be entered into with the blocker owners, certain existing owners affiliated with Centerbridge and the Continuing PE Holders, and the second of which will be entered into with the continuing owners who are not Continuing PE Holders and certain other existing owners (the parties to the two agreements collectively, the "TRA holders"). The term of each Tax Receivable Agreement will commence upon the closing of this offering and will continue until all tax benefits that are subject to such Tax Receivable Agreement have been utilized or expired, unless Table of Contents we experience a change of control (as defined in the Tax Receivable Agreements, which includes certain mergers, asset sales and other forms of business combinations) or the Tax Receivable Agreements terminate early (at our election or as a result of our breach), and we make the termination payments specified in the Tax Receivable Agreements. The Tax Receivable Agreements generally provide for the payment by Focus to each TRA holder of 85% of the net cash savings, if any, in U.S. federal, state and local income and franchise tax that Focus actually realizes (computed using simplifying assumptions to address the impact of state and local taxes) or is deemed to realize in certain circumstances in periods after this offering as a result of, as applicable to the relevant TRA holder, (i) certain increases in tax basis that occur as a result of Focus's acquisition (or deemed acquisition for U.S. federal income tax purposes) of all or a portion of such TRA holder's units in connection with this offering or pursuant to the exercise of an exchange right or the call right, (ii) the increases in tax basis relating to the July 2017 acquisition by certain of our private equity investors that will be available to Focus as a result of its acquisition of the blockers in connection with this offering and (iii) imputed interest deemed to be paid by Focus as a result of, and additional tax basis arising from, any payments Focus makes under the relevant Tax Receivable Agreement. We will retain the benefit of the remaining 15% of these cash savings. For purposes of the Tax Receivable Agreements, cash savings in tax generally are calculated by comparing Focus's actual tax liability (using the actual applicable U.S. federal income tax rate and an assumed combined state and local income and franchise tax rate) to the amount it would have been required to pay had it not been able to utilize any of the tax benefits subject to the Tax Receivable Agreements. In addition, if we elect to terminate the Tax Receivable Agreements early, or upon certain mergers, asset sales, other forms of business combinations or other changes of control, Focus's (or Focus's successor's) tax savings under the Tax Receivable Agreements would be based on certain assumptions, including the assumption that Focus has sufficient taxable income to fully utilize the tax benefits covered by the Tax Receivable Agreements. Please read "Certain Relationships and Related Party Transactions Tax Receivable Agreements" for a description of the Tax Receivable Agreements generally and for a discussion of circumstances in which Focus will be deemed to acquire units or realize net cash tax savings. We expect that future unitholders may become party to one or more tax receivable agreements entered into in connection with future acquisitions by Focus LLC. Because Focus is a holding company with no operations of its own, Focus's ability to make payments under the Tax Receivable Agreements is dependent on the ability of Focus LLC to make distributions to Focus in an amount sufficient to cover its obligations under the Tax Receivable Agreements. See "Risk Factors Risks Related to Our Internal Reorganization and Resulting Structure Focus is a holding company. Focus's sole material asset after completion of this offering will be its equity interest in Focus LLC and Focus will be accordingly dependent upon distributions from Focus LLC to pay taxes, make payments under the Tax Receivable Agreements and cover its corporate and other overhead expenses." If we experience a change of control (as defined under the Tax Receivable Agreements, which includes certain mergers, asset sales and other forms of business combinations) or the Tax Receivable Agreements terminate early (at our election or as a result of our breach), Focus could be required to make a substantial, immediate lump-sum payment. (1)Does not include 640,311 shares of our Class A common stock reserved for future issuance upon exercise of vested non-compensatory stock options or unvested compensatory stock options. (2)Does not include 26,799,361 shares of our Class A common stock reserved for issuance upon redemption of vested common units and vested incentive units in Focus LLC. (3)Does not include additional shares of Class A common stock reserved for future issuance under the Focus Financial Partners 2018 Omnibus Incentive Plan (the "Omnibus Plan"), which will become effective in connection with the completion of this offering. Table of Contents structured differently, and in the future we may structure acquisitions in foreign jurisdictions differently depending on legal and tax considerations. Table of Contents (4)Does not include additional Focus LLC units reserved for future issuance under the Omnibus Plan, which will become effective in connection with the completion of this offering. (5)Does not include 7,413,333 common units in Focus LLC (assuming vesting of unvested incentive units and an offering price at the midpoint of the range on the cover of this prospectus) issuable in connection with the exercise of an exchange right by a holder of outstanding incentive units in Focus LLC.
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+This summary only highlights the more detailed information appearing elsewhere in this prospectus. As this is a summary, it does not contain all of the information that you should consider in making an investment decision. You should read this entire prospectus carefully, including the information under Risk Factors and our financial statements and the related notes included elsewhere in this prospectus, before investing. Unless otherwise stated in this prospectus: anchor investor and co-anchor investors refer to Church Mutual Insurance Company and each of Fayez Sarofim, Imua T Capital Investments, LLC and Peter Wade, respectively, who are the investors with whom we have entered into forward purchase agreements; forward purchase agreements or forward purchase contracts refer to agreements providing for the sale of our securities to the anchor or co-anchor investor in private placements to occur concurrently with the closing of our initial business combination as described herein; we, us, , "our", company or our company refer to Tiberius Acquisition Corporation; public shares refers to shares of our common stock sold as part of the units in this offering (whether they are purchased in this offering or thereafter in the open market); public stockholders refers to the holders of our public shares, including our initial stockholders and members of our management team to the extent our initial stockholders and/or members of our management team purchase public shares, provided that each initial stockholder s and member of our management team s status as a public stockholder shall only exist with respect to such public shares; management or our management team refer to our executive officers and directors; sponsor refers to Lagniappe Ventures LLC, a Delaware limited liability company of which Michael T. Gray, our Executive Chairman and Chief Executive Officer, is managing member; founder shares refer to shares of our common stock initially purchased by our sponsor in a private placement prior to this offering; warrants refers to the redeemable warrants, which include all of our warrants sold as part of the units in this offering (whether they are purchased in this offering or thereafter in the open market) as well as the private placement warrants to the extent that they are no longer held by the initial purchasers of the private placement warrants or their permitted transferees; private placement warrants refer to the warrants issued to our sponsor in a private placement simultaneously with the closing of this offering; initial stockholders refers to holders of our founder shares prior to this offering; sponsor loan refers to the loan our sponsor will be making to us simultaneously with the closing of this offering; sponsor loan warrants refer to the warrants that may be issued to our sponsor upon conversion of the sponsor loan as described herein; Unless we tell you otherwise, the information in this prospectus assumes that the underwriters will not exercise their over-allotment option. General We are a blank check company incorporated as a Delaware corporation in November 2015 and formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses, which we refer to throughout this prospectus as our initial business combination. We have not identified any potential business combination target and we have not, nor has anyone on our behalf, initiated any substantive discussions, directly or indirectly, with any potential business combination target. To date, our efforts have been limited to organizational activities as well as activities related to our offering. 1 TABLE OF CONTENTS Our intent is to focus our efforts on seeking and completing an initial business combination within the middle-market insurance sector that has an expected enterprise value of approximately between $250 million to $800 million. While we may pursue an acquisition opportunity in any business industry or sector and in any geographic region, we believe that a focus on companies in the middle-market insurance sector best combine the expertise and experience of our management team in a sector that offers attractive investment opportunities. We broadly define the insurance sector (or insurance companies) to include, but not be limited to: Insurance carriers, including property-casualty, life, health and reinsurance; Insurance distribution companies, including retail agents, insurance brokers or managing general underwriters; Service providers, including claims or medical cost management, data and technology providers, and asset managers; and InsurTech companies, including companies focused on harnessing technology to maximize savings and efficiency, launching growth opportunities and innovating new risk selection processes from the established insurance operating model. We believe that the middle-market insurance sector is highly fragmented, with hundreds of private companies facing a confluence of insurance industry-specific factors contributing to ever increasing financial and operational pressures, including: Onset of InsurTech companies harnessing technology and driving an increased importance of data; Tightening regulations including an enhancement to the A.M. Best stochastic-based BCAR (Best Capital Adequacy Ratio) model and enhancements to the NAIC (National Association of Insurance Commissioners) Property Casualty RBC (Risk Based Capital) formula, leading to higher capital requirements; Low interest rate environment, negatively impacting returns on invested capital; Increasing competition, often from larger entities, decreasing underwriting margins and limiting revenue growth; Declining cash flow, resulting in lower distributions to owners; Limited diversification and monetization options, due to their small size and limited resources; and Recent catastrophic events including Hurricane Harvey, Hurricane Irma, Hurricane Maria, two recent earthquake loss events in Mexico and the 2017 California wildfires, leading to balance sheet stress. We believe that these factors impede middle-market insurance companies ability to effectively compete, thereby creating opportunities to acquire quality companies at attractive valuations. Post combination, with the benefit of our management team's domain and operational expertise, we envision that the public entity will serve as a platform allowing for: (i) enhanced return on equity and tangible book value per share growth, (ii) improved access to capital, (iii) strengthened management and board of directors, with an enhanced ability to recruit as needed, (iv) implementation of industry best practice methodologies, (v) optimized operations, (vi) the ability to make add-on acquisitions and (vii) the opportunity to benefit from a potential change in the competitive environment in markets for property related coverages as a result of recent catastrophic events, all resulting in a larger and stronger insurance entity, one that will be well equipped to compete and capitalize on market opportunities in a consolidating industry. While there is no assurance that we will be able to consummate a business combination with an insurance company, our management team s objective is to generate attractive risk-adjusted returns (including a focus on tangible book value per share growth) and create value for our stockholders by applying our disciplined strategy of underwriting intrinsic worth and improving tangible book value per share growth after making an acquisition to unlock value. We believe that our management s investments in the insurance sector, M&A experience, and advisory capabilities optimize the opportunity to identify, diligence, consummate and add substantial value to the business post combination with a focus on tangible book value per share growth. Our management team has: a) experience in operating profitable middle-market insurance sector companies, b) a broad network of contacts and relationships in the insurance and financial markets that may serve as a useful source of proprietary deal 2 TABLE OF CONTENTS flow, in addition to traditional relationships with other third party investment funds, investment banks, consultants, auditors, and lawyers c) in-depth investing, financial and M&A transaction acumen, and d) worked together previously on various projects over a period of years. Our management team is led by Michael T. Gray and Andrew J. Poole, supported by a team of executives at The Gray Insurance Company, and will be completed by a Board of Directors that is comprised of seasoned insurance industry and finance executives. Michael T. Gray, our Executive Chairman and Chief Executive Officer, has over 30 years of leadership experience in the insurance industry. He is the principal executive and President of The Gray Insurance Company, a middle-market property and casualty insurance company with an A.M. Best credit rating of A- . Mr. Gray became President of The Gray Insurance Company in 1996. We believe that this will serve as an important competitive advantage to us, as we currently expect to leverage The Gray Insurance Company's internal resources and expertise to assist in the evaluation and due diligence of potential targets and potentially in post combination value-add activities. In addition to his role at The Gray Insurance Company, Mr. Gray is Chairman of the Board of the Louisiana Insurance Guaranty Association, Director of the American Insurance Association, Director of the Property Casualty Insurers Association of America, Director of the Tulane University Family Business Center Advisory Council and served on the board of directors at the Argo Group International Holdings (Nasdaq: AGII), a global property and casualty, specialty insurance, and reinsurance products provider. Mr. Gray was the Chairman of the Board of Family Security, a personal lines/homeowners insurance company, in which The Gray Insurance Company held an ownership interest. This culminated in the sale of the company, which Mr. Gray led, to United Insurance Holding Corporation (Nasdaq: UIHC). The parent of The Gray Insurance Company, Gray & Company, has acquired or developed several business under Mr. Gray's guidance, including title insurance, oil production and exploration facilities, technology development and real estate. Andrew J. Poole, our Chief Investment Officer and Director, has over 13 years of diversified insurance company investment experience with a focus on analyzing public insurance companies. Currently an investment consultant at The Gray Insurance Company, his analytical work on insurance companies includes significant financial statement analysis and on-site due diligence with management teams, valuation and modeling of public securities across the capital structure, high degree of efficiency in data interpretation and reserve analysis and an in depth understanding of insurance markets and financial markets and economics broadly. Mr. Poole s most recent role prior to joining The Gray Insurance Company was as a Partner and Portfolio Manager at Scoria Capital Partners, LP, a long/short equity hedge fund, where he managed a portion of the firm s capital including insurance sector investments. His responsibilities included position sourcing and idea generation, fundamental research, risk management and overall investment portfolio construction for the insurance sector. Prior to Scoria, Mr. Poole held various positions at Diamondback Capital Management (including Portfolio Manager from 2011 onwards) and SAC Capital, both multi-strategy multi-manager cross capital structure long/short hedge funds. Earlier, Mr. Poole started his career at Swiss Re (SIX: SREN) working in facultative property placements. Mr. Poole was on the Board of Family Security, a personal lines/homeowners insurance company, and worked alongside Michael T. Gray in that capacity. He also served on the risk and reinsurance committees of Family Security working closely with management on rate filings, regulatory matters, strategy, marketing and reinsurance placements. Past performance by our management team or The Gray Insurance Company is not a guarantee either (i) of success with respect to any business combination we may consummate or (ii) that we will be able to identify a suitable candidate for our initial business combination. You should not rely on the historical performance record of our management as indicative of our future performance. Our officers and directors have not had management experience with blank check companies or special purpose acquisition corporations in the past. In addition, for a list of our executive officers, directors and entities for which a conflict of interest may or does exist between such officers, directors and the company, as well as the priority and preference that such entity has with respect to performance of obligations and presentation of business opportunities to us, please refer to the table and subsequent explanatory paragraph under Management Conflicts of Interest . Acquisition and Business Strategy Our current acquisition and value creation strategy will be to identify, acquire and, after our initial business combination, build a public company in the insurance sector. Our executive officers and directors have extensive experience in the insurance sector as managers, operators, principals, investors, advisors or directors, with 3 TABLE OF CONTENTS experience in sourcing, evaluating, negotiating, structuring and executing transactions. Our acquisition deal flow, due diligence and selection process will leverage their deep, broad and trusted network of insurance and finance industry relationships as well as their relationships with third party investment funds, investment bankers, consultants, attorneys and accountants. We have elected to focus our search for an initial business combination target on insurance because multiple members of our management team have extensive experience and a successful track record of investment and management within this sector. We believe that this sector is currently experiencing some element of change or dislocation that is having a broad impact on businesses within the industry. Those businesses which have the capital and expertise to respond well will obtain a competitive advantage that should drive a measurable increase in shareholder value and tangible book value per share growth. We believe that this creates a significant opportunity for us to apply our human and financial capital to our initial acquisition target in order to capture this measurable increase in value for our stockholders. We believe that our management team will (i) provide access to a wide breadth of business combination opportunities, (ii) attract potential business owners, who will view the public vehicle and our management team's capabilities in a positive manner and, (iii) potentially contribute value-added services in their role as advisors or in leadership positions post business combination, as we seek to build a strong growth platform. Acquisition Criteria Consistent with our current acquisition strategy, we have identified the following general criteria and guidelines we intend to use in evaluating prospective target businesses. While we currently intend to use these criteria and guidelines in evaluating acquisition opportunities, we may ultimately decide to enter into our initial business combination with a target business that does not meet these criteria and guidelines. We intend to seek to acquire one or more businesses that we believe: have tangible book value per share growth that is underperforming compared to its peers where we can create enhanced risk-adjusted shareholder returns by identifying value enhancing processes prior to the business combination; have significant growth and profit opportunities that are not being utilized. Improvements can be accomplished through a combination of enhanced utilization of reinsurance and partnerships, more effective growth in invested asset management, prudent capital management, data and technology enhancements leading to revenues generating superior risk adjusted returns, reviews of third party capital opportunities and strengthening of the balance sheet; benefit from enhanced access to capital markets through the public company structure. We believe that some private insurance companies have a lower return on tangible common equity and find it more difficult to grow relative to their public company peer groups due to a lack of established access to the public equity and debt markets; are being impeded by low interest rates, tightened regulatory standards, insufficient distributions to owners, increased competition, increasing capital requirements, limited diversification opportunities and the impact of InsurTech companies. Our management team believes it can leverage their experience and innovation to drive improved financial performance and ultimately a stronger competitive position; current management will gain a valuable employee retention tool by being a public company and be incented to retain ownership and help enhance shareholder value creation alongside our management team and advisors; we can solve next generation and dissident shareholder issues that a company may face; have opted not to sell to a larger or foreign entity where future upside is no longer largely driven by the original operations. This list is not intended to be all-inclusive. While we intend to use these criteria and guidelines in evaluating acquisition opportunities, we may decide to enter into our initial business combination with a target business that does not meet these criteria and guidelines. In evaluating a prospective target business, we expect to conduct a thorough due diligence review which will encompass, among other things, meetings with incumbent management and employees, document reviews, inspection of facilities, as well as a review of financial and other information which will be made available to us. 4 TABLE OF CONTENTS In addition, the consummation of the purchases pursuant to the forward purchase agreement with our anchor investor is subject to various closing conditions, including the anchor investor s ability to invest in the industry in which our proposed target business operates pursuant to our anchor investor s internal written policies. As a result, our management will need to take this into account when evaluating prospective target businesses. However, based on our anchor investor s internal written policies, the number of industries that would be prohibited is minimal. Accordingly, we do not anticipate that this would significantly impact our management teams investing decisions. Initial Business Combination NASDAQ rules provide that our initial business combination must be with one or more target businesses that together have a fair market value equal to at least 80% of the balance in the trust account (less any deferred underwriting commissions and taxes payable on interest earned) at the time of our signing a definitive agreement in connection with our initial business combination. If our board is not able to independently determine the fair market value of the target business or businesses, we will obtain an opinion from an independent investment banking firm or a qualified independent accounting firm with respect to the satisfaction of such criteria. If our securities are not listed on NASDAQ after this offering, we would not be required to satisfy the 80% requirement. However, we intend to satisfy the 80% requirement even if our securities are not listed on NASDAQ at the time of our initial business combination. We anticipate structuring our initial business combination so that the post-transaction company will own or acquire 100% of the equity interests or assets of the target business or businesses. We may, however, structure our initial business combination such that the post-transaction company owns or acquires less than 100% of such interests or assets of the target business in order to meet certain objectives of the target management team or stockholders or for other reasons, but we will only complete such business combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act of 1940, as amended, or the Investment Company Act. Even if the post-transaction company owns or acquires 50% or more of the voting securities of the target, our stockholders prior to the business combination may collectively own a minority interest in the post-transaction company, depending on valuations ascribed to the target and us in the business combination transaction. For example, we could pursue a transaction in which we issue a substantial number of new shares in exchange for all of the outstanding capital stock of a target. In this case, we would acquire a 100% controlling interest in the target. However, as a result of the issuance of a substantial number of new shares, our stockholders immediately prior to our initial business combination could own less than a majority of our outstanding shares subsequent to our initial business combination. If less than 100% of the equity interests or assets of a target business or businesses are owned or acquired by the post-transaction company, the portion of such business or businesses that is owned or acquired is what will be valued for purposes of the 80% fair market value test. If the business combination involves more than one target business, the 80% fair market value test will be based on the aggregate value of all of the target businesses. If our securities are not listed on NASDAQ after this offering, we would not be required to satisfy the 80% requirement. However, we intend to satisfy the 80% requirement even if our securities are not listed on NASDAQ at the time of our initial business combination. We are not prohibited from pursuing an initial business combination with a company that is affiliated with our sponsor, officers or directors. In the event we seek to complete our initial business combination with a company that is affiliated with our sponsor, officers or directors, we, or a committee of independent directors, will obtain an opinion from an independent investment banking firm, another independent firm that commonly renders valuation opinions for the type of company we are seeking to acquire or an independent accounting firm that our initial business combination is fair to our company from a financial point of view. Members of our management team will directly or indirectly own common stock and warrants following this offering, and, accordingly, may have a conflict of interest in determining whether a particular target business is an appropriate business with which to effectuate our initial business combination. Further, each of our officers and directors may have a conflict of interest with respect to evaluating a particular business combination if the retention or resignation of any such officers and directors was included by a target business as a condition to any agreement with respect to our initial business combination. For additional information regarding our executive officers and directors business affiliations and potential conflicts of interest, see Management Directors and Executive Officers and Management Conflicts of Interest. 5 TABLE OF CONTENTS Each of our officers and directors presently has, and any of them in the future may have additional, fiduciary or contractual obligations to another entity pursuant to which such officer or director is required to present a business combination opportunity to such entity. Accordingly, if any of our officers or directors becomes aware of a business combination opportunity which is suitable for an entity to which he or she has current fiduciary or contractual obligations, he or she will honor his or her fiduciary or contractual obligations to present such business combination opportunity to such entity, and only present it to us if such entity rejects the opportunity. We do not believe, however, that the fiduciary duties or contractual obligations of our executive officers will materially affect our ability to complete our business combination. Our amended and restated certificate of incorporation provides that we renounce our interest in any corporate opportunity offered to any director or officer unless such opportunity is expressly offered to such person solely in his or her capacity as a director or officer of our company and such opportunity is one we are legally and contractually permitted to undertake and would otherwise be reasonable for us to pursue. Our officers and directors have agreed not to become an officer or director of any other special purpose acquisition company with a class of securities registered under the Securities Exchange Act of 1934, as amended, or the Exchange Act, until we have entered into a definitive agreement regarding our initial business combination or we have failed to complete our initial business combination within 24 months after the closing of this offering. We are an emerging growth company, as defined in Section 2(a) of the Securities Act of 1933, as amended, or the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. As such, we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor internal controls attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. If some investors find our securities less attractive as a result, there may be a less active trading market for our securities and the prices of our securities may be more volatile. In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We intend to take advantage of the benefits of this extended transition period. We will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of this offering, (b) in which we have total annual gross revenue of at least $1.07 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our common stock that is held by non-affiliates exceeds $700 million as of the prior June 30, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period. References herein to emerging growth company shall have the meaning associated with it in the JOBS Act. Our executive offices are located at 3601 N Interstate 10 Service Rd W, Metairie, LA 70002 and our telephone number is 504-881-1060. 6 TABLE OF CONTENTS The Offering In making your decision whether to invest in our securities, you should take into account not only the backgrounds of the members of our management team, but also the special risks we face as a blank check company and the fact that this offering is not being conducted in compliance with Rule 419 promulgated under the Securities Act. You will not be entitled to protections normally afforded to investors in Rule 419 blank check offerings. You should carefully consider these and the other risks set forth in the section below entitled Risk Factors beginning on page 25 of this prospectus. Securities offered 15,000,000 units, at $10.00 per unit, each unit consisting of: one share of common stock; and one warrant to purchase one share of common stock. Proposed NASDAQ symbols Units: TIBRU Common Stock: TIBR Warrants: TIBRW Trading commencement and separation of common stock and warrants The units will begin trading on or promptly after the date of this prospectus. The common stock and warrants comprising the units will begin separate trading on the 52nd day following the date of this prospectus unless Cantor Fitzgerald & Co. informs us of its decision to allow earlier separate trading, subject to our having filed the Current Report on Form 8-K described below and having issued a press release announcing when such separate trading will begin. Once the shares of common stock and warrants commence separate trading, holders will have the option to continue to hold units or separate their units into the component securities. Holders will need to have their brokers contact our transfer agent in order to separate the units into shares of common stock and warrants. Separate trading of the common stock and warrants is prohibited until we have filed a Current Report on Form 8-K In no event will the common stock and warrants be traded separately until we have filed a Current Report on Form 8-K with the SEC containing an audited balance sheet reflecting our receipt of the gross proceeds at the closing of this offering. We will file the Current Report on Form 8-K promptly after the closing of this offering, which is anticipated to take place three business days from the date of this prospectus. If the underwriters over-allotment option is exercised following the initial filing of such Current Report on Form 8-K, a second or amended Current Report on Form 8-K will be filed to provide updated financial information to reflect the exercise of the underwriters over-allotment option. Units: Number outstanding before this offering 0 Number outstanding after this offering 15,000,000(1) Common stock: Number outstanding before this offering 4,312,500(2) Number outstanding after this offering 18,750,000(1) (1) Assumes no exercise of the underwriters over-allotment option and the forfeiture by our sponsor of 562,500 founder shares. (2) This number includes up to 562,500 shares that are subject to forfeiture by our sponsor depending on the extent to which the underwriters over-allotment option is exercised. 7 TABLE OF CONTENTS Warrants: Number of outstanding warrants before this offering 0 Number of private placement warrants to be sold in a private placement simultaneously with this offering 4,500,000 Number of warrants to be outstanding after this offering and the private placement 19,500,000 Exercisability Each warrant offered in this offering is exercisable to purchase one share of our common stock. Exercise price $11.50 per share, subject to adjustments as described herein. Exercise period The warrants will become exercisable on the later of: 30 days after the completion of our initial business combination, and 12 months from the closing of this offering; provided in each case that we have an effective registration statement under the Securities Act covering the shares of common stock issuable upon exercise of the warrants and a current prospectus relating to them is available (or we permit holders to exercise their warrants on a cashless basis under the circumstances specified in the warrant agreement). We are not registering the shares of common stock issuable upon exercise of the warrants at this time. However, we have agreed that as soon as practicable, but in no event later than thirty (30) days after the closing of our initial business combination, we will use our best efforts to file with the SEC and have an effective registration statement covering the shares of common stock issuable upon exercise of the warrants and to maintain a current prospectus relating to those shares of common stock until the warrants expire or are redeemed. If a registration statement covering the shares of common stock issuable upon exercise of the warrants is not effective within 90 days after the closing of our initial business combination, warrant holders may, until such time as there is an effective registration statement and during any period when we shall have failed to maintain an effective registration statement, exercise warrants on a cashless basis. The warrants will expire at 5:00 p.m., New York City time, five years after the completion of our initial business combination or earlier upon redemption or liquidation. On the exercise of any warrant, the warrant exercise price will be paid directly to us and not placed in the trust account. Redemption of warrants Once the warrants become exercisable, we may redeem the outstanding warrants (except as described herein with respect to the private placement warrants or sponsor loan warrants): in whole and not in part; at a price of $0.01 per warrant; 8 TABLE OF CONTENTS upon a minimum of 30 days prior written notice of redemption, which we refer to as the 30-day redemption period; and if, and only if, the last sale price of our common stock equals or exceeds $18.00 per share for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which we send the notice of redemption to the warrant holders. We will not redeem the warrants unless a registration statement under the Securities Act covering the shares of common stock issuable upon exercise of the warrants is effective and a current prospectus relating to those shares of common stock is available throughout the 30-day redemption period. If we call the warrants for redemption as described above, our management will have the option to require all holders that wish to exercise warrants to do so on a cashless basis. In determining whether to require all holders to exercise their warrants on a cashless basis, our management will consider, among other factors, our cash position, the number of warrants that are outstanding and the dilutive effect on our stockholders of issuing the maximum number of shares of common stock issuable upon the exercise of our warrants. In such event, each holder would pay the exercise price by surrendering the warrants for that number of shares of common stock equal to the quotient obtained by dividing (x) the product of the number of shares of common stock underlying the warrants, multiplied by the difference between the exercise price of the warrants and the fair market value (defined below) by (y) the fair market value. The fair market value shall mean the average reported last sale price of the common stock for the 10 trading days ending on the third trading day prior to the date on which the notice of redemption is sent to the holders of warrants. Please see the section entitled Description of Securities Warrants Public Stockholders Warrants for additional information. None of the private placement warrants or sponsor loan warrants will be redeemable by us so long as they are held by our sponsor or its permitted transferees. Private Placement at Initial Business Combination Our anchor investor has committed, pursuant to a forward purchase contract with us, to purchase, in a private placement to occur concurrently with the consummation of our initial business combination, 1,500,000 of our units at $10.00 per unit, and 300,000 shares of common stock (which will have the same terms as the founder shares described herein) for total gross proceeds of $15,000,000. The funds from the sale of units and shares will be used as part of the consideration to the sellers in the initial business combination or for the combined company s working capital needs. This commitment is independent of the percentage of stockholders electing to redeem their public shares and provides us with a minimum funding level for the initial business combination or future working capital needs. As part of the forward purchase contract, we have granted our anchor investor the right to appoint a 9 TABLE OF CONTENTS single observer to our Board of Directors. Such observer will not have voting rights. As of the date of this prospectus, no one has been appointed to such position. If the shares of common stock, either held directly or underlying the securities issued to or held by our anchor investor represent 10.0% or more of our issued and outstanding common stock at the closing of our initial business combination, then the size of our anchor investor s forward purchase contract shall be reduced, so that it holds (in the aggregate) no more than 9.9% of our issued and outstanding common stock at the closing of our initial business combination. The consummation of the purchases pursuant to the forward purchase agreement with our anchor investor is subject to various closing conditions, including the anchor investor s ability to invest in the industry in which our proposed target business operates pursuant to our anchor investor s internal written policies. Our co-anchor investors have also committed, pursuant to a forward purchase contract with us, to purchase, in a private placement to occur concurrently with the consummation of our initial business combination, 1,000,000 shares of our common stock at a purchase price of $10.00 per share and 100,000 additional shares of our common stock (which additional shares shall have the same terms as the founder shares described herein) for total gross proceeds of $10,000,000. The funds from the sale of such shares will be used as part of the consideration to the sellers in the initial business combination or for the combined company s working capital needs. This commitment is independent of the percentage of stockholders electing to redeem their public shares and provides us with a minimum funding level for the initial business combination or future working capital needs. As part of such forward purchase contracts, we have granted our co-anchor investors the right to each appoint a single observer to our Board of Directors. Such observers will not have voting rights. As of the date of this prospectus, no one has been appointed to such positions. If fully funded, the forward purchase contracts discussed above will result in net proceeds to us of $24,550,000. In addition, net tangible book value will increase by $24,550,000, resulting in reduced dilution to our public investors of $2.77 per share assuming 13,852,056 shares are redeemed at $10.10 per share. Additionally, any reduction of such forward purchase contracts may adversely affect us, including but not limited to, reducing the amount of funds we have to consummate our initial business combination, or reduce the amounts we have available to fund future working capital needs subsequent to our initial business combination. Expressions of Interest Our anchor investor has expressed an interest in purchasing approximately $15,000,000 of units in this offering. Our anchor investor has agreed that any such units purchased will be held through the consummation of our initial business combination and our anchor investor will not seek redemption in connection therewith. If purchased, any such units will be acquired on the 10 TABLE OF CONTENTS same terms as units purchased by the public in this offering (including payment of underwriting commissions) except that our anchor investor has agreed all such units purchased will be held through the consummation of our initial business combination and our anchor investor will not seek redemption in connection therewith. There can be no assurance that our anchor investor will acquire any units in this offering. Notwithstanding the provisions set forth above, any such units shall be held in compliance with our anchor investor s internal written policies regarding industries in which it is prohibited from investing. Founder shares In December 2015, our sponsor purchased an aggregate of 4,312,500 founder shares for an aggregate purchase price of $25,000, or approximately $0.006 per share. In December 2017, our sponsor agreed to transfer 15,000 founder shares to each of our independent director nominees, at a purchase price of approximately $0.006 per share. The 60,000 founder shares held by our independent director nominees shall not be subject to forfeiture in the event the underwriters over-allotment option is not exercised. The number of founder shares issued was determined based on the expectation that such founder shares would represent 20.0% of the outstanding shares upon completion of this offering. Prior to the initial investment in the company of $25,000 by the sponsor, we had no assets, tangible or intangible. The purchase price of the founder shares was determined by dividing the amount of cash contributed to us by the number of founder shares issued. If we increase or decrease the size of the offering pursuant to Rule 462(b) under the Securities Act, we will effect a stock dividend or share contribution back to capital, as applicable, immediately prior to the consummation of the offering in such amount as to maintain the ownership of our stockholders prior to this offering at 20.0% of our issued and outstanding shares of our common stock upon the consummation of this offering. Our initial stockholders will collectively own 20.0% of our issued and outstanding shares after this offering (assuming they do not purchase any units in this offering or in the aftermarket). Up to 562,500 founder shares will be subject to forfeiture by our sponsor (or its permitted transferees) depending on the extent to which the underwriters over-allotment option is exercised. The founder shares are identical to the shares of common stock included in the units being sold in this offering, except that the founder shares are subject to certain transfer restrictions, as described in more detail below. Additionally, our initial stockholders, officers, directors and director nominees have entered into letter agreements with us, pursuant to which they have agreed (i) to waive their redemption rights with respect to their founder shares and public shares in connection with the completion of our initial business combination and (ii) to waive their rights to liquidating distributions from the trust account with respect to their founder shares if we fail to complete our initial business combination within 24 months from the closing of this offering (although they will be entitled to liquidating distributions from 11 TABLE OF CONTENTS the trust account with respect to any public shares they hold if we fail to complete our business combination within the prescribed time frame). If we submit our initial business combination to our public stockholders for a vote, our initial stockholders have agreed to vote their founder shares and any public shares purchased during or after this offering in favor of our initial business combination. As a result, we would need only 5,625,001 of the 15,000,000 public shares, or 37.5%, sold in this offering to be voted in favor of a transaction in order to have our initial business combination approved (assuming the over-allotment option is not exercised and they do not purchase units in this offering or the aftermarket). Transfer restrictions on founder shares Our initial stockholders have agreed not to transfer, assign or sell any of their founder shares until the earlier to occur of: (A) one year after the completion of our initial business combination or (B) the date on which we complete a liquidation, merger, stock exchange or other similar transaction after our initial business combination that results in all of our stockholders having the right to exchange their shares of common stock for cash, securities or other property (except as described herein under Principal Stockholders Transfers of Founder Shares, Private Placement Warrants and Sponsor Loan Warrants ). We refer to such transfer restrictions throughout this prospectus as the lock-up. Notwithstanding the foregoing, if the last sale price of our common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after our initial business combination, the founder shares will be released from the lock-up. Private placement warrants Our sponsor has committed, pursuant to a written agreement, to purchase an aggregate of 4,500,000 warrants at a price of $1.00 per warrant ($4,500,000 in the aggregate) in a private placement that will occur simultaneously with the closing of this offering. The purchase price of the private placement warrants will be added to the proceeds from this offering to be held in the trust account. If we do not complete our initial business combination within 24 months from the closing of this offering, the proceeds of the sale of the private placement warrants will be used to fund the redemption of our public shares (subject to the requirements of applicable law) and the private placement warrants will expire worthless. The private placement warrants are identical to the warrants included in the units sold in this offering except that they will be non-redeemable and exercisable on a cashless basis so long as they are held by the sponsor or its permitted transferees (except as described below under Principal Stockholders Transfers of Founder Shares, Private Placement Warrants and Sponsor Loan Warrants ). If the private placement warrants are held by holders other than the sponsor or its permitted transferees, the private placement warrants will be redeemable by us and exercisable by the holders on the same basis as the warrants included in the units being sold in this offering. 12 TABLE OF CONTENTS Sponsor loan Our sponsor has agreed to lend us $1,500,000 (or $1,725,000 if the underwriter s overallotment option is exercised in full) as of the closing date of this offering. The Sponsor loan will bear nominal or no interest. The proceeds of the sponsor loan will be deposited into the trust account and be used to fund the redemption of our public shares (subject to the requirements of applicable law). The sponsor loan shall be repaid or converted into sponsor loan warrants, at the sponsor s discretion, only upon consummation of our business combination. The sponsor loan warrants would be identical to the warrants included in the units sold in this offering except that they will be non-redeemable and exercisable on a cashless basis so long as they are held by the sponsor or its permitted transferees (except as described below under Principal Stockholders Transfers of Founder Shares, Private Placement Warrants and Sponsor Loan Warrants ). The sponsor loan is being extended in order to ensure that the amount in the trust account is $10.10 per public share. If we do not consummate an initial business combination, we will not repay the sponsor loan and its proceeds will be distributed to our public stockholders. Our sponsor has waived any claims against the trust account in connection with the sponsor loan. Transfer restrictions on private placement warrants The private placement warrants (including the common stock issuable upon exercise of the private placement warrants) will not be transferable, assignable or saleable until 30 days after the completion of our initial business combination. Proceeds to be held in trust account NASDAQ rules provide that at least 90% of the gross proceeds from this offering and the private placement must be deposited in a trust account. Of the approximately $156,000,000 in proceeds we will receive from this offering, the sale of the private placement warrants and the sponsor loan described in this prospectus, or $178,725,000 if the underwriters over-allotment option is exercised in full, $151,500,000 ($10.10 per unit), or $174,225,000 ($10.10 per unit) if the underwriters over-allotment option is exercised in full, will be deposited into a segregated trust account at JPMorgan Chase Bank, N.A. with Continental Stock Transfer & Trust Company acting as trustee, and $1,500,000 will be used to pay expenses in connection with the closing of this offering (not including underwriting fees) and for working capital following this offering. The proceeds to be placed in the trust account include $6,000,000 (or up to $7,350,000 if the underwriters over-allotment option is exercised in full) in deferred underwriting commissions as well as the proceeds of the sponsor loan. Except with respect to interest earned on the funds held in the trust account that may be released to us to pay our franchise and income tax obligations, the proceeds from this offering, the sale of the private placement warrants and the sponsor loan will not be released from the trust account until the earliest of (i) the completion of our initial business combination, (ii) the redemption of our public shares in connection with a stockholder vote to amend any provisions of our amended and 13 TABLE OF CONTENTS restated certificate of incorporation relating to stockholders rights or pre-initial business combination activity and (iii) the redemption of 100% of our public shares if we are unable to complete our initial business combination within 24 months from the closing of this offering (subject to applicable requirements of law). The proceeds deposited in the trust account could become subject to the claims of our creditors, if any, which could have priority over the claims of our public stockholders. Anticipated expenses and funding sources Unless and until we complete our initial business combination, no proceeds held in the trust account will be available for our use, except for the withdrawal of interest to pay taxes as described below. Based upon current interest rates, we expect the trust account to generate approximately $2,100,000 of interest annually (assuming an interest rate of 1.4% per year). Unless and until we complete our initial business combination, we may pay our expenses only from: the net proceeds of this offering not held in the trust account, which will be approximately $900,000 in working capital after the payment of approximately $600,000 in expenses relating to this offering; and any loans or additional investments from our sponsor, members of our management team or their affiliates or other third parties, although they are under no obligation to advance funds or invest in us, and provided any such loans will not have any claim on the proceeds held in the trust account unless such proceeds are released to us upon completion of a business combination. Conditions to completing our initial business combination There is no limitation on our ability to raise funds privately or through loans in connection with our initial business combination. NASDAQ rules provide that our initial business combination must be with one or more target businesses that together have a fair market value equal to at least 80% of the balance in the trust account (less any deferred underwriting commissions and taxes payable on interest earned) at the time of our signing a definitive agreement in connection with our initial business combination. If our securities are not listed on NASDAQ after this offering, we would not be required to satisfy the 80% requirement. However, we intend to satisfy the 80% requirement even if our securities are not listed on NASDAQ at the time of our initial business combination. If our board is not able to independently determine the fair market value of the target business or businesses, we will obtain an opinion from an independent investment banking firm or a qualified independent accounting firm. We will complete our initial business combination only if the post-transaction company in which our public stockholders own shares will own or acquire 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act. Even if the post-transaction company owns or acquires 50% or more 14 TABLE OF CONTENTS of the voting securities of the target, our stockholders prior to the business combination may collectively own a minority interest in the post-transaction company, depending on valuations ascribed to the target and us in the business combination transaction. If less than 100% of the equity interests or assets of a target business or businesses are owned or acquired by the post-transaction company, the portion of such business or businesses that is owned or acquired is what will be valued for purposes of the 80% fair market value test, provided that in the event that the business combination involves more than one target business, the 80% fair market value test will be based on the aggregate value of all of the target businesses. Permitted purchases of public shares by our affiliates If we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our initial business combination pursuant to the tender offer rules, our initial stockholders, directors, executive officers, advisors or their affiliates may purchase shares in privately negotiated transactions or in the open market either prior to or following the completion of our initial business combination. However, they have no current commitments, plans or intentions to engage in such transactions and have not formulated any terms or conditions for any such transactions. None of the funds in the trust account will be used to purchase shares in such transactions. If they engage in such transactions, they will not make any such purchases when they are in possession of any material nonpublic information not disclosed to the seller or if such purchases are prohibited by Regulation M under the Exchange Act. Subsequent to the consummation of this offering, we will adopt an insider trading policy which will require insiders to: (i) refrain from purchasing shares during certain blackout periods and when they are in possession of any material nonpublic information and (ii) clear all trades with our legal counsel prior to execution. We cannot currently determine whether our insiders will make such purchases pursuant to a Rule 10b5-1 plan, as it will be dependent upon several factors, including but not limited to, the timing and size of such purchases. Depending on such circumstances, our insiders may either make such purchases pursuant to a Rule 10b5-1 plan or determine that such a plan is not necessary. We do not currently anticipate that such purchases, if any, would constitute a tender offer subject to the tender offer rules under the Exchange Act or a going-private transaction subject to the going-private rules under the Exchange Act; however, if the purchasers determine at the time of any such purchases that the purchases are subject to such rules, the purchasers will comply with such rules. Our initial stockholders, directors, executive officers, advisors or their affiliates will not make any purchases if the purchases would violate Section 9(a)(2) or Rule 10b-5 of the Exchange Act. 15 TABLE OF CONTENTS Redemption rights for public stockholders upon completion of our initial business combination We will provide our public stockholders with the opportunity to redeem all or a portion of their public shares upon the completion of our initial business combination at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account as of two business days prior to the consummation of our initial business combination, including interest (which interest shall be net of taxes payable), divided by the number of then outstanding public shares, subject to the limitations described herein. The amount in the trust account is initially anticipated to be $10.10 per public share. The per-share amount we will distribute to investors who properly redeem their shares will not be reduced by the deferred underwriting commissions we will pay to the underwriters. There will be no redemption rights upon the completion of our initial business combination with respect to our warrants. Our initial stockholders have entered into letter agreements with us, pursuant to which they have agreed to waive their redemption rights with respect to their founder shares and any public shares they may acquire during or after this offering in connection with the completion of our business combination. Prior to acquiring any securities from our initial stockholders, permitted transferees must enter into a written agreement with us agreeing to be bound by the same restriction. Manner of conducting redemptions We will provide our public stockholders with the opportunity to redeem all or a portion of their public shares upon the completion of our initial business combination either (i) in connection with a stockholder meeting called to approve the business combination or (ii) by means of a tender offer. The decision as to whether we will seek stockholder approval of a proposed business combination or conduct a tender offer will be made by us, solely in our discretion, and will be based on a variety of factors such as the timing of the transaction and whether the terms of the transaction would require us to seek stockholder approval under the law or stock exchange listing requirement. Asset acquisitions and stock purchases would not typically require stockholder approval while direct mergers with our company where we do not survive and any transactions where we issue more than 20.0% of our outstanding common stock or seek to amend our amended and restated certificate of incorporation would require stockholder approval. We intend to conduct redemptions without a stockholder vote pursuant to the tender offer rules of the SEC unless stockholder approval is required by law or stock exchange listing requirement or we choose to seek stockholder approval for business or other legal reasons. If a stockholder vote is not required and we do not decide to hold a stockholder vote for business or other legal reasons, we will, pursuant to our amended and restated certificate of incorporation: conduct the redemptions pursuant to Rule 13e-4 and Regulation 14E of the Exchange Act, which regulate issuer tender offers, and 16 TABLE OF CONTENTS file tender offer documents with the SEC prior to completing our initial business combination which contain substantially the same financial and other information about the initial business combination and the redemption rights as is required under Regulation 14A of the Exchange Act, which regulates the solicitation of proxies. Upon the public announcement of our business combination, if we elect to conduct redemptions pursuant to the tender offer rules, we or our sponsor will terminate any plan established in accordance with Rule 10b5-1 to purchase shares of our common stock in the open market, in order to comply with Rule 14e-5 under the Exchange Act. In the event we conduct redemptions pursuant to the tender offer rules, our offer to redeem will remain open for at least 20 business days, in accordance with Rule 14e-1(a) under the Exchange Act, and we will not be permitted to complete our initial business combination until the expiration of the tender offer period. In addition, the tender offer will be conditioned on public stockholders not tendering more than a specified number of public shares, which number will be based on the requirement that we may not redeem public shares in an amount that would cause our net tangible assets upon consummation of our initial business combination to be less than $5,000,001 (so that we are not subject to the SEC s penny stock rules) or any greater net tangible asset or cash requirement which may be contained in the agreement relating to our initial business combination. If public stockholders tender more shares than we have offered to purchase, we will withdraw the tender offer and not complete the initial business combination. If, however, stockholder approval of the transaction is required by law or stock exchange listing requirement, or we decide to obtain stockholder approval for business or other legal reasons, we will: conduct the redemptions in conjunction with a proxy solicitation pursuant to Regulation 14A of the Exchange Act, which regulates the solicitation of proxies, and not pursuant to the tender offer rules, and file proxy materials with the SEC. If we seek stockholder approval, we will complete our initial business combination only if a majority of the outstanding shares of common stock voted are voted in favor of the business combination. In such case, our initial stockholders have agreed to vote their founder shares and any public shares purchased during or after this offering in favor of our initial business combination. Each public stockholder may elect to redeem their public shares irrespective of whether they vote for or against the proposed transaction. Our amended and restated certificate of incorporation provides that in no event will we redeem our public shares in an amount that would cause our net tangible assets upon consummation of our initial business combination to be less than $5,000,001 (so that we are not subject to the SEC s penny stock rules). 17 TABLE OF CONTENTS Redemptions of our public shares may also be subject to a higher net tangible asset test or cash requirement pursuant to an agreement relating to our initial business combination. For example, the proposed business combination may require: (i) cash consideration to be paid to the target or its owners, (ii) cash to be transferred to the target for working capital or other general corporate purposes or (iii) the retention of cash to satisfy other conditions in accordance with the terms of the proposed business combination. In the event the aggregate cash consideration we would be required to pay for all shares of common stock that are validly submitted for redemption plus any amount required to satisfy cash conditions pursuant to the terms of the proposed business combination exceed the aggregate amount of cash available to us, we will not complete the business combination or redeem any shares, and all shares of common stock submitted for redemption will be returned to the holders thereof. Limitation on redemption rights of stockholders holding 10% or more of the shares sold in this offering if we hold stockholder vote Notwithstanding the foregoing redemption rights, if we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our business combination pursuant to the tender offer rules, our amended and restated certificate of incorporation provides that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a group (as defined under Section 13 of the Exchange Act), will be restricted from redeeming its shares with respect to more than an aggregate of 10% of the shares sold in this offering. We believe the restriction described above will discourage stockholders from accumulating large blocks of shares, and subsequent attempts by such holders to use their ability to redeem their shares as a means to force us or our management to purchase their shares at a significant premium to the then-current market price or on other undesirable terms. Absent this provision, a public stockholder holding more than an aggregate of 10% of the shares sold in this offering could threaten to exercise its redemption rights against a business combination if such holder s shares are not purchased by us or our management at a premium to the then-current market price or on other undesirable terms. By limiting our stockholders ability to redeem to no more than 10% of the shares sold in this offering, we believe we will limit the ability of a small group of stockholders to unreasonably attempt to block our ability to complete our business combination, particularly in connection with a business combination with a target that requires as a closing condition that we have a minimum net worth or a certain amount of cash. However, we would not be restricting our stockholders ability to vote all of their shares (including all shares held by those stockholders that hold 10% or more of the shares sold in this offering) for or against our business combination. 18 TABLE OF CONTENTS Redemption Rights in connection with proposed amendments to our certificate of incorporation Some other blank check companies have a provision in their charter which prohibits the amendment of certain charter provisions. Our amended and restated certificate of incorporation provides that any of its provisions related to pre-business combination activity (including the requirement to deposit proceeds of this offering and the private placement of warrants into the trust account and not release such amounts except in specified circumstances, and to provide redemption rights to public stockholders as described herein) may be amended if approved by holders of 65% of our common stock, and corresponding provisions of the trust agreement governing the release of funds from our trust account may be amended if approved by holders of 65% of our common stock. In all other instances, our amended and restated certificate of incorporation may be amended by holders of a majority of our common stock, subject to applicable provisions of the DGCL or applicable stock exchange rules. Our initial stockholders, who will collectively beneficially own up to 20.0% of our common stock upon the closing of this offering (assuming they do not purchase any units in this offering), will participate in any vote to amend our amended and restated certificate of incorporation and/or trust agreement and will have the discretion to vote in any manner they choose. Our sponsor, executive officers, directors and director nominees have agreed, pursuant to a written agreement with us, that they will not propose any amendment to our amended and restated certificate of incorporation that would affect the substance or timing of our obligation to allow holders to redeem their public shares, unless we provide our public stockholders with the opportunity to redeem their shares of common stock upon approval of any such amendment at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest (which interest shall be net of taxes payable), divided by the number of then outstanding public shares. Our initial stockholders have entered into letter agreements with us, pursuant to which they have agreed to waive their redemption rights with respect to their founder shares and public shares in connection with the completion of our initial business combination. Prior to acquiring any securities from our initial stockholders, permitted transferees must enter into a written agreement with us agreeing to be bound by the same restrictions. Release of funds in trust account on closing of our initial business combination On the completion of our initial business combination, all amounts held in the trust account will be released to us. We will use these funds to pay amounts due to any public stockholders who exercise their redemption rights as described above under Redemption rights for public stockholders upon completion of our initial business combination, to pay the underwriters their deferred underwriting commissions, to pay all or a portion of the consideration payable to the target or owners of the target of our initial business combination and to 19 TABLE OF CONTENTS pay other expenses associated with our initial business combination. If the entire purchase price of our initial business combination is paid for using stock or debt securities, or if not all of the funds released from the trust account are used for payment of the consideration in connection with our initial business combination, we may apply the balance of the cash released to us from the trust account for general corporate purposes, including for maintenance or expansion of operations of post-transaction businesses, the payment of principal or interest due on indebtedness incurred in completing our initial business combination, to fund the purchase of other companies or for working capital. Redemption of public shares and distribution and liquidation if no initial business combination Our sponsor, executive officers, directors and director nominees have agreed that we will have only 24 months from the closing of this offering to complete our initial business combination. If we are unable to complete our initial business combination within such 24-month period, we will: (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest (which interest shall be net of taxes payable, and less up to $50,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders rights as stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject in the case of clauses (ii) and (iii) to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. There will be no redemption rights or liquidating distributions with respect to our warrants, which will expire worthless if we fail to complete our business combination within the 24-month time period. If we are unable to complete our initial business combination, our public stockholders may only receive their pro rata portion of the funds in the trust account that are available for distribution to them, which could be less than $10.10 per share on the liquidation of our trust account and our warrants will expire worthless. Our initial stockholders have entered into letter agreements with us, pursuant to which they have waived their rights to liquidating distributions from the trust account with respect to their founder shares if we fail to complete our initial business combination within 24 months from the closing of this offering. However, if our initial stockholders acquire public shares in or after this offering, they will be entitled to liquidating distributions from the trust account with respect to such public shares if we fail to complete our initial business combination within the allotted 24-month time frame. The underwriters have 20 TABLE OF CONTENTS agreed to waive their rights to their deferred underwriting commission held in the trust account in the event we do not complete our initial business combination within 24 months from the closing of this offering and, in such event, such amounts will be included with the funds held in the trust account that will be available to fund the redemption of our public shares. Indemnification Michael T. Gray, our Executive Chairman, has agreed pursuant to a written agreement filed as an exhibit to the registration statement of which this prospectus forms part, that he will be liable to us if and to the extent any claims by a vendor for services rendered or products sold to us, or a prospective target business with which we have discussed entering into a transaction agreement, reduce the amount of funds in the trust account to below (i) $10.10 per public share or (ii) such lesser amount per public share held in the trust account as of the date of the liquidation of the trust account due to reductions in the value of the trust assets, in each case net of the interest which may be withdrawn to pay taxes, except as to any claims by a third party who executed a waiver of any and all rights to seek access to the trust account and except as to any claims under our indemnity of the underwriters of this offering against certain liabilities, including liabilities under the Securities Act. Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party, Mr. Gray will not be responsible to the extent of any liability for such third party claims. We have not independently verified whether Mr. Gray has sufficient funds to satisfy his indemnity obligations and Mr. Gray may not be able to satisfy those obligations. We have not asked Mr. Gray to reserve for such eventuality. We believe the likelihood of Mr. Gray having to indemnify the trust account is limited because we will endeavor to have all vendors and prospective target businesses as well as other entities execute agreements with us waiving any right, title, interest or claim of any kind in or to monies held in the trust account. If, as discussed elsewhere in this prospectus, our independent directors choose not to enforce these indemnification obligations, the amount of funds in the trust account available for distribution to our public stockholders may be reduced below $10.10 per share. Limited payments to insiders There will be no finder s fees, reimbursements or cash payments made to our sponsor, officers or directors, or our or their affiliates, for services rendered to us prior to or in connection with the completion of our initial business combination, other than the following payments, none of which will be made from the proceeds of this offering held in the trust account prior to the completion of our initial business combination: Repayment of up to $250,000 in loans, and any additional advances, made to us by our sponsor to cover offering-related and organizational expenses; 21 TABLE OF CONTENTS Reimbursement for any out-of-pocket expenses related to identifying, investigating and completing an initial business combination; Repayment of the sponsor loan in an amount up to $1,725,000 but only in the event we consummate our initial business combination; Repayment of future loans (which may include interest) which may, but are not required to, be made by our sponsor or an affiliate of our sponsor or certain of our officers and directors to finance transaction costs in connection with an intended initial business combination; Payment of a total of $10,000 per month to our sponsor for office space, utilities and secretarial support. Upon completion of our initial business combination or our liquidation, we will cease paying these monthly fees; and Payment of $12,500 per month to our Chief Investment Officer following the consummation of this offering until the earlier of our liquidation or the consummation of our initial business combination. Audit Committee We will establish an audit committee, which will be composed entirely of independent directors to, among other things, monitor compliance with the terms described above and the other terms relating to this offering. If any noncompliance is identified, then the audit committee will be charged with the responsibility to immediately take all action necessary to rectify such noncompliance or otherwise to cause compliance with the terms of this offering. Our audit committee will also review on a quarterly basis all payments that were made to our sponsor, officers or directors, or our or their affiliates. For more information, see the section entitled Management Committees of the Board of Directors Audit Committee. 22 TABLE OF CONTENTS Risks We are a blank check company that has conducted no operations and has generated no revenues. Until we complete our initial business combination, we will have no operations and will generate no operating revenues. In making your decision whether to invest in our securities, you should take into account not only the background of our management team, but also the special risks we face as a blank check company. This offering is not being conducted in compliance with Rule 419 promulgated under the Securities Act. Accordingly, you will not be entitled to protections normally afforded to investors in Rule 419 blank check offerings. For additional information concerning how Rule 419 blank check offerings differ from this offering, please see Proposed Business Comparison of This Offering to Those of Blank Check Companies Subject to Rule 419. You should carefully consider these and the other risks set forth in the section entitled Risk Factors beginning on page 25 of this prospectus. 23 TABLE OF CONTENTS
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+PROSPECTUS SUMMARY 1 THE OFFERING 7 SUMMARY CONSOLIDATED FINANCIAL INFORMATION 9 CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS 12 RISK FACTORS 13 USE OF PROCEEDS 40 DIVIDEND POLICY 41 THE CORPORATE REORGANIZATION 42 CAPITALIZATION 43 DILUTION 44 MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 46 BUSINESS 60 MANAGEMENT 77 EXECUTIVE COMPENSATION 82 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 84 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 85 SHARES ELIGIBLE FOR FUTURE SALE 86 MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES TO NON-U.S. HOLDERS OF OUR COMMON STOCK AND WARRANTS 87 DESCRIPTION OF OUR SECURITIES 92 DESCRIPTION OF THE SECURITIES WE ARE OFFERING 97 UNDERWRITING 99 LEGAL MATTERS 105 EXPERTS 105 WHERE YOU CAN FIND ADDITIONAL INFORMATION 105 INDEX TO FINANCIAL STATEMENTS F-1 You should rely only on the information contained in this prospectus or in any free writing prospectus that we may specifically authorize to be delivered or made available to you. We have not, and the underwriters have not, authorized anyone to provide you with any information other than that contained in this prospectus or in any free writing prospectus we may authorize to be delivered or made available to you. We take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. This prospectus may only be used where it is legal to offer and sell our securities. The information in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or any sale of our securities. Our business, financial condition, results of operations and prospects may have changed since that date. We are not, and the underwriters are not, making an offer of these securities in any jurisdiction where the offer is not permitted. For investors outside the United States: We have not and the underwriters have not done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the
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diff --git a/parsed_sections/prospectus_summary/2018/CIK0001666267_arrestage_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001666267_arrestage_prospectus_summary.txt
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+PROSPECTUS SUMMARY 1 RISK FACTORS 9 USE OF PROCEEDS 32 CAPITALIZATION 35 DILUTION 36 PRINCIPAL STOCKHOLDERS 39 SHARES ELIGIBLE FOR FUTURE SALE 43 MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES TO NON-U.S. HOLDERS 45 LEGAL MATTERS 50 EXPERTS 50 WHERE YOU CAN FIND MORE INFORMATION 51 DIVIDEND POLICY 55 MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 56 BUSINESS 67 MANAGEMENT 72 EXECUTIVE AND DIRECTOR COMPENSATION 79 CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS 83 DESCRIPTION OF CAPITAL STOCK 86 UNDERWRITING 91 FINANCIAL STATEMENTS OF ARRESTAGE INTERNATIONAL, INC. F-1 Table of Contents PROSPECTUS SUMMARY This summary highlights certain information about us and this offering contained elsewhere in this prospectus. Because it is only a summary, it does not contain all the information that you should consider before investing in shares of our common stock and it is qualified in its entirety by, and should be read in conjunction with, the more detailed information appearing elsewhere in this prospectus. Before you decide to invest in our common stock, you should read the entire prospectus carefully, including "Risk Factors" beginning in our prospectus and our financial statements and the accompanying notes included in this prospectus. Market for Securities Currently these securities are not offered on a stock exchange or any exchange traded entity. The company has a limited operating history, is not generating revenue, and the auditor has raised substantial concern about the business as a going concern. The Company has a limited operating history and faces all the risks and uncertainties associated with an unproven history. The Company is not currently generating revenues and does not expect to generate revenue in this quarter. The Company has debt from its previous operating history. The audit firm Schumacher and Associates has expressed substantial doubt about the Company s ability to remain a going concern. Investors should understand that there can be no assurance that the Company will ever achieve revenues or profitability. The likelihood of our success must be considered in light of the problems, expenses, difficulties, complications and delays frequently encountered in connection with the formation of a pre-revenue business. Company Overview We are a Company within the healthcare space. Specifically, we are in the Nutraceutical business that holds formulations on skin care products as well as brand formulas, and other intellectual property. In addition, we are seeking to perform roll-up transactions, to include a finance company that purchases and securitizes medical devises for periodic rental to end users. Arrestage is in the sector of research and development of nutraceutical products. Arrestage plans to acquire and maintain secured UCC-1 on the machines it purchases and provides full service plans and warranty options, and other companies within the wellness sector. ARRESTAGE INTERNATIONAL, INC. ("AII" or the "Company") a Nevada corporation, plans to develop an international licensing program whereby we plan to provide turnkey assistance with operations and support for distributors in the Skin Care and Anti-Aging arena, using our brand, custom formulas, trademark, internet presence and proprietary marketing protocols. In addition to this, we plan to continue to develop these aspects of the business and potentially acquire complimentary products and services. Arrestage International intends to create a significant brand in the aesthetic skincare marketplace. The officers and directors of AII all have created, or participated in the marketing and development of branded products in this space. AII will generate a licensing fee of 5-8% (or a higher rate the market may bear) of all revenues generated by future licensees. CALCULATION OF REGISTRATION FEE Title of Each Class of Securities to be Registered Proposed Maximum Aggregate Offering Price (1) Amount of Registration Fee (2) Common Stock, par value $0.001 per share $4,000,000 $498 Total $4,000,000 $498 (1) Estimated solely for the purpose of calculating the amount of the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended. (2) Calculated pursuant to Rule 457(o) under the Securities Act based on an estimate of the proposed maximum aggregate offering price. (3) Estimated solely for the purposes of calculating the registration fee pursuant to Rule 457(g) under the Securities Act. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. Table of Contents We have not authorized anyone to provide you with any information other than that contained in this prospectus, any amendment or supplement to this prospectus or in any free writing prospectus we may authorize to be delivered or made available to you. The underwriters and we take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. We are offering to sell shares of our common stock and seeking offers to buy shares of our common stock only in jurisdictions where offers and sales are permitted. The information in this prospectus is complete and accurate only as of the date on the front cover of this prospectus, regardless of the time of delivery of this prospectus or any sale of shares of our common stock. For investors outside the United States: We have not, and the underwriters have not, done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the U.S. Persons outside the U.S. who come into possession of this prospectus must inform themselves about, and observe any restrictions relating to, the offering of the shares of common stock and the distribution of this prospectus outside the U.S. Table of Contents AII plans to license full use of all intellectual property and formulas of its licensed products, in all geographical regions and channels of distribution. Arrestage is working on Research and Development of future products by working towards other possible acquisitions. AII plans to set itself apart from its competitors by providing clinically based sales materials that attract a more sophisticated consumer which may enable the licensee to increase their sales revenues with higher margins. Licensees will have access to the luminary panel, clinical and marketing training protocols, and collateral materials. Arrestage International plans to address an ever-increasing world demand for western culturally influenced aesthetic skin topical products, in addition to the increasing demand in US domestic and other western markets. AII seeks to license distribution organizations, in the US and Internationally, to market its proprietary brand of aesthetic dermal formulations and additional products that it may potentially acquire. The initial products have gone through clinical and behavioral testing and several reformulations to achieve the high acceptance status that they now hold. The size of the aesthetic topical world market is approximately $7.4 billion. Morningstar estimates a continued growth rate of 11% CAGR from 2016-2020. Due to the high margins, the major aesthetic device makers are attempting to enter this market as distributors. This may be a beneficial circumstance as it may enhance the valuation of AII and widen future exit possibilities. Medical Device Rental Division The Company plans to establish a medical device rental program that purchases or secures medical devices such as MRI systems and various other diagnostic equipment. Our target market will be physician groups, clinics, rural hospitals, and insurance companies. Arrestage intends to obtain residual income from such rentals and would maintain a fully secured UCC-1 position on each piece of equipment. To grow this division, Arrestage plans to aggressively market such services in this coming year. This function will help meet the expanding demand of medical systems due to the current healthcare trends. The United States market, the largest in the world, has reached a value of $133 billion by 2016, and is expected to reach 278 billion by 2021 worldwide. (2A) To date the Company has accumulated a strong market presence within this lucrative sector of secured structured medical lending. Market Opportunity Medical Equipment Rental is an industry that is expanding due to many factors in the health care industry. Professionally, many smaller businesses have found it much more cost effective to rent expensive equipment that they would normally have to refer patients to a larger facility to use. Rentals are creating greater accessibility to medical equipment in many places where there are not larger facilities close by. Rural areas that only have local access to small healthcare facilities could see specialized equipment that would not usually be available. Many medical professions that deal with varying, rare health issues, such as emergency clinics, pediatrics, physical therapists, and oncologists, in small or medium-sized facilities could have much more reliable access to this specialized equipment. Also, it is more convenient for patients to receive care and testing all in one location, and it streamlines the process of receiving test results when equipment can be found in house. Lastly, for larger medical facilities renting is beneficial for very specialized equipment that can be too expensive to purchase. Rentals allow the use of specialized equipment without undue burdens on a facility s budget. Due to the constantly changing advances in medical technology many places do not have consistent access to the most helpful equipment. If rented, adjustments in technology would be much more feasible for tight facility budgets, and more locations could use the latest technology in the healthcare market. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state or jurisdiction where the offer or sale is not permitted. Shares of Common Stock Arrestage International, Inc. Shares of Common Stock Two Million (2,000,000) Shares - $2.00 per Share This is a Best Efforts initial public offering of shares of common stock of Arrestage International, Inc. No public market currently exists for our shares. We anticipate that the initial public offering price of our shares of common stock will be $2.00 per share. We will apply to list our shares of common stock for trading on the OTCQB under the symbol "_______." No assurance can be given that our application will be approved. We are an "emerging growth company" as defined in the Jumpstart Our Business Startups Act of 2012 and, as such, we have elected to comply with certain reduced public company reporting requirements for this prospectus and future filings. Investing in our common stock involves a high degree of risk. See "Risk Factors" beginning on page 9 of this prospectus for a discussion of information that should be considered in connection with an investment in our common stock. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. Per Share Total Public offering price $2.00 $4,000,000 Underwriting fee (1) $0.00 $0 Proceeds to Arrestage International, Inc., before expenses $2.00 $4,000,000 (1) No commissions have been paid to date in exchange for selling or underwriting our shares. This is a Best Efforts Offering. Arrestage may engage an underwriter. Underwriters are not required to sell any specific number or dollar amount of securities but will use their best efforts to sell the securities offered. Since no arrangements with underwriter currently exist there is no provision for Underwriting fees. Table of Contents MARKET DATA AND FORECASTS Unless otherwise indicated, information in this prospectus concerning economic conditions, our industry, our markets and our competitive position is based on a variety of sources, including information from independent industry analysts and publications, as well as our own estimates and research. Our estimates are derived from industry and general publications, studies and surveys conducted by third-parties, as well as data from our own internal research. Industry publications, studies and surveys generally state that they have been obtained from sources believed to be reliable. ORGANIZATIONAL FACTS On June 15, 2011, we formed Arrestage International, Inc. in the state of Nevada for the purpose of conducting business within the nutraceutical and medical sectors in perpetuity. The first organizational meeting was held on June 20, 2011 where the articles of incorporation and bylaws were adopted. In the same meeting the stock specimen certificate and the annual meeting set for June 6th each fiscal year. The registered agent is Registered Agents, Inc. with offices located at 401 Ryland St., Suite 200-A, Reno, NV 89502. FINANCIAL STATEMENT PRESENTATION The financial statements as of December 31, 2017 and 2016, are those of Arrestage International, Inc. and will be presented below in tabular form with corresponding notes. They have been professionally prepared by the Company. December 31, 2017 was audited by BF Borgers CPA PC and December 31, 2016 was audited by Schumacher and Associates, Inc. TRADEMARKS AND TRADENAMES This prospectus includes our trademarks such as Arrestage International, Inc. ARRESTAGE International, Inc. which are each protected under applicable intellectual property laws and are the property of Arrestage International, Inc. Solely for convenience, trademarks, service marks and tradenames referred to in this prospectus may appear without the , TM or SM symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the right of the applicable licensor to these trademarks, service marks and tradenames. This prospectus may also contain trademarks, service marks, tradenames and copyrights of other companies, which are the property of their respective owners. The most recent renewals of registration to the marks to Arrestage International, Inc. s trademarks were filed on December of 2017 with the United States Patent and Trademark Office. ABOUT THIS PROSPECTUS Except where the context otherwise requires or where otherwise indicated, the terms "Arrestage," "Arrestage International," "AII," "we," "us," "our," "our company" and "our business" refer to Arrestage International, Inc. Table of Contents The global medical equipment rental market was recorded at US$33417.4 million in 2013 and, at a CAGR of 5.8% during the forecast period of 2014 to 2020, will reach a value of US$49,112.8 million by 2020 (1A). As demonstrated in the graphics below, the need for long-term medical equipment is rising. Geriatric and diabetic populations are two areas where our services could be used, and that need is rising. Arrestage International, Inc. Arrestage Skin Care Products Arrestage has licensed a line of skin care products that combines the expertise of herbalists, chemists, and dermatologists to create products that are customized for each client s skincare concerns. Arrestage only uses all-natural ingredients and components in their skin care products. All products are monitored closely, with high freshness, purity, and potency that result from Arrestage s micro-batching processes. Over time, as the original customized formula no longer has the desired results, Arrestage will provide the client with custom "boosters" to enhance the original formula s results. Table of Contents Nutraceuticals is an industry that is rapidly growing, and it is unique because it requires the overlapping of two industries that are highly relied upon in today s society: food and pharmaceuticals. Nutraceuticals are natural, bioactive chemical compounds that have health-promoting, disease-preventing or general medicinal properties. This category encompasses vitamins, minerals, herbal supplements, and certain animal products. This industry is becoming more popular to consumers both because greater self-awareness and diet education, but also because it incorporates preventative and curative care into everyday life through food, beverages, and supplements. The governmental support for this industry is positive worldwide, and in the United States some health insurances reimburse consumers for medical foods. This industry is largely dominated by a few companies, with the 5 top companies holding over 50% of the market as of 2014. North America is expected to continue to lead this industry over this period (North America held 39.6% market share in 2014). The Asia Pacific region held the second largest market share in 2014 with a significant growth rate. (source 2A) The global nutraceuticals market was valued at US$165.62 billion in 2014 and is expected to reach US$278.96 billion by 2021, growing at a CAGR of 7.3% from 2015 to 2021. (2A) Revenue-functional food segment held the largest share in the global nutraceuticals market, accounting for 31.0% market share in 2014 and is expected to grow at a CAGR of 7.1% from 2015 to 2021. Functional beverage is 2nd and expected to grow at a CAGR of 7.4 % from 2015-2021. (2A) Top companies are Cargill, Archer Daniels Midland Company, Royal DSM N.V, BASF SE, Nestle S.A., General Mills, Inc., etc. (2A) Table of Contents The WHO predicts that by 2020 over 65 million people will have dementia and that the prevalence of other neurodegenerative brain diseases, like Alzheimer s, is also increasing. (2B) It is estimated that over 100 million people globally are effected by , ' ': gut health problems, and the prevalence is rising. (2B) Cardiovascular disease (CVD) is significant. It is the number one cause of death globally. The risk of contracting CVD is associated with lifestyle choices including a poor diet. (2B) The WHO estimate that 347 million people worldwide have diabetes. (2B) Sales are predicted to reach US$250 billion by 2018. (2B) SOURCES (1A)- http://www.transparencymarketresearch.com/medical-equipment-rental.html (1B)- see scan attached in email (1C)- https://www.census.gov/prod/2014pubs/p25-1140.pdf (1D)- http://care.diabetesjournals.org/content/24/11/1936#T3 (2A)- http://www.prnewswire.com/news-releases/nutraceuticals-market-to-surpass-us278-billion-globally-by-2021-propelled-by-soaring-demand-for-functional-foods-and-beverages-transparency-market-research-531577541.html (2B)- https://www.kpmg.com/ID/en/industry/CM/Documents/neutraceuticals-the-future-of-intelligent-food.pdf Forward looking Statements: This prospectus contains statements that express our opinions, expectations, beliefs, plans, objectives, assumptions or projections regarding future events or future results, in contrast with statements that reflect historical facts. Many of these statements are contained under the headings "Prospectus Summary," "Management s Discussion and Analysis of Financial Condition and Results of Operations" and "Business." In some cases, we have identified such forward-looking statements with typical conditional words such as "anticipate," "intend," "believe," "estimate," "plan," "seek," "project" or "expect," "may," "will," "would," "could" or "should," the negative of these terms or other comparable terminology. Important factors related to forward-looking statements may include, among others, assumptions regarding: our ability to achieve and sustain profitability; market acceptance of our product line; our ability to successfully commercialize our products; our ability to compete effectively in selling our products and services; Table of Contents our ability to expand, manage and maintain our direct sales and marketing organizations; our actual financial results may vary significantly from forecasts and from period to period; our ability to successfully develop new products, improve or enhance existing products or acquire complementary products, technologies, services or businesses; our ability to obtain and maintain intellectual property of sufficient scope to adequately protect our products; market risks regarding consolidation in the healthcare and nutraceutical industry; our ability to effectively manage our anticipated growth; the regulatory requirements applicable to us and our competitors; our reliance on third party manufacturers and sole- or single-source suppliers; our ability to efficiently manage our supply chain processes; the regulatory and legal risks, and certain operating risks, that our international operations subject us to; the fact that product quality issues or product defects may harm our business; and any product liability claims. Forward-looking statements are not a guarantee of performance, and you should not place undue reliance on such statements. We have based forward-looking statements largely on our current expectations and projections about future events. Forward-looking statements are subject to many uncertainties and other variable circumstances, including those discussed elsewhere in this prospectus under the headings
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+PROSPECTUS SUMMARY The following is only a summary of this Prospectus and, while it contains material information about the Trust, it does not contain or summarize all of the information about the Trust and the Shares contained in this Prospectus that is material and that may be important to you. You should read this entire Prospectus, including The Risks You Face beginning on page 13, and the material incorporated by reference herein before making an investment decision about the Shares. Bitcoin A bitcoin is an asset that can be transferred among parties via the Internet, but without the use of a central administrator or clearing agency. Bitcoin with an upper case B describes the system as a whole (i.e., the network of computers running the software protocol underlying bitcoin involved in maintaining the database of bitcoin ownership and facilitating the transfer of bitcoin among parties). When written with a lower case b , the word bitcoin refers to the unit of account within the Bitcoin network. The Bitcoin network and the asset, bitcoin, are intrinsically linked and inseparable. The Bitcoin network, which has existed since 2009, can be used both as a value transfer system (i.e. the transfer of bitcoin from one party to another) and for non-financial applications. Development of the Bitcoin network s usage for non-financial applications has become increasingly prominent, including applications such as: asset title transfer, secure timestamping, counterfeit and fraud detection systems, secure document and contract signing, distributed cloud storage and identity management. As a mechanism purely for the transfer of value, the Bitcoin network has processed more than 280 million transactions since its inception. Hundreds of thousands of merchants worldwide accept bitcoin for goods and services. To date, venture capitalists have invested more than $1 billion in businesses related to Bitcoin and the blockchain, the technology underlying the Bitcoin network. The Trust VanEck SolidX Bitcoin Trust (the Trust ) was formed as a Delaware statutory trust on September 15, 2016. The Trust is governed by the Amended and Restated Declaration of Trust and Trust Agreement ( Trust Agreement ) dated [ ] between SolidX Management LLC (the Sponsor ) and Delaware Trust Company (the Trustee ). The Trust will issue common units of beneficial interest, or Shares, which represent units of fractional undivided beneficial interest in the Trust s net assets. The Trust s assets will consist of bitcoin, the unit of account within the Bitcoin network as described in the preceding paragraphs. The Trust will occasionally hold cash for short periods in connection with the Basket creation and redemption process, and to pay the Sponsor s Management Fee, the bitcoin Insurance Fee, bitcoin storage fees, salaries of Trust principals and employees and any other Trust expenses and liabilities not assumed by the Sponsor. The Trust will not hold any assets other than bitcoin or cash. The Trust will buy and sell bitcoin with a view to causing the performance of the Trust to track the price of bitcoin, less the expenses of the Trust s operations. The Trust will also be responsible for custody of the Trust s bitcoin. The value of bitcoin will be reported on the Trust s website daily as measured by the MVIS Bitcoin OTC Index ( MVBTCO ). Shares are issued by the Trust only in blocks of 5 Shares called Baskets principally in exchange for cash from certain registered broker-dealers ( Authorized Participants ). See Creation and Redemption of Shares for requirements to qualify as an Authorized Participant. Baskets will be redeemed by the Trust principally in exchange for the amount of cash corresponding to their redemption value. Baskets may also be created or redeemed partially or wholly in exchange for bitcoin at the discretion of the Sponsor if the Authorized Participant can convey bitcoin directly to the Trust. The Trust issues and redeems Baskets on an ongoing basis at net asset value ( NAV ) to Authorized Participants who have entered into a contract with the Sponsor and the Transfer Agent. Amendment No. 5 to FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Table of Contents Individual Shares will not be redeemed by the Trust, but are expected to be listed for trading, subject to notice at issuance, on the Exchange under the symbol XBTC. The material terms of the Trust and the Shares are discussed in greater detail under the sections Description of the Trust and Description of the Shares. The Trust is not a registered investment company under the Investment Company Act of 1940, as amended ( 1940 Act ), and is not required to register with the Securities and Exchange Commission thereunder. The Trust is not a commodity pool for purposes of the Commodity Exchange Act of 1936, as amended, and the Trust and the Sponsor are not subject to regulation by the Commodity Futures Trading Commission as a commodity pool operator or a commodity trading advisor. An investment in the Trust may not be suitable for retail investors. Secondary market purchases and sales of Shares are subject to customary brokerage commissions and charges. The market price of the Shares may not be identical to the NAV per Share. The intra-day indicative value per Share is based on the prior day s final NAV per Share, adjusted every 15 seconds throughout the day to reflect the continuous price changes of the Trust s bitcoin holdings, to provide a continuously updated indicative intra-day value per Share. The Trust is not involved in or responsible for the calculation or dissemination of the indicative intra-day value per Share and makes no warranty as to the accuracy of the indicative intra-day value per Share. The Sponsor The Sponsor is a Delaware limited liability company. The Shares are neither interests in nor obligations of, and are not guaranteed by, the Sponsor, its member(s), or any of its affiliates. The Sponsor: (1) will select the Trustee, Administrator, Transfer Agent, Cash Custodian, Marketing Agent and any other Trust service providers; (2) will negotiate various agreements and fees for the Trust; (3) will develop a marketing plan for the Trust on an ongoing basis and prepare marketing materials regarding the Shares, and in this respect the Sponsor has engaged Van Eck Securities Corporation ( VanEck ) pursuant to a marketing agent agreement to provide assistance in the marketing of the Shares; (4) will maintain the Trust s website; and (5) will perform such other services as the Sponsor believes that the Trust may require. The general role and responsibilities of the Sponsor are discussed in greater detail under the section The Sponsor. The Sponsor arranged for the creation of the Trust, the registration of the Shares for their public offering in the United States and the listing of the Shares on the Exchange. The Sponsor generally oversees the performance of the Trust s principal service providers, but does not exercise day-to-day oversight of the Trustee, Administrator, Transfer Agent, Cash Custodian, Marketing Agent, VanEck or other such service providers. The Sponsor may compensate its affiliates for providing marketing and other services to the Trust without any additional cost to the Trust. The Sponsor maintains a public website on behalf of the Trust, containing information about the Trust and the Shares. The Internet address of the Trust s website is [ ]. This Internet address is only provided here as a convenience to you, and the information contained on or connected to the Trust s website is not considered part of this Prospectus. The Sponsor has agreed to assume the following administrative and marketing expenses incurred by the Trust: each of the Trustee s, Administrator s, Cash Custodian s, Transfer Agent s and Marketing Agent s monthly fee and out-of-pocket expenses and expenses reimbursable in connection with such service provider s respective agreement; the marketing support fees and expenses; exchange listing fees; SEC registration fees; index license fees; printing and mailing costs; maintenance expenses for the Trust s website; audit fees and expenses; and up to $100,000 per annum in legal expenses. The Sponsor will not be responsible for paying the premiums associated with the bitcoin insurance that will be maintained by the Trust. The Sponsor also paid the costs of the Trust s organization and the initial sale of the Shares. See The Sponsor, The Trust s bitcoin Security System and The Trust s bitcoin Insurance. VanEck SolidX Bitcoin Trust (Exact name of Registrant as specified in its charter) Delaware 6221 35-7161067 (State or Other Jurisdiction of Incorporation or Organization) (Primary Standard Industrial Classification Code Number) (I.R.S. Employer Identification No.) 200 Park Avenue New York, New York 10166 (212) 273-9585 (Address, including zip code, and telephone number, including area code, of Registrant s principal executive offices) Table of Contents The Trustee Delaware Trust Company, a Delaware trust company, acts as the trustee of the Trust for the purpose of creating a Delaware statutory trust in accordance with the Delaware Statutory Trust Act ( DSTA ). The Trustee is appointed to serve as the trustee of the Trust in the State of Delaware for the sole purpose of satisfying the requirement of Section 3807(a) of the DSTA that the Trust have at least one trustee with a principal place of business in the State of Delaware. The duties of the Trustee will be limited to (i) accepting legal process served on the Trust in the State of Delaware and (ii) the execution of any certificates required to be filed with the Delaware Secretary of State which the Trustee is required to execute under the DSTA. To the extent that, at law or in equity, the Trustee has duties (including fiduciary duties) and liabilities relating thereto to the Trust or the Trust s shareholders, such duties and liabilities will be replaced by the duties and liabilities of the Trustee expressly set forth in the Trust Agreement. The Trustee will have no obligation to supervise, nor will it be liable for, the acts or omissions of the Sponsor, Trust principals and employees, Administrator, Transfer Agent, Cash Custodian, Marketing Agent, VanEck or any other person. See The Trustee. The Administrator The Administrator is The Bank of New York Mellon. The Administrator is generally responsible for the day-to-day administration and operation of the Trust, including: (1) valuing the Trust s bitcoin and calculating the net asset value per share of the Trust and the net asset value of the Trust; (2) supplying pricing information to the Sponsor for the Trust s website; and (3) receiving and reviewing reports on the custody of and transactions in cash and bitcoin from the Cash Custodian and the Trust, respectively, and taking such other actions in connection with the custody of cash as the Sponsor instructs. The general role and responsibilities of the Administrator are discussed in greater detail under the section The Administrator. The Transfer Agent The Transfer Agent is The Bank of New York Mellon. Pursuant to the Transfer Agency and Service Agreement between the Trust and the Transfer Agent, the Transfer Agent serves as the Trust s transfer agent and agent in connection with certain other activities as provided under the Transfer Agency and Service Agreement. The Transfer Agent s responsibilities include: (1) receiving and processing orders from Authorized Participants for the creation and redemption of Baskets; and (2) coordinating the processing of orders from Authorized Participants with the Marketing Agent, the Trust, the Cash Custodian and The Depository Trust Company ( DTC ). See The Transfer Agent. The Marketing Agent Foreside Fund Services, LLC is the Marketing Agent. The Marketing Agent s responsibilities include: (1) working with the Transfer Agent to review and accept or reject orders placed by Authorized Participants with the Transfer Agent; (2) reviewing and approving all sales and marketing materials for compliance with applicable laws, and filing such materials with FINRA as required by the Securities Act of 1933, as amended (the Securities Act ), and the rules promulgated thereunder, and (3) facilitating arrangements between the Sponsor, the Transfer Agent and broker-dealers for the purchase and redemption of Baskets. All such sales and marketing materials must be approved, in writing, by the Marketing Agent prior to use. Daniel H. Gallancy Chief Executive Officer SolidX Management LLC 200 Park Avenue New York, New York 10166 (212) 273-9585 (Name, address, including zip code, and telephone number, including area code, of agent for service) Table of Contents Custodial Arrangements The Bank of New York Mellon is the custodian (the Cash Custodian ) of the cash held by the Trust and has entered into the Cash Custody Agreement in connection therewith. The Trust will provide custody services relating to custody of the Trust s bitcoin. See The Cash Custodian and The Trust. Trust Objective The investment objective of the Trust is for the Shares to reflect the performance of the price of bitcoin, less the expenses of the Trust s operations. The Trust intends to achieve this objective by investing substantially all of its assets in bitcoin traded primarily in the over-the-counter ( OTC ) markets, though the Trust may also invest in bitcoin traded on domestic and international bitcoin exchanges, depending on liquidity and otherwise at the Trust s discretion. The Trust will invest in bitcoin on a non-discretionary basis (i.e., without regard to whether the value of bitcoin is rising or falling over any particular period). Bitcoin is an asset that is not issued by any government, bank or organization. A bitcoin is an asset that can be transferred among parties via the Internet, but without the use of a central administrator or clearing agency. The asset, bitcoin, is generally written with a lower case b. When written with an uppercase B, the word Bitcoin generally refers to the computers and software (or the protocol) involved in the transfer of bitcoin among users. The computers running Bitcoin software constitute the Bitcoin network. The asset, bitcoin, is the intrinsically linked unit of account that exists within the Bitcoin network. The Bitcoin network records each bitcoin balance (i.e., the quantity of bitcoin) held by each user on a database referred to as the blockchain. Each transfer of bitcoin between users is known as a bitcoin transaction. Approximately every ten minutes, the Bitcoin network groups together new transactions into what are referred to as blocks. Transactions in each block refer to transactions in previous blocks, thereby growing the blockchain and enabling it to serve as a consistent database of all bitcoin transactions and balances. The blockchain s record of transactions and balances provides a complete historical record of all activity within the Bitcoin network since Bitcoin s inception in January 2009. Copies of the blockchain are stored on various computers participating in the Bitcoin network. The blockchain can be used for a variety of non-financial applications, but all uses involve the expenditure of some quantity of bitcoin. See Bitcoin and the Bitcoin Industry. The Trust will be insured against loss or theft of bitcoin held by the Trust. The insurance will cover loss of bitcoin by, among other things, theft, destruction, bitcoin in transit, computer fraud (i.e., hacking attack), and other loss of numerical codes, known as private keys, which are necessary to access the bitcoin held by the Trust. The insurance will not cover certain losses including, but not limited to the following: Loss caused or contributed by theft or any other fraudulent, dishonest or criminal act committed by a partner, employee or director of the Sponsor or the Trust, controlling more than 25% of the issued share capital of the Sponsor or any of its subsidiaries. Loss caused by an employee if an elected or appointed official of the Trust or the Sponsor (not in collusion) knows of any act or acts of theft, fraud or dishonesty involving amounts in excess of $5,000 by such employee prior to the Trust s or Sponsor s discovery of a loss caused by such act or acts of the employee. Any and all losses caused by an employee who has access to the private key(s) associated with the Trust s bitcoin if an elected or appointed official of the Trust or Sponsor becomes aware of any act or acts of theft, fraud or dishonesty by such employee prior to the Trust s or Sponsor s discovery of a loss caused by such act or acts. Loss of the private key(s) associated with the Trust s bitcoin where such private key(s) is stored or being transmitted between computers or similar electronic devices that are connected to the Internet. Copies to Stuart M. Strauss, Esq. Jeremy Senderowicz, Esq. Dechert LLP 1095 Avenue of the Americas New York, New York 10036 Table of Contents Any and all loss resulting from the network failure of the Bitcoin protocol. The insurance carries a $500,000 deductible; the Trust will be responsible for any losses up to that amount. See The Trust s bitcoin Insurance. Advantages of investing in the Shares include: Ease and Flexibility of Investment. The Shares will trade on the Exchange and provide shareholders with indirect exposure to the price of bitcoin. The Shares may be bought and sold throughout the business day at real-time market prices on the Exchange like other exchange-listed securities. Insurance. As noted above, the bitcoin held by the Trust will be insured against loss or theft of bitcoin. Diversification. The correlation between bitcoin and global financial markets for equities, commodities and fixed income has, since bitcoin s inception in 2009, generally been low, so the Shares may help to diversify an investment portfolio. The Index MV Index Solutions GmbH ( MVIS ) is the sponsor for the MVBTCO. MVIS, with the assistance of its affiliates, is also the calculation agent for the MVBTCO. The MVBTCO is a real-time U.S. dollar-denominated composite reference rate for the price of bitcoin. The MVBTCO calculates the intra-day price of bitcoin every 15 seconds, including a closing price as of 4:00 p.m. E.T. The intra-day price and closing price are based on a methodology that consists of collecting actual firm bid/ask spreads and calculating a mid price from several bitcoin OTC platforms, all of which are U.S.-based entities, included within the index. As of [ ], 2018, the bitcoin OTC platforms that have entered into an agreement with MVIS for inclusion in the MVBTCO are [ ]. The logic utilized for the derivation of the daily closing index level for the MVBTCO is intended to analyze actual firm bid/ask data, verify and refine the data set, and yield an objective, fair-market value of one bitcoin as of 4:00 p.m. E.T. each weekday, priced in U.S. dollars. As discussed herein, the MVBTCO intra-day price and the MVBTCO closing price are collectively referred to as the MVBTCO price, unless otherwise noted. MVIS s MVBTCO index has been in operation since [ ]. In the event the MVBTCO is unavailable for use in calculating the intra-day and closing prices, the Sponsor will use the alternative pricing sources described under DESCRIPTION OF THE TRUST Pricing Sources. The key elements of the algorithm underlying the MVBTCO include: Equal weighting of OTC platforms. This mitigates the impact of spikes at single platforms. Approximate date of commencement of proposed sale to the public: As soon as practicable after the registration statement is declared effective. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. [x] If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement the same offering. [ ] Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [X] (Do not check if a smaller reporting company) Smaller reporting company [ ] Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 ( 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 ( 240.12b-2 of this chapter). Emerging growth company x If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. x CALCULATION OF REGISTRATION FEE Title of Each Class of Securities To Be Registered Amount to be Registered Proposed Maximum Offering Price Per Share Proposed Maximum Aggregate Offering Price(1) Amount of Registration Fee(2) VanEck SolidX Bitcoin Shares [ ] [ ] $1,000,000 $100.70 (1) Estimated solely for the purpose of determining the amount of the registration fee in accordance with Rule 457(d) under the Securities Act of 1933. (2) $100.70 was previously paid in the initial filing of the registration statement on Form S-1, filed on July 12, 2016. Table of Contents Using firm bid/ask spreads and the respective mid prices, which are consistently available. Pricing Information Available on the Exchange and Other Sources The following table lists the Exchange symbols and their descriptions with respect to the Shares and the MVBTCO: Ticker Description XBTC Market price per Share on the Exchange [ ] Indicative intra-day value per Share [ ] End of day NAV [ ] Number of outstanding Shares The intra-day data in the above table is published once every 15 seconds throughout each trading day. The current market price per Share (symbol: XBTC ) will be published continuously as trades occur throughout each trading day on the consolidated tape by market data vendors. The intra-day indicative value per Share (symbol: [ ] ) will be published by the Exchange once every 15 seconds throughout each trading day on the consolidated tape by market data vendors. The most recent end-of-day NAV (symbol: [ ] ) will be published as of the close of business by market data vendors and available on the Sponsor s website at [ ], or any successor thereto, and will be published on the consolidated tape. The number of outstanding Shares (symbol: [ ] ) will be published once every 15 seconds throughout the trading day and as of the close of business for the Exchange on the consolidated tape by market data vendors. Any adjustments made to the MVBTCO will be published on the MVIS website at https://www.mvis-indices.com/ or any successor thereto. The intra-day levels and closing levels of the MVBTCO are published by MVIS, and the closing NAV is published by the Administrator. The Shares are not issued, sponsored, endorsed, sold or promoted by the Exchange, and the Exchange makes no representation regarding the advisability of investing in the Shares. MVIS makes no warranty, express or implied, as to the results to be obtained by any person or entity from the use of the MVBTCO index for any purpose. Index information and any other data calculated and/or disseminated, in whole or part, by MVIS is for informational purposes only, not intended for trading purposes, and provided on an as is basis. MVIS does not warrant that the index information will be uninterrupted or error-free, or that defects will be corrected. MVIS also does not recommend or make any representation as to possible benefits from any securities or investments, or third-party products or services. Investors should undertake their own due diligence regarding securities and investment practices. The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. Table of Contents Summary Risk Factors An investment in the Shares is speculative and involves a high degree of risk. There is no assurance the Trust will achieve its investment objective or avoid substantial losses. A potential shareholder should not invest in the Shares unless he or she can afford to lose the entire investment. Before investing in the Shares, a potential shareholder should be aware of the various risks of investing in the Trust, including those described below. Additional risks and uncertainties not presently known by the Trust or not presently deemed material by the Trust may also impair the Trust s operations and performance. The summary risk factors set forth below are intended to highlight certain risks of investing in the Trust. A more extensive discussion of these risks appears beginning on page 13 in The Risks You Face. Bitcoin is a new technological innovation with a limited history. There is no assurance that usage of bitcoin and the blockchain will continue to grow. A contraction in use of bitcoin or the blockchain may result in increased volatility or a reduction in the price of bitcoin, which could adversely impact the value of the Shares. A decline in the adoption of bitcoin could negatively impact the performance of the Trust. The loss or destruction of certain private keys (numerical codes required by the Trust to access its bitcoin) could prevent the Trust from accessing its bitcoin. Loss of these private keys may be irreversible and could result in the loss of all or substantially all of an investment in the Trust. Bitcoin trading prices are volatile and shareholders could lose all or substantially all of their investment in the Trust. Regulation of bitcoin continues to evolve in both the U.S. and foreign jurisdictions, which may restrict the use of bitcoin or otherwise impact the demand for bitcoin. The Trust s return may not match the performance of the price of bitcoin due to, among other factors, the Trust incurring operating expenses. Sales of newly mined bitcoin may cause the price of bitcoin to decline, which could negatively affect an investment in the Shares. The NAV of the Trust may not always correspond to the market price of the Shares for a number of reasons, including price volatility, trading volume, and closing of bitcoin trading platforms due to fraud, failure, security breaches or otherwise. As a result, Baskets may be created or redeemed at a value that differs from the market price of the Shares. Disruptions at bitcoin trading platforms (including in the OTC market and on exchanges) and potential consequences of a bitcoin exchange s or OTC trading desk s failure could adversely affect an investment in the Shares. The Trust s bitcoin trading may subject the Trust to the risk of counterparty non-performance, potentially negatively impacting the market price of the Shares. The Trust s bitcoin insurance may be unavailable and may not protect the Trust against all losses and liabilities. Shareholders of the Trust will be subject to taxation on their allocable share of the Trust s taxable income, whether or not they receive cash distributions. Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED JUNE 5, 2018 [ ],000 VanEck SolidX Bitcoin Shares VANECK SOLIDX BITCOIN TRUST The VanEck SolidX Bitcoin Trust ( Trust ) will issue VanEck SolidX Bitcoin Shares ( Shares ), which represent units of fractional undivided beneficial interest in and ownership of the Trust. The investment objective of the Trust is for the Shares to reflect the performance of the price of bitcoin, less the expenses of the Trust s operations. The Trust is not actively managed. The Trust s assets will consist of bitcoin, an asset that can be transferred among parties via the Internet, but without the use of a central administrator or clearing agency. The Trust will occasionally hold cash for short periods in connection with the purchase and sale of bitcoin, and to pay Trust expenses. The Trust will be responsible for custody of the Trust s bitcoin. SolidX Management LLC is the sponsor of the Trust ( Sponsor ). Delaware Trust Company is the trustee ( Trustee ). The Bank of New York Mellon is the administrator ( Administrator ), transfer agent ( Transfer Agent ) and the custodian, with respect to cash, ( Cash Custodian ) of the Trust. Foreside Fund Services, LLC is the order examiner ( Marketing Agent ) in connection with the creation and redemption of Baskets of Shares. Van Eck Securities Corporation ( VanEck ) provides assistance in the marketing of the Shares. The Shares are issued by the Trust only in one or more blocks of 5 Shares, called a Basket, principally in exchange for cash. The Trust will issue and redeem Shares in Baskets to certain registered broker-dealers who have entered into a contract with the Sponsor and Transfer Agent ( Authorized Participants ) on an ongoing basis as described in Creation and Redemption of Shares. Baskets will be issued and redeemed on an ongoing basis at net asset value ( NAV ) on the day that an order to create a Basket is accepted by the Transfer Agent and approved by the Marketing Agent. Prior to this offering, there has been no public market for the Shares. The Shares of the Trust are expected to be listed for trading, subject to notice of issuance, on the Cboe BZX Exchange, Inc. ( Cboe or the Exchange ), under the symbol XBTC . The market price of the Shares may be different from the NAV per Share for a number of reasons, including price volatility, trading volume, and closing of bitcoin trading platforms due to fraud, failure, security breaches or otherwise. Except when aggregated in Baskets, Shares are not redeemable securities. AN INVESTMENT IN THE TRUST MAY NOT BE SUITABLE FOR RETAIL INVESTORS. THE TRUST WILL HOLD BITCOIN AND THEREFORE MAY BE RISKIER THAN OTHER EXCHANGE TRADED PRODUCTS THAT DO NOT HOLD BITCOIN OR FINANCIAL INSTRUMENTS RELATED TO BITCOIN. THE SHARES ARE SPECULATIVE SECURITIES AND THEIR PURCHASE INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD CONSIDER ALL RISK FACTORS BEFORE INVESTING IN THE TRUST. PLEASE REFER TO THE RISKS YOU FACE BEGINNING ON PAGE 13. Bitcoin is a new technological innovation with a limited history. There is no assurance that usage of bitcoin will continue to grow. A contraction in use of bitcoin may result in increased volatility or a reduction in the price of bitcoin, which could adversely impact the value of the Shares. Bitcoin trading prices are volatile and shareholders could lose all or substantially all of their investment in the Trust. Loss of the Trust s bitcoin may be irreversible and could result in the loss of all or substantially all of an investment in the Trust. Regulation of bitcoin continues to evolve in both the U.S. and foreign jurisdictions, which may restrict the use of bitcoin or otherwise impact the demand for bitcoin. Neither the Securities and Exchange Commission ( SEC ) nor any state securities commission has approved or disapproved of the securities offered in this prospectus ( Prospectus ), or determined if this Prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The Trust qualifies as an emerging growth company as defined in the Jumpstart Our Business Startups Act ( JOBS Act ). Emerging growth company does not mean the Trust is a growth type of investment vehicle or that it will utilize a growth investment strategy. However, the Trust will not take advantage of any exemptions or other relief provided to emerging growth companies under the JOBS Act. See Emerging Growth Company Status. The Shares are neither interests in nor obligations of the Sponsor, the Trustee, the Administrator, the Transfer Agent, the Cash Custodian, the Marketing Agent, VanEck or any of their respective affiliates. The Shares are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other governmental agency. The Trust is not an investment company registered under the Investment Company Act of 1940, as amended. The Trust is not a commodity pool for purposes of the Commodity Exchange Act of 1936, as amended, and the Sponsor is not subject to regulation by the Commodity Futures Trading Commission as a commodity pool operator or a commodity trading advisor. On [ ], 2018, an initial purchaser, subject to conditions, deposited cash for the purchase of [ ] initial Basket[s] totaling [ ] Shares. Delivery of the initial Baskets will be made on or about the date of this Prospectus, upon condition of effectiveness of the related registration statement. The Trust received all proceeds from the offering of the initial Basket[s] in cash in an amount equal to the full price for the initial Basket[s]. Per Share(1) Per Basket Public offering price for initial Baskets(2) $[ ] $[ ] (1) The initial Basket[s] [were/was] created at a per share price equal to the value of [25] bitcoin on [ ]. (2) The initial purchaser may receive commissions/fees from shareholders who purchase shares from the initial Basket[s] through their commission/fee-based brokerage accounts. The price per basket that will be paid in the future by the Authorized Participants may be different than the initial Basket price. The date of this Prospectus is [ ], 2018. Table of Contents Principal Offices The offices of the Trust and the Sponsor are located at 200 Park Avenue, New York, New York 10166 and the Trust s telephone number is (212) 273-9585. The office of the Trustee is located at 2711 Centerville Road, Wilmington, Delaware 19808. The offices of the Administrator, Transfer Agent and Cash Custodian are located at 2 Hanson Place, Brooklyn, New York 11217. The offices of the Marketing Agent are located at Three Canal Plaza, Suite 100, Portland, Maine 04101. Emerging Growth Company Status The Trust is an emerging growth company, as defined in the JOBS Act, and is eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002 and reduced disclosure obligations that are not otherwise applicable to the Trust. In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act, for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. However, the Trust is choosing to opt out of such extended transition period, and as a result, will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. Section 107 of the JOBS Act provides that the decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable.
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+Prospectus summary This summary highlights selected information contained in greater detail elsewhere in this prospectus and does not contain all of the information you should consider before investing in our common stock. You should read this entire prospectus carefully, including our financial statements and the related notes included elsewhere in this prospectus. You should also consider, among other things, the matters described under Risk factors and Management s discussion and analysis of financial condition and results of operations, in each case, appearing elsewhere in this prospectus. In this prospectus, unless context requires otherwise, references to we, us, our, Abpro, or the company refer to Abpro Corporation and its subsidiary AbMed Corporation. BUSINESS OVERVIEW Our company We are a biotechnology company dedicated to developing next-generation antibody therapeutics to improve the lives of patients with severe and life-threatening diseases. We are initially focused on novel antibody constructs for immuno-oncology, ophthalmology, and autoimmunity. By leveraging our proprietary DiversImmune and MultiMab antibody discovery and engineering platforms, we are developing a pipeline of potentially best-in-class antibodies, both independently and through collaborations with global pharmaceutical and research institutions. Our two lead product candidates, ABP-100 and ABP-201, feature our next generation tetravalent antibody format, or TetraBi antibody format, which binds to two different targets with two distinct binding sites per target. ABP-100 is designed to redirect a patient s immune system to fight cancer by engaging T cells through co-targeting human epidermal growth factor receptor 2, or HER2, and cluster of differentiation 3, or CD3, T-cell co-receptor. We plan initially to develop ABP-100 for difficult to treat HER2 solid tumors, focusing on orphan indications. ABP-201 is designed to block blood vessel formation and normalize damaged vessels through co-targeting vascular endothelial growth factor, or VEGF, and angiopoietin-2, or ANG-2. We plan to develop ABP-201 to treat vascular diseases of the eye, focusing on diabetic macular edema, or DME. We intend to follow these two lead product candidates with a broad pipeline of CD3-targeting T-cell engagers based on the differentiated format of ABP-100. We have exclusive licenses with worldwide commercialization rights to both ABP-100 and ABP-201, and expect to initiate clinical trials for ABP-100 in the first half of 2019 and for ABP-201 in the second half of 2019. DiversImmune is our antibody discovery platform that rapidly generates a diverse collection of proprietary antibodies against both clinically validated and novel targets that have been traditionally difficult to access. This provides us with high affinity and high specificity antibody building blocks with drug-like properties that we then use to engineer novel therapeutics. As validation of our DiversImmune platform, our technology has been used over the past 10 years to successfully generate antibodies for global pharmaceutical and research institutions against more than 300 different targets. MultiMab is our engineering platform that provides us with the flexibility to combine these antibody building blocks in different combinations and orientations to rapidly create fit for purpose novel full-length multi-specific antibody constructs. Our antibody constructs, including our TetraBi antibody format, can potentially benefit patients with improved efficacy, better safety profiles, and more convenient dosing regimens relative to current standard-of-care therapies. Furthermore, in contrast to single-format bispecific antibody platforms that are only able to provide a single solution to different biological problems, our platform enables us to design a diverse suite of full-length multi-specific antibody formats to address new problems in medicine. Our approach is designed to result in therapeutic Table of Contents The information contained in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION DATED MAY 4, 2018 4,000,000 Shares Abpro Corporation Common Stock $ per share This is the initial public offering of our common stock. No public market currently exists for our common stock. We are offering all of the 4,000,000 shares of common stock offered by this prospectus. We expect the initial public offering price to be between $14.00 and $16.00 per share. We have applied to list our common stock on The Nasdaq Global Market, under the symbol ABP. We are an emerging growth company as defined by the Jumpstart Our Business Startups Act of 2012 and, as such, we have elected to comply with certain reduced public company reporting requirements for this prospectus and future filings. Investing in our common stock involves a high degree of risk. Before buying any shares, you should carefully read the discussion of material risks of investing in our common stock in Risk factors beginning on page 13 of this prospectus. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. Per Share Total Public offering price $ $ Underwriting discounts and commissions(1) $ $ Proceeds, before expenses, to us $ $ (1) See Underwriting for a description of compensation payable to the underwriters. Certain of our existing stockholders or persons associated with them have indicated an interest in purchasing an aggregate of up to and no more than $28.0 million in shares of our common stock in this offering at the initial public offering price. However, because indications of interest are not binding agreements or commitments to purchase, the underwriters may determine to sell less or no shares in this offering to any of these stockholders or persons associated with them, or any of these stockholders or persons associated with them may determine to purchase less or no shares in this offering. The underwriters will receive the same underwriting discount on any shares purchased by these stockholders or persons associated with them as they will on any other shares sold to the public in this offering. To the extent these stockholders or persons associated with them purchase any shares in this offering, the number of shares available for sale to the general public will be accordingly reduced. See Certain relationships and related party transactions Participation in this offering. The underwriters may also purchase up to an additional 600,000 shares of our common stock at the public offering price, less the underwriting discounts and commissions payable by us, to cover over-allotments, if any, within 30 days from the date of this prospectus. If the underwriters exercise this option in full, the total underwriting discounts and commissions will be $ and our total proceeds, after underwriting discounts and commissions but before expenses, will be $ . The underwriters are offering the common stock and will receive the compensation as set forth under Underwriting. Delivery of the shares will be made on or about , 2018. UBS Investment Bank Wells Fargo Securities Nomura Oppenheimer & Co. , 2018 Table of Contents Explanatory note Unless we state otherwise or the context otherwise requires, references in this prospectus to: we, our, us, our company, the company and Abpro refer to Abpro Corporation and its subsidiary, AbMed Corporation; the FDA refer to the U.S. Food and Drug Administration; preferred stock refer to our outstanding shares of preferred stock; the JOBS Act refer to the Jumpstart Our Business Startups Act of 2012; the Securities Act refer to the Securities Act of 1933, as amended; the Exchange Act refer to the Securities Exchange Act of 1934, as amended; and the SEC refer to the Securities and Exchange Commission. Table of Contents candidates with differentiated characteristics, including stronger binding affinity, greater potency, improved safety, more convenient dosing regimens, and streamlined manufacturing processes. Our pipeline Our DiversImmune and MultiMab platforms and licensing strategy have generated a broad pipeline of next-generation antibody product candidates, for which we have exclusive majority or full commercialization rights, as reflected in the following table: Targets: GPC3: Glypican 3; 4-1BB: Tumor necrosis factor receptor superfamily member 9; CEA: carcinoembryonic antigen-related cell adhesion molecule 5; CD38: cluster of differentiation 38; FN14: Fibroblast growth factor inducible 14; and SLAMF7: Signaling lymphocytic activation molecule family member 7. * Held through our majority-owned subsidiary AbMed Corporation, or AbMed. MedImmune owns a minority stake in AbMed. Table of Contents About this prospectus We have proprietary rights to trademarks, trade names and service marks appearing in this prospectus that are important to our business. Solely for convenience, the trademarks, trade names and service marks may appear in this prospectus without the and symbols, but any such references are not intended to indicate, in any way, that we forgo or will not assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensors to these trademarks, trade names and service marks. All trademarks, trade names and service marks appearing in this prospectus are the property of their respective owners. Any discrepancies included in this prospectus between totals and the sums of the percentages and dollar amounts presented are due to rounding. For investors outside the United States: Neither we nor the underwriters have done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than the United States. You are required to inform yourselves about and to observe any restrictions relating to this offering and the distribution of this prospectus outside of the United States. Table of Contents ABP-100: next generation T-cell engager targeting HER2 and CD3 for HER2 solid tumors ABP-100 Key characteristics of ABP-100 Strong, bivalent binding to HER2 tumor antigen for increased efficacy Optimized position of CD3 binding domain for increased safety Mutations in Fc region for increased safety Natural antibody structure for improved dosing profile Symmetrical structure for efficient manufacturing Our lead product candidate, ABP-100, is a next generation immuno-oncology TetraBi antibody targeting HER2 and CD3 for the treatment of HER2 solid tumors, including breast, gastric, and endometrial cancers. ABP-100 features two potent HER2 binding sites and is engineered to target tumor cells with both high and intermediate levels of HER2 expression. In addition, the placement of the CD3 binding domain in the middle, or hinge region, of the TetraBi antibody format is designed to result in a therapeutic candidate that selectively activates T cells only in the presence of tumor cells. By simultaneously targeting CD3, ABP-100 is designed to harness the power of the immune system by redirecting cytotoxic T cells to tumor tissue, potentially triggering a potent and durable anti-tumor immune response. In preclinical studies, ABP-100 demonstrated strong and, in some cases, curative anti-tumor activity in mouse models of HER2 breast, ovarian, and gastric cancer, including models that are resistant to Herceptin (trastuzumab). We plan to initiate Phase 1 clinical trials of ABP-100 in the first half of 2019 and pursue a rapid registration path by focusing on HER2 orphan indications. We are developing ABP-100 in collaboration with Memorial Sloan Kettering Cancer Center, or MSK, and have an exclusive license to worldwide commercialization rights. We believe ABP-100 is an improvement over currently approved HER2-targeting agents such as Herceptin, Perjeta (pertuzumab), and Kadcyla (T-DM1), as well as other HER2-targeting agents currently in development, because it relies on the natural power and precision of cytotoxic T cells of the immune system to target and eliminate tumor cells. Current HER2-directed therapies, which are designed either to block HER2 function or deliver toxic payloads to the tumor, are only effective in a subset of HER2 patients, cause undesirable side effects, and are limited by the onset of drug resistance. ABP-100 has the potential to provide longer lasting or even curative results in a broader set of patients than are currently addressed by HER2-directed therapies. In 2016, the combined worldwide sales of HER2-directed therapies, including Herceptin, Perjeta, and Kadcyla, were approximately $9.6 billion. We are leveraging the TetraBi antibody format of ABP-100 to pursue a broad pipeline of immuno-oncology agents that target highly expressed antigens on a diverse range of tumor types, as depicted in the following chart. We believe that success with ABP-100 will translate into a large, industry-leading pipeline of T-cell engaging agents with the potential to transform the cancer treatment landscape. Tumor-specific binding domain ABP-100 ABP-110 ABP-120 ABP-130 ABP-140 Breast cancer Gastric cancer Endometrial cancer Liver cancer NHL CLL Colorectal cancer NSCLC Multiple myeloma Prostate cancer Table of Contents ABP-100 series of CD3-targeting T-cell engagers Key advantages of our TetraBi antibody format for T cell engagement Enhanced potency through bivalent binding. By including two binding sites for the tumor antigen, our antibodies are designed to form a much stronger connection to tumor cells than competitor molecules that feature only a single binding site. Better dosing through inclusion of an Fc region. By including a fragment crystallizable, or Fc, region, our TetraBi antibodies are designed to have long circulating half-lives, enabling more convenient dosing for patients. Controlled immune effector function through Fc engineering. By introducing defined mutations into the Fc region, we are potentially able to diminish or eliminate Fc-mediated interactions that can contribute to unwanted side effects such as cytokine release syndrome. Lower immunogenicity. By closely resembling natural human antibodies, our TetraBi antibodies may have a reduced risk of being immunogenic, or capable of producing an undesirable immune response, which could otherwise lead to decreased efficacy. Streamlined manufacturing. By building symmetrical molecules with two identical heavy chains and two identical light chains, our molecules are designed to eliminate complications arising from potential chain mispairing. ABP-201: Ligand trap targeting VEGF and ANG-2 for vascular diseases of the eye ABP-201 Key characteristics of ABP-201 Dual inhibition of VEGF and ANG-2 to block angiogenesis Four high-affinity binding sites for increased potency Dual targeting in single molecule for simultaneous inhibition Natural antibody structure for improved dosing Symmetrical structure for efficient manufacturing ABP-201 is a different TetraBi antibody format, designed to simultaneously inhibit VEGF and ANG-2 for the treatment of vascular diseases of the eye, including DME and wet age-related macular Table of Contents degeneration, or Wet AMD. In both DME and Wet AMD, blood vessels form abnormally and leak fluid, resulting in vision loss. Whereas VEGF drives new blood vessel formation, ANG-2 acts to destabilize blood vessels and contributes to vessel leakage. The current standard of care for DME and Wet AMD includes intravitreal injections of VEGF-targeted agents, including Eylea (aflibercept), Lucentis (ranibizumab), and Avastin (bevacizumab, used off-label). However, these drugs require eye injections every one to two months and are only effective in a subset of patients, many of whom eventually develop resistance. Because ANG-2 appears to play a critical role in the pathogenesis of these diseases, we believe ABP-201 could potentially provide increased efficacy over current agents. In addition, because ABP-201 has a high binding capacity, with a total of four binding sites per molecule, we believe ABP-201 could be administered less frequently than current agents. Recent Phase 2 results with RG7716, a bispecific antibody co-targeting VEGF and ANG-2, showed a dose-dependent improvement in best-corrected visual acuity relative to Lucentis, providing strong support for this approach. In 2016, the combined worldwide sales of Eylea and Lucentis exceeded $8.8 billion, according to Evaluate Ltd. We are developing ABP-201 with MedImmune Limited, or MedImmune, a subsidiary of AstraZeneca plc, and have an exclusive license to worldwide commercialization rights. Our strategy Our key strategies to achieve our mission are to: Aggressively advance our lead product candidates, ABP-100 and ABP-201, into the clinic. Rapidly follow ABP-100 with a broad pipeline of CD3-targeting T-cell engagers and leverage this approach to other immune cell targets. Leverage our DiversImmune and MultiMab platforms to grow our pipeline of antibody product candidates. Continue to explore and execute strategic collaborations. Build a leading fully integrated discovery-to-commercial antibody therapeutics company. Our team We have a highly experienced and well-regarded leadership team with significant industry know-how and deep experience in antibody discovery and development, biomarker discovery and validation, clinical development and regulatory approval, partnerships, operations, and corporate finance. Our leadership team has broad experience at leading pharmaceutical companies, including Sanofi S.A., Merrimack Pharmaceuticals, Inc., and AbbVie Laboratories. We also have a scientific advisory board chaired by our co-founder Eugene Chan, M.D. and comprising recognized leaders in the industry across various disciplines, including: Robert S. Langer, ScD, one of the most cited engineers in history and also a member of our board of directors; Ronald Levy, M.D., Professor and Chief, Division of Oncology, Stanford School of Medicine, whose work was the basis for the development of the antibody-based oncology drug Rituxan (rituximab); George Tsokos, M.D., Professor of Medicine at Beth Israel Deaconess Medical Center; Rita Colwell, Ph.D., Distinguished University Professor at University of Maryland and former Director of the National Science Foundation; Shiv Pillai, M.D., Ph.D., Professor of Medicine at Harvard Medical School and Massachusetts General Hospital; Laurie Glimcher, M.D., President and Chief Executive Officer of Dana-Farber Cancer Institute; and Nai-Kong Cheung, M.D., Ph.D., Head of the Neuroblastoma Program and Enid A. Haupt Chair in Pediatric Oncology at Memorial Sloan Kettering Cancer Center. Table of Contents RISKS RELATED TO OUR BUSINESS Our ability to implement our current business strategy is subject to numerous risks, as more fully described in the section entitled Risk factors beginning on page 13 of this prospectus. These risks include, among others, the following: We are a preclinical stage biopharmaceutical company with a history of losses, expect to continue to incur significant losses for the foreseeable future and may never achieve or maintain profitability, which could result in a decline in the market value of our common stock. Our product candidates are in early stages of development and have never been tested in a human subject. Our product candidates may fail in development or suffer delays that materially and adversely affect their commercial viability. Our approach to the discovery and development of our antibodies using our DiversImmune and MultiMab platforms is based on novel technologies that are unproven and may not result in marketable products. Our next-generation bispecific antibodies may not demonstrate the therapeutic effects of, or benefits at least comparable to, monospecific antibodies that we anticipate once tested in humans. The market may not be receptive to our product candidates based on our novel therapeutic modality, and we may not generate any revenue from the sale or licensing of product candidates. Even if we consummate this offering, we will need substantial additional funds to advance development of our product candidates, and we cannot guarantee that we will have sufficient funds available in the future to develop and commercialize our current or future product candidates. We have in-licensed our two lead product candidates from MSK and MedImmune. If we breach the terms of our license agreement with either or both of MSK or MedImmune, we could lose the ability to continue the development and potential commercialization of such product candidates. If we are unable to obtain or protect intellectual property rights related to our technology and current or future product candidates, or if our intellectual property rights are inadequate, we may not be able to compete effectively. IMPLICATIONS OF BEING AN EMERGING GROWTH COMPANY As a company with less than $1.07 billion in revenues during our last fiscal year, we qualify and intend to characterize ourselves as an emerging growth company under the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. An emerging growth company may take advantage of reduced reporting requirements and is relieved of certain other significant requirements that are otherwise generally applicable to public companies. As an emerging growth company: we may present only two years of audited financial statements and only two years of related management discussion and analysis of financial condition and results of operations; we are exempt from the requirement to obtain an attestation report from our auditors on the effectiveness of our internal control over financial reporting under the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act; we are permitted to provide less extensive disclosure about our executive compensation arrangements; and we are not required to give our stockholders non-binding advisory votes on executive compensation or golden parachute arrangements. Table of Contents We have elected to take advantage of the scaled disclosure requirements and other relief described above in this prospectus, and may take advantage of these exemptions for so long as we remain an emerging growth company. In general, we will be an emerging growth company until the earliest of (i) the end of the fiscal year during which we have total annual gross revenues of $1.07 billion or more, (ii) the end of the fiscal year following the fifth anniversary of the completion of this offering, (iii) the date on which we have, during the previous three-year period, issued more than $1.0 billion in non-convertible debt, and (iv) the date on which we are deemed to be a large accelerated filer, which will occur at such time that we (a) have an aggregate worldwide market value of common equity securities held by non-affiliates of $700 million or more as of the last business day of our most recently completed second fiscal quarter, (b) have been required to file annual and quarterly reports under the Securities Exchange Act of 1934, as amended, or the Exchange Act, for a period of at least 12 months, and (c) have filed at least one annual report pursuant to the Exchange Act. In addition to scaled disclosure and the other relief described above, the JOBS Act permits us an extended transition period for complying with new or revised accounting standards affecting public companies. We have elected to avail ourselves of the option to delay the adoption of new or revised accounting standards until such time as those standards apply to private companies and, therefore, our financial statements may not be comparable to other public companies that comply with public company effective dates. However, if we later decide to opt out of the extended period for adopting new accounting standards, we would need to disclose such decision and it would be irrevocable. CORPORATE INFORMATION We were incorporated in Delaware in August 2004 under the name IE LAB, Inc., commenced operations in May 2007, and changed our name to Abpro Corporation in September 2007. Our headquarters are located at 68 Cummings Park Drive, Woburn, MA 01801 and our main telephone number is (617) 225-0808. We maintain a website at www.abpro.com, which contains information about us. The information contained in, or that can be accessed through, our website is not part of, and is not incorporated into, this prospectus and should not be considered part of this prospectus. Table of Contents The offering Common stock offered by Abpro 4,000,000 shares (or 4,600,000 shares if the underwriters exercise in full their option to purchase additional shares of common stock). Common stock to be outstanding immediately after this offering 18,751,515 shares (or 19,351,515 shares if the underwriters exercise in full their option to purchase additional shares of common stock). Underwriters option to purchase additional shares We have granted the underwriters a 30-day option to purchase up to 600,000 additional shares at the public offering price less estimated underwriting discounts and commissions. Dividend policy We have never paid cash dividends on our common stock and we do not anticipate paying any cash dividends in the foreseeable future. See Dividend policy. Proposed Nasdaq Global Market symbol ABP Use of proceeds We estimate that the net proceeds from this offering will be approximately $53.7 million (approximately $62.1 million if the underwriters exercise in full their option to purchase additional shares of common stock), at an assumed public offering price of $15.00 per share, after deducting the estimated underwriting discounts and commissions and our estimated offering expenses. We intend to use the net proceeds from this offering, together with our existing cash resources, to fund preclinical and clinical development activities, continued investment in our technology platforms, further our business development efforts and for working capital and other general corporate purposes. See Use of proceeds for additional information. Directed share program At our request, the underwriters have reserved up to 400,000 shares of the common stock being offered by this prospectus for sale at the initial public offering price to our directors, officers, employees and other individuals associated with us and members of their families. The sales will be made by UBS Financial Services Inc., a selected dealer affiliated with UBS Securities LLC, an Table of Contents underwriter of this offering, through a directed share program. We do not know if these persons will choose to purchase all or any portion of these reserved shares, but any purchases they do make will reduce the number of shares available to the general public. Participants in the directed share program who purchase more than $1,000,000 of shares shall be subject to a 25-day lock-up with respect to any shares sold to them pursuant to that program, described under Shares eligible for future sale Lock-up agreements. Any reserved shares that are not so purchased will be offered by the underwriters to the general public on the same basis as the other shares offered in this prospectus. Risk factors You should carefully read and consider the information set forth under Risk factors beginning on page 13 and all other information included in this prospectus for a discussion of factors that you should consider before deciding to invest in shares of our common stock. Certain of our existing stockholders or persons associated with them have indicated an interest in purchasing an aggregate of up to and no more than $28.0 million in shares of our common stock in this offering at the initial public offering price. Assuming an initial public offering price of $15.00 per share, which is the midpoint of the price range set forth on the cover page of this prospectus, the stockholders may collectively purchase up to an aggregate of 1,866,666 of the 4,000,000 shares offered in this offering based on these indications of interest. However, because indications of interest are not binding agreements or commitments to purchase, the underwriters may determine to sell less or no shares in this offering to any of these stockholders or persons associated with them, or any of these stockholders or persons associated with them may determine to purchase less or no shares in this offering. The underwriters will receive the same underwriting discount on any shares purchased by these stockholders or persons associated with them as they will on any other shares sold to the public in this offering. To the extent these stockholders or persons associated with them purchase any shares in this offering and we do not otherwise change the assumed number of shares we are offering, the number of shares available for sale to the general public will be accordingly reduced. See Certain relationships and related party transactions Participation in this offering. Unless otherwise expressly stated or the context otherwise requires, the number of shares of common stock to be outstanding after this offering is based on 8,549,633 shares outstanding as of December 31, 2017 and excludes: 1,566,987 shares of our common stock, with a per share weighted-average exercise price of $3.71, issuable upon exercise of stock options, and 12,748 shares of our common stock issuable upon vesting of restricted stock unit, or RSU, awards outstanding as of December 31, 2017 under our 2014 Stock Incentive Plan, or the 2014 Plan; 954,626 shares of our common stock reserved for issuance pursuant to future awards under the 2014 Plan as of December 31, 2017 (which includes RSUs for 399,084 shares of our common stock granted subsequent to December 31, 2017); Table of Contents 1,448,225 shares of common stock reserved for future issuance under the 2018 Equity Incentive Plan, or the 2018 Plan, as well as any automatic increases in the number of shares of common stock reserved for issuance under this plan, which will become effective upon the execution of the underwriting agreement related to this offering; 492,396 shares of common stock reserved for future issuance under our 2018 Employee Stock Purchase Plan, or the ESPP, as well as any automatic increases in the number of shares of common stock reserved for future issuance under this plan, which will become effective upon the execution of the underwriting agreement related to this offering; and the payment of bonus compensation to employees and executive officers that becomes payable upon the completion of this offering, with $1,611,000 paid in cash and $482,000 that will be settled with the issuance of 32,166 shares of common stock, based upon the assumed public offering price of $15.00 per share, which is the midpoint of the estimated offering price set forth on the cover page of the prospectus. Unless otherwise expressly stated or the context otherwise requires, the information in this prospectus assumes or reflects: a 1-for-1.381 reverse stock split of our common stock effected May 1, 2018; the automatic conversion of all of our outstanding shares of preferred stock into an aggregate of 5,778,285 shares of our common stock immediately prior to completion of this offering; exercise of warrants outstanding as of December 31, 2017 to acquire an aggregate of 423,597 shares of common stock subsequent to December 31, 2017; no exercise of warrants outstanding as of December 31, 2017 to acquire 61,009 shares of common stock, which warrants are currently unexercisable and will expire upon completion of this offering; no purchases by our directors, officers or their affiliates pursuant to the directed share program; no exercise of the underwriters option to purchase additional shares of our common stock; and the amendment and restatement of our certificate of incorporation and bylaws, which will occur in connection with the completion of this offering. Table of Contents
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@@ -0,0 +1,1028 @@
+PROSPECTUS
+SUMMARY
+
+ 
+
+This summary
+highlights some of the information in this prospectus. It is not complete and may not contain all of the information that you may
+want to consider. You should read carefully the more detailed information set forth under "Risk Factors" and the other
+information included in this prospectus. Except where the context suggests otherwise, the terms "we," "us,"
+"our," "IA Energy Corp." and the "Company" refer to IA Energy Corp. We refer in this prospectus
+to our executive officers and other members of our management team, collectively, as "Management."
+
+ 
+
+Company Organization
+
+ 
+
+IA Energy Corp.,
+a Wyoming corporation, is a start-up global waste-to-energy company. We were incorporated on January 6, 2016 in the state of Wyoming.
+Our business office and mailing address is 24328 Vermont Avenue, Suite 300, Harbor City, CA 90710, and our telephone number is
+(310) 891-1959. Our website is www.iaenergy.com and is not part of this prospectus.
+
+ 
+
+Business
+
+ 
+
+Our operations to
+date have been devoted primarily to start-up and development activities, which include: (i) formation of the Company; (ii) development
+of our business plan; (iii) development of our proprietary waste-to-energy technology; and (iv) marketing of our proprietary waste-to-energy
+technology. Though to date, significant research and development has been done, as described in more detail herein, we have not
+completed development of our proprietary waste-to-energy technology and there is no assurance that we will be successful in completing
+the development.
+
+ 
+
+From our inception
+on January 6, 2016, until the present, we have had limited operating activities. During the period from inception on January 6,
+2016 until the date of this prospectus we had no revenues. During the period from inception on January 6, 2016 to March 31, 2018
+we had operating expenses of $297,507 which consisted mainly of consulting and business development expenses.
+
+ 
+
+From our inception
+on January 6, 2016 until the date of this prospectus we have received an aggregate of $257,500 from the sale of our common stock.
+We have used all proceeds from the offering for working capital.
+
+ 
+
+Neither management
+nor our shareholders have had preliminary contact or discussions with, nor do we have any present plans, proposals, arrangements
+or understandings with, any representatives of the owners of any business or company regarding the possibility of an acquisition
+or merger, change of control, or similar transaction.
+
+ IA Energy Corp. Mission Statement.
+
+ 
+
+OZS Management Consultancy Services
+
+ 
+
+On January 6, 2016,
+we entered into an agreement with OZS Management Consultancy Services to develop our contracts in the Philippines and to establish
+our first operating facility.
+
+ 
+
+OZS Management Consultancy
+Services is strategically located in Makati, the business district of Philippines. OZS isa business management consulting firm
+that provides business consultancy services to foreign and local companies setting up operations in the Philippines.
+
+ 
+
+OZS offers a turnkey
+solution dedicated to getting foreign companies up and running as soon as possible including business registration, government
+tax incentives, tax holidays and accounting.
+
+ 
+
+OZS has been working
+on waste to energy projects in the Philippines for over five years now and have worked as consultant with many public landfills
+for waste to energy projects including but not limited to gasification, pyrolysis, and RDFs (refuse derived fuels). OZS is working
+in conjunction with a group of retired government officials from the MMDA (Metropolitan Manila Development Authority) who oversee
+all landfills, MSW (municipal solid waste) government recycling programs in the Philippines for the last 30 years. 
+
+ 
+
+ 2 
+
+ Table of Contents 
+
+ 
+
+ 
+
+Business and Technology Description
+
+ 
+
+Our initial focus will be build
+and operate a pilot facility to process waste tires, which are in great supply in the Philippines due to a shortage of disposal
+capacity for these tires, and the lack of desire to create landfill capacity or alternative solutions. Supply of tires
+for processing is readily available, at low or no cost to us. 
+
+The tires will be converted
+by pyrolysis into bunker fuel and other recyclable bi-products that we will use to operate our own generators and sell electricity
+to local utilities or the national grid. Pyrolysis is a well-established technology that is detailed below. The bunker fuel,
+which is a type of diesel, will be utilized to run generators which will produce electricity and sold to utility companies
+in the local municipality. 
+
+In the Philippines, electricity
+is in short supply and many communities have daily scheduled power outages to conserve power. Unplanned power outages are also
+a expected throughout the Philippines. We are confident that the demand for this newly generated electricity from the processing
+of the tires and use of the bunker fuel. 
+
+We have attained
+renewable electricity status from the Philippines department of energy to qualify for all government incentives related to renewable
+electricity. We believe that due to shortages and increasing electricity demand in the Philippines, these fuel oils represent a
+significant opportunity for the Company.
+
+ 
+
+Our second stage of our business plan
+will be to process plastics in addition to the tires for the creation of the bunker fuel.
+
+ 
+
+Power generation
+in the Philippines is not considered as a public utility operation, which means interested parties do not need to secure a congressional
+franchise to operate a power generation company. However, power generation is regulated by the Energy Regulation Commission (ERC)
+who must issue a certificate of compliance to interested parties to ensure that the standards set forth in the Electric Power Industry
+Reform Act of 2011 (EPIRA) are followed. The ERC is also responsible for determining any power abuse or anti-competitive behavior.
+Power generation is a value added tax zero-rated (i.e. not subject to 12% VAT) to ensure lower rates for end-users. Electricity
+in the Philippines is produced from various sources such as coal, oil, natural gas, and renewable sources.
+
+ 
+
+According to several
+articles and news sites, the Philippines faced a power supply shortage leading to rolling blackouts across the country during the
+years 2014-2015. In late 2014, President Aquino requested the Congress to pass a resolution giving him emergency power to allow
+the government to provide additional supply and prevent a power shortage in 2015. However, the passing of the resolution was delayed
+and Aquino admitted that his original plan was no longer feasible. His proposal was tweaked and the Interruptible Load Program
+(ILP) was recommended for use in the Luzon power grid instead. The ILP essentially enrolls large establishments, including government
+owned and controlled corporations, with their own generators to voluntarily disconnect from the main grid and switch to their generators
+instead when a power outage was predicted. Their rationale was that a power outage would cause these establishments to run on generators
+anyway so it is more beneficial for them to run their generators in an organized fashion.
+
+ 
+
+Pursuant to this
+offering, the selling shareholders are offering up to 515,000 shares of common stock which will not fund the Company or its business
+plan.
+
+ 
+
+Pyrolysis
+
+ 
+
+Pyrolysis is the
+process of molecular breakdown where larger molecules are broken down in smaller molecules. We are dedicated to the pyrolysis of
+waste tires and plastic to oil plant manufacturing. The long chain polymer is broken down into smaller chains of Hydrocarbon Gas
+and Pyrolysis Oil during this process. After further processing in a distillation machine, this waste plastic pyrolysis oil can
+be changed into diesel oil which can be directly used for diesel oil generators, tractors and trucks, etc. In pyrolysis, the polymer
+waste is not burned; instead it is broken down into usable finished products like Pyrolysis Oil, Hydrocarbon Gas and Charcoal.
+
+ 
+
+ 3 
+
+ Table of Contents 
+
+ 
+
+ 
+
+Waste plastic to
+pyrolysis can generate quality fuel with lower emission, control waste plastic pollution, recover energy from waste plastic pollution,
+recover energy from waste plastic. In case of waste plastic management, pyrolysis is better alternative compared to incineration
+or dumping. Incineration is burning of waste which leads to loss of valuable energy from polymer waste. Dumping of polymer waste
+is known to cause land pollution. By pyrolysis of polymer waste, it is possible to recover value oil from waste plastic in the
+form of Hydrocarbon gas and charcoal. Pyrolysis is a thermo chemical decomposition or cracking of organic material at elevated
+temperatures inside a closed chamber where oxygen is removed and not allowed. Component of plastic is 60-80 % petroleum; thereby
+through pyrolysis technology, the petroleum component of the plastics could be recovered instead of burying in the landfills.
+
+ 
+
+Though the Pyrolysis
+System is a technology that has been implemented worldwide for over 40 years, we will be the first to implement this technology
+in the Philippines. Initially, the Company will manually process the garbage to be converted into bunker oil, carbon black, and
+self-sustaining gas used as fuel for daily operations. The Company intends to as soon as is economically feasible acquire a Trommel
+unit capable of extracting approximately 300 tons of plastics, rubber and tires per 1,000 tons of garbage processed daily with
+very high precision. However, there is no assurance that the company will ever be able to acquire a Trommel unit.
+
+ 
+
+The pilot project is intended to establish
+proof of concept that can be potentially replicated in additional Philippine locations. The budget for this pilot project
+is $1,000,000. There is no assurance that the company will be able to source financing to implement this objective. Further,
+intermediate term expansion is contemplated to require an additional $8,000,000. in capital expenditures. Similarly, there
+is no assurance that the company will be able to source this additional capital financing.
+
+ 
+
+Implementation Plan
+
+ 
+
+The following represents
+the Company s proposed implementation plan. As of the date of this Prospectus, other than the aforementioned obtaining of
+renewable electricity status from the Philippines department of energy to qualify for government incentives related to renewable
+electricity, the Company has not implemented any aspect of the following implementation plan, and there is no guarantee that the
+Company will remain on schedule with respect to each and every stage of the implementation plan.
+
+ 
+
+ 2018
+ March
+ April
+ May 
+ June
+ July
+ August
+ September
+ October
+ November
+ December
+ January
+ February
+
+ Stage 1 (750k) (6 months to a year)
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Government/Regulatory Approvals
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Supply Agreements
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Power Purchase Contracts
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Land Acquisition
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Facilities Buildout
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Staffing
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 2019
+ March
+ April
+ May 
+ June
+ July
+ August
+ September
+ October
+ November
+ December
+ January
+ February
+
+ Stage II (250k) (18 to 24 months)
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Supply Agreements
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Power Purchase Contracts
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Additional Facilities Buildout
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Additional Staffing
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+
+ 4 
+
+ Table of Contents 
+
+ 
+
+ 
+
+Emerging Growth Company
+
+ 
+
+We are an emerging
+growth company under the JOBS Act. We shall continue to be deemed an emerging growth company until the earliest of:
+
+ 
+
+ 
+ 
+ The last day of the fiscal year of the issuer during which it had total annual gross revenues of $1,070,000,000 (as such amount is indexed for inflation every 5 years by the Commission to reflect the change in the Consumer Price Index for All Urban Consumers published by the Bureau of Labor Statistics, setting the threshold to the nearest 1,000,000) or more;
+
+ 
+ 
+ The last day of the fiscal year of the issuer following the fifth anniversary of the date of the first sale of common equity securities of the issuer pursuant to an effective IPO registration statement;
+
+ 
+ 
+ The date on which such issuer has, during the previous 3-year period, issued more than $1,070,000,000 in non-convertible debt; or
+
+ 
+ 
+ The date on which such issuer is deemed to be a , ' ': large accelerated filer , as defined in section 240.12b-2 of title 17, Code of Federal Regulations, or any successor thereto.
+
+ 
+
+As an emerging growth
+company we are exempt from Section 404(b) of Sarbanes Oxley. Section 404(a) requires Issuers to publish information in their annual
+reports concerning the scope and adequacy of the internal control structure and procedures for financial reporting. This statement
+shall also assess the effectiveness of such internal controls and procedures. Section 404(b) requires that the registered accounting
+firm shall, in the same report, attest to and report on the assessment and the effectiveness of the internal control structure
+and procedures for financial reporting.
+
+ 
+
+As an emerging growth
+company we are also exempt from Section 14A (a) and (b) of the Securities Exchange Act of 1934 which require the shareholder approval
+of executive compensation and golden parachutes. These exemptions are also available to us as a Smaller Reporting Company.
+
+ 
+
+The Offering
+
+ 
+
+As of the date of
+this prospectus we had 25,515,000 shares of common stock issued and outstanding.
+
+ 
+
+Selling shareholders
+are offering up to 515,000 shares of common stock. Our selling shareholders will sell their shares at the price of $0.50 per share
+which is their purchase price, until the price of our shares is quoted on the OTCQB marketplace or on the OTC Bulletin Board, and
+thereafter at prevailing market prices or privately negotiated prices.
+
+ 
+
+We will pay all
+expenses of registering the securities, estimated at approximately $42,000. We will not receive any proceeds of the sale of these
+securities.
+
+ 
+
+To be quoted on
+OTCQB marketplace or on the OTC Bulletin Board, a market maker must file an application on our behalf in order to make a market
+for our common stock. The current absence of a public market for our common stock may make it more difficult for you to sell shares
+of our common stock that you own.
+
+ 
+
+Financial Summary
+
+ 
+
+The tables and information
+below are derived from our audited financial statements for the period from inception on January 6, 2016 to December 31, 2016,
+the year ended December 31, 2017 and from our unaudited financial statements for the three months ended March 31, 2018. Our
+working capital as of December 31, 2016 December 31, 2017, and March 31, 2018 was $-0-, negative $21,987 and negative $40,007,
+respectively. As of March 31, 2018 we had cash on hand of $1,993.
+
+ 5 
+
+ Table of Contents 
+
+ 
+
+ 
+
+ 
+
+ 
+ At 
+ December 31, 2016
+ Audited
+ 
+ At 
+ December 31, 2017
+ Audited
+ 
+ At
+ March 31, 2018
+ Unaudited
+
+ Financial Summary 
+ 
+ 
+ 
+
+ 
+ 
+ 
+ 
+
+ Cash 
+ $— 
+ $6,513 
+ $1,993 
+
+ 
+ 
+ 
+ 
+
+ Total Assets 
+ $— 
+ $6,513 
+ $1,993 
+
+ 
+ 
+ 
+ 
+
+ Total Liabilities 
+ $— 
+ $28,500 
+ $42,000 
+
+ 
+ 
+ 
+ 
+
+ Total Stockholders Equity (Deficit) 
+ $— 
+ $(21,987) 
+ $(40,007)
+
+ 
+
+ 
+ Period from Inception on January 6, 2016 to 
+ December 31, 2016
+ Audited
+ 
+ Year Ended December 31, 2017
+ Audited
+ 
+ Three Months Ended March 31, 2018
+ Unaudited
+
+ Statement of Operations 
+ 
+ 
+ 
+
+ 
+ 
+ 
+ 
+
+ Revenue 
+ $— 
+ $— 
+ $— 
+
+ 
+ 
+ 
+ 
+
+ Operating Expenses 
+ $182,500 
+ $96,987 
+ $18,020 
+
+ 
+ 
+ 
+ 
+
+ Net Loss for the Period 
+ $(182,500) 
+ $(96,987) 
+ $(18,020)
+
+ 
+ 
+ 
+ 
+
+ Net Loss per Share 
+ $(0.01) 
+ $(0.00) 
+ $(0.00)
+
+ 
+ 
+ 
+ 
+
+ 
+
+ 
+
+ 6 
+
+ Table of Contents 
+
+ 
+
+RISK FACTORS
+
+ 
+
+An investment
+in our securities involves certain risks relating to our business and operations. You should carefully consider these risks, together
+with all of the other information included in this prospectus, before you decide whether to purchase shares of our Company. If
+any of the following risks actually occur, our business, financial condition or results of operations could be materially adversely
+affected. If that happens, the trading price of our common stock could decline and you may lose all or part of your investment.
+
+ 
+
+Risks Related to Our Business
+
+ 
+
+Our auditors
+have expressed substantial doubt about our ability to continue as a going concern.
+
+ 
+
+Our financial statements
+for the period from inception on January 6, 2016 to December 31, 2016, the year ended December 31, 2017 and the three months ended
+March 31, 2018, were prepared assuming that we will continue our operations as a going concern. We do not, however, have a history
+of operating profitably. Consequently, our independent accountants in their audit report have expressed substantial doubt about
+our ability to continue as a going concern. Our continued operations are highly dependent upon our ability to increase revenues,
+decrease operating costs, and complete equity and/or debt financings. Such financings may not be available or may not be available
+on reasonable terms. Our financial statements do not include any adjustments that may result from the outcome of this uncertainty.
+We estimate that we will not be able to continue as a going concern after December 31, 2018 unless we are able to secure capital
+from one of these sources of financing. If we are unable to secure such financing, we may cease operations and investors in our
+common stock could lose all of their investment.
+
+ 
+
+We have not
+voluntarily implemented various corporate governance measures, in the absence of which, shareholders may have more limited protections
+against interested director transactions, conflicts of interest and similar matters.
+
+ 
+
+Federal legislation,
+including the Sarbanes-Oxley Act of 2002, has resulted in the adoption of various corporate governance measures designed to promote
+the integrity of the corporate management and the securities markets. Some of these measures have been adopted in response to legal
+requirements. Others have been adopted by companies in response to the requirements of national securities exchanges, such as the
+NYSE or the Nasdaq Stock Market, on which their securities are listed. Among the corporate governance measures that are required
+under the rules of national securities exchanges are those that address board of directors' independence, and audit committee oversight.
+We have not yet adopted any of these corporate governance measures and, since our securities are not yet listed on a national securities
+exchange, we are not required to do so. It is possible that if we were to adopt some or all of these corporate governance measures,
+stockholders would benefit from somewhat greater assurances that internal corporate decisions were being made by disinterested
+directors and that policies had been implemented to define responsible conduct. Prospective investors should bear in mind our current
+lack of corporate governance measures in formulating their investment decisions.
+
+ 
+
+We are an
+"emerging growth company," and we cannot be certain if the reduced reporting requirements applicable to emerging growth
+companies will make our common stock less attractive to investors.
+
+ 
+
+We are an "emerging
+growth company," as defined in the Jumpstart Our Business Startups Act, or the JOBS Act. For as long as we continue to be
+an emerging growth company, we may take advantage of exemptions from various reporting requirements that are applicable to other
+public companies that are not emerging growth companies, including not being required to comply with the auditor attestation requirements
+of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports
+and proxy statements and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder
+approval of any golden parachute payments not previously approved. We could be an emerging growth company for up to five years,
+although we could lose that status sooner if our revenues exceed $1,070,000,000, if we issue more than $1,070,000,000 in non-convertible
+debt in a three year period, or if the market value of our common stock held by non-affiliates exceeds $100,000,000 as of any June
+30 before that time, in which case we would no longer be an emerging growth company as of the following June 30. We cannot predict
+if investors will find our common stock less attractive because we may rely on these exemptions. If some investors find our common
+stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more
+volatile.
+
+ 7 
+
+ Table of Contents 
+
+ 
+
+We have elected to use the extended
+transition period for complying with new or revised accounting standards under Section 102(b)(2) of the Jobs Act, that allows us
+to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies
+until those standards apply to private companies. As a result of this election, our financial statements may not be comparable
+to companies that comply with public company effective dates.
+
+If we are
+unable to retain our staff, our business and results of operations could be harmed. 
+
+ 
+
+Our ability to compete
+with other waste-to-energy companies, and develop our business is largely dependent on the services of Renato A. Paraiso, our Chief
+Executive Officer, and other employees and contractors which assist him in the management and operation of the business. If we
+are unable to retain Mr. Paraiso s services and to attract other qualified senior management and key personnel on terms satisfactory
+to us, our business will be adversely affected. We do not have key man life insurance covering the life of Mr. Paraiso and, even
+if we are able to afford such a key man policy, our coverage levels may not be sufficient to offset any losses we may suffer as
+a result of Mr. Paraiso s death, disability, or other inability to perform services for us.
+
+ 
+
+We may acquire
+businesses and enter into joint ventures that will expose us to increased operating risks. 
+
+ 
+
+As part of our growth
+strategy, we intend to acquire other waste-to-energy businesses. We cannot provide any assurance that we will find attractive acquisition
+candidates in the future, that we will be able to acquire such candidates on economically acceptable terms or that we will be able
+to finance acquisitions on economically acceptable terms. Even if we are able to acquire new businesses in the future, they could
+result in the incurrence of substantial additional indebtedness and other expenses or potentially dilutive issuances of equity
+securities and may affect the market price of our common stock or restrict our operations. We have also entered into joint venture
+arrangements intended to complement or expand our business and will likely continue to do so in the future. These joint ventures
+are subject to substantial risks and liabilities associated with their operations, as well as the risk that our relationships with
+our joint venture partners do not succeed in the manner that we anticipate.
+
+ 
+
+If we are
+unable to establish the contracts that we believe we will get in the Philippines, we will not be able to generate meaningful revenues.
+
+ 
+
+The waste-to-energy
+business is driven by the access to the right type of garbage and the contracts with municipalities and other government bodies.
+We must develop relationships with politicians and other businesses in the region. If we do not establish a strong reputation and
+efficient operations, we will not be able to generate meaningful revenues and our business could fail.
+
+ 
+
+We may be
+unable to gain economical access to garbage, equipment, and governmental approvals
+
+ 
+
+Our survival is
+currently dependent upon the success of our efforts to create efficient, cost-effective, and profitable operations. If we are unable
+to create a strong profit margin because our costs are higher than our revenue, than we will not be able to continue operations
+in the Philippines.
+
+ 
+
+If our competitors
+develop more successful processes and enter the market our revenue, margins, and profitability will decline.
+
+ 
+
+We currently
+have no protection by any trademarks, patents and/or other intellectual property registrations.
+
+ 
+
+We have not applied
+for any trademark, patent or other intellectual property registration with any governmental agency for our name or for our any
+proprietary information. At present we are planning to enter into non-disclosure agreements with employees to protect confidentiality.
+Despite our precautions taken to protect our processes we intent to use, unauthorized parties may attempt in the future to reverse
+engineer, copy or obtain and use the same technology used as it is in the market with several manufacturers of the Pyrolysis equipment.
+
+ 
+
+ 8 
+
+ Table of Contents 
+
+ 
+
+ 
+
+We may not
+be able to compete effectively against our competitors.
+
+ 
+
+We expect to face
+strong competition from well-established companies and small independent companies. We will be at a competitive disadvantage as
+a smaller company with less access to significant capital. Our opportunity to obtain contracts, vendors, and customers may be limited
+by our financial resources and other assets.
+
+ 
+
+We cannot
+predict with certainty the extent of future costs under environmental, health and safety laws, and cannot guarantee that they will
+not be material.
+
+ 
+
+We could be liable
+if our operations cause environmental damage to our properties or to the property of other landowners, particularly as a result
+of the contamination of air, drinking water or soil. Under current law, we could even be held liable for damage caused by conditions
+that existed before we acquired the assets or operations involved. Also, we could be liable if we arrange for the transportation,
+disposal or treatment of hazardous substances that cause environmental contamination, or if a predecessor owner made such arrangements
+and under applicable law we are treated as a successor to the prior owner. Any substantial liability for environmental damage could
+have a material adverse effect on our financial condition, results of operations and cash flows.
+
+ 
+
+In the ordinary
+course of our business, we may in the future, become involved in a variety of legal and administrative proceedings relating to
+land use and environmental laws and regulations. These include proceedings in which:
+
+ 
+
+ agencies of federal,
+state, local or foreign governments seek to impose liability on us under applicable statutes, sometimes involving civil or criminal
+penalties for violations, or to revoke or deny renewal of a permit we need; and
+
+ local communities, citizen
+groups, landowners or governmental agencies oppose the issuance of a permit or approval we need, allege violations of the permits
+under which we operate or laws or regulations to which we are subject, or seek to impose liability on us for environmental damage.
+
+ 
+
+We generally seek
+to work with the authorities or other persons involved in these proceedings to resolve any issues raised. If we are not successful,
+the adverse outcome of one or more of these proceedings could result in, among other things, material increases in our costs or
+liabilities as well as material charges for asset impairments.
+
+ 
+
+The waste industry
+is subject to extensive government regulation, and existing or future regulations may restrict our operations, increase our costs
+of operations or require us to make additional capital expenditures.
+
+ 
+
+Government
+regulations at the federal, state, provincial, and local level in the Philippines have a substantial impact on our business. A
+large number of complex laws, rules, orders and interpretations govern environmental protection, health, safety, land use, zoning,
+transportation and related matters. Among other things, they may restrict our operations and adversely affect our financial condition,
+results of operations and cash flows by imposing conditions such as:
+
+ 
+
+ limitations on placing
+and constructing new waste disposal, transfer or processing facilities;
+
+ limitations, regulations
+or levies on collection and disposal prices, rates and volumes;
+
+ limitations or bans on
+disposal or transportation of out-of-state waste or certain categories of waste; or
+
+ mandates regarding the
+disposal of solid waste, including requirements to recycle rather than landfill certain waste streams.
+
+ 
+
+Regulations affecting
+the placing, design and closure of landfills could require us to undertake investigatory or remedial activities, curtail operations
+or close landfills temporarily or permanently. Future changes in these regulations may require us to modify, supplement or replace
+equipment or facilities. The costs of complying with these regulations could be substantial.
+
+ 9 
+
+ Table of Contents 
+
+ 
+
+ 
+
+ 
+
+In order to develop,
+expand or operate a waste management facility, we must have various facility permits and other governmental approvals, including
+those relating to zoning, environmental protection and land use. The permits and approvals are often difficult, time consuming
+and costly to obtain and could contain conditions that limit our operations.
+
+ 
+
+We will have
+substantial financial assurance and insurance requirements, and increases in the costs of obtaining adequate financial assurance,
+or the inadequacy of our insurance coverages, could negatively impact our liquidity and increase our liabilities.
+
+ 
+
+The amount of insurance
+we are required to maintain for environmental liability is governed by statutory requirements. We believe that the cost for such
+insurance is high relative to the coverage it would provide and, therefore, our coverages are generally maintained at the minimum
+statutorily-required levels. We face the risk of incurring additional costs for environmental damage if our insurance coverage
+is ultimately inadequate to cover those damages. We also carry a broad range of other insurance coverages that are customary for
+a company our size. We use these programs to mitigate risk of loss, thereby enabling us to manage our self-insurance exposure associated
+with claims. The inability of our insurers to meet their commitments in a timely manner and the effect of significant claims or
+litigation against insurance companies may subject us to additional risks. To the extent our insurers were unable to meet their
+obligations, or our own obligations for claims were more than we estimated, there could be a material adverse effect to our financial
+results.
+
+ 
+
+In addition, to
+fulfill our financial assurance obligations with respect to environmental closure and post-closure obligations, we generally obtain
+letters of credit or surety bonds, rely on insurance, including captive insurance, fund trust and escrow accounts or rely upon
+financial guarantees. We currently have in place all financial assurance instruments necessary for our operations. We currently
+do not anticipate any unmanageable difficulty in obtaining financial assurance instruments in the future, but general economic
+factors may adversely affect the cost of our current financial assurance instruments and changes in regulations may impose stricter
+requirements on the types of financial assurance that will be accepted. Additionally, in the event we are unable to obtain sufficient
+surety bonding, letters of credit or third-party insurance coverage at reasonable cost, or one or more states cease to view captive
+insurance as adequate coverage, we would need to rely on other forms of financial assurance. It is possible that we could be forced
+to deposit cash to collateralize our obligations. Other forms of financial assurance could be more expensive to obtain, and any
+requirements to use cash to support our obligations would negatively impact our liquidity and capital resources and could affect
+our ability to meet our obligations as they become due.
+
+ 
+
+The development and acceptance of
+alternatives to disposal and waste-to-energy facilities could reduce our ability to operate at full capacity.
+
+ 
+
+Our planned customers
+are increasingly using alternatives to disposal and waste-to-energy disposal, such as recycling and composting and others are working
+to reduce the waste they generate. In addition, some state and local governments mandate recycling and waste reduction at the source
+and prohibit the disposal of certain types of waste, such as yard waste, at landfills or waste-to-energy facilities. Although such
+mandates are a useful tool to protect our environment, these developments reduce the volume of waste, which may affect our ability
+to operate our facilities at full capacity, as well as the prices that we can charge.
+
+ 
+
+Current and
+future litigation could adversely affect us. 
+
+ 
+
+We are not currently
+involved in any legal proceedings. However, we may become involved in other legal proceedings in our ordinary course of business.
+Lawsuits and other legal proceedings can involve substantial costs, including the costs associated with investigation, litigation
+and possible settlement, judgment, penalty or fine. As a smaller company, the collective costs of litigation proceedings can represent
+a drain on our cash resources, as well as an inordinate amount of our Management s time and addition. Moreover, an adverse
+ruling in respect of certain litigation could have a material adverse effect on our results of operation and financial condition.
+
+ 
+
+ 10 
+
+ Table of Contents 
+
+ 
+
+ 
+
+We have limited
+the liability of our board of directors and management.
+
+ 
+
+We have adopted
+provisions in our Articles of Incorporation which limit the liability of our directors and officers and have also adopted provisions
+in our bylaws which provide for indemnification by the Company of our officers and directors to the fullest extent permitted by
+Wyoming corporate law. Our Articles of Incorporation generally provide that our directors shall have no personal liability to the
+Company or its stockholders for monetary damages for breaches of their fiduciary duties as directors, except for breaches of their
+duties of loyalty, acts or omissions not in good faith or which involve intentional misconduct or knowing violation of law, acts
+involving unlawful payment of dividends or unlawful stock purchases or redemptions, or any transaction from which a director derives
+an improper personal benefit. Such provisions substantially limit our shareholders ability to hold directors liable for
+breaches of fiduciary duty.
+
+ 
+
+Our share
+structure could impede a non-negotiated change of control of the Company.
+
+ 
+
+Champion Group LTD
+("Champion") currently holds 25,000,000 shares of common stock of the Company. Consequently, any attempt to take over
+the Company without the consent of Champion would be extremely difficult to achieve. Because of the disproportionate voting control
+of Champion, it alone could inhibit, delay, or frustrate entirely an attempt by others to take over control of our Company and
+could prevent our shareholders from obtaining a premium for their shares.
+
+ 
+
+Risks Relating To This Offering and
+Our Common Stock
+
+ 
+
+If the selling
+shareholders sell a large number of shares all at once or in blocks, the market price of our shares would most likely decline.
+
+ 
+
+Holders holding
+515,000 shares of common stock may resell their shares of Common stock through this prospectus. Should the
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2018/CIK0001674365_aptinyx_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001674365_aptinyx_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..6fd1b31a26ec10bc1fd1e216e073634da63e7929
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/CIK0001674365_aptinyx_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus summary 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2018/CIK0001675583_monster_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001675583_monster_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..50f1c0d65915ac6f548fbd41c1d58a837a73ba8d
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/CIK0001675583_monster_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus and does not contain all of the information that you should consider in making your investment decision. Before deciding to invest in our securities, you should read this entire prospectus carefully, including the sections of this prospectus entitled "Risk Factors" and "Management s Discussion and Analysis of Financial Condition and Results of Operations" and our financial statements and related notes contained elsewhere in this prospectus. References in this prospectus to "we," "us," "our" and similar words refer to the Company and its wholly-owned subsidiaries (defined below). Overview Monster, Inc. (formerly known as Monster Cable Products, Inc.) was founded by Mr. Noel Lee in 1978 and is headquartered in South San Francisco, California. Monster Products, Inc. together with approximately ten of its affiliates and subsidiaries created and established the Monster s brand as end-to-end high-quality audio solutions for consumer and professional use. Starting at the "electrical outlets," we deliver surge protectors, high quality cables to carry audio signals, and headphones and speakers to deliver high quality sound featuring Pure Monster Sound Technology. We have a portfolio of over 500 patents and trademarks in the United States and internationally. We offer over 5,000 different products in over 160 countries worldwide. Monster has historically sold the majority of its products through retail distribution with limited online sales. We currently offer five primary categories of consumer products, which are cables, headphones, speakers, power and other mobile phone accessories and add-ons, such as portable chargers, cables and screen cleaning spray. Monster s sales of its products grew steadily in the past 25 years and exponentially with the introduction of Beats headphones from 2007 to 2012. In 2012, Monster and Beats terminated their relationship, which dramatically interrupted Monster s product lines and strategies. After the departure of Beats, the management of Monster indicated that it has expanded its product mix to include several headphone lines, a High-Definition Multimedia Interface ("HDMI") cable and a home audio service line named "SoundStage." Monster s current business strategy is shifting focus away from simply building its product range to pursuing alternative retail platforms and implementing new marketing campaigns. Over the next five years, Monster s business strategy is to revitalize relationships with the Company s existing retail relationships as well as target expansion into new retail venues. The Company is developing relationships with a number of world renowned fortune 500 companies. We plan to integrate the Ethereum blockchain technology to our E-commerce website to create the new ecosystem, namely Monster Money Network where consumers may use either MMNY Tokens or fiat currencies to purchase Monster products and services. As we develop Monster Money Network and our backend systems, we intend to utilize the blockchain technology to our marketing, accounting and audit, internal control and shipping management functions. We believe the blockchain innovation will bring disruptive advancement to our E-commerce and business operation systems. Reverse Acquisition On February 13, 2018, the Company, formerly known as Atlantic Acquisition, Inc. ("AA"), a Nevada corporation, Monster, LLC, a Nevada limited liability company and Monster, Inc., a California corporation and each shareholder and member of Monster, Inc. and Monster, LLC, as applicable, entered into a Share Exchange Agreement (the "Share Exchange Agreement"). The closing for the Share Exchange Agreement occurred on April 12, 2018 (the "Closing Date"). On the closing for the Share Exchange Agreement, each stockholder and member of Monster, Inc. and Monster, LLC sold and conveyed all of the shares he or she owned in Monster, Inc. and Monster, LLC to the Company, which interest constituted 100% of all of the issued and outstanding ownership interests in both of such Monster entities. In consideration for the acquisition of all of the equity interest in Monster, LLC and Monster, Inc., the Company issued 300,000,000 shares of its common stock to the stockholders and members of Monster, LLC and Monster, Inc., pro rata in the respective amounts set forth in the Share Exchange Agreement and an aggregate of 5,000,000 shares held by one of the Company s insiders was cancelled. The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. Subject to completion, dated May 25, 2018 Up to 300,000,000 Monster Money Tokens ("MMNY Tokens") and 75,000,000 shares of Common stock. Monster Products, Inc. (the "Company" or "we") is offering up to three hundred million (300,000,000) of its Monster Money Tokens ("MMNY" or "Tokens") for gross proceeds of $300,000,000 (the "Maximum Offering Amount") before deduction of commissions, if applicable, and offering expenses. There is no minimum offering amount required as a condition to closing in this offering, and as a result, the actual public offering amount, any placement agent fees, if applicable, and net proceeds to us are not presently determinable and may be substantially less than the total Maximum Offering Amount. This offering will terminate the earlier of (i) one year from the date when this registration statement is declared effective (the "Effective Date"); (ii) the date on which the Offering is fully subscribed, or (iii) the earlier date that we decide to terminate the Offering in our sole discretion. In either event, the Offering may be closed without further notice to you. Any and all funds for the Tokens purchased in the Offering will be transmitted directly to the escrow account and released to us upon termination of this Offering for the purposes as described in the section titled "Use of Proceeds" on page 23 of this registration statement. Neither our MMNY nor our common stock is traded or quoted on any stock market in the United States. We intend to apply to have our shares of Common Stock quoted on an exchange or market. No assurance can be given that our application for such trading or quotation will be approved in a timely manner or at all. Currently, no public market exists for our Monster Money Tokens. We plan to apply to have the MMNY Tokens traded on an exchange for cryptocurrencies; however, we cannot assure you that MMNY Tokens will be traded on such exchange in a timely manner or at all. The holders of the Tokens may convert all or part of their Tokens to Common Stock of the Company at a ratio of four Tokens to one share of Common Stock in the event that (i) our Tokens shall not have become publicly tradable on June 30, 2020 or (ii) our Tokens shall have ceased trading publicly due to certain governmental enforcement actions on June 30, 2020. This is a self-underwritten offering. This prospectus is part of a registration statement that permits our officers and directors to sell the Tokens directly to the public with no commission or other remuneration payable to them for any Tokens that are sold by them. Our officers and directors will sell the Tokens and intend to offer them to friends, family members, and business acquaintances. In offering the Tokens on our behalf, our directors and officers will rely on the safe harbor from broker dealer registration set out in Rule 3a4-1 under the Securities Exchange Act of 1934. Our officers, directors, control persons and affiliates may purchase Tokens in this offering. We may also engage registered broker-dealers to offer and sell the Tokens (each a "Selling Agent" and collectively, the "Selling Agents"). We may pay any such registered persons who make such sales a commission of up to eight percent (8%) of the aggregate purchase price of the MMNY Tokens sold by such Selling Agent in this Offering. However, we have not entered into any underwriting or agent agreement, arrangement or understanding for the sale of the Tokens being offered pursuant to this prospectus. This Offering is intended to be made solely by the delivery of this prospectus and the accompanying subscription agreements to prospective investors. Any Placement Agent engaged by us for this Offering would only be compensated based on the aggregate purchase price of the Tokens sold by such Selling Agent in this Offering. In the event that Selling Agents were to sell the Maximum Offering Amount we would pay them a total of $24,000,000, a certain number of MMNY Tokens in the equivalent value, or a combination of the Tokens and cash in the equivalent value. Our business and an investment in our Tokens involve a high degree of risk. See "Risk Factors" beginning on page 6 of this prospectus for a discussion of information that you should consider before investing in our Tokens. We are an "emerging growth company" as defined under the federal securities laws and will be subject to reduced public company reports requirements. Please read the disclosures beginning on page 1 of this prospectus for more information. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these Tokens or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The date of this prospectus is , 2018 At December 31, 2017, the Company had collateralized notes payable to shareholders totaling approximately $100.5 million. On April 12, 2018, the two noteholders under common control of Mr. Noel Lee, our CEO and chairman, converted approximately $92,573,824 of the notes owed by Monster, LLC to 10,007,981 shares of Series A Convertible Preferred Stock of the Company, the certificate of designation of which is incorporated by reference and was filed with the Securities and Exchange Commission (the "SEC") on April 16, 2018 in a current report on Form 8-k. On May 7, 2018, the Company filed a Certificate of Amended and Restated Articles of Incorporation (the "Certificate of Amendment") with the Secretary of the State of Nevada. Pursuant to the Certificate of Amendment, among other things, the Company changed its name from Atlantic Acquisition Inc. to Monster Products, Inc. and increased its authorized shares of common stock from 400,000,000 to 800,000,000, par value $0.001 per share. The Certificate of Amendment became effective on May 7, 2018. Reference is made to Form 8-K filed with the SEC on May 8, 2018. Monster Money Network The Company intends to implement blockchain technology onto its E-commerce platform worldwide, which will be driven by Monster Money Tokens. The Company s blockchain-based E-commerce ecosystem is named as "Monster Money Network." As Monster further develops Monster Money Network and its blockchain technology, it contemplates to utilizing the blockchain technology for payment processing, market analysis, accounting, audit & payroll services, inventory management and shipping operation. Eventually Monster hopes to use its influence, scale and global connections along with blockchain technology to bring a number of E-commerce platforms onto Monster Money Network where transactions will be processed and completed instantly with low or no transaction costs. TABLE OF CONTENTS Page Prospectus Summary 1 Risk Factors 6 Cautionary Note Regarding Forward-Looking Statements and Industry Data 22 Use of Proceeds 23 Price Range of Common Stock 24 Dividend Policy 24 Capitalization 25 Dilution 25 Management s Discussion and Analysis of Financial Condition and Results of Operations 26 Business 35 Management 47 Security Ownership of Certain Beneficial Owners and Management 52 Certain Relationships and Related Party Transactions 52 Description of Securities 53 Plan of Distribution 55 State Suitability Standards 57 Certain United States Tax Considerations 61 Legal Matters 62 Experts 62 Where You Can Find More Information 62 You should rely only on the information contained in this prospectus or in any free writing prospectus that we may specifically authorize to be delivered or made available to you. We have not, authorized anyone to provide you with any information other than that contained in this prospectus or in any free writing prospectus we may authorize to be delivered or made available to you. We take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. This prospectus may only be used where it is legal to offer and sell our securities. The information in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or any sale of securities. Our business, financial condition, results of operations and prospects may have changed since that date. We are not, and any Selling Agents are not making an offer of these securities in any jurisdiction where the offer is not permitted. For investors outside the United States: We have not done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. Persons outside the United States who come into possession of this prospectus must inform themselves about, and observe any restrictions relating to, the offering of securities and the distribution of this prospectus outside the United States. Summary of the Offering The following is a summary of the principal terms of this Offering, but is not intended to be complete: Issuer Monster Products, Inc. Securities offered Monster Money Tokens ("MMNY", or "MMNY Tokens") Amount of this Offering Up to 300,000,000 MMNY Tokens Offering Price $1.00 per MMNY Token; up to an aggregate of $300,000,000 (the "Maximum Offering Amount") for this Offering. There is no minimum offering amount required as a condition to close this Offering and as a result the actual amount raised in this Offering may be significantly less than the Maximum Offering Amount. MMNY Token to Common Stock Conversion In the event of the ICO Failure as defined below, each investor of MMNY Tokens shall have the right to convert his or her MMNY Tokens purchased pursuant to this Prospectus into the Company s Common Stock registered herein at a conversion rate (the "Conversion Rate") of four (4) MMNY Tokens to one (1) share of the Company s Common Stock. The "ICO Failure" means that i) MMNY Tokens shall not have been traded on a cryptocurrency exchange or a U.S. stock exchange, including the OTC Markets, by June 30, 2020 because either this registration statement is not declared effective by the SEC or MMNY Tokens are not approved for trading on any such exchange market; or ii) MMNY Tokens shall have ceased trading on or before June 30, 2020 due to legal or administrative enforcement actions by the SEC, the Commodity Futures Trading Commission (the "CFTC"), or any other government authorities. "ICO" means the Initial Coin Offering of the Company s MMNY Tokens. Common Stock Outstanding Before and After this Offering 317,150,001 shares of the Company s common stock MMNY Tokens Outstanding Before this Offering 0 MMNY Tokens Maximum Amount of MMNY Tokens Outstanding After this Offering 300,000,000 MMNY Tokens. There is no minimum offering amount required as a condition to close this Offering and as a result the actual amount of MMNY Tokens issued and outstanding after this Offering may be significantly less than the maximum amount MMNY Tokens listed herein. Commencement of this Offering We expect to commence the sale of MMNY Tokens within two days following the declaration of effective of our Registration Statement by the SEC (the "Effective Date"). Termination of this Offering This Offering will terminate on the earlier of (i) one year from the Effective Date; (ii) the date on which the Maximum Offering Amount is sold, or (iii) the date that the Offering is earlier terminated by us, in our sole discretion. Description of Monster Money Tokens Monster Money Tokens are the currency to be used on Monster Money Network to purchase Monster products or pay for services. Holders of Monster Money Tokens are not entitled to vote as shareholders of the Company. Plan of Distribution The Offering is being conducted by our officers and directors on a best efforts basis up to the Maximum Offering Amount. Our officers and directors will not receive any direct compensation for sales of our MMNY Tokens. However, we reserve the right to engage broker-dealers registered under Section 15 of the Exchange Act ("Selling Agents"), and who are FINRA members to participate in the offer and sale of MMNY Tokens and to pay to such Selling Agents, if any, cash or Token commissions of up to 8% of the gross proceeds from the sales of MMNY Tokens placed by such Selling Agents. Our directors, officers, employees and affiliates (as defined in the Securities Act) may, but have no obligation to, purchase MMNY Tokens in the Offering and all proceeds from the sale of such Tokens shall be counted toward the Maximum Offering Amount. We reserve the right to reject a subscription to purchase our MMNY Tokens, in whole or in part in our sole discretion. If a subscription is so rejected, in whole or in part, we will direct the Escrow Agent to promptly return the funds submitted with such rejected subscription, or the rejected portion thereof, to the investor without interest thereon or deduction therefrom. Escrow Account All investor funds in the form of U.S. dollars and Ethers will be deposited in non-interest-bearing escrow accounts (the "Escrow Accounts") held by [ ], as escrow agent, for the benefit of the investors. The funds raised in this Offering will be released to the Company upon Termination of this Offering. Selling Agents (if any) In the event that we engage a Selling Agent we may agree to pay such Selling Agent cash or Token commissions of up to 8% of the gross proceeds from the sales of MMNY Tokens placed by such Selling Agents Use of Proceeds We intend to use the net proceeds of this Offering for the research and development of Monster Money Network, an E-commerce platform for Monster products, marketing Monster products and Monster Money Network, establishing partnerships with our strategic partners, and general working capital. See page 23 "Use of Proceeds" for more information. Proposed Trading We intend to file an application to have MMNY Tokens traded on a cryptocurrency exchange at such time as determined by the management of the Company after the Effective Date. Subscription Procedures Investors interested in subscribing for Monster Money Tokens in this Offering must complete and deliver to the Company a completed subscription agreement to the address provided in the subscription agreement. Within one business day of receipt of the subscription agreement, the Company will inform the investor that it has accepted the subscription and within three business days of the Company s notification of this acceptance, the investor should deliver the purchase price in the amount of $1.00 per Token in immediately available funds in the form of U.S. Dollars or Ethers. Investors paying in U.S. Dollars shall transfer the funds by wire using the wire transfer instructions provided in the subscription agreement and investors paying Ethers shall transfer the funds to the address of the Escrow Agent s wallet, which is provided in the subscription agreement. Promptly following the receipt of subscription proceeds from the investor, the Company will deliver to the investor the MMNY Tokens purchased by such investor. All funds for subscriptions in the offering will be transmitted to the Company s bank account for immediate use by the Company upon release by the Escrow Agent pursuant to the subscription agreement and escrow agreement. As a result upon execution of the subscription agreement by the subscriber and acceptance by the Company, such subscription is irrevocable. Risk factors See
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+PROSPECTUS SUMMARY This summary highlights selected information contained elsewhere in this prospectus. This summary does not contain all the information that you should consider before investing in our common stock. You should carefully read the entire prospectus including "Risk Factors", "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our Financial Statements, before making an investment decision. In this prospectus, unless otherwise specified, all references to "common shares" refer to shares of our common stock and the terms "we", "us", "our", "KVMD", and "Kelvin Medical" mean Kelvin Medical, Inc., a Nevada corporation. Corporate Overview Kelvin Medical, Inc. (the "Company") was incorporated in the State of Nevada on May 5, 2016. The Company, a recently organized company, is an early participant in medical device and telehealth wearables with a focus on the development of artificial intelligence driven physical therapeutic technologies. The Company is developing solutions that empower consumers ranging from aging users seeking to live pain-free, to competitive athletes seeking to maximize their performance. Our business model aims to provide medical device and telehealth wearables consumer direct, either single purchase or a recurring subscription basis, as well as a licensing of our full ecosystem to medical and physical therapy clinics/corporate wellness program administrators. Kelvin Medical's medical device and telehealth wearables platform has been devised to capture meaningful market share in the $30.5 billion global wearables market, along with the multi-billion-dollar medical and physical therapy and corporate wellness industries. The Company's medical device and telehealth platform of wearables, machine learning software, and re-loadable cartridges will enable consumer users, therapy clinics, and corporate wellness program administers, to maximize results through real-time local and distance monitored activity and therapeutic treatment. On May 5, 2016, Mr. William Mandel, our Company's founder, was appointed President and Director of the Company. Mr. Mandel is currently our sole officer of the Company. Mr. Mandel is also a director of our Company, and Margaret V. Austin, the spouse of Mr. Mandel, is our Chairman of the Board. Our headquarters are located at 10930 Skyranch Place Nevada City, CA 95959. William Mandel, our President, has worked in Medical Device technology development for over 25 years. The website www.kelvinmedical.com will be informational as per our current plan and will function as a point of sale for pre sales and product crowd funding efforts only. Mr. Mandel has made a working prototype of the proposed product, and has secured both a Chinese and a US patent. The use of hot and cold therapy is not a new treatment; however, our business model is based on the premise that customers will be drawn to our products because in a single convenient unit they can receive both hot and cold therapy. The Therm-N-Ice device delivers continuous or intermittent cold, continuous or intermittent warmth, or alternating hot and cold. In addition, this device can be programmed to follow timed treatment segments. This device is portable and rechargeable which allows mobility while experiencing ongoing and uninterrupted hot and cold temperatures. Initial, the Company is planning to offer, as our initial product, a simple arm band. We plan to expand our product to include leg bands, torso bands and the combination leg and arm band systems. We anticipate that there could be a demand for a system that combines all three options as well. At the date of this report, the Company has received a small order for three Therm-N-Ice devices, the deposit for which has been recorded as deferred revenue. Presently the Company does not have a production date for the initial Therm-N-Ice devices to fulfill this order. The Company was only recently incorporated in 2016; we have finalized our business plan, our marketing plan for our product is in place, and we are in the research and development phase of our business life-cycle. However, we have not commenced substantive operations, thus we believe that conducting this Offering will allow the Company added flexibility to raise capital in today's financial climate and carry out the objectives in our business plan. There can be no assurance that we will be successful in our attempt to sell 100% of the shares being registered hereunder; however, we believe that investors in today's markets demand more transparency and by our registering this Offering and becoming a reporting company, we will be able to capitalize on this fact. While we believe that our limited reporting requirements will satisfy most investors seeking transparency in any potential investment, we still caution that simply because we have a registration statement declared effective the Company will not become a "fully reporting" company, but rather, we will be only subject to the reporting requirements of Section 15(d) of the Securities Exchange Act of 1934. Accordingly, except during the year that our registration statement becomes effective, these reporting obligations may be automatically suspended under Section 15(d) if we have less than 300 shareholders at the beginning of our fiscal year and our required disclosure is less extensive than the disclosures required of "smaller reporting" companies. For example, we are not subject to disclose in our Form 10K risk factors, unresolved staff comments, or selected financial data, pursuant to Items 1A, 1B and 6, respectively. We have filed a Form 8-A12G with the Securities and Exchange Commission indicating our intention to remain a fully reporting company. Since inception, our operations have consisted of formulating and finalizing our business plan, and commencing in research and development. We hope to realize our full plan of operations by raising money through the sale of our securities, as contemplated within this Offering. We believe that if we are able to raise the full amount of funds contemplated herein, we would be able to fully launch our Company and properly market our initial proposed arm band device. Our president and CEO, Mr. William Mandel has worked in medical device technology development for over 25 years, and has the professional experience required for the start-up and operation of such a company. As an Engineer, Mr. Mandel understands the inner-workings of devices and the process required to design a product and carry it through to production. As a team leader, Mr. Mandel has an expanded understanding of the scope and magnitude of bringing a product to market. Presently Mr. Mandel has set out a scope of costs for our first arm band device production run. Proceeds from this offering will allow us to undertake the initial production and sale of our devices, as well as investigating new markets. Initial research and development has been completed by our management team who will currently service and continue the Company's product development, marketing, sales and operational plans. Our allocation of proceeds does provide for funds to be allocated to grow the operations of our business. For the marketing and sale of our product, once funds are in place, we plan to use our contacts in the medical industry to contract with for the promotion of our product to be resold by health care services companies who specialize in distribution of medical products, physician offices, pharmacies, pharmaceutical representatives and sporting goods stores. On November 26, 2017, the Company sold 3,000,000 Shares of KVMD's common stock to Mr. Gannon Giguiere, managing member of Phenix Ventures, LLC, for a total of Ninety Thousand Dollars ($90,000); at a purchase price of $0.03 per share. Proceeds from the sale of these shares will be used for operating costs of the Company. On January 22, 2018, the Company entered into an Equity Purchase Agreement with Phenix Ventures, LLC, Under the terms of the Agreement, Phenix Ventures has agreed to purchase up to 10,000,000 Shares of the Company's Common Stock. 10,000,000 PVLLC Equity Purchase Agreement and Registration Rights Agreement This prospectus includes the resale of up to 10,000,000 shares of our common stock by PVLLC. PVLLC will obtain our common stock pursuant to the Equity Purchase Agreement entered into by PVLLC and us, dated January 22, 2018. Although we are not mandated to sell shares under the Equity Purchase Agreement, the Equity Purchase Agreement gives us the option to sell to PVLLC, up to 10,000,000 shares of our common stock ("Put Shares"), par value $0.001 per share, over the period ending twenty-four months after this registration statement is effective. Based on the 10-day average of our stock price immediately prior to January 22, 2018, the registration statement covers the offer and possible sale of 10,000,000 (100% of the entire investment amount available to us) of our shares at $1.25 per share. For purposes of the information contained above the Company used the 10-day average market price of our common stock immediately prior to January 22, 2018 , of $1.25 and applied a discount of 17% for a purchase price of $1.0375 per share. The purchase price of the common stock will be set at eighty-three percent (83%) of the volume weighted average price ("VWAP") of our common stock during the pricing period. The pricing period will be the ten consecutive trading days immediately after the Put notice date. On the Put date, we are required to deliver shares to PVLLC in an amount (the "Estimated Put Shares") determined by dividing the closing price on the trading day immediately preceding the Put notice date multiplied by 83% and PVLLC is required to simultaneously deliver to us, the investment amount indicated on the Put notice. At the end of the pricing period when the purchase price is established and the number of Put Shares for a particular Put is definitely determined, PVLLC must return to us any excess Put Shares provided as Estimated Put Shares or alternatively, we must deliver to PVLLC any additional Put Shares required to cover the shortfall between the amount of Estimated Put Shares and the amount of Put Shares. At the end of the pricing period we must also return to PVLLC any excess related to the investment amount previously delivered to us. PVLLC is not permitted to engage in short sales involving our common stock during the commitment period ending May 1, 2020, (or twenty-four months following effect of this registration statement). In accordance with Regulation SHO however, sales of our common stock by PVLLC after delivery of a Put notice of such number of shares reasonably expected to be purchased by PVLLC under a Put will not be deemed a short sale. In addition, we must deliver the other required documents, instruments and writings required. PVLLC is not required to purchase the Put Shares unless: - Our registration statement with respect to the resale of the shares of common stock delivered in connection with the applicable Put shall have been declared effective. - We shall have obtained all material permits and qualifications required by any applicable state for the offer and sale of the registrable securities. - We shall have filed with the SEC in a timely manner all reports, notices and other documents required. We believe that we will be able to meet all of the above obligations mandated in the Equity Purchase Agreement set forth above. Business Overview and Strategy Kelvin Medical, Inc. ("THE COMPANY" or the "Company") was incorporated in the State of Nevada on May 5, 2016. William Mandel, who is currently our sole officer, and a director, has been with our Company since May 5, 2016, and manages our operations. Dr. Austin serves as our Chairman of the Board of Directors. Our headquarters are located at Kelvin Medical, LLC 10930 Skyranch Place Nevada City, CA 95959. Our Mission To impact global health and well-being through a new generation of medical device and telehealth wearable technologies. Our Focus on the Future Medical Device and Telehealth Wearables Technologies Comprised of smart watches, wristbands and monitors, the global wearables market is estimated to be over $30.5 Billion in sales revenue with over 310 million devices sold in 2017. The industry is projected to continue to grow and expand at approximately 16.7% CAGR over the next 3 to 5 years. Market growth is driven based on new technology innovations; expanding growth of younger population of users; and on-going adoption and acceptance by current consumers who are relying on wearables to monitor everything from their daily fitness/activity to their daily nutritional habits; as well as their nightly sleep. Coupling the overall global wearable market with the multi-billion dollar physical therapy, corporate wellness, and medical device and telehealth industries, Kelvin Medical has been presented with a meaningful sized market to penetrate. (Lomas, Natasha, 24 August 2017, "Global wearables market to grow 17% in 2017, 310M devices sold, $30.5BN revenue: Gartner." Tech Crunch.com Accessed ) Kelvin Medical, Inc. is focused on developing and launching next generation medical device and telehealth wearable technologies, both for tracking body function and therapeutic delivery, that positively impact one's health and well-being. Our strategy not only focuses on those seeking to age gracefully and pain free through medical device and telehealth management, but also on the most competitive athlete working to maximize their bodily output. Our Company intends to leverage artificial intelligence and machine learning combined with the latest advancements in monitoring and therapeutic delivery technologies to decrease the recovery time and improve body performance. This includes not only collecting vital body data, but processing the data and making specific therapeutic recommendations that are customized to each individual. Kelvin Medical has aspirations to not only provide self-treatment interventions but also insurance reimbursable physical therapy prescriptions. The Company is pursuing a "wearables ecosystem" product strategy that allows for seamless interactivity among its wearables, as well as customization, personalization of recommendations, and therapeutic based solutions targeting each individual user. Core aspects of Kelvin Medical's Execution Framework to track development include: 1. Medical device and telehealth wearables 2. Artificial intelligence engine 3. Single app connectivity 4. Facilitation of an industry standard 5. Intellectual property portfolio 6. Our business model Medical Device and Telehealth Wearables Kelvin Medical's medical device and telehealth wearables will consist of: 1. Body performance monitoring for: a. Pre-activity Users will be able to monitor, track, and share current vital stats before any physical activity. For any past injuries, consumers would be able to monitor how their injured area has recovered. b. During activity Users will be able to track, monitor, share and report how their body is performing real-time during physical activity. Sensors would track how the body and any injured areas are performing and would provide alerts to allow consumers to alter the intensity of the activities, as well as adjust to a different activity, if needed. c. Post-activity Users will be able to monitor the injured area performance post-workout to ensure that the injured area has fully recovered, and share relevant data with medical professionals, as needed. d. Treatment progress and long-term prognosis Users will be offered the opportunity to track and share their recovery progress based on the treatments they have completed, and receive recommendations on additional treatments. 2. Therapeutic delivery wearables for target areas: a. Kelvin Medical's therapeutic delivery wearables will include "cartridges" that leverage a battery powered source, where cartridges can be inserted into the wearable, heated and activated, and then delivered onto the skin to be absorbed. Consumers would be able to schedule the times they want the therapy/nutrients delivered, as well as track, monitor and share how they are feeling. Artificial Intelligence Engine The Company recognizes the on-going advancements in artificial intelligence and machine learning and intends to fully capitalize on those advancements by incorporating them into its product portfolio. Kelvin Medical, Inc. is working to develop a robust artificial intelligence and machine learning platform to support its entire suite of medical device and telehealth wearables so the devices can not only capture data, but process and share data to make tailored recommendations that are specific to each user. Single App Connectivity The Company intends to connect its medical device and telehealth wearables into a single app, available in both Android and iOS versions, to ensure that users have a centralized database to access current and historical data. This will provide users with confidence to continue to seek-out Kelvin Medical, Inc. medical device and telehealth wearables for their needs as they can access their historical data not only for review, but for current and future recommendations/ made by other types of Kelvin Medical, Inc. medical device and telehealth wearables. Intellectual Properties License Agreement On May 10, 2016, the Company entered into a patent license agreement with Oasis Medical Solutions ("OMS"), a sole proprietorship organized in the State of California controlled by our Board of Directors, ("Licensor") under which the Licensor granted to the Company an exclusive license of the Patent for the building of, and use of, machines incorporating the Patent's technology under certain terms and conditions. OMS is the holder, via assignment from the inventor, William R. Mandel of the U.S. Patent Number: PCT/US11/39860 on "APPARATUS FOR THERAPEUTIC COOLING AND WARMING OF A BODY PORTION OF A HUMAN OR MAMMAL" (the "Patent," "Medical Device") that, among other things, warms and cools portions of the human or mammal body". The Company, through its exclusive license, will bring this innovative technology to market. The provisional patent was filed on June 11, 2010, under the Patent Cooperation Treaty (PCT), and was granted on December 26, 2017. The patent will expire June 19, 2034. The term of the agreement shall be for 15 years and shall not extend beyond the full term of the patent. The Company pays a monthly maintenance fee, along with an annual fee to maintain the license; additionally, the Company agreed to pay 6% royalty per machine sold, which leverages this patent. If the product has not reached production within 5 years, the license will be considered null and void with all rights returning to Oasis Medical Solutions. Rights may not be sold or transferred without agreement between OMS and Kelvin. Kelvin plans to produce and resell our products to health care services companies who specialize in distribution of medical products, pharmacies, and sporting goods stores. The Company plans to produce our production prototype for the Therm-N-Ice arm band in the USA as our initial product launch. The Company does not maintain any inventory currently. Our CEO has spent 6 years, his own funds, as well as his time to develop our working prototype, and has secured a Chinese Patent, as well as a US Patent. Governmental Approval of Our Product All medical devices companies need to register with the FDA and pay the registration fee. We will also register and request that Kelvin Medical Inc. has "Small Business Status". This will help to reduce fees in the future. A Small Business is defined by having gross receipts of sales of no more than $100 million for the most recent tax year. FDA provides guidelines on when to submit a 510(k). A 510(K) is a premarket submission made to FDA to demonstrate that the device to be marketed is at least as safe and effective, that is, substantially equivalent, to a legally marketed device (21 CFR 807.92(a)(3)) that is not subject to premarket approval. Under FDA guides, the Therm-n-Ice device is 510(k) exempt, falling under these 21CFR listings: 890.5700 Cold Pack 890.5710 Hot Or Cold Disposable Pack 890.5720 Water Circulating Hot Or Cold Pack (II) 890.5730 Moist Heat Pack 890.5740 Powered Heating Pad (II) Under FDA classifications, the Therm-N-Ice is a Class II device. FDA has 3 classifications, Class I, Class II, and Class III. These classifications are risk based, that is, the risk the device poses to the patient and/or the user is a major factor in the class it is assigned. Class I includes devices with the lowest risk and Class III includes those with the greatest risk. Some Class I and Class II devices can be exempt. However, although some Class II devices may be exempt from 510(k), they are not exempt from current Good Manufacturing Practices (cGMP). cGMP refers to the "Current Good Manufacturing Practice" regulations enforced by the US Food and Drug Administration (FDA). cGMPs provide for systems that assure proper design, monitoring, and control of manufacturing processes and facilities. Reference to GMP rather than cGMP is the older reference to the same regulations. cGMP requirements for devices in part 820 (21 CFR part 820) were first authorized by section 520(f) of the Federal Food, Drug, and Cosmetic Act (the Act). Under section 520(f) of the Act, FDA issued a final rule in the Federal Register of July 21, 1978 (43 FR 31 508), prescribing cGMP requirements for medical devices. The requirement for Design Control was included later. These standards are harmonized with the International Organization for Standards (ISO)13485. In the future, if Kelvin Medical Inc. decides to market to the international market, we will be certified to ISO13485 and obtain CE (Conformit Europ enne) markings under the guidance of a Notified Body. cGMP defines the Quality System as required by the FDA. The quality system regulation includes requirements related to the methods used in, and the facilities and controls used for, designing, manufacturing, packaging, labeling, storing, installing, and servicing of medical devices intended for human use. Our president, William Mandel, has many years of experience dealing with the FDA and ISO in regard to medical device approval. The process duration is in the guidelines and states that 30 days after FDA registration, Kelvin Medical Inc. can commence putting a device into commercial distribution. During those 30 days, the FDA may do a factory inspection. The FDA approval process for medical devices does not actually exist, because the FDA provides clearance, not approval. The nature of regulatory oversight is for protecting the public health by assuring the safety, efficacy and security of human and veterinary drugs, biological products, medical devices, our nation's food supply, cosmetics, and products that emit radiation. The results of noncompliance are the following: There are different levels of noncompliance. When an audit occurs, the FDA auditor can give a 483 that list observations of noncompliance. These are reviewed and various types of actions can result. The lowest action is simply to verify that the noncompliance has been corrected upon the next audit, two year later. The next step up in severity is that the FDA verifies company compliance within 30 days of the audit. Being found non-compliant can lead to fines, business lock up, and/or jail time for upper management. Another possible FDA roadblock is a "Medical Device Report" (MDR). When someone reports an injury caused by a medical device, it is called an MDR. There are strict guidelines, given by the FDA, on what to do and the time frames in which to do it. An internal investigation occurs and appropriate action should take place. If the device is found to be defective, a recall of the device can occur. Commercial and Retail Markets None of the data relative to our product was purchased or commissioned. We hope to realize our full plan of operations by raising money through the sale of our securities, as contemplated within this Offering. We believe that if we are able to raise the full amount of funds contemplated herein, we would be able to launch our Company properly by producing our initial quantity of devices and reselling them through our proposed channels. Kelvin Medical, Inc. is preparing to establish both commercial and retail markets with a national distribution channel. The target channels for commercial healthcare distribution are through organizations that are established for product distribution to consumer locations. Kelvin Medical will also market the product through retail distributors for consumer markets, as well as provide joint advertising support for direct distribution to sports medicine, physical therapy and general consumer medical device advertising channels, such as journals, local advertising newspaper inserts. Opportunity Comprised of smart watches, wristbands and monitors, the global wearables market is estimated to be over $30.5 Billion in sales revenue with over 310 million devices sold in 2017. The industry is projected to continue to grow and expand at approximately 16.7% CAGR over the next 3 to 5 years. Market growth is driven based on new technology innovations, expanding growth of a younger population of users, and on-going adoption and acceptance by current consumers who are relying on wearables to monitor everything from their daily fitness/activity to their daily nutritional habits to their nightly sleep. (Lomas, Natasha, 24 August 2017, "Global wearables market to grow 17% in 2017, 310M devices sold, $30.5BN revenue: Gartner." Tech Crunch.com Accessed ) Additionally, critical care statistics show there are 420,870 cases of sprains, strains, or tears were the leading injury or illness in private industry and state and local government in the U.S. in 2014. "Type of injury or illness and body parts affected by non fatal injuries and illnesses in 2014." (BLS.gov., 02 Dec 2015 Published. Web. 28 April 2016 Accessed.) In the U.S., about 30 million children and teens participate in some form of organized sports, and more than 3.5 million injuries occur each year, which cause some loss of participation time. Almost one-third of all injuries incurred in childhood are sports-related injuries. The most common injuries are sprains and strains. More than 775,000 children, ages 14 and younger, are treated in hospital emergency rooms for sports-related injuries each year in the US. Most of the injuries occurred as a result of falls, being struck by an object, collisions, and over exertion during unorganized or informal sports activities. ("Sports Injury Statistics" Stanford Childrens.org. Stanford Children's Health, 2016 Published. Web. 28 April 2016 Accessed.) Professional athletes were among five occupations that had more than 1,000 injuries per 10,000 workers. Athletes and sports competitors suffer more than 2,000 injuries per 10,000 workers, according to the Bureau of Labor Statistics. (Fizgerald, Tim "Professional Athletes" Consumer Healthday.com. 20 Jan. 2016 Published. Web. 28 April 2016 Accessed.) Coupling the overall global wearable market with the multi-billion-dollar medical treatment and physical therapy, corporate wellness, and medical device and telehealth industries, Kelvin Medical has been presented with a meaningful sized market to penetrate. Industry Overview The use of Hot and Cold Therapy, sometimes referred to as Contrast Therapy, can be placed in three different categories: Critical Care, Long-Term Acute Care, and Chronic Care. Critical Care refers to the treatment of a trauma at the onset of an injury. The recommendation is to use the R.I.C.E. method at this time. R.I.C.E. stands for Rest, Ice, Compression and Elevation. Long-Term Acute Care refers to the time frame between the 72-hour period to full recovery. Two types of intervention are typically suggested for this period of time, either warmth only or alternating warm and cold therapy. The industry's leaders include Thermacare, Ace, Kaz Softheat, Bed Buddy, Thera Med, Cryo Max, Kaz Smart Heat, Well Patch, and Thermipaq. On Statistic.com the annual sales of the leading over the counter pain relief products in the United States in July 2014 showed Thermacare, one of the industry's leaders, had $58.6 million in U.S. sales of its hot/cold packs. Thermacare in 2008 showed sales of $51.6 million, showing a gain of $7 million in sales in the intervening 6 years. Although the industry's leaders as a whole do not have an up to date statistic less than two years old, Statistic.com did report in 2007/2008 the combined sales of 9 industry leaders, as $146.7 million, indicating an impressive market size. Current Operations Since inception, our operations have primarily consisted of the organization of our business, the development of our business plan, software development planning, and research and development. Our business plan includes a three-phase plan that details the steps we intend to take to produce, launch and market our product. Currently we are still in Phase 1 of our plan which includes the following: formation of our Company; completion of our business plan; procurement of funding development of our Beta software platform; and development of Prototypes in our wearable medical device and telehealth product line We are working through all aspects of this early phase in our Company's development, including the securing of funding. Operations and expenditures have included the incorporation of Kelvin Medical, Inc. under the laws of the State of Nevada, and the formation of an extensive business plan in which we have mapped out all of the initial products that we will eventually plan to offer to our clients. This, first phase will culminate with the completion of this Offering and development of our Beta software platform and Prototypes in our wearable medical device and telehealth product line. The second phase of our roll-out involves the commercialization of our first generation of devices, the software platform on which they will operate, and securing initial distribution partners from pharmacies, sporting goods stores, and healthcare services companies who specialize in distribution of medical products. The follow-on phases will include scaling the Company to meet and support large-scale demand of our product set in all aspects required. Beyond this Offering, if we do not raise additional funding, we may not be able to execute the full-extent of our long-term business plan. Business Model Strategy The Company's business model is three-fold: 1. Single purchase of medical device and telehealth wearables on a user direct basis. 2. Subscription business based model where users would be able to sign-up and receive cartridges delivered to them on a recurring basis. 3. Insurance reimbursable medical device and telehealth prescription delivery to therapeutic providers. Kelvin Medical is pursuing becoming an early participant in physical therapy medical device and telehealth by working to offer insurance reimbursable real-time distance monitored treatments. Marketing Initial, we plan to market our product through the established marketing channels of pharmacies, sporting goods stores, and health care services companies who specialize in distribution of pharmaceuticals and medical products. We plan to contract with one doctor who has connections to health care services companies and pharmaceutical companies to introduce our product and create our initial sales. Our CEO has experience in the medical device field, and believes that direct marketing of our product to consumers would not have the potential for sales that it would have being sold through established service companies. Competition Our current direct competitors are the manufacturers of Wearable Fitness Tracking Devices, Ice packs, Heat packs, and Gel packs. Our Company will compete for the sales of wearable fitness tracking devices, ice packs, heat packs and gel packs with many companies that have had a longer history of sales and greater name recognition to potential customers. We expect to compete with these other companies on the basis of providing a robust medical device and telehealth solution that will reduce the burden of the tasks of applying wearable therapeutic treatment, for specific time periods and allow people to remain mobile rather than pausing life activities in order to obtain repetitive therapy. Our principal competitors include Google, Apple, FitBit, Thermacare, Ace, Curad, Sunbeam, Thermipaq all of which offer online products and/or have distribution through medical companies similar to our proposed product offering. Corporate Information Our principal executive offices are located at 10930 Skyranch Place, Nevada City California 92959. Our telephone number is (530) 388-8706. Our website address is http://www.kelvinmedical.com. The information on, or that can be accessed through, our website is not part of this prospectus. Summary of the Offering Shares currently outstanding: 67,097,500 common shares Shares being offered: The selling stockholders identified in this prospectus may offer and sell up to 10,000,000 shares of our common stock to be sold by PVLLC pursuant to the Equity Purchase Agreement, and an additional 3,000,000 shares held by selling stockholder, Mr. Gannon Giguiere. If issued presently, the 10,000,000 shares of common stock registered for resale by PVLLC would represent approximately 15% of our existing issued and outstanding shares of common stock, which totals 67,097,500, as of February 1, 2018, and the 3,000,00 shares held by Mr. Giguiere represents 4.47% of the current issued and outstanding shares. Further on a fully diluted basis the 10,000,000 shares represent 13% of the issued share capital and the 3,000,000 shares represent 3.89% of the issued shares. Gannon Giguiere is the Managing Member of Phenix Ventures, LLC. Mr. Giguiere will not hold more than 9.99% of the issued and outstanding shares of our Common Stock at any time, either individually, or through PVLLC. Offering Price per share: The selling stockholders may sell all or a portion of the shares being offered pursuant to this prospectus at fixed prices, at prevailing market prices at the time of sale, at varying prices or at negotiated prices Use of Proceeds: We will not receive any proceeds from the sale of the shares of our common stock by the selling stockholders. However, we will receive proceeds from our initial sale of shares to PVLLC pursuant to the Equity Purchase Agreement. We will pay for expenses of this offering, except that the selling stockholders will pay any broker discounts or commissions or equivalent expenses applicable to the sale of their shares. OTC Markets Symbol: KVMD
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diff --git a/parsed_sections/prospectus_summary/2018/CIK0001680854_cape_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001680854_cape_prospectus_summary.txt
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--- /dev/null
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@@ -0,0 +1,143 @@
+PROSPECTUS
+SUMMARY
+
+ 
+
+This summary
+highlights some of the information in this prospectus. It is not complete and may not contain all of the information that you may
+want to consider. You should read carefully the more detailed information set forth under "Risk Factors" and the other
+information included in this prospectus. Except where the context suggests otherwise, the terms "we," "us,"
+"our," "CPH" and the "Company" refer to Cape Point Holdings, Inc. We refer in this prospectus
+to our executive officers and other members of our management team, collectively, as "Management."
+
+ 
+
+Company Organization
+
+ 
+
+Cape Point Holdings,
+Inc. ("us", "we" or "our") is a Florida corporation formed on July 22, 2016, by our chief executive
+officer Porfirio S nchez-Talavera to is an enterprise that seeks to build and operate a new satellite fleet to deliver broadband
+services within Mexico through strategic alliances and cutting-edge technology. Our principal executive office is located at Campos
+El seos 400, 601B, Colonia Polanco Reforma, Delegaci n Miguel Hidalgo, CP 11560, M xico, Ciudad de M xico.
+Our telephone number is +5255 70980527. Our website is www.capepointholdings.com and is not part of this prospectus.
+
+ 
+
+Business
+
+ 
+
+Our operations to
+date have been devoted primarily to start-up and development activities, which include: (i) Building strategic alliances on a revenue
+share basis; (ii) Development of a partnership network with leading retail, internet and telecom companies around the world in
+order to boost the industry development in the Americas through Ka-Band and further cutting-edge technologies. We have not sufficiently
+developed these strategic alliances, and joint-venture partnerships, and there is no assurance that we will be successful in developing
+cutting-edge technologies and strategic relationships.
+
+ 
+
+On March 15, 2017,
+through our 99% owned subsidiary Cape Point Telekom SociedadAnonima de Capital Variable ("Telekom Mexico"), we entered
+into a Joint Venture Agreement (the "Joint-Venture Agreement") with CromSat Corp. ("CromSat"), a Florida
+corporation. Pursuant to the terms of the Joint-Venture Agreement, the Company planned to work with CromSat to acquire its 3,300
+Mhz satellite capacity in exchange for 8,000,000 shares of Series B Preferred Stock of the Company. However, in August 2017, Cromsat
+Corp. received a notice of termination of its Ka-Band Satellite Capacity Lease Agreement, dated September 24, 2013 (the "Satellite
+Lease Agreement") with Hispasat. The notice received from Hispasat alleges a breach of the Satellite Lease Agreement due
+to CromSat s failure to convert the aforementioned Series B Preferred Stock of the Company, which was issued in the name
+of CromSat, but provided to Hispasat as a guarantee of CromSat s performance under the Satellite Lease Agreement, into common
+stock of the Company quoted on a public exchange (the "Conversion"). CromSat disputes Hispasat s assertions regarding
+the timing on the Conversion and has filed suit against Hispasat and its individual principals in the Tribunal Superior de Justicia
+de la Ciudad de M xico to enforce its rights under the Satellite Lease Agreement. However, CromSat believes that it is unlikely
+it will prevail in its lawsuit against Hispasat, and it is still further unlikely that its commitments pertaining to the Joint-Venture
+Agreement will be deliverable. Accordingly, CromSat, in January 2018 terminated the Joint-Venture, and returned the Series B Preferred
+Stock to the Company for return to treasury.
+
+ 
+
+Despite the loss
+of our Hispasat contract, we still plan of finding a replacement provider for satellite delivery of internet and telecom to the
+Mexico region.
+
+ 
+
+Business Plan
+
+ 
+
+On
+the one hand we have formed a subsidiary of Cape Point Holdings Florida named Cape Point Telekom, Inc. that will subscribe the
+agreements with all the international and national telecommunications companies in charge of providing all technical infrastructure
+for the project, such as Teleport, Ground Station, Master Antenna, VSAT s, Backbone and any other component needed for its
+technological deployment. We have also incorporated a Mexican entity named Cape Point Telekom, S.A. de C.V. to: a) acquire the
+MexicanTelecommunications Concession, in the understanding that the aforementioned permit is strictly needed for the delivery of
+broadband services, b) to acquire the satellite segment of 3,300MHz, c) subscribe all the necessary agreements with end users and
+d) commercialize all broadband services within Mexico. 
+
+ 
+
+ 2 
+
+ Table of Contents 
+
+ 
+
+ 
+
+Emerging Growth Company
+
+ 
+
+We are an emerging
+growth company under the JOBS Act. We shall continue to be deemed an emerging growth company until the earliest of:
+
+ 
+
+ 
+ 
+ 
+ The last day of the fiscal year of the issuer during which it had total annual gross revenues of $1,070,000,000 (as such amount is indexed for inflation every 5 years by the Commission to reflect the change in the Consumer Price Index for All Urban Consumers published by the Bureau of Labor Statistics, setting the threshold to the nearest 1,000,000) or more;
+
+ 
+ 
+ 
+ The last day of the fiscal year of the issuer following the fifth anniversary of the date of the first sale of common equity securities of the issuer pursuant to an effective IPO registration statement;
+
+ 
+ 
+ 
+ The date on which such issuer has, during the previous 3-year period, issued more than $1,070,000,000 in non-convertible debt; or
+
+ 
+ 
+ 
+ The date on which such issuer is deemed to be a , ' ': large accelerated filer , as defined in section 240.12b-2 of title 17, Code of Federal Regulations, or any successor thereto.
+
+ 
+
+As an emerging growth
+company we are exempt from Section 404(b) of Sarbanes Oxley. Section 404(a) requires Issuers to publish information in their annual
+reports concerning the scope and adequacy of the internal control structure and procedures for financial reporting. This statement
+shall also assess the effectiveness of such internal controls and procedures. Section 404(b) requires that the registered accounting
+firm shall, in the same report, attest to and report on the assessment and the effectiveness of the internal control structure
+and procedures for financial reporting.
+
+ 
+
+As an emerging growth
+company we are also exempt from Section 14A (a) and (b) of the Securities Exchange Act of 1934 which require the shareholder approval
+of executive compensation and golden parachutes. These exemptions are also available to us as a Smaller Reporting Company.
+
+ 
+
+The Offering
+
+ 
+
+As of the date of
+this prospectus, we had 22,168,000 shares of common stock issued and outstanding.
+
+ 
+
+The
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2018/CIK0001681282_anvia_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001681282_anvia_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..1fa7963950205b9730b996cbaea3eeb329fb795b
--- /dev/null
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@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights selected information contained elsewhere in this Prospectus. This summary does not contain all the information that you should consider before investing in the common stock of Anvia Holdings Corporation , Inc. (referred to herein as the "Company," "Anvia," "we," "our," and "us"). You should carefully read the entire Prospectus, including "Risk Factors," "Management s Discussion and Analysis of Financial Condition and Results of Operations" and the financial statements before making an investment decision. Business Background The Company, formerly known as Dove Street Acquisition Corporation, was incorporated in Delaware on July 22, 2016. The Company filed a registration statement on Form 10 with the Securities and Exchange Commission on August 9, 2016 and became a public reporting company. In January 2017, Dove Street Acquisition Corporation changed its name to Anvia Holdings Corporation. On January 10, 2017, the Company effected a change of control with the resignation of the then officers and directors, redemption of 19,500,000 shares of the 20,000,000 outstanding shares of its common stock, the appointment of new officers and directors and the issuance of 5,000,000 shares of common stock, pro rata, to the new shareholders of the Company. The Company has an authorized capitalization of 100,000,000 shares of common stock and 20,000,000 shares of preferred stock, of which 1,000 shares have been, designated Series A Preferred Stock. The Company has a fiscal year end of December 31. As of the date of this registration statement, there are 19,003,367 shares of common stock of the Company issued and outstanding and 1000 shares of Series A Preferred Stock issued and outstanding. The Company has only recently commenced operations as a development-stage company, and it has limited operating history and is expected to experience losses in the near term. The Company s independent auditors have issued a report raising substantial doubt about the Company s ability to continue as a going concern. Investment Agreement with GHS On June 5, 2018, we entered into an investment agreement with GHS Investments, LLC, a Nevada limited liability company ("GHS"). Pursuant to the terms of the GHS Equity Financing Agreement, GHS committed to purchase up to $10,000,000 of our common stock over a period of up to twenty-four (24) months. From time to time during the twenty-four (24) months period commencing from the effectiveness of the registration statement, we may deliver a drawdown notice ("Drawdown Notice") to GHS which states the dollar amount that we intend to sell to GHS on a date specified in the drawdown notice ("Drawdown Amount"). The maximum amount that the Company shall be entitled to drawdown to GHS shall be two hundred percent (200%) of average daily trading volume (U.S. market only) of the Common Stock during the ten (10) days preceding the Drawdown Notice, so long as such amount does render the Investor a holder of more than 9.99% of the outstanding Shares of the Company. The purchase price per share to be paid by GHS shall be calculated as a twenty percent (20%) discount to the lowest traded price of the Company Common Stock during the ten (10) consecutive trading days prior to the date the Drawdown Notice was submitted. We initially reserved 3,000,000 shares of our common stock for issuance under the GHS Equity Financing Agreement. The GHS Equity Financing Agreement is not transferable, and any benefits attached thereto may not be assigned. In connection with the GHS Equity Financing Agreement, we also entered into a registration rights agreement with GHS, pursuant to which we are obligated to file a registration statement with the Securities and Exchange Commission (the "SEC") covering shares of our common stock underlying the GHS Equity Financing Agreement within 30 days after the date of the GHS Equity Financing Agreement. In addition, we are obligated to use all commercially reasonable efforts to have the registration statement declared effective by the SEC within 90 days after filing and maintain the effectiveness of such registration statement until termination of the GHS Equity Financing Agreement. The 4 ,000,000 shares to be registered herein represent approximately 1 7 % of the shares then issued and outstanding, assuming that the selling stockholder will sell all of the shares offered for sale. The 4 ,000,000 shares to be registered herein represent approximately 32% of the shares issued and outstanding held by non-affiliates of the Company. At an assumed purchase price of $ 0.88 (equal to 80% of the closing price of our common stock of $1. 10 on September 14 , 2018), we will be able to receive up to $3, 520 ,000 in gross proceeds, assuming the sale of the entire 4 ,000,000 shares being registered hereunder pursuant to the GHS Equity Financing Agreement. Accordingly, we would be required to register approximately 7,363,636 additional shares to obtain the balance of $6,4 8 0,000 under the GHS Equity Financing Agreement at an assumed purchase price of $ 0.88 per share. We are currently authorized to issue 100,000,000 shares of our common stock. We may be required to increase our authorized shares in order to receive the entire purchase price in the even our share price decreases. The Company has agreed not to put an amount of shares which would result in GHS owning more than 9.99% of the then-outstanding shares of our common stock at any one time. There are substantial risks to investors as a result of the issuance of shares of our common stock under the GHS Equity Financing Agreement. These risks include dilution of stockholders percentage ownership, significant decline in our stock price and our inability to draw sufficient funds when needed. GHS will periodically purchase our common stock under the GHS Equity Financing Agreement and will, in turn, sell such shares to investors in the market at the market price. This may cause our stock price to decline, which will require us to issue increasing numbers of common shares to GHS to raise the same amount of funds, as our stock price declines. Because our ability to draw down any amounts under the GHS Equity Financing Agreement is subject to a number of conditions, there is no guarantee that we will be able to draw down any portion or all of the proceeds of $10,000,000 under the GHS Equity Financing Agreement. As such, we cannot make any guarantee that we will be successful in accessing the full amount under the GHS Equity Financing Agreement. Where You Can Find Us Our principal office is located at 1125 E Broadway #770, Glendale, CA 91205. Our telephone number is (323)-713-3244. THE OFFERING Common stock offered by Selling Stockholder 4 ,000,000 shares of common stock. Common
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2018/CIK0001681400_celebiddy_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001681400_celebiddy_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..1f41a3b5eec452a97bef0450bb867b7d29d950bb
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/CIK0001681400_celebiddy_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights some information from this prospectus, and it may not contain all the information important to making an investment decision. A potential investor should read the following summary together with the more detailed information regarding the Company and the common stock being sold in this offering, including "Risk Factors" and the financial statements and related notes, included elsewhere in this prospectus. The Company History Celebiddy Inc. (referred to as "the Company," or "Celebiddy"), a Delaware corporation, is a corporation formed for purpose of managing and operating Date Kickstarter, an online-dating management subscription service. Date Kickstarter is a web and mobile dating application service designed to help online dating platform users to generate higher frequency authentic responses from other users on existing respective dating platforms. The Company s mission is to improve the online dating experience by effectively managing online dating users dating profiles to facilitate higher response rates with other users. To fulfill its mission, the Company has acquired and obtained all rights and sole ownership in and to the DateKickstarter Afterburner Dating System, a match-making software (the "Technology"). The Technology shall function in combination with manual service of DateKickstarter dating assistants, to be employed or contracted as the Company develops and user base expands and utilizing this combination of human evaluation and program-based matchmaking software, the Company intends to streamline and expedite user-to-user outbound first messages, thereby producing a set number of responses, based on robust search criteria. Date Kickstarter will be operational on most popular dating sites, such as Tinder, Match.com, E-Harmony.com, OKCupid, PlentyOfFish and to this end, on February 1, 2018 the Company initiated a soft launch of its services, whereby the Company offered full services, but only offered such services to a select number of users. After this initial six-month, soft launch trial period whereby the Company tested its application and improved upon functionality based on user feedback, the Company subsequently initiated full launch of its services. The Company is in process of raising marketing and advertising capital to attract users on a wider scale. In the meantime, the Company will utilize social media and other cost-efficient marketing methods to grow its user-base. The Company was incorporated in the State of Delaware on July 22, 2016 and was formerly known as Sparrow Street Acquisition Corporation. In August 2016, Sparrow Street Acquisition Corporation filed a registration statement with the Securities and Exchange Commission on Form 10 by which it became a public reporting company. In April 2017, the Company implemented a change of control by redeeming shares of existing shareholders, issuing shares to new shareholders, electing new officers and directors and accepting the resignations of its then existing officers and directors. In connection with the change of control, the shareholders of the Company and its board of directors unanimously approved the change of the Company s name from Sparrow Street Acquisition Corporation to Celebiddy, Inc. On August 25, 2017, the Company entered into a Copyright License Agreement (the "Copyright License") pursuant to which software developer Adam Watson ("Licensor") licensed exclusively to the Company all of Licensor s copyrights, use and exploitation rights of and relating to Licensor s proprietary Afterburner online/mobile dating software application, or the Technology, including resale rights and rights in and to any and all associated media. Date Kickstarter will utilize the Afterburner Dating System to deliver date management services to the Company s user base. On November 1, 2017, the Company appointed one John Malek to serve as Vice President of the Company and to perform such duties and task as designated by the Board of Directors or President of the Company. Mr. Malek is a shareholder of the Company and is the son to Mary Malek, who prior to appointment was the sole officer and director and whom remains majority shareholder of the Company. John Malek is the founder and CFO of DripTrive Inc., a European market company. Mr. Malek completed the Business Management/Marketing/Finance bootcamp and has developed talents in business marketing and optimization, as well as forecasting and implementing strategic business growth. Mr. Malek also created, developed and implemented the DateKickstarter project. Mr. Malek is also currently developing innovative crypto-technologies in the digital currency and block-chain space. On February 1, 2018, the Company entered into a Modification of the Copyright License Agreement (the "Modification Agreement") pursuant to which, all rights that were previously licensed by Licensor to the Company were then purchased, such that all rights in and to the Technology became solely and exclusively owned by the Company. In exchange and in consideration for the rights granted pursuant to the Modification Agreement, the Company agreed to remunerate Licensor as follows: 1. Payment of $5,000 (five thousand dollars) as total cash consideration for purchase of the Technology and all aforementioned associated rights thereto; and 2. Payment of a monthly commission equal to 10% (ten percent) of the Company s monthly net profit (if any) ("Seller s Commission"), first payment which was to be due February 1, 2018 and further payments to endure indefinitely so long as the Company remains in existence and in good standing, unless mutually terminated by the Parties. Pursuant to the Copyright License and subsequent Modification Agreement, the Company will now focus its business in the exploitation and use of the Technology. The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission acting pursuant to said section 8(a), may determine. CALCULATION OF REGISTRATION FEE Title of Each Class of Securities to be Registered Amount to be Registered Proposed Maximum Offering Price Per Share (1) Proposed Maximum Aggregate Offering Price Amount of Registration Fee (2) Common Stock 850,000 $ 0.10 $ 85,000 $ 9.85 (1) There is no current market for the securities and the price at which the Shares are being offered has been arbitrarily determined by the Company and used for the purpose of computing the amount of the registration fee in accordance with Rule 457 under the Securities Act of 1933, as amended. (2) Paid by electronic transfer. Table of Contents The Afterburner Dating System is intended to facilitate dating "matches" for mobile and online-dating users. The Company intends to utilize the Afterburner Dating System to launch "Date Kickstarter", a mobile-friendly web application service designed to help online dating platform users to generate higher frequency authentic responses from other users on the respective dating platforms. The Company s mission is to improve the online dating experience by effectively managing online dating users dating profiles to facilitate higher response rates with other users. To fulfill its mission, the Company has acquired and obtained all rights and sole ownership in and to the DateKickstarter Afterburner Dating System, a match-making software (the "Technology"). The Technology shall function in combination with manual service of DateKickstarter dating assistants, to be employed or contracted as the Company develops and user base expands and utilizing this combination of human evaluation and program-based matchmaking software, the Company shall streamline and expedite user-to-user outbound first messages, thereby producing a set number of responses, based on robust search criteria. Date Kickstarter will be operational on most popular dating sites, such as Tinder, Match.com, E-Harmony.com, OKCupid, PlentyOfFish and to this end, on February 1st, 2018 the Company initiated a soft launch of its services, whereby the Company offered full services, but only offered such services to a select number of users. After this initial six-month, soft launch trial period whereby the Company tested its application and improved upon functionality based on user feedback, the Company subsequently initiated full launch of its services. The Company is in process of raising marketing and advertising capital to attract users on a wider scale. In the meantime, the Company will utilize social media and other cost-efficient marketing methods to grow its user-base. On February 7, 2018, the Company issued a promissory note (the "Promissory Note") in the amount of up to $90,000 (the "Loan Amount") to Mary Malek, President and CEO of the Company (the "Lender"). Pursuant to the terms and subject to the conditions of the Promissory Note, the Company agreed to repay to Lender the entire Loan Amount, at 0% interest rate, due upon demand by Lender. The Promissory Note has an indefinite term and bears 0% interest. The Promissory Note reflects the Company s intent to recompense the Lender for certain prior loans made by the Lender to the Company, one loan in the amount of $40,000 (Forty Thousand dollars), lent to the Company on November 6th, 2017, and another issued by the Lender to the Company in the amount of $50,000 (Fifty Thousand dollars), lent to the Company on December 26, 2017. Stripe Data and Privacy On September 1, 2017, the Company engaged Stripe, Inc. ("Stripe"), a digital privacy Data storage solutions company, to protect the Company s user s information and data. DateKickstarter database is fully integrated with Stripe such that when users provide personal information (e.g. address, credit card information, etc.), the information is sent directly to the Stripe server. The Stripe server protects user data by tokenizing user data with a specific Customer ID. That Customer ID only is stored in a Date Kickstarter database to interact with Stripe services when necessary. Stripe charges a per usage fee to the Company. Currently the Company pays 2.8% per user credit transaction to Stripe for utilization of Stripe s services. Consulting Services Agreement Voided On February 22, 2018, the Company and Halcyon Innovation, LLC ("Consultant") (collectively referred to hereafter occasionally as the "Parties") entered into a Consulting Services Agreement (the "Agreement") pursuant to which Consultant, which is in the business of providing customized technology solutions, was previously engaged to deploy a decentralized blockchain based profile storage solution (the "Development Work") for the Company s website, http://datekickstarter.com (the "Website"). The Company has elected to void their agreement with Consultant and remain with Stripe as Stripe s services shall provide sufficient data protection, and without cost and challenges associated with any block-chain integration. Business The basic premise of the Company is to enable online dating platform users to outsource the management of their online dating profiles to the Company in order to sufficiently increase authentic responses from other users on respective dating platforms such as OKCupid, Match.Com, Tinder, POF or other web and mobile dating websites and/or mobile applications. The Company will then launch a dating "campaign" based on the type of subscription selected by the user, and the user will be rewarded with higher frequency match responses than they were likely to achieve without use of the Company s services. The Company will charge a monthly subscription fee that shall vary based on demand, market conditions and other industry factors. The Company will initially charge $19.99 per dating platform account the user wants the company to manage. For each selected account, The Company will send 1,000 messages per platform per month. Payments will be collected on a month-to-month basis and users may cancel the service at any time. As of the date of this Prospectus, Mary Malek, the Company s founder and Chief Executive Officer, has either invested or loaned to the Company over $90,000 (Ninety Thousand Dollars) to fund development of the Company s website, acquire the Technology and implement the same into the Date Kickstarter web and mobile application, to implement block-chain technology for user data encryption, and to pay other Company operating expenses, as needed. In June 2017, pursuant to the Master Service Agreement (the "MSA") that has been attached as an Exhibit to this Registration Statement, Celebiddy engaged Giraffe Builder ("GB"), an eSolutions provider, to provide the following services and build-out (altogether referred to as the "Web Development") for the benefit of the Company: Desktop and Mobile Responsive Custom Theme-Based e-commerce / subscription model Website; 4 Individual Packages consisting of 1,000 messages per package to external dating websites; Upsell Sales Feature – within the shopping cart for Add-on options; Location Search with filter city / state, age, gender of user; Custom Site Design; Custom Development on Framework; Copy content and logo as provided by the Company; Social media integration; and Merchant Account Payment Gateway and SSL Certificate Integration EXPLANATORY NOTE This registration statement and the prospectus therein cover the registration of 850,000 shares of common stock offered by the holders thereof. Table of Contents The Web Development includes mobile friendly optimal graphic design, user-friendly digital architecture and programming, and build-out was completed in July 2017. On February 1, 2018, following the completion of the Web Development and subsequent integration of the Afterburner Dating System technology, the Company initiated a "soft launch" of its services, and the Company anticipates a complete launch of its functional dating management service by June 1, 2018. To fulfill its launch goals, the Company and has engaged a team of developers, coders, wire-framers, influencer recruiters, graphic designers, and web developers to optimize and refine its product and to build out a full-service digital marketplace application prior to launch. The Market The dating services industry has grown rapidly since 2010. According to IbisWorld, the industry is projected to reach $2.7BN in revenue in 2017, with the majority of sales being generated from online and mobile dating platforms. IBISWorld projects that revenue for the Dating Services industry will grow at an annualized rate of 5.7% over the next five years and will reach an estimated $3.5 billion by 2022. This figure includes an estimated 7.8% growth in 2018 alone. While there has been a robust growth of online and mobile dating, male users typically struggle to generate a response from female users. In a study performed by Evan Marc Katz, a famous dating author and recognized dating coach by CNN, Wall Street and other journals covering online dating, it was concluded that on average women who utilize online dating platforms receive 20 times more messages than men who utilize the same platforms. At the current response rate for even the most popular man, it would take 2.3 years to fill up his inbox, compared to 2 months and 13 days for a popular woman. Bearing these statistics in mind, the Company is confident that its Management Service will satisfy a tremendous need to help male users generate responses from female users that many are currently seeking through frequent use of online dating platforms but failing to realize. Currently, as indicated by Katz s study, most professional men do not have the have time nor dedication to pursue the number of female users necessary to get match with a target date. The Company intends to collaborate work and lend its services to both online dating sites and Mobile dating applications. Currently, the Company s dating management application will support a limited number of platforms, but as the Company grows the application will develop to accommodate more platforms. Risks and Uncertainties facing the Company As a development stage company, the Company has no operating history and has continuously experienced losses since its inception. The Company s independent auditors have issued a report questioning the Company s ability to continue as a going concern. That is, the Company needs to create a source of revenue or locate additional financing in order to continue its developmental plans. As a development stage company, management of the Company has no prior experience in building and selling projects similar to that planned by the Company and in marketing and distributing such projects on a broad scale. One of the biggest challenges facing the Company is the ability to raise adequate capital to generate sufficient cash flows from operations to meet its obligations, which it had not been able to accomplish to the date of the report, and /or obtain additional financing from its stockholders and/or other third parties. The Company has to date conducted limited operations. If the Company were unable to develop strong and reliable sources of funding for continued operations, it is unlikely that the Company could develop its operations to return revenue sufficient to further develop its business plan. Moreover, the above assumes that the Company s efforts are met with customer satisfaction in the marketplace and exhibit steady adoption of its solutions amongst the potential base of customers, neither of which are currently known or guaranteed. Due to these and other factors, the Company s need for additional capital, the Company s independent auditors have issued a report raising substantial doubt of the Company s ability to continue as a going concern. The information contained in this prospectus is not complete and may be changed. A registration statement relating to these securities has been filed with the Securities and Exchange Commission and these securities may not be sold until that registration statement becomes effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. PROSPECTUS Subject to Completion, Dated September __, 2018 Celebiddy, Inc. 850,000 shares of Common Stock offered by selling shareholders at $0.10 per share This prospectus relates to the offer and sale of 850,000 shares of common stock (the "Shares") of Celebiddy, Inc. ("Celebiddy" or the "Company"), $0.0001 par value per share, offered by the holders thereof, who are deemed to be statutory underwriters. The selling shareholders will offer their shares at a price of $0.10 per share. The maximum number of Shares that can be sold pursuant to the terms of this offering by the selling shareholders is (in aggregate) 850,000 Shares. Funds received by the selling shareholders will be immediately available to such selling shareholders for use by them. The Company will not receive any proceeds from the sale of the Selling Shareholder Shares. The offering will terminate twenty-four (24) months from the date that the registration statement relating to the Shares is declared effective, unless earlier fully subscribed or terminated by the Company. The Company intends to maintain the current status and accuracy of this prospectus and to allow selling shareholders to offer and sell the Shares for a period of up to two (2) years, unless earlier completely sold, pursuant to Rule 415 of the General Rules and Regulations of the Securities and Exchange Commission. All costs incurred in the registration of the Shares are being borne by the Company. Prior to this offering, there has been no public market for the Company s common stock. No assurances can be given that a public market will develop following completion of this offering or that, if a market does develop, it will be sustained. The offering price for the Shares has been arbitrarily determined by the Company and does not necessarily bear any direct relationship to the assets, operations, book or other established criteria of value of the Company. The Shares will become tradable on the effective date of the registration statement of which this prospectus is a part. Neither the Company nor any selling shareholders has any current arrangements nor entered into any agreements with any underwriters, broker-dealers or selling agents for the sale of the Shares. If the Company or selling shareholders can locate and enter into any such arrangement(s), the Shares will be sold through such licensed underwriter(s), broker-dealer(s) and/or selling agent(s). NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. The Company is an "emerging growth company," as defined in the Jumpstart Our Business Startups Act. These securities involve a high degree of risk. See "RISK FACTORS" contained in this prospectus beginning on page 5. Celebiddy, Inc. 18 Narbonne Newport Beach, CA 92660 Prospectus dated September __, 2018 Table of Contents Trading Market Currently, there is no trading market for the securities of the Company. The Company intends to initially apply for admission to quotation of its securities on the OTC Bulletin Board as soon as possible which may be while this offering is still in process. There can be no assurance that the Company will qualify for quotation of its securities on the OTC Bulletin Board. The Offering The maximum number of Shares that can be sold pursuant to the terms of this offering is 850,000. The offering will terminate twenty-four (24) months from the date of this prospectus unless earlier terminated by the Company. This prospectus relates to the offer and sale of 850,000 shares ("Shares") of common stock of the Company by the holders thereof (the "Selling Shareholder Shares"), who are deemed to be statutory underwriters. The selling shareholders will offer their shares, respectively, at a price of $0.10 per share. Common stock outstanding before the offering 21,300,000 (1) Common stock for sale by the Company 0 Common stock for sale by selling shareholders 850,000 Common stock outstanding after the offering 21,300,000 (2) Offering Price $ 0.10 per share Proceeds to the Company $ 0 (1) Based on number of shares outstanding as of the date of this prospectus. (2) Assumes the sale of the maximum number of Shares. Table of Contents
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+PROSPECTUS SUMMARY
+
+ 
+
+AS USED IN THIS PROSPECTUS, UNLESS THE CONTEXT OTHERWISE REQUIRES, WE, US, OUR, AND WALLEO INC. REFERS TO WALLEO INC. THE FOLLOWING SUMMARY DOES NOT CONTAIN ALL OF THE INFORMATION THAT MAY BE IMPORTANT TO YOU. YOU SHOULD READ THE ENTIRE PROSPECTUS BEFORE MAKING AN INVESTMENT DECISION TO PURCHASE OUR COMMON STOCK.
+
+ 
+
+WALLEO INC.
+
+ 
+
+Walleo Inc. was incorporated in Nevada on August 9, 2016. We are a startup company and provide distribution and wholesaler services of the furniture fittings manufactured in the People s Republic of China. We distribute furniture fittings to both small and medium-sized vendors. We intend on selling, importing, and marketing our business to European and North American markets. The Company also offers the consulting services in China.
+
+We intend to use the net proceeds from this offering to develop our business operations (See Description of Business and Use of Proceeds ). To implement our plan of operations we require a minimum of $52,000 for the next twelve months as described in our Plan of Operations. There is no assurance that we will generate additional revenue in the first 12 months after completion our offering or ever generate sufficient revenue.
+
+Being a startup company, we have very limited operating history. If we do not generate sufficient revenue, we may need a minimum of $10,000 of additional funding to pay for ongoing SEC filing requirements. We do not currently have any arrangements for additional financing. Our principal executive offices are located at 5th St. Dalong, Bldg., Ste. 14, International Furniture Center, Inner Mongolia, Manzhouli City, China 021400. Our phone number is 00852-8191-1379. 
+
+From inception (August 9, 2016) until the date of this filing, we have had limited operating activities. Our financial statements from inception (August 9, 2016) through October 31, 2017, reports $2,750 in revenue and accumulated deficit $5,099. Our independent registered public accounting firm has issued an audit opinion for Walleo Inc., which includes a statement expressing substantial doubt as to our ability to continue as a going concern. To date, we signed one consulting agreement, we developed our business plan, and working with our potential clients and developing our advertising campaign.
+
+As of the date of this prospectus, there is no public trading market for our common stock and no assurance that a trading market for our securities will ever develop. 
+
+Proceeds from this offering are required for us to proceed with your business plan over the next twelve months. We require minimum funding of approximately $52,000 to conduct our proposed operations and pay all expenses for a minimum period of one year including expenses associated with this offering and maintaining a reporting status with the SEC. If we are unable to obtain minimum funding of approximately $52,000, our business may fail. Since we are presently in a startup stage, we can provide no assurance that we will successfully sell any products or services related to our planned activities.
+
+5 |
+
+THE OFFERING
+
+The Issuer:
+
+ 
+
+Walleo Inc.
+
+Securities Being Offered:
+
+ 
+
+4,000,000 shares of common stock.
+
+Price Per Share:
+
+ 
+
+$0.03
+
+Duration of the Offering:
+
+ 
+
+The shares will be offered for a period of two hundred and forty (240) days from the effective date of this prospectus. The offering shall terminate on the earlier of (i) when the offering period ends (240 days from the effective date of this prospectus), (ii) the date when the sale of all 4,000,000 shares is completed, (iii) when the Board of Directors decides that it is in the best interest of the Company to terminate the offering prior the completion of the sale of all 4,000,000 shares registered under the Registration Statement of which this Prospectus is part. 
+
+ 
+
+Gross Proceeds
+
+ 
+
+If 50% of the shares sold - $60,000
+
+If 75% of the shares sold - $90,000
+
+If 100% of the shares sold - $120,000
+
+Securities Issued and Outstanding:
+
+There are 2,000,000 shares of common stock issued and outstanding as of the date of this prospectus, held by our president, secretary, treasurer and director, Xianfeng Wang.
+
+If we are successful at selling all the shares in this offering, we will have 6,000,000 shares issued and outstanding.
+
+Subscriptions
+
+All subscriptions once accepted by us are irrevocable.
+
+Registration Costs
+
+We estimate our total offering registration costs to be approximately $8,000.
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+Prospectus summary This summary highlights information contained elsewhere in this prospectus and in the documents incorporated by reference. This summary does not contain all of the information you should consider before investing in our common stock. You should read this entire prospectus and the documents incorporated by reference in this prospectus carefully, especially the "Risk factors" section beginning on page 13 of this prospectus and in the documents incorporated by reference into this prospectus and our consolidated financial statements and the related notes incorporated by reference in this prospectus, before making an investment decision. As used in this prospectus and in the documents incorporated by reference, unless the context otherwise requires, references to "we," "us," "our," "the company" and "Dova Pharmaceuticals" refer to Dova Pharmaceuticals, Inc. and our wholly-owned subsidiary, AkaRx, Inc. Overview We are a pharmaceutical company focused on acquiring, developing and commercializing drug candidates for diseases that are treated by specialist physicians, with an initial focus on addressing thrombocytopenia, a disorder characterized by a low blood platelet count. Our drug candidate, avatrombopag, which we acquired from Eisai, Inc., or Eisai, in March 2016, is an orally administered thrombopoietin receptor agonist, or TPO-RA, that we are developing for the treatment of thrombocytopenia. On September 21, 2017, we submitted a new drug application, or NDA, to the U.S. Food and Drug Administration, or FDA, for the treatment of thrombocytopenia in patients with chronic liver disease, or CLD, scheduled to undergo a procedure. The NDA submission was supported by two identically designed pivotal Phase 3 clinical trials, both of which met the primary and secondary endpoints with high statistical significance. The NDA was granted Priority Review by the FDA in November 2017 and the Prescription Drug User Fee Act goal date for an FDA decision is May 21, 2018. We intend to build a hepatology-focused sales organization in the United States and have initiated commercial activities to support the launch of avatrombopag. We also plan to submit a Supplemental New Drug Application, or sNDA, in the second half of 2018 for the treatment of patients with immune thrombocytopenic purpura, or ITP, which is chronic thrombocytopenia that requires continuous treatment. To date, avatrombopag has been evaluated in one Phase 3 clinical trial and two Phase 2 clinical trials for the treatment of adults with chronic ITP. In the Phase 3 trial, the primary efficacy endpoint was achieved with high statistical significance (p 0.0001). Additionally, during the first quarter of 2018, we are initiating a Phase 3 trial in pre-surgery thrombocytopenia, or PST, and in the second quarter of 2018 we plan to initiate a Phase 3 clinical trial for the treatment of patients with chemotherapy-induced thrombocytopenia, or CIT. We believe that avatrombopag's efficacy and safety profile in combination with its convenient oral dosing could provide advantages over other treatments for thrombocytopenia. To date, avatrombopag has been evaluated in more than 20 clinical trials involving more than 1,100 subjects and has been observed to be generally well tolerated. We believe that avatrombopag may have the potential to be used more broadly for patients with thrombocytopenia. Thrombocytopenia and current treatments Thrombocytopenia is characterized by a deficiency of platelets that impairs blood clot formation and increases bleeding risk. Thrombocytopenia is defined as having less than 150,000 platelets per microliter of circulating blood and is diagnosed with a routine blood test. Thrombocytopenia can result in significant FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Table of Contents bleeding risk even in cases of minor injury and increases the risk of excessive, uncontrolled bleeding during or after a medical procedure. Physicians determine how to treat thrombocytopenia, either in the acute setting or chronically, based on a number of factors, including the patient's platelet count, etiology of the underlying cause of thrombocytopenia, duration of required platelet count elevation and the patient's overall health profile. Acute setting We have initially focused on developing avatrombopag for the treatment of thrombocytopenia in CLD patients scheduled to undergo a procedure. CLD involves the progressive destruction and regeneration of the liver over a period of more than six months. Patients with CLD have reduced platelet production when liver cell mass becomes severely damaged. In addition, these patients also have increased trapping of platelets in the spleen and thus even fewer platelets are present in circulating blood. For multiple reasons, these patients often develop thrombocytopenia, which often worsens with the severity of the liver disease. Approximately 1.1 million CLD patients in the United States are affected by thrombocytopenia. Patients with CLD undergo numerous non-emergent medical procedures for diagnosis and treatment of their disease, including liver biopsies, fluid removal, liver transplantation and endoscopy. Multiple medical professional associations have guidelines that recommend that patients have at least 50,000 platelets per microliter of circulating blood prior to minimally to moderately invasive medical procedures. Approximately 70,000 CLD patients in the United States have a platelet count less than 50,000 platelets per microliter of circulating blood. We estimate that approximately 60% of these 70,000 CLD patients are treated with platelet transfusions in order to raise platelet counts in advance of medical procedures. These patients generally undergo one to three medical procedures per year. More broadly outside of this CLD patient population, approximately 125,000 platelet transfusions are administered annually for more invasive planned surgical procedures for thrombocytopenia patients irrespective of disease etiology. Additionally, approximately 125,000 platelet transfusions are administered for patients with chemotherapy-induced thrombocytopenia, or CIT. These are two follow-on indications we are pursuing. Despite being the standard of care, platelet transfusions are associated with limitations that impact their use including variable efficacy, risk of transfusion reactions, antibody development in up to 50% of patients, short duration of effect of transfused platelets, limited supply and inconvenience of administration. There is no drug treatment approved by the FDA or the European Medicines Agency, or EMA, for thrombocytopenia in patients with CLD in the acute setting prior to a medical procedure. Chronic setting Chronic treatment of thrombocytopenia involves continuous treatment of the disorder. The substantial majority of patients who require chronic treatment suffer from immune thrombocytopenic purpura, or ITP. First-line therapy for ITP consists of corticosteroids or intravenous immunoglobulin, or IVIG. In addition to off-label rituximab and splenectomy, currently marketed TPO-RAs are used as a second-line treatment of ITP. We estimate that chronic ITP affects approximately 60,000 adults in the United States, of which up to 27,000 may require continuous treatment beyond corticosteroids and IVIG. However, we believe these available treatments have limitations that impact their use, such as limited efficacy, risk to patient safety, patient non-compliance or inconvenience. Dova Pharmaceuticals, Inc. (Exact name of registrant as specified in its charter) Table of Contents Because of the limitations of current therapies used for thrombocytopenia in the acute and chronic setting, we believe there remains a significant unmet need for a treatment that demonstrates reliable and durable effectiveness and a favorable safety profile, that can be conveniently administered and potentially reduce the burden on patients. Our drug candidate We believe our drug candidate, avatrombopag, has the potential to be a first-in-class drug treatment of thrombocytopenia in the acute setting and a best-in-class treatment of thrombocytopenia in the chronic setting. Avatrombopag is an orally administered, small molecule TPO-RA, which is intended to address the limitations of other existing treatments for thrombocytopenia. Avatrombopag is designed to mimic the effects of thrombopoietin, or TPO, in vitro and in vivo. TPO is a hormone produced in the liver and kidneys that binds to its receptor, c-Mpl (myeloproliferative leukemia protein). Following TPO receptor binding, intracellular signaling leads to megakaryocyte growth and maturation, which results in increased platelet production. TPO-RAs, like TPO, stimulate the activation, proliferation and maturation of megakaryocytes, resulting in an increase in circulating platelets. Avatrombopag is a highly specific TPO-RA as it binds to the TPO receptor at a distinct site from native TPO, leaving the TPO receptor accessible to native TPO, enabling avatrombopag to have an additive effect on platelet production. While TPO-RAs are a validated class of therapy for the chronic treatment of thrombocytopenia, they have not been approved for the acute treatment of thrombocytopenia due, in part, to the risk of side effects, including portal vein thrombosis, or PVT. In CLD patients, who often have excessive accumulation of scar tissue in the liver, portal blood flow may be significantly lower than normal putting the patient at an increased risk of developing PVT. Further, the use of some TPO-RAs may lead to an even greater risk of PVT in these patients as large increases in platelet counts can give rise to platelet accumulation and cause further blockage of the portal vein. We believe avatrombopag's pharmacokinetic/pharmacodynamic, or PK/PD, profile and metabolic characteristics are the attributes that differentiate it from the currently marketed TPO-RAs and could make it a compelling treatment option for patients with thrombocytopenia in the acute setting. In clinical trials, avatrombopag has been observed to have a less variable PK/PD profile than other TPO-RAs. In addition, avatrombopag is not extensively metabolized approximately 40% to 50% is metabolized and is mostly eliminated away from the biliary route. We believe these metabolic characteristics and this PK/PD profile further reduce the risk of adverse effects, including thromboembolic events such as PVTs, in patient populations that are liver compromised, such as those with CLD. In the chronic setting, we believe that approved TPO-RAs suffer from limitations impacting their broader use such as the risk of severe hepatotoxicity, need for subcutaneous administration, and impact of food on drug absorption. We believe avatrombopag has the potential to provide an effective, predictable, convenient and safe alternative to currently available TPO-RAs. Clinical trials In the first quarter of 2017, we completed two identically designed Phase 3 pivotal clinical trials, ADAPT 1 and ADAPT 2, in which all primary and secondary endpoints were met with high statistical significance. The primary endpoint for both studies was the percentage of CLD patients with thrombocytopenia scheduled to undergo a procedure, who did not require a platelet transfusion or any rescue procedure for bleeding at each of two doses of avatrombopag compared to placebo. In each trial, the percentage of subjects in each Table of Contents of the two avatrombopag dosing cohorts requiring a platelet transfusion or a rescue procedure for bleeding was statistically significantly lower compared to placebo (across all cohorts, p-values ranging from p 0.0001 to p=0.0006). We also observed a larger percentage of avatrombopag-treated subjects who achieved the target platelet count of greater than or equal to 50,000 platelets per microliter of circulating blood on the procedure day and greater changes in platelet counts from baseline to procedure day, which were statistically significant improvements over placebo. We are initially developing avatrombopag for the acute treatment of thrombocytopenia in this population of patients with CLD scheduled to undergo a procedure. In addition to ADAPT 1 and ADAPT 2, avatrombopag has also been evaluated in one Phase 3 trial in adults with chronic ITP, five Phase 2 trials in various thrombocytopenia patient populations, 15 Phase 1 trials and numerous preclinical studies, and has been observed to be generally well tolerated in over 1,100 patients. Based on the safety and efficacy profile observed in these trials and studies, we believe avatrombopag has the potential for use in the following acute settings: a broader population of thrombocytopenia patients regardless of disease etiology undergoing a broader set of medical procedures, including, for example, joint replacements, for which we are initiating a Phase 3 clinical trial in the first quarter of 2018, and patients who develop thrombocytopenia after receiving chemotherapy, for which we plan to initiate a Phase 3 clinical trial in the second quarter of 2018. In the chronic setting, we believe avatrombopag has the potential to treat adult patients with chronic ITP based on the results from a completed Phase 3 trial, and we plan to submit a sNDA to the FDA in the second half of 2018 for the treatment of patients with ITP. Pipeline summary and addressable market The following table summarizes our lead development programs. We hold the worldwide rights to avatrombopag for these indications. We believe that the total addressable market for avatrombopag is approximately $2.5 billion in the United States, with an approximately $800 million addressable market for our first indication, the acute treatment of thrombocytopenia in patients with CLD scheduled to undergo a procedure, and an approximately $1.7 billion addressable market for our follow-on indications depicted in the table. Furthermore, we believe that avatrombopag for the treatment of patients with chronic ITP alone has an approximately $600 million addressable market in the United States and an approximately $1.2 billion worldwide addressable market. 240 Leigh Farm Road, Suite 245 Durham, North Carolina 27707 (919) 748-5975 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) Table of Contents Management Our management team has extensive experience ranging from identifying and acquiring drug candidates, drug development and global registrations through global commercial launches. Further, we are being supported by a leading group of biotech investors including PBM Capital Investments, LLC and Perceptive Advisors. Our strategy We are a pharmaceutical company focused on acquiring, developing and commercializing drug candidates for diseases that are treated by specialist physicians, with an initial focus on addressing thrombocytopenia. To achieve our goals, we are pursuing the following strategies: Advance the development of our late-stage drug candidate, avatrombopag, for regulatory approval in the United States and Europe. In the first quarter of 2017, we completed two identically designed pivotal Phase 3 clinical trials for avatrombopag in patients with CLD undergoing a procedure. Based on these results, a NDA was submitted to the FDA for this initial indication on September 21, 2017. The NDA was granted Priority Review by the FDA in November 2017 and the Prescription Drug User Fee Act goal date for an FDA decision is May 21, 2018. In addition, as our Phase 3 trials were also designed to be pivotal trials in Europe, we intend to submit a Marketing Authorization Application, or MAA, to the European's Medicine's Agency, or EMA, in the first half of 2018. Maximize the commercial potential of avatrombopag. Our intent is to initially build a hepatology-focused sales organization in the United States. We have begun to execute this strategy by hiring key executives with extensive U.S. commercial launch experience. In addition to the sales force, we intend to support the launch of avatrombopag with a dedicated team of reimbursement support case managers as well as a network of specialty pharmacy service providers that will distribute the drug directly to the patient's home. In the future, we also may selectively partner with leading companies that we believe can contribute additional resources and know-how for the development and commercialization of avatrombopag for additional indications and geographic regions, further enhancing the value of our drug candidate. Expand the breadth of indications for avatrombopag in other patient populations with thrombocytopenia. We believe avatrombopag has the potential to be used more broadly for patients with thrombocytopenia in other acute settings and chronically. During the first quarter of 2018, we are initiating a Phase 3 trial in PST, which will include patients with thrombocytopenia regardless of disease etiology undergoing surgeries that require a platelet count of more than 100,000 platelets per microliter of circulating blood prior to surgery. Additionally, based on the results of one completed Phase 3 trial and two Phase 2 trials evaluating the use of avatrombopag for the treatment of adults with chronic ITP and recent discussions with the FDA, we anticipate submitting a sNDA for avatrombopag in the second half of 2018 for this indication. We also plan to initiate a Phase 3 clinical trial in the second quarter of 2018 for the treatment of patients with CIT. Employ a value-driven approach to build a pipeline of drug candidates. Using a similar approach to our identification and acquisition of avatrombopag, we intend to employ a value-driven strategy to identify, acquire, develop and commercialize drug candidates for diseases that are treated by specialist physicians. Maintain and strengthen our intellectual property portfolio. Our intellectual property strategy aims to protect and control the development and commercialization of our drug candidates. Our owned and Alex Sapir President and Chief Executive Officer Dova Pharmaceuticals, Inc. 240 Leigh Farm Road Suite 245 Durham, NC 27707 (919) 748-5975 (Name, address, including zip code, and telephone number, including area code, of agent for service) Table of Contents in-licensed patents for avatrombopag provide us with composition of matter and method of use exclusivity with respect to avatrombopag in the United States, including a composition of matter patent that expires in 2025, with possible patent term extension up to 2029. We also hold patents and applications in major world markets with respect to avatrombopag, which are projected to expire between 2023 and 2029, including available patent term adjustment and patent term extension. We will seek to broaden the scope of and increase the geographic reach of our patent protection throughout the world. Risks associated with our business Our ability to implement our business strategy is subject to numerous risks that you should be aware of before making an investment decision. See the "Risk Factors" section of this prospectus and in the documents incorporated by reference herein for a discussion of factors you should consider carefully before deciding to invest in our common stock. These risks include the following, among others: We have a limited operating history and have never generated any product revenues. We expect to incur losses over the next several years and may never achieve or maintain profitability. We may require additional capital to fund our operations, and if we fail to obtain necessary financing, we may not be able to complete the development and commercialization of our only current drug candidate, avatrombopag and any other potential drug candidates in the future. We may be required to make significant payments in connection with our acquisition of avatrombopag from Eisai and our failure to make these payments may adversely affect our ability to progress our development programs. Our consolidated financial statements have been prepared assuming that we will continue as a going concern. We are heavily dependent on the success of avatrombopag and if avatrombopag does not receive regulatory approval or is not successfully commercialized, our business will be harmed. If we are not able to obtain required regulatory approvals, we will not be able to commercialize avatrombopag, and our ability to generate revenue will be materially impaired. Even if we obtain FDA approval for avatrombopag in the United States, we may never obtain approval for or commercialize it in any other jurisdiction, which would limit our ability to realize its full market potential. Even if avatrombopag receives marketing approval, it may fail to achieve market acceptance by physicians, patients, third-party payors or others in the medical community necessary for commercial success. We do not have our own manufacturing capabilities and will rely on third parties to produce clinical and commercial supplies of avatrombopag and any future drug candidate. We rely on our license agreement with Astellas to provide rights to the core intellectual property relating to avatrombopag. Any termination or loss of rights under that license agreement would have a material adverse effect on our development and commercialization of avatrombopag. We currently have a limited number of employees, and we rely on Eisai and PBM Capital Group, LLC to provide various administrative, research and development and other services. Copies to: Divakar Gupta Darren DeStefano Mark Ballantyne Cooley LLP 1114 Avenue of the Americas New York, New York 10036 (212) 479-6000 Deanna Kirkpatrick Davis Polk & Wardwell LLP 450 Lexington Avenue New York, New York 10017 (212) 450-4000 Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act. Large accelerated filer Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company Emerging growth company If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. Table of Contents If we are unable to obtain and maintain patent protection for avatrombopag or any future drug candidate, or if the scope of the patent protection obtained is not sufficiently broad, our competitors could develop and commercialize technology and products similar or identical to ours, which could have a material adverse effect on our ability to successfully commercialize our technology and drug candidates. Concentration of ownership of our common stock among our existing executive officers, directors and principal stockholders may prevent new investors from influencing significant corporate decisions. Implications of being an emerging growth company We qualify as an "emerging growth company" as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. An emerging growth company may take advantage of relief from certain reporting requirements and other burdens that are otherwise applicable generally to public companies. These provisions include: an exception from compliance with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, as amended, or the Sarbanes-Oxley Act; reduced disclosure about our executive compensation arrangements in our periodic reports, proxy statements and registration statements; and exemptions from the requirements of holding non-binding advisory votes on executive compensation or golden parachute arrangements. We may take advantage of these provisions until the earlier of December 31, 2022 or such time that we no longer qualify as an emerging growth company. We would cease to qualify as an emerging growth company if we have more than $1.07 billion in annual revenue, we are deemed to be a "large accelerated filer" under the rules of the U.S. Securities and Exchange Commission, or SEC, which means the market value of our common stock that is held by non-affiliates exceeds $700 million as of the prior June 30th, or we issue more than $1.0 billion of non-convertible debt over a three-year period. We may choose to take advantage of some but not all of these reduced reporting burdens. For example, we may take advantage of the exemption from auditor attestation on the effectiveness of our internal control over financial reporting. To the extent that we take advantage of these reduced reporting burdens, the information that we provide stockholders may be different than you might obtain from other public companies in which you hold equity interests. In addition, under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards until such time as those standards apply to private companies. We have irrevocably elected not to avail ourselves of this exemption from new or revised accounting standards and, therefore, we will be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies. Our corporate information We were originally formed as a limited liability company under the laws of the state of Delaware in March 2016 under the name PBM AKX Holdings, LLC. In June 2016, we amended our certificate of formation to change our name to Dova Pharmaceuticals, LLC. In September 2016, we converted from a limited liability company to a corporation, Dova Pharmaceuticals, Inc. Our principal executive offices are located at 240 Leigh Farm Road, Suite 245, Durham, NC 27707, and our telephone number is (919) 748-5975. Our CALCULATION OF REGISTRATION FEE Title of each class of securities to be registered Amount to be registered(1) Proposed maximum offering price per share Proposed maximum aggregate offering price(2) Amount of registration fee Common Stock, $0.001 par value per share 2,875,000 $31.15 $89,556,250 $11,149.76 (1) Includes shares the underwriters have the option to purchase. (2) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(c) under the Securities Act on the basis of the average of the high and low prices of the Registrant's common stock as reported on the NASDAQ Global Market on February 14, 2018. The registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment that specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. Table of Contents website address is www.dova.com. The information contained in, or accessible through, our website is not incorporated by reference into this prospectus, and you should not consider any information contained in, or that can be accessed through, our website as part of this prospectus or in deciding whether to purchase our common stock. We own various U.S. federal trademark applications and unregistered trademarks, including our company name. All other trademarks or trade names referred to in this prospectus are the property of their respective owners. Solely for convenience, the trademarks and trade names in this prospectus are referred to without the symbols and , but such references should not be construed as any indication that their respective owners will not assert, to the fullest extent under applicable law, their rights thereto. Subject to completion, dated February 20, 2018 The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. 2,500,000 Shares Common Stock Table of Contents The offering Common stock offered by us 2,500,000 shares Common stock to be outstanding immediately after this offering 28,152,457 shares Option to purchase additional shares We have granted the underwriters an option for a period of 30 days from the date of this prospectus to purchase a maximum of 375,000 additional shares of common stock. Use of proceeds We estimate that the net proceeds to us from this offering, after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us, will be $80.9 million, or $93.1 million if the underwriters exercise their option to purchase additional shares in full, based on an assumed public offering price of $34.68 per share, the last reported sales price of our common stock on The NASDAQ Global Market on February 16, 2018. We anticipate that the majority of the net proceeds from this offering will be used to fund the commercial launch of avatrombopag, if approved, to fund the initiation of the Phase 3 clinical trial of avatrombopag for the treatment of a broader population of patients with thrombocytopenia undergoing surgery, to fund the initiation of the Phase 3 clinical trial of avatrombopag for the treatment of patients with CIT, to fund the sNDA submission for avatrombopag for the treatment of patients with ITP, and to repay a portion of our obligations under the Eisai note. The remainder may be used for other general corporate purposes, including general and administrative expenses and working capital. See "Use of proceeds" on page 17.
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diff --git a/parsed_sections/prospectus_summary/2018/CIK0001687796_winnan_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001687796_winnan_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..fd920ff729c2945d3b4bea6817fba911fc93119c
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/CIK0001687796_winnan_prospectus_summary.txt
@@ -0,0 +1,77 @@
+PROSPECTUS SUMMARY
+
+ 
+
+AS USED IN THIS PROSPECTUS, UNLESS THE CONTEXT OTHERWISE REQUIRES, WE, US, OUR, AND WINNAN CORP. REFERS TO WINNAN CORP. THE FOLLOWING SUMMARY DOES NOT CONTAIN ALL OF THE INFORMATION THAT MAY BE IMPORTANT TO YOU. YOU SHOULD READ THE ENTIRE PROSPECTUS BEFORE MAKING AN INVESTMENT DECISION TO PURCHASE OUR COMMON STOCK.
+
+ 
+
+WINNAN CORP.
+
+ 
+
+Winnan Corp. was incorporated in Nevada on March 22, 2016. We are an start-up company engaged in filming various events and video production. We expect our services to be demanded by common public, as well as by small or medium-sized business entities. We intend to enhance the quality of our content and develop into a filming and production studio of a full cycle being able to offer and deliver services in filming, editing and other post-production services.
+
+We intend to use the net proceeds from this offering to develop our business operations (See Description of Business and Use of Proceeds ). To implement our plan of operations we require a minimum of $68,000 for the next twelve months as described in our Plan of Operations. There is no assurance that we will generate any revenue in the first 12 months after completion our offering or ever generate any revenue.
+
+Being a start-up company, we have very limited operating history. If we do not generate any revenue we may need a minimum of $10,000 of additional funding to pay for ongoing SEC filing requirements. We do not currently have any arrangements for additional financing. Our principal executive offices are located at 831 Laca St., Dayton, NV 89403. Our phone number is (925) 420-4700. 
+
+From inception (March 22, 2016) until the date of this filing, we have had limited operating activities. Our financial statements from inception (March 22, 2016) through November 30, 2017, reports no revenue and a net loss of $719. Our independent registered public accounting firm has issued an audit opinion for Winnan Corp., which includes a statement expressing substantial doubt as to our ability to continue as a going concern. To date, we have established our Company, developed our business plan, developed business-model of our company and have been looking for the potential clients. 
+
+As of the date of this prospectus, there is no public trading market for our common stock and no assurance that a trading market for our securities will ever develop. 
+
+Proceeds from this offering are required for us to proceed with your business plan over the next twelve months. We require minimum funding of approximately $68,000 to conduct our proposed operations and pay all expenses for a minimum period of one year including expenses associated with this offering and maintaining a reporting status with the SEC. If we are unable to obtain minimum funding of approximately $68,000, our business may fail. Since we are presently in the start-up of our business, we can provide no assurance that we will successfully sell any products or services related to our planned activities.
+
+5 | Page
+
+THE OFFERING
+
+The Issuer:
+
+ 
+
+Winnan Corp.
+
+Securities Being Offered:
+
+ 
+
+8,000,000 shares of common stock.
+
+Price Per Share:
+
+ 
+
+$0.02
+
+Duration of the Offering:
+
+ 
+
+The shares will be offered for a period of two hundred and forty (240) days from the effective date of this prospectus. The offering shall terminate on the earlier of (i) when the offering period ends (240 days from the effective date of this prospectus), (ii) the date when the sale of all 8,000,000 shares is completed, (iii) when the Board of Directors decides that it is in the best interest of the Company to terminate the offering prior the completion of the sale of all 8,000,000 shares registered under the Registration Statement of which this Prospectus is part. 
+
+ 
+
+Gross Proceeds
+
+ 
+
+If 50% of the shares sold - $80,000
+
+If 75% of the shares sold - $120,000
+
+If 100% of the shares sold - $160,000
+
+Securities Issued and Outstanding:
+
+There are 8,000,000 shares of common stock issued and outstanding as of the date of this prospectus, held by our sole officer and director, Dmitrii Klevchick. 
+
+If we are successful at selling all the shares in this offering, we will have 16,000,000 shares issued and outstanding.
+
+Subscriptions
+
+All subscriptions once accepted by us are irrevocable.
+
+Registration Costs
+
+We estimate our total offering registration costs to be approximately $12,000.
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diff --git a/parsed_sections/prospectus_summary/2018/CIK0001687999_emr_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001687999_emr_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..ecd0e908304e651e19aba8e4a884d4195c08fbaf
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/CIK0001687999_emr_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights certain information contained elsewhere in this prospectus. Because it is a summary, it may not contain all of the information that is important to you. Before investing in our common stock, you should read this entire prospectus carefully, especially the sections entitled
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diff --git a/parsed_sections/prospectus_summary/2018/CIK0001688470_imperial_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001688470_imperial_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..fd809aa04210cbbeaa4694dfc14929f192c2ce51
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/CIK0001688470_imperial_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY The following summary is qualified in its entirety by, and should be read in conjunction with, the more detailed information and financial statements appearing elsewhere in this prospectus. In addition to this summary, we urge you to read the entire prospectus carefully, especially the risks of investing in the ordinary shares discussed under "Risk Factors," before deciding whether to buy the ordinary shares. This prospectus contains information from a report commissioned by us dated June, 2015, as updated from time to time, by the Cuningham Group ("Cuningham"), an independent architectural design firm. Our Mission We seek to provide premium services to customers in the hospitality and entertainment businesses. Building on our current golf operation, we intend to expand our services to include leisure vacations, business travel, retail and dining segments. Our goal is to operate one of the largest resorts in Taiwan. Our Business We were incorporated in the British Virgin Islands on September 23, 2016. We are a development stage company, and we currently manage and operate a golf course known as the Royal Country Club, located in Taiwan on a parcel of land of which Yao-Teh International Recreation Co., Ltd., ("Yao-Teh") and Ta-Teh-Fu Co., Ltd. ("Ta-Teh-Fu"), two of our Subsidiaries, are the current record owners. Occupying approximately 295 acres of land, the Royal Country Club features a renovated18-hole golf course designed by Robert T. Jones, a world-class golf architect, a snack bar providing indigenous Hakka food, various amenities, such as locker and shower rooms, and a retail store that offers golf equipment and accessories. A majority of our current income is derived from the management and operations of the Royal Country Club. We aim to construct, develop and operate the "Royal Country Club Spa & Resort," a premier resort, which we intend to complete in two phases, Phase I and Phase II. Phase I will include construction of a premium hotel that will feature a full service hot spring spa and outdoor swimming pools, as well as a courtyard garden and a river view that will house water falls, restaurants and bars. Further, we envision, although we do not guarantee, that during Phase I, we will also complete the construction and development of a natural hot spring spa, which will be connected to the main hotel area by a bridge. We intend, although cannot guarantee, to finish Phase I by the end of 2019 and expect to be fully operational in the fourth quarter of 2021. We have applied for the necessary licenses to start the planned construction. As of the date of this prospectus, we received approvals to start Phase II construction from The Environmental Protection Administration of ROC, Ministry of the Interior of ROC and Taiwan Miaoli Irrigation Association. We anticipate receiving the approval from the Miaoli County in three to six months from the date of this prospectus for the Phase II construction and approximately three months thereafter to receive the land reclassification approval for the land of Phase I. However, we cannot provide any guaranty that we will receive approvals from the Miaoli County in a timely manner or at all in spite that the federal agencies granted their approvals. According to our current business plan, we anticipate to spend approximately $50 million to complete Phase I and approximately $150 million for the completion of Phase II. During Phase II, we anticipate constructing and developing a second hotel, three upscale restaurants, pools and water slides, a Japanese garden, a multi-purpose center for weddings and conferences and a shopping and entertainment village and other venues or facilities for recreational purposes. The garden will be designed and arranged to recreate a scene reflecting Japan in the 17th century. We believe that upon completion of Phase II, this Japanese garden will be the largest garden in the world, occupying approximately 90 hectares (approximately 222.4 acres) of land. On September 11, 2015, the Company and InterContinental Hotels Group (Shanghai) Ltd. ("IHG") entered into a binding letter of intent, pursuant to which during the pre-commencement period, IHG has agreed to provide technical services to us, including a review of the hotel building plan for Phase I and Phase II in accordance with IHG s Holiday Inn Standards. We have paid the first installment of the pre-commencement management fee and IHG has been providing assistance and guidance on our hotel plans. After the completion of land reclassification, we anticipate entering into a formal management contract with IHG, under which IHG will provide hotel management services in exchange for a set of fees, including incentive management fees, business planning application cost, revenue & channel management for hire service fee, licensing fee and system fund contributions. Bird s Eye View of The Royal Country Club Resort & Spa when Phase II is completed Phase II: The Royal Country Club Resort & Spa, Shopping & Entertainment Village and Clubhouse We expect that upon the completion of the two phases described above, we will begin to generate higher revenues. The mockup of the natural hot spring spa that is planned to be built in Phase I Upon completion of the first two phases discussed above, we plan to: TABLE OF CONTENTS Page Prospectus Summary 2
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diff --git a/parsed_sections/prospectus_summary/2018/CIK0001689813_biohaven_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001689813_biohaven_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..e05dd20b929cc7e3b4f64651bc9c90c7ec8e91a4
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/CIK0001689813_biohaven_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY The following summary highlights some of the information contained elsewhere in or incorporated by reference into this prospectus. Because this is only a summary, however, it does not contain all of the information that may be important to you. You should carefully read this entire prospectus, including the information incorporated by reference herein, especially the matters discussed under Risk Factors beginning on page 17 of this prospectus and the Risk Factors section of our Quarterly Report on Form 10 Q for the quarterly period ended September 30, 2018, along with our consolidated financial statements and notes thereto, before making an investment decision. All references to Biohaven, we, us, our or the Company mean Biohaven Pharmaceutical Holding Company Ltd. and its subsidiaries, except where it is made clear that the term means only the parent company. Biohaven Pharmaceutical Holding Company Ltd. Overview We are a clinical stage biopharmaceutical company with a portfolio of innovative, late stage product candidates targeting neurological diseases, including rare disorders. Our product candidates are small molecules based on three distinct mechanistic platforms calcitonin gene related peptide, or CGRP, receptor antagonists, glutamate modulators and myeloperoxidase, or MPO, inhibition which we believe have the potential to significantly improve existing treatment approaches across a diverse set of neurological indications with high unmet need in both large markets and orphan indications. Our programs include the following: Product Platform Indication Development Stage Rimegepant CGRP Acute treatment and prevention of migraine Three pivotal Phase 3 trials for acute treatment complete; long term safety ongoing. Trial for prevention initiated in the fourth quarter of 2018. NDA submission for acute treatment anticipated in the first half of 2019. BHV 3500 CGRP Acute treatment and prevention of migraine Phase 1 trial initiated in fourth quarter of 2018. Phase 2/3 trial expected to begin in 2019. Troriluzole Glutamate Ataxias Phase 2/3 trial in SCA complete; Extension trial ongoing. Second Phase 2/3 trial expected to begin in the first quarter of 2019. Troriluzole Glutamate Obsessive Compulsive Disorder Phase 2/3 trial ongoing. Troriluzole Glutamate Alzheimer s disease Phase 2/3 trial ongoing. Troriluzole Glutamate Generalized Anxiety Disorder Phase 2/3 trial expected to begin first quarter of 2019 BHV 0223 Glutamate Amyotrophic Lateral Sclerosis NDA filed with FDA in fourth quarter of 2018. PDUFA date of July 21, 2019. BHV 5000 Glutamate Neuropsychiatric disorders Phase 1 trial completed 2018; Additional nonclinical studies and Phase 1 trial anticipated for 2019. BHV 3241 MPO Neuroinflammation Phase 3 trial for the treatment of multiple system atrophy expected to begin in mid 2019. The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. PRELIMINARY PROSPECTUS (Subject to Completion) Dated December 10, 2018 3,000,000 Shares COMMON SHARES Biohaven Pharmaceutical Holding Company Ltd. is offering 3,000,000 of its common shares. Our common shares are listed on the New York Stock Exchange under the symbol BHVN. The last reported sale price of our common shares on the New York Stock Exchange on December 7, 2018 was $40.67 per share. The final public offering price will be determined through negotiation between us and the lead underwriters in the offering and the recent market price used throughout the prospectus may not be indicative of the final offering price. We are an emerging growth company as that term is used in the Jumpstart Our Business Startups Act of 2012 and, as such, have elected to comply with certain reduced public company reporting requirements for this prospectus and future filings. See Prospectus Summary Implications of Being an Emerging Growth Company. Investing in our common shares involves risks. Please see Risk Factors beginning on page 17 as well as in the documents incorporated by reference into this prospectus. PRICE $ A SHARE Price to Public Underwriting Discounts and Commissions(1) Proceeds, Before Expenses, to Biohaven Per Share $ $ $ Total $ $ $ ________________ (1) We have agreed to reimburse the underwriters for certain expenses in connection with this offering. See Underwriting in this prospectus for a description of compensation payable to the underwriters. We have granted the underwriters an option to purchase up to 450,000 additional common shares at the public offering price less the underwriting discount. The underwriters can exercise this option at any time within 30 days after the date of this prospectus. The underwriters expect to deliver the common shares to purchasers on or about , 2018. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense. GOLDMAN SACHS & CO. LLC PIPER JAFFRAY , 2018 CGRP Platform In July 2016, we acquired exclusive, worldwide rights to our CGRP receptor antagonist platform, including rimegepant and BHV 3500, through a license agreement with Bristol Myers Squibb Company, or BMS, which was amended in March 2018. Rimegepant Study 301/Study 302 The most advanced product candidate from our CGRP receptor antagonist platform is rimegepant, an orally available, potent and selective small molecule human CGRP receptor antagonist that we are developing for the acute and preventive treatment of migraine. In March 2018, we announced positive topline data from our first two pivotal Phase 3 trials (Study 301 and Study 302) for the acute treatment of migraine. In each trial, treatment with a single 75 mg dose of rimegepant met the co primary efficacy endpoints of the trial, which were superior to placebo, at two hours post dose, on measures of pain freedom and freedom from the patient s most bothersome symptom. In addition to achieving both co primary endpoints in each of the trials, rimegepant also was observed to be generally well tolerated in the trials, with a safety profile similar to placebo. Study 303 On December 3, 2018, we announced positive topline data from a randomized, controlled Phase 3 clinical trial (BHV3000-303 or Study 303) evaluating the efficacy and safety of our Zydis orally dissolving tablet (ODT) formulation of rimegepant for the acute treatment of migraine. In Study 303, rimegepant Zydis ODT statistically differentiated from placebo on the two co-primary endpoints as well as the first 21 consecutive primary and secondary outcome measures that were pre-specified in hierarchical testing. Consistent with the two previous Phase 3 clinical trials, Study 303 met its co-primary endpoints of pain freedom and freedom from the most bothersome symptom (MBS) at 2 hours using a single dose (Table 1). Importantly, patients treated with the rimegepant Zydis ODT formulation began to numerically separate from placebo on pain relief as early as 15 minutes, and this difference was statistically significant at 60 minutes (p < 0.0001) (Figure 1). Additionally, a significantly greater percentage of patients treated with rimegepant Zydis ODT returned to normal functioning within 60 minutes post-dose as compared to placebo (p < 0.0025). Rimegepant Zydis ODT was superior to placebo on the endpoints of sustained freedom from pain (p < 0.001), sustained pain relief (p < 0.001), sustained freedom from the most bothersome symptom (p < 0.0018), and sustained freedom from functional disability (p < 0.0001) from 2 to 48 hours. Superiority over placebo was also demonstrated in multiple other secondary endpoints. The vast majority of rimegepant Zydis ODT treated patients (86%) did not use any rescue medications. Table 1: Met Co-Primary Endpoints of Pain Freedom & Freedom from Most Bothersome Symptom 2 Hour Endpoint Rimegepant (N=669) Placebo (N=682) Difference p-value Pain Freedom 21.2 % 10.9 % 10.3 % < 0.0001 Freedom from MBS (1) 35.1 % 26.8 % 8.3 % 0.0009 ________________ (1) Most Bothersome Symptom of Photophobia, Phonophobia or Nausea TABLE OF CONTENTS PAGE PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2018/CIK0001690769_alta-mesa_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001690769_alta-mesa_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/CIK0001690769_alta-mesa_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2018/CIK0001693664_armo_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001693664_armo_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..454c593286068585f6ebc8a38dddcf1224ecaab3
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/CIK0001693664_armo_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights certain information contained elsewhere in this prospectus. This summary is not complete and does not contain all of the information you should consider in making your investment decision. You should read the entire prospectus carefully before making an investment in our common stock. You should carefully consider, among other things, our financial statements and the related notes and the sections titled Risk Factors and Management s Discussion and Analysis of Financial Condition and Results of Operations included elsewhere in this prospectus. Except as otherwise indicated herein or as the context otherwise requires, references in this prospectus to ARMO, the company, we, us, and our refer to ARMO BioSciences, Inc. Unless otherwise indicated, all data are as of or through September 30, 2017. Overview We are a late-stage immuno-oncology company that is developing a pipeline of novel, proprietary product candidates that activate the immune system of cancer patients to recognize and eradicate tumors. Our vision is to improve and prolong the lives of cancer patients by advancing and expanding the field of immuno-oncology through novel combinations and treatment sequences of our pipeline products with standard of care chemotherapies and checkpoint inhibitors or with other emerging immunotherapies that elicit complementary and synergistic treatment effects. To achieve this vision, we have assembled a seasoned and talented group of industry veterans, scientists, clinicians, key opinion leaders and investors. Our lead product candidate, AM0010 (pegilodecakin) is a long-acting form of human Interleukin-10 (IL-10). IL-10 is a naturally occuring immune cell growth factor in humans that stimulates the survival, expansion and tumor killing (cytotoxic) capacity of a particular white blood cell of the immune system, called the CD8+ T cell. We have focused on CD8+ T cells because these cells have been shown to recognize and kill cancer cells. An abundance of tumor-infiltrating CD8+ T cells improves the prognosis and lengthens the survival of cancer patients. AM0010 has been advanced into late-stage clinical development as an immuno-oncology drug based on the results of our Phase 1/1b clinical trial in over 350 cancer patients across more than 14 different types of cancer and many treatment settings. In this ongoing Phase 1/1b clinical trial, we have observed objective tumor responses, including partial and complete responses. AM0010 was well-tolerated in patients as a single agent and in combination with chemotherapeutic drugs or immune checkpoint inhibitors, nivolumab and pembrolizumab, which bind to a protein called PD-1. Based on the results from this Phase 1/1b clinical trial, the initial focus of our late-stage AM0010 development program is pancreatic ductal adenocarcinoma (PDAC), non-small cell lung cancer (NSCLC) and renal cell carcinoma (RCC). We have initiated SEQUOIA, a Phase 3 randomized pivotal clinical trial in PDAC patients, which compares a combination of AM0010 and FOLFOX to FOLFOX alone, as a second-line therapy after tumor progression during or following a gemcitabine-containing regimen. We initiated this trial in the fourth quarter of 2016, enrolled the first patients in early 2017 and we expect the first interim analysis to be conducted in early 2018. The second interim analysis, which could provide the basis for a Biologics License Application (BLA) submission to the Food and Drug Administration (FDA), is expected to be conducted in 2020. Depending on the outcome of this trial, we may expand the SEQUOIA program and further develop this combination or potentially combinations of AM0010 and other chemotherapies, including gemcitabine-based chemotherapies, as a first-line therapy for pancreatic cancer. The FDA and European Commission (EC) have granted AM0010 Orphan Drug designation for the treatment of pancreatic cancer. Orphan Drug designation is a status granted to a product candidate for the treatment of a rare disease (with a population of less than 200,000) that qualifies the drug for incentives if regulatory approval for the drug is achieved. The FDA also granted Fast Track designation for AM0010 in combination with FOLFOX as a second-line therapy in patients with pancreatic cancer. Fast Track designation is a designation granted to drugs that demonstrate the ability to treat a serious or life threatening disease and provides the designee with the opportunity for more frequent Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and we are not soliciting offers to buy these securities in any jurisdiction where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED JANUARY 16, 2018 PRELIMINARY PROSPECTUS 6,666,667 Shares ARMO BioSciences, Inc. Common Stock We are offering 6,666,667 shares of our common stock to be sold in this offering. This is our initial public offering of our common stock. Prior to this offering, there has been no public market for our common stock. The estimated initial public offering price is between $14.00 and $16.00 per share. We have applied to list our common stock on the Nasdaq Global Select Market under the symbol ARMO . Certain of our existing stockholders, including stockholders affiliated with certain of our directors, have indicated an interest in purchasing up to an aggregate of approximately $40.0 million in shares of our common stock in this offering at the initial public offering price. However, because indications of interest are not binding agreements or commitments to purchase, the underwriters could determine to sell more, less or no shares to any of these potential investors and any of these potential investors could determine to purchase more, less or no shares in this offering. We are an emerging growth company under the federal securities laws and will be subject to reduced public company reporting requirements. Investing in our common stock involves a high degree of risk. These risks are described under the caption Risk Factors that begins on page 13 of this prospectus. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the securities that may be offered under this prospectus, nor have any of these organizations determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. PER SHARE TOTAL Initial public offering price $ $ Underwriting discounts and commissions (1) $ $ Proceeds to us, before expenses $ $ (1) See Underwriting for a description of the compensation payable to the underwriters. We have granted the underwriters an option for a period of 30 days to purchase up to 1,000,000 additional shares on the same terms and conditions as set forth above. The underwriters expect to deliver the shares to investors on , 2018. If the underwriters exercise the option in full, the total underwriting discounts and commissions payable by us will be $ and the total proceeds to us, before expenses, will be $ . Jefferies Leerink Partners BMO Capital Markets Baird Prospectus dated , 2018 Table of Contents Neither we nor the underwriters have authorized anyone to provide any information or to make any representations other than those contained in this prospectus or in any free writing prospectuses prepared by or on behalf of us or to which we have referred you. We and the underwriters take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. This prospectus is an offer to sell only the shares offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so. The information contained in this prospectus or in any applicable free writing prospectus is current only as of its date, regardless of its time of delivery or any sale of shares of our common stock. Our business, financial condition, results of operations and prospects may have changed since that date. Through and including , 2018 (25 days after the date of this prospectus), all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions. Neither we nor the underwriters have done anything that would permit this offering or possession or distribution of this prospectus or any free writing prospectus we may provide to you in connection with this offering in any jurisdiction where action for that purpose is required, other than in the United States. You are required to inform yourselves about and to observe any restrictions relating to this offering and the distribution of this prospectus and any such free writing prospectus outside of the United States. Table of Contents interactions with the FDA review team and the potential for rolling review of completed portions of a marketing application even prior to submission of the comprehensive application. We are launching CYPRESS, a Phase 2b clinical development program in NSCLC which will initially include two randomized clinical trials in patients with different levels of tumor PD-L1 expression in different lines of treatment. CYPRESS-1 will compare the safety and efficacy of AM0010 plus pembrolizumab to standard of care pembrolizumab alone as front-line therapy for patients with high tumor PD-L1 expression (>50%). CYPRESS-2 will compare the safety and efficacy of AM0010 plus nivolumab to standard of care nivolumab alone in a second-line setting (one prior therapy that was not a PD-1 or PD-L1 inhibitor) in patients with low tumor PD-L1 expression (<50%). We plan to begin enrolling patients in these trials in the first quarter of 2018 and given the open label design of the trials we expect to have preliminary response data in a meaningful number of patients in both trials by late 2018, which we expect will inform our regulatory strategy and next steps in the development of AM0010 in NSCLC. We also expect to have additional data from both trials in 2019. Based on the results of CYPRESS-1 and CYPRESS-2 and the evolving treatment landscape for NSCLC, we may expand the CYPRESS program and, importantly, seek to develop our own independent, proprietary combination regimen in the immuno-oncology space by including our pipeline anti-PD-1 checkpoint inhibitor (AM0001). We continue to evaluate the results from our ongoing Phase 1/1b clinical trial assessing encouraging signals that justify further development of AM0010 in additional tumor types, such as, but not limited to, RCC, colorectal cancer (CRC), melanoma and breast cancer. In addition to AM0010, our immuno-oncology pipeline includes a number of product candidates. AM0001 is our anti-PD-1 checkpoint inhibitor currently undergoing Investigational New Drug Application (IND) enabling studies. We expect to initiate a Phase 1 clinical trial with AM0001 in advanced malignancies in 2018 and plan to subsequently combine this immune checkpoint inhibitor with AM0010 to develop our first proprietary immuno-oncology combination regimen. AM0015 is a pre-IND stage recombinant human Interleukin-15 (IL-15) cytokine that has demonstrated preclinical anti-tumor responses that are additive with AM0010. AM0012 is a recombinant human Interleukin-12 (IL-12) cytokine currently in preclinical studies. Cytokines are small proteins that are made by immune cells and non-immune cells and have an effect on the immune system and other physiologic functions. Some cytokines stimulate the immune system and others inhibit it. AM0003 is our anti-LAG-3 checkpoint inhibitor program that is undergoing pre-IND enabling studies. LAG-3 (Lymphocyte-activation gene 3) is a cell surface protein and immune checkpoint receptor. Table of Contents Product Candidate Pipeline We have built a pipeline of proprietary product candidates that activate the immune system of patients to recognize and eradicate their tumors. AM0010 Phase 1/1b Clinical Trial We submitted an IND for AM0010 to the FDA that became active in 2013. We have an ongoing Phase 1/1b clinical trial that is assessing the safety, tolerability, dosing and therapeutic activity of AM0010 as a monotherapy or in combination with chemotherapies or immune checkpoint inhibitors. We are also studying AM0010 s mechanism of action. We have enrolled over 350 patients with advanced cancer across more than 14 cancer indications. We have observed objective tumor responses (ORR), including complete responses (CRs), partial responses (PRs) and stable disease (SD) in patients treated with AM0010 as a single agent (monotherapy) or in combination with chemotherapeutic drugs or anti-PD-1 checkpoint inhibitors. A CR is defined as a complete disappearance of all tumor lesions, a PR is defined as a reduction of the tumor burden by at least 50% in the absence of CR, and a SD is defined as a stable tumor burden that neither decreases by more than 50% nor increases by 25% or more. Table of Contents In addition to the mechanistic data illustrating AM0010 s immunotherapeutic activity, preliminary data from the Phase 1/1b clinical trial demonstrated durable responses, as measured by overall survival. The survival benefit for AM0010 alone or in combination with standard of care in these populations with advanced stage diseases are longer than those observed historically, based on medical literature in comparable or earlier stage populations. The table below shows the diseases in our Phase 1/1b clinical trial where patients exposed to AM0010 alone or in combination with other agents (e.g. chemotherapy or immune checkpoint inhibitors) experienced complete and partial responses or a survival benefit when compared to historical results published by Garon et al., Pembrolizumab for the Treatment of Non-Small Cell Lung Cancer, The New England Journal of Medicine (2015), which we refer to in this prospectus as the Garon Article, and other studies published in medical literature. COMPLETE RESPONSES PARTIAL RESPONSES DURABLE RESPONSES* Monotherapy Cutaneous T-Cell Lymphoma Melanoma RCC PDAC CRC Combination with chemotherapy (FOLFOX) PDAC Gastroesophageal PDAC PDAC Combination with checkpoint inhibitors (anti-PD-1) NSCLC** RCC** NSCLC RCC Melanoma NSCLC Melanoma * As measured by overall survival; the survival benefit for AM0010 alone or in combination with standard of care in these populations with advanced stage diseases are longer than those observed historically based on medical literature in comparable or earlier stage populations. ** Partial responses with 100% reduction in measurable disease. AM0010 Development for the Treatment of Pancreatic Ductal Adenocarcinoma In our Phase 1/1b clinical trial, we treated 22 PDAC patients with AM0010 monotherapy and 21 patients with AM0010 in combination with FOLFOX standard of care. Treatment with AM0010 monotherapy showed in PDAC patients with a median number of three prior treatments, a median overall survival (mOS) of 3.8 months, median progression-free survival (mPFS) of 1.7 months and one-year survival of 22.7% as of October 2017. The combination with AM0010 and FOLFOX showed in PDAC patients with a median number of two prior therapies, a mPFS of 2.6 months. The mOS for the combination of AM0010 and FOLFOX is 10.2 months with a median follow-up time of 20.3 months with a range between 15.8 and 25.9 months as of October 2017. At that time, the one year survival rate was 42.9%. These results are of particular interest compared to a mOS of 4.3 months, mPFS of 1.7 months and one-year survival of 18.5% reported in a study of FOLFOX in the second-line setting. In addition, the treatment with a combination of AM0010 and FOLFOX has resulted in partial and complete antitumor responses in PDAC patients who have failed multiple prior lines of treatment. AM0010 Development with Anti-PD-1 Immune Checkpoint Inhibitors for the Treatment of Non-Small Cell Lung Cancer In our Phase 1/1b clinical trial, we treated as of October 2017 nine NSCLC patients with AM0010 monotherapy and 34 patients with AM0010 in combination with anti-PD-1 therapies nivolumab or pembrolizumab. There were no objective responses observed in the seven heavily pre-treated NSCLC evaluable patients exposed to AM0010 monotherapy. However, the mOS was 15.4 months (median follow up of 30.7 months with a range between 9.9 and 37.7 months) and the landmark one year survival rate was 55.6%. This is promising given the mOS for nivolumab, a standard of care in the second-line setting for NSCLC, is 9.2 months for squamous NSCLC and 12.0 months for non-squamous NSCLC and the one year survival is 42% and 52% for these subtypes, respectively. Table of Contents In our Phase 1/1b clinical trial, a cohort of 27 evaluable patients with advanced-stage NSCLC, who had received a median of two prior therapies, were treated with AM0010 in combination with anti-PD-1 immune checkpoint inhibitors and had an objective response rate (ORR) of 41% regardless of tumor PD-L1 expression (41% and 40% ORRs for AM0010 plus nivolumab or pembrolizumab, respectively). This could represent an increase in ORR in NSCLC patients that received a median of two prior therapies compared to a 19% ORR as reported in the Garon Article for nivolumab as a monotherapy in a second-line setting regardless of tumor PD-L1 expression. In addition, eight NSCLC patients treated with AM0010 in combination with pembrolizumab or nivolumab had liver metastasis. Of those eight patients, five had a partial response. In addition, these eight patients had a combined total number of 18 target secondary lesions in the liver, of which 16 had a reduction in size. More importantly, 14 of these 16 lesions showed more than a 50% reduction in size. These findings indicate that treatment with AM0010 in combination with immune checkpoint inhibitors may have a therapeutic impact on liver metastases and potentially improve clinical outcomes. AM0010 for the Treatment of Renal Cell Carcinoma In our Phase 1/1b clinical trial, we treated as of October 2017 eight RCC patients with AM0010 monotherapy and 37 patients with AM0010 in combination with anti-PD-1 therapies nivolumab or pembrolizumab. For later-stage RCC patients receiving AM0010 monotherapy in the Phase 1/1b clinical trial, the ORR was 25%, the DCR was 56.3% and mPFS was 1.9 months. For comparison purposes, nivolumab studies in second-line RCC reported an average ORR of about 20%, a DCR of between 57% and 65% and a mPFS of between 2.7 months and 4.2 months. For later-stage RCC patients receiving AM0010 plus pembrolizumab in the Phase 1/1b clinical trial, the mPFS was 16.7 months and the mOS has not yet been reached after a median follow-up time of 29.4 months. For RCC patients receiving AM0010 plus nivolumab, the mPFS and mOS has not yet been reached after a median follow-up time of 13.8 months. For comparison purposes, nivolumab studies in second-line RCC reported an average mPFS of between 2.7 months and 4.2 months and mOS of between 18.2 and 25.5 months. We are developing a plan to study AM0010 plus an immune checkpoint inhibitor in RCC. AM0010 for the Treatment of Additional Cancer Indications As part of our Phase 1/1b clinical trial, AM0010 has been studied in combination with pembrolizumab in melanoma patients whose tumors are resistant or refractory to immune checkpoint blockade and who failed a median number of three prior therapies. The mOS is 16.7 months with median follow-up time of 24.6 months and a range between 1.2 and 27.4 months. We are encouraged by the tail on the overall survival curve which is indicative of long term survivors. As a comparison, a recent study reports a mOS of 8 months in patients who received pembrolizumab in combination with ipilimumab after they progressed on prior treatment with ipilimumab and anti-PD-1 monotherapies. AM0010 monotherapy was studied in microsatellite stable CRC patients who had a median number of four prior therapies and the mOS was 11 months. These data appear favorable to the reported mOS of 7.1 months for LONSURF, a combination of trifluridine and tipiracil, which was approved by the FDA in 2015 for the treatment of metastatic CRC in third or later line of treatment. We are evaluating Phase 2 clinical trials to study AM0010, as a monotherapy or in a combination, in these indications in the future. Our strategy Our vision is to improve and prolong the lives of cancer patients by advancing and expanding the field of immuno-oncology through novel combinations and treatment sequences of our pipeline products with standard of care chemotherapies and checkpoint inhibitors or with other emerging immunotherapies that elicit complementary and synergistic treatment effects. Table of Contents Key elements of our strategy include: Rapidly advance the development of AM0010 as a cornerstone treatment for enhancing, augmenting and broadening the therapeutic effect of existing standard of care and emerging therapies in a number of tumor types, including high unmet need resistant and refractory malignancies. A cornerstone of our AM0010 development program is novel combinational and sequential approaches with standard of care chemotherapies, immune checkpoint inhibitors or other emerging immuno-oncology therapies. We believe AM0010 synergizes with these standard of care and emerging therapies to augment and expand anti-tumor responses beyond those seen when either agent is used separately. Consequently, we believe this synergy will lead to higher response rates, longer lasting responses and improved patient outcomes when compared to the current standard of care. More importantly, we believe this synergy may elicit responses in resistant and refractory tumors, broadening into areas of substantial unmet medical need where the therapeutic utility of existing and emerging treatments can be combined or sequenced with AM0010. Rapidly advance AM0010 through a pivotal clinical trial in combination with chemotherapy as a second-line therapy in PDAC. We are developing AM0010 in combination with standard of care chemotherapy (FOLFOX) for the treatment of second-line PDAC patients. We plan to continue the Phase 3 SEQUOIA clinical trial of AM0010 in combination with FOLFOX compared with FOLFOX alone in PDAC patients that have progressed during or following initial treatment with a gemcitabine-containing regimen. We expect results from the first interim analysis in early 2018. The second interim analysis, which could provide the basis for a BLA submission, is expected to be conducted in 2020. Further development of AM0010 in treatment-na ve PDAC is dependent on the result of the SEQUOIA trial. Rapidly advance the development of AM0010 in combination with established immune checkpoint inhibitors and potentially with AM0001 in NSCLC across levels of tumor PD-L1 expression and lines of therapy. We are developing AM0010 in combination with standard of care immune checkpoint inhibitors in NSCLC across levels of PD-L1 expression and across lines of therapy. We plan to initiate Phase 2 clinical trials of AM0010 in combination with pembrolizumab compared to pembrolizumab standard of care in the front-line setting of patients with high tumor PD-L1 expression (CYPRESS-1) and AM0010 in combination with nivolumab compared to nivolumab standard of care in the second-line setting of patients with low tumor PD-L1 expression (CYPRESS-2). We plan to begin enrolling patients in these trials in the first quarter of 2018 and given the open label design of the trials we expect to have preliminary response data in a meaningful number of patients in both trials by late 2018, which we expect will inform our regulatory strategy and next steps in the development of AM0010 in NSCLC. We also expect to have additional data from both trials in 2019. Based on the results of CYPRESS-1 and CYPRESS-2 and the evolving treatment landscape for NSCLC, we may expand the CYPRESS program and, importantly, seek to develop our own independent, proprietary combination regimen in the immuno-oncology space by including our pipeline anti-PD-1 checkpoint inhibitor (AM0001). Rapidly advance the development of AM0010 in other select oncology indications where strong treatment effect signals have been identified in our ongoing Phase 1/1b clinical trial. We continue to evaluate treatment effect signals from our Phase 1/1b clinical trial. To date, the strongest preliminary treatment effect signals outside PDAC and NSCLC have emerged in RCC, CRC, melanoma and breast cancer. In addition, there is early pre-clinical evidence that IL-10 may have clinical utility in acute myeloid leukemia (AML), myelodysplastic syndromes (MDS) and myeloproliferative neoplasms (MPN). Initiating a Phase 2 program in these or other areas will depend on definitive evaluation of these signals as well as the state of the emerging treatment landscape for these indications. Rapidly advance the development of our immunotherapy pipeline product candidates into clinical trials. We intend to develop our immuno-oncology pipeline of assets, which includes AM0001, AM0015, AM0012 and AM0003. AM0001 is our anti-PD-1 checkpoint inhibitor currently undergoing IND-enabling studies and we expect to initiate a Phase 1 clinical trial in 2018 and plan to subsequently combine this immune checkpoint inhibitor with AM0010 to develop our first proprietary immuno-oncology combination regimen. AM0015 and AM0012 are our product candidates that have demonstrated preclinical anti-tumor responses Table of Contents that could be additive or synergistic with anti-tumor effects of AM0010. AM0003 is our anti-LAG-3 checkpoint inhibitor program for which we are conducting preclinical studies. Continued focus on internal discovery efforts. Based on our expertise in immuno-oncology and the results from our clinical trials, we expect to commit resources to the research of additional product candidates that may work independently of, or complement, those in our existing pipeline. We seek to leverage the extensive experience of our team to further expand our expertise in CD8+ T cell and cytokine biology and to discover and develop novel, proprietary product candidates that activate the immune system to recognize and eradicate tumors. Opportunistically in-license and acquire novel immuno-oncology assets. We plan to leverage our clinical immuno-oncology expertise and our relationships in the oncology community to identify and in-license or acquire additional product candidates that we believe have the potential to become novel treatments for oncology indications with significant unmet medical needs. Potentially seek strategic collaborative relationships while maintaining flexibility in commercializing and maximizing the value of our development programs. We currently have global development, marketing and commercialization rights for all of the product candidates in our pipeline. We plan to develop and seek regulatory approval for their use in oncology indications. While we may develop these products independently, we also may enter into strategic relationships with biotechnology or pharmaceutical companies to realize the full value of these products. Risks Associated with Our Business Our ability to implement our business strategy is subject to numerous risks that you should be aware of before making an investment decision. These risks are described more fully in the section entitled Risk Factors immediately following this prospectus summary. These risks include, among others: We are a late-stage immuno-oncology company with a limited operating history and have incurred significant losses since inception. We expect to incur losses for the foreseeable future and may never achieve or maintain profitability. As of September 30, 2017, we had $66.5 million in cash and cash equivalents and an accumulated deficit of $120.8 million. At the date our financial statements for the nine months ended September 30, 2017 were issued, we did not have sufficient cash to fund our operations through November 30, 2018 without additional financing and, therefore, we concluded that there was substantial doubt about our ability to continue as a going concern for at least one year after the date the interim unaudited condensed financial statements were issued. Even if this offering is successful, we will need to obtain substantial additional funding to complete the development and any commercialization of our product candidates. If we are unable to raise this necessary capital when needed, we would be forced to delay, reduce or eliminate our product development programs, commercialization efforts or other operations. We are heavily dependent on the success of our lead product candidate, AM0010, since all of our other product candidates are still in the preclinical development stage and will require significant additional clinical trials. Our preclinical studies and clinical trials of our product candidates may not be successful. If we are unable to commercialize our product candidates, if approved, or if we experience significant delays in doing so, our business will be materially harmed. We cannot predict if we will receive regulatory approval to commercialize our product candidates. The development and commercialization of our lead product candidate, AM0010, is dependent on intellectual property we licensed from Merck. We contract with third parties for the manufacture of our product candidates for preclinical studies and expect to continue to do so for clinical trials and for commercialization. Table of Contents If we are unable to obtain and maintain patent or trade secret protection for our product candidates and preclinical programs, or if the scope of the patent protection obtained is not of sufficient scope, our competitors could develop and commercialize products and technology similar or identical to ours, and our ability to successfully commercialize our products may be adversely affected. Implications of Being an Emerging Growth Company We qualify as an emerging growth company as defined in the Jumpstart Our Business Startups Act of 2012 (JOBS Act). An emerging growth company may take advantage of relief from certain reporting requirements and other burdens that are otherwise applicable generally to public companies. These provisions include: reduced obligations with respect to financial data, including presenting only two years of audited financial statements in addition to any required unaudited interim financial statements and only two years of selected financial data; an exception from compliance with the auditor attestation requirements of Section 404 of the Sarbanes Oxley Act of 2002 (Sarbanes Oxley Act); reduced disclosure obligations about our executive compensation arrangements in our periodic reports, proxy statements and registration statements; and exemptions from the requirements of holding non-binding advisory votes on executive compensation or golden parachute arrangements. We may take advantage of these provisions for up to five years or such earlier time that we no longer qualify as an emerging growth company. We may choose to take advantage of some but not all of these reduced reporting burdens. We would cease to be an emerging growth company if we have more than $1.07 billion in annual gross revenues, have more than $700 million in market value of our capital stock held by non-affiliates or issue more than $1.0 billion of non-convertible debt over a three year period. In addition, under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards until such time as those standards apply to private companies. We have irrevocably elected not to avail ourselves of this exemption from new or revised accounting standards. Accordingly, we will be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies. Corporate Information We were incorporated in Delaware on June 23, 2010 under the name Targenics, Inc. We changed our name to ARMO BioSciences, Inc. in December 2012. Our principal executive offices are located at 575 Chesapeake Drive, Redwood City, CA 94063, and our telephone number is (650) 779-5075. Our website address is www.armobio.com. The information on, or that can be accessed through, our website is not part of this prospectus. We have included our website address as an inactive textual reference only. Table of Contents THE OFFERING Issuer ARMO BioSciences, Inc. Shares of common stock we are offering 6,666,667 shares Shares of common stock to be outstanding after this offering 28,412,953 shares (29,412,953 shares if the underwriters exercise their option to purchase additional shares in full) Underwriters option to purchase additional shares We have granted the underwriters the option, exercisable for 30 days following the date of this prospectus, to purchase up to 1,000,000 additional shares of our common stock. Use of proceeds We estimate that the net proceeds from this offering will be approximately $89.3 million, or $103.3 million if the underwriters exercise their option to purchase additional shares in full, after deducting underwriting discounts and commissions and estimated offering expenses payable by us, assuming an initial public offering price of $15.00 per share, the midpoint of the price range set forth on the cover page of this prospectus. We intend to use the net proceeds from this offering as follows: (i) approximately $35.0 million to fund our development of AM0010 for the treatment of PDAC, including our Phase 3 clinical trial in PDAC, (ii) approximately $35.0 million to fund our two planned Phase 2b clinical trials in NSCLC and (iii) the remaining proceeds to fund our development of AM0010 for the treatment of additional indications, as well as our development of other product candidates in our pipeline and other general corporate purposes, which may include the hiring of additional personnel, capital expenditures and the costs of operating as a public company. See Use of Proceeds on page 51.
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+PROSPECTUS
+SUMMARY
+
+ 
+
+This
+summary highlights some information from this prospectus, and it may not contain all the information important to making an investment
+decision. A potential investor should read the following summary together with the more detailed information regarding the Company
+and the common stock being sold in this offering, including "Risk Factors" and the financial statements and related
+notes, included elsewhere in this prospectus.
+
+ 
+
+The
+Company
+
+ 
+
+Corporate
+History and General Information
+
+ 
+
+Veroni
+Brands Corp. ("Veroni" or the "Company") was incorporated as "Echo Sound Acquisition Corporation"
+on December 7, 2016 under the laws of the State of Delaware. In September 2017, the Company implemented a change of control by
+issuing shares to new stockholders, redeeming shares of existing stockholders, electing a new officer and director and accepting
+the resignations of its then existing officers and directors.
+
+ 
+
+In
+connection with the change in control, the stockholders of the Company and its board of directors unanimously approved the chan
+ge of the Company s name from Echo Sound Acquisition Corporation to European CPG Acquisition Corporation. In November 2017,
+the stockholders of the Company and its board of directors unanimously approved the change of the Company s name to Veroni
+Brands Corp.
+
+ 
+
+The
+Company is located at 650 Forest Edge Drive, Vernon Hills, Illinois 60061. The Company s main phone number is 888-794-2999.
+The Company s fiscal year end is December 31. Neither the Company nor its predecessors have filed for bankruptcy, receivership
+or any similar proceedings nor are in the process of filing for bankruptcy, receivership or any similar proceedings.
+
+ 
+
+Business
+
+ 
+
+The
+business of the Company focuses on the import, sales and distribution of premium food and beverage products, primarily from Europe.
+Within this strategy, Veroni has secured a long-term exclusive import and distribution agreement with a major European supplier,
+FoodCare Sp. z o,o., a company organized under the laws of the Poland ("FoodCare"). Veroni will be the sole and exclusive
+importer and distributor to the United States market of Iron Energy, an energy drink sponsored by celebrity and former boxer Mike
+Tyson, with access to numerous other beverage brands through this partnership. We are planning to be a multifaceted company with
+a strategy for growing across a variety of consumer product categories.
+
+ 
+
+Risks
+and Uncertainties facing the Company
+
+ 
+
+The
+Company has had no revenues or customers to date; provided, however, it is Veroni s goal to begin sales of its licensed
+products by securing relationships with distributors and food and beverage retailers and by expanding its portfolio of products
+through strategic partnerships with new suppliers.
+
+ 
+
+As
+an early-stage company, the Company has no operating history and is expected to continuously experience losses in the near term.
+The Company needs to generate revenue or locate additional financing in order to continue its developmental plans. As a company
+in the early part of its life, management of the Company must build relationships with food and beverage retailers and effectively
+market its products in order to execute the business plan of the Company on a broad scale. Further, there is no guarantee that
+the Company will be able to identify sufficient numbers of customers to generate enough revenues to continue operations or proceed
+with developing its business in accordance with its business plan.
+
+ 
+
+One
+of the biggest challenges facing the Company will be in securing adequate capital to fund its projects, including securing adequate
+capital to pay for the manufacturing of its products. Secondarily, following the manufacturing of its products, a major challenge
+will be implementing effective sales, marketing and distribution strategies to reach the intended end customers. The Company has
+considered and devised its initial sales, marketing and advertising strategy; however, the Company will need to skillfully implement
+this strategy in order to achieve success in its business.
+
+ 
+
+Due
+to these and other factors, the Company s need for additional capital, the Company s independent auditors have issued
+a report raising substantial doubt of the Company s ability to continue as a going concern.
+
+ 
+
+Trading
+Market
+
+ 
+
+Currently,
+there is no trading market for the securities of the Company. The Company intends to initially apply for admission to quotation
+of its securities on the OTC Bulletin Board as soon as possible, which may be while this offering is still in process. There can
+be no assurance that the Company will qualify for quotation of its securities on the OTC Bulletin Board. See "RISK FACTORS"
+and "DESCRIPTION OF SECURITIES".
+
+ 
+
+ 2 
+
+ 
+
+ 
+
+ 
+
+The
+Offering
+
+ 
+
+The
+maximum number of Shares that can be sold pursuant to the terms of this offering is 1,893,500. The offering will terminate twenty-four
+(24) months from the date of this prospectus unless earlier fully subscribed or terminated by the Company.
+
+ 
+
+This
+prospectus relates to the offer and sale by certain shareholders of the Company of up to 1,893,500 Shares (the "Selling
+Shareholder Shares"). The selling shareholders, who are deemed to be statutory underwriters, will offer their shares at
+a price of $1.50 per share, until the Company s common stock is listed on a national securities exchange or is quoted on
+the OTC Bulletin Board (or a successor); after which, the selling shareholders may sell their shares at prevailing market or privately
+negotiated prices, including (without limitation) in one or more transactions that may take place by ordinary broker s transactions,
+privately-negotiated transactions or through sales to one or more dealers for resale.
+
+ 
+
+ Common stock outstanding before the
+ offering 
+ 28,396,599(1)
+
+ 
+ 
+
+ Common stock for sale
+ by selling shareholders 
+ 1,893,500 
+
+ 
+ 
+
+ Common stock outstanding after the offering 
+ 28,396,599 
+
+ 
+ 
+
+ Offering Price 
+ $1.50
+ per share 
+
+ 
+ 
+
+ Proceeds to the Company 
+ $0 
+
+ 
+
+ (1)
+ 
+ Based
+ on number of shares outstanding as of the date of this prospectus.
+
+ 
+
+Summary
+Financial Information
+
+ 
+
+The
+statements of operations data for the year ended December 31, 2017 and for the period from December 7, 2016 (Inception) to December
+31, 2016 and the balance sheet data as of December 31, 2017 and December 31, 2016 are derived from the Company s audited
+financial statements and related notes thereto included elsewhere in this prospectus.
+
+ 
+
+ 
+ Year
+ ended 
+December 31, 2017 
+ For
+ the period from 
+December 7, 2016 
+(Inception) to 
+December 31, 2016 
+
+ 
+ 
+ 
+
+ STATEMENT OF OPERATIONS
+ DATA 
+ 
+ 
+
+ Revenue 
+ $0 
+ $0 
+
+ Loss from operations 
+ (44,045) 
+ (3,312)
+
+ Net (loss) 
+ (44,045) 
+ (3,312)
+
+ 
+ 
+ 
+
+ BALANCE SHEET DATA 
+ 
+ 
+
+ Cash and cash equivalents 
+ $595 
+ $0 
+
+ Subscription receivable 
+ 210 
+ 0 
+
+ Prepaid expenses
+ and other current assets 
+ 48,833 
+ 0 
+
+ Total current assets 
+ 49,638 
+ 0 
+
+ Total current liabilities 
+ 11,339 
+ 1,000 
+
+ Accumulated (Deficit) 
+ (47,357) 
+ 3,312)
+
+ 
+
+RISK
+FACTORS
+
+ 
+
+A
+purchase of any Shares is an investment in the Company s common stock and involves a high degree of risk. Investors should
+consider carefully the following information about these risks, together with the other information contained in this prospectus,
+before the purchase of the Shares. If any of the following risks actually occur, the business, financial condition or results
+of operations of the Company would likely suffer. In this case, the market price of the common stock could decline, and investors
+may lose all or part of the money they paid to buy the Shares.
+
+ 
+
+The
+Company has no revenues to date.
+
+ 
+
+The
+Company has generated no revenues to date. To date, most of management s time, and the Company s limited resources
+have been spent in developing its business strategy, researching potential opportunities, contacting partners, exploring marketing
+contacts, establishing operations and management personnel and resources, preparing its business plan and model, selecting professional
+advisors and consultants and seeking capital for the Company.
+
+ 
+
+ 3 
+
+ 
+
+ 
+
+ 
+
+The
+Company s independent auditors have issued a report raising a substantial doubt of the Company s ability to continue
+as a going concern.
+
+ 
+
+In
+their audit report, the Company s independent auditors reported that unless the Company is able to generate sufficient cash
+flows from operations and/or obtain additional financing, there is a substantial doubt as to its ability to continue as a going
+concern.
+
+ 
+
+The
+Company has no operating history of its own, and as such, any prospective investor has very little on which to assess the Company s
+potential for profitability.
+
+ 
+
+Because
+the Company is an early-stage company with virtually no operating history, it is impossible for an investor to assess the performance
+of the Company or to determine whether the Company will meet its potential business plan. The Company has limited financial results
+upon which an investor may judge its potential. The Company may in the future still experience under-capitalization, shortages,
+setbacks and many of the problems, delays and expenses encountered by any early stage business. An investor will be required to
+make an investment decision based solely on the Company management s history and its potential operations in light of the
+risks, expenses and uncertainties that may be encountered by engaging in the Company s industry.
+
+ 
+
+The
+Company s contract to purchase products from FoodCare Sp. z o,o. contains minimum ordering requirements which could result
+in the loss of the products subject to the contract.
+
+ 
+
+In
+2018, the Company entered into a long-term exclusive import and distribution agreement to import certain foods and beverages,
+including certain beverages on an exclusive basis. The exclusive nature of the agreement is subject to the Company purchasing
+from Foodcare a minimum amount of products as defined in the agreement. Should the Company fail to purchase the minimum required
+under the contract, Foodcare may cancel the contract partially or completely, which could terminate the ability of the Company
+to purchase and import their products, and could also terminate its exclusive agreement to distribute and sell exclusively in
+the United States certain celebrity endorsed energy drinks. The effect of this loss would require the Company to change its plan
+of operations substantially and would result in a material adverse effect to the Company.
+
+ 
+
+The
+Company has a correspondingly small financial and accounting organization. Being a public company may strain the Company s
+resources, divert management s attention and affect its ability to attract and retain qualified officers and directors.
+
+ 
+
+The
+Company is an early-stage company with no developed finance and accounting organization and the rigorous demands of being a public
+company require a structured and developed finance and accounting group. As a reporting company, the Company is already subject
+to the reporting requirements of the Securities Exchange Act of 1934 (the "Exchange Act"). However, the requirements
+of these laws and the rules and regulations promulgated thereunder entail significant accounting, legal and financial compliance
+costs which may be prohibitive to the Company as it develops its business plan, services and scope. These costs have made, and
+will continue to make, some activities more difficult, time consuming or costly and may place significant strain on its personnel,
+systems and resources.
+
+ 
+
+The
+Exchange Act requires, among other things, that companies maintain effective disclosure controls and procedures and internal control
+over financial reporting. In order to maintain the requisite disclosure controls and procedures and internal control over financial
+reporting, significant resources and management oversight are required. As a result, management s attention may be diverted
+from other business concerns, which could have a material adverse effect on the development of the Company s business, financial
+condition and results of operations.
+
+ 
+
+ The Company does not currently possess
+effective disclosure controls and procedures that are adequate for a public company. 
+
+ 
+
+ Based upon his evaluation,
+the Chief Executive Officer, who is also the Chief Financial Officer of the Company has concluded that, as of the date of this
+prospectus, the existing disclosure controls and procedures of the Company were not effective. Disclosure controls and procedures
+means controls and other procedures that are designed to ensure that information required to be disclosed by the Company in the
+reports it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified
+in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed
+to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange
+Act is accumulated and communicated to management, including the principal executive and principal financial officer, as appropriate
+to allow timely decisions regarding required disclosure. 
+
+ 
+
+The
+Company expects to incur additional expenses and may ultimately never be profitable.
+
+ 
+
+The
+Company has limited operations to date. The Company will need to begin generating revenue to achieve and maintain profitability.
+To become profitable, the Company must successfully develop relationships with food and beverage retailers and effectively market
+its products. These processes involve many factors that are beyond the Company s control, including the type of competition
+that the Company may encounter. Ultimately, in spite of the Company s best or reasonable efforts, the Company may never
+actually generate revenues sufficient to cover operating expenses or become profitable.
+
+ 
+
+If
+the Company is unable to generate sufficient cash, it may find it necessary to curtail operational activities.
+
+ 
+
+The
+Company has a business plan hinged on its ability to distribute and sell its products. If the Company is unable to develop relationships
+with food and beverage retailers and market its products, then it will not be able to proceed with its business plan or possibly
+to successfully develop its planned operations at all. If the Company is unable to obtain sufficient funding to meet its minimum
+liquidity requirements, it may find it necessary to curtail operational activities.
+
+ 
+
+No
+formal market survey has been conducted.
+
+ 
+
+No
+independent marketing survey has been performed to determine the potential demand for the Company s products. Nor has the
+Company conducted marketing studies regarding whether such products would actually be marketable. No assurances can be given that
+upon marketing, the Company will be able to develop a sufficient customer base and business segment to sustain the Company s
+operations on a continued basis.
+
+ 
+
+ 4 
+
+ 
+
+ 
+
+ 
+
+No
+assurance of market acceptance.
+
+ 
+
+There
+can be no assurance that the market reception will be positive for the Company or its products.
+
+ 
+
+The
+Company depends on its management team to manage its business effectively.
+
+ 
+
+The
+Company s future success is dependent in large part upon its ability to understand and develop the business plan and to
+attract and retain highly skilled management, operational and executive personnel. In particular, due to the relatively early
+stage of the Company s business, its future success is highly dependent on its officers, to provide the necessary experience
+and background to execute the Company s business plan. The loss of any officer s services could impede, particularly
+initially as the Company builds a record and reputation, its ability to develop its objectives, particularly in its ability to
+sell its products and as such would negatively impact the Company s possible overall development.
+
+ 
+
+The
+time devoted by Company management may not be full-time.
+
+ 
+
+It
+is not anticipated that key officers would devote themselves full-time to the business of the Company at the present time.
+
+ 
+
+Government
+regulation could negatively impact the business.
+
+ 
+
+The
+Company s business may be subject to various government regulations in the jurisdictions in which it operates. Due to the
+potential wide scope of the Company s operations, the Company could be subject to regulation by various political and regulatory
+entities, including various local and municipal agencies and government sub-divisions. The Company may incur increased costs necessary
+to comply with existing and newly adopted laws and regulations or penalties for any failure to comply. The Company s operations
+could be adversely affected, directly or indirectly, by existing or future laws and regulations relating to its business or industry.
+
+ 
+
+As
+a producer of beverage products, we are subject to production, packaging, quality, labeling and distribution standards in each
+of the countries where we have operations, including, in the United States, as promulgated under the Federal Food, Drug and Cosmetic
+Act and the Fair Packaging and Labeling Act.
+
+ 
+
+The
+United States Food and Drug Administration ("FDA") maintains programs to inspect food and beverages imported into
+the United States. Imported food products are subject to FDA inspection when offered for import at U.S. ports of entry. FDA may
+detain shipments of products offered for import if the shipments are found not to be in compliance with U.S. requirements. Both
+imported and domestically-produced foods must meet the same legal requirements in the United States.
+
+ 
+
+There
+has been no prior public market for the Company s securities and the lack of such a market may make resale of the stock
+difficult.
+
+ 
+
+No
+prior public market has existed for the Company s securities and the Company cannot assure any investor that a market will
+develop subsequent to this offering. An investor must be fully aware of the long-term nature of an investment in the Company.
+The Company intends to apply for quotation of its common stock on the OTC Bulletin Board as soon as possible which may be while
+this offering is still in process. However, the Company does not know if it will be successful in such application, how long such
+application will take, or, that if successful, that a market for the common stock will ever develop or continue on the OTC Bulletin
+Board. If for any reason the common stock is not listed on the OTC Bulletin Board or a public trading market does not otherwise
+develop, investors in the offering may have difficulty selling their common stock should they desire to do so. If the Company
+is not successful in its application for quotation on the OTC Bulletin Board, it will apply to have its securities quoted by the
+Pink OTC Markets, Inc., real-time quotation service for over-the-counter equities.
+
+ 
+
+The
+Company does not intend to pay dividends to its stockholders, so investors will not receive any return on investment in the Company
+prior to selling their interest in it.
+
+ 
+
+The
+Company does not project paying dividends but anticipates that it will retain future earnings for funding the Company s
+growth and development. Therefore, investors should not expect the Company to pay dividends in the foreseeable future. As a result,
+investors will not receive any return on their investment prior to selling their Shares in the Company, if and when a market for
+such Shares develops. Furthermore, even if a market for the Company s securities does develop, there is no guarantee that
+the market price for the shares would be equal to or more than the initial per share investment price paid by any investor. There
+is a possibility that the Shares could lose all or a significant portion of their value from the initial price paid in this offering.
+
+ 
+
+The
+Company s stock may be considered a penny stock and any investment in the Company s stock will be considered a high-risk
+investment and subject to restrictions on marketability.
+
+ 
+
+If
+the Shares commence trading, the trading price of the Company s common stock may be below $5.00 per share. If the price
+of the common stock is below such level, trading in its common stock would be subject to the requirements of certain rules promulgated
+under the Exchange Act. These rules require additional disclosure by broker-dealers in connection with any trades generally involving
+any non-NASDAQ equity security that has a market price of less than $5.00 per share, subject to certain exceptions. Such rules
+require the delivery, before any penny stock transaction, of a disclosure schedule explaining the penny stock market and the risks
+associated therewith, and impose various sales practice requirements on broker-dealers who sell penny stocks to persons other
+than established customers and accredited investors (generally institutions). For these types of transactions, the broker-dealer
+must determine the suitability of the penny stock for the purchaser and receive the purchaser s written consent to the transactions
+before sale. The additional burdens imposed upon broker-dealers by such requirements may discourage broker-dealers from effecting
+transactions in the Company s common stock which could impact the liquidity of the Company s common stock.
+
+ 
+
+ 5 
+
+ 
+
+ 
+
+ 
+
+The
+Company may face significant competition from companies that serve its industries.
+
+ 
+
+The
+food and beverage industry is subject to intense competition. The Company will be competing for customers with competitors who
+have greater financial and marketing resources, which would allow them to expand and improve their marketing efforts in ways that
+could affect the Company s ability to effectively compete in this market. If the Company is unable to compete successfully,
+its financial performance may be adversely affected.
+
+ 
+
+The
+Company is subject to the potential factors of market changes.
+
+ 
+
+The
+business of the Company will be significantly impacted by the performance of the food and beverage industry and may experience
+more volatility and be exposed to greater risk than a more diversified business.
+
+ 
+
+The
+Company does not maintain certain insurance, including errors and omissions and indemnification insurance.
+
+ 
+
+The
+Company has limited capital and, therefore, does not currently have a policy of insurance against liabilities arising out of the
+negligence of its officers and directors and/or deficiencies in any of its business operations. Even assuming that the Company
+obtained insurance, there is no assurance that such insurance coverage would be adequate to satisfy any potential claims made
+against the Company, its officers and directors, or its business operations. Any such liability which might arise could be substantial
+and may exceed the assets of the Company. The certificate of incorporation and by-laws of the Company provide for indemnification
+of officers and directors to the fullest extent permitted under applicable law. Insofar as indemnification for liabilities arising
+under the Securities Act may be permitted to directors, officers and controlling persons, it is the opinion of the SEC that such
+indemnification is against public policy, as expressed in the Act, and is therefore, unenforceable.
+
+ 
+
+Intellectual
+property and/or trade secret protection may be inadequate.
+
+ 
+
+The
+Company has not applied for any intellectual property or trade secret protection on any aspects of its business. The Company has
+no current plans on attempting to obtain patents, copyright, trademarks and/or service marks on any of its solutions and services.
+There can be no assurance that the Company can obtain effective protection against unauthorized duplication or the introduction
+of substantially similar solutions and services.
+
+ 
+
+The
+offering price of the Shares has been arbitrarily determined by the Company and such offering should not be used by an investor
+as an indicator of the fair market value of the Shares.
+
+ 
+
+Currently
+there is no public market for the Company s common stock. The offering price for the Shares has been arbitrarily determined
+by the Company and does not necessarily bear any direct relationship to the assets, operations, book or other established criteria
+of value of the Company. Thus an investor should be aware that the offering price does not reflect the fair market price of the
+Shares.
+
+ 
+
+The
+Company may complete a primary public offering (or private placement) for Shares in parallel with or immediately following this
+offering.
+
+ 
+
+The
+Company may conduct a primary public offering (or private placement) for Shares to raise proceeds for the Company. Such an offering
+may be conducted in parallel with or immediately following this offering. Sales of additional Shares will dilute the percentage
+ownership of shareholders in the Company.
+
+ 
+
+Forward-Looking
+Statements
+
+ 
+
+This
+prospectus contains, in addition to historical information, certain information, assumptions and discussions that may constitute
+forward-looking statements. Such statements are subject to certain risks and uncertainties which could cause actual results to
+differ materially than those projected or anticipated. Actual results could differ materially from those projected in the forward-looking
+statements. Although the Company believes its assumptions underlying the forward-looking statements are reasonable, the Company
+cannot assure an investor that the forward-looking statements set out in this prospectus will prove to be accurate. The Company s
+businesses can be affected by, without limitation, such things as natural disasters, economic trends, international strife or
+upheavals, consumer demand patterns, labor relations, existing and new competition, consolidation, and growth patterns within
+the industries in which the Company competes and any deterioration in the economy may individually or in combination impact future
+results.
+
+ 
+
+DETERMINATION
+OF OFFERING PRICE
+
+ 
+
+There
+is no public market for the Company s common stock and the price at which the Shares are being offered has been arbitrarily
+determined by the Company. This price does not necessarily bear any direct relationship to the assets, operations, book or other
+established criteria of value of the Company but represents solely the arbitrary opinion of management of the Company.
+
+ 
+
+ 6 
+
+ 
+
+ 
+
+ 
+
+DIVIDEND
+POLICY
+
+ 
+
+The
+Company does not anticipate that it will declare dividends in the foreseeable future but rather intends to use any future earnings
+for the development of its business.
+
+ 
+
+SELLING
+SHAREHOLDER SALES
+
+ 
+
+This
+prospectus relates to the sale of 1,893,500 outstanding shares of the Company s common stock by the holders of those shares.
+The selling shareholders, who are deemed to be statutory underwriters, will offer their shares at a price of $1.50 per share,
+until the Company s common stock is listed on a national securities exchange or is quoted on the OTC Bulletin Board (or
+a successor); after which, the selling shareholders may sell their shares at prevailing market or privately negotiated prices,
+including (without limitation) in one or more transactions that may take place by ordinary broker s transactions, privately-negotiated
+transactions or through sales to one or more dealers for resale.
+
+ 
+
+Usual
+and customary or specifically negotiated brokerage fees or commissions may be paid by the selling shareholders in connection with
+sales of the common stock. The selling shareholders may from time to time offer their shares through underwriters, brokers-dealers,
+agents or other intermediaries. The distribution of the common stock by the selling shareholders may be effected in one or more
+transactions that may take place through customary brokerage channels, in privately negotiated sales; by a combination of these
+methods; or by other means. The Company will not receive any portion or percentage of any of the proceeds from the sale of the
+Selling Shareholders Shares.
+
+ 
+
+PLAN
+OF DISTRIBUTION
+
+ 
+
+The
+Company and the selling shareholders are seeking an underwriter, broker-dealer or selling agent to sell the Shares. Neither the
+Company nor the selling shareholders have entered into any arrangements with any underwriter, broker-dealer or selling agent as
+of the date of this prospectus. At the time of this prospectus, neither the Company nor the selling shareholders has located a
+broker-dealer or selling agent to sell the Shares.
+
+ 
+
+The
+Company intends to maintain the currency and accuracy of this prospectus and to permit offers and sales of the Shares for a period
+of up to two (2) years, unless earlier completely sold, pursuant to Rule 415 of the General Rules and Regulations of the SEC.
+
+ 
+
+Pursuant
+to the provisions of Rule 3a4-1 of the Exchange Act, none of the officers or directors offering the Shares is considered to be
+a broker of such securities as (i) no officer or director is subject to any statutory disqualification, (ii) no officer or director
+is nor will be compensated by commissions for sales of the securities, (iii) no officer or director is associated with a broker
+or dealer, (iv) all officers and directors are primarily employed on behalf of the Company in substantial duties and (v) no officer
+or director participates in offering and selling securities more than once every 12 months.
+
+ 
+
+The
+offering will terminate 24 months following the date of the initial effectiveness of the registration statement to which this
+prospectus relates, unless earlier closed.
+
+ 
+
+Resales
+of the Securities under State Securities Laws
+
+ 
+
+The
+National Securities Market Improvement Act of 1996 ("NSMIA") limits the authority of states to impose restrictions
+upon resales of securities made pursuant to Sections 4(a)(1) and 4(a)(3) of the Securities Act of companies which file reports
+under Sections 13 or 15(d) of the Exchange Act. Resales of the Shares in the secondary market will be made pursuant to Section
+4(a)(1) of the Securities Act (sales other than by an issuer, underwriter or broker). The resale of such Shares may be subject
+to the holding period and other requirements of Rule 144 of the General Rules and Regulations of the SEC.
+
+ 
+
+Selling
+Shareholders
+
+ 
+
+The
+selling shareholders will offer their shares at a price of $1.50 per share, until the Company s common stock is listed on
+a national securities exchange or is quoted on the OTC Bulletin Board (or a successor); after which, the selling shareholders
+may sell their shares at prevailing market or privately negotiated prices, including (without limitation) in one or more transactions
+that may take place by ordinary broker s transactions, privately-negotiated transactions or through sales to one or more
+dealers for resale. The distribution of the Selling Shareholder Shares may be effected in one or more transactions that may take
+place through customary brokerage channels, in privately-negotiated sales, by a combination of these methods or by other means.
+The selling shareholders may from time to time offer their shares through underwriters, brokers-dealers, agents or other intermediaries.
+Usual and customary or specifically negotiated brokerage fees or commissions may be paid by the selling shareholders in connection
+with sales of the Shares. The Company will not receive any portion or percentage of any of the proceeds from the sale of the Selling
+Shareholders Shares. Of the 1,893,500 Selling Shareholder Shares included in the registration statement of which this prospectus
+is a part, 1,020,000 Selling Shareholder Shares are held by officers or directors of the Company.
+
+ 
+
+ 7 
+
+ 
+
+ 
+
+ 
+
+DESCRIPTION
+OF SECURITIES
+
+ 
+
+Capitalization
+
+ 
+
+The
+Company is authorized to issue 100,000,000 shares of common stock, par value $0.0001, of which 28,396,599 shares are outstanding
+as of the date of this prospectus. The Company is also authorized to issue 20,000,000 shares of preferred stock, par value $0.0001,
+of which no shares were outstanding as of the date of this prospectus.
+
+ 
+
+The
+following statements relating to the capital stock set forth the material terms of the securities of the Company, however, reference
+is made to the more detailed provisions of, and such statements are qualified in their entirety by reference to, the certificate
+of incorporation and the by-laws, copies of which are filed as exhibits to the registration statement, of which this prospectus
+is a part.
+
+ 
+
+Common
+Stock
+
+ 
+
+The
+Company is registering up to 1,893,500 shares of common stock for sale to the public by the holders thereof at a price of $1.50
+per Share. The Company is not directly offering any Shares for sale.
+
+ 
+
+Holders
+of shares of common stock are entitled to one vote for each share on all matters to be voted on by the stockholders. Holders of
+common stock do not have cumulative voting rights.
+
+ 
+
+Subject
+to preferences that may be applicable to any outstanding shares of preferred stock, the holders of common stock are entitled to
+share ratably in dividends, if any, as may be declared from time to time by the board of directors in its discretion from funds
+legally available therefor.
+
+ 
+
+Holders
+of common stock have no preemptive rights to purchase the Company s common stock. There are no conversion or redemption
+rights or sinking fund provisions with respect to the common stock. The Company may issue additional shares of common stock which
+could dilute its current shareholder s share value.
+
+ 
+
+Preferred
+Stock
+
+ 
+
+Shares
+of preferred stock may be issued from time to time in one or more series as may be determined by the board of directors. The board
+of directors may fix the designation, powers, preferences and rights of the shares of each such series and the qualifications,
+limitations or restrictions thereof without any further vote or action by the stockholders of the Company, except that no holder
+of preferred stock shall have preemptive rights. Any shares of preferred stock so issued would typically have priority over the
+common stock with respect to dividend or liquidation rights. Any future issuance of preferred stock may have the effect of delaying,
+deferring or preventing a change in control of the Company without further action by the stockholders and may adversely affect
+the voting and other rights of the holders of common stock.
+
+ 
+
+At
+present, the Company has no plans to issue any preferred stock or adopt any series, preferences or other classification of preferred
+stock. The issuance of shares of preferred stock, or the issuance of rights to purchase such shares, could be used to discourage
+an unsolicited acquisition proposal. For instance, the issuance of a series of preferred stock might impede a business combination
+by including class voting rights that would enable the holder to block such a transaction, or facilitate a business combination
+by including voting rights that would provide a required percentage vote of the stockholders. In addition, under certain circumstances,
+the issuance of preferred stock could adversely affect the voting power of the holders of the common stock.
+
+ 
+
+Although
+the Company s board of directors is required to make any determination to issue such preferred stock based on its judgment
+as to the best interests of the stockholders of the Company, the board of directors could act in a manner that would discourage
+an acquisition attempt or other transaction that some, or a majority, of the stockholders might believe to be in their best interests
+or in which stockholders might receive a premium for their stock over the then market price of such stock. The board of directors
+does not at present intend to seek stockholder approval prior to any issuance of currently authorized stock, unless otherwise
+required by law or otherwise.
+
+ 
+
+Admission
+to Quotation on the OTC Bulletin Board
+
+ 
+
+If
+the Company meets the qualifications, it intends to apply for quotation of its securities on the OTC Bulletin Board. The OTC Bulletin
+Board differs from national and regional stock exchanges in that it (1) is not situated in a single location but operates through
+communication of bids, offers and confirmations between broker-dealers and (2) securities admitted to quotation are offered by
+one or more broker-dealers rather than the "specialist" common to stock exchanges. To qualify for quotation on the
+OTC Bulletin Board, an equity security must have one registered broker-dealer, known as the market maker, willing to list bid
+or sale quotations and to sponsor the company listing. In addition, the Company must make available adequate current public information
+as required by applicable rules and regulations.
+
+ 
+
+In
+certain cases the Company may elect to have its securities initially quoted in the Pink Sheets published by Pink OTC Markets Inc.
+In general there is greater liquidity for traded securities on the OTC Bulletin Board, and less through quotation on the Pink
+Sheets. It is not possible to predict where, if at all, the securities of the Company will be traded following the effectiveness
+of this registration statement.
+
+ 
+
+ 8 
+
+ 
+
+ 
+
+ 
+
+Transfer
+Agent
+
+ 
+
+The
+Company engaged VStock Transfer LLC, in Woodmere, NY, as the transfer agent for the common stock of the Company.
+
+ 
+
+Penny
+Stock Regulation
+
+ 
+
+Penny
+stocks generally are equity securities with a price of less than $5.00 per share other than securities registered on national
+securities exchanges or listed on the Nasdaq Stock Market, provided that current price and volume information with respect to
+transactions in such securities are provided by the exchange or system. The penny stock rules impose additional sales practice
+requirements on broker-dealers who sell such securities to persons other than established customers and accredited investors (generally
+those with assets in excess of $1,000,000 or annual income exceeding $200,000, or $300,000 together with their spouse). For transactions
+covered by these rules, the broker-dealer must make a special suitability determination for the purchase of such securities and
+have received the purchaser s written consent to the transaction prior to the purchase. Additionally, for any transaction
+involving a penny stock, unless exempt, the rules require the delivery, prior to the transaction, of a disclosure schedule prescribed
+by the SEC relating to the penny stock market. The broker-dealer also must disclose the commissions payable to both the broker-dealer
+and the registered representative and current quotations for the securities. Finally, monthly statements must be sent disclosing
+recent price information on the limited market in penny stocks. Because of these penny stock rules, broker-dealers may be restricted
+in their ability to sell the Company s common stock. The foregoing required penny stock restrictions will not apply to the
+Company s common stock if such stock reaches and maintains a market price of $5.00 per share or greater.
+
+ 
+
+Dividends
+
+ 
+
+The
+Company has not paid any dividends to date. The Company intends to employ all available funds for the growth and development of
+its business, and accordingly, does not intend to declare or pay any dividends in the foreseeable future.
+
+ 
+
+THE
+BUSINESS
+
+ 
+
+Corporate
+History and General Information
+
+ 
+
+Veroni
+Brands Corp. ("Veroni" or the "Company") was incorporated as "Echo Sound Acquisition Corporation"
+on December 7, 2016 under the laws of the State of Delaware. In September 2017, the Company implemented a change of control by
+issuing shares to new stockholders, redeeming shares of existing stockholders, electing a new officer and director and accepting
+the resignations of its then existing officers and directors.
+
+ 
+
+In
+connection with the change in control, the stockholders of the Company and its board of directors unanimously approved the change
+of the Company s name from Echo Sound Acquisition Corporation to European CPG Acquisition Corporation. In November 2017,
+the stockholders of the Company and its board of directors unanimously approved the change of the Company s name to Veroni
+Brands Corp.
+
+ 
+
+The
+Company is located at 650 Forest Edge Drive, Vernon Hills, Illinois 60061. The Company s main phone number is 888-794-2999.
+The Company s fiscal year end is December 31. Neither the Company nor its predecessors have filed for bankruptcy, receivership
+or any similar proceedings nor are in the process of filing for bankruptcy, receivership or any similar proceedings.
+
+ 
+
+Background
+
+ 
+
+The
+Company has only recently emerged from its status as a development-stage company after the end of the 2017 fiscal year, and it
+has limited operating history and is expected to experience losses in the near term. The Company s independent auditors
+have issued a report raising substantial doubt about the Company s ability to continue as a going concern.
+
+ 
+
+Summary
+
+ 
+
+The
+business of the Company focuses on the import, sales and distribution of premium food and beverage products, primarily from Europe.
+Within this strategy, Veroni has secured a long-term exclusive import and distribution agreement with a major European supplier,
+FoodCare Sp. z o,o., a company organized under the laws of the Poland ("FoodCare"). Veroni will be the sole and exclusive
+importer and distributor in the United States market of Iron Energy, an energy drink sponsored by celebrity and former boxer Mike
+Tyson, with access to numerous other beverage brands through this partnership. We are planning to be a multifaceted company with
+a strategy for growing across a variety of consumer product categories.
+
+ 
+
+Risks
+and Uncertainties facing the Company
+
+ 
+
+The
+Company has had no revenues or customers to date; provided, however, it is Veroni s goal to begin sales of its licensed
+products by securing relationships with distributors and food and beverage retailers and by expanding its portfolio of products
+through strategic partnerships with new suppliers.
+
+ 
+
+As
+an early-stage company, the Company has limited operating history and is expected to continuously experience losses in the near
+term. The Company needs to generate revenue or locate additional financing in order to continue its developmental plans. As a
+company in the early part of its life, management of the Company must build relationships with food and beverage retailers and
+effectively market its products in order to execute the business plan of the Company on a broad scale. Further, there is no guarantee
+that the Company will be able to identify sufficient numbers of customers to generate enough revenues to continue operations or
+proceed with developing its business in accordance with its business plan.
+
+ 
+
+ 9 
+
+ 
+
+ 
+
+ 
+
+One
+of the biggest challenges facing the Company will be in securing adequate capital to fund its projects, including securing adequate
+capital to pay for the manufacturing of its products. Secondarily, following the manufacturing of its products, a major challenge
+will be implementing effective sales, marketing and distribution strategies to reach the intended end customers. The Company has
+considered and devised its initial sales, marketing and advertising strategy, however, the Company will need to skillfully implement
+this strategy in order to achieve success in its business.
+
+ 
+
+Due
+to these and other factors, the Company s need for additional capital, the Company s independent auditors have issued
+a report raising substantial doubt of the Company s ability to continue as a going concern.
+
+ 
+
+The
+Business: Food and Beverage Distribution
+
+ 
+
+Veroni
+is an importer, seller and distributor of premium food and beverage products, primarily from Europe. Within this strategy, Veroni
+has secured a long-term exclusive import and distribution agreement with a major European supplier, FoodCare Sp. z o,o., a company
+organized under the laws of the Poland ("FoodCare"). Veroni will be the sole and exclusive importer and distributor
+to the United States market of Iron Energy, an energy drink sponsored by celebrity and former boxer Mike Tyson, with access to
+numerous other beverage brands through this partnership. We are planning to be a multifaceted company with a strategy for growing
+across a variety of consumer product categories.
+
+ 
+
+We
+believe that Veroni s business will have the following strategic advantages:
+
+ 
+
+ 
+ 
+ U.S.-Based
+ Distribution for European Products: Through the development of relationships with European suppliers, we believe that
+ our business will enable foreign suppliers to penetrate the U.S. market through immediate access to Veroni s network
+ of sales, brokers, distributor and retailers.
+
+ 
+ 
+ 
+
+ 
+ 
+ International
+ Beverage Portfolio – Veroni s product offerings will consist of an established European quality beverage portfolio
+ of energy drinks, water, juices and iced teas.
+
+ 
+ 
+ 
+
+ 
+ 
+ Diverse
+ Products - Veroni s product offerings will be available in a variety of flavors, sizes and price points.
+
+ 
+ 
+ 
+
+ 
+ 
+ International
+ Strategic Partnerships and Licensing – The Company plans on developing an international portfolio of consumer food
+ and beverage products through exclusive licensing agreements with companies across the world.
+
+ 
+ 
+ 
+
+ 
+ 
+ Focus
+ on Premium Goods – The Company plans on focusing on distributing high profit products that are traded in the premium
+ space.
+
+ 
+
+Veroni
+is an importer and distributor of beverage products with an extensive manufacturing relationship with an international partner
+that offers great margins and European quality. Our goal is to become a one stop shop to the food and beverage distributors as
+well as beer distributor network. Veroni will endeavor to have its future distributors achieve and maintain Veroni s Retail
+Vision: (1) Off-premise guidelines will include distribution, display and space management, holding power, brand positioning,
+price signage, retail merchandising and quality assurance; and (2) On-premise guidelines include distribution, feature support
+and retail merchandising and promotional/sampling events.
+
+ 
+
+We
+have confidence in our strategy to utilize the food and beverage distributors as well as 3-tier beer distributorship partnership
+and route to the retail market and consumers.
+
+ 
+
+Iron
+Mike Energy Drink Product
+
+ 
+
+The
+Company believes that its Iron Energy drink, sponsored by celebrity and former boxer Mike Tyson, will appeal to consumers that
+are active, edgy, aggressive, adventurous, fans of MMA, extreme sports, music, sporting events, surfing and fitness. Iron Energy s
+target consumers are college students, young transitional adults coming out of college, independent singles in their 20 s
+and 30 s, athletes and the "party-goers" population.
+
+ 
+
+The
+Company s Iron Energy drink product line is available in three flavors, in 8.4oz and 11.2oz quantities:
+
+ 
+
+ 
+ 
+ Iron
+ Energy Classic
+
+ 
+ 
+ Iron
+ Energy Zero Sugar
+
+ 
+ 
+ Iron
+ Energy Mojito 
+
+ 
+
+ 10 
+
+ 
+
+ 
+
+ 
+
+Iron
+Energy Branded Products
+
+ 
+
+ 
+
+The
+Company s sales imperatives are to grow Iron Energy s profitable volume, increase Iron Energy brand distribution,
+and create Iron Energy network excitement and enthusiasm for the Iron Energy portfolio. The Company will align Iron Energy Frontline
+and Promoted Price to Consumer (PTC) at the premium level; similar to Red Bull. The Company s price promotional schedule
+strategy will be designed to promote during key high volume periods, and create excitement, trial and increased sales.
+
+ 
+
+Other
+Products
+
+ 
+
+In
+addition to the Iron Mike Energy drink, the Company is the exclusive U.S. distributor for the following products:
+
+ 
+
+Energy
+& Functional Drinks
+
+ 
+
+ 
+ 
+ 
+
+ 
+
+Desserts,
+Pastries, Coffee & Baking Additives
+
+ 
+
+ 
+
+ 11 
+
+ 
+
+ 
+
+ 
+
+Breakfast
+Products and Iced Tea
+
+ 
+
+ 
+
+Fruit
+Drinks & Sweets
+
+ 
+
+ 
+
+The
+Market 
+
+ 
+
+Since
+the Red Bull brand arrived in the U.S. in 1997, we believe that the energy drink category has been fast-growth and high-margin.
+As the segment centered on a handful of major brands, most of them moving to retail through captive distribution systems, for
+a while there was a large flow of new entrants, some of them very well financed, but that has slowed as the difficulty of making
+much headway has become clear. Thus, many smaller brands either seek to carve out an identity as healthier than mainstream brands,
+with their artificial ingredients and curious and misunderstood fortifiers like taurine, or have sought to occupy carefully targeted
+marketing niches.
+
+ 
+
+According
+to Packaged Facts report, Energy & Sports Drinks: U.S. Market Trends & Opportunities, sales of energy and sports
+drinks grew to $25 billion in sales in 2016 after rising at an annual rate of 7% over the preceding half decade. Packaged Facts
+forecasts that energy and sport drinks will remain among the fastest growing sectors of the beverage market.1
+
+ 
+
+Marketing
+Strategy
+
+ 
+
+The
+Company plans on engaging celebrity and former boxer Mike Tyson to act as "brand ambassador" by representing Iron
+Energy at:
+
+ 
+
+ 
+ 
+ Special
+ events appearances
+
+ 
+ 
+ Trade
+ shows participation
+
+ 
+ 
+ Distributors
+ and retailers "meet and greets"
+
+ 
+ 
+ Veroni
+ Brands Sponsorship events
+
+ 
+
+Further,
+the Company plans to market the Company s products via the following retail merchandising and promotional programs:
+
+ 
+
+ 
+ 
+ Ad
+ features and promotional activities
+
+ 
+ 
+ Shelf
+ placement and adjacencies
+
+ 
+ 
+ Feature
+ and multiple display programming
+
+ 
+ 
+ Loyalty
+ card
+
+ 
+ 
+ In-store
+ sampling and promotions
+
+ 
+ 
+ Merchandising
+ via shelf strips, counter cards, paper and permanent P.O.S. such as mirrors and signs
+
+ 
+ 
+ College
+ rep program at major Southern California universities
+
+ 
+
+The
+Company also plans on advertising through traditional television, radio, print, and social media advertisements, airport, bus
+shelter, taxi cab top, airport terminal advertisements, and through event sponsorships.
+
+ 
+
+ 
+
+1
+https://www.prnewswire.com/news-releases/energy-drink--sports-drink-market-reaches-25-billion-300458400.html
+
+ 
+
+ 12 
+
+ 
+
+ 
+
+ 
+
+Competition
+
+ 
+
+The
+Energy drink beverage market is dominated by brands such as Monster (which as 43% of the market), Red Bull, and Rockstar.2
+
+ 
+
+Strategic
+Partners, Retailers and Suppliers
+
+ 
+
+The
+Company believes that strategic partnerships will be a major component of the Company s operating strategy and path to success.
+The Company hopes to work with several strategic partners in important areas of its business and operations. Currently, the Company
+has an exclusive distribution agreement, covering the United States market, with a European food and beverage supplier, FoodCare
+Sp. z o,o., a company organized under the laws of the Poland ("FoodCare"), through which it has the exclusive right
+to distribute the Iron Energy drink, as well as an assortment of other products. The Company plans on engaging retailers throughout
+the U.S. and Canada to sell its products, including retailers like 7-Eleven, Circle K, Dollar General and many others.
+
+ 
+
+ The
+Company also has agreements with Norman Distribution Inc. and Skokie Valley Beverage to distribute the Company s products. 
+
+ 
+
+Operations
+
+ 
+
+At
+December 31, 2017, Veroni had only has one employee, its sole officer, Igor Gabal. In March 2018, Veroni hired six additional
+employees. Veroni s corporate offices and distribution center (with access to 3,000 pallets space capacity) is located in
+Vernon Hills, Illinois.
+
+ 
+
+Veroni
+Headquarters and Distribution Center
+
+ 
+
+ 
+
+Existing
+Contracts
+
+ 
+
+On
+January 30, 2018, Company entered into a distribution agreement with FoodCare. Under the terms of the Distribution Agreement,
+the Company became the exclusive importer and distributor of FoodCare s products in the United States, Puerto Rico and the
+U.S. Virgin Islands (the "U.S. market"). The term of the Distribution Agreement is for a period of 10 years during
+which Veroni will have the exclusive right to distribute FoodCare products within the U.S. market, so long as Veroni purchases
+the required quantity of product from FoodCare. The Distribution Agreement is terminable upon (1) mutual consent of the parties,
+(2) by either party in writing without justification, if an issue is not amicably resolved in 30 days of such issue, by providing
+180 days notice (in which case the Company would lose its exclusivity right), or (3) immediately in the event of notice
+of an uncured breach in the terms of the Distribution Agreement. FoodCare is a manufacturer and supplier of desserts, cereals,
+energy drinks and other beverage products. Notably, FoodCare manufactures the "Iron Energy" drink, a product sponsored
+by celebrity and former boxer Mike Tyson.
+
+ 
+
+ 
+
+2
+http://money.cnn.com/2018/01/19/news/companies/monster-energy-red-bull/index.html
+
+ 
+
+ 13 
+
+ 
+
+ 
+
+ 
+
+Revenues
+and Losses
+
+ 
+
+Since
+its inception, the Company has focused its efforts on identifying potential products for acquisition and business development,
+and has devoted little attention or resources to sales and marketing or generating near-term revenues and profits. The Company
+has no revenues to date and has not realized any profits as of yet. In order to succeed, the Company needs to develop a viable
+strategy to market its products. The Company posted net losses of $44,045 and $3,312 for the year ended December 31, 2017 and
+for the period from December 6, 2016 (inception) to December 31, 2016, respectively.
+
+ 
+
+Effect
+of Existing or Probable Governmental Regulation
+
+ 
+
+The
+Company s business may be subject to various government regulations in the jurisdictions in which it operates. Due to the
+potential wide scope of the Company s operations, the Company could be subject to regulation by various political and regulatory
+entities, including various local and municipal agencies and government sub-divisions. The Company may incur increased costs necessary
+to comply with existing and newly adopted laws and regulations or penalties for any failure to comply. The Company s operations
+could be adversely affected, directly or indirectly, by existing or future laws and regulations relating to its business or industry.
+
+ 
+
+As
+a producer of beverage products, we are subject to production, packaging, quality, labeling and distribution standards in each
+of the countries where we have operations, including, in the United States, as promulgated under the Federal Food, Drug and Cosmetic
+Act and the Fair Packaging and Labeling Act.
+
+ 
+
+The
+United States Food and Drug Administration ("FDA") maintains programs to inspect food and beverages imported into
+the United States. Imported food products are subject to FDA inspection when offered for import at U.S. ports of entry. FDA may
+detain shipments of products offered for import if the shipments are found not to be in compliance with U.S. requirements. Both
+imported and domestically-produced foods must meet the same legal requirements in the United States.
+
+ 
+
+Legal
+Matters
+
+ 
+
+There
+are currently no pending, threatened or actual legal proceedings of a material nature in which the Company is a party.
+
+ 
+
+THE
+COMPANY
+
+ 
+
+Change
+of Control
+
+ 
+
+Veroni
+Brands Corp. ("Veroni" or the "Company"), originally known as Echo Sound Acquisition Corporation, was
+incorporated on December 7, 2016 under the laws of the State of Delaware. In August 2017, the Company implemented a change of
+control by issuing shares to new stockholders, redeeming shares of existing shareholders, electing a new officer and director
+and accepting the resignations of its then existing officers and directors. In connection with the change in control, the stockholders
+of the Company and its board of directors unanimously approved the change of the Company s name from Echo Sound Acquisition
+Corporation to European CPG Acquisition Corporation. In November 2017, the stockholders of the Company and its board of directors
+unanimously approved the change of the Company s name to Veroni Brands Corp.
+
+ 
+
+Relationship
+with Tiber Creek Corporation
+
+ 
+
+Igor
+Gabal on behalf of GP Michigan, LLC, the Company s sole officer and director, previously entered into an agreement with
+Tiber Creek Corporation, a Delaware corporation ("Tiber Creek"), whereby Tiber Creek would provide assistance to GP
+Michigan, LLC in effecting transactions for Mr. Gabal and GP Michigan, LLC to acquire a public reporting company, including: transferring
+control of a public reporting company to Mr. Gabal and/or GP Michigan; causing the preparation and filing of forms, including
+a registration statement, with the SEC; assist in listing its securities on a trading exchange; and assist in establishing and
+maintaining relationships with market makers and broker-dealers. GP Michigan agreed to pay Tiber Creek $80,000 for those services,
+which was recorded as a capital contribution on behalf of the Company, and of which $48,000 was recorded to prepaid expenses and
+$32,000 to professional fees on behalf of the Company.
+
+ 
+
+Under
+the agreement, Tiber Creek has received to date $55,000 from Igor Gabal of the $80,000 fee. In addition, the Company s then-current
+shareholders, James Cassidy and James McKillop, were permitted to retain an aggregate total of 250,000 shares of the original
+20,000,000 shares owned prior to the change in control.
+
+ 
+
+Property
+Leases 
+
+ 
+
+The
+Company proposes to enter into a sublease for a portion of the facilities located at 650 Forest Edge Drive, Vernon Hills, Illinois
+60061 from Baron Chocolatier, Inc., a related party.
+
+ 
+
+Intellectual
+Property
+
+ 
+
+At
+present, the Company does not possess any intellectual property protection. The Company may decide in the future to pursue efforts
+to protect its intellectual property, trade secrets and proprietary methods and processes.
+
+ 
+
+ 14 
+
+ 
+
+ 
+
+ 
+
+Research
+and Development
+
+ 
+
+The
+Company has not to date undertaken, and does not currently plan to undertake, any material research and development activities.
+
+ 
+
+Employees
+
+ 
+
+Currently,
+the Company has seven employees, who have agreed to assist the Company without pay until the Company is more stable and has recurring
+cash flow from operations.
+
+ 
+
+Subsidiaries
+
+ 
+
+The
+Company has no subsidiaries.
+
+ 
+
+Reports
+to Security Holders
+
+ 
+
+In
+January 2017, the Company (as Echo Sound Acquisition Corporation) filed a Form 10-12G general registration of securities pursuant
+to the Exchange Act and is a reporting company pursuant such Act and files with the SEC quarterly and annual reports and management
+shareholding information. The Company intends to deliver a copy of its annual report to its security holders, and will voluntarily
+send a copy of the annual report, including audited financial statements, to any registered shareholder who requests the same.
+
+ 
+
+The
+Company s documents filed with the SEC may be inspected at the Commission s principal office in Washington, D.C. Copies
+of all or any part of the registration statement may be obtained from the Public Reference Section of the SEC, 100 F Street N.E.,
+Washington, D.C. 20549. Call the Commission at 1-800-SEC-0330 for further information on the operation of the public reference
+rooms. The SEC also maintains a web site at http://www.sec.gov that contains reports, proxy statements and information regarding
+registrants that file electronically with the Commission. All of the Company s filings may be located under the CIK number
+0001693690.
+
+ 
+
+PLAN
+OF OPERATION
+
+ 
+
+Business
+Plan and Potential Revenue
+
+ 
+
+The
+business of the Company focuses on the import, sales and distribution of premium food and beverage products, primarily from suppliers
+located in Europe. Within this strategy, Veroni has secured a long-term exclusive import and distribution agreement with a major
+European supplier, FoodCare. Veroni will be the sole and exclusive importer and distributor in the United States market of Iron
+Energy, an energy drink sponsored by celebrity and former boxer Mike Tyson, with access to numerous other beverage brands through
+this partnership. We are planning to be a multifaceted company with a strategy for growing across a variety of consumer product
+categories and plan on generating revenues from sales of our products. The Company has offices and distribution facilities located
+in Vernon Hills, Illinois.
+
+ 
+
+MANAGEMENT S
+DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
+
+AND
+RESULTS OF OPERATIONS
+
+ 
+
+Overview
+
+ 
+
+Veroni
+Brands Corp. (formerly "Echo Sound Acquisition Corporation") ("Veroni" or the "Company") was
+incorporated on December 7, 2016, under the laws of the state of Delaware. The business purpose of the Company is to facilitate
+the sales and distribution of premium food and beverage products from Europe, most notably its Iron Energy beverage product.
+
+ 
+
+The
+Company has been in the development stage since inception and its operations to date have been limited to issuing shares to its
+original stockholders and effecting a change in control of the Company described below.
+
+ 
+
+The
+Company originated as a blank check company and qualifies as an "emerging growth company" as defined in the Jumpstart
+Our Business Startups Act which became law in April 2012.
+
+ 
+
+On
+August 31, 2017, the Company effected a change in control by the redemption of 19,500,000 shares of the then outstanding 20,000,000
+shares of common stock and the issuance on September 1, 2017 of 10,000,000 shares of common stock to Igor Gabal and GP Michigan
+LLC, a company controlled by Mr. Gabal, at a purchase price of $0.0001 per share. Messrs. James Cassidy and James McKillop, the
+then officers and directors of the Company, resigned and Igor Gabal was named its sole officer and director. Pursuant to the change
+in control, the Company changed its name to European CPG Acquisition Corporation, which was subsequently changed to Veroni Brands
+Corp.
+
+ 
+
+The
+Company filed Current Reports on Form 8-K to disclose the change of control and the change of name.
+
+ 
+
+Subsequently,
+on January 30, 2018, the Company entered into a distribution agreement with FoodCare. Under the terms of the Distribution Agreement,
+the Company became the exclusive importer and distributor of FoodCare s products in the United States, Puerto Rico and the
+U.S. Virgin Islands (the "U.S. market"). The term of the Distribution Agreement is for a period of 10 years during
+which Veroni will have the exclusive right to distribute FoodCare products within the U.S. market, so long as Veroni purchases
+the required quantity of product from FoodCare. The Distribution Agreement is terminable upon (1) mutual consent of the parties,
+(2) by either party in writing without justification, if an issue is not amicably resolved in 30 days of such issue, by providing
+180 days notice (in which case the Company would lose its exclusivity rights), or (3) immediately in the event of notice
+of an uncured breach in the terms of the Distribution Agreement. FoodCare is a manufacturer and supplier of desserts, cereals,
+energy drinks and other beverage products. Notably, FoodCare manufactures the "Iron Energy" drink, a product sponsored
+by celebrity and former boxer Mike Tyson.
+
+ 
+
+ 15 
+
+ 
+
+ 
+
+ 
+
+An
+affiliate of the Company has entered into an agreement with Tiber Creek Corporation of which the former president of the Company
+is the president and controlling stockholder. Tiber Creek Corporation assists companies to become public reporting companies and
+for the preparation and filing of registration statements pursuant to the Securities Act of 1933, and the introduction to brokers
+and market makers.
+
+ 
+
+Other
+than the Distribution Agreement described above, the Company has not entered into other any definitive or binding agreements and
+there are no assurances that any transactions will occur.
+
+ 
+
+As
+of December 31, 2017, the Company had not generated any revenues or cash flows from operations since inception. At December 31,
+2017, the Company had sustained net losses of $47,357 since inception.
+
+ 
+
+For
+the period ended December 31, 2017, the Company s independent auditors issued a report raising substantial doubt about the
+Company s ability to continue as a going concern. As of December 31, 2017, the Company has minimal operations and the continuation
+of the Company as a going concern is dependent upon financial support from its principal stockholders, its ability to obtain necessary
+equity and/or debt financing, or its ability to sell its products to generate consistent profitability.
+
+ 
+
+Revenues
+and Losses
+
+ 
+
+During
+the year ended December 31, 2017, the Company generated no revenues. The Company has focused its efforts on identifying products
+for distribution, and devoted little attention or resources to sales and marketing or generating near-term revenues and profits.
+
+ 
+
+During
+the year ended December 31, 2017, the Company posted a net loss of $44,045.
+
+ 
+
+Discussion
+of the Year Ended December 31, 2017 as compared to the period from December 6, 2016 (inception) to December 31, 2016
+
+ 
+
+The
+Company generated no revenues during the year ended December 31, 2017, and no revenues for the period from December 7, 2016 (inception)
+to December 31, 2016. The Company has focused its efforts on identifying business opportunities, and devoted little attention
+or resources to sales and marketing or generating near-term revenues and profits.
+
+ 
+
+During
+the year ended December 31, 2017, the Company posted a net loss of $44,045, compared to a net loss of $3,312 for the period from
+December 7, 2016 (inception) to December 31, 2016. The increased loss is primarily the result of the Company ramping up its operations
+in anticipation of executing its business plan.
+
+ 
+
+During
+the year ended December 31, 2017, the Company used net cash of $-0- in its operating activities and investing activities, and
+net cash provided by financing activities totaled $595. The Company had a cash balance of $595 as of December 31, 2017.
+
+ 
+
+Liquidity
+and Capital Resources
+
+ 
+
+Since
+its inception, the Company has devoted most of its efforts to business planning, research and development, recruiting management
+and staff and raising capital. Accordingly, the Company was considered to be in the development stage until it recently began
+formal operations in 2018. The Company has not generated any revenues from its operations, and there is no assurance of future
+revenues.
+
+ 
+
+The
+Company s proposed activities will necessitate significant uses of capital into and beyond 2018. Accordingly, since the
+beginning of 2018 and through the date of this report, the Company has engaged in sales of its equity securities in private placements.
+Through March 31, 2018, a total of 10,096,599 shares have been sold for total gross proceeds of $192,429.
+
+ 
+
+Plan
+of Operations
+
+ 
+
+For
+the next few months, the Company will be focusing on obtaining visibility for the products by contacting convenience store locations
+and small distributors to those types of locations. The Company is targeting metropolitan areas, such as Chicago, Los Angeles,
+Las Vegas and cities in New Jersey and New York.
+
+ 
+
+Currently,
+these efforts are being funded through the proceeds of the Company s private placements, as discussed above. Management
+of Veroni believes that having a trading market for the Company s common stock will make other sources of financing available
+and assist it in engaging with larger distributors.
+
+ 
+
+There
+is no assurance that the Company s activities will generate sufficient revenues to sustain its operations without additional
+capital, or if additional capital is needed, that such funds, if available, will be obtainable on terms satisfactory to the Company.
+Accordingly, given the Company s limited cash and cash equivalents on hand, the Company will be unable to implement its
+business plans and proposed operations unless it obtains additional financing or otherwise is able to generate revenues and profits.
+The Company may raise additional capital through sales of debt or equity, obtain loan financing or develop and consummate other
+alternative financial plans. In the near term, the Company plans to rely on its primary stockholder to continue his commitment
+to fund the Company s continuing operating requirements. Management anticipates a total capital raise between $5-10M USD
+over the course of the following four consecutive quarters; provided, however, that the Company will require a minimum of $600,000
+for the next 12 months to fund its operations, which will be used to fund expenses related to operations, office supplies, travel,
+salaries and other incidental expenses. Management believes that this capital would allow the Company to meet its operating cash
+requirements, and would facilitate the Company s business of selling and distributing its products. Management also believes
+that the acquisition of such assets would generate revenue to cover overhead cost and general liabilities of the Company, and
+allow the Company to achieve overall sustainable profitability.
+
+ 
+
+ 16 
+
+ 
+
+ 
+
+ 
+
+Equipment
+Financing
+
+ 
+
+The
+Company has no existing equipment financing arrangements.
+
+ 
+
+Potential
+Revenue
+
+ 
+
+The
+Company expects to generate revenue from selling its products, most notably the "Iron Energy" drink. Further, depending
+on the market environment, the Company plans on acquiring the rights to sell and distribute other food and beverage products.
+
+ 
+
+Alternative
+Financial Planning
+
+ 
+
+The
+Company has no alternative financial plans at the moment. If the Company is not able to successfully raise monies as needed through
+a private placement or other securities offering (including, but not limited to, a primary public offering of securities), the
+Company s ability to survive as a going concern and implement any part of its business plan or strategy will be severely
+jeopardized.
+
+ 
+
+Critical
+Accounting Policies
+
+ 
+
+The
+financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United
+States. The preparation of these financial statements requires making estimates and judgments that affect the reported amounts
+of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. The estimates are
+based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the
+results of which form the basis of making judgments about the carrying values of assets and liabilities that are not readily apparent
+from other sources. Actual results may differ from these estimates under different assumptions or conditions.
+
+ 
+
+Off-Balance
+Sheet Arrangements
+
+ 
+
+The
+Company has no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on its financial
+condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital
+resources.
+
+ 
+
+MANAGEMENT
+
+ 
+
+The
+following table sets forth information regarding the members of the Company s board of directors and its executive officers:
+
+ 
+
+ Name
+ 
+ Position
+ 
+ Year
+ Commenced
+
+ Igor
+ Gabal
+ 
+ President,
+ Secretary, Chief Financial Officer & Director
+ 
+ 2017
+
+ 
+
+Igor
+Gabal, age 43, serves as President, Secretary, Chief Financial Officer and director of the Company. Mr. Gabal has over 15 years
+of middle-market private equity investment experience primarily in real estate, industrial manufacturing, consumer packaged goods
+distribution or services operating industries. He has initiated and overseen add-on acquisitions, debt capital market issues for
+various companies and has experience and relationships with middle-market private equity firms, investment banks and debt financing
+sources. Mr. Gabal has served as a board member and managing member for Guterman Partners Companies since 2009. Mr. Gabal has
+been acting as executive vice president for Baron Chocolatier, Inc., a company that specializes on the importing and distribution
+of chocolate products throughout the United States since 2016. Mr. Gabal received his Bachelor of Science in Business Management
+degree from DeVry Institute in 2000 and also attended Kellogg School of Management 2000-2002.
+
+ 
+
+Director
+Independence
+
+ 
+
+The
+Board of Directors has determined that it does not have any independent directors as that term is defined by NASDAQ Marketplace
+Rule 5605(a)(2). In assessing the independence of the directors, the Board considers any transactions, relationships and arrangements
+between our Company and our independent directors or their affiliated companies. This review is based primarily on responses of
+the directors to questions in a director and officer questionnaire regarding employment, business, familial, compensation and
+other relationships with our Company or our management.
+
+ 
+
+ 17 
+
+ 
+
+ 
+
+ 
+
+Committees
+and Terms
+
+ 
+
+The
+Board of Directors (the "Board") has not established any committees.
+
+ 
+
+Legal
+Proceedings
+
+ 
+
+There
+are no legal proceedings regarding the Company.
+
+ 
+
+Code
+of Ethics
+
+ 
+
+Our
+Board of Directors has not adopted a code of ethics. We anticipate that we will adopt a code of ethics when we increase either
+the number of our Directors or the number of our employees.
+
+ 
+
+EXECUTIVE
+COMPENSATION
+
+ 
+
+To
+date, the Company has not paid compensation to any executive officer or director. The Company may choose to pay a salary or fees
+to its executive management in the future. There have been no changes in the Company s compensation policy since the end
+of the Company s last fiscal year, December 31, 2017.
+
+ 
+
+Narrative
+Disclosure to Summary Compensation Table
+
+ 
+
+There
+are no current employment agreements between the Company and its executive officers. The compensation discussed herein addresses
+all compensation awarded to, earned by, or paid to our named executive officers. There are no other stock option plans, retirement,
+pension, or profit sharing plans for the benefit of our officers and directors other than as described herein.
+
+ 
+
+Outstanding
+Equity Awards at Fiscal Year-End
+
+ 
+
+There
+are no current outstanding equity awards to our executive officers as of December 31, 2017.
+
+ 
+
+Committees
+of the Board
+
+ 
+
+Our
+Company currently does not have nominating, compensation or audit committees or committees performing similar functions nor does
+our Company have a written nominating, compensation or audit committee charter. Our sole Director believes that it is not necessary
+to have such committees, at this time, because he can adequately perform the functions of such committees.
+
+ 
+
+Our
+Company does not have any defined policy or procedural requirements for shareholders to submit recommendations or nominations
+for Directors. The sole Director believes that, given the stage of our development, a specific nominating policy would be premature
+and of little assistance until our business operations develop to a more advanced level. Our Company does not currently have any
+specific or minimum criteria for the election of nominees to the Board of Directors and we do not have any specific process or
+procedure for evaluating such nominees. The Board of Directors will assess all candidates, whether submitted by management or
+shareholders, and make recommendations for election or appointment.
+
+ 
+
+A
+shareholder who wishes to communicate with our Board of Directors may do so by directing a written request addressed to our President
+and Director, at the address appearing on the first page of this filing.
+
+ 
+
+Risk
+Oversight
+
+ 
+
+Effective
+risk oversight is an important priority of the Company. Because risks are considered in virtually every business decision, the
+Director s approach to risk oversight includes understanding the critical risks in the Company s business and strategy,
+evaluating the Company s risk management processes, allocating responsibilities for risk oversight among the future full
+Board of Directors, and fostering an appropriate culture of integrity and compliance with legal responsibilities.
+
+ 
+
+Corporate
+Governance
+
+ 
+
+The
+Company promotes accountability for adherence to honest and ethical conduct; endeavors to provide full, fair, accurate, timely
+and understandable disclosure in reports and documents that the Company files with the SEC and in other public communications
+made by the Company; and strives to be compliant with applicable governmental laws, rules and regulations. The Company has not
+formally adopted a written code of business conduct and ethics that governs the Company s employees, officers and Directors
+as the Company is not required to do so.
+
+ 
+
+In
+lieu of an Audit Committee, the Company s sole Director is responsible for reviewing and making recommendations concerning
+the selection of outside auditors, reviewing the scope, results and effectiveness of the annual audit of the Company s financial
+statements and other services provided by the Company s independent public accountants. The Company s sole Director
+reviews the Company s internal accounting controls, practices and policies.
+
+ 
+
+ 18 
+
+ 
+
+ 
+
+ 
+
+Code
+of Ethics
+
+ 
+
+The
+Company has not adopted a code of ethics. We anticipate that we will adopt a code of ethics when we increase either the number
+of our Directors or the number of our employees.
+
+ 
+
+Section
+16(a) Beneficial Ownership Reporting Compliance
+
+ 
+
+Section
+16(a) of the Exchange Act may require our executive officers and Directors, and persons who own more than ten percent of our common
+stock to file reports of ownership and change in ownership with the SEC and the exchange on which the common stock is listed for
+trading. Executive officers, Directors and more than ten percent (10%) stockholders are required by regulations promulgated under
+the Exchange Act to furnish us with copies of all Section 16(a) reports filed. Based solely on our review of copies of the Section
+16(a) reports filed for the fiscal years ended December 31, 2017, we believe that during the fiscal year ended December 31, 2017,
+the following10% stockholders did not comply with the reporting requirements applicable to them: Tomasz Kotas and GP Michigan,
+LLC.
+
+ 
+
+Director
+Compensation
+
+ 
+
+Our
+sole Director does not currently receive any consideration for his services as a Director. The Company reserves the right in the
+future to award future members of the Board of Directors cash or stock based consideration for their services to the Company,
+which awards, if granted shall be in the sole determination of the Board of Directors.
+
+ 
+
+Executive
+Compensation Philosophy
+
+ 
+
+Our
+sole Director determines the compensation given to our executive officers in his sole determination. Our sole Director also reserves
+the right to pay our executives a salary, and/or issue them shares of common stock issued in consideration for services rendered
+and/or to award incentive bonuses which are linked to our performance, as well as to the individual executive officer s
+performance. This package may also include long-term stock based compensation to certain executives, which is intended to align
+the performance of our executives with our long-term business strategies. Additionally, our sole Director reserves the right to
+grant stock options in the future, if he, in his sole determination, believes such grants would be in the best interests of the
+Company.
+
+ 
+
+Incentive
+Bonus
+
+ 
+
+The
+Board of Directors may grant incentive bonuses to our executive officers in its sole discretion, if the Board of Directors believes
+such bonuses are in the Company s best interest, after analyzing our current business objectives and growth, if any, and
+the amount of revenue we are able to generate each month, which revenue is a direct result of the actions and ability of such
+executives.
+
+ 
+
+Long-term,
+Stock Based Compensation
+
+ 
+
+In
+order to attract, retain and motivate executive talent necessary to support the Company s long-term business strategy we
+may award certain executives with long-term, stock-based compensation in the future, in the sole discretion of our sole Director,
+which we do not currently have any immediate plans to award.
+
+ 
+
+SECURITY
+OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
+
+ 
+
+The
+following table sets forth information as of March 31, 2018 regarding the beneficial ownership of the Company s common stock
+by each of its executive officers and directors, individually and as a group and by each person who beneficially owns in excess
+of five percent of the common stock after giving effect to any exercise of warrants or options held by that person.
+
+ 
+
+Security
+Ownership of Officers, Directors and Certain Beneficial Holders
+
+ 
+
+ Name
+ and Address of Beneficial Owner 
+ Title
+ of class 
+ Amount
+ and Nature of Beneficial Ownership 
+ Percentage
+ of Class Before Offering (1) 
+ Percentage
+ of Class After Offering (2) 
+
+ Igor Gabal
+ (3) (4) 
+ Common Stock 
+ 12,100,000(5) 
+ 42.6% 
+ 39.0%
+
+ Tomasz Kotas (6) 
+ Common Stock 
+ 12,703,599 
+ 44.7% 
+ 43.7%
+
+ Cathal J. O Flaherty
+ (7) 
+ Common Stock 
+ 2,020,000 
+ 7.0% 
+ 6.4%
+
+ 
+
+ 
+ (1)
+ Based
+ upon 28,396,599 shares outstanding as of the date of this offering.
+
+ 
+ (2)
+ Assumes
+ sale of all 1,893,500 Shares offered in the aggregate by the Selling Shareholders in the offering, and a total of 28,396,599
+ shares outstanding following the offering.
+
+ 
+ (3)
+ The
+ address of the Company s Officer and Director is 650 Forest Edge Drive, Vernon Hills, Illinois 60061.
+
+ 
+ (4)
+ Igor
+ Gabal is the Company s President, Secretary, Chief Financial Officer & sole Director.
+
+ 
+ (5)
+ Igor
+ Gabal is the beneficial owner of 12,100,000 shares of the Company s common stock, comprised of 4,900,000 shares held
+ by him individually and 7,200,000 shares held by GP Michigan, LLC, which is a company that is controlled by Mr. Gabal.
+
+ 
+ (6)
+ The
+ address of Tomasz Kotas is 1950 Telegraph Rd., Lake Forest, IL 60045. Includes 20,000 shares held of record by his wife.
+
+ 
+ (7)
+ The
+ address of Cathal J. O Flaherty is 228 Raleigh Rd., Kenilworth, IL 60043. Includes 20,000 shares held of record by his
+ wife.
+
+ 
+
+ 19 
+
+ 
+
+ 
+
+ 
+
+CERTAIN
+RELATIONSHIPS AND RELATED TRANSACTIONS
+
+ 
+
+Our
+officer and director are now and may in the future become a stockholder, officer or director of other companies that may be engaged
+in business activities similar to those conducted by us. Accordingly, direct conflicts of interest may arise in the future with
+respect to such individuals acting on our behalf or other entities. Moreover, additional conflicts of interest may arise with
+respect to opportunities which come to the attention of such individual in the performance of his duties or otherwise. Although
+we do not currently have a right of first refusal pertaining to opportunities that come to management s attention insofar
+as such opportunities may relate to our business operations, we have established a conflict of interest policy intended to ensure
+timely disclosure and avoidance of activities and relationships that conflict with the interests of the Company.
+
+ 
+
+Our
+officer and director is subject to the restriction that all opportunities contemplated by our business plan which come to their
+attention, either in the performance of their duties or in any other manner, will be considered opportunities of, and be made
+available to our Company. A breach of this requirement will be a breach of the fiduciary duties of the officer or director.
+
+ 
+
+All
+future affiliated transactions will be made or entered into on terms that are no less favorable to us than those that can be obtained
+from any unaffiliated third party. To the extent possible, a majority of the independent, disinterested members of our board of
+directors will approve future affiliated transactions.
+
+ 
+
+James
+Cassidy and James McKillop, who were both formerly officers and directors of the Company, each own 125,000 shares of the common
+stock of the Company. As the organizers and developers of Echo Sound Acquisition Corporation, Mr. Cassidy and Mr. McKillop were
+involved with the Company from inception in December 2016 to the change in control in August 2017. In particular, Mr. Cassidy
+provided services to the Company without charge, including preparation and filing of the charter corporate documents and preparation
+of the instant registration statement. James Cassidy is also a partner in the law firm which acts as counsel to the Company and
+is also the president of Tiber Creek Corporation, a Delaware corporation ("Tiber Creek"), which provides advisory
+services.
+
+ 
+
+Igor
+Gabal on behalf of GP Michigan, LLC, the Company s sole officer and director, previously entered into an agreement with
+Tiber Creek, whereby Tiber Creek would provide assistance to GP Michigan, LLC in effecting transactions for Mr. Gabal and GP Michigan,
+LLC to acquire a public reporting company, including: transferring control of a public reporting company to Mr. Gabal and/or GP
+Michigan; causing the preparation and filing of forms, including a registration statement, with the SEC; assist in listing its
+securities on a trading exchange; and assist in establishing and maintaining relationships with market makers and broker-dealers.
+GP Michigan agreed to pay Tiber Creek $80,000 for those services, which was recorded as a capital contribution on behalf of the
+Company, and of which $48,000 was recorded to prepaid expenses and $32,000 to professional fees on behalf of the Company.
+
+ 
+
+Under
+the agreement, Tiber Creek has received to date $55,000 from Igor Gabal of the $80,000 fee. In addition, the Company s then-current
+stockholders, James Cassidy and James McKillop, were permitted to retain an aggregate total of 250,000 shares of the original
+20,000,000 shares owned prior to the change in control.
+
+ 
+
+SELLING
+SHAREHOLDERS
+
+ 
+
+The
+Company is registering for offer and sale by existing holders thereof 1,893,500 shares of common stock held by such shareholders.
+The Company will not receive any proceeds from the sale of the Selling Shareholder Shares. The selling shareholders have no agreement
+with any underwriters with respect to the sale of the Selling Shareholder Shares. The selling shareholders, who are deemed to
+be statutory underwriters, will offer their shares at a price of $1.50 per share, until the Company s common stock is listed
+on a national securities exchange or is quoted on the OTC Bulletin Board (or a successor); after which, the selling shareholders
+may sell their shares at prevailing market or privately negotiated prices, including (without limitation) in one or more transactions
+that may take place by ordinary broker s transactions, privately-negotiated transactions or through sales to one or more
+dealers for resale.
+
+ 
+
+The
+selling shareholders may from time to time offer the Selling Shareholder Shares through underwriters, dealers or agents, which
+may receive compensation in the form of underwriting discounts, concessions or commissions from them and/or the purchasers of
+the Selling Shareholder Shares for whom they may act as agents. Any agents, dealers or underwriters that participate in the distribution
+of the Selling Shareholder Shares may be deemed to be "underwriters" under the Securities Act and any discounts, commissions
+or concessions received by any such underwriters, dealers or agents might be deemed to be underwriting discounts and commissions
+under the Securities Act.
+
+ 
+
+ 20 
+
+ 
+
+ 
+
+ 
+
+The
+following table sets forth ownership of shares held by each person who is a selling shareholder.
+
+ 
+
+ Name
+ of
+
+ Selling
+ Shareholder
+ 
+ Position,
+ Office or Other Material Relationship 
+ Shares
+ Beneficially Owned Prior to the Offering (1) 
+ Shares
+ to be Offered 
+ Shares
+ Beneficially Owned After the Offering (2) 
+ Percentage
+ Beneficially Owned before the Offering (3) 
+ Percentage
+ Beneficially Owned after the Offering (4) 
+
+ Igor Gabal(5)
+ 
+ President,
+ Secretary, Chief Financial Officer & Director 
+ 4,900,000 
+ 300,000 
+ 4,600,000 
+ 17.3% 
+ 16.2%
+
+ GP Michigan,
+ LLC(5) 
+ 
+ 7,200,000 
+ 720,000 
+ 6,480,000 
+ 25.4% 
+ 22.8%
+
+ Aleksander
+ Konowalczyk 
+ 
+ 500,000 
+ 250,000 
+ 250,000 
+ 1.8% 
+ <1%
+
+ Tomasz
+ Kotas (6) 
+ 
+ 12,703,599 
+ 300,000 
+ 12,403,599 
+ 44.7% 
+ 43.7%
+
+ Cathal
+ J. O Flaherty(7) 
+ 
+ 2,000,000 
+ 200,000 
+ 1,800,000 
+ 7.0% 
+ 6.3%
+
+ Thomas
+ Wyness 
+ 
+ 100,000 
+ 10,000 
+ 90,000 
+ <1% 
+ <1%
+
+ John
+ Shumski 
+ 
+ 20,000 
+ 2,000 
+ 18,000 
+ <1% 
+ <1%
+
+ Jenny
+ Calcara 
+ 
+ 30,000 
+ 3,000 
+ 27,000 
+ <1% 
+ <1%
+
+ Tracy O Flaherty(7)
+ 
+ 
+ 20,000 
+ 2,000 
+ 18,000 
+ <1% 
+ <1%
+
+ Jaroslaw
+ Grzywanowski 
+ 
+ 15,000 
+ 2,000 
+ 13,000 
+ <1% 
+ <1%
+
+ Marzena
+ Pol 
+ 
+ 15,000 
+ 2,000 
+ 13,000 
+ <1% 
+ <1%
+
+ Patrycja Kotas(6)
+ 
+ 
+ 20,000 
+ 2,000 
+ 18,000 
+ <1% 
+ <1%
+
+ Inez
+ Biernat Karbownik 
+ 
+ 5,000 
+ 2,000 
+ 3,000 
+ <1% 
+ <1%
+
+ Albert
+ Czerwinski 
+ 
+ 5,000 
+ 2,000 
+ 3,000 
+ <1% 
+ <1%
+
+ Robert
+ Radkowski 
+ 
+ 10,000 
+ 2,000 
+ 8,000 
+ <1% 
+ <1%
+
+ Wojciech
+ Wolny 
+ 
+ 10,000 
+ 2,000 
+ 8,000 
+ <1% 
+ <1%
+
+ Aleksandra
+ Cardona 
+ 
+ 5,000 
+ 2,000 
+ 3,000 
+ <1% 
+ <1%
+
+ Edyta
+ Slusarczyk 
+ 
+ 10,000 
+ 2,000 
+ 8,000 
+ <1% 
+ <1%
+
+ Robert
+ Wachowiak 
+ 
+ 10,000 
+ 2,000 
+ 8,000 
+ <1% 
+ <1%
+
+ Mary
+ Appelhans 
+ 
+ 3,000 
+ 3,000 
+ 0 
+ <1% 
+ 0%
+
+ Christopher
+ Hall 
+ 
+ 3,000 
+ 3,000 
+ 0 
+ <1% 
+ 0%
+
+ Aleksandra
+ Dabala 
+ 
+ 3,000 
+ 3,000 
+ 0 
+ <1% 
+ 0%
+
+ Kate
+ Mathews 
+ 
+ 3,000 
+ 3,000 
+ 0 
+ <1% 
+ 0%
+
+ Megan
+ Brancato 
+ 
+ 3,000 
+ 3,000 
+ 0 
+ <1% 
+ 0%
+
+ Louis
+ Brons 
+ 
+ 3,000 
+ 3,000 
+ 0 
+ <1% 
+ 0%
+
+ Maria
+ Krzanowska Rog 
+ 
+ 5,000 
+ 2,000 
+ 3,000 
+ <1% 
+ <1%
+
+ Joseph
+ Cusick 
+ 
+ 10,000 
+ 2,000 
+ 8,000 
+ <1% 
+ <1%
+
+ Stephen
+ Cole 
+ 
+ 10,000 
+ 2,000 
+ 8,000 
+ <1% 
+ <1%
+
+ Gabriel
+ Martinez 
+ 
+ 25,000 
+ 2,500 
+ 22,500 
+ <1% 
+ <1%
+
+ David
+ Goldberg 
+ 
+ 10,000 
+ 2,000 
+ 8,000 
+ <1% 
+ <1%
+
+ Yuriy
+ Gabal 
+ 
+ 20,000 
+ 2,000 
+ 18,000 
+ <1% 
+ <1%
+
+ GB Service,
+ Inc 
+ 
+ 20,000 
+ 2,000 
+ 18,000 
+ <1% 
+ <1%
+
+ Aleksander
+ Konowalczyk 
+ 
+ 30,000 
+ 3,000 
+ 27,000 
+ <1% 
+ <1%
+
+ Gerald
+ Guterman 
+ 
+ 10,000 
+ 2,000 
+ 8,000 
+ <1% 
+ <1%
+
+ John
+ Malarkey 
+ 
+ 10,000 
+ 2,000 
+ 8,000 
+ <1% 
+ <1%
+
+ John
+ Markowicz 
+ 
+ 10,000 
+ 2,000 
+ 8,000 
+ <1% 
+ <1%
+
+ Dariusz
+ Kania 
+ 
+ 10,000 
+ 2,000 
+ 8,000 
+ <1% 
+ <1%
+
+ Jay
+ Schiesser 
+ 
+ 10,000 
+ 2,000 
+ 8,000 
+ <1% 
+ <1%
+
+ Andrew
+ Bulkowski 
+ 
+ 10,000 
+ 2,000 
+ 8,000 
+ <1% 
+ <1%
+
+ Krzysztof
+ Fedorowicz 
+ 
+ 10,000 
+ 2,000 
+ 8,000 
+ <1% 
+ <1%
+
+ Beata
+ Fedorowicz 
+ 
+ 10,000 
+ 2,000 
+ 8,000 
+ <1% 
+ <1%
+
+ Ryszard
+ Brzozowski 
+ 
+ 10,000 
+ 2,000 
+ 8,000 
+ <1% 
+ <1%
+
+ Rafal
+ Kotas 
+ 
+ 20,000 
+ 2,000 
+ 18,000 
+ <1% 
+ <1%
+
+ Bartosz
+ Kotas 
+ 
+ 20,000 
+ 2,000 
+ 18,000 
+ <1% 
+ <1%
+
+ Martin
+ Murray 
+ 
+ 10,000 
+ 2,000 
+ 18,000 
+ <1% 
+ <1%
+
+ Dmitry
+ Richie 
+ 
+ 10,000 
+ 2,000 
+ 18,000 
+ <1% 
+ <1%
+
+ John
+ D. Nichols III 
+ 
+ 250,000 
+ 25,000 
+ 225,000 
+ <1% 
+ <1%
+
+ 
+
+ 21 
+
+ 
+
+ 
+
+ 
+
+ 
+ 1.
+ Beneficial
+ ownership is determined in accordance with Rule 13d-3 under the Securities Act, and includes any shares as to which the Selling
+ Shareholder has sole or shared voting power or investment power, and also any shares which the Selling Shareholder has the
+ right to acquire within 60 days of the date hereof, whether through the exercise or conversion of any stock option, convertible
+ security, warrant or other right. The indication herein that shares are beneficially owned is not an admission on the part
+ of the stockholder that it is a direct or indirect beneficial owner of those shares. This table includes the Warrant Shares
+ as part of the Selling Shareholder s beneficial ownership prior to the offering. Except as indicated in the footnotes
+ to the table above, each Selling Shareholder has voting and investment power with respect to the shares set forth opposite
+ such Selling Shareholder s name.
+
+ 
+ 
+ 
+
+ 
+ 2.
+ This
+ table assumes that each Selling Shareholder will sell all shares offered for sale by it under this registration statement.
+
+ 
+ 
+ 
+
+ 
+ 3.
+ Percentages
+ are based upon 28,396,599 shares of our common stock outstanding as of the date of this registration statement.
+
+ 
+ 
+ 
+
+ 
+ 4.
+ Assumes
+ sale of all 1,893,500 Shares offered in the aggregate by the Selling Shareholders in
+ the offering, and a total of 28,396,599 shares outstanding following the offering.
+
+ 
+ 
+ 
+
+ 
+ 5.
+ GP
+ Michigan, LLC is a company controlled by Igor Gabal.
+
+ 
+ 
+ 
+
+ 
+ 6.
+ Tomasz
+ Kotas and Patrycja Kotas are husband and wife.
+
+ 
+ 
+ 
+
+ 
+ 7.
+ Cathal
+ J. O Flaherty and Tracy O Flaherty are husband and wife.
+
+ 
+
+SHARES
+ELIGIBLE FOR FUTURE SALE
+
+ 
+
+As
+of the date of this prospectus, there are 28,396,599 shares of common stock outstanding of which 12,100,000 shares are beneficially
+owned by officers and directors of the Company. There will be 28,396,599 shares outstanding if the maximum number of Shares offered
+herein is sold.
+
+ 
+
+The
+shares of common stock held by current shareholders are considered "restricted securities" subject to the limitations
+of Rule 144 under the Securities Act. In general, securities may be sold pursuant to Rule 144 after being fully-paid and held
+for more than 12 months. While affiliates of the Company are subject to certain limits in the amount of restricted securities
+they can sell under Rule 144, there are no such limitations on sales by persons who are not affiliates of the Company. In the
+event non-affiliated holders elect to sell such shares in the public market, there is likely to be a negative effect on the market
+price of the Company s securities.
+
+ 
+
+LEGAL
+MATTERS
+
+ 
+
+Cassidy
+& Associates, Beverly Hills, California ("Cassidy & Associates"), has given its opinion as attorneys-at-law
+regarding the validity of the issuance of the Shares offered by the Company. James Cassidy, a member of the law firm of Cassidy
+& Associates, may be considered the beneficial owner of 125,000 shares of common stock of the Company.
+
+ 
+
+Interest
+of Counsel
+
+ 
+
+Cassidy
+& Associates, counsel for the Company, who has given an opinion upon the validity of the securities being registered and upon
+other legal matters in connection with the registration or offering of such securities, had, or is to receive in connection with
+the offering, a substantial interest in the Company and was connected with the Company through Echo Sound Acquisition Corporation.
+James Cassidy, a partner of Cassidy & Associates, was a director and officer of Echo Sound Acquisition Corporation prior to
+its change of control.
+
+ 
+
+EXPERTS
+
+ 
+
+LJ
+Soldinger Associates, LLC, an independent registered public accounting firm, has audited the balance sheets of Veroni Brands,
+Corp. as of December 31, 2017, and the related statements of operations, changes in stockholders equity (deficit), and
+cash flows for the year ended December 31, 2017. The Company has included such financial statements in the prospectus and elsewhere
+in the registration statement in reliance on the report of March 27, 2018, given their authority as experts in accounting and
+auditing.
+
+ 
+
+KCCW
+Accountancy Corp., an independent registered public accounting firm, has audited the balance sheets of the Company (formerly known
+as Echo Sound Acquisition Corporation) as of December 31, 2016, and the related statements of operations, changes in stockholders 
+equity (deficit), and cash flows for the period from December 6, 2016 (inception) to December 31, 2016. The Company has included
+such financial statements in the prospectus and elsewhere in the registration statement in reliance on the report of January 18,
+2017, given their authority as experts in accounting and auditing.
+
+ 
+
+ 22 
+
+ 
+
+ 
+
+ 
+
+DISCLOSURE
+OF COMMISSION POSITION ON INDEMNIFICATION
+
+FOR
+SECURITIES ACT LIABILITIES
+
+ 
+
+The
+Company s certificate of incorporation includes an indemnification provision that provides that the Company shall indemnify
+directors against monetary damages to the Company or any of its shareholders or others by reason of a breach of the director s
+fiduciary duty or otherwise, except under certain limited circumstances.
+
+ 
+
+The
+certificate of incorporation does not specifically indemnify the officers or directors or controlling persons against liability
+under the Securities Act. However, the indemnification provided in the certificate of incorporation is broad and should be considered
+to be of a broad scope and wide extent.
+
+ 
+
+The
+SEC s position on indemnification of officers, directors and control persons under the Securities Act by the Company is
+as follows:
+
+ 
+
+INSOFAR
+AS INDEMNIFICATION FOR LIABILITIES ARISING UNDER THE SECURITIES ACT OF 1933 MAY BE PERMITTED TO DIRECTORS, OFFICERS AND CONTROLLING
+PERSONS OF THE SMALL BUSINESS ISSUER PURSUANT TO THE RULES OF THE COMMISSION, OR OTHERWISE, THE SMALL BUSINESS ISSUER HAS BEEN
+ADVISED THAT IN THE OPINION OF THE SECURITIES AND EXCHANGE COMMISSION SUCH INDEMNIFICATION IS AGAINST PUBLIC POLICY AS EXPRESSED
+IN THE ACT AND IS, THEREFORE, UNENFORCEABLE.
+
+ 
+
+ 23 
+
+ 
+
+ 
+
+ 
+
+VERONI
+BRANDS CORP.
+
+December
+3l, 2017 and 2016
+
+ 
+
+Table
+of Contents
+
+ 
+
+ Report
+ of Independent Registered Public Accounting Firm 
+ F-1
+
+ 
+ 
+
+ Report
+ of Independent Registered Public Accounting Firm
+ F-2
+
+ 
+ 
+
+ Balance
+ Sheets as of December 31, 2017 and 2016 
+ F-3
+
+ 
+ 
+
+ Statements
+ of Operations for the Year ended December 31, 2017 and the Period from December 7, 2016 (inception) to December 31, 2016 
+ F-4
+
+ 
+ 
+
+ Statements
+ of Changes in Stockholders Equity (Deficit) for the Years ended December 31, 2017 and 2016 
+ F-5
+
+ 
+ 
+
+ Statements
+ of Cash Flows for the Years ended December 31, 2017 and 2016 
+ F-6
+
+ 
+ 
+
+ Notes
+ to Financial Statements 
+ F-7
+
+ 
+
+ 24 
+
+ 
+
+ 
+
+ 
+
+REPORT
+OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
+
+ 
+
+To
+the Shareholders and the Board of Directors
+
+of
+Veroni Brands Corp.
+
+ 
+
+Opinion
+on the Financial Statements
+
+ 
+
+We
+have audited the accompanying balance sheet of Veroni Brands Corp. (the "Company") as of December 31, 2017, the related
+statements of operations, stockholders equity and cash flows for the year ended December 31, 2017, and the related notes
+(collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly,
+in all material respects, the financial position of the Company as of December 31, 2017, and the results of its operations and
+its cash flows for the year ended December 31, 2017, in conformity with accounting principles generally accepted in the United
+States of America.
+
+ 
+
+Explanatory
+Paragraph – Going Concern
+
+ 
+
+The
+accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As more fully
+described in Note 2, the Company has incurred significant losses and needs to raise additional funds to meet its obligations and
+commence its operations. These conditions raise substantial doubt about the Company s ability to continue as a going concern.
+Management s plans in regard to these matters are also described in Note 2. The financial statements do not include any
+adjustments that might result from the outcome of this uncertainty.
+
+ 
+
+Basis
+for Opinion
+
+ 
+
+These
+financial statements are the responsibility of the Company s management. Our responsibility is to express an opinion on
+the Company s financial statements based on our audit. We are a public accounting firm registered with the Public Company
+Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company
+in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission
+and the PCAOB.
+
+ 
+
+We
+conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit
+to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error
+or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial
+reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not
+for the purpose of expressing an opinion on the effectiveness of the Company s internal control over financial reporting.
+Accordingly, we express no such opinion.
+
+ 
+
+Our
+audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to
+error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence
+regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles
+used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.
+
+ 
+
+We
+believe that our audit provides a reasonable basis for our opinion.
+
+ 
+
+ /s/
+ L J Soldinger Associates, LLC
+ 
+
+ 
+ 
+
+ Deer
+ Park, Illinois
+ 
+
+ March
+ 27, 2018
+ 
+
+ 
+ 
+
+ We
+ have served as the Company s auditor since 2018.
+ 
+
+ 
+
+ F-1 
+
+ 
+
+ 
+
+ 
+
+REPORT
+OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
+
+ 
+
+To
+the Board of Directors
+
+Echo
+Sound Acquisition Corporation
+
+ 
+
+We
+have audited the accompanying balance sheet of Echo Sound Acquisition Corporation (the "Company") as of December 31,
+2016, and the related statement of operations, changes in stockholders deficit and cash flows for the Period from December
+7, 2016 (Inception) to December 31, 2016. These financial statements are the responsibility of the Company s management.
+Our responsibility is to express an opinion on these financial statements based on our audit.
+
+ 
+
+We
+conducted our audit in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards
+require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material
+misstatement. The Company was not required to have, nor were we engaged to perform, an audit of its internal control over financial
+reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures
+that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company s
+internal control over financial reporting. Accordingly, we express no such opinion. Our audit includes examining, on a test basis,
+evidence supporting the amounts and disclosures in the financial statements. Our audit also includes assessing the accounting
+principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.
+We believe that our audit provides a reasonable basis for our opinion.
+
+ 
+
+In
+our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the
+Company as of December 31, 2016 and the results of its operations and its cash flows from December 7, 2016 (Inception) to December
+31, 2016 in conformity with accounting principles generally accepted in the United States of America.
+
+ 
+
+The
+accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed
+in Note 2 to the financial statements, the Company has had no revenues and income since inception. These conditions, among others,
+raise substantial doubt about the Company s ability to continue as a going concern. Management s plans concerning
+these matters are also described in Note 2, which includes the raising of additional equity financing or merger with another entity.
+The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
+
+ 
+
+ /s/
+ KCCW Accountancy Corp.
+ 
+
+ 
+ 
+
+ Diamond
+ Bar, California
+ 
+
+ January
+ 18, 2017
+ 
+
+ 
+
+ F-2 
+
+ 
+
+ 
+
+ 
+
+VERONI
+BRANDS CORP.
+
+BALANCE
+SHEETS
+
+December
+31, 2017 and 2016
+
+ 
+
+ 
+ 2017 
+ 2016 
+
+ ASSETS 
+ 
+ 
+
+ Current
+ Assets 
+ 
+ 
+
+ Cash
+ & equivalents 
+ $595 
+ $- 
+
+ Subscription
+ receivable 
+ 210 
+ - 
+
+ Prepaid
+ expenses and other current assets 
+ 48,833 
+ - 
+
+ Total
+ Current Assets 
+ 49,638 
+ - 
+
+ 
+ 
+ 
+
+ Total
+ Assets 
+ $49,638 
+ $- 
+
+ 
+ 
+ 
+
+ LIABILITIES
+ AND STOCKHOLDERS EQUITY (DEFICIT) 
+ 
+ 
+
+ Current
+ Liabilities 
+ 
+ 
+
+ Accounts
+ payable 
+ $10,589 
+ $- 
+
+ Accrued
+ liabilities 
+ 750 
+ 1,000 
+
+ Total
+ Current Liabilities 
+ 11,339 
+ 1,000 
+
+ 
+ 
+ 
+
+ Stockholders 
+ Equity (Deficit) 
+ 
+ 
+
+ Preferred
+ Stock, $0.0001 par value; 20,000,000 shares authorized; none outstanding as of December 31, 2017 and 2016. 
+ - 
+ - 
+
+ Common
+ Stock, $0.0001 par value; 100,000,000 shares authorized; 18,300,000 and 20,000,000 shares issued and outstanding as of December
+ 31, 2017 and 2016, respectively 
+ 1,830 
+ 2,000 
+
+ Additional
+ paid-in capital 
+ 83,826 
+ 312 
+
+ Accumulated
+ Deficit 
+ (47,357) 
+ (3,312)
+
+ 
+ 
+ 
+
+ Total
+ Stockholders Equity (Deficit) 
+ 38,299 
+ (1,000)
+
+ 
+ 
+ 
+
+ Total
+ Liabilities and Stockholders Equity (Deficit) 
+ $49,638 
+ $- 
+
+ 
+
+The
+accompanying notes are an integral part of these financial statements.
+
+ 
+
+ F-3 
+
+ 
+
+ 
+
+ 
+
+VERONI
+BRANDS CORP.
+
+STATEMENTS
+OF OPERATIONS
+
+ 
+
+ 
+ 
+ For
+ the Period from 
+
+ 
+ For
+ the Year 
+ December
+ 7, 2016 
+
+ 
+ Ended 
+ (inception)
+ to 
+
+ 
+ December
+ 31, 2017 
+ December
+ 31, 2016 
+
+ 
+ 
+ 
+
+ Revenue 
+ $- 
+ $- 
+
+ 
+ 
+ 
+
+ Selling
+ and general expenses 
+ 44,045 
+ 3,312 
+
+ 
+ 
+ 
+
+ Loss
+ before income taxes 
+ (44,045) 
+ (3,312)
+
+ 
+ 
+ 
+
+ Income
+ tax expense 
+ - 
+ - 
+
+ 
+ 
+ 
+
+ Net
+ Loss 
+ $(44,045) 
+ $(3,312)
+
+ 
+ 
+ 
+
+ Net
+ loss per common share: 
+ 
+ 
+
+ Basic
+ and diluted 
+ $(0.00) 
+ $(0.00)
+
+ 
+ 
+ 
+
+ Weighted
+ average common shares outstanding: 
+ 
+ 
+
+ Basic
+ and diluted 
+ 17,370,685 
+ 20,000,000 
+
+ 
+
+The
+accompanying notes are an integral part of these financial statements.
+
+ 
+
+ F-4 
+
+ 
+
+ 
+
+ 
+
+VERONI
+BRANDS CORP.
+
+STATEMENT
+OF CHANGES IN STOCKHOLDERS EQUITY (DEFICIT)
+
+December
+31, 2017 and 2016
+
+ 
+
+ 
+ Common
+ Stock 
+ Additional
+
+ Paid-in 
+ Accumulated 
+ Total
+
+ Stockholders 
+
+ 
+ Shares 
+ Amount 
+ Capital 
+ Deficit 
+ Deficit 
+
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Balance,
+ December 7, 2016 (inception) 
+ - 
+ $- 
+ $- 
+ $- 
+ $- 
+
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Issuance
+ of common stock for service 
+ 20,000,000 
+ 2,000 
+ - 
+ - 
+ 2,000 
+
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Additional
+ paid-in capital 
+ - 
+ - 
+ 312 
+ - 
+ 312 
+
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Net
+ Loss for the year 
+ - 
+ - 
+ - 
+ (3,312) 
+ (3,312)
+
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Balance,
+ December 31, 2016 
+ 20,000,000 
+ 2,000 
+ 312 
+ (3,312) 
+ (1,000)
+
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Redemption
+ of shares, August 31, 2017 
+ (19,750,000) 
+ (1,975) 
+ 1,975 
+ - 
+ - 
+
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Issuance
+ of shares upon change of ownership, September 1, 2017 
+ 10,000,000 
+ 1,000 
+ - 
+ - 
+ 1,000 
+
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Issuance
+ of common stock in private offering 
+ 8,050,000 
+ 805 
+ - 
+ - 
+ 805 
+
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Expenses
+ paid by stockholder contributed as capital 
+ - 
+ - 
+ 81,539 
+ - 
+ 81,539 
+
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Net
+ Loss for the year 
+ - 
+ - 
+ - 
+ (44,045) 
+ (44,045)
+
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Balance,
+ December 31, 2017 
+ 18,300,000 
+ $1,830 
+ $83,826 
+ $(47,357) 
+ $38,299 
+
+ 
+
+The
+accompanying notes are an integral part of these financial statements.
+
+ 
+
+ F-5 
+
+ 
+
+ 
+
+ 
+
+VERONI
+BRANDS CORP.
+
+STATEMENTS
+OF CASH FLOWS
+
+ 
+
+ 
+ 
+ For
+ the Period from 
+
+ 
+ For
+ the Year 
+ December
+ 7, 2016 
+
+ 
+ Ended 
+ (inception)
+ to 
+
+ 
+ December
+ 31, 2017 
+ December
+ 31, 2016 
+
+ 
+ 
+ 
+
+ Cash
+ flow from operating activities: 
+ 
+ 
+
+ Net
+ loss 
+ $(44,045) 
+ $(3,312)
+
+ Adjustments
+ to reconcile net loss to net cash used in operating activities: 
+ 
+ 
+
+ Common
+ stock issued for service 
+ 1,000 
+ 2,000 
+
+ Expenses
+ paid by stockholder and contributed as capital 
+ 33,289 
+ 312 
+
+ Changes
+ in operating assets and liabilities: 
+ 
+ 
+
+ Prepaid
+ expenses 
+ (833) 
+ - 
+
+ Accounts
+ payable 
+ 10,589 
+ - 
+
+ Accrued
+ liabilities 
+ - 
+ 1,000 
+
+ Net
+ cash used in operating activities 
+ - 
+ - 
+
+ 
+ 
+ 
+
+ Cash
+ flows from investing activities: 
+ 
+ 
+
+ Net
+ cash provided by investing activities 
+ - 
+ - 
+
+ 
+ 
+ 
+
+ Cash
+ flows from financing activities: 
+ 
+ 
+
+ Common
+ stock issued 
+ 595 
+ - 
+
+ Net
+ cash provided by financing activities 
+ 595 
+ - 
+
+ 
+ 
+ 
+
+ Net
+ change in cash 
+ 595 
+ - 
+
+ 
+ 
+ 
+
+ Cash
+ at the beginning of the year 
+ - 
+ - 
+
+ 
+ 
+ 
+
+ Cash
+ at the end of the year 
+ $595 
+ $- 
+
+ 
+ 
+ 
+
+ Supplemental
+ disclosure of cash flow information: 
+ 
+ 
+
+ Cash
+ paid for: 
+ 
+ 
+
+ Interest 
+ $- 
+ $- 
+
+ Taxes 
+ $- 
+ $- 
+
+ 
+ 
+ 
+
+ Non-cash
+ investing and financing activities: 
+ 
+ 
+
+ 2,100,000
+ shares of common stock subscribed to at par value 
+ $210 
+ $- 
+
+ Prepaid
+ expenses paid on behalf of Company by stockholder 
+ $48,250 
+ $- 
+
+ 
+
+The
+accompanying notes are an integral part of these financial statements.
+
+ 
+
+ F-6 
+
+ 
+
+ 
+
+ 
+
+VERONI
+BRANDS CORP.
+
+NOTES
+TO FINANCIAL STATEMENTS
+
+December
+3l, 2017 and 2016
+
+ 
+
+NOTE
+I - NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
+
+ 
+
+NATURE
+OF OPERATIONS
+
+ 
+
+Veroni
+Brands Corp. (formerly European CPG Acquisition Corp. or Echo Sound Acquisition Corporation) (the "Company") was incorporated
+on December 7, 2016 under the laws of the state of Delaware to engage in any lawful corporate undertaking, including, but not
+limited to, selected mergers and acquisition. The Company has been in the developmental stage since inception.
+
+ 
+
+On
+August 31, 2017, the Company effected a change in control by the redemption of 19,750,000 shares of the then outstanding 20,000,000
+shares of common stock. The then current officers and directors resigned and Igor Gabal was named the sole officer and director
+of the Company. Pursuant to the change in control, the Company changed its name to European CPG Acquisition Corp. On September
+I, 2017, the Company issued l0,000,000 shares of its common stock to two shareholders at par value of $0.000l and recorded share
+compensation of $1,000. On November 1, 2017, the name of the Company was changed to Veroni Brands Corp.
+
+ 
+
+The
+Company has been formed to acquire, operate, develop, grow and import premium European products into the U.S. market. Veroni Brands
+was created to search out unique, remarkable and desirable premium products across Europe and make them accessible to discerning
+consumers in the U.S. Veroni Brands strives to import the extraordinary and delight their consumers with experiences that had
+previously only been attainable in Europe. The Company became an exclusive importer and distributor of "Iron Energy"
+by Mike Tyson. The beverage will be available to consumers by May 2018 in three different flavors such as "Mojito,"
+"Zero Sugar" and "Original." The Company will be introducing other flavors of "Iron Energy"
+in 2019. We take pride in the products we import and are proud to share them with our consumers.
+
+ 
+
+USE
+OF ESTIMATES
+
+ 
+
+The
+preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect
+the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
+statements, and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those
+estimates.
+
+ 
+
+CASH
+
+ 
+
+Cash
+and cash equivalents include cash on hand and on deposit at banking institutions as well as all highly liquid short-term investments
+with original maturities of 90 days or less. The Company did not have cash equivalents as of December 31, 2016.
+
+ 
+
+CONCENTRATION
+OF RISK
+
+ 
+
+Financial
+instruments that potentially subject the Company to concentrations of credit risk consist principally of cash. The Company places
+its cash with high quality banking institutions. The Company did not have cash balances in excess of the Federal Deposit Insurance
+Corporation limit as of December 31, 2017 and 2016, respectively.
+
+ 
+
+LOSS
+PER COMMON SHARE
+
+ 
+
+Basic
+loss per common share excludes dilution and is computed by dividing net loss by the weighted average number of common shares outstanding
+during the period. Diluted loss per common share reflect the potential dilution that could occur if securities or other contracts
+to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared
+in the loss of the entity. As of December 31, 2017 and 2016, there were no outstanding dilutive securities.
+
+ 
+
+ F-7 
+
+ 
+
+ 
+
+ 
+
+VERONI
+BRANDS CORP.
+
+NOTES
+TO FINANCIAL STATEMENTS
+
+December
+31, 2017 and 2016
+
+ 
+
+NOTE
+1 - NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+
+ 
+
+FAIR
+VALUE OF FINANCIAL INSTRUMENTS
+
+ 
+
+The
+Company follows guidance for accounting for fair value measurements of financial assets and financial liabilities and for fair
+value measurements of nonfinancial items that are recognized or disclosed at fair value in the financial statements on a recurring
+basis. Additionally, the Company adopted guidance for fair value measurement related to nonfinancial items that are recognized
+and disclosed at fair value in the financial statements on a nonrecurring basis. The guidance establishes a fair value hierarchy
+that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted
+quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements
+involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows:
+
+ 
+
+Level
+1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability
+to access at the measurement date.
+
+ 
+
+Level
+2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly
+or indirectly.
+
+ 
+
+Level
+3 inputs are unobservable inputs for the asset or liability. The carrying amounts of financial assets such as cash approximate
+their fair values because of the short maturity of these instruments.
+
+ 
+
+The
+carrying amounts of the Company s financial instruments, which include cash and cash equivalents and accounts payable approximate
+their fair values at December 31, 2017 and 2016 due to their short-term nature and management s belief that their carrying
+amounts approximate the amount for which the assets could be sold or the liabilities could be settled.
+
+ 
+
+SHARE-BASED
+COMPENSATION
+
+ 
+
+The
+Company accounts for stock-based compensation issued to non-employees and consultants in accordance with the provisions of ASC
+505-50, Equity–Based Payments to Non-Employees. Measurement of share-based payment transactions with non-employees
+is based on the fair value of whichever is more reliably measurable: (a) the goods or services received; or (b) the equity instruments
+issued. The fair value of the share-based payment transaction is determined at the earlier of performance commitment date or performance
+completion date.
+
+ 
+
+EMERGING
+GROWTH COMPANY
+
+ 
+
+The
+Company has elected to be an emerging growth company as defined under the Jumpstart Our Business Startups Act of 2012 ("Jobs
+Act"). Included with this election, the Company has also elected to use the provisions within the Jobs Act that allow companies
+that go public to continue to use the private company adoption date rules for new accounting policies. Should the Company obtain
+revenues in excess of $1 billion on an annual basis, have its non-affiliated market capitalization increase to over $700 million
+as of the last day of its second quarter, or raise in excess of $1 billion in public offerings of its equity or instruments directly
+convertible into its equity, it will forfeit its status under the Jobs Act as an emerging growth company.
+
+ 
+
+ F-8 
+
+ 
+
+ 
+
+ 
+
+VERONI
+BRANDS CORP.
+
+NOTES
+TO FINANCIAL STATEMENTS
+
+December
+31, 2017 and 2016
+
+ 
+
+NOTE
+2 - GOING CONCERN
+
+ 
+
+The
+Company has not yet generated any revenue since inception to date and has sustained an operating loss of $44,045 during the year
+ended December 31, 2017. The Company has an accumulated deficit of $47,357 as of December 31, 2017. The Company s continuation
+as a going concern is dependent on its ability to generate sufficient cash flows from operations to meet its obligations and/or
+obtaining additional financing from its shareholders or other sources, as may be required.
+
+ 
+
+The
+accompanying audited financial statements have been prepared assuming that the Company will continue as a going concern; however,
+the above condition raises substantial doubt about the Company s ability to continue as a going concern. The audited financial
+statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets
+or the amounts and classifications of liabilities that may result should the Company be unable to continue as a going concern.
+
+ 
+
+The
+Company has raised approximately $216,000 through private placements subsequent to December 31, 2017. In addition, the Company
+has signed a distributorship agreement with a Polish manufacturer and has exclusive rights to sell its products in the United
+States. However, the Company will need to raise substantial additional proceeds from the sale of debt or equity to commence operations
+as a distributor.
+
+ 
+
+NOTE
+3 - NEW ACCOUNTING PRONOUNCEMENTS
+
+ 
+
+In
+February 2018, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2018-02, Reclassification
+of Certain Tax Effects from Accumulated Other Comprehensive Income, which amends ASC Topic 220, Income Statement - Reporting
+Comprehensive Income. This ASU allows for tax effects in accumulated other comprehensive income resulting from the Tax Cuts
+and Jobs Act to be reclassified as retained earnings. This ASU is effective for fiscal years, and interim periods within those
+years, beginning after December 15, 2018. Early adoption is permitted. The Company is currently evaluating the effect this guidance
+may have on its financial position, results of operations, comprehensive income, cash flows and disclosures.
+
+ 
+
+In
+August of 2017, the FASB issued guidance to better align the financial reporting related to hedging activities with the economic
+objectives of those activities and to simplify the application of current hedge accounting guidance. Entities are required to
+apply the guidance using a modified retrospective method as of the period of adoption. This guidance is effective for annual and
+interim periods beginning after December 15, 2019. Early adoption is permitted.
+
+ 
+
+In
+May 2017, the FASB issued ASU No. 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting.
+The new guidance provides clarity and reduces both (1) diversity in practice and (2) cost and complexity when applying the guidance
+in Topic 718, Compensation - Stock Compensation, to a change to the terms or conditions of a share-based payment award.
+The accounting standard update will be effective for the Company beginning January 1, 2018 on a prospective basis, and early adoption
+is permitted. The Company has not yet selected a transition method and is currently evaluating the effect that the updated standard
+will have on the financial statements.
+
+ 
+
+In
+March 2017, the FASB issued ASU 2017-08, Premium Amortization on Purchased Callable Debt Securities that shortens the amortization
+period for the premium on certain purchased callable debt securities to the earliest call date. This guidance is effective for
+annual periods beginning after December 15, 2019, and interim periods within those fiscal years with early adoption permitted.
+The adoption of this guidance is not expected to materially impact our results of operations, financial condition or liquidity.
+
+ 
+
+ F-9 
+
+ 
+
+ 
+
+ 
+
+VERONI
+BRANDS CORP.
+
+NOTES
+TO FINANCIAL STATEMENTS
+
+December
+31, 2017 and 2016
+
+ 
+
+NOTE
+3 - NEW ACCOUNTING PRONOUNCEMENTS (Continued)
+
+ 
+
+In
+January 2017, the FASB issued ASU 2017-01, Clarifying the Definition of a Business with the objective of adding guidance
+to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses.
+This guidance is effective for annual periods beginning after December 15, 2018, and interim periods within those fiscal years
+with early adoption permitted. This guidance will be applied prospectively to any transactions occurring within the period of
+adoption.
+
+ 
+
+In
+January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment that eliminates the requirement
+to calculate the implied fair value of goodwill (i.e., Step 2 of the current goodwill impairment test) to measure a goodwill impairment
+charge. Instead, an impairment charge will be based on the excess of a reporting unit s carrying amount over its fair value
+(i.e., measure the charge based on Step 1 of the current goodwill impairment test). This guidance is effective for annual and
+interim impairment tests performed in periods beginning after December 15, 2020, with early adoption permitted for annual and
+interim goodwill impairment testing dates after January 1, 2017.
+
+ 
+
+In
+August 2016, the FASB issued Accounting Standards Update ("ASU") No. 2016-15, Statement of Cash Flows (Topic 230):
+Classification of Certain Cash Receipts and Cash Payments. The new standard will make eight targeted changes to how cash receipts
+and cash payments are presented and classified in the statement of cash flows. The standard will be effective for the Company
+beginning January 1, 2019, with early application permitted. The standard will require adoption on a retrospective basis unless
+it is impracticable to apply, in which case we would be required to apply the amendments prospectively as of the earliest date
+practicable. The Company is currently evaluating the provisions of this guidance and assessing its impact on the Company s
+financial statements and disclosures.
+
+ 
+
+In
+June 2016, the FASB issued Accounting Standards Update ("ASU") No. 2016-13, Financial Instruments - Credit Losses
+(Topic 326): Measurement of Credit Losses on Financial Instruments. The new standard requires financial assets measured at
+amortized cost be presented at the net amount expected to be collected, through an allowance for credit losses that is deducted
+from the amortized cost basis. The standard will be effective for the Company beginning January 1, 2021, with early application
+permitted. This standard is not expected to have a material impact on our financial position, results of operations or statement
+of cash flows upon adoption.
+
+ 
+
+In
+March 2016, the FASB issued ASU No. 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based
+Payment Accounting. The new standard involves several aspects of the accounting for share-based payment transactions, including
+the income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash
+flows. The new standard will be effective for us on January 1, 2018. This ASU did not have a material impact on our financial
+position, results of operations or statement of cash flows upon adoption.
+
+ 
+
+In
+February 2016, the FASB issued ASU No. 2016-02, Leases. The new standard requires that all lessees recognize the assets
+and liabilities that arise from leases on the balance sheet and disclose qualitative and quantitative information about its leasing
+arrangements. The new standard will be effective for us on January 1, 2020. The Company is currently evaluating the provisions
+of this guidance and assessing its impact on the Company s financial statements and disclosures.
+
+ 
+
+In
+January 2016, the FASB issued ASU 2016-01, Financial Instruments - Overall: Recognition and Measurement of Financial Assets
+and Financial Liabilities. This new standard provides guidance on how entities measure certain equity investments and present
+changes in the fair value. This standard requires that entities measure certain equity investments that do not result in consolidation
+and are not accounted for under the equity method at fair value and recognize any changes in fair value in net income. ASU 2016-01
+is effective for fiscal years beginning after December 15, 2018. The Company is currently evaluating the provisions of this guidance
+and assessing its impact on the Company s financial statements and disclosures.
+
+ 
+
+ F-10 
+
+ 
+
+ 
+
+ 
+
+VERONI
+BRANDS CORP.
+
+NOTES
+TO FINANCIAL STATEMENTS
+
+December
+31, 2017 and 2016
+
+ 
+
+NOTE
+3 - NEW ACCOUNTING PRONOUNCEMENTS (Continued)
+
+ 
+
+From
+March through December 2016, the FASB issued ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal
+versus Agent Considerations (Reporting Revenue Gross versus Net), ASU No. 2016-10, Revenue from Contracts with Customers
+(Topic 606): Identifying Performance Obligations and Licensing, ASU No. 2016-11, Revenue Recognition (Topic 605) and Derivatives
+and Hedging (Topic 815): Rescission of SEC Guidance Because of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to Staff
+Announcements at the March 3, 2016 EITF Meeting, ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope
+Improvements and Practical Expedients and ASU No. 2016-20, Technical Corrections and Improvements to Topic 606, Revenue
+from Contracts with Customers. These amendments are intended to improve and clarify the implementation guidance of Topic 606.
+The effective date and transition requirements for the amendments are the same as the effective date and transition requirements
+of ASU No. 2014-09 and ASU No. 2015-14.
+
+ 
+
+Management
+has evaluated other recently issued accounting pronouncements and does not believe that any of these pronouncements will have
+a significant impact on our consolidated financial statements and related disclosures.
+
+ 
+
+NOTE
+4 - ACCRUED LIABILITIES
+
+ 
+
+As
+of December 31, 2017 and 2016, the Company had accrued professional fees of $750 and $1,000, respectively.
+
+ 
+
+NOTE
+5 – INCOME TAXES
+
+ 
+
+The
+Company follows the guidance of FASB ASC 740-10 which relates to the Accounting for Uncertainty in Income Taxes, which
+seeks to reduce the diversity in practice associated with the accounting and reporting for uncertainty in income tax positions.
+This interpretation prescribes a comprehensive model for financial statement recognition, measurement, presentation and disclosure
+of uncertain tax positions taken or expected to be taken in income tax returns.
+
+ 
+
+Significant
+components of the Company s deferred tax assets were as follows for the year ended December 31, 2017 and the period December
+7, 2016 (inception) through December 31, 2016:
+
+ 
+
+ 
+ December
+ 31, 
+
+ 
+ 2017 
+ 2016 
+
+ Deferred
+ tax assets: 
+ 
+ 
+
+ Net
+ operating loss carryforwards 
+ $2,400 
+ $- 
+
+ Total
+ deferred tax assets 
+ 2,400 
+ - 
+
+ 
+ 
+ 
+
+ Deferred
+ tax liabilities 
+ - 
+ - 
+
+ 
+ 
+ 
+
+ Total
+ deferred tax liabilities 
+ - 
+ - 
+
+ 
+ 
+ 
+
+ Net
+ deferred tax assets (liabilities) 
+ 2,400 
+ - 
+
+ Less
+ valuation allowance 
+ (2,400) 
+ - 
+
+ Net
+ deferred tax assets (liabilities) 
+ $- 
+ $- 
+
+ 
+
+ F-11 
+
+ 
+
+ 
+
+ 
+
+VERONI
+BRANDS CORP.
+
+NOTES
+TO FINANCIAL STATEMENTS
+
+December
+31, 2017 and 2016
+
+ 
+
+NOTE
+5 – INCOME TAXES (Continued)
+
+ 
+
+At
+December 31, 2017, the Company had net operating loss carryforwards for federal and state income tax purposes of approximately
+$10,000. The federal and state net operating loss carryforwards will expire beginning in 2037. The income tax expense (benefit)
+consisted of the following for the year ended December 31, 2017 and the period December 7, 2016 (inception) through December 31,
+2016:
+
+ 
+
+ 
+ 2017 
+ 2016 
+
+ Total
+ current 
+ $- 
+ $- 
+
+ Total
+ deferred 
+ - 
+ - 
+
+ 
+ $- 
+ $- 
+
+ 
+
+Deferred
+income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial
+reporting purposes and the amounts used for income tax purposes. The following is a reconciliation of the expected statutory federal
+income tax provision (15 percent) to the actual income tax benefit for the year ended December 31, 2017 and the period from December
+7, 2016 (inception) through December 31, 2016:
+
+ 
+
+ 
+ 2017 
+ 2016 
+
+ Federal
+ statutory rate 
+ $6,600 
+ $- 
+
+ State
+ taxes, net of federal benefits 
+ 4,300 
+ - 
+
+ Permanent
+ differences 
+ (8,500) 
+ - 
+
+ Change
+ in valuation allowance 
+ (2,400) 
+ - 
+
+ 
+ 
+ 
+
+ 
+ $- 
+ $- 
+
+ 
+
+Under
+ASC 740, Income Taxes, deferred tax assets and liabilities are recognized for the future tax consequences attributable
+to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective
+tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the
+years in which those temporary differences are expected to be recovered or settled. Valuation allowances are established when
+it is more likely than not that some or all of the deferred tax assets will not be realized. As of December 31, 2017 and 2016,
+there were no deferred taxes due to the uncertainty of the realization of net operating loss or carry forward prior to expiration.
+
+ 
+
+ F-12 
+
+ 
+
+ 
+
+ 
+
+VERONI BRANDS CORP.
+
+NOTES TO FINANCIAL STATEMENTS
+
+December 31, 2017 and 2016
+
+ 
+
+NOTE
+6 – STOCKHOLDERS EQUITY (DEFICIT)
+
+ 
+
+On
+December 7, 2016, the Company issued 20,000,000 founders common stock to two directors and officers at par for legal services
+provided to the Company. On August 31, 2017, an aggregate of 19,750,000 was contributed back to the Company pro rata from the
+then two shareholders.
+
+ 
+
+On
+September 1, 2017, the Company issued 2,800,000 shares of its common stock to Igor Gabal and 7,200,000 shares to GP Michigan,
+LLC at par value of $0.0001 in connection with the change in control.
+
+ 
+
+On
+December 1, 2017, the Company issued 8,050,000 shares of its common stock at par value of $0.0001.
+
+ 
+
+The
+Company is authorized to issue 100,000,000 shares of common stock and 20,000,000 shares of preferred stock. As of December 31,
+2017, 18,300,000 shares of common stock and no preferred stock were issued and outstanding.
+
+ 
+
+NOTE
+7 – RELATED PARTY TRANSACTION
+
+ 
+
+On
+May 23, 2017, GP Michigan, LLC entered into a contract with Tiber Creek Corporation for a myriad of services, one of which entails
+the change in control of the Company. The agreement also provides that Tiber Creek will effect a
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2018/CIK0001694187_neon_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001694187_neon_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..ecd42a4eecb3f5be13dda30e823931a0a4e10ee0
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/CIK0001694187_neon_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. Before investing in our common stock, you should carefully read this entire prospectus, including our consolidated financial statements and the related notes included elsewhere in this prospectus, "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations." As used in this prospectus, unless the context otherwise requires, references to the "company," "we," "us" and "our" refer to Neon Therapeutics, Inc. together with its consolidated subsidiary. Overview We are a clinical-stage immuno-oncology company and a leader in the field of neoantigen-targeted therapies, dedicated to transforming the treatment of cancer by directing the immune system towards neoantigens. Genetic mutations, which are a hallmark of cancer, can result in specific immune targets called neoantigens. The presence of neoantigens in cancer cells and their absence in normal cells makes them compelling, untapped targets for cancer therapy. By directing the immune system towards these targets, we believe our neoantigen-targeted therapies will offer a new level of patient and tumor specificity in the field of cancer immunotherapy that will drive a strong risk-benefit profile to dramatically improve patient outcomes. Our ambition is to lead a paradigm shift in the treatment of cancer patients towards an era of truly personal immuno-oncology therapies. Our founders have done pioneering work in immuno-oncology, including work that resulted in a class of immunotherapy known as checkpoint inhibitors, which aim to reactivate the immune system to kill cancer cells. Checkpoint inhibitors have demonstrated potent efficacy in cancers with higher rates of genetic mutations, or mutational burden, which provide a greater diversity of neoantigen targets. However, even in these tumor types, the majority of patients do not respond to treatment. Our development strategy leverages multiple neoantigen modalities, including vaccines and T cell therapies, to maximize the potential reach of our therapies. By directing the immune system against neoantigen targets, our vaccines have the potential to improve patient outcomes across both checkpoint-responsive and unresponsive disease, and our T cell therapies have the potential to unlock the potency of cell therapies in solid tumors. NEO-PV-01, our personal neoantigen vaccine, is custom-designed and manufactured based on the unique mutational fingerprint of each individual patient. This technology was developed based on more than a decade of work by our founders at the Dana-Farber Cancer Institute and the Broad Institute of MIT and Harvard, which culminated in an initial clinical trial reported in Nature in July 2017. This trial demonstrated the ability of a personal neoantigen vaccine to generate highly specific immune responses in six patients with stage III/IV melanoma treated in the adjuvant setting, with all six patients disease-free at a median of 20 months after initiating vaccination. NEO-PV-01 is currently being evaluated in an ongoing Phase 1b clinical trial in combination with nivolumab in metastatic melanoma, non-small cell lung cancer and bladder cancer. The clinical data so far from this trial demonstrates that the therapy has been well-tolerated and has been able to direct the immune system against neoantigens in advanced metastatic disease. Furthermore, we have observed both evidence of immune pressure on tumors and of tumor cell killing. We believe these findings provide emerging proof of mechanism and will inform our NEO-PV-01 clinical development plans. NEO-PTC-01, our personal neoantigen T cell therapy, consists of multiple T cell populations that are generated to target each individual patient's unique set of neoantigens. We are focusing the initial clinical development of NEO-PTC-01 in solid tumors, and we expect to file a clinical trial application, or CTA, in Europe in the first half of 2019 to evaluate NEO-PTC-01 in the solid tumor setting. In parallel to our personal therapies, we are advancing additional therapies that use a precision medicine approach. These include multiple neoantigen-targeted therapies that direct the immune system towards prevalent mutations that are shared across patients in specific tumor types. We intend to develop Amendment No. 1 to FORM S-1 REGISTRATION STATEMENT Under The Securities Act of 1933 Table of Contents product candidates targeting shared neoantigens using both vaccine and T cell modalities. Our first product candidate using this approach, NEO-SV-01, is a neoantigen vaccine for the treatment of a subset of estrogen-receptor-positive, or ER+, breast cancer, for which we expect to file an Investigational New Drug application, or IND, in the first half of 2019. Our product candidate pipeline is generated using our proprietary neoantigen platform, which continuously improves as our product candidates generate data. This platform comprises three key elements: our RECON (Real-time Epitope Computation for ONcology) Bioinformatics Engine; our deep capabilities in peptide chemistry; and our combined T cell biology and immune-monitoring expertise. A core component of our neoantigen platform is RECON, which uses a proprietary combination of algorithms designed to predict the most therapeutically-relevant neoantigen targets associated with each patient's tumor. As detailed in our February 2017 paper in Immunity, we observed a more than two-fold improvement in RECON's neoantigen predictive capabilities compared to standard approaches. We intend to strengthen our leading position in the neoantigen field by using data generated from our ongoing and future clinical trials, coupled with our machine learning expertise, to continue to refine RECON's neoantigen prediction algorithms. We have strategically chosen to utilize peptides for neoantigen targeting in our product candidates in order to directly replicate the body's natural immune processes. Peptides have demonstrated broad immunogenicity and safety. We believe that our choice to utilize peptides reduces both complexity and risk within our platform. From inception, we have also been focused on the unique supply chain requirements of our personal neoantigen therapies. Accordingly, we have developed automated peptide manufacturing capabilities that we believe provide advantages in both turnaround times and manufacturing costs for our product candidates. Our company's efforts build on more than a decade of pioneering work conducted by our world-class founders across multiple leading global institutions including the Broad Institute of MIT and Harvard, the Dana-Farber Cancer Institute, the MD Anderson Cancer Center, the Netherlands Cancer Institute and Washington University in St. Louis. Our founders were central to the development of the fields of both immuno-oncology and neoantigens and have published a number of seminal papers outlining the importance of neoantigens as critical immune targets for treating cancer. The Neoantigen Opportunity We believe that neoantigen-targeted therapies will confer a number of significant potential benefits over historic immunotherapy approaches to cancer treatment, including: exclusive specificity to the tumor; broad immunogenicity; broad applicability across cancer types; potential for durable clinical benefit; potential responses in both higher and lower mutational burden tumors; potential for use in earlier treatment settings; and being a key component of rational cancer treatment combinations. Our Approaches and Product Candidates We are leveraging our neoantigen platform and over a decade of insights from our founders to develop neoantigen-targeted therapies that use two distinct approaches, NEON / ONE and NEON / SELECT. These approaches focus on targeting a prioritized set of what we believe are the most therapeutically-relevant neoantigens. In NEON / ONE, these neoantigens are specific to each individual. In NEON / SELECT, these neoantigens are shared across subsets of patients or tumor types. We are applying these two approaches to develop neoantigen-targeting product candidates using multiple treatment modalities. NEON THERAPEUTICS, INC. (Exact name of registrant as specified in its charter) Table of Contents The following summarizes the current status of our product development pipeline: Our NEON / ONE Approach NEON / ONE is our personal medicine approach to neoantigen-targeted therapy. Using NEON / ONE, we are developing therapies that are tailored to each patient's specific set of tumor neoantigens. We are currently developing NEON / ONE product candidates using two modalities, personal neoantigen vaccines and personal neoantigen T cell therapies. We believe our NEON / ONE approach will be effective across tumors that are both responsive and unresponsive to checkpoint inhibitor therapy. Our NEON / SELECT Approach NEON / SELECT is our precision medicine approach to neoantigen-targeted therapy. While most neoantigen targets are specific to an individual patient's tumor, there are several prevalent neoantigens that are shared across subsets of patients or tumor types, known as shared neoantigens. Using NEON / SELECT, we intend to develop multiple therapies directed towards these shared neoantigen targets using several therapeutic modalities, including both vaccines and T cell therapies. We believe that our NEON / SELECT approach could be complementary to our NEON / ONE personal therapies by providing readily available therapies that can be used in patients identified as having the relevant shared genetic mutation. Our Neoantigen Platform We have pioneered a proprietary neoantigen platform that we are using to develop neoantigen-targeted therapies. Our platform seeks to identify and harness the most therapeutically relevant neoantigens present within each patient's tumor, and comprises three key elements that form an iterative feedback loop: Our RECON Bioinformatics Engine: At the core of our neoantigen platform is our RECON Bioinformatics Engine, which is designed to predict the most therapeutically-relevant neoantigen targets associated with each patient's tumor. RECON uses patient-specific data in a proprietary combination of algorithms that seek to: Identify the genetic mutations present within a patient's tumor; Predict which mutations will lead to neoantigen targets within each specific patient; and Select the most therapeutically-relevant neoantigen-targeting peptides for use in our therapies based on a set of additional biological and pharmacological factors. Table of Contents Our deep capabilities in peptide chemistry: Our platform uses peptides for neoantigen targeting to induce and expand immune responses in patients, either via in vivo or ex vivo approaches. We have strategically chosen to utilize peptides in order to directly replicate the body's natural immune processes, where peptides are presented on cells to prime an immune response. We believe our use of peptides will provide a number of significant pharmacological benefits, including broad immunogenicity and favorable drug distribution, as well as well-established safety and suitability for convenient and repeat dosing. Our combined T cell biology and immune-monitoring expertise: Fundamental to our platform is our ability to elicit neoantigen-specific immune responses, both in vivo and ex vivo, and to evaluate these responses in patients. It is therefore vital for us to understand how T cell responses can be induced and expanded to target neoantigens and monitor the immune system response in treated patients. We have developed a proprietary method for ex vivo T cell stimulation, which we call NEO-STIM, that allows us to test the immunogenicity of neoantigens, as well as to generate neoantigen-specific T cells and T cell receptors, or TCRs, for use in our neoantigen therapies. We have also developed extensive in-house immune-monitoring capabilities that allow us to interrogate the immune state of each patient before, during and after each therapeutic intervention. We are using our neoantigen platform to develop therapies using two distinct approaches, NEON / ONE and NEON / SELECT. We are applying these two approaches to develop product candidates across several neoantigen-targeting therapeutic modalities, including vaccines and T cell therapies. Overview of Our Neoantigen Platform, Treatment Approaches and Treatment Modalities 40 Erie St., Suite 110 Cambridge, MA 02139 (617) 337-4701 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) Table of Contents Our Mission Our mission is to build a breakthrough oncology company creating neoantigen-based therapies that significantly improve the lives of patients. Our Strategy To fulfill our mission, we are developing neoantigen-targeted therapies that we believe have the potential to lead a paradigm shift in the treatment of cancer patients. Key elements of our strategy include: Advance product candidates using multiple treatment modalities to enable therapies across a broad array of patient populations. By developing product candidates that utilize a range of neoantigen therapeutic modalities, we believe we will be able to address a wide array of solid and hematological tumors, across the tumor mutational burden spectrum, at both early and late stages of disease. Efficiently develop NEO-PV-01 through multiple exploratory clinical trials to enable a clear path to registration. We are currently evaluating NEO-PV-01, our personal neoantigen vaccine, in multiple exploratory clinical trials. Our exploratory clinical program is designed to enable us to efficiently determine the optimal patient populations, rational combinations and treatment protocols for use in late-stage clinical development of NEO-PV-01. Our NT-001 trial is evaluating NEO-PV-01 in combination with nivolumab (marketed as Opdivo) for the treatment of patients with metastatic melanoma, non-small cell lung cancer or bladder cancer, in collaboration with Bristol-Myers Squibb Company. NT-002 is evaluating NEO-PV-01 in combination with pembrolizumab (marketed as Keytruda) and chemotherapy for the treatment of patients with non-small cell lung cancer, in collaboration with Merck and Co., Inc., or Merck. Our NT-003 trial will evaluate NEO-PV-01 and a PD-1 antagonist in combination with other agents such as Apexigen Inc.'s CD40 agonist or a CTLA-4 antagonist. In addition, we are also planning for our NT-004 trial to further explore earlier disease settings, building on the results reported in the July 2017 Nature paper. Develop NEO-PTC-01 to leverage the potency of cell therapies to target neoantigens. We are currently completing preclinical development of NEO-PTC-01, our personal neoantigen T cell therapy. We believe NEO-PTC-01 has the potential to unlock the potency of cell therapies in solid tumors. We plan to file a CTA in Europe in the first half of 2019 to evaluate NEO-PTC-01 in the solid tumor setting. Develop NEON / SELECT therapies for patients who share specific neoantigens. We have identified several prevalent neoantigen targets that are shared across subsets of patients or tumor types, and have the potential to be used in multiple treatment modalities, including vaccines and TCR-based T cell therapies. Our first NEON / SELECT product candidate, NEO-SV-01, is currently in preclinical development, and we plan to file an IND for that candidate in the first half of 2019. NEO-SV-01 is a neoantigen vaccine for the treatment of a subset of ER+ breast cancer. Beyond that, we expect to complete the validation of several additional shared neoantigen targets in 2018. Strengthen our leading position in the neoantigen field through ongoing investment in our platform technologies. We intend to strengthen our leading position in the neoantigen field by using data generated from our platform and from our ongoing and future clinical trials, coupled with our machine learning expertise, to continue to refine RECON's neoantigen prediction algorithms. In addition, we have developed automated peptide manufacturing capabilities that we believe provide manufacturing cost advantages for our NEON / ONE product candidates. We expect to continue to make significant ongoing improvements to our manufacturing process as our product candidates move through clinical trials and towards commercialization. We also intend to continue to invest in our proprietary T cell biology capabilities, which are critical in helping us to both understand and harness patient immune responses to neoantigens. Hugh O'Dowd Chief Executive Officer 40 Erie St., Suite 110 Cambridge, MA 02139 (617) 337-4701 (Name, address, including zip code, and telephone number, including area code, of agent for service) Table of Contents Build a sustainable standalone biotechnology company. We currently have full worldwide development and commercial rights to all of our product candidates. At the appropriate time or times, we may seek development or commercial partners in order to efficiently manage our capital resources, leverage external technical capabilities or maximize the potential commercial reach of our product candidates and programs. In particular, we may explore the development of our NEON / SELECT shared neoantigen targets using multiple treatment modalities by leveraging complementary technical capabilities of external partners. Our Core Values At Neon, we believe that our achievements to date are a testament to the quality of our people, who will be critical to our ongoing success. We seek to hire, retain and cultivate exceptional people who embody our six core values: Patients: Urgently develop life-changing medicines. People: Listen, learn, teach. Science: Creative, rigorous, uncompromising. Tenacity: Persevere. Build Neon to last. Pioneer: Leave the comfort zone. Create the future. Integrity: Do right. Risks Associated with Our Business Our business is subject to numerous risks, including: We have incurred net losses in every year since our inception and anticipate that we will continue to incur net losses in the future. We will require additional capital to fund our operations and, if we fail to obtain necessary financing, we will not be able to complete the development and commercialization of our product candidates. Our independent registered public accounting firm has included an explanatory paragraph relating to our ability to continue as a going concern in its report on our audited financial statements included in this prospectus. Our business is highly dependent on the success of our lead product candidate, NEO-PV-01, as well as NEO-PTC-01, NEO-SV-01 and our other preclinical programs. All of our product candidates will require significant additional nonclinical and clinical development before we can seek regulatory approval for and launch a product commercially. Our most advanced product candidates are uniquely manufactured for each patient and we may encounter difficulties in production, particularly with respect to scaling our manufacturing capabilities. If we or any of our third-party manufacturers encounter these types of difficulties, our ability to provide supply of our product candidates for clinical trials or our products for patients, if approved, could be delayed or stopped, or we may be unable to achieve a commercially viable cost structure. We are dependent on single-source suppliers for some of the components and materials used in, and the processes required to develop, our product candidates. Clinical development is a lengthy and expensive process with an uncertain outcome. We may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of any product candidates. Copies to: Mitchell S. Bloom, Esq. Arthur McGivern, Esq. Laurie A. Burlingame, Esq. Goodwin Procter LLP 100 Northern Ave. Boston, MA 02210 (617) 570-1000 Yasir B. Al-Wakeel Chief Financial Officer Neon Therapeutics, Inc. 40 Erie St., Suite 110 Cambridge, MA 02139 (617) 337-4701 Divakar Gupta, Esq. Charles S. Kim, Esq. Nicole C. Brookshire, Esq. Richard C. Segal, Esq. Cooley LLP 500 Boylston St. Boston, MA 02116 (617) 937-2300 Table of Contents We face significant competition from other biotechnology and pharmaceutical companies, and our operating results will suffer if we fail to compete effectively. Neoantigen-targeted therapies are a novel approach. Even if a product candidate we develop receives marketing approval, it may fail to achieve the degree of market acceptance by physicians, patients, third-party payors and others in the medical community necessary for commercial success. The regulatory approval process for our product candidates in the United States, the European Union, or EU, and other jurisdictions is currently uncertain and will be lengthy, time-consuming and inherently unpredictable and we may experience significant delays in the clinical development and regulatory approval, if any, of our product candidates. Our success depends in part on our ability to protect our intellectual property. It is difficult and costly to protect our proprietary rights and technology, and we may not be able to ensure their protection. In addition, if we are unable to protect the confidentiality of our trade secrets, our business and competitive position would be harmed. Third-party claims of intellectual property infringement may prevent or delay our product discovery and development efforts. We will rely on third parties to conduct our clinical trials. If these third parties do not successfully carry out their contractual duties or meet expected deadlines or comply with regulatory requirements, we may not be able to obtain regulatory approval of or commercialize any potential product candidates. For
\ No newline at end of file
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@@ -0,0 +1,2614 @@
+Prospectus
+ Summary
+ 1
+
+ 
+ 
+
+ Summary
+ of the Offer
+ 3
+
+ 
+ 
+
+ Summary
+ Consolidated Financial Data and Other Data
+ 4
+
+ 
+ 
+
+ Risk
+ Factors
+ 5
+
+ 
+ 
+
+ Cautionary
+ Statement Regarding ForwardLooking Statements
+ 13
+
+ 
+ 
+
+ Implications
+ of Being an Emerging Growth Company
+ 13
+
+ 
+ 
+
+ Use
+ of Proceeds
+ 14
+
+ 
+ 
+
+ Dilution
+ 15
+
+ 
+ 
+
+ Capitalization
+ 15
+
+ 
+ 
+
+ Market
+ for our Common Stock and Determination of Offering Price
+ 15
+
+ 
+ 
+
+ Management's
+ Discussion and Analysis of Financial Condition and Results of Operations
+ 15
+
+ 
+ 
+
+ Description
+ of Securities to be Registered
+ 18
+
+ 
+ 
+
+ Results
+ of Operations
+ 18
+
+ 
+ 
+
+ Selling
+ Shareholders
+ 22
+
+ 
+ 
+
+ Plan
+ of Distribution
+ 23
+
+ 
+ 
+
+ Related
+ Party Transactions
+ 25
+
+ 
+ 
+
+ New
+ Accounting and Reporting Pronouncements
+ 25
+
+ 
+ 
+
+ Critical
+ Accounting Policies and Estimates
+ 25
+
+ 
+ 
+
+ Contractual
+ Commitments
+ 26
+
+ 
+ 
+
+ Quantitative
+ and Qualitative Disclosures About Market Risk
+ 26
+
+ 
+ 
+
+ Management
+ 26
+
+ 
+ 
+
+ Executive
+ Compensation
+ 30
+
+ 
+ 
+
+ Security
+ Ownership of Certain Beneficial Owners and Management
+ 32
+
+ 
+ 
+
+ Dividend
+ Policy
+ 33
+
+ 
+ 
+
+ Description
+ of Capital Stock and Warrants
+ 34
+
+ 
+ 
+
+ Shareholder
+ Matters
+ 36
+
+ 
+ 
+
+ Transfer
+ Agent
+ 40
+
+ 
+ 
+
+ Legal
+ Matters
+ 40
+
+ 
+ 
+
+ Experts
+ 40
+
+ 
+ 
+
+ Where
+ You Can Find More Information
+ 41
+
+ 
+ 
+
+ Index
+ to Financial Statements
+ 42
+
+ 
+ 
+
+ Exhibits
+ 45
+
+ 
+ 
+
+ Undertakings
+ 46
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+ABOUT
+THIS PROSPECTUS
+
+ 
+
+You
+may only rely on the information contained in this prospectus or on that information to which we have referred you. We have not
+authorized anyone to provide you with different information. This prospectus does not constitute an offer to sell or a solicitation
+of an offer to buy any securities other than the common stock offered by this prospectus. This prospectus does not constitute
+an offer to sell or a solicitation of an offer to buy any common stock in any circumstances in which such offer or solicitation
+is unlawful. Neither the delivery of this prospectus nor any sale made in connection with this prospectus shall, under any circumstances,
+create any implication or impression that there has been no change in our affairs since the date of this prospectus or that any
+information contained in this Prospectus is correct as of any time after its date.
+
+ 
+
+The
+selling shareholders may, from time to time, sell the common stock described in this prospectus in one or more offerings. This
+prospectus only provides you with a general description of the common stock they may offer. If required, when they sell shares
+of common stock under this prospectus, we will provide a prospectus supplement that contains specific information about the terms
+of the offering of the common stock. The prospectus supplement may also add, update or change information contained in this prospectus.
+
+ 
+
+Dealer
+Prospectus Delivery Obligation
+
+ 
+
+Until
+90 days after the later (i) the effective date of the registration statement or (ii) the first date on which the securities in
+this offering are offered publicly, all dealers that effect transactions in the securities, whether or not participating in this
+offering, may be required to deliver a prospectus.
+
+ 
+
+PROSPECTUS
+SUMMARY
+
+ 
+
+This
+summary provides an overview of certain information contained elsewhere in this Prospectus and does not contain all of the information
+that you should consider or that may be important to you. Before making an investment decision, you should read the entire Prospectus
+carefully, including the "Risk Factors" section, the financial statements and the notes to the financial statements.
+In this Prospectus, the terms "Altavoz,", "Company," "we," "us" and "our" or
+similar terms refer to Altavoz Entertainment, Inc. This Prospectus contains forwardlooking statements, which involve risks and
+uncertainties. Our actual results could differ materially from those anticipated in these forwardlooking statements because of
+certain risk factors, including those set forth under "Risk Factors" and elsewhere in this Prospectus.
+
+ 1 
+
+ 
+
+ 
+
+ 
+
+Corporate
+Background and Business Overview
+
+ 
+
+Altavoz
+was originally incorporated in Nevada in March of 2000 as Saveyourtime.com. On March 24, 2000, it filed a Form 10-SB with the
+SEC, designating itself as a "blank check" company. On January 28, 2003, the Company filed with the SEC a Form 8-K
+indicating that it had entered into an agreement and plan of merger with Hesperia Holding Corp. ("Hesperia"). On April
+15, 2003, the Company filed with the SEC a Form 10-KSB (a) indicating that it had consummated its merger with Hesperia and changed
+its name to Hesperia Holding, Inc. and (b) providing Form 10 information. From April, 2003 through November, 2005, the Company
+filed with the SEC periodic and current public information pursuant to Exchange Act Section 13. On August 8, 2008, the Company
+filed with the SEC a Form 15, terminating or suspending its reporting requirements under the Exchange Act. Current management
+was not present at the Company at that time, however, it is understood that the reason for the Company s filing of the Form
+15 was that it was deficient in its SEC filings and was unable to become current in a timely fashion. In April 2009, the Company
+acquired Hot Web Properties, Inc. In July 2009, it amended its Articles of Incorporation, changing the Company name to Max Media
+Group, Inc. It was then listed with the National Quotation Bureau under the trading symbol "MXMI".
+
+ 
+
+Nelson
+Jacobsen founded Altavoz, Inc., a Maryland corporation, in 2011. In September 2015, the Company merged with Altavoz, Inc. and
+changed the Company s name to Altavoz Entertainment, Inc. In April 2016 we changed our trading symbol to "AVOZ".
+We are currently listed with that symbol on the OvertheCounter Pink Sheets Market.
+
+ 
+
+ 
+
+Altavoz
+is an independent, full service, direct music distributor offering a wide range of digital and physical distribution products
+and marketing solutions for music producers and musicians. We use proprietary and traditional distribution channels and social
+media promotions to connect record labels and artists with music consumers.
+
+ 
+
+We
+implement Music Public Blockchain protocol ("Blockchain"). Blockchain is a computer based content management system
+that allows artists to manage their music catalogs. We are an issuer of International Standard Recording Codes ("ISRCs"),
+which are critical identification tools for sounds recording that enable tracking any iteration of the recordings across the digital
+and physical music market. We can also issue Universal Product Codes ("UPCs"), which are used by physical retailers
+and online outlets to gather and track sales information. Our use of IRSCs and UPCs allow us to distribute our artists 
+music to the larger physical and digital distributors and streaming services.
+
+ 2 
+
+ 
+
+ 
+
+ 
+
+SUMMARY
+OF THE OFFER
+
+ 
+
+Common
+Stock Offered: A maximum of SeventyFive Million shares. There is no minimum number of shares that must be sold by us for the offering
+to close.
+
+ 
+
+Common
+Stock Outstanding Before this Offering: 322,498,798 shares outstanding as of September 30, 2017.
+
+ 
+
+Par
+Value: $0.001
+
+ 
+
+Use
+of Proceeds: General corporate purposes, including working capital, hiring additional employees, capital expenditures and strategic
+acquisitions. For a more complete description of our anticipated use of proceeds, please see the "Use of Proceeds" section.
+
+ 
+
+OTCPink
+Symbol: AVOZ
+
+ 
+
+Risk
+Factors: You should read the "Risk Factors" section of this prospectus and in the documents incorporated by reference
+in this prospectus for a discussion of factors to consider before deciding to purchase shares of our common stock.
+
+ 
+
+Expenses
+of Offering: The Company will bear the expenses of this offering, which we estimate to be approximately $50,000, including legal
+expenses of approximately $30,000, accounting expenses of approximately $10,000, and miscellaneous expenses, including registration
+fee, of approximately $10,000.
+
+ 3 
+
+ 
+
+ 
+
+ 
+
+SUMMARY
+CONSOLIDATED FINANCIAL DATA AND OTHER DATA
+
+ 
+
+The
+following tables summarize our consolidated financial and other data. You should read this summary, consolidated financial and
+other data together with the sections titled "Selected Consolidated Financial and Other Data" and "Management's
+Discussion and Analysis of Financial Condition and Results of Operations," our audited annual consolidated financial statements
+and related notes included elsewhere in this prospectus, and our unaudited interim condensed consolidated financial statements
+and the related notes included elsewhere in this prospectus. The summary consolidated statements of operations data for the years
+ended December 31, 2015 and 2016 are derived from our audited annual consolidated financial statements included elsewhere in this
+prospectus. The consolidated statements of operations data for the nine months ended September 30, 2017 and 2016 are derived from
+our unaudited interim condensed consolidated financial statements included elsewhere in this prospectus. The unaudited interim
+condensed consolidated financial statements have been prepared on the same basis as our audited annual consolidated financial
+statements and, in our opinion, reflect all adjustments, which include only normal recurring adjustments that we consider necessary
+for a fair presentation of the financial information set forth in those statements. Our historical results are not necessarily
+indicative of the results that may be expected in the future. Results for the nine months ended September 30 2017 are not indicative
+of results expected for the full year.
+
+ 
+
+Consolidated
+Statement of Operations
+
+ 
+
+ 
+ 
+ Nine
+ Months Ended
+ Year
+ Ended
+ 
+ Year
+ Ended
+
+ 
+ 
+ September
+ 30, 2017
+ Dec.
+ 31, 2016
+ Dec.
+ 31, 2015
+
+ 
+ 
+ (unaudited)
+ (audited)
+ (audited)
+
+ Revenues
+ $
+ 11,945
+ $ 15,385
+ $
+ 9,875
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Total
+ Expenses
+ $
+ 242,772
+ $4,244,771
+ 89,328
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Net
+ Loss
+ $
+ 234,263
+ $
+ 33,122,841
+ $
+ 89,549
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Net
+ Loss Per Common Share, Basic and Diluted
+ $
+ 0.00
+ $
+ 0.44
+ $
+ 0.06
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Weighted
+ Average Common Shares Outstanding,
+ 311,023,798
+ 75,894,031
+ 1,611,653
+
+ Basic
+ and Diluted
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+ 
+ 
+ Consolidated
+ Balance Sheet
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+ September
+ 30, 2017
+ 
+ Dec.
+ 31, 2016
+ 
+ Dec.31,
+ 2015
+
+ 
+ 
+ (unaudited)
+ 
+ (audited)
+ 
+ (audited)
+
+ Total
+ Assets
+ 
+ $
+ 4,209
+ 
+ $
+ 4,449
+ 
+ $
+ 3,436
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Total
+ Liabilities
+ 
+ $
+ 298,702
+ 
+ $
+ 90,409
+ 
+ $
+ 211,055
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Stockholders 
+ Deficit
+ 
+ $
+ 294,493
+ 
+ $
+ 85,960
+ 
+ $
+ 207,619
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Total
+ Liabilities and Stockholders Deficit
+ 
+ $
+ 4,209
+ 
+ $
+ 4,449
+ 
+ $
+ 3,436
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+
+ 4 
+
+ 
+
+ 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+RISK
+FACTORS
+
+ 
+
+AN
+INVESTMENT IN OUR SECURITIES INVOLVES A HIGH DEGREE OF RISK. PERSONS SHOULD NOT INVEST UNLESS THEY CAN AFFORD TO LOSE THEIR INVESTMENT.
+YOU SHOULD CAREFULLY CONSIDER THE MATERIAL RISKS SET FORTH IN THIS SECTION, TOGETHER WITH THE OTHER INFORMATION IN THIS PROSPECTUS,
+BEFORE DECIDING WHETHER TO INVEST IN OUR SECURITIES. OUR BUSINESS, OPERATING RESULTS AND FINANCIAL CONDITION COULD BE SERIOUSLY
+HARMED BY THE OCCURRENCE OF ANY OF THE FOLLOWING MATERIAL RISKS.
+
+ 
+
+Risks
+Relating to Our Liquidity
+
+ 
+
+Our
+independent registered public accounting firm s report contains an explanatory paragraph that expresses substantial doubt
+about our ability to continue as a going concern.
+
+ 
+
+We
+have incurred net losses since our inception. For the three months ended June 30, 2017, we incurred a net loss of $150,530. As
+a result of our losses and limited cash balances, our independent registered public accounting firm has included in its report
+for the year ended December 31, 2016 an explanatory paragraph that expresses substantial doubt about our ability to continue as
+a going concern.
+
+ 
+
+We
+may not be able to generate the amount of cash needed to fund our future operations.
+
+ 
+
+Our
+ability either to fund planned capital expenditures and development efforts will depend on our ability to generate cash in the
+future. Our ability to generate cash is in part subject to general economic, financial, competitive, regulatory and other factors
+that are beyond our control. We cannot assure you, however, that our business will generate sufficient cash flow from operations
+to fund our liquidity needs.
+
+ 
+
+We
+are seeking additional capital funding and such capital may not be available to us.
+
+ 
+
+We
+are exploring various equity financing alternatives. If we are unable to obtain additional capital, we may be required to delay
+or reduce our operations. We cannot assure you that any necessary additional financing will be available on terms favorable to
+us, or at all. If we raise additional funds by issuing securities convertible into or exercisable for common stock, the percentage
+ownership of our stockholders could be significantly diluted, and these newly issued securities may have rights, preferences or
+privileges senior to those of existing stockholders. Market and industry factors may harm the market price of our common stock
+and may adversely impact our ability to raise additional funds. Similarly, if our common stock is delisted from the OTC Markets,
+it may limit our ability to raise additional funds.
+
+ 
+
+Risks
+Relating to Our Business
+
+ 
+
+We
+have limited working capital and limited access to financing.
+
+ 
+
+Our
+cash requirements, at times, may exceed the level of cash generated by operations. Accordingly, we may have limited working capital.
+
+ 5 
+
+ 
+
+ 
+
+ 
+
+We
+currently have sufficient cash to sustain our operations for a period of approximately one month. We will require additional funds
+through the operation of our business, receipt of conventional sources of capital or through future sales of our common stock
+until our revenues are sufficient to meet our cost structure, and ultimately achieve profitable operations. Management estimates
+that to fund our operations, projected business expansion and the professional costs of operating a public entity (i.e. legal,
+accounting and auditing expenses) it will need approximately $300,000 over the next twelve months. Management further estimates
+that if it scaled back its expansion plans and deferred paying some of its professional expenses until after the effectiveness
+of this registration, it would need to expend approximately $120,000 over the next 12 months, of which approximately $36,000 would
+be derived from business operations and the balance from private and related-party investments. There is no assurance we will
+be successful in raising additional capital or achieving profitable operations. Furthermore, the large number of shares available
+from the selling Security Holder pursuant to the prospectus and the depressive effect of the availability of such shares may make
+it difficult for us to raise funds from other sources. Wherever possible, our board of directors will attempt to use noncash consideration
+to satisfy obligations. In many instances, we believe that the noncash consideration will consist of restricted shares of our
+common stock. These actions will result in dilution of the ownership interests of existing stockholders and may further dilute
+common stock book value, and that dilution may be material.
+
+ 
+
+Our
+ability to obtain adequate additional financing on satisfactory terms may be limited. Our ability to raise financing through sales
+of equity securities depends on general market conditions, including the demand for our common stock. We may be unable to raise
+adequate capital through the sale of equity securities, and if we can sell equity, our existing stockholders could experience
+substantial dilution. If adequate financing is not available at all or it is unavailable on acceptable terms, we may find we are
+unable to fund expansion, continue offering products and services, take advantage of acquisition opportunities, develop or enhance
+services or products, or respond to competitive pressures in the industry.
+
+ 
+
+The
+proceeds of this offering may be insufficient to permit us to fully implement our business plan. To do so, we will need to obtain
+additional financing, which may not be available.
+
+ 
+
+We
+face the risk that we may not be able to effectively implement our business plan. If we are not effective in addressing these
+risks, we may not operate profitably and we may not generate adequate working capital to meet our obligations as they become due.
+
+ 
+
+We
+will become subject to the periodic reporting requirements of the Exchange Act, which requires us to incur audit fees and legal
+fees for the preparation of such reports. These additional costs could reduce our ability to earn a profit.
+
+ 
+
+Following
+the effective date of our registration statement of which this prospectus is a part, we will be required to file periodic reports
+with the SEC pursuant to the Exchange Act and the rules and regulations promulgated thereunder. To comply with these requirements,
+our independent registered public accounting firm must review our financial statements on a quarterly basis and audit our financial
+statements on an annual basis. Moreover, our legal counsel must review and assist in the preparation of such reports. The costs
+charged by these professionals for such services cannot be specifically predicted at this time because factors such as that the
+number and type of transactions we engage in and the complexity of our reports cannot be determined at this time and will have
+a major effect on the amount of time to be spent by our auditors and attorneys. However, based on conversations with our professionals,
+the annual costs are likely to range from $25,000 to $50,000 in the first year or two after our Registration statement goes effective.
+The incurrence of such costs will be an expense to our operations and thus have a negative effect on our ability to meet our overhead
+requirements and earn a profit.
+
+ 6 
+
+ 
+
+ 
+
+ 
+
+Our
+internal controls may be inadequate, which could cause our financial reporting to be unreliable and lead to misinformation being
+disseminated to the public.
+
+ 
+
+Our
+management is responsible for establishing and maintaining adequate internal control over financial reporting. As defined in Exchange
+Act Rule 13a-15(f), internal control over financial reporting is a process designed by, or under the supervision of, the principal
+executive and principal financial officer and effected by the board of directors, management and other personnel, to provide reasonable
+assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
+accordance with generally accepted accounting principles and includes those policies and procedures that:
+
+ 
+
+ pertain
+ to the maintenance of records that in reasonable detail accurately and fairly reflect
+ the transactions and disposition of the assets of the Company 
+
+ 
+
+ provide
+ reasonable assurance that transactions are recorded as necessary to permit preparation
+ of financial statements in accordance with generally accepted accounting principles,
+ and that receipts and expenditures of the Company are being made only in accordance with
+ authorizations of management and/or directors of the Company and
+
+ 
+
+ provide
+ reasonable assurance regarding prevention or timely detection of unauthorized acquisition,
+ use or disposition of the Company's assets that could have a material effect on the financial
+ statements.
+
+ 
+
+Our
+internal controls may become inadequate or ineffective if our operations grow, which could cause our financial reporting to be
+unreliable and lead to misinformation being disseminated to the public. Investors relying upon this misinformation may make an
+uninformed investment decision.
+
+ 
+
+Our
+operating results will fluctuate significantly from period to period
+
+ 
+
+.
+
+ 
+
+Like
+participants in the entertainment industry, our revenues and results of operations will be significantly dependent upon the timing
+of releases and the commercial success of the media that we distribute, none of which can be predicted with certainty. Accordingly,
+our revenues and results of operations may fluctuate significantly from period to period, and the results of any one period may
+not be indicative of the results for any future periods.
+
+ 
+
+If
+we are alleged or accused of having infringed on the intellectual property or other rights of third parties, we could be subject
+to significant liability for damages and invalidation of our proprietary rights.
+
+ 
+
+Our
+business activities are and will be highly dependent upon intellectual property, a field that has encountered increasing litigation
+in recent years. If third parties allege that we have infringed on their intellectual property rights, privacy rights or publicity
+rights or have defamed them, we could become a party to litigation. These claims and any resulting lawsuits could subject us to
+significant liability for damages and invalidation of our proprietary rights and/or restrict our ability to publish and distribute
+the infringing or defaming content. In addition, defending such cases involves significant levels of legal costs. There can be
+no assurance that we would prevail in any such litigation. If we were to lose a litigation relating to intellectual property,
+we could be forced to pay monetary damages and to cease the sale of certain products or the use of certain technology. Any of
+the foregoing may adversely affect our business and may cause us to cease operations.
+
+ 7 
+
+ 
+
+ 
+
+ 
+
+We,
+and third parties that manage portions of our secure data, are subject to cyber security risks and incidents.
+
+ 
+
+Our
+business involves the storage and transmission of confidential information. The protection of our customer, employee and company
+data is vitally important to us. While we have implemented measures to prevent security breaches and cyber incidents, any failure
+of these measures and any failure of third parties that assist us in managing our secure data could materially adversely affect
+our business, financial condition and results of operations.
+
+ 
+
+Limited
+Operating History History of Losses and Anticipation of Future Losses. Accordingly, the Company has a limited operating
+history on which to base an evaluation of its business and prospects.
+
+ 
+
+The
+Company and its prospects must be considered in light of the risks, difficulties and uncertainties frequently encountered by companies
+in an early stage of development, particularly companies in new and rapidly evolving markets.
+
+ 
+
+Security
+Risks. Despite the implementation of security measures, the Company's networks may be vulnerable to unauthorized access, computer
+viruses and other disruptive problems.
+
+ 
+
+A
+party who is able to circumvent security measures could misappropriate proprietary information or cause interruptions in the Company's
+operations. Many companies have experienced, and may in the future experience, interruptions in service as a result of the accidental
+or intentional actions of internet users, current and former employees or others. The Company may be required to expend significant
+capital or other resources to protect against the threat of security breaches or to alleviate problems caused by such breaches.
+Although the Company intends to continue to implement industry standard security measures, there can be no assurance that measures
+implemented by the Company will not be circumvented in the future. Eliminating computer viruses and alleviating other security
+problems may require interruptions, delays or cessation of service to users accessing the Company's Web sites, which could have
+a material adverse effect on the Company's business, results of operations and financial condition.
+
+ 
+
+Relationships
+with Customers and Business Partners.
+
+ 
+
+If
+we are not able to continue to attract successful record labels and artists as our clients we will not be able to grow to a profitable
+level.
+
+Our
+relationships with our business partners AMPED and The Connextion are non-exclusive and are not pursuant to a contractual obligation.
+If we are not able to maintain our relationships with our business partners, due to a loss of key executives or forces out of
+our control, we may not be able to remain competitive in the music distribution marketplace.
+
+ 8 
+
+ 
+
+ 
+
+ 
+
+Acquisition
+Risk.
+
+ 
+
+The
+Company may pursue the acquisition of new or complementary businesses, services or technologies, although it has no present understandings,
+commitments or agreements with respect to any material acquisitions or investments. Any such future acquisitions would be accompanied
+by the risks commonly encountered in acquisitions of companies, including, among other things, the difficulty of integrating the
+operations and personnel of the acquired companies, the potential disruption of the Company's ongoing business, the inability
+of management to incorporate successfully acquired technology and rights into the Company's services and content offerings, additional
+expense associated with amortization of acquired intangible assets, the maintenance of uniform standards, controls, procedures
+and policies, and the potential impairment of relationships with employees, customers and strategic partners.
+
+ 
+
+Certain
+AntiTakeover Provisions.
+
+ 
+
+The
+Company's Board of Directors has the authority to issue up to 100,000,000 shares of Preferred Stock and to determine the price,
+rights, preferences, privileges and restrictions, including voting rights, of those shares without any further vote or action
+by the stockholders of the Company. The rights of the holders of Common Stock will be subject to, and may be adversely affected
+by, the rights of the holders of any Preferred Stock that may be issued in the future. The issuance of Preferred Stock may have
+the effect of delaying, deferring or preventing a change in control of the Company, may discourage bids for the Company's Common
+Stock at a premium over the market price of the Common Stock and may adversely affect the market price of, and the other rights
+of the holders of, the Common Stock. The Company has no present plans to issue shares of Preferred Stock.
+
+ 
+
+The
+Company's Amended and Restated Bylaws provide that the Company will indemnify officers and directors against losses that they
+may incur in investigations and legal proceedings resulting from their services to the Company, which may be broad enough to include
+services in connection with takeover defense measures. Such provisions may have the effect of preventing changes in the management
+of the Company. See "Description of Capital Stock."
+
+ 
+
+No
+Specific Use of Proceeds.
+
+ 
+
+The
+Company has not designated any specific use for much of the net proceeds from the sale by the Company of the shares of Common
+Stock offered hereby. Rather, the Company intends to use most of the net proceeds general corporate purposes, including working
+capital, hiring additional employees, capital expenditures and strategic acquisitions. The Company has no present plans or commitments
+and is not currently engaged in any negotiations with respect to strategic acquisitions. Accordingly, management will have significant
+flexibility in applying the net proceeds of this offering. The failure of management to apply such funds effectively could have
+a material adverse effect on the Company's business, results of operations and financial condition. See "Use of Proceeds."
+
+ 9 
+
+ 
+
+ 
+
+ 
+
+Risks
+Relating to Our Stock
+
+ 
+
+Control
+by Certain Stockholders.
+
+ 
+
+Upon
+completion of this offering, the Company's directors and executive officers will beneficially own approximately 58.5% of the outstanding
+Common Stock. As a result, these stockholders, if they act as a group, will have a significant influence on all matters requiring
+stockholder approval, including the election of directors and approval of significant corporate transactions. Such control may
+have the effect of delaying or preventing a change in control of the Company. See the Section entitled "Security Ownership
+of Certain Beneficial Owners and Management" at Page 32.
+
+ 
+
+Limited
+Public Market for Stock.
+
+ 
+
+Prior
+to this offering, the company has been listed on the OTC Pink Sheets. Accordingly, the company s securities have only been
+thinly traded. The initial public offering price was determined based on the prior trading price in the OTC Pink Sheet market.
+The initial public offering price may not be indicative of future market prices.
+
+ 
+
+Possible
+Volatility of Stock Price.
+
+ 
+
+The
+trading price of the Common Stock is likely to be highly volatile and could be subject to wide fluctuations in response to factors
+such as actual or anticipated variations in quarterly operating results, announcements of technological innovations, new sales
+formats or new services by the Company or its competitors, changes in financial estimates by securities analysts, conditions or
+trends in Internet markets, changes in the market valuations of other Internet companies, announcements by the Company or its
+competitors of significant acquisitions, strategic partnerships, joint ventures, capital commitments, additions or departures
+of key personnel, sales of Common Stock and other events or factors, many of which are beyond the Company's control.
+
+ 
+
+Broad
+market and industry factors may materially adversely affect the market price of the Common Stock, regardless of the Company's
+operating performance.
+
+ 
+
+The
+stock market has experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating
+performance of the companies whose stock is being traded.
+
+ 
+
+In
+the past, following periods of volatility in the market price of a company's securities, securities classaction litigation have
+been instituted against such companies. Such litigation, if instituted against us, could result in substantial costs and a diversion
+of management's attention and resources, which could have a material adverse effect on the Company's business operations and financial
+condition.
+
+ 10 
+
+ 
+
+ 
+
+ 
+
+Shares
+Eligible for Future Sale Registration Rights.
+
+ 
+
+As
+a result of this offering, Selling Shareholders will be able to sell the common stock of the Company that they hold. If the Selling
+Shareholders elect to sell a substantial number of shares of Common Stock in the public market following this offering, market
+price for the Company's Common Stock could be adversely affected.
+
+ 
+
+Shareholders
+may be diluted significantly through our efforts to obtain financing and satisfy obligations through issuance of additional shares
+of our common stock.
+
+ 
+
+We
+have no committed source of financing. Wherever possible, our board of directors will attempt to use noncash consideration to
+satisfy obligation or to acquire services. Our board of directors has authority, without action or vote of the shareholders, to
+issue all or part of the authorized but unissued shares. In addition, if a trading market develops for our common stock, we may
+attempt to raise capital by selling shares of our common stock, possibly at a discount to market. These actions will result in
+dilution of the ownership interests of existing shareholders, may further dilute common stock book value, and that dilution may
+be material.
+
+ 
+
+Any
+market that develops in shares of our common stock will be subject to the penny stock regulations and restrictions pertaining
+to low priced stocks that may create a lack of liquidity and make trading difficult or impossible.
+
+ 
+
+Our
+shares will be considered a "penny stock." Rule 3a51-l of the Exchange Act establishes the definition of a "penny
+stock," for purposes relevant to us, as any equity security that has a minimum bid price of less than $5.00 per share or
+with an exercise price of less than $5 .00 per share, subject to a limited number of exceptions, which are not available to us.
+This classification will severely and adversely affect any market liquidity for our common stock.
+
+ 
+
+The
+market for penny stocks has experienced numerous frauds and abuses that could adversely impact investors in our stock.
+
+ 
+
+Company
+management believes that the market for penny stocks has suffered from patterns of fraud and abuse. Such patterns include:
+
+ 
+
+ Control
+ of the market for the security by one or a few brokerdealers that are often related to
+ the promoter or issuer 
+
+ 
+
+ Manipulation
+ of prices through prearranged matching of purchases and sales and false and misleading
+ press releases 
+
+ 
+
+ "Boiler
+ room" practices involving high pressure sales tactics and unrealistic price projections
+ by sales persons 
+
+ 
+
+ Excessive
+ and undisclosed bidask differentials and markups by selling brokerdealers and
+
+ 
+
+ Wholesale
+ dumping of the same securities by promoters and brokerdealers after prices have been
+ manipulated to a desired level, along with the inevitable collapse of those prices with
+ consequent investor losses.
+
+ 
+
+ 11 
+
+ 
+
+ 
+
+Our
+board of directors has the authority, without stockholder approval, to issue preferred stock with terms that may not be beneficial
+to common stockholders and with the ability to affect adversely stockholder voting power and perpetuate their control over us.
+
+ 
+
+ 
+
+Our
+articles of incorporation allow us to issue shares of preferred stock without any vote or further action by our stockholders.
+Our board of directors has the authority to fix and determine the relative rights and preferences of preferred stock. Our board
+of directors also has the authority to issue preferred stock without further stockholder approval, including large blocks of preferred
+stock. As a result, our board of directors could authorize the issuance of a series of preferred stock that would grant to holders
+the preferred right to our assets upon liquidation, the right to receive dividend payments before dividends are distributed to
+the holders of common stock and the right to the redemption of the shares, together with a premium, prior to the redemption of
+our common stock.
+
+ 
+
+Almost
+all our presently issued and outstanding common shares are restricted under rule 144 of the Securities Act, as amended. Once registered,
+the shares may be sold in the open market, the price of our common stock could be adversely affected.
+
+ 
+
+Almost
+all our outstanding shares of common stock are "restricted securities" as defined under Rule 144 promulgated under the
+Securities Act and may only be sold pursuant to an effective registration statement or an exemption from registration, if available.
+Once registered, the holders may sell the shares in the open market, which may have a depressive effect upon the price of the
+common stock in any market that may develop.
+
+ 
+
+We
+could be removed from the OTCPink if we fail to remain current with our financial reporting requirements.
+
+ 
+
+Companies
+trading on the OTCPink must be reporting issuers under Section 12 of the Securities Exchange Act of 1934, as amended, and must
+be current in their reports under Section 13 to maintain price quotation privileges on the OTCPink. If we fail to remain current
+in our reporting requirements, we would be removed from the OTCPink. As a result, the market liquidity of our securities could
+be severely adversely affected by limiting the ability of brokerdealers to trade our securities and the ability of stockholders
+to sell their securities in the secondary market.
+
+ 
+
+Any
+trading market that may develop may be restricted by virtue of state securities "Blue Sky" laws that prohibit trading
+absent compliance with individual state laws. These restrictions may make it difficult or impossible to sell shares in those states.
+
+ 
+
+There
+is currently no liquid, public market for our common stock, and there can be no assurance that any established public market will
+develop in the foreseeable future. Transfer of our common stock may also be restricted under the securities or securities regulations
+laws promulgated by various states and foreign jurisdictions, commonly referred to as "Blue Sky" laws. Absent compliance
+with such individual state laws, our common stock may not be traded in such jurisdictions. Because the securities registered hereunder
+have not been registered for resale under the blue sky laws of any state, the holders of such shares and persons who desire to
+purchase them in any trading market that might develop in the future, should be aware that there may be significant state blue
+sky law restrictions upon the ability of investors to sell the securities and of purchasers to purchase the securities. These
+restrictions prohibit the secondary trading of our common stock. We currently do not intend to and may not be able to qualify
+securities for resale in at least 17 states which do not offer manual exemptions (or may offer manual exemptions but may not offer
+one to us if we are considered a shell company at the time of application) and require shares to be qualified before they can
+be resold by our shareholders. Accordingly, investors should consider the secondary market for our securities to be a limited
+one. See also "Plan of DistributionState Securities Blue Sky Laws."
+
+ 12 
+
+ 
+
+ 
+
+ 
+
+CAUTIONARY
+STATEMENT REGARDING FORWARDLOOKING STATEMENTS
+
+ 
+
+Some
+of the statements contained or incorporated by reference in this prospectus or in any prospectus supplement constitute forward
+looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section
+21E of the Securities Exchange Act of 1934, as amended. Forwardlooking statements relate to expectations, beliefs, projections,
+future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts.
+In some cases, you can identify forwardlooking statements by terms such as "anticipate," "believe," "could,"
+"estimate," "expects," "intend," "may," "plan," "potential," "project,"
+"should," "will" and "would" or the negative of these terms or other comparable terminology.
+
+ 
+
+Forwardlooking
+statements contained or incorporated by reference in this prospectus or in any prospectus supplement are based on our beliefs,
+assumptions and expectations of our future performance, considering all information currently available to us. These beliefs,
+assumptions and expectations can change as a result of many possible events or factors, not all of which are known to us or are
+within our control. If a change occurs, our business, financial condition, liquidity and results of operations may vary materially
+from those expressed in our forwardlooking statements. Forwardlooking statements we make or incorporate by reference in this prospectus
+or in any prospectus supplement are subject to various risks and uncertainties that could cause actual results to vary from our
+forward looking statements, including:
+
+ 
+
+ Our
+ financial performance, including our ability to achieve revenue growth, margins or earnings 
+
+ 
+
+ Our
+ ability to raise additional capital and fund planned capital expenditures and development
+ efforts 
+
+ 
+
+ Our
+ ability to gauge and predict the commercial success of our business 
+
+ 
+
+ The
+ ability of our officers and directors to generate potential investment opportunities:
+
+ 
+
+ Our
+ ability to maintain relationships with customers, employees and suppliers and
+
+ 
+
+ Our
+ ability to meet the OTCPink Capital Market continuing listing standards and maintain
+ our listing.
+
+ 
+
+We
+caution you not to place undue reliance on these forwardlooking statements which speak only as of the date of this prospectus,
+any prospectus supplement or the date of any document incorporated by reference in this prospectus or any prospectus supplement.
+All subsequent written and oral forwardlooking statements attributable to us or any person acting on our behalf are expressly
+qualified in their entirety by the cautionary statements contained or referred to in this section. Except to the extent required
+by applicable law or regulation, we undertake no obligation to update these forwardlooking statements to reflect events or circumstances
+after the date of this filing or to reflect the occurrence of unanticipated events.
+
+ 
+
+IMPLICATIONS
+OF BEING AN EMERGING GROWTH COMPANY
+
+ 
+
+We
+qualify as an "emerging growth company" as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act.
+An emerging growth company may take advantage of relief from certain reporting requirements and other burdens that are otherwise
+applicable generally to public companies. These provisions include:
+
+ 
+
+ reduced
+ obligations with respect to financial data, including presenting only two years of audited
+ financial statements and only two years of selected financial data in this prospectus 
+
+ an
+ exception from compliance with the auditor attestation requirements of Section 404 of
+ the SarbanesOxley Act of 2002, or the SarbanesOxley Act 
+
+ 
+
+ reduced
+ disclosure about our executive compensation arrangements in our periodic reports, proxy
+ statements and registration statements and
+
+ exemptions
+ from the requirements of holding nonbinding advisory votes on executive compensation
+ or golden parachute arrangements.
+
+ 
+
+ 13 
+
+ 
+
+ 
+
+We
+may take advantage of these provisions for up to five years or such earlier time that we no longer qualify as an emerging growth
+company. We would cease to be an emerging growth company if we have more than $1.0 billion in annual revenue, have more than $700
+million in market value of our capital stock held by nonaffiliates as of the end of our second fiscal quarter or issue more than
+$1.0 billion of nonconvertible debt over a threeyear period. We may choose to take advantage of some but not all of these reduced
+reporting burdens. For example, we have taken advantage of the exemption from auditor attestation on the effectiveness of our
+internal control over financial reporting. To the extent that we take advantage of these reduced reporting burdens, the information
+that we provide shareholders may be different than you might obtain from other public companies in which you hold equity interests.
+
+ 
+
+In
+addition, under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards until such time
+as those standards apply to private companies. We have irrevocably elected not to avail ourselves of this exemption from new or
+revised accounting standards and, therefore, we will be subject to the same new or revised accounting standards as other public
+companies that are not emerging growth companies.
+
+ 
+
+USE
+OF PROCEEDS
+
+ 
+
+We
+estimate that we will receive up to $250,000 from the sale of the shares, based on the sale of 75,000,000 Shares at a public offering
+price of $0.004 per share, after deducting the estimated $50,000 for the expenses associated with this offering. If we engage
+brokerdealers to assist us in selling the shares, we will incur additional costs associated with this offering. We will use these
+proceeds for general working capital, including hiring additional employees, capital expenditures and strategic acquisitions.
+An estimate for the use of proceeds, based on a range of funds received is as follows:
+
+ 
+
+ 
+
+ Percentage
+ of targeted funds received
+ 25%
+ of Raise/
+
+ (%
+ of Total)
+
+ 50%
+ of Raise/
+
+ (%
+ of Total)
+
+ 75%
+ of Raise/
+
+ (%
+ of Total)
+
+ 100%
+ of Raise/
+
+ (%
+ of Total)
+
+ Use
+ of Funds
+ 
+ 
+ 
+ 
+
+ Sales and Customer
+ Relations (1)
+ $20,000
+ (32%)
+ $40,000
+ (32%)
+ $60,000
+ (32%)
+ $80,000
+ (32%)
+
+ 
+ 
+ 
+ 
+ 
+
+ Marketing
+ $20,000
+ (32%)
+ $40,000
+ (32%)
+ $60,000
+ (32%)
+ $80,000
+ (32%)
+
+ 
+ 
+ 
+ 
+ 
+
+ Technology Research
+ & Dev.
+ $10,000
+ (16%)
+ $20,000
+ (32%)
+ $30,000
+ (16%)
+ $40,000
+ (16%)
+
+ 
+ 
+ 
+ 
+ 
+
+ Working Capital and
+ General Corporate Purposes, Including Acquisitions (2)
+ $12,500
+ (20%)
+ $25,500
+ (20%)
+ $37,500
+ (20%)
+ $50,000
+ (20%)
+
+ 
+ 
+ 
+ 
+ 
+
+ 
+ $62,500
+ $125,000
+ $187,500
+ $250,000
+
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+ 
+ 
+ 
+
+ 
+
+ 
+
+(1)Includes
+ hiring of additional personnel.
+
+ 
+
+(2)Working
+ capital and general corporate purposes includes amounts required to pay officers 
+ salaries and incentive bonuses, professional fees, ongoing public reporting costs, office
+ related expenses, acquisitions of other companies using the Company s stock and
+ other corporate expenses.
+
+ 
+
+ 
+
+ 14 
+
+ 
+
+ 
+
+The
+allocation of net proceeds set forth above is only an estimate based on our current plans and assumptions regarding the industry
+and general economic conditions and our future revenues and expenditures. If any of these factors change, it may be necessary
+or advisable for us to reallocate some of the proceeds in the above listed categories or to use portions for other purposes. Investors
+will be relying on the judgment of our management regarding application of the net proceeds of this offering.
+
+ 
+
+DILUTION
+
+ 
+
+As
+of September 30, 2017, our net deficit book value per share was $(.0011) based on 354,998,798 shares outstanding on a fully diluted
+basis and a proforma net deficit book value of $321,402. Net tangible book value per share is determined by dividing the number
+of outstanding shares of common stock on a fully diluted basis into our net (deficit) tangible book value, which is our total
+tangible assets less our total liabilities. After giving effect to the sale of the shares in this offering and after deducting
+estimated expenses of this offering, our proforma as adjusted net tangible book value will be $(19,699) or $0.00 per share. This
+represents an immediate increase in net tangible book value of approximately $.0011 per share to our existing shareholders and
+an immediate dilution of $.0011 per share to investors purchasing shares in this offering.
+
+ 
+
+CAPITALIZATION
+
+ 
+
+We
+are authorized to issue 750,000,000 shares of common stock, par value of $0.001 per share and 100,000,000 shares of preferred
+stock, par value of $0.001 per share. As of September 30, 2017, 322,498,798 shares of the Company's common stock are issued and
+outstanding. The holders of common stock are entitled to one vote per share for the election of directors and on all other matters
+to be voted upon by the stockholders.
+
+ 
+
+MARKET
+FOR OUR COMMON STOCK AND
+
+ 
+
+DETERMINATION
+OF OFFERING PRICE
+
+ 
+
+The
+Company s stock is currently thinly traded on the OTC Pink Sheets Markets under the symbol AVOZ.PK. As of September 30,
+2017, we estimate that there were approximately 593 holders of record of our common stock. This figure does not take into account
+those shareholders whose certificates are held in the name of brokerdealers or other nominees.
+
+ 
+
+Our
+common stock is traded on OvertheCounter Pink Sheets Market under the symbol AVOZ. The offering price is based upon the
+average of the bid and asked prices of the Registrant s common stock as quoted on PTCPink of $0.004 per share on
+December 31, 2017.
+
+ 
+
+MANAGEMENT'S
+DISCUSSION AND ANALYSIS OF
+
+ 
+
+FINANCIAL
+CONDITION AND RESULTS OF OPERATIONS
+
+ 
+
+The
+following discussion of our financial condition and results of operation should be read in conjunction with the financial statements
+and related notes that appear elsewhere in this prospectus. This discussion contains forwardlooking statements and information
+relating to our business that reflect our current views and assumptions with respect to future events and are subject to risks
+and uncertainties, including the risks in the section entitled Risk Factors beginning on page 5, that may cause our or our industry s
+actual results, levels of activity, performance or achievements to be materially different from any future results, levels of
+activity, performance or achievements expressed or implied by these forwardlooking statements.
+
+ 15 
+
+ 
+
+ 
+
+ 
+
+These
+forwardlooking statements speak only as of the date of this prospectus. Although we believe that the expectations reflected in
+the forwardlooking statements are reasonable, we cannot guarantee future results, levels of activity, or achievements. Except
+as required by applicable law, including the securities laws of the United States, we expressly disclaim any obligation or undertaking
+to disseminate any update or revisions of any of the forwardlooking statements to reflect any change in our expectations with
+regard thereto or to conform these statements to actual results.
+
+ 
+
+All
+written and oral forwardlooking statements made are attributable to us or persons acting on our behalf. Given the uncertainties
+that surround such statements, you are cautioned not to place undue reliance on such forwardlooking statements.
+
+ 
+
+Company
+Overview
+
+ 
+
+Altavoz
+is an independent, full service, direct music distributor offering a wide range of digital and physical distribution products
+and marketing solutions for musicians. We use proprietary and traditional distribution channels and social media promotions to
+connect our artists with music consumers. We work in two spheres of distribution: digital and physical. While the physical distribution
+is limited, the core of the Company's business comes from the use of Distribution as a Service ("DaaS"). DaaS is a cloud
+based software system that uses the Company's proprietary platform to distribute to online stores such as iTunes and Amazon.com,
+as well as streaming devices, through mp3 and wav technology. It enables us to act as a middleman between artists and retail outlets.
+DaaS connects artists with over 2,500 digital outlets across 74 countries, 3,000 retailers (online and brick and mortar) and over
+16,000 public libraries. Altavoz directly markets our DaaS service to artists via appearances at trade shows and major industry
+events, such as the Grammys, the Country Music Awards and the Billboard Music Awards.
+
+ 
+
+We
+implement Music Public Blockchain protocol, which is a computer based content management system that allows artists to manage
+their music catalogs. We are an issuer of International Standard Recording Codes ("ISRCs"), which are critical identification
+tools for sounds recording that enable tracking any iteration of the recordings across the digital and physical music market.
+We can also issue Universal Product Codes ("UPCs"), which are used by physical retailers and online outlets to gather
+and track sales information. Our use of IRSCs and UPCs allow us to distribute our artists music to the larger physical
+and digital distributors and streaming services.
+
+ 
+
+Altavoz
+has business relationships with music industry leader, The Connexion, a white label (i.e. subdistributor) of InGrooves Fontana
+Music Group. Through these relationships, Altavoz provides its customers with access to physical and digital stores they otherwise
+could not otherwise obtain through direct sales these relationships also give Altavoz bulk pricing and discount advantage
+on platforms such as Amazon and iTunes, among others.
+
+ 
+
+Artists
+can face high startup costs when trying to promote their music. These costs include promotional and marketing expenses for all
+forms of music content, as well as the cost of manufacturing, packaging and distributing physical CDs. One attractive draw for
+smaller record labels and artists to Altavoz is that we do not charge them any a large upfront cost for distribution deals. Instead,
+our customers, record labels and artists need only pay a smaller start-up fee; typically in the range of $1,000 to $5,000. A typical
+contract would contain a two-year exclusivity for digital and physical music distribution. Altavoz is also working towards creating
+a relationship with a lending institution to provide an Altavoz-backed loan through a separate entity. This service is not yet
+available and might not be implemented.
+
+ 
+
+Altavoz
+splits the revenue for the music sales with our record label or artist customer. The split is usually on a sliding scale, ranging
+from 50/50 on the first five thousand units sold, and going to a 70/30 split after sales reach twenty thousand units.
+
+ 
+
+We
+currently have exclusive distribution agreements with twenty artists and two music distributors. These distribution agreements
+each typically generate between $100 and $600 per month, depending on the popularity of the artist and promotional efforts of
+the Company.
+
+ 16 
+
+ 
+
+ 
+
+ 
+
+Our
+Competition
+
+ 
+
+Our
+management estimates that annual digital music sales are approximately $6.7 billion. Of this, management estimates that 90% is
+controlled by the "Majors" (i.e. Capital Music Group/Universal, Sony Music Entertainment and Warner Music Group).
+Independent distribution companies, of which we are one, account for the remaining 10% of the industry revenue.
+
+ 
+
+Our
+competitors are independent distribution companies such as Caroline Distribution backed by Capital Music Group/Universal 
+RED Distribution, a division of Sony Music Entertainment Redeye, a small independent. We know of no other company that offers
+independent, smaller quantity release labels a DaaS platform to access physical and digital music retailers and wholesalers and
+marketing intelligence data.
+
+ 
+
+Growth
+Strategy
+
+ 
+
+The
+Majors continue to streamline purchasing, which limits the number of wholesalers working with retailers. Altavoz provides distribution
+with a global approach. For physical distribution, the Company has a base of over 3,000 media outlets, mainly consisting of independent
+, ' ': Mom & Pop' retailers (which is where most physical media of non-major artists is purchased in the United States). Altavoz
+will also sell to other media outlets using One-Stops, considered a wholesaler's wholesaler, as they carry a wide number of selections
+but in a limited amount. Digitally, our relationship with Fontana/Ingrooves ensure our artists are in all the download streaming
+and digital outlets across 74 countries at the top of the industry payouts and with state of the art fraud and monetization capabilities
+that our partners brings to Altavoz. In 2018 Altavoz will be one of the few distributors exporting American made music. Further,
+by using our software that measures the geographic distribution of potential customers based on downloads and inquiries, Altavoz
+can pinpoint oversea opportunities for suppliers and trading partners.
+
+ 
+
+The
+Company seeks to further develop its own intellectual property that would focus on geocentric retail placement to increase the
+effectiveness of the DAAS system and enable retailers to make strategic business and marketing decisions. Using our cloud based
+platform, Altavoz intends to offer this realtime awareness capability that aggregates and analyzes industry and internal data
+into a "Fan Heat Map" giving our suppliers and retail partners actionable, strategic sales and marketing intelligence
+on each product, down to the zip code. This data will be augmented by our software that will allow consumers to notify their friends,
+Altavoz, and retailers that they are interested in a product. The data produced allows brickandmortar stores receive products
+that are more likely to sell generating fewer returns. We offer record labels access to this data so that they can best
+plan bookings for tours, branding events, special performances, and more.
+
+ 
+
+We
+intend to develop our cloud based digital platform so that it provides a one stop solution for independent record labels and artists
+giving them a music distribution platform with marketing intelligence through a Fan Heat Map, a universal payment option which
+accepts credit card and bitcoin payments and a greater revenue through a higher royalty rate than other distribution companies.
+
+ 
+
+Using
+DaaS with the data from Fan Heat Map will allow our customers to make better strategic business decisions. We will then be able
+to expand our distribution network and attract more established record labels and artists.
+
+ 17 
+
+ 
+
+ 
+
+ 
+
+Dividends
+
+ 
+
+The
+Company has never paid any cash dividends on our common shares, and we do not anticipate that we will pay any dividends with respect
+to those securities in the foreseeable future. Our current business plan is to retain any future earnings to finance the expansion
+development of our business.
+
+ 
+
+DESCRIPTION
+OF SECURITIES TO BE REGISTERED
+
+ 
+
+This
+prospectus includes a public offering of 75,000,000 Shares of our common stock plus an additional 91,566,666 Shares offered by
+the Selling Security Holders. The following description of our common stock is only a summary. You should also refer to our certificate
+of incorporation and bylaws, which have been incorporated by reference as exhibits to the registration statement of which this
+prospectus forms a part.
+
+ 
+
+We
+are authorized to issue 750,000,000 shares of common stock, par value of $0.001 per share and 100,000,000 shares of preferred
+stock, par value of $0.001 per share. As of September 30, 2017, there were 322,498,798 shares of the Company's common stock issued
+and outstanding. The holders of common stock are entitled to one vote per share for the election of directors and on all other
+matters to be voted upon by the stockholders.
+
+ 
+
+There
+is no cumulative voting. Subject to preferences that may be applicable to any outstanding securities, the holders of common stock
+are entitled to receive, when and if declared by the board of directors, out of funds legally available for such purpose, any
+dividends on a pro rata basis. In the event of our liquidation, dissolution or winding up, the holders of common stock are entitled
+to share ratably in all assets remaining after payment of liabilities, subject to prior distribution rights of preferred stock,
+if any, then outstanding. The common stock has no preemptive or conversion rights or other subscription rights. There are no redemption
+or sinking fund provisions applicable to the common stock.
+
+ 
+
+RESULTS
+OF OPERATIONS
+
+ 
+
+A
+summary of the U.S. GAAP results of operations for the quarters ended September 30, 2017 and 2016 and for the years ended December
+31, 2016 and 2015, as disclosed in our consolidated financial statements in Item 8, Financial Statements and Supplementary
+Data, herein referred to as our "consolidated financial statements" is as follows:
+
+ 
+
+Revenue:
+
+ 
+
+The
+following table compares revenues received by the Company in the quarters ended September 30, 2017 and 2016 and the revenue received
+in the fiscal years ended December 31, 2016 and December 31, 2015:
+
+ 18 
+
+ 
+
+ 
+
+ 
+
+ Revenue
+ for the Quarters Ended September 30, 2017 and 2016
+ 
+
+ 
+ Quarter
+ Ended
+ Quarter
+ Ended
+ Increase/
+
+ 
+ September
+ 30, 2017
+ September
+ 30, 2016
+ Decrease
+
+ Sales
+ – Net
+ $3,009
+ $4,029
+ $(1,020)
+
+ Cost
+ of Goods Sold
+ $778
+ $635
+ $143
+
+ Gross
+ Profit (Loss)
+ $2,231
+ $3,394
+ $(1,163)
+
+ Gross
+ Profit (Loss) as a Percentage of Revenue
+ 74%
+ 84%
+ (10%)
+
+ 
+ 
+ 
+ 
+
+ Revenue
+ for the Years Ended December 31, 2016 and 2015
+ 
+
+ 
+ Year
+ Ended
+ Year
+ Ended
+ Increase/
+
+ 
+ Dec.
+ 31,2016
+ Dec.
+ 31, 2015
+ Decrease
+
+ Sales
+ – Net
+ $15,385
+ $9,875
+ $5,510
+
+ Cost
+ of Sales
+ $7,955
+ $8,899
+ $(944)
+
+ Gross
+ Profit (Loss)
+ $7,430
+ $976
+ $6,454
+
+ Gross
+ Profit (Loss) as a Percentage of Revenue
+ 42%
+ 10%
+ 32%
+
+ 
+ 
+ 
+ 
+ 
+
+ 
+
+Operating
+Expenses:
+
+ 
+
+The
+following table compares operating expenses of the Company in the quarters ended September 30, 2017 and 2016 and the operating
+expenses in the fiscal years ended December 31, 2016 and 2015:
+
+ 
+
+ Operating
+ Expenses for the Quarters Ended September 30, 2017 and 2016
+ 
+ 
+
+ 
+ Quarter
+ Ended
+ Quarter
+ Ended
+ Increase/
+
+ 
+ September
+ 30, 2017
+ September
+ 30, 2016
+ Decrease
+
+ Selling
+ Expenses (Marketing, Travel and Entertainment)
+ $347
+ $
+ 1,438
+ $(1,091)
+ 
+
+ General and Administrative
+ Expenses
+ $85,618
+ $50,617
+ $35,001
+ 
+
+ Total
+ Operating Expenses
+ $85,965
+ $52,055
+ $33910
+ 
+
+ Other Income (Expenses)
+ $0
+ $0
+ $0
+ 
+
+ Net
+ Loss before Taxes
+ $83,734
+ $48,661
+ $35,073
+ 
+
+ 
+ 
+
+ Operating
+ Expenses for the Fiscal Years Ended December 31, 2016 and 2015
+ 
+
+ 
+ 
+ 
+ 
+ 
+
+ 
+ Year
+ Ended
+ Year
+ Ended
+ Increase/
+
+ 
+ Dec.
+ 31, 2016
+ Dec.
+ 31, 2015
+ Decrease
+ 
+
+ Selling Expenses
+ $29,926
+ $9,390
+ $20,536
+ 
+
+ Total
+ General and Administrative Expenses
+ $
+ 4,214,845
+ $
+ 79,938
+ $4,134,907
+ 
+
+ Total Operating Expenses
+ $4,244,771
+ $89,328
+ $4,155,443
+ 
+
+ Other
+ Income (Expenses)
+ $(28,882,500)
+ $0
+ $28,882,500
+ 
+
+ Net Loss
+ $33,122,841
+ $89,549
+ $33,033,292
+ 
+
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 19 
+
+ 
+
+ 
+
+Liquidity
+and Capital Resources:
+
+ 
+
+The
+following table compares the liquidity and capital resources of the Company in the quarters ended September 30, 2017 and 2016
+and the liquidity and capital resources in the fiscal years ended December 31, 2016 and 2015:
+
+ 
+
+ Liquidity
+ and Capital Resources for the Quarters Ended September 30, 2017 and 2016
+ 
+ 
+
+ 
+ Quarter
+ Ended
+ Quarter
+ Ended
+ Increase/
+
+ 
+ September
+ 30, 2017
+ September
+ 30, 2016
+ Decrease
+
+ Current
+ Assets
+ $0
+ $12,522
+ $(12,522)
+ 
+
+ Current Liabilities
+ $298,702
+ $40,938
+ $257,764
+ 
+
+ Accounts
+ Payable and Accrued Expenses
+ $
+ 256,577
+ $40,938
+ $215,639
+ 
+
+ Working Capital (Deficit)
+ $(298,702)
+ $(28,416)
+ $(270,286)
+ 
+
+ 
+ 
+
+ Liquidity
+ and Capital Resources for the Fiscal Years Ended December 31, 2016 and 2015
+ 
+
+ 
+ 
+ 
+ 
+ 
+
+ 
+ Year
+ Ended
+ Year
+ Ended
+ Increase/
+
+ 
+ Dec.
+ 31, 2016
+ Dec.
+ 31, 2015
+ Decrease
+
+ Current
+ Assets
+ $0
+ $951
+ ($951)
+ 
+
+ Current Liabilities
+ $90,409
+ $211,055
+ $(120,646)
+ 
+
+ Accounts
+ Payable and Accrued Expenses
+ $84,906
+ $41,552
+ $43,354
+ 
+
+ Working Capital
+ $(90,409)
+ $(210,104)
+ $119,695
+ 
+
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 20 
+
+ 
+
+ 
+
+Satisfaction
+of Our Cash Obligations for the Next 12 Months:
+
+ 
+
+We
+believe that over the next twelve months our existing capital combined with anticipated cash flow from operations will not be
+sufficient to sustain our current operations. Management estimates that to fund our operations, projected business expansion and
+the professional costs of operating a public entity (i.e. legal, accounting and auditing expenses) it will need approximately
+$300,000 over the next twelve months. Management further estimates that if it scaled back its expansion plans and deferred paying
+some of its professional expenses until after the effectiveness of this registration, it would need to expend approximately $120,000
+over the next 12 months, of which approximately $36,000 would be derived from business operations and the balance from private
+and related-party investments.
+
+ 
+
+Two
+of our major stockholders, Frank Rubba and the Jacobsen Family trust have made non-binding agreements to fund our operational
+shortfall for the next 12 months from time to time as needed. In the event we locate potential acquisitions and/or mergers we
+will most likely need to obtain additional funding through the sale of equity and/or debt securities. There can be no assurances
+that we will receive the funds from the stockholders or that we will be able to secure funding from other sources on terms that
+are favorable to us, or at all.
+
+ 
+
+Research
+and Development:
+
+ 
+
+We
+have no existing commitments for cash expenditures on research and development. However, As funds become available through the
+proceeds of this offering or otherwise, we will pursue technical improvements to our existing cloud-based distribution system
+and computer-based management system.
+
+ 
+
+Expected
+Purchase or Sale of Plant and Significant Equipment:
+
+ 
+
+We
+have no existing commitments for the purchase or sale of any plant or significant equipment as such items are not required
+by us at this time.
+
+ 
+
+Significant
+Changes in the Number of Employees:
+
+ 
+
+We
+currently have 1 fulltime employee. The employee maintains and updates our cloud-based distribution system, computer-based management
+system and provides customer and technical support. Over the next 12 months, we intend to hire additional employees to assist
+and expand these functions as our needs and available cash dictate. None of our employees are subject to any collective bargaining
+agreements.
+
+ 
+
+OffBalance
+Sheet Arrangements:
+
+ 
+
+We
+do not have any offbalance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial
+condition, results or operations, liquidity, capital expenditures or capital resources that is deemed material.
+
+ 
+
+ 21 
+
+ 
+
+ 
+
+SELLING
+SHAREHOLDERS
+
+ 
+
+Selling
+shareholders hold 341,666 shares of the Company s common stock under the Company s Private Placement Memorandum Dated
+July 15, 2016 15,000,000 shares of the Company s common stock issued as compensation to professionals and
+92,225,000 shares of the Company s common stock issued to insiders in private transactions.
+
+ 
+
+The
+table below sets forth:
+
+ 
+
+ The
+ name of each of the Selling Shareholders 
+
+ 
+
+ The
+ number of shares and percentage of common stock beneficially owned by each of the Selling
+ Shareholders as of September 30, 2017 
+
+ 
+
+ The
+ number of shares that may be offered for sale by the Selling Shareholders under this
+ prospectus 
+
+ 
+
+ The
+ number of shares and percentage of common stock that would be beneficially owned by each
+ of the Selling Shareholders if they were to sell all of their shares offered for sale
+ under this prospectus (assuming a sale of all of the common stock that may be offered
+ by this prospectus).
+
+ 
+
+No
+material relationships exist between any of the Selling Shareholders and the Company, except as identified in the footnotes to
+this table nor have any such material relationships existed within the past three years. None of the Selling Shareholders are
+members of the Financial Industry Regulatory Authority (FINRA), or affiliates of such members, except as noted in the footnotes
+below.
+
+ 22 
+
+ 
+
+ 
+
+ 
+
+Beneficial
+ownership is determined under the rules of the SEC and includes investment power with respect to common stock. The shares issuable
+under this offering are not treated as outstanding for the purposes of computing the percentage ownership of any person.
+
+ 
+
+Except
+as indicated below, the Selling Shareholders are not the beneficial owners of any additional shares of common stock or other equity
+securities issued by us or any securities convertible into, or exercisable or exchangeable for, our equity securities.
+
+ 
+
+We
+may require the Selling Shareholders to suspend the sales of common stock offered by this prospectus upon the occurrence of any
+event that makes any statement in this prospectus or the related registration statement untrue in any material respect or that
+requires the changing of statements in these documents in order to make statements in those documents not misleading.
+
+ 
+
+ 
+ 
+ Beneficial
+ Ownership
+ 
+ 
+ Beneficial
+ Ownership
+
+ 
+ 
+ Prior
+ to this Offering
+ 
+ 
+ After
+ to this Offering
+
+ Selling
+ Shareholder
+ 
+ No.
+ of
+ Percentage
+ 
+ Shares
+ to be
+ No.
+ of
+ Percentage
+
+ 
+ 
+ Shares
+ 
+ 
+ Offered
+ Shares
+ 
+
+ Capricorn
+ Partners (1)
+ 
+ 1,650,000
+ 
+ 1%
+ 1,650,000
+ 0
+ 0%
+
+ Gus
+ West & Assoc.
+ 
+ 2,041,666
+ 
+ 1%
+ 2,041,666
+ 0
+ 0%
+
+ Lee
+ Ginsberg
+ 
+ 1,000,000
+ 
+ 0%
+ 1,000,000
+ 0
+ 0%
+
+ Michael
+ Mannicho
+ 
+ 2,000,000
+ 
+ 1%
+ 2,000,000
+ 0
+ 0%
+
+ Martone
+ Construction Corp.
+ 
+ 36,300,000
+ 
+ 11%
+ 36,300,000
+ 0
+ 0%
+
+ Walter
+ McDonough
+ 
+ 2,000,000
+ 
+ 1%
+ 2,000,000
+ 0
+ 0%
+
+ Meltzman
+ Venture Capital
+ 
+ 2,000,000
+ 
+ 1%
+ 2,000,000
+ 0
+ 0%
+
+ Motor
+ Media USA, LLC
+ 
+ 150,000
+ 
+ 0%
+ 150,000
+ 0
+ 0%
+
+ Mirsada
+ Muratovic
+ 
+ 500,000
+ 
+ 0%
+ 500,000
+ 0
+ 0%
+
+ Jeff
+ Osborn
+ 
+ 150,000
+ 
+ 0%
+ 150,000
+ 0
+ 0%
+
+ Out
+ of Order, LLC (1)
+ 
+ 14,800,000
+ 
+ 5%
+ 14,800,000
+ 0
+ 0%
+
+ Paul
+ A. Rachmuth (2)
+ 
+ 5,000,000
+ 
+ 2%
+ 5,000,000
+ 0
+ 0%
+
+ Robert
+ Rowe
+ 
+ 6,500,000
+ 
+ 2%
+ 6,500,000
+ 0
+ 0%
+
+ Frank
+ Rubba
+ 
+ 31,475,000
+ 
+ 9.7%
+ 31,475,000
+ 0
+ 0%
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ Total:
+ 105,566,666
+ 
+ 
+ 105,566,666
+ 
+ 
+
+ 
+
+ 
+
+(1)Capricorn
+ Partners and Out of Order, LLC have common ownership and, combined, hold 6% of the Company s
+ outstanding stock prior to this offering.
+
+(2)Paul
+ A. Rachmuth acts as the Company s General Counsel, who received his shares for
+ services rendered to the Company.
+
+ 
+
+ 
+
+PLAN
+OF DISTRIBUTION
+
+ 
+
+As
+our shares are currently only listed on the OTC Pink Sheet Markets, the current and potential market for our common stock is limited
+and the liquidity of our shares may be severely limited.
+
+ 
+
+The
+trading price of our common stock could be subject to wide fluctuations in response to various events or factors, many of which
+are beyond our control. As a result, investors may be unable to sell their shares at or greater than the price at which they are
+being offered.
+
+ 23 
+
+ 
+
+ 
+
+ 
+
+To
+the extent required, this prospectus may be amended or supplemented from time to time to describe a specific plan of distribution.
+If the plan of distribution involves an arrangement with a brokerdealer for the sale of shares through a block trade, special
+offering, or secondary distribution or purchase by a broker or dealer, the amendment or supplement will disclose:
+
+ 
+
+ the
+ name of the participating brokerdealer(s) 
+
+ 
+
+ the
+ number of shares involved 
+
+ 
+
+ the
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2018/CIK0001694665_evelo_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001694665_evelo_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/CIK0001694665_evelo_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2018/CIK0001697152_convergeon_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001697152_convergeon_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..d10069069d20df522fa744293bcbee122156603a
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/CIK0001697152_convergeon_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY The following summary highlights selected information contained elsewhere in this prospectus and does not contain all of the information that you should consider in making your investment decision. Before investing in our securities, you should carefully read this entire prospectus, including our consolidated financial statements and the related notes included in this prospectus and the information set forth under the headings Risk Factors and Management s Discussion and Analysis of Financial Condition and Results of Operations. The Company, ConvergeOne we, our, us or similar terms mean ConvergeOne Holdings, Inc. and our consolidated subsidiaries. General We are a leading IT services provider of collaboration and technology solutions for large and medium enterprises. We serve clients through our comprehensive engagement model which includes the full lifecycle of services from consultation and design through implementation, optimization, and ongoing support. Approximately 46% and 51% of our total revenue in 2016 and 2017, respectively, was derived from our services offerings, which include professional and managed, cloud, and maintenance services. Our deep technical expertise enables us to deliver complex, multi-vendor solutions across a number of delivery models, including on-premise and in private, hybrid, C1 Cloud, and public cloud environments. We served over 3,400, 3,700, and 7,200 clients in 2015, 2016, and 2017, respectively, which includes clients served in 2017 by companies we acquired in 2017. From 2015 to 2017, we served 57% of the Fortune 100, 43% of the Fortune 500, and 36% of the Fortune 1000, which includes clients served in the same period by companies we acquired in 2017. Through our leading professional services capabilities, we design thousands of solutions each year across our core technology markets: (i) collaboration and (ii) enterprise networking, data center, cloud, and security, each of which is complemented by our industry-leading managed, cloud, and maintenance services. Managed, cloud, and maintenance services typically have multi-year contractual terms with high renewal rates and accounted for 29% and 33% of our total revenue in 2016 and 2017, respectively. Through our relationships with more than 300 leading and next-generation technology partners, our engineers deliver optimal services and solutions to clients regardless of their existing infrastructure. Collaboration technology is essential to modern business, enabling workforce mobility and driving globalization through connectivity across any device. Collaboration solutions create significant competitive advantages through enhanced productivity, innovative ways of working together, and omni-channel customer engagement models. With our more than 20-year focus on collaboration solutions, we believe we will benefit from the rapid growth of this market. We derived approximately 68% and 66% of our total revenue in 2016 and 2017, respectively, from our services and technology offerings in the collaboration market. Our technical expertise and client-centric culture have led to long-standing and expanding client relationships. Our top 100 clients, based on 2017 revenue, excluding the impact of our 2017 acquisitions, had an average tenure of more than nine years. We generated 91% and 93% of our total revenue in 2016 and 2017, respectively, from clients we served in a prior year, excluding the impact of our 2017 acquisitions. Our Net Promoter Score ( NPS ) of 61 in 2016 was more than twice the technology vendor industry average of 30. NPS is a commonly used industry measure of customers overall satisfaction. According to this third-party survey, 86% of our clients indicated that they are highly likely to recommend us to other businesses and organizations. Corporate Information We were incorporated in Delaware in November 2016 as a blank check company under the name Forum Merger Corporation. Our principal executive offices are located at 3344 Highway 149, Eagan, Minnesota 55121, and our telephone number is (888) 321-6227. Our corporate website address is www.convergeone.com. Information contained on or accessible through our website is not a part of this prospectus, and the inclusion of our website address in this prospectus is an inactive textual reference only. Table of Contents On February 22, 2018, C1 Investment Corp. and Forum consummated the transactions contemplated by the Agreement and Plan of Merger, dated November 30, 2017, following the approval at the special meeting of the stockholders of Forum held on February 20, 2018. In connection with the closing of the Business Combination, we changed our name from Forum Merger Corporation to ConvergeOne Holdings, Inc. ConvergeOne is a trademark of ConvergeOne, Inc., our wholly-owned subsidiary. The ConvergeOne logos are trademarks of ConvergeOne Holdings Corp., our wholly-owned subsidiary. We do not intend our use or display of other companies trade names or trademarks to imply a relationship with, or endorsement or sponsorship of us by, any other companies. Table of Contents The Offering Securities offered by the selling securityholders We are registering the resale by the selling securityholders named in this prospectus, or their permitted transferees, of an aggregate of 22,142,250 shares of common stock and warrants to purchase 263,750 shares of common stock, which includes: up to 17,959,375 PIPE Shares; up to 3,919,125 Founder Shares; up to 263,750 Placement Warrants; and up to 263,750 shares of common stock issuable upon exercise of the Placement Warrants. In addition, we are registering 1,091,060 shares of common stock issuable upon exercise of the Public Warrants and 263,750 shares of common stock issuable upon exercise of the Placement Warrants. Sponsor Earnout Letter and Lock-Up Letter An aggregate of 2,156,250 of the Founder Shares are subject to forfeiture in the event that the Earnout Payments are not achieved, and may not be sold until such time. Such shares are also subject to 180-day lock-up agreement; provided, that if the volume-weighted average price of our common stock for 15 trading days is at least $12.50 per share, then 25% of such shares will be released from the lock-up agreement, but will remain subject to forfeiture and may not be sold. See the section titled Certain Relationships and Related Person Transactions Sponsor Earnout Letter and Lock-Up Letter Terms of the offering The selling securityholders will determine when and how they will dispose of the shares of common stock and warrants registered under this prospectus for resale. Shares outstanding prior to the offering As of April 24, 2018, we had 69,700,001 shares of common stock issued and outstanding. Shares outstanding after the offering 72,554,811 shares of common stock (assuming the exercise for cash of warrants to purchase 1,354,810 shares of common stock and the issuance of an additional 1,500,000 shares of common stock to a selling securityholder on the date the registration statement of which this prospectus forms a part is declared effective). Use of proceeds We will not receive any of the proceeds from the sale of the warrants or shares of common stock by the selling securityholders. We expect to use the proceeds received from the exercise of the warrants, if any, for working capital and general corporate purposes. Nasdaq ticker symbol Our common stock and warrants are listed on the Nasdaq Capital Market under the symbols CVON and CVONW , respectively. For additional information concerning the offering, see Plan of Distribution beginning on page 102. Table of Contents
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+PROSPECTUS SUMMARY This summary highlights certain information contained elsewhere in this prospectus. Because it is a summary, it may not contain all of the information that is important to you. Before investing in our common stock, you should read this entire offering carefully, especially the sections entitled "Risk Factors" beginning on page 6 and "Management's Discussion and Analysis of Financial Condition and Results of Operations" beginning on page 35, as well our financial statements and related notes included elsewhere in this prospectus. As used in this prospectus, references to "the Company," "XREE", "we", "our," "ours" and "us" refer to X Rail Entertainment, Inc., and its subsidiaries, unless otherwise indicated. Company Overview X Rail Entertainment, Inc. is in the specialty passenger train business and has three operating divisions, The X Train, currently in the planning stages, will be an excursion railroad between metropolitan areas and resort/casino destinations, X Wine Railroads, which is a rail excursion from metropolitan areas to wine regions, and Club X Train, currently in the planning stages, will be a riders membership club for X Train customers. X Train The X Train will be an excursion passenger rail service between Los Angeles and Las Vegas. We expect service to begin in September 2018. XREE plans to have its casino guests ride the exclusive train service and to manage the host activity of its guests throughout their stay in the resort/casino. We anticipate that, in addition to the service between Los Angeles and Las Vegas, future X Train runs will be added in the coming years. We expect to operate the X Train as an Amtrak train listed on the Amtrak national timetable. X Train will provide a complete bundled package of services including ticket, rooms and transfers to & from the station and weekend events such as access to nightclubs, golf outings and restaurants. It will be scheduled as a Friday through Sunday service with passengers in Los Angeles boarding the train at Union Station and arriving at a new station to be built in Las Vegas and owned and operated by the X Train. Only the X Train will be able to use our station in Las Vegas. A typical X Train will carry 10 passenger cars and will include food service and will carry on average, 500 passengers per trip. This number can be increased by adding more cars to the route. Our LA to Vegas business plan emanates from a regional transportation feasibility study published in 2007, which suggested that a well-run rail service between Los Angeles and Las Vegas could garner up to 30% of the approximately 12 million passengers who regularly drive between these two metropolitan areas. See: www.rtcsouthernnevada.com. We believe that with our current business plan, we would be able to break-even, on an operating basis, with approximately 2,000 riders per year. To commence commercial service of the Los Angeles to Las Vegas route, we will need to negotiate and secure the necessary rights, equipment and facilities. These items include: securing a regularly scheduled train agreement from Amtrak to operate our excursion service on a weekly basis beginning with one round trip train per week and increasing to six round trips per week over the next several years as demand dictates, securing operating rights to run our trains over tracks owned by private railroads, obtaining the capability to operate train equipment safely and in conformity with applicable government regulations, and purchasing or leasing appropriate locomotive and passenger cars designed to move passengers over the route in comfort and securing leases on terminal facilities and passenger depots in Los Angeles and in Las Vegas. We expect the X Train to begin running in January 2019. X Wine Railroad The Company's X Wine Railroad service from LA Union Station to Santa Barbara California ran on a scheduled basis, once a month on Saturdays, with individual riders (retail) as well as charters for corporate outings and special events (corporate). The X Wine Railroad provides a unique wine tasting experience to riders who take the train aboard special period classic railcars and an excursion to the Los Olivos wine area of Southern California. Over 250 private wineries reside in the area and the X Wine Railroad provides private access to these vineyards on an exclusive basis. Ticket prices are $369 per person, all inclusive. Since February 2017 this train has run once and the Company expects to continue to run this train intermittently, depending on demand. X Wine provides an all-inclusive day trip including a gourmet breakfast, wine tasting in the wineries, wine and cheese lunch at the wineries, and a gourmet dinner on the train's return trip. Club X Train Club X Train, which is still in the planning stage, will be a one stop shop for all Las Vegas rooms, activities, tours, show tickets and packages. Las Vegas shows, hotel rooms, tours, nightclubs and attractions will all available for members of ClubXTrain.com. This will be the only site riders need to plan their Vegas vacation getaway. We anticipate that when a customer purchases a train ticket on either the X Train (once it commences operations) or any of the X Wine Railroad excursions, such tickets will include enrollment in our Club X membership club. Members will receive points from each excursion they ride and will be provided discounts on products and services we provide. The more they ride, the more points they will receive. Club X train will be the customer's ticket within Vegas for access to nightclubs, hosted bottle service, pool parties, gentlemen's clubs and the Club X Train Crawl: a high end to visiting three nightclubs in one night. Customers will outline their desired plan for the evening and Club X Train will take care of arranging all the details. We expect to commence offering Club X Train service when the X Train commences running, currently anticipated to be January 2019. Implications of Being an Emerging Growth Company We qualify as an "emerging growth company" as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. As an emerging growth company, we may take advantage of specified reduced disclosure and other requirements that are otherwise applicable generally to public companies. These provisions include: being permitted to present two years of audited financial statements in addition to any required unaudited interim financial statements with correspondingly reduced "Management's Discussion and Analysis of Financial Condition and Results of Operations" disclosure; reduced disclosure about our executive compensation arrangements; exemptions from the requirements of holding non-binding advisory votes on executive compensation or golden parachute arrangements; and exemption from the auditor attestation requirement in the assessment of our internal control over financial reporting. We may take advantage of these exemptions for up to five years or such earlier time that we are no longer an emerging growth company. We would cease to be an emerging growth company on the date that is the earliest of (i) the last day of the fiscal year in which we have total annual gross revenues of $1 billion or more; (ii) the last day of our fiscal year following the fifth anniversary of the date of the completion of this offering; (iii) the date on which we have issued more than $1 billion in nonconvertible debt during the previous three years; or (iv) the last day of the fiscal year in which we are deemed to be a large accelerated filer under the rules of the Securities and Exchange Commission, or SEC, which means the market value of our common stock that is held by non-affiliates exceeds $700 million as of the prior September 30th. We may choose to take advantage of some but not all of these exemptions. We have taken advantage of reduced reporting requirements in this prospectus. Accordingly, the information contained herein may be different than the information you receive from other public companies in which you hold stock. Where You Can Find Us The company website is www.xrailentertainment.com and our booking website is www.vegasxtrain.com. The X Wine Railroad site is www.winerailroad.com The Club X Train website is www.clubxtrain.com. The contents of these websites are not incorporated into this prospectus. X Train Vacations, is a licensed IATAN travel agency, owned by X Rail Entertainment, Inc. About This Offering This prospectus covers 689,754,888 shares of common stock. being offered by the Company.
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+SUMMARY OF PROSPECTUS
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+THE OFFERING
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+DILUTION OF THE PRICE YOU PAY FOR YOUR SHARES
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+OFFERING WILL BE SOLD BY OUR OFFICER AND DIRECTOR
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+DEPOSIT OF OFFERING PROCEEDS
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+MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
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+CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
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+AND FINANCIAL DISCLOSURE
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+DIRECTOR, EXECUTIVE OFFICER, PROMOTER AND CONTROL PERSON
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+SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
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+CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
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+INDEMNIFICATION 
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+VADO CORP.
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+Dlh 816/9
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+Nitra, Slovakia 94901
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diff --git a/parsed_sections/prospectus_summary/2018/CIK0001701522_preferred_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001701522_preferred_prospectus_summary.txt
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+PROSPECTUS SUMMARY This summary highlights selected information about us and this offering but does not contain all of the information that you should consider before investing in our Class A common stock. Before making an investment decision, you should read this entire prospectus carefully, including the discussion under the heading "Risk Factors" and the historical and pro forma consolidated financial statements and related notes thereto contained elsewhere in this prospectus. This prospectus includes forward-looking statements that involve risks and uncertainties. See "Forward-Looking Statements" for more information. Unless we state otherwise or the context otherwise requires, all information in this prospectus gives effect to the reorganization transactions described below. Unless we state otherwise or the context otherwise requires, the terms "we," "us," "our," "Preferred Sands" and the "Company" refer to Preferred Sands, Inc., a Delaware corporation, and its consolidated subsidiaries after giving effect to the reorganization transactions described under " The Reorganization Transactions" below. "Preferred Proppants" refers to Preferred Proppants Holdings, LLC, a Delaware limited liability company, our accounting predecessor and a consolidated subsidiary of ours following the reorganization transactions. Overview We provide sand-based proppant solutions to the oil and gas industry through our ownership and operation of a portfolio of geographically diversified mines and processing and coating plants. Our products are sold to both oilfield service providers and oil and gas exploration and production ("E&P") companies operating in some of the most active basins in North America. We are focused on the development and operation of sand facilities located close to or within basins where our customers operate and consume our products, which we refer to as our "regional and in-basin sand facilities". E&P companies are increasingly favoring sands produced at regional and in-basin facilities given their lower delivered cost versus Northern White sands, which are produced primarily in Wisconsin and Illinois. We believe our regional and in-basin sand facilities provide us with a significant competitive advantage by allowing us to avoid or reduce certain transportation costs. We believe this enables us to offer our high-quality sands at a lower all-in cost compared to our competitors. In addition to our raw frac sands, we manufacture and sell a suite of proprietary coated sands which have been designed to provide our customers with additional benefits, including features such as enhanced proppant transport and reduced flowback. These features and benefits improve well performance and reduce costs for the end user. In the first quarter of 2018, we commenced operations on two new in-basin sand facilities, one located in the Permian basin near Monahans, Texas, which we refer to as our "Monahans" facility, and one facility located in the Eagle Ford shale in Atascosa County, Texas, which we refer to as our "Atascosa" facility. We are also in the process of developing a new in-basin sand facility located near the SCOOP/STACK formations in Oakwood, Oklahoma which we refer to as our "Oakwood" facility. The Oakwood facility is expected to commence operations during the third quarter of 2018. We refer to the Monahans, Atascosa and Oakwood facilities collectively as our "in-basin facilities". We believe that our three in-basin facilities will be among the lowest cost landed at well, or "CLAW", providers of raw frac sand in the industry, as our geographic footprint will eliminate long-haul rail shipment and transloading expenses associated with out-of-basin suppliers. We believe these three facilities also provide for a unique portfolio of in-basin modern plants in diversified basins. In addition, our existing regional sand facilities include our Sanders, Arizona facility, which primarily serves the Delaware sub-basin in the Permian basin (which consists of the Delaware and Midland sub-basins) and the San Juan and Bakersfield basins, and our Genoa, Nebraska facility, which primarily serves the SCOOP/STACK formations and the Denver-Julesburg basin. AMENDMENT NO. 1 TO FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 The market data regarding supply and demand is difficult to quantify as the proppant industry continues to evolve and many market participants are privately held, making accurate estimates of supply capacity and market demand difficult to qualify. While we are not aware of any misstatements regarding the market, industry or similar data presented herein, such data involve risks and uncertainties and are subject to change based on various factors, including those discussed under the headings "Forward-Looking Statements" and "Risk Factors" in this prospectus. TRADEMARKS This prospectus contains references to our trademarks and service marks and to those belonging to other entities. Solely for convenience, trademarks and trade names referred to in this prospectus may appear without the or symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensor to these trademarks and trade names. We do not intend our use or display of other companies' trade names, trademarks or service marks to imply a relationship with, or endorsement or sponsorship of us by, any other companies. (a)Reserves are estimated as of December 31, 2017 by third-party independent engineering firms based on core drilling results and in accordance with the SEC's definitions of proven and probable recoverable reserves and related rules for companies engaged in significant mining activities. Drilling density utilized by the independent engineering firm to determine proven versus probable reserves are based upon the relative characteristics of the mineral resource field evaluated, including the consistency and density of the mineral resource within the drilling core sample. The drill-hole spacing utilized by the independent engineering firm in its determination of proven and probable reserves in accordance with the SEC's definitions are as follows by property: Genoa, Nebraska 600 feet to 1,500 feet Sanders, Arizona 500 feet to 1,000 feet Atascosa, Texas 1,000 feet to 2,500 feet Monahans, Texas 1,500 feet to 4,000 feet Oakwood, Oklahoma 1,500 feet to 2,500 feet (b)For the Genoa and Sanders facilities, total proven and probable reserves at December 31, 2017 divided by sand volumes processed for the year ended December 31, 2017. For the Atascosa, Monahans and Oakwood facilities, total proven and probable reserves at their date of acquisition divided by annual expected processing capacity. (c)Currently under construction and includes 18.4 million tons of proven and probable reserves acquired in the first quarter of 2018. The Oakwood facility is expected to commence operations during the third quarter of 2018. See "Business In-Basin Facilities" for further detail. Once our Oakwood facility is operational, we expect to have approximately 12.8 million tons of total processing capacity, including 9.4 million tons at our in-basin facilities, making us one of the largest in-basin suppliers to the oil and gas industry (measured by processing capacity). Including the reserves associated with our in-basin facilities at their date of acquisition, we have total proven and probable reserves of approximately 654.0 million tons as of December 31, 2017. These reserve estimates do not include (i) the annual replenishment of approximately 1.8 million to 2.0 million product tons of unprocessed sand at our Genoa, Nebraska facility as a result of sediment dredging activities of the Loup River Public Power District ("LRPPD"), which the LRPPD conducts at its sole cost and expense, or (ii) additional reserves that we may identify with additional drilling and sampling on certain parts of our approximately 11,640 controlled acres adjacent to our current mining operations at Sanders, Table of Contents Arizona. These reserves reflect an estimated reserve life of approximately 51 years based upon the expected processing capacity of our existing facilities and Oakwood facility once construction is complete. Of our approximately 654.0 million tons of proven and probable reserves, approximately 91% is 40/70 or 100 mesh finer grade sand, both of which are in high demand from our customers as a result of their high crush strength as compared to Northern White sand, and lighter weight as compared to coarser grade alternative products, such as 20/40 and 30/50 sands. Our in-basin facilities can process frac sand in varying gradations, but predominantly 40/70 and 100 mesh. We currently have supply contracts for approximately 10.0 million tons per year of raw frac sand from our regional and in-basin facilities and are in discussions for additional supply contracts with customers. Our research and development team, which consists of 11 employees with degrees in chemical and petroleum engineering and other materials science and engineering disciplines, seeks to provide enhanced solutions to existing proppant and completion methodologies. We have been recognized with industry awards for our research and development efforts, including the 2014 Polyurethane Innovation Award for Improving Oil Productivity, among others. We have developed a suite of proprietary coated sand products including FloPRO PTT , Polymeric Proppants and DustPRO , which provide cost competitive, well-enhancing benefits to our end users including improved proppant transport, improved strength and reduced flowback, and reduced generation of dust during handling, respectively. Polymeric Proppants is a suite in its own right, providing multiple resin coated sand products, each for different downhole conditions. We manufacture our coated sands using proprietary, in house developed coating processes. We believe these coating processes are more efficient than other sand coating processes employed by competitors, which provides us with a cost advantage that results in us having high margins on such products. As of December 31, 2017, we held ten patents, had 23 patents pending in the U.S. and had 41 patents pending in other countries relating to these various technologies. Competitive Strengths We believe that proppant customers are primarily focused on achieving the lowest CLAW for raw frac sand and coated proppants. We believe that we are well positioned to address these market demands through the following strengths: Strategically located in-basin facilities. We commenced operations in the first quarter of 2018 on two new in-basin facilities, consisting of our Monahans facility in the Permian basin and our Atascosa facility in the Eagle Ford shale. We are also in the process of developing our new Oakwood in-basin facility located near the SCOOP/STACK formations. The Oakwood facility is expected to commence operations during the third quarter of 2018. We estimate that approximately 90% of the Permian, Eagle Ford and SCOOP/STACK proppant demand for the year ended December 31, 2017 was located within 100 miles of our in-basin facilities. The close proximity of our in-basin facilities to the Midland and Delaware sub-basins in the Permian, the Eagle Ford shale and the SCOOP/STACK formations will enable us to eliminate much of the cost associated with delivering frac sand from outside the basin, including the fixed cost of procuring, maintaining (and storing during periods of lower utilization) the associated railcar fleets, the capital expenditures associated with the rail and transload infrastructure that support a rail fleet (at origin and destination) and/or the fixed minimum throughput agreements common at third party transload facilities. As a result, we believe we will be able to move sand from our in-basin facilities to the well site for an average transportation cost of approximately $20 to $35 per ton. By comparison, providers of Northern White frac sand from facilities in Wisconsin typically incur $75 to $90 per ton in transportation costs (including rail freight expense, railcar lease, demurrage and storage expenses, transload expense and truck to the well site expense) to move sand to the Permian basin, $80 to $95 per ton to move sand to the Eagle Ford shale and $70 to $120 per ton to move sand to the SCOOP/STACK formations. According One Radnor Corporate Center 100 Matsonford Road, Suite 101 Radnor, Pennsylvania 19087 (484) 684-1257 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) Table of Contents to our estimates, these additional logistics costs result in an approximately $45 to $55 per ton higher CLAW for Northern White frac sand as compared to frac sand from in-basin facilities. We believe that this lower CLAW for in-basin facilities will render Northern White frac sand as incremental supply in Texas, which is expected to become approximately half of the total US proppant market in 2018. By eliminating these supply chain elements and costs, we expect our in-basin facilities to generate among the highest gross profit margins and lowest working capital burdens of any large-scale frac sand mine in the industry. Diversified portfolio of regional facilities serving some of the most active basins in North America. Including our new Oakwood in-basin facility once it becomes operational, we will have 12.8 million tons of annual sand processing capacity, including 9.4 million tons of annual sand processing capacity from our new in-basin facilities. Our reserves are located in close proximity to several of the most significant U.S. oil and gas basins, notably, the Permian basin, the Eagle Ford shale and the SCOOP/STACK formations. Of equal importance, the Permian basin, the Eagle Ford shale and the SCOOP/STACK formations are among the top regions in terms of highest proppant use per well and growth in proppant per well, according to NavPort. These regions represent three of the top five largest basins and regions in North America in terms of new drilling and well completion activity. Additionally, the location of our existing regional facilities provides us with a strategic advantage in delivering proppant to other active U.S. oil and gas basins, including the San Juan and Denver-Julesburg basins and the Bakersfield field in California. As a result of our close proximity to these important basins, we expect to benefit more than our peers from the compounding effect of the new wells completed and increasing proppant use per well. In addition to the strong underlying fundamentals of the markets we have historically served, our locations provide further cost advantages to certain basins, which may provide improved economics for our customers in a broader oil and gas recovery. Our footprint further facilitates our geographic, customer, commodity and supply chain diversity. Large reserve base consisting of high-demand fine mesh sand. Once our Oakwood facility becomes operational, we will have approximately 654.0 million tons of proven and probable reserves of frac sand, of which approximately 91% of our in situ reserves will be measured as either 40/70 or 100 mesh sand. Patent protected portfolio of coated sand products and production methods. Through our in house research and development team, we have developed a suite of proprietary coated sand products including: (i) FloPRO PTT , a product we believe provides customers with higher well productivity and reduces costs, (ii) Polymeric Proppants, a full suite of resin-coated sand products that are designed to reduce proppant flow back, and (iii) DustPRO , a dust suppression product. In addition, we manufacture our coated sand products using proprietary coating processes. We believe these processes are more operationally and economically efficient than other sand coating processes employed by our competitors, and provide us with a cost advantage that results in us having high margins on such products. Balanced mix of credit worthy oilfield service and E&P customers. As of December 31, 2017, our largest customers include Halliburton and Encana, among other oilfield service and E&P companies, and while many factors influence the selection of sand suppliers, we believe our ability to provide large volumes of regional sand at an attractive CLAW makes us among their preferred partners. We have supplied Halliburton since 2009 and have existing supply contracts with Halliburton and Encana. An experienced and entrepreneurial management team and supportive strategic partnership with KKR. Our management team has an average of nine years of experience in the oil and gas industry, as well as significant experience establishing, investing in, operating and growing industrial mineral asset businesses. Our management team was at the forefront of identifying the growing Robert Stienes General Counsel One Radnor Corporate Center 100 Matsonford Road, Suite 101 Radnor, Pennsylvania 19087 (484) 684-1257 (Name, address, including zip code, and telephone number, including area code, of agent for service) Table of Contents opportunities and expansion of the proppant market, and is focused on optimizing our current business and expanding our operations through disciplined reserve and product development and acquisitions. For example, we were among the first pure play frac sand companies in the market and the first to develop a multitude of new sand-based coating technologies for the oil and natural gas industry. Since 2014, KKR Credit Advisors (US) LLC (through certain managed funds, accounts and entities, and including its affiliated advisor entities, "KKR") has been a key supporter of our business model, notably providing us capital and enhanced access to E&P customers. Business Strategies We believe that we will be able to achieve our primary business objective of creating value for our shareholders by executing on the following strategies: Expand our in-basin reserve base, frac sand processing capacity and in-basin coating capabilities. We seek to identify and evaluate economically attractive acquisition and facility expansions and enhancement opportunities to increase our reserves, processing capacity and operational efficiency. Since our formation in 2007, we have acquired, built and expanded five frac sand processing facilities, and once our Oakwood facility is operational, we expect to have an aggregate processing capacity of approximately 12.8 million tons of finished goods per year. We take a disciplined and risk-adjusted, returns-focused approach to evaluating expansion projects, which are typically supported by contracted customer demand. We intend to continue selectively pursuing attractive acquisitions that meet our quality standards and targeted returns on invested capital and that enhance our market positioning and geographic presence. Prior to completing any acquisitions or commencing any expansions, we intend to enter long-term supply agreements for a substantial majority of any additional processing capacity. Capitalize on compelling industry fundamentals by expanding market share and production in most active basins. Demand growth for raw frac sand and other proppants is primarily driven by horizontal drilling activity and proppant intensity, both of which are projected to increase significantly in 2018 according to Spears and Associates. We intend to continue to expand our market share and position ourselves as a key producer of high-quality raw frac sand. We are well positioned for the expanding needs of operators across all major shale basins in North America, but in particular the Permian basin, Eagle Ford shale and SCOOP/STACK formations. We have commenced operations at two new in-basin facilities and are constructing a third in-basin facility in Oakwood, Oklahoma. We expect that our three new in-basin facilities will more than triple our sand processing capacity. We believe these facilities will allow us to deliver fine mesh sand to our customers for the lowest CLAW in the Permian basin Eagle Ford shale and SCOOP/STACK formations. Grow sales and continue expansion of portfolio of coated sands technology. We are focused on increasing customer adoption of our suite of coated sands technology, including enhanced proppant transport, resin coatings, and dust suppression. We believe our products address a number of shortcomings associated with existing proppant and completion methodologies. We intend to continue to work closely with our customers to develop new solutions to help them complete more productive and cost-efficient wells in shorter time and with less impact on their surroundings. We also have the ability to expand the coating capacity at our regional locations and terminals in a cost-effective manner, which creates optionality and reduces the cost of our finished products. We believe that this ability increases the addressable market for our coating technologies as our technology products can be applied at customer-owned terminals or sand plants. Copies to: John C. Kennedy, Esq. Paul, Weiss, Rifkind, Wharton & Garrison LLP 1285 Avenue of the Americas New York, New York 10019-6064 (212) 373-3000 J. Michael Chambers, Esq. Ryan J. Maierson, Esq. Latham & Watkins LLP 811 Main Street, Suite 3700 Houston, Texas 77002 (713) 546-5400 Table of Contents Maintain financial strength and flexibility. On a pro forma basis after giving effect to this offering and the reorganization transactions, as of December 31, 2017, we had $ million of indebtedness outstanding and approximately $ million of cash on hand. We believe that our borrowing capacity and ability to access debt and equity capital markets after this offering will provide us with the sufficient liquidity and the financial flexibility necessary to achieve our organic expansion and our acquisition growth strategy. Maintain safe, reliable and environmentally conscious operations. We are committed to maintaining and continually improving the safety, reliability and efficiency of our operations, which we believe is key to attracting employee talent and new customers and maintaining relationships with our current customers, regulators and the communities in which we operate. We strive for operational excellence by utilizing robust internal programs to integrate environmental integrity, health and occupational safety and risk management principles throughout our business. We employ comprehensive integrity management, inspection, monitoring and audit initiatives in support of this strategy and a majority of our existing facilities meet the standards required to maintain our International Organization for Standardization ("ISO") 9001 quality management systems registration. We have also received a Sentinel of Safety award from the National Mining Association for our Genoa, Nebraska facility. Sentinels of Safety are awarded annually to the nation's safest mines with a minimum of 4,000 injury-free hours. Our approach to environmental management enabled us to identify a potential environmental risk associated with the dunes sagebrush lizard when evaluating land in West Texas. Following collaboration with the Texas Comptroller on this issue, we received a Certificate of Inclusion into the Texas Conservation Plan. We believe this proactive step will help to mitigate future risks that may be associated with not being included in the Texas Conservation Plan. In February 2018, the Texas Comptroller's Office indicated that it intends to re-write the Texas Conservation Plan to, among other things, address increased frac sand mining in the Permian Basin. While we do not expect this development to have a material adverse effect on us, we cannot predict whether the process may result in additional restrictions on our West Texas Operations. Proppant Industry Trends Recently Improving Macro Conditions and Shift Toward Regional Frac Sand. Demand for proppant derives from the level of drilling and completion activity by E&P companies, which, in turn, depends largely on the current and anticipated profitability of developing oil and natural gas reserves. In response to lower hydrocarbon prices in 2015 and early 2016, many producers began seeking ways to improve well economics by lowering costs without sacrificing production performance. To this end, producers began shifting toward more cost-effective and efficient proppants and technologies, such as regional raw frac sand and proppant transport technology products. In response to the improved expected financial returns generated by the recent increases in hydrocarbon prices, producers began increasing their capital spending on drilling and completion activities in the second half of 2016, and as a result, demand for oilfield services and proppants has improved. Drivers of Demand for Frac Sand. The demand for proppant has grown in recent years as a result of increases in the level of horizontal drilling, the length of the typical horizontal wellbore, the number of fracturing stages per lateral foot in the typical completed horizontal wellbore and the volume of proppant used per fracturing stage. We believe that these modern completion techniques will continue to be a positive demand driver for the proppant industry going forward. Increased Focus on Enhanced Technology Coatings. Producers are increasingly focused on proppant selection as a means to solve well site challenges and improve hydrocarbon recovery rates and are investing in value-added proppants when the improvement in well site conditions, well production and efficiencies justifies the increased proppant investment. Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box: If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 ( 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 ( 240.12b-2 of this chapter). Large accelerated filer Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company Emerging growth company If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. Table of Contents Our Technologies Our proprietary suite of coated sand products includes FloPRO PTT , Polymeric Proppants and DustPRO . As of December 31, 2017, we held ten patents and had 23 patents pending in the U.S. and 41 patents pending in other countries relating to these technologies. FloPRO PTT is a multifunctional proppant coating technology formed by coating raw sand with a tailored wettability modifier coating, which is designed to enhance proppant transport and distribution with slickwater fluids improving the hydrocarbon mobility and reducing crystalline silica during operations. We believe FloPRO PTT has been pumped in multiple basins across the USA, Canada & Argentina including Midland, Delaware, Stack, Appalachian, Williston, Neuqu n, and others. FloPRO PTT improves the proppant transport and distribution during hydraulic fracturing treatments in order to allow pumping the proppant at high concentrations with slickwater fluids. The use of FloPRO PTT leads to savings in pumping time and water & chemicals requirements, thereby increasing well's productivity through increasing the propped fracture height and length of wells. Polymeric Proppants is our suite of resin-coated sand products that are designed to improve the characteristics of raw sand by reducing proppant flow back after hydraulic fracturing treatments. Our Polymeric Proppants products, which were developed with Dow Chemical Company, are designed to operate in specific ranges of reservoir temperatures commonly experienced in unconventional wells. We believe Polymeric Proppants offers an affordable solution to reduce sand flowback and that the cost premium to use an effective coated proppant technology largely offsets the cost of utilizing sand separators at the surface, secondary clean outs and replacing pumps. DustPRO is a dust suppression product that dramatically reduces the amount of particles in the air, allowing operators to comply with current Occupational Safety and Health Administration ("OSHA") standards for air quality. We manufacture our coated sand products using proprietary coating processes. Our Genoa, Nebraska facility currently has approximately 360,000 tons of annual coating capacity. We are currently constructing an in-basin coating facility adjacent to our Monahans facility in the Permian basin that is capable of processing approximately 1.0 million tons per year. The Monahans in-basin coating facility is expected to commence operations during the third quarter of 2018. The close proximity of the Monahans in-basin coating facility to the Midland and Delaware sub-basins in the Permian will enable us to eliminate much of the cost associated with delivering frac sand from out of basin, including the fixed cost of procuring, maintaining (and storing during periods of lower utilization) the associated railcar fleets, the capital expenditures associated with the rail and transload infrastructure that support a rail fleet (at origin and destination) and/or the fixed minimum throughput agreements common at third party transload facilities. Risks Associated with Our Business An investment in our common stock involves risks that include the demand for sand-based proppants and other risks. You should carefully consider the risks described under "Risk Factors" and the other information in this prospectus before investing in our common stock. Our Principal Equityholders Our predecessor, Preferred Proppants, was formed in 2007 by Michael O'Neill, our Founder and Chief Executive Officer, together with other investors, for the purpose of acquiring, integrating, developing and managing industrial mineral assets. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine. Table of Contents In the third quarter of 2014, affiliates and managed accounts of KKR led an approximately $700 million debt and equity investment in us. In addition, in September 2016, affiliates and managed accounts of KKR provided a $75.0 million incremental first lien term loan to us under the credit facility of our subsidiary, Preferred Proppants, LLC. Following the consummation of the reorganization transactions described below and this offering, affiliates and managed accounts of KKR (collectively, the "KKR Equityholders") and Mr. O'Neill and his affiliates (collectively with the KKR Equityholders, the "Principal Equityholders") will control approximately % of the combined voting power of our outstanding common stock (or % if the underwriters exercise their option to purchase additional shares in full) based on an assumed initial public offering price of $ per share (the midpoint of the estimated public offering price range set forth on the cover page of this prospectus). As a result, our Principal Equityholders will control any action requiring the general approval of our stockholders, including the election of our board of directors, the adoption of amendments to our certificate of incorporation and by-laws and the approval of any merger or sale of substantially all of our assets. Because our Principal Equityholders will collectively control more than 50% of the combined voting power of our outstanding common stock, we will be a "controlled company" under the corporate governance rules for NYSE-listed companies. Therefore we will be permitted to, and we intend to, elect not to comply with certain NYSE corporate governance requirements. See "Management Controlled Company." In addition, we will enter into a stockholders agreement (the "Stockholders Agreement") that will provide each group of Principal Equityholders with the right to nominate a specified number of our directors, determined based on the percentage of pre-IPO Class A common stock beneficially owned by such group of Principal Equityholders. The Principal Equityholders will agree to take all necessary action, including voting their respective shares of common stock, to cause the election of the other Principal Equityholder's nominees. See "Principal Stockholders" and "Certain Relationships and Related Party Transactions Stockholders Agreement" for additional information. KKR was founded in 1976 and is led by Henry Kravis and George Roberts. KKR is a leading investment firm with $168.5 billion in assets under management between KKR and its affiliates as of December 31, 2017. KKR manages multiple alternative asset classes, including private equity, energy, infrastructure, real estate, credit and, through its strategic partners, hedge funds. KKR aims to generate attractive investment returns by following a patient and disciplined investment approach, employing world-class people, and driving growth and value creation with KKR portfolio companies. KKR invests its own capital alongside its partners' capital and provides financing solutions and investment opportunities through its capital markets business. The Reorganization Transactions Existing Structure Prior to the consummation of the reorganization transactions described below and this offering, all of Preferred Proppants' outstanding equity interests, including its Class A Units, Class B Units and Class B Incentive Units, were owned by the following persons, whom we refer to collectively as the "Preferred Proppants Pre-IPO Members": affiliates and managed accounts of KKR, whom we refer to collectively as the "KKR Pre-IPO Members"; Mr. O'Neill, members of his family and affiliates or related parties of Mr. O'Neill, whom we refer to collectively as the "Founder Pre-IPO Members"; certain current and former employees and members of management and directors; and certain other pre-IPO investors (including our lenders who provided the project financing). Table of Contents The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission becomes effective. This preliminary prospectus is not an offer to sell these securities nor does it seek an offer to buy these securities in any state or jurisdiction where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED MARCH 30, 2018 Shares Preferred Sands, Inc. Class A Common Stock Table of Contents Certain investors, including affiliates and managed accounts of KKR, also owned $280.0 million aggregate initial principal amount of the $300.0 million Senior Secured Floating Rate Notes due 2021 of our subsidiary, Preferred Proppants, LLC (the "Second Lien Notes") that were issued in 2014 as part of KKR's investment in us. As of December 31, 2017, the accreted value of the Second Lien Notes (including interest paid by increasing the principal amount of the Second Lien Notes) was approximately $494 million. In addition, Preferred Proppants has adopted the following cash-based payment plans and cash-based payment awards in which certain employees and members of management participate: a long-term incentive plan that entitles participants to share in a pool equal to 1.0% of the "net capital proceeds" that holders of Class B Units and Class B Incentive Units would be entitled to receive in connection with a sale of Preferred Proppants (the "LTI Plan"); a management incentive bonus plan that entitles participants to share in a pool equal to approximately 4.1% of (i) the amounts received by the holders of the Second Lien Notes in respect of the repayment of the outstanding principal and interest of the Second Lien Notes and (ii) the "net capital proceeds" that holders of Class B Units and Class B Incentive Units would be entitled to receive in connection with a sale of Preferred Proppants (the "MIB Plan"). Certain holders of the Second Lien Notes have agreed, under a participation agreement, to provide Preferred Proppants with the proceeds to make payments to participants in the MIB Plan; and awards that entitle participants to a transaction cash bonus equal to a specified percentage, capped at a specified amount, of the "net capital proceeds" that holders of Class B Units and Class B Incentive Units would be entitled to receive in connection with a corporate transaction that results in the distribution of "net capital proceeds" (the "Transaction Bonuses," and together with the LTI Plan and the MIB Plan, the "LTIPs"). New Structure After the pricing of this offering and prior to the closing of this offering, we will complete an internal reorganization, which we refer to as the "reorganization transactions." In connection with the reorganization transactions and the pricing of this offering, the following transactions will occur: we will become the sole managing member of Preferred Proppants; we will form a subsidiary that will merge with and into an affiliate of KKR and the surviving entity will then merge with and into us. We refer to these transactions as the "Mergers." As consideration for the Mergers, we will issue to the equity owners of such affiliate of KKR shares of our Class A common stock with rights to receive payments under a tax receivable agreement described below. The number of shares of Class A common stock to be issued to the affiliates of KKR will be based on the value of the Preferred Proppants equity interests that we acquire, which will be determined based on a hypothetical liquidation of Preferred Proppants and the initial public offering price per share of our Class A common stock in this offering; we will amend and restate the Preferred Proppants limited liability company agreement and provide that, among other things, all of Preferred Proppants' outstanding equity interests, including its Class A Units, Class B Units and Class B Incentive Units, will be reclassified into Preferred Proppants' non-voting common units, which we refer to as "Preferred Proppants Units." The number of Preferred Proppants Units to be issued to each member of Preferred Proppants will be determined based on a hypothetical liquidation of Preferred Proppants and the initial public offering price per share of our Class A common stock in this offering. The Preferred Proppants Units that are reclassified from unvested Class B Incentive Units will vest This is the initial public offering of shares of Class A common stock of Preferred Sands, Inc. Prior to this offering, there has been no public market for our Class A common stock. We anticipate that the initial public offering price will be between $ and $ per share. We intend to apply to list our Class A common stock on The New York Stock Exchange LLC ("NYSE") under the symbol "PFRD." All of the shares of Class A common stock being offered are being sold by the Company. Affiliates and managed accounts of KKR Credit Advisors (US) LLC and Mr. Michael O'Neill, our Founder and Chief Executive Officer and his affiliates (collectively, our "Principal Equityholders") will control more than a majority of the combined voting power of our common stock. As a result, our Principal Equityholders will be able to control any action requiring the general approval of our stockholders, including the election of our board of directors, the adoption of amendments to our certificate of incorporation and by-laws and the approval of any merger or sale of substantially all of our assets. We will be a "controlled company" under the corporate governance rules for NYSE-listed companies, and therefore we will be permitted to, and we intend to, elect not to comply with certain NYSE corporate governance requirements. See "Management Controlled Company." We are an "emerging growth company" as the term is used in the Jumpstart Our Business Startups Act of 2012 and, as such, have elected to comply with certain reduced public company reporting requirements. See "Management Emerging Growth Company Status." Investing in our Class A common stock involves risks. See "Risk Factors" on page 24 to read about factors you should consider before buying shares of our Class A common stock. Price to Public Underwriting Discounts and Commissions Proceeds, before expenses, to Us(1) Per Share $ $ $ Total $ $ $ Table of Contents following the offering based on the time-based vesting schedule, if any, applicable to the Class B Incentive Units from which they were reclassified; we will amend and restate our certificate of incorporation and will be authorized to issue two classes of common stock: Class A common stock and Class B common stock, which we refer to collectively as our "common stock." The Class A common stock and Class B common stock will each provide holders with one vote on all matters submitted to a vote of stockholders. The holders of Class B common stock will not have any of the economic rights (including rights to dividends and distributions upon liquidation) provided to holders of Class A common stock; to the extent that the holders of the Second Lien Notes are not repaid with the proceeds from this offering, as described below, the holders of the Second Lien Notes will contribute their Second Lien Notes to either (a) us in exchange for shares of Class A common stock or (b) Preferred Proppants in exchange for Preferred Proppants Units, in each case based on the redemption price of the Second Lien Notes that we or Preferred Proppants acquire in such exchange and the initial public offering price per share of our Class A common stock in this offering; we will cancel the LTIPs and the participants in the LTIPs will be granted a number of Preferred Proppants Units determined based on the amount that such participants would have received under the LTIPs in a hypothetical sale and liquidation of Preferred Proppants and the initial public offering price per share of our Class A common stock in this offering (except that, to the extent the holders of the Second Lien Notes are repaid with proceeds from this offering in cash, the participants in the MIB Plan will receive a proportionate amount of cash in lieu of Preferred Proppants Units), and the number of Preferred Proppants Units delivered shall be reduced by the number of Preferred Proppants Units with a fair market value equal to the amount needed to satisfy any applicable required withholding taxes; the Preferred Proppants Units granted to the participants in the LTI Plan and the MIB Plan will be subject to time-based vesting restrictions; and the Preferred Proppants Units granted in respect of the vested portion of the Transaction Bonuses will be fully vested and the Preferred Proppants Units granted in respect of the unvested portion of the Transaction Bonuses will be subject to the same time-based vesting restrictions as such portion of the Transaction Bonuses; the participation agreements entered into by certain holders of the Second Lien Notes will be terminated and the amount of Class A common stock and/or Preferred Proppants Units to be issued to such holders in connection with the contributions described above will be reduced to satisfy their obligations to provide Preferred Proppants with the proceeds to make payments to participants in the MIB Plan; in addition, the amount of Preferred Proppants Units to be issued to holders of Class B Units will be reduced to reflect the grant of Preferred Proppants Units to participants in the LTIPs; we will form a new limited partnership, which we refer to as "Employee Holdco," and the former participants in the LTIPs and certain former holders of Class B Incentive Units will contribute their Preferred Proppants Units to Employee Holdco in exchange for an equal number of limited partnership units of Employee Holdco, or "Employee Holdco Units," which will be subject to the same time-based vesting restrictions, if any, as the contributed Preferred Proppants Units; we will issue additional Preferred Proppants Units to certain of the lenders under the project financing so that they will hold in the aggregate % of the outstanding Preferred Proppants Units after giving effect to this offering. (1)See "Underwriting" beginning on page 198 of this prospectus for additional information regarding underwriting compensation. Neither the Securities and Exchange Commission, any state securities commission nor any other regulatory body has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The shares of Class A common stock are being offered through the underwriters on a firm commitment basis, subject to the terms and conditions of an underwriting agreement. To the extent that the underwriters sell more than shares of Class A common stock, the underwriters have the option to purchase up to an additional shares from us at the initial price to the public less the underwriting discount within 30 days from the date of this prospectus. The underwriters expect to deliver the shares against payment in New York, New York on or about , 2018. CREDIT SUISSE KKR Morgan Stanley The date of this prospectus is , 2018. Table of Contents the following members of Preferred Proppants after giving effect to the reorganization transactions, whom we refer to collectively as the "Preferred Proppants Post-IPO Members," will subscribe for and purchase shares of our Class B common stock at a purchase price of $0.00001 per share and in an amount equal to the number of Preferred Proppants Units held by each such Preferred Proppants Post-IPO Member: affiliates and managed accounts of KKR, whom we refer to collectively as the "KKR Post-IPO Members"; Mr. O'Neill, members of his family and affiliates or related parties of Mr. O'Neill, whom we refer to collectively as the "Founder Post-IPO Members"; Employee Holdco and certain current and former employees and members of management; and certain other pre-IPO investors who held interests in Preferred Proppants or the Second Lien Notes (including our lenders who provided the project financing); and subject to certain restrictions, the Preferred Proppants Post-IPO Members will be granted the right to exchange their Preferred Proppants Units, together with a corresponding number of shares of our Class B common stock for, at our option, (i) shares of our Class A common stock on a one-for-one basis or (ii) cash (based on the market price of our Class A common stock). In addition, subject to certain restrictions, each holder of Employee Holdco Units will have the right to exchange its Employee Holdco Units on a one-to-one basis for Preferred Proppants Units (and corresponding shares of Class B common stock), which they may then exchange in the same manner as other Preferred Proppants Post-IPO Members for shares of Class A common stock. See "Certain Relationships and Related Party Transactions Exchange Agreement." See "Organizational Structure" for further details. After the completion of this offering, based on an assumed initial public offering price of $ per share (the midpoint of the estimated public offering price range set forth on the cover page of this prospectus), we intend to use the net proceeds from this offering as follows: We intend to contribute $ million to Preferred Proppants and we intend to cause such contribution amounts to be used by Preferred Proppants as follows: to repay any outstanding amounts under the $50.0 million revolving credit facility of Preferred Proppants, LLC (the "ABL Facility"); to repay, in part, the $350.0 million senior secured first lien term loans and the $75.0 million incremental first lien term loan provided by affiliates and managed accounts of KKR to our subsidiary, Preferred Proppants, LLC (collectively, the "First Lien Term Loan"); to repay, in part, the Second Lien Notes; and to use any remaining proceeds for working capital and general corporate purposes. If the underwriters exercise their option to purchase additional shares, we intend to cause Preferred Proppants to use such proceeds, together with cash on hand, to repurchase up to shares of Class A common stock from certain of our stockholders (including certain KKR Equityholders) and up to Preferred Proppants Units and corresponding shares of Class B common stock from certain of the Preferred Proppants Post-IPO Members (including certain KKR Equityholders) at a purchase price per share of Class A common stock or Table of Contents Table of Contents Preferred Proppants Unit (and corresponding share of Class B common stock) equal to the initial public offering price. We estimate that the offering expenses (other than the underwriting discounts) will be approximately $ million. All of such offering expenses will be paid for or otherwise borne by Preferred Proppants. After the consummation of this offering, we intend to amend the covenants in the First Lien Term Loan and extend its term to provide us with greater operational and financial flexibility and to obtain a new asset-backed revolving credit facility to provide us with additional working capital. The First Lien Term Loan, the new asset-backed revolving credit facility and the project financing are referred to as the "Credit Facilities." See "Use of Proceeds," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Certain Relationships and Related Party Transactions Purchases from Equityholders" for further details. The following diagram depicts our organizational structure following the reorganization transactions, this offering and the application of the net proceeds from this offering, including all of the transactions described above (assuming an initial public offering price of $ per share (the midpoint of the estimated public offering price range set forth on the cover page of this prospectus) and no exercise of the underwriters' option to purchase additional shares). This chart is provided for illustrative purposes only and does not purport to represent all legal entities within our organizational structure: Neither we nor the underwriters have authorized anyone to provide you with information that is different from that contained in this prospectus and any free writing prospectus we have prepared. We take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. We and the underwriters are offering to sell shares of our Class A common stock and seeking offers to buy shares of Class A common stock only in jurisdictions where offers and sales are permitted. This document may only be used where it is legal to sell these securities. The information in this document may only be accurate on the date of this document, regardless of the time of delivery of this prospectus or of any sale of shares of our common stock and the information in any free writing prospectus that we may provide you in connection with this offering is accurate only as of the date of that free writing prospectus. Our business, financial condition, results of operations and future growth prospects may have changed since those dates. *Represents economic interest in Preferred Sands, Inc. and not Preferred Proppants Holdings, LLC. **Includes unvested Preferred Proppants Units and corresponding shares of Class B common stock. In connection with the reorganization transactions, we will be appointed as the sole managing member of Preferred Proppants pursuant to Preferred Proppants' limited liability company agreement. Because we will manage and operate the business and control the strategic decisions and day-to-day operations of Preferred Proppants and will also have a substantial financial interest in Preferred Proppants, we will consolidate the financial results of Preferred Proppants, and a portion of our net income (loss) will be allocated to the noncontrolling interest to reflect the entitlement of the Preferred Proppants Post-IPO Members to a portion of Preferred Proppants' net income (loss). As described in "Organizational Structure The Reorganization Transactions," Preferred Proppants will be under the common ownership of the KKR Equityholders and the Founder Post-IPO Members before and after the reorganization transactions and prior to this offering, and the KKR Equityholders and the Founder Post-IPO Members will have the same economic percentages of Preferred Proppants before and after the reorganization transactions and prior to this offering, but without giving effect to the contribution of Second Lien Notes to the extent that the holders of the Second Lien Notes are not repaid with the proceeds from this offering. As a result, we will initially measure the interests of the Preferred Table of Contents Proppants Pre-IPO Members in the assets and liabilities of Preferred Proppants at their carrying amounts at the completion of the reorganization transactions. In connection with the reorganization transactions, we will acquire existing equity interests in Preferred Proppants from an affiliate of KKR in the Mergers, as described under "Organizational Structure The Reorganization Transactions." The Mergers will result in our succeeding to certain valuable tax attributes held by such affiliate of KKR. If the underwriters exercise their option to purchase additional shares, we intend to use a portion of the net proceeds from this offering to purchase Preferred Proppants Units (and corresponding shares of Class B common stock) from certain Preferred Proppants Post-IPO Members (including certain KKR Equityholders). These acquisitions of interests in Preferred Proppants will result in tax basis adjustments to the assets of Preferred Proppants that will be allocated to us and our subsidiaries. In addition, future exchanges by the Preferred Proppants Post-IPO Members of Preferred Proppants Units and corresponding shares of Class B common stock for shares of our Class A common stock are expected to produce favorable tax attributes. These tax attributes would not be available to us in the absence of those transactions. In connection with the reorganization transactions, we will enter into tax receivable agreements that will obligate us to make payments to the Preferred Proppants Post-IPO Members and certain KKR Equityholders generally equal to 85% of the applicable cash savings that we actually realize as a result of these tax attributes, certain other tax attributes we are entitled to as a result of contributing the proceeds of this offering to Preferred Proppants and tax attributes resulting from payments made under the tax receivable agreements. We will retain the benefit of the remaining 15% of these tax savings. See "Organizational Structure Holding Company Structure and Tax Receivable Agreements" and "Certain Relationships and Related Party Transactions Tax Receivable Agreements." Corporate Information We were formed as a Delaware corporation on March 7, 2017. We are a newly formed corporation, have no material assets and have not engaged in any business or other activities except in connection with the reorganization transactions described under "Organizational Structure." Our corporate headquarters are located at One Radnor Corporate Center, 100 Matsonford Road, Suite 101, Radnor, Pennsylvania 19087, and our telephone number is (484) 684-1257. Our website address is www.preferredsands.com. Information contained on our website is not incorporated by reference into this prospectus and does not constitute a part of this prospectus. Table of Contents The Offering Class A common stock outstanding before this offering shares. Class A common stock offered by us shares. Option to purchase additional shares We have granted the underwriters the right to purchase an additional shares of Class A common stock from us within 30 days from the date of this prospectus. Class A common stock to be outstanding immediately after this offering shares ( % of which would be owned by non-affiliates of the Company) (or shares ( % of which would be owned by non-affiliates of the Company) if the underwriters exercise their option to purchase additional shares in full) based on an assumed initial public offering price of $ per share (the midpoint of the estimated public offering price range set forth on the cover page of this prospectus). If, immediately after this offering and the application of the net proceeds from this offering, all of the Preferred Proppants Post-IPO Members elected to exchange their Preferred Proppants Units and corresponding shares of Class B common stock for shares of our Class A common stock, shares of our Class A common stock would be outstanding ( % of which would be owned by non-affiliates of the Company) (or shares ( % of which would be owned by non-affiliates of the Company) if the underwriters exercise their option to purchase additional shares in full). Class B common stock to be outstanding immediately after this offering shares (or shares if the underwriters exercise their option to purchase additional shares in full and giving effect to the use of the net proceeds therefrom) based on an assumed initial public offering price of $ per share (the midpoint of the estimated public offering price range set forth on the cover page of this prospectus). Shares of our Class B common stock have voting but no economic rights (including rights to dividends and distributions upon liquidation) and will be issued in an amount equal to the number of Preferred Proppants Units held by the Preferred Proppants Post-IPO Members. Voting rights Each share of our Class A common stock entitles its holder to one vote per share, representing an aggregate of % of the combined voting power of our issued and outstanding common stock upon the completion of this offering and the application of the net proceeds from this offering (or % if the underwriters exercise their option to purchase additional shares in full). Table of Contents Each share of our Class B common stock entitles its holder to one vote per share, representing an aggregate of % of the combined voting power of our issued and outstanding common stock upon the completion of this offering and the application of the net proceeds from this offering (or % if the underwriters exercise their option to purchase additional shares in full and giving effect to the use of the net proceeds therefrom). All classes of our common stock generally vote together as a single class on all matters submitted to a vote of our stockholders. Upon the completion of this offering, our Class B common stock will be held by the Preferred Proppants Post-IPO Members. See "Description of Capital Stock." Exchange Subject to certain restrictions, the Preferred Proppants Post-IPO Members will be granted the right to exchange their Preferred Proppants Units, together with a corresponding number of shares of our Class B common stock, for (i) shares of our Class A common stock on a one-for-one basis or (ii) cash (based on the market price of our Class A common stock), at our option (as the managing member of Preferred Proppants), subject to customary conversion rate adjustments for stock splits, stock dividends and reclassifications. When a Preferred Proppants Unit, together with a share of our Class B common stock, is exchanged for a share of our Class A common stock, the corresponding share of our Class B common stock will be cancelled. Use of proceeds We estimate that our net proceeds from this offering will be approximately $ million (or approximately $ million if the underwriters exercise their option to purchase additional shares in full), after deducting underwriting discounts and commissions and estimated offering expenses payable by us, based on an assumed initial offering price of $ per share (the midpoint of the estimated public offering price range set forth on the cover page of this prospectus). We intend to use the net proceeds from this offering as follows: We intend to contribute $ million to Preferred Proppants in exchange for a number of Preferred Proppants Units equal to the contribution amount divided by the price paid by the underwriters for shares of our Class A common stock in this offering ( Preferred Proppants Units at the midpoint of the estimated public offering price range set forth on the cover page of this prospectus), and we intend to cause such contribution amounts to be used by Preferred Proppants as follows: to repay approximately $ million outstanding under the ABL Facility; to repay approximately $ million outstanding under the First Lien Term Loan; Table of Contents to repay approximately $ million outstanding of the Second Lien Notes; and to use $ million for working capital and general corporate purposes. If the underwriters exercise their option to purchase additional shares, we intend to cause Preferred Proppants to use such proceeds, together with cash on hand, to repurchase up to shares of Class A common stock from certain of our stockholders (including certain KKR Equityholders) and up to Preferred Proppants Units and corresponding shares of Class B common stock from certain of the Preferred Proppants Post-IPO Members (including certain KKR Equityholders) at a purchase price per share of Class A common stock or Preferred Proppants Unit (and corresponding share of Class B common stock) equal to the initial public offering price. We estimate that the offering expenses (other than the underwriting discounts) will be approximately $ million. All of such offering expenses will be paid for or otherwise borne by Preferred Proppants. See "Use of Proceeds" and "Certain Relationships and Related Party Transactions Purchases from Equityholders" for further details. Dividend policy We do not intend to pay dividends on our Class A common stock. We plan to retain any earnings for use in the operation of our business and to fund future growth. See "Dividend Policy." Proposed NYSE symbol "PFRD."
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2018/CIK0001701732_altair_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001701732_altair_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..6fd1b31a26ec10bc1fd1e216e073634da63e7929
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/CIK0001701732_altair_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus summary 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2018/CIK0001703141_despegar_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001703141_despegar_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a6829952568e0907eda8c66946322ceb52e8e642
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/CIK0001703141_despegar_prospectus_summary.txt
@@ -0,0 +1 @@
+This summary highlights selected information contained elsewhere in this prospectus and does not contain all of the information you should consider before investing in our ordinary shares. You should read this entire prospectus carefully, including Risk Factors, Management s Discussion and Analysis of Financial Condition and Results of Operations and our audited consolidated financial statements included elsewhere in this prospectus, before you decide to invest in our ordinary shares. Our Company We are the leading online travel company in Latin America, known by our two brands, Despegar, our global brand, and Decolar, our Brazilian brand. We have a comprehensive product offering, including airline tickets, packages, hotels and other travel-related products, which enables consumers to find, compare, plan and purchase travel products easily through our marketplace. We provide our network of travel suppliers a technology platform for managing the distribution of their products and access to our users. We believe that our focus on the under penetrated Latin American online travel market, our knowledge of the consumer and supplier landscape in the region and our ability to manage the business successfully through economic cycles will allow us to continue our industry leadership. In 2017 and 2016, we had approximately 4.6 million and 4.0 million customers, generating $523.9 million and $411.2 million in revenue, respectively. Our gross bookings were $4.4 billion and $3.3 billion in 2017 and 2016, respectively. Latin America online travel bookings were approximately $36 billion and $32 billion in 2017 and 2016, respectively, and are expected to grow to approximately $49 billion (in constant terms) by 2021, representing an estimated compound annual growth rate ( CAGR ) of 8.4% for the period 2017 2021, according to Euromonitor. In 2017, 36% of all travel bookings were done online, a percentage that is expected to increase to approximately 41% in 2021. Factors driving the growth in online travel bookings include the increase of internet penetration, further adoption of smartphones, tablets and other mobile devices and a growing middle class with greater access to banking services and credit products, together enabling a larger segment of the growing population to transact online or on mobile devices. The Latin American travel industry is characterized by significant fragmentation in suppliers across airlines, hotels and other travel products. This fragmentation is compounded by regional complexities, including differences in language, local customs, travel preferences, currencies and regulatory regimes across the more than 40 countries in the region. These factors create challenges for suppliers to reach customers directly and, consequently, create a significant market opportunity for us. We believe we have the broadest travel portfolio among OTAs in Latin America, with inventory from global suppliers, including over 300 airlines and over 453,000 hotels, as well as approximately 1,000 car rental agencies and approximately 250 destination services suppliers with more than 7,500 activities. Our business benefits from network effects: our large customer base helps us to attract additional travel suppliers and, in turn, a larger network of travel suppliers helps us to attract new customers by enhancing our product offering. Additionally, as we continue to grow our marketplace, we are increasingly able to offer more competitive pricing and product availability to our customers as well as enhance the effectiveness of our marketing strategy. We launched our award-winning mobile travel app in 2012 and it is an increasingly important part of our business, as it allows consumers to access and browse our real-time inventory, compare prices and transact through their mobile devices quickly. As of December 31, 2017, our apps have more than 38 million cumulative downloads from the iOS App Store and Google Play (20.5 million of which were downloaded in the last two years) and we believe they are the most downloaded OTA apps in Latin America. During 2017 and 2016, mobile accounted for approximately 54% and 50%, respectively, of all of our user visits, and approximately 28% and Table of Contents 23%, respectively, of our transactions were purchased on our mobile platform, complementing our desktop website traffic. As internet, smartphone and other mobile device penetration continue to increase, we believe that our strength in mobile will continue to be a strategic advantage. Through mobile and online marketing, brand promotion and cross-marketing, we have created a strong brand recognition among Latin America travelers, which we view as one of our key competitive advantages. According to data from Google Adwords, Despegar and Decolar had the highest brand recognition among OTAs in Latin America. To date, we have invested more than $1.18 billion in marketing and branding initiatives promoting our brand, which we believe, combined with the quality of the service we have delivered over the years, has made us a trusted brand with our customers. In 2017 and 2016, 64% and 60% of our customers had completed previous purchases on our platform, respectively. Recent Developments On July 16, 2018, we announced that our Chief Financial Officer, Michael Doyle had resigned effective August 31, 2018. Ms. Maria Bettina Zubin has been appointed our interim Chief Financial Officer. Mr. Doyle will join our board of directors effective September 1, 2018. On August 9, 2018, the Company s board of directors approved a share repurchase program that enables the Company to repurchase up to $75 million of its shares effective immediately and expiring in one year. Share repurchases may be made through a variety of methods, including in the open market, a 10b5-1 program and through privately negotiated transactions. The timing and number of shares repurchased will depend on a variety of factors, including price, general business and market conditions, and alternative investment opportunities. The Company is not obligated to acquire any specific number of shares and the repurchase program may be suspended, terminated or modified at any time for any reason. As of July 1, 2018, as a result of a three-year cumulative inflation rate greater than 100% and following the guidance of ASC 830 the U.S. dollar became the functional currency of the Company s Argentine subsidiary. This change in functional currency is to be recognized prospectively in the financial statements. As a result, the impact of any change in currency exchange rate on the Company s balance sheet accounts will be reported in the Net financial income/(expense) line of the income statement instead of Other comprehensive income.
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2018/CIK0001704235_quintana_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001704235_quintana_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/CIK0001704235_quintana_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2018/CIK0001704523_loyal_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001704523_loyal_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..7a85322d0df1176c74a5d4f89bcf8cf094cf5742
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/CIK0001704523_loyal_prospectus_summary.txt
@@ -0,0 +1,1695 @@
+PROSPECTUS SUMMARY
+
+ 
+
+The following summary is qualified in its entirety by the more detailed information and the financial statements and notes thereto appearing elsewhere in this Prospectus. Prospective investors should consider carefully the information discussed under RISK FACTORS and USE OF PROCEEDS sections, commencing on pages 8 and 16, respectively. An investment in our securities presents substantial risks, and you could lose all or substantially all of your investment. 
+
+ 
+
+Corporate Background and Business Overview
+
+ 
+
+Our Company was incorporated in the State of Nevada on April 1, 2016 to engage in the development and operation of a business engaged in the distribution of Home Air Purifiers produced in Asia. Our principal executive offices are located at 13025 Klimovske, Zilina, Slovakia, 01001. Our phone number is (844)290-7562. We are a development stage company and we have no subsidiaries.
+
+ 
+
+We require a minimum funding of $20,000 to conduct our business over the next 12 months, and if we are unable to obtain this level of financing, our business may fail.
+
+ 
+
+We are an emerging growth company within the meaning of the federal securities laws. For as long as we are an emerging growth company, we will not be required to comply with the requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, the reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and the exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We intend to take advantage of these reporting exemptions until we are no longer an emerging growth company. For a description of the qualifications and other requirements applicable to emerging growth companies and certain elections that we have made due to our status as an emerging growth company, see RISK FACTORS RISKS RELATED TO THIS OFFERING AND OUR COMMON STOCK - WE ARE AN `EMERGING GROWTH COMPANY AND WE CANNOT BE CERTAIN IF THE REDUCED DISCLOSURE REQUIREMENTS APPLICABLE TO EMERGING GROWTH COMPANIES WILL MAKE OUR COMMON STOCK LESS ATTRACTIVE TO INVESTORS disclosed later in this prospectus.
+
+ 
+
+ 
+
+5
+
+ 
+
+Table of Contents
+
+ 
+
+We are in the early stages of developing our plan to distribute Home Air Purifiers. We currently have initial revenues, some operating history, and first orders to purchase Home Air Purifiers. Our plan of operations over the 12 month period following successful completion of our offering is to develop and establish our Home Air Purifiers distribution business and hire one salesperson (See Business of the Company and Plan of Operations ). We currently have commercial Home Air Purifiers products available, which we are currently selling.
+
+ 
+
+From inception until the date of this filing we have had limited operating activities, primarily consisting of the incorporation of our company, initial equity funding by our sole officer and director, purchasing our business office building on April 27, 2016 located at 13025 Klimovske, Zilina, Slovakia, 01001 and minimal sales.
+
+ 
+
+We have generated initial revenues and our principal business activities to date consist of creating a business plan, finding and selling to our first customer and generating our initial revenues. We have entered into a Supply Agreements, dated June 8, 2016, with Hangzhou XiaoBaiYang Technology CO., LTD., Hongkong Chictec International Trading Limited and ShenZhen AJS New Energy Technology Co.,LTD., China and Hong Kong limited liability companies ( Hangzhou XiaoBaiYang, Hongkong Chictec and ShenZhen AJS ), which are established distributors of Home Air Purifiers. Hangzhou XiaoBaiYang, Hongkong Chictec, ShenZhen AJS are large and well-established suppliers and distributors of Home Air Purifiers of almost any kind in Asia. 
+
+ 
+
+The terms and conditions of the Supply Agreement provide that, among other things, we have the right to purchase Home Air Purifier products (including PhotoPlasma technology,Thermodynamic sterilization (TSS),Ultraviolet germicidal irradiation products, Filters, Polarized-media electronic air cleaners, Photocatalytic oxidation (PCO) and Ionizer purifiers products and Ozone generators) at item prices agreed upon with our particular supplier. The prices to be paid by us are fixed but can be changed with a simple verbal communication between us and the particular supplier. The Supply Agreements don t have any minimum purchase requirements. Hangzhou XiaoBaiYang, Hongkong Chictec and ShenZhen AJS are currently distributors and manufacturers of Home Air Purifier products.
+
+ 
+
+We received our initial funding of $4,000 through the sale of common stock to our sole officer and director, who purchased 4,000,000 shares at $0.001 per share.
+
+ 
+
+Our financial statements from inception on April 1, 2016 through October 31, 2018 report initial revenues of $249,510 and a net gain of $1,198. 
+
+ 
+
+ 
+
+6
+
+ 
+
+Table of Contents
+
+ 
+
+The following is a brief summary of this Offering:
+
+ 
+
+THE OFFERING
+
+ 
+
+The Issuer:
+
+Loyal Source Market Services Inc.
+
+ 
+
+ 
+
+Securities Being Offered:
+
+2,000,000 shares of common stock
+
+ 
+
+Price Per Share:
+
+$0.04
+
+ 
+
+Common stock outstanding before the offering:
+
+4,000,000 shares of common stock
+
+ 
+
+Common stock outstanding after completion of the offering
+
+6,000,000 shares of common stock (assuming the sale of all 2,000,000 shares being offered)
+
+ 
+
+ 
+
+Duration of the Offering:
+
+ 
+
+The Offering will commence promptly on the date upon which this prospectus is declared effective by the SEC and will continue for 180 days. At the discretion of our management, we may discontinue the Offering before expiration of the 180 day period or extend the Offering for up to 90 days following the expiration of the 180-day Offering period. 
+
+ 
+
+Manner of Offering
+
+The offering is a self-underwritten, direct primary offering with no minimum purchase requirement.
+
+ 
+
+Net Proceeds
+
+$80,000 (assuming the sale of all 2,000,000 being offered)
+
+ 
+
+Securities Issued and Outstanding:
+
+There are 4,000,000 shares of common stock issued and outstanding as of the date of this prospectus, held solely by our sole officer and director, Kamil Hornik .
+
+ 
+
+Anticipated Total Registration Costs:
+
+We estimate our total offering registration costs to be approximately $7,010.
+
+ 
+
+Risk Factors:
+
+See Risk Factors and the other information in this prospectus for a discussion of the factors you should consider before deciding to invest in shares of our common stock.
+
+ 
+
+Summary of Financial Information
+
+ 
+
+The summarized financial data presented below is derived from, and should be read in conjunction with, our audited and reviewed financial statements and related notes from April 1, 2016 (date of inception) to October 31, 2018, included on Page F-1 in this prospectus.
+
+ 
+
+Financial Summary
+
+ 
+
+January 31,
+
+2018 
+
+($)
+
+ 
+
+Cash and Deposits
+
+ 
+
+ 
+
+1,105
+
+ 
+
+Total Assets
+
+ 
+
+ 
+
+5,698
+
+ 
+
+Total Liabilities
+
+ 
+
+ 
+
+500
+
+ 
+
+Total Stockholder s Equity
+
+ 
+
+ 
+
+4,198
+
+ 
+
+ 
+
+Statement of Operations
+
+ 
+
+Accumulated
+
+From April 1,
+
+2016 
+
+(Inception) to
+
+January 31, 2018 ($)
+
+ 
+
+Total Expenses
+
+ 
+
+ 
+
+400
+
+ 
+
+Net Gain (Loss) for the Period
+
+ 
+
+ 
+
+1,198
+
+ 
+
+ 
+
+We have recently commenced our operations and currently have initial revenues of $249,510. Our accumulated income at January 31, 2018 was $1,198. We anticipate that we will more than likely incur net losses from our operations for the foreseeable future.
+
+ 
+
+ 
+
+7
+
+ 
+
+Table of Contents
+
+ 
+
+CAUTIONARY STATEMENT REGAR DING FORWARD-LOOKING STATEMENTS
+
+ 
+
+The information contained in this prospectus, including in the documents incorporated by reference into this prospectus, includes some statements that are not purely historical and that are forward-looking statements. Such forward-looking statements include, but are not limited to, statements regarding our Company and management s expectations, hopes, beliefs, intentions or strategies regarding the future, including our financial condition, results of operations, and the expected impact of the offering on the parties individual and combined financial performance. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words anticipates, believes, continue, could, estimates, expects, intends, may, might, plans, possible, potential, predicts, projects, seeks, should, will, would and similar expressions, or the negatives of such terms, may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking.
+
+ 
+
+The forward-looking statements contained in this prospectus are based on current expectations and beliefs concerning future developments and the potential effects on the parties and the transaction. There can be no assurance that future developments actually affecting us will be those anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond the parties control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements.
+
+ 
+
+RISK FACTORS
+
+ 
+
+An investment in our common stock involves a high degree of risk. You should carefully consider the risks described below and the other information in this prospectus before investing in our common stock. If any of the following risks occur, our business, operating results and financial condition could be seriously harmed. The trading price of our common stock, when and if we trade at a later date, could decline due to any of these risks, and you may lose all or part of your investment.
+
+ 
+
+Risks Relating to our Business
+
+ 
+
+Because our independent registered public accountants have issued a going concern opinion, there is substantial uncertainty that we will continue operations, in which case you could lose your investment.
+
+ 
+
+Our independent registered public accountants have issued a going concern opinion. This means that there is substantial doubt that we can continue as an ongoing business for the next twelve months. The financial statements do not include any adjustments that might result from the uncertainty about our ability to continue in business. As such we may have to cease operations and you could lose your investment.
+
+ 
+
+We have a limited operating history and more than likely will have losses for the foreseeable future.
+
+ 
+
+We were incorporated on April 1, 2016 and have limited operations. We have realized $249,510 in revenues to date. Our Home Air Purifiers distribution business is under development and we do have Home Air Purifiers available for commercial sale. We have initial operating history upon which an evaluation of our future success or failure can be made, though it is limited. Our net gain from inception to January 31, 2018 is $1,198. Based upon our proposed plans, we expect to incur operating losses in future periods. This might happen because there are substantial costs and expenses associated with the development, marketing and distribution of our product. We may fail to generate revenues in the future. If we cannot attract a significant number of purchasers, we will not be able to generate significant revenues or income. Failure to generate revenues will cause us to go out of business because we will not have the money to pay our ongoing expenses.
+
+ 
+
+ 
+
+8
+
+ 
+
+Table of Contents
+
+ 
+
+In particular, additional capital may be required in the event that:
+
+ 
+
+ 
+the actual expenditures required to be made are at or above the higher range of our estimated expenditures;
+
+ 
+
+ 
+
+ 
+we incur unexpected costs in completing the development of our business or encounter any unexpected difficulties;
+
+ 
+
+ 
+
+ 
+we incur delays and additional expenses related to the development of a market for our product; or
+
+ 
+
+ 
+
+ 
+we are unable to create a substantial market for our products; or we incur any significant unanticipated expenses.
+
+ 
+
+The occurrence of any of the aforementioned events could adversely affect our ability to meet our business plans and achieve a profitable level of operations.
+
+ 
+
+If we are unable to obtain the necessary financing to implement our business plan we will not have the money to pay our ongoing expenses and we may go out of business.
+
+ 
+
+Our ability to successfully market our product and to eventually distribute and use it to generate operating revenues depends on our ability to obtain the necessary financing to implement our business plan. Given that we have limited operating history and limited revenues to date, we may not be able to achieve this goal, and we may go out of business. We may need to issue additional equity securities in the future to raise the necessary funds. We do not currently have any arrangements for additional financing and we can provide no assurance to investors we will be able to find such financing if further funding is required. Obtaining additional financing would be subject to a number of factors, including investor acceptance of our Home Air Purifiers products and our business model. The issuance of additional equity securities by us would result in a significant dilution in the equity interests of our current stockholders. Obtaining loans will increase our liabilities and future cash commitments, and there can be no assurance that we will even have sufficient funds to repay our future indebtedness or that we will not default on our future debts if we are able to even obtain loans.
+
+ 
+
+There can be no assurance that capital will continue to be available if necessary to meet future funding needs or, if the capital is available, that it will be on terms acceptable to us. If we are unable to obtain financing in the amounts and on terms deemed acceptable to us, we may be forced to scale back or cease operations, which might result in the loss of some or all of your investment in our common stock.
+
+ 
+
+The Home Air Purifiers distribution market is fragmented and competitive and we may not be able to compete successfully with our existing competitors or new entrants into the markets we serve.
+
+ 
+
+The Home Air Purifiers distribution market is fragmented and competitive. Our competition varies by product line, customer classification and geographic market. The principal competitive factors in our industry are quality of product, pricing, service and delivery capabilities and availability of product. We will compete with many local, regional and national Home Air Purifiers distributors and dealers. In addition, some Home Air Purifiers suppliers might sell and distribute their products directly to our customers, and the volume of such direct sales could increase in the future. Additionally, distributors of products similar to those distributed by us may elect to sell and distribute to our customers in the future or enter into exclusive supplier arrangements with other distributors. Most of our competitors have greater financial resources and may be able to withstand sales or price decreases more effectively than we can. We also expect to continue to face competition from new market entrants. We may be unable to continue to compete effectively with these existing or new competitors, which could have a material adverse effect on our financial condition and results of operations.
+
+ 
+
+ 
+
+9
+
+ 
+
+Table of Contents
+
+ 
+
+We depend on independent Home Air Purifiers suppliers for our business to operate.
+
+ 
+
+We are and will continue to be for the foreseeable future, substantially dependent on independent Home Air Purifiers suppliers to deliver our products. We do not have our own manufacturing facilities to produce Home Air Purifiers. We are and will continue to be for the foreseeable future, entirely dependent on third parties to supply Home Air Purifiers to operate our Home Air Purifiers distribution business. We rely on third-party supply companies to supply Home Air Purifiers and deliver it to us for resale. We can make no assurance that we will be able to establish and maintain these third-party relationships or establish additional relationships as necessary to support growth and profitability of our business on economically viable terms. As independent companies, these suppliers make their own business decisions. Such suppliers may choose not to do business with us for a variety of reasons, including competition, brand identity, product standards and concerns regarding our economic viability. In addition, their financial condition could also be adversely affected by conditions beyond our control and our business could suffer. In addition, we will face risks associated with any supplier s failure to adhere to quality control and service guidelines or failure to ensure an adequate and timely supply of product to our potential and future customers. Any of these factors could negatively affect our business and financial performance. If we are unable to obtain and maintain a source of supply for Home Air Purifiers, our business will be materially and adversely affected.
+
+ 
+
+If we are unable to build and maintain our brand image and corporate reputation, our business may suffer.
+
+ 
+
+We are a new company, having been formed and commenced operations only in 2016. Our success depends on our ability to build and maintain the brand image for our Home Air Purifiers products and effectively build the brand image for any new products. We cannot assure you, however, that any additional expenditure on advertising and marketing will have the desired impact on our products brand image and on consumer preferences. Actual or perceived product quality issues or allegations of product flaws, even if false or unfounded, could tarnish the image of our brand and may cause consumers to choose other products. Allegations of product defects, even if untrue, may require us from time to time to recall a product from all of the markets in which the affected product was distributed. Product recalls would negatively affect our profitability and brand image. 
+
+ 
+
+If we are unable to complete our plan to distribute our Home Air Purifiers, we will not be able to generate revenues and you will lose your investment.
+
+ 
+
+We have not yet fully completed our plan to distribute Home Air Purifiers, and we have initial revenues from the sale of our Home Air Purifiers. The success of our proposed business will depend on the completion of our plan and the acceptance of our Home Air Purifiers products by the general public. Achieving such acceptance will require significant marketing investment. Once we are capable of distributing our Home Air Purifiers products, it may not be accepted by consumers at sufficient levels to support our operations and build our business. If our Home Air Purifiers products are not accepted at sufficient levels, our business will fail.
+
+ 
+
+Changes in economic conditions that impact consumer spending could harm our business.
+
+ 
+
+Our financial performance is sensitive to changes in overall economic conditions that impact consumer spending, particularly spending associated with non-essential products, such as Home Air Purifiers, which are not indispensable to maintaining a basic lifestyle. Future economic conditions affecting consumer income such as employment levels, business conditions, interest rates, and tax rates could reduce consumer spending or cause consumers to shift their spending to other products. A general reduction in the level of consumer spending or shifts in consumer spending to other products could have a material adverse effect on our growth, sales and profitability.
+
+ 
+
+ 
+
+10
+
+ 
+
+Table of Contents
+
+ 
+
+Because we will import our products from overseas, a disruption in the delivery of imported products may have a greater effect on us than on our competitors.
+
+ 
+
+We will import our product from Asia. Because we import our product and deliver it directly to our customers, we believe that disruptions in shipping deliveries may have a greater effect on us than on competitors who manufacture and/or warehouse products in the US. Deliveries of our products may be disrupted through factors such as:
+
+ 
+
+ 
+raw material shortages, work stoppages, strikes and political unrest;
+
+ 
+
+ 
+
+ 
+fuel price increases;
+
+ 
+
+ 
+
+ 
+problems with ocean shipping, including work stoppages and shipping;
+
+ 
+
+ 
+
+ 
+container shortages;
+
+ 
+
+ 
+
+ 
+increased inspections of import shipments or other factors causing delays in shipments; and
+
+ 
+
+ 
+
+ 
+economic crises, international disputes and wars.
+
+ 
+
+Some of our competitors warehouse products they import from overseas, which allows them to continue delivering their products for the near term, despite overseas shipping disruptions. If our competitors are able to deliver products when we cannot, our reputation may be damaged and we may lose customers to our competitors.
+
+ 
+
+Price competition could negatively affect our gross margins.
+
+ 
+
+Price competition could negatively affect our operating results. To respond to competitive pricing pressures, we will have to offer our products at lower prices in order to retain or gain market share and customers. If our competitors offer discounts on products in the future, we may need to lower prices to match the competition, which could adversely affect our gross margins and operating results.
+
+ 
+
+We do not currently accept credit card payment for our products.
+
+ 
+
+We currently accept wire transfers, checks and cash. We plan to accept credit card payments and other types of payments such as PayPal in the near future once our website is operational. As many of our competitors accept credit card payments this could present a material risk as potential customers may only wish to pay with a credit card and may order from a competitor if we do not.
+
+ 
+
+We depend to a significant extent on certain key personnel, the loss of any of whom may materially and adversely affect our company.
+
+ 
+
+Currently, we have only one employee who is also our sole officer and director. We depend entirely on Mr. Hornik for all of our operations. The loss of Mr. Hornik will have a substantial negative effect on our company and may cause our business to fail. Mr. Hornik has not been compensated for his services since our incorporation, and it is highly unlikely that he will receive any compensation unless and until we generate substantial revenues. There is intense competition for skilled personnel and there can be no assurance that we will be able to attract and retain qualified personnel on acceptable terms. The loss of Mr. Hornik s services could prevent us from completing the development of our business distributing Home Air Purifiers products and having revenues. In the event of the loss of services of such personnel, no assurance can be given that we will be able to obtain the services of adequate replacement personnel. 
+
+ 
+
+We do not have any employment agreements or maintain key person life insurance policies on our sole officer and director. We do not anticipate entering into employment agreements with him or acquiring key man insurance in the foreseeable future.
+
+ 
+
+We have limited business, sales and marketing experience in our industry.
+
+ 
+
+We have not fully completed the development of our business distributing Home Air Purifiers products and have only generated initial limited revenues. Our sole officer and director has some prior experience distributing or selling Home Air Purifiers products. While we have plans for marketing and sales, there can be no assurance that such efforts will be successful. There can be no assurance that our proposed Home Air Purifiers products will gain wide acceptance in its target market or that we will be able to effectively market our product.
+
+ 
+
+ 
+
+11
+
+ 
+
+Table of Contents
+
+ 
+
+Our officer and director is engaged in other activities and may not devote sufficient time to our affairs, which may affect our ability to conduct operations and generate revenues.
+
+ 
+
+Our sole officer and director has existing responsibilities and has additional responsibilities to provide management and services to other entities. We initially expect Mr. Hornik to spend approximately 20 hours a week on the business of our company. As a result, demands for the time and attention from Mr. Hornik from our company and other entities may conflict from time to time. Because we rely primarily on Mr. Hornik to maintain our business contacts and to promote our product, his limited devotion of time and attention to our business may hurt the operation of our business.
+
+ 
+
+Our officer and director beneficially owns a significant portion of our stock, and accordingly, may have control over stockholder matters, our business and management.
+
+ 
+
+As of the date of this prospectus, our sole officer and director, Mr. Hornik, beneficially owns 4,000,000 shares of our common stock in the aggregate, or 100% of our issued and outstanding shares of common stock. Assuming completion of the Maximum Offering, he will hold 67% of our issued and outstanding shares of common stock. As a result, our sole officer and director will have significant influence to:
+
+ 
+
+ 
+Elect or defeat the election of our directors;
+
+ 
+
+ 
+
+ 
+amend or prevent amendment of our articles of incorporation or bylaws;
+
+ 
+
+ 
+
+ 
+effect or prevent a merger, sale of assets or other corporate transaction; and
+
+ 
+
+ 
+
+ 
+affect the outcome of any other matter submitted to the stockholders for vote.
+
+ 
+
+Moreover, because of the significant ownership position held by Mr. Hornik, new investors may not be able to effect a change in our business or management, and therefore, stockholders would have no recourse as a result of decisions made by management.
+
+ 
+
+In addition, sales of significant amounts of shares held by our Mr. Hornik, or the prospect of these sales, could adversely affect the market price of our common stock. Management s stock ownership may discourage a potential acquirer from making a tender offer or otherwise attempting to obtain control of us, which in turn could reduce our stock price or prevent our stockholders from realizing a premium over our stock price.
+
+ 
+
+We are an emerging growth company and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our common stock less attractive to investors.
+
+ 
+
+We are an emerging growth company, as defined in the Jumpstart our Business Startups Act of 2012, and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We cannot predict if investors will find our common stock less attractive because we will rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile.
+
+ 
+
+Under the Jumpstart Our Business Startups Act, emerging growth companies can delay adopting new or revised accounting standards until such time as those standards apply to private companies. We have irrevocably elected not to avail ourselves to this exemption from new or revised accounting standards and, therefore, we will be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies. 
+
+ 
+
+We intend to become subject to the periodic reporting requirements of the Securities Exchange Act of 1934, which will require us to incur audit fees and legal fees in connection with the preparation of such reports. These additional costs will negatively affect our ability to earn a profit.
+
+ 
+
+Following the effective date of the registration statement in which this prospectus is included, we will be required to file periodic reports with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder. In order to comply with such requirements, our independent registered public accountants will have to review our financial statements on a quarterly basis and audit our financial statements on an annual basis. Moreover, our legal counsel will have to review and assist in the preparation of such reports. The costs charged by these professionals for such services cannot be accurately predicted at this time because factors such as the number and type of transactions that we engage in and the complexity of our reports cannot be determined at this time and will have a major effect on the amount of time to be spent by our independent registered public accountants and attorneys. However, the incurrence of such costs will obviously be an expense to our operations and thus have a negative effect on our ability to meet our overhead requirements and earn a profit.
+
+ 
+
+ 
+
+12
+
+ 
+
+Table of Contents
+
+ 
+
+Furthermore, so long as our common stock is not registered under the Exchange Act, our obligation to file reports under Section 15(d) of the Exchange Act will be automatically suspended if, on the first day of any fiscal year (other than a fiscal year in which a registration statement under the Securities Act has gone effective), we have fewer than 300 shareholders of record. This suspension is automatic and does not require any filing with the SEC. In such an event, we may cease providing periodic reports and current or periodic information, including operational and financial information, may not be available with respect to our results of operations.
+
+ 
+
+For as long as we remain an emerging growth company as defined in the Jumpstart Our Business Startups Act of 2012, we intend to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We intend to take advantage of these reporting exemptions until we are no longer an emerging growth company. 
+
+ 
+
+We will remain an emerging growth company until the earlier of (i) the last day of the fiscal year (A) following the fifth anniversary of our first sale of common equity securities pursuant to an effective registration statement, (B) in which we have total annual gross revenue of at least $1.0 billion, or (C) the date that we become a large accelerated filer as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our common stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter, and (ii) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period.
+
+ 
+
+Rule 12b-2 of the Securities Exchange Act of 1934, as amended, defines a smaller reporting company as an issuer that is not an investment company, an asset-backed issuer), or a majority-owned subsidiary of a parent that is not a smaller reporting company and that:
+
+ 
+
+ 
+
+Had a public float of less than $75 million as of the last business day of its most recently completed second fiscal quarter, computed by multiplying the aggregate worldwide number of shares of its voting and non-voting common equity held by non-affiliates by the price at which the common equity was last sold, or the average of the bid and asked prices of common equity, in the principal market for the common equity; or
+
+ 
+
+ 
+
+In the case of an initial registration statement under the Securities Act or Exchange Act for shares of its common equity, had a public float of less than $75 million as of a date within 30 days of the date of the filing of the registration statement, computed by multiplying the aggregate worldwide number of such shares held by non-affiliates before the registration plus, in the case of a Securities Act registration statement, the number of such shares included in the registration statement by the estimated public offering price of the shares; or
+
+ 
+
+ 
+
+In the case of an issuer whose public float as calculated under paragraph (1) or (2) of this definition was zero, had annual revenues of less than $50 million during the most recently completed fiscal year for which audited financial statements are available.
+
+ 
+
+We qualify as a smaller reporting company, and so long as we remain a smaller reporting company, we benefit from the same exemptions and exclusions as an emerging growth company. In the event that we cease to be an emerging growth company as a result of a lapse of the five year period, but continue to be a smaller reporting company, we would continue to be subject to the exemptions available to emerging growth companies until such time as we were no longer a smaller reporting company.
+
+ 
+
+After, and if ever, we are no longer an emerging growth company, we expect to incur significant additional expenses and devote substantial management effort toward ensuring compliance with those requirements applicable to companies that are not emerging growth companies, including Section 404 of the Sarbanes-Oxley Act.
+
+ 
+
+ 
+
+13
+
+ 
+
+Table of Contents
+
+ 
+
+Because our headquarters and assets are located outside the U.S., investors may experience difficulties in attempting to affect service of process and to enforce judgments based upon U.S. federal securities laws against the Company and its non-U.S. resident officer and director.
+
+ 
+
+While we are organized under the laws of State of Nevada, our sole officer and director is a non-U.S. resident and our headquarters and assets are located outside the United States, in Slovakia. Consequently, it may be difficult for investors to affect service of process on our sole officer and director and to enforce in the United States judgments obtained in United States courts against the Company and its sole officer and director based on the civil liability provisions of the United States securities laws. Since all our assets will be located outside U.S. it may be difficult or impossible for U.S. investors to collect a judgment against us. As well, any judgment obtained in the United States against us is likely not be enforceable in Slovakia.
+
+ 
+
+The lack of public company experience of our management could adversely impact our ability to comply with the reporting requirements of U.S. securities laws.
+
+ 
+
+Mr. Hornik lacks public company experience, which could impair our ability to comply with legal and regulatory requirements such as those imposed by Sarbanes-Oxley Act of 2002. Our CEO has never been responsible for managing a publicly traded company. Such responsibilities include complying with federal securities laws and making required disclosures on a timely basis. Any such deficiencies, weaknesses or lack of compliance could have a materially adverse effect on our ability to comply with the reporting requirements of the Securities Exchange Act of 1934, as amended, which is necessary to maintain our public company status. If we were to fail to fulfill those obligations, our ability to continue as a U.S. public company would be in jeopardy in which event you could lose your entire investment in our company. 
+
+ 
+
+We are selling this offering without an underwriter and may be unable to sell any shares.
+
+ 
+
+This offering is self-underwritten, that is, we are not going to engage the services of an underwriter to sell the shares; we intend to sell our shares through our sole officer and director, Mr. Hornik, who will receive no commissions. He will offer the shares to friends, family members, and business associates; however, there is no guarantee that he will be able to sell any of the shares. Unless he is successful in selling all of the shares and we receive the proceeds from this offering, we may have to seek alternative financing to implement our business plan.
+
+ 
+
+Because our headquarters and assets are located outside the U.S., potential investors may experience difficulties in delivering subscription agreements and payment to our international address.
+
+Our headquarters and mailing address are located outside the United States, in Slovakia. While international mail delivery is generally successful, there is the risk that potential investors will have difficulty with our foreign address or that subscription agreements and payment may be delayed or lost.
+
+Risks Associated with our Common Stock
+
+ 
+
+Due to the lack of a trading market for our securities, you may have difficulty selling any shares you purchase in this offering.
+
+ 
+
+We are not registered on any market or public stock exchange. There is presently no demand for our common stock and no public market exists for the shares being offered in this prospectus. We plan to contact a market maker immediately following the completion of the offering and apply to have the shares quoted on the Over-the-Counter Bulletin Board ( OTCBB ). The OTCBB is a regulated quotation service that displays real-time quotes, last sale prices and volume information in over-the-counter securities. The OTCBB is not an issuer listing service, market or exchange. Although the OTCBB does not have any listing requirements per se, to be eligible for quotation on the OTCBB, issuers must remain current in their filings with the SEC or applicable regulatory authority. Market makers are not permitted to begin quotation of a security whose issuer does not meet this filing requirement. Securities already quoted on the OTCBB that become delinquent in their required filings will be removed following a 30 to 60 day grace period if they do not make their required filing during that time. We cannot guarantee that our application will be accepted or approved and our stock listed and quoted for sale. As of the date of this filing, there have been no discussions or understandings between us and anyone acting on our behalf, with any market maker regarding participation in a future trading market for our securities. If no market is ever developed for our common stock, it will be difficult for you to sell any shares you purchase in this offering. In such a case, you may find that you are unable to achieve any benefit from your investment or liquidate your shares without considerable delay, if at all. In addition, if we fail to have our common stock quoted on a public trading market, your common stock will not have a quantifiable value and it may be difficult, if not impossible, to ever resell your shares, resulting in an inability to realize any value from your investment.
+
+ 
+
+ 
+
+14
+
+ 
+
+Table of Contents
+
+ 
+
+If our shares of common stock commence trading on the OTC Bulletin Board, the trading price may fluctuate significantly and stockholders may have difficulty reselling their shares.
+
+ 
+
+As of the date of this Registration Statement, our common stock does not yet trade on the Over-the-Counter Bulletin Board. If our shares of common stock commence trading on the Bulletin Board, the extremely small numbers of holders will sharply limit liquidity of the shares, and there is a volatility associated with Bulletin Board securities in general and the value of your investment could decline due to the impact of any of the following factors upon the market price of our common stock: (i) disappointing results from our discovery or development efforts; (ii) failure to meet our revenue or profit goals or operating budget; (iii) decline in demand for our common stock; (iv) downward revisions in securities analysts estimates or changes in general market conditions; (v) technological innovations by competitors or in competing technologies; (vi) lack of funding generated for operations; (vii) investor perception of our industry or our prospects; and (viii) general economic trends.
+
+ 
+
+We have not engaged a market maker to apply for quotation on the OTC Bulletin Board on our behalf. There is no current trading market for our securities and if a trading market does not develop, purchasers of our securities may have difficulty selling their shares. In addition, stock markets have experienced price and volume fluctuations and the market prices of securities have been highly volatile. These fluctuations are often unrelated to operating performance and may adversely affect the market price of our common stock. As a result, investors may be unable to sell their shares at a fair price and you may lose all or part of your investment.
+
+ 
+
+Broker-dealers may be discouraged from effecting transactions in our shares because they are considered penny stocks and are subject to the penny stock rules.
+
+ 
+
+The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks generally are equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system). Penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from those rules, to deliver a standardized risk disclosure document prepared by the SEC, which specifies information about penny stocks and the nature and significance of risks of the penny stock market. A broker-dealer must also provide the customer with bid and offer quotations for the penny stock, the compensation of the broker-dealer, and sales person in the transaction, and monthly account statements indicating the market value of each penny stock held in the customer s account. In addition, the penny stock rules require that, prior to a transaction in a penny stock not otherwise exempt from those rules; the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser s written agreement to the transaction. These disclosure requirements may have the effect of reducing the trading activity in the secondary market for stock that becomes subject to those penny stock rules. If a trading market for our common stock develops, our common stock will probably become subject to the penny stock rules, and shareholders may have difficulty in selling their shares.
+
+ 
+
+Because we do not intend to pay any cash dividends on our common stock, our stockholders will not be able to receive a return on their shares unless they sell them.
+
+ 
+
+We have not declared or paid any dividends on our common stock since our inception, and we do not anticipate paying any such dividends for the foreseeable future. Investors that need to rely on dividend income should not invest in our common stock, as any income would only come from any rise in the market price of our common stock, which is uncertain and unpredictable. Investors that require liquidity should also not invest in our common stock. Unless we pay dividends, our stockholders will not be able to receive a return on their shares unless they sell them. There is no established trading market and should one develop, it will likely be volatile and subject to minimal trading volumes. 
+
+ 
+
+ 
+
+15
+
+ 
+
+Table of Contents
+
+ 
+
+Because we can issue additional shares of common stock, purchasers of our common stock may incur immediate dilution and may experience further dilution.
+
+ 
+
+We are authorized to issue up to 75,000,000 shares of common stock. At present, there are 4,000,000 issued and outstanding shares of common stock, and if we are successful in completing the Maximum Offering there will be 6,000,000 shares outstanding. Our Board of Directors has the authority to cause us to issue additional shares of common stock without consent of any of our stockholders. Consequently, our stockholders may experience more dilution in their ownership of our Company in the future, which could have an adverse effect on the trading market for our shares of common stock.
+
+ 
+
+The issuance of preferred stock could adversely affect holders of our common stock, which may negatively impact your investment. 
+
+ 
+
+Our Board of Directors is authorized to issue up to 5,000,000 shares of preferred stock without any action on the part of the shareholders. The Board of Directors also has the power, without shareholder approval, to set the terms of any such classes of preferred stock that may be issued, including voting rights, dividend rights, and preferences over the common stock with respect to dividends or upon our dissolution, winding-up and liquidation and other terms. If we issue preferred stock in the future that has a preference over our common stock with respect to the payment of dividends or upon our dissolution, winding up and liquidation, or if we issue preferred stock with voting rights that dilute the voting power of our common stock, the rights of holders of our common stock or the market price of our common stock could be adversely affected. At this time the Board of Directors has no plans to issue any preferred shares of stock. If Preferred Shares are issued in the future, the number of shares available for issue as Common Stock would be reduced by the number of Preferred Shares issued.
+
+ 
+
+Anti-takeover effects of certain provisions of Nevada state law hinder a potential takeover of the company.
+
+ 
+
+Though not now, we may be or in the future we may become subject to Nevada s control share law. A corporation is subject to Nevada s control share law if it has more than 200 stockholders, at least 100 of whom are stockholders of record and residents of Nevada, and it does business in Nevada or through an affiliated corporation. The law focuses on the acquisition of a controlling interest which means the ownership of outstanding voting shares sufficient, but for the control share law, to enable the acquiring person to exercise the following proportions of the voting power of the corporation in the election of directors: (i) one-fifth or more but less than one-third, (ii) one-third or more but less than a majority, or (iii) a majority or more. The ability to exercise such voting power may be direct or indirect, as well as individual or in association with others.
+
+ 
+
+The effect of the control share law is that the acquiring person, and those acting in association with it, obtains only such voting rights in the control shares as are conferred by a resolution of the stockholders of the corporation, approved at a special or annual meeting of stockholders. The control share law contemplates that voting rights will be considered only once by the other stockholders. Thus, there is no authority to strip voting rights from the control shares of an acquiring person once those rights have been approved. If the stockholders do not grant voting rights to the control shares acquired by an acquiring person, those shares do not become permanent non-voting shares. The acquiring person is free to sell its shares to others. If the buyers of those shares themselves do not acquire a controlling interest, their shares do not become governed by the control share law.
+
+ 
+
+If control shares are accorded full voting rights and the acquiring person has acquired control shares with a majority or more of the voting power, any stockholder of record, other than an acquiring person, who has not voted in favor of approval of voting rights, is entitled to demand fair value for such stockholder s shares.
+
+ 
+
+Nevada s control share law may have the effect of discouraging takeovers of the corporation.
+
+ 
+
+In addition to the control share law, Nevada has a business combination law which prohibits certain business combinations between Nevada corporations and interested stockholders for three years after the interested stockholder first becomes an interested stockholder, unless the corporation s board of directors approves the combination in advance. For purposes of Nevada law, an interested stockholder is any person who is (i) the beneficial owner, directly or indirectly, of ten percent or more of the voting power of the outstanding voting shares of the corporation, or (ii) an affiliate or associate of the corporation and at any time within the three previous years was the beneficial owner, directly or indirectly, of ten percent or more of the voting power of the then outstanding shares of the corporation. The definition of the term business combination is sufficiently broad to cover virtually any kind of transaction that would allow a potential acquirer to use the corporation s assets to finance the acquisition or otherwise to benefit its own interests rather than the interests of the corporation and its other stockholders.
+
+ 
+
+The effect of Nevada s business combination law is to potentially discourage parties interested in taking control of us from doing so if it cannot obtain the approval of our board of directors.
+
+ 
+
+ 
+
+16
+
+ 
+
+Table of Contents
+
+ 
+
+MARKET FOR OUR COMMON STOCK
+
+ 
+
+Market Information
+
+ 
+
+There is no established public market for our common stock.
+
+ 
+
+After the effective date of the registration statement of which this prospectus forms a part, we intend to try to identify a market maker to file an application with the Financial Industry Regulatory Authority, Inc., or FINRA, to have our common stock quoted on the Over-the-Counter Bulletin Board. We will have to satisfy certain criteria in order for our application to be accepted. We do not currently have a market maker that is willing to participate in this application process, and even if we identify a market maker, there can be no assurance as to whether we will meet the requisite criteria or that our application will be accepted. Our common stock may never be quoted on the Over-the-Counter Bulletin Board, or, even if quoted, a liquid or viable market may not materialize. There can be no assurance that an active trading market for our shares will develop, or, if developed, that it will be sustained.
+
+ 
+
+We have issued 4,000,000 shares of our common stock since our inception on April 1, 2016. There are no outstanding options or warrants or securities that are convertible into shares of common stock.
+
+ 
+
+Holders
+
+ 
+
+We have 1 holder of record of our common stock as of the date of this prospectus.
+
+ 
+
+Securities Authorized for Issuance under Equity Compensation Plans
+
+ 
+
+We have not established any compensation plans under which equity securities are authorized for issuance.
+
+ 
+
+USE OF PROCEEDS
+
+ 
+
+Our offering is being made on a self-underwritten basis: no minimum number of shares must be sold in order for the offering to proceed. The offering price per share is $0.04. The following table sets forth the uses of proceeds assuming the sale of 25%, 50%, 75% and 100%, respectively, of the securities offered for sale by the Company. The various offering amounts presented are for illustrative purposes only and the actual amount of proceeds raised, if any, may differ significantly.
+
+ 
+
+ 
+
+ 
+
+If 25% of
+
+Shares Sold
+
+ 
+
+ 
+
+If 50% of
+
+Shares Sold
+
+ 
+
+ 
+
+If 75% of
+
+Shares Sold
+
+ 
+
+ 
+
+If 100% of
+
+Shares Sold
+
+ 
+
+SHARES SOLD
+
+ 
+
+ 
+
+500,000
+
+ 
+
+ 
+
+ 
+
+1,000,000
+
+ 
+
+ 
+
+ 
+
+1,500,000
+
+ 
+
+ 
+
+ 
+
+2,000,000
+
+ 
+
+GROSS PROCEEDS
+
+ 
+
+$
+20,000
+
+ 
+
+ 
+
+$
+40,000
+
+ 
+
+ 
+
+$
+60,000
+
+ 
+
+ 
+
+$
+80,000
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+NET CASH January 31, 2017
+
+ 
+
+ 
+
+355
+
+ 
+
+ 
+
+ 
+
+355
+
+ 
+
+ 
+
+ 
+
+355
+
+ 
+
+ 
+
+ 
+
+355
+
+ 
+
+TOTAL BEFORE EXPENSES
+
+ 
+
+ 
+
+20,355
+
+ 
+
+ 
+
+ 
+
+40,355
+
+ 
+
+ 
+
+ 
+
+60,355
+
+ 
+
+ 
+
+ 
+
+80,355
+
+ 
+
+OFFERING EXPENSES
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+Legal and Accounting
+
+ 
+
+ 
+
+3,500
+
+ 
+
+ 
+
+ 
+
+3,500
+
+ 
+
+ 
+
+ 
+
+3,500
+
+ 
+
+ 
+
+ 
+
+3,500
+
+ 
+
+Publishing/EDGAR fees
+
+ 
+
+ 
+
+200
+
+ 
+
+ 
+
+ 
+
+200
+
+ 
+
+ 
+
+ 
+
+200
+
+ 
+
+ 
+
+ 
+
+200
+
+ 
+
+Transfer Agent
+
+ 
+
+ 
+
+3,300
+
+ 
+
+ 
+
+ 
+
+3,300
+
+ 
+
+ 
+
+ 
+
+3,300
+
+ 
+
+ 
+
+ 
+
+3,300
+
+ 
+
+SEC Filing fee
+
+ 
+
+ 
+
+10
+
+ 
+
+ 
+
+ 
+
+10
+
+ 
+
+ 
+
+ 
+
+10
+
+ 
+
+ 
+
+ 
+
+10
+
+ 
+
+TOTAL OFFERING EXPENSES
+
+ 
+
+ 
+
+7,010
+
+ 
+
+ 
+
+ 
+
+7,010
+
+ 
+
+ 
+
+ 
+
+7,010
+
+ 
+
+ 
+
+ 
+
+7,010
+
+ 
+
+NET AFTER OFFERING EXPENSES
+
+ 
+
+ 
+
+12,990
+
+ 
+
+ 
+
+ 
+
+32,990
+
+ 
+
+ 
+
+ 
+
+52,990
+
+ 
+
+ 
+
+ 
+
+72,990
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+EXPENDITURES (1)
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+Maintaining reporting status
+
+ 
+
+ 
+
+10,000
+
+ 
+
+ 
+
+ 
+
+10,000
+
+ 
+
+ 
+
+ 
+
+10,000
+
+ 
+
+ 
+
+ 
+
+10,000
+
+ 
+
+Office set up
+
+ 
+
+ 
+
+1,000
+
+ 
+
+ 
+
+ 
+
+2,000
+
+ 
+
+ 
+
+ 
+
+3,000
+
+ 
+
+ 
+
+ 
+
+4,000
+
+ 
+
+Web site development
+
+ 
+
+ 
+
+1,090
+
+ 
+
+ 
+
+ 
+
+2,500
+
+ 
+
+ 
+
+ 
+
+4,000
+
+ 
+
+ 
+
+ 
+
+5,000
+
+ 
+
+Advertising/marketing
+
+ 
+
+ 
+
+900
+
+ 
+
+ 
+
+ 
+
+15,000
+
+ 
+
+ 
+
+ 
+
+30,000
+
+ 
+
+ 
+
+ 
+
+35,000
+
+ 
+
+Sales person
+
+ 
+
+ 
+
+-
+
+ 
+
+ 
+
+ 
+
+-
+
+ 
+
+ 
+
+ 
+
+-
+
+ 
+
+ 
+
+ 
+
+12,000
+
+ 
+
+General administrative costs
+
+ 
+
+ 
+
+-
+
+ 
+
+ 
+
+ 
+
+3,490
+
+ 
+
+ 
+
+ 
+
+5,990
+
+ 
+
+ 
+
+ 
+
+6,990
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+Net Remaining Balance
+
+ 
+
+ 
+
+-0-
+
+ 
+
+ 
+
+ 
+
+-0-
+
+ 
+
+ 
+
+ 
+
+-0-
+
+ 
+
+ 
+
+ 
+
+-0-
+
+ 
+
+______ 
+
+(1) Expenditures for the 12 months following the completion of this Offering. The expenditures are categorized by significant area of activity.
+
+ 
+
+The figures above represent only estimated costs. 
+
+ 
+
+ 
+
+17
+
+ 
+
+Table of Contents
+
+ 
+
+Please see a detailed description of the use of proceeds in the Plan of Operation section of this Prospectus.
+
+ 
+
+If the Company is not successful in selling all 2,000,000 shares within the prescribed 180 day period (which may be extended an additional 90 days in our sole discretion), then we will not be able to proceed with our business plan unless additional funds are raised in some other manner.
+
+ 
+
+Please see a detailed description of the use of proceeds in the Plan of Operation section of this Prospectus.
+
+ 
+
+Our offering expenses of approximately $7,010 are comprised primarily of legal and accounting expenses, publishing/Edgarization fees, SEC filing fees and transfer agent fees. Our officer and director will not receive any compensation for his efforts in selling our shares.
+
+ 
+
+If we are able to sell only 1,500,000, shares (75% of this offering) we can maintain our reporting requirements with the SEC and complete the development of our business to distribute Home Air Purifiers, with the exception that we will have insufficient funds to hire a sales person. If we are not able to sell a minimum of 500,000 shares (25% of this offering), we will not implement our business plan at all, except maintaining our reporting with the SEC and remain in good standing with the state of Nevada. If we do not sell at least 500,000 shares (25% of this offering) we will not be able to maintain our reporting status with the SEC, remain in good standing with the state of Nevada and complete most of our website development. If we are unable to complete the Maximum Offering of 2,000,000 shares, we will attempt to raise the funds needed to complete our Plan of Operation through equity financing, debt financing, or other sources, which may result in the dilution in the equity ownership of our shares. We will also need more funds if the costs of developing our website are greater than we have budgeted. We will also require additional financing to sustain our business operations if we are not successful in earning revenues.
+
+ 
+
+We currently do not have any arrangements regarding this Offering or following this Offering for further financing and we may not be able to obtain financing when required. Our future is dependent upon our ability to obtain further financing, the successful development of our Home Air Purifiers products business, a successful marketing and promotion program, and achieving a profitable level of operations. The issuance of additional equity securities by us could result in a significant dilution in the equity interests of our current stockholders. Obtaining commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments. There are no assurances that we will be able to obtain further funds required for our continued operations. Even if additional financing is available, it may not be available on terms we find favorable. At this time, there are no anticipated sources of additional funds in place. Failure to secure the needed additional financing will have an adverse effect on our ability to remain in business.
+
+ 
+
+If we are successful in selling all 2,000,000 shares of common stock under this Offering, the net proceeds will be used for our business plan and general working capital, during the twelve months following the successful completion of this Offering. In all instances, after the effectiveness of the registration statement of which this prospectus is a part, we will require some amount of working capital to maintain our basic operations and comply with our public reporting obligations. In addition to changing our allocation of cash because of the amount of proceeds received, we may change the use of proceeds because of changes in our business plan. Investors should understand that we have wide discretion over the use of proceeds.
+
+ 
+
+<a name="
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2018/CIK0001705338_spark_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001705338_spark_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/CIK0001705338_spark_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2018/CIK0001706945_g-mes_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001706945_g-mes_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..1eb4d168b59abff94077d7c41fe6f174a4c39436
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/CIK0001706945_g-mes_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary 6
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2018/CIK0001707210_navios_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001707210_navios_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..6a381bbb458fda3707b11ab68bf35ad381d87b14
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/CIK0001707210_navios_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. You should read the entire prospectus carefully, including the historical consolidated financial statements and the notes to those financial statements contained in this prospectus. You should read Risk Factors for more information about important risks relating to an investment in our common units. Unless otherwise indicated, all references to dollars and $ in this prospectus are to, and amounts are presented in, U.S. dollars. Unless otherwise indicated, all data regarding our fleet and the terms of our charters is as of October 31, 2018. We use the term twenty foot equivalent unit ( TEU ), the international standard measure of containers, in describing the capacity of our containerships. For the definition of certain shipping terms used in this prospectus, see the Glossary of Terms included in this prospectus as Appendix A. We were incorporated under the laws of the Republic of the Marshall Islands as a private company named Navios Maritime Containers Inc. and we converted into a limited partnership organized under the laws of the Republic of the Marshall Islands named Navios Maritime Containers L.P., which we refer to as Navios Containers, in connection with our listing on the Nasdaq Global Select Market. References in this prospectus to we, our, us or similar terms refer to Navios Containers and any one or more of its subsidiaries, or to all of such entities, depending on the context. Unless otherwise indicated or the context otherwise requires, all information in this prospectus reflects the conversion of Navios Maritime Containers Inc. into Navios Containers at a conversion ratio of one common share of Navios Maritime Containers Inc. for each common unit of Navios Containers. In connection with the conversion, Navios Maritime Containers GP LLC, a Marshall Islands limited liability company and wholly-owned subsidiary of Navios Holdings (as defined below), has been admitted as our general partner and holds a non-economic interest that does not provide the holder with any rights to profits or losses of, or distributions by, the partnership. Unless the context otherwise requires, references in this prospectus to: Navios Holdings refer, depending on the context, to Navios Maritime Holdings Inc. or any one or more of its subsidiaries; general partner refer to Navios Maritime Containers GP LLC, and because the general partner is a wholly-owned subsidiary of Navios Holdings, we may also refer to Navios Holdings as the general partner in this prospectus depending on the context; Manager refer to a wholly-owned subsidiary of Navios Holdings, which manages the commercial and technical operation of our fleet pursuant to a management agreement dated June 7, 2017, as amended on November 23, 2017, April 23, 2018 and June 1, 2018, which we refer to as the Management Agreement, and also provides administrative services to us pursuant to an administrative services agreement dated June 7, 2017, which we refer to as the Administrative Services Agreement ; Navios Partners refer to Navios Maritime Partners L.P.; and Navios Group refer, depending on the context, to Navios Holdings, Navios Maritime Acquisition Corporation, which we refer to as Navios Acquisition, Navios Partners, Navios Maritime Midstream Partners L.P., which we refer to as Navios Midstream, us and any one or more of our and their subsidiaries.
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2018/CIK0001707717_virtue_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001707717_virtue_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..31bd523dec00501210892609de2085f51d6eeb10
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/CIK0001707717_virtue_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights selected information contained elsewhere in this prospectus. This summary does not contain all the information that you should consider before investing in the Common Stock. You should carefully read the entire prospectus, including "Risk Factors", "Management s Discussion and Analysis of Financial Condition and Results of Operations" and the Financial Statements, before making an investment decision. In this prospectus, the terms "Virtue," "Company," "we," "us" and "our", "our company" refer to Virtue Resources Corporation. Overview Incorporated in February 2017 under the laws of the State of Nevada, Virtue Resources Corporation is a hotel development company launched to develop and construct specialty themed hotels in Vietnam. Planning to begin our operation by first developing a "shipping container" themed hotel in Phu Quoc, Vietnam, we plan to capture a niche market within the hotel industry in an area that has seen growth in tourism. We are conceptually different from traditional shipping container hotels by providing an upscale experience resembling 3-star to 4-star caliber hotels that plan to target both millennial luxury travelers and families with mid-tier spending power. We plan to begin our first pilot project in Phu Quoc, Vietnam, strategically located on Ong Lang beach, where it has been drawn comparison to Phuket of Thailand. We believe that we are among the first to develop shipping container themed hotel in Vietnam and therefore would have a first-mover advantage. In response to the surge of international and domestic visitors in Vietnam, we plan to attract travelers all year round, particularly international tourists during their high and peak seasons and local tourists for the duration of the year. We will strive to provide our guests with an environment that encourages relaxation, serenity, and an opportunity to experience the local lifestyle. Our completed hotel is expected to have both traditional hotel styled rooms for single or couple travelers and villa-styled houses for group travelers. In addition to a breach-front accommodation, we also plan to provide amenities such as a pool, restaurants, and a workout facility. Calculation of Registration Fee Title of Each Class Of Securities to be Registered Amount to be Registered (1) Proposed Maximum Offering Price per Share (2) Proposed Maximum Offering Price Amount of Registration Fee common stock, par value $0.001 per share (the "Common Stock") 430,000 $0.10 43,000 4.98 (1) This registration statement covers the resale by our selling shareholders of up to 430,000 shares of Common Stock previously issued to such selling shareholders. (2) The offering price has been estimated solely for the purpose of computing the amount of the registration fee in accordance with Rule 457(o). Our Common Stock is not traded on any national exchange and in accordance with Rule 457; the offering price was determined by the price of the shares that were sold to our shareholders in a private placement memorandum. The price of $0.10 is a fixed price at which the selling security holders may sell their shares for the duration of the offering. As of the date of this registration statement, we plan to engage with a market maker to file an application with the Financial Industry Regulatory Authority ("FINRA") to have our Common Stock quoted on the OTCQB. However, there can be no assurance that the application for quotation will be approved by FINRA. THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SUCH SECTION 8(a), MAY DETERMINE. Table of Contents We are currently a development stage company. We have not generated any revenues to date and there can be no assurances that we will ever generate any revenue. We do not currently engage in any business activities that provide cash flow. Our cash at hand is limited to the investments we raised during our initial round of financing as well as an initial contribution from our president, less our expenses to date. In May 2017, we completed a Regulation S offering in which we sold 193,000,000 shares of Common Stock to thirty-seven (37) investors, at a purchase price of $0.001 per share for an aggregate offering price of $193,000. Where You Can Find Us The Company s principal executive office and mailing address is 19 Floor, Petrovietnam Tower, 1-5 Le Duan, Ben Nghe Ward, District 1, Ho Chi Minh City, Vietnam and our mailing address is 100.3.041, 129 Offices, Block J, Jaya One, No. 72A, Jalan University, Petaling Jaya, Malaysia. Our telephone number is +60123911706. Implications of Being an Emerging Growth Company We qualify as an emerging growth company as that term is used in the JOBS Act. An emerging growth company may take advantage of specified reduced reporting and other burdens that are otherwise applicable generally to public companies. These provisions include: A requirement to have only two years of audited financial statements and only two years of related MD Exemption from the auditor attestation requirement in the assessment of the emerging growth company s internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act of 2002; Reduced disclosure about the emerging growth company s executive compensation arrangements; and No non-binding advisory votes on executive compensation or golden parachute arrangements. We have already taken advantage of these reduced reporting burdens in this prospectus, which are also available to us as a smaller reporting company as defined under Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended (the "Securities Act") for complying with new or revised accounting standards. We have elected to use the extended transition period provided above and therefore our financial statements may not be comparable to companies that comply with public company effective dates. We could remain an emerging growth company for up to five years, or until the earliest of (i) the last day of the first fiscal year in which our annual gross revenues exceed $1 billion, (ii) the date that we become a "large accelerated filer" as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our common stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter, or (iii) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three year period. The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission (the "SEC") becomes effective. This prospectus is not an offer to sell these securities and we are not soliciting offers to buy these securities in any state where the offer or sale is not permitted. PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION ON FEBRUARY 13, 2018 VIRTUE RESOURCES CORPORATION 430,000 SHARES OF COMMON STOCK The selling shareholders named in this prospectus are offering all of the shares of Common Stock offered through this prospectus. The Common Stock to be sold by the selling shareholders as provided in the "Selling Security Holders" section is Common Stock that are shares that have already been issued and are currently outstanding. We will not receive any proceeds from the sale of the Common Stock covered by this prospectus. Our Common Stock is presently not traded on any market or securities exchange. The selling security holders have not engaged any underwriter in connection with the sale of their shares of Common Stock. Common Stock being registered in this registration statement may be sold by selling security holders at a fixed price of $0.10 per share for the duration of the offering and thereafter at a prevailing market prices or privately negotiated prices or in transactions that are not in the public market. As of the date of this registration statement, we plan to engage with a market maker to file an application with FINRA to have our Common Stock quoted on OTCQB. Because we are considered a "Shell" company, shareholders shares will have limited transferability under Rule 144(i), see "Risk Factors" beginning on page 3. Public resale of our Common Stocks under Rule 144 is not available without registering the resale with the SEC because we are a shell company, and Rule 144 is not available for the resale of securities initially issued by shell companies. All selling shareholders are underwriters and must sell their respective shares at a fixed price of $0.10 per share for the duration of the offering. There is currently no market for our Common Stock. PLEASE NOTE THAT THE COMPANY IS CONSIDERED A "SHELL" COMPANY IN ACCORDANCE WITH THE SECURITIES ACT OF 1933, AS AMENDED. ACCORDINGLY, THE SECURITIES SOLD IN THIS OFFERING CAN ONLY BE RESOLD THROUGH REGISTRATION UNDER THE SECURITIES ACT OF 1933; SECTION 4(l), IF AVAILABLE, FOR NON-AFFILIATES; OR BY MEETING THE FOLLOWING CONDITIONS OF RULE 144(I): THE ISSUER OF THE SECURITIES THAT WAS FORMERLY A SHELL COMPANY HAS CEASED TO BE A SHELL COMPANY; THE ISSUER OF THE SECURITIES IS SUBJECT TO THE REPORTING REQUIREMENTS OF SECTION 13 OR 15(D) OF THE EXCHANGE ACT; THE ISSUER OF THE SECURITIES HAS FILED ALL REPORTS AND MATERIAL REQUIRED TO BE FILED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS APPLICABLE, DURING THE PRECEDING 12 MONTHS (OR SUCH SHORTER PERIOD THAT THE ISSUER WAS REQUIRED TO FILE SUCH REQUIRED TO FILE SUCH REPORTS AND MATERIALS), OTHER THAN FORM 8-K REPOTRS; AND AT LEAST ONE YEAR HAS ELAPSED FROM THE TIME THAT THE ISSUER FILED CURRENT FORM 10 TYPE INFORMATION WITH THE SEC REFLECTING ITS STATUS AS AN ENTITY THAT IS NOT A SHELL COMPANY. However, there can be no assurance that the application for quotation will be approved by FINRA. We have agreed to bear the expenses relating to the registration of the shares of the selling security holders. We are an emerging growth company as that term is used in the Jumpstart Our Business Startups Act of 2012 (the "JOBS Act") and are subject to reduced public company reporting requirements. Investing in our Common Stock involves a high degree of risk. See "Risk Factors" beginning on page 4 to read about factors you should consider before buying shares of our Common Stock. NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. The Date of This Prospectus is: ________________. Table of Contents The Offering Common stock offered by selling security holders 430,000 shares of Common Stock. This number represents 0.22% of our current outstanding Common Stock. Common stock outstanding before the offering 200,000,000 shares of Common Stock. Common stock outstanding after the offering 200,000,000 shares of Common Stock. Terms of the Offering The selling security holders will determine when and how they will sell the common stock offered in this prospectus. The selling security holders are underwriters. The shares may be sold at a fixed price of $0.10 per share for the duration of the offering. Termination of the Offering The offering will conclude upon the earliest of (i) such time as all of the common stock has been sold pursuant to the registration statement or (ii) such time as all of the common stock becomes eligible for resale without volume limitations pursuant to Rule 144 under the Securities Act (iii) or we decide at any time to terminate the registration of the shares at our sole discretion. Trading Market There is currently no trading market for our Common Stock. We plan to apply for quotation on OTCQB. We will require the assistance of a market-maker to apply for quotation and there is no guarantee that a market-maker will agree to assist us. Use of proceeds We are not selling any shares of the Common Stock covered by this prospectus. As such, we will not receive any of the offering proceeds from the registration of the shares of Common Stock covered by this prospectus. Risk Factors The Common Stock offered hereby involves a high degree of risk and should not be purchased by investors who cannot afford the loss of their entire investment. See "Risk Factors" beginning on page 6. TABLE OF CONTENTS PAGE Prospectus Summary 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2018/CIK0001709401_rubius_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001709401_rubius_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..6fd1b31a26ec10bc1fd1e216e073634da63e7929
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/CIK0001709401_rubius_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus summary 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2018/CIK0001711291_curo_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001711291_curo_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..dd2d15f3822c2127bcdb352297b26aa5e7034fb7
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/CIK0001711291_curo_prospectus_summary.txt
@@ -0,0 +1 @@
+The following summary highlights information contained or incorporated by reference in this prospectus. You should read the following summary together with the more detailed information appearing or incorporated by reference in this prospectus, including our consolidated financial statements and related notes, before deciding whether to purchase shares of our common stock. The terms we, our, us, CURO and the Company, as used in this prospectus, refer to CURO Group Holdings Corp. and its consolidated subsidiaries, except where otherwise stated or where it is clear that the terms mean only CURO Group Holdings Corp. exclusive of its subsidiaries. Unless the context otherwise indicates or requires, the term Curo Platform and platform, as used in this prospectus, refer to our Company s proprietary IT systems and operating platform. Company Overview We are a growth-oriented, technology-enabled, highly-diversified consumer finance company serving a wide range of underbanked consumers in the United States, Canada and the United Kingdom and are a market leader in our industry based on revenues. We believe that we have the only true omni-channel customer acquisition, onboarding and servicing platform that is integrated across store, online, mobile and contact center touchpoints. Our IT platform, which we refer to as the Curo Platform, seamlessly integrates loan underwriting, scoring, servicing, collections, regulatory compliance and reporting activities into a single, centralized system. We use advanced risk analytics powered by proprietary algorithms and over 15 years of loan performance data to efficiently and effectively score our customers loan applications. From 2010 through March 31, 2018, we extended over $15.1 billion in total credit across approximately 39.5 million total loans of which $1.2 billion in total credit was extended across approximately 3 million total loans from September 30, 2017 to March 31, 2018. Additionally, our revenue was $261.7 million and $963.6 million for the three months ended March 31, 2018 and the year ended December 31, 2017, respectively. We operate in the United States under two principal brands, Speedy Cash and Rapid Cash, and launched our new brand Avio Credit in the United States in the second quarter of 2017. In the United Kingdom we operate online as Wage Day Advance and Juo Loans and, prior to their closure in the third quarter of 2017, our stores were branded Speedy Cash. In Canada, our stores are branded Cash Money and we offer LendDirect installment loans online and at certain stores. As of March 31, 2018, our store network consisted of 408 locations across 14 U.S. states and seven Canadian provinces and we offered our online services in 27 U.S. states, five Canadian provinces and the United Kingdom. We offer a broad range of consumer finance products including Unsecured Installment Loans, Secured Installment Loans, Open-End Loans and Single-Pay Loans. We have tailored our products to fit our customers particular needs as they access and build credit. Our product suite allows us to serve a broader group of potential borrowers than most of our competitors. The flexibility of our products, particularly our installment and open-end products, allows us to continue serving customers as their credit needs evolve and mature. Our broad product suite creates a diversified revenue stream and our omni-channel platform seamlessly delivers our products across all contact points we refer to it as Call, Click or Come In. We believe these complementary channels drive brand awareness, increase approval rates, lower our customer acquisition costs and improve customer satisfaction levels and customer retention. We serve the large and growing market of individuals who have limited access to traditional sources of consumer credit and financial services. We define our addressable market as underbanked consumers in the United States, Canada and the United Kingdom. According to a study by CFSI, there are as many as 121 million Americans who are currently underserved by financial services companies. According to studies by ACORN Canada and PWC, the statistics in Canada and the United Kingdom are similar, with an estimated 15% of Canadian residents (approximately 5 million individuals) and an estimated 20% to 25% of United Kingdom residents (approximately 10 to 14 million individuals) classified as underbanked. Given our international Table of Contents The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until a registration statement filed with the Securities and Exchange Commission is declared effective. This preliminary prospectus is not an offer to sell these securities, and we are not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED MAY 14, 2018 5,000,000 Shares CURO Group Holdings Corp. Common Stock The selling stockholders identified in this prospectus are offering 5,000,000 shares of our common stock as described in this prospectus. We will not receive any proceeds from the sale of shares offered by the selling stockholders. Our common stock is traded on the New York Stock Exchange under the symbol CURO. The last reported sale price of our common stock on May 11, 2018 was $24.30 per share. Certain of the selling stockholders have granted the underwriters a 30-day option to purchase up to 750,000 additional shares of our common stock from them at the public offering price, less the underwriting discounts and commissions. We are an emerging growth company as the term is used in the Jumpstart Our Business Startups Act of 2012 and, as such, have elected to comply with certain reduced public company reporting requirements. See Summary Implications of Being an Emerging Growth Company. Investing in our common stock involves risks. See Risk Factors on page 16. Price to Public Underwriting Discounts and Commissions Proceeds to the Selling Stockholders (Before Expenses)(1) Per Share $ $ $ Total $ $ $ (1) See Underwriting for information relating to underwriting compensation, including certain expenses of the underwriters to be reimbursed by us. Neither the Securities and Exchange Commission, any state securities commission nor any other regulatory body has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The underwriters expect to deliver the shares on or about , 2018. Credit Suisse Jefferies Stephens Inc. William Blair Janney Montgomery Scott The date of this prospectus is , 2018. Table of Contents This prospectus contains forward-looking statements that are subject to a number of risks and uncertainties, many of which are beyond our control. See Risk Factors and Special Note Regarding Forward-Looking Statements. We do not intend our use or display of other companies tradenames, trademarks or service marks to imply a relationship with, or endorsement or sponsorship of us by, any other company. Each trademark, tradename or service mark of any other company appearing in this prospectus is the property of its respective holder. We or one of our subsidiaries own or have applied for ownership of the marks CURO, CURO Financial Technologies Corp., Speedy Cash , RC Rapid CashSM, OPT SM, Rapid Cash, Avio Credit, LendDirect and Wage Day Advance. All other trademarks, service marks and tradenames appearing in this prospectus are the property of their respective owners. In this prospectus, when we refer to CURO, we are referring to CURO Group Holdings Corp. and its subsidiaries, including CURO Financial Technologies Corp.; CFTC, we are referring to CURO Financial Technologies Corp.; the FFL Holders, we are referring to Friedman Fleischer & Lowe Capital Partners II, L.P., FFL Executive Partners II, L.P. and FFL Parallel Fund II, L.P.; and the Founder Holders, we are referring to Doug Rippel, Chad Faulkner and Mike McKnight and certain of their family trusts and affiliated entities. Unless otherwise specified herein or the context otherwise requires, all references to $, U.S.$, USD or dollars in this prospectus refer to U.S. dollars, all references to C$ refer to Canadian dollars, and all references to , pound sterling or GBP refer to British pounds sterling. The C$ and GBP are the functional currency of our Canadian and U.K. operations, respectively. For investors outside the United States: neither we nor any of the underwriters have done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. You are required to inform yourselves about and to observe any restrictions relating to this offering and the distribution of this prospectus outside of the United States. Industry and Market Data This prospectus and the information incorporated by reference include statistical data, market data and other industry data and forecasts, which we obtained from market research, publicly available information and independent industry publications and reports, including those by the Pew Research Center, CFI Group and FactorTrust. We have supplemented these data and forecasts where necessary with information from publicly available sources and our own internal estimates. We use these sources and estimates and believe them to be reliable, but they involve a number of assumptions and limitations. The sources of certain industry and market data contained in this prospectus are listed below. ACORN Canada, It s Expensive to be Poor: How Canadian Banks are Failing Low Income Communities; May 2016. Board of Governors of the Federal Reserve System, Report on the Economic Well-Being of U.S. Households in 2015; May 2016. Center for Financial Services Innovation, or CFSI, 2016 Financially Underserved Market Size Study; November 2016. Table of Contents footprint, this translates into an addressable target market of approximately 140 million individuals. We believe that with our scalable omni-channel platform and diverse product offerings, we are well positioned to gain market share as sub-scale players struggle to keep pace with the technological evolution taking place in the industry. Our customers require essential financial services and value timely, transparent, affordable and convenient alternatives to banks, credit card companies and other traditional financial services companies. According to a recent study by FactorTrust, underbanked customers in the United States tend to have the following characteristics: average age of 39 for applicants and 41 for borrowers; applicants are 47% male and 53% female; 41% are homeowners; 45% have a bachelor s degree or higher; and the top five employment segments are Retail, Food Service, Government, Banking/Finance and Business Services. In the United States, our customers generally earn between $25,000 and $75,000 annually. In Canada, our customers generally earn between C$25,000 and C$60,000 annually. In the United Kingdom, our customers generally earn between 18,000 and 31,000 annually. Our customers utilize the services provided by our industry for a variety of reasons, including that they often: have immediate need for cash between paychecks; have been rejected for traditional banking services; maintain sufficient account balances to make a bank account economically efficient; prefer and trust the simplicity, transparency and convenience of our products; need access to financial services outside of normal banking hours; and reject complicated fee structures in bank products (e.g., credit cards and overdrafts). Products and Services We provide Unsecured Installment Loans, Secured Installment Loans, Open-End Loans, Single-Pay Loans and a number of ancillary financial products including check cashing, proprietary reloadable prepaid debit cards (Opt ), credit protection insurance in the Canadian market, gold buying, retail installment sales and money transfer services. We have designed our products and customer journey to be consumer-friendly, accessible and easy to understand. Our platform and product suite enable us to provide several key benefits that appeal to our customers: transparent approval process; flexible loan structure, providing greater ability to manage monthly payments; simple, clearly communicated pricing structure; and full account management online and via mobile devices. Our centralized underwriting platform and its proprietary algorithms are used for every aspect of underwriting and scoring of our loan products. The customer application, approval, origination and funding processes differ by state, country and channel. Our customers typically have an active phone number, open Table of Contents CFI Group, Bank Satisfaction Barometer; 2016. FactorTrust, The FactorTrust Underbanked Index; May 2017. FICO, US Average FICO Score Hits 700: A Milestone for Consumers; July 2017. Financial Credit Authority, High-cost credit; July 2017. JPMorgan Chase & Co., Weathering Volatility: Big Data on the Financial Ups and Downs of U.S. Individuals; 2015. L.E.K. Consulting, Consumer Specialist Lending Newly Sustainable or Another Boom-and-Bust; Volume XVIII, Issue 10. Pew Research Center, Smartphone Ownership and Internet Usage Continues to Climb in Emerging Economies; February 2016. Pricewaterhouse Coopers LLP, or PWC, Banking the Under-Banked: The Growing Demand for Near Prime Credit; 2016. The industry in which we operate is subject to a high degree of uncertainty and risk due to a variety of factors, including those described in
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+Prospectus Summary 1
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+UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM S-1/A-2 Registration Statement Under the Securities Act of 1933 Pre-effective Amendment No. 2 Post-effective Amendment No. EDGAR EXPRESS, INC. (Exact Name of Registrant as Specified in Charter) 11650 South State St., Ste. 240 Draper, Utah 84020 (Address of Principal Executive Offices) (801) 816-2524 (Registrant s Telephone Number, Including Area Code) Mary Foster, Chief Executive Officer Edgar Express, Inc. 11650 South State St., Ste. 240 Draper, Utah 84020 (Name and Address of Agent for Service) Copies to: John D. Thomas, Esq. John D. Thomas, P.C. 11650 South State Street, Suite 240 Draper, UT 84020 Telephone: (801) 816-2536 Facsimile: (801) 816-2537 Approximate Date of Proposed Public Offering: As soon as practicable after the effective date of this Registration Statement. If any of the securities being registered on this form are offered on a delayed or continuous basis in reliance on Rule 415 under the Securities Act of 1933, other than securities offered in connection with a dividend reinvestment plan, check the following box. If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one): Large Accelerated Filer [ ] Accelerated Filer [ ] Non-Accelerated Filer [ ] Smaller reporting company [X] CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933 Title of Securities Being Registered Amount Being Registered (1) Proposed Maximum Aggregate Offering Price (2) Amount of Registration Fee Common stock ($0.001 par value) 1,550,000 $XX.XX $X.XX (1) Represents the maximum number of common shares to be registered for resale by certain shareholders of the Registrant. In the event of a stock split, stock dividend, or similar transaction involving our common stock, the number of shares registered shall automatically be increased to cover additional shares of common stock pursuant to Rule 416 under the Securities Act of 1933, as amended (the "Securities Act"). (2) The offering price has been estimated solely for the purpose of computing the amount of the registration fee in accordance with Rule 457(o). Further, the offering price has been arbitrarily determined by the Company and bears no relationship to assets, market assets, earnings, or any other valuation criteria. No assurance can be given that the shares offered hereby will have a market value or that they may be sold at this, or at any other price. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine. The information in this prospectus is not complete and may be changed without notice. The Selling Stockholders may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities, and neither the Registrant nor the Selling Stockholders are soliciting offers to buy these securities, in any state where the offer or sale of these securities is not permitted. PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION ON ____________ Up to 1,550,000 Shares of Common Stock EDGAR EXPRESS, INC. ________________________________________ The information in this prospectus is not complete and may be changed. The Selling Stockholders may not sell these securities until the Registration Statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offering to sell these securities and it is not a solicitation of an offering to buy these securities in any state where the offering or sale of such securities is not permitted. This prospectus relates to the exchange and resale of 1,550,000 shares of common stock (collectively, the "Shares") of Edgar Express, Inc. (hereafter, "we" "us" "our", "Edgar Express" or the "Company") by certain holders of our common stock (hereafter, the "Selling Stockholders") of the Company, at a fixed price of $0.02 per share. The Selling Stockholders will each be selling for their own account, but we are paying the expenses incurred in registering the Shares. All selling and other expenses incurred by the Selling Stockholders will be borne by them. We will not receive any of the proceeds from the sale of the Shares by the Selling Stockholders. Any participating broker-dealers and any Selling Stockholders who are affiliates of broker-dealers may be deemed to be "underwriters" within the meaning of the Securities Act of 1933, as amended (the "Securities Act"), and any commissions or discounts given to any such broker-dealer or affiliates of a broker-dealer may be regarded as underwriting commissions or discounts under the Securities Act. The Selling Stockholders have informed us that they do not have any agreement or understanding, directly or indirectly, with any person to distribute their Shares. The Shares being offered by the Selling Stockholders pursuant to this prospectus are considered "restricted securities" under the Securities Act before their sale under this prospectus. This prospectus has been prepared for the purpose of registering these Shares under the Securities Act to allow for a sale by the Selling Stockholders to the public without restriction. We are registering the Shares pursuant to a Registration Statement filed with the U.S. Securities and Exchange Commission ("SEC"), of which this prospectus forms a part. We intend to apply to have our common stock quoted on the over-the-counter market ("OTC"). We cannot assure you that a market maker will agree to file the necessary documents with the Financial Industry Regulatory Authority ("FINRA") to facilitate such quotation, nor can we assure you that such an application for quotation will be approved. Further, we cannot assure you that an active trading market for our common stock will develop or will be sustained if developed. If our common stock becomes traded on the OTC, then the sale price to the public will vary according to prevailing market prices or privately negotiated prices by the Selling Stockholders. Our auditors have expressed substantial doubt as to our ability to continue as a going concern. We expect that we will need approximately $25,000 in capital to continue as a going concern for the next twelve months from the date of this prospectus, excluding any costs or expenses we might incur with respect to any commercial or business development opportunities. We intend to raise capital to fund future operations through private placements and public securities offerings. We are an "emerging growth company" under the Jumpstart Our Business Startups Act ("JOBS Act") and are eligible for reduced public company reporting requirements. We do not consider ourselves a shell company or a blank check company. The information in this preliminary prospectus is not complete and may be changed. The Shares may not be sold until the Registration Statement filed with the SEC is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with information different from that contained in this prospectus. The information contained in this prospectus is accurate only as of the date of this prospectus. An investment in our common stock is subject to many risks and an investment in our shares will also involve a high degree of risk. See "Risk Factors" on page 4 to read about factors you should consider before purchasing shares of our common stock. _______________________________________ Neither the SEC nor any state securities commission has approved or disapproved of these securities, or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The information in this prospectus is not complete and may be changed. This prospectus is included in the Registration Statement that was filed by us with the SEC. The Selling Stockholders may not sell these securities without an exemption under the Securities Act until the Registration Statement becomes effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. The date of this prospectus is January ___, 2018 You should rely only on the information contained in this prospectus. We have not authorized any other person to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. The Selling Stockholders are not offering to sell the Shares in any jurisdiction where such offering or sale is not permitted. You should assume that the information appearing in this prospectus is accurate only as of the date on the front cover of this prospectus. Our business, financial condition, results of operations and prospects may have changed since that date. TABLE OF CONTENTS FORWARD-LOOKING STATEMENTS AND PROJECTIONS 1 PROSPECTUS SUMMARY 2
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+PROSPECTUS SUMMARY This summary highlights selected information contained elsewhere in this prospectus and is qualified in its entirety by the more detailed information and consolidated financial statements and the related notes thereto included elsewhere in this prospectus. This summary does not contain all the information
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diff --git a/parsed_sections/prospectus_summary/2018/CIK0001712923_greensky_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001712923_greensky_prospectus_summary.txt
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+PROSPECTUS SUMMARY This summary highlights material information about our business and the offering of our Class A common stock. This is a summary of material information contained elsewhere in this prospectus and is not complete and does not contain all of the information that you should consider before deciding to invest in our Class A common stock. For a more complete understanding of our business and this offering, you should read this entire prospectus, including the section entitled Risk Factors, as well as the consolidated financial statements and the related notes thereto, before making an investment decision. GreenSky, Inc. Company Overview We are a leading technology company that powers commerce at the point of sale. Our platform facilitates merchant sales, while reducing the friction, and improving the economics, associated with a consumer making a purchase and a bank extending financing for that purchase. We had approximately 12,000 active merchants on our platform as of March 31, 2018 and, from our inception through March 31, 2018, merchants used our platform to enable approximately 1.7 million consumers to finance over $12 billion of transactions with our Bank Partners. Our market opportunity is significant. In 2017, there was approximately $315 billion of spending volume in the home improvement market, which historically has represented substantially all of our transaction volume, and substantial opportunities in the elective healthcare market, which we entered in 2016. In addition, at year end 2017, according to the Federal Reserve System, there was approximately $3.8 trillion of U.S. consumer credit outstanding across a fragmented landscape of lenders, providing a significant opportunity for us to extend our platform to other markets where transactions are financed at the point of sale. Over the past decade, we have developed and have been advancing and refining our proprietary, purpose-built platform to provide significant benefits to our growing ecosystem of merchants, consumers and banks: Merchants. Merchants using our platform, which presently range from small, owner-operated home improvement contractors and healthcare providers to large national home improvement brands and retailers, rely on us to facilitate low or deferred interest promotional point-of-sale financing and payments solutions that enable higher sales volume. Our platform is designed to provide a seamless experience for our merchants with a mobile-native design that is intuitive and easy to use. Our technology integrates effortlessly with merchants existing payments systems, while also allowing merchants to access funds faster. Consumers. Consumers on our platform, who to date primarily have super-prime or prime credit scores, find financing with promotional terms to be an attractive alternative to paying with cash, check, credit card, or general purpose revolving credit, particularly in the case of larger purchases. We provide a completely paperless, mobile-enabled experience that typically permits a consumer to apply and be approved for financing in less than 60 seconds at the point of sale. Banks. We provide our Bank Partners with access to our proprietary technology solution and merchant network, enabling them to build a diversified portfolio of high quality consumer loans with attractive risk-adjusted yields. Our platform delivers significant loan volume, while requiring minimal upfront investment by our Bank Partners. Furthermore, our program is designed to adhere to the regulatory and compliance standards of our Bank Partners, which has helped us to gain their confidence, allowing them to outsource both loan facilitation and servicing functions to us. Our platform is powered by a proprietary technology infrastructure that delivers stability, speed, scalability and security. It supports the full transaction lifecycle, including credit application, underwriting, real-time allocation to our Bank Partners, document distribution, funding, settlement, The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell, nor does it seek an offer to buy, these securities in any jurisdiction where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED MAY 14, 2018 PRELIMINARY PROSPECTUS 34,090,909 Shares GreenSky, Inc. Class A Common Stock This is an initial public offering of shares of Class A common stock of GreenSky, Inc. We will use the net proceeds from this offering to purchase common membership interests of GreenSky Holdings, LLC ( GS Holdings ), which we refer to as Holdco Units, from certain holders (which we refer to as the Exchanging Members ), including our Chief Executive Officer and certain of our other officers and directors; to redeem shares of our Class A common stock from equity holders of the Former Corporate Investors (as defined herein); and to redeem shares of our Class A common stock issued upon exercise of options by certain option holders of GS Holdings. Prior to this offering, there has been no public market for our Class A common stock. The initial public offering price per share is expected to be between $21.00 and $23.00. We have applied to list our Class A common stock on The NASDAQ Global Select Market ( NASDAQ ) under the symbol GSKY. We will have two authorized classes of common stock: Class A and Class B. Holders of our Class A common stock are entitled to one vote per share, holders of our Class B common stock are entitled to ten votes per share, and all holders generally will vote together as a single class. Holders of our Class B common stock will not have any of the economic rights provided to holders of Class A common stock. Our Class B common stock will be held by the Continuing LLC Members (as defined herein) on a one-share-per-one-Holdco Unit basis. Each Holdco Unit is exchangeable (with automatic cancellation of an equal number of shares of Class B common stock) for one share of Class A common stock or cash (based on the market price of the shares of Class A common stock), at our option (such determination to be made by the disinterested members of our board of directors). We will be a holding company, and our sole material asset will be an equity interest in GS Holdings. Immediately following this offering, the holders of our Class A common stock collectively will own 100% of the economic interests (as defined herein) in GreenSky, Inc. (which will own 22.2% of the economic interests in GS Holdings) and will hold 2.8% of the voting power of the outstanding capital stock of GreenSky, Inc. The holders of our Class B common stock collectively will own 77.8% of the economic interests (by virtue of their Holdco Units) in GS Holdings and will hold 97.2% of the voting power of the outstanding capital stock of GreenSky, Inc. Although we will have a minority economic interest in GS Holdings, because we will be its managing member, we will control all of its business and affairs. We are an emerging growth company, as that term is defined under the federal securities laws, and will be subject to reduced public company reporting requirements. Investing in our Class A common stock involves risks. See Risk Factors beginning on page 26. Neither the Securities and Exchange Commission ( SEC ) nor any state securities commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense. Per Share Total Initial public offering price $ $ Underwriting discounts and commissions(1) $ $ Proceeds, before expenses, to us(2) $ $ (1) See Underwriting for a full description of compensation payable to the underwriters in connection with this offering. (2) We will use the net proceeds from the sale of our Class A common stock to purchase Holdco Units from the Exchanging Members; to redeem shares of our Class A common stock from equity holders of the Former Corporate Investors; and to redeem shares of our Class A common stock issued upon exercise of options by certain option holders of GS Holdings. The purchase price for each Holdco Unit surrendered, and share of Class A common stock redeemed, will equal the price per share of our Class A common stock in this offering, less underwriting discounts and commissions. The underwriters have an option to purchase up to 5,113,636 additional shares of Class A common stock from us at the initial public offering price, less the underwriting discounts and commissions. The underwriters can exercise this option at any time and from time to time within 30 days from the date of this prospectus. If the underwriters exercise in full their option to purchase additional shares, we intend to use the net proceeds to purchase an additional 4,823,759 Holdco Units (with automatic cancellation of an equal number of shares of our Class B common stock) from the Exchanging Members at the same price per Holdco Unit as set forth in note 2 above; redeem an additional 257,414 shares of our Class A common stock from equity holders of the Former Corporate Investors; and redeem an additional 32,463 shares of our Class A common stock issued upon exercise of options by certain option holders of GS Holdings. See Use of Proceeds. The underwriters expect to deliver securities entitlements with respect to the shares of Class A common stock against payment therefor in New York, New York on or about , 2018. Goldman Sachs & Co. LLC J.P. Morgan Morgan Stanley BofA Merrill Lynch Citigroup Credit Suisse SunTrust Robinson Humphrey Raymond James Sandler O Neill + Partners, L.P. Fifth Third Securities Guggenheim Securities The date of this prospectus is , 2018 Neither we nor the underwriters have authorized anyone to provide any information or to make any representations other than those contained in this prospectus or in any free writing prospectuses we have prepared. Neither we nor the underwriters take any responsibility for, nor do we or they provide any assurance as to the reliability of, any other information that others may give you. This prospectus is an offer to sell only the shares offered hereby, and only under circumstances and in jurisdictions where it is lawful to do so. The information contained in this prospectus is current only as of its date. Our business, prospects, financial condition and results of operations may have changed since that date. For investors outside the United States: We have not, and the underwriters have not, done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. Persons outside the United States who come into possession of this prospectus must inform themselves about, and observe any restrictions relating to, the offering of our shares of Class A common stock and the distribution of this prospectus outside the United States. See Underwriting. BASIS OF PRESENTATION In connection with the consummation of this offering, we will effect certain reorganizational transactions. Unless otherwise stated or the context otherwise requires, all information in this prospectus reflects the consummation of the reorganizational transactions, which we refer to collectively as the Reorganization Transactions, and the consummation of this offering. See Organizational Structure for a description of the Reorganization Transactions and a diagram depicting our organizational structure after giving effect to the Reorganization Transactions and the consummation of this offering. As used in this prospectus, unless the context otherwise requires, references to: we, us, our, the Company, GreenSky and similar references refer, unless otherwise indicated or the context otherwise requires: (i) prior to the consummation of the Reorganization Transactions and the consummation of this offering, to GS Holdings and GSLLC, as applicable, and their consolidated subsidiaries; and (ii) following the consummation of the Reorganization Transactions and the consummation of this offering, to GreenSky, Inc., the issuer of the Class A common stock offered hereby, and its consolidated subsidiaries, including GS Holdings and GSLLC. Bank Partners refers to federally insured banks that originate loans under the GreenSky program and any other lenders with respect to those loans. Continuing LLC Members refers to those Original GS Equity Owners and Original Profits Interests Holders who will continue to own Holdco Units after the Reorganization Transactions and who may, following the consummation of this offering, exchange their Holdco Units (with automatic cancellation of an equal number of shares of our Class B common stock) for shares of our Class A common stock or cash (based on the market price of the shares of Class A common stock), at our option (such determination to be made by the disinterested members of our board of directors), as described in Certain Relationships and Related Party Transactions Operating Agreement of GS Holdings. Economic interest means the right to receive any distributions or dividends, whether cash or stock, in connection with common stock. Exchange Agreement refers to the agreement pursuant to which the Exchange Agreement parties will have the right to exchange their Holdco Units (with automatic cancellation of an equal number of shares of Class B common stock) for shares of our Class A common stock on a one-for-one basis, subject to customary adjustments for stock splits, stock dividends and reclassifications, or for cash (based on the market price of the shares of Class A common stock), at our option (such determination to be made by the disinterested members of our board of directors). In the event that there are multiple Exchange Agreements, Exchange Agreement refers to all of the Exchange Agreements collectively. and servicing, and it can be easily expanded to additional industry verticals as we scale our business. We have cultivated strong relationships with manufacturers and trade associations (which we refer to as Sponsors) to amplify the reach of our technology, enabling us to efficiently and cost-effectively onboard large numbers of potential merchants underlying each Sponsor. We offer potential merchants a platform that they can adopt without friction including no upfront fees, capital expenditure, or onerous systems integration. When our merchants offer our solution at the point of sale, they provide our Bank Partners with cost-effective access to a vast number of consumers. This ecosystem of merchants, consumers and Bank Partners allows us to generate recurring revenues with minimal customer acquisition and marketing costs, resulting in attractive unit economics and strong margins. As we scale, network effects reinforce and support the growth of our ecosystem. As our solution becomes integral to the manner by which our merchants regularly drive sales, these merchants and their sales associates become more deeply engaged and frequent users. As more sales associates, merchants and consumers benefit from our solution and develop affinity for our brand, we believe they promote GreenSky to other merchants and generate further organic interest. As more merchants and consumers become satisfied users of the GreenSky program, we are able to grow volume to support relationships with new Bank Partners and negotiate larger commitments from our existing Bank Partners. We believe these network effects reinforce an attractive virtuous cycle, whereby larger bank commitments allow us to facilitate more financing, which in turn enables us to serve more merchants and consumers. We have a strong recurring revenue model built upon repeat and growing usage by merchants. We derive most of our revenue and profitability from upfront transaction fees that merchants pay us every time they facilitate a transaction using our platform. Thus, our profitability is strongly correlated with merchant transaction volume. The transaction fee rate depends on the terms of financing selected by a consumer. In addition, we collect servicing fees on the loan portfolios we service for our Bank Partners. We have achieved significant growth in active merchants, transaction volume, total revenue, net income and Adjusted EBITDA. Our low-cost go-to-market strategy, coupled with our recurring revenue model, has helped us generate strong margins. Transaction volume (which we define as the dollar value of loans facilitated on our platform during a given period) was $3.8 billion in 2017, representing an increase of 31% from $2.9 billion in 2016. Further, transaction volume was $1.0 billion in the three months ended March 31, 2018, representing an increase of 47% from $0.7 billion in the three months ended March 31, 2017. Active merchants (which we define as home improvement merchants and healthcare providers that have submitted at least one consumer application during the 12 months ended at the date of measurement) totaled 12,231 as of March 31, 2018, representing an increase of 52% from 8,048 as of March 31, 2017. Our total revenue grew 23% from $264 million in 2016 to $326 million in 2017, net income grew 12% from $124 million in 2016 to $139 million in 2017, and Adjusted EBITDA grew 21% from $131 million in 2016 to $159 million in 2017. For the period ended March 31, 2018, total revenue was $85 million, net income was $19 million and Adjusted EBITDA was $27 million. For information regarding our use of Adjusted EBITDA, a non-GAAP measure, and a reconciliation of Adjusted EBITDA to net income, the most comparable GAAP measure, see Prospectus Summary Summary Historical and Pro Forma Consolidated Financial Data. Exchange Agreement parties refers to the Continuing LLC Members and any other holders of Holdco Units (including Holdco Units issued upon exercise of warrants) that may become parties to the Exchange Agreement from time to time. Exchanging Members refers to those Original GS Equity Owners and Original Profits Interests Holders who will receive from us a portion of the net proceeds from this offering in exchange for Holdco Units in connection with the consummation of this offering. Former Corporate Investors refers to certain Original GS Equity Owners that will merge with and into one or more subsidiaries of GreenSky, Inc. in connection with the Reorganization Transactions. GreenSky program or program refers to a consumer financing and payments program that we administer for merchants and on behalf of, and at the direction and under the control of, our Bank Partners in connection with which we provide point-of-sale financing and payments technology and related marketing, servicing, collection and other services. GSLLC refers to GreenSky, LLC, the original operator of our Company s business and a wholly-owned subsidiary of GS Holdings. GS Holdings refers to GreenSky Holdings, LLC, which was formed as the holding company of GSLLC. Holdco Units refers to the single class of common membership interests of GS Holdings initially issued in connection with the Reorganization Transactions. Original GS Equity Owners refers to the owners of units of GS Holdings prior to the Reorganization Transactions. Original Profits Interests Holders refers to the owners of profits interests in GS Holdings prior to the Reorganization Transactions. The smaller Original Profits Interests Holders refers to certain of the Original Profits Interests Holders that will contribute Holdco Units to GreenSky, Inc. in exchange for shares of Class A common stock in connection with the Reorganization Transactions. Platform refers to our technology platform through which we administer the GreenSky program. Sponsors refers to manufacturers, their captive and franchised showroom operations, and trade associations with which we partner to onboard merchants. Tax Receivable Agreement refers to the agreement between GreenSky, Inc., GS Holdings and the TRA Parties, pursuant to which GreenSky, Inc. will agree to pay those parties 85% of certain cash tax savings, if any, in United States federal, state and local taxes that GreenSky, Inc. realizes or is deemed to realize in connection with the Reorganization Transactions, the offering-related transactions and any future exchanges of Holdco Units for our Class A common stock pursuant to the Exchange Agreement. TRA Parties refers to the equity holders of the Former Corporate Investors, the Exchanging Members, the Continuing LLC Members and any other parties receiving benefits under the Tax Receivable Agreement. We will be a holding company and will be the managing member of GS Holdings. Upon the consummation of this offering and the application of proceeds therefrom, our sole material asset will be an equity interest in GS Holdings. Following the formation of GS Holdings, effective August 2017 the equity holders of GSLLC exchanged their equity interests in GSLLC for equity interests in GS Holdings in proportion to their existing ownership interests. In accordance with Accounting Standards Codification ( ASC ) 805, Business Combinations, the exchange was accounted for as a common control transaction resulting in a change in the reporting entity. As the entities were always under common control, we retrospectively adjusted the historical consolidated financial statements of GS Holdings as if the common control transaction had occurred as of the earliest period presented. As such, GS Holdings is the predecessor of the issuer, GreenSky, Inc., for financial Our Market Opportunity We believe technology is transforming and streamlining commerce, reducing the traditional transaction frictions that merchants and consumers face and opening new payments and financing channels for banks. Payments and consumer financing are vast markets in the United States with $13.4 trillion of personal consumption expenditure in 2017, according to the U.S. Bureau of Economic Analysis, and $3.8 trillion of consumer loans outstanding at the end of 2017, according to the Federal Reserve System. We believe the following trends define the U.S. consumer finance market, and other core markets, today. Our Existing Markets Home Improvement and Elective Healthcare are Sizeable and Growing The home improvement market is large, fragmented and growing, representing approximately $315 billion in spending volume in 2017, according to the Joint Center for Housing Studies of Harvard University, although not all home improvement projects are of a size suitable for financing. Merchants in this market range from small, owner-operated contractors to large national brands and retailers. From our inception through March 31, 2018, our Bank Partners have used our program to extend over $12 billion of financing, primarily including loans for home improvement sales and projects involving, among other things, windows, doors, roofing and siding; kitchen and bath remodeling; and heating, ventilation and air conditioning units. We believe that spending on home improvement goods and services will continue to increase as the national housing stock ages and existing home sales increase. In 2016, we began expanding into elective healthcare, which, like the home improvement market, is a large, fragmented market featuring creditworthy consumers who make large-ticket purchases. We believe the elective healthcare market rivals in size the home improvement market in terms of annual spending volume, based on the number and cost of annual procedures performed. Elective healthcare providers include doctors, dentists, outpatient surgery centers and clinics providing orthodontics, cosmetic and aesthetic dentistry, vision correction, bariatric surgery, cosmetic surgery, hair replacement, reproductive medicine, veterinary medicine and hearing aid devices. We believe that because of population aging, innovations in medical technology and ongoing healthcare cost inflation, we are well-positioned to increase volume in the growing elective healthcare industry vertical. reporting purposes, and GreenSky, Inc. will be the audited financial reporting entity following this offering. This prospectus contains the following historical financial statements: GreenSky, Inc. Balance sheets as of December 31, 2017 and March 31, 2018, which reflect the initial capitalization of the entity by GSLLC. Separate statements of operations, changes in stockholders equity and cash flows have not been presented because GreenSky, Inc. has not engaged in any business or other activities except in connection with its formation and initial capitalization. GS Holdings. Because we will have no interest in any operations other than the operations of GS Holdings and its subsidiaries, including GSLLC, the historical consolidated financial information included in this prospectus is that of GS Holdings and its consolidated subsidiaries as if the common control transaction had occurred at the earliest date presented. The unaudited pro forma financial information of GreenSky, Inc. presented in this prospectus has been derived by the application of pro forma adjustments to the historical consolidated financial statements of GS Holdings and its subsidiaries included elsewhere in this prospectus. These pro forma adjustments give effect to the Reorganization Transactions and the consummation of this offering as if they had occurred on January 1, 2017, in the case of the unaudited pro forma consolidated statement of operations data, and as of March 31, 2018, in the case of the unaudited pro forma consolidated balance sheet. See Unaudited Pro Forma Consolidated Financial Information for a complete description of the adjustments and assumptions underlying the pro forma financial information included in this prospectus. Except as otherwise indicated, units and per unit data in this prospectus are presented after adjustment for the Forward Split (as defined under Organizational Structure ). Numerical figures included in this prospectus may have been subject to rounding adjustments. Accordingly, numerical figures shown as totals in various tables may not be arithmetic aggregations of the figures that precede them. All references to years in this prospectus, unless otherwise noted or indicated by the context, refer to our fiscal years, which end on December 31. MARKET, INDUSTRY AND OTHER DATA This prospectus contains statistical data and estimates, including those relating to market size, competitive position and growth rates of the markets in which we participate, that we obtained from our own internal estimates and research, as well as from industry and general publications and research, surveys and studies conducted by third parties. This information involves many assumptions and limitations, and you are cautioned not to give undue weight to any of this data or to these estimates. Industry publications, studies and surveys generally state that they have been obtained from sources believed to be reliable, although they do not guarantee the accuracy or completeness of such information. While we believe that each of these studies and publications is reliable, we have not independently verified market or industry data from third-party sources. We also believe our internal company research is reliable and the definitions of our market and industry are appropriate, though neither this research nor these definitions have been verified by any independent source. TRADEMARKS, SERVICE MARKS AND TRADE NAMES We own or license the trademarks, service marks and trade names that we use in connection with the operation of our business, including our corporate names, logos and website names. This prospectus also may contain trademarks, service marks, trade names and copyrights of other companies, which are the property of their respective owners. Solely for convenience, the trademarks, service marks, trade names and copyrights referred to in this prospectus are listed without the TM, SM, and symbols, but we will assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensors, if any, to these trademarks, service marks, trade names and copyrights. We continually evaluate opportunities for expansion into new industry verticals. For example, we have identified significant opportunities within verticals such as online retail, power sports, auto repair and jewelry. These markets are also large and fragmented, and they similarly feature attractive consumers who make large ticket purchases. Banks Seek Consumer Credit Exposure but are Not Well-Positioned to Lend at the Point of Sale We believe that banks seek attractive risk-adjusted yields and portfolio diversification through exposure to consumer credit. Banks traditional consumer lending advantages have included physical branch networks and trusted brands. However, our experience has demonstrated that consumers are increasingly comfortable using mobile devices to shop, make payments and manage finances. This has provided an opening at the point of sale for a new lending channel, but it is one that many banks to date have had a difficult time accessing. Legacy Financing Solutions are Less Attractive to Consumers Providers of installment loan financing to consumers traditionally have required paper-based applications for which consumers are required to gather burdensome amounts of information. Accordingly, there often has been a substantial time lag between a consumer deciding to apply for a loan and receiving approval, and then from approval to funding. Meanwhile, revolving credit alternatives such as credit cards are faster and more convenient but are characterized by high rates and restrictive credit limits for large-ticket purchases. Consequently, prime consumers tend to use credit cards as payment, rather than financing, solutions. Absent a simple, fast and cost-effective alternative to finance large-ticket purchases, many consumers resort to paying with cash, debit card or check, or avoiding purchases altogether. Our Ecosystem We have built an entrenched ecosystem of merchants, consumers and Bank Partners. Our platform enables each of these constituents to benefit from enhanced access to each other and to our technology, resulting in a virtuous cycle of increasing engagement and value creation. We believe our ecosystem grows stronger with scale. Value Proposition to Merchants Increased sales volume. Promotional payment plans and financing solutions make it easier for merchants to sell more goods and services. We have observed that our customizable solution helps merchants increase ticket size and conversion of sales. Seamless integration. We design our solution to deliver instant value, enabling our merchants sales associates to use their existing mobile devices to facilitate loans through our platform. We settle payments through a national credit card payment network or through the Automated Clearing House ( ACH ) network, meaning merchants that already accept these types of payments require no systems integration to adopt our platform. This frictionless onboarding makes consumer point-of-sale financing available for merchants of all sizes. Accelerated funding. Our merchants typically receive a sizeable portion of their funding faster than they would if they were paid in installments in a more traditional 30-day billing cycle. Superior customer service. We work creatively and collaboratively to design promotional financing offers that fulfill the needs of our merchants while continuing to improve our solution to appeal to their customers. Value Proposition to Consumers Superior experience. Because we are able to process an application and approve financing at the point of sale with limited burden on the consumer, our platform enables consumers to apply and buy in most cases in less than a minute, utilizing an intuitive mobile interface and paperless loan agreement. Promotional interest rates and terms. The majority of the loans facilitated by our platform carry promotional financing with deferred interest or low-rate terms, an attractive alternative relative to the rates on credit card balances. Enables larger purchases. By allowing merchants to market to their customers by focusing on the monthly cost of their purchases rather than the one-time upfront cash outlays, consumers are able to better budget for larger purchases. Preserves revolving credit availability. Rather than utilizing revolving credit for large purchases, which results in available credit lines being reduced, the loans we facilitate preserve credit card availability for everyday purchases. Value Proposition to Banks Consumer credit exposure at attractive risk-adjusted yields. We believe loans originated on our platform offer strong net interest margin, credit performance, and duration characteristics relative to banks other unsecured consumer lending opportunities. Nationally-diversified, small-balance loans. While many of our Bank Partners may traditionally focus on lending opportunities within their geographic footprints, our platform enables them to originate loans in all 50 states and at an average loan size of less than $10,000, thus creating an efficient mechanism to aggregate a granular, diversified national portfolio. Access to our proprietary technology and merchant network. Over the past decade, we have built and refined our technology platform to deliver significant value to merchants and consumers. We also have cultivated strong relationships with Sponsors and merchants, resulting in 12,231 active merchants as of March 31, 2018. We believe our Bank Partners would require significant time and investment to build such a technology solution and merchant network themselves. No customer acquisition cost and limited operating expenses. Our platform alleviates the need for our Bank Partners to bear any marketing, software development or technology infrastructure costs to originate loans. Robust compliance framework. We continually refine and upgrade our platform, risk management and servicing capabilities to meet the compliance, documentation and vendor management requirements of our Bank Partners and their regulators. Our Platform Our Business Model Efficient Go to Market Strategy Technology led, simple and affordable. Our digital offering enables an efficient, low-cost distribution model and offers frictionless setup at no upfront fee to merchants. Sponsor driven. We leverage our Sponsor relationships to access a large network of home improvement merchants at a minimal cost. Our track record demonstrates that Sponsors are attracted to working with GreenSky because they believe our promotional financing and payments platform is a valuable tool for their affiliated merchants. Organic and expansive. As merchants and their sales associates observe the competitive and other advantages that our program provides, we expect to experience greater demand. We have started to experience the impact of word-of-mouth marketing as sales associates who have used the program have begun working with new merchants and advocated joining the program. With over 43,000 sales associates having downloaded and used the GreenSky mobile application as of the date hereof, they are expected to serve as a strong organic customer acquisition channel. Visible and Recurring Revenue Streams Although we offer our technology at no upfront cost, we monetize through an upfront transaction fee every time a merchant receives a payment using our platform. This creates stable, recurring revenues, aligns our incentives with the interests of our merchants, and enables us to grow along with our ecosystem. In 2017, 93% of our transaction volume was generated from merchants that were enrolled on our technology platform as of December 31, 2016. In addition, our Bank Partners pay us a recurring servicing fee over the lives of their loans. Attractive Unit Economics Our low-cost go to market strategy, combined with our visible and recurring revenue model, provides for a fast payback period and strong dollar-based retention: Fast payback period. Payback period refers to the number of months it takes for the cumulative transaction fees we earn from merchants acquired during a given month to exceed our total sales and marketing spend in that same month. For merchant groups acquired during 2017 for which payback was completed, the average payback period was approximately five months. Strong dollar-based retention. We measure dollar-based retention on an annual cohort basis and define a cohort as the merchants that enroll for the first time on our platform within a given year. Our dollar-based retention calculation is adjusted to exclude Home Depot, which we count as a single merchant despite it having approximately 2,000 locations, and to exclude solar panel merchants, as we actively reduced our transaction volume with such merchants in 2017. Dollar-based retention refers to the transaction volume generated during a given year by each cohort of merchants relative to the transaction volume generated by that same merchant cohort in the prior year, and the calculation is adjusted for a two quarter seasoning period. Our dollar-based retention has exceeded 100% on our platform for each annual cohort in the past three years. We believe our fast payback period, combined with our strong dollar-based retention, indicates that our merchants will generate significant lifetime value for us relative to our cost of acquiring them. For illustration, we measured the cumulative transaction fee revenues generated by merchants acquired during 2014 through the period ended March 31, 2018 by aggregating the total transaction volume for each calendar year and for the three months ended March 31, 2018 for the 2014 merchant cohort and multiplying each of the respective periods total transaction volume by each period s respective average transaction fee rate. We compared this amount to our total sales and marketing costs in 2014, inclusive of compensation costs for sales and marketing personnel. Merchants acquired during 2014 have generated approximately 44 times more transaction fee revenues, to date, than our cost of acquiring them. Business Metrics We review a number of operating and financial metrics, including the following, to evaluate our business, measure our performance, identify trends, formulate plans and make strategic decisions. Year ended December 31, Three months ended March 31, 2017 2016 2015 2018 2017 Active Merchants Number 10,891 7,361 5,076 12,231 8,048 Percentage Increase 48% 45% 52% Transaction Volume Dollars (millions) $ 3,767 $ 2,882 $ 2,076 $ 1,033 $ 705 Percentage Increase 31% 39% 47% Loan Servicing Portfolio Dollars (millions) $ 5,390 $ 3,832 $ 2,561 $ 5,693 $ 4,018 Percentage Increase 41% 50% 42% Cumulative Consumer Accounts Number 1,565,166 1,077,400 692,428 1,709,364 1,181,230 Active Merchants. Since our transaction volume is a function of the size, engagement and growth of our merchant network, active merchants (as defined above), in aggregate, are an indicator of future revenue and profitability, although they are not directly correlated. As of March 31, 2018, we had 12,231 active merchants on our platform, representing an increase of 52% over 8,048 as of March 31, 2017. Transaction Volume. Transaction volume (as defined above) is an indicator of revenue and overall platform profitability and has grown substantially in the past several years. For the three months ended March 31, 2018, transaction volume was $1.0 billion, which represented an increase of 47% over $0.7 billion for the same period in 2017. Loan Servicing Portfolio. We define our loan servicing portfolio as the aggregate outstanding consumer loan balance (principal plus accrued interest and fees) facilitated and serviced by our platform at the date of measurement. Our loan servicing portfolio is an indicator of our servicing activities. As of March 31, 2018, we had a loan servicing portfolio of $5.7 billion, representing an increase of 42% over $4.0 billion as of March 31, 2017. Our average loan servicing portfolio was $5.5 billion for the three months ended March 31, 2018 and $3.9 billion for the same period in 2017. Cumulative Consumer Accounts. We define cumulative consumer accounts as the aggregate number of consumer accounts approved on our platform since our inception, including both existing and prior accounts. Although not directly correlated to revenue, cumulative consumer accounts is a measure of our brand awareness among consumers, as well as the value of the data we have been collecting from those consumers since our inception. We may use this data to support future growth by cross-marketing products and delivering potential additional customers to merchants who may not have been able to source those customers themselves. As of March 31, 2018, we had 1.7 million cumulative consumer accounts compared to 1.2 million as of March 31, 2017. Our Strengths and Competitive Advantages Differentiated Technology Platform and Customer Experience We believe that our proprietary, patent-pending technology is unique because it can deliver: Frictionless setup and multiple promotional financing alternatives for our merchants An intuitive, mobile-native user interface, and real-time apply and buy capabilities, for consumers Instant digital loan underwriting and distribution mechanisms for our Bank Partners We believe these capabilities will help us deepen our existing relationships and provide a competitive advantage in winning new business. Large, Entrenched Ecosystem As of March 31, 2018, we had 12,231 active merchants. From our inception through March 31, 2018, our Bank Partners have used our technology and network of merchants to provide over $12 billion of financing to approximately 1.7 million consumers. The powerful network effects of our platform strengthen this ecosystem, providing increasing value to GreenSky and each of our constituents as we scale. Trusted Relationship with our Bank Partners We have continually refined and upgraded our compliance, control, servicing and collections functions to meet the regulatory requirements, documentation and operating standards applicable to our Bank Partners, which include several of the largest banks in the United States, and to us. Asset-Light Model Our Bank Partners originate and own the loans that they facilitate through our platform. We derive a substantial majority of our revenue and profitability from upfront transaction fees every time a merchant facilitates a transaction and receives a payment using our platform. Attractive Consumer Profile Consumers using our platform live in all 50 states and typically are or have been homeowners with super-prime or prime credit scores. For all loans originated on our platform during the three months ended March 31, 2018, the credit-line weighted average consumer credit score was 769. Efficient Go To Market Strategy and Recurring Revenue Model Drive Strong Operating Leverage We leverage our proprietary technology and strong Sponsor relationships to efficiently access and onboard a large network of merchants. Our merchants, once acquired, allow us to reach an even larger universe of consumers and facilitate repeat transactions at very low cost relative to the transaction fee we receive. Coupled with the highly scalable technology anchoring our platform, we deliver strong operating margins. Our Growth Opportunities We have significant opportunities to expand our business. Our growth strategy focuses on the following efforts to continue to deliver value for our constituents and expand our ecosystem. Grow Our Merchant Community We intend to continue building relationships with large Sponsors and independent, high-sales volume merchants in our existing core markets. Expand into New Industry Verticals, Including Online Retail and Traditional Store-Based Merchants We recently expanded into the elective healthcare industry vertical and intend to explore other large, fragmented markets with creditworthy consumers who tend to make large-ticket purchases online and in-store. For example, online retail represents an attractive and low cost acquisition channel ripe for penetration that fits synergistically with our existing point-of-sale mobile platform. In 2017, domestic retail sales through the e-commerce platform exceeded $453 billion, growing by almost 16% over the prior year, according to the U.S. Census Bureau. We expect to seek out additional attractive industry verticals (whether online or in-store) based on our ability to efficiently go to market, grow market share, generate attractive risk-adjusted yields for our Bank Partners and continue to maximize value for our constituents. Widen Our Spectrum of Consumers and Funding Partners We continue to evaluate opportunities to assist our merchants to drive more sales by extending financing to a wider range of consumer credit profiles. To facilitate this extension of our platform, we may work with our Bank Partners to offer near-prime and non-prime financing, leveraging our technology platform to offer merchants and consumers a single application user experience that is designed to be superior to the user experience offered by our competitors in traditional second-look programs. We may expand our universe of Bank Partners to undertake these opportunities. Leverage Our Current Customer Base and Bank Partner Relationships to Deliver New Solutions We believe we have a substantial opportunity to cross-market value-enhancing solutions to consumers and to our merchants. We believe that, as the number of transactions we facilitate increases, the data we accumulate from our technology platform will enable us to broaden our monetization model and leverage this data to attract incremental customers whom merchants may not have been able to source otherwise. We also believe that we can leverage our platform to efficiently connect consumers, including existing retail customers of our Bank Partners, with merchant-driven promotions, expanding GreenSky s brand and driving incremental revenue in each of our industry verticals.
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+This summary highlights information contained elsewhere in this prospectus and does not contain all of the information you should consider before investing in shares of our Class A common stock. You should read this entire prospectus carefully, including the section entitled Risk Factors and the financial statements and the related notes thereto included elsewhere in this prospectus, before you decide to invest in shares of our Class A common stock. Vista Proppants and Logistics We are a leading in-basin provider of frac sand solutions for oil and gas well completions in prolific producing regions in Texas and Oklahoma. We offer leading E&P and oilfield service companies the high-quality, fine grade white sand that is most in demand in these basins with the cost advantages of a regional provider. Through our vertically integrated logistics network of 12 transload terminals throughout Texas and Oklahoma, and fleet of approximately 100 last-mile transport vehicles, our customers benefit from our mine-to-wellhead frac sand supply chain solutions and assured security of supply in the most active oil and gas regions of the United States, including the Permian Basin, Eagle Ford Shale and SCOOP/STACK. We mine all of our sand in Texas and believe we are the largest supplier of frac sand mined in the state, as measured by produced tonnage per year. We produce high-quality, fine grade 40/70-mesh, 100-mesh and 200-mesh sand. Marketed as Texas Premium White, our sand is comparable to sand mined in Wisconsin and Illinois, commonly referred to as Northern White, and meets applicable industry specifications and customer requirements for a large addressable market of wells. We believe the low overburden, homogeneous geology, and strategic location of our mines near sustainable water and power sources provide us with cost advantages over other Texas-based sand mines. The proximity of our mines and transload terminals to active demand centers enables significantly lower logistics costs as compared to Northern White sand providers because our costs of transportation (based on published tariff rates of Class I and shortline railroads) are lower than Northern White sand providers for proppant delivered into the basins we serve. Our mines are located near multiple rail lines, providing us with flexible logistics infrastructure and multiple rail delivery options into the major Texas and Oklahoma basins. We believe these advantages not only assure lower delivered cost, but also increase security of supply from mine-to-wellhead. The following table summarizes key characteristics of our mining facilities: Location Reserves Annual Production Capacity Logistics Access Basins Served Commencement of Operations Cresson, Texas 37.7 million tons (proven reserves) 64.9 million tons (probable reserves) 8% 40/70-mesh 79% 100-mesh 13% 200-mesh(1) 4.5 million tons BNSF Railway, Union Pacific Railroad, Texas Pac fico Transportation Railway, trucking Permian Basin, Eagle Ford Shale, SCOOP/STACK 2011 Tolar, Texas 12.4 million tons (proven reserves) 100% 100-mesh 1.0 million tons BNSF Railway, Union Pacific Railroad, Texas Pac fico Transportation Railway, trucking Permian Basin, Eagle Ford Shale, SCOOP/STACK November 2017 Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED AUGUST 13, 2018 PRELIMINARY PROSPECTUS Shares Vista Proppants and Logistics Inc. Class A Common Stock $ per share This is the initial public offering of shares of Class A common stock of Vista Proppants and Logistics Inc. We are selling shares of our Class A common stock. We currently expect the initial public offering price to be between $ and $ per share of Class A common stock. We have applied to list our shares of Class A common stock on the NASDAQ Global Select Market ( NASDAQ ) under the trading symbol VPRL. We have granted the underwriters an option to purchase up to additional shares of Class A common stock to cover over-allotments. We are an emerging growth company as defined under the federal securities laws and, as such, will be subject to certain reduced public company reporting requirements. See Summary Implications of Being an Emerging Growth Company. Investing in shares of our Class A common stock involves risks. See Risk Factors beginning on page 22. Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense. Per Share Total Initial public offering price $ $ Underwriting discounts and commissions $ $ Proceeds, before expenses, to Vista Proppants and Logistics Inc. $ $ Please see the section entitled Underwriting for a description of compensation payable to the underwriters. The underwriters expect to deliver the shares of our Class A common stock on or about , through the book-entry facilities of The Depositary Trust Company. Joint Book-Running Managers Citigroup Credit Suisse Simmons & Company International Energy Specialists of Piper Jaffray Co-Managers Cowen Jefferies Johnson Rice & Company L.L.C. Raymond James The date of this prospectus is , . Table of Contents sand from rail to truck and the implementation of frac sand logistics solutions focused on the transportation of sand from in-basin terminals to the wellhead; and (iii) Maalt Specialized Bulk, LLC, a Texas limited liability company ( Bulk ), was formed on June 30, 2011 and provides commercial trucking services through its fleet of commercial trucks, trailers and related assets, used in the transport of frac sand and related commodities. Lonestar is our predecessor for accounting purposes. On March 20, 2017, our pre-IPO owners completed a transaction in which Lonestar, MAALT and Bulk were acquired by a newly formed holding company, Vista OpCo. More specifically, Lonestar Prospects Holding Company, L.L.C. ( LS Holdings ), which was the 100% owner of Vista OpCo and Lonestar prior to the transaction, contributed its ownership interests in Lonestar to Vista OpCo in exchange for newly issued common units in Vista OpCo. Additionally, the owners of MAALT and Bulk, who also held a significant ownership interest in LS Holdings, contributed their ownership interests in each entity to Vista OpCo in exchange for newly issued common units in Vista OpCo. While LS Holdings, MAALT and Bulk had similar ownership prior to the transaction, they were not under common control. Finally, an affiliate of First Reserve Management, L.P. ( First Reserve ) purchased certain outstanding common units in Vista OpCo from existing owners and also made a cash capital contribution to Vista OpCo in exchange for newly issued common units in Vista OpCo. We refer to this transaction in this prospectus as the March 2017 Transaction. The sums or percentages, as applicable, of certain tables and charts included in this prospectus may not foot due to rounding. Unless indicated otherwise, the information included in this prospectus assumes no exercise by the underwriters of their option to purchase up to an additional shares of Class A common stock from us and that the shares of Class A common stock to be sold in this offering are sold at $ per share of Class A common stock, which is the midpoint of the price range indicated on the front cover of this prospectus. Table of Contents Location Reserves Annual Production Capacity Logistics Access Basins Served Commencement of Operations Winkler County, Texas 236.5 million tons (proven reserves) 38% 40/70-mesh 62% 100-mesh 5.0 million tons(2) Trucking Midland Basin and Delaware Basin (sub-basins of the Permian Basin) March 2018(2) (1) Historically, 200-mesh sand from the Cresson mine has been sold as an industrial product. (2) Operations at our West Texas mine commenced in March 2018, with 3.0 million tons of annual production capacity available as of the third quarter of 2018. We expect to expand annual production capacity at our West Texas mine to 5.0 million tons by the fourth quarter of 2018, assuming receipt of applicable permits. Our vertically integrated proprietary network of transload terminals and last-mile logistics capabilities enable us to provide our customers with complete mine-to-wellhead frac sand supply solutions. Our 12 existing transload terminals are strategically located in the most active U.S. basins, including the Permian Basin (six terminals), Eagle Ford Shale (two terminals) and SCOOP/STACK (two terminals). We utilize our transload terminals to deliver and store sand within trucking distance to the well site. To complement our network of transload terminals and complete our mine-to-wellhead capabilities, we own and operate a fleet of approximately 100 fit-for-purpose last-mile transport vehicles that can integrate with various wellsite storage solutions, including silo, box and portable conveyance solutions. Our vertically integrated operations allow us to provide our customers with greater control over their development plans, security of supply and efficient cost management of their hydraulic fracturing process. For the year ended December 31, 2017 and the six months ended June 30, 2018, we generated pro forma consolidated net income of approximately $ million and $ million, respectively, and pro forma Adjusted EBITDA of approximately $ million and $ million, respectively. See Unaudited Pro Forma Condensed Consolidated Financial Information. For the definition of Adjusted EBITDA and a reconciliation to its most directly comparable financial measure calculated and presented in accordance with GAAP, please read Summary Historical and Pro Forma Financial and Other Data. Our Competitive Strengths We believe that the following strengths position us to achieve our primary business objective of creating value for our stockholders: Pure play, low-cost provider of high-quality Texas Premium White sand: We believe our low logistics costs, combined with low-cost mining, make us among the lowest cost in-basin frac sand producers in Texas. We refer to production facilities located in Texas, Oklahoma, Arkansas and Arizona as regional. All of our mines are regional and located in Texas, enabling a low cost of delivery relative to our publicly traded competitors with Northern White sand exposure. Additionally, our regional focus provides us with expertise and market intelligence that enable us to identify risks and incorporate best practices specific to the development of fine grade regional sand deposits. We believe the following factors further differentiate us from other regional providers: Strategically Located Mines. The strategic location of our regional sand mines, owned transload terminals and access to multiple rail lines combined with our last-mile trucking capabilities enable our frac sand to be delivered in a low-cost manner to the most active plays in the Permian Basin, Eagle Ford Shale and SCOOP/STACK. Texas Premium White Sand. As opposed to traditional brown regional sands, substantially all of our reserves meet API specifications for crush resistance, sphericity, solubility and turbidity, where applicable. We believe these characteristics differentiate our sand from most other existing regional sand providers in Texas and compare favorably with Northern White sand mined in Wisconsin and Illinois. Table of Contents Table of Contents Fine Grade Reserves. Substantially all of our reserves consist of finer grain size sand, measured as either 40/70-mesh, 100-mesh or 200-mesh, which is fit-for-purpose for modern shale oil and natural gas hydraulic fracturing requirements and is in high demand relative to coarser grain sizes of frac sand. In addition, we believe we are one of the few commercially available sources for ultra-fine 200-mesh sand. Low-Cost Production. We refer to our mines as low cost because we believe the minimal overburden, abundant access to low-cost water, natural gas and electricity to process mined sand and homogeneous nature of the geology at our operating mines provide us with cost advantages over other Texas-based sand mines, enabling us to consistently produce sand at low costs. Advanced Logistics Infrastructure. Our transload rail terminals and in-basin mines are located close to customer wellheads, minimizing our customers exposure to the elevated truck rates and non-productive time ( NPT ) incurred during times of high trucking activity as a result of the 150- to 300-mile hauls from a typical regional mine operator. Vertically integrated mine-to-wellhead frac sand solutions provider: In order to be a low-cost provider of frac sand supply solutions, we believe that logistics networks have to be streamlined, logistics costs have to be managed efficiently and solutions have to be tailored to the specific characteristics and locations of individual wells. By owning and operating our vertically integrated logistics infrastructure, we are able to improve cost efficiency and reliability of mine origin and rail distribution pairings, mitigate volatility in transportation costs, ensure transloading availability and capacity, provide security of supply at delivered locations close to, or at, the wellhead and offer a full portfolio of last-mile solutions, including the delivery of sand to customers using last-mile proppant delivery solutions, such as pneumatic trucks, portable sand silos, portable wellsite conveyance systems and boxes. We have increased the number of our transload facilities to 12 as of the date of this prospectus from one in 2006, three in 2011 and five in 2013. Over the last five years we have transloaded approximately 15 million tons of frac sand and delivered approximately six million tons of frac sand to the wellsite in the aggregate. These benefits represent a cost and customer service advantage over other frac sand providers and have greatly contributed to our success securing business from E&P operators, who typically do not have the personnel or relevant expertise to manage the complex frac sand supply chain and frequently require one or more last-mile proppant delivery solutions to most efficiently hydraulically fracture their wells. We believe our large network of terminals, fleet of last-mile vehicles, 24/7 real time logistics reports, onsite well coordinators and final mile experience delivering sand to a wide range of our customer s customized proppant delivery solutions (including pneumatic trucks, portable silo, portable conveyance or boxes) would be difficult, costly and time-consuming for competitors to replicate. Our logistics assets also provide us with the ability to opportunistically generate revenue from handling of third-party sand and allow us to more quickly adapt to the growing challenges posed by an industry that is increasingly focused on high-intensity well completions. Strong contracted relationships with blue chip customer base: Our contracted customer base includes some of the largest and most active E&P operators in the United States as well as premier oilfield services companies. Sand has become an increasingly important component of the oil and gas production process, and our ability to deliver sand from the mine to the wellhead and ensure low-cost, in-basin supply has been a key factor in expanding our relationship with blue chip companies that have turned to us for our differentiated logistics capabilities, particularly E&P operators. Even during the recent industry downturn from late 2014 to mid-2016, our customers continued to purchase sand from us at their contracted volumes, evidencing the quality of our customer base and the strength of our relationships. As of July 31, 2018, approximately 85% and 65% of our frac sand volumes were contracted for 2018 and 2019, respectively. For the year ended December 31, 2017 and the six months ended June 30, 2018, nearly all of the frac sand volumes we sold were to customers utilizing our integrated services. Proven track record of profitably executing organic growth projects: We have a track record of successfully identifying and executing greenfield and brownfield growth projects. We have grown annual Table of Contents capacity at our Cresson facility from under 300,000 tons in 2011 to 1.6 million tons by the end of 2013, to 3.1 million tons by the end of 2015 and to 4.5 million tons as of December 31, 2017 by completing three brownfield expansion projects. We commenced operations at our Tolar mine and our mine in Winkler County, Texas, which we refer to as the West Texas mine, in November 2017 and March 2018, respectively. The addition of the Tolar and West Texas mines have increased our total production capacity to approximately 8.5 million tons annually as of the second quarter of 2018. We expect to expand annual production capacity at our West Texas mine to 5.0 million tons by the fourth quarter of 2018, assuming receipt of applicable permits, which will increase our total production capacity to approximately 10.5 million tons annually. With approximately 351.5 million tons of reserves, consisting of 286.6 million tons of proven reserves and 64.9 million tons of probable reserves, our operations have been designed to enable up to six million tons of additional capacity expansion, most of which would occur at our West Texas mine, including a two million ton capacity expansion at our West Texas mine that is anticipated to be complete by the fourth quarter of 2018, assuming receipt of applicable permits. Moreover, since inception we have constructed five transload terminals. We believe our demonstrated ability to identify and successfully develop high-quality sand reserves and transload sites in attractive basins will allow us to continue to opportunistically and profitably expand our business. Consistent profitability and financial flexibility through the cycle: Lonestar, our predecessor for accounting purposes, was able to consistently generate positive net income and Adjusted EBITDA throughout the recent industry downturn from late 2014 to mid-2016, while continuing to increase its sales volumes and expand its capacity and footprint. Our low fixed cost structure and integrated mine-to-wellhead frac sand solution offerings allowed us to operate profitably in 2016 on both a net income and Adjusted EBITDA basis, a period during which many of our publicly traded competitors were operating at or below breakeven Adjusted EBITDA levels and/or curtailed their operations. Our definition of Adjusted EBITDA may not be comparable to a similarly titled measure of other companies. See Management s Discussion and Analysis of Financial Condition and Results of Operations How We Evaluate Our Business Adjusted EBITDA. After giving effect to this offering, we expect to have approximately $ million of liquidity in the form of cash on hand and undrawn borrowing capacity under our $60.0 million line-of-credit, and we believe that we will have ample liquidity to pursue attractive initiatives. Highly experienced and aligned management and operating team: The members of our senior management team have considerable experience in constructing and operating frac sand mines and logistics assets, including frac sand-specific industry experience and last-mile logistics industry experience. In addition to our strong senior management team, we have an operating and technical team with experience and expertise in the best practices of regional sand mining, logistics and delivery solutions. Our management has experience operating a total of 18 mines, and our logistics team has an average of over 30 years of experience, which includes over 45 years of our Founders combined experience in trucking. We believe our management team is invested in our success through their significant economic interest in the equity of our company. Before giving effect to this offering, members of our senior management team beneficially own approximately 68% of our outstanding equity. See Principal Stockholders. Our Business Strategy We believe that we will be able to achieve our primary business objective of creating value for our stockholders by executing on the following strategies: Capitalize on the U.S. oil and gas market recovery and favorable secular trends: We believe we are well positioned to benefit from a continued recovery in U.S. land drilling and completion activity. In the Permian Basin and Eagle Ford Shale, where we have a significant presence and are a low-cost supplier of proppant, Spears & Associates projects proppant demand will grow by 265% and 231% from 2016 to 2018, respectively. Coras Research estimates that 82% of sand demand in 2018 will be demand for 40/70-mesh sand or finer, compared to 64% of total sand demand in 2016. Our sand mines consist entirely of fine grade sand (API spec 40/70-mesh or finer), which allows us to produce fine grade sand without also having to Table of Contents produce coarser grain sand, as is typical for many regional proppant providers in Texas that have less homogeneous reserves. As industry trends have shifted toward a preference for fine grade sand, and as proppant demand in the Permian Basin has come to represent an increasingly significant amount of total U.S. sand demand, Northern White sand sold as a percent of total proppant volume sold in the United States has decreased from 72% in 2014 to 63% in 2016, and is expected to account for only 52% in 2018 based on effective supply, according to Coras Research. We believe our ability to maintain our position as a low-cost supplier of proppant to the Permian, Eagle Ford and SCOOP/STACK basins while growing our proppant volumes to meet rising demand in our core markets will position us to capitalize on a continued recovery and enable us to increase our market share. Proppant Demand by Basin (Millions of tons) Source: Spears & Associates, December 2017. Execute greenfield and brownfield regional sand mine and transload terminal expansion: We intend to continue to expand our base of regional sand reserves and grow our network of transload terminals. We commenced operations at our Tolar and West Texas greenfield sand mines in November 2017 and March 2018, respectively. We are currently undertaking a two million ton capacity expansion at our West Texas mine and expect to expand annual production capacity at the mine to 5.0 million tons by the fourth quarter of 2018, assuming receipt of applicable permits. Additionally, we constructed a transload terminal in West Texas, which commenced operations in August 2017. We also constructed a rail-to-truck transload terminal in Gonzales, Texas during the first quarter of 2018. These projects all have access to critical utility infrastructure such as clean water, natural gas and electricity, the lack of which has the potential to create significant bottlenecks in Texas-based regional expansion projects. We take a disciplined and risk-adjusted, returns-focused approach to evaluating expansion projects, which are typically supported by contracted customer demand. Our strategic planning for greenfield expansion opportunities typically includes accommodating low-cost incremental brownfield expansions. In addition to our current projects and other identified greenfield opportunities in our strategic pipeline, we believe we have ample opportunity for continued brownfield expansion of our existing asset base to meet customer demand. Our purpose-built sand processing facilities were constructed in a manner that provides us with the ability to increase production by six million tons of proppant per year, most of which relates to a potential expansion of our West Texas facility, including a two million ton capacity expansion at our West Texas mine that is anticipated to be complete by the fourth quarter of 2018, assuming receipt of applicable permits. Table of Contents Capitalize on our ability to provide customer specific vertically integrated sand solutions: We plan to continue to leverage our fully integrated platform to provide our customers with a complete sand supply solution that manages the proppant supply chain from the sand mine to the wellhead. According to Coras Research, regional and in-basin sand supply is expected to represent 48% of total sand supply in 2018, up from 37% of total sand supply in 2016. We believe existing proppant logistics infrastructure will become increasingly constrained due to proppant demand outpacing logistics supply growth, road infrastructure limitations leading to congestion and increasing proppant loads at the wellhead. These factors are likely to impact each E&P operator differently. We believe we are well positioned to develop efficient, customized solutions as a result of our: established track record of delivering sand to E&P operators that have directly contracted for or purchased portable silo, portable conveyance or box solutions, allowing for a broad array of customizable solutions; diverse mix of flexible transload assets and regional in-basin, rail-focused sand supply assets that enable low-cost, in-basin deliveries while reducing truck loading times and exposure to individual railroads and road systems; ability to couple fully managed sand delivery from mine-to-wellhead with streamlined invoicing; and integrated reporting systems that enable real-time tracking of inventory. We believe our ability to offer a complete sand solution, including proppant delivery logistics, will continue to make us a proppant provider of choice to E&P customers seeking alternatives to oilfield service companies for proppant delivery logistics support and will allow us to increase the quantity of our sand that is sold at the wellhead. Develop and expand customer relationships while tactically approaching long-term contracts: We have established relationships with more than 33 E&P and oilfield service companies that have turned to us for proppant and proppant delivery logistics in our primary markets. Since the beginning of 2016, we have supplied proppant solutions to more than 10 new customers that we had not previously served. We actively work with customers to evaluate the benefits of finer grain sand and to develop a market for ultra-fine 200-mesh sand, for which we believe we are one of the few commercially available sources. We carefully manage the volume of proppant demand that we have contracted to provide to our customers in order to balance the benefits of earnings visibility with the benefits of exposure to increases in market pricing. Selectively pursue accretive acquisitions of high-quality complementary assets: We intend to remain a pure play regional proppant solutions company and benefit from the continued shift in proppant demand from Northern White sand to regional sand, and from coarser grain size to finer grain size. We may seek to bolster our existing business line through accretive acquisitions by strategically adding reserves and annual capacity to our proppant mining activities as well as adding assets to complement our existing logistics solutions. We will focus on opportunities that fit with our strategy of providing high-quality proppant at low cost of production and delivery. Additionally, we may evaluate opportunities to use accretive acquisitions to enter complementary business lines, such as the transportation of water, chemicals, consumables or other wellsite materials, that capitalize on our ability to provide superior wellsite logistics support. We plan to continue exploring opportunities to acquire additional assets in our current operational footprint as well as monitor opportunities to acquire and integrate operations in other active basins in our region. As a public company, we believe our increased access to capital and a publicly traded currency will enhance our ability to pursue accretive acquisition opportunities. Maintain financial flexibility: At the closing of this offering we expect to have approximately $ million of liquidity in the form of cash on hand and undrawn borrowing capacity under our $60.0 million line-of-credit. We plan to use and maintain this financial flexibility to opportunistically grow our business and effectively manage our business through potential changes in market conditions. Table of Contents Industry Trends Impacting Our Business Demand for our proppant and proppant logistics services is primarily driven by both the level of well completion activity by E&P companies and the intensity of those well completions, each of which has increased since the beginning of 2016. Depressed industry conditions in 2015 and 2016 resulted in decreased drilling and completion activities and proppant demand from the highs observed in 2014. However, recent increases in crude oil and natural gas commodity prices have driven significant increases in U.S. drilling and completion activity and proppant demand growth in excess of commodity price and rig count growth. We believe that we are well positioned to benefit from numerous secular trends that we expect to further increase demand for our product and service offering beyond a rising commodity price environment: E&P companies are focused on drilling and completion activities in core regions. Our frac sand logistics services are focused on the most active oil and gas regions in the United States, including the Permian Basin, Eagle Ford Shale and the SCOOP/STACK. Rystad Energy estimates the wellhead breakeven drilling and production price in both the Permian Basin and Eagle Ford Shale is expected to average $42 per barrel ( Bbl ) in 2018, which has driven favorable economic returns for E&P companies in these regions. These attractive economics are expected to drive continued drilling and completion investment in the Permian Basin, Eagle Ford Shale and the SCOOP/STACK. According to Spears & Associates, the Permian Basin and Eagle Ford Shale will account for 48% of overall active land rigs in the United States in 2020. Our in-basin mine and transload terminals allow us to serve an undersupplied fine mesh market in the Permian Basin, which accounted for approximately 60% of the proppant we sold during the first six months of 2018. Our network of transload terminals allows us to take a targeted approach to where we deploy our proppant to better serve our customers experiencing supply challenges in other undersupplied markets. Our Permian Basin activities support the highly active Midland Basin (West Texas) and Delaware Basin (West Texas and New Mexico). The Midland Basin and the Delaware Basin are expected to remain two of the most active regions in the United States, supported by considerable oil and natural gas reserves and drilling and completion activity by large E&P companies. In 2016, the United States Geological Survey released its assessment of the Wolfcamp shale in the Midland Basin, estimating that the formation contains 20 billion barrels of oil and 16 trillion cubic feet of natural gas. Additionally, a number of the largest E&P companies in the United States have consolidated acreage positions in the Midland and Delaware Basins, which indicates a continuing commitment to developing assets in the region and supports long-term forecasts for increased drilling and completion spending. Proppant demand per well continues to rise with advanced drilling and completion techniques. Over the past decade, E&P companies have increasingly utilized advanced drilling and completion techniques, such as horizontal drilling and hydraulic fracturing, in order to cost-effectively develop and produce hydrocarbon resources in North America. These advancements require drilling increasingly long laterals and more hydraulic fracturing stages per horizontal well, both individually leading to increased levels of proppant per well. According to Spears & Associates, the average lateral lengths of horizontal and directional wells will increase from approximately 7,300 feet in 2015 to approximately 8,700 feet in 2018. Additionally, according to Spears & Associates, the average number of fracturing stages per new U.S. horizontal well has increased from 23 stages per well in 2014 to 34 stages per well in 2016, and is expected to further increase to an average of 48 stages per new U.S. horizontal well in 2018. The combination of these trends is expected to result in a considerable increase in proppant demand per well, which Spears & Associates estimates to increase from an average of 4,700 tons per well in 2016 to an average of approximately 7,100 tons per well in 2018. The increase in proppant per well has stressed supply chains at transload terminals, last-mile trucking operations and well pads, requiring innovations that we believe would be difficult to implement without captive and controlled infrastructure solutions. These same factors were present in 2014 and resulted in increases in NPT for service companies and increased costs of well completions in North America. To reduce NPT, operators were forced to delay completion activity or implement new well completion designs based on what sand was available in-basin. Table of Contents Insufficient supply from regional providers to meet demand. Attractive economics for E&P companies in the Permian Basin, Eagle Ford Shale and the SCOOP/STACK are expected to drive increased levels of drilling and completion spending, creating considerable demand for proppant in Texas, Oklahoma and New Mexico. Spears & Associates estimates annual proppant demand in the Permian Basin and Eagle Ford Basin will increase from 14.3 million tons and 5.6 million tons in 2016 to 52.2 million tons and 18.6 million tons in 2018, respectively. Despite the approval of a number of West Texas-based sand mine permits, we believe several of these mines will face regulatory and environmental hurdles, lack access to sufficient water, electricity or natural gas supply, and/or contain high levels of overburden, which may increase the cost of proppant production or delay operations of those mines. We believe increased demand, limited supply and barriers to entry will drive a supply deficit for regional sand in close proximity to the Permian Basin, Eagle Ford Shale and the SCOOP/STACK. We believe we are well positioned to capitalize on this supply deficit because our delivered cost into the Permian Basin is significantly lower than the delivered cost of the lowest cost providers of proppant outside Texas. Increasing preference for integrated proppant logistics solutions. The increase in demand for proppant is expected to decrease the availability of in-basin proppant transload and last-mile logistics assets and increase the difficulty of transporting proppant from rail lines to the wellhead. As transloading and last-mile logistics availability becomes increasingly constrained, we believe proppant end users, primarily E&P operators that typically lack dedicated in-house proppant logistics teams, are increasingly focused on ensuring proppant supply to the wellhead due to the critical importance of proppant to their drilling and completion programs. E&P operators have relied on oilfield service companies and fully integrated proppant suppliers to provide security of proppant supply to the wellhead and manage the complexities surrounding proppant logistics. Additionally, as the proppant intensity of hydraulic fracturing has increased, proppant costs have increased. The high cost of proppant relative to the cost of hydraulic fracturing and total well cost has led E&P companies to place increased strategic importance on proppant supply. As a result, we believe E&P companies will seek alternatives to oilfield service companies in order to ensure proppant supply programs are met, providing competitive advantages to suppliers with fully integrated proppant mining and logistics capabilities. Increasing industry preference for finer grade sand. Before 2014, coarser grades of sand (API specification 20/40-mesh and API specification 30/50-mesh) were prevalent in oil and liquids rich regions while finer grades (API specification 40/70-mesh and 100-mesh) were typically more prevalent in gas rich regions. During the broader energy downturn from late 2014 to mid-2016, cost pressure and performance benefits realized by early adopters of micro-fracturing techniques encouraged more E&P companies to experiment with finer grades of sand. As the adoption of micro-fracturing techniques increased and E&P companies began to realize production benefits from using basin-specific mixes of sand, the demand for fine grade sand increased. Currently, E&P companies have shown a preference for finer grade sand as a result of the demonstrated success of leading E&P companies such as EOG Resources, which has publicly released production results that support the use of fine grade sand. Additionally, since 2013, in order to save costs and increase production, E&P companies have increasingly utilized slickwater fracturing fluid instead of crosslinked gel fracturing fluid, which has further bolstered the shift from coarse grade sand to fine grade sand. Due to the low viscosity of slickwater fluid, the coarser grades of sand traditionally used in crosslinked gel fluid cannot be as easily suspended or conveyed by slickwater fluid. Today, the vast majority of well completions are slickwater or a hybrid treatment with a slickwater portion. According to Rystad Energy, approximately 94% of U.S. horizontal well completions in the second quarter of 2018 utilized slickwater or hybrid fluids. As a result, E&P operators have increasingly shifted from coarser grades of sand to finer grades of sand to accommodate the use of slickwater fluid. We believe we are one of the largest producers of fine grade sand and the single largest producer of fine grade sand in Texas. We believe the trend toward finer grades of sand is likely to continue, creating a long-term demand for fine grade sand products, including ultra-fine 200-mesh, of which we believe we are one of only a few providers in the market. Table of Contents Our Sponsor First Reserve is a leading global private equity investment firm exclusively focused on energy. With nearly 35 years of industry insight, investment expertise and operational excellence, First Reserve has cultivated an enduring network of global relationships and raised approximately $31 billion of aggregate capital since inception. First Reserve has completed over 600 transactions (including platform investments and add-on acquisitions), creating several notable energy companies throughout the firm s history. Its portfolio companies operate on six continents, spanning the energy spectrum from upstream oil and gas to midstream and downstream, including resources, equipment and services and associated infrastructure. Investment Risks An investment in shares of our Class A common stock involves substantial risks and uncertainties that may adversely affect our business, financial condition and results of operations and cash flows. Some of the more significant challenges and risks relating to an investment in our company include, among other things, the following: Our business and financial performance depend on the level of activity in the oil and natural gas industries and the price of oil and natural gas. Increasing logistics costs, a lack of dependability or availability of transportation services or infrastructure and geographic shifts in demand could have a material adverse effect on our business. Our operations are dependent on our rights and ability to mine our properties and on our having renewed or received the required permits and approvals from governmental authorities and other third parties. The demand for frac sand fluctuates, which could adversely affect our results of operations. Our operations are subject to the cyclical nature of our customers businesses, and we may not be able to mitigate that risk. We may be adversely affected by decreased demand for the finer grade frac sand we produce or the development of either effective alternative proppants or new processes to replace hydraulic fracturing. Our proppant sales and supply chain solutions offerings are subject to fluctuations in market pricing. The construction of new assets or the expansion or modification of existing assets may not result in revenue increases and may be subject to regulatory, environmental, political, legal and economic risks, which could adversely affect our results of operations and financial condition. A large portion of our sales is generated by a limited number of customers, and the loss of, or a significant reduction in purchases by our largest customers could adversely affect our operations. Our operations are subject to operating risks that are often beyond our control and could adversely affect production levels and costs, and such risks may not be covered by insurance. Any adverse developments at our mines could have a material adverse effect on our business, financial condition and results of operations. We may face competition from additional in-basin sand mines. Inaccuracies in our estimates of the quantity and quality of our sand reserves could result in lower than expected sales and higher than expected costs. Our production process consumes large amounts of natural gas and electricity. An increase in the price or a significant interruption in the supply of these or any other significant raw material costs could have a material adverse effect on our business, financial condition or results of operations. Table of Contents Federal, state and local legislative and regulatory initiatives relating to hydraulic fracturing and the potential for related litigation could result in increased costs and additional operating restrictions or delays for our customers, which could cause a decline in the demand for our sand-based proppants and negatively impact our business, financial condition, and results of operations. We and our customers are subject to extensive environmental and health and safety regulations which impose, and will continue to impose, significant costs and liabilities. In addition, future regulations, or more stringent enforcement of existing regulations, could increase those costs and liabilities, which could adversely affect our results of operations. Vista Proppants and Logistics Inc. is controlled by our pre-IPO owners, whose interests may differ from those of our public stockholders. Upon the listing of our shares on NASDAQ, we will be a controlled company within the meaning of NASDAQ rules and, as a result, will qualify for, and intend to rely on, exemptions from certain corporate governance requirements. You will not have the same protections afforded to stockholders of companies that are subject to such requirements. Please see Risk Factors for a discussion of these and other factors you should consider before making an investment in shares of our Class A common stock. Implications of Being an Emerging Growth Company As a company with less than $1.07 billion in revenue during our most recently completed fiscal year prior to the initial filing date of the registration statement of which this prospectus forms a part, we qualify as an emerging growth company as defined in Section 2(a) of the Securities Act of 1933, as amended (the Securities Act ), as modified by the Jumpstart Our Business Startups Act of 2012 (the JOBS Act ). As an emerging growth company, we may take advantage of specified reduced disclosure and other requirements that are otherwise applicable generally to public companies that are not emerging growth companies. These provisions include: presentation of two years of audited financial statements rather than three years and the inclusion of two years of selected historical financial information rather than five years in this prospectus; reduced disclosure about our executive compensation arrangements; exemptions from the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved; and exemption from the auditor attestation requirement in the assessment of our internal control over financial reporting. We may take advantage of these exemptions for up to five years or such earlier time that we are no longer an emerging growth company. We will cease to be an emerging growth company upon the earliest of: (1) the end of the fiscal year following the fifth anniversary of this offering; (2) the last day of the first fiscal year during which our annual gross revenue was $1.07 billion or more; (3) the date on which we have, during the previous three-year period, issued more than $1.0 billion in non-convertible debt securities; or (4) the date on which we are deemed to be a large accelerated filer under the Securities Exchange Act of 1934, as amended (the Exchange Act ). We have elected to take advantage of the provisions permitting presentation of two years of audited financial statements and selected financial information and reduced disclosure regarding executive compensation arrangements in this prospectus, and we may choose to take advantage of some but not all of these reduced disclosure obligations in future filings. If we do, the information that we provide stockholders may be different than you might get from other public companies in which you hold stock. Table of Contents The JOBS Act permits an emerging growth company such as us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies. We are choosing to opt out of this provision and, as a result, we will comply with new or revised accounting standards as required when they are adopted. This decision to opt out of the extended transition period under the JOBS Act is irrevocable. Organizational Structure The March 2017 Transaction Our business has historically been conducted through three affiliated entities and their respective subsidiaries: (i) Lonestar, which is in the business of mining, processing, transporting and selling frac sand; (ii) MAALT, which specializes in the transloading of sand from rail to truck and the implementation of frac sand logistics solutions focused on the transportation of sand from in-basin terminals to the wellhead; and (iii) Bulk, which provides commercial trucking services through its fleet of commercial trucks, trailers and related assets, used in the transportation of frac sand and related commodities. On March 20, 2017, our pre-IPO owners completed a transaction in which Lonestar, MAALT and Bulk were acquired by a newly formed holding company, Vista OpCo. More specifically, LS Holdings, which was the 100% owner of Vista OpCo and Lonestar prior to the transaction, contributed its ownership interests in Lonestar to Vista OpCo in exchange for newly issued common units in Vista OpCo. Additionally, the owners of MAALT and Bulk, who also held a significant ownership interest in LS Holdings, contributed their ownership interests in each entity to Vista OpCo in exchange for newly issued common units in Vista OpCo. While LS Holdings, MAALT and Bulk had similar ownership prior to the transaction, they were not under common control. Finally, an affiliate of First Reserve purchased certain outstanding common units in Vista OpCo from existing owners and also made a cash capital contribution to Vista OpCo in exchange for newly issued common units in Vista OpCo. We refer to this transaction in this prospectus as the March 2017 Transaction. Lonestar is our predecessor for accounting purposes. Our Organizational Structure Following this Offering Following this offering, Vista Proppants and Logistics Inc. will be a holding company and its sole material asset will be a controlling equity interest in Vista OpCo. Vista Proppants and Logistics Inc. will operate and control all of the business and affairs and consolidate the financial results of Vista OpCo and its subsidiaries. Prior to the completion of this offering, the limited liability company agreement of Vista OpCo will be amended and restated to, among other things, modify its capital structure by reclassifying the interests currently held by our pre-IPO owners into a single new class of units that we refer to as LLC Units. We and our pre-IPO owners will also enter into an exchange agreement under which they (or certain permitted transferees) will have the right, from and after the completion of this offering (subject to the terms of the exchange agreement), to exchange their LLC Units for shares of our Class A common stock on a one-for-one basis, subject to customary conversion rate adjustments for stock splits, stock dividends and reclassifications. For a description of the amended and restated limited liability company agreement of Vista OpCo and the exchange agreement, please read Certain Relationships and Related Person Transactions. In addition, prior to this offering Vista Proppants and Logistics Inc. will acquire the LLC Units beneficially owned by one of our pre-IPO owners, which we refer to as the Merged Owner, in exchange for the issuance to the Merged Owner of an equal number of shares of Class A common stock. Immediately following this offering, the Merged Owner will own less than 2% of the issued and outstanding shares of Class A common stock of Vista Proppants and Logistics Inc. (assuming the exchange of all LLC Units held by our pre-IPO owners for shares of Class A common stock). Our pre-IPO owners will hold all of the issued and outstanding shares of our Class B common stock. The shares of Class B common stock will have no economic rights but will entitle each holder, without regard to the Table of Contents number of shares of Class B common stock held by such holder, to a number of votes that is equal to the aggregate number of LLC Units of Vista OpCo held by such holder on all matters on which stockholders of Vista Proppants and Logistics Inc. are entitled to vote generally. The voting power afforded to holders of LLC Units by their shares of Class B common stock will be automatically and correspondingly reduced as they exchange LLC Units for shares of Class A common stock of Vista Proppants and Logistics Inc. pursuant to the exchange agreement. If at any time the ratio at which LLC Units are exchangeable for shares of our Class A common stock changes from one-for-one as described under Certain Relationships and Related Person Transactions Exchange Agreement, the number of votes to which Class B common stockholders are entitled will be adjusted accordingly. Holders of shares of our Class B common stock will vote together with holders of our Class A common stock as a single class on all matters on which stockholders are entitled to vote generally, except as otherwise required by law. Table of Contents The simplified diagram below depicts our organizational structure immediately following this offering. For additional detail, see Organizational Structure. (1) Includes shares of Class A common stock that will be acquired by the Merged Owner immediately prior to this offering pursuant to certain reorganization transactions. Immediately following this offering, the Merged Owner will own less than 2% of the issued and outstanding shares of Class A common stock of Vista Proppants and Logistics Inc. (assuming the exchange of all LLC Units held by our pre-IPO owners for shares of Class A common stock). See Organizational Structure Blocker Merger. (2) The Class B common stock will provide each of our pre-IPO owners with a number of votes that is equal to the aggregate number of LLC Units held by such pre-IPO owner. Immediately following this offering, the Founders, our Sponsor, and the other pre-IPO owners will hold %, %, and % of the voting power in Vista Proppants and Logistics Inc., respectively. For additional information, see Organizational Structure Organizational Structure Following this Offering. (3) Immediately following this offering, the Founders, our Sponsor and the other pre-IPO owners will hold %, %, and % of the outstanding LLC Units of Vista OpCo, respectively. Vista Proppants and Logistics Inc. was incorporated in Delaware on July 19, 2017. Our principal executive offices are located at 4413 Carey Street, Fort Worth, Texas 76119 and our telephone number is (817) 563-3500. Table of Contents The Offering Class A common stock offered by Vista Proppants and Logistics Inc. shares (plus up to an additional shares at the option of the underwriters). Class A common stock outstanding after giving effect to this offering shares (or shares if the underwriters exercise in full their option to purchase additional shares of Class A common stock). Class A common stock outstanding after this offering assuming exchange of all LLC Units held by our pre-IPO owners shares (or shares if the underwriters exercise in full their option to purchase additional shares of Class A common stock). Voting power held by holders of Class A common stock after giving effect to this offering % (or % if the underwriters exercise in full their option to purchase additional shares of Class A common stock), of which % relates to shares of Class A common stock that will be acquired by the Merged Owner immediately prior to this offering pursuant to certain reorganization transactions. See Organizational Structure Blocker Merger. Voting power held by our pre-IPO owners as holders of all outstanding shares of Class B common stock after giving effect to this offering % (or % if the underwriters exercise in full their option to purchase additional shares of Class A common stock). Use of proceeds We estimate that the net proceeds to Vista Proppants and Logistics Inc. from this offering, after deducting estimated underwriting discounts, will be approximately $ (or $ if the underwriters exercise in full their option to purchase additional shares of Class A common stock). Vista OpCo will bear or reimburse Vista Proppants and Logistics Inc. for all of the expenses payable by it in this offering (excluding underwriting discounts and commissions), which we estimate will be approximately $ . Vista Proppants and Logistics Inc. intends to use all of the net proceeds from this offering (including from any exercise by the underwriters of their option to purchase additional shares of Class A common stock) to purchase a number of newly issued LLC Units from Vista OpCo that is equivalent to the number of shares of Class A common stock that we offer and sell in this offering, as described under Organizational Structure Offering Transactions. Vista Proppants and Logistics Inc. intends to cause Vista OpCo to use these proceeds, as described in Unaudited Pro Forma Condensed Table of Contents Consolidated Financial Information, to repay indebtedness and for general corporate purposes. See Use of Proceeds. Voting rights Each share of our Class A common stock entitles its holder to one vote on all matters to be voted on by stockholders generally. Our pre-IPO owners hold all of the outstanding shares of our Class B common stock. The shares of Class B common stock will have no economic rights but will entitle each holder, without regard to the number of shares of Class B common stock held by such holder, to a number of votes that is equal to the aggregate number of LLC Units held by such holder on all matters on which stockholders of Vista Proppants and Logistics Inc. are entitled to vote generally. Holders of shares of our Class B common stock will vote together with holders of our Class A common stock as a single class on all matters on which stockholders are entitled to vote generally, except as otherwise required by law. See Description of Capital Stock Common Stock Class B Common Stock. Dividend policy The declaration, amount and payment of any future dividends will be at the sole discretion of our board of directors. Our board of directors may take into account general economic and business conditions, our financial condition and operating results, our available cash and current and anticipated cash needs, capital requirements, contractual, legal, tax and regulatory restrictions and implications on the payment of dividends by us to our stockholders or by our subsidiaries (including Vista OpCo) to us, and such other factors as our board of directors may deem relevant. Vista Proppants and Logistics Inc. is a holding company and has no material assets other than its ownership of Vista OpCo. We intend to cause Vista OpCo to make distributions to us in an amount sufficient to cover our taxes and obligations under the tax receivable agreement, as well as any cash dividends declared by us. If Vista OpCo makes such distributions to us, the other holders of LLC Units will be entitled to receive equivalent distributions. Exchange rights of holders of LLC Units Prior to this offering we will enter into an exchange agreement with our pre-IPO owners so that they may, from and after the completion of this offering (subject to the terms of the exchange agreement) exchange their LLC Units for shares of Class A common stock of Vista Proppants and Logistics Inc. on a one-for-one basis, subject to customary conversion rate adjustments for stock splits, stock dividends and reclassifications. See Certain Relationships and Related Person Transactions Exchange Agreement. Tax receivable agreement Future exchanges of LLC Units for shares of Class A common stock are expected to result in increases in the tax basis of the tangible and intangible assets of Vista OpCo. These increases in tax basis may increase (for tax purposes) depreciation and amortization deductions Table of Contents and therefore reduce the amount of tax that Vista Proppants and Logistics Inc. would otherwise be required to pay in the future. Prior to the completion of this offering, we will enter into a tax receivable agreement with our pre-IPO owners that provides for the payment by Vista Proppants and Logistics Inc. to exchanging holders of LLC Units of 85% of the benefits, if any, that Vista Proppants and Logistics Inc. realizes, or in certain cases is deemed to realize, as a result of these increases in tax basis and of certain other tax benefits related to such exchanges, including tax benefits attributable to payments under the tax receivable agreement. See Certain Relationships and Related Person Transactions Tax Receivable Agreement. Directed share program The underwriters have reserved for sale, at the initial public offering price, up to shares of our Class A common stock being offered for sale to our directors, officers and certain employees and other parties with a connection to us. We will offer these shares to the extent permitted under applicable regulations. The number of shares available for sale to the general public in this offering will be reduced to the extent these persons purchase reserved shares. Any reserved shares not purchased will be offered by the underwriters to the general public on the same terms as the other shares. Please read Underwriting.
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. This summary does not contain all of the information you should consider before investing in our common stock. You should read this entire prospectus carefully, especially the "Risk Factors" section of this prospectus and our financial statements and the related notes appearing at the end of this prospectus, before making an investment decision. Formed in 2016, SharedLABS, Inc., a Delaware corporation, is a parent company that operates within the information technology industry together with its subsidiaries. Except as otherwise indicated, references to "SharedLABS," "we", "us," "our," and the "Company" refer to SharedLABS, Inc. and its direct and indirect subsidiaries, collectively: iTech US, Inc., a Virginia corporation; iTech IT Solutions Private Ltd., a company organized under the laws of India; SmartWorks, LLC, a New Jersey limited liability company; and ExoiS, Inc., a California corporation. SHAREDLABS, INC. Company Overview SharedLABS is an information technology ("IT") services company. We enable businesses and organizations to radically adapt as they harness our extensive experience with next-generation technologies like cloud hosting, big data analytics, artificial intelligence ("AI"), and the Internet of Things ("IoT"). Rather than offer a "one size fits all" approach, through strategy, consulting, design and implementation, we tailor our professional services to each client s needs to provide customized IT solutions, allowing them to make the absolute most of our services. We complement our professional services with project management, managed services, maintenance and support; in other words, we shepherd each and every product through its entire lifecycle. Even with this care, we remain a flexible organization that is able to predict and capitalize upon new technologies. We believe that our ability to straddle the present and the future sets us apart from our competitors. Market Overview The IT services market grew rapidly and continues to expand. According to International Data Corporation ("IDC"), the market grew from $805 billion to $953 billion between 2012 and 2016 in the U.S. and in 2016 it surpassed $3.4 trillion globally. If current growth forecasts prove accurate, the industry will pass the $3.5 trillion mark in the coming year. The U.S. market represents 28% of the worldwide total, or slightly over $1 trillion. The next largest market is the Asia-Pacific region, which encompasses Japan, China, Australia, India, and surrounding countries. The share of the Asia-Pacific region has increasingly accounted for a larger share of the global IT pie. This has mostly come at the expense of a Western Europe market growing at a slower rate and thereby reducing its proportional share over time. Once valued primarily for its operational support, IT is now a source of competitive advantage. Leading enterprises use IT to accelerate time-to-market while increasing productivity and improving customer service. As these services have become more essential, they have also become more costly, causing many companies to outsource. Engaging service providers to improve business performance, beyond reducing costs, can be challenging. The rate of technological change, the impact of mergers and acquisitions and a historical approach to building and managing stand-alone, legacy IT systems and applications have led to fragmented IT environments, which are complex, inefficient and costly to maintain and operate. Further, the breakneck speed of market shifts strains the abilities of most companies to keep pace. Organizations are actively seeking IT service providers that offer cost-effective, customized solutions and a delivery model that is both tailored to their specific needs and is also based on industry standards, which allows them to address these complex challenges. EXPLANATORY NOTE This Registration Statement (the "Registration Statement") contains one prospectus (the "Prospectus") in connection with a public offering of up to 1,000,000 shares of our common stock at an assumed initial public offering price between $5.00 and $7.00 per share and one prospectus to be used in connection with the potential resale by certain selling stockholders (the "Selling Stockholders") of an aggregate of 1,137,250 shares of common stock underlying warrants held by the Selling Stockholders (the "Selling Stockholder Prospectus"). The Prospectus and the Selling Stockholder Prospectus are identical in all respects except for the alternative pages for the Selling Stockholder Prospectus included herein which are labeled "Alternate Page for Selling Stockholder Prospectus". The Selling Stockholder prospectus is substantially identical to the Prospectus, except for the following principal points: they contain different outside and inside front covers they contain different Offering sections in the Prospectus Summary section they contain different Use of Proceeds sections the Capitalization and Dilution sections are deleted from the Selling Stockholder Prospectus a Selling Stockholder section is included in the Selling Stockholder Prospectus and the Plan of Distribution Sections are different. The Company has included in this Registration Statement, after the financial statements, a set of alternate pages to reflect the foregoing differences of the Selling Stockholder Prospectus as compared to the Prospectus. Market Opportunity According to a March 2017 report published by The Business Research Company titled "U.S. IT Services Market 2017" (the "Report"), the IT services industry in the U.S. is expected to grow from $953 billion in 2016 to $1.2 trillion in 2020 at a compound annual growth rate (CAGR) of 5.1%. According to the Report, much of this growth will be spurred by advances in technology, internet and media penetration, specialized research and development and digitalization. For example, advances in AI, IoT and wearable technologies are driving the demand for cloud services, software services and hardware support services. As a result, the proliferation of these technologies in a wide range of industries, running the gamut from manufacturing to healthcare, electronics to retail, is further driving the demand for IT services. E-Commerce companies use AI and cloud computing to minimize their operational costs. As these technologies become ever-more pervasive, so do the security risks associated with them. There is increasing demand for more robust cyber security services. Market and Offering Segments Centered on performance, reliability, security, flexibility and cost efficiency, we offer a client-centric portfolio of services which we believe enables clients to attain their data, network, applications and workforce objectives in both managed and outsourced environments. We focus on four solution areas: (i) software & applications; (ii) data & analytics; (iii) cloud; and (iv) web & digital. We offer our solutions in a service delivery framework, which includes consulting, managed services and outsourcing, focusing our strengths in such areas as business process improvement, project management and business strategy. We offer our solutions through a framework of broad and evolving sets of building block capabilities built upon our service platforms, automation systems, and tools. These building blocks can be transformed into comprehensive solutions that our clients can easily consume. We design and develop our building block capabilities, whenever possible, so as to afford our clients the ability to customize and employ our solutions in as many ways as possible while also maintaining high standards of quality in our service delivery. Software & Applications. This offering includes writing and maintaining the source code, but in a broader sense, it includes all that is involved between the conception of the desired software through to the final manifestation of the software; and may include research, prototyping, modification, reuse, re-engineering, maintenance, or any other activities that result in software products. We offer custom software development, maintenance and management, and consulting services which enable our clients to pull value from the technologies in their business, at every stage of their product development lifecycle, from concept, discovery, and requirements definition, to ongoing post-launch enhancement. We strive to design our organization for flexibility and align with our clients needs. With a refined expertise across multiple verticals and solutions, we believe we will be able to drive success and minimize risk regardless of size or scope. Our business and technology engineers help businesses define and validate a concept, set clear expectations, and identify potential bottlenecks. Our unique approach involves a number of factors, such as: (i) market and competitive analysis; (ii) feasibility study and proof of concept; (iii) discovering new business and monetization models; (iv) business and technology innovation; (v) multi-platform strategy development; (vi) creating security and scalability roadmaps; and (vii) selecting a suitable technology stack, which is a set of components or layers in software that provides users broad functionality. We believe usability is a paramount. From the outset, we drive user adoption and satisfaction for our clients products with an eye for future growth. We perform user-centric analysis to align the overall experience with each of our clients business goals and user needs, and help our clients make well-informed product decisions. Our user interface approach, which we believe to be deeply intuitive, involves the following: (i) user journey mapping; (ii) identifying technical, business, or usage constraints; (iii) wireframing, mocking up, and prototyping; and (iv) setting usability metrics. Through our design and development, we aim to provide our clients a lightning-fast, pixel-perfect user interface approach that delivers consistency in user experience across all platforms. Through the combination of engineering and quality assurance ("QA"), we believe we can further reduce costs and time-to-market while also building a product that is functional, scalable and secure. We believe our QA and testing capabilities are underpinned by a robust and flexible back-end, enterprise-grade information security, DevOps-powered continuous delivery process, a fully-fledged automation framework for web, mobile, and application programming interface testing, and end-to-end manual testing, including functional, integration, regression, and user interface. Cloud. Our cloud services include access to servers, storage, databases and a broad set of application support services. These services are managed by our teams of highly competent engineers both onsite and offsite with our clients. Our offering set also includes data processing and hosting services, data management and disaster recovery. Coupled with what we believe to be best-in-class tools, we enable cloud software solutions to move manage and recover data. Using virtualization technologies, we offer (i) Infrastructure–as–a–Service ("Iaas") which includes include hosted hardware, software, servers, storage and other infrastructure components for their users. These components include networking features, computer hardware, space for data storage, system maintenance, backup and resiliency planning. IaaS offers the highest level of flexibility and management control to the user; (ii) Platform–as–a–Service ("PaaS"), which refers to a cloud-based solutions set which delivers hardware and software tools for compute and storage needs, wherein we support the complete lifecycle of application or software development without the need for clients to manage the underlying infrastructure;, and (iii) Software as a Service ("SaaS") which provides our clients access to their business applications, managing access to the application, its security, availability, and performance in a fully managed consumption based model. Web & Digital. Our web & digital services offerings include enterprise-level website design and development to various clients, including companies ranging from small to global enterprise, at affordable rates. By leveraging our best developers, search engine optimization ("SEO") specialists, social media managers, and engagement experts to deliver what we believe to be premium products and the most advanced digital marketing services in the industry, we believe we serve an increasingly important function in our clients lifecycle. We offer a full suite of web products, including e-commerce, digital strategy consulting, security, integration storage management and Customer Relationship Management ("CRM"). Our digital services offerings include web design, SEO, conversation rate optimization, social media and reputation management, as well as email, pay-per-click, and content marketing. Data & Analytics. Using a variety of service engagements options, from exploratory assessments to analytics infrastructure deployment, our data sciences offerings are built to help our clients (i) develop data science capabilities, (ii) survey and assess their enterprise data landscape, or (iii) help our clients organizations harness the power of advanced analytics, based on thorough data mining and analysis. By leveraging our capabilities in business intelligence, data analytics, data warehousing, and big data and also employing our data analytics tools, we believe we are well positioned to offer our clients the ability to use analytics to identify and prioritize issues in an easy-to-use, contextually relevant and massively scalable manner. The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION DATED OCTOBER 10 , 2018 1,000,000 Shares Common Stock SharedLABS, Inc. This is a firm commitment initial public offering of 1,000,000 shares of common stock of SharedLABS, Inc. No public market currently exists for our shares. We anticipate that the initial public offering price of our shares will be between $5.00 and $7.00 per share. Prior to this offering, there has been no public market for our common stock. We have applied to list our shares of common stock for trading on The Nasdaq Capital Market under the symbol "SHLB." We will not conduct this offering unless our shares are quoted on a national exchange or marketplace. No assurance can be given that our application will be approved. We are an "emerging growth company" under the Jumpstart our Business Startups Act of 2012, or JOBS Act, and, as such, may elect to comply with certain reduced public company reporting requirements for future filings. Investing in our common stock involves a high degree of risk. This Prospectus covers our initial public offering of 1,000,000 shares of our common stock. We are concurrently conducting a resale offering pursuant to which certain selling stockholders are offering an aggregate of 1,137,250 shares of our common stock underlying warrants held by such selling stockholders, and the price per share of each could differ. If our shares are not listed on The Nasdaq Capital Market, we will not proceed with this secondary offering. Investing in our common stock is highly speculative and involves a high degree of risk. See "Risk Factors" beginning on page 11 of this prospectus for a discussion of information that you should consider before investing in our securities. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense. Per Share Total(2) Public offering price $ $ Underwriting discounts and commissions(1) $ $ Proceeds to us (before expenses) $ $ (1) Does not include a non-accountable expense allowance equal to 1.0% of the gross proceeds (excluding any proceeds from the exercise of the over-allotment option) of this offering payable to ThinkEquity, a division of Fordham Financial Management, Inc. ("ThinkEquity"). See "Underwriting" on page 82 for a description of compensation payable to the underwriters. (2) Assumes no exercise of the over-allotment option to purchase shares we have granted to the underwriters as described below. We have granted the representative of the underwriters an option to purchase up to 150,000 additional shares of common stock from us at the public offering price, less the underwriting discounts and commissions, within 45 days within the date of this prospectus to cover over-allotments, if any. If the representative of the underwriters exercises the option in full, the total underwriting discounts and commissions payable will be $ , and the total proceeds to us, before expenses, will be $ . The underwriters expect to deliver our shares to purchasers in the offering on or about , 2018. ThinkEquity a division of Fordham Financial Management, Inc. The date of this prospectus is , 2018 Through our increasing focus on emerging technologies in cloud and data sciences, we believe we are well positioned to benefit from the rapid growth in demand for these technologies and capabilities across the industry and expect our business mix to continue to include more in these areas. Within our four solutions areas, we offer customers enterprise-class solutions that are critical to driving digital transformation and improving their business capabilities. Examples of our offerings include proprietary solutions designed to offer highly scalable storage for both structured and unstructured data while maintaining chain of custody across multiple clouds, IoT, data analytics and reporting, hybrid and multi-cloud, and enterprise digital. These solutions are enabled by our expertise in foundational technologies, built upon our investments in data, networks, and applications capabilities. We develop and maintain long-term client relationships through our localized sales and delivery resources of approximately 500 team members based in over 40 states across the United States as of July 2018. As a strategic partner and trusted advisor to our clients, we provide the expertise to create new or modernize legacy software and applications, implement new solutions, as well as optimize and better leverage existing IT resources. We provide customized strategy, consulting, design, development, integration, and lifecycle management through our team members in the US, Canada, and India, enabling us to deliver superior results at market leading prices for our clients. Our client base is diversified across individual customers and industry verticals. For the six-month period and year ended June 30, 2018 and December 31, 2017, our top 15 clients accounted for 37.4% and 38.2% of our total revenue, respectively, with revenues in multiple verticals including healthcare, technology, government, financial services, education, and professional services as our largest categories. We believe that our diversified client profile is a key driver of our ability to generate growth across different economic and technology cycles. The SharedLABS, Inc. Method Our Embedded Service Partner, or ESP, methodology allows clients to see around the corner. Through the integration of capabilities and strategy, ESP helps managers and employees lower costs and expedite change. We provide actionable intelligence, based not on corporate historical experiences but rather on shifts in the intelligent quotient. Market drivers are difficult to read at times, as is the influence of personality and interest trends that are not yet forged. ESP provides the extrasensory pathway of knowledge that guides our clients to achieve their goals. Our Solutions Our ESP method, broad range of IT services, global delivery model and innovative framework approach enable us to deliver IT solutions to clients that enhance business performance, accelerate time-to-market, increase productivity and improve customer service. Our wide sales, operations and delivery networks, spanning the United States, Canada and India, afford us powerful resource capabilities that uniquely position us to provide solutions in every time zone. We reduce the effort and costs required to maintain and develop IT applications on an ongoing basis by streamlining and consolidating our clients applications. We believe that our solution provides our clients with the consultative and high-value services associated with large consulting and systems integration firms and the cost-effectiveness associated with offshore IT outsourcing firms. It is the best of both worlds. Our consulting services help accelerate business outcomes, drive innovation, navigate change and enable transformation, while delivering superior results to companies ranging in size from medium to large enterprise in more than 15 industry verticals across all business functions. Our digital transformation and innovation solutions empower companies to accelerate business growth by reimagining the consumer experience, and creating lasting value while our differentiated solutions in software, infrastructure, mobile, analytics, and security enable improvement through operating efficiencies and automation. Growth Strategies Organic Growth We believe the diverse and fragmented nature of the global IT Services market provides us with a significant opportunity to further grow our client base. We built and will continue to build a dedicated business development team focused on generating engagements with new clients. At the same time, we will continue to manage our current client relationships. We can offer prospective clients our experience handling complex technologies and vertical-specific challenges, making us a compelling choice for those seeking an IT solutions partner. Our industry solutions team works closely with our marketing group, industry and technology practice groups and research and development teams to develop new, highly-differentiated services. Through our international team of engineers, we maintain institutional knowledge and service capabilities that are adaptable, scalable and transferrable. We are constantly improving our offerings and developing new services and solutions for our clients, which we expect to drive incremental growth from existing and new clients. We plan to enhance assessment and consultative services with more "lean" engagements which we believe will drive annuity revenues as well as short-term high-margin engagements. We will also up-sell higher value services (driving stronger margins and reuse by developing open standard or easy integration into current modules) to existing customers. We will sell higher-value, greater volume (applications) services to new customers based on re-use and app store concept. We will also offer services from our new hype digital product line to broaden our reach outside of IT. TABLE OF CONTENTS Page PROSPECTUS SUMMARY 1 THE OFFERING 7 SUMMARY SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA 8 RISK FACTORS 11 SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS 30 STATEMENT REGARDING INDUSTRY AND MARKET DATA 30 USE OF PROCEEDS 31 DIVIDEND POLICY 32 CAPITALIZATION 33 DILUTION 34 DETERMINATION OF OFFERING PRICE 35 MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 36 BUSINESS 55 MARKET AND INDUSTRY DATA 66 MANAGEMENT 67 EXECUTIVE COMPENSATION 72 CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS 73 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 74 DESCRIPTION OF CAPITAL STOCK 75 SHARES ELIGIBLE FOR FUTURE SALE 76 CERTAIN MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS 78 UNDERWRITING 82 LEGAL MATTERS 90 EXPERTS 90 WHERE YOU CAN FIND ADDITIONAL INFORMATION 90 INDEX TO FINANCIAL STATEMENTS F-1 You should rely only on the information contained in this prospectus or contained in any free writing prospectus we may authorize to be delivered or made available to you. Neither we nor any of the underwriters have authorized anyone to provide any information or make any representations other than those contained in this prospectus or in any free writing prospectus. We take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. We are offering to sell, and seeking offers to buy, shares of common stock only in jurisdictions where offers and sales are permitted. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of the common stock. Our business, financial condition, results of operations, and prospects may have changed since such date. Through and including , 2018 (the 25th day after the date of this prospectus), all dealers effecting transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to a dealer s obligation to deliver a prospectus when acting as an underwriter and with respect to an unsold allotment or subscription. For investors outside of the United States: Neither we nor any of the underwriters have done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. You are required to inform yourselves about, and to observe any restrictions relating to, this offering and the distribution of this prospectus outside of the United States. See "Underwriting" on page 82. Our efforts to develop new client relationships are supported by our existing referenceable client base. We will endeavor to increase the number of deals with more than one offering, while further developing our existing industry expertise. At the same time, we will also familiarize ourselves with the developments in adjacent industries. Maintaining a firm grasp on the state of our industry and those related to it further cements our position as a thought leader, whose authority attracts both new clients and talent. At the same time, we will forge new alliances even as we further develop our current pacts. These relationships will prove especially important as we further expand into new geographic areas. Strategic Acquisitions Planned acquisition targets include sector-specific technology companies with the objective of augmenting our current capabilities with feature-rich, third-party solutions. The decision-making process includes, but is not limited to, weighing time, effort and approximate cost to develop certain technologies in-house, versus acquiring or merging with one or more entities that we believe have a proven record of successfully developing a technology sub-component. Additional criteria include evaluating the potential acquisition target s customer base, stage of technology, merger or acquisition cost as compared to market conditions. We expect to continue to consider strategic acquisitions that can increase our technology expertise and geographic presence. We believe that our mergers and acquisition ("M&A") strategy enhances and augments all of our growth avenues, including gaining capabilities, cross-selling our existing clients and entering new markets and verticals. Since our inception in 2016, we completed two acquisitions and successfully integrated three companies, capitalizing on our scale, client relationships and vendor partnerships to drive margin expansion post-acquisition. We have been successful at integrating our acquisitions and at retaining key management talent. These acquisitions are complementary with new office openings and the organic expansion of our presence in existing geographic markets. We expect to continue to selectively pursue acquisition opportunities within the highly fragmented IT solutions market, with a focus on enhancing our solutions offerings and geographic presence. We plan to align our approach to creating software and applications, fielding and developing talented engineers, and solving technical problems to meet their client s business needs; and to create and field a suite of digital, security, managed, and cloud IT services offerings which increase monthly recurring revenue streams while expanding wallet share in existing clients and bringing on new clients. With this execution plan, management believes that they can win more work, at a lower cost, and drive scale that allows them to offer the best service, at the lowest price, with the highest quality in the industry. Risks Affecting Our Business Our business is subject to a number of risks and uncertainties, including those highlighted in the section titled "Risk Factors" immediately following this prospectus summary. Some of these risks are: Our business is affected by general economic, political and financial conditions, which could adversely affect our results of operations; We may not be able to manage our growth effectively and our growth may slow down in the future; We operate in a highly competitive environment and may not be able to effectively compete or retain our current customers or attract new customers due to competition; We may be unable to attract; develop and retain the high performing individuals we need to effectively operate our business; We rely heavily and must compete based upon the flexibility and sophistication of the technologies utilized in performing our core businesses; Business interruptions, such as power outages, could adversely affect future operations, revenues, and financial conditions, and may increase our costs and expenses; Our inability to raise capital on acceptable terms in the future may cause us to delay, diminish, or curtail certain operational activities, including the expansion of our business operations, research and development activities, sales and marketing, and other operations, in order to reduce costs and sustain the business, and such inability would have a material adverse effect on our business and financial condition; Raising additional capital may cause dilution to our existing stockholders, including purchasers of common stock in this offering or restrict our operations; If we fail to maintain an effective system of disclosure controls and internal control over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable regulations could be impaired; and Our management team has limited experience managing a public company. For a more detailed discussion of these risks, see "Risk Factors" on page 11. Implications of Being an Emerging Growth Company As a company with less than $1.07 billion in revenue during our last completed fiscal year, we qualify as an "emerging growth company" as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. An emerging growth company may take advantage of specified reduced reporting requirements that are otherwise applicable generally to public companies. These reduced reporting requirements include: an exemption from compliance with the auditor attestation requirement on the effectiveness of our internal control over financial reporting; an exemption from compliance with any requirement that the Public Company Accounting Oversight Board may adopt regarding mandatory audit firm rotation or a supplement to the auditor s report providing additional information about the audit and the financial statements; an exemption from the requirements to obtain a non-binding advisory vote on executive compensation or a stockholder approval of any golden parachute arrangements; extended transition periods for complying with new or revised accounting standards; being permitted to present only two years of audited financial statements and only two years of related "Management s Discussion and Analysis of Financial Condition and Results of Operations", in addition to any required unaudited interim financial statements in this prospectus; and reduced disclosures regarding executive compensation in our periodic reports, proxy statements and registration statements, including in this prospectus; We will remain an emerging growth company until the earliest to occur of: (i) the end of the first fiscal year in which our annual gross revenue is $1.07 billion or more; (ii) the end of the first fiscal year in which we are deemed to be a "large accelerated filer," as defined in the Securities Exchange Act of 1934, as amended, or the Exchange Act; (iii) the date on which we have, during the previous three-year period, issued more than $1.00 billion in non-convertible debt securities; and (iv) the end of the fiscal year during which the fifth anniversary of this offering occurs. We may choose to take advantage of some, but not all, of the available benefits under the JOBS Act. We currently intend to take advantage of the exemptions discussed above. Accordingly, the information contained herein may be different than the information you receive from other public companies in which you hold stock. We are also a "smaller reporting company," as defined under SEC Regulation S-K. As such, we also are exempt from the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act and also are subject to less extensive disclosure requirements regarding executive compensation in our periodic reports and proxy statements. We will continue to be deemed a smaller reporting company until our public float exceeds $75 million on the last day of our second fiscal quarter in the preceding fiscal year. Corporate Information We were incorporated in the State of Delaware in 2016 initially to acquire and integrate other technology and IT services companies. We now operate as an information technology company focused on professional services and strategic acquisitions to increase stockholder value. Our principal executive offices are located at 6 E Bay St., 4th Fl., Jacksonville, FL 32202. Our telephone number is (800) 960-0149. Our website address is http://www.sharedlabs.com/. The references to our website in this prospectus are inactive textual references only. The information on our website is neither incorporated by reference into this prospectus nor intended to be used in connection with this offering. THE OFFERING The following summary of the offering contains basic information about the offering and the common stock and is not intended to be complete. It does not contain all the information that is important to you. For a more complete understanding of the common stock, please refer to the section of this prospectus entitled "Description of Capital Stock" on page 75. Common Stock offered by us: 1,000,000 shares Common Stock outstanding before this offering: 7,996,636 shares (1) Common Stock to be outstanding immediately after this offering: 8,996,636 shares (1) Offering Price: $ per share Option to purchase additional shares: We have granted the underwriters a 45-day option to purchase up to 150,000 additional shares of our common stock to cover over-allotments, if any. Use of Proceeds: We expect to receive approximately $4,875,630 in net proceeds from the sale of our shares offered by us in this offering (approximately $5,703,630 if the underwriters exercise their over-allotment option in full), after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us, assuming an initial public offering price of $6.00 per share. We intend to use the net proceeds from this offering for general working capital purposes, to finance the expansion of our business, a portion of which may be used to acquire a specific target, to hire additional personnel as we re-focus our business plan, to reduce or repay a portion of our debt, and to reduce or satisfy our obligations under certain advance agreements. See "Use of Proceeds" on page 31 for a more complete description of the intended use of proceeds from this offering. Dividend Policy: We currently expect to retain all available funds and any future earnings for use in the operation and expansion of our business. We do not currently anticipate paying dividends on our common stock following this offering. Any declaration and payment of future dividends to holders of our common stock may be limited by restrictive covenants in our debt agreements and will be at the sole discretion of our Board of Directors and will depend on many factors, including our financial condition, earnings, capital requirements, level of indebtedness, statutory and contractual restrictions applying to the payment of dividends and other considerations that our Board of Directors deems relevant. See "Dividend Policy" on page 32. Risk Factors: An investment in our common stock involves a high degree of risk. You should carefully consider the information set forth in this prospectus and, in particular, the specific factors set forth in the "Risk Factors" section beginning on page 11 of this prospectus before deciding whether or not to invest in our common stock. Proposed Nasdaq Capital Market Symbol: We have applied to list our common stock on The Nasdaq Capital Market under the symbol "SHLB." However, no assurance can be given that our application will be approved. Lock-ups: We and our directors, officers and any other holder of our common stock have agreed with the underwriters to enter into lock-up agreements pursuant to which we will agree not to offer for sale, issue, sell, contract to sell, pledge or otherwise dispose of any of our common stock for a period of twelve (12) months from the date of this offering, in the case of our officers and directors, and six (6) months from the date of this offering, in the case of our existing stockholders, except as with respect to certain stockholders that hold an aggregate of $975,000 worth of common (the "Leak-Out Stockholders"), which are permitted to sell or otherwise transfer a portion of their shares. See "Underwriting" on page 82. (1) Based on 7,996,636 shares of common stock issued and outstanding as of October 10 , 2018, and excludes: 1,829,080 shares of common stock issuable upon exercise of warrants, which includes 22,750 shares of common stock issuable upon exercise of warrants to be issued to ThinkEquity, a division of Fordham Financial Management, Inc., in connection with the C6 Capital, LLC financing transactions (See "Description of Capital Stock"); and 2,250,000 shares of common stock held into escrow as collateral in connection with the January 2018 Financing (as more fully described elsewhere in this prospectus). Unless otherwise indicated, the information in this prospectus assumes: a public offering price of $6.00 per share of common stock, the midpoint of the estimated price range set forth on the cover page of this prospectus; no exercise by the underwriter of its option to purchase up to 150,000 additional shares of common stock to cover over-allotments, if any; and no exercise of the representative s warrants. Business Address and Telephone Number Our address is 6 E Bay St., 4th Fl., Jacksonville, FL 32202, and our telephone number at such address is (800) 960-0149. SUMMARY SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA The following tables set forth our summary selected consolidated financial data for SharedLABS and its predecessor, iTech, for the periods indicated. The selected condensed consolidated statements of operations data for the years ended December 31, 2017 (As Restated), 2016 and 2015 and as of June 30, 2017 have been derived from our audited consolidated financial statements and related notes included elsewhere in this prospectus. The interim audited consolidated financial data for the period ended June 30, 2017 is presented below to avoid any lapse in the audited financial statements between the predecessor and successor financial statements. Additionally, we have derived the selected condensed consolidated statements of operations data for the six months ended June 30, 2018 and 2017 and the selected condensed consolidated balance sheet data as of June 30, 2018 from our unaudited condensed consolidated financial statements included elsewhere in this prospectus. We have prepared our unaudited condensed consolidated financial statements on the same basis as our audited consolidated financial statements and, in the opinion of management have included all adjustments, which include only normal recurring adjustments, necessary to present fairly in all material respects our financial position and results of operations. The results of any interim period are not necessarily indicative of the results that may be expected for the full year. The pro forma condensed consolidated statement of operations for the years ended December 31, 2017 and 2016 and for the six months ended June 30, 2017 summarizes the consolidated results of operations of the Company and acquired entities as if such acquisitions occurred on January 1, 2016. The historical results and pro forma data set forth below are not necessarily indicative of what the actual results of operations would have been had the acquisitions occurred at the dates referred to above, nor do they purport to be indicative of the results of future operations. The historical information should be read in conjunction with "Risk Factors," "Management Discussion and Analysis of Financial Condition and Results of Operations," and our consolidated financial statements and related notes thereto included elsewhere in this prospectus. The pro forma information should be read in conjunction with the sections entitled "Pro Forma Results of Operations for the Six Months Ended June 30, 2018 and 2017" and "Pro Forma Results of Operations for the Years Ended December 31, 2017 and 2016" in "Management s Discussion and Analysis of Financial Condition and Results of Operations," Note 4-Pro Forma Financial Information (Unaudited) in the notes to the unaudited condensed consolidated financial statements for the six months ended June 30, 2018 and 2017, Note 5-Acquisitions in the notes to the consolidated financial statements for the years ended December 31, 2017 and 2016, and the unaudited pro forma consolidated financial statements for SharedLABS, Inc. and Subsidiaries beginning on page F-85. Condensed Consolidated Statement of Operations Data SharedLABS, Inc. SharedLABS, Inc. iTech US, Inc. (Predecessor) For the Six Months Ended June 30, For the Years Ended December 31, For the Six Months Ended June 30, For the Years Ended December 31, 2018 2017 2017 (Pro Forma) 2017 (As Restated) 2017 (Pro Forma) 2016 2016 (Pro Forma) 2017 2016 2015 Net revenue $ 36,010,787 $ - $ 35,956,285 $ 36,226,660 $ 73,397,942 $ - $ 74,280,696 $ 35,281,396 $ 74,280,696 $ 69,561,422 Cost of revenue 31,277,710 - 30,901,342 31,064,482 63,232,731 - 65,135,402 30,834,788 65,135,402 60,460,449 Gross profit 4,733,077 - 5,054,943 5,162,178 10,165,211 - 9,145,294 4,446,608 9,145,294 9,100,973 Total operating expenses 5,409,914 1,327,507 4,899,510 7,944,609 10,400,383 445 6,953,915 2,917,923 5,826,878 5,847,213 Income (loss) from operations (676,837 ) (1,327,507 ) 155,433 (2,782,431 ) (235,172 ) (445 ) 2,191,379 1,528,685 3,318,416 3,253,760 Total other income (expenses), net (3,030,564 ) - (1,213,650 ) (1,200,452 ) (2,691,294 ) - (2,610,203 ) (14,891 ) (25,900 ) (8,842 ) Income (loss) before income taxes and noncontrolling interest (3,707,401 ) (1,327,507 ) (1,058,217 ) (3,982,883 ) (2,926,466 ) (445 ) (418,824 ) 1,513,794 3,292,516 3,244,918 Provision for (benefit from) income taxes (642,280 ) - (326,783 ) (1,855,529 ) (1,128,307 ) - (116,446 ) 48,777 69,654 61,891 Net income (loss) (3,065,121 ) (1,327,507 ) (731,434 ) (2,127,354 ) (1,798,159 ) (445 ) (302,378 ) 1,465,017 3,222,862 3,183,027 Net income (loss) attributable to noncontrolling interest 119 - (3,689 ) 245 512 - 7,003 3,689 7,003 4,996 Net income (loss) attributable to SharedLABS, Inc. (3,065,240 ) (1,327,507 ) (735,123 ) (2,127,599 ) (1,798,671 ) (445 ) (309,381 ) 1,461,328 3,215,859 3,178,031 Deemed dividends on redeemable common stock - - 805,260 805,260 805,260 - 805,260 - - - Net income (loss) applicable to SharedLABS, Inc. common stockholders $ (3,065,240 ) $ (1,327,507 ) $ (1,540,383 ) $ (2,932,859 ) $ (2,603,931 ) $ (445 ) $ (1,114,641 ) $ 1,461,328 $ 3,215,859 $ 3,178,031 Comprehensive income (loss): Net income (loss) attributable to SharedLABS, Inc. $ (3,065,240 ) $ (1,327,507 ) $ (735,123 ) $ (2,127,599 ) $ (1,798,671 ) $ (445 ) $ (309,381 ) Other comprehensive income (loss) - net of tax (5,189 ) - - 451 6,886 - - Total comprehensive income (loss) $ (3,070,429 ) $ (1,327,507 ) $ (735,123 ) $ (2,127,148 ) $ (1,791,785 ) $ (445 ) $ (309,381 ) Net income (loss) per share attributable to SharedLABS, Inc. stockholders - basic and diluted $ (0.38 ) $ (0.31 ) $ (0.28 ) $ (0.55 ) $ (0.43 ) $ - $ (0.21 ) Weighted average number of shares outstanding during the period - basic and diluted 8,071,086 4,245,524 5,416,514 5,375,340 6,117,801 4,137,824 5,308,216 Condensed and Consolidated Balance Sheet Data SharedLABS, Inc. As of December 31, As of June 30, 2017 2016 2018 Current Assets: Cash $748,987 $- $864,130 Accounts receivable, net 11,986,252 - 13,868,289 Other current assets 234,651 15,000 201,041 Total current assets 12,969,890 15,000 14,933,460 Property and equipment, net 55,530 - 119,413 Total other assets 20,700,718 - 20,242,848 TOTAL ASSETS $33,726,138 $15,000 $35,295,721 Total current liabilities $24,133,253 $- $27,782,767 Total long-term liabilities 3,483,192 - 1,534,281 Total other liabilities 422,329 - 1,615,572 Total liabilities 28,038,774 - 30,932,620 Redeemable common stock 2,056,637 - 2,056,637 Total SharedLABS stockholders equity 3,630,482 15,000 2,306,100 Noncontrolling interests 245 - 364 Total stockholders equity 3,630,727 15,000 2,306,464 Total liabilities and stockholders equity $33,726,138 $15,000 $35,295,721 RISK FACTORS You should carefully consider the risks described below and all other information contained in this prospectus before making an investment decision. If any of the following risks, as well as other risks and uncertainties that are not yet identified or that we currently think are immaterial, actually occur, our business, financial condition and results of operations could be materially and adversely affected. In that event, the trading price of our shares could decline, and you may lose part or all of your investment. General Business and Industry Risks The accompanying financial statements have been prepared assuming that we will continue as a going concern. The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. For the six-month period and year ended June 30, 2018 and December 31, 2017, respectively, we had incurred an operating loss and continue to generate losses from operations. These matters raise substantial doubt about our ability to continue as a going concern. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of asset amounts or the classification of liabilities that might be necessary should we be unable to continue as a going concern. As a result, our independent registered public accounting firm included an explanatory paragraph in its report on our financial statements as of December 31, 2017 with respect to this uncertainty. Our ability to continue as a going concern is dependent upon our ability to generate profitable business operations in the future and/or obtaining the necessary financing to meet our obligations and repay our liabilities. To date, we have operated at a loss and remained in business through the issuance of shares of our common stock and warrants, stockholder capital contributions and entering into a short-term loan facility. Management s plan to continue as a going concern is based on us obtaining additional capital resources through the sale of our securities and/or loans on an as needed basis. The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described above and eventually attaining profitable operations. In addition to the normal risks associated with a new business venture, there can be no assurance that our business plan will be successfully executed. Our ability to execute our business plan will depend on our ability to obtain additional financing and achieve a profitable level of operations. There can be no assurance that sufficient financing will be available, or, if available, that it will be on terms that are satisfactory to us. Even if we are able to obtain additional financing, it may contain undue restrictions on our operations, in the case of debt financing, or cause substantial dilution for our stockholders, in the case of equity financing. Further, we cannot give any assurance that we will generate substantial revenues or that our business operations will prove to be profitable. To the extent that we are unsuccessful, we may need to curtail or cease our operations and implement a plan to extend payables or reduce overhead until sufficient additional capital is raised to support further operations. Our ability to continue as a going concern is dependent on management s plans, which include further implementation of its business plan and continuing to raise funds through debt and/or equity raises We may need to secure additional financing. We anticipate that we may require additional funds for our operations in the future. If we are not successful in securing additional financing when needed, we may be unable to execute our business strategy, which could result in curtailment of our operations. Our ability to raise additional capital is uncertain and dependent on numerous factors beyond our control including, but not limited to, economic conditions and lack of availability of credit. We currently do not have any committed external source of funds. If we need additional capital and cannot raise it on acceptable terms, we may not be able to, among other things: continue to expand our development, sales and marketing teams; acquire complementary technologies, products or businesses; if determined to be appropriate, expand our global operations; hire, train and retain employees; and respond to competitive pressures or unanticipated working capital requirements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, then-existing stockholders interests may be materially diluted, and the terms of such securities could include liquidation or other preferences that adversely affect their rights as common stockholders. Debt financing and preferred equity financing, if available, may involve agreements that include restrictive covenants that limit our ability to take specified actions, such as incurring additional debt, making capital expenditures or declaring dividends. The IT services market is highly competitive and our competitors may have advantages that may allow them to compete more effectively than we do to secure client contracts and attract skilled IT professionals. The IT services market in which we operate includes a large number of participants and is highly competitive. Our primary competitors include: on and off-shore outsourcing firms; system integrators; consulting firms We also occasionally compete with in-house IT departments, smaller vertically-focused IT service providers and local IT service providers based in the geographic areas where we compete. We expect additional competition from offshore IT outsourcing firms in emerging locations such as Eastern Europe, Latin America and China, as well as offshore IT service providers with facilities in less expensive geographies within India. The IT services industry in which we compete is experiencing rapid changes in its competitive landscape. Some of the large consulting firms and offshore IT service providers that we compete with have significant resources and financial capabilities combined with a greater number of IT professionals. Many of our competitors are significantly larger and some have gained access to public and private capital or have merged or consolidated with better capitalized partners, which has created and may in the future create, larger and better capitalized competitors. These competitors may have superior abilities to compete for market share and for our existing and prospective clients. Our competitors may be better able to use significant economic incentives, such as lower billing rates, to secure contracts with our existing and prospective clients. These competitors may also be better able to compete for and retain skilled professionals by offering them more attractive compensation or other incentives. These factors may allow these competitors to have advantages over us to meet client demands in an engagement for large numbers and varied types of resources with specific experience or skill-sets that we may not have readily available in the short- or long-term. We cannot assure you that we can maintain or enhance our competitive position against current and future competitors. Our failure to compete effectively could have a material adverse effect on our business, financial condition or results of operations. If we cannot attract and retain highly-skilled IT professionals, our ability to obtain, manage and staff new projects and continue to expand existing projects may result in loss of revenue and an inability to expand our business. Our ability to execute and expand existing projects and obtain new clients depends largely on our ability to hire, train and retain highly-skilled IT professionals, particularly project managers, IT engineers and other senior technical personnel. If we cannot hire and retain such additional qualified personnel, our ability to obtain, manage and staff new projects and to expand, manage and staff existing projects, may be impaired. We may then lose revenue and our ability to expand our business may be harmed. There is intense worldwide competition for IT professionals with the skills necessary to perform the services we offer. We and the industry in which we operate generally experience high employee attrition. Given our recent significant growth and strong demand for IT professionals from our competitors, we cannot assure you that we will be able to hire or retain the number of technical personnel necessary to satisfy our current and future client needs. We also may not be able to hire and retain enough skilled and experienced IT professionals to replace those who leave. Additionally, if we have to replace personnel who have left our company, we will incur increased costs not only in hiring replacements but also in training such replacements until they can become productive and billable to our clients. In addition, we may not be able to redeploy and retrain our IT professionals in anticipation of continuing changes in technology, evolving standards and changing client preferences. Our inability to attract and retain IT professionals could have a material adverse effect on our business, operating results and financial condition. We are dependent on engineering, support and IT personnel, a number of which are foreign nationals who rely heavily on visas and entry permits in order to legally work in the United States; changes in immigration legislation and enforcement may adversely affect our business and results of operations. Our future success depends upon our ability to recruit and retain the services of executive, engineering, sales and marketing, and support personnel. The supply of highly qualified individuals, in particular engineers in very specialized technical areas, or sales people with specialized industry expertise, is limited and competition for such individuals is intense. The loss of the services of any of our key employees, the inability to attract or retain personnel in the future or delays in hiring required personnel, engineers and sales people, and the complexity and time involved in replacing or training new employees, could delay the development and introduction of new products, and negatively impact our ability to market, sell, or support our products. A number of our team members are foreign nationals who rely on visas and entry permits in order to legally work in the United States and other countries. In recent years, the United States has increased the level of scrutiny in granting H-1(B), L-1 and other business visas. In addition, the current U.S. administration has indicated that immigration reform is a priority. Compliance with United States immigration and labor laws could require us to incur additional unexpected labor costs and expenses or could restrain our ability to retain skilled professionals. Any of these restrictions could have a material adverse effect on our business, results of operations and financial conditions. As we continue to grow, we may find our recruiting and retention efforts more challenging. We are seeking to continue to hire a significant number of personnel, including certain key management personnel. We may be limited in our ability to recruit global talent by U.S. immigration laws, including those related to H1-(B) visas. The demand for H1-(B) visas to fill highly-skilled IT and computer science jobs is greater than the number of H-1(B) visas available each year; for the U.S. government s 2018 fiscal year, the U.S. issued 85,000 H-1(B) visas out of 199,000 requests. In addition, the regulatory environment related to immigration under the current presidential administration may increase the likelihood that immigration laws may be modified to further limit the availability of H1-B visas. If a new or revised visa program is implemented, it may impact our ability to recruit, hire and retain qualified skilled personnel, which could adversely impact our business, operating results and financial condition. If we do not succeed in attracting, hiring and integrating qualified personnel, or retaining and motivating existing personnel, we may be unable to grow effectively. Immigration reform continues to attract significant attention in the public arena and the United States Congress. If new immigration legislation is enacted at the federal level or in states in which we do business, such legislation may contain provisions that could make it more difficult or costly for us to hire United States citizens and/or legal immigrant workers. In such case, we may incur additional costs to run our business or may have to change the way we conduct our operations, either of which could have a material adverse effect on our business, operating results and financial condition. Conditions in the economy, the markets we serve, and the financial markets generally may adversely affect our business and results of operations. Our business is sensitive to general economic conditions. Slower economic growth, volatility in the credit markets, high levels of unemployment, and other challenges that affect the economy adversely could affect us and our customers and suppliers. If growth in the economy or in any of the markets we serve slows for a significant period, if there is a significant deterioration in the economy or such markets or if improvements in the economy do not benefit the markets we serve, our business and results of operations could be adversely affected. Our reputation and ability to do business may be negatively impacted by the improper conduct by our business partners, employees or agents. We cannot provide assurance that our internal controls and compliance systems will always protects us from acts committed by our employees, agents or business partners in violation of U.S. federal or state laws. Any improper acts or allegations could damage our reputation and subject us to civil or criminal investigations and related stockholder lawsuits, could lead to substantial civil and criminal monetary and non-monetary penalties, and could cause us to incur significant legal and investigatory fees. If we do not effectively manage changes in our business, these changes could place a significant strain on our management and operations. Our ability to grow successfully requires that we have an effective planning and management process. The expansion and growth of our business could place a significant strain on our management systems, infrastructure and other resources. To manage our growth successfully, we must continue to improve and expand our systems and infrastructure in a timely and efficient manner. Our controls, systems, procedures and resources may not be adequate to support a changing and growing company. If our management fails to respond effectively to changes and growth in our business, including acquisitions, this could have a material adverse effect on the Company s business, financial condition, results of operations and future prospects. We may not be able to recognize revenue in the period in which our services are performed, which may cause our margins to fluctuate. Our services are performed under both time-and-material and fixed-price arrangements. All revenue is recognized pursuant to applicable accounting standards. These standards require us to recognize revenue once evidence of an arrangement has been obtained, services are delivered, fees are fixed or determinable and collectability is reasonably assured. If we perform our services prior to the time when we are able to recognize the associated revenue, our margins may fluctuate significantly from quarter to quarter. Our revenue recognition standards will likely change in 2018 as a result of management applying new revenue recognition standards, and any change in future policies may result in significantly different margins as compared to prior periods as a result. Management is still evaluating the effect the new standards will have on our results of operations. Additionally, payment of our fees on fixed-price contracts are based on our ability to provide deliverables on certain dates or meet certain defined milestones. Our failure to produce the deliverables or meet the project milestones in accordance with agreed upon specifications or timelines, or otherwise meet a client s expectations, may result in our having to record the cost related to the performance of services in the period that services were rendered, but delay the timing of revenue recognition to a future period in which the milestone is met We may be required to spend substantial time and expense before we can recognize revenue, if any, from a client contract. The period between our initial contact with a potential client and the execution of a client contract for our services is lengthy, and can extend over one or more fiscal quarters. To sell our services successfully and obtain an executed client contract, we generally have to educate our potential clients about the use and benefits of our services, which can require significant time, expense and capital without the ability to realize revenue, if any. If our sales cycle unexpectedly lengthens for one or more large projects, it would negatively affect the timing of our revenue, and hinder our revenue growth. Furthermore, a delay in our ability to obtain a signed agreement or other persuasive evidence of an arrangement or to complete certain contract requirements in a particular quarter, could reduce our revenue in that quarter. These delays or failures can cause our gross margin and profitability to fluctuate significantly from quarter to quarter. Overall, any significant failure to generate revenue or delays in recognizing revenue after incurring costs related to our sales or services process could have a material adverse effect on our business, financial condition and results of operations. Our operations and properties may be uninsured or underinsured and failure to maintain adequate insurance may result in a default under our debt instruments. We carry various insurance policies to cover our properties and operational hazards, including industrial, road traffic or transportation accidents that could potentially result in injury or fatality to employees, contractors or the public with policy specifications and insured limits that we believe are customarily carried for similar properties and operating activities. However, potential losses of a catastrophic nature such as those arising from floods, earthquakes, terrorism or other similar catastrophic events, as well as certain operating liabilities, particularly with respect to our data security, may be either uninsurable, or, in our judgment, not insurable on a financially reasonable basis or may be subject to larger excesses. If an uninsured loss occurs, we could be subject to material liability or lose both our invested capital in and anticipated profits from the affected property or assets. Unexpected events could disrupt our operations and adversely affect the results of our operations. Unexpected events, including fires or explosions at our facilities, natural disasters such as hurricanes and tornados, war or terrorist activities, unplanned power outages, supply disruptions and failure of equipment or systems, could adversely affect our results of operations. In particular, fire, flood, seismic activity or other disruptive event in our offices could have a number of potential consequences in terms of employee safety, reputation, financial impairment and litigation. These events could result in customer disruption, physical damage to one or more key operating facilities, the temporary closure of one or more of our facilities or the temporary disruption of information systems. Our quarterly financial position, revenue, operating results and profitability are difficult to predict and may vary from quarter to quarter, which could cause our share price to decline significantly. Our quarterly revenue, operating results and profitability, while currently consistent, have varied in the past and are likely to vary significantly from quarter to quarter in the future. The factors that are likely to cause these variations include: the number, timing, scope and contractual terms of IT projects in which we are engaged; delays in project commencement or staffing delays due to immigration issues or assignment of appropriately skilled or experienced personnel; the accuracy of estimates of resources, time and fees required to complete fixed-price projects and costs incurred in the performance of each project; changes in pricing in response to client demand and competitive pressures; respond to competitive pressures or unanticipated working capital requirements; the mix of onsite and offshore staffing; the ratio of leadership and senior technical resources to junior engineering resources staffed on each project; seasonal trends, primarily our hiring cycle and the budget and work cycles of our clients; the continuing financial stability of our clients; general economic conditions; the timing of collection of accounts receivable; unanticipated contract or project terminates; unexpected changes in the utilization rate of our IT professionals; employee wage levels and increases in compensation costs, including timing of promotions and annual pay increases; and the ratio of fixed-price contracts to time-and-materials contracts in process. As a result, our revenue and our operating results for a particular period are difficult to predict and may decline in comparison to corresponding prior periods regardless of the strength of our business. Our future revenue is also difficult to predict because we derive a substantial portion of our revenue from fees for services generated from short-term contracts that may be terminated or delayed by our clients without penalty. In addition, a high percentage of our operating expenses, particularly related to personnel and facilities, are relatively fixed in advance of any particular quarter and are based, in part, on our expectations as to future revenue. If we are unable to predict the timing or amounts of future revenue accurately, we may be unable to adjust spending in a timely manner to compensate for any unexpected revenue shortfall and fail to meet our forecasts. Unexpected revenue shortfalls may also decrease our gross margins and could cause significant changes in our operating results from quarter to quarter. As a result, and in addition to the factors listed above, any of the following factors could have a significant and adverse impact on our operating results, could result in a shortfall of revenue and could result in losses to us: a client s decision not to pursue a new project or proceed to succeeding stages of a current project; the completion during a quarter of several major client projects could require us to pay underutilized employees in subsequent periods; adverse business decisions of our clients regarding the use of our services; our inability to transition employees quickly from completed projects to new engagements; our inability to manage costs, including personnel, infrastructure, facility and support services costs; and exchange rate fluctuations Due to the foregoing factors, it is possible that in some future periods our revenue and operating results may not meet the expectations of securities analysts or investors. If this occurs, the trading price of our common stock could fall substantially either suddenly or over time and our business, financial condition and results of operations would be adversely affected. The loss of key members of our senior management team may prevent us from executing our business strategy. Our future success depends to a significant extent on the continued service and performance of key members of our senior management team. Our growth and success depend, to a significant extent, on our ability to retain Jason Cory, our chief executive officer, who is the founder of our company and has led the growth, operation, culture and strategic direction of our business since its inception. The loss of his services or the services of other key members of our senior management could seriously harm our ability to execute our business strategy. We also may have to incur significant costs in identifying, hiring, training and retaining replacements for key employees. The loss of any member of our senior management team might significantly delay or prevent the achievement of our business or development objectives and could materially harm our business. We may lose revenue if our clients terminate or delay their contracts with us. Our clients typically retain us on a non-exclusive, engagement-by-engagement basis, rather than under exclusive long-term contracts. Many of our contracts for services have terms of less than 12 months and permit our clients to terminate our engagement on prior written notice of 90 days or less for convenience, and without termination-related penalties. Further, many large client projects typically involve multiple independently defined stages, and clients may choose not to retain us for additional stages of a project or cancel or delay their start dates. These terminations, cancellations or delays could result from factors unrelated to our work product or the progress of the project, including: - client financial difficulties - a change in a client s strategic priorities, resulting in a reduced level of IT spending - a client s demand for price reductions - a change in a client s outsourcing strategy that shifts work to in-house IT departments or to our competitors - replacement by our client of existing software to packaged software supported by licensors If our contracts were terminated early or materially delayed, our business and operating results could be materially harmed and the value of our common stock could be impaired. Unexpected terminations, cancellation or delays in our client engagements could also result in increased operating expenses as we transition our employees to other engagements. We are dependent on a limited number of major customers for a significant portion of our net sales, and the loss of one or more of our major customers could adversely impact our revenue. A significant portion of our revenue is concentrated in one major customer. Our top customer, based on net sales, accounted for approximately 15%, 17% and 15% for the years ended December 31, 2017, 2016 and 2015, respectively, and approximately 14% for the six months ended June 30, 2018. Our top 15 customers accounted for 37.4% and 38.2% of our revenues for the six months ended June 30, 2018 and year ended December 31, 2017, respectively. The loss of our top customer, or a material decrease in services purchased by such customer could adversely impact our revenues. We may face damage to our professional reputation if our services do not meet our clients expectations. Many of our projects involve technology applications or systems that are critical to the operations of our clients businesses and handle very large volumes of transactions. If we fail to perform our services correctly, we may be unable to deliver applications or systems to our clients with the promised functionality or within the promised time frame, or to satisfy the required service levels for support and maintenance. If a client is not satisfied with our services or products, including those of subcontractors we employ, our business may suffer. Moreover, if we fail to meet our contractual obligations, our clients may terminate their contracts and we could face legal liabilities and increased costs, including warranty claims against us. Any failure in a client s project could result in a claim for substantial damages, non-payment of outstanding invoices, loss of future business with such client and increased costs due to non-billable time of our resources dedicated to address any performance or client satisfaction issues, regardless of our responsibility for such failure. Our inability to manage to a desired onsite-to-offshore service delivery mix may negatively affect our gross margins and costs and our ability to offer competitive pricing. We may not succeed in maintaining or increasing our profitability and could incur losses in future periods if we are not able to manage to a desired onsite-to-offshore service delivery mix. To the extent that our engagements involve an increasing number of consulting, production support, software package implementation or other services typically requiring a higher percentage of onsite resources, we may not be able to manage to our desired service delivery mix. Additionally, other factors like client constraint or preferences or our inability to manage engagements effectively with limited resources onsite may result in a higher percentage of onsite resources than our desired service delivery mix. Accordingly, we cannot assure you that we will be able to manage to our desired onsite-to-offshore service delivery mix. If we are unable to manage to our targeted service delivery mix, our gross margins may decline and our profitability may be reduced. Additionally, our costs will increase and we may not be able to offer competitive pricing to our clients. The international nature of our business exposes us to several risks, such as significant currency fluctuations and unexpected changes in the regulatory requirements of multiple jurisdictions. We have operations in India, Canada and the United States of America and we serve clients across Europe, North America and Asia. For the six months ended June 30, 2018 and the year ended December 31, 2017, revenue generated outside of the United States was immaterial. Our corporate structure also spans multiple jurisdictions, with our parent company incorporated in Delaware and operating subsidiaries organized in India, Canada and the United States. As a result, any international revenue and operations may be exposed to risks typically associated with conducting business internationally, many of which are beyond our control. These risks include: significant currency fluctuations between the U.S. dollar and the Canadian Dollar (in which our revenue is principally denominated) and the Indian rupees (in which a significant portion of our costs are denominated); legal uncertainty owing to the overlap of different legal regimes and problems in asserting contractual or other rights across international borders; potentially adverse tax consequences, such as scrutiny of transfer pricing arrangements by authorities in the countries in which we operate, potential tariffs and other trade barriers; difficulties in staffing, managing and supporting operations in multiple countries; potential fluctuations in foreign economies; unexpected changes in regulatory requirements; unexpected changes in regulatory requirements; government currency control and restrictions on repatriation of earnings; the burden and expense of complying with the laws and regulations of various jurisdictions; domestic and international economic or political changes, hostilities, terrorist attacks and other acts of violence or war; and earthquakes, tsunamis and other natural disasters in regions where we currently operate or may operate in the future. Negative developments in any of these areas in one or more countries could result in a reduction in demand for our services, the cancellation or delay of client contracts, threats to our intellectual property, difficulty in collecting receivables and a higher cost of doing business, any of which could negatively affect our business, financial condition or results of operations We may not be able to continue to maintain or increase our profitability and our recent growth rates may not be indicative of our future growth. We expect to incur additional operating expenses associated with being a public company and we intend to continue to increase our operating expenses, including stock-based compensation, in all areas as we grow our business. If we experience declines in demand or declines in pricing for our services, or if wages in India or Canada increase at a faster rate than in the United States, we will be faced with continued growing costs for our IT professionals, including wage increases. We also expect to continue to make investments in infrastructure, facilities, sales and marketing and other resources as we expand our operations, thus incurring additional costs. If our revenue does not increase to offset these increases in costs or operating expenses, our operating results would be negatively affected. In fact, in future quarters we may not have any revenue growth and our revenue and net income could decline. You should not consider our historic revenue and net income growth rates as indicative of future growth rates. Accordingly, we cannot assure you that we will be able to maintain or increase our profitability in the future. If we fail to manage our rapid growth effectively, we may not be able to obtain, develop or implement new systems, infrastructure, procedures and controls that are required to support our operations, maintain cost controls, market our services and manage our relationships with our clients. We have experienced rapid growth since inception. Since December 2016, we have grown internationally through our acquisitions. We expect that we will continue to grow, and our anticipated growth could place a significant strain on our ability to: recruit, hire, train, motivate and retain highly-skilled IT services and management personnel; adequately and timely staff personnel at client locations in the United States and Europe due to increasing immigration and related visa restrictions and intense competition to hire and retain these skilled IT professionals; adhere to our global delivery process and execution standards; maintain and manage costs to correspond with timeliness of revenue recognition; develop and improve our internal administrative infrastructure, including our financial, operational and communication systems, processes and controls; provide sufficient operational facilities and offshore global delivery centers to accommodate and satisfy the capacity needs of our growing workforce on reasonable commercial terms, or at all, whether by leasing, buying or building suitable real estate; preserve our corporate culture, values and entrepreneurial environment; and maintain high levels of client satisfaction. To manage this anticipated future growth effectively, we must continue to maintain and may need to enhance, our IT infrastructure, financial and accounting systems and controls and manage expanded operations in several locations. We also must attract, integrate, train and retain qualified personnel, especially in the areas of accounting, internal audit and financial disclosure. Further, we will need to manage our relationships with various clients, vendors and other third parties. We may not be able to develop and implement, on a timely basis, if at all, the systems, infrastructure procedures and controls required to support our operations. Additionally, some factors, like changes in immigration laws or visa processing restrictions that limit our ability to engage offshore resources at client locations in the United States or the United Kingdom, are outside of our control. Our future operating results will also depend on our ability to develop and maintain a successful sales organization despite our rapid growth. If we are unable to manage our growth, our operating results could fluctuate from quarter to quarter and our financial condition could be materially adversely affected. Unexpected costs or delays could make our contracts unprofitable. When making proposals for engagements, we estimate the costs and timing for completion of the projects. These estimates reflect our best judgment regarding the efficiencies of our methodologies, staffing of resources, complexities of the engagement and costs. The profitability of our engagements, and in particular our fixed-price contracts, are adversely affected by increased or unexpected costs or unanticipated delays in connection with the performance of these engagements, including delays caused by factors outside our control, which could make these contracts less profitable or unprofitable. The occurrence of any of these costs or delays could result in an unprofitable engagement or litigation. A significant or prolonged economic downturn in the IT services industry may result in our clients reducing or postponing spending on the services we offer. Our revenue is dependent on entering into large contracts for our services with a limited number of clients each year. Because we are not the exclusive IT service provider for our clients, the volume of work that we perform for any specific client is likely to vary from year to year. There are a number of factors, other than our performance, that could affect the size, frequency and renewal rates of our client contracts. For instance, if economic conditions weaken in the IT services industry, our clients may reduce or postpone their IT spending significantly which may, in turn, lower the demand for our services and negatively affect our revenue and profitability. As a way of dealing with a challenging economic environment, clients may change their outsourcing strategy by performing more work in-house or replacing their existing software with packaged software supported by the licensor. The loss of, or any significant decline in business from, one or more of our major clients likely would lead to a significant decline in our revenue and operating margins, particularly if we are unable to make corresponding reductions in our expenses in the event of any such loss or decline. Moreover, a significant change in the liquidity or financial position of any of these clients could have a material adverse effect on the collectability of our accounts receivable, liquidity and future operating results. Restrictions on immigration may affect our ability to compete for and provide services to clients in the United States or Canada, which could result in lost revenue and delays in client engagements and otherwise adversely affect our ability to meet our growth and revenue projections. A large number of our employees are foreign nationals. The ability of our IT professionals to work in the United States, Canada, and other countries depends on the ability to obtain the necessary visas and entry permits. In recent years, the United States has increased the level of scrutiny in granting H-1(B), L-1 and ordinary business visas. In response to terrorist attacks and global unrest, U.S. and Canadian immigration authorities, as well as other countries, have not only increased the level of scrutiny in granting visas, but have also introduced new security procedures, which include extensive background checks, personal interviews and the use of biometrics, as conditions to granting visas and work permits. The inability of key project personnel to obtain necessary visas or work permits could delay or prevent our fulfillment of client projects, which could hamper our growth and cause our revenue to decline. These restrictions and additional procedures may delay, or even prevent, the issuance of a visa or work permit to our IT professionals and affect our ability to staff projects in a timely manner. Any delays in staffing a project can result in project postponement, delays or cancellation, which could result in lost revenue and decreased profitability and have a material adverse effect on our business, revenue, profitability and utilization rates. Immigration laws in countries in which we seek to obtain visas or work permits may require us to meet certain other legal requirements as conditions to obtaining or maintaining entry visas. These immigration laws are subject to legislative change and varying standards of application and enforcement due to political forces, economic conditions or other events, including terrorist attacks. We cannot predict the political or economic events that could affect immigration laws, or any restrictive impact those events could have on obtaining or monitoring entry visas for our personnel. Our reliance on work visas and work permits for a significant number of our IT professionals makes us particularly vulnerable to such changes and variations, particularly in the United States and Canada, because these immigration and legislative changes affect our ability to staff projects with IT professionals who are not citizens of the country where the onsite work is to be performed. We may not be able to obtain a sufficient number of visas for our IT professionals or may encounter delays or additional costs in obtaining or maintaining such visas. To the extent we experience delays due to such immigration restrictions, we may encounter client dissatisfaction, project and staffing delays in new and existing engagements, project cancellations, higher project costs and loss of revenue, resulting in decreases in profits and a material adverse effect on our business, results of operations, financial condition and cash flows. Currency exchange rate fluctuations may negatively affect our operating results. The exchange rates among the Indian rupees and the U.S. dollar and the Canadian Dollar have changed substantially in recent years and may fluctuate substantially in the future. We expect that a majority of our revenue will continue to be generated in the U.S. dollar and Canadian Dollar for the foreseeable future and that a significant portion of our expenses, including personnel costs, as well as capital and operating expenditures, will continue to be denominated in Indian rupees. Accordingly, any material appreciation of the Indian rupee or the Canadian Dollar against the U.S. dollar or Canadian Dollar could have a material adverse effect on our cost of services, gross margin and net income, which may in turn have a negative impact on our business, operating results and financial condition. We may face liability if we inappropriately disclose confidential client information. In the course of providing services to our clients, we may have access to confidential client information. We are bound by certain agreements to use and disclose this information in a manner consistent with the privacy standards under regulations applicable to our clients. Although these privacy standards may not apply directly to us, if any person, including an employee of ours, misappropriates client confidential information, or if client confidential information is inappropriately disclosed due to a breach of our computer systems, system failures or otherwise, we may have substantial liabilities to our clients or our clients customers. In addition, in the event of any breach or alleged breach of our confidentiality agreements with our clients, these clients may terminate their engagements with us or sue us for breach of contract, resulting in the associated loss of revenue and increased costs. We may also be subject to civil or criminal liability if we are deemed to have violated applicable regulations. We cannot assure you that we will adequately address the risks created by the regulations to which we may be contractually obligated to abide. Our failure to anticipate rapid changes in technology may negatively affect demand for our services in the marketplace. Our success will depend, in part, on our ability to develop and implement business and technology solutions that anticipate rapid and continuing changes in technology, industry standards and client preferences. We may not be successful in anticipating or responding to these developments on a timely basis, which may negatively affect demand for our solutions in the marketplace. Also, if our competitors respond faster than we do to changes in technology, industry standards and client preferences, we may lose business and our services may become less competitive or obsolete. Any one or a combination of these circumstances could have a material adverse effect on our ability to obtain and successfully complete client engagements. Interruptions or delays in service from our third-party providers could impair our global delivery model, which could result in client dissatisfaction and a reduction of our revenue. We depend upon third parties to provide a high-speed network of active voice and data communications 24 hours per day and various satellite and optical links between our global delivery centers and our clients. Consequently, the occurrence of a natural disaster or other unanticipated problems with the equipment or at the facilities of these third-party providers could result in unanticipated interruptions in the delivery of our services. For example, we may not be able to maintain active voice and data communications between our global delivery centers and our clients sites at all times due to disruptions in these networks, system failures or virus attacks. Any significant loss in our ability to communicate or any impediments to any IT professional s ability to provide services to our clients could result in a disruption to our business, which could hinder our performance or our ability to complete client projects in a timely manner. This, in turn, could lead to substantial liability to our clients, client dissatisfaction, loss of revenue and a material adverse effect on our business, our operating results and financial condition. We cannot assure you that our business interruption insurance will adequately compensate our clients or us for losses that may occur. Even if covered by insurance, any failure or breach of security of our systems could damage our reputation and cause us to lose clients. Our services may infringe on the intellectual property rights of others, which may subject us to legal liability, harm our reputation, prevent us from offering some services to our clients or distract management. We cannot be sure that our services or the deliverables that we develop and create for our clients do not infringe the intellectual property rights of third parties and infringement claims may be asserted against us or our clients. These claims may harm our reputation, distract management, cost us money and prevent us from offering some services to our clients. Historically, we have generally agreed to indemnify our clients for all expenses and liabilities resulting from infringement of intellectual property rights of third parties based on the services and deliverables that we have performed and provided to our clients. In some instances, the amount of these indemnities may be greater than the revenue we receive from the client. In addition, as a result of intellectual property litigation, we may be required to stop selling, incorporating or using products that use or incorporate the infringed intellectual property. We may be required to obtain a license or pay a royalty to make, sell or use the relevant technology from the owner of the infringed intellectual property. Such licenses or royalties may not be available on commercially reasonable terms, or at all. We may also be required to redesign our services or change our methodologies so as not to use the infringed intellectual property, which may not be technically or commercially feasible and may cause us to expend significant resources. Subject to certain limitations, under our indemnification obligations to our clients, we may also have to provide refunds to our clients to the extent that we must require them to cease using an infringing deliverable if we are unable to provide a work around or acquire a license to permit use of the infringing deliverable that we had provided to them as part of a service engagement. If we are obligated to make any such refunds or dedicate time to provide alternatives or acquire a license to the infringing intellectual property, our business and financial condition could be materially adversely affected. Any claims or litigation involving intellectual property, whether we ultimately win or lose, could be extremely time-consuming, costly and injure our reputation. As the number of patents, copyrights and other intellectual property rights in our industry increases, we believe that companies in our industry will face more frequent infringement claims. Defending against these claims, even if the claims have no merit, may not be covered by or could exceed the protection offered by our insurance and could divert management s attention and resources from operating our company. Our ability to raise capital in the future may be limited and our failure to raise capital when needed could prevent us from growing. We anticipate that our current cash and cash equivalents, together with the net proceeds of this offering, will be sufficient to meet our current needs for general corporate purposes for the foreseeable future. We may also need additional financing to execute our current or future business strategies, including to: - add additional global delivery centers - procure additional capacity and facilities - hire additional personnel - enhance our operating infrastructure - acquire businesses or technologies - otherwise respond to competitive pressures If we raise additional funds through the issuance of equity or convertible debt securities, the percentage ownership of our stockholders could be significantly diluted and these newly issued securities may have rights, preferences or privileges senior to those of existing stockholders. If we incur additional debt financing, a substantial portion of our operating cash flow may be dedicated to the payment of principal and interest on such indebtedness, thus limiting funds available for our business activities. Any such debt financing could require us to comply with restrictive financial and operating covenants, which could have a material adverse impact on our business, results of operations or financial condition. We cannot assure you that additional financing will be available on terms favorable to us, or at all. If adequate funds are not available or are not available on acceptable terms, when we desire them, our ability to fund our operations and growth, take advantage of unanticipated opportunities or otherwise respond to competitive pressures may be significantly limited. Potential future acquisitions, strategic investments, partnerships or alliances could be difficult to identify and integrate, divert the attention of key management personnel, disrupt our business, dilute stockholder value and adversely affect our financial results. We may acquire or make strategic investments in complementary businesses, technologies or services or enter into strategic partnerships or alliances with third parties to enhance our business. If we do identify suitable candidates, we may not be able to complete transactions on terms commercially acceptable to us, if at all. These types of transactions involve numerous risks, including: - difficulties in integrating operations, technologies, accounting and personnel - difficulties in supporting and transitioning clients of our acquired companies or strategic partners - diversion of financial and management resources from existing operations - risks of entering new markets - potential loss of key employees - inability to generate sufficient revenue to offset transaction costs We may finance future transactions through debt financing or the issuance of our equity securities or a combination of the foregoing. Acquisitions financed with the issuance of our equity securities could be dilutive, which could affect the market price of our stock. Acquisitions financed with debt could require us to dedicate a substantial portion of our cash flow to principal and interest payments and could subject us to restrictive covenants. Acquisitions also frequently result in the recording of goodwill and other intangible assets that are subject to potential impairments in the future that could harm our financial results. It is possible that we may not identify suitable acquisition, strategic investment or partnership or alliance candidates. Our inability to identify suitable acquisition targets, strategic investments, partners or alliances, or our inability to complete such transactions, may negatively affect our competitiveness and growth prospects. Moreover, if we fail to properly evaluate acquisitions, alliances or investments, we may not achieve the anticipated benefits of any such transaction and we may incur costs in excess of what we anticipate. Our profitability is dependent on our billing and utilization rates, which may be negatively affected by various factors. Our profit margin is largely a function of the rates we are able to charge for our services and the utilization rate of our IT professionals. The rates we are able to charge for our services are affected by a number of factors, including: - our clients perception of our ability to add value through our services - the introduction of new services or products by us or our competitors - the pricing policies of our competitors - general economic conditions A number of factors affect our utilization rate, including: - our ability to transition employees quickly from completed or terminated projects to new engagements - our ability to maintain continuity of existing resources on existing projects - our ability to obtain visas for offshore personnel to commence projects at a client site for new or existing engagements - the amount of time spent by our employees on non-billable training activities - the number of campus hires - seasonal trends, primarily our hiring cycle, holidays and vacations - our ability to forecast demand for our services and thereby maintain an appropriate number of employees - the amount of time spent by our employees on non-billable training activities If we are not able to maintain the rates we charge for our services or maintain an appropriate utilization rate for our IT professionals, our revenue will decline, our costs will increase and we will not be able to sustain our profit margin, any of which will have a material adverse effect on our profitability. We depend on clients primarily located in the United States, as well as clients concentrated in specific industries, and are therefore subject to risks relating to developments affecting these clients that may cause them to reduce or postpone their IT spending. For the fiscal years ended December 31, 2017 and 2016, we derived substantially all of our revenue from clients located in the United States. Reductions in IT budgets, increased consolidation or decreased competition in these geographic locations or industries could result in an erosion of our client base and a reduction in our target market, and may reduce the demand for our services and negatively affect our revenue and profitability. Some of our client contracts contain restrictions or penalty provisions that, if triggered, could result in lower future revenue and decrease our profitability. We have entered in the past, and may in the future enter, into contracts that contain restrictions or penalty provisions that, if triggered, may adversely affect our operating results. For instance, some of our client contracts provide that, during the term of the contract and for a certain period thereafter ranging from six to 12 months, we may not use the same personnel to provide similar services to any of the client s competitors. This restriction may hamper our ability to compete for and provide services to clients in the same industry. In addition, some contracts contain provisions that would require us to pay penalties to our clients if we do not meet pre-agreed service level requirements. If any of the foregoing were to occur, our future revenue and profitability under these contracts could be materially harmed. Negative public perception in the United States regarding IT service providers and proposed legislation may adversely affect demand for our services. We have based our growth strategy on certain assumptions regarding our industry, services and future demand in the market for such services. However, the trend to outsource IT services may not continue and could reverse. Outsourcing is a politically sensitive topic in the United States. For example, many organizations and public figures in the United States have publicly expressed concern about a perceived association between outsourcing providers and the loss of jobs in their home countries. Current or prospective clients may elect to perform such services themselves or may be discouraged from transferring these services from onshore to offshore providers to avoid negative perceptions that may be associated with using an offshore provider. Any slowdown or reversal of existing industry trends towards offshore outsourcing would seriously harm our ability to compete effectively with competitors that operate out of facilities located in the United States. Legislation in the United States may be enacted that is intended to discourage or restrict outsourcing. In the United States, a variety of federal and state legislation has been proposed that, if enacted, could restrict or discourage U.S. companies from outsourcing their services to companies outside the United States. However, there can be no assurance that these restrictions will not extend to or be adopted by private companies, including our clients. Risks Related to our Indian and Canadian Operations Political instability or changes in the government in India could result in the change of several policies relating to foreign direct investment and repatriation of capital and dividends. Further, changes in the economic policies could adversely affect economic conditions in India generally and our business in particular. We have a subsidiary in India and a portion of our business, fixed assets and human resources are located in India. As a result, our business is affected by foreign exchange rates and controls, interest rates, changes in government policy, taxation, social and civil unrest and other political, economic or other developments in or affecting India. Since 1991, successive Indian governments have pursued policies of economic liberalization, including significantly relaxing restrictions on foreign direct investment into India with repatriation benefits. Nevertheless, the roles of the Indian central and state governments in the Indian economy as producers, consumers and regulators have remained significant. The rate of economic liberalization could change and specific laws and policies affecting software companies, foreign investment, currency exchange and other matters affecting investment in our securities could change as well. A significant change in India s economic liberalization and deregulation policies could adversely affect business and economic conditions in India generally and our business in particular, if new restrictions on the private sector are introduced or if existing restrictions are increased. Regional conflicts or terrorist attacks and other acts of violence or war in India, the United States or other regions could adversely affect financial markets, resulting in loss of client confidence and our ability to serve our clients which, in turn, could adversely affect our business, results of operations and financial condition. The Asian region has from time to time experienced instances of civil unrest and hostilities among neighboring countries, including between India and Pakistan. Since May 1999, military confrontations between India and Pakistan have occurred in Kashmir. Also, there have been military hostilities and civil unrest in Iraq. Terrorist attacks, such as the ones that occurred in New York and Washington, D.C., on September 11, 2001, New Delhi on December 13, 2001, Bali on October 12, 2002, civil or political unrest in Canada and other acts of violence or war, including those involving India, the United States, Canada or other countries, may adversely affect U.S., Canada, and worldwide financial markets. Prospective clients may wish to visit several of our facilities, including our global delivery centers in India, prior to reaching a decision on vendor selection. Terrorist threats, attacks and international conflicts could make travel more difficult and cause potential clients to delay, postpone or cancel decisions to use our services. In addition, such attacks may have an adverse impact on our ability to operate effectively and interrupt lines of communication and restrict our offshore resources from traveling onsite to client locations, effectively curtailing our ability to deliver our services to our clients. These obstacles may increase our expenses and negatively affect our operating results. In addition, military activity, terrorist attacks, political tensions between India and Pakistan and conflicts within Canada could create a greater perception that the acquisition of services from companies with significant Indian or n operations involves a higher degree of risk that could adversely affect client confidence in India or Canada as a software development center, each of which would have a material adverse effect on our business. Our net income may decrease if the governments of the United States, India or Canada adjust the amount of our taxable income by challenging our transfer pricing policies. Our subsidiaries conduct intercompany transactions among themselves and with the U.S. parent company on an arm s-length basis in accordance with U.S. and local country transfer pricing regulations. The jurisdictions in which we pay income taxes could challenge our determination of arm s-length profit and issue tax assessments. Although the United States has income tax treaties with all countries in which we have operations, which mitigates the risk of double taxation, the costs to appeal any such tax assessment and potential interest and penalties could decrease our earnings and cash flows. Wage pressures and increases in government mandated benefits in India and Canada may reduce our profit margins. Wage costs in India and Canada have historically been significantly lower than wage costs in the United States and Europe for comparably-skilled professionals. However, wages in India and Canada are increasing, which will result in increased costs for IT professionals, particularly project managers and other mid-level professionals. We may need to increase the levels of our employee compensation more rapidly than in the past to remain competitive without the ability to make corresponding increases to our billing rates. Compensation increases may reduce our profit margins, make us less competitive in pricing potential projects against those companies with lower cost resources and otherwise harm our business, operating results and financial condition. In addition, we contribute to benefit funds covering our employees in India and Canada as mandated by the Indian governments. Benefits are based on the employee s years of service and compensation. If the governments of India and/or Canada were to legislate increases to the benefits required under these plans or mandate additional benefits, our profitability and cash flows would be reduced. Our facilities are at risk of damage by earthquakes, tsunamis and other natural disasters. In December 2004, India was struck by multiple tsunamis that devastated certain areas of both countries. Our Indian facilities are located in regions that are susceptible to tsunamis and other natural disasters, which may increase the risk of disruption of information systems and telephone service for sustained periods. Damage or destruction that interrupts our ability to deliver our services could damage our relationships with our clients and may cause us to incur substantial additional expense to repair or replace damaged equipment or facilities. Our insurance coverage may not be sufficient to cover all such expenses. Furthermore, we may be unable to secure such insurance coverage or to secure such insurance coverage at premiums acceptable to us in the future. Prolonged disruption of our services as a result of natural disasters may cause our clients to terminate their contracts with us and may result in project delays, project cancellations and loss of substantial revenue to us. Prolonged disruptions may also harm our team members or cause them to relocate, which could have a material adverse effect on our business. The laws of India and Canada do not protect intellectual property rights to the same extent as those of the United States and we may be unsuccessful in protecting our intellectual property rights. Unauthorized use of our intellectual property rights may result in loss of clients and increased competition. Our success depends, in part, upon our ability to protect our proprietary methodologies, trade secrets and other intellectual property. We rely upon a combination of trade secrets, confidentiality policies, non-disclosure agreements, other contractual arrangements and copyright and trademark laws to protect our intellectual property rights. However, existing laws of India and Canada do not provide protection of intellectual property rights to the same extent as provided in the United States. The steps we take to protect our intellectual property may not be adequate to prevent or deter infringement or other unauthorized use of our intellectual property. Thus, we may not be able to detect unauthorized use or take appropriate and timely steps to enforce our intellectual property rights. Our competitors may be able to imitate or duplicate our services or methodologies. The unauthorized use or duplication of our intellectual property could disrupt our ongoing business, distract our management and employees, reduce our revenue and increase our costs and expenses. We may need to litigate to enforce our intellectual property rights or to determine the validity and scope of the proprietary rights of others. Any such litigation could be extremely time-consuming and costly and could materially adversely impact our business. Risks Related to this Offering and Our Common Stock The initial public offering price of our common stock may not be indicative of the market price of our common stock after this offering. In addition, an active, liquid and orderly trading market for our common stock may not develop or be maintained and our stock price may be volatile. Prior to this offering, our common stock was not traded on any market. An active, liquid and orderly trading market for our common stock may not develop or be maintained after this offering. Active, liquid and orderly trading markets usually result in less price volatility and more efficiency in carrying out investors purchase and sale orders. The market price of our common stock could vary significantly as a result of a number of factors, some of which are beyond our control. In the event of a drop in the market price of our common stock, you could lose a substantial part or all of your investment in our common stock. The initial public offering price will be negotiated between us and the underwriters, based on numerous factors which we discuss in "Underwriting," and may not be indicative of the market price of our common stock after this offering. Consequently, you may not be able to sell shares of our common stock at prices equal to or greater than the price paid by you in this offering. The following factors could affect our stock price: our operating and financial performance; quarterly variations in the rate of growth of our financial indicators, such as net income per share, net income and revenues; the public reaction to our press releases, our other public announcements and our filings with the SEC; strategic actions by our competitors; changes in revenue or earnings estimates, or changes in recommendations or withdrawal of research coverage, by equity research analysts; speculation in the press or investment community; the failure of research analysts to cover our common stock; sales of our common stock by us or other stockholders, or the perception that such sales may occur; changes in accounting principles, policies, guidance, interpretations or standards; additions or departures of key management personnel; actions by our stockholders; domestic and international economic, legal and regulatory factors unrelated to our performance; and the realization of any risks describes under this "Risk Factors" section. The stock markets in general have experienced extreme volatility that has often been unrelated to the operating performance of particular companies. These broad market fluctuations may adversely affect the trading price of our common stock. Securities class action litigation has often been instituted against companies following periods of volatility in the overall market and in the market price of a company s securities. Such litigation, if instituted against us, could result in very substantial costs, divert our management s attention and resources and harm our business, operating results and financial condition. The requirements of being a public company, including compliance with the reporting requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the requirements of the Sarbanes-Oxley Act, may strain our resources, increase our costs and distract management, and we may be unable to comply with these requirements in a timely or cost-effective manner. As a public company, we will need to comply with new laws, regulations and requirements, certain corporate governance provisions of the Sarbanes-Oxley Act of 2002, related regulations of the SEC and the requirements of Nasdaq, with which we are not required to comply as a private company. Complying with these statutes, regulations and requirements will occupy a significant amount of time of our board of directors and management and will significantly increase our costs and expenses. We will need to: institute a more comprehensive compliance function; comply with rules promulgated by Nasdaq; continue to prepare and distribute periodic public reports in compliance with our obligations under the federal securities laws; design and implement additional internal controls over financial reporting; establish new internal policies, such as those relating to insider trading; and involve and retain to a greater degree outside counsel and accountants in the above activities. Furthermore, while we generally must comply with Section 404 of the Sarbanes Oxley Act of 2002 for our fiscal year ending December 31, 2018, we are not required to have our independent registered public accounting firm attest to the effectiveness of our internal controls until our first annual report subsequent to our ceasing to be an "emerging growth company" within the meaning of Section 2(a)(19) of the Securities Act. Accordingly, we may not be required to have our independent registered public accounting firm attest to the effectiveness of our internal controls until as late as our annual report for the fiscal year ending December 31, 2022. Once it is required to do so, our independent registered public accounting firm may issue a report that is adverse in the event it is not satisfied that the internal controls over financial reporting was maintained in all material respects. Compliance with these requirements may strain our resources, increase our costs and distract management, and we may be unable to comply with these requirements in a timely or cost-effective manner. In addition, we expect that being a public company subject to these rules and regulations may make it more difficult and more expensive for us to obtain director and officer liability insurance and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a result, it may be more difficult for us to attract and retain qualified individuals to serve on our board of directors or as executive officers. We are currently evaluating these rules, and we cannot predict or estimate the amount of additional costs we may incur or the timing of such costs. If we fail to maintain an effective system of disclosure controls and internal control over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable regulations could be impaired. As a public company, we will be subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, and the rules and regulations of the applicable listing standards of The Nasdaq Stock Market. We expect that the requirements of these rules and regulations will continue to increase our legal, accounting, and financial compliance costs, make some activities more difficult, time-consuming, and costly, and place significant strain on our personnel, systems, and resources. The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting. We are continuing to develop and refine our disclosure controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we will file with the Securities and Exchange Commission, or SEC, is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms and that information required to be disclosed in reports under the Exchange Act is accumulated and communicated to our principal executive and financial officers. We are also continuing to improve our internal control over financial reporting. In order to maintain and improve the effectiveness of our disclosure controls and procedures and internal control over financial reporting, we have expended, and anticipate that we will continue to expend, significant resources, including accounting-related costs and significant management oversight. Our current controls and any new controls that we develop may become inadequate because of changes in conditions in our business. Further, weaknesses in our disclosure controls and internal control over financial reporting may be discovered in the future. Any failure to develop or maintain effective controls or any difficulties encountered in their implementation or improvement could harm our operating results or cause us to fail to meet our reporting obligations and may result in a restatement of our financial statements for prior periods. Any failure to implement and maintain effective internal control over financial reporting also could adversely affect the results of periodic management evaluations and annual independent registered public accounting firm attestation reports regarding the effectiveness of our internal control over financial reporting that we will eventually be required to include in our periodic reports that will be filed with the SEC. Ineffective disclosure controls and procedures and internal control over financial reporting could also cause investors to lose confidence in our reported financial and other information, which would likely have a negative effect on the trading price of our common stock. In addition, if we are unable to continue to meet these requirements, we may not be able to remain listed on The Nasdaq Stock Market. We are not currently required to comply with the SEC rules that implement Section 404 of the Sarbanes-Oxley Act and are therefore not required to make a formal assessment of the effectiveness of our internal control over financial reporting for that purpose. As a public company, we will be required to provide an annual management report on the effectiveness of our internal control over financial reporting commencing with our second annual report on Form 10-K. Our independent registered public accounting firm is not required to formally attest to the effectiveness of our internal control over financial reporting until after we are no longer an "emerging growth company" as defined in the JOBS Act. At such time, our independent registered public accounting firm may issue a report that is adverse in the event it is not satisfied with the level at which our internal control over financial reporting is designed, or operating. Any failure to maintain effective disclosure controls and internal control over financial reporting could have a material and adverse effect on our business and operating results and could cause a decline in the price of our common stock. Our management team has limited experience managing a public company. Most members of our management team have limited experience managing a publicly-traded company, interacting with public company investors, and complying with the complex and ever-changing laws, rules, regulations and pronouncements pertaining to public companies. Our management team may not successfully or efficiently manage our transition to being a public company subject to significant regulatory oversight and reporting obligations under the federal securities laws and the continuous scrutiny of securities analysts and investors. These new obligations and constituents will require significant attention from our senior management and could divert their attention away from the day-to-day management of our business, which could adversely affect our business, financial condition, and operating results. We will incur increased costs as a result of operating a public company, and our management will be required to devote substantial time to compliance with our public company responsibilities and corporate governance practices. As a public company, and particularly after we are no longer an "emerging growth company," we will incur significant legal, accounting and other expenses that we did not incur as a private company. The Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the listing requirements of Nasdaq and other applicable securities rules and regulations impose various requirements on public companies. Our management and other personnel will need to devote a substantial amount of time to compliance with these requirements. Moreover, these rules and regulations will increase our legal and financial compliance costs and will make some activities more time-consuming and costly. For example, we expect that these rules and regulations may make it more difficult and more expensive for us to obtain directors and officers liability insurance, which could make it more difficult for us to attract and retain qualified members of our board of directors. We cannot predict or estimate the amount of additional costs we will incur as a public company or the timing of such costs. For as long as we are an emerging growth company, we will not be required to comply with certain reporting requirements, including those relating to accounting standards and disclosure about our executive compensation, that apply to other public companies. In April 2012, the JOBS Act was signed into law. We are classified as an "emerging growth company" under the JOBS Act. For as long as we are an emerging growth company, which may be up to five full fiscal years, unlike other public companies, we will not be required to, among other things, (i) provide an auditor s attestation report on management s assessment of the effectiveness of our system of internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act, (ii) comply with any new requirements adopted by the PCAOB requiring mandatory audit firm rotation or a supplement to the auditor s report in which the auditor would be required to provide additional information about the audit and the financial statements of the issuer, (iii) provide certain disclosure regarding executive compensation required of larger public companies or (iv) hold nonbinding advisory votes on executive compensation. We will remain an emerging growth company for up to five years, although we will lose that status sooner if we have more than $1.07 billion of revenues in a fiscal year, have more than $700 million in market value of our common stock held by non-affiliates, or issue more than $1.0 billion of non-convertible debt over a three-year period. We have elected to take advantage of the reduced disclosure requirements set forth above and may elect to take advantage of these exemptions for so long as we remain an emerging growth company. As a result, the information that we provide to our stockholders may be different than you might receive from other public reporting companies in which you hold equity interests. In addition, the JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. We have elected to use the extended transition period for complying with new or revised accounting standards; and as a result of this election, our financial statements may not be comparable to companies that comply with public company effective dates. If some investors find our common stock to be less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile. In making your investment decision, you should understand that we and the underwriters have not authorized any other party to provide you with information concerning us or this offering. You should carefully evaluate all of the information in this prospectus before investing in our company. We may receive media coverage regarding our company, including coverage that is not directly attributable to statements made by our officers, directors or employees, that incorrectly reports on statements made by such persons, or that is misleading as a result of omitting information provided by such persons. We and the underwriters have not authorized any other party to provide you with information concerning us or this offering other than as set forth in this prospectus, and you should not rely on this information in making an investment decision. If securities or industry analysts do not publish research or reports about our business, or publish negative reports about our business, our share price and trading volume could decline. The trading market for our common stock will depend, in part, on the research and reports that securities or industry analysts publish about us or our business. We do not have any control over these analysts. If our financial performance fails to meet analyst estimates or one or more of the analysts who cover us downgrade our common shares or change their opinion of our common shares, our share price would likely decline. If one or more of these analysts cease coverage of our company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which could cause our share price or trading volume to decline. You will suffer immediate and substantial dilution in the net tangible book value of the common stock you purchase. You will incur immediate and substantial dilution as a result of this offering. Prior investors have paid substantially less per share than the price per share in this offering. The initial offering price is substantially higher than the net tangible book value per share of the outstanding common stock immediately after this offering. Accordingly, based on our net tangible book value as of June 30, 2018, assuming an initial public offering price of $6.00 per share, we expect that purchasers of common stock in this offering will experience immediate and substantial dilution of approximately $ 7 .22 per share. Furthermore, if the underwriters exercise their over-allotment option in full, outstanding options or warrants are exercised, we issue awards to our employees from our management incentive option pool or we otherwise issue additional shares of our common stock, you could experience further dilution. See "Dilution" on page 34. We are conducting a primary and secondary offering concurrently and the offering price of each offering could differ. We are conducting a primary and secondary offering concurrently. The offering price of the shares of common stock has been arbitrarily determined without independent valuation of the shares by our management based on estimates of the price that purchasers of speculative securities, such as our common stock, will be willing to pay considering our nature and capital structure, the experience of the officers and directors and the market conditions for the sale of equity securities in similar companies. The offering price of the shares bears no relationship to our assets, earnings or book value, or any other objective standard of value and thus the offering price of each offering could differ. Purchasers in the resale offering could pay more or less than the offering price in the best efforts offering, and, as a result, the secondary offering could hinder our ability to raise funds in our primary offering. We may invest or spend the net proceeds of this offering in ways in which you may not agree or in ways which may not yield a return. We intend to use the net proceeds for working capital purposes, to finance the expansion of our business, which may include the acquisition of complementary businesses, to hire additional personnel to support such expansion, as well as the re-focus of our business plan, to reduce or repay the seller note issued in connection with our acquisition of iTech US, Inc., and to reduce or satisfy our obligations under our advance agreements with C6 Capital, LLC. See "Use of Proceeds" on page 31. Our management will have considerable discretion in the application of the net proceeds. You will be relying on the judgment of our management with regard to the use of these net proceeds, and you will not have the opportunity, as part of your investment decision, to assess whether the proceeds are being used effectively. The net proceeds may be invested with a view towards long-term benefits for our stockholders and this may not increase our operating results or market value. The failure by our management to apply these funds effectively may adversely affect the return on your investment. We have no plans to pay regular dividends on our common stock for the foreseeable future. We have paid no dividends on our common stock to date and we do not anticipate paying any dividends to holders of our common stock in the foreseeable future. Any declaration and payment of future dividends to holders of our common stock may be limited by our credit facilities, will be at the sole discretion of our board of directors and will depend on many factors, including our financial condition, earnings, capital requirements, level of indebtedness, statutory and contractual restrictions applying to the payment of dividends and other considerations that our board of directors deems relevant. See "Dividend Policy." SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS This prospectus contains forward-looking statements. Such statements include statements regarding our expectations, hopes, beliefs or intentions regarding the future, including but not limited to statements regarding our market, strategy, competition, development plans (including acquisitions and expansion), financing, revenues, operations, and compliance with applicable laws. Forward-looking statements involve certain risks and uncertainties, and actual results may differ materially from those discussed in any such statement. Factors that could cause actual results to differ materially from such forward-looking statements include the risks described in greater detail in the following paragraphs. All forward-looking statements in this document are made as of the date hereof, based on information available to us as of the date hereof, and we assume no obligation to update any forward-looking statement except where applicable law requires us to update these statements. Market data used throughout this prospectus is based on published third party reports or the good faith estimates of management, which estimates are based upon their review of internal surveys, independent industry publications and other publicly available information. STATEMENT REGARDING INDUSTRY AND MARKET DATA Any market or industry data contained in this prospectus is based on a variety of sources, including internal data and estimates, independent industry publications, government publications, reports by market research firms or other published independent sources. Industry publications and other published sources generally state that the information contained therein has been obtained from third-party sources believed to be reliable. Our internal data and estimates are based upon information obtained from trade and business organizations and other contacts in the markets in which we operate and our management s understanding of industry conditions, and such information has not been verified by any independent sources. Accordingly, investors should not place undue reliance on such data and information. USE OF PROCEEDS We expect the net proceeds from this offering to be approximately $ 4.9 million, assuming an initial public offering price of $6.00 per share (the midpoint of the price range set forth on the cover page of this prospectus) and after deducting estimated underwriting discounts and commissions and estimated offering expenses of approximately $ 1.1 million, in the aggregate. If the underwriters over-allotment option is exercised in full, assuming an initial public offering price of $6.00 per share and after deducting estimated underwriting discounts and commissions and estimated offering expenses, we estimate that our net proceeds will be approximately $5.7 million. We intend to allocate net proceeds from this offering for working capital purposes, to finance the expansion of our business, which may include the acquisition of complementary businesses, and to hire additional personnel to support such expansion, as well as the re-focus of our business plan. We do not have an agreement in place with any acquisition candidates as of the date of this prospectus. We intend to allocate up to approximately $1.4 million of net proceeds to reduce or repay the seller note, which was issued to Kishore Khandavalli in the iTech US, Inc. acquisition, who is a current board member of SharedLABS. We also intend to allocate up to approximately $2.4 million of the net proceeds to reduce or satisfy our obligations under our advance agreements with C6 Capital, LLC. A $1.00 increase or decrease in the assumed initial public offering price of $6.00 per share would cause the net proceeds from this offering, after deducting the underwriting discounts and commissions and estimated offering expenses, received by us to increase or decrease, respectively, by approximately $ 0.9 million, assuming the number of shares offered by us, as set forth on the cover page of this prospectus remains the same. If the proceeds increase due to a higher initial public offering price or due to the issuance of additional shares, we would use the additional net proceeds for general corporate purposes. If the proceeds decrease due to a lower initial public offering price or a decrease in the number of shares issued, then we would reduce by a corresponding amount the net proceeds directed to capital expenditures. We will pay all of our own expenses and certain expenses of the underwriters related to this offering. See "Underwriting" on page 82. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS There is no market for our common stock. We have applied to list our common stock on The Nasdaq Capital Market; however, there can be no assurance that our application will be approved. As of October 10 , 2018, there were 7,996,636 shares of common stock issued and outstanding. As of October 10 , 2018, there were approximately 44 holders of record of our common stock. DIVIDEND POLICY After this offering, we intend to retain all available funds and any future earnings to reduce debt and fund the development and growth of our business, and we do not anticipate paying any dividends on our common stock. However, in the future, subject to the factors described below and our future liquidity and capitalization, we may change this policy and choose to pay dividends. The amounts available to us to pay cash dividends are restricted by our credit facilities and may be further restricted by any future indebtedness we incur. The declaration and payment of dividends also is subject to the discretion of our board of directors and depends on various factors, including our net income, financial condition, cash requirements, future prospects and other factors deemed relevant by our board of directors. In addition, under Delaware law, our board of directors may declare dividends only to the extent of our surplus (which is defined as total assets at fair market value minus total liabilities, minus statutory capital) or, if there is no surplus, out of our net profits for the then current and/or immediately preceding fiscal year. Any future determination to pay dividends will be at the discretion of our board of directors and will take into account: restrictions in our credit facilities; general economic and business conditions; our financial condition and results of operations; our capital requirements; the ability of our operating subsidiaries to pay dividends and make distributions to us; and such other factors as our board of directors may deem relevant. CAPITALIZATION The following table sets forth our consolidated cash and cash equivalents and capitalization as of June 30, 2018, on: an actual basis; a pro forma basis to give effect to a net increase of approximately $2.1 million in debt from the $3.3 million C6 Capital financing transactions during July and August of 2018, offset by the $1.2 million repayment of the Super G loan balance; and a pro forma as-adjusted basis after giving effect to the sale of 1,000,000 shares of our common stock in this offering at an assumed initial offering price of $6.00 per share (which is the midpoint of the range set forth on the cover of this prospectus), resulting in a net increase in cash and cash equivalents of approximately $1.0 million after deducting estimated underwriting discounts and commissions and estimated offering expenses of approximately $1.1 million, in the aggregate, and after deducting the planned repayment of debt to Kishore Khandavalli and C6 Capital of approximately $1.4 million and $2.4 million, respectively. See "Use of Proceeds" on page 31. You should read the following table in conjunction with "Management s Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements and related notes appearing elsewhere in this prospectus. As of June 30, 2018 Pro Pro Forma Actual Forma (1) As Adjusted (2)(3) Cash and cash equivalents $ 864,130 $ 2,914,130 $ 3,925,260 Debt $ 13,839,501 $ 15,889,501 $ 12,025,001 Redeemable common stock, $0.0001 par value, 549,067 shares issued and outstanding 2,056,637 2,056,637 2,056,637 Members /stockholders equity: Preferred stock, $0.0001 par value, 10,000,000 shares authorized, none issued and outstanding - - - Common stock, $0.0001 par value per share, 100,000,000 shares authorized, 7,447,569 shares outstanding on an actual basis, 7,447,569 shares outstanding on a pro forma basis, 8,447,569 shares outstanding on a pro forma as adjusted basis 745 745 845 Additional paid-in capital 7,588,023 7,588,023 12,463,553 Accumulated deficit (5,277,930 ) (5,277,930 ) (5,277,930 ) Accumulated other comprehensive income (4,738 ) (4,738 ) (4,738 ) Total SharedLABS stockholders equity 2,306,100 2,306,100 7,181,730 Total capitalization $ 18,202,238 $ 20,252,238 $ 21,263,368 The information presented above is based on the number of shares of our common stock outstanding as of June 30, 2018. (1) The pro forma information presented is reflective of the financing transactions with C6 Capital and the repayment of the Super G loan balance, which is discussed elsewhere in this prospectus. (2) The pro forma as adjusted information presented is illustrative only and will be adjusted based on the actual public offering price and other terms of this offering determined at pricing. A $1.00 increase (decrease) in the assumed initial public offering price of $6.00 per share, which is the midpoint of the price range set forth on the cover page of this prospectus, would increase (decrease) our pro forma as adjusted cash and cash equivalents, additional paid-in capital, total stockholders equity, and total capitalization by $ 920,000 , assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same, and after deducting the estimated underwriting discounts and commissions. Similarly, each increase (decrease) of one hundred thousand shares in the number of shares offered by us would increase (decrease) our pro forma as adjusted cash and cash equivalents, additional paid-in capital, total stockholders equity, and total capitalization by $ 552,000 , assuming that the assumed initial public offering price, which is the midpoint of the price range set forth on the cover page of this prospectus, remains the same and after deducting the estimated underwriting discounts and commissions. If the underwriters option to purchase additional shares is exercised in full, the pro forma as adjusted amount of each of cash and cash equivalents, additional paid-in capital, total stockholders equity, and total capitalization would increase by $ 828,000 , after deducting the estimated underwriting discounts and commissions, and we would have 9,146,636 shares of our common stock and no shares of our preferred stock issued and outstanding, pro forma as adjusted. (3) The pro forma as adjusted information presented is reflective of the planned repayment of debt to Kishore Khandavalli and C6 Capital of approximately $1.4 million and $2.4 million, respectively. See "Use of Proceeds" on page 31. DILUTION If you invest in our common stock, your interest will be diluted to the extent of the difference between the initial public offering price per share of our common stock and the as adjusted net tangible book value per share of our common stock immediately after this offering. The net tangible book value of our common stock as of June 30, 2018 was $(15,879,747), or $(1.99) per share. Net tangible book value per share represents our total tangible assets (which excludes deferred offering costs), less our total liabilities, divided by the number of shares of outstanding common stock. After giving effect to the receipt of the net proceeds from our sale of 1,000,000 shares of common stock in this offering at an assumed initial public offering price of $6.00 per share, the midpoint of the range set forth on the cover of this prospectus, after deducting underwriting discounts and commissions and estimated offering expenses payable by us, our as adjusted net tangible book value as of June 30, 2018 would have been $( 11,004,117 ), or $( 1 .22) per share. This represents an immediate increase in net tangible book value of $0.77 per share to existing stockholders and an immediate dilution of $ 7 .22 per share to new investors purchasing common stock in this offering. We are conducting this offering concurrently with a secondary offering pursuant to which Selling Stockholders are offering an aggregate of 1,137,250 shares of our common stock, and the offering price of each offering could differ. The following table illustrates this dilution on a per share basis to new investors: Assumed initial public offering price per share $6.00 Net tangible book value per share as of June 30, 2018 $(1.99) Increase per share attributable to investors in this offering $ 0 .77 Net tangible book value per share, as adjusted to give effect to this offering $( 1 .22) Dilution in net tangible book value per share to new investors in this offering $ 7 .22 A $1.00 increase (decrease) in the assumed initial public offering price of $6.00 per share would increase (decrease) the net tangible book value, as adjusted to give effect to this offering, by $0.10 per share and the dilution to new investors by $0. 90 per share, assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same, and after deducting underwriting discounts and commissions and estimated expenses payable by us. Similarly, each increase of one hundred thousand shares in the number of shares of common stock offered by us would increase the net tangible book value, as adjusted to give effect to this offering, by $0.07 per share and reduce the dilution to new investors by $0.07 per share, assuming the assumed initial public offering price remains the same and after deducting underwriting discounts and commissions and estimated expenses payable by us. Similarly, each decrease of one hundred thousand shares in the number of shares of common stock offered by us would decrease the net tangible book value, as adjusted to give effect to this offering, by $0.08 per share and increase the dilution to new investors by $0.08 per share, assuming the assumed initial public offering price remains the same and after deducting underwriting discounts and commissions and estimated expenses payable by us. If the underwriters exercise their over-allotment option in full, the net tangible book value per share of our common stock, as adjusted to give effect to this offering, would be $( 1.11 ) per share, and the dilution in net tangible book value per share to investors in this offering would be $7.11 per share of common stock. The table below summarizes as of June 30, 2018, on an as adjusted basis described above, the number of shares of our common stock, the total consideration and the average price per share (i) paid to us by existing stockholders and (ii) to be paid by new investors purchasing our common stock in this offering at an assumed initial public offering price of $6.00 per share, before deducting underwriting discounts and commissions and estimated offering expenses. Shares Purchased Total Consideration Number Percent Amount (in thousands) Percent Average Price Per Share Existing stockholders 7,996,636 89 % 4,765 44 % 0.60 New investors 1,000,000 11 % 6,000 56 % 6.00 Total 8,996,636 100% 10,765 100% 1.20 To the extent that any outstanding options are exercised, new options are issued under our stock-based compensation plans or we issue additional shares of common stock in the future, there will be further dilution to investors participating in this offering. If all outstanding warrants as of June 30, 2018 were exercised, then our existing stockholders, including the holders of these warrants, would own 91% and our new investors would own 9% of the total number of shares of our common stock outstanding upon the completion of this offering. In such event, the total consideration paid by our existing stockholders, including the holders of these warrants, would be approximately $10.2 million, or 63% , the total consideration paid by our new investors would be $6.0 million, or 37% , of the total consideration for our common stock outstanding upon the completion of this offering, and, the average price per share paid by our existing stockholders would be $1.04 and the average price per share paid by our new investors would be $6.00. DETERMINATION OF OFFERING PRICE Since our shares of common stock are not listed or quoted on any exchange or quotation system, the initial public offering price was determined through negotiations between us and the representative of the underwriters. In addition to prevailing market conditions, the factors considered in determining the initial public offering price included the following: the information included in this prospectus and otherwise available to the representative; the valuation multiples of publicly traded companies that the representative believes to be comparable to us; our financial information; our prospects and our history, and the prospects of the industry in which we compete; an assessment of our management, its past and present operations, and the prospects for, and timing of, our future revenues; and the above factors in relation to market values and various evolution measures of other companies engaged in activities similar to ours. An active trading market for our common shares may not develop. It is also possible that, after the offering, the shares will not trade in the public market at or above the initial public offering price. The initial public offering price does not necessarily bear any relationship to our book value, assets, past operating results, financial condition or any other established criteria of value. Although our common stock is not listed on a public exchange, we have applied to have our common stock listed on The Nasdaq Capital Market. No assurance can be given that our application will be approved. There is no assurance that our common stock will trade at market prices in excess of the initial public offering price as prices for the common stock in any public market which may develop will be determined in the marketplace and may be influenced by many factors, including the depth and liquidity of the market for the common stock, investor perception of us and general economic and market conditions and many of these factors are not within our control. MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CERTAIN SECTIONS RESTATED) The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the section titled "Summary Selected Consolidated Financial and Other Data" and the consolidated financial statements and related notes thereto included elsewhere in this prospectus. The historical results and pro forma data set forth below are not necessarily indicative of what the actual results of operations would have been had the acquisitions occurred on the first day of each period presented, nor do they purport to be indicative of the results of future operations. The pro forma information should be read in conjunction with Note 4-Pro Forma Financial Information (Unaudited) in the notes to the unaudited condensed consolidated financial statements for the six months ended June 30, 2018 and 2017, Note 5-Acquisitions in the notes to the consolidated financial statements for the years ended December 31, 2017 and 2016, and the unaudited pro forma consolidated financial statements for SharedLABS, Inc. and Subsidiaries beginning on page F-85. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those discussed below. Factors that could cause or contribute to such differences include, but are not limited to, those identified below and those discussed in the section titled "Risk Factors" included elsewhere in this prospectus. Restatement As discussed in Note 2 — Restatement of Previously Issued Financial Statements to the consolidated financial statements, we are restating our consolidated financial statements and related financial information for the year ended December 31, 2017. Company Overview We are an information technology ("IT") services company. We enable businesses and organizations to radically adapt as they harness our extensive experience with next-generation technologies like cloud hosting, big data analytics, artificial intelligence ("AI"), and the Internet of Things ("IoT"). Rather than offer a "one size fits all" approach, through strategy, consulting, design and implementation, we tailor our professional services to each client s needs to provide customized IT solutions, allowing them to make the absolute most of our services. We complement our professional services with project management, managed services, maintenance and support; in other words, we shepherd each and every product through its entire lifecycle. Even with this care, we remain a flexible organization that is able to predict and capitalize upon new technologies. We believe that our ability to straddle the present and the future sets us apart from our competitors. We enable business transformation through our expertise in IT solutions and offer a broad range of software, digital, cloud, and security services and solutions to both commercial and government clients across various sectors including technology, digital media and entertainment, banking and insurance, payments, transportation, retail and e-commerce. Our industry and technological expertise and our investments in network, data center, security, collaboration and mobility allow us to customize our integration services specifically for each client. We differentiate ourselves in the market through our bias for action, our unwavering commitment to client satisfaction, our market-driven services, and our exceptional knowledge and insight into the industries and vertical markets we serve. We are investing in key focus areas to build and deliver our next-generation infrastructure and software capabilities in order to bring customers greater value and innovation. We leverage our deep experiential knowledge, technological competencies, and innovative solutions to provide market-leading platforms powered by our exceptional global delivery service. Our solutions are delivered through a broad suite of professional services, including software development, digital marketing, strategy, consulting, design and implementation. We customize our service offerings to the client s needs to enable them to attain their data, network applications, and workforce objectives. We complement our professional services with project management, technology acquisition, managed services, maintenance and support to offer a full lifecycle model. Our services-led, lifecycle model leads to ongoing client engagement. Using our methodology, global delivery model, innovative solutions, and industry expertise, we provide cost-effective services that enable our clients to use IT to enhance business performance, accelerate time-to-market, increase productivity and improve customer service. Given our broad technology enablement, approach to service delivery, flexible services model, and robust partner community, we believe that we are well positioned to be a leading technology services company by providing end-to-end technology and business solutions to the newly defined enterprise. Factors Affecting Our Operating Performance We believe that the financial performance of our business and our future success are dependent upon many factors, including those highlighted in this section. Our operating performance will depend upon many variables, including the success of our growth strategies and the timing and size of investments and expenditures that we choose to undertake, as well as market growth and other factors that are not within our control. Macroeconomic environment: Weak economic conditions generally, U.S. federal or other government spending cuts, a rising interest rate environment, uncertain tax and regulatory policies, weakening business confidence or a tightening of credit markets could cause our clients and potential clients to postpone or reduce spending on technology solutions, products or services. Our clients are diverse, including both public and private sector parties, but any long-term, severe or sustained economic downturn may adversely affect all of our clients. Competitive markets: We believe that we are uniquely positioned to take advantage of the markets in which we operate because of our expertise and specialization. We focus on the middle-market segment of the IT Services market. Since most large-scale IT Service providers focus on larger enterprises and because smaller regional competitors are typically unable to provide end-to-end solutions, we believe the middle market is underpenetrated and underserved. Strategic and investment decisions by our competitors may affect our operating performance. Delivery of complex technology solutions: Our vendor agnostic approach to the market allows us to develop optimal IT solutions for our clients based on what we view as the best mix of technologies. We deliver our end-to-end solutions through a full lifecycle model, which combines consulting, engineering, managed services, and technology to give us a significant competitive advantage compared to other IT providers. Our ability to effectively manage project engagements, including logistics, product availability, client requirements, engineering resources, and service levels, will affect our financial performance. Vendor relationships: We are focused on developing and strengthening our relationships with OEMs. We partner with OEMs to deploy product offerings. Pricing and incentive programs are subject to change, and the loss of, change in business relationship with or change in the behavior, including the timing of fulfillment, of any key vendor partners, or the diminished availability of their products, may impact the timing of our sales or could reduce the supply and increase the cost of the products we sell. While we maintain existing relationships with large vendors, there is no guarantee that our vendor partners will continue to develop or produce information technology products that are popular with our clients. We maintain the ability to evolve our vendor relationships as necessary to respond to market trends. Seasonality: Our results may be affected by slight variances as a result of seasonality we may experience across our business. This seasonality is typically driven by budget cycles and spending patterns across our diverse client base. For example, our local, state and federal government clients operate on an annual budget cycle, most often on the basis of a fiscal year that begins October 1. Our private sector clients operate on an annual budget cycle, most often on the basis of a fiscal year that begins January 1. It is not uncommon to experience a higher level of contract awards, funding actions and overall government and private demand for services in the final months and weeks of the government and private fiscal years, respectively. Consequently, our revenue in the first and second quarters of our fiscal year may be greater than revenue recognized in the third and fourth quarters of our fiscal year. Recent Developments iTech US, Inc. and SmartWorks, LLC Acquisition We acquired all of the outstanding stock of iTech effective after the close of business on June 30, 2017. Accordingly, the consolidated financial statements include the results of operations of the iTech and its subsidiaries, SmartWorks and iTech IT, from that date forward. The aggregate purchase price was approximately $16.9 million, which was comprised of $11,000,000 in cash, consisting of $2,000,000 in long-term debt, and an assignment agreement of $7,275,000 and cash. Along with cash, the purchase includes approximately $3,081,000 in seller notes payable, 885,436 shares of common stock, contingent consideration of $606,795 and warrants to purchase up to 16,000 shares of common stock of the Company issued as part of the purchase. The fair value of the common stock and warrants issued was $2,195,881 and $1,890, respectively. A total of 485,436 (the "Rollover Shares") of the 885,436 common shares issued to the seller is subject to a Value Assurances Agreement (the "Contingent Consideration"), which assures that the value of the shares subject to the agreement will maintain a fair value of not less than $2,000,000 as of the second anniversary of the effective date of the acquisition. If the fair value is less than $2,000,000, the Company will issue such number of additional shares of common stock as is necessary to ensure the fair value of the total shares subject to this agreement is equal to $2,000,000, capped at 242,718 additional shares. These shares are also subject to a call option prior to the second anniversary of the effective date, under which we may purchase the shares subject to this agreement in total for $2,000,000, or in part by dividing $2,000,000 by the total shares subject to this agreement to establish a per share price for the purchase. The call option is subject to certain conditions, as defined in the agreement. On the date of the acquisition the Company recorded a liability at fair value of $606,795 related to the contingent stock liability. The fair value of the Contingent Consideration is based on the Company s most recent sales of equity securities (See Note 12). As of December 31, 2017, $422,329 was the fair value of the Contingent Consideration obligation in connection with this acquisition. The remaining 400,000 of the 885,436 shares of the common stock issued to the seller is subject to a Put and Call Option Agreement, under which the seller has the option, exercisable any time after 90 days from the effective date of the acquisition, to sell to the Company all or any portion of the common shares owned for a price of $2.60 per share. The Company has the right to purchase from the seller any or all of the common shares owned for a price of $2.60 per share. The securities must be classified outside of permanent equity because certain redemption features of the common stock are outside of the Company s control. The initial carrying value of the redeemable common stock is its issuance date fair value of $992,000. Subsequently, the Company concluded the security was currently redeemable and recorded in temporary equity at December 31, 2017 the maximum redemption amount of $1,040,000. Increases in the carrying amount of the redeemable common stock are affected by charges against retained earnings (or in the absence of retained earnings, additional paid-in capital). The Company recorded a deemed dividend of $48,000 related to the increase in the redemption value. In addition to the purchase price the Company agreed to pay the seller a management fee of $10,000 per day for each calendar day beginning July 1, 2017 until the closing occurred on August 11, 2017 which totaled $410,000. These fees were recorded as transaction costs. ExoiS Inc. Acquisition Effective December 1, 2017, we acquired all of the outstanding stock of ExoiS, Inc. in exchange for 149,067 shares of the Company s common stock. The fair value of the common stock issued was $259,377. The common stock issued to the seller is subject to a Put Option Agreement, under which the seller has the option to sell to the Company all the common shares owned for a price equal to the greater of i) $1,016,637 or ii) the fair market value of the shares as of the date of the exercise notice. The securities must be classified outside of permanent equity because certain redemption features of the common stock are outside of the Company s control. The initial carrying value of the redeemable common stock is its issuance date fair value of $259,377. Subsequently, the Company concluded the security was currently redeemable and recorded in temporary equity at December 31, 2017 the maximum redemption amount of $1,016,637. Increases in the carrying amount of the redeemable common stock are affected by charges against retained earnings (or in the absence of retained earnings, additional paid-in capital). The Company recorded a deemed dividend of $757,260 related to the increase in the redemption value. C6 Capital, LLC Advance Agreements The Company completed a transaction on July 5, 2018 with C6 Capital, LLC ("C6") to raise $1,750,000, less applicable fees, which is an advance on future revenues. As a result of this transaction, the Company has agreed to sell, assign and transfer, without recourse, certain proceeds of each future sale made by the Company, until C6 has received their purchased amount of future revenues. The purchased amount is determined based on the number of calendar days between funding by C6 and delivery of purchased amount to C6, as follows: (a) $2,030,000 within 30 days; (b) $2,080,500 within 60 days; (c) $2,212,000 within 90 days; (d) $2,215,500 within 120 days; or (e) $2,397,500 after 120 days. To satisfy the Super G Business Loan, as more fully described below (See "Liquidity and Capital Resources"), on August 30, 2018, the Company completed a second transaction with C6 to raise $1,500,000, less applicable fees, which is an advance on future revenues. As a result of this transaction, the Company has agreed to sell, assign and transfer, without recourse, certain proceeds of each future sale made by the Company, until C6 has received their purchased amount of future revenues. The purchased amount is determined based on the number of calendar days between funding by C6 and delivery of purchased amount to C6, as follows: (a) $1,800,000 within 90 days; or (b) $2,055,000 after 90 days. Operational Developments Since January 1, 2018, we implemented a direct sales plan, which involves utilizing our entire staff to drive revenue growth. As a result, since June 30, 2018, 54 new customers have moved into billing and are currently generating revenue. Additionally, in August 2018, we recognized an approximate $800,000 increase in invoicing over our June 2018 invoicing, due primarily to our contracts with the aforementioned new customers. These contracts carry a total contract value, over a 12 to 18 month period, of approximately $15.9 million. Results of Operations for the Three Months Ended June 30, 2018 and 2017. The condensed consolidated financial information below includes the results of operations of iTech and ExoiS from the date of each acquisition forward. The following table sets forth the summary income statement for the three months ended June 30, 2018 and 2017: For the Three Months Ended For the Three Months Ended June 30, 2018 June 30, 2017 Net revenue $18,227,869 $- Cost of revenue $(15,956,209) $- Operating expenses $(2,650,690) $(1,203,576) Other income (expenses), net $(1,112,925) $- Benefit from income taxes $344,630 $- Net loss $(1,147,325) $(1,203,576) Revenues: Revenues consist primarily of IT consulting, application development, and project development services. Revenues generated during the six months ended June 30, 2018 from our four solution areas were as follows: (i) approximately 64.5% from software & applications; (ii) approximately 26.8% from data & analytics; (iii) approximately 5.6% from cloud; and (iv) approximately 3.1% from web & digital. Revenue was $18,227,869 for the three months ended June 30, 2018, as compared to $0 for the three months ended June 30, 2017. The substantial increase in revenue was due to the iTech and ExoiS acquisitions which took place during the second half of 2017. The Company recognized revenue from iTech of approximately $17.9 million and ExoiS of approximately $208,000 during the six months ended June 30, 2018. Cost of Revenues: Cost of revenues consist primarily of compensation and related costs for personnel along with costs related to outside programmers. Cost of revenues was $15,956,209 for the three months ended June 30, 2018, as compared to $0 for the three months ended June 30, 2017. The substantial increase in cost of revenues was due to the iTech acquisition which took place during the second half of 2017. The Company recognized cost of revenues from iTech of approximately $15.9 million during the three months ended June 30, 2018. Operating Expenses: Operating expenses consist primarily of compensation and related costs for personnel and include costs related to facilities, finance, human resources, information technology and fees for professional services. Professional services are principally comprised of outside legal, audit and outsourcing services. Operating expenses increased by $1,447,114 during the three months ended June 30, 2018, as compared to the three months ended June 30, 2017. The overall increase in operating expenses is primarily attributable to the following net increases (decreases) in operating expenses: A decrease in stock-based compensation expense of $942,400. During the three months ended June 30, 2018, no stock-based awards were granted. During the three months ended June 30, 2017, the Company recognized $198,400 and $744,000 of stock-based compensation as a result of stock-based awards granted to employees and consultants, respectively; An increase of payroll and related expenses of $1,709,164 (excluding stock-based compensation - see above). The substantial increase in payroll and related expenses was due to the iTech and ExoiS acquisitions during 2017. The Company recorded payroll and related expenses from iTech of approximately $1.01 million and ExoiS of approximately $67,000 during the three months ended June 30, 2018. In addition, subsequent to the second quarter of 2017, the Company hired two finance and accounting employees, one sales and marketing employee, and three administrative employees (collectively, the "New Employees"). The Company recorded payroll and related expenses of approximately $598,000 during the three months ended June 30, 2018 related to the New Employees. During the three months ended June 30, 2017, the Company did not have payroll expenses; An increase in professional fees of $3,234 (excluding stock-based compensation - see above). In the current period the Company incurred an increase in consulting fees of approximately $240,000 related to business development, financial advisory services, auditing fees and legal fees related to public filing requirements. $17,500 of the $240,000 increase in consulting fees was due to the iTech and ExoiS acquisitions which took place during the second half of 2017. During the three months ended June 30, 2017, the Company incurred professional fees related to acquisition costs of approximately $242,000; An increase in computer, internet expenses and supplies of $74,000. $40,500 of the $74,000 increase in computer, internet expenses and supplies was due to the iTech and ExoiS acquisitions which took place during the second half of 2017; An increase in rent and facility related expense of $188,000. $166,000 of the $188,000 increase in rent and facility related expense was due to the iTech and ExoiS acquisitions which took place during the second half of 2017; An increase in amortization expense of $226,263 as a result of the intangible assets acquired in the iTech and ExoiS acquisitions which took place during the second half of 2017; and An increase in travel, marketing and marketing related expenses of $71,800. $14,000 of the $71,800 increase in travel, marketing and marketing related expenses was due to the iTech and ExoiS acquisitions which took place during the second half of 2017. Other expenses: Other expenses consist primarily of interest expense primarily related to the Company s factoring agreement, promissory notes and warrant issuances, changes in fair value of contingent consideration related to the iTech acquisition and changes in fair value of the guarantee liability. Other expenses were $1,112,925 during the three months ended June 30, 2018, as compared to $0 during the three months ended June 30, 2017. The increase was primarily due to the interest expense on notes issued in conjunction with the acquisition of iTech which took place during the second half of 2017, interest expense on LSQ agreement entered into during the second quarter of 2018 and the change in fair value of the guarantee liability. For the three months ended June 30, 2018, other expenses consisted of $836,262 in interest expense, a change in fair value of guarantee liability of $276,036 and miscellaneous expenses of $627. Benefit from income taxes: For the three months ended June 30, 2018, benefit from income taxes was $344,630. This increase was primarily due to the increase in net operating loss carryforward generated during the three months ended June 30, 2018. As of June 30, 2017, management believed that it was more likely than not that the future benefits of its deferred tax assets would not be realized and established a full valuation allowance at that time. Results of Operations for the Six Months Ended June 30, 2018 and 2017. The condensed consolidated financial information below includes the results of operations of iTech and ExoiS from the date of each acquisition forward. The following table sets forth the summary income statement for the six months ended June 30, 2018 and 2017: For the Six Months Ended For the Six Months Ended June 30, 2018 June 30, 2017 Net revenue $36,010,787 $- Cost of revenue $(31,277,710) $- Operating expenses $(5,409,914) $(1,327,507) Other income (expenses), net $(3,030,564) $- Benefit from income taxes $642,280 $- Net loss $(3,065,121) $(1,327,507) Revenues: Revenues consist primarily of IT consulting, application development, and project development services. Revenues generated during the six months ended June 30, 2018 from our four solution areas were as follows: (i) approximately 63.3% from software & applications; (ii) approximately 27.5% from data & analytics; (iii) approximately 6.4% from cloud; and (iv) approximately 2.8% from web & digital. Revenue was $36,010,787 for the six months ended June 30, 2018, as compared to $0 for the six months ended June 30, 2017. The substantial increase in revenue was due to the iTech and ExoiS acquisitions which took place during the second half of 2017. The Company recognized revenue from iTech of approximately $35.4 million and ExoiS of approximately $400,000 during the six months ended June 30, 2018. Cost of Revenues: Cost of revenues consist primarily of compensation and related costs for personnel along with costs related to outside programmers. Cost of revenues was $31,277,710 for the six months ended June 30, 2018, as compared to $0 for the six months ended June 30, 2017. The substantial increase in cost of revenues was due to the iTech acquisition which took place during the second half of 2017. The Company recognized cost of revenues from iTech of approximately $31.2 million during the six months ended June 30, 2018. Operating Expenses: Operating expenses consist primarily of compensation and related costs for personnel and include costs related to facilities, finance, human resources, information technology and fees for professional services. Professional services are principally comprised of outside legal, audit and outsourcing services. Operating expenses increased by $4,082,407 during the six months ended June 30, 2018, as compared to the six months ended June 30, 2017. The overall increase in operating expenses is primarily attributable to the following net increases (decreases) in operating expenses: A decrease in stock-based compensation expense of $798,850. During the six months ended June 30, 2018, the Company recognized $143,550 of stock-based compensation as a result of stock-based awards granted to employees. During the six months ended June 30, 2017, the Company recognized $198,400 and $744,000 of stock-based compensation as a result of stock-based awards granted to employees and consultants, respectively; An increase of payroll and related expenses of $3,223,728 (excluding stock-based compensation - see above). The substantial increase in payroll and related expenses was due to the iTech and ExoiS acquisitions during 2017. The Company recorded payroll and related expenses from iTech of approximately $2.1 million and ExoiS of approximately $139,000 during the six months ended June 30, 2018. In addition, subsequent to the second quarter of 2017, the Company hired two finance and accounting employees, one sales and marketing employee, and three administrative employees (collectively, the "New Employees"). The Company recorded payroll and related expenses of approximately $950,000 during the six months ended June 30, 2018 related to the New Employees. The increase in payroll and related expenses was partially offset by a reduction in severance compensation of $83,000 recorded during the six months ended June 30, 2018. During the six months ended June 30, 2017, the Company did not have payroll expenses; An increase in professional fees of $239,350 (excluding stock-based compensation - see above). In the current period the Company incurred an increase in consulting fees of approximately $595,000 related to business development, financial advisory services, auditing fees and legal fees related to public filing requirements. $46,500 of the $595,000 increase in consulting fees was due to the iTech and ExoiS acquisitions which took place during the second half of 2017. During the six months ended June 30, 2017, the Company incurred professional fees related to acquisition costs of approximately $361,000; An increase in computer, internet expenses and supplies of $153,000. $93,500 of the $153,000 increase in computer, internet expenses and supplies was due to the iTech and ExoiS acquisitions which took place during the second half of 2017; An increase in rent and facility related expense of $373,000. $303,000 of the $373,000 increase in rent and facility related expense was due to the iTech and ExoiS acquisitions which took place during the second half of 2017; An increase in amortization expense of $456,850 as a result of the intangible assets acquired in the iTech and ExoiS acquisitions which took place during the second half of 2017; and An increase in travel, marketing and marketing related expenses of $140,800. $22,000 of the $140,800 increase in travel, marketing and marketing related expenses was due to the iTech and ExoiS acquisitions which took place during the second half of 2017. Other expenses: Other expenses consist primarily of interest expense primarily related to the Company s factoring agreement, promissory notes and warrant issuances, changes in fair value of contingent consideration related to the iTech acquisition and changes in fair value of the guarantee liability. Other expenses were $3,030,564 during the six months ended June 30, 2018, as compared to $0 during the six months ended June 30, 2017. The increase was primarily due to the interest expense on notes issued in conjunction with the acquisition of iTech which took place during the second half of 2017, interest expense on LSQ agreement entered into during the second quarter of 2018 and the change in fair value of the guarantee liability. For the six months ended June 30, 2018, other expenses consisted of $1,835,945 in interest expense, a change in fair value of guarantee liability of $1,193,243 and miscellaneous expenses of $1,376. Benefit from income taxes: For the six months ended June 30, 2018, benefit from income taxes was $642,280. This increase was primarily due to the increase in net operating loss carryforward generated during the six months ended June 30, 2018. As of June 30, 2017, management believed that it was more likely than not that the future benefits of its deferred tax assets would not be realized and established a full valuation allowance at that time. Results of Operations for the Year Ended December 31, 2017 (As Restated) and For the Period from December 7, 2016 (Inception) to December 31, 2016. The consolidated financial information below includes the results of operations of iTech and ExoiS from the date of each acquisition forward. The following table sets forth the summary income statement for the years ended December 31, 2017 and 2016: For the Year Ended For the Period from December 7, 2016 (Inception) to December 31, 2017 December 31, 2016 (As Restated) Net revenue $ 36,226,660 $ - Cost of revenue $ (31,064,482 ) $ - Operating expenses $ (7,944,609 ) $ (445 ) Other income (expenses), net $ (1,200,452 ) $ - Benefit from income taxes $ 1,855,529 $ - Net loss $ (2,127,354 ) $ (445 ) Revenues: Revenues consist primarily of IT consulting, application development, and project development services. Revenues generated during the year ended December 31, 2017 from our four solution areas were as follows: (i) approximately 51.6% from software & applications; (ii) approximately 38.9% from data & analytics; (iii) approximately 7.3% from cloud; and (iv) approximately 2.2% from web & digital. Revenue was $36,226,660 for the year ended December 31, 2017, as compared to $0 for the period from December 7, 2016 (Inception) to December 31, 2016. The substantial increase in revenue was due to the iTech and ExoiS acquisitions during 2017. The Company recognized revenue from iTech of approximately $35.5 million and ExoiS of approximately $65,000 during the year ended December 31, 2017. Cost of Revenues: Cost of revenues consist primarily of compensation and related costs for personnel along with costs related to outside programmers. Cost of revenues was $31,064,482 for the year ended December 31, 2017, as compared to $0 for the period from December 7, 2016 (Inception) to December 31, 2016. The substantial increase in cost of revenues was due to the iTech acquisition during 2017. The Company recognized cost of revenues from iTech of approximately $31.0 million during the year ended December 31, 2017. Operating Expenses: Operating expenses consist primarily of compensation and related costs for personnel and include costs related to facilities, finance, human resources, information technology and fees for professional services. Professional services are principally comprised of outside legal, audit, and outsourcing services. Operating expenses increased by $7,944,164 during the year ended December 31, 2017, as compared to the period from December 7, 2016 (Inception) to December 31, 2016. The overall increase in operating expenses is primarily attributable to the following net increases in operating expenses: An increase in stock-based compensation expense of $2,019,619. During the year ended December 31, 2017, the Company recognized $1,806,366 of stock-based compensation as a result of stock-based awards granted to consultants, $213,062 of stock-based compensation as a result of stock-based awards granted to employees and $191 of stock-based compensation as a result of a stock-based award granted to board member. During the period from December 7, 2016 (Inception) to December 31, 2016, the Company recognized $0 of stock-based compensation as the fair value of stock-based awards granted was deemed de minimus on the dates of issuance; An increase of payroll and related expenses of $2,540,586 (excluding stock-based compensation - see above). The substantial increase in payroll and related expenses was due to the iTech and ExoiS acquisitions and hiring new employees during 2017. The Company recorded payroll and related expenses from iTech of approximately $2.0 million and ExoiS of approximately $22,000 during the year ended December 31, 2017. On December 29, 2017, a former employee resigned from their position. The Company accrued $183,000 in severance compensation as of December 31, 2017 per the terms of a separation agreement entered into with the former employee in January 2018. During the period from December 7, 2016 (Inception) to December 31, 2016, the Company did not have payroll expenses; An increase in professional fees of $1,962,553 (excluding stock-based compensation - see above). In the current period the Company incurred an increase in acquisition related professional fees of approximately $1.5 million and an increase in consulting fees of approximately $410,000 related to business development, financial advisory services, auditing fees and legal fees related to public filing requirements. $120,000 of the $410,000 increase in consulting fees was due to the iTech and ExoiS acquisitions during 2017. During the period from December 7, 2016 (Inception) to December 31, 2016, the Company did not incur professional fees; An increase in computer, internet expenses and supplies of $131,000. $76,000 of the $131,000 increase in computer, internet expenses and supplies was due to the iTech and ExoiS acquisitions during 2017; An increase in rent and facility related expense of $340,000. $295,000 of the $340,000 increase in rent and facility related expense was due to the iTech and ExoiS acquisitions during 2017; An increase in amortization expense of $306,667 as a result of the intangible assets acquired in the iTech and ExoiS acquisitions during 2017; An increase in bad debt expense of $100,000; An increase in amortization of debt issuance costs of approximately $75,000 primarily related to the notes issued in conjunction with the iTech acquisition.; and An increase in travel, marketing and marketing related expenses of $165,000. $58,000 of the $165,000 increase in travel, marketing and marketing related expenses was due to the iTech and ExoiS acquisitions during 2017. Other income (expenses): Other income (expenses) consist primarily of interest expense primarily related to the Company s factoring agreement, promissory notes and warrant issuances and changes in fair value of contingent consideration related to the iTech acquisition. Other income (expenses), net was $(1,200,452) for the year ended December 31, 2017, as compared to $0 for the period from December 7, 2016 (Inception) to December 31, 2016. The increase was primarily due to the issuance of notes in conjunction with the acquisition of iTech partially offset by a decrease in the fair value of contingent liability. For year ended December 31, 2017 other income (expenses) consisted of $(1,382,826) in interest expense, a change in fair value of contingent liability of $184,466 and miscellaneous expenses of $(2,092). Benefit from income taxes: For the year ended December 31, 2017, benefit from income taxes was $1,855,529. This increase was primarily due to the net operating loss carryforward generated during the year ended December 31, 2017, intangible assets recorded as part of the iTech and ExoiS acquisitions, and the impact of the Tax Cuts and Jobs Act. Pro Forma Results of Operations for the Three Months Ended June 30, 2018 and 2017. The pro forma condensed consolidated financial information below summarizes the consolidated results of operations of the Company and acquired entities for the three months ended June 30, 2018 and 2017 as if the acquisition of the acquired entities had occurred on January 1, 2017. The following table sets forth the pro forma summary income statements for the three months ended June 30, 2018 and 2017: For the Three Months Ended For the Three Months Ended June 30, 2018(1) June 30, 2017 Net revenue $18,227,869 $17,579,819 Cost of revenue $(15,956,209) $(15,051,828) Operating expenses $(2,650,690) $(2,890,042) Other expenses $(1,112,925) $(705,356) Income tax benefit (expense) $344,630 $356,337 Net loss $(1,147,325) $(711,070) (1) Reflects actual results as there were no pro forma adjustments for the three months ended June 30, 2018. Revenues: Revenues consist primarily of IT consulting, application development, and project development services. Revenues generated during the three months ended June 30, 2018 from our four solution areas were as follows: (i) approximately 64.5% from software & application services; (ii) approximately 26.8% from data & analytics; (iii) approximately 5.6% from cloud services; (iv) approximately 3.1% from web & digital. Pro forma revenue was $18,227,869 for the three months ended June 30, 2018, as compared to $17,579,819 for the three months ended June 30, 2017. The increase in revenue is mainly due to an increase in cloud services revenue from ExoiS, as well as the positive impact of new business at SharedLABS. The Company recognized revenue from iTech of approximately $17.9 million for the three months ended June 30, 2018 compared to $17.3 million for the three months ended June 30, 2017. Cost of Revenues: Cost of revenues consist primarily of compensation and related costs for personnel along with costs related to outside programmers. Pro forma cost of revenues was $15,956,209 for the three months ended June 30, 2018, as compared to $15,051,828 for the three months ended June 30, 2017. The increase in cost of revenues was partially due to higher sales, as well as a strategic move from the use of outside contractors to full-time employees. The Company recognized cost of revenues from iTech of approximately $15.9 million, for the three months ended June 30, 2018 compared to $15.0 million for the three months ended June 30, 2017. Operating Expenses: Operating expenses consist primarily of compensation and related costs for personnel and include costs related to facilities, finance, human resources, information technology and fees for professional services. Professional services are principally comprised of outside legal, audit and outsourcing services. Pro forma operating expenses were $2,650,690 for the three months ended June 30, 2018 as compared to $2,890,042 for the three months ended June 30, 2017. The overall increase in operating expenses is primarily attributable to the following approximate net increases in operating expenses: A decrease in stock-based compensation expense of approximately $942,400. During the three months ended June 30, 2018, no stock-based awards were granted. During the three months ended June 30, 2017, the Company recognized $198,400 and $744,000 of stock-based compensation as a result of stock-based awards granted to employees and consultants, respectively; An increase of payroll and related expenses of approximately $837,420 (excluding stock-based compensation - see above). During the fiscal year ended 2017, the Company hired two finance and accounting employees, one sales and marketing employee, and three administrative employees; An increase in professional fees of approximately $151,200 (excluding stock-based compensation - see above) related to business development, financial advisory services, auditing fees and legal fees related to public filing requirements; Other expenses: Other expenses consist primarily of interest expense primarily related to the Company s factoring agreement, promissory notes and warrant issuances, changes in fair value of contingent consideration related to the iTech acquisition and changes in fair value of the guarantee liability. Pro forma other expenses were $1,112,925 for the three months ended June 30, 2018, as compared to $705,356 for the three months ended June 30, 2017. The increase was primarily due to the interest expense on the LSQ agreement entered into during the first quarter of 2018 and the change in fair value of the guarantee liability. Pro forma income tax benefit (expense): For the three months ended June 30, 2018, benefit from income taxes was $344,630 compared to $356,337 for the three months ended June 30, 2017. Pro Forma Results of Operations for the Six Months Ended June 30, 2018 and 2017. The pro forma condensed consolidated financial information below summarizes the consolidated results of operations of the Company and acquired entities for the six months ended June 30, 2018 and 2017 as if the acquisition of the acquired entities had occurred on January 1, 2017. The following table sets forth the pro forma summary income statements for the six months ended June 30, 2018 and 2017: For the Six Months Ended For the Six Months Ended June 30, 2018(1) June 30, 2017 Net revenue $36,010,787 $35,956,285 Cost of revenue $(31,277,710) $(30,901,342) Operating expenses $(5,409,914) $(4,899,510) Other expenses $(3,030,564) $(1,213,650) Income tax benefit (expense) $642,280 $326,783 Net loss $(3,065,121) $(731,434) (1) Reflects actual results as there were no pro forma adjustments for the six months ended June 30, 2018. Revenues: Revenues consist primarily of IT consulting, application development, and project development services. Revenues generated during the six months ended June 30, 2018 from our four solution areas were as follows: (i) approximately 63.2% from software & application services; (ii) approximately 27.5% from data & analytics; (iii) approximately 6.4% from cloud services; and (iv) approximately 2.8% from web & digital. Pro forma revenue was $36,010,787 for the six months ended June 30, 2018, as compared to $35,956,285 for the six months ended June 30, 2017. The increase in revenue is mainly due to an increase in cloud services revenue from ExoiS, as well as the positive impact of new business brought in by SharedLABS. The Company recognized revenue from iTech of approximately $35.4 million for the six months ended June 30, 2018 compared to $35.3 million for the six months ended June 30, 2017. Cost of Revenues: Cost of revenues consist primarily of compensation and related costs for personnel along with costs related to outside programmers. Pro forma cost of revenues was $31,277,710 for the six months ended June 30, 2018, as compared to $30,901,342 for the six months ended June 30, 2017. The increase in cost of revenues was partially due to higher sales, as well as a strategic move from the use of outside contractors to full-time employees. The Company recognized cost of revenues from iTech of approximately $31.2 million, for the six months ended June 30, 2018 compared to $30.8 million for the six months ended June 30, 2017. Operating Expenses: Operating expenses consist primarily of compensation and related costs for personnel and include costs related to facilities, finance, human resources, information technology and fees for professional services. Professional services are principally comprised of outside legal, audit and outsourcing services. Pro forma operating expenses were $5,409,914 for the six months ended June 30, 2018 as compared to $4,899,510 for the six months ended June 30, 2017. The overall increase in operating expenses is primarily attributable to the following net increases in operating expenses: A decrease in stock-based compensation expense of $798,850. During the six months ended June 30, 2018, the Company recognized $143,550 of stock-based compensation as a result of stock-based awards granted to employees. During the six months ended June 30, 2017, the Company recognized $198,400 and $744,000 of stock-based compensation as a result of stock-based awards granted to employees and consultants, respectively; An increase of payroll and related expenses of approximately $1,407,000 (excluding stock-based compensation - see above). During the fiscal year ended 2017, the Company hired two finance and accounting employees, one sales and marketing employee, and three administrative employees; An increase in professional fees of approximately $411,000 (excluding stock-based compensation - see above) related to business development, financial advisory services, auditing fees and legal fees related to public filing requirements; Other expenses: Other expenses consist primarily of interest expense primarily related to the Company s factoring agreement, promissory notes and warrant issuances, changes in fair value of contingent consideration related to the iTech acquisition, changes in fair value of contingent liability and changes in fair value of the guarantee liability. Pro forma other expenses were $3,030,564 for the six months ended June 30, 2018, as compared to $1,213,650 for the six months ended June 30, 2017. The increase was primarily due to the interest expense on the LSQ agreement entered into during the first quarter of 2018 and the change in fair value of the guarantee liability. Pro forma income tax benefit (expense): For the six months ended June 30, 2018, benefit from income taxes was $642,280 compared to $326,783 for the six months ended June 30, 2017. This increase in benefit was primarily due to the net operating loss generated for six months ended June 30, 2018. Pro Forma Results of Operations for the Years Ended December 31, 2017 and 2016. The pro forma consolidated financial information below summarizes the consolidated results of operations of the Company and acquired entities for the years ended December 31, 2017 and 2016 as if the acquisition of the acquired entities had occurred on January 1, 2016. The operations of ExoiS were deemed immaterial during the year ended December 31, 2016 and are not presented in the December 31, 2016 pro forma financial information below. The following table sets forth the pro forma summary income statements for the years ended December 31, 2017 and 2016: For the Year Ended For the Year Ended December 31, 2017 December 31, 2016 Net revenue $73,397,942 $74,280,696 Cost of revenue $(63,232,731) $(65,135,402) Operating expenses $(10,400,383) $(6,953,915) Other income (expenses), net $(2,691,294) $(2,610,203) Benefit from income taxes $1,128,307 $116,446 Net loss $(1,798,159) $(302,378) Revenues: Revenues consist primarily of IT consulting, application development, and project development services. Revenues generated during the year ended December 31, 2017 from our four solution areas were as follows: (i) approximately 59.0% from software & applications; (ii) approximately 31.2% from data & analytics; (iii) approximately 7.8% from cloud; and (iv) approximately 2.0% from web & digital. Revenue was $73,397,942 for the year ended December 31, 2017, as compared to $74,280,696 for the year ended December 31, 2016. The decreases in revenue was due to iTech having a slight move to lower revenue projects that carry a higher margin. Cost of Revenues: Cost of revenues consist primarily of compensation and related costs for personnel along with costs related to outside programmers. Cost of revenues was $63,232,731 for the year ended December 31, 2017, as compared to $65,135,402 for the year ended December 31, 2016. The decrease in cost of revenues was due to a slight redirection to higher margin projects along with the reduction of revenue. Operating Expenses: Operating expenses consist primarily of compensation and related costs for personnel and include costs related to facilities, finance, human resources, information technology and fees for professional services. Professional services are principally comprised of outside legal, audit, and outsourcing services. Operating expenses increased by $3,446,468 during the year ended December 31, 2017, as compared to the year ended December 31, 2016. The overall increase in operating expenses is primarily attributable to the following approximate net increases (decreases) in operating expenses: An increase in stock-based compensation expense of $2,019,619. During the year ended December 31, 2017, the Company recognized $1,806,366 of stock-based compensation as a result of stock-based awards granted to consultants, $213,062 of stock-based compensation as a result of stock-based awards granted to employees and $191 of stock-based compensation as a result of a stock-based award granted to board member. During the year ended December 31, 2016, the Company recognized $0 of stock-based compensation as the fair value of stock-based awards granted was deemed de minimus on the dates of issuance. An increase in professional fees of $646,501 (excluding stock-based compensation - see above). In the current period the Company incurred an increase in professional fees, advisory services and audit fees related to public filing requirements. Other expenses: Other expenses consist primarily of interest expense primarily related to the Company s factoring agreement, promissory notes and warrant issuances. Other expenses were $2,691,294 for the year ended December 31, 2017, as compared to $2,610,203 for the year ended December 31, 2016. The decrease was primarily due to pay down of notes in conjunction with the acquisition of iTech. Benefit from income taxes: For the year ended December 31, 2017, benefit from income taxes was $1,128,307 as compared to $ 116,446 for the year end December 31, 2016. This increase in benefit was primarily due to the net operating loss generated by the acquisition of iTech and ExoiS. Liquidity and Capital Resources The following table summarizes total current assets, liabilities and working capital at June 30, 2018 compared to December 31, 2017: June 30, 2018 December 31, 2017 Increase/ (Decrease) Current Assets $14,933,460 $12,969,890 $1,963,570 Current Liabilities $27,782,767 $24,133,253 $3,649,514 Working Capital (Deficit) $(12,849,307) $(11,163,363) $1,685,944 As of June 30, 2018, we had a working capital deficit of $12,849,307 as compared to working capital deficit of $11,163,363 as of December 31, 2017, an increase in working capital deficit of $1,685,944. During the six months ended June 30, 2018 we received proceeds of approximately $1.6 million from the issuance of common stock and warrants and net proceeds from our factor of approximately $2.8 million. The Company used the proceeds to fund operations during the current period, pay down accrued liabilities and pay down certain debt. The following table summarizes total current assets, liabilities and working capital at December 31, 2017 compared to December 31, 2016: December 31, 2017 (As Restated) December 31, 2016 Increase/ (Decrease) Current Assets $ 12,969,890 $ 15,000 $ 12,954,890 Current Liabilities $ 24,133,253 $ - $ 24,133,253 Working Capital (Deficit) $ (11,163,363 ) $ 15,000 $ (11,178,363 ) As of December 31, 2017, we had a working capital deficit of $11,163,363 as compared to working capital of $15,000 as of December 31, 2016, a decrease of $11,178,363. During the year ended December 31, 2017 we received proceeds of approximately $3.16 million from the issuance of common stock and warrants and $160,000 from stockholder capital contributions. We used the proceeds to fund operations during the current period, pay business acquisition costs and pay down certain debt. In addition, in conjunction with the acquisitions of iTech and ExoiS, we entered into promissory note agreements in the aggregate amount of approximately $12.3 million, acquired assets (excluding goodwill) in the aggregate amount of approximately $21.8 million and assumed liabilities in the aggregate amount of approximately $16.3 million. We have applied to list our shares on The Nasdaq Capital Market. If our application is approved, we will be obligated to file annual, quarterly and current reports with the SEC pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange Act"). In addition, the Sarbanes-Oxley Act of 2002 ("Sarbanes-Oxley") and the rules subsequently implemented by the SEC and the Public Company Accounting Oversight Board have imposed various requirements on public companies, including requiring changes in corporate governance practices. We expect these rules and regulations to increase our legal and financial compliance costs and to make some activities of ours more time-consuming and costly. We expect to spend between $200,000 and $250,000 in legal and accounting expenses annually to comply with our reporting obligations and Sarbanes-Oxley. These costs could affect profitability and our results of operations. No assurance can be given that our application to list on The Nasdaq Capital Market will be approved. Management has determined that additional capital will be required in the form of equity or debt securities. In addition, if we cannot raise additional short-term capital we will be forced to continue to further accrue liabilities due to our limited cash reserves. There are no assurances that management will be able to raise capital on terms acceptable to the Company. If we are unable to obtain sufficient amounts of additional capital, we may be required to reduce the scope of our planned development, which could harm our business, financial condition and operating results. If we obtain additional funds by selling any of our equity securities or by issuing common stock to pay current or future obligations, the percentage ownership of our stockholders will be reduced, stockholders may experience additional dilution, or the equity securities may have rights preferences or privileges senior to the common stock. If adequate funds are not available to us when needed on satisfactory terms, we may be required to cease operating or otherwise modify our business strategy. Going Concern and Management Liquidity Plans The accompanying condensed consolidated financial statements have been prepared on a going concern basis as of and for the six-month period ended June 30, 2018 and as of and for the year ended December 31, 2017, respectively, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has incurred significant operating losses since inception and continues to generate losses from operations. Additionally, the Company had an accumulated deficit of $5,277,930 and $2,128,044 as of June 30, 2018 and December 31, 2017, respectively. These matters raise substantial doubt about the Company s ability to continue as a going concern. The condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of asset amounts or the classification of liabilities that might be necessary should the Company be unable to continue as a going concern. Management s Plan to Continue as a Going Concern Our ability to continue as a going concern is dependent upon our ability to generate profitable business operations in the future and/or obtaining the necessary financing to meet our obligations and repay our liabilities. To date, we have operated at a loss and remained in business through the issuance of shares of our common stock and warrants, stockholder capital contributions and entering into a short-term loan facility. Management s plan to continue as a going concern is based on us obtaining additional capital resources through the sale of our securities and/or loans on an as needed basis. The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described above and eventually attaining profitable operations. In addition to the normal risks associated with a new business venture, there can be no assurance that the Company s business plan will be successfully executed. Our ability to execute our business plan will depend on our ability to obtain additional financing and achieve a profitable level of operations. There can be no assurance that sufficient financing will be obtained. Further, we cannot give any assurance that we will generate substantial revenues or that our business operations will prove to be profitable. To the extent that the Company is unsuccessful, the Company may need to curtail or cease its operations and implement a plan to extend payables or reduce overhead until sufficient additional capital is raised to support further operations. Financing Transactions Prestige Capital Corporation In connection with the business acquisition of iTech (See Note 5 to the consolidated financial statements contained elsewhere in this document), on August 11, 2017, iTech and SmartWorks each entered into purchase and sale agreements with Prestige Capital Corporation ("Prestige"), pursuant to which Prestige purchased certain accounts receivable totaling $7,275,000. Each agreement is for a one-year term and automatically renews unless terminated at least sixty days prior to expiration of the initial term or the renewal term. Pursuant to these agreements, iTech and SmartWorks each assigned to Prestige certain accounts receivable and contract rights. Upon assignment, Prestige agreed to pay 80% of the face value of billed accounts receivable and 70% of the face value of unbilled accounts receivable (collectively, the "Down Payment"), up to $6,500,000 for iTech and up to $3,500,000 for SmartWorks. Upon collection of the accounts receivable, Prestige agreed to pay the balance of the receivables sold, less a discount fee of 1.65% if paid within 30 days, increasing 0.55% for each additional 10 days outstanding, up to 4.95% if paid within 90 days, and increasing an additional 1.5% for each 10-day period thereafter until the account is paid in full. The outstanding balance due to Prestige under the agreements was paid off in February 2018 (See "LSQ Funding Group, L.C." below). Super G Capital, LLC In connection with the business acquisition of iTech (See Note 5 to the consolidated financial statements contained elsewhere in this document), on August 11, 2017 the Company entered into a Business Loan and Security Agreement (the "Business Loan") with Super G Capital, LLC ("Super G"). The Business Loan was for total principal of $2,000,000 plus interest at an annual rate of 20.0% for total interest of $800,000. The Business Loan is payable in semi-monthly installments of $58,333, including interest, fully maturing after 48 equal payments and is secured by substantially all assets of the Company. The loan has a discount provision subject to a reduction of interest by $300,000 if loan is paid in full by February 11, 2018 or a reduction of interest by $200,000 if loan is paid in full by August 11, 2018. In addition, the Company has granted warrants to purchase 120,000 shares of common stock for an exercise price of $0.0001 per share in connection with the issuance of the note. These warrants were fully vested on the date of grant and expire in 2020. On or before August 11, 2020, at the option of Super G, which it may exercise in its sole and absolute discretion, Super G may, in lieu of exercising the warrants, require the Company to pay Super G an exit fee of $300,000 (the "Put Feature"). The Put Feature causes the warrants to be classified as a liability under ASC 480 because that feature embodies an obligation that may require the Company to ultimately transfer assets (e.g., cash). The Company recorded a $300,000 debt discount measured at the amount of cash that would be paid under the warrant agreement if settlement occurred on the date of issuance. The warrant is subsequently measured at the amount of cash that would be paid under the warrant agreement if settlement occurred as of the reporting date which is $300,000. In addition the Company incurred debt issuance costs of $100,000. The debt discount and debt issuance costs are being accreted over the life of the loan to interest expense. The Business Loan contains certain covenants, including the following financial covenants: i) Maintain minimum unrestricted cash of no less than $1,000,000. Minimum unrestricted cash is defined as cash on hand plus the remaining borrowing availability under the LSQ (formerly Prestige) senior loan agreement; ii) Maintain revenue and adjusted earnings before interest taxes depreciation and amortization ("EBITDA") of no less than $800,000 for each three-month period ending on the last date of each fiscal quarter, commencing September 30, 2017; and iii) Maintain a Fixed Charge Coverage Ratio that limits our projected fixed charges (consisting of the ratio of EDITDA to projected fixed charges, each as defined in the Business Loan) of no less than 1.10:1.0, commencing September 30, 2017. We have obtained waivers for any covenants we may have failed to meet under our Business Loan. On August 30, 2018, the Company paid off the Super G term loan facility, fully satisfying the Company s indebtedness and obligations, other than the Put Feature, under the Business Loan. The buy-out totaled approximately $1,200,000, which included applicable fees, less a pre-payment discount of $200,000 as set forth in the Business Loan. Seller Notes In connection with the business acquisition of iTech (See Note 5 to the consolidated financial statements contained elsewhere in this document), the Company entered into a promissory agreement of $2,850,000 with the seller. The note provides for interest payable quarterly at an annual rate of 6%, beginning in October 2017. The principal is payable in bi-annual installments of $712,500, beginning January 2018 through July 2019. This note is subordinated to Super G and Prestige debt, guaranteed by iTech and a limited guarantee by a stockholder. In connection with the business acquisition of iTech (See Note 5 to the consolidated financial statements contained elsewhere in this document), the Company entered into a promissory agreement with the seller in the amount of $231,289, plus interest at 6%. The note is secured by accounts receivable and is payable as and when payments of amounts due are collected. The outstanding principal balance as of December 31, 2017 was $76,498. The remaining principal and interest was paid in full in January 2018. On July 27, 2018, the Company entered into a forbearance agreement with the seller pursuant to which the seller agreed to extend the due date of the January 2018 and July 2018 principal payments until the earlier of (i) the date on which additional equity or debt capital can be secured to make payments or (ii) September 30, 2018, at which time all payments and interest currently due under the terms of the agreement will be due. The agreement further provides that the forbearance period may be extended up to an additional 30 days if payment is not made on or before September 30, 2018, subject to the terms and conditions of the agreement. The seller subsequently agreed to extend the forbearance period to November 15, 2018. During January 2018, the Company sold 20,500 shares of common stock and 4,100 common stock purchase warrants to five investors for proceeds of $102,500. On January 10, 2018, the Company sold 750,000 Units at a price of $2.00 per Unit (the "January 2018 Financing") to an accredited investor (the "Investor") for total cash consideration of $1,500,000. Each Unit consists of one share of common stock, 750,000 shares in aggregate (the "2018 Shares"), and a warrant to purchase 1/2 of a share of common stock, 375,000 shares in aggregate (the "Jan 2018 Warrants"). The Jan 2018 Warrants are exercisable for a period of three years at a purchase price of $2.00 per share of common stock. The Investor is guaranteed a 35% annual return on his investment on the one-year anniversary of the initial public offering of the Company s securities. The guaranteed return shall increase by one percent for each month after August 1, 2018 if the Company does not complete an initial public offering of its common stock by such date. The Company placed into escrow 2,250,000 shares (the "Pledged Shares") of the Company s common stock as collateral for the guaranteed return. The Company s obligation under the guaranteed return is limited to the Pledged Shares. Simultaneously, upon entering into the January 2018 Financing, a previous financing agreement entered into during 2017 with the same Investor was amended as follows: i) The Investor is guaranteed a 35% annual return on his 2017 investment in the amount of $1,500,000 on the one-year anniversary of the initial public offering of the Company s securities; ii) The guaranteed return shall increase by one percent for each month after August 1, 2018 if the Company does not complete an initial public offering of its common stock by such date; iii) The Investor must attempt to first collect the guaranteed return from the Company through the receipt of a sufficient amount of Pledged Shares. The Company s obligation under the guaranteed return is limited to the Pledged Shares; and iv) The warrants issued to the Investor in 2017 were increased from 120,000 to 300,000 common stock warrants, the exercise price was adjusted from $5.00 to $2.50 and the issuance date was amended to January 10, 2018. LSQ Funding Group, L.C. On January 30, 2018, the Company entered into an Invoice Purchase agreement with LSQ Funding Group, L.C. ("LSQ"). The agreement is for a one-year term and automatically renews annually unless terminated at least thirty days prior to each anniversary date. In February 2018, LSQ paid the outstanding balance due to Prestige in the amount of $8,076,898. iTech and SmartWorks have an arrangement with LSQ, under which they may assign certain accounts receivable. Upon assignment, LSQ will pay 90% of the face value of billed accounts receivable and 75% of the face value of unbilled accounts receivable, up to $15,000,000 (the "Maximum Amount"). Upon collection of the accounts receivable, LSQ will pay the balance of the accounts receivable sold, less a discount fee. The discount fee is based on a daily rate of 0.0367% of the face amount of each purchased account outstanding. The Company will pay an origination fee of 0.40% of the Maximum Amount, paid at the initial purchase of accounts and paid Joseph Gunnar an advisory fee of $225,000 upon the Company entering into the agreement with LSQ. The Company will incur a late fee of 18% per annum on any obligation not paid when due and will incur an early termination fee if upon termination proper notice of termination, as further detailed in the agreement, is not given to LSQ. The maximum termination fee the Company could incur is $112,500. The agreement is secured by all assets of the Company. C6 Capital, LLC The Company completed a transaction on July 5, 2018 with C6 Capital, LLC ("C6") to raise $1,750,000, less applicable fees, which is an advance on future revenues. As a result of this transaction, the Company has agreed to sell, assign and transfer, without recourse, certain proceeds of each future sale made by the Company, until C6 has received their purchased amount of future revenues. The purchased amount is determined based on the number of calendar days between funding by C6 and delivery of purchased amount to C6, as follows: (a) $2,030,000 within 30 days; (b) $2,080,500 within 60 days; (c) $2,212,000 within 90 days; (d) $2,215,500 within 120 days; or (e) $2,397,500 after 120 days. To satisfy the Super G Business Loan, as discussed above, on August 30, 2018, the Company completed a second transaction with C6 to raise $1,500,000, less applicable fees, which is an advance on future revenues. As a result of this transaction, the Company has agreed to sell, assign and transfer, without recourse, certain proceeds of each future sale made by the Company, until C6 has received their purchased amount of future revenues. The purchased amount is determined based on the number of calendar days between funding by C6 and delivery of purchased amount to C6, as follows: (a) $1,800,000 within 90 days; or (b) $2,055,000 after 90 days. Placement Agent and Finders Agreements The Company had an advisory engagement with Joseph Gunnar & Co LLC ("Joseph Gunnar") for advisory services to procure acquisition funding. Upon successful closing of a credit facility as defined by the agreement, the Company will be required to pay 3.5% cash fee (the "Cash Fee") along with a 3.5% warrant (the "Joseph Gunnar Warrants") for the successful closing of the total credit facility. Joseph Gunnar shall be entitled to the Cash Fee and the Joseph Gunnar Warrants, calculated in the manner provided above, with respect to any financing or capital-raising transaction of any kind, including situations in which an existing loan is increased in size or renewed for a new term. During the year ended December 31, 2017, the Company paid Joseph Gunnar a Cash Fee of $330,525 and issued 140,000 common stock warrants with a fair value of approximately $100,000. As of December 31, 2017, no fees were owed to Joseph Gunnar. During the six months ended June 30, 2018, the Company paid Joseph Gunnar a cash fee of $225,000 relating to the LSQ financing (See Note 8). No warrants were required to be issued as part of the LSQ financing. As of June 30, 2018, no fees were owed to Joseph Gunnar. On April 24, 2018, all agreements with Joseph Gunnar were cancelled. Summary Cash Flows For the Six Months Ended June 30, 2018 and 2017: For the Six Months Ended For the Six Months Ended June 30, 2018 June 30, 2017 Net cash used in operating activities $(3,683,141) $(385,107) Net cash used in investing activities $(81,079) $- Net cash provided by financing activities $3,885,864 $670,000 Cash Used in Operating Activities Our primary uses of cash from operating activities include payments to employees and consultants for compensation and related costs, legal and professional fees, computer and other general corporate expenditures. Cash used in operating activities consist of net loss adjusted for certain non-cash items, primarily equity-based compensation expense, amortization of intangible assets, deferred income taxes, amortization of debt discount, amortization of debt issuance costs and changes in the fair value of guarantee liability during the six months ended June 30, 2018, as well as the effect of changes in working capital and other activities. The adjustments for the non-cash items increased from the six months ended June 30, 2018 to the six months ended June 30, 2017 due primarily to an increase in stock-based compensation, amortization of intangible assets, benefit from income taxes, amortization of debt issuance costs and changes in the fair value of guarantee liability. In addition, the net decrease in cash from changes in working capital activities for the six months ended June 30, 2017 to the six months ended June 30, 2018 primarily consisted of an increase in accounts receivable, an increase in prepaid expenses, an increase in accounts payable and a decrease in accrued liabilities primarily due to a decrease in accrued payroll and payroll related expenses, accrued interest, and accrued consulting fees. Cash Used in Investing Activities Cash used in investing activities consists primarily of payments for property and equipment. Cash used in investing activities increased from the six months ended June 30, 2017 to the six months ended June 30, 2018, driven by payments for property and equipment. Cash Provided by Financing Activities Cash provided by financing activities consists primarily of proceeds from the issuance of common stock and warrants of the Company and net proceeds from our factor partially offset by repayments of notes payable and related party loans. Cash provided by financing activities increased from the six months ended June 30, 2017 to the six months ended June 30, 2018, primarily driven by net proceeds from our factor and proceeds from the issuance of common stock and warrants. Summary Cash flows for the year ended December 31, 2017 and the period from December 7, 2016 (Inception) to December 31, 2016: For the Year Ended For the Period from December 7, 2016 (Inception) to December 31, 2017 December 31, 2016 (As Restated) Net cash used in operating activities $ (190,080) $ (15,445 ) Net cash used in investing activities $ (1,727,141 ) $ - Net cash provided by financing activities $ 2,660,202 $ 15,445 Cash Used in Operating Activities Our primary uses of cash from operating activities include payments to employees and consultants for compensation and related costs, legal and professional fees, computer and other general corporate expenditures. Cash used in operating activities consist of net loss adjusted for certain non-cash items, primarily stock-based compensation expense, amortization of intangible assets, deferred income taxes, amortization of debt discount, amortization of debt issuance costs and changes in the fair value of contingent consideration during the year ended December 31, 2017, as well as the effect of changes in working capital and other activities. The adjustments for the non-cash items increased from the year ended December 31, 2017 to the period from December 7, 2016 (Inception) to December 31, 2016 due primarily to an increase in stock-based compensation, amortization of intangible assets, benefit from income taxes and changes in the fair value of contingent consideration. In addition, the net increase in cash from changes in working capital activities for the period from December 7, 2016 (Inception) to December 31, 2016 to the year ended December 31, 2017 primarily consisted of an increase in accounts receivable and an increase in accounts payable and accrued liabilities primarily due to an increase in accrued payroll and payroll related expenses, accrued accounting fees, and accrued consulting fees, business development and financial advisory services. Cash Used in Investing Activities Cash used in investing activities consists primarily of net payments for business acquisitions and payments for property and equipment. Cash used in investing activities increased from the period from December 7, 2016 (Inception) to December 31, 2016 to the year ended December 31, 2017, primarily driven by payments for the acquisition of iTech. Cash Provided by Financing Activities Cash provided by financing activities consists primarily of proceeds from the issuance of common stock and warrants of the Company and stockholder capital contributions partially offset by repayments of notes payable, related party loans and repayments to factor. Cash provided by financing activities increased from the period from December 7, 2016 (Inception) to December 31, 2016 to the year ended December 31, 2017, primarily driven by proceeds from the issuance of common stock and warrants. Off Balance Sheet Arrangements: We do not have any off-balance sheet arrangements, financings, or other relationships with unconsolidated entities or other persons, also known as "special purpose entities" ("SPEs"). Contractual Obligations Long Term Debt Super G Capital, LLC – Term Loan Facility In connection with the business acquisition of iTech, on August 11, 2017 the Company entered into a Business Loan and Security Agreement (the "Business Loan") with Super G. The Business Loan was for total principal of $2,000,000 plus interest at an annual rate of 20.0% for total interest of $800,000. The Business Loan is payable in semi-monthly installments of $58,333, including interest, fully maturing after 48 equal payments. The loan has a discount provision subject to a reduction of interest by $300,000 if paid in full by February 11, 2018 or a reduction of interest by $200,000 if paid in full by August 11, 2018. In addition, the Company has granted warrants to purchase 120,000 shares of common stock for an exercise price of $0.0001 per share in connection with the issuance of the note. These warrants were fully vested on the date of grant and expire in 2020. On or before August 11, 2020, at the option of Super G, which it may exercise in its sole and absolute discretion, Super G may, in lieu of exercising the warrants, require the Company to pay Super G an exit fee of $300,000 (the "Put Feature"). The Put Feature causes the warrants to be classified as a liability under ASC 480 because that feature embodies an obligation that may require the Company to ultimately transfer assets (e.g., cash). The Company recorded a $300,000 debt discount measured at the amount of cash that would be paid under the warrant agreement if settlement occurred on the date of issuance. The warrant is subsequently measured at the amount of cash that would be paid under the warrant agreement if settlement occurred as of the reporting date which is $300,000. In addition the Company incurred debt issuance costs of $100,000. The debt discount and debt issuance costs are being accreted over the life of the loan to interest expense. On August 30, 2018, the Company paid off the Super G term loan facility, fully satisfying the Company s indebtedness and obligations, other than the Put Feature, under the Business Loan. The buy-out totaled approximately $1,200,000, which included applicable fees, less a pre-payment discount of $200,000 as set forth in the Business Loan. Advance Agreements C6 Capital, LLC Transactions The Company completed a transaction on July 5, 2018 with C6 Capital, LLC ("C6") to raise $1,750,000, less applicable fees, which is an advance on future revenues. As a result of this transaction, the Company has agreed to sell, assign and transfer, without recourse, certain proceeds of each future sale made by the Company, until C6 has received their purchased amount of future revenues. The purchased amount is determined based on the number of calendar days between funding by C6 and delivery of purchased amount to C6, as follows: (a) $2,030,000 within 30 days; (b) $2,080,500 within 60 days; (c) $2,212,000 within 90 days; (d) $2,215,500 within 120 days; or (e) $2,397,500 after 120 days. To satisfy the Super G Business Loan, as discussed above, on August 30, 2018, the Company completed a second transaction with C6 to raise $1,500,000, less applicable fees, which is an advance on future revenues. As a result of this transaction, the Company has agreed to sell, assign and transfer, without recourse, certain proceeds of each future sale made by the Company, until C6 has received their purchased amount of future revenues. The purchased amount is determined based on the number of calendar days between funding by C6 and delivery of purchased amount to C6, as follows: (a) $1,800,000 within 90 days; or (b) $2,055,000 after 90 days. Commitments and Contingencies In the normal course of business, we are subject to certain claims and assessments that arise in the ordinary course of business. We record a liability when we believe that it is both probable that a loss has been incurred and the amount can be reasonably estimated. Significant judgment is required to determine the outcome and the estimated amount of a loss related to such matters. Management believes that there are no claims or assessments outstanding which would materially affect our consolidated results of operations or our financial position. Impact of Inflation In general, we believe that inflation could have a negative impact on our operating expenses. We believe that inflation has not had a significant impact on our results of operations nor do we expect inflation to have a significant impact on our operations. Quantitative and Qualitative Disclosure About Market Risk Interest Rate Risk Our market risks relate primarily to changes in interest rates. The interest rates on borrowings under our term loans are floating and, therefore, are subject to fluctuations. Currently the applicable interest rate is based on a floor, however if interest rates rise in the future with the base rate increasing above the floor, our interest expense will increase. To manage this risk, we may enter into interest rate swaps to add stability to interest expense and to manage our exposure to interest rate fluctuations. Adequacy of Facilities We believe our present corporate facilities are adequate for our immediate needs, and we have no commitment for expansion in the absence of a successful consummation of this offering. Critical Accounting Policies Our financial statements and related public financial information are based on the application of accounting principles generally accepted in the United States ("U.S. GAAP"). U.S. GAAP requires the use of estimates; assumptions, judgments and subjective interpretations of accounting principles that have an impact on the assets, liabilities, revenues and expense amounts reported. These estimates can also affect supplemental information contained in our external disclosures including information regarding contingencies, risk and financial condition. We believe our use of estimates and underlying accounting assumptions adhere to U.S. GAAP and are consistently and conservatively applied. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions. We continue to monitor significant estimates made during the preparation of our financial statements. While all these significant accounting policies impact our financial condition and results of operations, we view certain of these policies as critical. Policies determined to be critical are those policies that have the most significant impact on our financial statements and require management to use a greater degree of judgment and estimates. Our management believes that given current facts and circumstances, it is unlikely that applying any other reasonable judgments or estimate methodologies would cause effect on our consolidated results of operations, financial position or liquidity for the periods presented in this report. We believe the following critical accounting policies and procedures, among others, affect our more significant judgments and estimates used in the preparation of our consolidated financial statements: Principles of Consolidation The condensed consolidated financial statements include the accounts of SharedLabs, Inc. and its subsidiaries. All intercompany accounts, transactions and profits have been eliminated. The Company s consolidated subsidiaries are as follows: Name of consolidated subsidiary or entity State or other jurisdiction of incorporation or organization Date of incorporation or formation (date of acquisition, if applicable) Attributable interest iTech US, Inc. Virginia August 9, 2001 (July 1, 2017) 100% SmartWorks, LLC New Jersey May 30, 2003 (July 1, 2017) 99.9% iTech IT Solutions Private Ltd. India January 1, 2017 (July 1, 2017) 100% ExoiS, Inc. California November 8, 2004 (December 1, 2017) 100% Use of Estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the period. Actual results could differ from these estimates. The Company s significant estimates and assumptions include the fair value of the Company s equity instruments, stock-based compensation, goodwill, intangible assets and other long-lived assets and the valuation allowance relating to the Company s deferred tax assets. Revenue Recognition We provide our services primarily under time-and-materials contracts. Revenues earned under time-and-material arrangements are recognized as services are provided. We recognize revenue from the provision of professional services when it is realized or realizable and earned. We consider revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the services have been rendered to the customer, (iii) the sales price is fixed or determinable and (iv) collectability is reasonably assured. Appropriate allowances for returns and discounts are recorded concurrent with revenue recognition. In accordance with U.S. GAAP guidance, Income Statement Characterization of Reimbursement Received for Out-of-Pocket Expenses, we classify reimbursed expenses as revenue and the related expense within cost of revenue in the accompanying consolidated statements of operations. For fixed price service arrangements, we apply the proportional performance model or a ratable model to recognize revenue. When customer acceptance provisions exist, we are generally able to reliably demonstrate that the service meets, or will meet upon completion, the customer acceptance criteria. If circumstances exist which prevent us from verifying compliance with the acceptance provisions until the service has been completed, revenue is not recognized until compliance can be verified. Revenues recognized in excess of the amounts invoiced to clients are classified as unbilled revenues in our consolidated balance sheets. We may record deferred revenue in circumstances where the customer s contract calls for pre-billing of services. Amounts in deferred revenue are realized when the services are performed and the criteria noted above are met. Compensation expense / accrued compensation Compensation for certain employees that provide revenue-generating services is paid under various arrangements. Certain employees are compensated under profit-sharing arrangements under which the Company pays compensation upon collection of related billings from customers; any write-offs of uncollectible accounts result in a commensurate reduction of the Company s liability for payment of compensation to such employees. The Company provides an estimated allowance against accrued payroll through a credit to cost of revenue. Property and Equipment Property and equipment is stated at cost. Depreciation is calculated over the estimated useful lives of 1-3 years using the straight-line method. Business Combinations The assets acquired and liabilities assumed in a business combination, including identifiable intangible assets, are recorded at their estimated fair values as of the acquisition date. The excess of the purchase price over the estimated fair value of the identifiable net assets acquired is recorded as goodwill. We base the fair values of identifiable intangible assets on detailed valuations that require management to make significant judgments, estimates and assumptions. Critical estimates and assumptions include: expected future cash flows for customer relationships, trade names and other identifiable intangible assets; discount rates that reflect the risk factors associated with future cash flows; and estimates of useful lives. When an acquisition involves contingent consideration, we recognize a liability equal to the fair value of the contingent consideration obligation at the acquisition date. The estimate of fair value of a contingent consideration obligation requires subjective assumptions to be made regarding future business results, discount rates, discount periods and probabilities assigned to various potential business result scenarios. The consolidated financial statements include the results of operations from these business combinations from the date of acquisition. In order to assess performance, the Company classifies costs incurred in connection with acquisitions as acquisition-related costs. These costs consist primarily of transaction costs, integration costs and changes in the fair value of contingent payments (earn-outs) and are recorded within selling, general and administrative costs. Acquisition transaction costs are incurred during the initial evaluation of a potential targeted acquisition and primarily relate to costs to analyze, negotiate and consummate the transaction as well as financial and legal due diligence activities. Post-acquisition integration activities are costs incurred to combine the operations of an acquired enterprise into the Company s operations. Goodwill Goodwill represents the excess of the cost of acquired businesses over the fair value of identifiable tangible net assets and identifiable intangible assets purchased. Goodwill is tested at least annually for impairment and more frequently if events or changes in circumstances indicate that the asset might be impaired. We review goodwill for impairment by first assessing qualitative factors to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test. If it is determined that it is not more likely than not that the fair value of the reporting unit is less than its carrying amount, we conclude that goodwill is not impaired. If the carrying value of the reporting unit exceeds the fair value of the reporting unit, then the Company must perform the second step in order to determine the implied fair value of the reporting unit s goodwill and compare it to the carrying value of the reporting unit s goodwill. No goodwill impairments have been recognized as of June 30, 2018 and December 31, 2017. Intangible Assets Intangible assets include customer relationships and trade names. Our intangible assets have definite lives of 10 years. The straight-line method of amortization generally reflects an appropriate allocation of the cost of the intangible assets to earnings in proportion to the amount of economic benefits obtained by the Company in each reporting period. Amortizable intangibles are measured for impairment consistent with the process utilized for long-lived assets as described below under the heading , ' ': Long-lived Assets . There was no impairment recorded to intangible assets as of June 30, 2018 and December 31, 2017. Long-lived Assets The Company reviews its long-lived assets for events or changes in circumstances that may indicate that the carrying amount of a long-lived asset may not be recoverable or exceeds its fair value. The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. An impairment loss shall be measured as the amount by which the carrying amount of a long-lived asset exceeds its fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company s long-lived assets include property, equipment, and definite-lived intangibles. There was no impairment recorded to long-lived assets as of June 30, 2018 and December 31, 2017. Fair Value of Financial Instruments The carrying amounts of cash, accounts receivable, accounts payable, due to factor and accrued liabilities approximate fair value due to the short-term nature of these instruments. The fair value of long–term debt is estimated to approximate carrying value given the debt s interest rates. The Company measures the fair value of financial assets and liabilities based on the guidance of ASC 820 "Fair Value Measurements and Disclosures" which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value: Level 1 Quoted market prices available in active markets for identical assets or liabilities as of the reporting date. Level 2 Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. Level 3 Pricing inputs that are generally unobservable inputs and not corroborated by market data. Level 3 liabilities are valued using unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the warrant liabilities. For fair value measurements categorized within Level 3 of the fair value hierarchy, the Company s Chief Financial Officer determines its valuation policies and procedures. The development and determination of the unobservable inputs for Level 3 fair value measurements and fair value calculations are the responsibility of the Company s Chief Financial Officer. Changes in fair value measurements categorized within Level 3 of the fair value hierarchy are analyzed each period based on changes in estimates or assumptions and recorded as appropriate. Accounting for Warrants The Company classifies as equity contracts that (i) require physical settlement or net-share settlement or (ii) gives the Company a choice of net-cash settlement or settlement in its own shares (physical settlement or net-share settlement). The Company classifies as assets or liabilities any contracts that (i) require net-cash settlement (including a requirement to net-cash settle the contract if an event occurs and if that event is outside the control of the Company) or (ii) gives the counterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement). The Company assessed the classification of its common stock purchase warrants as of the date of each equity offering and determined that certain instruments met the criteria for equity classification, as the settlement terms indicate that the instruments are indexed to the entity s underlying stock. Certain warrants issued contain a put feature that causes the warrants to be classified as a liability under ASC 480-10 because that feature embodies an obligation that may require the Company to ultimately transfer assets (e.g., cash). Stock-Based Compensation The Company measures the cost of services received in exchange for an award of equity instruments based on the fair value of the award. For employees, the fair value of the award is measured on the grant date and for non-employees, the fair value of the award is generally re-measured on vesting dates and interim financial reporting dates until the service period is complete. The fair value amount is then recognized over the period during which services are required to be provided in exchange for the award, usually the vesting period. Awards granted to directors are treated on the same basis as awards granted to employees. Stock Issued for Services The Company measures the cost of services received in exchange for an award of equity instruments based on the fair value of the award on the grant date. The fair value amount is then recognized over the period during which services are required to be provided in exchange for the award, usually the vesting period. Deferred Financing Costs and Commitment Fees Costs incurred in connection with debt financing are deferred and amortized over the term of the debt using the effective interest method or, in certain instances where the differences are not material, using the straight-line method. Costs incurred in connection with the Company s factor are deferred and amortized using the straight-line method. Income Taxes The Company accounts for income taxes pursuant to the provision of ASC 740-10, "Accounting for Income Taxes" ("ASC 740-10"), which requires, among other things, an asset and liability approach to calculating deferred income taxes. The asset and liability approach requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. A valuation allowance is provided to offset any net deferred tax assets for which management believes it is more likely than not that the net deferred asset will not be realized. The Company follows the provision of ASC 740-10 related to Accounting for Uncertain Income Tax Positions. When tax returns are filed, there may be uncertainty about the merits of positions taken or the amount of the position that would be ultimately sustained. In accordance with the guidance of ASC 740-10, the benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more likely than not recognition threshold are measured at the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefit associated with tax positions taken that exceed the amount measured as described above should be reflected as a liability for uncertain tax benefits in the accompanying balance sheet along with any associated interest and penalties that would be payable to the taxing authorities upon examination. The Company believes its tax positions are all more likely than not to be upheld upon examination. As such, the Company has not recorded a liability for uncertain tax benefits. The Company has adopted ASC 740-10-25, "Definition of Settlement", which provides guidance on how an entity should determine whether a tax position is effectively settled for the purpose of recognizing previously unrecognized tax benefits and provides that a tax position can be effectively settled upon the completion and examination by a taxing authority without being legally extinguished. For tax positions considered effectively settled, an entity would recognize the full amount of tax benefit, even if the tax position is not considered more likely than not to be sustained based solely on the basis of its technical merits and the statute of limitations remains open. The federal and state income tax returns of the Company are subject to examination by the IRS and state taxing authorities, generally for three years after they are filed. In December 2017, the Tax Cuts and Jobs Act (the "Tax Act") was signed into law. The Tax Act makes changes to U.S. tax law, including a reduction in the corporate tax rate from 35% to 21%. As a result of the enacted law, the Company was required to revalue deferred tax assets and liabilities at the enacted rate. The revaluation resulted in a $514,100 reduction in the Company s net deferred tax liability. Due to the timing of the enactment and the complexity involved in applying the provisions of the Tax Act, the Company has made reasonable estimates of the effects in its consolidated financial statements as of December 31, 2017. As the Company collects and prepares necessary data and interprets the Tax Act and any additional guidance issued by the U.S. Treasury Department, the IRS, the SEC, and other standard-setting bodies, it may make adjustments to the provisional amounts. The accounting for the tax effects of the Tax Act will be completed in 2018. Recent Accounting Pronouncements See Note 3 to our consolidated financial statements for the period ended June 30, 2018 included elsewhere in this prospectus for information about recent accounting pronouncements. BUSINESS Company Overview SharedLABS is an information technology ("IT") services company. We enable businesses and organizations to radically adapt as they harness our extensive experience with next-generation technologies like cloud hosting, big data analytics, artificial intelligence ("AI"), and the Internet of Things ("IoT"). Rather than offer a "one size fits all" approach, through strategy, consulting, design and implementation, we tailor our professional services to each client s needs to provide customized IT solutions, allowing them to make the absolute most of our services. We complement our professional services with project management, managed services, maintenance and support; in other words, we shepherd each and every product through its entire lifecycle. Even with this care, we remain a flexible organization that is able to predict and capitalize upon new technologies. We believe that our ability to straddle the present and the future sets us apart from our competitors. We enable business transformation through our expertise in IT solutions and offer a broad range of software, digital, cloud, and security services and solutions to both commercial and government clients across various sectors including technology, digital media and entertainment, banking and insurance, payments, transportation, retail and e-commerce. Our industry and technological expertise and our investments in network, data center, security, collaboration and mobility allow us to customize our integration services specifically for each client. We differentiate ourselves in the market through our bias for action, our unwavering commitment to client satisfaction, our market-driven services, and our exceptional knowledge and insight into the industries and vertical markets we serve. We are investing in key focus areas to build and deliver our next-generation infrastructure and software capabilities in order to bring customers greater value and innovation. We leverage our deep experiential knowledge, technological competencies, and innovative solutions to provide market-leading platforms powered by our exceptional global delivery service. Our solutions are delivered through a broad suite of professional services, including software development, digital marketing, strategy, consulting, design and implementation. We customize our service offerings to the client s needs to enable them to attain their data, network applications, and workforce objectives. We complement our professional services with project management, technology acquisition, managed services, maintenance and support to offer a full lifecycle model. Our services-led, lifecycle model leads to ongoing client engagement. Using our methodology, global delivery model, innovative solutions, and industry expertise, we provide cost-effective services that enable our clients to use IT to enhance business performance, accelerate time-to-market, increase productivity and improve customer service. Given our broad technology enablement, approach to service delivery, flexible services model, and robust partner community, we believe that we are well positioned to be a leading technology services company by providing end-to-end technology and business solutions to the newly defined enterprise. Corporate Structure The following chart reflects our corporate structure: Market Overview The global IT services market grew rapidly and continues to expand. According to International Data Corporation ("IDC"), the market grew from $805 billion to $953 billion between 2012 and 2016 in the US and in 2016, it surpassed $3.4 trillion globally. If current growth forecasts prove accurate, the industry will pass the $3.5 trillion mark in the coming year. The U.S. market represents 28% of the worldwide total, or slightly over $1 trillion. The next largest market is the Asia-Pacific region, which encompasses Japan, China, Australia, India, and surrounding countries. The share of the Asia-Pacific region has increasingly accounted for a larger share of the global IT pie. This has mostly come at the expense of a Western Europe market growing at a slower rate and thereby reducing its proportional share over time. Once valued primarily for its operational support, IT is now a source of competitive advantage. Leading enterprises use IT to accelerate time-to-market while increasing productivity and improving customer service. As these services have become more essential, they have also become more costly, causing many companies to outsource. Engaging service providers to improve business performance, beyond reducing costs, can be challenging. The rate of technological change, the impact of mergers and acquisitions and a historical approach to building and managing stand-alone, legacy IT systems and applications have led to fragmented IT environments, which are complex, inefficient and costly to maintain and operate. Further, the breakneck speed of market shifts strains the abilities of most companies to keep pace. Organizations are actively seeking IT service providers that offer cost-effective, customized solutions and a delivery model that is both tailored to their specific needs and is also based on industry standards, which allows them to address these complex challenges. Market Opportunity According to a March 2017 report published by The Business Research Company titled "U.S. IT Services Market 2017" (the "Report"), the IT services industry in the US is expected to grow from $953 billion in 2016 to $1163 billion in 2020 at a compound annual growth rate (CAGR) of 5.1%. Much of this growth will be spurred by advances in technology, internet and media penetration, specialized research and development and digitalization. For example. advances in AI, IoT and wearable technologies are driving the demand for cloud services, software services and hardware support services. The proliferation of these technologies in a wide range of industries, running the gamut from manufacturing to healthcare, electronics to retail, is further driving the demand for IT services. E-Commerce companies use AI and cloud computing to minimize their operational costs. As these technologies become ever-more pervasive, so do the security risks associated with them. There is increasing demand for more robust cyber security services. Market and Offering Segments Centered on performance, reliability, security, flexibility and cost efficiency, we offer a client-centric portfolio of services which we believe enables clients to attain their data, network, applications and workforce objectives in both managed and outsourced environments. We focus on four solution areas: (i) software & applications; (ii) data & analytics; (iii) cloud; and (iv) web & digital. We offer our solutions in a service delivery framework, which includes consulting, managed services and outsourcing, focusing our strengths in such areas as business process improvement, project management and business strategy. We offer our solutions through a framework of broad and evolving sets of building block capabilities built upon our service platforms, automation systems, and tools. These building blocks can be transformed into comprehensive solutions that our clients can easily consume. We design and develop our building block capabilities, whenever possible, so as to afford our clients the ability to customize and employ our solutions in as many ways as possible while also maintaining high standards of quality in our service delivery. Software & Applications. This offering includes writing and maintaining the source code, but in a broader sense, it includes all that is involved between the conception of the desired software through to the final manifestation of the software; and may include research, prototyping, modification, reuse, re-engineering, maintenance, or any other activities that result in software products. We offer custom software development, maintenance and management, and consulting services which enable our clients to pull value from the technologies in their business, at every stage of their product development lifecycle, from concept, discovery, and requirements definition, to ongoing post-launch enhancement. We strive to design our organization for flexibility and align with our clients needs. With a refined expertise across multiple verticals and solutions, we believe we will be able to drive success and minimize risk regardless of size or scope. Our business and technology engineers help businesses define and validate a concept, set clear expectations, and identify potential bottlenecks. Our unique approach involves a number of factors, such as: (i) market and competitive analysis; (ii) feasibility study and proof of concept; (iii) discovering new business and monetization models; (iv) business and technology innovation; (v) multi-platform strategy development; (vi) creating security and scalability roadmaps; and (vii) selecting a suitable technology stack, which is a set of components or layers in software that provides users broad functionality. We believe usability is a paramount. From the outset, we drive user adoption and satisfaction for our clients products with an eye for future growth. We perform user-centric analysis to align the overall experience with each of our clients business goals and user needs, and help our clients make well-informed product decisions. Our user interface approach, which we believe to be deeply intuitive, involves the following: (i) user journey mapping; (ii) identifying technical, business, or usage constraints; (iii) wireframing, mocking up, and prototyping; and (iv) setting usability metrics. Through our design and development, we aim to provide our clients a lightning-fast, pixel-perfect user interface approach that delivers consistency in user experience across all platforms. Through the combination of engineering and quality assurance ("QA"), we believe we can further reduce costs and time-to-market while also building a product that is functional, scalable and secure. We believe our QA and testing capabilities are underpinned by a robust and flexible back-end, enterprise-grade information security, DevOps-powered continuous delivery process, a fully-fledged automation framework for web, mobile, and application programming interface testing, and end-to-end manual testing, including functional, integration, regression, and user interface. Cloud. Our cloud services include access to servers, storage, databases and a broad set of application support services. These services are managed by our teams of highly competent engineers both onsite and offsite with our clients. Our offering set also includes data processing and hosting services, data management and disaster recovery. Coupled with what we believe to be best-in-class tools, we enable cloud software solutions to move manage and recover data. Using virtualization technologies, we offer (i) Infrastructure–as–a–Service ("Iaas") which includes include hosted hardware, software, servers, storage and other infrastructure components for their users. These components include networking features, computer hardware, space for data storage, system maintenance, backup and resiliency planning. IaaS offers the highest level of flexibility and management control to the user; (ii) Platform–as–a–Service ("PaaS"), which refers to a cloud-based solutions set which delivers hardware and software tools for compute and storage needs, wherein we support the complete lifecycle of application or software development without the need for clients to manage the underlying infrastructure;, and (iii) Software as a Service ("SaaS") which provides our clients access to their business applications, managing access to the application, its security, availability, and performance in a fully managed consumption based model. Web & Digital Services. Our web & digital services offerings include enterprise-level website design and development to various clients, including companies ranging from small to global enterprise, at affordable rates. By leveraging our best developers, search engine optimization ("SEO") specialists, social media managers, and engagement experts to deliver what we believe to be premium products and the most advanced digital marketing services in the industry, we believe we serve an increasingly important function in our clients lifecycle. We offer a full suite of web products, including e-commerce, digital strategy consulting, security, integration storage management and Customer Relationship Management ("CRM"). Our digital services offerings include web design, SEO, conversation rate optimization, social media and reputation management, as well as email, pay-per-click, and content marketing. Data & Analytics. Using a variety of service engagements options, from exploratory assessments to analytics infrastructure deployment, our data sciences offerings are built to help our clients (i) develop data science capabilities, (ii) survey and assess their enterprise data landscape, or (iii) help our clients organizations harness the power of advanced analytics, based on thorough data mining and analysis. By leveraging our capabilities in business intelligence, data analytics, data warehousing, and big data and also employing our data analytics tools, we believe we are well positioned to offer our clients the ability to use analytics to identify and prioritize issues in an easy-to-use, contextually relevant and massively scalable manner. Through our increasing focus on emerging technologies in cloud and data sciences, we believe we are well positioned to benefit from the rapid growth in demand for these technologies and capabilities across the industry and expect our business mix to continue to include more in these areas. Within our four solutions areas, we offer customers enterprise-class solutions that are critical to driving digital transformation and improving their business capabilities. Examples of our offerings include proprietary solutions designed to offer highly scalable storage for both structured and unstructured data while maintaining chain of custody across multiple clouds, IoT, data analytics and reporting, hybrid and multi-cloud, and enterprise digital. These solutions are enabled by our expertise in foundational technologies, built upon our investments in data, networks, and applications capabilities. We develop and maintain long-term client relationships through our localized sales and delivery resources of approximately 500 team members based in over 40 states across the United States as of July 2018. As a strategic partner and trusted advisor to our clients, we provide the expertise to create new or modernize legacy software and applications, implement new solutions, as well as optimize and better leverage existing IT resources. We provide customized strategy, consulting, design, development, integration, and lifecycle management through our team members in the US, Canada, and India, enabling us to deliver superior results at market leading prices for our clients. Our client base is diversified across individual customers and industry verticals. For the six months ended June 30, 2018 and year ended December 31, 2017, our top 15 clients accounted for 37.4% and 38.2% of our total revenue, respectively, with revenues in multiple verticals including healthcare, technology, government, financial services, education, and professional services as our largest categories. We believe that our diversified client profile is a key driver of our ability to generate growth across different economic and technology cycles. The SharedLABS, Inc. Method Our Embedded Service Partner, or ESP, methodology allows clients to see around the corner. Through the integration of capabilities and strategy, ESP helps managers and employees lower costs and expedite change. We provide actionable intelligence, based not on corporate historical experiences but rather on shifts in the intelligent quotient. Market drivers are difficult to read at times, as is the influence of personality and interest trends that are not yet forged. ESP provides the extrasensory pathway of knowledge that guides our clients to achieve their goals. Our Solutions Our ESP method, broad range of IT services, global delivery model and innovative framework approach enable us to deliver IT solutions to clients that enhance business performance, accelerate time-to-market, increase productivity and improve customer service. Our wide sales, operations and delivery networks, spanning the United States, Canada and India, afford us powerful resource capabilities that uniquely position us to provide solutions in every time zone. We reduce the effort and costs required to maintain and develop IT applications on an ongoing basis by streamlining and consolidating our clients applications. We believe that our solution provides our clients with the consultative and high-value services associated with large consulting and systems integration firms and the cost-effectiveness associated with offshore IT outsourcing firms. It is the best of both worlds. Our consulting services help accelerate business outcomes, drive innovation, navigate change and enable transformation, while delivering superior results to companies ranging in size from medium to large enterprise in more than 15 industry verticals across all business functions. Our digital transformation and innovation solutions empower companies to accelerate business growth by reimagining the consumer experience, and creating lasting value while our differentiated solutions in software, infrastructure, mobile, analytics, and security enable improvement through operating efficiencies and automation. Our Global Delivery Model We have developed a global delivery model that allows us to provide innovative IT services to our clients in a flexible, cost-effective and timely manner. We are focused on the overall structure and strategy for delivering successful IT services from our global locations and offer solutions using geographically spread teams while ensuring high-quality project delivery, security and IP protections, and round-the-clock resource availability. Our model leverages an efficient onsite-to-offshore service delivery mix to manage and accelerate delivery, foster innovation and promote continual improvement. Since developing our global delivery model, we are continuously seeking ways to improve the delivery of our IT services. Our global delivery model uses resources from each of our locations to deliver our IT services. This may involve gathering/analyzing customer requirements at the client site while also executing the project using technical teams located at a remote site, whether onshore or offshore. Tasks can be divided among various operational teams and controlled by distributed project management. This model can also be used to deliver a customized project based on the client s requirements. By incorporating on site off site nearshore and offshore models our global delivery model is highly extensible and scalable at below market pricing providing us an advantage in the markets we serve. Our Onsite Delivery Model is where consultants are deployed at the client site, working from the initial consultation until the project s completion. Representatives will have face-to-face client interaction and a clear understanding of the client s requirements and policies. There are no communication gaps, which enables better project control and management. In our Offsite/Nearshore Delivery Model, a consultant may work remotely, but resides in the same city or country as that of the client. We have consultants in 43 states and three countries performing onshore work. It is possible that some consultants will work at the client site while others work from a remote location within the same territory. This model could be a combination of onsite and offsite (onshore). Our Offshore Delivery Model takes all the project tasks from the start until completion to one or more offshore sites using an outsourcing team, however we maintain project managers, client executives, or delivery managers at the client as well as the offshore site to have better project governance, control, communication, and manageability. Our Hybrid Delivery Model (Onsite/Offsite + Offshore) features the combination of onsite, offsite, and onshore models. The Hybrid model provides the cost-effectiveness of the offshore model as well as the face-to-face contact that is crucial to preventing communication gaps and ensuring the success of our clients projects. The ultimate solution is usually the integrated Onsite-Nearshore model, as it is usually as effective as the Onsite model, yet offers the cost-efficiency of offshore development. Using our global delivery model, our onsite teams will have direct client interaction and may serve as solution architects, project managers, or even consultants, depending upon client requirements and needs. Usually, they will gather client requirements and generate project specifications by working together with our offsite teams, while the offshore outsourcing team will communicate with the onshore team to get these project requirements and execute the project based on the information provided. Benefits of the SharedLABS Global Delivery Model Our Global Delivery and Development centers and teams are being built and grown in order to drive the following benefits: Minimize investment cost Speed of execution Quality of work Access to hard to find and keep resources Experience from other projects (industry expertise) 24x7 resource availability Access to expertise and knowledge Intelligent workload distribution and integration Faster response to changing client requirements Mix and match onsite and offshore resources Extended workday—faster project completion Lower risk Back-up facilities in global locations in case of emergency or natural disaster Highly scalable and flexible resourcing Increased transparency and visibility Overcome communication challenges Multicultural work environment Our governance structure is designed to support projects in our global delivery model by ensuring the following: Coordination between global teams Clearly understood processes and workflows Proper inventory and information management No communication gaps Flexible and adaptable infrastructure Strong project control Our Competitive Strengths Our strengths include technological expertise, a global delivery model, a utility services model, and a robust partner community; all of which we believe help enable organizations to adapt quickly to shifts in the market. We offer a client-centric portfolio of services that enable our clients to attain their data, network, applications, and workforce objectives. This is very different then provider-centric portfolios that most customers have experienced. We value propositions are centered on performance, reliability, security flexibility, and cost efficiency. These are critical elements in all of our services. We deliver our end-to-end solutions through a full lifecycle model, which combines consulting, engineering, managed services and technology to give us a significant competitive advantage compared to other IT providers. We believe that businesses increasingly seek a single provider of integrated multi-vendor, multi-technology solutions for their complex and mission-critical IT needs. Our ability to take a client s high-level vision and distill it into a tangible IT roadmap is a key differentiator for our company; it requires a high degree of investment and technical know-how across technologies that would be difficult and costly to replicate. Our solutions enhance the technology capabilities that our clients believe are most important to their businesses by empowering enhanced productivity and expanded offerings to their clients. With our clients, our lifecycle approach allows for ongoing engagement across new projects and upgrades, as well as ongoing managed services and support. For the six months ended and year ended June 30, 2018 and December 31, 2017, this service-led model resulted in a small percentage of our revenues coming from clients that purchased our services. We provide broad and evolving sets of the building block capabilities. These capabilities are built upon our service platforms, automation systems, and tools. These building blocks can be transformed into comprehensive solutions that our clients can easily consume. We recognize that client support needs will vary. As such, we offer a flexible services model that can adapt to the client s needs. Our analysts and engineers develop custom solutions for clients within specific technologies and verticals and drive them across our global network. We have expertise in digital infrastructure, cloud and security solutions, and we have a deep understanding of the emerging trends, technologies and best practices. Our extensive experience with a broad set of technologies allows us to create differentiated and best-in-class solutions, which we expect to be increasingly important as IT solutions become more multi-vendor and tailored for clients. Across our global platform, we develop insights into the specific IT challenges facing our clients, which provide us with a significant advantage in developing superior solutions and winning new clients. We are able to leverage this domain expertise within and across verticals and technologies. Our ability to replicate and scale our knowledge and practices greatly enhances our efficiency and the quality of our solutions. Through our proprietary ESP methodology and patented software, our teams are able to access prior work product including successful proposals, scopes of work, design and as-built drawings, configurations and technical training. By leveraging this knowledge base, our professionals are able to quickly and efficiently respond to new opportunities with validated technical details based on previous work for that client or another of a similar size or in a similar vertical. We recognize the challenges our customers face while operating and managing complex technologies and systems. With SharedLABS, our clients gain access to our highly experienced and certified engineering and operational resources to build, deploy, monitor, and acutely manage their environment. We use process-driven controls in accordance with several industry standards and frameworks. We do this to attain service excellence and to enable the access and control our client desires. Our Growth Strategies We believe we are well-positioned for continued growth worldwide and have a multi-faceted strategy that builds upon our brand, strong client relationships and integral role in information technology and analysis. Our strategy is to grow our business through a combination of organic growth of our applications and technology solutions, both within our existing geographic reach and through geographic expansion, as well as expansion through strategic acquisitions. Organic Growth We believe the diverse and fragmented nature of the global IT Services market provides us with a significant opportunity to further grow our client base. We built and will continue to build a dedicated business development team focused on generating engagements with new clients. At the same time, we will continue to manage our current client relationships. We can offer prospective clients our experience handling complex technologies and vertical-specific challenges, making us a compelling choice for those seeking an IT solutions partner. Our industry solutions team works closely with our marketing group, industry and technology practice groups and research and development teams to develop new, highly-differentiated services. Through our international team of engineers, we maintain institutional knowledge and service capabilities that are adaptable, scalable and transferrable. We are constantly improving our offerings and developing new services and solutions for our clients, which we expect to drive incremental growth from existing and new clients. We plan to enhance assessment and consultative services with more "lean" engagements which we believe will drive annuity revenues as well as short-term high-margin engagements. We will also up-sell higher value services (driving stronger margins and reuse by developing open standard or easy integration into current modules) to existing customers. We will sell higher-value, greater volume (applications) services to new customers based on re-use and app store concept. We will also offer services from our new hype digital product line to broaden our reach outside of IT. Our efforts to develop new client relationships are supported by our existing referenceable client base. We will endeavor to increase the number of deals with more than one offering, while further developing our existing industry expertise. At the same time, we will also familiarize ourselves with the developments in adjacent industries. Maintaining a firm grasp on the state of our industry and those related to it further cements our position as a thought leader, whose authority attracts both new clients and talent. At the same time, we will forge new alliances even as we further develop our current pacts. These relationships will prove especially important as we further expand into new geographic areas. Strategic Acquisitions Planned acquisition targets include sector-specific technology companies with the objective of augmenting our current capabilities with feature-rich, third-party solutions. The decision-making process includes, but is not limited to, weighing time, effort and approximate cost to develop certain technologies in-house, versus acquiring or merging with one or more entities that we believe have a proven record of successfully developing a technology sub-component. Additional criteria include evaluating the potential acquisition target s customer base, stage of technology, merger or acquisition cost as compared to market conditions. We expect to continue to consider strategic acquisitions that can increase our technology expertise and geographic presence. We believe that our Mergers and Acquisition (M&A) strategy enhances and augments all of our growth avenues, including gaining capabilities, cross-selling our existing clients and entering new markets and verticals. Since our inception in 2016, we have completed two acquisitions and successfully integrated three companies, capitalizing on our scale, client relationships and vendor partnerships to drive margin expansion post-acquisition. We have been successful at integrating our acquisitions and at retaining key management talent. These acquisitions are complementary with new office openings and the organic expansion of our presence in existing geographic markets. We expect to continue to selectively pursue acquisition opportunities within the highly fragmented IT solutions market, with a focus on enhancing our solutions offerings and geographic presence. We plan to align our approach to creating software and applications, fielding and developing talented engineers, and solving technical problems to meet their client s business needs; and to create and field a suite of digital, security, managed, and cloud IT services offerings which increase monthly recurring revenue streams while expanding wallet share in existing clients and bringing on new clients. With this execution plan, management believes that they can win more work, at a lower cost, and drive scale that allows them to offer the best service, at the lowest price, with the highest quality in the industry. Sales & Marketing Our global sales, marketing and business development teams seek to develop strong relationships with managers and executives at prospective and existing clients to establish long-term business relationships that continue to grow in size and strategic value. As of August 31, 2018, we had 80 sales, marketing and business development professionals, including sales managers, sales representatives, account managers, telemarketers, sales support personnel and marketing professionals. The sales cycle for our services often includes initiating contact with a prospective client, understanding the prospective client s business challenges and opportunities, performing discovery or assessment activities, submitting proposals, providing client case studies and references and developing proofs-of-concept or solution prototypes. We organize our sales teams by business unit with professionals who have specialized industry knowledge. This industry focus enables our sales teams to better understand the prospective client s business and technology needs and to offer appropriate industry-focused solutions. Sales and sales support. Our sales and sales support teams focus primarily on identifying, targeting and building relationships with prospective clients. These teams are supported in their efforts by industry specialists, technology consultants and solution architects, who work together to design client-specific solution proposals. Our sales and sales support teams are based in offices throughout India, Canada, and the United States. Our team in Montreal, Canada consists of four (4) full-time employees of iTech. We consider these employees to be critical to our organizational effectiveness and revenue flow. Specifically, these employees are compliance and legal staff responsible for the oversight of establishment of procedures relating to I-9 compliance, Labor Condition Application filings, H-1-B visa filings, green card sponsorship filings through PERM/I-140/I-485 and Immigrant Visa Consular Processing. They also assist with consular issues in both visa and non-visa contexts. Our other two employees We have approximately 72 full-time employees in our office in Hyderabad, India who support the U.S.-based operations of iTech and SmartWorks. We have 13 administrative employees that support human resources, payroll, benefits and IT as well as seven (7) marketing staff who support iTech and 11 marketing staff who support SmartWorks. The remaining employees support recruitment efforts for both subsidiaries. Our independent contractors provide client support, as well as more critical functions such as software development and support, design and deployment of technology related solutions for our clients as well as the support and maintenance of our own internal networks and systems. Each of these employees and independent contractors operate under our subsidiary, iTech IT Solutions Private Limited. Account management. We assign experienced account managers who build and regularly update detailed account development plans for each of our clients. These managers are responsible for developing strong working relationships across the client organization, working day-to-day with the client and our service delivery teams to understand and address the client s needs. Our account managers work closely with our clients to develop a detailed understanding of their business objectives and technology environments. We use this knowledge to identify and target additional consulting engagements and other outsourcing opportunities. Marketing. We maintain a marketing presence in India, Canada and the United States. Our marketing team seeks to build our brand awareness and generate target lists and sales leads through industry events, press releases, thought leadership publications, direct marketing campaigns and referrals from clients, strategic alliances and industry analysts. The marketing team maintains frequent contact with industry analysts and experts to understand market trends and dynamics. Strategic alliances. We have strategic alliances with software companies, some of which are also our clients, to provide services to their customers. We believe these alliances differentiate us from our competition. Our extensive engineering, quality assurance and technology implementation and support services to software companies enable us to compete more effectively for the technology implementation and support services required by their customers. In addition, our strategic alliances with software companies allow us to share sales leads, develop joint account plans and engage in joint marketing activities. Client and Industry Expertise We market and provide our services globally to a vast domain of market verticals. Our vertical expertise encompasses the following industries: Retail/E-commerce Manufacturing Media & Entertainment Social Media Financial Services (BFSI & FINTech) Healthcare Oil & Gas Online Training/E-learning Telecommunications Travel & Hospitality Sports & Lifestyle Customers Customers are considered major customers when sales exceed 10% of total net sales for the period or outstanding receivable balances exceed 10% of total receivables. A significant portion of our revenue is concentrated in one major customer. Net sales from this customer accounted for approximately 15%, 17% and 15% for the years ended December 31, 2017, 2016 and 2015, respectively, and approximately 14% for the six months ended June 30, 2018. Our top 15 customers accounted for 37.4% and 38.2% of our revenues for the six months ended June 30, 2018 and year ended December 31, 2017, respectively. Competition The IT services market in which we operate is highly competitive, rapidly evolving and subject to shifting client needs and expectations. This market includes a large number of participants from a variety of marketing segments, including: offshore IT outsourcing firms, such as Cognizant Technology Solutions Corporation, HCL Technologies Ltd., Infosys Technologies Limited, Patni Computer Systems Limited, Satyam Computer Services Limited, Tata Consultancy Services Limited, Tech Mahindra Limited and Wipro Limited; and consulting and systems integration firms, such as Accenture Ltd., Cap Gemini S.A., Computer Sciences Corporation (now d/b/a DXC Technology Co.), Deloitte Consulting LLP, Hewlett Packard Enterprise Company, IBM Global Services Consulting and Sapient Corporation. We also occasionally compete with in-house IT departments, smaller vertically-focused IT service providers and local IT service providers based in the geographic areas where we compete. We expect additional competition from offshore IT outsourcing firms in emerging locations such as Eastern Europe, Latin America and China, as well as offshore IT service providers with facilities in less expensive geographies within India. We believe that the principal competitive factors in our business include technical expertise and industry knowledge, a breadth of service offerings to provide one-stop solutions to clients, a well-developed recruiting, training and retention model, a responsiveness to clients business needs and quality of services. We believe that we compete favorably with respect to these factors. Many of our competitors, however, have significantly greater financial, technical and marketing resources and a greater number of IT professionals than we do. As a result, many of these companies may respond more quickly to changes in client requirements. We cannot assure you that we will continue to compete favorably or that we will be successful in the face of increasing competition. Properties Our corporate headquarters are located in Jacksonville, FL. We also have offices in California, Texas, New Jersey, Virginia, Vermont and Montreal. At the present time, we believe our facilities are suitable and adequate for our current needs. However, as part of our expansion plan, we intend to identify and lease additional office space to support the expansion of our service offerings and business divisions. The table below summarizes information concerning the leases of our office locations, but does not include local sales tax, VAT tax or common area maintenance charges where applicable: Aggregate Square Footage Approximate Monthly Rent Lease term SharedLABS, Inc. – Jacksonville, FL Headquarters 6,800 $4,500 Through May 31, 2019 SharedLABS, Inc. – Jacksonville, FL Office 1,300 $2,635 Month-to-Month SharedLABS, Inc. – San Jose, CA Office 1,296 $1,606 Through March 31, 2019 iTech US, Inc. – Burlington, VT Office 5,500 $5,005 Month-to-Month iTech US, Inc. – Montreal, Canada Office 950 $2,350 March 2016 – May 2021 iTech US Inc./SmartWorks, LLC – Herndon, VA Office 1,250 $1,854 February 2018 – February 2019 iTech US Inc. – Addison, TX Office 250 $2,000 Month-to-Month SmartWorks, LLC – Edison, NJ Office 3,029 $4,589 Through December 31, 2018 SmartWorks, LLC – NJ Guest House Lease 1,000 $1,760 Month-to-Month SmartWorks, LLC – NJ Guest House Lease 1,000 $1,795 Month-to-Month SmartWorks, LLC – NJ Guest House Lease 1,000 $1,920 Through January 1, 2019 iTech IT Solutions Private Ltd. – Hyderabad, India Office 5,450 $1,151* Month-to-Month *Assumes 71 rupee/$1.00 Legal Proceedings We may be involved from time to time in ordinary litigation, negotiation and settlement matters that will not have a material effect on our operations or finances. Employees As of August 31, 2018, we have approximately 567 full-time employees. The Company s employees are not employed under any collectively bargained labor contracts and are not represented by any collective bargaining groups. We consider our relations with our employees to be good. MARKET AND INDUSTRY DATA The data included in this prospectus regarding market share, market position and industry data pertaining to our business are based on reports of published industry sources and estimates based on our management s knowledge and experience in the markets in which we operate. These estimates have been based on information obtained from our trade and business organizations and other contacts in the markets in which we operate. We believe these estimates to be accurate as of the date of this prospectus. MANAGEMENT Executive Officers and Directors Set forth below is certain information with respect to the individuals who are our directors and executive officers as of the date of this prospectus: Name Age Position(s) Jason M. Cory 45 President, Chief Executive Officer and Director Timothy Rahman 52 Chief Financial Officer John F. Andrews 64 Chief Operating Officer Mark T. Dinkel 64 General Counsel and Corporate Secretary Richard Keith Sauls 50 Independent Director William Weingart 59 Independent Director Susan Quackenbush 53 Independent Director Victor R. Eilau 59 Independent Director Kishore Khandavalli 50 Director Jason M. Cory. Mr. Cory has served as Chairman, President and CEO of SharedLABS, Inc. since May 2016. From February 2017 to May 2017, Mr. Cory was Senior Vice President, Tech Operations of Prometric, Inc., where he led its global technology operations to improve companies delivery ability and reduce costs. From February 2015 to April 2016, Mr. Cory was Senior Vice President of Managed Services at Presidio, Inc. (Nasdaq: PSDO), a public company that provides IT solutions. From 2010 to 2014, Mr. Cory served on the board as Chairman of Atherio, Inc., a private company that provides clients a variety of IT services. In 2012, he was named Atherio s President and Chief Executive Officer, positions he held until 2015. From 2010 to 2012, Mr. Cory was Senior Vice President of Global Services of Fidelity National Information Services (NYSE: FIS), a public company that provides financial services technology and outsourcing services. From 2007 to 2010, he served as Executive Vice President and Global Portfolio Executive at Computer Sciences Corporation, a public company that provided IT and professional services before being acquired by DXC Technology Co. (NYSE: DXC). From 2005 to 2007, Mr. Cory was Executive Director of Global Outsourcing & Infrastructure Services at UNISYS (NYSE: UIS), a public company that provides IT services, software and technology. From 2000 to 2005, he was Executive Director of Hosting, Cloud, Security and Network Services at SAVVIS, Inc. (now CenturyLink), a private company that provides voice and data telecommunications services. From 1997 to 2000, he was Chief Technical Architect at Anheuser-Busch Companies, Inc. (NYSE: BUD), the world s largest brewing company. From 1995 to 1997, he was Information Systems and Telecommunications Manager at Thompson Coburn, LLP, a law firm with a special focus on issues relating to computer technology. Timothy Rahman. Mr. Rahman has served as the Chief Financial Officer of SharedLABS, Inc. since September 2017. Prior to joining us, from June 2007 to September 2017, he served as Chief Financial Officer of Mission Critical Electronic, a private company that manufactures battery chargers, converters and other electronic parts. Mr. Rahman earned a B.S. in Finance from California State University, Dominguez Hills and his Master of Business Administration from Pepperdine University. John F. Andrews. Mr. Andrews has served as the Chief Operating Officer of SharedLABS, Inc. since August 2017. From March 2017 to August 2017, Mr. Andrews served as President of Duos Technologies, Inc. and Chief Operating Officer of Duos Technologies Group, Inc. (OTC: DUOT), a public company that provides intelligent technology solutions and systems for inspection, automation, safety and security for critical infrastructure. From 2011 to 2016, Mr. Andrews served as Executive Vice President of Business Development for ShipXpress, which provides cloud-based software solutions which enable transportation, industrial, and commodities businesses to efficiently operate and collaborate with their supply chain partners. Mr. Andrews also served on the ShipXpress Board of Directors from 2004 to 2016 when the private company was acquired by GE. From October 2014 to March 2017, Mr. Andrews served a Chief Operating Officer of the Girl Scouts of Gateway Council, the girl centric nonprofit serving North Florida. From 2009 to 2011, Mr. Andrews was Chief Executive Officer and a Director of Varsity Media Group, a private company responsible to complete and assimilate the acquisition of Wireless Grids Corp. and commercialize the software based intellectual property developed by the National Science Foundation, Massachusetts Institute of Technology and Syracuse University. From 2005 to 2009, Mr. Andrews was Chief Executive Officer and a Director of Evans Data Corporation, a private information technology research and advisory firm which provides these services to the top 50 global IT organizations. From 2003 to 2004, Mr. Andrews was Chief Executive Officer and a Director of Resolution, EBC, Inc, a private company that developed decision making logic systems for health, manufacturing, and property and casualty insurance industries. From 2002 to 2003, Mr. Andrews was the Chief Executive Officer and a Director of Giga Information Group, a global market research and consulting technology company. Mark T. Dinkel. Mr. Dinkel has served as Corporate Secretary of SharedLABS, Inc. since December 2016. From May 2017 to present, Mr. Dinkel has served as Chief Executive Officer of Payne|Bouchier, Inc., a private company that provides construction and project management, millwork, cabinetry and fine word working for residential and commercial customers. During 2017, Mr. Dinkel provided consulting services to Bain & Company, KPMG, LLP and other similar firms and assisted them in advising their clients on strategies involving go-to-market, investment and acquisitions relating to technology and managed services providers. From 2015 to 2016, Mr. Dinkel served as Vice President of Managed Services of Presidio, Inc. (Nasdaq: PSDO), a public company that provides IT solutions. From 2003 to 2015, Mr. Dinkel served as Vice President & General Manager, Alliances Director, Global Commercial Management of DXC Technology Co. (f/k/a Computer Sciences Corporation) (NYSE: DXC), a global IT services company providing managed information technology services, including systems integration, business process, infrastructure and applications outsourcing. Mr. Dinkel holds an MA in International Relations from the University of California, Los Angeles, a JD from Boston College Law School, an MLT from Georgetown University Law Center, and an MBA from The Wharton School of the University of Pennsylvania. Richard Keith Sauls. Mr. Sauls has serves as director of SharedLABS, Inc. since January 2018. Mr. Sauls has been a Managing General Partner at Exeter Venture Group, a privately-owned venture capital and private equity firm, since January 2000. Over the course of the same period, he has been a Managing Partner at AppleGold Investment Company, a private investment company. From February 2014 to March 2015, Mr. Sauls was a Portfolio Manager at J.P. Morgan. He served as Investment Chair on the College of Charleston s Foundation Board from 2012 to 2015. From 2004 to 2014, Mr. Sauls was Senior Vice President at GenSpring Family Offices (formerly AMA Global), a privately-owned multi-family office. 2008 to 2010 saw him working as Managing Director of the Diversified Portfolio Group at Crawford Investment Counsel, an investment firm that manages significant assets for private and institutional investors. From 2002 to 2004, Mr. Sauls was Senior Vice President of Client Account Management for Bessemer Trust, a private multi-family office. From 1994 to 1998, he was Associate Vice President of SunTrust Bank. William Weingart. Mr. Weingart has served as Director of SharedLABS, Inc. since January 2018. Since 2010, Mr. Weingart has held various positions at Vantiv Corporation (AMEX: VNTV), a public company that provides Electronic Transaction Processing services to Financial Institutions and Merchants. He has held such roles as Senior Vice President of Product and Strategy, President of E-commerce Business, Chief Investment Officer, and most recently, as Senior Vice President of Business Integration. Mr. Weingart received a Master of Business Administration in Corporation Finance from Dowling College. Susan Quackenbush. Ms. Quackenbush has served as director of SharedLABS, Inc. since January 2018. From November 2015 to present, Ms. Quackenbush has served as Chief Human Resources Officer of Vonage Holdings Corp. (NYSE: VG), a public company that provides business cloud communications services. Vonage transforms the way people work and businesses operate through a portfolio of cloud-based communications solutions that enable internal collaboration among employees, while also keeping companies closely connected with their customers, across any mode of communication, on any device. Prior to joining Vonage, she was Chief Human Resources Officer of Presidio, Inc. (Nasdaq: PSDO) from September 2012 to November 2015, a public company that is a leading North American IT solutions provider delivering digital transformation solutions through a full lifecycle of professional, managed and support services. Ms. Quackenbush has served as Vice President of Human Resources of DMG Information & Events from November 2010 to August 2012, a public company that provides high-value data to the insurance, property, energy, education and finance sectors and operates highly successful large-scale events. She holds a M.B.A. in finance from Drexel University and a Bachelor s degree in environmental and business economics from Rutgers University, Cook College. Victor R. Eilau. Mr. Eilau has served as director of SharedLABS, Inc. since January 2018. From January 2013 to present, Mr. Eilau has served as Vice President of Technology Financing of Summit Funding Group, Inc., an international equipment leasing and financing company where he provides business development to the information technology sector. From June 2008 to present, Mr. Eilau has served as director of Essential LifeCycle Services, a private company that provides business processing outsourcing for the IT hardware repair and services supply chain. From 2010 to 2013, he served as Senior Vice President of Technology Value Financial LLC, an IT financing company. Mr. Eilau holds a Master of Management in finance from the Kellogg School of Management, Northwestern University and a Bachelor s degree in marketing and computer science from Southern Illinois University. Kishore Khandavalli. Mr. Khandavalli has served as director of SharedLABS, Inc. since August 2017. He is the founder of iTech US, Inc., a wholly-owned subsidiary of SharedLABS, Inc. From January 2003 to August 2017, he served as Chief Executive Officer of iTech US, Inc., a private company that provides software consulting and staffing services. Mr. Khandavalli currently serves as Chief Executive Officer of Seven Tablets, Inc., a private company that provides mobile software development services, a position he has held since March 2012. He also serves as Chief Executive Officer of iTech Data Services, Inc., a private company that provides business processing outsourcing and data management services. Mr. Khandavalli earned a B.S. in Chemical Engineering from Andhra University and holds a MS in Chemical Engineering from The University of Akron. Family Relationships No family relationships exist between any of our current or former directors or executive officers. Board Leadership Structure and Role in Risk Oversight Our Board of Directors is primarily responsible for overseeing our risk management processes on behalf of the Company. The Board of Directors receives and reviews periodic reports from management, auditors, legal counsel, and others, as considered appropriate regarding our company s assessment of risks. The Board of Directors focuses on the most significant risks facing our company and our company s general risk management strategy, and also ensures that risks undertaken by our Company are consistent with the board s appetite for risk. While the board oversees our company s risk management, management is responsible for day-to-day risk management processes. We believe this division of responsibilities is the most effective approach for addressing the risks facing our company and that our board leadership structure supports this approach. Involvement in Certain Legal Proceedings To our knowledge, our directors and executive officers have not been involved in any of the following events during the past ten years: 1. any bankruptcy petition filed by or against such person or any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time; 2. any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); 3. being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from or otherwise limiting his involvement in any type of business, securities or banking activities or to be associated with any person practicing in banking or securities activities; 4. being found by a court of competent jurisdiction in a civil action, the SEC or the Commodity Futures Trading Commission to have violated a Federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated; 5. being subject of, or a party to, any Federal or state judicial or administrative order, judgment decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of any Federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or 6. being subject of or party to any sanction or order, not subsequently reversed, suspended, or vacated, of any self-regulatory organization, any registered entity or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member. Board Committees We expect that, immediately following this offering, the standing committees of our board of directors will consist of an audit committee, a compensation committee and a nominating and corporate governance committee. Our board of directors may establish other committees to facilitate the management of our business. The expected composition and functions of the audit committee, compensation committee and nominating and corporate governance committee are described below. Members will serve on committees until their resignation or until otherwise determined by our board of directors. Audit Committee Upon completion of this offering, our audit committee will consist of Messrs. Sauls, Eilau and Weingart, with Mr. Keith Sauls serving as the chairman. Our board of directors has determined that Mr. Keith Sauls is an "audit committee financial expert" within the meaning of the SEC regulations. Our board of directors has also determined that each member of our audit committee can read and understand fundamental financial statements in accordance with applicable requirements. In arriving at these determinations, the board of directors has examined each audit committee member s scope of experience and the nature of their employment in the corporate finance sector. The functions of this committee include: selecting a qualified firm to serve as the independent registered public accounting firm to audit our financial statements; helping to ensure the independence and performance of the independent registered public accounting firm; discussing the scope and results of the audit with the independent registered public accounting firm, and reviewing, with management and the independent accountants, our interim and year-end operating results; developing procedures for employees to submit concerns anonymously about questionable accounting or audit matters; reviewing our policies on risk assessment and risk management; reviewing related party transactions; obtaining and reviewing a report by the independent registered public accounting firm at least annually, that describes our internal quality-control procedures, any material issues with such procedures, and any steps taken to deal with such issues when required by applicable law; and approving (or, as permitted, pre-approving) all audit and all permissible non-audit services, other than de minimis non-audit services, to be performed by the independent registered public accounting firm. Compensation Committee Upon the pricing of this offering, our compensation committee will consist of Ms. Susan Quackenbush and Mr. Keith Sauls, with Ms. Susan Quackenbush serving as the chairman. The functions of the compensation committee will include: reviewing and approving, or recommending that our board of directors approve, the compensation of our executive officers; reviewing and recommending that our board of directors approve the compensation of our directors; reviewing and approving, or recommending that our board of directors approve, the terms of compensatory arrangements with our executive officers; administering our stock and equity incentive plans; selecting independent compensation consultants and assessing conflict of interest compensation advisers; reviewing and approving, or recommending that our board of directors approve, incentive compensation and equity plans; and reviewing and establishing general policies relating to compensation and benefits of our employees and reviewing our overall compensation philosophy. Nominating and Corporate Governance Committee Upon the pricing of this offering, our nominating and corporate governance committee will consist of Ms. Susan Quackenbush and Mr. Keith Sauls, with Ms. Susan Quackenbush serving as the chairman. The functions of the nominating and governance committee will include: identifying and recommending candidates for membership on our board of directors; including nominees recommended by stockholders; reviewing and recommending the composition of our committees; overseeing our code of business conduct and ethics, corporate governance guidelines and reporting; and making recommendations to our board of directors concerning governance matters. The nominating and corporate governance committee also annually reviews the nominating and corporate governance committee charter and the committee s performance. Code of Ethics We have adopted a code of ethics that applies to all of our employees, including employees of our subsidiaries, as well as each of our directors and certain persons performing services for us. The code of ethics addresses, among other things, competition and fair dealing, conflicts of interest, financial matters and external reporting, Company funds and assets, confidentiality and corporate opportunity requirements and the process for reporting violations of the code of ethics, employee misconduct, improper conflicts of interest or other violations. We will provide a copy of our code of ethics without charge upon written request to SharedLABS, Inc., 6 E Bay St., 4th Fl., Jacksonville, FL 32202. EXECUTIVE COMPENSATION The following table sets forth the compensation for our fiscal years ended December 31, 2017 and 2016 earned by or awarded to, as applicable, our principal executive officer, principal financial officer and our other most highly compensated executive officers as of December 31, 2017. Name and Principal Position Year Salary ($) Bonus ($) Stock Awards ($) Option Awards ($) All Other Compensation ($) ($) Jason M. Cory, 2017 121,154 - - - 7,911 129,065 President & Chief Executive Officer 2016 - - - - - - Timothy Rahman, 2017 56,923 - 198,400 - 16,292 271,615 Chief Financial Officer(1)(2) 2016 - - - - - - John F. Andrews, 2017 64,038 - - - 7,911 71,949 Chief Operating Officer 2016 - - - - - - (1) During the year ended December 31, 2017, the Company issued an aggregate of 80,000 shares of common stock to Mr. Rahman with a fair value of $198,400. These shares vested immediately on the date of issuance. These shares were valued based on recent sales of the Company s common stock to independent qualified investors. (2) During the year ended December 31, 2017, the Company granted warrants to purchase up to an aggregate of 46,000 shares of common stock to Mr. Rahman for services rendered. The warrants are exercisable for a term of three (3) years from the date of issuance, and have an exercise price ranging from $2.50 to $6.82 per share. The Company recorded compensation expense related to these warrant issuances in the amount of $8,381 during the year ended December 31, 2017. Employment Agreements with Named Executive Officers We have entered into employment agreements with Tim Rahman and John Andrews. A description of each of the agreements follows. Timothy Rahman. Pursuant to the terms of an employment agreement dated June 22, 2017, Mr. Rahman receives an annual base salary of $200,000, subject to increase in accordance with the policies of the Company in force from time to time, payable in installments in accordance with Company policy. The agreement also provides that Mr. Rahman is eligible to receive an executive incentive bonus of up to 100% of his annual salary. In addition, Mr. Rahman shall be eligible to receive an annual equity incentive bonus consisting of stock options of the Company in the sole discretion of Board of Directors. Mr. Rahman s employment agreement has a term of two years and 6 days, commencing on July 24, 2017 and expiring on July 31, 2019, unless a 30-day advance notice is provided by Mr. Rahman or as otherwise provided in the agreement. John F. Andrews. Pursuant to the terms of an employment agreement dated August 14, 2017, Mr. Andrews receives an annual base salary of $185,000, subject to increase in accordance with the policies of the Company in force from time to time, payable in installments in accordance with Company policy. The agreement also provides that Mr. Andrews is eligible to receive an executive incentive bonus of up to 100% of his annual salary. Mr. Andrews s employment agreement has a term of three years, commencing on August 14, 2017 and expiring on August 14, 2020, unless a 30-day advance notice is provided by Mr. Andrews or as otherwise provided in the agreement. The agreement further provides that in the event Mr. Andrews is terminated without cause, he shall be entitled to severance payments of three months of his annual base salary then in effect. Outstanding Equity Awards at Fiscal Year-End There were no outstanding equity awards as of December 31, 2017 or as of the date of this prospectus. Director Compensation During the year ended December 31, 2017, the Company granted 21,000 common stock warrants to a board member for services rendered. The warrants have an exercise price of $5.00 per share, have a three (3) year term and vest immediately on the date of issuance. The Company recorded compensation expense related to the warrant issuance of $191 during the year ended December 31, 2017. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE Certain Relationships and Related Transactions None of the directors or executive officers of the Company, nor any person who owned of record or was known to own beneficially more than 5% of the Company s outstanding shares of its common stock, nor any associate or affiliate of such persons or companies, has any material interest, direct or indirect, in any transaction that has occurred during the past fiscal year, or in any proposed transaction, which has materially affected or will affect the Company. Director Independence The listing requirements and rules of Nasdaq generally require that independent directors comprise a majority of the members of the boards of directors of listed companies within one year of the closing of their initial public offerings. At this time, Mr. William Weingart, Ms. Susan Quackenbush, Mr. Keith Sauls and Mr. Victor Eilau are our independent directors. Our board of directors has undertaken a review of its composition, the composition of its committees and the independence of each director. Based upon information requested from and provided by each director concerning his or her background, employment and affiliations, including family relationships, our board of directors has determined that Mr. William Weingart, Ms. Susan Quackenbush, Mr. Keith Sauls and Mr. Victor Eilau do not have any relationships that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director and that each of these directors is "independent" as that term is defined under the applicable rules and regulations of the SEC and the listing requirements and rules of Nasdaq. In making this determination, our board of directors considered the current and prior relationships that each non-employee director has with our company and all other facts and circumstances our board of directors deemed relevant in determining their independence, including the beneficial ownership of our capital stock by each non-employee director. In making this determination, our board of directors considered the current and prior relationships that each non-employee director has with our company and all other facts and circumstances our board of directors deemed relevant in determining their independence, including the beneficial ownership of our capital stock by each non-employee director. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth certain information with respect to the beneficial ownership of our voting securities by (i) any person or group owning more than 5% of any class of voting securities; (ii) our director and chief executive officer; (iii) our chief financial officer; and (iv) all executive officers and directors as a group as of October 10 , 2018. Unless otherwise indicated, the address of all listed stockholders is c/o 6 E Bay St., 4th Fl., Jacksonville, FL 32202. Name of Beneficial Owner Common Stock Beneficially Owned Percentage of Common Stock** Directors and Officers: Jason M. Cory 2,550,000 31.89 % Timothy Rahman (1 ) 247,000 3.07 % John Andrews (2 ) 81,310 1.01 % Mark T. Dinkel (3 ) 125,000 1.55 % William Weingart 25,628 * Kishore Khandavalli (4 ) 901,436 11.25 % Susan Quackenbush (5 ) 13,940 * Richard Keith Sauls (6 ) 59,663 * Victor R. Eilau (7 ) 46,000 * All officers and directors as a group (9 persons) 4,049,977 49.37 % 5% or greater stockholder RACE Holdings LLC (8 ) 2,125,000 24.51 % Peach Management LLC (9 ) 622,000 7.55 % Canyon Technologies LLC (10 ) 779,033 9.90 % * Denotes less than 1% ** Applicable percentage ownership is based on 7,996,636 shares of common stock outstanding as of October 10 , 2018. "Beneficial ownership" includes shares for which an individual, directly or indirectly, has or shares voting or investment power, or both, and also includes options and/or warrants that are exercisable within 60 days of October 10 , 2018. Unless otherwise indicated, all of the listed persons have sole voting and investment power over the shares listed opposite their names. Beneficial ownership as reported in the above table has been determined in accordance with Rule 13d-3 of the Exchange Act. In computing the percentage ownership of any person, the amount of shares outstanding is deemed to include the amount of shares beneficially owned by such person (and only such person) by reason of these acquisition rights. (1) Includes 62,000 shares of common stock issuable within 60 days upon exercise of warrants. (2) Includes 40,000 shares of common stock issuable within 60 days upon exercise of warrants. (3) Includes 50,000 shares of common stock issuable within 60 days upon exercise of warrants. (4) Includes 16,000 shares of common stock issuable within 60 days upon exercise of warrants. (5) Includes 6,970 shares of common stock issuable within 60 days upon exercise of warrants. (6) Includes 25,000 shares of common stock issuable within 60 days upon exercise of warrants. (7) Includes 6,000 shares of common stock issuable within 60 days upon exercise of warrants and 30,000 shares of common stock held in the name of Equity Trust IRA FBO Victor Eilau. (8) Includes 675,000 shares of common stock issuable within 60 days upon exercise of warrants. Keith Michael Jensen, managing member, holds sole voting and dispositive power over these shares. (9) Includes 246,000 shares of common stock issuable within 60 days upon exercise of warrants. The Briggs Family 2017 Trust, managing member, holds sole voting and dispositive power over these shares. (10) Includes 13,360 shares of common stock issuable within 60 days upon exercise of warrants. Michael Tower, managing member, holds voting and dispositive power over these shares. DESCRIPTION OF CAPITAL STOCK Authorized and Outstanding Capital Stock We have authorized capital stock of 110,000,000 shares, consisting of 100,000,000 shares of common stock, par value $0.0001 per share, and 10,000,000 "blank check" preferred stock. Common Stock We currently have 7,996,636 shares of our common stock issued and outstanding. The holders of our common stock are entitled to one vote per share. In addition, the holders of our common stock will be entitled to receive ratably dividends, if any, declared by our board of directors out of legally available funds; however, the current policy of our board of directors is to retain earnings, if any, for operations and growth. Upon liquidation, dissolution or winding-up, the holders of our common stock will be entitled to share ratably in all assets that are legally available for distribution. The holders of our common stock will have no preemptive, subscription, redemption or conversion rights. Preferred Stock We currently do not have any shares of preferred stock issued and outstanding. Our board of directors will be authorized, subject to any limitations prescribed by law, without further vote or action by our stockholders, to issue from time to time shares of preferred stock in one or more series. Each series of preferred stock will have the number of shares, designations, preferences, voting powers, qualifications and special or relative rights or privileges as shall be determined by our board of directors, which may include, among others, dividend rights, voting rights, liquidation preferences, conversion rights and preemptive rights. Warrants As of October 10 , 2018, we have outstanding warrants to purchase 1,829,080 shares of common stock, which consists of (i) 1,806,330 three-year warrants and (ii) 22,750 authorized but unissued five-year warrants. Each warrant represents the right to purchase one share of our common stock at an exercise price ranging from $0.001 per share to $6.82 per share. Options We currently do not have any options to purchase shares of our common stock outstanding. Listing Our common stock is not quoted or listed on a quotation or over the counter market, stock market or exchange. We have applied to list our common stock on The Nasdaq Capital Market. No assurance can be given that our application will be approved. Transfer Agent and Registrar Securities Transfer Corporation will serve as our transfer agent and registrar. They are located at 2901 N Dallas Parkway, Suite 380, Plano, TX 75093. The transfer agent s phone number is (469) 633-0101. SHARES ELIGIBLE FOR FUTURE RESALE There is currently no public market for our common stock. We cannot predict the effect, if any, that market sales of shares of our common stock or the availability of shares of our common stock will have on the market price of our common stock prevailing from time to time. Future sales of substantial amounts of our common stock, including shares issued upon exercise of outstanding warrants, in the public market after this offering, could adversely affect market prices prevailing from time to time and could impair our ability to raise equity capital in the future. After completion of this offering, we will have 10,496,636 shares of common stock outstanding (or 10,871,636 shares if the underwriters option to purchase additional shares is exercised in full). This number excludes any issuance of an aggregate of additional shares of common stock that could occur in connection with the exercise of outstanding warrants. All of the shares of common stock sold in this offering will be freely tradable without restrictions or further registration under the Securities Act, unless the shares are purchased by our "affiliates" as that term is defined in Rule 144 and except certain shares that will be subject to the lock-up period described below after completion of this offering. Any shares owned by our affiliates may not be resold except in compliance with Rule 144 volume limitations, manner of sale and notice requirements, pursuant to another applicable exemption from registration or pursuant to an effective registration statement. As noted in the Explanatory Note to this registration statement of which this prospectus forms a part, this prospectus is to be used in connection with the potential resale by the Selling Stockholders of up to an aggregate of 1,137,250 shares of our common stock issuable upon exercise of warrants. We will not receive any proceeds from the sale of shares of our common stock by the Selling Stockholders pursuant to this prospectus. The shares of common stock being registered under this prospectus permit public resales of such shares, and the Selling Stockholders may offer the shares for resale from time to time pursuant to this prospectus. The Selling Stockholders may also sell, transfer or otherwise dispose of all or a portion of their shares in transactions exempt from the registration requirements of the Securities Act of 1933, as amended, or pursuant to another effective registration statement covering those shares. 7,996,636 shares of our outstanding shares of common stock that are not registered under the registration statement of which this prospectus is a part and that have not been registered under another registration statement will be deemed restricted securities as defined under Rule 144. Restricted shares may be sold in the public market only if registered or if they qualify for an exemption from registration promulgated under the Securities Act. Subject to the provisions of Rule 144, all of the outstanding shares of common stock that are currently restricted are available for sale in the public market under Rule 144. Lock-Up Agreements All of our directors, officers and existing stockholders intend to enter into lock-up agreements that, subject to certain exceptions, prohibit them from directly or indirectly offering, pledging, selling, contracting to sell, selling any option or contract to purchase, purchasing any option or contract to purchase, granting any option, right or warrant to purchase or otherwise transferring or disposing of any shares of our common stock, options to acquire shares of our common stock or any securities convertible into or exercisable or exchangeable for common stock, whether now owned or hereafter acquired, or entering into any swap or any other agreement or any transaction that transfer, in whole or in part, directly or indirectly, the economic consequence of ownership, for a period of twelve (12) months from the date of this offering in the case of our directors and officers, and six (6) months from the date of this offering in the case of our existing stockholders. With respect to certain existing stockholders that hold an aggregate of $975,000 worth of common stock (the "Leak-Out Stockholders"), the lock-up agreements shall contain an exception to the Lock-Up Period contained therein (the "Leak-Out") allowing each Leak-Out Stockholder to sell or offer for sale (1) up to an aggregate of $300,000 worth of shares of our common stock from and after the date of the closing of this offering, (2) up to an aggregate of an additional $300,000 worth of our shares of common stock from and after the 60th day following the date of the closing of this offering; and (3) up to an aggregate of an additional $375,000 worth of shares of our common stock from and after the 90th day following the date of the closing of this offering, without the prior written consent of the Representative. These agreements are described in the section entitled "Underwriting" on page 82. Rule 144 In general, under Rule 144 as currently in effect, once we have been subject to public company reporting requirements for at least 90 days, a person who is not deemed to have been one of our affiliates for purposes of the Securities Act at any time during the 90 days preceding a sale and who has beneficially owned the shares proposed to be sold for at least six months, including the holding period of any prior owner other than our affiliates, is entitled to sell those shares without complying with the manner of sale, volume limitation or notice provisions of Rule 144, subject to compliance with the public information requirements of Rule 144. If such a person has beneficially owned the shares proposed to be sold for at least one year, including the holding period of any prior owner other than our affiliates, then that person would be entitled to sell those shares without complying with any of the requirements of Rule 144. In general, under Rule 144, as currently in effect, our affiliates or persons selling shares on behalf of our affiliates are entitled to sell upon expiration of the lock-up agreements described above, within any three-month period, a number of shares that does not exceed the greater of: 1% of the number of shares of our common stock then outstanding, which will equal approximately shares immediately after this offering; or the average weekly trading volume of our common stock during the four calendar weeks preceding the filing of a notice on Form 144 with respect to that sale. Sales under Rule 144 by our affiliates or persons selling shares on behalf of our affiliates are also subject to certain manner of sale provisions and notice requirements and to the availability of current public information about us. CERTAIN MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS The following is a general discussion of certain material U.S. federal income tax considerations with respect to the ownership and disposition of shares of our common stock applicable to non-U.S. holders who acquire such shares in this Offering. This discussion is based on current provisions of the Internal Revenue Code, U.S. Treasury regulations promulgated thereunder and administrative rulings and court decisions in effect as of the date hereof, all of which are subject to change at any time, possibly with retroactive effect. For purposes of this discussion, the term "non-U.S. holder" means a beneficial owner of our common stock that is not, for U.S. federal income tax purposes, a partnership or any of the following: a citizen or resident of the United States; a corporation, or other entity taxable as a corporation for U.S. federal income tax purposes, created or organized in the United States or under the laws of the United States, any state thereof or the District of Columbia; an estate, the income of which is includible in gross income for U.S. federal income tax purposes regardless of its source; or a trust if (1) a court within the United States is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust, or (2) it has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person for U.S. federal income tax purposes. If an entity or arrangement treated as a partnership for U.S. federal income tax purposes holds shares of our common stock, the tax treatment of a person treated as a partner generally will depend on the status of the partner and the activities of the partnership. Persons that for U.S. federal income tax purposes are treated as a partner in a partnership holding shares of our common stock should consult their tax advisors. This discussion assumes that a non-U.S. holder holds shares of our common stock as a capital asset within the meaning of Section 1221 of the Code (generally, property held for investment). This discussion does not address all aspects of U.S. federal income taxation that may be important to a non-U.S. holder in light of that holder s particular circumstances or that may be applicable to holders subject to special treatment under U.S. federal income tax law (including, for example, financial institutions, brokers or dealers in securities, "controlled foreign corporations," "passive foreign investment companies," traders in securities that elect mark-to-market treatment, insurance companies, tax-exempt entities, holders who acquired our common stock pursuant to the exercise of employee stock options or otherwise as compensation, entities or arrangements treated as partnerships for U.S. federal income tax purposes, holders liable for the alternative minimum tax, certain former citizens or former long-term residents of the United States and holders who hold our common stock as part of a hedge, straddle, constructive sale or conversion transaction). In addition, this discussion does not address U.S. federal tax laws other than those pertaining to the U.S. federal income tax, nor does it address any aspects of the unearned income Medicare contribution tax pursuant to the Health Care and Education Reconciliation Act of 2010, any U.S. federal estate and gift taxes, or any U.S. state, local or non-U.S. taxes. Accordingly, prospective investors should consult with their own tax advisors regarding the U.S. federal, state, local, non-U.S. income and other tax considerations of acquiring, holding and disposing of shares of our common stock. THIS SUMMARY IS FOR GENERAL INFORMATION ONLY AND IS NOT INTENDED TO CONSTITUTE A COMPLETE DESCRIPTION OF ALL TAX CONSEQUENCES RELATING TO THE OWNERSHIP AND DISPOSITION OF OUR COMMON STOCK. WE RECOMMEND THAT PROSPECTIVE HOLDERS OF OUR COMMON STOCK CONSULT WITH THEIR TAX ADVISORS REGARDING THE TAX CONSEQUENCES TO THEM (INCLUDING THE APPLICATION AND EFFECT OF ANY FEDERAL, STATE, LOCAL, NON-U.S. INCOME AND OTHER TAX LAWS) OF THE OWNERSHIP AND DISPOSITION OF OUR COMMON STOCK. Dividends In general, any distributions we make to a non-U.S. holder with respect to its shares of our common stock that constitute dividends for U.S. federal income tax purposes will be subject to U.S. withholding tax at a rate of 30% of the gross amount (or a reduced rate prescribed by an applicable income tax treaty) unless the dividends are effectively connected with a trade or business carried on by the non-U.S. holder within the United States (and, if an income tax treaty applies, are attributable to a permanent establishment of the non-U.S. holder within the United States). A distribution will constitute a dividend for U.S. federal income tax purposes to the extent of our current or accumulated earnings and profits as determined for U.S. federal income tax purposes. Any distribution not constituting a dividend will be treated as first reducing the adjusted basis in the non-U.S. holder s shares of our common stock and, to the extent it exceeds the adjusted basis in the non-U.S. holder s shares of our common stock, as gain from the sale or exchange of such shares. Any such gain will be subject to the treatment described below under "—Gain on Sale or Other Disposition of our Common Stock." Subject to the discussion below regarding "—Foreign Account Tax Compliance," dividends effectively connected with a U.S. trade or business (and, if an income tax treaty applies, attributable to a U.S. permanent establishment) of a non-U.S. holder generally will not be subject to U.S. withholding tax if the non-U.S. holder complies with applicable certification and disclosure requirements. Instead, such dividends generally will be subject to U.S. federal income tax on a net income basis, in the same manner as if the non-U.S. holder were a resident of the United States. A non-U.S. holder that is a corporation may be subject to an additional "branch profits tax" at a rate of 30% (or such lower rate as may be specified by an applicable income tax treaty) on its "effectively connected earnings and profits," subject to certain adjustments. Gain on Sale or Other Disposition of Our Common Stock In general, a non-U.S. holder will not be subject to U.S. federal income or, subject to the discussion below under the headings "Information Reporting and Backup Withholding" and "Foreign Account Tax Compliance," withholding tax on any gain realized upon the sale or other disposition of our common stock unless: the gain is effectively connected with a trade or business carried on by the non-U.S. holder within the United States and, if required by an applicable income tax treaty, is attributable to a U.S. permanent establishment of the non-U.S. holder; the non-U.S. holder is an individual and is present in the United States for 183 days or more in the taxable year of disposition and certain other conditions are satisfied; or we are or have been a U.S. real property holding corporation (a "USRPHC") for U.S. federal income tax purposes at any time within the shorter of the five-year period ending on the date of the disposition and the non-U.S. holder s holding period and certain other conditions are satisfied. We believe that we currently are not and we do not anticipate becoming, a USRPHC. Gain that is effectively connected with the conduct of a trade or business in the United States generally will be subject to U.S. federal income tax, net of certain deductions, at regular U.S. federal income tax rates. If the non-U.S. holder is a foreign corporation, the branch profits tax described above also may apply to such effectively connected gain. An individual non-U.S. holder who is subject to U.S. federal income tax because the non-U.S. holder was present in the United States for 183 days or more during the year of sale or other disposition of our common stock will generally be subject to a flat 30% tax on the gain derived from such sale or other disposition, which may be offset by U.S. source capital losses, provided the Non-U.S. Holder has timely filed U.S. federal income tax returns with respect to such losses. Information Reporting and Backup Withholding We must report annually to the Internal Revenue Service and to each non-U.S. holder the amount of dividends paid to and the tax withheld with respect to, each non-U.S. holder. These reporting requirements apply regardless of whether withholding was reduced or eliminated by an applicable tax treaty. Copies of this information also may be made available under the provisions of a specific treaty or agreement with the tax authorities in the country in which the non-U.S. holder resides or is established. U.S. backup withholding tax (currently, at a rate of 28%) is imposed on certain payments to persons that fail to furnish the information required under the U.S. information reporting rules. Dividends paid to a non-U.S. holder generally will be exempt from backup withholding if the non-U.S. holder provides a properly executed IRS Form W-8BEN or W-8BEN-E, or otherwise establishes an exemption. Under U.S. Treasury regulations, the payment of proceeds from the disposition of our common stock by a non-U.S. holder effected at a U.S. office of a broker generally will be subject to information reporting and backup withholding, unless the beneficial owner, under penalties of perjury, certifies, among other things, its status as a non-U.S. holder or otherwise establishes an exemption. The payment of proceeds from the disposition of our common stock by a non-U.S. holder effected at a non-U.S. office of a broker generally will not be subject to backup withholding and information reporting, except in the case of proceeds from a disposition of our common stock by a non-U.S. holder effected at a non-U.S. office of a broker that is: a U.S. person; a "controlled foreign corporation" for U.S. federal income tax purposes; a foreign person 50% or more of whose gross income from certain periods is effectively connected with a U.S. trade or business; or a foreign partnership if at any time during its tax year (a) one or more of its partners are U.S. persons who, in the aggregate, hold more than 50% of the income or capital interests of the partnership, or (b) the foreign partnership is engaged in a U.S. trade or business. Information reporting will apply unless the broker has documentary evidence in its files that the owner is a non-U.S. holder and certain other conditions are satisfied, or the beneficial owner otherwise establishes an exemption (and the broker has no knowledge or reason to know to the contrary). Backup withholding will apply if the sale is subject to information reporting and the broker has actual knowledge that the owner is a U.S. person. Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules from a payment to a non-U.S. holder generally can be refunded or credited against the non-U.S. holder s U.S. federal income tax liability, if any, provided that the required information is furnished to the Internal Revenue Service in a timely manner. Non-U.S. holders should consult their tax advisors regarding the application of the information reporting and backup withholding rules to them. Foreign Account Tax Compliance Under Sections 1471 through 1474 of the Code and the Treasury regulations and administrative guidance promulgated thereunder (collectively, "FATCA"), a U.S. federal withholding tax of 30% generally is imposed on any dividends paid on our common stock and a U.S. federal withholding tax of 30% generally will be imposed on gross proceeds from the disposition of our common stock (beginning January 1, 2019) paid to (i) a "foreign financial institution" (as specifically defined under FATCA) unless such institution enters into an agreement with the U.S. tax authorities to withhold on certain payments and to collect and provide to the U.S. tax authorities substantial information regarding U.S. account holders of such institution (which includes certain equity and debt holders of such institution, as well as certain account holders that are foreign entities with U.S. owners) and (ii) certain other foreign entities unless such entity provides the withholding agent with a certification identifying its direct and indirect "substantial U.S. owners" (as defined under FATCA) or, alternatively, provides a certification that no such owners exist and, in either case, complies with certain other requirements. The withholding tax described above will not apply if the foreign financial institution or non-financial foreign entity otherwise qualifies for an exemption from the rules and properly certifies its exempt status to a withholding agent or is deemed to be in compliance with FATCA. Application of FATCA tax does not depend on whether the payment otherwise would be exempt from U.S. federal withholding tax under the other exemptions described above. Under certain circumstances, a non-U.S. holder might be eligible for refunds or credits of such taxes. Foreign financial institutions and non-financial foreign entities located in jurisdictions that have an intergovernmental agreement with the United States governing FATCA may be subject to different rules. Prospective non-U.S. holders should consult with their tax advisors regarding the possible implications of FATCA on their investment in our common stock. UNDERWRITING ThinkEquity, a division of Fordham Financial Management, Inc. ("ThinkEquity") is acting as the sole representative of the underwriters of the offering. We have entered into an underwriting agreement dated , 2018 with the representative. Subject to the terms and conditions of the underwriting agreement, we have agreed to sell to each underwriter named below and each underwriter named below has severally and not jointly agreed to purchase from us, at the public offering price per share less the underwriting discounts set forth on the cover page of this prospectus, the number of common shares listed next to its name in the following table: Underwriter Number of Shares ThinkEquity, a division of Fordham Financial Management, Inc. Total All of the shares to be purchased by the underwriters will be purchased from us. The underwriting agreement provides that the obligations of the underwriters to pay for and accept delivery of the shares of common stock offered by us in this prospectus are subject to various conditions and representations and warranties, including the approval of certain legal matters by their counsel and other conditions specified in the underwriting agreement. The shares of common stock are offered by the underwriters, subject to prior sale, when, as and if issued to and accepted by them. The underwriters reserve the right to withdraw, cancel or modify the offer to the public and to reject orders in whole or in part. The underwriting agreement provides that the underwriters are obligated to take and pay for all of the shares of common stock offered by this prospectus if any such shares are taken, other than those shares covered by the over-allotment option described below. If an underwriter defaults, the underwriting agreement provides that the purchase commitments of the non-defaulting underwriters may be increased or the underwriting agreement may be terminated. The obligations of the underwriters may be terminated upon the occurrence of certain events specified in the underwriting agreement. Over-allotment Option. We have granted the underwriters an over-allotment option. This option, which is exercisable for up to 45 days after the date of this prospectus, permits the underwriters to purchase up to a maximum of 150,000 additional shares (15% of the shares sold in this offering) from us to cover over-allotments, if any. If the underwriters exercise all or part of this option, they will purchase shares covered by the option at the public offering price per share that appears on the cover page of this prospectus, less the underwriting discount. If this option is exercised in full, the total offering price to the public will be $ , and the total net proceeds, before expenses, to us will be $ . Discount. The following table shows the public offering price, underwriting discount and proceeds, before expenses, to us. The information assumes either no exercise or full exercise by the underwriters of the over-allotment option. Per Share Total Without Over-Allotment Option Total With Over-Allotment Option Public offering price $ $ $ Underwriting discount (7.0%) $ $ $ Non-accountable expense allowance (1.0%)(1) $ $ $ Proceeds, before expense, to us $ $ $ (1) We have agreed to pay a non-accountable expense allowance to the underwriters equal to 1.0% of the gross proceeds received in this offering (excluding proceeds received from the exercise of the underwriters over-allotment option). The underwriters propose to offer the shares offered by us to the public at the public offering price per share set forth on the cover of this prospectus. In addition, the underwriters may offer some of the shares to other securities dealers at such price less a concession of up to $ per share. If all of the shares offered by us are not sold at the public offering price per share, the underwriters may change the offering price per share and other selling terms by means of a supplement to this prospectus. We have agreed to pay (i) $5,000 advance to the representative upon the launch of the roadshow and (ii) an amount equal to the funds received from the previously engaged underwriter as a reimbursement of a previously paid advance, which will be applied against the out-of-pocket accountable expenses that will be paid by us to the underwriters in connection with this offering, and will be reimbursed to us to the extent not incurred. In addition to the 1.0%
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+PROSPECTUS SUMMARY As used in this prospectus, references to the Company , we , our , us , SigmaRenoPro refer to SigmaRenoPro, Inc., unless the context otherwise indicates. The following summary highlights selected information contained in this prospectus. Before making an investment decision, you should read the entire prospectus carefully, including the Risk Factors section, the financial statements, and the notes to the financial statements. OUR COMPANY Corporate Background and Business Overview SigmaRenoPro, Inc. is a development stage company. We were incorporated under the laws of the state of Nevada on June 16, 2017. We are not a blank check registrant as that term is defined in Rule 419(a)(2) of Regulation C of the Securities Act, since we have a specific business plan or purpose. Neither the Company, its affiliates nor its promoters have had preliminary contact or discussions with, nor does the Company, its affiliates or its promoters have any present plans, proposals, arrangements or understandings with, any representatives of the owners of any business or company regarding the possibility of an acquisition or merger. Neither the Company, its affiliates nor its promoters intend for the Company, once it is a reporting company, to be used as a vehicle for a private company to become a reporting company. We plan to provide home project owners with contractor match making services in the U.S. Our customized match making service helps homeowners converge with professional contractors. We plan to create a collection of articles intended to help homeowners with home project information, including: How to outline project requirements; How to select the right contractor; How to interview contractors; How to draw up a project contract; and How to settle disputes with contractors Our service is deigned to be free for all homeowners to use and post their projects. We plan to build a network of professionally-skilled contractors who provide a broad array of construction and renovation services for everything from changing light fixtures to complete kitchen renovation, and from housecleaning services to new construction. Our website is currently in the development stage. We expect our website to be operational within 6 months following successful completion of this offering, and the funding needed to reach this level of functionality is $_55,000. If we are successful in completing and launching our website, we anticipate that we will generate nominal revenues within 4 to 6 months following the website launch. The Company has already begun developing its website. The Company has a set business plan which does not include the merger or acquisition with any other entity. Our services are free to homeowners. We plan to generate revenues when service professionals pay a subscription fee of $49 to participate in the Company's network. Each service provider will be required to complete a profile, specifying the type of work they perform, areas of expertise, and geographical area they serve. We plan to provide lead generation services - new customer leads that match the service professional's criteria. The service professional will be required to pay a monthly subscription fee of $49 to access the leads. Because we are a shell company, the Rule 144 safe harbor is not available for the resale of any restricted securities issued by us in any subsequent unregistered offering. This will likely make it more difficult for us to attract additional capital through subsequent unregistered offerings because purchasers of securities in such unregistered offerings will not be able to resell their securities in reliance on Rule 144, a safe harbor on which holders of restricted securities usually rely to resell securities. Our fiscal year end is June 30, and we have no subsidiaries. Our business offices are currently located at Aloni Noa kh St. 1, Kiryat Motzkin 26402, Israel. Certain Information about this Offering Offering Price Per Share Commissions Proceeds to Company Before Expenses if 10% of the shares are sold Proceeds to Company Before Expenses if 50% of the shares are sold Proceeds to Company Before Expenses if 100% of the shares are sold Common Stock $0.02 Not Applicable $5,500 $27,500 $55,000 Totals $0.02 Not Applicable $5,500 $27,500 $55,000 There has been no market for our securities and a public market may never develop, or, if any market does develop, it may not be sustained. Our common stock is not traded on any exchange or on the over-the-counter market. After the effective date of the registration statement relating to this prospectus, we hope to have a market maker file an application with the Financial Industry Regulatory Authority for our common stock to be eligible for trading on the Over-the-Counter Bulletin Board. We do not yet have a market maker who has agreed to file such application. There can be no assurance that our common stock will ever be quoted on a stock exchange or a quotation service or that any market for our stock will develop. Emerging Growth Company We are an emerging growth company within the meaning of the federal securities laws. For as long as we are an emerging growth company, we will not be required to comply with the requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, the reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and the exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We intend to take advantage of these reporting exemptions until we are no longer an emerging growth company. For a description of the qualifications and other requirements applicable to emerging growth companies and certain elections that we have made due to our status as an emerging growth company, see Risk Factors Risks Related to this Offering and our Common Stock We are an emerging growth company and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our common stock less attractive to investors on page 10 of this prospectus. Omar Aamar serves as our President and sole director. We are a development stage company that has generated no revenues and has had limited operations to date. From June 16, 2017 (date of inception) to September 30, 2017 we have incurred accumulated net losses of 7,700. As of September 30, 2017 we had total assets of $10,995 and total liabilities of $295. We have sold and issued an aggregate of 2,300,000 shares of our common stock since our inception through the date of this Prospectus. All 2,300,000, or 100%, of the shares are held collectively by our President, Treasurer and director, Omar Aamar, and Hosnieh Aamar, our Secretary. Due to the uncertainty of our ability to meet our current operating and capital expenses, our independent auditors have included a going concern opinion in their report on our audited financial statements for the period ended June 30, 2017. The notes to our financial statements contain additional disclosure describing the circumstances leading to the issuance of a going concern opinion by our auditors. THE OFFERING The Offering Securities offered: We are offering up to 2,200,000 of our common stock. Offering price: We will offer and sell our shares of common stock at a fixed price of $0.025 per share. Shares outstanding prior to offering: 2,300,000 Shares outstanding after offering: 4,500,000 Market for the common shares: There is no public market for our shares. Our common stock is not traded on any exchange or on the over-the-counter market. After the effective date of the registration statement relating to this prospectus, we hope to have a market maker file an application with the Financial Industry Regulatory Authority ( FINRA ) for our common stock to eligible for trading on the OTC Markets. We do not yet have a market maker who has agreed to file such application. There is no assurance that a trading market will develop, or, if developed, that it will be sustained. Consequently, a purchaser of our common stock may find it difficult to resell the securities offered herein should the purchaser desire to do so when eligible for public resale. Use of proceeds: We intend to use the net proceeds from the sale of our 2,200,000 shares (after deducting estimated offering expenses payable by us) for professional fees, further development of our website, administration expenses, and marketing and advertising. See Use of Proceeds on page 18 for more information on the use of proceeds. SUMMARY FINANCIAL INFORMATION The tables and information below are derived from our audited financial statements for the period from June 16, 2017 (Inception) to June 30, 2017, and our unaudited financial statements for the six-month period ended December 31, 2017. Our working capital as at December 31, 2017 was $10,700. June 30, 2017 ($) Financial Summary (Audited) Cash and Deposits 18,385 Total Assets 18,385 Total Liabilities 255 Total Stockholder s Equity 18,130 Accumulated from June 16, 2017 (Inception) to June 30, 2017 ($) Consolidated Statements of Expenses and Comprehensive Loss Total Operating Expenses 270 Net Loss for the Period (270) December 31, 2017 ($) Financial Summary (Unudited) Cash and Deposits 2,658 Prepaid Expenses 6,212 Total Assets 8,870 Total Liabilities 0 Total Stockholder s Equity 8,870 Six Months ended December 31, 2017 ($) Statements of Operations Operating Expenses 9,260 Net Loss for the Period (9,260 ) RISK FACTORS An investment in our common stock involves a number of very significant risks. You should carefully consider the following known material risks and uncertainties in addition to other information in this prospectus in evaluating our company and its business before purchasing shares of our company s common stock. You could lose all or part of your investment due to any of these risks. RISKS RELATING TO OUR COMPANY Our auditors have expressed substantial doubt about our ability to continue as a going concern. Our audited financial statements for the year ended June 30, 2017 were prepared assuming that we will continue our operations as a going concern. We were incorporated on June 16, 2017 and do not have a history of earnings. As a result, our independent accountants in their audit report have expressed substantial doubt about our ability to continue as a going concern. Continued operations are dependent on our ability to complete equity or debt financings or generate profitable operations. Such financings may not be available or may not be available on reasonable terms. Our financial statements do not include any adjustments that may result from the outcome of this uncertainty. The proceeds of this offering, if any, may not be sufficient to fund planned operations and may not even cover the costs of the offering and you may lose your entire investment. We are offering a maximum of 2,200,000 shares of our common stock at $0.025 per share, however there is no minimum to our offering. Funds we raise in this offering, if any, may not be sufficient to fund our planned operations and may not even cover the costs of this offering. If we are not able to raise any funds in this offering, our company will be in a worse financial position then prior to commencement of the offering as we will still incur the costs of this offering. If we do not raise sufficient funds in this offering to fund our operations or even cover the costs of this offering, you may lose your entire investment. There is uncertainty regarding our ability to continue as a going concern, indicating the possibility that we may be required to curtail or discontinue our operations in the future. If we discontinue our operations, you may lose all of your investment. We have incurred net losses of $270 from our inception on June 16, 2017 to June 30, 2017, $9,260 for the six months ended December 31, 2017, and have completed only the preliminary stages of our business plan. We anticipate incurring additional losses before realizing any revenues and will depend on additional financing in order to meet our continuing obligations and ultimately, to attain profitability. We anticipate that our current cash assets will be extinguished by December 31, 2018. The financial statements do not include any adjustments that might result from the uncertainty about our ability to continue our business. If we are unable to obtain additional financing from outside sources and eventually produce enough revenues, we may be forced to sell our assets, or curtail or discontinue our operations. If this happens, you could lose all or part of your investment. We are in an early stage of development. If we are not able to develop out business as anticipated, we may not be able to generate revenues or achieve profitability and you may lose your investment. We were incorporated on June 16, 2017. We have no customers, and we have not earned any revenues to date. Our business prospects are difficult to predict because of our limited operating history, early stage of development, and unproven business strategy. Our primary business activities will be focused on the development of our homeowner-contractor match making service. Although we believe that our business plan has significant profit potential, we may not attain profitable operations and our management may not succeed in realizing our business objectives. If we are not able to develop out business as anticipated, we may not be able to generate revenues or achieve profitability and you may lose your investment. We expect to suffer losses in the immediate future that may cause us to curtail or discontinue our operations. We expect to incur operating losses in future periods. These losses will occur because we do not yet have any revenues to offset the expenses associated with the development of our homeowner-contractor match making services, generally. We cannot guarantee that we will ever be successful in generating revenues in the future. We recognize that if we are unable to generate revenues, we will not be able to earn profits or continue operations. There is no history upon which to base any assumption as to the likelihood that we will prove successful, and we can provide investors with no assurance that we will generate any operating revenues or ever achieve profitable operations. If we are unsuccessful in addressing these risks, our business will almost certainly fail. We may not be able to execute our business plan or stay in business without additional funding. Our ability to generate future operating revenues depends in part on whether we can obtain the financing necessary to implement our business plan. We will likely require additional financing through the issuance of debt and/or equity in order to establish profitable operations, and such financing may not be forthcoming. As widely reported, the global and domestic financial markets have been extremely volatile in recent months. If such conditions and constraints continue or if there is no investor appetite to finance our specific business, we may not be able to acquire additional financing through credit markets or equity markets. Even if additional financing is available, it may not be available on terms favorable to us. At this time, we have not identified or secured sources of additional financing. Our failure to secure additional financing when it becomes required will have an adverse effect on our ability to remain in business. The homeowner-contractor match making services industry is extremely competitive, and if we are not able to compete successfully against other homeowner-contractor match making services, we will not be able operate our business and investors will lose their entire investment. The homeowner-contractor match making services industry is extremely competitive and rapidly changing. We currently and in the future face competitive pressures from numerous actual and potential competitors. Many of our current and potential competitors in the homeowner-contractor match making services business have substantial competitive advantages than we have, including: longer operating histories; significantly greater financial, technical and marketing resources; greater brand name recognition; existing customer bases; and commercially accepted services. Our competitors may be able to respond more quickly to new or emerging technologies and changes in the homeowner-contractor match making services industry and devote greater resources to identify, develop and market new products, and distribute and sell their products than we can. The loss of the services of Omar Aamar, our President and Chairman, or our failure to timely identify and retain competent personnel could negatively impact our ability to develop our website and sell our services. The development of our homeowner-contractor match making services business and the marketing of our prospective products will continue to place a significant strain on our limited personnel, management, and other resources. Our future success depends upon the continued services of our executive officers who are developing our business, and on our ability to identify and retain competent consultants and employees with the skills required to execute our business objectives. The loss of the services of Omar Aamar or our failure to timely identify and retain competent personnel could negatively impact our ability to develop our website and sell our services, which could adversely affect our financial results and impair our growth. We are a development stage, homeowner-contractor match making services company, with no experience in the market, and failure to successfully compensate for this inexperience may adversely impact our operations and financial position. We operate as development stage, homeowner-contractor match making services company, with few substantial tangible assets in a highly competitive industry. We have little operating history, no customer base and no revenue to date. This makes it difficult to evaluate our future performance and prospects. Our prospects must be considered in light of the risks, expenses, delays and difficulties frequently encountered in establishing a new business in an emerging and evolving industry characterized by intense competition, including: our business model and strategy are still evolving and are continually being reviewed and revised; we may not be able to raise the capital required to develop our initial customer base and reputation; we may not be able to successfully implement our business model and strategy; and our management consists of one person, Omar Aamar, our President and Chairman. We cannot be sure that we will be successful in meeting these challenges and addressing these risks and uncertainties. If we are unable to do so, our business will not be successful and the value of your investment in our company will decline. Our failure to protect our intellectual property and proprietary technology may significantly impair our competitive advantage. Our success and ability to compete depend in large part upon protecting our proprietary technology. We rely on a combination of patent, trademark and trade secret protection, non disclosure and non use agreements to protect our proprietary rights. The steps we have taken may not be sufficient to prevent the misappropriation of our intellectual property, particularly in foreign countries where the laws may not protect our proprietary rights as fully as in the United States. The patent and trademark law and trade secret protection may not be adequate to deter third party infringement or misappropriation of our patents, trademarks and similar proprietary rights. In addition, patents issued to the us may be challenged, invalidated or circumvented. Our rights granted under those patents may not provide competitive advantages to us, and the claims under our patent applications may not be allowed. We may be subject to or may initiate interference proceedings in the United States Patent and Trademark Office, which can demand significant financial and management resources. The process of seeking patent protection can be time consuming and expensive and patents may not be issued from currently pending or future applications. Moreover, our existing patents or any new patents that may be issued may not be sufficient in scope or strength to provide meaningful protection or any commercial advantage to us. We may in the future initiate claims or litigation against third parties for infringement of our proprietary rights in order to determine the scope and validity of our proprietary rights or the proprietary rights of our competitors. These claims could result in costly litigation and the diversion of our technical and management personnel. We may face costly intellectual property infringement claims, the result of which would decrease the amount of cash we would anticipate to operate and complete our business plan. We anticipate that from time to time we will receive communications from third parties asserting that we are infringing certain patents and other intellectual property rights of others or seeking indemnification against alleged infringement. If anticipated claims arise, we will evaluate their merits. Any claims of infringement brought of third parties could result in protracted and costly litigation, damages for infringement, and the necessity of obtaining a license relating to one or more of our products or current or future technologies, which may not be available on commercially reasonable terms or at all. Litigation, which could result in substantial cost to us and diversion of our resources, may be necessary to enforce our patents or other intellectual property rights or to defend us against claimed infringement of the rights of others. Any intellectual property litigation and the failure to obtain necessary licenses or other rights could have a material adverse effect on our business, financial condition and results of operations. We are dependent on our President and sole director, without whose services company business operations could cease. At this time, Omar Aamar, our President and sole director, is wholly responsible for the development and execution of our business plan. Our President and sole director is under no contractual obligation to remain employed by us, although he has no present intention to leave. If our President and sole director should choose to leave us for any reason before we have hired additional personnel our operations may fail. Even if we are able to find additional personnel, it is uncertain whether we could find qualified management who could develop our business as described herein or would be willing to work for compensation the Company could afford. Without such management, the Company could be forced to cease operations and investors in our common stock or other securities could lose their entire investment. Because we are a shell company, it will likely be difficult for us to obtain additional financing by way of private offerings of our securities. We are a "shell company" within the meaning of Rule 405, promulgated pursuant to Securities Act, because we have nominal assets and nominal operations. Accordingly, the holders of securities purchased in private offerings of our securities we make to investors will not be able to rely on the safe harbor from being deemed an underwriter under SEC Rule 144 in order to resell their securities. This will likely make it more difficult for us to attract additional capital through subsequent unregistered offerings because purchasers of securities in such unregistered offerings will not be able to resell their securities in reliance on Rule 144, a safe harbor on which holders of restricted securities usually rely to resell securities. Because we are a shell company, you will not be able to resell your shares in certain circumstances, which could hinder the resale of your shares. We are a "shell company" within the meaning of Rule 405, promulgated pursuant to Securities Act, because we have nominal assets and nominal operations. Accordingly, the securities sold in this offering can only be resold through registration under Section 5 the Securities Act of 1933, Section 4(1), if available, for non-affiliates, or by meeting the conditions of Rule 144(i). Another implication of us being a shell company is that we cannot file registration statements under Section 5 of the Securities Act using a Form S-8, a short form of registration to register securities issued to employees and consultants under an employee benefit plan. Additionally, though exemptions, such as Section 4(1) of the Securities Act may be available for non-affiliate holders our shares to resell their shares, because we are a shell company, a holder of our securities may not rely on the safe harbor from being deemed statutory underwriter under Section 2(11) of the Securities Act, as provided by Rule 144, to resell his or her securities. Only after we (i) are not a shell company, and (ii) have filed all reports and other materials required to be filed by section 13 or 15(d) of the Exchange Act, as applicable, during the preceding 12 months (or for such shorter period that we may be required to file such reports and materials, other than Form 8-K reports); and have filed current "Form 10 information" with the SEC reflecting our status as an entity that is no longer a shell company for a period of not less than 12 months, can our securities be resold pursuant to Rule 144. "Form 10 information" is, generally speaking, the same type of information as we are required to disclose in this prospectus, but without an offering of securities. These circumstances regarding how Rule 144 applies to shell companies may hinder your resale of your shares of the Company. We are an emerging growth company and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our common stock less attractive to investors. We are an emerging growth company, as defined in the Jumpstart our Business Startups Act of 2012, and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We cannot predict if investors will find our common stock less attractive because we will not rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile. Under the Jumpstart Our Business Startups Act, emerging growth companies can delay adopting new or revised accounting standards until such time as those standards apply to private companies. We have irrevocably elected not to avail ourselves to this exemption from new or revised accounting standards and, therefore, we will be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies. Because we will likely have fewer than three hundred shareholders of record, we will likely be able to terminate our reporting obligations, and if we do that, our shares of common stock will not be eligible for quotation on the OTCQB tier of OTC Markets. We will be required to file reports with the SEC only for the fiscal year in which the registration statement for this offering becomes effective. In order to continue to be obligated to file reports either we would have to voluntarily file a Registration Statement on SEC Form 8-A, as we presently intend, or we would be obligated to file a Registration Statement SEC Form 8-A if on the last day of our fiscal year in which the registration statement for this offering becomes effective we have more than $10 million in assets and either 2,000 or more record holders or 500 or more record holders who are not "accredited investors." If we were to cease reporting, you will not have access to updated information regarding the Company's business, financial condition and results of operation. Upon suspension of reporting obligations, although the Company may continue to file reports with the SEC, such filings will be voluntary. If we terminate or suspend our reporting obligations to the SEC, our shares of common stock will not be eligible for quotation on the OTCQB tier of OTC Markets, and as a result, your entire investment may be lost. Additionally, if we do not file a Registration Statement on Form 8-A we will not be subject to the proxy statement requirements, and our officers, directors and 10% stockholders will not be required to submit reports to the SEC regarding their stock ownership and stock trading activity, all of which could reduce the value of your investment and the amount of publicly available information about us. It will be extremely difficult to acquire jurisdiction and enforce liabilities against our officers, directors and assets outside the United States. Substantially all of our assets are currently located outside of the United States. Additionally, our two officers and directors reside outside of the United States, in Israel. As a result, it may not be possible for United States investors to enforce their legal rights, to effect service of process upon our directors or officers or to enforce judgments of United States courts predicated upon civil liabilities and criminal penalties of our directors and officers under Federal securities laws. Moreover, we have been advised Israel does not have a treaty providing for the reciprocal recognition and enforcement of judgments of courts with the United States. Further, it is unclear if extradition treaties now in effect between the United States and Israel would permit effective enforcement of criminal penalties of the Federal securities laws. We incur costs associated with SEC reporting compliance, which may significantly affect our financial condition. The Company made the decision to become an SEC reporting company. We will incur certain costs of compliance with applicable SEC reporting rules and regulations including, but not limited to attorneys fees, accounting and auditing fees, other professional fees, financial printing costs and Sarbanes-Oxley compliance costs in an amount estimated at approximately $25,000 per year. On balance, the Company determined that the incurrence of such costs and expenses was preferable to the Company being in a position where it had very limited access to additional capital funding. However, for as long as we remain an emerging growth company as defined in the Jumpstart Our Business Startups Act of 2012, we intend to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We intend to take advantage of these reporting exemptions until we are no longer an emerging growth company. We will remain an emerging growth company for up to five years, although if the market value of our common stock that is held by non-affiliates exceeds $700 million as of any June 30 before that time, we would cease to be an emerging growth company as of the following June 30. After, and if ever, we are no longer an emerging growth company, we expect to incur significant additional expenses and devote substantial management effort toward ensuring compliance with those requirements applicable to companies that are not emerging growth companies, including Section 404 of the Sarbanes-Oxley Act. It will be extremely difficult to acquire jurisdiction and enforce liabilities against our officers, directors and assets outside the United States. Substantially all of our assets are currently located outside of the United States. Additionally, our two officers and directors reside outside of the United States, in Israel. As a result, it may not be possible for United States investors to enforce their legal rights, to effect service of process upon our directors or officers or to enforce judgments of United States courts predicated upon civil liabilities and criminal penalties of our directors and officers under Federal securities laws. Moreover, we have been advised Israel does not have a treaty providing for the reciprocal recognition and enforcement of judgments of courts with the United States. Further, it is unclear if extradition treaties now in effect between the United States and Israel would permit effective enforcement of criminal penalties of the Federal securities laws. RISKS ASSOCIATED WITH OUR SECURITIES Due to the lack of a trading market for our securities, you may have difficulty selling any shares you purchase in this offering. Our shares of common stock do not trade on any exchange and are not quoted over-the-counter. There is presently no demand for our common stock and no public market exists for the shares being offered in this prospectus. We plan to contact a market maker immediately following the completion of the offering and apply to have the shares quoted on the OTC Markets. We cannot guarantee that our application will be accepted or approved and our stock quoted for sale. As of the date of this filing, there have been no discussions or understandings between the Company and anyone acting on our behalf, with any market maker regarding participation in a future trading market for our securities. If no market is ever developed for our common stock, it will be difficult for you to sell any shares you purchase in this offering. In such a case, you may find that you are unable to achieve any benefit from your investment or liquidate your shares without considerable delay, if at all. In addition, if we fail to have our common stock quoted on a public trading market, your common stock will not have a quantifiable value and it may be difficult, if not impossible, to ever resell your shares, resulting in an inability to realize any value from your investment. Because there is no escrow, trust or similar account, the offering proceeds could be seized by creditors or by a trustee in bankruptcy, in which case investors would lose their entire investment. Any funds that we raise from our offering of 2,200,000 shares of common stock will be immediately available for our use and will not be returned to investors. We do not have any arrangements to place the funds received from our offering of 2,200,000 shares of common stock in an escrow, trust or similar account. Accordingly, if we file for bankruptcy protection or a petition for involuntary bankruptcy is filed by creditors against us, your funds will become part of the bankruptcy estate and administered according to the bankruptcy laws. If a creditor sues us and obtains a judgment against us, the creditor could garnish the bank account and take possession of the subscription funds. As such, it is possible that a creditor could attach your subscription funds which could preclude or delay the return of money to you. If that happens, you will lose your investment and your funds will be used to pay creditors. Our common stock is subject to the penny stock rules of the SEC and there is no trading market in our securities, which makes transactions in our stock cumbersome and may reduce the value of an investment in our stock. Under U.S. federal securities legislation, our common stock will constitute penny stock . Penny stock is any equity security that has a market price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require that a broker or dealer approve a potential investor s account for transactions in penny stocks, and the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased. In order to approve an investor s account for transactions in penny stocks, the broker or dealer must obtain financial information and investment experience objectives of the person, and make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks. The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prepared by the Commission relating to the penny stock market, which, in highlight form sets forth the basis on which the broker or dealer made the suitability determination. Brokers may be less willing to execute transactions in securities subject to the penny stock rules. This may make it more difficult for investors to dispose of our common stock and cause a decline in the market value of our stock. Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks. We may, in the future, issue additional common shares, which would reduce investors percent of ownership and may dilute our share value. Our Articles of Incorporation authorize the issuance of 75,000,000 shares of common stock. As of the date of this prospectus, the Company had 2,300,000 shares of common stock, and no shares of preferred stock, issued and outstanding. Accordingly, we may issue up to an additional 72,700,000 shares of common stock. The future issuance of common stock or preferred stock may result in substantial dilution in the percentage of our common stock held by our then existing shareholders. We may value any common stock issued in the future on an arbitrary basis. The issuance of common stock for future services or acquisitions or other corporate actions may have the effect of diluting the value of the shares held by our investors, and might have an adverse effect on any trading market for our common stock. Our insiders beneficially own a significant portion of our stock, and accordingly, may have control over stockholder matters, our business and management. As of the date of this prospectus, our officers and directors beneficially own 2,300,000 shares of our common stock in the aggregate, or 100% of our issued and outstanding shares of common stock. If we sell all 2,200,000 shares in the offering, our officers and sole director will hold 51% of the issued and outstanding shares of common stock of the Company. Therefore, our two officers, one of whom is our sole director, will have significant influence to: Elect or defeat the election of our directors; Amend or prevent amendment of our articles of incorporation or bylaws; effect or prevent a merger, sale of assets or other corporate transaction; and affect the outcome of any other matter submitted to the stockholders for vote. Moreover, because of the significant ownership position held by our insiders, new investors may not be able to effect a change in our business or management, and therefore, shareholders would have no recourse as a result of decisions made by management. In addition, sales of significant amounts of shares held by our officers and sole director, or the prospect of these sales, could adversely affect the market price of our common stock. Management s stock ownership may discourage a potential acquirer from making a tender offer or otherwise attempting to obtain control of us, which in turn could reduce our stock price or prevent our stockholders from realizing a premium over our stock price. We are selling this offering without an underwriter and may be unable to sell any shares. This offering is self-underwritten, that is, we are not going to engage the services of an underwriter to sell the shares; we intend to sell our shares through our officers and director, Omar Aamar and Hosnie Amar, neither of whom will receive any commission. They will offer the shares to friends, family members, and business associates, however, there is no guarantee that they will be able to sell any of the shares. Unless they are successful in selling all of the shares and we receive the proceeds from this offering, we may have to seek alternative financing to implement our business plan. State securities laws may limit secondary trading, which may restrict the states in which and conditions under which you can sell the shares offered by this prospectus. Secondary trading in common stock sold in this offering will not be possible in any state until the common stock is qualified for sale under the applicable securities laws of the state or there is confirmation that an exemption, such as listing in certain recognized securities manuals, is available for secondary trading in the state. If we fail to register or qualify, or to obtain or verify an exemption for the secondary trading of, the common stock in any particular state, the common stock could not be offered or sold to, or purchased by, a resident of that state. In the event that a significant number of states refuse to permit secondary trading in our common stock, the liquidity for the common stock could be significantly impacted thus causing you to realize a loss on your investment. The Company does not intend to seek registration or qualification of its shares of common stock the subject of this offering in any state or territory of the United States. Aside from a secondary trading exemption, other exemptions under state law and the laws of US territories may be available to purchasers of the shares of common stock sold in this offering, Anti-takeover effects of certain provisions of Nevada state law hinder a potential takeover of our company. Though not now, in the future we may become subject to Nevada s control share law. A corporation is subject to Nevada s control share law if it has more than 200 stockholders, at least 100 of whom are stockholders of record and residents of Nevada, and it does business in Nevada or through an affiliated corporation. The law focuses on the acquisition of a controlling interest which means the ownership of outstanding voting shares sufficient, but for the control share law, to enable the acquiring person to exercise the following proportions of the voting power of the corporation in the election of directors: (i) one-fifth or more but less than one-third, (ii) one-third or more but less than a majority, or (iii) a majority or more. The ability to exercise such voting power may be direct or indirect, as well as individual or in association with others. The effect of the control share law is that the acquiring person, and those acting in association with it, obtains only such voting rights in the control shares as are conferred by a resolution of the stockholders of the corporation, approved at a special or annual meeting of stockholders. The control share law contemplates that voting rights will be considered only once by the other stockholders. Thus, there is no authority to strip voting rights from the control shares of an acquiring person once those rights have been approved. If the stockholders do not grant voting rights to the control shares acquired by an acquiring person, those shares do not become permanent non-voting shares. The acquiring person is free to sell its shares to others. If the buyers of those shares themselves do not acquire a controlling interest, their shares do not become governed by the control share law. If control shares are accorded full voting rights and the acquiring person has acquired control shares with a majority or more of the voting power, any stockholder of record, other than an acquiring person, who has not voted in favor of approval of voting rights is entitled to demand fair value for such stockholder s shares. Nevada s control share law may have the effect of discouraging takeovers of the corporation. In addition to the control share law, Nevada has a business combination law which prohibits certain business combinations between Nevada corporations and interested stockholders for three years after the interested stockholder first becomes an interested stockholder, unless the corporation s board of directors approves the combination in advance. For purposes of Nevada law, an interested stockholder is any person who is (i) the beneficial owner, directly or indirectly, of ten percent or more of the voting power of the outstanding voting shares of the corporation, or (ii) an affiliate or associate of the corporation and at any time within the three previous years was the beneficial owner, directly or indirectly, of ten percent or more of the voting power of the then outstanding shares of the corporation. The definition of the term business combination is sufficiently broad to cover virtually any kind of transaction that would allow a potential acquiror to use the corporation s assets to finance the acquisition or otherwise to benefit its own interests rather than the interests of the corporation and its other stockholders. The effect of Nevada s business combination law is to potentially discourage parties interested in taking control of our company from doing so if it cannot obtain the approval of our board of directors. Because we do not intend to pay any cash dividends on our common stock, our stockholders will not be able to receive a return on their shares unless they sell them. We intend to retain any future earnings to finance the development and expansion of our business. We do not anticipate paying any cash dividends on our common stock in the foreseeable future. Unless we pay dividends, our stockholders will not be able to receive a return on their shares unless they sell them. Stockholders may never be able to sell shares when desired. Before
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+prospectus summary highlights certain information appearing elsewhere in this prospectus. As this is a summary, it does not contain all of the information that you should consider in making an investment decision. You should read the entire prospectus carefully, including the information under Risk Factors, Management s Discussion and Analysis of Financial Condition and Results of Operations and our combined financial statements and the related notes thereto included in this prospectus, before investing. This prospectus includes forward-looking statements that involve risks and uncertainties. See Cautionary Statement Regarding Forward-Looking Statements. Company Overview Hudson Group, anchored by our iconic Hudson brand, is committed to enhancing the travel experience for over 300,000 travelers every day in the continental United States and Canada. Our first concession opened in 1987 with five Hudson News stores in a single airport in New York City. Today we operate in airports, commuter terminals, hotels and some of the most visited landmarks and tourist destinations in the world, including the Empire State Building, Space Center Houston and United Nations Headquarters. The Company is guided by a core purpose: to be The Traveler s Best Friend. We aim to achieve this purpose by serving the needs and catering to the ever-evolving preferences of travelers through our product offerings and store concepts. Through our commitment to this purpose, as part of the global Dufry Group, we have become one of the largest travel concession operators in the continental United States and Canada. As of September 30, 2017, we had a diversified portfolio of over 200 concession agreements, through which we operated 989 stores across 88 different transportation terminals and destinations, including concessions in 24 of the 25 largest airports in the continental United States and Canada. We have over one million square feet of commercial space and conduct close to 120 million transactions annually. Since 2008, we have been a wholly-owned subsidiary of Dufry, a leading global travel retailer operating close to 2,200 stores in 64 countries on six continents, and benefit from Dufry s expertise and scale in the travel retail market. We operate travel essentials and convenience stores, bookstores, duty-free stores, proprietary and branded specialty stores, electronics stores, themed stores and quick-service food and beverage outlets under proprietary and third-party brands. Our proprietary brands include: We offer our customers a broad assortment of products through our duty-paid and duty-free operations. Within our duty-paid operations, we offer products in the following categories: media (including books and magazines), food and beverage (including snacks and confectionary), essentials (including travel accessories, electronics, health and beauty accessories), destination (including souvenir, apparel and gifts) and fashion (including apparel, watches, jewelry, accessories, leather and baggage). Within our duty-free retail operations, our product categories include perfume and cosmetics, wine and spirits, confectionary, fashion (including watches, jewelry, accessories, leather and baggage) and tobacco. TABLE OF CONTENTS The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. Subject to completion Preliminary Prospectus dated January 19, 2018 PRELIMINARY PROSPECTUS 39,417,765 Shares Hudson Ltd. Class A Common Shares This is the initial public offering of Hudson Ltd. The selling shareholder named in this prospectus is selling all of the Class A common shares offered hereby. We are not selling any of the Class A common shares in this offering and will not receive any proceeds from the sale of the Class A common shares. We expect the public offering price to be between $19.00 and $21.00 per share. Prior to this offering, no public market existed for our Class A common shares. Our Class A common shares have been approved for listing on the New York Stock Exchange under the symbol HUD. Following this offering, we will have two classes of common shares outstanding: Class A common shares and Class B common shares. The rights of the holders of our Class A common shares and our Class B common shares are identical, except with respect to voting and conversion. Each Class A common share is entitled to one vote per share and is not convertible into any other shares of our share capital. Each Class B common share is entitled to 10 votes per share and is convertible into one Class A common share at any time. In addition, each Class B common share will automatically convert into one Class A common share upon any transfer thereof to a person or entity that is not an affiliate of the holder of such Class B common share. Further, all of our Class B common shares will automatically convert into Class A common shares on the date when all holders of Class B common shares together cease to hold Class B common shares representing, in the aggregate, 10% or more of the total number of Class A and Class B common shares issued and outstanding. As a result of its ownership of Class B common shares, our controlling shareholder will have the ability to determine the outcome of all matters submitted to our shareholders for approval, including the election and removal of directors and any amalgamation, merger, consolidation or sale of all or substantially all of our assets. See Description of Share Capital and Bye-Laws Common Shares. Investing in our Class A common shares involves risks. See Risk Factors beginning on page 20 of this prospectus. Neither the U.S. Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. Per Share Total Public offering price $ $ Underwriting discounts and commissions(1) $ $ Proceeds, before expenses, to the selling shareholder $ $ (1) See Underwriting (Conflicts of Interest) beginning on page 118 for additional information regarding underwriting compensation. Delivery of the Class A common shares is expected to be made on or about , 2018. The selling shareholder named in this prospectus has granted the underwriters an option for a period of 30 days to purchase an additional 5,912,664 Class A common shares solely to cover over-allotments. Credit Suisse BofA Merrill Lynch Banco Santander Credit Agricole CIB Raiffeisen Centrobank Morgan Stanley BBVA HSBC UBS Investment Bank Goldman Sachs & Co. LLC BNP PARIBAS Natixis UniCredit Capital Markets Prospectus dated , 2018 TABLE OF CONTENTS About This Prospectus In this prospectus, the words Hudson Ltd., the Issuer, we, us, our, and the Company refer to Hudson Ltd., an exempted company limited by shares incorporated in Bermuda, and its consolidated subsidiaries, assuming consummation of the Reorganization Transactions (as defined below), unless context otherwise requires. References to Hudson Group are to all entities and operations directly or indirectly owned by Dufry AG that carry on Dufry AG s duty-free and duty-paid travel retail operations in the continental United States and Canada that will be transferred to Hudson Ltd. in connection with this offering. References to our financial statements are to the financial statements of Hudson Group, unless context otherwise requires. All references to Dufry, Dufry Group, Dufry AG and our controlling shareholder are to Dufry AG, a Swiss stock corporation, and its consolidated subsidiaries (other than Hudson Ltd.). All references to Dufry International AG and the selling shareholder are to Dufry International AG, a Swiss stock corporation, which is a wholly-owned subsidiary of Dufry AG. All references in this prospectus to U.S. dollars, U.S.$, $ and USD refer to the currency of the United States of America. We, the selling shareholder and the underwriters have not authorized anyone to provide any information or to make any representations other than those contained in this prospectus or in any free writing prospectuses prepared by or on behalf of us or to which we may have referred you. We, the selling shareholder and the underwriters take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. We, the selling shareholder and the underwriters have not authorized any other person to provide you with different or additional information. The selling shareholder is offering to sell, and seeking offers to buy, Class A common shares only in jurisdictions where such offers and sales are permitted. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of the Class A common shares. PRESENTATION OF FINANCIAL INFORMATION Unless otherwise indicated, all financial information contained in this prospectus is prepared and presented in accordance with International Financial Reporting Standards ( IFRS ) as issued by the International Accounting Standards Board ( IASB ). Certain differences exist between IFRS and generally accepted accounting principles in the United States of America ( U.S. GAAP ) which might be material to the financial information herein. We have not prepared a reconciliation of our combined financial statements and related footnote disclosures between IFRS and U.S. GAAP. Potential investors should consult their own professional advisers for an understanding of the differences between IFRS and U.S. GAAP and how these differences might affect the financial information herein. Hudson Group Combined Financial Statements In connection with this offering, our combined financial statements have been prepared in accordance with IFRS as issued by the IASB. For the purpose of our combined financial statements, Hudson Group comprises all entities and operations directly or indirectly owned by Dufry that carry on Dufry s duty-free and duty-paid travel retail operations in the continental United States and Canada that will be transferred to Hudson Ltd. in connection with this offering. Generally, we used the same accounting policies and principles in these combined financial statements as were used for the preparation of the consolidated financial statements of Dufry. Hudson Group has not operated as an independent group of companies. Our combined financial statements may therefore not be indicative of the financial position and performance that would have been achieved had we operated as an independent group of companies or of our future results. Nuance Group Entities Financial Statements Dufry acquired 100% of The Nuance Group AG ( Nuance ) on September 9, 2014. Certain entities that were part of Nuance will be transferred to Hudson Ltd. in connection with this offering and are therefore reflected in Hudson Group s combined financial statements from September 2014. This prospectus includes historical financial statements for those entities as of September 8, 2014 and for the period January 1 to September 8, 2014 which have been prepared in accordance with IFRS as issued by the IASB. TABLE OF CONTENTS For the year ended December 31, 2016, our net sales were broken down as follows: As a travel concession operator, we operate primarily in airports and other locations where concessions are awarded by landlords, which include airlines, airport authorities, cities, counties, developers, master concessionaires, port authorities and states. Our success has been driven by our ability to provide differentiated retail concepts and customized concession programs to address the complex requirements of our landlords and the characteristics of the market that each location serves. This capability is key to our strong relationships with landlords, leading to a concession agreement renewal rate exceeding 80% over the last five years. Operational flexibility is key to our success. To promote and sustain our flexibility, we have established integrated and collaborative processes to drive coordinated operations across real estate management, store operations, marketing, merchandising and store concept design and planning. Our flexibility enables us to operate multiple retail concepts, ranging from 200 square-foot retail walls to 10,000 square-foot stores. Our stores are well-organized and designed to be comfortable and easy-to-shop, and are tailored to meet the unique specifications of each airport or travel facility. Additionally, our stores utilize innovative and highly-customized designs to draw attention to impulse items and maximize sales. As an example, in 2013 we introduced the new Hudson format, which brings modern visuals, a different layout and new allocation to product categories, such as increased space allocation to beverages and snacks, and reflects the changing needs and preferences of the travelers. Over the past three years, we have opened 100 stores under the new Hudson format and, overall, we have invested close to $200 million in new store buildouts, store upgrades and expansions to improve the overall shopping experience at our stores, as well as other capital investments in our business to support our stores. Through our customized merchandising approach, we provide curated assortments to each market to take advantage of traffic flow, seasonality, landlord preferences, local tastes, large-scale regional events and traveler spending habits. We merchandise our stores with both necessity-driven and on-trend discretionary TABLE OF CONTENTS TABLE OF CONTENTS THE REORGANIZATION TRANSACTIONS Prior to the completion of this offering, as part of a series of reorganization transactions, Dufry will cause all of the equity interests of the entities that constitute the Hudson Group to be contributed to Hudson Ltd. in exchange for common shares of Hudson Ltd. As a result of these reorganization transactions, which will occur prior to the completion of this offering, our business will be conducted through Hudson Ltd. and its subsidiaries. In this prospectus, we refer to all of these events as the Reorganization Transactions. Prior to the Reorganization Transactions, Hudson Ltd., which was incorporated on May 30, 2017, had no operations, nominal assets and no liabilities or contingencies. MARKET AND INDUSTRY DATA We obtained certain industry data concerning the travel concession sector used throughout this prospectus from research conducted by us and our controlling shareholder, surveys or studies conducted by third parties and industry publications and surveys, as well as an overview of brand usage, prepared by Ipsos Market Research, which was commissioned by us. Third-party and industry studies, publications and surveys generally state that they have obtained information from sources believed to be reliable, but do not guarantee the accuracy and completeness of such information. While we believe that each of these studies, publications and surveys is reliable, we have not independently verified such data and we do not make any representation as to the accuracy of such information. Similarly, we believe our internal research and that by our controlling shareholder is reliable, but it has not been verified by any independent sources. Certain information contained in this prospectus relating to our market share represents management estimates based, where available, on the most recently available industry reports relevant to our market. We have accurately reproduced this data, and as far as we are aware and able to ascertain from surveys or studies conducted by third parties and industry or general publications, no facts have been omitted which would render the reproduced information inaccurate or misleading. TRADEMARKS In our key markets, we have rights to use, or hold, certain trademarks relating to Hudson Group, Dufry, Nuance and World Duty Free, or the respective applications for trademark registration are underway. We do not hold or have rights to any other additional patents, trademarks or licenses, that, if absent, would have had a material adverse effect on our business operations. Solely for convenience, trademarks and trade names referred to in this prospectus may appear without the or symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent possible under applicable law, our rights or the rights of the applicable licensor to these trademarks and trade names. We do not intend our use or display of other companies trade names, trademarks or service marks to imply a relationship with, or endorsement or sponsorship of us by, any other companies. Each trademark, trade name or service mark of any other company appearing in this prospectus is the property of its respective holder. EXCHANGE CONTROL Consent under the Exchange Control Act 1972 (and its related regulations) has been received from the Bermuda Monetary Authority for the issue and transfer of our Class A common shares to and between non-residents of Bermuda for exchange control purposes provided our Class A common shares remain listed on an appointed stock exchange, which includes the New York Stock Exchange. In granting such consent the Bermuda Monetary Authority accepts no responsibility for our financial soundness or the correctness of any of the statements made or opinions expressed in this prospectus. TABLE OF CONTENTS products and we provide discretion to our location general managers to make choices regarding product mix for the stores they manage. Our merchandising team is committed to continuously sourcing new products to stay ahead of trends, getting the right product at the right price, to the right place at the right time. Both our and Dufry s tenured relationships with a diversified set of suppliers support our successful merchandise-sourcing approach. Following this offering, we will remain an integrated part of the global Dufry Group. Dufry will be our controlling shareholder, a number of the members of our board of directors will be affiliated with Dufry and our business will continue to benefit from Dufry s global expertise and best practices across all major functions. Moreover, we expect that Dufry will continue to be one of our largest suppliers, extend intercompany financing to us and provide us with other support and services. See Certain Relationships and Related Party Transactions. From December 31, 2014 to December 31, 2016, we: increased our number of stores from 733 to 948, representing a CAGR of 9.0%; and increased the total square feet of our stores from 742.9 thousand to 1,010.5 thousand, representing a CAGR of 10.8%. Competitive Strengths Hudson is an Iconic Brand in North American Travel Retail With over 440 Hudson-branded stores and a 30-year heritage in travel retail, Hudson is one of North America s leading travel essentials brands. We believe that we have built a reputation among travelers as a reliable destination to meet their needs and preferences when traveling. According to an Ipsos Market Research survey conducted in 2017, more travelers who shop at airports would prefer to shop at Hudson stores than at any other travel news, gift and convenience retail store. Our customers look for Hudson stores for personal items, gifts for loved ones or a convenient stop for food and beverages. We have also leveraged the strength of the Hudson brand to become one of the leading airport retailers in the United States for many international consumer brands such as Godiva Chocolates, Papyrus, Mophie, SwissGear, Sony and Belkin. We believe the iconic Hudson brand anchors our proposals for concessions and provides us with a competitive advantage. Customized and Local Approach Delivers Compelling Traveler Experience Our customized and local approach to creating our concession portfolio and to the design, layout and merchandising of our stores produces a compelling retail experience for travelers. We believe that our ability to operate multiple proprietary and third-party-branded retail concepts, ranging from 200 square-foot retail walls to 10,000 square-foot stores, while simultaneously meeting the unique specifications of each airport or travel facility, also provides an attractive retail proposition for our landlords. We believe customers find our stores to be well-organized, comfortable and easy-to-shop. Our stores are merchandised to deliver both necessity-driven and on-trend products, while also displaying products that travelers may have forgotten to pack. We have unrivaled access to travelers, which enables us to understand their mindsets and behaviors and informs the evolution of our merchandising strategies and product mix. For example, we have merchandised our stores to take advantage of recent trends in traveler tastes, resulting in an increase in the share of our duty-paid sales mix attributable to electronic accessories, snacks and beverage. In addition, we serve customers needs and preferences by offering merchandise that targets regional tastes and includes city-specific branding and logos. Our merchandising approach benefits from Dufry s expertise in duty-free retail and access to strong global brands, which complements our portfolio of concepts for our airports and customers. Extensive Experience and Superior Scale in our Industry We believe that other operators cannot match our 30 years of industry experience and unparalleled scale of over 200 concession agreements under which we operate over one million square feet of commercial space in the continental United States and Canada. We believe this experience and scale reflect our strong credibility with landlords and other business partners and our knowledge of airport retail operations and travel concessions. TABLE OF CONTENTS Additionally, we believe the expertise and operational track record required to bid successfully on new concessions, combined with our ability to offer a broad range of retail concepts and customize each opportunity regardless of landlord structure or concession model, are advantages when competing for new concessions. Our expertise also allows us to successfully manage the myriad of legal, regulatory and logistical complexities involved in operating a business in complex and highly regulated environments. Diversified and Dynamic Business Model Our business model is diversified in terms of the customers we serve and concession models we manage. We operate a mix of concession programs and retail concepts under both proprietary and third-party brands, including travel essentials stores and bookstores under the Hudson brand, specialty branded retail stores such as Coach, Est e Lauder, Kate Spade and Tumi, duty-free shops under Dufry, World Duty Free and Nuance, category stores such as Tech on the Go, Kids Works and 5th and Sunset, as well as food and beverage outlets such as Dunkin Donuts. As of September 30, 2017, we sold products in 989 stores across 88 locations. Our concessions also benefit from multi-year contract terms. For the year ended December 31, 2016, approximately 70% of our sales were generated from concessions with a remaining term greater than five years, while no single concession accounted for more than 10% of our sales. The long average residual duration of our concession portfolio and diversification across contracts provide us with a high degree of sales visibility. In addition, our strategy emphasizes continuously improving formats and adjusting our store concepts and product mix to meet and exceed travelers needs and preferences. Due to our merchandising flexibility, our location general managers can tailor their purchasing to address regional preferences. This approach enables our location general managers to update store concepts and product mix every season and allows them to be nimble in their approach, including testing new concepts. This diversified and dynamic business model, combined with a historical concession agreement renewal rate that exceeds 80%, has contributed to the historical resilience of our financial performance. Service-driven, Cohesive Management Team Together with our global parent, Dufry, our talented and dedicated senior management team has guided our organization through its expansion and positioned us for continued growth. Our team has an average of 18 years of experience at the Hudson Group. Additionally, our management team possesses extensive experience across a broad range of disciplines, including merchandising, marketing, real estate, finance, legal and regulatory and supply chain management. Our management team embraces our core purpose to be The Traveler s Best Friend and embodies our passionate, dedicated and service-oriented culture, which is shared by our employees throughout the entire organization. We believe this results in a cohesive team focused on operational excellence and sustainable long-term growth. Growth Strategies Increase Sales at Existing Concessions Continue Innovation in Store Formats and Merchandise At Hudson, every square foot matters. We aim to increase sales per transaction and overall sales by maintaining our emphasis on merchandising and refining operations to continuously provide travelers with an array of in-demand products. We seek innovative ways to increase potential selling space within existing locations. Through continuous refinement we optimize our concession configurations to maximize sales for our landlord and product vendor partners. We also constantly evolve our merchandizing mix to stay relevant and on-trend, as well as to continue driving sales by serving travelers enthusiasm for large-scale regional events, including music festivals, trade shows and sporting events, such as the Super Bowl and the World Series. We also will continue to leverage technology to enhance the customer experience through mobile pre-ordering applications, self-checkout capabilities and other evolving technologies. TABLE OF CONTENTS Refurbish and Convert Existing Stores We intend to improve sales and profitability within current concession agreements by focusing capital investments on refurbishing or converting existing stores, including when we pursue contract extensions. For example, we will continue converting our existing Hudson News stores into our updated and reinvigorated Hudson retail concept. We have already rebranded 60 Hudson News stores to our Hudson concept, and we plan to rebrand an additional 31 Hudson News stores to our Hudson concept over the next two years. Expand Concession Portfolio Continue to Win Airport Concessions We intend to grow by securing new concessions at the airports in which we currently operate and at additional airports in the continental United States and Canada, while maintaining a high renewal rate for our existing concessions. Airport authorities are dedicating more commercial space to concession opportunities and adopting a more comprehensive approach to its development. We are well-positioned to succeed in this competitive environment due to our experience and reputation with comprehensive retail concession opportunities, our integrated and collaborative approach, and the proven economics of our concession model. For investments in new concessions, expansions and renewals, we have defined a hurdle rate of a low double-digit internal rate of return over the lifetime of the concession and we typically target a payback period between two and five years. Continue Expansion into Non-traditional Locations We intend to leverage Hudson s consumer brand awareness and retail expertise to capture customer spending at travel centers, tourist destinations, hotels and other non-airport locations. These venues share similar retail characteristics with airports, such as higher foot traffic and customers with above-average purchasing power and greater time to shop. Our ability to deploy successfully our capabilities to maximize sales outside of airports has led to a number of recent wins. For example, in June 2017, we announced the opening of six new stores at Hard Rock Hotel & Casino in Las Vegas, which will incorporate our specialty and travel essentials retail concepts. We will opportunistically pursue avenues for growth across the continental United States and Canada in these non-traditional locations. Grow Food and Beverage Platform We intend to pursue growth opportunities in the large and expanding travel food and beverage market in the continental United States and Canada. Based on market data from the Airport Revenue News ( ARN ) Fact Book and our estimates, the airport food and beverage market in the United States and Canada generated in excess of $4.9 billion of passenger spending in 2016. This market generated sales of approximately 1.3x the combined airport sales of specialty, news and gifts and duty-free products in 2016. The travel food and beverage market is highly fragmented and there is an increasing overlap between travel food and beverage and travel retail, such as packaged food and grab-and-go concepts. We intend to pursue these growth opportunities both organically and through acquisitions. In addition, we believe that growing our food and beverage expertise and track record will strengthen our ability to compete for master-concessionaire contracts and drive sales, gross margin and cost synergies with our existing retail concepts. Pursue Accretive Acquisitions We believe that we have demonstrated our ability to create value by acquiring and integrating companies into the Hudson Group. During the last three years, we have successfully integrated the operations of Nuance and World Duty Free S.p.A. ( World Duty Free Group ) in the continental United States and Canada following the acquisitions of Nuance and World Duty Free Group. By deploying our customized and collaborative approach to store operations and merchandising, we have been able to drive sales and advertising income growth at acquired locations and achieve significant cost synergies. Our management team will approach potential acquisitions in a disciplined manner with a focus on strengthening our offerings for travelers and driving additional procurement and cost synergies. We actively maintain a pipeline of potential acquisition opportunities across retail and food and beverage. TABLE OF CONTENTS Target Improved Profitability by Leveraging our Fixed Costs and Investments We plan to continue to improve our operating results by leveraging our scale, partnerships and operational excellence. The strength of our market position in the continental United States and Canada, combined with Dufry s global presence, enables us to negotiate favorable terms with our business partners. Additionally, as we continue to increase sales under new and existing concession agreements, we will seek to improve our profitability as general corporate overhead and fixed costs shrink as a percentage of sales. Further, we have invested in our sourcing and distribution network and integrated information technology systems. We intend to leverage these investments to grow our sales and profitability. Our Market We operate in the travel concession market in the continental United States and Canada, which we consider to consist of concessions located in airports, ports, bus and railways stations, tourist destinations, hotels and highway rest stops, as well as sales onboard aircrafts, ferries and cruise liners. We plan to continue to expand across store formats and into non-airport locations as we grow our operations. See Business Growth Strategies. The majority of our sales are derived from airports. As of and for the year ended December 31, 2016, 95% of our concessions were located in, and 95% of our net sales were generated at, airports in the continental United States and Canada. According to the ARN Fact Book, airport concession sales at the top 44 international airports by performance in the United States and Canada were approximately $8.7 billion for the year ended December 31, 2016. Based on the ARN Fact Book, as a breakdown of sales at these airports for the year ended December 31, 2016, food and beverage contributed more than $4.9 billion in sales while specialty, news and gifts and duty-free contributed $1.3 billion, $1.3 billion and $1.1 billion in sales, respectively. The Airport Concession Market Airport concessions are comprised of a variety of retail, food and beverage and commercial service concepts. The terms of an agreement between an airport concession operator and the relevant airport landlord are generally set forth in a concession agreement. Concessions are generally awarded through either a public tender process or pursuant to direct negotiations. Landlords generally determine the number and type of concessions to be awarded, and terms for individual concessions may vary considerably from facility to facility. Concession agreements may permit an airport concessionaire to sell a particular assortment of goods (for example, general duty-free shops may sell wine and spirits, tobacco, perfumes and cosmetics while specialty stores may sell one specific product category, such as sunglasses) or operate in a specified physical location (for example, an allocation of space within a terminal or the right to operate an entire terminal). The concession operator may also obtain the right to allocate concession space within all or a portion of the facility, subject to the approval of the landlord. The duration of a concession agreement typically ranges from five to ten years, depending on the location and type of facility. Each landlord has needs and requirements that differ depending on a number of factors. Certain landlords may prefer to develop commercial operations from idea conception through to completion, and therefore will partner with an experienced travel concession operator to assist with overall development of airport concessions. Other landlords may be more involved in the management and allocation of commercial space and therefore may be more focused on maximizing returns at a given location, with pricing terms being more important. Most airport landlords determine rent by reference to metrics such as gross sales or the number of passengers traveling through an airport. Concession agreements typically provide for rent that generally is based on a variable component and also includes a MAG (referring to a minimum annual guaranteed payment). See Business Concession Agreements. Airport Retailers Airport retailers differ significantly from traditional retailers. Unlike traditional retailers, airport retailers benefit from a steady and largely predictable flow of traffic from a constantly changing customer base. Airport retailers also benefit from dwell time, the period after travelers have passed through airport TABLE OF CONTENTS security and before they board an aircraft. Airports often offer fewer shopping alternatives compared to the traditional channel, including limited competition from Internet retailers, which leads to necessity and impulse-driven purchases being made from available airport retailers. Airport retail customers differ from traditional retail customers in their wants and needs. Increased security incentivizes travelers to arrive well before their flights depart, which creates the opportunity and time for shopping, meals and other activities. Enhanced security checks and the need to reach a departure gate on time may also add to overall travel anxiety and drive impulse purchases. In general, airport retail customers are relatively more affluent than traditional retail customers, and travelers who are on holiday may be more inclined to spend money at the airport. Trends Recent trends affecting the airport concession market in North America include: Growth in Passenger Numbers In the past decade, there has been a significant increase in both domestic and international air travel due largely to improvements in, and greater accessibility of, air transport, as well as increased disposable income and business professionals needing to travel due to the internationalization of many industries. According to Airports Council International ( ACI ), between 2010 and 2016, total passenger traffic in North America grew at a compound annual growth rate of 3%. Looking to the future, ACI projects that annual North American passenger volumes will surpass 2.0 billion by 2019, and grow at a 3% compound annual growth rate between 2017 and 2025. The North American airport retail market s overall exposure to passengers is much more heavily weighted towards passengers traveling domestically. The chart below presents historical and projected North American passenger volumes. Historical and Projected North American Passenger Volumes(1) (1) Source: ACI. Increased Dwell Time and Propensity to Spend Travel industry dynamics continue to evolve. Lengthy security procedures and transportation delays have led to earlier arrival times and increased passenger dwell time, with dwell times in medium and large U.S. airports averaging 66 and 75 minutes, respectively, according to the 2016 Airport Council TABLE OF CONTENTS International-North America ( ACI-NA ) Concessions Benchmarking Survey. Additionally, airlines have eliminated many complementary services, such as in-flight meals, headphones and other amenities, to reduce costs. Further, travelers have demonstrated a willingness to spend more at airports when presented with better quality products, convenience and a greater product selection. Finally, airports often offer fewer shopping alternatives compared to the traditional channel, including limited competition from Internet retailers, which leads to necessity and impulse-driven purchases being made from available airport retailers. Airport Expansion and Focus on New Sales Streams Air travel is a critical and central aspect of the United States economic infrastructure with resiliency to external pressures. Airports and governments are focused on redevelopment of terminal concession programs and additional space is being dedicated to new opportunities to develop retail and other new sales streams. As each travel location is unique, each airport operator works to find the optimal mix of formats and products best suited to that region or location in order to maximize turnover and profit. Recent Developments Preliminary Operating Results for the Three Months and the Year Ended December 31, 2017 Our preliminary estimated unaudited operating results for the three months and the year ended December 31, 2017 are set forth below. We have provided a range for our operating results because our closing procedures for our fiscal quarter and our year ended December 31, 2017 are not yet complete. Our actual results remain subject to the completion of management s final review and our other closing procedures, or subsequent events, as well as the completion of the audit of our annual combined financial statements. Accordingly, you should not place undue reliance on our preliminary operating results, which may differ from actual results. Our actual combined financial statements and related notes as of and for the year ended December 31, 2017 are not expected to be filed with the SEC until after this offering is completed. During the course of the preparation of our actual combined financial statements and related notes, additional items that would require material adjustments to the preliminary operating results presented below may be identified. See Management s Discussion and Analysis of Financial Condition and Results of Operations Critical Accounting Estimates, Risk Factors Risks Relating to Our Business and Cautionary Statement Regarding Forward-Looking Statements. The preliminary operating results included in this prospectus have been prepared by and are the responsibility of our management. Our independent accountant, Ernst & Young AG, has not audited, reviewed, compiled or performed any procedures with respect to the preliminary operating results. Accordingly, Ernst & Young AG does not express an opinion or any other form of assurance with respect thereto. These estimates are not a comprehensive statement of our financial results for the three months and the year ended December 31, 2017, and should not be viewed as a substitute for full financial statements prepared in accordance with IFRS. In addition, these preliminary estimates for the three months and the year ended December 31, 2017 are not necessarily indicative of the results to be achieved in any future period. We expect to report improvements in each of turnover and operating profit for the three months and the year ended December 31, 2017 as compared to the comparable prior periods. Turnover For the three months ended December 31, 2017, we expect to report turnover in the range of $445 million to $455 million, compared to $415.1 million for the three months ended December 31, 2016. We also expect to report turnover in the range of $1,795 million to $1,805 million for the year ended December 31, 2017, compared to $1,687.2 million for the year ended December 31, 2016. The increase in turnover was primarily the result of an increase in net sales attributable to increases in average sales per transaction, with the remainder attributable to an increase in the overall number of transactions. This growth was partially offset by a decrease in net sales of acquired wind-down stores. For additional information regarding acquired wind-down stores, see Management s Discussion and Analysis of Financial Condition and Results of Operations Principal Factors Affecting Our Results of Operations Turnover Organic Growth. TABLE OF CONTENTS The following is a tabular presentation of preliminary financial information as of and for the three months and the year ended December 31, 2017 set forth above. For the three months ended December 31, For the year ended December 31, 2017 2016 2017 2016 Low High Low High (estimated) (unaudited) (actual) (estimated) (unaudited) (actual) Turnover (in millions of USD) $ 445 $ 455 $ 415.1 $ 1,795 $ 1,805 $ 1,687.2 Net sales (in millions of USD) $ 435 $ 445 $ 405.1 $ 1,755 $ 1,765 $ 1,650.1 Net sales growth 7% 10% 6.9% 6% 7% 20.5% Like-for-like sales growth(1) 4% 7% 6.5% 4% 5% 3.9% Like-for-like sales growth on a constant currency basis(1) 3% 6% 6.5% 4% 5% 4.3% Organic growth(1) 8% 11% 10.1% 8% 9% 5.4% (1) For a description of how each line item is calculated, see the footnotes to the similarly captioned line items in the table labelled Other Data in Summary Summary Financial and Other Information. Operating Profit For the three months ended December 31, 2017, we expect to report operating profit in the range of $5 million to $9 million compared to $5.1 million for the three months ended December 31, 2016. We also expect to report operating profit in the range of $57 million to $61 million for the year ended December 31, 2017, compared to $43.2 million for the year ended December 31, 2016. The increase in operating profit for the year ended December 31, 2017 was primarily the result of an increase in turnover and gross profit and a decrease in the amount of costs reported under other operational result and in lower depreciation and amortization charges. This growth was partially offset by an increase in selling, personnel and general expenses. We have not provided a range for net earnings/(loss) attributable to equity holders of the parent as we do not have all of the data, as of the date of this prospectus, to provide estimates for earnings before taxes (which requires the computation of interest expenses, interest income and foreign exchange gain/(loss)), income tax and net earnings attributable to non-controlling interest that are necessary to calculate net earnings attributable to equity holders of the parent. Our expected ranges for turnover and operating profit above may not be indicative of, and should not be taken to imply, any expected range for net earnings/(loss) attributable to equity holders of the parent. Risks Affecting Us We are subject to numerous risks, including risks that may prevent us from achieving our business objectives or may adversely affect our business, financial condition, results of operations, cash flow and prospects. Please read the section entitled Risk Factors beginning on page 20 for a discussion of some of the factors you should carefully consider before deciding to invest in our Class A common shares. Risks to our business include the following, among others: Factors outside our control that cause a reduction in airline passenger traffic, including terrorist attacks and natural disasters, could adversely affect our business and our sales growth. Our concessions are operated under concession agreements that are subject to revocation or modification and the loss of concessions could negatively affect our business, financial condition and results of operations. Our profitability depends on the number of airline passengers in the terminals in which we have concessions. Changes by airport authorities or airlines that lower the number of airline passengers in any of these terminals could affect our business, financial condition and results of operations. TABLE OF CONTENTS We may not be able to execute our growth strategy to expand and integrate new concessions or future acquisitions into our business or remodel existing concessions. Any new concessions, future acquisitions or remodeling of existing concessions may divert management resources, result in unanticipated costs or dilute holders of our Class A common shares. If we are unable to implement our growth strategy to expand into the food and beverage market, our business, financial condition and results of operations could be negatively impacted. We are dependent on our local partners. Taxation of goods policies in the United States and Canada may change. We rely on a limited number of distributors and suppliers for certain of our products, and events outside our control may disrupt our supply chain, which could result in an inability to perform our obligations under our concession agreements and ultimately cause us to lose our concessions. We generate a meaningful portion of our turnover in certain airports or groups of airports in metropolitan areas. We rely on our customers spending a significant amount of time in the airports where we operate, and a change in customer habits or changes in transportation safety requirements and procedures could have a materially adverse impact on our business, financial condition and results of operations. Failure to comply with Airport Concession Disadvantaged Business Enterprise ( ACDBE ) participation goals and requirements could lead to lost business opportunities or the loss of existing business. If we are unable to protect our customers credit card data and other personal information, we could be exposed to data loss, litigation and liability, and our reputation could be significantly impacted. Damage to our reputation or lack of acceptance or recognition of our retail concepts or the brands we license from Dufry, including Dufry, Hudson, Nuance and World Duty Free, could negatively impact our business, financial condition and results of operations. Our failure to maintain an effective system of internal control over financial reporting, given the material weakness identified in connection with the audit of our combined financial statements as of and for the year ended December 31, 2014. Our Corporate Information We were incorporated in Bermuda on May 30, 2017 as an exempted company limited by shares under the Companies Act 1981 of Bermuda as amended (the Companies Act ). Dufry AG, through its wholly-owned subsidiary Dufry International AG, is our sole shareholder as of the date of this prospectus. Our principal executive office is located at 4 New Square, Bedfont Lakes, Feltham, Middlesex, United Kingdom and our telephone number is +44 (0) 208 624 4300. Our website is www.hudsongroup.com. The information on our website is not incorporated by reference into this prospectus, and you should not consider information contained on our website to be a part of this prospectus or in deciding whether to purchase our Class A common shares. TABLE OF CONTENTS
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+SUMMARY OF PROSPECTUS
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+OFFERING WILL BE SOLD BY OUR OFFICER AND DIRECTOR
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+MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
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+CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
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+DIRECTOR, EXECUTIVE OFFICER, PROMOTER AND CONTROL PERSON
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+SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
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+TIBURON INTERNATIONAL TRADING CORP.
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+Xinkaicun, group 5, Weizigouzhen, Jiutai
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+Changchun, Jilin province, China 130519
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+PRELIMINARY PROSPECTUS Acasys Capital, INC. 59,720,000 SHARES OF COMMON STOCK $0.0001 PAR VALUE PER SHARE Prior to this Offering, no public market has existed for the common stock of Acasys Capital, Inc. Upon completion of this Offering, we will attempt to have the shares quoted on the OTCQB operated by OTC Markets Group, Inc. There is no assurance that the Shares will ever be quoted on the OTCQB. To be quoted on the OTCQB, a market maker must apply to make a market in our common stock. As of the date of this Prospectus, we have not made any arrangement with any market makers to quote our shares. We are not a blank check company and do not have plans to engage in a future merger nor do we intend to be acquired by another company or individual for the foreseeable future. In this public offering we, "Acasys Capital, Inc." are offering 49,800,000 shares of our common stock and our selling shareholders are offering 9,920,000 shares of our common stock. We will not receive any of the proceeds from the sale of shares by the selling shareholders. The offering is being made on a self-underwritten, "best efforts" basis. There is no minimum number of shares required to be purchased by each investor. The shares offered by the Company will be sold on our behalf by our President, Hatadi Shapiro Supaat. Mr. Supaat is deemed to be an underwriter of this offering. Our selling shareholders are also deemed to be underwriters in this offering. Mr. Supaat will not receive any commissions or proceeds for selling the shares on our behalf. All of the shares being registered for sale by the Company and the selling shareholders will be sold at a fixed price of $0.01 per share for the duration of the Offering. Assuming all of the 49,800,000 shares being offered by the Company are sold, the Company will receive $498,000 in gross proceeds. Assuming 37,350,000 shares (75%) being offered by the Company are sold, the Company will receive $373,500 in gross proceeds. Assuming 24,900,000 shares (50%) being offered by the Company are sold, the Company will receive $249,000 in gross proceeds. Assuming 12,450,000 shares (25%) being offered by the Company are sold, the Company will receive $124,500 in gross proceeds. The Company is of the belief that we require the entire $498,000 we are attempting to raise in this offering in order to fully implement our business plan. In the event we are unable to acquire the full amount, then we would be forced to decrease and/or alter our planned business operations accordingly. There is no minimum amount we are required to raise from the shares being offered by the Company and any funds received will be immediately available to us. There is no guarantee that we will sell any of the securities being offered in this offering. Additionally, there is no guarantee that this Offering will successfully raise enough funds to institute our company s business plan. Additionally, there is no guarantee that a public market will ever develop and you may be unable to sell your shares. In their audit report dated August 16, 2017, our auditors have expressed substantial doubt as to our ability to continue as a going concern. This primary offering will terminate upon the earliest of (i) such time as all of the common stock has been sold pursuant to the registration statement or (ii) 365 days from the effective date of this Prospectus, unless extended by our directors for an additional 90 days. We may however, at any time and for any reason terminate the offering. SHARES OFFERED PRICE TO SELLING AGENT PROCEEDS TO BY COMPANY PUBLIC COMMISSIONS THE COMPANY Per Share $ 0.01 Not applicable $ 0.01 Minimum Purchase None Not applicable Not applicable Total (49,800,000 shares) $ 498,000 Not applicable $ 498,000 SHARES OFFERED PRICE TO SELLING AGENT PROCEEDS TO BY SELLING SHAREHOLDERS PUBLIC COMMISSIONS THE COMPANY Per Share $ 0.01 Not applicable $ Not applicable Minimum Purchase None Not applicable Not applicable Total (9,920,000 shares) $ 99,200 Not applicable $ Not applicable Currently, Mr. Supaat owns approximately 61.00% of the voting power of our outstanding capital stock. If all the shares being offered herein by the Company and selling shareholders are sold, our President and Director, Mr. Supaat, will own approximately 55.09% of the voting power of our outstanding capital stock. *Hatadi Shapiro Supaat will be selling shares of common stock on behalf of the Company simultaneously to selling shares of his own personal stock from his own account. A conflict of interest may arise between Mr. Supaat s interest in selling shares for his own account and in selling shares on the Company s behalf. Regarding the sale of Mr. Supaat s shares, they will be sold at a fixed price of $0.01 for the duration of the offering. Please note that at this time Mr. Supaat intends to sell the Company s shares prior to selling his own shares, although he is under no obligation to do so. Mr. Supaat will decide whether shares are being sold by the Company or on his own behalf. If all the shares are not sold in the company s offering, there is the possibility that the amount raised may be minimal and might not even cover the costs of the offering, which the Company estimates at $31,574. The proceeds from the sale of the securities will be placed directly into the Company s account; any investor who purchases shares will have no assurance that any monies, beside their own, will be subscribed to the prospectus. All proceeds from the sale of the securities are non-refundable, except as may be required by applicable laws. All expenses incurred in this offering are being paid for by the Company s Officers and Directors. There has been no public trading market for the common stock of Acasys Capital, Inc. The Company qualifies as an "emerging growth company" as defined in the Jumpstart Our Business Startups Act, which became law in April 2012 and will be subject to reduced public company reporting requirements. THESE SECURITIES ARE SPECULATIVE AND INVOLVE A HIGH DEGREE OF RISK. YOU SHOULD PURCHASE SHARES ONLY IF YOU CAN AFFORD THE COMPLETE LOSS OF YOUR INVESTMENT. PLEASE REFER TO , ' ': RISK FACTORS BEGINNING ON PAGE 5. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. You should rely only on the information contained in this Prospectus and the information we have referred you to. We have not authorized any person to provide you with any information about this Offering, the Company, or the shares of our Common Stock offered hereby that is different from the information included in this Prospectus. If anyone provides you with different information, you should not rely on it. The date of this prospectus is July 13, 2018 - 1 - The following table of contents has been designed to help you find important information contained in this prospectus. We encourage you to read the entire prospectus. TABLE OF CONTENTS PART I PROSPECTUS PAGE PROSPECTUS SUMMARY 2
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+S-1/A 1 axium_s1a6.htm FORM S-1 AMENDMENT Table of Contents As filed with the Securities and Exchange Commission on January 10, 2018 File No. 333-220076 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM S-1/A AMENDMENT NO. 6 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 AXIUM PHARMACEUTICALS, INC. North Carolina 2836,2835 82-1984738 (State or jurisdiction of Incorporation or organization) (Primary Standard Industrial Classification Code) (I.R.S. Employer Identification No.) 265 Eastchester Drive, Suite 133, High Point, NC 27262 1-888-805-7734 (Address, including zip code, and telephone number, including area code, of registrant s principle executive offices) White Oak Industries Holding, Inc. Resident Agent 265 Eastchester Drive, Suite 133, High Point, NC 27262 1-888-805-7734 (Name, address, including zip code, and telephone number, including area code, of agent for service Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box: x If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer o Accelerated filer o Non-accelerated filer o (Do not check if a smaller reporting company) Smaller reporting company Emerging growth company If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. Calculation of Registration Fee Title of each Class of Securities To be Registered Amount to be registered (1) Proposed maximum Offering price per share (2) (3)(4)(5) Proposed maximum aggregate Offering price Amount of registration fee (6) Common Stock, $0.10 par value per share, to be offered by the issuer 50,000,000 $ 0.10 $ 5,000,000 $ 622.50 Common Stock, $0.10 par value per share, to be offered by the selling stockholders 1,396,000 $ 0.10 $ 139,600 $ 17.38 Total 51,396,000 — $ 5,139,600 $ 639.88 (1) In the event of a stock split, stock dividend or similar transaction involving our common stock, the number of shares registered shall automatically be increased to cover the additional shares of common stock issuable pursuant to Rule 416 under the Securities Act of 1933, as amended. (2) Estimated solely for the purpose of computing the registration fee pursuant to Rule 457 of the Securities Act. (3) Offering price has been arbitrarily determined by the Board of Directors. (4) The offering price has been estimated solely for the purpose of computing the amount of the registration fee in accordance with Rule 457(o). (5) The offering price has been calculated as the exercise price solely for the purpose of computing the amount of the registration fee in accordance with Rule 457(g). (6) Registration fee of $1,102.06 was paid with S-1 filed August 21, 2017 based upon $9,513,000 aggregate maximum offering price. $462.18 will be available for Section 457(p) offset on future registrations. The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. TABLE OF CONTENTS Page SUMMARY 1
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+PROSPECTUS SUMMARY The following summary is qualified in its entirety by, and should be read in conjunction with, the more detailed information and financial statements included elsewhere in this prospectus. In addition to this summary, we urge you to read the entire prospectus carefully, especially the risks of investing in our Ordinary Shares, discussed under "Risk Factors," before deciding whether to buy our Ordinary Shares. Unless otherwise indicated, all dollar amounts included herein are recorded in United States dollars. GLOSSARY OF SELECTED MINING TERMS Anthracite coal. A hard natural coal containing few volatile hydrocarbons which burns slowly and gives intense heat almost without flame. Ash. Impurities consisting of silica, iron, alumina and other incombustible matter that are contained in coal. Since ash increases the weight of coal, it adds to the cost of handling and can affect the burning characteristics of coal. Bituminous coal. A common type of coal with moisture content less than 20% by weight. It is dense and black and often has well-defined bands of bright and dull material. British thermal unit, or "Btu". A measure of the thermal energy required to raise the temperature of one pound of pure liquid water one degree Fahrenheit at the temperature at which water has its greatest density (39 degrees Fahrenheit). Coke. A hard, dry carbon substance produced by heating coal to a very high temperature in the absence of air. Coke is used in the manufacture of iron and steel. Its production results in a number of useful by-products. Hard coking coal. Hard coking coal is a type of metallurgical coal that is a necessary ingredient in the production of strong coke. It is evaluated based on the strength, yield and size distribution of coke produced from such coal which is dependent on rank and plastic properties of the coal. Hard coking coals trade at a premium to other coals due to their importance in producing strong coke and as they are a limited resource. Industrial coal. Coal generally used as a heat source in the production of lime, cement, or for other industrial uses and is not considered thermal coal or metallurgical coal. Metallurgical coal. The various grades of coal with suitable carbonization properties to make coke or be used as a pulverized injection ingredient for steel manufacture, including hard coking coal (see definition above), semi-soft coking coal (SSCC) and PCI coal (see definition below). Also known as "met" coal, its quality depends on four important criteria: (1) volatility, which affects coke yield; (2) the level of impurities including sulfur and ash, which affect coke quality; (3) composition, which affects coke strength; and (4) other basic characteristics that affect coke oven safety. Met coal typically has particularly high Btu characteristics but low ash and sulfur content. Nitrogen oxide (NOx). Produced as a gaseous by-product of coal combustion. It is a harmful pollutant that contributes to smog. PCI Coal. Coal used by steelmakers for pulverized coal injection (PCI) into blast furnaces to use in combination with the coke used to produce steel. The use of PCI allows a steel maker to reduce the amount of coke needed in the steel making process. Preparation plant. Preparation plants are usually located on a mine site, although one plant may serve several mines. A preparation plant is a facility for crushing, sizing and washing coal to remove impurities and prepare it for use by a particular customer. The washing process has the added benefit of removing some of the coal's sulfur content. Reserve. That part of a mineral deposit that could be economically and legally extracted or produced at the time of the reserve determination. Sulfur. One of the elements present in varying quantities in coal that contributes to environmental degradation when coal is burned. Sulfur dioxide is produced as a gaseous by-product of coal combustion. Thermal coal. Coal used by power plants and industrial steam boilers to produce electricity, steam or both. It generally is lower in Btu heat content and higher in volatile matter than metallurgical coal. Tons. A "short" or net ton is equal to 2,000 pounds. A "metric" ton is approximately 2,205 pounds; a "long" or British ton is equal to 2,240 pounds. Unless otherwise indicated, the metric ton is the unit of measure referred to in this document. The international standard for quoting price per ton is based in U.S. dollars per metric ton. Our Business Overview We were incorporated in the Cayman Islands on February 24, 2017. Our PRC operating company, Liulin Junhao Coking Coal Trading Co., Ltd ("Liulin Junhao") was incorporated as a PRC entity pursuant to PRC law on October 16, 2012. For more information, see "Business – History and Corporate Structure." Through our PRC operating entity, Liulin Junhao, we are a Shanxi Province-based manufacturer and supplier of blended coking coal. The blended coking coal we produce is also known as metallurgical coke, used to produce coke for use mainly in the steel-making process. Our blended coking coal is primarily purchased by other coking coal suppliers and coke producers for the purpose of making the coke required for the steel manufacturing process. We started generating revenue in the year ended December 31, 2015, where we generated revenue of $20,270 via acting as an agent for coking coal trade for a related party, Shanxi Yidayang Coal Transportation Co., Ltd. Our coking coal production operation started generating revenue in the year ended December 31, 2016, with $19,589,747 and 100% of our revenue derived from blended coking coal. We purchase raw materials of various grades in characteristics of coking coal from suppliers such as coal washing plants, which are primarily based in Shanxi Province, China. We developed in house, our proprietary electric coking coal blender, which we use to blend and manufacture coking coals of various grades in characteristics into a uniform mix, based upon customer specifications. Our customers are all based in the PRC and currently mainly in the Shanxi Province. Some of our customers are coke-suppliers while others resell coking coal. Our revenue is primarily generated through sales of our blended coking coal based upon specific customer specifications. For the six months ended June 30, 2017 and 2016, we generated revenue of $174,034 and $3,187,312 in the aggregate, respectively, with $93,776 and $nil generated from agent fees from third parties, Shanxi Jinquan Energy Co. Ltd. We produced and sold a total of 806 and 47,899 tons of coking coal, respectively, and generated coking coal revenues of $80,258 and $3,187,312, respectively. Our net loss for the six months ended June 30, 2017 and 2016 was $444,240 and $95,129, respectively. For the year ended December 31, 2016, we produced and sold a total of 221,303 tons of coking coal and generated coal revenues of $19,589,747. Our net income for the year ended December 31, 2016 was $749,561. For the year ended December 31, 2015, we had generated income of $20,270 via acting as an agent for coking coal trade for a related party, Shanxi Yidayang Coal Transportation Co., Ltd, and incurred a net loss of $12,993. 100% of our raw materials, various grades of coking coal, were from suppliers based in Shanxi Province, the PRC. 100% of our total revenue was derived from sales made to PRC customers. Our annual operating capacity for manufacturing and blending coking coal is 1 million tons. We are currently at 20% capacity. Our coking coal blending process and selling of the blending coking coal do not require regulatory permits other than the business license from the relevant PRC authorities which we already have. As of the date of this prospectus, there is no public trading market for our Ordinary Shares and there is no assurance that a trading market for our Ordinary Shares will ever develop. Reorganization We were incorporated in the Cayman Islands on February 24, 2017 by our controlling shareholder Mr. Xiangyang Guo. We directly hold 100% equity interests of Jinxuan JH Limited, a limited company formed in British Virgin Islands. Jinxuan JH Limited holds 100% equity interests of each of Jacqueline G.D International Limited ("Jacqueline HK") and Junhao Coking Coal International Holding Limited, which in turn collectively hold 100% equity interests of Liulin Junhao, our PRC operating entity. On December 31, 2016, Mr. Xiangyang Guo acquired 72% equity interest in Liulin Junhao and became its controlling shareholder. Between June 19, 2017 and August 5, 2017, we acquired 100% of the equity interests of Liulin Junhao, through a series of transactions with the then shareholders of Liulin Junhao, including Mr. Xiangyang Guo. More specifically, on June 19, 2017, Junhao International acquired the 75% equity interest of Liulin Junhao, and Merit Sky Holding Limited, a Hong Kong limited company then controlled by Mr. Bingshan Guo, acquired the 25% equity interest of Liulin Junhao (which was subsequently transferred to Jacqueline HK on July 16, 2017). As such, our controlling shareholder Mr. Xiangyang Guo has had a controlling ownership interest in Liulin Junhao since January 1, 2017. The following diagram illustrates our corporate structure as of the date of this prospectus: Competitive Strengths We believe that the following competitive strengths enhance our position in the PRC market: Our proprietary coking coal blending machine is able to blend various grades of coking coal and blend more efficiently. Our proprietary coking coal-blending machine uses predictive model to blend coking coal based upon customer specification and the various grades of available raw materials, minimizing the quantity of high-quality coking coal needed to produce high quality uniform mix coking coal, thus allowing us to have a competitive pricing over other market participants. Efficient Producer continuing to provide a mix of coking coal types and qualities to satisfy our customers needs. We believe our manufacturing and blending know-how and experience, operating efficiency and our strategic location in Liulin, Shanxi give us a competitive advantage over our competitors. Business Strategy Our long-term objective is to establish our company as the regional leader in the coking coal industry while continuing to expand our supplier and customer base. Our key strategies to achieve this objective are described below: In 2018, we plan to expand our customer base and supplier base in Shanxi Province, and to acquire suppliers of quality coking coal raw materials both in and outside of Shanxi Province, such as coal washing plants. Our ideal targets are suppliers with a minimum annual supply capacity of 1 million ton. We are actively searching for and negotiating with new suppliers. We are actively identifying and discussing with supplier targets to merge and/or acquire, while there is no guarantee that we will be able to locate appropriate targets in our desired timeline. As of the date of this prospectus, no acquisition or merger agreements have been entered into. Between the years of 2019 and 2020, we plan to expand our customer base to the nearby provinces of Hebei and Shandong, and continue to acquire additional coking coal suppliers, and coal washing plants with existing coke plants customer base. Between the years of 2021 and 2022, we plan to collaborate with regional futures exchanges to establish a one-stop industry park that serves the industry chain of coking coal, and to establish a coking coal e-commerce platform for coking coal products trade, derivative products investment and financing for coking coal companies. Corporate Information Our principal executive offices are located at South Zhonghuan Street 529, C-12, rooms 1204 and 1205, Taiyuan, Shanxi, PRC, and our phone number is + 86–351–7020402. We maintain a corporate website at http://www.bestjxjm.com. The information contained in, or accessible from, our website or any other website does not constitute a part of this prospectus. Recent Developments Effective July 30, 2017, the holders of all the outstanding shares of our Ordinary Shares approved the following, converting our authorized capital from $50,000 to $100,000 divided into 100,000,000 shares of Ordinary Shares, $0.001 par value per share; and converting issued capital of $50,000 in 50,000 shares, into 10,000,000 shares of US$0.001 par value each in the capital of the Company at an issue price of $0.005 per share (together, the "Recapitalization"). On August 5, 2017, the Company issued 3,333,334 shares of Ordinary Shares to Jacqueline G.D Limited ("Jacqueline Guo"), 100% owned by Bingshan Guo, a Director of Liulin Junhao, pursuant to a Share Exchange Agreement dated on the even date, in exchange for the 100% equity interest in Jacqueline HK transferred to Jinxuan BVI (the "Jacqueline Share Issuance"). As a result of the aforementioned Recapitalization and the Jacqueline Share Issuance (together, the "Reorganization"), there were 13,333,334 ordinary shares issued and outstanding, and the Reorganization was accounted for as a recapitalization. The Company believes it is appropriate to reflect the Reorganization on a retroactive basis similar to stock split pursuant to ASC 260. The Company has retroactively presented all shares and per share data for the six month period ended June 30, 2017 and for the years ended December 31, 2016 and 2015. On September 14, 2017, Liulin Junhao entered into a Share Transfer Agreement with Feiyue Mao (the "Beijing Jinxuan Transfer Agreement"), a related party of Liulin Junhao from March 1, 2015 to December 21, 2016, and as of September 14, 2017, a 99% equity owner of Beijing Jinxuan, pursuant to which Liulin Junhao shall purchase 99% of equity ownership in Beijing Jinxuan for a consideration of RMB7.92 million. Liulin Junhao has paid RMB5 million as a down payment following the execution of the Beijing Jinxuan Transfer Agreement, and the rest will be due upon closing of the transactions underlying the Beijing Jinxuan Transfer Agreement. The closing has not been completed as of the date of this prospectus. Following the closing of the transactions underlying the Beijing Jinxuan Transfer Agreement, Liulin Junhao will become a 99% equity owner of Beijing Jinxuan. The remaining 1% equity interest of Beijing Jinxuan is and will continue to be held by Ji Li, also a 1% beneficial owner of the Company. Feiyue Mao was a related party of Liulin Junhao from March 1, 2015 to December 21, 2016 during which Beijing Jinxuan was the 100% owner of Liulin Junhao and Feiyue Mao was the beneficial owner of Beijing Jinxuan and in turn of Liulin Junhao. On February 22, 2018, Beijing Jinxuan, Liulin Junhao, and Feiyue Mao, as a 99% equity owner of Beijing Jinxuan, entered into a Termination Agreement pursuant to which the parties terminated the Beijing Jinxuan Transfer Agreement, and agreed that Feiyue Mao shall return the RMB5 million deposit to Liulin Junhao no later than April 22, 2018. Implications of Being an "Emerging Growth Company" With less than $1.0 billion in revenue during our last fiscal year, we qualify as an "emerging growth company" under the Jumpstart our Business Startups Act of 2012, or the JOBS Act. An emerging growth company may take advantage of certain reduced reporting requirements and is relieved of certain other significant requirements that are otherwise generally applicable to public companies. In particular, as an emerging growth company we: - are not required to obtain an attestation and report from our auditors on our management s assessment of our internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002; - are not required to provide a detailed narrative disclosure discussing our compensation principles, objectives and elements and analyzing how those elements fit with our principles and objectives (commonly referred to as "compensation discussion and analysis); - are not required to obtain a non-binding advisory vote from our shareholders on executive compensation or golden parachute arrangements (commonly referred to as the "say-on-pay," "say-on-frequency" and "say-on-golden-parachute" votes); - - are exempt from certain executive compensation disclosure provisions requiring a pay-for-performance graph and CEO pay ratio disclosure; - may present only two years of audited financial statements and only two years of related Management s Discussion & Analysis of Financial Condition and Results of Operations, or MD - are eligible to claim longer phase-in periods for the adoption of new or revised financial accounting standards under 107 of the JOBS Act; and - are exempt from any proposed new requirements of the PCAOB rules relating to mandatory audit firm rotation and any requirement to include an auditor discussion and analysis narrative in our audit report. We intend to take advantage of all of these reduced reporting requirements and exemptions, including the longer phase-in periods for the adoption of new or revised financial accounting standards under 107 of the JOBS Act. Our election to use the phase-in periods may make it difficult to compare our financial statements to those of non-emerging growth companies and other emerging growth companies that have opted out of the phase-in periods under 107 of the JOBS Act. We will remain an "emerging growth company" until the earliest of (i) the last day of the first fiscal year in which our annual gross revenues exceed US$1 billion, (ii) the last day of our fiscal year following the fifth anniversary of the completion of this offering; (iii) the date that we become a "large accelerated filer" as defined in Rule 12b-2 under the Securities Exchange Act of 1934 (the "Exchange Act"), which would occur if the market value of our common shares that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter, or (iv) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three year period. Investors should be aware that we will be subject to the "Penny Stock" rules adopted by the Securities and Exchange Commission, which regulate broker-dealer practices in connection with transactions in Penny Stocks. These regulations may have the effect of reducing the level of trading activity, if any, in the secondary market for our stock, and investors in our Ordinary Shares may find it difficult to sell their shares. Please see the disclosures under "Penny Stock Considerations" in this Prospectus for more information. The Offering Following is a brief summary of this Offering. Please see the "Plan of Distribution" section for a more detailed description of the terms of the Offering. Except as otherwise indicated, all information in this prospectus assumes Reorganization of our Ordinary Share effective as of August 5, 2017. Ordinary Shares outstanding prior to the completion of this Offering 13,333,334 Ordinary Shares offered by us 1,000,000 shares, par value $0.001 Ordinary Shares Outstanding Immediately After the Offering 14,333,334 shares Price per Ordinary Shares The $0.08 per share offering price of our Ordinary Shares was determined by our Board of Directors based on several factors, including the most recent selling price of shares of our Ordinary Shares in private placements. Best Efforts We are directly selling our Ordinary Shares on a "best efforts" basis. Accordingly, we are not required to sell any specific number of dollar amount of Ordinary Shares but will use our best efforts to sell the Ordinary Shares offered. Use of proceeds We intend to use the proceeds from this offering to for working capital and general corporate purposes, including the expansion of our business. To the extent that we are unable to raise the total offering amount in this Offering, we may not be able to achieve all of our business objectives in a timely manner. See "Use of Proceeds" for more information. Trading Symbol " " Transfer Agent Island Stock Transfer 15500 Roosevelt Blvd, Suite 301 Clearwater, FL 33760 Risk Factors An investment in the shares of Ordinary Shares is subject to a number of risks. You should carefully consider the information set forth in the "Risk Factors" section below and the other sections of this Prospectus, in addition to the documents included in and/or incorporated by reference in the registration statement to which this Prospectus forms a part. Duration of the Offering The Offering shall be terminated on the earlier of: (1) The date when sale of all 1,000,000 shares is completed; (2) One year from the date of this Prospectus; (3) Prior to one year from the date of this Prospectus at the sole determination of the Board of Directors; Except as otherwise indicated, all information in this prospectus assumes Reorganization effected as of August 5, 2017, where our authorized capital was converted from $50,000 to $100,000 divided into 100,000,000 shares of Ordinary Shares, $0.001 par value per share.
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+PROSPECTUS SUMMARY
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+ 
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+This Prospectus, and any supplement to this Prospectus include forward-looking statements . To the extent that the information presented in this Prospectus discusses financial projections, information or expectations about our business plans, results of operations, products or markets, or otherwise makes statements about future events, such statements are forward-looking. Such forward-looking statements can be identified by the use of words such as intends , anticipates , believes , estimates , projects , forecasts , expects , plans and proposes . Although we believe that the expectations reflected in these forward-looking statements are based on reasonable assumptions, there are a number of risks and uncertainties that could cause actual results to differ materially from such forward-looking statements. These include, among others, the cautionary statements in the Risk Factors section beginning on page 12 of this Prospectus and the Management s Discussion and Analysis of Financial Position and Results of Operations section elsewhere in this Prospectus.
+ 
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+Prospectus Summary
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+ 
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+This summary contains basic information about us and the offering. Because it is a summary, it does not contain all the information that you should consider before investing. You should read the entire prospectus carefully, including the risk factors and our financial statements and the related notes to those statements included in this prospectus. Except as otherwise required by the context, references in this prospectus to we, our, us and Regnum refer to Regnum Corp.
+
+ 
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+Corporate Background
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+We were incorporated on March 31, 2016 under the laws of the State of Nevada. Our address is 1541 Ocean Avenue, Santa Monica, CA 90401, and our telephone number is (310)881-6954. Our fiscal year end is December 31. Our founder, Director and sole officer, Ms. Tiffani Jones, designed our business plan, and a total of $12,000 cash initial funding was provided to the Company in exchange for 20,000,000 shares of our common stock, currently held in the name of Ocean Ave Holdings LLC, a Montana limited liability company beneficially owned and controlled by Ms. Jones. We were formed for a primary business purpose of servicing the increasing demand for premium entertainment content and becoming a depository of unpublished intellectual properties for resale with focus on achieving profitability and sustaining business growth. Our business model is based on acquiring unproduced and unpublished quality intellectual properties at a discount from studios, agencies and production companies for subsequent recycling or production in wide variety of media with the intent to resell back to the entertainment community for a profit. Regnum believes such an approach gives the Company an advantage over bigger studios that are competing for fresh scripts from writers who are in demand. As at the date of this prospectus, we have acquired a bundle of 10 scripts and manuscripts from an independent production company at a deep discount for a total amount of $500, out of which 8 were recycled and subsequently optioned off/sold for a total of $18,100, and one more is still in development status. Upon its completion within 30 days we anticipate marketing it for sale.
+ 
+
+This is our initial public offering. We are registering a total of 10,000,000 shares of our common stock. All of the shares being registered for sale by the Company will be sold at a price per share of $0.01 for the duration of this Offering.
+
+ 
+
+Proceeds from this offering are required for us to proceed with our business plan over the next twelve months. We estimate we will require a minimum funding of $40,400 in capital to conduct our proposed operations and pay all expenses for a period of one year including expenses associated with maintaining a reporting status with the SEC. If we are unable to obtain funding of $40,400, our business may fail. Even if we raise $100,000 from the maximum offering, we may need more funds to develop our growth strategy and to continue maintaining our reporting status.
+
+ 
+
+We plan to sell 10,000,000 shares of common stock on a best efforts basis. There is no minimum amount we are required to raise in this Offering, and any funds received will be immediately available to us. The offering shall terminate on the earlier of (i) the date when the sale of all 10,000,000 shares is completed, (ii) when the board of directors decides that it is in our best interest to terminate the offering prior the completion of the sale of all 10,000,000 shares registered or (iii) one year after the effective date of this prospectus.
+
+ 
+
+ 
+
+6
+
+ 
+
+Table of Contents
+
+ 
+
+There is no current public market for our securities. As our stock is not publicly traded, investors should be aware they probably will be unable to sell their shares and their investments in our securities are not liquid and there is no assurance that a trading market for our securities will ever develop.
+
+ 
+
+Until we completed designing our business plan in February 2017, we had limited operations, sales or revenues, and have a net income (loss) for the year ended December 31, 2017 of $1,387 . As of the date of this prospectus, Regnum has acquired a bundle of 10 scripts and manuscripts from an independent production company at a deep discount for a total amount of $500, out of which 8 were recycled and subsequently optioned off/sold for a total of $18,100, and one more is still in development status. We hope to realize revenue in the future, however, we can provide no guarantees that we will be successful. We will rely upon the sale of our securities to fund our operations. We have a going concern uncertainty as of the date of our most recent financial statements. 
+
+ 
+
+Regnum has secured all the resources and skills needed to acquire, recycle and market our products by utilizing our sole officer and director s skills and experience in the fields of advertising and marketing, as well as entertainment. It is anticipated that, as the Company grows and develops over the next twelve months, its management team will be expanded from its current one member to consist of additional members who have expertise in the film and television entertainment industry, as well as entrepreneurial experience.
+
+ 
+
+ 
+
+To date, our operations have encompassed the following activities:
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+Forming the Company.
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+Designing a detailed business plan focused on acquiring unproduced and unpublished quality intellectual properties at a discount for subsequent reworking and/or production in wide variety of media with intent to resell back to the entertainment community for profit.
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+Acquiring a bundle of 10 scripts and manuscripts from an independent production company at a steep discount.
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+Recycling the acquired intellectual properties into new projects.
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+Marketing our completed projects, as well as ones still in development, to potential clients.
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+Optioning/selling the completed 8 projects and realizing first sales.
+
+ 
+
+The main goal of the Company is to become a self-sustained and profitable operational entity with the aim of future business growth. To generate revenues, Regnum will strategize to implement a viable business model, select a target market, develop marketing and future growth strategies and address competition.
+
+ 
+
+In order to maintain our current operations and implement our business plan over the next 12 months, we believe that we will need a minimum of $40,400 in capital, including the capital raised in this offering. We anticipate incurring up to $19,400 in offering expenses (out of which $18,000 are being paid from the initial investment of the Founder and Regnum s sales), $15,000 in SEC reporting and compliance, $4,000 in advertising and marketing, $2,500 in website design, $3,000 in operating and equipment, and $5,500 to maintain our general and administrative functions over the next twelve months and a one-time $9,000 DTC eligibility fee. Assuming we raise the entire $100,000, the proceeds from this offering will satisfy our cash requirements for more than twelve (12) months. 
+
+ 
+
+ 
+
+7
+
+ 
+
+Table of Contents
+
+ 
+
+Emerging Growth Company
+
+ 
+
+We are an emerging growth company under the JOBS Act. We shall continue to be deemed an emerging growth company until the earliest of:
+
+ 
+
+ 
+
+1.
+
+The last day of the fiscal year of the issuer during which it had total annual gross revenues of $1,070,000,000 (as such amount is indexed for inflation every 5 years by the Commission to reflect the change in the Consumer Price Index for All Urban Consumers published by the Bureau of Labor Statistics, setting the threshold to the nearest 1,070,000) or more;
+
+ 
+
+2.
+
+The last day of the fiscal year of the issuer following the fifth anniversary of the date of the first sale of common equity securities of the issuer pursuant to an effective IPO registration statement;
+
+ 
+
+ 
+
+3.
+
+The date on which such issuer has, during the previous 3-year period, issued more than $1,000,000,000 in non-convertible debt; or
+
+ 
+
+4.
+
+The date on which such issuer is deemed to be a large accelerated filer , as defined in section 240.12b-2 of title 46, Code of Federal Regulations, or any successor thereto.
+
+ 
+
+As an emerging growth company, we are exempt from Section 404(b) of Sarbanes Oxley. Section 404(a) requires issuers to publish information in their annual reports concerning the scope and adequacy of the internal control structure and procedures for financial reporting. This statement shall also assess the effectiveness of such internal controls and procedures. Section 404(b) requires that the registered accounting firm shall, in the same report, attest to and report on the assessment and the effectiveness of the internal control structure and procedures for financial reporting.
+
+ 
+
+As an emerging growth company, we are also exempt from Section 14A (a) and (b) of the Securities Exchange Act of 1934, which require the shareholder approval of executive compensation and golden parachutes. These exemptions are also available to us as a Smaller Reporting Company.
+
+ 
+
+We have elected to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(2) of the Jobs Act, that allows us to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies. As a result of this election, our financial statements may not be comparable to companies that comply with public company effective dates.
+
+ 
+
+ 
+
+8
+
+ 
+
+Table of Contents
+
+ 
+
+<a name="
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diff --git a/parsed_sections/prospectus_summary/2018/CIK0001718644_zander_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001718644_zander_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..3f4ce23a2be2ca839d0941b883bafa85d5f5c980
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/CIK0001718644_zander_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights certain information contained elsewhere in this prospectus. Because it is a summary, it may not contain all of the information that is important to you. Before investing in our common stock, you should read this entire prospectus carefully, especially the sections entitled "Risk Factors" beginning on page 11 and "Management s Discussion and Analysis of Financial Condition and Results of Operations" beginning on page 105 , as well our financial statements and related notes included elsewhere in this prospectus. In this prospectus, the terms "Zander Therapeutics, Inc" "Zander " "Company," "we," "us" and "our" refer to Zander Therapeutics , Inc.. In this prospectus, the terms "Entest Group", "Entest Biomedical" "Entest" and "ENTB" refer to Entest Group, Inc. (formerly Entest Biomedical, Inc.) About Us We were incorporated June 18, 2015 under the laws of the State of Nevada. We are a majority owned subsidiary of Entest Group, Inc. ( formerly Entest Biomedical, Inc,), a Nevada corporation. We intend to engage primarily in the development and commercialization of veterinary medical therapies which we intend to license from other entities as well as develop internally. As of December 15, 2017, we have not licensed, developed or commercialized any existing veterinary medical therapies, however we have licensed intellectual properties from Regen Biopharma, Inc., a company under common control with us, and these intellectual properties comprise the therapeutic concept behind ZAN-100 and ZAN-200, two therapies in early stage development by the Company. NR2F6 Both of Zander s products under development will operate through either inhibition or activation by small (low molecular weight) molecules of the nuclear receptor NR2F6. Nuclear receptors are a class of proteins found within cells that are responsible for sensing certain other molecules. In response, these receptors work with other proteins to regulate the expression of specific genes. ZAN-100 ZAN-100 is intended to be a veterinary cancer therapy. In the opinion of the Company, the studies performed by Hermann-Kleiter et al. (The Nuclear Orphan Receptor NR2F6 Is a Central Checkpoint for Cancer Immune Surveillance. Cell Reports 12, 2072–2085 (2015)) demonstrate that the inhibition of NR2F6 in T cells may yield anti-cancer benefits in small animals. The studies indicate that, in the presence of NR2F6, T cell activation is limited within the tumor microenvironment. The Company believes that inhibition of NR2F6 removes a barrier to the animal s own immune system s ability to attack cancer cells. ZAN-100 is intended to be a small molecule therapy whose mode of action will be the inhibition of NR2F6. High throughput screening assays conducted for Regen Biopharma, Inc. (the licensor of the intellectual property which forms the basis for the Company s products in development) between July and September of 2016 on thirty thousand compounds yielded four newly discovered small molecule compounds which (a) can bind to the relevant structure in a cellular system and (b) show evidence of the ability to modulate the effects of NR2F6. ZAN-200 ZAN-200 is intended to be a veterinary arthritis therapy. Rheumatoid arthritis is an immune-mediated disease. This means it is caused by an overreaction of the immune system. In rheumatoid arthritis, the body mistakes some of its own protein for foreign protein. It then makes antibodies against its own protein. In the opinion of the Company, suppression of the immune system through activation of NR2F6 in those immune cells would be an effective therapy. ZAN-200 is intended to operate by activating NR2F6 in the animals immune cells. Ex-vivo assays were performed using immune cells from five dog blood samples. Data derived from those tests demonstrated the ZAN-200 may inhibit T cell activation and production of cytokines, particularly IL-17 and IL-2. IL-17 and IL-2 have been shown to create inflammatory responses leading to arthritic conditions. We have filed applications with the United States Patent and Trademark Office for patent protection with respect to internally developed intellectual property covering our products in development. As of December 15, 2017 no patent protection has been granted to any intellectual property developed by Zander. We generated net losses of $875,660 during the period from June 18, 2015 (inception) through December 31, 2017. This condition raises substantial doubt about our ability to continue as a going concern. Our continuation as a going concern is dependent on our ability to meet our obligations, to obtain additional financing as may be required and ultimately to attain profitability. Our auditor's report dated September 5, 2017 expressed substantial doubt about our ability to continue as a going concern. As of December 31, 2017 we had $ 721,242 cash on hand and current liabilities of $112,297 .Although we feel we will be able to satisfy our cash requirements over the next twelve months, we also feel that we shall be required to seek additional financing in the future. We currently plan to raise additional funds primarily by offering securities for cash. Management has yet to decide what type of offering the Company will use or how much capital the Company will raise. There is no guarantee that the Company will be able to raise any capital through any type of offerings. For the period beginning on June 23, 2015 and ending on March 9, 2018 the Company s activities have been primarily focused upon the development and undertaking of preclinical research with regard to the development of therapies related to inhibition or activation of NR2F6. The Company estimates that it will require $1,500,000 to complete medicinal chemistry studies with regards to the Company s products in development. Medicinal chemistry is the process by which trained chemists modify a starting compound (called a parent compound) in an effort to optimize its characteristics such as binding affinity and toxicity profile. The Company estimates that it will require an additional require an additional $1,500,000 to complete pre-clinical studies with regards to the Company s products in development. Pre-clinical studies refer to detailed cellular and animal studies that measure the toxic effects of the drug, how long it stays in the blood stream, efficacy, where it goes in the body and the best way to formulate and deliver the drug. The Company estimates that it will require a further additional $2,000,000 to complete studies required in order that New Animal Drug Applications (NADA) may be submitted to the United States Food and Drug Administration (FDA) with regards to the Company s products in development. NADA-enabling studies include using the drug in its final commercial manufactured form in the target animals of interest to show efficacy in the field and to look for toxicity. The NADA must also include information on the drug's chemistry; composition and component ingredients; manufacturing methods, facilities, and controls; proposed labeling; analytical methods for residue detection and analysis if applicable; an environmental assessment; and other information. The sponsor of a new animal drug is responsible for submitting all appropriate data to establish effectiveness and safety. If the drug product is intended for use in a food-producing animal, residues in food products must also be established as safe for human consumption. FDA review of the NADA submitted by drug sponsors is extremely detailed and comprehensive. No assurance may be given that ZAN-100, ZAN-200 or any new animal drug product which the Company may develop will be approved by the FDA to be marketed and sold. Regulatory authorities in countries outside of the United States and Europe also have requirements for approval of veterinary drug candidates with which we must comply prior to marketing in those countries. Obtaining regulatory approval for marketing of a product candidate in one country does not ensure that we will be able to obtain regulatory approval in any other country The foregoing statements that are not historical facts, including statements about Zander s plans, beliefs or expectations, are forward-looking statements. These statements are based on plans, estimates and projections at the time Zander made the original statement, and you should not place undue reliance on them as these plans, estimates and projections may be subject to change. Forward-looking statements involve inherent risks and uncertainties and Zander cautions you that a number of important factors could cause actual results to differ materially from those contained in any such forward-looking statement.
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2018/CIK0001718903_realm_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001718903_realm_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/CIK0001718903_realm_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2018/CIK0001719323_energy_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001719323_energy_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a93379cf35fa40ffa8c4be1fd0e2d2fee469ff89
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/CIK0001719323_energy_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY The following summary highlights selected information from this prospectus and may not contain all the information that is important to you. To understand our business and this offering fully, you should read this entire prospectus carefully, including the financial statements and the related notes beginning on page F-1. This prospectus contains forward-looking statements and information relating to Energy Conversion Services, Inc. See Cautionary Note Regarding Forward Looking Statements on page 8. Our Company The Company was formed on April 8, 2017 in the State of Wyoming for the purpose of using portable generating equipment to generate electricity from natural gas, methane, landfill gas, syngas, etc. The resulting product would be sold to an end user or an Electrical Utility. We have the ability to create, or purchase equipment to generate electricity from 250 kilowatts to 2 megawatts. Our systems are clean, quiet and unobtrusive. Our CEO is the controlling interest holder in our sole shareholder. We do not currently have any equipment and any acquisition of such equipment is planned, and subject to financing and development. Business Strategy Energy Conversion Services, Inc., (the company) is a Wyoming "C" Corporation created to utilize gas to power generators to produce electricity. The company, ' ': s equipment will be able to use many different forms of gas: natural, methane or waste gases. The equipment used is remotely managed and each unit will be independently operated. The company will then sell the resulting electricity to an area utility. The United States has hundreds of thousands of gas wells or, oil wells producing gas that do not have an opportunity to market their gas. These are the intended customers of the company. The company can install its equipment next to the producer or, in a producing field. Our company needs only three items: the equipment, gas, to power the equipment and a utility to purchase the resulting electricity. These are planned uses for the equipment and other operators are utilizing the same equipment in this manner currently. The equipment is standard equipment produced by Caterpillar. Current management has no previous experience with the power generation industry or with the equipment and services that you plan to provide. ECS, s electricity conversion technology s standard configuration resides in a 40 enclosure that produces up to 1 Megawatt of electricity – enough electricity to power up to 1000 homes. Based upon other utilizers of this equipment s results. Each unmanned unit operates remotely and independently and is managed via a centralized satellite remote monitoring facility. There is no capital equipment or manpower cost to the gas producers for the implementation of our technology. ECS, owns, installs, operates and maintains all the necessary equipment for each implementation, thus eliminating requirements for additional budgets, increased taxes and special approvals for the gas producers. The Company intends to negotiate contracts where there may be no cost to ECS, for the natural gas or methane gas that ECS, utilizes to operate the equipment. Instead, the gas producer is paid a royalty on the electric revenue generated by the implementation of our technology. There is no guarantee these terms will be acceptable to customers. In many cases, the current natural gas and methane gas producers are burning (flaring) their natural and methane gas. In most states, this results in excessive fines from the EPA resulting from the pollution being generated. Implementing the Energy technology not only stops the EPA fines, it also provides additional revenue to the gas producers from the royalties of the electricity sale to the local utility companies. In addition to eliminating EPA fines and generating royalty revenue for operational sites such as landfills, farms and waste water treatment facilities, ECS, can provide electricity directly to the facility at up to a 50% cost savings because the electricity is being generated on-site. In some cases, this can result in savings of tens of thousands of dollars per month. Based upon other utilizers of this equipment s results. The anticipated cost savings is based upon the lack of need for long distance distribution equipment. Pricing will be based on the size and needs of the unit for each facility. Our executive offices are located at 2724 Otter Creek Ct 101, Las Vegas, Nevada 89122. Our telephone number is 702-289-8620. Our Company is an "emerging growth company," as defined in the Jumpstart Our Business Startups Act. Our Company shall continue to be deemed an emerging growth company until the earliest of— (A)The last day of the fiscal year of the issuer during which it had total annual gross revenues of !,000,000) (as such amount is indexed for inflation every 5 years by the Commission to reflect the change in the Consumer Price Index for All Urban Consumers, published by the Bureau of Labor Statistics, setting the threshold to the nearest 1,000,000) or more; (B)The last day of the fiscal year of the issuer following the fifth anniversary of the date of the first sale of common equity securities of the issuer pursuant to an effective registration statement under this title (C)The date on which such issuer has, during the previous 3-year period, issued more than $1,000,000 in non-convertible debt; or (D)The date on which such issuer is deemed to be a , ' ': large accelerated filer , as defined in section 240.12b-2 of title 17, Code of Federal Regulations, or any successor thereto. As an emerging growth company the company is exempt from Section 404(b) of Sarbanes Oxley. Section 404(a) requires Issuers to publish information in their annual reports concerning the scope and adequacy of the internal control structure and procedures for financial reporting. This statement shall also assess the effectiveness of such internal controls and procedures. Section 404(b) requires that the registered accounting firm shall, in the same report, attest to and report on the assessment on effectiveness of the internal control structure and procedures for financial reporting. As an emerging growth company the company is exempt from Section 14A and B of the Securities Exchange Act of 1934 which require shareholder approval of executive compensation and golden parachutes. Our Company has irrevocably opted out of the extended transition period for complying with new or revised accounting standards pursuant to Section 107(b) of the Act. The Offering This prospectus covers up to 3,000,000 shares to be issued and sold by the company at a price of $0.10 per share in a direct public offering . ABOUT THIS OFFERING Securities Being Offered Up to 3,000,000 shares of common stock of Energy Conversion Services, Inc. to be sold by the company at a price of $0.10 per share. Initial Offering Price The company will sell up to 3,000,000 shares at a price of $0.10 per share. Terms of the Offering The company will offer and sell the shares of its common stock at a price of $0.10 per share in a direct offering to the public. Termination of the Offering The offering will conclude when the company has sold all of the 3,000,000 shares of common stock offered by it up to a maximum of 360 days. The company may, in its sole discretion, decide to terminate the registration of the shares offered by the company.
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2018/CIK0001719435_assisted_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001719435_assisted_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/CIK0001719435_assisted_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2018/CIK0001719881_fmc_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001719881_fmc_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..9223bc989148c961b11514395f2e2e77a77e0f02
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/CIK0001719881_fmc_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 1 RISK FACTORS 3 CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS 3 USE OF PROCEEDS 14 DIVIDEND POLICY 14 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 14 BUSINESS 18 MANAGEMENT 23 EXECUTIVE COMPENSATION 27 PRINCIPAL STOCKHOLDERS 31 CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS 32 DESCRIPTION OF CAPITAL STOCK 32 SELLING STOCKHOLDERS 33 PLAN OF DISTRIBUTION 35 MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS 37 LEGAL MATTERS 37 EXPERTS 37 DISCLOSURE OF COMMISSION POSITION OF INDEMNIFICATION FOR SECURITIES ACT LIABILITIES 37 WHERE YOU CAN FIND ADDITIONAL INFORMATION 38 INDEX TO FINANCIAL STATEMENTS F-1 Table of Contents You should rely only on the information contained in this prospectus. We have not authorized any other person to provide you with information different from or in addition to that contained in this prospectus. If anyone provides you with different or inconsistent information, you should not rely on it. We are not making an offer to sell these securities in any jurisdiction where an offer or sale is not permitted. You should assume that the information appearing in this prospectus is accurate only as of the date on the front cover of this prospectus. Our business, financial condition, results of operations and prospects may have changed since that date. Additional risks and uncertainties not presently known or that are currently deemed immaterial may also impair our business operations. The risks and uncertainties described in this document and other risks and uncertainties which we may face in the future will have a greater impact on those who purchase our Common Stock. These purchasers will purchase our Common Stock at the market price or at a privately negotiated price and will run the risk of losing their entire investments. For investors outside the United States: We have not done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. You are required to inform yourselves about and to observe any restrictions relating to this offering and the distribution of this prospectus. PROSPECTUS SUMMARY This summary highlights information contained in other parts of this prospectus. Because it is a summary, it does not contain all of the information that you should consider in making your investment decision. Before investing in our Common Stock, you should read the entire prospectus carefully, including our consolidated financial statements and the related notes included in this prospectus and the information set forth under the headings "Risk Factors" and "Management s Discussion and Analysis of Financial Condition and Results of Operations." When used herein, unless the context requires otherwise, references to the "Company," "we," "our" and "us" refer to FMC GlobalSat Holdings, Inc., a Delaware corporation, collectively with its wholly-owned subsidiary, FMC GlobalSat, Inc, a Florida corporation. About the Company FMC GlobalSat Holdings, Inc. ("FGH") was formed as a Delaware corporation on August 31, 2017. On October 6, 2017, FGH executed an agreement with FMC GlobalSat, Inc. ("FMC GlobalSat" or "FG"), pursuant to which the FGH agreed to acquire all of the issued and outstanding securities of FG in exchange for 10,500,000 newly issued shares of the FGH s Common Stock. FG was formed as a Florida Limited Liability Company on April 19, 2017 and was later changed to a corporation on November 2, 2017, with an effective date as of April 19, 2017. This transaction is being accounted for as a reverse recapitalization since the stockholders of FG own a majority of the outstanding shares of FGH, and the management and Board of FG became the management and Board of FGH immediately following the merger. Accordingly, FG is the acquirer for accounting purposes and, consequently, the assets and liabilities and the historical operations that are reflected in the financial statements herein are those of FG. The Company mainly operates business through FMC GlobalSat, Inc. The Company is a provider of global connectivity, currently offering data connectivity to remote or underserved areas through broadband satellite and wireless (cellular). Effective on May 4, 2017, FMC GlobalSat entered into a Master Agreement (the "Kymeta Agreement") with Kymeta Corporation ("Kymeta"), pursuant to which FMC GlobalSat was appointed as a distributor/reseller of Kymeta s satellite antenna products and satellite connectivity services. Under the Kymeta Agreement, FMC GlobalSat has been appointed as Kymeta s exclusive worldwide distributor of its products and services for the renewable energy industry (solar, wind, hydro, biomass and geothermal power plants). FMC GlobalSat also has the right to sell Kymeta products and services in all other industry sectors on a non-exclusive basis where exclusivity has not already been granted to another party (such as for yachts over 24 meters – for which FMC GlobalSat has obtained rights as a sub-distributor on a non-exclusive basis). The initial term of the Kymeta Agreement began (and the effectiveness of the Company s appointment as a distributor, including the effectiveness of its appointment as the exclusive distributor for the renewable energy industry, started) on May 4, 2017, and will last for five (5) years from the date on which Kymeta notifies the Company that it has met certain performance criteria (the "Performance Notification Date"), as further discussed in the Risk Factor "Limited Scope and Duration of Kymeta Agreement" on page 7. In order to maintain its appointment as the exclusive distributor of Kymeta products and services in the renewable energy sector, the Company must meet certain minimum product purchase targets in five consecutive individual 12 month periods, the first of which will commence on the Performance Notification Date. The Company is currently in discussions with Kymeta regarding the performance criteria and expects to receive the notification that Kymeta has met the performance criteria in the near future. The Company also offers, as an "add on" service to the satellite connectivity services as part of a bundled service, wireless (cellular) data plans through a reseller agreement (the "Aeris Agreement") with Aeris Mobile Solutions ("Aeris"), a global telecom aggregator, which leverages 550 telecom carriers in 180 different countries. The wireless services are not currently expected to be a material contributor to the Company s business or revenues. The Company provides satellite and wireless connectivity solutions to markets and industries that require long term visibility into cost, and demand strict adherence to regulatory requirements. The Company s main satellite products comprise Kymeta s KyWay Terminal and K LOTM service. Powered by the mTenna technology, the KyWay Terminal provides high-throughput, mobile communication wherever it is needed, covering land, sea and air, initially utilizing Ku band (fixed) satellite frequencies. The K LOTM service, recently jointly developed by Kymeta and Intelsat Corporation, introduced a simplified way to buy and sell Ku band satellite connectivity billed on a "by-the-byte" (data plan) basis to customers and sectors that are currently unreached or underserved by terrestrial networks, or where service through traditional VSAT or Inmarsat providers was considered too expensive. Using Kymeta mTenna u7 antenna subsystem modules (ASMs) and fully integrated KyWay Terminals, K LOTM provides easy, flexible satellite connectivity for both fixed and mobile applications, further reducing communication barriers. In addition to its satellite connectivity offerings, the Company offers certain customers as an add-on service, wireless connectivity to seamlessly deliver 3G and 4G cellular data connectivity across Code Division Multiple Access (CDMA), Global System for Mobiles (GSM), and Long-Term Evolution (LTE) networks, on a resale basis through Aeris, leveraging 550 telecom carriers in 180 different countries, all delivered on a single platform. The Company currently offers various satellite data plans, and satellite data plans bundled with an add-on wireless service, providing the most flexible range of data usage for its customers. The wireless services are not currently expected to be a material contributor to the Company s business or revenues. CALCULATION OF REGISTRATION FEE Title of Each Class of Securities to Be Registered Amount to Be Registered(1) Proposed Maximum Aggregate Offering Price (2) Amount of Registration Fee(3) Shares of common stock (4) 510,460 $ 510,460 $ 63.55 Shares of common stock (5) 1,693,000 $ 1,693,000 $ 210.78 Shares of common stock underlying warrants (6) 846,500 $ 846,500 $ 105.39 Total 3,049,960 $ 3,049,960 $ 379.72 (1) Pursuant to Rule 416, there are also being registered such indeterminable additional securities as may be issued to prevent dilution as a result of stock splits, stock dividends or similar transactions. (2) No market presently exists for our Common Stock. The selling stockholders will initially be offering their shares at a fixed price of $1.00. (3) Calculated under Section 6(b) of the Securities Act of 1933 (the "Securities Act") as the aggregate offering price multiplied by 0.0001245. (4) Represents shares of Common Stock issued on December 28, 2017 upon the conversion of outstanding principal and accrued interest under convertible promissory notes purchased pursuant to a private placement bridge financing which had a final closing in November 2017 (the "Bridge Financing"). Proposed maximum aggregate offering price is based on the total amount of proceeds raised in the Bridge Financing. Total number of shares represent 500,000 shares purchased at $0.50 per share with converted principal plus 10,460 shares purchased at $0.50 per share with accrued interest each upon conversion at the closing of the December 2017 Private Placement. (5) Represents shares of Common Stock purchased pursuant to a private placement which closed on December 28, 2017 and January 29, 2018, respectively (the "December 2017 Private Placement"). Proposed maximum aggregate offering price is based on the total amount of proceeds raised in the December 2017 Private Placement. (6) Represents shares of Common Stock issuable upon the exercise of warrants issued in the December 2017 Private Placement with an exercise price of $2.50 per share. Proposed maximum offering price per share is based on the exercise price of the warrant in accordance with Rule 457(g). The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act, as amended, or until this Registration Statement shall become effective on such date as the Commission, acting pursuant to such Section 8(a), may determine. Table of Contents The Offering Common Stock Outstanding 15,203,960 shares Warrants Outstanding 1,346,500 warrants Shares of Common Stock, including Shares of Common Stock underlying Warrants, Offered by Selling Stockholders 3,049,960 shares (1) Use of Proceeds We will not receive any proceeds from the sale of the Common Stock by the selling stockholders. We would, however, receive proceeds upon the exercise of the warrants held by the selling stockholders which, if such warrants are exercised in full, would be approximately $2,116,250. Proceeds, if any, received from the exercise of such warrants will be used for working capital and general corporate purposes. No assurances can be given that any of such warrants will be exercised. Quotation of Common Stock: Our Common Stock is not presently traded on any market or securities exchange, and we have not applied for listing or quotation on any exchange. We are seeking sponsorship for the trading of our Common Stock on the OTC Bulletin Board and/or OTCQB Market upon the effectiveness of the registration statement of which this prospectus forms a part. There can be no assurance that a market maker will agree to file the necessary documents with FINRA, nor can we provide any assurance that our shares will actually be quoted on the OTC Bulletin Board and/or OTCQB Market or, if quoted, that a viable public market will materialize. Risk Factors An
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+PROSPECTUS SUMMARY This summary only highlights the more detailed information appearing elsewhere in this prospectus. As this is a summary, it does not contain all of the information that you should consider in making an investment decision. You should read this entire prospectus carefully, including the information under "Risk Factors" and our financial statements and the related notes included elsewhere in this prospectus, before investing. References in this prospectus to "we," "us" or "our company" refer to MTech Acquisition Corp. References in this prospectus to our "public shares" are to shares of our Class A common stock sold as part of the units in this offering (whether they are purchased in this offering or thereafter in the open market) and references to "public stockholders" refer to the holders of our public shares, including our sponsor (as defined below), officers and directors to the extent they purchase public shares, provided that their status as "public stockholders" shall only exist with respect to such public shares. References in this prospectus to our "management" or our "management team" refer to our officers and directors, references to our "sponsor" refer to MTech Sponsor LLC. Our chairman, Steven Van Dyke, and our president and one of our directors, Scott Sozio, are the managing members of one of our sponsor s managing members and each of our officers, directors and director nominees is a member of our sponsor or owns, indirectly, membership interests in our sponsor through a managing member entity. Unless we tell you otherwise, the information in this prospectus assumes that the underwriters will not exercise their over-allotment option. General We are a newly organized blank check company formed as a Delaware corporation for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses, which we refer to throughout this prospectus as our initial business combination. We have not selected any specific business combination target and we have not, nor has anyone one our behalf, initiated any substantive discussions, directly or indirectly, with any business combination target. Our initial business combination and value creation strategy will be to identify, acquire and, after our initial business combination, assist in the growth of a business ancillary to the cannabis industry, with a particular sector focus that includes compliance, business intelligence, brand development and media. However, we are not limited to this industry and we may pursue a business combination opportunity in any business or industry we choose and we may pursue a company with operations or opportunities outside of the United States. Although the cannabis industry has evolved significantly and continues to mature, we believe the industry is still undercapitalized and companies operating across multiple verticals consistently have trouble accessing capital from traditional resources. Financing of businesses that operate within the legal cannabis industry in the U.S. has relied largely on private money — friends and family, high net-worth individuals and small-to-medium-sized private investment firms. Institutional investors have shied away from companies in the cannabis industry, especially those that are directly involved in the production, distribution and sale of cannabis (businesses that "touch the plant"), which we do not intend to target. Even businesses that do not "touch the plant" and instead provide ancillary services to the industry, for the most part, have found it extremely difficult to access capital. The federal prohibition on cannabis has led to a situation in which small investors and venture funds have become the industry s financial backbone. As a result, we believe we have the opportunity to create a compelling structure that will enable the right target company to go public and access the capital it needs in order to accelerate its organic growth and also create additional stakeholder value as a well-capitalized acquirer in an industry defined by undercapitalized competition. We will not invest in an entity or assets which violate, or aid and abet the violation, of federal law. Our management team is an experienced group of deal makers and operators that have been investing in the cannabis industry since 2014, with transactions focused on ancillary cannabis companies in the compliance, business intelligence, brand development and media sectors of the industry. Our management team has collectively invested over $30 million in cannabis-related businesses in the last 3+ years, more than half of which is personal capital. In 2016, Steven Van Dyke and Scott Sozio, both members of our management team, founded Hypur Ventures, L.P. ("Hypur Ventures"), a venture capital fund dedicated to investing in businesses that operate in the cannabis industry. Hypur Ventures is fully invested with positions in eight portfolio companies engaged in various aspects of the cannabis industry not "touching the plant", including compliance, business intelligence, brand development and media. Our management believes its investments have established market leadership positions and emerging track records of customer acquisition in this high-growth industry. We believe our management team s history of completing cannabis transactions and building businesses that require creative solutions give us a unique ability to combine with an attractive company in this industry. CALCULATION OF REGISTRATION FEE Title of each Class of Security being registered Amount being Registered Proposed Maximum Offering Price Per Security(1) Proposed Maximum Aggregate Offering Price(1) Amount of Registration Fee Units, each consisting of one share of Class A common stock, $.0001 par value, and one redeemable Warrant(2) 5,750,000 Units $ 10.00 $ 57,500,000 $ 7,159 Shares of Class A common stock included as part of the Units(2) 5,750,000 Shares — — — (3) Redeemable Warrants included as part of the Units(2) 5,750,000 Warrants — — — (3) Units underlying the Representative s Unit Purchase Option ("Representative s Units") 250,000 Units $ 10.00 $ 2,500,000 $ 312 Shares included as part of the Representative s Units 250,000 Shares — — — (3) Redeemable Warrants included as part of the Representative s Units 250,000 Warrants — — — (3) Total $ 60,000,000 $ 7,471 (4) (1)Estimated solely for the purpose of calculating the registration fee. (2) Includes 750,000 Units, 750,000 shares of Class A common stock and 750,000 redeemable Warrants underlying such Units which may be issued on exercise of a 45-day option granted to the Underwriters to cover over-allotments, if any. (3)No fee pursuant to Rule 457(g). (4) Previously paid. The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. Our management team is led by Steven Van Dyke, our Chairman, who has more than 30 years of capital management experience, having founded and run two hedge funds with over $1 billion in assets under management, most recently as founding partner of New York-based BHR Capital LLC. Mr. Van Dyke built his career and reputation around his expertise in alternative investments, including restructurings, venture capital and real estate. We believe that our management team is well positioned to identify high-growth acquisition opportunities in the marketplace and that our network within the cannabis industry is uniquely deep. The relationships our management team has established within the industry cover the major geographies where cannabis has been legalized, including Colorado, Washington, Oregon, California, Nevada, Arizona, Florida and other emerging legal-cannabis states. In addition to the industry relationships we have with management teams in the cannabis industry through our existing investments, our network includes professionals that provide services to the industry, including cannabis-focused attorneys, investment bankers, lenders, accountants and advisors. Business Strategy Our strategy will be to invest in businesses that are ancillary to the production, distribution and sale of cannabis, with a particular focus on three segments of the industry: Compliance: We believe the businesses that succeed in these early years of legal cannabis will be the ones that make compliance with state regulations an operational priority, driving decision-making at all levels of the company. We believe that investing in compliance services will be critical to the success of the industry in the long-term. Business Intelligence: Cannabis is in the very early stages of discovery. Companies need tools to understand and analyze their business, in many cases without the ability to borrow from other industries. We believe cannabis presents a unique set of challenges, as a highly-regulated industry that operates within a network of conflicting federal and state laws. As a result, ancillary businesses that provide services to other industries, and would under normal circumstances make their products and technologies available to the cannabis industry, have instead stayed out of the market. The void is being filled by companies dedicated to the cannabis industry, in many cases designing custom-built technology. Brands & Media: Cannabis is an industry defined by a lack of information and misinformation. We believe that brands and media will play a critical role in supplying consumers with the knowledge and confidence to patronize the category. Competitive Strengths In order to execute our business strategy, we intend to: Utilize our management team s extensive sourcing network to identify the leading companies and assets servicing the cannabis industry that we believe are underperforming, and leverage our network to streamline the diligence process, achieving a deep level of understanding of a target s business. Our management s expertise in finance and our reputation in the industry as active investors has enabled us to build strong relationships with company owners, executives, stakeholders, industry experts, consultants, professionals and financial intermediaries. We believe these relationships will help provide us with attractive acquisition opportunities. We also intend to rely on our management team s reputation and history of investing and operating in the finance and cannabis industries. Understanding the dynamics, competitors, trends, risks, and opportunities of the segment enables us to target selected companies and efficiently pursue a potential transaction. Conduct rigorous research and analysis. Performing disciplined, bottom-up fundamental research and analysis is core to our strategy, and we intend to conduct extensive due diligence to evaluate the impact that a transaction may have on a target business. Acquire the target company at an attractive price relative to our view of intrinsic value. Combining analysis and input from industry and financial experts, we intend to develop our view of the intrinsic value of a potential business combination. In doing so, our management team will evaluate future cash flow potential, relative industry valuation metrics and precedent transactions to inform its view of intrinsic value, with the intention of creating a business combination at an attractive price relative to such intrinsic value. Implement operational and financial structuring opportunities. We intend to structure and execute a business combination that will provide the combined business with a capital structure that will support the growth in shareholder value and give it the flexibility to grow organically and/or through strategic acquisitions or divestitures. We also intend to develop and implement strategies to improve the business s operational and financial performance and create a platform for growth. Specifically, our management team intends to evaluate opportunities for industry consolidation in the company s core lines of business as well as opportunities to vertically or horizontally integrate with other industry participants. Leverage Advisors. We expect to have access to various advisors through Hypur Ventures, who are experts in specific verticals of the cannabis industry. If we choose to retain them, we expect that they will assist our management team by providing deal flow and industry intelligence, affording us a competitive advantage. Such advisors, if retained, may offer unique, on-the-ground access and insight into this rapidly evolving industry, specifically as it relates to our main industry focus — compliance, business intelligence, brand development and media. With respect to the foregoing examples, past performance of our management team is not a guarantee either (i) of success with respect to any business combination we may consummate or (ii) that we will be able to identify a suitable candidate for our initial business combination. You should not rely on the historical performance record of our management as indicative of our future performance. Our officers and directors have not had management experience with blank check companies or special purpose acquisition corporations in the past. In addition, for a list of our executive officers and entities for which a conflict of interest may or does exist between such officers and the company, as well as the priority and preference that such entity has with respect to performance of obligations and presentation of business opportunities to us, please refer to the table and subsequent explanatory paragraph under "Management — Conflicts of Interest". Acquisition Criteria Consistent with our business strategy, we have identified the following criteria that we intend to use in evaluating business transaction opportunities. We expect that no individual criterion will entirely determine a decision to pursue a particular opportunity. Further, any particular business transaction opportunity which we ultimately determine to pursue may not meet one or more of these criteria. Notwithstanding anything below, we will not invest in an entity or assets which violate, or aid and abet the violation, of federal law. We will seek a business transaction with a company that is: Ancillary: Does not touch the plant, allowing the business to be unconstrained by state borders. Able to Build Infrastructure: Our management believes that technology-driven solutions to operational challenges in a nascent industry and complex regulatory environment have a unique window of opportunity to create infrastructure that will grow with the industry. Scalable: We believe the cannabis industry is in an explosive growth phase and our goal is to invest in the businesses that are built to scale faster than the competition. In addition, target businesses may be one or several of the following: Underperforming. Undervalued. Have Sustainable Competitive Advantages. Have Strong Management Teams. Will Benefit from Being a Public Company. Is a Merger Candidate. Offers attractive risk-adjusted equity returns for our shareholders. These criteria are not intended to be exhaustive. Any evaluation relating to the merits of a particular initial business transaction may be based, to the extent relevant, on these general guidelines as well as other considerations, factors and criteria that our management team may deem relevant. In the event that we find an opportunity that is more compelling to us than the opportunities described above, we would pursue such opportunity. However, we have not established any particular parameters as to when we might turn our attention to opportunities that are not described above. In the event that we decide to enter into our initial business transaction with a target business that does not meet the above criteria and guidelines, we will disclose that the target business does not meet the above criteria in our stockholder communications related to our initial business transaction. Direct Involvement Post-Transaction Because our management team knows what it is like to operate in the cannabis industry, we understand the everyday challenges confronting other management teams in this industry. Not only do we bring capital and resources to our investments, but we have the ability to anticipate their needs and equip them with solutions. After the initial business combination, our management team intends to apply a rigorous approach to enhancing shareholder value, including evaluating the experience and expertise of incumbent management and making changes when appropriate, examining opportunities for revenue enhancement, cost savings, operating efficiencies and strategic acquisitions and divestitures, and accessing the financial markets to optimize the company s capital structure. We will pursue post-merger initiatives through participation on the board of directors, through direct involvement with company operations and/or calling upon a stable of former managers and advisors when necessary, described in greater detail under the heading "Proposed Business" elsewhere in this prospectus. Effecting a Business Combination We will either (1) seek stockholder approval of our initial business combination at a meeting called for such purpose at which stockholders may seek to convert their shares, regardless of whether they vote for or against the proposed business combination, into their pro rata share of the aggregate amount then on deposit in the trust account (net of taxes payable), or (2) provide our stockholders with the opportunity to sell their shares to us by means of a tender offer (and thereby avoid the need for a stockholder vote) for an amount equal to their pro rata share of the aggregate amount then on deposit in the trust account (net of taxes payable), in each case subject to the limitations described herein. The decision as to whether we will seek stockholder approval of our proposed business combination or allow stockholders to sell their shares to us in a tender offer will be made by us, solely in our discretion, and will be based on a variety of factors such as the timing of the transaction and whether the terms of the transaction would otherwise require us to seek stockholder approval. Unlike other blank check companies which require stockholder votes and conduct proxy solicitations in conjunction with their initial business combinations and related conversions of public shares for cash upon consummation of such initial business combinations even when a vote is not required by law, we will have the flexibility to avoid such stockholder vote and allow our stockholders to sell their shares pursuant to the tender offer rules of the Securities and Exchange Commission, or SEC. In that case, we will file tender offer documents with the SEC which will contain substantially the same financial and other information about the initial business combination as is required under the SEC s proxy rules. We will consummate our initial business combination only if we have net tangible assets of at least $5,000,001 upon such consummation and, if we seek stockholder approval, a majority of the outstanding shares of common stock voted are voted in favor of the business combination. We will have until 18 months from the closing of this offering to consummate an initial business combination. If we are unable to consummate an initial business combination within such time period, we will, as promptly as reasonably possible but not more than ten business days thereafter, redeem 100% of the outstanding public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including any interest earned on the funds held in the trust account and net of interest that may be used by us to pay our franchise and income taxes payable, divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders rights as stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law and as further described herein, and then seek to dissolve and liquidate. We expect the pro rata redemption price to be approximately $10.00 per share of Class A common stock (regardless of whether or not the underwriters exercise their over-allotment option), without taking into account any interest earned on such funds. However, we cannot assure you that we will in fact be able to distribute such amounts as a result of claims of creditors which may take priority over the claims of our public stockholders. So long as we obtain and maintain a listing for our securities on NASDAQ, our initial business combination must occur with one or more target businesses that together have a fair market value of at least 80% of the assets held in the trust account (excluding taxes payable on the income earned on the trust account) at the time of the agreement to enter into the initial business combination. The fair market value of the target or targets will be determined by our board of directors based upon one or more standards generally accepted by the financial community (such as actual and potential sales, earnings, cash flow and/or book value). Even though our board of directors will rely on generally accepted standards, our board of directors will have discretion to select the standards employed. In addition, the application of the standards generally involves a substantial degree of judgment. Accordingly, investors will be relying on the business judgment of the board of directors in evaluating the fair market value of the target or targets. The proxy solicitation materials or tender offer documents used by us in connection with any proposed transaction will provide public stockholders with our analysis of the fair market value of the target business, as well as the basis for our determinations. If our board is not able independently to determine the fair market value of the target business or businesses, we will obtain an opinion from an independent investment banking firm, or another independent entity that commonly renders valuation opinions on the type of target business we are seeking to acquire, with respect to the satisfaction of such criteria. We currently anticipate structuring a business combination to acquire 100% of the equity interests or assets of the target business or businesses. We may, however, structure our initial business combination where we merge directly with the target business or where we acquire less than 100% of such interests or assets of the target business in order to meet certain objectives of the target management team or stockholders or for other reasons, but we will only complete such business combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act of 1940, as amended, or the Investment Company Act. Even if the post-transaction company owns or acquires 50% or more of the voting securities of the target, our stockholders prior to the business combination may collectively own a minority interest in the post-transaction company, depending on valuations ascribed to the target and us in the business combination transaction. For example, we could pursue a transaction in which we issue a substantial number of new shares in exchange for all of the outstanding capital stock of a target. In this case, we could acquire a 100% controlling interest in the target; however, as a result of the issuance of a substantial number of new shares, our stockholders immediately prior to our initial business combination could own less than a majority of our outstanding shares subsequent to our initial business combination. If less than 100% of the equity interests or assets of a target business or businesses are owned or acquired by the post-transaction company, the portion of such business or businesses that is owned or acquired is what will be valued for purposes of the 80% fair market value test. We are not prohibited from consummating an initial business combination with an entity that is affiliated with any of our sponsor, officers or directors so long as we have obtained an opinion from an independent investment banking firm, or another independent entity that commonly renders valuation opinions on the type of target business we are seeking to acquire, and the approval of a majority of our disinterested independent directors that the business combination is fair to our unaffiliated stockholders from a financial point of view. As more fully discussed in "Management — Conflicts of Interest", if any of our officers or directors becomes aware of a business combination opportunity that falls within the line of business of any entity to which he has fiduciary or contractual obligations, he may be required to present such business combination opportunity to such entity prior to presenting such business combination opportunity to us. Certain of our directors currently have, and any of our officers or directors may in the future have, certain relevant fiduciary duties or contractual obligations. Our executive officers and directors have agreed not to participate in the formation of, or become an officer or director of, any other special purpose acquisition company with a class of securities registered under the Exchange Act until we have entered into a definitive agreement regarding our initial business combination or we have failed to complete our initial business combination within the required time period. JOBS Act We are an emerging growth company as defined in the Jumpstart Our Business Startups Act of 2012 (which we refer to herein as the JOBS Act) and will remain such for up to five years. However, if our non-convertible debt issued within a three year period exceeds $1 billion or our total revenues exceed $1.07 billion, or the market value of our shares of common stock that are held by non-affiliates exceeds $700 million on the last day of the second fiscal quarter of any given fiscal year, we would cease to be an emerging growth company as of the following fiscal year. As an emerging growth company, we have elected, under Section 107(b) of the JOBS Act, to take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended, or the Securities Act, for complying with new or revised accounting standards. Private Placements to Initial Stockholder In September 2017, our sponsor purchased an aggregate of 1,437,500 shares of our Class B common stock, which we refer to throughout this prospectus as the "founders shares," for an aggregate purchase price of $25,000, or approximately $0.017 per share. The founders shares include an aggregate of up to 187,500 shares subject to forfeiture to the extent that the underwriters over-allotment option is not exercised in full or in part, so that our initial stockholder will continue to own 20.0% of our issued and outstanding shares after this offering (assuming such stockholder does not purchase units in this offering and not including the shares of Class A common stock underlying the founders units). The shares of Class B common stock will automatically convert into shares of Class A common stock at the time of our initial business combination on a one-for-one basis, subject to adjustment as provided herein. In the case that additional shares of Class A common stock, or equity-linked securities, are issued or deemed issued in excess of the amounts offered in this prospectus and related to the closing of the business combination, the ratio at which shares of Class B common stock shall convert into shares of Class A common stock will be adjusted (unless the holders of a majority of the outstanding shares of Class B common stock agree to waive such adjustment with respect to any such issuance or deemed issuance) so that the number of shares of Class A common stock issuable upon conversion of all shares of Class B common stock will equal, in the aggregate, on an as-converted basis, 20% of the total number of all shares of common stock outstanding upon completion of this offering (not including the shares of Class A common stock underlying the founders units plus all shares of Class A common stock and equity-linked securities issued or deemed issued in connection with the business combination, excluding any shares or equity-linked securities issued, or to be issued, to any seller in the business combination or pursuant to units (and their underlying securities) issued to our sponsor upon conversion of working capital loans, after taking into account any shares of Class A common stock redeemed in connection with the business combination). Holders of the Class B common stock and holders of the Class A common stock will vote together as a single class on all matters submitted to a vote of our stockholders, except as required by law. MTech Sponsor LLC, which we refer to throughout this prospectus as our "sponsor" or "initial stockholder," has committed to purchase from us an aggregate of 225,000 units, or "founders units," at $10.00 per unit (for a total purchase price of $2,250,000) in a private placement that will close simultaneously with the closing of this offering. Our sponsor has also agreed that if the over-allotment option is exercised by the underwriters in full or in part, it will purchase from us additional founders units (up to a maximum of 18,750 founders units) at a price of $10.00 per founders unit in an amount that is necessary to maintain in the trust account at $10.00 per unit sold to the public in this offering. These additional founders units will be purchased in a private placement that will occur simultaneously with the purchase of units resulting from the exercise of the over-allotment option. The founders units are identical to the units sold in this offering except that the warrants underlying the founders units (the "founders warrants"): (i) will not be redeemable by us and (ii) may be exercised for cash or on a cashless basis, as described in this prospectus, so long as they are held by our sponsor or any of its permitted transferees. The proceeds from the private placement of the founders units will be added to the proceeds of this offering and placed in a U.S.-based trust account at JPMorgan Chase Bank, N.A. with Continental Stock Transfer & Trust Company, as trustee. If we do not complete an initial business combination within 18 months from the closing of this offering, the proceeds from the sale of the founders units will be included in the liquidating distribution to our public stockholders and the founders warrants will expire worthless. Our executive offices are located at 10124 Foxhurst Court, Orlando, Florida 32836 and our telephone number is (407) 345-8332. The Offering Securities offered 5,000,000 units, at $10.00 per unit, each unit consisting of one share of Class A common stock and one warrant. Listing of our securities and proposed symbols We anticipate the units, and the shares of Class A common stock and warrants once they begin separate trading, will be listed on Nasdaq under the symbols "MTECU," "MTEC" and "MTECW," respectively. Trading commencement and separation of Class A common stock and redeemable warrants The units will begin trading on or promptly after the date of this prospectus. The Class A common stock and redeemable warrants comprising the units will begin separate trading on the 90th day following the date of this prospectus unless EarlyBirdCapital, Inc. informs us of its decision to allow earlier separate trading, subject to our having filed the Current Report on Form 8-K described below and having issued a press release and filed a Current Report on Form 8-K announcing when such separate trading will begin. Once the shares of Class A common stock and warrants commence separate trading, holders will have the option to continue to hold units or separate their units into the component pieces. Holders will need to have their brokers contact our transfer agent in order to separate the units into shares of Class A common stock and warrants. In no event will the Class A common stock and warrants be traded separately until we have filed a Current Report on Form 8-K with the SEC containing an audited balance sheet reflecting our receipt of the gross proceeds at the closing of this offering. We will file the Current Report on Form 8-K promptly after the closing of this offering, which is anticipated to take place three business days from the date of this prospectus. If the underwriters over-allotment option is exercised following the initial filing of such Current Report on Form 8-K, a second or amended Current Report on Form 8-K will be filed to provide updated financial information to reflect the exercise of the underwriters over-allotment option. We will also include the Form 8-K, or amendment thereto, or in a subsequent Form 8-K, information indicating if EarlyBirdCapital, Inc. has allowed separate trading of the Class A common stock and warrants prior to the 90th day after the date of this prospectus. Units: Number outstanding before this offering 0 units Number outstanding after this offering and private placement 5,225,000 units Shares of common stock: Number outstanding before this offering 1,437,500 shares(1) Number to be outstanding after this offering and private placement 6,475,000 shares(2)(3) Redeemable Warrants: Number outstanding before this offering 0 warrants Number to be outstanding after this offering and private placement 5,225,000 warrants Exercisability Each warrant is exercisable for one share of Class A common stock. The warrants will become exercisable on the later of 30 days after the completion of an initial business combination and 12 months from the closing of this offering. The warrants will expire at 5:00 p.m., New York City time, on the fifth anniversary of our completion of an initial business combination, or earlier upon redemption. The period of time from the date the warrants will first become exercisable until the expiration of the warrants shall hereafter be referred to as the "exercise period." Exercise price $11.50. No warrants will be exercisable for cash unless we have an effective and current registration statement covering the shares of Class A common stock issuable upon exercise of the warrants and a current prospectus relating to such shares of Class A common stock. Notwithstanding the foregoing, if a registration statement covering the shares of Class A common stock issuable upon exercise of the warrants is not effective within a specified period following the consummation of our initial business combination, warrant holders may, until such time as there is an effective registration statement and during any period when we shall have failed to maintain an effective registration statement, exercise warrants on a cashless basis pursuant to the exemption provided by Section 3(a)(9) of the Securities Act of 1933, as amended, or the Securities Act, provided that such exemption is available. If that exemption, or another exemption, is not available, holders will not be able to exercise their warrants on a cashless basis. (1)This number includes an aggregate of up to 187,500 founders shares that are subject to forfeiture if the over-allotment option is not exercised by the underwriters in full. Founders shares are classified as shares of Class B common stock, which shares will automatically convert into shares of Class A common stock at the time of our initial business combination on a one-for-one basis, subject to adjustment as described below adjacent to the caption "Founders shares conversion and anti-dilution rights." (2)Assumes the over-allotment option has not been exercised and an aggregate of 187,500 founders shares have been forfeited. (3)Excludes the securities underlying the underwriters unit purchase option. Redemption and Amendment We may redeem the outstanding warrants (excluding the founders warrants and any other warrants underlying units we may issue to our sponsor, officers or directors upon conversion of working capital loans as described in this prospectus, but including any outstanding warrants issued upon exercise of the unit purchase option issued to EarlyBirdCapital and/or its designees) in whole and not in part, at a price of $0.01 per warrant at any time during the exercise period, upon a minimum of 30 days prior written notice of redemption, if, and only if, the last sales price of our shares of common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations and recapitalizations) for any 20 trading days within a 30 trading day period ending three business days before we send the notice of redemption; and if, and only if, there is a current registration statement in effect with respect to the shares of Class A common stock underlying such warrants. If the foregoing conditions are satisfied and we issue a notice of redemption, each warrant holder can exercise his, her or its warrant prior to the scheduled redemption date. However, the price of the shares of common stock may fall below the $18.00 trigger price as well as the $11.50 warrant exercise price after the redemption notice is issued. If we call the warrants for redemption as described above, our management will have the option to require all holders that wish to exercise warrants to do so on a "cashless basis." In such event, each holder would pay the exercise price by surrendering the warrants for that number of shares of Class A common stock equal to the quotient obtained by dividing (x) the product of the number of shares of Class A common stock underlying the warrants, multiplied by the difference between the exercise price of the warrants and the "fair market value" (defined below) by (y) the fair market value. The "fair market value" shall mean the average reported last sale price of the shares of Class A common stock for the five trading days ending on the third trading day prior to the date on which the notice of redemption is sent to the holders of warrants. Our warrants will be issued in registered form under a warrant agreement between Continental Stock Transfer & Trust Company, as warrant agent, and us. The warrant agreement provides that the terms of the warrants may be amended without the consent of any holder to cure any ambiguity or correct any defective provision. The warrant agreement requires the approval by the holders of at least 50% of the then outstanding warrants in order to make any change that adversely affects the interests of the registered holders. Securities purchased, or being purchased, by insiders Our initial stockholder has purchased an aggregate of 1,437,500 founders shares for an aggregate purchase price of $25,000, or approximately $0.017 per share. The 1,437,500 founders shares includes an aggregate of up to 187,500 shares of Class B common stock subject to forfeiture to the extent that the over-allotment option is not exercised by the underwriters in full or in part. The initial stockholder will be required to forfeit only a number of shares of Class B common stock necessary to continue to maintain the 20.0% ownership interest in our shares of common stock after giving effect to the offering (not including the shares of Class A common stock underlying the founders units) and exercise, if any, of the underwriters over-allotment option. The initial stockholder has agreed (A) to vote any shares owned by it in favor of any proposed business combination and (B) not to convert any shares in connection with a stockholder vote to approve a proposed initial business combination or sell any shares to us in a tender offer in connection with a proposed initial business combination. Furthermore, the founders shares are automatically convertible into shares of our Class A common stock at the time of our initial business combination on a one-for-one basis, subject to adjustment pursuant to certain anti-dilution rights, as described in more detail below under the heading "Founders shares conversion and anti-dilution rights." Our sponsor has committed to purchase from us an aggregate of 225,000 units, or "founders units," at $10.00 per unit (for a total purchase price of $2,250,000) in a private placement that will close simultaneously with the closing of this offering. Our sponsor has also agreed that if the over-allotment option is exercised by the underwriters in full or in part, it will purchase from us additional founders units (up to a maximum of 18,750 founders units) at a price of $10.00 per founders unit in an amount that is necessary to maintain in the trust account at $10.00 per unit sold to the public in this offering. These additional founders units will be purchased in a private placement that will occur simultaneously with the purchase of units resulting from the exercise of the over-allotment option. The amounts to be paid upon consummation of the private placement will be placed in escrow with our counsel prior to the consummation of this offering. The founders units are identical to the units sold in this offering except that the underlying founders warrants: (i) will not be redeemable by us and (ii) may be exercised for cash or on a cashless basis, as described in this prospectus, so long as they are held by our sponsor or any of its permitted transferees. If the founders warrants are held by holders other than our sponsor or any of its permitted transferees, the founders warrants will be redeemable by us and exercisable by the holders on the same basis as the warrants included in the units being sold in this offering. In the event of a liquidation prior to our initial business combination, the founders warrants will expire worthless. Restrictions on transfer of founders shares and founders units On the date of this prospectus, the founders shares will be placed into an escrow account maintained in New York, New York by Continental Stock Transfer & Trust Company, acting as escrow agent. Subject to certain limited exceptions, 50% of these shares will not be transferred, assigned, sold or released from escrow until one year after the date of the consummation of our initial business combination or earlier if, subsequent to our business combination, the last sales price of our common stock equals or exceeds $12.50 per share (as adjusted for stock splits, stock dividends, reorganizations and recapitalizations) for any 20 trading days within any 30-trading day period, and the remaining 50% of these shares will not be transferred, assigned, sold or released from escrow until one year after the date of the consummation of our initial business combination. The limited exceptions include transfers, assignments or sales (i) to our officers, directors, consultants, advisors or their affiliates, (ii) to an entity s members, (iii) to relatives and trusts for estate planning purposes, (iv) by virtue of the laws of descent and distribution upon death, (v) pursuant to a qualified domestic relations order, (vi) to us for no value for cancellation in connection with the consummation of our initial business combination, or (vii) by private sales made at or prior to the consummation of a business combination at prices no greater than the price at which the shares were originally purchased, in each case (except for clause (vi) or with our prior consent) where the transferee agrees to the terms of the escrow agreement and to be bound by these transfer restrictions. Our sponsor has also agreed not to transfer, assign or sell any of the founders units, shares of Class A common stock underlying the founders units, or founders warrants, including the Class A common stock issuable upon exercise of the founders warrants (except in connection with the same limited exceptions that the founders shares may be transferred as described above), until after the completion of our initial business combination. Founders shares conversion and anti-dilution rights The shares of Class B common stock will automatically convert into shares of Class A common stock at the time of our initial business combination on a one-for-one basis, subject to adjustment as provided herein. In the case that additional shares of Class A common stock, or equity-linked securities, are issued or deemed issued in excess of the amounts offered in this prospectus and related to the closing of the business combination, the ratio at which shares of Class B common stock shall convert into shares of Class A common stock will be adjusted (unless the holders of a majority of the outstanding shares of Class B common stock agree to waive such adjustment with respect to any such issuance or deemed issuance) so that the number of shares of Class A common stock issuable upon conversion of all shares of Class B common stock will equal, in the aggregate, on an as-converted basis, 20% of the total number of all shares of common stock outstanding upon the completion of this offering (not including the shares of Class A common stock underlying the founders units) plus all shares of Class A common stock and equity-linked securities issued or deemed issued in connection with the business combination, excluding any shares or equity-linked securities issued, or to be issued, to any seller in the business combination or pursuant to units (and their underlying securities) issued to our sponsor upon conversion of working capital loans, after taking into account any shares of Class A common stock redeemed in connection with the business combination. The term "equity-linked securities" refers to any debt or equity securities that are convertible, exercisable or exchangeable for shares of Class A common stock issued in a financing transaction in connection with our initial business combination, including but not limited to a private placement of equity or debt. Securities could be "deemed issued" for purposes of the conversion rate adjustment if such shares are issuable upon the conversion or exercise of convertible securities, warrants or similar securities. Voting Holders of the Class B common stock and holders of the Class A common stock will vote together as a single class on all matters submitted to a vote of our stockholders, except as required by law. Each share of common stock shall have one vote. Offering proceeds to be held in trust $50,000,000, or $57,500,000 if the over-allotment option is exercised in full, of net proceeds of this offering and the sale of the founders units will be placed in a U.S. — based trust account at JPMorgan Chase Bank, N.A., maintained by Continental Stock Transfer & Trust Company, New York, New York, as trustee, or $10.00 per public unit (regardless of whether or not the over-allotment option is exercised in full or part) pursuant to an agreement to be signed on the date of this prospectus. Except as set forth below, the proceeds held in the trust account will not be released until the earlier of the completion of an initial business combination and our redemption of 100% of the outstanding public shares if we have not completed a business combination in the required time period. Therefore, unless and until an initial business combination is consummated, the proceeds held in the trust account will not be available for our use for any expenses related to this offering or expenses which we may incur related to the investigation and selection of a target business and the negotiation of an agreement to acquire a target business. Notwithstanding the foregoing, there can be released to us from the trust account any interest earned on the funds in the trust account that we need to pay our franchise and income taxes and up to $15,000 of any remaining interest for any liquidation expenses. With these exceptions, expenses incurred by us may be paid prior to a business combination only from the net proceeds of this offering not held in the trust account (initially estimated to be $500,000); provided, however, that in order to meet our working capital needs following the consummation of this offering if the funds not held in the trust account are insufficient, our sponsor, officers, directors or their affiliates may, but are not obligated to, loan us funds, from time to time or at any time, in whatever amount they deem reasonable in their sole discretion. Each loan would be evidenced by a promissory note. The notes would either be paid upon consummation of our initial business combination, without interest, or, at the holder s discretion, up to $1,500,000 of the notes may be converted into units at a price of $10.00 per unit. These units would be identical to the founders units. If we do not complete a business combination, the loans will be forgiven. None of the warrants may be exercised until the later of 30 days after the consummation of a business combination or 12 months from the closing of this offering and, thus, after the proceeds of the trust account have been disbursed. Accordingly, the warrant exercise price will be paid directly to us and not placed in the trust account. Limited payments to insiders There will be no fees, reimbursements or other cash payments paid to our sponsor, officers, directors or their affiliates for any services they render prior to, or in order to effectuate the consummation of, an initial business combination (regardless of the type of transaction that it is) other than the following payments, none of which will be made from the proceeds of this offering held in the trust account prior to the completion of our initial business combination: repayment at the closing of an aggregate of $130,000 of advances made by our sponsor; payment of an aggregate of $10,000 per month to our sponsor for office space and related services; and reimbursement of out-of-pocket expenses incurred by them in connection with certain activities on our behalf, such as identifying and investigating possible target businesses and business combinations. There is no limit on the amount of out-of-pocket expenses reimbursable by us. Our audit committee will review and approve all reimbursements and payments made to our sponsor, officers, directors or our or their respective affiliates, with any interested director abstaining from such review and approval. Stockholder approval of, or tender offer in connection with, initial business combination In connection with any proposed initial business combination, we will either (1) seek stockholder approval of such initial business combination at a meeting called for such purpose at which stockholders may seek to convert their shares, regardless of whether they vote for or against the proposed business combination, into their pro rata share of the aggregate amount then on deposit in the trust account (net of taxes payable), or (2) provide our stockholders with the opportunity to sell their shares to us by means of a tender offer (and thereby avoid the need for a stockholder vote) for an amount equal to their pro rata share of the aggregate amount then on deposit in the trust account (net of taxes payable), in each case subject to the limitations described herein. If we determine to engage in a tender offer, such tender offer will be structured so that each stockholder may tender any or all of his, her or its shares rather than some pro rata portion of his, her or its shares. If enough stockholders tender their shares so that we are unable to satisfy any applicable closing condition set forth in the definitive agreement related to our initial business combination, or we are unable to maintain net tangible assets of at least $5,000,001 upon such consummation, we will not consummate such initial business combination. The decision as to whether we will seek stockholder approval of a proposed business combination or will allow stockholders to sell their shares to us in a tender offer will be made by us, solely in our discretion, and will be based on a variety of factors such as the timing of the transaction and whether the terms of the transaction would otherwise require us to seek stockholder approval. Unlike other blank check companies which require stockholder votes and conduct proxy solicitations in conjunction with their initial business combinations and related conversions of public shares for cash upon consummation of such initial business combinations even when a vote is not required by law, we will have the flexibility to avoid such stockholder vote and allow our stockholders to sell their shares pursuant to Rule 13e-4 and Regulation 14E of the Securities Exchange Act of 1934, as amended, or Exchange Act, which regulate issuer tender offers. In that case, we will file tender offer documents with the SEC which will contain substantially the same financial and other information about the initial business combination as is required under the SEC s proxy rules. We will consummate our initial business combination only if we have net tangible assets of at least $5,000,001 upon such consummation and, if we seek stockholder approval, a majority of the outstanding shares of common stock voted are voted in favor of the business combination. We chose our net tangible asset threshold of $5,000,001 to ensure that we would avoid being subject to Rule 419 promulgated under the Securities Act. However, if we seek to consummate an initial business combination with a target business that imposes any type of working capital closing condition or requires us to have a minimum amount of funds available from the trust account upon consummation of such initial business combination, we may need to have more than $5,000,001 in net tangible assets upon consummation and this may force us to seek third party financing which may not be available on terms acceptable to us or at all. As a result, we may not be able to consummate such initial business combination and we may not be able to locate another suitable target within the applicable time period, if at all. Our sponsor has agreed (i) to vote any founders shares and shares of Class A common stock underlying the founders units in favor of any proposed business combination, (ii) not to convert any such shares in connection with a stockholder vote to approve a proposed initial business combination and (iii) not to sell any such shares to us in a tender offer in connection with any proposed business combination. As a result, we would need only 1,762,501, or approximately 35.3%, of the 5,000,000 public shares sold in this offering to be voted in favor of a transaction in order to have our initial business combination approved (assuming the over-allotment option is not exercised and all shares were present and entitled to vote at the meeting). Any permitted transferees of such securities will be subject to the same obligations as our sponsor. None of our sponsor, officers, directors or their affiliates has indicated any intention to purchase units in this offering or any units or shares of Class A common stock from persons in the open market or in private transactions. However, if we hold a meeting to approve a proposed business combination and a significant number of stockholders vote, or indicate an intention to vote, against a proposed business combination, our sponsor, officers, directors or their affiliates could make such purchases in the open market or in private transactions, either before or after we mail a proxy statement related to the proposed business combination, in order to influence any vote held to approve a proposed initial business combination. Notwithstanding the foregoing, our officers, directors, sponsor and their affiliates will not make purchases of shares of Class A common stock if the purchases would violate Section 9(a)(2) or Rule 10b-5 of the Exchange Act, which are rules designed to stop potential manipulation of a company s stock. Conversion rights In connection with any stockholder meeting called to approve a proposed initial business combination, each public stockholder will have the right, regardless of whether he is voting for or against such proposed business combination, to demand that we convert his shares into a pro rata share of the trust account. We may also require public stockholders seeking conversion, whether they are a record holder or hold their shares in "street name," to either (i) physically tender their certificates to our transfer agent or (ii) deliver their shares to the transfer agent electronically using Depository Trust Company s DWAC (Deposit/Withdrawal At Custodian) System, at the holder s option, in each case prior to a date set forth in the proxy materials sent in connection with the proposal to approve the business combination. The requirement for physical or electronic delivery prior to the meeting ensures that a holder s election to convert his shares is irrevocable once the business combination is approved. There is a nominal cost associated with this tendering process and the act of certificating the shares or delivering them through the DWAC system. The transfer agent will typically charge the tendering broker $45 and it would be up to the broker whether or not to pass this cost on to the converting holder. We will consummate our initial business combination only if we have net tangible assets of at least $5,000,001 upon such consummation. In connection with any proposed business combination, a target business could impose a working capital closing condition or require us to have a higher minimum amount of funds available from the trust account upon consummation of such initial business combination. As a result, the foregoing may limit the number of shares that we can have converted and still consummate such business combination. Liquidation if no business combination If we are unable to complete an initial business combination by 18 months from the closing of this offering, we will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem 100% of the outstanding public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including any interest not previously released to us but net of interest that may be used by us to pay our franchise and income taxes payable, including dissolution expenses, divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders rights as stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject (in the case of (ii) and (iii) above) to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. We cannot assure you that we will have funds sufficient to pay or provide for all creditors claims. Although we are required to use our reasonable best efforts to have all third parties (including any vendors or other entities we engage after this offering) and any prospective target businesses enter into agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the trust account, there is no guarantee that they will execute such agreements. There is also no guarantee that the third parties would not challenge the enforceability of these waivers and bring claims against the trust account for monies owed them. Our Chairman, Steven Van Dyke, has agreed that he will be personally liable to ensure that the proceeds in the trust account are not reduced below $10.00 per share by the claims of target businesses or claims of vendors or other entities that are owed money by us for services rendered or contracted for or products sold to us, but we cannot assure you that he will be able to satisfy his indemnification obligations if he is required to do so. Additionally, the agreement entered into by Mr. Van Dyke specifically provides for two exceptions to the indemnity he has given: he will have no liability (1) as to any claimed amounts owed to a target business or vendor or other entity who has executed an agreement with us waiving any right, title, interest or claim of any kind they may have in or to any monies held in the trust account, or (2) as to any claims for indemnification by the underwriters of this offering against certain liabilities, including liabilities under the Securities Act. We have not independently verified whether Mr. Van Dyke has sufficient funds to satisfy his indemnity obligations and we have not asked Mr. Van Dyke to reserve for such indemnification obligations. The holders of the founders shares or shares of Class A common stock underlying the founders units will not participate in any redemption distribution from our trust account with respect to such founders shares. If we are unable to conclude an initial business combination and we expend all of the net proceeds of this offering not deposited in the trust account, we expect that the initial per-share redemption price will be approximately $10.00 (not taking into account any interest earned on the funds held in the trust account and not released to us to pay our franchise and income taxes payable and used to pay dissolution expenses). The proceeds deposited in the trust account could, however, become subject to claims of our creditors that are in preference to the claims of our stockholders. In addition, if we are forced to file a bankruptcy case or an involuntary bankruptcy case is filed against us that is not dismissed, the proceeds held in the trust account could be subject to applicable bankruptcy law, and may be included in our bankruptcy estate and subject to the claims of third parties with priority over the claims of our stockholders. Therefore, we cannot assure you that the actual per-share redemption price will not be less than approximately $10.00. We will pay the costs of any subsequent liquidation from our remaining assets outside of the trust account and interest earned on the funds held in the trust account that we are permitted to withdraw to pay such expenses. Potential amendments to charter Our amended and restated certificate of incorporation provides that any of the provisions related to our pre-business combination activity (which are contained in Article Six of our amended and restated certificate of incorporation, a copy of which has been filed as an exhibit to the registration statement of which this prospectus forms a part, and include, among other items, the requirement to submit any proposed business combination to stockholders for approval or provide all our public stockholders the ability to tender their shares to us, to allow our public stockholders to have their shares redeemed for cash in connection with any proposed business combination and the time period in which we must consummate our initial business combination), may be amended if approved by holders of a majority of our outstanding common stock entitled to vote thereon, subject to applicable provisions of the Delaware General Corporation Law, or DGCL, or applicable stock exchange rules. Our sponsor, executive officers, and directors have agreed, pursuant to a written agreement with us, that they will not propose any amendment to our amended and restated certificate of incorporation (i) to modify the substance or timing of our obligation to redeem 100% of our public shares if we do not complete our initial business combination within 18 months from the closing of this offering or (ii) with respect to any other provision relating to stockholders rights or pre-business combination activity as discussed above, unless in each case we provide our public stockholders with the opportunity to redeem their shares of common stock upon approval of any such amendment at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest (which interest shall be net of taxes payable) divided by the number of then outstanding public shares. This redemption right shall apply in the event of the approval of any such amendment, whether proposed by our sponsor, any executive officer, director or any other person. However, we may not redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001 upon the consummation of our initial business combination (so that we are not subject to the SEC s "penny stock" rules). If this optional redemption right is exercised with respect to an excessive number of public shares such that we cannot satisfy the net tangible asset requirement (described above), we would not proceed with the amendment or the related redemption of our public shares at such time. Risks In making your decision on whether to invest in our securities, you should take into account the special risks we face as a blank check company, as well as the fact that this offering is not being conducted in compliance with Rule 419 promulgated under the Securities Act, and, therefore, you will not be entitled to protections normally afforded to investors in Rule 419 blank check offerings. For additional information concerning how Rule 419 blank check offerings differ from this offering, please see "Proposed Business — Comparison to offerings of blank check companies subject to Rule 419." You should carefully consider these and the other risks set forth in the section entitled "Risk Factors" beginning on page 22 of this prospectus. In addition, an investment in this offering may result in uncertain United States federal income tax consequences. For instance, because there are no authorities that directly address instruments similar to the units we are issuing in this offering, the allocation an investor makes with respect to the purchase price of the unit between the share of common stock and the warrant to purchase one share of common stock included in each unit could be challenged by the Internal Revenue Service (the "IRS") or the courts. Furthermore, the United States federal income tax consequences of a cashless exercise of a warrant included in the units is unclear under current law. Finally, it is unclear whether the redemption rights with respect to our shares of common stock suspend the running of a U.S. holder s holding period for purposes of determining whether any gain or loss realized by such holder on the sale or exchange of common stock is long-term capital gain or loss and for determining whether any dividend we pay would be considered "qualified dividends" for federal income tax purposes. See the section titled "Material U.S. Federal Tax Considerations" for a summary of the principal United States federal income tax consequences of an investment in our securities. Prospective investors are urged to consult their tax advisors with respect to these and other tax consequences when purchasing, holding or disposing of our securities. You should carefully consider these and the other risks set forth in the section entitled "Risk Factors".
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+this prospectus. As this is a summary, it does not contain all of the information that you should consider in making an investment decision. You should read this entire prospectus carefully, including the information under the section of this prospectus entitled "Risk Factors" and our financial statements and the related notes included elsewhere in this prospectus, before investing. Unless otherwise stated in this prospectus, or the context otherwise requires, references to: "we," "us," "company" or "our company" are to Nebula Acquisition Corporation; "public shares" are to shares of our Class A common stock sold as part of the units in this offering (whether they are purchased in this offering or thereafter in the open market); "public stockholders" are to the holders of our public shares, including our initial stockholders and management team to the extent our initial stockholders and/or members of our management team purchase public shares, provided that each initial stockholder s and member of our management team s status as a "public stockholder" shall only exist with respect to such public shares; "management" or our "management team" are to our off cers and directors; "sponsor" are to Nebula Holdings, LLC, a Delaware limited liability company; True Wind Capital LP, is the sole managing member of our sponsor; Mr. Greene and Mr. Clammer, our co-Chief Executive Officers, are the managing members of True Wind Capital GP, LLC, the General Partner of True Wind Capital L.P. "initial stockholders" are to holders of our founder shares prior to this offering; "True Wind Capital" are to True Wind Capital Management, LLC, our advisor and an affiliate of our sponsor; "common stock" are to our Class A common stock and our Class B common stock, collectively; "founder shares" are to shares of our Class B common stock initially purchased by our sponsor in a private placement prior to this offering, and the shares of our Class A common stock issued upon the conversion thereof as provided herein; "public warrants" are to our redeemable warrants sold as part of the units in this offering (whether they are purchased in this offering or thereafter in the open market) and to any private placement warrants or warrants issued upon conversion of working capital loans that are sold to third parties that are not initial purchasers or executive officers or directors (or permitted transferees) following the consummation of our initial business combination; "private placement warrants" are to the warrants issued to our sponsor in a private placement simultaneously with the closing of this offering; "warrants" are to our redeemable warrants, which includes the public warrants as well as the private placement warrants to the extent such private placement warrants are no longer held by the initial purchasers or their permitted transferees. "equity-linked securities" are to any securities of our company which are convertible into or exchangeable or exercisable for, common stock of our company; and "specified future issuance" are to an issuance of a class of equity or equity-linked securities to specified purchasers, which may include affiliates of True Wind Capital, that we may determine to make in connection with financing our initial business combination. 1 Each unit consists of one share of Class A common stock and one-third of one warrant for each unit purchased. Each whole warrant entitles the holder thereof to purchase one share of our Class A common stock at a price of $11.50 per share, subject to adjustment as described in this prospectus, and only whole warrants are exercisable. No fractional warrants will be issued upon separation of the units and only whole warrants will trade. Accordingly, unless you purchase at least three units, you will not be able to receive or trade a whole warrant. Registered trademarks referred to in this prospectus are the property of their respective owners. Unless we tell you otherwise, the information in this prospectus assumes that the underwriters will not exercise their over-allotment option. 2 PROPOSED BUSINESS Overview We are a newly organized blank check company incorporated as a Delaware corporation and formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses, which we refer to throughout this prospectus as our initial business combination. We have not selected any potential business combination target and we have not, nor has anyone on our behalf, initiated any substantive discussions, directly or indirectly, with any potential business combination target. True Wind Capital Management, LLC, a technology-focused private investment firm, referred to herein as True Wind Capital, is our advisor and the advisor of True Wind Capital, L.P. Our sponsor is a vehicle formed to effect a portfolio investment by True Wind Capital, L.P. We intend to capitalize on the ability of our management team and the broader True Wind Capital platform to identify, acquire, and operate a business in the technology and technology-enabled services sectors that may provide opportunities for attractive long-term risk-adjusted returns, though we reserve the right to pursue an acquisition opportunity in any business or industry. True Wind Capital True Wind Capital is a San Francisco-based private equity firm managing $558 million as of October 2017 that is focused on investing in leading technology companies in the lower middle-market and middle-market with a broad mandate including software, IT services, internet, semiconductors, industrial technology, and hardware. True Wind Capital is a value-added partner, providing support and expertise that is rooted in its teams 75+ years of collective investing experience. True Wind Capital currently has a team of ten full-time investment professionals with deep technology investing expertise. We are a portfolio investment held in True Wind Capital s sole investment fund, True Wind Capital, L.P., which has provided all of the risk capital to fund our launch. As such, we will utilize True Wind Capital s platform to provide complete access to its team, deal prospects, and network, along with any necessary resources to aid in the identification, diligence, and operational support of a target for the initial business combination. True Wind Capital s principals, including our Co-Chairmen and Co-Chief Executive Officers, Mr. Adam H. Clammer and Mr. James H. Greene, Jr., who are also the founding partners of True Wind Capital, have fiduciary responsibility to dedicate substantially all their business time to the affairs and portfolio companies of its investment fund and, as a portfolio investment within True Wind Capital s fund, we should receive substantial time and support from the True Wind Capital platform. Business Strategy Our business strategy is to utilize True Wind Capital s existing investment identification and evaluation platform to identify and complete our initial business combination with a company that our management believes, with proper utilization of our network and experience, has compelling potential for value creation through our involvement. Mr. Clammer and Mr. Greene, with the support of the True Wind Capital team, will leverage their long-standing partnership, vast investment experience, deep network and technology industry expertise to identify and generate attractive acquisition opportunities among lower middle-market and middle-market technology companies with overall transaction values between $500 million and $2.5 billion. To the extent the purchase price for any acquisition to be paid in cash exceeds the net proceeds available to us, we may issue debt or equity to consummate the acquisition. Such additional financing may come in the form of bank financings or preferred equity, common equity or debt offerings or a combination of the foregoing. We believe their experience and track record, along with True Wind Capital s disciplined direct sourcing and thematic research approach, are particularly differentiated, and will 3 enable us to successfully identify and execute an initial business combination. We will leverage True Wind Capital s extensive network of relationships, ranging from senior executives at public and private companies to financial advisory firms around the globe, to assist in the identification of a target for the initial business combination. True Wind Capital intends to dedicate its time and resources to conduct diligence in an effort to complete an initial business combination. True Wind Capital and our management team has experience in: Operating companies, setting and changing strategies, and identifying, mentoring and recruiting exceptional talent; Developing and growing companies, both organically and through strategic transactions and acquisitions, and expanding the product range and geographic footprint of a number of target businesses; Investing in leading private and public technology companies to accelerate their growth and maturation; Sourcing, structuring, acquiring, and selling businesses; Accessing the capital markets, including financing businesses and helping companies transition to public ownership; and Fostering relationships with sellers, capital providers and target management teams. Market Opportunity We intend to identify and acquire a business within the technology and technology-enabled services sectors with an overall transaction value between $500 million and $2.5 billion. We believe that these sectors represent attractive target markets given the size, breadth and prospects for growth, with global information technology spending over $3.0 trillion in 2016 and expected to grow an average of 3.3% annually through 2021. Further, we believe that the market landscape is both wide and deep, comprising over 6,000 potential target companies and divisions of large businesses across more than 300 independent, niche markets (defined as individual subsectors with individual total addressable markets, market participants, industry trends, management teams, and companies) within the technology industry in the United States alone. We believe that this large, fragmented ecosystem creates a compelling opportunity for us to identify, build relationships with, and create opportunities to complete an initial business combination with, very attractive companies. Additionally, we believe that technology has become, and will continue to be, a core component of every economic sector. As technology continues to propagate across different functional departments within an organization, the need for additional technology solutions will increase, expanding the addressable market for technology companies. Acquisition Criteria We will seek to identify companies that have compelling growth potential and a combination of the following characteristics. We will use these criteria and guidelines in evaluating acquisition opportunities, but we may decide to enter our initial business combination with a target business that does not meet these criteria and guidelines. We intend to acquire companies or assets that we believe have the following attributes: Large and growing market. We will focus on investments in industry segments that we believe demonstrate attractive long-term growth prospects and reasonable overall size or potential; Attractive, inherently profitable business with high operating leverage. We will seek to invest in companies that we believe possess not only established business models and sustainable competitive advantages, but also inherently profitable unit economics; 4 Strong management teams. We will spend significant time assessing a company s leadership and personnel and evaluating what we can do to augment and/or upgrade the team over time if needed; Opportunity for operational improvements. We will seek to identify businesses that we believe are stable but at an inflection point and would benefit from our ability to drive improvements in the company s processes, go-to-market strategy, product or service offering, sales and marketing efforts, geographical presence and/or leadership team; Differentiated products or services. We will evaluate metrics such as recurring revenues, product life cycle, cohort consistency, pricing per product or customer, cross-sell success and churn rates to focus on businesses whose products or services are differentiated or where we see an opportunity to create value by implementing best practices; Compelling growth prospects. We view growth as an important driver of value and will seek companies whose growth potential can generate meaningful upside; Minimal technology risk. We will seek to invest in companies that have established market-tested product or service offerings; and Appropriate valuations. We will seek to be a disciplined and valuation-centric investor that will invest on terms that we believe provide significant upside potential with limited downside risk. These criteria are not intended to be exhaustive. Any evaluation relating to the merits of a particular initial business combination may be based, to the extent relevant, on these general guidelines as well as other considerations, factors and criteria that our management may deem relevant. Our Management Team Our management team is led by our Co-Chairmen and Co-Chief Executive Officers, Mr. Clammer and Mr. Greene, who are also the founding partners of True Wind Capital, who have worked together for over twenty years and who, collectively, have more than 50 years of private equity investing experience. We believe that they constitute one of the longest standing and most successful partnerships in technology private equity investing. Prior to founding True Wind Capital, Mr. Clammer and Mr. Greene were founding partners of the Kohlberg Kravis Roberts & Co. ("KKR") Global Technology Group in 2004. At KKR, Mr. Clammer and Mr. Greene played a major role in over 30 platform investments with total transaction values in excess of $75 billion and more than $15 billion of invested equity, and were involved in investments across geographies, through a variety of different structures and amidst diverse economic cycles. These investments included some of the largest and most complex private equity deals in the technology industry. Success at this level requires the highest degree of diligence, financial and market analyses, process management, structuring abilities, operational knowhow and investment acumen. As pioneers in the technology private equity industry, Mr. Clammer and Mr. Greene were required to build the KKR platform organically. This included: (i) building an exceptional investment team; (ii) creating and fostering relationships with industry leaders and bankers; (iii) formulating and executing new investment theses; (iv) developing and refining due diligence processes appropriate for highly technical businesses and markets; and (v) building networks of operating executives and knowledgeable advisors to rely on for investment input and portfolio management support. More recently, and without the benefit of the KKR brand, Mr. Clammer and Mr. Greene launched True Wind Capital, creating another exceptional team and raising a $558 million first time fund. Holding its final close in January 2017, True Wind Capital has already completed control-stake, private equity investments in three technology companies to date. 5 Our management team is supported by True Wind Capital s team of investment professionals who each have meaningful technology-related private equity investing experience and possess extensive experience in corporate finance, mergers and acquisitions, equity and debt capital markets, strategic consulting, and operations. We believe that True Wind Capital s operating expertise, transaction experience, and relationships will provide us with a substantial number of attractive potential business combination targets. See the section of this prospectus entitled "Management" for a more complete description of our management team s experience. The past performance of our management team or of True Wind Capital is not a guarantee either (i) of success with respect to any business combination we may consummate or (ii) that we will be able to identify a suitable candidate for our initial business combination. Our officers and directors have not had management experience with special purpose acquisition corporations in the past. You should not rely on the historical record of our management s performance as indicative of our future performance. Initial Business Combination Our initial business combination must occur with one or more target businesses that together have an aggregate fair market value of at least 80% of the assets held in the trust account (excluding the deferred underwriting commissions and taxes payable on the income earned on the trust account) at the time of the agreement to enter into the initial business combination. If our board is not able to independently determine the fair market value of the target business or businesses, we will obtain an opinion from an independent investment banking firm that is a member of the Financial Industry Regulatory Authority, or FINRA, or an independent accounting firm with respect to the satisfaction of such criteria. Our stockholders may not be provided with a copy of such opinion, nor will they be able to rely on such opinion. We may, at our option, pursue an acquisition opportunity jointly with one or more entities affiliated with True Wind Capital and/or one or more investors in funds managed by True Wind Capital, which we refer to as an "Affiliated Joint Acquisition." Any such parties may co-invest with us in the target business at the time of our initial business combination, or we could raise additional proceeds to complete the acquisition by issuing to such parties a class of equity or equity-linked securities. We refer to this potential future issuance, or a similar issuance to other specified purchasers, as a "specified future issuance" throughout this prospectus. The amount and other terms and conditions of any such specified future issuance would be determined at the time thereof. We are not obligated to make any specified future issuance and may determine not to do so. This is not an offer for any specified future issuance. Pursuant to the anti-dilution provisions of our Class B common stock, any such specified future issuance would result in an adjustment to the conversion ratio such that our initial stockholders and their permitted transferees, if any, would retain their aggregate percentage ownership at 20% of the sum of the total number of all shares of common stock outstanding upon completion of this offering plus all shares issued in the specified future issuance, unless the holders of a majority of the then-outstanding shares of Class B common stock agreed to waive such adjustment with respect to the specified future issuance at the time thereof. We cannot determine at this time whether a majority of the holders of our Class B common stock at the time of any such specified future issuance would agree to waive such adjustment to the conversion ratio. If such adjustment is not waived, the specified future issuance would not reduce the percentage ownership of holders of our Class B common stock, but would reduce the percentage ownership of holders of our Class A common stock. If such adjustment is waived, the specified future issuance would reduce the percentage ownership of holders of both classes of our common stock. 6 Our Acquisition Process True Wind Capital believes that conducting comprehensive due diligence on prospective investments is particularly important within the technology industry. We will utilize the diligence, rigor, and expertise of True Wind Capital s platform to evaluate potential targets strengths, weaknesses, and opportunities to identify the relative risk and return profile of any potential target for our initial business combination. Given our management team s extensive tenure investing in technology companies, we will often be familiar with the prospective target s end-market, competitive landscape and business model. In evaluating a prospective initial business combination, we expect to conduct a thorough diligence review that will encompass, among other things, meetings with incumbent management and employees, document reviews, inspection of facilities, financial analyses and technology reviews, as well as a review of other information that will be made available to us. We are not prohibited from pursuing an initial business combination with a company that is affiliated with True Wind Capital, our sponsor, our officers, or our directors, subject to certain approvals and consents. In the event we seek to complete our initial business combination with a company that is affiliated with True Wind Capital, our sponsor, officers or directors, we, or a committee of independent directors, will obtain an opinion from an independent investment banking firm which is a member of FINRA or an independent accounting firm that our initial business combination is fair to us from a financial point of view. Currently, we are not aware of an affiliate of True Wind Capital that would make a suitable target for our initial business combination. We currently do not have any specific targets for an initial business combination selected. Our officers and directors have not contacted nor had any discussions with possible target businesses in which they directly or indirectly proposed or encouraged a potential target to consider a possible combination with us. Certain of our officers and directors are employed by or affiliated with True Wind Capital. True Wind Capital is continuously made aware of potential investment opportunities, one or more of which we may desire to pursue for a business combination, but we have not (nor has anyone on our behalf) contacted any prospective target business or had any discussions, formal or otherwise, with respect to a business combination transaction with any prospective target business. We have not (nor have any of our agents or affiliates) been approached by any candidates (or representative of any candidates) with respect to a possible business combination with us. Each of our officers and directors presently has, and any of them in the future may have additional, fiduciary or contractual obligations to other entities pursuant to which such officer or director is or will be required to present a business combination opportunity. Accordingly, if any of our officers or directors becomes aware of a business combination opportunity which is suitable for an entity to which he or she has then-current fiduciary or contractual obligations, he or she will honor his or her fiduciary or contractual obligations to present such opportunity to such entity. In addition, we may, at our option, pursue an Affiliated Joint Acquisition opportunity with an entity to which an officer or director has a fiduciary or contractual obligation. Any such entity may co-invest with us in the target business at the time of our initial business combination, or we could raise additional proceeds to complete the acquisition by making a specified future issuance to any such entity. Our amended and restated certificate of incorporation will provide that we renounce our interest in any corporate opportunity offered to any director or officer unless such opportunity is expressly offered to such person solely in his or her capacity as a director or officer of our company and such opportunity is one we are legally and contractually permitted to undertake and would otherwise be reasonable for us to pursue. Our sponsor and officers have agreed not to become an officer or director of any other special purpose acquisition company with a class of securities registered under the Securities Exchange Act of 1934, as amended, or the Exchange Act, until we have entered into a definitive agreement regarding our initial business combination or we have failed to complete our initial business combination within 24 months after the closing of this offering. 7 Corporate Information Our executive offices are located at Four Embarcadero Center, Suite 2350, San Francisco, CA 94111, and our telephone number is (415) 780-9975. We are an "emerging growth company," as defined in Section 2(a) of the Securities Act of 1933, as amended, or the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. As such, we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not "emerging growth companies" including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. If some investors find our securities less attractive as a result, there may be a less active trading market for our securities and the prices of our securities may be more volatile. In addition, Section 107 of the JOBS Act also provides that an "emerging growth company" can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an "emerging growth company" can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We intend to take advantage of the benefits of this extended transition period. We will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of this offering, (b) in which we have total annual gross revenue of at least $1.07 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our Class A common stock that is held by non-affiliates exceeds $700 million as of the prior June 30th, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period. References herein to "emerging growth company" shall have the meaning associated with it in the JOBS Act. 8 The Offering In making your decision on whether to invest in our securities, you should take into account not only the backgrounds of the members of our management team, but also the special risks we face as a blank check company and the fact that this offering is not being conducted in compliance with Rule 419 promulgated under the Securities Act. You will not be entitled to protections normally afforded to investors in Rule 419 blank check offerings. You should carefully consider these and the other risks set forth in the section of this prospectus entitled "Risk Factors." Securities offered 25,000,000 units, at $10.00 per unit, each unit consisting of: one share of Class A common stock; and one-third of one warrant. Proposed NASDAQ symbols Units: "NEBU.U" Class A Common Stock: "NEBU" Warrants: "NEBU.W" Trading commencement and separation of Class A common stock and warrants The units will begin trading on or promptly after the date of this prospectus. The Class A common stock and warrants comprising the units will begin separate trading on the 52nd day following the date of this prospectus unless Deutsche Bank Securities Inc. and Goldman Sachs & Co. LLC as representatives of the several underwriters (the "Representatives") inform us of their decision to allow earlier separate trading, subject to our having filed the Current Report on Form 8-K described below and having issued a press release announcing when such separate trading will begin. Once the shares of Class A common stock and warrants commence separate trading, holders will have the option to continue to hold units or separate their units into the component securities. Holders will need to have their brokers contact our transfer agent in order to separate the units into shares of Class A common stock and warrants. No fractional warrants will be issued upon separation of the units and only whole warrants will trade. Accordingly, unless you purchase at least three units, you will not be able to receive or trade a whole warrant. Separate trading of the Class A common stock and warrants is prohibited until we have filed a Current Report on Form 8-K In no event will the Class A common stock and warrants be traded separately until we have filed a Current Report on Form 8-K with the SEC containing an audited balance sheet reflecting our receipt of the gross proceeds at the closing of this offering. We will file the Current Report on Form 8-K promptly after the closing of this offering, 9 which is anticipated to take place three business days from the date of this prospectus. If the underwriters over-allotment option is exercised following the initial filing of such Current Report on Form 8-K, a second or amended Current Report on Form 8-K will be filed to provide updated financial information to reflect the exercise of the underwriters over-allotment option. Units: Number outstanding before this offering 0 Number outstanding after this offering 25,000,000(1) Common stock: Number outstanding before this offering 7,187,500 shares of Class B common stock(2)(3) Number outstanding after this offering 31,250,000 shares of Class A common stock and Class B common stock(1)(3) Redeemable Warrants: Number of private placement warrants to be sold in a private placement simultaneously with this offering 4,666,667(1) Number of warrants to be outstanding after this offering and the private placement 13,000,000(1) Exercisability Each whole warrant is exercisable to purchase one share of our Class A common stock and only whole warrants are exercisable. No fractional warrants will be issued upon separation of the units and only whole warrants will trade. Exercise price $11.50 per share, subject to adjustment as described herein. Exercise period The warrants will become exercisable on the later of: 30 days after the completion of our initial business combination, or 12 months from the closing of this offering; ____________ (1) Assumes no exercise of the underwriters over-allotment option and the forfeiture by our sponsor of 937,500 founder shares. (2) Includes up to 937,500 shares that are subject to forfeiture by our sponsor depending on the extent to which the underwriters over-allotment option is exercised. (3) The shares of common stock included in the units are Class A common stock. Founder shares are classified as shares of Class B common stock, which shares are convertible into shares of our Class A common stock on a one-for-one basis, subject to adjustment as described below adjacent to the caption "Founder shares conversion and anti-dilution." 10 provided in each case that we have an effective registration statement under the Securities Act covering the shares of Class A common stock issuable upon exercise of the warrants and a current prospectus relating to them is available (or we permit holders to exercise their warrants on a cashless basis under the circumstances specified in the warrant agreement). We are not registering the shares of Class A common stock issuable upon exercise of the warrants at this time. However, we have agreed that as soon as practicable, but in no event later than 15 business days after the closing of our initial business combination, we will use our reasonable best efforts to file, and within 60 business days following our initial business combination to have declared effective, a registration statement covering the shares of Class A common stock issuable upon exercise of the warrants, to maintain a current prospectus relating to those shares of Class A common stock until the warrants expire or are redeemed; provided, that if our Class A common stock is at the time of any exercise of a warrant not listed on a national securities exchange such that it satisfies the definition of a "covered security" under Section 18(b)(1) of the Securities Act, we may, at our option, require holders of public warrants who exercise their warrants to do so on a "cashless basis" in accordance with Section 3(a)(9) of the Securities Act and, in the event we so elect, we will not be required to file or maintain in effect a registration statement, but we will be required to use our best efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available. The warrants will expire at 5:00 p.m., New York City time, five years after the completion of our initial business combination or earlier upon redemption or liquidation. On the exercise of any warrant, the warrant exercise price will be paid directly to us and not placed in the trust account. Redemption of warrants Once the warrants become exercisable, we may redeem the outstanding warrants (except as described herein with respect to the private placement warrants): in whole and not in part; at a price of $0.01 per warrant; upon a minimum of 30 days prior written notice of redemption, which we refer to as the 30-day redemption period; and 11 if, and only if, the last sale price of our Class A common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which we send the notice of redemption to the warrant holders. We will not redeem the warrants unless a registration statement under the Securities Act covering the shares of Class A common stock issuable upon exercise of the warrants is effective and a current prospectus relating to those shares of Class A common stock is available throughout the 30-day redemption period, except if the warrants may be exercised on a cashless basis and such cashless exercise is exempt from registration under the Securities Act. If and when the warrants become redeemable by us, we may exercise our redemption right even if we are unable to register or qualify the underlying securities for sale under all applicable state securities laws. If we call the warrants for redemption as described above, our management will have the option to require all holders that wish to exercise warrants to do so on a "cashless basis." In determining whether to require all holders to exercise their warrants on a "cashless basis," our management will consider, among other factors, our cash position, the number of warrants that are outstanding and the dilutive effect on our stockholders of issuing the maximum number of shares of Class A common stock issuable upon the exercise of our warrants. In such event, each holder would pay the exercise price by surrendering the warrants for that number of shares of Class A common stock equal to the quotient obtained by dividing (x) the product of the number of shares of Class A common stock underlying the warrants, multiplied by the excess of the "fair market value" (defined below) over the exercise price of the warrants by (y) the fair market value. The "fair market value" shall mean the average reported last sale price of the Class A common stock for the 10 trading days ending on the third trading day prior to the date on which the notice of redemption is sent to the holders of warrants. Please see the section of this prospectus entitled "Description of Securities—Redeemable Warrants—Public Stockholders Warrants" for additional information. None of the private placement warrants will be redeemable by us so long as they are held by the sponsor or its permitted transferees. 12 Founder shares In October 2017, our sponsor acquired 7,187,500 founder shares for an aggregate purchase price of $25,000. In December 2017 and January 2018, our sponsor agreed to transfer 25,000 founder shares to each of our independent director nominees, at the original per share purchase price. The 100,000 founder shares held by our independent director nominees shall not be subject to forfeiture in the event the underwriters over-allotment option is not exercised. Prior to the initial investment in the company of $25,000 by our sponsor, the company had no assets, tangible or intangible. The per share purchase price of the founder shares was determined by dividing the amount of cash contributed to the company by the aggregate number of founder shares issued. The number of founder shares issued was determined based on the expectation that the founder shares would represent 20% of the outstanding shares after this offering. As such, our initial stockholders will collectively own 20% of our issued and outstanding shares after this offering (assuming they do not purchase any units in this offering). If we increase or decrease the size of the offering, we will effect a stock dividend or share contribution back to capital, as applicable, with respect to our Class B common stock immediately prior to the consummation of this offering in such amount as to maintain the ownership of our initial stockholders prior to this offering at 20% of the issued and outstanding shares of our common stock upon the consummation of this offering. Up to 937,500 founder shares will be subject to forfeiture by our sponsor depending on the extent to which the underwriters over-allotment option is exercised so that our initial stockholders will maintain ownership of 20% of our common stock after this offering. The founder shares are identical to the shares of Class A common stock included in the units being sold in this offering, except that: the founder shares are shares of Class B common stock that automatically convert into shares of our Class A common stock at the time of our initial business combination, or at any time prior thereto at the option of the holder, on a one-for-one basis, subject to adjustment pursuant to certain anti-dilution rights, as described herein; the founder shares are subject to certain transfer restrictions, as described in more detail below; 13 our sponsor, officers and directors have entered into a letter agreement with us, pursuant to which they have agreed (i) to waive their redemption rights with respect to any founder shares and any public shares held by them in connection with the completion of our initial business combination and (ii) to waive their rights to liquidating distributions from the trust account with respect to any founder shares held by them if we fail to complete our initial business combination within 24 months from the closing of this offering, although they will be entitled to liquidating distributions from the trust account with respect to any public shares they hold if we fail to complete our business combination within the prescribed time frame. If we submit our initial business combination to our public stockholders for a vote, we will complete our initial business combination only if a majority of the outstanding shares of common stock voted are voted in favor of the initial business combination. Our initial stockholders have agreed to vote any founder shares held by them and any public shares purchased during or after this offering in favor of our initial business combination. As a result, in addition to our initial stockholders founder shares, we would need 9,375,001, or 37.5%, of the 25,000,000 public shares sold in this offering to be voted in favor of a transaction (assuming all outstanding shares are voted) in order to have our initial business combination approved (assuming the over-allotment option is not exercised); and the founder shares are subject to registration rights. Transfer restrictions on founder shares Our initial stockholders have agreed not to transfer, assign or sell any of their founder shares until the earlier to occur of: (A) one year after the completion of our initial business combination or (B) subsequent to our initial business combination, (x) if the last sale price of our Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after our initial business combination, or (y) the date on which we complete a liquidation, merger, capital stock exchange or other similar transaction that results in all of our stockholders having the right to exchange their shares of common stock for cash, securities or other property (except as described herein under the section of this prospectus entitled "Principal Stockholders—Restrictions on Transfers of Founder Shares and Private Placement Warrants"). We refer to such transfer restrictions throughout this prospectus as the lock-up. 14 Founder shares conversion and anti-dilution rights The shares of Class B common stock will automatically convert into shares of our Class A common stock at the time of our initial business combination on a one-for-one basis, subject to adjustment for stock splits, stock dividends, reorganizations, recapitalizations and the like, and subject to further adjustment as provided herein. In the case that additional shares of Class A common stock, or equity-linked securities, are issued or deemed issued in excess of the amounts offered in this prospectus and related to the closing of the initial business, including pursuant to a specified future issuance, the ratio at which shares of Class B common stock shall convert into shares of Class A common stock will be adjusted (unless the holders of a majority of the outstanding shares of Class B common stock agree to waive such adjustment with respect to any such issuance or deemed issuance, including a specified future issuance) so that the number of shares of Class A common stock issuable upon conversion of all shares of Class B common stock will equal, in the aggregate, on an as-converted basis, 20% of the sum of the total number of all shares of common stock outstanding upon the completion of this offering plus all shares of Class A common stock and equity-linked securities issued or deemed issued in connection with the initial business combination (excluding any shares or equity-linked securities issued, or to be issued, to any seller in the business combination). Holders of founder shares may also elect to convert their shares of Class B common stock into an equal number of shares of Class A common stock, subject to adjustment as provided above, at any time. Voting Holders of the Class A common stock and holders of the Class B common stock will vote together as a single class on all matters submitted to a vote of our stockholders, except as required by law. Each share of common stock will have one vote on all such matters. Private placement warrants Our sponsor has committed, pursuant to a written agreement, to purchase an aggregate of 4,666,667 private placement warrants (or 5,166,667 if the over-allotment option is exercised in full), each exercisable to purchase one share of our Class A common stock at $11.50 per share, at a price of $1.50 per whole warrant (approximately $7,000,000 in the aggregate or approximately $7,750,000 in the aggregate if the over-allotment option is exercised in full) in a private placement that will occur simultaneously with the closing of this offering. Each whole private placement warrant is exercisable for one whole share of our Class A common stock at $11.50 per share. 15 A portion of the purchase price of the private placement warrants will be added to the proceeds from this offering to be held in the trust account such that at the time of closing $250.0 million (or $287.5 million if the underwriters exercise their over-allotment option in full) will be held in the trust account. If we do not complete our initial business combination within 24 months from the closing of this offering, the proceeds from the sale of the private placement warrants held in the trust account will be used to fund the redemption of our public shares (subject to the requirements of applicable law) and the private placement warrants will expire worthless. The private placement warrants will be non-redeemable and exercisable on a cashless basis so long as they are held by the sponsor or its permitted transferees. If the private placement warrants are held by holders other than the sponsor or its permitted transferees, the private placement warrants will be redeemable by us and exercisable by the holders on the same basis as the warrants included in the units being sold in this offering. Transfer restrictions on private placement warrants The private placement warrants (including the Class A common stock issuable upon exercise of the private placement warrants) will not be transferable, assignable or salable until 30 days after the completion of our initial business combination (except as described under the section of this prospectus entitled "Principal Stockholders—Restrictions on Transfers of Founder Shares and Private Placement Warrants"). Cashless exercise of private placement warrants If holders of private placement warrants elect to exercise them on a cashless basis, they would pay the exercise price by surrendering their warrants for that number of shares of Class A common stock equal to the quotient obtained by dividing (x) the product of the number of shares of Class A common stock underlying the warrants, multiplied by the excess of the "fair market value" (defined below) over the exercise price of the warrants by (y) the fair market value. The "fair market value" shall mean the average reported last sale price of the Class A common stock for the 10 trading days ending on the third trading day prior to the date on which the notice of warrant exercise is sent to the warrant agent. The reason that we have agreed that these warrants will be exercisable on a cashless basis so long as they are held by the sponsor or its permitted transferees is because it is not known at this time whether they will be affiliated with us following a business combination. If they remain affiliated with us, their ability to sell our securities in the open market will be significantly limited. We expect to have policies in place that prohibit insiders from selling our securities except during specific periods of time. Even during such periods of time when insiders will be permitted to sell our securities, an insider cannot 16 trade in our securities if he or she is in possession of material non-public information. Accordingly, unlike public stockholders who could sell the shares of Class A common stock issuable upon exercise of the warrants freely in the open market, the insiders could be significantly restricted from doing so. As a result, we believe that allowing the holders to exercise such warrants on a cashless basis is appropriate. Proceeds to be held in trust account The rules of NASDAQ provide that at least 90% of the gross proceeds from this offering and the sale of the private placement warrants be deposited in a trust account. Of the net proceeds of this offering and the sale of the private placement warrants, $250,000,000, or $10.00 per unit ($287,500,000, or $10.00 per unit, if the underwriters over-allotment option is exercised in full) will be placed into a U.S.-based trust account at Deutsche Bank Trust Company Americas, with American Stock Transfer & Trust Company acting as trustee. These proceeds include $8,750,000 (or $10,062,500 if the underwriters over-allotment option is exercised in full) in deferred underwriting commissions. Except with respect to interest earned on the funds held in the trust account that may be released to us to pay our franchise and income tax obligations and up to $500,000 of interest which may be released to us for working capital purposes, the proceeds from this offering and the sale of the private placement warrants will not be released from the trust account until the earliest of (a) the completion of our initial business combination, (b) the redemption of any public shares properly submitted in connection with a stockholder vote to amend our amended and restated certificate of incorporation to modify the substance or timing of our obligation to redeem 100% of our public shares if we do not complete our initial business combination within 24 months from the closing of this offering and (c) the redemption of our public shares if we are unable to complete our business combination within 24 months from the closing of this offering, subject to applicable law. The proceeds deposited in the trust account could become subject to the claims of our creditors, if any, which could have priority over the claims of our public stockholders. Anticipated expenses and funding sources Except as described above with respect to the payment of taxes and release of funds for working capital purposes, unless and until we complete our initial business combination, no proceeds held in the trust account will be available for our use. The proceeds held in the trust account will be invested only in U.S. government securities with a maturity of 180 days or less or in money market funds meeting certain conditions 17 under Rule 2a-7 under the Investment Company Act which invest only in direct U.S. government treasury obligations. We will disclose in each quarterly and annual report filed with the SEC prior to our initial business combination whether the proceeds deposited in the trust account are invested in U.S. government treasury obligations or money market funds or a combination thereof. Based upon a current interest rate of .94%, we expect the trust account to generate approximately $2,350,000 of interest annually. Unless and until we complete our initial business combination, we may pay our expenses only from: the net proceeds of this offering and the sale of the private placement warrants not held in the trust account, which will be approximately $1,250,000 in working capital after the payment of approximately $750,000 in expenses relating to this offering; and any loans or additional investments from our sponsor, members of our management team or their affiliates or other third parties, although they are under no obligation to advance funds or invest in us, and provided that any such loans will not have any claim on the proceeds held in the trust account unless such proceeds are released to us upon completion of our initial business combination. Conditions to completing our initial business combination There is no limitation on our ability to raise funds privately, including pursuant to any specified future issuance, or through loans in connection with our initial business combination. Our initial business combination must occur with one or more target businesses that together have an aggregate fair market value of at least 80% of our assets held in the trust account (excluding the deferred underwriting commissions and taxes payable on the income earned on the trust account) at the time of the agreement to enter into the initial business combination. If our board is not able to independently determine the fair market value of the target business or businesses or we are considering an initial business combination with an affiliated entity, we will obtain an opinion from an independent investment banking firm that is a member of FINRA or an independent accounting firm. We anticipate structuring our initial business combination so that the post-transaction company in which our public stockholders own shares will own or acquire 100% of the equity interests or assets of the target business or businesses. We may, however, structure our initial business combination such that the post-transaction company owns or acquires less than 100% of such interests or assets of the target business in order to meet 18 certain objectives of the target management team or stockholders or for other reasons, including an Affiliated Joint Acquisition. However, we will only complete such business combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires an interest in the target sufficient for the post-transaction company not to be required to register as an investment company under the Investment Company Act. Even if the post-transaction company owns or acquires 50% or more of the voting securities of the target, our stockholders prior to the business combination may collectively own a minority interest in the post business combination company, depending on valuations ascribed to the target and us in the business combination transaction. If less than 100% of the equity interests or assets of a target business or businesses are owned or acquired by the post-transaction company, the portion of such business or businesses that is owned or acquired is what will be valued for purposes of the 80% of net assets test, provided that in the event that the business combination involves more than one target business, the 80% of net assets test will be based on the aggregate value of all of the target businesses and we will treat the target businesses together as the initial business combination for purposes of a tender offer or for seeking stockholder approval, as applicable. Permitted purchases of public shares by our affiliates If we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our initial business combination pursuant to the tender offer rules, our initial stockholders, directors, officers, advisors or their affiliates may purchase shares in privately negotiated transactions or in the open market either prior to or following the completion of our initial business combination. There is no limit on the number of shares our sponsor, directors, officers, advisors or their affiliates may purchase in such transactions, subject to compliance with applicable law and the rules of NASDAQ. However, they have no current commitments, plans or intentions to engage in such transactions and have not formulated any terms or conditions for any such transactions. If they engage in such transactions, they will not make any such purchases when they are in possession of any material nonpublic information not disclosed to the seller or if such purchases are prohibited by Regulation M under the Securities Exchange Act of 1934, as amended, or the Exchange Act. We do not currently anticipate that such purchases, if any, would constitute a tender offer subject to the tender offer rules under the Exchange Act or a going-private transaction subject to the going-private rules under the Exchange Act; however, if the purchasers determine at the time of any such purchases that the purchases are subject to such rules, the purchasers will comply with such rules. 19 Redemption rights for public stockholders upon completion of our initial business combination We will provide our public stockholders with the opportunity to redeem all or a portion of their public shares upon the completion of our initial business combination at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account as of two business days prior to the consummation of our initial business combination, including interest earned on the funds held in the trust account and not previously released to us to pay our franchise and income taxes and for working capital purposes, divided by the number of then outstanding public shares, subject to the limitations described herein. The amount in the trust account is initially anticipated to be $10.00 per public share. The per-share amount we will distribute to investors who properly redeem their shares will not be reduced by the deferred underwriting commissions we will pay to the underwriters. There will be no redemption rights upon the completion of our initial business combination with respect to our warrants. Our sponsor, officers and directors have entered into a letter agreement with us, pursuant to which they have agreed to waive their redemption rights with respect to any founder shares held by them and any public shares they may acquire during or after this offering in connection with the completion of our business combination or otherwise. Manner of conducting redemptions We will provide our public stockholders with the opportunity to redeem all or a portion of their public shares upon the completion of our initial business combination either (i) in connection with a stockholder meeting called to approve the business combination or (ii) by means of a tender offer. The decision as to whether we will seek stockholder approval of a proposed business combination or conduct a tender offer will be made by us, solely in our discretion, and will be based on a variety of factors such as the timing of the transaction and whether the terms of the transaction would require us to seek stockholder approval under applicable law or stock exchange listing requirements. Asset acquisitions and stock purchases would not typically require stockholder approval, while direct mergers with our company where we do not survive and any transactions where we issue more than 20% of our outstanding common stock or seek to amend our amended and restated certificate of incorporation would require stockholder approval. We intend to conduct redemptions without a stockholder vote pursuant to the tender offer rules of the SEC unless stockholder approval is required by law or stock exchange listing requirements or we choose to seek stockholder approval for business or other legal reasons. So long as we obtain and maintain a listing for our securities on NASDAQ, we will be required to comply with such rules. 20 If a stockholder vote is not required and we do not decide to hold a stockholder vote for business or other legal reasons, we will, pursuant to our amended and restated certificate of incorporation: conduct the redemptions pursuant to Rule 13e-4 and Regulation 14E of the Exchange Act, which regulate issuer tender offers, and file tender offer documents with the SEC prior to completing our initial business combination which contain substantially the same financial and other information about the initial business combination and the redemption rights as is required under Regulation 14A of the Exchange Act, which regulates the solicitation of proxies. Upon the public announcement of our business combination, if we elect to conduct redemptions pursuant to the tender offer rules, we or our sponsor will terminate any plan established in accordance with Rule 10b5-1 under the Exchange Act to purchase shares of our Class A common stock in the open market, in order to comply with Rule 14e-5 under the Exchange Act. In the event that we conduct redemptions pursuant to the tender offer rules, our offer to redeem will remain open for at least 20 business days, in accordance with Rule 14e-1(a) under the Exchange Act, and we will not be permitted to complete our initial business combination until the expiration of the tender offer period. In addition, the tender offer will be conditioned on public stockholders not tendering more than a specified number of public shares, which number will be based on the requirement that we may not redeem public shares in an amount that would cause our net tangible assets to be less than $5,000,001 upon completion of our initial business combination (so that we are not subject to the SEC s "penny stock" rules) or any greater net tangible asset or cash requirement which may be contained in the agreement relating to our initial business combination. If public stockholders tender more shares than we have offered to purchase, we will withdraw the tender offer and not complete the initial business combination. If, however, stockholder approval of the transaction is required by law or stock exchange listing requirements, or we decide to obtain stockholder approval for business or other legal reasons, we will: conduct the redemptions in conjunction with a proxy solicitation pursuant to Regulation 14A of the Exchange Act, which regulates the solicitation of proxies, and not pursuant to the tender offer rules, and file proxy materials with the SEC. 21 If we seek stockholder approval, we will complete our initial business combination only if a majority of the outstanding shares of common stock voted are voted in favor of the business combination. A quorum for such meeting will consist of the holders present in person or by proxy of shares of outstanding capital stock of the company representing a majority of the voting power of all outstanding shares of capital stock of the company entitled to vote at such meeting. Our initial stockholders will count towards this quorum and have agreed to vote their founder shares and any public shares purchased during or after this offering in favor of our initial business combination. For purposes of seeking approval of the majority of our outstanding shares of common stock voted, non-votes will have no effect on the approval of our initial business combination once a quorum is obtained. As a result, in addition to our initial stockholders founder shares, we would need 9,375,001, or 37.5%, of the 25,000,000 public shares sold in this offering to be voted in favor of a transaction (assuming all outstanding shares are voted) in order to have our initial business combination approved (assuming the over-allotment option is not exercised). We intend to give approximately 30 days (but not less than 10 days nor more than 60 days) prior written notice of any such meeting, if required, at which a vote shall be taken to approve our initial business combination. These quorum and voting thresholds, and the voting agreements of our initial stockholders, may make it more likely that we will consummate our initial business combination. Each public stockholder may elect to redeem its public shares irrespective of whether they vote for or against the proposed transaction. We may require our public stockholders seeking to exercise their redemption rights, whether they are record holders or hold their shares in "street name," to either tender their certificates to our transfer agent prior to the date set forth in the tender offer documents or proxy materials mailed to such holders, or up to two business days prior to the vote on the proposal to approve the business combination in the event we distribute proxy materials, or to deliver their shares to the transfer agent electronically. We believe that this will allow our transfer agent to efficiently process any redemptions without the need for further communication or action from the redeeming public stockholders, which could delay redemptions and result in additional administrative cost. If the proposed business combination is not approved and we continue to search for a target company, we will promptly return any certificates delivered, or shares tendered electronically, by public stockholders who elected to redeem their shares. 22 Our amended and restated certificate of incorporation will provide that in no event will we redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001 upon completion of our initial business combination (so that we are not subject to the SEC s "penny stock" rules) or any greater net tangible asset or cash requirement which may be contained in the agreement relating to our initial business combination. For example, the proposed business combination may require: (i) cash consideration to be paid to the target or its owners, (ii) cash to be transferred to the target for working capital or other general corporate purposes or (iii) the retention of cash to satisfy other conditions in accordance with the terms of the proposed business combination. In the event the aggregate cash consideration we would be required to pay for all shares of Class A common stock that are validly submitted for redemption plus any amount required to satisfy cash conditions pursuant to the terms of the proposed business combination exceed the aggregate amount of cash available to us, we will not complete the business combination or redeem any shares, and all shares of Class A common stock submitted for redemption will be returned to the holders thereof. Limitation on redemption rights of stockholders holding 15% or more of the shares sold in this offering if we hold stockholder vote Notwithstanding the foregoing redemption rights, if we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our business combination pursuant to the tender offer rules, our amended and restated certificate of incorporation will provide that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a "group" (as defined under Section 13 of the Exchange Act), will be restricted from redeeming its shares with respect to more than an aggregate of 15% of the shares sold in this offering. We believe the restriction described above will discourage stockholders from accumulating large blocks of shares, and subsequent attempts by such holders to use their ability to redeem their shares as a means to force us or our management to purchase their shares at a significant premium to the then-current market price or on other undesirable terms. Absent this provision, a public stockholder holding more than an aggregate of 15% of the shares sold in this offering could threaten to exercise its redemption rights against a business combination if such holder s shares are not purchased by us or our management at a premium to the then-current market price or on other undesirable terms. By limiting our stockholders ability to redeem to no more than 15% of the shares sold in this offering, 23 we believe we will limit the ability of a small group of stockholders to unreasonably attempt to block our ability to complete our business combination, particularly in connection with a business combination with a target that requires as a closing condition that we have a minimum net worth or a certain amount of cash. However, we would not be restricting our stockholders ability to vote all of their shares (including all shares held by those stockholders that hold more than 15% of the shares sold in this offering) for or against our business combination. Redemption rights in connection with proposed amendments to our certificate of incorporation Some other blank check companies have a provision in their charter which prohibits the amendment of certain charter provisions. Our amended and restated certificate of incorporation will provide that any of its provisions related to pre-business combination activity (including the requirement to deposit proceeds of this offering and the private placement of warrants into the trust account and not release such amounts except in specified circumstances, and to provide redemption rights to public stockholders as described herein) may be amended if approved by holders of 65% of our common stock entitled to vote thereon, and corresponding provisions of the trust agreement governing the release of funds from our trust account may be amended if approved by holders of 65% of our common stock entitled to vote thereon. In all other instances, our amended and restated certificate of incorporation may be amended by holders of a majority of our outstanding common stock entitled to vote thereon, subject to applicable provisions of the Delaware General Corporation Law, or DGCL, or applicable stock exchange rules. We may not issue additional securities that can vote on amendments to our amended and restated certificate of incorporation or in our initial business combination. Our initial stockholders, who will collectively beneficially own 20% of our common stock upon the closing of this offering (assuming they do not purchase any units in this offering), will participate in any vote to amend our amended and restated certificate of incorporation and/or trust agreement and will have the discretion to vote in any manner they choose. Our sponsor, executive officers, and directors have agreed, pursuant to a letter agreement with us (filed as an exhibit to the registration statement of which this prospectus forms a part), that they will not propose any amendment to our amended and restated certificate of incorporation that would modify the substance or timing of our obligation to redeem 100% of our public shares if we do not complete our initial business combination within 24 months from the closing of this offering, unless we provide our public stockholders with the opportunity to redeem their shares 24 of Class A common stock upon approval of any such amendment at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest (which interest shall be net of taxes payable and working capital amounts released to us) divided by the number of then outstanding public shares. Our sponsor, officers and directors have entered into a letter agreement with us pursuant to which they have agreed to waive their redemption rights with respect to any founder shares and any public shares held by them in connection with the completion of our initial business combination. Release of funds in trust account on closing of our initial business combination On the completion of our initial business combination, all amounts held in the trust account will be released to us. We will use these funds to pay amounts due to any public stockholders who exercise their redemption rights as described above under "Redemption rights for public stockholders upon completion of our initial business combination," to pay the underwriters their deferred underwriting commissions, to pay all or a portion of the consideration payable to the target or owners of the target of our initial business combination and to pay other expenses associated with our initial business combination. If our initial business combination is paid for using equity or debt securities, or not all of the funds released from the trust account are used for payment of the consideration in connection with our initial business combination, we may apply the balance of the cash released to us from the trust account for general corporate purposes, including for maintenance or expansion of operations of post-transaction businesses, the payment of principal or interest due on indebtedness incurred in completing our initial business combination, to fund the purchase of other assets, companies or for working capital. Redemption of public shares and distribution and liquidation if no initial business combination Our amended and restated certificate of incorporation provides that we will have only 24 months from the closing of this offering to complete our initial business combination. If we are unable to complete our initial business combination within such time period, we will: (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account including interest earned on the funds held 25 in the trust account and not previously released to us to pay our franchise and income taxes (less up to $500,000 of interest released to us for working capital purposes and $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders rights as stockholders (including the right to receive further liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject in each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. There will be no redemption rights or liquidating distributions with respect to our warrants, which will expire worthless if we fail to complete our business combination within the 24-month time period. Our sponsor, officers and directors have entered into a letter agreement with us, pursuant to which they have waived their rights to liquidating distributions from the trust account with respect to any founder shares held by them if we fail to complete our initial business combination within 24 months from the closing of this offering. However, if our initial stockholders acquire public shares in or after this offering, they will be entitled to liquidating distributions from the trust account with respect to such public shares if we fail to complete our initial business combination within the allotted time period. The underwriters have agreed to waive their rights to their deferred underwriting commission held in the trust account in the event we do not complete our initial business combination and subsequently liquidate and, in such event, such amounts will be included with the funds held in the trust account that will be available to fund the redemption of our public shares. Limited payments to insiders There will be no finder s fees, reimbursements or cash payments made to our sponsor, officers or directors, or our or their affiliates, for services rendered to us prior to or in connection with the completion of our initial business combination. However, the following payments will be made to our sponsor, officers or directors, or our or their affiliates, none of which will be made from the proceeds of this offering held in the trust account prior to the completion of our initial business combination: Repayment of an aggregate of up to $300,000 in loans made to us by our sponsor; 26 Reimbursement for any out-of-pocket expenses related to identifying, investigating and completing an initial business combination; and Repayment of loans which may be made by our sponsor or an affiliate of our sponsor or certain of our officers and directors to finance transaction costs in connection with an intended initial business combination, the terms of which have not been determined nor have any written agreements been executed with respect thereto. Up to $1,500,000 of such loans may be convertible into warrants, at a price of $1.50 per warrant at the option of the lender. The warrants would be identical to the private placement warrants, including as to exercise price, exercisability and exercise period. Our audit committee will review on a quarterly basis all payments that were made to our sponsor, officers or directors, or our or their affiliates. Audit Committee We will establish and maintain an audit committee, which will be composed entirely of independent directors to, among other things, monitor compliance with the terms described above and the other terms relating to this offering. If any noncompliance is identified, then the audit committee will be charged with the responsibility to immediately take all action necessary to rectify such noncompliance or otherwise to cause compliance with the terms of this offering. For more information, see the section of this prospectus entitled "Management—Committees of the Board of Directors—Audit Committee." Conflicts of Interest Although we do not believe any conflict currently exists between us and True Wind Capital, future funds formed and managed by True Wind Capital or its affiliates may compete with us for acquisition opportunities. If such funds decide to pursue an opportunity, we may be precluded from procuring such opportunity. In addition, investment ideas generated within True Wind Capital may be suitable for both us and for a future True Wind Capital fund and may be directed to such investment vehicle rather than to us. Neither True Wind Capital nor members of our management team who are also employed by True Wind Capital will have any obligation to present us with any opportunity for a potential business combination of which they become aware, unless presented to such member specifically in his or her capacity as an officer of the company. True Wind Capital and/or our management, in their capacities as employees of True Wind Capital or in their other endeavors, may be required to present potential business combinations to future True Wind Capital funds, investment vehicles, or third parties, before they present such opportunities to us. 27 Notwithstanding the foregoing, we may, at our option, pursue an Affiliated Joint Acquisition opportunity with any such fund or other investment vehicle. Such entity may co-invest with us in the target business at the time of our initial business combination, or we could raise additional proceeds to complete the acquisition by making a specified future issuance to any such fund or vehicle. Indemnity Our sponsor has agreed that it will be liable to us if and to the extent any claims by a third party for services rendered or products sold to us, or by a prospective target business with which we have discussed entering into a transaction agreement, reduce the amount of funds in the trust account to below (i) $10.00 per public share or (ii) such lesser amount per public share held in the trust account as of the date of the liquidation of the trust account due to reductions in the value of the trust assets, in each case net of the interest which may be withdrawn to pay taxes. This liability will not apply with respect to any claims by a third party who executed a waiver of any and all rights to seek access to the trust account and except as to any claims under our indemnity of the underwriters of this offering against certain liabilities, including liabilities under the Securities Act. Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party, then our sponsor will not be responsible to the extent of any liability for such third party claims. We have not independently verified whether our sponsor has sufficient funds to satisfy its indemnity obligations and believe that our sponsor s only assets are securities of our company. We have not asked our sponsor to reserve for such indemnification obligations. None of our officers will indemnify us for claims by third parties including, without limitation, claims by vendors and prospective target businesses. 28 Risks We are a newly formed company that has conducted no operations and has generated no revenues. Until we complete our initial business combination, we will have no operations and will generate no operating revenues. In making your decision whether to invest in our securities, you should take into account not only the background of our management team, but also the special risks we face as a blank check company. This offering is not being conducted in compliance with Rule 419 promulgated under the Securities Act. Accordingly, you will not be entitled to protections normally afforded to investors in Rule 419 blank check offerings. For additional information concerning how Rule 419 blank check offerings differ from this offering, please see the section of this prospectus entitled "Proposed Business—Comparison of This Offering to Those of Blank Check Companies Subject to Rule 419." You should carefully consider these and the other risks set forth in the section of this prospectus entitled "Risk Factors." 29 Summary Financial Data The following table summarizes the relevant financial data for our business and should be read with our financial statements, which are included in this prospectus. We have not had any significant operations to date, so only balance sheet data is presented. December 31, 2017 Actual As Adjusted Balance Sheet Data: Working capital (deficiency)(1) $ (225,601 ) $ 242,494,318 Total assets(2) $ 244,919 $ 251,244,318 Total liabilities(3)(6) $ 250,601 $ 8,750,000 Value of Class A common stock subject to possible redemption(4) $ — $ 237,494,310 Stockholders equity (deficit)(5) $ (5,682 ) $ 5,000,008 ____________ (1) The "as adjusted" calculation includes $250,000,000 cash held in trust from the proceeds of this offering and the sale of the private placement warrants, plus $1,250,000 in cash held outside the trust account, less $5,682 of actual stockholders deficit as of December 31, 2017, less $8,750,000 of deferred underwriting commissions. (2) The "as adjusted" calculation equals $250,000,000 cash held in trust from the proceeds of this offering and the sale of the private placement warrants, plus $1,250,000 in cash held outside the trust account less $5,682 of actual stockholders deficit as of December 31, 2017. (3) The "as adjusted" calculation includes $8,750,000 of deferred underwriting commissions. (4) The "as adjusted" calculation equals the "as adjusted" total assets, less the "as adjusted" total liabilities, less the "as adjusted" stockholders equity, which is set to approximate the minimum net tangible assets threshold of at least $5,000,001 upon completion of our initial business combination. (5) Excludes 23,749,431 shares of Class A common stock purchased in the public market which are subject to redemption in connection with our initial business combination. The "as adjusted" calculation equals the "as adjusted" total assets, less the "as adjusted" total liabilities, less the value of Class A common stock that may be redeemed in connection with our initial business combination (approximately $10.00 per share). (6) Our sponsor agreed to loan us up to $300,000 to be used for a portion of the expenses of this offering. This amount will be repaid upon the closing of this offering out of the offering proceeds not held in the trust account. As of December 31, 2017, we have borrowed $221,201 under the note. If no business combination is completed within 24 months from the closing of this offering, the proceeds then on deposit in the trust account including interest earned on the funds held in the trust account and not previously released to us to pay our franchise and income taxes (less up to $500,000 of interest released to us for working capital purposes and $100,000 of interest to pay dissolution expenses), will be used to fund the redemption of our public shares. Our sponsor, officers and directors have entered into a letter agreement with us, pursuant to which they have agreed to waive their rights to liquidating distributions from the trust account with respect to any founder shares held by them if we fail to complete our initial business combination within such time period. 30
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+This summary only highlights the more detailed information appearing elsewhere in this prospectus. You should read this entire prospectus carefully, including the information under Risk Factors and our financial statements and the related notes included elsewhere in this prospectus, before investing. Unless otherwise stated in this prospectus or the context otherwise requires, references to: we, us, company or our company are to Iron Horse Acquisition Corp., a Cayman Islands exempted company; CCM are to Cerberus Capital Management, L.P., a founder and an affiliate of our sponsor with whom we have entered into a Co-Investment agreement; Cerberus are to CCM and its affiliated management and general partner entities, operations companies, loans serving companies and other affiliates; Co-Investors are to currently existing and future investment funds, accounts, co-investment vehicles, special purpose vehicles and other entities managed by CCM or its affiliates and/or investors in such funds, accounts, vehicles and other entities, in each case, who, as determined by CCM in its discretion, have the right, but no obligation, to participate in the Co-Investment relating to our initial business combination pursuant to the Co-Investment agreement; Co-Investment agreement are to that certain agreement providing for the sale of the Co-Investment units, for a cash purchase price of $10.00 per unit, to the Co-Investors in a private placement to occur concurrently with the closing of our initial business combination, at the option (without any obligation) of CCM; Co-Investment shares are to Class A ordinary shares to be issued to Co-Investors upon CCM s exercise of its Co-Investment option pursuant to the Co-Investment agreement; Co-Investment units are to the units consisting of one Class A ordinary share and one-third of a redeemable warrant to purchase one Class A ordinary share to be sold to the Co-Investors pursuant to the Co-Investment agreement; Companies Law are to the Companies Law (2016 Revision) of the Cayman Islands as the same may be amended from time to time; equity-linked securities are to any debt or equity securities that are convertible, exercisable or exchangeable for our Class A ordinary shares issued in a financing transaction in connection with our initial business combination, including but not limited to a private placement of equity or debt; Founders are to CCM; Steven F. Mayer, a former senior executive at CCM; and certain current senior executives of CCM; founder shares are to our Class B ordinary shares initially issued to our sponsor in private placements prior to this offering and the Class A ordinary shares that will be issued upon the automatic conversion of the Class B ordinary shares at the time of our initial business combination (for the avoidance of doubt, such Class A ordinary shares will not be public shares ); management or our management team are to our executive officers and directors; ordinary shares are to our Class A ordinary shares and our Class B ordinary shares; private placement warrants are to the warrants to be issued to our sponsor in a private placement simultaneously with the closing of this offering and upon conversion of working capital loans, if any; Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED FEBRUARY 8, 2018 PRELIMINARY PROSPECTUS $300,000,000 Iron Horse Acquisition Corp. 30,000,000 Units Iron Horse Acquisition Corp. is a blank check company newly incorporated by Cerberus Capital Management, L.P. ( CCM ), an affiliate of our Sponsor; Steven F. Mayer, a former senior executive at CCM; and certain current senior executives of CCM for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses, which we refer to as our initial business combination. We have not selected any business combination target and we have not initiated any substantive discussions with any business combination target. This is an initial public offering of our securities. Each unit has an offering price of $10.00 and consists of one Class A ordinary share and one-third of one redeemable warrant. Each whole warrant entitles the holder thereof to purchase one Class A ordinary share at a price of $11.50 per share, subject to adjustment, terms and limitations as described herein. The underwriters have a 45-day option from the date of this prospectus to purchase up to 4,500,000 additional units to cover over-allotments, if any. We will provide our public shareholders with the opportunity to redeem all or a portion of their Class A ordinary shares upon the completion of our initial business combination, subject to the limitations described herein. If we are unable to consummate an initial business combination within 24 months from the closing of this offering, we will redeem 100% of the public shares for cash, subject to applicable law and certain conditions as described herein. Our sponsor, Cerberus Iron Horse Holdings, LLC, has agreed to purchase 5,333,333 warrants (or 6,133,333 warrants if the underwriters over-allotment option is exercised in full), each exercisable to purchase one Class A ordinary share at $11.50 per share, at a price of $1.50 per warrant, in a private placement to occur concurrently with the closing of this offering. Our sponsor currently owns 8,625,000 Class B ordinary shares which will automatically convert into Class A ordinary shares at the time of our initial business combination as described herein. We have entered into an agreement with CCM, a founder and an affiliate of our sponsor, pursuant to which CCM has the right (but not the obligation), on behalf of any currently existing and future investment funds, accounts, co-investment vehicles, special purpose vehicles and other entities managed by CCM or its affiliates and/or investors in such funds, accounts, vehicles and other entities, to co-invest in our initial business combination by having one or more of such entities as it determines (the Co-Investors ) subscribe, pursuant to such agreement, for an aggregate of up to 30,000,000 units, with each unit consisting of one Class A ordinary share and one-third of one redeemable warrant to purchase one Class A ordinary share, for $10.00 per unit, or an aggregate maximum of $300,000,000 (the Co-Investment ). This right will expire upon the mailing of definitive proxy materials related to our initial business combination. If this Co-Investment right is exercised, the Class A ordinary shares that are issued to the Co-Investors will be identical to the Class A ordinary shares included in the units being sold in this offering, except that the Co-Investment shares will be subject to transfer restrictions and certain registration and shareholder rights, as described herein. The warrants that would be issued to the Co-Investors if the Co-Investment right is exercised will be identical to the warrants issued to investors in this offering. Currently, there is no public market for our securities. We have applied to have our units listed on the New York Stock Exchange, or NYSE, under the symbol LOU.U . We cannot guarantee that our securities will be approved for listing. We expect the Class A ordinary shares and warrants comprising the units to begin separate trading on NYSE under the symbols LOU and LOU WS , respectively, on the 52nd day following the date of this prospectus unless the representatives of the underwriters permit earlier separate trading and we have satisfied certain conditions. We are an emerging growth company under applicable federal securities laws and will be subject to reduced public company reporting requirements. Investing in our securities involves a high degree of risk. See Risk Factors beginning on page 41 for a discussion of information that should be considered in connection with an investment in our securities. Investors will not be entitled to protections normally afforded to investors in Rule 419 blank check offerings. Neither the Securities and Exchange Commission (the SEC ) nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. Per Unit Total Public offering price $ 10.00 $ 300,000,000 Underwriting discounts and commissions(1) $ 0.55 $ 16,500,000 Proceeds, before expenses, to us $ 9.45 $ 283,500,000 (1) Includes $0.35 per unit, or $10,500,000 in the aggregate (or $12,075,000 in the aggregate if the underwriters over-allotment option is exercised in full), payable to the underwriters for deferred underwriting commissions to be placed in a trust account located in the United States as described herein and released to the underwriters only upon the completion of an initial business combination. See also Underwriting beginning on page 172 for a description of compensation and other items of value payable to the underwriters. Of the proceeds we receive from this offering and the sale of the private placement warrants described in this prospectus, $300.00 million, or $345.00 million if the underwriters over-allotment option is exercised in full ($10.00 per unit in either case), will be deposited into a trust account with Continental Stock Transfer & Trust Company acting as trustee. The underwriters are offering the units for sale on a firm commitment basis. The underwriters expect to deliver the units to the purchasers on or about , 2018. Citigroup Goldman Sachs & Co. LLC , 2018 Table of Contents public shares are to our Class A ordinary shares sold as part of the units in this offering (whether they are purchased in this offering or thereafter in the open market); public shareholders are to the holders of our public shares, including our sponsor and management team to the extent our sponsor and/or members of our management team purchase public shares, provided that our sponsor s and each member of our management team s status as a public shareholder will only exist with respect to such public shares; and sponsor are to Cerberus Iron Horse Holdings, LLC, a Delaware limited liability company, which is a related party controlled by CCM and owned by Steven F. Mayer and certain current senior executives of CCM. Any forfeiture of shares described in this prospectus will take effect as a surrender of shares for no consideration of such shares as a matter of Cayman Island law. Any conversion of the Class B ordinary shares described in this prospectus will take effect as a compulsory redemption of Class B ordinary shares and an issuance of Class A ordinary shares as a matter of Cayman Islands law. Unless we tell you otherwise, the information in this prospectus assumes that the underwriters will not exercise their over-allotment option. General We are a blank check company newly incorporated as a Cayman Islands exempted company for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses, which we refer to throughout this prospectus as our initial business combination. We have not selected any potential business combination target and we have not, nor has anyone on our behalf, initiated any substantive discussions, directly or indirectly, with any potential business combination target. While the potential business combinations that we intend to seek may provide an opportunity for our Co-Investors to participate pursuant to the terms of the Co-Investment agreement, we may also elect to pursue a transaction in which there is no co-investment. Moreover, we may pursue an acquisition opportunity in any business industry or sector. Our company was founded by Cerberus Capital Management, L.P., an affiliate of our sponsor ( CCM, and together with its affiliated management and general partner entities, operations companies, loan servicing companies and other affiliates, collectively, Cerberus ); Steven F. Mayer, a former senior executive at CCM; and certain current senior executives of CCM (our Founders ). Our company is led by our Chairman and Chief Executive Officer, Mr. Mayer, a former Senior Managing Director of CCM who previously served as Co-Head of Global Private Equity of Cerberus. We believe that we derive significant benefit from our relationship with Cerberus and our Founders. Headquartered in New York, Cerberus is one of the largest and most experienced alternative investment firms in the world, with 14 offices throughout the U.S., Europe and Asia. Since the firm s founding in 1992, Cerberus has pursued special and distressed investment opportunities across various investment strategies, including private equity, global credit (including mortgage securities and assets, non-performing loans, corporate credit and distressed debt and direct lending), and real estate and real estate related debt (including non-performing loans). As of September 30, 2017, Cerberus had over $33.4 billion of assets under management. Although CCM is one of our Founders and our sponsor is therefore affiliated with Cerberus generally, Cerberus will continue to invest its existing managed funds and accounts in private equity and other investment strategies and will raise additional funds and/or successor funds in the future to similarly invest. See Other Considerations below. Table of Contents TABLE OF CONTENTS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2018/CIK0001720587_seriesone_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001720587_seriesone_prospectus_summary.txt
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+PROSPECTUS SUMMARY This summary does not contain all of the information that should be considered before investing in our common stock. Investors should read the entire prospectus carefully, including the more detailed information regarding our business, the risks of purchasing our common stock discussed in this prospectus under "Risk Factors" beginning on page 5 of this prospectus and our financial statements and the accompanying notes beginning on page F-1 of this prospectus. Our Company seriesOne, Inc. (formerly Finfora, Inc. ) was incorporated as a Delaware corporation in July 7, 2017 for the express purpose of marketing our proprietary web hosted financing platform technology to clients who desire to launch online funding portals. We are a financial technology start-up and represent a new generation of online financing technology software solutions. Our turn-key online cloud-based hosted white label financing platform technology, which we refer to as our software platform, enables our clients to launch their own online funding portals under their own domains and branding to facilitate capital raising from private investors by small and medium-sized enterprises, or SME s, for capital intensive projects, referred to as alternative capital . Using our software platform, our clients will operate funding portals on which entrepreneurs, intermediaries, and investors will meet, invest instantaneously and manage their investments in a secure and regulatory compliant online forum that is hosted by seriesOne, but managed by our clients and branded under our clients names. Our software platform was initially developed by Funding Wonder, Inc. ( Funding Wonder ), our affiliate, and the intellectual property related to the software platform was contributed to us in exchange for shares of our common stock. Funding Wonder is the largest shareholder of the Company and has retained a royalty free license to use the software platform in perpetuity in connection with its crowdfunding platform located at www.seriesone.com. Despite this relationship, the Company itself does not own, operate or control the website or platform at www.seriesone.com, the brand name seriesOne or Series One, nor does it have any financial or economic interest in Funding Wonder or its crowdfunding platform. The relationship between the Company and its affiliates is described in the following diagram: Corporate Information Our principal executive office is located at 175 SW 7th Street, Suite 1800, Miami, Florida 33130, and our telephone number is (786) 473-4600. Our fiscal year end is December 31. Summary of the Offering This prospectus relates to the resale from time to time by the selling stockholders identified in this prospectus of 33,346,880 shares of our common stock, including 15,000,000 shares owned by our executive officers, directors and their affiliates. Currently there is no market for our common stock. The selling stockholders have not engaged any underwriter in connection with the sale of their shares of common stock. The shares of our common stock may be offered and sold by selling stockholders at a fixed price of $0.10 per share until our common stock is quoted on either the OTCQX or OTCQB tiers of the OTC Markets, and thereafter at prevailing market prices or privately negotiated prices or in transactions that are not in the public market. We will not receive any proceeds from the resale of our shares by the selling stockholders. We will pay all of the fees and expenses associated with registration of the shares covered by this prospectus. Common stock presently outstanding: 33,346,880 shares at July 31, 2018 (does not include the 22,389 shares of common stock for which rescission offers were accepted). Common stock subject to accepted rescission offers 22,389 as of July 31, 2018. Common stock offered by the selling stockholders: Aggregate of 33,346,880 shares of our common stock, including 15,000,000 shares held by our affiliates. Use of proceeds: We will not receive any proceeds from the sale of the common stock offered by the selling stockholders. Risk factors: Investing in our securities involves a high degree of risk. As an investor you should be able to bear a complete loss of your investment. You should carefully consider the information set forth in the section of this prospectus entitled Risk Factors.
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diff --git a/parsed_sections/prospectus_summary/2018/CIK0001721133_right-of_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001721133_right-of_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..087b907d97e73f143d36dcfcf8789409c96e56f5
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+following summary highlights selected information contained in this prospectus. This summary does not contain all the information you should consider before investing in the securities. Before making an investment decision, you should read the entire prospectus carefully, including the "Risk Factors" section, the financial statements, and the notes to the financial statements. For purposes of this prospectus, unless otherwise indicated or the context otherwise requires, all references herein to "ROR" "we," "us," the "Company" and "our," refer to RIGHT OF REPLY LTD, a Company registered in England and Wales. Without taking into account the offering, we will run out of funds approximately December 31, 2018. Following this offering, we will additionally incur public company reporting costs of approximately $100,000 per year or $25,000 per quarter. To fund the Company s operating expenses following December 31, 2018, the Company will clearly require additional funding for ongoing operations and to finance additional growth. There is no guarantee that we will be able to raise any additional capital and have no current arrangements for any such financing. Our near-term financing requirement (less than 6 months), is anticipated to be approximately $500,000, which includes a monthly overhead burn rate of $40,000, public reporting costs and the remainder allocated to the Company s general working capital. Beyond our near-term financing requirement (more than 6 months), we will need an additional approximately $4,000,000 to implement the Company s plan of operations. Of this amount, we anticipate that we will need approximately $1,500,000 of the total amount required by the end of calendar year 2018. The foregoing represents the Company s best estimates as of the date of this Prospectus and may materially vary based upon actual experience. The
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diff --git a/parsed_sections/prospectus_summary/2018/CIK0001721467_collectabl_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001721467_collectabl_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..28aa36eb3a78ef313d74e646c290cf3b75d6d119
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+PROSPECTUS SUMMARY
+ 
+ You should read the following summary together with the more detailed business information, financial statements and related notes that appear elsewhere in this Prospectus. In this Prospectus, unless the context otherwise denotes, references to we, us, our , The Collectable Gallery, Inc. , CGI , and the Company are to The Collectable Gallery, Inc. We are an emerging growth company under the federal securities laws and will be subject to reduced public company reporting requirements.
+ 
+ A Cautionary Note on Forward-Looking Statements
+ 
+ This Prospectus contains forward-looking statements which relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as may, should, expects, plans, anticipates, believes, estimates, predicts, potential, or continue or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled
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diff --git a/parsed_sections/prospectus_summary/2018/CIK0001721980_praetorian_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001721980_praetorian_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
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+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2018/CIK0001722964_y-mabs_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001722964_y-mabs_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..6da42c8acec64b18aa8f4cb6909efcd3ef7173cc
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+included elsewhere in this prospectus. This summary does not contain all of the information that may be important to you in making your investment decision. You should read and carefully consider this entire prospectus, including the sections titled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our financial statements and related notes included elsewhere in this prospectus, before deciding to invest in our common stock. Except as otherwise indicated herein or as the context otherwise requires, references in this prospectus to "Y-mAbs," the "company," "we," "us" and "our" and similar words refer to Y-mAbs Therapeutics, Inc. and our wholly owned Danish subsidiary, Y-mAbs Therapeutics A/S. Overview We are a late-stage clinical biopharmaceutical company focused on the development and commercialization of novel, antibody-based therapeutic products for the treatment of cancer. We have a broad and advanced product pipeline, including two pivotal-stage product candidates naxitamab and omburtamab which target tumors that express GD2 and B7-H3, respectively. We are developing naxitamab for the treatment of pediatric patients with relapsed or refractory, or R/R, high-risk neuroblastoma, or NB, and radiolabeled omburtamab for the treatment of pediatric patients with central nervous system, or CNS, leptomeningeal metastases, or LM, from NB. NB is a rare and almost exclusively pediatric cancer that develops in the sympathetic nervous system and CNS/LM is a rare and usually fatal complication of NB in which the disease spreads to the membranes, or meninges, surrounding the brain and spinal cord in the CNS. We expect to submit a Biologics License Application, or BLA, for each of our two lead product candidates in 2019, with a goal of receiving approval by the U.S. Food and Drug Administration, or FDA, in 2020. We plan to commercialize both of our lead product candidates in the United States as soon as possible after obtaining FDA approval, if such approval occurs. We have two additional omburtamab follow-on product candidates in pre-clinical development, omburtamab-DTPA (diethylenetriamine pentaacetate) and huB7-H3, each targeting indications with large adult patient populations. We are also advancing an early-stage, novel pipeline of bispecific antibodies, or BsAbs. We believe our BsAbs have the potential to result in improved tumor-binding, longer serum half-life and significantly greater T-cell mediated killing of tumor cells without the need for continuous infusion. Our mission is to become the world leader in developing better and safer antibody-based pediatric oncology products addressing clear unmet medical needs and, as such, have a transformational impact on the lives of patients. We intend to advance and expand our product pipeline into certain adult cancer indications either independently or in collaboration with potential partners. Naxitamab is a recombinant humanized immunoglobulin G, or IgG1k, monoclonal antibody that targets ganglioside GD2, which is highly expressed in various neuroectoderm-derived tumors and sarcomas. Naxitamab is currently being studied in several clinical trials, including pivotal-stage development (Study 201) and a Phase 1/2 clinical trial (Study 12-230) for the treatment of pediatric R/R high-risk NB, a Phase 2 clinical trial (Study 16-1643) in front-line NB, a pilot study (Study 17-251) of chemoimmunotherapy for high-risk NB and a Phase 2 clinical trial (Study 15-096) for relapsed osteosarcoma. We believe that naxitamab has multiple potential advantages over other GD2-targeting antibody-based therapies. In particular, its modest toxicity allows for doses two-and-a-half times greater than existing GD2-targeting antibody-based therapies. Unlike currently approved GD2-targeting therapies for NB, which require 10 to 20 hours of infusion and hospitalization for several days, naxitamab is administered in approximately 30 minutes in an outpatient setting. We believe this significantly shorter administration time is an important advantage considering the overall pain associated with treatment. Copies to: Dwight A. Kinsey, Esq. Michael D. Baird, Esq. Rina R. Patel, Esq. Satterlee Stephens LLP 230 Park Avenue New York, NY 10169 Tel: (212) 818-9200 Ilir Mujalovic, Esq. Shearman & Sterling LLP 599 Lexington Avenue New York, NY 10022 Tel: (212) 848-4000 Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act, check the following box. If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act. (check one) Large accelerated filer Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company Emerging growth company If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided to Section 7(a)(2)(B) of the Securities Act. CALCULATION OF REGISTRATION FEE Title of Each Class of Securities to be Registered Amount to be Registered(1) Proposed Maximum Aggregate Offering Price Per Share Proposed Maximum Aggregate Offering Price(1)(2) Amount of Registration Fee(3)(4) Common Stock, $0.0001 par value per share 6,133,333 $16.00 $98,133,328 $12,218.00 (1)Includes 800,000 shares that the underwriters will have the option to purchase. (2)Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(a) under the Securities Act of 1933, as amended. (3)$11,454 of this registration fee was previously paid by the Registrant. (4)Calculated pursuant to Rule 457(a) based on an estimate of the proposed maximum aggregate offering price. The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. Table of Contents Factors." These and other factors could cause results to differ materially from those expressed in the estimates made by the independent parties and by us. FOR INVESTORS OUTSIDE THE UNITED STATES We have not, and the underwriters have not, done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. Persons outside the United States who come into possession of this prospectus must inform themselves about, and observe any restrictions relating to, the offering of the shares of common stock and the distribution of this prospectus outside the United States. Table of Contents In the dose escalation part of Study 12-230 for naxitamab, which together with Study 201 is expected to form the primary basis of our BLA submission, we achieved an overall response rate, or ORR, of 57% in 23 patients with pediatric R/R high-risk NB who at study entry had evaluable tumors and no evidence of progression of disease, or PD. Based on our discussions with the FDA, the profile of the non-PD R/R high-risk NB pediatric patients in Study 12-230 is representative of the intended patient population for naxitamab's target indication. The corresponding ORRs will form the primary objective of our pivotal study (Study 201). Additionally, based on our discussions with the FDA, we believe that naxitamab may qualify for accelerated approval if we can demonstrate a 30% ORR (which is significantly different from a 20% ORR at a 95% confidence interval, or CI) with a minimum 12-week duration of response. We have proposed to the FDA that, pending comparability between the study population in Study 12-230 and Study 201, the data from the two studies may be pooled for analysis. Naxitamab has been administered to more than 200 patients to date, who will form the safety portion of our planned BLA submission. In May 2018, we reported topline results from the Phase 2 part of Study 12-230. The endpoints of this part of the study were complete or partial tumor response. Complete tumor response is the total disappearance of a tumor and partial tumor response is a decrease in the size of a tumor, or in the extent of cancer in the body, in response to the treatment. No statistical significance was observed, as this data continued to show response rates at the same levels as in the dose escalation part of the study with 13 of 15, or 87% of, primary refractory patients responding and 7 of 23, or 30% of, secondary refractory patients responding. We expect to submit the BLA for naxitamab for R/R high-risk NB in 2019. Currently, there are no FDA-approved therapies for primary refractory or second-line pediatric NB patients. Naxitamab has also received orphan drug designation, or ODD, and rare pediatric disease designation, or RPDD, from the FDA, in each case, for the treatment of NB. In addition, on August 20, 2018, naxitamab received breakthrough therapy designation, or BTD, in combination with GM-CSF, for the treatment of high-risk NB refractory to initial therapy or with incomplete response to salvage therapy in patients greater than 12 months of age with persistent, refractory disease limited to bone marrow with or without evidence of concurrent bone involvement. While our current clinical efforts for naxitamab are focused on rare pediatric cancers, we believe that we can potentially expand its application to the treatment of adults with cancers that express GD2. We estimate that there were more than 200,000 new adult patients diagnosed with GD2-positive cancers in the United States in 2017. Omburtamab is a murine monoclonal antibody that targets B7-H3, an immune checkpoint molecule that is widely expressed in tumor cells of several cancer types. 131I-omburtamab, which is omburtamab radiolabeled with Iodine-131, is currently being studied in several clinical trials including pivotal-stage development (Study 101) and a Phase 1 clinical trial (Study 03-133) for the treatment of pediatric patients who have CNS/LM from NB. As of August 2017, 93 patients with pediatric CNS/LM from NB had been treated with 131I-omburtamab in Study 03-133. An analysis of these 93 patients demonstrated a median overall survival, or OS, of 47 months (including an estimated five-year OS of approximately 43%), as compared to historical median OS of approximately six months. We have proposed to the FDA that, pending comparability between study population and the pharmacokinetics analysis in Study 03-133 and Study 101, data from both studies may be pooled for analysis for our planned BLA submission. 131I-omburtamab has received ODD and RPDD from the FDA, in each case, for the treatment of NB, and BTD for the treatment of pediatric patients who have CNS/LM from NB. In 2019, we expect to submit the BLA for 131I-omburtamab for CNS/LM from NB. 124I-omburtamab, which is omburtamab radiolabeled with Iodine-124, is currently being studied for the treatment of Diffuse Intrinsic Pontine Glioma, or DIPG. 131I-omburtamab is currently being studied for the treatment of Desmoplastic Small Round Cell Tumors, or DSRCT. Both DIPG and DSRCT are rare, and often fatal, cancers. While our current clinical efforts are focused on rare pediatric cancers, we believe we can potentially expand omburtamab's application to the treatment of CNS/LM resulting from other adult and pediatric solid tumors expressing B7-H3 and the underlying solid systemic tumors. We estimate that, in the United States in 2017, there were more than 30,000 new Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. Subject to Completion Preliminary Prospectus dated September 7, 2018 PROSPECTUS 5,333,333 Shares Common Stock Table of Contents patients diagnosed with cancer that has metastasized to the CNS/LM, of which the vast majority express B7-H3. We have initiated Study 101 and Study 201 to form the primary basis for our planned BLAs, to establish comparability of study population and pharmacokinetics analysis with Study 03-133 and Study 12-230, respectively, and to satisfy the confirmatory study and post-marketing requirements by the FDA. If the results from Study 101 and Study 201 fail to demonstrate comparability to the satisfaction of the FDA and other comparable regulatory authorities, this may lead to a delay in, or otherwise adversely affect, such clinical trials, including the timing of submission of BLAs. For a more detailed discussion of Study 101 and Study 201 see the sections entitled "Business Study 101" and "Business Study 201." We have two additional B7-H3 targeting product candidates in pre-clinical development, omburtamab-DTPA, a Lutetium-177 conjugated antibody, and huB7-H3, a humanized version of omburtamab, each targeting indications with pediatric and large adult patient populations where we believe there is a significant unmet medical need. We are also advancing a pipeline of novel BsAbs through late pre-clinical development, including our huGD2-BsAb product candidate for the treatment of refractory GD2-positive adult and pediatric solid tumors and our huCD33-BsAb product candidate for the treatment of hematological cancers expressing CD33, a transmembrane receptor expressed on cells of myeloid lineage. In pre-clinical studies, huGD2-BsAb has demonstrated the potential for improved tumor-binding, longer serum half-life and significantly greater T-cell mediated killing compared to existing bispecific constructs. We currently have three active INDs related to our product candidates. The table below sets forth the product candidate, date of the initial submission of the IND to the FDA, as well as the current sponsor, the subject matter and the current status of each such IND. Product Candidate Date of Initial Submission Current Sponsor Subject Matter of IND Current Status Naxitamab June 14, 2011 MSK Treatment of NB and other GD2 positive tumors Clinical trials ongoing Omburtamab (131I-Omburtamab and 124I-Omburtamab) September 22, 2000 Y-mAbs (MSK original sponsor) CNS/LM from NB, DSRCT, DIPG and other B7-H3 positive tumors Clinical trials ongoing Naxitamab September 5, 2017 Y-mAbs Pediatric NB Clinical trials ongoing In October 2017, the FDA issued a partial clinical hold on our IND for naxitamab. A partial clinical hold, as opposed to a full clinical hold, is a delay or suspension of only a specific part of the clinical work requested under the IND, which allows otherwise unaffected parts of the clinical work to proceed under the IND. The FDA stated that the proposed acceptance criterion for the ADCC-CD16, ADCC-CD32, and CDC assays were too wide to provide sufficient control over these attributes, which are critical for safety and efficacy. ADCC and CDC refer to antibody dependent cell-mediated cytotoxicity and complement-dependent cytotoxicity, respectively. We submitted a response to the FDA in March 2018, and met with the FDA on April 24, 2018. Subsequently, we submitted a complete response to the partial clinical hold to the FDA in May 2018 and the partial clinical hold was removed on June 7, 2018. We have exclusive rights to MSK's rights in all of our current product candidates under our 2015 license agreement, or the MSK License, with Memorial Sloan Kettering Cancer Center, or MSK. The MSK License also provides us with non-exclusive access to technology that involves the creation of a novel human protein tag that can potentially dimerize, or link together, bispecific T-cell engagers, or BiTEs. We refer to this technology as the MULTI-TAG technology. We plan to create a broad platform of dimerized BiTEs using the MULTI-TAG technology and are currently collaborating with MSK on This is Y-mAbs Therapeutics, Inc.'s initial public offering. We are selling 5,333,333 shares of our common stock. We expect the public offering price to be between $14.00 and $16.00 per share. Currently, no public market exists for the shares. After pricing of the offering, we expect that the shares will trade on the Nasdaq Global Market under the symbol "YMAB." We are an "emerging growth company" under federal securities laws and are subject to reduced public company disclosure standards. See "Summary Implications of Being an Emerging Growth Company." Investing in the common stock involves risks that are described in the "Risk Factors" section beginning on page 15 of this prospectus. Table of Contents several MULTI-TAG product candidates. We believe that our strong relationship with MSK, one of the world's leading cancer treatment centers, and our access to certain of MSK's technologies and substantial research capabilities affords us several competitive advantages. In addition, we believe that our relationship with MSK may help us with respect to patient recruitment for clinical trials. Under a separate 2017 CD33 license agreement with MSK, or the MSK CD33 License, we have a worldwide, sub-licensable license to MSK's rights in certain patent rights and intellectual property rights related to certain know-how to develop, make, and commercialize licensed products and to perform services for all therapeutic and diagnostic uses in the field of cancer diagnostics and cancer treatments in connection with certain CD33 antibodies developed in the laboratory of a specific principal investigator at MSK and constructs thereof. Our management team has substantial public company experience and extensive knowledge in the field of antibody oncology drug development, manufacturing and commercialization. Thomas Gad, our Founder, Chairman, President and Head of Business Development, co-founded Singad Pharma ApS, a Danish pharmaceutical and distribution company, where, as part of senior management, he gained more than 12 years of experience in the pharmaceutical industry, including in business development, financing and licensing negotiations and manufacturing site qualification. In 2006, Mr. Gad's then two year old daughter was diagnosed with high-risk NB and was treated at MSK with the murine version of naxitamab. In 2009, she relapsed with CNS/LM from NB and again was treated at MSK, this time with 131I-omburtamab. Since then, she has been disease free and is now 13 years old. Our Chief Executive Officer, Dr. Claus Juan M ller San Pedro, co-founded Genmab A/S, or Genmab, one of the largest public biotechnology companies in Europe, where he served as Executive Vice President and Chief Operating Officer for approximately 10 years. Our Chief Financial Officer, Bo Kruse, served as Genmab's Chief Financial Officer and was directly involved in several of Genmab's financing rounds including Genmab's initial public offering. In addition, since our inception in April 2015, we have raised approximately $120.0 million from our founding investors and prominent biotechnology institutional investors, including HBM Healthcare Investments (Cayman) Ltd. and funds advised by or affiliated with Scopia Capital Management LP and Sofinnova Ventures, Inc., among others, and as of June 30, 2018 we had cash and cash equivalents of $70.2 million. Per Share Total Initial public offering price $ $ Underwriting discount(1) $ $ Proceeds, before expenses, to us $ $ (1)We refer you to "Underwriting" beginning on page 221 for additional information regarding underwriting compensation. The underwriters may also exercise their option to purchase up to an additional 800,000 shares from us, at the public offering price, less the underwriting discount, for 30 days after the date of this prospectus. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. Certain of our existing stockholders, including certain of our directors and entities affiliated with certain of our directors, have indicated an interest in purchasing an aggregate of up to approximately $30.0 million in shares of our common stock in this offering at the initial public offering price. However, because indications of interest are not binding agreements or commitments to purchase, the underwriters may determine to sell more, fewer or no shares in this offering to any or all of these stockholders, or any or all of these stockholders may determine to purchase more, fewer or no shares in this offering. The underwriters will receive the same underwriting discount on any shares purchased by these stockholders as they will on any other shares sold to the public in this offering. The shares will be ready for delivery on or about , 2018. Table of Contents Our Pipeline The following table sets forth our product candidates and their current development stages, estimated development timelines and anticipated milestones. Our Strategy Key elements of our strategy are: Rapidly and concurrently advance our lead product candidates to regulatory approval. Expand the indications and target patient populations for our existing product candidates. Independently commercialize our product candidates in indications and territories where we believe we can maximize their value. Advance our novel BsAb product candidates that we believe may offer potential substantial benefits over existing bispecific constructs. Leverage our relationships with leading academic and clinical institutions to develop additional product candidates. Joint Book-Running Managers BofA Merrill Lynch Cowen Lead Manager Canaccord Genuity Co-Manager BTIG Table of Contents Risks Associated with Our Business Our business is subject to a number of risks of which you should be aware before making an investment decision. These risks are discussed more fully in the "Risk Factors" section of this prospectus immediately following this prospectus summary. These risks include the following: We have a limited operating history and have incurred significant losses since our inception. As of June 30, 2018, we had an accumulated deficit of $59.3 million. We have no products approved for commercial sale and expect to incur significant losses for the foreseeable future and may never achieve or maintain profitability. We have never obtained marketing approval for a product candidate and we may be unable to obtain, or may be delayed in obtaining, marketing approval for any of our product candidates. Our payment obligations to MSK may be a drain on our cash resources, or may cause us to incur debt obligations or issue additional equity securities to satisfy such payment obligations. We will need substantial additional funding for our product candidates. If we fail to obtain additional funding for our product candidates, we may be forced to delay, reduce or eliminate our research and drug development programs or future commercialization efforts and our licenses and other agreements may be terminated. Our product candidates and related technologies are novel approaches to cancer treatment that present significant challenges, and our ability to generate product revenue is dependent on the success of one or more of our lead product candidates, which will require additional clinical testing before we can seek regulatory approval and begin commercial sales. We may expend our resources to pursue a particular product candidate or indication and fail to capitalize on other product candidates or indications that may be more profitable or for which there is a greater likelihood of success. Drug development is a lengthy and expensive process, with an uncertain outcome. If clinical trials of our product candidates fail to demonstrate safety and efficacy to the satisfaction of regulatory authorities or do not otherwise produce positive results, we may incur additional costs, experience delays in completing, or ultimately be unable to complete, the development of our product candidates or be unable to obtain marketing approval. We may encounter substantial delays in our clinical trials, or may not be able to conduct our trials on the timelines we expect. The market opportunities for our product candidates may be limited to those patients who are ineligible for or have failed prior treatments and may be small. If we encounter difficulties enrolling patients in our clinical trials, our clinical development activities could be delayed or otherwise adversely affected. Our product candidates may cause serious adverse events, or SAEs, undesirable side effects or have other properties that could halt their clinical development, prevent, delay, or cause the withdrawal of their regulatory approval, limit their commercial potential, or result in significant negative consequences, including death of patients. If any of our product candidates receives marketing approval and we, or others, later discover that the drug is less effective than previously believed or causes undesirable side effects that were not previously identified, our ability, or that of any of the potential future collaborators, to market the drug could be compromised. The outcome of pre-clinical studies and early clinical trials may not be predictive of the success of later clinical trials, interim results of a clinical trial do not necessarily predict final results, and the results of our clinical trials may not satisfy the requirements of the FDA or comparable foreign regulatory authorities, and if an adverse safety issue, clinical hold or The date of this prospectus is , 2018. Table of Contents other adverse finding occurs in one or more of our clinical trials of our lead product candidates, such event could adversely affect our other clinical trials of our lead product candidates. Research and development of biopharmaceutical products is inherently risky. We may not be successful in our efforts to create a pipeline of product candidates and develop commercially successful products. If we fail to develop additional product candidates, our commercial opportunity will be limited. Even if any of our product candidates receive marketing approval, they may fail to achieve the degree of market acceptance by physicians, patients, healthcare payors and others in the medical community necessary for commercial success. We currently have no marketing and sales organization and have no experience in marketing products. We may not be successful in commercializing our product candidates if and when they are approved unless we are able to establish sales and marketing capabilities or enter into agreements with third parties to sell and market such approved products. We face significant competition from other biotechnology and pharmaceutical companies, and our operating results will suffer if we fail to compete effectively. We have entered into several agreements with MSK that are important to our business. We may also form or seek other collaborations or strategic alliances or enter into additional licensing arrangements in the future but may not realize the benefits of such collaborations or strategic alliances. If we are unable to enter into collaborations in the future, or if such collaborations are not successful, our business could be adversely affected. Third parties have sponsored and conducted all clinical trials of our lead product candidates so far, and our ability to influence the design and conduct of such clinical trials has been limited. To date, we have incurred significant expenses and are obligated to make significant payments in the future with respect to such clinical trials. We plan to assume control over the future clinical and regulatory development of such product candidates, including obtaining sponsorship of existing INDs or filing new company-sponsored INDs, which will entail substantial additional expenses and may be subject to delay. Any failure by a third party to meet its obligations with respect to the clinical and regulatory development of our product candidates may delay or impair our ability to obtain regulatory approval for our product candidates and result in liability for our company. Even if we complete the necessary pre-clinical studies and clinical trials, the FDA regulatory approval process is lengthy, time-consuming, and inherently unpredictable, and we or any of our collaborators may experience significant delays in the clinical development and regulatory approval, if any, for the commercialization of our product candidates. As a result, we cannot predict when or if, and in which territories, we, or any of our collaborators, will obtain marketing approval to commercialize a product candidate. The European Medicines Agency, or the EMA, or comparable foreign regulatory authorities, may disagree with our regulatory plans, including our plans to seek accelerated approval, and we may fail to obtain regulatory approval of our product candidates, which would prevent our product candidates from being marketed abroad. Any approval we are granted for our product candidates in the United States would not assure approval of our product candidates in foreign jurisdictions. Reimbursement decisions by third-party payors may have an adverse effect on pricing and market acceptance. If there is not sufficient reimbursement for our products, it is less likely that our products will be widely used. Table of Contents Government price controls or other changes in pricing regulation could restrict the amount that we are able to charge for our lead product candidates, if approved, or any of our other product candidates that may be approved in the future, which would adversely affect our revenue and results of operations. Our success depends in part on our ability to protect our intellectual property. It is difficult and costly to protect our proprietary rights and technology, and we may not be able to ensure their protection. We have a limited number of employees and depend heavily on our executive officers and consultants. Our future success depends on our ability to retain our senior management and other key executives and to attract, retain and motivate qualified personnel. The loss of their services could materially harm our business. It has been determined that we have material weaknesses in our internal control over financial reporting. If our remediation of these material weaknesses is not effective, or if we experience additional material weaknesses or otherwise fail to maintain an effective system of internal controls in the future, we may not be able to accurately or timely report our financial condition or results of operations, which may adversely affect investor confidence in us and, as a result, the value of our common stock. In addition, because of our status as an emerging growth company, our independent registered public accounting firm is not required to provide an attestation report as to our internal control over financial reporting for the foreseeable future. Implications of Being an Emerging Growth Company As a company with less than $1.07 billion of revenue during our last fiscal year, we qualify as an "emerging growth company" as defined in the Jumpstart Our Business Startups Act of 2012, as amended, or the JOBS Act. We may remain an emerging growth company until the earlier of (i) the last day of the fiscal year following the fifth anniversary of the completion of this offering, (ii) the last day of the fiscal year in which we have more than $1.07 billion in annual gross revenue, (iii) the last day of the fiscal year in which we are deemed to be a "large accelerated filer" as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended, or the Exchange Act, which would occur if the market value of our common stock held by non-affiliates exceeded $700.0 million as of the last business day of the second fiscal quarter of such fiscal year, or (iv) the date on which we issue more than $1 billion of non-convertible debt securities during the prior three-year period. For so long as we remain an emerging growth company, we are permitted and intend to rely on exemptions from certain disclosure and other requirements that are applicable to other public companies that are not emerging growth companies. In particular, as an emerging growth company, in this prospectus, we (i) will have provided only two years of audited financial statements, with correspondingly reduced "Management's Discussion and Analysis of Financial Condition and Results of Operations" disclosure, (ii) may avail ourselves of the exemption from the requirement to obtain an attestation and report from our auditors on the assessment of our internal control over financial reporting pursuant to the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, (iii) have not included all of the executive compensation-related information that would be required if we were not an emerging growth company and (iv) we may not require stockholder non-binding advisory votes on executive compensation or golden parachute arrangements. Accordingly, the information contained herein may be different than the information you receive from other public companies in which you hold stock. We have chosen to opt out of the extended transition periods available to emerging growth companies under the JOBS Act for complying with new or revised accounting standards. Section 107 of the JOBS Act provides that our decision to opt out of the extended transition periods for complying with new or revised accounting standards is irrevocable. Table of Contents Our Corporate Information We were incorporated under the laws of the State of Delaware on April 30, 2015. Our executive offices are located at 230 Park Avenue, 33rd Floor, New York, NY 10169 and our telephone number is (917) 817-2992. Our website address is www.ymabs.com. The information contained on, or that can be accessed through, our website is not a part of this prospectus and is not incorporated by reference herein. We have included our website address in this prospectus solely as an inactive textual reference. "Y-mAbs" is our common law trademark. Any other trademarks or service marks of our company appearing in this prospectus are the property of Y-mAbs Therapeutics, Inc. All other trademarks, trade names and service marks appearing in this prospectus are the property of their respective owners. Solely for convenience, the trademarks and trade names in this prospectus are referred to without the and symbols, but such references should not be construed as any indicator that their respective owners will not assert, to the fullest extent under applicable law, their rights thereto. We do not intend our use or display of other entities' trade names, trademarks or service marks to imply a relationship with, or endorsement or sponsorship of us by, any other entity. Table of Contents
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+Prospectus Summary 1 Risk Factors 14 Special Note Regarding Forward-Looking Statements 48 Use of Proceeds 49 Dividend Policy 50 Exchange Rate Information 51 Capitalization 52 Dilution 54 Post-Offering Ownership 55 Management s Discussion and Analysis of Financial Condition and Results of Operations 56 Business 68 Description of Property 83 Management 98 Executive Compensation 104 Related Party Transactions 106 Principal Shareholders 107 Description of Ordinary Shares 108 Shares Eligible for Future Sale 116 Material Tax Consequences Applicable to U.S. Holders of Our Ordinary Shares 118 Enforceability of Civil Liabilities 124 Underwriting 125 Expenses Relating to This Offering 133 Legal Matters 133 Experts 133 Interests of Named Experts and Counsel 133 Disclosure of Commission Position on Indemnification 133 Where You Can Find Additional Information 134 Index to Financial Statements F-1 You should rely only on the information contained in this prospectus or in any related free-writing prospectus. We have not authorized anyone to provide you with information different from that contained in this prospectus or in any related free-writing prospectus. We are offering to sell, and seeking offers to buy, the ordinary shares offered hereby, but only under circumstances and in jurisdictions where offers and sales are permitted and lawful to do so. The information contained in this prospectus is current only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of the ordinary shares. Neither we nor any of the underwriters have taken any action that would permit a public offering of the ordinary shares outside the United States or permit the possession or distribution of this prospectus or any related free-writing prospectus outside the United States. Persons outside the United States who come into possession of this prospectus or any related free-writing prospectus must inform themselves about and observe any restrictions relating to the offering of the ordinary shares and the distribution of the prospectus outside the United States. Until , 2018 (the 25th day after the date of this prospectus), all dealers that buy, sell or trade ordinary shares, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the obligation of dealers to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions. Table of Contents PROSPECTUS SUMMARY This summary highlights information contained in greater detail elsewhere in this prospectus. This summary is not complete and does not contain all of the information you should consider in making your investment decision. You should read the entire prospectus carefully before making an investment in our Ordinary Shares. You should carefully consider, among other things, our consolidated financial statements and the related notes and the sections entitled "Risk Factors" and "Management s Discussion and Analysis of Financial Condition and Results of Operations" included elsewhere in this prospectus. Prospectus Conventions Except where the context otherwise requires and for purposes of this prospectus only, "we", "us", "our company", "Company", "our" and "Fortunes Capital" refer to Fuqin Fintech Limited, a Cayman Islands exempted company ("Fuqin Fintech" when individually referenced); Fortunes Capital Financial Holding (HK) Limited ("Fortunes Capital HK" when individually referenced), a Hong Kong company that is a wholly-owned subsidiary of Fuqin Fintech; Keen Point Enterprise Group, Limited ("Keen Point" when individually referenced), a Hong Kong company that is a wholly-owned subsidiary of Fuqin Fintech; Fuqin Jinkong Development (Beijing) Co. Ltd. ("Fuqin Jinkong" when individually referenced) (also referred to as ( ) , a PRC company ("Fuqin Jinkong" when individually referenced), a wholly foreign owned enterprise ("WFOE") and a wholly owned subsidiary of Fortunes Capital HK; Fuqin Huizhong Financial Lease (Beijing) Co. Ltd. ("Huizhong" when individually referenced) (also referred to as ( ) , a PRC company, a WFOE and a wholly owned subsidiary of Keen Point; Fuqin Hengye Technology Development (Beijing) Co. Ltd. ("Hengye" when individually referenced) (also referred to as ( ) ), a PRC company and a variable interest entity ("VIE") controlled by Huaishan Cao, Xingliang Li, Xiaoqing Ma, and Yaojun Liu. Fuqin Yidai Information Consulting (Beijing) Co, Ltd. ("Yidai" when individually referenced) (also referred to as ( ) ), a PRC company and a VIE that is wholly-owned by Hengye. Fuqin Pucheng Credit Management (Beijing) Consulting Co, Ltd. ("Pucheng" when individually referenced) (also referred to as ( ) ), a PRC company and a VIE that is wholly-owned by Hengye. Fuqin International Commercial Factoring Co. Ltd. ("Fuqin Factoring" when individually referenced) (also referred to as ), a PRC company and a VIE that is wholly-owned by Hengye. Hengye, Pucheng, Fuqin Factoring, and Yidai are collected referred to as the "VIEs" hereafter. This prospectus contains translations of certain RMB amounts into U.S. dollar amounts at specified rates solely for the convenience of the reader. The relevant exchange rates are listed below: For the Year Ended December 31, 2017 For the Year Ended December 31, 2016 Period Ended RMB: USD exchange rate 6.4387 6.9437 Period Average RMB: USD exchange rate 6.7547 6.6430 For the sake of clarity, this prospectus follows the English naming convention of first name followed by last name, regardless of whether an individual s name is Chinese or English. For example, the name of our Chairman will be presented as "Huaishan Cao," even though, in Chinese, Mr. Cao s name is presented as "Cao Huaishan." CALCULATION OF REGISTRATION FEE Title of Class of Securities to be Registered Proposed Maximum Aggregate offering Price(1) Amount of Registration Fee Ordinary Shares, par value $0.0001 per share(2) $ 21,000,000 $ 2,614.50 Underwriter Warrants(3) — — Ordinary Shares, par value $0.0001 per share underlying Underwriter Warrants(3) $ 1,771,875 $ 220.60 Total $ 22,771,875 $ 2,835.10 (1) The registration fee for securities is based on an estimate of the Proposed Maximum Aggregate Offering Price of the securities, assuming the sale of the maximum number of shares at the highest expected offering price, and such estimate is solely for the purpose of calculating the registration fee pursuant to Rule 457(o). (2) In accordance with Rule 416(a), the Registrant is also registering an indeterminate number of additional Ordinary Shares that shall be issuable pursuant to Rule 416 to prevent dilution resulting from share splits, share dividends or similar transactions. (3) The Registrant will issue to the Underwriter warrants to purchase a number of ordinary shares equal to an aggregate of six point seven five percent (6.75%) of the ordinary shares (the "Underwriter Warrant") sold in the offering. The exercise price of the Underwriter Warrants is equal to 125% of the offering price of the ordinary shares offered hereby. The ordinary shares underlying the Underwriter Warrants are exercisable within three years commencing 180 days from the effective date of the offering at any time, and from time to time, in whole or in part. The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. Table of Contents We have relied on statistics provided by a variety of publicly-available sources regarding China s expectations of growth. We did not directly or indirectly sponsor or participate in the publication of such materials, and these materials are not incorporated in this prospectus other than to the extent specifically cited in this prospectus. We have sought to provide current information in this prospectus and believe that the statistics provided in this prospectus remain up-to-date and reliable, and these materials are not incorporated in this prospectus other than to the extent specifically cited in this prospectus. Overview Incorporated on June 23, 2017, Fuqin Fintech Limited is a Cayman Islands exempted company. In November 2017, we completed a legal reorganization with which our current controlling shareholder Fortunes Capital Fintech Holding Limited ("Fortunes Capital Cayman"), a Cayman Islands exempted company that was controlled by Huaishan Cao, transferred its 100% equity interest in Keen Point to our Company (the "Reorganization"). Prior to the completion of such transfer, Fortunes Capital Cayman held 100% of the total issued and outstanding shares of Keen Point. In addition, our Chairman Huaishan Cao currently has the majority interest and control over our VIEs. While the transfer was for zero to nominal considerations, since our Company and our subsidiaries and VIEs are effectively controlled by the same controlling shareholder before and after the reorganization, they will be considered under common control. The above mentioned transactions are accounted for as a recapitalization and are collectively referred to as the "Reorganization" hereafter. The consolidation of our Company and our subsidiaries and VIEs has been accounted for at historical cost and prepared on the basis as if the aforementioned transactions had become effective as of the beginning of the first period presented in the accompanying consolidated financial statement. We conduct our business in China through our subsidiaries and VIEs. We are a leading online lending marketplace platform providing information intermediary service connecting borrowers and lenders. Different from companies that provide or facilitate consumer credit financing, we focus our attention only on facilitating loans secured by the borrowers automobiles, where we believe the market potential is vast and the risk level is low because the borrowers pledge the security interests in their cars as collaterals to the loans. We opened our first business outlet in Shandong province in January 2014 and launched our online automobile finance marketplace in February 2016. We have business outlets all over the country, covering 86 second-, third-, and forth-tier cities. Our business outlets allow us to promote our brand and recognition, assist our customers in loan applications, conduct due diligence, and install GPS devices as needed. All of the loans we facilitated are secured by the security interests in the borrowers automobiles. Our targeted customers are primarily individual consumers, micro-, small- and medium-sized enterprises, and sole proprietors in the less developed regions of China. The automobiles they finance with us are, in many cases, vital to their day-to-day life or operations of business. As of December 31, 2017, we have facilitated over RMB 2,242,130,000 (USD 331,936,281) in secured loans since inception. The total loan facilitated through our platform was RMB 512,000,000 (USD 73,752,898) in the fiscal year ended December 31, 2016 and RMB 1,573,290,000 (USD 232,917,820) in the fiscal year ended December 31, 2017. Our risk management and our business model lowered the delinquency rate significantly for lenders. Refer to disclosure of our delinquency rate in the "Management Discussion & Analysis" section of this registration statement. Of the total amount of RMB 2,242,130,000 (USD 331,936,281) that we have facilitated as of December 31, 2017, RMB 935,093,000 (USD 138,435,904) was facilitated through our online channels and RMB 1,307,037,000 (USD 193,500,378) was facilitated through our offline channels. As of December 31, 2017, the average amount invested through our platform by lenders via our online channel and offline channels was RMB 91,200 (USD 13,502) and RMB 183,900 (USD 27,225) respectively. There is an increasing trend of loans coming more from online rather than offline channels. This is due to the continuous development of our online lending platform, thereby providing more convenient and efficient services to the borrowers and lenders, and increasing the efficiency of loan matching. This has helped increase the volume of the loan facilitations through us, and therefore helped increase our revenue. Our borrowers and lenders come from a variety of channels, including online sources, such as the internet and our mobile applications, as well as offline sources, such as the on-the-ground sales teams in our business outlets. We have more than 1,800 full-time and 200 part-time experienced sales representatives in 96 outlets. We also work with 96 third party business referral intermediaries that generate sales leads for us. Our sales representatives work directly with our customers, who we believe, given their financial condition and size of business, are often underserved by larger financial institutions. Through our online marketplace, we are able to reach more potential customers and lenders. The loan application for the borrowers is simple and straight-forward. We gather the information about the applicant s credit, car title, insurance and tax payment. We are able to make decisions based on big data1 analysis with regard to the value of the car and any potential risks with the applicant. In addition, the loans facilitated through our platform provide lenders with attractive returns with investment thresholds as low as RMB 100 (USD 15). We also provide flexibility to the lenders, with different thresholds and exit time, each loan facilitated by us is secured by the security interest in the borrowers automobiles. Furthermore, we have a professional asset protection team to collect the automobiles upon borrowers delinquencies on loans. We currently conduct our business operations exclusively in China, and our online automobile finance marketplace does not facilitate loans from lenders located in the United States. 1 The term of big data" refers to extremely large data sets that may be processed through professional technologies and techniques, analyzed computationally to reveal valuable patterns, trends, and associations, especially relating to human behavior and interactions. We obtain this data primarily through accumulation of information from our past operating experience and third-party market researchers. The information in this prospectus is not complete and may be changed. We will not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION, DATED SEPTEMBER 27, 2018 FUQIN FINTECH LIMITED Minimum Offering: 2,000,000 Ordinary Shares Maximum Offering: 3,500,000 Ordinary Shares This is an initial public offering of ordinary shares of Fuqin Fintech Limited, a Cayman Islands exempted company. We are offering a minimum of 2,000,000 and a maximum of 3,500,000 of our ordinary shares. Prior to this offering, there has been no public market for our ordinary shares. The initial public offering price of our ordinary shares is expected to be between $5.00 and $6.00 per share. We have applied to list our ordinary shares on Nasdaq Capital Market under the symbol "FQJR." We cannot guarantee that we will be successful in listing on Nasdaq; however, we will not complete this offering unless we are so listed. We are an "emerging growth company" under the federal securities laws and will be subject to reduced public company reporting requirements. Investing in our ordinary shares involves risks. See "Risk Factors" beginning on page 14. Initial Public Offering Price Underwriting Discounts and Commissions(1) Proceeds to Our Company Before Expenses(2) Minimum Offering Amount $10,000,000 $675,000 $9,325,000 Maximum Offering Amount $21,000,000 $1,417,500 $19,582,500 (1) We will pay the Underwriter 6.75% of the gross proceeds of this offering. See "Underwriting" in this prospectus for more information regarding our arrangements with the Underwriter. (2) The total estimated expenses related to this offering are set forth in the section entitled "Fees, Commissions and Expense Reimbursement." We expect our total cash expenses for this offering, including cash expenses payable to our underwriter, Boustead Securities, LLC (the "Underwriter"), for its reasonable non-accountable and accountable expenses referenced above, exclusive of the above commissions. The Underwriter must sell the minimum number of securities offered (2,000,000) if any are sold. The Underwriter is only required to use its best efforts to sell the maximum number of securities offered (3,500,000). In addition, we have agreed to issue to the Underwriter and to register herein warrants to purchase up to a total of 236,250 ordinary shares (equal to 6.75% of the maximum number of ordinary shares sold in this offering) and to also register herein such underlying shares. The warrants will be exercised at any time, and from time to time, in whole or in part, commencing from the closing of the initial public offering and expiring three (3) years from the effective date of the registration statement. The warrants are exercisable at a per share price of 125% of the fair market value price of the ordinary shares for the Company as of the date the Company receives the funds. The offering will close or terminate, as the case may be, upon the earlier of: (i) a date mutually acceptable to us and the Underwriter after the minimum offering amount of our offering is raised, or (ii) December 31, 2018, unless extended by the Company and the Underwriter for a period of up to additional 60 days (the "Termination Date"). Until we sell at least 2,000,000 shares, all investor funds will be held in an escrow account at FinTech Clearing, LLC. If we do not sell at least 2,000,000 shares by the Offering Termination Date, all funds will be promptly returned to investors without interest or deduction. If we complete this offering, net proceeds will be delivered to us on the closing date. We plan to use our proceeds in our subsidiaries in China, however, we will not be able to use such proceeds until we complete certain remittance procedures in China. If we complete this offering, then on the closing date, we will issue ordinary shares to investors in the offering on ordinary shares sold in this offering. One of the conditions to our obligation to sell any securities through the Underwriter is that, upon the closing of the offering, the Ordinary Shares would qualify for listing on the Nasdaq Capital Market. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The date of this prospectus is __________, 2018. Table of Contents We focus exclusively on facilitating loans secured by the security interests in the borrowers automobile. Unlike cash or consumer credit financing platforms, our business practices require borrowers to pledge the security interests in their automobile to secure the loan. We believe the existence of collateral to the loans significantly lowers the risk of default. We have obtained financial leasing and factoring licenses from various government authorities which gives us the ability to start offering financial leasing services to individuals and businesses. We have been and will continue to develop our market in second-, third- and fourth-tier cities. These cities are underserved by traditional financial institutions, but the business potential in these cities is substantial because the markets are not as saturated as first-tier cities and we can meet the demand with our efficient and convenient lending and financing service. We have a 2-prong marketing and customer acquiring method - online platform and offline outlets. Our online platform is straightforward and easy to use. Our offline outlets are equipped with professional sales teams that provide customer services in person. Using both channels, we have built our brand recognition among customers, which, in turn, has been driving our sales leads. We have developed an industry leading professional asset protection team, consisting of experienced professionals, mechanics and specialists who are able to collect the collateral automobiles using efficient and safe methods. We have developed an advanced analytical model to enhance our ability to identify potential borrowers Online and on the mobile platform. We developed the Auto Risk Management System (ARMS), which enables us to cut down on risk assessment time, reduce fraud significantly, and to foresee and prevent malicious behavior before it even happens. Our primary source of revenue is the service fee earned on the loans facilitated through us. We are required by recent PRC laws and regulations to complete record-filing for our online lending information services by October 15, 2018. We plan to make our record-filing submission by the deadline. However, we cannot assure you when we will be able to submit our filing application on time, and once submitted, whether such application will be accepted by the local financial regulatory authorities or any other competent regulatory authorities as relevant laws and regulations continue to develop and evolve. See "Risk Factors – Risks Related to Our Business and Industry – If any of our business practices is deemed to violate any laws or regulations governing the marketplace lending industry in China, our business, financial condition and results of operations will be materially and adversely affected." Our Products and Services Services offered to Borrowers We primarily facilitate online lending between borrowers and lenders on our marketplace. We are leading in the auto-collateralized lending segment in the online lending marketplace in the People s Republic of China ("PRC"). For the loans we facilitate, the APR paid by borrowers to lenders ranges from 6.96% to 18%, with the specific rate charged dependent upon a risk assessment of the borrower and the value of the automobile. Within the range of 6.96% to 18% APR rates, the most prevalent rate is 11.88%, which accounts for 45.09% of all the loans facilitated through us. The following chart provides information regarding the frequency of these different rates facilitated through our platform: We believe that these loans are simple and quality products that make it easy for borrowers to budget their repayment obligations and meet their financial needs. All of the loans facilitated through our platform have terms from 1 month to 24 months. For the years ended December 31, 2015, 2016, and 2017, the average amounts for the loans facilitated through our platform were approximately RMB 220,000 (USD 35,380), RMB 87,000 (USD 13,100), and RMB 98,614 (USD 14,599) respectively. To apply for a loan with us, a borrower needs to complete an application on our online marketplace or in one of our business outlets, and provide their personal details and car title details, which include PRC identification card, driver license, vehicle registration certificate, vehicle license, tax voucher/invoice of vehicle purchase, original/transfer invoice of vehicle, insurance policy of compulsory traffic accident liability insurance, tax payment certificate of vehicle and vessel tax, insurance policy of commercial insurance, as well as the desired loan amount and term. Table of Contents Loan pricing mechanism We price the loans facilitated through us with an APR calculated to correspond to a risk assessment based on the borrowers credit and the value of the automobiles. These loans are quoted as a fee rate displayed as an APR, which is a fixed interest rate that borrowers pay lenders for borrowing loans from them. As for our facilitation services, we will charge a service fee from the borrowers for matching them with the lenders. The service fee is a standalone fee from the APR. The APR is fully paid by the borrowers to the lenders. We charge borrowers a separate service fee that is charged as a percentage of the loan contract. All fees are clearly disclosed to the borrowers upfront. Currently, all our revenue is derived from our facilitation service fees. A prepayment premium is imposed as a percentage of the amount prepaid. A penalty fee for late payment is imposed as a percentage of the amount past due. The total amounts of prepayment premiums and penalties were $589,300 and US$908,643 for the years ended December 31, 2016 and 2017 respectively. The prepayment premiums and penalties are part of the investment returns for the lenders, and are not retained by us, therefore are not recognized in our financial statements. Services offered to Lenders Lenders have an opportunity to invest in a wide range of loans facilitated through our platform with attractive returns. We believe having the borrowers pledge the security interest in their cars as collateral, together with our risk management and fraud detection systems and our asset protection practice, will increase lenders confidence in the quality of the loans that they are investing in through our platform. Fee charged to lenders Currently, we do not charge lenders any service fee. In the future, we plan to charge lenders on-going monthly management fees, as well as one-time service fees depending on their specific investment activity on our marketplace. Investing tool The funds that the lenders invest through our platform are deposited in their respective escrow accounts at Shanghai Fuiou Payment Service Co., Ltd. (used since inception) and Bank of Langfang (we shifted to Bank of Langfang since June 2017 and Fuiou is now primarily used to collect and disburse payments related to old lenders). Our automated investing tool automatically allocates committed funds from multiple lenders among multiple approved borrowers, which goes beyond the simple one-to-one matching between lenders and borrowers and could be viewed as building a portfolio to diverse the risk of investment. We provide the lenders with a customized service that is accommodated to the lenders expected timing of exit, amount of investment, and expected return. The minimum threshold for a lending commitment on our platform is RMB 100 (USD 15). Most of the loans facilitated through our platform have an amount from RMB 20,000 to RMB 100,000 with a 3- to 6-month term. As of December 31, 2015, the average amount invested through our platform by lenders via online and offline channels was RMB nil (USD nil) and RMB 56,920 (USD 9,060), respectively. As of December 31, 2016, the average amount invested through our platform by lenders via online channel and offline channel were RMB 84,270 (USD 12,680) and RMB 94,400 (USD 14,210) respectively. As of December 31, 2017, the average amount invested through our platform by lenders via our online channel and offline channel was RMB 91,200 (USD 13,502) and RMB 183,900 (USD 27,225) respectively. Our platform and the service process We believe that our platform enables an efficient loan facilitation process, credit assessment, and automobile evaluation to accurately determine an applicant s creditworthiness, the value of the car and potential risks with regard to the loan, and a superior overall user experience. Our platform touches each point of our relationship with the borrowers and lenders, from the application process, the funding and servicing of loans, the monitoring of the risk, through the recovery of the collaterals. We provide an automated, streamlined application process. To borrowers and lenders alike, the process is designed to appear simple, seamless, and efficient, but our platform leverages sophisticated, proprietary technology to make it possible. The entire process from initial application to disbursement of lenders funds typically takes one to two days, but can be as fast as four hours. Stage 1: Borrower Acquisition We utilize online and offline channels for borrower acquisition. Prospective borrowers can learn about our company and our products and services through our website and mobile applications. In addition, we have over 1,800 full-time sales representatives in business outlets in 96 cities. The sales team will approach prospective borrowers through cold calls, advertisements, and referrals. We also have 96 business development intermediaries having physical locations (i.e. used car shops, real estate agents, job placement agents) that generate sales leads for us. Stage 2: Car Evaluation Once we encounter a prospective borrower, we invite the prospective borrower to bring his/her car to one of our business outlets for a preliminary car evaluation. The prospective borrower is required to bring the car to our business outlets for physical evaluation prior to receiving a loan. Our employees at the business outlet take pictures of the car and conduct researches to determine the value of the car. For a more accurate estimate, we utilize big data from a variety of automobile sales platforms to confirm the value of the car. A car evaluation report is then submitted to our Beijing office for final determination on the value of the car. Table of Contents Stage 3: Application Our borrower application process begins with the submission of a loan application by a prospective borrower. Borrowers can apply at our business outlets, through our website, or mobile applications. As part of both the online and offline application process, the prospective borrower is asked to provide various personal details including PRC identity card information, employer information, bank account information, credit card information, vehicle registration certificate, and vehicle license. New lenders sign up to our marketplace using a simple online portal. The funds they invest in our marketplace are deposited into an escrow account at Shanghai Fuiou Payment Service Co., Ltd., (used since inception) and Bank of Langfang (we shifted to Bank of Langfang since June 2017 and Fuiou is now primarily used to collect and disburse payments related to old lenders). Stage 4: Anti-Fraud, Credit Assessment, and Decision-making In order to efficiently screen applicants, we have designed an initial qualification phase to review the basic information regarding a prospective borrower that has been submitted with the application and gathered by us from available sources. We also conduct research to make sure that there is no outstanding lien or judgment against the car, and that the prospective borrower has paid off all outstanding traffic tickets. Following initial qualification, we interview the prospective borrower at one of our business outlets. For a prospective borrower who passes our initial qualification phase and the interview, the application proceeds to our assessment team at the risk management department for review. The assessment team reviews the application documents, focusing on the prospective borrower s financial situation, credit, and value of the car. Once complete, the prospective borrower s loan application either is approved and proceeds to the next stage, or the prospective borrower is notified of the decision to decline the application. Stage 5: Approval, Listing and Funding Once the loan application is approved, we make a set of agreements (including all the involved parties, the borrower, the lender, and the Company) available for the prospective borrower s review and approval. The set of agreements include a Credit Consultation and Management Agreement, a Warm Prompt for Pledged Vehicle, an Authorization Letter, a Repayment Management Service Instruction, a Service Agreement, Agreement on Vehicle Pledge Loan, a Delegate Authorization Letter for Withholding Fees, and an Agreement on Dedicated Account of Bank of Langfang. Upon execution of the agreements, we install our GPS in the car, and subsequently register the pledge and the collateral with the local Department of Motor Vehicles. Once the agreements are signed and the GPS is installed, the loan is then registered on our marketplace. Our algorithms will match lenders with the borrower. Funds are then drawn from the lenders escrow account to the borrower s account at Bank of Langfang, and the borrower will sign the Receipt. Stage 6: Servicing and Asset Protection We utilize an automated process for collecting scheduled loan payments from our borrowers. Upon loan origination, we establish a payment schedule with payment occurring on a set business day each month. Borrowers then make scheduled loan payments to the escrow account at Bank of Langfang, and authorize us to debit their account for the transfer of scheduled loan repayments to the lenders. We check the balances in the lenders escrow accounts and reconcile the transactions against our records on a daily basis. As a day-to-day service to borrowers, we provide payment reminder services such as sending reminders via text message on the day a repayment is due. Once a repayment is past due, we also send additional reminders via email, text message or phone call on the 7th day before, the 3rd day before and on the day of scheduled payment. A loan will be deemed to have become delinquent when the borrower had missed a payment at the time of 6:00 pm on the repayment date and the borrower had not reached an agreement with the Company regarding the resolution of the loan repayment. When a loan is delinquent, we will follow up with the borrower immediately if we noticed the borrower has missed the payment at the 6:00 pm cut-off time. We will notify the borrower of the late payment and inquire with the borrower of his or her plan to settle the late payment. If the borrower does not reach a repayment resolution with us after our follow-up with the borrower, we will deploy our asset protection process. Our asset protection team is well-trained and able to handle different kinds of situations, and collect the pledged cars in an efficient and safe way. The missed payment could be any instalment payment and our repossession could be triggered immediately or within a couple of days depending on the cases of the borrower (i.e. depending on our assessment of the borrower s intention and willingness to settle the payment based on our follow-up communications with the customer). The repossession is to ensure that the lenders investments are protected. The borrower can pay off the loan and remove the security interest on the title. We will not trigger the disposal process if the borrower later settles the missed payment, explains the reasons behind the late payment, and expresses the intention to repay the remaining instalment payments. If the borrower is unable or expresses unwillingness to repay the balance of the loan, the borrower will sign a Vehicle Sales Contract authorizing us to sell the collateral car. We will then sell the car and repay the lenders with the proceeds of the sale. The lenders bear the risk of loss if the proceeds of the sale do not cover the principle and interest of the loan. Table of Contents Industry and Market Background Auto consumption demand in China is growing rapidly, but remains underfinanced, suggesting tremendous growth potential for China s auto finance market. Auto consumption in China has experienced rapid growth as a result of China s economic development and rising consumption power among Chinese consumers. According to the National Bureau of Statistics of China, China s GDP increased from RMB 67.7 trillion in 2015 to RMB 74.4 trillion in 2016. Consumption has increasingly become an important driver of China s GDP growth. Auto consumption has grown 19.8% in 2016 compared to 2015. By the end of 2016, the number of passenger vehicles in use reached 199.28 million in China, with an average car ownership of 27.7 units per 100 households, according to the National Bureau of Statistics of China. In addition, sales of new passenger vehicles in China have reached roughly 28 million, among which 19.4 million are used passenger vehicles. The penetration rate of the auto finance industry in China is about 38.6% for new vehicles, and about 8%-10% for used vehicles (China Industry Information Network run by Beijing Zhikao Kexin Consulting Co., Ltd. at http://www.chyxx.com/industry/201711/580324.html, and Roland Berger 2017 China Auto Finance Report at https://www.rolandberger.com/zh/Publications/pub_2017_china_auto_finance_report.html). As compared to the penetration rate of 85.5% for new vehicles 53% in the US for the third quarter of 2017 (Experian at http://www.experian.com/assets/automotive/quarterly-webinars/2017-q3-safm-recording.pdf), the auto finance market in China has a huge potential for growth. In addition, car buyers who choose installment payments accounted for 53.3% of overall buyers in 2016, a 23.3% increase compared to 30% in 2015, which illustrates the large potential for the auto finance of passenger vehicles (http://www.sohu.com/a/155243478_576579). As the urbanization drive in China goes on, the country has seen a significant percentage of the population moving from the countryside to cities. As such, new city immigrants will continue to drive up auto consumption in China. In addition, Fintech has achieved mass adoption in China, with 69% of consumers across 20 different markets. China is leading the way in adopting Fintech services for savings and investments, as well as borrowing. In China, 58% of consumers have used Fintech savings and investment services, compared to 39% of Indian consumers and 27% of US consumers. Moreover, 46% of consumers in China have used Fintech borrowing services, compared to 20% of Indian consumers and 13% US consumers. In China, open regulations allow FinTech firms to innovate how financial services products are offered, which enables their mobile leadership. (EY FinTech Adoption Index 2017 – the rapid emergence of FinTech http://www.ey.com/Publication/vwLUAssets/ey-fintech-adoption-index-2017/$FILE/ey-fintech-adoption-index-2017.pdf) Our Growth Strategy We are transitioning into a comprehensive financial services platform that offers a diversified portfolio of services to cater to various customer needs. Continue to define industry best practices in China. We strive to create and uphold industry best practices for all aspects of our business, including risk management and analysis, operational transparency, fund settlement and data security. Broaden the borrower base. We seek to grow the number of borrowers on our online marketplace by introducing new services and new types of loans to be facilitated through our platform, and by tailoring products to specific borrower needs. Expand the lender base. We strive to increase the overall number of lenders and the amounts they invest through our platform by facilitating investments in a diversified portfolio of high-quality secured loans. We will continue to develop new investment options in order to satisfy different lender requirements. In the future, we plan to offer lenders a more diverse array of loans to be facilitated through our platform that better meet their return targets. Expand our services and the variety of loans facilitated through our platform. Currently, we primarily facilitate loans to individuals or business that pledge the security interest in their automobiles as collateral the loans. We plan to provide three new services in facilitating (i) Finance leases: unlike our current operating model, where the car and the title of the car remains with the owner, in finance lease, the title of the car will be transferred to our financial lease subsidiary, Huizhong, and Huizhong will provide finance lease services to borrowers. We will be able to facilitate loans that exceed RMB 200,000 to borrowers. This will give us a competitive advantage because, to our knowledge, we are the only company in the online lending financing information intermediary industry, where all loans are secured with the security interest in the borrowers automobile, that has a finance lease certificate; (ii) Car-collateralized loans for automobile dealers: in this case, the borrowers will be car dealers. We will facilitate loans for them if they pledge the security interest in their car inventory to secure the loan. This new business will have a bigger volume because we expect that the average inventory will include 50 to 100 cars; and Table of Contents (iii) Auto loans: we also plan to expand the loans facilitated through our platform to include facilitating auto loans for new car buyers and industrial automobile buyers. Further enhance our risk management capabilities. We will continue to automate our risk management system by enhancing our online data analysis capabilities and utilizing additional data sources. We will also advance our proprietary algorithms in order to increase the automation and predictive capabilities of our risk management systems. Additionally, we will further develop an effective monitoring system and technology to achieve 24/7 monitoring of collateral automobiles in order to minimize risk. We plan to continue to install small, concealed GPS devices that provide precise location of the collateral automobile. These devices will enable us to further increase the efficiency of our marketplace while maintaining sophisticated risk management capabilities. Commercialize loan asset protection as our new service offering. We have a professional asset protection team, consisting of experienced professionals, mechanics and specialists who are able to collect the collateral automobiles using efficient and safe methods. Post-loan collateral asset protection and recovery has always been the main problem for finance services companies. Some have experienced difficulties collecting the collateral and are interested in outsourcing the recovery process. We plan to start a new service in collateral asset protection for other market participants. Continue to execute our mobile strategy. We have made and will continue to make significant investments in pursuing our mobile strategy. We plan to further strengthen our mobile interest presence to seize promising market opportunities by developing targeted marketing programs directed at mobile users, introduce more mobile related products and further enhance our risk management capabilities utilizing additional information from our mobile users. Continue to invest in our technology platform. We will continue to make significant investments in our proprietary technologies in the areas of data collection and processing algorithms to increase the precision, speed and scale at which we match the demand and supply of funds. Enhanced data analytics will also improve our conversion of online leads into successful borrowers and lenders. We will continue to improve and update our proprietary ARMS system. Cultivate a vibrant consumer lending ecosystem. We will expand strategic relationships with key industry value chain partners to further increase the value of our marketplace and better serve borrowers and lenders. We will continue to promote the positive development of the online auto finance marketplace industry in China through long-term partnerships with government institutions to advocate for the adoption of an industry-wide credit scoring system to better protect borrowers and lenders. Competitive Advantages We have a number of competitive advantages that will enable us to maintain and further increase our market position in the industry for the regional market. Our competitive strengths include: Our business outlets cover northern China. Currently, we have 96 offices covering the northern part of China. Including offices of other third party intermediary agencies we work with, we have more than 100 business outlets in total. We plan to open 30 more offices so that the total number of our business outlets will be more than 130. Our business outlets are mainly located in third-, fourth- and fifth-tier cities in the northern part of China. Chinese cities are often categorized according to tiers based on gross domestic product (GDP), population and level of political administration. Third-, fourth- and fifth-tier cities are cities that have less GDP, population and lower level of political administration compared to first- and second-tier cities. We are very familiar with the markets in third, fourth and fifth-tier cities, which are less competitive than in first- or second-tier cities. We are able to provide customization based on borrower and lender needs. We are able to customize the loans facilitated through our platform for our customers and lenders, with the monthly interest rates ranging from 0.99% to 1.5% and terms ranging from 1 to 24 months. The automobile models that qualify for our loans are extensive. Because the loans we facilitate through our platform are all secured, we are flexible with the terms of the loan depending on customer and lender needs. Such flexibility makes us more attractive to borrowers and lenders than traditional financial institutions or other automobile finance marketplaces in the industry. We have a quick and efficient approval system. A borrower applicant can be accepted by us from as fast as 4 hours to up to two days, which is much less than the 5- to 7-day process it usually takes for banks to process application and release funds. We use big data to assess the applicant borrower s credit and evaluate the collateral automobile, manage risk and eliminate fraudulent applications. Because the loans we facilitate through our platform are all secured and we install GPS to achieve 24/7 monitoring of the collateral, we are flexible with the standard of acceptation, and have a high acceptation rate of 90%. Table of Contents We have developed our own evaluation system. We have acquired internal and external sources in big data to assess borrowers creditworthiness. We also utilize the vast automobile trading history with big data to give an estimated value of the automobile. In addition, we keep a record of the automobile s service, maintenance and insurance history to better assess depreciation and amortization of the automobile. Our evaluation system analyzes and calculates all the information and generates risk warnings with regard to each application. With these analyses and warnings, we are able to better understand the creditworthiness of the borrower and the value of the collateral, and therefore reasonably price the loans facilitated through our platform. We have the most advanced GPS technology and equipment. Our GPS equipment is small, easy to conceal, and is shielding-proof, demolition-proof and scanning-proof. We also have special equipment installation technology – welding. We have used welding for more than two years now and none of the GPSs we installed in the collateral cars were removed or shielded. We install a maximum number of 7 GPSs in one car to realize 24/7 monitoring. We are among the first in the industry to establish a collateral asset protection team. In order to protect the interests of the lenders upon a borrower s delinquency, we need to repossess the car to exercise the security interest in the collateral. We thus established our own collateral asset protection team. Our asset protection team is consisted of experienced professionals, mechanics and specialists. They are able to collect the collaterals efficiently and safely because they have advanced equipment, successful experience, well-designed strategies, and extensive social connections. We have a total of 76 people in our asset protection team. So far, our asset protection team has successfully repossessed 1,158 cars, representing a success rate of 90%, upon borrowers delinquency. We have developed our own Automobile Risk Management System (ARMS). We have developed a new intelligent automobile risk management system, which is implemented mainly at Stage 6 "Servicing and Asset Protection" of our service process. It is safe, convenient and shows real time results. It has reduced cost in human labor and improved risk management in automobile financing by monitoring the collateral automobiles and the risk of the loans on an all-round, full-time basis. ARMS provides 24/7 online real time monitoring, position tracking, route replay, data management, risk assessment of the car s track record, warnings of abnormal activities, warnings of the risks regarding secondary mortgage, warnings of signal disturbance, and other post-loan management solutions. Our Challenges and Risk Factors Summary The following section outlines the primary challenges and risks inherent to our business model. Before deciding to invest in our ordinary shares, we strongly recommend a close reading and consider all of the risks in the section entitled "Risk Factors" beginning on page 14. Limited Operating History. Our significant business lines have a limited operating history, which makes it difficult to evaluate our future prospects and results of operations. Our ability to maintain and enhance our brand recognition and to conduct our sales and marketing activities cost-effectively. As we have a limited operating history, our focus will be on maintaining and enhancing our brand recognition in a cost-effective manner. We may not be able to compete effectively with our more established competitors, and this may in turn impede our growth and profitability. Our reliance on the information technology infrastructure. We are heavily reliant on information technology and our business will suffer from any unexpected network interruptions or network failures. Also, if we are not able to continue to innovate or if we fail to adapt to changes in our industry, our business, financial condition and results of operations would be materially and adversely affected. Table of Contents Implications of Being an Emerging Growth Company We qualify as an "emerging growth company" as defined in the Jumpstart our Business Startups Act of 2012, or the JOBS Act. An emerging growth company may take advantage of specified reduced reporting and other burdens that are otherwise applicable generally to public companies. These provisions include: the ability to include only two years of audited financial statements and only two years of related management s discussion and analysis of financial condition and results of operations disclosure; and an exemption from the auditor attestation requirement in the assessment of our internal control over financial reporting pursuant to the Sarbanes-Oxley Act of 2002. We may take advantage of these provisions for up to five years or such earlier time that we are no longer an emerging growth company. We would cease to be an emerging growth company if we have more than $1.0 billion in annual revenue, have more than $700 million in market value of our ordinary shares held by non-affiliates or issue more than $1.0 billion of non-convertible debt over a three-year period. Implication of Being a Foreign Private Issuer We are a foreign private issuer within the meaning of the rules under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). As such, we are exempt from certain provisions applicable to United States domestic public companies. For example: we are not required to provide as many Exchange Act reports, or as frequently, as a domestic public company; for interim reporting, we are permitted to comply solely with our home country requirements, which are less rigorous than the rules that apply to domestic public companies; we are not required to provide the same level of disclosure on certain issues, such as executive compensation; we are exempt from provisions of Regulation FD aimed at preventing issuers from making selective disclosures of material information; we are not required to comply with the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act; and we are not required to comply with Section 16 of the Exchange Act requiring insiders to file public reports of their share ownership and trading activities and establishing insider liability for profits realized from any "short-swing" trading transaction. Corporate Information Our principal executive office is located at No.8 Guanghua Dongli, Zhonghai Guangchang, South Tower, 7th Floor, Chaoyang District, Beijing, PRC 100020. The telephone number of our principal executive offices is +86-010-8018-8588. Our registered agent in the Cayman Islands is Forbes Hare Trust Company Limited. Our registered office and our registered agent s office in the Cayman Islands are both at Cassia Court, Suite 716, 10 Market Street, Camana Bay, Grand Cayman KU1-9006, Cayman Islands. Our registered agent in the United States is Vcorp Services, LLC. We maintain a website at www.fuqinjinrong.com. We do not incorporate the information on our website into this prospectus and you should not consider any information on, or that can be accessed through, our website as part of this prospectus. Table of Contents Offering Summary Following completion of our initial public offering, ownership of Fuqin Fintech Limited will be as follows, assuming completion of the minimum and maximum offerings, respectively. To the extent we complete an offering between the minimum and maximum offerings, the percentage ownership of participants in our initial public offering will be between the below amounts (the IPO shareholders includes shareholders who acquire shares from the Company and the Selling Shareholders through this offering): Minimum Offering Maximum Offering Existing IPO Existing IPO Shareholders Shareholders Shareholders Shareholders 96.15% 3.85% 93.46% 6.54% Fuqin Fintech Limited Fuqin Fintech Limited Table of Contents The Offering Offering Price per Ordinary Share: We anticipate that the initial public offering price will be between $5.00 per ordinary share and $6.00 per ordinary share Shares Offered by us: 2,000,000 ordinary shares if the ordinary shares are offered and sold at the minimum offering amount in this offering, or 3,500,000 ordinary shares if the ordinary shares are offered and sold at the maximum offering amount in this offering Share offered by Selling Shareholders 4,999,999 ordinary shares Shares Outstanding Prior to Completion of Offering: 50,000,000 ordinary shares Shares to be Outstanding after Offering: 52,000,000 ordinary shares if the ordinary shares are offered and sold at the minimum offering amount in this offering, or 53,500,000 ordinary shares if the ordinary shares are offered and sold at the maximum offering amount in this offering Gross Proceeds to Us, Net of Underwriting Discount but Before Expenses: $9,325,000 if the ordinary shares are offered and sold at the minimum offering amount in this offering, or $19,582,500 if the ordinary shares are offered and sold at the maximum offering amount in this offering Best efforts The Underwriter is selling our ordinary shares on a "best efforts, minimum/maximum" basis. Accordingly, the Underwriter has no obligation or commitment to purchase any securities. The Underwriter is not required to sell any specific number of dollar amount of ordinary shares but will use its best efforts to sell the ordinary shares offered. We do not intend to close this offering unless we sell at least a minimum number of ordinary share, at the price per ordinary share set forth on the cover page of this prospectus, to result in sufficient proceeds to list our ordinary shares on the Nasdaq Capital Market. Escrow account The gross proceeds from the sale of the ordinary shares in this offering will be deposited in a non-interest bearing escrow account maintained by the deposit account agent, FinTech Clearing, LLC (the "Deposit Account Agent"). All checks will be deposited directly into the escrow account and all wire transfers will be wired directly to the escrow account. The funds will be held in escrow until the Deposit Account Agent has advised us that it has received $10,000,000, the minimum offering, in cleared funds. If we do not receive the minimum of $10,000,000 by December 31, 2018 (and for a period of up to 60 additional days if extended by agreement between us and the underwriter), all funds will be promptly returned to purchasers in this offering after the termination of the offering, without charge, deduction or interest. Prior to December 31, 2018 (and for a period of up to 60 additional days if extended by agreement between us and the underwriter), in no event will funds be returned to you unless the offering is terminated. You will only be entitled to receive a refund of your subscription price if we do not raise a minimum of $10,000,000 by December 31, 2018 (and for a period of up to 60 additional days if extended by agreement between us and the underwriter). No interest will be paid either to us or to you. See "Underwriting — Deposit of Offering Proceeds." Table of Contents Nasdaq Capital Market Symbol: "FQJR" Transfer Agent: Securities Transfer Corporation
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+PROSPECTUS SUMMARY This summary highlights some information from this prospectus, and it may not contain all the information important to making an investment decision. A potential investor should read the following summary together with the more detailed information regarding the Company and the common stock being sold in this offering, including "
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+PROSPECTUS SUMMARY 2 RISK FACTORS 5 SUMMARY OF FINANCIAL INFORMATION 13 MANAGEMENT S DISCUSSION AND ANALYSIS 14 INDUSTRY OVERVIEW 14 FORWARD-LOOKING STATEMENTS 15 DESCRIPTION OF BUSINESS 15 USE OF PROCEEDS 17 DETERMINATION OF OFFERING PRICE 17 DILUTION 18 SELLING SHAREHOLDERS 19 PLAN OF DISTRIBUTION 20 DESCRIPTION OF SECURITIES 21 INTERESTS OF NAMED EXPERTS AND COUNSEL 22 REPORTS TO SECURITIES HOLDERS 22 DESCRIPTION OF FACILITIES 22 LEGAL PROCEEDINGS 23 PATENTS AND TRADEMARKS 23 DIRECTORS AND EXECUTIVE OFFICERS 23 EXECUTIVE COMPENSATION 23 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 26 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 26 PRINCIPAL ACCOUNTING FEES AND SERVICES 26 MATERIAL CHANGES 26 FINANCIAL STATEMENTS F1-F14 PART II. INFORMATION NOT REQUIRED IN PROSPECTUS OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION 27 INDEMNIFICATION OF OFFICERS AND DIRECTORS 27 RECENT SALES OF UNREGISTERED SECURITIES 28 EXHIBITS TO FINANCIAL STATEMENTS 28 UNDERTAKINGS 29 SIGNATURES 30 You should rely only on the information contained in this prospectus or contained in any free writing prospectus filed with the Securities and Exchange Commission. We have not authorized anyone to provide you with additional information or information different from that contained in this prospectus filed with the Securities and Exchange Commission. We take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. We are offering to sell, and seeking offers to buy, our common stock only in jurisdictions where offers and sales are permitted. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or any sale of shares of our common stock. Our business, financial condition, results of operations and prospects may have changed since that date. Through February 28, 2019, all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers' obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions. The date of this prospectus is __________________. - 1 - Table of Contents PROSPECTUS SUMMARY In this Prospectus, "Leader Hill Corp.," "the "Company," "Leader Hill," , ' ': "we," , ' ': , ' ': us, and , ' ': , ' ': our, refer to Leader Hill Corporation, unless the context otherwise requires. Unless otherwise indicated, the term , ' ': , ' ': fiscal year refers to our fiscal year ending November 30 th. Unless otherwise indicated, the term , ' ': , ' ': common stock refers to shares of the Company s common stock. This Prospectus, and any supplement to this Prospectus include "forward-looking statements". To the extent that the information presented in this Prospectus discusses financial projections, information or expectations about our business plans, results of operations, products or markets, or otherwise makes statements about future events, such statements are forward-looking. Such forward-looking statements can be identified by the use of words such as "intends", "anticipates", "believes", "estimates", "projects", "forecasts", "expects", "plans" and "proposes". Although we believe that the expectations reflected in these forward-looking statements are based on reasonable assumptions, there are a number of risks and uncertainties that could cause actual results to differ materially from such forward-looking statements. These include, among others, the cautionary statements in the "Risk Factors" section and the "Management s Discussion and Analysis of Financial Position and Results of Operations" section in this Prospectus. This summary only highlights selected information contained in greater detail elsewhere in this Prospectus. This summary may not contain all of the information that you should consider before investing in our common stock. You should carefully read the entire Prospectus, including "Risk Factors" beginning on Page 5, and the financial statements, before making an investment decision. The Company We, Leader Hill Corporation, a Nevada corporation ("the Company") was incorporated under the laws of the State of Nevada on August 21, 2017. We, Leader Hill Corporation ("the Company"), are an early stage business consulting company that intends to assist start-up to mid size companies in the East Asia region, with a focus on mainland China and Hong Kong, to operate their businesses more cost effectively through our multifaceted consulting services. The Company s executive office is located at Flat 1204 Block B, Mei Li Yuan, Hong Ling Middle Road, Luohu, Shenzhen 518000 China. We believe we need to raise $160,000 to execute our business plan over the next 12 months. The funds raised in this offering, even assuming we sell all the shares being offered, may be insufficient to carry out our intended business operations. We will receive proceeds from the sale of 4,000,000 shares of our common stock and intend to use the proceeds from this offering for advertising, marketing costs, staffing, funding of day to day operations, and offering expenses. There is uncertainty that we will be able to sell any of the 4,000,000 shares being offered herein by the Company. The expenses of this offering, including the preparation of this prospectus and the filing of this registration statement, estimated at approximately $39,000 are being paid for by the Company. Should the Company not be able to fund the costs of this offering, our sole officer and director, Seah Chia Yee, has agreed to pay for such expenses. The maximum proceeds to us from this offering ($160,000) will satisfy our basic subsistence level, cash requirements for up to 12 months. 75% of the possible proceeds from the offering by the company ($120,000) will satisfy our basic, subsistence level cash requirements for up to 9 months, while 50% of the proceeds ($80,000) will sustain us for up to 6 months, and 25% of the proceeds ($40,000) will sustain us for up to 3 months. Our budgetary allocations may vary, however, depending upon the percentage of proceeds that we obtain from this offering. For example, we may determine that it is more beneficial to allocate funds toward securing potential financing and business opportunities in the short terms rather than to conserve funds to satisfy continuous disclosure requirements for a longer period. During the 12 months following the completion of this offering, we intend to continue our current business plan and increase our current level of operations. - 2 - Table of Contents We believe that if we are not able to raise additional capital within 12 months of the effective date of this registration statement, we may be adversely effected and may have to curtail operations or continue operations at a limited level that is financially suitable for the Company. Our Offering We have authorized capital stock consisting of 75,000,000 shares of common stock, $0.001 par value per share ("Common Stock"). We have 4,000,000 shares of Common Stock issued and outstanding. Through this offering we will register a total of 4,400,000 shares. These shares represent 4,000,000 additional shares of common stock to be issued by us and 400,000 shares of common stock by our selling stockholder. We may endeavor to sell all 4,000,000 shares of common stock after this registration becomes effective. Upon effectiveness of this Registration Statement, the selling stockholder may also sell his own shares. The price at which we, the company, offer these shares is at a fixed price of $0.04 per share for the duration of the offering. The selling stockholder will also sell shares at a fixed price of $0.04 for the duration of the offering. There is no arrangement to address the possible effect of the offering on the price of the stock. We will receive all proceeds from the sale of our common stock but we will not receive any proceeds from the selling stockholder. The primary offering on behalf of the company is separate from the secondary offering of the selling stockholder in that the proceeds from the shares of stock sold by the selling stockholder will go directly to them, not the company. The same idea applies if the company approaches or is approached by investors who then subsequently decide to invest with the company. Those proceeds would then go to the company. Whomever the investors decide to purchase the shares from will be the beneficiary of the proceeds. None of the proceeds from the selling stockholder will be utilized or given to the company. As of the date of this prospectus, our President, Seah Chia Yee, owns and controls 100% of the voting power of our outstanding capital stock. After the offering, assuming all of the shares that are being registered herein on behalf of Seah Chia Yee and the Company our sold, Mr. Seah will own and control 45% of our common stock. Mr. Seah will be selling shares of common stock on behalf of the Company simultaneously to selling shares of his own personal stock from his own account. A conflict of interest may arise between Mr. Seah s interest in selling shares for his own account and in selling shares on the Company s behalf. Please note that at this time Mr. Seah intends to sell the Company s shares prior to selling his own shares, although he is under no obligation to do so. Mr. Seah will decide whether shares are being sold by the Company or by Mr. Seah himself. *We will notify investors by filing an information statement that will be available for public viewing on the SEC Edgar Database of any such extension of the offering. Securities being offered by the Company 4,000,000 shares of common stock, at a fixed price of $0.04 offered by us in a direct offering. Our offering will terminate upon the earliest of (i) such time as all of the common stock has been sold pursuant to the registration statement or (ii) 365 days from the effective date of this prospectus unless extended by our Board of Directors for an additional 90 days. We may however, at any time and for any reason terminate the offering. Securities being offered by the Selling Stockholder 400,000 shares of common stock, at a fixed price of $0.04 offered by our selling stockholder in a resale offering. As previously mentioned this fixed price applies at all times for the duration of the offering. The offering will terminate upon the earliest of (i) such time as all of the common stock has been sold pursuant to the registration statement or (ii) 365 days from the effective date of this prospectus, unless extended by our Board of Directors for an additional 90 days. We may however, at any time and for any reason terminate the offering. Offering price per share We and our selling stockholder will sell the shares at a fixed price per share of $0.04 for the duration of this Offering. Number of shares of common stock outstanding before the offering of common stock 4,000,000 common shares are currently issued and outstanding. Number of shares of common stock outstanding after the offering of common stock 8,000,000 common shares will be issued and outstanding if we sell all of the shares we are offering herein. The minimum number of shares to be sold in this offering None. Market for the common shares There is no public market for the common shares. The price per share is $0.04. We may not be able to meet the requirement for a public listing or quotation of our common stock. Furthermore, even if our common stock is quoted or granted listing, a market for the common shares may not develop. The offering price for the shares will remain at $0.04 per share for the duration of the offering. - 3 - Table of Contents Use of Proceeds We intend to use the gross proceeds to us for advertising, marketing costs, staffing, funding of day to day operations, and offering expenses. Termination of the Offering This offering will terminate upon the earlier to occur of (i) 365 days after this registration statement becomes effective with the Securities and Exchange Commission, or (ii) the date on which all 4,400,000 shares registered hereunder have been sold. We may, at our discretion, extend the offering for an additional 90 days. At any time and for any reason we may also terminate the offering. Terms of the Offering Our President, Seah Chia Yee will sell the 4,000,000 shares of common stock on behalf of the company, upon effectiveness of this registration statement, on a BEST EFFORTS basis. Subscriptions: All subscriptions once accepted by us are irrevocable. Registration Costs We estimate our total offering registration costs to be approximately $39,000.
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+This summary highlights information contained elsewhere in this prospectus, but it does not contain all of the information that you may consider important before deciding to invest in our Class A Common Stock. Therefore, you should read this entire prospectus carefully, including, in particular, the sections entitled Risk Factors beginning on page 16 of this prospectus and Management s Discussion and Analysis of Financial Condition and Results of Operations, and our consolidated financial statements and related notes, before making an investment decision. Some of the statements in this summary and elsewhere in this prospectus constitute forward-looking statements. See Cautionary Note Regarding Forward-Looking Statements. Our Company We are a premier installer and nationwide distributor of interior building products with leading market positions in residential interior design services in highly attractive markets. Through our Residential Design Services (which we refer to as RDS ) segment, we serve leading national and regional homebuilders by providing an integrated, outsourced solution for the design, consultation, sourcing, distribution and installation needs of their homebuyer customers. Through our 18 design centers located in California, Nevada, and Arizona, our specially-trained design consultants work closely with homebuyers in the selection of a broad array of interior products and finishes, including flooring, countertops, wall tile, window treatments, shower enclosures, and related interior items, primarily for newly constructed homes. We then coordinate the ordering, fulfillment and installation of many of these interior products to provide a seamless experience for the homebuyer. With our attractively arranged design centers and our strong product sourcing and installation capabilities, we enable our homebuilder customers to outsource critical aspects of their business to us, thereby increasing their sales, profitability, and return on capital. We also have leading market positions in the selection and importation of natural and engineered stone slabs for kitchen and bathroom countertops and specialty tiles through our Architectural Surfaces Group (which we refer to as ASG ) segment. ASG sources natural and engineered stone from a global supply base, often under exclusive terms, and markets these materials through a national network of distribution centers and showrooms under proprietary brand names such as AG&M, Modul, Pental, Bedrock International and Cosmic. In addition to serving the new residential and commercial construction markets with these materials, we also distribute them to the repair and remodel (which we refer to as R&R ) market. Residential Design Services. Our outsourced interior design center and installation services operate in some of the most attractive and fastest growing residential areas in the United States. We enter into exclusive service agreements with homebuilders in these areas at the beginning of new community development projects to provide them with a single-source solution for the design center operations, consultation, sourcing, fulfillment, and installation phases of the homebuilding process. At our design centers, our expert design staff work directly with homebuyers to help them achieve their design, styling, and product needs, leveraging our web-based preference analysis and proprietary software system to enable real-time pricing of interior options. We believe our consultative sales focus helps homebuyers optimize their product choices, often leading to the selection of higher margin products. This, in turn, creates significant value for our homebuilder customers, who share in incremental product upgrade revenue. We have developed strong, long-term relationships with many of our homebuilder customers, many of which we have worked with for over 15 years. In 2017, our largest customers included Toll Brothers, CalAtlantic (now a part of Lennar Group), TriPointe, Brookfield Residential, D.R. Horton, and Taylor Morrison. To expand our market opportunity within our RDS segment, we continually consider additional markets, product adjacencies and other opportunities for our installation services. For example, we believe that the multi-family and R&R segments of the residential construction markets represent areas where we are currently Table of Contents The information in this preliminary prospectus is not complete and may be changed. The selling stockholders may not sell these securities until the registration statement filed with the U.S. Securities and Exchange Commission is declared effective. This preliminary prospectus is not an offer to sell these securities, nor a solicitation of an offer to buy these securities, in any jurisdiction where the offer, solicitation, or sale is not permitted. SUBJECT TO COMPLETION, DATED AUGUST 13, 2018 Select Interior Concepts, Inc. 24,145,996 Shares Class A Common Stock This prospectus relates solely to the resale of up to an aggregate of 24,145,996 shares of our Class A common stock, par value $0.01 per share (which we refer to as our Class A Common Stock ), by the selling stockholders identified in this prospectus (which term as used in this prospectus includes pledgees, donees, transferees or other successors-in-interest). We are registering the offer and sale of the shares of our Class A Common Stock that were acquired by the selling stockholders in our November 2017 private offering and private placement. The selling stockholders may offer the shares of our Class A Common Stock from time to time as they may determine through public or private transactions or through other means described in the section entitled Plan of Distribution. We do not know when or in what amounts the selling stockholders may offer the shares of our Class A Common Stock for sale. The selling stockholders may sell all, some, or none of the shares offered by this prospectus. The prices at which the selling stockholders may sell the shares of our Class A Common Stock may be determined by the prevailing market price for the shares at the time of sale, may be different than such prevailing market prices, or may be determined through negotiated transactions with third parties. We will not receive any of the proceeds from the sale of these shares of our Class A Common Stock by the selling stockholders. We have agreed to pay all expenses relating to registering these shares of our Class A Common Stock. The selling stockholders will pay any brokerage commissions and/or similar charges incurred for the sale of these shares of our Class A Common Stock. Prior to the date of this prospectus, there was not a public market for the shares of our Class A Common Stock. Because all of the shares offered under this prospectus are being offered by the selling stockholders, we cannot currently determine the price or prices at which the shares may be sold under this prospectus. We have applied to list the shares of our Class A Common Stock for trading on the NASDAQ Capital Market under the symbol SIC. We are an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012, under applicable federal securities laws and are eligible for reduced public company reporting requirements. See Summary Emerging Growth Company Status. Investing in our Class A Common Stock involves a high degree of risk. Before buying any shares, you should carefully read the discussion of material risks of investing in our Class A Common Stock in Risk Factors beginning on page 16 of this prospectus. We may amend or supplement this prospectus from time to time by filing amendments or supplements as required. You should carefully read this entire prospectus and any amendments or supplements hereto before you make your investment decision. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. , 2018 Table of Contents STATEMENT REGARDING INDUSTRY AND MARKET DATA The industry and market data in this prospectus are based on the good faith estimates of our management (which estimates are based upon review of our internal estimates), research studies and surveys, independent industry publications, and other publicly available information. Industry publications and research studies and surveys generally state that they have been obtained from sources believed to be reliable, although they do not guarantee the accuracy or completeness of such information. These data involve a number of assumptions and limitations, and investors are cautioned not to give undue weight to such estimates. Although we have not independently verified the accuracy or completeness of any third-party information, we believe that the information from these publications and studies included in this prospectus is generally reliable, and the conclusions contained in the third-party information are reasonable. Forecasts and other forward-looking information obtained from these sources are subject to the same qualifications and additional uncertainties regarding the other forward-looking statements in this prospectus. In addition, projections, assumptions and estimates of our future performance and the future performance of the industry in which we operate are necessarily subject to a high degree of uncertainty and risk due to a variety of factors, including those described in the section entitled Risk Factors and elsewhere in this prospectus. These and other factors could cause results to differ materially from those expressed in the estimates made by independent parties and by us. Table of Contents underpenetrated yet where there are attractive growth opportunities for us. We also believe that our recent product expansion into cabinet supply and installation represents a substantial growth opportunity with our existing homebuilder customers. In addition, given the fragmented nature of our industry, we believe there is significant opportunity for us to continue growing both our geographic footprint and install capabilities through value-enhancing, accretive acquisitions. Architectural Surfaces Group. Our ASG segment imports and distributes natural and engineered stone slabs, as well as tile, through 22 strategically positioned warehouse locations across the United States. Our stone slabs include marble, granite, and quartz, for use as distinctive kitchen and bathroom countertops, and our tiles consist of ceramic and porcelain for flooring, backsplash, and wall tile applications. We maintain a broad domestic footprint of showrooms and distribution centers, serving attractive markets in the Northeast, Southeast, Southwest, Mountain West, and West Coast regions of the United States and offer what we believe is a distinctive and targeted merchandising strategy, including displaying our products in customer-oriented showrooms that cater to professional interior designers and architects as well as homeowners. Our showrooms are staffed by product and design experts who focus on the total customer experience. We carry product lines of natural and engineered stone slabs and tile products that are tailored to the specific geographic regions that we serve and our goal is to provide a comprehensive offering that meets all of our professional and homeowner customers stone and tile needs. We have relationships with a wide array of stone slab quarries, manufacturers and distributors around the world, and we work closely with these providers to ensure their product performance and variety meet our high quality standards. We believe the strength and breadth of these relationships helps us offer our customers a broad and consistent selection of high-quality stone slabs from a global supply chain. As a result of our geographic reach and product knowledge, we have successfully secured exclusive rights to leading materials that are marketed under ASG s MetroQuartz and PentalQuartz brands along with our new PentalTek porcelain brand. We believe that the markets for design center services and natural and engineered stone slab distribution are complementary and that our ability to combine them into a single platform strengthens our business model and expands our growth opportunities. Both of our business segments provide key value-added services that are critical to serving our customers needs and result in an attractive free cash-flow profile. In addition, both of these markets are highly fragmented and, we believe, are poised for further consolidation. In the last two years, we have completed six acquisitions and opened five greenfield locations (which we define as new facilities opened in geographic areas that we previously served from a remote distribution point), and we believe we are well positioned to continue pursuing both additional acquisition opportunities and new greenfield locations in the foreseeable future. Our Competitive Strengths We believe that our competitive strengths include: Exceptional Customer Experience We believe that the customer experience we provide distinguishes us from our competition and is a critical driver of our success. Key elements of our customer experience include: Highly Trained Design Center Staff and Sales Consultants. Our merchandising efforts are designed to expand our customer base while achieving the highest level of customer satisfaction. At RDS design centers, design consultants possess strong reputations and skill sets. Our design consultants are knowledgeable about interior design trends, materials, and options, and a majority have technical training and certifications from interior design schools. Based on our customer homebuilder surveys in 2017, over 95% of homebuyers are highly satisfied by the RDS design consultation experience. Similarly, ASG s facilities are staffed by knowledgeable Table of Contents sales associates that maintain high-end, well-designed showrooms with convenient product displays. ASG sales teams establish and expand relationships with architecture and design firms, kitchen and bath dealers, and countertop fabricators and internal installers, which we believe drive stronger sales and higher satisfaction. Superior Quality and Service. RDS maintains in-house countertop fabrication, light manufacturing, and installation capabilities, which enable it to meet demanding customer schedules and quality standards. These capabilities help drive on-time project completion, homebuyer satisfaction, and profitability for homebuilders. At ASG, suppliers are selected based on a demonstrated ability to provide product that passes our stringent, hands-on inspection process, which results in consistently high-quality products and strong countertop fabricator yields with minimal waste. ASG also offers branded products, and is the exclusive provider of products marketed under ASG s MetroQuartz , PentalQuartz and PentalTek brands. We believe these brands are known in the industry for superior quality, which further enhances ASG s reputation industry-wide. Comprehensive Suite of Product and Service Offerings. Our homebuilder customers increasingly indicate a preference to work with a small number of reliable partners that offer a broad suite of products and services. RDS and ASG have been built to satisfy this preference, and we believe that our businesses offer among the most comprehensive product sets and services in the markets in which we operate. RDS provides a turnkey homebuyer management process consisting of interior design and product selection and installation service, for homebuilder customers, which depend on RDS to provide the homebuyer with a comprehensive interior product offering that includes approximately 100,000 items. ASG s customers, which include architects, interior designers, homeowners, and countertop fabricators, rely on ASG to provide a full suite of products that includes in-demand surface materials, including natural stone slabs, engineered stone slabs notably high-end quartz products that are exclusively marketed through ASG and related products such as tile. Sophisticated, Global Supply Chain. We maintain a global and diverse supplier network with extensive procurement resources that promote continuity of supply. We enjoy long-standing relationships with a global supplier base, which enable sourcing of quality products to meet a broad range of customer preferences and specifications at competitive prices. Our footprint provides visibility into local trends that drive highly tailored product procurement, which enables efficient working capital management. We believe that our merchandising capabilities encourage suppliers to partner with us on an exclusive basis, which provides us with an additional competitive advantage. We also believe that the strength of our supplier relationships helps us source products at attractive prices, which further differentiates us from our competitors. Significant Visibility into Future Financial Performance. RDS is awarded homebuilder development contracts that provide significant visibility into future net revenue. We estimate and track the expected net revenue to be derived from sales related to the remaining housing lots to be fulfilled under existing service agreements for active residential developments. As of December 31, 2017, we estimate that amount was approximately $370 million across approximately 17,000 unique housing lots, assuming each lot is fulfilled and the historical average value of our products are installed with respect to each lot. This amount has increased each of the past three years, despite RDS achieving consecutive increases in net revenue in each of those years. Additionally, ASG s high-volume fabrication and design customers help provide us with visibility into their supply chain and sales programs, which enable us to forecast expected demand. A substantial percentage of our net revenue is attained from repeat customers with whom ASG has long-standing, cooperative relationships, which provides additional visibility into ASG s future net revenue profile. Long-Standing Relationships with Leading, Blue Chip Customers. RDS serves a mix of production homebuilders, multi-family accounts, and high-volume builders. In 2017, RDS top ten customers had an average relationship tenure of 15 years, demonstrating the strength of our relationships as well as the trust we have earned in the homebuilding process. ASG also has strong relationships with many architecture and design firms, kitchen and bath dealers, and fabricators. For example, approximately 88% of ASG s customers that purchased more Table of Contents than $5,000 of products in 2016 also purchased products from ASG in 2017. We believe that ASG s expanded geographic footprint with premier design centers will drive stronger demand from these large regional and national customers. Scalable Platform and a Track Record of Accretive Acquisitions. We have built our RDS and ASG platforms to be scalable and to maximize organic and acquisition-driven growth. We have an integration playbook that standardizes our approach to human resources and labor management matters and vendor relationships, and improves our overall integration process of financial and operational data. We believe our system roll-out and management processes provide us with a repeatable procedure for on-boarding of newly acquired businesses, with minimal disruption to our existing operations and those of our acquisitions. In the last two years, we have completed six acquisitions, the most significant of which was the acquisition of Pental Granite and Marble, LLC (which we refer to as Pental ). We believe Pental represents a transformative acquisition, which significantly expanded our geographic reach and product offering. As a result of our multi-regional platform, we believe we are well positioned to continue as a consolidator in our markets, identifying and integrating acquisitions into our existing operations to drive growth and scale. Experienced Management Team with Track Record of Driving Growth. We are led by Tyrone Johnson, our Chief Executive Officer, Kendall R. Hoyd, our Chief Financial Officer, and Sunil Palakodati, President of ASG. Messrs. Johnson, Hoyd, and Palakodati have a combined 52 years in the building products and construction industries. Prior to their current roles, Messrs. Johnson, Hoyd, and Palakodati held senior executive positions with M&A responsibility at OmniMax International, Inc. (formerly Euramax International, Inc.), Trussway Holdings, Inc., and Masco Corporation, respectively. Our Growth Strategy Our growth strategy includes: Expand Geographically through Greenfield Investment. We believe that our greenfield initiatives help lower our overall risk by targeting markets for new physical locations in which we have already established a base of business in our ASG segment through remote distribution, and offer attractive returns due to our knowledge of the market and our low fixed investment costs relative to revenue and profit potential. For example, with respect to the four ASG greenfield locations established in 2016 and 2017, the average fixed investment was $0.9 million and average estimated operating losses during the ramp-up period were $0.5 million, which brought the average total investment to approximately $1.4 million. These four locations took an average of 12 months from establishment to break even on an EBITDA basis. Based on current market assessments, we believe we can continue to expand ASG s footprint by opening new greenfield locations. Offer New Products and Services. We will seek to expand the suite of products and services that we provide to our customers. For example, for RDS, cabinets represent an attractive adjacent product expansion opportunity. Many of our long-term homebuilder customers have identified cabinet supply and installation as a challenging area in the construction process due to skilled labor shortages and difficulties associated with material sourcing. We believe that our existing capabilities and relationships can facilitate a successful product expansion in this area. RDS management is also evaluating appliances, home automation, and other products for similar opportunities. ASG will seek exclusive distribution rights from leading manufacturers by leveraging our geographic footprint and national presence following the acquisition of Pental. ASG management is also evaluating additional materials, including porcelain surfaces, for distribution within and cross-selling throughout the ASG network. Accelerate Penetration of Existing Markets. We believe that we have several opportunities to expand our market penetration and capture additional market share. For RDS, the multi-family market is largely Table of Contents unpenetrated and represents a significant growth opportunity. Within our existing markets, RDS has approximately 4% market share of multi-family construction, and we believe this segment can contribute a larger percentage of net revenue over time. At ASG, management is focused on cross-selling products, identifying new customers, and accelerating the build-out of recently opened ASG greenfield sites with the goal of increasing revenue and earnings potential. Identify and Pursue New Customer Segments. R&R remains a relatively untapped opportunity for us and we intend to pursue opportunities in this market. We believe that RDS design centers and staff are well positioned to serve the needs of R&R customers given the breadth of our product offerings, which would enable us to increase design center utilization and expand our margins. At ASG, management is evaluating new customer segments, including builders and dealers, which historically have not been central to the ASG sales effort. We believe that these initiatives have the potential to accelerate our net revenue growth with limited capital investment or increased cost. Acquisitions. We intend to pursue acquisitions that bolster our existing geographic reach, facilitate expansion into new regions, and provide new product or service capabilities. Acquisitions that give us direct contact with homebuyers and homeowners are particularly valuable, as we believe that our merchandising strategies differentiate us from our competitors and drive customer satisfaction. Since June 2015, we have successfully integrated two bolt-on acquisitions, helping us achieve higher net revenue, reduced expenses, and improved cash flow. We closed on three more acquisitions in 2017 and two additional acquisitions in the first quarter of 2018, and are in the process of integrating them. We also have a pipeline of acquisition candidates and engage in conversations from time to time with companies that we deem a strategic fit with our existing businesses. Our History Our platform originated in September 2014, when affiliates of Trive Capital Management LLC (which we refer to as Trive Capital ) acquired RDS, which in turn acquired the assets of PT Tile Holdings, LP (which we refer to as Pinnacle ) in February 2015 and Greencraft Holdings, LLC (which we refer to as Greencraft ) in December 2017. Tyrone Johnson and Kendall R. Hoyd joined RDS in 2015 as Chief Executive Officer and Chief Financial Officer of RDS, respectively. Affiliates of Trive Capital also formed a consolidation platform in the stone countertop market by acquiring the assets of Architectural Granite & Marble, LLC in June 2015, which in turn acquired the assets of Bermuda Import-Export, Inc. (which we refer to as Modul ) in July 2016, Pental Granite and Marble, LLC (which we refer to as Pental ) in February 2017, and the assets of Cosmic Stone & Tile Distributors, Inc. (which we refer to as Cosmic ) in October 2017, and these acquired businesses were combined to form ASG. ASG then acquired certain assets of Elegant Home Design, LLC (which we refer to as Bedrock ) in January 2018 and certain assets of NSI, LLC (which we refer to as NSI ) in March 2018. ASG is led by Sunil Palakodati, who joined as Chief Executive Officer of ASG in August 2016. Table of Contents Recent Transactions November 2017 Restructuring Transactions In November 2017, Select Interior Concepts, Inc. entered into a series of restructuring transactions (which we refer to as the November 2017 restructuring transactions ) pursuant to which it acquired all of the outstanding equity interests in each of RDS and ASG, including all of their respective wholly-owned subsidiaries, each of which entities, including Select Interior Concepts, Inc., were then under common control by affiliates of Trive Capital. Following the November 2017 restructuring transactions, Select Interior Concepts, Inc. became a holding company that wholly owns RDS and ASG, and Tyrone Johnson, Kendall R. Hoyd, and Sunil Palakodati became our Chief Executive Officer, our Chief Financial Officer, and the President ASG, respectively. The following diagram shows our current organizational structure: November 2017 Private Offering and Private Placement In November 2017, we completed a private offering and private placement pursuant to which we issued an aggregate of 21,750,000 shares of our Class A Common Stock, which included shares issued pursuant to the exercise of the option granted by us to the initial purchaser and placement agent thereunder, in reliance upon the exemptions from the registration requirements of the Securities Act of 1933, as amended (which we refer to as the Securities Act ), provided by Rule l44A, Regulation S, and Rule 506 of Regulation D under the Securities Act (which we refer to as the November 2017 private offering and private placement ). We received net proceeds of $240.5 million from the November 2017 private offering and private placement, of which we used $122.8 million in connection with the November 2017 restructuring transactions, which included our acquisition of all of the outstanding equity interests in each of RDS and ASG and the repurchase by us of shares of our Class B common stock, par value $0.01 per share (which we refer to as our Class B Common Stock ) from existing stockholders, and $112.8 million to repay our outstanding indebtedness, with the remaining $4.9 million of the net proceeds being used for working capital and general corporate purposes. Table of Contents
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+Prospectus Summary 1 Risk Factors 7 Cautionary Note Regarding Forward Looking Statements 20 Use of Proceeds 21 Dividend Policy 22 Capitalization 23 Dilution 24 Pro Forma Financial Data 25 Management s Discussion and Analysis of Financial Condition and Results of Operations 29 Business 37 Management 45 Executive Compensation 49 Security Ownership of Certain Beneficial Owners and Management 53 Certain Relationships and Related Party Transactions 54 Description of Capital Stock 55 Underwriting 58 Legal Matters 65 Experts 65 Where You Can Find More Information 65 Index to Consolidated Financial Statements 66 Neither we nor the underwriters have authorized anyone to provide you with any information or to make any representation, other than those contained in this prospectus or any free writing prospectus we have prepared. The underwriters and we take no responsibility for, and provide no assurance as to the reliability of, any other information that others may give you. We are offering to sell our common stock, and seeking offers to buy our common stock, only in jurisdictions where offers and sales are permitted. The information contained in this prospectus is accurate only as of its date, regardless of the time of delivery of this prospectus or of any sale of our common stock. Neither we nor any of the underwriters have done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than the United States. You are required to inform yourself about, and to observe any restrictions relating to, this offering and the distribution of this prospectus. This prospectus includes statistical and other industry and market data that we obtained from industry publications and research, surveys and studies conducted by third parties. Industry publications and third-party research, surveys and studies generally indicate that their information has been obtained from sources believed to be reliable, although they do not guarantee the accuracy or completeness of such information. While we believe these industry publications and third-party research, surveys and studies are reliable, we have not independently verified such data. Unless the context suggests otherwise, references in this prospectus to "Tal Consolidated," "company," "we," "us" and "our" refer to Tal Consolidated Inc., a New York corporation, and, where appropriate, our wholly-owned subsidiaries. References to "Tal Depot" refer to Ram Distribution Group LLC d/b/a Tal Depot, a New York limited liability company and our wholly-owned subsidiary, and Lady Shipper LLC, a New York limited liability company that is wholly-owned by Ram Distribution Group LLC. PROSPECTUS SUMMARY This summary highlights selected information appearing elsewhere in this prospectus. While this summary highlights what we consider to be important information about us, you should carefully read this entire prospectus before investing in our common stock, especially the risks and other information we discuss under the headings "Risk Factors" and "Management s Discussion and Analysis of Financial Condition and Results of Operation" and our financial statements and related notes beginning on page 66 . Our fiscal year end is December 31. Some of the statements made in this prospectus discuss future events and developments, including our future strategy and our ability to generate revenue, income and cash flow. These forward-looking statements involve risks and uncertainties which could cause actual results to differ materially from those contemplated in these forward-looking statements. See "Cautionary Note Regarding Forward-Looking Statements". Our Business Tal Consolidated will serve as the holding company for its wholly-owned operating subsidiary, Tal Depot. Tal Depot primarily sells non-perishable grocery products and home goods online, comprising a vast array of products targeted at both retail and business customers in various geographical regions in the continental United States. The grocery items we currently sell are snacks, biscuits, pastries, k-cups and other coffee and tea products, spreads, dips, breakfast foods, pasta, rice, canned foods, dried fruit and vegetables, spices, vitamin supplements, milk, juices, sodas, water and other drinks. The home goods we currently sell are cleaning supplies, paper towels, toiletries, diapers and pet supplies. We purchase our products and goods directly from the manufacturers and from distributors. We strive to increase our offerings so that we can present our customers with a catalog of items that meets as many of their grocery and home good needs as possible. To do so, we work directly with manufacturers and with distributors. We serve our clients through our website, taldepot.com, and various third party online platforms to provide a seamless and enjoyable online shopping experience. We have developed a computerized inventory management process that reviews orders made and fulfilled. Through such review we keep track of our outgoing inventory and any notable changes in customer demands, and thereby maintain optimal levels of inventory to increase inventory turnover and product freshness. We currently distribute products to customers by taking orders and arranging shipments at our facility. Once an order is received, the products ordered are properly packaged, marked with an identification number, and shipped. For more information on our business please see the section entitled "Our Business." Current Limitations of Online Shopping Tal Depot s business is based on the realization that while retail customers seem to have little spare time to purchase bare essentials such as groceries, they often avoid e-commerce for such items because of the higher costs associated with purchasing such items online, the limited selection online, a lack of comfort with the online shopping experience, and a general concern of buying non-perishable and perishable items online because the shelf life is unknown. Additionally, business customers who have a need to purchase food for their businesses face similar challenges. Our Solution Tal Depot has grown its business by focusing on, and striving to solve, the current limitations of online shopping facing most retail and business customers of groceries and foodstuffs. With our strategically located distribution facility, and plans to expand existing infrastructure and our current product line while adding new facilities throughout the continental United States, we believe we are well positioned to decrease our already competitive costs, provide more selections online, enhance our brand to make customers more comfortable with shopping for groceries and foodstuffs online, and to alleviate shelf life concerns by having local supply of goods close to potential customers. Our Strategy Since its formation, Tal Depot has more than one million customers all throughout the United States, but its highest concentration of orders are shipped to customers located in the northeastern United States, where approximately 31% of Tal Depot s shipments are delivered. Our plan for growth includes opening warehouses and shipping centers in other areas of the country to better serve current Tal Depot customers that are in other regions, notably the west coast and mid-west, and further expand that geographic customer base. In addition to being able to attract more localized business, such facilities will enable us to attract local suppliers and have better inventory control to provide constantly fresh non-perishable, perishable and other goods, which we believe will enhance our brand and contribute to increasing market share. Our sales are made either directly through our website, taldepot.com, or on third party platforms ("TPPs"). Our primary focus is generating as many direct sales as possible, which is one of its greatest challenges. Direct sales have increased from year to year, and continuing that trend remains our goal. The availability of TPPs is what has enabled us to build up the Tal Depot brand and its business to what it is today, and position us to concentrate on continued growth of direct sales. Indeed, TPPs are becoming increasingly more difficult to sell on due to the fees they charge and difficult benchmarks placed on third party sellers, thereby restricting them from freely making use of TPPs. By taking advantage of the TPP market over the past five years, Tal Depot has leveraged that market to its advantage, and its business model going forward is to continue to increase its direct sales, making them its primary revenue source. We believe certain factors can give Tal Depot a competitive advantage over its competitors. These include: pricing; offering hard to find items; offering a variety of products; the freshness of the products offered; ease of use of our website to place orders; brand relationships; experience in the food industry in general and specifically dedicated to the online part of it; the market share we have in the online food industry market; and having leveraged the TPP market for grocery items and household goods for the past five years to build its brand name. We will strive to leverage these advantages to grow Tal Depot s business and expand into related services. Our growth strategy for Tal Depot involves increasing direct sales, improving and expanding infrastructure, opening new facilities in strategic locations, expanding our product offering including through acquiring or otherwise integrating with strategic suppliers and distributors, increasing marketing efforts, and hiring additional proven and experienced executives and operational personnel to complement our current management and personnel to drive our vision for growth. Our Risks and Challenges An investment in our common stock involves a high degree of risk, including risks related to the following: Tal Depot was not profitable during the 2016 and 2017 fiscal years. At December 31, 2016 and December 31, 2017, Tal Depot had an accumulated deficit approximating $3.6 million and $7.7 million, respectively, and has incurred negative cash flows from operations, which according to our auditors, raise substantial doubt about our ability to continue as a going concern. Tal Depot is currently dependent on sales through TPPs for a large majority of its revenues, and is reliant on these platforms continuing to authorize Tal Depot to sell on their websites. Historically, the Company has generated most of its sales from one TPP, Amazon.com. The TPPs may revoke Tal Depot s authorization immediately and even for no reason, and have done so. Our ability to meet our capital spending requirements to expand and grow our business. We may be required to reduce our capital expenditures and investments or take other measures in order to meet our cash requirements. We may need to seek additional funds from liquidity-generating transactions and other conventional sources of external financing (which may include a variety of debt, convertible debt and/or equity financings) to meet our cash and capital spending requirements. Maintaining and enhancing the Tal Depot brand is critical to expanding our business, and maintaining and enhancing the Tal Depot brand may require substantial investments, and these investments may not be successful. Issues that may arise with some of our suppliers and manufacturers and any of their ability to meet customers standards are beyond our control. Our competitors may have more extensive experience or more specialized products and capabilities than we do in some areas. We are subject to a number of additional risks, including general business risks and risks that are specific to the online and grocery/home goods industry, and you should be aware of such risks before you buy our common stock. These risks are discussed more fully in the section entitled "Risk Factors" following this prospectus summary. Emerging Growth Company under the JOBS Act As a company with less than $1.07 billion in revenues during our last fiscal year, we qualify as an "emerging growth company" under the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. As an emerging growth company, we have elected to take advantage of reduced reporting requirements and are relieved of certain other significant requirements that are otherwise generally applicable to public companies. As an emerging growth company: we are required to present only two years of audited financial statements and only two years of related Management s Discussion and Analysis of Financial Condition and Results of Operations; we are exempt from the requirement to obtain an attestation and report from our auditors on whether we maintained effective internal control over financial reporting under the Sarbanes-Oxley Act; we are permitted to provide less extensive disclosure about our executive compensation arrangements; and we are not required to give our stockholders non-binding advisory votes on executive compensation or golden parachute arrangements. We have elected to take advantage of these provisions for up to five years so long as we continue to qualify as an emerging growth company. We would cease to be an emerging growth company if we have more than $1.07 billion in annual revenues, have more than $700 million in market value of our shares held by non-affiliates or issue more than $1.0 billion of non-convertible debt over a three-year period. We have chosen to take advantage of some but not all of these reduced burdens. We have elected to provide two years of audited consolidated financial statements. Additionally, we have elected to take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended (the "Securities Act"), for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act. Our Corporate Information Tal Consolidated was formed in 2017 and is a New York corporation. Tal Depot, the operating subsidiary that Tal Consolidated will wholly-own upon the effective date of the registration statement of which this prospectus forms a part (the "Effective Date"), is a New York limited liability company that has been in business since 2012. The owners of Tal Depot, which include Jeremy Reichmann, our Chief Executive Officer, who owns 85.2% of Tal Depot, will have, as of the Effective Date, exchanged their ownership in Tal Depot for shares in Tal Consolidated. Following this offering Mr. Reichmann will hold a substantial interest in Tal Consolidated, equal to approximately 53.2% of Tal Consolidated s issued and outstanding equity. Tal Depot wholly owns Taldepot.com LLC (formed in 2014), which currently conducts no business, and Lady Shipper LLC (formed in 2017), which at times, processes some of our customer orders on TPPs, and each of which we may use in the future to conduct some of our current or new business enterprises, at the discretion of our management. Our executive offices are located at 377B Pearsall Avenue, Cedarhurst, New York 11516 and our telephone number is (516) 415-7850. Our warehouse from which we conduct our operations is located at 120 Adams Blvd., Farmingdale, NY 11734. Our web site is located at www.talconsolidatedinc.com. The information contained on our website is not incorporated by reference into this prospectus, and the reference to our website in this prospectus is an inactive textual reference only. THE OFFERING Common stock offered by us 2,143,000 shares (or 2,464,450 shares if the representative of the underwriters exercises its over-allotment option in full). Common stock to be outstanding immediately after the offering 5,714,429 shares (or 6,035,879 shares if the representative of the underwriters exercises its over-allotment option in full). Over-allotment option We have granted the representative of the underwriters an option, exercisable for 45 days after the date of this prospectus, to purchase up to an additional 321,450 shares of common stock from us, less underwriting discounts and commissions, to cover over-allotments. Use of proceeds We currently intend to use the net proceeds received from this offering to fund our future growth projects, for other general corporate purposes and to pay off certain of Tal Depot s current debts. See "Use of Proceeds" on page 21. Risk factors Investing in our common stock involves substantial risks. You should carefully review and consider the "Risk Factors" section of this prospectus beginning on page and the other information in this prospectus for a discussion of the factors you should consider before you decide to invest in this offering. Proposed trading symbol Our common stock is presently not traded or quoted on any quotation system or national securities exchange. We have applied to the NASDAQ Capital Market to list our common stock under the symbol "TCL." No assurance can be given that our application will be approved. The number of shares of our common stock to be outstanding after this offering is based on 3,571,429 shares outstanding as of the Effective Date and excludes: the exercise of the underwriters option to purchase up to an additional 321,450 shares of common stock to cover over-allotments, if any; the exercise of the warrants to purchase up to shares of common stock to be issued to the representative of the underwriters, or its designees, or the "Representative s Warrants"; and the awarding of any stock and options to eligible officers, directors and employees under the Tal Consolidated Inc. Equity Incentive Plan. SUMMARY FINANCIAL INFORMATION We were formed on November 8, 2017, in contemplation of wholly-owning Tal Depot, and have not engaged in any other business. As a result, we have no historical or current financial data. The following summary statements are from the operations data of Tal Depot for the years ended December 31, 2016 and 2017 have been derived from Tal Depot s audited consolidated financial statements included elsewhere in this prospectus. The historical financial data presented below is not necessarily indicative of our financial results in future periods, You should read the summary consolidated financial data in conjunction with those financial statements and the accompanying notes and "Management s Discussion and Analysis of Financial Condition and Results of Operations." Tal Depot s consolidated financial statements are prepared and presented in accordance with United States generally accepted accounting principles ("U.S. GAAP"). The following unaudited pro forma condensed consolidated financial information was prepared using the using the as-if method as though the transactions occurred as of the beginning of the period. The following unaudited pro forma condensed consolidated financial statements are based on the historical financial statements of the Company as adjusted to give effect to contemplated transactions in this initial public offering. The unaudited pro forma condensed consolidated statements of operations for the year ended December 31, 2017 give effect to these transactions as if they had occurred on January 1, 2017. The unaudited pro forma condensed consolidated balance sheet as of December 31, 2017 gives effect to these transactions as if they had occurred on December 31, 2017. The pro forma financial information is presented for informational purposes only and does not purport to represent what the Company s results of operations or financial condition would have been had the initial public offering actually occurred on the dates indicated, and does not purport to project the Company s results of operations or financial condition for any future period or as of any future date. The pro forma financial statements are based on the assumptions and adjustments that are described in the accompanying notes. The pro forma adjustments are preliminary, subject to further revision as additional information becomes available and additional analyses are performed, and have been made solely for providing the pro forma financial data. Differences between these preliminary estimates and the final accounting, expected to be completed after the closing of the initial public offering, will occur and these differences could have a material impact on the accompanying pro forma financial statements and the Company s future results of operations and financial position. In addition, differences between the preliminary and final amounts will likely occur as a result of the amount of cash used for the Company s operations, changes in the fair value of the Company s preferred and common stock and other changes in the Company s assets and liabilities. The pro forma financial information is preliminary and has been prepared for illustrative purposes only. The actual results reported in periods following the initial public offering may differ significantly from those reflected in this pro forma financial information presented herein for a number of reasons, including, but not limited to, differences between the assumptions used to prepare this pro forma financial information. The assumptions and estimates underlying the pro forma financial statements are described in the accompanying notes, which should be read together with the pro forma financial statements. The unaudited pro forma condensed consolidated financial statements should be read together with the historical financial statements of the Company, included herein. The pro forma and pro forma as adjusted information set forth below is illustrative only and will be adjusted based on the actual public offering price and other terms of this offering determined at pricing. Summary Operating Data: 2017 Pro Forma (1) Pro Forma as adjusted Pro Forma as adjusted (2) Actual 2017 Adjustments 2017 Unaudited NET REVENUES $26,215,032 $26,215,032 $26,215,032 COST OF GOODS SOLD 13,392,429 13,392,429 13,392,429 GROSS PROFIT 12,822,603 12,822,603 12,822,603 SELLING, GENERAL AND ADMINISTRATIVE: Payroll and related expenses 2,612,665 2,612,665 2,612,665 Shipping 8,654,796 8,654,796 8,654,796 Professional fees 623,488 623,488 623,488 General and administrative expenses 4,563,748 4,563,748 4,563,748 Depreciation 47,292 47,292 47,292 TOTAL SELLING, GENERAL AND ADMINISTRATIVE 16,501,989 16,501,989 16,501,989 LOSS FROM OPERATIONS (3,679,386) (3,679,386) (3,679,386) OTHER INCOME (EXPENSE): Other income 2,856 2,856 2,856 Interest expense, net (291,742) (291,742) 101,599 7 (190,143) TOTAL OTHER INCOME (EXPENSE) (288,886) (288,886) (187,287) LOSS BEFORE INCOME TAXES (3,968,272) (3,968,272) (3,866,673) Income tax - - - NET LOSS $(3,968,272) $(3,968,272) $(3,866,673) Pro forma basic and diluted net loss per common share (unaudited) $(1.11) $( 0.68 ) Pro forma basic and diluted weighted average number of common shares outstanding (unaudited) 3,571,429 5,714 ,429 The pro forma as adjusted information set forth below is illustrative only and will be adjusted based on the actual public offering price and other terms of this offering determined at pricing. Consolidated Balance Sheet Data Year Ended December 31, 2017 Actual Pro Forma (1) Pro Forma as adjusted adjustments Pro Forma as adjusted (2) Unaudited ASSETS CURRENT ASSETS: Cash $11,971 $11,971 13,200,920 3 $10,362,711 (2,850,180) 4,5,6 Accounts receivable, net 241,435 241,435 241,435 Inventory 373,872 373,872 373,872 Other current assets 9,271 9,271 9,271 Total current assets 636,549 636,549 10,987,289 Property and equipment, net 152,491 152,491 152,491 Other assets 30,333 30,333 30,333 TOTAL ASSETS $819,373 $819,373 $11,170,113 LIABILITIES AND MEMBERS /STOCKHOLDERS S EQUITY (DEFICIT) CURRENT LIABILITIES: Accounts payable $3,868,868 $3,868,868 $3,868,868 Accrued expenses 114,264 114,264 114,264 Cash overdraft 298,424 298,424 298,424 Accrued payroll 35,201 35,201 35,201 Current portion of term loans, net of discount of $6,241, $6,241, $6,241 Pro Forma, $0 Pro Forma as adjusted 692,199 692,199 (692,199) 4 - Current portion of notes payable, net of discount of $0, $138,838, $138,838 Pro Forma and Pro Forma as adjsuted 567,414 567,414 567,414 Current portion of capital lease obligations 8,277 8,277 8,277 Current portion of bank line of credit 10,046 10,046 10,046 Due to related parties 1,836,047 1,836,047 (1,100,000) 6 736,047 Total current liabilities 7,430,740 7,430,740 5,638,541 LONG TERM LIABILITIES: Term loans - long term portion, net of discount of $46,096 and $39,855, $39,855 Pro Forma, and $0 Pro Forma as adjusted 1,011,885 1,011,885 (1,011,885) 5 - Notes payable - long term portion, net of discount of $0 and $975, $975 Pro Forma and Pro Forma as adjusted 22,423 22,423 22,423 Capital lease obligation - long term portion 26,647 26,647 26,647 Bank line of credit - long term portion 70,400 70,400 70,400 Total long term liabilities 1,131,354 1,131,354 119,470 TOTAL LIABILITIES 8,562,095 8,562,095 5,758,012 Commitments and contingencies MEMBERS /STOCKHOLDERS EQUITY (DEFICIT): Blank Check Preferred Stock; 10,000,000 shares authorized, 0 shares issued and outstanding pro forma Common Stock, no par value;150,000,000 shares of common stock authorized; 2,143,000 shares issued and outstanding pro forma and 5,714,429 shares issued and outstanding pro forma as adjusted - 13,200,920 3 13,200,920 Accumulated deficit (7,742,722) (7,742,722) (46,096) 4,5 (7,788,818) TOTAL MEMBERS /STOCKHOLDERS" EQUITY (DEFICIT) (7,742,722) (7,742,722) 5,412,102 TOTAL LIABILITIES AND MEMBERS /STOCKHOLDERS EQUITY (DEFICIT) $819,373 $819,373 $11,170,113 (1) Gives effect to the transactions set forth in the Share Exchange Agreement. Pro forma basic and diluted net loss per common share were computed to give effect to the transactions set forth in the Share Exchange Agreement dated March 8, 2018, between Tal Consolidated, Tal Depot, Jeremy J. Reichmann, Albert Reichmann, Seth Yanofsky and Rambamm LLC (the "Share Exchange Agreement"), which would result in an aggregate of 3,571,429 shares of common stock issued as of December 31, 2017, assuming 2,143,000 shares are issued in this offering, using the as-if converted method as though the conversion had occurred as of the beginning of the period. (2) Gives effect to the sale by us of shares of common stock in this offering at an initial public offering price of $7.00 per share, the midpoint of the public offering price range set forth on the cover page of this prospectus, after deducting underwriting discounts and commissions and estimated offering expenses, in addition to the payoff of debt disclosed in the use of proceeds. (3) Assumes the closing of $15,001,000 in financing from the initial public offering, less $1,200,080 and $600,000 of underwriting discounts and commissions and estimated offering expenses, respectively. (4) Assumes the cash payment of $698,440 to repay the short-term debts owed to Key Bank and acceleration of $6,241 of debt discount amortization. (5) Assumes the cash payment of $1,051,740 to repay the long-term debts owed to Key Bank and acceleration of $39,855 of debt discount amortization. (6) Assumes the cash payment of $1,100,000 to repay the short-term debt due to a related party. (7) Assumes the repayment of certain debt had occurred on January 1, 2017 and gives effect to the elimination of interest expense related to the repayment of certain debt. RISK FACTORS As of the Effective Date, Tal Depot will be the only operating subsidiary that we own and our financial strength will depend on the success or failure of Tal Depot s business. Therefore, all of the business operational risks described below are attributed specifically to Tal Depot in this prospectus. Given the dependence of our success on Tal Depot s success, all such risks should be understood to pose risks to us. Additionally, in the future, we may form or acquire additional operating subsidiaries as part of our plan for strategic growth (see the section below entitled "Our Business" for a more detailed discussion). The risks described below that relate and have been ascribed specifically to Tal Depot s operations will exist and should likewise be attributed to any such new operating subsidiaries that we form or acquire after the Effective Date. Investing in our common stock involves a great deal of risk. Careful consideration should be made of the following factors as well as other information included in this prospectus before deciding to purchase our common stock. There are many risks that affect Tal Depot s business and results of operations, some of which are beyond our control, and its business, financial condition or operating results could be materially harmed by any of these risks. This could cause the trading price of our common stock to decline, and you may lose all or part of your investment. Additional risks that we do not yet know of or that we currently think are immaterial may also affect our business and results of operations. Risks Related To Our Financial Condition Tal Depot has a history of losses and its and our future profitability on a quarterly or annual basis is uncertain, which could have a harmful effect on our business and the value of our common stock. During the last three fiscal years, Tal Depot incurred losses from operations. These losses are attributable primarily to (i) Tal Depot expanding rapidly while still in its old facility, which was not equipped with the infrastructure to handle the increased volumes of products sold; (ii) a fire in Tal Depot s old facility that destroyed significant inventory, shut down a portion of Tal Depot s facility and caused significant delays in delivery and refund requests; and (iii) an inexperienced and understaffed employee team. As of December 31, 2016, Tal Depot had an accumulated deficit and total members deficit of $3,631,794. We moved into a new warehouse facility better suited to Tal Depot s business operations on January 3, 2017, which in the long term we anticipate will improve Tal Depot s financial performance, but there can be no assurance that will be the case or that occurrences that negatively impact Tal Depot s financial performance, such as a fire or other disaster, will not occur again in the future. As of December 31, 2017, Tal Depot had an accumulated deficit and total members deficit of $7,742,722. Although access to the public financial markets could increase our ability to raise capital and properly fund Tal Depot, no assurances can be given that a significant liquid market will develop for our common stock, and we may not be, therefore, provided with greater access to capital. Our future profitability depends upon the success of Tal Depot, and its success depends on many factors, including several that are beyond our control. These factors include, without limitation: (i) changes in the demand for Tal Depot s products; (ii) loss of key customers and vendors; (iii) loss or limitation of access to TPPs for the sale of Tal Depot s products; (iv) introduction of competitive online distributors of the products Tal Depot sells; and (v) the failure to successfully and cost effectively develop, introduce and market new products in a timely manner. In addition, we will incur significant legal, accounting, and other expenses related to being a public company. As a result of these expenditures, Tal Depot will have to generate and sustain increased revenue to achieve and maintain future profitability. Although our consolidated financial statements have been prepared on a going concern basis, we must raise additional capital to fund our operations in order to continue as a going concern. Friedman LLP, our independent registered public accounting firm for the fiscal years ending December 31, 2016 and 2017, has included an explanatory paragraph in their opinions that accompanies our consolidated audited financial statements as of and for the years ending December 31, 2016 and 2017, indicating that Tal Depot s accumulated deficit and negative cash flows from operations raises substantial doubt about Tal Depot s ability to continue as a going concern. Based on Tal Depot s cash balance at December 31, 2017, and projected cash needs for 2018, management estimates that it will need to increase sales revenue and/or raise additional capital to cover operating and capital requirements for the 2018 year. Although management has been successful to date in raising necessary funding, there can be no assurance that sales revenue will substantially increase or that any required future financing can be successfully completed on a timely basis, or on terms acceptable to Tal Depot. Additionally, many of the financing options that have been available to us in 2017 and 2018 that we have agreed to accept have effective interest rates that are significantly higher than market rates and require high monthly or weekly payments that decrease our cash flow. Therefore, while these financing options that we have undertaken and may continue to undertake in the future provide immediate liquidity, they decrease our cash flow and revenue, and also present risks, including that we may lose the ability to make required payments and be subject to collection and enforcement actions. If we are unable to improve Tal Depot s liquidity position, we may not be able to continue as a going concern. The accompanying financial statements do not include any adjustments that might result if we are unable to continue as a going concern and, therefore, be required to realize our assets and discharge our liabilities other than in the normal course of business which could cause investors to suffer the loss of all or a substantial portion of their investment. A number of factors could negatively impact Tal Depot s gross margins, which in turn would negatively affect its operating results. Tal Depot s gross margins may be negatively affected by a result of a number of factors, including: (i) increased price competition; (ii) customer dissatisfaction; (ii) higher product, material or labor costs; (iii) introduction of new products and costs of entering new markets; (iv) increased levels of customer service; (v) changes in distribution channels; and (vi) changes in product and geographic mix. Tal Depot s future cash flow fluctuations may affect our ability to fund our working capital requirements or achieve business objectives in a timely manner. Tal Depot s working capital requirements and cash flows historically have been, and are expected to continue to be, subject to quarterly and yearly fluctuations, as described above. However, a substantial slow-down in capital spending by its customers may require us to adjust our current business model. As a result, Tal Depot s revenues and cash flows may be materially lower than we expect and we may be required to reduce our capital expenditures and investments or take other measures in order to meet our cash requirements. We may seek additional funds from liquidity-generating transactions and other conventional sources of external financing (which may include a variety of debt, convertible debt and/or equity financings). We cannot provide any assurance that our net cash requirements will be as we currently expect. Our inability to manage cash flow fluctuations resulting from the above factors could have a material adverse effect on our ability to fund our working capital requirements from operating cash flows from Tal Depot and other sources of liquidity or to achieve our business objectives in a timely manner. Our business may be adversely affected by increased levels of debt. Some of the proceeds from this offering will be used to pay down Tal Depot s outstanding debt. While this may be an immediate boost to Tal Depot s cash flow, due the uncertainty of Tal Depot s cash flow from quarter to quarter, as discussed above, we may incur significant levels of debt in the future in order to finance Tal Depot s business or to finance possible acquisitions and expansions. We may incur significant levels of debt that are higher than what Tal Depot has carried historically. A high level of debt, arduous or restrictive terms and conditions relating to accessing certain sources of funding, failure to provide certain financial information and certification of no adverse condition (as required in our current largest credit facility) and any significant reduction in, or access to, such facilities, poor business performance or lower than expected cash inflows could have adverse consequences on our ability to fund Tal Depot s business and the operation of other subsidiaries that we may form. Other effects of a high level of debt include the following: (i) we may have difficulty borrowing money in the future or accessing sources of funding; (ii) we may need to use a large portion of our cash flow from Tal Depot s operations to pay principal and interest on our indebtedness, which would reduce the amount of cash available to finance our other planned business activities; (iii) a high debt level, arduous or restrictive terms and conditions, or lower than expected cash flows from Tal Depot would make us more vulnerable to economic downturns and adverse developments in our business; and (iv) if Tal Depot s operating cash flows are not sufficient to meet its operating expenses, capital expenditures and debt service requirements as they become due, we may be required, in order to meet our debt service obligations, to delay or reduce capital expenditures or the introduction of new products, sell assets and/or forego business opportunities including acquisitions we may consider as strategic opportunities. Risks Related To Our Business Tal Depot depends on running an efficient operation to deliver products to its customers, and any significant disruption to its operation will materially adversely affect financial results. Tal Depot currently distributes products to its customers by taking orders and arranging shipments at its facility. Once an order is received, the products ordered are properly packaged, marked with an identification number, and shipped. Tal Depot may not be able to respond rapidly to a disruption to any step in the process, which could take time to properly resolve, result in delayed shipments, customer dissatisfaction, loss of sales and damage to its reputation. Disruptions in the process can occur for many reasons, including natural disasters, accidents or intentional criminal acts that can damage Tal Depot s facilities and inventory and interrupt Tal Depot s ability to process orders. If there is any interruption in Tal Depot s ability to process orders, it can have a drastic effect on our profits, as a large backlog of unfilled customer orders results in shipments being made containing damaged product, "mispicks" (selecting and sending items customers did not order) and "mispacks" (packing items for delivery in a faulty manner). If this were to occur, it could lead to an increase in returns, decreases in sales and decreases in revenue. If Tal Depot cannot establish and maintain relationships with product manufacturers or local product distributors, it may not be able to increase revenue. In order to maintain and increase revenues, Tal Depot must establish and maintain relationships with manufacturers of the products it sells, and for many products, the local wholesale distributors of the product or sales representatives. Any breakdown in these relationships, or reduction, delay or cancellation of orders from one or more of these parties could significantly reduce Tal Depot s product variety and availability to its customers, which could hurt revenues and could damage Tal Depot s reputation. Competition within our markets may reduce our revenues and market share. Tal Depot operates in a highly competitive market and our competitors may have more extensive experience or more specialized products and capabilities than we do in some areas. If Tal Depot is unable to continue to compete successfully against its current or future competitors, it may experience declines in revenues and market share which could negatively impact its results of operations, and Tal Depot s and our financial condition or liquidity. Tal Depot s competitors include direct competitors that are other companies that sell online grocery and home goods, such as Boxed.com; big box and online retailers such as WalMart, Jet.com and Amazon that sell, among many other items and products, grocery and home goods (and Jet.com and Amazon even serve as our TPPs to sell our own products); and brick and mortar groceries that are establishing an online presence. Each of these types of competitors bring their own unique expertise and functions that may take away our business and hinder our growth and expansion goals. The TPPs sites in particular may specifically discontinue doing business with us if our business is deemed as a threat to their businesses. Tal Depot s business depends on its ability to build and maintain the Tal Depot brand. Tal Depot may not be able to maintain and enhance its existing brand if it fails to live up to customers expectations, which could materially adversely affect Tal Depot s business, results of operations and growth prospects. Tal Depot currently offers products to its customers under the Tal Depot brand. Maintaining and enhancing the Tal Depot brand is critical to expanding our business. However, a significant portion of Tal Depot s customers experience depends on third parties outside of our control, including suppliers and logistics providers such as FedEx, UPS and the U.S. Postal Service. If these third parties do not meet Tal Depot s or its customers expectations, the Tal Depot brand may suffer irreparable damage. In addition, maintaining and enhancing the Tal Depot brand may require substantial investments, and these investments may not be successful. If we fail to promote and maintain the Tal Depot brand, or if we incur excessive expenses in this effort, Tal Depot s business, operating results and financial condition may be materially adversely affected. We anticipate that, as the online grocery and home goods market becomes increasingly competitive, maintaining and enhancing the Tal Depot brand may become increasingly difficult and expensive. Maintaining and enhancing the Tal Depot brand will depend largely on its ability to provide high quality products to its customers and a reliable, trustworthy and profitable sales channel to our suppliers, which we may not do successfully. Tal Depot is currently exposed, and will continue to be exposed, potentially at an increased rate, to negative publicity and customer reviews, which may materially adversely affect Tal Depot s business, results of operations and growth prospects. The customer ratings and reviews of Tal Depot and its products and services that we receive through feedback on our website and on TPP websites are mostly positive. However, from time to time, Tal Depot is exposed to negative customer reviews, customer complaints or negative publicity about customers web experiences, Tal Depot s products, product delivery times, customer data handling and security practices or customer support, either on the Tal Depot s website, on the web sites of TPPs that offer Tal Depot products for sale, or on blogs and social media websites. For customer reviews and complaints on TPPs websites, TPPs enable our management to address and resolve certain customer review and complaints with the TPPs rather than directly with the customer, and our management has utilized these methods to address and resolve such negative reviews and complaints through TPPs, not through the customer that was the source of the review or complaint. Any TPP may change their policies in this regard and limit or entirely prevent our management s ability to address and resolve such negative reviews and complaints with the TPPs, thereby increasing such negative reviews and complaints. In July 2017, Amazon, one of the TPPs Tal Depot sells on, implemented such a limitation. The negative customer reviews, customer complaints or negative publicity described above could rapidly and severely diminish consumer use of Tal Depot s website, consumer and supplier confidence in Tal Depot, purchases of Tal Depot s goods on its website and on the websites of TPPs and result in harm to our brands. Any increase in such negative reviews, customer complaints or negative publicity, whether as the result of a change in a TPP s policies or otherwise, will increase such risks. Our efforts to launch new brands and expand the existing Tal Depot brand may not be successful. Our growth prospects depend on our ability to expand Tal Depot customer offerings by launching new brands relating to specialized product offering and expanding our existing Tal Depot brand into existing and new geographies. Launching new brands or expanding our existing brand requires significant upfront investments, including investments in marketing, information technology and additional personnel. We may not be able to generate satisfactory revenue from these efforts to offset these upfront costs. Any lack of market acceptance of our efforts to launch new brands or expand our existing brand could have a material adverse effect on our business, prospects, financial condition and results of operations. Purchasers of Tal Depot s products may not choose to shop online, which would prevent us from growing our business. The online market for groceries and other home goods is less developed than the online market for apparel, consumer electronics and other consumer products. According to a Nielsen Global Connected Commerce Survey in the third quarter of 2016, 50% of people surveyed purchased books, music and other media products online and 58% purchased clothes accessories and shoes online. In contrast, only 24% of people surveyed purchased online packaged grocery food, 23% purchased household products, and 21% purchased fresh groceries. If the online market for groceries and other home goods does not gain more acceptance, our business may suffer. Our success will depend, in part, on our ability to attract consumers who have historically purchased these goods through traditional retailers. Furthermore, we may have to incur significantly higher and more sustained advertising and promotional expenditures in order to attract additional online consumers to Tal Depot s sites and convert them into purchasing customers. Specific factors that could impact consumers willingness to purchase groceries and home goods online include: concerns about buying products without a physical storefront and the ability to physically examine products; delivery time associated with online orders; actual or perceived lack of security of online transactions and concerns regarding the privacy of personal information; delayed shipments or shipments of incorrect or damaged products; inconvenience associated with returning or exchanging items purchased online; and usability, functionality and features of websites. If the shopping experience Tal Depot provides does not appeal to potential new consumers or meet the expectations of existing customers, Tal Depot may not acquire new customers, may lose existing customers altogether or existing customers buying patterns and levels may be less than historical rates. Tal Depot s business may be adversely affected if it is unable to provide its customers with a cost-effective shopping platform that is able to respond and adapt to rapid changes in technology. The number of people who access the internet through devices other than personal computers, including mobile phones, smartphones, handheld computers such as notebooks and tablets, video game consoles, and television set-top devices, has increased dramatically in the past few years. The smaller screen size, functionality, and memory associated with some alternative devices may make the use of Tal Depot s website and purchasing its products more difficult. In addition, it is time consuming and costly to keep pace with rapidly changing and continuously evolving technology. As new mobile devices and platforms are released, it is difficult to predict the problems Tal Depot may encounter in developing applications for alternative devices and platforms, and we may need to devote significant resources to the creation, support and maintenance of such applications. If Tal Depot is unable to attract customers to its website through these devices or is slow to develop a version of its website that is more compatible with alternative devices or a mobile application, Tal Depot may fail to capture a significant share of customers in the grocery and home goods market, which could adversely affect its business. Further, upgrading existing technologies and business applications will be necessary for the foreseeable future and will require significant investment and expenditures. Tal Depot s inability to adequately address these issues harm customer growth, and its business, financial condition and operating results may be materially adversely affected. Tal Depot may be subject to product liability claims if people are harmed by the products it sells. Some of the products Tal Depot sells may expose it to product liability claims and litigation or regulatory action relating to such claims including those related to personal injury or death. Some of Tal Depot s agreements with its suppliers and manufacturers may not indemnify Tal Depot from product liability for a particular supplier s or manufacturer s products, or the suppliers or manufacturer may not have sufficient resources or insurance to satisfy their indemnity and defense obligations. Additionally, some of Tal Depot s agreements with its TPPs require Tal Depot to indemnify these third parties from certain product liability claims and litigation or certain regulatory action relating to such claims, and at times TPPs have asked Tal Depot to confirm such agreements and/or asked it to take specific rectifying measures when these TPPs were threatened with such claims. Although Tal Depot maintains liability insurance, we cannot be certain that such coverage will be adequate for all liabilities actually incurred or that insurance will continue to be available on economically reasonable terms, or at all. Significant merchandise returns could harm Tal Depot s business. Tal Depot allows its customers to return products, subject to its return policy. If product returns are significant, Tal Depot s business, prospects, financial condition and results of operations could be harmed. Further, Tal Depot modifies its policies relating to returns from time to time, which may result in customer dissatisfaction or an increase in the number of product returns. Risks associated with the suppliers and manufacturer from whom Tal Depot s products are sourced could materially adversely affect Tal Depot s financial performance as well as its reputation and brand. Tal Depot depends on its ability to provide customers with a wide range of products from qualified suppliers and manufacturers in a timely and efficient manner. Political and economic instability, the financial stability of suppliers and manufacturers, their ability to meet customers standards, labor problems experienced by suppliers and manufacturers, the availability of raw materials, merchandise quality issues, currency exchange rates, transport availability and cost, transport security, inflation, and other factors relating to the suppliers are beyond our control. Tal Depot s agreement with most of its suppliers and manufactures do not provide for the long-term availability of merchandise or the continuation of particular pricing practices, nor do they restrict such suppliers from selling products to other buyers. There can be no assurance that Tal Depot s current suppliers and manufactures will continue to seek to sell Tal Depot products on current terms or that it will be able to establish new or otherwise extend current supply and manufacturer relationships to ensure product acquisitions in a timely and efficient manner and on acceptable commercial terms. Tal Depot s ability to develop and maintain relationships with reputable suppliers and manufacturers and offer high quality merchandise to its customers is critical to our success. If Tal Depot is unable to develop and maintain relationships with suppliers and manufactures that would allow it to offer a sufficient amount and variety of quality products on acceptable commercial terms, Tal Depot s ability to satisfy its customers needs, and therefore our long-term growth prospects, would be materially adversely affected. Tal Depot may be unable to source additional or strengthen its relationships with suppliers and manufacturers. As of December 31, 2017, Tal Depot had relationships with over 50 suppliers and manufacturers. Tal Depot s agreements with suppliers and manufactures are generally terminable at will by either party upon short notice. If Tal Depot does not maintain its existing relationships or build new relationships with suppliers and manufacturers on acceptable commercial terms, it may not be able to maintain a broad selection of products, and its business and would suffer severely. Tal Depot depends on its agreements and relationships with TPPs, and changes in these agreements, cancellations of these agreements or changes in the relationships with these parties could adversely impact Tal Depot s revenue and profits. Currently, Tal Depot s net revenue are primarily generated from sales on TPPs. Tal Depot s agreement with TPPs allow customers to purchase Tal Depot products though TPP websites and mobile applications. TPPs require Tal Depot to abide by specific terms and conditions, reach and/or maintain certain benchmarks or metrics in order to sell products on their sites, such as metrics tied into TPPs customers satisfaction. TPPs also require Tal Depot to ensure even all inadvertent non-compliance with laws and regulations in states where Tal Depot s products are sold, no matter the amount or frequency of sales in a given state. Because Tal Depot s agreements with TPPs are generally terminable at will and because of the TPPs benchmarks, metric requirements and other requirements, these agreements may be terminated (either because of a violation under the agreement or for no reason), Tal Depot s ability to make sales on TPPs may be limited, or Tal Depot may be unable to maintain these relationships, each of which would result in significantly reduced sales and have a material adverse effect on its business and results of operations, and our prospects and financial condition. This risk includes the fact that (i) TPPs may in the future determine they no longer wish to do business with Tal Depot or take other action that could harm Tal Depot s business; and (ii) Tal Depot itself may determine that it no longer wants to do business with TPPs. TPPs may take such action because they are competitors or potential competitors in the grocery and home goods market, a violation of the agreements with the TPPs or for some other unknown reason, because, as stated above, Tal Depot s agreements with TPPs are terminable at will. While we may take actions to repair any issues that may arise with any of our TPPs and incur costs in doing so, and we may also temporarily attempt to do business with TPPs through Tal Depot s wholly owned subsidiaries to the extent any TPP will allow us to do so – and some may not – there can be no assurances that such actions will provide a remedy in the long terms, or even in the short term. In 2017 Amazon.com limited Tal Depot s ability to make sales on its platform from February until April 2017, and Amazon.com and Walmart temporarily revoked Tal Depot s authorization to do business on their platforms for one week in September 2017, and for approximately six weeks in September and October 2017, respectively. Other TPPs may to do so in the future. We could suffer substantial losses should Tal Depot s ability to sell products on any one of our TPPs be eliminated or even limited and may not be able to continue operations. A large majority of Tal Depot s sales in 2016 and 2017 came from one TPP Amazon.com, one of our TPPs, has accounted for 82% and 73% of Tal Depot s revenue in 2016 and 2017, respectively. If our authorization to sell on Amazon.com is suspended temporarily or permanently, or even if our authorization to sell is limited for a significant of time, we could suffer substantial losses and may not be able to continue operations. In 2017 Amazon.com limited Tal Depot s ability to make sales on its platform from February until April 2017, and Amazon.com and Walmart temporarily revoked Tal Depot s authorization to do business on their platforms for one week in September 2017, and for approximately six weeks in September and October 2017, respectively. While Tal Depot had been able to regain full selling rights on Amazon.com and Walmart after each of these instances, there can be no assurances in that if any of these or similar actions were to be taken against us in the future that we would be able to resolve the situation and regain the ability to sell on this TPP. System interruptions that impair customer access to the Tal Depot website or our TPPs that offer Tal Depot s products, or other performance failures in Tal Depot s or the TPPs technology infrastructure could damage Tal Depot s business, reputation and brand, and substantially harm its business and results of operations. The satisfactory performance, reliability and availability of Tal Depot s website, transaction processing systems and technology infrastructure are critical to its reputation and its ability to acquire and retain customers, as well as maintain adequate customer service levels. The same applies to the websites and systems utilized by the TPPs that offer Tal Depot products for sale. If there are computer and communications hardware failures, or other types of interruptions or degradations of computer and network services, Tal Depot could lose customer data and miss order fulfillment deadlines, which could have a material adverse effect on its business, prospects, financial condition and results of operations. Moreover, these systems are vulnerable to damage or interruption from fire, flood, power loss, telecommunications failure, terrorist attacks, cyber-attacks, data loss, acts of war, break-ins, earthquake and similar events. In the event of any failure described above, response and recovery could take substantial time, during which time Tal Depot s website or the websites of the TPPs selling Tal Depot products could be completely shut down for significant time. Such occurrences will reduce order fulfillment performance, reduce the volume of goods sold, increase the amount of refund requests and returns and could also materially adversely affect consumer perception of the Tal Depot brand. In addition, continued growth in Tal Depot transaction volume, as well as surges in online traffic and orders associated with promotional activities or seasonal trends in Tal Depot s business, place additional demands on the technology Tal Depot relies on to facilitate sales and operate its business, which could cause or exacerbate slowdowns or interruptions. There can be no assurance that we or Tal Depot will be able to accurately project the rate or timing of increases in order traffic, if any, and Tal Depot may not be able to adapt, expand and upgrade any systems and infrastructures that would be required to accommodate such increases on a timely basis. Tal Depot relies heavily on information technology to manage its inventory. Tal Depot s business is highly dependent upon inventory management software and procedures that we have internally developed and use in conjunction with third-party inventory management solutions. Any issues affecting our inventory management system, including system delay or failure, could adversely and materially affect our business operations and profitability if we are unable to address any such issues in a timely manner. To achieve our growth strategy, we will need to maintain our current level of inventory management while expanding our inventory management control over any new facilities. Should we experience difficulties in expanding or integrating our inventory management as we expand our facilities and operations, our business operations and profitability may be adversely and materially affected. Additionally, we may need to improve upon our existing inventory management to stay competitive, and if we are unable to keep pace with improvements implemented by our competitors, then our business operations and profitability could adversely and materially be affected. Tal Depot relies heavily on email and other messaging services, and any restrictions on the sending of emails or messages or an inability to timely deliver such communications could materially adversely affect its business. Tal Depot s business is highly dependent upon email and other messaging services for not only accepting order, but also promoting and selling its products. Promotions are offered through emails and other messages, which generates a portion of Tal Depot s revenue. If Tal Depot is unable to successfully deliver or receive emails or other messages to its customers and subscribers for any reason, or if customers or subscribers decline to open emails or other messages, Tal Depot s net revenue and profitability would be materially adversely affected. Tal Depot is subject to risks related to online payment methods. Tal Depot accepts payments using a variety of methods, including credit card, debit card, PayPal and gift cards. As Tal Depot offers new payment options to consumers, it may be subject to additional regulations, compliance requirements and fraud. For certain payment methods, including credit and debit cards, Tal Depot pays interchange and other fees, which may increase over time and raise its operating costs and lower profitability. Tal Depot is also subject to payment card association operating rules and certification requirements, including the Payment Card Industry Data Security Standard and rules governing electronic funds transfers, which could change or be reinterpreted to make it difficult or impossible for us to comply. If Tal Depot fails to comply with the rules or requirements of any provider of a payment method it accepts, if the volume of fraud in transactions limits or terminates its rights to use payment methods it currently accept, or if a data breach occurs, Tal Depot may, among other things, be subject to fines or higher transaction fees and may lose, or face restrictions placed upon, the ability to accept credit card and debit card payments from customers or facilitate other types of online payments. Tal Depot has been, and may continue to be, victimized by the receipt of orders placed with fraudulent credit card data, and may suffer losses even if the associated financial institution approved payment. The occurrence if all these events may adversely affect Tal Depot s business, financial condition and operating results. Government regulation of the internet and e-commerce is evolving, and unfavorable changes or failure by Tal Depot to comply with these regulations could substantially harm its business and results of operations. Tal Depot is subject to general business regulations and laws as well as regulations and laws specifically governing the Internet and e-commerce. Existing and future regulations and laws could impede the growth of the Internet, e-commerce or mobile commerce. These regulations and laws may involve taxes, tariffs, privacy and data security, anti-spam, content protection, electronic contracts and communications, consumer protection, Internet neutrality and gift cards. It is not clear how existing laws governing issues such as property ownership, sales and other taxes and consumer privacy apply to the Internet as the vast majority of these laws were adopted prior to the advent of the Internet and do not contemplate or address the unique issues raised by the Internet or e-commerce. It is possible that general business regulations and laws, or those specifically governing the Internet or e-commerce, may be interpreted and applied in a manner that is inconsistent from one jurisdiction to another and may conflict with other rules or our practices. We cannot be sure that Tal Depot s practices have complied, comply or will comply fully with all such laws and regulations. Any failure, or perceived failure, by Tal Depot to comply with any of these laws or regulations could result in damage to its reputation, a loss in business and proceedings or actions against it by governmental entities or others. Any such proceeding or action could hurt Tal Depot s reputation, force it to spend significant amounts in defense of these proceedings, distract our and Tal Depot s management, increase Tal Depot s costs of doing business, decrease the use of Tal Depot s sites by its customers and may result in the imposition of monetary liability. Failure to comply with federal, state and international laws and regulations relating to privacy, data protection and consumer protection, or the expansion of current or the enactment of new laws or regulations relating to privacy, data protection and consumer protection, could adversely affect Tal Depot s business and financial condition. A variety of federal, state and international laws and regulations govern the collection, use, retention, sharing and security of consumer data. Laws and regulations relating to privacy, data protection and consumer protection are evolving and subject to potentially differing interpretations. These requirements may be interpreted and applied in a manner that is inconsistent from one jurisdiction to another or may conflict with other rules or our practices. As a result, Tal Depot s practices may not have complied or may not comply in the future with all such laws, regulations, requirements and obligations. Any failure, or perceived failure, by Tal Depot to comply with posted privacy policies or with any federal, state or international privacy or consumer protection-related laws, regulations, industry self-regulatory principles, industry standards or codes of conduct, regulatory guidance, orders to which it may be subject or other legal obligations relating to privacy or consumer protection could adversely affect Tal Depot s reputation, brand and business, and may result in claims, proceedings or actions against it by governmental entities or others or other liabilities or require us to change its operations and/or cease using certain data sets. Any such claim, proceeding or action could hurt Tal Depot s reputation, brand and business, force it to incur significant expenses in defense of such proceedings, distract our and Tal Depot s management, increase Tal Depot s costs of doing business, result in a loss of customers and may result in the imposition of monetary penalties. Tal Depot s failure or the failure of third-party service providers to protect its website, networks and systems against security breaches, or otherwise to protect confidential information, could damage Tal Depot s reputation and brand and substantially harm its business and operating results. Tal Depot collects, maintains, transmits and stores data about its customers, suppliers, manufacturers and others, including credit card information and personally identifiable information, as well as other confidential and proprietary information. Tal Depot may also employ third-party service providers that store, process and transmit proprietary, personal and confidential information on its behalf. Tal Depot may rely on encryption and authentication technology licensed from third parties in an effort to securely transmit confidential and sensitive information, including credit card numbers. Advances in computer capabilities, new technological discoveries or other developments may result in the whole or partial failure of this technology to protect transaction data or other confidential and sensitive information from being breached or compromised. The security measures in place may not detect or prevent all attempts to hack Tal Depot s systems, denial-of-service attacks, viruses, malicious software, break-ins, phishing attacks, social engineering, security breaches or other attacks and similar disruptions that may jeopardize the security of information stored in or transmitted by Tal Depot s website, networks and systems, including payment card systems which may subject us to fines or higher transaction fees or limit or terminate Tal Depot s access to certain payment methods. Breaches of the security measures in place or cyber security incidents could result in unauthorized access to Tal Depot s website, networks and systems; unauthorized access to and misappropriation of consumer information, including customers personally identifiable information, or other confidential or proprietary information of Tal Depot or third parties; viruses, worms, spyware or other malware being served from Tal Depot s website, networks or systems; deletion or modification of content or the display of unauthorized content on Tal Depot s website; interruption, disruption or malfunction of operations; costs relating to breach remediation, deployment of additional personnel and protection technologies, response to governmental investigations and media inquiries and coverage; engagement of third-party experts and consultants; litigation, regulatory action and other potential liabilities. If any of these occur, Tal Depot s reputation and brand could be damaged, its business may suffer, and Tal Depot could be required to expend significant capital and other resources to alleviate problems caused by such breaches and Tal Depot could be exposed to a risk of loss, litigation or regulatory action and possible liability. If we cannot effectively manage our internal growth, our potential business prospects, revenues and profit margins may suffer. If we and Tal Depot fail to effectively manage our internal growth in a manner that minimizes strains on resources, we could experience disruptions in operations and ultimately be unable to generate revenues or profits. We expect that we will need to significantly expand Tal Depot s operations and add additional subsidiaries to successfully implement our business strategy. If Tal Consolidated, through new subsidiaries that it may add, and Tal Depot add manufacturing, marketing, and sales staff and build infrastructure, we expect expenses and capital requirements will increase. To effectively manage such growth, we must continue to expend funds to improve operational, financial and management controls, and our reporting systems and procedures. In addition, we must effectively expand, train and manage our employee base. If we fail in our efforts to manage our internal growth, our prospects, revenue and profit margins may suffer. We may be unable to attract and hire qualified management to lead any expansion we may undertake, may fail to invest properly in adequate machinery and may not appropriately address other critical needs to successfully grow our business. Any such failure will adversely affect our results from operations. The loss of one or more members of Tal Depot s senior management team or key personnel may adversely affect our ability to implement our strategy. Tal Depot s success depends to a significant extent upon the continued services of Jeremy J Reichmann, CEO; Seth Yanofsky, COO; and Albert Reichmann, Chief Procurement Officer. The departure of any these individuals could have a material adverse effect on Tal Depot s growth, revenues, and prospective business. These individuals are committed to Tal Depot, and we will enter into an employment agreement with Jeremy J. Reichmann to make him the CEO of Tal Consolidated, as well as fund new employment agreements between Tal Depot and Seth Yanofsky and Tal Depot and Albert Reichmann. While each of these key individual are willing to devote their full time and energy to us and Tal Depot, there can be no assurances that any of them will not terminate their employment with little or no prior notice. Neither we nor Tal Depot has or intends to obtain "key person" life insurance policies covering any of our employees. Tal Depot depends on its experienced management team and the loss of one or more key executives could have a negative impact on its business. Tal Depot also depend on its ability to retain and motivate key employees and attract qualified new employees. If it loses a member of the management team or a key employee, Tal Depot may not be able to replace him or her. We plan to continue to pursue and consummate, strategic acquisitions and divestitures that could involve significant risks and uncertainties. Strategic acquisitions or formations of new entities and facilities that we plan to pursue and consummate present significant risks and uncertainties, which include: difficulty in identifying and evaluating potential acquisitions, including the risk that our due diligence does not identify or fully assess valuation issues, potential liabilities or other acquisition risks; difficulty in integrating newly acquired businesses and operations, including combining product and service offerings, and in entering into new markets in which we are not experienced, in an efficient and cost-effective manner while maintaining adequate standards, controls and procedures, and the risk that we encounter significant unanticipated costs or other problems associated with integration; challenges in achieving strategic objectives, cost savings and other benefits expected from acquisitions; risk that our markets do not evolve as anticipated and that the strategic acquisitions and divestitures do not prove to be those needed to be successful in those markets; risk that we assume significant liabilities that exceed the limitations of any applicable indemnification provisions or the financial resources of any indemnifying parties; potential loss of key employees or customers of the businesses acquired; risk of diverting the attention of senior management and other resources from our existing operations; risk that future valuations of acquired businesses may decrease from the price we paid for these acquisitions; generation of insufficient revenues by acquired businesses to offset increased operating expenses associated with these acquisitions; potential difficulties in completing in-process research and development projects and delivering high quality products to our customers; potential difficulties in integrating new products, businesses and operations in an efficient and effective manner; risk that our customers or customers of the acquired businesses may defer purchase decisions as they evaluate the impact of the acquisitions on our future product strategy; risk of entering new markets in which we have limited experience and where competitors may have a stronger market presence; and unanticipated costs. Our inability to successfully operate and integrate newly-acquired businesses and facilities appropriately, effectively and in a timely manner could have a material adverse effect on our ability to take advantage of further growth in demand for products in our marketplace, as well as on the revenues, gross margins and expenses of our operating subsidiaries. Changes in future business or other market conditions could cause business investments and/or recorded goodwill or other long-term assets to become impaired, resulting in substantial losses and write-downs that would adversely affect our financial results. As part of our overall strategy, we may, from time to time, acquire a minority or majority interest in businesses. These investments are made upon careful analysis and due diligence procedures designed to achieve a desired return or strategic objective. These procedures often involve certain assumptions and judgment in determining acquisition price. After acquisition, unforeseen issues could arise which adversely affect the anticipated returns or which are otherwise not recoverable as an adjustment to the purchase price. Even after careful integration efforts, actual operating results may vary significantly from initial estimates. The outcome of litigation or arbitration in which we are involved or may become involved is unpredictable and an adverse decision in any such matter could have a material adverse effect on our financial condition From time to time, we or Tal Depot may become defendants in a number of litigation matters or otherwise become the subject of governmental investigations or proceedings, and we may become involved in a number of arbitrations. These actions may divert financial and management resources that would otherwise be used to benefit our and Tal Depot s management and operations. No assurances can be given that the results of these or new matters will be favorable to us. An adverse resolution of lawsuits, investigations or arbitrations could have a material adverse effect on our financial condition, results of Tal Depot s operations and cash flows. In February 2017, Tal Depot received a request for information from the New York Department of Labor (NYDL), related to Tal Depot s compliance with New York s minimum wage and overtime requirements, and in March 2017, Tal Depot timely provided what it believed to be an appropriate response to such request. While we and Tal Depot believe that matter has been fully resolved, we cannot provide any assurances that the NYDL or any other governmental authorities will not have any follow-up requests or follow-up this request with a more formal investigation or other administrative proceeding, which may have a material adverse effect on its business. Tal Depot faces certain significant risk exposures and potential liabilities that may not be covered adequately by insurance or indemnity. Tal Depot is exposed to liabilities from the products it provides and is exposed to risks of operational and natural disasters and accidents that can cause significant damages to infrastructure and inventory, and severely inhibit or shut down production at its current facility or any new facility that it or we may open. While Tal Depot maintains insurance for certain risks, the amount of such insurance coverage may not be adequate to cover all claims or liabilities, and Tal Depot may be forced to bear substantial costs from an accident or incident. It also is not possible for Tal Depot to obtain insurance to protect against all operational risks and liabilities. Substantial claims resulting from an incident in excess of Tal Depot s insurance coverage would harm its financial condition, results of operations and cash flows. Moreover, any accident or incident for which Tal Depot may be liable, even if fully insured, could negatively affect its standing with its customers and the public, thereby making it more difficult for Tal Depot to compete effectively, and could significantly impact the cost and availability of adequate insurance in the future. Tal Depot is not able to insure against all potential risks and may become subject to higher insurance premiums. Tal Depot will have insurance policies covering certain risks associated with its business. However, any such insurance policies will not cover losses as a result of force majeure, natural disasters, terrorist attacks or sabotage, among other things. We do not expect to maintain insurance for certain environmental risks. In addition, Tal Depot s insurance policies may be subject to annual review by its insurers and may not be renewed at all or on similar or favorable terms. A serious uninsured loss or a loss significantly exceeding the limits of Tal Depot s future insurance policies could have a material adverse effect on its business, financial condition and results of operations. The high costs of being a public company will increase our costs. We have adopted procedures in connection with corporate governance that we believe to be most appropriate for our circumstances. We will observe such procedures because we consider this to be in the best interest of our stakeholders, including employees, customers, suppliers, financiers and shareholders. These measures carry a cost, and these costs, plus the expected costs of maintaining the quotation for our stock relative to the size of our business, are high. We must be able to establish and maintain required disclosure controls and procedures and internal controls over financial reporting and to meet the public reporting and the financial requirements for our business. Our management has a legal and fiduciary duty to establish and maintain disclosure controls and control procedures in compliance with the securities laws, including the requirements mandated by the Sarbanes-Oxley Act of 2002. The standards that must be met for management to assess the internal control over financial reporting as effective are complex, and require significant documentation, testing and possible remediation to meet the detailed standards. In addition, our independent registered public accounting firm has not yet performed the attestation process as it was not required, and, if and when it becomes required, we may encounter problems or delays in completing the implementation of any requested improvements and receiving an attestation of our assessment by our independent registered public accounting firm. If our independent registered public accounting firm is unable to provide an unqualified attestation report on such assessment, investor confidence and share value may be negatively impacted. Under current SEC rules, we will be required to include in our annual reports an assessment, as of the end of the most recent fiscal year, of the effectiveness of our internal control structure and procedures for financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act, and related rules and regulations of the SEC. We will be required to review and evaluate on an annual basis our internal control over financial reporting. This process also results in a diversion of management s time and attention. In the event that we are unable to maintain compliance with the applicable provisions of Section 404 of the Sarbanes-Oxley Act and related rules, we and the market price of our common stock may be adversely affected. Tal Depot may be unable to adequately protect its intellectual property rights. There can be no assurance that Tal Depot s trade names, and the "Tal Depot" trademark, will not be challenged, invalidated, misappropriated or circumvented by third parties, and any such occurrence may materially adversely affect its business and result of operations. Changes in tax treatment of companies engaged in e-commerce may adversely affect the commercial use of our sites and our financial results. Due to the global nature of the Internet, it is possible that various states might attempt to impose additional or new regulation on Tal Depot s business or levy additional or new sales, income or other taxes relating to its activities. Tax authorities at the federal, state and local levels are currently reviewing the appropriate treatment of companies engaged in e-commerce. New or revised federal, state or local tax regulations may subject Tal Depot or its customers to additional sales, income and other taxes. We cannot predict the effect of current attempts to impose sales, income or other taxes on e-commerce. New or revised taxes and, in particular, sales taxes, VAT and similar taxes would likely increase the cost of doing business online and decrease the attractiveness of selling products over the Internet. New taxes could also create significant increases in internal costs necessary to capture data and collect and remit taxes. Any of these events could have a material adverse effect on Tal Depot s business, financial condition and operating results. Taxing authorities may successfully assert that Tal Depot should have collected or in the future should collect sales and use, commercial activity, vat or similar taxes, and it could be subject to liability with respect to past or future sales, which could adversely affect its operating results. Tal Depot does not collect sales and use, commercial activity, VAT or similar taxes in all jurisdictions in which it has sales, based on its belief that such taxes are not applicable. Sales and use, VAT and similar tax laws and rates vary greatly by jurisdiction. Any future tax assessments, penalties and interest may materially adversely affect Tal Depot s business, financial condition and operating results. Tal Depot and Tal Consolidated may experience fluctuations in their respective tax obligations and effective tax rate, which could materially adversely affect financial results. Tal Depot has been, and will continue to be, subject to taxes in the United States. We will also be subject to taxes in the United Stated. Tal Depot has recorded and will record tax expense based on current tax payments and estimated future tax payments, and we will do the same. At any one time, multiple tax years may be subject to audit by various taxing jurisdictions, and the results of these audits could expose Tal Depot or Tal Consolidated to additional tax liability. As a result, we expect that throughout the year there could be ongoing variability in Tal Depot and Tal Consolidated s quarterly tax rates as taxable events occur and exposures are re-evaluated. Further, the effective tax rate in a given financial statement period may be materially impacted by changes in tax laws, changes in the mix and level of earnings by taxing jurisdiction, changes to existing accounting rules or regulations or by changes to our ownership or capital structures. Fluctuations in tax obligations and effective tax rate could materially adversely affect our results of business, financial condition and operating results. Risks Relating To Ownership Of Our Common Stock We currently do not intend to pay dividends on our common stock. As a result, your only opportunity to achieve a return on your investment is if the price of our common stock appreciates. We currently do not expect to declare or pay dividends on our common stock. In addition, in the future we may enter into agreements that prohibit or restrict our ability to declare or pay dividends on our common stock. As a result, your only opportunity to achieve a return on your investment may be if the market price of our common stock appreciates and you sell your shares at a profit. You may experience dilution of your ownership interest due to the future issuance of additional shares of our common stock. While we expect to have sufficient funds to execute our business plan for at least 12 months post this public offering, assuming we raise the entire proceeds stated above, we may need additional funds in the future to execute additional prospective joint ventures or acquisitions or due to changed business conditions or other future developments. As a result, we may require additional funds from future equity or debt financings, including sales of preferred shares or convertible debt, to complete the development of new projects and pay the general and administrative costs of our business. We may in the future issue our previously authorized and unissued securities, resulting in the dilution of the ownership interests of holders of our common stock. On the Effective Date we will be authorized to issue 160,000,000 shares, of which 150,000,000 are for shares of common stock, no par value per share, and 10,000,000 are for shares of "blank check" preferred stock, having such designations, rights and preferences as the Board of Directors may determine, in its sole discretion, from time to time. The potential issuance of such additional shares of common stock or preferred stock or convertible debt may create downward pressure on the trading price of our common stock. We may also issue additional shares of common stock or other securities that are convertible into or exercisable for common stock in future public offerings or private placements for capital raising purposes or for other business purposes, including as part of the Tal Consolidated Inc. Equity Incentive Plan that we will implement, at the sole discretion of our board of directors, for our employees and for the employees of Tal Depot or any other subsidiary we may own in the future. The future issuance of a substantial number of common shares into the public market, or the perception that such issuance could occur, could adversely affect the prevailing market price of our common shares. A decline in the price of our common shares could make it more difficult to raise funds through future offerings of our common shares or securities convertible into common shares. Our certificate of incorporation allows for our board of directors to create new series of preferred stock without further approval by our stockholders, which could have an anti-takeover effect and could adversely affect holders of our common stock. Our authorized capital includes preferred stock issuable in one or more series. Our board of directors has the authority to issue preferred stock and determine the price, designation, rights, preferences, privileges, restrictions and conditions, including voting and dividend rights, of those shares without any further vote or action by stockholders. The rights of the holders of common stock will be subject to, and may be adversely affected by, the rights of holders of any preferred stock that may be issued in the future. The issuance of additional preferred stock, while providing desirable flexibility in connection with possible financings and acquisitions and other corporate purposes, could make it more difficult for a third-party to acquire a majority of the voting power of our outstanding voting securities, which could deprive our holders of common stock of a premium that they might otherwise realize in connection with a proposed acquisition of the Company. One of our stockholders own a significant percentage of our stock and will be able to exert significant control over matters subject to stockholder approval. Prior to this offering, Jeremy J. Reichmann owned 85.2% of the ownership interests of Tal Depot. After this offering, Tal Consolidated will own 100% of the ownership interests of Tal Depot, and Mr. Reichmann will own approximately 53.2% of our outstanding common stock, either individually or through entities under his direct control. Mr. Reichmann may be able to substantially determine the outcome of all matters requiring stockholder approval. For example, he may be able to substantially control elections of directors, amendments of our organizational documents, or approval of any merger, sale of assets, or other major corporate transaction. This may prevent or discourage unsolicited acquisition proposals or offers for our common stock that you may feel are in your best interest as one of our stockholders. The interests of Mr. Reichmann may not always coincide with your interests or the interests of other stockholders and he may act in a manner that advances his best interests and not necessarily those of other stockholders, including seeking a premium value for his common stock, and might affect the prevailing market price for our common stock. We are an "emerging growth company," and we cannot be certain if the reduced reporting requirements applicable to emerging growth companies will make our common share less attractive to investors. We are an "emerging growth company" as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act. We may take advantage of exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We have also elected to take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act. We could be an emerging growth company for up to five years, although circumstances could cause us to lose that status earlier, including if we have more than $1.07 billion in annual revenues as of the end of our fiscal year, we have more than $700.0 million in market value of our common share held by non-affiliates as of the end of our second fiscal quarter or we issue more than $1.0 billion of non-convertible debt over a three-year period. Our financial statements may not be comparable to companies that comply with public company effective dates because of our election under Section 7(a)(2)(B) of the Securities Act. We cannot predict if investors will find our common share less attractive because we may rely on these exemptions. If some investors find our common share less attractive as a result, there may be a less active trading market for our common share and our per share trading price may be adversely affected and more volatile Our shares will be subject to potential delisting if we do not meet or continue to maintain the listing requirements of the NASDAQ Capital Market. The NASDAQ Capital market has rules for continued listing, including, without limitation, minimum market capitalization and other requirements. Failure to maintain our listing, or de-listing from this market, would make it more difficult for shareholders to dispose of our common stock and more difficult to obtain accurate price quotations on our common stock. This could have an adverse effect on the price of our common stock. Our ability to issue additional securities for financing or other purposes, or otherwise to arrange for any financing we may need in the future, may also be materially and adversely affected if our common stock is not traded on a national securities exchange. There is currently no public market for our common stock. Failure to develop or maintain a trading market could negatively affect its value and make it difficult or impossible for you to sell your shares. There is currently no public market for our common stock and an active public market for our common stock may not develop. Failure to develop or maintain an active trading market could make it difficult for you to sell your shares or recover any part of your investment in us. Even if a market for our common stock does develop, the market price of our common stock may be highly volatile. In addition to the uncertainties relating to future operating performance and the profitability of operations, factors such as variations in interim financial results or various, as yet unpredictable, factors, many of which are beyond our control, may have a negative effect on the market price of our common stock. If and when a trading market for our common stock develops, the market price of our common stock is still likely to be highly volatile and subject to wide fluctuations, and you may be unable to resell your shares at or above the price at which you acquired them. The market price of our common stock is likely to be highly volatile and could be subject to wide fluctuations in response to a number of factors that are beyond our control, including, but not limited to: variations in our revenue and operating expenses; market conditions in our industry and the economy as a whole; actual or expected changes in our growth rates or our competitors growth rates; developments in the financial markets and worldwide or regional economies; announcements by the government relating to regulations that govern our industry; sales of our common stock or other securities by us or in the open market; and changes in the market valuations of other comparable companies. The trading price of our shares might also decline in reaction to events that affect other companies in our industry, even if these events do not directly affect us. Each of these factors, among others, could harm the value of your investment in our common stock. In the past, following periods of volatility in the market, securities class-action litigation has often been instituted against companies. Such litigation, if instituted against us, could result in substantial costs and diversion of management s attention and resources, which could materially and adversely affect our business, operating results and financial condition. If securities or industry analysts do not publish or cease publishing research or reports about us, our business or our market, or if they change their recommendations regarding our stock adversely, our stock price and trading volume could decline. The trading market for our common stock will be influenced by the research and reports that industry or securities analysts may publish about us, our business, our market or our competitors. If any of the analysts who may cover us change their recommendation regarding our stock adversely, or provide more favorable relative recommendations about our competitors, our stock price would likely decline. If any analyst who may cover us were to cease coverage of the Company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline. Risks Related To The Offering Investors in this offering will experience immediate and substantial dilution in net tangible book value. The public offering price will be substantially higher than the net tangible book value per share of our outstanding shares of common stock. As a result, investors in this offering will incur immediate dilution of $6.04 per share, based on the public offering price of $7.00 per share, the midpoint of the public offering price range set forth on the cover page of this prospectus. Investors in this offering will pay a price per share that substantially exceeds the book value of our assets after subtracting our liabilities. See "Dilution" for a more complete description of how the value of your investment will be diluted upon the completion of this offering. We have broad discretion in the use of the net proceeds from this offering and may not use them effectively. Other than a portion of the proceeds of this offering that will go directly to Key Bank to payoff Tal Depot s outstanding loan balances, our management will have broad discretion in the application of the net proceeds, including for any of the purposes described in the section of this prospectus entitled "Use of Proceeds." The failure by our management to apply these funds effectively could harm our business. Sales of a substantial number of shares of our common stock following this offering may adversely affect the market price of our common stock and the issuance of additional shares will dilute all other stockholders. Sales of a substantial number of shares of our common stock in the public market or otherwise following this offering, or the perception that such sales could occur, could adversely affect the market price of our common stock. After completion of this offering at an initial offering price of $7.00 per share, the midpoint of the public offering price range set forth on the cover page of this prospectus, our existing stockholders will own approximately 62.5% of our common stock assuming there is no exercise of the underwriters over-allotment option. After completion of this offering there will be 5,714,429 shares of our common stock outstanding. In addition, our certificate of incorporation, as amended, permits the issuance of up to approximately 144,300,000 additional shares of common stock after the completion of this offering. Thus, we have the ability to issue substantial amounts of common stock in the future, which would dilute the percentage ownership held by the investors who purchase shares of our common stock in this offering. We and our officers, directors and all stockholders have agreed, subject to customary exceptions, not to, without the prior written consent of Joseph Gunnar & Co., LLC, the representative of the underwriters, during the period ending 365 days from the date of this offering in the case of our directors and officers and 180 days from the date of this offering in the case of us and all other stockholders, directly or indirectly, offer to sell, sell, pledge or otherwise transfer or dispose of any of shares of our common stock, enter into any swap or other derivatives transaction that transfers to another any of the economic benefits or risks of ownership of shares of our common stock, make any demand for or exercise any right or cause to be filed a registration statement, including any amendments thereto, with respect to the registration of any shares of common stock or securities convertible into or exercisable or exchangeable for common stock or any other securities of the Company or publicly disclose the intention to do any of the foregoing. After the lock-up agreements with our principal stockholders pertaining to this offering expire 180 days from the date of this offering unless waived earlier by the representative, up to 135,715 of the shares that had been locked up will be eligible for future sale in the public market. After the lock-up agreements with our directors and officers pertaining to this offering expire 365 days from the date of this offering unless waived earlier by the managing underwriter, up to 3,435,714 of the shares (net of any shares also restricted by lock-up agreements with our principal stockholders) that had been locked up will be eligible for future sale in the public market. Sales of a significant number of these shares of common stock in the public market could reduce the market price of the common stock. CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS This prospectus contains forward-looking statements. Forward-looking statements give our current expectations or forecasts of future events. You can identify these statements by the fact that they do not relate strictly to historical or current facts. Forward-looking statements involve risks and uncertainties and include statements regarding, among other things, our projected revenue growth and profitability, our growth strategies and opportunity, anticipated trends in our market and our anticipated needs for working capital. They are generally identifiable by use of the words "may," "will," "should," "anticipate," "estimate," "plans," "potential," "projects," "continuing," "ongoing," "expects," "management believes," "we believe," "we intend" or the negative of these words or other variations on these words or comparable terminology. These statements may be found under the sections entitled "Management s Discussion and Analysis of Financial Condition and Results of Operations" and "Business," as well as in this prospectus generally. In particular, these include statements relating to future actions, prospective products, market acceptance, future performance or results of current and anticipated products, sales efforts, expenses, and the outcome of contingencies such as legal proceedings and financial results. Additional examples of forward-looking statements in this prospectus include, but are not limited to, our expectations regarding our business strategy, business prospects, operating results, operating expenses, working capital, liquidity and capital expenditure requirements. Important assumptions relating to the forward-looking statements include, among others, assumptions regarding demand for our products, the cost, terms and availability of components, pricing levels, the timing and cost of capital expenditures, competitive conditions and general economic conditions. These statements are based on our management s expectations, beliefs and assumptions concerning future events affecting us, which in turn are based on currently available information. These assumptions could prove inaccurate. Although we believe that the estimates and projections reflected in the forward-looking statements are reasonable, our expectations may prove to be incorrect. Important factors that could cause actual results to differ materially from the results and events anticipated or implied by such forward-looking statements include, but are not limited to: changes in the market acceptance of our products; increased levels of competition; changes in political, economic or regulatory conditions generally and in the markets in which we operate; adverse conditions in the industries in which our customers operate; our ability to retain and attract senior management and other key employees; our ability to quickly and effectively respond to new technological developments; our ability to protect our trade secrets or other proprietary rights, operate without infringing upon the proprietary rights of others and prevent others from infringing on our proprietary rights; and other risks, including those described in the "Risk Factors" discussion of this prospectus. We operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for us to predict all of those risks, nor can we assess the impact of all of those risks on our business or the extent to which any factor may cause actual results to differ materially from those contained in any forward-looking statement. The forward-looking statements in this prospectus are based on assumptions management believes are reasonable. However, due to the uncertainties associated with forward-looking statements, you should not place undue reliance on any forward-looking statements. Further, forward-looking statements speak only as of the date they are made, and unless required by law, we expressly disclaim any obligation or undertaking to publicly update any of them in light of new information, future events, or otherwise. USE OF PROCEEDS We estimate that the net proceeds from the sale of the shares of common stock in the offering at an initial offering price of $7.00 per share, the midpoint of the public offering price range set forth on the cover page of this prospectus, will be approximately $13.2 million, after deducting the underwriting discounts and commissions and estimated offering expenses, or approximately $1.8 million. We estimate that such net proceeds will be $15.2 million if the underwriters exercise their over-allotment option in full. A $1.00 increase or decrease in the public offering price per share would increase or decrease our proceeds by approximately $2.0 million assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the underwriting discount and estimated offering expenses payable by us. We currently intend to use the net proceeds received from this offering to fund our future growth projects and for other corporate purposes at the sole and complete discretion of our management, and where applicable, our Board of Directors. The growth projects may include increased marketing, expanding and improving our current equipment and infrastructure, improving personnel, opening new distribution centers and automating facilities and expanding product offerings in core segments. The approximate amount of proceeds we may use for any of these growth projects that we may decide to undertake would be $7 to $8 million. We also currently intend to use $2 to $3 million of net proceeds received from this offering for general corporate purposes. These approximate amounts for growth projects and general corporate purposes are based on the assumption that we raise sufficient money in this offering after payment of expenses and repayment of certain debt, as described below. We will have broad discretion and flexibility in the application of the net proceeds for the purposes specified above (and for other corporate purposes), and we may not use any of the proceeds for these purposes. We also intend to use some of our net proceeds to repay certain of Tal Depot s outstanding long-term and short term debts, which includes: (i) Key Bank SBA loan in the amount of approximately $1,150,000; (ii) Key Bank Line of Credit in the amount of approximately $600,000; and (iii) loan from a related party of approximately $1,100,000. The repayment of the outstanding Key Bank SBA loan and Key Bank line of credit will be made directly from the proceeds of the offering to avoid any potential claim of default on these debts based on the change of ownership structure of Tal Depot that will occur on the Effective Date. If the proceeds of this offering exceed $5,000,000, the repayment of the related party will be made within thirty (30) days upon the Company s receipt of such proceeds in order to comply with the repayment terms. Pending the uses described above, the proceeds will be invested in short-term bank deposits. DIVIDEND POLICY To date, we have not paid any cash dividends on our stock and do not anticipate paying any such dividends in the foreseeable future. The declaration and payment of dividends on our common stock is at the discretion of our board of directors and will depend on, among other things and our operating results, financial condition, capital requirements, contractual restrictions or such other factors as our board of directors may deem relevant. We currently expect to use all available funds to finance the future development and expansion of our business and do not anticipate paying dividends in the foreseeable future. CAPITALIZATION The following table sets forth (i) Tal Depot s cash and cash equivalents and capitalization as of December 31, 2017 on an actual basis; (ii) our cash and cash equivalents capitalization as of December 31, 2017, on pro forma basis assuming the effectuation of the transactions set forth in the Share Exchange Agreement; and (iii) and our cash and cash equivalents and capitalization as of as of December 31, 2017, on a pro forma assuming the effectuation of the transactions set forth in the Share Exchange Agreement and adjusted to give effect to the sale by us of shares of common stock in this offering at an initial public offering price of $7.00 per share, the midpoint of the public offering price range set forth on the cover page of this prospectus, after deducting underwriting discounts and commissions and estimated offering expenses: The pro forma as adjusted information below is illustrative only and our capitalization following the completion of this offering will be adjusted based on the actual public offering price and other terms of this offering determined at pricing. You should read this table together with "Management s Discussion and Analysis of Financial Condition and Results of Operations" and the audited and unaudited consolidated financial statements of Tal Depot and the related notes appearing elsewhere in this prospectus. As of December 31, 2017 Actual Pro forma Pro Forma as Adjusted(1) Cash and cash equivalents $ 11,971 $ 11,971 $ 10,362,711 Total indebtedness 4,245,337 4,245,337 1,441,254 Stockholders equity (deficit): Blank Check Preferred Stock; 10,000,000 shares authorized; 0 shares issued and outstanding actual, 0 shares issued and outstanding pro forma and pro forma as adjusted - - - Common Stock, no par value;150,000,000 shares of common stock authorized; 3,571,429 shares issued and outstanding actual, 5,714,429 shares issued and outstanding pro forma, 5,714,429 shares issued and outstanding pro forma as adjusted - - - Additional paid-in capital - - 13,200,920 Accumulated deficit (7,742,722 ) (7,742,722 ) (7,788,818 ) Total stockholders equity (deficit) (7,742,722 ) (7,742,722 ) 5,412,102 Total capitalization 3,497,385 3,497,385 6,853,356 (1) A $1.00 increase or decrease in the public offering price per share would increase or decrease our pro forma as adjusted cash and cash equivalents, additional paid-in capital, total stockholders equity and total capitalization by approximately $1,971,560 assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the underwriting discount and estimated offering expenses payable by us. DILUTION If you invest in our shares of common stock, you will experience immediate and substantial dilution to the extent of the difference between the initial public offering price of our shares of common stock and the pro forma as adjusted net tangible book value (deficit) per share of our shares of common stock immediately after the offering. Our net (deficit) tangible book value immediately after giving effect to the transactions set forth in the Share Exchange Agreement but prior to the sale of any shares in this offering is determined by dividing our consolidated total tangible assets, less total liabilities, by the actual number of outstanding shares of common stock. This historical net tangible book (deficit) of our shares of common stock as of December 31, 2017 was ($7,742,722). The pro forma net tangible book (deficit) of our shares of common stock as of December 31, 2017 was ($7,742,722) or ($2.17) per share of common stock. Pro forma net tangible book (deficit) per share represents our total tangible assets less our total liabilities, divided by the number of outstanding shares of common stock, after giving effect to the pro forma adjustments referenced under "Capitalization." The pro forma as adjusted net tangible book value of our shares of common stock as of December 31, 2017, was $5,412,102 or $0.95 per share. The pro forma as adjusted net tangible book value gives effect to the sale of shares of common stock in this offering at the initial public offering price of $7.00 per share, the midpoint of the range set forth on the cover page of this prospectus, after deducting underwriting discounts and commissions and estimated offering expenses payable by us. The difference between the initial public offering price and the pro forma as adjusted net tangible book value (deficit) per share represents an immediate dilution of $6.04 per share to new investors purchasing shares of common stock in this offering. The following table illustrates this dilution on a per share basis to new investors: Assumed initial public offering price per share $ 7.00 Pro forma net tangible book (deficit) per share before this offering, as of December 31, 2017 (2.17 ) Pro forma increase in net tangible book value per share attributable to new investors 3.12 Pro forma as adjusted net tangible book value per share, after giving effect to this offering 0.95 Dilution in pro forma as adjusted net tangible book value per share to new investors 6.05 A $1.00 increase (decrease) in the initial public offering price of $7.00 per share, the midpoint of the public offering price range set forth on the cover page of this prospectus, would increase (decrease) our pro forma net tangible book value per share by $0.35 and the dilution per share of common stock to new investors by $0.35, assuming that the number of shares of common stock offered by us, as set forth on the cover page of this prospectus, remains the same, and after deducting the estimated underwriting discounts and commissions. If the underwriters over-allotment option to purchase additional shares from us is exercised in full, and based on the initial public offering price of $7.00 per share, the midpoint of the public offering price range set forth on the cover page of this prospectus, the pro forma as adjusted net tangible book value (deficit) per share after this offering would be approximately $1.24 per share, the increase in the pro forma net tangible book value (deficit) per share attributable to new investors would be approximately $3.41 per share and the dilution to new investors purchasing shares in this offering would be approximately $5.76 per share. The table below summarizes as of December 31, 2017, on the pro forma as adjusted basis described above, the number of shares of common stock we issued and sold, the total consideration we received and the average price per share (1) paid by our existing shareholders and (2) to be paid by new investors purchasing our shares of common stock in this offering at the initial public offering price of $7.00 per share, before deducting underwriting discounts and commissions and estimated offering expenses payable by us. Shares Purchased Total Consideration Average Price Number Percent Amount Percent Per Share Existing shareholders 3,571,429 62.5% $ 990,000 6.2 % $ 0.28 New investors 2,143,000 37.5% $ 15,001,000 93.8 % 7.00 Total 5,714,429 100.0% $ 15,991,000 100.0% $ 2.80 The number of shares of common stock outstanding immediately after this offering is based on 5,714,429 shares of common stock, on an as converted basis, giving effect to the pro forma transactions described in "Capitalization." PRO FORMA FINANCIAL DATA The following unaudited pro forma condensed statements of operations data gives effect to certain transactions as if they have occurred as of the beginning of the period. The unaudited pro forma condensed consolidated balance sheet data gives effect to these transactions as if they had occurred on December 31, 2017. The following unaudited pro forma condensed consolidated financial statements are based on the historical financial statements of the Company as adjusted to give effect to contemplated transactions in this offering. The unaudited pro forma condensed consolidated statements of operations for the year ended December 31, 2017 give effect to these transactions as if they had occurred on January 1, 2017. The unaudited pro forma condensed consolidated balance sheet as of December 31, 2017 gives effect to these transactions as if they had occurred on December 31, 2017. The pro forma financial information is presented for informational purposes only and does not purport to represent what the Company s results of operations or financial condition would have been had the initial public offering actually occurred on the dates indicated and does not purport to project the Company s results of operations or financial condition for any future period or as of any future date. The pro forma financial statements are based on the assumptions and adjustments that are described in the accompanying notes. The pro forma adjustments are preliminary, subject to further revision as additional information becomes available and additional analyses are performed and have been made solely for providing the pro forma financial data. Differences between these preliminary estimates and the final accounting, expected to be completed after the closing of the initial public offering, will occur and these differences could have a material impact on the accompanying pro forma financial statements and the Company s future results of operations and financial position. In addition, differences between the preliminary and final amounts will likely occur as a result of the amount of cash used for the Company s operations, changes in the fair value of the Company s preferred and common stock and other changes in the Company s assets and liabilities. The pro forma financial information is preliminary and has been prepared for illustrative purposes only. The actual results reported in periods following the initial public offering may differ significantly from those reflected in this pro forma financial information presented herein for a number of reasons, including, but not limited to, differences between the assumptions used to prepare this pro forma financial information. The assumptions and estimates underlying the pro forma financial statements are described in the accompanying notes, which should be read together with the pro forma financial statements. The unaudited pro forma condensed consolidated financial statements should be read together with the historical financial statements of the Company, included herein. The pro forma and pro forma as adjusted information set forth below is illustrative only and will be adjusted based on the actual public offering price and other terms of this offering determined at pricing. 2017 Pro Forma (1) Pro Forma as adjusted Pro Forma as adjusted (2) Actual 2017 Adjustments 2017 Unaudited NET REVENUES $ 26,215,032 $ 26,215,032 $ 26,215,032 COST OF GOODS SOLD 13,392,429 13,392,429 13,392,429 GROSS PROFIT 12,822,603 12,822,603 12,822,603 SELLING, GENERAL AND ADMINISTRATIVE: Payroll and related expenses 2,612,665 2,612,665 2,612,665 Shipping 8,654,796 8,654,796 8,654,796 Professional fees 623,488 623,488 623,488 General and administrative expenses 4,563,748 4,563,748 4,563,748 Depreciation 47,292 47,292 47,292 TOTAL SELLING, GENERAL AND ADMINISTRATIVE 16,501,989 16,501,989 16,501,989 LOSS FROM OPERATIONS (3,679,386 ) (3,679,386 ) (3,679,386 ) OTHER INCOME (EXPENSE): Other income 2,856 2,856 2,856 Interest expense, net (291,742 ) (291,742 ) 101,599 7 (190,143 ) TOTAL OTHER INCOME (EXPENSE) (288,886 ) (288,886 ) (187,287 ) LOSS BEFORE INCOME TAXES (3,968,272 ) (3,968,272 ) (3,866,673 ) Income tax - - - NET LOSS $ (3,968,272 ) $ (3,968,272 ) $ (3,866,673 ) Pro forma basic and diluted net loss per common share (unaudited) $ (1.11 ) $ (0.68 ) Pro forma basic and diluted weighted average number of common shares outstanding (unaudited) 3,571,429 5, 714,429 Consolidated Balance Sheet Data Year Ended December 31, 2017 Actual Pro Forma (1) Pro Forma as adjusted adjustments Pro Forma as adjusted (2) Unaudited ASSETS CURRENT ASSETS: Cash $ 11,971 $ 11,971 13,200,920 3 $ 10,362,711 (2,850,180 ) 4,5,6 Accounts receivable, net 241,435 241,435 241,435 Inventory 373,872 373,872 373,872 Other current assets 9,271 9,271 9,271 Total current assets 636,549 636,549 10,987,289 Property and equipment, net 152,491 152,491 152,491 Other assets 30,333 30,333 30,333 TOTAL ASSETS $ 819,373 $ 819,373 $ 11,170,113 LIABILITIES AND MEMBERS /STOCKHOLDERS S EQUITY (DEFICIT) CURRENT LIABILITIES: Accounts payable $ 3,868,868 $ 3,868,868 $ 3,868,868 Accrued expenses 114,264 114,264 114,264 Cash overdraft 298,424 298,424 298,424 Accrued payroll 35,201 35,201 35,201 Current portion of term loans, net of discount of $6,241, $6,241, $6,241 Pro Forma, $0 Pro Forma as adjusted 692,199 692,199 (692,199 ) 4 - Current portion of notes payable, net of discount of $0, $138,838, $138,838 Pro Forma and Pro Forma as adjusted 567,414 567,414 567,414 Current portion of capital lease obligations 8,277 8,277 8,277 Current portion of bank line of credit 10,046 10,046 10,046 Due to related parties 1,836,047 1,836,047 (1,100,000 ) 6 736,047 Total current liabilities 7,430,740 7,430,740 5,638,541 LONG TERM LIABILITIES: Term loans - long term portion, net of discount of $46,096 and $39,855, $39,855 Pro Forma, and $0 Pro Forma as adjusted 1,011,885 1,011,885 (1,011,885 ) 5 - Notes payable - long term portion, net of discount of $0 and $975, $975 Pro Forma and Pro Forma as adjusted 22,423 22,423 22,423 Capital lease obligation - long term portion 26,647 26,647 26,647 Bank line of credit - long term portion 70,400 70,400 70,400 Total long term liabilities 1,131,354 1,131,354 119,470 TOTAL LIABILITIES 8,562,095 8,562,095 5,758,012 Commitments and contingencies MEMBERS /STOCKHOLDERS EQUITY (DEFICIT): Blank Check Preferred Stock; 10,000,000 shares authorized, 0 shares issued and outstanding pro forma Common Stock, no par value;150,000,000 shares of common stock authorized; 2,143,000 shares issued and outstanding pro forma and 5,714,429 shares issued and outstanding pro forma as adjusted - 13,200,920 3 13,200,920 Accumulated deficit (7,742,722 ) (7,742,722 ) (46,096 ) 4,5 (7,788,818 ) TOTAL MEMBERS /STOCKHOLDERS" EQUITY (DEFICIT) (7,742,722 ) (7,742,722 ) 5,412,102 TOTAL LIABILITIES AND MEMBERS /STOCKHOLDERS EQUITY (DEFICIT) $ 819,373 $ 819,373 $ 11,170,113 Basis of Presentation The unaudited pro forma financial information was prepared in accordance with U.S. GAAP and present the pro forma and pro forma as adjusted financial position and results of operations based upon the historical data of the Company and related initial public offering. For the purposes of the unaudited pro forma financial information, there are no differences to the accounting policies as set forth in Note 3 of the Company s audited financial statements. Accordingly, no effect has been provided for the pro forma as adjusted adjustments described below "Pro Forma and Pro Forma as adjusted adjustments." Pro Forma and Pro Forma as adjusted adjustments The pro forma and pro forma as adjusted adjustments are based on the preliminary estimates and assumptions that are subject to change. The following adjustments have been reflected in the unaudited pro forma combined financial information: (1) Gives effect to the transactions set forth in the Share Exchange Agreement. Pro forma basic and diluted net loss per common share were computed to give effect to the transactions set forth in the Share Exchange Agreement, which would result in an aggregate of 3,571,429 shares of common stock issued as of December 31, 2017, assuming 2,143,000 shares are issued in this offering, using the as-if converted method as though the conversion had occurred as of the beginning of the period. (2) Gives effect to the sale by us of shares of common stock in this offering at an initial public offering price of $7.00 per share, the midpoint of the public offering price range set forth on the cover page of this prospectus, after deducting underwriting discounts and commissions and estimated offering expenses, in addition to the payoff of certain debt. (3) Assumes the closing of $15,001,000 in financing from the initial public offering, less $1,200,080 and $600,000 of underwriting discounts and commissions and estimated offering expenses, respectively. (4) Assumes the cash payment of $698,440 to repay the short-term debts owed to Key Bank and acceleration of $6,241 of debt discount amortization. (5) Assumes the cash payment of $1,051,740 to repay the long-term debts owed to Key Bank and acceleration of $39,855 of debt discount amortization. (6) Assumes the cash payment of $1,100,000 to repay the short-term debt due to a related party. (7) Assumes the repayment of certain debt had occurred on January 1, 2017 and gives effect to the elimination of interest expense related to the repayment of certain debt. MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis of the financial condition and results of our operations should be read in conjunction with our consolidated financial statements and the notes to those statements appearing elsewhere in this prospectus. This discussion and analysis contains forward-looking statements reflecting our management s current expectations that involve risks, uncertainties and assumptions. Our actual results and the timing of events may differ materially from those described in or implied by these forward-looking statements due to a number of factors, including those discussed below and elsewhere in this prospectus, particularly
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+Prospectus Summary This summary highlights information contained in greater detail elsewhere in this prospectus. This summary is not complete and does not contain all of the information you should consider in making your investment decision. You should read the entire prospectus carefully before making an investment in our Ordinary Shares. You should carefully consider, among other things, our consolidated financial statements and the related notes and the sections entitled "Risk Factors" and "Management s Discussion and Analysis of Financial Condition and Results of Operations" included elsewhere in this prospectus. Prospectus Conventions Except where the context otherwise requires and for purposes of this prospectus only, "we", "us", "our company", "Company", "our" and "Golden Metropolis" refer to Golden Metropolis International Limited, a British Virgin Islands company ("Golden Metropolis" when individually referenced); Hong Kong Hansheng Limited, a limited liability company incorporated in Hong Kong ("Hong Kong Hansheng") (also referred to as in China) and a wholly-owned subsidiary of Golden Metropolis; Jiangsu Aiwen Investment Co. Ltd. ("Jiangsu Aiwen") (also referred to as in China), a wholly foreign-owned enterprise ("WFOE") formed under the laws of the People s Republic of China (the "PRC") and a wholly-owned subsidiary of Hong Kong Hansheng; Jiangsu Wenhan Investment Co. Ltd. ("Jiangsu Wenhan") (also referred to as in China), a wholly foreign-owned enterprise ("WFOE") formed under the laws of the People s Republic of China (the "PRC") and a wholly-owned subsidiary of Hong Kong Hansheng; Wuxi Jincheng Curtain Wall Co. Ltd ("Wuxi Jincheng") (also referred to as in China), a PRC company, 99% of its shares are owned by Jiangsu Aiwen and 1% of its shares are owned by Jiangsu Wenhan; Jiangsu Aiwen, Jiangsu Wenhan and Wuxi Jincheng are collectively referred to as the "PRC subsidiaries." This prospectus contains translations of certain RMB amounts into U.S. dollar amounts at specified rates solely for the convenience of the reader. The relevant exchange rates are listed below: For the Six Months Ended June 30, 2018 For the Year Ended December 31, 2017 For the Year Ended December 31, 2016 Period Ended RMB: USD exchange rate US$1=RMB 6.6166 US$1=RMB 6.5063 US$1=RMB 6.9430 Period Average RMB: USD exchange rate US$1=RMB 6.3711 US$1=RMB 6.7569 US$1=RMB 6.6400 For the sake of clarity, this prospectus follows the English naming convention of first name followed by last name, regardless of whether an individual s name is Chinese or English. For example, the name of our chief executive officer will be presented as "Minpei Zha," even though, in Chinese, Mr. Zha s name is presented as "Zha Minpei." We have relied on statistics provided by a variety of publicly-available sources regarding China s expectations of growth. We did not, directly or indirectly, sponsor or participate in the publication of such materials, and these materials are not incorporated in this prospectus other than to the extent specifically cited in this prospectus. We have sought to provide current information in this prospectus and believe that the statistics provided in this prospectus remain up-to-date and reliable, and these materials are not incorporated in this prospectus other than to the extent specifically cited in this prospectus. CALCULATION OF REGISTRATION FEE Title of Class of Securities to be Registered Amount to be Registered Proposed Maximum Aggregate Price Per Share Proposed Maximum Aggregate offering Price Amount of Registration Fee(1)(5) Ordinary shares, no par value ("Ordinary Shares")(2) 2,000,000 $ 5.00 $ 10,000,000 $ 1,212.00 Ordinary Shares(2)(3) 1,200,000 $ 5.00 $ 6,000,000 $ 727.00 Underwriter Warrants(4) - $ - $ - $ - Ordinary shares underlying Underwriter Warrants(4) 90,000 $ 6.00 $ 540,000 $ 65.45 Total 3,290,000 $ - $ 16,540,000 $ 2,004.65 (1) The registration fee for securities is based on an estimate of the Proposed Maximum Aggregate Offering Price of the securities, assuming the sale of the maximum number of shares at the highest expected offering price, and such estimate is solely for the purpose of calculating the registration fee pursuant to Rule 457(o). (2) In accordance with Rule 416(a), the Registrant is also registering an indeterminate number of additional Ordinary Shares that shall be issuable pursuant to Rule 416 to prevent dilution resulting from share splits, share dividends or similar transactions. (3) Reflects the resale by the selling shareholders set forth herein of up to 1,200,000 ordinary shares. (4) We have agreed to issue, on the closing date of this offering, to the underwriters warrants to purchase a number of ordinary shares equal to (1) an aggregate of four percent (4%) of the Ordinary Shares sold up to the minimum offering and (2) an aggregate of five percent (5%) of the Ordinary Shares sold above the minimum offering, (the "Underwriter Warrants"). The closing date will be a date mutually acceptable to the Registrant and the Underwriter after the minimum offering has been sold. The exercise price of the Underwriter Warrants is equal to 120% of the offering price of the ordinary shares offered hereby. The Underwriter Warrants are exercisable, with a cashless provision, commencing from the effective day of the registration statement at any time, and from time to time, in whole or in part, for a period of 5 years from the issuance date. (5) Previously paid. The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. Table of Contents Prior to this offering, we closed financing transactions to meet our working capital needs relating our proposed initial public offering pursuant to exemptions provided by Regulations S and Regulation D of the Securities Act of 1933, as amended (the "Securities Act"). We sold an aggregate of 1,200,000 Ordinary Shares, all of which carry certain registration rights, for total proceeds of $1,210,000. The Ordinary Shares subscribed in the Regulation S and Regulation D offering were issued after we i) decreased our par value from $1 per ordinary share to no par value (the "Par Value Change"), ii) effectuated a 180:1 forward share split on May 15, 2018 whereby every authorized, issued and outstanding ordinary share was exchanged for 180 new ordinary shares (the "Forward Split") and iii) increased our authorized shares from 9,000,000 to unlimited ordinary shares (the "Share Increase", collectively with Par Value Change and Forward Split referred as the "Recapitalization"). Overview Incorporated on January 20, 2017, under the laws of the British Virgin Islands ("BVI"), we primarily conduct our business through our subsidiary, Wuxi Jincheng Curtain Wall Co. Ltd. ("Wuxi Jincheng"), which was formed on December 22, 1993 under the laws of the PRC. We believe that we are one of the leading companies to provide systematic solutions to construction projects of high-rise steel frame and curtain wall buildings in China. Our core business focuses on designing, processing, manufacturing, modifying and installing of metal doors, windows, and curtain wall and processing and installing steel structure. Headquartered in Wuxi, a regional business hub in southern Jiangsu Province, China, we have completed projects throughout China with specialized materials, complex geometry, novel structural and mechanical system designs. Our curtain wall systems combine innovative design with state-of-the-art materials and performance. Our Products and Services We specialize in the designing, processing, modification and installation of metal gates, metal window frames, curtain walls, and steel structures. Our services include product development, project design, processing and modification, installation and advisory services. Our main products are customized curtain walls, doors and windows. We process standard pieces into our own products that vary in size, specifications and functionality. Our curtain walls are custom designed by the supporting structure, closure, and material. According to a customer s specific needs, the curtain wall can be installed using a stick system, ladder system, or unitized system. The infills can be glass, metal panel, stone and fabric veneer, or a combination of the above. Our facilities incorporate state-of-the-art equipment and processes for curtain wall unit fabrication and assembly to meet the complex project demands of our clients. We process components into unitized and stick-built curtain walls, and offer a wide range panel of material options for our clients, such as glass, metal, granite and composite. The foundation of a successful fa ade or curtain wall project is innovative system design and engineering. Our design and engineering group develops custom solutions for each new project which are derived from a framework of our technology and experience. Design considerations range from the aesthetic and performance requirements determined in collaboration with the architect, to the fabrication and installation requirements that must be anticipated by the system design. To take a project from concept to reality, we prefer to deploy our own professional construction team to handle the installation. We offer installation services to clients and a custom delivery strategy is developed for each client in response to the singular set of considerations presented by the project. This custom strategy is developed through a uniform process unique to us that embraces the spectrum of activities from pre-construction through design, engineering, procurement, fabrication, assembly and installation. This process has been developed and refined through the successful completion of hundreds of remarkably diverse curtain wall installations and serves to mitigate the inherent risk of a challenging building project by enhancing the predictability of our performance, schedule and cost. Our products have been widely adopted in areas such as high-end residence buildings, public infrastructures, and office buildings, especially in high-rises, stylish design and modern architecture. Our targeted markets include high-end office buildings, hotels, stadiums, airports, bus stations, exhibition centers, shopping malls, hospitals and government buildings. Our customers include domestic and foreign corporations, real estate developers, governments and their respective agencies. EXPLANATORY NOTE This Registration Statement contains two prospectuses, as set forth below. Public Offering Prospectus. A prospectus to be used for the public offering by the Registrant of up to 2,000,000 ordinary shares of the Registrant (including up to 90,000 ordinary shares underlying the Underwriter Warrants) (the "Public Offering Prospectus") through the underwriter named on the cover page of the Public Offering Prospectus. Resale Prospectus. A prospectus to be used for the resale by selling shareholders of up to 1,200,000 ordinary shares of the Registrant (the "Resale Prospectus"). The Resale Prospectus is substantively identical to the Public Offering Prospectus, except for the following principal points: they contain different outside and inside front covers; they contain different Offering sections in the Prospectus Summary section beginning on page 1; they contain different Use of Proceeds sections on page 33; the Capitalization, Dilution, Post-Offering Ownership sections on page 36, page 38 and page 38 of the Public Offering Prospectus are deleted from the Resale Prospectus respectively; a Selling Shareholders section is included in the Resale Prospectus beginning on page 112; references in the Public Offering Prospectus to the Resale Prospectus will be deleted from the Resale Prospectus; the Underwriting section from the Public Offering Prospectus on page 107 is deleted from the Resale Prospectus and a Plan of Distribution is inserted in its place; the Legal Matters section in the Resale Prospectus on page 115 deletes the reference to counsel for the underwriter; and the outside back cover of the Public Offering Prospectus is deleted from the Resale Prospectus. The Registrant has included in this Registration Statement, after the financial statements, a set of alternate pages to reflect the foregoing differences of the Resale Prospectus as compared to the Public Offering Prospectus. Table of Contents Industry and Market Background Curtain wall is a product in high demand and represents a new trend in architecture in China. According to the statistics of the China Decoration Association Curtain Wall Committee, in 2016, China s curtain wall market had a total output of 370 billion yuan, an 8.8% increase from 340 billion yuan in 2015. The output in 2015 had a 6.3% increase from 320 billion yuan in 2014. The Curtain Wall Committee estimated that during the "Thirteenth Five Years" from 2016 to 2020, the market scale will increase from 370 billion yuan to 550 billion yuan, with an average annual growth rate of 9.7%. The increasing demand for curtain wall comes from the increased investment in large-scale constructions such as high-end office buildings, hotels, stadiums, airports, railway stations, exhibition centers, shopping malls and other commercial or public buildings. Because of the continuous high growth of China s macro economy, the steady growth of fixed asset investments and constructions will have a lasting effect on the curtain wall industry. Curtain wall is an urban industry. The market is mainly concentrated in large- and medium-sized cities, such as those based in the Yangtze River Delta, the Pearl River Delta, and Beijing-Tianjin-Hebei Area, where the economic volume and population are large. Urbanization in China has continued to grow rapidly. According to the data released by the National Bureau of Statistics, the population of urban residents at the end of 2015 was 771.16 million, which was an increase of 22 million from the end of 2014. Urban population consisted 56.1% of the total population, which was 1.3% higher than that in 2014. According to the United Nations, the Chinese Academy of Social Sciences and other institutions, it can be estimated that the urban population in the portion of the total population will continue to increase at 0.8% to 1% per year during 2016 to 2020. The rapid speed in urbanization will directly increase the demand for large-scale construction, which in turn will increase the demand for curtain walls. In addition, the market center will expand from first-tier cities such as Beijing, Shanghai and Guangzhou to second-tier cities such as Hangzhou, Nanjing and Wuhan. "Green buildings" with sustainable technology and energy are the trend in architecture and construction. Research and development in energy conservation and environmental protection, new product and new technology will become the theme of the curtain wall industry s development. It is estimated that from 2016 to 2020, with the "green building" policy, the curtain wall industry will be able to accelerate its transformation and upgrading in order to enhance its core competence. Our Growth Strategy To maintain the growth of our business and sustain our leading position in the market, we rely on these key drivers as part of our growth strategy: Breaking into the commercial and public building interior designing and decorating market which is a market supplementary to our current business landscape and is expected to create a synergistic business. Expand our sales network into the greater Beijing region (including the city of Beijing, Tianjin and Hebei Province) and establish our presence in mid-western China by 2020 to stimulate our revenue growth. Refine our processing techniques and improve the heat-insulation and airtightness performance of our overall projects and achieve even higher energy-saving performances. Competitive Advantages Compared with traditional manufacturing, a curtain wall panel has a higher degree of customization, which is reflected not only by different designs for different projects but also with different fa ade panels. Additionally, with growing pressure for superior performance at competitive costs, building skins has become increasingly more complex. We understand the importance of early technical input into fa ade development during the schematic phase of a new building design, and specialize in providing comprehensive design-build services. Curtain wall designing is a highly professional engineering task which requires a distinguished appearance, technical functionality and significant investment in installation planning. Like structural design, plumbing design and electrical design, curtain wall design requires special expertise. With more than 20 years of successful construction experience, we have developed a highly professional design and engineering team to tailor existing solutions to client s projects. We have received prestigious industry awards such as the Luban Awards, China Construction & Decoration Awards, the Magnolia Award, the Yangtze Cup and Purple Gold Cups. The information in this prospectus is not complete and may be changed. We will not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION, DATED [DATE], 2018 Golden Metropolis International Limited Minimum Offering: 1,000,000 Ordinary Shares Maximum Offering: 2,000,000 Ordinary Shares This is an initial public offering of Ordinary Shares of Golden Metropolis International Limited, a British Virgin Islands company. We are offering a minimum of 1,000,000 and a maximum of 2,000,000 of our Ordinary Shares. Prior to this offering, there has been no public market for our Ordinary Shares. The initial public offering price of our Ordinary Shares is expected to be $5.00 per share. We plan to list our Ordinary Shares on Nasdaq Capital Market under the symbol "WALL." We are an "emerging growth company" under the federal securities laws and will be subject to reduced public company reporting requirements. Investing in our Ordinary Shares involves risks. See "Risk Factors" beginning on page 10. Per Ordinary Share Minimum Offering Maximum Offering Assumed public offering price $5.00 $5,000,000 $10,000,000 Underwriter fees and commissions(1) $0.35 $350,000 $700,000 Proceeds to us, before expenses $4.65 $4,650,000 $9,300,000 (1) Under the Underwriting Agreement, we will pay our underwriters ("underwriters"), for which Boustead Securities, LLC is acting as the representative (the "Representative"), a fee equal to 7% of the gross proceeds raised in the offering. In addition to the cash commission, we agreed to reimburse the Representative for its reasonable out-of-pocket expenses, including its legal expenses in an amount not to exceed $75,000, $25,000 of travel expenses, payable only if the actual offering amount exceeds the minimum offering, and $25,000 for a third party due diligence report incurred by the Representative in connection with the offering. We have agreed to advance an aggregate of $100,000 to the Representative against its out-of-pocket, accountable expenses. We will also be responsible for costs and expenses incurred in conducting background checks of the Company s three officers by a background search firm, aggregate expenses not to exceed $5,000, up to a maximum of $230,000. We have agreed to issue, on the closing date of this offering, to the underwriters warrants to purchase a number of ordinary shares equal to (1) an aggregate of four percent (4%) of the Ordinary Shares sold up to the minimum offering amount and (2) an aggregate of five percent (5%) of the Ordinary Shares sold above the minimum offering amount, (the "Underwriter Warrants"). The Underwriter Warrants will be exercisable at any time, and from time to time, in whole or in part, from the effective date of the offering and for a period of five years thereafter. The Underwriter Warrants are exercisable at a per share price equal to 120% of the public offering price per share in the offering and may also be exercisable on a cashless basis. Table of Contents Curtain wall designs have been advancing rapidly, from simple frame design to unitized, point-supported, double-skinned, and membrane-structured frame design. In addition, more energy-efficient, ecological fa ade panels, photoelectric panels, and intelligent panels are starting to become more common in our industry. Continuing our research and development is the only way we can maintain an edge on our competitors. Our research and development department consists of 21 dedicated researchers and engineers which accounts for 9% of our total number of employees. In the construction industry, reputation and proven track record are particularly important for the consideration of project quality and safety as the cost to fix problems after the construction complete can be enormous. As a common practice, a contractor is required to have completed a certain number of projects within the past 3 years. We have been in this industry for more than 20 years and have completed hundreds of projects. Our reputation, along with our outstanding quality assurance, is a unique advantage for us and is one of the barriers our competitors have to overcome to compete with us in this industry. Our Challenges and Risk Factors Summary The following section outlines the primary challenges and risks inherent to our business model. Before deciding to invest in our Ordinary Shares, we strongly recommend a close reading and consider all of the risks in the section entitled "Risk Factors" beginning on page 10. Risk of intense competition in the industry - According to the China Building Decorating Association, as of July 2016, there are a total of 260 companies with Class A Curtain Wall Designing Qualifications, 210 companies which possess Level I Curtain Wall Contracting Qualifications, and 947 companies holding Level I Building Decoration Contracting Qualifications. A considerable number of these companies have a competitive advantage in this industry, however, we believe that we are one of the few companies that has received all of the above-mentioned qualifications. If we do not continue to improve our operational and technical advantages to stay competitive, we may not be able to continue to stay competitive in our industry. Risk of economic and policy changes within China - We cater our products and service to the commercial and public building construction sector. The majority of our projects are for the curtain wall designing and construction of office buildings, commercial complexes, hotels, airports, museums, libraries, sport stadiums, schools and hospitals. The market demand for commercial and public buildings can be affected by the macro economy and public policy and therefore we could experience negative impact from economic and policy changes. Risk of inability to collect our accounts receivable - As of June 30, 2018, we had net accounts receivable of $32,190,834 which accounts for 127% of our total revenue for the six months ended June 30, 2018. As of December 31, 2017 and 2016, we had net accounts receivable of $53,071,542 and $43,872,122, respectively, accounting for 75% and 57% of total revenue for the respective fiscal periods. If we continue experiencing an increase in accounts receivable without substantial collection, this could have a material adverse effect on our financial performance. Risk of changes in the cost of key components - Our curtain wall processing operations depends heavily on the availability of various components. The cost of key components accounts for a major portion of our total cost of revenue. The availability of these components may decline and their prices may fluctuate greatly. In the event that prices for these components increase significantly, we usually have mechanisms in the contracts with our clients to adjust our prices in response to such significant increase. However, it could still have an adverse impact on our operational performance if the prices of the components increase dramatically. Risk related to our relatively high debt amount - Our debt to asset ratio is relatively high compared with companies in other industries but is normal compared with companies in our industry. This is mainly caused by the lengthy projects and receivable cycle that are common in our industry. In addition to our operational cash flow, we mainly finance our operations through bank loans, third parties loans and related parties loans, as well as business credits given by our vendors and clients. We may face liquidity risk if our debt to asset ratio continues to increase. We expect our total cash expenses for this offering, including cash expenses payable to the Underwriter, for its reasonable out of pocket, to be up to approximately $230,000, exclusive of the above commissions. See "Underwriting" starting on page 107 of this prospectus for more information regarding our arrangements with the Underwriter. The Underwriters are only obligated to use their best efforts to sell the securities offered. We must sell at least the minimum number of securities offered (1,000,000) if any are sold, and thereafter the Underwriters may sell up to the maximum number of securities offered (2,000,000). The offering will close or terminate, as the case may be, upon the earlier of: (i) a date mutually acceptable to us and the Representative after the minimum offering amount of our offering is raised, or (ii) 120 days from the effective date (the "Effective Date") of the Registration Statement (and for a period of up to 60 additional days if extended by agreement of the Company and the Representative) (the "Termination Date"). Until we sell at least 1,000,000 shares, all investor funds will be held in an offering deposit account, administered by FinTech Clearing, LLC. If we do not sell at least 1,000,000 shares by the Termination Date, all funds will be promptly returned to investors within five (5) business days after the termination of this offering without charge, interest or deduction. If we complete this offering, net proceeds will be delivered to us on the closing date. We plan to use our proceeds in our subsidiaries in the People s Republic of China (the "PRC"), however, we will not be able to use such proceeds until we complete certain remittance procedures in PRC. If we complete this offering, then on the closing date, we will issue Ordinary Shares to investors in the offering on Ordinary Shares sold in this offering. One of the conditions to our obligation to sell any securities through the Underwriter is that, upon the closing of the offering, Ordinary Shares would qualify for listing on the Nasdaq Capital Market. We are and will remain, following this offering, to be a "controlled company" within the meaning of the Nasdaq Stock Market Rules and, as a result, may rely on exemptions from certain corporate governance requirements that provide protection to shareholders of other companies. See "Implication of Being a , ' ': Controlled Company " on page 6. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The date of this prospectus is [DATE], 2018. Table of Contents Risk of inability to expand our business elsewhere in China - A major portion of our sales revenue is generated from Jiangsu Province of China. For the six months ended June 30, 2018 and 2017, our revenue generated from the Jiangsu Province accounted for approximately 81% and 75% of our total revenue, respectively. For the fiscal years ended December 31, 2017 and 2016, our revenue generated from the Jiangsu Province accounted for approximately 70% and 62% of our total revenue, respectively. We have set up branches outside of Jiangsu Province to establish our presence in top-tier cities such as Shanghai, Beijing and Zhengzhou and have expanded our sales coverage to include Zhejiang Province, Shanxi Province, Henan Province, and Xinjiang Province. However, if we are not able to successfully diversify our revenue sources into other regions we may face regional risks due to the market concentration within Jiangsu Province. Implications of Being an Emerging Growth Company We are an "emerging growth company," as defined in the Jumpstart Our Business Startups Act (the "JOBS Act"), and we are eligible to take advantage of certain exemptions from various reporting and financial disclosure requirements that are applicable to other public companies, that are not emerging growth companies, including, but not limited to, (1) presenting only two years of audited financial statements and only two years of related management s discussion and analysis of financial condition and results of operations in this prospectus, (2) not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act"), (3) reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and (4) exemptions from the requirements of holding a non-binding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We intend to take advantage of these exemptions. In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended (the "Securities Act"), for complying with new or revised accounting standards. As a result, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We could remain an emerging growth company for up to five years, or until the earliest of (1) the last day of the first fiscal year in which our annual gross revenues exceed $1.07 billion, (2) the date that we become a "large accelerated filer" as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our Ordinary Shares that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter and we have been publicly reporting for at least 12 months, or (3) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three-year period. Implication of Being a Foreign Private Issuer We are a foreign private issuer within the meaning of the rules under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). As such, we are exempt from certain provisions applicable to United States domestic public companies. For example: we are not required to provide as many Exchange Act reports, or as frequently, as a domestic public company; for interim reporting, we are permitted to comply solely with our home country requirements, which are less rigorous than the rules that apply to domestic public companies; we are not required to provide the same level of disclosure on certain issues, such as executive compensation; we are exempt from provisions of Regulation FD aimed at preventing issuers from making selective disclosures of material information; we are not required to comply with the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act; and we are not required to comply with Section 16 of the Exchange Act requiring insiders to file public reports of their share ownership and trading activities and establishing insider liability for profits realized from any "short-swing" trading transaction. (Finished Project: Wuxi Grand Theatre – Total Curtain Wall Coverage: 79,135 m2) Table of Contents Implication of Being a "Controlled Company" We are and will be a "controlled company" as defined under the Nasdaq Stock Market Rules because two of our principal shareholders, Mr. Zuoliang Zha and Minpei Zha, who are father and son, will collectively beneficially own more than 50% of our outstanding ordinary shares. For so long as we are a controlled company under that definition, we are permitted to elect to rely, and may rely, on certain exemptions from corporate governance rules, including: an exemption from the rule that a majority of our board of directors must be independent directors; an exemption from the rule that the compensation of our chief executive officer must be determined or recommended solely by independent directors; and an exemption from the rule that our director nominees must be selected or recommended solely by independent directors. As a result, you will not have the same protection afforded to shareholders of companies that are subject to these corporate governance requirements. Although we do not intend to rely on the "controlled company" exemption under the Nasdaq listing rules, we could elect to rely on this exemption in the future. If we elected to rely on the "controlled company" exemption, a majority of the members of our board of directors might not be independent directors and our nominating and corporate governance and compensation committees might not consist entirely of independent directors upon closing of the offering. Corporate Information We are a British Virgin Islands (also referred to as "BVI") company. Our current corporate structure is as follows prior to completion of this offering: Wenhan Consulting Limited ("Wenhan Consulting") British Virgin Islands (June 27, 2017) Pre-IPO Investors 88.24% 11.76% Golden Metropolis International Limited ("Golden Metropolis") British Virgin Islands (January 20, 2017) 100% Hong Kong Hansheng Limited ("HK Hansheng") Hong Kong SAR (March 31, 2017) 100% 100% Jiangsu Aiwen Investment Co. Ltd. ("Jiangsu Aiwen") People s Republic of China (June 5, 2017) Jiangsu Wenhan Investment Co. Ltd. ("Jiangsu Wenhan") People s Republic of China (June 2, 2017) 99% 1% Wuxi Jincheng Curtain Wall Co. Ltd. ("Wuxi Jincheng") People s Republic of China (January 9, 1993) TABLE OF CONTENTS Prospectus Summary 1
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere, or incorporated by reference, in this prospectus. It does not contain all of the information that you should consider before deciding to purchase shares of our common stock. You should carefully read this entire prospectus, including the Risk Factors section, the Risk Factors included in our Annual Report on Form 10-K for the fiscal year ended March 31, 2018 (the 2018 10-K ), Management s Discussion and Analysis of Financial Condition and Results of Operations in the 2018 10-K, in our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2018 (the First Quarter 10-Q ), in our Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2018 (the Second Quarter 10-Q, and, together with the First Quarter 10-Q, the 2018 10-Qs ) and in our Current Report on Form 8-K filed on November 14, 2018, each incorporated by reference herein, as well as our historical financial statements, the notes to those financial statements and certain unaudited pro forma condensed combined financial information appearing elsewhere in this prospectus or incorporated by reference into this prospectus, before making an investment decision to purchase shares of our common stock. Unless otherwise indicated or the context otherwise requires, Perspecta, we, our and us refer to Perspecta Inc. and its combined subsidiaries, including Ultra Second VMS LLC ( Ultra Second ), KGS Holding Corp. ( KGS HC ) and their respective subsidiaries, after giving effect to the Spin-Off and the Mergers (as defined below) for periods following the consummation of the Spin-Off and the Mergers. Introduction On May 31, 2018, Perspecta became an independent company through the consummation of the spin-off (the Spin-Off ) of the United States ( U.S. ) Public Sector business ( USPS ) of DXC Technology Company (together with its consolidated subsidiaries other than, for all periods following the Spin-Off, Perspecta, DXC ). Following the Spin-Off and pursuant to an Agreement and Plan of Merger dated October 11, 2017 (the Merger Agreement ), on May 31, 2018, Perspecta completed the combination of USPS with Vencore Holding Corp. ( Vencore HC ) and KGS HC through the following transactions: Ultra KMS Inc., a wholly owned subsidiary of Perspecta, merged with and into KGS HC (the KeyPoint Merger ), with KGS HC surviving the KeyPoint Merger; concurrently with the KeyPoint Merger, Ultra First VMS Inc., another wholly owned subsidiary of Perspecta prior to the Mergers, merged with and into Vencore HC (the First Vencore Merger ), with Vencore HC surviving the first Vencore Merger; and immediately after the KeyPoint Merger and First Vencore Merger, Vencore HC merged with and into Ultra Second, another wholly owned subsidiary of Perspecta prior to the Mergers (the Second Vencore Merger and, together with the KeyPoint Merger and the First Vencore Merger, the Mergers ), with Ultra Second surviving the Second Vencore Merger. As a result of these transactions, the businesses owned by Vencore HC and KGS HC became wholly owned by Perspecta. In this prospectus, unless otherwise noted or the context otherwise requires: KeyPoint Merger Sub refers to Ultra KMS Inc., a wholly owned subsidiary of Perspecta prior to the Mergers; KeyPoint Stockholder refers to KGS Holding LLC, the sole stockholder of KGS HC prior to the Mergers; USPS refers to the U.S. Public Sector business of DXC and its combined subsidiaries after giving retroactive effect to Internal Reorganization; Perspecta , we , our and us refers to Perspecta Inc. and its combined subsidiaries, including Ultra Second, KGS HC and their respective subsidiaries, after giving effect to the Spin-Off and the Mergers for periods following the consummation of the Spin-Off and the Mergers; Vencore Merger Corp. refers to Ultra First VMS Inc., a wholly owned subsidiary of Perspecta prior to the Mergers; Ultra Second refers to Ultra Second VMS LLC, a wholly owned subsidiary of Perspecta; If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of large accelerated filer, accelerated filer, smaller reporting company, and emerging growth company in Rule 12b-2 of the Exchange Act. Large accelerated filer o Accelerated filer o Non-accelerated filer x Smaller reporting company o Emerging growth company o If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. o Vencore Stockholder refers to The SI Organization Holdings LLC, the sole stockholder of Vencore HC prior to the Mergers; Veritas Capital Management refers to Veritas Capital Fund Management, L.L.C.; and Veritas Capital refers to The Veritas Capital Fund III, L.P., The Veritas Capital Fund IV, L.P. and their affiliates, including Veritas Capital Management. Our Business Perspecta delivers information technology ( IT ), mission, and operations-related services across the U.S. federal government to the Department of Defense ( DoD ), the intelligence community, and homeland security, civilian and health care agencies, as well as to certain state and local government agencies through two reportable segments: (1) Defense and Intelligence and (2) Civilian and Health Care. We are a leading provider of end-to-end enterprise IT services to government customers across U.S. federal, state and local markets. Using our market-leading enterprise offerings and solutions, we help our government customers implement modern collaborative workplaces, hybrid cloud platforms and integrated digital systems of engagement with their enterprise management systems. By delivering these modern enterprise solutions, often while ensuring interoperability with mission critical legacy systems, we believe we have helped our government customers better realize the benefits of technology, which will ultimately enable them to fulfill their mission objectives and achieve desired business outcomes. Our Corporate Information Perspecta was incorporated as a Nevada corporation on October 10, 2017. Our principal executive offices are located at 15052 Conference Center Drive, Chantilly, VA 20151, our telephone number is (571) 313-6000 and our principal website address is www.perspecta.com. As of November 1, 2018, we have approximately 14,482 employees with approximately 70% of our employees having a public trust and/or Secret security clearance, and approximately 21% of our employees having Top Secret and/or Sensitive Compartmented Information level clearance, the latter of which typically requires the completion of a polygraph. No information available on or through our website shall be deemed to be incorporated in this prospectus or the registration statement of which it forms a part. The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the U.S. Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state or jurisdiction where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED DECEMBER 21, 2018 PROSPECTUS 23,273,341 Shares Perspecta Inc. Common Stock This prospectus relates solely to the offer and sale from time to time of up to 23,273,341 shares of Perspecta Inc. common stock, $0.01 par value per share, by the selling stockholders identified in this prospectus. See Principal and Selling Stockholders. The registration of the shares of common stock to which this prospectus relates does not require the selling stockholders to sell any of their shares of our common stock nor does it require us to issue any shares of common stock. We will not receive any proceeds from the sale of the shares by the selling stockholders, but we have agreed to pay certain registration expenses, other than commissions or discounts of underwriters, broker-dealers, or agents. The selling stockholders from time to time may offer and sell the shares held by them directly or through underwriters, agents or broker-dealers on terms to be determined at the time of sale, as described in more detail in this prospectus. For more information, see Plan of Distribution. Our common stock is listed on the New York Stock Exchange ( NYSE ), under the symbol PRSP. On December 20, 2018, the closing sales price of our common stock as reported on the NYSE was $17.98 per share. Because all of the shares of our common stock offered under this prospectus are being offered by the selling stockholders, we cannot currently determine the price or prices at which our shares may be sold under this prospectus. Investing in our common stock involves risks. Before making a decision to invest in our common stock, you should carefully consider the matters described under Risk Factors beginning on page 3 of this prospectus. Neither the Securities and Exchange Commission ( SEC ) nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. The date of this prospectus is , 2018. This prospectus is part of a registration statement that we have filed with the SEC using a shelf registration process. Under this shelf registration process, the selling stockholders may, from time to time, offer and sell the shares described in this prospectus in one or more offerings.
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diff --git a/parsed_sections/prospectus_summary/2018/CIK0001725022_gas-ships_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001725022_gas-ships_prospectus_summary.txt
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+PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2018/CIK0001725166_firstcarib_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001725166_firstcarib_prospectus_summary.txt
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+This summary highlights information contained in other parts of this prospectus. Because it is only a summary, it does not contain all of the information that you should consider before investing in the common shares and it is qualified in its entirety by, and should be read in conjunction with, the more detailed information appearing elsewhere in this prospectus. You should read the entire prospectus carefully, especially "Risk Factors," "Cautionary Note Regarding Forward-Looking Statements," "Management's Discussion and Analysis of Financial Condition and Results of Operations," and our financial statements and the related notes included elsewhere in this prospectus, before deciding to buy the common shares. See "Explanatory Note" on page iii of this prospectus for definitions of certain terms used herein. Overview We are a leading financial institution operating throughout the English and Dutch-speaking Caribbean with a strong balance sheet and regionally-leading digital banking capabilities. Our team, extensive branch network, ongoing investments in technology and unwavering client focus are competitive differentiators that enable us to maintain our leadership in the Caribbean banking sector, address the needs of our clients, and meet our strategic and financial objectives. We are a leader in our three primary markets of Barbados, the Bahamas and the Cayman Islands based on total deposits and total loans as of January 31, 2018. Our total assets in our primary markets represented approximately two-thirds of our total assets at the end of the first quarter of 2018. In addition to our primary markets, we operate in our key growth markets of Jamaica, Trinidad and Tobago and certain countries in the Dutch Caribbean, primarily Cura ao and Aruba. In total, we have a presence in 17 countries and territories. Through our three core business segments: (i) Retail and Business Banking ("RBB"), (ii) Corporate and Investment Banking ("CIB"), and (iii) Wealth Management ("WM"), we provide individual and business clients with a full range of products and services, including deposits, loans, credit cards, foreign exchange, online and mobile banking, fund administration and trust services. In our markets, business segments and products and services, we are focused on providing our clients with modern digital banking services and supporting our back office processes with current and efficient technology platforms. To this end, we have invested over $100 million in technology over the past five years, enhancing the scalability of our platform and positioning us for growth in all of our markets. The map and table below show our Caribbean footprint and summarize our total assets, performing loans, total deposits, revenue and market shares in our primary markets and our key growth markets as of January 31, 2018, unless otherwise indicated. Michael Mansoor Building Warrens, Saint Michael, Barbados BB22026 +1 246 467-8735 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) (1)Other markets is comprised of the Eastern Caribbean (Anguilla, Antigua and Barbuda, Dominica, Grenada, St. Lucia, St. Vincent and the Grenadines, St. Kitts and Nevis), BVI and Turks and Caicos. Market shares are weighted averages across these markets. (2)Market totals include intercompany eliminations of $2.9 billion, which are not included in the total. (3)We define total revenue as (i) the sum of net interest income before provision for loan losses and (ii) total non-interest income. (4)Market share data has been calculated by dividing (i) our loans or deposits, calculated in accordance with IFRS, as we reported to our local regulators as of June 30, 2017, by (ii) the aggregate total loans or deposits in a market as of June 30, 2017, as published by the local regulator. For the purposes of the loan market share calculations, our loans and the market loans include both performing and non-performing loans, and our loans for a market include the loans that were originated in that market. For more information see "Presentation of Financial and Other Information Market Share Information". (5)The Dutch-speaking Caribbean market shares reflect the weighted average of only Cura ao and Sint Maarten. Aruba is a new market and so our market share is not meaningful. CT Corporation System 111 Eighth Avenue New York, New York 10011 (212) 590-9070 (Name, address, including zip code, and telephone number, including area code, of agent for service) Table of Contents EXPLANATORY NOTE In this prospectus, unless the context indicates otherwise, the term: "ATM" or "ATMs" refers to automated teller machines. "Barbados Companies Act" refers to The Companies Act Cap 308 of the laws of Barbados. "Barclays Bank" refers to Barclays Bank PLC. "BVI" refers to the British Virgin Islands. "CIBC" refers to Canadian Imperial Bank of Commerce. "CICL" refers to CIBC Investments (Cayman) Limited, a wholly-owned subsidiary of CIBC. "Dominica" refers to the Commonwealth of Dominica. "Dutch Caribbean" or "Dutch-speaking Caribbean" refers to Aruba, Cura ao and Sint Maarten. "Eastern Caribbean" refers to the Organization of Eastern Caribbean States that use the currency of the Eastern Caribbean dollar, or the states and territories of Anguilla, Antigua and Barbuda, Dominica, Grenada, Montserrat, St. Kitts and Nevis, St. Lucia and St. Vincent and the Grenadines. If the context indicates, "Eastern Caribbean" refers to the islands of the Eastern Caribbean in which we operate, which would exclude Montserrat. "gross loans" include both performing and non-performing loans. "high net worth" refers to our clients with more than U.S.$1.0 million in deposits or loans. "IFRS" refers to International Financial Reporting Standards as adopted by the International Accounting Standards Board. "ISM" refers to the International Securities Market of the Barbados Stock Exchange. "loans", unless otherwise indicated, refers to performing loans only and excludes non-performing loans. "mass-affluent" refers to our clients with (i) total deposit balances greater than or equal to $100,000 for all countries and territories with the exception of the Bahamas, or (ii) total deposit balances greater than or equal to $200,000 in the Bahamas, or (iii) a mortgage with an outstanding balance greater than or equal to $400,000 in the Bahamas, $250,000 in Jamaica, or $350,000 in all other countries and territories. "our key growth markets" refers collectively to Jamaica, Trinidad and Tobago and the Dutch Caribbean. "our markets" refers collectively to the English and Dutch-speaking Caribbean. "our primary markets" refers collectively to Barbados, the Bahamas and the Cayman Islands. "selling shareholder" refers to CICL, the subsidiary of CIBC that is selling common shares in this offering. "St. Kitts and Nevis" refers to the Federation of Saint Kitts and Nevis. "the Bahamas" refers to the Commonwealth of The Bahamas. "Trinidad and Tobago" refers to the Republic of Trinidad and Tobago. "Turks and Caicos" refers to the Turks and Caicos Islands. "U.S." or "United States" refers to the United States of America. "U.S. dollar", "U.S.$" or "$" refers to the lawful currency of the United States of America. "U.S. GAAP" refers to generally accepted accounting principles in the United States of America. "we," "our," "us," or "the Company" refers to FirstCaribbean International Bank Limited and its consolidated subsidiaries. Table of Contents Our business is well diversified across our operating regions and business segments. The charts below show our total revenue for 2017 and the first quarter of 2018 by geography. 2017 Revenue by Geography (U.S.$ in millions) First Quarter 2018 Revenue by Geography (U.S.$ in millions) Total: $518 million Total: $105 million Our business has grown substantially in recent years, resulting in increased market share across most of our product and business lines. The charts below show our net income, adjusted net income, return on average assets ("ROAA"), adjusted ROAA, return on average tangible shareholders' common equity ("ROATCE") and adjusted ROATCE for 2015, 2016 and 2017 and for the first quarters of 2017 and 2018. Net Income (U.S.$ in millions) Adjusted Net Income* (U.S.$ in millions) Copies to: David S. Bakst James B. Carlson Reb D. Wheeler Mayer Brown LLP 1221 Avenue of the Americas New York, New York 10020 (212) 506-2500 David J. Goldschmidt, Esq. Skadden, Arps, Slate, Meagher & Flom LLP Four Times Square New York, New York 10036-6522 (212) 735-3000 Approximate date of commencement of proposed sale to the public: As promptly as practicable after this Registration Statement becomes effective. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, as amended, please check the following box. If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act of 1933, as amended, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act of 1933, as amended, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act of 1933, as amended, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933. Emerging growth company If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. CALCULATION OF REGISTRATION FEE Title of Each Class of Securities to be Registered Proposed Maximum Aggregate Offering Price(1)(2) Amount of Registration Fee(3) Common shares, no par value $300,000,000 $37,350 (1)Estimated solely for the purpose of computing the amount of the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended. (2)Includes common shares that the underwriters have the option to purchase pursuant to the option to purchase additional common shares. (3)$12,450 of which was previously paid. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment that specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine. Table of Contents PRESENTATION OF FINANCIAL AND OTHER INFORMATION Financial Statements Our consolidated financial statements as of and for the years ended October 31, 2017 and 2016 have been audited, as stated in the report appearing herein, by Ernst & Young LLP, and are included in this prospectus and are referred to as our audited consolidated financial statements. Our unaudited interim consolidated financial statements as of and for the three months ended January 31, 2018 and 2017 are included in this prospectus and are referred to as our interim unaudited consolidated financial statements (and together with our audited consolidated financial statements, our "financial statements"). Our financial statements have been prepared in accordance with generally accepted accounting principles in the United States, or U.S. GAAP. We have historically prepared our financial statements in accordance with IFRS. Our audited consolidated financial statements included in this prospectus were our first financial statements prepared and audited in accordance with U.S. GAAP. For regulatory purposes, in Barbados, the Bahamas, the Cayman Islands and the other markets where we operate we prepare and will continue to be required to prepare and make available to regulators and our shareholders financial statements and other financial data prepared in accordance with IFRS. IFRS Segment Results Our audited consolidated financial statements and related notes included elsewhere in this prospectus have been prepared in accordance with U.S. GAAP. However, we have ongoing obligations in the markets where we operate to submit our financial statements to local regulators under IFRS and to prepare our capital ratios in accordance with regulatory requirements in the various jurisdictions that we operate in, which are based on our IFRS financial statements. As such, management will continue making operational decisions based on IFRS financial information. Under U.S. GAAP, segment reporting disclosures are required to be made in a manner consistent with the internal reporting provided to the chief operating decision-maker (the "CODM"). The operating results of the business segments are reported to the CODM in accordance with IFRS. Therefore, the segment results presented in this prospectus are presented in accordance with IFRS. In addition, U.S. GAAP requires us to disclose our regulatory capital requirements and therefore the capital ratios presented in this prospectus are also presented based on our IFRS financial statements. Year End and Quarter End Information Our fiscal year ends on October 31. Unless otherwise indicated, our annual financial results are as of and for the year ended October 31, and our first quarter financial results are presented as of and for the three months ended January 31. This prospectus includes market data. Unless otherwise indicated, all annual market data is presented as of and for the year ended December 31. Because our fiscal year end is not a calendar year end, the information presented in this prospectus about our company and about the market may not be directly comparable even when both are presented for a particular year. Market Share Information Unless otherwise indicated, the market share information presented in this prospectus has been calculated by dividing (i) our loans or deposits as of June 30, 2017, prepared in accordance with IFRS, and as we reported to our local regulators, by (ii) the aggregate total loans or deposits in a market as of June 30, 2017, as published by the local regulator. For the purposes of the loan market share calculations, our loans and the market loans include both performing and non-performing loans, and *For a reconciliation of these non-U.S. GAAP financial measures to the most directly comparable U.S. GAAP measures, see "Summary Consolidated Financial Data Reconciliation of Non-U.S. GAAP Financial Measures". Adjusted net income, adjusted ROAA and adjusted ROATCE are non-U.S. GAAP financial measures which have been adjusted for the financial impact of (i) the sale of the net assets of our Belize operations, which closed on February 1, 2016, (ii) a restructuring plan, which concluded in 2015, (iii) Hurricanes Irma and Maria in September 2017, which we believe to be one-time in nature, (iv) structural changes to our balance sheet, which are related to this offering, and (v) modifications to our hedging strategies to take into account U.S. GAAP accounting. We believe that our adjusted net income, adjusted ROAA and adjusted ROATCE are better representations as to the capital generation and profitability of our business. We also believe the adjusted changes to our balance sheet better align our financial statements with the way we operate our business. Additionally, the changes to our hedging strategies will enable us to more appropriately align the U.S. GAAP impact of our existing hedges with their actual economic impact. Our Retail and Business Banking Segment Our RBB segment serves our retail, mass-affluent and small business clients through our branch network, ATM network and regionally leading mobile banking platforms. This segment provides our clients with lending, credit card and deposit services, and distributes third-party home and auto insurance products. We offer our comprehensive suite of products and services in all of our markets, except Platinum Banking, our high-touch relationship banking service for our mass-affluent clients, and third-party home and auto insurance sales distribution. Platinum Banking is currently offered in 11 markets and third-party home and auto insurance sales distribution is offered in ten markets. As of June 30, 2017, according to statistical data published by the local regulators in the countries and territories in which we operate, our market share in retail lending in such countries and territories was 10.6%, which represents a 0.4% increase since December 31, 2015. We also continue to develop our relationship-oriented business banking service offerings for small business clients. As of the first quarter Table of Contents The information in this preliminary prospectus is not complete and may be changed. The selling shareholders identified in this preliminary prospectus may not sell these securities until the Registration Statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting offers to buy these securities in any jurisdiction where such offer or sale is not permitted. SUBJECT TO COMPLETION, DATED APRIL 10, 2018 PRELIMINARY PROSPECTUS 9,600,000 Shares FirstCaribbean International Bank Limited Common Shares Table of Contents our loans for a market include the loans that were originated in that market, not where we booked those loans for accounting purposes. The total market loan and deposit data are published by or in the following sources: Central Bank of Barbados online statistics and Central Bank of Barbados Financial Stability Report; Central Bank of the Bahamas Quarterly Statistical Digest; Cayman Islands Monetary Authority Domestic Banking Survey Retail Banks; Bank of Jamaica; Central Bank of Trinidad and Tobago Data Statistics Centre; Eastern Caribbean Central Bank Selected Monetary and Financial Statistics; Centrale Bank van Cura ao en Sint Maarten Statistics; and Turks and Caicos Islands Financial Services Commission Quarterly Financial Statistics Digest. Currency Our functional currency was the Barbados dollar until October 31, 2017. However, our audited consolidated financial statements are presented in U.S. dollars because this currency is universally accepted and recognized in all the territories in which we operate. Effective November 1, 2017, we changed our functional currency to U.S. dollars. Unless otherwise indicated, all "$" amounts in this prospectus are in U.S. dollars. Exchange Rates We present a variety of currencies in this prospectus, which are summarized below: The Barbados dollar (or BBD or BB$) is pegged to the U.S. dollar at an exchange rate of U.S.$1.00 to BBD 2.00. The Bahamas dollar is pegged to the U.S. dollar at an exchange rate of U.S.$1.00 to B$1.00. The Cayman Islands dollar is pegged to the U.S. dollar at an exchange rate of U.S.$1.20 to KYD 1.00. The official currency of Anguilla, Antigua and Barbuda, Dominica, Grenada, St. Kitts and Nevis, St. Lucia and St. Vincent and the Grenadines is the Eastern Caribbean dollar (or XCD), which is pegged to the U.S. dollar at an exchange rate of U.S.$1.00 to XCD 2.70. The Aruba florin (or Afl.) is pegged to the U.S. dollar at an exchange rate of U.S.$1.00 to Afl.1.79. The official currency of BVI and Turks and Caicos is the U.S. dollar. The official currency of Cura ao and Sint Maarten is the Netherlands Antilles Guilder (or ANG), which is pegged to the U.S. dollar at an exchange rate of U.S.$1.00 to ANG1.79. The official currency of Jamaica is the Jamaican dollar (or JMD or J$). As of January 31, 2018, the U.S.$ to J$ exchange rate was U.S.$1.00 to J$124.44. The official currency of Trinidad and Tobago is the Trinidad and Tobago dollar (or TTD or TT$). As of January 31, 2018, the U.S.$ to TTD exchange rate was U.S.$1.00 to TTD 6.75. Table of Contents of 2018, this segment had total deposits of $3.7 billion and performing loans of $2.4 billion. Revenue from our RBB segment was $227.9 million in 2017 and $61.9 million in the first quarter of 2018. Our RBB segment has achieved 12 consecutive quarters of loan growth. During this time, we took advantage of the scale and improving efficiency of our platform to increase our monthly volume of processed loan applications by 200% from 2015 to 2017. Supported by these platform benefits, our mortgage and consumer loans business grew at a rate of 4.0% from 2015 to 2017, which is faster than the market growth rate of 1.4%, according to statistical data published by the local regulator in the countries and territories in which we operate. Our credit card business has grown, as evidenced by cardholder purchases, increasing from $577.6 million in 2015 to $641.0 million in 2016 and to $713.2 million in 2017. Our debit card purchases have also grown, increasing from $307.8 million in 2015 to $370.4 million in 2016 and to $465.2 million in 2017. In 2016, we began distributing third-party home and auto insurance services, and this service has also experienced strong growth with approximately 4,000 policies sold since inception. The following charts present our RBB loan originations and total performing loans in our markets for the periods presented. RBB Loan Originations by Market (U.S.$ in millions) RBB Performing Loans by Market (U.S.$ in millions) Our Corporate and Investment Banking Segment Our CIB segment includes our corporate and investment banking, advisory, foreign exchange and derivatives business lines. Our corporate and investment banking business provides a full range of corporate and investment banking and cash management services to large and mid-size corporations, governments and financial institutions. Our advisory business provides debt and equity, capital markets and corporate finance products and services to large corporations and governments. Our foreign exchange and derivatives businesses provide risk mitigating products and services. Our CIB team is comprised of experienced professionals and, in 2017, structured and arranged over $1.3 billion of financing transactions across a broad range of industries including energy, infrastructure, utilities, hospitality, telecommunications and real estate. As of the end of 2017, this segment had total deposits of $3.2 billion and performing loans of $3.3 billion. As of the first quarter of 2018, this segment had total deposits of $3.4 billion and performing loans of $3.3 billion. Our CIB segment generated revenue of $219.3 million in 2017 and $55.8 million in the first quarter of 2018, comprised primarily of net interest income from our corporate and investment banking businesses, which represented 78.4% of the segment's revenue for 2017 and 78.6% of the segment's revenue for the first quarter of 2018. We are a leading corporate and investment bank in our markets as measured by corporate loans and deposits. As of June 30, 2017, according to statistical data published by the local regulator in the countries and territories in which we operate, our market shares for corporate loans in our primary markets of Barbados, the Bahamas and the Cayman Islands were 43%, 30%, and 50%, respectively, and for corporate deposits were 29%, 20%, and 20%, respectively. Additionally, as of June 30, 2017, according to such statistical data, our market share in corporate and government lending in the This is our initial public offering in the United States. The selling shareholder is offering 9,600,000 common shares, no par value per share (the "common shares"). All of the shares in this offering are being sold by the selling shareholder, a subsidiary of our parent, Canadian Imperial Bank of Commerce ("CIBC"). We will not receive any of the proceeds from this offering. The initial public offering price of our common shares is expected to be between $22.00 and $25.00 per common share. Our common shares are currently listed on the domestic securities exchange of the Barbados Stock Exchange, Inc. (the "Barbados Stock Exchange") and the Trinidad and Tobago Stock Exchange Limited (the "Trinidad and Tobago Stock Exchange") under the symbol "FCI". We have applied to delist our common shares from the Trinidad and Tobago Stock Exchange and intend to complete the delisting process as soon as practical after the completion of this offering. Prior to the completion of this offering, we intend to delist our common shares from the local exchange of the Barbados Stock Exchange and concurrently relist them on the International Securities Market of the Barbados Stock Exchange (the "ISM"). Our common shares have been approved for listing on the New York Stock Exchange (the "NYSE") under the symbol "FCI". After the completion of this offering, the selling shareholder will continue to own a majority of the voting power of all of our outstanding common shares. As a result, we will be a "controlled company" within the meaning of the corporate governance standards of the NYSE. See "Principal Shareholders and Selling Shareholder". We are eligible to be treated as an "emerging growth company" as defined under the federal securities laws and, as a result, are subject to reduced public company reporting requirements. Investing in the common shares involves risk. See "Risk Factors" beginning on page 30. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed on the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. Price per common share Total Initial public offering price $ $ Underwriting discounts and commissions(1) $ $ Proceeds before expenses to the selling shareholder $ $ (1)See "Underwriting (Conflicts of Interest)" for a detailed description of compensation payable to the underwriters. The selling shareholder has agreed to reimburse the underwriters for certain expenses in connection with this offering. The underwriters have the option to purchase up to an aggregate of 1,440,000 additional common shares from the selling shareholder at the initial public offering price less the underwriting discounts and commissions for 30 days after the date of this prospectus. The underwriters expect to deliver the common shares against payment in New York, New York on or about , 2018. Joint Book-Running Managers Barclays UBS Investment Bank CIBC Capital Markets Co-Managers Keefe Bruyette & Woods A Stifel Company Raymond James Sandler O'Neill + Partners, L.P. Wells Fargo Securities Prospectus dated , 2018. Table of Contents Reverse Share Split We will effect a reverse share split of our common shares of thirty-to-one prior to the closing of the offering. No fractional common shares will be issued in connection with the reverse share split, and all such fractional interests will be rounded down to the nearest whole number of common shares. All information presented in this prospectus has been adjusted to reflect the reverse share split and, unless otherwise indicated, all such amounts and corresponding common share price and per share price data set forth in this prospectus have been adjusted to give effect to this reverse share split. Rounding Certain monetary amounts, percentages and other figures included in this prospectus have been subject to rounding adjustments. Accordingly, figures shown as totals in certain tables may not be the arithmetic aggregation of the figures that precede them, and figures expressed as percentages in the text may not total 100% or, as applicable, when aggregated may not be the arithmetic aggregation of the percentages that precede them. INDUSTRY AND MARKET DATA Some of the discussion contained in this prospectus relies on certain market and industry data obtained from third-party sources. We believe these third party sources are reliable but have not independently verified them. Market estimates are calculated by using independent industry publications and third-party forecasts in conjunction with our assumptions about our markets. While we are not aware of any misstatements regarding any market, industry or similar data presented herein, such data involves risks and uncertainties and is subject to change based on various factors, including those discussed under the headings "Cautionary Note Regarding Forward-Looking Statements" and "Risk Factors" in this prospectus. TRADEMARKS AND SERVICE MARKS We own or have rights to trademarks and service marks for use in connection with the operation of our business, including, but not limited to, each of the names and logos of CIBC, FirstCaribbean and CIBC FirstCaribbean. All other trademarks or service marks appearing in this prospectus that are not identified as marks owned by us are the property of their respective owners. Solely for convenience, the trademarks, service marks and trade names referred to in this prospectus are listed without the , (TM) and (sm) symbols, but we will assert, to the fullest extent under applicable law, our applicable rights in these trademarks, service marks and trade names. Our license of the CIBC name and logo will be phased out after the closing of this offering. See "Our Relationship with CIBC and Related Party Transactions". IMPLICATIONS OF BEING AN EMERGING GROWTH COMPANY AND A FOREIGN PRIVATE ISSUER As a company with less than $1.07 billion in revenues during our last fiscal year, we qualify as an "emerging growth company" under the Jumpstart Our Business Startups Act of 2012 (the "JOBS Act"). An emerging growth company in the U.S. may take advantage of reduced reporting requirements and is relieved of certain other significant requirements that are otherwise generally applicable to public companies. As an emerging growth company: we may present only two years of audited financial statements and only two years of related selected financial data and management discussion and analysis of financial condition and results of operations; Table of Contents countries and territories in which we operate was 18.7%, which represents a 1.3% increase since December 31, 2015. Our CIB performing loans and customer deposits are diversified by geography, as shown in the charts below for the periods presented. CIB Performing Loans (U.S.$ in millions) CIB Customer Deposits (U.S.$ in millions) Our Wealth Management Segment Our WM segment includes four primary business lines, private wealth management, trust and fund administration, international corporate banking, and securities-related services. Each of these four business lines operates in a subset of our markets based on the needs of our clients. Our products and services include cash management, trust and fund administration services, relationship-based private banking, discretionary portfolio management services, and other wealth management solutions. Revenue from this segment is primarily derived from fees and net interest income. Net interest income is driven by our low cost international corporate banking deposits, which fund our loans and investment securities. The majority of the growth for this business currently comes from Asia and, as a result, we opened a sales and relationship management office in Hong Kong in 2016 to service this market. As of the first quarter of 2018, this segment had $46.4 billion of assets under administration and $1.4 billion of assets under management, along with corporate deposits of $3.5 billion. Our revenue from this segment was $80.3 million in 2017 and $22.2 million in the first quarter of 2018. Our Markets We operate in 17 countries and territories across the English and Dutch-speaking Caribbean. Our primary markets are Barbados, the Bahamas and the Cayman Islands and our key growth markets are Jamaica, Trinidad and Tobago and the Dutch Caribbean, primarily Aruba and Cura ao. Our other markets include Anguilla, Antigua and Barbuda, BVI, Dominica, Grenada, St. Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines, and the Turks and Caicos Islands. From these markets, we also serve clients internationally. These markets have a combined population of approximately 6.0 million and a weighted average total gross domestic product ("GDP") per capita of $19,818. Table of Contents we are exempt from the requirement to obtain an attestation and report from our auditors on management's assessment of our internal control over financial reporting under the Sarbanes-Oxley Act of 2002; we may provide reduced disclosure regarding our executive compensation arrangements pursuant to the rules applicable to foreign private issuers and emerging growth companies, which means we do not have to include a compensation discussion and analysis and certain other disclosures regarding our executive compensation; and we are not required to seek a nonbinding advisory vote on executive compensation or golden parachute arrangements. We have elected to take advantage of the scaled disclosure requirements and other relief described above in this prospectus and may take advantage of these exemptions for so long as we remain an emerging growth company. We will remain an emerging growth company until the earliest of (1) the end of the fiscal year during which we have total annual gross revenues of $1.07 billion or more, (2) the end of the fiscal year following the fifth anniversary of the completion of this offering, (3) the date on which we have, during the previous three-year period, issued more than $1.0 billion in non-convertible debt and (4) the date we qualify as a "large accelerated filer" with at least $700 million of equity securities held by non-affiliates. In addition to scaled disclosure and the other relief described above, the JOBS Act permits us an extended transition period for complying with new or revised accounting standards affecting public companies. We do not intend to take advantage of this extended transition period, which means that the financial statements included in this prospectus, as well as any financial statements that we file in the future, will be subject to all new or revised accounting standards generally applicable to public companies. The decision not to take advantage of the extended transition period is irrevocable. Upon consummation of this offering, we will report under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as a non-U.S. company with foreign private issuer status. As a foreign private issuer, we may take advantage of certain provisions of the NYSE corporate governance rules that allow us to follow Barbados law for certain corporate governance matters. See "Management Corporate Governance Overview Foreign Private Issuer Status". Even after we no longer qualify as an emerging growth company, as long as we qualify as a foreign private issuer under the Exchange Act, we will be exempt from certain provisions of the Exchange Act that are applicable to U.S. domestic public companies, including: the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act; the sections of the Exchange Act requiring insiders to file public reports of their share ownership and trading activities and liability for insiders who profit from trades made in a short period of time; the rules under the Exchange Act requiring the filing with the U.S. Securities and Exchange Commission (the "SEC") of quarterly reports on Form 10-Q containing unaudited financial and other specified information, or current reports on Form 8-K, upon the occurrence of specified significant events; and Regulation Fair Disclosure, or Regulation FD, which regulates selective disclosures of material information by issuers. As a foreign private issuer, we will, however, be required to file an annual report on Form 20-F within four months of the end of each fiscal year. In addition, we intend to publish our results on a quarterly basis through press releases distributed pursuant to the rules and regulations of the NYSE. Press releases related to financial results and material events will also be furnished to the SEC on Source: United Nations Statistics Division World Statistics Pocketbook 2017, unless otherwise specified. (1)International Monetary Fund World Economic Outlook October 2017 estimates of average consumer price inflation for 2016. (2)Current ratings as reported by Standard & Poor's and Moody's. (3)CIA World Factbook, The Commonwealth. We operate in markets with diverse levels of loan penetration. Barbados and the Cayman Islands are mature markets with loan-to-GDP ratios of over 60%. Jamaica and Trinidad and Tobago are underpenetrated markets where loan-to-GDP ratios are under 50% and where market loan penetration is expected to grow and ultimately become consistent with that of more mature markets. Below is a (1)Total recorded investment. Impact of Non-performing Loans on Interest Income The following table presents the gross interest income for both non-accrual and troubled debt restructurings, or TDR's, that would have been recognized if such loans had been current in accordance with their original contractual terms, and had been outstanding throughout the period or since origination if held for only part of the period. The table also presents the interest income related to these loans that was actually recognized for the period. (U.S.$ in millions) For the quarter ended January 31, 2018 2017 Gross amount of interest income that would have been recorded in accordance with original contractual terms, and had been outstanding throughout the period or since origination, if held only part of the period(1) $ 3 $ 10 Interest income actually recognized 3 Total interest income foregone $ 3 $ offering of our common shares and the preliminary terms thereof. A copy of this prospectus will be filed with the Financial Services Commission of Barbados. The offer or sale of the common shares is not made as part of any distribution of securities to the public in Barbados, nor is it made in connection with any invitation to the public in Barbados to subscribe for securities of the issuer. Any purchase or acquisition of the common shares when listed on the NYSE will constitute the ownership of a security not registered in Barbados (a foreign security) within the meaning of the Barbados Exchange Control Act Cap. 71 of the laws of Barbados and such ownership by residents of Barbados is restricted and limited. Neither the Financial Services Commission of Barbados nor any regulatory commission or authority in Barbados has reviewed this prospectus. We are responsible for the information contained in this prospectus and in any free writing prospectus we prepare or authorize. We have not, and the underwriters and the selling shareholder have not, authorized anyone to provide you with different information, and we, the underwriters and the selling shareholder take no responsibility for any other information others may give you. We are not, and the underwriters and the selling shareholder are not, making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted. You should not assume that the information contained in this prospectus is accurate as of any date other than its date. Through and including , 2018 (the 25 days after the date of this prospectus), all dealers that effect transactions in our common shares, whether or not participating in this offering, may be required to deliver a prospectus. This delivery is in addition to a dealer's obligation to deliver a prospectus when acting as an underwriter and with respect to their unsold allotments and subscriptions. Table of Contents Form 6-K. However, the information we are required to file with or furnish to the SEC will be less extensive and less timely compared to that required to be filed with the SEC by U.S. domestic issuers. As a result, you may not be afforded the same protections or information which would be made available to you, were you investing in a U.S. domestic issuer. IMPLICATIONS OF BEING A CONTROLLED COMPANY After the completion of this offering, CIBC, through its wholly-owned subsidiary, the selling shareholder, will continue to beneficially own more than 50% of our common shares and voting power. As a result, we will be a "controlled company" within the meaning of the NYSE corporate governance standards. Under the NYSE corporate governance standards, a company of which more than 50% of the voting power is held by an individual, group or another company is a "controlled company" and may elect not to comply with certain corporate governance standards, including the requirements that (1) a majority of the board of directors consist of independent directors, (2) the compensation committee is composed entirely of independent directors with a written charter addressing the committee's purpose and responsibilities, (3) the nominating and corporate governance committee is composed entirely of independent directors with a written charter addressing the committee's purpose and responsibilities and (4) there be an annual performance evaluation of the nominating and corporate governance and compensation committees. Following this offering, we do not intend to utilize these exemptions. Additionally, under the terms of the Separation Agreement (as defined herein) that we will enter into with CIBC and CICL, so long as CICL continues to own 5% or more of our common shares and voting power, CICL will have certain rights with respect to our corporate governance, including the right to nominate one or more directors (such number will depend upon CICL's ownership percentage) comprising our board of directors. For a further discussion, see "Our Relationship with CIBC and Related Party Transactions Our Relationship with CIBC Separation Agreement". Table of Contents more detailed discussion of the economic and market environment in our primary markets and our key growth markets. Our Primary Markets Barbados Barbados is one of the most developed countries in the region with a GDP per capita of approximately $15,400 in 2015 and average annual earnings of $16,192 for 2016. Tourism is the main economic driver in Barbados and indirectly drives activity in the construction, distribution and business and general services sectors. Foreign direct investment also drives economic activity in Barbados particularly in the construction and business and general services sectors. According to our calculations based on June 2017 data published by the Central Bank of Barbados, we believe we are the market leader in deposits in Barbados with approximately 31% of the total market deposits, and the market leader in loans with approximately 22% of the total market loans. The Bahamas The Bahamas has the second highest per capita GDP in the English-speaking Caribbean with an economy that is heavily dependent on tourism and international banking. In 2015, the per capita GDP was approximately $22,800 and the average annual earnings were $20,200. Tourism directly accounts for approximately 9% of GDP, but indirectly it accounts for approximately 60% of GDP by encouraging activity in other industries such as construction. Financial services constitutes the next largest sector of the Bahamian economy, accounting for approximately 15% of GDP. We are a market leader in the Bahamas with approximately 18% of the total market deposits and 21% of the total market loans, according to our calculations based on June 2017 data published by the Central Bank of the Bahamas. The Cayman Islands The Cayman Islands has the highest per capita GDP in the English-speaking Caribbean and is a major global international financial center with banks, hedge funds, structured finance and captive insurance entities all featuring prominently in the local economy. In 2015, GDP per capita was approximately $62,100 and in 2016 the average annual income was $48,100. Tourism, financial services and real estate are the most important sectors in the Cayman Islands, accounting for 32%, 28% and 26% of foreign exchange inflows, respectively. We are one of the largest banks serving the Cayman Islands with approximately 21% of the total market deposits, and 27% of the total market loans, according to our calculations based on June 2017 data published by the Cayman Islands Monetary Authority and the Cayman Islands Economics and Statistics Office. Our Key Growth Markets Jamaica The Jamaican economy is heavily dependent on services, which accounts for more than 70% of GDP. In 2015, the GDP per capita was approximately $5,100 and in 2016, the average annual income was $10,527. Jamaica has made steady progress in reducing its debt-to-GDP ratio from a high of almost 150% in 2012 to approximately 115% in 2017, in close collaboration with the International Monetary Fund ("IMF"), and growth has begun and is expected to accelerate. Jamaica is one of our key growth markets, and we are focused on expanding our RBB and CIB businesses in this jurisdiction. According to our calculations based on June 2017 data published by the Bank of Jamaica, we believe we are the fifth largest bank by assets in Jamaica with approximately 6% of the total market deposits and 7% of the total market loans. Table of Contents Trinidad and Tobago Trinidad and Tobago relies on its energy sector for much of its economic activity. Oil and related downstream industries are the country's main economic drivers. In 2015, GDP per capita was approximately $19,100. Trinidad and Tobago is supported by meaningful foreign cash reserves and a sovereign wealth fund that equals approximately one-and-a-half times the national budget. Trinidad and Tobago is one of our key growth markets. Currently, we are focused on developing our RBB and our CIB businesses in this market. According to our calculations based on June 2017 data published by the Central Bank of Trinidad and Tobago, our current market share in Trinidad and Tobago is approximately 2% of the total market deposits and approximately 4% of the total market loans. Dutch Caribbean Our Dutch Caribbean markets include three constituent countries of the Kingdom of the Netherlands: Aruba, Cura ao and Sint Maarten. Aruba's economy is primarily driven by tourism, petroleum storage and financial and business services. In 2015, GDP per capita in Aruba was approximately $26,000. Cura ao's economy is primarily driven by tourism, petroleum refining and storage, financial services, transportation and communication and its GDP per capita was approximately $20,000 in 2015. Sint Maarten's economy is primarily driven by tourism and its GDP per capita was approximately $28,200 in 2015. The Dutch Caribbean is one of our key growth markets. Currently, we are focused on developing our RBB and our CIB businesses in Aruba and Cura ao. According to our calculations based on June 2017 data published by the Central Banks of Cura ao and Sint Maarten, our market share in Cura ao and Sint Maarten is approximately 7% of the total market deposits and approximately 7% of the total market loans. Our Competitive Strengths The market leading bank in the English and Dutch-speaking Caribbean We have been active in the region through our predecessor banks since 1837. We are a leading full-service banking institution across the English and Dutch-speaking Caribbean, by total loans and total deposits. We are a market leader in our primary markets, which collectively comprised approximately two-thirds of our total assets as of the end of the first quarter of 2018. According to data published by the Central Banks of Barbados and the Bahamas, as of June 2017, we believe we are the largest financial institution in each of Barbados and the Bahamas as measured by total deposits and total loans, with a total deposit market share of approximately 31% and 18%, respectively, and total loans market share of approximately 22% and 21%, respectively. We believe we are also a leader in the Cayman Islands with approximately 21% market share in total deposits and 27% market share in total loans, as of June 2017. We believe that our leading position in our primary markets and our strong presence across the broader English and Dutch-speaking Caribbean is evidence of our ability to satisfy the needs of our clients and our local geographies. In addition to our leading market position in our primary markets in loans and deposits, we have also demonstrated our strength as a cards issuer. According to International Finance 2017, we have the leading credit card offering in the Caribbean. Market reports from VISA indicate that in the three year period ending September 30, 2017, our debit card purchase volumes have grown at a three-year CAGR of 22.0% compared to a 16.0% growth rate in card issuance across our competitors in the jurisdictions in which we operate. As of September 30, 2017, our personal premium and business premium card accounts grew 54.0% and 30.9%, respectively, from the same period in 2016 compared to the industry, which declined by 1.7% and grew by 17% for those same periods, respectively. According to statistics from VISA, our portfolio growth has also outpaced the overall market growth levels, particularly in the credit premium and credit business segments, which typically has the most impact on future spending. In addition, as of September 2017, our usage per card was 19% higher than the rest of the English- *The total consists of drawn loan balances and leases along with accounting adjustments for unamortized loan costs which have been capitalized under US GAAP, hedged loans and leaseback loans adjustment. As part of the risk-rating methodology, the risk assessed includes a review of external ratings of the obligor. The obligor rating assessment takes into consideration our financial assessment of the obligor, the industry, and the economic environment of the country in which the obligor operates. In certain circumstances, where a guarantee from a third party exists, both the obligor and the guarantor will be assessed. The table below sets out the iCAP Obligor Risk Rating categories: Risk Level Obligator Risk Rating Rating Definition Status Low 1 Minimal risk "Clean" credit Low 2 Nominal risk "Clean" credit Low 3 Low risk "Clean" credit Average 4 Excellent risk "Clean" credit Average 4.5 Very good risk "Clean" credit Average 5 Good risk "Clean" credit Average 5.5 Reasonable risk "Clean" credit Average 6 Acceptable risk "Clean" credit Average 6.5 Marginally acceptable risk EWL1* High 7 Deteriorating risk EWL2* High 8 High risk EWL3* High Table of Contents speaking Caribbean. We intend to leverage our market leading positions in our primary markets to continue to drive growth through our operating footprint, and in particular, in our key growth markets of Jamaica, Trinidad and Tobago and the Dutch Caribbean. In addition to our strong market position, we believe that we also benefit from significant regulatory and technological barriers to entry. In order to maintain a pan-Caribbean presence and achieve significant scale in the region, our business requires regulatory expertise across numerous jurisdictions. We devote substantial resources to managing our robust regulatory framework, including having experienced executives and senior managers in each of our jurisdictions that oversee our relationships with regulators and governments. Furthermore, we have made over $100 million in technological investments over the last five years, which has allowed us to build a scalable platform with a single core system through which we offer products and services across all of our business segments and geographies. We believe our technology platform and regulatory expertise positions us for growth, and would be difficult for a new entrant to replicate without substantial costs and a significant investment of time and human resources. Strong operating performance and financial results We have delivered strong operating performance and financial results over the last three years. Net income increased from $113.1 million in 2015 to $127.6 million in 2017, representing a CAGR of 6%. Adjusted net income increased from $103.5 million in 2015 to $131.5 million in 2017, representing a CAGR of 13%. Additionally, our growing loan book has led to consistently strong profitability metrics, with an average ROAA of 1.2%, an average adjusted ROAA of 1.1%, an average ROATCE of 11.0% and an average adjusted ROATCE of 11.6% over the past three years. Furthermore, net income decreased from $32.4 million in the first quarter of 2017 to $4.2 million in the first quarter of 2018 and adjusted net income increased from $30.2 million to $30.9 million over the same period. These improved results are partly due to meaningful enhancements made to our underwriting policies following the global financial crisis in 2008. Our non-performing loans peaked in 2012. In our RBB segment, these enhancements improved our approach to retail underwriting, delinquency management and collections management. In our CIB segment, this involved migrating to a new technology platform, implementing an independent credit monitoring group and updating our underwriting and property policies to be more broadly in line with our parent. As a result of these enhancements, non-performing loans have declined by 43% over the last three years. Growth in primary markets driven by market share gains We have demonstrated an ability to generate consistent market share gains across most of our geographies and business segments. We believe we have achieved this by offering a superior client experience, a leading technology platform and a full suite of products and services. As shown in the chart below, according to market data published by the Central Banks of Barbados, the Bahamas and the Cayman Islands, from December 31, 2015 to June 30, 2017, we have outperformed the market growth rates in our primary markets in each of our primary product types. During this time, our largest growth area was our corporate deposits, which grew by 35.4% compared to the market growth of 12.5%. We grew our corporate loans by 6.0% and mortgages by 1.5% compared to the market decline of 1.7% and 1.3%, respectively, and we grew our retail loans by 2.4% compared to 0.4% market growth. Our growth of retail deposits was slower than the market, which we attribute to our existing deposit base in certain markets, which continue to be sufficient to grow our loan book. We believe our performance compared to the market is compelling evidence of the strength of our platform and the successful implementation of our strategy. Table of Contents The following chart shows our growth in our primary markets compared to the overall market growth in terms of corporate deposits, retail deposits, corporate loans, retail loans and mortgages for the period from December 31, 2015 to June 30, 2017. Our Growth in Our Primary Markets vs. Market Growth December 31, 2015 to June 30, 2017 Our objective is to deliver attractive growth and market share gains in our primary markets by relying on our relationship-based model, strong product and service offerings, and a leading technology platform. We operate in markets with diverse levels of loan penetration and this presents an opportunity for us to continue our loan growth trajectory. In particular, we believe there are both significant growth opportunities and market share gains achievable in our key growth markets. Proven history of returning capital to shareholders with a growing dividend Our strong capital position and recurring cash flow generation create significant capital distribution opportunities for our shareholders. Our management team has a proven commitment to return capital to shareholders and has distributed approximately $285 million in cash to our shareholders over the past three years via a combination of regular and special dividends. Furthermore, we have increased the regular dividend on our common shares each year over the past three years. We also paid a special dividend of $100 million in 2016 and will pay a $200 million special dividend on April 27, 2018 to the holders of record on April 9, 2018. The charts below show the dividends per share we have paid and our actual and adjusted dividend payout ratios from 2015 to the first quarter of 2018. Table of Contents Our Markets As of January 31, 2018 Our Primary Markets Our Key Growth Markets (U.S.$ in millions) Barbados The Bahamas Cayman Islands Jamaica Trinidad and Tobago Dutch Caribbean Other Markets(1) Total Branches and private wealth and trust facilities 8 12 4 15 2 4 17 62 Total assets $ 4,450 $ 2,858 $ 3,212 $ 716 $ 592 $ 915 $ 2,562 $ 12,375 (2) Performing loans $ 1,771 $ 1,739 $ 1,080 $ 414 $ 338 $ 394 $ 550 $ 6,285 Total deposits $ 2,235 $ 2,122 $ 2,902 $ 605 $ 376 $ 753 $ 1,499 $ 10,492 Total revenue (2017)(3) $ 113 (3) $ 154 (3) $ 78 (3) $ 36 (3) $ 11 (3) $ 27 (3) $ 99 (3) $ 518 (3) Total revenue (first quarter 2018)(3) $ 28 $ 27 $ 1 $ 11 $ 5 $ 6 $ 27 $ 105 Market share of loans(4) 22 % 21 % 27 % 7 % 4 % 6% (5) 11 % 14 % Market share of deposits(4) 31 % 18 % 21 % 6 % 2 % 7% (5) 10 % *For a reconciliation of these non-U.S. GAAP financial measures to the most directly comparable U.S. GAAP measures, see "Summary Consolidated Financial Data Reconciliation of Non-U.S. GAAP Financial Measures". Stable and growing, low cost deposit base provides significant liquidity to fund loan growth As of the end of the first quarter of 2018, we had $10.5 billion in total deposits. Our deposit base has demonstrated strong growth in recent years, increasing $1.8 billion from the end of 2015 to the end of the first quarter of 2018. Our deposit base is also well diversified by geography, as shown in the chart below, as of the first quarter of 2018. Table of Contents As of January 31, 2018 Our Primary Markets Our Key Growth Markets (U.S.$ in millions) Barbados The Bahamas Cayman Islands Jamaica Trinidad and Tobago Dutch Caribbean Other Markets(1) Total Branches and private wealth and trust facilities 8 12 4 15 2 4 17 62 Total assets $ 4,450 $ 2,858 $ 3,212 $ 716 $ 592 $ 915 $ 2,562 $ 12,375 (2) Performing loans $ 1,771 $ 1,739 $ 1,080 $ 414 $ 338 $ 394 $ 550 $ 6,285 Total deposits $ 2,235 $ 2,122 $ 2,902 $ 605 $ 376 $ 753 $ 1,499 $ 10,492 Total revenue (2017)(3) $ 113 (3) $ 154 (3) $ 78 (3) $ 36 (3) $ 11 (3) $ 27 (3) $ 99 (3) $ 518 (3) Total revenue (first quarter 2018)(3) $ 28 $ 27 $ 1 $ 11 $ 5 $ 6 $ 27 $ 105 Market share of loans(4) 22 % 21 % 27 % 7 % 4 % 6 %(5) 11 % 14 % Market share of deposits(4) 31 % 18 % 21 % 6 % 2 % 7 %(5) 10 % Table of Contents Total Deposits by Geography (U.S.$ in millions) Total: $10.5 billion Our deposit base has an attractive weighted average cost of 0.5%, helping us to generate strong net interest margins. Our non-interest accounts, which comprised 39.6% of our total deposits as of the end of the first quarter of 2018, form the foundation of our sticky and low-cost deposit base. For our interest-bearing deposits, the markets in which we operate typically pay relatively low rates on deposited funds. In addition, some of our markets have an excess of local currency liquidity, and as such, we generally experience limited market pressure to increase interest rates on our deposits proportionately to the increases in the rates we charge on our loans. These dynamics create a compelling opportunity for us to generate increased net interest margins in a rising rate environment. The following charts show our total deposits and our deposits by client for the periods indicated. Total Deposits (U.S.$ in millions) First Quarter 2018 Deposits by Client (U.S.$ in millions) Our total gross loan-to-deposit ratio was 64.4% as of the end of 2017, and was 63.8% as of the end of the first quarter of 2018, which highlights the significant excess liquidity available to drive growth in loan originations across our segments. We intend to continue to leverage our low-cost deposit base to grow our total loans market share across our markets. Table of Contents Robust technology offerings and technology pipeline which drives client experience and growth We have made major investments in upgrading our operations and technology platforms providing us with a significant competitive advantage in our markets. We have spent over $100 million on technology upgrades to develop our digital banking platform and technological infrastructure. These investments have enabled us to generate market-leading, technology-enabled growth across our business segments and geographies. We continue to undergo upgrades to our platform approximately every four to six months to keep our platform innovative and relevant to our clients. These investments provide opportunities for growth in several areas, including mobile banking and payments. As an example of our proven ability to adopt innovative technologies for the benefits of our clients, in 2017, we won International Finance's Best Mobile Banking App in the Caribbean award for our mobile app's market leading features. Most recently we launched regionally-leading security and fraud protection features including Freeze My Card, transaction alerts, mobile location tracking and touch ID capabilities. Overall, active users of our mobile app have increased by over 50.6% in 2017 and overall transactions executed through the app have increased by 260% to over 280,000 transactions compared to 2016. In addition, we were the first regional bank to issue VISA credit and debit cards with contactless transaction capabilities and as of September 2017, have converted 30.4% of our VISA debit and credit cards to chip-and-PIN and contactless payment systems, compared to 20.4% for the rest of the English speaking Caribbean, according to VISA. The chart below, shows data from VISA, that demonstrated our September 30, 2013 to September 30, 2017 growth of payment volume and VISA cards. Payment Volume and Cards Unwavering client focus with comprehensive and differentiated product and service offerings We believe that our client-focused business model has been one of the key drivers of our profitability. Our fundamental approach to our business is that we aim to place the client at the center of everything we do, which we view as an omni-channel and omni-product approach. Since 2014, we have completed a number of initiatives aimed at putting our clients' needs first and delivering best-in-class client experience and transaction execution, including: Optimization and reconfiguration of our branch network to enhance our clients' borrowing experience; Increasing our number of ATMs by 67% to 189 for greater client convenience; Table of Contents Offering products that no other competitor is offering in our footprint such as a no fee, 1% cash-back VISA credit card; and Introducing our mobile app and online banking products and services, with market-leading features, including Freeze My Card, transaction alerts and mobile location tracking. Each innovation has been motivated by the desire to provide our clients with the types of products and services they seek. This is evident in our consistently strong client survey results, which is a testament to the benefits our relationship-focused model provides to clients. Finally, we have also developed a corporate ethos that we believe embodies the pillars of our brand personalized, responsive and easy which are further underscored by our corporate culture of agility, collaboration, integrity, ownership and urgency themes we instill among our employee base to further ensure client focus. This enables us to respond quickly to any changes in our markets and clients' needs. Experienced leadership with deep local knowledge of and commitment to our markets and a proven ability to execute Our executive officers have an average of 30 years of banking experience both in the Caribbean and globally, and over 55% of our employees have been with us for at least 10 years. We believe that their experience and knowledge of our company and our markets has allowed us to deliver high-quality and innovative products and services to our clients and has positioned us to capitalize on future growth opportunities. Our executive officers, senior management and employees also have deep ties in the Caribbean community and significant experience and knowledge of the local culture, markets and businesses that underpin these regions. We contribute 1% of our net income after tax to our charitable trust that gives back to our communities through donations to institutions, such as hospitals, and causes, such as education and hurricane relief. Our Strategies We are a relationship-oriented bank and aspire to be our client's first choice for financial products and services in our markets. We have three core company-wide strategies, which we employ across our business segments and geographies in order to continue to grow and strengthen our franchise. These strategies focus on: (i) strengthening our existing and developing new client relationships; (ii) building on our technology base to provide a modern, digital banking experience; and (iii) simplifying the way in which we interact with our clients to deliver a superior customer experience and drive returns to our shareholders. Strengthening existing and developing new client relationships At the core of our strategy is our focus on our clients. Our brand is built on fostering client relationships that are personalized, responsive and serve our clients' needs. We intend to continue to gain market share by focusing on providing a holistic banking experience to our new and existing clients. In our RBB segment, we have been successful in introducing our Platinum Banking products and services to our mass-affluent clients in our primary markets, and view these products and services as key elements supporting our growth in our key growth markets. In our CIB segment, we have implemented a dedicated senior banker coverage model for our larger clients, which we believe will facilitate closer client interaction and stronger segment growth in the future. Our WM clients already benefit from an integrated client service model that delivers personalized and responsive service. Our recently launched investment advisor technology platform looks to build on our strategy of addressing our clients' needs with access to world-class, personalized portfolio management capabilities. We believe our client focus puts us in a unique position to continue to win Table of Contents market share in our WM segment, supported by significant cross-selling opportunities across our existing client relationships in our RBB and CIB segments. Our approach is to offer each client the full range of our products and services, for example, by introducing a CIB client to our cash management, credit card, payroll and other electronic banking solutions as well as introducing, where appropriate, our RBB and WM capabilities to directors and employees. Leveraging our technology base to provide a modern, digital banking experience We have invested over $100 million over the past five years on technology upgrades to develop our digital banking platform and technological infrastructure. Our technology investments have included application consolidation, infrastructure upgrades, expansion of client relationship management and client experience capabilities. We believe our digital platform provides us with a key competitive advantage relative to our competitors, and we remain focused on building regionally-leading, digital capabilities across our sales and delivery channels to provide our clients with a modern client experience. In addition to our industry leading mobile app offering, which experienced a 50.6% increase in the base of active users in 2017, we believe that the unique features of our internet technology and payments offering is attractive to our client base. In the future, we plan to continue our investments in cards, cash management and merchant service offerings, mobile and internet banking, electronic payment advancements and other new technologies to drive the growth of our digital channel by offering our clients innovative digital solutions to meet their banking and financial services needs. Simplification to continue delivering a superior client experience and to achieve further operating efficiencies We aim to deliver a simple and straightforward client experience. We believe that this is best executed through a continuous process of technological enhancement and process simplification. For example, in our RBB segment, we have introduced office locations with a targeted purpose either loans and mortgages or Platinum Banking. We have also introduced a larger number of ATMs at our newer branches to improve client convenience. In our CIB segment, we continue to focus on simplifying our client onboarding and lending processes to enhance the client experience. We believe the benefits of simplification will not only enhance our clients' experience, but will also help to improve operating efficiencies in our business. Our Relationship with CIBC We are an indirect subsidiary of CIBC, a leading Canadian-based, global financial institution with operations in Europe, North America, including the United States, and other key financial centers around the world. CIBC's common shares trade on the NYSE and the Toronto Stock Exchange, or TSX. In each of the five years from 2011 to 2015 that Bloomberg Markets offered this award, CIBC was named one of the top 20 strongest banks in the world. Following the completion of this offering, CIBC will beneficially own 73.41% of our outstanding common shares (or 70.67% if the underwriters' option to purchase additional common shares from the selling shareholder is exercised in full), and, as a result, CIBC will continue to have significant control of our business, including pursuant to the agreements described below. CIBC intends to divest itself of its controlling interest in us over time, subject to market conditions and other considerations as well as a lock-up agreement by the selling shareholder in connection with this offering. See "Underwriting (Conflicts of Interest)". The timing of any subsequent sales by CIBC of our common shares is unknown at this time. See "Risk Factors Risks Relating to This Offering and Our Common Shares CIBC will continue to have significant influence over us after this offering, including control over decisions that require shareholder approval, which could limit your ability to influence the outcome of matters submitted to shareholders for a vote". Table of Contents Historically, CIBC and its affiliates have provided certain services to us. In connection with this offering, we and CIBC intend to enter into certain agreements that will provide a framework for our ongoing relationship with CIBC. We intend to enter into a separation agreement with CIBC and CICL (the "Separation Agreement") in connection with this offering that will give CIBC and CICL certain consent and other rights with respect to our business, including the ability to nominate candidates for election to our board of directors (and appointment to board committees) and various other significant corporate actions we may pursue. We also intend to enter into a transition services agreement (the "Transition Services Agreement") with CIBC which will govern the transition of certain shared services, which primarily consist of shared services provided pursuant to agreements with third-party vendors, during specified transition periods following this offering, and a registration rights agreement (the "Registration Rights Agreement") which will require us to register our common shares beneficially owned by CIBC under certain circumstances. For a description of these and other agreements we have entered into with CIBC and its affiliates, see "Our Relationship with CIBC and Related Party Transactions Our Relationship with CIBC". Corporate Information Our principal executive offices are located at The Michael Mansoor Building, Warrens, St. Michael BB22026 Barbados and our telephone number is +1 246-367-2012. We maintain a website at www.cibcfcib.com. Neither this website nor the information on or accessible through this website is included or incorporated in, or is a part of, this prospectus. Summary Risk Factors An investment in the common shares involves a high degree of risk. Any of the factors set forth under "Risk Factors" may limit our ability to successfully execute our business strategy. You should carefully consider all of the information set forth in this prospectus and, in particular, should evaluate the specific factors set forth under "Risk Factors" in deciding whether to invest in the common shares. Among these important risks are the following: Adverse economic and market conditions in the markets in which we operate, in particular Barbados, the Bahamas and the Cayman Islands, could materially and adversely affect our business. A continued decline in Barbados's sovereign debt ratings or a debt restructuring in Barbados may impede economic growth, and lead to significant impairments of our holdings of sovereign debt, which may negatively impact our results of operations or financial condition. Volatility levels and fluctuations in foreign currency exchange rates and a de-pegging of certain currencies from the U.S. dollar may affect our business, financial position and results of operations. We hold securities, including sovereign debt, that do not have an investment grade rating and which may negatively impact our business, results of operations and financial condition. Tourism, real estate and financial services are important drivers of economic activity in the markets in which we operate. A decline in one of more of these sectors in our markets could have a negative impact on our business, results of operations or financial condition. Severe weather, natural disasters and other external events could disrupt our businesses and adversely affect our financial condition or results of operations. Global climate change may in the future increase the frequency and severity of weather events and the losses resulting therefrom, which could have a material adverse effect on the economies of our current and future markets and therefore on our business. Table of Contents A decline in the residential and commercial real estate markets in markets in which we operate could increase defaults on our mortgage loans, create challenges with the foreclosure process and generally have an adverse effect on our business, financial condition or results of operations. CIBC has provided us with services that we will transition away from CIBC pursuant to our Transition Services Agreement with them, but this transition may not be successful. We are required to maintain certain levels of liquidity. If we fail to maintain sufficient liquidity, we could face regulatory action and our business, financial condition or results of operations could be adversely affected. We face competition in all aspects of our business, and may not be able to attract clients at current levels. Fluctuations in interest rates may negatively impact our net interest margin and our profitability. We could fail to attract, retain or motivate highly skilled and qualified personnel, including our senior management, other key employees or members of our board of directors, which could adversely affect our business. We are subject to litigation, regulatory actions, claims and other legal proceedings, and our expenses related to the legal proceedings to which we are subject could have an adverse effect on our business, financial condition, results of operations or prospects. We operate in a highly regulated environment and changes to, or failure to comply with, applicable laws, regulations, and guidance, including banking guidelines and capital adequacy and regulatory requirements could adversely affect our business. Barbados law differs from the laws in effect in the United States and might afford less protection to shareholders, including by preventing or delaying a change in control or restricting the payment of dividends. Table of Contents
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+PROSPECTUS SUMMARY This summary only highlights the more detailed information appearing elsewhere in this prospectus. As this is a summary, it does not contain all of the information that you should consider in making an investment decision. You should read this entire prospectus carefully, including the information under Risk Factors and our financial statements and the related notes included elsewhere in this prospectus, before investing. References in this prospectus to we, us or our company refer to Union Acquisition Corp. References in this prospectus to our public shares are to our ordinary shares sold as part of the units in this offering (whether they are purchased in this offering or thereafter in the open market) and references to public shareholders refer to the holders of our public shares, including our initial shareholders (as defined below), officers and directors to the extent they purchase public shares, provided that their status as public shareholders shall only exist with respect to such public shares. References in this prospectus to our management or our management team refer to our officers and directors. Unless we tell you otherwise, the information in this prospectus assumes that the underwriters will not exercise their over-allotment option. All references in this prospectus to shares of Union Acquisition Corp. being forfeited shall take effect as surrenders for no consideration of such shares as a matter of Cayman Islands law. Any conversion of the ordinary shares described in this prospectus will take effect as a compulsory redemption of ordinary shares and an issuance of ordinary shares as a matter of Cayman Islands law. General We are a Cayman Islands company incorporated on November 14, 2017 as an exempted company with limited liability. We were formed for the purpose of entering into a merger, share exchange, asset acquisition, share purchase, recapitalization, reorganization or other similar business combination with one or more businesses or entities, which we refer to as a target business. To date, our efforts have been limited to organizational activities as well as activities related to this offering. None of our officers, directors, promoters and other affiliates has engaged in any substantive discussions on our behalf with representatives of other companies regarding the possibility of a potential business combination with us. We believe Latin American countries present a diverse set of opportunities whose value can be unlocked by accessing international capital markets. We believe our management team is uniquely qualified to use its extensive networks and experience in the continent to source and execute a business combination. Possible acquisitions may involve special situations in which significant value can be created by recapitalization, providing growth capital and allowing the company to use its listing to engage in additional consolidations in its industry. We intend to focus on businesses in Latin America within sectors that are underrepresented on public exchanges, including but not limited to natural resources, industrial operations and financial services and technology sectors, and therefore represent the potential for valuation arbitrage between private M&A comparables and public valuations. According to BBVA Research, in recent years, Latin American financial markets have posted gains across nearly all countries and asset classes. This positive trend contrasts somewhat with weak economic activity relative to global levels. However, Argentina, Brazil and Chile have experienced significant economic recovery in recent months driven by commodity price improvements, particularly in the cases of copper and oil. For instance, according to JP Morgan s "LatAm Year Ahead 2018," it is expected that Brazil s gross domestic product growth will reach 2.3% in 2018, a meaningful acceleration from the 0.9% of 2017 and the deep recession prior to that. Interest rates are today at the lowest level since the start of the inflation targeting regime (1999). Furthermore, BBVA Research forecasts Chile s growth for 2018 at 2.4% driven by the prospect of higher copper prices than those previously anticipated. JP Morgan and BBVA Research believe that recovering consumer confidence, accommodative financial conditions, rising commodities prices and a healthy global backdrop are expected to continue driving Latin America s improved economic performance in 2018. Notwithstanding the foregoing, many of the countries in Latin America are still in the development stage and are maturing. This can result in challenges for management teams, such as reconciling financial reporting standards to those of more established countries. We believe that our management has the necessary skills and experience to source, evaluate, and execute an attractive business combination while navigating the challenges associated with these markets. We will seek to capitalize on the operating experience and contacts of our officers and directors in consummating an initial business combination. These individuals have extensive transactional experience and a broad network of contacts to assist in our search for a target business. See the section titled "Management" for more information on the business backgrounds of our officers and directors. Furthermore, certain of our initial shareholders (including Union Group International Holdings Limited) and Atlantic-Pacific Capital, Inc., each of which is affiliated with certain of our officers and directors, and Ladenburg Thalmann and CIM Securities, LLC, two of the underwriters in this offering, have extensive investment and transactional experience, and in the case of Ladenburg Thalmann, have underwritten and assisted numerous similarly structured blank check companies in their search for a target business. Notwithstanding the foregoing, none of our officers or directors has any prior experience with consummating a business combination for a blank check company. Accordingly, past performance of our management team or their affiliates is not a guarantee either (i) of success with respect to any business combination we may consummate or (ii) that we will be able to identify a suitable candidate for our initial business combination. UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ________________________ AMENDMENT NO. 3 TO FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ________________________ UNION ACQUISITION CORP. (Exact name of registrant as specified in its charter) ________________________ Cayman Islands 6770 N/A (State or other jurisdiction of incorporation (Primary Standard Industrial Classification (I.R.S. Employer or organization) Code Number) Identification Number) 400 Madison Ave, Suite 11A New York, NY 10017 (212) 981-0630 (Address, including zip code, and telephone number, including area code, of registrant s principal executive offices) ________________________ Kyle P. Bransfield, Chief Executive Officer Union Acquisition Corp. 400 Madison Ave, Suite 11A New York, NY 10017 (212) 981-0630 (Name, address, including zip code, and telephone number, including area code, of agent for service) ________________________ Copies to: David Alan Miller, Esq. Bradley D. Houser, Esq. Jeffrey M. Gallant, Esq. Shane Segarra, Esq. Graubard Miller Holland & Knight LLP The Chrysler Building 701 Brickell Avenue, Suite 3300 405 Lexington Avenue Miami, FL 33131 New York, New York 10174 Telephone: (305) 374-8500 Telephone: (212) 818-8800 Facsimile: (305) 789-7799 Facsimile: (212) 818-8881 ________________________ Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box. Effecting a Business Combination We will either (1) seek shareholder approval of our initial business combination at a meeting called for such purpose at which shareholders may seek to convert their shares, regardless of whether they vote for or against the proposed business combination, into their pro rata share of the aggregate amount then on deposit in the trust account (net of taxes payable), or (2) provide our shareholders with the opportunity to sell their shares to us by means of a tender offer (and thereby avoid the need for a shareholder vote) for an amount equal to their pro rata share of the aggregate amount then on deposit in the trust account (net of taxes payable), in each case subject to the limitations described herein. The decision as to whether we will seek shareholder approval of our proposed business combination or allow shareholders to sell their shares to us in a tender offer will be made by us, solely in our discretion, and will be based on a variety of factors such as the timing of the transaction and whether the terms of the transaction would otherwise require us to seek shareholder approval. Unlike other blank check companies which require shareholder votes and conduct proxy solicitations in conjunction with their initial business combinations and related conversions of public shares for cash upon consummation of such initial business combinations even when a vote is not required by law, we will have the flexibility to avoid such shareholder vote and allow our shareholders to sell their shares pursuant to the tender offer rules of the SEC. In that case, we will file tender offer documents with the SEC which will contain substantially the same financial and other information about the initial business combination as is required under the SEC s proxy rules. We will consummate our initial business combination only if we have net tangible assets of at least $5,000,001 upon such consummation and, if we seek shareholder approval, a majority of the outstanding ordinary shares voted are voted in favor of the business combination. We will have until 21 months from the closing of this offering to consummate an initial business combination. If we are unable to consummate an initial business combination within such time period, we will redeem 100% of our outstanding public shares for a pro rata portion of the funds held in the trust account, equal to the aggregate amount then on deposit in the trust account including interest earned on the funds held in the trust account (less up to $100,000 of interest to pay liquidation expenses and which interest shall be net of taxes payable), divided by the number of then outstanding public shares, subject to applicable law and as further described herein, and then seek to liquidate and dissolve. We expect the pro rata redemption price to be $10.10 per ordinary share (regardless of whether or not the underwriters exercise their over-allotment option), without taking into account any interest earned on such funds. However, we cannot assure you that we will in fact be able to distribute such amounts as a result of claims of creditors which may take priority over the claims of our public shareholders. Our initial business combination must occur with one or more target businesses that together have a fair market value of at least 80% of the assets held in the trust account (excluding taxes payable on the income earned on the trust account) at the time of the agreement to enter into the initial business combination. The fair market value of the target or targets will be determined by our board of directors based upon one or more standards generally accepted by the financial community (such as actual and potential sales, earnings, cash flow and/or book value). Although our board of directors will rely on generally accepted standards, our board of directors will have discretion to select the standards employed. In addition, the application of the standards generally involves a substantial degree of judgment. Accordingly, investors will be relying on the business judgment of the board of directors in evaluating the fair market value of the target or targets. The proxy solicitation materials or tender offer documents used by us in connection with any proposed transaction will provide public shareholders with our analysis of the fair market value of the target business, as well as the basis for our determinations. If our board is not able independently to determine the fair market value of the target business or businesses, we will obtain an opinion from an independent investment banking firm, or another independent entity that commonly renders valuation opinions on the type of target business we are seeking to acquire, with respect to the satisfaction of such criteria. If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of large accelerated filer, accelerated filer, smaller reporting company and emerging growth company in Rule 12b-2 of the Exchange Act. Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company (Do not check if a smaller reporting company) Emerging growth company If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. CALCULATION OF REGISTRATION FEE Proposed Proposed Maximum Maximum Amount being Offering Price Aggregate Amount of Title of each Class of Security being registered Registered Per Security(1) Offering Price(1) Registration Fee Units, each consisting of one ordinary share, $.0001 par value, one Right and one Warrant(2) 11,500,000 Units $ 10.00 $ 115,000,000 $ 14,317.50 Ordinary shares included as part of the Units(2) 11,500,000 Shares (3) Rights included as part of the Units 11,500,000 Rights (3) Redeemable Warrants included as part of the Units(2) 11,500,000 Warrants (3) Ordinary shares underlying the rights included as part of the Units 1,150,000 Shares (3) Total $ 115,000,000 $ 14,317.50 (4) ____________________ (1) Estimated solely for the purpose of calculating the registration fee. (2) Includes 1,500,000 Units, 1,500,000 ordinary shares, 1,500,000 Rights and 1,500,000 Redeemable Warrants underlying such Units which may be issued on exercise of a 45-day option granted to the Underwriters to cover over-allotments, if any. (3) No fee pursuant to Rule 457(g). (4) Previously paid. ________________________ The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. We currently anticipate structuring a business combination to acquire 100% of the equity interests or assets of the target business or businesses. We may, however, structure our initial business combination where we merge directly with the target business or where we acquire less than 100% of such interests or assets of the target business in order to meet certain objectives of the target management team or shareholders or for other reasons, but we will only complete such business combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act of 1940, as amended, or the Investment Company Act. Even if the post-transaction company owns or acquires 50% or more of the voting securities of the target, our shareholders prior to the business combination may collectively own a minority interest in the post-transaction company, depending on valuations ascribed to the target and us in the business combination transaction. For example, we could pursue a transaction in which we issue a substantial number of new shares in exchange for all of the outstanding capital stock of a target. In this case, we could acquire a 100% controlling interest in the target; however, as a result of the issuance of a substantial number of new shares, our shareholders immediately prior to our initial business combination could own less than a majority of our issued and outstanding shares subsequent to our initial business combination. If less than 100% of the equity interests or assets of a target business or businesses are owned or acquired by the post-transaction company, the portion of such business or businesses that is owned or acquired is what will be valued for purposes of the 80% fair market value test. Potential Conflicts Members of our management team have various interests in this offering that are different than our other shareholders and, accordingly, may have a conflict of interest in determining whether a particular target business is an appropriate business with which to effectuate our initial business combination. Further, each of our officers and directors may have a conflict of interest with respect to evaluating a particular business combination if the retention or resignation of any such officers and directors was included by a target business as a condition to any agreement with respect to our initial business combination. As more fully discussed in Management Conflicts of Interest, if any of our officers or directors becomes aware of an initial business combination opportunity that falls within the line of business of any entity to which he has pre-existing fiduciary or contractual obligations, he may be required to present such initial business combination opportunity to such entity prior to presenting such initial business combination opportunity to us subject to his fiduciary duties under Cayman Islands law. Our officers and directors currently have certain relevant fiduciary duties or contractual obligations to such entities (as well as to us). We do not believe, however, that any fiduciary duties or contractual obligations of our executive officers would materially undermine our ability to complete our initial business combination. Our officers and directors have agreed to present to us all target business opportunities that have a fair market value of at least 80% of the assets held in the trust account (excluding taxes payable on the income accrued in the trust account) prior to presenting them to any other entity, subject to any pre-existing fiduciary or contractual obligations they may have. For more information on the foregoing conflicts of interest and the relevant pre-existing fiduciary duties or contractual obligations of our management team, see the section titled Management Conflicts of Interest. JOBS Act We are an emerging growth company as defined in the Jumpstart Our Business Startups Act of 2012 (which we refer to herein as the JOBS Act) and will remain such for up to five years. We will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of this offering, (b) in which we have total annual gross revenue of at least $1.07 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our outstanding ordinary shares that are held by non-affiliates exceeds $700 million as of the prior June 30, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three year period. As an emerging growth company, we have elected, under Section 107(b) of the JOBS Act, to take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended, or the Securities Act, for complying with new or revised accounting standards. Private Placements In December 2017, we issued an aggregate of 2,875,000 of our ordinary shares, which we refer to throughout this prospectus as the founders shares, for an aggregate purchase price of $25,000, or approximately $0.01 per share, to our initial shareholders. The founders shares held by our initial shareholders includes an aggregate of up to 375,000 shares subject to forfeiture to the extent that the underwriters over-allotment option is not exercised in full or in part, so that our initial shareholders will continue to own, in the aggregate, 20.0% of our issued and outstanding shares after this offering (not including ownership of the private warrants and assuming they do not purchase units in this offering). In addition, certain of our initial shareholders, including Ladenburg Thalmann and CIM Securities, LLC, the underwriters for this offering, have committed that they or their designees will purchase an aggregate of 4,750,000 private warrants at a price of $1.00 per warrant ($4,750,000 in the aggregate) in a private placement that will occur simultaneously with the closing of this offering. They have also agreed that if the over-allotment option is exercised by the underwriters in full or in part, they or their designees will purchase from us at a price of $1.00 per private warrant an additional number of private warrants (up to a maximum of 450,000 private warrants, for a total of 5,200,000 private warrants, or a total purchase price of $5,200,000, if the over-allotment option is exercised in full) in order to maintain in the trust account $10.10 per unit sold to the public in this offering. These additional private warrants will be purchased in a private placement that will occur simultaneously with the purchase of units resulting from the exercise of the over-allotment option. The proceeds from the private placement of the private warrants will be added to the proceeds of this offering and placed in a U.S.-based trust account at Oppenheimer & Co. with Continental Stock Transfer & Trust Company, as trustee. If we do not complete an initial business combination within 21 months from the closing of this offering, the proceeds from the sale of the private warrants will be included in the liquidating distribution to our public shareholders and the private warrants will be worthless. Our executive offices are located at 400 Madison Ave, Suite 11A, New York, NY 10017, and our telephone number is (212) 981-0630. The Offering Securities offered 10,000,000 units, at $10.00 per unit, each unit consisting of one ordinary share, one right and one redeemable warrant. Listing of our securities and proposed symbols We anticipate the units, and the ordinary shares, rights and warrants once they begin separate trading, will be listed on the NYSE under the symbols LTN.U, LTN , LTN RT and LTN WS, respectively. Trading commencement and separation of ordinary shares, rights and warrants The units will begin trading on or promptly after the date of this prospectus. The ordinary shares, rights and warrants comprising the units will begin separate trading on the 52nd day following the date of this prospectus unless Ladenburg Thalmann informs us of its decision to allow earlier separate trading, subject to our having filed the Current Report on Form 8-K described below and having issued a press release and filed a Current Report on Form 8-K announcing when such separate trading will begin. Once the ordinary shares, rights and warrants commence separate trading, holders will have the option to continue to hold units or separate their units into the component pieces. Holders will need to have their brokers contact our transfer agent in order to separate the units into ordinary shares, rights and warrants. In no event will the ordinary shares, rights and warrants be traded separately until we have filed a Current Report on Form 8-K with the SEC containing an audited balance sheet reflecting our receipt of the gross proceeds at the closing of this offering. We will file the Current Report on Form 8-K promptly after the closing of this offering, which is anticipated to take place two business days from the date of this prospectus. If the underwriters over-allotment option is exercised following the initial filing of such Current Report on Form 8-K, a second or amended Current Report on Form 8-K will be filed to provide updated financial information to reflect the exercise of the underwriters over-allotment option. We will also include in the Form 8-K, or amendment thereto, or in a subsequent Form 8-K, information indicating if Ladenburg Thalmann has allowed separate trading of the ordinary shares, rights and warrants prior to the 52nd day after the date of this prospectus. The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state or jurisdiction where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED FEBRUARY 23, 2018 PRELIMINARY PROSPECTUS $100,000,000 Union Acquisition Corp. 10,000,000 Units ________________________ Union Acquisition Corp. is a Cayman Islands exempted company incorporated as a blank check company for the purpose of entering into a merger, share exchange, asset acquisition, share purchase, recapitalization, reorganization or other similar business combination with one or more businesses or entities, which we refer to as a target business. Our efforts to identify a prospective target business will not be limited to a particular industry or geographic region, although we intend to focus our search for a target business located in Latin America. We do not have any specific business combination under consideration and we have not (nor has anyone on our behalf) engaged in any substantive discussions with representatives of other companies regarding the possibility of a potential business combination with us. If we are unable to consummate an initial business combination within 21 months from the closing of this offering, we will redeem 100% of the public shares for a pro rata portion of the trust account, equal to the aggregate amount then on deposit in the trust account including interest earned on the funds held in the trust account (less up to $100,000 of interest to pay liquidation expenses and which interest shall be net of taxes payable), divided by the number of then outstanding public shares, subject to applicable law and as further described herein. This is an initial public offering of our securities. Each unit that we are offering has a price of $10.00 and consists of one ordinary share, one right and one redeemable warrant. Each right entitles the holder thereof to receive one-tenth (1/10) of one ordinary share upon the consummation of an initial business combination, as described in more detail in this prospectus. Each warrant entitles the holder to purchase one ordinary share at a price of $11.50. Each warrant will become exercisable on the later of the completion of an initial business combination or 12 months from the closing of this offering and will expire on the fifth anniversary of our completion of an initial business combination, or earlier upon redemption or liquidation. We have granted the underwriters a 45-day option to purchase up to an additional 1,500,000 units to cover over-allotments, if any. Certain of our shareholders prior to this offering, including Ladenburg Thalmann & Co. Inc. ( Ladenburg Thalmann ) and CIM Securities, LLC, the underwriters for this offering, have committed that they or their designees will purchase from us an aggregate of 4,750,000 warrants, or private warrants, at $1.00 per warrant (for a total purchase price of $4,750,000) in a private placement that will occur simultaneously with the consummation of this offering. These shareholders have also agreed that if the over-allotment option is exercised by the underwriters in full or in part, they or their designees will purchase from us additional private warrants (up to a maximum of 450,000 private warrants, for a total of 5,200,000 private warrants, or a total purchase price of $5,200,000, if the over-allotment option is exercised in full) at a price of $1.00 per private warrant in an amount that is necessary to maintain in the trust account $10.10 per unit sold to the public in this offering. These additional private warrants will be purchased in a private placement that will occur simultaneously with the purchase of units resulting from the exercise of the over-allotment option. The private warrants are identical to the warrants included in the units sold in this offering, subject to certain limited exceptions as described in this prospectus. There is presently no public market for our units, ordinary shares, rights or warrants. We have applied to have our units listed on the New York Stock Exchange, or NYSE, under the symbol LTN.U on or promptly after the date of this prospectus. The ordinary shares, rights and warrants comprising the units will begin separate trading on the 52nd day following the date of this prospectus unless Ladenburg Thalmann informs us of its decision to allow earlier separate trading, subject to our filing a Current Report on Form 8-K with the SEC containing an audited balance sheet reflecting our receipt of the gross proceeds of this offering and issuing a press release announcing when such separate trading will begin. We cannot guarantee that our securities will be approved for listing. Once the securities comprising the units begin separate trading, the ordinary shares, rights and warrants will be traded on the NYSE under the symbols LTN , LTN RT and LTN WS, respectively. Units: Number outstanding before this offering 0 units Number to be sold to insiders in private placement 0 units Number outstanding after this offering and private placement 10,000,000 units Ordinary Shares: Number outstanding before this offering 2,875,000 shares1 Number to be sold to insiders in private placement 0 shares Number to be outstanding after this offering and private placement 12,500,000 shares2 Rights: Number outstanding before this offering 0 rights Number to be sold to insiders in private placement 0 rights Number to be outstanding after this offering and private placement 10,000,000 rights Warrants: Number outstanding before this offering 0 warrants Number to be sold to insiders in private placement 4,750,000 warrants Number to be outstanding after this offering and private placement 14,750,000 warrants Warrant Terms: Exercisability Each warrant is exercisable for one ordinary share. The warrants will become exercisable on the later of the completion of an initial business combination and 12 months from the date of this prospectus. The warrants will expire at 5:00 p.m., New York City time, on the fifth anniversary of our completion of an initial business combination, or earlier upon redemption. Exercise price $11.50 per warrant. No warrants will be exercisable for cash unless we have an effective and current registration statement covering the ordinary shares issuable upon exercise of the warrants and a current prospectus relating to such ordinary shares is available. Notwithstanding the foregoing, if a registration statement covering the ordinary shares issuable upon exercise of the warrants is not effective within a specified period following the consummation of our initial business combination, warrant holders may, until such time as there is an effective registration statement and during any period when we shall have failed to maintain an effective registration statement, exercise warrants on a cashless basis pursuant to the exemption provided by Section 3(a)(9) of the Securities Act of 1933, as amended, or the Securities Act, provided that such exemption is available. If that exemption, or another exemption, is not available, holders will not be able to exercise their warrants on a cashless basis. ____________________ 1 This number includes an aggregate of up to 375,000 founders shares that are subject to forfeiture if the over-allotment option is not exercised by the underwriters in full. 2 Assumes the over-allotment option has not been exercised and an aggregate of 375,000 founders shares have been forfeited. We are an emerging growth company as defined in the Jumpstart Our Business Startups Act and will therefore be subject to reduced public company reporting requirements. Investing in our securities involves a high degree of risk. See Risk Factors beginning on page 16 of this prospectus for a discussion of information that should be considered in connection with an investment in our securities. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. Per Unit Total Public Offering Price $ 10.00 $ 100,000,000 Underwriting Discount(1) $ 0.20 $ 2,000,000 Proceeds to Union Acquisition Corp. (before expenses) $ 9.80 $ 98,000,000 ____________________ (1) The underwriters will receive compensation in addition to the underwriting discount. See Underwriting. Upon consummation of the offering, an aggregate of $101,000,000 (or $116,150,000 if the over-allotment option is exercised in full) or $10.10 per unit sold to the public in this offering will be deposited into a U.S.-based trust account at Oppenheimer & Co. maintained by Continental Stock Transfer & Trust Company, acting as trustee. Except as described in this prospectus, these funds will not be released to us until the earlier of the completion of a business combination and our redemption of our public shares (which may not occur until ________, 2020). The underwriters are offering the units on a firm commitment basis. The underwriters expect to deliver the units to purchasers on or about ________, 2018. ________________________ Sole Book-Running Manager Lead Manager Ladenburg Thalmann CIM Securities, LLC ________________________ , 2018 Redemption We may redeem the outstanding warrants (excluding the private warrants and any warrants underlying additional units issued to our initial shareholders, officers, directors or their affiliates in payment of working capital loans made to us) in whole and not in part, at a price of $0.01 per warrant at any time while the warrants are exercisable, upon a minimum of 30 days prior written notice of redemption, if, and only if, the last sales price of our ordinary shares equals or exceeds $18.00 per share (as adjusted for share splits, share capitalizations, reorganizations and recapitalizations) for any 20 trading days within a 30 trading day period ending three business days before we send the notice of redemption; and if, and only if, there is a current registration statement in effect with respect to the ordinary shares underlying such warrants. If the foregoing conditions are satisfied and we issue a notice of redemption, each warrant holder can exercise his, her or its warrant prior to the scheduled redemption date. However, the price of the ordinary shares may fall below the $18.00 trigger price as well as the $11.50 warrant exercise price after the redemption notice is issued. If we call the warrants for redemption as described above, our management will have the option to require all holders that wish to exercise warrants to do so on a cashless basis. In such event, each holder would pay the exercise price by surrendering the warrants for that number of ordinary shares equal to the quotient obtained by dividing (x) the product of the number of ordinary shares underlying the warrants, multiplied by the difference between the exercise price of the warrants and the fair market value (defined below) by (y) the fair market value. The fair market value shall mean the average reported last sale price of the ordinary shares for the five trading days ending on the third trading day prior to the date on which the notice of redemption is sent to the holders of warrants. Right Terms: Each holder of a right will receive one-tenth (1/10) of one ordinary share upon consummation of our initial business combination. In the event we will not be the surviving entity upon completion of our initial business combination, each holder of a right will be required to affirmatively convert its rights in order to receive the 1/10 ordinary share underlying each right (without paying any additional consideration). If we are unable to complete an initial business combination within the required time period and we redeem the public shares for the funds held in the trust account, holders of rights will not receive any such funds in exchange for their rights and the rights will expire worthless. We will not issue fractional shares upon exchange of the rights. If, upon exchange of the rights, a holder would be entitled to receive a fractional interest in a share, we will, upon exchange, round down to the nearest whole number the number of shares to be issued to the right holder. Securities purchased, or being purchased, by insiders Our initial shareholders have purchased an aggregate of 2,875,000 founders shares for an aggregate purchase price of $25,000, or approximately $0.01 per share. The 2,875,000 founders shares includes an aggregate of up to 375,000 ordinary shares subject to forfeiture to the extent that the over-allotment option is not exercised by the underwriters in full or in part. Our initial shareholders will be required to forfeit only a number of ordinary shares necessary to continue to maintain, in the aggregate, the 20.0% ownership interest in our ordinary shares after giving effect to the offering and exercise, if any, of the underwriters over-allotment option (excluding the private warrants and any units purchased in this offering). The founders shares are identical to the ordinary shares included in the units being sold in this offering. However, the initial shareholders have agreed (A) to vote any shares owned by them in favor of any proposed business combination, (B) not to convert any shares in connection with a shareholder vote to approve a proposed initial business combination or any amendment to our charter documents prior to consummation of an initial business combination or sell any shares to us in a tender offer in connection with a proposed initial business combination and (C) that the founders shares shall not participate in any liquidating distribution from the trust account upon winding up if a business combination is not consummated. Simultaneously with the consummation of this offering, certain of our initial shareholders, including Ladenburg Thalmann and CIM Securities, LLC, have committed that they or their designees will purchase an aggregate of 4,750,000 private warrants at $1.00 per private warrant (for a total purchase price of $4,750,000) pursuant to a subscription agreement with us. They have also agreed that if the over-allotment option is exercised by the underwriters in full or in part, they or their designees will purchase from us an additional number of private warrants (up to a maximum of 450,000 private warrants, for a total of 5,200,000 private warrants, or a total purchase price of $5,200,000, if the over-allotment option is exercised in full) at a price of $1.00 per private warrant necessary to maintain in the trust account $10.10 per unit sold to the public in this offering. These additional private warrants will be purchased in a private placement that will occur simultaneously with the purchase of units resulting from the exercise of the over-allotment option. The private warrants are identical to the warrants included in the units sold in this offering except that the private warrants: (i) will not be redeemable by us and (ii) may be exercised for cash or on a cashless basis, as described in this prospectus, in each case so long as they are held by the initial purchasers or any of their permitted transferees. If the private warrants are held by holders other than the initial purchasers or any of their permitted transferees, the private warrants will be redeemable by us and exercisable by the holders on the same basis as the warrants included in the units being sold in this offering. In the event of a liquidation prior to our initial business combination, the private warrants will be worthless. Restrictions on transfer of founders shares and private warrants On the date of this prospectus, the founders shares will be placed into an escrow account maintained in New York, New York by Continental Stock Transfer & Trust Company, acting as escrow agent. Subject to certain limited exceptions, these shares will not be transferred, assigned, sold or released from escrow until the earlier of one year after the date of the consummation of our initial business combination and the date on which the closing price of our ordinary shares equals or exceeds $12.00 per share (as adjusted for share splits, share capitalizations, reorganizations and recapitalizations) for any 20 trading days within any 30-trading day period commencing 150 days after our initial business combination, or earlier if, subsequent to our initial business combination, we consummate a liquidation, merger, stock exchange or other similar transaction which results in all of our shareholders having the right to exchange their ordinary shares for cash, securities or other property. The limited exceptions include transfers, assignments or sales (i) to our initial shareholders, officers, directors, consultants or their affiliates, (ii) to an initial shareholder s members upon its liquidation, (iii) to relatives and trusts for estate planning purposes, (iv) by virtue of the laws of descent and distribution upon death, (v) pursuant to a qualified domestic relations order, (vi) to us for no value for cancellation in connection with the consummation of our initial business combination, or (vii) in connection with the consummation of our initial business combination, by private sales at prices no greater than the price at which the shares were originally purchased, in each case (except for clause (vi) or with our prior consent) where the transferee agrees to the terms of the escrow agreement and to be bound by these transfer restrictions. The purchasers of the private warrants have agreed not to transfer, assign or sell any of the private warrants (except in connection with the same limited exceptions that the founders shares may be transferred as described above), until the completion of our initial business combination. Offering proceeds to be held in trust An aggregate of $10.10 per unit sold to the public in this offering (regardless of whether or not the over-allotment option is exercised) will be placed in a U.S.-based trust account at Oppenheimer & Co. maintained by Continental Stock Transfer & Trust Company, acting as trustee pursuant to an agreement to be signed on the date of this prospectus. Except as set forth below, the proceeds held in the trust account will not be released until the earlier of the completion of an initial business combination and our redemption of 100% of the outstanding public shares if we have not completed a business combination in the required time period. Therefore, unless and until an initial business combination is consummated, the proceeds held in the trust account will not be available for our use for any expenses related to this offering or expenses which we may incur related to the investigation and selection of a target business and the negotiation of an agreement to acquire a target business. Notwithstanding the foregoing, there can be released to us from the trust account any interest earned on the funds in the trust account that we need to pay our income or other tax obligations. With this exception, expenses incurred by us may be paid prior to a business combination only from the net proceeds of this offering not held in the trust account (initially estimated to be $1,000,000); provided, however, that in order to meet our working capital needs following the consummation of this offering if the funds not held in the trust account are insufficient, our initial shareholders, officers, directors or their affiliates may, but are not obligated to, loan us funds, from time to time or at any time, in whatever amount they deem reasonable in their sole discretion. Each loan would be evidenced by a promissory note. The notes would either be paid upon consummation of our initial business combination, without interest, or, at the holder s discretion, up to $1,500,000 of the notes may be converted into warrants at a price of $1.00 per warrant. These warrants would be identical to the private warrants. In the event that the initial business combination does not close, we may use a portion of the working capital held outside the trust account to repay such loaned amounts, but no proceeds from our trust account would be used for such repayment. Limited payments to insiders There will be no fees, reimbursements or other cash payments paid to our initial shareholders, officers, directors or their affiliates for any services they render prior to, or in order to effectuate the consummation of, an initial business combination (regardless of the type of transaction that it is) other than the following payments, none of which will be made from the proceeds of this offering held in the trust account prior to the completion of our initial business combination: repayment at the closing of this offering of an aggregate of $200,000 of non-interest bearing loans made by Union Group International Holdings Limited, an affiliate of Juan Sartori, our Chairman; payment of an aggregate of $10,000 per month to Atlantic-Pacific Capital, Inc. and UCG International Corp., affiliates of certain of our officers and directors, for office space and related services; payment of underwriting and business combination fees as described under the section titled Underwriting ; and reimbursement of out-of-pocket expenses incurred by them in connection with certain activities on our behalf, such as identifying and investigating possible target businesses and business combinations. There is no limit on the amount of out-of-pocket expenses reimbursable by us. Our audit committee will review and approve all reimbursements and payments made to our initial shareholders, officers, directors or our or their respective affiliates, with any interested director abstaining from such review and approval. Shareholder approval of, or tender offer in connection with, initial business combination In connection with any proposed initial business combination, we will either (1) seek shareholder approval of such initial business combination at a meeting called for such purpose at which shareholders may seek to convert their shares, regardless of whether they vote for or against the proposed business combination, into their pro rata share of the aggregate amount then on deposit in the trust account (net of taxes payable), or (2) provide our shareholders with the opportunity to sell their shares to us by means of a tender offer (and thereby avoid the need for a shareholder vote) for an amount equal to their pro rata share of the aggregate amount then on deposit in the trust account (net of taxes payable), in each case subject to the limitations described herein. If we determine to engage in a tender offer, such tender offer will be structured so that each shareholder may tender all of his, her or its shares rather than some pro rata portion of his, her or its shares. The decision as to whether we will seek shareholder approval of a proposed business combination or will allow shareholders to sell their shares to us in a tender offer will be made by us, solely in our discretion, and will be based on a variety of factors such as the timing of the transaction and whether the terms of the transaction would otherwise require us to seek shareholder approval. We will consummate our initial business combination only if we have net tangible assets of at least $5,000,001 upon such consummation and, if we seek shareholder approval, a majority of the outstanding ordinary shares voted are voted in favor of the business combination. We chose our net tangible asset threshold of $5,000,001 to ensure that we would avoid being subject to Rule 419 promulgated under the Securities Act. However, if we seek to consummate an initial business combination with a target business that imposes any type of working capital closing condition or requires us to have a minimum amount of funds available from the trust account upon consummation of such initial business combination, we may need to have more than $5,000,001 in net tangible assets upon consummation and this may force us to seek third party financing which may not be available on terms acceptable to us or at all. As a result, we may not be able to consummate such initial business combination and we may not be able to locate another suitable target within the applicable time period, if at all. Our initial shareholders and officers and directors and their affiliates have agreed (i) to vote any shares owned by them in favor of any proposed business combination, (ii) not to convert any shares in connection with a shareholder vote to approve a proposed initial business combination or any amendment to our charter prior to the consummation of our initial business combination and (iii) not to sell any shares to us in a tender offer in connection with any proposed business combination. None of our initial shareholders, officers, directors or their affiliates has indicated any intention to purchase units in this offering or any units or ordinary shares from persons in the open market or in private transactions. However, if we hold a meeting to approve a proposed business combination and a significant number of shareholders vote, or indicate an intention to vote, against a proposed business combination, or choose to convert their shares, our initial shareholders, officers, directors or their affiliates could make such purchases in the open market or in private transactions in order to influence any vote held to approve a proposed initial business combination or to increase the likelihood of satisfying any closing conditions. Notwithstanding the foregoing, our officers, directors, initial shareholders and their affiliates will not make purchases of ordinary shares if the purchases would violate Section 9(a)(2) or Rule 10b-5 of the Exchange Act, which are rules designed to stop potential manipulation of a company s stock. Conversion rights In connection with any shareholder meeting called to approve a proposed initial business combination, each public shareholder will have the right, regardless of whether he is voting for or against such proposed business combination, to demand that we convert his shares into a pro rata share of the trust account. Notwithstanding the foregoing conversion rights, if we seek shareholder approval of our initial business combination and we do not conduct conversions in connection with our initial business combination pursuant to the tender offer rules, our amended and restated memorandum and articles of association provide that a public shareholder, together with any affiliate of such shareholder or any other person with whom such shareholder is acting in concert or as a group (as defined under Section 13 of the Exchange Act), will be restricted from converting its shares with respect to more than an aggregate of 20% of the shares sold in this offering, without our prior consent. We believe the restriction described above will discourage shareholders from accumulating large blocks of shares, and subsequent attempts by such holders to use their ability to convert their shares as a means to force us or our management to purchase their shares at a significant premium to the then-current market price or on other undesirable terms. By limiting our shareholders ability to convert to no more than 20% of the shares sold in this offering, we believe we will limit the ability of a small group of shareholders to unreasonably attempt to block our ability to complete our initial business combination, particularly in connection with a business combination with a target that requires as a closing condition that we have a minimum net worth or a certain amount of cash. However, we would not be restricting our shareholders ability to vote all of their shares (including all shares held by those shareholders that hold more than 20% of the shares sold in this offering) for or against our initial business combination. We may also require public shareholders, whether they are a record holder or hold their shares in street name, to either (i) physically tender their certificates (if any) to our transfer agent or (ii) deliver their shares to the transfer agent electronically using Depository Trust Company s DWAC (Deposit/Withdrawal At Custodian) System, at the holder s option, in each case prior to a date set forth in the tender offer documents or proxy materials sent in connection with the proposal to approve the business combination. There is a nominal cost associated with this tendering process and the act of certificating the shares or delivering them through the DWAC system. The transfer agent will typically charge the tendering broker $45 and it would be up to the broker whether or not to pass this cost on to the converting holder. Liquidation if no business combination Our amended and restated memorandum and articles of association provide that we will have only 21 months from the closing of this offering to complete our initial business combination. If we are unable to complete our initial business combination within such 21-month period (or such later date as may be approved by our shareholders), we will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest earned on the trust account (less up to $100,000 of interest to pay liquidation expenses and which interest shall be net of taxes payable), divided by the number of then outstanding public shares, which redemption will completely extinguish public shareholders rights as shareholders (including the right to receive further liquidation distributions, if any) and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining shareholders and our board of directors, liquidate and dissolve. There will be no redemption rights or liquidating distributions with respect to our warrants or rights which will expire worthless if we fail to complete our initial business combination within the 21-month time period. The holders of the founders shares will not participate in any liquidation distribution from our trust account with respect to such securities. Union Group International Holdings Limited, an affiliate of Juan Sartori, our Chairman, has contractually agreed pursuant to a written agreement with us that, if we liquidate the trust account prior to the consummation of a business combination, Union Group International Holdings Limited will be liable to ensure that the proceeds in the trust account are not reduced by the claims of target businesses or claims of vendors or other entities that are owed money by us for services rendered or contracted for or products sold to us. We believe Union Group International Holdings Limited has sufficient net worth to satisfy its indemnity obligation should it arise, however we cannot assure you it will have sufficient liquid assets to satisfy such obligations if it is required to do so. Additionally, the agreement entered into by Union Group International Holdings Limited specifically provides for two exceptions to the indemnity given: it will have no liability (1) as to any claimed amounts owed to a target business or vendor or other entity who has executed an agreement with us waiving any right, title, interest or claim of any kind they may have in or to any monies held in the trust account, or (2) as to any claims for indemnification by the underwriters of this offering against certain liabilities, including liabilities under the Securities Act. As a result, we cannot assure you that the per-share distribution from the trust account, if we liquidate the trust account because we have not completed a business combination within the required time period, will not be less than $10.10. We will pay the costs of liquidating the trust account from the up to $100,000 of interest earned on the funds held in the trust account that is available to us for liquidation expenses. Risks In making your decision on whether to invest in our securities, you should take into account the special risks we face as a blank check company, as well as the fact that this offering is not being conducted in compliance with Rule 419 promulgated under the Securities Act, and, therefore, you will not be entitled to protections normally afforded to investors in Rule 419 blank check offerings. For additional information concerning how Rule 419 blank check offerings differ from this offering, please see Proposed Business Comparison to offerings of blank check companies subject to Rule 419. You should carefully consider these and the other risks set forth in the section entitled Risk Factors beginning on page 16 of this prospectus.
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+detailed information appearing elsewhere in this prospectus. As this is a summary, it does not contain all of the information that you should consider in making an investment decision. You should read this entire prospectus carefully, including the information under "Risk Factors" and our financial statements and the related notes included elsewhere in this prospectus, before investing. Unless otherwise stated in this prospectus, references to: "we," "us," "company" or "our company" are to Terrapin 4 Acquisition Corporation; "public shares" are to shares of our Class A common stock sold as part of the units in this offering (whether they are purchased in this offering or thereafter in the open market); "public stockholders" are to the holders of our public shares, including our initial stockholders and members of our management team to the extent our initial stockholders and/or members of our management team purchase public shares, provided that each initial stockholder s and member of our management team s status as a "public stockholder" shall only exist with respect to such public shares; "management" or our "management team" are to our executive officers and directors; "sponsor" are to Terrapin 4 Sponsor Partnership, LLC, a Delaware limited liability company affiliated with Nathan Leight, our Chairman of the Board, and Guy Barudin, our Chief Operating Officer and Chief Financial Officer; "Nomura" are to Nomura Securities International, Inc., an underwriter of this offering; "equity-linked securities" are to any debt or equity securities that are convertible, exercisable or exchangeable for shares of our Class A common stock issued in a financing transaction in connection with our initial business combination, including but not limited to a private placement of equity or debt; "founder shares" are to shares of our Class F common stock, 7,016,373 of which have been issued to our initial stockholders prior to this offering (up to 750,000 of which are subject to forfeiture depending on the extent to which the underwriters over-allotment option is exercised, and up to 1,266,373 of which are subject to forfeiture depending on the extent to which the forward purchase shares are purchased); "common stock" are to Class A common stock and Class F common stock; "forward purchase agreement" is to the agreement providing for the sale of an aggregate of 5,065,494 shares of our Class A common stock to Nomura or its assignees in a private placement to occur concurrently with the closing of our initial business combination; "forward purchase shares" are to the shares of our Class A common stock to be issued pursuant to the forward purchase agreement; "forward financing" are to the agreement of Nomura, if requested by us, to underwrite, arrange and/or syndicate up to $450,000,000 of additional financing for us in the form of equity or debt (or a combination thereof) in connection with our initial business combination, as described herein; "private placement warrants" are to the warrants issued to our sponsor in a private placement simultaneously with the closing of this offering; and "initial stockholders" are to holders of our founder shares prior to this offering. Unless we tell you otherwise, the information in this prospectus assumes that the underwriters will not exercise their over-allotment option. General We are a newly organized blank check company incorporated as a Delaware corporation and formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. We have not identified any potential business combination target and we have not, nor has anyone on our behalf, initiated any substantive discussions, directly or indirectly, with any potential business combination target. We intend to focus our efforts on seeking an initial business combination with a company that has an enterprise value of between $500 million and $2 billion, although a target entity with a smaller or larger enterprise value may be considered. Following the initial business combination, our objective will be to implement or support the acquired company s operating strategies in order to generate additional value for shareholders. General goals may include additional acquisitions and operational improvements. Our efforts to identify a prospective target business will not be limited to a particular industry. We believe that private equity firms, venture capital funds and others will find the opportunity to enter into the initial business combination with us attractive for the following reasons: Track Record of Our Team. Members of our management team have served in management of three other blank check companies that completed business combinations. Nathan Leight served as chairman of Aldabra Acquisition Corporation, or Aldabra 1, which completed a merger with affiliates of and into Great Lakes Dredge & Dock Corporation, or GLDD (NASDAQ: GLDD), in 2006. Mr. Leight later served as chairman of Aldabra 2 Acquisition Corp., or Aldabra 2, which completed a merger in 2008 with certain paper and packaging businesses of Boise Cascade Company. The resulting company was subsequently listed on the New York Stock Exchange as Boise, Inc. or Boise. Mr. Leight served as the Chairman of Terrapin 3 Acquisition Corporation, or Terrapin 3, from its initial public offering in 2014 until its business combination with Yatra Online, Inc., or YTRA (NASDAQ: YTRA) in 2016. YTRA is the second largest online travel agency in India. Robert Plotkin served as a key member of the team for Aldabra 1, Aldabra 2, and Terrapin 3. Mr. Barudin served as a key member of the team for both Aldabra 2 and Terrapin 3. Stephen Schifrin and Irina Carpov served as key members of the team for Terrapin 3. David McMillan was an advisor to Aldabra 2 in the Boise transaction, has maintained a long relationship with our team, and has an extensive track record advising special purpose acquisition companies like Terrapin in the process of closing their business combinations. We believe private equity firms and venture capital funds will view the consummation of the Aldabra 1, Aldabra 2 and Terrapin 3 mergers as positive factors in considering whether to sell a portfolio company to us. Minimum Funding Available as a Result of the $50 Million Forward Purchase Agreement and the Up to $450 Million Forward Financing. Nomura has entered into a forward purchase agreement with us which provides for the purchase by Nomura of an aggregate of 5,065,494 shares of our Class A common stock for an aggregate purchase price of $50,000,000 in a private placement to occur concurrently with the closing of our initial business combination. The forward purchase shares are identical to the shares of Class A common stock included in the units being sold in this offering, except that the forward purchase shares are subject to transfer restrictions and certain registration rights, as described herein. The forward purchase agreement allows Nomura to approach other institutional and accredited investors and, with our consent, which will not be unreasonably withheld, delayed or conditioned, enter into agreements with any such investor to assume Nomura s purchase obligation under the forward purchase agreement. The forward purchase agreement also allows Nomura to be excused from its purchase obligation in connection with a specific business combination if, within five business days following written notice delivered by us of our intention to enter into such business combination, Nomura notifies us that it has decided not to proceed with the purchase for any reason, including, without limitation, if it has determined that such purchase would constitute a conflict of interest. In the event Nomura is unable to identify an investor to assume Nomura s purchase obligation under the forward purchase agreement and Nomura instead exercises its right of excusal, Nomura has agreed to waive its right to receive the placement fee earned from the sale of the forward purchase shares and the underwriters will waive their right to receive a portion of the deferred underwriting discount. The funds from the forward purchase agreement will be used as part of the consideration to the sellers in the initial business combination; any excess funds from this private placement may be used for working capital in the post-transaction company. The obligations under the forward purchase agreement are not affected by any redemptions by our public stockholders of shares of our Class A common stock and provide us with a minimum funding level for the initial business combination, subject to the satisfaction of the conditions to funding. Prior to the consummation of this offering our sponsor sold 2,110,346 of its founder shares to Nomura. Prior to the consummation of this offering, Nomura will forfeit 606,416 founder shares. Of the 1,503,930 founder shares held by Nomura, up to 303,930 are subject to forfeiture depending on the extent to which the forward purchase shares are purchased. Of the 1,503,930 founder shares held by Nomura, 220,000 were sold to Nomura in connection with the underwriting of this transaction. Nomura has also agreed, if so requested by us, to underwrite, arrange and/or syndicate up to $450,000,000 of additional financing for us in the form of equity or debt (or a combination thereof) in connection with our initial business combination. We will not be obligated to engage Nomura in connection with any such forward financing. The terms of any such forward financing will be based upon then-current general economic and market conditions and subject to terms and conditions satisfactory in all respects to Nomura in its sole judgement and determination if Nomura is so engaged. Any such forward financing will be without regard to any redemptions that may be tendered to us. Nomura has agreed to allow the Company to disclose the terms, conditions and assumptions under which Nomura would be highly confident of executing financing documents of a predetermined size, as part of the financing in the letter of intent delivered to each potential business combination counterparty, subject to certain conditions. Nomura is a wholly owned subsidiary of Nomura Holding America Inc., which, in turn, is a wholly owned subsidiary of Nomura Holdings, Inc., or the Nomura Group (TSE: 8604; NYSE: NMR). The Nomura Group is an Asia-headquartered global investment bank with an integrated network spanning over 30 countries. The Nomura Group services the needs of individuals, institutions, corporates and governments through three business divisions: Retail, Asset Management, and Wholesale (Global Markets and Investment Banking). As of September 30, 2017, the Nomura Group had $391.6 billion in total assets and 28,857 employees globally (2,348 in the Americas, 3,047 in Europe, Middle East, and Africa, 6,756 in Asia excluding-Japan and 16,706 in Japan). The Nomura Group s Wholesale Division comprises Global Markets, which offers research, sales and trading of global securities, and Investment Banking, which offers capital raising and advisory services. The Investment Banking platform provides a variety of advisory and capital-raising solutions to corporations, financial institutions, private equity, governments and public-sector organizations around the world. Collaborating across geographies, industries and products, Nomura provides comprehensive and innovative financing, advisory and risk solutions to clients. Product offerings include: Mergers and Acquisitions: The Nomura Group acts as a financial advisor to identify and facilitate strategic merger and acquisition, sale of business or alliance opportunities for corporate, financial institutions and sponsor clients, with dedicated M&A teams in Asia, EMEA and the Americas work across borders and time zones to deliver holistic support to its clients globally; Capital Raising: In Equity Capital Markets, the Nomura Group originates and executes equity and equity-linked transactions, including IPOs, rights issues, accelerated bookbuilds and convertibles. Debt Capital Markets helps clients execute local and foreign-currency debt transactions with specialized teams servicing financial institutions, corporates, public sector agencies and sovereigns. Acquisition and Leveraged Finance arranges financing for leveraged buyouts and corporate acquisitions along with on-going refinancing needs using a variety of debt products; Solutions: Solutions teams apply a broad range of Fixed Income solutions, Equity related solutions and Insurance solutions to address the various risks faced by clients. The team is also dedicated to understanding the capital and risk management needs of insurance companies and developing cutting-edge Insurance Solutions to help them respond to these challenges. These include securitization products, structured reinsurance and derivative hedging solutions for complex insurance-specific asset and liability risks. The Nomura Group s Investment Banking platform offers services to a variety of industry sectors, including: Business Services; Consumer / Retail; Financial Institutions; Healthcare; Industrials; Natural Resources & Power; Real Estate / Gaming / Lodging / Leisure; and Telecom / Media / Technology. We believe private equity firms, venture capital firms and management teams will view the track record of our team and the Nomura Group s financial commitments, deal sourcing, and execution capabilities as positive attributes contributing to our ability to identify attractive acquisition opportunities, and structure and complete a successful business combination. With respect to the above transactions, past performance by Mr. Leight, our team and/or Nomura, its affiliates and employees, is not a guarantee either of success with respect to any business combination we may consummate or that we will be able to locate a suitable candidate for our initial business combination. Initial Business Combination NASDAQ rules require that our initial business combination be with one or more target businesses that together have a fair market value equal to at least 80% of the balance in the trust account (less any deferred underwriting commissions and taxes payable on interest earned) at the time of our signing a definitive agreement in connection with our initial business combination. If our board is not able to independently determine the fair market value of the target business or businesses, we will obtain an opinion from an independent accounting firm or an independent investment banking firm that is a member of the Financial Industry Regulatory Authority, or FINRA, with respect to the satisfaction of such criteria. We anticipate structuring our initial business combination so that the post-transaction company in which our public stockholders own shares will own or acquire 100% of the equity interests or assets of the target business or businesses. We may structure our initial business combination such that the post-transaction company owns or acquires less than 100% of such interests or assets of the target business in order to meet certain objectives of the target management team or shareholders or for other reasons, but we will only complete such business combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act of 1940, as amended, or the Investment Company Act. Even if the post-transaction company owns or acquires 50% or more of the voting securities of the target, our stockholders prior to the business combination may collectively own a minority interest in the post-transaction company, depending on valuations ascribed to the target and us in the business combination transaction. For example, we could pursue a transaction in which we issue a substantial number of new shares in exchange for all of the outstanding capital stock of a target. In this case, we would acquire a 100% controlling interest in the target. However, as a result of the issuance of a substantial number of new shares, our stockholders immediately prior to our initial business combination could own less than a majority of our outstanding shares subsequent to our initial business combination. If less than 100% of the equity interests or assets of a target business or businesses are owned or acquired by the post-transaction company, the portion of such business or businesses that is owned or acquired is what will be valued for purposes of the 80% of net assets test. If the business combination involves more than one target business, the 80% of net assets test will be based on the aggregate value of all of the target businesses. We do not have any specific business combination under consideration. Our officers and directors have neither individually identified nor considered a target business nor have they had any discussions regarding possible target businesses amongst themselves or with our underwriters or other advisors. Nomura, through its financial advisory business, is continuously made aware of potential business opportunities, one or more of which we may desire to pursue, for a business combination. We will not consider a business combination with any company that has been identified by or to Nomura as an acquisition candidate for our initial business combination prior to the closing of this offering. Additionally, we have not, nor has anyone on our behalf, taken any measure, directly or indirectly, to identify or locate any suitable acquisition candidate, nor have we engaged or retained any agent or other representative to identify or locate any such acquisition. We have identified certain general criteria and guidelines for evaluating prospective target businesses. We will use these criteria and guidelines, but we may decide to enter into our initial business combination with a target business that does not meet some or all of these criteria and guidelines. Fundamentally, we intend to focus on companies with positive operating cash flow, significant assets, and experienced and successful management teams that are also well-positioned to capitalize on one or more of the following investment themes. These criteria are not intended to be exhaustive. Any evaluation relating to the merits of a particular initial business combination may be based on these general guidelines as well as other considerations, factors and criteria that our management may deem relevant. Fundamental Changes in Socio-Economics and Demographics. We may focus on candidates who would benefit from global and regional socio-economic and demographic trends including, but not limited to, growing consumer demand in emerging markets and aging populations in developed markets. While these trends provide opportunities for broad market growth of sales and profits, we believe that certain companies may not have altered their strategy to specifically prepare for such trends. If we acquire such a company, we intend to support strategies aimed at accelerating its ability to benefit from the effect of these types of fundamental economic changes on its business. Under-managed Intellectual Property, Proprietary Business Practices and/or Other Intangible Assets. We intend to focus on companies that have potentially underexploited intellectual property, proprietary business practices or other under-managed assets. If we acquire such a company, we intend to focus on applying new resources, technologies, or business models to leverage or more fully develop its intangible assets, and thereby increase growth and improve profitability. Competitive Advantage. We will seek targets that can take advantage of barriers to entry of competition for its products or services. For example, companies with assets that are difficult to replicate, either due to proprietary technology, location, or simply because their replacement cost exceeds the capacity of competitors to invest, may be able to earn sustainable profits. Fundamental Changes in Competitive Dynamics. We may seek targets in industries in which fundamental changes, regardless of their source, are altering the relative advantages enjoyed by new and old competitors. Certain markets may be undergoing disruptive change or shifts in historic patterns of competition. This may occur in both rapidly growing and mature, stable industries. We believe there are good investments not only in high-growth industries but also in more mature sectors in which significant restructuring drives better asset utilization and improved pricing discipline. Increasingly Networked Economies. We may focus on targets that benefit from increasing connectivity between production and consumption in geographic markets or industrial sectors. We believe that accelerated change in the deployment of telecommunication grids and electronic commerce in both developing and developed economies, and more intensive use of air, rail, road, and maritime transportation to link markets, may create growth opportunities for target companies that may benefit from funding in the public markets available through a business combination with us. Technology Disrupting Markets. We may seek candidates either benefiting from new technology or providing technology products or services that change the competitive environment in their target markets. Continuing and accelerating advances in hardware, software, and materials sciences create opportunities to disrupt traditional industries and also may profoundly influence the development of new types of businesses. In particular, the novel use of technology to innovate the gathering and analysis of large amounts of data may accelerate business growth and shifts in market share. Increasingly Large Private Technology Companies. We may seek targets among the increasingly large number of private technology companies. According to Bloomberg Data, funds raised in 2006 or earlier held more than $210 billion of unrealized assets as of June 2016. As a result, the number of large private companies has increased, particularly in the technology sector. PitchBook Data, Inc. listed 215 privately held U.S. technology companies with valuations in excess of $1.0 billion as of February 9, 2018. We believe investors in these entities will want liquidity at some point and that a business combination with us can provide flexibility not available in traditional IPOs. Sourcing of Potential Business Combination Targets We believe certain non-public companies and their shareholders can benefit from a transaction with us. Acquisition candidates are entities that may need stable, permanent equity financing, but may currently have limited access to the public markets. While targets may be either independent entities or divisions of larger organizations, we believe there is an opportunity for us to provide value to current owners of targets that fall into four general categories. (1)Private Equity Fund Portfolio Companies — Substantial amounts of capital have been invested by private equity and venture capital firms. According to PitchBook Data, Inc., U.S. private equity funds raised approximately $2.3 trillion from 2007 through 2017 in more than 2,120 different funds. Venture capital funds raised approximately $292 billion in the U.S. during the same period. From 2007 through 2016, the median hold time of companies held by private equity funds increased from approximately 3.6 years to more than 5.2 years. Therefore, we believe that there should be a significant number of portfolio companies available for sale from private equity firms in the coming years as they seek liquidity. These funds have an ongoing need for investment realizations, particularly in older vintage portfolios. (2)Entities Struggling with Complex or Failed Transactions — Public market exits are increasingly challenging for many private company shareholders. According to JP Morgan Asset Management, the number of publicly-traded companies declined from more than 8,000 to less than 4,400 between 1996 and 2016. According to Bloomberg Data and SEC filings, the number of IPOs completed annually between the 1996 and 2016 declined at a compound average rate of 10% annually. Companies seeking to access the public market through traditional IPOs or to sell to financial buyers may face obstacles to closing those transactions. Failed auctions and failed IPOs occur for a variety of reasons. Public or strategic investors may have previously judged these transactions to be too complicated to close in a timely manner. Public markets may simply be inaccessible for IPOs due to economic conditions or negative investor sentiment at the time the transaction was prepared to begin. A business combination with us can be a solution for investors in firms that have experienced these types of failed transactions. (3)Entities Held by Non-Traditional Investors — Financial institutions, banks, non-bank lenders, hedge funds, or any other investor who does not typically hold and manage operating assets, may be anxious to divest their holdings. In the event that those types of investors are experiencing liquidation or other pressures in their core businesses, they may need to divest certain holdings in order to maximize the return on their portfolios or from their other assets. (4)Divestiture of Non-Core Assets by Large Conglomerates — Certain multi-unit companies may face the need to rationalize their business by sale or spin-off of operating units due to pressures from lenders, customers, suppliers, or shareholders. We may or may not consummate our business combination with a company that falls into one of the categories above. In evaluating a prospective target business, we expect to conduct a thorough due diligence review which will encompass, among other things, meetings with incumbent management and employees, document reviews, inspection of facilities, as well as a review of financial and other information which will be made available to us. We are not prohibited from pursuing an initial business combination with a company that is affiliated with our sponsor, officers or directors. In the event we seek to complete our initial business combination with a company that is affiliated with our sponsor, officers or directors, we, or a committee of independent directors, will obtain an opinion from an independent accounting firm or an independent investment banking firm which is a member of FINRA that our initial business combination is fair to our company from a financial point of view. Members of our management team may directly or indirectly own common stock and warrants following this offering, and, accordingly, may have a conflict of interest in determining whether a particular target business is an appropriate business with which to effectuate our initial business combination. Further, each of our officers and directors may have a conflict of interest with respect to evaluating a particular business combination if the retention or resignation of any such officers and directors was included by a target business as a condition to any agreement with respect to our initial business combination. Our sponsor was formed in 2017 by some of the members of our management team for the purpose of serving as our sponsor. Mr. Leight, our Chairman and Chief Executive Officer, is the sole managing member and majority owner of our sponsor, and certain other members of our management team have financial interests in our sponsor. Each of our sponsor, officers and directors presently has, and any of them in the future may have, additional fiduciary or contractual obligations to another entity pursuant to which such sponsor, officer or director is required to present a business combination opportunity to such entity. Accordingly, if any of our sponsor, officers or directors becomes aware of a business combination opportunity which is suitable for an entity to which he or she has then current fiduciary or contractual obligations, it, he or she will honor its, his or her fiduciary or contractual obligations to present such business combination opportunity to such entity, and only present it to us if such entity rejects the opportunity. We do not believe, however, that the fiduciary duties or contractual obligations of our executive officers will materially affect our ability to complete our business combination. Our sponsor and our executive officers, directors and director nominees have agreed, pursuant to a written letter agreement, not to participate in the formation of, or become an officer or director of, another blank check company that is seeking an initial business combination requiring total consideration to the seller of less than $1.25 billion until we have entered into a definitive agreement regarding our initial business combination or we have failed to complete our initial business combination within the time frame set forth in this prospectus. Prior to the date of this prospectus, we will file a Registration Statement on Form 8-A with the SEC to voluntarily register our securities under Section 12 of the Securities Exchange Act of 1934, as amended, or the Exchange Act. As a result, we will be subject to the rules and regulations promulgated under the Exchange Act. We have no current intention of filing a Form 15 to suspend our reporting or other obligations under the Exchange Act prior or subsequent to the consummation of our business combination. We are an "emerging growth company," as defined in Section 2(a) of the Securities Act of 1933, as amended, or the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. As such, we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not "emerging growth companies," including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. If some investors find our securities less attractive as a result, there may be a less active trading market for our securities and the prices of our securities may be more volatile. In addition, Section 107 of the JOBS Act also provides that an "emerging growth company" can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an "emerging growth company" can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We intend to take advantage of the benefits of this extended transition period. We will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of this offering, (b) in which we have total annual gross revenue of at least $1.07 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our common stock that is held by non-affiliates exceeds $700 million as of the prior June 30th, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period. References herein to "emerging growth company" shall have the meaning associated with it in the JOBS Act. Our executive offices are located at 2655 South Le Jeune Road, Suite 550, Coral Gables, Florida 33134 and our telephone number is (212) 710-4100. The Offering In making your decision whether to invest in our securities, you should take into account not only the backgrounds of the members of our management team, but also the special risks we face as a blank check company and the fact that this offering is not being conducted in compliance with Rule 419 promulgated under the Securities Act. You will not be entitled to protections normally afforded to investors in Rule 419 blank check offerings. You should carefully consider these and the other risks set forth in the section below entitled "Risk Factors" beginning on page 24 of this prospectus. Securities offered 20,000,000 units, at $10.00 per unit, each unit consisting of: one share of Class A common stock; and one warrant. Each warrant entitles its holder to purchase one share of Class A common stock. NASDAQ symbols Units: "TRTLU" Class A common stock: "TRTL" Warrants: "TRTLW" Trading commencement and separation of common stock and warrants The units will begin trading on or promptly after the date of this prospectus. The Class A common stock and warrants comprising the units will begin separate trading on the 52nd day following the date of this prospectus unless Nomura, as the representative of the underwriters, informs us of its decision to allow earlier separate trading, subject to our having filed the Current Report on Form 8-K described below and having issued a press release announcing when such separate trading will begin. Once the shares of Class A common stock and warrants commence separate trading, holders will have the option to continue to hold units or separate their units into the component securities. Holders will need to have their brokers contact our transfer agent in order to separate the units into shares of Class A common stock and warrants. Separate trading of the Class A common stock and warrants is prohibited until we have filed a Current Report on Form 8-K In no event will the Class A common stock and warrants be traded separately until we have filed a Current Report on Form 8-K with the SEC containing an audited balance sheet reflecting our receipt of the gross proceeds at the closing of this offering. We will file the Current Report on Form 8-K promptly after the closing of this offering, which is anticipated to take place two business days from the first trading of the units on NASDAQ. If the underwriters over-allotment option is exercised following the initial filing of such Current Report on Form 8-K, a second or amended Current Report on Form 8-K will be filed to provide updated financial information to reflect the exercise of the underwriters over-allotment option. Units: Number outstanding before this offering 0 Number outstanding after this offering 20,000,000(1) Common stock: Number outstanding before this offering 7,016,373(2) (4) Number outstanding after this offering 26,266,373 (1)(3) (4) Warrants: Number outstanding before this offering 0 Number of private placement warrants to be sold in a private placement simultaneously with this offering 3,500,000 Number of warrants to be outstanding after this offering and the private placement 23,500,000(1) Exercisability Each warrant offered in this offering is exercisable to purchase one share of our Class A common stock, subject to adjustment as provided herein. (1) Assumes no exercise of the underwriters over-allotment option. (2) Includes up to 750,000 founder shares subject to forfeiture depending on the extent to which the underwriters over-allotment option is exercised such that the founder shares will represent 20% of the shares of our common stock issued and outstanding upon the consummation of this offering, calculated on a pro forma basis assuming the issuance of all of the forward purchase shares. Up to 1,266,373 founder shares are subject to forfeiture following the consummation of this offering depending on the extent to which the forward purchase shares are purchased, such that the founder shares will represent 20% of the shares of our common stock issued and outstanding upon the consummation of this offering if none of the forward purchase shares are ultimately purchased. (3) Includes 20,000,000 public shares and 6,266,373 founder shares, of which up to 1,266,373 founder shares are subject to forfeiture depending on the extent to which the forward purchase shares are purchased, such that the founder shares will represent 20% of the shares of our common stock issued and outstanding upon the consummation of this offering if none of the forward purchase shares are ultimately purchased. (4) Founder shares are classified as shares of Class F common stock, which shares, at the time of this offering, are convertible into Class A common stock on a one-for-one basis, subject to adjustment as described below adjacent to the caption "Founder share anti-dilution." Exercise price $11.50 per whole share, subject to adjustments as described herein. Exercise period The warrants will become exercisable on the later of: 30 days after the completion of our initial business combination, and 12 months from the closing of this offering; provided in each case that we have an effective registration statement under the Securities Act covering the shares of common stock issuable upon exercise of the warrants and a current prospectus relating to them is available (or we permit holders to exercise their warrants on a cashless basis under the circumstances specified in the warrant agreement). We are not registering the shares of Class A common stock issuable upon exercise of the warrants at this time. However, we have agreed that as soon as practicable, but in no event later than fifteen (15) business days after the closing of our initial business combination, we will use our best efforts to file with the SEC and have an effective registration statement covering the shares of Class A common stock issuable upon exercise of the warrants, to maintain a current prospectus relating to those shares of Class A common stock until the warrants expire or are redeemed; provided, that if our Class A common stock is at the time of any exercise of a warrant not listed on a national securities exchange such that it satisfies the definition of a "covered security" under Section 18(b)(1) of the Securities Act, we may, at our option, require holders of public warrants who exercise their warrants to do so on a "cashless basis" in accordance with Section 3(a)(9) of the Securities Act and, in the event we so elect, we will not be required to file or maintain in effect a registration statement. The warrants will expire at 5:00 p.m., New York City time, five years after the completion of our initial business combination or earlier upon redemption or liquidation. On the exercise of any warrant, the warrant exercise price will be paid directly to us and not placed in the trust account. Redemption of warrants Once the warrants become exercisable, we may call the warrants for redemption (except as described therein with respect to the private placement warrants): in whole and not in part; at a price of $0.01 per warrant; upon not less than 30 days prior written notice of redemption to each warrant holder; and if, and only if, the reported last sale price of the Class A common stock equals or exceeds $18.00 per share for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date we send to the notice of redemption to the warrant holders. We will not redeem the warrants unless an effective registration statement under the Securities Act covering the shares of Class A common stock issuable upon exercise of the warrants is effective and a current prospectus relating to those shares of common stock is available throughout the 30-day redemption period, except if the warrants may be exercised on a cashless basis and such cashless exercise is exempt from registration under the Securities Act. If and when the warrants become redeemable by us, we may exercise our redemption right even if we are unable to register or qualify the underlying securities for sale under all applicable state securities laws. If we call the warrants for redemption as described above, our management will have the option to require any holder that wishes to exercise his, her or its warrant to do so on a "cashless basis." In determining whether to require all holders to exercise their warrants on a "cashless basis," our management will consider, among other factors, our cash position, the number of warrants that are outstanding and the dilutive effect on our stockholders of issuing the maximum number of shares of Class A common stock issuable upon the exercise of our warrants. If our management takes advantage of this option, all holders of warrants would pay the exercise price by surrendering their warrants for that number of shares of Class A common stock equal to the quotient obtained by dividing (x) the product of the number of shares of Class A common stock underlying the warrants, multiplied by the difference between the exercise price of the warrants and the "fair market value" (defined below) by (y) the fair market value. The "fair market value" shall mean the average reported last sale price of the Class A common stock for the 10 trading days ending on the third trading day prior to the date on which the notice of redemption is sent to the holders of warrants. Please see the section entitled "Description of Securities — Warrants — Public Stockholders Warrants" for additional information. None of the private placement warrants will be redeemable by us so long as they are held by our sponsor of the private placement warrants or its permitted transferees. Forward Purchase Agreement Nomura has entered into a forward purchase agreement with us which provides for the purchase by Nomura of an aggregate of 5,065,494 shares of our Class A common stock for an aggregate purchase price of $50,000,000 in a private placement to occur concurrently with the closing of our initial business combination. The forward purchase shares are identical to the shares of Class A common stock included in the units being sold in this offering, except that the forward purchase shares are subject to transfer restrictions and certain registration rights, as described herein. The forward purchase agreement allows Nomura to approach other institutional and accredited investors and, with our consent, which will not be unreasonably withheld, delayed or conditioned, enter into agreements with any such investor to assume Nomura s purchase obligation under the forward purchase agreement. The forward purchase agreement also allows Nomura to be excused from its purchase obligation in connection with a specific business combination if, within five business days following written notice delivered by us of our intention to enter into such business combination, Nomura notifies us that it has decided not to proceed with the purchase for any reason, including, without limitation, if it has determined that such purchase would constitute a conflict of interest. In the event Nomura exercises its right of excusal, Nomura has agreed to waive its right to receive the placement fee earned from the sale of the forward purchase shares and the underwriters will waive their right to receive a portion of the deferred underwriting discount. The forward purchase agreement provides that Nomura (or its assignees) is entitled to registration rights with respect to the forward purchase shares. Prior to the consummation of this offering our sponsor sold 2,110,346 of its founder shares to Nomura. Prior to the consummation of this offering, Nomura will forfeit 606,416 founder shares. Of the 1,503,930 founder shares held by Nomura, up to 303,930 are subject to forfeiture depending on the extent to which the forward purchase shares are purchased. Of the 1,503,930 founder shares held by Nomura, 220,000 were sold to Nomura in connection with the underwriting of this transaction. The funds from the forward purchase agreement will be used as part of the consideration to the sellers in the initial business combination; any excess funds from this private placement may be used for working capital in the post-transaction company. The obligations under the forward purchase agreement are not affected by any redemptions by our public stockholders of shares of our Class A common stock and provide us with a minimum funding level for the initial business combination, subject to the satisfaction of the conditions to funding. Forward Financing Nomura has also agreed, if so requested by us, to underwrite, arrange and/or syndicate up to $450 million of additional financing for us in the form of equity or debt (or a combination thereof) in connection with our initial business combination. We will not be obligated to engage Nomura in connection with any such forward financing. The terms of any such forward financing will be based upon then-current general economic and market conditions and subject to terms and conditions satisfactory in all respects to Nomura in its sole judgement and determination if Nomura is so engaged. Any such forward financing will be without regard to any redemptions that may be tendered to us. Nomura has agreed to allow the Company to disclose the terms, conditions and assumptions under which Nomura would be highly confident of executing financing documents of a predetermined size, as part of the financing in the letter of intent delivered to each potential business combination counterparty, subject to certain conditions. Founder shares In June 2017, our sponsor and an affiliate thereof purchased an aggregate of 11,500,000 founder shares for an aggregate purchase price of $25,000. Prior to the initial investment in the company of $25,000 by our sponsor and its affiliate, the company had no assets, tangible or intangible. The purchase price of the founder shares was determined by dividing the amount of cash contributed to the company by the number of founder shares issued. Prior to the consummation of this offering our sponsor sold 2,110,346 of its founder shares to Nomura for an aggregate purchase price of $4,587.71, or approximately $0.0022 per share. Also prior to the consummation of this offering, our sponsor sold an aggregate of 75,000 founder shares to Messrs. Kagan, Pollack, Rosston and Valner, each an independent director nominee, and Mr. Jeffrey Brown, a director nominee, for a purchase price of approximately $0.0022 per share. Prior to the consummation of this offering, the initial stockholders will forfeit an aggregate of 4,483,627 founder shares, such that at the time of this offering the initial stockholders own an aggregate of 7,016,373 founder shares (up to 750,000 of which are subject to forfeiture depending on the extent to which the underwriters over-allotment option is exercised, and up to 1,266,373 of which are subject to forfeiture depending on the extent to which the forward purchase shares are purchased). Of the 1,503,930 founder shares held by Nomura, up to 303,930 are subject to forfeiture depending on the extent to which the forward purchase shares are purchased. Of the 1,503,930 founder shares held by Nomura, 220,000 were sold to Nomura in connection with the underwriting of this transaction. Immediately after this offering, our initial stockholders will beneficially own 20.0% of the then issued and outstanding shares of our common stock (assuming they do not purchase any units in this offering), calculated on a pro forma basis assuming the issuance of all of the forward purchase shares. If we increase or decrease the size of the offering pursuant to Rule 462(b) under the Securities Act, we will effect a stock dividend or a share contribution back to capital, as applicable, immediately prior to the consummation of the offering in such amount as to maintain the ownership of our stockholders prior to this offering at 20.0% of our issued and outstanding shares of our common stock upon the consummation of this offering, calculated on a pro forma basis assuming the issuance of all of the forward purchase shares (Nomura has agreed to waive its rights to any additional Class A common stock pursuant to the foregoing). Because of this ownership block, our initial stockholders may be able to effectively influence the outcome of all matters requiring approval by our stockholders, including the election of directors, amendments to our amended and restated certificate of incorporation and approval of significant corporate transactions other than approval of our initial business combination. Up to 750,000 founder shares will be subject to forfeiture by certain of our initial stockholders depending on the extent to which the underwriters over-allotment option is exercised, and up to 1,266,373 founder shares are subject to forfeiture by certain of our initial stockholders (or their permitted transferees) depending on the extent to which the forward purchase shares are purchased. The founder shares are identical to shares of Class A common stock included in the units being sold in this offering, except that: the founder shares are subject to certain transfer restrictions, as described in more detail below; our initial stockholders, officers, directors and director nominees have entered into letter agreements with us, pursuant to which they have agreed to waive their redemption rights with respect to their founder shares in connection with the completion of our initial business combination and to waive their rights to liquidating distributions from the trust account with respect to their founder shares if we fail to complete our initial business combination within 24 months from the closing of this offering (although they will be entitled to liquidating distributions from the trust account with respect to any public shares they hold if we fail to complete our business combination within the prescribed time frame). If we submit our initial business combination to our public stockholders for a vote, our initial stockholders have agreed to vote their founder shares and any public shares purchased during or after this offering in favor of our initial business combination; and the founder shares are subject to certain anti-dilution rights, as described in more detail below. Transfer restrictions on founder shares Our initial stockholders have agreed not to transfer, assign or sell any of their founder shares until one year after our initial business combination (except as described herein under "Principal Stockholders — Transfers of Shares and Warrants Held by Our Initial Stockholders"). We refer to such transfer restrictions throughout this prospectus as the lock-up. Notwithstanding the foregoing, if the last sale price of our common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after our initial business combination, or (2) if we consummate a transaction after our initial business combination which results in our stockholders having the right to exchange their shares for cash or property, the founder shares will be released from the lock-up. Founder share anti-dilution The 7,016,373 shares of our Class F common stock, par value $0.0001 per share, that will be issued and outstanding at the time of this offering will be convertible at the time of this offering into shares of Class A common stock at a ratio of one-for-one. In the case that additional shares of Class A common stock, or equity-linked securities, are deemed issued in excess of the amounts offered in this prospectus and related to the closing of the business combination, the ratio at which shares of Class F common stock shall convert into shares of Class A common stock will be adjusted so that the number of shares of Class A common stock issuable upon conversion of all shares of Class F common stock will equal, in the aggregate, on an as-converted basis, 20% of the total number of all shares of Class A common stock sold pursuant to the prospectus, on a pro forma basis assuming the issuance of all of the forward purchase shares, plus all common shares or equity-linked securities deemed to be issued in connection with the business combination, excluding any shares or equity-linked securities issued, or to be issued, to any seller in the business combination or pursuant to warrants issued to our sponsor. Nomura has agreed to waive its rights to any additional Class A common stock pursuant to the foregoing. Private placement warrants Our sponsor has committed to purchase an aggregate of 3,500,000 warrants at a price of $1.00 per warrant, or $3,500,000 in the aggregate, in a private placement that will close simultaneously with the closing of this offering. Each private placement warrant is exercisable to purchase one share of our Class A common stock at a price of $11.50 per share subject to adjustment as provided herein. The purchase price of the private placement warrants will be added to the net proceeds from this offering to be held in the trust account less offering expenses, existing loans from shareholders and $950,000 in working capital to be held outside of the trust. If we do not complete our initial business combination within 24 months from the closing of this offering, the proceeds of the sale of the private placement warrants will be used, in part, to fund the redemption of our public shares (subject to the requirements of applicable law) and the private placement warrants will expire worthless. The private placement warrants will be non-redeemable so long as they are held by our sponsor or its permitted transferees (except as described below under "Principal Stockholders — Transfers of Founder — Shares and Private Placement Warrants"). If the private placement warrants are held by holders other than our sponsor or its permitted transferees, the private placement warrants will be redeemable by us and exercisable by the holders on the same basis as the warrants included in the units being sold in this offering. Our sponsor, or its permitted transferees, has the option to exercise the private placement warrants on a cashless basis. Transfer restrictions on private placement warrants The private placement warrants (including the Class A common stock issuable upon exercise of the private placement warrants) will not be transferable, assignable or salable until 30 days after the completion of our initial business combination. Proceeds to be held in trust account The rules of NASDAQ provide that at least 90% of the gross proceeds from this offering and the private placement be deposited in a trust account. Of the $203,500,000 (or $233,500,000 if the underwriters over-allotment option is exercised in full) in proceeds we will receive from this offering and the sale of the private placement warrants described in this prospectus, $200,000,000 (or $230,000,000 if the underwriters over-allotment option is exercised in full) ($10.00 per unit), will be deposited into a segregated trust account located in the United States and held at JPMorgan Chase Bank, N.A., with Continental Stock Transfer & Trust Company acting as trustee. An estimated $750,000 of the proceeds of this offering will be used to pay expenses in connection with the closing of this offering and an estimated $950,000 of the proceeds from this offering will be used for working capital following this offering. In addition, our sponsor has committed up to $1,000,000 in working capital loans to be provided to us to fund our expenses relating to investigating and selecting a target business and other working capital requirements after this offering and prior to our initial business combination. The proceeds to be placed in the trust account include $8,000,000 (or $9,800,000 if the underwriters over-allotment option is exercised in full) in deferred underwriting commissions. Except for the withdrawal of interest income to pay our taxes and to fund our working capital requirements, none of the funds held in the trust account will be released from the trust account until the earlier of the completion of our initial business combination and the redemption of 100% of our public shares if we are unable to complete our initial business combination within the allotted time period. The proceeds deposited in the trust account could become subject to the claims of our creditors, if any, which could have priority over the claims of our public stockholders. Anticipated expenses and funding sources Unless and until we complete our initial business combination, no proceeds held in the trust account will be available for our use, except for the withdrawal of interest income to pay our taxes and to fund our working capital requirements. Based upon current interest rates, we expect the trust account to generate approximately $2,000,000 of interest income per year. Unless and until we complete our initial business combination, we may pay our expenses only from: the net proceeds of this offering not held in the trust account, which will be approximately $950,000 in working capital after the payment of approximately $750,000 in expenses relating to this offering; any interest income earned from the trust account net of taxes payable and any amounts payable to us to fund working capital requirements; and working capital loans from our sponsor, its affiliates or designees, who have committed up to $1,000,000 to be provided to us in the event funds held outside of the trust are insufficient to fund our expenses relating to investigating and selecting a target business and other working capital requirements after this offering and prior to our initial business combination and may, but are not obligated to, loan us additional funds to fund our expenses relating to investigating and completing our initial business combination. If we complete our initial business combination, we would repay such loaned amounts out of the proceeds of the trust account released to us. Otherwise, such loans would be repaid only out of funds held outside the trust account. In the event that our initial business combination does not close, we may use a portion of the working capital held outside the trust account to repay such loaned amounts but no proceeds from our trust account would be used to repay such loaned amounts. Up to $1,000,000 of any such working capital loans may be convertible into warrants of the post business combination entity at a price of $1.00 per warrant at the option of the lender at the time of the business combination. The warrants would be identical to the private placement warrants issued to the initial stockholders Conditions to completing our initial business combination There is no limitation on our ability to raise funds privately or through loans in connection with our initial business combination. NASDAQ rules require that our initial business combination must be with one or more target businesses that together have a fair market value equal to at least 80% of the balance in the trust account (less any deferred underwriting commissions and taxes payable on interest earned) at the time of our signing a definitive agreement in connection with our initial business combination. If our board is not able to independently determine the fair market value of the target business or businesses, we will obtain an opinion from an independent accounting firm or an independent investment banking firm that is a member of FINRA. We will complete our initial business combination only if the post-transaction company in which our public stockholders own shares will own or acquire 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act. Even if the post-transaction company owns or acquires 50% or more of the voting securities of the target, our stockholders prior to the business combination may collectively own a minority interest in the post-transaction company, depending on the structure of the initial business combination and on valuations ascribed to the target and us in the business combination transaction. If less than 100% of the equity interests or assets of a target business or businesses are owned or acquired by the post-transaction company, the portion of such business or businesses that is owned or acquired is what will be valued for purposes of the 80% of net assets test, provided that in the event that the business combination involves more than one target business, the 80% of net assets test will be based on the aggregate value of all of the target businesses. Permitted purchases of public shares by our affiliates If we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our initial business combination pursuant to the tender offer rules, our initial stockholders, directors, executive officers, advisors or their affiliates may purchase shares in privately negotiated transactions or in the open market either prior to or following the completion of our initial business combination. However, they have no current commitments, plans or intentions to engage in such transactions and have not formulated any terms or conditions for any such transactions. None of the funds in the trust account will be used to purchase shares in such transactions. If they engage in such transactions, they will not make any such purchases when they are in possession of any material nonpublic information not disclosed to the seller or if such purchases are prohibited by Regulation M under the Securities Exchange Act of 1934, as amended, or the Exchange Act. Subsequent to the consummation of this offering, we will adopt an insider trading policy which will require insiders to refrain from purchasing shares during certain blackout periods and when they are in possession of any material nonpublic information and to clear all trades with our legal counsel prior to execution. We cannot currently determine whether our insiders will make such purchases pursuant to a Rule 10b5-1 plan, as such purchases will be dependent upon several factors, including but not limited to, the timing and size of such purchases. Depending on such circumstances, our insiders may either enter make such purchases pursuant to a Rule 10b5-1 plan or determine that such a plan is not necessary. We do not currently anticipate that such purchases, if any, would constitute a tender offer subject to the tender offer rules under the Exchange Act or a going-private transaction subject to the going-private rules under the Exchange Act; however, if the purchasers determine at the time of any such purchases that the purchases are subject to such rules, the purchasers will comply with such rules. Our initial stockholders, directors, executive officers, advisors or their affiliates will not make any purchases if the purchases would violate Section 9(a)(2) or Rule 10b-5 of the Exchange Act. Redemption rights for public stockholders upon completion of our initial business combination We will provide our stockholders with the opportunity to redeem all or a portion of their Class A common stock upon the completion of our initial business combination at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account as of two business days prior to the consummation of our initial business combination, including interest income (net of taxes payable and any amounts released to us to fund working capital requirements), divided by the number of then outstanding Class A common stock issued in this initial public offering, subject to the limitations described herein. The amount in the trust account is initially anticipated to be $10.00 per public share (regardless of whether or not the underwriters exercise any portion of the over-allotment option). The per-share amount we will distribute to investors who properly redeem their shares will not be reduced by the deferred underwriting commissions that we will pay to the underwriters. There will be no redemption rights upon the completion of our initial business combination with respect to our warrants. Our initial stockholders have entered into letter agreements with us, pursuant to which they have agreed to waive their redemption rights with respect to their founder shares in connection with the completion of our business combination. Manner of conducting redemptions We will provide our stockholders with the opportunity to redeem all or a portion of their public shares upon the completion of our initial business combination either in connection with a stockholder meeting called to approve the business combination or by means of a tender offer. The decision as to whether we will seek stockholder approval of a proposed business combination or conduct a tender offer will be made by us, solely in our discretion, and will be based on a variety of factors such as the timing of the transaction and whether the terms of the transaction would require us to seek stockholder approval under the law or stock exchange listing requirement. Asset acquisitions and stock purchases would not typically require stockholder approval while direct mergers with our company where we do not survive and any transactions where we issue more than 20.0% of our outstanding common stock or seek to amend our amended and restated certificate of incorporation would require stockholder approval. We intend to conduct redemptions without a stockholder vote pursuant to the tender offer rules of the SEC unless stockholder approval is required by law or stock exchange listing requirement or we choose to seek stockholder approval for business or other legal reasons. If a stockholder vote is not required and we do not decide to hold a stockholder vote for business or other legal reasons, we will, pursuant to our amended and restated certificate of incorporation: conduct the redemptions pursuant to Rule 13e-4 and Regulation 14E under the Exchange Act, which regulate issuer tender offers, and file tender offer documents with the SEC prior to completing our initial business combination which contain substantially the same financial and other information about the initial business combination and the redemption rights as is required under Regulation 14A of the Exchange Act, which regulates the solicitation of proxies. Upon the public announcement of our business combination, if we elect to conduct redemptions pursuant to the tender offer rules, we or our sponsor will terminate any plan established in accordance with Rule 10b5-1 to purchase shares of our common stock in the open market, in order to comply with Rule 14e-5 under the Exchange Act. In the event we conduct redemptions pursuant to the tender offer rules, our offer to redeem will remain open for at least 20 business days, in accordance with Rule 14e-1(a) under the Exchange Act, and we will not be permitted to complete our initial business combination until the expiration of the tender offer period. In addition, the tender offer will be conditioned on public stockholders not tendering more than a specified number of public shares, which number will be based on the requirement that we may not redeem public shares in an amount that would cause our net tangible assets to be less than $5,000,001 (so that we are not subject to the SEC s "penny stock" rules) or any greater net tangible asset or cash requirement which may be contained in the agreement relating to our initial business combination. If public stockholders tender more shares than we have offered to purchase, we will withdraw the tender offer and not complete the initial business combination. If, however, stockholder approval of the transaction is required by law or stock exchange listing requirement, or we decide to obtain stockholder approval for business or other legal reasons, we will: conduct the redemptions in conjunction with a proxy solicitation pursuant to Regulation 14A of the Exchange Act, which regulates the solicitation of proxies, and not pursuant to the tender offer rules, and file proxy materials with the SEC. If we seek stockholder approval, we will complete our initial business combination only if a majority of the outstanding shares of common stock voted are voted in favor of the business combination. In such case, our initial stockholders have agreed to vote their founder shares and any public shares purchased during or after this offering in favor of our initial business combination. Each public stockholder may elect to redeem their public shares irrespective of whether they vote for or against the proposed transaction. Our amended and restated certificate of incorporation provides that in no event will we redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001 (so that we are not subject to the SEC s "penny stock" rules). Redemptions of our public shares may also be subject to a higher net tangible asset test or cash requirement pursuant to an agreement relating to our initial business combination. For example, the proposed business combination may require: cash consideration to be paid to the target or its owners, cash to be transferred to the target for working capital or other general corporate purposes or the retention of cash to satisfy other conditions in accordance with the terms of the proposed business combination. In the event the aggregate cash consideration we would be required to pay for all shares of common stock that are validly submitted for redemption plus any amount required to satisfy cash conditions pursuant to the terms of the proposed business combination exceed the aggregate amount of cash available to us, we will not complete the business combination or redeem any shares, and all shares of common stock submitted for redemption will be returned to the holders thereof. Limitation on redemption rights of stockholders holding 10% or more of the shares sold in this offering if we hold stockholder vote Notwithstanding the foregoing redemption rights, if we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our business combination pursuant to the tender offer rules, our amended and restated certificate of incorporation provides that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a "group" (as defined under Section 13 of the Exchange Act), will be restricted from redeeming its shares with respect to more than an aggregate of 10% of the shares sold in this offering (unless such restriction is waived by us in our sole discretion). We believe the restriction above will discourage stockholders from accumulating large blocks of shares, and subsequent attempts by such holders to use their ability to redeem their shares as a means to force us or our management to purchase their shares at a significant premium to then-current market price or on other undesirable terms. Absent this provision, a public stockholder holding more than an aggregate of 10% of the shares sold in this offering could threaten to exercise its redemption rights against a business combination if such holder s shares are not purchased by us or our management at a premium to then-current market price or on other undesirable terms. By limiting our stockholders ability to redeem to no more than 10% of the shares sold in this offering, we believe we will limit the ability of a small group of stockholders to unreasonably attempt to block our ability to complete our business combination, particularly in connection with a business combination with a target that requires as a closing condition that we have a minimum net worth or a certain amount of cash. However, we would not be restricting our stockholders ability to vote all of their shares (including all shares held by those stockholders that hold 10% or more of the shares sold in this offering) for or against our business combination. Redemption rights in connection with proposed amendments to our certificate of incorporation Some other blank check companies have a provision in their charter which prohibits the amendment of certain charter provisions. Our amended and restated certificate of incorporation provides that any of its provisions related to pre-business combination activity (including the requirement to deposit proceeds of this offering and the private placement of warrants into the trust account and not release such amounts except in specified circumstances, and to provide redemption rights to public stockholders as described herein) may be amended if approved by holders of 65% of our common stock, and corresponding provisions of the trust agreement governing the release of funds from our trust account may be amended only if approved by holders of 65% of our common stock. In all other instances, our amended and restated certificate of incorporation may be amended by holders of a majority of our common stock, subject to applicable provisions of the Delaware General Corporation Law, or the DGCL, or applicable stock exchange rules. Our initial stockholders, who will collectively beneficially own 20% of our common stock upon the closing of this offering (assuming they do not purchase any units in this offering), will participate in any vote to amend our amended and restated certificate of incorporation and/or trust agreement and will have the discretion to vote in any manner they choose. Our sponsor, executive officers, directors and director nominees have agreed, pursuant to a written agreement with us, that they will not propose any amendment to our amended and restated certificate of incorporation that would affect the substance or timing of our obligation to redeem 100% of our public shares if we do not complete our initial business combination within 24 months from the closing of this offering, unless we provide our public stockholders with the opportunity to redeem their shares of common stock upon approval of any such amendment at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest income (net of taxes payable and any amounts released to us to fund working capital requirements), divided by the number of then outstanding public shares. Our initial stockholders have entered into letter agreements with us, pursuant to which they have agreed to waive their redemption rights with respect to their founder shares in connection with the completion of our initial business combination. Release of funds in trust account on closing of our initial business combination On the completion of our initial business combination, all amounts held in the trust account will be released to us. We will use these funds to pay amounts due to any public stockholders who exercise their redemption rights as described above under "Redemption rights for public stockholders upon completion of our initial business combination," to pay the underwriters their deferred cash underwriting commissions, to pay all or a portion of the consideration payable to the target or owners of the target of our initial business combination and to pay other expenses associated with our initial business combination. If our initial business combination is paid for using stock or debt securities, or not all of the funds released from the trust account are used for payment of the consideration in connection with our initial business combination, we may apply the balance of the cash released to us from the trust account for general corporate purposes, including for maintenance or expansion of operations of post-transaction businesses, the payment of principal or interest due on indebtedness incurred in completing our initial business combination, to fund the purchase of other companies or for working capital. Redemption of public shares and distribution and liquidation if no initial business combination Our sponsor, executive officers, directors and director nominees have agreed that we will have only 24 months from the closing of this offering to complete our initial business combination. If we are unable to complete our initial business combination within such time period, we will: cease all operations except for the purpose of winding up, as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest income (net of taxes payable and any amounts released to us to fund working capital requirements), and less up to $50,000 to pay dissolution expenses, divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders rights as stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject in each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. There will be no redemption rights or liquidating distributions with respect to our warrants, which will expire worthless if we fail to complete our business combination within the allotted time period. Our initial stockholders have entered into letter agreements with us, pursuant to which they have waived their rights to liquidating distributions from the trust account with respect to their founder shares if we fail to complete our initial business combination within 24 months from the closing of this offering. However, if our initial stockholders acquire public shares in or after this offering, they will be entitled to liquidating distributions from the trust account with respect to such public shares if we fail to complete our initial business combination within the allotted time frame. The underwriters have agreed to waive their rights to their deferred underwriting commission held in the trust account in the event we do not complete our initial business combination within the allotted time frame and, in such event, such amounts will be included with the funds held in the trust account that will be available to fund the redemption of our public shares. Our sponsor, executive officers, directors and director nominees have agreed, pursuant to a written agreement with us, that they will not propose any amendment to our amended and restated certificate of incorporation that would affect the substance or timing of our obligation to redeem 100% of our public shares if we do not complete our initial business combination within 24 months from the closing of this offering, unless we provide our public stockholders with the opportunity to redeem their shares of common stock upon approval of any such amendment at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest income (net of taxes payable and any amounts released to us to fund working capital requirements), divided by the number of then outstanding public shares. However, we may not redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001 (so that we are not subject to the SEC s "penny stock" rules). Limited payments to insiders There will be no finder s fees, reimbursements or cash payments made to our sponsor, officers or directors, or our or their affiliates, for services rendered to us prior to or in connection with the completion of our initial business combination, other than the following payments, none of which will be made from the proceeds of this offering held in the trust account prior to the completion of our initial business combination: Repayment of up to $140,000 in loans and advances made to us by an affiliate of our sponsor, which it has committed to cover offering-related and organizational expenses; Repayment of any working capital loans our sponsor, its affiliates or designees have committed to make to us to cover working capital costs and to finance transaction costs in connection with an intended initial business combination following this offering; Payment to an affiliate of our sponsor of a total of $16,875 per month for office space, utilities and secretarial support; Reimbursement for any out-of-pocket expenses related to identifying, investigating and completing an initial business combination; Repayment of loans (other than the $1,000,000 in loans which it has committed to make) which may be made by our sponsor or an affiliate of our sponsor or certain of our officers and directors to finance transaction costs in connection with an intended initial business combination, the terms of which have not been determined nor have any written agreements been executed with respect thereto; and underwriting discounts, commissions and other fees and expenses payable to the underwriters. There is no cap or ceiling on the reimbursement of out-of-pocket expenses incurred in connection with activities on our behalf. Nomura will be paid a market-based placement fee on the gross proceeds from the sale of the forward purchase shares upon the consummation of an initial business combination. In addition, the forward purchase agreement provides that Nomura (or its assignees) is entitled to registration rights with respect to the forward purchase shares. Our audit committee will review on a quarterly basis all payments that were made to our sponsor, officers or directors, or our or their affiliates. Audit Committee We have established and will maintain an audit committee, which will be composed entirely of independent directors to, among other things, monitor compliance with the terms described above and the other terms relating to this offering. If any noncompliance is identified, then the audit committee will be charged with the responsibility to immediately take all action necessary to rectify such noncompliance or otherwise to cause compliance with the terms of this offering. For more information, see the section entitled "Management — Committees of the Board of Directors — Audit Committee." Conflicts of Interest Because Nomura will own 21.4% of our outstanding shares, prior to the consummation of this offering, consisting of 1,503,930 founder shares that our sponsor sold to Nomura, Nomura is deemed to have a "conflict of interest" under FINRA Rule 5121. Accordingly, this offering is being made in compliance with the applicable provisions of FINRA Rule 5121. FINRA Rule 5121 prohibits Nomura from making sales to discretionary accounts without the prior written approval of the account holder and requires that a "qualified independent underwriter," as defined in FINRA Rule 5121, participate in the preparation of the registration statement and exercise its usual standards of due diligence with respect thereto. SunTrust Robinson Humphrey, Inc. is assuming the responsibilities of acting as the qualified independent underwriter in this offering and is undertaking the legal responsibilities and liabilities of an underwriter under the Securities Act, which specifically include those inherent in Section 11 thereunder. SunTrust Robinson Humphrey, Inc. will not receive any additional fees for serving as qualified independent underwriter in connection with this offering. Risks We are a newly formed company that has conducted no operations and has generated no revenues. Until we complete our initial business combination, we will have no operations and will generate no operating revenues. In making your decision whether to invest in our securities, you should take into account not only the background of our management team, but also the special risks we face as a blank check company. This offering is not being conducted in compliance with Rule 419 promulgated under the Securities Act. Accordingly, you will not be entitled to protections normally afforded to investors in Rule 419 blank check offerings. For additional information concerning how Rule 419 blank check offerings differ from this offering, please see "Proposed Business — Comparison of This Offering to Those of Blank Check Companies Subject to Rule 419." You should carefully consider these and the other risks set forth in the section entitled "Risk Factors" beginning on page 24 of this prospectus. SUMMARY FINANCIAL DATA The following table summarizes the relevant financial data for our business and should be read with our financial statements, which are included in this prospectus. We have not had any significant operations to date, so only balance sheet data is presented. December 31, 2017 Actual As Adjusted Balance Sheet Data: Working capital (deficiency) (1) $ (146,563 ) $ 192,971,221 Total assets (2) $ 192,804 $ 200,971,221 Total liabilities (3) $ 171,583 $ 8,000,000 Value of Class A common stock that may be redeemed in connection with our initial business combination ($10.00 per share) (4) $ — $ 187,971,220 Stockholders equity (5) $ 21,221 $ 5,000,001 (1) The "as adjusted" calculation includes $200,000,000 cash held in trust from the proceeds of this offering and the sale of the private placement warrants plus $950,000 in cash held outside the trust account, plus $21,221 of actual stockholders equity at December 31, 2017, less $8,000,000 of deferred cash underwriting commissions. The "as adjusted" calculation excludes gross proceeds of $50,000,000 from the sale of the forward purchase shares to occur concurrently with the consummation of our initial business combination. (2) The "as adjusted" calculation equals $200,000,000 cash held in trust from the proceeds of this offering and the sale of the private placement warrants, plus $950,000 in cash held outside the trust account, plus $21,221 of actual stockholders equity at December 31, 2017. (3) The "as adjusted" calculation includes $8,000,000 of deferred cash underwriting commissions. (4) The "as adjusted" calculation equals the "as adjusted" total assets, less the "as adjusted" total liabilities, less the "as adjusted" stockholders equity, which is set to approximate the minimum net tangible assets threshold of at least $5,000,001. (5) Excludes 18,797,122 shares of Class A common stock purchased in the public market which are subject to redemption in connection with our initial business combination. The "as adjusted" calculation equals the "as adjusted" total assets, less the "as adjusted" total liabilities, less the value of common shares that may be redeemed in connection with our initial business combination (approximately $10.00 per share). The "as adjusted" information gives effect to the sale of the units in this offering, the sale of the private placement warrants, repayment of an aggregate of $140,000 in loans and advances made to us by an affiliate of our sponsor, and the payment of the estimated expenses of this offering. The "as adjusted" total assets amount includes the $200,000,000 held in the trust account ($230,000,000 if the underwriters over-allotment option is exercised in full) for the benefit of our public stockholders, which amount, less deferred cash underwriting commissions, will be available to us only upon the completion of our initial business combination within 24 months from the closing of this offering. The "as adjusted" working capital and "as adjusted" total assets include $8,000,000 being held in the trust account (up to $9,800,000 if the underwriters over-allotment option is exercised in full) representing deferred cash underwriting commissions. The underwriters will not be entitled to any interest accrued on the deferred underwriting discounts and commissions. If no business combination is completed within the allotted time frame, the proceeds then on deposit in the trust account, including interest income (net of taxes payable and any amounts released to us to fund working capital requirements, and less up to $50,000 of interest to pay dissolution expenses), will be used to fund the redemption of our public shares. Our initial stockholders have entered into letter agreements with us, pursuant to which they have agreed to waive their rights to liquidating distributions from the trust account with respect to their founder shares if we fail to complete our initial business combination within 24 months from the closing of this offering. RISK FACTORS An investment in our securities involves a high degree of risk. You should consider carefully all of the risks described below, together with the other information contained in this prospectus, before making a decision to invest in our units. If any of the following events occur, our business, financial condition and operating results may be materially adversely affected. In that event, the trading price of our securities could decline, and you could lose all or part of your investment. We are a newly formed company with no operating history and no revenues, and you have no basis on which to evaluate our ability to achieve our business objective. We are a recently formed company with no operating results, and we will not commence operations until obtaining funding through this offering. Because we lack an operating history, you have no basis upon which to evaluate our ability to achieve our business objective of completing our initial business combination with one or more target businesses. We have no plans, arrangements or understandings with any prospective target business concerning a business combination and may be unable to complete our business combination. If we fail to complete our business combination, we will never generate any operating revenues. Our public stockholders may not be afforded an opportunity to vote on our proposed business combination, which means we may complete our initial business combination even though a majority of our public stockholders do not support such a combination. We may not hold a stockholder vote to approve our initial business combination unless the business combination would require stockholder approval under applicable state law or the rules of NASDAQ or if we decide to hold a stockholder vote for business or other reasons. For instance, NASDAQ rules currently allow us to engage in a tender offer in lieu of a stockholder meeting but would still require us to obtain stockholder approval if we were seeking to issue more than 20% of our outstanding shares to a target business as consideration in any business combination. Therefore, if we were structuring a business combination that required us to issue more than 20% of our outstanding shares, we would seek stockholder approval of such business combination. However, except for as required by law, the decision as to whether we will seek stockholder approval of a proposed business combination or will allow stockholders to sell their shares to us in a tender offer will be made by us, solely in our discretion, and will be based on a variety of factors, such as the timing of the transaction and whether the terms of the transaction would otherwise require us to seek stockholder approval. Accordingly, we may consummate our initial business combination even if holders of a majority of the outstanding shares of our common stock do not approve of the business combination we consummate. Please see the section entitled "Proposed Business — Stockholders May Not Have the Ability to Approve Our Initial Business Combination" for additional information. If we seek stockholder approval of our initial business combination, our initial stockholders have agreed to vote in favor of such initial business combination, regardless of how our public stockholders vote. Unlike many other blank check companies in which the initial stockholders agree to vote their founder shares in accordance with the majority of the votes cast by the public stockholders in connection with an initial business combination, our initial stockholders have agreed to vote their founder shares, as well as any public shares purchased during or after this offering, in favor of our initial business combination. Our initial stockholders will own approximately 23.9% (or 23.4% if the underwriters over-allotment option is exercised in full) of our outstanding shares of common stock immediately following the completion of this offering. Accordingly, if we seek stockholder approval of our initial business combination, it is more likely that the necessary stockholder approval will be received than would be the case in certain other blank check companies if our initial stockholders agreed to vote their founder shares in accordance with the majority of the votes cast by our public stockholders. Your only opportunity to affect the investment decision regarding a potential business combination will be limited to the exercise of your right to redeem your shares from us for cash, unless we seek stockholder approval of the business combination. At the time of your investment in us, you will not be provided with an opportunity to evaluate the specific merits or risks of one or more target businesses. Since our board of directors may complete a business combination without seeking stockholder approval, public stockholders may not have the right or opportunity to vote on the business combination, unless we seek such stockholder vote. Accordingly, your only opportunity to affect the investment decision regarding a potential business combination may be limited to exercising your redemption rights within the period of time (which will be at least 20 business days) set forth in our tender offer documents delivered to our public stockholders in which we describe our initial business combination. In evaluating a prospective target business for our initial business combination, our management will rely on the availability of all of the funds from the sale of the forward purchase shares to be used as part of the consideration to the sellers in the initial business combination. If the sale of some or all of the forward purchase shares fails to close, we may lack sufficient funds to consummate our initial business combination. We have entered into the forward purchase agreement pursuant to which Nomura has agreed to purchase an aggregate of 5,065,494 forward purchase shares for an aggregate purchase price of $50,000,000 in a private placement to occur concurrently with our initial business combination. The forward purchase agreement allows Nomura to approach other institutional and accredited investors and, with our consent, which will not be unreasonably withheld, delayed or conditioned, enter into agreements with any such investor to assume Nomura s purchase obligation under the forward purchase agreement. The forward purchase agreement also allows Nomura to be excused from its purchase obligation in connection with a specific business combination if, within five business days following written notice delivered by us of our intention to enter into such business combination, Nomura notifies us that it has decided not to proceed with the purchase for any reason, including, without limitation, if it has determined that such purchase would constitute a conflict of interest. In the event Nomura exercises its right of excusal, Nomura has agreed to waive its right to receive the placement fee earned from the sale of the forward purchase shares and the underwriters will waive their right to receive a portion of the deferred underwriting discount. The funds from the sale of forward purchase shares may be used as part of the consideration to the sellers in our initial business combination, expenses in connection with our initial business combination or for working capital in the post-transaction company. The obligations under the forward purchase agreement are not affected by any redemptions by our public stockholders of shares of our Class A common stock and provide us with a minimum funding level for the initial business combination. However, if the sale of the forward purchase shares does not close by reason of the failure by Nomura and/or one or more of its assignees to fund the purchase price for their forward purchase shares, for example, we may lack sufficient funds to consummate our initial business combination. In addition to Nomura s excusal right, each purchaser s obligation to purchase the forward purchase shares is subject to termination prior to the closing of the sale of the forward purchase shares by mutual written consent of the company and such investor, or, automatically: (i) if this offering is not consummated on or prior to June 30, 2018; (ii) if the gross proceeds from this offering do not equal or exceed $150 million; (iii) if our initial business combination is not consummated within 24 months from the closing of this offering (unless extended in accordance with our amended and restated certificate of incorporation); (iv) if we or our sponsor becomes bankrupt or insolvent; or (v) if Nathan Leight is convicted in a criminal proceeding for a crime involving fraud or dishonesty. In the event of any such failure to fund by an investor or any obligation is so terminated, we may not be able to obtain additional funds to account for such shortfall on terms favorable to us or at all. Any such shortfall would also reduce the amount of funds that we have available for working capital of the post-business combination company. While Nomura has represented to us that it has sufficient funds to satisfy its obligations under the forward purchase agreement, we have not obligated Nomura to reserve funds for such obligations. Nomura has the ability to excuse itself from its obligation to purchase forward purchase shares for any reason. Pursuant to the forward purchase agreement with Nomura, Nomura has committed to purchase 5,065,494 forward purchase shares (unless one or more other investors assume all or a portion of its purchase obligations). Pursuant to such agreement, if, upon notification of our intention to enter into an initial business combination, Nomura decides not to purchase such forward purchase shares for any reason, including, without limitation, if it has determined that such purchase would constitute a conflict of interest, it will be excused from its obligation to purchase such forward purchase shares. In the event Nomura exercises its right of excusal, Nomura has agreed to waive its right to receive the placement fee earned from the sale of the forward purchase shares and the underwriters will waive their right to receive a portion of the deferred underwriting discount. This excusal right could give Nomura significant influence over our decision of whether or not to proceed with an initial business combination with a particular target business. We may not be able to obtain any or enough additional funds to account for such shortfall, which may impact our ability to consummate an initial business combination. Any such shortfall would also reduce the amount of funds that we have available for working capital of the post-business combination company. If any potential assignees of Nomura s obligation to purchase forward purchase shares purchase large amounts of public shares in the open market, they may attempt to leverage their redemption rights in order to affect the outcome of a potential initial business combination. Any assignees of Nomura s obligation to purchase forward purchase shares will have redemption rights with respect to any public shares they own, subject to the limitation that under the Company s amended and restated certificate of incorporation, that a public shareholder, together with any affiliate of such shareholder or any other person with whom such shareholder is acting in concert or as a "group" (as defined under Section 13 of Exchange Act), is restricted from redeeming its shares with respect to more than an aggregate of 10% or more of the shares of Class A common stock sold in this offering, without the prior consent of the Company. If management proposes an initial business combination that some or all of these investors (if any) are not in favor, such investors may decide to purchase public shares in the open market and seek to leverage their redemption rights to influence whether such business combination is consummated. This could result in our having to negotiate for more favorable terms for these investors, which could jeopardize our ability to successfully consummate an initial business combination. The ability of our public stockholders to redeem their shares for cash may make our financial condition unattractive to potential business combination targets, which may make it difficult for us to enter into a business combination with a target. We may seek to enter into a business combination transaction agreement with a prospective target that requires as a closing condition that we have a minimum net worth or a certain amount of cash. While we will have access to the proceeds from the sale of the forward purchase shares, subject to the conditions of the forward purchase agreement, if too many public stockholders exercise their redemption rights, we may not be able to meet such closing condition and, as a result, may not be able to proceed with the business combination. Furthermore, in no event will we redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001 (so that we are not subject to the SEC s "penny stock" rules) or any greater net tangible asset or cash requirement which may be contained in the agreement relating to our initial business combination. Consequently, if accepting all properly submitted redemption requests would cause our net tangible assets to be less than $5,000,001 or such greater amount necessary to satisfy a closing condition as described above, we would not proceed with such redemption and the related business combination and may instead search for an alternate business combination. Prospective targets will be aware of these risks and, thus, may be reluctant to enter into a business combination transaction with us. The ability of our stockholders to exercise redemption rights with respect to a large number of our shares may prevent us from completing a business combination and optimizing our capital structure. At the time we enter into an agreement for our initial business combination, we will not know how many stockholders may exercise their redemption rights, and, therefore, we will need to structure the transaction based on our expectations as to the number of shares that will be submitted for redemption. If our business combination agreement requires us to use a portion of the cash in the trust account to pay the purchase price, or requires us to have a minimum amount of cash at closing, we will need to reserve a portion of the cash in the trust account to meet such requirements, or arrange for third party financing. If a larger number of shares are submitted for redemption than we initially expected, we may need to restructure the transaction to accommodate the resulting reduction in cash available in the trust account. As a result, raising additional third party financing may involve dilutive equity issuances or the incurrence of indebtedness at higher than desirable levels. The above considerations may limit our ability to complete the most desirable business combination available to us or optimize our capital structure. The ability of our stockholders to exercise redemption rights with respect to a large number of our shares could increase the probability that our initial business combination would be unsuccessful and that you would have to wait for liquidation in order to redeem your stock. If our business combination agreement requires us to use a portion of the cash in the trust account to pay the purchase price, or requires us to have a minimum amount of cash at closing, the probability that our initial business combination would be unsuccessful is increased. If our initial business combination is unsuccessful, you would not receive your pro rata portion of the trust account until we liquidate the trust account. If you are in need of immediate liquidity, you could attempt to sell your stock in the open market; however, at such time our stock may trade at a discount to the pro rata amount per share in the trust account. In either situation, you may suffer a material loss on your investment or lose the benefit of funds expected in connection with our redemption until we liquidate or you are able to sell your stock in the open market. The requirement that we complete our initial business combination within the prescribed time frame may give potential target businesses leverage over us in negotiating a business combination and may decrease our ability to conduct due diligence on potential business combination targets as we approach our dissolution deadline, which could undermine our ability to complete our business combination on terms that would produce value for our stockholders. Any potential target business with which we enter into negotiations concerning a business combination will be aware that we must complete our initial business combination within 24 months from the closing of this offering. Consequently, such target business may obtain leverage over us in negotiating a business combination, knowing that if we do not complete our initial business combination with that particular target business, we may be unable to complete our initial business combination with any target business. This risk will increase as we get closer to the end of the allotted time frame. In addition, we may have limited time to conduct due diligence and may enter into our initial business combination on terms that we would have rejected upon a more comprehensive investigation. We may not be able to complete our initial business combination within the prescribed time frame, in which case we would cease all operations except for the purpose of winding up and we would redeem our public shares and liquidate. Our sponsor, executive officers, directors and director nominees have agreed that we must complete our initial business combination within 24 months from the closing of this offering. We may not be able to find a suitable target business and complete our initial business combination within such time period. If we have not completed our initial business combination within such time period, we will: cease all operations except for the purpose of winding up, as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest income (net of taxes payable and any amounts released to us to fund working capital requirements, and less up to $50,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders rights as stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject in each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. If we seek stockholder approval of our initial business combination, our sponsor, directors, executive officers, advisors and their affiliates may elect to purchase shares from public stockholders, which may influence a vote on a proposed business combination and reduce the public "float" of our common stock. If we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our business combination pursuant to the tender offer rules, our sponsor, directors, executive officers, advisors or their affiliates may purchase shares in privately negotiated transactions or in the open market either prior to or following the completion of our initial business combination, although they are under no obligation to do so. Such a purchase may include a contractual acknowledgement that such stockholder, although still the record holder of our shares is no longer the beneficial owner thereof and therefore agrees not to exercise its redemption rights. In the event that our sponsor, directors, executive officers, advisors or their affiliates purchase shares in privately negotiated transactions from public stockholders who have already elected to exercise their redemption rights, such selling stockholders would be required to revoke their prior elections to redeem their shares. The purpose of such purchases could be to vote such shares in favor of the business combination and thereby increase the likelihood of obtaining stockholder approval of the business combination or to satisfy a closing condition in an agreement with a target that requires us to have a minimum net worth or a certain amount of cash at the closing of our business combination, where it appears that such requirement would otherwise not be met. This may result in the completion of our business combination that may not otherwise have been possible. In addition, if such purchases are made, the public "float" of our common stock and the number of beneficial holders of our securities may be reduced, possibly making it difficult to maintain or obtain the quotation, listing or trading of our securities on a national securities exchange. If a stockholder fails to receive notice of our offer to redeem our public shares in connection with our business combination, or fails to comply with the procedures for tendering its shares, such shares may not be redeemed. We will comply with the tender offer rules or proxy rules, as applicable, when conducting redemptions in connection with our business combination. Despite our compliance with these rules, if a stockholder fails to receive our tender offer or proxy materials, as applicable, such stockholder may not become aware of the opportunity to redeem its shares. In addition, the tender offer documents or proxy materials, as applicable, that we will furnish to holders of our public shares in connection with our initial business combination will describe the various procedures that must be complied with in order to validly tender or redeem public shares. In the event that a stockholder fails to comply with these procedures, its shares may not be redeemed. See "Proposed Business — Effecting our Initial Business Combination— Tendering stock certificates in connection with a tender offer or redemption rights." You will not have any rights or interests in funds from the trust account, except under certain limited circumstances. To liquidate your investment, therefore, you may be forced to sell your public shares or warrants, potentially at a loss. Our public stockholders will be entitled to receive funds from the trust account only upon the earlier to occur of: our completion of an initial business combination, and then only in connection with those shares of our Class A common stock that such stockholder properly elected to redeem, subject to the limitations described herein, and the redemption of our public shares if we are unable to complete an initial business combination within 24 months from the closing of this offering, subject to applicable law and as further described herein. In addition, if our plan to redeem our public shares if we are unable to complete an initial business combination within the allotted time period is not completed for any reason, compliance with Delaware law may require that we submit a plan of dissolution to our then-existing stockholders for approval prior to the distribution of the proceeds held in our trust account. In that case, public stockholders may be forced to wait beyond allotted time period before they receive funds from our trust account. In no other circumstances will a public stockholder have any right or interest of any kind in the trust account. Accordingly, to liquidate your investment, you may be forced to sell your public shares or warrants, potentially at a loss. NASDAQ may delist our securities from trading on its exchange, which could limit investors ability to make transactions in our securities and subject us to additional trading restrictions. Our units will be listed on NASDAQ on or promptly after the date of this prospectus and our Class A common stock and warrants will be listed on or promptly after their date of separation. Although after giving effect to this offering we expect to meet, on a pro forma basis, the minimum initial listing standards set forth in the NASDAQ listing standards, we cannot assure you that our securities will be, or will continue to be, listed on NASDAQ in the future or prior to our initial business combination. In order to continue listing our securities on NASDAQ prior to our initial business combination, we must maintain certain financial, distribution and stock price levels. Generally, we must maintain a minimum amount in stockholders equity (generally $2,500,000) and a minimum number of holders of our securities (generally 300 round-lot holders). Additionally, in connection with our initial business combination, we will be required to demonstrate compliance with NASDAQ s initial listing requirements, which are more rigorous than NASDAQ s continued listing requirements, in order to continue to maintain the listing of our securities on NASDAQ. For instance, our stock price would generally be required to be at least $4 per share and our stockholders equity would generally be required to be at least $5 million. We cannot assure you that we will be able to meet those initial listing requirements at that time. If NASDAQ delists our securities from trading on its exchange and we are not able to list our securities on another national securities exchange, we expect our securities could be quoted on an over-the-counter market. If this were to occur, we could face significant material adverse consequences, including: a limited availability of market quotations for our securities; reduced liquidity for our securities; a determination that our Class A common stock is a "penny stock" which will require brokers trading in our Class A common stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our securities; a limited amount of news and analyst coverage; and a decreased ability to issue additional securities or obtain additional financing in the future. The National Securities Markets Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating the sale of certain securities, which are referred to as "covered securities." Because we expect that our units and eventually our Class A common stock and warrants will be listed on NASDAQ, our units, Class A common stock and warrants will be covered securities. Although the states are preempted from regulating the sale of our securities, the federal statute does allow the states to investigate companies if there is a suspicion of fraud, and, if there is a finding of fraudulent activity, then the states can regulate or bar the sale of covered securities in a particular case. While we are not aware of a state having used these powers to prohibit or restrict the sale of securities issued by blank check companies, other than the state of Idaho, certain state securities regulators view blank check companies unfavorably and might use these powers, or threaten to use these powers, to hinder the sale of securities of blank check companies in their states. Further, if we were no longer listed on NASDAQ, our securities would not be covered securities and we would be subject to regulation in each state in which we offer our securities. You will not be entitled to protections normally afforded to investors of many other blank check companies. Since the net proceeds of this offering and the sale of the private placement warrants are intended to be used to complete an initial business combination with a target business that has not been identified, we may be deemed to be a "blank check" company under the United States securities laws. However, because we will have net tangible assets in excess of $5,000,000 upon the successful completion of this offering and the sale of the private placement warrants and will file a Current Report on Form 8-K, including an audited balance sheet demonstrating this fact, we are exempt from rules promulgated by the SEC to protect investors in blank check companies, such as Rule 419. Accordingly, investors will not be afforded the benefits or protections of those rules. Among other things, this means our units will be immediately tradable and we will have a longer period of time to complete our business combination than do companies subject to Rule 419. Moreover, if this offering were subject to Rule 419, that rule would prohibit the release of any interest earned on funds held in the trust account to us unless and until the funds in the trust account were released to us in connection with our completion of an initial business combination. For a more detailed comparison of our offering to offerings that comply with Rule 419, please see "Proposed Business — Comparison of This Offering to Those of Blank Check Companies Subject to Rule 419." If we seek stockholder approval of our initial business combination and we do not conduct redemptions pursuant to the tender offer rules, and if you or a "group" of stockholders are deemed to hold in excess of 10% of our Class A common stock, you will lose the ability to redeem all such shares in excess of 10% of our Class A common stock. If we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our initial business combination pursuant to the tender offer rules, our amended and restated certificate of incorporation provides that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a "group" (as defined under Section 13 of the Exchange Act), will be restricted from seeking redemption rights with respect to more than an aggregate of 10% of the shares sold in this offering, which we refer to as the "Excess Shares." However, we would not be restricting our stockholders ability to vote all of their shares (including Excess Shares) for or against our business combination. Your inability to redeem the Excess Shares will reduce your influence over our ability to complete our business combination and you could suffer a material loss on your investment in us if you sell Excess Shares in open market transactions. Additionally, you will not receive redemption distributions with respect to the Excess Shares if we complete our business combination. And as a result, you will continue to hold that number of shares exceeding 10% and, in order to dispose of such shares, would be required to sell your stock in open market transactions, potentially at a loss. Because of our limited resources and the significant competition for business combination opportunities, it may be more difficult for us to complete our initial business combination. If we are unable to complete our initial business combination, our public stockholders may receive only approximately $10.00 per share (regardless of whether or not the underwriters exercise any portion of their over-allotment option), on our redemption, and our warrants will expire worthless. We expect to encounter intense competition from other entities having a business objective similar to ours, including private investors (which may be individuals or investment partnerships), other blank check companies and other entities, domestic and international, competing for the types of businesses we intend to acquire. Many of these individuals and entities are well-established and have extensive experience in identifying and effecting, directly or indirectly, acquisitions of companies operating in or providing services to various industries. Many of these competitors possess greater technical, human and other resources or more local industry knowledge than we do and our financial resources will be relatively limited when contrasted with those of many of these competitors. While we believe there are numerous target businesses we could potentially acquire with the net proceeds of this offering and the sale of the private placement warrants, our ability to compete with respect to the acquisition of certain target businesses that are sizable will be limited by our available financial resources. This inherent competitive limitation gives others an advantage in pursuing the acquisition of certain target businesses. Furthermore, if we are obligated to pay cash for the shares of Class A common stock redeemed and, in the event we seek stockholder approval of our business combination, we make purchases of our Class A common stock, potentially reducing the resources available to us for our initial business combination. Any of these obligations may place us at a competitive disadvantage in successfully negotiating a business combination. If we are unable to complete our initial business combination, our public stockholders may receive only approximately $10.00 per share (regardless of whether or not the underwriters exercise any portion of their over-allotment option) on the liquidation of our trust account and our warrants will expire worthless. If the net proceeds of this offering not being held in the trust account are insufficient to allow us to operate for at least the next 24 months, we may be unable to complete our initial business combination. The funds available to us outside of the trust account may not be sufficient to allow us to operate for at least the next 24 months, assuming that our initial business combination is not completed during that time. We believe that, upon the closing of this offering, the funds available to us outside of the trust account will be sufficient to allow us to operate for at least the next 24 months; however, we cannot assure you that our estimate is accurate. Of the funds available to us, we could use a portion of the funds available to us to pay fees to consultants to assist us with our search for a target business. We could also use a portion of the funds as a down payment or to fund a "no-shop" provision (a provision in letters of intent designed to keep target businesses from "shopping" around for transactions with other companies on terms more favorable to such target businesses) with respect to a particular proposed business combination, although we do not have any current intention to do so. If we entered into a letter of intent where we paid for the right to receive exclusivity from a target business and were subsequently required to forfeit such funds (whether as a result of our breach or otherwise), we might not have sufficient funds to continue searching for, or to conduct due diligence with respect to, a target business. If we are unable to complete our initial business combination, our public stockholders may receive only approximately $10.00 per share (regardless of whether or not the underwriters exercise any portion of their over-allotment option) on the liquidation of our trust account and our warrants will expire worthless. If the net proceeds of this offering not being held in the trust account are insufficient, it could limit the amount available to fund our search for a target business or businesses and to complete our initial business combination, leading to our dependence on loans from our sponsor or management team to fund our search, to pay our taxes and to complete our business combination. Of the net proceeds of this offering, only approximately $950,000 will be initially available to us outside the trust account to fund our working capital requirements. In the event that our offering expenses exceed our estimate of $750,000, we may fund additional offering expenses with funds not to be held in the trust account or with a portion of the working capital loans committed by our sponsor, its affiliates or designees. In such case, the amount of funds we intend to be held outside the trust account or otherwise available to us would decrease by a corresponding amount. Conversely, in the event that the offering expenses are less than our estimate of $750,000, the amount of funds we intend to be held outside the trust account would increase by a corresponding amount. If we are required to seek additional capital other than the working capital loans, we would need to borrow funds from our sponsor, management team or other third parties to operate or we may be forced to liquidate. Other than the working capital loans of up to $1,000,000 in the aggregate, neither our sponsor, members of our management team nor any of their affiliates is under any obligation to advance funds to us in such circumstances. Any such advances would be repaid only from funds held outside the trust account or from funds released to us upon completion of our initial business combination. If we are unable to complete our initial business combination because we do not have sufficient funds available to us, we will be forced to cease operations and liquidate the trust account. Consequently, our public stockholders may only receive approximately $10.00 per share (regardless of whether or not the underwriters exercise any portion of their over-allotment option) on our redemption of our public shares, and our warrants will expire worthless. Subsequent to our completion of our initial business combination, we may be required to take write-downs or write-offs, restructuring and impairment or other charges that could have a significant negative effect on our financial condition, results of operations and our stock price, which could cause you to lose some or all of your investment. Even if we conduct extensive due diligence on a target business with which we combine, we cannot assure you that this diligence will surface all material issues that may be present inside a particular target business, that it would be possible to uncover all material issues through a customary amount of due diligence, or that factors outside of the target business and outside of our control will not later arise. As a result of these factors, we may be forced to later write-down or write-off assets, restructure our operations, or incur impairment or other charges that could result in our reporting losses. Even if our due diligence successfully identifies certain risks, unexpected risks may arise and previously known risks may materialize in a manner not consistent with our preliminary risk analysis. Even though these charges may be non-cash items and not have an immediate effect on our liquidity, the fact that we report charges of this nature could contribute to negative market perceptions about us or our securities. In addition, charges of this nature may cause us to violate net worth or other covenants to which we may be subject as a result of assuming pre-existing debt held by a target business or by virtue of our obtaining post-combination debt financing. Accordingly, any stockholders who choose to remain stockholders following the business combination could suffer a reduction in the value of their shares. Such stockholders are unlikely to have a remedy for such reduction in value unless they are able to successfully claim that the reduction was due to the breach by our officers or directors of a duty of care or other fiduciary duty owed to them, or if they are able to successfully bring a private claim under securities laws that the tender offer materials or proxy statement relating to the business combination contained an actionable material misstatement or material omission. If third parties bring claims against us, the proceeds held in the trust account could be reduced and the per-share redemption amount received by stockholders may be less than $10.00 per share (regardless of whether or not the underwriters exercise any portion of their over-allotment option). Our placing of funds in the trust account may not protect those funds from third-party claims against us. Although we will seek to have all vendors, service providers (other than our independent registered public accounting firm), prospective target businesses, or other entities with which we do business, execute agreements with us in which they would waive any right, title, interest or claim of any kind in or to any monies held in the trust account for the benefit of our public stockholders, such parties may not execute such agreements, or, even if they execute such agreements, they may not be prevented from bringing claims against the trust account, including, but not limited to, fraudulent inducement, breach of fiduciary responsibility or other similar claims, as well as claims challenging the enforceability of the waiver, in each case in order to gain advantage with respect to a claim against our assets, including the funds held in the trust account. In addition, there is no guarantee that such entities will agree to waive any claims they may have in the future as a result of, or arising out of, any negotiations, contracts or agreements with us and will not seek recourse against the trust account for any reason. If any third party refuses to execute an agreement waiving such claims to the monies held in the trust account, our management will perform an analysis of the alternatives available to it and will only enter into an agreement with a third party that has not executed a waiver if management believes that such third party s engagement would be significantly more beneficial to us than any alternative. Examples of possible instances where we may engage a third party that refuses to execute a waiver include the engagement of a third party consultant whose particular expertise or skills are believed by management to be significantly superior to those of other consultants that would agree to execute a waiver or in cases where management is unable to find a service provider willing to execute a waiver. Upon redemption of our public shares, if we are unable to complete our business combination within the prescribed time frame, or upon the exercise of a redemption right in connection with our business combination, we will be required to provide for payment of claims of creditors that were not waived that may be brought against us within the 10 years following redemption. Accordingly, the per-share redemption amount received by public stockholders could be less than the $10.00 per share (regardless of whether or not the underwriters exercise any portion of their over-allotment option) initially held in the trust account, due to claims of such creditors. Our sponsor has agreed that it will be liable to us if and to the extent any claims by a vendor for services rendered or products sold to us, or a prospective target business with which we have discussed entering into a transaction agreement, reduce the amount of funds in the trust account to below $10.00 per public share (regardless of whether or not the underwriters exercise any portion of their over-allotment option) or such lesser amount per public share held in the trust account as of the date of the liquidation of the trust account due to reductions in the value of the trust assets, in each case net of the interest which may be withdrawn to pay taxes and fund working capital requirements, except as to any claims by a third party who executed a waiver of any and all rights to seek access to the trust account and except as to any claims under our indemnity of the underwriters of this offering against certain liabilities, including liabilities under the Securities Act. Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party, our sponsor will not be responsible to the extent of any liability for such third party claims. We have not independently verified whether our sponsor has sufficient funds to satisfy its indemnity obligations and, therefore, our sponsor may not be able to satisfy those obligations. We have not asked our sponsor to reserve for such eventuality. We believe the likelihood of our sponsor having to indemnify the trust account is limited because we will endeavor to have all vendors and prospective target businesses as well as other entities execute agreements with us waiving any right, title, interest or claim of any kind in or to monies held in the trust account. Our directors may decide not to enforce the indemnification obligations of our sponsor, resulting in a reduction in the amount of funds in the trust account available for distribution to our public stockholders. In the event that the proceeds in the trust account are reduced below the lesser of $10.00 per share (regardless of whether or not the underwriters exercise any portion of their over-allotment option) or such waiver such lesser amount per share held in the trust account as of the date of the liquidation of the trust account due to reductions in the value of the trust assets, in each case net of the interest which may be withdrawn to pay taxes, and our sponsor asserts that it is unable to satisfy its obligations or that it has no indemnification obligations related to a particular claim, our independent directors would determine whether to take legal action against our sponsor to enforce its indemnification obligations. While we currently expect that our independent directors would take legal action on our behalf against our sponsor to enforce its indemnification obligations to us, it is possible that our independent directors in exercising their business judgment may choose not to do so in any particular instance. If our independent directors choose not to enforce these indemnification obligations, the amount of funds in the trust account available for distribution to our public stockholders may be reduced below $10.00 per share (regardless of whether or not the underwriters exercise any portion of their over-allotment option). If, before distributing the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, the claims of creditors in such proceeding may have priority over the claims of our stockholders and the per-share amount that would otherwise be received by our stockholders in connection with our liquidation may be reduced. If, before distributing the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, the proceeds held in the trust account could be subject to applicable bankruptcy law, and may be included in our bankruptcy estate and subject to the claims of third parties with priority over the claims of our stockholders. To the extent any bankruptcy claims deplete the trust account, the per-share amount that would otherwise be received by our stockholders in connection with our liquidation may be reduced. If, after we distribute the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, a bankruptcy court may seek to recover such proceeds, and the members of our board of directors may be viewed as having breached their fiduciary duties to our creditors, thereby exposing the members of our board of directors and us to claims of punitive damages. If, after we distribute the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, any distributions received by stockholders could be viewed under applicable debtor/creditor and/or bankruptcy laws as either a "preferential transfer" or a "fraudulent conveyance." As a result, a bankruptcy court could seek to recover all amounts received by our stockholders. In addition, our board of directors may be viewed as having breached its fiduciary duty to our creditors and/or having acted in bad faith, thereby exposing it and us to claims of punitive damages, by paying public stockholders from the trust account prior to addressing the claims of creditors. If we are deemed to be an investment company under the Investment Company Act, we may be required to institute burdensome compliance requirements and our activities may be restricted, which may make it difficult for us to complete our business combination. If we are deemed to be an investment company under the Investment Company Act, our activities may be restricted, including: restrictions on the nature of our investments, and restrictions on the issuance of securities, each of which may make it difficult for us to complete our business combination. In addition, we may have burdensome requirements imposed upon us, including: registration as an investment company; adoption of a specific form of corporate structure; and reporting, record keeping, voting, proxy and disclosure requirements and other rules and regulations. We do not believe that our anticipated principal activities will subject us to the Investment Company Act. The proceeds held in the trust account may be invested by the trustee only in United States government treasury bills with a maturity of 180 days or less or in money market funds investing solely in United States Treasuries and meeting certain conditions under Rule 2a-7 under the Investment Company Act. Because the investment of the proceeds will be restricted to these instruments, we believe we will meet the requirements for the exemption provided in Rule 3a-1 promulgated under the Investment Company Act. If we were deemed to be subject to the Investment Company Act, compliance with these additional regulatory burdens would require additional expenses for which we have not allotted funds and may hinder our ability to consummate a business combination. If we were deemed to be subject to the Investment Company Act, compliance with these additional regulatory burdens would require additional expenses for which we have not allotted funds and may hinder our ability to complete a business combination. If we are unable to complete our initial business combination, our public stockholders may receive only approximately $10.00 per share (regardless of whether or not the underwriters exercise any portion of their over-allotment option) on the liquidation of our trust account and our warrants will expire worthless. Changes in laws or regulations, or a failure to comply with any laws and regulations, may adversely affect our business, investments and results of operations. We are subject to laws and regulations enacted by national, regional and local governments. In particular, we will be required to comply with certain SEC and other legal requirements. Compliance with, and monitoring of, applicable laws and regulations may be difficult, time consuming and costly. Those laws and regulations, and their interpretation and application, may also change from time to time and those changes could have a material adverse effect on our business, investments and results of operations. In addition, a failure to comply with applicable laws or regulations, as interpreted and applied, could have a material adverse effect on our business and results of operations. Our stockholders may be held liable for claims by third parties against us to the extent of distributions received by them upon redemption of their shares. Under the Delaware General Corporation Law, or the DGCL, stockholders may be held liable for claims by third parties against a corporation to the extent of distributions received by them in a dissolution. If we do not complete our initial business combination within the allotted time period, the pro rata distribution of the funds in our trust account to our public stockholders upon the redemption of our public shares may be considered a liquidation distribution under Delaware law. If a corporation complies with certain procedures set forth in Section 280 of the DGCL intended to ensure that it makes reasonable provision for all claims against it (including a 60-day notice period during which any third-party claims can be brought against the corporation, a 90-day period during which the corporation may reject any claims brought, and an additional 150-day waiting period before any liquidating distributions can be made to stockholders), any liability stockholders may have with respect to a liquidating distribution is limited to the lesser of such stockholder s pro rata share of the claim or the amount distributed to the stockholder. Any such liability of the stockholder that may arise would be barred after the third anniversary of the dissolution. However, in the event we do not complete our business combination, it is our intention to redeem our public shares as soon as reasonably possible following the 24th month from the closing of this offering and, therefore, we do not intend to comply with the procedures set forth in Section 280 of the DGCL. Because we will not be complying with Section 280, Section 281(b) of the DGCL requires us to adopt a plan based on facts known to us at the time of the adoption of the plan that will provide for our payment of all existing and pending claims or claims that may be potentially brought against us within the 10 years following our dissolution. However, because we are a blank check company, rather than an operating company, and our operations will be limited to searching for prospective target businesses to acquire, the only likely claims to arise would be from our vendors (such as lawyers, investment bankers, etc.) or prospective target businesses. If our plan of distribution complies with Section 281(b) of the DGCL, any liability of stockholders with respect to a liquidating distribution is limited to the lesser of such stockholder s pro rata share of the claim or the amount distributed to the stockholder. Any liability of the stockholder would likely be barred after the third anniversary of the dissolution. We cannot assure you that we will properly assess all claims that may potentially be brought against us. As such, our stockholders could potentially be liable for any claims to the extent of distributions received by them (but no more) and any liability of our stockholders may extend beyond the third anniversary of such date. It is important to note that, in the event we do not complete our initial business combination within the allotted time period, if the pro rata portion of our trust account distributed to our public stockholders upon the redemption of our public shares is not considered a liquidation distribution under Delaware law and such redemption distribution is deemed to be unlawful, then pursuant to Section 174 of the DGCL, the statute of limitations for claims of creditors could then be six years after the unlawful redemption distribution, instead of the three years that would apply in the case of a liquidation distribution. We do not currently intend to hold an annual meeting of stockholders until after our consummation of a business combination and you will not be entitled to any of the corporate protections provided by such a meeting. We do not currently intend to hold an annual meeting of stockholders until after we consummate a business combination (unless required by NASDAQ), and thus may not be in compliance with Section 211(b) of the DGCL, which requires an annual meeting of stockholders be held for the purposes of electing directors in accordance with a company s bylaws unless such election is made by written consent in lieu of such a meeting. Therefore, if our stockholders want us to hold an annual meeting prior to our consummation of a business combination, they may attempt to force us to hold one by submitting an application to the Delaware Court of Chancery in accordance with Section 211(c) of the DGCL. We are not registering the shares of Class A common stock issuable upon exercise of the warrants under the Securities Act or any state securities laws at this time, and such registration may not be in place when an investor desires to exercise warrants, thus precluding such investor from being able to exercise its warrants and causing such warrants to expire worthless. We are not registering the shares of Class A common stock issuable upon exercise of the warrants under the Securities Act or any state securities laws at this time. However, under the terms of the warrant agreement, we have agreed, as soon as practicable, but in no event later than 15 business days after the closing of our initial business combination, to use our best efforts to file a registration statement under the Securities Act covering such shares and maintain a current prospectus relating to the Class A common stock issuable upon exercise of the warrants, until the expiration of the warrants in accordance with the provisions of the warrant agreement. We cannot assure you that we will be able to do so, for example, if any facts or events arise which represent a fundamental change in the information set forth in the registration statement or prospectus, the financial statements contained or incorporated by reference therein are not current or correct, or if the SEC issues a stop order. If the shares issuable upon exercise of the warrants are not registered under the Securities Act, we will be required to permit holders to exercise their warrants on a cashless basis. However, no warrant will be exercisable for cash or on a cashless basis, and we will not be obligated to issue any shares to holders seeking to exercise their warrants, unless the issuance of the shares upon such exercise is registered or qualified under the securities laws of the state of the exercising holder, unless an exemption is available. Notwithstanding the above, if our Class A common stock is, at the time of any exercise of a warrant, not listed on a national securities exchange such that it satisfies the definition of a "covered security" under Section 18(b)(1) of the Securities Act, we may, at our option, require holders of public warrants who exercise their warrants to do so on a "cashless basis" in accordance with Section 3(a)(9) of the Securities Act and, in the event we so elect, we will not be required to file or maintain in effect a registration statement or register or qualify the shares under blue sky laws. In no event will we be required to net cash settle any warrant, or issue securities or other compensation in exchange for the warrants in the event that we are unable to register or qualify the shares underlying the warrants under the Securities Act or applicable state securities laws. If the issuance of the shares upon exercise of the warrants is not so registered or qualified or exempt from registration or qualification, the holder of such warrant shall not be entitled to exercise such warrant and such warrant may have no value and expire worthless. In such event, holders who acquired their warrants as part of a purchase of units will have paid the full unit purchase price solely for the shares of Class A common stock included in the units. If and when the warrants become redeemable by us, we may exercise our redemption right even if we are unable to register or qualify the underlying shares of Class A common stock for sale under all applicable state securities laws. The grant of registration rights to our initial stockholders and holders of our private placement warrants and private placement units may make it more difficult to complete our initial business combination, and the future exercise of such rights may adversely affect the market price of our Class A common stock. Pursuant to an agreement to be entered into concurrently with the issuance and sale of the securities in this offering, our initial stockholders and their permitted transferees can demand that we register their 7,016,373 founder shares after they convert those shares to Class A shares. In addition, holders of our private placement warrants and their permitted transferees can demand that we register the 3,500,000 private placement warrants and the 3,500,000 shares of Class A common stock issuable upon exercise of the private placement warrants. Pursuant to the forward purchase agreement, we have agreed that we will use our commercially reasonable efforts (i) to file within 30 days after the closing of the initial business combination a registration statement with the SEC for a secondary offering of the forward purchase shares, (ii) to cause such registration statement to be declared effective promptly thereafter and (iii) to maintain the effectiveness of such registration statement until the earliest of (A) the date on which the initial purchaser ceases to hold the securities covered thereby, (B) the date all of the securities covered thereby can be sold publicly without restriction or limitation under Rule 144 under the Securities Act, and (C) the second anniversary of the date of effectiveness of such registration statement, subject to certain conditions and limitations set forth in the forward purchase agreement. We will bear the cost of registering these securities. The registration and availability of such a significant number of securities for trading in the public market may have an adverse effect on the market price of our Class A common stock. In addition, the existence of the registration rights may make our initial business combination more costly or difficult to conclude. This is because the stockholders of the target business may increase the equity stake they seek in the combined entity or ask for more cash consideration to offset the negative effect on the market price of our Class A common stock that is expected when the securities owned by our initial stockholders, holders of our private placement units or holders of our private placement warrants or their respective permitted transferees are registered. Because we are not limited to a particular industry or any specific target businesses with which to pursue our initial business combination, you will be unable to ascertain the merits or risks of any particular target business s operations. Because we have not yet identified or approached any specific target business with respect to a business combination, there is no basis to evaluate the possible merits or risks of any particular target business s operations, results of operations, cash flows, liquidity, financial condition or prospects. To the extent we complete our business combination, we may be affected by numerous risks inherent in the operations of the business with which we combine. For example, if we combine with a financially unstable business or an entity lacking an established record of sales or earnings, we may be affected by the risks inherent in the business and operations of a financially unstable or a development stage entity. Although our officers and directors will endeavor to evaluate the risks inherent in a particular target business, we cannot assure you that we will properly ascertain or assess all of the significant risk factors or that we will have adequate time to complete due diligence. Furthermore, some of these risks may be outside of our control and leave us with no ability to control or reduce the chances that those risks will adversely affect a target business. We also cannot assure you that an investment in our units will ultimately prove to be more favorable to investors than a direct investment, if such opportunity were available, in a business combination target. Accordingly, any stockholders who choose to remain stockholders following the business combination could suffer a reduction in the value of their shares. Such stockholders are unlikely to have a remedy for such reduction in value unless they are able to successfully claim that the reduction was due to the breach by our officers or directors of a duty of care or other fiduciary duty owed to them, or if they are able to successfully bring a private claim under securities laws that the tender offer materials or proxy statement relating to the business combination contained an actionable material misstatement or material omission. Although we have identified general criteria and guidelines that we believe are important in evaluating prospective target businesses, we may enter into our initial business combination with a target that does not meet such criteria and guidelines, and as a result, the target business with which we enter into our initial business combination may not have attributes entirely consistent with our general criteria and guidelines. Although we have identified general criteria and guidelines for evaluating prospective target businesses, it is possible that a target business with which we enter into our initial business combination will not have all of these attributes. If we complete our initial business combination with a target that does not meet some or all of these guidelines, such combination may not be as successful as a combination with a business that does meet all of our general criteria and guidelines. In addition, if we announce a prospective business combination with a target that does not meet our general criteria and guidelines, a greater number of stockholders may exercise their redemption rights, which may make it difficult for us to meet any closing condition with a target business that requires us to have a minimum net worth or a certain amount of cash. In addition, if stockholder approval of the transaction is required by law, or we decide to obtain stockholder approval for business, legal, or other reasons, it may be more difficult for us to attain stockholder approval of our initial business combination if the target business does not meet our general criteria and guidelines. If we are unable to complete our initial business combination, our public stockholders may receive only approximately $10.00 per share (regardless of whether or not the underwriters exercise any portion of their over-allotment option) on the liquidation of our trust account and our warrants will expire worthless. We may seek investment opportunities with a financially unstable business or an entity lacking an established record of revenue or earnings. To the extent we complete our initial business combination with a financially unstable business or an entity lacking an established record of sales or earnings, we may be affected by numerous risks inherent in the operations of the business with which we combine. These risks include volatile revenues or earnings and difficulties in retaining and obtaining key personnel. Although our officers and directors will endeavor to evaluate the risks inherent in a particular target business, we may not be able to properly ascertain or assess all of the significant risk factors and we may not have adequate time to complete due diligence. Furthermore, some of these risks may be outside of our control and leave us with no ability to control or reduce the chances that those risks will adversely affect a target business. We may not be required to obtain an opinion from an independent accounting firm or an independent investment banking firm, and consequently, you may have no assurance from an independent source that the price we are paying for the business is fair to our company from a financial point of view. Unless we complete our business combination with an affiliated entity, we are not required to obtain an opinion from an independent accounting firm or an independent investment banking firm that is a member of FINRA that the price we are paying is fair to our company from a financial point of view. If no opinion is obtained, our stockholders will be relying on the judgment of our board of directors, who will determine fair market value based on standards generally accepted by the financial community. Such standards used will be disclosed in our tender offer documents or proxy solicitation materials, as applicable, related to our initial business combination. We may issue additional shares of Class A common stock, and may issue shares of preferred stock, to complete our initial business combination. We may also issue additional shares of Class A common stock upon the conversion of the Class F stock, in connection with anti-dilution provisions related to certain financings at the time of our initial business combination, or under an employee incentive plan after completion of our initial business combination, any one of which would dilute the interest of our stockholders and likely present other risks. Our amended and restated certificate of incorporation authorizes the issuance of up to 150,000,000 shares of Class A common stock, par value $0.0001 per share, 50,000,000 shares of Class F common stock, par value $0.0001 per share, and 1,000,000 shares of undesignated preferred stock, par value $0.0001 per share. Immediately after this offering, there will be 130,000,000 and 43,733,627 (assuming in each case that the underwriters have not exercised their over-allotment option) authorized but unissued shares of Class A common stock and Class F common stock, respectively, available for issuance, which amount of shares of Class A common stock does not take into account shares reserved for issuance upon exercise of outstanding warrants, shares issuable upon conversion of the Class F common stock or the forward purchase shares. Shares of Class F common stock are convertible into our Class A common stock, initially at a one-for-one ratio, but subject to adjustment as set forth herein. Immediately after this offering, there will be no shares of preferred stock issued and outstanding. We may issue a substantial number of additional shares of Class A common stock, and may issue shares of preferred stock, in order to complete our initial business combination. We may also issue additional shares of Class A common stock upon conversion of the Class F common stock in connection with anti-dilution provisions related to certain financings at the time of our initial business combination, or under an employee incentive plan after the completion of our initial business combination. Our amended and restated certificate of incorporation provides, among other things, that prior to our initial business combination, we may not issue additional shares of capital stock that would entitle the holders thereof to (a) receive funds from the trust account or (b) vote on any initial business combination. The issuance of additional shares of common or preferred stock: will significantly dilute the equity interest of investors in this offering; may subordinate the rights of holders of common stock if preferred stock is issued with rights senior to those afforded our common stock; could cause a change in control if a substantial number of common stock is issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and could result in the resignation or removal of our present officers and directors; and may adversely affect prevailing market prices for our units, common stock and/or warrants. Resources could be expended in researching acquisitions that are not completed, which could materially adversely affect subsequent attempts to locate and acquire or merge with another business. If we are unable to complete our initial business combination, our public stockholders may receive only approximately $10.00 per share on the liquidation of our trust account and our warrants will expire worthless. We anticipate that the investigation of each specific target business and the negotiation, drafting and execution of relevant agreements, disclosure documents and other instruments will require substantial management time and attention, and substantial costs for accountants, attorneys and others. If we decide not to complete a specific initial business combination, the costs incurred up to that point for the proposed transaction likely would not be recoverable. Furthermore, if we reach an agreement relating to a specific target business, we may fail to complete our initial business combination for any number of reasons including those beyond our control. Any such event will result in a loss to us of the related costs incurred which could materially adversely affect subsequent attempts to locate and acquire or merge with another business. If we are unable to complete our initial business combination, our public stockholders may receive only approximately $10.00 per share (regardless of whether or not the underwriters exercise any portion of their over-allotment option) on the liquidation of our trust account and our warrants will expire worthless. We are dependent upon our executive officers and directors and their departure could adversely affect our ability to operate. Our operations are dependent upon a relatively small group of individuals including, but not limited to, our executive officers and directors. We believe that our success depends on the continued service of our executive officers and directors, at least until we have completed our business combination. In addition, our executive officers and directors are not required to commit any specified amount of time to our affairs and, accordingly, will have conflicts of interest in allocating management time among various business activities, including identifying potential business combinations and monitoring the related due diligence. We do not have an employment agreement with, or key person insurance on the life of, any of our directors or executive officers. The unexpected loss of the services of one or more of our directors or executive officers could have a detrimental effect on us. Our ability to successfully effect our initial business combination and to be successful thereafter will be totally dependent upon the efforts of our key personnel, some of whom may join us following our initial business combination. The loss of key personnel could negatively affect the operations and profitability of our post-combination business. Our ability to successfully effect our business combination is dependent upon the efforts of our key personnel. The role of our key personnel in the target business, however, cannot presently be ascertained. Although some of our key personnel may remain with the target business in senior management or advisory positions following our business combination, it is likely that some or all of the management of the target business will remain in place. While we intend to closely scrutinize any individuals we engage after our business combination, we cannot assure you that our assessment of these individuals will prove to be correct. These individuals may be unfamiliar with the requirements of operating a company regulated by the SEC, which could cause us to have to expend time and resources helping them become familiar with such requirements, with such time potentially interfering with their ability to do their jobs. Our key personnel may attempt to negotiate employment or consulting agreements with a target business in connection with a particular business combination. These agreements may provide for them to receive compensation following our business combination and as a result, may cause them to have conflicts of interest in determining whether a particular business combination is the most advantageous. Our key personnel may be able to remain with the company after the completion of our business combination only if they are able to negotiate employment or consulting agreements in connection with the business combination. Such negotiations would take place simultaneously with the negotiation of the business combination and could provide for such individuals to receive compensation in the form of cash payments and/or our securities for services they would render to us after the completion of the business combination. The personal and financial interests of such individuals may influence their motivation in identifying and selecting a target business. However, we believe the ability of such individuals to remain with us after the completion of our business combination will not be the determining factor in our decision as to whether or not we will proceed with any potential business combination. There is no certainty, however, that any of our key personnel will remain with us after the completion of our business combination. We cannot assure you that any of our key personnel will remain in senior management or advisory positions with us. The determination as to whether any of our key personnel will remain with us will be made at the time of our initial business combination. We may have a limited ability to assess the management of a prospective target business and, as a result, this may affect our initial business combination with a target business whose management may not have the skills, qualifications or abilities to manage a public company. When evaluating the desirability of affecting our initial business combination with a prospective target business, our ability to assess the target business s management may be limited due to a lack of time, resources or information. Our assessment of the capabilities of the target s management, therefore, may prove to be incorrect and such management may lack the skills, qualifications or abilities we believed they possessed. Should the target s management not have the skills, qualifications or abilities necessary to manage a public company, the operations and profitability of the post-combination business may be negatively affected. Accordingly, any stockholders who choose to remain stockholders following the business combination could suffer a reduction in the value of their shares. Such stockholders are unlikely to have a remedy for such reduction in value unless they are able to successfully claim that the reduction was due to the breach by our officers or directors of a duty of care or other fiduciary duty owed to them, or if they are able to successfully bring a private claim under securities laws that the tender offer materials or proxy statement relating to the business combination contained an actionable material misstatement or material omission. Our executive officers and directors will allocate their time to other businesses thereby causing conflicts of interest in their determination as to how much time to devote to our affairs. This conflict of interest could have a negative effect on our ability to complete our initial business combination. Our executive officers and directors are not required to, and will not, commit their full time to our affairs, which may result in a conflict of interest in allocating their time between our operations and our search for a business combination, and their other businesses. We do not intend to have any full-time employees prior to the completion of our business combination. Each of our executive officers is engaged in several other business endeavors for which such individual may be entitled to substantial compensation and our executive officers are not obligated to contribute any specific number of hours per week to our affairs. Our independent directors also serve as officers and board members for other entities. If our executive officers and directors other business affairs require them to devote substantial amounts of time to such affairs in excess of their current commitment levels, it could limit their ability to devote time to our affairs which may have a negative effect on our ability to complete our initial business combination. For a complete discussion of our executive officers and directors other business affairs, please see "Management — Directors and Executive Officers." Our sponsor, and its affiliates, have no obligation to provide us with potential investment opportunities or to devote any specified amount of time or support to our company s business. Although we expect to benefit from our sponsor s network of relationships and processes for evaluating and allocating investment opportunities among itself, us, and other parties, our sponsor has no legal or contractual obligation to seek on our behalf or to present to us investment opportunities that might be suitable for our business. Our sponsor may allocate potential investments at its discretion to any of Terrapin, Nomura, us, or other parties. We have no investment management, advisory, consulting or other agreement in place with our sponsor that obligates it to undertake efforts on our behalf or that govern the manner in which they will allocate investment opportunities. Even if our sponsor refers an opportunity to us, no assurance can be given that such opportunity will result in an acquisition agreement or an initial business combination. Certain of our executive officers and directors are now, and all of them may in the future become, affiliated with entities engaged in business activities similar to those intended to be conducted by us and, accordingly, may have conflicts of interest in determining to which entity a particular business opportunity should be presented. Following the completion of this offering and until we consummate our initial business combination, we intend to engage in the business of identifying and combining with one or more businesses. Our executive officers and directors are, or may in the future become, affiliated with entities that are engaged in a similar business. Our officers and directors also may become aware of business opportunities which may be appropriate for presentation to us and the other entities to which they owe certain fiduciary duties. Accordingly, they may have conflicts of interest in determining to which entity a particular business opportunity should be presented. These conflicts may not be resolved in our favor and a potential target business may be presented to another entity prior to its presentation to us. Our amended and restated certificate of incorporation will provide that we renounce our interest in any corporate opportunity offered to any director or officer unless such opportunity is expressly offered to such person solely in his or her capacity as a director or officer of our company and such opportunity is one we are legally and contractually permitted to undertake and would otherwise be reasonable for us to pursue. For a more thorough discussion of our executive officers and directors business affiliations and the potential conflicts of interest that may arise, please see "Management — Directors and Executive Officers," "Management — Conflicts of Interest" and "Certain Relationships and Related Transactions." Our executive officers, directors, security holders and their respective affiliates may have competitive pecuniary interests that conflict with our interests. We have not adopted a policy that expressly prohibits our directors, executive officers, security holders or affiliates from having a direct or indirect pecuniary or financial interest in any investment to be acquired or disposed of by us or in any transaction to which we are a party or have an interest. In fact, we may enter into a business combination with a target business that is affiliated with our sponsor, our directors or executive officers, although we do not intend to do so. Nor do we have a policy that expressly prohibits any such persons from engaging for their own account in business activities of the types conducted by us. Accordingly, such persons or entities may have a conflict between their interests and ours. We may engage in a business combination with one or more target businesses that have relationships with entities that may be affiliated with our executive officers, directors or existing holders which may raise potential conflicts of interest. In light of the involvement of our sponsor, executive officers and directors with other entities, we may decide to acquire one or more businesses affiliated with our sponsor, executive officers and directors. Our directors also serve as officers and board members for other entities, including, without limitation, those described under "Management — Conflicts of Interest." Such entities may compete with us for business combination opportunities. Our sponsor, officers and directors are not currently aware of any specific opportunities for us to complete our business combination with any entities with which they are affiliated, and there have been no preliminary discussions concerning a business combination with any such entity or entities. Although we will not be specifically focusing on, or targeting, any transaction with any affiliated entities, we would pursue such a transaction if we determined that such affiliated entity met our criteria for a business combination as set forth in "Proposed Business — Effecting our Initial Business Combination — Selection of a target business and structuring of our initial business combination" and such transaction was approved by a majority of our disinterested directors. Despite our agreement to obtain an opinion from an independent accounting firm or independent investment banking firm that is a member of FINRA regarding the fairness to our company from a financial point of view of a business combination with one or more businesses affiliated with our executive officers, directors or existing holders, potential conflicts of interest still may exist and, as a result, the terms of the business combination may not be as advantageous to our public stockholders as they would be absent any conflicts of interest. Since our sponsor will lose its entire investment in us if our business combination is not completed, a conflict of interest may arise in determining whether a particular business combination target is appropriate for our initial business combination. In June 2017, our sponsor and an affiliate purchased an aggregate of 11,500,000 founder shares for an aggregate purchase price of $25,000. Prior to the initial investment in the company of $25,000 by our sponsor and its affiliate, the company had no assets, tangible or intangible. The purchase price of the founder shares was determined by dividing the amount of cash contributed to the company by the number of founder shares issued. Prior to the consummation of this offering our sponsor sold 2,110,346 of its founder shares to Nomura for an aggregate purchase price of $4,587.71, or approximately $0.0022 per share. Also prior to the consummation of this offering, our sponsor sold an aggregate of 75,000 founder shares to Messrs. Kagan, Pollack, Rosston and Valner, each an independent director nominee, and Mr. Jeffrey Brown, a director nominee, for a purchase price of approximately $0.0022 per share. Prior to the consummation of this offering, the initial stockholders will forfeit an aggregate of 4,483,627 founder shares, such that at the time of this offering the initial stockholders own an aggregate of 7,016,373 founder shares (up to 750,000 of which are subject to forfeiture depending on the extent to which the underwriters over-allotment option is exercised, and up to 1,266,373 of which are subject to forfeiture depending on the extent to which the forward purchase shares are purchased). Of the 1,503,930 founder shares held by Nomura, up to 303,930 are subject to forfeiture depending on the extent to which the forward purchase shares are purchased. Of the 1,503,930 founder shares held by Nomura, 220,000 were sold to Nomura in connection with the underwriting of this transaction. In addition, our sponsor has committed to purchase an aggregate of 3,500,000 private placement warrants, each exercisable to purchase one share of our Class A common stock at a price of $11.50 per share, for an aggregate purchase price of $3,500,000, that will also be worthless if we do not complete a business combination. With certain exceptions, as described below under "Description of Securities," the founder shares are identical to the shares of Class A common stock included in the units being sold in this offering. However, the holders have agreed (i) to vote any shares owned by them in favor of any proposed business combination and (ii) not to redeem any shares in connection with a stockholder vote to approve a proposed initial business combination. The personal and financial interests of our executive officers and directors may influence their motivation in identifying and selecting a target business combination, completing an initial business combination, and influencing the operation of the business following the initial business combination. Since our sponsor, executive officers and directors will not be eligible to be reimbursed for their out-of-pocket expenses if our business combination is not completed, a conflict of interest may arise in determining whether a particular business combination target is appropriate for our initial business combination. At the closing of our initial business combination, our sponsor, executive officers and directors, or any of their respective affiliates, will be reimbursed for any out-of-pocket expenses incurred in connection with activities on our behalf such as identifying potential target businesses and performing due diligence on suitable business combinations. There is no cap or ceiling on the reimbursement of out-of-pocket expenses incurred in connection with activities on our behalf. These financial interests of our sponsor, executive officers and directors may influence their motivation in identifying and selecting a target business combination and completing an initial business combination. Nomura and its affiliates may represent a client to acquire potential target businesses in competition with us, thereby causing conflicts of interest that limit our ability to pursue potential targets. These conflicts of interest could have a negative effect on our ability to consummate a business combination. Nomura, or its affiliates, engage in a broad spectrum of activities including principal investing, specialized investment vehicle management, asset management, financial advisory, securities underwriting, sales and trading, investment research, lending and other activities. In the ordinary course of business, they engage in activities where their interests or the interests of their clients may conflict with our interests. Accordingly, there may be situations in which Nomura has an obligation or an interest that actually or potentially conflicts with our interests. You should assume that these conflicts will not be resolved in our favor and, as a result, we may be denied certain acquisition opportunities or otherwise disadvantaged in certain situations by our relationship to Nomura. Nomura, its affiliates and their clients make investments in a variety of different businesses and may directly compete with us for acquisition opportunities provided or created by Nomura that meet our initial business combination objectives. Nomura is under no specific obligation to offer potential acquisition opportunities to us and may allocate them at its discretion to us or other parties, and we will not have any priority in respect of acquisition opportunities provided or created by Nomura. You should assume that Nomura and its affiliates and clients will have priority over us in terms of access to acquisition opportunities. Clients of Nomura, and its affiliates, may also compete with us for investment opportunities meeting our initial business combination objectives. If Nomura is engaged to act for any such clients, we may be precluded from pursuing opportunities that would conflict with Nomura s obligations to such client. In addition, investment ideas generated within Nomura may be suitable for our company or a client of Nomura, and may be directed to any of such persons or entities rather than to us. Nomura may also be engaged to advise the seller of a company, business or assets that would qualify as an acquisition opportunity for us. In such cases, we may be precluded from participating in the sale process or from purchasing the company, business or assets. If, however, we are permitted to pursue the opportunity, the interests of Nomura or its obligations to the seller may diverge from our interests. We may issue notes or other debt securities, or otherwise incur substantial debt, to complete a business combination, which may adversely affect our leverage and financial condition and thus negatively affect the value of our stockholders investment in us. Other than working capital loans which have been committed by our sponsor, although we have no commitments as of the date of this prospectus to issue any notes or other debt securities, or to otherwise incur outstanding debt, we may choose to incur substantial debt to complete our business combination (including pursuant to the forward financing). We have agreed that we will not incur any indebtedness unless we have obtained from the lender a waiver of any right, title, interest or claim of any kind in or to the monies held in the trust account. As such, no issuance of debt will affect the per-share amount available for redemption from the trust account. Nevertheless, the incurrence of debt (including pursuant to the forward financing) could have a variety of negative effects, including: default and foreclosure on our assets if our operating revenues after an initial business combination are insufficient to repay our debt obligations; acceleration of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant; our immediate payment of all principal and accrued interest, if any, if the debt security is payable on demand; our inability to obtain necessary additional financing if the debt security contains covenants restricting our ability to obtain such financing while the debt security is outstanding; our inability to pay dividends on our common stock; using a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for dividends on our common stock if declared, expenses, capital expenditures, acquisitions and other general corporate purposes; limitations on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate; increased vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation; and limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, execution of our strategy and other purposes and other disadvantages compared to our competitors who have less debt. We may only be able to complete one business combination with the proceeds of this offering and the sale of the private placement warrants, which will cause us to be solely dependent on a single business which may have a limited number of products or services. This lack of diversification may negatively affect our operations and profitability. The net proceeds from this offering and the private placement of warrants will provide us with $200,000,000 (or $230,000,000 if the underwriters over-allotment option is exercised in full) that we may use to complete our business combination (excluding $8,000,000, or up to $9,800,000 if the over-allotment option is exercised in full, of deferred cash underwriting commissions being held in the trust account). We may effectuate our business combination with a single target business or multiple target businesses, either simultaneously or within a short period of time. However, we may not be able to effectuate our business combination with more than one target business because of various factors, including the existence of complex accounting issues and the requirement that we prepare and file pro forma financial statements with the SEC that present operating results and the financial condition of the several target businesses as if they had been operated on a combined basis. By completing our initial business combination with only a single entity, our lack of diversification may subject us to numerous economic, competitive and regulatory risks. Further, we would not be able to diversify our operations or benefit from the possible spreading of risks or offsetting of losses, unlike other entities which may have the resources to complete several business combinations in different industries or different areas of a single industry. Accordingly, the prospects for our success may be: solely dependent upon the performance of a single business, property or asset, or dependent upon the development or market acceptance of a single or limited number of products, processes or services. This lack of diversification may subject us to numerous economic, competitive and regulatory developments, any or all of which may have a substantial adverse effect upon the particular industry in which we may operate subsequent to our business combination. We may attempt to simultaneously complete business combinations with multiple prospective targets, which may hinder our ability to complete our business combination and give rise to increased costs and risks that could negatively affect our operations and profitability. If we determine to simultaneously acquire several businesses that are owned by different sellers, we will need for each of such sellers to agree that our purchase of its business is contingent on the simultaneous closings of the other business combinations, which may make it more difficult for us, and delay our ability, to complete our initial business combination. With multiple business combinations, we could also face additional risks, including additional burdens and costs with respect to multiple possible negotiations and due diligence investigations (if there are multiple sellers) and the additional risks associated with the subsequent assimilation of the operations and services or products of the acquired companies in a single operating business. If we are unable to adequately address these risks, it could negatively affect our profitability and results of operations. We may attempt to complete our initial business combination with a private company about which little information is available, which may result in a business combination with a company that is not as profitable as we suspected, if at all. In pursuing our acquisition strategy, we may seek to effectuate our initial business combination with a privately held company. By definition, very little public information exists about private companies, and we could be required to make our decision on whether to pursue a potential initial business combination on the basis of limited information, which may result in a business combination with a company that is not as profitable as we suspected, if at all. Our management may not be able to maintain control of a target business after our initial business combination. We cannot provide assurance that, upon loss of control of a target business, new management will possess the skills, qualifications or abilities necessary to profitably operate such business. We may structure a business combination so that the post-transaction company in which our public stockholders own shares will own less than 100% of the equity interests or assets of a target business, but we will only complete such business combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for us not to be required to register as an investment company under the Investment Company Act. We will not consider any transaction that does not meet such criteria. Even if the post-transaction company owns 50% or more of the voting securities of the target, our stockholders prior to the business combination may ultimately own collectively a minority interest in the post-business combination company, depending on valuations ascribed to the target and us in the business combination transaction. For example, we could pursue a transaction in which we issue a substantial number of new shares of common stock in exchange for all of the outstanding capital stock of a target. In this case, we would acquire a 100% interest in the target. However, as a result of the issuance of a substantial number of new shares of common stock, our stockholders immediately prior to such transaction could own less than a majority of our outstanding shares of common stock subsequent to such transaction. In addition, other minority stockholders may subsequently combine their holdings resulting in a single person or group obtaining a larger share of the company s stock than we initially acquired. Accordingly, this may make it more likely that our management will not be able to maintain control of the target business. We do not have a specified maximum redemption threshold. The absence of such a redemption threshold may make it possible for us to complete a business combination with which a substantial majority of our stockholders do not agree. Our amended and restated certificate of incorporation does not provide a specified maximum redemption threshold, except that in no event will we redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001 (such that we are not subject to the SEC s "penny stock" rules) or any greater net tangible asset or cash requirement which may be contained in the agreement relating to our initial business combination. As a result, we may be able to complete our business combination even though a substantial majority of our public stockholders do not agree with the transaction and have redeemed their shares or, if we seek stockholder approval of our initial business combination and do not conduct redemptions in connection with our business combination pursuant to the tender offer rules, have entered into privately negotiated agreements to sell their shares to our sponsor, officers, directors, advisors or their affiliates. If we have inadequate cash simultaneously to meet the closing requirements of a business combination and redeem all shares submitted at that time for redemption, we will return any shares submitted for redemption and continue to pursue an alternative transaction. If you redeemed in order to liquidate your investment at that time, you may be forced to sell your public shares, potentially at a loss. In the event the aggregate cash consideration we would be required to pay for all shares of Class A common stock that are validly submitted for redemption plus any amount required to satisfy cash conditions pursuant to the terms of the proposed business combination exceed the aggregate amount of cash available to us, we will not complete the business combination or redeem any shares, all shares of Class A common stock submitted for redemption will be returned to the holders thereof, and we instead may search for an alternate business combination. The exercise price for the public warrants is higher than in many similar blank check company offerings in the past, and, accordingly, the warrants are more likely to expire worthless. The exercise price of the public warrants is higher than is typical in many similar blank check companies in the past. Historically, the exercise price of a warrant was generally a fraction of the purchase price of the units in the initial public offering. The exercise price for our public warrants is $11.50 per share, subject to adjustment as provided herein. As a result, the warrants are less likely to ever be in the money and more likely to expire worthless. In order to effectuate our initial business combination, blank check companies have, in the recent past, amended various provisions of their charters and modified governing instruments. We cannot assure you that we will not seek to amend our amended and restated certificate of incorporation or governing instruments in a manner that will make it easier for us to complete our initial business combination that our stockholders may not support. In order to effectuate a business combination, blank check companies have, in the recent past, amended various provisions of their charters and modified governing instruments. For example, blank check companies have amended the definition of business combination, increased redemption thresholds and changed industry focus. We cannot assure you that we will not seek to amend our charter or governing instruments in order to effectuate our initial business combination. The provisions of our amended and restated certificate of incorporation that relate to our pre-business combination activity (and corresponding provisions of the agreement governing the release of funds from our trust account) may be amended with the approval of holders of 65% of our common stock, which is a lower amendment threshold than that of some other blank check companies. It may be easier for us, therefore, to amend our amended and restated certificate of incorporation to facilitate the completion of an initial business combination that some of our stockholders may not support. Some other blank check companies have a provision in their charter which prohibits the amendment of certain of its provisions, including those which relate to a company s pre-business combination activity, without approval by a certain percentage of the company s stockholders. In those companies, amendment of these provisions requires approval by between 90% and 100% of the company s public stockholders. Our amended and restated certificate of incorporation provides that any of its provisions related to pre-business combination activity (including the requirement to deposit proceeds of this offering and the private placement of warrants into the trust account and not release such amounts except in specified circumstances, and to provide redemption rights to public stockholders as described herein) may be amended if approved by holders of 65% of our common stock, and corresponding provisions of the trust agreement governing the release of funds from our trust account may be amended if approved by holders of 65% of our common stock. In all other instances, our amended and restated certificate of incorporation may be amended by holders of a majority of our common stock, subject to applicable provisions of the DGCL or applicable stock exchange rules. Our initial stockholders, who will collectively beneficially own 20.0% of our common stock upon the closing of this offering (assuming they do not purchase any units in this offering), will participate in any vote to amend our amended and restated certificate of incorporation and/or trust agreement and will have the discretion to vote in any manner they choose. As a result, we may be able to amend the provisions of our amended and restated certificate of incorporation which govern our pre-business combination behavior more easily than some other blank check companies, and this may increase our ability to complete a business combination with which you do not agree. Our stockholders may pursue remedies against us for any breach of our amended and restated certificate of incorporation. Our sponsor, executive officers, directors and director nominees have agreed, pursuant to a written agreement with us, that they will not propose any amendment to our amended and restated certificate of incorporation that would affect the substance or timing of our obligation to redeem 100% of our public shares if we do not complete our initial business combination within 24 months from the closing of this offering, unless we provide our public stockholders with the opportunity to redeem their shares of Class A common stock upon approval of any such amendment at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest income (net of taxes payable and any amounts released to us to fund working capital requirements), divided by the number of then outstanding public shares. These agreements are contained in letter agreements that we have entered into with our sponsor, executive officers, directors and director nominees. Our stockholders are not parties to, or third-party beneficiaries of, these agreements and, as a result, will not have the ability to pursue remedies against our sponsor, executive officers, directors or director nominees for any breach of these agreements. As a result, in the event of a breach, our stockholders would need to pursue a stockholder derivative action, subject to applicable law. We may be unable to obtain additional financing to complete our initial business combination or to fund the operations and growth of a target business, which could compel us to restructure or abandon a particular business combination. Although we believe that the net proceeds of this offering and the sale of the private placement warrants and the forward purchase shares will be sufficient to allow us to complete our initial business combination, because we have not yet identified any prospective target business we cannot ascertain the capital requirements for any particular transaction. If the net proceeds of this offering and the sale of the private placement warrants and the forward purchase shares prove to be insufficient, either because of the size of our initial business combination, the depletion of the available net proceeds in search of a target business, the obligation to repurchase for cash a significant number of shares from stockholders who elect redemption in connection with our initial business combination or the terms of negotiated transactions to purchase shares in connection with our initial business combination, we may be required to seek additional financing or to abandon the proposed business combination. We cannot assure you that such financing will be available on acceptable terms, if at all. In the current economic environment, it may be difficult for companies to obtain acquisition financing. To the extent that additional financing proves to be unavailable when needed to complete our initial business combination, we would be compelled to either restructure the transaction or abandon that particular business combination and seek an alternative target business candidate. In addition, even if we do not need additional financing to complete our business combination, we may require such financing to fund the operations or growth of the target business. The failure to secure additional financing could have a material adverse effect on the continued development or growth of the target business. None of our officers, directors or stockholders is required to provide any financing to us in connection with or after our business combination. If we are unable to complete our initial business combination, our public stockholders may only receive approximately $10.00 per share (regardless of whether or not the underwriters exercise any portion of their over-allotment option) on the liquidation of our trust account, and our warrants will expire worthless. Our initial stockholders control a substantial interest in us and thus may exert substantial influence on actions requiring a stockholder vote, potentially in a manner that you do not support. Upon the closing of this offering, our initial stockholders will own approximately 23.9% (or 23.4% if the underwriters over-allotment option is exercised in full) of the issued and outstanding shares of our common stock (assuming they do not purchase any units in this offering), including shares that are subject to forfeiture if all or part of the forward purchase shares are not purchased. Accordingly, they may exert a substantial influence on actions requiring a stockholder vote, potentially in a manner that you do not support, including amendments to our amended and restated certificate of incorporation. If our initial stockholders purchase any units in this offering or if our initial stockholders purchase any additional shares of Class A common stock in the aftermarket or in privately negotiated transactions, this would increase their control. Neither our initial stockholders nor, to our knowledge, any of our officers or directors, have any current intention to purchase additional securities, other than as disclosed in this prospectus. Factors that would be considered in making such additional purchases would include consideration of the current trading price of our Class A common stock. In addition, our board of directors, whose members were elected by our sponsor, is and will be divided into two classes, each of which will generally serve for a term of two years with only one class of directors being elected in each year. We may not hold an annual meeting of stockholders to elect new directors prior to the completion of our business combination, in which case all of the current directors will continue in office until at least the completion of the business combination. If there is an annual meeting, as a consequence of our "staggered" board of directors, only a minority of the board of directors will be considered for election and our initial stockholders, because of their ownership position, will have considerable influence regarding the outcome. Accordingly, our initial stockholders will continue to exert control at least until the completion of our business combination, and, due to the conversion of the Class F common stock into our Class A common stock, the anti-dilution rights of the Class F common stock and the sale of the forward purchase shares to Nomura, potentially after consummation of our initial business combination. Our sponsor paid an aggregate of $25,000, or approximately $0.0022 per founder share, and, accordingly, you will experience immediate and substantial dilution from the purchase of our Class A common stock. The difference between the public offering price per share and the pro forma net tangible book value per share of our Class A common stock after this offering constitutes the dilution to you and the other investors in this offering. Our sponsor acquired the founder shares at a nominal price, significantly contributing to this dilution. Upon the closing of this offering, and assuming no value is ascribed to the warrants included in the units, you and the other public stockholders will incur an immediate and substantial dilution of approximately 91.9% (or $9.19 per share, assuming no exercise of the underwriters over-allotment option), the difference between the pro forma net tangible book value per share of $0.81 and the initial offering price of $10.00 per unit. This dilution would increase to the extent that the anti-dilution provisions of the Class F common stock result in issuance of additional Class A shares to our initial stockholders and would become exacerbated to the extent that public stockholders seek redemptions from the trust. In addition, because of the anti-dilution protection in the founder shares, any equity or equity-linked raisings would be disproportionately dilutive to our Class A common stock. We may amend the terms of the warrants in a manner that may be adverse to holders with the approval by the holders of at least 65% of then outstanding public warrants. Our warrants will be issued in registered form under a warrant agreement between Continental Stock Transfer & Trust Company, as warrant agent, and us. The warrant agreement provides that the terms of the warrants may be amended without the consent of any holder to cure any ambiguity or correct any defective provision, but requires the approval by the holders of at least 65% of then outstanding public warrants to make any change that adversely affects the interests of the registered holders. Accordingly, we may amend the terms of the warrants in a manner adverse to a holder if holders of at least 65% of then outstanding public warrants approve of such amendment. Although our ability to amend the terms of the warrants with the consent of at least 65% of then outstanding public warrants is unlimited, examples of such amendments could be amendments, among other things, to increase the exercise price of the warrants, shorten the exercise period or decrease the number of shares of our common stock purchasable upon exercise of a warrant. We may redeem your unexpired warrants prior to their exercise at a time that is disadvantageous to you, thereby making your warrants worthless. We have the ability to redeem outstanding warrants at any time after they become exercisable and prior to their expiration, at a price of $0.01 per warrant, provided that the last reported sales price of our Class A common stock equals or exceeds $18.00 per share for any 20 trading days within a 30 trading-day period ending on the third trading day prior to the date we send the notice of redemption to the warrant holders. If and when the warrants become redeemable by us, we may exercise our redemption right even if we are unable to register or qualify the underlying securities for sale under all applicable state securities laws. Redemption of the outstanding warrants could force you to exercise your warrants and pay the exercise price therefor at a time when it may be disadvantageous for you to do so, to sell your warrants at then-current market price when you might otherwise wish to hold your warrants or to accept the nominal redemption price which, at the time the outstanding warrants are called for redemption, is likely to be substantially less than the market value of your warrants. None of the private placement warrants will be redeemable by us so long as they are held by our sponsor or its permitted transferees. Our warrants may have an adverse effect on the market price of our Class A common stock and make it more difficult to effectuate our business combination. We will be issuing warrants to purchase 20,000,000 shares of our Class A common stock (or 23,000,000 shares of Class A common stock if the underwriters over-allotment option is exercised in full) as part of the units offered by this prospectus and, simultaneously with the closing of this offering, we will be issuing in a private placement an aggregate of 3,500,000 private placement warrants, each exercisable to purchase one share of Class A common stock. In addition, if our sponsor makes any working capital loans, it may convert those loans into up to an additional 1,000,000 private placement warrants, at the price of $1.00 per warrant. To the extent we issue shares of Class A common stock to effectuate a business transaction, the potential for the issuance of a substantial number of additional shares of Class A common stock upon exercise of these warrants could make us a less attractive acquisition vehicle to a target business. Such warrants, when exercised, may increase the number of issued and outstanding shares of our Class A common stock and reduce the value of the shares of Class A common stock issued to complete the business transaction. Therefore, our warrants may make it more difficult to effectuate a business transaction or increase the cost of acquiring the target business. The private placement warrants are identical to the warrants sold as part of the units in this offering except that, so long as they are held by our sponsor or its permitted transferees, they will not be redeemable by us, they (including the Class A common stock issuable upon exercise of these warrants) may not, subject to certain limited exceptions, be transferred, assigned or sold by our sponsor until 30 days after the completion of our initial business combination and they may be exercised by the holders on a cashless basis. The determination of the offering price of our units and the size of this offering is more arbitrary than the pricing of securities and size of an offering of an operating company in a particular industry. You may have less assurance, therefore, that the offering price of our units properly reflects the value of such units than you would have in a typical offering of an operating company. Prior to this offering there has been no public market for any of our securities. The public offering price of the units and the terms of the warrants were negotiated between us and the underwriters. In determining the size of this offering, management held customary organizational meetings with the representative of the underwriters, both prior to our inception and thereafter, with respect to the state of capital markets, generally, and the amount the underwriters believed they reasonably could raise on our behalf. Factors considered in determining the size of this offering, pricing and terms of the units, including the Class A common stock and warrants underlying the units, include: the history and prospects of companies whose principal business is the acquisition of other companies; prior offerings of those companies; our prospects for acquiring an operating business at attractive values; a review of debt to equity ratios in leveraged transactions; our capital structure; an assessment of our management and their experience in identifying operating companies; general conditions of the securities markets at the time of this offering; and other factors as were deemed relevant. Although these factors were considered, the determination of our offering price is more arbitrary than the pricing of securities of an operating company in a particular industry since we have no historical operations or financial results. There is currently no market for our securities and a market for our securities may not develop, which would adversely affect the liquidity and price of our securities. There is currently no market for our securities. Stockholders therefore have no access to information about prior market history on which to base their investment decision. Following this offering, the price of our securities may vary significantly due to one or more potential business combinations and general market or economic conditions. Furthermore, an active trading market for our securities may never develop or, if developed, it may not be sustained. You may be unable to sell your securities unless a market can be established and sustained. Because we must furnish our stockholders with target business financial statements, we may lose the ability to complete an otherwise advantageous initial business combination with some prospective target businesses. The federal proxy rules require that a proxy statement with respect to a vote on a business combination meeting certain financial significance tests include historical and/or pro forma financial statement disclosure in periodic reports. We will include the same financial statement disclosure in connection with our tender offer documents, whether or not they are required under the tender offer rules. These financial statements may be required to be prepared in accordance with, or be reconciled to, accounting principles generally accepted in the United States of America, or GAAP, or international financial reporting standards, or IFRS, depending on the circumstances and the historical financial statements may be required to be audited in accordance with the standards of the Public Company Accounting Oversight Board (United States), or PCAOB. These financial statement requirements may limit the pool of potential target businesses we may acquire because some targets may be unable to provide such statements in time for us to disclose such statements in accordance with federal proxy rules and complete our initial business combination within the prescribed time frame. We are an emerging growth company within the meaning of the Securities Act, and if we take advantage of certain exemptions from disclosure requirements available to emerging growth companies, this could make our securities less attractive to investors and may make it more difficult to compare our performance with other public companies. We are an "emerging growth company" within the meaning of the Securities Act, as modified by the JOBS Act, and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. As a result, our stockholders may not have access to certain information they may deem important. We could be an emerging growth company for up to five years, although circumstances could cause us to lose that status earlier, including if the market value of our common stock held by non-affiliates exceeds $700 million as of any June 30 before that time, in which case we would no longer be an emerging growth company as of the following December 31. We cannot predict whether investors will find our securities less attractive because we will rely on these exemptions. If some investors find our securities less attractive as a result of our reliance on these exemptions, the trading prices of our securities may be lower than they otherwise would be, there may be a less active trading market for our securities and the trading prices of our securities may be more volatile. Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. We have elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, we, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of our financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accountant standards used. Compliance obligations under the Sarbanes-Oxley Act may make it more difficult for us to effectuate our business combination, require substantial financial and management resources, and increase the time and costs of completing an acquisition. Section 404 of the Sarbanes-Oxley Act requires that we evaluate and report on our system of internal controls beginning with our Annual Report on Form 10-K for the year ending December 31, 2019. Only in the event we are deemed to be a large accelerated filer or an accelerated filer will we be required to comply with the independent registered public accounting firm attestation requirement on our internal control over financial reporting. Further, for as long as we remain an emerging growth company, we will not be required to comply with the independent registered public accounting firm attestation requirement on our internal control over financial reporting. The fact that we are a blank check company makes compliance with the requirements of the Sarbanes-Oxley Act particularly burdensome on us as compared to other public companies because a target company with which we seek to complete our business combination may not be in compliance with the provisions of the Sarbanes-Oxley Act regarding adequacy of its internal controls. The development of the internal control of any such entity to achieve compliance with the Sarbanes-Oxley Act may increase the time and costs necessary to complete any such acquisition. Provisions in our amended and restated certificate of incorporation and Delaware law may inhibit a takeover of us, which could limit the price investors might be willing to pay in the future for our Class A common stock and could entrench management. Our amended and restated certificate of incorporation contains provisions that may discourage unsolicited takeover proposals that stockholders may consider to be in their best interests. These provisions include a staggered board of directors and the ability of the board of directors to designate the terms of, and issue new series of, preferred shares, which may make more difficult the removal of management and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for our securities. We are also subject to anti-takeover provisions under Delaware law, which could delay or prevent a change of control. Together these provisions may make more difficult the removal of management and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for our securities. If we effect our initial business combination with a company located in the United States but with operations or opportunities outside of the United States, we would be subject to a variety of additional risks that may negatively affect our operations. If we effect our initial business combination with a company located in the United States but with operations or opportunities outside of the United States, we would be subject to any special considerations or risks associated with companies operating in an international setting, including any of the following: costs and difficulties inherent in managing cross-border business operations; rules and regulations regarding currency redemption; complex corporate withholding taxes on individuals; laws governing the manner in which future business combinations may be effected; tariffs and trade barriers; regulations related to customs and import/export matters; longer payment cycles; tax issues, such as tax law changes and variations in tax laws as compared to the United States; currency fluctuations and exchange controls; rates of inflation; challenges in collecting accounts receivable; cultural and language differences; employment regulations; crime, strikes, riots, civil disturbances, terrorist attacks and wars; and deterioration of political relations with the United States. We may not be able to adequately address these additional risks. If we were unable to do so, our operations might suffer, which may adversely affect our results of operations and financial condition. CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS The statements contained in this prospectus that are not purely historical are forward-looking statements. Our forward-looking statements include, but are not limited to, statements regarding our or our management team s expectations, hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words "anticipate," "believe," "continue," "could," "estimate," "expect," "intends," "may," "might," "plan," "possible," "potential," "predict," "project," "should," "would" and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements in this prospectus may include, for example, statements about: our ability to complete our initial business combination; our success in retaining or recruiting, or changes required in, our officers, key employees or directors following our initial business combination; our officers and directors allocating their time to other businesses and potentially having conflicts of interest with our business or in approving our initial business combination, as a result of which they would then receive expense reimbursements; the proceeds of the forward purchase shares being available to us; our potential ability to obtain additional financing to complete our initial business combination, by means of the forward financing or otherwise; our pool of prospective target businesses; the ability of our officers and directors to generate a number of potential investment opportunities; our public securities potential liquidity and trading; the lack of a market for our securities; the use of proceeds not held in the trust account or available to us from interest income on the trust account balance; or our financial performance following this offering. The forward-looking statements contained in this prospectus are based on our current expectations and beliefs concerning future developments and their potential effects on us. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described under the heading "Risk Factors" beginning on page 24. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws. USE OF PROCEEDS We are offering 20,000,000 units at an offering price of $10.00 per unit. We estimate that the net proceeds of this offering together with the funds we will receive from the sale of the private placement warrants will be used as set forth in the following table. Without Over-Allotment Option Over-Allotment Option Exercised Gross proceeds Gross proceeds from units offered to public (1) $ 200,000,000 $ 230,000,000 Gross proceeds from private placement warrants offered in the private placement 3,500,000 3,500,000 Total gross proceeds $ 203,500,000 233,500,000 Offering expenses (2) Underwriting commissions (3) $ 1,800,000 1,800,000 Legal fees and expenses 300,000 300,000 Printing and engraving expenses 35,000 35,000 Accounting fees and expenses 42,500 42,500 SEC Expenses 37,350 37,350 FINRA Expenses 45,500 45,500 Travel and road show 40,000 40,000 NASDAQ listing and filing fees 75,000 75,000 Directors and officers insurance 160,000 160,000 Miscellaneous expenses 14,650 14,650 Total offering expenses (other than underwriting commissions) $ 750,000 $ 750,000 Proceeds after offering expenses $ 200,950,000 230,950,000 Held in trust account (3) $ 200,000,000 $ 230,000,000 % of public offering size 100 % 100 % Not held in trust account $ 950,000 $ 950,000 The following table shows the use of the approximately $950,000 of net proceeds not held in the trust account, as well as up to $1,000,000 in working capital loans committed by our sponsor, its affiliates or designees, but not including interest earned on funds held in the trust account. (4) (6) Amount % of Total Legal, accounting, due diligence, travel, and other expenses in connection with any business combination (5) $ 900,000 46.1 % Legal and accounting fees related to regulatory reporting obligations 150,000 7.7 % Payment for office space, administrative and support services 405,000 20.8 % Reserve for liquidation expenses 50,000 2.6 % NASDAQ continued listing fees 75,000 3.8 % Other miscellaneous expenses (including franchise taxes net of anticipated interest income) 370,000 19.0 % Total $ 1,950,000 100.0 % (1)Includes amounts payable to public stockholders who properly redeem their shares in connection with our successful completion of our initial business combination. (2) A portion of the offering expenses have been paid from the proceeds of loans and advances from an affiliate of our sponsor of $140,000 as described in this prospectus. These loans will be repaid upon completion of this offering. (3) The underwriters have agreed to defer cash underwriting commissions equal to 4.0% of the gross proceeds of this offering (or approximately 4.3% of the gross proceeds of this offering if the underwriters over-allotment option is exercised in full). Upon completion of our initial business combination, up to $8,000,000, which constitutes the underwriters deferred commissions (or up to $9,800,000 if the underwriters over-allotment option is exercised in full) will be paid to the underwriters from the funds held in the trust account, and the remaining funds will be released to us and can be used to pay all or a portion of the purchase price of the business or businesses with which our initial business combination occurs or for general corporate purposes, including payment of principal or interest on indebtedness incurred in connection with our initial business combination, to fund the purchases of other companies or for working capital. The underwriters will not be entitled to any interest accrued on the deferred underwriting discounts and commissions. (4) These expenses are estimates only. Our actual expenditures for some or all of these items may differ from the estimates set forth herein. For example, we may incur greater legal and accounting expenses than our current estimates in connection with negotiating and structuring a business combination based upon the level of complexity of such business combination. In the event we identify an acquisition target in a specific industry subject to specific regulations, we may incur additional expenses associated with legal due diligence and the engagement of special legal counsel. In addition, our staffing needs may vary and as a result, we may engage a number of consultants to assist with legal and financial due diligence. We do not anticipate any change in our intended use of proceeds, other than fluctuations among the current categories of allocated expenses, which fluctuations, to the extent they exceed current estimates for any specific category of expenses, would not be available for our expenses. The amount in the table above does not include interest available to us from the trust account. Based on the current interest rate environment, we would expect approximately $2,000,000 to be available to us per year from interest earned on the funds held in the trust account; however, we can provide no assurances regarding this amount. This estimate assumes an interest rate of 1.0% per annum based upon current yields of securities in which the trust account may be invested. (5)Includes estimated amounts that may also be used in connection with our business combination to fund a "no shop" provision and commitment fees for financing. This amount does not include any investment banking fees which may be payable upon consummation of a business combination. No funds will be paid out of the trust to fund any such fee payments and it is not expected that any fees would be paid prior to the consummation of a business combination. The actual amount of fees received will vary significantly based on the size of any transaction and the extent to which other investment banks are involved. (6)In order to finance transaction costs in connection with an intended initial business combination, our sponsor, its affiliates or designees have committed up to $1,000,000 to be provided to us to fund our expenses relating to investigating and selecting a target business and other working capital requirements after this offering and prior to our initial business combination. The rules of the NASDAQ Capital Market provide that at least 90% of the gross proceeds from this offering and the private placement be deposited in a trust account. Of the net proceeds of this offering and the sale of the private placement warrants, $200,000,000 (or $230,000,000 if the underwriters over-allotment option is exercised in full), including $8,000,000 (or up to $9,800,000 if the underwriters over-allotment option is exercised in full) of deferred cash underwriting commissions, will be placed in a trust account located in the United States and held at JPMorgan Chase Bank, N.A., with Continental Stock Transfer & Trust Company acting as trustee and will be invested only in U.S. government treasury bills with a maturity of 180 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act which invest only in direct U.S. government treasury obligations. Based upon current interest rates, we expect the trust account to generate approximately $2,000,000 of interest income per year. We will not be permitted to withdraw any of the principal or interest held in the trust account, except for the withdrawal of interest to pay taxes and to fund working capital requirements, until the earlier of the completion of our initial business combination or the redemption of 100% of our public shares if we are unable to complete a business combination within 24 months from the closing of this offering (subject to the requirements of law). The net proceeds held in the trust account may be used as consideration to pay the sellers of a target business with which we ultimately complete our business combination. If our initial business combination is paid for using stock or debt securities, or not all of the funds released from the trust account are used for payment of the consideration in connection with our business combination, we may apply the balance of the cash released from the trust account for general corporate purposes, including for maintenance or expansion of operations of the post-transaction company, the payment of principal or interest due on indebtedness incurred in completing our initial business combination, to fund the purchase of other companies or for working capital. We believe that amounts not held in trust will be sufficient to pay the costs and expenses to which such proceeds are allocated. This belief is based on the fact that while we may begin preliminary due diligence of a target business in connection with an indication of interest, we intend to undertake in-depth due diligence, depending on the circumstances of the relevant prospective acquisition, only after we have negotiated and signed a letter of intent or other preliminary agreement that addresses the terms of a business combination. However, if our estimate of the costs of undertaking in-depth due diligence and negotiating a business combination is less than the actual amount necessary to do so, we may be required to raise additional capital, the amount, availability and cost of which is currently unascertainable. If we are required to seek additional capital, we could seek such additional capital through loans or additional investments from our sponsor, members of our management team or their affiliates, but such persons are not under any obligation to advance funds to, or invest in, us. We intend to enter into an Administrative Services Agreement pursuant to which we will pay an affiliate of our sponsor a total of $16,875 per month for office space, utilities and secretarial support. Upon completion of our initial business combination or our liquidation, we will cease paying these monthly fees. Prior to the closing of this offering, an affiliate of our sponsor has loaned and advanced us $140,000 to be used for a portion of the expenses of this offering. These loans are non-interest bearing, unsecured and are due at the earlier of June 30, 2018 or the closing of this offering. In addition, in order to finance transaction costs in connection with an intended initial business combination, our sponsor, its affiliates or designees, have committed up to $1,000,000 to be provided to us in the event that funds held outside of the trust are insufficient to fund our expenses relating to investigating and selecting a target business and other working capital requirements after this offering and prior to our initial business combination and may, but are not obligated to, loan us additional funds to fund our expenses relating to investigating and completing our initial business combination. If we complete our initial business combination, we would repay such loaned amounts out of the proceeds of the trust account released to us. Otherwise, such loans would be repaid only out of funds held outside the trust account. In the event that our initial business combination does not close, we may use a portion of the working capital held outside the trust account to repay such loaned amounts but no proceeds from our trust account would be used to repay such loaned amounts. Up to $1,000,000 of any such working capital loans may be convertible into warrants of the post business combination entity at a price of $1.00 per warrant at the option of the lender. The warrants would be identical to the private placement warrants issued to the initial stockholders. Nomura has entered into a forward purchase agreement with us which provides for the purchase by Nomura of an aggregate of 5,065,494 shares of our Class A common stock for an aggregate purchase price of $50,000,000 in a private placement to occur concurrently with the closing of our initial business combination. The forward purchase shares are identical to the shares of Class A common stock included in the units being sold in this offering, except that the forward purchase shares are subject to transfer restrictions and certain registration rights, as described herein. The forward purchase agreement allows Nomura to approach other institutional and accredited investors and, with our consent, which will not be unreasonably withheld, delayed or conditioned, enter into agreements with any such investor to assume Nomura s purchase obligation under the forward purchase agreement. The forward purchase agreement also allows Nomura to be excused from its purchase obligation in connection with a specific business combination if, within five business days following written notice delivered by us of our intention to enter into such business combination, Nomura notifies us that it has decided not to proceed with the purchase for any reason, including, without limitation, if it has determined that such purchase would constitute a conflict of interest. In the event Nomura exercises its right of excusal, Nomura has agreed to waive its right to receive the placement fee earned from the sale of the forward purchase shares and the underwriters will waive their right to receive a portion of the deferred underwriting discount. The funds from the forward purchase agreement will be used as part of the consideration to the sellers in the initial business combination; any excess funds from this private placement may be used for working capital in the post-transaction company. The obligations under the forward purchase agreement are not affected by any redemptions by our public stockholders of shares of our Class A common stock and provide us with a minimum funding level for the initial business combination, subject to the satisfaction of the conditions to funding. Prior to the consummation of this offering our sponsor sold 2,110,346 of its founder shares to Nomura. Prior to the consummation of this offering, Nomura will forfeit 606,416 founder shares. Of the 1,503,930 founder shares held by Nomura, up to 303,930 are subject to forfeiture depending on the extent to which the forward purchase shares are purchased. Of the 1,503,930 founder shares held by Nomura, 220,000 were sold to Nomura in connection with the underwriting of this transaction. Nomura has also agreed, if so requested by us, to underwrite, arrange and/or syndicate up to $450 million of additional financing for us in the form of equity or debt (or a combination thereof) in connection with our initial business combination. We will not be obligated to engage Nomura in connection with any such forward financing. The terms of any such forward financing will be based upon then-current general economic and market conditions and subject to terms and conditions satisfactory in all respects to Nomura in its sole judgement and determination if Nomura is so engaged. Any such forward financing will be without regard to any redemptions that may be tendered to us. Nomura has agreed to allow the Company to disclose the terms, conditions and assumptions under which Nomura would be highly confident of executing financing documents of a predetermined size, as part of the financing in the letter of intent delivered to each potential business combination counterparty, subject to certain conditions. If we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our business combination pursuant to the tender offer rules, our sponsor, directors, officers, advisors or their affiliates may also purchase shares in privately negotiated transactions either prior to or following the completion of our initial business combination. However, they have no current commitments, plans or intentions to engage in such transactions and have not formulated any terms or conditions for any such transactions. If they engage in such transactions, they will not make any such purchases when they are in possession of any material non-public information not disclosed to the seller or if such purchases are prohibited by Regulation M under the Exchange Act. We do not currently anticipate that such purchases, if any, would constitute a tender offer subject to the tender offer rules under the Exchange Act or a going-private transaction subject to the going-private rules under the Exchange Act; however, if the purchasers determine at the time of any such purchases that the purchases are subject to such rules, the purchasers will comply with such rules. We may not redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001 (so that we are not subject to the SEC s "penny stock" rules) and the agreement for our business combination may require as a closing condition that we have a minimum net worth or a certain amount of cash. If too many public stockholders exercise their redemption rights so that we cannot satisfy the net tangible asset requirement or any net worth or cash requirements, we would not proceed with the redemption of our public shares or the business combination, and instead may search for an alternate business combination. A public stockholder will be entitled to receive funds from the trust account only upon the earlier to occur of: our completion of an initial business combination, and then only in connection with those shares of our Class A common stock that such stockholder properly elected to redeem, subject to the limitations described herein or the redemption of our public shares if we are unable to complete our business combination within 24 months following the closing of this offering, subject to applicable law and as further described herein and any limitations (including but not limited to cash requirements) created by the terms of the proposed business combination. In no other circumstances will a public stockholder have any right or interest of any kind to or in the trust account. Our initial stockholders have entered into letter agreements with us, pursuant to which they have agreed to waive their redemption rights with respect to their founder shares and public shares in connection with the completion of our initial business combination. In addition, our initial stockholders have agreed to waive their rights to liquidating distributions from the trust account with respect to their founder shares if we fail to complete our business combination within the prescribed time frame. However, if our initial stockholders or any of our officers, directors or affiliates acquires public shares in or after this offering, they will be entitled to liquidating distributions from the trust account with respect to such public shares if we fail to complete our initial business combination within the prescribed time frame. DIVIDEND POLICY We have not paid any cash dividends on our common stock to date and do not intend to pay cash dividends prior to the completion of our initial business combination. The payment of cash dividends in the future will be dependent upon our revenues and earnings, if any, capital requirements and general financial condition subsequent to completion of our initial business combination. The payment of any cash dividends subsequent to our initial business combination will be within the discretion of our board of directors at such time. In addition, our board of directors is not currently contemplating and does not anticipate declaring any stock dividends in the foreseeable future, except if we increase the size of the offering pursuant to Rule 462(b) under the Securities Act, in which case we will effect a stock dividend (or, potentially, a split) immediately prior to the consummation of the offering in such amount as to maintain the ownership of our stockholders prior to this offering at 20.0% of our issued and outstanding shares of our common stock upon the consummation of this offering. Further, if we incur any indebtedness in connection with our business combination, our ability to declare dividends may be limited by restrictive covenants we may agree to in connection therewith. DILUTION The difference between the public offering price per share of Class A common stock, assuming no value is attributed to the warrants included in the units we are offering pursuant to this prospectus or the private placement warrants, and the pro forma net tangible book value per share of our Class A common stock after this offering constitutes the dilution to investors in this offering. Such calculation does not reflect any dilution associated with the sale and exercise of warrants, including the private placement warrants, which would cause the actual dilution to the public stockholders to be higher, particularly where a cashless exercise is utilized. Net tangible book value per share is determined by dividing our net tangible book value, which is our total tangible assets less total liabilities (including the value of Class A common stock which may be redeemed for cash), by the number of outstanding shares of our Class A common stock. At December 31, 2017, our net tangible book value was $(146,563), or approximately $(0.01) per share of Class F common stock. After giving effect to the sale of 20,000,000 shares of Class A common stock included in the units we are offering by this prospectus, the sale of the private placement warrants and the deduction of cash underwriting commissions and estimated expenses of this offering, our pro forma net tangible book value at December 31, 2017 would have been $5,000,001, or $0.81 per share, representing an immediate increase in net tangible book value (as decreased by the value of the approximately 18,797,122 shares of Class A common stock that may be redeemed for cash and assuming no exercise of the underwriters over-allotment option) of $10.00 per share to our initial stockholders as of the date of this prospectus and an immediate dilution of $10.00 per share or 100% to our public stockholders not exercising their redemption rights. Total dilution to public stockholders from this offering will be $9.19 per share. The dilution to new investors if the underwriters exercise the over-allotment option in full would be an immediate dilution of $9.29 per share. The following table illustrates the dilution to the public stockholders on a per-share basis, assuming no value is attributed to the warrants included in the units, the founder shares or the private placement warrants: Public offering price $ 10.00 Net tangible book value before this offering (0.01 ) Increase attributable to public stockholders 9.20 Decrease attributable to public shares subject to redemption (10.00 ) Pro forma net tangible book value after this offering and the sale of the private placement warrants $ 0.81 Dilution to public stockholders $ 9.19 For purposes of presentation, we have reduced our pro forma net tangible book value after this offering (assuming no exercise of the underwriters over-allotment option) by $187,971,220 because holders of up to approximately 94.7% of our public shares may redeem their shares for a pro rata share of the aggregate amount then on deposit in the trust account at a per-share redemption price equal to the amount in the trust account as set forth in our tender offer or proxy materials (initially anticipated to be the aggregate amount held in trust two days prior to the commencement of our tender offer or stockholders meeting, including interest income (net of taxes payable and net of any amounts released to us to fund working capital requirements), divided by the number of shares of Class A common stock sold in this offering. The following table sets forth information with respect to our initial stockholders and the public stockholders: Shares Purchased Total Consideration Average Price per Share Number Percentage Amount Percentage Initial Stockholders (1) (2) 5,000,000 20.0 % $ 25,000 0.01 % $ 0.005 Public Stockholders 20,000,000 80.0 % 200,000,000 99.99 % $ 10.000 25,000,000 100.00 % $ 200,025,000 100.00 % (1) Assumes (a) the over-allotment option has not been exercised and the resulting forfeiture of 750,000 founder shares held by our initial stockholders has occurred and (b) that none of the intended forward purchase shares are purchased and the resulting forfeiture of 1,266,373 founder shares held by our initial stockholders has occurred. (2)Assumes conversion of Class F common stock to Class A common stock on a 1-for-1 basis. The dilution to public stockholders would increase to the extent that the anti-dilution provisions of the Class F common stock result in issuance of additional Class A shares to our initial stockholders. The pro forma net tangible book value per share after the offering is calculated as follows: Numerator: Net tangible book value before this offering $ (146,563 ) Proceeds from this offering and sale of the private placement warrants, net of expenses 200,950,000 Offering costs excluded from net tangible book value before this offering 167,784 Less: deferred underwriters commissions payable (8,000,000 ) Less: amount of Class A common stock subject to redemption to maintain net tangible assets of $5,000,001 (187,971,220 ) $ 5,000,001 Denominator: Shares of Class F common stock outstanding prior to this offering 7,016,373 Founder shares to be forfeited if the over-allotment option is not exercised (750,000 ) Founder shares to be forfeited if no forward purchase shares are purchased (1,266,373 ) Shares of Class A common stock included in the units offered 20,000,000 Less: shares subject to redemption to maintain net tangible assets of $5,000,001 (18,797,122 ) 6,202,878 CAPITALIZATION The following table sets forth our capitalization as of December 31, 2017, and as adjusted to give effect to the filing of our amended and restated certificate of incorporation, the sale of our units in this offering and the private placement warrants and the application of the estimated net proceeds derived from the sale of such securities: December 31, 2017 Actual As Adjusted(1) Deferred cash underwriting commissions $ — $ 8,000,000 Notes payable — Class A common stock, subject to redemption (2) — 187,971,220 Stockholders equity: Preferred stock, $0.0001 par value, 1,000,000 shares authorized; no shares issued and outstanding — — Class A Common stock, $0.0001 par value, 150,000,000 shares authorized; 0 shares issued and outstanding (actual); 20,000,000 shares issued and outstanding (excluding 18,797,122 shares subject to redemption) (as adjusted) — 121 Class F Common stock, $0.0001 par value, 50,000,000 shares authorized; 11,500,000 shares issued and outstanding (actual); 6,266,373 shares issued and outstanding (as adjusted) 1,150 626 Additional paid-in capital 23,850 5,003,033 Accumulated deficit (3,779 ) (3,779 ) Total stockholders equity 21,221 5,000,001 Total capitalization $ 21,221 $ 200,971,221 (1) Includes the $3,500,000 we will receive from the sale of the private placement warrants. Assumes the over-allotment option has not been exercised and the resulting forfeiture of 750,000 founder shares held by our initial stockholders (other than our independent director nominees) has occurred. (2)Upon the completion of our initial business combination, we will provide our stockholders with the opportunity to redeem their public shares for cash equal to their pro rata share of the aggregate amount then on deposit in the trust account as of two business days prior to the consummation of the initial business combination, including interest income (net of taxes payable and any amounts released to us to fund working capital requirements), subject to the limitations described herein whereby our net tangible assets will be maintained at a minimum of $5,000,001 and any limitations (including, but not limited to, cash requirements) created by the terms of the proposed business combination. MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Overview We are a blank check company incorporated as a Delaware corporation and formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. We have not identified any business combination target and we have not, nor has anyone on our behalf, initiated any substantive discussions, directly or indirectly, with respect to identifying any business combination target. We intend to effectuate our initial business combination using cash from the proceeds of this offering and the private placement of the private placement warrants, our capital stock, debt or a combination of cash, stock and debt. The issuance of additional shares of our stock in a business combination: may significantly dilute the equity interest of investors in this offering; may subordinate the rights of holders of common stock if preferred stock is issued with rights senior to those afforded our common stock; could cause a change of control if a substantial number of shares of our Class A common stock are issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and could result in the resignation or removal of our present officers and directors; may have the effect of delaying or preventing a change of control of us by diluting the stock ownership or voting rights of a person seeking to obtain control of us; and may adversely affect prevailing market prices for our Class A common stock and/or warrants. Similarly, if we issue debt securities, it could result in: default and foreclosure on our assets if our operating revenues after an initial business combination are insufficient to repay our debt obligations; acceleration of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant; our immediate payment of all principal and accrued interest, if any, if the debt security is payable on demand; our inability to obtain necessary additional financing if the debt security contains covenants restricting our ability to obtain such financing while the debt security is outstanding; our inability to pay dividends on our common stock; using a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for dividends on our common stock if declared, expenses, capital expenditures, acquisitions and other general corporate purposes; limitations on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate; increased vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation; and limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, execution of our strategy and other purposes and other disadvantages compared to our competitors who have less debt. As indicated in the accompanying financial statements, at December 31, 2017, we had approximately $25,020 in cash and deferred offering costs of $167,784. Further, we expect to continue to incur significant costs in the pursuit of our acquisition plans. We cannot assure you that our plans to raise capital or to complete our initial business combination will be successful. Results of Operations and Known Trends or Future Events We have neither engaged in any operations nor generated any revenues to date. Our only activities since inception have been organizational activities and those necessary to prepare for this offering. Following this offering, we will not generate any operating revenues until after completion of our initial business combination. We will generate non-operating income in the form of interest income on cash and cash equivalents after this offering. There has been no significant change in our financial or trading position and no material adverse change has occurred since the date of our audited financial statements. After this offering, we expect to incur increased expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses. We expect our expenses to increase substantially after the closing of this offering. Liquidity and Capital Resources Our liquidity needs have been satisfied to date through receipt of $25,000 from the sale of the founder shares to our sponsor and through loans and advances made by our sponsor. We estimate that the net proceeds from the sale of the units in this offering, after deducting offering expenses of approximately $750,000, cash underwriting commissions of $1,800,000 (excluding deferred cash underwriting commissions of $8,000,000 (or up to $9,800,000 if the underwriters over-allotment option is exercised in full), and the sale of the private placement warrants for a purchase price of $3,500,000, will be $200,950,000 (or $230,950,000 if the underwriters over-allotment option is exercised in full). $200,000,000 (or $230,000,000 if the underwriters over-allotment option is exercised in full) will be held in the trust account, which includes $8,000,000 (or up to $9,800,000 if the underwriters over-allotment option is exercised in full) of deferred underwriting commissions. The remaining approximately $950,000 will not be held in the trust account. In the event that our offering expenses exceed our estimate of $750,000, we may fund such excess with funds not to be held in the trust account. In such case, the amount of funds we intend to be held outside the trust account would decrease by a corresponding amount. Conversely, in the event that the offering expenses are less than our estimate of $750,000, the amount of funds we intend to be held outside the trust account would increase by a corresponding amount. We intend to use substantially all of the funds held in the trust account, including any amounts representing interest earned on the trust account (net of taxes payable and net of any amounts released to us to fund working capital requirements), excluding deferred cash underwriting commissions, to complete our initial business combination. We may withdraw interest to pay taxes, if any, and to fund working capital requirements. We estimate our annual franchise tax obligations, based on the number of shares of our common stock authorized and outstanding after the completion of this offering, to be $200,000. Our annual income tax obligations will depend on the amount of interest and other income earned on the amounts held in the trust account. We expect that the interest earned on the amount in the trust account will be sufficient to pay our taxes. To the extent that our capital stock or debt is used, in whole or in part, as consideration to complete our initial business combination, the remaining proceeds held in the trust account will be used as working capital to finance the operations of the target business or businesses, make other acquisitions and pursue our growth strategies. Prior to the completion of our initial business combination, we will have available to us the approximately $950,000 of proceeds held outside the trust account. We will use these funds primarily to identify and evaluate target businesses, perform business due diligence on prospective target businesses, travel to and from the offices, plants or similar locations of prospective target businesses or their representatives or owners, review corporate documents and material agreements of prospective target businesses, structure, negotiate and complete a business combination, and to pay taxes to the extent the interest earned on the trust account is not sufficient to pay our taxes. In addition, in order to finance transaction costs in connection with an intended initial business combination, our sponsor and its affiliates or designees have committed up to $1,000,000 to be provided to us in the event that funds held outside of the trust are insufficient to fund our expenses relating to investigating and selecting a target business and other working capital requirements after this offering and prior to our initial business combination and may, but are not obligated to, loan us additional funds to fund our expenses relating to investigating and completing our initial business combination. If we complete our initial business combination, we would repay such loaned amounts out of the proceeds of the trust account released to us. Otherwise, such loans would be repaid only out of funds held outside the trust account. In the event that our initial business combination does not close, we may use a portion of the working capital held outside the trust account to repay such loaned amounts but no proceeds from our trust account would be used to repay such loaned amounts. Up to $1,000,000 of any such working capital loans may be convertible into warrants of the post business combination entity at a price of $1.00 per warrant at the option of the lender. The warrants would be identical to the private placement warrants issued to the initial stockholders. We expect our primary liquidity requirements during that period to include approximately $900,000 for legal, accounting, due diligence, travel and other expenses associated with structuring, negotiating and documenting successful business combinations; $150,000 for legal and accounting fees related to regulatory reporting requirements; $75,000 for NASDAQ continued listing fees and other regulatory fees, $405,000 for office space, administrative and support services; $50,000 as a reserve for liquidation expenses; and approximately $370,000 for general working capital that will be used for miscellaneous expenses and reserves. These amounts are estimates and may differ materially from our actual expenses. In addition, we could use a portion of the funds not being placed in trust to pay commitment fees for financing, fees to consultants to assist us with our search for a target business or as a down payment or to fund a "no-shop" provision (a provision designed to keep target businesses from "shopping" around for transactions with other companies on terms more favorable to such target businesses) with respect to a particular proposed business combination, although we do not have any current intention to do so. If we entered into an agreement where we paid for the right to receive exclusivity from a target business, the amount that would be used as a down payment or to fund a "no-shop" provision would be determined based on the terms of the specific business combination and the amount of our available funds at the time. Our forfeiture of such funds (whether as a result of our breach or otherwise) could result in our not having sufficient funds to continue searching for, or conducting due diligence with respect to, prospective target businesses. We do not believe we will need to raise additional funds following this offering in order to meet the expenditures required for operating our business. However, if our estimates of the costs of identifying a target business, undertaking in-depth due diligence and negotiating an initial business combination are less than the actual amount necessary to do so, we may have insufficient funds available to operate our business prior to our business combination. Moreover, we may need to obtain additional financing either to complete our business combination or because we become obligated to redeem a significant number of our public shares upon completion of our business combination, in which case we may issue additional securities or incur debt in connection with such business combination. Subject to compliance with applicable securities laws, we would only complete such financing simultaneously with the completion of our business combination. In the current economic environment, it may be difficult to obtain acquisition financing. If we are unable to complete our initial business combination because we do not have sufficient funds available to us, we will be forced to cease operations and liquidate the trust account. In addition, following our initial business combination, if cash on hand is insufficient, we may need to obtain additional financing in order to meet our obligations. Controls and Procedures We are not currently required to maintain an effective system of internal controls as defined by Section 404 of the Sarbanes-Oxley Act. We will be required to comply with the internal control requirements of the Sarbanes-Oxley Act for the fiscal year ending December 31, 2019. Only in the event that we are deemed to be a large accelerated filer or an accelerated filer would we be required to comply with the independent registered public accounting firm attestation requirement. Further, for as long as we remain an emerging growth company as defined in the JOBS Act, we intend to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirement. Prior to the closing of this offering, we have not completed an assessment, nor have our auditors tested our systems, of internal controls. We expect to assess the internal controls of our target business or businesses prior to the completion of our initial business combination and, if necessary, to implement and test additional controls as we may determine are necessary in order to state that we maintain an effective system of internal controls. A target business may not be in compliance with the provisions of the Sarbanes-Oxley Act regarding the adequacy of internal controls. Many small and mid-sized target businesses we may consider for our business combination may have internal controls that need improvement in areas such as: staffing for financial, accounting and external reporting areas, including segregation of duties; reconciliation of accounts; proper recording of expenses and liabilities in the period to which they relate; evidence of internal review and approval of accounting transactions; documentation of processes, assumptions and conclusions underlying significant estimates; and documentation of accounting policies and procedures. Because it will take time, management involvement and perhaps outside resources to determine what internal control improvements are necessary for us to meet regulatory requirements and market expectations for our operation of a target business, we may incur significant expenses in meeting our public reporting responsibilities, particularly in the areas of designing, enhancing, or remediating internal and disclosure controls. Doing so effectively may also take longer than we expect, thus increasing our exposure to financial fraud or erroneous financing reporting. Once our management s report on internal controls is complete, we will retain our independent registered public accounting firm to audit and render an opinion on such report when required by Section 404. The independent auditors may identify additional issues concerning a target business s internal controls while performing their audit of internal control over financial reporting. Quantitative and Qualitative Disclosures about Market Risk The net proceeds of this offering and the sale of the private placement warrants held in the trust account will be invested in U.S. government treasury bills with a maturity of 180 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act which invest only in direct U.S. government treasury obligations. Due to the short-term nature of these investments, we believe there will be no associated material exposure to interest rate risk. Related Party Transactions In June 2017, our sponsor and an affiliate thereof purchased an aggregate of 11,500,000 founder shares for an aggregate purchase price of $25,000. Prior to the initial investment in the company of $25,000 by our sponsor and its affiliate, the company had no assets, tangible or intangible. The purchase price of the founder shares was determined by dividing the amount of cash contributed to the company by the number of founder shares issued. Prior to the consummation of this offering our sponsor sold 2,110,346 of its founder shares to Nomura for an aggregate purchase price of $4,587.71, or approximately $0.0022 per share. Also prior to the consummation of this offering, our sponsor sold an aggregate of 75,000 founder shares to Messrs. Kagan, Pollack, Rosston and Valner, each an independent director nominee, and Mr. Brown, a director nominee, for a purchase price of approximately $0.0022 per share. Prior to the consummation of this offering, the initial stockholders will forfeit an aggregate of 4,483,627 founder shares, such that at the time of this offering the initial stockholders own an aggregate of 7,016,373 founder shares (up to 750,000 of which are subject to forfeiture depending on the extent to which the underwriters over-allotment option is exercised, and up to 1,266,373 of which are subject to forfeiture depending on the extent to which the forward purchase shares are purchased). Of the 1,503,930 founder shares held by Nomura, up to 303,930 are subject to forfeiture depending on the extent to which the forward purchase shares are purchased. Of the 1,503,930 founder shares held by Nomura, 220,000 were sold to Nomura in connection with the underwriting of this transaction. Immediately after this offering, our initial stockholders will beneficially own 20.0% of the then issued and outstanding shares of our common stock (assuming they do not purchase any units in this offering), calculated on a pro forma basis assuming the issuance of all of the forward purchase shares. If we increase or decrease the size of the offering pursuant to Rule 462(b) under the Securities Act, we will effect a stock dividend or a share contribution back to capital, as applicable, immediately prior to the consummation of the offering in such amount as to maintain the ownership of our stockholders prior to this offering at 20.0% of our issued and outstanding shares of our common stock upon the consummation of this offering, calculated on a pro forma basis assuming the issuance of all of the forward purchase shares (Nomura has agreed to waive its rights to any additional Class A common stock pursuant to the foregoing). Because of this ownership block, our initial stockholders may be able to effectively influence the outcome of all matters requiring approval by our stockholders, including the election of directors, amendments to our amended and restated certificate of incorporation and approval of significant corporate transactions other than approval of our initial business combination. Up to 750,000 founder shares will be subject to forfeiture by certain of our initial stockholders depending on the extent to which the underwriters over-allotment option is exercised, and up to 1,266,373 founder shares are subject to forfeiture by certain of our initial stockholders (or their permitted transferees) depending on the extent to which the forward purchase shares are purchased. We intend to enter into an Administrative Services Agreement pursuant to which we will pay an affiliate of our sponsor a total of $16,875 per month for office space, utilities and secretarial support. Upon completion of our initial business combination or our liquidation, we will cease paying these monthly fees. Prior to the closing of this offering, an affiliate of our sponsor has loaned and advanced us $140,000 to be used for a portion of the expenses of this offering. These loans are non-interest bearing, unsecured and are due at the earlier of June 30, 2018 or the closing of this offering. In addition, in order to finance transaction costs in connection with an intended initial business combination, our sponsor and its affiliates or designees have committed up to $1,000,000 to be provided to us in the event that funds held outside of the trust are insufficient to fund our expenses relating to investigating and selecting a target business and other working capital requirements after this offering and prior to our initial business combination and may, but are not obligated to, loan us additional funds to fund our expenses relating to investigating and completing our initial business combination. If we complete our initial business combination, we would repay such loaned amounts out of the proceeds of the trust account released to us. Otherwise, such loans would be repaid only out of funds held outside the trust account. In the event that our initial business combination does not close, we may use a portion of the working capital held outside the trust account to repay such loaned amounts but no proceeds from our trust account would be used to repay such loaned amounts. Up to $1,000,000 of any such working capital loans may be convertible into warrants of the post business combination entity at a price of $1.00 per warrant at the option of the lender. The warrants would be identical to the private placement warrants issued to the initial stockholders. Our sponsor has committed to purchase an aggregate of 3,500,000 private placement warrants at a price of $1.00 per warrant, or $3,500,000 in the aggregate, in a private placement that will close simultaneously with the closing of this offering. Each private placement warrant is exercisable to purchase one share of our Class A common stock at $11.50 per share, subject to adjustment as provided herein. Our sponsor will be permitted to transfer the private placement warrants held by it to certain permitted transferees, including our executive officers and directors and other persons or entities affiliated with or related to them, but the transferees receiving such securities will be subject to the same agreements with respect to such securities as our sponsor. Otherwise, these warrants will not, subject to certain limited exceptions, be transferable or salable until 30 days after the completion of our business combination. The private placement warrants will be non-redeemable so long as they are held by our sponsor or its permitted transferees (except as described below under "Principal Stockholders — Transfers of Founder Units and Private Placement Warrants"). The private placement warrants may also be exercised by our sponsor or its permitted transferees for cash or on a cashless basis. Otherwise, the private placement warrants have terms and provisions that are identical to those of the warrants being sold as part of the units in this offering. Nomura has entered into a forward purchase agreement with us which provides for the purchase by Nomura of an aggregate of 5,065,494 shares of our Class A common stock for an aggregate purchase price of $50,000,000 in a private placement to occur concurrently with the closing of our initial business combination. The forward purchase shares are identical to the shares of Class A common stock included in the units being sold in this offering, except that the forward purchase shares are subject to transfer restrictions and certain registration rights, as described herein. The forward purchase agreement allows Nomura to approach other institutional and accredited investors and, with our consent, which will not be unreasonably withheld, delayed or conditioned, enter into agreements with any such investor to assume Nomura s purchase obligation under the forward purchase agreement. The forward purchase agreement also allows Nomura to be excused from its purchase obligation in connection with a specific business combination if, within five business days following written notice delivered by us of our intention to enter into such business combination, Nomura notifies us that it has decided not to proceed with the purchase for any reason, including, without limitation, if it has determined that such purchase would constitute a conflict of interest. In the event Nomura exercises its right of excusal, Nomura has agreed to waive its right to receive the placement fee earned from the sale of the forward purchase shares and the underwriters will waive their right to receive a portion of the deferred underwriting discount. The obligations under the forward purchase agreement are not affected by any redemptions by our public stockholders of shares of our Class A common stock. Prior to the consummation of this offering our sponsor sold 2,110,346 of its founder shares to Nomura. Prior to the consummation of this offering, Nomura will forfeit 606,416 founder shares. Of the 1,503,930 founder shares held by Nomura, up to 303,930 are subject to forfeiture depending on the extent to which the forward purchase shares are purchased. Of the 1,503,930 founder shares held by Nomura, 220,000 were sold to Nomura in connection with the underwriting of this transaction. Nomura has also agreed, if so requested by us, to underwrite, arrange and/or syndicate up to $450 million of additional financing for us in the form of equity or debt (or a combination thereof) in connection with our initial business combination. We will not be obligated to engage Nomura in connection with any such forward financing. The terms of any such forward financing will be based upon then-current general economic and market conditions and subject to terms and conditions satisfactory in all respects to Nomura in its sole judgement and determination if Nomura is so engaged. Any such forward financing will be without regard to any redemptions that may be tendered to us. Nomura has agreed to allow the Company to disclose the terms, conditions and assumptions under which Nomura would be highly confident of executing financing documents of a predetermined size, as part of the financing in the letter of intent delivered to each potential business combination counterparty, subject to certain conditions. Nomura will be paid a market-based placement fee on the gross proceeds from the sale of the forward purchase shares upon the consummation of an initial business combination. In addition, the forward purchase agreement provides that Nomura (or its assignees) is entitled to registration rights with respect to the forward purchase shares. We have agreed that Nomura will not be asked to render a fairness opinion with respect to the Business Combination as it may have a conflict of interest by virtue of its affiliation with us. As a consequence, we may be required to retain another firm to render such an opinion if one is required. Pursuant to a registration rights agreement we will enter into with our initial stockholders and initial purchaser of the private placement warrants, and Nomura (or any assignees of Nomura s obligations under the forward purchase agreement) on or prior to the closing of this offering, we may be required to register certain securities for sale under the Securities Act. Our sponsor and Nomura are entitled under the registration rights agreement to make up to three demands and two demands, respectively, that we register certain of our securities held by them for sale under the Securities Act and to have the securities covered thereby registered for resale pursuant to Rule 415 under the Securities Act. In addition, these holders have the right to include their securities in other registration statements filed by us. However, the registration rights agreement provides that we will not permit any registration statement filed under the Securities Act to become effective until the securities covered thereby are released from any applicable lock-up restrictions, as described herein. We will bear the costs and expenses of filing any such registration statements. See "Certain Relationships and Related Party Transactions." Off-Balance Sheet Arrangements; Commitments and Contractual Obligations; Quarterly Results As of December 31, 2017, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K and did not have any commitments or contractual obligations. No unaudited quarterly operating data is included in this prospectus as we have conducted no operations to date. JOBS Act On April 5, 2012, the JOBS Act was signed into law. The JOBS Act contains provisions that, among other things, relax certain reporting requirements for qualifying public companies. We will qualify as an "emerging growth company" and under the JOBS Act will be allowed to comply with new or revised accounting pronouncements based on the effective date for private (not publicly traded) companies. We are electing to delay the adoption of new or revised accounting standards, and as a result, we may not comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. As a result, our financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates. Additionally, we are in the process of evaluating the benefits of relying on the other reduced reporting requirements provided by the JOBS Act. Subject to certain conditions set forth in the JOBS Act, if, as an "emerging growth company", we choose to rely on such exemptions we may not be required to, among other things, provide an auditor s attestation report on our system of internal controls over financial reporting pursuant to Section 404, provide all of the compensation disclosure that may be required of non-emerging growth public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act, comply with any requirement that may be adopted by the PCAOB regarding mandatory audit firm rotation or a supplement to the auditor s report providing additional information about the audit and the financial statements (auditor discussion and analysis), and disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the CEO s compensation to median employee compensation. These exemptions will apply for a period of five years following the completion of our initial public offering or until we are no longer an "emerging growth company," whichever is earlier. PROPOSED BUSINESS Introduction We are a newly organized blank check company incorporated in June 2017 as a Delaware corporation formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. We have not identified any business combination target and we have not, nor has anyone on our behalf, initiated any substantive discussions, directly or indirectly, with respect to identifying any business combination target. We do not have any specific business combination under consideration. Our officers and directors have neither individually identified nor considered a target business nor have they had any discussions regarding possible target businesses amongst themselves or with our underwriters or other advisors. Nomura, through its financial advisory business, is continuously made aware of potential business opportunities, one or more of which we may desire to pursue, for a business combination. We will not consider a business combination with any company that has been identified by or to Nomura or any of its affiliates as an acquisition candidate for our initial business combination prior to the closing of this offering. Additionally, we have not, nor has anyone on our behalf, taken any measure, directly or indirectly, to identify or locate any suitable acquisition candidate, nor have we engaged or retained any agent or other representative to identify or locate any such acquisition. Objective We intend to focus our efforts on seeking an initial business combination with a company that has an enterprise value of between $500 million and $2 billion, although a target entity with a smaller or larger enterprise value may be considered. Following the initial business combination, our objective will be to implement or support the acquired company s operating strategies in order to generate additional value for shareholders. General goals may include additional acquisitions and operational improvements. Our efforts to identify a prospective target business will not be limited to a particular industry. We believe that private equity firms, venture capital funds and others will find the opportunity to enter into the initial business combination with us attractive for the following reasons: Track Record of Our Team. Members of our management team have served in management of three other blank check companies that completed business combinations. Nathan Leight served as chairman of Aldabra Acquisition Corporation, or Aldabra 1, which completed a merger with affiliates of and into Great Lakes Dredge & Dock Corporation, or GLDD (NASDAQ: GLDD), in 2006. Mr. Leight later served as chairman of Aldabra 2 Acquisition Corp., or Aldabra 2, which completed a merger in 2008 with certain paper and packaging businesses of Boise Cascade Company. The resulting company was subsequently listed on the New York Stock Exchange as Boise, Inc. or Boise. Mr. Leight served as the Chairman of Terrapin 3 Acquisition Corporation, or Terrapin 3, from its initial public offering in 2014 until its business combination with Yatra Online, Inc., or YTRA (NASDAQ: YTRA), in 2016. YTRA is the second largest online travel agency in India. Mr. Plotkin served as a key member of the team for Aldabra 1, Aldabra 2, and Terrapin 3. Mr. Barudin served as a key member of the team for both Aldabra 2 and Terrapin 3. Mr. Schifrin and Ms. Carpov served as key members of the team for Terrapin 3. Mr. McMillan was an advisor to Aldabra 2 in the Boise transaction, has maintained a long relationship with our team, and has an extensive track record advising special purpose acquisition companies like Terrapin in the process of closing their business combinations. We believe private equity firms and venture capital funds will view the consummation of the Aldabra 1, Aldabra 2 and Terrapin 3 mergers as positive factors in considering whether to sell a portfolio company to us. Minimum Funding Available as a Result of the $50 Million Forward Purchase Agreement and the Up to $450 Million Forward Financing. Nomura has entered into a forward purchase agreement with us which provides for the purchase by Nomura of an aggregate of 5,065,494 shares of our Class A common stock for an aggregate purchase price of $50,000,000 in a private placement to occur concurrently with the closing of our initial business combination. The forward purchase shares are identical to the shares of Class A common stock included in the units being sold in this offering, except that the forward purchase shares are subject to transfer restrictions and certain registration rights, as described herein. The forward purchase agreement allows Nomura to approach other institutional and accredited investors and, with our consent, which will not be unreasonably withheld, delayed or conditioned, enter into agreements with any such investor to assume Nomura s purchase obligation under the forward purchase agreement. The forward purchase agreement also allows Nomura to be excused from its purchase obligation in connection with a specific business combination if, within five business days following written notice delivered by us of our intention to enter into such business combination, Nomura notifies us that it has decided not to proceed with the purchase for any reason, including, without limitation, if it has determined that such purchase would constitute a conflict of interest. In the event Nomura exercises its right of excusal, Nomura has agreed to waive its right to receive the placement fee earned from the sale of the forward purchase shares and the underwriters will waive their right to receive a portion of the deferred underwriting discount. The funds from the forward purchase agreement will be used as part of the consideration to the sellers in the initial business combination; any excess funds from this private placement may be used for working capital in the post-transaction company. The obligations under the forward purchase agreement are not affected by any redemptions by our public stockholders of shares of our Class A common stock and provide us with a minimum funding level for the initial business combination, subject to the satisfaction of the conditions to funding. Prior to the consummation of this offering our sponsor sold 2,110,346 of its founder shares to Nomura. Prior to the consummation of this offering, Nomura will forfeit 606,416 founder shares. Of the 1,503,930 founder shares held by Nomura, up to 303,930 are subject to forfeiture depending on the extent to which the forward purchase shares are purchased. Of the 1,503,930 founder shares held by Nomura, 220,000 were sold to Nomura in connection with the underwriting of this transaction. Nomura has also agreed, if so requested by us, to underwrite, arrange and/or syndicate up to $450 million of additional financing for us in the form of equity or debt (or a combination thereof) in connection with our initial business combination. We will not be obligated to engage Nomura in connection with any such forward financing. The terms of any such forward financing will be based upon then-current general economic and market conditions and subject to terms and conditions satisfactory in all respects to Nomura in its sole judgement and determination if Nomura is so engaged. Any such forward financing will be without regard to any redemptions that may be tendered to us. Nomura has agreed to allow the Company to disclose the terms, conditions and assumptions under which Nomura would be highly confident of executing financing documents of a predetermined size, as part of the financing in the letter of intent delivered to each potential business combination counterparty, subject to certain conditions. Nomura is a wholly owned subsidiary of Nomura Holding America Inc., which, in turn, is a wholly owned subsidiary of Nomura Holdings, Inc., or the Nomura Group (TSE: 8604; NYSE: NMR). The Nomura Group is an Asia-headquartered global investment bank with an integrated network spanning over 30 countries. The Nomura Group services the needs of individuals, institutions, corporates and governments through three business divisions: Retail, Asset Management, and Wholesale (Global Markets and Investment Banking). As of September 30, 2017, the Nomura Group had $391.6 billion in total assets and 28,857 employees globally (2,348 in the Americas, 3,047 in Europe, Middle East, and Africa, 6,756 in Asia excluding-Japan and 16,706 in Japan). The Nomura Group s Wholesale Division comprises Global Markets, which offers research, sales and trading of global securities, and Investment Banking, which offers capital raising and advisory services. The Investment Banking platform provides a variety of advisory and capital-raising solutions to corporations, financial institutions, private equity, governments and public-sector organizations around the world. Collaborating across geographies, industries and products, Nomura provides comprehensive and innovative financing, advisory and risk solutions to clients. Product offerings include: Mergers and Acquisitions: The Nomura Group acts as a financial advisor to identify and facilitate strategic merger and acquisition, sale of business or alliance opportunities for corporate, financial institutions and sponsor clients, with dedicated M&A teams in Asia, EMEA and the Americas work across borders and time zones to deliver holistic support to its clients globally; Capital Raising: In Equity Capital Markets, the Nomura Group originates and executes equity and equity-linked transactions, including IPOs, rights issues, accelerated bookbuilds and convertibles. Debt Capital Markets helps clients execute local and foreign-currency debt transactions with specialized teams servicing financial institutions, corporates, public sector agencies and sovereigns. Acquisition and Leveraged Finance arranges financing for leveraged buyouts and corporate acquisitions along with on-going refinancing needs using a variety of debt products; Solutions: Solutions teams apply a broad range of Fixed Income solutions, Equity related solutions and Insurance solutions to address the various risks faced by clients. The team is also dedicated to understanding the capital and risk management needs of insurance companies and developing cutting-edge Insurance Solutions to help them respond to these challenges. These include securitization products, structured reinsurance and derivative hedging solutions for complex insurance-specific asset and liability risks. The Nomura Group s Investment Banking platform offers services to a variety of industry sectors, including: Business Services; Consumer / Retail; Financial Institutions; Healthcare; Industrials; Natural Resources & Power; Real Estate / Gaming / Lodging / Leisure; and Telecom / Media / Technology. We believe private equity firms, venture capital firms and management teams will view the track record of our team and the Nomura Group s financial commitments, deal sourcing, and execution capabilities as positive attributes contributing to our ability to identify attractive acquisition opportunities, and structure and complete a successful business combination. With respect to the above transactions, past performance by Mr. Leight, our team and Nomura is not a guarantee either of success with respect to any business combination we may consummate or that we will be able to locate a suitable candidate for our initial business combination. Business Opportunity We believe certain non-public companies and their shareholders can benefit from a transaction with us. Acquisition candidates are entities that may need stable, permanent equity financing, but may currently have limited access to the public markets. While targets may be either independent entities or divisions of larger organizations, we believe there is an opportunity for us to provide value to current owners of targets that fall into four general categories. (1)Private Equity Fund Portfolio Companies — Substantial amounts of capital have been invested by private equity and venture capital firms. According to PitchBook Data, Inc., U.S. private equity funds raised approximately $2.3 trillion from 2007 through 2017 in more than 2,120 different funds. Venture capital funds raised approximately $292 billion in the U.S. during the same period. From 2007 through 2016, the median hold time of companies held by private equity funds increased from approximately 3.6 years to more than 5.2 years. Therefore, we believe that there should be a significant number of portfolio companies available for sale from private equity firms in the coming years as they seek liquidity. These funds have an ongoing need for investment realizations, particularly in older vintage portfolios. (2)Entities Struggling with Complex or Failed Transactions — Public market exits are increasingly challenging for many private company shareholders. According to JP Morgan Asset Management, the number of publicly-traded companies declined from more than 8,000 to less than 4,400 between 1996 and 2016. According to Bloomberg Data and SEC filings, the number of IPOs completed annually between the 1996 and 2016 declined at a compound average rate of 10% annually. Companies seeking to access the public market through traditional IPOs or to sell to financial buyers may face obstacles to closing those transactions. Failed auctions and failed IPOs occur for a variety of reasons. Public or strategic investors may have previously judged these transactions to be too complicated to close in a timely manner. Public markets may simply be inaccessible for IPOs due to economic conditions or negative investor sentiment at the time the transaction was prepared to begin. A business combination with us can be a solution for investors in firms that have experienced these types of failed transactions. (3)Entities Held by Non-Traditional Investors — Financial institutions, banks, non-bank lenders, hedge funds, or any other investor who does not typically hold and manage operating assets, may be anxious to divest their holdings. In the event that those types of investors are experiencing liquidation or other pressures in their core businesses, they may need to divest certain holdings in order to maximize the return on their portfolios or from their other assets. (4)Divestiture of Non-Core Assets by Large Conglomerates — Certain multi-unit companies may face the need to rationalize their business by sale or spin-off of operating units due to pressures from lenders, customers, suppliers, or shareholders. We may or may not consummate our business combination with a company that falls into one of the categories above. Strategy and Execution We have identified certain general criteria and guidelines for evaluating prospective target businesses. We will use these criteria and guidelines, but we may decide to enter into our initial business combination with a target business that does not meet some or all of these criteria and guidelines. Fundamentally, we intend to focus on companies with positive operating cash flow, significant assets, and experienced and successful management teams that are also well-positioned to capitalize on one or more of the following investment themes. These criteria are not intended to be exhaustive. Any evaluation relating to the merits of a particular initial business combination may be based on these general guidelines as well as other considerations, factors and criteria that our management may deem relevant. Fundamental Changes in Socio-Economics and Demographics. We may focus on candidates who would benefit from global and regional socio-economic and demographic trends including, but not limited to, growing consumer demand in emerging markets and aging populations in developed markets. While these trends provide opportunities for broad market growth of sales and profits, we believe that certain companies may not have altered their strategy to specifically prepare for such trends. If we acquire such a company, we intend to support strategies aimed at accelerating its ability to benefit from the effect of these types of fundamental economic changes on its business. Under-managed Intellectual Property, Proprietary Business Practices and/or Other Intangible Assets. We intend to focus on companies that have potentially underexploited intellectual property, proprietary business practices or other under-managed assets. If we acquire such a company, we intend to focus on applying new resources, technologies, or business models to leverage or more fully develop its intangible assets, and thereby increase growth and improve profitability. Competitive Advantage. We will seek targets that can take advantage of barriers to entry of competition for its products or services. For example, companies with assets that are difficult to replicate, either due to proprietary technology, location, or simply because their replacement cost exceeds the capacity of competitors to invest, may be able to earn sustainable profits. Fundamental Changes in Competitive Dynamics. We may seek targets in industries in which fundamental changes, regardless of their source, are altering the relative advantages enjoyed by new and old competitors. Certain markets may be undergoing disruptive change or shifts in historic patterns of competition. This may occur in both rapidly growing and mature, stable industries. We believe there are good investments not only in high-growth industries but also in more mature sectors in which significant restructuring drives better asset utilization and improved pricing discipline. Increasingly Networked Economies. We may focus on targets that benefit from increasing connectivity between production and consumption in geographic markets or industrial sectors. We believe that accelerated change in the deployment of telecommunication grids and electronic commerce in both developing and developed economies, and more intensive use of air, rail, road, and maritime transportation to link markets, may create growth opportunities for target companies that may benefit from funding in the public markets available through a business combination with us. Technology Disrupting Markets. We may seek candidates either benefiting from new technology or providing technology products or services that fundamentally change the competitive environment in their target markets. Continuing and accelerating advances in hardware, software, and materials sciences create opportunities to disrupt traditional industries and also may profoundly influence the development of new types of businesses. In particular, the novel use of technology to innovate the gathering and analysis of large amounts of data may accelerate business growth and shifts in market share. Increasingly Large Private Technology Companies. We may seek targets among the increasingly large number of private technology companies. According to Bloomberg Data, funds raised in 2006 or earlier held more than $210 billion of unrealized assets as of June 2016. As a result, the number of large private companies has increased, particularly in the technology sector. PitchBook Data, Inc. listed 215 privately held U.S. technology companies with valuations in excess of $1.0 billion as of February 9, 2018. We believe investors in these entities will want liquidity at some point and that a business combination with us can provide flexibility not available in traditional IPOs. These criteria are not intended to be exhaustive. Any evaluation relating to the merits of a particular initial business combination may be based on these general guidelines as well as other considerations, factors and criteria that our management may deem relevant. We will use a disciplined process to searching for, screening, and researching targets. We believe a systematic approach to applying our investment criteria will result in an efficient use of our resources. Members of our management team has experience working together on previous blank check companies and applying similar criteria in search of transactions similar to our proposed initial business combination. Over the course of their careers, the members of our management team and board of directors have developed a broad network of contacts and corporate relationships that we believe will serve as a useful source of investment opportunities. This network has been developed through our management team s: experience in sourcing, acquiring, operating, developing, growing, financing and selling businesses; and experience in executing transactions under varying economic and financial market conditions. This network has provided our management team with a flow of referrals that have resulted in numerous transactions. We believe that the network of contacts and relationships of our management team will provide us with an important source of investment opportunities. In addition, we anticipate that target business candidates will be brought to our attention from various unaffiliated sources, including investment market participants, private equity groups, investment banking firms, consultants, accounting firms and large business enterprises. In addition, Nomura is a diversified financial services firm with an international network of holdings. We will have access to this global institutional network from which to source possible transactions and will incorporate outreach to those relationships as part of our systematic search process. In evaluating a prospective target business, we expect to conduct a thorough due diligence review which will encompass, among other things, meetings with incumbent management and employees, document reviews, inspection of facilities, as well as a review of financial and other information which will be made available to us. Competitive Advantage We believe the ability of a blank check company to represent that it has the experience and resources to negotiate and close an initial business combination while minimizing financing risk will represent a competitive advantage for a blank check company relative to other buyers of an acquisition candidate. We believe that private equity firms, venture capital funds and others will find the opportunity to enter into the initial business combination with us attractive for the following reasons: Track Record of Our Team. Members of our management team have served in management of three other blank check companies that completed business combinations. Nathan Leight served as chairman of Aldabra Acquisition Corporation, or Aldabra 1, which completed a merger with affiliates of and into Great Lakes Dredge & Dock Corporation, or GLDD (NASDAQ: GLDD) in 2006. Mr. Leight later served as chairman of Aldabra 2 Acquisition Corp., or Aldabra 2, which completed a merger in 2008 with certain paper and packaging businesses of Boise Cascade Company. The resulting company was subsequently listed on the New York Stock Exchange as Boise, Inc. or Boise. Mr. Leight served as the Chairman of Terrapin 3 Acquisition Corporation, or Terrapin 3, from its initial public offering in 2014 until its business combination with Yatra Online, Inc., or YTRA (NASDAQ: YTRA) in 2016. YTRA is the second largest online travel agency in India. Mr. Plotkin served as a key member of the team for Aldabra 1, Aldabra 2, and Terrapin 3. Mr. Barudin served as a key member of the team for both Aldabra 2 and Terrapin 3. Mr. Schifrin and Ms. Carpov served as key members of the team for Terrapin 3. Mr. McMillan was an advisor to Aldabra 2 in the Boise transaction, has maintained a long relationship with our team, and has an extensive track record advising special purpose acquisition companies like Terrapin in the process of closing their business combinations. We believe private equity firms and venture capital funds will view the consummation of the Aldabra 1, Aldabra 2 and Terrapin 3 mergers as positive factors in considering whether to sell a portfolio company to us. Minimum Funding Available as a Result of the $50 Million Forward Purchase Agreement and the Up to $450 Million Forward Financing. Nomura has entered into a forward purchase agreement with us which provides for the purchase by Nomura of an aggregate of 5,065,494 shares of our Class A common stock for an aggregate purchase price of $50,000,000 in a private placement to occur concurrently with the closing of our initial business combination. The forward purchase shares are identical to the shares of Class A common stock included in the units being sold in this offering, except that the forward purchase shares are subject to transfer restrictions and certain registration rights, as described herein. The forward purchase agreement allows Nomura to approach other institutional and accredited investors and, with our consent, which will not be unreasonably withheld, delayed or conditioned, enter into agreements with any such investor to assume Nomura s purchase obligation under the forward purchase agreement. The forward purchase agreement also allows Nomura to be excused from its purchase obligation in connection with a specific business combination if, within five business days following written notice delivered by us of our intention to enter into such business combination, Nomura notifies us that it has decided not to proceed with the purchase for any reason, including, without limitation, if it has determined that such purchase would constitute a conflict of interest. In the event Nomura is unable to identify an investor to assume Nomura s purchase obligation under the forward purchase agreement and Nomura instead exercises its right of excusal, Nomura has agreed to waive its right to receive the placement fee earned from the sale of the forward purchase shares and the underwriters will waive their right to receive a portion of the deferred underwriting discount. The funds from the forward purchase agreement will be used as part of the consideration to the sellers in the initial business combination; any excess funds from this private placement may be used for working capital in the post-transaction company. The obligations under the forward purchase agreement are not affected by any redemptions by our public stockholders of shares of our Class A common stock and provide us with a minimum funding level for the initial business combination, subject to the satisfaction of the conditions to funding. Prior to the consummation of this offering our sponsor sold 2,110,346 of its founder shares to Nomura. Prior to the consummation of this offering, Nomura will forfeit 606,416 founder shares. Of the 1,503,930 founder shares held by Nomura, up to 303,930 are subject to forfeiture depending on the extent to which the forward purchase shares are purchased. Of the 1,503,930 founder shares held by Nomura, 220,000 were sold to Nomura in connection with the underwriting of this transaction. Nomura has also agreed, if so requested by us, to underwrite, arrange and/or syndicate up to $450 million of additional financing for us in the form of equity or debt (or a combination thereof) in connection with our initial business combination. We will not be obligated to engage Nomura in connection with any such forward financing. The terms of any such forward financing will be based upon then-current general economic and market conditions and subject to terms and conditions satisfactory in all respects to Nomura in its sole judgement and determination if Nomura is so engaged. Any such forward financing will be without regard to any redemptions that may be tendered to us. Nomura has agreed to allow the Company to disclose the terms, conditions and assumptions under which Nomura would be highly confident of executing financing documents of a predetermined size, as part of the financing in the letter of intent delivered to each potential business combination counterparty, subject to certain conditions. Summary of Aldabra Acquisition Corporation Merger with Great Lakes Dredge & Dock Corporation Mr. Leight served as chairman of Aldabra 1, a blank check company formed for the purpose of effecting a business combination with an operating business. Aldabra 1 raised gross proceeds of $55.2 million in its initial public offering in 2005. In 2006, Aldabra 1 completed a merger with Great Lakes Dredge & Dock Corporation, a portfolio company of a private equity firm for total consideration of approximately $410 million. GLDD is the largest dredging company in North America. Great Lakes trades on NASDAQ under the symbol "GLDD." Mr. Leight served as a member of the board of GLDD starting in 2006 and served as chairman of GLDD from 2011 until October 2015. Summary of Aldabra 2 Acquisition Corp. Acquisition of Certain Assets of Boise Cascade, L.L.C. Mr. Leight also served as chairman of Aldabra 2, a blank check company formed for the purpose of effecting a business combination with an operating business. Aldabra 2 raised gross proceeds of $414 million in its initial public offering in 2007. In 2007, Aldabra 2 entered into an initial definitive agreement for a business combination with the paper and packaging divisions of Boise Cascade, L.L.C., a portfolio company of a private equity firm, for total consideration of approximately $1.6 billion, and subsequently listed as Boise, Inc. on the NYSE in 2008. In October 2013, Packaging Corp of America, Inc. or Packaging Corp. completed the acquisition of all the common shares outstanding of Boise for $12.55 per share. From the time of its listing on the NYSE to the acquisition by Packaging Corp., Boise, Inc. paid a total of approximately $200.0 million of dividends on its common shares or approximately $2.00 per average share outstanding during the time in which it was publicly listed. Summary of Terrapin 3 Acquisition Corporation Business Combination with Yatra Online, Inc. Mr. Leight also served as chairman of Terrapin 3, a blank check company formed for the purpose of effecting a business combination with an operating business. Terrapin 3 raised gross proceeds of approximately $212.8 million in an initial public offering in July 2014. In July 2016, Terrapin 3 entered into an initial definitive agreement for a business combination with YTRA, the second largest online travel agency in India, which subsequently listed as YTRA on the NASDAQ in December 2016. With respect to the above transactions, past performance by Mr. Leight is not a guarantee of success with respect to any business combination we may consummate. The benefits Mr. Leight received in connection with his prior three special purpose acquisition companies were the same as, or similar to, those received by all other sponsors, and included the ownership of founders equity prior to the initial public offering and the acquisition of warrants in connection with the public offering. Mr. Leight received no finder s fees, management fees, or other compensation of any nature either in anticipation of, or at the time of, the business combinations of Aldabra Acquisition Corporation, Aldabra 2 Acquisition Corp. or Terrapin 3 Acquisition Corporation, or at any time after the consummation of either such business combination, other than fees paid to Mr. Leight as compensation for serving as a director of Aldabra 1 and Aldabra 2 following each such business combination, which in each case were approved by a compensation committee composed of independent directors. Summary of the Nomura Group Nomura is a wholly owned subsidiary of Nomura Holding America Inc., which, in turn, is a wholly owned subsidiary of Nomura Holdings, Inc., or the Nomura Group (TSE: 8604; NYSE: NMR). The Nomura Group is an Asia-headquartered global investment bank with an integrated network spanning over 30 countries. The Nomura Group services the needs of individuals, institutions, corporates and governments through three business divisions: Retail, Asset Management, and Wholesale (Global Markets and Investment Banking). As of September 30, 2017, the Nomura Group had $391.6 billion in total assets and 28,857 employees globally (2,348 in the Americas, 3,047 in Europe, Middle East, and Africa, 6,756 in Asia excluding-Japan and 16,706 in Japan). The Nomura Group s Wholesale Division comprises Global Markets, which offers research, sales and trading of global securities, and Investment Banking, which offers capital raising and advisory services. The Investment Banking platform provides a variety of advisory and capital-raising solutions to corporations, financial institutions, private equity, governments and public-sector organizations around the world. Collaborating across geographies, industries and products, Nomura provides comprehensive and innovative financing, advisory and risk solutions to clients. Product offerings include: Mergers and Acquisitions: The Nomura Group acts as a financial advisor to identify and facilitate strategic merger and acquisition, sale of business or alliance opportunities for corporate, financial institutions and sponsor clients, with dedicated M&A teams in Asia, EMEA and the Americas work across borders and time zones to deliver holistic support to its clients globally; Capital Raising: In Equity Capital Markets, the Nomura Group originates and executes equity and equity-linked transactions, including IPOs, rights issues, accelerated bookbuilds and convertibles. Debt Capital Markets helps clients execute local and foreign-currency debt transactions with specialized teams servicing financial institutions, corporates, public sector agencies and sovereigns. Acquisition and Leveraged Finance arranges financing for leveraged buyouts and corporate acquisitions along with on-going refinancing needs using a variety of debt products; Solutions: Solutions teams apply a broad range of Fixed Income solutions, Equity related solutions and Insurance solutions to address the various risks faced by clients. The team is also dedicated to understanding the capital and risk management needs of insurance companies and developing cutting-edge Insurance Solutions to help them respond to these challenges. These include securitization products, structured reinsurance and derivative hedging solutions for complex insurance-specific asset and liability risks. The Nomura Group s Investment Banking platform offers services to a variety of industry sectors, including: Business Services; Consumer / Retail; Financial Institutions; Healthcare; Industrials; Natural Resources & Power; Real Estate / Gaming / Lodging / Leisure; and Telecom / Media / Technology. With respect to the above transactions, past performance by the Nomura Group and its affiliates are not guarantees of success with respect to any business combination we may consummate. Initial Business Combination NASDAQ rules require that our initial business combination must be with one or more target businesses that together have a fair market value equal to at least 80% of the balance in the trust account (less any deferred underwriting commissions and taxes payable on interest earned) at the time of our signing a definitive agreement in connection with our initial business combination. If our board is not able to independently determine the fair market value of the target business or businesses, we will obtain an opinion from an independent accounting firm or independent investment banking firm that is a member of FINRA, with respect to the satisfaction of such criteria. We anticipate structuring our initial business combination so that the post-transaction company in which our public stockholders own shares will own or acquire 100% of the equity interests or assets of the target business or businesses. We may, however, structure our initial business combination such that the post-transaction company owns or acquires less than 100% of such interests or assets of the target business in order to meet certain objectives of the target management team or shareholders or for other reasons, but we will only complete such business combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act of 1940, as amended, or the Investment Company Act. Even if the post-transaction company owns or acquires 50% or more of the voting securities of the target, our stockholders prior to the business combination may collectively own a minority interest in the post-transaction company, depending on valuations ascribed to the target and us in the business combination transaction. For example, we could pursue a transaction in which we issue a substantial number of new shares in exchange for all of the outstanding capital stock of a target. In this case, we would acquire a 100% controlling interest in the target. However, as a result of the issuance of a substantial number of new shares, our stockholders immediately prior to our initial business combination could own less than a majority of our outstanding shares subsequent to our initial business combination. If less than 100% of the equity interests or assets of a target business or businesses are owned or acquired by the post-transaction company, the portion of such business or businesses that is owned or acquired is what will be valued for purposes of the 80% of net assets test. If the business combination involves more than one target business, the 80% of net assets test will be based on the aggregate value of all of the target businesses. Status as a Public Company We believe our structure will make us an attractive business combination partner to target businesses. As an existing public company, we offer a target business an alternative to the traditional initial public offering through a merger or other business combination. In this situation, the owners of the target business would exchange their shares of stock in the target business for shares of our stock or for a combination of shares of our stock and cash, allowing us to tailor the consideration to the specific needs of the sellers. Although there are various costs and obligations associated with being a public company, we believe target businesses will find this method a more certain and cost effective method to becoming a public company than the typical initial public offering. In a typical initial public offering, there are additional expenses incurred in marketing, road show and public reporting efforts that may not be present to the same extent in connection with a business combination with us. Furthermore, once a proposed business combination is completed, the target business will have effectively become public, whereas an initial public offering is always subject to the underwriters ability to complete the offering, as well as general market conditions, which could prevent the offering from occurring. Once public, we believe the target business would then have greater access to capital and an additional means of providing management incentives consistent with stockholders interests. It can offer further benefits by augmenting a company s profile among potential new customers and vendors and aid in attracting talented employees. We are an "emerging growth company," as defined in the JOBS Act. We will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of this offering, (b) in which we have total annual gross revenue of at least $1.07 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our common stock that is held by non-affiliates exceeds $700 million as of the prior June 30th, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period. Financial Position With funds available for a business combination initially in the amount of approximately $239,500,000 including the proceeds from the $50,000,000 forward purchase agreement and proceeds from the private placement warrants, assuming no redemptions, and after payment of estimated offering expenses, $8,000,000 of deferred cash underwriting fees (or $267,700,000 after payment of up to $9,800,000 of deferred underwriting fees if the underwriters over-allotment option is exercised in full) and a placement fee to Nomura on account of the forward purchase, as well as access to the forward financing of up to $450,000,000 from Nomura, we offer a target business a variety of options such as creating a liquidity event for its owners, providing capital for the potential growth and expansion of its operations or strengthening its balance sheet by reducing its debt ratio. Because we are able to complete our business combination using our cash, debt or equity securities, or a combination of the foregoing, we have the flexibility to use the most efficient combination that will allow us to tailor the consideration to be paid to the target business to fit its needs and desires. However, we have not taken any steps to secure third party financing and there can be no assurance it will be available to us. Effecting our Initial Business Combination General We are not presently engaged in, and we will not engage in, any operations for an indefinite period of time following this offering. We intend to effectuate our initial business combination using cash from the proceeds of this offering, from the private placement of the private placement warrants, from the $50,000,000 forward purchase agreement with Nomura (or its assignees) and from up to $450,000,000 from the forward financing from Nomura. We may also use our capital stock, debt or a combination of these as consideration to be paid in our initial business combination. We may seek to complete our initial business combination with a company or business that may be financially unstable or in its early stages of development or growth, which would subject us to the numerous risks inherent in such companies and businesses. If our initial business combination is paid for using stock or debt securities, or not all of the funds released from the trust account are used for payment of the consideration in connection with our business combination or used for redemptions of purchases of our Class A common stock, we may apply the balance of the cash released to us from the trust account, as well as the $50,000,000 proceeds from the forward purchase agreement and up to $450,000,000 from the forward financing, for general corporate purposes, including for maintenance or expansion of operations of the post-transaction company, the payment of principal or interest due on indebtedness incurred in completing our initial business combination, to fund the purchase of other companies or for working capital. We have not identified any business combination target and we have not, nor has anyone on our behalf, initiated any substantive discussions with respect to identifying any business combination target. From the period prior to our formation through the date of this prospectus, there have been no communications or discussions between any of our officers, directors or our sponsor and any of their potential contacts or relationships regarding a potential initial business combination. Additionally, we have not engaged or retained any agent or other representative to identify or locate any suitable acquisition candidate, to conduct any research or take any measures, directly or indirectly, to locate or contact a target business. Accordingly, there is no current basis for investors in this offering to evaluate the possible merits or risks of the target business with which we may ultimately complete our initial business combination. Although our management will assess the risks inherent in a particular target business with which we may combine, we cannot assure you that this assessment will result in our identifying all risks that a target business may encounter. Furthermore, some of those risks may be outside of our control, meaning that we can do nothing to control or reduce the chances that those risks will adversely affect a target business. In addition to the $50,000,000 forward purchase and up to $450,000,000 forward financing, we may seek to raise additional funds through a private offering of debt or equity securities in connection with the completion of our initial business combination, and we may effectuate our initial business combination using the proceeds of such offering rather than using the amounts held in the trust account. Subject to compliance with applicable securities laws, we would complete such financing only simultaneously with the completion of our business combination. In the case of an initial business combination funded with assets other than the trust account assets, our tender offer documents or proxy materials disclosing the business combination would disclose the terms of the financing and, only if required by law, we would seek stockholder approval of such financing. There are no prohibitions on our ability to raise funds privately or through loans in connection with our initial business combination. At this time, we are not a party to any arrangement or understanding with any third party with respect to raising any additional funds through the sale of securities or otherwise. Origination and Sourcing of Target Business Opportunities We believe there will be a large number of target acquisitions in need of stable, permanent equity financing, but with limited access to the public markets. Acquisition sources may include private equity fund portfolio companies, entities struggling with complex or failed transactions, entities held by non-traditional investors and divestitures of non-core assets by large conglomerates, each as described in more detail in the section entitled "Proposed Business" above. We believe that the members of the board and our management team have an extensive network of contacts and relationships in the private equity, corporate management, and investment banking markets that will be a source of acquisitions candidates, both for our initial business combination and for future potential add-on acquisition opportunities. Further, we intend to focus on opportunities which are proprietary or where a limited group of potential buyers have been invited to participate in the sale process. We anticipate that target business candidates will also be brought to our attention from various unaffiliated sources, including investment bankers, private investment funds, large business enterprises, and other intermediaries. We are not prohibited from pursuing an initial business combination with a company that is affiliated with our sponsor, executive officers or directors, or making the acquisition through a joint venture or other form of shared ownership with our sponsor, executive officers or directors. In the event we seek to complete an initial business combination with a target that is affiliated with our sponsor, executive officers or directors, we, or a committee of independent directors, would obtain an opinion from an independent accounting firm or independent investment banking firm that is a member of FINRA that such an initial business combination is fair to our company from a financial point of view. We are not required to obtain such an opinion in any other context. As more fully discussed in "Management — Conflicts of Interest," if any of our executive officers becomes aware of a business combination opportunity that falls within the line of business of any entity to which he or she has pre-existing fiduciary or contractual obligations, he or she may be required to present such business combination opportunity to such entity prior to presenting such business combination opportunity to us. All of our executive officers currently have certain relevant fiduciary duties or contractual obligations that may take priority over their duties to us. Target businesses may be brought to our attention by unaffiliated sources as a result of being solicited by us through calls or mailings. These sources may also introduce us to target businesses in which they think we may be interested on an unsolicited basis, since many of these sources will have read this prospectus and know what types of businesses we are targeting. Our officers and directors, as well as their affiliates, may also bring to our attention target business candidates that they become aware of through their business contacts as a result of formal or informal inquiries or discussions they may have, as well as attending trade shows or conventions. In addition, we expect to receive a number of proprietary deal flow opportunities that would not otherwise necessarily be available to us as a result of the track record and business relationships of our officers and directors. Selection of a target business and structuring of our initial business combination NASDAQ rules require that our initial business combination must be with one or more target businesses that together have a fair market value equal to at least 80% of the balance in the trust account (less any deferred underwriting commissions and taxes payable on interest earned) at the time of our signing a definitive agreement in connection with our initial business combination. The fair market value of the target or targets will be determined by our board of directors based upon one or more standards generally accepted by the financial community, such as discounted cash flow valuation or value of comparable businesses. If our board is not able to independently determine the fair market value of the target business or businesses, we will obtain an opinion from independent accounting firm or independent investment banking firm that is a member of FINRA with respect to the satisfaction of such criteria. Subject to this requirement, our management will have virtually unrestricted flexibility in identifying and selecting one or more prospective target businesses, although we will not be permitted to effectuate our initial business combination with another blank check company or a similar company with nominal operations. In any case, we will only complete an initial business combination in which we own or acquire 50% or more of the outstanding voting securities of the target or otherwise acquire a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act. If we own or acquire less than 100% of the equity interests or assets of a target business or businesses, the portion of such business or businesses that are owned or acquired by the post-transaction company is what will be valued for purposes of the 80% of net assets test. There is no basis for investors in this offering to evaluate the possible merits or risks of any target business with which we may ultimately complete our business combination. To the extent we effect our business combination with a company or business that may be financially unstable or in its early stages of development or growth we may be affected by numerous risks inherent in such company or business. Although our management will endeavor to evaluate the risks inherent in a particular target business, we cannot assure you that we will properly ascertain or assess all significant risk factors. In evaluating a prospective target business, we expect to conduct a thorough due diligence review which will encompass, among other things, meetings with incumbent management and employees, document reviews, inspection of facilities, as well as a review of financial and other information which will be made available to us. The time required to select and evaluate a target business and to structure and complete our initial business combination, and the costs associated with this process, are not currently ascertainable with any degree of certainty. Any costs incurred with respect to the identification and evaluation of a prospective target business with which our business combination is not ultimately completed will result in our incurring losses and will reduce the funds we can use to complete another business combination. Lack of business diversification For an indefinite period of time after the completion of our initial business combination, the prospects for our success may depend entirely on the future performance of a single business. Unlike other entities that have the resources to complete business combinations with multiple entities in one or several industries, it is probable that we will not have the resources to diversify our operations and mitigate the risks of being in a single line of business. By completing our business combination with only a single entity, our lack of diversification may: subject us to negative economic, competitive and regulatory developments, any or all of which may have a substantial adverse effect on the particular industry in which we operate after our initial business combination, and cause us to depend on the marketing and sale of a single product or limited number of products or services. Limited ability to evaluate the target s management team Although we intend to closely scrutinize the management of a prospective target business when evaluating the desirability of effecting our business combination with that business, our assessment of the target business s management may not prove to be correct. In addition, the future management may not have the necessary skills, qualifications or abilities to manage a public company. Furthermore, the future role of members of our management team, if any, in the target business cannot presently be stated with any certainty. While it is possible that one or more of our directors will remain associated in some capacity with us following our business combination, it is unlikely that any of them will devote their full efforts to our affairs subsequent to our business combination. Moreover, we cannot assure you that members of our management team will have significant experience or knowledge relating to the operations of the particular target business. We cannot assure you that any of our key personnel will remain in senior management or advisory positions with the combined company. The determination as to whether any of our key personnel will remain with the combined company will be made at the time of our initial business combination. Following a business combination, we may seek to recruit additional managers to supplement the incumbent management of the target business. We cannot assure you that we will have the ability to recruit additional managers, or that additional managers will have the requisite skills, knowledge or experience necessary to enhance the incumbent management. Stockholders may not have the ability to approve our initial business combination We may conduct redemptions without a stockholder vote pursuant to the tender offer rules of the SEC. However, we will seek stockholder approval if it is required by law or applicable stock exchange rule, or we may decide to seek stockholder approval for business or other legal reasons. Presented in the table below is a graphic explanation of the types of initial business combinations we may consider and whether stockholder approval is currently required under Delaware law for each such transaction. Type of Transaction Whether Stockholder Approval is Required Purchase of assets No Purchase of stock of target not involving a merger with the company No Merger of target into a subsidiary of the company No Merger of the company with a target Yes Under NASDAQ s listing rules, stockholder approval would be required for our initial business combination if, for example: we issue common stock that will be equal to or in excess of 20% of the number of shares of our Class A common stock then outstanding; any of our directors, officers or substantial shareholders (as defined by NASDAQ rules) has a 5% or greater interest (or such persons collectively have a 10% or greater interest), directly or indirectly, in the target business or assets to be acquired or otherwise and the present or potential issuance of common stock could result in an increase in outstanding common shares or voting power of 5% or more; or the issuance or potential issuance of common stock will result in our undergoing a change of control. Permitted purchases of our securities In the event we seek stockholder approval of our business combination and we do not conduct redemptions in connection with our business combination pursuant to the tender offer rules, our sponsor, directors, officers, advisors or their affiliates may purchase shares in privately negotiated transactions or in the open market either prior to or following the completion of our initial business combination. However, they have no current commitments, plans or intentions to engage in such transactions and have not formulated any terms or conditions for any such transactions. None of the funds in the trust account will be used to purchase shares in such transactions. They will not make any such purchases when they are in possession of any material non-public information not disclosed to the seller or if such purchases are prohibited by Regulation M under the Exchange Act. Such a purchase may include a contractual acknowledgement that such stockholder, although still the record holder of our shares is no longer the beneficial owner thereof and therefore agrees not to exercise its redemption rights. Subsequent to the consummation of this offering, we will adopt an insider trading policy which will require insiders to: refrain from purchasing shares during certain blackout periods and when they are in possession of any material nonpublic information and to clear all trades with our legal counsel prior to execution. We cannot currently determine whether our insiders will make such purchases pursuant to a Rule 10b5-1 plan, as it will be dependent upon several factors, including but not limited to, the timing and size of such purchases. Depending on such circumstances, our insiders may either enter make such purchases pursuant to a Rule 10b5-1 plan or determine that such a plan is not necessary. In the event that our sponsor, directors, officers, advisors or their affiliates purchase shares in privately negotiated transactions from public stockholders who have already elected to exercise their redemption rights, such selling stockholders would be required to revoke their prior elections to redeem their shares. We do not currently anticipate that such purchases, if any, would constitute a tender offer subject to the tender offer rules under the Exchange Act or a going-private transaction subject to the going-private rules under the Exchange Act; however, if the purchasers determine at the time of any such purchases that the purchases are subject to such rules, the purchasers will comply with such rules. The purpose of such purchases would be to vote such shares in favor of the business combination and thereby increase the likelihood of obtaining stockholder approval of the business combination or to satisfy a closing condition in an agreement with a target that requires us to have a minimum net worth or a certain amount of cash at the closing of our business combination, where it appears that such requirement would otherwise not be met. This may result in the completion of our business combination that may not otherwise have been possible. In addition, if such purchases are made, the public "float" of our common stock may be reduced and the number of beneficial holders of our securities may be reduced, which may make it difficult to maintain or obtain the quotation, listing or trading of our securities on a national securities exchange. Our sponsor, officers, directors and/or their affiliates anticipate that they may identify the stockholders with whom our sponsor, officers, directors or their affiliates may pursue privately negotiated purchases by either the stockholders contacting us directly or by our receipt of redemption requests submitted by stockholders following our mailing of proxy materials in connection with our initial business combination. To the extent that our sponsor, officers, directors, advisors or their affiliates enter into a private purchase, they would identify and contact only potential selling stockholders who have expressed their election to redeem their shares for a pro rata share of the trust account or vote against the business combination. Our sponsor, officers, directors, advisors or their affiliates will only purchase shares if such purchases comply with Regulation M and the other federal securities laws. Any open market purchases by our sponsor, officers, directors and/or their affiliates who are affiliated purchasers under Rule 10b-18 under the Exchange Act will only be made to the extent such purchases are able to be made in compliance with Rule 10b-18, which is a safe harbor from liability for manipulation under Section 9(a)(2) and Rule 10b-5 of the Exchange Act. Rule 10b-18 has certain technical requirements that must be complied with in order for the safe harbor to be available to the purchaser. Our sponsor, officers, directors and/or their affiliates will not make purchases of Class A common stock if the purchases would violate Section 9(a)(2) or Rule 10b-5 of the Exchange Act. Redemption rights for public stockholders upon completion of our initial business combination We will provide our public stockholders with the opportunity to redeem all or a portion of their shares of Class A common stock upon the completion of our initial business combination at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account as of two business days prior to the consummation of the initial business combination, including interest income (net of taxes payable and net of any amounts released to us to fund working capital requirements), divided by the number of then outstanding public shares, subject to the limitations described herein. The amount in the trust account is initially anticipated to be approximately $10.00 per public share (regardless of whether or not the underwriters exercise any portion of their over-allotment option). The per-share amount we will distribute to investors who properly redeem their shares will not be reduced by the deferred underwriting commissions we will pay to the underwriters. Our initial stockholders have entered into letter agreements with us, pursuant to which they have agreed to waive their redemption rights with respect to their founder shares. Manner of Conducting Redemptions We will provide our public stockholders with the opportunity to redeem all or a portion of their shares of Class A common stock upon the completion of our initial business combination either in connection with a stockholder meeting called to approve the business combination or by means of a tender offer. The decision as to whether we will seek stockholder approval of a proposed business combination or conduct a tender offer will be made by us, solely in our discretion, and will be based on a variety of factors such as the timing of the transaction and whether the terms of the transaction would require us to seek stockholder approval under the law or stock exchange listing requirement. Asset acquisitions and stock purchases would not typically require stockholder approval while direct mergers with our company where we do not survive and any transactions where we issue more than 20% of our outstanding common stock or seek to amend our amended and restated certificate of incorporation would require stockholder approval. We intend to conduct redemptions without a stockholder vote pursuant to the tender offer rules of the SEC unless stockholder approval is required by law or stock exchange listing requirement or we choose to seek stockholder approval for business or other legal reasons. If a stockholder vote is not required and we do not decide to hold a stockholder vote for business or other legal reasons, we will, pursuant to our amended and restated certificate of incorporation: conduct the redemptions pursuant to Rule 13e-4 and Regulation 14E under the Exchange Act, which regulate issuer tender offers, and file tender offer documents with the SEC prior to completing our initial business combination which contain substantially the same financial and other information about the initial business combination and the redemption rights as is required under Regulation 14A under the Exchange Act, which regulates the solicitation of proxies. Upon the public announcement of our business combination, we or our sponsor will terminate any plan established in accordance with Rule 10b5-1 to purchase shares of our Class A common stock in the open market if we elect to redeem our public shares through a tender offer, to comply with Rule 14e-5 under the Exchange Act. In the event we conduct redemptions pursuant to the tender offer rules, our offer to redeem will remain open for at least 20 business days, in accordance with Rule 14e-1(a) under the Exchange Act, and we will not be permitted to complete our initial business combination until the expiration of the tender offer period. In addition, the tender offer will be conditioned on public stockholders not tendering more than a specified number of public shares which are not purchased by our sponsor, which number will be based on the requirement that we may not redeem public shares in an amount that would cause our net tangible assets to be less than $5,000,001 (so that we are not subject to the SEC s "penny stock" rules) or any greater net tangible asset or cash requirement which may be contained in the agreement relating to our initial business combination. If public stockholders tender more shares than we have offered to purchase, we will withdraw the tender offer and not complete the initial business combination. If, however, stockholder approval of the transaction is required by law or stock exchange listing requirement, or we decide to obtain stockholder approval for business or other legal reasons, we will, pursuant to our amended and restated certificate of incorporation: conduct the redemptions in conjunction with a proxy solicitation pursuant to Regulation 14A of the Exchange Act, which regulates the solicitation of proxies, and not pursuant to the tender offer rules, and file proxy materials with the SEC. In the event that we seek stockholder approval of our initial business combination, we will distribute proxy materials and, in connection therewith, provide our public stockholders with the redemption rights described above upon completion of the initial business combination. If we seek stockholder approval, we will complete our initial business combination only if a majority of the outstanding shares of Class A common stock voted are voted in favor of the business combination. In such case, our initial stockholders have agreed to vote their founder shares and any public shares purchased during or after this offering in favor of our initial business combination. Each public stockholder may elect to redeem their public shares irrespective of whether they vote for or against the proposed transaction. In addition, our initial stockholders have entered into letter agreements with us, pursuant to which they have agreed to waive their redemption rights with respect to their founder shares and public shares in connection with the completion of a business combination. Our amended and restated certificate of incorporation provides that in no event will we redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001 (so that we are not subject to the SEC s "penny stock" rules). Redemptions of our public shares may also be subject to a higher net tangible asset test or cash requirement pursuant to an agreement relating to our initial business combination. For example, the proposed business combination may require: cash consideration to be paid to the target or its owners, cash to be transferred to the target for working capital or other general corporate purposes or the retention of cash to satisfy other conditions in accordance with the terms of the proposed business combination. In the event the aggregate cash consideration we would be required to pay for all shares of Class A common stock that are validly submitted for redemption plus any amount required to satisfy cash conditions pursuant to the terms of the proposed business combination exceed the aggregate amount of cash available to us, we will not complete the business combination or redeem any shares, and all shares of Class A common stock submitted for redemption will be returned to the holders thereof. Limitation on redemption upon completion of our initial business combination if we seek stockholder approval Notwithstanding the foregoing, if we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our business combination pursuant to the tender offer rules, our amended and restated certificate of incorporation provides that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a "group" (as defined under Section 13 of the Exchange Act), will be restricted from seeking redemption rights with respect to Excess Shares. We believe this restriction will discourage stockholders from accumulating large blocks of shares, and subsequent attempts by such holders to use their ability to exercise their redemption rights against a proposed business combination as a means to force us or our management to purchase their shares at a significant premium to then-current market price or on other undesirable terms. Absent this provision, a public stockholder holding more than an aggregate of 10% of the shares sold in this offering could threaten to exercise its redemption rights if such holder s shares are not purchased by us or our management at a premium to then-current market price or on other undesirable terms. By limiting our stockholders ability to redeem no more than 10% of the shares sold in this offering, we believe we will limit the ability of a small group of stockholders to unreasonably attempt to block our ability to complete our business combination, particularly in connection with a business combination with a target that requires as a closing condition that we have a minimum net worth or a certain amount of cash. However, we would not be restricting our stockholders ability to vote all of their shares (including Excess Shares) for or against our business combination. Tendering stock certificates in connection with a tender offer or redemption rights We may require our public stockholders seeking to exercise their redemption rights, whether they are record holders or hold their shares in "street name," to either tender their certificates to our transfer agent prior to the date set forth in the tender offer documents or proxy materials mailed to such holders, or up to two business days prior to the vote on the proposal to approve the business combination in the event we distribute proxy materials, or to deliver their shares to the transfer agent electronically using Depository Trust Company s DWAC (Deposit/Withdrawal At Custodian) System, at the holder s option. The tender offer or proxy materials, as applicable, that we will furnish to holders of our public shares in connection with our initial business combination will indicate whether we are requiring public stockholders to satisfy such delivery requirements. Accordingly, a public stockholder would have from the time we send out our tender offer materials until the close of the tender offer period, or up to two days prior to the vote on the business combination if we distribute proxy materials, as applicable, to tender its shares if it wishes to seek to exercise its redemption rights. Given the relatively short exercise period, it is advisable for stockholders to use electronic delivery of their public shares. There is a nominal cost associated with the above-referenced tendering process and the act of certificating the shares or delivering them through the DWAC System. The transfer agent will typically charge the tendering broker $35.00 and it would be up to the broker whether or not to pass this cost on to the redeeming holder. However, this fee would be incurred regardless of whether or not we require holders seeking to exercise redemption rights to tender their shares. The need to deliver shares is a requirement of exercising redemption rights regardless of the timing of when such delivery must be effectuated. The foregoing is different from the procedures used by many blank check companies. In order to perfect redemption rights in connection with their business combinations, many blank check companies would distribute proxy materials for the stockholders vote on an initial business combination, and a holder could simply vote against a proposed business combination and check a box on the proxy card indicating such holder was seeking to exercise his or her redemption rights. After the business combination was approved, the company would contact such stockholder to arrange for him or her to deliver his or her certificate to verify ownership. As a result, the stockholder then had an "option window" after the completion of the business combination during which he or she could monitor the price of the company s stock in the market. If the price rose above the redemption price, he or she could sell his or her shares in the open market before actually delivering his or her shares to the company for cancellation. As a result, the redemption rights, to which stockholders were aware they needed to commit before the stockholder meeting, would become "option" rights surviving past the completion of the business combination until the redeeming holder delivered its certificate. The requirement for physical or electronic delivery prior to the meeting ensures that a redeeming holder s election to redeem is irrevocable once the business combination is approved. Any request to redeem such shares, once made, may be withdrawn at any time up to the date set forth in the tender offer materials or the date of the stockholder meeting set forth in our proxy materials, as applicable. Furthermore, if a holder of a public share delivered its certificate in connection with an election of redemption rights and subsequently decides prior to the applicable date not to elect to exercise such rights, such holder may simply request that the transfer agent return the certificate (physically or electronically). It is anticipated that the funds to be distributed to holders of our public shares electing to redeem their shares will be distributed promptly after the completion of our business combination. If our initial business combination is not approved or completed for any reason, then our public stockholders who elected to exercise their redemption rights would not be entitled to redeem their shares for the applicable pro rata share of the trust account. In such case, we will promptly return any certificates delivered by public stockholders who elected to redeem their shares. If our initial proposed business combination is not completed, we may continue to try to complete a business combination with a different target until 24 months from the closing of this offering. Redemption of public shares and liquidation if no initial business combination Our sponsor, executive officers, directors and director nominees have agreed that we will have only 24 months from the closing of this offering to complete our initial business combination. If we are unable to complete our business combination within such 24-month period, we will: cease all operations except for the purpose of winding up, as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest income (net of taxes payable and any amounts released to us to fund working capital requirements, and less up to $50,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders rights as stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject in each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. There will be no redemption rights or liquidating distributions with respect to our warrants, which will expire worthless if we fail to complete our business combination within the allotted time period. Our initial stockholders have entered into letter agreements with us, pursuant to which they have waived their rights to liquidating distributions from the trust account with respect to their founder shares if we fail to complete our initial business combination within the allotted time period. However, if our initial stockholders acquire public shares in or after this offering, they will be entitled to liquidating distributions from the trust account with respect to such public shares if we fail to complete our initial business combination within the allotted 24-month time period. Our sponsor, executive officers, directors and director nominees have agreed, pursuant to a written letter agreement with us, that they will not propose any amendment to our amended and restated certificate of incorporation that would affect the substance or timing of our obligation to redeem 100% of our public shares if we do not complete our initial business combination within 24 months from the closing of this offering, unless we provide our public stockholders with the opportunity to redeem their shares of Class A common stock upon approval of any such amendment at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest income (net of taxes payable and any amounts released to us to fund working capital requirements), divided by the number of then outstanding public shares. However, we may not redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001 (so that we are not subject to the SEC s "penny stock" rules). We expect that all costs and expenses associated with implementing our plan of dissolution, as well as payments to any creditors, will be funded from amounts remaining out of the approximately $950,000 of proceeds held outside the trust account, the $1,000,000 in loans committed by affiliates of our sponsor, or provided through additional working capital loans from our sponsor, although we cannot assure you that there will be sufficient funds for such purpose. However, if those funds are not sufficient to cover the costs and expenses associated with implementing our plan of dissolution, to the extent that there is any interest accrued in the trust account not required to pay taxes or not released to fund our working capital requirements, we may request the trustee to release to us an additional amount of up to $50,000 of such accrued interest to pay those costs and expenses. If we were to expend all of the net proceeds of this offering, other than the proceeds deposited in the trust account, and without taking into account interest, if any, earned on the trust account, the per-share redemption amount received by stockholders upon our dissolution would be approximately $10.00. The proceeds deposited in the trust account could, however, become subject to the claims of our creditors which would have higher priority than the claims of our public stockholders. We cannot assure you that the actual per-share redemption amount received by stockholders will not be substantially less than $10.00. Under Section 281(b) of the DGCL, our plan of dissolution must provide for all claims against us to be paid in full or make provision for payments to be made in full, as applicable, if there are sufficient assets. These claims must be paid or provided for before we make any distribution of our remaining assets to our stockholders. While we intend to pay such amounts, if any, we cannot assure you that we will have funds sufficient to pay or provide for all creditors claims. Although we will seek to have all vendors, service providers (other than our independent registered public accounting firm), prospective target businesses or other entities with which we do business execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the trust account for the benefit of our public stockholders, there is no guarantee that they will execute such agreements or even if they execute such agreements that they would be prevented from bringing claims against the trust account including but not limited to fraudulent inducement, breach of fiduciary responsibility or other similar claims, as well as claims challenging the enforceability of the waiver, in each case in order to gain an advantage with respect to a claim against our assets, including the funds held in the trust account. If any third party refuses to execute an agreement waiving such claims to the monies held in the trust account, our management will perform an analysis of the alternatives available to it and will only enter into an agreement with a third party that has not executed a waiver if management believes that such third party s engagement would be significantly more beneficial to us than any alternative. Examples of possible instances where we may engage a third party that refuses to execute a waiver include the engagement of a third party consultant whose particular expertise or skills are believed by management to be significantly superior to those of other consultants that would agree to execute a waiver or in cases where management is unable to find a service provider willing to execute a waiver. In addition, there is no guarantee that such entities will agree to waive any claims they may have in the future as a result of, or arising out of, any negotiations, contracts or agreements with us and will not seek recourse against the trust account for any reason. In order to protect the amounts held in the trust account, our sponsor has agreed that it will be liable to us if and to the extent any claims by a vendor for services rendered or products sold to us, or a prospective target business with which we have discussed entering into a transaction agreement, reduce the amount of funds in the trust account to below $10.00 per public share (regardless of whether or not the underwriters exercise any portion of their over-allotment option) or such lesser amount per public share held in the trust account as of the date of the liquidation of the trust account, due to reductions in value of the trust assets other than due to the failure to obtain such waiver, in each case net of the amount of interest which may be withdrawn to pay taxes or for working capital purposes, except as to any claims by a third party who executed a waiver of any and all rights to seek access to the trust account and except as to any claims under our indemnity of the underwriters of this offering against certain liabilities, including liabilities under the Securities Act. In the event that an executed waiver is deemed to be unenforceable against a third party, then our sponsor will not be responsible to the extent of any liability for such third-party claims. We cannot assure you, however, that our sponsor would be able to satisfy its obligations. None of our other officers will indemnify us for claims by third parties including, without limitation, claims by vendors and prospective target businesses. In the event that the proceeds in the trust account are reduced below $10.00 per public share (regardless of whether or not the underwriters exercise any portion of their over-allotment option) or such lesser amount per public share held in the trust account as of the date of the liquidation of the trust account, due to reductions in value of the trust assets other than due to the failure to obtain such waiver, in each case net of the amount of interest which may be withdrawn to pay taxes or fund our working capital requirements, and our sponsor asserts that it is unable to satisfy its indemnification obligations or that it has no indemnification obligations related to a particular claim, our independent directors would determine whether to take legal action against our sponsor to enforce its indemnification obligations. While we currently expect that our independent directors would take legal action on our behalf against our sponsor to enforce its indemnification obligations to us, it is possible that our independent directors in exercising their business judgment may choose not to do so in any particular instance. Accordingly, we cannot assure you that due to claims of creditors the actual value of the per-share redemption price will not be substantially less than $10.00 per share (regardless of whether or not the underwriters exercise any portion of their over-allotment option). We will seek to reduce the possibility that our sponsor will have to indemnify the trust account due to claims of creditors by endeavoring to have all vendors, service providers (other than our independent auditors), prospective target businesses or other entities with which we do business execute agreements with us waiving any right, title, interest or claim of any kind in or to monies held in the trust account. Our sponsor will also not be liable as to any claims under our indemnity of the underwriters of this offering against certain liabilities, including liabilities under the Securities Act. We will have access to up to approximately $950,000 from the proceeds of this offering and the $1,000,000 in loans committed to us by affiliates of our sponsor with which to pay any such potential claims (including costs and expenses incurred in connection with our liquidation, currently estimated to be no more than approximately $50,000). In the event that we liquidate and it is subsequently determined that the reserve for claims and liabilities is insufficient, stockholders who received funds from our trust account could be liable for claims made by creditors. In the event that our offering expenses exceed our estimate of $750,000, we may fund such excess with funds from the funds not to be held in the trust account. In such case, the amount of funds we intend to be held outside the trust account would decrease by a corresponding amount. Conversely, in the event that the offering expenses are less than our estimate of $750,000, the amount of funds we intend to be held outside the trust account would increase by a corresponding amount. Under the DGCL, stockholders may be held liable for claims by third parties against a corporation to the extent of distributions received by them in a dissolution. The pro rata portion of our trust account distributed to our public stockholders upon the redemption of our public shares in the event we do not complete our business combination within 24 months from the closing of this offering may be considered a liquidation distribution under Delaware law. If the corporation complies with certain procedures set forth in Section 280 of the DGCL intended to ensure that it makes reasonable provision for all claims against it, including a 60-day notice period during which any third-party claims can be brought against the corporation, a 90-day period during which the corporation may reject any claims brought, and an additional 150-day waiting period before any liquidating distributions are made to stockholders, any liability of stockholders with respect to a liquidating distribution is limited to the lesser of such stockholder s pro rata share of the claim or the amount distributed to the stockholder, and any liability of the stockholder would be barred after the third anniversary of the dissolution. Furthermore, if the pro rata portion of our trust account distributed to our public stockholders upon the redemption of our public shares in the event we do not complete our business combination within 24 months from the closing of this offering, is not considered a liquidation distribution under Delaware law and such redemption distribution is deemed to be unlawful, then pursuant to Section 174 of the DGCL, the statute of limitations for claims of creditors could then be six years after the unlawful redemption distribution, instead of three years, as in the case of a liquidation distribution. If we are unable to complete our business combination within 24 months from the closing of this offering, we will: cease all operations except for the purpose of winding up, as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest income (net of taxes payable and any amounts released to us to fund working capital requirements, and less up to $50,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders rights as stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject in each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. Accordingly, it is our intention to redeem our public shares as soon as reasonably possible following our 24th month and, therefore, we do not intend to comply with those procedures. As such, our stockholders could potentially be liable for any claims to the extent of distributions received by them (but no more) and any liability of our stockholders may extend well beyond the third anniversary of such date. Because we will not be complying with Section 280, Section 281(b) of the DGCL requires us to adopt a plan, based on facts known to us at such time that will provide for our payment of all existing and pending claims or claims that may be potentially brought against us within the subsequent 10 years. However, because we are a blank check company, rather than an operating company, and our operations will be limited to searching for prospective target businesses to acquire, the only likely claims to arise would be from our vendors (such as lawyers, investment bankers, etc.) or prospective target businesses. As described above, pursuant to the obligation contained in our underwriting agreement, we will seek to have all vendors, service providers (other than our independent registered public accounting firm), prospective target businesses or other entities with which we do business execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the trust account. As a result of this obligation, the claims that could be made against us are significantly limited and the likelihood that any claim that would result in any liability extending to the trust account is remote. Further, our sponsor may be liable only to the extent necessary to ensure that the amounts in the trust account are not reduced below $10.00 per public share (regardless of whether or not the underwriters exercise any portion of their over-allotment option) or such lesser amount per public share held in the trust account as of the date of the liquidation of the trust account, due to reductions in value of the trust assets other than due to the failure to obtain such waiver, in each case net of the amount of interest withdrawn to pay taxes or to fund our working capital requirements and less any per-share amounts distributed from our trust account to our public stockholders in the event we are unable to complete our business combination within 24 months from the closing of this offering and will not be liable as to any claims under our indemnity of the underwriters of this offering against certain liabilities, including liabilities under the Securities Act. In the event that an executed waiver is deemed to be unenforceable against a third party, our sponsor will not be responsible to the extent of any liability for such third-party claims. If we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, the proceeds held in the trust account could be subject to applicable bankruptcy law, and may be included in our bankruptcy estate and subject to the claims of third parties with priority over the claims of our stockholders. To the extent any bankruptcy claims deplete the trust account, we cannot assure you we will be able to return $10.00 per share (regardless of whether or not the underwriters exercise any portion of their over-allotment option) to our public stockholders. Additionally, if we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, any distributions received by stockholders could be viewed under applicable debtor/creditor and/or bankruptcy laws as either a "preferential transfer" or a "fraudulent conveyance." As a result, a bankruptcy court could seek to recover all amounts received by our stockholders. Furthermore, our board may be viewed as having breached its fiduciary duty to our creditors and/or may have acted in bad faith, and thereby exposing itself and our company to claims of punitive damages, by paying public stockholders from the trust account prior to addressing the claims of creditors. We cannot assure you that claims will not be brought against us for these reasons. Our public stockholders will be entitled to receive funds from the trust account only in the event of the redemption of our public shares if we do not complete our business combination within 24 months from the closing of this offering or if they redeem their respective shares for cash upon the completion of the initial business combination. In no other circumstances will a stockholder have any right or interest of any kind to or in the trust account. In the event we seek stockholder approval in connection with our initial business combination, a stockholder s voting in connection with the business combination alone will not result in a stockholder s redeeming its shares to us for an applicable pro rata share of the trust account. Such stockholder must have also exercised its redemption rights described above. Amended and Restated Certificate of Incorporation Our amended and restated certificate of incorporation contains certain requirements and restrictions relating to this offering that will apply to us until the consummation of our initial business combination. If we seek to amend any provisions of our amended and restated certificate of incorporation relating to stockholders rights or pre-business combination activity, we will provide dissenting public stockholders with the opportunity to redeem their public shares in connection with any such vote. Our initial stockholders have agreed to waive any redemption rights with respect to their founder shares and public shares in connection with the completion of our initial business combination. Specifically, our amended and restated certificate of incorporation provides, among other things, that: prior to the consummation of our initial business combination, we shall either (1) seek stockholder approval of our initial business combination at a meeting called for such purpose at which stockholders may seek to redeem their shares, regardless of whether they vote for or against the proposed business combination, into their pro rata share of the aggregate amount then on deposit in the trust account, including interest income (net of taxes payable and net of any amounts released to us to fund our working capital requirements) or (2) provide our stockholders with the opportunity to tender their shares to us by means of a tender offer (and thereby avoid the need for a stockholder vote) for an amount equal to their pro rata share of the aggregate amount then on deposit in the trust account, including interest income (net of taxes payable and net of any amounts released to us to fund our working capital requirements) in each case subject to the limitations described herein; we will consummate our initial business combination only if we have net tangible assets of at least $5,000,001 upon such consummation and, solely if we seek stockholder approval, a majority of the outstanding shares of common stock voted are voted in favor of the business combination; if our initial business combination is not consummated within 24 months from the closing of this offering, then our existence will terminate and we will distribute all amounts in the trust account; and prior to our initial business combination, we may not issue additional shares of capital stock that would entitle the holders thereof to receive funds from the trust account or vote on any initial business combination. These provisions cannot be amended without the approval of holders of 65% of our common stock. In the event we seek stockholder approval in connection with our initial business combination, our amended and restated certificate of incorporation provides that we may consummate our initial business combination only if approved by a majority of the shares of common stock voted by our stockholders at a duly held stockholders meeting. Comparison of redemption or purchase prices in connection with our initial business combination and if we fail to complete our business combination. The following table compares the redemptions and other permitted purchases of public shares that may take place in connection with the completion of our initial business combination and if we are unable to complete our business combination within 24 months from the closing of this offering. Redemptions in Connection with our Initial Business Combination Other Permitted Purchases of Public Shares by our Affiliates Redemptions if we fail to Complete an Initial Business Combination Calculation of redemption price Redemptions at the time of our initial business combination may be made pursuant to a tender offer or in connection with a stockholder vote. The redemption price will be the same whether we conduct redemptions pursuant to a tender offer or in connection with a stockholder vote. In either case, our public stockholders may redeem their public shares for cash equal to the aggregate amount then on deposit in the trust account as of two business days prior to the consummation of the initial business combination (which is initially anticipated to be $10.00 per share, including interest income (net of taxes payable and net of any amounts released to us to fund our working capital requirements), divided by the number of then outstanding public shares, subject to the limitation that no redemptions will take place if all of the redemptions would cause our net tangible assets to be less than $5,000,001 and any limitations (including but not limited to cash requirements) agreed to in connection with the negotiation of terms of a proposed business combination. If we seek stockholder approval of our initial business combination, our sponsor, directors, officers, advisors or their affiliates may purchase shares in privately negotiated transactions or in the open market either prior to or following completion of our initial business combination. Such purchases will only be made to the extent such purchases are able to be made in compliance with Rule 10b-18, which is a safe harbor from liability for manipulation under Section 9(a)(2) and Rule 10b-5 of the Exchange Act. None of the funds in the trust account will be used to purchase shares in such transactions. If we are unable to complete our business combination within 24 months from the closing of this offering, we will redeem all public shares at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account (which is initially anticipated to be $10.00 per share (regardless of whether or not the underwriters exercise any portion of their over-allotment option)), including interest income (net of taxes payable and net of any amounts released to us to fund our working capital requirements, and less up to $50,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares. Effect to remaining stockholders The redemptions in connection with our initial business combination will reduce the book value per share for our remaining stockholders, who will bear the burden of the deferred cash underwriting commissions and interest withdrawn in order to pay taxes and any amounts released to us to fund our working capital requirements (to the extent not paid from amounts accrued as interest on the funds held in the trust account). If the permitted purchases described above are made, there will be no effect to our remaining stockholders because the purchase price would not be paid by us. The redemption of our public shares if we fail to complete our business combination will reduce the book value per share for the shares held by our initial stockholders, who will be our only remaining stockholders after such redemptions. Comparison of This Offering to Those of Blank Check Companies Subject to Rule 419 The following table compares the terms of this offering to the terms of an offering by a blank check company subject to the provisions of Rule 419. This comparison assumes that the gross proceeds, underwriting commissions and underwriting expenses of our offering would be identical to those of an offering undertaken by a company subject to Rule 419, and that the underwriters will not exercise their over-allotment option. None of the provisions of Rule 419 apply to our offering. Terms of Our Offering Terms Under a Rule 419 Offering Escrow of offering proceeds The rules of the NASDAQ Capital Market provide that at least 90% of the gross proceeds from this offering and the private placement be deposited in a trust account. Approximately $200,000,000 of the net proceeds of this offering and the sale of the private placement warrants will be deposited into a trust account located in the United States and held at JPMorgan Chase Bank, N.A., with Continental Stock Transfer & Trust Company acting as trustee. Approximately $171,180,000 of the offering proceeds, representing the gross proceeds of this offering less allowable underwriting commissions, expenses and company deductions under Rule 419, would be required to be deposited into either an escrow account with an insured depositary institution or in a separate bank account established by a broker-dealer in which the broker-dealer acts as trustee for persons having the beneficial interests in the account. Investment of net proceeds Approximately $200,000,000 of the net offering proceeds and the sale of the private placement warrants held in trust will be invested only in U.S. government treasury bills with a maturity of 180 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act which invest only in direct U.S. government treasury obligations. Proceeds could be invested only in specified securities such as a money market fund meeting conditions of the Investment Company Act or in securities that are direct obligations of, or obligations guaranteed as to principal or interest by, the United States. Receipt of interest on escrowed funds Interest on proceeds from the trust account to be paid to stockholders is reduced by any taxes paid or payable, any amounts released to us to fund working capital requirements and in the event of our liquidation for failure to complete our initial business combination within the allotted time, up to $50,000 of net interest that may be released to us should we have no or insufficient working capital to fund the costs and expenses of our dissolution and liquidation. Interest on funds in escrow account would be held for the sole benefit of investors, unless and only after the funds held in escrow were released to us in connection with our completion of a business combination. Limitation on fair value or net assets of target business NASDAQ rules require that our initial business combination must be with one or more target businesses that together have a fair market value equal to at least 80% of the balance in the trust account (less any deferred underwriting commissions, taxes payable on interest earned) at the time of our signing a definitive agreement in connection with our initial business combination. The fair value or net assets of a target business must represent at least 80% of the maximum offering proceeds. Terms of Our Offering Terms Under a Rule 419 Offering Trading of securities issued The units will begin trading on or promptly after the date of this prospectus. The Class A common stock and warrants comprising the units will begin separate trading on the 52nd day following the date of this prospectus unless Nomura, as the representative of the underwriters, informs us of its decision to allow earlier separate trading, subject to our having filed the Current Report on Form 8-K described below and having issued a press release announcing when such separate trading will begin. We will file the Current Report on Form 8-K promptly after the closing of this offering, which is anticipated to take place two business days from the first trading of the units on NASDAQ. If the over-allotment option is exercised following the initial filing of such Current Report on Form 8-K, a second or amended Current Report on Form 8-K will be filed to provide updated financial information to reflect the exercise of the over-allotment option. No trading of the units or the underlying common stock and warrants would be permitted until the completion of a business combination. During this period, the securities would be held in the escrow or trust account. Exercise of the warrants The warrants cannot be exercised until the later of 30 days after the completion of our initial business combination or 12 months from the closing of this offering. The warrants could be exercised prior to the completion of a business combination, but securities received and cash paid in connection with the exercise would be deposited in the escrow or trust account. Election to remain an investor We will provide our public stockholders with the opportunity to redeem their public shares for cash equal to their pro rata share of the aggregate amount then on deposit in the trust account as of two business days prior to the consummation of our initial business combination, including interest income, net of taxes payable and any amounts released to us for working capital purposes, upon the completion of our initial business combination, subject to the limitations described herein. We may not be required by law to hold a stockholder vote. If we are not required by law and do not otherwise decide to hold a stockholder vote, we will, pursuant to our amended and restated certificate of incorporation, conduct the redemptions pursuant to the tender offer rules of the SEC and file tender offer documents with the SEC which will contain substantially the same financial and other information about the initial business combination and the redemption rights as is required under the SEC s proxy rules. If, however, we hold a stockholder vote, we will, like many blank check companies, offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. If we seek stockholder approval, we will complete our initial business combination only if a majority of the outstanding shares of common stock voted are voted in favor of the business combination. Additionally, each public stockholder may elect to redeem their public shares irrespective of whether they vote for or against the proposed transaction. A prospectus containing information pertaining to the business combination required by the SEC would be sent to each investor. Each investor would be given the opportunity to notify the company in writing, within a period of no less than 20 business days and no more than 45 business days from the effective date of a post-effective amendment to the company s registration statement, to decide if he, she or it elects to remain a stockholder of the company or require the return of his, her or its investment. If the company has not received the notification by the end of the 45th business day, funds and interest or dividends, if any, held in the trust or escrow account are automatically returned to the stockholder. Unless a sufficient number of investors elect to remain investors, all funds on deposit in the escrow account must be returned to all of the investors and none of the securities are issued. Terms of Our Offering Terms Under a Rule 419 Offering Business combination deadline If we are unable to complete an initial business combination within 24 months from the closing of this offering, we will cease all operations except for the purpose of winding up, as promptly as reasonably possible but not more than ten business days thereafter, redeem 100% of the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest income (net of taxes payable and any amounts released to us to fund working capital requirements, and less up to $50,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders rights as stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject in each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. If an acquisition has not been completed within 18 months after the effective date of the company s registration statement, funds held in the trust or escrow account are returned to investors. Release of funds Except for the withdrawal of interest to pay taxes and fund our working capital requirements, none of the funds held in trust (including the interest on such funds) will be released from the trust account until the earlier of the completion of our initial business combination or the redemption of 100% of our public shares if we are unable to complete a business combination within the required time frame (subject to the requirements of applicable law). Based upon current interest rates, we expect the trust account to generate approximately $2,000,000 of interest income per year, which could be released to pay taxes and fund our working capital requirements. The proceeds held in the escrow account are not released until the earlier of the completion of a business combination or the failure to effect a business combination within the allotted time. Competition In identifying, evaluating and selecting a target business for our business combination, we may encounter intense competition from other entities having a business objective similar to ours, including other blank check companies, private equity groups and leveraged buyout funds, and operating businesses seeking strategic acquisitions. Many of these entities are well established and have extensive experience identifying and effecting business combinations directly or through affiliates. Moreover, many of these competitors possess greater financial, technical, human and other resources than us. Our ability to acquire larger target businesses will be limited by our available financial resources. This inherent limitation gives others an advantage in pursuing the acquisition of a target business. Furthermore, our obligation to pay cash in connection with our public stockholders who exercise their redemption rights may reduce the resources available to us for our initial business combination and our outstanding warrants, and the future dilution they potentially represent, may not be viewed favorably by certain target businesses. Either of these factors may place us at a competitive disadvantage in successfully negotiating an initial business combination. Facilities We currently maintain our business address at 2655 South Le Jeune Road, Suite 550, Coral Gables, Florida 33134. The cost for a portion of this location and the spaces in which we maintain our offices is included in the $16,875 per month fee that we intend to pay an affiliate of our sponsor for office space, utilities and secretarial support. We consider our current office space adequate for our current operations. Employees We currently have two executive officers and no employees. Members of our team are not obligated to devote any specific number of hours to our matters but they intend to devote as much of their time as they deem necessary to our affairs until we have completed our initial business combination. The amount of time that Mr. Leight or any other members of our team will devote in any time period will vary based on whether a target business has been selected for our initial business combination and the current stage of the business combination process. Periodic Reporting and Financial Information We will register our units, Class A common stock and warrants under the Exchange Act and have reporting obligations, including the requirement that we file annual, quarterly and current reports with the SEC. In accordance with the requirements of the Exchange Act, our annual reports will contain financial statements audited and reported on by our independent registered public auditors. We will provide stockholders with audited financial statements of the prospective target business as part of the tender offer materials or proxy solicitation materials sent to stockholders to assist them in assessing the target business. In all likelihood, these financial statements will need to be prepared in accordance with GAAP. We cannot assure you that any particular target business identified by us as a potential acquisition candidate will have financial statements prepared in accordance with GAAP or that the potential target business will be able to prepare its financial statements in accordance with GAAP. To the extent that this requirement cannot be met, we may not be able to acquire the proposed target business. While this may limit the pool of potential acquisition candidates, we do not believe that this limitation will be material. We will be required to evaluate our internal control procedures for the fiscal year ending December 31, 2019 as required by the Sarbanes-Oxley Act. Only in the event we are deemed to be a large accelerated filer or an accelerated filer will we be required to have our internal control procedures audited. A target company may not be in compliance with the provisions of the Sarbanes-Oxley Act regarding adequacy of their internal controls. The development of the internal controls of any such entity to achieve compliance with the Sarbanes-Oxley Act may increase the time and costs necessary to complete any such acquisition. Prior to the date of this prospectus, we will file a Registration Statement on Form 8-A with the SEC to voluntarily register our securities under Section 12 of the Exchange Act. As a result, we will be subject to the rules and regulations promulgated under the Exchange Act. We have no current intention of filing a Form 15 to suspend our reporting or other obligations under the Exchange Act prior or subsequent to the consummation of our business transaction. We are an "emerging growth company," as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act. As such, we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not "emerging growth companies" including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. If some investors find our securities less attractive as a result, there may be a less active trading market for our securities and the prices of our securities may be more volatile. In addition, Section 107 of the JOBS Act also provides that an "emerging growth company" can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an "emerging growth company" can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We intend to take advantage of the benefits of this extended transition period. We will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of this offering, (b) in which we have total annual gross revenue of at least $1.07 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our common stock that is held by non-affiliates exceeds $700 million as of the prior June 30th , and (2) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period. References herein to "emerging growth company" shall have the meaning associated with it in the JOBS Act. Legal Proceedings There is no material litigation, arbitration or governmental proceeding currently pending against us or any members of our management team in their capacity as such, and we and the members of our management team have not been subject to any such proceeding in the 12 months preceding the date of this prospectus. MANAGEMENT Directors and Executive Officers Our directors, officers and director nominees are as follows: Name Age Title Nathan Leight 58 Chairman of the Board of Directors and Chief Executive Officer Guy Barudin 57 Chief Operating Officer, Chief Financial Officer Jonathan Kagan 61 Director Nominee* Bruce Pollack 58 Director Nominee* Steven Rosston 58 Director Nominee* Sandor Valner 56 Director Nominee* Jeffrey Brown 44 Director Nominee* * This individual has indicated his assent to occupy such position on the effective date of the registration statement of which this prospectus forms a part. Nathan Leight. Mr. Leight, our Chairman and Chief Executive Officer since inception, is the senior managing member of Terrapin Partners, LLC, and has been since 1998. He is also chairman and chief investment officer of Terrapin Asset Management, LLC as well as chairman of its specialty finance lending affiliate, Terrapin Lending Company. From June 2014 to December 2016, Mr. Leight was chairman of Terrapin 3 Acquisition Corporation, a blank check company that raised approximately $212.8 million of gross proceeds in its initial public offering and later consummated a business combination with Yatra Online Inc. (NASAQ:YTRA), the second largest online travel agent based in India. Mr. Leight served as chairman of Aldabra 2, another blank check company which raised $414 million of gross proceeds in its 2007 initial public offering and later acquired the paper and packaging assets of Boise Cascade, LLC to form Boise, Inc. (NYSE:BZ) in a transaction valued at more than $1.6 billion. Mr. Leight served as a director of Boise Inc. for five years, from 2007 to 2012. Mr. Leight was chairman of Aldabra 1, a blank check company that raised $55.2 million of gross proceeds in its 2005 initial public offering and later merged with and into affiliates of Great Lakes Dredge & Dock Corporation (NASDAQ:GLDD), the largest provider of dredging services in North America, in a transaction valued at more than $400 million. Mr. Leight initially served as a director of the company following the business combination, and served as chairman from 2011 to October 2015. From 2009 to 2011, Mr. Leight served on the board of TradeStation Group, Inc., now a wholly-owned subsidiary of Monex Group, Inc. (Tokyo Stock Exchange: 8698). Previously, from 1995 to 1998, Mr. Leight was the chief investment officer of Gabriel Capital LP, managing more than $1 billion. Gabriel Capital specialized in bankruptcies, under-valued securities, emerging markets, private equity and merger arbitrage. Prior to joining Gabriel Capital, from 1991 to 1995 Mr. Leight established and oversaw the proprietary trading department at Dillon Read & Co. Inc., which specialized in bankruptcy and distressed situations as well as risk arbitrage. Mr. Leight graduated cum laude from Harvard College. Mr. Leight is well qualified to serve as director due to his more than 30 years of experience in capital markets, asset and portfolio management, venture capital and private equity investing. Guy Barudin. Mr. Barudin, our Chief Operating Officer and Chief Financial Officer since inception, is also a managing director with Terrapin Partners, LLC. From June 2014 to December 2016, Mr. Barudin served as chief financial officer and chief operating officer of Terrapin 3 Acquisition Corporation. Mr. Barudin continues to serve as a chief operating officer of Yatra USA Corp., the U.S.-based affiliate of Yatra Online, Inc. Mr. Barudin joined Terrapin in 2007 to focus on its business development and private equity efforts. In addition to supporting Terrapin s private equity activities, he manages a portfolio of alternative assets including real estate, energy, private equity, venture capital, hedge funds and fund of funds. Mr. Barudin joined Terrapin from Medco Health Solutions, where from 2000 to 2007 he held various business development and finance positions and concentrated on strategic transactions related to healthcare information technology and pharmacy benefit strategy. Prior to Medco, from 1996 to 1999 Mr. Barudin was Vice President for Alliances and New Ventures at MasterCard International. Prior to Mastercard, he held positions in corporate finance at Merrill Lynch, PaineWebber Group Inc., and Dillon Read & Co., Inc. Mr. Barudin received an MS from Massachusetts Institute of Technology Sloan School of Management and a BSE from Princeton University cum laude. Mr. Barudin is well qualified to serve as a director due to his extensive experience with special purpose acquisition companies, corporate development, and capital markets. Jonathan Kagan. Mr. Kagan, our director nominee, has been a Managing Principal of Corporate Partners LLC since 2006, where he oversees the investment of privately negotiated investments in public and private companies. Mr. Kagan began his career in the investment banking division of Lazard Fr res Co. LLC where he held a variety of positions from 1980 until 2009 including Managing Director of Lazard Alternative Investments LLC. Previously, Mr. Kagan was also a Managing Director of Corporate Partners I LP, and of Centre Partners Management LLC, where he managed the Centre Capital Funds. Mr. Kagan served as a director of Terrapin 3 Acquisition Corporation from the closing of its initial public offering in July 2014 until the consummation of its business combination with Yatra in December 2016. Mr. Kagan received an MA (1 Hon) from Oxford University and his AB, summa cum laude and Phi Beta Kappa from Harvard College. Mr. Kagan is well qualified to serve as director due to his extensive experience with corporate finance, capital markets and institutional investments, and due to his extensive experience as a member of the board of directors of numerous companies. Bruce Pollack. Mr. Pollack, our director nominee, has served as Managing Partner at Centre Partners Management LLC, a private equity fund manager, since 1991. Prior to Center Partners, Mr. Pollack began his career in the investment banking division of Becker Paribas Incorporated and Merrill Lynch Capital Markets. Mr. Pollack currently serves as a director of publicly listed, Lifetime Brands, Inc. (NASD: LCUT) and as a director of the following private companies: Taylor Precision Products, Inc., K2 Pure Solutions, L.P., Nearly Natural, LLC, Sun Orchard, Inc. and U.S. Retirement & Benefits Partners, Inc. Mr. Pollack previously served on the Boards of a number of companies, including Bellisio Foods, Inc., Bumble Bee Foods, L.P., Captain D's Holding Corp., the Connors Bros. Income Fund, Distant Lands Trading Co., Inc., Garden Fresh Holdings, Inc., The Johnny Rockets Group, Inc., KIK Corporation Holdings, Inc., Salton, Inc., Ross Aviation, LLC and several other private companies. He is on the Board of Governors of the Weizmann Institute of Science and serves as a Trustee at Brandeis University. Mr. Pollack received a B.A. from Brandeis University. We believe Mr. Pollack is well qualified to serve as a director due, among other things, to his extensive experience in private and public company investing, and due to his extensive experience as a member of the board of directors of numerous companies. Steven Rosston. Mr. Rosston, our director nominee, has served as Executive Chairman and as a director of Procare Software, a leading provider of childcare management software and integrated payment processing in the United States, since August 2015. Mr. Rosston has served as a director and as a consultant to the CEO of Click Diagnostics, Inc., a life sciences technology company since February 2015. Mr. Rosston was a founding investor in Workiva (NYSE:WK), a software-as-a-service business, and he served on the Advisory Board and then Senior Advisor to the CEO from 2008 to November 2017. Mr. Rosston also served as a director and as the Executive Chairman of Maintenance Connection from April 2016 to September 2017. Mr. Rosston served as a Partner, General Partner, Managing Director and Senior Advisor at Glynn Capital Management, LLC, a venture capital and public company investment firm, from 1990 through December 2015, investing in software, Internet, semiconductor, business service, medical device, and medical instrumentation companies. Prior to Glynn Capital, Mr. Rosston served as a product manager, marketing manager and group product manager at ROLM from 1986 to 1990. Mr. Rosston received his MBA (Arjay Miller Scholar) and JD degrees from Stanford University and his BA, magna cum laude, from Harvard College. We believe Mr. Rosston is well-qualified to serve as a director due, among other things, to his experience as a public and private company investor and his extensive experience as a member of board of directors of numerous companies. Sandor Valner. Mr. Valner, our director nominee, has been associated with Walton Street Capital since 2006. He is a Managing Principal for Mexico and Latin America at Walton Street Capital, a global real estate private equity firm. Prior to Walton, Mr. Valner was CEO of VALOR, a real estate merchant banking firm he founded in 2001. Prior to founding VALOR, Mr. Valner was a Partner at EMVA since 1995. He headed Credit Suisse /First Boston s operations in Mexico from 1990 to 1995 and was part of the Latin America executive committee in New York. Before joining Credit Suisse, Mr. Valner worked for JP Morgan in corporate finance and mergers & acquisitions in New York from 1986 to 1990. Mr. Valner is currently a member on the board of directors of six publicly listed Mexican real estate funds. Mr. Valner received an MBA degree and an MS degree in Engineering from Stanford University in 1986. He obtained his BS in Engineering summa cum laude from the UAM University in Mexico in 1983. Mr. Valner is well qualified to serve on the board because of his many years of experience in fund management and investment banking. Jeffrey Brown. Mr. Brown, our director nominee, is a managing director at Terrapin Partners, LLC and TICO Management Company, LP. Mr. Brown joined Terrapin in December 2017 as CIO and Portfolio Manager of TICO and is primarily responsible for investment decisions for TICO fund vehicles which focus on debt-related and special situations investments. Mr. Brown leads the TICO investment committee and contributes significant global private credit and special situations investment expertise to the Fund s team. Prior to TICO, Mr. Brown was a Partner and Managing Director with J.H. Whitney Investment Management LLC from October 2014 to July 2017 and, earlier, from 2010 to July 2014, a Founding Partner and member of the investment committee of True Green Capital Management LLC, a special situations investment firm with over $700 million current assets under management focused on non-traditional sectors undergoing disruption and social impact-accredited end markets. Mr. Brown was earlier a Senior Vice President and Senior Research Analyst with Plainfield Asset Management LLC, a special situations hedge fund based in Greenwich, CT with more than $5 billion in peak assets under management. Mr. Brown was earlier an analyst at W.R. Huff Investment Management, a $14 billion high yield and private equity manager in Morristown, NJ. Mr. Brown s prior board and bond holder committee directorships include, among others, Solsil Inc (GSM:NASDAQ), HelioSphera SA, Recycled Paper Greetings, Bioenergy Holdings LLC, WR-TGC Solar Generation IV, Atkins Nutraceuticals and TCBY (MF Holdings). Mr. Brown received an M.B.A. from MIT Sloan School of Management and a B.A., with distinction, from Yale University. Mr. Brown is well qualified to serve on the board given his extensive experience as a credit and equity investor across industries, his structuring and transaction management experience, as well as his experience serving as board director for diverse companies in both traditional and emerging sectors. Other Team Members In addition to our management, our team will include the Terrapin employees noted below. None of these individuals are required to commit any specified amount of time to our affairs; however, we expect that certain of these individuals will on average dedicate a significant amount of their professional time on our affairs. David McMillan, Capital Markets. Mr. McMillan is a managing director of Terrapin Partners, LLC and TICO Management Company, LP. Mr. McMillan joined Terrapin in May 2017 to focus on the SPAC business and direct lending business. David has extensive experience in investment banking and capital markets with a 37 year career on Wall Street in all aspects of equity and debt capital markets. Mr. McMillan also has extensive experience with SPAC IPOs and back-end executions including the Aldabra 2 Acquisition Corp/Boise Inc. business combination. Prior to joining the firm, Mr. McMillan was a managing director and head of international equity capital markets at MUFG Securities, Inc. from October 2012 to May 2017. He was mandated to build a new equity/equity linked capital markets team to originate and distribute new issue securities. He achieved record revenues in all five years of his tenure at MUFG Securities. Previously, Mr. McMillan was a managing director at Lazard Capital Markets, head of equity and fixed-income corporate syndicate departments. During his 26 years at Lazard, he also served on the management and underwriting committees. Before joining Lazard, Mr. McMillan was a vice president in equity capital markets at Drexel Burnham Lambert after starting his career at Teachers Insurance Annuity Association as an advisory officer. Mr. McMillan received a BA from Hobart and William Smith Colleges. He is a Registered Representative with Corporate Partners & Co. LLC. Stephen Schifrin, Legal. Mr. Schifrin, our Corporate Secretary since inception, is chief compliance officer of Terrapin Asset Management, LLC, an investment adviser registered with the SEC that manages alternative investments, including multi-manager hedge fund portfolios and niche-oriented private funds, and its affiliated specialty finance lending company, Terrapin Lending Company, which makes asset-based loans to small businesses. Mr. Schifrin also manages regulatory compliance and legal affairs for Terrapin Partners, LLC. Mr. Schifrin served as corporate secretary for Terrapin 3, managing all legal and regulatory compliance matters for the Terrapin team s third SPAC in connection with its IPO, target search, and business combination with Yatra Online, Inc. Mr. Schifrin continues to serve as a board observer for Yatra Online, Inc. and as chief legal officer of Yatra USA Corp., the U.S.-based affiliate of Yatra Online, Inc. Mr. Schifrin is a director of Legacy Bank of Florida, a community bank headquartered in Broward and Palm Beach Counties. He received his J.D. from the University of Texas School of Law, where he served as chair of the Board of Advocates and was a member of the Texas Journal for Civil Liberties & Civil Rights. He interned for the Honorable Diana Saldana, in the U.S. District Court for the Southern District of Texas. Mr. Schifrin received his B.A. from the University of California, Santa Barbara. He is a member of the State Bar of California. Irina Carpov, Finance. Ms. Carpov is currently the head of finance at Terrapin Asset Management, LLC and TICO Management Company, LP where she oversees operations of diverse base of investment vehicles, including hedge funds, direct lending funds, funds of funds as well as management companies. Irina joined Terrapin in 2010. Ms. Carpov served as head of finance for Terrapin 3 Acquisition Corporation, overseeing financial reporting and analysis from that firm s IPO through its business combination with Yatra Online, Inc. Previously, Ms. Carpov was a member of the alternative investments audit group at Marcum LLP, and prior to that worked in audit/tax group at New York based public accounting firm Farkouh Furman and Faccio LLP. Previously, Ms. Carpov was a business analyst at Accenture LLP. Ms. Carpov received a BA in accounting from Zicklin School of Business, Baruch College, is a certified public accountant and a certified global management accountant. Robert Plotkin, Corporate Development. Mr. Plotkin is director of technology at Terrapin Partners, LLC where he leads technology and operational due diligence for private equity and venture investments as well as managing that firm s corporate IT infrastructure. Mr. Plotkin previously served in similar corporate development and research capacities for all of Terrapin s prior special purpose acquisition companies: Aldabra Acquisition Corporation, Aldabra 2 Acquisition Corp., and Terrapin 3 Acquisition Corporation. Mr. Plotkin joined Terrapin Partners, LLC in 2000 from IBM s T.J. Watson Research Center, where he worked for 10 years on projects including the development of parallel supercomputers, MPEG video systems, digital library management systems, and interactive web technologies. Mr. Plotkin received a masters degree in computer science from NYU Polytechnic School of Engineering and a BS in electrical engineering from Columbia University. Number and Terms of Office of Officers and Directors Our board of directors is divided into two classes with only one class of directors being elected in each year and each class (except for those directors appointed prior to our first annual meeting of stockholders) serving a two-year term. The term of office of the first class of directors, consisting of Messrs. Pollack, Rosston and Valner, will expire at our first annual meeting of stockholders. The term of office of the second class of directors, consisting of Messrs. Leight, Brown and Kagan, will expire at the second annual meeting of stockholders. We do not currently intend to hold an annual meeting of stockholders until after we consummate our initial business combination. Our officers are elected by the board of directors and serve at the discretion of the board of directors, rather than for specific terms of office. Our board of directors is authorized to appoint persons to the offices set forth in our bylaws as it deems appropriate. Our bylaws provide that our officers may consist of a Chief Executive Officer, President, Chief Financial Officer, Vice Presidents, Secretary, Assistant Secretaries, Treasurer and such other offices as may be determined by the board of directors. Director Independence NASDAQ listing standards require that a majority of our board of directors be independent. An "independent director" is defined generally as a person other than an officer or employee of the company or its subsidiaries or any other individual having a relationship which in the opinion of the company s board of directors, would interfere with the director s exercise of independent judgment in carrying out the responsibilities of a director. Our board of directors has determined that Messrs. Kagan, Pollack, Rosston and Valner are "independent directors" as defined in the NASDAQ listing standards and applicable SEC rules. We intend to appoint an additional independent director to our board within one year following completion of this offering pursuant to the NASDAQ phase-in provisions for initial public offerings. Our independent directors will have regularly scheduled meetings at which only independent directors are present. Executive Officer and Director Compensation None of our executive officers, directors or director nominees has received any cash (or non-cash) compensation for services rendered to us. Commencing on the date that our securities are first listed on NASDAQ through the earlier of consummation of our initial business combination and our liquidation, we will not pay our independent directors annual compensation. We intend to pay an affiliate of our sponsor a total of $16,875 per month for office space, utilities and secretarial support. Our sponsor, executive officers and directors, or any of their respective affiliates, will be reimbursed for any out-of-pocket expenses incurred in connection with activities on our behalf such as identifying potential target businesses and performing due diligence on suitable business combinations. Our independent directors will review on a quarterly basis all payments that were made to our sponsor, officers, directors or our or their affiliates. After the completion of our initial business combination, directors or members of our management team who remain with us may be paid consulting, management or other fees from the combined company. All of these fees will be fully disclosed to stockholders, to the extent then known, in the tender offer materials or proxy solicitation materials furnished to our stockholders in connection with a proposed business combination. It is unlikely the amount of such compensation will be known at the time, because the directors of the post-combination business will be responsible for determining executive and director compensation. Any compensation to be paid to our officers will be determined by a compensation committee constituted solely by independent directors. We do not intend to take any action to ensure that members of our management team maintain their positions with us after the consummation of our initial business combination, although it is possible that some or all of our executive officers and directors may negotiate employment or consulting arrangements to remain with us after the initial business combination. The existence or terms of any such employment or consulting arrangements to retain their positions with us may influence our management s motivation in identifying or selecting a target business but we do not believe that the ability of our management to remain with us after the consummation of our initial business combination will be a determining factor in our decision to proceed with any potential business combination. We are not party to any agreements with our executive officers and directors that provide for benefits upon termination of employment. Our sponsor was formed in 2017 by some of the members of our management team for the purpose of serving as our sponsor. Mr. Leight, our Chairman and Chief Executive Officer, is the sole managing member and majority owner of our sponsor. In addition, Mr. Barudin, our Chief Operating Officer, and Chief Financial Officer, has an ownership interest in our sponsor. The interests of certain members of our management team in our sponsor will be dependent on the value, following the consummation of our initial business combination, of the founders shares and the private placement warrants held by our sponsor. Committees of the Board of Directors Upon the effective date of the registration statement of which this prospectus forms a part, our board of directors will have two standing committees: an audit committee and a compensation committee. Both our audit committee and our compensation committee will be composed solely of independent directors. Audit Committee Upon the effectiveness of the registration statement of which this prospectus forms a part, we will establish an audit committee of the board of directors. Messrs. Kagan, Rosston and Valner will serve as members of our audit committee. Mr. Kagan will serve as chairman of the audit committee. Under the NASDAQ listing standards and applicable SEC rules, we are required to have three members of the audit committee, all of whom must be independent. Messrs. Kagan, Rosston and Valner are independent. Each member of the audit committee is financially literate and our board of directors has determined that Mr. Kagan qualifies as an "audit committee financial expert" as defined in applicable SEC rules. Responsibilities of the audit committee include: the appointment, compensation, retention, replacement, and oversight of the work of the independent registered independent public accounting firm and any other independent registered public accounting firm engaged by us; pre-approving all audit and non-audit services to be provided by the independent registered independent public accounting firm or any other registered public accounting firm engaged by us, and establishing pre-approval policies and procedures; reviewing and discussing with the independent registered independent public accounting firm all relationships the registered independent public accounting firm have with us in order to evaluate their continued independence; setting clear hiring policies for employees or former employees of the independent registered independent public accounting firm; setting clear policies for audit partner rotation in compliance with applicable laws and regulations; obtaining and reviewing a report, at least annually, from the independent registered independent public accounting firm describing the independent registered independent public accounting firm s internal quality-control procedures and any material issues raised by the most recent internal quality-control review, or peer review, of the audit firm, or by any inquiry or investigation by governmental or professional authorities, within, the preceding five years respecting one or more independent audits carried out by the firm and any steps taken to deal with such issues; reviewing and approving any related party transaction required to be disclosed pursuant to Item 404 of Regulation S-K promulgated by the SEC prior to us entering into such transaction; and reviewing with management, the independent registered independent public accounting firm, and our legal advisors, as appropriate, any legal, regulatory or compliance matters, including any correspondence with regulators or government agencies and any employee complaints or published reports that raise material issues regarding our financial statements or accounting policies and any significant changes in accounting standards or rules promulgated by the Financial Accounting Standards Board, the SEC or other regulatory authorities. Compensation Committee Upon the effectiveness of the registration statement of which this prospectus forms a part, and subject to the requirements of law or the NASDAQ market rules, we will establish a compensation committee of the board of directors. The members of our Compensation Committee will be Messrs. Kagan, Rosston and Pollack. Mr. Rosston will serve as chairman of the compensation committee. We will adopt a compensation committee charter, which will detail the principal functions of the compensation committee, including: reviewing and approving on an annual basis the corporate goals and objectives relevant to our Chief Executive Officer s compensation, evaluating our Chief Executive Officer s performance in light of such goals and objectives and determining and approving the remuneration (if any) of our Chief Executive Officer s based on such evaluation in executive session at which the Chief Executive Officer is not present; reviewing and approving the compensation of all of our other executive officers; reviewing our executive compensation policies and plans; implementing and administering our incentive compensation equity-based remuneration plans; assisting management in complying with our proxy statement and annual report disclosure requirements; approving all special perquisites, special cash payments and other special compensation and benefit arrangements for our executive officers and employees; producing a report on executive compensation to be included in our annual proxy statement; and reviewing, evaluating and recommending changes, if appropriate, to the remuneration for directors. The charter will also provide that the compensation committee may, in its sole discretion, retain or obtain the advice of a compensation consultant, legal counsel or other adviser and will be directly responsible for the appointment, compensation and oversight of the work of any such adviser. However, before engaging or receiving advice from a compensation consultant, external legal counsel or any other adviser, the compensation committee will consider the independence of each such adviser, including the factors required by NASDAQ and the SEC. Director Nominations We do not have a standing nominating committee, though we intend to form a corporate governance and nominating committee as and when required to do so by law or NASDAQ rules. In accordance with Rule 5605(e)(2) of the NASDAQ rules, a majority of the independent directors may recommend a director nominee for selection by the board of directors. The board of directors believes that the independent directors can satisfactorily carry out the responsibility of properly selecting or approving director nominees without the formation of a standing nominating committee. The directors who shall participate in the consideration and recommendation of director nominees are Messrs. Kagan, Pollack and Valner. In accordance with Rule 5605(e)(1)(A) of the NASDAQ rules, all such directors are independent. As there is no standing nominating committee, we do not have a nominating committee charter in place. The board of directors will also consider director candidates recommended for nomination by our stockholders during such times as they are seeking proposed nominees to stand for election at the next annual meeting of stockholders (or, if applicable, a special meeting of stockholders). Our stockholders that wish to nominate a director for election to the Board should follow the procedures set forth in our bylaws. We have not formally established any specific, minimum qualifications that must be met or skills that are necessary for directors to possess. In general, in identifying and evaluating nominees for director, the board of directors considers educational background, diversity of professional experience, knowledge of our business, integrity, professional reputation, independence, wisdom, and the ability to represent the best interests of our stockholders. Compensation Committee Interlocks and Insider Participation None of our executive officers currently serves, and in the past year has not served, as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving on our board of directors. Code of Ethics We have adopted a Code of Ethics applicable to our directors, officers and employees. We have filed a copy of our form of Code of Ethics and our audit committee charter as exhibits to the registration statement of which this prospectus forms a part. You will be able to review these documents by accessing our public filings at the SEC s web site at www.sec.gov. In addition, a copy of the Code of Ethics will be provided without charge upon request from us. We intend to disclose any amendments to or waivers of certain provisions of our Code of Ethics in a Current Report on Form 8-K. See "Where You Can Find Additional Information." Conflicts of Interest Each of our officers and directors presently has, and any of them in the future may have additional, fiduciary or contractual obligations to another entity pursuant to which such officer or director is required to present a business combination opportunity to such entity. Accordingly, if any of the above executive officers becomes aware of a business combination opportunity which is suitable for an entity to which he or she has then-current fiduciary or contractual obligations, he or she will honor his or her fiduciary or contractual obligations to present such business combination opportunity to such entity, and only present it to us if such entity rejects the opportunity. We do not believe, however, that the fiduciary duties or contractual obligations of our executive officers will materially affect our ability to complete our business combination. Our amended and restated certificate of incorporation will provide that we renounce our interest in any corporate opportunity offered to any director or officer unless such opportunity is expressly offered to such person solely in his or her capacity as a director or officer of our company and such opportunity is one we are legally and contractually permitted to undertake and would otherwise be reasonable for us to pursue. Our sponsor and our executive officers, directors and director nominees have agreed, pursuant to a written letter agreement, not to participate in the formation of, or become an officer or director of, another blank check company that is seeking an initial business combination requiring total consideration to the seller of less than $1.25 billion until we have entered into a definitive agreement regarding our initial business combination or we have failed to complete our initial business combination within the time frame set forth in this prospectus. Nomura has entered into a forward purchase agreement with us which provides for the purchase by Nomura of an aggregate of 5,065,494 shares of our Class A common stock for an aggregate purchase price of $50,000,000 in a private placement to occur concurrently with the closing of our initial business combination. The forward purchase shares are identical to the shares of Class A common stock included in the units being sold in this offering, except that the forward purchase shares are subject to transfer restrictions and certain registration rights, as described herein. The forward purchase agreement allows Nomura to approach other institutional and accredited investors and, with our consent, which will not be unreasonably withheld, delayed or conditioned, enter into agreements with any such investor to assume Nomura s purchase obligation under the forward purchase agreement. The forward purchase agreement also allows Nomura to be excused from its purchase obligation in connection with a specific business combination if, within five business days following written notice delivered by us of our intention to enter into such business combination, Nomura notifies us that it has decided not to proceed with the purchase for any reason, including, without limitation, if it has determined that such purchase would constitute a conflict of interest. In the event Nomura exercises its right of excusal, Nomura has agreed to waive its right to receive the placement fee earned from the sale of the forward purchase shares and the underwriters will waive their right to receive a portion of the deferred underwriting discount. The obligations under the forward purchase agreement are not affected by any redemptions by our public stockholders of shares of our Class A common stock. Prior to the consummation of this offering our sponsor sold 2,110,346 of its founder shares to Nomura. Prior to the consummation of this offering, Nomura will forfeit 606,416 founder shares. Of the 1,503,930 founder shares held by Nomura, up to 303,930 are subject to forfeiture depending on the extent to which the forward purchase shares are purchased. Of the 1,503,930 founder shares held by Nomura, 220,000 were sold to Nomura in connection with the underwriting of this transaction. Nomura has also agreed, if so requested by us, to underwrite, arrange and/or syndicate up to $450 million of additional financing for us in the form of equity or debt (or a combination thereof) in connection with our initial business combination. We will not be obligated to engage Nomura in connection with any such forward financing. The terms of any such forward financing will be based upon then-current general economic and market conditions and subject to terms and conditions satisfactory in all respects to Nomura in its sole judgement and determination if Nomura is so engaged. Any such forward financing will be without regard to any redemptions that may be tendered to us. Nomura has agreed to allow the Company to disclose the terms, conditions and assumptions under which Nomura would be highly confident of executing financing documents of a predetermined size, as part of the financing in the letter of intent delivered to each potential business combination counterparty, subject to certain conditions. Nomura will be paid a market-based placement fee on the gross proceeds from the sale of the forward purchase shares upon the consummation of an initial business combination. In addition, the forward purchase agreement provides that Nomura (or its assignees) is entitled to registration rights with respect to the forward purchase shares. Nomura or its affiliates engage in a broad spectrum of activities including principal investing, specialized investment vehicle management, asset management, financial advisory, securities underwriting, sales and trading, investment research, lending and other activities. In the ordinary course of business, they engage in activities where their interests or the interests of their clients may conflict with our interests. Accordingly, there may be situations in which Nomura has an obligation or an interest that actually or potentially conflicts with our interests. You should assume that these conflicts will not be resolved in our favor and, as a result, we may be denied certain acquisition opportunities or otherwise disadvantaged in certain situations by our relationship to Nomura. Nomura, its affiliates and their clients make investments in a variety of different businesses and may directly compete with us for acquisition opportunities provided or created by Nomura that meet our initial business combination objectives. Nomura is under no specific obligation to offer potential acquisition opportunities to us and may allocate them at its discretion to us or other parties. We will not have any priority in respect of acquisition opportunities provided or created by Nomura. You should assume that Nomura and its affiliates and clients will have priority over us in terms of access to acquisition opportunities. Clients of Nomura, and its affiliates, may also compete with us for investment opportunities meeting our initial business combination objectives. If Nomura is engaged to act for any such clients, we may be precluded from pursuing opportunities that would conflict with Nomura s obligations to such client. In addition, investment ideas generated within Nomura may be suitable for our company or a client of Nomura, and may be directed to any of such persons or entities rather than to us. Nomura may also be engaged to advise the seller of a company, business or assets that would qualify as an acquisition opportunity for us. In such cases, we may be precluded from participating in the sale process or from purchasing the company, business or assets. If, however, we are permitted to pursue the opportunity, the interests of Nomura or its obligations to the seller may diverge from our interests. Potential investors should also be aware of the following other potential conflicts of interest: None of our officers or directors is required to commit his or her full time to our affairs and, accordingly, may have conflicts of interest in allocating his or her time among various business activities. In the course of their other business activities, our officers and directors may become aware of investment and business opportunities which may be appropriate for presentation to us as well as the other entities with which they are affiliated. Our management may have conflicts of interest in determining to which entity a particular business opportunity should be presented. For a complete description of our management s other affiliations, see "Management — Directors and Executive Officers." Our initial stockholders have agreed to waive their redemption rights with respect to their founder shares and public shares in connection with the consummation of our initial business combination. Additionally, our initial stockholders have agreed to waive their redemption rights with respect to such founder shares if we fail to consummate our initial business combination within 24 months after the closing of this offering. If we do not complete our initial business combination within such applicable time period, the proceeds of the sale of the private placement warrants will be used to fund the redemption of our public shares, and the private placement warrants will expire worthless. With certain limited exceptions, the founder shares will not be transferable, assignable or salable by our initial stockholders until the earlier of (1) one year after the completion of our initial business combination and (2) the date on which we consummate a liquidation, merger, capital stock exchange, reorganization, or other similar transaction after our initial business combination that results in all of our stockholders having the right to exchange their shares of Class A common stock for cash, securities or other property. Notwithstanding the foregoing, if the last sale price of our Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after our initial business combination, the founder shares will be released from the lock-up. With certain limited exceptions, the private placement warrants and the Class A common stock underlying such warrants, will not be transferable, assignable or salable by our sponsor until 30 days after the completion of our initial business combination. Since our sponsor and officers and directors may directly or indirectly own Class A common stock and warrants following this offering, our officers and directors may have a conflict of interest in determining whether a particular target business is an appropriate business with which to effectuate our initial business combination. Our officers and directors may have a conflict of interest with respect to evaluating a particular business combination if the retention or resignation of any such officers and directors was included by a target business as a condition to any agreement with respect to our initial business combination. The conflicts described above may not be resolved in our favor. In general, officers and directors of a corporation incorporated under the laws of the State of Delaware are required to present business opportunities to a corporation if: the corporation could financially undertake the opportunity; the opportunity is within the corporation s line of business; and it would not be fair to the corporation and its stockholders for the opportunity not to be brought to the attention of the corporation. Accordingly, as a result of multiple business affiliations, our officers and directors may have similar legal obligations relating to presenting business opportunities meeting the above-listed criteria to multiple entities. Furthermore, our amended and restated certificate of incorporation provides that the doctrine of corporate opportunity will not apply with respect to any of our officers or directors in circumstances where the application of the doctrine would conflict with any fiduciary duties or contractual obligations they may have. Below is a table summarizing the entities to which our executive officers, directors and director nominees currently have fiduciary duties or contractual obligations: Individual Entity Entity s Business Affiliation Nathan Leight Terrapin Partners, LLC Private equity Managing member Terrapin Asset Management, LLC Hedge fund management and advisory activity Chairman and chief investment officer TICO Management Company, LP Direct lending Chairman Guy Barudin Terrapin Partners, LLC Private equity Managing Director Terrapin Asset Management, LLC Private equity fund-of-funds Portfolio Manager Jonathan Kagan Corporate Partners LLC Private equity Managing Principal BIH Holdings LLC Produce Director Drill Partners LLC Oil and gas production Director Gumps, Inc. Retail Director Ironshore, Inc. Insurance Director Lee Antimicrobial Solutions LLC Disinfection products Director, Chairman of the board Mapleton Communications LLC Radio stations Director, Chairman of the board Ovation LLC Cable network Observer Universal Trailer Holdings Corp. Transport manufacturing Director WWRD Holdings Luxury goods Director Bruce Pollack Centre Partners Private equity Managing Partner Lifetime Brands, Inc. Home products Director Filament Brands, Inc. Home products Director K2 Pure Solutions, L.P. Water treatment Director Sun Orchard, Inc. Food and beverage Director U.S. Retirement & Benefits Partners, Inc. Financial services Director Steven Rosston Procare Software Software Director, Executive Chairman Click Diagnostics, Inc. Life sciences Director Sandor Valner Walton Street Capital Mexico Private equity Managing Partner, Mexico and Latin America Funds associated with Walton Street Capital Mexico Private equity Director Grupo Calidra, S.A. de C.V. Construction materials Director Fibra Hotelera, SC Real Estate investment Trust Director Jeffrey Brown Terrapin Partners, LLC Private equity Managing Director TICO Management Company, LP Direct lending Portfolio Manager Accordingly, if any of the above executive officers, directors or director nominees becomes aware of a business combination opportunity which is suitable for any of the above entities to which he or she has then current fiduciary or contractual obligations, he or she will honor his or her fiduciary or contractual obligations to present such business combination opportunity to such entity, and only present it to us if such entity rejects the opportunity. We do not believe, however, that any of the foregoing fiduciary duties or contractual obligations will materially affect our ability to complete our business combination. Our amended and restated certificate of incorporation will provide that we renounce our interest in any corporate opportunity offered to any director or officer unless such opportunity is expressly offered to such person solely in his or her capacity as a director or officer of our company and such opportunity is one we are legally and contractually permitted to undertake and would otherwise be reasonable for us to pursue. Each of Messrs. Leight, Brown and Barudin are currently involved with Terrapin Partners, LLC or its affiliates and therefore know each other well. Although it may be beneficial to us that the members of our management team know each other and work together, these previous and/or existing relationships may influence the roles taken by our officers and directors with respect to us. For example, one of our directors or officers may be less likely to object to a course of action with respect to our activities because it may jeopardize his relationships in another enterprise. Therefore, such persons may not protect our interests as strenuously as would persons who had no previous relationship with each other. We are not prohibited from pursuing an initial business combination with a company that is affiliated with our sponsor, officers or directors. In the event we seek to complete our initial business combination with such a company, we, or a committee of independent directors, would obtain an opinion from an independent accounting firm or independent investment banking firm which is a member of FINRA that such an initial business combination is fair to our company from a financial point of view. In the event that we submit our initial business combination to our public stockholders for a vote, our initial stockholders have agreed to vote their founder shares and any public shares purchased during or after the offering in favor of our initial business combination and our officers and directors have also agreed to vote any public shares purchased during or after the offering in favor of our initial business combination. Our sponsor and our executive officers and directors are deemed to be our "promoters" as such term is defined under the federal securities laws. None of our sponsor, executive officers or directors have received any item of value other than as disclosed in this prospectus. Limitation on Liability and Indemnification of Officers and Directors Our amended and restated certificate of incorporation provides that our officers and directors will be indemnified by us to the fullest extent authorized by Delaware law, as it now exists or may in the future be amended. In addition, our amended and restated certificate of incorporation provides that our directors will not be personally liable for monetary damages to us for breaches of their fiduciary duty as directors, except to the extent such exemption from liability or limitation thereof is not permitted by the DGCL. We will enter into agreements with our officers and directors to provide contractual indemnification in addition to the indemnification provided for in our amended and restated certificate of incorporation. Our bylaws also permit us to maintain insurance on behalf of any officer, director or employee for any liability arising out of his or her actions, regardless of whether Delaware law would permit such indemnification. We will purchase a policy of directors and officers liability insurance that insures our officers and directors against the cost of defense, settlement or payment of a judgment in some circumstances and insures us against our obligations to indemnify our officers and directors. These provisions may discourage stockholders from bringing a lawsuit against our directors for breach of their fiduciary duty. These provisions also may have the effect of reducing the likelihood of derivative litigation against officers and directors, even though such an action, if successful, might otherwise benefit us and our stockholders. Furthermore, a stockholder s investment may be adversely affected to the extent we pay the costs of settlement and damage awards against officers and directors pursuant to these indemnification provisions. We believe that these provisions, the insurance and the indemnity agreements are necessary to attract and retain talented and experienced officers and directors. PRINCIPAL STOCKHOLDERS The following table sets forth information regarding the beneficial ownership of our common stock as of the date of this prospectus, and as adjusted to reflect the sale of our common stock included in the units offered by this prospectus, and assuming no purchase of units in this offering, by each person known by us to be the beneficial owner of more than 5% of our outstanding shares of common stock; each of our executive officers, directors and director nominees that beneficially owns shares of our common stock; and all our executive officers and directors as a group. Unless otherwise indicated, we believe that all persons named in the table have sole voting and investment power with respect to all shares of common stock beneficially owned by them. The following table does not reflect record or beneficial ownership of the private placement warrants as these warrants are not exercisable within 60 days of the date of this prospectus. The post-offering ownership percentage column below assumes that the underwriters do not exercise their over-allotment option, none of the forward purchase shares are purchased, our initial stockholders forfeit an aggregate of 2,016,373 founder shares and there are 25,000,000 shares of our common stock issued and outstanding after this offering. Name and Address of Beneficial Owner (1) (5) Number of Shares Owned (2) Approximate Percentage of Outstanding Common Stock Before Offering After Offering Nathan Leight (3) 5,437,443 77.5 % 14.9 % Jeffrey Brown 15,000 * * Guy Barudin (4) 0 - - Terrapin 4 Sponsor Partnership, LLC (5) 4,507,075 64.2 % 12.4 % Terrapin Partners Employee Partnership 4, LLC (5) 930,368 13.3 % 2.5 % Nomura Securities International, Inc. (6) 1,503,930 21.4 % 4.8 % Jonathan Kagan 15,000 * * Bruce Pollack 15,000 * * Steven Rosston 15,000 * * Sandor Valner 15,000 * * All directors and executive officers as a group (7 individuals) 5,512,443 78.6 % 15.2 % *Less than 1% (1)Unless otherwise noted, the business address of each of the following entities or individuals is c/o Terrapin Partners, 2655 South Le Jeune Road, Suite 550, Coral Gables, Florida 33134. (2)Interests shown consist solely of founders shares, classified as shares of Class F common stock. Such shares are convertible as of the date of this prospectus into shares of Class A common stock on a one-for-one basis but are subject to adjustment, as described below in the section entitled "Description of Securities." Excludes the forward purchase shares, as such shares may not be voted or disposed of by Nomura (or its assignees) within 60 days of the date of this prospectus. (3) Represents 4,507,075 shares held by our sponsor and 930,368 shares held by Terrapin Partners Employee Partnership 4, LLC for the benefit of employees of Terrapin Partners, LLC and affiliates, and includes 750,000 founder shares which are subject to forfeiture depending on the extent to which the over-allotment option is exercised and 962,443 founder shares which are subject to forfeiture depending on the extent to which the forward purchase shares are purchased. Nathan Leight, our chairman and CEO, is the sole managing member of Apple Orange LLC, which is the sole managing member of our sponsor. Our sponsor is the sole managing member of Terrapin Partners Employee Partnership 4, LLC. Accordingly, all shares held by our sponsor and Terrapin Partners Employee Partnership 4, LLC may be deemed to be beneficially owned by Mr. Leight. Mr. Leight disclaims beneficial ownership of such securities except to the extent of his pecuniary interest therein. (4)Excludes beneficial interest in shares allocated to Mr. Barudin by our sponsor. Mr. Barudin has no right to vote or dispose of the shares underlying his respective membership interest until the shares are distributed by our sponsor. (5) Shares held by our sponsor and Terrapin Partners Employee Partnership 4, LLC include 621,672 and 128,328 shares, respectively, which are subject to forfeiture depending on the extent to which the over-allotment option is exercised and 797,765 and 164,678 shares, respectively, which are subject to forfeiture depending on the extent to which the forward purchase shares are purchased. (6) Includes 303,930 shares which are subject to forfeiture depending on the extent to which the forward purchase shares are purchased. The business address of Nomura Securities International, Inc. is Worldwide Plaza, 309 West 49th Street, New York, New York 10019-7316. Immediately after this offering, our initial stockholders will beneficially own 20.0% of the then issued and outstanding shares of our common stock (assuming they do not purchase any units in this offering), calculated on a pro forma basis assuming the issuance of all of the forward purchase shares. If we increase or decrease the size of the offering pursuant to Rule 462(b) under the Securities Act, we will effect a stock dividend or a share contribution back to capital, as applicable, immediately prior to the consummation of the offering in such amount as to maintain the ownership of our stockholders prior to this offering at 20.0% of our issued and outstanding shares of our common stock upon the consummation of this offering, calculated on a pro forma basis assuming the issuance of all of the forward purchase shares (Nomura has agreed to waive its rights to any additional Class A common stock pursuant to the foregoing). Because of this ownership block, our initial stockholders may be able to effectively influence the outcome of all matters requiring approval by our stockholders, including the election of directors, amendments to our amended and restated certificate of incorporation and approval of significant corporate transactions other than approval of our initial business combination. Our sponsor has committed to purchase an aggregate of 3,500,000 warrants at a price of $1.00 per warrant, or $3,500,000 in the aggregate, in a private placement that will close simultaneously with the closing of this offering. Each private placement warrant is exercisable to purchase one share of our Class A common stock at a price of $11.50 per share, subject to adjustment as provided herein. The purchase price of the private placement warrants will be added to the proceeds from this offering to be held in the trust account pending our completion of our business combination. If we do not complete our business combination within 24 months from the closing of this offering, the proceeds of the sale of the private placement warrants will be used to fund the redemption of our public shares, and the private placement warrants will expire worthless. The private placement warrants are subject to the transfer restrictions described below. The private placement warrants will not be redeemable by us so long as they are held by our sponsor or its permitted transferees. If the private placement warrants are held by holders other than our sponsor or its permitted transferees, the private placement warrants will be redeemable by us and exercisable by the holders on the same basis as the warrants included in the units being sold in this offering. Otherwise, the private placement warrants have terms and provisions that are identical to those of the warrants being sold as part of the units in this offering. Nomura has entered into a forward purchase agreement with us which provides for the purchase by Nomura of an aggregate of 5,065,494 shares of our Class A common stock for an aggregate purchase price of $50,000,000 in a private placement to occur concurrently with the closing of our initial business combination. The forward purchase shares, are identical to the shares of Class A common stock included in the units being sold in this offering, except that the forward purchase shares are subject to transfer restrictions and certain registration rights, as described herein. The forward purchase agreement allows Nomura to approach other institutional and accredited investors and, with our consent, which will not be unreasonably withheld, delayed or conditioned, enter into agreements with any such investor to assume Nomura s purchase obligation under the forward purchase agreement. The forward purchase agreement also allows Nomura to be excused from its purchase obligation in connection with a specific business combination if, within five business days following written notice delivered by us of our intention to enter into such business combination, Nomura notifies us that it has decided not to proceed with the purchase for any reason, including, without limitation, if it has determined that such purchase would constitute a conflict of interest. In the event Nomura exercises its right of excusal, Nomura has agreed to waive its right to receive the placement fee earned from the sale of the forward purchase shares and the underwriters will waive their right to receive a portion of the deferred underwriting discount. The obligations under the forward purchase agreement are not affected by any redemptions by our public stockholders of shares of our Class A common stock. Prior to the consummation of this offering our sponsor sold 2,110,346 of its founder shares to Nomura. Prior to the consummation of this offering, Nomura will forfeit 606,416 founder shares. Of the 1,503,930 founder shares held by Nomura, up to 303,930 are subject to forfeiture depending on the extent to which the forward purchase shares are purchased. Of the 1,503,930 founder shares held by Nomura, 220,000 were sold to Nomura in connection with the underwriting of this transaction. Nomura has also agreed, if so requested by us, to underwrite, arrange and/or syndicate up to $450 million of additional financing for us in the form of equity or debt (or a combination thereof) in connection with our initial business combination. We will not be obligated to engage Nomura in connection with any such forward financing. The terms of any such forward financing will be based upon then-current general economic and market conditions and subject to terms and conditions satisfactory in all respects to Nomura in its sole judgement and determination if Nomura is so engaged. Any such forward financing will be without regard to any redemptions that may be tendered to us. Nomura has agreed to allow the Company to disclose the terms, conditions and assumptions under which Nomura would be highly confident of executing financing documents of a predetermined size, as part of the financing in the letter of intent delivered to each potential business combination counterparty, subject to certain conditions. Our sponsor and our executive officers and directors are deemed to be our "promoters" as such term is defined under the federal securities laws. Transfers of Shares and Warrants Held by Our Initial Stockholders The founder shares, private placement warrants and any shares of Class A common stock issued upon exercise of the private placement warrants are each subject to transfer restrictions pursuant to lock-up provisions in the letter agreements with us to be entered into by our initial stockholders. Those lock-up provisions provide that such securities are not transferable or salable, in the case of the founder shares, until the earlier of (x) one year after the completion of our initial business combination or earlier if, subsequent to our business combination, the last sale price of the Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after our initial business combination, or (y) the date following the completion of our initial business combination on which we complete a liquidation, merger, stock exchange or other similar transaction that results in all of our stockholders having the right to exchange their shares of Class A common stock for cash, securities or other property, and in the case of the private placement warrants and the respective shares of Class A common stock underlying such warrants, until 30 days after the completion of our initial business combination, except in each case (a) to our officers or directors, any affiliates or family members of any of our officers or directors, any members of our sponsor, or any affiliates of our sponsor, directors or officers, (b) in the case of an individual, by gift to a member of one of the members of the individual s immediate family or to a trust, the beneficiary of which is a member of one of the individual s immediate family, an affiliate of such person or to a charitable organization; (c) in the case of an individual, by virtue of laws of descent and distribution upon death of the individual; (d) in the case of an individual, pursuant to a qualified domestic relations order; (e) by private sales or transfers made in connection with the consummation of a business combination at prices no greater than the price at which the shares were originally purchased; (f) in the event of our liquidation prior to our completion of our initial business combination; (g) by virtue of the laws of Delaware or any of our initial stockholders limited liability company operating agreements upon dissolution of such stockholder; or (h) in the event of our completion of a liquidation, merger, stock exchange or other similar transaction which results in all of our stockholders having the right to exchange their shares of Class A common stock for cash, securities or other property subsequent to our completion of our initial business combination; provided, however, that in the case of clauses (a) through (e) and (g) these permitted transferees must enter into a written agreement agreeing to be bound by these transfer restrictions. Registration Rights The holders of the founder shares, private placement warrants, private placement units, and their respective constituent securities, will have registration rights to require us to register a sale of any of our securities held by them pursuant to a registration rights agreement to be signed prior to or on the effective date of the registration statement of which this prospectus forms a part. Our sponsor and Nomura will be entitled to make up to three demands and two demands, respectively, excluding short form registration demands, that we register such securities for sale under the Securities Act. In addition, these holders will have "piggy-back" registration rights to include such securities in other registration statements filed by us and rights to require us to register for resale such securities pursuant to Rule 415 under the Securities Act. However, the registration rights agreement provides that we will not permit any registration statement filed under the Securities Act to become effective until termination of any applicable lock-up period, which occurs in the case of the founder shares, upon the earlier of (A) one year after the completion of our initial business combination or earlier if, subsequent to our business combination, the last sale price of the Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after our initial business combination, or (B) the date following the completion of our initial business combination on which we complete a liquidation, merger, stock exchange or other similar transaction that results in all of our stockholders having the right to exchange their shares of Class A common stock for cash, securities or other property, and in the case of the private placement warrants and the shares of Class A common stock underlying such warrants, 30 days after the completion of our initial business combination. In the case of the private placement units and their constituent securities, we may file a registration statement immediately following the business combination. We will bear the costs and expenses of filing any such registration statements. Pursuant to the forward purchase agreement, we have agreed that we will use our commercially reasonable efforts (i) to file within 30 days after the closing of the initial business combination a registration statement with the SEC for a secondary offering of the forward purchase shares, (ii) to cause such registration statement to be declared effective promptly thereafter and (iii) to maintain the effectiveness of such registration statement until the earliest of (A) the date on which the applicable purchaser ceases to hold the securities covered thereby, (B) the date all of the securities covered thereby can be sold publicly without restriction or limitation under Rule 144 under the Securities Act and (C) the second anniversary of the date of effectiveness of such registration statement, subject to certain conditions and limitations set forth in the forward purchase agreement. We will bear the costs and expenses of filing such registration statement. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS In June 2017, our sponsor and an affiliate thereof purchased an aggregate of 11,500,000 founder shares for an aggregate purchase price of $25,000. Prior to the initial investment in the company of $25,000 by our sponsor and its affiliate, the company had no assets, tangible or intangible. The purchase price of the founder shares was determined by dividing the amount of cash contributed to the company by the number of founder shares issued. Prior to the consummation of this offering our sponsor sold 2,110,346 of its founder shares to Nomura for an aggregate purchase price of $4,587.71, or approximately $0.0022 per share. Also prior to the consummation of this offering, our sponsor sold an aggregate of 75,000 founder shares to Messrs. Kagan, Pollack, Rosston and Valner, each an independent director nominee, and Mr. Jeffrey Brown, a director nominee, for a purchase price of approximately $0.0022 per share. Prior to the consummation of this offering, the initial stockholders will forfeit an aggregate of 4,483,627 founder shares, such that at the time of this offering the initial stockholders own an aggregate of 7,016,373 founder shares (up to 750,000 of which are subject to forfeiture depending on the extent to which the underwriters over-allotment option is exercised, and up to 1,266,373 of which are subject to forfeiture depending on the extent to which the forward purchase shares are purchased). Of the 1,503,930 founder shares held by Nomura, up to 303,930 are subject to forfeiture depending on the extent to which the forward purchase shares are purchased. Of the 1,503,930 founder shares held by Nomura, 220,000 were sold to Nomura in connection with the underwriting of this transaction. The number of founder shares issued was determined based on the expectation that such founder shares would represent 20.0% of the outstanding shares upon completion of this offering, calculated on a pro forma basis assuming the issuance of all of the forward purchase shares. Prior to the initial investment in the company of $25,000 by our sponsor and its affiliate, the company had no assets, tangible or intangible. The purchase price of the founder shares was determined by dividing the amount of cash contributed to the company by the number of founder shares issued. Immediately after this offering, our initial stockholders will beneficially own 20.0% of the then issued and outstanding shares of our common stock (assuming they do not purchase any units in this offering), calculated on a pro forma basis assuming the issuance of all of the forward purchase shares. If we increase or decrease the size of the offering pursuant to Rule 462(b) under the Securities Act, we will effect a stock dividend or a share contribution back to capital, as applicable, immediately prior to the consummation of the offering in such amount as to maintain the ownership of our stockholders prior to this offering at 20.0% of our issued and outstanding shares of our common stock upon the consummation of this offering, calculated on a pro forma basis assuming the issuance of all of the forward purchase shares. Nomura has agreed to waive its rights to any additional Class A common stock pursuant to the foregoing. Up to 750,000 founder shares are subject to forfeiture by certain of our initial stockholders depending on the extent to which the underwriters over-allotment option is exercised, and up to 1,266,373 founder shares are subject to forfeiture by certain of our initial stockholders (or their permitted transferees) depending on the extent to which the forward purchase shares are purchased. Our sponsor has committed to purchase an aggregate of 3,500,000 warrants at a price of $1.00 per warrant, or $3,500,000 in the aggregate, in a private placement that will close simultaneously with the closing of this offering. Each private placement warrant is exercisable to purchase one share of our Class A common stock at a price of $11.50 per share, subject to adjustment as provided herein. Only whole warrants may be exercised. No fractional warrants will be issued upon separation of the units. Only whole warrants will trade. The private placement warrants (including the Class A common stock issuable upon exercise of the private placement warrants) may not, subject to certain limited exceptions, be transferred, assigned or sold by it until 30 days after the completion of our initial business combination. Nomura has entered into a forward purchase agreement with us which provides for the purchase by Nomura of an aggregate of 5,065,494 shares of our Class A common stock for an aggregate purchase price of $50,000,000 in a private placement to occur concurrently with the closing of our initial business combination. The forward purchase shares are identical to the shares of Class A common stock included in the units being sold in this offering, except that the forward purchase shares are subject to transfer restrictions and certain registration rights, as described herein. The forward purchase agreement allows Nomura to approach other institutional and accredited investors and, with our consent, which will not be unreasonably withheld, delayed or conditioned, enter into agreements with any such investor to assume Nomura s purchase obligation under the forward purchase agreement. The forward purchase agreement also allows Nomura to be excused from its purchase obligation in connection with a specific business combination if, within five business days following written notice delivered by us of our intention to enter into such business combination, Nomura notifies us that it has decided not to proceed with the purchase for any reason, including, without limitation, if it has determined that such purchase would constitute a conflict of interest. In the event Nomura exercises its right of excusal, Nomura has agreed to waive its right to receive the placement fee earned from the sale of the forward purchase shares and the underwriters will waive their right to receive a portion of the deferred underwriting discount. The obligations under the forward purchase agreement are not affected by any redemptions by our public stockholders of shares of our Class A common stock. Prior to the consummation of this offering our sponsor sold 2,110,346 of its founder shares to Nomura. Prior to the consummation of this offering, Nomura will forfeit 606,416 founder shares. Of the 1,503,930 founder shares held by Nomura, up to 303,930 are subject to forfeiture depending on the extent to which the forward purchase shares are purchased. Of the 1,503,930 founder shares held by Nomura, 220,000 were sold to Nomura in connection with the underwriting of this transaction. Nomura has also agreed, if so requested by us, to underwrite, arrange and/or syndicate up to $450 million of additional financing for us in the form of equity or debt (or a combination thereof) in connection with our initial business combination. We will not be obligated to engage Nomura in connection with any such forward financing. The terms of any such forward financing will be based upon then-current general economic and market conditions and subject to terms and conditions satisfactory in all respects to Nomura in its sole judgement and determination if Nomura is so engaged. Any such forward financing will be without regard to any redemptions that may be tendered to us. Nomura has agreed to allow the Company to disclose the terms, conditions and assumptions under which Nomura would be highly confident of executing financing documents of a predetermined size, as part of the financing in the letter of intent delivered to each potential business combination counterparty, subject to certain conditions. Nomura will be paid a market-based placement fee on the gross proceeds from the sale of the forward purchase shares upon the consummation of an initial business combination. In addition, the forward purchase agreement provides that Nomura (or its assignees) is entitled to registration rights with respect to the forward purchase shares. As more fully discussed in "Management — Conflicts of Interest," if any of our officers or directors (other than our independent directors) becomes aware of a business combination opportunity that falls within the line of business of any entity to which he or she has then current fiduciary or contractual obligations, he or she may be required to present such business combination opportunity to such entity prior to presenting such business combination opportunity to us. Our executive officers and directors currently have certain relevant fiduciary duties or contractual obligations that may take priority over their duties to us. We intend to enter into an Administrative Services Agreement with Terrapin Partners, LLC, an affiliate of our sponsor, pursuant to which we will pay a total of $16,875 per month for office space, utilities and secretarial support. Upon completion of our initial business combination or our liquidation, we will cease paying these monthly fees. Accordingly, in the event the consummation of our initial business combination takes 24 months, our sponsor s affiliate will be paid a total of $405,000 ($16,875 per month) for office space, utilities and secretarial support and will be entitled to be reimbursed for any out-of-pocket expenses. Our sponsor, executive officers and directors, or any of their respective affiliates, will be reimbursed for any out-of-pocket expenses incurred in connection with activities on our behalf such as identifying potential target businesses and performing due diligence on suitable business combinations. Our audit committee will review on a quarterly basis all payments that were made to our sponsor, officers, directors or our or their affiliates and will determine which expenses and the amount of expenses that will be reimbursed. There is no cap or ceiling on the reimbursement of out-of-pocket expenses incurred by such persons in connection with activities on our behalf. As of the date of this prospectus, an affiliate of our sponsor provided an aggregate of $140,000 to our company under an unsecured promissory note and in advances, to be used for a portion of the expenses of this offering. These loans and advances are non-interest bearing, unsecured and are due at the earlier of June 30, 2018 or the closing of this offering. The loans and advances will be repaid upon the closing of this offering. In addition, in order to finance transaction costs in connection with an intended initial business combination, our sponsor and its affiliates or designees have committed up to $1,000,000 to be provided to us in the event that funds held outside of the trust are insufficient to fund our expenses relating to investigating and selecting a target business and other working capital requirements after this offering and prior to our initial business combination and may, but are not obligated to, loan us additional funds to fund our expenses relating to investigating and completing our initial business combination. If we complete our initial business combination, we would repay such loaned amounts out of the proceeds of the trust account released to us. Otherwise, such loans would be repaid only out of funds held outside the trust account. In the event that our initial business combination does not close, we may use a portion of the working capital held outside the trust account to repay such loaned amounts but no proceeds from our trust account would be used to repay such loaned amounts. Up to $1,000,000 of any such working capital loans may be convertible into warrants of the post business combination entity at a price of $1.00 per warrant at the option of the lender. The warrants would be identical to the private placement warrants purchased by the initial stockholders. After our initial business combination, members of our management team who remain with us may be paid consulting, management or other fees from the combined company with any and all amounts being fully disclosed to our stockholders, to the extent then known, in the tender offer or proxy solicitation materials, as applicable, furnished to our stockholders. It is unlikely the amount of such compensation will be known at the time of distribution of such tender offer materials or at the time of a stockholder meeting held to consider our initial business combination, as applicable, as it will be up to the directors of the post-combination business to determine executive and director compensation. We have entered into a registration rights agreement with respect to the founder shares, the private placement warrants, the private placement units and their respective constituent securities, which is described under the heading "Principal Stockholders — Registration Rights." Following this offering, our Audit Committee must review and approve any related person transaction we propose to enter into. Our Audit Committee Charter details the policies and procedures relating to transactions that may present actual, potential or perceived conflicts of interest and may raise questions as to whether such transactions are consistent with the best interest of the company and our stockholders. A summary of such policies and procedures is as follows: Any potential related party transaction that is brought to the Audit Committee s attention will be analyzed by the Audit Committee, in consultation with outside counsel or members of management, as appropriate, to determine whether the transaction or relationship does, in fact, constitute a related party transaction. At each of its meetings, the Audit Committee will be provided with the details of each new, existing or proposed related party transaction, including the terms of the transaction, any contractual restrictions that the company has already committed to, the business purpose of the transaction, and the benefits to us and to the relevant related party. In determining whether to approve a related party transaction, the Audit Committee must consider, among other factors, the following factors to the extent relevant: whether the terms of the transaction are fair to us and on the same basis as would apply if the transaction did not involve a related party; whether there are business reasons for us to enter into the transaction; whether the transaction would impair the independence of an outside director; whether the transaction would present an improper conflict of interests for any director or executive officer; and any pre-existing contractual obligations. Any member of the Audit Committee who has an interest in the transaction under discussion must abstain from voting on the approval of the transaction, but may, if so requested by the Chairman of the Audit Committee, participate in some or all of the Committee s discussions of the transaction. Upon completion of its review of the transaction, the Audit Committee may determine to permit or to prohibit the transaction. DESCRIPTION OF SECURITIES Pursuant to our amended and restated certificate of incorporation, our authorized capital stock consists of 150,000,000 shares of Class A common stock, $0.0001 par value, 50,000,000 shares of Class F common stock, $0.0001 par value, and 1,000,000 shares of undesignated preferred stock, $0.0001 par value. The following description summarizes the material terms of our capital stock. Because it is only a summary, it may not contain all the information that is important to you. Units Each unit has an offering price of $10.00 and consists of one share of Class A common stock and one warrant. Each warrant entitles the holder thereof to purchase one share of our Class A common stock. The Class A common stock and warrants comprising the units will begin separate trading on the 52nd day following the closing of this offering unless Nomura, as the representative of the underwriters, informs us of its decision to allow earlier separate trading, subject to our having filed the Current Report on Form 8-K described below and having issued a press release announcing when such separate trading will begin. Once the shares of Class A common stock and warrants commence separate trading, holders will have the option to continue to hold units or separate their units into the component securities. Holders will need to have their brokers contact our transfer agent in order to separate the units into shares of Class A common stock and warrants. In no event will the Class A common stock and warrants be traded separately until we have filed with the SEC a Current Report on Form 8-K which includes an audited balance sheet reflecting our receipt of the gross proceeds at the closing of this offering. We will file a Current Report on Form 8-K promptly after the closing of this offering which will include this audited balance sheet, which is anticipated to take place two business days from the first trading of the units on NASDAQ. If the underwriters over-allotment option is exercised following the initial filing of such Current Report on Form 8-K, a second or amended Current Report on Form 8-K will be filed to provide updated financial information to reflect the exercise of the underwriters over-allotment option. Common Stock Upon the closing of this offering, 26,266,373 shares of our common stock will be outstanding (assuming no exercise of the underwriters over-allotment option and the corresponding forfeiture of 750,000 founder shares held by certain of our initial stockholders), consisting of: 20,000,000 shares of our Class A common stock underlying the units being offered in this offering; and 6,266,373 shares of our Class F common stock held by our initial stockholders (assuming no exercise of the underwriters over-allotment option and the corresponding forfeiture of 750,000 founder shares held by certain of our initial stockholders), up to 1,266,373 of which are subject to forfeiture depending on the extent to which the forward purchase shares are purchased. If we increase or decrease the size of the offering pursuant to Rule 462(b) under the Securities Act, we will effect a stock dividend or share contribution back to capital, as applicable, immediately prior to the consummation of the offering in such amount as to maintain the ownership of our stockholders prior to this offering at 20.0% of our issued and outstanding shares of our common stock upon the consummation of this offering, calculated on a pro forma basis assuming the issuance of all of the forward purchase shares. Nomura has agreed to waive its rights to any additional Class A common stock pursuant to the foregoing. Nomura has entered into a forward purchase agreement with us which provides for the purchase by Nomura of an aggregate of 5,065,494 shares of our Class A common stock for an aggregate purchase price of $50,000,000 in a private placement to occur concurrently with the closing of our initial business combination. The forward purchase shares are identical to the shares of Class A common stock included in the units being sold in this offering, except that the forward purchase shares are subject to transfer restrictions and certain registration rights, as described herein. The forward purchase agreement allows Nomura to approach other institutional and accredited investors and, with our consent, which will not be unreasonably withheld, delayed or conditioned, enter into agreements with any such investor to assume Nomura s purchase obligation under the forward purchase agreement. The forward purchase agreement also allows Nomura to be excused from its purchase obligation in connection with a specific business combination if, within five business days following written notice delivered by us of our intention to enter into such business combination, Nomura notifies us that it has decided not to proceed with the purchase for any reason, including, without limitation, if it has determined that such purchase would constitute a conflict of interest. In the event Nomura exercises its right of excusal, Nomura has agreed to waive its right to receive the placement fee earned from the sale of the forward purchase shares and the underwriters will waive their right to receive a portion of the deferred underwriting discount. The obligations under the forward purchase agreement are not affected by any redemptions by our public stockholders of shares of our Class A common stock. Prior to the consummation of this offering our sponsor sold 2,110,346 of its founder shares to Nomura. Prior to the consummation of this offering, Nomura will forfeit 606,416 founder shares. Of the 1,503,930 founder shares held by Nomura, up to 303,930 are subject to forfeiture depending on the extent to which the forward purchase shares are purchased. Of the 1,503,930 founder shares held by Nomura, 220,000 were sold to Nomura in connection with the underwriting of this transaction. The founder shares (classified as Class F common stock) are identical to the units being sold in this offering (classified as Class A common stock), and holders of founder shares contained in the founder shares have the same stockholder rights as public stockholders, except that the founder shares are subject to certain transfer restrictions, as described in more detail below under the heading "— Founder Shares"; our initial stockholders have entered into letter agreements with us, pursuant to which they have agreed (A) to waive their redemption rights with respect to their founder shares and public shares in connection with the completion of our business combination and (B) to waive their rights to liquidating distributions from the trust account with respect to their founder shares if we fail to complete our business combination within 24 months from the closing of this offering, although they will be entitled to liquidating distributions from the trust account with respect to any public shares they hold if we fail to complete our business combination within such time period. If we submit our business combination to our public stockholders for a vote, our initial stockholders have agreed to vote their founder shares and any public shares purchased during or after this offering in favor of our initial business combination; and the founder shares are subject to certain anti-dilution rights, as described in more detail below under the heading "— Founder Shares." Common stockholders of record are entitled to one vote for each share held on all matters to be voted on by stockholders. Unless specified in our amended and restated certificate of incorporation or bylaws, or as required by applicable provisions of the DGCL or applicable stock exchange rules, the affirmative vote of a majority of our common shares that are voted is required to approve any such matter voted on by our stockholders. Our board of directors is divided into two classes, each of which will generally serve for a term of two years with only one class of directors being elected in each year. There is no cumulative voting with respect to the election of directors, with the result that the holders of more than 50% of the shares voted for the election of directors can elect all of the directors. Our stockholders are entitled to receive ratable dividends when, as and if declared by the board of directors out of funds legally available therefor. In accordance with the NASDAQ corporate governance requirements, we are not required to hold an annual meeting until one year after our first fiscal year end following our listing on NASDAQ. Under Section 211(b) of the DGCL, we are, however, required to hold an annual meeting of stockholders for the purposes of electing directors in accordance with our bylaws unless such election is made by written consent in lieu of such a meeting. We may not hold an annual meeting of stockholders to elect new directors prior to the consummation of our initial business combination, and thus we may not be in compliance with Section 211(b) of the DGCL, which requires an annual meeting. Therefore, if our stockholders want us to hold an annual meeting prior to the consummation of our initial business combination, they may attempt to force us to hold one by submitting an application to the Delaware Court of Chancery in accordance with Section 211(c) of the DGCL. We will provide our Class A stockholders with the opportunity to redeem all or a portion of their public shares upon the completion of our initial business combination at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account as of two business days prior to the consummation of our initial business combination, including interest income (net of taxes payable and any amounts released to us to fund our working capital requirements), divided by the number of then outstanding public shares, subject to the limitations described herein. The amount in the trust account is initially anticipated to be approximately $10.00 per public share (regardless of whether or not the underwriters exercise any portion of their over-allotment option). The per-share amount we will distribute to investors who properly redeem their Class A shares will not be reduced by the deferred underwriting commissions we will pay to the underwriters. Our initial stockholders have entered into letter agreements with us, pursuant to which they have agreed to waive their redemption rights with respect to their founder shares and public shares in connection with the completion of our business combination. Unlike many blank check companies that hold stockholder votes and conduct proxy solicitations in conjunction with their initial business combinations and provide for related redemptions of public shares for cash upon completion of such initial business combinations even when a vote is not required by law, if a stockholder vote is not required by law and we do not decide to hold a stockholder vote for business or other legal reasons, we will, pursuant to our amended and restated certificate of incorporation, conduct the redemptions pursuant to the tender offer rules of the SEC, and file tender offer documents with the SEC prior to completing our initial business combination. Our amended and restated certificate of incorporation requires these tender offer documents to contain substantially the same financial and other information about the initial business combination and the redemption rights as is required under the SEC s proxy rules. If, however, a stockholder approval of the transaction is required by law, or we decide to obtain stockholder approval for business or other legal reasons, we will, like many blank check companies, offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. If we seek stockholder approval, we will complete our initial business combination only if a majority of the outstanding shares of common stock voted are voted in favor of the business combination. However, the participation of our sponsor, officers, directors, advisors or their affiliates in privately-negotiated transactions (as described in this prospectus), if any, could result in the approval of our business combination even if a majority of our public stockholders vote, or indicate their intention to vote, against such business combination. For purposes of seeking approval of the majority of our outstanding shares of common stock, non-votes will have no effect on the approval of our business combination once a quorum is obtained. We intend to give approximately 30 days (but not less than 10 days nor more than 60 days) prior written notice of any such meeting, if required, at which a vote shall be taken to approve our business combination. If we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our business combination pursuant to the tender offer rules, our amended and restated certificate of incorporation provides that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a "group" (as defined under Section 13 of the Exchange Act), will be restricted from redeeming its shares with respect to Excess Shares. However, we would not be restricting our stockholders ability to vote all of their shares (including Excess Shares) for or against our business combination. If we seek stockholder approval in connection with our business combination, our initial stockholders have agreed to vote their founder shares and any public shares purchased during or after this offering in favor of our initial business combination. Additionally, each public stockholder may elect to redeem their public shares irrespective of whether they vote for or against the proposed transaction. Pursuant to our amended and restated certificate of incorporation, if we are unable to complete our business combination within 24 months from the closing of this offering, we will cease all operations except for the purpose of winding up, as promptly as reasonably possible but no more than ten business days thereafter, subject to lawfully available funds therefor, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest income (net of taxes payable and any amounts released to us to fund our working capital requirements, and less up to $50,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders rights as stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject in each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. Our initial stockholders have entered into letter agreements with us, pursuant to which they have agreed to waive their rights to liquidating distributions from the trust account with respect to their founder shares if we fail to complete our business combination within 24 months from the closing of this offering. However, if our initial stockholders acquire public shares in or after this offering, they will be entitled to liquidating distributions from the trust account with respect to such public shares if we fail to complete our business combination within the prescribed time period. In the event of a liquidation, dissolution or winding up of the company after a business combination, our stockholders are entitled to share ratably in all assets remaining available for distribution to them after payment of liabilities and after provision is made for each class of stock, if any, having preference over the common stock. Our stockholders have no preemptive or other subscription rights. There are no sinking fund provisions applicable to the common stock, except that we will provide our stockholders with the opportunity to redeem their public shares for cash equal to their pro rata share of the aggregate amount then on deposit in the trust account, including interest income (which interest shall be net of taxes payable and net of any amounts released to us to fund our working capital requirements) upon the completion of our initial business combination, subject to the limitations described herein. Founder Shares The founder shares (classified as Class F common stock) are convertible at the time of this offering into shares of Class A common stock at a ratio of one-for-one. In the case that additional shares of Class A common stock, or equity-linked securities, are deemed issued in excess of the amounts offered in this prospectus and related to the closing of the business combination, the ratio at which shares of Class F common stock shall convert into shares of Class A common stock will be adjusted so that the number of shares of Class A common stock issuable upon conversion of all shares of Class F common stock will equal, in the aggregate, on an as-converted basis, 20% of the total number of all shares of Class A common stock sold pursuant to the prospectus, calculated on a pro forma basis assuming the issuance of all of the forward purchase shares, plus all common shares or equity-linked securities deemed to be issued in connection with the business combination, excluding any shares or equity-linked securities issued, or to be issued, to any seller in the business combination or pursuant to warrants issued to the sponsor. Nomura has agreed to waive its rights to any additional Class A common stock pursuant to the foregoing. With certain limited exceptions, the founder shares are not transferable, assignable or salable (except to our officers and directors and other persons or entities affiliated with our initial stockholders, each of whom will be subject to the same transfer restrictions) until the earlier of one year after the completion of our initial business combination or earlier if, (x) subsequent to our business combination, the last sale price of the Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after our initial business combination, or (y) the date following the completion of our initial business combination on which we complete a liquidation, merger, stock exchange or other similar transaction that results in all of our stockholders having the right to exchange their shares of Class A common stock for cash, securities or other property. Up to 750,000 founder shares will be subject to forfeiture by certain of our initial stockholders on a pro rata basis depending on the exercise of the underwriters over-allotment option, and up to 1,266,373 founder shares are subject to forfeiture by certain of our initial stockholders (or their permitted transferees), on a pro rata basis depending on the extent to which the forward purchase shares are purchased. In addition, holders of founder shares have agreed (A) to vote any shares owned by them in favor of any proposed business combination and (B) not to redeem any shares in connection with a stockholder vote to approve a proposed initial business combination. Preferred Stock Our amended and restated certificate of incorporation provides that shares of preferred stock may be issued from time to time in one or more series. Our board of directors will be authorized to fix the voting rights, if any, designations, powers, preferences, the relative, participating, optional or other special rights and any qualifications, limitations and restrictions thereof, applicable to the shares of each series. Our board of directors will be able to, without stockholder approval, issue preferred stock with voting and other rights that could adversely affect the voting power and other rights of the holders of the common stock and could have anti-takeover effects. The ability of our board of directors to issue preferred stock without stockholder approval could have the effect of delaying, deferring or preventing a change of control of us or the removal of existing management. We have no preferred stock outstanding at the date hereof. Although we do not currently intend to issue any additional shares of preferred stock, we cannot assure you that we will not do so in the future. No shares of preferred stock are being registered in this offering. Warrants Public Stockholders Warrants Each warrant entitles the holder thereof to purchase one share of our Class A common stock at a price of $11.50 per share, subject to adjustment as provided below. The warrants will expire five years after the completion of our initial business combination, at 5:00 p.m., New York City time, or earlier upon redemption or liquidation. We will not be obligated to deliver any shares of Class A common stock pursuant to the exercise of a warrant and will have no obligation to settle such warrant exercise unless a registration statement under the Securities Act with respect to the shares of Class A common stock underlying the warrants is then effective and a prospectus relating thereto is current, subject to our satisfying our obligations described below with respect to registration. No warrant will be exercisable for cash or on a cashless basis, and we will not be obligated to issue any shares to holders seeking to exercise their warrants, unless the issuance of the shares upon such exercise is registered or qualified under the securities laws of the state of the exercising holder, unless an exemption is available. In the event that the conditions in the two immediately preceding sentences are not satisfied with respect to a warrant, the holder of such warrant will not be entitled to exercise such warrant and such warrant may have no value and expire worthless. In no event will we be required to net cash settle any warrant. In the event that a registration statement is not effective for the exercised warrants, the purchaser of a unit containing such warrant will have paid the full purchase price for the unit solely for the share of Class A common stock underlying such unit. We have agreed that as soon as practicable, but in no event later than fifteen (15) business days, after the closing of our initial business combination, we will use our best efforts to file with the SEC a registration statement for the registration, under the Securities Act, of the shares of Class A common stock issuable upon exercise of the warrants. We will use our best efforts to cause the same to become effective and to maintain the effectiveness of such registration statement, and a current prospectus relating thereto, until the expiration of the warrants in accordance with the provisions of the warrant agreement. Notwithstanding the above, if our Class A common stock is at the time of any exercise of a warrant not listed on a national securities exchange such that it satisfies the definition of a "covered security" under Section 18(b)(1) of the Securities Act, we may, at our option, require holders of public warrants who exercise their warrants to do so a "cashless basis" in accordance with Section 3(a)(9) of the Securities Act and, in the event we so elect, we will not be required to file or maintain in effect a registration statement or register or qualify the shares under blue sky laws. Once the warrants become exercisable, we may call the warrants for redemption: in whole and not in part; at a price of $0.01 per warrant; upon not less than 30 days prior written notice of redemption to each warrant holder; and if, and only if, the reported last sale price of the Class A common stock equals or exceeds $18.00 per share for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date we send to the notice of redemption to the warrant holders. If and when the warrants become redeemable by us, we may exercise our redemption right even if we are unable to register or qualify the underlying securities for sale under all applicable state securities laws. We have established the last of the redemption criterion discussed above to prevent a redemption call unless there is at the time of the call a significant premium to the warrant exercise price. If the foregoing conditions are satisfied and we issue a notice of redemption of the warrants, each warrant holder will be entitled to exercise his, her or its warrant prior to the scheduled redemption date. However, the price of the Class A common stock may fall below the $18.00 redemption trigger price as well as the $11.50 warrant exercise price (for whole shares) after the redemption notice is issued. If we call the warrants for redemption as described above, our management will have the option to require any holder that wishes to exercise his, her or its warrant to do so on a "cashless basis." In determining whether to require all holders to exercise their warrants on a "cashless basis," our management will consider, among other factors, our cash position, the number of warrants that are outstanding and the dilutive effect on our stockholders of issuing the maximum number of shares of Class A common stock issuable upon the exercise of our warrants. If our management takes advantage of this option, all holders of warrants would pay the exercise price by surrendering their warrants for that number of shares of Class A common stock equal to the quotient obtained by dividing (x) the product of the number of shares of Class A common stock underlying the warrants, multiplied by the difference between the exercise price of the warrants and the "fair market value" (defined below) by (y) the fair market value. The "fair market value" shall mean the average reported last sale price of the Class A common stock for the 10 trading days ending on the third trading day prior to the date on which the notice of redemption is sent to the holders of warrants. If our management takes advantage of this option, the notice of redemption will contain the information necessary to calculate the number of shares of Class A common stock to be received upon exercise of the warrants, including the "fair market value" in such case. Requiring a cashless exercise in this manner will reduce the number of shares to be issued and thereby lessen the dilutive effect of a warrant redemption. We believe this feature is an attractive option to us if we do not need the cash from the exercise of the warrants after our initial business combination. If we call our warrants for redemption and our management does not take advantage of this option, our sponsor and its permitted transferees would still be entitled to exercise their private placement warrants for cash or on a cashless basis using the same formula described above that other warrant holders would have been required to use had all warrant holders been required to exercise their warrants on a cashless basis, as described in more detail below. A holder of a warrant may notify us in writing in the event it elects to be subject to a requirement that such holder will not have the right to exercise such warrant, to the extent that after giving effect to such exercise, such person (together with such person s affiliates), to the warrant agent s actual knowledge, would beneficially own in excess of 9.8% (or such other amount as a holder may specify) of the shares of common stock outstanding immediately after giving effect to such exercise. If the number of outstanding shares of Class A common stock is increased by a stock dividend payable in shares of Class A common stock, or by a split of shares of Class A common stock or other similar event, then, on the effective date of such stock dividend, split or similar event, the number of shares of Class A common stock issuable on exercise of each warrant will be increased in proportion to such increase in the outstanding shares of Class A common stock. A rights offering to holders of Class A common stock entitling holders to purchase shares of Class A common stock at a price less than the fair market value will be deemed a stock dividend of a number of shares of Class A common stock equal to the product of (i) the number of shares of Class A common stock actually sold in such rights offering (or issuable under any other equity securities sold in such rights offering that are convertible into or exercisable for Class A common stock) multiplied by (ii) one (1) minus the quotient of (x) the price per share of Class A common stock paid in such rights offering divided by (y) the fair market value. For these purposes if the rights offering is for securities convertible into or exercisable for Class A common stock, in determining the price payable for Class A common stock, there will be taken into account any consideration received for such rights, as well as any additional amount payable upon exercise or conversion and fair market value means the volume weighted average price of Class A common stock as reported during the ten (10) trading day period ending on the trading day prior to the first date on which the shares of Class A common stock trade on the applicable exchange or in the applicable market, regular way, without the right to receive such rights. In addition, if we, at any time while the warrants are outstanding and unexpired, pay a dividend or make a distribution in cash, securities or other assets to the holders of Class A common stock on account of such shares of Class A common stock (or other shares of our capital stock into which the warrants are convertible), other than (a) as described above, (b) certain ordinary cash dividends, (c) to satisfy the redemption rights of the holders of Class A common stock in connection with a proposed initial business combination, (d) as a result of the repurchase of shares of Class A common stock by the company if the proposed initial business combination is presented to the stockholders of the company for approval, or (e) in connection with the redemption of our public shares upon our failure to complete our initial business combination, then the warrant exercise price will be decreased, effective immediately after the effective date of such event, by the amount of cash and/or the fair market value of any securities or other assets paid on each share of Class A common stock in respect of such event. If the number of outstanding shares of our Class A common stock is decreased by a consolidation, combination, reverse stock split or reclassification of shares of Class A common stock or other similar event, then, on the effective date of such consolidation, combination, reverse stock split, reclassification or similar event, the number of shares of Class A common stock issuable on exercise of each warrant will be decreased in proportion to such decrease in outstanding shares of Class A common stock. Whenever the number of shares of Class A common stock purchasable upon the exercise of the warrants is adjusted, as described above, the warrant exercise price will be adjusted by multiplying the warrant exercise price immediately prior to such adjustment by a fraction (x) the numerator of which will be the number of shares of Class A common stock purchasable upon the exercise of the warrants immediately prior to such adjustment, and (y) the denominator of which will be the number of shares of Class A common stock so purchasable immediately thereafter. In case of any reclassification or reorganization of the outstanding shares of Class A common stock (other than those described above or that solely affects the par value of such shares of Class A common stock), or in the case of any merger or consolidation of us with or into another corporation (other than a consolidation or merger in which we are the continuing corporation and that does not result in any reclassification or reorganization of our outstanding shares of Class A common stock), or in the case of any sale or conveyance to another corporation or entity of the assets or other property of us as an entirety or substantially as an entirety in connection with which we are dissolved, the holders of the warrants will thereafter have the right to purchase and receive, upon the basis and upon the terms and conditions specified in the warrants and in lieu of the shares of our Class A common stock immediately theretofore purchasable and receivable upon the exercise of the rights represented thereby, the kind and amount of shares of stock or other securities or property (including cash) receivable upon such reclassification, reorganization, merger or consolidation, or upon a dissolution following any such sale or transfer, that the holder of the warrants would have received if such holder had exercised their warrants immediately prior to such event. However, if such holders were entitled to exercise a right of election as to the kind or amount of securities, cash or other assets receivable upon such consolidation or merger, then the kind and amount of securities, cash or other assets for which each warrant will become exercisable will be deemed to be the weighted average of the kind and amount received per share by such holders in such consolidation or merger that affirmatively make such election, and if a tender, exchange or redemption offer has been made to and accepted by such holders (other than a tender, exchange or redemption offer made by the company in connection with redemption rights held by stockholders of the company as provided for in the company s amended and restated certificate of incorporation or as a result of the repurchase of shares of Class A common stock by the company if a proposed initial business combination is presented to the stockholders of the company for approval) under circumstances in which, upon completion of such tender or exchange offer, the maker thereof, together with members of any group (within the meaning of Rule 13d-5(b)(1) under the Exchange Act) of which such maker is a part, and together with any affiliate or associate of such maker (within the meaning of Rule 12b-2 under the Exchange Act) and any members of any such group of which any such affiliate or associate is a part, own beneficially (within the meaning of Rule 13d-3 under the Exchange Act) more than 50% of the outstanding shares of common stock, the holder of a warrant will be entitled to receive the highest amount of cash, securities or other property to which such holder would actually have been entitled as a stockholder if such warrant holder had exercised the warrant prior to the expiration of such tender or exchange offer, accepted such offer and all of the Class A common stock held by such holder had been purchased pursuant to such tender or exchange offer, subject to adjustments (from and after the consummation of such tender or exchange offer) as nearly equivalent as possible to the adjustments provided for in the warrant agreement. Additionally, if less than 70% of the consideration receivable by the holders of Class A common stock in such a transaction is payable in the form of common stock in the successor entity that is listed for trading on a national securities exchange or is quoted in an established over-the-counter market, or is to be so listed for trading or quoted immediately following such event, and if the registered holder of the warrant properly exercises the warrant within thirty days following public disclosure of such transaction, the warrant exercise price will be reduced as specified in the warrant agreement based on the per share consideration minus Black-Scholes value (as defined in the warrant agreement) of the warrant. The warrants will be issued in registered form under a warrant agreement between Continental Stock Transfer & Trust Company, as warrant agent, and us. You should review a copy of the warrant agreement, which will be filed as an exhibit to the registration statement of which this prospectus forms a part, for a complete description of the terms and conditions applicable to the warrants. The warrant agreement provides that the terms of the warrants may be amended without the consent of any holder to cure any ambiguity or correct any defective provision, but requires the approval by the holders of at least 65% of then outstanding public warrants to make any change that adversely affects the interests of the registered holders of public warrants. The warrants may be exercised upon surrender of the warrant certificate on or prior to the expiration date at the offices of the warrant agent, with the exercise form on the reverse side of the warrant certificate completed and executed as indicated, accompanied by full payment of the exercise price (or on a cashless basis, if applicable), by certified or official bank check payable to us, for the number of warrants being exercised. The warrant holders do not have the rights or privileges of holders of Class A common stock and any voting rights until they exercise their warrants and receive shares of Class A common stock. After the issuance of shares of Class A common stock upon exercise of the warrants, each holder will be entitled to one vote for each share held of record on all matters to be voted on by stockholders. Private Placement Warrants The private placement warrants (including the Class A common stock issuable upon exercise of the private placement warrants) will not be transferable, assignable or salable until 30 days after the completion of our initial business combination (except, among other limited exceptions as described under "Principal Stockholders — Transfers of Shares and Warrants Held by Our Initial Stockholders," to our officers and directors and other persons or entities affiliated with our sponsor) and they will not be redeemable by us so long as they are held by our sponsor or its permitted transferees. Otherwise, the private placement warrants have terms and provisions that are identical to those of the warrants being sold as part of the units in this offering. If the private placement warrants are held by holders other than our sponsor or its permitted transferees, the private placement warrants will be redeemable by us and exercisable by the holders on the same basis as the warrants included in the units being sold in this offering. If holders of the private placement warrants elect to exercise them on a cashless basis, they would pay the exercise price by surrendering his, her or its warrants for that number of shares of Class A common stock equal to the quotient obtained by dividing (x) the product of the number of shares of Class A common stock underlying the warrants, multiplied by the difference between the exercise price of the warrants and the "fair market value" (defined below) by (y) the fair market value. The "fair market value" shall mean the average reported last sale price of the Class A common stock for the 10 trading days ending on the third trading day prior to the date on which the notice of warrant exercise is sent to the warrant agent. The reason that we have agreed that these warrants will be exercisable on a cashless basis so long as they are held by our sponsor and permitted transferees is because it is not known at this time whether they will be affiliated with us following a business combination. If they remain affiliated with us, their ability to sell our securities in the open market will be significantly limited. We expect to have policies in place that prohibit insiders from selling our securities except during specific periods of time. Even during such periods of time when insiders will be permitted to sell our securities, an insider cannot trade in our securities if he or she is in possession of material non-public information. Accordingly, unlike public stockholders who could exercise their warrants and sell the shares of Class A common stock received upon such exercise freely in the open market in order to recoup the cost of such exercise, the insiders could be significantly restricted from selling such securities. As a result, we believe that allowing the holders to exercise such warrants on a cashless basis is appropriate. Dividends We have not paid any cash dividends on our common stock to date and do not intend to pay cash dividends prior to the completion of a business combination. The payment of cash dividends in the future will be dependent upon our revenues and earnings, if any, capital requirements and general financial condition subsequent to completion of a business combination. The payment of any cash dividends subsequent to a business combination will be within the discretion of our board of directors at such time. In addition, our board of directors is not currently contemplating and does not anticipate declaring any stock dividends in the foreseeable future, except if we increase the size of the offering pursuant to Rule 462(b) under the Securities Act, in which case we will effect a stock dividend immediately prior to the consummation of the offering in such amount as to maintain the ownership of our stockholders prior to this offering at 20% of our issued and outstanding shares of our common stock upon the consummation of this offering, calculated on a pro forma basis assuming the issuance of all of the forward purchase shares. Further, if we incur any indebtedness, our ability to declare dividends may be limited by restrictive covenants we may agree to in connection therewith. Our Transfer Agent and Warrant Agent The transfer agent for our common stock and warrant agent for our warrants is Continental Stock Transfer & Trust Company. We have agreed to indemnify Continental Stock Transfer & Trust Company in its roles as transfer agent and warrant agent, its agents and each of its stockholders, directors, officers and employees against all liabilities, including judgments, costs and reasonable counsel fees that may arise out of acts performed or omitted for its activities in that capacity, except for any liability due to any gross negligence, willful misconduct or bad faith of the indemnified person or entity. Our Amended and Restated Certificate of Incorporation Our amended and restated certificate of incorporation contains certain requirements and restrictions relating to this offering that will apply to us until the completion of our initial business combination. These provisions cannot be amended without the approval of the holders of at least 65% of our common stock. Our initial stockholders, who will collectively beneficially own 20% of our common stock upon the closing of this offering (assuming they do not purchase any units in this offering), calculated on a pro forma basis assuming the issuance of all of the forward purchase shares, will participate in any vote to amend our amended and restated certificate of incorporation and will have the discretion to vote in any manner they choose. Specifically, our amended and restated certificate of incorporation provides, among other things, that: if we are unable to complete our initial business combination within 24 months from the closing of this offering, we will cease all operations except for the purpose of winding up, as promptly as reasonably possible but not more than ten business days thereafter, subject to lawfully available funds therefor, redeem 100% of the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest income (net of taxes payable and any amounts released to us to fund our working capital requirements, and less up to $50,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders rights as stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject in each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law; prior to our initial business combination, we may not issue additional shares of capital stock that would entitle the holders thereof to receive funds from the trust account or vote on any initial business combination; although we do not intend to enter into a business combination with a target business that is affiliated with our sponsor, our directors or our executive officers, we are not prohibited from doing so. In the event we enter into such a transaction, we, or a committee of independent directors, will obtain an opinion from an independent accounting firm or an independent investment banking firm that is a member of FINRA that such a business combination is fair to our company from a financial point of view; if a stockholder vote on our initial business combination is not required by law and we do not decide to hold a stockholder vote for business or other legal reasons, we will offer to redeem our public shares pursuant to Rule 13e-4 and Regulation 14E under the Exchange Act, and will file tender offer documents with the SEC prior to completing our initial business combination which contain substantially the same financial and other information about our initial business combination and the redemption rights as is required under Regulation 14A of the Exchange Act; Our initial business combination must occur with one or more target businesses that together have an aggregate fair market value of at least 80% of our assets held in the trust account (excluding the deferred underwriting commissions and taxes payable on the income earned on the trust account) at the time of the agreement to enter into the initial business combination; If our stockholders approve an amendment to our amended and restated certificate of incorporation that would affect the substance or timing of our obligation to redeem 100% of our public shares if we do not complete our business combination within 24 months from the closing of this offering, we will provide our public stockholders with the opportunity to redeem all or a portion of their shares of Class A common stock upon such approval at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest income (net of taxes payable and any amounts released to us to fund our working capital requirements), divided by the number of then outstanding public shares; and we will not effectuate our initial business combination with another blank check company or a similar company with nominal operations. In addition, our amended and restated certificate of incorporation provides that under no circumstances will we redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001. Certain Anti-Takeover Provisions of Delaware Law and our Amended and Restated Certificate of Incorporation and Bylaws We will be subject to the provisions of Section 203 of the DGCL regulating corporate takeovers upon completion of this offering. This statute prevents certain Delaware corporations, under certain circumstances, from engaging in a "business combination" with: a stockholder who owns 15% or more of our outstanding voting stock (otherwise known as an "interested stockholder"); an affiliate of an interested stockholder; or an associate of an interested stockholder, for three years following the date that the stockholder became an interested stockholder. A "business combination" includes a merger or sale of more than 10% of our assets. However, the above provisions of Section 203 do not apply if: our board of directors approves the transaction that made the stockholder an "interested stockholder," prior to the date of the transaction; after the completion of the transaction that resulted in the stockholder becoming an interested stockholder, that stockholder owned at least 85% of our voting stock outstanding at the time the transaction commenced, other than statutorily excluded shares of common stock; or on or subsequent to the date of the transaction, the business combination is approved by our board of directors and authorized at a meeting of our stockholders, and not by written consent, by an affirmative vote of at least two-thirds of the outstanding voting stock not owned by the interested stockholder. Our amended and restated certificate of incorporation provides that our board of directors will be classified into two classes of directors. As a result, in most circumstances, a person can gain control of our board only by successfully engaging in a proxy contest at two or more annual meetings. Our authorized but unissued common stock and preferred stock are available for future issuances without stockholder approval and could be utilized for a variety of corporate purposes, including future offerings to raise additional capital, acquisitions and employee benefit plans. The existence of authorized but unissued and unreserved common stock and preferred stock could render more difficult or discourage an attempt to obtain control of us by means of a proxy contest, tender offer, merger or otherwise. Special meetings of stockholders Our bylaws provide that special meetings of our stockholders may be called only by a majority vote of our board of directors, by our CEO or by our chairman. Advance notice requirements for stockholder proposals and director nominations Our bylaws provide that stockholders seeking to bring business before our annual meeting of stockholders, or to nominate candidates for election as directors at our annual meeting of stockholders must provide timely notice of their intent in writing. To be timely, a stockholder s notice will need to be received by the secretary to our principal executive offices not later than the close of business on the 90th day or earlier than the opening of business on the 120th day prior to the scheduled date of the annual meeting of stockholders. Our bylaws also specify certain requirements as to the form and content of a stockholders meeting. These provisions may preclude our stockholders from bringing matters before our annual meeting of stockholders or from making nominations for directors at our annual meeting of stockholders. Securities Eligible for Future Sale Immediately after this offering (assuming no exercise of the underwriters over-allotment option) we will have 26,266,373 (or 30,016,373 if the underwriters over-allotment option is exercised in full) shares of Class A common stock outstanding. Of these shares, the 20,000,000 shares (or 23,000,000 shares if the over-allotment option is exercised in full) sold in this offering will be freely tradable without restriction or further registration under the Securities Act, except for any shares purchased by one of our affiliates within the meaning of Rule 144 under the Securities Act. All of the remaining founder shares, and all the private placement warrants are restricted securities under Rule 144, in that they were issued in private transactions not involving a public offering. All the 7,016,373 shares of Class F common stock that will be issued and outstanding as of the time of this offering (up to 750,000 of which are subject to forfeiture depending on the extent to which the underwriters over-allotment option is exercised, and up to 1,266,373 of which are subject to forfeiture depending on the extent to which the forward purchase shares are purchased) are subject to restrictions as set forth elsewhere in this prospectus. Rule 144 Pursuant to Rule 144, a person who has beneficially owned restricted shares of our common stock or warrants for at least six months would be entitled to sell their securities provided that such person is not deemed to have been one of our affiliates at the time of, or at any time during the three months preceding, a sale and we are subject to the Exchange Act periodic reporting requirements for at least three months before the sale and have filed all required reports under Section 13 or 15(d) of the Exchange Act during the 12 months (or such shorter period as we were required to file reports) preceding the sale. Persons who have beneficially owned restricted shares of our common stock or warrants for at least six months but who are our affiliates at the time of, or at any time during the three months preceding, a sale, would be subject to additional restrictions, by which such person would be entitled to sell within any three-month period only a number of securities that does not exceed the greater of: 1% of the total number of shares of common stock then outstanding, which will equal 262,664 shares immediately after this offering (or 300,164 if the underwriters exercise their over-allotment option in full); or the average weekly reported trading volume of the common stock during the four calendar weeks preceding the filing of a notice on Form 144 with respect to the sale. Sales by our affiliates under Rule 144 are also limited by manner of sale provisions and notice requirements and to the availability of current public information about us. Restrictions on the Use of Rule 144 by Shell Companies or Former Shell Companies Rule 144 is not available for the resale of securities initially issued by shell companies (other than business combination related shell companies) or issuers that have been at any time previously a shell company. However, Rule 144 also includes an important exception to this prohibition if the following conditions are met: the issuer of the securities that was formerly a shell company has ceased to be a shell company; the issuer of the securities is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act; the issuer of the securities has filed all Exchange Act reports and material required to be filed, as applicable, during the preceding 12 months (or such shorter period that the issuer was required to file such reports and materials), other than Form 8-K reports; and at least one year has elapsed from the time that the issuer filed current Form 10 type information with the SEC reflecting its status as an entity that is not a shell company. As a result, our initial stockholders will be able to sell their founder shares and private placement warrants, as applicable, pursuant to Rule 144 without registration one year after we have completed our initial business combination. Registration Rights The holders of the founder shares, private placement warrants, private placement units, and their respective constituent securities, will have registration rights to require us to register a sale of any of our securities held by them pursuant to a registration rights agreement to be signed prior to or on the effective date of the registration statement of which this prospectus forms a part. Our sponsor and Nomura will be entitled to make up to three demands and two demands, respectively, excluding short form registration demands, that we register such securities for sale under the Securities Act. In addition, these holders will have "piggy-back" registration rights to include such securities in other registration statements filed by us and rights to require us to register for resale such securities pursuant to Rule 415 under the Securities Act. However, the registration rights agreement provides that we will not permit any registration statement filed under the Securities Act to become effective until termination of any applicable lock-up period, which occurs in the case of the founder shares, upon the earlier of (A) one year after the completion of our initial business combination or earlier if, subsequent to our business combination, the last sale price of the Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after our initial business combination, or (B) the date following the completion of our initial business combination on which we complete a liquidation, merger, stock exchange or other similar transaction that results in all of our stockholders having the right to exchange their shares of Class A common stock for cash, securities or other property, and in the case of the private placement warrants and the shares of Class A common stock underlying such warrants, 30 days after the completion of our initial business combination. In the case of the private placement units and their constituent securities, we may file a registration statement immediately following the business combination. We will bear the costs and expenses of filing any such registration statements. Pursuant to the forward purchase agreement, we have agreed that we will use our commercially reasonable efforts (i) to file within 30 days after the closing of the initial business combination a registration statement with the SEC for a secondary offering of the forward purchase shares, (ii) to cause such registration statement to be declared effective promptly thereafter and (iii) to maintain the effectiveness of such registration statement until the earliest of (A) the date on which the applicable purchaser ceases to hold the securities covered thereby, (B) the date all of the securities covered thereby can be sold publicly without restriction or limitation under Rule 144 under the Securities Act and (C) the second anniversary of the date of effectiveness of such registration statement, subject to certain conditions and limitations set forth in the forward purchase agreement. We will bear the costs and expenses of filing such registration statement. Listing of Securities We have applied to list our units, Class A common stock and warrants on NASDAQ under the symbols "TRTLU," "TRTL" and "TRTLW," respectively. Our units will be listed on NASDAQ on or promptly after the effective date of the registration statement of which this prospectus forms a part. Following the date the shares of our common stock and warrants are eligible to trade separately, we anticipate that the shares of our Class A common stock and warrants will be listed separately and as a unit on NASDAQ. UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS The following discussion is a summary of the U.S. federal income tax considerations generally applicable to the acquisition, ownership and disposition of our units, Class A common stock and warrants, which we refer to collectively as our securities. This summary is based upon U.S. federal income tax law as of the date of this prospectus, which is subject to change or differing interpretations, possibly with retroactive effect. This summary does not discuss all aspects of U.S. federal income taxation that may be important to particular investors in light of their individual circumstances, including investors subject to special tax rules (e.g., financial institutions, insurance companies, broker-dealers, partnerships and their partners, tax-exempt organizations (including private foundations), taxpayers that have elected mark-to-market accounting, S corporations, regulated investment companies, real estate investment trusts, investors that will hold Class A common stock or warrants as part of a straddle, hedge, conversion, or other integrated transaction for U.S. federal income tax purposes, former citizens or residents of the United States or investors that have a functional currency other than the U.S. dollar), all of whom may be subject to tax rules that differ materially from those summarized below. In addition, this summary does not discuss other U.S. federal tax consequences (e.g., estate or gift tax), any state, local, or non-U.S. tax considerations or the Medicare tax or alternative minimum tax. In addition, this summary is limited to investors that will hold our securities as "capital assets" (generally, property held for investment) under the Internal Revenue Code of 1986, as amended, (the "Code"), and that acquired the securities pursuant to this offering (or, in the case of Class A common stock, upon exercise of warrants so acquired). No ruling from the Internal Revenue Service, (the "IRS") has been or will be sought regarding any matter discussed herein. No assurance can be given that the IRS would not assert, or that a court would not sustain a position contrary to any of the tax aspects set forth below. For purposes of this summary, a "U.S. Holder" is a beneficial holder of securities who or that, for U.S. federal income tax purposes is: an individual who is a United States citizen or resident of the United States; a corporation or other entity treated as a corporation for United States federal income tax purposes created in, or organized under the laws of, the United States or any state or political subdivision thereof; an estate the income of which is includible in gross income for United States federal income tax purposes regardless of its source; or a trust (A) the administration of which is subject to the primary supervision of a United States court and which has one or more United States persons (within the meaning of the Code) who have the authority to control all substantial decisions of the trust or (B) that has in effect a valid election under applicable Treasury regulations to be treated as a United States person. A "non-U.S. Holder" is a beneficial holder of shares who or that is neither a U.S. Holder nor a partnership for U.S. federal income tax purposes. If a partnership (including an entity or arrangement treated as a partnership for U.S. federal income tax purposes) holds our securities, the tax treatment of a partner in such partnership will generally depend upon the status of the partner, the activities of the partnership and certain determinations made at the partner level. If you are a partner of a partnership holding our securities, you are urged to consult your tax advisor regarding the tax consequences of the ownership and disposition of our securities. THIS DISCUSSION OF U.S. FEDERAL INCOME TAX CONSIDERATIONS IS FOR GENERAL INFORMATION PURPOSES ONLY AND IS NOT TAX ADVICE. WE URGE PROSPECTIVE HOLDERS TO CONSULT THEIR TAX ADVISORS CONCERNING THE U.S. FEDERAL INCOME TAX CONSEQUENCES TO THEM OF OWNING AND DISPOSING OF OUR SECURITIES, AS WELL AS THE APPLICATION OF ANY, STATE, LOCAL AND NON-U.S. INCOME, ESTATE AND OTHER TAX CONSIDERATIONS. Personal Holding Company Status We would be subject to a second level of U.S. federal income tax on a portion of our income if we are determined to be a personal holding company, or PHC, for U.S. federal income tax purposes. A U.S. corporation will generally be classified as a PHC for U.S. federal income tax purposes in a given taxable year if (1) at any time during the last half of such taxable year, five or fewer individuals (without regard to their citizenship or residency and including as individuals for this purpose certain entities such as certain tax-exempt organizations, pension funds, and charitable trusts) own or are deemed to own (pursuant to certain constructive ownership rules) more than 50% of the stock of the corporation by value and (2) at least 60% of the corporation s adjusted ordinary gross income, as determined for U.S. federal income tax purposes, for such taxable year consists of PHC income (which includes, among other things, dividends, interest, certain royalties, annuities and, under certain circumstances, rents). Depending on the date and size of our initial business combination, it is possible that at least 60% of our adjusted ordinary gross income may consist of PHC income as discussed above. In addition, depending on the concentration of our stock in the hands of individuals, including the members of our sponsor and certain tax-exempt organizations, pension funds, and charitable trusts, it is possible that more than 50% of our stock will be owned or deemed owned (pursuant to the constructive ownership rules) by such persons during the last half of a taxable year. Thus, no assurance can be given that we will not become a PHC following this offering or in the future. If we are or were to become a PHC in a given taxable year, we would be subject to an additional PHC tax, currently 20%, on our undistributed PHC income, which generally includes our taxable income, subject to certain adjustments. General Treatment of Units There is no authority directly addressing the treatment, for U.S. federal income tax purposes, of instruments with terms substantially the same as the units and, therefore, their treatment is not entirely clear. The acquisition of a unit should be treated for U.S. federal income tax purposes as the acquisition of one share of our Class A common stock and one warrant to acquire one share of our Class A common stock. We intend to treat the acquisition of a unit in this manner and, by purchasing a unit, you agree to adopt such treatment for tax purposes. Each holder of a unit must allocate the purchase price paid by such holder for such unit between the share of Class A common stock and the warrant based on their respective relative fair market values at the time of issuance. A holder s initial tax basis in the Class A common stock and the warrant included in each unit should equal the portion of the purchase price of the unit allocated thereto. The separation of the Class A common stock and warrant components constituting a unit should not be a taxable event for U.S. federal income tax purposes. The foregoing treatment of the units and a holder s purchase price allocation are not binding on the IRS or the courts. Because there is no authority that directly addresses instruments that are similar to the units, no assurance can be given that the IRS or the courts will agree with the characterization described above or the discussion below. Each prospective investor is urged to consult its own tax advisors regarding the U.S. federal, state, local and any foreign tax consequences of an investment in a unit (including alternative characterizations of a unit and its components). The following discussion is based on the assumption that the characterization of the Class A common stock and warrants and the allocation described above are accepted for U.S. federal income tax purposes. U.S. Holders Taxation of Distributions If we pay cash distributions to U.S. Holders of shares of our Class A common stock, such distributions will constitute dividends for U.S. federal income tax purposes to the extent paid from our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. Distributions in excess of current and accumulated earnings and profits will constitute a return of capital that will be applied against and reduce (but not below zero) the U.S. Holder s adjusted tax basis in our Class A common stock. Any remaining excess will be treated as gain realized on the sale or other disposition of the Class A common stock and will be treated as described under "U.S. Holders — Gain or Loss on Sale, Taxable Exchange or Other Taxable Disposition of Class A Common Stock" below. Dividends we pay to a U.S. Holder that is a taxable corporation generally will qualify for the dividends received deduction if the requisite holding period is satisfied. With certain exceptions (including dividends treated as investment income for purposes of investment interest deduction limitations), and provided certain holding period requirements are met, dividends we pay to a non-corporate U.S. Holder will generally constitute "qualified dividends" that will be subject to tax at the maximum tax rate accorded to long-term capital gains. It is unclear whether the redemption rights with respect to the Class A common stock described in this prospectus may prevent a U.S. Holder from satisfying the applicable holding period requirements with respect to the dividends received deduction or the preferential tax rate on qualified dividend income, as the case may be. Gain or Loss on Sale, Taxable Exchange or Other Taxable Disposition of Class A Common Stock A U.S. Holder will recognize gain or loss on the sale, taxable exchange or other taxable disposition (which would include a dissolution and liquidation in the event we do not complete an initial business combination within 24 months from the closing of this offering) of our Class A common stock. Any such gain or loss will be capital gain or loss, and will be long-term capital gain or loss if the U.S. Holder s holding period for the Class A common stock so disposed of exceeds one year. It is unclear, however, whether the redemption rights with respect to the Class A common stock described in this prospectus may suspend the running of the applicable holding period for this purpose. The amount of gain or loss recognized will generally be equal to the difference between (1) the sum of the amount of cash and the fair market value of any property received in such disposition (or, if the Class A common stock is held as part of a unit at the time of the disposition, the portion of the amount realized on such disposition that is allocated to the Class A common stock based upon the then fair market values of the Class A common stock and the warrant included in the unit) and (2) the U.S. Holder s adjusted tax basis in its Class A common stock so disposed of. A U.S. Holder s adjusted tax basis in its Class A common stock will generally equal the U.S. Holder s acquisition cost (that is, as discussed above, the portion of the purchase price of a unit allocated to a share of Class A common stock or, as discussed below, the U.S. Holder s initial basis for Class A common stock received upon exercise of a warrant) less any prior distributions treated as a return of capital. The deductibility of capital losses is subject to limitations. Redemption of Class A Common Stock In the event that a U.S. Holder s Class A common stock is redeemed pursuant to the redemption provisions described in this prospectus under "Description of Securities — Common Stock", the treatment of the transaction for U.S. federal income tax purposes will depend on whether the redemption qualifies as sale of the Class A common stock under Section 302 of the Code. If the redemption qualifies as a sale of Class A common stock under the tests described below, the tax consequences to the U.S. Holder will be the same as described under "U.S. Holders — Gain or Loss on Sale, Taxable Exchange or Other Taxable Disposition of Class A Common Stock" above. If the redemption does not qualify as a sale of Class A common stock, the U.S. Holder will be treated as receiving a corporate distribution, the tax consequences of which are described above under "U.S. Holders — Taxation of Distributions". Whether the redemption qualifies for sale treatment will depend primarily on the total number of shares of our stock treated as held by the U.S. Holder (including any stock constructively owned by the U.S. Holder as a result of owning warrants) both before and after the redemption. The redemption of Class A common stock will generally be treated as a sale of the Class A common stock (rather than as a corporate distribution) if the redemption (1) is "substantially disproportionate" with respect to the U.S. Holder, (2) results in a "complete termination" of the U.S. Holder s interest in us or (3) is "not essentially equivalent to a dividend" with respect to the U.S. Holder. These tests are explained more fully below. In determining whether any of the foregoing tests are satisfied, a U.S. Holder takes into account not only stock actually owned by the U.S. Holder, but also shares of our stock that are constructively owned by it. A U.S. Holder may constructively own, in addition to stock owned directly, stock owned by certain related individuals and entities in which the U.S. Holder has an interest or that have an interest in such U.S. Holder, as well as any stock the U.S. Holder has a right to acquire by exercise of an option, which would generally include common stock which could be acquired pursuant to the exercise of the warrants. A redemption of a U.S. Holder s stock will be substantially disproportionate with respect to the U.S. Holder if the percentage of our outstanding voting stock actually and constructively owned by the U.S. Holder immediately following the redemption of common stock is, among other requirements, less than 80% of the percentage of our outstanding voting stock actually and constructively owned by the U.S. Holder immediately before the redemption. There will be a complete termination of a U.S. Holder s interest if either (1) all of the shares of our stock actually and constructively owned by the U.S. Holder are redeemed or (2) all of the shares of our stock actually owned by the U.S. Holder are redeemed and the U.S. Holder is eligible to waive, and effectively waives in accordance with specific rules, the attribution of stock owned by certain family members and the U.S. Holder does not constructively own any other stock (including any stock constructively owned by the U.S. Holder as a result of owning warrants). The redemption of the Class A common stock will not be essentially equivalent to a dividend if the redemption results in a "meaningful reduction" of the U.S. Holder s proportionate interest in us. Whether the redemption will result in a meaningful reduction in a U.S. Holder s proportionate interest in us will depend on the particular facts and circumstances. The IRS has indicated in a published ruling that even a small reduction in the proportionate interest of a small minority stockholder in a publicly held corporation who exercises no control over corporate affairs may constitute such a "meaningful reduction." A U.S. Holder is urged to consult its tax advisors as to the tax consequences of a redemption, including the application of the constructive ownership rules described above. If none of the foregoing tests is satisfied, the redemption will be treated as a corporate distribution, the tax consequences of which are described under "U.S. Holders — Taxation of Distributions," above. After the application of those rules, any remaining tax basis of the U.S. Holder in the redeemed Class A common stock should be added to the U.S. Holder s adjusted tax basis in its remaining stock, or, if it has none, to the U.S. Holder s adjusted tax basis in its warrants or possibly in other stock constructively owned by it. Exercise of a Warrant Except as discussed below with respect to the cashless exercise of a warrant, a U.S. Holder will not recognize gain or loss upon the exercise of a warrant. The U.S. Holder s tax basis in the share of our Class A common stock received upon exercise of the warrant will generally be an amount equal to the sum of the U.S. Holder s initial investment in the warrant (i.e., the portion of the U.S. Holder s purchase price for a unit that is allocated to the warrant, as described above under "— General Treatment of Units") and the exercise price of such warrant. It is unclear whether a U.S. Holder s holding period for the Class A common stock would commence on the date of exercise of the warrant or the day following the date of exercise of the warrant; however, in either case the holding period will not include the period during which the U.S. Holder held the warrants. The tax consequences of a cashless exercise of a warrant are not clear under current tax law. A cashless exercise may be nontaxable, either because the exercise is not a realization event or because the exercise is treated as a recapitalization for U.S. federal income tax purposes. In either situation, a U.S. Holder s tax basis in the Class A common stock received would generally equal the holder s tax basis in the warrant. If the cashless exercise were treated as not being a realization event, it is unclear whether a U.S. Holder s holding period for the Class A common stock would commence on the date of exercise of the warrant or the day following the date of exercise of the warrant. If, however, the cashless exercise were treated as a recapitalization, the holding period of the Class A common stock would include the holding period of the warrant. It is also possible that a cashless exercise could be treated as a taxable exchange in which gain or loss is recognized. In such event, a U.S. Holder would be deemed to have surrendered warrants equal to the number of shares of Class A common stock having a value equal to the exercise price for the total number of warrants to be exercised. The U.S. Holder would recognize capital gain or loss in an amount equal to the difference between the fair market value of the Class A common stock represented by the warrants deemed surrendered and the U.S. Holder s tax basis in the warrants deemed surrendered. In this case, a U.S. Holder s tax basis in the Class A common stock received would equal the sum of the U.S. Holder s initial investment in the warrants exercised (i.e., the portion of the U.S. Holder s purchase price for the units that is allocated to the warrant, as described above under , ' ': , ' ': — General Treatment of Units ) and the exercise price of such warrants. It is unclear whether a U.S. Holder s holding period for the Class A common stock would commence on the date of exercise of the warrant or the day following the date of exercise of the warrant. Due to the absence of authority on the U.S. federal income tax treatment of a cashless exercise, including when a U.S. Holder s holding period would commence with respect to the Class A common stock received, there can be no assurance which, if any, of the alternative tax consequences and holding periods described above would be adopted by the IRS or a court of law. Accordingly, U.S. Holders are urged to consult their tax advisors regarding the tax consequences of a cashless exercise. Sale, Exchange, Redemption or Expiration of a Warrant Upon a sale, exchange (other than by exercise), redemption, or expiration of a warrant, a U.S. Holder will recognize taxable gain or loss in an amount equal to the difference between (1) the amount realized upon such disposition or expiration (or, if the warrant is held as part of a unit at the time of the disposition of the unit, the portion of the amount realized on such disposition that is allocated to the warrant based on the then fair market values of the warrant and the Class A common stock constituting such unit) and (2) the U.S. Holder s tax basis in the warrant (that is, the portion of the U.S. Holder s purchase price for a unit that is allocated to the warrant, as described above under "— General Treatment of Units"). Such gain or loss will generally be treated as long-term capital gain or loss if the warrant is held by the U.S. Holder for more than one year at the time of such disposition or expiration. The deductibility of capital losses is subject to certain limitations. Possible Constructive Distributions The terms of each warrant provide for an adjustment to the number of shares of Class A common stock for which the warrant may be exercised or to the exercise price of the warrant in certain events, as discussed in the section of this prospectus captioned "Description of Securities — Warrants — Public Stockholders Warrants." An adjustment which has the effect of preventing dilution is generally not a taxable event. Nevertheless, a U.S. Holder of warrants would be treated as receiving a constructive distribution from us if, for example, the adjustment increases the holder s proportionate interest in our assets or earnings and profits (e.g., through an increase in the number of shares of Class A common stock that would be obtained upon exercise) as a result of a distribution of cash to the holders of shares of our Class A common stock which is taxable to such U.S. Holders as described under "U.S. Holders — Taxation of Distributions" above. Such constructive distribution would be subject to tax as described under that section in the same manner as if such U.S. Holder received a cash distribution from us equal to the fair market value of such increased interest. Information Reporting and Backup Withholding In general, information reporting requirements may apply to dividends paid to a U.S. Holder and to the proceeds of the sale or other disposition of our units, shares of common stock and warrants, unless the U.S. Holder is an exempt recipient. Backup withholding may apply to such payments if the U.S. Holder fails to provide a taxpayer identification number, a certification of exempt status or has been notified by the IRS that it is subject to backup withholding (and such notification has not been withdrawn). Any amounts withheld under the backup withholding rules will be allowed as a refund or a credit against a U.S. Holder s U.S. federal income tax liability provided the required information is timely furnished to the IRS. Non-U.S. Holders Taxation of Distributions In general, any distributions (including constructive distributions) we make to a non-U.S. Holder of shares of our Class A common stock, to the extent paid out of our current or accumulated earnings and profits (as determined under U.S. federal income tax principles), will constitute dividends for U.S. federal income tax purposes and, provided such dividends are not effectively connected with the non-U.S. Holder s conduct of a trade or business within the United States, we will be required to withhold tax from the gross amount of the dividend at a rate of 30%, unless such non-U.S. Holder is eligible for a reduced rate of withholding tax under an applicable income tax treaty and provides proper certification of its eligibility for such reduced rate (usually on an IRS Form W-8BEN or W-8BEN-E, as applicable). In the case of any constructive dividend, it is possible that this tax would be withheld from any amount owed to a non-U.S. Holder by the applicable withholding agent, including cash distributions on other property or sale proceeds from warrants or other property subsequently paid or credited to such holder. Any distribution not constituting a dividend will be treated first as reducing (but not below zero) the non-U.S. Holder s adjusted tax basis in its shares of our Class A common stock and, to the extent such distribution exceeds the non-U.S. Holder s adjusted tax basis, as gain realized from the sale or other disposition of the Class A common stock, which will be treated as described under "Non-U.S. Holders — Gain on Sale, Taxable Exchange or Other Taxable Disposition of Class A Common Stock and Warrants" below. In addition, if we determine that we are classified as a "United States real property holding corporation" (see "Non-U.S. Holders — Gain on Sale, Taxable Exchange or Other Taxable Disposition of Class A Common Stock or Warrants" below), we will withhold 15% of any distribution that exceeds our current and accumulated earnings and profits. Dividends we pay to a non-U.S. Holder that are effectively connected with such non-U.S. Holder s conduct of a trade or business within the United States (or if a tax treaty applies are attributable to a U.S. permanent establishment or fixed base maintained by the non-U.S. Holder) will generally not be subject to U.S. withholding tax, provided such non-U.S. Holder complies with certain certification and disclosure requirements (usually by providing an IRS Form W-8ECI). Instead, such dividends will generally be subject to U.S. federal income tax, net of certain deductions, at the same graduated individual or corporate rates applicable to U.S. Holders. If the non-U.S. Holder is a corporation, dividends that are effectively connected income may also be subject to a "branch profits tax" at a rate of 30% (or such lower rate as may be specified by an applicable income tax treaty). Exercise of a Warrant The U.S. federal income tax treatment of a non-U.S. Holder s exercise of a warrant generally will correspond to the U.S. federal income tax treatment of the exercise of a warrant by a U.S. Holder, as described under "U.S. Holders — Exercise of a Warrant" above, although to the extent a cashless exercise results in a taxable exchange, the tax consequences to the non-U.S. Holder would be the same as those described below in "Non-U.S. Holders — Gain on Sale, Exchange or Other Taxable Disposition of Class A Common Stock or Warrants." Gain on Sale, Exchange or Other Taxable Disposition of Class A Common Stock or Warrants A non-U.S. Holder will generally not be subject to U.S. federal income or withholding tax in respect of gain recognized on a sale, taxable exchange or other taxable disposition of our Class A common stock, which would include a dissolution and liquidation in the event we do not complete an initial business combination within 24 months from the closing of this offering, or warrants (including an expiration or redemption of our warrants), in each case without regard to whether those securities were held as part of a unit, unless: the gain is effectively connected with the conduct of a trade or business by the non-U.S. Holder within the United States (and, under certain income tax treaties, is attributable to a U.S. permanent establishment or fixed place of business maintained by the non-U.S. Holder); the non-U.S. Holder is an individual who is present in the United States for 183 days or more in the taxable year of disposition and certain other conditions are met; or we are or have been a "United States real property holding corporation" for U.S. federal income tax purposes at any time during the shorter of the five-year period ending on the date of disposition or the period that the non-U.S. Holder held our Class A common stock, and, in the case where shares of our Class A common stock are regularly traded on an established securities market, the non-U.S. Holder has owned, directly or constructively, more than 5% of our Class A common stock at any time within the shorter of the five-year period preceding the disposition or such non-U.S. Holder s holding period for the shares of our Class A common stock. There can be no assurance that our Class A common stock will be treated as regularly traded on an established securities market for this purpose. These rules may be modified for non-U.S. Holders of warrants. If we are or have been a "United States real property holding corporation" and you own warrants, you are urged to consult your own tax advisors regarding the application of these rules. Gain described in the first bullet point above will be subject to tax at generally applicable U.S. federal income tax rates. Any gains described in the first bullet point above of a non-U.S. Holder that is a foreign corporation may also be subject to an additional "branch profits tax" at a 30% rate (or lower applicable treaty rate). Gain described in the second bullet point above will generally be subject to a flat 30% U.S. federal income tax. Non-U.S. Holders are urged to consult their tax advisors regarding possible eligibility for benefits under income tax treaties. If the third bullet point above applies to a non-U.S. Holder, gain recognized by such holder on the sale, exchange or other disposition of our Class A common stock or warrants will be subject to tax at generally applicable U.S. federal income tax rates. In addition, a buyer of our Class A common stock or warrants from such holder may be required to withhold U.S. income tax at a rate of 15% of the amount realized upon such disposition. We cannot determine whether we will be a United States real property holding corporation in the future until we complete an initial business combination. We will be classified as a United States real property holding corporation if the fair market value of our "United States real property interests" equals or exceeds 50% of the sum of the fair market value of our worldwide real property interests plus our other assets used or held for use in a trade or business, as determined for U.S. federal income tax purposes. Possible Constructive Distributions The terms of each warrant provide for an adjustment to the number of shares of Class A common stock for which the warrant may be exercised or to the exercise price of the warrant in certain events, as discussed in the section of this prospectus captioned "Description of Securities — Warrants — Public Stockholders Warrants." An adjustment which has the effect of preventing dilution is generally not a taxable event. Nevertheless, a non-U.S. Holder of warrants would be treated as receiving a constructive distribution from us if, for example, the adjustment increases the holder s proportionate interest in our assets or earnings and profits (e.g., through an increase in the number of shares of Class A common stock that would be obtained upon exercise) as a result of a distribution of cash to the holders of shares of our Class A common stock which is taxable to such non-U.S. Holders as described under "Non-U.S. Holders — Taxation of Distributions" above. A non-U.S. Holder would be subject to U.S. federal income tax withholding under that section in the same manner as if such non-U.S. Holder received a cash distribution from us equal to the fair market value of such increased interest without any corresponding receipt of cash. Redemption of Class A Common Stock The characterization for U.S. federal income tax purposes of the redemption of a non-U.S. Holder s Class A common stock pursuant to the redemption provisions described in this prospectus under "Description of Securities — Common Stock" will generally correspond to the U.S. federal income tax characterization of such a redemption of a U.S. Holder s Class A common stock, as described under "U.S. Holders — Redemption of Class A Common Stock" above, and the consequences of the redemption to the non-U.S. Holder will be as described above under "Non-U.S. Holders — Taxation of Distributions" and "Non-U.S. Holders — Gain on Sale, Exchange or Other Taxable Disposition of Class A Common Stock or Warrants," as applicable. Foreign Account Tax Compliance Act Sections 1471 through 1474 of the Code and the Treasury Regulations and administrative guidance promulgated thereunder (commonly referred as the "Foreign Account Tax Compliance Act" or "FATCA") generally impose withholding at a rate of 30% in certain circumstances on dividends in respect of, and, after December 31, 2018, gross proceeds from the sale or other disposition of, our securities which are held by or through certain foreign financial institutions (including investment funds), unless any such institution (1) enters into, and complies with, an agreement with the IRS to report, on an annual basis, information with respect to interests in, and accounts maintained by, the institution that are owned by certain U.S. persons and by certain non-U.S. entities that are wholly or partially owned by U.S. persons and to withhold on certain payments, or (2) if required under an intergovernmental agreement between the United States and an applicable foreign country, reports such information to its local tax authority, which will exchange such information with the U.S. authorities. An intergovernmental agreement between the United States and an applicable foreign country may modify these requirements. Accordingly, the entity through which our securities are held will affect the determination of whether such withholding is required. Similarly, dividends in respect of, and, after December 31, 2018, gross proceeds from the sale or other disposition of, our securities held by an investor that is a non-financial non-U.S. entity that does not qualify under certain exceptions will generally be subject to withholding at a rate of 30%, unless such entity either (1) certifies to us or the applicable withholding agent that such entity does not have any "substantial United States owners" or (2) provides certain information regarding the entity s "substantial United States owners," which will in turn be provided to the U.S. Department of Treasury. Prospective investors should consult their tax advisors regarding the possible implications of FATCA on their investment in our securities. Information Reporting and Backup Withholding In general, information reporting requirements will apply to payments of dividends and proceeds from the sale of our securities to non-U.S. Holders that are not exempt recipients (such as corporations). We must report annually to the IRS and to each such holder the amount of dividends or other distributions we pay to such non-U.S. Holder on our shares of Class A common stock and the amount of tax withheld with respect to those distributions, regardless of whether withholding is required. The IRS may make copies of the information returns reporting those dividends and amounts withheld available to the tax authorities in the country in which the non-U.S. Holder resides pursuant to the provisions of an applicable income tax treaty or exchange of information treaty. The gross amount of dividends and proceeds from the disposition of our Class A common stock or warrants paid to a holder that fails to provide the appropriate certification in accordance with applicable U.S. Treasury regulations generally will be subject to backup withholding at the applicable rate. Information reporting and backup withholding are generally not required with respect to the amount of any proceeds from the sale by a non-U.S. Holder of Class A common stock or warrants outside the United States through a foreign office of a foreign broker that does not have certain specified connections to the United States. However, if a non-U.S. Holder sells Class A common stock or warrants through a U.S. broker or the U.S. office of a foreign broker, the broker will be required to report to the IRS the amount of proceeds paid to such holder, unless the non-U.S. Holder provides appropriate certification (usually on an IRS Form W-8BEN or W-8BEN-E, as applicable) to the broker of its status as a non-U.S. Holder or such non-U.S. Holder is an exempt recipient. In addition, for information reporting purposes, certain non-U.S. brokers with certain relationships with the United States will be treated in a manner similar to U.S. brokers. Backup withholding is not an additional tax. Any amounts we withhold under the backup withholding rules may be refunded or credited against the non-U.S. Holder s U.S. federal income tax liability, if any, by the IRS if the required information is furnished in a timely manner to the IRS. UNDERWRITING (CONFLICTS OF INTEREST) Subject to the terms and conditions of the underwriting agreement, the underwriters named below, through their representative, Nomura Securities International, Inc., have severally agreed to purchase from us on a firm commitment basis the following respective number of units at a public offering price less the underwriting discounts and commissions set forth on the cover page of this prospectus. The underwriters may sell units to the public through one or more of their affiliates or selling agents. Underwriter Number of Units Nomura Securities International, Inc. SunTrust Robinson Humphrey, Inc. Janney Montgomery Scott LLC Total 20,000,000 The underwriting agreement provides that the obligations of the underwriters to purchase the units included in this offering are subject to approval of legal matters by counsel and to other conditions. The underwriters are obligated to purchase all of the units (other than those covered by the over-allotment option described below) if they purchase any of the units. Units sold by the underwriters to the public will initially be offered at the initial public offering price set forth on the cover of this prospectus. Any units sold by the underwriters to securities dealers may be sold at a discount from the initial public offering price not to exceed $ per unit. After the initial offering of the units, the offering price and other selling terms may from time to time be varied by the underwriters. If the underwriters sell more units than the total number set forth on the cover page of this prospectus, we have granted to the underwriters an option, exercisable for 45 days from the date of this prospectus, to purchase up to 3,000,000 additional units at the public offering price. The underwriter may exercise this option solely for the purpose of covering over-allotments, if any, in connection with this offering. To the extent the option is exercised, each underwriter must purchase a number of additional units approximately proportionate to that underwriter s initial purchase commitment. Any units issued or sold under the option will be issued and sold on the same terms and conditions as the other units that are the subject of this offering. We, our initial stockholders and our officers and directors have agreed that, for a period of 180 days from the date of this prospectus, we and they will not, without the prior written consent of Nomura, as the representative of the underwriters, offer, sell, contract to sell, pledge or otherwise dispose of, directly or indirectly, any units, warrants, shares of common stock or any other securities convertible into, or exercisable, or exchangeable for, shares of common stock subject to certain exceptions. Nomura, as the representative of the underwriters, in its sole discretion may release any of the securities subject to these lock-up agreements at any time without notice. Our initial stockholders have agreed not to transfer, assign or sell any of their founder shares until the earlier to occur of: (A) one year after the completion of our initial business combination or earlier if, subsequent to our business combination, the last sale price of the Class A common stock (equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after our initial business combination, or (B) the date following the completion of our initial business combination on which we complete a liquidation, merger, stock exchange or other similar transaction that results in all of our stockholders having the right to exchange their shares of Class A common stock for cash, securities or other property, except with respect to permitted transferees as described herein under "Principal Stockholders — Transfers of Shares and Warrants Held by Our Initial Stockholders". The private placement warrants (including the Class A common stock issuable upon exercise of the private placement warrants) will not be transferable, assignable or salable until 30 days after the completion of our initial business combination (except with respect to permitted transferees as described herein under "Principal Stockholders — Transfers of Shares and Warrants Held by Our Initial Stockholders"). Prior to this offering, there has been no public market for our securities. Consequently, the initial public offering price for the units was determined by negotiations between us and the underwriters. The determination of our per unit offering price was more arbitrary than would typically be the case if we were an operating company. Among the factors considered in determining initial public offering price were the history and prospects of companies whose principal business is the acquisition of other companies, prior offerings of those companies, our management, our capital structure, and currently prevailing general conditions in equity securities markets, including current market valuations of publicly traded companies considered comparable to our company. We cannot assure you, however, that the price at which the units, Class A common stock or warrants will sell in the public market after this offering will not be lower than the initial public offering price or that an active trading market in our units, Class A common stock or warrants will develop and continue after this offering. Our units will be listed on NASDAQ under the symbol "TRTLU" and, once the Class A common stock and warrants begin separate trading, to have our Class A common stock and warrants listed on NASDAQ under the symbols "TRTL" and "TRTLW", respectively. The following table shows the underwriting discounts and commissions that we are to pay to the underwriters in connection with this offering. These amounts are shown assuming both no exercise and full exercise of the underwriters over-allotment option. Paid by Terrapin 4 Acquisition Corporation No Exercise Full Exercise (2) Per Unit (1) $ 0.49 $ 0.50 Total (1) $ 9,800,000 $ 11,600,000 (1) Includes $0.40 per unit, or $8,000,000 in the aggregate, payable to the underwriters for deferred underwriting commissions to be placed in a trust account located in the United States and held at JPMorgan Chase Bank, N.A., with Continental Stock Transfer & Trust Company acting as trustee as described herein. Does not include the sale of 220,000 founder shares in connection with the underwriting of this transaction. The deferred commissions will be released to the underwriters only on completion of an initial business combination. (2) If the underwriters' over-allotment option is exercised, an additional $0.60 per over-allotment unit, or an additional $1,800,000 in the aggregate if the over-allotment option is exercised in full, will be payable to the underwriters as underwriting commissions, the entire amount of which will be deferred. The deferred commissions will be released to the underwriters only on completion of an initial business combination. In the event Nomura has not exercised its right of excusal in connection with the forward purchase agreement, and under the circumstances described below, the underwriters have agreed to waive a portion of the deferred gross spread in an amount that equals the lesser of $2,000,000 and 1.00% of this offering from their deferred gross spread that may be paid as a fee to third party firms that assist the company in consummating its initial business combination (the "IBC Fee"). These parties may or may not be participating in this offering (but who are members of FINRA) and may provide assistance with: 1) originating and introducing the Initial Business Combination to the Company; 2) arranging institutional investor meetings on behalf of the Company; 3) providing a fairness opinion; 4) assisting the Company in meeting post-closing exchange listing requirements; and 5) capital markets advice and liquidity post-closing of the transaction. The decision to make IBC Fee payments will be made jointly by Nomura, as the representative of the underwriters, and the Company. In addition, we have agreed to pay for the FINRA-related fees and expenses of the underwriters legal counsel (excluding blue sky fees and expenses), in an amount not to exceed $30,000. If we do not complete our initial business combination within 24 months from the closing of this offering, the trustee and the underwriters have agreed that they will forfeit any rights or claims to their deferred underwriting discounts and commissions, including any accrued interest thereon, then in the trust account, and that the deferred underwriters discounts and commissions will be distributed on a pro rata basis, together with any accrued interest thereon (which interest shall be net of taxes payable) to the public stockholders. In connection with the offering, the underwriters may purchase and sell units in the open market. Purchases and sales in the open market may include short sales, purchases to cover short positions, which may include purchases pursuant to the over-allotment option, and stabilizing purchases. Short sales involve secondary market sales by the underwriters of a greater number of shares than they are required to purchase in the offering. "Covered" short sales are sales of units in an amount up to the number of units represented by the underwriters over-allotment option. "Naked" short sales are sales of units in an amount in excess of the number of units represented by the underwriters over-allotment option. Covering transactions involve purchases of units either pursuant to the over-allotment option or in the open market after the distribution has been completed in order to cover short positions. To close a naked short position, the underwriters must purchase shares in the open market after the distribution has been completed. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of the units in the open market after pricing that could adversely affect investors who purchase in the offering. To close a covered short position, the underwriters must purchase units in the open market after the distribution has been completed or must exercise the over-allotment option. In determining the source of shares to close the covered short position, the underwriter will consider, among other things, the price of units available for purchase in the open market as compared to the price at which they may purchase units through the over-allotment option. Stabilizing transactions involve bids to purchase units so long as the stabilizing bids do not exceed a specified maximum. Purchases to cover short positions and stabilizing purchases, as well as other purchases by the underwriters for their own accounts, may have the effect of preventing or retarding a decline in the market price of the units. They may also cause the price of the units to be higher than the price that would otherwise exist in the open market in the absence of these transactions. The underwriters may conduct these transactions in the over-the-counter market or otherwise. If the underwriters commence any of these transactions, they may discontinue them at any time. We estimate that our portion of the total expenses of this offering payable by us will be $750,000, excluding underwriting discounts and commissions. We have agreed to indemnify the underwriters against certain liabilities, including liabilities under the Securities Act, or to contribute to payments the underwriters may be required to make because of any of those liabilities. We are not under any contractual obligation to engage any of the underwriters to provide any services for us after this offering, and have no present intent to do so. However, any of the underwriters may introduce us to potential target businesses or assist us in raising additional capital in the future. If any of the underwriters provide services to us after this offering, we may pay such underwriter fair and reasonable fees that would be determined at that time in an arm s length negotiation; provided that no agreement will be entered into with any of the underwriters and no fees for such services will be paid to any of the underwriters prior to the date that is 90 days from the effective date of the registration statement of which this prospectus forms a part, unless FINRA determines that such payment would not be deemed underwriters compensation in connection with this offering and we may pay the underwriters of this offering or any entity with which they are affiliated a finder s fee or other compensation for services rendered to us in connection with the completion of a business combination. Prior to the consummation of this offering our sponsor sold 2,110,346 of its founder shares to Nomura for an aggregate purchase price of $4,587.71, or approximately $0.0022 per share. Prior to the consummation of this offering, Nomura will forfeit 606,416 founder shares. Of the 1,503,930 founder shares held by Nomura, up to 303,930 are subject to forfeiture depending on the extent to which the forward purchase shares are purchased. Of the 1,503,930 founder shares held by Nomura, 220,000 were sold to Nomura in connection with the underwriting of this transaction. The founder shares acquired by Nomura pursuant to the foregoing transactions will be considered underwriting compensation in connection with this offering. Such securities will be subject to lock-up restrictions, as required by FINRA Rule 5110(g)(1) and may not be sold during the offering, or sold, transferred, assigned, pledged, or hypothecated, or be the subject of any hedging, short sale, derivative, put, or call transaction that would result in the effective economic disposition of such securities by any person for a period of 1,080 days immediately following the date of effectiveness of the registration statement of which this prospectus forms a part or commencement of sales of the offering, except as provided in FINRA Rule 5110(g)(2). Nomura has also entered into a forward purchase agreement with us which provides for the purchase by Nomura of an aggregate of 5,065,494 shares of our Class A common stock for an aggregate purchase price of $50,000,000 in a private placement to occur concurrently with the closing of our initial business combination. In addition, any forward purchase shares acquired by Nomura will also be considered underwriting compensation in connection with this offering. Such securities will also be subject to lock-up restrictions, as required by FINRA Rule 5110(g)(1) and may not be sold during the offering, or sold, transferred, assigned, pledged, or hypothecated, or be the subject of any hedging, short sale, derivative, put, or call transaction that would result in the effective economic disposition of such securities by any person for a period of 180 days immediately following the date of effectiveness of the registration statement of which this prospectus forms a part or commencement of sales of the offering, except as provided in FINRA Rule 5110(g)(2). Nomura will be paid a market-based placement fee on the gross proceeds from the sale of the forward purchase shares upon the consummation of an initial business combination. In addition, the forward purchase agreement provides that Nomura (or its assignees) is entitled to registration rights with respect to the forward purchase shares. The underwriters and their affiliates have engaged in, and may in the future engage in, investment banking and other commercial dealings in the ordinary course of business with us or our affiliates. They have received, or may in the future receive, customary fees and commissions for these transactions. In addition, in the ordinary course of their business activities, the underwriters and their affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers. Such investments and securities activities may involve securities and/or instruments of ours or our affiliates. The underwriters and their affiliates may also make investment recommendations and/or publish or express independent research views in respect of such securities or financial instruments and may hold, or recommend to clients that they acquire, long and/or short positions in such securities and instruments. Conflicts of Interest Because Nomura will own 21.4% of our outstanding shares, prior to the consummation of this offering, consisting of 1,503,930 founder shares that our sponsor sold to Nomura (after Nomura s forfeiture of 606,416 founder shares prior to this offering), Nomura is deemed to have a "conflict of interest" under FINRA Rule 5121. Accordingly, this offering is being made in compliance with the applicable provisions of FINRA Rule 5121. FINRA Rule 5121 prohibits Nomura from making sales to discretionary accounts without the prior written approval of the account holder and requires that a "qualified independent underwriter," as defined in FINRA Rule 5121, participate in the preparation of the registration statement and exercise its usual standards of due diligence with respect thereto. SunTrust Robinson Humphrey, Inc. is assuming the responsibilities of acting as the qualified independent underwriter in this offering and is undertaking the legal responsibilities and liabilities of an underwriter under the Securities Act, which specifically include those inherent in Section 11 thereunder. SunTrust Robinson Humphrey, Inc. will not receive any additional fees for serving as qualified independent underwriter in connection with this offering. Notice to Prospective Investors in Canada The securities may be sold in Canada only to purchasers purchasing, or deemed to be purchasing, as principal that are accredited investors, as defined in National Instrument 45-106 Prospectus Exemptions or subsection 73.3(1) of the Securities Act (Ontario), and are permitted clients, as defined in National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations. Any resale of the securities must be made in accordance with an exemption from, or in a transaction not subject to, the prospectus requirements of applicable securities laws. Securities legislation in certain provinces or territories of Canada may provide a purchaser with remedies for rescission or damages if this offering memorandum (including any amendment thereto) contains a misrepresentation, provided that the remedies for rescission or damages are exercised by the purchaser within the time limit prescribed by the securities legislation of the purchaser s province or territory. The purchaser should refer to any applicable provisions of the securities legislation of the purchaser s province or territory for particulars of these rights or consult with a legal advisor. Pursuant to section 3A.3 of National Instrument 33-105 Underwriting Conflicts (NI 33-105), the underwriters are not required to comply with the disclosure requirements of NI 33-105 regarding underwriter conflicts of interest in connection with this offering. Notice to Prospective Investors in the European Economic Area In relation to each member state of the European Economic Area, an offer of units described in this prospectus may not be made to the public in that member state prior to the publication of a prospectus in relation to the units that has been approved by the competent authority in that member state or, where appropriate, approved in another member state and notified to the competent authority in that member state, all in accordance with the Prospectus Directive, except that an offer of our units may be made to the public in that member state at any time: to any legal entity which is a qualified investor as defined in the Prospectus Directive; to fewer than: 150 natural or legal persons (other than qualified investors as defined in the Prospectus Directive), as permitted under the Prospectus Directive, subject to obtaining the prior consent of the relevant Dealer or Dealers nominated by the issuer for any such offer; or 150 natural or legal persons (other than qualified investors as defined in the Prospectus Directive), subject to obtaining the prior consent of the underwriters for any such offer; or under any other circumstances falling within Article 3(2) of the Prospectus Directive. Each purchaser of units described in this prospectus located within a member state will be deemed to have represented, acknowledged and agreed that it is a "qualified investor" within the meaning of Article 2(1)(e) of the Prospectus Directive. For the purpose of this provision, the expression an "offer to the public" in relation to any units in any member state means the communication in any form and by any means of sufficient information on the terms of the offer and the units to be offered so as to enable an investor to decide to purchase or subscribe for the units, as the expression may be varied in that member state by any measure implementing the Prospectus Directive in that member state, and the expression "Prospectus Directive" means Directive 2003/71/EC (and amendments thereto, including the PD 2010 Amending Directive) and includes any relevant implementing measure in each relevant member state, and the expression "2010 PD Amending Directive" means Directive 2010/73/EU. This prospectus has been prepared on the basis that any offer of units in any member state of the European Economic Area will be made pursuant to an exemption under the Prospectus Directive from the requirement to produce a prospectus for offers of securities. Accordingly any person making or intending to make an offer in that member state of units described in this prospectus may only do so in circumstances in which no obligation arises for us or any of the underwriters to publish a prospectus pursuant to Article 3 of the Prospectus Directive or supplement a prospectus pursuant to Article 16 of the Prospectus Directive, in each case, in relation to such offer. We have not authorized and do not authorize the making of any offer of units through any financial intermediary on their behalf, other than offers made by the underwriters with a view to the final placement of the units as contemplated in this prospectus. Accordingly, no purchaser of the units, other than the underwriters, is authorized to make any further offer of the units on behalf of us or the underwriters. Notice to Prospective Investors in the United Kingdom This prospectus is only being distributed to, and is only directed at, persons in the United Kingdom that are qualified investors within the meaning of Article 2(1)(e) of the Prospectus Directive that are also investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended) (the "Order") or high net worth entities, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order or persons to whom an invitation or inducement to engage in investment activity (within the meaning of section 21 of the Financial Services and Markets Act 2000, as amended ("FSMA")) in connection with the issue or sale of any units may otherwise lawfully be communicated or caused to be communicated (all such persons together being referred to as a "relevant person"). The units are only available to, and any invitation, offer or agreement to purchase or otherwise acquire such units will be engaged in only with, relevant persons. This prospectus and its contents are confidential and should not be distributed, published or reproduced (in whole or in part) or disclosed by recipients to any other persons in the United Kingdom. Any person in the United Kingdom that is not a relevant person should not act or rely on this document or any of its contents. Any invitation or inducement to engage in investment activity (within the meaning of section 21 of FSMA) in connection with the issue or sale of units may only be communicated or caused to be communicated in circumstances in which section 21(1) of FSMA does not apply to us. All applicable provisions of FSMA must be complied with in respect of anything done by any person in relation to the units in, from or otherwise involving the United Kingdom. Notice to Prospective Investors in France Neither this prospectus nor any other offering material relating to the units described in this prospectus has been submitted to the clearance procedures of the Autorit des March s Financiers or by the competent authority of another member state of the European Economic Area and notified to the Autorit des March s Financiers. The units have not been offered or sold and will not be offered or sold, directly or indirectly, to the public in France. Neither this prospectus nor any other offering material relating to the units has been or will be: released, issued, distributed or caused to be released, issued or distributed to the public in France; or used in connection with any offer for subscription or sale of the units to the public in France. Such offers, sales and distributions will be made in France only: to qualified investors (investisseurs qualifi s) and/or to a restricted circle of investors (cercle restreint d investisseurs), in each case investing for their own account, all as defined in, and in accordance with, Article L.411-2, D.411-1, D.411-2, D.734-1, D.744-1, D.754-1 and D.764-1 of the French Code mon taire et financier; to investment services providers authorized to engage in portfolio management on behalf of third parties; or in a transaction that, in accordance with article L.411-2-II-1|Fsb[-or-2|Fsb[-or 3|Fsb[ of the French Code mon taire et financier and article 211-2 of the General Regulations (R glement G n ral) of the Autorit des March s Financiers, does not constitute a public offer (appel public l pargne). The units may be resold directly or indirectly, only in compliance with Articles L.411-1, L.411-2, L.412-1 and L.621-8 through L.621-8-3 of the French Code mon taire et financier. Notice to Prospective Investors in Switzerland The company has not been approved by the Swiss Financial Market Supervisory Authority FINMA ("FINMA") as a foreign collective investment scheme pursuant to Article 120 paragraph 1 of the Swiss Collective Investment Schemes Act of June 23, 2006, as amended ("CISA"), and the company has neither appointed a representative nor a paying agent in Switzerland pursuant to Article 120 paragraph 4 CISA. Accordingly, this prospectus and any other marketing or offering material relating to the company or the Units may only be distributed, directly or indirectly, and the company and the Units may only be offered, advertised or otherwise distributed, directly or indirectly, in or from Switzerland to (i) regulated qualified investors which are subject to prudential supervision by FINMA as defined in Article 10 paragraph 3 lit.(a) and (b) CISA, or (ii) investors with a written asset management agreement with either a regulated qualified investors in the sense of Article 10 paragraph 3 lit.(a) CISA or an independent asset manager in the sense of Article 3 paragraph 2 lit.(c) CISA. Investors in the Units do not benefit from the specific investor protection provided by CISA and the supervision by the FINMA in connection with the licensing for distribution or the appointment of a representative and a paying agent in Switzerland. Notice to Prospective Investors in Hong Kong The units may not be offered or sold in Hong Kong by means of any document other than in circumstances which do not constitute an offer to the public within the meaning of the Companies Ordinance (Cap. 32, Laws of Hong Kong), or to "professional investors" within the meaning of the Securities and Futures Ordinance (Cap. 571, Laws of Hong Kong) and any rules made thereunder, or in other circumstances which do not result in the document being a "prospectus" within the meaning of the Companies Ordinance (Cap. 32, Laws of Hong Kong) and no advertisement, invitation or document relating to the units may be issued or may be in the possession of any person for the purpose of issue (in each case whether in Hong Kong or elsewhere), which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the laws of Hong Kong) other than with respect to units which are or are intended to be disposed of only to persons outside Hong Kong or only to "professional investors" within the meaning of the Securities and Futures Ordinance (Cap. 571, Laws of Hong Kong) and any rules made thereunder. Notice to Prospective Investors in Singapore This prospectus has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this prospectus and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the units may not be circulated or distributed, nor may the units be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than to an institutional investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore, or the SFA, to a relevant person pursuant to Section 275(1), or any person pursuant to Section 275(1A), and in accordance with the conditions specified in Section 275 of the SFA or otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA, in each case subject to compliance with conditions set forth in the SFA. Where the units are subscribed or purchased under Section 275 of the SFA by a relevant person which is: shares, debentures and units of shares and debentures of that corporation or the beneficiaries rights and interest (howsoever described) in that trust shall not be transferred within six months after that corporation or that trust has acquired the shares pursuant to an offer made under Section 275 of the SFA except: to an institutional investor (for corporations, under Section 274 of the SFA) or to a relevant person defined in Section 275(2) of the SFA, or to any person pursuant to an offer that is made on terms that such shares, debentures and units of shares and debentures of that corporation or such rights and interest in that trust are acquired at a consideration of not less than S$200,000 (or its equivalent in a foreign currency) for each transaction, whether such amount is to be paid for in cash or by exchange of securities or other assets, and further for corporations, in accordance with the conditions specified in Section 275 of the SFA; where no consideration is or will be given for the transfer; or where the transfer is by operation of law. LEGAL MATTERS Greenberg Traurig, LLP, New York, New York, is acting as counsel in connection with the registration of our securities under the Securities Act, and as such, will pass upon the validity of the securities offered in this prospectus. Skadden, Arps, Slate, Meagher & Flom LLP, Los Angeles, California, advised the underwriters in connection with the offering of the securities. EXPERTS The financial statements of Terrapin 4 Acquisition Corporation as of December 31, 2017 and for the period April 12, 2017 (date of inception) to December 31, 2017, appearing in this prospectus, have been audited by WithumSmith+Brown, PC, independent registered public accounting firm, as set forth in their report thereon appearing elsewhere in this prospectus, and are included in reliance on such report given on the authority of WithumSmith+Brown, PC as experts in accounting and auditing. WHERE YOU CAN FIND ADDITIONAL INFORMATION We have filed with the SEC a registration statement on Form S-1 under the Securities Act with respect to the securities we are offering by this prospectus. This prospectus does not contain all of the information included in the registration statement. For further information about us and our securities, you should refer to the registration statement and the exhibits and schedules filed with the registration statement. Whenever we make reference in this prospectus to any of our contracts, agreements or other documents, the references are materially complete but may not include a description of all aspects of such contracts, agreements or other documents, and you should refer to the exhibits attached to the registration statement for copies of the actual contract, agreement or other document. Upon completion of this offering, we will be subject to the information requirements of the Exchange Act and will file annual, quarterly and current event reports, proxy statements and other information with the SEC. You can read our SEC filings, including the registration statement, over the Internet at the SEC s website at www.sec.gov. You may also read and copy any document we file with the SEC at its public reference facility at 100 F Street, N.E., Washington, D.C. 20549. You may also obtain copies of the documents at prescribed rates by writing to the Public Reference Section of the SEC at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the public reference facilities. Table of Contents Page SUMMARY 3
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diff --git a/parsed_sections/prospectus_summary/2018/CIK0001726146_bpgic_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001726146_bpgic_prospectus_summary.txt
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@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2018/CIK0001726744_exent-corp_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001726744_exent-corp_prospectus_summary.txt
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@@ -0,0 +1 @@
+PROSPECTUS SUMMARY AS USED IN THIS PROSPECTUS, UNLESS THE CONTEXT OTHERWISE REQUIRES, WE, US, OUR, AND EXENT CORP. REFERS TO EXENT CORP. THE FOLLOWING SUMMARY DOES NOT CONTAIN ALL OF THE INFORMATION THAT MAY BE IMPORTANT TO YOU. YOU SHOULD READ THE ENTIRE PROSPECTUS BEFORE MAKING AN INVESTMENT DECISION TO PURCHASE OUR COMMON STOCK. EXENT CORP. We are a development stage company that plans to manufacture drywall steel studs in the Kyrgyz Republic. Exent Corp. was incorporated in Nevada on February 15, 2017. We intend to use the net proceeds from this offering to develop our business operations (See Description of Business and Use of Proceeds ). To implement our plan of operations we require a minimum of $70,000 for the next twelve months as described in our Plan of Operations. There is no assurance that we will generate sufficient revenue in the first 12 months after completion our offering or ever generate any revenue. Being a development stage company, we have very limited operating history. If we do not generate sufficient revenue, we may need a minimum of $10,000 of additional funding to pay for ongoing SEC filing requirements. We do not currently have any arrangements for additional financing. Our principal executive offices are located at Stroitelnaya str. 9-1, Ivanovka, Chui region, Kyrgyzstan 72000. Our phone number is +996555158151. From inception (February 15, 2017) until the date of this filing, we have had limited operating activities. Our financial statements from inception (February 15, 2017) through March 31, 2018 , reports no revenues and an accumulated deficit of $7,047 . Our independent registered public accounting firm has issued an audit opinion for Exent Corp. which includes a statement expressing substantial doubt as to our ability to continue as a going concern. To date, we have established our Company, developed our business plan and started to search for manufacturing equipment. As of the date of this prospectus, there is no public trading market for our common stock and no assurance that a trading market for our securities will ever develop. Proceeds from this offering are required for us to proceed with your business plan over the next twelve months. We require minimum funding of approximately $70,000 to conduct our proposed operations and pay all expenses for a minimum period of one year including expenses associated with this offering and maintaining a reporting status with the SEC. If we are unable to obtain minimum funding of approximately $70,000, our business may fail. We do not anticipate earning sufficient revenues until we enter into commercial operation. Since we are presently in the development stage of our business, we can provide no assurance that we will successfully sell any products or services related to our planned activities. PROSPECTUS THE INFORMATION IN THIS PROSPECTUS MAY BE CHANGED. THESE SECURITIES MAY NOT BE SOLD UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED. THERE IS NO MINIMUM PURCHASE REQUIREMENT FOR THE OFFERING TO PROCEED. EXENT CORP. 4,000,000 SHARES OF COMMON STOCK $0.05 PER SHARE This is the initial offering of common stock of EXENT CORP. and no public market currently exists for the securities being offered. We are offering for sale a total of 4,000,000 shares of common stock at a fixed price of $0.05 per share. We estimate our total offering registration costs to be approximately $13,000. There is no minimum number of shares that must be sold by us for the offering to proceed, and we will retain the proceeds from the sale of any of the offered shares. The offering is being conducted on a self-underwritten, best efforts basis, which means our President, Marat Asylbekov, will attempt to sell the shares. We are making this offering without the involvement of underwriters or broker-dealers. This Prospectus will permit our President to sell the shares directly to the public, with no commission or other remuneration payable to him for any shares he may sell. Mr. Asylbekov will sell all the shares registered herein. In offering the securities on our behalf, he will rely on the safe harbor from broker-dealer registration set out in Rule 3a4-1 under the Securities and Exchange Act of 1934. The shares will be offered at a fixed price of $0.05 per share for a period of one hundred and eighty (180) days from the effective date of this prospectus. The offering shall terminate on the earlier of (i) when the offering period ends (180 days from the effective date of this prospectus), (ii) the date when the sale of all 4,000,000 shares is completed, (iii) when the Board of Directors decides that it is in the best interest of the Company to terminate the offering prior the completion of the sale of all 4,000,000 shares registered under the Registration Statement of which this Prospectus is part. Anticipated Proceeds to Company If 50% shares are sold If 75% shares are sold If 100% shares are sold Gross proceeds $ 100,000 $ 150,000 $ 200,000 Offering expenses $ 13,000 $ 13,000 $ 13,000 Net proceeds $ 87,000 $ 137,000 $ 187,000 Exent Corp. is a development stage company and has recently started its operation. To date we have been involved primarily in organizational activities. We do not have sufficient capital for operations. Any investment in the shares offered herein involves a high degree of risk. You should only purchase shares if you can afford a loss of your investment. Our independent registered public accountant has issued an audit opinion which includes a statement expressing substantial doubt as to our ability to continue as a going concern. SEE "RISK FACTORS" FOR A DISCUSSION OF CERTAIN INFORMATION THAT SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE COMMON STOCK OFFERED HEREBY. There has been no market for our securities and a public market may never develop, or, if any market does develop, it may not be sustained. Our common stock is not traded on any exchange or on the over-the-counter market. Following the close of the offering, we hope to have a market maker file an application with the Financial Industry Regulatory Authority ( FINRA ) for our common stock to be eligible for trading on the Over-the-Counter Bulletin Board and/or OTC Link. To be eligible for quotation, issuers must remain current in their quarterly and annual filings with the SEC. If we are not able to pay the expenses associated with our reporting obligations, we will not be able to apply for quotation on the OTC Bulletin Board and/or OTC Link. We do not yet have a market maker who has agreed to file such application. There can be no assurance that our common stock will ever be quoted on a stock exchange or a quotation service or that any market for our stock will develop. Exent Corp. is not a Blank Check company. We have no any plans, arrangements, commitments or understandings to engage in a merger with or acquisition of another company. We are an emerging growth company as defined in the Jumpstart Our Business Startups Act ( JOBS Act ). THE PURCHASE OF THE SECURITIES OFFERED THROUGH THIS PROSPECTUS INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD CAREFULLY READ AND CONSIDER THE SECTION OF THIS PROSPECTUS ENTITLED RISK FACTORS ON PAGES 5 THROUGH 11 BEFORE BUYING ANY SHARES OF EXENT CORP. S COMMON STOCK. NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED. SUBJECT TO COMPLETION, DATED __________, 2018 THE OFFERING The Issuer: EXENT CORP. Securities Being Offered: 4,000,000 shares of common stock. Price Per Share: $ 0.05 Duration of the Offering: The shares will be offered for a period of one hundred and eighty (180) days from the effective date of this prospectus. The offering shall terminate on the earlier of (i) when the offering period ends (180 days from the effective date of this prospectus), (ii) the date when the sale of all 4,000,000 shares is completed, (iii) when the Board of Directors decides that it is in the best interest of the Company to terminate the offering prior the completion of the sale of all 4,000,000 shares registered under the Registration Statement of which this Prospectus is part. Gross Proceeds $ 200,000 Securities Issued and Outstanding: There are 1,500,000 shares of common stock issued and outstanding as of the date of this prospectus, held by our sole officer and director, Marat Asylbekov. If we are successful at selling all the shares in this offering, we will have 5,500,000 shares issued and outstanding. Subscriptions All subscriptions once accepted by us are irrevocable. Registration Costs We estimate our total offering registration costs to be approximately $13,000.
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diff --git a/parsed_sections/prospectus_summary/2018/CIK0001727953_crest_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001727953_crest_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..6d52bf5c3b44f57c1bb5ffcf2ba34058303e6eb6
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/CIK0001727953_crest_prospectus_summary.txt
@@ -0,0 +1,25 @@
+SUMMARY OF PROSPECTUS
+
+ 
+
+You should read the following summary together with the more detailed business information, financial statements and related notes that appear elsewhere in this prospectus. In this prospectus, unless the context otherwise denotes, references to "we," "us," "our" and "Crest Radius Inc" are to Crest Radius Inc. 
+
+ 
+
+GENERAL INFORMATION ABOUT OUR COMPANY
+
+ 
+
+Crest Radius Inc. Inc. was incorporated in the State of Nevada on April 3, 2017. Our primary business will be the distribution of Laundry Washing Machines from China to the markets of USA and Europe. We have concluded an agreements with Guangzhou Enejean Washing Equipment Manufacturing Co., Ltd,Ningbo Qishuai Electrical Appliance Co., Ltd, Shanghai Flying Fish Machinery Manufacturing Co., Ltd., Zhengzhou Hento Machinery Co., Ltd. for distribution of their Laundry Washing Machines.
+
+ 
+
+We are a development stage company and as of March 31, 2018 we have generated revenues of 90,178. Our limited start-up operations have consisted of the formation of our business plan, identification of our target market, negotiation of supply and distribution contracts, closing our first sale with customer, purchasing our office located at 7 Kaapa, Tsolgo , Estonia 65552 on April 27, 2017. Per our business plan we anticipate sales to continue in 2018. Currently our President devotes approximately 20 hours a week to the company. We will require the funds from this offering in order to fully implement our business plan as discussed in the "Plan of Operation" section of this prospectus. We have been issued a "substantial doubt" going concern opinion from our auditors. Our assets at March 31, 2018 were $6,477 consisting of $2,381 in cash and $4,096 (net) in property.
+
+ 
+
+The administrative office of the company is currently located at 7 Kaapa,Tsolgo , Estonia 65552. We plan to use these offices until we require larger space. Our fiscal year end is September 30.
+
+ 
+
+<a name="
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diff --git a/parsed_sections/prospectus_summary/2018/CIK0001728041_cf_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001728041_cf_prospectus_summary.txt
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+S-1/A 1 s114632_s1a.htm FORM S-1A As filed with the U.S. Securities and Exchange Commission on December 11, 2018. Registration No. 333-228420 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Amendment No. 4 to FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 CF Finance Acquisition Corp. (Exact name of registrant as specified in its charter) Delaware 6770 47-3806343 (State or other jurisdiction of incorporation or organization) (Primary Standard Industrial Classification Code Number) (I.R.S. Employer Identification Number) 110 East 59th Street New York, NY 10022 Telephone: (212) 938-5000 (Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant s Principal Executive Offices) Howard W. Lutnick Chief Executive Officer 110 East 59th Street New York, NY 10022 Telephone: (212) 938-5000 (Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent For Service) Copies to: Douglas S. Ellenoff, Esq. Stuart Neuhauser, Esq. Ellenoff Grossman & Schole LLP 1345 Avenue of the Americas New York, New York 10105 Telephone: (212) 370-1300 Gregg A. Noel, Esq. Jonathan Ko, Esq. Skadden, Arps, Slate, Meagher & Flom LLP 300 South Grand Avenue, Suite 3400 Los Angeles, California 90071 Telephone: (213) 687-5000 Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box. If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act. Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company Emerging growth company If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. CALCULATION OF REGISTRATION FEE Title of Each Class of Security Being Registered Amount Being Registered Proposed Maximum Offering Price per Security(1) Proposed Maximum Aggregate Offering Price(1) Amount of Registration Fee Units, each consisting of one share of Class A common stock, $0.0001 par value, and three-quarters of one redeemable warrant(2) 28,750,000 Units $ 10.00 $ 287,500,000 $ 34,845.00 Shares of Class A common stock included as part of the units(3) 28,750,000 Shares — — — (4) Redeemable warrants included as part of the units(3) 21,562,500 Warrants — — — (4) Total $ 287,500,000 $ 34,845.00 (5) (1)Estimated solely for the purpose of calculating the registration fee. (2) Includes 3,750,000 units, consisting of 3,750,000 shares of Class A common stock and 2,812,500 redeemable warrants, which may be issued upon exercise of a 45-day option granted to the underwriters to cover over-allotments, if any. (3)Pursuant to Rule 416, there are also being registered an indeterminable number of additional securities as may be issued to prevent dilution resulting from stock splits, stock dividends or similar transactions. (4)No fee pursuant to Rule 457(g). (5)Previously paid. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine. TABLE OF CONTENTS Summary 1
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+PROSPECTUS SUMMARY 1
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+PROSPECTUS SUMMARY This summary highlights certain information contained elsewhere in this prospectus. You should read the entire prospectus carefully, including our financial statements and related notes, and especially the risks described under "Risk Factors" beginning on page 15. We note that our actual results and future events may differ significantly based upon a number of factors. The reader should not put undue reliance on the forward-looking statements in this document, which speak only as of the date on the cover of this prospectus. All references to "we," "us," "our," "Company," "Registrant" or similar terms used in this prospectus refer to Puhui Wealth Investment Management Co., Ltd., a Cayman Islands company, including its consolidated subsidiaries and variable interest entity ("VIE"), unless the context otherwise indicates. "PRC" or "China" refers to the People s Republic of China, excluding, for the purpose of this prospectus, Taiwan, Hong Kong and Macau. "RMB" or "Renminbi" refers to the legal currency of China and "$," "US$" or "U.S. Dollars" refers to the legal currency of the United States. In addition, we commissioned Beijing Heading Century Consulting Co., Ltd., a third-party market research firm, to prepare a report in October 2017 about the third-party wealth management services industry in China and our market position in the industry in China. Information from this report, or the "Heading Report," appears in "Prospectus Summary," "Industry," and other sections of this prospectus. We amended our Memorandum and Articles of Association on May 18, 2018 in order to effect a 10-for-1 forward stock split of our ordinary shares. As a result of the forward stock split, there are 10,000,000 ordinary shares outstanding as of the date hereof. Throughout this prospectus, each reference to a number of our ordinary shares gives effect to the forward split, unless otherwise indicated. Overview We are a third-party wealth management service provider focusing on marketing financial products to, and managing funds for, individuals and corporate clients in the PRC. Our main operating activities are carried out through our VIE, Puhui Wealth Investment Management (Beijing) Co., Ltd. ("Puhui Beijing"), and its subsidiaries. From its inception in 2013 to October 2016, Puhui Beijing was the investment advisory subsidiary of Finup Group (previously known as Puhui Finance Wealth Management Co., Ltd.), or Finup, which is primarily engaged in internet financial services, including peer-to-peer, or P2P, lending business in China. Puhui Beijing marketed Finup s products primarily to retail investors with low transaction amounts, ranging from approximately $150 to approximately $10,000. Puhui Beijing charged Finup one-time commissions equal to a percentage of loan proceeds invested by its clients at the time of loan issuance. The commissions Puhui Beijing received from Finup, and one of its former shareholders, Shanghai Fengsui, accounted for substantially all of Puhui Beijing s revenues prior to October 2016. Due to new regulations promulgated by the China Banking Regulatory Commission in December 2015, which placed certain limitations on the P2P lending industry in China, we anticipated that our commissions from Finup would substantially decrease starting in 2016. Our management team decided to change our business focus from marketing P2P loans to retail customers to marketing financial products developed by financial institutions to high net worth and corporate clients. From June 2016 to October 2016, Finup underwent a reorganization, pursuant to which Finup entered into various equity transfer agreements with the shareholders of Puhui Beijing pursuant to which such shareholders acquired all of Finup s interests in Puhui Beijing. Consequently, following the registration of Puhui Beijing s shareholders with the State Administration for Industry and Commerce ("SAIC") on November 16, 2016, Finup s ownership of Puhui Beijing terminated. One of Puhui Beijing s five shareholders, Shanghai Fengsui, subsequently sold its ownership to Puhui Beijing s majority shareholder, Beijing Dongfang Henghui Consulting Center (Limited Partnership) ("Dongfang Henghui"), an affiliate of Mr. Zhe Ji, our Chief Executive Officer and Chairman. In anticipation of higher growth of investable assets among potential high-net-worth clients in China in 2017, we also started marketing financial products to high-net worth individuals with investable assets of between RMB 3 million and RMB 15 million (approximately US$0.44 million to $2.21 million) and small and medium enterprises with investable assets of RMB 5 million to RMB 20 million (approximately US$0.73 million to $2.93 million). As of December 31, 2017, we have facilitated the sale of financial products from 15 financial institutions to our clients. These products include primarily private equity fund products, securities investment fund products and private placement bond products. We charge financial institutions one-time commissions, calculated as a percentage of the value of the financial products purchased by our clients from such institutions. In addition, during the life cycle of certain of the security investment funds, private equity funds and fixed income products sold by such institutions to our clients, we charge such institutions recurring service fees for our ongoing services, such as investment relationship maintenance and coordination and product reports distribution. In December 2017, Puhui Beijing was issued a convertible note in the principal amount of $1,075,814 (approximately $963,034 of the funds were contributed by investors for this investment) by SSLJ.com Limited, a home improvement service and product providers in China. The note was automatically convertible into the ordinary shares of SSLJ.com Limited upon its successful listing on NASDAQ. SSLJ.com Limited s shares commenced trading on NASDAQ on February 5, 2018. We received 213,642 shares of ordinary shares of SSLJ.com Limited upon conversion of such note at a rate of $5.00 per share on February 8, 2018. Starting in June 2017, we launched our asset management business, acting as manager or general partner of funds in which our clients invest. Our subsidiaries, Qingdao Puhui and Shanghai Pucai, serve as the manager of their respective funds. As of December 31, 2017, we served as manager or general partner of five funds with an aggregate of over RMB105 million (approximately US$16.7 million) under management. Two of these funds are in the form of a limited partnership in which we serve as general partner and we are also limited partner in one of the limited partnerships. As of December 31, 2017, one of the limited partnerships was deemed a consolidated entity. See "Critical Accounting Policies – Principal of Consolidation" in the section entitled "Management s Discussion and Analysis of Financial Condition and Results of Operations" below. With respect to two of the funds we manage, we charge investors subscription fees, as well as performance fees and recurring management fees in exchange for our managing such funds as general partner or manager. We do not charge such fees to the two funds in the form of limited partnership. Subscription fees are computed as a percentage of the capital contributions made to the funds. Recurring management fees are paid to us on a quarterly basis. Performance fees and carried interest are required to be paid to us upon maturity of such funds. We do not charge separate advisory fees for our services. Our funds are set to mature within three to five years of formation with the exception of one securities investment fund, Pucai-Fengsui Wenying No.1 Private Securities Fund ("Pucai"), which invested in publicly traded securities in China. Pucai was liquidated in February 2018 with the consent of all the investors and the fund manager. 100% of the funds were returned to the investors. Below is a table describing the five operating funds for which we currently serve or have served as manager or general partner. Name of the Fund Type of fund Role Structure Maturity Pucai-Fengsui Wenying No.1 Private Securities Fund Securities investment fund Shanghai Pucai as Manager Contractual Fund Liquidated in 2/2018 Puhui-Fengsui No.4 Private Equity Fund Private equity fund Qingdao Puhui as Manager Contractual Fund 5/23/2020 Puhui-Fengsui No.5 Private Equity Fund Private equity fund Qingdao Puhui as Manager Contractual Fund 9/3/2020 Beijing Ruying Consulting Center (LP) Private equity fund Qingdao Puhui as Manager & GP Limited partnership 5/7/2022 Xinyu JiJi Investment Center (LP) Private equity fund Qingdao Puhui as Manager & GP Limited partnership 5/23/2022 Our Industry and Market Trends According to the Heading Report, by the end of 2016, the total amount of private investable assets in China reached RMB165 trillion (approximately US$24.8 trillion). The total amount of private investable assets is expected to achieve RMB188 trillion (US$27.8 trillion) in 2017. The increasing private investable assets have provided, and are expected to continue to provide, significant development potential for wealth management companies in China. In 2016, global wealth reached US$255.7 trillion, increased by 1.4% from 2015, with per capita wealth of US$52,800. On the other hand, the total wealth in China has achieved US$23.39 trillion in 2016, grown from US$12.75 trillion in 2008, the annual compounding growth reached 7.9%. In 2016, as shown in the chart below, the wealth in China accounts for 9.15% of the global total wealth, ranking right behind the United States (33.2%) and Japan (9.4%). Wealth Distribution Unit: trillion USD Data source: Heading Report According to the Heading Report, data shows that there was a total of 4.4 billion individuals with personal wealth below $100,000 in 2016 worldwide. 990 million of them are from China, accounting for 22.5% of the total population of middle and low-income group. In the meantime, the total population of wealth group (individual wealth above US$100,000) reached 398 million, among which 12.5% are from China, increased by 1.9% from 2015. With the economic development and increasing per capita disposable income, the populations of wealthy and high-net-worth individuals are expected to continue to increase accordingly in the near future. The average wealth of Chinese adults reached US$22,900 in 2016, which is approximately US$30,000 lower than the global average level. The average wealth of Chinese residents is only 6.6% of that in the United States. However, the average wealth of Chinese adults has experienced a significant increase from 2000 to 2016, during which annual compounding growth rate was 303.1%, while the average wealth growth of the world was 66.9% and the average wealth growth of the United States was 67.2%. The accumulation of wealth in China is much faster than the global, which indicates an enormous market potential in the foreseeable future. Average Wealth and Financial Asset, 2010-2016 Unit: USD 2010 2011 2012 2013 2014 2015 2016 China Average wealth 18,686 20,345 20,762 22,904 22,753 23,751 22,864 Average financial assets 9,478 10,279 10,570 11,320 11,857 12,820 11,835 World Average wealth 49,852 50,543 52,365 54,561 53,048 52,874 52,819 Average financial assets 30,516 31,303 32,618 34,326 33,909 33,941 33,517 US Average wealth 262,278 263,555 285,374 321,397 336,522 341,609 344,692 Average financial assets 227,742 229,256 245,265 273,247 285,478 288,786 287,782 Data source: Heading Report History and Corporate Structure We operate in China through Puhui Beijing, formed on September 24, 2013 under the PRC laws. We incorporated Puhui Wealth Investment Management Co., Ltd. under the laws of the Cayman Islands as our offshore holding company on November 30, 2017. Puhui Wealth Investment Management Co., Ltd. owns 100% of the equity interest in PCZ Limited, a company formed under the laws of the British Virgin Islands on December 6, 2017. Through PCZ Limited, we indirectly own 100% of the equity interest in HZF (HK) Limited, a Hong Kong company established on December 18, 2017. Beijing Rucong Enterprise Management and Advisory Co., Ltd. ("Rucong," "WFOE" or "PRC subsidiary"), a wholly owned PRC subsidiary of HZF (HK) Limited established on January 30, 2018, entered into a series of agreements with Puhui Beijing and the majority of Puhui Beijing s shareholders, through which we effectively control 90.21% of Puhui Beijing and derive 90.21% of the economic interest from Puhui Beijing. As consideration for entry into such agreements, such shareholders of Puhui Beijing received an aggregate of 10,000,000 ordinary shares of our company. On July 8, 2014, Shanghai Pucai Investment Management Co., Ltd. ("Shanghai Pucai") was incorporated under PRC laws as a wholly-owned subsidiary of Puhui Beijing. On October 29, 2015, Qingdao Puhui Zhuoyue Investment Management Co., Ltd. ("Qingdao Puhui") was incorporated under PRC laws as a wholly-owned subsidiary of Puhui Beijing. On April 27, 2017, Shanghai Ruyue Enterprise Management Consulting Co., Ltd. ("Shanghai Ruyue") was incorporated under PRC laws as a wholly-owned subsidiary of Puhui Beijing. Until June 2016, Finup was Puhui Beijing s sole shareholder. Finup transferred (i) 62.11% shares of Puhui Beijing pursuant to an equity transfer agreement with Dongfang Henghui, Xizang Rongshun Consulting Partnership Enterprise (Limited Partnership) ("Xizang Rongshun"), Banyan Capital (Shenzhen) Investment Center (Limited Partnership) ("Banyan"), Shanghai Fengsui Investment Management Co., Ltd. ("Fengsui"), and Qianyi Investment Management (Shanghai) Co., Ltd. ("Qianyi") dated June 28, 2016 and (ii) 37.89% shares of Puhui Beijing pursuant to another equity transfer agreement with Dongfang Henghui, Fengsui, Xizang Rongshun and Banyan dated October 14, 2016. As a result of the above equity transactions, Finup transferred 100% of its equity interest in Puhui Beijing. Puhui Beijing started its own business of wealth management advisory. Puhui Wealth Investment Management Co., Ltd. is a Cayman Islands holding company that conducts its business in China through its subsidiary and variable interest entity, Puhui Beijing. We may rely on dividends from our wholly foreign-owned subsidiary in China for our cash requirements. Under PRC laws and regulations, our wholly foreign-owned subsidiary in China may pay dividends only out of its accumulated profits as determined in accordance with PRC accounting standards and regulations. In addition, a wholly foreign-owned enterprise is required to set aside at least 10% of its accumulated after-tax profits each year, if any, to fund certain statutory reserve fund, until the aggregate amount of such fund reaches 50% of its registered capital. See "Risk Factors—Risks Related to Our Corporate Structure—We may rely on dividends and other distributions on equity paid by our PRC subsidiary to fund any cash and financing requirements we may have, and any limitation on the ability of our PRC subsidiary to make payments to us could have a material and adverse effect on our ability to conduct our business." The following diagram illustrates our corporate structure, including our subsidiary and consolidated variable interest entity and its subsidiaries, as of the date of this prospectus: Notes: (1) Beijing Synergetic SIFT Asset Management Company Limited is not a party to any of the VIE Agreements. (2) Beijing Pusheng Management Consulting Co., Ltd. was established on March 19, 2018 and currently does not have any operations. (3) Beijing Haidai Puhui Information Consulting Co., Ltd. was established on May 30, 2018 and currently does not have any operations. (4) Beijing Rueyue Jiahe Management Consulting Co., Ltd. has established 2 subsidiaries Beijing Fenghui Management Consulting Co., Ltd and Beijing Lingshengchuangyuan Management Consulting Co., Ltd. These 2 entities have no operations. Below is additional information of our subsidiaries and operating entities on an unconsolidated basis: Revenue Profit/(Loss) Entity Date Formed Business Purpose Assets as of 12/31/2017 USD Equity (Deficiency) as of 12/31/2017 USD Number of Employees 6M ended 12/31/2017 USD (including intercompany) 6M ended 12/31/2017 USD Revenue Source Puhui Wealth Investment Management Co., Ltd. 11/30/2017 Listed entity 5,061,595 5,061,595 (817,430) (817,430) Investment income PCZ Limited 12/6/2017 For tax planning purpose 2,671,751 2,671,751 (817,430) (817,430) Investment income HZF (HK) Limited 12/18/2017 For tax planning purpose 2,671,751 2,671,751 (817,430) (817,430) Investment income Beijing Rucong Enterprise Management and Advisory Co., Ltd. 1/30/2018 Manager of Puhui Beijing through VIE agreements 2,671,751 2,671,751 (817,430) (817,430) Management fee Puhui Wealth Investment Management (Beijing) Co. Ltd. 9/24/2013 Third-party wealth management service provider 8,878,087 3,001,546 45 505,467 (858,517) One-time commissions, recurring service fees and other service fees Qingdao Puhui Zhuoyue Investment management Co., Ltd. 10/29/2015 Serve as Fund Manager of Private Equity and Venture Capital 968,158 572,661 5 70,218 (112,928) One-time commissions, subscription fees and recurring management fees Shanghai Pucai Investment Management Co., Ltd. 7/8/2014 Serve as Private Securities Investment Fund Manager 411,735 (791,239) 8 207 (156,647) One-time commissions, recurring service fees Shanghai Ruyue Enterprise Management Consulting Co., Ltd. 4/27/2017 Engage in direct investment - (269,773) 172,663 (264,360) One-time commissions Beijing Pusheng Management Consulting Co., Ltd 3/19/2018 No operations Beijing Haidai Puhui Information Consulting Co., Ltd. 5/30/2018 No operations Beijing Ruyue Haipeng Management Consulting Co., Ltd. 6/23/2017 Operation and management 35,370 (106,111) — (103,982) None Shanghai Hengshi Business Consulting Co., Ltd. 7/21/2017 Operation and management 7,787 (8,566) 3,940 (8,394) Other service fees Shanghai Shengshi Business Management Consulting Co., Ltd. 8/15/2017 Operation and management 35,474 (104.371) — (102,277) None Beijing Puhui Shanying Management Consulting Co., Ltd. 9/5/2017 Operation and management 6,678 (20,035) — (19,632) None Beijing Ruyue Jiahe Management Consulting Co., Ltd. 7/14/2017 Operation and management 47,918 (158,219) — (155,043) None Beijing Zhangpuji Management Consulting Co., Ltd. 9/15/2017 No operations Our Competitive Strengths We believe the following competitive strengths have contributed to, or will contribute to, our recent and ongoing growth: Extensive and targeted coverage of China s high-net-worth population; Carefully selected products; Loyal client base; and Experienced management team. Our Strategies We aspire to become a trusted management institution of privately offered investment funds among China s high-net-worth population. To achieve this goal, we intend to leverage on our existing strengths and pursue the following strategies: Further enhance our brand recognition among high-net-worth population and small and midsize enterprises ("SMEs") in China; Further grow our client base and increase our market penetration; Broaden our individual and corporate client base; Continue product innovation to enhance our value proposition to clients; Enhance our IT infrastructure and proprietary database; and Pursue strategic investments and acquisition opportunities. Our Challenges Our ability to achieve our goal and execute our strategies is subject to risks and uncertainties, including those relating to: manage our growth or implement our business strategies sustainably; further development of the laws and regulations governing the wealth management services industry in China; attract and retain qualified wealth management product advisors and product development personnel and maintain a healthy employee turnover rate; maintain and further grow our active high-net-worth and SME client base or maintain or increase the amount of investment made by our clients in the products we distribute; fail to identify or fully appreciate various risks involved in the wealth management products we distribute; and fail to protect our reputation and enhance our brand recognition. Please see "Risk Factors" and other information included in this prospectus for a detailed discussion of these challenges and risks. Foreign Private Issuer Status We are a foreign private issuer within the meaning of the rules under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). As such, we are exempt from certain provisions applicable to United States domestic public companies. For example: We are not required to provide as many Exchange Act reports, or as frequently, as a domestic public company; Subject to NASDAQ rules, for interim reporting, we are permitted to comply solely with our home country requirements, which are less rigorous than the rules that apply to domestic public companies; We are not required to provide the same level of disclosure on certain issues, such as executive compensation; We are exempt from provisions of Regulation FD aimed at preventing issuers from making selective disclosures of material non-public information; We are not required to comply with the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act; and Our insiders are not required to comply with Section 16 of the Exchange Act requiring such insiders to file public reports of their share ownership and trading activities and establishing insider liability for profits realized from any "short-swing" trading transaction. Variable Interest Entity Arrangements In establishing our business, we have used a variable interest entity, or VIE, structure. In the PRC, investment activities by foreign investors are principally governed by the Guidance Catalog of Industries for Foreign Investment, or the Catalog, which was promulgated and is amended from time to time by the PRC Ministry of Commerce, or MOFCOM, and the PRC National Development and Reform Commission, or NDRC. The Catalog divides industries into three categories: encouraged, restricted and prohibited. Industries not listed in the Catalog are generally open to foreign investment unless specifically restricted by other PRC regulations. Our company and Rucong are considered as foreign investors or foreign invested enterprises under PRC law. The provision of market surveys business, which we conduct through our VIE, is within the category under the Catalog in which foreign investment is currently restricted, which makes a VIE structure necessary. In addition, we currently hold licenses to act as fund managers of private equity products through our VIE, which may be hard to maintain if we are considered as foreign-invested enterprises in practice. In addition, we intend to centralize our management and operation in the PRC without being restricted to conduct certain business activities which are important for our current or future business but are restricted or might be restricted in the future. As such, we believe the agreements between Rucong and Puhui Beijing are essential for our business operation. These contractual arrangements with Puhui Beijing and its major shareholders enable us to exercise effective control over Puhui Beijing and hence consolidate its financial results as our VIE. In our case, Rucong effectively assumed management of the business activities of Puhui Beijing through a series of agreements which are referred to as the VIE Agreements. The VIE Agreements are comprised of a series of agreements, including Equity Pledge Agreements, a Technical Consultation and Service Agreement, a Business Cooperation Agreement, Equity Option Agreements, and Voting Rights Proxy and Finance Supporting Agreements. Through the VIE Agreements, Rucong has the right to advise, consult, manage and operate Puhui Beijing for an annual consulting service fee in the amount of 90.2077% of Puhui Beijing s net profit (9.7923% of the equity owned by SIFT will not be part of the VIE structure). Beijing Dongfang Henghui Consulting Center (Limited Partnership), Beijing Dongfang Puzhong Consulting Center (Limited Partnership), Beijing Huicai Hengyun Consulting Center (Limited Partnership), Xizang Rongshun and Banyan (each a "Beijing Puhui Shareholder", collectively, the "Puhui Beijing Shareholders" or "Participating Shareholders") have each pledged all of their right, title and equity interests in Puhui Beijing as security for Rucong to collect consulting services fees provided to Puhui Beijing through the Equity Pledge Agreement. In order to further reinforce Rucong s rights to control and operate Puhui Beijing, the Puhui Beijing Shareholders have granted Rucong an exclusive right and option to acquire all of their equity interests in Puhui Beijing through the Equity Option Agreement. The VIE Agreements are detailed below as follows: Technical Consultation and Service Agreement. Pursuant to the Technical Consultation and Service Agreement between Rucong and Puhui Beijing dated January 30,2018, Rucong has the exclusive right to provide consultation and services to Puhui Beijing in the area of fund, human, technology and intellectual property rights. For such services, Puhui Beijing agrees to pay service fees in the amount of 90.2077% of its net income and also has the obligation to absorb 90.2077% of Puhui Beijing s losses. Rucong exclusively owns any intellectual property rights arising from the performance of this Technical Consultation and Service Agreement. The amount of service fees and payment term can be amended by Rucong and Puhui Beijing s consultation and the implementation. The term of the Technical Consultation and Service Agreement is 20 years. Rucong may terminate this agreement at any time by giving 30 days written notice to Puhui Beijing. Business Cooperation Agreement. Pursuant to the Business Cooperation Agreement between Rucong and Puhui Beijing dated January 30,2018, Rucong has the exclusive right to provide Puhui Beijing with technical support, business support and related consulting services, including but not limited to technical services, business consultations, equipment or property leasing, marketing consultancy, system integration, product research and development, and system maintenance. In exchange, Rucong is entitled to a service fee that equals to 90.2077% of the net income of Puhui Beijing determined by U.S. GAAP, the service fees may be adjusted based on the services rendered by Rucong in that month and the operational needs of Puhui Beijing. Rucong also exclusively owns any intellectual property rights arising from the performance of the Business Cooperation Agreement. The Business Cooperation Agreement shall remain effective unless it is terminated or is compelled to terminate under applicable PRC laws and regulations. Rucong may terminate this Business Cooperation Agreement at any time by giving 30 days prior written notice to Puhui Beijing. Equity Pledge Agreement. Pursuant to a series of Equity Pledge Agreements among Rucong, Puhui Beijing and Puhui Beijing Shareholders dated January 30, 2018, Puhui Beijing Shareholders pledged all of their equity interests in Puhui Beijing to Rucong to guarantee Puhui Beijing s performance of relevant obligations and indebtedness under the Technical Consultation and Service Agreement and other control agreements ("Control Agreement"). In addition, Puhui Beijing Shareholders have completed the registration of the equity pledge under the Equity Pledge Agreement with the competent local authority. If Puhui Beijing breaches its obligation under the Control Agreement, Rucong, as pledgee, will be entitled to certain rights, including the right to dispose the pledged equity interests in order to recover these breached amounts. The Equity Pledge Agreements shall be continuously valid until all of the Puhui Beijing Shareholders are no longer shareholders of Puhui Beijing or the satisfaction of all its obligations by Puhui Beijing under the Control Agreements. Equity Option Agreement. Pursuant to a series of Equity Option Agreements among Rucong, Puhui Beijing and Puhui Beijing Shareholders dated January 30, 2018, Rucong has the exclusive right to require the Puhui Beijing Shareholders to fulfill and complete all approval and registration procedures required under PRC laws for Rucong to purchase, or designate one or more persons to purchase, Puhui Beijing Shareholders equity interests in Puhui Beijing, once or at multiple times at any time in part or in whole at Rucong s sole and absolute discretion. The purchase price shall be the lowest price allowed by PRC laws (currently estimated to be RMB 1.00). The Equity Option Agreements shall remain effective until all the equity interest owned by each Puhui Beijing Shareholder has been legally transferred to Rucong or its designee(s). Voting Rights Proxy and Finance Supporting Agreement. Pursuant to the Voting Rights Proxy and Finance Supporting Agreements among Rucong, Puhui Beijing and Puhui Beijing Shareholders dated January 30, 2018, each Puhui Beijing Shareholder irrevocably appointed Rucong or Rucong s designee to exercise all his or her rights as Puhui Beijing Shareholders under the Articles of Association of Puhui Beijing, including but not limited to the power to exercise all shareholders voting rights with respect to all matters to be discussed and voted in the shareholders meeting of Puhui Beijing. The term of the Voting Rights Proxy and Finance Supporting Agreements is 20 years. Emerging Growth Company Status We are an "emerging growth company," as defined in the Jumpstart Our Business Startups Act (the "JOBS Act"), and we are eligible to take advantage of certain exemptions from various reporting and financial disclosure requirements that are applicable to other public companies that are not emerging growth companies, including, but not limited to, (1) presenting only two years of audited financial statements and only two years of related management s discussion and analysis of financial condition and results of operations in this prospectus, (2) not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act") and (3) reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements. We intend to take advantage of these exemptions. As a result, investors may find investing in our ordinary shares less attractive. In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended (the "Securities Act"), for complying with new or revised accounting standards. As a result, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We could remain an emerging growth company for up to five years, or until the earliest of (1) the last day of the first fiscal year in which our annual gross revenues exceed $1.07 billion, (2) the date that we become a "large accelerated filer" as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our ordinary shares that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter and we have been publicly reporting for at least 12 months, or (3) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three-year period. Corporate Information Our principal executive offices are located at Suite 1002, W3 Office Building, Oriental Commerce Tower, No.1 Chang An Street, Dong Cheng District, Beijing, People s Republic of China. Our telephone number at this address is (+86) 10 53605158. Our registered office in the Cayman Islands is located at the offices of Sertus Incorporations (Cayman) Limited, Sertus Chambers, Governors Square, Suite #5-204, 23 Lime Tree Bay Avenue, P.O. Box 2547, Grand Cayman, KYI-1104. Our agent for service of process in the United States is Law Debenture Corporate Services Inc. Our website is http://www.puhuiwealth.com. The information contained on our website or any third-party websites is not a part of this prospectus. The Offering Shares Being Offered: A minimum of $8,000,000 and a maximum of $12,000,000 of ordinary shares. (1) Initial Offering Price: The purchase price for the shares will be $6.00 per share. Number of Ordinary Shares Outstanding Before the Offering: 10,000,000 of our ordinary shares are outstanding as of the date of this prospectus. Number of Ordinary Shares Outstanding After the Offering (2): Minimum Offering: 11,333,334 of our ordinary shares will be outstanding. Maximum Offering: 12,000,000 of our ordinary shares will be outstanding. Gross Proceeds to us, net of Underwriting Discount, but before Expenses (2): $7,520,000, assuming completion of the minimum offering. $11,280,000, assuming completion of the maximum offering. Best Efforts: The Underwriter is selling our ordinary shares on a "best efforts" basis. Accordingly, the Underwriter has no obligation or commitment to purchase any securities. The Underwriter is not required to sell any specific number or dollar amount of ordinary shares, but will use its best efforts to sell the ordinary shares offered. We do not intend to close this offering unless we sell at least the minimum number of ordinary shares, at the price per ordinary share set forth on the cover page of this prospectus, which would result in sufficient proceeds to list our ordinary shares on the NASDAQ Capital Market. Closing of Offering The offering contemplated by this prospectus will terminate upon the earlier of: (i) a date mutually acceptable to us and the Underwriter after the minimum offering is sold or (ii) September 30, 2018, unless mutually extended by us and the Underwriter for up to an additional 90 days. If we complete this offering, net proceeds will be delivered to us on each closing date (such closing date being the above mutually acceptable date, provided the minimum offering has been sold). We will not complete this offering unless our application to list on the NASDAQ Capital Market is approved. Use of Proceeds: We plan to use the net proceeds of this offering primarily for general corporate purposes, which may include establishing branches and hiring financial advisors in affluent cities in mainland China, acquiring other companies in our industry, working capital and other general and administrative matters. For more information on the use of proceeds, see "Use of Proceeds" on page 44. Lock-up We, all of our directors and officers and shareholders have agreed with the Underwriter, subject to certain exceptions, not to sell, transfer or dispose of, directly or indirectly, any of our ordinary shares or securities convertible into or exercisable or exchangeable for our ordinary shares for a period of six or twenty-four months after the closing of this offering. See "Shares Eligible for Future Sale" and "Underwriting" for more information. NASDAQ Symbol: PHCF
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. This summary does not contain all of the information you should consider before investing in our common stock. You should read this entire prospectus carefully, especially the "Risk Factors" section of this prospectus and our financial statements and the related notes appearing at the end of this prospectus, before making an investment decision. MR2 Group, Inc., a Nevada corporation, is a holding company formed in 2017 that operates as a market research company through its subsidiary, Precision Opinion, Inc. ("Precision Opinion"). The Company has entered into a contribution agreement with the individual owners of Precision Opinion which includes James T. Medick, the Company s Chief Executive Officer, pursuant to which Precision Opinion will become a wholly-owned subsidiary of the Company (the "Reorganization"). As part of the Reorganization, all of the existing shareholders of Precision Opinion will exchange their respective shares of Precision Opinion for shares of MR2 Group, Inc. Except as otherwise indicated, references to "MR2 Group", "we", "us", "our", and the "Company" refer to MR2 Group, Inc. and its wholly-owned subsidiary, Precision Opinion, Inc. and gives effect to the Reorganization. In addition, all share numbers give effect to a 37.5 for 1 forward stock split effective in July 2018. Additionally, on October 12, 2018 the Company completed an asset purchase of all of the assets of Market Analysts, LLC d/b/a MAi Research ("MAi Research"), effective as of October 1, 2018. Company Overview We are an intelligence empowered holding company that operates through our subsidiar ies , Precision Opinion , Turning Point, and MAi Research , as a full-service information research consulting firm with expertise in data-collection, research and analytics that commenced operations in 2007. We are an experienced analytical team operating one of the largest telephonic data-collection centers in the United States and offering a state-of-the-art and customizable online research tool capable of gathering data daily from consumers around the globe and providing clients with actionable insights . We believe that our team, products and services combine to create the quality service, information and consultative leadership that corporations, government agencies and other organizations seek to better their respective organizations or constituents. We provide consultative, data-collection, and analytical services to corporations, non-profit research organizations, government agencies, political pollsters, media organizations, and the entertainment and hospitality industries. We provide our clients with a comprehensive understanding of current consumer preferences, behavior, attitudes and opinions. Our information, insights, guidance and solutions help our clients to identify opportunities for profitable growth over the short and long-term horizons to maintain and strengthen their market positions. At MR2 Group, we transform data from being mere information, to being practical and strategic, to actionable and making it matter to those who benefit the most - our clients. We combine science and creativity to afford our clients greater visibility and insight into market trends. For over 20 years since the inception of Precision Opinion, we have advanced the practice of data-collection, market research and media audience measurement. We believe our industry expertise, client-focused offerings and experienced management team positions us well to continue leading and influencing the market research and consulting industries in the United States and provides us the opportunity to achieve the same status internationally. We help our clients enhance their interactions with consumers and make critical business decisions that we believe positively affect our clients sales. Our methodologies, practices and technological advancements have become deeply embedded into our clients workflow, which we believe is demonstrated by many of our long-term client relationships, multi-year contracts and high contract renewal rates. In 2017, revenue from repeat clients under contract represented approximately 94.5% of our total revenue, while the remaining 5.5% of our revenue is generated from one-off projects not subject to contract renewal. A majority of our long-term clients are government service clients, including the National Opinion Research Center at the University of Chicago ("NORC"), RTI International and IMPAQ International, LLC ("IMPAQ"). Government service contracts and medical studies accounted for approximately 66% and 56% of our revenues during the years ended December 31, 2017 and 2016, respectively. We offer our clients multiple approaches to data-collection ranging from telephone calls, focus groups, online surveying, and a combination of these approaches. Through our analytical group, we provide clients with reliable and actionable information resulting from the systematic analysis of the data that has been collected. The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION DATED OCTOBER 16 , 2018 1, 750,0 00 Shares Common Stock MR2 GROUP, INC. This is a firm commitment initial public offering of 1, 750,000 shares of common stock of MR2 Group, Inc. No public market currently exists for our shares. We anticipate that the initial public offering price of our shares will be between $7.00 and $9.00 and for calculation purposes herein assumes a mid-point of $8.00 per share. We have been approved to list our shares of common stock for trading on The Nasdaq Capital Market, subject to official notice of issuance, under the symbol "MRMR." We are an emerging growth company under the Jumpstart our Business Startups Act of 2012, or JOBS Act, and, as such, may elect to comply with certain reduced public company reporting requirements for future filings. Investing in our common stock involves a high degree of risk. Investing in our common stock is highly speculative and involves a high degree of risk. See "Risk Factors" beginning on page 15 of this prospectus for a discussion of information that should be considered in connection with an investment in our common stock. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense. Per Share Total (2) Public offering price $ Underwriting discounts and commissions(1) $ Proceeds to MR2 Group, Inc. (before expenses) $ (1) Does not include a non-accountable expense allowance equal to 1.0% of the public offering price payable to ThinkEquity, a division of Fordham Financial Management, Inc. ("ThinkEquity"), the representative of the underwriters. See "Underwriting" for a description of compensation payable to the underwriters. (2) Assumes no exercise of the over-allotment option to purchase shares we have granted to the underwriters as described below. We have granted the underwriters a 45-day option to purchase up to 262,500 additional shares of common stock solely to cover over-allotments, if any. The underwriters expect to deliver our shares to purchasers in the offering on or about , 2018. ThinkEquity A division of Fordham Financial Management, Inc. The date of this prospectus is , 2018 Our telephone data-collection call center offerings are not pre-set – we develop customized research services programs for each of our clients. In 2016, we acquired the telephone data-collection operations of SHC Universal ("SHC"), which strengthened our client base resulting in increased revenues. We have integrated SHC s operations with our own and as a result have now increased our profit margins on the acquired SHC operations. To enhance our product and service offerings, effective October 1, 2018, we acquired MAi Research. MAi Research provides market research, analytics and consulting services to their clients. MAi Research provides their clients with actionable information allowing them to better promote their brands, improve product design, functionality and offerings while also better understanding their customers by using proven research methodologies, innovative analytic techniques, and the insight of its customers experiences. Below is a summary of the business activities that we carry out and how and why we segregate such activities. Precision Opinion Business Operations Telephone Data-collections – Based on the number of CATI stations that it utilizes, Precision Opinion is home to the second largest telephone data-collection call center in the United States, equipped with 650 VOXCO and CfMC Computer Assisted Telephone Interviewing ("CATI") Command Center and Pronto dialer systems, which allows us to deliver what we believe is uncompromising data-collection and service to the research industry. Our TCPA-compliant telephone center s high-tech capabilities allow real-time reporting to help keep our clients up-to-date with the progress of all of their research needs. Our telephone data-collections represented approximately 90% and 89% of our aggregate revenues during the years ended December 31, 2017 and 2016, respectively. Our telephone call center provides clients ranging from corporations, to non-profit research organizations, to government agencies, to political pollsters, to entertainment, gaming and hospitality companies with the ability to directly collect data from individuals, families, consumers, constituent and, businesses as to their beliefs and opinions on virtually any topic. We provide individuals the ability for their voice to be heard on various topics. We staff our telephone call center with highly trained research associates who call individuals or businesses, which our clients identify and we assemble, and ask them a series of questions in a computerized survey. The results of these completed surveys are amalgamated, and the data is provided to our clients. For some clients, we also analyze the data through our Analytics team and provide these clients with the actionable findings from these completed surveys. The length of a survey can vary from a few minutes to 45 minutes or more, with the typical survey lasting for 10 to 20 minutes. The topics and questions asked in these surveys range from the full spectrum of current events, consumer preferences or distastes relating to a new product or service, opinions on medical services and even to who they intend to vote for in the next election. Government and Medical Sector. The government and medical sector is our largest "client group" for market research services, specifically, telephone data-collection. We believe there is a constant demand from the government for research either directly, or through approved research organizations. Although government agencies also conduct their own market research, they often use private companies and non-profit organizations for research. We often contract with such entities who are working on behalf of federal, state and municipal government clients. For example, various health and regulatory agencies commonly outsource market research services to design, tailor or measure the effectiveness of a public health or public information campaign. For our largest client, NORC, we provide a dedicated staff of approximately 250 employees including research associates, quality control staff and managers for a national tracking study for the Center for Disease Control and Prevention ("CDC") which we have been working on since 2001. For this study, we contact a predetermined list of families and their medical providers by telephone and provide NORC the results of a complex 45-minute multi-step survey for each responding family. We also performed telephone data-collection services on a multi-year tracking study for the CDC through a subcontract with NORC, which we worked on for 10 years. This study compiled data relating to children with special needs. Over the last five years, we have conducted multiple health and medical telephone data-collection studies for other clients, including RTI International, IMPAQ and Morpace Market Research and Consulting ("Morpace"). Political Sector. The political sector is our second largest "client group" for market research services. Specifically, we provide political polling and the analysis of the public s views on current events, election issues and other topical legislative matters. Over the years, we have completed hundreds of telephone political polling projects including telephone polling for President Barack Obama s campaign committee during his two Presidential elections, telephone polling for the Democratic National Committee during President Obama s two terms of office, telephone polling for both Senate and House of Representative elections along with state and local elections and telephone polling for various Political Action Committees. In addition, we provided services for the absentee and exit polling for the 2016 Presidential elections. We have several clients that rely on our expertise in political polling including Benenson Strategy Group ("BSG"), Global Strategy Group, Edison Research, LHK Partners, Inc., Expedition Strategies and Abt Associates. Political research telephone surveys tend to be 10 to 25 minutes in length and are typically looking to gather information on certain types of qualified respondents. The questions asked generally include, whether you are a registered voter, did you vote in the last election, your age, political party affiliation and income levels. Corporate Clients. Corporate clients comprise our third largest "client group" for market research services. Businesses utilize our telephone data-collection expertise for research focused on various topics including asking questions about consumer preferences on existing products, what new products and services consumers may desire, a comparison of their product performance against competitor products and awareness of their brand. We also provide telephone surveys for businesses wanting to talk with other businesses about products, services, market conditions and other current topics. The information from these surveys provide businesses with information that they can use in budgeting influence corporate spending on advertising and marketing, capital expansion, acquisitions and other business-related issues. Some of our business-related clients have included AARP, United Way, Bank of America, J.D. Power and Associates and Marketcast. Focus + Group Data-collection - Through Precision Opinion, we also operate Focus +, an award winning premier focus group facility located in Las Vegas. The Focus + facility comprises approximately 12,000 square feet including a 48-seat movie theatre and two focus group conference rooms. We are planning to expand Focus + by allocating staff and working capital to strengthen its business operations, which we believe will support our other lines of business with potential new clients. In addition, we plan to strengthen our Focus + business through an online digital presence given the growth and expansion of social media and online data collection. Given that our focus group facility is in Las Vegas, we believe that it is an excellent location for our Focus+ business. Specifically, Las Vegas as a major tourist destination provides greater access to a cross-section of the United States population, thereby affording clients diversity in focus group responses. Further Las Vegas Convention and Visitors Authority, Las Vegas is home to more than 11 million square feet of meeting and exhibit space citywide and home to three of the country s ten largest convention venues. Thus, we believe this to be a prime location where we will be able to attract new clients either exhibiting or attending the large number of trade shows and conventions. For example, in our Focus + groups we work with movie studios seeking to gauge audience reactions to new movie ideas and trailers for new movies, and new reporters and anchors in television studios. We also work with consumer product companies seeking to test their products including new frozen foods, beer taste test, new e-cigarettes, new cigarette brand/flavors, new product packaging, and new website design and functionality. We also work with casinos and resorts seeking to enhance guest engagement to gauge satisfaction levels and compile opinions on their respective properties, food offerings and many other topics. Other specialty services that we offer through our Focus + groups include law firms seeking to utilize mock juries to test their client s legal court case, as well as holding live panels during political debates and tracking respondent s opinions live based on what they are seeing and hearing. Our Focus + groups have included clients such as Facebook, the CBS network and its affiliates, Warner Brothers, Madame Tussauds, ShuffleMaster, Bally Technologies, Frank Luntz, Wynn Resorts, Hyatt Hotels, AAA, Domino s Pizza, Corona Beer, Coca Cola, Pepsi Cola, Cracker Barrel, Hungry-Man, and Birds Eye. TABLE OF CONTENTS PROSPECTUS SUMMARY 1 THE OFFERING 13 SUMMARY SELECTED FINANCIAL AND OTHER DATA 14 RISK FACTORS 15 CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS 28 USE OF PROCEEDS 29 DIVIDEND POLICY 30 CAPITALIZATION 31 DILUTION 32 DETERMINATION OF OFFERING PRICE 33 MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 39 DESCRIPTION OF BUSINESS 57 MANAGEMENT 76 EXECUTIVE COMPENSATION 81 CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS 83 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS 84 DESCRIPTION OF CAPITAL STOCK 85 SHARES ELIGIBLE FOR FUTURE SALE 89 MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS 91 UNDERWRITING 94 INTERESTS OF NAMED EXPERTS AND COUNSEL 102 EXPERTS 102 LEGAL MATTERS 102 WHERE YOU CAN FIND ADDITIONAL INFORMATION 102 INDEX TO FINANCIAL STATEMENTS F-1 You should rely only on the information contained in this prospectus or contained in any free writing prospectus we may authorize to be delivered or made available to you. Neither we nor any of the underwriters have authorized anyone to provide any information or make any representations other than those contained in this prospectus or in any free writing prospectus. We take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. We are offering to sell, and seeking offers to buy, shares of common stock only in jurisdictions where offers and sales are permitted. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of the common stock. Our business, financial condition, results of operations, and prospects may have changed since such date. Through and including , 2018 (the 25th day after the date of this prospectus), all dealers effecting transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to a dealer s obligation to deliver a prospectus when acting as an underwriter and with respect to an unsold allotment or subscription. For investors outside of the United States: Neither we nor any of the underwriters have done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. You are required to inform yourselves about, and to observe any restrictions relating to, this offering and the distribution of this prospectus outside of the United States. See "Underwriting" on page 94. Online Data-collection - We launched our online survey and panel business , Turning Point Research ("Turning Point") in 2014 to increase our service offerings and adapt to the ever-evolving market. We develop customized panels and online surveys based on our clients particular needs, making our offerings unique compared to other players in the market. We developed our online and internet device agnostic survey platform to allow respondents to participate in surveys no matter their device – smart phones, tablets, personal computers or Apple-based computers wherever they are and whenever they would like to participate. Online respondents have shown a high inclination to participate in surveys. The ease of and respondent s ability to take an online survey wherever they are makes this a very popular approach for our clients. Whether a client is looking for a point time reaction to products, services or current events or wants to track consumer behavior over weeks, months or any combination, we believe that the online services we provide offer our clients the actionable information they are looking for. Unlike other online survey platforms, our main focus is on the quality of the information we provide to our clients. We plan, develop and implement both proprietary and probability-based panels for our clients. We have developed safeguards to protect the reliability of our data-collection. Turning Point s do-it-yourself ("DIY") survey product offering, YouSay! will be relaunched in late 2018 to offer small to large companies, organizations and associations an alternative to existing DIY survey products in order to engage with their clients, customers or constituents. YouSay! s focus is on providing a simplified online survey tool for small to large companies, organizations and associations that is simple to use, which offers several layers of service, tiered pricing coupled with strong data analytics to provide actionable insights to the DIY survey. The YouSay! new platform is designed to get things done easier, faster and cheaper while providing greater insight into respondents. We believe YouSay! s strong back-end analytics helps provide clients answers to "why" in order to better drive optimal solutions. Given the vast nature and volume of data today, we believe this is critical to allow companies, organizations and associations to be able to gather and convert quality data into actionable insights, affording them the ability to make informed business decisions, whether it be with respect to launching new products or services or developing product features to enhance customer experiences. We believe YouSay! surveys will also help clients improve their marketing messages, product and package design. We designed YouSay! to provide clients with extensive pre-sales materials via their blogs and social outlets, including short-form articles, ebooks, white papers, how-to guides and educate prospects. We believe these DIY surveys coupled with strong data analytics will allow clients to add value to their organizations. Turning Point will rely on support from its sister company, MAi Research, to provide automated data analytics as part of its YouSay! product offering. Client Agreements - Precision Opinion has several types of client relationships and contracts with its clients. The type of contract depends on the type of work requested. Contract lengths vary, ranging from several days to several years, depending on the scope of the project and the type of information clients request. For example, with Precision Opinion s largest client, NORC, Precision Opinion provides a dedicated staff of research associates and management team who are conducting a multi-year tracking study under a multi-year contract. Pursuant to this subcontract, Precision Opinion interviews respondents identified by NORC seven days a week in order to obtain specific medical information on behalf the CDC. Effective January 1, 2018, Precision Opinion was awarded a renewal of its current contract with NORC, which runs concurrently with NORC s 5-year renewal of its underlying prime contract with the CDC. Precision Opinion s contract with NORC, which runs through February 2019, provides for annual renewals during the 5-year period. The initial budget for 2018 is $2,477,000, which may be increased if needed during the year. Overall, this contract is valued at approximately $6.0 million in annual revenue based on the estimated weekly interview hours required by NORC and the historical annual revenue run rate for this contract. Under this contract with NORC, we provide a dedicated staff of research associates, management team and a facility to conduct this multi-year tracking study on behalf of the CDC, which Precision Opinion has been working on this study since 2001. Precision Opinion realized $5,914,188 and $7,078,663 in revenue from the NORC contract for the fiscal years ended December 31, 2017 and 2016, respectively. Precision Opinion recognize s revenue under this contract on a daily basis and submits a monthly invoice to NORC for the work performed during that month. Precision Opinion has similar multi-year contracts with RTI International and IMPAQ for medical studies. These contracts have specific fixed billing amounts for the services to be provided by Precision Opinion and are agreed to prior to the commencement of the study. Under these contracts, Precision Opinion recognizes revenue as the data required under the contract is delivered to the client. Typically, these contracts provide for specific invoicing based on milestones achieved or specific dates. For its clients Morpace and ICF International Inc. ("ICF"), Precision Opinion provides services under a contract for a specific study with a specified time period, number of completed surveys and specific number of dialing attempts for each respondent. These types of studies are typically completed within two to six months. Under these types of contracts, clients provide both the survey and e specific respondents they are targeting, and Precision Opinion then manages the contract based upon the timeframe, required numbers of completed surveys, required number of dialing attempts and dispositions. Under these contracts, Precision Opinion recognizes revenue as the collected data is delivered to the client or by the actual number of hours provided by Precision Opinion under the contract. Typically, these contracts provide for specific invoicing based on milestones achieved or specific dates. STATEMENT REGARDING INDUSTRY AND MARKET DATA Any market or industry data contained in this prospectus is based on a variety of sources, including internal data and estimates, independent industry publications, government publications, reports by market research firms or other published independent sources. Industry publications and other published sources generally state that the information contained therein has been obtained from third-party sources believed to be reliable. Our internal data and estimates are based upon information obtained from trade and business organizations and other contacts in the markets in which we operate and our management s understanding of industry conditions, and such information has not been verified by any independent sources. Accordingly, investors should not place undue reliance on such data and information. TRADEMARKS AND TRADE NAMES We own or have rights to various trademarks, service marks and trade names that we use in connection with the operation of our business. This prospectus may also contain trademarks, service marks and trade names of third parties, which are the property of their respective owners. Our use or display of third parties trademarks, service marks, trade names or products in this prospectus is not intended to, and does not imply a relationship with, or endorsement or sponsorship by us. Solely for convenience, the trademarks, service marks and trade names referred to in this prospectus may appear without the , TM or SM symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the right of the applicable licensor to these trademarks, service marks and trade names. For its client BSG, Precision Opinion provides services under a Master Services Agreement ("MSA") that sets forth the general terms of the work to be performed by Precision Opinion on behalf of BSG. On February 5, 2018, Precision Opinion and BSG entered into a new MSA which replaced the previous MSA entered into in July 2016. Under the new MSA, BSG prepaid Precision Opinion for a certain number of interview hours to be provided by Precision Opinion. This prepayment of services is recorded as a liability on our balance sheet, as unearned revenue. As of June 30, 2018, the unearned revenue associated with BSG is approximately $527,312. For each specific project under the MSA, BSG issues a Statement of Work ("SOW"). With each SOW, BSG outlines specific requirements of the project, as well as the survey, the respondents they are targeting and the required number of completed surveys. These SOW s are typically short-term projects that must be completed within a specific timeframe (typically 3 to 5 days) and a specific number of completes surveys. Upon completion of each SOW, Precision Opinion issues an invoice for services provided and reduces the unearned revenue accordingly. This is the only client that has prepaid for Precision Opinion s services. For other clients, such as Global Strategy Group and Expedition Strategies, Precision Opinion performs services based upon specific terms set forth in a SOW issued by the client. With each SOW, clients outline specific requirements of the project, as well as the survey, the respondents they are targeting and the required number of completed surveys. These SOW s are typically shorter-term projects that must be completed within a specific timeframe (typically 3 to 5 days) and a specific number of completed surveys. Upon completion of each SOW, Precision Opinion issues an invoice for services provided based upon the predetermined hourly rate or the rate for each completed survey. For other clients such as Under Armour, SSRS, Edison Research and LHK Partners, Precision Opinion enters into a general MSA, with specific terms for each project set forth in a SOW issued by the client. With each SOW provided, clients outline specific requirements of the project, as well as the survey, the respondents they are targeting and the required number of completed surveys. The timeframe for these SOW s can vary from one day (i.e. election day exit polling) to more long-term projects that are completed based upon a specific timeframe required to either provide a specific number of completed surveys or to have achieved a required number of dialing attempts for each respondent. Depending on the SOW, Precision Opinion will invoice the client based upon predetermined intervals (weekly or monthly), completed SOW or based on the number of completed surveys if it is a longer-term SOW. Precision Opinion issues an invoice for services provided based upon the predetermined hourly rate or rate for each completed survey. MAi Research Business Operations Since 1982 MAi Research, has been delivering accurate, actionable research to some of the most successful companies in the world. MAi Research provides actionable information to its clients allowing them to promote their brands and better understand their customers by using proven research methodologies, innovative analytic techniques, and the insight of its experience. MAi Research s commitment to excellence has led it to develop new approaches to research methodologies, questionnaire design, analytical data techniques, and new research applications. MAi Research invests in its business so it can better serve its clients to ensure their success in brand marketing and communication and in developing new and existing products. MAi Research clients rely on MAi Research s experience to provide them with actionable information to support key business decisions such as: learning which opportunities are worth investing in; developing and identifying winning brand and marketing concepts; optimizing and evaluating products and product features/elements; and sharpening customer/shopper insights. MAi Research provides true custom research for their clients. MAi Research develops custom market research solutions to address each client s challenges, however complex or routine. MAi Research focuses on strengthening the connection between its client s brands and their customers by helping craft more impactful messaging and create more fulfilling products. MAi Research s techniques have been applied across categories and targets -- from product-oriented to service-oriented and from consumer-focused to business-focused. From start to finish, MAi Research engages with their clients to fully understand what their clients need to know – and then develop and propose a research solution that will provide the answers its clients need and when they need them. MAi assigns an executive to work with each client through every phase of a study, from questionnaire design through final presentation, providing its clients with a clear direction and a specific plan of action. For each project MAi Research strives to deliver: Creativity: Creative study designs suited exactly to each client s research objectives; Innovation: A variety of cutting-edge research methodologies including proprietary tools; Expertise: Collaboration with its experienced market researchers; Quality: Focus on quality control; Insight: Insight in to its client s customers that tells the story behind the data clearly, concisely, and insightfully; and Passion: MAi Research presents each project s results by engaging its clients in dynamic and productive discussion to determine how to implement the project findings. MAi Research has conducted research with a wide variety of Fortune 500 clients across; consumer packaged goods, cosmetics, financial services, media, pharmaceuticals, retail and technology. Their clients are both domestic and multinational including: Mexico, Latin America, Brazil, Asia, Australia, the Middle East and Eastern and Western Europe. MAi Research provides Brand Strategy services to its clients. Its focus under Brand Strategy is to build a connection between its clients and their customers that incorporates the rational, emotional, and personal closeness elements that drive customer predispositions. This requires getting the right messages to the right people at the right time and in the right sequence. MAi Research s Brand Strategy is broken into five modules: Listening to their client s customer/consumer – using a fusion of open-ended and closed-ended questions to elicit their client s customers unfiltered perceptions, revealing their category associations, expectations, and barriers. In addition, MAi Research s use of advanced text analytics allows them to group the words people use into themes using the context of their full answers and to connect this qualitative data to a quantitative drivers analysis. The end result for a client is an Engagement Index that depicts purchasing decisions in the category, drivers of those purchase decisions, and how the verbatims link to those drivers. Engage – providing their clients with a comprehensive understanding of how customers/consumers make brand choices: how they think, how they feel, and how they form connections by utilizing Bayesian Modeling. Bayesian Modeling allows MAi Research to develop in-depth drivers analyses and drivers-of-drivers analyses, which help discover connections between rational, emotional and personal connection benefits. This allows MAi Research to provide their clients with actionable information which determines consumers drivers of choice and their needs and wants that motive consumer s preferred action. Optimize – using modeling technologies MAi Research is able to tune a message to its client s audience by connecting the message s overall performance to its brand identity and individual messaging components by utilizing a combination analytical approaches, including predictive modeling, advanced text analytics, and choice-based modeling. MAi Research then custom-builds desktop simulators so its clients can experiment with different messaging combinations and immediately see the potential opportunity. Connect – MAi Research refines targeting metrics to continuously deliver the best message to each individual in the audience. This micro-targeting approach increases efficiency for each client and the impact of its messaging. Perfect - over time, there is a need to refine messaging based on actual results in the real world. This refinement encompasses not only the messaging content, but also the strategy itself, based on competitive actions. By applying a forward-looking tracking process, MAi Research can identify for its clients upcoming trends, learn their impact on purchasing decisions and usage occasions, and anticipate your brand s opportunities and vulnerabilities. MAi Research believes this transforms tracking from a rearview-mirror methodology to an active and dynamic refinement process, keeping a customer s message and brand identity on track. Major clients of MAi Research services include; Pepsi, Budweiser, Kellogg s, Kraft Heinz, Oscar Mayer, Clorox, Colgate, Revlon, Loreal, Crayola, Foster Farms, MasterLock and Bayer. The Reorganization We have recently created two new wholly-owned subsidiaries: Turning Point Research, Inc. ("Turning Point") and MR2 Life, Inc. ("MR2 Life"). The Reorganization will occur prior to the effective date of this offering. We believe the Reorganization will provide us with the necessary structure to grow our business as follows: Through Turning Point, we plan to expand our client base and the services we provide to clients utilizing online data-collection services that are currently part of the Precision Opinion business. The future growth of Turning Point will come from acquisitions and securing new business from existing and new clients. Turning Point s DIY survey product offering, YouSay! will be relaunched in late 2018 to offer small to medium-size companies, organizations and associations an alternative to existing DIY survey products in order to engage with their clients, customers or constituents. YouSay! s focus is on providing a simplified online survey tool for small to large companies, organizations and associations that is simple to use, which offers several layers of service, tiered pricing coupled with strong data analytics to provide actionable insights to the DIY survey. The YouSay! new platform is designed to get things done easier, faster and cheaper while providing greater insight into respondents. Through MR2 Life, we plan to acquire other analytical and consulting services business . For example, effective October 1, 2018, we completed an asset purchase agreement to acquire all of the assets of MAi Research . See "Our Growth Strategy – MAi Research Acquisition" on page 69. We anticipate the future growth and expansion of MR2 Life will come from additional acquisitions and securing new business from existing clients of MAi Research, Turning Point and Precision Opinion as new clients. Going forward, Precision Opinion s operations will be focused on providing the telephonic data-collections and focus groups to its clients and clients of Turning Point and MR2 Life. By splitting the operations of Precision Opinion, we believe that all three subsidiaries under MR2 Group will be in better a position to expand their client base and the level and type of service to create a vertically integrated, full-service information research consulting firm with expertise in data-collection research via the methods described above, consulting and analytics. Industry Background Market research involves measuring both consumers and business opinions on a variety of topics, whether it be gathering focus groups receptiveness to new products and services or assessing the effectiveness of promotional campaigns. Companies in this industry systematically gather, record, tabulate and present marketing and public opinion data. Examples of industry services include political polling, sampling and statistical services, broadcast media rating services and market analysis services. Operators also conduct research in the fields of social science, medical, health, and quality of life. The industry s markets can be divided into three broad areas (1) providers of consumer goods and services wishing to measure and understand their market; (2) providers of media and advertising wishing to measure and understand their viewers; and (3) government institutions and political candidates wishing to measure and understand their constituents. The U.S. market research industry is a more than a $19.8 billion revenue market as of 2016 and has experienced an average annual growth rate of 0.3% since 2011. According to a study conducted by FuelCycle Research, it is anticipated that the annual growth rate will double in size by the year 2020. After suffering in 2012 and 2013, the industry has benefited from a series of economic and consumer trends. First, increases in disposable income and consumer spending have caused companies to reinvest in expanding their product pipelines. Consequently, since 2013, many companies have allocated more money to marketing and advertising budgets and industry revenue has increased accordingly. Companies are spending more on research and development, which has furthered growth in the market because products often undergo extensive market research before their launch. When business conditions improved, the industry began to rebound, with revenue increasing in 2014. However, much of this revenue growth was the result of the industry beginning from a low recessionary base. In the past five years, strong increases in consumer spending and steadily rising advertising expenditures propelled industry revenue. In addition, research and development budgets have been expanding solidly through 2016, as corporations hire market research firms to assess the public s receptiveness to new products and services, which helped industry revenue rise 2.4% in 2016. Although there can be no assurance, this expansion of research and development ("R&D") budgets is expected to continue as the economy expands. Consolidation and Improving Profit The market research industry has experienced increased merger and acquisition activity over the past five years. In 2013, the Federal Trade Commission ("FTC") granted approval to Nielsen, the industry s largest company, to acquire another large industry player, Arbitron. While there has been consolidation in the industry, the market remains fragmented with many small players. The number of market research enterprises totaled 42,525 as of 2016. We intend to take advantage of this fragmentation by seeking to acquire select smaller players that can expend our service offerings. Companies in this industry were slow to increase wages and employment in the years following the recession. As the number of industry operators increased 6.3% in 2013, industry employment grew just 1.0%. In later years, operators sought to maintain the lean operations that were achieved with cuts during the recession. Over the five years leading to 2016, industry employment grew at an average annual rate of 1.4% to 143,296 workers, despite stronger enterprise growth during this period. The combined effects of consolidation and slow employment growth during this period resulted in low operating costs and, as a result, profit growth. Growth Opportunities Opportunities for market researchers to measure online audiences have significantly increased over the past five years, which will be a point of emphasis for us moving forward. The rapid expansion of new media is providing market researchers with innovative ways to interact with and study consumer opinions. Many companies now allow consumers to provide ratings, comments and feedback for products online. As more consumers use social networking sites, companies have gained additional means of engaging consumers in conversations about their products and services. The ability to directly converse with clients can improve a company s understanding of their clientele s wants and needs. Many industry players have acquired or invested in companies that specialize in new media and related technology. Over the next five years, our management believes that more individuals will turn to new media. Consequently, market research companies that invest in technology to measure and analyze the habits of online clients will be better equipped than those that continue to rely on traditional methods. We believe the market research industry is also expected to remain strong due to the continued usage of telephone call center infrastructures. According to a 2017 report from the American Association for Public Opinion Research Task Force (the "AAPOR Task Force") on "The Future of U.S. General Population Telephone Survey Research," the AAPOR Task Force "anticipates that the telephone will remain an important mode for surveying the general public of the United States for many years to come." Based on the AAPOR Task Force s findings and our interactions with our clients, we expect that the majority of government-related research on health, medical, and related fields will continue to require phone research as a major component of the necessary primary research. Additionally, growth in online research is expected to continue to grow as will the use of both online and phone ("Multi-Mode") research. The ability to use Multi-Mode research helps provide a better picture of individual preferences and market trends as both forms of research provide complementary, yet distinguishable information. Companies like us that provide Multi-Mode research will be able to provide greater value to their clients and will be able to grow alongside the industry. The internet has also fragmented demographic markets by enabling people with increasingly specialized interests to interact. According to the Pew Research Center, about 84.0% of adults had internet access at home, work, school or through mobile devices in 2015. Given this expansive audience, market researchers can target specific consumer groups through improved online advertising metrics. By assessing unique page views and click-through rates, advertisers can guarantee that their target market is being reached. Our Market Opportunity We believe companies and government agencies, including our clients, require an increasing amount of data and analytics to set strategy and direct operations. This has resulted in a large market for business information and insight which we believe will continue to grow. Our clients are corporations, government agencies, political pollsters, and the entertainment and hospitality industries. We believe that significant economic, technological, demographic and competitive trends facing consumers and our clients will provide a competitive advantage to our business and enable us to capture a greater share of our significant market opportunity. According to the 2018 Small Business Profile from the U.S. Small Business Administration Office of Advocacy, there are over 11 million small to medium-size companies (employing more than 1 employee up to 499 employees). Secondly, according to a 2012 BizJournal article, in 2010, the U.S. Census counted 16,055 large companies (employing more than 500 employees). Lastly, according to the 2012 Associations Matter publication by The Center for Association Leadership, in 2010, there were 92,311 trade and professional organizations and 1,280,739 charitable, cause-related and philanthropic organizations. We believe these companies and organizations are potential clients of the products and services offered by the MR2 Group of companies. The media landscape is dynamic and changing. Consumers are rapidly changing their media consumption patterns. The growing availability of the internet, and the proliferation of new formats and channels such as mobile devices, social networks and other forms of user-generated media have led to an increasingly fragmented consumer base that is more difficult to measure and analyze. In addition, simultaneous usage of more than one screen is becoming a regular aspect of daily consumer media consumption. We have effectively measured and tracked media consumption through numerous cycles in the industry s evolution—from broadcast to cable, from analog to digital, from offline to online and from live to time-shifted. We believe our distinct ability to provide metrics across social media, online and mobile platforms helps our clients better understand, adapt to and profit from the continued transformation of the global intellectual landscape. Increasing amounts of consumer information are leading to new marketing approaches. The advent of the internet and other digital platforms has created rapid growth in consumer data that is expected to intensify as more entertainment and commerce are delivered across these platforms. As a result, companies are looking for real-time access to more granular levels of data to understand growth opportunities more quickly and more precisely. This presents a significant opportunity for us to work with companies to effectively manage, integrate and analyze large amounts of information and extract meaningful insights that allow marketers to generate profitable growth. Consumers are more connected, informed and in control. Today, more than 37% of the world population is an active social media user according to a study conducted by Hootsuite. There are more than 3.8 billion global internet users (52% of the world population), and 4.9 billion unique mobile device users, with 60% of those mobile device users utilizing the internet from their device. In 2016, internet users grew by 10%, or 354 million, and mobile users increased by 5%, or 222 million. Advances in technology have given consumers a greater level of control of when, where and how they consume information and interact with media and brands. They can compare products and prices instantaneously and have new avenues to learn about, engage with and purchase products and services. These shifts in behavior create significant complexities for our clients. Our broad portfolio of information and insights enables our clients to engage consumers with more impact and efficiency, influence consumer purchasing decisions and actively participate in and shape conversations about their brands. Demographic shifts and changes in spending behavior are altering the consumer landscape. Consumer demographics and related trends are constantly evolving globally, leading to changes in consumer preferences and the relative size and buying power of major consumer groups. Shifts in population size, age, racial composition, family size and relative wealth are causing marketers to continuously re-evaluate and reprioritize their consumer marketing strategies. We track and interpret consumer demographics and psychographics that help enable our clients to engage more effectively with their existing consumers as well as forge new relationships with emerging segments of the population. Consumers are looking for greater value. Economic and social trends have spurred consumers to seek greater value in what they buy as exemplified by the rising demand for "private label" (store branded) products. This increased focus on value is causing manufacturers, retailers and media companies to re-evaluate brand positioning, pricing and loyalty. We believe companies will increasingly look to our broad range of consumer purchasing insights and analytics to more precisely and effectively measure consumer behavior and target their products and marketing offers at the right place and at the right price. Our Growth Strategy We believe that we are well-positioned for both domestic and international expansion and have a multi-faceted marketing and growth strategy that builds upon the MR2 brand, strong client relationships and the integral role we play in the market research, data-collection and analytical fields. However, our growth strategy is also subject to certain risks. For example, we may be unable to adapt to significant technological changes such as changes in the technology used for data-collection and processing, or we may not be successful in expanding our MR2 Life segment. In addition, consolidation in our clients industries may reduce the aggregate demand for our services. While we take all measures toward being a leader in our field and not falling prey to such risks, such risks still exist. See "Risk Factors" on page 15. By separating the business of Precision Opinion into three separate subsidiaries: (i) Precision Opinion; (ii) Turning Point; and (iii) MR2 Life, we believe we will increase our focus and will drive and diversify revenues and allow for higher profit margins. Precision Opinion. We plan to acquire and/or start-up additional CATI stations to support our planned growth in government and medical tracking studies. As part of our plan, we are looking to acquire 200 CATI stations consisting of 125 and 75 CATI stations primarily dedicated to the Hispanic and Asian demographics, respectively. These additional CATI stations will be staffed by both bi-lingual Hispanic and Asian research associates. We believe that having bi-lingual research associates will provide us with the flexibility to utilize our research associates on both English-speaking surveys or surveys in the respective in-language. We believe that these new CATI stations will enable us to serve more government and private clients and projects with a niche demographic focus on Hispanic and Asian consumers. Most of the surveys we are engaged to perform include a specific number of surveys completed in-language with the most prevalent request being for Hispanic and then Asian requests, primarily in one or more of the Chinese dialects. Based on a Pew Research study conducted in 2017, the Asian immigrant population in the US grew at 72% and Hispanic immigrant population grew at 60% between 2000 and 2015. This same Pew study forecasted that in the next 50 years, the Asian population will make up 38% of all US immigrants, with Hispanics making up 31% of the population. Our plan to expand our operations to include additional Asian and Hispanic language capacity is based on the current and future estimated demand for bi-lingual surveys from our clients. Our plan includes the expansion of our Focus + business in both traditional "brick and mortar" as well as online (digital). Given that our focus group facility is in Las Vegas, we believe that it is an excellent location for our Focus+ business. Specifically, Las Vegas as a major tourist destination provides greater access to a cross-section of the United States population, thereby affording clients diversity in focus group responses. Further Las Vegas Convention and Visitors Authority, Las Vegas is home to more than 11 million square feet of meeting and exhibit space citywide and home to three of the country s ten largest convention venues. Thus, we believe this to be a prime location where we will be able to attract new clients either exhibiting or attending the large number of trade shows and conventions. Turning Point. Given the current state of online digital market research, and the consolidation of large players, we believe that there is an opportunity for us to grow through strategic acquisitions in our online digital product line. To achieve this growth, we formed a subsidiary which will focus on providing online digital services to our existing clients. We intend to use a portion of the net proceeds of this offering for use in R&D to enhance our online platform, and ultimately to enhance demand across all of our facets: virtual online focus groups, chat rooms, survey design & implementation, and to identify acquisitions as appropriate. For Turning Point s DIY survey product offering, we believe the growth opportunity of YouSay! exists with delivering its products and services to the over 11 million small to medium-size companies, 92,311 trade and professional organizations and 1,280,739 charitable, cause-related and philanthropic organizations. YouSay! s focus is on providing a simplified online survey tool for small to medium-size companies, organizations and associations that is simple to use, which offers several layers of service, tiered pricing coupled with strong data analytics to provide actionable insights to the DIY survey. The YouSay! new platform is designed to get things done easier, faster and cheaper while providing greater insight into respondents. MR2 Life. We are seeking to re-position ourselves in the market as more of a strategic consultant and to pursue strategic acquisitions to complement our business and to offer consulting services to assist clients to not only understand and analyze the data gathered, but also to advise as to how to act upon such data in an effective manner. Through MR2 Life, we intend to continue to develop our product and service portfolio to provide our clients with comprehensive and advanced solutions, including our analytical offerings across all facets of our client base to provide a more comprehensive offering and help our clients think through their most important challenges. MAi Research. To enhance our product and service offerings, we acquired MAi Research, a company that provides market research, analytics and consulting services to clients. MAi Research provides their clients with actionable information allowing them to better promote their brands, improve product design, functionality and offerings while also better understanding their customers by using proven research methodologies, innovative analytic techniques and the insight of its customers experiences. Effective October 1, 2018, we acquire d all of the assets of MAi Research including but not limited to all cash, receivables, deposits, prepaids , tangible and intangible assets, such as: intellectual property, contracts, client lists and relationships, and goodwill. We did not assume MAi Research s line of credit. In consideration of the acquisition, and for the settlement of deferred compensation and certain other liabilities, we have agreed to pay to the former owners of MAi Research (i) cash consideration of approximately $712,860 within seven days of the closing of our initial public offering, and (ii) an amount of consideration consisting of shares of common stock (75%) and cash (25%), which shall be based on 10% of revenues attributable to MAi Research s operations, payable annually for a period of (5) years; provided, however, that payment of such compensation each year shall be contingent upon both (A) earning a minimum of $6,139,728 in such revenues and (B) gross margins of at least 58.5%, plus an additional incentive payment if gross margins are improved beyond 60.1%. The contingent consideration has a preliminary estimated fair value of $2,121,909, based on estimated annual payments for five years, discounted to the effective date of the transaction using the discount rate applicable to acquisition of the business. The preliminary discount rate used was based on the implicit rate of other acquisitions and dispositions transactions of which we have been a party and/or are aware. We intend to also focus on securing new government contracts primarily within the healthcare sector. The government is the leading source of market research and includes government agencies within the healthcare and human services sector, such as the CDC and the U.S. Food and Drug Administration (the "FDA"). The market research that we perform for government agencies tends to be large-scale, highly complex and well-disciplined, requiring long-term commitment in both manpower and capital resources, which is the foundation of our business. We believe that we have the acumen and capability required for these kinds of government projects. In addition, both government-related and healthcare-related projects typically offer higher profit margins as compared to other data-collection projects due to privacy issues stemming from possessing medical information and the costs associated with building and maintaining secure data sites, providing project-specific training for our research associates, managing the complexity of data samples, as well as complying with additional reporting requirements. We are also planning to obtain a "moderate" rating certification under the Federal Information Security Management Act of 2002 ("FISMA"). We believe that with a FISMA "moderate" rating certification, we will able to secure new government contracts by providing us pre-qualification access to current requests for proposals. As there are few data-collection firms with a FISMA "moderate" rating certification due to the expenses involved, we believe that obtaining this certification will result in a competitive advantage over our competitors. Our Competitive Strengths We make market research more relevant and the underlying data more actionable by both our clients and other end-users. We believe that the following strengths provide us with a competitive advantage: Client-Centric – Our company culture is client-focused. We develop customized research products and services tailored to our clients specific needs, requirements, budgets and timeframe. Because we have more than one dialing platform, we have the ability to work in a Multi-Mode environment with analytical expertise and also customize our products and services for our clients. Industry Experience – Our senior management team has extensive experience in market research, data-collection, analytics and consulting. We believe this allows us to deliver quality data, information and advice to our clients within their project specifications. Breadth of Services – Over the years, we have developed expertise in several types of research, data-collection and analytical consulting through a wide spectrum of industries including, but not limited to, the management of political polling projects, large social science or medical studies that require complex methodologies, and online tracking studies for brand awareness and enhancement that take place not just in the United States, but countries from all over the globe. Reputation – We believe our telephonic and online data-collection operations have excellent reputations because we are able to deliver uncompromising data, information and analytics all within our client s project s scopes, budget and requirements. In addition, our entire operation has a reputation for delivering on the MR2 Group brand of excellence by creating customized tools, methodologies, reporting, technology and individualized employee training to enhance the work conducted for their projects. Size – Our telephonic data-collection operations have over 650 CATI stations managed by a strong, well-trained and tenured team that is capable of managing multiple large projects simultaneously without compromising our MR2 Group brand of excellence. We believe that we are well-positioned in comparison to our competitors. Specifically, other phone room operators with a smaller number of available CATI stations and a smaller staff size require more resources in order to execute larger projects. We believe we are at an advantage in that we have sufficient resources, management and oversight required to handle multiple large-scale projects at once. Technology – We utilize the latest technological advancements in the research industry in regard to CATI dialing platforms (VOXCO), to our real-time, proprietarily developed in-house data metrics and project management tools, to our cutting-edge efforts in online data-collection, to our state-of-the-art information technology ("IT") infrastructure and cyber security, we believe that we have the most advanced technology resources in the industry. In addition, we employ advanced, forward-thinking analysts, web-developers and programmers that are able to enhance our technology in order to increase efficiency, productivity, and quality. DIY Survey Platform - YouSay! – We plan to relaunch our DIY survey platform, YouSay! in late 2018. Through YouSay!, we plan to offer small to large companies, organizations and associations an alternative to existing DIY survey products in order to engage with their clients, customers or constituents. YouSay! s focus is on providing a simplified online survey tool for small to medium size companies, organizations and associations that is simple to use, which offers several layers of service, tiered pricing coupled with strong data analytics to provide actionable insights to the DIY survey. The YouSay! platform is designed to get things done easier, faster and cheaper while providing greater insight into respondents. Multi-Mode Data-collection – We provide our clients the ability to use several forms of data-collection services from phone, online, interactive voice response ("IVR"), or a combination of all three on their research projects. Multi-Dialing Platform – We offer our clients the flexibility of using two dialing platforms for data-collection, VOXCO and CfMC. We believe this versatility and ability to choose platforms allows us to provide our services to a larger number of clients and other research companies that most of our competitors do not have the luxury of doing. Risks Affecting Our Business Our business is subject to a number of risks and uncertainties, including those highlighted in the section titled "Risk Factors" immediately following this prospectus summary. Some of these risks are: Our success is dependent on the demand of our clients seeking public opinion and market research; Our business is affected by general economic, political and financial conditions, which could adversely affect our results of operations and our ability to sustain revenue growth in the future; A substantial portion of our revenue is derived from the government and a small number of large corporate clients, and the loss of one of these clients would have a material adverse effect on our financial condition; We may not be able to manage our growth effectively and our business, financial condition and operating results may be negatively affected; We operate in a competitive environment and may not be able to retain our current clients or attract new clients due to competition; We may be unable to attract; develop and retain the high performing individuals we need to effectively operate and grow our business; We rely heavily and must compete based upon the flexibility and sophistication of the technologies utilized in performing our core businesses. We may be unable to adapt to significant technological change which could adversely affect our business; Natural or man-made disasters and other similar events may significantly disrupt our business, and negatively impact our business, financial condition and operating results; We may need to secure additional financing to accomplish our goals. Our inability to raise capital on acceptable terms in the future may cause us to delay, diminish, or curtail certain operational activities, including the expansion of our business operations, research and development activities, sales and marketing, and other operations, in order to reduce costs and sustain the business, and such inability would have a material adverse effect on our business and financial condition; Raising additional capital may cause dilution to our existing stockholders, including purchasers of common stock in this offering or restrict our operations; If we fail to maintain an effective system of disclosure controls and internal control over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable regulations could be impaired; Our management team has limited experience managing a public company and ineffective internal controls could impact our business and operating results; Our business could be damaged and subjected to liabilities if there are any cyberattacks trying to disrupt/ impede our services to our clients of obtain stored information; Compromises of our data security could cause us to incur unexpected expenses and may materially harm our reputation and operating results; We cannot assure you that we will realize the anticipated benefits of such acquisition. For a more detailed discussion of these risks, see "Risk Factors" starting on page 15. Implications of Being an Emerging Growth Company As a company with less than $1.07 billion in revenue during our last completed fiscal year, we qualify as an "emerging growth company" as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. An emerging growth company may take advantage of specified reduced reporting requirements that are otherwise applicable generally to public companies. These reduced reporting requirements include: an exemption from compliance with the auditor attestation requirement on the effectiveness of our internal control over financial reporting; an exemption from compliance with any requirement that the Public Company Accounting Oversight Board may adopt regarding mandatory audit firm rotation or a supplement to the auditor s report providing additional information about the audit and the financial statements; an exemption from the requirements to obtain a non-binding advisory vote on executive compensation or a stockholder approval of any golden parachute arrangements; extended transition periods for complying with new or revised accounting standards; being permitted to present only two years of audited financial statements and only two years of related "Management s Discussion and Analysis of Financial Condition and Results of Operations", in addition to any required unaudited interim financial statements in this prospectus; and reduced disclosures regarding executive compensation in our periodic reports, proxy statements and registration statements, including in this prospectus; We will remain an emerging growth company until the earliest to occur of: (i) the end of the first fiscal year in which our annual gross revenue is $1.07 billion or more; (ii) the end of the first fiscal year in which we are deemed to be a "large accelerated filer," as defined in the Securities Exchange Act of 1934, as amended, or the Exchange Act; (iii) the date on which we have, during the previous three-year period, issued more than $1.00 billion in non-convertible debt securities; and (iv) the end of the fiscal year during which the fifth anniversary of this offering occurs. We may choose to take advantage of some, but not all, of the available benefits under the JOBS Act. We currently intend to take advantage of the exemptions discussed above. Accordingly, the information contained herein may be different than the information you receive from other public companies in which you hold stock. We are also a "smaller reporting company," as defined under SEC Regulation S-K. As such, we also are exempt from the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act and also are subject to less extensive disclosure requirements regarding executive compensation in our periodic reports and proxy statements. We will continue to be deemed a smaller reporting company until our public float exceeds $75 million on the last day of our second fiscal quarter in the preceding fiscal year. Corporate Information MR2 Group, Inc. was formed as a holding company in Nevada in 2017 by our current President, James T. Medick. Prior to starting MR2 Group, Mr. Medick had previously founded his original market research and consulting company, MRC Group in 1996 which he sold in 2006. At the request of MRC Group clients in 2007, Medick started his second market research and consulting firm, Precision Opinion, Inc. in 2007. In 2017, Mr. Medick formed MR2 Group as a holding company for what will be our three operating subsidiaries, one of which is Precision Opinion. Our principal executive offices are located at 101 Convention Center Drive, Plaza 125, Las Vegas, NV 89109. Our telephone number is (702) 483-4000. Our website address is http://www.mr2group.com/. The references to our website in this prospectus are inactive textual references only. The information on our website is neither incorporated by reference into this prospectus nor intended to be used in connection with this offering. THE OFFERING The following summary of the offering contains basic information about the offering and the common stock and is not intended to be complete. It does not contain all the information that is important to you. For a more complete understanding of the common stock, please refer to the section of this prospectus entitled "Description of Capital Stock." Common Stock offered by us 1,750,0 00 shares Common Stock outstanding before this offering: 2, 453,025 shares (1) Common Stock to be outstanding immediately after this offering: 4, 203,025 shares (1) Offering Price $8.00 per share Option to purchase additional shares: We have granted the underwriters a 45-day option to purchase up to additional shares of our common stock to cover over-allotments, if any. Use of proceeds: We expect to receive approximately $1 2,260,0 00 in net proceeds from the sale of our shares offered by us in this offering (approximately $ 14,181,500 if the underwriters exercise their over-allotment option in full), after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us of $550,000, plus a 1.0% non-accountable expense allowance of $ 140 ,000, based on the shares being offered at $8.00 per share, the midpoint of the expected offering range. We intend to use the net proceeds from this offering to (i) finance the expansion of our business, (ii) to pay the first two quarterly dividend payments to holders of our common stock as of December 15, 2018, a portion of which (approximately $1,00 8,726 ) will be segregated in a separate account for purposes of paying these dividends, (iii) for general working capital purposes, a portion of which may be used to acquire complementary companies. See "Use of Proceeds" on page 29 for a more complete description of the intended use of proceeds from this offering. Dividend Policy Our subsidiary, Precision Opinion, has declared dividends in the past. We intend to pay an annual dividend equal to 6.0% of the offering price per share to holders of record beginning on December 15, 2018, and to holders of record each 90 days thereafter (the "Dividend"). The annual dividend shall be payable quarterly for the first four (4) quarters following this offering. Due to state law, there can be no assurance that the Company will be able to pay the Dividend although the funds will be segregated for such purpose. See "Dividend Policy" and "Risk Factors - While we plan to pay an annual dividend equal to 6.0% of the purchase price of our common stock in the offering, state law may prohibit the payment of such dividend." Risk Factors: Investing in our common stock is highly speculative and involves a high degree of risk. You should carefully consider the information set forth in this prospectus and, in particular, the specific factors set forth in the "Risk Factors" section beginning on page 15 of this prospectus before deciding whether or not to invest in our common stock. Proposed Nasdaq Ticker Symbol We have been approved to list our common stock on The Nasdaq Capital Market, subject to official notice of issuance, under the symbol "MRMR." Lock-ups We and our directors, officers and existing stockholders have agreed with the underwriters not to offer for sale, issue, sell, contract to sell, pledge or otherwise dispose of any of our common stock for a period of twelve (12) months after the date of this prospectus, in the case of our company and our officers and directors, and six (6) months after the date of this prospectus, in the case of any existing stockholder. See "Underwriting" on page 94. (1) Based on shares of common stock issued and outstanding as of October 16 , 2018. Unless otherwise indicated, the information in this prospectus assumes: A public offering price of $8.00 per share of common stock, the midpoint of the estimated price range set forth on the cover of this prospectus; No exercise by the underwriter of its option to purchase 262,500 additional shares of common stock to cover over-allotments, if any; No exercise of the underwriter s warrants; and 2,453,025 shares of common stock which takes into effect a forward split on a 37.5 for 1.0 basis issued in exchange for the ownership interests in our subsidiaries in the Reorganization. SUMMARY SELECTED FINANCIAL AND OTHER DATA The following tables set forth our selected consolidated condensed financial data for MR2 Group and the combined condensed financial data for MR2 Group and MAi Research as of the dates and for the periods indicated. Data for MR2 Group for the fiscal years ended December 31, 2017 and 2016 as have been derived from our audited consolidated financial statements and related notes included elsewhere in this prospectus. Additionally, we have derived the selected combined condensed statements of operations for the years ended December 31, 2017 and 2016, three months ended March 31, 2018 and 2017 , and the three and six months ended June 30, 2018 and 2017 . T he selected balance sheet data as of June 30, 2018 was derived from unaudited financial statements included elsewhere in this prospectus. We have prepared the unaudited combined condensed financial statements on the same basis as our audited consolidated financial statements and, in the opinion of management have included all adjustments, which include only normal recurring adjustments, necessary to present fairly in all material respects our financial position and results of operations. The results of any interim period are not necessarily indicative of the results that may be expected for the full year. The combined pro forma balance sheet data reflects the acquisition of MAi Research as if it had occurred on June 30, 2018. The historical and pro forma data set forth below is not necessarily indicative of what the actual results of operations would have been had the transaction occurred at the dates referred to above, nor do they purport to be indicate in the results of future operations. The historical and pro forma information should be read in conjunction with "Risk Factors," "Management Discussion and Analysis of Financial Condition and Operations," and our consolidated financial statements and related notes thereto included elsewhere in this prospectus. For the three months ended For the three months ended For the six months ended March 31, June 30, June 30, 2018 2017 2018 2017 2018 2017 Combined Condensed Statements of Operations: Revenues $3,530,133 $5,442,213 $4,195,777 $5,871,956 $7,725,910 $11,314,169 Operating expenses Production costs 2,067,171 3,098,737 2,611,453 3,528,692 4,678,624 6,627,429 Selling, general, and administrative 1,638,526 1,881,780 1,676,284 2,214,546 3,314,809 4,096,326 Depreciation and amortization 179,264 137,964 166,630 216,280 345,894 354,243 3,884,960 5,118,481 4,454,367 5,959,518 8,339,327 11,077,998 Operating income (loss) (354,827) 323,732 (258,590) (87,562) (613,417) 236,170 Other income (expense) (236,766) (40,004) (212,857) (57,203) (449,623) (97,208) Net income (loss) $(591,593) $283,728 $(471,447) $(144,765) $(1,063,040) $138,963 Basic and diluted income (loss) per share(1) $(0.14) $0.07 $(0.11) $(0.03) $(0.25) $0.03 (1) Assumes 4,203,025
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diff --git a/parsed_sections/prospectus_summary/2018/CIK0001730761_castle_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001730761_castle_prospectus_summary.txt
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+Prospectus Summary 5
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diff --git a/parsed_sections/prospectus_summary/2018/CIK0001730823_mycliks_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001730823_mycliks_prospectus_summary.txt
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+PROSPECTUS SUMMARY As used in this prospectus, references to the "Company," "we," "our", "us" or "Mycliks" refer to Mycliks Inc. unless the context otherwise indicates. We maintain our web site at www.mycliks.com, information on such web site is not considered a part of this prospectus. You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with information different from the information contained in this prospectus. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of when this prospectus is delivered or when any sale of our securities occurs. The following summary highlights selected information contained in this prospectus. Before making an investment decision, you should read the entire prospectus carefully, including the "Risk Factors" section, the financial statements, and the notes to the financial statements. Company Overview Mycliks Inc. ("Mycliks" or the "Company"), was incorporated in California on October 25, 2017. The Company owns and manages its e-commerce platform called "Mycliks.com" which is a marketplace for handmade/Vintage/Arts and women products. Mycliks.com strives to be a dedicated online e-commerce platform for craft men & women entrepreneurs connecting buyer & sellers globally. Mycliks.com seeks to provide appealing customer service, high-quality content, more comprehensive selection, personalized services and competitive pricing to its customers and visitors. Mycliks.com will be a convenient shopping platform for the handmade lovers and a favorite platform for female shopper. Mycliks.com was launched on March 12, 2018 and has since successfully registered 200 sellers with approximate of 15,000 various products through road shows and event engagements. We envision to build an innovative, technology-based platform to achieve the vision to a leading dedicated e-commerce provider for handmade & women products. Mycliks.com also providing professional training and consultation services through its professional portal to educate the entrepreneurs on e-commerce strategies and ideas to grow their business by combining their existing business through e-commerce platforms. The Company offers complete turnkey e-commerce solutions to small and medium enterprises by bundling the consulting, education and technology to enable E-commerce for their existing businesses. Our independent auditor has issued an audit opinion for our Company which includes a statement expressing substantial doubt as to our ability to continue as a going concern. The Company s principal office is located at 8383 Wilshire Blvd., Suite 800, Beverly Hills, CA, 90212. Our telephone number is (323) 456-8770. As of the date of this prospectus, there is no public trading market for our common stock and no assurance that a trading market for our securities will ever develop. We are an "emerging growth company" within the meaning of the federal securities laws. For as long as we are an emerging growth company, we will not be required to comply with the requirements that are applicable to other public companies that are not "emerging growth companies" including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, the reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and the exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We intend to take advantage of these reporting exemptions until we are no longer an emerging growth company. For a description of the qualifications and other requirements applicable to emerging growth companies and certain elections that we have made due to our status as an emerging growth company, see "RISK FACTORS RISKS RELATED TO THIS OFFERING AND OUR COMMON STOCK – WE ARE AN `EMERGING GROWTH COMPANY AND WE CANNOT BE CERTAIN IF THE REDUCED DISCLOSURE REQUIREMENTS APPLICABLE TO EMERGING GROWTH COMPANIES WILL MAKE OUR COMMON STOCK LESS ATTRACTIVE TO INVESTORS" on page 25 of this prospectus. This is a direct participation offering since we are offering the stock directly to the public without the participation of an underwriter. Our officers and directors will be solely responsible for selling shares in this offering and no commission will be paid on any sales.
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diff --git a/parsed_sections/prospectus_summary/2018/CIK0001731176_tottenham_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001731176_tottenham_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad
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+PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2018/CIK0001731362_crosscode_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001731362_crosscode_prospectus_summary.txt
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+ABOUT THIS PROSPECTUS In making your investment decision, you should only rely on the information contained in this prospectus. We have not authorized anyone to provide you with any other or different information. If anyone provides you with information that is different from, or inconsistent with, the information in this prospectus, you should not rely on it. We believe the information in this prospectus is materially complete and correct as of the date on the front cover. We cannot, however, guarantee that the information will remain correct after that date. For that reason, you should assume that the information in this prospectus is accurate only as of the date on the front cover and that it may not still be accurate on a later date. This document may only be used where it is legal to sell these securities. The information contained in this prospectus is current only as of its date, regardless of the time of delivery of this prospectus or of any sales of our shares of common stock. You should not interpret the contents of this prospectus to be legal, business, investment or tax advice. You should consult with your own advisors for that type of advice and consult with them about the legal, tax, business, financial and other issues that you should consider before investing in our common stock. This prospectus does not offer to sell, or ask for offers to buy, any shares of our common stock in any state or other jurisdiction in which such offer or solicitation would be unlawful or where the person making the offer is not qualified to do so. No action is being taken in any jurisdictions outside the United States to permit a public offering of our common stock or possession or distribution of this prospectus in those jurisdictions. Persons who come into possession of this prospectus in jurisdictions outside the United States are required to inform themselves about, and to observe, any restrictions that apply in those jurisdictions to this offering or the distribution of this prospectus. In this prospectus, unless the context otherwise denotes, references to "we," "us," "our," "Sharma" and the "Company" refer to Crosscode, Inc. SUMMARY The following summary highlights material information in this prospectus. It may not contain all the information that is important to you. For additional information, you should read this entire prospectus carefully, including "Risk Factors" the financial statements and the notes to the financial statements. Overview Crosscode Inc. ("Crosscode") is a patent pending cloud based IT mapping software which mitigates the risk of making IT changes by automating key analytical processes. Large organizations typically have a defined number of business (or capability) domains that are decomposed into many business processes implemented by people and thousands of IT assets – applications, data and infrastructure. Large reengineering efforts, or even small changes in business processes require touching hundreds or thousands of lines of code. And changing these lines of code potentially affect other processes and business services in the organization. There is no single panoptic map of what depends on what. The impact of this situation is that analysis of what must be changed and what impact the change will have in itself takes as much as 50% and up to 70% of any enterprise business transformation project. After this analysis is complete, the coding and testing itself is very straightforward. Crosscode s Enterprise technology creates such a map and uses it to be able to perform such analysis at the touch of a button. Beyond the dramatic cost savings that this will provide, it opens up a vista of being able to do instant detailed "what if" scenarios for IT and enterprise planning. We call, this "single pane of glass" view the panoptic view. Problem & Market Opportunity: Enterprises tens of thousands of business applications and databases built on a foundation made of layers of patches. It is so large and complex that no one person could understand it all, and it is continuously changing. Today, when a business owner requests even just a budget estimate for a small change to be made by the CIO s organization, that organization looks unresponsive because the information is not all in one place and not all in any machine readable format. This estimating process is a combination of high level guesswork with a smattering of drill-down to look for gotchas. When the project is approved, analysis begins in earnest, consuming over 50% and up to 70% of the total manual human effort required for the entire project. The opportunity for Crosscode is to capture a portion of the billion dollars of value that comes from saving its customers up to 70% of the nearly $1 trillion labor cost component of the over $3.5 trillion global IT market (Source: Gartner report on global IT spend). We have received a "Going Concern" classification from our auditors which raises substantial doubts about our ability to continue as a viable enterprise under a wide range of circumstances which are not limited to: "Our continued need of additional capital for the foreseeable future, our inability to raise such capital on acceptable terms if any. Also, we have generated no revenues since inception and have incurred losses during the same time period, due to the fact that the initial years were spend on technology development. Our platform was commercially available effective November 2017 and formally launched in December 2017. Investors should note that we operate in an intensely competitive environment however our technology addresses a fundamental issue that exists in the industry for which our solution is very uniquely poised. Further, the most significant risks facing the Company are rapid technological innovations and changes which the Company may not foresee or anticipate. Such potential developments may severely impair our ability to offer products that are able to address our customers needs or effectively compete in the marketplace. Our Solution The Crosscode Panoptic Solution suite includes: The Panoptic Dependency Analyzer, the foundation for the Crosscode Solution The Enterprise Architecture Modeler, a tool for analyzing sweeping IT changes The Enterprise Impact Assessment Analyzer Market Size Crosscode is first targeting the approximately 22,000 US companies with revenues of greater than $100 million annually. Approximately 2,000 of these are above $1billion in revenue annually. The Company will target the approximately similar numbers of >$1 billion enterprises in Europe and Asia from 2018. Split between the large enterprise offering s rough economic value to the Company of just over $250,000 annually via a SaaS offering (Can also be offered as an on-prem offering for additional consulting charges) over the cloud, and the smaller self-service cloud based model of $50 to $75 per server per month (a typical mid-sized company would have at least 500 servers), this represents between $5 billion and $10 billion annual revenue market opportunity for the Company. Sales & Distribution Crosscode has a traditional sales organization, comprising of individuals with industry experience in selling enterprise software. The Company is also engaged in efforts to build a partner network with leading global technology and consulting firms. We currently have partnership agreements in place with Accenture, Avanade, Alto Strategies, Xoriant Corporation and are in active negotiations with a number of additional global corporations to expand our partnership program. Competition Crosscode s environment is filled with various enterprise tool vendors – Business Process Modeling "BPM" tool suites, Universal Makeup Language "UML" tool suites, Application Performance Monitoring "APM" tools, Business Process Optimization "BPO" tools, Business Intelligence "BI" tools, enterprise schema management tools, Extract, Transform, Load "ETL" tools, and the like. None of the major vendors in any of these categories have roadmaps that promise to deliver the particular value that Crosscode brings to the enterprise, by mapping dependencies between every application and database at the code level. Competitive Advantages: Sources of short and long-term competitive advantage include: First-to-market: There are no tool vendors with significant distribution capabilities that have any technology easily repurposed to compete with Crosscode. Innovator s Dilemma: The large consulting companies most likely to be able to develop technology similar to Crosscode s quickly will be slowed by their dependency on this problem remaining unsolved. Patent Protection: Crosscode s IP (patent) development strategy includes not only patenting the algorithms within its engine, but also various adaptors and business methods required for utilization of any similar technology. Play Nice: Crosscode will aggressively pursue both attractive reseller and sub-licensing agreements with any receptive companies, constraining their need to develop competitive solutions. Where You Can Find Us Our principal executive offices are located at: Crosscode, Inc. 17285 74th Avenue North, Maple Grove, MN 55311 Our telephone number at this address is: 408-813-4601 Our website address is http://www.crosscode.com The Offering Issuer: Crosscode, Inc. Common stock offered by us: 4,000,000 shares at $0.30 per share for the
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diff --git a/parsed_sections/prospectus_summary/2018/CIK0001731536_trinity_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001731536_trinity_prospectus_summary.txt
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@@ -0,0 +1 @@
+This summary only highlights the more detailed information appearing elsewhere in this prospectus. As this is a summary, it does not contain all of the information that you should consider in making an investment decision. You should read this entire prospectus carefully, including the information under the section of this prospectus entitled Risk Factors and our financial statements and the related notes included elsewhere in this prospectus, before investing. Unless otherwise stated in this prospectus, or the context otherwise requires, references to: common stock are to our Class A common stock and our Class B common stock, collectively; founder shares are to shares of our Class B common stock initially purchased by our sponsor in a private placement prior to this offering, and the shares of our Class A common stock issued upon the conversion thereof as provided herein; initial stockholders are to holders of our founder shares prior to this offering (or their permitted transferees); management or our management team are to our officers and directors; private placement warrants are to the warrants issued to our sponsor in a private placement simultaneously with the closing of this offering; public shares are to shares of our Class A common stock sold as part of the units in this offering (whether they are purchased in this offering or thereafter in the open market); public stockholders are to the holders of our public shares, including our initial stockholders and management team to the extent our initial stockholders and/or members of our management team purchase public shares, provided that each initial stockholder s and member of our management team s status as a public stockholder shall only exist with respect to such public shares; specified future issuance are to an issuance of a class of equity or equity-linked securities to specified purchasers that we may determine to make in connection with financing our initial business combination, to the extent permitted under applicable regulatory and contractual requirements related to those funds and accounts; sponsor are to HN Investors LLC, a Delaware limited liability company and an affiliate of Trinity Investments; Trinity Investments are to Trinity Real Estate Investments LLC, a Delaware limited liability company and an entity with which Sean A. Hehir, our Chief Executive Officer, President and one of our directors, and one of the principals of our sponsor, is affiliated. we, us, company or our company are to Trinity Merger Corp. Unless we tell you otherwise, the information in this prospectus assumes that the underwriter will not exercise its over-allotment option. 1 TABLE OF CONTENTS Our Company We are a newly organized blank check company formed as a Delaware corporation for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses, which we refer to throughout this prospectus as our initial business combination. We have not selected any specific business combination target and we have not, nor has anyone on our behalf, initiated any substantive discussions, directly or indirectly, with any business combination target. We may pursue an initial business combination target in any industry or sector, however, given the experience of our founders, the Company expects to focus on acquiring a business combination target with a real estate component (such as a real estate investment or management company, or a business within the hospitality and lodging industry). Our management team has extensive experience in acquiring and operating similar companies in these industries. We believe this experience makes us well situated to identify, source, negotiate and execute an initial business combination with an attractive company or business with a real estate component (such as a business within the hospitality, lodging, gaming, real estate or property services, or asset management industries). We believe that we will benefit from the extensive operating and deal-making experience of our management team. Our leadership team has a substantial track record of investing in the lodging sector, including the acquisition of more than 50 hotels with more than 30,000 keys in the United States and abroad, through their respective firms. Our management team is led by Sean A. Hehir, who serves as our Chief Executive Officer and President, and is one of our directors. Lee S. Neibart serves as our Chairman. Together, Mr. Hehir and Mr. Neibart have more than 60 years of combined investment experience and have a strong track record of investing in real estate equity, debt and corporate acquisitions across both expansionary and recessionary market cycles. Mr. Hehir and Mr. Neibart have partnered on several large institutional real estate transactions over the past two decades and together, now lead our sponsor, HN Investors LLC. Sean A. Hehir has more than 20 years of experience in real estate investment and asset management, and currently serves as the President and Chief Executive Officer of Trinity Investments. In addition to management of Trinity Investments, Mr. Hehir oversees the investment activities of Trinity Investments, including sourcing and executing investment opportunities, formulating investment strategy, and structuring acquisitions and dispositions. Since joining Trinity Investments in May 1998, Mr. Hehir has executed over $4 billion of global real estate transactions, including approximately $2 billion of lodging real estate. Prior to joining Trinity, Mr. Hehir worked for HVS International, a leading consulting firm to the hospitality industry, as a senior associate performing in-depth market studies, financial analyses, income and expense projections, valuations and feasibility studies, competitive market and property positioning studies, and operational reviews for hotels ranging from limited-service to full-service corporate and resort properties. Mr. Hehir has a Bachelor of Science degree in Hotel Administration from Cornell University and holds a Diploma in Hotel Administration from the Hotel Institute Montreux, Switzerland. Mr. Hehir is a board member of the American Red Cross in Hawaii, the Hawaii Business Roundtable, Assets School, and the Hawaii Chapter of The Nature Conservancy, in addition to being an active member of YPO, a chief executive leadership organization. Lee S. Neibart is a partner in the Ares Real Estate Group, focused on fundraising and U.S. opportunistic investing. Mr. Neibart serves on the Ares Real Estate Group s U.S. Development and Redevelopment Fund II Investment Committee. He is a Director on various boards relating to Ares investment portfolio. Mr. Neibart joined Ares Management LLC in July 2013 from AREA Property Partners (formerly Apollo Real Estate Advisors) where he was a Global CEO from 1993 to 2013. In addition to his work with Ares, Mr. Neibart also serves as Chief Executive Officer of HBS Global Properties, a joint-venture between Hudson s Bay Company (TSX: HBC) and Simon Property Group (NYSE: SPG) which owns a portfolio of 83 trophy retail properties throughout the United States, Canada and Germany. From 1979 to 1993, Mr. Neibart was with the Robert Martin Company, a real estate development and management firm, most recently serving as Executive Vice President and Chief Operating Officer. Mr. Neibart currently serves as a director of Hudson s Bay Company and a director of Retail Opportunity Investments Corp. (NASDAQ: ROIC), a real estate investment trust ( REIT ). ROIC was formerly NRDC Acquisition Corp ( NRDC ), a special purpose acquisition company ( SPAC ) that went public in 2007. Mr. Neibart is the former president of NRDC. NRDC did not complete a business combination as contemplated at the time of its initial public offering. Instead, following receipt of the approval of its stockholders, NRDC converted to a REIT and changed its name to Retail Opportunity Investments Corp. in 2009. Since its conversion to a REIT in 2009, ROIC has completed many property asset acquisitions; ROIC currently owns more than 90 shopping centers, primarily in the western regions of the United States. Mr. Neibart holds a Bachelor of Arts degree from the University of Wisconsin and a Masters of Business Administration 2 TABLE OF CONTENTS degree from New York University. Mr. Neibart also serves on the Advisory Board of The Real Estate Institute of New York University. He is also a past President of the New York Chapter of the National Association of Industrial and Office Parks. Past performance by Trinity Investments, or by the members of our management team in their other endeavors or the other entities with which they are or have been affiliated, is not a guarantee of future success. We cannot assure you that we will be able to locate a suitable candidate for our initial business combination or that any business combination we consummate will be successful. You should not rely on the historical record of Trinity Investments or our management team s performance, or the performance of any other entities with which our management team is or has been affiliated, as indicative of our future performance or how an investment in our company will perform or the returns our company will, or is likely to, generate going forward. Business Strategy Our initial business combination and value creation strategy will be to identify, acquire and, after our initial business combination, implement an operating strategy with a view of creating value for our shareholders through operational improvements, capital infusion or future acquisitions. We intend to source initial business combination opportunities through our management team s extensive network of real estate owners and investors, board members, company executives, lawyers, accountants and brokers. Business Combination Criteria The Company s business combination criteria will not be limited to a particular industry or geographic sector, however, given the experience of our founders, the Company expects to focus on acquiring a business combination target with a real estate component (such as a real estate investment or management company, or a business within the hospitality and lodging industry). Our management team will look to identify combination targets which are in need of strategic growth capital, will benefit from becoming a publicly listed company or need to repurchase debt, target strategic acquisitions or require working capital. We have identified the following criteria that we believe are important and that we intend to use in evaluating initial business combination opportunities. While we intend to utilize these criteria in evaluating business combination opportunities, we expect that no individual criterion will entirely determine a decision to pursue a particular opportunity. Further, any particular initial business combination opportunity which we ultimately determine to pursue may not meet one or more of these criteria. Middle-Market Business. We intend to seek candidates with an enterprise value of approximately $750 million to $2.0 billion, determined in the sole discretion of our officers and directors according to reasonable accepted valuation standards and methodologies. We believe that the middle-market segment provides the greatest number of opportunities for investment, and it is where we believe we have the strongest network to identify opportunities. Benefit from Being a Public Company. We intend to pursue a business combination with a company that we believe will benefit from being publicly traded and can effectively utilize the broader access to capital and public profile that are associated with being a publicly traded company. Opportunities For Add-On Acquisitions. We will seek to acquire one or more businesses or assets that we can grow both organically and through acquisitions. In addition, we believe that our ability to source proprietary opportunities and execute such transactions will help the business we acquire grow through acquisition, and thus serve as a platform for further add-on acquisitions. Targets That Can Benefit from our Management Team s Relationships and Experience. While we may pursue an initial business combination opportunity in any industry or sector, we intend to capitalize on the ability of our management team to identify, acquire and operate a business or businesses that can benefit from our management team s established global relationships and operating experience. Our management team has extensive experience in acquiring and operating real estate investment or management companies, as well as businesses with a real estate component within the hospitality and lodging industries. We believe our management s significant operating and deal-making experience and relationships will give us a number of competitive advantages and will present us with 3 TABLE OF CONTENTS a substantial number of potential business combination targets, particularly within the hospitality, lodging, gaming, real estate or property services, or asset management industries. The factors we will consider include growth prospects, competitive dynamics, opportunities for consolidation and need for capital investment. Risk-Adjusted Return. We intend to acquire one or more companies that we believe can offer attractive risk-adjusted return on investments for our stockholders. To the extent we pursue a business combination target having a real estate component (such as a real estate investment of management company, or a business within the hospitality and lodging industry), the criteria we expect to evaluate, among others, include the following: Competitive market position We intend to seek candidates that operate in one or more markets that exhibit strong or improving fundamentals. We intend to evaluate each market based on several factors including competitive dynamics, demand drivers, barriers to entry and the potential for sustainable competitive advantages. We intend to seek target companies which have leading positions in the markets in which they operate, analyzing strengths and weaknesses against competitors, growth potential, brand recognition, and customer loyalty which may help to protect the candidate s profitability and generate attractive returns. Strong free cash flow characteristics We intend to seek candidates which have a history of strong free cash flow generation, or a path through our business combination which will lead to strong free cash flow generation. We further intend to focus on companies which have predictable, defensible recurring revenue streams, appropriate cost controls, low working capital requirements and that present opportunities for revenue growth through accretive capital investment. Strong management teams with a proven track record We intend to seek candidates who have strong management teams with a proven track record of driving revenue growth, enhancing profitability and generating strong free cash flow. We believe that our management team will complement, not replace, existing management, and by providing additional management expertise through our business combination, will unlock opportunities for future growth and enhanced profitability. Growth opportunities through capital investment We intend to seek candidates who will benefit from additional capital investment through a business combination. These opportunities may include increasing profitability through the recapitalization of existing financial obligations, capital investments in existing facilities or capital investment in new facilities or expansion opportunities. In evaluating prospective target candidates, the Company expects, but is not required, to consider primarily the criteria and guidelines set forth above. In addition, the Company expects to consider, among other factors, the following with respect to any potential candidates: The target s historical operating and financial performance; The target s financial condition; The target s growth potential; The experience and skill of existing personnel and availability of additional personnel; The target s brand recognition and potential; The target s capital requirements; The target s internal structure and corporate governance; The regulatory environment with respect to the target and its market, and the impact of regulation and potential future regulation on the target s business; Seasonality associated with the target s business and the ability to offset seasonal fluctuations; and The ability to grow the target s business both organically and through acquisitions. These criteria are not intended to be exhaustive. Any evaluation relating to the merits of a particular initial business combination may be based, to the extent relevant, on these general guidelines as well as other 4 TABLE OF CONTENTS considerations, factors and criteria that our management may deem relevant. In the event that we decide to enter into our initial business combination with a target business that does not meet the above criteria and guidelines, we will disclose that the target business does not meet the above criteria in our stockholder communications related to our initial business combination, which, as discussed in this prospectus, would be in the form of proxy solicitation materials or tender offer documents that we would file with the U.S. Securities and Exchange Commission (the SEC ). Initial Business Combination NASDAQ rules require that we must complete one or more business combinations having an aggregate fair market value of at least 80% of the value of the assets held in the trust account (excluding the deferred underwriting commissions and taxes payable on the interest earned on the trust account) at the time of our signing a definitive agreement in connection with our initial business combination. Our board of directors will make the determination as to the fair market value of our initial business combination. If our board of directors is not able to independently determine the fair market value of our initial business combination, we will obtain an opinion from an independent investment banking firm that is a member of the Financial Industry Regulatory Authority, or FINRA , or an independent accounting firm with respect to the satisfaction of such criteria. While we consider it unlikely that our board of directors will not be able to make an independent determination of the fair market value of our initial business combination, it may be unable to do so if it is less familiar or experienced with the business of a particular target or if there is a significant amount of uncertainty as to the value of a target s assets or prospects. We may, at our option, pursue an initial business combination opportunity jointly with one or more entities affiliated with our sponsor, Trinity Investments, or any of our officers or directors, which we refer to as an Affiliated Joint Acquisition. Any such parties would co-invest only if (i) permitted by applicable regulatory and other legal limitations; (ii) we and our sponsor, Trinity Investments, considered a transaction to be mutually beneficial to us as well as the affiliated entity; and (iii) other business reasons exist to do so, such as the strategic merits of including such co-investors, the need for additional capital beyond the amount held in our trust account to fund the initial business combination and/or the desire to obtain committed capital for closing the initial business combination. An Affiliated Joint Acquisition may be effected through a co-investment with us in the target business at the time of our initial business combination, or we could raise additional proceeds to complete the initial business combination by issuing to such parties a class of equity or equity-linked securities. We refer to this potential future issuance, or a similar issuance to other specified purchasers, as a specified future issuance throughout this prospectus. The amount and other terms and conditions of any such specified future issuance would be determined at the time thereof. We are not obligated to make any specified future issuance and may determine not to do so. This is not an offer for any specified future issuance. Pursuant to the anti-dilution provisions of our Class B common stock, any such specified future issuance would result in an adjustment to the conversion ratio such that our initial stockholders and their permitted transferees, if any, would retain their aggregate percentage ownership at 20% of the sum of the total number of all shares of common stock outstanding upon completion of this offering plus all shares issued in the specified future issuance, unless the holders of a majority of the then-outstanding shares of Class B common stock agreed to waive such adjustment with respect to the specified future issuance at the time thereof. We cannot determine at this time whether a majority of the holders of our Class B common stock at the time of any such specified future issuance would agree to waive such adjustment to the conversion ratio. They may waive such adjustment due to (but not limited to) the following: (i) closing conditions which are part of the agreement for our initial business combination; (ii) negotiation with Class A stockholders on structuring an initial business combination; (iii) negotiation with parties providing financing which would trigger the anti-dilution provisions of the Class B common stock; or (iv) as part of the Affiliated Joint Acquisition. If such adjustment is not waived, the specified future issuance would not reduce the percentage ownership of holders of our Class B common stock, but would reduce the percentage ownership of holders of our Class A common stock. If such adjustment is waived, the specified future issuance would reduce the percentage ownership of holders of both classes of our common stock. We anticipate structuring our initial business combination either (i) in such a way so that the post-transaction company in which our public stockholders own shares will own or acquire 100% of the equity interests or assets of the target business or businesses, or (ii) in such a way so that the post-transaction company owns or acquires less than 100% of such interests or assets of the target business in order to meet certain objectives of the target management team or stockholders, or for other reasons, including an Affiliated Joint 5 TABLE OF CONTENTS Acquisition as described above. However, we will only complete an initial business combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act of 1940, as amended, or the Investment Company Act. Even if the post-transaction company owns or acquires 50% or more of the voting securities of the target, our stockholders prior to the initial business combination may collectively own a minority interest in the post-transaction company, depending on valuations ascribed to the target and us in the initial business combination. For example, we could pursue a transaction in which we issue a substantial number of new shares in exchange for all of the outstanding capital stock of a target. In this case, we would acquire a 100% controlling interest in the target. However, as a result of the issuance of a substantial number of new shares, our stockholders immediately prior to our initial business combination could own less than a majority of our outstanding shares subsequent to our initial business combination. If less than 100% of the equity interests or assets of a target business or businesses are owned or acquired by the post-transaction company, the portion of such business or businesses that is owned or acquired is what will be taken into account for purposes of NASDAQ s 80% of net assets test. If the initial business combination involves more than one target business, the 80% of net assets test will be based on the aggregate value of all of the transactions. We may issue a substantial number of additional equity or equity-linked securities to complete our initial business combination (including pursuant to a specified future issuance, whether in connection with an Affiliated Joint Acquisition or to other parties) or under an employee incentive plan after completion of our initial business combination. We may also issue shares of Class A common stock upon conversion of the Class B common stock at a ratio greater than one-to-one at the time of our initial business combination as a result of the anti-dilution provisions contained in our amended and restated certificate of incorporation. In addition, your interest in us could also be further diluted by other issuances of equity or equity-linked securities we make in the future. The issuance of additional equity or equity-linked securities by us, whether in connection with our initial business combination or otherwise, may significantly dilute the equity interests of investors in this offering. In addition, while we have no current plans to do so, if we issue preferred stock in the future, the rights of holders of our common stock may be subordinated to the rights of holders of such preferred stock. See Risk Factors We may issue additional common stock or preferred stock to complete our initial business combination or under an employee incentive plan after completion of our initial business combination. We may also issue shares of Class A common stock upon the conversion of the Class B common stock at a ratio greater than one-to-one at the time of our initial business combination as a result of the anti-dilution provisions contained in our amended and restated certificate of incorporation. Any such issuances would dilute the interest of our stockholders and likely present other risks and We may acquire a target business through an Affiliated Joint Acquisition with one or more affiliates of Trinity Investments and/or other entities affiliated with our officers or directors. This may result in conflicts of interest as well as dilutive issuances of our securities. Our Initial Business Combination Process In evaluating prospective business combinations, we expect to conduct a thorough due diligence review process that will encompass, among other things, meetings with incumbent management and employees, document reviews and inspection of facilities, as applicable, as well as a review of financial and other information that will be made available to us. We are not prohibited from pursuing an initial business combination with a company that is affiliated with our sponsor, Trinity Investments, or any of our officers or directors. In the event we seek to complete our initial business combination with a company that is affiliated with our sponsor, Trinity Investments, or any of our officers or directors, we, or a committee of independent directors, will obtain an opinion from an independent investment banking firm which is a member of FINRA or an independent accounting firm that our initial business combination is fair to our company from a financial point of view. Members of our management team will directly or indirectly own founder shares and/or private placement warrants following this offering and, accordingly, may have a conflict of interest in determining whether a particular target business is an appropriate business with which to effectuate our initial business combination. Further, each of our officers and directors may have a conflict of interest with respect to evaluating a particular business combination if the retention or resignation of any such officers and directors were to be included by a target business as a condition to any agreement with respect to our initial business combination. 6 TABLE OF CONTENTS All of the members of our management team are employed by Trinity Investments or with entities affiliated with it or with other entities. Trinity Investments and these other entities and their respective affiliates are continuously made aware of potential business opportunities, one or more of which we may desire to pursue for an initial business combination; we have not, however, selected any specific business combination target and we have not, nor has anyone on our behalf, initiated any substantive discussions, directly or indirectly, with any business combination target. Trinity Investments and each of our officers and directors presently has, and any of them and our sponsor in the future may have additional, fiduciary or contractual obligations to other entities pursuant to which such officer or director is or will be required to present a business combination opportunity. For example, Trinity Investments and certain of their respective officers and directors, as well as the principals of our sponsor, may currently be obligated by contract to offer or allocate certain investment opportunities first to specific private funds managed by or affiliated with them. Accordingly, if any of our officers or directors becomes aware of a business combination opportunity which is suitable for an entity to which he or she has then-current fiduciary or contractual obligations, he or she will honor his or her fiduciary or contractual obligations to present such business combination opportunity to such other entity. We do not believe, however, that any fiduciary duties or contractual obligations of our sponsor, Trinity Investments and our officers or directors will materially affect our ability to complete our initial business combination. In addition, we may, at our option, pursue an Affiliated Joint Acquisition opportunity with an entity to which our sponsor, Trinity Investments or an officer or director has a fiduciary or contractual obligation. Any such entity may co-invest with us in the target business at the time of our initial business combination, or we could raise additional proceeds to complete the initial business combination by making a specified future issuance to any such entity. Our amended and restated certificate of incorporation will provide that we renounce our interest in any corporate opportunity offered to any director or officer unless such opportunity is expressly offered to such person solely in his or her capacity as a director or officer of our company and such opportunity is one we are legally and contractually permitted to undertake and would otherwise be reasonable for us to pursue, and to the extent the director or officer is permitted to refer that opportunity to us without violating another legal obligation. Please see the section of this prospectus entitled Management Conflicts of Interest for additional information. Our sponsor, officers and directors have agreed not to participate in the formation of, or become an officer or director of, any other blank check company such as our company until we have entered into a definitive agreement regarding our initial business combination or we have failed to complete our initial business combination within 18 months after the closing of this offering. Corporate Information Our executive offices are located at 55 Merchant St, Suite 1500, Honolulu 96813, and our telephone number is (808) 529-0909. We are an emerging growth company, as defined in Section 2(a) of the Securities Act of 1933, as amended (the Securities Act ), as modified by the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. As such, we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. If some investors find our securities less attractive as a result, there may be a less active trading market for our securities and the prices of our securities may be more volatile. In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We intend to take advantage of the benefits of this extended transition period. We will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of this offering, (b) in which we have total annual gross revenue of at least $1.07 billion, or (c) in which we are deemed to be a large accelerated filer, which means the 7 TABLE OF CONTENTS market value of our Class A common stock that is held by non-affiliates exceeds $700 million as of the prior June 30, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period. References herein to emerging growth company will have the meaning associated with it in the JOBS Act. 8 TABLE OF CONTENTS The Offering
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diff --git a/parsed_sections/prospectus_summary/2018/CIK0001731831_eidos_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001731831_eidos_prospectus_summary.txt
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+Prospectus summary This summary highlights information contained elsewhere in this prospectus and does not contain all of the information that you should consider in making your investment decision. Before investing in our common stock, you should carefully read this entire prospectus, including our financial statements and the related notes included elsewhere in this prospectus. You should also consider, among other things, the matters described under Risk Factors and Management s Discussion and Analysis of Financial Condition and Results of Operations, in each case appearing elsewhere in this prospectus. Unless otherwise stated, all references to us, our, Eidos we, the Company and similar designations refer to Eidos Therapeutics, Inc. Overview We are a clinical stage biopharmaceutical company focused on addressing the large and growing unmet need in diseases caused by transthyretin, or TTR, amyloidosis, or ATTR. We seek to treat this well-defined family of diseases at their collective source by stabilizing TTR, a therapeutic approach that is supported by genetic evidence as well as previous clinical trials. Our product candidate, AG10, is an orally-administered small molecule designed to potently stabilize TTR, with the potential to halt the progression of ATTR and be a promising treatment for this family of diseases. The development of AG10 is led by our proven management team who are responsible for developing over 30 molecules through Investigational New Drug, or IND, applications, and more than ten approved drugs. Together with patients and physicians, we aim to bring a well-tolerated, effective and disease-modifying treatment for ATTR to market as quickly as possible. Disease background ATTR represents a significant unmet need, with a comparatively large patient population in the context of rare genetic diseases and an inadequate current standard of care. There are three distinct diseases that comprise the ATTR family: wild-type ATTR cardiomyopathy, or ATTRwt-CM, mutant ATTR cardiomyopathy, or ATTRm-CM, and ATTR polyneuropathy, or ATTR-PN. The worldwide prevalence of each disease is approximately 200,000, 40,000, and 10,000, respectively, although we believe the cardiomyopathic forms of the disease are significantly underdiagnosed due to non-specific symptoms and a historical reliance on an invasive heart biopsy diagnostic method. We believe that improvements in disease awareness and the introduction of a non-invasive, imaging-based diagnostic algorithm are significantly increasing rates of diagnosis for ATTRwt-CM and ATTRm-CM. All three forms of ATTR are progressive and fatal and no disease-modifying therapies have been approved by the FDA. For patients with ATTRwt-CM and ATTRm-CM, symptoms usually begin to manifest later in life (age 50 ) with median survival of between three to five years from diagnosis. ATTR-PN presents either in a patient s early 30s or later (age 50 ) with a median life expectancy of five to ten years from diagnosis. Progression of all forms of ATTR causes significant morbidity, impacts productivity and quality of life, and creates a significant economic burden due to the costs associated with progressively greater patient needs for supportive care. Mechanism of disease and therapeutic approach Over 25 years of research have shown that ATTR is uniformly driven by destabilization of the TTR tetramer, a molecular structure consisting of four identical subunits, or monomers, stemming from either specific gene mutations or aging. Destabilized TTR drives an irreversible dissociation of the TTR tetramer into monomers, which subsequently aggregate and deposit throughout the body, leading to organ damage, loss of organ function and eventual death if left untreated. Table of Contents The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any jurisdiction where such offer or sale is not permitted. Subject to Completion, dated June 15, 2018. Preliminary prospectus 6,250,000 shares Common stock This is an initial public offering of 6,250,000 shares of common stock by Eidos Therapeutics, Inc. We are offering shares of our common stock to be sold in the offering. The initial public offering price is expected to be between $15.00 and $17.00 per share. Prior to this offering, there has been no public market for our common stock. We have applied to list our common stock on The Nasdaq Global Market under the symbol EIDX. We are an emerging growth company as defined under the federal securities laws and, as such, have elected to comply with certain reduced public company reporting requirements. Per share Total Initial public offering price $ $ Underwriting discounts and commissions(1) $ $ Proceeds to Eidos Therapeutics, Inc., before expenses $ $ (1) See Underwriting for a description of the compensation payable to the underwriters. We have granted the underwriters an option for a period of 30 days to purchase up to 937,500 additional shares of common stock. Certain of our principal stockholders, including stockholders affiliated with certain of our directors, have indicated an interest in purchasing an aggregate of up to approximately $50.0 million in shares of our common stock in this offering at the initial public offering price per share and on the same terms as the other purchasers in this offering. However, because these indications of interest are not binding agreements or commitments to purchase, such entities may elect to purchase fewer shares than they indicate an interest in purchasing or not to purchase any shares in this offering. In addition, the underwriters may elect to sell fewer shares or not to sell any shares in this offering to such entities. The underwriters will receive the same discount from any shares sold to such entities as they will from any other shares sold to the public in this offering. Investing in our common stock involves a high degree of risk. See Risk factors beginning on page 11. Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense. The underwriters expect to deliver the shares to purchasers on or about , 2018. J.P. Morgan BofA Merrill Lynch Barclays , 2018 Table of Contents We are building upon our significant mechanistic understanding of ATTR to develop a potentially disease-modifying treatment for this family of diseases. Previous clinical trials of small molecule TTR stabilizers have demonstrated that increasing levels of TTR stabilization may lead to increasing levels of clinical benefit. In March 2018, Pfizer announced that its Phase 3 trial of tafamidis in ATTRwt-CM and ATTRm-CM patients (ATTR-ACT) reportedly met its primary endpoint: a reduction in the combination of all-cause mortality and cumulative incidence of cardiovascular-related hospitalizations in patients treated with either 20 mg or 80 mg of tafamidis relative to placebo. The 20 mg dose of tafamidis, which in preclinical studies resulted in a lower rate of TTR stabilization than the 80 mg dose, resulted in a non-statistically significant improvement relative to placebo in a Phase 3 clinical trial in ATTR-PN. The generic NSAID, diflunisal, which in preclinical studies has been shown to result in greater TTR stabilization at a 250 mg twice-daily dose than tafamidis at either 20 mg or 80 mg dose, showed statistically significant improvements on clinical endpoints in a separate NIH-funded Phase 3 trial in ATTR-PN. Diflunisal has not been approved for the treatment of ATTR and its usage is limited by non-TTR-related toxicities. We believe that the relative clinical data for tafamidis at the 20 mg dose, tafamidis at the 80 mg dose and diflunisal support the hypothesis that maximally stabilizing TTR may lead to optimal clinical benefit. We aim to provide a compelling treatment for ATTR by developing a well-tolerated small molecule that completely stabilizes TTR. Our product candidate, AG10, is an orally-administered small molecule designed to potently stabilize tetrameric TTR, thereby halting at its outset the series of molecular events that give rise to ATTR. AG10 was designed to mimic a naturally-occurring variant of the TTR gene (T119M) that is considered a rescue mutation because it has been shown to prevent ATTR in individuals carrying pathogenic, or disease-causing, mutations in the TTR gene. We have observed through X-ray crystallography that the binding of AG10 to TTR creates strong molecular bonds at the same locations as seen in T119M. To our knowledge, AG10 is the only TTR stabilizer in development that has been observed to mimic the super-stabilizing properties of this rescue mutation. We believe the clinical and preclinical data generated to date by AG10 strongly support its development as a preferred therapeutic to treat ATTR, as outlined below: In our Phase 1 clinical trial, the primary objective of evaluating safety and tolerability of single and multiple doses of AG10 administered to healthy adult volunteers was achieved. AG10 was well tolerated and was not associated with any clinically important adverse events in our Phase 1 clinical trial. This is consistent with our preclinical studies in which AG10 was demonstrated to have a greater than 50-fold therapeutic window between our target therapeutic blood levels and concentrations associated with toxicity in nonhuman mammals. The secondary objectives of evaluating pharmacokinetics (PK), pharmacodynamics (PD) and the PK-PD relationship were also achieved in our Phase 1 clinical trial. PD properties were assessed by established assays of TTR stabilization. In these assays in our Phase 1 clinical trial, AG10 demonstrated 100% TTR stabilization at peak concentrations and over 95% TTR stabilization on average at the highest tested dose in healthy adult volunteers at steady state. These data are consistent with our preclinical studies. In our preclinical studies at clinically relevant concentrations, AG10 demonstrated near-complete stabilization of wild-type TTR and all TTR variants tested, which represent greater than 70% of all patients with mutation-driven ATTR. In April 2018, we initiated a randomized, placebo-controlled, double-blind Phase 2 clinical trial of AG10 in ATTR-CM patients. In this trial, we are evaluating safety and tolerability and TTR stabilization as clinical proof of concept in the target patient population. We expect to report topline data from this Phase 2 clinical trial by the Table of Contents Table of contents Page No. Prospectus summary 1
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diff --git a/parsed_sections/prospectus_summary/2018/CIK0001733689_derma_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001733689_derma_prospectus_summary.txt
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+summary of financial data summarizes certain information from our financial statements as of February 28, 2018 and May 31, 2017. 
+
+ 
+
+ 
+
+ 
+
+As of
+
+May 31,
+
+2017
+
+ 
+
+ 
+
+As of
+
+ February 28, 
+
+ 2018 
+
+ 
+
+ Net Revenue 
+
+ 
+
+$
+0
+
+ 
+
+ 
+
+ 
+
+158
+
+ 
+
+Operating Expenses
+
+ 
+
+$
+1,709
+
+ 
+
+ 
+
+ 
+
+ 6,512 
+
+ 
+
+Net Loss
+
+ 
+
+$
+(1,709
+)
+
+ 
+
+ 
+
+ (6,354 
+ ) 
+
+Working Capital
+
+ 
+
+$
+3,291
+
+ 
+
+ 
+
+ 
+
+ (5,683 
+ ) 
+
+Stockholder s Equity
+
+ 
+
+$
+3,291
+
+ 
+
+ 
+
+ 
+
+ (3,063 
+ ) 
+
+Cash Balance
+
+ 
+
+$
+1,103
+
+ 
+
+ 
+
+ 
+
+ 310 
+
+ 
+
+ 
+
+ 
+
+7
+
+ 
+
+Table of Contents
+
+ 
+
+RISK FACTORS
+
+ 
+
+An investment in our common stock involves a number of very significant risks. You should carefully consider the following risks and uncertainties in addition to other information in this prospectus in evaluating our Company and its business before purchasing shares of our common stock. Our business, operating results and financial condition could be seriously harmed due to any of the following risks. The risks described below may not be all of the risks facing our Company. Additional risks not presently known to us or that we currently consider immaterial may also impair our business operations. You could lose all or part of your investment due to any of these risks.
+
+ 
+
+Risks Related to Our Company
+
+ 
+
+We are a recently organized early-stage Company but have not yet commenced operations in our business. We expect to incur operating losses for the foreseeable future.
+
+ 
+
+We were incorporated on January 10, 2017 and to date have been involved primarily in organization activities. We have not yet fully commenced business operations. Further, we have not yet fully initiated our business plan, or our management team, nor have we targeted or assembled any real or intangible property rights. Accordingly, we have no way to evaluate the likelihood that our business will be successfully. We have earned limited revenues as of the date of this prospectus. Potential investors should be aware of the difficulties normally encountered by a new niche market using online sales activities and the high rate of failure for such enterprises. The likelihood of success must be considered in light of the problems, expenses, difficulties, complications and delays encountered in connection with the operations that we plan to undertake. These potential problems include, but are not limited to, unanticipated problems relating to production, the market acceptance of our product, online store, developing relationship with suppliers, distribution and challenges, and additional costs and expenses that may exceed current estimates. Prior to time that we are ready to market our prospective product, we anticipate that DERMA GLISTEN will incur increased operating expenses without realizing any revenues. We expect to incur significant losses into the foreseeable future. We recognize that if the effectiveness of our business plan is not forthcoming we will not be able to continue business operations. There is no operating her tory upon which to base any assumption as to the likelihood that we will prove successful and it is doubtful that we will generate any operating revenues or ever achieve profitable operations. If we are unsuccessful in addressing these risks, our business will most likely fail.
+
+ 
+
+We are an early-stage organization and have a correspondingly small financial and accounting organization. Being a public Company may strain our resources, divert management s attention and affect its ability to attract and retain qualified officers and directors.
+
+ 
+
+We are an early-stage Company with no developed finance and accounting organization and the rigorous demands of being a public Company require a structured and developed finance and accounting group. As a reporting Company, we will be subject to the reporting requirements of the Securities Exchange Act of 1934. However, the requirements of these laws and the rules and regulations promulgated thereunder entail significant accounting, legal and financial compliance costs which may be prohibitive to us as we develop our business plan, services and scope. These costs have made, and will continue to make, some activities more difficult, time consuming or costly and may place significant strain on its personnel, systems and resources.
+
+ 
+
+The Securities Exchange Act requires, among other things, that companies maintain effective disclosure controls and procedures and internal control over financial reporting. In order to maintain the requisite disclosure controls and procedures and internal control over financial reporting, significant resources and management oversight are required. As a result, management s attention may be diverted from other business concerns, which could have a material adverse effect on the development of our business, financial condition and results of operations.
+
+ 
+
+These rules and regulations may also make it difficult and expensive for us to obtain director and officer liability insurance. If we are unable to obtain adequate director and officer insurance, our ability to recruit and retain qualified officers and directors, especially those directors who may be deemed independent, will be significantly curtailed.
+
+ 
+
+Our Company s management has no prior experience in running a public Company; the Company may be faced with additional costs to maintain its reporting requirements. Such costs could have a material adverse effect on our business financial condition and operating results.
+
+ 
+
+Because the Company s management has no prior experience in running a public Company, the Company may be faced with additional costs to maintain its reporting requirements and as such may be reliant upon external consultants and additional accounting and legal advice. These costs may be significant and such costs may have an adverse effect on our ability to operate and our results of operations.
+
+ 
+
+ 
+
+8
+
+ 
+
+Table of Contents
+
+ 
+
+We have incurred net losses since our inception and expect losses to continue.
+
+ 
+
+We have not been profitable since our inception. Since our inception on January 10, 2017 to November 30, 2017, we had a net accumulated loss of $4,279. We have generated limited revenues from operations and do not expect to generate significant revenues from operations unless and until we are able to bring our concept to the market place. There is a risk that we may never bring our concept to the market place or that our business concept will attract customers. In addition, there is no guarantee and that our operations will be profitable in the future and you could lose your entire investment.
+
+ 
+
+One of the biggest challenges facing us will be in securing adequate capital to continue to expand our business and increase operations. Secondarily, an ongoing challenge remains the maintenance of an efficient operating structure and business model. We must keep our expenses and the costs of marketing and distribution at a minimum in order to generate a profit from the revenues that we anticipate receiving from the sales of our product. Third, in order to expand, we will need to continue implementing effective sales and marketing strategies to reach and forge new business markets and consumers. We have devised our initial sales, marketing and advertising strategies. We will need to continue to refine these strategies and skillfully implement them in order to achieve ongoing and long-term success in our business. Fourth, we will continuously identify, attract, solicit and manage potential employee talent, which requires us to consistently recruit, incent and monitor various employees. High employee turnover or attrition is a significant risk for us as it requires expending substantial resources to identify and train new personnel and also to replace personnel. These tasks require significant time and attention from our management and employees may nevertheless become dissatisfied with their respective tenure with us.
+
+ 
+
+Due to financial constraints and the early stage of our life, we have to date conducted only limited advertising and marketing to reach customers. In addition, we have not yet located the sources of funding for further development on a broader scale through acquisitions or other major partnerships. If we were unable to locate such financing and/or later develop strong and reliable sources of potential new business relationships and a means to efficiently reach new business partners and customers, it is unlikely that we will be able to develop our proposed expanded operations and business plan. Moreover, the above assumes that our products are consistently met with client satisfaction in the marketplace and exhibit steady success amongst the potential customer base, neither of which is reasonably predictable or guaranteed.
+
+ 
+
+Our auditors have questioned our ability to continue operations as a going concern. Investors may lose all of their investment if we are unable to continue operations and generate revenues. We hope to obtain significant revenues from future product sales. In the absence of significant sales and profits, we may seek to raise additional funds to meet our working capital needs, principally through the additional sales of our securities. However, we cannot guarantee that we will be able to obtain sufficient additional funds when needed, or that such funds, if available, will be obtainable on terms satisfactory to us. As a result, substantial doubt exists about our ability to continue as a going concern.
+
+ 
+
+We may not be able to continue as a going concern if we do not obtain additional financing.
+
+ 
+
+Our independent accountants audit report states that there is substantial doubt about our ability to continue as a going concern. We have incurred only losses since our inception raising substantial doubt about our ability to continue as a going concern. Therefore, our ability to continue as a going concern is highly dependent upon obtaining additional financing for our planned operations. There can be no assurance that we will be able to raise any additional funds, or if we are able to raise additional funds, that such funds will be in the amounts required or on terms favorable to us.
+
+ 
+
+Our competition is well established.
+
+ 
+
+The skin care market is dominated by many well-known brands. These established brands are well accepted globally. We will need to differentiate our products from those already on the market and identify their particular qualities that will make them acceptable to consumers. There is no guarantee that we will be able to realize commercial acceptance of our proposed products in such an established competitive market. 
+
+ 
+
+We intend to outsource all aspects of our products and will not be in complete control of our deliverables. 
+
+ 
+
+Our initial products are OEM branded products that we purchase from existing cosmetic manufacturers. We will not be in control of our delivery which could affect our ability to supply our customers. Most of our products may be sourced outside of America and we may face increase in duties, shipping and currency fluctuations that could affect our costs and profits. In the event that any of our suppliers no longer desire to provide products, we may be forced to locate alternative suppliers. We cannot guarantee that we will be able to obtain our products from alternative suppliers. Failure to obtain alternative sources will disrupt our operations and hinder our ability to generate revenues.
+
+ 
+
+ 
+
+9
+
+ 
+
+Table of Contents
+
+ 
+
+Our president and chief executive officer does not have any formal training specific to the skin care business.
+
+ 
+
+Our President and Chief Executive Officer is Jessica Foster. While, Jessica Foster does have some sales experience she has no direct training or experience in skin care and or the makeup industry. Her lack of knowledge could impact our operations; earnings and ultimate financial success could suffer irreparable harm due to management s lack of experience in this industry.
+
+ 
+
+Our current president and chief executive officer has other business interests.
+
+ 
+
+Jessica Foster, our President and Chief Executive Officer, currently devotes approximately eight to twelve hours per week providing management services to us. While she presently possesses adequate time to attend to our interests, it is possible that the demands on her from other obligations could increase, with the result that she would no longer be able to devote sufficient time to the management of our business. The loss of Jessica Foster to our Company could negatively impact our business development.
+
+ 
+
+We have requirements for and there is an uncertainty of access to additional capital. 
+
+ 
+
+At November 30, 2017, we had cash of $44 and working capital deficit of $1,899. We will continue to incur development costs to fund our plan of operations and intend to fund our plan of operations from working capital, equity subscriptions and shareholders loans. Ultimately, our ability to continue our business operations depends in part on our ability to obtain financing through, debt financing, equity financing, or commence operations and generate revenues or some combination of these or other means. There can be no assurance that we will be able to obtain any such financing.
+
+ 
+
+We have minimal cash flow from operations and depend on equity financing and shareholder loans for our operations. 
+
+ 
+
+Our current operations have generated limited cash flow. Our current operating funds are less than necessary to complete our intended plan of operations real and/or intangible property. We have planned for three phases to our operations over the next twelve months. The business activities and related expenses in each phase will be affected by the proceeds from the sales of shares in this offering received by the Company as discussed below. The Company requires that 25% of the shares offered must be sold which is a minimum of $25,000 of gross offering proceeds, to implement its business plan.
+
+ 
+
+Our failure to obtain such additional financing could result in delay or indefinite postponement of further operations which would have a material adverse effect on our business.
+
+ 
+
+We lack an operating history.
+
+ 
+
+We were incorporated on January 10, 2017 and we have realized limited revenue. We have very little operating history upon which an evaluation of our future success or failure can be made. Our ability to achieve and maintain profitability and positive cash flow is dependent upon the completion of this offering, our ability to attract customers and to generate revenues through our sales.
+
+ 
+
+We expect to incur losses in the future.
+
+ 
+
+Based upon current plans, we expect to incur operating losses in future periods because we will be incurring expenses and not generating revenues. We cannot guarantee that we will be successful in generating revenues in the future. Failure to generate revenues will cause us to go out of business.
+
+ 
+
+Our operating results may prove unpredictable.
+
+ 
+
+Our operating results are likely to fluctuate significantly in the future due to a variety of factors, many of which we have no control over. Factors that may cause our operating results to fluctuate significantly include: our ability to generate enough working capital from future equity sales; the level of commercial acceptance by the public of our proposed product; fluctuations in the demands of our products; the amount and timing operating costs and capital expenditures relating to expansion of our business, operations, infrastructure and general economic conditions. If realized, any of these factors could have a material effect on our business, financial condition and operating results, which could result in the complete loss of your investment.
+
+ 
+
+ 
+
+10
+
+ 
+
+Table of Contents
+
+ 
+
+We may not be able to gain any significant market acceptance.
+
+ 
+
+The Company s growth strategy is substantially dependent upon its ability to access the on-line consumer. However, our planned product(s) may not achieve significant acceptance. Such acceptance, if achieved, may not be sustained for any significant period of time. Failure of the Company to produce product and achieve market acceptance could have a material adverse effect on our business, financial conditions and results of our operations.
+
+ 
+
+RISKS ASSOCIATED WITH THIS OFFERING
+
+ 
+
+There is no minimum number of shares that must be sold and no assurance that the proceeds from the sale of shares will allow the Company to meet its goals. 
+
+ 
+
+We are selling our shares on a best efforts basis, and there is no minimum number of shares that must be sold by us in this Offering. Similarly, there are no minimum purchase requirements. We do not have an underwriter, and no party has made a firm commitment to buy any or all of our securities. We intend to sell the shares through our President and Chief Executive Officer, who will not be separately compensated for her efforts. Even if we only raise a nominal amount of money, we will not refund any funds to you. Any money we do receive will be immediately used by us for our business purposes. Upon completion of this Offering, we intend to utilize the net proceeds to finance our business operations. While we believe that the net proceeds from the sale of all shares in this Offering will enable us to meet our business plans and enable us to operate as other than a going concern, there can be no assurance that all these goals can be achieved. Moreover if the Company sells less than the 25% ($25,000) of this offering, the Company will not be able to implement it plan of operations (refer Use of Proceeds Page 15). If necessary, the Company s sole officer and director Jessica Foster has indicated that she will be willing to provide a maximum of $25,000, required to fund the offering expenses and maintain the reporting status, in the form of a non-secured loan for the next twelve months as the expenses are incurred if less than $25,000 in proceeds are obtained by the Company from the offering. However, there is no contract or written agreement in place with Ms. Foster other than as described herein, the Company has no other plans, arrangements or commitments to raise funds outside this offering. It is highly likely that if not all of the shares are sold there will be a need for additional financing in the future, without which our ability to operate as other than a going concern may be jeopardized. No assurance whatsoever can be given or is made that such additional financing, if and when needed, will be available or that it can be obtained on terms favorable to us. Accordingly, you may be investing in a Company that does not have adequate funds to conduct its operations. If that happens, you will suffer a loss of your investment.
+
+ 
+
+Our officers and directors may have a conflict of interest with the minority shareholders.
+
+ 
+
+Jessica Foster, our President and Chief Executive Officer and sole Director, beneficially owns 100% of our outstanding common stock. Assuming the sale of all 4,000,000 shares in this offering, Jessica Foster will own approximately 55.56% of all shares of common stock of the Company. The interest of Jessica Foster may not be, at all times, the same as that of our other shareholders. Jessica Foster is not simply a passive investor but is also an executive officer and director of the Company and her interests as an executive may, at times be averse to those of passive investors. Where those conflicts exist, our shareholders will be dependent upon Jessica Foster exercising, in a manner fair to all of our shareholders, her fiduciary duties as an officer or as a member of the Company s Board of Directors. Also, Jessica Foster has the ability to control the outcome of most corporate actions requiring shareholder approval, including the sale of all or substantially all of our assets, amendments to our Articles of Incorporation and the election of directors. This concentration of ownership may also have the effect of delaying, deferring or preventing a change of control of us, which may be disadvantageous to minority shareholders.
+
+ 
+
+We are an Emerging Growth Company and we cannot be certain if the reduced disclosure requirements applicable to Emerging Growth Company will make our common stock less attractive to investors.
+
+ 
+
+We are an emerging growth Company, as defined in the Jumpstart our Business Start-ups Act of 2012, and, pursuant to that Act, we have decided to opt out of certain exemptions from various reporting requirements that are applicable to other public companies, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We cannot predict if investors will find our common stock less attractive because we will rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile.
+
+ 
+
+Under the Jumpstart Our Business Start-ups Act, emerging growth companies can delay adopting new or revised accounting standards until such time as those standards apply to private companies. We have irrevocably elected not to avail ourselves to this exemption from new or revised accounting standards and, therefore, we will be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies. 
+
+ 
+
+ 
+
+11
+
+ 
+
+Table of Contents
+
+ 
+
+There has been no prior public market for our securities and the lack of such a market may make resale of the stock difficult.
+
+ 
+
+No prior public market has existed for our securities and we cannot assure any investor that a market will develop subsequent to this offering. An investor must be fully aware of the long-term nature of an investment in us. We intend to apply for quotation of our common stock on the OTCMKTS as soon as possible, which may be while this offering is still in process. However, we do not know if we will be successful in such application, how long such application will take, or, that if successful, that a market for the common stock will ever develop or continue on the OTCMKTS. If for any reason the common stock is not listed on the OTCMKTS or a public trading market does not otherwise develop, investors in the offering may have difficulty selling their common stock should they desire to do so. If we are not successful in our application for quotation on the OTCMKTS, we will apply to have its securities quoted by the Pink OTCMKTS Markets, Inc., real-time quotation service for over-the-counter equities.
+
+ 
+
+Our shares may not become eligible to be traded electronically which could result in brokerage firms being unwilling to trade them.
+
+ 
+
+Our shares of common stock may be eligible to be quoted on the OTCMKTS and OTCMKTS. Our shares are not eligible with Depository Trust Company (DTC) to trade electronically. Because we are not DTC eligible, our shares will not be electronically transferred between brokerage accounts, the practical effect of which means that our shares will not trade much, if at all, on the OTCMKTS or OTCMKTS. In order for our shares to trade on the OTCMKTS or OTCMKTS, our shares would need to be traded manually between broker dealers and their accounts, which is time consuming, costly and cumbersome. We cannot guaranty that our shares will ever become DTC eligible or, if in the event we apply for DTC eligibility, how long it will take to become eligible.
+
+ 
+
+We do not intend to pay dividends to our stockholders so investors will not receive any return on investment in us prior to selling their equity interest.
+
+ 
+
+We do not project paying dividends but anticipate that we will retain future earnings for funding our growth and development. Therefore, investors should not expect us to pay dividends in the foreseeable future. As a result, investors will not receive any return on their investment prior to selling their shares, and if and when a market for such shares develops. Furthermore, even if a market for our securities does develop, there is no guarantee that the market price for the shares would be equal to or more than the initial per share investment price paid by any investor. There is a possibility that the shares could lose all or a significant portion of their value from the initial price paid in this offering.
+
+ 
+
+Our stock will be a penny stock. Trading of our stock may be restricted by the SEC s penny stock regulations and FINRA s sales practice requirements, which may limit a stockholder s ability to buy and sell our stock.
+
+ 
+
+As the Company s shares may be trading under $5.00 per share is the offering becomes effective, the shares may be traded as a penny stock . The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks generally are equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system). Penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from those rules, to deliver a standardized risk disclosure document prepared by the SEC, which specifies information about penny stocks and the nature and significance of risks of the penny stock market. A broker-dealer must also provide the customer with bid and offer quotations for the penny stock, the compensation of the broker-dealer, and sales person in the transaction, and monthly account statements indicating the market value of each penny stock held in the customer s account. In addition, the penny stock rules require that, prior to a transaction in a penny stock not otherwise exempt from those rules; the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser s written agreement to the transaction. These disclosure requirements may have the effect of reducing the trading activity in the secondary market for stock that becomes subject to those penny stock rules. If a trading market for our common stock develops, our common stock will probably become subject to the penny stock.
+
+ 
+
+We are not registered on any market or public stock exchange. There is presently no demand for our common stock and to public market exists for the shares being offered in this prospectus. We plan to contact a market maker immediately following the completion of the offering and apply to have our shares of common stock quoted on the OTC Markets Group ( OTCMKTS ). The OTCMKTS is a regulated quotation service that displays real-time quotes, last sale prices and volume information in the over-the-counter securities. The OTCMKTS is not an issuer listing service, market or exchange. Although the OTCMKTS does not have any listing requirements per say, to be eligible for quotation on the OTCMKTS, issuers must remain correct in their filings with the SEC or applicable regulatory authority. Market makers are not permitted to begin quotation of a security whose issue does not meet the filing requirements. We cannot guarantee that we will be able to find a market maker who will submit a Form 15c-211 application for us to FINRA or that application, if submitted, will be accepted or approved and our stock listed and quoted for sale. As of the date of this filing, there have been no discussions or understandings between DERMA GLISTEN and anyone acting on our behalf, with any market maker regarding participation in a future trading market four our securities. If no market is ever developed for our common stock, it will be difficult for you to sell any shares you purchase in this offering. In such a case, you may find that you are unable to achieve any benefit from your investment or liquidate your shares without considerable delay, if at all. In addition, if we fail to have our common stock quoted on a public trading market, your common stock will not have a quantifiable value and it may be difficult, if not impossible, to ever resell your shares, resulting in an inability to realize any value from your investment.
+
+ 
+
+ 
+
+12
+
+ 
+
+Table of Contents
+
+ 
+
+Offering price has been arbitrarily set by Company.
+
+ 
+
+The offering price and other terms and conditions relative to the Company s shares have been arbitrarily determined by us and do not bear any relationship to assets, earnings, book value or any other objective criteria of value. Additionally, as the Company was formed on January 10, 2017 and has only a limited operating history and no earnings, the price of the offered shares is not based on its past earnings and no investment banker, appraiser or other independent third party has been consulted concerning the offering price for the shares or the fairness of the offering price used for the shares, as such our stockholders may not be able to receive a return on their investment when they sell their shares of common stock.
+
+ 
+
+Investing in the Company is highly speculative investment.
+
+ 
+
+A purchase of the offered shares is highly speculative and involves significant risks. The offered shares should not be purchased by any person who cannot afford the loss of their entire investment. The business objectives of the Company are also speculative, and it is possible that we could be unable to satisfy them. The Company s shareholders may be unable to realize a substantial return on their purchase of the offered shares, or any return whatsoever, and may lose their entire investment. For this reason, each prospective purchaser of the offered shares should read this prospectus and all of its exhibits carefully and consult with their attorney, business and/or investment advisor.
+
+ 
+
+Buyers will pay more for our common stock than the pro rata portion of the assets.
+
+ 
+
+The offering price and other terms and conditions regarding the Company s shares have been arbitrarily determined and to not bear any relationship to assets, earnings, book value or any other objective criteria of value. Additionally, no investment banker, appraiser or other independent third party has been consulted concerning the offering price for the shares or the fairness of the offering price used for the shares. Buyers of our shares pursuant to this offering will pay more for our common stock than the pro-rata portion of the assets are worth and as a result, investing in our Company may result in an immediate loss.
+
+ 
+
+The Company s management could issue additional shares.
+
+ 
+
+The Company has 200,000,000 authorized common shares, of which 5,000,000 are currently issued and outstanding and up to 9,000,000 will be issued and outstanding after this offering terminates. The Company s management could, without the consent of the existing shareholders, issue substantially more shares, causing a large dilution in the equity portion of the Company s current shareholders. Additionally, large share issuances would generally have a negative impact on the Company s share price. It is possible that, due to additional share issuance, you could lose a substantial amount, or all, or your investment.
+
+ 
+
+We do not have an escrow or trust account for investors subscriptions.
+
+ 
+
+Invested funds for this offering will not be placed in an escrow or trust account. Accordingly, if we file for bankruptcy protection, or a petition for involuntary bankruptcy is filed by creditors against us, your funds will become part of the bankruptcy estate and administered according to bankruptcy laws. As such, you will lose your investment and your funds will be used to pay creditors.
+
+ 
+
+Anti-takeover rules of certain provisions of the Nevada state law my hinder a potential takeover.
+
+ 
+
+The Nevada Business Corporation Law contains a provision governing Acquisition of Controlling Interest. This law provides generally that any person or entity that acquires 20% or more of the outstanding voting shares of a publicly-held Nevada corporation in the secondary public or private market may be denied voting rights with respect to the acquired shares, unless a majority of the disinterested stockholders of the corporation elects to restore such voting rights in whole or in part. The control share acquisition act provides that a person or entity acquires control shares whenever it acquires shares that, but for the operation of the control share acquisition act, would bring its voting power within any of the following three ranges: (1) 20 to 33 1/3%, (2) 33 1/3 to 50%, (3) more than 50%. A control share acquisition is generally defined as the direct or indirect acquisition of either ownership or voting power associated with issued and outstanding control shares. The stockholders or board of directors of a corporation may elect to exempt the stock of the corporation from the provisions of the control share acquisition act through adoption of a provision to that effect in the Articles of Incorporation or Bylaws of the corporation. Our Articles of Incorporation and Bylaws do not exempt our common stock from the control share acquisition act. The control share acquisition act is applicable only to shares of Issuing Corporations as defined by the act. An Issuing Corporation is a Nevada corporation, which (1) has 200 or more stockholders, with at least 100 of such stockholders being both stockholders of record and residents of Nevada; (2) does business in Nevada directly or through an affiliated corporation. At this time, we do not have 100 stockholders of record of Nevada. Therefore, the provisions of the control share acquisition act do not apply to acquisitions of our shares and will not until such time as these requirements have been met. At such time as they may apply to us, the provisions of the control share acquisitions act may discourage companies or persons interested in acquiring a significant interest in or control of DERMA GLISTEN, regardless of whether such acquisition may be in the interest of our stockholders.
+
+ 
+
+ 
+
+13
+
+ 
+
+Table of Contents
+
+ 
+
+Nevada law and our Articles of Incorporation may protect our director from certain types of lawsuits. 
+
+ 
+
+Nevada law provides that our officers and directors will not be liable to us or our stockholders for monetary damages for all but certain types of conduct as officers and directors. Our Bylaws permit us broad indemnification powers to all persons against all damages incurred in connection with our business to the fullest extent provided or allowed by law. The exculpation provisions may have the effect of preventing stockholders from recovering damages against our officers and directors caused by their negligence, poor judgment or other circumstances. The indemnification provisions may require us to use our limited assets to defend our officers and directors against claims, including claims arising out of their negligence, poor judgment or other circumstances.
+
+ 
+
+Failure to maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act would lead to loss of investor confidence in our reports of financial information. 
+
+ 
+
+Pursuant to proposals related to Section 404 of the Sarbanes-Oxley Act of 2002, after our Registration Statement is declared effective by the Securities and Exchange Commission, we intend to make a filing to which would result in the Company becoming a mandatory filer under the Securities Exchange Act of 1934, as amended. For subsequent reports, we will be required to furnish a report by our management on our internal control over financial reporting. If we cannot provide reliable financial reports or prevent fraud, then our business and operating results could be harmed, investors could lose confidence in our reported financial information, and the trading price of our stock could drop significantly.
+
+ 
+
+To maintain compliance with Section 404 of the Act, we intend to engage in a process to document and evaluate our internal control over financial reporting, which is both costly and challenging and requires management to dedicate scarce internal resources and to retain outside consultants.
+
+ 
+
+During the course of our testing, we may identify deficiencies which we may not be able to remediate in time for securities disclosure reporting deadlines. In addition, if we fail to maintain the adequacy of our internal controls, as such standards are modified, supplemented or amended from time to time; we may not be able to ensure that we can conclude on an ongoing basis that we have effective internal controls over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act. Moreover, effective internal controls, particularly those related to revenue recognition, are necessary for us to produce reliable financial reports and are important to helping prevent financial fraud.
+
+ 
+
+We do not anticipate paying dividends.
+
+ 
+
+We do not anticipate paying dividends on our common stock in the foreseeable future, but plan rather to retain earnings, if any for the operation, growth and expansion of our business. Because the Company does not anticipate paying cash dividends in the foreseeable future which may lower expected returns for investors, and as such our stockholders will not be able to receive a return on their investment unless they sell their shares of common stock.
+
+ 
+
+Risks Related to Investing in Our Company
+
+ 
+
+We lack an operating history.
+
+ 
+
+We were incorporated on January 10, 2017 and we have realized only limited revenues. We have very little operating history upon which an evaluation of our future success or failure can be made. Our ability to achieve and maintain profitability and positive cash flow is dependent upon the completion of this offering, our ability to attract customers and to generate revenues through our sales.
+
+ 
+
+We expect to incur losses in the future.
+
+ 
+
+Based upon current plans, we expect to incur operating losses in future periods because we will be incurring expenses and not generating revenues. We cannot guarantee that we will be successful in generating revenues in the future. Failure to generate revenues will cause us to go out of business.
+
+ 
+
+Our operating results may prove unpredictable.
+
+ 
+
+Our operating results are likely to fluctuate significantly in the future due to a variety of factors, many of which we have no control over. Factors that may cause our operating results to fluctuate significantly include: our ability to generate enough working capital from future equity sales; the level of commercial acceptance by the public of our products; fluctuations in the demands of our products; the amount and timing operating costs and capital expenditures relating to expansion of our business, operations, infrastructure and general economic conditions. If realized, any of these factors could have a material effect on our business, financial condition and operating results, which could result in the complete loss of your investment.
+
+ 
+
+ 
+
+14
+
+ 
+
+Table of Contents
+
+ 
+
+Please read this prospectus carefully. You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with different information. You should not assume that the information provided by the prospectus is accurate as of any date other than the date on the front of this prospectus.
+
+ 
+
+FORWARD-LOOKING STATEMENTS
+
+ 
+
+The information in this prospectus contains forward-looking statements. These forward-looking statements involve risks and uncertainties, including statements regarding our capital needs, business plans and expectations. Further any safe harbor protections implied or stated do not apply to any statements made in connection with the offer. Any statements contained herein that are not statements of historical facts may be deemed to be forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as may , will , should , expect , plan , intend , anticipate , believe , estimate , predict , potential or continue , the negative of such terms or other comparable terminology.
+
+ 
+
+USE OF PROCEEDS
+
+ 
+
+DERMA GLISTEN offering is being made on a self-underwritten basis: no minimum number of shares must be sold in order for the offering to proceed. The offering price per share is $0.025. The following table sets forth the uses of proceeds assuming the sale of 25%, 50%, 75% and 100%, respectively. If $25,000 is raised in this offering, the Company will operate on a limited basis, meeting only its obligations to file its reports with the Securities and Exchange Commission, and seek additional financing. However, the Company currently has no source of additional funding, will not commence seeking additional financing until this registration statement is effective, and we cannot provide investors with any assurance that we will be able to raise sufficient funds to proceed with any work or activities.
+
+ 
+
+Gross Proceeds From This Offering
+
+ 
+
+25% of
+
+Shares Sold ($25,000)
+
+ 
+
+ 
+
+50% of
+
+Shares Sold ($50,000)
+
+ 
+
+ 
+
+75% of
+
+Shares Sold ($75,000)
+
+ 
+
+ 
+
+100%
+
+of Shares Sold ($100,000)
+
+ 
+
+Less: Offering Expenses
+
+ 
+
+$
+-
+
+ 
+
+ 
+
+$
+-
+
+ 
+
+ 
+
+$
+-
+
+ 
+
+ 
+
+$
+-
+
+ 
+
+Legal & Accounting
+
+ 
+
+ 
+
+6,500
+
+ 
+
+ 
+
+ 
+
+6,500
+
+ 
+
+ 
+
+ 
+
+6,500
+
+ 
+
+ 
+
+ 
+
+6,500
+
+ 
+
+Printing
+
+ 
+
+ 
+
+500
+
+ 
+
+ 
+
+ 
+
+500
+
+ 
+
+ 
+
+ 
+
+500
+
+ 
+
+ 
+
+ 
+
+500
+
+ 
+
+Transfer Agent
+
+ 
+
+ 
+
+1,500
+
+ 
+
+ 
+
+ 
+
+1,500
+
+ 
+
+ 
+
+ 
+
+1,500
+
+ 
+
+ 
+
+ 
+
+1,500
+
+ 
+
+Registration fee
+
+ 
+
+ 
+
+12
+
+ 
+
+ 
+
+ 
+
+12
+
+ 
+
+ 
+
+ 
+
+12
+
+ 
+
+ 
+
+ 
+
+12
+
+ 
+
+TOTAL
+
+ 
+
+ 
+
+8,512
+
+ 
+
+ 
+
+ 
+
+8,512
+
+ 
+
+ 
+
+ 
+
+8,512
+
+ 
+
+ 
+
+ 
+
+8,512
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+Less: General Business Development
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+Initial inventory 
+
+ 
+
+ 
+
+5,000
+
+ 
+
+ 
+
+ 
+
+27,000
+
+ 
+
+ 
+
+ 
+
+40,000
+
+ 
+
+ 
+
+ 
+
+50,000
+
+ 
+
+Shipping and Duties 
+
+ 
+
+ 
+
+500
+
+ 
+
+ 
+
+ 
+
+1,000
+
+ 
+
+ 
+
+ 
+
+2,000
+
+ 
+
+ 
+
+ 
+
+3,000
+
+ 
+
+TOTAL
+
+ 
+
+ 
+
+9,000
+
+ 
+
+ 
+
+ 
+
+28,000
+
+ 
+
+ 
+
+ 
+
+42,000
+
+ 
+
+ 
+
+ 
+
+53,000
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+Less: Logo Design and Website
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+Logo development
+
+ 
+
+ 
+
+300
+
+ 
+
+ 
+
+ 
+
+500
+
+ 
+
+ 
+
+ 
+
+500
+
+ 
+
+ 
+
+ 
+
+500
+
+ 
+
+Website development 
+
+ 
+
+ 
+
+1,000
+
+ 
+
+ 
+
+ 
+
+2,000
+
+ 
+
+ 
+
+ 
+
+3,000
+
+ 
+
+ 
+
+ 
+
+4,000
+
+ 
+
+Website Support 
+
+ 
+
+ 
+
+2,000
+
+ 
+
+ 
+
+ 
+
+3,000
+
+ 
+
+ 
+
+ 
+
+4,000
+
+ 
+
+ 
+
+ 
+
+8,000
+
+ 
+
+TOTAL
+
+ 
+
+ 
+
+3,300
+
+ 
+
+ 
+
+ 
+
+5,500
+
+ 
+
+ 
+
+ 
+
+7,500
+
+ 
+
+ 
+
+ 
+
+12,500
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+Less: Sales & Marketing
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+Social media marketing
+
+ 
+
+ 
+
+1,000
+
+ 
+
+ 
+
+ 
+
+2,000
+
+ 
+
+ 
+
+ 
+
+6,000
+
+ 
+
+ 
+
+ 
+
+8,000
+
+ 
+
+Search Engine Optimization ( SEO )
+
+ 
+
+ 
+
+1,000
+
+ 
+
+ 
+
+ 
+
+2,000
+
+ 
+
+ 
+
+ 
+
+5,000
+
+ 
+
+ 
+
+ 
+
+7,000
+
+ 
+
+Google Ad Words
+
+ 
+
+ 
+
+1,000
+
+ 
+
+ 
+
+ 
+
+2,000
+
+ 
+
+ 
+
+ 
+
+4,000
+
+ 
+
+ 
+
+ 
+
+7,000
+
+ 
+
+TOTAL
+
+ 
+
+ 
+
+3,000
+
+ 
+
+ 
+
+ 
+
+6,000
+
+ 
+
+ 
+
+ 
+
+15,000
+
+ 
+
+ 
+
+ 
+
+22,000
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+Less: Administration Expenses
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+Office supplies
+
+ 
+
+ 
+
+938
+
+ 
+
+ 
+
+ 
+
+1,488
+
+ 
+
+ 
+
+ 
+
+1,488
+
+ 
+
+ 
+
+ 
+
+1,988
+
+ 
+
+Telephone/fax
+
+ 
+
+ 
+
+250
+
+ 
+
+ 
+
+ 
+
+500
+
+ 
+
+ 
+
+ 
+
+500
+
+ 
+
+ 
+
+ 
+
+1,000
+
+ 
+
+TOTAL
+
+ 
+
+ 
+
+1,188
+
+ 
+
+ 
+
+ 
+
+1,988
+
+ 
+
+ 
+
+ 
+
+1,988
+
+ 
+
+ 
+
+ 
+
+3,988
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+TOTALS
+
+ 
+
+ 
+
+25,000
+
+ 
+
+ 
+
+ 
+
+50,000
+
+ 
+
+ 
+
+ 
+
+75,000
+
+ 
+
+ 
+
+ 
+
+100,000
+
+ 
+
+NET PROCEEDS FROM OFFERING
+
+ 
+
+$
+16,488
+
+ 
+
+ 
+
+$
+41,488
+
+ 
+
+ 
+
+$
+66,488
+
+ 
+
+ 
+
+$
+91,488
+
+ 
+
+ 
+
+ 
+
+15
+
+ 
+
+Table of Contents
+
+ 
+
+DERMA GLISTEN will establish a separate bank account and all proceeds will be deposited into that account. In the event the Company sells less than the 25% ($25,000) of this offering, the Company will not be able to implement its plan of operations. If necessary, the Company s sole officer and director Jessica Foster has indicated that she will be willing to provide a maximum of $25,000, required to fund the offering expenses and maintain the reporting status, in the form of a non-secured loan for the next twelve months as the expenses are incurred if less than $25,000 in proceeds are obtained by the Company from the offering. However, there is no written or oral contract or agreement in place with Ms. Foster. If such a loan were to be made, the Company anticipates that it will be interest free with no fixed repayment date. Other than as described herein, the Company has no other plans, arrangements or commitments to raise funds outside this offering.
+
+ 
+
+DETERMINATION OF OFFERING PRICE
+
+ 
+
+The offering price of the shares has been determined arbitrarily by us. The price does not bear any relationship to our assets, book value, earnings, or other established criteria for valuing a privately held Company. In determining the number of shares to be offered and the offering price, we took into consideration our cash on hand and the amount of money we would need to begin to implement our business plan. Accordingly, the offering price should not be considered an indication of the actual value of the securities.
+
+ 
+
+DILUTION
+
+ 
+
+The price of the current offering is fixed at $0.025 per share which is the price purchasers of the shares must pay. This price is significantly different than the price paid by the Company s sole director and officer for common equity since the Company s inception on January 10, 2017. Jessica Foster, the Company s sole officer and director purchased 5,000,000 (five million) common shares at a price $0.001 per share a difference of $0.024 per share lower than the price in this offering, with $5,000 in net proceeds to the Company. The 5,000,000 shares of Jessica Foster valued at $5,000 are reflected as Capital contributions in the table entitled, Existing Stockholders if all of the Shares are sold. The purchase price for the shares in this offering, paid by purchasers of the shares, is reflected in the subsequent tables as, Capital contributions. Dilution represents the difference between the offering price and the net tangible book value per share immediately after completion of this offering. Net tangible book value is the amount that results from subtracting total liabilities and intangible assets from total assets. Dilution arises mainly as a result of our arbitrary determination of the offering price of the shares being offered. Dilution of the value of the shares you purchase is also a result of the lower book value of the shares held by our existing stockholders. The following table compares the differences of your investment in our shares with the investment of our existing stockholders.
+
+ 
+
+Existing Stockholders if all of the Shares are Sold
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+Price per share
+
+ 
+
+$
+0.025
+
+ 
+
+Post offering net tangible book value
+
+ 
+
+ $ 
+ 88,425 
+
+ 
+
+Potential gain to existing shareholders
+
+ 
+
+$
+100,000
+
+ 
+
+Net tangible book value per share after the offering 
+
+ 
+
+ $ 
+ 0.0098 
+
+ 
+
+Increase to present stockholders in net tangible book value per share after the offering
+
+ 
+
+ $ 
+ 0.0092 
+
+ 
+
+Capital contributions by purchasers of shares
+
+ 
+
+$
+100,000
+
+ 
+
+Capital contributions by existing stockholder (1)
+
+ 
+
+$
+5,000
+
+ 
+
+Number of shares outstanding before the offering
+
+ 
+
+$
+5,000,000
+
+ 
+
+Number of shares after the offering held by existing stockholder
+
+ 
+
+$
+5,000,000
+
+ 
+
+Existing stockholders percentage of ownership after offering
+
+ 
+
+ 
+
+55.56
+%
+
+ 
+
+Purchasers of Shares if all of the Shares are Sold
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+Price per share
+
+ 
+
+$
+0.025
+
+ 
+
+Post offering net tangible book value
+
+ 
+
+ $ 
+ 88,425 
+
+ 
+
+Increase in net tangible book value per share after the offering
+
+ 
+
+ $ 
+ 0.0104 
+
+ 
+
+Dilution per share
+
+ 
+
+ $ 
+ 0.0152 
+
+ 
+
+Capital contributions by purchasers of shares
+
+ 
+
+$
+100,000
+
+ 
+
+Capital contribution by existing stockholder
+
+ 
+
+$
+5,000
+
+ 
+
+Percentage capital contribution by purchasers of shares
+
+ 
+
+ 
+
+95
+%
+
+Percentage capital contribution by existing stockholder
+
+ 
+
+ 
+
+5
+%
+
+Anticipated net offering proceeds
+
+ 
+
+ $ 
+ 91,488 
+
+ 
+
+Number of shares after the offering held by public investors
+
+ 
+
+ 
+
+4,000,000
+
+ 
+
+Total shares issued and outstanding
+
+ 
+
+ 
+
+9,000,000
+
+ 
+
+Purchasers of shares percentage of ownership after offering
+
+ 
+
+ 
+
+44.44
+%
+
+Existing stockholders percentage of ownership after offering
+
+ 
+
+ 
+
+55.56
+%
+
+ 
+
+ 
+
+16
+
+ 
+
+Table of Contents
+
+ 
+
+ 
+
+Purchasers of Shares in this Offering if 75% of Shares Sold
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+Price per share
+
+ 
+
+$
+0.025
+
+ 
+
+Post offering net tangible book value
+
+ 
+
+ $ 
+ 63,425 
+
+ 
+
+Post offering net tangible book value per share
+
+ 
+
+ $ 
+ 0.0079 
+
+ 
+
+Pre-offering net tangible book value per share
+
+ 
+
+ $ 
+ 0.0006 
+
+ 
+
+Increase in net tangible book value per share after offering
+
+ 
+
+ $ 
+ 0.0073 
+
+ 
+
+Dilution per share
+
+ 
+
+ $ 
+ 0.0171 
+
+ 
+
+Capital contributions by purchasers shares
+
+ 
+
+$
+75,000
+
+ 
+
+Capital contributions by existing shareholders
+
+ 
+
+$
+5,000
+
+ 
+
+Percentage of capital contributions by purchasers of shares
+
+ 
+
+ 
+
+94.0
+%
+
+Percentage of capital contribution by existing shareholders
+
+ 
+
+ 
+
+6.0
+%
+
+Anticipated net offering proceeds
+
+ 
+
+ $ 
+ 66,488 
+
+ 
+
+Number of shares after offering held by public investors
+
+ 
+
+ 
+
+3,000,000
+
+ 
+
+Total shares issued and outstanding
+
+ 
+
+ 
+
+8,000,000
+
+ 
+
+Purchasers of shares percentage of ownership after offering
+
+ 
+
+ 
+
+38.0
+%
+
+Existing stockholders percentage of ownership after offering
+
+ 
+
+ 
+
+63.0
+%
+
+ 
+
+Purchasers of Shares in this Offering if 50% of Shares Sold
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+Price per share
+
+ 
+
+$
+0.025
+
+ 
+
+Post offering net tangible book value
+
+ 
+
+ $ 
+ 38,425 
+
+ 
+
+Post offering net tangible book value per share
+
+ 
+
+ $ 
+ 0.0055 
+
+ 
+
+Pre-offering net tangible book value per share
+
+ 
+
+ $ 
+ 0.0006 
+
+ 
+
+Increase in net tangible book value per share after offering
+
+ 
+
+ $ 
+ 0.0049 
+
+ 
+
+Dilution per share to new investors
+
+ 
+
+ $ 
+ 0.0195 
+
+ 
+
+Capital contributions by purchasers of shares
+
+ 
+
+$
+50,000
+
+ 
+
+Capital contribution by existing shareholders
+
+ 
+
+$
+5,000
+
+ 
+
+Percentage capital contributions by purchasers of shares
+
+ 
+
+ 
+
+91.0
+%
+
+Percentage capital contributions by existing shareholders
+
+ 
+
+ 
+
+9.0
+%
+
+Anticipated net offering proceeds
+
+ 
+
+$
+42,488
+
+ 
+
+Number of shares after offering held by public investors
+
+ 
+
+ 
+
+2,000,000
+
+ 
+
+Total issued and outstanding
+
+ 
+
+ 
+
+7,000,000
+
+ 
+
+Purchasers of shares percentage of ownership after offering
+
+ 
+
+ 
+
+28.57
+%
+
+Existing stockholders percentage of ownership after offering
+
+ 
+
+ 
+
+71.43
+%
+
+ 
+
+Purchasers of Shares in this Offering in 25% of Shares Sold
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+Price per share
+
+ 
+
+$
+0.025
+
+ 
+
+Post offering net tangible book value
+
+ 
+
+ $ 
+ 13,425 
+
+ 
+
+Post offering net tangible book value per share
+
+ 
+
+ $ 
+ 0.0022 
+
+ 
+
+Pre-offering net tangible book value per share
+
+ 
+
+ $ 
+ 0.0006 
+
+ 
+
+Increase in net tangible book value per share after offering
+
+ 
+
+ $ 
+ 0.0228 
+
+ 
+
+Dilution per share to new investors
+
+ 
+
+$
+0.0220
+
+ 
+
+Capital contributions by purchasers of shares
+
+ 
+
+$
+25,000
+
+ 
+
+Capital contribution by existing shareholders
+
+ 
+
+$
+5,000
+
+ 
+
+Percentage capital contributions by purchasers of shares
+
+ 
+
+ 
+
+83.0
+%
+
+Percentage capital contributions by existing shareholders
+
+ 
+
+ 
+
+17.0
+%
+
+Anticipated net offering proceeds
+
+ 
+
+ $ 
+ 16,488 
+
+ 
+
+Number of shares after offering held by public investors
+
+ 
+
+ 
+
+1,000,000
+
+ 
+
+Total shares issued and outstanding
+
+ 
+
+ 
+
+6,000,000
+
+ 
+
+Purchasers of shares percentage of ownership after offering
+
+ 
+
+ 
+
+16.67
+%
+
+Existing shareholders percentage of ownership after offering
+
+ 
+
+ 
+
+83.33
+%
+
+________________
+
+(1) Jessica Foster, our sole shareholder (and President and Chief Executive Officer) acquired 5,000,000 shares of common stock at $0.001 per share for a total cost of $5,000.
+
+ 
+
+ 
+
+17
+
+ 
+
+Table of Contents
+
+ 
+
+PLAN OF DISTRIBUTION
+
+ 
+
+DERMA GLISTEN has 5,000,000 common shares of common stock issued and outstanding as of the date of this prospectus. The Company is registering an additional 4,000,000 shares of its common stock for sale at the price of $0.025 per share. There is no arrangement to address the possible effect of the offering on the price of the stock.
+
+ 
+
+ The Company President and Director, Jessica Foster, intends to contact personally mostly friends, family and some business associates to solicit sales of common shares . She does not intend to use any marketing materials other than the Company s S-1 Registration Statement and the provision of some product samples . 
+
+ 
+
+In connection with the Company s selling efforts in the offering, Jessica Foster will not register as a broker-dealer pursuant to Section 15 of the Exchange Act, but rather will rely upon the safe harbor provisions of SEC Rule 3a4-1, promulgated under the Securities Exchange Act of 1943 as amended (the Exchange Act ). In general Rule 3a4-1 provides an exemption from the broker-dealer registration requirements of the Exchange Act for persons associated with an issuer that participated in an offering of the issuer s securities. Jessica Foster is not subject to any statutory disqualification, as that term is defined in Section 3(a) (39) of the Exchange Act. Jessica Foster will not be compensated in connection with her participation in the offering by the payment of commissions or other remuneration based either directly or indirectly on transactions in our securities. Jessica Foster is not, nor has she been within the past 12 months, a broker or dealer, and she is not, nor has she been within the past 12 month), an associated person of a broker or dealer. At the end of the offering, Jessica Foster will continue to primarily perform substantial duties for the Company or on its behalf otherwise than in connection with transactions in securities. Jessica Foster will not participate in selling an offering of securities for any issuer more than once every 12 months other than in reliance on Exchange Act Rule 3a4-1(a)(4)(i) or (iii).
+
+ 
+
+DERMA GLISTEN will receive all proceeds from the sale of the 4,000,000 shares being offered. The price per share is fixed at $0.025 for the duration of this offering. Although our common stock is not listed on a public exchange or quoted or quoted over-the-counter, we intend to seek to have our shares of common stock quoted on the Over-the Counter Bulletin Board. In order to be quoted on the OTC Bulletin Board, a market maker must file an application on our behalf in order to make a market for our common stock. There can be no assurance that a market maker will agree to file the necessary documents with FINRA, nor can there be any assurance that such an application for quotation will be approved.
+
+ 
+
+The Company s shares may be sold to purchasers from time to time directly by and subject to the discretion of the Company. Further, the Company will not offer its shares for sale through underwriters, dealers, agents or anyone who may receive compensation in the form of underwriting discounts, concessions or commissions from the Company and/or the purchasers of the shares for whom they may act as agents. The shares of common stock sold by the Company may be occasionally sold in one or more transactions; all shares sold under this prospectus will be sold at a fixed price of $0.025 per share.
+
+ 
+
+In order to comply with the applicable securities law of certain states, the securities will be offered or sold in those only if they have been registered or qualified for sale; an exemption from such registration or if qualification require is available and with which DERMA GLISTEN has complied.
+
+ 
+
+In addition, and without limited the foregoing, the Company will be subject to applicable provisions, rules and regulations under the Exchange Act with regard to security transactions during the period of time when this Registration Statement is effective. DERMA GLISTEN will pay all expenses incidental to the registration of the shares (including registration pursuant to the securities laws of certain states).
+
+ 
+
+REGULATION M
+
+ 
+
+Our officer and director, Jessica Foster, who will offer and sell the shares, offered hereby, is aware that she is required to comply with the provisions of Regulation M promulgated under the Exchange Act. With certain exceptions, Regulation M precludes the officers and directors, sales agents, any broker-dealer or other person who participates in the distribution of shares in this offering from bidding for or purchasing or attempting to induce any person to bid for or purchase any security which is the subject of the distribution until the entire distribution is complete.
+
+ 
+
+ 
+
+18
+
+ 
+
+Table of Contents
+
+ 
+
+DESCRIPTION OF SECURITIES TO BE REGISTERED
+
+ 
+
+General
+
+ 
+
+Our authorized capital stock consists of 200,000,000 shares of common stock at a par value of $0.001 per share. As of November 30, 2017, there were 5,000,000 shares of our common stock issued and outstanding that was held by one registered stockholder of record.
+
+ 
+
+Common Stock
+
+ 
+
+Each share of common stock is entitled to one vote with respect to the election of any director or any other matter upon which shareholders are required or permitted to vote. Holders of our common stock representing 50.1% of our capital stock issued and outstanding and entitled to vote, represented in person or by proxy, are necessary to constitute a quorum at any meeting of our stockholders, except as otherwise provided by statute. A vote by the holders of a majority of our outstanding shares is required to effectuate certain fundamental corporate changes such as liquidation, merger or an amendment to our Articles of Incorporation.
+
+ 
+
+Holders of common stock are entitled to share in all dividends that the Board of Directors, in its discretion, declares from available funds. The payment of dividends is at the discretion of our Board of Directors. We have never declared or paid any cash dividends on our common stock. We currently intend to retain future earnings, if any, to finance the expansion of our business. As a result, we do not anticipate paying any cash dividends in the liquidation, dissolution or winding up, each outstanding share entitles its holder to participate pro rata in all assets that remain after payment of liabilities.
+
+ 
+
+Holders of our common stock have no pre-emptive rights, no conversion rights and there are no redemption provisions applicable to our common stock.
+
+ 
+
+Our By-laws provide that at all meetings of the stockholders for the election of directors, a plurality of the votes cast shall be sufficient to elect. On all other matters except as otherwise required by Nevada law or the Articles of Incorporation, a majority of the votes cast at a meeting of the stockholders shall be necessary to authorize any corporate action to be taken by vote of the stockholders. A plurality means the excess of the votes cast for one candidate over any other. When there are more than two competitors for the same office, the person who receives the greatest number of votes has a plurality.
+
+ 
+
+Please refer to the Company s Articles of Incorporation, Bylaws and the applicable statues of the State of Nevada for a more complete description of the rights and liabilities of holders of the Company s securities.
+
+ 
+
+NEVADA ANTI-TAKEOVER LAWS
+
+ 
+
+The Nevada Business Corporation Law contains a provision governing Acquisition of Controlling Interest. This law provides generally that any person or entity that acquires 20% or more of the outstanding voting shares of a publicly-held Nevada corporation in the secondary public or private market may be denied voting rights with respect to the acquired shares, unless a majority of the disinterested stockholders of the corporation elects to restore such voting rights in whole or in part. The control share acquisition act provides that a person or entity acquires control shares whenever it acquires shares that, but for the operation of the control share acquisition act, would bring its voting power within any of the following three ranges: (1) 20 to 33 1/3%, (2) 33 1/3 to 50%, (3) more than 50%. A control share acquisition is generally defined as the direct or indirect acquisition of either ownership or voting power associated with issued and outstanding control shares. The stockholders or board of directors of a corporation may elect to exempt the stock of the corporation from the provisions of the control share acquisition act through adoption of a provision to that effect in the Articles of Incorporation or By-laws of the corporation. Our Articles of Incorporation and By-laws do not exempt our common stock from the control share acquisition act. The control share acquisition act is applicable only to shares of Issuing Corporations as defined by the act. An Issuing Corporation is a Nevada corporation, which (1) has 200 or more stockholders, with at least 100 of such stockholders being both stockholders of record and residents of Nevada; (2) does business in Nevada directly or through an affiliated corporation. At this time, we do not have 100 stockholders of record of Nevada. Therefore, the provisions of the control share acquisition act do not apply to acquisitions of our shares and will not until such time as these requirements have been met. At such time as they may apply to us, the provisions of the control share acquisitions act may discourage companies or persons interested in acquiring a significant interest in or control of DERMA GLISTEN, regardless of whether such acquisition may be in the interest of our stockholders.
+
+ 
+
+STOCK TRANSFER AGENT
+
+ 
+
+We have not engaged the services of a transfer agent at this time. However, within the next twelve months we anticipate doing so. Until such time a transfer agent is retained, DERMA GLISTEN will act as its own transfer agent.
+
+ 
+
+ 
+
+19
+
+ 
+
+Table of Contents
+
+ 
+
+RULE 144 AND REGISTRATION AGREEMENTS
+
+ 
+
+All 5,000,000 shares of our issued and outstanding shares of our common stock are restricted securities under Rule 144, promulgated pursuant to the Securities Act of 1933, as amended, but none of those 5,000,000 shares can be resold under Rule 144 or are subject to any registration agreement.
+
+ 
+
+Because our Company is a shell company, there are restrictions imposed upon the transferability of unregistered shares.
+
+ 
+
+DERMA GLISTEN is a shell company as defined in Rule 405, because it is a company with minimal operations and it has assets consisting solely of cash and cash equivalents. Accordingly, there will be illiquidity of any future trading market until the company is no longer considered a shell company, as well as restrictions imposed upon the transferability of unregistered shared as outlined in Rule 144(i).
+
+ 
+
+INTERESTS OF NAMED EXPERTS AND COUNSEL
+
+ 
+
+No expert or counsel named in this prospectus as having prepared or certified any part of this prospectus or having given an opinion upon the validity of the securities being registered or upon other legal matters in connection with the registration or offering of the common stock offered hereby was employed on a contingency basis, or had, or is to receive, in connection with such offering, a substantial interest, direct or indirect, in our Company, nor was any such person connected with our Company as a promoter, managing or principal underwriter, voting trustee, director, officer, or employee.
+
+ 
+
+Experts
+
+ 
+
+Allen C. Tucci, Esq. 1650 Market Street, One Liberty Place, Suite 1800, Philadelphia, PA 19103-7395 has rendered an opinion with respect to the validity of the shares of common stock covered by this prospectus.
+
+ 
+
+The financial statements included in this registration statement have been audited by Michael Gillespie & Associates, PLLC, A PCAOB Registered Firm, 10544 Alton Ave., Seattle, WA 98125, to the extent and for the periods set forth in their report appearing elsewhere herein and in the registration statement. The financial statements are included in reliance on such report given upon the authority of said firm as experts in auditing and accounting.
+
+ 
+
+DESCRIPTION OF BUSINESS
+
+ 
+
+Organization
+
+ 
+
+DERMAGLISTEN was incorporated on January 10, 2017 under the laws of the State of Nevada. Ms. Jessica Foster has served as President, Chief Executive Officer and Secretary of our Company from January 10, 2017 to the current date. No person other than Jessica Foster has acted as a promoter of DERMA GLISTEN, since our inception. There are no agreements with us pursuant to which Jessica Foster is to receive from us or provide to us anything of value.
+
+ 
+
+General
+
+ 
+
+DERMA GLISTEN is a shell Company as defined in Rule 405, because it is a Company with nominal operations and it has assets consisting primarily of cash and cash equivalents. Our independent registered public accountant has issued an audit opinion which includes statement expressing substantial doubt as to our ability to continue as a going concern. Accordingly, there may be illiquidity of any future trading market until the Company is no longer considered a shell Company.
+
+ 
+
+ The Company s offers its customers facial skin care products. The Company s target market are consumers who are looking for quality skin care products at a reasonable price. We intend to deploy current electronic marketing activities such as Search Engine Optimizations ( SEO ), internet online and social media advertising 
+
+ 
+
+From the date of the Company s inception on January 10, 2017 to November 30, 2017, we have started our plan of operation. The Company has secured its web domain www.dermaglisten.com, designed its product logo and placed its initial product order. The Company, as of the filing of this offering, has built its website and has hired a fulfillment company to warehouse and ship the Company s products. Th is agree ment is found in Exhibit 10.1. 
+
+ 
+
+By seeking out the best in natural skin care products and staying at the medium end of the pricing spectrum DERMA GLISTEN hopes that consumers will see the perceived value in our product line. Skin care products are highly competitive but the company feels its marketing approach suggesting a skin care regime backed up with its product line will help differentiate the company. Customers will be encouraged to buy the Skin Care Kit which will include all of our products. They will be encouraged to Wash with the scrubber, Exfoliate, Hydrate and then Restore. We expect that this skin care regime will have positive results in a short time. 
+
+ 
+
+ 
+
+20
+
+ 
+
+Table of Contents
+
+ 
+
+ The company currently purchases its pro ducts from a Canadian based supplier and formulator. The time between ordering product complete with our graphics and packaging and receipt is between two and three weeks . The Company keeps inventory consisting of several hundred units of each product w a rehoused and r eady for shipping. As sales and distribution grow, the Company intends to buy its beauty products in bulk and do its own packaging to reduce costs. The Company intends to buy its bulk formulations from a third party supplier. Some of the largest and best-known cosmetics companies do not manufacture their own products but are essentially marketing companies. DERMA GLISTEN intends to be a marketing company and be involved in the manufacturing of its product. 
+
+ 
+
+There is the likelihood that our Company may never be able to market its skin care products and be able to successfully complete its plan of operation and develop and implement the Company s on-line retail web-site. If our Company is not capable of building a market for its proposed product, all funds that we spend on development will be lost.
+
+ 
+
+Products
+
+ 
+
+DERMAGLISTEN offers 5 products.
+
+ 
+
+Wash $25.00 Infused with ultra-calming organic chamomile. Red clover and elderflower extracts deeply penetrate to clean and shrink pores.
+
+ 
+
+Luxurious soap-free lather pampers the face while soothing, softening, and lightly hydrating the skin. 
+
+ 
+
+ 
+
+ 
+Leaves skin clean, fresh and balanced and never leaves behind residue.
+
+ 
+
+ 
+A soothing formula that penetrates deep into and shrink skin pores without over-drying
+
+ 
+
+ 
+Calming extracts keep skin plump and hydrated for a healthy and youthful complexion
+
+ 
+
+ 
+Fragrance free, soap free and pH-balanced for all skin types
+
+ 
+
+Exfoliate $45.00 An infusion of fresh organic mint, peppermint, and eucalyptus extracts soothes the skin while aloe and apricot fruit extracts nourish the skin and clean the pores.
+
+ 
+
+Gentle micro pearls of rice polish away dead skin, leaving behind a more youthful and luminous complexion after only one use.
+
+ 
+
+ 
+
+ 
+Promotes cell turnover and provides a fresh canvas which increases the effectiveness of your skin care routine
+
+ 
+
+ 
+Great to use the day before a special event so your makeup application looks its very best on your skin type
+
+ 
+
+ 
+Packed with soothing ingredients and antioxidants that help nurture the skin
+
+ 
+
+ 
+Repairs irritated skin caused by use of harsh chemical skin care products.
+
+ 
+
+Hydrate $40.00 Our Hydrate is a light yet intensely nourishing day cream packed with juicy mango, gentle shea butter, our 5-essential oil blend and the intensely hydrating powerhouse hyaluronic acid!
+
+ 
+
+Quickly eases fine lines and revitalizes as it rehydrates the skin, creating an instant plumping effect so your skin is supple and fresh in no time.
+
+ 
+
+ 
+
+ 
+Oil-free, intensely moisturizing, silky & emollient face cream
+
+ 
+
+ 
+Lightweight but potent
+
+ 
+
+ 
+Improves skin s radiance and clarity
+
+ 
+
+ 
+Erases fine lines and helps repair the effects of aging
+
+ 
+
+ 
+Perfect for normal to dry skin
+
+ 
+
+Restore $40.00 Our Restore is a velvety, emollient cream that provides more oils without a greasy feel. 
+
+ 
+
+Contains Aloe Vera Gel, Jojoba, Avocado and Grape Seed Oils, 4% African Shea Butter, Vegetable Glycerin and Vitamin E. Extremely mild and over 94% natural. Ideal for sensitive skin. 
+
+ 
+
+ 
+
+21
+
+ 
+
+Table of Contents
+
+ 
+
+Facial Scrubber $29.00 The scrubber is battery operate and comes with three different brushes. One brush for deep cleaning one brush for derma abrasion and one brush to polish skin
+
+ 
+
+ 
+
+ 
+
+ The Company intends to offer the facial scrubber in a cost saving bundle that includes all these products . 
+
+ 
+
+Market Analysis 
+
+ 
+
+The skin care markets and especially facial products are dominated by the large makeup companies and companies that specialize in Acne like ProActive. ProActive is a leader in facial skin care with annual sales (according to Internet research) of over 800 million dollars. The size of the global market for skin care is estimated to be over 121 billion dollars and growing a rate of about 5%. The Company feels with its multi-faceted approach to facial skin care backed up with great products will enable it to penetrate this marketplace.
+
+ 
+
+Competition 
+
+ 
+
+There is an exhausting list of large billion-dollar competitors in our marketplace, but the Company feels there are only a handful that specifically target facial care and facial cleaning. While many if not all makeup companies offer skin care products they do not concentrate or focus on these products. With a focus on skin care we would consider companies like ProActive, Sephora, Bare Essentials and Neutrogena to companies in our space. As we are a startup company and the competition is well established large corporations, the Company does not feel it is yet a substantial competitor to these organizations.
+
+ 
+
+Competitive Edge
+
+ 
+
+DERMA GLISTEN feels it has several competitive advantages that will help the Company in breaking into this well-established market. All our products are botanical based, gentle, uncomplicated, contain no harsh chemicals and are extremely effective. 
+
+ 
+
+Online Marketing Strategy
+
+ 
+
+Our online marketing strategy will rely primarily on our website to provide product information and answer the questions customers will have about our products. The following strategies are being used:
+
+ 
+
+We focus on natural skin care products and visually entice our potential customers into purchasing our products. A web site with pictures of flowers and fruits will make the products look so desirable one may be tempted to eat them.
+
+ 
+
+The Company will deploy industry standard online marketing techniques using traditional Internet marketing along with social media. Traditional Internet marketing would include SEO Search Engine Optimization to help customer s find our site, the company plans to also purchase Google search words that will help place our site at the top of the search engine under certain target word searches.
+
+ 
+
+The company will also attempt to hire influencers that have large followings in social media; these influences can be from a wide range of industries and or activities. Many influencers have millions of followers that read their Tweets, Instagram, Blogs etc.
+
+ 
+
+Traditional Marketing
+
+ 
+
+The Company intends to reach out to beauty writers in magazines and more traditional media who may write about what we perceive to be a desirable beauty product. The Company does not currently envision its products to be sold in bricks and mortar retail outlets, nor does it see itself participating in any major skin care shows. The Company does intend to reach out to the celebrity market to try and get a high-profile person to use our product. Obviously, we would offer to give the celebrity the product or if we could we may negotiate an equity position for a celebrity endorsement. 
+
+ 
+
+Research and Development Expenditures
+
+ 
+
+We have not incurred any research or development expenditures since our incorporation.
+
+ 
+
+ 
+
+22
+
+ 
+
+Table of Contents
+
+ 
+
+Patent and Trademarks
+
+ 
+
+We do not own, either legally or beneficially, any patent or trademarks.
+
+ 
+
+Bankruptcy or Similar Proceedings
+
+ 
+
+There has been no bankruptcy, receivership or similar proceedings.
+
+ 
+
+Compliance with Government Regulations
+
+ 
+
+We are unaware of and do not anticipate having to expend significant resources to comply with any governmental regulations of importing goods. In general, the development and operations of our business is not subject to special regulatory and/or supervisory requirements.
+
+ 
+
+LEGAL PROCEEDINGS
+
+ 
+
+We are not a party to any material legal proceedings nor are we aware of any legal proceedings pending or threatened against us.
+
+ 
+
+Facilities 
+
+ 
+
+We currently are supplied office space free of rent from our sole Director and President and Chief Executive Officer, Jessica Foster, and do not own or rent any physical property, and do not own or rent any real property. Our current business address is Suite 328 14260 W. Newberry Rd. Newberry Fl. 32669-2730
+
+ 
+
+Our agent for service in the USA is State Agent & Transfer Syndicate, Inc., 112 North Curry Street, Carson City, Nevada, 89703. Their telephone number is (775) 882 1013
+
+ 
+
+Management believes that current arrangement is sufficient for its needs at this time. The Company intends to lease its own offices and distribution facilities at such time as it has sufficient financing to do so. Management believes the current premises are sufficient for its needs at this time.
+
+ 
+
+Employees and Employment Agreements
+
+ 
+
+We have no employees as of the date of this prospectus. We have no employment or other agreement with Jessica Foster our President and Chief Executive Officer or any other person. Jessica Foster currently devotes approximately eight to twelve per week to Company matters and after receiving funding, she plans to devote as much time as the Board of Directors determines is necessary to manage the affairs of the Company. We anticipate we will conduct our business largely through consultants.
+
+ 
+
+Available Information
+
+ 
+
+We have not previously been required to comply with the reporting requirements of the Securities Exchange Act. We have filed with the SEC a registration statement on Form S-1 to register the securities offered by this prospectus. For future information about us and the securities offered under this prospectus, you may refer to the registration statement and to the exhibits filed as part of the registration statement. In addition, after the effective date of this prospectus, we will be required to file annual, quarterly and current reports, or other information with the SEC as proved by the Securities Exchange Act. You may read and copy any reports, statements or other information we file at the SEC s public reference facility maintained by the SEC at 100F Street, N.E., Washington, D.C. 20549. You can request copies of these documents upon payment of a duplicating fee, by writing the SEC. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the public reference. Our SEC filings are also available to the public through the SEC Internet site at www.sec.gov.
+
+ 
+
+FINANCIAL STATEMENTS
+
+ 
+
+The financial statements of DERMA GLISTEN for the fiscal year ended May 31, 2017 and related notes, included in this prospectus have been audited by Michael Gillespie & Associates, PLLC, A PCAOB Registered Firm, 10544, Alton Ave, NE, Seattle, WA 98125 and have been so included in reliance upon the opinion of such accountants given upon their authority as an expert in auditing and accounting.
+
+ 
+
+ 
+
+23
+
+ 
+
+Table of Contents
+
+ 
+
+Financial Statements 
+
+ 
+
+DERMA GLISTEN, INC.
+
+FINANCIAL STATEMENTS
+
+ 
+
+May 31, 2017
+
+ 
+
+REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
+
+ 
+
+ F-2
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+BALANCE SHEET
+
+ 
+
+ F-3
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+STATEMENT OF OPERATIONS
+
+ 
+
+ F-4
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+STATEMENT OF STOCKHOLDERS EQUITY
+
+ 
+
+ F-5
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+STATEMENT OF CASH FLOWS
+
+ 
+
+ F-6
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+NOTES TO FINANCIAL STATEMENTS
+
+ 
+
+ F-7
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+F-1
+
+ 
+
+Table of Contents
+
+ 
+
+MICHAEL GILLESPIE & ASSOCIATES, PLLC
+
+CERTIFIED PUBLIC ACCOUNTANTS
+
+10544 ALTON AVE NE
+
+SEATTLE, WA 98125
+
+206.353.5736
+
+ 
+
+REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
+
+ 
+
+To the Board of Directors
+
+Derma Glisten, Inc. 
+
+ 
+
+Opinion on the Financial Statements
+
+We have audited the accompanying balance sheets of Derma Glisten, Inc. as of May 31, 2017 and the related statements of operations, changes in stockholder s equity and cash flows for the period from January 10, 2017 (inception) through May 31, 2017, and the related notes (collectively referred to as financial statements ). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of May 31, 2017 and the results of its operations and its cash flows for the period from January 10, 2017 (inception) through May 31, 2017, in conformity with accounting principles generally accepted in the United States of America.
+
+ 
+
+Basis for Opinion
+
+These financial statements are the responsibility of the Company s management. Our responsibility is to express an opinion on the Company s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
+
+ 
+
+We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company s internal control over financial reporting. Accordingly, we express no such opinion.
+
+ 
+
+Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provide a reasonable basis for our opinion.
+
+ 
+
+The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note #1 to the financial statements, although the Company has limited operations it has yet to attain profitability. This raises substantial doubt about its ability to continue as a going concern. Management s plan in regard to these matters is also described in Note #1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
+
+ 
+
+/S/ MICHAEL GILLESPIE & ASSOCIATES, PLLC
+
+We have served as the Company s auditor since 2017.
+
+ 
+
+Seattle, Washington
+
+January 3, 2018
+
+ 
+
+ 
+
+F-2
+
+ 
+
+Table of Contents
+
+ 
+
+DERMA GLISTEN, INC
+
+ 
+
+BALANCE SHEET
+
+ 
+
+ 
+
+ 
+
+May 31,
+ 2017 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ASSETS
+
+ 
+
+ 
+
+ 
+
+ 
+
+CURRENT ASSETS
+
+ 
+
+ 
+
+ 
+
+Cash 
+
+ 
+
+ 
+
+1,103
+
+ 
+
+Cosmetics Inventory Deposit (Note 6)
+
+ 
+
+ 
+
+3,658
+
+ 
+
+TOTAL CURRENT ASSETS
+
+ 
+
+$
+4,761
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+LIABILITIES AND STOCKHOLDERS EQUITY
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+CURRENT LIABILITIES
+
+ 
+
+ 
+
+ 
+
+ 
+
+Due to related party
+
+ 
+
+ 
+
+1,470
+
+ 
+
+TOTAL CURRENT LIABILITIES
+
+ 
+
+$
+1,470
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+STOCKHOLDERS EQUITY 
+
+ 
+
+ 
+
+ 
+
+ 
+
+Capital stock (Note 3)
+
+ 
+
+ 
+
+ 
+
+ 
+
+Authorized 200,000,000 shares of common stock, $0.001 par value, 
+
+ 
+
+ 
+
+ 
+
+ 
+
+Issued and outstanding 5,000,000 shares of common stock 
+
+ 
+
+ 
+
+5,000
+
+ 
+
+Accumulated deficit
+
+ 
+
+ 
+
+(1,709
+)
+
+TOTAL STOCKHOLDER EQUITY
+
+ 
+
+$
+3,291
+
+ 
+
+TOTAL LIABILITIES AND STOCKHOLDER S EQUITY
+
+ 
+
+$
+4,761
+
+ 
+
+ 
+
+The accompanying notes are an integral part of these financial statements
+
+ 
+
+ 
+
+F-3
+
+ 
+
+Table of Contents
+
+ 
+
+DERMA GLISTEN, INC
+
+ 
+
+STATEMENT OF OPERATIONS
+
+ 
+
+ 
+
+ 
+
+Period from
+
+January 10,
+
+2017 (date of inception)
+
+to May 31,
+
+2017
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+EXPENSES
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+Filing Fees
+
+ 
+
+ 
+
+(1,470
+)
+
+Office and general
+
+ 
+
+ 
+
+(79
+)
+
+Advertising and Promotion 
+
+ 
+
+ 
+
+(160
+)
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+NET LOSS
+
+ 
+
+$
+(1,709
+)
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+BASIC NET LOSS PER SHARE
+
+ 
+
+$
+0.00
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
+
+ 
+
+ 
+
+1,958,333
+
+ 
+
+ 
+
+The accompanying notes are an integral part of these financial statements
+
+ 
+
+ 
+
+F-4
+
+ 
+
+Table of Contents
+
+ 
+
+DERMA GLISTEN, INC
+
+ 
+
+STATEMENT OF STOCKHOLDERS EQUITY
+
+FROM INCEPTION (JANUARY 10, 2017) TO May 31, 2017
+
+ 
+
+ 
+
+ 
+
+Common Stock
+
+ 
+
+ 
+
+Additional
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+Number of
+
+shares
+
+ 
+
+ 
+
+Amount
+
+ 
+
+ 
+
+Paid-in 
+
+Capital
+
+ 
+
+ 
+
+Accumulated
+
+Deficit
+
+ 
+
+ 
+
+Total
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+Balance, January 10, 2017
+
+ 
+
+ 
+
+-
+
+ 
+
+ 
+
+$
+-
+
+ 
+
+ 
+
+$
+-
+
+ 
+
+ 
+
+$
+-
+
+ 
+
+ 
+
+$
+-
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+Common stock issued for cash at $0.001 per share January 17, 2017
+
+ 
+
+ 
+
+5,000,000
+
+ 
+
+ 
+
+$
+5,000
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+$
+5,000
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+Net loss
+
+ 
+
+ 
+
+-
+
+ 
+
+ 
+
+ 
+
+-
+
+ 
+
+ 
+
+ 
+
+-
+
+ 
+
+ 
+
+ 
+
+(1,709
+)
+
+ 
+
+$
+(1,709
+)
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+Balance, May 31, 2017
+
+ 
+
+ 
+
+5,000,000
+
+ 
+
+ 
+
+$
+5,000
+
+ 
+
+ 
+
+ 
+
+-
+
+ 
+
+ 
+
+$
+(1,709
+)
+
+ 
+
+$
+3,291
+
+ 
+
+ 
+
+The accompanying notes are an integral part of these financial statements
+
+ 
+
+ 
+
+F-5
+
+ 
+
+Table of Contents
+
+ 
+
+DERMA GLISTEN, INC.
+
+ 
+
+STATEMENT OF CASH FLOWS
+
+ 
+
+ 
+
+ 
+
+Cumulative
+
+results of
+
+operations
+
+from inception (January 10,
+
+2017) to
+
+May 31,
+
+2017 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+CASH FLOWS FROM OPERATING ACTIVITIES
+
+ 
+
+ 
+
+ 
+
+Net loss 
+
+ 
+
+ 
+
+(1,709
+)
+
+Net cash provided by operations:
+
+ 
+
+ 
+
+ 
+
+ 
+
+Cosmetics Inventory Deposit
+
+ 
+
+ 
+
+(3,658
+)
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+NET CASH USED IN OPERATING ACTIVITIES
+
+ 
+
+ 
+
+(5,367
+)
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+CASH FLOWS FROM FINANCING ACTIVITIES
+
+ 
+
+ 
+
+ 
+
+ 
+
+Proceeds from sale of common stock
+
+ 
+
+ 
+
+5,000
+
+ 
+
+Adjustment to reconcile net loss to net cash used in operating activities
+
+ 
+
+ 
+
+ 
+
+ 
+
+-shareholder loan
+
+ 
+
+ 
+
+1,470
+
+ 
+
+ 
+
+ 
+
+ 
+
+6,470
+
+ 
+
+NET CASH PROVIDED BY FINANCING ACTIVITIES
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+NET INCREASE IN CASH 
+
+ 
+
+ 
+
+1,103
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+CASH, BEGINNING OF PERIOD
+
+ 
+
+ 
+
+-
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+CASH, END OF PERIOD
+
+ 
+
+$
+1,103
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+Supplemental cash flow information and noncash financing activities:
+
+ 
+
+ 
+
+ 
+
+ 
+
+Cash paid for:
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+Interest
+
+ 
+
+$
+-
+
+ 
+
+Income taxes
+
+ 
+
+$
+-
+
+ 
+
+ 
+
+The accompanying notes are an integral part of these financial statements
+
+ 
+
+ 
+
+F-6
+
+ 
+
+Table of Contents
+
+ 
+
+DERMA GLISTEN, INC.
+
+ 
+
+NOTES TO THE FINANCIAL STATEMENTS
+
+ 
+
+May 31, 2017
+
+ 
+
+NOTE 1 NATURE OF OPERATIONS AND BASIS OF PRESENTATION
+
+ 
+
+DERMA GLISTEN, INC. ( Company ) is in the initial development stage and has incurred losses since inception totaling $1,709. The Company was incorporated on January 10, 2017 in the State of Nevada and established a fiscal year end of May 31. The company is located at 14260 W. Newberry Rd. Suite 328 Newberry, FL 32669-2765. The Company is a development stage company organized to enter skin care industry. The Company intends to be an on-line store specializing in products that will enhance the appearance of our customers facial skin. The Company intends to sell products to treat skin, not makeup products to cover skin. 
+
+ 
+
+Going concern
+
+To date the Company has generated no revenues from its business operations and has incurred operating losses since inception of $1,709. As at May 31, 2017 the Company has working capital of $3,291. The Company requires additional funding to meet its ongoing obligations and to fund anticipated operating losses. The ability of the Company to continue as a going concern is dependent on raising capital to fund its initial business plan and ultimately to attain profitable operations. Accordingly, these factors raise substantial doubt as to the Company s ability to continue as a going concern. The Company intends to continue to fund its business by way of private placements and advances from related parties as may be required. As of May 31, 2017, the Company has issued 5,000,000 founders shares at $0.001 per share for net proceeds of $5,000 to the Company. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might result from this uncertainty.
+
+ 
+
+NOTE 2
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2018/CIK0001734993_goodbulk_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001734993_goodbulk_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..9844e4a5f0dcacdae25d6c92e3a83032174a6ee5
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/CIK0001734993_goodbulk_prospectus_summary.txt
@@ -0,0 +1 @@
+This summary highlights information contained elsewhere in this prospectus. This summary may not contain all the information that may be important to you, and we urge you to read this entire prospectus carefully, including the Risk Factors, Business and Management s Discussion and Analysis of Financial Condition and Results of Operations sections and our consolidated financial statements and notes to those statements, included elsewhere in this prospectus, before deciding to invest in our common shares. For the definition of certain terms used in this prospectus that are commonly used in the shipping industry, see the Glossary of Shipping Terms beginning on page 158 of this prospectus. Our Business We are GoodBulk Ltd., a leading international owner and operator of dry bulk vessels, and one of the world s largest owners of Capesize vessels. Founded in October 2016, for the purpose of owning high-quality secondhand dry bulk vessels between 50,000 and 210,000 dwt, we offer investors an efficient company to access the dry bulk market. We were formed at a historically low point in the shipping cycle, which our management and Board of Directors believe represents an opportunity to expand our fleet and business with a low cost asset base. Starting with only one vessel on the water in January 2017, through our actively managed fleet strategy and opportunistic acquisitions at attractive valuations, we have successfully grown our fleet to 25 dry bulk vessels as of the date of this prospectus. This includes 22 Capesize, 1 Panamax, and 2 Supramax vessels, which have an average age of 9 years and an aggregate carrying capacity of 4.1 million dwt. We have entered into a Heads of Terms Agreement (the Terms Agreement ) whereby, if this offering is consummated by July 15, 2018, we have agreed to acquire up to five secondhand Capesize drybulk vessels (the Acquisition Vessels ) for up to an aggregate purchase price of $178.75 million in cash and share-based consideration. The Acquisition Vessels have an aggregate carrying capacity of 898,687 dwt with expected delivery by the end of September 2018. Including all five of the Acquisition Vessels, our combined fleet would total 30 dry bulk vessels with an average age of 8.8 years and an aggregate carrying capacity of 5.0 million dwt. Our vessels transport a broad range of major and minor bulk commodities, including ores, coal, and grains, across global shipping routes. Our chartering policy is to employ our vessels primarily in the spot market depending on prevailing industry dynamics. Currently we deploy our vessels on the spot market and in pools, which also includes Revenue Sharing Agreements ( RSAs ), managed by our commercial, operational, and technical managers, C Transport Holding Ltd. and its subsidiary C Transport Maritime S.A.M. (collectively defined as CTM, or our Manager ). We believe this policy allows us to obtain attractive charter hire rates for our vessels, while also affording us flexibility to take advantage of a rising charter rate environment. Being in a pool can improve an owner s income stream by providing access to global trade through sharing earnings brought in by the other pool members trading in a myriad of routes (a wider range of routes than those that make up the Baltic Indices), rather than just depending on the single route that standalone operations can achieve. Through these pools, we have access to long standing industry experience and contacts with major operators and charterers, economies of scale with respect to cost reductions, superior market intelligence and information as well as improved utilization rates that come from being part of a larger fleet. We maintain a strong relationship with CTM, which we believe has allowed us to become one of the most cost-efficient public dry bulk operators. We believe CTM has an excellent track record in supplying leading dry bulk management services at very competitive rates. Our company, its founders and its manager have a long history of operating and investing in the shipping industry. Our founding shareholders are Brentwood Shipping and Trading Inc. ( Brentwood Shipping ), Lantern Capital Partners ( Lantern ), and two other financial investors. Brentwood Shipping is a privately held shipping business owned by the family of our Chairman and Chief Executive Officer ( CEO ) John Michael Radziwill and has over a century of involvement in the shipping industry. Mr. Radziwill has served as our Chairman and CEO since our inception. During his career, Mr. Radziwill has overseen sale, purchase and new building contracting transactions of approximately 80 vessels, for an aggregate purchase price of over $2 billion. Additionally, Mr. Radziwill has served as the Chief Executive Officer of our manager CTM since 2010, providing him unique insight and access into the dry bulk market, which we are able to leverage. Mr. Radziwill s interests are fully aligned with our company through his family s ownership stake in Brentwood Shipping. TABLE OF CONTENTS The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. Subject to Completion Preliminary Prospectus dated June 18, 2018 PROSPECTUS 8,500,000 Common Shares GoodBulk Ltd. This is our initial public offering of common shares. We are offering a total of 8,500,000 common shares, $1.00 par value, of GoodBulk Ltd. We expect the initial public offering price will be between $15.50 and $17.50 per common share. We have applied to list our common shares on the Nasdaq Global Select Market (the Nasdaq ) under the symbol GBLK. Prior to this offering, there has been no active trading market for our common shares, although the common shares are listed on the Norwegian Over-The-Counter List (the N-OTC ), an over-the-counter market that is administered and operated by a subsidiary of the Norwegian Securities Dealers Association. For a discussion of the factors considered in determining the public offering price, see Underwriters. We are an emerging growth company under the U.S. federal securities laws and will be subject to reduced public company reporting requirements. Investing in our common shares involves risks. See Risk Factors beginning on page 16 of this prospectus. Per Share Total Public offering price $ $ Underwriting discounts and commissions $ $ Proceeds, before expenses, to us(1) $ $ (1) See Underwriters for additional information regarding the total underwriters compensation. We have also granted the underwriters an option for a period of 30 days to purchase up to an additional 1,275,000 common shares on the same terms as set forth above to cover over-allotments, if any. See Underwriters. Neither the U.S. Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. Our common shares will be ready for delivery on or about , 2018. Morgan Stanley Credit Suisse Clarksons Platou Securities Evercore ISI Pareto Securities UBS Investment Bank ABN AMRO Prospectus dated , 2018. TABLE OF CONTENTS For investors outside the United States: neither we nor any of the underwriters has done anything that would permit this offering or possession or distribution of this prospectus or any free writing prospectus we may provide to you in connection with this offering in any jurisdiction where action for that purpose is required, other than in the United States. You are required to inform yourselves about and to observe any restrictions relating to this offering and the distribution of this prospectus and any such free writing prospectus outside of the United States. Certain market data and forecasts used throughout this prospectus were obtained from internal company surveys, market research, consultant surveys, reports of governmental and international agencies and industry publications and surveys. Industry publications and third-party research, surveys and reports generally indicate that their information has been obtained from sources believed to be reliable. We believe the data from third-party sources to be reliable based upon our management s knowledge of the industry, but have not independently verified such data. In some cases, we do not expressly refer to the sources from which this data is derived. In that regard, when we refer to one or more sources of this type of data in any paragraph, you should assume that other data of this type appearing in the same paragraph is derived from the same sources, unless otherwise expressly stated or the context otherwise requires. Our estimates involve risks and uncertainties and are subject to change based on various factors, including those discussed under the heading Risk Factors in this prospectus. Presentation of Financial and Other Information We prepare and report our consolidated financial statements in accordance with International Financial Reporting Standards ( IFRS ) as issued by the International Accounting Standards Board (the IASB ). None of our financial statements were prepared in accordance with generally accepted accounting principles in the United States. We maintain our books and records in U.S. dollars. We have made rounding adjustments to some of the figures included in this prospectus. Accordingly, numerical figures shown as totals in some tables may not be an arithmetic aggregation of the figures that precede them. Unless otherwise indicated, all references to U.S. dollars, dollars, U.S. $ and $ in this prospectus are to the lawful currency of the United States of America and references to Norwegian Kroner and NOK are to the lawful currency of Norway. EXCHANGE CONTROL Consent under the Exchange Control Act 1972 (and its related regulations) has been obtained from the Bermuda Monetary Authority for the issue and transfer of our common shares to and between non-residents of Bermuda for exchange control purposes provided our common shares remain listed on an appointed stock exchange, which includes the Nasdaq. In granting such consent the Bermuda Monetary Authority accepts no responsibility for our financial soundness or the correctness of any of the statements made or opinions expressed in this prospectus. TABLE OF CONTENTS At the end of March 2017, our common shares began trading on the N-OTC under the symbol BULK. Our Relationship with C Transport Maritime Our fleet is managed by CTM, which is beneficially owned by the family of our Chairman and CEO, John Michael Radziwill. Headquartered in Monaco and founded in 2004, CTM is one of the largest ship management companies and provides services that include commercial and operations management, technical management, risk management and research, as well as sale and purchase services to various third party vessel owners. CTM directly operates over 100 dry cargo vessels, ranging from Supramax to Newcastlemax bulk carriers, and over 140 vessels, including vessels managed through Capesize Chartering Ltd. ( CCL ) where CTM serves as co-manager. CTM s fully managed pools include the Capesize and Supramax RSAs, with the vessels in the Capesize RSA being part of CCL. CTM s RSAs are commercial and operational platforms that collectively manage member vessels operating them on the spot market and distributing income produced proportionately according to each member vessel s earning capacity. The RSAs are open to third party vessels with CTM charging a commercial management fee of 1.25% on incomes produced for their services. The RSA aggregates the revenues and expenses of all the participant vessels and distributes the net earnings calculated on (i) a key figure expressing the relative theoretical earning capacity of such member vessel based on the cargo carrying capacity, tradability, speed and consumptions and performances and (ii) the number of days the vessel was operated during the period. Each member also provides CTM with working capital of $650,000 per vessel under agreement in the Capesize RSA and $400,000 per vessel under agreement in the Supramax RSA. During 2017, the Supramax RSA member vessels carried approximately 22 million tonnes of cargo and performed 341 fixtures. Likewise, in 2017, CCL carried about 55 million tonnes of cargo and performed 325 fixtures for Capesize vessels. CTM also manages vessels on behalf of other owners. CTM-managed vessels transported an aggregate of approximately 47 million tonnes of cargo in 2017 and approximately 87 million tonnes including the cargo carried on CCL controlled vessels. CTM has won several industry accolades which are testament to the company s commitment to its clients and to providing high quality service. In 2017, CTM won the award for Dry Bulk Operator of the Year at the 20th Annual Lloyds List Global Awards and, in 2015, CTM s Technical Management was recognized by the United States Coast Guard ( USCG ) with its highest award the QUALSHIP 21 for quality shipping for the 21st century. Our relationship with CTM gives us access to their relationships with major international charterers, end-users, brokers, lenders and shipbuilders. The scale and reach of CTM s commercial and technical platforms allow us to compete more effectively and operate our vessels on a cost-efficient basis. Mr. Radziwill, our Chairman and CEO, is a member of the Radziwill family which owns and controls Brentwood Shipping, the parent company of CTM. This relationship, and other relationships among our executive officers, Brentwood Shipping and CTM, may create certain conflicts of interest between us, on the one hand, and Brentwood Shipping or CTM, on the other hand. For example, our Chief Executive Officer, President, and Chief Financial Officer each participate in business activities not associated with us, including in the case of our Chief Executive Officer and Chief Financial Officer, serving in similar roles on the management team of CTM. This may create conflicts of interest in matters involving or affecting us, including in the chartering, purchase, sale and operation of the vessels in our fleet versus vessels owned or chartered-in by other companies affiliated with or managed by CTM. It is not certain that these conflicts of interest will be resolved in our favor, and CTM may favor its own or other owners interest over our interests. Please see Risk Factors Our Chief Executive Officer is also the Chief Executive Officer of our manager, which could create conflicts of interest between us and our manager, and Risk Factors Our Chief Executive Officer, Chief Financial Officer and President do not devote all of their time to our business, which may hinder our ability to operate successfully. Our Fleet All of our vessels are currently operated in the spot market, with the majority operated through CTM s RSAs or on index-linked charters. TABLE OF CONTENTS The following table summarizes key information about our fleet as of the date of this prospectus: Vessel Name Type Delivery Date to GoodBulk Size (dwt) Year Built Shipyard Aquamarine(1) Capesize January 5, 2017 182,060 2009 Odense, DEN Aquadonna(1) Capesize February 2, 2017 177,173 2005 Namura, JPN Aquakula(2) Supramax April 18, 2017 55,309 2007 Oshima, JPN Aquaknight(4) Panamax April 25, 2017 75,395 2007 Universal, JPN Nautical Dream(1) Capesize April 25, 2017 180,730 2013 JMU, JPN Aquapride(2) Supramax June 1, 2017 61,465 2012 Imabari, JPN Aquacharm(1) Capesize June 16, 2017 171,009 2003 Sasebo, JPN Aquajoy(1) Capesize June 21, 2017 171,009 2003 Sasebo, JPN Aquavictory(1) Capesize June 30, 2017 182,060 2010 Odense, DEN Aquahope(1) Capesize September 19, 2017 177,173 2007 Namura, JPN Aquakatana(1) Capesize September 28, 2017 185,897 2005 Kawasaki, JPN Aquarange(1) Capesize December 4, 2017 179,842 2011 Hanjin, PH Aquamarie(3) Capesize December 19, 2017 178,896 2012 Sungdong, KR Aquaenna(1) Capesize January 9, 2018 175,975 2011 Jinhai, CHN Aquabridge(1) Capesize January 16, 2018 177,106 2005 Namura, JPN Aquaproud(1) Capesize January 24, 2018 178,055 2009 SWS, CHN Aquatonka(1) Capesize January 31, 2018 179,004 2012 Hanjin, PH Aquavoyageurs(3) Capesize February 5, 2018 177,022 2005 Namura, JPN Aquahaha(1) Capesize February 15, 2018 179,023 2012 Hanjin, PH Aquataine(5) Capesize February 20, 2018 181,725 2010 Imabari, JPN Aquascope(1) Capesize February 21, 2018 174,008 2006 SWS, CHN Aquasurfer(5) Capesize March 1, 2018 178,854 2013 Sungdong, KR Aquamaka(1) Capesize April 27, 2018 179,362 2009 Hyundai, KR Aquacarrier(1) Capesize May 14, 2018 175,935 2011 Jinhai, CHN Aquakatie(1) Capesize June 14, 2018 174,142 2007 SWS, CHN Total: 25 4,108,229 * The table above does not reflect the Acquisition Vessels. (1) Operated in the Capesize RSA. (2) Operated in the Supramax RSA. (3) Operated on index-linked charters. (4) Operated in the spot market. (5) Operated on period charter. Management of Our Business Our Board of Directors defines our overall direction and business strategy and exercises all significant decision-making authority including, but not limited to, with respect to our investments and divestments. Our day-to-day business and vessel operations are managed by CTM with the guidance and oversight of our Board, under the operational, commercial, technical and administrative service agreements discussed below. CTM also sources and advises on strategic opportunities for our Board s consideration. Commercial Management Agreement We have entered into a Commercial Management Agreement with CTM (the Commercial Management Agreement ) for the operational and commercial management of all dry bulk carrier motor vessels owned or chartered by us or our subsidiaries. CTM s services include negotiating contracts related to TABLE OF CONTENTS the vessels, negotiating terms of employment of the vessels, making all necessary arrangements for the proper employment of the vessels, negotiating the terms of all contracts for the purchase or sale of the vessels, and appointing port and other agents for the vessels, in each case subject to the express limitations and guidelines imposed by us. We pay CTM commission fees as follows: (i) in relation to time chartered-in and time chartered-out vessels, 1.25% commission on all hires paid or a 1.25% commission on all gross freight on all of the performed voyage charter contracts; and (ii) 1.00% commission of the memorandum of agreement price for the sale of any vessel by us or any of our subsidiaries. Upon completion of this offering, the Commercial Management Agreement will only be subject to termination by us upon three months prior notice. Upon any termination by us that is not a result of CTM s failure to perform a material obligation, we must pay CTM a termination fee equal to twice the amount of commissions due over the prior twelve months. Shipmanagement Agreement Through our subsidiaries, we enter into a Shipmanagement Agreement with CTM with respect to each vessel in our fleet (each, a Shipmanagement Agreement ). CTM s services include providing technical management services, such as selecting and engaging the vessel s crew, providing payroll and compliance services, providing competent personnel to supervise the maintenance and general efficiency of the vessel, arranging and supervising drydockings, repairs, alterations and the upkeep of the vessel, appointing surveyors and technical consultants, arranging the transportation of shore personnel when servicing the vessel, arranging supervisory visits to the vessel, and maintaining a safety management system. We pay CTM a basic annual management fee in the amount of $144,000 per vessel. Additionally, we reimburse CTM for rent, communication and other general expenses in the aggregate amount of $15,000 per vessel per quarter, and for travel and out-of-pocket expenses incurred by CTM in pursuance of its management services. Upon completion of this offering, a Shipmanagement Agreement will only be subject to termination by us upon three months prior notice. Upon any termination by us that is not a result of CTM s failure to perform a material obligation, we must pay CTM a termination fee equal to the basic management fees for the prior twelve months. In addition, a Shipmanagement Agreement is deemed terminated upon the sale of the vessel to a non-affiliated third party. Services Agreement We have entered into a Services Agreement (the Services Agreement ) with CTM for the provision of staff services, including customer and supplier management, accounting, treasury, budgeting and reporting, consultancy services, corporate and legal services, and information technology services. We pay CTM an annual management fee of $50,000 for each vessel, in quarterly installments. We also reimburse CTM for all travel and subsistence expenses CTM incurs in the provision of services. Upon completion of this offering, the Services Agreement will only be subject to termination by us, upon three months prior notice. Upon any termination by us that is not a result of CTM s failure to perform its obligations (including if such failure is due to applicable law or insolvency of CTM), we must pay CTM a termination fee equal to twice the amount of the fees for the prior twelve months. Unless terminated earlier by us, our Commercial, Shipmanagement and Services Agreements with CTM will automatically extend for an additional five years after completion of this offering. During this period the commissions and fee rates as noted above will remain fixed, thereby providing significant visibility into our cost structure. Our Competitive Strengths Demonstrated Access to Capital and Significant Financial Flexibility We believe that we have successfully capitalized the business in a financially conservative manner that allows for continued access to capital to fund our growth opportunities. We target a long-term leverage profile below 30% Net Debt/Gross Asset Value, which provides us with significant financial flexibility going forward. In line with this target, we recently funded the acquisition of 13 Capesize vessels from certain fund entities managed by CarVal Investors, LLC (together the CarVal Funds ) using a mix of cash and shares, thereby demonstrating our ability to access capital to fund opportunistic acquisitions. TABLE OF CONTENTS We believe that we have also demonstrated the ability to raise equity capital at increasing valuations, as measured on a share price basis, thereby driving improved returns for investors. In particular, we have successfully raised equity, each time at a higher valuation, to fund our initial growth, including our initial capital raise of $44.5 million (of which $18.5 million was contributed in kind for the vessel Aquamarine) in December 2016 at $10.00 per share. Three months later, in March 2017, we raised an additional $100.0 million at $11.00 per share to fund the acquisition of six vessels (one Ultramax and five Capesize vessels). More recently, in December 2017 through May 2018, we raised $32.3 million at $15.23 per share, a significant majority of which was to fund part of the acquisition of 13 Capesize vessels from the CarVal Funds. We have continued to demonstrate our ability to source attractive and accretive acquisitions and successfully access the capital markets to drive increased value for our investors and propel growth in the business. As of March 31, 2018, we had $32.2 million of available cash and cash equivalents, in addition to $107.0 million available under committed but undrawn credit facilities. Under the Terms Agreement, if this offering is consummated by July 15, 2018, we have agreed to acquire the Acquisition Vessels for up to an aggregate purchase price of $178.75 million, up to $169.81 million of which is payable in cash, which we intend to fund with the net proceeds of this offering, cash on hand and additional borrowings under our credit facilities, and up to $8.94 million of which is payable in our common shares valued at the public offering price per share in this offering. We believe that our committed financing capacity will allow us to make additional accretive acquisitions. High Quality Fleet Developed Through Timely Vessel Acquisitions Our fleet consists of 25 dry bulk vessels, including 22 Capesize, 1 Panamax and 2 Supramax carriers, and we are the second largest and most concentrated owner of Capesize vessels among publicly listed peers. We believe that each vessel was acquired at an opportunistic point across each vessel s life cycle, thereby maximizing earnings potential while at the same time minimizing acquisition cost. We have entered into a Terms Agreement whereby, if this offering is consummated by July 15, 2018, we have agreed to acquire up to five secondhand Capesize drybulk vessels for up to an aggregate purchase price of $178.75 million in cash and share-based consideration, which we believe is below current asset values. We also actively review disposition opportunities to take advantage of asset value cycles or to redeploy capital into younger vessels or vessels with equal or more attractive return potential in light of asset-specific trends and market fundamentals. To date, we have sold one vessel the Aquabeauty, which we acquired in May 2017 for $10.0 million and agreed to sell in January 2018 for $15.0 million. Our fleet has an average age of 9 years, and we believe that owning a high-quality, well-maintained fleet affords us significant benefits, including reduced operating costs, improved quality of service and a competitive advantage in securing favorable charters with high-quality counterparties. We believe that our active vessel acquisition and disposition strategy has allowed us to build one of the largest Capesize dry bulk fleets globally. While our current fleet composition is weighted towards Capesize vessels, our strategy is to continue to evaluate the demand and supply dynamics across the various dry bulk vessel segments. We plan to focus on the 50,000 dwt 210,000 dwt vessel range, supported by CTM s expertise in operating and managing vessels across all vessel sizes. Since our formation, we believe that Capesize vessels have presented the most attractive value and upside potential, and as such, management has taken advantage of opportunistic acquisitions in the space. Our ability to acquire vessels at attractive prices has not required us to compromise on other critical vessel features, such as quality or the existence of a liquid secondary market for similar type vessels. Our vessels are built at the world s most renowned shipyards and have been carefully maintained by CTM. However, we do not limit ourselves to vessels constructed at certain yards but rather look extensively for opportunistic purchases across all geographies. Additionally, the current sale and purchase market for types of vessels consistent with those in our fleet remains highly active, which is an important metric we take into account as we evaluate acquisition opportunities. The dry bulk sale and purchase market is the most liquid shipping market, with approximately 596 bulker sales (41.6 million dwt) in 2016 and 645 bulker sales (43.9 million dwt) in 2017 alone. The Panamax and Capesize markets together represented approximately 38% of the market on a number of vessels basis and 60% on a dwt basis. This highly liquid sale and purchase market offers us a unique opportunity to take advantage of opportunistic vessel acquisitions and TABLE OF CONTENTS dispositions, without having to incur an illiquidity discount. This can be seen through our acquisition and subsequent sale of the vessel Aquabeauty. This is but one example of our ability to generate significant returns to our investors. Although we are a recently incorporated company with a limited performance history, we believe we have a proven and successful track record of acquiring vessels at attractive prices. Our first vessel was contributed by Brentwood Shipping, and each subsequent vessel acquisition/disposition has represented an attractive opportunity for us at that point in time. In the second half of 2017, we announced a transformative acquisition of up to 13 vessels from the CarVal Funds for a combination of cash and shares. This transaction allowed us to expand our fleet with similarly young and low leveraged Capesize vessels and positions us as one of the largest publicly listed owners of Capesize vessels. Strong Relationship with CTM We believe that one of our principal strengths is our relationship with CTM, which enables us to take advantage of its best-in-class fleet management capabilities across commercial, operational, technical and sale and purchase activities, as well as all the supporting functions it provides and also benefit from CTM s history of actively managing financing relationships with international banks on behalf of its clients. These financing relationships include, but are not limited to, arranging ship mortgages, pre-delivery financing and arranging working capital lines. In addition, we believe CTM is one of a handful of Western shipping companies with access to finance from Japanese banks, having previously arranged financing for two bulk carriers for another client of theirs. In addition, our relationship with CTM has provided us with extensive acquisition sourcing capabilities, including opportunities to acquire high quality vessels at attractive prices. For example, GoodBulk has benefited from the strong ties that CTM has with the Japanese shipping market, from where we have directly sourced four of our acquired vessels to date without requiring non-Japanese intermediaries. CTM s long-standing relationships and network in Japan span back to 2004 when CTM was formed. Since that time, CTM has completed close to 70 sale and purchase and charter-based transactions in Japan. CTM s scope of work includes identifying and suggesting potential acquisition or disposition candidates, asset inspections determining overall condition, engaging in price negotiation on behalf of and in close guidance with the Company, legal documentation handling and hand-over completion for a successful deal execution. CTM employs approximately 80 employees, several of which have been there since the company s inception, including its CFO, Director of Handymax Post Panamax, Director of Capesize VLOC, Director of Sale and Purchase, and Director of Operations and Fleet. Other key executives have been with CTM for over 10 years including its CEO. Collectively, the top eight executives have over 90 years of experience with CTM. Our management team has worked together for up to 24 years for CTM and its predecessors. Moreover, the employees of CTM are well aligned with the company as they have personally invested over $3.3 million into the business. This provides extensive high quality industry expertise. Following this offering, our agreements with CTM will automatically extend for an additional five years, during which period the commissions and fee rates as noted above will remain fixed, thereby providing significant visibility into our cost structure and ability to source vessel acquisition opportunities. Industry Leading Cost Structure with Lowest Break Evens Through our unique high operating leverage/low financial leverage strategy, we have been able to create a low cost platform with very competitive cash break even rates. This is in part due to our strong relationship with our external manager CTM, which has allowed us to benefit from its significant experience and scale, directly managing over 100 dry bulk vessels ranging from Supramaxes to Newcastlemaxes. Our ability to leverage CTM s industry leading commercial and technical platform has allowed to us to maintain a lean corporate structure, thereby reducing our costs. In addition, our low leverage model limits interest and amortization expenses, further driving down our very low and competitive cash break evens. In light of these factors, we believe that our per vessel costs and operating expenses are among the lowest in the industry. Our low cost structure further provides downside protection in the event of a prolonged downturn in charter rates. TABLE OF CONTENTS Experienced Management Team with Interests Aligned to Shareholders Our management team and Board of Directors have an extensive track record of managing both shipping companies and capital markets transactions, including initial public offerings, secondary offerings, debt offerings and restructurings. Our Chairman and CEO, Mr. John Michael Radziwill has over 20 years of experience in the industry, including as CEO of CTM and as a board member of Euronav at the time of its listing on the NYSE. Our CFO, Mr. Luigi Pulcini, has over 20 years of experience in the shipping industry and has been with CTM since inception, where he also works as CFO. Our President and Director, Mr. Andrew Garcia has 17 years of capital markets experience with expertise developed as an investor in the shipping and dry bulk space and through creating and bringing companies public in the U.S., including Two Harbors Investment Corp. Our management team, including the family of our Chairman and CEO, owns approximately 12% of the company prior to this offering, fully aligning their interests with that of the other shareholders. Moreover, 100% of management s economic participation is in the form of at risk equity purchased in our first two equity offerings. Our Business Strategies Continue to Opportunistically Engage in Acquisitions or Disposals to Maximize Shareholder Value We intend to continue our practice of acquiring or disposing of secondhand vessels while focusing on maximizing shareholder value and returning capital to shareholders when appropriate. Our management team has a demonstrated track record of acquiring and disposing of vessels at attractive prices, and we will continue to monitor prices of secondhand dry bulk Supramax, Panamax, and Capesize vessels as we seek opportunities in line with our acquisition strategy. Our relationship with CTM has provided us with extensive acquisition sourcing capabilities, including opportunities to acquire high quality vessels at attractive prices. We plan to continue to remain active in the secondhand market as we believe this offers the best value opportunity and do not anticipate participating in the newbuilding market at this time. The key component of our acquisition strategy is to focus on high-quality assets at attractive prices, and maintain a disciplined approach focused on protecting and increasing shareholder value as we evaluate new acquisitions. When considering potential acquisitions, we will evaluate several factors, including, but not limited to, our expectation of fundamental developments in the industry, the level of liquidity in the resale and charter market, the vessel s earning potential in relation to its value, its condition and technical specifications, expected remaining useful life, the credit quality of the charterer, in the event that there is an attached charter, and the overall diversification of our fleet and customers. Through this framework, we have demonstrated a successful track record of opportunistic vessel acquisitions and dispositions that has developed our fleet into one of the largest Capesize fleets today. While we actively pursue acquisition opportunities from Supramaxes to Capesizes, since inception, we have favored Capesize vessels as we believed that they offered the best relative opportunity. At times when others have pulled back from the Capesize market due to volatility in charter rates, resulting decline in asset values and financing constraints, our conviction around the market opportunity has allowed us to take advantage of opportunistic prices and build our high quality fleet. We continue to see significant opportunity among the larger vessel classes given their strong earnings potential, favorable acquisition prices, and liquid secondhand market. Capture Revenue Upside Potential Through Spot Market Exposure We plan to strategically employ our fleet to provide for high utilization, while at the same time substantially preserving flexibility so as to capitalize on any favorable changes in the rate environment. While the Baltic Dry Index ( BDI ), the generally agreed upon proxy for dry bulk shipping rates, has recently come off its near all-time low in February 2016, the index still remains approximately 50% below its long-term average (since the BDI s inception in 1985). Given industry backdrop and macroeconomic factors, we believe that there is still significant upside potential in charter rates and we expect these rates to continue to increase in the near to medium term. We believe that our unique relationship with CTM, whose pools have consistently outperformed the Baltic Supramax, Panamax, and Capesize indices, coupled with our strong balance sheet of low financial leverage, afford us the ability to employ our vessels in the spot market for extended periods of time. Consequently, this provides additional flexibility to capture the upside opportunity should rates rise. TABLE OF CONTENTS However, we note that there is no guarantee that rates will continue to rise or that CTM will continue to outperform the various market indices. Low Cost Operating Platform We maintain a strong relationship with our external manager and believe that CTM is able to oversee the technical and commercial management of our fleet at a lower cost than could otherwise be achieved in-house. Moreover, we believe that CTM s cost structure and compensation rates are competitive with those available through other external vessel managers. We believe that our external management arrangement will promote scalability as it will allow for growth without the incurrence of significant additional overhead. We also believe this structure allows us to maintain a very competitive, low cost operating platform with low cash break evens. Following this transaction, our agreement with CTM will automatically extend for an additional five years from the date of this offering at fixed fee levels, thereby providing additional cost visibility. Low Financial Leverage We intend to maintain a strong balance sheet and low financial leverage over time, even though we may have the capacity to obtain additional financing. By targeting on a long-term basis a Net Debt/Gross Asset Value below 30%, we expect to retain greater flexibility than our more levered competitors and to operate our vessels under shorter spot or period charters. Additionally, our low leverage approach affords increased flexibility in the event of downward pressures on rates, allowing us to operate profitably at rates that would otherwise result in losses for some of our competitors. At an estimated scrap price of $436 per lightweight tonne based on the Baltic Exchange s Indian Subcontinent demolition price assessment as of June 11, 2018 and an average lightweight tonnage per vessel of 23,543 tonnes (including the Acquisition Vessels), the approximate scrap value of GoodBulk s fleet is roughly 1.3 times more than its expected borrowings of $242.1 million after the delivery of the Acquisition Vessels. Shipping industry participants have increasingly favored financially solid vessel owners, compared to those that are more susceptible to insolvency risk. As such, we believe that our low leverage profile will make us more attractive to potential counterparties such as charterers and commercial banks. We believe that this will afford us further opportunities including better charters and negotiating leverage with our lending partners. Dividend Strategy We intend to manage our capital structure by actively monitoring our leverage level with changing market conditions, targeting on a long-term basis a Net Debt/Gross Asset Value below 30%, and returning capital to shareholders when appropriate. Our Board of Directors declared a dividend of $0.22 per share on May 21, 2018 that was paid on June 12, 2018 to holders of record as of May 25, 2018. Subject to the sole discretion of our Board of Directors and the considerations discussed below, we intend to continue to return capital to shareholders through quarterly dividends or share repurchases that will annually equal, in the aggregate, between 25% and 50% of our net income. Any future determination related to our dividend policy will be subject to the discretion of our Board of Directors, requirements of Bermuda law, our results of operations, financial condition and cash requirements and availability, our ability to obtain debt and equity financing on acceptable terms as contemplated by our growth strategy, the terms of our outstanding indebtedness, contractual restrictions, the ability of our subsidiaries to distribute funds to us and other factors deemed relevant by our Board of Directors. See Dividends and Dividend Policy and Description of Share Capital. We cannot assure that we will be able to pay regular dividends in the event of unforeseen market events. Favorable Industry Fundamentals We believe that the following trends identified by Fearnley Consultants ( Fearnleys ) in the dry bulk carrier market present growth opportunities: TABLE OF CONTENTS The global dry bulk shipping downturn in rates and values ended in 2016, and the sector is showing growth and recovery in charter rates and vessel values. Newbuilding and secondhand prices have improved but are still well below average levels from the last 15 years. The outlook for bulk carriers is positive, with overall demand growth estimated at 2.0% to 3.5% for 2018 and 2019. The fleet is estimated to grow at a slower pace of approximately 2.1% and 1.8% in 2018 and 2019, respectively. As such, the market balance is set to improve over this period and subsequently, earnings and values are expected to increase. The total order book to existing fleet ratio as of December 31, 2017 was 9.9%. This is the lowest order book to fleet ratio observed since 2002. Growth in demand of approximately 3.5% to 4.0% for coal and 2.0% to 3.5% for iron ore in 2018 and 2019 is expected, according to Fearnleys. This is expected to benefit our fleet, as most of this demand growth is expected to be for Capesize and Panamax bulk carriers. See The International Dry Bulk Shipping Industry for more information on the dry bulk shipping industry. Recent Developments Capesize Vessel Acquisition On June 1, 2018, we entered into a Heads of Terms Agreement (the Terms Agreement ) to acquire up to five secondhand Capesize dry bulk vessels from subsidiaries of Defender Holding Ltd. and Constitution Holding Ltd. (such subsidiaries together, the Sellers ), affiliates of a maritime investment fund unrelated to us, for up to an aggregate purchase price of $178.75 million in cash and share-based consideration. If this offering is consummated by July 15, 2018, we intend to use the net proceeds from this offering, together with cash on hand and additional borrowings under our credit facilities, to fund the up to $169.81 million cash portion of the purchase price for the vessel acquisitions. Pursuant to the Terms Agreement, we have agreed to acquire between three to five vessels depending on the proceeds of this offering. Based on the midpoint of the range set forth on the cover page of this prospectus, we expect to receive total estimated net proceeds of approximately $128.6 million in this offering and acquire five vessels at an aggregate purchase price of $178.75 million. See Use of Proceeds. The vessels are expected to be delivered by the end of September 2018. We will deposit 12.5% of the aggregate purchase price of the vessels in an escrow account for the benefit of the Sellers promptly after the closing of this offering. The purchase price per vessel will be paid on delivery in (i) 95% cash (less allocable deposit paid) and (ii) 5% of our common shares, at a price per share equal to the public offering price in this offering. In connection with the acquisition, the Sellers have also agreed to a 180 day lock-up on any of our common shares issued in connection with the vessel acquisitions. The fleet description is as set forth below: Vessel Name Type Size (dwt) Year Built Shipyard True Explorer Capesize 178,929 2012 Sungdong, KR True Navigator Capesize 179,905 2011 Daehan, KR True Windsor Capesize 180,012 2012 Daehan, KR True Endurance Capesize 179,147 2012 Hyundai, KR True Dream Capesize 180,694 2014 Tsuneishi Cebu, PH If this offering is not consummated by July 15, 2018, we intend to use the net proceeds of this offering for other vessel acquisitions and general corporate purposes. Corporate Information GoodBulk Ltd. was incorporated pursuant to the laws of Bermuda on October 20, 2016. TABLE OF CONTENTS Our principal executive offices are located at c/o C Transport Maritime S.A.M., 7 Rue du Gabian, Gildo Pastor Center, Monaco, 98000. Our telephone number at this address is +377 97 98 59 87. Investors should contact us for any inquiries through the address and telephone number of our principal executive office. Our principal website is www.goodbulk.com. The information contained on our website is not a part of this prospectus, and the inclusion of our website address in this prospectus is an inactive textual reference only. We maintain a registered office in Bermuda at Clarendon House, 2 Church Street, Hamilton HM11, Bermuda. The telephone number of our registered office is +1 441 295 1422. Risk Factors We face a number of risks associated with our business and industry and must overcome a variety of challenges to utilize our strengths and implement our business strategies. These risks relate to, among others, changes in the international shipping industry, including charter hire rates, a downturn in the global economy, supply and demand, risks inherent in our industry and operations that could result in liability for damage to or destruction of property and equipment, pollution or environmental damage, our dependence on CTM, potential conflicts of interests between us and CTM, inability to comply with the financial covenants in our credit facilities and inability to successfully employ our dry bulk carriers. You should carefully consider the following risks, those risks described in Risk Factors and the other information in this prospectus before deciding whether to invest in our common shares. Implications of Being an Emerging Growth Company As a company with less than $1.07 billion in revenue during our last fiscal year, we qualify as an emerging growth company as defined in the Jumpstart our Business Startups Act of 2012, or the JOBS Act. An emerging growth company may take advantage of specified reduced reporting and other burdens that are otherwise applicable generally to public companies. These provisions include: the ability to include only two years of audited financial statements and only two years of related Management s Discussion and Analysis of Financial Condition and Results of Operations disclosure; and an exemption from the auditor attestation requirement in the assessment of our internal control over financial reporting pursuant to the Sarbanes-Oxley Act of 2002. We may take advantage of these provisions for up to five years or such earlier time that we are no longer an emerging growth company. We would cease to be an emerging growth company (i) upon the last day of the fiscal year (A) in which we had more than $1.07 billion in annual revenue, or (B) we are deemed to be a large accelerated filer under the rules of the SEC, which means the market value of our common shares held by non-affiliates exceeds $700 million as of the prior June 30th, or (ii) we issue more than $1.0 billion of non-convertible debt over a three-year period. We may choose to take advantage of some but not all of these reduced burdens. To the extent that we take advantage of these reduced reporting burdens, the information that we provide shareholders may be different than you might obtain from other public companies in which you hold equity interests. We are choosing to opt out of the extended transition period to comply with new or revised accounting standards applicable to public companies and, as a result, we will comply with new or revised accounting standards as required when they are adopted. Our decision to opt out of the extended transition period is irrevocable. TABLE OF CONTENTS THE OFFERING This summary highlights information presented in greater detail elsewhere in this prospectus. This summary is not complete and does not contain all the information you should consider before investing in our common shares. You should carefully read this entire prospectus before investing in our common shares including Risk Factors and our consolidated financial statements. Issuer GoodBulk Ltd. Offering We are offering 8,500,000 common shares. Offering price range Between $15.50 and $17.50 per common share. Voting rights Our common shares have one vote per share. Over-allotment option We have granted the underwriters the right to purchase up to an additional 1,275,000 common shares from us within 30 days of the date of this prospectus, to cover over-allotments, if any, in connection with the offering. Share capital before and after offering As of the date of this prospectus, our issued and outstanding share capital consists of 29,540,457 common shares (after giving effect to the exchange of the Class A share as described below). Immediately after the offering, we will have 38,040,457 common shares outstanding, assuming no exercise of the underwriters over-allotment option. Use of proceeds We estimate that the net proceeds to us from the offering will be approximately $128.6 million, based on the midpoint of the price range set forth on the cover of this prospectus after deducting estimated underwriting discounts and commissions and expenses of the offering that are payable by us. If this offering is consummated by July 15, 2018, we intend to use the net proceeds from this offering, together with cash on hand and additional borrowings under our credit facilities, to fund the cash portion of the purchase price for the acquisition of up to five secondhand Capesize vessels and for general corporate purposes. If this offering is not consummated by July 15, 2018, we intend to use the net proceeds of this offering for other vessel acquisitions and general corporate purposes. See Use of Proceeds. Dividend policy Our Board of Directors declared a dividend of $0.22 per share on May 21, 2018 that was paid on June 12, 2018 to holders of record as of May 25, 2018. Subject to the sole discretion of our Board of Directors and the considerations discussed below, we intend to continue to return capital to shareholders through quarterly dividends or share repurchases that will annually equal, in the aggregate, between 25% and 50% of our net income. Any future determination related to our dividend policy will be subject to the discretion of our Board of Directors, requirements of Bermuda law, our results of operations, financial condition and cash requirements and availability, our ability to obtain debt and equity financing on acceptable terms as contemplated by our growth strategy, the terms of our outstanding indebtedness, contractual restrictions, the ability of our subsidiaries to distribute funds TABLE OF CONTENTS to us and other factors deemed relevant by our Board of Directors. See Dividends and Dividend Policy and Description of Share Capital. Lock-up agreements We have agreed with the underwriters, subject to certain exceptions, not to offer, sell, or dispose of any shares of our share capital or securities convertible into or exchangeable or exercisable for any shares of our share capital during the 180-day period following the date of this prospectus, subject to certain exceptions. Members of our Board of Directors and our executive officers, as well as certain of our shareholders, have agreed to substantially similar lock-up provisions, subject to certain exceptions. Risk factors See Risk Factors and the other information included in this prospectus for a discussion of factors you should consider before deciding to invest in our common shares. Listing We have applied to list our common shares on the Nasdaq under the symbol GBLK . Unless otherwise indicated, all information contained in this prospectus assumes: the exchange of the Class A share held by one of our founders into one common share, the exchange of which will occur immediately prior to the consummation of this offering; and no exercise of the option granted to the underwriters to purchase up to 1,275,000 additional common shares to cover over-allotments, if any, in connection with the offering. TABLE OF CONTENTS
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+PROSPECTUS SUMMARY As used in this prospectus, references to the "Company," "we," "our", "us" or "Wigi" refer to Wigi Blockchain Technologies, Inc. unless the context otherwise indicates. The following summary highlights selected information contained in this prospectus. Before making an investment decision, you should read the entire prospectus carefully, including the "Risk Factors" section, the financial statements, and the notes to the financial statements. Our Company Wigi Blockchain Technologies, Inc., an Oklahoma corporation incorporated on August 10, 2017, is a payments technology company that is developing a payments platform knowns as "WigiPay" that will utilize blockchain technologies. From inception until the date of this filing our operating activities have primarily consisted of (i) the incorporation of our company, (ii) the development of our business plan, (iii) the acquisition of the source code for the Wigi software platform, (iv) the initial equity funding, (v) the development of WigiPay through conceptually setting out the use of WigiPay points and how the overall platform will function. The Company intends to develop a blockchain payments platform using fiat currency as opposed to the many other cryptocurrencies. In order to do that, the Company intends to implement WigiPay points which will allow payments to be made using blockchain technology. Each WigiPay point will represent the 1 fiat currency in the local currency. For example, in the United States, 1 WigiPay point will represent 1 U.S. dollar. In order to implement blockchain technology into the payments industry while using fiat currency, the Company intends to use WigiPay points . WigiPay is intended to give retail and e-commerce the ability to lower the cost of payments, eliminate fraud and deliver an automated and integrated rewards system. WigiPay is intended to be a consumer-focused payment platform that when fully developed will provide consumers with multiple payment options. As the platform evolves, it will allow for cash, credit cards, debit cards, gift cards, cryptocurrencies, as well as loyalty/rewards transactions. WigiPay will be developed to allow for the transfer of cash from a user's account into his or her WigiPay account. From there, users can buy goods and/or services online. In addition, we intend to provide retail and e-commerce businesses the ability to accept payments utilizing WigiPay points via our WigiPay payments system, which will charge a fee on every transaction made through our application. This is intended to provide a larger customer base to businesses while also lowering the payment processor transaction costs. Wigi believes that consumers, merchants and merchant network platform providers, can simultaneously benefit with its WigiPay payment system, which will use blockchain technology. Wigi believes it can disrupt legacy payments industry systems, which are costly for merchants (and ultimately for consumers), especially when fraud and chargebacks are included. Our products will include the WigiPay mobile app for consumers and WigiPOS merchant dashboard. When used in tandem, consumers will be able to pay for products and services at lower costs while merchants will benefit from an automated rewards system that result in greater consumer retention and satisfaction. Wigi intends to modernize legacy payments by utilizing blockchain technology with fiat currency. We have not realized any revenues to date. We are in the early stages of developing our business. We intend to be in the business of providing retail and e-commerce companies the ability to accept WigiPay points using a blockchain based payment platform. The goal is to create blockchain based payment platform that focuses primarily on fiat as opposed to the many other digital currencies. Our plan of operations over the 12-month period following the successful completion of our offering of 3,000,000 shares of our common stock is to complete development and marketing of our ecommerce blockchain products. The Company's principal office is located at 8F Iwasaki Building. 1-7-2 Asakusabashi, Taito-ku, Tokyo-to, Japan 111-0053. Our telephone number is 81 90-9954-2711. We are an "emerging growth company" within the meaning of the federal securities laws. For as long as we are an emerging growth company, we will not be required to comply with the requirements that are applicable to other public companies that are not "emerging growth companies" including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, the reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and the exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We intend to take advantage of these reporting exemptions until we are no longer an emerging growth company. This is a direct participation offering since we are offering the stock directly to the public without the participation of an underwriter. Our officers and directors will be solely responsible for selling shares under this offering and no commission will be paid on any sales. There has been no market for our securities and a public market may never develop, or, if any market does develop, it may not be sustained. Our common stock is not traded on any exchange or on the over-the-counter market. After the effective date of the registration statement relating to this prospectus, we intend to seek to have a market maker file an application with the Financial Industry Regulatory Authority ("FINRA") for our common stock to be eligible for trading on the Over-the-Counter Bulletin Board. We do not yet have a market maker who has agreed to file such application. There can be no assurance that our common stock will ever be quoted on a stock exchange or a quotation service or that any market for our stock will develop. You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with information different from that contained in this prospectus. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of our common shares. The Offering Securities Being Offered: 3,000,000 shares of common stock, par value $0.001 per share. Offering price $1.00 per share Duration of the Offering: The 3,000,000 shares of common stock are being offered for a period of 18 months. Net proceeds to us $3,000,000 assuming the maximum number of shares sold. For further information on the Use of Proceeds, see page 26. Shares Outstanding Prior to Offering 9,046,890 shares of common stock. Shares Outstanding After Offering 12,046,890 shares of common stock. Subscriptions All subscriptions once accepted by us are irrevocable. Registration Costs All registration costs shall be borne by the Company
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+This summary provides a brief overview of information contained elsewhere in this prospectus. This summary does not contain all of the information that you should consider before investing in our common stock. You should read the entire prospectus carefully, including the financial statements and the notes to those financial statements included in this prospectus. Unless indicated otherwise, the information presented in this prospectus assumes an initial public offering price of $16.50 per share (the midpoint of the price range on the cover page of this prospectus) and that the underwriters do not exercise their option to purchase additional shares. You should read Risk Factors for more information about important risks that you should consider carefully before buying our common stock. Unless the context otherwise requires, references in this prospectus to AFG Holdings, the Company, our company, we, our and us, or like terms, refer to AFG Holdings, Inc. and its subsidiaries. Our Company We are a leading original equipment manufacturer ( OEM ) that designs and manufactures highly-engineered, mission critical equipment and provides complementary consumable products, parts and aftermarket services. We serve a diverse range of customers in the global oil and gas and general industrial end markets. We have a proven track record in new technology development and product commercialization, as well as decades of experience working with our customers to manufacture state-of-the-art, specialized equipment that meets their stringent requirements. Our fully-integrated business model allows us to optimize our supply chain, deliver high quality products and control our cost structure, resulting in high margins and a compelling cash flow profile. We have minimal debt and significant liquidity, which will enable us to continue pursuing strategic organic growth initiatives and acquisitions of synergistic businesses. We believe we are well-positioned to capture additional market share through these initiatives and acquisitions, while taking advantage of improving secular trends and fundamentals in our end markets. We were founded in 1996 in Houston, Texas, and by 2014 we had grown both organically and through a targeted acquisition strategy to operate as both an OEM and as a supplier for customers across a variety of industries. In 2015, we began a business transformation in response to the oil and gas industry s downturn by adopting a new strategy that involved consolidating our broad portfolio to focus on high-return business segments, OEM products, and our fully-integrated business model. We also consolidated our facilities from more than 25 in 2014 to 15 currently without sacrificing our core profitable products and services, which resulted in more than $90 million of annual cost savings. Despite these efforts, due to our significant outstanding indebtedness made unsustainable by the market downturn that began in 2014 and persisted into 2016, we sought relief under Chapter 11 of the Bankruptcy Code in April of 2017 which substantially improved our liquidity profile upon emergence in June of 2017. Please see Recent Developments Restructuring and Financial Deleveraging. We believe we have established market-leading positions in the manufacturing of pressure pumping equipment for the onshore oil and gas market and high-technology offshore oil and gas equipment. We believe our managed pressure drilling ( MPD ) systems and new DuraStim frac pump are cutting-edge technologies and are capable of disrupting the markets in which we operate. Our Technology and Research & Development Capabilities We deploy innovative technology and have several decades of experience developing tailored products and services for our customers. This experience has helped position us as the provider of Table of Contents The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED JULY 9, 2018 PROSPECTUS 18,200,000 Shares AFG Holdings, Inc. Common Stock This is our initial public offering. We are offering 5,600,000 shares of our common stock and the selling stockholders are selling 12,600,000 shares of common stock. We will not receive any of the proceeds from the sale of the shares being sold by the selling stockholders. Prior to this offering, there has been no public market for our common stock. It is currently estimated that the initial public offering price will be between $15.00 and $18.00 per share. We have been approved, subject to official notice of issuance, to list our common stock on the New York Stock Exchange (the NYSE ) under the symbol AFGL. We are an emerging growth company as that term is used in the Jumpstart Our Business Startups Act of 2012 (the JOBS Act ), and will be subject to reduced public company reporting requirements. See Risk Factors beginning on page 24 to read about factors you should consider before buying shares of our common stock. Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense. Per Share Total Initial public offering price $ $ Underwriting discounts and commissions(1) $ $ Proceeds, before expenses, to AFG Holdings, Inc. $ $ Proceeds, before expenses, to the selling stockholders $ $ (1) Please read Underwriting for a description of all underwriting compensation payable in connection with this offering. The underwriters have the option to purchase up to an additional 2,730,000 shares from the selling stockholders at the initial public offering price, less the underwriting discounts. Delivery of the shares of common stock is expected to be made on or about , 2018 through the book-entry facilities of The Depository Trust Company. Joint Book-Running Managers Goldman Sachs & Co. LLC Credit Suisse Simmons & Company International Energy Specialists of Piper Jaffray Barclays Evercore ISI UBS Investment Bank Wells Fargo Securities Co-Managers Jefferies Raymond James Tudor, Pickering, Holt & Co. Prospectus dated , 2018. Table of Contents TRADEMARKS, SERVICE MARKS AND TRADE NAMES We own or have rights to various trademarks, service marks and trade names that we use in connection with the operation of our business. This prospectus may also contain trademarks, service marks and trade names of third parties, which are the property of their respective owners. Our use or display of third parties trademarks, service marks, trade names or products in this prospectus is not intended to, and does not imply, a relationship with, or endorsement or sponsorship by us or third parties. Solely for convenience, the trademarks, service marks and trade names referred to in this prospectus may appear without the , TM or SM symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the right of the applicable licensor to these trademarks, service marks and trade names. INDUSTRY AND MARKET DATA The data included in this prospectus regarding the industry in which we operate, including descriptions of trends in the market and our position and the position of our competitors within our industries, is based on a variety of sources, including independent publications, government publications, information obtained from customers, distributors, suppliers, trade and business organizations and publicly available information, as well as our good faith estimates, which have been derived from our management s knowledge and experience in the industry in which we operate. The industry data is sourced from Spears & Associates, Baker Hughes, a GE company ( Baker Hughes ), the American Chemistry Counsel, International Air Transport Association ( IATA ), and the U.S. Energy Information Administration and the International Energy Agency. We believe that these third-party sources are reliable and that the third-party information included in this prospectus and in our estimates is materially accurate and complete. BASIS OF PRESENTATION Our historical financial and operating information as of December 31, 2017 (Successor) and for the period from June 9, 2017 to December 31, 2017 (Successor) may not be comparable to the historical financial and operating information for the period from January 1, 2017 to June 8, 2017 (Predecessor) and as of and for the year ended December 31, 2016. We emerged from bankruptcy on June 8, 2017, and as a result, our financial statements after June 8, 2017 reflect the application of fresh start accounting. References to Successor in this prospectus relate to our financial position and results of operations subsequent to June 8, 2017, the date of our emergence from bankruptcy, and references to Predecessor in this prospectus relate to our financial position and results of operations prior to, and including, June 8, 2017. Unless otherwise indicated, the information presented in this prospectus, other than our historical financial statements, is adjusted to reflect our 7.10 for 1 stock split to be effected immediately prior to the consummation of this offering. Certain numbers reflected in this prospectus represent approximations due to required rounding in connection with our anticipated 7.10 for 1 stock split. The actual numbers will not differ materially from such approximations. Table of Contents choice for mission critical onshore and offshore oil and gas equipment. We have over 40 dedicated research and engineering professionals who use their experience to develop globally appealing, innovative technologies. We believe the technology we developed in the last five years will account for approximately 75% of our revenues and profits in 2018. There are several aspects of our technology solutions that differentiate us from our competitors: Leading pressure pumping equipment offering. We believe we offer the most technologically advanced pressure pumping equipment currently available. Our controls and data management systems enable our customers to improve ultimate recovery from oil and gas reservoirs and make more informed, real-time decisions. Additionally, we believe that our proprietary blender technology offers our customers best-in-class efficiency and reliability. Proprietary, disruptive pressure pumping technology. We are developing innovative new technology to provide the hydraulic fracturing industry with eco-friendly, efficient, low-cost frac equipment. We have recently developed the patented DuraStim , a 6,000 hydraulic horsepower ( HHP ) frac pump that we expect to commercially offer to our customers in the second half of 2018. DuraStim provides approximately three times the equivalent horsepower with roughly the same footprint and weight as a conventional system. DuraStim has been specifically designed to alleviate many of the harsh operating conditions of a traditional frac pumper which we expect will result in a longer useful life and lower annual maintenance requirements as compared to conventional systems. Additionally, we believe DuraStim is more environmentally friendly, more robust and will reduce non-productive time for our customers. We believe it provides an opportunity to capture a large portion of the pressure pumping equipment market and expand our market share. Broad portfolio of patent-protected products servicing the offshore oil and gas industry. We believe our MPD systems are at the forefront of the next generation of drilling technology. These state-of-the-art systems offer significant safety and efficiency benefits for customers through precise control of the wellbore and well pressure. Improved control allows drillers to reduce nonproductive time and decrease the likelihood of disruptive events. Extensive portfolio of intellectual property. We have a portfolio of approximately 386 active patents related to equipment, assets and techniques that support or protect our products and technologies. For example, we hold patents related to subsea equipment including Retlock Technology and VirtusTM connection systems, the basis for our core subsea connector technology. Our Segments and Products We design and manufacture equipment and products (and report our operations relating to these equipment and products) through three segments: Onshore Oil & Gas OEM, Offshore Oil & Gas OEM and Connectors & Precision Manufacturing. Each segment also provides supporting aftermarket services for our own products and competing OEM products. Our lines of business within these segments are detailed below. Onshore Oil & Gas OEM. We design, engineer and manufacture equipment and products, and provide aftermarket parts and services, primarily for pressure pumping and gas compression operations. Our pressure pumping equipment is used in the hydraulic fracturing and cementing of oil and gas wells. We manufacture what we believe to be one of the industry s most complete suites of equipment for pressure pumping operations, including pump units, blenders, hydration units and proprietary end-to-end automation, controls and data management, and we are in the process of commercializing our fluid end and power end product lines. We believe we are also the only pressure pumping equipment manufacturer that builds its own U.S. Department of Transportation compliant fuel tanks, trailer frames, fluid Table of Contents Table of Contents tanks, platforms, racks and other structures used with its equipment. We also manufacture gas compression packages used in artificial lift applications. Offshore Oil & Gas OEM. We design, engineer and manufacture equipment and products, and provide aftermarket parts and services, for drilling, production and intervention operations primarily in the offshore, deepwater and subsea markets. Our products include market-leading, patent-protected MPD systems for both retrofits and new-build rigs, drilling risers, riser gas management, early kick/loss detection, dual gradient drilling, continuous circulation, buoyancy and subsea connectors. We hold 351 patents related to this segment. Our MPD systems are state-of-the-art in that they enable active control of downhole drilling pressure, resulting in safety and drilling efficiency for offshore drillships, semi-submersible rigs and jackup rigs. In addition, we offer a corollary product, rotating control devices ( RCDs ), in the onshore space with a similar value proposition as in offshore markets. We also provide software, controls, analytics and testing. In particular, our proprietary testing and simulation equipment and software includes the unique capability to test MPD scenarios and equipment beyond standard industry requirements and simulate drilling conditions. Connectors & Precision Manufacturing. We design, engineer and manufacture connectors, forgings, forged products and rolled rings for the global oil and gas industry, including midstream, refining, LNG and petrochemical, as well as general industrial, power generation, transportation and aerospace markets, and provide private label manufacturing services for other OEMs. Our proprietary connector design utilizes metal-to-metal seal ring technology providing superior leak-free reliability compared to traditional gaskets. In addition to our connector and sealing products, we also provide engineering, forging and private label precision manufacturing services that meet stringent industrial specifications and processes. Our forging capabilities include open and closed die forgings, ranging in tonnage from approximately 650 to 6,500 tons. Table of Contents Onshore Oil & Gas OEM Offshore Oil & Gas OEM Connectors & Precision Manufacturing Key Segment End Markets Pressure Pumping Onshore E&P Artificial Lift Compression Offshore Drilling Offshore E&P Oilfield Equipment Manufacturers Oil and Gas Midstream U.S. Refining LNG Petrochemical Power Generation Transportation Aerospace Products/ Services Equipment DuraStim 6,000 HHP Frac Pumps 2,250 and 2,500 HHP Frac Pumps Fluid ends* Power ends 140 BPM Blenders 200 and 250 BBL Hydration Units 44 ft. Data Vans 16 Port Manifold Trailers 1,400 HP Twin Cementers Automation and Control Systems 200 and 400 HP Compressor Packages for Artificial Lift 3 Stage Compressor Packages Services Aftermarket Service and Repairs Drilling Equipment MPD Systems Active Control Devices/ Rotating Control Devices Riser Gas Handling Systems Risers Choke Systems Dual Gradient Drilling Systems Diverter Manifolds Continuous Circulation Systems Elastomer Products Control Systems Subsea Equipment Flowline Connection Systems Retlock Clamp Connectors Virtus Connection Systems Services Asset Management Buoyancy Aftermarket Service and Repairs Taper-Lok Pressure-Energized Connectors Coffer-Lok Specialty Flanges Commodity Forgings Forged Products Private Label Manufacturing Services Fuel Nozzle Assemblies Oil and Gas Chassis Gas Turbine Combustion Covers * Under commercialization. Our business is diversified across our three segments and has a strong backlog of contracted work as reflected in the following charts: Revenue Composition for 2017 Backlog (in millions) Table of Contents We focus on organic development of innovative, differentiated technologies in our core markets, facilitating our current market-leading OEM positions in pressure pumping equipment and MPD systems. We also completed four complementary acquisitions during 2016 and 2017 that enhanced our portfolio of products. We plan to continue selectively acquiring businesses that enhance our research and development capabilities and product offerings, while also undertaking high-return organic growth initiatives to further entrench our products and services with our customer base and position us for continued long-term growth. For the year ended December 31, 2017, we generated pro forma net income of approximately $72.3 million, Adjusted EBITDA of approximately $46.2 million (consisting of $9.4 million for the period from January 1, 2017 to June 8, 2017 and $36.8 million for the period from June 9, 2017 to December 31, 2017) and Adjusted EBITDA margin of approximately 10.5%. For the three months ended March 31, 2018, we generated net income of approximately $7.5 million, Adjusted EBITDA of approximately $26.1 million and Adjusted EBITDA margin of approximately 15.3%. As of March 31, 2018, our backlog of contracted work was approximately $482 million. For definitions of Adjusted EBITDA and Adjusted EBITDA margin, each of which are non-GAAP financial measures, and reconciliations to their most directly comparable GAAP measure, please read Summary Historical and Unaudited Pro Forma Financial Data Non-GAAP Financial Measures. Our Competitive Strengths We believe the following strengths differentiate us from our peers and will position us to achieve our primary business objective of creating value for our stockholders: Market-Leading, Fully-Integrated OEM of Highly-Engineered, Mission Critical Equipment. We are a fully-integrated manufacturing company focused on being a market-leading OEM in the global oil and gas and general industrial markets we serve. The vertical integration of our business model enables us to control our manufacturing costs, product quality, safety controls and ability to provide on-time delivery of critical equipment, products and services to our customers. By participating throughout the manufacturing process, we are ideally positioned to control costs and innovate new OEM technologies by leveraging our expertise in metallurgy, engineering, forging and sealing to enhance product integrity, safety and efficiency for our customers. Leader in Pressure Pumping Equipment. We manufactured approximately 28% of the total net HHP additions between 2014 and 2018 in North America, including expected orders for 2018, which we believe makes us the largest provider of frac equipment to third parties based on internal estimates. According to Spears & Associates, industry-wide net pressure pumping capacity decreased by 1 million HHP during the past two years. However, over this same period we sold more than 210 newly manufactured pressure pumping units, representing more than 525,000 HHP collective capacity and an increase in our units and capacity sold versus prior years. With increasing completion intensity driving down the average useful lives of equipment, we believe our market-leading position will allow us to benefit from increasing OEM sales and aftermarket needs as pressure pumping equipment is refurbished or replaced at an increased cadence. We also believe we are well-positioned to capture additional favorable trends, including accumulated demand for new equipment and parts due to deferred maintenance during the downturn and a significant wave of replacement demand from pressure pumping equipment installed over five years ago. Additionally, our customers often install our hydraulic fracturing control systems and software on competitors equipment. This provides us with broader market penetration and the opportunity to gain share in aftermarket customer spending that will potentially drive future OEM sales as older equipment is replaced. Table of Contents Leading Provider of Managed Pressure Drilling Systems. We are a market leading OEM for high-technology MPD systems, and we believe we have the most complete suite of deepwater MPD products currently available to the market. MPD is an adaptive drilling process that is used to precisely control the annular pressure profile throughout the wellbore. By using MPD systems, drilling contractors can drill to total depth effectively and accurately, avoiding hazards that decrease drilling efficiency and increase costs to the operator. Our MPD systems have the technology necessary to become the standard for the next generation of drilling equipment. We expect our MPD business to continue benefitting from service providers retrofitting current fleets due to safety and efficiency benefits. As offshore activity increases, we believe that demand for our MPD packages will increase as our MPD upgrades enable offshore drilling rigs to drill faster and more safely. Exploration and production ( E&P ) operators increasingly require drillers to include MPD equipment in their drilling packages, reinforcing our belief that the industry will continue to adopt this technology. In addition, our MPD technology is utilized onshore in RCDs with a similar value proposition as in offshore markets. Strength of Our Diverse and Blue Chip Customer Base. Our customers include some of the largest companies operating in the oil and gas industry, including oilfield services companies (e.g., Keane, ProPetro, ProFrac), offshore drilling contractors (e.g., Ensco, Noble Corporation, Transocean), other equipment manufacturers (e.g., Baker Hughes/GE, National Oilwell Varco, Schlumberger), international oil companies ( IOCs ) (e.g., BP, Chevron, Conoco Phillips, Marathon), national oil companies ( NOCs ) (e.g., Aramco, CNOOC, Petrobras, Statoil), engineering, procurement and construction ( EPC ) companies (e.g., SBM, Subsea 7, TechnipFMC, WorleyParsons) and general industrial customers (e.g., Dodson Global and General Electric). Given the scale and breadth of most of our customers operations, we believe they generally seek to partner with suppliers like us because we can serve them on a global basis. Global Manufacturing Footprint with Strong Safety Record. We have a global manufacturing presence that includes 11 manufacturing facilities and three service facilities in seven countries across four continents. Additionally, our safety record is among the best across any industry and significantly better than most of our manufacturing peers. In 2017, our total recordable incident rate ( TRIR ) was 0.63 and our days away, restricted or transferred ( DART ) was 0.35, comparing favorably to most recently available industrial equipment manufacturing benchmarks of 6.2 and 3.9, respectively, published by the U.S. Bureau of Labor and Statistics. We believe that our global manufacturing footprint and reputation for quality and safety help us win new business and prevent lower-quality manufacturers from effectively competing with us. Proven Track Record of Expanding and Enhancing OEM Product Offering Through Focused Acquisition Strategy. We have consistently grown our business by combining a disciplined acquisition strategy with organic growth. We have recently focused on acquisitions of companies to complement our value-added OEM products and enable technologies that can leverage our fully-integrated manufacturing business model, global footprint, and diverse customer base. As a result of our investments, we believe that we have a greater overall earnings capacity relative to 2014 when adjusting for industry activity levels. We made four acquisitions during 2016 and 2017 that have each made important contributions to our current market position and growth strategies in key product areas. For example, we acquired Advanced Measurements Inc. ( AMI ), a key provider of automation, controls and data management systems. This acquisition served as an important vehicle to further develop more advanced control and data management offerings, enhancing our ability to help customers achieve stronger production gains and make better real-time decisions. We are focused on fully Table of Contents expanding our controls and data management portfolio in pressure pumping controls into new markets, such as MPD and gas compression. Highly Attractive Financial Profile. We participate in the global oil and gas and general industrial markets with attractive growth trends, and our business generates strong Adjusted EBITDA margins. Our financial profile and cash flow generation are further enhanced by our low capital requirements, as demonstrated by our capital expenditures averaging approximately 3% of revenues over the last two years. Our margin profile and low capital requirements result in strong and stable cash flows that we believe will enable us to deploy our capital to fund strategic initiatives to drive innovation and organic growth opportunities and finance value-enhancing acquisitions. We believe that our financial profile, which has been enhanced by our business transformation that reduced our number of facilities by half and our headcount by approximately 60%, reflects a strong and attractive business with potential for significant earnings growth over time. As a result of significant outstanding indebtedness, we sought bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code and significantly reduced our outstanding debt and bolstered our liquidity profile upon emergence in 2017. Please see Recent Developments Restructuring and Financial Deleveraging below. Our liquidity profile and cash flow safely support our capital expenditure budget of approximately $14.4 million for 2018. Experienced Management and Operating Team with Strong Industry Relationships and Track Record of Success. Since our chief executive officer assumed such role in 2015, our management team has been critical in pursuing key opportunities and effectively managing challenges facing our business. Our management team has successfully implemented a business transformation strategy to navigate the significant downturn in the oil and gas industry, position the company for continued long-term growth, and continue to drive earnings growth in the ongoing market recovery. Our current management team, comprised of individuals with extensive operational, financial and managerial experience, has demonstrated a track record of success via organic growth, acquisitions and cost reduction. Our senior management team has an average of over 30 years of experience and has strong customer relationships across all of the industries we serve. Our Growth Strategies We intend to achieve our primary business objective of creating value for our stockholders by successfully executing the following strategies: Capitalize on Demand for Pressure Pumping Equipment. Pressure pumping services demand is rebounding with increased oil and gas drilling and completion activity. We expect continued strong demand for pressure pumping equipment as a result of the need to replace aging equipment that has not been well-maintained during the downturn. According to Spears & Associates, a large and growing percentage of the 22 million of North American frac HHP as of 2017 is over five years old. Additionally, changing completion designs are causing meaningful compression of useful lives, as well as resulting in extensive annual repair and maintenance needs. We anticipate this older equipment will require significant overhaul or replacement to serve today s demanding operational environment. We believe these trends have led, and will continue to lead, to increased purchasing of pressure pumping equipment. With this observed elevated demand for our pressure pumping equipment, we are investing in expanding manufacturing and aftermarket service capacity and view this as a significant opportunity for growth. Our sales backlog for our pressure pumping-related equipment and products stood at approximately $414 million as of March 31, 2018. Table of Contents Commercially Deploy Innovative and Disruptive Technologies. We are focused on high value technologies that could contribute to our high margin OEM portfolio of products, including our patented DuraStim frac pumps. We expect to allow customers to begin to place orders for DuraStim later this year for delivery in 2019. We believe DuraStim will disrupt the frac pump market by providing more than double the horsepower of a conventional hydraulic frac pump. DuraStim is much more cost efficient to maintain and is considerably quieter than a conventional frac pump. We believe our pressure pumping equipment market share will increase with the introduction of DuraStim . Additionally, in 2017 we launched a new RCD for use in onshore drilling. We will continue to work closely with our customer base to innovate and manufacture novel products to match the demand of our customers evolving needs. Continue to Target High Return Low-Capital Intensity Investments to Support our Global, Fully-Integrated Supply Chain. We are continually focused on improving the capabilities of our global, fully-integrated platform and strive to achieve high levels of performance for our product lines and supporting aftermarket services. Our investments are typically not capital-intensive relative to other participants in the oil and gas industry and still produce high returns. For example, we are currently investing in upgrading existing forging equipment to meet increased sales volumes and the increased demands of our customers. These upgrades will increase capacity and productivity of our equipment, as well as expand the capabilities of the equipment manufactured at this facility. We believe these investments will provide significant cost savings, and ultimately enhance Adjusted EBITDA performance in 2018 and beyond. Expand Aftermarket Service Infrastructure to Drive Highly Profitable Recurring Revenues. We aim to provide our customers with products that maximize uptime and have placed service facilities close to our customers field locations to improve customer response time. In addition to servicing our products and equipment, we also service our competitors products and equipment which ultimately increases our customer base and provides us with broader market penetration and additional opportunities to gain market share through cross-selling. We currently have three service facilities. We are in the process of expanding our maintenance and service facility footprint within West Texas and adding locations in New Mexico and Pennsylvania later this year to support major pressure pumping customers and to meet growing demand for outsourced repairs and maintenance. Continue Product and Technology Acquisition Strategy to Complement Organic Growth. We have a track record of completing successful acquisitions to augment and expand our current offerings. We believe our ability to leverage our fully-integrated business model, global footprint and blue chip customer base helps us realize significant synergies in acquisitions and generate attractive returns on investments. We have consistently employed a disciplined approach to acquisitions focused on opportunities that (i) strengthen our existing portfolio, (ii) allow us to establish new platforms in attractive markets, and (iii) enhance our aftermarket offerings. Leverage Increased Manufacturing Capacity to Provide Additional Offerings in the Connectors & Precision Manufacturing Segment. We believe our commercial networks and global operating footprint allow us to provide additional offerings in global oil and gas and general industrial markets as well as access new geographic markets. For example, we intend to expand our product lines to include high-spec, severe service bolts for the offshore oil and gas market. This opportunity will allow us to leverage our existing asset base and operating model to access an attractive, high margin market. Continue to Maintain Financial Discipline. We intend to maintain a conservative balance sheet, with a focus on cash flow generation, which will allow us to react to potential changes in Table of Contents industry and market conditions and opportunistically grow our business through acquisitions or capital expenditures for organic growth projects. We approach our capital allocation with discipline, and make organic or inorganic investment decisions to meet anticipated return thresholds in excess of our cost of capital. We intend to manage our liquidity by continuously monitoring cash flow, capital spending and debt capacity. Our focus on maintaining our financial stability, coupled with the low capital intensity of our operations, allows us the flexibility to execute our strategy throughout commodity price cycles and industry volatility. We currently intend to maintain significantly lower debt levels than in previous years to maintain a strong and stable financial profile. As of March 31, 2018 we had a net positive cash position, and after giving effect to this offering, we will have $116.8 million of liquidity in the form of cash on hand and undrawn borrowing capacity under our asset-based revolving credit facility (the ABL Facility ), excluding the payment of the IPO Bonuses (as defined below). We expect to enter into a new ABL credit facility at or around the closing of this offering, which will increase our pro forma liquidity. Please read Management s Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources Our Debt Agreements New ABL Credit Facility for additional information. Industry The demand for our products and services is primarily driven by drilling, production and completion activity by E&P companies, which depends on the current and anticipated profitability of developing oil and gas reserves. We believe that the recent recovery in commodity price levels will result in increased demand for our products and services, both in the onshore and offshore oil and gas sectors. Our business also serves general industrial markets where we believe we have benefited from the global economic recovery over the past several years. Onshore Oil and Gas The North American onshore oil and gas market has experienced a recovery, driven in part by the recent improvement in oil prices. However, the majority of the increase in North American onshore oil and gas activity levels will be driven by other factors described below that we believe will support North America s outpaced growth in the broader global oil and gas industry. Growth in North American Land Rig and Well Counts. Demand for our services is influenced by the number of drilling rigs our potential customers operate and the number of wells that our potential customers drill. Oil and gas wells in North American unconventional resource plays typically experience rapid declines in productivity over time. As a result, new wells are required to be drilled and completed in order to replace declining production. We believe that as sustained production from wells drilled over the last several years continues to decline, the number of horizontal drilling rigs and the North American well count will increase, as well as the prevalence of pad drilling. According to Spears & Associates, the total North American land drilling rig count is expected to average 1,248 rigs during 2018, and 33,801 wells are expected to be drilled during the year. These figures represent increases of 18% and 16% from the North American land drilling rig count and North American land well count over 2017 levels, respectively. Horizontal wells in particular typically enable more wellbore contact within the targeted geological zone, resulting in more productive wells, and more productive wells can potentially result in more business for our business segments. According to Spears & Associates, horizontal wells, as a percentage of total wells drilled in the U.S., has increased each year since 2011, such that in 2017, 67% of total wells drilled in the U.S. were horizontal wells. Horizontal wells typically require more intensive completion than vertical wells due to Table of Contents their longer reach to total depth and complexity. We believe this growth trend is favorable for our Onshore Oil & Gas OEM segment and associated aftermarket parts business, as an average single active rig is now expected to generate more demand for hydraulic fracturing due to the increase in service intensity. Growth in North American Onshore Drilling and Completions Spending. We believe that North American unconventional shale resources will continue to capture a growing share of global capital spending on oil and gas resource development as a result of the shale resources competitive positioning on the global cost curve. Spears & Associates estimates that capital spending for drilling and completions in the North American onshore market will reach approximately $124 billion in 2018, and will increase approximately 43% over the next four years to $177 billion. Increasing Number of Drilled but Uncompleted Wells. As a result of a shortage of available hydraulic frac crews, long lead-times on new frac equipment and constrained E&P capital budgets, there is a large inventory of wells in the North American land market that E&P operators previously drilled but did not complete in an effort to defer capital spending. The U.S. Energy Information Administration ( EIA ) estimates that there are 7,677 drilled but uncompleted wells ( DUCs ) in the U.S. as of April 2018. These DUCs represent a backlog of uncompleted wells that we expect will provide additional demand for completion services and equipment. Increasing Lateral Lengths, Hydraulic Fracturing Intensity and Volume of Proppant Used. As E&P companies have gained more experience operating in unconventional resource plays and a better understanding of reservoir characteristics, they have applied new drilling and completion equipment and technology in order to maximize the recovery of hydrocarbons and reduce the costs associated with each well. Recently, the industry has favored increasing lateral lengths, a higher number of hydraulic fracturing stages and substantially increased amounts of proppant pumped into each well, as operators focus on lowering costs associated with wells drilled. Each of these trends increases the amount of required HHP at well sites. Spears & Associates estimates that the increase in average lateral length, number of hydraulic fracturing stages per 1,000 lateral feet and pounds of proppant pumped per lateral foot in the North American land market to be 26%, 46% and 79%, respectively from 2014 to 2018. Growth in Hydraulic Fracturing Demand. Demand for HHP in the North American market is increasing substantially as a result of all of the factors described above. Spears & Associates estimates that demand for HHP will average 14.3 million HHP in 2018, which is an increase of approximately 185% relative to the recent trough demand level in 2016. Additionally, demand for new HHP favors new generation technology and fit-for-purpose hydraulic fracturing pumps that can both maximize operators run time and withstand the rigors of challenging operating environments throughout the North American land market. Aging Frac Equipment and Ensuing Replacement Cycle. As the prevalence of horizontal drilling and hydraulic fracturing in unconventional resource plays grew between 2010 and 2015, new equipment and services with the capability of approximately 15 million HHP entered the North American market, resulting in an oversupply of HHP relative to demand. As a result of the oversupply of HHP, pricing for hydraulic fracturing services declined significantly. This led many hydraulic fracturing service providers to defer critical maintenance spending and allow equipment conditions to deteriorate. Equipment conditions have deteriorated so much that large portions of the North American hydraulic fracturing fleets are becoming obsolete. Spears & Associates estimates that as of October 2017 approximately 29% of all North American HHP was older than five years. Additionally, the useful life for the average frac pump unit has declined from approximately seven to ten years in 2010 to three to five years in the Table of Contents current operating environment as a result of increased completion intensity, a shift towards twenty-four hour frac operations, and equipment quality degradation driven by the idling of assets during periods of low activity levels such as the recent industry downturn. As older equipment becomes obsolete, the market demands leading edge frac equipment of the type we design and manufacture. Thus, we believe that as the North American pressure pumping fleet requires replacement over the next several years, demand for our equipment, technology and designs will increase. Offshore Oil and Gas The global offshore oil and gas market is beginning to see signs of recovery. The costs of exploring for and producing oil and gas are declining as a result of technological advances and recent efficiency improvements, resulting in increased offshore oil and gas capital expenditures. We believe the following offshore oil and gas trends will positively affect our business over the coming years. Growth in Global Offshore Rig and Well Count. The global offshore rig and well count has begun to stabilize, and Spears & Associates estimates that the offshore rig count will grow 5% annually through 2022, and the offshore well count will grow 4% annually through 2022. Growth in Global Offshore Drilling and Completions Spending. Capital spending for offshore drilling and completions is expected to grow 6% annually to $68 billion by 2022. A sustained recovery in global oil and gas prices could accelerate offshore spending. Improvements in Global Offshore Operating Efficiency and Utilization. As offshore activity and rig utilization begin to increase, we believe that operators will be motivated to install MPD packages and other advanced drilling systems that offer significant improvements in operating efficiency and safety. We are well-positioned to benefit from improving offshore drilling activity and rig dayrates through the deployment of our MPD advanced drilling systems which have significant efficiency and safety benefits for customers. We are also targeting the retrofit markets for drillships, floaters and jackups. Connectors & Precision Manufacturing The strength of the overall economy, general economic expansion, the lowest unemployment rate in 10 years, projected GDP growth of 2.7% for 2018, and the general recovery of onshore and offshore oil and gas activity, bode well for our Connectors & Precision Manufacturing segment as economic expansion leads to growth in many sectors of the energy and industrial value chains where our manufactured parts are sold. Plant turnarounds and maintenance activities, which may be supported by continued economic expansion can provide a source of recurring revenue for connectors. Continued spending on domestic pipeline infrastructure should provide consistent demand for these products going forward. We also serve a variety of end markets including the general industrial, midstream, refining, LNG, petrochemical, power generation, transportation and aerospace sectors. We provide private label manufacturing services to customers in many of these sectors. Over the past several years these markets have benefited from the global economic recovery. Participating in the general industrial markets serves to diversify our customer and geographic concentration of revenues and reduce volatility of our earnings. Table of Contents We believe the following trends will continue to positively drive our business over the coming years. Onshore and Offshore Oil & Gas Industry Capital Expenditures. Through the manufacture of connectors, riser strings and other equipment used in drilling and completion applications, and our new fluid end product line, our Connectors & Precision Manufacturing segment is well-positioned to capitalize on an upstream recovery, particularly in North American pressure pumping and in the global offshore drilling market. We believe we are exposed to some of the highest growth market drivers in the context of the onshore and offshore oil and gas industry. Secular trends are driving increased demand for and replacement of manufactured equipment. The quickly growing demand for fracturing HHP, increased service intensity, and other factors, are causing an accelerated wear and tear on frac pumps and associated aftermarket parts, consumables and related services. Spears & Associates estimates that capital spending for drilling and completions in the North American onshore market will reach approximately $124 billion in 2018, increasing at a compound annual growth rate ( CAGR ) of approximately 9% per year until 2022. In addition, Spears & Associates estimates global offshore drilling and completions spending will increase at a CAGR of approximately 6% per year until 2022. Midstream Capital Spending Continues to be Robust. As domestic onshore production continues to meet growing global demand, multiple basins in the U.S. are expected to have a shortfall of midstream takeaway capacity in the next three to five years. Large investments in midstream and downstream energy end-markets are expected to drive sales of our equipment and future sales in aftermarket parts and services as facilities age. Our Connectors & Precision Manufacturing segment is well-positioned to benefit from both ongoing maintenance spending as well as growth spending in the midstream and downstream sectors. U.S. Refining Capital Expenditures Expected To Increase. Over the last several years, low priced crude oil and strong demand for refined products have incentivized refiners to increase maintenance capital expenditures and delay full turnarounds in order to maximize facility production uptime. However, recent lower-than-typical crack spreads are expected to lead refiners to increase capital expenditures in 2018 as maintenance and turnaround projects that had been deferred over the last several years are planned. We believe that the connectors business will benefit from increased industry spending on refinery turnaround projects that were delayed over the last several years. LNG Export Capacity is Projected to Grow Significantly. Prolific gas production in the Appalachian Basin and growing associated gas production in the Permian Basin and Mid-Continent has served as a governor on natural gas prices. Lower domestic gas prices relative to global gas prices has led to a growing number of approved and proposed LNG export facilities. This abundance of gas has led to the establishment of multiple LNG export facilities. Shale Gas-Oriented Petrochemical Expansion. Consistently low gas prices are expected to contribute to a continued build out of petrochemical processing facilities, with a significant percentage of these plants expected to be located along the Gulf Coast. At the end of 2017, the American Chemistry Council determined there were an estimated 317 petrochemical projects completed, currently under construction or planned, representing an aggregate $185 billion in capital investment. The American Chemistry Council forecasts the annual U.S. capital spending by the chemical industry to reach $48 billion by 2022, more than double the level of spending in 2010. Power Generation Growth. The EIA expects aggregate global energy use to grow 28% by 2040, driven in large part by demand for natural gas for electricity generation. In addition, Table of Contents developed countries are supporting policies for reduced emissions and are increasing capital spending on the modernization of their power generation facilities. These improvements in new facilities are driven by low prices and abundant production of natural gas. The Transportation and Aerospace Industries are Benefitting from Favorable Industry Trends. Global economic growth has resulted in increasing demand for commercial air travel, air freight services, heavy-truck and off-highway industries. The IATA estimates that global commercial airline passenger traffic has grown approximately 6.6% annually over the last five years. Demand for expedited delivery of goods and lean retail inventory levels have driven increasing air freight traffic, while the expansion of the middle class in emerging markets has also contributed to growth in the market for airline travel. Defense spending levels have risen over the last several years in the U.S. and internationally. Manufacturers of aircrafts are well-positioned to capitalize on the ongoing equipment replacement cycle, because older airplanes continue to be phased out of the global fleet in favor of newer, state-of-the-art aircrafts that offer fuel efficiency, reduced noise emissions and improved customer experiences. In addition, we believe that primary products including wheel hubs, fly wheels and torque tube for the transportation industry will continue to benefit from the global economic growth. Recent Developments Restructuring and Financial Deleveraging Our financial performance depends, in large part, on conditions in the global oil and gas and general industrial markets we serve and on the general condition of the global economy, which impacts these markets. Due to significant outstanding indebtedness and the significant decline in and subsequent period of low commodity prices beginning in 2014, we voluntarily filed prepackaged restructuring petitions on April 30, 2017 under Chapter 11 of the U.S. Bankruptcy Code. On June 8, 2017, we emerged from bankruptcy with our consensual prepackaged restructuring (the Restructuring ) resulting in a significant reduction in our debt and interest burden and a substantial increase in our liquidity. Following the completion of the Restructuring, our debt and other obligations were reduced by approximately $743.5 million. The Restructuring significantly delevered our balance sheet, provided us with working capital to fund ongoing operations both during the Restructuring and after, and maximized recoveries for the stakeholders. The Restructuring preserved the going-concern value of the business and allowed us to reorganize and right-size our business through a reduction of our number of facilities by half and of our headcount by approximately 60% without sacrificing our core products or services. For additional information about our bankruptcy proceedings and emergence, please see Note 2 to the audited consolidated financial statements included elsewhere in this prospectus. New ABL Facility We plan to enter into a new ABL credit facility at or around the closing of this offering. The new ABL credit facility will replace our existing ABL Facility. Please read Management s Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources Our Debt Agreements New ABL Credit Facility for additional information. Preliminary Estimate of Selected Second Quarter 2018 Financial Results Although our results of operations as of and for the three and six months ended June 30, 2018 are not yet final, based on the information and data currently available, we estimate, on a preliminary Table of Contents basis, that revenue will be within a range of $193.7 million to $201.6 million for the three months ended June 30, 2018, and within a range of $364.2 million to $372.1 million for the six months ended June 30, 2018. Additionally, we estimate that total capital expenditures for the three months ended June 30, 2018 will be within a range of $6.5 million to $7.0 million and estimate that backlog as of June 30, 2018 will be within a range of $390.0 million to $400.0 million. Based on currently available information, we also estimate that our net income will be within a range of $6.2 million to $11.4 million for the three months ended June 30, 2018, and within a range of $13.8 million to $18.9 million for the six months ended June 30, 2018. In addition, we estimate that Adjusted EBITDA will be within a range of $34.2 million to $36.1 million for the three months ended June 30, 2018 and within a range of $60.4 million to $62.2 million for the six months ended June 30, 2018. In addition, we estimate that Adjusted EBITDA Margin will be within a range of 17.7% to 17.9% for the three months ended June 30, 2018 and within a range of 16.6% to 16.7% for the six months ended June 30, 2018. Adjusted EBITDA and Adjusted EBITDA Margin are non-GAAP financial measures. For definitions of Adjusted EBITDA and Adjusted EBITDA Margin, see Summary Financial Data Non-GAAP Financial Measures below. The following table presents a reconciliation of the non-GAAP financial measures of estimated Adjusted EBITDA and estimated Adjusted EBITDA Margin to the estimated GAAP financial measure of net income for the three and six months ended June 30, 2018: Successor Successor Three months ended June 30, 2018 Six months ended June 30, 2018 (in thousands) Low High Low High Revenue, net: Onshore Oil & Gas OEM $ 127,184 $ 132,375 $ 239,544 $ 244,735 Offshore Oil & Gas OEM 18,029 18,765 32,153 32,889 Connectors & Precision Manufacturing 48,450 50,427 92,471 94,448 Total Revenue $ 193,663 $ 201,567 $ 364,168 $ 372,072 Adjusted EBITDA by Segment: Onshore Oil & Gas OEM $ 27,260 $ 28,372 $ 51,167 $ 52,279 Offshore Oil & Gas OEM 3,778 3,932 4,257 4,411 Connectors & Precision Manufacturing 8,806 9,165 15,839 16,198 Corporate/Other (5,618 ) (5,398 ) (10,890 ) (10,670 ) Subtotal Adjusted EBITDA $ 34,226 $ 36,071 $ 60,373 $ 62,218 Adjusted EBITDA Margin 17.7 % 17.9 % 16.6 % 16.7 % Non-GAAP Reconciliation: Net income $ 6,226 $ 11,401 $ 13,750 $ 18,925 Interest Expense 2,500 2,100 5,120 4,720 Depreciation and amortization 13,500 13,000 26,338 25,838 Provision (benefit) from income taxes 1,500 3,000 3,460 4,960 Impairment and restructuring charges 1,600 1,400 2,395 2,195 Fresh start inventory adjustments 500 400 938 838 Non-cash inventory write-offs 2,500 500 2,500 500 Stock-based compensation 200 170 386 356 Transaction costs & IPO Readiness 1,500 1,100 2,671 2,271 Other 4,200 3,000 2,815 1,615 Adjusted EBITDA $ 34,226 $ 36,071 $ 60,373 $ 62,218 Table of Contents We have prepared these estimates on a basis materially consistent with the financial information presented elsewhere in this prospectus and in good faith based upon our internal reporting as of and for the three and six months ended June 30, 2018. These estimated ranges are preliminary and unaudited and are thus inherently uncertain and subject to change as we complete our financial results for the three and six months ended June 30, 2018. We are in the process of completing our customary quarterly close and review procedures as of and for the three and six months ended June 30, 2018, and there can be no assurance that our final results for this period will not differ from these estimates. During the course of the preparation of our consolidated financial statements and related notes as of and for the three and six months ended June 30, 2018, we may identify items that could cause our final reported results to be materially different from the preliminary financial estimates presented herein. Important factors that could cause actual results to differ from our preliminary estimates are set forth under the headings Risk Factors and Cautionary Note Regarding Forward-Looking Statements. These estimates should not be viewed as a substitute for full interim financial statements prepared in accordance with U.S. generally accepted accounting principles ( GAAP ). In addition, these preliminary estimates for the three and six months ended June 30, 2018 are not necessarily indicative of the results we may achieve in any future period. Our consolidated financial statements and related notes as of and for the three and six months ended June 30, 2018 are not expected to be filed with the SEC until after this offering is completed. The preliminary estimates have been prepared by and are the responsibility of management. In addition, the preliminary financial results presented above have not been audited, reviewed, or compiled by our independent registered public accounting firm. Accordingly, our independent registered public accounting firm does not express an opinion or any other form of assurance with respect thereto and assumes no responsibility for, and disclaims any association with, this information. Risk Factors Investing in our common stock involves risks. You should read carefully the section of this prospectus titled Risk Factors beginning on page 24 and other information in this prospectus for an explanation of these risks before investing in our common stock. Principal Executive Offices and Internet Address Our principal executive offices are located at 945 Bunker Hill Road, Suite 500, Houston, Texas 77024, and our telephone number is (713) 393-4200. Our website is located at www.afglobalcorp.com. We expect to make our periodic reports and other information filed with or furnished to the Securities and Exchange Commission (the SEC ) available, free of charge, through our website, as soon as reasonably practicable after those reports and other information are electronically filed with or furnished to the SEC. Information on our website or any other website is not incorporated by reference into this prospectus and does not constitute a part of this prospectus. Our Emerging Growth Company Status As a company with less than $1.07 billion in revenue during our last fiscal year, we qualify as an emerging growth company as defined in the JOBS Act. As an emerging growth company, we may, for up to five years, take advantage of specified exemptions from reporting and other regulatory requirements that are otherwise applicable generally to public companies. These exemptions include: the presentation of only two years of audited financial statements and only two years of related Management s Discussion and Analysis of Financial Condition and Results of Operations in this prospectus; Table of Contents deferral of the auditor attestation requirement on the effectiveness of our system of internal control over financial reporting; exemption from the adoption of new or revised financial accounting standards until they would apply to private companies; exemption from compliance with any new requirements adopted by the Public Company Accounting Oversight Board (the PCAOB ) requiring mandatory audit firm rotation or a supplement to the auditor s report in which the auditor would be required to provide additional information about the audit and the financial statements of the issuer; and reduced disclosure about executive compensation arrangements. We intend to take advantage of all of the reduced reporting requirements and exemptions, including the longer phase-in periods for the adoption of new or revised financial accounting standards under Section 107 of the JOBS Act. We may take advantage of these provisions until we are no longer an emerging growth company, which will occur on the earliest of (i) the last day of the fiscal year following the fifth anniversary of this offering, (ii) the last day of the fiscal year in which we have more than $1.07 billion in annual revenue, (iii) the date on which we issue more than $1.0 billion of non-convertible debt over a three-year period and (iv) the date on which we are deemed to be a large accelerated filer, as defined in Rule 12b-2 promulgated under the Securities Exchange Act of 1934, as amended (the Exchange Act ). Our election to use the phase-in periods permitted by this election may make it difficult to compare our financial statements to those of non-emerging growth companies and other emerging growth companies that have opted out of the longer phase-in periods under Section 107 of the JOBS Act and who will comply with new or revised financial accounting standards. If we were to subsequently elect instead to comply with these public company effective dates, such election would be irrevocable pursuant to Section 107 of the JOBS Act. Please see Risk Factors We are an emerging growth company and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our common stock less attractive to investors. Table of Contents
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+PROSPECTUS SUMMARY This summary highlights selected information contained elsewhere in this prospectus. This summary does not contain all of the information you should consider before investing in our ordinary shares. Before making an investment decision, you should read this entire prospectus carefully, especially "Risk Factors", "Management s Discussion and Analysis of Financial Condition and Results of Operation", our and Grand World s consolidated financial statements, and each of their respective related notes appearing at the end of this prospectus. Some of the statements in this prospectus constitute forward-looking statements that involve risks and uncertainties. See "Cautionary Note Regarding Forward-Looking Statements" for more information. Our Company JMax International Limited ("JMax") was incorporated on September 8, 2016 as an Exempted Company in the Cayman Islands. Prior to JMax s acquisition of Grand World Pro Limited ("Grand World"), a private company incorporated with limited liability under the laws of Hong Kong, on January 11, 2017, JMax had no business operations or revenue. Grand World Pro Limited Grand World is a wholly owned subsidiary of JMax, and currently all of JMax s revenue is derived from Grand World operations. Grand World is a trading and logistics company which was incorporated in Hong Kong on February 26, 2014. Grand World has signed exclusive purchase agreements with suppliers located in the United States, Mainland China, Korea and Malaysia and sell to wholesale customers healthcare related consumer products in over 30 different counties including Venezuela, the United States, Canada, Ecuador, Colombia, Peru, Bolivia and Mexico in North and South America; Australia, New Zealand and PNG in Oceania; Italy in West Europe; Turkey and UAE in Middle East; Ivory Coast, Cameroon, Senegal, Kenya, Togo, Nigeria and Uganda in Africa; and Hong Kong, Taiwan, Malaysia, Philippine, Singapore, Cambodia, Indonesia, Thailand, Myanmar, Timor Leste, Vietnam, Korea and in Asia. We do not manufacture any of the products we sell but instead, have entered into exclusive purchase agreements with our suppliers. We currently trade 4 main products, namely AlpaMeta, AlphaSpin, Angels Secrets and JMS3. Sales of Angels Secret and JMS3 constituted 53.7% and 16.7% of the total sales for the year ended March 31, 2016, respectively and 45.5% and 12.4% of the total sales from April 1, 2016 through December 31, 2016, respectively. Our sales were more diverse with AlpaMeta, AlphaSpin, Angels Secrets and JMS3 comprising 31.3%, 34.3%, 10.0% and 17.0% from January 11, 2017 through March 31, 2017, respectively. Sales of AlpaMeta, AlphaSpin and Angels Secrets then constituted 31.8% , 33.6% and 19.2% of the total sales for the year ended March 31, 2018, respectively. Sales of Angels Secrets, AlphaMeta and AlphaSpin constituted 41.4%, 22.2% and 17.5% of the total sales for 6-month period ended September 30, 2017, sales of AlphaMeta, Angels Secrets and AlphaSpin constituted 43.0%, 23.8% and 19.0% of the total sales for 6-month period ended September 30, 2018. For the year ended March 31, 2016, we had revenue of $4,172,263 from related entities, operating profit of $13,961, net income for the period of $17,998, and EBITDA and EBITDA margin of $21,555 and 0.5%, respectively. Over the same period, we generated cash flows from operations of $93,852. For the period from April 1, 2016 through January 10, 2017, we had revenue of $2,776,845 from related entities, income from operation of $62,465, net income for the period of $52,158, and EBITDA and EBITDA margin of $62,864 and 2.3%, respectively. Over the same period, we used cash flows in operations of $351,193. For the period from January 11, 2017 through March 31, 2017, we had revenue of $1,858,940 , income from operation of $369,802, net income of $304,219, and EBITDA and EBITDA margin of $378,417 and 20.4%, respectively. Over the same period, we generated cash flows from operations of $1,329,887. For the year ended March 31, 2018, we had revenue of $7,157,209, income from operation of $1,120,518, net income of $806,626, and EBITDA and EBITDA margin of $1,155,098, and 16.1%, respectively. Net cash of $953,024 was used in operations for the year ended March 31, 2018. For the 6-month period ended September 30, 2018 and 2017, we had revenue of $3,594,451 and $4,739,359, income from operation of $152,184 and $1,281,466, net income of $35,750 and $1,015,315, and EBITDA and EBITDA margin of $171,611 and $1,298,701, and 4.8% and 27.4%, respectively. Net cash of $346,121 and $746,924 was used in operations for six months September 30, 2018 and 2017. See "Prospectus Summary—Summary Consolidated Financial Information" for our definition of EBITDA, which are non-GAAP metrics, and reconciliations to the most comparable U.S. GAAP metrics. Our Strategy We intend to grow our business profitably and create shareholder value through the following strategic initiatives: Build an integrated group of best-in-class healthcare related consumer products companies and brands within existing and related healthcare consumer product categories and expand our geographic footprint through strategic acquisitions and relationships. Our goal is to transform our company into an integrated best-in-class, global marketer and distributor of healthcare consumer products, within and outside of the healthcare consumer product category and the broader consumer product sector. We believe there are significant growth opportunities in the Latin American, Southeast Asian, Japanese, and African markets and that the Grand World Acquisition provides a strong platform on which to grow our business and expand and enhance our market share in the healthcare consumer product industry in key geographic markets. Leverage our acquisition expertise, strong management team and access to capital to identify and evaluate attractive growth opportunities. Our founder, Guowen Ren (the "Founder"), and our CEO, Chee Boon Chiew, have significant experience and expertise, and have been highly successful, in identifying, acquiring and integrating value-added businesses. Pursuant to an Independent Consultant Agreement dated January 1, 2018, we retained Mr. Ren as our independent consultant to advise us on strategy and strategic alliances, capital markets strategy, potential acquisitions and market opportunities for a period of four years. In consideration of providing these services, we have agreed to pay Mr. Ren in the form of 6,000,000 ordinary shares. We believe that this expertise, our access to capital and the deep industry knowledge of our management team will position us to acquire or partner with related and complementary healthcare consumer product businesses that can enhance our market position, create synergies and fully leverage our existing marketing and supply chain capabilities, which we believe will allow us to deliver sustained profitable growth and maximize shareholder value. In analyzing such opportunities. we will consider the following factors: Potential for growth, indicated by new technology, anticipated market expansion or new products; Competitive position as compared to other firms of similar size and experience within the industry segment as well as within the industry as a whole; Strength and diversity of management, either in place or scheduled for recruitment; Capital requirements and anticipated availability of required funds, to be provided by the Company or from operations, through the sale of additional securities, through joint ventures or similar arrangements or from other sources; The cost of participation by our Company as compared to the perceived tangible and intangible values and potentials; The extent to which the business opportunity can be advanced; The accessibility of required management expertise, personnel, raw materials, services, professional assistance and other required items. Aligning our business with consumer preferences. Our goal is to create, acquire or partner with healthcare consumer product businesses and brands that strongly align with consumer needs and preferences, that have the highest growth and margin potential and that leverage our existing portfolio of brands. Integrating our marketing program We plan to integrate our marketing program which will include customer flyers, brochures and promotional pieces. We also plan to publish sales and marketing magazines quarterly, with health care tips and product information and sponsor and organize important social activities, such as sales rallies, motivational events, and sales and training seminars for our distributors and their sales forces. These activities are expected not only to reflect our high-level social responsibility, but also make us unique in the industry. We believe that this kind of operation will continue to effectively promote our reputation and our brand name. Commitment to research We plan to seek partnerships with the research centers of well-known universities worldwide to further increase awareness of the products that we sell and to research market demand for potential future products. We have increased our investment in market research to ensure that the products we launch or acquire address well established or on-trend market needs. In order to ensure the development and acquisition of products that fit this criteria, we have implemented a structured process through which we take new products from idea generation, through concept screening, concept/products laboratories and early volume sizing, to final validation. Specifically, we work closely with the research and development team of the chosen manufacturer/supplier tasked with creating new products based on our requirements. Once a sample product is provided by the manufacturer/supplier, we will then conduct product trials and provide feedback to the manufacturer/supplier. This process will repeat itself until we are satisfied with the product and confirms its final product specifications. The final product specifications will form the basis of the product inspection sheet between us and the manufacturer/supplier. Finally, when the product is created, the manufacturer/supplier will provide us with the supporting documentation for product registration in the countries where the product is sold. The relationship between us and our manufacturer suppliers is symbiotic and collegial to the products the Company sells. Our Competitive Strengths We believe the following competitive strengths differentiate us from our competitors and contribute to our ongoing success. We have strong relationships with our suppliers and customers We have signed exclusive purchase agreements with our suppliers and wholesale our products to customers in approximately 30 countries. We believe that our relationships with them will form a strong platform for our products internationally and we will benefit from economies of scale. We also believe that our strong existing platforms facilitate our expansion within a large addressable market and provide a broad set of potential acquisition targets in various healthcare consumer product categories and geographic markets. Experienced management team and Board with a proven track record Our management team has extensive experience in the healthcare consumer products industry and other fast moving consumer goods markets. Our management team is complimented by an experienced Board of Directors, which includes several individuals with a proven track record of successfully acquiring and managing consumer businesses. Flexibility in forging relationships and expansion We have flexibility in seeking, analyzing and participating in potential business opportunities. Recent Developments Between April 2017 and October 2017, we entered into subscription agreements and closed on several non-brokered private placements of an aggregate 223,600,000 Ordinary Shares at a subscription price of $0.01 per share for total gross proceeds of $2,236,000. The private placements were with 374 subscribers, who comprise the Selling Shareholders in this Registration Statement. We plan to use the proceeds of the raise for general working capital purposes. The subscription agreements contain customary representations and warranties, covenants and conditions to closing that the parties made to, and solely for the benefit of, each other in the context of all of the terms and conditions of the subscription agreements and in the context of the specific relationship between the parties. The provisions of the subscription agreements, including the representations and warranties contained therein, are not for the benefit of any party other than the parties to such agreements and are not intended as documents for investors and the public to obtain factual information about the current state of affairs of the Company. The foregoing description of the subscription agreements is not complete and is qualified in its entirety by the full text of the subscription agreements, a form of which is filed herewith as Exhibit 10.12 and incorporated into this Registration Statement by reference. We have relied on the exemptions from registration under Section 4(a)(2) of the Securities Act of 1933, as amended (the "Securities Act"), and Regulation S under the Securities Act for purposes of the private placements of the Ordinary Shares. The Ordinary Shares have not been registered under the Securities Act or any applicable securities laws of any state of the United States and may not be offered or sold in the United States or to, or for the account or benefit of, U.S. persons (as defined in Regulation S under the Securities Act) or persons in the United States absent registration or an applicable exemption from such registration requirements. Summary
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+This summary only highlights the more detailed information appearing elsewhere in this prospectus. As this is a summary, it does not contain all of the information that you should consider in making an investment decision. You should read this entire prospectus carefully, including the information under the section of this prospectus entitled Risk Factors and our financial statements and the related notes included elsewhere in this prospectus, before investing. Unless otherwise stated in this prospectus, or the context otherwise requires, references to: we, us, company or our company are to Far Point Acquisition Corporation; common stock are to our Class A common stock and our Class B common stock, collectively; equity-linked securities are to any debt or equity securities that are convertible into or exchangeable or exercisable for, shares of Class A common stock issued in a financing transaction in connection with our initial business combination, including, but not limited to, a private placement of equity or debt; forward purchase agreement are to an agreement providing for the sale of our Class A common stock and warrants to the forward purchaser and its permitted transferees in a private placement that will close simultaneously with the closing of our initial business combination; forward purchase shares are to the shares of our Class A common stock to be issued pursuant to the forward purchase agreement; forward purchaser are to Cloudbreak Aggregator LP, a Cayman Islands exempted limited partnership, the managing member of our sponsor and an affiliate of Third Point; forward transferee are to any entity to which the forward purchaser transfers any portion of its obligation to purchase the forward purchase shares under the forward purchase agreement; founder shares are to shares of our Class B common stock initially purchased by our sponsor in a private placement prior to this offering, and the shares of our Class A common stock issued upon the conversion thereof as provided herein; initial stockholders are to holders of our founder shares prior to this offering; management or our management team are to our directors and officers; private placement warrants are to the warrants issued to our sponsor in a private placement simultaneously with the closing of this offering; public shares are to shares of our Class A common stock sold as part of the units in this offering (whether they are purchased in this offering or thereafter in the open market); public stockholders are to the holders of our public shares, including our initial stockholders and management team to the extent our initial stockholders and/or members of our management team purchase public shares, provided that each initial stockholder s and member of our management team s status as a public stockholder shall only exist with respect to such public shares; sponsor are to Far Point LLC, a Delaware limited liability company; and Third Point are to Third Point LLC, a Delaware limited liability company, which was founded in 1995 by Daniel S. Loeb. Each unit consists of one share of Class A common stock and one-third of one redeemable warrant for each unit purchased. Each whole warrant entitles the holder thereof to purchase one share of our Class A common Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED JUNE 6, 2018 PRELIMINARY PROSPECTUS $500,000,000 Far Point Acquisition Corporation 50,000,000 Units Far Point Acquisition Corporation is a newly organized blank check company formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses, which we refer to throughout this prospectus as our initial business combination. We have not selected any specific business combination target and we have not, nor has anyone on our behalf, initiated any substantive discussions, directly or indirectly, with any business combination target. We intend to focus our search for a target business in the financial technology, technology or financial services industries. This is an initial public offering of our securities. Each unit has an offering price of $10.00 and consists of one share of our Class A common stock and one-third of one redeemable warrant. Each whole warrant entitles the holder thereof to purchase one share of our Class A common stock at a price of $11.50 per share, subject to adjustment as described in this prospectus, and only whole warrants are exercisable. The warrants will become exercisable on the later of 30 days after the completion of our initial business combination or 12 months from the closing of this offering, and will expire five years after the completion of our initial business combination or earlier upon redemption or liquidation, as described in this prospectus. No fractional warrants will be issued upon separation of the units and only whole warrants will trade. We have also granted the underwriters a 45-day option to purchase up to an additional 7,500,000 units to cover over-allotments, if any. Subject to adjustment as provided herein, our sponsor, Far Point LLC (which we refer to as our sponsor throughout this prospectus), has committed to purchase 8,000,000 warrants (or 9,000,000 warrants if the over-allotment option is exercised in full) at a price of $1.50 per whole warrant ($12,000,000 in the aggregate, or $13,500,000 in the aggregate if the over-allotment option is exercised in full) in a private placement that will close simultaneously with the closing of this offering. We refer to these warrants as the private placement warrants throughout this prospectus. Each whole private placement warrant is exercisable to purchase one whole share of our Class A common stock at $11.50 per share, subject to adjustment as provided herein. Cloudbreak Aggregator LP, a Cayman Islands exempted limited partnership, the managing member of our sponsor and an affiliate of Third Point LLC (which we refer to as the forward purchaser throughout this prospectus), has entered into a forward purchase agreement with us that provides for the purchase by the forward purchaser of shares of our Class A common stock ( forward purchase shares ) for $9.50 per forward purchase share in a private placement that will close simultaneously with the closing of our initial business combination. The actual number of forward purchase shares to be purchased will be a number of shares (rounded up to the nearest whole share) equal to (A) the excess of the number of shares of Class A common stock that are redeemed from holders in connection with our initial business combination (which redemptions are not revoked prior to the date of our initial business combination) over 20,000,000, multiplied by (B) a fraction, the numerator of which is $10.00 and the denominator of which is $9.50. The forward purchase shares are identical to the shares of Class A common stock included in the units being sold in this offering, except that the forward purchase shares are subject to transfer restrictions and certain registration rights, as described herein. Funds managed or advised by Third Point have indicated an interest in purchasing, directly or indirectly, up to 4,000,000 units in this offering at the public offering price. However, indications of interest are not binding agreements or commitments to purchase and such funds may decide not to purchase any units in this offering. In addition, the underwriters could determine to sell fewer units to such funds than they indicated an interest in purchasing or could determine not to sell any units to such funds. The underwriters will not receive any underwriting discounts and commissions on units purchased by such funds. Per Unit Total Public offering price $10.00 $500,000,000 Underwriting discounts and commissions(1)(2) $0.55 $27,500,000 Proceeds, before expenses, to us $9.45 $472,500,000 (1) Includes $0.35 per unit, or $17,500,000 (or up to $20,125,000 if the underwriters over-allotment option is exercised in full) in the aggregate payable to the underwriters for deferred underwriting commissions to be placed in a trust account located in the United States as described herein. The deferred commissions will be released to the underwriters only on completion of our initial business combination, as described in this prospectus. See the section of this prospectus entitled Underwriting beginning on page 144 for a description of compensation and other items of value payable to the underwriters. (2) The underwriters will not receive any underwriting discounts or commissions on units purchased by funds managed or advised by Third Point. Neither the Securities and Exchange Commission ( SEC ) nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The underwriters are offering the units for sale on a firm commitment basis. The underwriters expect to deliver the units to the purchasers on or about , 2018. Credit Suisse BofA Merrill Lynch , 2018 Table of Contents stock at a price of $11.50 per share, subject to adjustment as described in this prospectus, and only whole warrants are exercisable. No fractional warrants will be issued upon separation of the units and only whole warrants will trade. Accordingly, unless you purchase at least three units, you will not be able to receive or trade a whole warrant. In June 2018, we effected a stock dividend of 0.25 shares of Class B common stock for each outstanding share of Class B common stock, resulting in our initial stockholders holding an aggregate of 14,375,000 founder shares. Registered trademarks referred to in this prospectus are the property of their respective owners. Unless we tell you otherwise, the information in this prospectus assumes that the underwriters will not exercise their over-allotment option. Our Company General We are a newly organized blank check company incorporated as a Delaware corporation and formed for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses, which we refer to throughout this prospectus as our initial business combination. We have not selected any potential business combination target and we have not, nor has anyone on our behalf, initiated any substantive discussions, directly or indirectly, with any potential business combination target. We currently intend to concentrate our efforts in identifying businesses in the financial technology, technology or financial services (collectively, Fintech ) industries that offer a differentiated technology platform and product suite for interfacing with the financial services sector. We would also be interested in certain types of technology companies or financial services companies that lie adjacent to the Fintech space. Over the past several years, there has been a rise in the level of sophistication and interconnectivity between innovative technology and financial services providers, and we expect this trend to continue and accelerate. We believe that there are many potential targets within the Fintech space that could become attractive public companies. These potential targets exhibit a broad range of business models and financial characteristics that range from very high growth innovative companies to more mature businesses with established franchises, recurring revenues and strong cash flows. It has been noted that the total global investment in the financial technology industry has risen substantially, from $9 billion in 2010 to over $25 billion in 2016, largely driven by an increase in venture capital investment from $1 billion to $14 billion over the same time period. We believe that there currently exist a number of privately owned Fintech companies that are attractive acquisition targets and well-positioned to deliver substantial value to stockholders in the public markets. Key industry characteristics include long-term organic growth, attractive competitive dynamics and further consolidation opportunities. Key business characteristics include high barriers to entry, low risk of technological obsolescence and public market-ready scale. Key financial metrics include robust revenue growth, recurring revenues and strong cash flow conversion. We are not, however, required to complete our initial business combination with a Fintech business and, as a result, we may pursue a business combination outside of that industry. We will seek to acquire established businesses that we believe are fundamentally sound but potentially in need of financial, operational, strategic or managerial redirection to maximize value. We will also look at earlier stage companies that exhibit the potential to change the industries in which they participate and which offer the potential of sustained high levels of revenue growth. Our management team will be led by Thomas W. Farley, who will serve as our Chief Executive Officer and President, and as Chairman of our board of directors. Until recently, Mr. Farley served as President of the NYSE Group of Intercontinental Exchange Inc. ( ICE ) from May 2014 to May 2018. Mr. Farley s responsibilities Table of Contents Our initial stockholders own 14,375,000 shares of our Class B common stock (up to 1,875,000 shares of which are subject to forfeiture depending on the extent to which the underwriters over-allotment option is not exercised). We refer to these shares of Class B common stock as the founder shares throughout this prospectus. The shares of Class B common stock will automatically convert into shares of Class A common stock at the time of our initial business combination, or earlier at the option of the holder, on a one-for-one basis, subject to adjustment as provided herein. We will provide our public stockholders with the opportunity to redeem all or a portion of their shares of our Class A common stock upon the completion of our initial business combination at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account described below as of two business days prior to the consummation of our initial business combination, including interest earned on the funds held in the trust account and not previously released to us to pay our taxes, divided by the number of then outstanding shares of Class A common stock that were sold as part of the units in this offering, which we refer to collectively as our public shares throughout this prospectus, subject to the limitations described herein. If we are unable to complete our business combination within 24 months (or 27 months from the closing of this offering if we have executed a letter of intent, agreement in principle or definitive agreement for our initial business combination within 24 months from the closing of this offering but have not completed our initial business combination within such 24 month period) from the closing of this offering, we will redeem 100% of the public shares at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account including interest earned on the funds held in the trust account and not previously released to us to pay our taxes (less $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares, subject to applicable law and as further described herein. Currently, there is no public market for our units, Class A common stock or warrants. We have applied to list our units on the New York Stock Exchange, or the NYSE, under the symbol FPAC.U . We expect that our units will be listed on the NYSE on or promptly after the date of this prospectus. We cannot guarantee that our securities will be approved for listing on the NYSE. The Class A common stock and warrants comprising the units will begin separate trading on the 52nd day following the date of this prospectus unless Credit Suisse Securities (USA) LLC and Merrill Lynch, Pierce, Fenner & Smith Incorporated inform us of their decision to allow earlier separate trading, subject to our filing a Current Report on Form 8-K with the Securities and Exchange Commission, or the SEC, containing an audited balance sheet reflecting our receipt of the gross proceeds of this offering and issuing a press release announcing when such separate trading will begin. Once the securities comprising the units begin separate trading, we expect that the Class A common stock and warrants will be listed on the NYSE under the symbols FPAC and FPAC WS, respectively. Of the proceeds we receive from this offering and the sale of the private placement warrants described in this prospectus, $500.0 million or $575.0 million if the underwriters over-allotment option is exercised in full ($10.00 per unit) will be deposited into a U.S.-based trust account with Continental Stock Transfer & Trust Company acting as trustee, and approximately $2.0 million will be available to pay fees and expenses in connection with the closing of this offering and for working capital following the closing of this offering. Except with respect to interest earned on the funds held in the trust account that may be released to us to pay our tax obligations, the proceeds from this offering and the sale of the private placement warrants will not be released from the trust account until the earliest to occur of (a) the completion of our initial business combination, (b) the redemption of any public shares properly submitted in connection with a stockholder vote to amend our amended and restated certificate of incorporation (i) to modify the substance or timing of our obligation to redeem 100% of our public shares if we do not complete our initial business combination within 24 months (or 27 months, as applicable) from the closing of this offering, or (ii) with respect to any other provision relating to stockholders rights or pre-initial business combination activity, and (c) the redemption of our public shares if we are unable to complete our business combination within 24 months (or 27 months, as applicable) from the closing of this offering, subject to applicable law. The proceeds deposited in the trust account could become subject to the claims of our creditors, if any, which could have priority over the claims of our public stockholders. We are an emerging growth company under applicable federal securities laws and will be subject to reduced public company reporting requirements. Investing in our securities involves a high degree of risk. See the section of this prospectus entitled Risk Factors beginning on page 30 for a discussion of information that should be considered in connection with an investment in our securities. Investors will not be entitled to protections normally afforded to investors in Rule 419 blank check offerings. Table of Contents included leading all operations for the New York Stock Exchange (the NYSE ) and managing a diverse range of equity and equity options exchanges, comprising the largest equities listing and securities trading venue in the world. In this role, Mr. Farley spearheaded the NYSE through a significant strategic and operational transition, revitalizing an iconic business and brand. Under Mr. Farley s leadership, the NYSE improved trading market share from 58% to 63% (relative to NASDAQ) and listed 27 of the last 28 initial public offerings that raised over $1 billion in proceeds during this period. Mr. Farley also presided over a series of operational improvements which led to the tripling of profits, the doubling of pre-acquisition operating margin, the reduction of annual costs by $550 million and the modernization of NYSE technology. Prior to joining the NYSE, Mr. Farley served as the Senior Vice President of Financial Markets at ICE, where he oversaw a variety of modernization efforts, strategic acquisitions and exchange consolidations. Prior to joining ICE, Mr. Farley was President of SunGard Kiodex after being its Chief Financial Officer and Chief Operating Officer. Mr. Farley has also held various positions in investment banking and private equity. We believe that Mr. Farley s extensive relationships that he developed as the leader of NYSE Group as well as his extensive experience in the Fintech sector and financial markets will allow us to identify and complete an attractive business combination. Mr. Farley s vast experience in the Fintech sector will provide us with unique insight and access to potential opportunities. We also believe that the management team s expertise will be augmented by the other members of our board of directors, which will provide extensive experience in business and financial matters. In addition, we believe our ability to complete our initial business combination will be enhanced by our having entered into the forward purchase agreement pursuant to which the forward purchaser has agreed to purchase forward purchase shares for $9.50 per forward purchase share in a private placement that will close simultaneously with the closing of our initial business combination. The actual number of forward purchase shares to be purchased will be a number of shares (rounded up to the nearest whole share) equal to (A) the excess of the number of shares of Class A common stock that are redeemed from holders in connection with our initial business combination (which redemptions are not revoked prior to the date of our initial business combination) over 20,000,000, multiplied by (B) a fraction, the numerator of which is $10.00 and the denominator of which is $9.50. These purchases are intended to provide us with a minimum funding level for our initial business combination. Funds managed or advised by Third Point have indicated an interest in purchasing, directly or indirectly, up to 4,000,000 units in this offering at the public offering price. However, indications of interest are not binding agreements or commitments to purchase and such funds may decide not to purchase any units in this offering. In addition, the underwriters could determine to sell fewer units to such funds than they indicated an interest in purchasing or could determine not to sell any units to such funds. The underwriters will not receive any underwriting discounts or commissions on units purchased by such funds. Third Point or its affiliates will have the option to invest up to 75% of any additional equity (or equity-linked securities) we may issue to raise additional capital prior to or in connection with the completion of our initial business combination. None of our sponsor, members of our sponsor, directors, director nominees or officers has any past experience with any blank check companies or special purpose acquisition companies. Each of our directors, director nominees and officers, other than David W. Bonanno, has agreed not to become a director or officer of any other special purpose acquisition company with a class of securities registered under the Exchange Act until we have entered into a definitive agreement regarding our initial business combination or we have failed to complete our initial business combination within 24 months (or 27 months from Table of Contents TABLE OF CONTENTS We are responsible for the information contained in this prospectus. We have not authorized anyone to provide you with different information, and we take no responsibility for any other information others may give to you. We are not, and the underwriters are not, making an offer to sell securities in any jurisdiction where the offer or sale is not permitted. You should not assume that the information contained in this prospectus is accurate as of any date other than the date on the front of this prospectus. Page SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2018/CIK0001736420_lgh-group_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001736420_lgh-group_prospectus_summary.txt
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+PROSPECTUS SUMMARY The following summary highlights selected information from this prospectus and may not contain all the information that is important to you. To understand our business and this offering fully, you should read this entire prospectus carefully, including the financial statements and the related notes beginning on page F-1. This prospectus contains forward-looking statements and information relating to LGH Group US, Inc. See Cautionary Note Regarding Forward Looking Statements on page 8. Our Company The Company was formed on March 20, 2017 in the State of Nevada for the purpose of Green Food distribution to produce and market safe, delicious high-quality food, while emphasizing food safety, quality, and ingredients. The company seeks to ensure that all food produced, distributed, and sold has undergone stringent food control systems, and adheres to the necessary regulations. Business Strategy LGH Group US, Inc., (the company) is a Nevada "C" Corporation created to distribute and market Green Food and to produce safe, delicious high-quality food, while emphasizing food safety, quality, and ingredients. The company seeks to ensure that all food produced, distributed, and sold has undergone stringent food control systems, and adheres to the necessary regulations. The Company has entered into a new stage of development. Apart from pursuing business growth, it will devote efforts to build its long-term brand image, as well as expand into the market of Mainland China, serving as a bridge between China and the World. LGH Group US, Inc., will not only introduce high-quality foods to Hong Kong – bringing in more choices and enjoyment – but also take mainland food products to the international arena, and expanding overseas. LGH Group US, Inc., will distribute products mainly from the whole of China s green food. Food categories include: primary products, processed products, and deep processing of products. Green Food products are defined as pollution-free, safe, high-quality, nutritious food, and include rice, beans, dried fruit, oil, dry goods, tea, soup, honey, mushrooms, etc. As China has natural and geographical advantages, healthy cultivation and treatment and high quality agricultural science, it is able to grow green food which is very high in nutritional value. Environmental consciousness and social development are also core value of green food. The Company has a well-established international network, and brings in high-quality food products from China to Hong Kong, and internationally. Our executive offices are located at 2500 E. Colorado Blvd., Suite 255, Pasadena, CA 91107. Our telephone number is (650) 530-0699. Our Company is an "emerging growth company," as defined in the Jumpstart Our Business Startups Act. Our Company shall continue to be deemed an emerging growth company until the earliest of— (A)The last day of the fiscal year of the issuer during which it had total annual gross revenues of !,000,000) (as such amount is indexed for inflation every 5 years by the Commission to reflect the change in the Consumer Price Index for All Urban Consumers, published by the Bureau of Labor Statistics, setting the threshold to the nearest 1,000,000) or more; (B)The last day of the fiscal year of the issuer following the fifth anniversary of the date of the first sale of common equity securities of the issuer pursuant to an effective registration statement under this title (C)The date on which such issuer has, during the previous 3-year period, issued more than $1,000,000 in non-convertible debt; or (D)The date on which such issuer is deemed to be a , ' ': large accelerated filer , as defined in section 240.12b-2 of title 17, Code of Federal Regulations, or any successor thereto. As an emerging growth company the company is exempt from Section 404(b) of Sarbanes Oxley. Section 404(a) requires Issuers to publish information in their annual reports concerning the scope and adequacy of the internal control structure and procedures for financial reporting. This statement shall also assess the effectiveness of such internal controls and procedures. Section 404(b) requires that the registered accounting firm shall, in the same report, attest to and report on the assessment on effectiveness of the internal control structure and procedures for financial reporting. As an emerging growth company the company is exempt from Section 14A and B of the Securities Exchange Act of 1934 which require shareholder approval of executive compensation and golden parachutes. Our Company has irrevocably opted out of the extended transition period for complying with new or revised accounting standards pursuant to Section 107(b) of the Act. The Offering This prospectus covers up to 10,000,0000 shares to be issued and sold by the company at a price of $0.10 per share in a direct public offering . ABOUT THIS OFFERING Securities Being Offered Up to 10,000,0000 shares of common stock of LGH Group US, Inc. to be sold by the company at a price of $0.10 per share. Initial Offering Price The company will sell up to 10,000,0000 shares at a price of $0.10 per share. Terms of the Offering The company will offer and sell the shares of its common stock at a price of $0.10 per share in a direct offering to the public. Termination of the Offering The offering will conclude when the company has sold all of the 10,000,0000 shares of common stock offered by it up to a maximum of 360 days. The company may, in its sole discretion, decide to terminate the registration of the shares offered by the company.
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diff --git a/parsed_sections/prospectus_summary/2018/CIK0001737204_riviera_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001737204_riviera_prospectus_summary.txt
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+This summary highlights information contained in this prospectus and provides an overview of Riviera Resources, Inc., our spin-off from Linn Energy, Inc. and the distribution of our common stock by LINN Energy to its stockholders. For a more complete understanding of our business and the spin-off, you should read this entire prospectus carefully, particularly the sections titled Risk Factors and Unaudited Pro Forma Condensed Consolidated and Combined Financial Information and our audited and unaudited consolidated and combined financial statements and the notes thereto included in this prospectus. Our Company We are currently an indirect subsidiary of Linn Energy, Inc. After the spin-off is completed, we will be an independent oil and natural gas company with a strategic focus on efficiently operating our mature low-decline assets, developing our growth-oriented assets, and returning capital to our stockholders. We will own (i) LINN Energy s legacy properties located in the Hugoton Basin, East Texas, North Louisiana, Michigan/Illinois, the Uinta Basin and Mid-Continent regions, and (ii) Blue Mountain, a midstream company centered in the core of the Merge play in the Anadarko Basin. LINN Energy will not retain any ownership interest in us following the spin-off. Relationship with LINN Energy Linn Energy, Inc. is an independent oil and natural gas company that was formed on February 14, 2017, in connection with the reorganization of its predecessor, Linn Energy, LLC. Linn Energy, LLC was publicly traded on the NASDAQ stock exchange from January 2006 to February 2017. In May 2016, following the steep decline in oil and natural gas prices between 2014 and 2016, and after wide ranging efforts to proactively improve its capital structure, Linn Energy, LLC (together with certain of its direct and indirect subsidiaries and affiliates, the Debtors ) filed voluntary petitions for relief under Chapter 11 of the U.S. Bankruptcy Code ( Bankruptcy Code ) in the U.S. Bankruptcy Court for the Southern District of Texas ( Bankruptcy Court ). During the pendency of the Chapter 11 proceedings, the Debtors operated their businesses as debtors-in-possession under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code. Linn Energy, Inc. emerged from bankruptcy effective February 28, 2017. Following the spin-off, we will have an ongoing relationship with LINN Energy, which owns a 50% equity interest in Roan. Under the Transition Services Agreement, we will provide transitional services to LINN Energy for, among other things, finance, information technology, human resources and other services, for a limited time to help ensure an orderly transition following the distribution. For a more detailed description, see Certain Relationships and Related Party Transactions Agreements with LINN Energy Related to the Spin-Off. Certain members of our board of directors also serve on the LINN Energy board of directors. See Management. Operating Regions Our properties are located in six operating regions in the United States: Hugoton Basin, which includes oil and natural gas properties, as well as the Jayhawk natural gas processing plant, located in Kansas; East Texas, which includes oil and natural gas properties producing primarily from the Cotton Valley and Bossier Sandstone; North Louisiana, which includes oil and natural gas properties producing primarily from the Cotton Valley Sandstones; Table of Contents Index to Financial Statements The information in this prospectus is not complete and may be changed. We may not issue these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED JULY 24, 2018 PRELIMINARY PROSPECTUS Riviera Resources, Inc. Common Stock (par value $0.01 per share) This prospectus is being furnished to you in connection with the separation of Riviera Resources, Inc. from Linn Energy, Inc. (collectively with its consolidated subsidiaries, LINN Energy ), following which Riviera Resources, Inc. will be an independent company with a strategic focus on efficiently operating its mature low-decline assets, developing its growth-oriented assets (including Blue Mountain Midstream LLC), and returning capital to its stockholders. Unless otherwise indicated or the context otherwise requires, references herein to Riviera Resources, Inc., Riviera, we, our, us, the Company and our company refer (i) prior to the consummation of our internal reorganization, to Linn Energy, Inc. and its consolidated subsidiaries, and (ii) after the consummation of such internal reorganization, to Riviera Resources, Inc. and its consolidated subsidiaries. In connection with the separation, LINN Energy will undergo an internal reorganization, and Riviera Resources, LLC will convert from a Delaware limited liability company to a Delaware corporation and change its name to Riviera Resources, Inc. (the conversion ). After the conversion, LINN Energy will complete the separation by distributing all of the outstanding shares of common stock, par value $0.01 per share, of Riviera (the Riviera common stock or our common stock ) to the holders of LINN Energy s Class A common stock, par value $0.001 per share ( LINN common stock ) on a pro rata basis. We refer to this pro rata distribution as the distribution and we refer to the separation, including the internal reorganization, the conversion and the distribution, as the spin-off. As discussed in greater detail below, the distribution will be a taxable distribution for U.S. federal income tax purposes, and the tax treatment to stockholders of Linn Energy, Inc. ( LINN stockholders ) will depend on, among other things, the factors discussed in this prospectus. Each LINN stockholder will receive one share of our common stock for each share of LINN common stock held by such stockholder on August 3, 2018 (the record date ). The distribution of shares will be made by way of direct registration in book-entry form only. The distribution will be effective as of 5:00 p.m., Eastern Time, on August 7, 2018. Immediately after the distribution becomes effective, Riviera will be an independent reporting company, and eventually a publicly traded company. No vote or other action of LINN stockholders is required in connection with the spin-off (except as provided herein). We are not asking you for a proxy and you should not send us a proxy. LINN stockholders will not be required to pay any consideration for the shares of Riviera common stock they receive in the spin-off, and they will not be required to surrender or exchange their shares of LINN common stock or take any other action, other than to provide any documentation that may be required as discussed under Material U.S. Federal Income Tax Consequences of the Spin-Off, in connection with the spin-off. Immediately prior to the distribution, all of the outstanding shares of Riviera common stock will be indirectly owned by Linn Energy, Inc. Accordingly, there is currently no public market for Riviera common stock. We anticipate, however, that our common stock will begin trading sometime after the distribution date, on a date to be determined. We intend to have our common stock quoted for trading on the OTC Market, where we expect to qualify as a Securities and Exchange Commission ( SEC ) reporting company, under the ticker symbol RVRA .
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diff --git a/parsed_sections/prospectus_summary/2018/CIK0001739208_tenaya_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001739208_tenaya_prospectus_summary.txt
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+PROSPECTUS SUMMARY
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diff --git a/parsed_sections/prospectus_summary/2018/CIK0001739287_samoyed_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001739287_samoyed_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad
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+PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2018/CIK0001739936_momentive_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001739936_momentive_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
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+++ b/parsed_sections/prospectus_summary/2018/CIK0001739936_momentive_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2018/CIK0001740321_remora_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001740321_remora_prospectus_summary.txt
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+This summary highlights selected information contained elsewhere in this prospectus. It does not contain all the information you should consider before investing in our Class A common stock. You should carefully read the entire prospectus, including Risk Factors and the historical and unaudited pro forma condensed combined financial statements and related notes included elsewhere in this prospectus before making an investment decision. The information presented in this prospectus assumes an initial public offering price of $20.00 per share (the mid-point of the price range set forth on the cover page of this prospectus) and, unless otherwise indicated, that the underwriters do not exercise their option to purchase additional shares of our Class A common stock. Unless the context otherwise requires, references in this prospectus to the Company, we, our, us or like terms, when used in a historical context, refer to Remora Petroleum, L.P., our predecessor for accounting purposes, also referred to as our Predecessor, and when used in the present tense or prospectively, refer to Remora Royalties, Inc. and its subsidiaries (including Remora Holdings, LLC). References to our Operating Affiliate , when used in the present tense or prospectively, refer to Remora Petroleum, L.P. References to Remora Holdings or RH refer to Remora Holdings, LLC. References to the Contributing Parties refer to all entities, including our Operating Affiliate and its affiliates, that are contributing certain royalty interests to us. References to the Other Principal Contributing Parties refer to all entities that are contributing certain royalty interests to us, except our Operating Affiliate and its affiliates. Remora Royalties, Inc. Overview We are a growth-oriented Delaware corporation formed to own and acquire overriding royalty, mineral and royalty interests in oil and natural gas properties. We refer to these non-cost-bearing interests, which entitle us to a portion of the revenues received from the production of oil, natural gas and associated natural gas liquids ( NGLs ) from the acreage underlying our interests, net of post-production expenses and taxes, collectively as our royalty interests. Our royalty interests are located in 12 states and in 13 major onshore basins across the continental United States and include ownership in approximately 3,600 gross producing wells, predominantly in the Midcontinent, South Texas/Gulf Coast, East Texas/North Louisiana and Permian Basin, which are among the most historically prolific oil and natural gas regions in the United States. The geographic breadth of our assets gives us exposure to potential production and reserves from new and existing plays. As an owner of royalty interests, we benefit from the continued development of the properties in which we own an interest without the need for investment of additional capital by us. We are not obligated to fund drilling and completion costs, lease operating expenses, plugging and abandonment costs at the end of a well s productive life, or any environmental liability costs. Our primary business objective is to provide increasing dividends to stockholders resulting from acquisitions and from organic growth through the continued development of the properties in which we own an interest. As of December 31, 2017, on a pro forma basis, we owned royalty interests in approximately 593,000 gross acres (43,000 net acres), of which over 97% was held by production. For the year ended December 31, 2017, on a pro forma basis, approximately 75% of the net production underlying our royalty interests was from the Midcontinent, South Texas/Gulf Coast, East Texas/North Louisiana and Permian Basin. For the same period, the Contributing Parties operated approximately 46% of our net production, 788 Table of Contents Index to Financial Statements If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer , smaller reporting company and emerging growth company in Rule 12b-2 of the Exchange Act: Large accelerated filer Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company Emerging growth company If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. CALCULATION OF REGISTRATION FEE Title of Each Class of Securities to be Registered Amount to be Registered(1) Proposed Maximum Offering Price Per Share(2) Proposed Maximum Aggregate Offering Price(1)(2) Amount of Registration Fee(3) Class A common stock, par value $0.01 per share 6,037,500 $21.00 $126,787,500.00 $15,785.05 (1) Estimated pursuant to Rule 457(a) under the Securities Act of 1933, as amended. Includes 787,500 additional shares of Class A common stock that the underwriters have the option to purchase. (2) Estimated solely for the purpose of calculating the registration fee. (3) The Registrant previously paid $12,450.00 of the total registration fee in connection with the previous filing of this Registration Statement. The registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment that specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until this Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine. Table of Contents Index to Financial Statements PRESENTATION OF FINANCIAL AND OPERATING DATA Unless otherwise indicated, the historical financial information presented in this prospectus is that of our predecessor for accounting purposes, Remora Petroleum, L.P. (our predecessor ). The pro forma financial information in this prospectus is derived from the unaudited pro forma condensed combined financial statements included elsewhere in this prospectus which reflect, among other things, (1) the financial statements of our predecessor; (2) the acquisition of assets to be contributed to our subsidiary, Remora Holdings, LLC, by Vendera Resources II, LLC and its affiliates, Vendera Resources III, L.P. and its affiliates and AVAD Energy Partners, LLC, which make up a portion of the Contributing Parties (as defined herein), (3) the acquisition by our predecessor of oil and natural gas properties in South Texas on December 19, 2017 (the 2017 South Texas Assets ) and (4) the retention by our predecessor of certain oil and natural gas properties and all other assets, liabilities and operations that will not be acquired by us in connection with this offering. Please read the unaudited pro forma condensed combined financial statements included elsewhere in this prospectus. In addition, unless otherwise indicated, the reserve and operational data presented in this prospectus is with respect to all the assets that will be contributed to us by the Contributing Parties. Please read Formation Transactions. INDUSTRY AND MARKET DATA This prospectus includes industry data and forecasts that we obtained from internal company sources, publicly available information and industry publications and surveys. Our internal research and forecasts are based on management s understanding of industry conditions, and such information has not been verified by independent sources. Industry publications, surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable. There can be no assurance as to the accuracy or completeness of the information presented herein derived from third party sources. Statements as to the industry or operator estimates and future activity are based on independent industry publications, government publications, third-party forecasts, public statements by the operators of our properties, management s estimates and assumptions about our markets and our internal research. While we are not aware of any misstatements regarding such estimates or the market, industry, or similar data presented herein, such estimates and data involve risks and uncertainties and are subject to change based on various factors, including those discussed under the headings Risk Factors and Forward-Looking Statements in this prospectus, most of which are not within our control. Table of Contents Index to Financial Statements of our gross wells and approximately 57% of our net acreage. The Contributing Parties, which includes our largest operator by proved reserves, Remora Petroleum, L.P. (our Operating Affiliate), were formed in part to acquire and develop mature oil and natural gas properties. We expect further development on our acreage by the Contributing Parties and other working interest owners through recompletions, infill drilling, horizontal drilling, hydraulic fracturing and secondary and tertiary recovery methods. We believe our Operating Affiliate s significant ownership interest in us will incentivize it to sell us additional royalty interests at attractive prices from its current and future inventory of properties. We also believe our Operating Affiliate, through its continued ownership in the working interests of the underlying properties and significant ownership interest in us, will be further incentivized to pursue the development of its current and future properties that would benefit us directly through increased production. Our Operating Affiliate operated 541 of our wells as of December 31, 2017 and approximately 29% of our net production during 2017. Additionally, our Operating Affiliate operates 85% of our Proved Developed Non Producing ( PDNP ) reserves. Our Operating Affiliate was formed in 2011 by its management team and affiliates of NGP Energy Capital Management, LLC ( NGP ), a family of energy-focused private equity investment funds. Our Operating Affiliate is currently focused on the acquisition, development and exploitation of both conventional and unconventional oil and natural gas reserves in multiple onshore U.S. basins. Since inception, our Operating Affiliate has evaluated over 250 acquisition candidates, and has completed 43 property acquisitions and expects to continue acquiring properties for the benefit of itself and the Company. Our Operating Affiliate targets assets with a decline profile indicative of mature wells. We believe, based on publicly available data, that, as of December 31, 2017, there was production of approximately 34 Bcfe/d from wells in the lower 48 states that meet the decline profile targeted by our Operating Affiliate. We believe that operators are motivated to sell these mature and undervalued assets. As of December 31, 2017, on a pro forma basis, our Operating Affiliate owned approximately 123,000 net acres (97% held by production). For the year ended December 31, 2017, and on a pro forma basis giving effect to the contribution of working interests from the Contributing Parties to our Operating Affiliate, our Operating Affiliate had net production of 31.3 MMcfe/d and estimated proved reserves of 206 Bcfe (57.0% proved developed), according to Cawley, Gillespie & Associates, Inc. ( Cawley ), our independent petroleum engineering firm. As of December 31, 2017, on a pro forma basis, the estimated proved oil, natural gas and NGL reserves attributable to our interests in our underlying acreage were 107.8 Bcfe (22.3% liquids, consisting of 12.3% oil and 10.0% NGLs) based on the reserve report prepared by Cawley. Of these reserves, 84.8% were classified as Proved Developed Producing ( PDP ) reserves, 6.1% were classified as PDNP reserves and 9.1% were classified as Proved Undeveloped ( PUD ) reserves. Our PDNP reserves included in this estimate are derived from 57 recompletion and workover projects, primarily located in the South Texas/Gulf Coast and East Texas/North Louisiana regions. Our PUD reserves included in this estimate are from 173 gross PUD locations, primarily located in the Arkoma STACK play. Additionally, the estimated probable oil, natural gas and NGL reserves attributable to our interests in our underlying acreage were 30.8 Bcfe (29.8% liquids), derived from 29 recompletion opportunities and 412 gross undeveloped locations. The producing properties underlying our royalty interests typically have low estimated decline rates. Our PDP reserves have an average estimated initial five-year decline rate of approximately 9.9%. For the year ended December 31, 2017, our average daily net production was 26.2 MMcfe/d. For the year ended December 31, 2017, on a pro forma basis, our revenues were derived 27% from oil sales, 60% from natural gas sales and 13% from NGL sales. Our revenues are derived from royalty payments we receive from the Contributing Parties and other operators of our properties based on the sale of oil and natural gas production, as well as the sale of NGLs that are extracted from natural gas during processing. As of December 31, 2017, on a pro forma basis, we had over 250 operators on our acreage, with Table of Contents Index to Financial Statements The information in this prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities, and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED SEPTEMBER 10, 2018 5,250,000 Shares Remora Royalties, Inc. Class A Common Stock This is the initial public offering of our Class A common stock. We are offering 5,250,000 shares of our Class A common stock in this offering. Prior to this offering, there has been no public market for our Class A common stock. We currently expect the initial public offering price to be between $19.00 and $21.00 per share. We have applied to list our Class A common stock on the Nasdaq Global Market ( NASDAQ ) under the symbol RRI. We are an emerging growth company as that term is used in the Jumpstart Our Business Startups Act. Investing in our Class A common stock involves a high degree of risk. Before buying any shares of Class A common stock, you should carefully read the discussion of material risks of investing in our Class A common stock in Risk Factors beginning on page 30. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. Per Share Total Initial public offering price $ $ Underwriting discount(1)(2) $ $ Proceeds to Remora Royalties, Inc. (before expenses)(1) $ $ (1) Excludes an aggregate structuring fee equal to 0.75% of the gross proceeds of this offering payable by us to RBC Capital Markets, LLC and Wells Fargo Securities, LLC. Please read Underwriting. (2) We refer you to Underwriting on page 168 of this prospectus for additional information regarding underwriting compensation. The underwriters may purchase up to an additional 787,500 shares of Class A common stock from us at the public offering price, less the underwriting discount, within 30 days from the date of this prospectus solely to cover over-allotments. The underwriters expect to deliver the shares of Class A common stock to purchasers on or about , 2018 through the book-entry facilities of The Depository Trust Company. Joint Book-Running Managers RBC Capital Markets Wells Fargo Securities UBS Investment Bank Stifel Co-Managers Stephens Inc. Seaport Global Securities Prospectus dated , 2018 Table of Contents Index to Financial Statements the Contributing Parties operating approximately 46% of our net production during 2017. Our top five operators are our Operating Affiliate, AVAD Energy Partners, LP, Linn Energy LLC, SK Plymouth, LLC and Exco Operating Company, LP, and together account for approximately 66% of our net production during 2017. We have acreage in counties where there were 16 rigs operating and approximately 500 active permits as of April 2018. We believe that one of our key strengths is our management team s extensive experience in acquiring and managing mature oil and natural gas properties. Our management team and board of directors, which includes our founders George B. Peyton V and Grant W. Livesay, have a long history of creating value. We expect that our management team s extensive experience in acquiring and integrating oil and natural gas properties will allow us to efficiently integrate significant acquisitions into our existing organizational structure. Furthermore, we expect the Contributing Parties to operate a significant portion of our future production and undeveloped reserves. In connection with this offering, we will enter into a management services agreement with our Operating Affiliate, pursuant to which it will identify, evaluate and recommend to us acquisition opportunities and negotiate the terms of such acquisitions. Please read Certain Relationships and Related Party Transactions Agreements and Transactions with Affiliates in Connection with this Offering Management Services Agreement. Upon completion of this offering, the Contributing Parties will own 5,265,274 shares of our Class B common stock representing 100% of our outstanding Class B common stock and 5,265,274 units representing limited liability company interests in Remora Holdings ( RH Units ) representing a 50.1% interest in Remora Holdings. Each share of Class B common stock has no economic rights but entitles its holder to one vote on all matters to be voted on by shareholders generally. The Contributing Parties expect to retain a diverse portfolio of oil and natural gas properties with production and reserve characteristics similar to the assets we will own at the closing of this offering. In connection with this offering and pursuant to the contribution agreement that we will enter into with the Contributing Parties, certain of the Contributing Parties will grant us a right of first offer for a period of three years after the closing of this offering with respect to certain oil and natural gas properties in their portfolio, including properties located in the Permian, Anadarko, Arkoma, Appalachia, Uinta and Williston Basins. These oil and natural gas interests, many of which overlap with our royalty interests, include ownership in approximately 5,000 gross producing wells and approximately 600,000 gross acres across major producing basins in the United States. We believe the Contributing Parties will be incentivized through their continued ownership in the working interests in the underlying properties and ownership of our Class B common stock and RH Units to (i) offer us the opportunity to acquire additional royalty interests from them in the future and (ii) develop and grow production on the properties in which we own interests. Such Contributing Parties, however, have no obligation to sell any assets to us or to accept any offer that we may make for such assets, and we may decide not to acquire such assets even if such Contributing Parties offer them to us. Please read Certain Relationships and Related Party Transactions Remora Holdings LLC Agreement. Our Assets We categorize our assets into two groups: overriding royalty interests and mineral interests. Overriding Royalty Interests We primarily own overriding royalty interests, which are royalty interests that burden the working interests of a lease and represent the right to receive a fixed, cost-free percentage of production or revenue from production from a lease for as long as the lease is effective. Overriding royalty interests typically remain in effect until the associated lease expires, and because substantially all of the underlying leases are Table of Contents Index to Financial Statements DIVERSIFIED ROYALTY INTERESTS IN 3,600 GROSS WELLS ACROSS 12 STATES 50% OF TOTAL PROVED RESERVES OPERATED BY OUR CONTRIBUTING PARTIES (1) Numbers may not sum due to rounding. (2) Reserves based on 3rd party reserve report prepared by Cawley, Gillespie & Associates, Inc. in accordance with SEC guidelines as of December 31, 2017. Please see Business Oil and Natural Gas Data for more information. (3) Pro forma for the offering transactions, as described herein. Table of Contents Index to Financial Statements perpetual so long as production in paying quantities perpetuates the leasehold, substantially all of our overriding royalty interests are likewise perpetual as long as production continues. Overriding royalty interests generate over 95% of our revenue and are also the assets over which our Operating Affiliate will have the most influence. The Contributing Parties operated approximately 46% of the net production associated with these interests for the year ended December 31, 2017. Approximately 97% of our overriding royalty interests are held by production. Mineral Interests In addition to overriding royalty interests, we also own mineral interests, which are real property interests that are typically perpetual and grant ownership to all of the oil and natural gas lying below the surface of the property, as well as the right to explore, drill and produce oil and natural gas on that property or to lease such rights to a third party. Mineral owners typically grant oil and natural gas leases to operators for an initial three-year term with an upfront cash payment to the mineral owners known as a lease bonus. Once a well is producing, the mineral owner retains a royalty interest entitling it to a cost-free percentage of production or revenue from production. When production or drilling ceases on the leased property, the lease is terminated, subject to certain exceptions, and all mineral rights revert back to the mineral owner who can then lease the exploration and development rights to another party. We also own royalty interests that have been carved out of mineral interests and are known as nonparticipating royalty interests. Nonparticipating royalty interests are typically perpetual and have rights similar to mineral interests, including the right to a cost-free percentage of production revenues for minerals extracted from the acreage, without the associated executive right to lease and the right to receive lease bonuses. We combine our mineral and nonparticipating royalty assets into one category because they share many of the same characteristics due to the nature of the underlying interest. For example, we receive similar royalties from operators with respect to our mineral interests and nonparticipating royalty interests as long as such interests are subject to an oil and natural gas lease. As of December 31, 2017, on a pro forma basis, approximately 73% of the acreage subject to our mineral and nonparticipating royalty interests was leased. Less than 5% of our revenue for the year ended December 31, 2017, on a pro forma basis, was generated from such interests. When evaluating our business, our management team does not distinguish between mineral and nonparticipating royalty interests on leased acreage due to the similarity of the royalties received in respect to each. Table of Contents Index to Financial Statements Production The following charts provide information regarding the production of oil, natural gas and NGLs for the properties underlying our royalty interests on a pro forma basis for the year ended December 31, 2017. (1) Numbers may not sum due to rounding. (2) Btu-equivalent production volumes are presented on a natural gas-equivalent basis using a conversion factor of six Mcf of natural gas per barrel of oil, which is based on approximate energy equivalency and does not reflect the price or value relationship between oil and natural gas. (3) Value-equivalent production volumes are presented on a natural gas-equivalent basis using a conversion factor of 20 Mcf of natural gas per barrel of oil, which is the conversion factor we use in our business. For a discussion of the 20-to-1 conversion factor, please read footnote three to the Royalty Interests table under Key Producing Regions Royalty Interests. Key Producing Regions The following tables present information about our royalty interest acreage, production and well count by basin. We may own more than one type of interest in the same tract of land. Consequently, some of the acreage shown for one type of interest below may also be included in the acreage shown for another type of interest. Table of Contents Index to Financial Statements Royalty Interests The following table sets forth information about the properties underlying our royalty interests on a pro forma basis as of and for the year ended December 31, 2017: As of December 31, 2017 Average Daily Production For the Year Ended December 31, 2017 (Mcfe/d) Basin or Producing Region Gross Acres Net Acres Percent HBP 6:1(2) 20:1(3) Midcontinent 260,184 11,020 89 % 8,400 15,286 South Texas / Gulf Coast 72,486 19,732 100 % 6,443 9,889 East Texas / North Louisiana 63,516 2,331 100 % 4,366 4,759 Permian Basin 9,903 1,331 100 % 506 1,585 Other(1) 187,108 8,616 100 % 6,455 8,337 Total 593,197 43,030 97 % 26,170 39,856 (1) Other producing regions include multiple producing basins or plays across the United States, including the DJ Basin, San Juan Basin, Black Warrior Basin, Uinta Basin, onshore California and the western Gulf Coast (onshore) Basin. (2) Btu-equivalent production volumes are presented on a natural gas-equivalent basis using a conversion factor of six Mcf of natural gas per barrel of oil, which is based on approximate energy equivalency and does not reflect the price or value relationship between oil and natural gas. (3) Value-equivalent production volumes are presented on a natural gas-equivalent basis using a conversion factor of 20 Mcf of natural gas per barrel of oil, which is the conversion factor we use in our business. We are providing this measure supplementally because we believe this conversion factor represents an estimation of value equivalence over time and better correlates with the respective contribution of natural gas and oil to our revenues. We use the 20-to-1 conversion factor as we assess our business, including analysis of our financial and production performance, strategic decisions to purchase additional properties and budgeting. We do not adjust the 20-to-1 ratio to reflect current pricing, because the significant volatility in the conversion ratio makes it difficult for us to compare results across periods. By reviewing our aggregate production on a constant 20-to-1 basis, which removes the variability of price fluctuations but generally approximates price equivalence over recent periods, we are able to compare production data from period to period as well as the relative contribution of natural gas and oil to our revenues. The 20-to-1 conversion factor approximates the mean ratio of the average monthly price of WTI oil to the average monthly price of Henry Hub natural gas from January 1, 2008 to December 31, 2017, as reported by the U.S. Energy Information Agency ( EIA ). During this period, the ratio of the price of oil to the price of natural gas ranged from 53.0-to-1 to 7.1-to-1. The mean ratios of the price of oil to the price of natural gas were 17.1-to-1 and 17.6-to-1 for the years ended December 31, 2017 and December 31, 2016, respectively. Due to the variability of the prices of natural gas and oil, there is no standard conversion ratio for value equivalence, and the 20-to-1 ratio presented here may not accurately reflect the ratio of oil prices to natural gas prices for a given period. Table of Contents Index to Financial Statements Wells The following table sets forth information about the wells in which we have a royalty interest as of December 31, 2017, on a pro forma basis: Basin or Producing Region Well Count Midcontinent 1,949 South Texas / Gulf Coast 222 East Texas / North Louisiana 592 Permian Basin 28 Other(1) 819 Total 3,610 (1) Other producing regions include multiple producing basins or plays across the United States, including the DJ Basin, San Juan Basin, Black Warrior Basin, Uinta Basin, onshore California and the western Gulf Coast (onshore) Basin. Material Basins and Producing Regions The following is an overview of the U.S. basins and producing regions we consider most material to our current and future business. Midcontinent. The Midcontinent is a broad area containing hundreds of fields in Arkansas, Kansas, New Mexico, Oklahoma, Nebraska and Texas, and includes the Granite Wash, Cleveland, Woodford, Meramec, Osage and Mississippi Lime formations, among many others. The Anadarko and Arkoma Basins within the Midcontinent are among the most prolific and largest onshore producing oil and natural gas basins in the United States, having multiple producing horizons and extensive well control demonstrated over seven decades of development. The Anadarko Basin is a structural basin centered in the western part of Oklahoma and the Texas Panhandle, extending into southwestern Kansas and southeastern Colorado. Our interests contain diversified exposure to the STACK, Woodford, Mississippi Lime, Granite Wash, Hunton and other liquids-rich plays across the Anadarko Basin. As of April 2018, there were 12 active rigs and approximately 370 active permits in the counties in which we own royalty interests. The Arkoma Basin is a structural basin that spans across west-central Arkansas into southeastern Oklahoma along the northern side of the Ouachita orogenic belt. A significant portion of our Midcontinent acreage lies in the Arkoma STACK play, which is primarily targeting the liquids-rich Woodford formation and secondarily targeting the Mayes shale and Caney shale formations. As of December 31, 2017, the number of active rigs increased by 100% and permitting activity increased approximately 53% compared to the prior year on and around our Arkoma Basin acreage, which is operated by multiple high-quality operators. Also, included in the Midcontinent region are our royalty interests in approximately 165 gross long-lived conventional oil wells located in the western Fort Worth Basin. These properties are operated by our Operating Affiliate and produce primarily from the Canyon, Caddo, Marble Falls, Duffer and Ellenburger formations. South Texas/Gulf Coast. Our South Texas/Gulf Coast interests are diversified across 222 gross wells located in 19 counties and are primarily producing from prolific, long-lived natural gas-weighted reservoirs including the Wilcox, Vicksburg, Frio and Edwards Lime. Approximately 80.0% of our 18.0 Bcfe total proved reserves in South Texas/Gulf Coast are operated by our Table of Contents Index to Financial Statements Operating Affiliate, which has identified 32 recompletion cases and more than 100 additional workover/reactivation opportunities across our acreage position. We believe the South Texas/Gulf Coast region represents an attractive opportunity for further consolidation of predictable, conventional oil and natural gas properties producing from high-quality reservoirs with substantial geologic support of in-place hydrocarbons. East Texas/North Louisiana. Our East Texas/North Louisiana interests are primarily located in Desoto, Bienville, Webster and Jackson Parishes in Louisiana and Rusk County, Texas, as well as eight additional counties and parishes. Our Operating Affiliate operates approximately 153 wells, representing 52.0% of our 15.7 Bcfe total proved reserves in East Texas/North Louisiana and primarily producing from the Hosston, Cotton Valley and Haynesville formations. Beyond our PDP reserves, we believe our interests in this area contain longer-term upside potential in a higher gas price environment, particularly in the Lower Cotton Valley, Haynesville and Bossier plays across the region. Permian Basin. The Permian Basin extends from southeastern New Mexico into west Texas and is currently one of the most active drilling regions in the United States. It includes three geologic provinces: the Midland Basin to the east, the Delaware Basin to the west and the Central Basin Platform in between. The Permian Basin consists of mature legacy onshore oil and liquids-rich natural gas reservoirs and has been actively drilled over the past 90 years. The extensive operating history, favorable operating environment, mature infrastructure, long reserve life, multiple producing horizons, horizontal development potential and liquids-rich reserves make the Permian Basin one of the most prolific oil-producing regions in the United States. Our proved reserves in the Permian Basin are primarily located in Crockett County, Texas and are operated by one of the Contributing Parties. There are a number of uphole redevelopment projects, including eight Wolfcamp recompletions, that such Contributing Party intends to pursue in the near future, which we believe will directly benefit our royalty interests. Other. Our other assets consist of interests in 819 gross wells and are located in multiple other producing basins across the United States, including the DJ Basin, San Juan Basin, Black Warrior Basin, Uinta Basin, onshore California and the western Gulf Coast (onshore) Basin. Our Relationship with our Operating Affiliate Our Operating Affiliate is a privately-held Texas limited partnership focused on the acquisition, development and exploitation of both conventional and unconventional oil and natural gas reserves in multiple onshore US basins. Our Operating Affiliate was formed in 2011 by its management team and affiliates of NGP. As of December 31, 2017, on a pro forma basis, our Operating Affiliate owned approximately 123,000 net acres (97% held by production). For the year ended December 31, 2017, on a pro forma basis, our Operating Affiliate had net production of 31.3 MMcfe/d and estimated proved reserves of 206 Bcfe (57.0% proved developed), according to Cawley. Our Operating Affiliate expects to enter into hedging contracts covering approximately 75% of its estimated proved developed production for at least three years following this offering. We believe our Operating Affiliate, through its ownership of our Class B common stock and RH Units, will be incentivized to sell us additional royalty interests from its existing inventory of properties in the future as they become mature, though it will have no obligation to do so following this offering. Furthermore, our Operating Affiliate has the ability to own operated and non-operated properties, and although our Operating Table of Contents Index to Financial Statements Affiliate is not limited in its ability to compete against us, we expect it to pursue acquisitions of such properties with the intention of creating additional royalty interests for us to acquire. Finally, our Operating Affiliate can pursue development of current and future properties that would benefit us directly through increased production, and would likewise benefit our Operating Affiliate through its continued ownership in the working interests of the underlying properties and ownership of our Class B common stock and RH Units. We expect our Operating Affiliate to reinvest a substantial portion of the dividends it receives from us in the development of its properties. For example, on our royalty acreage, our Operating Affiliate has a portfolio of 57 PDNP recompletion projects (75% operated) to grow production, with the top 20 identified near term operated projects having an anticipated payback period of less than two years. Our Operating Affiliate also has an additional 29 probable recompletion projects (100% operated) in its portfolio and over 100 additional operated reactivation candidates, which could restore production in inactive wells for minimal costs. Additionally, our Operating Affiliate has advised us that it has identified a multi-year inventory of 173 gross PUD locations (99% non-operated) on acreage where we own royalty interests, primarily located in the Arkoma STACK play. Further, our Operating Affiliate has identified an additional 412 gross horizontal drilling locations (100% non-operated) included in our probable reserve estimates. We believe our Operating Affiliate s current recompletion/workover, PUD and probable locations and reactivation projects are capable of growing the production from the acreage underlying our interests through December 2021 without acquiring incremental reserves. Business Strategies Our primary business objective is to provide increasing dividends to stockholders resulting from acquisitions from the Contributing Parties and third parties and from organic growth through the continued development by the Contributing Parties and other working interest owners of the properties in which we own an interest. We intend to accomplish this objective by executing the following strategies: Acquire additional royalty interests from the Contributing Parties. Following the completion of this offering, certain of the Contributing Parties will continue to own significant interests in mature producing oil and natural gas properties, as well as undeveloped acreage that we expect the Contributing Parties will drill and convert to production in the near future. We believe certain of the Contributing Parties view the Company as a key part of their growth strategy. In addition, we believe their ownership in us will incentivize them to offer us additional royalty interests from their existing asset portfolios in the future. In connection with this offering and pursuant to the contribution agreement that we will enter into with the Contributing Parties, certain of the Contributing Parties will grant us a right of first offer for a period of three years after the closing of this offering with respect to certain oil and natural gas properties in their portfolio, including properties located in the Permian, Anadarko, Arkoma, Appalachia, Uinta and Williston Basins. These oil and natural gas interests subject to such right of first offer include ownership in approximately 5,000 gross producing wells and approximately 600,000 gross acres across the major producing basins in the United States. Such Contributing Parties, however, have no obligation to sell any assets to us or to accept any offer that we may make for such assets, and we may decide not to acquire such assets even if such Contributing Parties offer them to us. Participate with our Operating Affiliate in third-party acquisitions. Our Operating Affiliate, as well as the other Contributing Parties, were formed in part to acquire and develop mature oil and natural gas properties. Some of these properties will meet our acquisition criteria, which include (i) a sufficient, stable current production profile to create near-term accretion for our stockholders, (ii) significant amounts of recoverable oil and natural gas in place with geologic support for future Table of Contents Index to Financial Statements production and reserve growth, (iii) a geographic footprint complementary to our diverse portfolio and (iv) targeted acreage positions in resource and conventional plays that maximize our potential for reserve and production upside. More specifically, through our relationship with our Operating Affiliate, we expect to acquire royalty interests in mature properties concurrently with our Operating Affiliate s acquisition of such property, although our Operating Affiliate is under no obligation to include us in any acquisitions it makes. Through this participation with our Operating Affiliate in acquisitions, we expect to significantly increase the size and scope of potential acquisition targets available to us. Through our relationships with the Contributing Parties, we have access to each of their management teams and industry networks, which we believe provide us with a competitive advantage in pursuing potential third-party acquisitions. Further, we may have opportunities to work together with certain of the Contributing Parties to acquire properties that may not otherwise be attractive candidates for us or the Contributing Party individually. Our Operating Affiliate and its affiliates have significant experience in identifying, evaluating and completing strategic acquisitions of mature producing oil and natural gas properties. In connection with the closing of this offering, we will enter into a management services agreement with our Operating Affiliate pursuant to which it will identify, evaluate and recommend to us acquisition opportunities and negotiate the terms of such acquisitions. We believe that these individuals knowledge of the oil and natural gas industry, relationships within the industry and experience in identifying, evaluating and completing acquisitions will provide us opportunities to grow through strategic and accretive acquisitions that complement or expand our asset portfolio. Benefit from reserve, production and cash flow growth through organic production growth and development of our royalty interests to grow dividends. Our initial assets consist of diversified royalty interests. Over the long term, we expect working interest owners will continue to develop our acreage through recompletions, infill drilling, horizontal drilling, hydraulic fracturing and secondary and tertiary recovery methods. As an owner of royalty interests, we are entitled to a portion of the revenues received from the production of oil, natural gas and associated NGLs from the acreage underlying our interests, net of post-production expenses and taxes. We are not obligated to fund drilling and completion costs, lease operating expenses or plugging and abandonment costs at the end of a well s productive life. As such, we benefit from the continued development of the properties we own a royalty interest in without the need for investment of additional capital by us, which we expect to increase our dividends over time. For the year ended December 31, 2017, approximately 46% of our net production was operated by the Contributing Parties, who have advised us that they have identified a multi-year inventory of recompletion projects and drilling locations on our acreage. We believe the Contributing Parties will be incentivized through their ownership of Class B common stock and RH Units to develop and grow production on the properties in which we own interests. Maintain a conservative capital structure and prudently manage our business for the long term. We are committed to maintaining a conservative capital structure that will afford us the financial flexibility to execute our business strategies on an ongoing basis. Though not required pursuant to our amended and restated certificate of incorporation or amended and restated bylaws (respectively, our certificate of incorporation and our bylaws ), our board of directors intends to adopt a written policy whereby we limit our incurrence of borrowings up to 2.5 times our debt to Adjusted EBITDA ratio for the preceding four quarters. Additionally, we expect to maintain a conservative hedging strategy. Our strategy includes entering into commodity derivative contracts covering approximately 20% to 30% of our estimated production from total PDP reserves underlying our royalty interests for at least two years, although we may increase this percentage if debt levels rise as a result of acquisitions. Table of Contents Index to Financial Statements Competitive Strengths We believe that the following competitive strengths will allow us to successfully execute our business strategies and achieve our primary business objective: Significant diversified portfolio of royalty interests in mature producing basins and exposure to undeveloped opportunities. We have a diversified, low decline asset base with exposure to high-quality conventional and unconventional plays. As of December 31, 2017, we owned royalty interests in approximately 593,000 gross acres and approximately 43,000 net acres, of which approximately 57% is operated by the Contributing Parties. As of December 31, 2017, over 97% of the acreage subject to our royalty interests were held by production. The geographic breadth of our assets gives us exposure to potential production and reserves from new and existing plays without further required investment on our behalf. We believe that we will continue to benefit from these cost-free additions to production and reserves for the foreseeable future as a result of technological advances and continuing interest by the Contributing Parties and third-party producers in development activities on our acreage. The Contributing Parties have significant operational control over our properties. At the completion of this offering and on a pro forma basis, the Contributing Parties will operate approximately 46% of our 2017 net production, 50% of our total proved reserves and approximately 57% of our net acreage. The Contributing Parties operate approximately 98% of our PDNP reserves and have advised us they intend to develop such reserves in the near future. Given the Contributing Parties will own 100% of our Class B common stock, 5,265,274 RH Units representing a 50.1% interest in Remora Holdings, and will have continued ownership in the working interests in the underlying properties, we believe they are strongly incentivized to maximize production and development of the properties underlying our royalty interests. Further, we believe we have greater visibility into the Contributing Parties multi-year development programs than we would otherwise have with an unaffiliated third-party operator. Ability to acquire additional royalty interests from the Contributing Parties. We believe our relationship with the Contributing Parties will provide us with opportunities to acquire additional royalties at attractive valuations. Following the completion of this offering, the Contributing Parties will continue to own significant interests in mature producing oil and natural gas properties, as well as undeveloped acreage that we expect them to develop and convert to production in the near future. We believe the Contributing Parties view the Company as a key part of their growth strategy and that their ownership in us will incentivize them to offer us additional royalty interests from their asset portfolios over time. Exposure to leading plays in the United States, particularly in the Midcontinent region. We expect the operators of our properties to continue to drill new wells on our acreage, which we believe should more than offset the natural production declines from our existing wells through the year ending December 31, 2021. We believe that our operators have significant drilling inventory remaining on the acreage underlying our royalty interests in multiple plays. Our royalty interests are located in 12 states and in 13 major onshore basins across the continental United States and include ownership in approximately 3,600 gross producing wells, including over 1,900 wells in the Midcontinent. In the Midcontinent, and as of April 2018, there were 12 active rigs and approximately 370 active permits in the counties in which we own royalty interests. For the year ended December 31, 2017, approximately 75% of our net production was from the Midcontinent, South Texas/Gulf Coast, East Texas/North Louisiana and Permian Basin, which are among the most historically prolific oil and natural gas regions in the country. Table of Contents Index to Financial Statements Financial flexibility to fund expansion. We believe our conservative capital structure after this offering will permit us to maintain the financial flexibility to allow us to opportunistically purchase strategic royalty interests. We anticipate entering into a new $175.0 million secured revolving credit facility in connection with the closing of this offering. We expect to have an initial borrowing base under our secured revolving credit facility of $95.0 million and an initial aggregate elected commitment amount of $65.0 million, with approximately $10.0 million of borrowings outstanding at the closing of this offering. Experienced and proven management team with a track record of making acquisitions. The members of our management team and board of directors have a combined total of over 150 years of oil and natural gas experience. Our management team and board of directors, which includes our founders, have a long history of buying mature oil and natural gas properties in high-quality producing acreage throughout the United States. Since inception, our Operating Affiliate has evaluated over 250 acquisition candidates, and has completed 43 oil and natural gas property acquisitions and expects to continue acquiring properties for the benefit of itself and the Company. Management Services Agreement In connection with the closing of this offering, we and Remora Holdings will enter into a management services agreement with our Operating Affiliate pursuant to which our Operating Affiliate will provide management and administrative services to us and Remora Holdings. Neither we, Remora Holdings, nor our other subsidiaries will have any employees. Although certain of the employees that conduct our business will be employed by our Operating Affiliate, we sometimes refer to these individuals in this prospectus as our employees. In addition, certain of our executive officers and directors currently serve as executive officers or directors of our Operating Affiliate. Please read Management and Certain Relationships and Related Party Transactions. Risk Factors An investment in our Class A common stock involves a high degree of risk. You should carefully consider the risks described in Risk Factors and the other information in this prospectus, before deciding whether to invest in our Class A common stock. If any of these risks were to occur, our financial condition, results of operations, cash flows and ability to pay dividends to our stockholders would be adversely affected, and you could lose all or part of your investment. Risks Related to Our Business We may not have sufficient available cash to pay dividends on shares of our Class A common stock and we are not required to pay dividends by any law, our certificate of incorporation or our bylaws. The assumptions underlying the forecast of cash available to make dividend payments that we include in Dividend Policy Estimated Cash Available to Make Dividend Payments for the Twelve Months Ending September 30, 2019 are inherently uncertain and are subject to significant business, economic, financial, regulatory, environmental and competitive risks and uncertainties that could cause actual results to differ materially from those forecasted. Our business is difficult to evaluate because we have a limited financial history. The amount of our quarterly dividend payment, if any, may vary significantly both quarterly and annually and will be directly dependent on the performance of our business. Table of Contents Index to Financial Statements All of our revenues are derived from royalty payments that are based on the price at which oil, natural gas and NGLs produced from the acreage underlying our interests is sold. The volatility of these prices due to factors beyond our control greatly affects our business, financial condition, results of operations and cash available to make dividend payments. Risks Inherent in an Investment in Us Our board of directors may modify or revoke our dividend policy at any time at its discretion, including in such a manner that would result in an elimination of cash dividends regardless of the amount of available cash we generate. Our certificate of incorporation and bylaws do not require us to make any dividends at all. Our Operating Affiliate and its affiliates are not limited in their ability to compete with us, and the corporate opportunity provisions in our certificate of incorporation could enable our Operating Affiliate to benefit from corporate opportunities that might otherwise be available to us. Neither we nor our subsidiaries have any employees, and we rely solely on our Operating Affiliate to manage and operate, or arrange for the management and operation of, our business. The management team of our Operating Affiliate, which includes the individuals who will manage us, will also provide substantially similar services to other entities and thus will not be solely focused on our business. Increases in interest rates may cause the market price of our Class A common stock to decline. Stockholders will incur immediate and substantial dilution of $7.44 per share of our Class A common stock. Formation Transactions We were incorporated by our Operating Affiliate as a Delaware corporation in May 2018. Following this offering and the transactions related thereto, we will be a holding company whose sole material asset will consist of 5,250,000 RH Units. After the consummation of the transactions contemplated by this prospectus, we will be the managing member of Remora Holdings and will be responsible for all operational, management and administrative decisions relating to Remora Holdings business and will consolidate the financial results of Remora Holdings and its subsidiaries. The Limited Liability Company Agreement of Remora Holdings will be amended and restated as the Amended and Restated Limited Liability Company Agreement of Remora Holdings (the Remora Holdings LLC Agreement ) to, among other things, admit us as the sole managing member of Remora Holdings. In connection with this offering, (a) the Contributing Parties will contribute certain royalty interests to Remora Holdings in exchange for 7,914,567 RH Units and Remora Holdings assumption of approximately $50.0 million of our Operating Affiliate s indebtedness that burdens the royalty interests to be contributed by our Operating Affiliate, (b) we will contribute approximately $48.4 million of the proceeds of this offering, net of underwriting discounts and the structuring fee, to Remora Holdings in exchange for 2,600,707 RH Units, (c) we will purchase 2,649,293 RH Units from the Contributing Parties in exchange for approximately $49.3 million of the proceeds of this offering, net of underwriting discounts and the structuring fee, and (d) each of the Contributing Parties will purchase from us one share of Class B common stock at par value for each RH Unit such Contributing Party holds. Additionally, the Contributing Parties will contribute certain working interests to our Operating Affiliate. Table of Contents Index to Financial Statements After giving effect to these transactions and the offering contemplated by this prospectus, we will own an approximate 49.9% interest in Remora Holdings (or 57.4% if the underwriters option to purchase additional shares is exercised in full) and the Contributing Parties will own an approximate 50.1% interest in Remora Holdings (or 42.6% if the underwriters option to purchase additional shares is exercised in full) and all of the outstanding Class B common stock. Each share of the Class B common stock has no economic rights but entitles its holder to one vote on all matters to be voted on by shareholders generally. Holders of Class A common stock and Class B common stock will vote together as a single class on all matters presented to our shareholders for their vote or approval, except as otherwise required by applicable law or by our certificate of incorporation. We do not intend to list Class B common stock on any stock exchange. Following this offering, under the Remora Holdings LLC Agreement, the Contributing Parties will, subject to certain limitations, have the right to cause Remora Holdings to redeem (the Redemption Right ) all or a portion of their RH Units (together with a corresponding number of shares of Class B common stock) for Class A common stock (or cash at Remora Holdings election (the Cash Option )) at a redemption ratio of one share of Class A common stock for each RH Unit (and corresponding share of Class B common stock) redeemed as described under Certain Relationships and Related Party Transactions Remora Holdings LLC Agreement. Alternatively, upon the exercise of the Redemption Right, Remora Royalties, Inc. (instead of Remora Holdings) will have the right (the Call Right ) to, for administrative convenience, acquire each tendered RH Unit directly from the redeeming holder of RH Units for, at its election, (x) one share of Class A common stock or (y) an equivalent amount of cash. In addition, upon a change of control of Remora Royalties, Inc., Remora Royalties, Inc. has the right to require each holder of RH Units (other than Remora Royalties, Inc.) to exercise its Redemption Right with respect to some or all of such unitholder s RH Units. In connection with any redemption of RH Units pursuant to the Redemption Right or our Call Right, the corresponding number of shares of Class B common stock will be cancelled. In addition, the Contributing Parties will have the right, under certain circumstances, to cause us to register the offer and sale of their shares of Class A common stock as described under Certain Relationships and Related Party Transactions Registration Rights Agreement. Following the completion of this offering and our corporate reorganization, our Contributing Parties will in the aggregate own 100% of our Class B common stock, representing approximately 50.1% of the voting power of Remora Royalties, Inc. (or 42.6% if the underwriters option to purchase additional shares is exercised in full). Table of Contents Index to Financial Statements The following diagram indicates our simplified ownership structure immediately following this offering and the transactions related thereto (assuming that the underwriters option to purchase additional shares is not exercised): Emerging Growth Company Status We are an emerging growth company as defined in the Jumpstart Our Business Startups Act ( JOBS Act ). For as long as we are an emerging growth company, we may take advantage of specified exemptions from reporting and other regulatory requirements that are otherwise generally applicable to other public companies. These exemptions include: an exemption from providing an auditor s attestation report on the effectiveness of our system of internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002 (the Sarbanes-Oxley Act ); an exemption from compliance with any new requirements adopted by the Public Company Accounting Oversight Board ( PCAOB ), requiring mandatory audit firm rotation or supplement to the auditor s report in which the auditor would be required to provide additional information about the audit and the financial statements of the issuer; an exemption from compliance with any other new auditing standards adopted by the PCAOB after April 5, 2012, unless the Securities and Exchange Commission ( SEC ) determines otherwise; and reduced disclosure of executive compensation. In addition, Section 102 of the JOBS Act also provides that an emerging growth company can use the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended (the Table of Contents Index to Financial Statements Securities Act ), for complying with new or revised accounting standards. This permits an emerging growth company to delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of all of the applicable JOBS Act provisions. We will cease to be an emerging growth company upon the earliest of (i) the last day of the first fiscal year when we have $1.07 billion or more in annual revenues; (ii) the date on which we have issued more than $1.0 billion of non-convertible debt over a three-year period; (iii) the last day of the fiscal year following the fifth anniversary of our initial public offering; or (iv) the date on which we have qualified as a large accelerated filer under the Securities Exchange Act of 1934, as amended (the Exchange Act ). Principal Executive Offices Our principal executive offices are located at 807 Las Cimas Parkway, Building II Suite 275, Austin, Texas 78746 and our telephone number is (512) 579-3590. Our website address will be www.remoraroyalties.com. We intend to make our periodic reports and other information filed with or furnished to the SEC available, free of charge, through our website, as soon as reasonably practicable after those reports and other information are electronically filed with or furnished to the SEC. Information on our website is not incorporated by reference into this prospectus and does not constitute a part of this prospectus. Table of Contents Index to Financial Statements The Offering Issuer Remora Royalties, Inc. Class A common stock offered to the public 5,250,000 shares of Class A common stock (6,037,500 shares of Class A common stock if the underwriters exercise in full their option to purchase additional shares of Class A common stock from us). Option to purchase additional shares of Class A common stock We have granted the underwriters a 30-day option to purchase up to an additional 787,500 shares of Class A common stock. Class A common stock to be outstanding after this offering 5,250,000 shares of Class A common stock (6,037,500 shares of Class A common stock if the underwriters exercise in full their option to purchase additional shares of Class A common stock from us). Class B common stock to be outstanding immediately after completion of this offering 5,265,274 shares of Class B common stock, or one share for each RH Unit held by the Contributing Parties immediately following this offering. Class B shares are non-economic. In connection with any redemption of RH Units pursuant to the Redemption Right or our Call Right, the corresponding number of shares of Class B common stock will be cancelled. Use of proceeds We will receive net proceeds of approximately $97.7 million from this offering (based on an assumed initial public offering price of $20.00 per share of Class A common stock, the mid-point of the price range set forth on the cover page of this prospectus), after deducting underwriting discounts and the structuring fee. We intend to use the net proceeds of this offering to (1) make a contribution of $48.4 million to Remora Holdings in exchange for RH Units representing a 24.7% membership interest in Remora Holdings and (2) purchase RH Units representing a 25.2% membership interest in Remora Holdings from the Contributing Parties for $49.3 million. Remora Holdings will use the proceeds of the contribution along with approximately $10.0 million that we will borrow under our secured revolving credit facility upon the closing of this offering to repay in full approximately $50.0 million of our Operating Affiliate s indebtedness that burdens the royalty interests to be contributed to Remora Holdings by our Operating Affiliate that Remora Holdings will assume in connection with the formation transactions and the estimated offering expenses payable in connection with this offering. If the proceeds of the offering increase due to a higher initial public offering price or decrease due to a lower initial offering price, the Table of Contents Index to Financial Statements amount used to purchase RH Units from the Contributing Parties will increase or decrease, as applicable, by a corresponding amount. If the underwriters exercise their option to purchase additional shares of Class A common stock in full, the additional net proceeds to us would be approximately $14.6 million (based on an assumed initial offering price of $20.00 per share, the mid-point of the price range set forth on the cover page of this prospectus), after deducting the underwriting discount and structuring fee. We will use any net proceeds from the exercise of the underwriters option to purchase additional RH Units, on a pro rata basis, from the Contributing Parties. Please read Use of Proceeds. Voting Power of Class A common stock after giving effect to this offering 49.9% (or 100% if all outstanding RH Units held by the Contributing Parties are redeemed, along with a corresponding number of shares of our Class B common stock, for newly-issued shares of Class A common stock on a one-for-one basis). Voting Power of Class B common stock after giving effect to this offering 50.1% (or 0% if all outstanding RH Units held by the Contributing Parties are redeemed, along with a corresponding number of shares of our Class B common stock, for newly-issued shares of Class A common stock on a one-for-one basis). Voting rights Each share of our Class A common stock entitles its holder to one vote on all matters to be voted on by shareholders generally. Each share of our Class B common stock entitles its holder to one vote on all matters to be voted on by shareholders generally. Holders of our Class A common stock and Class B common stock vote together as a single class on all matters presented to our shareholders for their vote or approval, except as otherwise required by applicable law or by our certificate of incorporation. See Description of Capital Stock. Dividend policy Though we will not be required by any law, our certificate of incorporation or our bylaws to pay dividends, our board of directors expects to adopt a written policy whereby we intend to make a dividend of all of our cash on hand to our Class A common stockholders at the end of each quarter in an amount equal to our available cash for such quarter, beginning with the quarter ending December 31, 2018. We do not currently intend to retain cash from our operations for capital expenditures necessary to replace our existing oil and natural gas reserves or otherwise maintain our asset base (replacement capital expenditures), primarily due to our Table of Contents Index to Financial Statements expectation that the continued development of our properties by working interest owners will offset the natural production declines from our existing wells through 2021. Our board of directors may change our dividend policy and decide to withhold replacement capital expenditures from cash available to make dividend payments, which would reduce the amount of cash available to make dividend payments in the quarter(s) in which any such amounts are withheld. Over the long term, if our reserves are depleted and our Operating Affiliate and other operators become unable to maintain production on our existing properties and we have not been retaining cash for replacement capital expenditures, the amount of cash generated from our existing properties will decrease and we may have to reduce the amount of dividends payable to our Class A common stockholders. It is our intent, subject to market conditions, to finance acquisitions of royalty interests that increase our asset base largely through external sources, such as borrowings under our secured revolving credit facility and the issuance of equity and debt securities, although our board of directors may choose to reserve a portion of cash generated from operations to finance such acquisitions as well. Because we expect to pay out an amount equal to all available cash we generate each quarter pursuant to our dividend policy, our Class A common stockholders will have direct exposure to fluctuations in the amount of cash generated by our business. We expect that the amount of our quarterly cash dividends, if any, will fluctuate based on variations in, among other factors, (i) the performance of our Operating Affiliate and the other operators of our properties, (ii) earnings caused by, among other things, fluctuations in the price of oil, natural gas and NGLs, changes to working capital or capital expenditures and (iii) cash reserves deemed appropriate by our board of directors. Such variations in the amount of our quarterly dividends may be significant and could result in our not making any dividends for any particular quarter. Based upon our forecast for the full twelve months ending September 30, 2019, we expect to generate approximately $23.6 million in cash available to make dividend payments and distributions for the twelve months ending September 30, 2019, resulting in $11.8 million of cash available for dividend payments to Class A common stock for the same period, after distributions to holders of RH Units, or $2.25 per share of Class A common stock. Please read Dividend Policy Estimated Cash Available to Make Dividend Payments for the Twelve Months Ending September 30, 2019. Unanticipated events may occur which could materially adversely affect the actual results we achieve during the forecast Table of Contents Index to Financial Statements period. Consequently, our actual results of operations, cash reserve requirements and financial condition during the forecast period may vary from the forecast, and such variations may be material. Prospective investors are cautioned not to place undue reliance on our forecast and should make their own independent assessment of our future results of operations and financial condition. In addition, our board of directors may be
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+SUMMARY OF PROSPECTUS You should read the following summary together with the more detailed business information, financial statements and related notes that appear elsewhere in this prospectus. In this prospectus, unless the context otherwise denotes, references to "we," "us," "our" and "Lux Amber" are to Lux Amber, Corp.
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+S-1/A 1 d518076ds1a.htm PRE-EFFECTIVE AMENDMENT NO. 3 Pre-effective amendment No. 3 Table of Contents As filed with the Securities and Exchange Commission on August 3, 2018 Registration No. 333 -225353 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 PRE-EFFECTIVE AMENDMENT NO. 3 TO FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 CBM BANCORP, INC. (Exact Name of Registrant as Specified in Its Charter) Maryland 6035 83-1095537 (State or other jurisdiction of incorporation or organization) (Primary Standard Industrial Classification Code Number) (I.R.S. Employer Identification Number) 2001 East Joppa Road Baltimore, Maryland 21234 (410) 665-7600 (Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant s Principal Executive Offices) Joseph M. Solomon, President 2001 East Joppa Road Baltimore, Maryland 21234 (410) 665-7600 (Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent for Service) Copies to: Edward B. Crosland, Jr., Esq. Edward G. Olifer, Esq. James C. Stewart, Esq. Kilpatrick Townsend & Stockton LLP Jones Walker LLP 607 14th Street, NW, Suite 900 1227 25th Street, NW, Suite 200 Washington, D.C. 20005 Washington, D.C. 20037 (202) 508-5800 (202) 434-4660 Approximate date of commencement of proposed sale to the public: As soon as practicable after this registration statement becomes effective. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box: If this Form is filed to register additional shares for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of large accelerated filer, accelerated filer, smaller reporting company and emerging growth company in Rule 12b-2 of the Exchange Act. Large accelerated filer Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company Emerging growth company If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. Table of Contents SUMMARY The following summary explains significant aspects of the conversion, reorganization and the offering. It may not contain all of the information that is important to you. Before making an investment decision, you should read this entire document carefully, including the consolidated financial statements and the notes thereto, and the section entitled Risk Factors. In this prospectus, where appropriate, the terms we, us and our refer collectively to CBM Bancorp, Chesapeake Bank of Maryland and Banks of the Chesapeake, M.H.C. The Companies Chesapeake Bank of Maryland Our business operations are conducted through Chesapeake Bank of Maryland, a federally chartered stock savings association headquartered in Baltimore County, Maryland. Prior to 1998 and the creation of our current mutual holding company structure, Chesapeake Bank of Maryland or its predecessors had operated as thrift institutions since 1913. Chesapeake Bank of Maryland conducts business out of its main office located in Baltimore County, Maryland, and out of three branch offices located in Arbutus, Maryland, Bel Air, Maryland, and Pasadena, Maryland. Chesapeake Bank of Maryland operates as a community-oriented institution by offering a variety of loan and deposit products and serving other financial needs of its local community. Chesapeake Bank of Maryland takes its corporate citizenship seriously and is committed to meeting the credit needs of the community, consistent with safe and sound operations. Chesapeake Bank of Maryland s business consists principally of attracting retail deposits from the general public in our market area and using those funds, together with funds generated from operations and borrowings, to originate loans secured by residential and nonresidential real estate. Nonresidential real estate loans, construction and land development loans and commercial loans constitute a significant percentage of the loan portfolio and, in that respect, Chesapeake Bank of Maryland s lending operations are more diversified and have more risk than many traditional thrift institutions. Chesapeake Bank of Maryland s primary market area is the Baltimore Metropolitan Area and its surrounding counties. The economy of Chesapeake Bank of Maryland s market area is diversified, with a mix of services, manufacturing, wholesale/retail trade and federal and local government. See Business of Chesapeake Bank of Maryland Market Area. Chesapeake Bank of Maryland is, and will continue after the conversion and reorganization to be, subject to comprehensive regulation and examination by the Office of the Comptroller of the Currency. Chesapeake Bank of Maryland is subject to Maryland banking laws except to the extent they are preempted by Federal law. Chesapeake Bank of Maryland is not regulated by the Maryland Commissioner of Financial Regulation. CBM Bancorp, Inc. CBM Bancorp is a newly formed Maryland corporation. Following the completion of the conversion, reorganization and offering, CBM Bancorp will be the holding company for Chesapeake Bank of Maryland. Banks of the Chesapeake, M.H.C. Banks of the Chesapeake, M.H.C. is a federally chartered mutual holding company. Its primary business is ownership and operation of Chesapeake Bank of Maryland. Upon consummation of the conversion and reorganization, Banks of the Chesapeake, M.H.C. will cease to exist. Our executive offices are located at 2001 East Joppa Road, Baltimore, Maryland 21234, and our telephone number is (410) 665-7600. Our website address is www.chesapeakebank.com. Information on this website is not and should not be considered a part of this prospectus. Our Organizational Structure and the Proposed Conversion Pursuant to the terms of the plan of conversion and reorganization, which we refer to as the plan of conversion, we are converting from the mutual holding company corporate structure to the public stock holding company corporate structure. Table of Contents PROSPECTUS (Proposed Holding Company for Chesapeake Bank of Maryland) Up to 3,680,000 Shares of Common Stock (Subject to Increase to up to 4,232,000 Shares) CBM Bancorp, Inc., a Maryland corporation, is offering shares of its common stock for sale at $10.00 per share on a best efforts basis in connection with the conversion of Banks of the Chesapeake, M.H.C. from the mutual holding company to the stock holding company form of organization. In this prospectus, we refer to CBM Bancorp, Inc. as CBM Bancorp. We expect the shares of CBM Bancorp common stock will be listed on the Nasdaq Capital Market under the symbol CBMB, upon conclusion of the offering. There is no current market for the common stock. We are an emerging growth company as defined in the Jumpstart Our Business Startups Act of 2012. The shares of common stock are first being offered for sale in a subscription offering to eligible depositors and tax-qualified employee benefit plans of Chesapeake Bank of Maryland. Shares not purchased in the subscription offering may be offered for sale to the general public in a community offering, with a preference given first to residents of the communities served by Chesapeake Bank of Maryland. Any shares of common stock not purchased in the subscription or community offering may be offered for sale to the public through a syndicate of broker-dealers, referred to in this prospectus as the syndicated offering. The syndicated offering may commence before the subscription and community offerings (including any extensions) have expired. However, no shares purchased in the subscription offering or the community offering will be issued until the completion of any syndicated offering. We may sell up to 4,232,000 shares of common stock because of demand for the shares of common stock or changes in market conditions, without resoliciting subscribers. We must sell a minimum of 2,720,000 shares to complete the offering. The minimum purchase order is 25 shares. Generally, no individual, or individuals acting through a single qualifying account held jointly, may purchase more than 17,500 shares of common stock, and no person or entity, together with associates or persons acting in concert with such person or entity, may purchase more than 17,500 shares of common stock in all categories of the offering combined. The subscription offering will expire at 12:00 Noon, Eastern Time, on September 7, 2018. We expect that the community offering, if held, will terminate at the same time. We may extend the expiration date of the subscription and/or community offerings without notice to you until October 22, 2018 or longer if the Federal Reserve Board approves a later date. No single extension may exceed 90 days, and the offering must be completed by September 19, 2020. Once submitted, orders are irrevocable unless the subscription and community offerings are terminated or extended, with regulatory approval, beyond October 22, 2018, or the number of shares of common stock to be sold is increased to more than 4,232,000 shares or decreased to less than 2,720,000 shares. If the subscription and community offerings are extended past October 22, 2018, all subscribers will be notified and given the opportunity to confirm, change or cancel their orders. If you do not respond to the notice of extension, we will promptly return your funds with interest or cancel your deposit account withdrawal authorization. If the number of shares to be sold in the offering is increased to more than 4,232,000 shares or decreased to less than 2,720,000 shares, we will resolicit subscribers, and all funds delivered to us to purchase shares of common stock in the subscription and community offerings will be returned promptly with interest. Funds received in the subscription and the community offerings will be held in a segregated account at Chesapeake Bank of Maryland and will earn interest at 0.05% per annum until completion or termination of the offering. Raymond James & Associates, Inc. will assist us in selling the shares on a best efforts basis in the subscription and community offerings, and will serve as sole manager for any syndicated offering. Raymond James & Associates, Inc. is not required to purchase any shares of common stock that are sold in the offering. OFFERING SUMMARY Price: $10.00 per Share Minimum Midpoint Maximum Adjusted Maximum Number of shares 2,720,000 3,200,000 3,680,000 4,232,000 Gross offering proceeds $ 27,200,000 $ 32,000,000 $ 36,800,000 $ 42,320,000 Estimated offering expenses, excluding selling agent fees and expenses $ 940,000 $ 940,000 $ 940,000 $ 940,000 Selling agent fees and expenses (1) $ 376,990 $ 421,150 $ 465,310 $ 516,094 Estimated net proceeds(1) $ 25,883,010 $ 30,638,850 $ 35,394,690 $ 40,863,906 Estimated net proceeds per share(1) $ 9.52 $ 9.57 $ 9.62 $ 9.66 (1) The amounts shown assume that all of the shares are sold in the subscription and community offerings, and include estimated reimbursable expenses and stock information center fees. See Pro Forma Data and The Conversion and Offering Plan of Distribution; Selling Agent and Underwriter Compensation for information regarding compensation to be received by Raymond James & Associates, Inc. in the subscription and community offerings and the compensation to be received by Raymond James & Associates, Inc. and the other broker-dealers that may participate in the syndicated offering, excluding those purchased by our directors, officers, and other employees, members of their immediate families and our employee stock ownership plan, for which no selling fee will be paid. If all shares of common stock (other than shares expected to be purchased by our insiders and employee stock ownership plan) are sold in the syndicated offering, the selling agent fees and expenses would be approximately $1.6 million, $1.8 million, $2.1 million and $2.4 million at the minimum, midpoint, maximum and adjusted maximum levels of the offering, respectively. This investment involves a degree of risk, including the possible loss of principal. See Risk Factors beginning on page 13. These securities are not deposits or accounts and are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. None of the Securities and Exchange Commission, the Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, nor any state securities regulator has approved or disapproved of these securities or determined if this prospectus is accurate or complete. Any representation to the contrary is a criminal offense. For assistance, please contact the Stock Information Center at (888) 317-2811 The date of this prospectus is [Prospectus Date]. Table of Contents Upon completion of the conversion, Banks of the Chesapeake, M.H.C. will cease to exist, and CBM Bancorp, a newly formed Maryland corporation will become the parent holding company for Chesapeake Bank of Maryland. The conversion will be accomplished by the merger of Banks of the Chesapeake, M.H.C. with and into CBM Bancorp, with CBM Bancorp the surviving corporation. The following diagram shows our current organizational structure: After the conversion and offering are completed, we will be organized as a stock holding company, as follows: Business Strategy We intend to continue to operate as a well-capitalized, profitable and community-oriented bank dedicated to providing exceptional service to our individual and business customers. We believe that we have a competitive advantage in the markets we serve because of our knowledge of the local marketplace, our presence in the communities we serve and our long-standing history of providing superior relationship-based customer service. Following the conversion, reorganization and offering, our goal will also be to enhance long-term stockholder and franchise value by continuing to execute a safe and sound growth strategy that produces increasing earnings. We have sought to accomplish this objective by implementing a business strategy designed to grow our loan portfolio while maintaining a strong capital position and high asset quality. Our current business strategy is to grow and improve our profitability by: Continuing to originate and increase one- to four-family residential mortgage loans, a majority of which are sold in the secondary market; Continuing to originate and increase nonresidential real estate, land acquisition, development and construction, commercial and other loans; Monitoring credit risk and asset quality; Maintaining high underwriting standards for our loan products; Investing intelligently in a talented workforce, technology and marketing; Increasing core deposits to support the loan portfolio; Table of Contents Table of Contents Continuing to build and expand our current relationships within our market area; Target market to new businesses and new customer relationships; and Continuing to improve the efficiency of our operations. Reasons for the Conversion, Reorganization and Offering Our primary reasons for converting and reorganizing from the mutual to stock holding company structure and undertaking the stock offering are to: Support our planned growth and strengthen our regulatory capital position with the additional capital we will raise in the stock offering. While Chesapeake Bank of Maryland exceeds all regulatory capital requirements, the proceeds from the offering will greatly strengthen our capital position and provide a larger capital cushion to support our planned growth. Offer Chesapeake Bank of Maryland s depositors, employees, management and directors an equity ownership interest in CBM Bancorp and thereby obtain an economic interest in its future success. We will also be able to provide stock-based incentives to directors, officers and employees, which we believe will assist us in attracting and retaining qualified personnel. Compete more effectively in the financial services marketplace. The additional capital raised in the offering is expected to support our growth and diversification of operations, products and services and thereby improve our competitive position relative to other banks and financial institutions in our market area. Transition our organization to a stock holding company structure, which gives us greater flexibility to access the capital markets compared to our existing mutual holding company structure. The stock holding company structure is a more flexible form of organization that will give us greater flexibility to access the capital markets through possible future equity and debt offerings, although we have no current plans, agreements or understandings regarding any additional securities offerings. Facilitate future mergers, acquisitions and expansion. Although we do not currently have any understandings or agreements regarding any specific acquisition transaction, the stock holding company structure will give us greater flexibility to structure, and make us a more attractive and competitive bidder for, mergers and acquisitions of other financial institutions or business lines as opportunities arise. The additional capital raised in the offering also will enable us to consider larger merger transactions, as well as branching and other expansion opportunities in competitive markets. Although we intend to remain an independent financial institution, the stock holding company structure may make us a more attractive acquisition candidate for other institutions. Applicable regulations prohibit the acquisition of CBM Bancorp for three years following completion of the conversion, and also prohibit anyone from acquiring or offering to acquire more than 10% of our stock without regulatory approval. Growing organically and through opportunistic acquisitions. We expect to consider both organic growth as well as acquisition opportunities that we believe would enhance the value of our franchise and yield long-term financial benefits for our stockholders. We will consider expanding our branch network through the opening of additional branches or the acquisition of branches or other financial institutions if the right opportunity occurs. The capital we are raising in the offering may also help fund improvements in our operating facilities and customer delivery services in order to enhance our competitiveness. Terms of the Offering We are offering for sale between 2,720,000 and 3,680,000 shares (subject to increase to 4,232,000 shares) of common stock in a subscription offering to eligible depositors of Chesapeake Bank of Maryland, to our tax-qualified employee benefit plans and, to the extent shares remain available, in a community offering to the general public, with a preference given first to natural persons (including trusts of natural persons) residing in Baltimore City, Maryland and the Maryland counties of Anne Arundel, Baltimore, Carroll, Harford and Howard. If necessary, we will also offer for sale shares to the general public in a syndicated offering. The number of shares of common stock to be sold may be increased to up to 4,232,000 shares as a result of demand for the shares of common stock in the offering or changes in market conditions. Unless the number of shares of common stock to be offered is increased to more than 4,232,000 shares or decreased to fewer than 2,720,000 shares, or the subscription and community offerings are extended beyond October 22, 2018, subscribers will not have the opportunity to change or cancel their stock orders once submitted. If the subscription and community offerings are extended past October 22, 2018, all subscribers will be notified and given an opportunity to confirm, change or cancel their orders. All Table of Contents subscribers will be notified by mail sent to the address the subscriber provides on the stock order form they have submitted. If you do not respond to the notice of extension, your order will be canceled and we will promptly return your funds with interest at 0.05% per annum or cancel your deposit account withdrawal authorization. If the number of shares to be sold is increased to more than 4,232,000 shares or decreased to less than 2,720,000 shares, all subscribers stock orders will be canceled, their withdrawal authorizations will be canceled and funds delivered to us to purchase shares of common stock in the subscription and community offerings will be returned promptly with interest at 0.05% per annum. We will then resolicit subscribers, giving them an opportunity to place new orders for a period of time. No shares purchased in the subscription offering and community offering will be issued until the completion of any syndicated offering. The purchase price of each share of common stock offered for sale in the offering is $10.00. All investors will pay the same purchase price per share, regardless of whether the shares are purchased in the subscription offering, the community offering or a syndicated offering. Investors will not be charged a commission to purchase shares of common stock in the offering. Raymond James & Associates, Inc., our marketing agent in the offering, will use its best efforts to assist us in selling shares of our common stock in the offering but is not obligated to purchase any shares of common stock in the offering. Persons Who May Order Shares of Common Stock in the Offering We are offering the shares of common stock for sale in a subscription offering in the following descending order of priority: To depositors with accounts at Chesapeake Bank of Maryland with aggregate balances of at least $50 at the close of business on April 30, 2017. To our tax-qualified employee benefit plans (including Chesapeake Bank of Maryland s employee stock ownership plan), which may subscribe for, in the aggregate, up to 10% of the shares of common stock sold in the offering. We expect our employee stock ownership plan to purchase 8% of the shares of common stock sold in the stock offering. To depositors of Chesapeake Bank of Maryland at the close of business on July 31, 2018. Converting mutual holding companies, like Banks of the Chesapeake, M.H.C., are required by federal regulations to include an additional subscription priority for depositors as of the end of the calendar quarter preceding Federal Reserve Board approval of their conversion, referred to as the Supplemental Eligibility Record Date, but only if the converting institution s conversion is not approved by the Federal Reserve Board within 15 months of the Eligibility Record Date. Because the Federal Reserve Board approved our conversion within 15 months of our Eligibility Record Date, we do not have a subscription priority for Supplemental Eligible Account Holders. Shares of common stock not purchased in the subscription offering may be offered for sale to the general public in a community offering, with a preference given to natural persons (including trusts of natural persons) residing in Baltimore City, Maryland and the Maryland counties of Anne Arundel, Baltimore, Carroll, Harford and Howard. The community offering may begin concurrently with, during or promptly after the subscription offering. We also may offer for sale shares of common stock not purchased in the subscription offering and the community offering in a syndicated offering. Raymond James & Associates, Inc. will act as sole manager for the syndicated offering. We have the right to accept or reject, in our sole discretion, orders received in the community offering or syndicated offering, and our interpretation of the terms and conditions of the plan of conversion will be final. Any determination to accept or reject stock orders in the community offering or syndicated offering will be based on the facts and circumstances available to management at the time of the determination. If we receive orders for more shares than we are offering for sale, we may not be able to fully or partially fill your order. A detailed description of the subscription offering, the community offering and the syndicated offering, as well as a discussion regarding allocation procedures, can be found in The Conversion and Offering. How We Determined the Offering Range and the $10.00 Per Share Stock Price The amount of common stock we are offering for sale is based on an independent appraisal of the estimated pro forma market value of CBM Bancorp, assuming the offering has been completed. Feldman Financial Advisors, Inc., our independent appraiser, has estimated that, as of May 18, 2018, this market value was $32.0 million. Based on federal regulations, this market value forms the midpoint of a valuation range with a minimum of $27.2 million and a maximum of $36.8 million. Based on this valuation range, the number of shares of common stock being offered for sale by CBM Bancorp ranges from 2,720,000 shares to 3,680,000 shares. The purchase price of $10.00 per share was selected primarily because it is Table of Contents the price most commonly used in mutual-to-stock conversions of financial institutions. Feldman Financial Advisors, Inc. will update its appraisal before we complete the conversion and offering. If, as a result of demand for the shares or changes in market conditions, Feldman Financial Advisors, Inc. determines that our estimated pro forma market value has increased, we may sell up to 4,232,000 shares without further notice to you. If our pro forma market value at that time is either below $27.2 million or above $42.3 million, then, after consulting with the Federal Reserve Board, we may: terminate the offering and promptly return all funds with interest; set a new offering range and give all subscribers the opportunity to place a new order; or take such other actions as may be permitted by the Federal Reserve Board and the Securities and Exchange Commission. The appraisal is based in part on the financial condition and operating results of Banks of the Chesapeake, M.H.C., the pro forma effect of the additional capital raised by the sale of shares of common stock in the offering, and an analysis of a peer group of 10 publicly traded savings institutions and holding companies that Feldman Financial Advisors, Inc. considers comparable to Banks of the Chesapeake, M.H.C. The appraisal peer group consists of the following companies, all of which are traded on the Nasdaq Stock Market. Company Name Ticker Symbol Headquarters Total Assets (1) (In millions) Elmira Savings Bank ESBK Elmira, NY $ 553.3 Equitable Financial Corp. EQFN Grand Island, NE 305.7 FSB Bancorp, Inc. FSBC Fairport, NY 314.7 HV Bancorp, Inc. HVBC Huntingdon Valley, PA 263.8 IF Bancorp, Inc. IROQ Watseka, IL 619.3 Melrose Bancorp, Inc. MELR Melrose, MA 311.1 Ottawa Bancorp, Inc. OTTW Ottawa, IL 268.0 PB Bancorp, Inc. PBBI Putnam, CT 530.5 Poage Bankshares, Inc. PBSK Ashland, KY 450.3 WVS Financial Corp. WVFC Pittsburgh, PA 356.4 (1) Asset size for all companies is as of March 31, 2018. The regulatory appraisal guidelines that require Feldman Financial Advisors, Inc. to select a minimum of ten peer companies, whose equity securities are traded on an exchange, resulted in all of the peer companies having greater assets than we do because of the limited number of smaller savings institutions and holding companies trading on an exchange versus the over-the-counter market. The following table presents a summary of selected pricing ratios for CBM Bancorp (on a pro forma basis) as of and for the twelve months ended March 31, 2018, and for the peer group companies based on earnings and other information as of and for the twelve months ended March 31, 2018, with stock prices as of May 18, 2018, as reflected in the appraisal report. Compared to the average pricing of the peer group, and based upon the information in the following table, our pro forma pricing ratios at the midpoint of the offering range indicated a discount of 36.7% on a price-to-book value basis and a discount of 39.8% on a price-to-tangible book value basis. Our pro forma earnings for the twelve months ended March 31, 2018 resulted in price-to-earnings multiples that are extraordinarily high and are thereby considered not meaningful for comparative valuation purposes. Price-to-earnings multiple (1) Price-to-book value ratio Price-to-tangible book value ratio CBM Bancorp (on a pro forma basis, assuming completion of the conversion) Adjusted Maximum N.M. 73.48 % 73.48 % Maximum N.M. 69.69 % 69.69 % Midpoint N.M. 65.83 % 65.83 % Minimum N.M. 61.24 % 61.24 % Valuation of peer group companies (as of May 18, 2018) Averages 31.74x 104.07 % 109.34 % Medians 32.33x 101.77 % 104.68 % Table of Contents (1) Price-to-earnings multiples calculated by Feldman Financial Advisors, Inc., in the independent appraisal are based on earnings for the twelve months ended March 31, 2018. Our pro forma price-to-earnings multiples based on historical earnings for this period resulted in multiples that are extraordinarily high and are considered not meaningful for comparative valuation purposes. These ratios are different than those presented in Pro Forma Data. The independent appraisal does not indicate trading market value. Do not assume or expect that our valuation as indicated in the appraisal means that after the conversion and offering the shares of our common stock will trade at or above the $10.00 per share purchase price. Furthermore, the pricing ratios presented in the appraisal were used by Feldman Financial Advisors, Inc., to estimate our pro forma appraised value for regulatory purposes and not to compare the relative value of shares of our common stock with the value of the capital stock of the peer group. The value of the capital stock of a particular company may be affected by a number of factors such as financial performance, asset size and market location. For a more complete discussion of the amount of common stock we are offering for sale and the independent appraisal, see The Conversion and Offering Stock Pricing and Number of Shares to be Issued. Intended Use of the Proceeds from the Offering We intend to invest at least 50% of the net proceeds from the stock offering in Chesapeake Bank of Maryland, fund the loan to our employee stock ownership plan to finance its purchase of shares of common stock in the stock offering and retain the remainder of the net proceeds from the offering at CBM Bancorp. Accordingly, assuming we sell 3,200,000 shares of common stock in the stock offering at the midpoint of the offering range, and we have net proceeds of $30.6 million, we intend to invest $15.3 million in Chesapeake Bank of Maryland, lend $2.6 million to our employee stock ownership plan to fund its purchase of shares of common stock, and retain the remaining $12.8 million of the net proceeds at CBM Bancorp. CBM Bancorp may use the funds it retains for investment to repurchase shares of common stock, to acquire other financial institutions or financial services companies, to pay cash dividends and for other general corporate purposes. Chesapeake Bank of Maryland may use the proceeds it receives to support increased lending, enhance existing, or support growth and the development of, new products and services, or expand its branch network by establishing or acquiring new branches or by acquiring other financial institutions or financial services companies. We do not currently have any agreements or understandings regarding any acquisition transactions. See How We Intend to Use the Proceeds from the Offering for more information on the proposed use of the proceeds from the offering. Limits on How Much Common Stock You May Purchase The minimum number of shares of common stock that may be purchased is 25 shares. Generally, no individual, or individuals acting through a single qualifying account held jointly, may purchase more than 17,500 shares ($175,000) of common stock. If any of the following persons purchase shares of common stock, their purchases, in all categories of the offering, when combined with your purchases, also cannot exceed 17,500 shares ($175,000) of common stock: your spouse or relatives of you or your spouse living in your house; most companies, trusts or other entities in which you are a senior officer, partner, trustee or have a substantial beneficial interest; or other persons who may be your associates or persons acting in concert with you. Unless we determine otherwise, persons having the same address and persons exercising subscription rights through qualifying accounts registered to the same address will be subject to the overall purchase limitation of 17,500 shares ($175,000). Subject to regulatory approval, we may increase or decrease the purchase and ownership limitations at any time. See the detailed description of the purchase limitations in The Conversion and Offering Additional Limitations on Common Stock Purchases. Table of Contents How You May Purchase Shares of Common Stock in the Subscription Offering and the Community Offering In the subscription offering and community offering, you may pay for your shares only by: (i) personal check, bank check or money order made payable directly to CBM Bancorp, Inc.; or (ii) authorizing us to withdraw available funds (without any early withdrawal penalty) from your Chesapeake Bank of Maryland deposit account(s), other than checking accounts or individual retirement accounts ( IRAs ). Chesapeake Bank of Maryland is not permitted to lend funds to anyone to purchase shares of common stock in the offering. Additionally, you may not use any type of third party check to pay for shares of common stock. Please do not submit cash. Wire transfers will not be accepted. You may not designate withdrawal from Chesapeake Bank of Maryland accounts with check-writing privileges; instead, please submit a check. If you request a direct withdrawal, we reserve the right to interpret that as your authorization to treat those funds as if we had received a check for the designated amount, and will immediately withdraw the amount from your checking account(s). You may not authorize direct withdrawal from a Chesapeake Bank of Maryland individual retirement account, or IRA. See Using Individual Retirement Account Funds to Purchase Shares of Common Stock. You may subscribe for shares of common stock in the subscription and community offerings by delivering a signed and completed original stock order form, together with full payment payable to CBM Bancorp, Inc. or authorization to withdraw funds from one or more of your Chesapeake Bank of Maryland deposit accounts, provided that the stock order form is received before 12:00 Noon, Eastern Time, on September 7, 2018, which is the end of the subscription offering period. You may submit your stock order form and payment by mail using the stock order reply envelope provided or by overnight delivery to the address listed on the stock order form. You may also hand-deliver stock order forms to our main office, located at 2001 East Joppa Road, Baltimore, Maryland, which is open between 9:00 a.m. to 4:00 p.m., local time, Monday through Thursday and 9:00 a.m. to 6:00 p.m., local time, Friday. Hand-delivered stock order forms will be accepted only at this location. We will not accept stock order forms at our other offices. Please do not mail stock order forms to Chesapeake Bank of Maryland offices. See The Conversion and Offering Procedure for Purchasing Shares in the Subscription and Community Offerings Payment for Shares for a complete description of how to purchase shares in the subscription and community offerings. Using Individual Retirement Account Funds to Purchase Shares of Common Stock You may be able to subscribe for shares of common stock using funds in your individual retirement account, or IRA, or other retirement account. If you wish to use some or all of the funds in your retirement account, the applicable funds must be transferred to a self-directed account maintained by an independent custodian or trustee, such as a brokerage firm, and the purchase must be made through that account. If you do not have such an account, you will need to establish one before placing your stock order. A one-time and/or an annual administrative fee may be payable to the independent custodian or trustee. Because individual circumstances differ and the processing of retirement account orders takes additional time, we recommend that you contact our Stock Information Center promptly, preferably at least two weeks before the September 7, 2018 offering deadline, for assistance with purchases using funds in your retirement account held at Chesapeake Bank of Maryland or elsewhere. Whether you may use such funds to purchase shares in the stock offering may depend on timing constraints and, possibly, limitations imposed by the institution where the funds are held. We cannot guarantee that you will be able to us such funds. See The Conversion and Offering Procedure for Purchasing Shares in the Subscription and Community Offerings Payment for Shares and Using Individual Retirement Account Funds for a complete description of how to use retirement funds to purchase shares of common stock in the stock offering. Market for Common Stock Upon completion of the conversion, we expect the shares of CBM Bancorp common stock will trade on the Nasdaq Capital Market under the symbol CBMB. To list our stock on the Nasdaq Capital Market, we are required to have at least three broker-dealers who will make a market in our common stock. Raymond James & Associates, Inc. has advised us that it intends to make a market in our common stock following the offering, but is under no obligation to do so. Our Dividend Policy At this time, no determination has been made with respect to the future payment of dividends on our common stock. Following completion of the stock offering, our board of directors will have the authority to declare dividends on our shares Table of Contents of common stock, subject to our capital requirements, our financial condition and results of operations, tax considerations, statutory and regulatory limitations, and general economic conditions. We cannot assure you that we will pay dividends in the future, or that any such dividends will not be reduced or eliminated in the future. For information regarding our proposed dividend policy, see Our Dividend Policy. Purchases by Directors and Executive Officers We expect our directors and executive officers, together with their associates, to subscribe for 132,500 shares of common stock in the offering, representing 4.87% of the shares to be sold at the minimum of the offering range. The purchase price paid by them will be the same $10.00 per share price paid by all other persons who purchase shares of common stock in the offering. See Subscriptions by Directors and Executive Officers for more information on the proposed purchases of shares of common stock by our directors and executive officers. Deadline for Orders of Shares of Common Stock in the Subscription and Community Offerings The deadline for submitting orders to purchase shares of common stock in the subscription and community offerings is 12:00 Noon, Eastern Time, on September 7, 2018, unless we extend this deadline. If you wish to purchase shares of common stock, a properly completed and signed original stock order form, together with full payment, must be received (not postmarked) by this time. Although we will make reasonable attempts to provide this prospectus and offering materials to holders of subscription rights, the subscription offering and all subscription rights will expire at 12:00 Noon, Eastern Time, on September 7, 2018, whether or not we have been able to locate each person entitled to subscription rights. See The Conversion and Offering Procedure for Purchasing Shares in the Subscription and Community Offerings Expiration Date for a complete description of the deadline for purchasing shares in the stock offering. You May Not Sell or Transfer Your Subscription Rights Applicable regulations prohibit you from transferring your subscription rights. If you order shares of common stock in the subscription offering, you will be required to certify that you are purchasing the common stock for yourself and that you have no agreement or understanding to sell or transfer your subscription rights or the shares that you are purchasing. We intend to take legal action, including reporting persons to federal or state agencies, against anyone who we believe has sold or transferred his or her subscription rights. We will not accept your order if we have reason to believe you have sold or transferred your subscription rights. On the stock order form, you cannot add the names of others for joint or beneficial stock registration who do not have subscription rights or who qualify only in a lower subscription offering priority than you do. Doing so may jeopardize your subscription rights. You may only add those who were eligible to purchase shares of common stock in the subscription offering at your date of eligibility. In addition, the stock order form requires that you list all deposit accounts, giving all names on each account and the account number at the applicable eligibility date. Failure to provide this information, or providing incomplete or incorrect information, may result in a loss of part or all of your share allocation. Delivery of Shares of Common Stock All shares of common stock sold will be issued in book entry form. Stock certificates for shares not subject to transfer restrictions will not be issued. A statement reflecting ownership of shares of common stock issued in the subscription and community offerings will be mailed by our transfer agent to the persons entitled thereto at the registration address noted by them on their stock order forms as soon as practicable following consummation of the conversion and offering. We expect trading in the stock to begin on the day of completion of the conversion and offering or the next business day. The conversion and offering are expected to be completed as soon as practicable following satisfaction of the conditions described below in Conditions to Completion of the Conversion. Until a statement reflecting ownership of shares of common stock is available and delivered to purchasers, purchasers might not be able to sell the shares of common stock that they purchased in the offering, even though the common stock will have begun trading. Your ability to sell your shares of common stock before receiving your statement will depend on arrangements you may make with a brokerage firm. Table of Contents Conditions to Completion of the Conversion We cannot complete the conversion and offering unless: The plan of conversion is approved by at least a majority of votes eligible to be cast by members of Banks of the Chesapeake, M.H.C. (depositors of Chesapeake Bank of Maryland) as of July 31, 2018; We sell at least the minimum number of shares of common stock offered in the offering; and We receive approval from the Federal Reserve Board. Steps We May Take if We Do Not Receive Orders for the Minimum Number of Shares If we do not receive orders for at least 2,720,000 shares of common stock, we may take one or more steps to sell the minimum number of shares of common stock in the offering range. Specifically, we may: increase the purchase and ownership limitations; and/or seek regulatory approval to extend the offering beyond October 22, 2018, so long as we resolicit subscribers who previously submitted subscriptions in the offering. If we extend the offering past October 22, 2018, all subscribers will be notified and given an opportunity to confirm, change or cancel their orders. If you do not respond to the notice of extension, we will cancel your stock order and promptly return your funds with interest for funds received in the subscription and community offering or cancel your deposit account withdrawal authorization. If one or more purchase limitations are increased, subscribers in the subscription offering who ordered the maximum amount will be, and, in our sole discretion, some other large purchasers may be, given the opportunity to increase their subscriptions up to the then-applicable limit. Possible Change in the Offering Range Feldman Financial Advisors, Inc. will update its appraisal before we complete the conversion and offering. If, as a result of demand for the shares or changes in market conditions, Feldman Financial Advisors, Inc. determines that our pro forma market value has increased, we may sell up to 4,232,000 shares in the offering without further notice to you. If our pro forma market value at that time is either below $27.2 million or above $42.3 million, then, after consulting with the Federal Reserve Board, we may: terminate the stock offering and promptly return all funds (with interest paid on funds received in the subscription and community offerings); set a new offering range; or take such other actions as may be permitted by the Federal Reserve Board and the Securities and Exchange Commission. If we set a new offering range, we will promptly return funds, with interest at 0.05% per annum, for funds received for purchases in the subscription and community offerings, and cancel any authorization to withdraw funds from deposit accounts for the purchase of shares of common stock. We will then resolicit subscribers, allowing them to place a new stock order for a period of time. Possible Termination of the Offering We may terminate the offering at any time prior to the special meeting of members of Banks of the Chesapeake, M.H.C. that has been called to vote on the conversion, and at any time after such approval with regulatory approval. If we terminate the offering, we will promptly return your funds with interest at 0.05% per annum, and we will cancel deposit account withdrawal authorizations. Our Officers, Directors and Employees Will Receive Additional Benefits and Compensation After the Conversion In connection with the conversion, we are establishing an employee stock ownership plan, and, subject to stockholder approval, we intend to implement a stock-based benefits plan that will provide for grants of stock options and restricted stock. Table of Contents Employee Stock Ownership Plan. The board of directors of Chesapeake Bank of Maryland has adopted an employee stock ownership plan, which will award shares of our common stock to eligible employees primarily based on their compensation. Our board of directors will, prior to the completion of the offering, approve the loan to the employee stock ownership plan with such loan proceeds to be used to purchase the common stock subscribed for by the employee stock ownership plan. It is expected that our employee stock ownership plan will purchase an amount of shares equal to up to 8% of our outstanding shares from the proceeds of the loan made by CBM Bancorp to the plan. Stock-Based Benefit Plan. In addition to shares purchased by the employee stock ownership plan, we intend to adopt a stock-based benefit plan. The plan will be designed to attract and retain qualified personnel in key positions and provide directors, officers and other key employees with an ownership interest in CBM Bancorp, which will be an incentive to contribute to our success, and will reward key employees for their performance. The number of options granted and shares of restricted common stock awarded under a stock-based benefit plan may not exceed 10% and 4%, respectively, of our total outstanding shares, provided that if Chesapeake Bank of Maryland s tangible capital at the time of adoption of the stock-based benefit plan is less than 10% of its assets, then the amount of shares of restricted common stock may not exceed 3% of our outstanding shares. A stock-based benefit plan will not be established sooner than six months after the stock offering, and if adopted within one year after the stock offering, the plan must be approved by a majority of the votes eligible to be cast by our stockholders. If a stock-based benefit plan is established more than one year after the stock offering, it must be approved by a majority of votes cast by our stockholders. The following additional restrictions would apply to our stock-based benefit plan only if such plan is adopted within one year after the stock offering: the exercise price of options granted within one year of the completion of the offering must be equal to no less than the then fair market value of the common stock on the date the options are granted. non-employee directors in the aggregate may not receive more than 30% of the options and shares of restricted common stock authorized under the plan; no non-employee director may receive more than 5% of the options and shares of restricted common stock authorized under the plan; no individual may receive more than 25% of the options and shares of restricted common stock authorized under the plan; options and shares of restricted common stock may not vest more rapidly than 20% per year, beginning on the first anniversary of stockholder approval of the plan; and accelerated vesting of awards is not permitted except for death, disability or upon a change in control of CBM Bancorp or Chesapeake Bank of Maryland. We have not determined whether we will present a stock-based benefit plan for stockholder approval prior to or more than 12 months after the completion of the stock offering. The terms of such plan, any awards to be made or the potential recipients of any awards under such plan have not been determined at this time. In the event federal regulators change their regulations or policies regarding stock-based benefit plans, including any regulations or policies restricting the size of awards and vesting of benefits as described above, the restrictions described above may not be applicable. We may obtain the shares needed for our stock-based benefit plan by issuing additional shares of common stock from authorized but unissued shares or through stock repurchases. Equity Plan Expenses. The implementation of an employee stock ownership plan and a stock-based benefit plan will increase our future compensation costs, thereby reducing our earnings. For example, we will be required to recognize an expense each year under our employee stock ownership plan equal to the fair market value of the shares committed to be released for that year to the participating employees. Similarly, if we issue restricted stock awards under a stock-based benefit plan, we would be required to recognize an expense as the shares vest equal to their fair market value on the grant date. Finally, if we issue stock options, we would be required to recognize an expense as the options vest, equal to their estimated value on the grant date. See Risk Factors Risks Related to the Offering Our stock-based benefit plan will increase our costs, which will reduce our income and Management Future Stock Benefit Plans. Benefits to Management. The following table summarizes the stock benefits that our officers, directors and employees may receive following the reorganization and offering, at the adjusted maximum of the offering range and assuming that our Table of Contents employee stock ownership plan purchases 8% of our outstanding shares and that we implement a stock-based benefit plan granting options to purchase 10% of the total shares of common stock of CBM Bancorp issued in connection with the reorganization and awarding shares of restricted common stock equal to 4% of the total shares of common stock of CBM Bancorp issued in connection with the reorganization. Plan Individuals Eligible to Receive Awards Percent of Outstanding Shares Value of Benefits Based on Adjusted Maximum of Offering Range (In Thousands) Employee stock ownership plan All employees 8.00 % $ 3,386 Stock awards Directors, officers and employees 4.00 1,693 Stock options Directors, officers and employees 10.00 1,202 (1) Total 22.00 % $ 6,281 (1) The fair value of stock options has been estimated at $2.84 per option using the Black-Scholes option pricing model with the following assumptions: a grant-date share price and option exercise price of $10.00; no dividend yield; expected option life of 10 years; risk-free interest rate of 2.74%; and a volatility rate of 11.93% based on an index of publicly traded thrift institutions. The actual value of the shares of restricted common stock awarded under the stock-based benefit plan would be based on the price of CBM Bancorp s common stock at the time the shares are awarded. The following table presents the total value of all shares of restricted common stock to be available for award and issuance under the stock-based benefit plan, assuming receipt of stockholder approval and that the shares are awarded in a range of market prices from $8.00 per share to $14.00 per share. Share Price 108,800 Shares Awarded at Minimum of Offering Range 128,000 Shares Awarded at Midpoint of Offering Range 147,200 Shares Awarded at Maximum of Offering Range 169,280 Shares Awarded at Adjusted Maximum of Offering Range (In thousands, except share price information) $ 8.00 $ 870 $ 1,024 $ 1,178 $ 1,354 $ 10.00 $ 1,088 $ 1,280 $ 1,472 $ 1,693 $ 12.00 $ 1,306 $ 1,536 $ 1,766 $ 2,031 $ 14.00 $ 1,523 $ 1,792 $ 2,061 $ 2,370 The grant-date fair value of the options granted under the stock-based benefit plan would be based in part on the price of shares of CBM Bancorp s common stock at the time the options are granted. The value will also depend on the various assumptions utilized in the option pricing model ultimately adopted. The following table presents the total estimated value of the options to be available for grant under the stock-based benefit plan, assuming receipt of stockholder approval, using a Black-Scholes option pricing model, and assuming the market price and exercise price for the stock options are equal and the range of market prices for the shares is $8.00 per share to $14.00 per share. The Black-Scholes option pricing model provides an estimate only of the fair value of the options, and the actual value of the options may differ significantly from the value set forth in this table. Market/Exercise Price Grant-Date Fair Value Per Option 272,000 Options at Minimum of Offering Range 320,000 Options at Midpoint of Offering Range 368,000 Options at Maximum of Offering Range 423,200 Options at Adjusted Maximum of Offering Range (In thousands, except market/exercise price and fair value information) $ 8.00 $ 2.27 $ 617 $ 726 $ 835 $ 961 $ 10.00 $ 2.84 $ 772 $ 909 $ 1,045 $ 1,202 $ 12.00 $ 3.41 $ 928 $ 1,091 $ 1,255 $ 1,443 $ 14.00 $ 3.98 $ 1,083 $ 1,274 $ 1,465 $ 1,684 Tax Consequences Banks of the Chesapeake, M.H.C., Chesapeake Bank of Maryland and CBM Bancorp have received an opinion of counsel, Jones Walker LLP, regarding the material federal and Maryland income tax consequences of the conversion. As a Table of Contents general matter, the conversion will not be a taxable transaction for purposes of federal or state income taxes to Banks of the Chesapeake, M.H.C., Chesapeake Bank of Maryland, CBM Bancorp or persons eligible to subscribe for shares in the subscription offering. Emerging Growth Company Status We qualify as an emerging growth company under the Jumpstart Our Business Startups Act of 2012. For as long as we are an emerging growth company, we may choose to take advantage of exemptions from various reporting requirements applicable to other public companies but not to emerging growth companies. See Risk Factors Risks Related to Our Business We are an emerging growth company, and any decision on our part to comply only with certain reduced reporting and disclosure requirements applicable to emerging growth companies could make our common stock less attractive to investors and Supervision and Regulation Emerging Growth Company Status. An emerging growth company may elect to use the extended transition period to delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies, but must make such election when the company is first required to file a registration statement. Such an election is irrevocable during the period a company is an emerging growth company. We have elected to use the extended transition period to delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies. Accordingly, our financial statements may not be comparable to the financial statements of public companies that comply with such new or revised accounting standards. How You Can Obtain Additional Information Stock Information Center Our banking personnel may not, by law, assist with investment-related questions about the offering. If you have any questions regarding the conversion or offering, please call our Stock Information Center. The telephone number is (888) 317-2811. The Stock Information Center is open Monday through Friday between 10:00 a.m. and 5:00 p.m., Eastern Time. The Stock Information Center will be closed on bank holidays. Table of Contents
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+Prospectus Summary 1
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+PROSPECTUS SUMMARY 1
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+TABLE OF CONTENTS CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS ii SUMMARY 1
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+This summary only highlights the more detailed information appearing elsewhere in this prospectus. As this is a summary, it does not contain all of the information that you should consider in making an investment decision. You should read this entire prospectus carefully, including the information under Risk Factors and our financial statements and the related notes included elsewhere in this prospectus, before investing. Unless otherwise stated in this prospectus or the context otherwise requires, references to: amended and restated certificate of incorporation are to our certificate of incorporation to be in effect upon the completion of this offering; common stock are to our Class A common stock and our Class B common stock; completion window is the period following the completion of this offering at the end of which, if we have not completed our initial business combination, we will redeem 100% of the public shares at a per share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest earned on the funds held in the trust account and not previously released to us to pay our taxes (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares, subject to applicable law and certain conditions and as further described herein. The completion window ends 24 months from the closing of this offering; directors are to our directors and director nominees; equity-linked securities are to any debt or equity securities that are convertible, exercisable or exchangeable for shares of our Class A common stock issued in a financing transaction in connection with our initial business combination, including but not limited to a private placement of such securities; founder shares are to shares of our Class B common stock and the shares of our Class A common stock issued upon the automatic conversion thereof at the time of our initial business combination as provided herein; initial stockholders are to our sponsor and any other holders of our founder shares immediately prior to this offering; letter agreement refers to the letter agreement, the form of which is filed as an exhibit to the registration statement of which this prospectus forms a part; M. Klein Associates are to M. Klein Associates, Inc., an affiliate of M. Klein and Company, LLC; M. Klein and Company are to M. Klein and Company, LLC, a Delaware limited liability company and its affiliates; management or our management team are to our officers and directors; private placement warrants are to the warrants issued to our sponsor in a private placement simultaneously with the closing of this offering; public shares are to shares of our Class A common stock sold as part of the units in this offering (whether they are purchased in this offering or thereafter in the open market); public stockholders are to the holders of our public shares, including our sponsor, officers and directors to the extent our sponsor, officers or directors purchase public shares, provided that each of their status as a public stockholder shall only exist with respect to such public shares; sponsor are to Churchill Sponsor LLC, a Delaware limited liability company and an affiliate of M. Klein and Company in which certain of our directors and officers hold membership interests; underwriters option to purchase additional units are to the underwriters 45-day option to purchase up to an additional 9,000,000 units to cover over-allotments, if any; TABLE OF CONTENTS The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED SEPTEMBER 6, 2018 PRELIMINARY PROSPECTUS $600,000,000 Churchill Capital Corp 60,000,000 Units Churchill Capital Corp is a newly incorporated blank check company formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses, which we refer to throughout this prospectus as our initial business combination. We have not identified any business combination target and we have not, nor has anyone on our behalf, initiated any substantive discussions, directly or indirectly, with any business combination target. While we may pursue an initial business combination target in any business or industry, we intend to focus on businesses in the information services segment of the broader technology services and software industry and, more specifically, the predictive analytics and data market. This is an initial public offering of our securities. Each unit has an offering price of $10.00 and consists of one share of our Class A common stock and one half of one redeemable warrant. Each whole warrant entitles the holder thereof to purchase one share of our Class A common stock at a price of $11.50 per share, subject to adjustment as described in this prospectus. Only whole warrants are exercisable. The warrants will become exercisable on the later of 30 days after the completion of our initial business combination and 12 months from the closing of this offering, and will expire five years after the completion of our initial business combination or earlier upon redemption or liquidation, as described in this prospectus. Subject to the terms and conditions described in this prospectus, we may redeem the warrants for cash once the warrants become exercisable. We have also granted the underwriters a 45-day option to purchase up to an additional 9,000,000 units to cover over-allotments, if any. We will provide our public stockholders with the opportunity to redeem all or a portion of their shares of our Class A common stock upon the completion of our initial business combination at a per share price, payable in cash, equal to the aggregate amount then on deposit in the trust account described below calculated as of two business days prior to the consummation of our initial business combination, including interest earned on the funds held in the trust account and not previously released to us to pay our taxes, divided by the number of then outstanding public shares, subject to the limitations described herein. If we are unable to complete our initial business combination within 24 months from the closing of this offering, we will redeem 100% of the public shares at a per share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest earned on the funds held in the trust account and not previously released to us to pay our taxes (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares, subject to applicable law and certain conditions as further described herein. Our sponsor, Churchill Sponsor LLC, is an affiliate of M. Klein and Company, LLC. Our sponsor has subscribed to purchase an aggregate of 16,500,000 warrants (or 18,300,000 warrants if the underwriters option to purchase additional units is exercised in full) at a price of $1.00 per warrant ($16,500,000 in the aggregate, or $18,300,000 in the aggregate if the underwriters option to purchase additional units is exercised in full) in a private placement that will close simultaneously with the closing of this offering. Each private placement warrant entitles the holder thereof to purchase one share of our Class A common stock at $11.50 per share, subject to adjustment as described in this prospectus. Our sponsor currently holds 17,250,000 shares of Class B common stock (up to 2,250,000 of which are subject to forfeiture depending on the extent to which the underwriters option to purchase additional units is exercised). The shares of Class B common stock will automatically convert into shares of Class A common stock at the time of our initial business combination, or earlier at the option of the holder, on a one-for-one basis, subject to adjustment as provided herein. Holders of our Class B common stock will have the right to elect all of our directors prior to the consummation of our initial business combination. On any other matter submitted to a vote of our stockholders, holders of our Class B common stock and holders of our Class A common stock will vote together as a single class, except as required by applicable law or stock exchange rule. Prior to this offering, there has been no public market for our units, Class A common stock or warrants. We have applied to list our units on the New York Stock Exchange, or the NYSE, under the symbol CCC.U on or promptly after the date of this prospectus. We cannot guarantee that our securities will be approved for listing on the NYSE. The Class A common stock and warrants constituting the units will begin separate trading on the 52nd day following the date of this prospectus, subject to certain conditions. Once the securities constituting the units begin separate trading, we expect that the Class A common stock and warrants will be listed on the NYSE under the symbols CCC and CCC WS, respectively. We are an emerging growth company under applicable federal securities laws and will be subject to reduced public company reporting requirements. Investing in our securities involves risks. Please see Risk Factors on page 34. Investors will not be entitled to protections normally afforded to investors in Rule 419 blank check offerings. Neither the SEC nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. Per Share Total Price to Public $ 10.00 $ 600,000,000 Underwriting Discounts and Commissions(1) $ 0.55 $ 33,000,000 Proceeds, before expenses, to us $ 9.45 $ 567,000,000 (1) Includes $0.35 per unit, or $21,000,000 (or up to $24,150,000 if the underwriters option to purchase additional units is exercised in full) in the aggregate, payable to the underwriters for deferred underwriting commissions to be placed in a trust account located in the United States as described herein. The deferred commissions will be released to the underwriters only on completion of an initial business combination, in an amount equal to $0.35 multiplied by the number of shares of Class A common stock sold as part of the units in this offering, as described in this prospectus. Does not include certain fees and expenses payable to the underwriters in connection with this offering. See also Underwriting for a description of compensation and other items of value payable to the underwriters. Of the proceeds we receive from this offering and the sale of the private placement warrants described in this prospectus, $600.0 million, or $690.0 million if the underwriters option to purchase additional units is exercised in full ($10.00 per unit in either case), will be deposited into a U.S.-based trust account with Continental Stock Transfer & Trust Company acting as trustee. The underwriters are offering the units for sale on a firm commitment basis. The underwriters expect to deliver the units to the purchasers on or about , 2018. Citigroup Co-Manager B. Riley FBR , 2018 TABLE OF CONTENTS warrants are to our warrants sold as part of the units in this offering (whether they are purchased in this offering or thereafter in the open market) and the private placement warrants; and we, us, company or our company are to Churchill Capital Corp, a Delaware corporation. Unless the context indicates otherwise, share and per share amounts reflect a 0.125 for 1 dividend and a one third for 1 dividend, each in the nature of a stock split, that took place in August 2018 and September 2018, respectively. Unless we tell you otherwise, the information in this prospectus assumes that the underwriters will not exercise their option to purchase additional units and the forfeiture by our sponsor of 2,250,000 founder shares. General We are a newly incorporated blank check company formed as a Delaware corporation for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses, which we refer to throughout this prospectus as our initial business combination. We have not identified any business combination target and we have not, nor has anyone on our behalf, initiated any substantive discussions, directly or indirectly, with any business combination target. While we may pursue an initial business combination in any sector, we intend to focus our efforts on businesses in the information services segment of the broader technology services and software industry and, more specifically, the predictive analytics and data market, where we believe our management team and co-founders expertise will provide us with a competitive advantage. Our co-founder, Jerre Stead, has a long history of leadership and value creation at public and private companies, including during his tenure at IHS Markit Ltd. ( IHS Markit ) (Nasdaq: INFO), a world leader in critical information, analytics and solutions, and its predecessor company, IHS Inc. (together with IHS Markit, IHS ). Mr. Stead became Executive Chairman of IHS on December 1, 2000. He led the company s initial public offering in November 2005 and served as both Executive Chairman and CEO from September 2006 until June 2013. Mr. Stead returned as CEO in June 2015 until his retirement from the company on December 31, 2017. Under Mr. Stead s leadership of IHS, IHS reported that GAAP revenue grew from $476 million in the fiscal year ended November 30, 2005 to $3.6 billion in the fiscal year ended November 30, 2017, driven by a mix of organic growth and acquisitions, while GAAP operating income grew from $62 million to $524 million over the same time period year ended November 30, 2017. Under Mr. Stead s leadership, IHS provided its shareholders with a 21% compound annual return from the time of its initial public offering until Mr. Stead s retirement from the company. During his tenure at IHS, Mr. Stead oversaw the acquisition of over 80 companies, including the purchase of: R.L. Polk & Co., a provider of information and analytics on the automobile industry, for $1.4 billion in 2013; Oil Price Information Service ( OPIS ), a provider of data on the refined fuels sector, for $650 million in 2016; Seismic Micro-Technology, a provider of analytical tools for the energy industry, for $502 million in 2011; and CARPROOF Corporation, a provider of data on vehicles, for approximately $460 million in 2015. Mr. Stead also spearheaded the merger of IHS Inc. and Markit Ltd. in 2016, a transaction which created a global information services leader with a market capitalization at the time of Mr. Stead s retirement of over $18 billion. Prior to leading IHS, Mr. Stead held a number of senior positions at companies, including Chairman and CEO of Honeywell-Phillips Medical Electronics, Chairman and CEO of Square D Company, Chairman and CEO of AT&T Global Information Solutions, Chairman and CEO of Legent Corporation and Chairman and CEO of Ingram Micro. Our co-founder, Michael Klein, is also the founder and managing partner of M. Klein and Company, which he founded in 2012. M. Klein and Company is a global strategic advisory firm that provides its clients a variety of advice tailored to their objectives. Mr. Klein is a strategic advisor to global companies, boards of directors, senior executives, governments and institutional investors. Mr. Klein s background in TABLE OF CONTENTS strategic advisory work was built during his 30-year career, including more than two decades at Citigroup Inc. ( Citi ) and its predecessors, during which he initiated and executed strategic advisory transactions. He began his career as an investment banker in the M&A Advisory Group at Salomon Smith Barney and subsequently became Chairman and Co-Chief Executive Officer of Citi Markets and Banking, with responsibilities for global corporate and investment banking and Global Transaction Services across Citi. He was previously Chief Executive Officer of Global Banking, a position he held from the group s inception in February 2004. He also held the positions of CEO of Citi Markets & Banking, Europe, and Co-Head of Global Investment Banking for Salomon Smith Barney. In early 1999, he was given responsibility for the expansion of the firm s European investment banking business. A major step in that development was the merger, in May 2000, of Salomon Smith Barney s European operation with Schroders, a leading UK and European Merchant Bank. Prior to becoming Co-Head of the Global Investment Bank, he had been responsible for the firm s Global Financial Entrepreneurs and Private Equity Groups. Our Chief Operations Officer, Sheryl von Blucher, has over 30 years of experience in a variety of roles in the global integrated energy, information services, and public and non-profit sectors. She has led strategic and portfolio planning, operations, and corporate finance and development for both domestic and international organizations. From January 2018 to July 2018, Ms. von Blucher served as Co-Chief Executive Officer of DTN LLC, which provides services in relation to the delivery of weather, agricultural, energy and commodity market information. Prior to this, she joined IHS Inc. in 2000 as Senior Vice President of Planning and Corporate Development, and then served as an Advisor to the Chairman & CEO of the company from 2007 through 2017. Since 2008 Ms. von Blucher has worked in private-equity portfolio management and as a partner and managing director for the JMJS Group, a private equity partnership. We will seek to capitalize on the collective experience and complimentary expertise of our co-founders. Mr. Stead and Mr. Klein have formed a close business collaboration over the past 15 years. Mr. Stead and Mr. Klein served on the board of IHS together from 2003 to 2013. While Mr. Klein was on the IHS board, he was actively involved in significant transactions including the company s initial public offering and each of its acquisitions. After stepping down from his role as a board member of IHS, Mr. Klein became an outside advisor to Mr. Stead and IHS and was actively involved in IHS s major transactions, including the 2013 acquisition of R.L. Polk & Co. and the 2016 merger of IHS Inc. with IHS Markit. We believe the longstanding professional relationship between Mr. Stead and Mr. Klein will provide an advantage in terms of seamless coordination and spirit of partnership in managing the business of the company. We believe that our management team and M. Klein and Company, which is an affiliate of our sponsor, are well positioned to identify attractive business combination opportunities within the information services segment of the broader technology services and software industry and, more specifically, the predictive analytics and data market. Our objectives are to generate attractive returns for shareholders and enhance value through improving operational performance of the acquired company. We expect to favor potential target companies with certain industry and business characteristics. Key industry characteristics include compelling long term growth prospects, attractive competitive dynamics, consolidation opportunities and low risk of technological obsolescence. Key business characteristics include high barriers to entry, significant streams of recurring revenue, opportunity for operational improvement, attractive steady-state margins, high incremental margins and attractive free cash flow characteristics. We believe that there are significant, attractive investment opportunities that exist in the information services segment of and across the technology services and software industry. We define this industry as a combination of three of International Data Corporation s ( IDC ) worldwide markets: services, software and organizational data as a service; and the information services segment overlaps each of these. Within this segment, we intend to target opportunities in the predictive analytics and data market, which represents a total addressable market of approximately $153 billion in 2018, expected to grow at a 12.3% compound annual growth rate from 2018 through 2021. We define predictive analytics and data markets as the aggregate of three of IDC s markets: worldwide business analytics services, worldwide big data and analytics software and worldwide organizational data as a service; these three IDC markets fit within the broader technology services and software industry. Growth in predictive analytics and data markets is driven by a number of factors, including the application of digital and transformational business analytics services, software and information such as advanced analytics, cognitive computing and big data. As TABLE OF CONTENTS these trends continue, data analysis grows more complex, the cost of technology continues to decline, and companies seek to apply data-driven technologies and insights to tackle their business problems, we anticipate sustained market expansion will act as a tailwind. While we intend to focus on the information services segment of the technology services and software industry more broadly, we may ultimately choose to pursue an initial business combination in other industries, which we identify as having similarly attractive investment and operating characteristics. Our management team has broad experience investing and advising on transactions in a wide range of industries, including data processing, business services, financial services, information services and technology services and software. To the extent we identify attractive investments outside of the information services segment of technology services and software, we intend to apply the same disciplined due diligence, execution and value creation strategies to the investment. The co-founders desire to create a sustainable leader in the information services industry with ongoing and continuous value created for the company s customers, shareholders, employees and the communities it serves. The co-founders intend to consistently drive to maximize returns to the company s shareholders. In addition, we intend that a portion of the company s cash flow and/or value created will be directed to long-term employee training and to significant initiatives supported by the co-founders. With respect to the foregoing experiences of our management and M. Klein and Company, past performance is not a guarantee (i) that we will be able to identify a suitable candidate for our initial business combination or (ii) of success with respect to any business combination we may consummate. You should not rely on the historical record of our management s or M. Klein and Company s performance as indicative of our future performance. None of the members of our management team has any past experience with any blank check companies or special purpose acquisition companies. For more information on the experience and background of our management team, see the section entitled Management. Business Strategy Our strategy is to identify and complete our initial business combination with a company in an industry that complements the experience and expertise of our management team. We will seek to: leverage the strategic and transactional experience of our co-founders to bring advice and attention to potential business combination targets; deliver creative approaches to transaction sourcing; and utilize an understanding of global financial markets and events, financing, and overall corporate strategy options. We believe the information services segment of the broader technology services and software industry and, more specifically, the predictive analytics and data market presents an attractive investment opportunity. Our selection process will leverage our co-founders network of industry, private equity sponsor, credit fund sponsor and lending community relationships as well as relationships with management teams of public and private companies, investment bankers, restructuring advisers, attorneys and accountants, which we believe should provide us with a number of business combination opportunities. We intend to deploy a proactive, thematic sourcing strategy and to focus on companies where we believe the combination of our operating experience, relationships, capital and capital markets expertise can be catalysts to transform a target company and can help accelerate the target s growth and performance. Upon completion of this offering, members of our management team and M. Klein and Company will communicate with their network of relationships to articulate our initial business combination criteria, including the parameters of our search for a target business, and will begin the disciplined process of pursuing and reviewing promising leads. Our management team and M. Klein and Company have experience in: operating companies, setting and changing strategies, and identifying, monitoring and recruiting world-class talent; TABLE OF CONTENTS developing and growing companies, both organically and through acquisitions and strategic transactions and expanding the product range and geographic footprint of a number of target businesses; sourcing, structuring, acquiring and selling businesses; accessing the capital markets, including financing businesses and helping companies transition to public ownership; fostering relationships with sellers, capital providers and target management teams; and executing transactions in multiple geographies and under varying economic and financial market conditions. Competitive Strengths The sourcing, valuation, diligence and execution capabilities of our management team and M. Klein and Company will provide us with a significant pipeline of opportunities from which to evaluate and select a business that will benefit from our expertise. We will also have the benefit of using M. Klein and Company as our lead financial advisor on our business combinations and other transactions. Our competitive strengths include the following: Industry Leading Executive. We believe the strong track record of Mr. Stead in information services will be viewed favorably by target businesses in need of professionalized management, improved operating processes and controls, better access to industry relationships and strategic planning. Proprietary Sourcing Channels and Leading Industry Relationships. We believe the capabilities and connections associated with our management team, in combination with those of M. Klein and Company, will provide us with a differentiated pipeline of acquisition opportunities that would be difficult for other participants in the market to replicate. We expect these sourcing capabilities will be further bolstered by our management team s and M. Klein and Company s reputation and deep industry relationships. Investing Experience. We believe that our management s track record of identifying and sourcing transactions in the information services segment of the broader technology services and software industry position us well to appropriately evaluate potential business combinations and select one that will be well received by the public markets. Execution and Structuring Capability. Our management team and sponsor believe that our combined industry expertise and reputation will allow them to source and complete transactions possessing structural attributes that create an attractive investment thesis. These types of transactions are typically complex and require creativity, industry knowledge and expertise, rigorous due diligence, and extensive negotiations and documentation. We believe that by focusing our investment activities on these types of transactions, we are able to generate investment opportunities that have attractive risk/reward profiles based on their valuations and structural characteristics. Investment Criteria We have developed the following high level, non-exclusive investment criteria that we will use to screen for and evaluate target businesses. We will seek to acquire a business that: Has a Leading Position/Consolidation Opportunity in the Information Services Segment of the Broader Technology Services and Software Industry with Supportive Long-Term Dynamics. We will seek to acquire a business that holds a leading position in an industry with attractive characteristics. Specifically, we will seek to exclude businesses that (i) do not hold a strong position in the markets they serve, (ii) do not have a differentiated product or service in a well-defined market, and (iii) are extremely sensitive to macroeconomic conditions. TABLE OF CONTENTS Generates Stable Free Cash-Flow. We will seek to acquire a business that has historically generated, or has the near-term potential to generate, strong and sustainable free cash flow. Would Benefit Uniquely from our Capabilities. We will seek to acquire a business where the collective capabilities of our management and sponsor can be leveraged to tangibly improve the operations and market position of the target. Is Sourced Through our Proprietary Channels. We do not expect to participate in broadly marketed processes, but rather will aim to leverage our extensive network to source our business combination. Has a Committed and Capable Management Team. We will seek to acquire a business with a professional management team whose interests are aligned with those of our investors and complement the expertise of our co-founders. Where necessary, we may also look to complement and enhance the capabilities of the target business s management team by recruiting additional talent through our network of contacts. Has the Potential to Grow Through Further Acquisition Opportunities. We will seek to acquire a business that has the potential to grow inorganically through additional acquisitions. These criteria are not intended to be exhaustive. Any evaluation relating to the merits of a particular initial business combination may be based, to the extent relevant, on these general guidelines as well as on other considerations, factors and criteria that our management may deem relevant. In the event that we decide to enter into our initial business combination with a target business that does not meet the above criteria and guidelines, we will disclose that the target business does not meet the above criteria in our stockholder communications related to our initial business combination, which, as discussed in this prospectus, would be in the form of tender offer documents or proxy solicitation materials that we would file with the SEC. Our Acquisition Process In evaluating a prospective target business, we expect to conduct a thorough due diligence review which will encompass, among other things, meetings with incumbent management and employees, document reviews, inspection of facilities, as well as a review of financial, operational, legal and other information which will be made available to us. We are not prohibited from pursuing an initial business combination with a company that is affiliated with our sponsor, officers or directors. In the event we seek to complete our initial business combination with a business that is affiliated with our sponsor, officers or directors, we, or a committee of independent and disinterested directors, will obtain an opinion from an independent investment banking firm that is a member of the Financial Industry Regulatory Authority, or FINRA, or from an independent accounting firm, that such an initial business combination is fair to our company from a financial point of view. Members of our management team may directly or indirectly own our securities following this offering, and accordingly, they may have a conflict of interest in determining whether a particular target business is an appropriate business with which to effectuate our initial business combination. Further, each of our officers and directors may have a conflict of interest with respect to evaluating a particular business combination if the retention or resignation of any such officers and directors was included by a target business as a condition to any agreement with respect to our initial business combination. Our sponsor and its principals may from time to time become aware of potential business opportunities, one or more of which we may desire to pursue, for a business combination, but we have not (nor has anyone on our behalf) contacted any prospective target business or had any substantive discussions, formal or otherwise, with respect to a business combination transaction with us. Additionally, we have not, nor has anyone on our behalf, taken any substantive measure, directly or indirectly, to identify or locate any suitable acquisition candidate, nor have we engaged or retained any agent or other representative to identify or locate any such acquisition candidate. TABLE OF CONTENTS As described in Proposed Business Sourcing of Potential Business Combination Targets and Management Conflicts of Interest, each of our officers and directors presently has, and any of them in the future may have additional, fiduciary, contractual or other obligations or duties to one or more other entities pursuant to which such officer or director is or will be required to present a business combination opportunity to such entities. Our amended and restated certificate of incorporation will provide that we renounce our interest in any corporate opportunity offered to any director or officer unless such opportunity is expressly offered to such person solely in his or her capacity as a director or officer of our company and such opportunity is one we are legally and contractually permitted to undertake and would otherwise be reasonable for us to pursue. Accordingly, if any of our officers or directors becomes aware of a business combination opportunity which is suitable for one or more entities to which he or she has fiduciary, contractual or other obligations or duties, he or she will honor these obligations and duties to present such business combination opportunity to such entities first, and only present it to us if such entities reject the opportunity and he or she determines to present the opportunity to us. While M. Klein and Company will not have any duty to offer acquisition opportunities to us, M. Klein and Company may become aware of a potential transaction that is an attractive opportunity for us, which it may decide to share with us. Conflicts may arise from M. Klein and Company s affiliation with our company, its provision of services both to us and to third-party clients, as well as from actions undertaken by M. Klein and Company for its own account. In performing services for other clients and also when acting for its own account, M. Klein and Company may take commercial steps which may have an adverse effect on us. Any of M. Klein and Company s other activities may, individually or in the aggregate, have an adverse effect on us, and the interests of M. Klein and Company or its clients or counterparties may at times be averse to ours. We do not believe, however, that the fiduciary, contractual or other obligations or duties of our officers or directors, or of M. Klein and Company, or policies applicable to M. Klein and Company, will materially affect our ability to complete our initial business combination. Jerre Stead and Sheryl von Blucher have agreed, pursuant to a written agreement, not to participate in the formation of, or become an officer or director of, any other special purpose acquisition company with a class of securities registered under the Securities Exchange Act of 1934, as amended, or the Exchange Act, until we have entered into a definitive agreement regarding our initial business combination or we have failed to complete our initial business combination within the completion window. M. Klein and Company and its affiliates, including Michael Klein, our sponsor and each of our officers and directors (other than Jerre Stead and Sheryl von Blucher) may participate in the formation of, and may become an officer or director of, any other special purpose acquisition company. Please see Proposed Business Certain Potential Conflicts of Interest Relating to M. Klein and Company and Our Officers and Directors for additional information regarding certain potential conflicts of interest relating to M. Klein and Company and our officers and directors. Initial Business Combination The NYSE rules require that an initial business combination must be with one or more operating businesses or assets with a fair market value equal to at least 80% of the net assets held in the trust account (net of amounts disbursed to management for working capital purposes, if applicable, and excluding the amount of any deferred underwriting discount). We refer to this as the 80% of net assets test. If our board of directors is not able to independently determine the fair market value of the target business or businesses, we will obtain an opinion from an independent investment banking firm that is a member of FINRA or from an independent accounting firm, with respect to the satisfaction of such criteria. We do not currently intend to purchase multiple businesses in unrelated industries in conjunction with our initial business combination, although there is no assurance that will be the case. We anticipate structuring our initial business combination so that the post-transaction company in which our public stockholders own shares will own or acquire 100% of the outstanding equity interests or assets of the target business or businesses. We may, however, structure our initial business combination such that the post-transaction company owns or acquires less than 100% of such interests or assets of the target business in order to meet certain objectives of the target management team or stockholders or for other TABLE OF CONTENTS reasons, but we will only complete such business combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target business sufficient for it not to be required to register as an investment company under the Investment Company Act of 1940, as amended, or the Investment Company Act. Even if the post-transaction company owns or acquires 50% or more of the voting securities of the target, our stockholders prior to our initial business combination may collectively own a minority interest in the post-transaction company, depending on valuations ascribed to the target and us in our initial business combination transaction. For example, we could pursue a transaction in which we issue a substantial number of new shares in exchange for all of the outstanding capital stock of a target. In this case, we would acquire a 100% controlling interest in the target. However, as a result of the issuance of a substantial number of new shares, our stockholders immediately prior to our initial business combination could own less than a majority of our outstanding shares subsequent to our initial business combination. If less than 100% of the equity interests or assets of a target business or businesses are owned or acquired by the post-transaction company, the portion of such business or businesses that is owned or acquired is what will be valued for purposes of the 80% of net assets test. If our initial business combination involves more than one target business, the 80% of net assets test will be based on the aggregate value of all of the target businesses. Our amended and restated certificate of incorporation will require the affirmative vote of a majority of our board of directors, which must include a majority of our independent directors to approve our initial business combination. Prior to the date of this prospectus, we will file a Registration Statement on Form 8-A with the SEC to voluntarily register our securities under Section 12 of the Exchange Act. As a result, we will be subject to the rules and regulations promulgated under the Exchange Act. We have no current intention of filing a Form 15 to suspend our reporting or other obligations under the Exchange Act prior or subsequent to the consummation of our initial business combination. Corporate Information We are an emerging growth company, as defined in Section 2(a) of the Securities Act of 1933, as amended, or the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. As such, we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. If some investors find our securities less attractive as a result, there may be a less active trading market for our securities and the prices of our securities may be more volatile. In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We intend to take advantage of the benefits of this extended transition period. We will remain an emerging growth company until the earlier of: (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of this offering, (b) in which we have total annual gross revenue of at least $1.07 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our common stock that is held by non-affiliates exceeds $700 million as of the end of the prior fiscal year s second fiscal quarter; and (2) the date on which we have issued more than $1.00 billion in non-convertible debt during the prior three-year period. References herein to emerging growth company shall have the meaning associated with it in the JOBS Act. TABLE OF CONTENTS Our executive offices are located at 640 Fifth Avenue, 12th Floor, New York, NY 10019 and our telephone number is (212) 380-7500. Upon completion of this offering, our corporate website address will be www.churchillcapitalcorp.com. Our website and the information contained on, or that can be accessed through, the website is not deemed to be incorporated by reference in, and is not considered part of, this prospectus. You should not rely on any such information in making your decision whether to invest in our securities. TABLE OF CONTENTS The Offering
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+Prospectus Summary The following is a summary of this prospectus, and while it contains material information about the Trust and the Shares, it does not contain or summarize all of the information about the Trust and the Shares contained in this prospectus that is material and that may be important to you. You should read this entire prospectus, including "Risk Factors" beginning on page 10 before making an investment decision about the Shares. Capitalized terms not defined in this section have the meaning set forth in the Glossary. Trust Structure, the Sponsor, the Trustee and the Custodian The Trust was formed in 2018 when an initial deposit of gold was made in exchange for the issuance of [ ] Baskets. The purpose of the Trust is to own gold transferred to the Trust in exchange for Shares issued by the Trust. Each Share represents a fractional undivided beneficial interest in the net assets of the Trust. The assets of the Trust consist primarily of gold held by the Custodian on behalf of the Trust. However, there may be situations where the Trust will unexpectedly hold cash. For example, a claim may arise against a third party, which is settled in cash. In situations where the Trust unexpectedly receives cash or other assets, no new Shares will be issued until after the record date for the distribution of such cash or other property has passed. The Sponsor of the Trust is GraniteShares LLC, a Delaware limited liability company. The Shares are not obligations of, and are not guaranteed by the Sponsor, or any of its subsidiaries or affiliates. The Trust is governed by the provisions of the Depositary Trust Agreement (as amended from time to time, the "Trust Agreement") executed on [XXX, XX, 2018] by the Sponsor and the Trustee. The Trust issues Shares only in blocks of [50,000] or integral multiples thereof. Baskets of Shares may be redeemed by the Trust in exchange for the amount of gold corresponding to their redemption value. Individual Shares are not redeemed by the Trust, but are listed and trade on the Exchange under the symbol "MBAR." The Trust seeks to reflect generally the performance of the price of gold. The Trust seeks to reflect such performance before payment of the Trust s expenses and liabilities. The material terms of the Trust are discussed in greater detail under the section "Description of the Shares and the Trust Agreement." The Trust is not a registered investment company under the Investment Company Act and is not required to register under such act. The Trust is not a commodity pool for purposes of the Commodity Exchange Act. The Sponsor will arrange for the creation of the Trust, the ongoing registration of the Shares for their public offering in the United States and the listing of the Shares on the Exchange. The Sponsor will not exercise day-to-day oversight over the Trustee or the Custodian. The Sponsor will (1) develop a marketing plan for the Trust on an ongoing basis, (2) prepare marketing materials regarding the Shares of the Trust, and (3) execute the marketing plan of the Trust. The Sponsor has agreed to assume the following expenses incurred by the Trust: the Trustee s fee (the "Trustee s Fee") and its ordinary out-of-pocket expenses, the Custodian s fee (the "Custodian s Fee") and its reimbursable expenses, the Exchange listing fees, SEC registration fees, marketing expenses, printing and mailing costs, audit fees and expenses and up to $100,000 per annum in legal fees and expenses. The Trustee is The Bank of New York Mellon and the Custodian is ICBC Standard Bank Plc. The agreements between the Trustee and the Custodian for the custody of the Trust s gold are governed by English law. The Trustee is responsible for the day-to-day administration of the Trust. The responsibilities of the Trustee include (1) processing orders for the creation and redemption of Baskets; (2) coordinating with the Custodian the receipt and delivery of gold transferred to, or by, the Trust in connection with each issuance and redemption of Baskets; (3) calculating the net asset value of the Trust on each business day; and (4) selling the Trust s gold as needed to cover the Trust s expenses. For a more detailed description of the role and responsibilities of the Trustee see "Description of the Shares and the Trust Agreement" and "The Trustee." The Custodian is responsible for safekeeping the gold owned by the Trust. The Custodian was selected by the Sponsor and, at the direction of the Sponsor, appointed by the Trustee, and is responsible to the Trustee under the Trust s gold custody agreements. The general role and responsibilities of the Custodian are further described in "The Custodian." Trust Objective The objective of the Trust is for the value of the Shares to reflect, at any given time, the value of the assets owned by the Trust at that time less the Trust s accrued expenses and liabilities as of that time. The Shares are intended to constitute a simple and cost-effective means of making an investment similar to an investment in gold. An investment in allocated physical gold bullion requires expensive and sometimes complicated arrangements in connection with the assay, transportation and warehousing of the metal. Traditionally, such expense and complications have resulted in investments in physical gold bullion being efficient only in amounts beyond the reach of many investors. The Shares have been designed to remove the obstacles represented by the expense and complications involved in an investment in physical gold bullion, while at the same time having an intrinsic value that reflects, at any given time, the price of the assets owned by the Trust at such time less the Trust expenses and liabilities. Although the Shares are not the exact equivalent of an investment in gold, they provide investors with an alternative that allows a level of participation in the gold market through the securities market. Advantages of investing in the Shares include: Minimal credit risk. The Shares represent an interest in physical gold owned by the Trust (other than up to a maximum of 430 ounces of gold held in unallocated form) and held in physical custody at the Custodian. Physical gold of the Trust in the Custodian s possession is not subject to borrowing arrangements with third parties. Other than the gold temporarily being held in an unallocated gold account of the Trust in connection with deposits and an amount of gold comprising less than 430 ounces which may be held in the unallocated gold account of the Trust on an ongoing basis, the physical gold of the Trust is not subject to counterparty or credit risks. This contrasts with most other financial products that gain exposure to precious metals through the use of derivatives that are subject to counterparty and credit risks. Backed by gold held by the Custodian on behalf of the Trust. The Shares are backed primarily by allocated physical gold bullion identified as the Trust s property in the Custodian s books. The Trust arrangements contemplate that no Shares can be issued unless the corresponding amount of gold has been deposited into the Trust. Once deposited into the Trust, gold is only removed from the Trust if (i) sold to pay Trust expenses (such as the Sponsor s Fee and any other expenses not assumed by the Sponsor) or liabilities to which the Trust may be subject, or (ii) transferred from the Trust s account to an Authorized Participant s account in exchange for one or more Baskets of Shares surrendered for redemption. Ease and flexibility of investment. Retail investors may purchase and sell Shares through traditional brokerage accounts. Because the amount of gold corresponding to a Share is significantly less than the minimum amounts of physical gold bullion that are commercially available for investment purposes, the cash outlay necessary for an investment in Shares should be less than the amount required for currently existing means of investing in physical gold bullion. Shares are eligible for margin accounts. Relatively cost efficient. Although the return, if any, of an investment in the Shares is subject to the additional expenses of the Trust, including the Sponsor s Fee and other costs and expenses not assumed by the Sponsor which would not be incurred in the case of a direct investment in gold, the Shares may represent a cost-efficient alternative for investors not otherwise in a position to participate directly in the market for allocated physical gold bullion, because the expenses involved in an investment in allocated physical gold bullion through the Shares are dispersed among all holders of Shares. Emerging Growth Company Status The Trust is an "emerging growth company," as defined in the JOBS Act. For as long as the Trust is an "emerging growth company," the Trust may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not "emerging growth companies," including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes–Oxley Act of 2002 (the "Sarbanes-Oxley Act"), reduced disclosure obligations regarding executive compensation in the Trust s periodic reports, and exemptions from the requirements of holding advisory "say-on-pay" votes on executive compensation and shareholder advisory votes on golden parachute compensation. Under the JOBS Act, the Trust will remain an "emerging growth company" until the earliest of: The last day of the fiscal year during which the Trust has total annual gross revenues of $1 billion; The last day of the fiscal year following the fifth anniversary of the completion of this offering; The date on which the Trust has, during the previous three-year period, issued more than $1 billion in non-convertible debt; and The date on which the Trust is deemed to be a "large accelerated filer" (i.e., an issuer that (1) has more than $700 million in outstanding equity held by non-affiliates and (2) has been subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act") for at least 12 calendar months and has filed at least one annual report on Form 10-K. The JOBS Act also provides that an "emerging growth company" can utilize the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended (the "Securities Act") for complying with new or revised accounting standards. The Trust is choosing to opt out of this extended transition period and, as a result, the Trust will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for companies that are not "emerging growth companies." Section 107 of the JOBS Act provides that the Trust s decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable. Principal Offices The Sponsor s office is located at 205 Hudson Street, 7th Floor, New York, New York 10013. The Trustee has a Trust office at 2 Hanson Place, 9th Floor, Brooklyn, New York 11217. The Custodian s office is located at 20 Gresham Street, London, EC2V 7JE, United Kingdom. The Offering Offering The Shares represent units of fractional undivided beneficial interest in the net assets of the Trust. Use of proceeds Proceeds received by the Trust from the issuance and sale of Baskets, including the [..] Baskets issued to the initial Authorized Participant, which is [ ], in connection with the formation of the Trust, and the Shares (as described on the front page of this prospectus) will consist of gold deposits and, possibly from time to time, cash. Pursuant to the Trust Agreement, during the life of the Trust such proceeds will only be (1) held by the Trust, (2) distributed to Authorized Participants in connection with the redemption of Baskets, or (3) disbursed or sold as needed to pay the Trust s ongoing expenses. Exchange symbol MBAR CUSIP [ ] Creation and redemption The Trust expects to issue and redeem Baskets of Shares on a continuous basis. Baskets of Shares will only be issued or redeemed in exchange for an amount of gold determined by the Trustee on each day that the Exchange is open for regular trading. No Shares will be issued unless the Custodian has allocated to the Trust s account the corresponding amount of gold. Initially, a Basket will require delivery of [500] Fine Ounces of gold. The amount of gold necessary for the creation of a Basket, or to be received upon redemption of a Basket, will decrease over the life of the Trust, due to the payment or accrual of fees and other expenses or liabilities payable by the Trust. Baskets may be created or redeemed only by Authorized Participants, who will pay the Trustee a transaction fee for each order to create or redeem Baskets. See "Description of the Shares and the Trust Agreement" for more details. Net Asset Value The net asset value of the Trust will be obtained by subtracting the Trust s expenses and liabilities on any day from the value of the gold owned by the Trust on that day; the NAV per Share will be obtained by dividing the net asset value of the Trust on a given day by the number of Shares outstanding on that day. On each day on which the Exchange is open for regular trading, the Trustee will determine the net asset value of the Trust and the NAV per Share as promptly as practicable after 4:00 p.m. (New York time). The Trustee will value the Trust s gold on the basis of LBMA Gold Price PM. If there is no LBMA Gold Price PM on any day, the Trustee is authorized to use the LBMA Gold Price AM announced on that day. If neither price is available for that day, the Trustee will value the Trust s gold based on the most recently announced LBMA Gold Price PM or LBMA Gold Price AM. If the Sponsor determines that such price is inappropriate to use, the Sponsor will identify an alternate basis for evaluation to be employed by the Trustee. Further, the Sponsor may instruct the Trustee to use on an on-going basis a different publicly available price which the Sponsor determines to fairly represent the commercial value of the Trust s gold. See "The Trust—Valuation of Gold; Computation of Net Asset Value." Trust Expenses The Trust s only ordinary recurring expense is expected to be the remuneration due to the Sponsor (the "Sponsor s Fee"). In exchange for the Sponsor s Fee, the Sponsor has agreed to assume the following expenses of the Trust: the Trustee s Fee and its ordinary out-of-pocket expenses, the Custodian s Fee and its reimbursable expenses, the Exchange listing fees, SEC registration fees, marketing expenses, printing and mailing costs, audit fees and expenses and up to $100,000 per annum in legal fees and expenses. The Sponsor s Fee is accrued daily at an annualized rate equal to [ ]% of the net asset value of the Trust and is payable monthly in arrears. The Sponsor may, at its discretion and from time to time, waive all or a portion of the Sponsor s Fee for stated periods of time. The Sponsor is under no obligation to waive any portion of its fees and any such waiver shall create no obligation to waive any such fees during any period not covered by the waiver. Presently, the Sponsor does not intend to waive any part of its fee. The Trustee from time to time may sell gold in such quantities as may be necessary to permit the payment of the Sponsor s Fee and other Trust expenses and liabilities not assumed by the Sponsor. The Trustee will endeavor to sell gold at such times and in the smallest amounts required to permit such payments as they become due, it being the intention to avoid or minimize the Trust s holdings of assets other than gold. Accordingly, the amount of gold to be sold may vary from time to time depending on the level of the Trust s expenses and liabilities and the market price of gold. See "The Trust—Trust Expenses" and "Description of the Shares and the Trust Agreement—Trust Expenses and Gold Sales." Federal Income Tax Considerations Owners of Shares are treated, for U.S. federal income tax purposes, as if they owned a corresponding share of the assets of the Trust. They are also viewed as if they directly received a corresponding share of any income of the Trust, or as if they had incurred a corresponding share of the expenses of the Trust. Consequently, each sale of gold by the Trust constitutes a taxable event to owners of beneficial interests in the Shares ("Shareholders"). See "United States Federal Income Tax Consequences—Taxation of U.S. Shareholders" and "ERISA and Related Considerations." Voting Rights Owners of Shares have the right to vote in limited circumstances, i.e., causing the Trustee to cure a material breach by the Trustee under the Trust Agreement, or requiring the Trustee to terminate the Trust Agreement. See "Description of the Shares and the Trust Agreement—Voting Rights." Suspension of Issuance, Transfers and Redemptions The Trustee may, and upon direction of the Sponsor will, generally suspend the delivery of Shares against deposits of gold or the registration of transfer of Shares or refuse a particular delivery or transfer (i) during any period when the Trustee s transfer books are closed, (ii) if the Custodian has informed the Trustee and the Sponsor that it is unable to allocate gold to the Trust Allocated Account or (iii) if any such action is otherwise deemed necessary or advisable by the Sponsor for any reason in its sole discretion. Redemptions may be suspended only (i) during any period in which regular trading on the Exchange is suspended or restricted, or the Exchange is closed, or (ii) during an emergency as a result of which delivery, disposal or evaluation of gold is not reasonably practicable. See "Description of the Shares and the Trust Agreement—Redemption of Baskets." Limitation on Liability The Sponsor and the Trustee: are only obligated to take the actions specifically set forth in the Trust Agreement without gross negligence, willful misconduct or bad faith; are not liable for the exercise of discretion permitted under the Trust Agreement; and have no obligation to prosecute any lawsuit or other proceeding on behalf of the Shareholders or any other person. See "Description of the Shares and the Trust Agreement—The Sponsor (Liability of the Sponsor and indemnification)" and "The Trustee (Limitation on Trustee s liability)." Termination events The Trustee will terminate the Trust Agreement if: the Trustee is notified that the Shares are delisted from the Exchange and are not approved for listing on another national securities exchange within five business days of their delisting; Shareholders acting in respect of at least 75% of the outstanding Shares notify the Trustee that they elect to terminate the Trust; 60 days have elapsed since the Trustee notified the Sponsor of the Trustee s election to resign or since the Sponsor removed the Trustee, and a successor trustee has not been appointed and accepted its appointment; any sole Custodian then acting resigns or is removed and no successor custodian has been employed within 60 days of such resignation or removal; the SEC determines that the Trust is an investment company under the Investment Company Act, and the Trustee has actual knowledge of that determination; the U.S. Commodity Futures Trading Commission (the "CFTC") determines that (i) the Trust is a commodity pool under the Commodity Exchange Act; and/or (ii) the Shares constitute "commodity interests", as defined by the CFTC in CFTC Regulation 1.3(yy) and the Trustee has actual knowledge of that determination; the aggregate market capitalization of the Trust, based on the closing price for the Shares, is less than $50 million (as adjusted for inflation by reference to the U.S. Consumer Price Index) at any time more than 18 months after the Trust s formation, and the Trust receives, within 6 months after the last trading date on which such capitalization was less than $50 million, notice from the Sponsor of its decision to terminate the Trust; the Trust fails to qualify for treatment, or ceases to be treated, as a grantor trust under the United States Internal Revenue Code of 1986, as amended (the "Code"), or under any comparable provision of any other jurisdiction where such treatment is sought, and the Trustee receives notice that the Sponsor has determined that the termination of the Trust is advisable; or 60 days have elapsed since DTC ceases to act as depository with respect to the Shares and the Sponsor has not identified another depository which is willing to act in such capacity. If the Sponsor resigns without appointing a successor sponsor, or is dissolved or has ceased to exist as a legal entity for any reason or is deemed to have resigned because (1) it fails to undertake or perform, or becomes incapable of undertaking or performing, any of the duties required by the Trust Agreement, and such failure or incapacity is not cured, or (2) the Sponsor is adjudged bankrupt or insolvent, or a receiver of the Sponsor or of its property is appointed, or a trustee or liquidator or any public officer takes charge or control of the Sponsor or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, then the Trustee may, among other actions, terminate and liquidate the Trust. See "Description of the Shares and the Trust Agreement—Amendment and Termination." After termination of the Trust, the Trustee will deliver Trust property to Authorized Participants upon surrender and cancellation of Shares and, at least 60 days after termination, may sell any remaining Trust property in a private or public sale, and hold the proceeds, uninvested and in a non-interest bearing account, for the benefit of the holders who have not surrendered their Shares for cancellation. See "Description of the Shares and the Trust Agreement—Amendment and Termination." Authorized Participants Baskets may be created or redeemed only by Authorized Participants. Each Authorized Participant must be a registered broker-dealer or other securities market participant, a participant in DTC, have entered into an agreement with the Trustee and the Sponsor (the "Authorized Participant Agreement") and have established a gold unallocated account with the Custodian or another LBMA-approved gold-clearing bank. The Authorized Participant Agreement provides the procedures for the creation and redemption of Baskets and for the delivery of gold in connection with such creations or redemptions. A list of the current Authorized Participants can be obtained from the Trustee or the Sponsor. Clearance and settlement The Shares are issued in book-entry form only. Transactions in Shares clear through the facilities of DTC. Investors may hold their Shares through DTC, if they are participants in DTC, or indirectly through entities that are participants in DTC. Summary Financial Condition As of the date of the formation of the Trust and the date the initial Authorized Participant deposited [ ] Fine Ounces of gold into the Trust, the net asset value of the Trust, which represents the value of the gold deposited into the Trust in exchange for the initial Baskets, was [$ ] and the NAV per Share was [$ ]. Risk Factors Before making an investment decision, you should consider carefully the risks described below, as well as the other information included in this prospectus. Because the Shares are created to reflect the price of the gold held by the Trust, the market price of the Shares will be as unpredictable as the price of gold has historically been. This creates the potential for losses, regardless of whether you hold Shares for the short-, mid- or long-term. Shares are created to reflect, at any given time, the market price of gold owned by the Trust at that time less the Trust s expenses and liabilities. Because the value of Shares depends on the price of gold, it is subject to fluctuations similar to those affecting gold prices. The price of gold has fluctuated widely over the past several years. If gold markets continue to be characterized by the wide fluctuations that they have shown in the past several years, the price of the Shares will change widely and in an unpredictable manner. This exposes your investment in Shares to potential losses if you need to sell your Shares at a time when the price of gold is lower than it was when you made your investment in Shares. Even if you are able to hold Shares for the mid- or long-term you may never realize a profit, because gold markets have historically experienced extended periods of flat or declining prices. Following an investment in Shares, several factors may have the effect of causing a decline in the prices of gold and a corresponding decline in the price of Shares. Among them: Large sales, including those by the official sector (government, central banks and related institutions), which own a significant portion of the aggregate world holdings. If one or more of these institutions decides to sell in amounts large enough to cause a decline in world gold prices, the price of the Shares will be adversely affected. A significant increase in gold hedging activity by gold producers. Should there be an increase in the level of hedge activity of gold producing companies, it could cause a decline in world gold prices, adversely affecting the price of the Shares. A significant change in the attitude of speculators and investors towards gold. Should the speculative community take a negative view towards gold, it could cause a decline in world gold prices, negatively impacting the price of the Shares. Attitudes towards gold could be influenced by: Investors expectations regarding future inflation rates; Currency exchange rate volatility; Interest rate volatility; and Unexpected political, economic, global or regional incidents. Conversely, several factors may trigger a temporary increase in the price of gold prior to your investment in the Shares. If that is the case, you will be buying Shares at prices affected by the temporarily high prices of gold, and you may incur losses when the causes for the temporary increase disappear. As the Sponsor has a limited history of operating an investment vehicle like the Trust, its experience may be inadequate or unsuitable to manage the Trust. The Sponsor has a limited history of past performance in operating an investment vehicle like the Trust. The past performances of the Sponsor s management in other positions are no indication of their ability to manage an investment vehicle such as the Trust. If the experience of the Sponsor and its management is not adequate or suitable to manage an investment vehicle such as the Trust, the operations of the Trust may be adversely affected. Actual or perceived disruptions in the processes used to determine the new LBMA Gold Price PM, or lack of confidence in that benchmark, may adversely affect the return on your investment in the Shares (if any). The London PM Fix was the benchmark price for valuation of gold prior to March 20, 2015, at which time the London PM Fix was discontinued and replaced by the LBMA Gold Price PM. The LBMA Gold Price AM and LBMA Gold Price PM are gold price benchmark mechanisms administered by ICE Benchmark Administration ("IBA"), an independent specialist benchmark administrator appointed by the LBMA. Twice daily during London business hours IBA hosts an electronic, physically settled, and tradable auction, during which buyers and sellers trade physical spot gold at a pre-determined price and the price of the final auction is published to the market as the LBMA Gold Price AM and LBMA Gold Price PM for that day. IBA hosts each auction in rounds of 45 seconds (which may be adjusted by IBA by notice). The prices for each round of any auction are set by an independent chairperson appointed by IBA, who sets the prices in their sole discretion in line with the market conditions and the activity in the auction. An auction will conclude following a round in which the difference between the entered buying and selling interest (referred to as imbalance) does not exceed a certain volume of gold identified by IBA (initially set at 20,000 troy ounces), and the price for that round will be published as the LBMA Gold Price AM (for the auction taking place at 10:00 a.m. (London time)) or the LBMA Gold Price PM (for the auction taking place at 3:00 p.m. (London time)) for that day. IBA has indicated that the chairperson responsible for setting the prices for the auctions will have the requisite credentials and experience and will be independent from any direct participant or sponsored client. However, because the identity of the chairperson will not be disclosed to the market, it will not be possible to independently assess the adequacy of the chairperson s qualifications or to assure the chairperson s independence from any third party or market participant. In addition, because the chairperson has unlimited discretion in setting the auction prices and does not rely on any automated algorithm for the price setting, there can be no assurance that the LBMA Gold Price AM or LBMA Gold Price PM will accurately reflect the fundamentals of the gold market. See "The Trust – Valuation of Gold; Computation of Net Asset Value" for a description of how the LBMA Gold Price PM is determined. Furthermore, while the features of the mechanism to determine the LBMA Gold Price AM and LBMA Gold Price PM may be improvements over the London AM Fix and London PM Fix, investors should keep in mind that electronic markets are not exempt from failures. As with any innovation, it is possible that electronic failures or other unanticipated events may occur that could result in delays in the announcement of, or the inability of the system to produce, a LBMA Gold Price AM or LBMA Gold Price PM on any given day. In addition, if a perception were to develop that the LBMA Gold Price AM or LBMA Gold Price PM is vulnerable to manipulation attempts, or if the new administration proceedings surrounding the determination of the LBMA Gold Price AM or LBMA Gold Price PM are not received with confidence by the markets, the behavior of investors and traders in gold may change, and those changes may have an effect on the price of gold (and, consequently, the value of the Shares). In any of these circumstances, the intervention of extraneous events disruptive of the normal interaction of supply and demand of gold at any given time may result in distorted prices and losses on an investment in the Shares that, but for such extraneous events, might not have occurred. Other effects of disruptions in the determination of the LBMA Gold Price AM or LBMA Gold Price PM or any inaccuracies in setting of the auction prices on the operations of the Trust include the potential for an incorrect valuation of the Trust s gold, an inaccurate computation of the Sponsor s Fee, and the sales of gold to cover Trust expenses at prices that do not accurately reflect the fundamentals of the gold market. Each of these events could have an adverse effect on the value of the Shares. Effective April 1, 2015, the LBMA Gold Price AM and LBMA Gold Price PM became regulated by the Financial Conduct Authority of the United Kingdom (the "FCA"). As of the date of this prospectus, the Sponsor has no reason to believe that the LBMA Gold Price (AM or PM) will not fairly represent the price of the gold held by the Trust. Should this situation change, the Sponsor expects to use the powers granted by the Trust s governing documents to seek to replace the LBMA Gold Price PM with a more reliable indicator of the value of the Trust s gold. There is no assurance that such alternative value indicator will be identified, or that the process of changing from the LBMA Gold Price PM to a new benchmark price will not adversely affect the price of the Shares. The amount of gold represented by each Share will decrease over the life of the Trust due to the sales of gold necessary to pay the Sponsor s Fee and Trust expenses. Without increases in the price of gold sufficient to compensate for that decrease, the price of the Shares will also decline and you will lose money on your investment in Shares. Although the Sponsor has agreed to assume all organizational and certain ordinary expenses incurred by the Trust, not all Trust expenses have been assumed by the Sponsor. For example, any taxes and other governmental charges that may be imposed on the Trust s property will not be paid by the Sponsor. As part of its agreement to assume some of the Trust s ordinary administrative expenses, the Sponsor has agreed to pay legal fees and expenses of the Trust not in excess of $100,000 per annum. Any legal fees and expenses in excess of that amount will be the responsibility of the Trust. Because the Trust does not have any income, it needs to sell gold to cover expenses not assumed by the Sponsor. The Trust may also be subject to other liabilities (for example, as a result of litigation) which have also not been assumed by the Sponsor. The only source of funds to cover those liabilities will be sales of gold held by the Trust. Even if there are no expenses other than those assumed by the Sponsor, and there are no other liabilities of the Trust, the Trustee will still need to sell gold to pay the Sponsor s Fee. The result of these sales is a decrease in the amount of gold represented by each Share. New deposits of gold, received in exchange for new Shares issued by the Trust, do not reverse this trend. A decrease in the amount of gold represented by each Share results in a decrease in its price assuming the price of gold does not change. To retain the Share s original price, the price of gold has to increase. Without that increase, the lesser amount of gold represented by the Share will have a correspondingly lower price. If these increases do not occur, or are not sufficient to counter the lesser amount of gold represented by each Share, you will sustain losses on your investment in Shares. An increase in the Trust expenses not assumed by the Sponsor, or the existence of unexpected liabilities affecting the Trust, will force the Trustee to sell larger amounts of gold, and will result in a more rapid decrease of the amount of gold represented by each Share and a corresponding decrease in its value. Future governmental decisions may have significant impact on the price of gold, which may result in a significant decrease or increase in the value of the net assets and the net asset value of the Trust. Generally, gold prices reflect the supply and demand of available gold. Governmental decisions, such as the executive order issued by the President of the United States in 1933 requiring all persons in the United States to deliver gold to the Federal Reserve or the abandonment of the gold standard by the United States in 1971, have been viewed as having significant impact on the supply and demand of gold and the price of gold. Future governmental decisions may have an impact on the price of gold, and may result in a significant decrease or increase in the value of the net assets and the net asset value of the Trust. Further regulations applicable to U.S. banks and non-U.S. bank entities operating in the U.S. with respect to their trading in physical commodities, such as precious metals, may further impact the price of gold in the U.S. The Trust is a passive investment vehicle. This means that the value of your Shares may be adversely affected by Trust losses that, if the Trust had been actively managed, it might have been possible to avoid. The Trustee does not actively manage the gold held by the Trust. This means that the Trustee does not sell gold at times when its price is high, or acquire gold at low prices in the expectation of future price increases. It also means that the Trustee does not make use of any of the hedging techniques available to professional gold investors to attempt to reduce the risks of losses resulting from price decreases. Any losses sustained by the Trust will adversely affect the value of your Shares. The price received upon the sale of Shares may be less than the value of the gold represented by them. The result obtained by subtracting the Trust s expenses and liabilities on any day from the price of the gold owned by the Trust on that day is the net asset value of the Trust which, when divided by the number of Shares outstanding on that day, results in the NAV per Share. Shares may trade at, above or below their NAV. The NAV will fluctuate with changes in the market value of the Trust s assets. The trading prices of Shares will fluctuate in accordance with changes in their NAVs as well as market supply and demand. The amount of the discount or premium in the trading price relative to the NAV may be influenced by non-concurrent trading hours between the major gold markets and the Exchange. While the Shares will trade on the Exchange until 4:00 p.m. (New York time), liquidity in the market for gold will be reduced after the close of the major world gold markets, including London, Zurich and COMEX. As a result, during this time, trading spreads, and the resulting premium or discount on Shares, may widen. An investment in the Trust may be adversely affected by competition from other methods of investing in gold. The Trust competes with other financial vehicles, including traditional debt and equity securities issued by companies in the gold industry and other securities backed by or linked to gold, direct investments in gold and investment vehicles similar to the Trust. Market and financial conditions, and other conditions beyond the Sponsor s control, may make it more attractive to invest in other financial vehicles or to invest in gold directly, which could affect the market capitalization of the Trust and reduce the NAV. To the extent existing exchange traded funds, or ETFs, or other exchange traded vehicles tracking gold markets represent a significant proportion of demand for physical gold bullion, large redemptions of the securities of these ETFs or other exchange traded vehicles could negatively affect physical gold bullion prices and the price and NAV. The Trust may be forced to sell gold earlier than anticipated if expenses are higher than expected. The Trust may be forced to sell physical gold earlier than anticipated if the Trust s expenses are higher than estimated. Such accelerated sales may result in a reduction of the NAV and the value of the Shares. Because the Trust is not a diversified investment, it may be more volatile than other investments. An investment in the Trust is not intended as a complete investment plan. Because the Trust principally only holds physical gold, an investment in the Trust may be more volatile than an investment in a more broadly diversified portfolio. Accordingly, the NAV may be more volatile than another investment vehicle with a more broadly diversified portfolio and may fluctuate substantially over time. An investment in the Trust may be deemed speculative and is not intended as a complete investment program; therefore investors should review closely the objective and strategy, the investment and operating restrictions and the redemption provisions of the Trust as outlined herein and familiarize themselves with the risks associated with an investment in the Trust. The liquidation of the Trust may occur at a time when the disposition of the Trust s gold will result in losses to investors in Shares. The Trust may have a limited duration. If certain events occur, at any time, the Trustee will have to terminate the Trust. See "Description of the Shares and the Trust Agreement—Amendment and Termination" for more information about the termination of the Trust, including when events outside the control of the Sponsor, the Trustee or the Shareholders may prompt the Trust s termination. Upon termination of the Trust, the Trustee will sell gold in the amount necessary to cover all expenses of liquidation, and to pay any outstanding liabilities of the Trust. The remaining gold will be distributed among Authorized Participants surrendering Shares. Any gold remaining in the possession of the Trustee after 60 days may be sold by the Trustee and the proceeds of the sale will be held by the Trustee until claimed by any remaining holders of Shares. Sales of gold in connection with the liquidation of the Trust at a time of low prices will likely result in losses, or adversely affect your gains, on your investment in Shares. There may be situations where an Authorized Participant is unable to redeem a Basket of Shares. To the extent the value of gold decreases, these delays may result in a decrease in the value of the gold the Authorized Participant will receive when the redemption occurs, as well as a reduction in liquidity for all Shareholders in the secondary market. Although Shares surrendered by Authorized Participants in Basket-size aggregations are redeemable in exchange for the underlying amount of gold, redemptions may be suspended during any period while regular trading on the Exchange is suspended or restricted, or in which an emergency exists that makes it reasonably impracticable to deliver, dispose of, or evaluate gold. If any of these events occurs at a time when an Authorized Participant intends to redeem Shares, and the price of gold decreases before such Authorized Participant is able again to surrender Shares for redemption, such Authorized Participant will sustain a loss with respect to the amount that it would have been able to obtain in exchange for the gold received from the Trust upon the redemption of its Shares, had the redemption taken place when such Authorized Participant originally intended it to occur. As a consequence, Authorized Participants may reduce their trading in Shares during periods of suspension, decreasing the number of potential buyers of Shares in the secondary market and, therefore, decreasing the price a Shareholder may receive upon sale. The liquidity of the Shares may also be affected by the withdrawal from participation of Authorized Participants. In the event that one or more Authorized Participants that have substantial interests in Shares withdraw from participation, the liquidity of the Shares will likely decrease which could adversely affect the market price of the Shares and result in your incurring a loss on your investment. The Trust is an "emerging growth company" and it cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make the Shares less attractive to investors. The Trust is an "emerging growth company" as defined in the JOBS Act. For as long as the Trust continues to be an emerging growth company it may choose to take advantage of certain exemptions from various reporting requirements applicable to other public companies but not to emerging public companies, which include, among other things: Exemption from the auditor attestation requirements under Section 404 of the Sarbanes-Oxley Act; Reduced disclosure obligations regarding executive compensation in the Trust s periodic reports; Exemption from the requirements of holding non-binding shareholder votes on executive compensation arrangements; and Exemption from any rules requiring mandatory audit firm rotation and auditor discussion and analysis and, unless otherwise determined by the SEC, any new audit rules adopted by the Public Company Accounting Oversight Board. The Trust could be an emerging growth company until the last day of the fiscal year following the fifth anniversary after its initial public offering, or until the earliest of (1) the last day of the fiscal year in which it has annual gross revenue of $1 billion or more, (2) the date on which it has, during the previous three year period, issued more than $1 billion in non-convertible debt or (3) the date on which it is deemed to be a large accelerated filer under the federal securities laws. The Trust will qualify as a large accelerated filer as of the first day of the first fiscal year after it has (A) more than $700 million in outstanding equity held by nonaffiliates and (B) been public for at least 12 months. The value of the Trust s outstanding equity will be measured each year on the last day of its second fiscal quarter. Under the JOBS Act, emerging growth companies are also permitted to elect to delay adoption of new or revised accounting standards until companies that are not subject to periodic reporting obligations are required to comply, if such accounting standards apply to non-reporting companies. However, the Trust has chosen to opt out of this extended transition period for complying with new or revised accounting standards. Section 107 of the JOBS Act provides that the decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable. The Trust cannot predict if investors will find an investment in the Trust less attractive if it relies on these exemptions. Authorized Participants with large holdings may choose to terminate the Trust. Holders of 75% of the Shares have the power to terminate the Trust. This power may be exercised by a relatively small number of holders. If it is so exercised, investors who wished to continue to invest in gold through the vehicle of the Trust will have to find another vehicle, and may not be able to find another vehicle that offers the same features as the Trust. The lack of an active trading market for the Shares may result in losses on your investment at the time of disposition of your Shares. Although Shares are listed for trading on the Exchange, you should not assume that an active trading market for the Shares will develop or be maintained. If you need to sell your Shares at a time when no active market for them exists, such lack of an active market will most likely adversely affect the price you receive for your Shares (assuming you are able to sell them). If the process of creation and redemption of Baskets encounters any unanticipated difficulties, the possibility for arbitrage transactions intended to keep the price of the Shares closely linked to the price of gold may not exist and, as a result, the price of the Shares may fall or otherwise diverge from NAV. If the processes of creation and redemption of Shares (which depend on timely transfers of gold to and by the Custodian) encounter any unanticipated difficulties, potential market participants, such as the Authorized Participants and their customers, who would otherwise be willing to purchase or redeem Baskets to take advantage of any arbitrage opportunity arising from discrepancies between the price of the Shares and the price of the underlying gold may not take the risk that, as a result of those difficulties, they may not be able to realize the profit they expect. If this is the case, the liquidity of the Shares may decline and the price of the Shares may fluctuate independently of the price of gold and may fall or otherwise diverge from NAV. As an owner of Shares, you will not have the rights normally associated with ownership of other types of shares. Shares are not entitled to the same rights as shares issued by a corporation. By acquiring Shares, you are not acquiring the right to elect directors, to receive dividends, to vote on certain matters regarding the issuer of your Shares or to take other actions normally associated with the ownership of shares of a corporation. You will only have the limited rights described under "Description of the Shares and the Trust Agreement." As an owner of Shares, you will not have the protections normally associated with ownership of shares in an investment company registered under the Investment Company Act, or the protections afforded by the Commodity Exchange Act. The Trust is not registered as an investment company for purposes of United States federal securities laws, and is not subject to regulation by the SEC as an investment company. Consequently, the owners of Shares do not have the regulatory protections provided to investors in registered investment companies. For example, the provisions of the Investment Company Act that limit transactions with affiliates, prohibit the suspension of redemptions (except under certain limited circumstances) or limit sales loads, among others, do not apply to the Trust. The Trust does not hold or trade in commodity futures contracts, "commodity interests", or any other instruments regulated by the CEA, as administered by the CFTC and the National Futures Association (the "NFA"). Furthermore, the Trust is not a commodity pool for purposes of the CEA and the Shares are not "commodity interests". Consequently, the Trustee and Sponsor are not subject to registration as commodity pool operators or commodity trading advisors with respect to the Trust or the Shares. The owners of Shares do not receive the CEA disclosure document and certified annual report required to be delivered by a registered commodity pool operator or a commodity trading advisor with respect to the Trust, and the owners of Shares do not have the regulatory protections provided to investors in commodity pools operated by registered commodity pool operators or advised by commodity trading advisors. The value of the Shares will be adversely affected if gold owned by the Trust is lost or damaged in circumstances in which the Trust is not in a position to recover the corresponding loss. The Custodian is responsible to the Trust for loss or damage to the Trust s gold only under limited circumstances. The agreements with the Custodian contemplate that the Custodian will be responsible to the Trust only if it acts with negligence, fraud or in willful default of its obligations under those agreements. The Custodian s liability will not exceed the market value of the gold credited to the Trust Unallocated Account and the Trust Allocated Account at the time such negligence, fraud or willful default is either discovered by or notified to the Custodian (such market value calculated using the nearest available LBMA Gold Price PM following the occurrence of such negligence, fraud or willful default), provided that, in the case of such discovery by or notification to the Custodian, the Custodian notifies the Sponsor and the Trustee promptly after any discovery of such negligence, fraud or willful default. Furthermore, the Custodian is not liable for any delay in performance, or for the non-performance, of any of its obligations under the Custody Agreements by reason of any cause beyond the Custodian s reasonable control, including any act of God or war or terrorism, any breakdown, malfunction or failure of, or connected with, any communication, computer, transmission, clearing or settlement facilities, industrial action, or acts, rules and regulations of any governmental or supra national bodies or authorities or any relevant regulatory or self-regulatory organization. In addition, because the Custody Agreements are governed by English law, the holders of the Shares may have no rights against the Custodian and any rights they may have against the Custodian will be different from, and may be more limited than, those that could have been available to them under the laws of a different jurisdiction. The choice of English law to govern the Custody Agreements, however, is not expected to affect any rights that the holders of the Shares may have against the Trust or the Trustee. Moreover, the Trust may not be in a position to recover insurance proceeds in the event of any loss with respect to its gold. The Trust does not insure its gold. The Custodian maintains insurance with regard to its business on such terms and conditions as it considers appropriate, which does not cover the full amount of gold held in custody. The Trust is not a beneficiary of any such insurance and does not have the ability to dictate the existence, nature or amount of coverage. Therefore, Shareholders cannot be assured that the Custodian will maintain adequate insurance or any insurance with respect to the gold held by the Custodian on behalf of the Trust. The Custodian and the Trustee do not require any direct or indirect subcustodians to be insured or bonded with respect to their custodial activities or in respect of the gold held by them on behalf of the Trust. Consequently, a loss may be suffered with respect to the Trust s gold which is not covered by insurance and for which no person is liable in damages. Any loss of gold owned by the Trust will result in a corresponding loss in the net asset value of the Trust and it is reasonable to expect that such loss will also result in a decrease in the value at which the Shares are traded on the Exchange. Although the relationship between the Custodian and the Trustee concerning the Trust s allocated gold is expressly governed by English law, a court hearing any legal dispute concerning that arrangement may disregard that choice of law and apply U.S. law, in which case the ability of the Trust to seek legal redress against the Custodian may be frustrated. The obligations of the Custodian under the Custody Agreements are governed by English law. The Trust is a New York common law trust. Any United States, New York or other court situated in the United States may have difficulty interpreting English law (which, insofar as it relates to custody arrangements, is largely derived from court rulings rather than statute), London Bullion Market Association (LBMA) rules or the customs and practices in the London custody market. It may be difficult or impossible for the Trust to sue the Custodian in a United States, New York or other court situated in the United States. In addition, it may be difficult, time consuming and/or expensive for the Trust to enforce in a foreign court a judgment rendered by a United States, New York or other court situated in the United States. Shareholders and Authorized Participants lack the right under the Custody Agreements to assert claims directly against the Custodian, which significantly limits their options for recourse. Neither the Shareholders nor any Authorized Participant will have a right under the Custody Agreements to assert a claim of the Trustee against the Custodian. Claims under the Custody Agreements may only be asserted by the Trustee on behalf of the Trust. Gold held in the Trust Unallocated Account and any Authorized Participant s unallocated gold account will not be segregated from the Custodian s assets. If the Custodian becomes insolvent, its assets may not be adequate to satisfy a claim by the Trust or any Authorized Participant. In addition, in the event of the Custodian s insolvency, there may be a delay and costs incurred in identifying the gold bars held in the Trust Allocated Account. Gold which is part of a deposit for a purchase order or part of a redemption distribution will be held for a time in the Trust Unallocated Account and, previously or subsequently in, the unallocated gold account of the purchasing or redeeming Authorized Participant. During those times, the Trust and the Authorized Participant, as the case may be, will have no proprietary rights to any specific bars of gold held by the Custodian and will each be an unsecured creditor of the Custodian with respect to the amount of gold held in such unallocated accounts. In addition, if the Custodian fails to allocate the Trust s gold in a timely manner, in the proper amounts or otherwise in accordance with the terms of the Trust Unallocated Account Agreement, or if a subcustodian fails to so segregate gold held by it on behalf of the Trust, unallocated gold will not be segregated from the Custodian s assets, and the Trust will be an unsecured creditor of the Custodian with respect to the amount so held in the event of the insolvency of the Custodian. In the event the Custodian becomes insolvent, the Custodian s assets might not be adequate to satisfy a claim by the Trust or the Authorized Participant for the amount of gold held in their respective unallocated gold accounts. In the event of the insolvency of the Custodian, a liquidator may seek to freeze access to the gold held in all of the accounts held by the Custodian, including the Trust Allocated Account. Although the Trust would retain legal title to the allocated gold bars, the Trust could incur expenses in connection with obtaining control of the allocated gold bars, and the assertion of a claim by such liquidator for unpaid fees could delay creations and redemptions of Baskets. From time to time subcustodians may be employed by the Custodian to provide temporary custody and safekeeping of the Trust s gold. The obligations of any subcustodian of the Trust s gold are not determined by contractual arrangements but by LBMA rules and London bullion market customs and practices, which may prevent the Trust s recovery of damages for losses on its gold custodied with subcustodians. Gold bars may be held by one or more subcustodians appointed by the Custodian, or employed by the subcustodians appointed by the Custodian, until it is transported to the Custodian s London vault premises. Under the Trust Allocated Account Agreement, except for an obligation on the part of the Custodian to use commercially reasonable efforts to obtain delivery of the Trust s gold bars from any subcustodians appointed by the Custodian, the Custodian is not liable for the acts or omissions of its subcustodians unless the selection of such subcustodians was made negligently or in bad faith. There are expected to be no written contractual arrangements between subcustodians that hold the Trust s gold bars and the Trustee or the Custodian, because traditionally such arrangements are based on the LBMA s rules and on the customs and practices of the London bullion market. In the event of a legal dispute with respect to or arising from such arrangements, it may be difficult to define such customs and practices. The LBMA s rules may be subject to change outside the control of the Trust. Under English law, neither the Trustee nor the Custodian would have a supportable breach of contract claim against a subcustodian for losses relating to the safekeeping of gold. If the Trust s gold bars are lost or damaged while in the custody of a subcustodian, the Trust may not be able to recover damages from the Custodian or the subcustodian. Because neither the Trustee nor the Custodian oversees or monitors the activities of subcustodians who may temporarily hold the Trust s gold bars until transported to the Custodian s London vault, failure by the subcustodians to exercise due care in the safekeeping of the Trust s gold bars could result in a loss to the Trust. Under the Trust Allocated Account Agreement, the Custodian agreed that it will hold all of the Trust s gold bars in its own vault premises except when the gold bars have been allocated in a vault other than the Custodian s vault premises, and in such cases the Custodian agreed that it will use commercially reasonable efforts promptly to transport the gold bars to the Custodian s vault, at the Custodian s cost and risk. Nevertheless, there may be periods of time when some portion of the Trust s gold bars will be held by one or more subcustodians appointed by the Custodian or by a subcustodian of such subcustodian. The Custodian is required under the Trust Allocated Account Agreement to use reasonable care in appointing its subcustodians but otherwise has no other responsibility in relation to the subcustodians appointed by it. These subcustodians may in turn appoint further subcustodians, but the Custodian is not responsible for the appointment of these further subcustodians. The Custodian does not undertake to monitor the performance by subcustodians of their custody functions or their selection of further subcustodians. The Trustee does not undertake to monitor the performance of any subcustodian. Furthermore, the Trustee may have no right to visit the premises of any subcustodian for the purposes of examining the Trust s gold bars or any records maintained by the subcustodian, and no subcustodian will be obligated to cooperate in any review the Trustee may wish to conduct of the facilities, procedures, records or creditworthiness of such subcustodian. In addition, the ability of the Trustee to monitor the performance of the Custodian may be limited because under the Custody Agreements the Trustee has only limited rights to visit the premises of the Custodian for the purpose of examining the Trust s gold bars and certain related records maintained by the Custodian. The value of the Shares will be adversely affected if any services provided to the Trust by the Sponsor, the Custodian or the Trustee are suddenly or unexpectedly terminated. Upon the sudden or unexpected termination, resignation or removal of any service provider to the Trust, it is possible that a comparable replacement service provider will be available or able to be appointed without material delay. Any such unavailability or delay could cause the Trustee to expend assets of the Trust and consequently, the NAV of the Shares, in finding a replacement service provider. The value of the Shares will be adversely affected if the Trust is required to indemnify the Sponsor, the Trustee, or the Custodian as contemplated in the Trust Agreement and the Custody Agreements. Under the Trust Agreement, the Sponsor and the Trustee each have the right to be indemnified from the Trust for any liability or expense it incurs without gross negligence, bad faith, willful misconduct or willful malfeasance on its part. Similarly, the Custody Agreements provide for indemnification of the Custodian by the Trust under certain circumstances. The Trust will not carry any insurance to cover such potential obligations. This means that it may be necessary to sell assets of the Trust in order to cover losses or liability suffered by the Sponsor, the Trustee or the Custodian. Any sale of that kind would reduce the net asset value of the Trust and the value of the Shares. The service providers engaged by the Trust may not carry adequate insurance to cover claims against them by the Trust, which could adversely affect the value of net assets of the Trust. The Trustee, the Custodian and other service providers engaged by the Trust maintain such insurance as they deem adequate with respect to their respective businesses. Investors cannot be assured that any of the aforementioned parties will maintain any insurance with respect to the Trust s assets held or the services that such parties provide to the Trust and, if they maintain insurance, that such insurance is sufficient to satisfy any losses incurred by them in respect of their relationship with the Trust. Accordingly, the Trust will have to rely on the efforts of the service provider to recover from their insurer compensation for any losses incurred by the Trust in connection with such arrangements. The Sponsor and its affiliates manage other funds, including those that invest in physical gold bullion or other precious metals, and conflicts of interest may occur, which may reduce the value of the net assets of the Trust, the NAV and the trading price of the Shares. The Sponsor or its affiliates and associates currently engage in, and may in the future engage, in the promotion, management or investment management of other accounts, funds or trusts that invest primarily in physical gold bullion or other precious metals. Although officers and professional staff of the Sponsor s management intend to devote as much time to the Trust as is deemed appropriate to perform their duties, the Sponsor s management may allocate their time and services among the Trust and the other accounts, funds or trusts. The Sponsor will provide any such services to the Trust on terms not less favorable to the Trust than would be available from a non-affiliated party. The Sponsor and the Trustee may agree to amend the Trust Agreement without the consent of the Shareholders. The Sponsor and the Trustee may agree to amend the Trust Agreement, including to increase the Sponsor s Fee, without Shareholder consent. If an amendment imposes new fees and charges or increases existing fees or charges, including the Sponsor s Fee (except for taxes and other governmental charges, registration fees or other such expenses, or prejudices a substantial right of Shareholders), it will become effective for outstanding Shares 30 days after notice of such amendment is given to registered owners. Shareholders that are not registered owners (which most shareholders will not be) may not receive specific notice of a fee increase other than through an amendment to the prospectus. Moreover, at the time an amendment becomes effective, by continuing to hold Shares, Shareholders are deemed to agree to the amendment and to be bound by the Trust Agreement as amended without specific agreement to such increase (other than through the "negative consent" procedure described above). Shareholders could incur a tax liability without an associated distribution of the Trust. In the normal course of business it is possible that the Trust could incur a taxable gain in connection with the sale of gold that is otherwise not associated with a distribution. In the event that this occurs, Shareholders may be subject to tax due to the grantor trust status of the Trust even though there is not a corresponding distribution from the Trust. Use of Proceeds Proceeds received by the Trust from the issuance and sale of Baskets consist of gold deposits. Such deposits are held by the Custodian on behalf of the Trust until (i) delivered to Authorized Participants in connection with redemptions of Baskets or (ii) sold to pay fees due to the Sponsor and Trust expenses and liabilities not assumed by the Sponsor. See "The Trust—Trust Expenses." Description of the Gold Industry Introduction This section provides a brief introduction to the gold industry by looking at some of the key participants, detailing the primary sources of demand and supply and outlining the role of the "official" sector (i.e., central banks) in the market. Market Participants The participants in the world gold industry may be classified in the following sectors: the mining and producer sector, the banking sector, the official sector, the investment sector, and the manufacturing sector. A brief description of each follows. The Mining and Producer Sector This group includes mining companies that specialize in gold and silver production; mining companies that produce gold as a by-product of other production (such as a copper or silver producer); scrap merchants and recyclers. The Banking Sector Bullion banks provide a variety of services to the gold market and its participants, thereby facilitating interactions between other parties. Services provided by the bullion banking community include traditional banking products as well as mine financing, physical gold purchases and sales, hedging and risk management, inventory management for industrial users and consumers, and gold deposit and loan instruments. The Official Sector The official sector encompasses the activities of the various central banking operations of gold-holding countries. Having been a source of gold supply for many years, the official sector became a source of net demand in 2010. The prominence given by market commentators to this activity coupled with the total amount of gold held by the official sector has resulted in this area being a significant shift in the gold market. The Investment Sector This sector includes the investment and trading activities of both professional and private investors and speculators. These participants range from large hedge and mutual funds to day-traders on futures exchanges and retail-level coin collectors. The Manufacturing Sector The fabrication and manufacturing sector represents all the commercial and industrial users of gold for whom gold is a daily part of their business. The jewelry industry is a large user of gold. Other industrial users of gold include the electronics and dental industries. World Gold Supply and Demand (2008-2017) The following table sets forth a summary of the world gold supply and demand from 2008 to 2017: (tonnes)(1) Supply 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Mine production 2,467 2,651 2,771 2,868 2,882 3,076 3,180 3,222 3,251 3,247 Scrap 1,388 1,765 1,743 1,698 1,700 1,303 1,159 1,180 1,306 1,210 Net hedging supply -357 -234 -106 18 -40 -39 108 21 32 -41 Total Supply 3,497 4,182 4,407 4,584 4,543 4,340 4,446 4,422 4,590 4,415 Demand Jewelry 2,355 1,866 2,083 2,099 2,066 2,726 2,559 2,464 1,953 2,214 Industrial fabrication 479 426 480 470 432 428 411 376 366 380 of which electronics 334 295 346 342 310 306 297 267 264 277 of which dental & medical 56 53 48 43 39 36 34 32 30 29 of which other industrial 89 79 86 85 84 85 80 76 71 73 Net official sector -235 -34 77 457 544 409 466 443 269 366 Retail investment 939 866 1,263 1,617 1,407 1,871 1,162 1,160 1,043 1,028 of which bars 667 562 946 1,248 1,057 1,444 886 875 786 780 of which coins 272 304 317 369 350 426 276 284 257 248 Physical Demand 3,538 3,125 3,903 4,643 4,449 5,434 4,598 4,442 3,630 3,988 Physical Surplus/Deficit -40 1,057 504 -59 94 -1,094 -151 -20 959 427 ETF inventory build 321 623 384 189 279 -879 -155 -117 539 177 Exchange Inventory build 34 39 54 -6 -10 -98 1 -48 86 0 Net Balance -396 395 67 -241 -176 -117 3 146 334 250 Gold Price (LBMA PM, US$/oz) 871.96 972.35 1,224.52 1,571.69 1,668.98 1,411.23 1,266.40 1,160.06 1,250.80 1,257.15 Note:Totals may not add due to independent rounding. Net producer hedging is the change in the physical market impact of mining companies gold loans, forwards and options positions. (1)"Tonne" refers to one metric ton. This is equivalent to 1,000 kilograms or 32,150.7465 troy ounces. Source: Gold Survey 2018, GFMS, Thomson Reuters Historical Chart of the Price of Gold The price of gold is volatile and its fluctuations are expected to have a direct impact on the value of the Shares. However, movements in the price of gold in the past, and any past or present trends, are not a reliable indicator of future movements. Movements may be influenced by various factors, including announcements from central banks regarding a country s reserve gold holdings, agreements among central banks, fluctuations in the value of the U.S. dollar, political uncertainties around the world, and economic concerns. The following chart illustrates the changes in the LBMA gold prices from May 2008 through May 2018: Operation of the Gold Market The global trade in gold consists of Over-the-Counter ("OTC") transactions in spot, forwards, and options and other derivatives, together with exchange-traded futures and options. Over-the-Counter Market The OTC gold market includes spot, forward, and option and other derivative transactions conducted on a principal-to-principal basis. While this is a global, nearly 24-hour per day market, its main centers are London, New York and Zurich. Most OTC market trades are cleared through London. The LBMA plays an important role in setting OTC gold trading industry standards. A London Good Delivery Bar (as described below), which is acceptable for settlement of any OTC transaction, will be acceptable for delivery to the Trust in connection with the issuance of Baskets. Futures Exchanges Futures exchanges seek to provide a neutral, regulated marketplace for the trading of derivatives contracts for commodities, such as futures, options and certain swaps. The terms of these contracts are defined by an exchange for each commodity. For each commodity traded, the contract specifies the precise commodity quality and quantity standards, as well as the location and timing of physical delivery for the reference physical commodity, although only a very small number of these contracts result in the actual commodity delivery. An exchange does not buy or sell those contracts, but seeks to offer a transparent forum where members, on their own behalf or on the behalf of customers, can trade the contracts in a safe, efficient and orderly manner. The futures and options contracts, as well as some swaps, are cleared through a derivatives clearing organization which ensures more accurate valuation of positions in these contracts as well as settlement of trades in these contracts. The most significant gold futures exchange in the U.S. is COMEX, operated by Commodities Exchange, Inc., a subsidiary of New York Mercantile Exchange, Inc., and a subsidiary of the Chicago Mercantile Exchange Group (the "CME Group"). Other commodity exchanges include the Tokyo Commodity Exchange ("TOCOM"), the Multi Commodity Exchange Of India ("MCX"), the Shanghai Futures Exchange, ICE Futures US (the "ICE"), and the Dubai Gold & Commodities Exchange. Exchange Regulation In addition to the public nature of the pricing, futures exchanges in the United States are regulated at two levels, internal and external governmental supervision. The internal is performed through self-regulation as self-regulatory organizations and consists of regular monitoring of the trading process to ensure that it is conducted in conformance with all exchange rules; the financial condition of all exchange member firms to ensure that they continuously meet financial commitments; and the positions of commercial and non-commercial customers to ensure that physical delivery and other commercial commitments can be met, and that pricing is not being improperly affected by the size of any particular customer positions. External governmental oversight is performed by the CFTC, which reviews all the rules and regulations of United States futures exchanges and monitors their enforcement. The CFTC oversees the operation of the U.S. commodity futures markets, including COMEX and ICE Futures US. One of the principal public policy objectives of the Commodity Exchange Act is to ensure the integrity of the markets it oversees and the reliability of the prices of trades on those markets. The Commodity Exchange Act and CFTC require futures exchanges to ensure compliance with core principles applicable to designated contract markets to have rules and procedures to prevent market manipulation, abusive trade practice and fraud, and the CFTC conducts regular review of the markets rule enforcement programs. Other local regulators enforce their own regulations governing trading platforms and futures exchanges located in their jurisdictions. The London Bullion Market Most trading in physical gold is conducted on the OTC market, predominantly in London. The LBMA coordinates various OTC-market activities, including clearing and vaulting, acts as the principal intermediary between physical gold market participants and the relevant regulators, promotes good trading practices and develops standard market documentation. In addition, the LBMA promotes refining standards for the gold market by maintaining the "London Good Delivery List," which identifies refiners of gold that have been approved by the LBMA. In the OTC market, gold bars that meet the specifications for weight, dimensions, fineness (or purity), identifying marks (including the assay stamp of an LBMA-acceptable refiner) and appearance described in "The Good Delivery Rules for Gold and Silver Bars" published by the LBMA are referred to as "London Good Delivery Bars." A London Good Delivery Bar (typically called a "400 ounce bar") must contain between 350 and 430 fine troy ounces of gold (1 troy ounce = 31.1034768 grams), with a minimum fineness (or purity) of 995 parts per 1000 (99.5%), be of good appearance and be easy to handle and stack. The fine gold content of a gold bar is calculated by multiplying the gross weight of the bar (expressed in units of 0.025 troy ounces) by the fineness of the bar. A London Good Delivery Bar must also bear the stamp of one of the refiners identified on the London Good Delivery List. London Market Regulation Following the enactment of the Financial Markets Act 2012, the Prudential Regulation Authority of the Bank of England is responsible for regulating most of the financial firms that are active in the bullion market, and the Financial Conduct Authority is responsible for consumer and competition issues. Trading in spot, forwards and wholesale deposits in the bullion market is subject to the Non-Investment Products Code adopted by market participants. Not a Regulated Commodity Pool The Trust does not trade in gold futures, options or swap contracts on any futures exchange or over the counter. The Trust takes delivery of gold that complies with the LBMA gold delivery rules. Because the Trust does not trade in gold futures, options or swap contracts on any futures exchange or OTC, the Trust is not regulated by the CFTC or the NFA under the Commodity Exchange Act as a "commodity pool," and is not required to be operated by a CFTC-regulated commodity pool operator or advised by a commodity trading advisor. Investors in the Trust do not receive the regulatory protections afforded to investors in commodity pools operated by registered commodity pool operators, nor may any futures exchange or the NFA enforce its rules with respect to the Trust s activities. In addition, investors in the Trust do not benefit from the protections afforded to investors in gold futures, options or swaps contracts on regulated futures exchanges or OTC. Other Methods of Investing in Gold The Trust competes with other financial vehicles, including traditional debt and equity securities issued by companies in the gold industry and other securities backed by or linked to gold, direct investments in gold and investment vehicles similar to the Trust. The Trust The activities of the Trust are limited to (1) issuing Baskets in exchange for the gold deposited with the Custodian as consideration, (2) selling gold as necessary to cover the Sponsor s Fee and Trust expenses not assumed by the Sponsor and other liabilities, and (3) delivering gold in exchange for Baskets surrendered for redemption. The Trust is not actively managed. It does not engage in any activities designed to obtain a profit from, or to ameliorate losses caused by, changes in the price of gold. Trust Objective The objective of the Trust is for the value of the Shares to reflect, at any given time, the value of the assets owned by the Trust at that time less the Trust s accrued expenses and liabilities as of that time. The Shares are intended to constitute a simple and cost-effective means of making an investment similar to an investment in gold. An investment in allocated physical gold bullion requires expensive and sometimes complicated arrangements in connection with the assay, transportation and warehousing of the metal. Traditionally, such expense and complications have resulted in investments in physical gold bullion being efficient only in amounts beyond the reach of many investors. The Shares have been designed to remove the obstacles represented by the expense and complications involved in an investment in physical gold bullion, while at the same time having an intrinsic value that reflects, at any given time, the price of the assets owned by the Trust at such time less the Trust expenses and liabilities. Although the Shares are not the exact equivalent of an investment in gold, they provide investors with an alternative that allows a level of participation in the gold market through the securities market. Advantages of investing in the Shares include: Minimal credit risk. The Shares represent an interest in physical gold owned by the Trust (other than up to a maximum of 430 ounces of gold held in unallocated form) and held in physical custody at the Custodian. Physical gold of the Trust in the Custodian s possession is not subject to borrowing arrangements with third parties. Other than the gold temporarily being held in an unallocated gold account of the Trust in connection with deposits and an amount of gold comprising less than 430 ounces which may be held in the unallocated gold account of the Trust on an ongoing basis, the physical gold of the Trust is not subject to counterparty or credit risks. This contrasts with most other financial products that gain exposure to precious metals through the use of derivatives that are subject to counterparty and credit risks. Backed by gold held by the Custodian on behalf of the Trust. The Shares are backed primarily by allocated physical gold bullion identified as the Trust s property in the Custodian s books. The Trust arrangements contemplate that no Shares can be issued unless the corresponding amount of gold has been deposited into the Trust. Once deposited into the Trust, gold is only removed from the Trust if (i) sold to pay Trust expenses (such as the Sponsor s Fee and any other expenses not assumed by the Sponsor) or liabilities to which the Trust may be subject, or (ii) transferred from the Trust s account to an Authorized Participant s account in exchange for one or more Baskets of Shares surrendered for redemption. Ease and flexibility of investment. Retail investors may purchase and sell Shares through traditional brokerage accounts. Because the amount of gold corresponding to a Share is significantly less than the minimum amounts of physical gold bullion that are commercially available for investment purposes, the cash outlay necessary for an investment in Shares should be less than the amount required for currently existing means of investing in physical gold bullion. Shares are eligible for margin accounts. Relatively cost efficient. Although the return, if any, of an investment in the Shares is subject to the additional expenses of the Trust, including the Sponsor s Fee, the Trustee s Fee, the Custodian s Fee, and to other costs and expenses not assumed by the Sponsor which would not be incurred in the case of a direct investment in gold, the Shares may represent a cost-efficient alternative for investors not otherwise in a position to participate directly in the market for allocated physical gold bullion, because the expenses involved in an investment in allocated physical gold bullion through the Shares are dispersed among all holders of Shares. Secondary Market Trading While the Trust seeks to reflect generally the performance of the price of gold less the Trust s expenses and liabilities, Shares may trade at, above or below their NAV. The NAV of Shares will fluctuate with changes in the market value of the Trust s assets. The trading prices of Shares will fluctuate in accordance with changes in their NAV as well as market supply and demand. The amount of the discount or premium in the trading price relative to the NAV may be influenced by non-concurrent trading hours between the major gold markets and the Exchange. While the Shares trade on the Exchange until 4:00 p.m. (New York time), liquidity in the market for gold may be reduced after the close of the major world gold markets, including London, Zurich and COMEX. As a result, during this time, trading spreads, and the resulting premium or discount, on Shares may widen. However, given that Baskets of Shares can be created and redeemed in exchange for the underlying amount of gold, the Sponsor believes that the arbitrage opportunities may provide a mechanism to mitigate the effect of such premium or discount. Valuation of Gold; Computation of Net Asset Value On each business day, as soon as practicable after 4:00 p.m. (New York time), the Trustee evaluates the gold held by the Trust and determines the net asset value of the Trust and the NAV. For purposes of making these calculations, a business day means any day other than a day when the Exchange is closed for regular trading. The Trustee values the gold held by the Trust using that day s LBMA Gold Price PM. LBMA Gold Price PM is the price per fine troy ounce of gold, stated in U.S. dollars, determined by IBA following one or more 45-second electronic auctions conducted starting at 3:00 p.m. (London time), on each day that the London gold market is open for business, and announced by the LBMA shortly thereafter. If there is no LBMA Gold Price PM on any day, the Trustee is authorized to use the LBMA Gold Price AM announced on that day. If neither price is available for that day, the Trustee will value the Trust s gold based on the most recently announced LBMA Gold Price PM or LBMA Gold Price AM. If the Sponsor determines that such price is inappropriate to use, the Sponsor will identify an alternate basis for evaluation to be employed by the Trustee. Further, the Sponsor may instruct the Trustee to use on an on-going basis a different publicly available price which the Sponsor determines to fairly represent the commercial value of the Trust s gold. Neither the Trustee nor the Sponsor are liable to any person for the determination that the most recently announced LBMA Gold Price PM (or other benchmark price) is not appropriate as a basis for evaluation of the gold held or receivable by the Trust or for any determination as to the alternative basis for evaluation, provided that such determination is made in good faith. On each day that the LBMA Gold Price PM is to be determined, a price for the first round of auction (and any round thereafter) is set by a chairperson appointed by IBA, based on a set of rules and taking into account relevant pricing information available at the time, and made publicly available in advance of the auction. Beginning at 3:00 p.m. (London time), the direct participants pre-qualified by IBA and their sponsored clients are allowed, but not required, to electronically submit during a 45-second period buy and/or sell orders for spot transactions in gold at the pre-determined price. If at the conclusion of the 45-second round the market is determined by IBA to be balanced, the price determined by a chairperson for that round is the LBMA Gold Price PM for that day and announced as such by the LBMA. If the market is not balanced at the end of the first auction, a chairperson will revise the starting price, and an additional 45-second auction is held at the new price. If necessary, the process is repeated until the market is determined to be balanced and the price at which that determination occurs is the LBMA Gold Price PM for that date. For these purposes, the market is considered to be balanced when, at the end of an auction, the total number of ounces of gold for which buy orders were submitted in that auction falls within a certain pre-determined margin of tolerance from the total number of ounces of gold for which sell orders were submitted in the auction. Once the LBMA Gold Price PM has been determined for a given day, the buy and sell orders entered by the auction participants during the last auction will be executed at that day s LBMA Gold Price PM. Any market imbalance remaining after the last auction (which must be within the margin of tolerance) is allocated equally among all participants (and not only those participating in any auction held on that date). IBA reserves a right to limit the allocation of any market imbalance on any date only among participants that have entered an order during an auction on that date. Once the value of the Trust s gold has been determined, the Trustee subtracts all accrued fees, expenses and other liabilities of the Trust from the total value of the gold and all other assets of the Trust. The resulting figure is the net asset value of the Trust. The Trustee determines the NAV per Share by dividing the net asset value of the Trust by the number of Shares outstanding at the time the computation is made. Any estimate of the accrued but unpaid fees, expenses and liabilities of the Trust for purposes of computing the net asset value of the Trust and NAV per Share of the Trust made by the Trustee in good faith shall be conclusive upon all persons interested in the Trust. Trust Expenses The Trust s only ordinary recurring expense is expected to be the Sponsor s Fee. In exchange for the Sponsor s Fee, the Sponsor has agreed to assume the following expenses incurred by the Trust: the Trustee s Fee and its ordinary out-of-pocket expenses, the Custodian s Fee and its reimbursable expenses, the Exchange listing fees, SEC registration fees, marketing expenses, printing and mailing costs, audit fees and expenses and up to $100,000 per annum in legal fees and expenses. The Sponsor s Fee is accrued daily at an annualized rate equal to [ ] % of the net asset value of the Trust and is payable monthly in arrears. The Sponsor may, at its discretion and from time to time, waive all or a portion of the Sponsor s Fee for stated periods of time. The Sponsor is under no obligation to waive any portion of its fees and any such waiver shall create no obligation to waive any such fees during any period not covered by the waiver. Presently, the Sponsor does not intend to waive any part of its fee. Furthermore, the Sponsor may, in its sole discretion, agree to rebate all or a portion of the Sponsor s Fee attributable to Shares held by certain institutional investors subject to minimum Share holding and lock up requirements as determined by the Sponsor to foster stability in the Trust s asset levels. Any such rebate will be subject to negotiation and written agreement between the Sponsor and the investor on a case by case basis. The Sponsor is under no obligation to provide any rebates of the Sponsor s Fee. Neither the Trust nor the Trustee will be a party to any Sponsor s Fee rebate arrangements negotiated by the Sponsor. Any Sponsor s Fee rebate shall be paid from the funds of the Sponsor and not from the assets of the Trust. The Sponsor s Fee will be paid through delivery of gold from the Trust Unallocated Account that has been de-allocated from the Trust Allocated Account for this purpose. The Trustee will, when directed by the Sponsor, and, in the absence of such direction, may, in its discretion, sell gold in such quantity and at such times, as may be necessary to permit payment of the Trust expenses or liabilities not assumed by the Sponsor. The Trustee will endeavor to sell gold at such times and in the smallest amounts required to permit such payments as they become due, it being the intention to avoid or minimize the Trust s holdings of assets other than gold. Accordingly, the amount of gold to be sold will vary from time to time depending on the level of the Trust s expenses and the market price of gold. The Custodian may, but is not required to purchase gold needed to cover Trust expenses provided that if the Trustee s instruction to sell gold is received by the Custodian by 2:00 p.m. (London time), the purchase price for the gold will be that day s LBMA Gold Price PM (or other applicable benchmark price), and if the Trustee s instruction to sell gold is received by the Custodian after 2:00 p.m. (London time), the purchase price will be the next LBMA Gold Price PM (or other applicable benchmark price) available after that day. Cash held by the Trustee pending payment of the Trust s expenses will not bear any interest. Each sale of gold by the Trust will be a taxable event to Shareholders for federal income tax purposes. See "United States Federal Income Tax Consequences—Taxation of U.S. Shareholders." Impact of Trust Expenses The Trust sells gold to raise the funds needed for the payment of the Sponsor s Fee and all other Trust expenses or liabilities not assumed by the Sponsor. The purchase price received as consideration for such sales is the Trust s sole source of funds to cover its liabilities. The Trust does not engage in any activity designed to derive a profit from changes in the price of gold. Gold not needed to redeem Baskets of Shares, or to cover the Sponsor s Fee and Trust expenses or liabilities not assumed by the Sponsor, will be held in physical form by the Custodian. As a result of the recurring deliveries or sales of gold necessary to pay the Sponsor s Fee and the Trust expenses or liabilities not assumed by the Sponsor, the fractional amount of gold represented by each Share will decrease over the life of the Trust. New deposits of gold, received in exchange for additional new Baskets issued by the Trust, do not reverse this trend. Hypothetical Expense Example The following table, prepared by the Sponsor, illustrates the anticipated impact of the deliveries and sales of gold discussed above on the fractional amount of gold represented by each outstanding Share for three years. It assumes that the only dispositions of gold will be those sales needed to pay the Sponsor s Fee and that the price of gold and the number of Shares remain constant during the three-year period covered. The table does not show the impact of any extraordinary expenses the Trust may incur. Any such extraordinary expenses, if and when incurred, will accelerate the decrease in the fractional amount of gold represented by each Share. In addition, the table does not show the effect of any waivers of the Sponsor s Fee that may be in effect from time to time. Year 1 2 3 Hypothetical gold price per ounce Sponsor s Fee Shares of Trust, beginning Ounces of gold in Trust, beginning Beginning adjusted net asset value of the Trust Ounces of gold to be delivered to cover the Sponsor s Fee Ounces of gold in Trust, ending Ending adjusted net asset value of the Trust Ending NAV per share Description of the Shares and the Trust Agreement General The Trust was formed in 2018 when an initial deposit of gold was made in exchange for the issuance of [ ] Baskets. The purpose of the Trust is to own gold transferred to the Trust in exchange for Shares issued by the Trust. The Trust is governed by the Trust Agreement between the Sponsor and the Trustee. The Trust Agreement sets out the rights of depositors of gold and registered holders of Shares and the rights and obligations of the Sponsor and the Trustee. New York law governs the Trust Agreement, the Trust and the Shares. The following is a general description of the Shares and a summary of material provisions of the Trust Agreement. It is qualified by reference to the entire Trust Agreement, which is filed as an exhibit to the registration statement of which this prospectus is a part. Each Share represents a fractional undivided beneficial interest in the net assets of the Trust. The assets of the Trust consist primarily of gold held by the Custodian on behalf of the Trust. However, the Trustee will, at the direction of the Sponsor, or, in the absence of such direction, may, in its discretion, sell the Trust s gold as necessary to cover the Sponsor s Fee and expenses and liabilities not assumed by the Sponsor. Such sales result in the Trust holding cash for brief periods of time. In addition, there may be other situations where the Trust may hold cash. For example, a claim may arise against the Custodian, an Authorized Participant, or any other third party, which is settled in cash. In those situations where the Trust unexpectedly receives cash or any other assets, the Trust Agreement provides that no deposits of gold will be accepted (i.e., there will be no issuance of new Shares) until after the record date for the distribution of such cash or other property has passed. The Trustee is authorized under the Trust Agreement to create and issue an unlimited number of Shares. The Trustee will create Shares only in Baskets (a Basket equals a block of 50,000 Shares) and only upon the order of an Authorized Participant. Any creation and issuance of Shares above the amount registered on the registration statement of which this prospectus is a part will require the registration of such additional Shares. Baskets of Shares may be redeemed by the Trust in exchange for the amount of gold represented by the aggregate number of Shares redeemed. The Trust is not a registered investment company under the Investment Company Act, and is not required to register under such act. The Trust is not a commodity pool for purposes of the Commodity Exchange Act. Deposit of Gold; Issuance of Baskets The Trust creates and redeems Shares on a continuous basis but only in Baskets of 50,000 Shares. Upon the deposit of the corresponding amount of gold with the Custodian, and the payment of the Trustee s applicable fee and of any expenses, taxes or charges (such as stamp taxes or stock transfer taxes or fees), the Trustee will deliver the appropriate number of Baskets to the DTC account of the depositing Authorized Participant. Only Authorized Participants can deposit gold and receive Baskets of Shares in exchange. As of the date of this prospectus, [ ] is the only Authorized Participant. The Sponsor and the Trustee will maintain a current list of Authorized Participants. Gold allocated by the Custodian to the Trust Allocated Account must meet the London Good Delivery Standards. Before making a deposit, the Authorized Participant must deliver to the Trustee a written purchase order indicating the number of Baskets it intends to acquire. The Trustee will acknowledge the purchase order unless it or the Sponsor decides to refuse the purchase order as permitted by the Trust Agreement. The date the Trustee receives that order determines the Basket Amount the Authorized Participant needs to deposit. However, orders received by the Trustee after 3:59 p.m. (New York time) on a normal business day, or on a business day when the LBMA Gold Price PM or other applicable benchmark price is not announced, will not be accepted. If the Trustee accepts the purchase order, it transmits to the Authorized Participant, via facsimile or electronic mail message, no later than 5:30 p.m. (New York time) on the date such purchase order is received, or deemed received, a copy of the purchase order endorsed "Accepted" by the Trustee and indicating the Basket Amount that the Authorized Participant must deliver to the Custodian at the Trust Unallocated Account loco London in exchange for each Basket. Prior to the Trustee s acceptance as specified above, a purchase order only represents the Authorized Participant s unilateral offer to deposit gold in exchange for Baskets of Shares and has no binding effect upon the Trust, the Trustee, the Custodian or any other party. The Basket Amount necessary for the creation of a Basket changes from day to day. The initial Basket Amount at the time of creation of the Trust was [500] Fine Ounces of gold. On each day that the Exchange is open for regular trading, the Trustee adjusts the quantity of gold constituting the Basket Amount as appropriate to reflect sales of gold, any loss of gold that may occur, and accrued expenses. The computation is made by the Trustee as promptly as practicable after 4:00 p.m. (New York time). See "The Trust—Valuation of Gold; Computation of Net Asset Value" for a description of how the LBMA Gold Price PM is determined, and description of how the Trustee determines the NAV. The Trustee determines the Basket Amount for a given day by dividing the number of Fine Ounces of gold held by the Trust as of the opening of business on that business day, adjusted for the amount of gold constituting estimated accrued but unpaid fees and expenses of the Trust as of the opening of business on that business day, by the quotient of the number of Shares outstanding at the opening of business divided by 50,000. Fractions of a Fine Ounce of gold smaller than 0.001 Fine Ounce are disregarded for purposes of the computation of the Basket Amount. The Basket Amount so determined is communicated via electronic mail message to all Authorized Participants, and made available on the Sponsor s website for the Shares. The Exchange also publishes the Basket Amount determined by the Trustee as indicated above. Because the Sponsor has assumed what are expected to be most of the Trust s expenses, and the Sponsor s Fee accrues daily at the same rate (i.e., 1/365th of the net asset value of the Trust multiplied by [ ]%), in the absence of any extraordinary expenses or liabilities, the amount of gold by which the Basket Amount decreases each day is predictable. Authorized Participants may use that indicative Basket Amount as guidance regarding the amount of gold that they may expect to have to deposit with the Custodian in respect of purchase orders placed by them on such next business day and accepted by the Trustee. The Authorized Participant Agreement provides, however, that once a purchase order has been accepted by the Trustee, the Authorized Participant will be required to deposit with the Custodian the Basket Amount determined by the Trustee on the effective date of the purchase order. No Shares are issued unless and until the Custodian has informed the Trustee that it has allocated to the Trust Allocated Account (other than up to 430 Fine Ounces, which may be held in the Trust Unallocated Account) the corresponding amount of gold. Redemption of Baskets Authorized Participants, acting on authority of the registered holder of Shares or on their own account, may surrender Baskets of Shares in exchange for the corresponding Basket Amount announced by the Trustee. Upon the surrender of such Shares and the payment of the Trustee s applicable fee and of any expenses, taxes or charges (such as stamp taxes or stock transfer taxes or fees), the Trustee will deliver to the order of the redeeming Authorized Participant the amount of gold corresponding to the redeemed Baskets. Shares can only be surrendered for redemption in Baskets of 50,000 Shares each. Before surrendering Baskets of Shares for redemption, an Authorized Participant must deliver to the Trustee a written request indicating the number of Baskets it intends to redeem or on a business day when the LBMA Gold Price PM or other applicable benchmark price is not announced. The date the Trustee receives that order determines the Basket Amount to be received in exchange. However, orders received by the Trustee after 3:59 p.m. (New York time) on a business day or on a business day when the LBMA Gold Price PM or other applicable benchmark price is not announced, will not be accepted. The redemption distribution from the Trust will consist of a credit to the redeeming Authorized Participant s unallocated account representing the amount of the gold held by the Trust evidenced by the Shares being redeemed as of the date of the redemption order. Fractions of a Fine Ounce included in the redemption distribution smaller than 0.001 of a Fine Ounce are disregarded. The redemption distribution will not be delivered unless and until all of the Shares to be redeemed have been received by the Trustee. In connection with any issuance or redemption of Shares, the Authorized Participant shall be responsible for paying or reimbursing to the Custodian and the Trustee the amount of any applicable tax, fees or other governmental charge that may be due in connection with the transfer of gold and the issuance and delivery of Shares, and any expense associated with the delivery of gold other than by credit to an Authorized Participant s unallocated account with the Custodian. Redemptions may be suspended, or the date for delivery of gold may be postponed, only (i) during any period in which regular trading on the Exchange is suspended or restricted or the Exchange is closed (other than scheduled holiday or weekend closings), or (ii) during an emergency as a result of which delivery, disposal or evaluation of gold is not reasonably practicable. Neither the Trustee nor the Sponsor will be liable to any person by reason of any such suspension or postponement. Certificates Evidencing the Shares The Shares are evidenced by certificates executed and delivered by the Trustee on behalf of the Trust. DTC has accepted the Shares for settlement through its book-entry settlement system. So long as the Shares are eligible for DTC settlement, there will be only one or more global certificates evidencing Shares that will be registered in the name of a nominee of DTC. Investors will be able to own Shares only in the form of book-entry security entitlements with DTC or direct or indirect participants in DTC. No investor will be entitled to receive a separate certificate evidencing Shares. Because Shares can only be held in the form of book-entries through DTC and its participants, investors must rely on DTC, a DTC participant and any other financial intermediary through which they hold Shares to receive the benefits and exercise the rights described in this section. Investors should consult with their broker or financial institution to find out about the procedures and requirements for securities held in DTC book-entry form. Cash and Other Distributions If the Sponsor and Trustee determine that there is more cash being held in the Trust than is needed to pay the Trust s expenses for the next month, the Trustee will distribute the extra cash to DTC for further distribution to the Shareholders. If the Trust receives any property other than gold or cash, the Trustee will distribute that property in proportion to the number of Shares owned by any means the Sponsor thinks is lawful, equitable and feasible. If the Sponsor is of the opinion that the distribution cannot be made in that way, the Trustee will adopt a method the Sponsor deems lawful, equitable and feasible for the purpose of effecting the distribution, including the public or private sale of the property, or any part thereof, and the net proceeds shall be distributed in the same manner as a distribution of cash. Such distributions shall be made after deduction or upon payment of the expenses of the Trustee. Registered holders of Shares are entitled to receive these distributions in proportion to the number of Shares owned. Before making a distribution, the Trustee may deduct any applicable withholding taxes and governmental charges and any expenses of the Trustee that have not been paid. The Trustee distributes only whole dollars and cents and shall round fractional cents down to the nearest whole cent. Shareholders of record on the record date fixed by the Trustee for a distribution will be entitled to receive their pro rata portion of any distribution. If the Trust is terminated and liquidated, the Trustee will distribute to the Shareholders in exchange for their Shares their pro rata share of any amounts remaining after the satisfaction of all outstanding liabilities of the Trust and the establishment of such reserves for applicable taxes, other governmental charges and contingent or future liabilities as the Trustee shall determine. See "Description of the Shares and the Trust Agreement—Amendment and Termination." Voting Rights The Shares do not represent a traditional investment and you should not view them as similar to "shares" of a corporation operating a business enterprise with management and a board of directors. As a Shareholder, you will not have the statutory rights normally associated with the ownership of shares of a corporation, including, for example, the right to bring "oppression" or "derivative" actions. All Shares are of the same class with equal rights and privileges. Each Share is transferable, is fully paid and non- assessable and entitles the holder to vote on the limited matters upon which Shareholders may vote under the Trust Agreement. The Shares do not entitle their holders to any conversion or pre-emptive rights or any redemption rights or rights to distributions. However, registered holders of at least 25% of the Shares have the right to require the Trustee to cure any material breach by it of the Trust Agreement, and registered holders of at least 75% of the Shares have the right to require the Trustee to terminate the Trust Agreement as described below. In addition, certain amendments to the Trust Agreement require advance notice to the Shareholders before the effectiveness of such amendments, but no Shareholder vote or approval is required for any amendment to the Trust Agreement. Fees and Expenses of the Trustee Each deposit of gold for the creation of Baskets of Shares and each surrender of Baskets of Shares for the purpose of withdrawing Trust property (including if the Trust Agreement terminates) must be accompanied by a payment to the Trustee of a fee of $500 (or such other fee as the Trustee, with the prior written consent of the Sponsor, may from time to time announce). The Trustee is entitled to reimburse itself from the assets of the Trust for all expenses and disbursements incurred by it for extraordinary services it may provide to the Trust or in connection with any discretionary action the Trustee may take to protect the Trust or the interests of the holders. Trust Expenses and Gold Sales In addition to the fee payable to the Sponsor (See "The Sponsor—The Sponsor s Fee"), the following expenses are paid out of the assets of the Trust: any expenses or liabilities of the Trust and the Trustee that are not assumed by the Sponsor; any taxes and other governmental charges that may fall on the Trust or its property; expenses and costs of any action taken by the Trustee or the Sponsor to protect the Trust and the rights and interests of holders of Shares; and any indemnification of the Trustee or the Sponsor as described below. The Trustee may sell the Trust s gold from time to time as necessary to permit payment of the fees and expenses that the Trust is required to pay. See "The Trust—Trust Expenses." The Trustee and the Sponsor shall not be responsible for any depreciation or loss incurred by reason of sales of gold made in compliance with the Trust Agreement, including upon termination of the Trust Agreement. Payment of Taxes The Trustee may deduct the amount of any taxes owed from any distributions it makes. It may also sell trust assets, by public or private sale, to pay any taxes owed. Authorized Participants are responsible for any transfer tax, sales or use tax, recording tax, value added tax or similar tax or other governmental charge applicable to the creation or redemption of Baskets regardless of whether such tax or charge is imposed directly on the Authorized Participant. By placing a purchase order or redemption order, the Authorized Participant agrees to indemnify the Sponsor, the Trustee and the Trust if any of them is required by law to pay any such tax or charge, together with any applicable penalties, additions to tax and interest thereon. Evaluation of Gold and the Trust Assets See "The Trust—Valuation of Gold; Computation of Net Asset Value." Amendment and Termination The Sponsor and the Trustee may agree to amend the Trust Agreement without the consent of the holders of Shares. If an amendment imposes or increases fees or charges, except for taxes and other governmental charges, registration fees or other such expenses, or prejudices a substantial right of holders of Shares, it will not become effective for outstanding Shares until 30 days after the Trustee notifies DTC of the amendment. At the time an amendment becomes effective, by continuing to hold Shares, registered and beneficial owners of Shares are deemed to agree to the amendment and to be bound by the Trust Agreement as amended. The Trustee will terminate the Trust Agreement if: the Trustee is notified that the Shares are delisted from the Exchange and are not approved for listing on another national securities exchange within five business days of their delisting; Shareholders acting in respect of at least 75% of the outstanding Shares notify the Trustee that they elect to terminate the Trust; 60 days have elapsed since the Trustee notified the Sponsor of the Trustee s election to resign or since the Sponsor removed the Trustee, and a successor trustee has not been appointed and accepted its appointment; any sole Custodian then acting resigns or is removed and no successor custodian has been employed within 60 days of such resignation or removal; the SEC determines that the Trust is an investment company under the Investment Company Act, and the Trustee has actual knowledge of that determination; the CFTC determines that (i) the Trust is a commodity pool under the CEA; and/or (ii) the Shares constitute "commodity interests", as defined by the CFTC or in CFTC Regulation 1.3(yy) and the Trustee has actual knowledge of that determination; the aggregate market capitalization of the Trust, based on the closing price for the Shares, is less than $50 million (as adjusted for inflation by reference to the U.S. Consumer Price Index) at any time more than 18 months after the Trust s formation, and the Trust receives, within 6 months after the last trading date on which such capitalization was less than $50 million, notice from the Sponsor of its decision to terminate the Trust; the Trust fails to qualify for treatment, or ceases to be treated, as a grantor trust under the Code, or under any comparable provision of any other jurisdiction where such treatment is sought, and the Trustee receives notice that the Sponsor has determined that the termination of the Trust is advisable; or 60 days have elapsed since DTC ceases to act as depository with respect to the Shares and the Sponsor has not identified another depository which is willing to act in such capacity. If the Sponsor resigns without appointing a successor sponsor, is dissolved or ceases to exist as a legal entity for any reason, or is deemed to have resigned because (1) it fails to undertake or perform, or becomes incapable of undertaking or performing, any of the duties required by the Trust Agreement, and such failure or incapacity is not cured, or (2) the Sponsor is adjudged bankrupt or insolvent, or a receiver of the Sponsor or of its property is appointed, or a trustee or liquidator or any public officer takes charge or control of the Sponsor or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, the Sponsor shall be deemed to have resigned, in which case the Trustee may, among other actions, terminate and liquidate the Trust. The Trustee will notify DTC at least 30 days before the date for termination of the Trust Agreement. After termination, the Trustee and its agents will do the following under the Trust Agreement but nothing else: (i) collect distributions pertaining to Trust property; (ii) pay the Trust s expenses and sell gold as necessary to meet those expenses; and (iii) deliver Trust property to Authorized Participants upon surrender of Shares. 60 days or more after termination, the Trustee will sell any remaining Trust property. After that, the Trustee will hold the money it received on the sale, as well as any other cash it is holding under the Trust Agreement, for the pro rata benefit of the registered holders that have not surrendered their Shares and will deliver to such registered holders against the surrender of their Shares their pro rata portion thereof. It will not invest the money and has no liability for interest. The Trustee will deduct from any delivery to Authorized Participants or registered holders of Shares any applicable fees, Trust expenses and taxes and governmental charges. The Sponsor This section summarizes some of the important provisions of the Trust Agreement which apply to the Sponsor. For a general description of the Sponsor s role concerning the Trust, see "The Sponsor—The Sponsor s Role." Liability of the Sponsor and indemnification The Sponsor is required to perform its obligations under the Trust Agreement without gross negligence, willful misconduct or bad faith. Otherwise the Sponsor has no obligation, and will not be liable, to any Shareholder, Authorized Participant or other person under the Trust Agreement. Additionally, the Sponsor will not have any liability to any Shareholder, Authorized Participant or other person if it is prevented or delayed by law or circumstances beyond its control from performing its obligations under the Trust Agreement, or for any act or omission it made in reliance upon information or advice from legal counsel, accountants, any Authorized Participant, Shareholder or other person believed by it in good faith to be competent to give such information or advice. The Sponsor has no obligation to prosecute any action, suit or proceeding in respect of any Trust property or in respect of the Shares on behalf of a Shareholder, Authorized Participant or other person, or to comply with any direction or instruction from a Shareholder or Authorized Participant regarding Shares, unless specifically required to do so by the Trust Agreement. The Sponsor and its members, managers, directors, officers, employees, agents and affiliates (as such term is defined under the Securities Act) and subsidiaries shall be indemnified from the Trust and held harmless against any loss, liability, or expense (including reasonable fees and expenses of legal counsel) arising out of or in connection with the performance of its obligations under the Trust Agreement and under each other agreement entered into by the Sponsor in furtherance of the administration of the Trust (including Authorized Participant agreements to which the Sponsor is a party, including the Sponsor s indemnification obligations thereunder) or any actions taken in accordance with the provisions of the Trust Agreement to the extent such loss, liability or expense was incurred without (1) gross negligence, bad faith, willful misconduct or willful malfeasance on the part of such indemnified party in connection with the performance of its obligations under the Trust Agreement or any such other agreement or any actions taken in accordance with the provisions of the Trust Agreement or any such other agreement, or (2) reckless disregard on the part of such indemnified party of its obligations and duties under the Trust Agreement or any such other agreement. Such indemnity shall include payment from the Trust of the reasonable costs and expenses incurred by such indemnified party in investigating or defending itself against any claim or liability in its capacity as Sponsor. Any amounts payable to an indemnified party may be payable in advance or shall be secured by a lien on the Trust s assets. The Sponsor may, in its discretion, undertake any action which it may deem necessary or desirable in respect of the Trust Agreement and the interests of the Shareholders and, in such event, the reasonable legal expenses and costs of any such actions shall be expenses and costs of the Trust and the Sponsor shall be entitled to be reimbursed therefor by the Trust. Successor sponsors If the Sponsor fails to undertake or perform, or becomes incapable of undertaking or performing, any of its duties and such failure or incapacity is not cured within 30 days following receipt of notice from the Trustee of such failure or incapacity, or if the Sponsor is adjudged bankrupt or insolvent, or a receiver of the Sponsor or of its property is appointed, or a trustee or liquidator or any public officer takes charge or control of the Sponsor or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, then, in any such case, the Trustee may (1) appoint a successor sponsor, (2) agree to act as the sponsor, or (3) terminate and liquidate the Trust and distribute its remaining assets. The Trustee has no obligation to appoint a successor sponsor or to assume the duties of the Sponsor and will have no liability to any person because the Trust is or is not terminated as described in the preceding sentence. The Trustee This section summarizes some of the important provisions of the Trust Agreement which apply to the Trustee. For a general description of the Trustee s role concerning the Trust, see "The Trustee—The Trustee s Role." Qualifications of the Trustee The Trustee and any successor trustee must be (1) a bank, trust company, corporation or national banking association organized and doing business under the laws of the United States or any of its states, and authorized under such laws to exercise corporate trust powers, (2) a participant in DTC or such other securities depository as shall then be acting with respect to Shares, and (3) unless counsel to the Sponsor, the appointment of which is acceptable to the Trustee, determines that such requirement is not necessary for the exception under section 408(m)(3)(B) of the Code, to apply, a banking institution as defined in Code section 408(n). The Trustee and any successor trustee must have, at all times, an aggregate capital, surplus, and undivided profits of at least $150 million. General duty of care of Trustee The Trustee is a fiduciary under the Trust Agreement; provided, however, that the fiduciary duties and responsibilities and liabilities of the Trustee are limited by, and are only those specifically set forth in, the Trust Agreement. For limitations of the fiduciary duties of the Trustee, see the limitations on liability set forth in "Description of the Shares and the Trust Agreement—The Trustee." Limitation on Trustee s liability The Trustee is required to perform its obligations under the Trust Agreement without gross negligence, willful misconduct or bad faith. Otherwise the Trustee has no obligations, and will not be liable to any Shareholder, Authorized Participant or other person, under the Trust Agreement. The Trustee will not have any liability to any Shareholder or Authorized Participant if it is prevented or delayed by law or circumstances beyond its control from performing its obligations under the Trust Agreement, or for any act or omission it made in reliance upon information or advice from legal counsel, accountants, any Authorized Participant, any Shareholder or any other person believed by it in good faith to be competent to give such information or advice. The Trustee has no obligation to comply with any direction or instruction from any Shareholder or Authorized Participant regarding Shares, unless specifically required to do so by the Trust Agreement. In no event will the Trustee be liable for acting in accordance with or conclusively relying upon any instruction, notice, demand, certificate or document (1) from the Sponsor or a Custodian or any entity acting on behalf of either which the Trustee believes is given pursuant to or is authorized by the Trust Agreement or a Custody Agreement, respectively; or (2) from or on behalf of any Authorized Participant which the Trustee believes is given pursuant to or is authorized by an Authorized Participant Agreement (provided that the Trustee has complied with any verification procedures specified in the Authorized Participant Agreement). The Trustee will not be liable for any indirect, consequential, punitive or special damages, regardless of the form of action and whether or not any such damages were foreseeable or contemplated, or for an amount in excess of the value of the Trust s assets. Trustee s liability for custodial services and agents The Trustee will not be answerable for the default of the Custodian or any other custodian of the Trust s gold employed at the direction of the Sponsor or selected by the Trustee with reasonable care. The Trustee does not monitor the performance of the Custodian or any sub-custodian other than to review the reports provided by the Custodian pursuant to the Custody Agreements. The Trustee may also employ custodians for Trust assets other than gold, agents, attorneys, accountants, auditors and other professionals and shall not be answerable for the default or misconduct of any of them if they were selected with reasonable care. The fees and expenses charged by custodians for the custody of gold and related services, agents, attorneys, accountants, auditors or other professionals, and expenses reimbursable to any custodian under a custody agreement authorized by the Trust Agreement, exclusive of fees for services to be performed by the Trustee, will be expenses of the Sponsor or the Trust. Fees paid for the custody of assets other than gold will be an expense of the Trustee. Taxes The Trustee will not be personally liable for any taxes or other governmental charges imposed upon the gold or its custody, moneys or other Trust assets, or on the income therefrom or the sale or proceeds of the sale thereof, or upon it as Trustee (except that it shall be personally liable for any income or other taxes on the amounts it receives from the Sponsor for its fee for acting as Trustee and for reimbursement for out of pocket expenses) or upon or in respect of the Trust or the Shares which it may be required to pay under any present or future law of the United States of America or of any other taxing authority having jurisdiction in the premises. For all such taxes and charges and for any expenses, including reasonable counsel s fees, which the Trustee may sustain or incur with respect to such taxes or charges, the Trustee will be reimbursed and indemnified out of the Trust s assets and the payment of such amounts shall be secured by a lien on the Trust s assets. Indemnification of the Trustee The Trustee and its directors, officers, employees, shareholders, agents and affiliates (as such term is defined under the Securities Act) shall be indemnified from the Trust and held harmless against any loss, liability or expense (including the reasonable fees and expenses of counsel) arising out of or in connection with the performance of its obligations under the Trust Agreement and under each other agreement entered into by the Trustee in furtherance of the administration of the Trust (including the Custody Agreements and any Authorized Participant Agreement, including the Trustee s indemnification obligations thereunder) or otherwise by reason of the Trustee s acceptance or administration of the Trust, to the extent such loss, liability or expense was incurred without (i) gross negligence, bad faith, willful misconduct or willful malfeasance on the part of such indemnified party in connection with the performance of its obligations under the Trust Agreement or any such other agreement or any actions taken in accordance with the provisions of the Trust Agreement or any such other agreement or (ii) reckless disregard on the part of such indemnified party of its obligations and duties under the Trust Agreement or any such other agreement. Such indemnity shall include payment from the Trust of the costs and expenses incurred by such indemnified party in investigating or defending itself against any claim or liability. Any amounts payable to an indemnified party may be payable in advance or shall be secured by a lien on the Trust s assets. Indemnity for actions taken to protect the Trust The Trustee is under no obligation to appear in, prosecute or defend any action that in its opinion may involve it in expense or liability, unless it is furnished with reasonable security and indemnity against the expense or liability. Subject to the preceding conditions, the Trustee may, in its sole discretion, undertake such action as it may deem necessary or desirable to protect the Trust and the rights and interests of all Shareholders pursuant to the terms of the Trust Agreement. The expenses, costs and disbursements incurred by the Trustee in connection with taking any action under the preceding sentence (including the reasonable fees and disbursements of legal counsel) shall be expenses of the Trust, and shall be deductible from, and constitute a lien on, the assets of the Trust. Protection for amounts due to Trustee If any fees or costs owed to the Trustee under the Trust Agreement are not paid when due by the Sponsor, the Trustee may charge those amounts to the Trust, in any amount not exceeding the amount that could be charged to the Trust in respect of the Sponsor s Fee (without regard to whether the Sponsor may not be entitled to such fee due to its default, waiver or other reason), and any subsequent amount paid to the Sponsor as its fee shall be net of the amounts withheld. The Trustee s right of reimbursement shall be secured by a lien on amounts chargeable to the Trust for the Sponsor s Fee, without giving effect to any fee waiver, which shall have priority over the interest of the Sponsor, the Shareholders and any other person. Holding of Trust property other than gold The Trustee will hold and record the ownership of the Trust s assets in a manner so that it will be owned by the Trust and the Trustee as trustee thereof for the benefit of the Shareholders for the purposes of, and subject to and limited by the terms and conditions set forth in, the Trust Agreement. Other than issuance of the Shares, the Trust shall not issue or sell any certificates or other obligations or, except as provided in the Trust Agreement, otherwise incur, assume or guarantee any indebtedness for money borrowed. All moneys held by the Trustee shall be held by it, without interest thereon or investment thereof, as a deposit for the account of the Trust. Such monies held shall be deemed segregated by maintaining such monies in an account or accounts for the exclusive benefit of the Trust. The Trustee may also employ custodians for Trust assets other than gold, agents, attorneys, accountants, auditors and other professionals and shall not be answerable for the default or misconduct of any of them if they were selected with reasonable care. Any Trust assets other than gold or cash will be held by the Trustee either directly or through the commercial book-entry system operated by the Federal Reserve Banks ("Book Entry System"), DTC, or through any other clearing agency or similar system ("Clearing Agency"), if available. The Trustee will have no responsibility or liability for the actions or omissions of the Book Entry System, DTC or any Clearing Agency. The Trustee shall not be liable for ascertaining or acting upon any calls, conversions, exchange offers, tenders, interest rate changes, or similar matters relating to securities held at DTC. Resignation, discharge or removal of Trustee; successor trustees The Trustee may at any time resign as Trustee by written notice of its election so to do, delivered to the Sponsor, and such resignation shall take effect upon the appointment of a successor Trustee and its acceptance of such appointment. The Sponsor may remove the Trustee in its sole discretion by written notice delivered to the Trustee not more than 120 days and at least 90 days prior to the fifth anniversary of the date of the Trust Agreement or, thereafter, by written notice delivered to the Trustee not more than 120 days and at least 90 days prior to the last day of any subsequent three-year period. The Sponsor may also remove the Trustee at any time if the Trustee (1) ceases to be a Qualified Bank (as defined below), (2) is in material breach of its obligations under the Trust Agreement and fails to cure such breach within 30 days after receipt of written notice from the Sponsor or Shareholders acting on behalf of at least 25% of the outstanding Shares specifying such default and requiring the Trustee to cure such default, or (3) fails to consent to the implementation of an amendment to the Trust s initial Internal Control Over Financial Reporting deemed necessary by the Sponsor and, after consultations with the Sponsor, the Sponsor and the Trustee fail to resolve their differences regarding such proposed amendment. Under such circumstances, the Sponsor, acting on behalf of the Shareholders, may remove the Trustee by written notice delivered to the Trustee and such removal shall take effect upon the appointment of a successor Trustee and its acceptance of such appointment. A "Qualified Bank" means a bank, trust company, corporation or national banking association organized and doing business under the laws of the United States or any State of the United States that is authorized under those laws to exercise corporate trust powers and that (i) is a DTC Participant or a participant in such other depository as is then acting with respect to the Shares; (ii) unless counsel to the Sponsor, the appointment of which is acceptable to the Trustee, determines that the following requirement is not necessary for the exception under section 408(m)(3) of the Code, to apply, is a banking institution as defined in section 408(n) of the Code and (iii) had, as of the date of its most recent annual financial statements, an aggregate capital, surplus and undivided profits of at least $150 million. The Sponsor may also remove the Trustee at any time if the Trustee merges into, consolidates with or is converted into another corporation or entity in a transaction in which the Trustee is not the surviving entity. The surviving entity from such a transaction shall be the successor of the Trustee without the execution or filing of any document or any further act; however, during the 90-day period following the effectiveness of such transaction, the Sponsor may, by written notice to the successor Trustee, remove the Trustee and designate a successor Trustee. If the Trustee resigns or is removed, the Sponsor, acting on behalf of the Shareholders, shall use its reasonable efforts to appoint a successor Trustee, which shall be a Qualified Bank. Every successor Trustee shall execute and deliver to its predecessor and to the Sponsor, acting on behalf of the Shareholders, an instrument in writing accepting its appointment, and thereupon such successor Trustee, without any further act or deed, shall become fully vested with all the rights, powers, duties and obligations of its predecessor; but such predecessor, nevertheless, upon payment of all sums due it and on the written request of the Sponsor, acting on behalf of the Shareholders, shall execute and deliver an instrument transferring to such successor all rights and powers of such predecessor, shall duly assign, transfer and deliver all right, title and interest in the Trust s assets to such successor, and shall deliver to such successor a list of the registered owners of all outstanding Shares. The Sponsor or any such successor Trustee shall promptly give notice of the appointment of such successor Trustee to the Shareholders. If the Trustee resigns and a successor trustee has not been appointed and accepted its appointment within 60 days after the date the Trustee issues its notice of resignation, the Trustee will terminate and liquidate the Trust and distribute its remaining assets. The Custodian and Custody of the Trust s Gold In addition to this section, see "The Custodian—The Custodian s Role" for a summary of some of the important provisions of the Trust Agreement which apply to the Custodian and the custody of the Trust s gold. The Trustee, on behalf of the Trust, will enter into the Custody Agreements with the Custodian. The Sponsor will appoint accountants, auditors, or other inspectors to audit or examine the accounts and operations of the Custodian and any successor custodian or additional custodian at such times as directed by the Sponsor as permitted by the Custody Agreements. The Trustee has no obligation to monitor the activities of any Custodian other than to receive and review such reports of the gold held for the Trust by such Custodian and of transactions in gold held for the account of the Trust made by such Custodian pursuant to the Custody Agreements. Appointment and removal of custodians The Sponsor may direct the Trustee to employ one or more other custodians in addition to or in replacement of the Custodian, provided that the Trustee shall not be answerable for the default of any custodian employed at the direction of the Sponsor or selected by the Trustee with reasonable care. When directed by the Sponsor, the Trustee will employ one or more successor or additional custodians selected by the Sponsor for the safekeeping of gold and services in connection with the deposit and delivery of gold. The Securities Depository; Book-Entry-Only System; Global Security DTC acts as securities depository for the Shares. DTC is a limited-purpose trust company organized under the laws of the State of New York, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Exchange Act. DTC was created to hold securities of DTC Participants and to facilitate the clearance and settlement of transactions in those securities among DTC Participants through electronic book-entry changes. This eliminates the need for physical movement of securities certificates. DTC Participants include securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations, some of whom (and/or their representatives) own DTC. Access to the DTC system is also available to others such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a DTC Participant, either directly or indirectly. DTC agrees with and represents to DTC Participants that it will administer its book-entry system in accordance with its rules and by-laws and requirements of law. Individual certificates are not issued for the Shares. Instead, one or more global certificates are signed by the Trustee on behalf of the Trust, registered in the name of Cede & Co., as nominee for DTC, and deposited with the Trustee on behalf of DTC. The global certificates represent all of the Shares outstanding at any time. Upon the settlement date of any creation, transfer or redemption of Shares, DTC will credit or debit, on its book-entry registration and transfer system, the number of Shares so created, transferred or redeemed to the accounts of the appropriate DTC Participants. The Trustee and the DTC Participants will designate the accounts to be credited and charged in the case of creation or redemption of Shares. Beneficial ownership of the Shares is limited to DTC Participants, Indirect Participants and persons holding interests through DTC Participants and Indirect Participants. Owners of beneficial interests in the Shares will be shown on, and the transfer of ownership is effected only through, records maintained by DTC, with respect to DTC Participants, the records of DTC Participants, with respect to Indirect Participants, and the records of Indirect Participants with respect to beneficial owners that are not DTC Participants or Indirect Participants. Beneficial owners are expected to receive from or through a DTC Participant a written confirmation relating to their purchase of the Shares. Investors may transfer Shares through DTC by instructing the DTC Participant or Indirect Participant through which they hold their Shares to transfer the Shares. Transfers will be made in accordance with standard securities industry practice. DTC may decide to discontinue providing its service for the Shares by giving notice to the Trustee and the Sponsor. Under these circumstances, the Sponsor will either find a replacement for DTC to perform its functions at a comparable cost or, if a replacement is unavailable, the Trustee will terminate the Trust. The rights of the Shareholders generally must be exercised by DTC Participants acting on their behalf in accordance with the rules and procedures of DTC. The Trust Agreement provides that, as long as the Shares are eligible for deposit with DTC, the sole registered owner will be DTC or its nominee and transfer of Shares will be effected solely by DTC in accordance with its customary practices from time to time. The Sponsor The Sponsor is a Delaware limited liability company and was formed on January 6, 2017. The Sponsor s office is located at 205 Hudson Street, 7th Floor, New York, New York 10013. Under the Delaware Limited Liability Company Act and the governing documents of the Sponsor, the sole member of the Sponsor, GraniteShares, Inc., is not responsible for the debts, obligations and liabilities of the Sponsor solely by reason of being the sole member of the Sponsor. The Sponsor s Role The Sponsor will arrange for the creation of the Trust, the registration of the Shares for their public offering in the United States and the listing of the Shares on the Exchange. The Sponsor has agreed to assume the organizational expenses of the Trust and the following expenses incurred by the Trust: the Trustee s monthly fee and its ordinary out-of-pocket expenses, the Custodian s Fee and its reimbursable expenses, Exchange listing fees, SEC registration fees, marketing expenses, printing and mailing costs, audit fees and expenses and up to $100,000 per annum in legal fees and expenses. The Sponsor will not exercise day-to-day oversight over the Trustee or the Custodian. The Sponsor may remove the Trustee and appoint a successor Trustee (i) if the Trustee ceases to meet certain objective requirements (including the requirement that it have capital, surplus and undivided profits of at least $150 million), (ii) if, having received written notice of a material breach of its obligations under the Trust Agreement, the Trustee has not cured the breach within 30 days, or (iii) if the Trustee refuses to consent to the implementation of an amendment to the Trust s initial Internal Control Over Financial Reporting. The Sponsor also has the right to replace the Trustee during the 90 days following any merger, consolidation or conversion in which the Trustee is not the surviving entity or, in its discretion, on the fifth anniversary of the creation of the Trust or on any subsequent third anniversary thereafter. The Sponsor also has the right to direct the Trustee to appoint any new or additional Custodian that the Sponsor selects. The Sponsor will (1) develop a marketing plan for the Trust on an ongoing basis, (2) prepare marketing materials regarding the Shares, including the content of the Trust s website, and (3) execute the marketing plan for the Trust. Management of the Sponsor The Trust does not have any directors, officers or employees. The creation and operation of the Trust has been arranged by the Sponsor. The Sponsor is not governed by a board of directors. The principals and executive officers of the Sponsor are as follows: William Rhind has been the Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO") of the Sponsor since its inception on January 6, 2017. Prior to forming the Sponsor and becoming its CEO and CFO, Mr. Rhind was the CEO of World Gold Trust Services, LLC ("WGTS") from September 2014 to February 2016. WGTS is the sponsor of SPDR Gold Trust, the largest gold fund in the world, and is a wholly-owned subsidiary of the World Gold Council, a market development organization for the gold industry. Mr. Rhind also served as the Managing Director, Institutional Investment, of the World Gold Council from September 2013 to February 2016. From March 2007 to September 2013, Mr. Rhind was employed by ETF Securities Ltd ("ETF Securities"), an independent exchange-traded product provider, in a number of leadership roles, including as Managing Director from June 2009 to September 2013. In that role, Mr. Rhind managed the company s U.S. exchange traded fund business. Prior to joining ETF Securities, Mr. Rhind was a Principal for the iShares unit of Barclays Global Investors. He began his career as an investment banking analyst at Nomura International in London. Mr. Rhind earned a Bachelor of Arts in Modern Languages (French & Russian) and European Studies from the University of Bath in England. Mr. Rhind is 39 years old. Benoit Autier has been the Chief Accounting Officer ("CAO") and Head of Products of the Sponsor since its inception on January 6, 2017. Mr. Autier was previously the Head of Product Management for the World Gold Council from September 2015 to October 2016. As Head of Product Management, Mr. Autier designed the index and liaised with the swap provider for the SPDR Long Dollar Gold Trust. From January 2015 to September 2015, Mr. Autier was the President of ETF Securities Advisors, LLC, an affiliate of ETF Securities. As President, Mr. Autier managed all aspects of implementation of ETF Securities platform for funds registered under the Investment Company Act. Mr. Autier was also the Head of Product Management of ETF Securities from July 2005 to September 2015. Mr. Autier designed and implemented operational processes for over 300 European and U.S. financial products in that role. Mr. Autier previously was employed by Flow Traders, one of the leading market makers in Europe for exchange-traded commodities; by KPMG in Paris as a senior consultant; and by Ricol, Lasteyrie, a member of the Ernst and Young Corporate Finance network. Mr. Autier holds a Masters in Finance from London Business School and a Bachelors degree in Accounting and Finance from the University of Paris (Pantheon Assas). Mr. Autier is 43 years old. The Sponsor s Fee The Sponsor s Fee accrues daily and is paid monthly in arrears at an annualized rate equal to [ ]% of the net asset value of the Trust. The Trustee The Bank of New York Mellon, a banking corporation organized under the laws of the State of New York with trust powers, serves as the Trustee. The Bank of New York Mellon has a trust office at 2 Hanson Place, 9th Floor, Brooklyn, New York 11217. The Bank of New York Mellon is subject to supervision by the New York State Department of Financial Services and the Board of Governors of the Federal Reserve System. A copy of the Trust Agreement is available for inspection at The Bank of New York Mellon s trust office identified above. The Bank of New York Mellon had at least $150 million in capital and retained earnings as of December 31, 2017. The Trustee s Role The Trustee is responsible for the day-to-day administration of the Trust. This includes (i) processing orders for the creation and redemption of Baskets; (ii) coordinating with the Custodian the receipt and delivery of gold transferred to, or by, the Trust in connection with each issuance and redemption of Baskets; (iii) calculating the net asset value of the Trust on each business day; and (iv) selling the Trust s gold as needed to cover the Trust s expenses. The Trustee intends to regularly communicate with the Sponsor to monitor the overall performance of the Trust. The Trustee does not monitor the performance of the Custodian other than to review the reports provided by the Custodian pursuant to the Custody Agreements. The Trustee, along with the Sponsor, will liaise with the Trust s legal, accounting and other professional service providers as needed. The Trustee will assist and support the Sponsor with the preparation of the financial statements of the Trust and with all periodic reports required to be filed with the SEC on behalf of the Trust. The Trustee s Fees are paid by the Sponsor. The Trustee and any of its affiliates may from time to time purchase or sell Shares for their own account, as agent for their customers and for accounts over which they exercise investment discretion. The Custodian ICBC Standard Bank Plc, a public limited company incorporated under the laws of England and Wales, serves as the Custodian of the Trust s gold. The Custodian s Role The Custodian is responsible for holding the Trust s allocated gold as well as receiving and converting allocated and unallocated gold on behalf of the Trust. Unless otherwise agreed between the Trustee (as instructed by the Sponsor) and the Custodian, physical gold must be held by the Custodian at its London vault premises. At the end of each business day, the Custodian will hold no more than 430 Fine Ounces of unallocated gold for the Trust, which corresponds to the maximum Fine Ounce weight of a London Good Delivery Bar. The Custodian converts the Trust s gold between allocated and unallocated gold when: (1) Authorized Participants engage in creation and redemption transactions with the Trust; or (2) gold is sold to pay Trust expenses. The Custodian will facilitate the transfer of gold in and out of the Trust through the unallocated gold accounts it may maintain for each Authorized Participant or unallocated gold accounts that may be maintained for an Authorized Participant by another LBMA-approved gold-clearing bank, and through the unallocated gold account it will maintain for the Trust. The Custodian is responsible for allocating specific bars of gold to the Trust Allocated Account. The Custodian will provide the Trustee with regular reports detailing the gold transfers in and out of the Trust Unallocated Account with the Custodian and identifying the gold bars held in the Trust Allocated Account. The Custodian s fees and expenses are to be paid by the Sponsor. The Custodian and its affiliates may from time to time act as Authorized Participants or purchase or sell gold or shares for their own account, as an agent for their customers and for accounts over which they exercise investment discretion. The Trustee, on behalf of the Trust, has entered into the Custody Agreements with the Custodian, under which the Custodian maintains the Trust Unallocated Account and the Trust Allocated Account. Pursuant to the Trust Agreement, if, upon the resignation of the Custodian, there would be no custodian acting pursuant to the Custody Agreements, the Trustee shall, promptly after receiving notice of such resignation, appoint a substitute custodian or custodians selected by the Sponsor pursuant to custody agreement(s) approved by the Sponsor (provided, however, that the rights and duties of the Trustee under the Trust Agreement and the custody agreement(s) shall not be materially altered without its consent). When directed by the Sponsor, and to the extent permitted by, and in the manner provided by, the Custody Agreements, the Trustee shall remove the Custodian and appoint a substitute or appoint an additional custodian or custodians selected by the Sponsor. Each such substitute or additional custodian shall, forthwith upon its appointment, enter into a Custody Agreement in form and substance approved by the Sponsor. After the entry into the Custody Agreements, the Trustee shall not enter into or amend any Custody Agreement with a custodian without the written approval of the Sponsor (which approval shall not be unreasonably withheld or delayed). When instructed by the Sponsor, the Trustee shall demand that a custodian of the Trust deliver such of the Trust s gold held by it as is requested of it to any other custodian or such substitute or additional custodian or custodians directed by the Sponsor. In connection with such transfer of physical gold, the Trustee will, at the direction of the Sponsor, cause the physical gold to be weighed or assayed. The Trustee shall have no liability for any transfer of physical gold or weighing or assaying of delivered physical gold as directed by the Sponsor, and in the absence of such direction shall have no obligation to effect such a delivery or to cause the delivered physical gold to be weighed, assayed or otherwise validated. Under the Trust Agreement, the Sponsor is responsible for appointing accountants, auditors or other inspectors to audit or examine the accounts and operations of the Custodian and any successor custodian or additional custodian at such times as directed by the Sponsor as permitted by the Custody Agreements. See "—Inspection of Gold" for a summary of the provisions of the Custody Agreements permitting the Sponsor and the Trustee and their identified representatives, independent public accountants and physical gold auditors to access the premises of the Custodian and to examine the physical gold and records maintained by the Custodian pursuant to the Custody Agreements. The Trustee has no obligation to monitor the activities of the Custodian other than to receive and review such reports of the gold held for the Trust by such Custodian and of transactions in gold held for the account of the Trust made by such Custodian pursuant to the Custody Agreements. Description of the Custody Agreements The Trustee has entered into the Custody Agreements with the Custodian on the Trust s behalf. The Custody Agreements establish the Trust Unallocated Account and the Trust Allocated Account with the Custodian and define the Custodian s responsibilities to the Trust. Transfers from the Trust Unallocated Account The Custodian will arrange for the transfer of gold from the Trust Unallocated Account only in accordance with the Trustee s instructions to the Custodian. A transfer of gold from the Trust Unallocated Account may only be made (1) by transferring gold to an Authorized Participant s unallocated account, (2) by transferring gold to the Trust Allocated Account, (3) the collection of physical gold from the Custodian at its vault premises or such other location as the Custodian may direct, at the Trust s expense and risk, (4) delivery of gold to such location as the Trustee directs, at the Trust s expense and risk, or (5) by transfer to an account maintained by the Custodian or a third party on an unallocated basis in connection with the sale of gold or other transfers permitted under the Trust Agreement. Transfers made pursuant to clauses (3) and (4) are anticipated to be made only on an exceptional basis, with transfers under clause (5) to include transfers made in connection with a sale of gold to pay the Sponsor s Fee and any extraordinary expenses of the Trust not paid by the Sponsor or on the liquidation of the Trust. Any gold made available in physical form by the Custodian will be in a form that complies with the rules, regulations, practices, procedures and customs of the LBMA, the Bank of England or any applicable regulatory body that apply to such gold or in such other form as may be agreed between the Trustee and the Custodian, the combined weight of which will not exceed the number of Fine Ounces the Trustee has instructed the Custodian to debit. The Custodian shall identify bars of a weight most closely approximating, but not exceeding, the balance in the Trust Unallocated Account and shall transfer such weight from the Trust Unallocated Account to the Trust Allocated Account. Right to Refuse Transfers or Amend Transfer Procedures The Custodian will, where practicable, refuse to accept instructions to transfer gold to or from the Trust Unallocated Account or the Trust Allocated Account if, in the Custodian s reasonable opinion, they are or may be contrary to the rules, regulations, practices, procedures and customs of the LBMA or the Bank of England or contrary to any applicable law. The Custodian may amend the procedures for transferring gold to or from the Trust Unallocated Account or the Trust Allocated Account or impose such additional procedures in relation to the transfer of gold to or from the Trust Unallocated Account or the Trust Allocated Account where such amendment or imposition is caused by a change in the rules, regulations, practices, procedures and customs of the LBMA or the Bank of England or other applicable regulatory authority. The Custodian will, whenever practicable, notify the Trustee and the Sponsor within a commercially reasonable time before the Custodian amends these procedures or imposes additional ones. Trust Unallocated Account Credit and Debit Balances No interest will be paid by the Custodian on any credit balance to the Trust Unallocated Account or the Trust Allocated Account. The Trust Unallocated Account may not at any time have a debit or negative balance. Exclusion of Liability The Custodian will use reasonable care in the performance of its duties under the Custody Agreements and will only be responsible for any loss or damage suffered by the Trustee or the Trust as a direct result of any negligence, fraud or willful default on its part in the performance of its duties. In the case where gold is lost or damaged, the Custodian s liability under the Custody Agreements is further limited to the market value of the gold credited to the Trust Unallocated Account and the Trust Allocated Account at the time such negligence, fraud or willful default is either discovered by the Custodian or notified to the Custodian by the Trustee. Indemnity The Trustee will, solely out of and to the extent of the Trust s assets, indemnify and keep indemnified the Custodian (on an after-tax basis) on demand against all costs and expenses, damages, liabilities and losses (other than value added taxes and expenses assumed by the Sponsor) that the Custodian may suffer or incur directly or indirectly in connection with the Custody Agreements, except to the extent that such sums are due directly to the Custodian s negligence, willful default or fraud. Insurance The Custodian (or one of its affiliates) will maintain such insurance as it deems appropriate in connection with its custodial and other obligations and will be responsible for all costs, fees and expenses (including any relevant taxes) arising from the insurance policy or policies attributable to its relationship with the Trust. The Trustee and the Sponsor may, subject to confidentiality restrictions, review the details of this insurance coverage from time to time upon reasonable prior notice. In the event the Custodian or one of its affiliates elects to reduce, cancel or not renew the Custodian s insurance, the Custodian will give the Trustee and the Sponsor written notice of the election within 15 days thereafter. Force Majeure The Custodian will not be liable for any delay in performance or any non-performance of any of its obligations under the Custody Agreements by reason of any cause beyond its reasonable control, including acts of God, war or terrorism or other breakdowns or acts set forth in the Custody Agreements. Reports The Custodian will provide the Trustee with reports for each London business day identifying (1) the credits and debits of gold to the Trust Unallocated Account and the Trust Allocated Account and (2) sufficient information to identify each bar of physical gold held in the Trust Allocated Account. The Custodian will provide notification to the Trustee on each London business day of (1) each separate transaction transferring gold to and from the Trust Unallocated Account and the Trust Allocated Account, (2) the amount of gold transferred to and from the Trust Allocated Account, and (3) the closing balance of gold in the Trust Unallocated Account and the Trust Allocated Account, and the Custodian will use commercially reasonable efforts to send the notification by 12:00 noon (New York time). For each calendar month, the Custodian will provide the Trustee within a reasonable time after the end of the month a statement of account for the Trust Allocated Account and the Trust Unallocated Account which shall include the opening and closing monthly balances and all transfers to and from the Trust Allocated Account and the Trust Unallocated Account, accompanied by one or more weight lists containing information sufficient to identify each bar of gold held in the Trust Allocated Account as of the last London Business Day of the calendar month. Under the Custody Agreements, a "business day" generally means any day that is a "London Business Day," when commercial banks generally and the London gold market are open for the transaction of business in London. Transfers into the Trust Unallocated Account The Custodian will credit to the Trust Unallocated Account the amount of gold it receives from an Authorized Participant s unallocated account. Additionally, in the ordinary course, the only gold the Custodian will accept for credit to the Trust Unallocated Account is gold that has transferred from an Authorized Participant s unallocated account or from the Trust Allocated Account. Termination The Custody Agreements each have an initial five (5) years term and will automatically renew for successive one (1) year terms unless otherwise terminated. The Trustee, upon instruction from the Sponsor, and the Custodian may each terminate any Custody Agreement for any reason or for no reason upon 90 days prior written notice. Each Custody Agreement may also be terminated immediately upon written notice as follows: (1) by the Trustee, if the Custodian ceases to offer the services contemplated by the Custody Agreement to its clients or proposes to withdraw from the gold bullion business, (2) by the Trustee or the Custodian, if it becomes unlawful for the Custodian or the Trustee to have entered into the agreement or to provide or receive the services thereunder, (3) by the Custodian, if the Custodian determines in its reasonable view that the Trust or the Sponsor is insolvent or faces impending insolvency, or by the Trustee, if the Sponsor determines in its view that the Custodian or the Sponsor is insolvent or faces impending insolvency, (4) by the Trustee, if the Trust is to be terminated, or (5) by the Trustee or the Custodian, if the other Custody Agreement ceases to be in full force and effect. If arrangements acceptable to the Custodian for redelivery of the balance in the Trust Unallocated Account or the gold in the Trust Allocated Account are not made, the Custodian may continue to maintain the Trust Unallocated Account and the Trust Allocated Account and charge for its fees and expenses payable under the Trust Allocated Account Agreement, and, after six months from the termination date, the Custodian may close the Trust Allocated Account and Trust Unallocated Account, sell the Trust s gold and account to the Trustee for the proceeds. Governing Law The Custody Agreements are governed by English law. The Trustee and the Custodian both consent to the non-exclusive jurisdiction of the courts of the State of New York and the federal courts located in the borough of Manhattan in New York City. Such consent is not required for any person to assert a claim of New York jurisdiction over the Trustee or the Custodian. Inspection of Gold Under the Custody Agreements, the Custodian will allow the Sponsor and the Trustee and their identified representatives, independent public accountants and physical gold auditors (currently Inspectorate), access to its premises upon reasonable notice during normal business hours, to examine the physical gold and such records as they may reasonably require to perform their respective duties with regard to investors in Shares. The Trustee agrees that any such access shall be subject to execution of a confidentiality agreement and agreement to the Custodian s security procedures, and any such audit shall be at the Trust s expense. United States Federal Income Tax Consequences The following discussion of the material United States federal income tax consequences that generally will apply to the purchase, ownership and disposition of Shares by a U.S. Shareholder (as defined below), and certain United States federal income consequences that may apply to an investment in Shares by a Non-U.S. Shareholder (as defined below), represents, insofar as it describes conclusions as to United States federal income tax law and subject to the limitations and qualifications described therein, the opinion of Vedder Price P.C., special United States federal income tax counsel to the Sponsor. The discussion below is based on the Internal Revenue Code of 1986, as amended (the "Code"), Treasury Regulations promulgated thereunder and judicial and administrative interpretations of the Code, all as in effect on the date of this prospectus and all of which are subject to change either prospectively or retroactively. The tax treatment of Shareholders may vary depending upon their own particular circumstances. Certain Shareholders (including but not limited to banks, financial institutions, insurance companies, tax-exempt organizations, broker-dealers, traders, Shareholders that are partnerships for United States federal income tax purposes, persons holding Shares as a position in a "hedging," "straddle," "conversion," or "constructive sale" transaction for United States federal income tax purposes, persons whose "functional currency" is not the U.S. dollar, or other investors with special circumstances) may be subject to special rules not discussed below. In addition, the following discussion applies only to investors who will hold Shares as "capital assets" within the meaning of section 1221 of the Code. Moreover, the discussion below does not address the effect of any state, local or foreign tax law on an owner of Shares. Purchasers of Shares are urged to consult their own tax advisers with respect to all federal, state, local and foreign tax law considerations potentially applicable to their investment in Shares. For purposes of this discussion, a "U.S. Shareholder" is a Shareholder that is: an individual who is treated as a citizen or resident of the United States for United States federal income tax purposes; a corporation (or entity treated as a corporation for United States federal income tax purposes) created or organized in or under the laws of the United States, any state thereof or the District of Columbia; an estate, the income of which is includible in gross income for United States federal income tax purposes regardless of its source; or a trust, if a court within the United States is able to exercise primary supervision over the administration of the trust and one or more United States persons have the authority to control all substantial decisions of the trust, or a trust that has made a valid election under applicable Treasury Regulations to be treated as a domestic trust. A Shareholder that is not a U.S. Shareholder as defined above is considered a "Non-U.S. Shareholder" for purposes of this discussion. If a partnership or other entity or arrangement treated as a partnership for U.S. federal income tax purposes holds Shares, the tax treatment of a partner generally depends upon the status of the partner and the activities of the partnership. If you are a partner of a partnership holding Shares, the discussion below may not be applicable and so we urge you to consult your own tax adviser for the U.S. federal tax implications of the purchase, ownership and disposition of such Shares. Taxation of the Trust The Sponsor and the Trustee will treat the Trust as a "grantor trust" for United States federal income tax purposes. In the opinion of Vedder Price P.C., special United States federal income tax counsel to the Sponsor, the Trust will be classified as a "grantor trust" for United States federal income tax purposes. As a result, the Trust itself will not be subject to United States federal income tax. Instead, the Trust s income and expenses will "flow through" to the Shareholders, and the Trustee will report the Trust s income, gains, losses and deductions to the Internal Revenue Service (the "IRS") on that basis. The opinion of Vedder Price P.C. represents only its best legal judgment and is not binding on the IRS or any court. Accordingly, there can be no assurance that the IRS will agree with the conclusions of counsel s opinion and it is possible that the IRS or another tax authority could assert a position contrary to one or all of those conclusions and that a court could sustain that contrary position. Neither the Sponsor nor the Trustee will request a ruling from the IRS with respect to the classification of the Trust for United States federal income tax purposes. If the IRS were to assert successfully that the Trust is not classified as a "grantor trust," the Trust would likely be classified as a partnership for United States federal income tax purposes, which may affect the timing and other tax consequences to the Shareholders. The following discussion assumes that the Trust will be classified as a "grantor trust" for United States federal income tax purposes. Taxation of U.S. Shareholders Shareholders will be treated, for United States federal income tax purposes, as if they directly owned a pro rata share of the underlying assets held in the Trust. Shareholders also will be treated as if they directly received their respective pro rata shares of the Trust s income, if any, and as if they directly incurred their respective pro rata shares of the Trust s expenses. In the case of a Shareholder that purchases Shares for cash, its initial tax basis in its pro rata share of the assets held in the Trust at the time it acquires its Shares will be equal to its cost of acquiring the Shares. In the case of a Shareholder that acquires its Shares as part of a creation of a Basket, the delivery of gold to the Trust in exchange for the underlying gold represented by the Shares will not be a taxable event to the Shareholder, and the Shareholder s tax basis and holding period for the Shareholder s pro rata share of the gold held in the Trust will be the same as its tax basis and holding period for the gold delivered in exchange therefor. For purposes of this discussion, and unless stated otherwise, it is assumed that all of a Shareholder s Shares are acquired on the same date and at the same price per Share. Shareholders that hold multiple lots of Shares, or that are contemplating acquiring multiple lots of Shares, should consult their own tax advisers as to the determination of the tax basis and holding period for the underlying gold related to such Shares. When the Trust sells gold, for example to pay expenses, a Shareholder will recognize gain or loss in an amount equal to the difference between (a) the Shareholder s pro rata share of the amount realized by the Trust upon the sale and (b) the Shareholder s tax basis for its pro rata share of the gold that was sold. A Shareholder s tax basis for its share of any gold sold by the Trust generally will be determined by multiplying the Shareholder s total basis for its share of all of the gold held in the Trust immediately prior to the sale, by a fraction the numerator of which is the amount of gold sold, and the denominator of which is the total amount of the gold held in the Trust immediately prior to the sale. After any such sale, a Shareholder s tax basis for its pro rata share of the gold remaining in the Trust will be equal to its tax basis for its share of the total amount of the gold held in the Trust immediately prior to the sale, less the portion of such basis allocable to its share of the gold that was sold. Upon a Shareholder s sale of some or all of its Shares, the Shareholder will be treated as having sold the portion or all, respectively, of its pro rata share of the gold held in the Trust at the time of the sale that is attributable to the Shares sold. Accordingly, the Shareholder generally will recognize gain or loss on the sale in an amount equal to the difference between (a) the amount realized pursuant to the sale of the Shares, and (b) the Shareholder s tax basis for the portion of its pro rata share of the gold held in the Trust at the time of sale that is attributable to the Shares sold, as determined in the manner described in the preceding paragraph. A redemption of some or all of a Shareholder s Shares in exchange for the underlying gold represented by the Shares redeemed generally will not be a taxable event to the Shareholder. The Shareholder s tax basis for the gold received in the redemption generally will be the same as the Shareholder s tax basis for the portion of its pro rata share of the gold held in the Trust immediately prior to the redemption that is attributable to the Shares redeemed. The Shareholder s holding period with respect to the gold received should include the period during which the Shareholder held the Shares redeemed. A subsequent sale of the gold received by the Shareholder will be a taxable event, unless a nonrecognition provision of the Code applies to such sale. After any sale or redemption of less than all of a Shareholder s Shares, the Shareholder s tax basis for its pro rata share of the gold held in the Trust immediately after such sale or redemption generally will be equal to its tax basis for its share of the total amount of the gold held in the Trust immediately prior to the sale or redemption, less the portion of such basis which is taken into account in determining the amount of gain or loss recognized by the Shareholder upon such sale or, in the case of a redemption, that is treated as the basis of the gold received by the Shareholder in the redemption. Maximum 28% Long-Term Capital Gains Tax Rate for U.S. Shareholders Who Are Individuals Under current law, gains recognized by individuals from the sale of "collectibles," including gold, held for more than one year are taxed at a maximum rate of 28%, rather than the current maximum 20% rate applicable to most other long-term capital gains. For these purposes, gain recognized by an individual upon the sale of an interest in a trust that holds collectibles is treated as gain recognized on the sale of collectibles, to the extent that the gain is attributable to unrealized appreciation in value of the collectibles held by the trust. Therefore, any gain recognized by an individual U.S. Shareholder attributable to a sale of Shares held for more than one year, or attributable to the Trust s sale of any gold which the Shareholder is treated (through its ownership of Shares) as having held for more than one year, generally will be taxed at a maximum federal income tax rate of 28%. The federal income tax rates for capital gains recognized upon the sale of assets held by an individual U.S. Shareholder for one year or less are generally the same as those at which ordinary income is taxed. A U.S. corporation s capital gain is generally taxed at the same federal income tax rates applicable to the corporation s ordinary income. 3.8% Tax on Net Investment Income Certain U.S. Shareholders who are individuals are required to pay a 3.8% tax on the lesser of the excess of their modified adjusted gross income over a threshold amount ($250,000 for married persons filing jointly and $200,000 for single taxpayers) or their "net investment income," which generally includes capital gains from the disposition of property. This tax is in addition to any capital gains taxes due on such investment income. A similar tax applies to estates and trusts. U.S. Shareholders should consult their own tax advisers regarding the effect, if any, this law may have on their investment in the Shares. Brokerage Fees and Trust Expenses Any brokerage or other transaction fee incurred by a Shareholder in purchasing Shares will be treated as part of the Shareholder s tax basis in the underlying assets of the Trust. Similarly, any brokerage fee incurred by a Shareholder in selling Shares will reduce the amount realized by the Shareholder with respect to the sale. Shareholders will be required to recognize the full amount of gain or loss upon a sale of gold by the Trust (as discussed above), even though some or all of the proceeds of such sale are used by the Trustee to pay Trust expenses. Shareholders may deduct their respective pro rata shares of each expense incurred by the Trust to the same extent as if they directly incurred the expense. Shareholders who are individuals, estates or trusts, however, may be required to treat some or all of the expenses of the Trust as miscellaneous itemized deductions. An individual may not deduct miscellaneous itemized deductions for tax years beginning after December 31, 2017 and before January 1, 2026. For tax years beginning before January 1, 2018 and after December 31, 2025, individuals may deduct certain miscellaneous itemized deductions only to the extent they exceed in the aggregate 2% of adjusted gross income. In addition, such deductions may be subject to phase outs and other limitations under applicable provisions of the Code. Investment by U.S. Tax-Exempt Shareholders Certain U.S. Shareholders ("U.S. Tax-Exempt Shareholders") are subject to United States federal income tax only on their "unrelated business taxable income" ("UBTI"). Unless they incur debt in order to purchase Shares, it is expected that U.S. Tax-Exempt Shareholders should not realize UBTI in respect of income or gains from the Shares. U.S. Tax-Exempt Shareholders should consult their own independent tax advisers regarding the United States federal income tax consequences of holding Shares in light of their particular circumstances. Investment by Regulated Investment Companies Mutual funds and other investment vehicles which are "regulated investment companies" within the meaning of Code section 851 should consult with their tax advisers concerning (i) the likelihood that an investment in Shares may be considered an investment in the underlying gold for purposes of Code section 851(b), and (ii) the extent to which an investment in Shares might nevertheless be consistent with preservation of their qualification under Code section 851. We note that in recent administrative guidance, the IRS stated that it will no longer issue rulings under Code section 851(b) relating to the determination of whether or not an instrument or position is a "security," but, instead, intends to defer to guidance from the SEC for such determination. Investment by Certain Retirement Plans Section 408(m) of the Code provides that the purchase of a "collectible" as an investment for an IRA, or for a participant-directed account maintained under any plan that is tax-qualified under section 401(a) of the Code ("Tax Qualified Account"), is treated as a taxable distribution from the account to the owner of the IRA, or to the participant for whom the Tax Qualified Account is maintained, of an amount equal to the cost to the account of acquiring the collectible. The IRS has issued private letter rulings which provide that the purchase of shares of trusts similar to the Trust by an IRA or a Tax Qualified Account will not constitute the acquisition of a collectible or be treated as resulting in a taxable distribution to the IRA owner or Tax Qualified Account participant under Code section 408(m). However, if any of the Shares so purchased are distributed from an IRA or Tax Qualified Account to the IRA owner or plan participant, or if any gold received by such IRA or Tax Qualified Account upon the redemption of any of the Shares purchased by it is distributed (or treated as distributed pursuant to Code section 408(m)) to the IRA owner or plan participant, the Shares or gold so distributed will be subject to federal income tax in the year of distribution, to the extent provided under the applicable provisions of Code sections 408(d), 408(m) or 402. Private letter rulings are only binding on the IRS with respect to the taxpayer to which they were issued, and the Trust has neither requested nor obtained such a private letter ruling. Accordingly, potential IRA or Tax Qualified Account investors are urged to consult with their own professional advisors concerning the treatment of an investment in Shares under Code section 408(m). Taxation of Non-U.S. Shareholders A Non-U.S. Shareholder generally will not be subject to United States federal income tax with respect to gain recognized upon the sale or other disposition of Shares, or upon the sale of gold by the Trust, unless (1) the Non-U.S. Shareholder is an individual and is present in the United States for 183 days or more during the taxable year of the sale or other disposition, and the gain is treated as being from United States sources; or (2) the gain is effectively connected with the conduct by the Non-U.S. Shareholder of a trade or business in the United States and certain other conditions are met. United States Information Reporting and Backup Withholding The Trustee will file certain information returns with the IRS, and provide certain tax-related information to Shareholders, in connection with the Trust. To the extent required by applicable regulations, each Shareholder will be provided with information regarding its allocable portion of the Trust s annual income (if any) and expenses. A U.S. Shareholder may be subject to United States backup withholding tax, at a rate of 24%, in certain circumstances unless it provides its taxpayer identification number and complies with certain certification procedures. Non-U.S. Shareholders may have to comply with certification procedures to establish that they are not a United States person, and some Non-U.S. Shareholders will be required to meet certain information reporting or certification requirements imposed by the Foreign Account Tax Compliance Act, in order to avoid certain information reporting and withholding tax requirements. The amount of any backup withholding will be allowed as a credit against a Shareholder s United States federal income tax liability and may entitle such a Shareholder to a refund, provided that the required information is furnished to the IRS in a timely manner. Taxation in Jurisdictions Other Than the United States Prospective purchasers of Shares that are based in or acting out of a jurisdiction other than the United States are advised to consult their own tax advisers as to the tax consequences, under the laws of such jurisdiction (or any other jurisdiction other than the United States to which they are subject), of their purchase, holding, sale and redemption of or any other dealing in Shares and, in particular, as to whether any value added tax, other consumption tax or transfer tax is payable in relation to such purchase, holding, sale, redemption or other dealing. ERISA and Related Considerations ERISA and/or Code section 4975 impose certain requirements on certain employee benefit plans and certain other plans and arrangements, including individual retirement accounts and annuities, Keogh plans, and certain commingled investment vehicles or insurance company general or separate accounts in which such plans or arrangements are invested (collectively, "Plans"), and on persons who are fiduciaries with respect to the investment of "plan assets" of a Plan. Government plans and some church plans are not subject to the fiduciary responsibility provisions of ERISA or the provisions of section 4975 of the Code, but may be subject to substantially similar rules under other federal law, or under state or local law ("Other Law"). In contemplating an investment of a portion of Plan assets in Shares, the Plan fiduciary responsible for making such investment should carefully consider, taking into account the facts and circumstances of the Plan and the "Risk Factors" discussed above and whether such investment is consistent with its fiduciary responsibilities under ERISA or Other Law, including, but not limited to: (1) whether the investment is permitted under the Plan s governing documents, (2) whether the fiduciary has the authority to make the investment, (3) whether the investment is consistent with the Plan s funding objectives, (4) the tax effects of the investment on the Plan, and (5) whether the investment is prudent considering the factors discussed in this prospectus. In addition, ERISA and Code section 4975 prohibit a broad range of transactions involving assets of a plan and persons who are "parties in interest" under ERISA or "disqualified persons" under section 4975 of the Code. A violation of these rules may result in the imposition of significant excise taxes and other liabilities. Plans subject to Other Law may be subject to similar restrictions. It is anticipated that the Shares will constitute "publicly offered securities" as defined in the Department of Labor "Plan Asset Regulations," 2510.3-101 (b)(2) as modified by section 3(42) of ERISA. Accordingly, pursuant to the Plan Asset Regulations, only Shares purchased by a Plan, and not an interest in the underlying assets held in the Trust, should be treated as assets of the Plan, for purposes of applying the "fiduciary responsibility" rules of ERISA and the "prohibited transaction" rules of ERISA and the Code. Fiduciaries of plans subject to Other Law should consult legal counsel to determine whether there would be a similar result under the Other Law. Allowing an investment in the Trust is not to be construed as a representation by the Sponsor or any of its affiliates, agents or employees that this investment meets some or all of the relevant legal requirements with respect to investments by any particular Plan or that this investment is appropriate for any such particular Plan. The person with investment discretion should consult with the Plan s attorney and financial advisors as to the propriety of an investment in the Trust in light of the circumstances of the particular Plan, current tax law and ERISA. Plan of Distribution In addition to, and independent of the initial purchases by the initial Authorized Participant (described below), the Trust will issue Shares in Baskets to Authorized Participants in exchange for deposits of gold on a continuous basis. Because new Shares can be created and issued on an ongoing basis, at any point during the life of the Trust, a "purchases," as such term is used in the Securities Act, will be occurring. Broker-dealers and other persons are cautioned that some of their activities will result in their being deemed participants in a distribution in a manner which would render them statutory underwriters and subject them to the prospectus-delivery and liability provisions of the Securities Act. For example, a broker-dealer firm or its client will be deemed a statutory underwriter if it purchases a Basket from the Trust, breaks the Basket down into the constituent Shares and sells the Shares directly to its customers; or if it chooses to couple the creation of a supply of new Shares with an active selling effort involving solicitation of secondary market demand for the Shares. A determination of whether a particular market participant is an underwriter must take into account all the facts and circumstances pertaining to the activities of the broker-dealer or its client in the particular case, and the examples mentioned above should not be considered a complete description of all the activities that could lead to designation as an underwriter. Investors that purchase Shares through a commission/fee-based brokerage account may pay commissions/fees charged by the brokerage account. We recommend that investors review the terms of their brokerage accounts for details on applicable charges. Dealers that are not "underwriters" but are participating in a distribution (as contrasted to ordinary secondary trading transactions), and thus dealing with Shares that are part of an "unsold allotment" within the meaning of Section 4(a)(3)(C) of the Securities Act, would be unable to take advantage of the prospectus-delivery exemption provided by Section 4(a)(3) of the Securities Act. The initial Authorized Participant purchased [ ] Shares, which compose the initial Baskets. The initial Baskets were purchased by the initial Authorized Participant, which was acting as a statutory underwriter in connection with the initial purchase of shares. Authorized Participants will offer Shares at an offering price that will vary, depending on, among other factors, the price of gold and the trading price of the Shares on the Exchange at the time of offer. Authorized Participants will not receive from the Trust, the Sponsor, the Trustee or any of their affiliates a fee or other compensation in connection with the sale of the Shares, although Authorized Participants may receive commissions/fees from investors who purchase Shares. The Trust will not bear any expenses in connection with the offering or sales of the Shares. The offering of Baskets is being made in compliance with Conduct Rule 2810 of FINRA. Accordingly, the Authorized Participants will not make any sales to any account over which it has discretionary authority without the prior written approval of a purchaser of Shares. Authorized Participants will not receive from the Trust or the Sponsor any compensation in connection with an offering of the Shares. Accordingly, there is, and will be, no payment of underwriting compensation in connection with any such offering
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+S-1/A 1 fs12018a1_aryasciencesacq.htm AMENDMENT NO. 1 TO FORM S-1 Filed with the United States Securities and Exchange Commission on September 25, 2018 under the Securities Act of 1933, as amended. No. 333-227283 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _________________ Amendment No. 1 to FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 _________________ ARYA Sciences Acquisition Corp. (Exact name of registrant as specified in its charter) _________________ Cayman Islands 6770 98-1436307 (State or other jurisdiction of incorporation or organization) (Primary Standard Industrial Classification Code Number) (I.R.S. Employer Identification No.) 51 Astor Place, 10th Floor New York, NY 10003 (212) 284-2300 (Address, including zip code, and telephone number, including area code, of registrant s principal executive offices) _________________ Adam Stone 51 Astor Place, 10th Floor New York, NY 10003 (212) 284-2300 (Name, address, including zip code, and telephone number, including area code, of agent for service) _________________ Copies to: Christian O. Nagler Peter S. Seligson Kirkland & Ellis LLP 601 Lexington Avenue New York, New York 10022 Tel: (212) 446-4800 Fax: (212) 446-4900 Gregg A. Noel Jonathan B. Ko Skadden, Arps, Slate, Meagher & Flom LLP 525 University Avenue, Suite 1400 Palo Alto, California 94301 Tel: (650) 470-4500 Fax: (650) 470-4570 Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement. _________________ If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box: If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act. Large accelerated filer Accelerated filer Non-accelerated filer x Smaller reporting company Emerging growth company x If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. CALCULATION OF REGISTRATION FEE Title of Each Class of Securities to be Registered Amount Being Registered Proposed Maximum Offering Price per Security (1) Proposed Maximum Aggregate Offering Price (1) Amount of Registration Fee Units, each consisting of one Class A ordinary share, $0.0001 par value, and one-half of one redeemable warrant (2) 14,375,000 units $ 10.00 $ 143,750,000 $ 17,897 Class A ordinary shares included as part of the units (3) 14,375,000 shares — — — (4) Redeemable warrants included as part of the units (3) 7,187,500 warrants — — — (4) Total $ 143,750,000 $ 17,897 (5) (1) Estimated solely for the purpose of calculating the registration fee. (2) Includes 1,875,000 Units, consisting of 1,875,000 Class A ordinary shares and 937,500 redeemable warrants, which may be issued upon exercise of a 45-day option granted to the underwriters to cover over-allotments, if any. (3) Pursuant to Rule 416, there are also being registered an indeterminable number of additional securities as may be issued to prevent dilution resulting from share splits, share capitalizations or similar transactions. (4) No fee pursuant to Rule 457(g). (5) Previously paid. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine. The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED September 25, 2018 PRELIMINARY PROSPECTUS $125,000,000 ARYA Sciences Acquisition Corp. 12,500,000 Units ARYA Sciences Acquisition Corp. is a newly organized blank check company incorporated as a Cayman Islands exempted company and formed for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses or entities, which we refer to as our initial business combination. We have not selected any business combination target and we have not, nor has anyone on our behalf, initiated any substantive discussions, directly or indirectly, with any business combination target. This is an initial public offering of our securities. Each unit has an offering price of $10.00 and consists of one Class A ordinary share and one-half of one redeemable warrant. Each whole warrant entitles the holder thereof to purchase one Class A ordinary share at a price of $11.50 per share, subject to adjustment, terms and limitations as described herein. The underwriters have a 45-day option from the date of this prospectus to purchase up to 1,875,000 additional units to cover over-allotments, if any. We will provide our public shareholders with the opportunity to redeem all or a portion of their Class A ordinary shares upon the completion of our initial business combination, subject to the limitations described herein. If we are unable to consummate an initial business combination within 24 months from the closing of this offering, we will redeem 100% of the public shares for cash, subject to applicable law and certain conditions as described herein. Our sponsor, ARYA Sciences Holdings, has agreed to purchase 5,437,500 warrants (or 5,953,125 warrants if the underwriters over-allotment option is exercised in full), each exercisable to purchase one Class A ordinary share at $11.50 per share, at a price of $1.00 per warrant, in a private placement to occur concurrently with the closing of this offering. Our initial shareholders currently own 3,593,750 Class B ordinary shares which will automatically convert into Class A ordinary shares at the time of our initial business combination as described herein. Our sponsor has indicated an interest to purchase up to an aggregate of $25,000,000 of our ordinary shares in a private placement that would occur concurrently with the consummation of our initial business combination. The capital from such private placement would be used as part of the consideration to the sellers in our initial business combination, and any excess capital from such private placement would be used for working capital in the post-transaction company. However, because indications of interest are not binding agreements or commitments to purchase, our sponsor may determine not to purchase any such shares, or to purchase fewer shares than it has indicated an interest in purchasing. Furthermore, we are not under any obligation to sell any such shares. Such investment would be made on terms and conditions determined at the time of the business combination. Currently, there is no public market for our securities. We have applied to have our units listed on The Nasdaq Capital Market, or Nasdaq, under the symbol "ARYAU." We expect the Class A ordinary shares and warrants comprising the units to begin separate trading on Nasdaq under the symbols "ARYA" and "ARYAW," respectively, on the 52nd day following the date of this prospectus unless the underwriters permit earlier separate trading and we have satisfied certain conditions. We are an "emerging growth company" under applicable federal securities laws and will be subject to reduced public company reporting requirements. Investing in our securities involves a high degree of risk. See "Risk Factors" beginning on page 27 for a discussion of information that should be considered in connection with an investment in our securities. Investors will not be entitled to protections normally afforded to investors in Rule 419 blank check offerings. Neither the Securities and Exchange Commission (the "SEC") nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. Per Unit Total Public offering price $ 10.00 $ 125,000,000 Underwriting discounts and commissions (1) $ 0.60 $ 7,500,000 Proceeds, before expenses, to us $ 9.40 $ 117,500,000 (1) Includes $0.325 per unit, or $4,062,500 in the aggregate (or $4,671,875 in the aggregate if the underwriters over-allotment option is exercised in full), payable to the underwriters for deferred underwriting commissions to be placed in a trust account located in the United States as described herein and released to the underwriters only upon the consummation of an initial business combination. See also "Underwriting" beginning on page 133 for a description of compensation and other items of value payable to the underwriters. Of the proceeds we receive from this offering and the sale of the private placement warrants described in this prospectus, $125.0 million, or $143.75 million if the underwriters over-allotment option is exercised in full ($10.00 per unit in either case), will be deposited into a trust account with Continental Stock Transfer & Trust Company acting as trustee. The underwriters are offering the units for sale on a firm commitment basis. The underwriters expect to deliver the units to the purchasers on or about , 2018. _______________________ Sole Book-Running Manager Jefferies Lead Manager Chardan _______________________ , 2018 TABLE OF CONTENTS Page Summary 1
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diff --git a/parsed_sections/prospectus_summary/2018/CIK0001746379_bitwise_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001746379_bitwise_prospectus_summary.txt
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+Prospectus Summary This is only a summary of the prospectus and, while it contains material information about the Fund and its shares, it does not contain or summarize all of the information about the Fund and the shares contained in this prospectus that is material and/or which may be important to you. You should read this entire prospectus before making an investment decision about the shares. For a glossary of defined terms, see Appendix A. The Trust and the Fund The Bitwise ETF Trust (the "Trust") is a Delaware statutory trust. The Trust is a series trust formed pursuant to the Delaware Statutory Trust Act. The Bitwise HOLD 10 Cryptocurrency Index Fund (the "Fund") is a series of the Trust and is a commodity pool that continuously issues common shares of beneficial interest that may be purchased and sold on the [TBD] stock exchange (the "Exchange"). The Trust and the Fund operate pursuant to the Trust s Declaration of Trust and Trust Agreement (the "Trust Agreement"), dated as of [ ]. [Wilmington Trust Company], a Delaware trust company, is the Delaware trustee of the Trust. The Trust and the Fund are managed and controlled by Bitwise Investment Advisers, LLC (the "Sponsor"). The Sponsor is a corporation formed in the state of Delaware on June 4, 2018. The Sponsor intends to be registered as a commodity pool operator ("CPO") with the Commodity Futures Trading Commission ("CFTC") and become a member of the National Futures Association ("NFA"). The Fund s Investment Objective and Strategies The Fund s investment objective is for the shares to reflect the performance of the HOLD 10 Index (the "Index"), less the expenses of the Fund s operations. The Index was designed by Bitwise Index Services, LLC (the "Index Provider") to reflect a "basket" of broad-based cryptocurrencies. The Index is comprised of the ten global cryptocurrencies with the largest market capitalization. By holding a diversified portfolio of the world s largest cryptocurrencies, the Index provides investors with exposure to the cryptocurrency market while minimizing investment-analysis and administrative costs. The Sponsor manages the Fund s investments. In seeking to track the Index, the Sponsor will invest the Fund s assets in the cryptocurrency components of the Index. The Sponsor may also invest some or all of the Fund s assets in derivative financial instruments, including listed futures contracts based on the Portfolio Cryptocurrencies ("Futures Contracts") and cleared and non-cleared swap agreements based on individual or multiple Portfolio Cryptocurrencies ("Cryptocurrency Swaps"). All assets will be held at the Fund s custodian. The Index The Index is composed of a portfolio (the "Portfolio") of broad-based cryptocurrencies (each, a "Portfolio Cryptocurrency" and collectively, "Portfolio Cryptocurrencies"). The Index was designed by the Index Provider. The Index is comprised of the ten largest global cryptocurrencies, based on and weighted by inflation-adjusted market capitalization. For purposes of assigning a weight to each Portfolio Cryptocurrency, the Index Provider calculates inflation-adjusted market capitalization using data from publicly-available cryptocurrency exchanges that, in the view of the Index Provider, are well-established and reputable. The market capitalization of a cryptocurrency is determined by multiplying its price by its circulating supply, with a five-year supply inflation adjustment applied to that supply. Each Portfolio Cryptocurrency is then assigned a weight corresponding to its inflation-adjusted market capitalization. APPENDIX A Glossary of Defined Terms [To be updated as necessary] In this prospectus, each of the following terms have the meanings set forth after such term: 1933 Act: The Securities Act of 1933. 1940 Act: Investment Company Act of 1940. Administrator: [To be provided by subsequent amendment] Authorized Participant: One that purchases or redeems Creation Baskets or Redemption Baskets, respectively, from or to the Fund. Futures Contracts: The futures contracts that at any given time make up the Index. Business Day: Any day other than a day when the Exchange, the NYMEX, the New York Stock Exchange, or any of the Futures Exchanges upon which a Futures Contract is traded is closed for regular trading. CBOT: Chicago Board of Trade. CEA: Commodity Exchange Act. CFTC: Commodity Futures Trading Commission, an independent agency with the mandate to regulate commodity futures and options in the United States. CME: Chicago Mercantile Exchange. Code: Internal Revenue Code. COMEX: Commodity Exchange, Inc. Commodity Pool: An enterprise in which several individuals contribute funds in order to trade futures contracts or options on futures contracts collectively. Commodity Pool Operator or CPO: Any person engaged in a business which is of the nature of an investment trust, syndicate, or similar enterprise, and who, in connection therewith, solicits, accepts, or receives from others, funds, securities, or property, either directly or through capital contributions, the sale of stock or other forms of securities, or otherwise, for the purpose of trading in any commodity for future delivery or commodity option on or subject to the rules of any contract market. Commodity Trading Advisor or CTA: Subject to certain exceptions set forth in the Commodity Exchange Act, any person who for compensation or profit, (i) engages in the business of advising others, either directly or through publications, writings, or electronic media, as to the value of or the advisability of trading in any commodity for future delivery or commodity option on or subject to the rules of any contract market, or (ii) as part of a regular business, issues or promulgates analyses or reports concerning any of the activities referred to in (i). Creation Basket: A block of 10,000 shares used by the Fund to issue shares. PROSPECTUS Bitwise HOLD 10 Cryptocurrency Index Fund The Bitwise HOLD 10 Cryptocurrency Index Fund (the "Fund") is an exchange traded fund that issues shares that trade on [TBD] stock exchange (the "Exchange"). The Fund s investment objective is for the shares to reflect the performance of the HOLD 10 Index (the "Index"), less the expenses of the Fund s operations. The Index is composed of a portfolio (the "Portfolio") of broad-based cryptocurrencies (each, a "Portfolio Cryptocurrency" and collectively, "Portfolio Cryptocurrencies"). The Index was designed by Bitwise Index Services, LLC (the "Index Provider"). The Index is comprised of the ten largest cryptocurrencies in the world, based on and weighted by inflation-adjusted market capitalization. By holding a diversified portfolio of the world s largest cryptocurrencies, the Index provides investors with exposure to the cryptocurrency market while minimizing investment-analysis and administrative costs. The Fund is sponsored by Bitwise Investment Advisers, LLC (the "Sponsor"). The Sponsor manages the Fund s investments. In seeking to track the Index, the Sponsor will invest the Fund s assets in Portfolio Cryptocurrencies. The Sponsor may also invest some or all of the Fund s assets in derivative financial instruments, including listed futures contracts based on the Portfolio Cryptocurrencies ("Futures Contracts") and cleared and non-cleared swaps based on individual or multiple Portfolio Cryptocurrencies ("Cryptocurrency Swaps"). All assets will be held at the Fund s custodian. The Fund is an exchange traded fund. This means that most investors who decide to buy or sell shares of the Fund will place their trade orders through their brokers and may incur customary brokerage commissions and charges. Prior to this offering, there has been no public market for the shares. The shares are expected to be listed for trading, subject to notice of issuance, on the Exchange under a ticker symbol to be announced prior to commencement of trading. The Fund issues and redeems shares in blocks of 25,000 shares (a "Creation Basket"). Only Authorized Participants may purchase and redeem shares from the Fund and then only in Creation Baskets. An Authorized Participant is a financial firm that has entered into an Authorized Participant Agreement with the Trust and the Sponsor. The initial Authorized Participant is expected to be [Name of Initial Authorized Participant]. Shares of the Fund are offered to Authorized Participants in Creation Baskets at the Fund s net asset value ("NAV"). Authorized Participants may then offer shares to the public at prices that depend on various factors, including the supply and demand for shares, the value of the Fund s Portfolio Cryptocurrencies, and market conditions at the time of a transaction. Investors who buy or sell shares during the day from their broker may do so at a premium or discount relative to the net asset value of the shares of the Fund. Premiums and discounts may be due to supply and demand forces at work in the secondary trading market for the Fund s shares that may be closely related to, but not identical to, the same forces influencing the prices of the Portfolio Cryptocurrencies, Futures Contracts or Cryptocurrency Swaps in which the Fund invests. Investing in the Fund involves risks similar to those involved with an investment directly in the Portfolio Cryptocurrencies, Futures Contracts or Cryptocurrency Swaps and other significant risks. See "RISK FACTORS" beginning on page 3. The Fund is a series of the Bitwise ETF Trust (the "Trust"), and the shares represent units of fractional undivided beneficial interest in and ownership of the Trust. The offering of the Fund s shares is registered with the Securities and Exchange Commission ("SEC") in accordance with the Securities Act of 1933 (the "1933 Act"). The offering is intended to be a continuous offering and is not expected to terminate until all of the registered shares have been sold or three years from the date of the original offering, whichever is earlier, unless extended as permitted under the rules under the 1933 Act, although the offering may be temporarily suspended if and when no suitable investments for the Fund are available or practicable. Neither the Fund nor the Trust is a mutual fund registered under the Investment Company Act of 1940 ("1940 Act"), and neither the Fund nor the Trust is subject to regulation under such Act. The Index Provider has also developed additional eligibility criteria that it applies in selecting the Portfolio Cryptocurrencies that comprise the Index. One such criterion is that a cryptocurrency must be traded at two or more public exchanges that the Index Provider believes are reputable, with volume existing on at least two of these exchanges considered by the Index Provider to be material. In this regard, public exchanges used for calculating the Index are selected by the Index Provider based on factors such as trading volume, the availability and reliability of real-time price and trade volume, compliance with local regulations, and the absence of abnormal withdrawal restrictions of crypto and/or fiat currencies. Additional criteria for selecting eligible cryptocurrencies are that trading volume of the cryptocurrency must exceed a minimum threshold relative to its inflation-adjusted market capitalization, and the price of the cryptocurrency must float based on the market for such cryptocurrency and not be pegged to another asset or currency. Principal Investment Risks of an Investment in the Fund An investment in the Fund involves risks. Some of the risks you may face are summarized below. A more extensive discussion of these risks appears beginning on page 3. Risks Associated with Cryptocurrencies Cryptocurrency is an emerging asset class. The market prices of Bitcoin, Ether, and certain other broad-based cryptocurrencies have been subject to extreme fluctuations and recently have appreciated rapidly. If cryptocurrency markets continue to be subject to sharp fluctuations, investors may experience losses as the value of the Fund s investments decline. Similar to fiat currencies (i.e., a currency that is backed by a central bank or a national, supra-national or quasi-national organization), cryptocurrencies are susceptible to theft, loss and destruction. Cryptocurrency exchanges and other trading venues on which cryptocurrencies trade are relatively new and, in most cases, largely unregulated and may therefore be more exposed to fraud and failure than established, regulated exchanges for securities, derivatives and other currencies. Despite efforts to ensure accurate pricing, the Fund, and the price of cryptocurrencies generally, remains subject to volatility experienced by the cryptocurrency exchanges and other cryptocurrency trading venues. Such volatility can adversely affect an investment in the Fund. Risks Associated with the Index The Index is a new index and has a limited history and the methodology for determining the Index established by the Index Provider is relatively new and untested. The failure of one or more of the assumptions built into the Index methodology could have an adverse effect on the Fund and on the value of an investment in the Fund. Indexes are unmanaged and it is not possible to invest directly in an index. In addition, the performance of the Fund and the Index may diverge due to factors such as imperfect correlation between the Fund s investments and components of the Index, regulatory restrictions, high portfolio turnover rate, rounding of prices and timing differences associated with additions to and deletions from the Index. Risks Associated with Investing in the Fund Investors may choose to use the Fund as means of investing indirectly in cryptocurrencies. As noted, there are significant risks and hazards inherent in the cryptocurrency industry that may cause the price of cryptocurrencies to widely fluctuate. An investment in the Fund is suitable only for certain sophisticated investors for whom such investment does not constitute a complete investment program and that fully understand, are willing to assume, and have the financial resources necessary to withstand, the risks involved in the Fund s investment strategy, and that can bear the potential loss of their entire investment in the Fund. There is no assurance as to whether the Fund will be profitable or meet its expenses and liabilities. Any investment made in the Fund may result in a total loss of the investment. The Fund may invest in Futures Contracts and Cryptocurrency Swaps. Cryptocurrency Swaps are negotiated "over-the-counter" ("OTC") contracts that are not as liquid as futures contracts and expose the Fund to credit risk that its counterparty to the contract may not be able to satisfy its obligations to the Fund. Breakeven Amount The Fund will be profitable only if returns from the Fund s investments exceed its "breakeven amount." The estimated breakeven amount represents the estimated amount of trading income that the Fund would need to achieve during one year to offset the Fund s estimated fees, costs and expenses, net of any interest income earned by the Fund on its investments. [To be provided by subsequent amendment.] Creation Basket Deposit: the total deposit required to create each basket. Custodian: [To be provided by subsequent amendment] DCM: designated contract market. DTC: The Depository Trust Company. DTC will act as the securities depository for the shares. ECI: income that is effectively connected with the conduct of a U.S. trade or business. ERISA: Employee Retirement Income Security Act of 1974. DTC Participant: An entity that has an account with DTC. Exchange: [To be provided by subsequent amendment] Exchange Act: The Securities Exchange Act of 1934. FCM: Futures Commission Merchant. FINRA: Financial Industry Regulatory Authority, formerly the National Association of Securities Dealers. Futures Contracts: Futures contracts for cryptocurrencies that are traded on the Chicago Board of Trade and Chicago Mercantile Exchange or on other foreign exchanges. Futures Exchanges: Chicago Board of Trade and Chicago Mercantile Exchange or on other foreign exchanges. Indirect Participants: Banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a DTC Participant, either directly or indirectly. IRA: individual retirement account. IRS: U.S. Internal Revenue Service. Margin: The amount of equity required for an investment in futures contracts. Marketing Agent: [To be provided by subsequent amendment] NAV: Net asset value of the Fund. NFA: National Futures Association. NYMEX: New York Mercantile Exchange. Option: The right, but not the obligation, to buy or sell a futures contract or forward contract at a specified price on or before a specified date. Cryptocurrency Swaps: Cryptocurrency Swaps such as cash-settled options on futures contracts, forward contracts relating to cryptocurrencies, cleared swap contracts and OTC transactions that are based on the price of cryptocurrencies, futures contracts and indices based on the foregoing. AN INVESTMENT IN THE FUND MAY NOT BE SUITABLE FOR RETAIL INVESTORS. THE FUND WILL HOLD CRYPTOCURRENCIES AND THEREFORE MAY BE RISKIER THAN OTHER EXCHANGE TRADED PRODUCTS THAT DO NOT HOLD CRYPTOCURRENCIES OR INTERESTS RELATED TO CRYPTOCURRENCIES. THE SHARES ARE SPECULATIVE SECURITIES. THEIR PURCHASE INVOLVES A HIGH DEGREE OF RISK AND YOU COULD LOSE YOUR ENTIRE INVESTMENT. YOU SHOULD CONSIDER ALL RISK FACTORS BEFORE INVESTING IN THE TRUST. PLEASE REFER TO "RISK FACTORS" BEGINNING ON PAGE 3. NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THE SECURITIES OFFERED IN THIS PROSPECTUS, OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. The Fund is a commodity pool and the Sponsor intends to be a commodity pool operator subject to regulation by the Commodity Futures Trading Commission ("CFTC") and the National Futures Association ("NFA") under the Commodity Exchange Act, as amended ("CEA"). THE COMMODITY FUTURES TRADING COMMISSION HAS NOT PASSED UPON THE MERITS OF PARTICIPATING IN THIS POOL NOR HAS THE COMMISSION PASSED ON THE ADEQUACY OR ACCURACY OF THIS DISCLOSURE DOCUMENT. COMMODITY FUTURES TRADING COMMISSION RISK DISCLOSURE STATEMENT YOU SHOULD CAREFULLY CONSIDER WHETHER YOUR FINANCIAL CONDITION PERMITS YOU TO PARTICIPATE IN A COMMODITY POOL. IN SO DOING, YOU SHOULD BE AWARE THAT COMMODITY INTEREST TRADING CAN QUICKLY LEAD TO LARGE LOSSES AS WELL AS GAINS. SUCH TRADING LOSSES CAN SHARPLY REDUCE THE NET ASSET VALUE OF THE POOL AND CONSEQUENTLY THE VALUE OF YOUR INTEREST IN THE POOL. IN ADDITION, RESTRICTIONS ON REDEMPTIONS MAY AFFECT YOUR ABILITY TO WITHDRAW YOUR PARTICIPATION IN THE POOL. FURTHER, COMMODITY POOLS MAY BE SUBJECT TO SUBSTANTIAL CHARGES FOR MANAGEMENT, AND ADVISORY AND BROKERAGE FEES. IT MAY BE NECESSARY FOR THOSE POOLS THAT ARE SUBJECT TO THESE CHARGES TO MAKE SUBSTANTIAL TRADING PROFITS TO AVOID DEPLETION OR EXHAUSTION OF THEIR ASSETS. THIS DISCLOSURE DOCUMENT CONTAINS A COMPLETE DESCRIPTION OF EACH EXPENSE TO BE CHARGED THIS POOL AT PAGE 28 AND A STATEMENT OF THE PERCENTAGE RETURN NECESSARY TO BREAK EVEN, THAT IS, TO RECOVER THE AMOUNT OF YOUR INITIAL INVESTMENT, AT PAGE 28. THIS BRIEF STATEMENT CANNOT DISCLOSE ALL THE RISKS AND OTHER FACTORS NECESSARY TO EVALUATE YOUR PARTICIPATION IN THIS COMMODITY POOL. THEREFORE, BEFORE YOU DECIDE TO PARTICIPATE IN THIS COMMODITY POOL, YOU SHOULD CAREFULLY STUDY THIS DISCLOSURE DOCUMENT, INCLUDING A DESCRIPTION OF THE PRINCIPAL RISK FACTORS OF THIS INVESTMENT, AT PAGE 3. Risk Factors You should consider carefully the risks described below before making an investment decision. You should also refer to the other information included in this prospectus, as well as information found in documents incorporated by reference in this prospectus, before you
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+PROSPECTUS SUMMARY About GPods, Inc. We are a designer of self-contained growing units that will be customizable to meet the needs of the micro-grower or -farmer who wants to grow vegetables and leafy green products in close proximity to each other. The grow units will be fabricated in various sizes that meet the standard sizes for garages and other small spaces. The GPods grow unit will utilize the most current and technologically advanced hydroponic and aeroponic systems available to the consumer. We intend on manufacturing these self-contained grow units until we can identify a manufacturer that can provide these services at a competitive rate while providing the quality control that we demand for our customers. The Company was incorporated under the laws of the State of Nevada on March 27, 2017. On April 20, 2017, we entered into an asset purchase agreement with our founder, Mr. Robert Dolan, at which time we acquired a comprehensive business plan and certain assets with which we started GPods business operations. Mr. Dolan has been working on the GPods enterprise business-model for years. The original inspiration came in 2005 when Mr. Dolan saw the need for a self-contained, affordable growing solution, combined with the ease of operation, parked inside or out, electricity available or not, and of course running water available or not. Best of all for the user is the unit s ability to be operated by one person and may be hitched to a normal size pickup truck. As of September 14 , 2018, we had one employee, our founder and CEO, Mr. Dolan. Mr. Dolan devotes between 10 and 30 hours per week to the Company s business operations. We currently have a compensation agreement in place with Mr. Dolan. This agreement provides for a deferred payment of $5,000 per month to Mr. Dolan. For the remainder of 2018, Mr. Dolan has agreed to provide his services under this current compensation arrangement. The Company agreed to revisit Mr. Dolan s compensation arrangement prior to March 2019 if his services and time commitment were to expand significantly under our plan of operations. Mr. Dolan continues to provide his services to another business focused on the horticulture and micro-farming industry from which he substantially derives his income from. These activities do not preclude Mr. Dolan from providing his substantial attention to us. The Company issued 6,000,000 shares of its common stock to Mr. Dolan on March 27, 2017 (our date of inception) in exchange for services provided. These services were valued at $6,000. As described above, Mr. Dolan sold the Company a comprehensive business plan packed with over seven years of research and development efforts. This includes design costs related to our efficient, environmentally optimized growing system, along with certain micro-farming equipment, office furnishings and various computing equipment that Mr. Dolan acquired for our business operations. The Company issued 4,000,000 shares of common stock to him with a stated value of $8,000 or approximately $0.002 per share. From his records Mr. Dolan incurred or paid in excess of $30,000 (over a period of seven (7) years) in the advancement of, refinement of, and the development of the GPods plan. The Company believes $8,000 represents the fair value of the assets purchased. The Company estimates that total costs incurred by Mr. Dolan could be well in excess of $60,000, not taking into account Mr. Dolan professional services, which we are required to value at $0 for purposes of Topic 5-G and in accordance with US generally accepted accounting principles ( GAAP ). We are an early stage business enterprise ( development stage entity ) and have limited financial resources. We have not established or attempted to establish a source of equity or debt financing. We intend on having open discussions with advisors and other financial resources regarding the financing or securing of working capital for business operations and growth. Our auditors included an explanatory paragraph in their report on our financial statements that state that the Company s losses from operations raise substantial doubt about its ability to continue as a going concern . We will continue to improve upon our business plan and its operations. We intend to hire consultants, fabricators, equipment designers and other professionals to assist with the development and design of our optimized growing system, along with fabrication techniques that are progressive and unique for our intended products. To date, we ve incurred significant costs related to our product development. We have a significant amount of work that needs to be completed and working capital needs to be secured in order to bring our product to market in an efficient and timely manner. To date, we have not developed a saleable product and cannot predict when a saleable product will be ultimately developed and finished for retail sale. We believe that we have a distinct advantage with our founder and CEO s professional history in this industry. Management believes Mr. Dolan s horticultural and organic growing experience, along with his established business relationships, will be valuable in executing and improving upon our core business operations and prospects. The Company has no intentions, plans, arrangements, commitments or understandings to engage in a merger or acquisition with another company nor does the Company or any of its shareholders have any plans to enter into a change of control or similar type of transaction. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THE INFORMATION INCLUDED IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED AT ANY TIME. WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES, AND IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED. The date of this prospectus is September 14, 2018. PROSPECTUS SUMMARY About GPods, Inc. We are a designer of self-contained growing units that will be customizable to meet the needs of the micro-grower or -farmer who wants to grow vegetables and leafy green products in close proximity to each other. The grow units will be fabricated in various sizes that meet the standard sizes for garages and other small spaces. The GPods grow unit will utilize the most current and technologically advanced hydroponic and aeroponic systems available to the consumer. We intend on manufacturing these self-contained grow units until we can identify a manufacturer that can provide these services at a competitive rate while providing the quality control that we demand for our customers. The Company was incorporated under the laws of the State of Nevada on March 27, 2017. On April 20, 2017, we entered into an asset purchase agreement with our founder, Mr. Robert Dolan, at which time we acquired a comprehensive business plan and certain assets with which we started GPods business operations. Mr. Dolan has been working on the GPods enterprise business-model for years. The original inspiration came in 2005 when Mr. Dolan saw the need for a self-contained, affordable growing solution, combined with the ease of operation, parked inside or out, electricity available or not, and of course running water available or not. Best of all for the user is the unit s ability to be operated by one person and may be hitched to a normal size pickup truck. As of September 14 , 2018, we had one employee, our founder and CEO, Mr. Dolan. Mr. Dolan devotes between 10 and 30 hours per week to the Company s business operations. We currently have a compensation agreement in place with Mr. Dolan. This agreement provides for a deferred payment of $5,000 per month to Mr. Dolan. For the remainder of 2018, Mr. Dolan has agreed to provide his services under this current compensation arrangement. The Company agreed to revisit Mr. Dolan s compensation arrangement prior to March 2019 if his services and time commitment were to expand significantly under our plan of operations. Mr. Dolan continues to provide his services to another business focused on the horticulture and micro-farming industry from which he substantially derives his income from. These activities do not preclude Mr. Dolan from providing his substantial attention to us. The Company issued 6,000,000 shares of its common stock to Mr. Dolan on March 27, 2017 (our date of inception) in exchange for services provided. These services were valued at $6,000. As described above, Mr. Dolan sold the Company a comprehensive business plan packed with over seven years of research and development efforts. This includes design costs related to our efficient, environmentally optimized growing system, along with certain micro-farming equipment, office furnishings and various computing equipment that Mr. Dolan acquired for our business operations. The Company issued 4,000,000 shares of common stock to him with a stated value of $8,000 or approximately $0.002 per share. From his records Mr. Dolan incurred or paid in excess of $30,000 (over a period of seven (7) years) in the advancement of, refinement of, and the development of the GPods plan. The Company believes $8,000 represents the fair value of the assets purchased. The Company estimates that total costs incurred by Mr. Dolan could be well in excess of $60,000, not taking into account Mr. Dolan professional services, which we are required to value at $0 for purposes of Topic 5-G and in accordance with US generally accepted accounting principles ( GAAP ). We are an early stage business enterprise ( development stage entity ) and have limited financial resources. We have not established or attempted to establish a source of equity or debt financing. We intend on having open discussions with advisors and other financial resources regarding the financing or securing of working capital for business operations and growth. Our auditors included an explanatory paragraph in their report on our financial statements that state that the Company s losses from operations raise substantial doubt about its ability to continue as a going concern . We will continue to improve upon our business plan and its operations. We intend to hire consultants, fabricators, equipment designers and other professionals to assist with the development and design of our optimized growing system, along with fabrication techniques that are progressive and unique for our intended products. To date, we ve incurred significant costs related to our product development. We have a significant amount of work that needs to be completed and working capital needs to be secured in order to bring our product to market in an efficient and timely manner. To date, we have not developed a saleable product and cannot predict when a saleable product will be ultimately developed and finished for retail sale. We believe that we have a distinct advantage with our founder and CEO s professional history in this industry. Management believes Mr. Dolan s horticultural and organic growing experience, along with his established business relationships, will be valuable in executing and improving upon our core business operations and prospects. The Company has no intentions, plans, arrangements, commitments or understandings to engage in a merger or acquisition with another company nor does the Company or any of its shareholders have any plans to enter into a change of control or similar type of transaction. Business Operations GPods is an early stage designer, developer of a custom grow system. GPods grow units will be designed to be cost efficient and easy to use making it an ideal growing system for the micro-farmer. Our product offerings ultimately will be made to fit into a standard one-car garage and contain extra-capacity hardware to grow effectively and efficiently in significantly tighter spaces and under harsher conditions than what is usually available. The GPod units will be designed to use interchangeable hardware to accommodate any grow environment that can be imagined or needed by the user. To date any manufacturing on our part has been developmental or for internal-use only by our founder and outside services provider. GPods will provide a state of-the-art environmentally optimized integrated portable indoor system for growing high quality specialty crops. GPods utilizes breakthrough technology in soil-less, hydroponic and aeroponic growing in order to produce superior quality, high crop yields in a secure and optimal monitored efficient environment. We intend to provide through our custom grow systems the ability for our future customers to be able to produce fresh tomatoes, peppers, and other vegetables that can be grown in the heart of metropolises such as New York City, Los Angeles, or Chicago. We believe these urban environments lack fresh produce due to many factors which include cost, availability of space, a lack of distribution and certain community limitations and regulations. The GPod system we believe will allow aspiring micro-farmers to grow fresh, healthy, organic food, right in their backyard or garage. Making produce available to locals we believe will enhance nutritional uptake, positively impact families, both children and the elderly, who may not have ready access to healthy, locally grown produce. GPods will provide a state of-the-art, environmentally optimized growing system for cultivating high quality specialty crops, specifically leaf crops, including a variety of herbs and spices. Leaf crops are generally quick growing and prefer a sunny spot with well-drained, fertile soil that has been improved with plenty of well-rooted organic matter, such as garden compost or manure. Where space is limited, small crops can be grown in containers such as our GPods growing units providing optimal efficiency and success. All of this can be done with our GPod solution utilizing the most advanced technology in soil-less, hydroponic and aeroponic growing technology. This is in response to a tremendous need that exists for superior quality, high crop yields in a completely secure and safely monitored grow environment. These benefits cannot be achieved by old-school natural agricultural field growing methods. Our services will include: System lease or out-right purchase Shipment, installation and on-site training Custom planting and harvesting schedule Grow supplies, seeds, nutrients, packaging, branding and repair materials On-site visits; on-call and scheduled maintenance, cleanliness (important in hydroponic and aeroponic grow systems) and re-supply Education (classroom and hands on training) Remote monitoring, automated controls, ensuring optimal growth using nutrients, creating a sustainable and optimized environment (pH, temperature, light) and circulation values Technical assistance Consultation and system design The controlled environment of the GPod unit is approximately 80 square feet . With this square footage the GPod unit can provide an annual production of four times (4X) that of a traditional outdoor growing unit. Traditional outdoor methods utilize a 40 square foot unit with a grow season of twice a year, whereas the GPod unit is twice the size and can be back-to-back grows (doubling the twice a year grow), we believe increasing profitability to the micro-farmer user. Our estimation of increased production is anecdotal and based on our founder s real world application and experience. Our founder and CEO, Mr. Dolan, we believe has designed a progressive modular grow system that is simplistic in operation via automation with minimal hands-on operations. These environmentally friendly optimized growing systems are easily modified, upgraded, separated, combined to accommodate differing grow configurations. We believe GPods will allow the green thumb to come out in all aspiring gardeners, micro-farmers, horticulturists, specialty growers and take their grow to the next level. We intend to develop the brand GPods as an affordable, superior-quality, environmentally friendly, optimized growing system, all made in America. Our environmentally optimized growing system will allow consumers to create unique growing environments through modular and interchangeable system components. Our products are intended to be of high quality, durable construction and affordable whether you are a novice or an advanced grower. We believe our optimized grow system will enable the creation of custom design, providing greater flexibility. Through our service offerings we will seek to identify cost-saving opportunities and define true economic returns for gardeners, growers and the like to increase productivity and efficiency using our products. We believe our optimized growing system will become an integral part of any growers development and operations. We have not yet formed any meaningful industry relationships in the horticulture or farming industry, but we intend to. The Company will seek the assistance of sales and marketing consultants that focus on the emerging organic growing/farming industry in order to develop a sales and marketing strategy that capitalizes on product and services. We intend to staff our organization and its management team with skills such as product design, horticulture know-how, and hydroponic and aeroponic system development along with a strong emphasis on hands-on skills. In partnering with a manufacturer, we will have access to skill sets that we do not necessarily have and allow our focus to be on consumers/users that are price-conscious along with the perception of quality allowing a customer to aspire to have efficient and prosperous organic garden in a landless urban setting. Our offices are located at 1308 Oak Avenue, Carlsbad, California 92008. Our telephone number is (760) 681-6665. We may refer to ourselves in this prospectus as GPods , GPD, the Company, we, or us . We have no revenues, have achieved only losses since inception, have limited operations, have been issued a going concern opinion by our auditors and will rely upon the sale of our common stock and loans from related and non-related parties to fund our operations. Emerging Growth Company We are and we will remain an emerging growth company as defined under the Jumpstart Our Business Startups Act (the JOBS Act ), until the earliest to occur of (i) the last day of the fiscal year during which our total annual revenues equal or exceed $1 billion (subject to adjustment for inflation), (ii) the last day of the fiscal year following the fifth anniversary of our initial public offering, (iii) the date on which we have, during the previous three-year period, issued more than $1 billion in non-convertible debt securities, or (iv) the date on which we are deemed a large accelerated filer (with at least $700 million in public float) under the Securities and Exchange Act of 1934, as amended (the Exchange Act ). As an emerging growth company , we may take advantage of specified reduced disclosure and other requirements that are otherwise applicable generally to public companies. These provisions include: only two years of audited financial statements in addition to any required unaudited interim financial statements with correspondingly reduced Management s Discussion and Analysis disclosure; reduced disclosure about our executive compensation arrangements; no requirement that we hold non-binding advisory votes on executive compensation or golden parachute arrangements; and exemption from the auditor attestation requirement in the assessment of our internal control over financial reporting. We have taken advantage of some of these reduced burdens, and thus the information we provide stockholders may be different from what you might receive from other public companies in which you hold shares. In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended, (the Securities Act ) for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. However, we are choosing to opt out of such extended transition period, and as a result, we will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. Section 107 of the JOBS Act provides that our decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable. Notwithstanding the above, we will be a smaller reporting company , meaning that we are not an investment company, an asset-backed issuer, or a majority-owned subsidiary of a parent company that is not a smaller reporting company and have a public float of less than $75 million and annual revenues of less than $50 million during our most recently completed fiscal year. In the event that we are still considered a smaller reporting company , and at such time we cease being an emerging growth company , the disclosure requirements that we will need to provide in our Securities and Exchange Commission filings will definitely increase, but still less than if we were not considered either an emerging growth company or a smaller reporting company . Specifically, similar to emerging growth companies , smaller reporting companies are able to provide simplified executive compensation disclosures in their filings; are exempt from the provisions of Section 404(b) of the Sarbanes-Oxley Act of 2002 requiring that independent registered public accounting firms provide an attestation report on the effectiveness of internal control over financial reporting; and have certain other decreased disclosure obligations in their filings, including, among other things, only being required to provide two years of audited financial statements in annual reports. The Offering We are offering for sale a maximum of 7,500,000 shares of common stock at a fixed price of $0.01 per share (the Offering ). There is no minimum number of shares that must be sold by us for this offering to close, and we will retain all the proceeds from the sale of the shares we sell. This Offering is being conducted on a self-underwritten, best efforts basis, which means our founder, and CEO, Mr. Dolan, will attempt to sell any and all of the shares hereby offered. This prospectus permits our founder and CEO to sell the shares directly to the public, with no commission or remuneration. Mr. Dolan will attempt to sell any and all of the shares himself and intends to offer them to friends, family and business acquaintances with which he has a personal relationship with. In offering the securities on our behalf, Mr. Dolan will rely on the safe harbor from broker-dealer registration as set out in Rule 3a4-1 under the Exchange Act. The intended methods of communication include, without limitation, telephone and personal contacts. The proceeds from the sale of securities in this Offering will be made payable to Krueger LLP Attorney-Client Trust Account, who acts as the Company s escrow agent. Krueger LLP also acts as legal counsel for the Company and, therefore, may not be considered an independent third party. All subscription agreements and checks are irrevocable and will be delivered to Krueger LLP at the address provided in the Subscription Agreement (see Exhibit 99.1). All subscribed funds will be held in a non-interest-bearing account pending the completion of this Offering. The Offering ordinarily will be completed 180 days from the effective date of this prospectus, unless extended by our Board of Directors for an additional 180 days. There is no minimum number of shares that must be sold. All subscription agreements and checks for the payment of shares are irrevocable (except for states that require a statutory cooling-off period or provide for rescission rights to the prospective investor). The Company will deliver certificates for the shares of common stock purchased within 30 days of closing this Offering or as soon thereafter as practicable. The offering price of the common stock has been determined arbitrarily and bears no relationship to any objective criterion or value. The price does not bear any relationship to assets, book value, historical earnings (if any), or net worth. Shares of common stock offered Maximum of 7,500,000 shares. There is no minimum number of shares that must be sold by us for this Offering to close. Use of proceeds The Company will use the proceeds from this Offering to pay for professional fees and other general expenses. Total estimated costs for this Offering ($45,000) is less than the maximum proceeds (expected from this Offering) which is $75,000. Termination of this Offering This Offering will conclude when all 7,500,000 shares of common stock have been sold, or 180 days after this registration statement becomes effective with the Securities and Exchange Commission. We may at our discretion extend this Offering for an additional 180 days. Risk factors Purchase of our common stock involves a high degree of risk. The common stock offered in this prospectus is for investment purposes only and currently no market for our common stock exists. Please refer to the sections entitled Risk Factors and Dilution before making an investment in our common stock. Trading market None. While we intend to contact a market maker to file a Rule 211 application with the Financial Industry Regulatory Authority ( FINRA ) for inclusion of our shares on a trading market, such efforts may not be successful, and our shares may never be quoted and therefore investors in our common stock may not have a market in which to sell their shares. Also, no estimate may be given as to how long this application may require to be approved. Even if the Company s common stock is quoted or granted a listing, a market for our shares may never develop.
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diff --git a/parsed_sections/prospectus_summary/2018/CIK0001748577_gm_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001748577_gm_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..1223660e94e05d004a1fd7a5bd96ac4970ab718c
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/CIK0001748577_gm_prospectus_summary.txt
@@ -0,0 +1 @@
+PRELIMINARY PROSPECTUS GM Capital Inc 13,036,250 SHARES OF COMMON STOCK $0.00001 PAR VALUE PER SHARE Prior to this Offering, no public market has existed for the common stock of GM Capital Inc. Upon completion of this Offering, we will attempt to have the shares quoted on the OTCQB operated by OTC Markets Group, Inc. There is no assurance that the Shares will ever be quoted on the OTCQB. To be quoted on the OTCQB, a market maker must apply to make a market in our common stock. As of the date of this Prospectus, we have not made any arrangement with any market makers to quote our shares. In this public offering we, "GM Capital Inc" are offering 8,000,000 shares of our common stock and our selling shareholders are offering 5,036,250 shares of our common stock. We will not receive any of the proceeds from the sale of shares by the selling shareholders. The offering is being made on a self-underwritten, "best efforts" basis. There is no minimum number of shares required to be purchased by each investor. The shares offered by the Company will be sold on our behalf by our Chief Executive Officer, Sim Min Teck and our Chief Operating Officer, Low Wai Kong. Mr. Sim and Mr. Low are deemed to be an underwriters of this offering. Our selling shareholders are also deemed to be underwriters in this offering. Mr. Sim and Mr. Low will not receive any commissions or proceeds for selling the shares on our behalf. All of the shares being registered for sale by the Company and the selling shareholders will be sold at a fixed price of $1.00 per share for the duration of the Offering. Assuming all of the 8,000,000 shares being offered by the Company are sold, the Company will receive $8,000,000 in gross proceeds. Assuming 6,000,000 shares (75%) being offered by the Company are sold, the Company will receive $6,000,000 in gross proceeds. Assuming 4,000,000 shares (50%) being offered by the Company are sold, the Company will receive $4,000,000 in gross proceeds. Assuming 2,000,000 shares (25%) being offered by the Company are sold, the Company will receive $2,000,000 in gross proceeds. The Company is of the belief that we require the entire $8,000,000 we are attempting to raise in this offering in order to fully implement our business plan. In the event we are unable to acquire the full amount, then we would be forced to decrease and/or alter our planned business operations accordingly. There is no minimum amount we are required to raise from the shares being offered by the Company and any funds received will be immediately available to us. There is no guarantee that we will sell any of the securities being offered in this offering. Additionally, there is no guarantee that this Offering will successfully raise enough funds to institute our company s business plan. Additionally, there is no guarantee that a public market will ever develop and you may be unable to sell your shares. This primary offering will terminate upon the earliest of (i) such time as all of the common stock has been sold pursuant to the registration statement or (ii) 365 days from the effective date of this Prospectus, unless extended by our directors for an additional 90 days. We may however, at any time and for any reason terminate the offering. SHARES OFFERED PRICE TO SELLING AGENT PROCEEDS TO BY COMPANY PUBLIC COMMISSIONS THE COMPANY Per Share $ 1.00 Not applicable $ 1.00 Minimum Purchase None Not applicable Not applicable Total (8,000,000 shares) $ 8,000,000 Not applicable $ 8,000,000 SHARES OFFERED PRICE TO SELLING AGENT PROCEEDS TO BY SELLING SHAREHOLDERS PUBLIC COMMISSIONS THE COMPANY Per Share $ 1.00 Not applicable $ Not applicable Minimum Purchase None Not applicable Not applicable Total (5,036,250 shares) $ 5,036,250 Not applicable $ Not applicable Currently, Mr. Sim and Mr. Low own approximately 99.28% of the voting power of our outstanding capital stock. If all the shares being offered herein by the Company and selling shareholders are sold, our Officers and Directors will together own, approximately 77.1% of the voting power of our outstanding capital stock. *Sim Min Teck and Low Wai Kong will be selling shares of common stock on behalf of the Company simultaneously to selling shares of their own personal stock from their own accounts. A conflict of interest may arise between Mr. Sim and Mr. Low s interest in selling shares for their own accounts and in selling shares on the Company s behalf. Regarding the sale of Mr. Sim and Mr. Low s shares, they will be sold at a fixed price of $1.00 for the duration of the offering. Please note that at this time Mr. Sim and Mr. Low intend to sell the Company s shares prior to selling their own shares, although they are under no obligation to do so. Mr. Sim and Mr. Low will decide whether shares are being sold by the Company or on their own behalf. If all the shares are not sold in the company s offering, there is the possibility that the amount raised may be minimal and might not even cover the costs of the offering, which the Company estimates at $61,123. The proceeds from the sale of the securities will be placed directly into the Company s account; any investor who purchases shares will have no assurance that any monies, beside their own, will be subscribed to the prospectus. All proceeds from the sale of the securities are non-refundable, except as may be required by applicable laws. All expenses incurred in this offering are being paid for by the Company s Officers and Directors. There has been no public trading market for the common stock of GM Capital Inc. The Company qualifies as an "emerging growth company" as defined in the Jumpstart Our Business Startups Act, which became law in April 2012 and will be subject to reduced public company reporting requirements. THESE SECURITIES ARE SPECULATIVE AND INVOLVE A HIGH DEGREE OF RISK. YOU SHOULD PURCHASE SHARES ONLY IF YOU CAN AFFORD THE COMPLETE LOSS OF YOUR INVESTMENT. PLEASE REFER TO , ' ': RISK FACTORS BEGINNING ON PAGE 5. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. You should rely only on the information contained in this Prospectus and the information we have referred you to. We have not authorized any person to provide you with any information about this Offering, the Company, or the shares of our Common Stock offered hereby that is different from the information included in this Prospectus. If anyone provides you with different information, you should not rely on it. The date of this prospectus is August 3, 2018 - 1 - The following table of contents has been designed to help you find important information contained in this prospectus. We encourage you to read the entire prospectus. TABLE OF CONTENTS PART I PROSPECTUS PAGE PROSPECTUS SUMMARY 2
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diff --git a/parsed_sections/prospectus_summary/2018/CIK0001748621_alberton_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001748621_alberton_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/CIK0001748621_alberton_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2018/CIK0001750407_uranium_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001750407_uranium_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..93d9204dfc92f9e658bba8b77c24555e2ab36d58
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/CIK0001750407_uranium_prospectus_summary.txt
@@ -0,0 +1 @@
+summary highlights selected information contained elsewhere in this Prospectus. This summary is not complete and does not contain all the information that you should consider before deciding whether to invest in our Class A Common Stock. You should carefully
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diff --git a/parsed_sections/prospectus_summary/2018/CIK0001750690_caliburn_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001750690_caliburn_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..c9bbeebf38389ea15340428239c0522274c834eb
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/CIK0001750690_caliburn_prospectus_summary.txt
@@ -0,0 +1 @@
+This summary highlights certain significant aspects of our business and this offering. This is a summary of information contained elsewhere in this prospectus, is not complete, and does not contain all of the information that you should consider before making your investment decision. You should carefully read the entire prospectus, including the information presented under the section entitled Risk Factors, our pro forma financial statements and our combined financial statements and the notes thereto, before making an investment decision. This summary contains forward-looking statements that involve risks and uncertainties. Our actual results may differ significantly from future results contemplated in the forward-looking statements as a result of certain factors such as those set forth in
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diff --git a/parsed_sections/prospectus_summary/2018/CIK0001753203_cibus-ltd_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001753203_cibus-ltd_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..8f5caed73525365dc6d757dd0a0c6512ac38464d
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/CIK0001753203_cibus-ltd_prospectus_summary.txt
@@ -0,0 +1 @@
+prospectus summary. The Reorganization Transactions Cibus Ltd. was incorporated in Bermuda on September 12, 2018 to serve as the issuer of the Class A common shares offered in this offering and the Class B common shares. Cibus Global is our predecessor company. In connection with the closing of this offering, we will consummate the following reorganizational transactions: We will amend the organizational documents of Cibus Global to provide, among other things, that Cibus Global shall have a single director. Cibus Ltd. will concurrently be appointed to serve as the sole director of Cibus Global. All of the issued and outstanding preferred shares in Cibus Global will be converted on a one-for-one basis into the existing class of Non-Voting Equity Interests in Cibus Global (the Conversion ), and following completion of the Conversion, Cibus Global will undertake a -for-one reverse Equity Interest split. After the reverse split, a total of Equity Interests (all of which will be Non-Voting Equity Interests) will be outstanding in Cibus Global. As a result of the Conversion, all of the issued and outstanding warrants that were exercisable for preferred shares will become exercisable in accordance with their terms for Non-Voting Equity Interests (the Warrants ). Cibus Ltd. will acquire 100% of the issued and outstanding Equity Interests of Cibus Global held by each of the Blockers (as defined herein) through the acquisition from the Blocker Owners (as defined herein) of all of the shares in the Blockers in exchange for a number of Class A common shares equal to the number of Cibus Global Equity Interests held by such Blockers. Cibus Ltd. will offer to acquire, directly or indirectly through a wholly-owned subsidiary of Cibus Ltd. (such wholly-owned subsidiary, Cibus Holdings ) all of the Equity Interests (all of which will be Non-Voting Equity Interests) in Cibus Global held by the Mandatorily Exchanging Owners and Other Exchanging Owners (each as defined herein), in each case, in exchange for an equal number of our Class A common shares, subject, in the case of restricted Equity Interests, to adjustments to take into account applicable threshold values. Cibus Ltd. will also offer to acquire, directly or indirectly through Cibus Holdings, all of the Warrants held by the Mandatorily Exchanging Owners and Other Exchanging Owners for a number of Class A common shares taking into account the exercise price of such Warrants. Cibus Ltd. will utilize the net proceeds from this offering to purchase, directly or indirectly through Cibus Holdings, newly issued Voting Equity Interests in Cibus Global at a purchase price per Equity Interest equal to the initial public offering price per Class A common share, less underwriting discounts and commissions (the Net IPO Price ), collectively representing % of Cibus Global s issued Equity Interests. Cibus Global will, in turn, use a portion of the proceeds from the sale of such newly issued Voting Equity Interests as described in Use of Proceeds, including to purchase all of the issued Equity Interests in Cibus Global and Warrants held by certain non-accredited investors. The Original Cibus Global Equity Owners (other than those referenced above) will continue to own their Equity Interests (all of which will be Non-Voting Equity Interests) in Cibus Global and Warrants following completion of this offering. These Continuing Cibus Global Equity Owners will also be issued Class B common shares of Cibus Ltd., which will have no economic interests in Cibus Ltd. 10 TABLE OF CONTENTS (such economic interests meaning the right to receive any distributions or dividends from Cibus Ltd.). Following this offering, each such Continuing Cibus Global Equity Owner will be entitled to cause Cibus Global to redeem some or all of such Continuing Cibus Global Equity Owner s vested Equity Interests for an equal number of newly issued Class A common shares (with a corresponding cancellation of an equal number of such Continuing Cibus Global Equity Owner s Class B common shares), subject, in the case of restricted Equity Interests, to adjustments to take into account applicable threshold values. The foregoing transactions are discussed in further detail under Our Structure and Reorganization. Immediately following this offering, and as a result of these related transactions, Cibus Ltd. will be a holding company whose principal asset will consist of Voting Equity Interests and Non-Voting Equity Interests in Cibus Global, such Equity Interests in Cibus Global being held by Cibus Ltd. either directly or indirectly through Cibus Holdings. The diagram below depicts our organizational structure after giving effect to the Reorganization Transactions summarized above, and after giving effect to the offering of Class A common shares: 11 TABLE OF CONTENTS Corporate Information Cibus Ltd., the issuer of the Class A common shares in this offering, was incorporated in Bermuda on September 12, 2018. Our principal executive offices are located at 6455 Nancy Ridge Drive, San Diego, California 92121, and our telephone number is +1 (858) 450-0008. We also maintain a website at www.cibus.com. The information contained in, or that can be accessed through, our website is not part of this prospectus. Implications of Being an Emerging Growth Company We qualify as an emerging growth company as defined in the Jumpstart Our Business Startups (JOBS) Act of 2012 (the JOBS Act ). As an emerging growth company, we may take advantage of certain reduced disclosure and other requirements that are otherwise applicable generally to public companies. Pursuant to these provisions: we are not required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002 (the Sarbanes-Oxley Act ); we are required to have only two years of audited financial statements, and correspondingly only two years of related disclosure in Management s Discussion and Analysis of Financial Condition and Results of Operations; and we have (i) reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and (ii) exemptions from the requirements of holding a non-binding advisory vote on executive compensation, including golden parachute compensation. We may take advantage of these provisions for up to five years or until such earlier time that we are no longer an emerging growth company. We would cease to be an emerging growth company upon the earliest to occur of (1) the last day of the fiscal year in which we have more than $1.07 billion in annual revenue; (2) the date we qualify as a large accelerated filer, with at least $700 million of equity securities; (3) the issuance, in any three-year period, by us of more than $1.0 billion in non-convertible debt securities held by non-affiliates; and (4) the last day of the fiscal year ending after the fifth anniversary of our initial public offering. In addition, Section 107 of the JOBS Act also provides that an emerging growth company can use the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended (the Securities Act ) for complying with new or revised accounting standards. This permits an emerging growth company to delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We intend to take advantage of the exemptions discussed above. Accordingly, the information contained herein may be different than the information you receive from other public companies. We are also a smaller reporting company as defined in Regulation S-K under the Securities Act and have elected to take advantage of certain of the scaled disclosures available to smaller reporting companies. We may be a smaller reporting company even after we are no longer an emerging growth company. 12 TABLE OF CONTENTS
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diff --git a/parsed_sections/prospectus_summary/2018/CIK0001753850_arog_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001753850_arog_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/CIK0001753850_arog_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2018/CIK0001753931_shengda_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001753931_shengda_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..54f853514d4201244a6beb1bfbf4d8bba47fa18f
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/CIK0001753931_shengda_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this Prospectus and does not contain all of the information that you should consider in making your investment decision. You should read the entire Prospectus carefully, including our financial statements and the related notes and the information set forth under the heading Risk Factors , and Management s Discussion and Analysis of Financial Conditions and Results of Operations in each case included elsewhere in this prospectus. Unless otherwise stated, references in this prospectus to SOLTREST INC. , we, our, the Company or the Registrant refer to SOLTREST INC., unless the context requires otherwise. Unless otherwise indicated, the term fiscal year refers to our fiscal year ending June 30. Unless otherwise indicated, the term common stock refers to shares of the Company s common stock, par value $0.001 per share. SOLTREST INC. The Company SOLTREST INC. was incorporated in the State of Nevada on March 14, 2018. Our office is located at 8 Tiaojiayuan Street, Suite 1402, Chaoyang District, Beijing, China. Our telephone number: 702-979-5606, fax: 702-924-0612. SOLTREST INC. is a new company that provides special tools to computer users to reduce the risks of accessing public networks/internet. There is a range of software applications that we already developed and will continue to develop when additional financing will be available. These applications are not a substitute for existing antivirus products on a market but an additional protection layer of security while accessing public networks. These applications could be used as standalone network defenders or in conjunction with other cybersecurity applications. Implications of Being a new startup Company We are a new startup company with no significant revenue to-date. Currently we have limited assets and have began conducting business on a small- scale. Our company is in the first stage of business activities such as acquiring new clients and promoting services. Since incorporation, management has developed a detailed business plan. We have identified our target market and obtained initial funding of $5,000 (registration of the Company) from our President Ms. Li Weiwei. We will require additional funding in order to pursue our business objectives; there is no guarantee that we will be successful in this regard. We will need to complete our Offering in order to cover an estimated $17,500 in federal securities law compliance costs which includes $10,000 in accounting and auditing costs for the 12 month period following the effectiveness of our registration statement. Currently, our President devotes approximately 15 hours per week to the Company s operations. We will require capital from this Offering to fund implementation of our business plan (as discussed in the "Plan of Operation" section of this Prospectus). Our financial statements for the quarter ended September 30, 2018 report no revenue, net loss of ($8,469) and total assets of $5,159 consisting of cash and prepaid expenses. Most recent cash balance (at November 1, 2018) was $4,860. We anticipate incurring monthly operational costs of about $2,000 until our Offering is complete. The information in this Prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This Prospectus is not an offer to sell these securities and it is not soliciting offers to buy these securities in any jurisdictions where the offer or sale is not permitted. PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION DATED _____ __, 2018 SOLTREST INC. 10,000,000 Shares of Common Stock par value $0.001 per share This Prospectus relates to the direct Offering by SOLTREST INC. of up to 10,000,000 shares of our Common Stock, par value $0.001 per share. The Company is considered an emerging growth company as defined in the Jumpstart Our Business Startups Act and will be subject to reduced public company reporting requirements. There is no minimum offering of the SOLTREST INC., shares. The offering shall terminate on the earlier of (i) the date when the sale of all 10,000,000 shares is completed, (ii) when the Board of Directors decides that it is in the best interest of the Company to terminate the offering prior to the completion of the sale of all 10,000,000 shares registered under the Registration Statement of which this Prospectus is part or (iii) one year after the effective date of this prospectus. OFFERING SUMMARY Total number of offered shares 10,000,000 Common Stock Price to the public (total) $ 100,000 Price to the public (per share) $ 0.01 Underwriter s discounts and commissions N/A Net proceed company will receive from this Offering $ 100,000 Net proceed per share $ 0.01 The offering may be extended for up to two years from effectiveness. This is our initial public Offering. Prior to this Offering there has been no public market for our common stock and we have not applied for listing or quotation on any public market. After the effective date of the registration statement, we intend to list our common stock on the Over-The-Counter Bulletin Board (OTCBB), which is maintained by the Financial Industry Regulatory Authority, Inc. (FINRA). We intend to apply for quotation on OTCQB. Please note we have not engaged a market maker to apply for admission to quotation of securities on the OTCBB to-date. There is no guarantee that our common stock will ever be quoted on the OTCQB. This is the best effort direct participation Offering that will not utilize broker-dealer arrangement without incurring any additional commission expense. Our President will market our common stock and offer / sell the securities on our behalf. No Officer or Director will receive any compensation for her/his role in selling shares in the Offering. Management of the company determines the public Offering price at the time of the Offering at $0.01 per share. Our President and her affiliates have not acted as promoters nor do they have a controlling interest in any companies (either viable or dormant). Management will have sole control over company s accounts. We have not made arrangements to place the funds in an escrow account with a third party escrow agent due to the costs involved. As a result, investors are subject to the risk that creditors could attach these funds during the Offering process (see "Use of Proceeds" and "Plan of Distribution" sections). We qualify as an emerging growth company as defined in the Jumpstart our Business Startups Act of 2012, or JOBS Act. Please read the related disclosure contained on page 16 of this prospectus. We are a small startup company with limited earnings to-date focusing on early-stage business activities. This fact may impose some limitations on our shareholders ability to re-sell their shares in our company. We are not a blank check company and have no plans or intentions to engage in a business combination following this Offering. INVESTING IN OUR COMMON STOCK INVOLVES RISKS. SEE RISK FACTORS ON PAGE 5. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this Prospectus. Any representation to the contrary is a criminal offense. The date of this Prospectus is December 7, 2018 Our auditors have expressed substantial doubt regarding the company s ability to continue as a going concern. We currently do not have any written agreements in place for any investments or loans from third parties. We must raise cash to implement our business plan. Should there be no additional capital raised, we will run out of funds by January 10, 2019 ($4,860/2,000). Investors must be aware that we do not have enough capital to finance our business plans independently. We have no arrangements or contingencies in place in the event of ceased operations, in which case investors could lose their entire investment. The Offering We are offering, on a self-underwritten basis, a total of 10,000,000 shares of the common stock of our Company at a price of $0.01 per share. This is a fixed price Offering. This Offering of shares will terminate 365 days from the effective date of this Prospectus, although we may close the Offering on any date prior if the Offering is fully subscribed. The Offering price of the common stock has been arbitrarily determined and bears no relationship to our assets, book value, historical earnings or net worth. There is no minimum offering of the SOLTREST INC. shares; investors will not receive a return of their investment if all shares are not sold. The purchase of the common stock in this Offering involves a high degree of risk. The common stock offered in this Prospectus is for investment purposes only; no market currently exists for our common stock. Please refer to "Risk Factors" and "Dilution" sections before making an investment decision. Issuer SOLTREST INC. Seller SOLTREST INC. Securities Offered 10,000,000 shares of common stock Offering Price Gross $0.01 per share Offering Price Underwriter s Discounts and Commissions n/a Offering Price Net $0.01 per share Offering Period The shares are being offered for a period not to exceed 180 days from the effective date of this Prospectus Number of Common Stock Issued and Outstanding Before Offering 5,000,000, all of which are held by our President Number of Common Stock to be Issued and Outstanding After Offering 15,000,000 Gross Proceeds $100,000 Underwriter s Discounts and Commissions N/A Net Proceeds $100,000
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diff --git a/parsed_sections/prospectus_summary/2018/CIK0001754824_schultze_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001754824_schultze_prospectus_summary.txt
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+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2018/CIK0001755874_gateway_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001755874_gateway_prospectus_summary.txt
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+PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2018/CIK0001756640_wiseman_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CIK0001756640_wiseman_prospectus_summary.txt
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+PROSPECTUS SUMMARY 2 RISK FACTORS 5 SUMMARY OF FINANCIAL INFORMATION 13 MANAGEMENT S DISCUSSION AND ANALYSIS 16 INDUSTRY OVERVIEW 17 FORWARD-LOOKING STATEMENTS 18 DESCRIPTION OF BUSINESS 18 USE OF PROCEEDS 20 DETERMINATION OF OFFERING PRICE 20 DILUTION 21 SELLING SHAREHOLDERS 22 PLAN OF DISTRIBUTION 23 DESCRIPTION OF SECURITIES 24 INTERESTS OF NAMED EXPERTS AND COUNSEL 25 REPORTS TO SECURITIES HOLDERS 25 DESCRIPTION OF FACILITIES 25 LEGAL PROCEEDINGS 26 PATENTS AND TRADEMARKS 26 DIRECTORS AND EXECUTIVE OFFICERS 26 EXECUTIVE COMPENSATION 26 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 29 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 29 PRINCIPAL ACCOUNTING FEES AND SERVICES 29 MATERIAL CHANGES 29 FINANCIAL STATEMENTS F1-F23 PART II. INFORMATION NOT REQUIRED IN PROSPECTUS OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION 30 INDEMNIFICATION OF OFFICERS AND DIRECTORS 30 RECENT SALES OF UNREGISTERED SECURITIES 31 EXHIBITS TO THE REGISTRATION STATEMENT 31 UNDERTAKINGS 32 SIGNATURES 33 You should rely only on the information contained in this prospectus or contained in any free writing prospectus filed with the Securities and Exchange Commission. We have not authorized anyone to provide you with additional information or information different from that contained in this prospectus filed with the Securities and Exchange Commission. We take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. We are offering to sell, and seeking offers to buy, our common stock only in jurisdictions where offers and sales are permitted. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or any sale of shares of our common stock. Our business, financial condition, results of operations and prospects may have changed since that date. Through December 16, 2019, all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers' obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions. The date of this prospectus is __________________. - 1 - Table of Contents PROSPECTUS SUMMARY In this Prospectus "Wiseman Global Limited," "Wiseman," the "Company, , ' ': , ' ': we, , ' ': , ' ': us, and , ' ': , ' ': our, refer to Wiseman Global Limited, unless the context otherwise requires. Unless otherwise indicated, the term , ' ': , ' ': fiscal year refers to our fiscal year ending December 31st. Unless otherwise indicated, the term , ' ': , ' ': common stock refers to shares of the Company s common stock. This Prospectus, and any supplement to this Prospectus include "forward-looking statements". To the extent that the information presented in this Prospectus discusses financial projections, information or expectations about our business plans, results of operations, products or markets, or otherwise makes statements about future events, such statements are forward-looking. Such forward-looking statements can be identified by the use of words such as "intends", "anticipates", "believes", "estimates", "projects", "forecasts", "expects", "plans" and "proposes". Although we believe that the expectations reflected in these forward-looking statements are based on reasonable assumptions, there are a number of risks and uncertainties that could cause actual results to differ materially from such forward-looking statements. These include, among others, the cautionary statements in the "Risk Factors" section and the "Management s Discussion and Analysis of Financial Position and Results of Operations" section in this Prospectus. This summary only highlights selected information contained in greater detail elsewhere in this Prospectus. This summary may not contain all of the information that you should consider before investing in our common stock. You should carefully read the entire Prospectus, including "Risk Factors" beginning on Page 5, and the financial statements, before making an investment decision. The Company Wiseman Global Limited, a Nevada corporation ("the Company") was incorporated under the laws of the State of Nevada on July 17, 2018. On September 12, 2018 We, "Wiseman Global Limited," a Nevada corporation, acquired 100% of the equity interests of Wisdom Global Group Co., Limited, a Seychelles Company, in consideration of 50,000 US Dollars. Wisdom Global Group Co., Limited, a Seychelles Company, owns 100% of Wiseman Global Limited, a Hong Kong Company. On September 7, 2018, Wisdom Global Group Co., Limited, our wholly owned subsidiary, acquired 100% of the equity interests of Wiseman Global Limited, a Hong Kong Company, from our Chief Executive Officer, Mr. Lai Jinpeng, in consideration of 100 Hong Kong Dollars (Equivalent to about 13 US Dollars). At this time, we operate exclusively through our wholly owned subsidiary and share the same business plan as our wholly owned subsidiary, which also shares the same business plan as its wholly owned subsidiary, Wiseman Global Limited, the Hong Kong Company. We are engaged in the sale of household appliances and related products with a focus on the Greater China region including, but not limited to, Shenzhen and Hong Kong. The Company s executive office is located at 1308#39, Renmin 4th Road, Danshui Town, Huizhou City, 516200 Guangdong, China. We believe we need to raise $1,000,000 to execute our business plan over the next 12 months. The funds raised in this offering, even assuming we sell all the shares being offered, may be insufficient to carry out our intended business operations. We will receive proceeds from the sale of 20,000,000 shares of our common stock and intend to use the proceeds from this offering to further develop and market our lineup of products and services. There is uncertainty that we will be able to sell any of the 20,000,000 shares being offered herein by the Company. The expenses of this offering, including the preparation of this prospectus and the filing of this registration statement, estimated at $60,182, are being paid for by the Company. The maximum proceeds to us from this offering ($1,000,000) will satisfy our basic subsistence level, cash requirements for up to 12 months. 75% of the possible proceeds from the offering by the company ($750,000) will satisfy our basic, subsistence level cash requirements for up to 9 months, while 50% of the proceeds ($500,000) will sustain us for up to 6 months, and 25% of the proceeds ($250,000) will sustain us for up to 3 months. Our budgetary allocations may vary, however, depending upon the percentage of proceeds that we obtain from this offering. For example, we may determine that it is more beneficial to allocate funds toward securing potential financing and business opportunities in the short terms rather than to conserve funds to satisfy continuous disclosure requirements for a longer period. During the 12 months following the completion of this offering, we intend to continue our current business plan and increase our current level of operations. We believe that if we are not able to raise additional capital within 12 months of the effective date of this registration statement, we may be adversely affected and may have to curtail operations or continue operations at a limited level that is financially suitable for the Company. We believe that if we are not able to raise additional capital within 12 months of the effective date of this registration statement, we may be adversely affected and may have to curtail operations or continue operations at a limited level that is financially suitable for the Company. Our financial statements included herein, have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. As reflected in the accompanying financial statements, included herein, for the period ended September 30, 2018, the Company incurred a net loss of $37,932 and used cash in operating activities of $35,432, and at September 30, 2018, the Company had a working capital deficiency of $32,932. These conditions raise substantial doubt about the Company s ability to continue as a going concern. The ability to continue as a going concern is dependent upon the Company s profit generating operations in the future and/or obtaining the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they become due. These consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. The Company expects to finance its operations primarily through cash flow from revenue and continuing financial support from a shareholder. In the event that we require additional funding to finance the growth of the Company s current and expected future operations as well as to achieve our strategic objectives, the shareholder has indicated the intent and ability to provide additional financing. No assurance can be given that any future financing, if needed, will be available or, if available, that it will be on terms that are satisfactory to the Company. Even if the Company is able to obtain additional financing, if needed, it may contain undue restrictions on its operations, in the case of debt financing, or cause substantial dilution for its stock holders, in the case of equity financing. - 2 - Table of Contents Our Offering We have authorized capital stock consisting of 800,000,000 shares of common stock, $0.0001 par value per share ("Common Stock") and 200,000,000 shares of preferred stock, $0.0001 par value per share ("Preferred Stock"). We have 50,000,000 shares of Common Stock and no shares of Preferred Stock issued and outstanding. Through this offering we will register a total of 30,000,000 shares. These shares represent 20,000,000 additional shares of common stock to be issued by us and 10,000,000 shares of common stock by our selling stockholders. We may endeavor to sell all 20,000,000 shares of common stock after this registration statement becomes effective. Upon effectiveness of this Registration Statement, the selling stockholders may also sell their own shares. The price at which we, the company, offer these shares is at a fixed price of $0.05 per share for the duration of the offering. The selling stockholders will also sell shares at a fixed price of $0.05 for the duration of the offering. There is no arrangement to address the possible effect of the offering on the price of the stock. We will receive all proceeds from the sale of our common stock but we will not receive any proceeds from the selling stockholders. *The primary offering on behalf of the Company is separate from the secondary offering of the selling stockholders in that the proceeds from the shares of stock sold by the selling stockholder s will go directly to them, not the Company. The same idea applies if the Company approaches or is approached by investors who then subsequently decide to invest with the Company. Those proceeds would then go to the Company. Whomever the investors decide to purchase the shares from will be the beneficiary of the proceeds. None of the proceeds from the selling stockholder s will be utilized or given to the Company. Mr. Lai Jinpeng will clarify for investors at the time of purchase whether the proceeds are going to the Company or directly to himself. *Mr. Lai Jinpeng will be able to sell his shares at any time during the duration of this offering. Regarding the sale of Mr. Lai Jinpeng s shares, they will be sold at a fixed price of $0.05 for the duration of the offering. *Mr. Lai Jinpeng will be selling shares of common stock on behalf of the Company simultaneously to selling shares of his own personal stock from his own account. A conflict of interest may arise between Mr. Lai Jinpeng s interest in selling shares for his own account and in selling shares on the Company s behalf. Please note that at this time Mr. Lai Jinpeng intends to sell the Company s shares prior to selling his own shares, although he is under no obligation to do so. Mr. Lai Jinpeng will decide whether shares are being sold by the Company or by Mr. Lai Jinpeng himself. *We will notify investors by filing an information statement that will be available for public viewing on the SEC Edgar Database of any such extension of the offering. Securities being offered by the Company 20,000,000 shares of common stock, at a fixed price of $0.05 offered by us in a direct offering. Our offering will terminate upon the earliest of (i) such time as all of the common stock has been sold pursuant to the registration statement or (ii) 365 days from the effective date of this prospectus unless extended by our Board of Directors for an additional 90 days. We may however, at any time and for any reason terminate the offering. Securities being offered by the Selling Stockholders 10,000,000 shares of common stock, at a fixed price of $0.05 offered by selling stockholders in a resale offering. As previously mentioned this fixed price applies at all times for the duration of the offering. The offering will terminate upon the earliest of (i) such time as all of the common stock has been sold pursuant to the registration statement or (ii) 365 days from the effective date of this prospectus, unless extended by our Board of Directors for an additional 90 days. We may however, at any time and for any reason terminate the offering. Offering price per share We and the selling shareholders will sell the shares at a fixed price per share of $0.05 for the duration of this Offering. Number of shares of common stock outstanding before the offering of common stock 50,000,000 common shares are currently issued and outstanding. Number of shares of common stock outstanding after the offering of common stock 70,000,000 common shares will be issued and outstanding if we sell all of the shares we are offering. The minimum number of shares to be sold in this offering None. Market for the common shares There is no public market for the common shares. The price per share is $0.05. We may not be able to meet the requirement for a public listing or quotation of our common stock. Furthermore, even if our common stock is quoted or granted listing, a market for the common shares may not develop. The offering price for the shares will remain at $0.05 per share for the duration of the offering. - 3 - Table of Contents Use of Proceeds We intend to use the gross proceeds to us to pay for daily operating expenses, advertising and marketing expenses, fees for ongoing reporting requirements, accounting expenses, research and development of new products offerings, and expenses related to this offering. We also intend to use some of the proceeds to possibly consummate mergers or acquisitions that may further our business plan. Termination of the Offering This offering will terminate upon the earlier to occur of (i) 365 days after this registration statement becomes effective with the Securities and Exchange Commission, or (ii) the date on which all 30,000,000 shares registered hereunder have been sold. We may, at our discretion, extend the offering for an additional 90 days. At any time and for any reason we may also terminate the offering. Terms of the Offering Our Chief Executive Officer, Mr. Lai Jinpeng will sell the 20,000,000 shares of common stock on behalf of the company, upon effectiveness of this registration statement, on a BEST EFFORTS basis. Subscriptions: All subscriptions once accepted by us are irrevocable. Registration Costs We estimate our total offering registration costs to be approximately $60,182. Risk Factors: See
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diff --git a/parsed_sections/prospectus_summary/2018/CNF_cnfinance_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/CNF_cnfinance_prospectus_summary.txt
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+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2018/COGT_cogent_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/COGT_cogent_prospectus_summary.txt
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus and does not contain all of the information that you should consider in making your investment decision. Before investing in our common stock, you should carefully read this entire prospectus, including our consolidated financial statements and the related notes included elsewhere in this prospectus. You should also consider, among other things, the matters described under Risk Factors, Business, and Management s Discussion and Analysis of Financial Condition and Results of Operations, in each case appearing elsewhere in this prospectus. Unless the context otherwise requires, we use the terms Unum, company, we, us, and our in this prospectus to refer to Unum Therapeutics Inc. and, where appropriate, our subsidiary. Overview We are a clinical-stage biopharmaceutical company focused on the development and commercialization of novel immunotherapy products designed to harness the power of a patient s immune system to cure cancer. Our proprietary technology, called antibody-coupled T cell receptor (ACTR), is a universal, engineered cell therapy that is intended to be used in combination with a wide range of tumor-specific antibodies to target different tumor types. Our product candidates are composed of ACTR T cells co-administered with approved and commercially available antibodies or antibodies in preclinical or clinical development. Our vision is to use our ACTR platform to transform cancer treatment and deliver patient cures in many different hematologic and solid tumor cancers, improving upon current cell therapies. In our ongoing Phase I clinical trial using our lead ACTR construct, ACTR087, to treat adult patients with relapsed or refractory non-Hodgkin lymphoma (r/r NHL), we have demonstrated clinical proof of concept, as evidenced by ACTR T cell expansion and persistence, a favorable tolerability profile at the first dose level, and anti-tumor activity. We recently completed patient enrollment into the dose escalation phase of this trial and are advancing towards testing in an expanded patient cohort using an optimized dose of ACTR087 to support potential registration trials. Our pipeline also includes two additional product candidates in clinical testing. We have commenced a Phase I clinical trial of ACTR707, a modified ACTR construct, used in combination with rituximab in adult patients with r/r NHL and a Phase I clinical trial of ACTR087 used in combination with the novel antibody SEA-BCMA in adult patients with r/r multiple myeloma. Further, we expect to file an investigational new drug application (IND) in 2018 for ACTR707 used in combination with trastuzumab, an FDA-approved antibody, to treat patients with solid tumor cancers that overexpress the human epidermal growth factor receptor 2 (HER2+ cancers). In the longer term, we aim to leverage our ACTR platform to develop a broad range of product candidates to address many different hematologic and solid tumor cancers. Immuno-oncology, the use of a patient s immune system to treat cancer, is one of the most actively pursued areas of research in drug discovery and development. Adoptive cell therapies are one immuno-oncology approach for cancer treatment. Adoptive cell therapy starts with the isolation of immune cells from a patient, followed by genetic modification of these cells outside the patient s body. Modified cells are then re-introduced into the patient to treat disease. Chimeric antigen receptor (CAR)-T cells are one type of adoptive cell therapy. While CAR-T s efficacy in hematologic cancers has been impressive, limited clinical data have been reported on the use of CAR-Ts in solid tumor cancers and the results have been much less encouraging than in the hematologic cancer setting. Severe side effects, such as cytokine release syndrome (CRS) and neurotoxicity, have been observed in some patients. For certain CARs, on-target, off-tumor effects have led to patient deaths. These toxicities and specific solid tumor challenges create a need to better control the activity of these therapies. Our product candidates use patient-derived T cells, which are genetically modified to express the ACTR protein and co-administered with a tumor-specific antibody. ACTR is a chimeric protein which combines Table of Contents The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. PRELIMINARY PROSPECTUS (Subject to Completion) Dated March 19, 2018 5,770,000 Shares Common Stock Unum Therapeutics Inc. is offering 5,770,000 shares of its common stock. This is our initial public offering and no public market exists for our common stock. We anticipate that the initial public offering price per share of our common stock will be between $12.00 and $14.00. We have applied to list our common stock on The Nasdaq Global Market under the symbol UNUM. We are an emerging growth company as that term is used in the Jumpstart Our Business Startups Act of 2012 (JOBS Act), and, as such, we have elected to comply with certain reduced public company reporting requirements for this prospectus and future filings. See Prospectus Summary Implications of Being an Emerging Growth Company. Investing in our common stock involves risks. See Risk Factors beginning on page 12. Price to Public Underwriting Discounts and Commissions(1) Proceeds to Unum Therapeutics Inc. (Before Expenses) Per Share $ $ $ Total $ $ $ (1) See Underwriters beginning on page 168 of this prospectus for additional information regarding underwriting compensation. Certain of our existing stockholders, including affiliates of our directors, have indicated an interest in purchasing an aggregate of up to $37.5 million of shares of our common stock in this offering at the initial public offering price. However, because indications of interest are not binding agreements or commitments to purchase, the underwriters may determine to sell more, less or no shares in this offering to any of these stockholders, or any of these stockholders may determine to purchase more, less or no shares in this offering. The underwriters will receive the same underwriting discount on any shares purchased by these stockholders as they will on any other shares sold to the public in this offering. We have granted the underwriters an option to purchase up to 865,500 additional shares of our common stock to cover over allotments. The underwriters can exercise this option at any time within 30 days after the date of this prospectus. Seattle Genetics, Inc. has agreed to purchase from us, concurrently with this offering in a private placement, $5.0 million of shares of our common stock at a price per share equal to the initial public offering price. The shares of common stock purchased in the concurrent private placement will not be subject to any underwriting discounts or commissions. See Concurrent Private Placement. The underwriters expect to deliver the shares of our common stock to purchasers on or about , 2018. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. MORGAN STANLEY COWEN SUNTRUST ROBINSON HUMPHREY WEDBUSH PACGROW , 2018 Table of Contents components from proteins normally found on both T cells and natural killer cells, two types of human immune cells. The natural killer cell component enables binding to tumor cell-bound antibodies and the T cell component enables potent cytotoxicity, proliferation, and persistence. Tumor-targeting antibodies administered with ACTR T cells bind to the surface of the tumor cell and, in effect, label it for ACTR T cell attack. When an ACTR T cell encounters a tumor cell bound with antibodies, it binds to those antibodies and kills the tumor cell through a process known as antibody-dependent cellular cytotoxicity (ADCC), a function not normally observed with T cells. No special modification of the tumor-specific antibody is required in order for ADCC to take place. ACTR T cells can be directed to a wide range of different cancer cell antigens through the co-administration of antigen-specific antibodies. Thus, we believe an ACTR T cell can be used in many different cancer types. Preclinical data from in vivo testing show that ACTR T cell-mediated tumor killing activity may be adjusted by modulating the dose of the targeting antibodies. This ability to adjust ACTR T cell activity could make it possible to define an optimal dose through clinical testing to maximize tumor-killing activity and minimize toxicity. We have a broad product pipeline that includes three clinical stage product candidates: Our most advanced product candidate, ACTR087 used in combination with rituximab, is being tested in adult patients with r/r NHL in an ongoing Phase I clinical trial called ATTCK-20-2. Two dose levels were explored in the dose escalation phase of this trial. Expansion and persistence of ACTR T cells was observed in all patients evaluable for response in both tested dose levels for as long as monitoring continued, consistent with what has been observed in CAR-T trials. At the first dose level of this trial, seven patients were treated with ACTR087 used in combination with rituximab and six patients were evaluable for response. Of the six evaluable patients, two complete responses and one partial response were observed. As of March 7, 2018, one of the complete responses was ongoing. No adverse events commonly associated with T cell activation (CRS or neurotoxicity) of any grade were observed. At the second dose level of this trial, nine patients were treated with ACTR087 used in combination with rituximab (a tenth patient was treated at the first dose level due to patient cell production limitations). Six of these patients were evaluable for response at the 42-day follow-up as of March 7, 2018. Three partial responses have thus far been observed, one of which was ongoing as of March 7, 2018. We also observed dose-limiting toxicities in three patients within this cohort and concluded that under this treatment regimen, the second dose level exceeds the maximum tolerated dose. We recently completed patient enrollment into the dose escalation phase of this trial and are advancing towards testing in an expanded patient cohort using an optimized dose of ACTR087 to support potential registration trials. We plan to report preliminary data from this expansion cohort at the end of 2018. In parallel with this ongoing Phase I clinical trial, we plan to initiate a Phase II clinical trial exploring ACTR087 used in combination with rituximab in adult patients with r/r NHL who received prior CD19 CAR-T therapy. Our second clinical stage product candidate, ACTR707 used in combination with rituximab, is being tested in adult patients with r/r NHL in a Phase I, multi-center, open-label clinical trial called ATTCK-20-03. ACTR707 is a modified ACTR construct designed to generate a more potent and sustained immune response to overcome immunosuppressive tumor microenvironments commonly found in solid tumor cancers. ACTR707 demonstrated activity against both hematologic and solid tumor cancers in preclinical studies. We are currently enrolling and dosing patients, and we expect to report initial data from the clinical trial in the fourth quarter of 2018. We plan to continue enrolling patients in this trial into 2019. We expect to leverage data from the Phase I clinical trial in future studies by combining ACTR707 with a variety of antibodies targeting different cancers. Our third clinical stage product candidate, ACTR087 used in combination with SEA-BCMA, is the first product candidate resulting from our strategic collaboration with Seattle Genetics, Inc. (Seattle Genetics). We are currently enrolling and dosing adult patients with r/r multiple myeloma in a Phase I multi-center trial and we expect to report initial data from this trial in the fourth quarter of 2018. Table of Contents TABLE OF CONTENTS Page Prospectus Summary 1
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+Prospectus summary This summary highlights information contained elsewhere in this prospectus. This summary does not contain all of the information you should consider before investing in our common stock. You should read this entire prospectus carefully, especially the section in this prospectus entitled Risk factors and our consolidated financial statements and the related notes thereto included at the end of this prospectus, before making an investment decision. As used in this prospectus, unless the context otherwise requires, references to we, us, our, our company and Crinetics refer to Crinetics Pharmaceuticals, Inc. Overview We are a clinical stage pharmaceutical company focused on the discovery, development and commercialization of novel therapeutics for rare endocrine diseases and endocrine-related tumors. Endocrine pathways function to maintain homeostasis and commonly use peptide hormones acting through G protein coupled receptors, or GPCRs, to regulate many aspects of physiology including growth, energy, metabolism, gastrointestinal function and stress responses. We have assembled a seasoned team with extensive expertise in drug discovery and development in endocrine GPCRs and built a highly productive drug discovery organization. We have discovered a pipeline of oral nonpeptide (small molecule) new chemical entities that target peptide GPCRs to treat a variety of rare endocrine diseases where treatment options have significant efficacy, safety and/or tolerability limitations. Our lead product candidate, CRN00808, is currently in clinical development for the treatment of acromegaly, and we are advancing additional product candidates through preclinical studies in parallel. Our vision is to build the leading endocrine company which consistently pioneers new therapeutics to help patients better control their disease and improve their daily lives. We focus on the discovery and development of oral nonpeptide therapeutics that target peptide GPCRs with well understood biological functions, validated biomarkers and the potential to substantially improve the treatment of endocrine diseases and/or endocrine-related tumors. All of our product candidates have been discovered and developed internally and we have retained global rights to commercialize our product candidates and have no royalty or licensing obligations. The following table summarizes our product candidate pipeline and anticipated milestones. Our discovery team has significant expertise in understanding and creating product candidates to influence the dynamic behavior of GPCRs and has developed a number of proprietary methods, techniques and tools that we believe will enable us to efficiently and reliably evaluate newly synthesized molecules. We employ an iterative strategy where compounds are designed, synthesized and rapidly characterized for pharmacologic and pharmaceutical properties. There are more than 80 known peptide hormones acting at more than 120 known different receptors. Historically, it was assumed that small molecules could not replicate or compete with the complex interactions between peptides and their cognate GPCRs. As such, most drugs developed for peptide GPCRs have been and continue to be peptides themselves, which present manufacturing and formulation Table of Contents The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state or other jurisdiction where the offer or sale is not permitted. Subject to Completion, dated July 9, 2018 Preliminary prospectus 5,000,000 shares Common stock This is an initial public offering of shares of common stock by Crinetics Pharmaceuticals, Inc. We are offering 5,000,000 shares of our common stock to be sold in the offering. The initial public offering price is expected to be between $15.00 and $17.00 per share. Prior to this offering, there has been no public market for our common stock. We have applied to list our common shares on the Nasdaq Global Market, under the symbol CRNX. We are an emerging growth company as defined under the federal securities laws and, as such, have elected to comply with certain reduced public company reporting requirements. Per share Total Initial public offering price $ $ Underwriting discounts and commissions(1) $ $ Proceeds to Crinetics Pharmaceuticals, Inc., before expenses $ $ (1) See Underwriting for a description of the compensation payable to the underwriters. We have granted the underwriters an option for a period of 30 days to purchase up to 750,000 additional shares of common stock. Investing in our common stock involves a high degree of risk. See Risk factors beginning on page 11. Neither the Securities and Exchange Commission nor any other state securities commission has approved or disapproved of these securities or passed on the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. Certain of our principal stockholders, including entities affiliated with certain of our directors, have indicated an interest in purchasing an aggregate of approximately $30.0 million in shares of our common stock in this offering at the initial public offering price per share and on the same terms as the other purchasers in this offering. However, because these indications of interest are not binding agreements or commitments to purchase, the underwriters may determine to sell more, less or no shares in this offering to any or all of these stockholders, or any or all of these stockholders may determine to purchase more, less or no shares in this offering. The underwriters will receive the same underwriting discount on any shares purchased by these stockholders as they will on any other shares sold to the public in this offering. The underwriters expect to deliver the shares to purchasers on or about , 2018. J.P. Morgan Leerink Partners Piper Jaffray , 2018 Table of Contents difficulties and force patients to undergo frequent injections because peptides generally are not orally bioavailable. With each of our drug discovery programs, our goal is to specifically tailor a product candidate with pharmacologic and pharmaceutical properties highly optimized for its interaction with its specific GPCR target that we anticipate will translate to downstream benefits in our chosen therapeutic applications. We were founded by a team of scientists with a track record of drug discovery and development to create important new therapeutic options for patients with rare endocrine diseases. Prior to founding the company, our Chief Executive Officer, Scott Struthers, Ph.D., was Senior Director and Head of Endocrinology and Metabolism at Neurocrine Biosciences, Inc. There, Dr. Struthers and his fellow co-founders, Stephen Betz, Ph.D. and Frank Zhu, Ph.D., as well as our VP of Development Ajay Madan, Ph.D., D.A.B.T., held key leadership roles in the discovery and development of elagolix, a nonpeptide product candidate designed for the treatment of endometriosis and uterine fibroids that is currently awaiting a decision from the U.S. Food and Drug Administration, or FDA, on marketing approval. In addition, Dr. Madan held a key leadership role in the discovery and development of Ingrezza, which was approved by the FDA in 2017 for tardive dyskinesia. Our investors include 5AM Ventures, OrbiMed Advisors, Perceptive Advisors, RA Capital Management, Versant Ventures and Vivo Capital. Our product candidates CRN00808 for the treatment of acromegaly Our lead product candidate, CRN00808, establishes a new class of oral selective nonpeptide somatostatin receptor type 2, or sst2, biased agonists designed for the treatment of acromegaly and is the first agent in its class with reported clinical results. Somatostatin is a neuropeptide hormone that broadly inhibits the secretion of other hormones, including growth hormone, or GH, from the pituitary gland. Acromegaly arises from a benign pituitary tumor that secretes excess GH that in turn causes excess secretion of insulin-like growth factor-1, or IGF-1, by the liver. This loss of homeostasis in the GH axis results in excess tissue growth and other adverse metabolic effects throughout the body. More than 25,000 people in the United States suffer from acromegaly, and an estimated 40% to 60% are candidates for chronic pharmacological intervention, of which somatostatin peptide analogs are the primary pharmacotherapy. In 2017, injected somatostatin peptide drugs accounted for approximately $2.7 billion in global sales for the treatment of acromegaly, neuroendocrine tumors, or NETs, and other uses. Currently marketed peptide drugs require painful monthly or daily injections and, in the case of somatostatin peptide drugs, often fail to fully control the disease in many acromegaly patients. In March 2018, we reported initial results from a Phase 1, double-blind, randomized, placebo-controlled, single- and multiple-ascending dose trial to evaluate the safety, pharmacokinetics, or PK, and pharmacodynamics, or PD, of CRN00808 in 99 healthy volunteers. CRN00808 demonstrated clinical proof-of-concept by potently suppressing stimulated GH and baseline IGF-1 in these subjects. The plasma exposure of CRN00808 indicated the drug was well absorbed with a half-life of 42 to 50 hours, supporting once daily administration in patients. The safety and tolerability of CRN00808 observed in this trial was generally consistent with that of approved peptide somatostatin analogs. The most common adverse events were mild gastrointestinal disorders and mild elevations of pancreatic enzymes. We plan to submit an investigational new drug application, or IND, to the FDA in the second half of 2018 and, if accepted, plan to initiate two Phase 2 clinical trials in acromegaly patients in early 2019. We anticipate that the first of these will be a double-blind, randomized, placebo-controlled trial conducted in patients whose IGF-1 levels are currently controlled by octreotide or lanreotide, each of which is a somatostatin analog approved for the treatment of acromegaly. We plan to conduct a second, open-label exploratory Phase 2 trial to evaluate the effects of CRN00808 on patients whose IGF-1 levels are not adequately controlled by octreotide or lanreotide alone. Table of Contents Table of contents Page Prospectus summary 1
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+PROSPECTUS SUMMARY This prospectus summary contains information about us and this offering. Because it is a summary, it does not contain all of the information that you should consider before deciding whether or not you should purchase shares of our common stock. To understand this offering fully, you should carefully read this entire prospectus, including the Risk Factors section, and the documents incorporated herein by reference. The following summary is qualified in its entirety by reference to the detailed information appearing elsewhere or incorporated by reference into this registration statement. Our Company USA Technologies, Inc. (the Company, we, USAT, us or our ) provides wireless networking, cashless transactions, asset monitoring, and other value-added services principally to the small ticket, unattended Point of Sale ( POS ) market. Our ePort technology can be installed and/or embedded into everyday devices such as vending machines, a variety of kiosks, amusement games, and commercial laundry via either our ePort hardware or our Quick Connect solution. Our associated service, ePort Connect, is a Payment Card Industry Data Security Standard (PCI DSS)-compliant, comprehensive service that includes simplified credit card processing and support, consumer engagement services as well as telemetry, Internet of Things ( IoT ) and machine-to-machine ( M2M ) services, including the ability to remotely monitor, control, and report on the results of distributed assets containing our electronic payment solutions. We are a leading provider in the small ticket, beverage and food vending industry and are expanding our solutions and services to other unattended market segments, such as amusement, commercial laundry, kiosk and others. Historically, these distributed assets have relied on cash for payment in the form of coins or bills, whereas, our systems allow them to accept cashless payments through the use of credit or debit cards or other emerging contactless forms, such as mobile payment. On November 9, 2017, we acquired Cantaloupe Systems, Inc. ( Cantaloupe ), a premier provider of cloud and mobile solutions for the self-service retail market, in a transaction valued at approximately $85 million, consisting of $65.2 million in cash and $19.8 million in shares of our common stock. The acquisition expanded our existing cashless payment and asset monitoring platform to an end-to-end logistics and enterprise platform by integrating Cantaloupe s Seed software services, which provide dynamic route scheduling, automated pre-kitting, responsive merchandising, inventory management, and warehouse and accounting management. We believe that the services we obtained as a result of the acquisition are highly complementary, value-added cloud-based and mobile services, which we are now able to cross-sell to our existing customer base. In addition to new technology and services, due to Cantaloupe s existing customer base, the acquisition expands our footprint into new global markets. As a result of the Cantaloupe acquisition, we acquired approximately 1,400 new customers and 270,000 new connections to our service. We generate revenue from the sale of equipment and from license and transaction fees. During the fiscal year ended June 30, 2017, and the nine months ended March 31, 2018, we derived 66% and 74% of our revenues, respectively, from recurring license and transaction fees related to our service and 34% and 26% of our revenues, respectively, from equipment sales. We consider a connection to be the utilization by an unattended location owned or operated by our customer of at least one of the services offered by our end-to-end enterprise platform. These services include cashless payment, loyalty, inventory management, warehouse and accounting management, and responsive merchandising. Connections to our service include those resulting from the sale or lease of our POS electronic payment devices or certified payment software or the servicing of similar third-party installed POS terminals. Connections to our service are the most significant driver of our revenues, particularly the higher margin recurring revenues from license and transaction fees. We believe that our service-approach business model, including our value-added services, could create a high-margin stream of recurring revenues that could create a foundation for long-term value and continued growth. Our Industry We operate primarily in the small ticket electronic payments industry and, more specifically, the unattended POS market. We also have the ability to accept cashless payment on the go through mobile-based payment services, which are generally higher ticket transactions. Our solutions and services facilitate electronic payments in industries that have traditionally relied on cash transactions. We believe the following industry trends are driving growth in demand for electronic payment systems in general and more specifically within the markets we serve: Shift Toward Electronic Payment Transactions and Away from Cash and Checks. There has been an ongoing shift away from paper-based methods of payment, including cash and checks, towards electronic-based methods of payment. According to The Nilson Report, December 2016, paper-based methods of payment continued to decline in 2015, representing 26.14% of transaction dollars measured compared to 28.07% in 2014. The four card-based systems credit, debit, prepaid, and electronic benefits transfer generated $5.67 trillion in the United States in 2015, 59.32% of transaction dollars measured. The Nilson Report projects that, by 2019, spending at merchants in the U.S. from the four card-based systems will grow to 67.03% of total transaction dollars measured. The information in this preliminary prospectus is not complete and may be changed. Neither we nor the selling shareholders may sell these securities or accept offers to buy these securities until the registration statement filed with the Securities and Exchange Commission becomes effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. Subject to Completion Preliminary Prospectus Dated May 21, 2018 PROSPECTUS 4,669,750 Shares of Common Stock USA TECHNOLOGIES, INC. We and the selling shareholders are offering 4,116,563 shares and 553,187 shares, respectively, of our common stock, assuming a public offering price of $11.75, the last reported sale price of our common stock on The NASDAQ Global Market on May 15, 2018, with an aggregate market value of approximately $48,369,618 and $6,499,947, respectively. We will not receive any proceeds from the sale of the shares to be offered by the selling shareholders. Our common stock is quoted on The Nasdaq Global Market under the symbol USAT. Investing in our common stock involves risks. You should read the section entitled Risk Factors, beginning on page 12 of this prospectus and the documents incorporated by reference into this prospectus, and all other information included in this prospectus in connection with an investment in our common stock. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. Per Share Total Public offering price $ $ Underwriting discounts and commissions (1) $ $ Proceeds to us, before expenses $ $ Proceeds to selling shareholders, before expenses $ $ Table of Contents Increase in Consumer Demand for Electronic Payments. The unattended, vending and kiosk POS market has historically been dominated by cash purchases. However, oftentimes, cash purchases at unattended POS locations represent a cumbersome transaction for the consumer because they do not have the correct monetary value (paper or coin), or the consumer does not have the ability to convert their bills into coins. We believe electronic payment system providers such as the Company that can meet consumers demand within the unattended market will be able to offer retailers, card associations, card issuers and payment processors and business owners an expanding value proposition at the POS. Based upon our survey of selected vending machines connected to our service over a recent twelve-month period, we estimate that average annual cashless sales per machine increased by approximately 44% from those of a prior twelve-month period, and cashless sales as a percentage of total machine sales (cashless and cash) increased by 15% from those of such prior twelve-month period. In addition, average consumer purchases during the recent twelve-month period in which the consumer utilized a credit or debit card were approximately 35% higher than purchases where the consumer utilized cash. Increase in Merchant/Operator Demand for Electronic Payments. We believe that, increasingly, merchants and operators of unattended payment locations (e.g., vending machines, laundry, tabletop games, etc.) are utilizing electronic payment alternatives as a means to improve business results. The Company works with its customers to help them drive increased revenue of their distributed assets through this expanded market opportunity. In addition, electronic payment systems can provide merchants and operators real-time sales and inventory data utilized for back-office reporting and forecasting, like the Company s solutions and services, helping them to manage their business more efficiently. Increase in Demand for Integrated Payment Solutions. We believe that merchants have come to value payment solutions that are integrated or bundled with other solutions and software. Offering an integrated solution allows us to provide a single source solution for our products and results in better customer retention, less focus on price and a better overall experience for our customers. Our recent acquisition of Cantaloupe allows us to provide an end-to-end enterprise solution to our customers, which includes dynamic route scheduling, automated pre-kitting, responsive merchandising, inventory management, and warehouse and accounting management. We also view our integrated solutions as a significant competitive advantage as competitors will need fully integrated solutions to compete. Increase in Demand for Networked Assets. Machine-to-machine ( M2M ) technology includes capturing value from wireless modules and electronic devices to improve business productivity and customer service. In addition, networked assets can provide valuable information regarding consumers purchasing patterns and payment preferences, allowing operators to more effectively tailor their offerings to consumers. Gartner, Inc. forecasts that 20.8 billion connected things will be in use worldwide by 2020. POS Technology and NFC Equipped Mobile Phone Payment Improvements. Near Field Communication ( NFC ) is a short range wireless connectivity technology that uses electromagnetic radio fields to enable communication between devices when there is a physical touch, or when they are within close proximity to one another. We believe that POS contactless terminals that are enabled to accept NFC payments and digital wallet applications, such as Google Wallet, Chase Pay, Apple Pay, the recently introduced Android Pay, and others, stand to benefit from these evolving trends in mobile payment. Digital wallet is essentially a digital service, accessed via the web or a mobile phone application that serves as a substitute for the traditional credit or debit card. Providers can also market directly to targeted consumers with coupons and loyalty programs. As approximately 622,000 of our connections are contactless enabled to accept NFC payments (in addition to magnetic stripe cards) as of December 31, 2017, we believe that we are well-positioned to benefit from this emerging space. Our Connection Base As of June 30, 2017 and March 31, 2018, we had 568,000 and 969,000 connections, respectively, to our service. These connections represented a 32% and 92% increase from connections as of June 30, 2016 and March 31, 2017, respectively. During the fiscal year ended June 30, 2017, we processed approximately 414.9 million cashless transactions totaling approximately $803 million in transaction dollars, representing a 31% increase in transaction volume and a 37% increase in dollars processed during the previous fiscal year ended June 30, 2016. During the three months ended March 31, 2018, we processed approximately 170.6 million cashless transactions, totaling approximately $318.0 million in transaction dollars, representing a 63% increase in transaction volume and a 57% increase in dollars processed during the three months ended March 31, 2017. As of March 31, 2018, we had approximately 15,600 customers. Our customers range from global food service organizations to small businesses that operate primarily in the self-serve, small ticket retail markets including beverage and food vending, amusement and arcade machines, smartphones via our ePort Online solution, commercial laundry, tolls and various other self-serve kiosk applications, as well as equipment developers or manufacturers who incorporate our service into their product offerings. We estimate that there are approximately 13 million to 15 million potential connections in this self-serve, small ticket retail market. We estimate that our current customers represent approximately 2 million of these potential connections, exclusive of any potential connections attributable to new customers acquired from Cantaloupe. (1) See the section entitled Underwriting, beginning on page 32 of this prospectus, for additional information regarding underwriting compensation. We have granted the underwriters an option to buy up to an additional 700,463 shares of common stock to cover over-allotments, assuming a public offering price of $11.75, the last reported sale price of our common stock on The NASDAQ Global Market on May 15, 2018, with an aggregate market value of approximately $8,230,435. The underwriters may exercise this option at any time during the 30-day period from the date of this prospectus. The underwriters are offering the shares of common stock for sale on a firm commitment basis. The underwriters expect to deliver the shares of common stock to the purchasers on or about , 2018. Sole Book-Running Manager William Blair Table of Contents Our customers can obtain POS electronic payment devices from us in the following ways: Purchasing devices directly from us or one of our authorized resellers; Financing devices under the Company s QuickStart Program, which are non-cancellable sixty-month sales-type leases, through an unrelated equipment financing company, if available, or directly from the Company; and Renting devices under our JumpStart Program, which are cancellable month-to-month operating leases. Our Solutions Our solutions and services have been designed to simplify the transition to cashless for traditionally cash-only based businesses. As such, they are turn-key and include our comprehensive ePort Connect service and POS electronic payment devices or certified payment software, which are able to process traditional magnetic stripe credit and debit cards, contactless credit and debit cards and mobile payments. Standard services through ePort Connect are maintained on our proprietary operating systems and include merchant account setup on behalf of the customer, automatic processing and settlement, sales reporting and 24x7 customer support. Other value-added services that customers can choose from include things such as cashless deployment planning, cashless performance review and loyalty products and services. Our solutions also provide flexibility to execute a variety of payment applications on a single system, transaction security, connectivity options, compliance with certification standards, and centralized, accurate, real-time sales and inventory data to manage distributed assets (wireless telemetry and M2M). Our ePort Interactive is a cloud-based interactive media and content delivery management system that provides enhanced vendor management system ( VMS ) integration and consumer product information, including nutritional data. The technology is NFC enabled and compatible with mobile wallets including Apple Pay and Android Pay, and supports instant refunds, couponing, advertising and real-time consumer feedback to the owner and operator. Our Competitive Strengths We believe that we benefit from a number of advantages gained through our nearly twenty-five year history in our industry. They include: One-Stop Shop, End-to-End Solution. We offer our customers one point of contact through a bundled cashless payment solution, which, following the Cantaloupe acquisition, includes dynamic route scheduling, automated pre-kitting, responsive merchandising, inventory management and warehouse and accounting management. Trusted Brand Name. Our ePort Connect solution has a strong national reputation for quality, reliability and innovation. Market Leadership. With 969,000 connections to our network as of March 31, 2018, we believe we have the largest installed base of unattended POS electronic payment systems in the unattended small ticket retail market for food and beverage and we are continuing to expand to other adjacent markets. Attractive Value Proposition for Our Customers. We believe that our solutions provide our customers an attractive value proposition by reducing costs, improve operating efficiencies and increasing the purchases of their consumers machines. Increasing Scale and Financial Stability. Due to the continued growth in connections to our service, during the 2017 fiscal year and the nine months ended March 31, 2018, 66% and 74% of our revenues, respectively, were derived from licensing and processing fees, which are recurring in nature. Customer-Focused Research and Development. We have generated considerable intellectual property and know-how with 86 patents (US and International) as of March 31, 2018. Our Growth Opportunity Our primary objective is to continue to enhance our position as a leading provider of technology that enables electronic payment transactions and value-added services. We plan to execute this growth strategy organically and through strategic acquisitions. Key elements of our strategy are to: Leverage and further penetrate our existing customers/partners Table of Contents Expand distribution and sales reach Further penetrate attractive adjacent markets Capitalize on opportunities in international markets Capitalize on the emerging NFC and growing mobile payments trends Continuously enhance our solutions and services through innovation Provide comprehensive service and support Leverage intellectual property consisting of 86 U.S. and foreign patents Our Acquisition Strategy We have historically, and expect to continue to, drive growth in connections and expand the value of our services through strategic acquisitions of businesses, products, or technologies. We intend to pursue acquisitions of businesses that are accretive and complementary to our current product and service offerings by broadening our customer base, expanding our geographic footprint, and acquiring strategic technologies or otherwise complementing our current or future business. On November 9, 2017, we acquired Cantaloupe, a premier provider of cloud and mobile solutions for the self-service retail market, for which the Company paid $65.2 million in cash and issued shares of its common stock valued at $19.8 million. We have funded the cash portion of the transaction with cash on hand from a public offering that closed in July 2017, and through a new $37.5 million credit facility with JPMorgan Chase Bank, N.A. The acquisition expanded our existing cashless payment and asset monitoring platform to an end-to-end logistics and enterprise platform by integrating Cantaloupe s Seed software services, which provide dynamic route scheduling, automated pre-kitting, responsive merchandising, inventory management and warehouse and accounting management.
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+PROSPECTUS SUMMARY 1
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+This summary of material information contained or incorporated by reference in this Prospectus is intended for quick reference only and does not contain all of the information that may be important to you. For ease of reference, any references throughout this Prospectus to various actions taken by the Fund are actually actions that the Trust has taken on behalf of the Fund. The remainder of this Prospectus contains more detailed information. You should read the entire Prospectus, including the information incorporated by reference in this Prospectus, before deciding whether to invest in Shares. Please see the section Incorporation by Reference of Certain Documents for information on how you can obtain the information that is incorporated by reference in this Prospectus. This Prospectus is dated October 10, 2018. The Trust and the Fund Invesco DB Multi-Sector Commodity Trust (the Trust ) was formed as a Delaware statutory trust, in seven separate series, or funds, on August 3, 2006. Invesco DB Agriculture Fund (the Fund ) is a series of the Trust. The Fund issues common units of beneficial interest ( Shares ), which represent units of fractional undivided beneficial interest in and ownership of the Fund. The term of the Trust and the Fund is perpetual (unless terminated earlier in certain circumstances). The principal executive offices of the Trust and the Fund are located at c/o Invesco Capital Management LLC, 3500 Lacey Road, Suite 700, Downers Grove, IL 60515, and its telephone number is (800) 983-0903. As of the date of this Prospectus, the Trust consists of the following seven series Invesco DB Energy Fund, Invesco DB Oil Fund, Invesco DB Precious Metals Fund, Invesco DB Gold Fund, Invesco DB Silver Fund, Invesco DB Base Metals Fund and Invesco DB Agriculture Fund. This Prospectus is for the Fund only and not for the first six funds listed in the prior sentence (the Sectors Funds ). The Sectors Funds are not being offered by this Prospectus. Information regarding both the Fund and the Sectors Funds (and any other additional series of the Trust) is available at www.invesco.com/ETFs. Shares Listed on the NYSE Arca The Shares are listed on the NYSE Arca under the symbol DBA. Secondary market purchases and sales of Shares are subject to ordinary brokerage commissions and charges. Purchases and Sales in the Secondary Market on the NYSE Arca Individual Shares may be purchased and sold only on the NYSE Arca. Because the Shares will trade at market prices, rather than the net asset value ( NAV ) of the Fund, Shares may trade at prices greater than NAV (at a premium), at NAV, or less than NAV (at a discount). Baskets may be created or redeemed directly with the Fund only by Authorized Participants. It is expected that Baskets will be created when the market price per Share is at a premium to the NAV per Share. Similarly, it is expected that Baskets will be redeemed when the market price per Share is at a discount to the NAV per Share. Retail investors seeking to purchase or sell Shares on any day are expected to effect such transactions in the secondary market, on the NYSE Arca, at the market price per Share. The market price of the Shares may not be identical to the NAV per Share, but these valuations are expected to be very close. Investors are able to use the intra-day indicative value ( IIV ) per Share to determine if they want to purchase in the secondary market via the NYSE Arca. The IIV per Share is based on the prior day s final NAV, adjusted four times per minute throughout the trading day to reflect the price changes of the Fund s holdings. As a result, the IIV provides a continuously updated estimate of the Fund s NAV per Share. Retail investors may purchase and sell Shares through traditional brokerage accounts. Purchases or sales of Shares may be subject to brokerage commissions. Investors are encouraged to review the terms of their brokerage accounts for applicable charges. Table of Contents INVESCO DB MULTI-SECTOR COMMODITY TRUST Invesco DB Agriculture Fund 101,372,875 Common Units of Beneficial Interest Invesco DB Multi-Sector Commodity Trust (the Trust ) is organized in seven separate series as a Delaware statutory trust. The Invesco DB Agriculture Fund (the Fund ) is a series of the Trust and is offered pursuant to this Prospectus. The Fund issues common units of beneficial interest ( Shares ), which represent units of fractional undivided beneficial interest in and ownership of the Fund. Shares may be purchased from the Fund only by certain eligible financial institutions, called Authorized Participants, and only in one or more blocks of 200,000 Shares ( Baskets ). Baskets are issued on the creation order settlement date as of 2:45 p.m., Eastern time, on the business day immediately following the creation order date at the applicable net asset value ( NAV ) per Share as of the closing time of the NYSE Arca, Inc. ( NYSE Arca ) or the last to close of the exchanges on which the Fund s futures contracts are traded, whichever is later, on the creation order date. Upon submission of a creation order, the Authorized Participant may request the Managing Owner to agree to a creation order settlement date up to two business days after the creation order date. The Shares trade on the NYSE Arca under the symbol DBA. Invesco Capital Management LLC serves as the Fund s managing owner (the Managing Owner ), commodity pool operator and commodity trading advisor. The Fund trades exchange-traded futures contracts on the commodities comprising the DBIQ Diversified Agriculture Index Excess Return (the Index ) with a view to tracking the Index over time. The Fund also earns interest income ( Treasury Income ) from United States Treasury securities ( Treasury Securities ) and dividends from its holdings in money market mutual funds (affiliated or otherwise) ( Money Market Income ). The Fund also gains exposure to Treasury Securities through an investment in exchange-traded funds (affiliated or otherwise) ( ETFs ) that track indexes that measure the performance of U.S. Treasury Obligations with a maximum remaining maturity of up to twelve months ( T-Bill ETFs ), and the Fund may receive dividends or distributions of capital gains from those investments ( T-Bill ETF Income ). Additionally, the Fund s performance reflects the appreciation or depreciation of its investments in Treasury Securities, money market mutual funds and T-Bill ETFs. The Index, which is comprised of one or more underlying commodities (the Index Commodities ), is intended to reflect the agricultural sector. The Index Commodities consist of Corn, Soybeans, Wheat, Kansas City Wheat, Sugar, Cocoa, Coffee, Cotton, Live Cattle, Feeder Cattle, and Lean Hogs. Except when aggregated in Baskets, the Shares are not redeemable securities. INVESTING IN THE SHARES INVOLVES SIGNIFICANT RISKS. PLEASE REFER TO RISK FACTORS BEGINNING ON PAGE 15. Futures trading is volatile and even a small movement in market prices could cause large losses. The success of the Fund s trading program depends upon the skill of the Managing Owner and its trading principals. You could lose all or substantially all of your investment. The Index is concentrated in a small number of commodities. Concentration may result in greater volatility. Investors pay fees in connection with their investment in the Shares, including asset-based fees of 0.85% per annum. Additional charges include brokerage fees of approximately 0.04% per annum in the aggregate. Authorized Participants may offer to the public, from time-to-time, Shares from any Baskets they create. Shares offered to the public by Authorized Participants will be offered at a per-Share offering price that will vary depending on, among other factors, the trading price of the Shares on the NYSE Arca, the NAV per Share and the supply of and demand for the Shares at the time of sale. Because the Shares will trade at market prices, rather than the NAV of the Fund, Shares may trade at prices greater than NAV (at a premium), at NAV, or less than NAV (at a discount). Authorized Participants will not receive from the Fund, the Managing Owner or any of their affiliates any fee or other compensation in connection with their sale of Shares to the public. An Authorized Participant may receive commissions or fees from investors who purchase Shares through their commission or fee-based brokerage accounts. In addition, the Managing Owner pays a distribution services fee to Invesco Distributors, Inc. and pays a marketing services fee to Deutsche Investment Management Americas Inc. ( DIMA ) without reimbursement from the Trust or the Fund. For more information regarding items of compensation paid to Financial Industry Regulatory Authority, Inc. ( FINRA ) members, please see the Plan of Distribution section on page 95. These securities have not been approved or disapproved by the U.S. Securities and Exchange Commission ( SEC ) or any state securities commission nor has the SEC or any state securities commission passed upon the accuracy or adequacy of this Prospectus. Any representation to the contrary is a criminal offense. The Fund is not a mutual fund or any other type of investment company within the meaning of the Investment Company Act of 1940, as amended, and is not subject to regulation thereunder. THE COMMODITY FUTURES TRADING COMMISSION HAS NOT PASSED UPON THE MERITS OF PARTICIPATING IN THIS POOL NOR HAS THE COMMISSION PASSED ON THE ADEQUACY OR ACCURACY OF THIS DISCLOSURE DOCUMENT. October 10, 2018 Table of Contents THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR SOLICITATION TO SELL OR A SOLICITATION OF AN OFFER TO BUY, NOR SHALL THERE BE ANY OFFER, SOLICITATION, OR SALE OF THE SHARES IN ANY JURISDICTION IN WHICH SUCH OFFER, SOLICITATION, OR SALE IS NOT AUTHORIZED OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE ANY SUCH OFFER, SOLICITATION, OR SALE. THE BOOKS AND RECORDS OF THE FUND ARE MAINTAINED AS FOLLOWS: ALL MARKETING MATERIALS ARE MAINTAINED AT THE OFFICES OF INVESCO DISTRIBUTORS, INC., 11 GREENWAY PLAZA, SUITE 1000, HOUSTON, TEXAS 77046-1173; TELEPHONE NUMBER (800) 983-0903; BASKET CREATION AND REDEMPTION BOOKS AND RECORDS, ACCOUNTING AND CERTAIN OTHER FINANCIAL BOOKS AND RECORDS (INCLUDING FUND ACCOUNTING RECORDS, LEDGERS WITH RESPECT TO ASSETS, LIABILITIES, CAPITAL, INCOME AND EXPENSES, THE REGISTRAR, TRANSFER JOURNALS AND RELATED DETAILS) AND TRADING AND RELATED DOCUMENTS RECEIVED FROM FUTURES COMMISSION MERCHANTS ARE MAINTAINED BY THE BANK OF NEW YORK MELLON, 2 HANSON PLACE, BROOKLYN, NEW YORK 11217, TELEPHONE NUMBER (718) 315-7500. ALL OTHER BOOKS AND RECORDS OF THE FUND (INCLUDING MINUTE BOOKS AND OTHER GENERAL CORPORATE RECORDS, TRADING RECORDS AND RELATED REPORTS AND OTHER ITEMS RECEIVED FROM THE FUND S COMMODITY BROKERS) ARE MAINTAINED AT THE FUND S PRINCIPAL OFFICE, C/O INVESCO CAPITAL MANAGEMENT LLC, 3500 LACEY ROAD, SUITE 700, DOWNERS GROVE, ILLINOIS 60515; TELEPHONE NUMBER (800) 983-0903. SHAREHOLDERS WILL HAVE THE RIGHT, DURING NORMAL BUSINESS HOURS, TO HAVE ACCESS TO AND COPY (UPON PAYMENT OF REASONABLE REPRODUCTION COSTS) SUCH BOOKS AND RECORDS IN PERSON OR BY THEIR AUTHORIZED ATTORNEY OR AGENT. MONTHLY ACCOUNT STATEMENTS FOR THE FUND CONFORMING TO COMMODITY FUTURES TRADING COMMISSION ( CFTC ) AND THE NATIONAL FUTURES ASSOCIATION ( NFA ) REQUIREMENTS ARE POSTED ON THE MANAGING OWNER S WEBSITE AT HTTP://WWW.INVESCO.COM/ETFs. ADDITIONAL REPORTS MAY BE POSTED ON THE MANAGING OWNER S WEBSITE IN THE DISCRETION OF THE MANAGING OWNER OR AS REQUIRED BY REGULATORY AUTHORITIES. INFORMATION ON THE MANAGING OWNER S WEBSITE SHALL NOT BE DEEMED TO BE A PART OF THIS PROSPECTUS OR INCORPORATED BY REFERENCE HEREIN UNLESS OTHERWISE EXPRESSLY STATED. THERE WILL SIMILARLY BE DISTRIBUTED TO SHAREHOLDERS, NOT MORE THAN 90 DAYS AFTER THE CLOSE OF THE FUND S FISCAL YEAR, CERTIFIED AUDITED FINANCIAL STATEMENTS AND (IN NO EVENT LATER THAN MARCH 15 OF THE IMMEDIATELY FOLLOWING YEAR) THE TAX INFORMATION RELATING TO SHARES OF THE FUND NECESSARY FOR THE PREPARATION OF SHAREHOLDERS ANNUAL FEDERAL INCOME TAX RETURNS. THE DIVISION OF INVESTMENT MANAGEMENT OF THE SECURITIES AND EXCHANGE COMMISSION REQUIRES THAT THE FOLLOWING STATEMENT BE PROMINENTLY SET FORTH HEREIN: NEITHER INVESCO DB MULTI-SECTOR COMMODITY TRUST NOR ANY SERIES THEREOF IS A MUTUAL FUND OR ANY OTHER TYPE OF INVESTMENT COMPANY WITHIN THE MEANING OF THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED, AND IS NOT SUBJECT TO REGULATION THEREUNDER. AUTHORIZED PARTICIPANTS MAY BE REQUIRED TO DELIVER A PROSPECTUS WHEN TRANSACTING IN SHARES. SEE PLAN OF DISTRIBUTION. Table of Contents Pricing Information Available on the NYSE Arca and Other Sources The following table lists additional NYSE Arca symbols and their meanings with respect to the Fund and the Index: DBA Market price per Share on NYSE Arca DBA.IV IIV per Share DBA.NV End of day NAV of the Fund DBAGIX Intra-day Index closing level DBLCDBAE End of day Index closing level as of close of NYSE Arca The intra-day data in the above table, including the IIV, is published once every fifteen seconds throughout each trading day. The Index Sponsor (as defined herein) calculates and publishes the closing level of the Index daily. The Managing Owner publishes the NAV of the Fund and the NAV per Share daily. All of the foregoing information is published as follows: The intra-day level of the Index (symbol: DBAGIX) and the IIV per Share (symbol: DBA.IV) (each quoted in U.S. dollars) are published once every fifteen seconds throughout each trading day on the consolidated tape, Reuters and/or Bloomberg and on the Managing Owner s website at www.invesco.com/ETFs, or any successor thereto. The current trading price per Share (symbol: DBA) (quoted in U.S. dollars) is published continuously as trades occur throughout each trading day on the consolidated tape, Reuters and/or Bloomberg and on the Managing Owner s website at www.invesco.com/ETFs, or any successor thereto. The most recent end-of-day Index closing level (symbol: DBLCDBAE) is published as of the close of business for the NYSE Arca each trading day on the consolidated tape, Reuters and/or Bloomberg and on the Managing Owner s website at www.invesco.com/ETFs, or any successor thereto. The most recent end-of-day NAV of the Fund (symbol: DBA.NV) is published as of the close of business on Reuters and/or Bloomberg and on the Managing Owner s website at www.invesco.com/ETFs, or any successor thereto. In addition, the most recent end-of-day NAV of the Fund (symbol: DBA.NV) is published the following morning on the consolidated tape. All of the foregoing information with respect to the Index, including the Index s history, is also published at https://index.db.com. The Index Sponsor obtains information for inclusion in, or for use in the calculation of, the Index from sources the Index Sponsor considers reliable. None of the Index Sponsor, the Managing Owner, the Fund or any of their respective affiliates accepts responsibility for or guarantees the accuracy and/or completeness of the Index or any data included in the Index. Information on the Managing Owner s website shall not be deemed to be a part of this Prospectus or incorporated by reference herein unless otherwise expressly stated. CUSIP Number The CUSIP number of the Fund is 46140H106.
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diff --git a/parsed_sections/prospectus_summary/2018/DBO_invesco_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/DBO_invesco_prospectus_summary.txt
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@@ -0,0 +1 @@
+This summary of material information contained or incorporated by reference in this Prospectus is intended for quick reference only and does not contain all of the information that may be important to you. For ease of reference, any references throughout this Prospectus to various actions taken by each of the Funds are actually actions that the Trust has taken on behalf of such respective Funds. The remainder of this Prospectus contains more detailed information. You should read the entire Prospectus, including the information incorporated by reference in this Prospectus, before deciding whether to invest in Shares of any Fund. Please see the section Incorporation by Reference of Certain Documents for information on how you can obtain the information that is incorporated by reference in this Prospectus. This Prospectus is dated November 15, 2018. The Trust and the Funds Invesco DB Multi-Sector Commodity Trust (the Trust ) was formed as a Delaware statutory trust, in seven separate series ( Funds ) on August 3, 2006. Each Fund issues common units of beneficial interest ( Shares ) which represent units of fractional undivided beneficial interest in and ownership of such Fund. The term of the Trust and each Fund is perpetual (unless terminated earlier in certain circumstances). The principal executive offices of the Trust and each Fund are located at c/o Invesco Capital Management LLC, 3500 Lacey Road, Suite 700, Downers Grove, IL 60515, and its telephone number is (800) 983-0903. As of the date of this Prospectus, the Trust consists of the following seven series Invesco DB Energy Fund, Invesco DB Oil Fund, Invesco DB Precious Metals Fund, Invesco DB Gold Fund, Invesco DB Silver Fund, Invesco DB Base Metals Fund and Invesco DB Agriculture Fund. This Prospectus is for each of the Funds listed in the prior sentence, except for Invesco DB Silver Fund and Invesco DB Agriculture Fund. Information regarding the offered Funds (including any other additional series of the Trust) and both Invesco DB Silver Fund and Invesco DB Agriculture Fund (neither of which is offered by this Prospectus) is available at www.invesco.com/ETFs. Shares Listed on the NYSE Arca The Shares of each Fund are listed on the NYSE Arca under the following symbols: Invesco DB Energy Fund DBE; Invesco DB Oil Fund DBO; Invesco DB Precious Metals Fund DBP; Invesco DB Gold Fund DGL; and Invesco DB Base Metals Fund DBB. Secondary market purchases and sales of Shares are subject to ordinary brokerage commissions and charges. Purchases and Sales in the Secondary Market on the NYSE Arca Individual Shares of each Fund may be purchased and sold only on the NYSE Arca. Because the Shares will trade at market prices, rather than the net asset value ( NAV ) of a Fund, Shares may trade at prices greater than NAV of such Fund (at a premium), at NAV, or less than NAV (at a discount). Baskets may be created or redeemed directly with each Fund only by Authorized Participants. It is expected that Baskets in a Fund will be created when the market price per Share in such Fund is at a premium to the NAV per Share. Similarly, it is expected that Baskets in a Fund will be redeemed when the market price per Share of such Fund is at a discount to the NAV per Share. Retail investors seeking to purchase or sell Shares on any day are expected to effect such transactions in the secondary market, on the NYSE Arca, at the market price per Share. The market price of the Shares of a Fund may not be identical to the NAV per Share, but these valuations are expected to be very close. Investors are able to use the intra-day indicative value ( IIV ) per Share to determine if they want to purchase in the secondary market via the NYSE Arca. The IIV per Share of each Fund is based on the prior day s final Table of Contents Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of large accelerated filer , accelerated filer , smaller reporting company and emerging growth company in Rule 12b-2 of the Exchange Act. (check one). Invesco DB Energy Fund Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company Emerging growth company If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. Invesco DB Oil Fund Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company Emerging growth company If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. Invesco DB Precious Metals Fund Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company Emerging growth company If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. Invesco DB Gold Fund Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company Emerging growth company If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. Invesco DB Base Metals Fund Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company Emerging growth company If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. CALCULATION OF REGISTRATION FEE Title of Securities being included in this registration statement Earlier Registration Statements Numbers Unsold Number of Shares from Earlier Registration Statement Offered1, Filing Fee paid for Unsold Shares1 Invesco DB Energy Fund Common Units of Beneficial Interest 333-209437-05 22,000,000 $31,635.25 Invesco DB Oil Fund Common Units of Beneficial Interest 333-209437-04 81,600,000 $75,270.06 Invesco DB Precious Metals Fund Common Units of Beneficial Interest 333-209437-01 22,400,000 $50,434.28 Invesco DB Gold Fund Common Units of Beneficial Interest 333-209437-02 15,400,000 $35,893.79 Invesco DB Base Metals Fund Common Units of Beneficial Interest 333-209437-03 27,000,000 $37,292.48 (1) Pursuant to the provisions of Rule 415(a)(6) under the Securities Act of 1933, as amended, the issuer is including on this new registration statement both the unsold Shares and the filing fees paid in connection with such unsold Shares that was covered by the earlier registration statements, as provided in the table above. The filing fees in the above table will continue to be applied to such unsold Shares. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. Table of Contents Shares will trade at market prices, rather than the NAV of each Fund, Shares may trade at prices greater than NAV (at a premium), at NAV, or less than NAV (at a discount). Authorized Participants will not receive from any Fund, the Managing Owner or any of their affiliates, any fee or other compensation in connection with their sale of Shares to the public. An Authorized Participant may receive commissions or fees from investors who purchase Shares through their commission or fee-based brokerage accounts. In addition, the Managing Owner pays a distribution services fee to Invesco Distributors, Inc. and pays a marketing services fee to Deutsche Investment Management Americas Inc. ( DIMA ) without reimbursement from the Trust or any Fund. For more information regarding items of compensation paid to Financial Industry Regulatory Authority, Inc. ( FINRA ) members, please see the Plan of Distribution section on page 128. These securities have not been approved or disapproved by the U.S Securities and Exchange Commission ( SEC ) or any state securities commission nor has the SEC or any state securities commission passed upon the accuracy or adequacy of this Prospectus. Any representation to the contrary is a criminal offense. None of the Funds is a mutual fund or any other type of investment company within the meaning of the Investment Company Act of 1940, as amended, and is not subject to regulation thereunder. THE COMMODITY FUTURES TRADING COMMISSION HAS NOT PASSED UPON THE MERITS OF PARTICIPATING IN THESE POOLS NOR HAS THE COMMISSION PASSED ON THE ADEQUACY OR ACCURACY OF THIS DISCLOSURE DOCUMENT. November 15, 2018 Table of Contents NAV, adjusted four times per minute throughout the trading day to reflect the price changes of the Fund s holdings. As a result, the IIV provides a continuously updated estimate of each Fund s NAV per Share. Retail investors may purchase and sell Shares through traditional brokerage accounts. Purchases or sales of Shares may be subject to brokerage commissions. Investors are encouraged to review the terms of their brokerage accounts for applicable charges. Pricing Information Available on the NYSE Arca and Other Sources The intra-day data, including the IIV, is published once every fifteen seconds throughout each trading day. The Index Sponsor (as defined herein) calculates and publishes the closing level of the Indexes daily. The Managing Owner publishes the NAV of each Fund and the NAV per Share of each Fund daily. All of the foregoing information is published as follows: Intra-Day Index Level Symbols and IIVs Per Share Symbols Invesco DB Energy Fund. The intra-day index level of the DBIQ-OY Energy ER is published under the symbol DBENIX. The IIV per Share of Invesco DB Energy Fund is published under the symbol DBE.IV. Invesco DB Oil Fund. The intra-day index level of the DBIQ-OY CL ER is published under the symbol DBOLIX. The IIV per Share of Invesco DB Oil Fund is published under the symbol DBO.IV. Invesco DB Precious Metals Fund. The intra-day index level of the DBIQ-OY Precious Metals ER is published under the symbol DBPMIX. The IIV per Share of Invesco DB Precious Metals Fund is published under the symbol DBP.IV. Invesco DB Gold Fund. The intra-day index level of the DBIQ-OY GC ER is published under the symbol DGLDIX. The IIV per Share of Invesco DB Gold Fund is published under the symbol DGL.IV. Invesco DB Base Metals Fund. The intra-day index level of the DBIQ-OY Industrial Metals ER is published under the symbol DBBMIX. The IIV per Share of Invesco DB Base Metals Fund is published under the symbol DBB.IV. The current trading price per Share of each Fund (quoted in U.S. dollars) is published continuously under its ticker symbol as trades occur throughout each trading day on the consolidated tape, Reuters and/or Bloomberg and on the Managing Owner s website at www. invesco.com/ETFs, or any successor thereto. The most recent end-of-day closing level of each Index is published under its own symbol as of the close of business for the NYSE Arca each trading day on the consolidated tape, Reuters and/or Bloomberg and on the Managing Owner s website at www.invesco.com/ETFs, or any successor thereto. The most recent end-of-day NAV of each Fund is published under its own symbol as of the close of business on Reuters and/or Bloomberg and on the Managing Owner s website at www.invesco.com/ETFs, or any successor thereto. In addition, the most recent end-of-day NAV of each Fund is published under its own symbol the following morning on the consolidated tape. End-of-Day Index Closing Level Symbols; End-of-Day NAV Symbols Invesco DB Energy Fund. The end-of-day closing level of the DBIQ-OY Energy ER is published under the symbol DBCMYEEN. The end-of-day NAV of Invesco DB Energy Fund is published under the symbol DBE.NV. Invesco DB Oil Fund. The end-of-day closing level of the DBIQ-OY CL ER is published under the symbol DBCMOCLE. The end-of-day NAV of Invesco DB Oil Fund is published under the symbol DBO.NV. Invesco DB Precious Metals Fund. The end-of-day closing level of the DBIQ-OY Precious Metals ER is published under the symbol Table of Contents COMMODITY FUTURES TRADING COMMISSION RISK DISCLOSURE STATEMENT YOU SHOULD CAREFULLY CONSIDER WHETHER YOUR FINANCIAL CONDITION PERMITS YOU TO PARTICIPATE IN A COMMODITY POOL. IN SO DOING, YOU SHOULD BE AWARE THAT COMMODITY INTEREST TRADING CAN QUICKLY LEAD TO LARGE LOSSES AS WELL AS GAINS. SUCH TRADING LOSSES CAN SHARPLY REDUCE THE NET ASSET VALUE OF THE POOL AND CONSEQUENTLY THE VALUE OF YOUR INTEREST IN THE POOL. IN ADDITION, RESTRICTIONS ON REDEMPTIONS MAY AFFECT YOUR ABILITY TO WITHDRAW YOUR PARTICIPATION IN THE POOL. FURTHER, COMMODITY POOLS MAY BE SUBJECT TO SUBSTANTIAL CHARGES FOR MANAGEMENT, AND ADVISORY AND BROKERAGE FEES. IT MAY BE NECESSARY FOR THOSE POOLS THAT ARE SUBJECT TO THESE CHARGES TO MAKE SUBSTANTIAL TRADING PROFITS TO AVOID DEPLETION OR EXHAUSTION OF THEIR ASSETS. THIS DISCLOSURE DOCUMENT CONTAINS A COMPLETE DESCRIPTION OF EACH EXPENSE TO BE CHARGED THESE POOLS AT PAGE 81 AND A STATEMENT OF THE PERCENTAGE RETURNS NECESSARY TO BREAK EVEN, THAT IS, TO RECOVER THE AMOUNT OF YOUR INITIAL INVESTMENT, AT PAGE 31. THIS BRIEF STATEMENT CANNOT DISCLOSE ALL THE RISKS AND OTHER FACTORS NECESSARY TO EVALUATE YOUR PARTICIPATION IN ANY OF THESE COMMODITY POOLS. THEREFORE, BEFORE YOU DECIDE TO PARTICIPATE IN ANY OF THESE COMMODITY POOLS, YOU SHOULD CAREFULLY STUDY THIS DISCLOSURE DOCUMENT, INCLUDING A DESCRIPTION OF THE PRINCIPAL RISK FACTORS OF THIS INVESTMENT, AT PAGES 15 THROUGH 29. YOU SHOULD ALSO BE AWARE THAT THIS COMMODITY POOL MAY TRADE FOREIGN FUTURES OR OPTIONS CONTRACTS. TRANSACTIONS ON MARKETS LOCATED OUTSIDE THE UNITED STATES, INCLUDING MARKETS FORMALLY LINKED TO A UNITED STATES MARKET, MAY BE SUBJECT TO REGULATIONS WHICH OFFER DIFFERENT OR DIMINISHED PROTECTION TO THE POOL AND ITS PARTICIPANTS. FURTHER, UNITED STATES REGULATORY AUTHORITIES MAY BE UNABLE TO COMPEL THE ENFORCEMENT OF THE RULES OF REGULATORY AUTHORITIES OR MARKETS IN NON-UNITED STATES JURISDICTIONS WHERE TRANSACTIONS FOR THE POOL MAY BE EFFECTED. THIS PROSPECTUS DOES NOT INCLUDE ALL OF THE INFORMATION OR EXHIBITS IN THE REGISTRATION STATEMENT OF THE TRUST OR FUNDS. YOU CAN READ AND COPY THE ENTIRE REGISTRATION STATEMENT AT THE PUBLIC REFERENCE FACILITIES MAINTAINED BY THE SEC IN WASHINGTON, D.C. THE FUNDS FILE QUARTERLY AND ANNUAL REPORTS WITH THE SEC. YOU CAN READ AND COPY THESE REPORTS AT THE SEC PUBLIC REFERENCE FACILITIES IN WASHINGTON, D.C. PLEASE CALL THE SEC AT 1-800-SEC-0330 FOR FURTHER INFORMATION. THE FILINGS OF THE TRUST AND FUNDS ARE POSTED AT THE SEC WEBSITE AT HTTP://WWW.SEC.GOV. REGULATORY NOTICES NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATION Table of Contents DBCMYEPM. The end-of-day NAV of Invesco DB Precious Metals Fund is published under the symbol DBP.NV. Invesco DB Gold Fund. The end-of-day closing level of the DBIQ-OY GC ER is published under the symbol DBCMOGCE. The end-of-day NAV of Invesco DB Gold Fund is published under the symbol DGL.NV. Invesco DB Base Metals Fund. The end-of-day closing level of the DBIQ-OY Industrial Metals ER is published under the symbol DBCMYEIM. The end-of-day NAV of Invesco DB Base Metals Fund is published under the symbol DBB.NV. All of the foregoing information with respect to each Index, including each Index s history, is also published at https://index.db.com. The Index Sponsor obtains information for inclusion in, or for use in the calculation of, the Indexes from sources the Index Sponsor considers reliable. None of the Index Sponsor, the Managing Owner, the Funds or any of their respective affiliates accepts responsibility for or guarantees the accuracy and/or completeness of any of the Indexes or any data included in any of the Indexes. Information on the Managing Owner s website shall not be deemed to be a part of this Prospectus or incorporated by reference herein unless otherwise expressly stated. CUSIP Numbers The CUSIP number of Invesco DB Energy Fund is 46140H304. The CUSIP number of Invesco DB Oil Fund is 46140H403. The CUSIP number of Invesco DB Precious Metals Fund is 46140H502. The CUSIP number of Invesco DB Gold Fund is 46140H601. The CUSIP number of Invesco DB Base Metals Fund is 46140H700.
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diff --git a/parsed_sections/prospectus_summary/2018/DBP_invesco_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/DBP_invesco_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..99036906b4f5698e9b6ffb4fec1c06f4854c8d3c
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@@ -0,0 +1 @@
+This summary of material information contained or incorporated by reference in this Prospectus is intended for quick reference only and does not contain all of the information that may be important to you. For ease of reference, any references throughout this Prospectus to various actions taken by each of the Funds are actually actions that the Trust has taken on behalf of such respective Funds. The remainder of this Prospectus contains more detailed information. You should read the entire Prospectus, including the information incorporated by reference in this Prospectus, before deciding whether to invest in Shares of any Fund. Please see the section Incorporation by Reference of Certain Documents for information on how you can obtain the information that is incorporated by reference in this Prospectus. This Prospectus is dated November 15, 2018. The Trust and the Funds Invesco DB Multi-Sector Commodity Trust (the Trust ) was formed as a Delaware statutory trust, in seven separate series ( Funds ) on August 3, 2006. Each Fund issues common units of beneficial interest ( Shares ) which represent units of fractional undivided beneficial interest in and ownership of such Fund. The term of the Trust and each Fund is perpetual (unless terminated earlier in certain circumstances). The principal executive offices of the Trust and each Fund are located at c/o Invesco Capital Management LLC, 3500 Lacey Road, Suite 700, Downers Grove, IL 60515, and its telephone number is (800) 983-0903. As of the date of this Prospectus, the Trust consists of the following seven series Invesco DB Energy Fund, Invesco DB Oil Fund, Invesco DB Precious Metals Fund, Invesco DB Gold Fund, Invesco DB Silver Fund, Invesco DB Base Metals Fund and Invesco DB Agriculture Fund. This Prospectus is for each of the Funds listed in the prior sentence, except for Invesco DB Silver Fund and Invesco DB Agriculture Fund. Information regarding the offered Funds (including any other additional series of the Trust) and both Invesco DB Silver Fund and Invesco DB Agriculture Fund (neither of which is offered by this Prospectus) is available at www.invesco.com/ETFs. Shares Listed on the NYSE Arca The Shares of each Fund are listed on the NYSE Arca under the following symbols: Invesco DB Energy Fund DBE; Invesco DB Oil Fund DBO; Invesco DB Precious Metals Fund DBP; Invesco DB Gold Fund DGL; and Invesco DB Base Metals Fund DBB. Secondary market purchases and sales of Shares are subject to ordinary brokerage commissions and charges. Purchases and Sales in the Secondary Market on the NYSE Arca Individual Shares of each Fund may be purchased and sold only on the NYSE Arca. Because the Shares will trade at market prices, rather than the net asset value ( NAV ) of a Fund, Shares may trade at prices greater than NAV of such Fund (at a premium), at NAV, or less than NAV (at a discount). Baskets may be created or redeemed directly with each Fund only by Authorized Participants. It is expected that Baskets in a Fund will be created when the market price per Share in such Fund is at a premium to the NAV per Share. Similarly, it is expected that Baskets in a Fund will be redeemed when the market price per Share of such Fund is at a discount to the NAV per Share. Retail investors seeking to purchase or sell Shares on any day are expected to effect such transactions in the secondary market, on the NYSE Arca, at the market price per Share. The market price of the Shares of a Fund may not be identical to the NAV per Share, but these valuations are expected to be very close. Investors are able to use the intra-day indicative value ( IIV ) per Share to determine if they want to purchase in the secondary market via the NYSE Arca. The IIV per Share of each Fund is based on the prior day s final Table of Contents Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of large accelerated filer , accelerated filer , smaller reporting company and emerging growth company in Rule 12b-2 of the Exchange Act. (check one). Invesco DB Energy Fund Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company Emerging growth company If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. Invesco DB Oil Fund Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company Emerging growth company If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. Invesco DB Precious Metals Fund Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company Emerging growth company If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. Invesco DB Gold Fund Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company Emerging growth company If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. Invesco DB Base Metals Fund Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company Emerging growth company If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. CALCULATION OF REGISTRATION FEE Title of Securities being included in this registration statement Earlier Registration Statements Numbers Unsold Number of Shares from Earlier Registration Statement Offered1, Filing Fee paid for Unsold Shares1 Invesco DB Energy Fund Common Units of Beneficial Interest 333-209437-05 22,000,000 $31,635.25 Invesco DB Oil Fund Common Units of Beneficial Interest 333-209437-04 81,600,000 $75,270.06 Invesco DB Precious Metals Fund Common Units of Beneficial Interest 333-209437-01 22,400,000 $50,434.28 Invesco DB Gold Fund Common Units of Beneficial Interest 333-209437-02 15,400,000 $35,893.79 Invesco DB Base Metals Fund Common Units of Beneficial Interest 333-209437-03 27,000,000 $37,292.48 (1) Pursuant to the provisions of Rule 415(a)(6) under the Securities Act of 1933, as amended, the issuer is including on this new registration statement both the unsold Shares and the filing fees paid in connection with such unsold Shares that was covered by the earlier registration statements, as provided in the table above. The filing fees in the above table will continue to be applied to such unsold Shares. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. Table of Contents Shares will trade at market prices, rather than the NAV of each Fund, Shares may trade at prices greater than NAV (at a premium), at NAV, or less than NAV (at a discount). Authorized Participants will not receive from any Fund, the Managing Owner or any of their affiliates, any fee or other compensation in connection with their sale of Shares to the public. An Authorized Participant may receive commissions or fees from investors who purchase Shares through their commission or fee-based brokerage accounts. In addition, the Managing Owner pays a distribution services fee to Invesco Distributors, Inc. and pays a marketing services fee to Deutsche Investment Management Americas Inc. ( DIMA ) without reimbursement from the Trust or any Fund. For more information regarding items of compensation paid to Financial Industry Regulatory Authority, Inc. ( FINRA ) members, please see the Plan of Distribution section on page 128. These securities have not been approved or disapproved by the U.S Securities and Exchange Commission ( SEC ) or any state securities commission nor has the SEC or any state securities commission passed upon the accuracy or adequacy of this Prospectus. Any representation to the contrary is a criminal offense. None of the Funds is a mutual fund or any other type of investment company within the meaning of the Investment Company Act of 1940, as amended, and is not subject to regulation thereunder. THE COMMODITY FUTURES TRADING COMMISSION HAS NOT PASSED UPON THE MERITS OF PARTICIPATING IN THESE POOLS NOR HAS THE COMMISSION PASSED ON THE ADEQUACY OR ACCURACY OF THIS DISCLOSURE DOCUMENT. November 15, 2018 Table of Contents NAV, adjusted four times per minute throughout the trading day to reflect the price changes of the Fund s holdings. As a result, the IIV provides a continuously updated estimate of each Fund s NAV per Share. Retail investors may purchase and sell Shares through traditional brokerage accounts. Purchases or sales of Shares may be subject to brokerage commissions. Investors are encouraged to review the terms of their brokerage accounts for applicable charges. Pricing Information Available on the NYSE Arca and Other Sources The intra-day data, including the IIV, is published once every fifteen seconds throughout each trading day. The Index Sponsor (as defined herein) calculates and publishes the closing level of the Indexes daily. The Managing Owner publishes the NAV of each Fund and the NAV per Share of each Fund daily. All of the foregoing information is published as follows: Intra-Day Index Level Symbols and IIVs Per Share Symbols Invesco DB Energy Fund. The intra-day index level of the DBIQ-OY Energy ER is published under the symbol DBENIX. The IIV per Share of Invesco DB Energy Fund is published under the symbol DBE.IV. Invesco DB Oil Fund. The intra-day index level of the DBIQ-OY CL ER is published under the symbol DBOLIX. The IIV per Share of Invesco DB Oil Fund is published under the symbol DBO.IV. Invesco DB Precious Metals Fund. The intra-day index level of the DBIQ-OY Precious Metals ER is published under the symbol DBPMIX. The IIV per Share of Invesco DB Precious Metals Fund is published under the symbol DBP.IV. Invesco DB Gold Fund. The intra-day index level of the DBIQ-OY GC ER is published under the symbol DGLDIX. The IIV per Share of Invesco DB Gold Fund is published under the symbol DGL.IV. Invesco DB Base Metals Fund. The intra-day index level of the DBIQ-OY Industrial Metals ER is published under the symbol DBBMIX. The IIV per Share of Invesco DB Base Metals Fund is published under the symbol DBB.IV. The current trading price per Share of each Fund (quoted in U.S. dollars) is published continuously under its ticker symbol as trades occur throughout each trading day on the consolidated tape, Reuters and/or Bloomberg and on the Managing Owner s website at www. invesco.com/ETFs, or any successor thereto. The most recent end-of-day closing level of each Index is published under its own symbol as of the close of business for the NYSE Arca each trading day on the consolidated tape, Reuters and/or Bloomberg and on the Managing Owner s website at www.invesco.com/ETFs, or any successor thereto. The most recent end-of-day NAV of each Fund is published under its own symbol as of the close of business on Reuters and/or Bloomberg and on the Managing Owner s website at www.invesco.com/ETFs, or any successor thereto. In addition, the most recent end-of-day NAV of each Fund is published under its own symbol the following morning on the consolidated tape. End-of-Day Index Closing Level Symbols; End-of-Day NAV Symbols Invesco DB Energy Fund. The end-of-day closing level of the DBIQ-OY Energy ER is published under the symbol DBCMYEEN. The end-of-day NAV of Invesco DB Energy Fund is published under the symbol DBE.NV. Invesco DB Oil Fund. The end-of-day closing level of the DBIQ-OY CL ER is published under the symbol DBCMOCLE. The end-of-day NAV of Invesco DB Oil Fund is published under the symbol DBO.NV. Invesco DB Precious Metals Fund. The end-of-day closing level of the DBIQ-OY Precious Metals ER is published under the symbol Table of Contents COMMODITY FUTURES TRADING COMMISSION RISK DISCLOSURE STATEMENT YOU SHOULD CAREFULLY CONSIDER WHETHER YOUR FINANCIAL CONDITION PERMITS YOU TO PARTICIPATE IN A COMMODITY POOL. IN SO DOING, YOU SHOULD BE AWARE THAT COMMODITY INTEREST TRADING CAN QUICKLY LEAD TO LARGE LOSSES AS WELL AS GAINS. SUCH TRADING LOSSES CAN SHARPLY REDUCE THE NET ASSET VALUE OF THE POOL AND CONSEQUENTLY THE VALUE OF YOUR INTEREST IN THE POOL. IN ADDITION, RESTRICTIONS ON REDEMPTIONS MAY AFFECT YOUR ABILITY TO WITHDRAW YOUR PARTICIPATION IN THE POOL. FURTHER, COMMODITY POOLS MAY BE SUBJECT TO SUBSTANTIAL CHARGES FOR MANAGEMENT, AND ADVISORY AND BROKERAGE FEES. IT MAY BE NECESSARY FOR THOSE POOLS THAT ARE SUBJECT TO THESE CHARGES TO MAKE SUBSTANTIAL TRADING PROFITS TO AVOID DEPLETION OR EXHAUSTION OF THEIR ASSETS. THIS DISCLOSURE DOCUMENT CONTAINS A COMPLETE DESCRIPTION OF EACH EXPENSE TO BE CHARGED THESE POOLS AT PAGE 81 AND A STATEMENT OF THE PERCENTAGE RETURNS NECESSARY TO BREAK EVEN, THAT IS, TO RECOVER THE AMOUNT OF YOUR INITIAL INVESTMENT, AT PAGE 31. THIS BRIEF STATEMENT CANNOT DISCLOSE ALL THE RISKS AND OTHER FACTORS NECESSARY TO EVALUATE YOUR PARTICIPATION IN ANY OF THESE COMMODITY POOLS. THEREFORE, BEFORE YOU DECIDE TO PARTICIPATE IN ANY OF THESE COMMODITY POOLS, YOU SHOULD CAREFULLY STUDY THIS DISCLOSURE DOCUMENT, INCLUDING A DESCRIPTION OF THE PRINCIPAL RISK FACTORS OF THIS INVESTMENT, AT PAGES 15 THROUGH 29. YOU SHOULD ALSO BE AWARE THAT THIS COMMODITY POOL MAY TRADE FOREIGN FUTURES OR OPTIONS CONTRACTS. TRANSACTIONS ON MARKETS LOCATED OUTSIDE THE UNITED STATES, INCLUDING MARKETS FORMALLY LINKED TO A UNITED STATES MARKET, MAY BE SUBJECT TO REGULATIONS WHICH OFFER DIFFERENT OR DIMINISHED PROTECTION TO THE POOL AND ITS PARTICIPANTS. FURTHER, UNITED STATES REGULATORY AUTHORITIES MAY BE UNABLE TO COMPEL THE ENFORCEMENT OF THE RULES OF REGULATORY AUTHORITIES OR MARKETS IN NON-UNITED STATES JURISDICTIONS WHERE TRANSACTIONS FOR THE POOL MAY BE EFFECTED. THIS PROSPECTUS DOES NOT INCLUDE ALL OF THE INFORMATION OR EXHIBITS IN THE REGISTRATION STATEMENT OF THE TRUST OR FUNDS. YOU CAN READ AND COPY THE ENTIRE REGISTRATION STATEMENT AT THE PUBLIC REFERENCE FACILITIES MAINTAINED BY THE SEC IN WASHINGTON, D.C. THE FUNDS FILE QUARTERLY AND ANNUAL REPORTS WITH THE SEC. YOU CAN READ AND COPY THESE REPORTS AT THE SEC PUBLIC REFERENCE FACILITIES IN WASHINGTON, D.C. PLEASE CALL THE SEC AT 1-800-SEC-0330 FOR FURTHER INFORMATION. THE FILINGS OF THE TRUST AND FUNDS ARE POSTED AT THE SEC WEBSITE AT HTTP://WWW.SEC.GOV. REGULATORY NOTICES NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATION Table of Contents DBCMYEPM. The end-of-day NAV of Invesco DB Precious Metals Fund is published under the symbol DBP.NV. Invesco DB Gold Fund. The end-of-day closing level of the DBIQ-OY GC ER is published under the symbol DBCMOGCE. The end-of-day NAV of Invesco DB Gold Fund is published under the symbol DGL.NV. Invesco DB Base Metals Fund. The end-of-day closing level of the DBIQ-OY Industrial Metals ER is published under the symbol DBCMYEIM. The end-of-day NAV of Invesco DB Base Metals Fund is published under the symbol DBB.NV. All of the foregoing information with respect to each Index, including each Index s history, is also published at https://index.db.com. The Index Sponsor obtains information for inclusion in, or for use in the calculation of, the Indexes from sources the Index Sponsor considers reliable. None of the Index Sponsor, the Managing Owner, the Funds or any of their respective affiliates accepts responsibility for or guarantees the accuracy and/or completeness of any of the Indexes or any data included in any of the Indexes. Information on the Managing Owner s website shall not be deemed to be a part of this Prospectus or incorporated by reference herein unless otherwise expressly stated. CUSIP Numbers The CUSIP number of Invesco DB Energy Fund is 46140H304. The CUSIP number of Invesco DB Oil Fund is 46140H403. The CUSIP number of Invesco DB Precious Metals Fund is 46140H502. The CUSIP number of Invesco DB Gold Fund is 46140H601. The CUSIP number of Invesco DB Base Metals Fund is 46140H700.
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+PROSPECTUS SUMMARY This summary highlights selected information that is presented in greater detail elsewhere in this prospectus. This summary does not contain all of the information you should consider before investing in our Class A common stock. You should read this entire prospectus carefully, including the sections titled Risk Factors and Management s Discussion and Analysis of Financial Condition and Results of Operations, and our consolidated financial statements, and the related notes included elsewhere in this prospectus, before making an investment decision. Unless the context otherwise requires, the terms Dropbox, the Company, we, us, and our in this prospectus refer to Dropbox, Inc. and its consolidated subsidiaries, and references to our common stock include our Class A common stock, Class B common stock, and Class C common stock. DROPBOX, INC. Our Business Our modern economy runs on knowledge. Today, knowledge lives in the cloud as digital content, and Dropbox is a global collaboration platform where more and more of this content is created, accessed, and shared with the world. We serve more than 500 million registered users across 180 countries. Dropbox was founded in 2007 with a simple idea: Life would be a lot better if everyone could access their most important information anytime from any device. Over the past decade, we ve largely accomplished that mission but along the way we recognized that for most of our users, sharing and collaborating on Dropbox was even more valuable than storing files. Our market opportunity has grown as we ve expanded from keeping files in sync to keeping teams in sync. Today, Dropbox is well positioned to reimagine the way work gets done. We re focused on reducing the inordinate amount of time and energy the world wastes on work about work tedious tasks like searching for content, switching between applications, and managing workflows. We want to free up our users to spend more of their time on the work that truly matters. Our mission is to unleash the world s creative energy by designing a more enlightened way of working. We believe the need for our platform will continue to grow as teams become more fluid and global, and content is increasingly fragmented across incompatible tools and devices. Dropbox breaks down silos by centralizing the flow of information between the products and services our users prefer, even if they re not our own. By solving these universal problems, we ve become invaluable to our users. The popularity of our platform drives viral growth, which has allowed us to scale rapidly and efficiently. We ve built a thriving global business with over 11 million paying users. Our revenue was $603.8 million, $844.8 million, and $1,106.8 million in 2015, 2016, and 2017, respectively, representing an annual growth rate of 40% and 31%, respectively. We generated net losses of $325.9 million, $210.2 million, and $111.7 million in 2015, 2016, and 2017, respectively. We also generated positive free cash flow of $137.4 million and $305.0 million in 2016 and 2017, respectively, compared to negative free cash flow of $63.9 million in 2015. Table of Contents The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. Subject To Completion. Dated March 21, 2018. 36,000,000 Shares Class A Common Stock This is an initial public offering of shares of Class A common stock of Dropbox, Inc. Dropbox, Inc. is offering to sell 26,822,409 shares of Class A common stock in this offering. The selling stockholders identified in this prospectus are offering to sell an additional 9,177,591 shares of Class A common stock. We will not receive any of the proceeds from the sale of the shares being sold by the selling stockholders. We have three classes of authorized common stock, Class A common stock, Class B common stock, and Class C common stock. The rights of the holders of Class A common stock, Class B common stock, and Class C common stock are identical, except with respect to voting and conversion. Each share of Class A common stock is entitled to one vote per share. Each share of Class B common stock is entitled to ten votes per share and is convertible at any time into one share of Class A common stock. Shares of Class C common stock have no voting rights, except as otherwise required by law, and will convert into Class A common stock, on a share-for-share basis, following the conversion of all outstanding shares of Class B common stock into shares of Class A common stock and upon the date or time specified by the holders of a majority of the outstanding shares of Class A common stock voting as a separate class. Following this offering, outstanding shares of Class B common stock will represent approximately 98.0% of the voting power of our outstanding capital stock. Prior to this offering, there has been no public market for the Class A common stock. It is currently estimated that the initial public offering price per share will be between $18.00 and $20.00. We have been approved to list the Class A common stock on the Nasdaq Global Select Market under the symbol DBX . We will be treated as an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012, for certain purposes until we complete this offering. As such, in this registration statement we have taken advantage of certain reduced disclosure obligations that apply to emerging growth companies regarding selected financial data and executive compensation arrangements. Salesforce Ventures LLC has entered into an agreement with us pursuant to which it has agreed to purchase $100,000,000 of our Class A common stock in a private placement at a price per share equal to the initial offering price. This transaction is contingent upon, and is scheduled to close immediately subsequent to, the closing of this offering. See Risk Factors beginning on page 16 to read about factors you should consider before buying shares of our Class A common stock. Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense. Per share Total Initial public offering price $ $ Underwriting discount(1) $ $ Proceeds, before expenses, to Dropbox, Inc. $ $ Proceeds, before expenses, to selling stockholders $ $ (1) See the section titled Underwriting (Conflicts of Interest) for a description of the compensation payable to the underwriters. To the extent that the underwriters sell more than 36,000,000 shares of Class A common stock, the underwriters have the option to purchase up to an additional 5,400,000 shares from Dropbox, Inc. at the initial public offering price less the underwriting discount. The underwriters expect to deliver the shares against payment in New York, New York, on or about , 2018. Goldman Sachs & Co. LLC J.P. Morgan Deutsche Bank Securities Allen & Company LLC BofA Merrill Lynch RBC Capital Markets Jefferies Macquarie Capital Canaccord Genuity JMP Securities KeyBanc Capital Markets Piper Jaffray Prospectus dated , 2018 Table of Contents Our Users We re constantly inspired by the diverse ways people use Dropbox to bring their ideas to life and achieve their missions faster. Here are just a few examples: Nobel Prize-winning researchers sync data with collaborators to speed development of new scientific breakthroughs. Designers for a sustainable apparel company iterate on new designs and coordinate store openings. A commercial construction company shares blueprints with subcontractors on job sites and sends bids to prospective clients. A Fortune 500 online travel company keeps its global workforce connected with business partners around the world. Pro bono lawyers at a refugee assistance organization collect and share information across continents to save lives. What Sets Us Apart Since the beginning, we ve focused on simplifying the lives of our users. In a world where business software can be frustrating to use, challenging to integrate, and expensive to sell, we take a different approach. Simple and intuitive design While traditional tools developed in the desktop age have struggled to keep up with evolving user demands, Dropbox was designed for the cloud era. We build simple, beautiful products that bring joy to our users and make it easier for them to do their best work. Unencumbered by legacy features, we can perfect the aspects of our platform that matter most today, such as the mobile experience and the ability to work in teams. Open ecosystem We know people will continue to use a wide variety of tools and platforms. That s why we ve built Dropbox to work seamlessly with other products, integrating with partners from Google and Microsoft to Slack and Autodesk. More than 75% of Dropbox Business teams have linked to one or more third-party applications. Viral, bottom-up adoption Our 500 million registered users are our best salespeople. They ve spread Dropbox to their friends and brought us into their offices. Every year, millions of individual users sign up for Dropbox at work. Bottom-up adoption within organizations has been critical to our success as users increasingly choose their own tools at work. We generate over 90% of our revenue from self-serve channels users who purchase a subscription through our app or website. Performance and security Our custom-built infrastructure allows us to maintain high standards of performance, availability, and security. Dropbox is built on proprietary, block-level sync technology to achieve industry-leading performance. In 2016, IDC highlighted our sync performance as best-in-class, outperforming competitors on multiple sync tests, including upload and download speeds for large files. We designed our platform with multiple layers of redundancy to guard against data loss and deliver high availability. We also offer numerous layers of protection, from secure file data transfer and encryption to network configuration and application-level controls. Table of Contents Table of Contents Industry Trends in Our Favor Content is increasingly scattered The proliferation of devices, operating systems, and applications has dramatically increased the volume and complexity of content in the workplace. Content is now routinely scattered across multiple silos, making it harder to access. According to a 2016 IDC report, more than half of companies ranging from 100 to 5,000+ employees use at least three repositories for accessing documents on a weekly basis. The tools people use are fragmented Content created at work tends to follow a predictable pattern: It s authored, sent out for feedback, and shared or published once it s done. At the same time, teams are organizing that content and coordinating tasks around it. But many of the tools people use today don t work well together and support only one or two steps of the content lifecycle. This requires users to constantly switch between these tools and makes it even harder to get work done. Teams have become more fluid and global Technology hasn t kept up with a modern workforce that s increasingly fluid and mobile. People work together on teams that span different functions, organizations, and geographies. A 2016 study by Deloitte found that 37% of the global workforce is now mobile, 30% of full-time employees primarily work remotely, and 20% of the workforce is made up of temporary workers, contractors, and freelancers. The ability to swiftly disseminate content and its relevant context is critical to keeping teams in sync. Work about work is wasteful and stifles creativity The combination of scattered content, fragmented tools, and fluid team structures has led to decreased workplace productivity. According to a report by McKinsey & Company, knowledge workers spend approximately 60% of their time at work on tedious tasks such as searching for content, reviewing email, and re-sharing context to keep team members in the loop what we call work about work. This means they spend just 40% of their time doing the jobs they were hired to do. Individual users are changing the way software is adopted and purchased Software purchasing decisions have traditionally been made by an organization s IT department, which often deploys products that employees don t like and many refuse to adopt. As individuals increasingly choose their own tools at work, purchasing power has become more decentralized. A 2017 IDC report noted that new devices and software were being adopted at a faster rate by individual users than by IT departments. Our Solution Dropbox allows individuals, teams, and organizations to collaborate more effectively. Anyone can sign up for free through our website or app, and upgrade to a paid subscription plan for premium features. Our platform offers an elegant solution to the challenges described above. Key elements of our platform Unified home for content. We provide a unified home for the world s content and the relevant context around it. To date, our users have added more than 400 billion pieces of content to Dropbox, totaling over an exabyte (more than 1,000,000,000 gigabytes) of data. When users join Dropbox, they gain Table of Contents Table of Contents access to a digital workspace that supports the full content lifecycle they can create and organize their content, access it from anywhere, share it with internal and external collaborators, and review feedback and history. Global sharing network. We ve built one of the largest collaboration platforms in the world, with more than 4.5 billion connections to shared content. We cater to the needs of dynamic, dispersed teams. The overwhelming majority of our customers use Dropbox to share and collaborate. As we continue to grow, more users benefit from frictionless sharing, and powerful network effects increase the utility and stickiness of our platform. New product experiences. The insights we glean from our community of users lead us to develop new product experiences, like Paper, Smart Sync, and Showcase. Machine learning further improves the user experience by enabling more intelligent search and better organization and utility of information. This ongoing innovation broadens the value of our platform and deepens user engagement. These elements reinforce one another to produce a powerful flywheel effect. As users create and share more content with more people, they expand our global sharing network. This network allows us to gather insights and feedback that help us create new product experiences. And with our scale, we can instantly put these innovations in the hands of millions. This, in turn, helps attract more users and content, which further propels the flywheel. Our Growth Strategy Increase adoption and paid conversion We designed Dropbox to be easy to try, use, and buy. Anyone can create an account and be up and running in minutes. We believe that our current registered user base represents a significant opportunity to increase our revenue. We estimate that approximately 300 million of our registered users have characteristics including specific email domains, devices, and geographies that make them more likely than other registered users to pay over time. Substantially all of our paying users share at least one of these characteristics. We reach our users through in-product notifications on our website and across hundreds of millions of actively connected devices without any external marketing spend. We define an actively connected device as a desktop, laptop, phone, or tablet on which our app has been installed, and from which our app has been launched, and made a request to our servers at least once in the most recent quarter. Upgrade our paying users We offer a range of paid subscription plans, from Plus and Professional for individuals, to Standard, Advanced, and Enterprise for teams. We analyze usage patterns within our network and run hundreds of targeted marketing campaigns to encourage paying users to upgrade their plans. For example, we prompt individual subscribers who collaborate with others on Dropbox to purchase our Standard or Advanced plans for a better team experience. In 2017, over 40% of new Dropbox Business teams included a member who was previously a subscriber to one of our individual paid plans. We believe that a large majority of individual customers use Dropbox for work, which creates an opportunity to significantly increase conversion to Dropbox Business team offerings over time. Apply insights to build new product experiences As our community of users grows, we gain more insight into their needs and pain points. We translate these insights into new product experiences that support the entire content lifecycle. For example, we learned through analytics and research that our users often work with many different types of content. As a result, we added the ability to embed rich media in Paper so they can pull everything together in one place from InVision graphics and Google slides to Spotify tracks and Vimeo clips. Table of Contents Table of Contents Expand our ecosystem Our open and thriving ecosystem fosters deeper relationships with our users and makes Dropbox more valuable to them over time. The scale and reach of our platform is enhanced by a number of third-party applications, developers, and technology partners. As of December 31, 2017, Dropbox was receiving over 50 billion API calls per month, and more than 500,000 developers had registered and built applications on our platform. Our Market Opportunity Over the past decade, Dropbox has pioneered the worldwide adoption of file sync and share software. We ve since expanded our capabilities and introduced new product experiences to help our users get work done. For the second consecutive year, Gartner has named Dropbox a leader in their Magic Quadrant for Content Collaboration Platforms. Our addressable market includes collaborative applications, content management, project and portfolio management, and public cloud storage. IDC estimates that investment in these categories will total more than $50 billion in 2019. As one of the few large-scale collaboration platforms that serves customers of all sizes, we also have an opportunity to reach a broad population of independent knowledge and creative workers. We believe that this market hasn t traditionally been included in IT spending estimates.
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+Prospectus Summary 1
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+Prospectus Summary 1
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+PROSPECTUS SUMMARY The following summary highlights information contained elsewhere in this prospectus. It is not complete and does not contain all of the information that you should consider before investing in our common stock. You should read the entire prospectus carefully, especially the risks of investing in our common stock discussed under "Risk Factors" and our consolidated financial statements and accompanying notes. Any references to "we", "us" "our" or "the Company" refer to Cannabis Sativa, Inc., a Nevada corporation. Our Business We are engaged in the research, development, acquisition and licensing of specialized natural cannabis related products, including cannabis formulas, edibles, topicals, strains, recipes and delivery systems. We also are engaged in marketing and branding within the cannabis space, including with our trademark pending "hi" brand and others. We hold a license for a proprietary cannabis lozenge delivery methodology, and a proprietary cannabis trauma cream formula. We have recently been awarded a U.S. patent for a strain of cannabis plant named Ecuadorian Sativa (also referred to as CTS-A or CTA). We also have U.S. patents pending on cannabis based compositions and methods of treating hypertension and a lozenge delivery system. We plan to license our intellectual property, including patents, branding and know-how to companies licensed under, and in full compliance with, state regulations applicable to cannabis businesses. In addition, through its 51% owned subsidiary PrestoCorp, the Company operates an online telemedicine service that allows patients to use secure and confidential video conference technology to speak with a licensed physician for a medical marijuana evaluation. following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ] If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [ ] CALCULATION OF REGISTRATION FEE Title of Each Class of Securities To Be Registered Amount to be Registered Proposed Maximum Offering Price Per Share Proposed Maximum Aggregate Offering Price Amount of Registration Fee Common stock, par value $.001 per share 230,775 shares(1) $4.10(2) $946,178 $117.80 (1)The 230,775 common shares are being registered for resale by Selling Stockholders who may acquire such shares upon the exercise of warrants. (2)The closing price of the common shares on December 11, 2017. The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. The information in this prospectus is not complete and may be changed. The selling stockholders may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and the selling stockholders are not soliciting offers to buy these securities in any state where such offers are not permitted. Subject to completion, December _____, 2017 SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS In addition to historical information, this prospectus contains forward-looking statements. The words "forecast", "eliminate", "project", "intend", "expect", "should", "believe" and similar expressions are intended to identify forward-looking statements. These forward-looking statements involve known and unknown risks, uncertainties, assumptions and other factors, including those discussed in "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations," which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to, the following: Our ability to achieve our business of producing and selling products; The legalization of cannabis production and use in states where it is not currently legal; Our ability to attract, retain and motivate qualified employees and management. The impact of federal, state or local government regulations; Competition in the cannabis industry; Availability and cost of additional capital; Litigation in connection with our business; Our ability to protect our trademarks, patents and other proprietary rights; Other risks described from time to time in our periodic reports filed with the Securities and Exchange Commission This list of factors that may affect future performance and the accuracy of forward-looking statements are illustrative but not exhaustive. Accordingly, all forward-looking statements should be evaluated with an understanding of their inherent uncertainty. Except as required by law, we assume no obligation to publicly update or revise these forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future. PROSPECTUS SUMMARY The following summary highlights information contained elsewhere in this prospectus. It is not complete and does not contain all of the information that you should consider before investing in our common stock. You should read the entire prospectus carefully, especially the risks of investing in our common stock discussed under "Risk Factors" and our consolidated financial statements and accompanying notes. Any references to "we", "us" "our" or "the Company" refer to Cannabis Sativa, Inc., a Nevada corporation. Our Business We are engaged in the research, development, acquisition and licensing of specialized natural cannabis related products, including cannabis formulas, edibles, topicals, strains, recipes and delivery systems. We also are engaged in marketing and branding within the cannabis space, including with our trademark pending "hi" brand and others. We hold a license for a proprietary cannabis lozenge delivery methodology, and a proprietary cannabis trauma cream formula. We have recently been awarded a U.S. patent for a strain of cannabis plant named Ecuadorian Sativa (also referred to as CTS-A or CTA). We also have U.S. patents pending on cannabis based compositions and methods of treating hypertension and a lozenge delivery system. We plan to license our intellectual property, including patents, branding and know-how to companies licensed under, and in full compliance with, state regulations applicable to cannabis businesses. In addition, through its 51% owned subsidiary PrestoCorp, the Company operates an online telemedicine service that allows patients to use secure and confidential video conference technology to speak with a licensed physician for a medical marijuana evaluation. Our Offices Cannabis Sativa, Inc. is a Nevada corporation organized on November 5, 2004. Our principal executive offices are located at 1646 W. Pioneer Blvd., Suite 120 Mesquite, NV. Our telephone number is (702) 346-3906. Our Website Our Internet address is http://cannabissativainc.com/. Information contained on our website is not part of this prospectus. The Offering Shares of common stock offered by us: None. Shares of common stock that may be sold by the selling stockholders: 230,775. Our common stock is listed on the OTCQB under the symbol CBDS. The Selling Shareholders will sell the shares at prevailing market prices or at privately negotiated prices. Use of proceeds: We will not receive any proceeds from the resale of the shares offered hereby. All proceeds will be paid to the Selling Stockholders. However, we would receive proceeds if the Selling Shareholders exercise such warrants.
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+MANAGEMENT Executive Officers and Directors The following table sets forth the names, ages and positions of our executive officers and directors as of May 31, 2018: Name Age Position Executive Officers Joshua G. James(3) 44 Founder, Chief Executive Officer and Chairman of the Board Christopher C. Harrington 49 President Bruce Felt 60 Chief Financial Officer Catherine Wong 42 Chief Product Officer and Executive Vice President of Engineering Non-Employee Directors Fraser Bullock(2) 63 Director Matthew R. Cohler(1)(3) 41 Director Dana Evan(1) 58 Director Mark Gorenberg(2) 63 Director Nehal Raj(2) 39 Director Glenn Solomon(1) 49 Director ________________ (1) Member of the Audit Committee (2) Member of the Compensation Committee (3) Member of the Nominating and Governance Committee Executive Officers Joshua G. James, our founder, has served as our chief executive officer and as a member of our board of directors since 2010. Mr. James was the co-founder of Omniture, and from 1996 to 2009, he served as the chief executive officer. Mr. James has served on the board of directors of various privately-held companies. He founded Silicon Slopes, an initiative with the mission to promote the interests of Utah s high-tech industry and is a board member of Parity.org, where he was a co-founder of the Parity Pledge initiative. Mr. James attended Brigham Young University for three years and studied entrepreneurship. We believe Mr. James perspective, experience and institutional knowledge as our founder and chief executive officer qualify him to serve as director. Christopher C. Harrington has served as our president since December 2012. Mr. Harrington served as president of global sales & client services at Omniture, Inc. from 2002 until its acquisition by Adobe Systems Incorporated, then served as vice president of Americas enterprise sales at Adobe Systems Incorporated from 2009 until 2012. Mr. Harrington attended Southern Utah University. Bruce Felt has served as our chief financial officer since August 2014. From June 2012 to June 2014, Mr. Felt served as chief financial officer of Ten-X LLC . From October 2006 to June 2012, Mr. Felt served as the chief financial officer of SuccessFactors, Inc. Mr. Felt currently sits on the board of directors of Evolent Health, Inc., Cambium Networks Corporation and Personal Capital Corp. Mr. Felt was a member of the board of directors of Yodlee, Inc., a public company, from March 2014 until November 2015. Mr. Felt holds a B.S. in accounting from the University of South Carolina and an M.B.A. from Stanford University Graduate School of Business. Catherine Wong has served as our chief product officer since November 2015 and as executive vice president of engineering since May 2018 and previously served as our senior vice president of engineering from September 2013 through October 2015. Ms. Wong served as vice president of product integration at Omniture, Inc. until its acquisition by Adobe Systems Incorporated in 2009, and then served as vice president of engineering at Adobe Systems Incorporated until September 2013. Ms. Wong has been an advisory board member of Women Tech Council since October 2007 and received the Technology Leadership Award in 2015. She holds a B.S. in Computer Science from Brigham Young University. Board of Directors Fraser Bullock has served as a member of our board of directors since July 2011. Mr. Bullock is a senior advisor and one of the co-founders of Sorenson Capital, a private equity firm, and also served as its Managing Director from January 2004 to December 2015. From 2003 to 2009, Mr. Bullock served on the board of directors of Omniture, Inc. Mr. Bullock joined the Salt Lake Organizing Committee for the Olympic Winter Games of 2002 in 1999 as its Chief Operating Officer and in 2002 was appointed President and Chief Executive Officer. Mr. Bullock has also served as President of Visa Interactive, was one of the original partners of Bain Capital and previously held various positions at Bain & Company. He serves as a director of a number of privately held companies. Mr. Bullock holds a B.A. in Economics and an M.B.A. from Brigham Young University. We believe Mr. Bullock's experience as a co-founder of a private equity firm and as a director of various companies qualifies him to serve on our board of directors. Matthew R. Cohler has served as a member of our board of directors since April 2011. Mr. Cohler has been a partner at Benchmark, a venture capital firm since October 2008. He serves as a director of a number of privately held companies. Mr. Cohler holds a B.A. in Music from Yale University. We believe Mr. Cohler's experience advising technology companies and as a venture capital investor and his experience as a director of various companies qualify him to serve on our board of directors. Dana Evan has served as a member of our board of directors since May 2018. Ms. Evan has been a venture partner at Icon Ventures since 2013 and has invested in and served on the boards of directors of companies in the internet, technology and media sectors since July 2007. From May 1996 until July 2007, Ms. Evan served as chief financial officer of VeriSign, Inc., a provider of intelligent infrastructure services for the internet and telecommunications networks. Ms. Evan currently serves on the boards of directors of Box, Inc., Proofpoint, Inc., and a number of privately held companies. Ms. Evan also served on the board of Criteo S.A. from March 2013 until July 2017 and Fusion-IO, Inc. from February 2011 until July 2014. Ms. Evan previously served on the board of directors of Everyday Health, Inc. until it was acquired by Ziff Davis in December 2016 and on the board of directors of Omniture, Inc. until it was acquired by Adobe Systems Incorporated in 2009. Ms. Evan holds a B.S. in commerce from Santa Clara University and is a certified public accountant (inactive). We believe that Ms. Evan's experience in operations, strategy, accounting, financial management and investor relations at both publicly and privately held technology, media and internet companies, along with her experience as a director of various companies, qualify her to serve on our board of directors. Mark Gorenberg has served as a member of our board of directors since July 2011. Since November 2013, Mr. Gorenberg has been a managing director of Zetta Venture Partners. Mr. Gorenberg served as managing director of Hummer Winblad Equity Partners from 1993 to 2013 and as an associate from 1990 to 1993. Previously, Mr. Gorenberg was a Senior Software Manager in advanced product development at Sun Microsystems, Inc., a provider of network computing products and services. Mr. Gorenberg previously served on the board of directors of Omniture, Inc. from 2004 until 2009 and currently serves as a director of a number of privately held companies. He is also a member of the Corporation of the Massachusetts Institute of Technology. Mr. Gorenberg holds a B.S. in Electrical Engineering from the Massachusetts Institute of Technology, an M.S. in Electrical Engineering from the University of Minnesota and an M.S. in Engineering Management from Stanford University. We believe Mr. Gorenberg's experience as a director of various private and public companies, along with his industry experience, qualifies him to serve on our board of directors. Nehal Raj has served as a member of our board of directors since January 2014. Mr. Raj joined TPG in 2006, where he is a Partner and helps lead the firm s investments in the technology sector. Prior to joining TPG, Mr. Raj was a technology private equity investor at Francisco Partners and a technology mergers and acquisitions professional at Morgan Stanley. Mr. Raj previously served as a director of IMS Health Holdings, Inc. and currently serves as a director of a number of privately held companies. He holds both a B.A. in Economics and an M.S. in Industrial Engineering and Engineering Management from Stanford University. He also holds an M.B.A from Harvard Business School. We believe Mr. Raj's experience as a private equity investor and as a director for various companies in the technology sector qualifies him to serve on our board of directors. Glenn Solomon has served as a member of our board of directors since August 2017. Since 2006, Mr. Solomon has been a managing partner of GGV Capital. He serves as a director of a number of privately held companies. Mr. Solomon holds a B.A. in Public Policy from Stanford University and an M.B.A. from Stanford University Graduate School of Business. We believe Mr. Solomon's experience advising technology companies as a venture capital investor, coupled with his experience as a director of various companies, qualifies him to serve on our board. Board Composition and Risk Oversight Our board of directors is currently composed of seven members. Six of our directors are independent within the meaning of the independent director guidelines of The Nasdaq Stock Market. All of the directors other than Mr. James were initially elected to our board of directors pursuant to a voting agreement that will terminate automatically by its terms upon the completion of this offering. Our certificate of incorporation and bylaws to be in effect upon the completion of this offering provide that until the outstanding shares of Class A common stock represent less than a majority of the total combined voting power of our Class A common stock and Class B common stock, or the voting threshold date, the number of our directors shall be at least one and may be fixed from time to time by resolution of our stockholders. Following the voting threshold date, the number of our directors may only be fixed from time to time by resolution of our board of directors. There are no family relationships among any of our directors or executive officers. Our board of directors has an active role, as a whole and also at the committee level, in overseeing the management of our risks. The board of directors is responsible for general oversight of risks and regular review of information regarding our risks, including credit risks, liquidity risks and operational risks. Our compensation committee is responsible for overseeing the management of risks relating to our executive compensation plans and arrangements. Our audit committee is responsible for overseeing the management of our risks relating to accounting matters and financial reporting. Our nominating and governance committee is responsible for overseeing the management of our risks associated with the independence of our board of directors and potential conflicts of interest. While each committee is responsible for evaluating certain risks and overseeing the management of such risks, our entire board of directors is regularly informed through discussions from committee members about such risks. Our board of directors believes its administration of its risk oversight function has not affected the board of directors leadership structure. Classified Board of Directors Until the outstanding shares of our Class A common stock represent less than a majority of the combined voting power of common stock, we will have a single class of directors who are each elected for one-year terms and until their successors are duly elected and qualified. Following the voting threshold date, we will have a classified board of directors consisting of three classes of approximately equal size, each serving staggered three-year terms. Our directors will be assigned by the then-current board of directors to a class. At such times as we have a classified board of directors, upon expiration of the term of a class of directors, directors for that class will be elected for three-year terms at the annual meeting of stockholders in the year in which that term expires. As a result, only one class of directors will be elected at each annual meeting of our stockholders, with the other classes continuing for the remainder of their respective three-year terms. Each director s term continues until the election and qualification of his or her successor, or his or her earlier death, resignation, or removal. Prior to the voting threshold date, vacancies on our board may be filled by resolution of our stockholders. Following the voting threshold date, vacancies on our board may be filled by resolution of the board of directors. At such times as our board of directors is classified, any additional directorships resulting from an increase in the number of directors will be distributed among the three classes so that, as nearly as possible, each class will consist of one-third of the total number of directors. The classification of our board of directors may have the effect of delaying or preventing changes in our control or management. See Description of Capital Stock Anti-Takeover Effects of Delaware Law and Our Certificate of Incorporation and Bylaws Certificate of Incorporation and Bylaws. Director Independence Upon the completion of this offering, we anticipate that our Class B common stock will be listed on The Nasdaq Global Market. Under the rules of The Nasdaq Stock Market, independent directors must comprise a majority of a listed company s board of directors within a specified period of the completion of this offering. In addition, the rules of The Nasdaq Stock Market require that, subject to specified exceptions, each member of a listed company s audit, compensation and nominating and governance committees be independent. Audit committee members must also satisfy the independence criteria set forth in Rule 10A-3 under the Exchange Act. Under the rules of The Nasdaq Stock Market, a director will only qualify as an independent director if, in the opinion of that company s board of directors, that person does not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. To be considered independent for purposes of Rule 10A-3, a member of an audit committee of a listed company may not, other than in his capacity as a member of the audit committee, the board of directors or any other board committee: (1) accept, directly or indirectly, any consulting, advisory or other compensatory fee from the listed company or any of its subsidiaries; or (2) be an affiliated person of the listed company or any of its subsidiaries. In January 2018, our board of directors undertook a review of its composition, the composition of its committees and the independence of our directors and considered whether any director has a material relationship with us that could compromise his ability to exercise independent judgment in carrying out his responsibilities. Based upon information requested from and provided by each director concerning his background, employment and affiliations, including family relationships, our board of directors has determined that, other than Mr. James, none of our directors, has a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director and that each of these directors is independent as that term is defined under the rules of The Nasdaq Stock Market. Our board of directors also determined that Dana Evan, Matthew Cohler and Nehal Raj, who comprise our audit committee, satisfy the independence standards for those committees established by applicable SEC rules and the rules of The Nasdaq Stock Market. We intend to avail ourselves of the controlled company exemption under the corporate governance rules of The Nasdaq Stock Market, which exempts us from the requirement that we have a compensation committee or a nominating and corporate governance committee composed entirely of independent directors. In making this determination, our board of directors considered the relationships that each non-employee director has with us and all other facts and circumstances our board of directors deemed relevant in determining their independence, including the beneficial ownership of our capital stock by each non-employee director. Controlled Company Exemption Upon the completion of this offering, Mr. James, our founder, chief executive officer and chairman, will continue to control a majority of our common stock. As a result, we are a controlled company within the meaning of the corporate governance rules of The Nasdaq Stock Market. Under these rules, a company of which more than 50% of the voting power for the election of directors is held by an individual, a group or another company is a controlled company and may elect not to comply with certain Nasdaq Stock Market corporate governance requirements. We intend to rely on the foregoing exemptions provided to controlled companies under the corporate governance rules of The Nasdaq Stock Market. Therefore, immediately following the consummation of this offering, we may not have a majority of independent directors on our board of directors, an entirely independent nominating and corporate governance committee, an entirely independent compensation committee or perform annual performance evaluations of the nominating and corporate governance and compensation committees unless and until such time as we are required to do so. Accordingly, you may not have the same protections afforded to stockholders of companies that are subject to all of these corporate governance requirements. In the event that we cease to be a controlled company and our shares continue to be listed on The Nasdaq Global Market, we will be required to comply with these provisions within the applicable transition periods. See Risk Factors Risks Relating to Our Class B Common Stock and this Offering We have elected to take advantage of the controlled company exemption to the corporate governance rules of The Nasdaq Stock Market, which could make our common stock less attractive to some investors or otherwise harm our stock price. Board Committees Our board of directors has an audit committee, a compensation committee and a nominating and governance committee, each of which has the composition and the responsibilities described below. Audit Committee The members of our audit committee are Dana Evan, Matthew Cohler, and Glenn Solomon, each of whom is a non-employee member of our board of directors. Our audit committee chairman, Ms. Evan, is our audit committee financial expert, as that term is defined under the SEC rules implementing Section 407 of the Sarbanes-Oxley Act of 2002, and possesses financial sophistication, as defined under the rules of The Nasdaq Stock Market. Our audit committee oversees our corporate accounting and financial reporting process and assists our board of directors in monitoring our financial systems. Our audit committee operates under a written charter that specifies its duties and responsibilities and satisfies the applicable listing standards of The Nasdaq Stock Market. Our audit committee will: approve the hiring, discharging and compensation of our independent registered public accounting firm; oversee the work of our independent registered public accounting firm; approve engagements of the independent registered public accounting firm to render any audit or permissible non-audit services; review the qualifications, independence and performance of the independent registered public accounting firm; review our consolidated financial statements and review our critical accounting policies and estimates; develop procedures for employees to anonymously submit concerns about questionable accounting or audit matters; review the adequacy and effectiveness of our internal controls; and review and discuss the scope and results of the audit with the independent registered public accounting firm and review, with management and the independent accountants, our interim and annual operating results. Compensation Committee The members of our compensation committee are Fraser Bullock, Mark Gorenberg and Nehal Raj, each of whom is a non-employee member of our board of directors. Mr. Bullock is the chairman of our compensation committee. Our compensation committee oversees our compensation policies, plans and benefits programs. Our compensation committee operates under a written charter that specifies its duties and responsibilities and satisfies the applicable listing standards of The Nasdaq Stock Market. The compensation committee will: review and recommend policies relating to compensation and benefits of our officers and employees; review and approve corporate goals and objectives relevant to compensation of our founder and chief executive officer and other senior officers; evaluate the performance of our officers in light of established goals and objectives; recommend compensation of our officers based on its evaluations; and administer the issuance of stock options and other awards under our stock plans. Nominating and Governance Committee The members of our nominating and governance committee are Joshua James and Matthew Cohler. Mr. James is the chairman of our nominating and governance committee. Our nominating and governance committee oversees and assists our board of directors in reviewing and recommending nominees for election as directors. Our nominating and governance committee operates under a written charter that specifies its duties and responsibilities and satisfies the applicable listing standards of The Nasdaq Stock Market. The nominating and governance committee will: evaluate and make recommendations regarding the organization and governance of the board of directors and its committees; assess the performance of members of the board of directors and make recommendations regarding committee and chair assignments; recommend desired qualifications for board of directors membership and conduct searches for potential members of the board of directors; and review and make recommendations with regard to our corporate governance guidelines. Our board of directors may from time to time establish other committees. Director Compensation No cash or equity compensation was paid to our directors in the fiscal year ended January 31, 2018. We have a practice of reimbursing directors for travel, lodging and other reasonable expenses incurred in connection with their attendance at board or committee meetings. As of January 31, 2018, Mr. Gorenberg held stock options to purchase 17,455 shares of our Class B common stock. For further information regarding the equity compensation of our non-employee directors, see the section captioned "Executive Compensation Employee Benefit Plans." Prior to this offering, we did not have a formal policy with respect to compensation payable to our non-employee directors for service as directors. We retained Compensia, a national compensation consultant, to provide our board of directors with an analysis of market data compiled from certain public technology companies and assistance in determining compensation of directors following this offering. Based on the discussions with and assistance from Compensia, in June 2018, our board of directors approved certain compensation to our non-employee directors under our Outside Director Compensation Policy, which our stockholders also approved in June 2018. The Outside Director Compensation Policy provides for the following cash compensation program for non-employee directors, effective upon the effective date of the registration statement of which this prospectus forms a part: $7,500 retainer per quarter for each non-employee director; $3,750 retainer per quarter for our lead non-employee director (if applicable); $5,000 retainer per quarter for the chairman of the audit committee or $1,875 retainer per quarter for each other member of the audit committee; $2,625 retainer per quarter for the chairman of the compensation committee or $1,250 retainer per quarter for each other member of the compensation committee; and $1,875 retainer per quarter for the chairman of the nominating and governance committee or $750 retainer per quarter for each other member of the nominating and governance committee. In addition to the cash compensation structure described above, our Outside Director Compensation Policy provides for the following equity incentive compensation program for non-employee directors effective upon the effective date of the registration statement of which this prospectus forms a part. Each non-employee director who first joins us (other than a director who becomes a non-employee director as a result of terminating employment with us) automatically will be granted a one-time, initial restricted stock unit award with a value of $300,000. Further, on the date of each of our annual stockholder meetings following the effective date of the registration statement or, with respect to each individual who was serving as a non-employee director on June 15, 2018, beginning with our 2021 annual stockholder meeting, each non-employee director who is continuing as a director following our annual stockholder meeting automatically will be granted an annual restricted stock unit award with a value of $150,000 (provided that (1) the value of the award will be reduced to $75,000 if the director first became a non-employee director during the period beginning six months prior to the annual stockholders meeting and ending three months prior to the annual stockholders meeting, and (2) the director will not receive such an award if the director has not provided services as a non-employee director for at least three months prior to the annual stockholders meeting). Unless otherwise determined by our board of directors or our compensation committee, the number of restricted stock units will be determined based on the fair market value of the shares of our common stock subject thereto at grant. Each initial restricted stock unit award is scheduled to vest over a period of three years following the award s date of grant, with one-third of the award scheduled to vest on each of the first three anniversaries of the date the director first becomes a non-employee director, subject to continued service through each relevant vesting date. Each annual restricted stock unit award is scheduled to vest as to 100% of the underlying shares on the earlier of the one-year anniversary of the award s grant date or the date of our next annual stockholder meeting, subject to continued service through such date. In the event of a change in control of our company, all equity awards granted to a non-employee director (including those granted pursuant to our Outside Director Compensation Policy) will fully vest and become immediately exercisable. In any fiscal year, a non-employee director may be paid, issued or granted cash payments and equity awards with a total value of no more than $750,000 (with the value of an equity award based on its grant date fair value for purposes of this limit), or the annual director limit. Equity awards or other compensation granted to a non-employee director while he or she was an employee or consultant (other than a non-employee director) and the restricted stock unit awards discussed below granted to our non-employee directors other than Mr. Raj will not count toward this annual director limit. On June 15, 2018, we granted to each of our non-employee directors, other than Mr. Raj, a restricted stock unit award, or the director RSU award, covering 20,000 shares of Class B common stock which will be scheduled to vest, as to one-third of the director RSU award, on the one-year anniversary of the vesting start date, and one-twelfth of the director RSU award on a quarterly basis thereafter, subject to the non-employee director s continued service through the vesting date. In the event of a change in control of our company, the director RSU awards will become fully vested. In accordance with TPG policy, Nehal Raj has declined to receive any compensation under our Outside Director Compensation Policy. Compensation for our non employee directors is not limited to the equity awards and payments set forth in our Outside Director Compensation Policy. Our non employee directors will remain eligible to receive equity awards and cash or other compensation outside of the Outside Director Compensation Policy, as may be provided from time to time at the discretion of our board of directors. For further information regarding the equity compensation of our non-employee directors, see the section of this prospectus captioned Executive Compensation-Employee Benefit Plans 2018 Equity Incentive Plan. Code of Business Conduct and Ethics We have adopted a written code of business conduct and ethics that will apply to our directors, officers and employees, including our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions prior to the completion of this offering. Following this offering, a copy of the code will be posted on the investor section of our website. Compensation Committee Interlocks and Insider Participation The members of our compensation committee are Fraser Bullock, Mark Gorenberg and Nehal Raj. None of the members of our compensation committee is an officer or employee of us. None of our executive officers currently serves, or in the past year has served, as a member of the board of directors or compensation committee (or other board committee performing equivalent functions or, in the absence of any such committee, the entire board of directors) of any entity that has one or more executive officers serving on our board of directors or compensation committee. None of the members of our compensation committee may be deemed to have an interest in certain transactions requiring disclosure under Item 404 of Regulation S-K under the Securities Act that are disclosed in "Certain Relationships and Related Party Transactions," which disclosure is hereby incorporated by reference in this section. Limitation of Liability and Indemnification Our certificate of incorporation and bylaws, each to be effective upon completion of this offering, will provide that we will indemnify our directors and officers, and may indemnify our employees and other agents, to the fullest extent permitted by the Delaware General Corporation Law, which prohibits us from limiting the liability of our directors for the following: any breach of the director s duty of loyalty to us or to our stockholders; acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law; unlawful payment of dividends or unlawful stock repurchases or redemptions; and any transaction from which the director derived an improper personal benefit. As permitted by Delaware General Corporation Law, we have entered into indemnification agreements with each of our current directors, officers and some employees. These agreements provide for the indemnification of our directors, officers and some employees for certain expenses and liabilities incurred in connection with any action, suit, proceeding or alternative dispute resolution mechanism, or hearing, inquiry or investigation that may lead to the foregoing, to which they are a party, or are threatened to be made a party, by reason of the fact that they are or were a director, officer, employee, agent or fiduciary of us, or any of our subsidiaries, by reason of any action or inaction by them while serving as an officer, director, agent or fiduciary, or by reason of the fact that they were serving at our request as a director, officer, employee, agent or fiduciary of another entity. In the case of an action or proceeding by or in the right of us or any of our subsidiaries, no indemnification will be provided for any claim where a court determines that the indemnified party is prohibited from receiving indemnification. We believe that these bylaw provisions and indemnification agreements are necessary to attract and retain qualified persons as directors and officers. We also maintain directors and officers liability insurance. Although we believe that these provisions and agreements are necessary to attract and retain qualified persons as our officers and directors, the limitation of liability and indemnification provisions in our certificate of incorporation and bylaws may discourage stockholders from bringing a lawsuit against directors for breach of their fiduciary duties. They may also reduce the likelihood of derivative litigation against directors and officers, even though an action, if successful, might benefit us and our stockholders. A stockholder s investment may be harmed to the extent we pay the costs of settlement and damage awards against directors and officers pursuant to these indemnification provisions. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers and controlling persons pursuant to the foregoing provisions, or otherwise, we have been advised that, in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act, and is, therefore, unenforceable. At present, there is no pending litigation or proceeding involving our directors or officers for whom indemnification is required or permitted, and we are not aware of any threatened litigation or proceeding that may result in a claim for indemnification. EXECUTIVE COMPENSATION Our named executive officers, consisting of our principal executive officer and the next two most highly compensated executive officers, as of January 31, 2018, were: Joshua G. James, our founder, chief executive officer and director; Bruce Felt, our chief financial officer; and Catherine Wong, our chief product officer and executive vice president of engineering. The amounts below represent the compensation earned by or paid to the named executive officers in the fiscal year ended January 31, 2018. Summary Compensation Table The following table provides information regarding the compensation of our named executive officers who were serving as executive officers as of January 31, 2018. Name and Principal Position Salary Bonus(1) Stock Awards(2) All Other Compensation Total Joshua G. James Founder, Chief Executive Officer and Director $ 350,000 $ 175,000 $ $ 12,659(3) $ 537,659 Bruce Felt Chief Financial Officer 350,000 100,000 2,340,000 23,809(4) 2,813,809 Catherine Wong Chief Product Officer and Executive Vice President of Engineering 350,000 450,000 1,950,000 11,550(3) 2,761,550 ________________ (1) Amounts represent the payment of a discretionary bonus and, for Ms. Wong, additional one-time discretionary bonuses totaling $350,000 in recognition of her contributions to the Company during the fiscal year ended January 31, 2018. (2) The amounts reported in this column represent the aggregate grant date fair value of the restricted stock units, or RSUs, granted under our 2011 Equity Incentive Plan to our named executive officers in the fiscal year ended January 31, 2018 as computed in accordance with FASB ASC Topic 718. The assumptions used in calculating the dollar amount recognized for financial statement reporting purposes of the equity awards reported in this column are set forth in Note 12 to our consolidated financial statements included in this prospectus. Note that the amounts reported in this column reflect the accounting value for these equity awards and do not correspond to the actual economic value that may be received by our named executive officers from the equity awards. The RSUs only vest upon the satisfaction of both (i) service-based vesting conditions and (ii) a liquidity-based vesting condition, as provided in the table below titled Outstanding Equity Awards at January 31, 2018. (3) Reflects matching contributions made by us under our 401(k) plan. (4) Reflects spousal travel, including a gross up of $3,899 for the related taxes; plus matching contributions made by us under our 401(k) plan. Outstanding Equity Awards at January 31, 2018 The following table presents estimated information regarding outstanding equity awards held by our named executive officers as of January 31, 2018. Number of Securities Underlying Unexercised Options Stock Awards Name Vesting Commencement Date Exercisable (#) Unexercisable (#) Option Exercise Prices ($) Option Expiration Date Number of Shares that Have Not Vested(#)(3) Market Value of Shares that Have Not Vested ($)(3) Joshua G. James 9/4/2014 514,100 102,821(1) 25.50 9/3/2024 Bruce Felt 8/18/2014 131,738 22,492(2) 25.50 9/3/2024 1/31/2018 100,000 Catherine Wong 9/23/2013 45,089 8.40 10/7/2023 9/4/2014 22,222 4,444(1) 25.50 9/3/2024 12/13/2014 513 153(1) 25.50 1/28/2025 11/16/2015 21,666 18,334(2) 27.60 9/30/2026 1/31/2018 83,333 ________________ (1) Stock option vests over four years, with 50% vesting on the second anniversary of the vesting commencement date and the remainder vesting monthly over the following 24 months, subject to continued service. (2) Stock option vests over four years, with 25% vesting on the first anniversary of the vesting commencement date and the remainder vesting monthly over the following 36 months, subject to continued service. (3) The market value of our Class B common stock is based on the assumed initial public offering price of our common stock of $20.50 per share, which is the midpoint of the estimated price range on the cover of this prospectus. The RSUs are scheduled to vest as to 25% of the RSUs on the one-year anniversary of the vesting commencement date, and 1/16 th of the RSUs quarterly thereafter, provided that in no event will any RSUs vest before the earlier of (a) immediately prior to a change of control (as defined in our 2011 Equity Incentive Plan) and (b) the first scheduled vesting date occurring more than 180 days after the date of this prospectus. The vesting of RSUs on any such vesting dates is subject to the named executive officer s continued service with us through such date. Executive Employment Arrangements We have entered into employment letters setting forth the terms and conditions of employment for each of our named executive officers as described below. These agreements provide for at-will employment. In addition, each of our named executive officers has executed our standard form of confidential information, invention assignment and arbitration agreement, or confidentiality agreement. Joshua G. James We entered into an employment letter with Mr. James in June 2018. His employment letter provides that his annual base salary is $350,000 and his target annual bonus opportunity for the fiscal year ending January 31, 2019 will be at least 50% of his annual base salary. For the fiscal year ended January 31, 2018, Mr. James annual base salary was $350,000 and his target bonus opportunity was $175,000. Bruce C. Felt We entered into an employment letter with Mr. Felt in June 2018. His employment letter provides that his annual base salary is $350,000 and his target annual bonus opportunity for the fiscal year ending January 31, 2019 is $100,000. The employment letter further provides for our reimbursement to Mr. Felt for travel expenses, including airfare, lodging and rental car costs for him and his family between his California residence and our Utah headquarters. We provide additional payments to Mr. Felt that generally are intended to make the reimbursed travel expenses tax-neutral for Mr. Felt. For the fiscal year ended January 31, 2018, Mr. Felt received an annual base salary of $350,000 and participated in our annual bonus program at a target annual bonus opportunity in the amount of $100,000. Catherine Wong We entered into an employment letter with Ms. Wong in June 2018. Her employment letter provides that her annual base salary is $350,000 and her target annual bonus opportunity for the fiscal year ending January 31, 2019 is $350,000. For the fiscal year ended January 31, 2018, Ms. Wong received an annual base salary of $350,000, an annual bonus opportunity of $100,000, and additional one-time discretionary bonuses totaling $350,000. Executive Change in Control and Severance Agreements In June 2018, our board of directors approved a change in control and severance agreement for each of our named executive officers, which agreement would provide for certain severance and change in control benefits as described below. Each change in control and severance agreement will supersede any prior agreement or arrangement the named executive officer may have had with us that provides for severance and/or change in control payments or benefits. Each change in control and severance agreement will have an initial term of three years commencing on the effective date of the agreement. On the third anniversary of the effective date of the agreement, the agreement will renew automatically for additional one year terms unless either party provides the other party with written notice of nonrenewal at least one year prior to the date of automatic renewal. However, if a change in control (as defined in the applicable agreement) occurs when there are fewer than 12 months remaining during the initial term or during an additional term, the term of the change in control and severance agreement will extend automatically through the date that is 12 months following the date of the change in control. If a named executive officer s employment is terminated outside the period beginning 60 days (or six months, in the case of Mr. Felt) before a change in control and ending 12 months (or 24 months, in the case of Mr. Felt) following a change in control, or the Change in Control Period, either (1) by the Company (or any of its subsidiaries) without cause (excluding by reason of death or disability) or (2) by the named executive officer for good reason (as such terms are defined in the named executive officer s change in control and severance agreement), the named executive officer will receive the following benefits if he or she timely signs and does not revoke a release of claims in our favor: a lump-sum payment equal to 12 months (or 18 months in the case of Mr. James) of the named executive officer s annual base salary as in effect immediately prior to such termination (or if such termination is due to a resignation for good reason based on a material reduction in base salary, then as in effect immediately prior to the reduction); in the case of Mr. Felt only, a lump-sum payment equal to 100% of his target annual bonus as in effect for the fiscal year in which such termination occurs; and payment of premiums for coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, or COBRA, for the named executive officer and the named executive officer s eligible dependents, if any, for up to 12 months (or 18 months in the case of Mr. James), or taxable monthly payments for the equivalent period in the event payment of the COBRA premiums would violate or be subject to an excise tax under applicable law. If, within the Change in Control Period, the named executive officer s employment is terminated either (1) by the Company (or any of its subsidiaries) without cause (excluding by reason of death or disability) or (2) by the named executive officer for good reason, the named executive officer will receive the following benefits if the named executive officer timely signs and does not revoke a release of claims in our favor: a lump-sum payment equal to 12 months (or 18 months in the case of Mr. James) of the executive s annual base salary as in effect immediately prior to such termination (or if such termination is due to a resignation for good reason based on a material reduction in base salary, then as in effect immediately prior to the reduction) or if greater, at the level in effect immediately prior to the change in control); a lump-sum payment equal to 100% (or 150% in the case of Mr. James) of the named executive officer s target annual bonus as in effect for the fiscal year in which such termination occurs; payment of premiums for coverage under COBRA for the named executive officer and the named executive officer s eligible dependents, if any, for up to 12 months (or 18 months in the case of Mr. James), or taxable monthly payments for the equivalent period in the event payment of the COBRA premiums would violate or be subject to an excise tax under applicable law; and 100% accelerated vesting and exercisability of all outstanding equity awards and, in the case of an equity award with performance-based vesting, all performance goals and other vesting criteria generally will be deemed achieved at 100% of target levels. In the event of a termination described above during the Change in Control Period, that occurs as a result of a resignation by Mr. Felt for good reason and because of our change in control, Mr. Felt is required to offer to us, the acquiring entity or new entity following a merger (as applicable), to continue working in good faith for at least an additional nine months following the date of our change in control. In the event of a termination described above that qualifies Ms. Wong for severance benefits, if the termination occurs on or following a change in control, Ms. Wong is required to offer to the acquiring entity, or new entity following a merger, to continue working in good faith for at least an additional six months in the case of a termination of the named executive officer s employment without cause (excluding by reason of death or disability), or 12 months in the case of such a termination that occurs as a result of a resignation by the named executive officer for good reason, following that date on which such termination otherwise would become effective in order to appropriately transition between responsibilities. With respect to each of Mr. Felt and Ms. Wong, if the named executive officer s offer of transition assistance is accepted, the named executive officer will be paid a pro rata amount of the executive s annual base salary and annual cash target bonus opportunity during the transition period. If any of the amounts provided for under these change in control and severance agreements or otherwise payable to our named executive officers would constitute parachute payments within the meaning of Section 280G of the Internal Revenue Code and could be subject to the related excise tax, the named executive officer would be entitled to receive either full payment of benefits under his or her change in control or severance agreement or such lesser amount which would result in no portion of the benefits being subject to the excise tax, whichever results in the greater amount of after-tax benefits to the named executive officer. The change in control and severance agreements do not require us to provide any tax gross-up payments. Employee Benefit Plans 2018 Equity Incentive Plan Our board of directors adopted, and our stockholders approved, the 2018 Equity Incentive Plan, or the 2018 Plan, in June 2018. The 2018 Plan will be effective as of one business day prior to the effective date of this registration statement. Our 2018 Plan provides for the grant of incentive stock options, within the meaning of Section 422 of the Code, to our employees and any parent and subsidiary corporations employees, and for the grant of nonstatutory stock options, restricted stock, restricted stock units, stock appreciation rights, performance units and performance shares to our employees, consultants, and members of our board of directors and our parent and subsidiary corporations employees and consultants. Authorized Shares We have reserved a total of 5,238,423 shares of our Class B common stock for issuance pursuant to the 2018 Plan, of which no awards are issued and outstanding. In addition, the shares reserved for issuance under our 2018 Plan will also include (1) those shares reserved but unissued under our 2011 Plan (as defined below) as of immediately prior to its termination and (2) shares of Class B common stock subject to or issued pursuant to awards granted under our 2011 Plan that, on or after the termination of the 2011 Plan, expire or otherwise terminate without having been exercised or issued in full or are forfeited to or repurchased by us (provided that the maximum number of shares that may be added to the 2018 Plan pursuant to (1) and (2) is 3,775,172 shares). The number of shares available for issuance under the 2018 Plan also will include an annual increase on the first day of each fiscal year beginning in 2019, equal to the least of: 3,500,000 shares; 5% of the outstanding shares of Class A and Class B common stock as of the last day of the immediately preceding fiscal year; and such other amount as our board of directors may determine no later than the last day of the immediately preceding year. The shares may be authorized, but unissued or reacquired shares of Class B common stock. Plan Administration Our board of directors or one or more committees appointed by the board of directors will administer the 2018 Plan. We anticipate that the compensation committee of the board of directors will administer our 2018 Plan. In addition, if desirable, we may structure transactions under the 2018 Plan to be exempt under Rule 16b-3 of the Exchange Act. Subject to the provisions of our 2018 Plan, the administrator has the power to administer the plan, including but not limited to the following: interpret the terms of the 2018 Plan and awards granted under it; create, amend and rescind rules relating to the 2018 Plan, including rules relating to sub-plans; determine recipients and the terms of awards, including their exercise prices, the numbers of shares subject to the awards, the exercisability of the awards, and the form of consideration, if any, payable upon exercise; amend existing awards, including to reduce or increase their exercise price; allow participants the opportunity to transfer outstanding awards to a financial institution or other person or entity selected by the administrator; institute an exchange program by which outstanding awards may be surrendered in exchange for awards of the same type which may have a higher or lower exercise price or different terms, awards of a different type and/or cash; and make all other determinations necessary or advisable for administering the 2018 Plan. Stock Options We may grant stock options under the 2018 Plan. The per share exercise price of options granted under our 2018 Plan must be equal to at least the fair market value of a share of our Class B common stock on the grant date of the award, except in certain limited circumstances. The term of an incentive stock option may not exceed ten years, except that with respect to any participant who owns more than 10% of the voting power of all classes of stock of ours or any of our parent or subsidiary corporations, the term must not exceed five years and the exercise price must equal at least 110% of the fair market value of a share of our Class B common stock on the grant date. The administrator will determine the methods of payment of the exercise price of an option, which may include cash, shares or other property acceptable to the administrator, as well as other types of consideration permitted by applicable law. After the termination of service of a participant, he or she may exercise his or her option for the period of time stated in his or her option agreement. In the absence of a specified period in the option agreement, an option will remain exercisable for three months following a termination of a participant s service (or in the case of a termination of service due to death or disability, for 12 months following such termination). However, in no event may an option be exercised later than the expiration of its term. Subject to the provisions of our 2018 Plan, the administrator determines the other terms of options, including any vesting and exercisability requirements. Stock Appreciation Rights We may grant stock appreciation rights under our 2018 Plan. Stock appreciation rights allow the recipient to receive the appreciation in the fair market value of our Class B common stock between the grant date and the exercise date. After the termination of service of the participant, he or she may exercise his or her stock appreciation right for the period of time stated in his or her award agreement. In the absence of a specified period in the award agreement, a stock appreciation right will remain exercisable for three months following a termination of a participant s service (or in the case of a termination of service due to death or disability, for 12 months following such termination). However, in no event may a stock appreciation right be exercised later than the expiration of its term. Subject to the provisions of our 2018 Plan, the administrator determines the other terms of stock appreciation rights, including when such rights become exercisable, the maximum term of the stock appreciation rights, and whether to pay any increased appreciation in cash or with shares of our Class B common stock, or a combination of both, except that the per share exercise price for the shares subject to a stock appreciation right will be no less than 100% of the fair market value per share on the date of grant. Restricted Stock We may grant restricted stock under our 2018 Plan. Restricted stock awards are grants of shares of our Class B common stock that may be subject to various restrictions, including restrictions on transferability and forfeiture provisions. The administrator will determine the number of shares of restricted stock granted to any participant and, subject to the provisions of our 2018 Plan, will determine the terms and conditions of such awards. The administrator may impose any conditions to vesting it determines to be appropriate (for example, the administrator may set restrictions based on the achievement of specific performance goals or continued service to us), and the administrator, in its sole discretion, may accelerate the time at which any restrictions will lapse or be removed. Recipients of restricted stock awards generally will have voting and dividend rights with respect to such shares upon grant without regard to vesting, unless the administrator provides otherwise, provided that any dividends will be subject to the same restrictions as the shares of restricted stock on which they were distributed. Shares of restricted stock that do not vest are subject to our right of repurchase or forfeiture. Restricted Stock Units We may grant restricted stock units under our 2018 Plan. Restricted stock units are bookkeeping entries with each unit representing an amount equal to the fair market value of one share of our Class B common stock. Subject to the provisions of our 2018 Plan, the administrator determines the terms and conditions of restricted stock units, including any vesting criteria (which may include accomplishing specified performance criteria or continued service to us) and the form and timing of payment. The administrator may accelerate the time at which any restrictions will lapse or be removed. Performance Units and Performance Shares We may grant performance units and performance shares under our 2018 Plan. Performance units and performance shares are awards that will result in a payment to a participant if performance goals or other vesting criteria established by the administrator are achieved or the awards otherwise vest. The administrator may establish any organizational or individual performance goals or any other vesting criteria in its discretion, which, depending on the extent to which they are met, generally will determine the number or value of performance units and performance shares to be paid to participants. The administrator, in its sole discretion, may reduce or waive any performance criteria or other vesting provisions for such performance units or performance shares. Performance units will have an initial dollar value established by the administrator on or before the grant date. Performance shares will have an initial value equal to the fair market value of the underlying shares of our Class B common stock on the grant date. The administrator, in its sole discretion, may pay earned performance units or performance shares in the form of cash, in shares or in some combination of both. Non-Employee Directors Our 2018 Plan provides that all non-employee directors will be eligible to receive all types of awards (except for incentive stock options) under the 2018 Plan. Our 2018 Plan provides that in any given fiscal year of ours, a non-employee director may not receive awards having a grant date fair value as determined under GAAP and any other compensation (such as cash retainers or fees) greater than $750,000 in the aggregate. Any awards provided to an individual for his or her service as an employee or consultant (other than as a non-employee director) will not count for purposes of this limitation. This maximum limit does not reflect the intended size of any potential grants or a commitment to make grants in the future. In connection with this offering, we implemented a formal policy making our non-employee directors eligible to receive equity awards under the 2018 Plan, as described under the section captioned "Management Director Compensation." Non-Transferability of Awards Unless the administrator provides otherwise, our 2018 Plan does not allow for the transfer of awards, and only the recipient of an award may exercise an award during his or her lifetime. Certain Adjustments In the event of any dividend or other distribution, recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange of our shares or other securities, or other change in our corporate structure affecting our shares, in order to prevent diminution or enlargement of the benefits or potential benefits available under the 2018 Plan, the administrator will adjust the number and class of shares that may be delivered under the 2018 Plan or the number, class and price of shares covered by each outstanding award, and any numerical share limits set forth in the 2018 Plan. In the event of our proposed liquidation or dissolution, the administrator will notify participants as soon as practicable, and all awards will terminate immediately prior to the consummation of such proposed transaction. Merger or Change in Control Our 2018 Plan provides that in the event of our merger or change in control, as defined under the 2018 Plan, each outstanding award will be treated as the administrator determines, except that if a successor corporation does not assume or substitute for the award, then such award will fully vest, all restrictions on such award will lapse, and with respect to any award with performance-based vesting, all performance goals or other vesting criteria applicable to such award will be deemed achieved at 100% of target levels and all other terms and conditions met unless specifically provided otherwise under the applicable award agreement or another applicable agreement between the participant and us. For any option or stock appreciation right that is not assumed or substituted, the administrator will notify the participant that such award will be exercisable for a specified period prior to the transaction, and the award will then terminate upon the expiration of the specified period of time. If a non-employee director s awards are assumed or substituted for and the service of the non-employee director is terminated on or following a change of control, other than pursuant to a voluntary resignation that is not at the request of the acquirer, his or her options and stock appreciation rights, if any, will vest fully and become immediately exercisable, all restrictions on his or her restricted stock and restricted stock units will lapse, and with respect to any award with performance-based vesting, all performance goals or other vesting requirements for his or her awards will be deemed achieved at 100% of target levels, and all other terms and conditions met. Forfeiture Events Awards will be subject to any clawback policy that we may establish or amend from time to time, and the administrator may specify in an award agreement that the participant s rights, payments, and benefits with respect to an award will be subject to reduction, cancellation, forfeiture, or recoupment upon the occurrence of certain specified events. The administrator may require a participant to forfeit, return, or reimburse us all or a portion of his or her award and any amounts paid under the award pursuant to the terms of such clawback policy or to comply with applicable laws. Amendment, Termination The administrator has the authority to amend, suspend or terminate the 2018 Plan provided such action does not impair the existing rights of any participant. The 2018 Plan automatically terminates in 2028, unless earlier terminated by the administrator. 2011 Equity Incentive Plan Our 2011 Equity Incentive Plan, or the 2011 Plan, was adopted by our board of directors and approved by our stockholders in April 2011 and was most recently amended in June 2018. The 2011 Plan permits the grant of incentive stock options, within the meaning of Section 422 of the Code, to our employees and to the employees of any of our parent or subsidiaries, and the grant of nonstatutory stock options, stock appreciation rights, restricted stock, and restricted stock units to our employees, consultants and members of our Board and the employees and consultants of any of our parent or subsidiaries. The 2011 Plan will be terminated prior to the completion of this offering, and thereafter we will not grant any additional awards under the 2011 Plan. However, the 2011 Plan will continue to govern the terms and conditions of the outstanding awards previously granted under the 2011 Plan. Authorized Shares The maximum aggregate number of shares of our Class B common stock authorized for issuance under the 2011 Plan is 4,259,209 shares, of which 16,182 shares were available for grant as of April 30, 2018 . Shares may be authorized but unissued, or reacquired Class B common stock. Shares issued pursuant to awards granted under our 2011 Plan that expire or become unexercisable without having been exercised in full, are surrendered under an exchange program, or are forfeited to or repurchased by us due to the failure to vest, as well as shares used to pay the exercise price of an award or to satisfy the tax withholding obligations related to an award, will become available for future grant under the 2011 Plan while the 2011 Plan remains in effect. In addition, to the extent that an award is paid out in cash rather than shares, such cash payment will not reduce the number of shares available for issuance under the 2011 Plan. Further, only shares actually issued under stock appreciation rights will reduce the shares available for issuance under the 2011 Plan. As of April 30, 2018, options to purchase 2,436,043 shares of our Class B common stock and 1,204,223 restricted stock units were outstanding under the 2011 Plan. Plan Administration Our 2011 Plan is administered by our board of directors or a committee appointed by it. Subject to the provisions of our 2011 Plan, the administrator has the power to construe and interpret our 2011 Plan and any awards granted under it, determine the terms of awards, including the recipients, the number of shares subject to each award, the exercise price, the fair market value of a share of Class B common stock, the vesting schedule of awards, and any vesting acceleration, and the award agreements for use under the 2011 Plan. The administrator may amend awards as well as implement a program under which (1) outstanding awards are surrendered or cancelled in exchange for awards of the same type (which may have lower or higher exercise prices and different terms), awards of a different type, and/or cash, (2) award holders have an opportunity to transfer outstanding awards to a financial institution or other person or entity selected by the administrator, or (3) the exercise price of an outstanding award is increased or reduced. The administrator may establish rules and regulations, including sub-plans for satisfying applicable laws or qualification for favorable tax treatment in jurisdictions outside of the U.S. Stock Options Prior to the completion of this offering, we may grant options under our 2011 Plan. The exercise price per share of all options must equal at least 100% of the fair market value per share of our Class B common stock on the grant date. The term of an option may not exceed ten years. An incentive stock option to be granted to a participant who owns more than 10% of the total combined voting power of all classes of our stock or any of our parent or subsidiary corporations may not have a term in excess of five years and must have a per share exercise price of at least 110% of the fair market value per share of our Class B common stock on the grant date. Subject to the provisions of the 2011 Plan, the administrator determines all other terms of options, including vesting, any earlier termination of the option upon termination of service, and the method of payment of the exercise price of an option. Stock Appreciation Rights Prior to the completion of this offering, we may grant stock appreciation rights under our 2011 Plan. Stock appreciation rights allow the recipient to receive the appreciation in the fair market value of our Class B common stock between the grant date and the exercise date. Subject to the provisions of our 2011 Plan, the administrator determines the terms of stock appreciation rights, including when such rights vest and become exercisable, any earlier termination of the award upon termination of service and whether to pay any increased appreciation in cash or with shares of our Class B common stock, or a combination of both. The per share exercise price for the shares to be issued pursuant to the exercise of a stock appreciation right will be no less than 100% of the fair market value per share of our Class B common stock on the grant date. The term of a stock appreciation right may not exceed 10 years. Restricted Stock Prior to the completion of this offering, we may grant restricted stock under our 2011 Plan. Restricted stock awards are grants of shares of our Class B common stock that may be subject to various restrictions, including restrictions on transferability and forfeiture provisions. Subject to the terms of our 2011 Plan, the administrator will determine the number of shares of restricted stock granted and other terms and conditions of such awards. The administrator may impose any conditions to vesting it determines to be appropriate, and may, in its sole discretion, accelerate the time at which any restrictions will lapse or be removed. Recipients of restricted stock generally will have voting and dividend rights with respect to such shares upon grant without regard to vesting, unless the administrator provides otherwise. Shares of restricted stock that have not vested are subject to our right of repurchase or forfeiture. Restricted Stock Units Prior to the completion of this offering, we may grant restricted stock units under our 2011 Plan. Restricted stock units are bookkeeping entries with each unit representing an amount equal to the fair market value of one share of our Class B common stock. The administrator determines the terms and conditions of restricted stock units, including the number of units granted, the vesting criteria (which may include accomplishing specified performance criteria or continued service to us) and the form and timing of payment. The administrator in its sole discretion may reduce or waive any vesting criteria. The administrator determines in its sole discretion whether an award will be settled in cash, shares of Class B common stock, or a combination of both. Restricted stock units that do not vest will be forfeited by the recipient and will return to us. Non-Transferability of Awards Unless the administrator provides otherwise, our 2011 Plan generally does not allow for the transfer of awards other than by will or the laws of descent or distribution, and only the recipient of an award may exercise an award during his or her lifetime. Certain Adjustments In the event of any dividend or other distribution, recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange of our shares or other securities, or other change in our corporate structure affecting our shares, in order to prevent diminution or enlargement of the benefits or potential benefits to be made available under the 2011 Plan, the administrator will adjust the number and class of shares that may be delivered under our 2011 Plan or the number, class, and price of shares covered by each outstanding award. In the event of our proposed liquidation or dissolution, the administrator will notify participants as soon as practicable prior to the proposed transaction, and to the extent not previously exercised, awards will terminate immediately prior to the closing of the proposed transaction. Merger or Change in Control Our 2011 Plan provides that in the event of a merger or change in control, as defined under the 2011 Plan, each outstanding award will be treated as the administrator determines, including, without limitation, that each award be assumed or a substantially equivalent award substituted by the acquiring or succeeding corporation (or an affiliate thereof). The administrator is not required to treat all awards similarly in the transaction. Amendment, Termination Our board of directors has the authority to amend, alter, suspend or terminate the 2011 Plan, provided such action does not impair the rights of any participant mutually agreed between us and the affected participant. The 2011 Plan will be terminated prior to the completion of this offering, and thereafter we will not grant any additional awards under the 2011 Plan. However, the 2011 Plan will continue to govern the terms and conditions of the outstanding awards previously granted under the 2011 Plan. 2018 Employee Stock Purchase Plan The board of directors adopted, and our stockholders approved, the 2018 Employee Stock Purchase Plan, or the ESPP, in June 2018. Our ESPP will be effective as of one business day prior to the effective date of this registration statement. Our ESPP will include a component that is intended to qualify as an employee stock purchase plan under Section 423 of the Internal Revenue Code of 1986, as amended, referred to as the 423 Component, and a component that does not comply with Section 423, referred to as the Non-423 Component. For purposes of this disclosure, a reference to the ESPP will mean the 423 Component. Authorized Shares A total of 1,047,684 shares of our Class B common stock will be available for issuance under our ESPP. In addition, our ESPP will provide for annual increases in the number of shares available for issuance under our ESPP on the first day of each fiscal year beginning in 2019, equal to the least of: 1,050,000 shares of Class B common stock; 1.5% of the outstanding shares of our Class A and Class B common stock on the last day of the immediately preceding fiscal year; and such other amount as the administrator of our ESPP may determine on or before the last day of the immediately preceding year. Administration Our board of directors or a committee appointed by the board of directors in accordance with applicable law will administer the ESPP. We anticipate that our compensation committee will administer our ESPP. The administrator will have authority to administer the ESPP, including but not limited to, full and exclusive authority to interpret the terms of our ESPP, delegate ministerial duties to any of our employees, designate separate offerings under the ESPP, designate subsidiaries and affiliates as participating in the 423 Component or the Non-423 Component, determine eligibility, adjudicate all disputed claims filed under our ESPP, and establish such procedures that it deems necessary for the administration of our ESPP (including, without limitation, adopt such procedures and sub-plans as are necessary or appropriate to permit the participation in our ESPP by employees who are foreign nationals or employed outside the U.S., the terms of which sub-plans may take precedence over other provisions of our ESPP except with respect to our ESPP s share reserve limits). Eligibility Generally, any of our employees are eligible to participate if they are employed by us, or any participating subsidiary, for at least 20 hours per week and more than five months in any calendar year. However, an employee may not be granted an option to purchase stock under our ESPP if such employee: immediately after the grant would own stock and/or hold outstanding options to purchase such stock possessing 5% or more of the total combined voting power or value of all classes of our capital stock; or holds rights to purchase stock under all of our employee stock purchase plans that accrue at a rate that exceeds $25,000 worth of stock for each calendar year. Our ESPP will be intended to qualify under Section 423 of the Code, and will provide for successive, overlapping offering periods that are approximately 24 months in duration. The offering periods will be scheduled to start on the first trading day on or after April 1 and October 1 of each year, except for the first offering period, which will commence on the first trading day on or after the effective date of the registration statement of which this prospectus forms a part and will end on the first trading day on or after October 1, 2020. The second offering period will commence on the first trading day on or after April 1, 2019 The administrator may change the duration of future offering periods if the change is announced prior to the beginning of the first affected offering period. Each offering period will include purchase periods that are approximately six months in duration, which will commence after an exercise date (or for the first purchase period of an offering period, the first day of the offering period) and end with the next exercise date; provided, however, that the first exercise date under our ESPP will be the first trading day on or after April 1, 2019. Contributions Our ESPP will permit participants to purchase shares of Class B common stock through payroll deductions of up to 15% of their eligible compensation, which includes a participant s base straight time gross earnings and payments for overtime and shift premium but does not include payments for commissions, incentive compensation, bonuses, equity compensation income and other similar compensation. The administrator may allow all employees participating in a separate offering to contribute amounts to our ESPP via cash, check or other means set forth in the participants subscription agreement prior to an exercise date in an offering period. Unless otherwise determined by the administrator, a participant may make a one-time decrease (but not increase) to the rate of his or her contributions during a purchase period, and a participant may change the rate of his or her contributions for future purchase periods. Exercise of Purchase Right Amounts deducted and accumulated by the participant will be used to purchase shares of Class B common stock at the end of each purchase period. The purchase price of the shares will be 85% of the lower of the fair market value of Class B common stock on the first trading day of each offering period or the fair market value of Class B common stock on the applicable exercise date. A participant will be able to purchase a maximum of 2,000 shares during each purchase period. If the fair market value of a share of our Class B common stock on the exercise date of an offering period is less than it was on the first trading day of that offering period, participants automatically will be withdrawn from that offering period following their purchase of shares on the exercise date and will be re enrolled in a new offering period. Withdrawal Participants will be able to end their participation at any time during an offering period and will be paid their accrued contributions that have not yet been used to purchase shares of Class B common stock. Participation will end automatically upon termination of employment with us. Non-Transferability A participant will not be able to transfer rights granted under our ESPP other than by will, the laws of descent and distribution, or as otherwise provided under our ESPP. Certain Adjustments In the event of any dividend or other distribution, recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange of our shares or other securities, or other change in our corporate structure affecting our shares, to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under our ESPP, the administrator will make adjustments to the number and class of shares that may be delivered under our ESPP and/or the purchase price per share and number of shares covered by each option under our ESPP that has not yet been exercised, and the numerical share limits under our ESPP. In the event of our proposed dissolution or liquidation, any offering period then in progress will be shortened by setting a new exercise date and all offering periods will terminate immediately prior to the completion of the transaction, unless the administrator determines otherwise. Prior to the new exercise date, the administrator will provide notice to participants that the exercise date has been changed to the new exercise date and that the participant s option will be exercised automatically unless the participant already has withdrawn from the offering period. Merger or Change in Control In the event of our merger or change in control, as defined under our ESPP, a successor corporation may assume or substitute for each outstanding option. If the successor corporation refuses to assume or substitute for the option, the offering period then in progress will be shortened, and a new exercise date will be set to occur prior to the date of the proposed merger or change in control. The administrator will notify each participant that the exercise date has been changed and that the participant s option will be exercised automatically on the new exercise date unless prior to such date the participant has withdrawn from the offering period. Plan Amendment and Termination Our ESPP will terminate automatically in 2038, unless the administrator terminates it sooner. Our board of directors will have the authority to amend, suspend or terminate our ESPP. Executive Incentive Compensation Plan Our board of directors adopted an Executive Incentive Compensation Plan, or the Bonus Plan, in June 2018. The Bonus Plan will be administered by a committee appointed by our board of directors. Unless and until our board of directors determines otherwise, our compensation committee will be the administrator of the Bonus Plan. The Bonus Plan allows our compensation committee to provide cash incentive awards to selected employees, including our NEOs, determined by our compensation committee, based upon performance goals established by our compensation committee. Our compensation committee, in its sole discretion, will establish a target award for each participant under the Bonus Plan, which may be expressed as a percentage of the participant s average annual base salary for the applicable performance period, a fixed dollar amount, or such other amount or based on such other formula as our compensation committee determines to be appropriate. Under the Bonus Plan, our compensation committee will determine the performance goals applicable to awards, which goals may include, without limitation: attainment of research and development milestones, bookings, business divestitures and acquisitions, cash flow, cash position, contract awards or backlog, customer renewals, customer retention rates from an acquired company, subsidiary, business unit or division, earnings (which may include earnings before interest and taxes, earnings before taxes, and net taxes), earnings per share, expenses, gross margin, growth in stockholder value relative to the moving average of the S&P 500 Index or another index, internal rate of return, market share, net income, net profit, net sales, new product development, new product invention or innovation, number of customers, operating cash flow, operating expenses, operating income, operating margin, overhead or other expense reduction, product defect measures, product release timelines, productivity, profit, retained earnings, return on assets, return on capital, return on equity, return on investment, return on sales, revenue, revenue growth, sales results, sales growth, stock price, time to market, total stockholder return, working capital, and individual objectives such as peer reviews or other subjective or objective criteria. As determined by our compensation committee, the performance goals may be based on generally accepted accounting principles, or GAAP, or non-GAAP results and any actual results may be adjusted by our compensation committee for one-time items or unbudgeted or unexpected items and/or payments of actual awards under the Bonus Plan when determining whether the performance goals have been met. The goals may be on the basis of any factors our compensation committee determines relevant, and may be on an individual, divisional, business unit, segment or company-wide basis. Any criteria used may be measured on such basis as our compensation committee determines. The performance goals may differ from participant to participant and from award to award. Our compensation committee also may determine that a target award or a portion thereof will not have a performance goal associated with it but instead will be granted (if at all) in the compensation committee s sole discretion. Our compensation committee may, in its sole discretion and at any time, increase, reduce or eliminate a participant s actual award, or increase, reduce or eliminate the amount allocated to the bonus pool. The actual award may be below, at or above a participant s target award, in our compensation committee s discretion. Our compensation committee may determine the amount of any increase, reduction or elimination on the basis of such factors as it deems relevant, and it will not be required to establish any allocation or weighting with respect to the factors it considers. Actual awards will generally be paid in cash (or its equivalent) in a single lump sum only after they are earned and approved by our compensation committee. Our compensation committee has the right, in its sole discretion, to settle an actual award with a grant of an equity award under our then-current equity compensation plan, which equity award may have such terms and conditions, including vesting, as our compensation committee determines in its sole discretion. Unless otherwise determined by our compensation committee, to earn an actual award, a participant must be employed by us (or an affiliate of us, as applicable) through the date the bonus is paid. Payment of bonuses occurs as soon as administratively practicable after the end of the applicable performance period, but no later than the dates set forth in the Bonus Plan. Our board of directors will have the authority to amend or terminate the Bonus Plan provided such action does not alter or impair the existing rights of any participant with respect to any earned bonus without the participant's consent. The Bonus Plan will remain in effect until terminated in accordance with the terms of the Bonus Plan. 401(k) Plan We maintain a tax-qualified 401(k) retirement plan that provides eligible employees with an opportunity to save for retirement on a tax-advantaged basis. Eligible employees may participate in the 401(k) plan as of the first day of any month following 30 days of service to us, and participants may defer up to 100% of their eligible compensation, within the limits prescribed by the Code. We match 100% of the contributions that eligible participants make to the 401(k) plan up to 3.00% of the participants eligible compensation on a per-pay period basis. Contributions from 3.01% to 5.00% are matched at 50%. The 401(k) plan also permits us to make discretionary contributions to the 401(k) plan for the benefit of eligible participants. All participants interests in their deferrals and our matching contributions (other than discretionary matching contributions made by us) are 100% vested when contributed to the 401(k) Plan. Pre-tax contributions are allocated to each participant s individual account and are then invested in selected investment alternatives according to the participants directions. The 401(k) plan is intended to qualify under Sections 401(a) and 501(a) of the Code. As a tax-qualified retirement plan, contributions to the 401(k) plan and earnings on those contributions are not taxable to the employees until distributed from the 401(k) plan, and all contributions are deductible by us when made. The 401(k) plan also permits contributions to be made on a post-tax basis for those employees participating in the Roth 401(k) plan component. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS The following is a summary of transactions since February 1, 2015 to which we have been a party in which the amount involved exceeded $120,000 and in which any of our executive officers, directors, promoters or beneficial holders of more than 5% of our capital stock had or will have a direct or indirect material interest, other than compensation arrangements which are described under the section of this prospectus captioned Executive Compensation. Related Party Transaction Policy We have adopted a formal, written policy, which will become effective upon completion of this offering, that our executive officers, directors (including director nominees), holders of more than 5% of any class of our voting securities and any member of the immediate family of or any entities affiliated with any of the foregoing persons, are not permitted to enter into a related party transaction with us without the prior approval or, in the case of pending or ongoing related party transactions, ratification of our audit committee. For purposes of our policy, a related party transaction is a transaction, arrangement or relationship where we were, are or will be involved and in which a related party had, has or will have a direct or indirect material interest. Certain transactions with related parties, however, are excluded from the definition of a related party transaction including, but not limited to: transactions involving the purchase or sale of products or services in the ordinary course of business, not exceeding $20,000; transactions where a related party s interest derives solely from his or her service as a director of another entity that is a party to the transaction; transactions where a related party s interest derives solely from his or her ownership of less than 10% of the equity interest in another entity that is a party to the transaction; and transactions where a related party s interest derives solely from his or her ownership of a class of our equity securities and all holders of that class received the same benefit on a pro rata basis. No member of the audit committee may participate in any review, consideration or approval of any related party transaction where such member or any of his or her immediate family members is the related party. In approving or rejecting the proposed agreement, our audit committee shall consider the relevant facts and circumstances available and deemed relevant by the audit committee, including, but not limited to: the benefits and perceived benefits to us; the materiality and character of the related party s direct and indirect interest; the availability of other sources for comparable products or services; the terms of the transaction; and the terms available to unrelated third parties under the same or similar circumstances. In reviewing proposed related party transactions, the audit committee will only approve or ratify related party transactions that are in, or not inconsistent with, the best interests of us and our stockholders. The transactions described below were consummated prior to our adoption of the formal, written policy described above, and therefore the foregoing policies and procedures were not followed with respect to the transactions. However, we believe that the terms obtained or consideration that we paid or received, as applicable, in connection with the transactions described were comparable to terms available or the amounts that would be paid or received, as applicable, in arm s-length transactions. Sales of Securities since February 1, 2015 The following table sets forth a summary of the sale and issuance of our securities to related persons since February 1, 2015, other than compensation arrangements which are described under the sections of this prospectus captioned Management Director Compensation and Executive Compensation. For a description of beneficial ownership see the section of this prospectus captioned Principal Stockholders. Purchaser Series D-2 Convertible Preferred Stock 5% Stockholders: Institutional Venture Partners XIII, L.P. 105,816 Entities affiliated with BlackRock(1) 1,344,146 GGV Capital Select L.P. 197,669 TPG Dominion Holdings, L.P. Executive Officers and Directors: Glenn Solomon(2) Nehal Raj(3) ________________ (1) Consists of 14,243 shares of Series D-2 convertible preferred stock held by BlackRock Global Allocation Fund (Australia), 9,632 shares of Series D-2 convertible preferred stock held by AZL BlackRock Global Allocation Fund, a Series of Allianz Variable Insurance Products Trust, 28,815 shares of Series D-2 convertible preferred stock held by BlackRock Global Allocation Collective Fund, 18,367 shares of Series D-2 convertible preferred stock held by BlackRock Global Funds - Global Dynamic Equity Fund, 186,575 shares of Series D-2 convertible preferred stock held by BlackRock Global Allocation V.I. Fund of BlackRock Variable Series Funds, Inc., 319,189 shares of Series D-2 convertible preferred stock held by BlackRock Global Funds - Global Allocation Fund, 709,810 shares of Series D-2 convertible preferred stock held by BlackRock Global Allocation Fund, Inc., 3,715 shares of Series D-2 convertible preferred stock held by BlackRock Global Allocation Portfolio of BlackRock Series Fund, Inc., 43,600 shares of Series D-2 convertible preferred stock held by JNL/BlackRock Global Allocation Fund of JNL Series Trust, and 10,200 shares of Series D-2 convertible preferred stock held by MassMutual Select BlackRock Global Allocation Fund. (2) Mr. Solomon is a managing partner of GGV Capital, and as such may be deemed to beneficially own such shares. Mr. Solomon disclaims beneficial ownership of such shares except to the extent of any pecuniary interest therein. (3) Mr. Raj is a managing partner of TPG, but has no voting or investment power over and disclaims beneficial ownership of the shares held by TPG Dominion Holdings, L.P. Series D-2 Convertible Preferred Stock From April 2015 to January 2016 and April 2017 to June 2017, we issued and sold an aggregate of 3,431,502 shares of Series D-2 convertible preferred stock at $126.47 per share to a number of accredited investors, including GGV Capital and certain funds and accounts under management by subsidiaries of BlackRock, Inc. for aggregate proceeds of approximately $434.0 million . In connection with the sale of Series D-2 convertible preferred stock to certain funds and accounts under management by subsidiaries of BlackRock, Inc., we granted such funds the right to acquire shares of our capital stock in future financings, subject to certain exceptions. This right will terminate following this offering. In April 2015, we issued and sold 105,816 shares of Series D-2 convertible preferred stock at $94.86 per share to Institutional Venture Partners XIII, L.P. for aggregate proceeds of approximately $10.0 million . Repurchase of Series 1 Convertible Preferred Stock In connection with the initial sale and issuance of Series D-2 convertible preferred stock in April 2015, we entered into a stock repurchase agreement with Cocolalla, LLC, an entity affiliated with Mr. James, to repurchase 105,816 shares of our Series 1 convertible preferred stock for $94.86 per share for an aggregate purchase price of approximately $10.0 million . Investors Rights Agreement We have entered into an investors rights agreement with certain holders of convertible preferred stock, including Mr. James, our founder, chief executive officer and chairman, Cocolalla, LLC, and entities affiliated with each of IVP, Benchmark Capital and GGV Capital, and certain funds and accounts under management by subsidiaries of BlackRock, Inc. As of January 31, 2018, the holders of 14,098,937 shares of our common stock or their transferees (including shares issuable upon the conversion of convertible preferred stock), are entitled to rights with respect to the registration of their shares under the Securities Act. For a description of these registration rights, see Description of Capital Stock-Registration Rights. Voting Agreement The election of the members of the board of directors has historically been governed by a voting agreement with certain of the holders of our outstanding Class B common stock and convertible preferred stock, including Joshua G. James, our founder, chief executive officer and chairman, Cocolalla, LLC, an entity affiliated with Mr. James, and entities affiliated with each of Benchmark Capital and GGV Capital and certain funds and accounts under management by subsidiaries of BlackRock, Inc. The parties to the voting agreement have agreed, subject to certain conditions, to vote their shares to elect directors as follows: one nominee designated by entities affiliated with Benchmark Capital, currently Mr. Cohler; one nominee designated by entities affiliated with TPG, currently Mr. Raj; and one nominee designated by Mr. James, our founder, chief executive officer and chairman, and Cocolalla, LLC, an entity affiliated with Mr. James, currently Mr. Solomon. In addition, the parties further agreed to vote their shares to elect one or more individuals who are designated by the holders of a majority of the common stock issued or issuable upon the conversion of the convertible preferred stock, currently Messrs. Bullock, Gorenberg, and James and Ms. Evan. Upon the consummation of this offering, the obligations of the parties to the voting agreement to vote their shares to elect these nominees will terminate, and none of our stockholders will have any special rights regarding the nomination, election or designation of members of the board of directors. Our existing certificate of incorporation contains provisions that correspond to the voting agreement; however, the certificate of incorporation that will be effective upon the closing of this offering will not include such provisions. Other Transactions In October 2015, we entered into a non-exclusive aircraft dry lease agreement with JJ Spud LLC, an entity controlled by Mr. James, our founder, chief executive officer and chairman. The agreement allowed us to use an aircraft owned by JJ Spud LLC for our business and on an as-needed basis. The agreement had an initial one-year term and automatically renewed for successive one-year periods. Either party had the right to terminate the agreement with 30 days notice to the other party. Under the agreement, we paid $3,275.65 per flight hour for use of the aircraft. We were also responsible for taxes relating to our use of the aircraft. During the years ended January 31, 2017 and 2018 and the three months ended April 30, 2018, we incurred expenses of approximately $0.9 million, $0.7 million and $0.2 million, respectively, related to the use of this plane. We believe we received favorable pricing under this agreement; however, in June 2018, we terminated our agreement with JJ Spud LLC. In addition, we have done business with vendors and customers which may be affiliated with our directors, officers or holders of more than 5% of our capital stock. We incurred expenses of approximately $0.3 million during each of the years ended January 31, 2017 and 2018 for catering services from Cubby's Chicago Beef, a restaurant owned by Mr. James and Cubby James, his brother, and approximately $0.2 million during the fiscal year ended January 31, 2017 for furnishings from Alice Lane Home Collection, LLC, an interior design company for which Mr. James is a partial owner and Drew James, Mr. James' brother, is an executive officer. We believe we have received favorable pricing from both vendors; however, we do not intend to do business with either Cubby's Chicago Beef or Alice Lane Home Collection, LLC in the future. We have entered into employment agreements with most of our executive officers that, among other things, provide for certain severance and change of control benefits. For a description of these agreements, see Executive Compensation-Executive Employment Arrangements. We have granted stock options and restricted stock units to our executive officers and to one of our directors. For a description of these options and restricted stock units, see Management Director Compensation and Executive Compensation. We have entered into indemnification agreements with our directors and executive officers. For a description of these agreements, see Management Limitation of Liability and Indemnification Matters. PRINCIPAL STOCKHOLDERS The following table sets forth the beneficial ownership of our common stock as of May 31, 2018 by: each person, or group of affiliated persons, who is known by us to beneficially own more than 5% of our common stock; each of the named executive officers; each of our directors; and all of our executive officers and directors as a group. The percentage of beneficial ownership prior to the offering shown in the table is based upon 3,263,659 shares of Class A common stock and 12,491,451 shares of Class B common stock outstanding as of May 31, 2018, assuming the automatic conversion of all outstanding shares of convertible preferred stock into an aggregate of 3,263,659 shares of Class A common stock and 10,835,278 shares of Class B common stock. The percentage of beneficial ownership after this offering shown in the table is based on 3,263,659 shares of Class A common stock and 21,691,451 shares of Class B common stock outstanding after the closing of this offering, assuming no exercise of the underwriters option to purchase additional shares. The number of shares beneficially owned and the percentage of beneficial ownership after this offering shown in the table assume our directors and officers, do not purchase shares of Class B common stock in this offering. Information with respect to beneficial ownership has been furnished by each director, officer or beneficial owner of more than 5% of our common stock. We have determined beneficial ownership in accordance with the rules of the SEC. These rules generally attribute beneficial ownership of securities to persons who possess sole or shared voting power or investment power with respect to those securities. In addition, the rules take into account shares of Class B common stock issuable pursuant to the exercise of stock options or warrants that are either immediately exercisable or exercisable on or before the 60th day after May 31, 2018. These shares are deemed to be outstanding and beneficially owned by the person holding those options or a warrant for the purpose of computing the percentage ownership of that person, but they are not treated as outstanding for the purpose of computing the percentage ownership of any other person. Unless otherwise indicated, the persons or entities identified in this table have sole voting and investment power with respect to all shares shown as beneficially owned by them, subject to applicable community property laws. Except as otherwise noted below, the address for each person or entity listed in the table is c/o Domo, Inc., 772 East Utah Valley Drive, American Fork, Utah 84003.
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+PROSPECTUS SUMMARY This summary highlights information that appears later in this prospectus and is qualified in its entirety by the more detailed information and financial statements included elsewhere or incorporated by reference in this prospectus. This summary may not contain all of the information that may be important to you. As an investor or prospective investor, you should carefully review the entire prospectus, including the section of this prospectus entitled "Risk Factors" and the more detailed information that appears later in this prospectus before making an investment in our common shares. Unless otherwise indicated, references to "EuroDry," the "Company," "we," "our," "us" or similar terms refer to the registrant, EuroDry Ltd., and its subsidiaries, except where the context otherwise requires. We use the term deadweight tons, or dwt, expressed in metric tons, each of which is equivalent to 1,000 kilograms, in describing the size of our vessels. Unless otherwise indicated, all references to "U.S. dollars," "dollars," "U.S. $" and "$" in this prospectus are to the lawful currency of the United States of America. Explanatory Note EuroDry Ltd. was incorporated under the laws of the Republic of the Marshall Islands on January 8, 2018. The Company was incorporated by Euroseas to serve as the holding company of seven subsidiaries that will be contributed by Euroseas to the Company (the "Subsidiaries" or "EuroDry Ltd. Predecessor") in connection with the Spin-Off Distribution. Euroseas will contribute these subsidiaries to the Company prior to the Spin-Off Distribution, and, as the sole shareholder of the Company, intends to distribute the Company's common shares to shareholders of Euroseas on a pro rata basis on or about May 30, 2018. Euroseas will also distribute shares of our Series B Preferred Stock (the "EuroDry Series B Preferred Shares") to holders of Euroseas' Series B Preferred Shares in exchange for a number of such Euroseas Series B Preferred Shares. Under this registration statement, the Company is applying to register its common shares under the Securities Act of 1933. In addition, the Company has applied to have the common shares listed on the Nasdaq Capital Market under the ticker symbol "EDRY". Upon consummation of the Spin-Off Distribution and the successful listing of our common shares on the Nasdaq Capital Market, the Company and Euroseas will be independent publicly traded companies with separate boards of directors and management, although, at the time of the Spin-Off Distribution, all of the directors and officers of Euroseas may hold similar positions at the Company . The financial statements presented in this registration statement are carve-out financial statements. The carve-out financial statements in this registration statement include combined carve-out financial statements of the EuroDry Ltd. Predecessor for the fiscal years ended December 31, 2016 and December 31, 2017. Unless otherwise indicated or required by the context in this registration statement, our disclosure assumes that the consummation of the Spin-Off Distribution has occurred. Although the Company will not acquire seven subsidiaries of Euroseas until shortly before the Spin-Off Distribution, the operating and other statistical information with respect to our business is presented as of December 31, 2017, unless otherwise indicated, as if we owned such business as of such date. Overview EuroDry Ltd. was incorporated under the laws of the Republic of the Marshall Islands on January 8, 2018. The Company was incorporated by Euroseas to serve as the holding company of seven subsidiaries that will be contributed by Euroseas to the Company in connection with the Spin-Off Distribution. Euroseas will contribute these subsidiaries to the Company prior to the Spin-Off Distribution, and, as the sole shareholder of the Company, intends to distribute the Company's common shares to holders of Euroseas common stock on a pro rata basis on or about May 30, 2018. Euroseas will also distribute EuroDry Series B Preferred Shares to holders of Euroseas' Series B Preferred Shares in exchange for a number of such Euroseas Series B Preferred Shares. We are a provider of worldwide ocean-going transportation services. We own and operate drybulk carriers that transport major bulks such as iron ore, coal and grains, and minor bulks such as bauxite, phosphate and fertilizers. As of May 7, 2018, our fleet consisted of six drybulk vessels. The total cargo carrying capacity of our fleet is 453,086 dwt. There currently is no existing public trading market for our common shares. However, we are in the process of applying to have our common shares listed on the Nasdaq Capital Market under the symbol "EDRY". We make no representation that such application will be approved or that our common shares will trade on such market, either now or at any time in the future. The successful listing of our common shares on the Nasdaq Capital Market is subject to our fulfilling all of the requirements of the Nasdaq Capital Market. Our Fleet As of May 7, 2018, the profile and deployment of our fleet is the following : Name Type Dwt Year Built Employment (1) TCE Rate ($/day) XENIA Kamsarmax 82,000 2016 TC until Jan-20 thereafter 1-year at Charterer's option $14,100 $14,350 EIRINI P. Panamax 76,466 2004 TC until Sep-18 Hire 103.25% of Average BPI 4 TC (2) TASOS Panamax 75,100 2000 TC until Jun-18 $12,300 PANTELIS Panamax 74,020 2000 TC until Jun-18 $10,000 and a Gross Ballast Bonus of $525,000 (total equivalent to about $8,650) ALEXANDROS P. Ultramax 63,500 2017 TC until Jul-18 114% BSI(3) EKATERINI Kamsarmax 82,000 2018 TC until Apr-20 to maximum Oct-20 $13,000 Fleet Grand Total 6 453,086 (1) TC denotes time charter. All dates listed are the earliest redelivery dates under each TC. (2) Denotes the Baltic Panamax Index (3) Denotes the Baltic Supramax Index We plan to expand our fleet by investing in vessels in the drybulk markets under favorable market conditions. We also intend to take advantage of the cyclical nature of the market by buying and selling ships when we believe favorable opportunities exist. We employ our vessels in the spot charter and in the time charter market. As of May 7, 2018, all of our vessels are employed under time charter contracts. As of May 7, 2018, approximately 53% of our ship capacity days in 2018 and approximately 33% of our ship capacity days in 2019 are under contract. Management of Our Fleet The operations of our vessels will be managed by Eurobulk Ltd., or Eurobulk, and Eurobulk (Far East) Ltd. Inc., or Eurobulk FE, both affiliated companies (each a "Manager" and together, the "Managers"). Eurobulk will manage our fleet under a Master Management Agreement with us and separate management agreements with each shipowning company, all of which we expect to have entered into prior to the Spin-Off Distribution and which will contain substantially similar terms to the present agreements between the Managers and Euroseas. Eurobulk was founded in 1994 by members of the Pittas family and is a reputable ship management company with strong industry relationships and experience in managing vessels. Under our Master Management Agreement, Eurobulk will be responsible for providing us with: (i) executive services associated with us being a public company; (ii) other services to our subsidiaries and commercial management services, which include obtaining employment for our vessels and managing our relationships with charterers; and (iii) technical management services, which include managing day-to-day vessel operations, performing general vessel maintenance, ensuring regulatory and classification society compliance, supervising the maintenance and general efficiency of vessels, arranging our hire of qualified officers and crew, arranging and supervising drydocking and repairs, arranging insurance for vessels, purchasing stores, supplies, spares and new equipment for vessels, appointing supervisors and technical consultants and providing technical support and shoreside personnel who carry out the management functions described above and certain accounting services. Our Master Management Agreement with Eurobulk will compensate Eurobulk with an annual fee and a daily management fee per vessel managed. Our Master Management Agreement, which we expect to have entered into prior to the Spin-Off Distribution, will be substantially similar to the master management agreement between Euroseas and Eurobulk relating to our vessels that were previously owned by Euroseas. The Master Management Agreement will be terminable by Eurobulk only for cause or under other limited circumstances, such as sale of the Company or Eurobulk or the bankruptcy of either party. The Master Management Agreement will run through January 1, 2023 and will automatically be extended after the initial period for an additional five-year period unless terminated on or before the 90th day preceding the initial termination date. Pursuant to the Master Management Agreement, vessels we might acquire in the future can enter into a separate management agreement with Eurobulk with the term and daily rate as specified in the Master Management Agreement. The fee under the management agreements between Eurobulk FE and the shipowning companies will follow substantially the same terms of the similar agreements with Eurobulk. The management fee will be adjusted annually for Eurozone inflation every January 1st. Under the Master Management Agreement, we will pay Eurobulk an annual fee of $1,250,000 and a fee of 685 Euros per vessel per day in operation and 342.50 Euros per vessel per day in lay-up. In the case of newbuilding vessel contracts, the same management fee of 685 Euros will become effective when construction of the vessels actually begins. During any period in which the "volume discount" applies, the daily management fee will be 685 Euros per vessel per day in operation and 342.5 Euros per vessel per day in lay-up. Eurobulk FE was founded in 2015 and is based in The Philippines. Eurobulk FE will manage our vessels M/V "Xenia," M/V "Tasos," M/V "Alexandros P" and M/V "Ekaterini," pursuant to a management agreement with each vessel's shipowning company and Master Management Agreement with Eurobulk FE, both of which will be entered into prior to the Spin-Off Distribution with terms substantially similar to the corresponding agreements of Eurobulk with the other shipowning companies. Our Competitive Strengths We believe that we possess the following competitive strengths: Experienced Management Team. Our management team has significant experience in all aspects of commercial, technical, operational and financial areas of our business. Aristides J. Pittas, our Chairman and Chief Executive Officer, holds a dual graduate degree in Naval Architecture and Marine Engineering and Ocean Systems Management from the Massachusetts Institute of Technology. He has worked in various technical, shipyard and ship management capacities and since 1991 has focused on the ownership and operation of vessels carrying dry cargoes. Dr. Anastasios Aslidis, our Chief Financial Officer, holds a Ph.D. in Ocean Systems Management also from Massachusetts Institute of Technology and has over 20 years of experience, primarily as a partner at a Boston based international consulting firm focusing on investment and risk management in the maritime industry. Cost Efficient Vessel Operations. We believe that because of the efficiencies afforded to us through Eurobulk and Eurobulk FE, the strength of our management team and the quality of our fleet, we are, and will continue to be, a reliable, low cost vessel operator, without compromising our high standards of performance, reliability and safety. Our total vessel operating expenses, including management fees and general and administrative expenses but excluding drydocking expenses, were $5,116 per day for the year ended December 31, 2017. We believe that our technical and operating expertise allows us to efficiently manage and transport a wide range of cargoes with a flexible trade route profile, which helps reduce ballast time between voyages and minimize off-hire days. Our professional, well-trained masters, officers and on-board crews further help us to control costs and ensure consistent vessel operating performance. We actively manage our fleet and strive to maximize utilization and minimize maintenance expenditures for operational and commercial utilization. For the year ended December 31, 2017, our operational fleet utilization was 98.8%, down from 100% in 2016, while our commercial utilization rate was 100% in both 2017 and 2016. Our total fleet utilization rate in 2017 was 98.8%. Strong Relationships with Customers and Financial Institutions. We believe our management team, Eurobulk, Eurobulk FE and the Pittas family to have developed strong industry relationships and to have gained acceptance with charterers, lenders and insurers because of long-standing reputation for safe and reliable service and financial responsibility through various shipping cycles. Through Eurobulk and Eurobulk FE, we offer reliable service and cargo carrying flexibility that enables us to attract customers and obtain repeat business. We also believe that the established customer base and reputation of ourselves, Eurobulk, Eurobulk FE and the Pittas family help us to secure favorable employment for our vessels with well-known charterers. Our Business Strategy Our business strategy is focused on providing consistent shareholder returns by carefully timing and structuring acquisitions of drybulk vessels and by reliably, safely and competitively operating our vessels through Eurobulk and Eurobulk FE. We continuously evaluate purchase and sale opportunities, as well as long term employment opportunities for our vessels. Key elements of the above strategy are: Renew and Expand our Fleet. We expect to grow our fleet in a disciplined manner through timely and selective acquisitions of quality vessels. We perform in-depth technical review and financial analysis of each potential acquisition and only purchase vessels as market opportunities present themselves. We focus on purchasing well-maintained secondhand vessels, newbuildings or newbuilding resales based on the evaluation of each investment option at the time it is made. In 2016 we took delivery of one newbuilding drybulk carrier. In January 2017, we took delivery of one secondhand and one newbuilding drybulk carrier. In addition, in March 2017, we signed an addendum to our newbuilding contract with Jiangsu Tianyuan Marine Import & Export Co., Ltd., and Jiangsu Yangzijiang Shipbuilding Co., Ltd. and Jiangsu New Yangzi Shipbuilding Co., Ltd. to proceed with the construction of an 82,000 dwt bulk carrier which we took delivery of on May 7, 2018. Maintain Balanced Employment. We intend to employ our fleet on either longer term time charters, i.e. charters with duration of more than a year, or shorter term time/spot charters. We seek longer term time charter employment to obtain adequate cash flow to cover as much as possible of our fleet's recurring costs, consisting of vessel operating expenses, management fees, general and administrative expenses, interest expense and drydocking costs for the upcoming 12-month period. We may also use forward freight agreements ("FFA" or "FFAs") as a substitute for time charter employment to partly provide coverage for our drybulk vessels in order to increase the predictability of our revenues. We look to deploy the remainder of our fleet on spot charters, shipping pools or contracts of affreightment depending on our view of the direction of the markets and other tactical or strategic considerations. When we expect charter rates to improve we try to increase the percentage of our fleet employed in shorter term contracts (allowing us to take advantage of higher rates in the future), while when we expect the market to weaken we try to increase the percentage of our fleet employed in longer term contracts (allowing us to take advantage of higher current rates). We believe this balanced employment strategy will provide us with more predictable operating cash flows and sufficient downside protection, while allowing us to participate in the potential upside of the spot market during periods of rising charter rates. As of May 7, 2018, on the basis of our existing time charters, approximately 53% of our vessel capacity in 2018 and approximately 33% in 2019 are under time charter contracts, which will ensure employment of a portion of our fleet, partly protect us from market fluctuations and increase our ability us to make principal and interest payments on our debt and pay dividends to our shareholders. Operate a Fleet of Drybulk Vessels. We will primarily focus on the Handy to Kamsarmax ship segments of the drybulk market, which have, historically, been less volatile than the largest, Capesize, segment. Optimize Use of Financial Leverage. We intend to use bank debt to partly fund our vessel acquisitions and increase financial returns for our shareholders. We actively assess the level of debt we incur in light of our ability to repay that debt based on the level of cash flow generated from our chartering strategy and efficient operating cost structure. Our debt repayment schedule as of January 1, 2018 calls for a reduction of approximately 21% of our debt by the end of 2018 and an additional reduction of about 28% by the end of 2019 for a total of about 49% reduction over the next two years, excluding any new debt that we may assume for the financing of our vessel under construction. As our debt is being repaid we expect that our ability to raise or borrow additional funds more cheaply in order to grow our fleet and generate better returns for our shareholders will increase. Risk Factors We face a number of risks associated with our business and industry and must overcome a variety of challenges to utilize our strengths and implement our business strategies. These risks relate to, among others, changes in the international shipping industry, including supply and demand, charter hire rates, commodity prices, a downturn in the global economy, hazards inherent in our industry and operations resulting in liability for damage to or destruction of property and equipment, pollution or environmental damage, inability to comply with covenants in the credit facilities we may enter into, inability to finance capital projects, and inability to successfully employ our vessels. You should carefully consider the risks described under the heading "Risk Factors" beginning on page 20 of this prospectus and the other information in this prospectus before deciding whether to invest in our common shares. Corporate Structure The Company is a wholly-owned subsidiary of Euroseas and is the sole owner of all outstanding shares of the subsidiaries listed in Exhibit 21.1 hereto. After the completion of the Spin-Off Distribution, we will no longer be a subsidiary of Euroseas and will own each of the vessels in our current fleet through direct wholly-owned subsidiaries. The following diagram depicts our organizational structure before and following the completion of the Spin-Off Distribution (omits certain dormant, non-vessel owning subsidiaries of Euroseas): Before After Corporate Information EuroDry Ltd. is a holding company existing under the laws of the Marshall Islands. We maintain our principal executive offices at 4 Messogiou & Evropis Street, 151 24 Maroussi, Greece. Our telephone number at that address is +30-211-1804006. Our website address is www.eurodry.gr. The information on our website is not a part of this prospectus. Other Information Because we are incorporated under the laws of the Republic of the Marshall Islands, you may encounter difficulty protecting your interests as shareholders, and your ability to protect your rights through the U.S. federal court system may be limited. Please refer to the sections entitled "Risk Factors" and "Service of Process and Enforcement of Civil Liabilities" for more information. Implications of Being an Emerging Growth Company We qualify as an "emerging growth company," as defined in the Jumpstart Our Business Startups Act of 2012 (the "JOBS Act"). An emerging growth company may take advantage of specified reduced reporting requirements and is relieved of certain other significant requirements that are otherwise generally applicable to public companies. As an emerging growth company, among other things: we are exempt from the requirement to obtain an attestation and report from our auditors on the assessment of our internal control over financial reporting pursuant to the Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act"); we are exempt from compliance with any requirement that the Public Company Accounting Oversight Board (the "PCAOB") may adopt regarding mandatory audit firm rotation or a supplement to the auditor's report providing additional information about the audit and the financial statements; we are permitted to provide less extensive disclosure about our executive compensation arrangements; we are not required to give our shareholders non-binding advisory votes on executive compensation or golden parachute arrangements; we are granted the ability to present more limited financial data in this registration statement, of which this prospectus is a part; and we may elect not to use an extended transition period for complying with new or revised accounting standards. We may take advantage of these provisions for up to five years or such earlier time that we are no longer an emerging growth company. We will cease to be an emerging growth company by 2023 or if we have more than $1.07 billion in annual revenues, have more than $700 million in market value of our common shares held by non-affiliates or issue more than $1.0 billion of non-convertible debt securities over a three-year period. We may choose to take advantage of some but not all of these reduced burdens. We have elected not to opt-out of such extended transition period, which means that when a new or revised accounting standard is issued, and it has different application dates for public or private companies, we, as an emerging growth company, may elect not to adopt the new or revised standard until the time private companies are required to adopt the new or revised standard.
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+prospectus summary for a more thorough discussion of these and other risks and uncertainties we face. 12 TABLE OF CONTENTS Organizational Structure The chart below summarizes our ownership and corporate structure after giving effect to this offering, assuming no exercise of the underwriters option to purchase additional shares. (1) If the underwriters exercise in full their option to purchase additional shares, Onex and Emerald-affiliated shareholders would own approximately 63.4% of our common stock and non-affiliated shareholders would own approximately 36.6% of our common stock. 13 TABLE OF CONTENTS Implications of Being an Emerging Growth Company As a company with less than $1.07 billion in revenue during our last fiscal year, we qualify as an emerging growth company as defined in the Jumpstart Our Business Startups Act of 2012 (the JOBS Act ). An emerging growth company may take advantage of specified reduced reporting and other requirements that are otherwise applicable generally to public companies. These provisions include: we are not required to engage an auditor to report on our internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002 (the Sarbanes-Oxley Act ); we are not required to comply with any requirement that may be adopted by the Public Company Accounting Oversight Board (the PCAOB ) regarding mandatory audit firm rotation or a supplement to the auditor s report providing additional information about the audit and the financial statements (i.e., an auditor discussion and analysis); we are not required to submit certain executive compensation matters to stockholder advisory votes, such as say-on-pay , say-on-frequency and say-on-golden parachutes ; and we are not required to disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the chief executive officer s compensation to median employee compensation. We may take advantage of these provisions until December 31, 2022 or such earlier time that we are no longer an emerging growth company. We would cease to be an emerging growth company upon the earliest of: (i) the last day of the first fiscal year in which our annual gross revenues are $1.07 billion or more; (ii) the end of any fiscal year in which the market value of our common stock held by non-affiliates exceeded $700.0 million as of the end of the second quarter of that fiscal year; (iii) the date on which we have, during the previous three-year period, issued more than $1.0 billion in non-convertible debt securities; or (iv) the last day of the fiscal year ending December 31, 2022. We have elected to take advantage of some of the reduced disclosure obligations listed above in this prospectus, and may elect to take advantage of other reduced reporting requirements in future filings. In particular, we have elected to adopt the reduced disclosure with respect to our executive compensation disclosure. As a result of this election, the information that we provide stockholders may be different than you might get from other public companies. The JOBS Act permits an emerging growth company like us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies. We have chosen to irrevocably opt out of this provision and, as a result, we will comply with new or revised accounting standards as required when they are adopted. 14 TABLE OF CONTENTS Corporate Information We were incorporated as Expo Event Holdco, Inc. in Delaware in 2013 and renamed Emerald Expositions Events, Inc. on March 29, 2017. Our principal executive offices are located at 31910 Del Obispo Street, Suite 200, San Juan Capistrano, California 92675. Our telephone number is (949) 226-5700. We maintain a website at www.emeraldexpositions.com. The information contained on, or that can be accessed through, our website is not a part of, and should not be considered as being incorporated by reference into, this prospectus. We were acquired by an affiliate of certain investment funds managed by an affiliate of Onex on June 17, 2013 (the Onex Acquisition ). Prior to the Onex Acquisition, we were named Nielsen Business Media Holding Company and operated as a separate business of The Nielsen Company B.V. ( Nielsen ). Following the consummation of this offering, we will continue to be a controlled company for the purposes of the New York Stock Exchange rules. Our Sponsor Onex is one of the oldest and most successful private equity firms in North America. Through its Onex Partners and ONCAP private equity funds, Onex acquires and builds high-quality businesses in partnership with talented management teams. At Onex Credit, Onex manages and invests in leveraged loans, collateralized loan obligations and other credit securities. Onex has more than $32 billion of assets under management, including $6.8 billion of Onex proprietary capital, in private equity and credit securities. With offices in Toronto, New York, New Jersey and London, Onex and the Onex team are collectively the largest investors across Onex platforms. Onex has extensive experience investing in leading business services companies. Notable examples of Onex investments in the business services sector over its 34-year history include SMG, Clarivate Analytics (formerly the IP & Science business of Thomson Reuters), sgsco, USI Insurance Services, CSI Global Education, Canadian Securities Registration Systems and SITEL Worldwide Corporation. After giving effect to this offering, Onex and its affiliates are expected to own approximately 64.3% of our common stock (or 62.9% if the underwriters exercise in full their option to purchase additional shares). Onex will have the ability to control the outcome of matters submitted to our stockholders for approval, including the election of our directors and the approval of any change in control transaction. For a discussion of our relationship with Onex and more details on Onex ownership interest and conflicts of interest, see Certain Relationships and Related Party Transactions, Description of Capital Stock and Risk Factors Risks Relating to this Offering and Ownership of Our Common Stock Our directors who have relationships with Onex may have conflicts of interest with respect to matters involving us. 15 TABLE OF CONTENTS The Offering Issuer Emerald Expositions Events, Inc., a Delaware corporation. Common stock outstanding as of March 2, 2018. 72,782,563 shares Common stock offered by the selling stockholders 7,000,000 shares (or 8,050,000 shares if the underwriters exercise their option to purchase additional shares in full) Option to purchase additional shares The underwriters have an option to purchase up to 1,050,000 additional shares from the selling stockholders. The underwriters can exercise this option at any time within 30 days from the date of this prospectus. Use of proceeds The selling stockholders will receive all of the net proceeds from this offering. We will not receive any proceeds from the sale of shares by the selling stockholders. See Use of Proceeds. Dividend policy We intend to continue to pay quarterly cash dividends on our common stock. We paid a dividend of $0.07 per share in the second, third and fourth quarters of 2017, and in the first quarter of 2018. Management intends to propose, and expects the Board of Directors will approve, a 3.6% increase in the quarterly cash dividend rate, to $0.0725 per share effective for the second quarter 2018 dividend. The incremental quarterly cash cost of the proposed increase would be approximately $0.2 million. The payment of the dividend in future quarters is subject to the discretion of our board of directors. The amount of dividends paid may be changed or terminated in the future at any time and for any reason without advance notice. Our business is conducted through our subsidiaries. See Dividend Policy. Listing Our common stock is listed on the New York Stock Exchange under the symbol EEX .
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+PROSPECTUS SUMMARY This summary highlights information included elsewhere in this prospectus and does not contain all of the information you should consider in making an investment decision. You should read this entire prospectus carefully, including the sections entitled "Risk Factors," "Cautionary Note Regarding Forward-Looking Statements," "Selected Historical Combined Financial Data," "Unaudited Pro Forma Condensed Combined Financial Statements" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our combined financial statements and the notes thereto before making an investment decision regarding our common stock. Overview Founded in 1954 as part of Eli Lilly and Company, Elanco is a premier animal health company that innovates, develops, manufactures and markets products for companion and food animals. Headquartered in Greenfield, Indiana, we are the fourth largest animal health company in the world, with revenue of $2.9 billion for the year ended December 31, 2017. Globally, we are #1 in medicinal feed additives, #2 in poultry and #3 in cattle, measured by 2017 revenue, according to Vetnosis. We also have one of the broadest portfolios of pet parasiticides in the companion animal sector. We offer a diverse portfolio of more than 125 brands that make us a trusted partner to veterinarians and food animal producers in more than 90 countries. Our vision is to enrich the lives of people through food making protein more accessible and affordable and through pet companionship helping pets live longer, healthier lives. We advance our vision by offering products in four primary categories: Companion Animal Disease Prevention ("CA Disease Prevention"): We have one of the broadest parasiticide portfolios in the companion animal sector based on indications, species and formulations, with products that protect pets from worms, fleas and ticks. Combining our parasiticide portfolio with our vaccines presence, we are a leader in the U.S. in the disease prevention category based on share of revenue. Companion Animal Therapeutics ("CA Therapeutics"): We have a broad pain and osteoarthritis portfolio across species, modes of action, indications and disease stages. Pet owners are increasingly treating osteoarthritis in their pets, and our Galliprant product is one of the fastest growing osteoarthritis treatments in the U.S. We also have treatments for otitis (ear infections), as well as cardiovascular and dermatology indications. Food Animal Future Protein & Health ("FA Future Protein & Health"): Our portfolio in this category, which includes vaccines, nutritional enzymes and animal-only antibiotics, serves the growing demand for protein and includes innovative products in poultry and aquaculture production, where demand for animal health products is outpacing overall industry growth. We are focused on developing functional nutritional health products that promote food animal health, including enzymes, probiotics and prebiotics. We are a leader in providing vaccines as alternatives to antibiotics to promote animal health based on share of revenue. Food Animal Ruminants & Swine ("FA Ruminants & Swine"): We have developed a range of food animal products used extensively in ruminant (e.g., cattle, sheep and goats) and swine production. We also deliver value to producers beyond our products through our technical expertise and support. Amendment No. 2 To FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Unless the context requires otherwise: (a) references to "Elanco," our "company," "we," "us" or "our" refer to Elanco Animal Health Incorporated, an Indiana corporation, and its subsidiaries after giving effect to the transactions described under "The Separation and Distribution Transactions The Separation" or for periods prior to such transactions, the combined businesses operating within Lilly's Elanco animal health division that have been or will be contributed to Elanco as part of such transactions, and (b) references to "Lilly" refer to Eli Lilly and Company, an Indiana corporation, and its subsidiaries other than Elanco. Market and Industry Information Unless otherwise indicated, information contained in this prospectus concerning our industry and the markets in which we operate, including our general expectations and market position, market opportunity and market share, is based on information from third-party sources and management estimates. Certain statements, where indicated, are based on information published by Vetnosis Limited ("Vetnosis"), a research and consulting firm specializing in global animal health and veterinary medicine, and management estimates. Our management estimates are derived from publicly available information, our knowledge of our industry and assumptions based on such information and knowledge, which we believe to be reasonable. Our management estimates have not been verified by any independent source. In addition, assumptions and estimates of our and our industry's future performance are necessarily subject to a high degree of uncertainty and risk due to a variety of factors, including those described in "Risk Factors." These and other factors could cause future performance to differ materially from our assumptions and estimates. See "Cautionary Note Regarding Forward-Looking Statements." Trademarks and Trade Names The name and mark, Elanco, and other trademarks, trade names and service marks of Elanco appearing in this prospectus are the property of Elanco or, as applicable, licensed to Elanco, or, as applicable, prior to the completion of this offering, are the property of Lilly. The name and mark, Eli Lilly and Company, and other trademarks, trade names and service marks of Lilly appearing in this prospectus are the property of Lilly. This prospectus also contains additional trade names, trademarks and service marks belonging to other companies. We do not intend our use or display of other parties' trademarks, trade names or service marks to imply, and such use or display should not be construed to imply, a relationship with, or endorsement or sponsorship of us by, these other parties. (1)Certain percentages may reflect rounding adjustments. (2)LATAM includes aquaculture in all regions. Table of Contents Through our global sales force of approximately 1,530 sales representatives, our veterinary consultants and our key distributors, we seek to build strong customer relationships and fulfill demand for our food animal products primarily with food animal producers, veterinarians and nutritionists, and for our companion animal products primarily with veterinarians and, in some markets, pet owners. We are also expanding into retail channels in order to meet pet owners where they want to purchase. Our inclusive approach to sourcing innovation helps us identify, attract, fund and develop new ideas that enhance our pipeline and reduce risk as compared to an in-house only approach. Through this process, we launched nine products from 2015 to 2017 that delivered $143.8 million of revenue in 2017 and $136.6 million of revenue in the first half of 2018. We believe we have an experienced leadership team that fosters an adaptive, purpose-driven culture among approximately 5,880 employees worldwide as of June 30, 2018 and that our employees share a deep conviction for achieving our vision of food and companionship, enriching life. For the six months ended June 30, 2018 and 2017, our revenue was $1.5 billion and $1.4 billion, respectively, and for each of the years ended December 31, 2017, 2016 and 2015, our revenue was $2.9 billion. For the six months ended June 30, 2018 and 2017, our net income (loss) was $9.9 million and $(128.5) million, respectively, our adjusted EBITDA was $306.2 million and $278.4 million, respectively, and our adjusted net income was $219.0 million and $156.4 million, respectively. For the years ended December 31, 2017, 2016 and 2015, our net income (loss) was $(310.7) million, $(47.9) million and $(210.8) million, respectively, our adjusted EBITDA was $498.9 million, $540.4 million and $393.7 million, respectively, and our adjusted net income was $250.5 million, $332.7 million and $208.7 million, respectively. For a reconciliation of adjusted EBITDA and adjusted net income to net income (loss), see " Summary Historical Combined Financial Data and Unaudited Pro Forma Condensed Combined Financial Data." Industry Animal Health Industry Overview Global animal health industry revenue is projected to grow nominally at a compound annual growth rate ("CAGR") of 5% from 2017 to 2023, according to Vetnosis. Importantly, this growing industry, which includes both food and companion animals, benefits billions of people worldwide. The food animal sector focuses on species raised to provide animal protein, such as cattle, other ruminants (e.g., sheep and goats), swine, poultry and aqua. The companion animal or pet sector focuses primarily on dogs and cats. Animal health medicines, vaccines and functional nutritionals represent an estimated global market of $34.3 billion, based on 2017 revenue, according to industry sources. Medicines and vaccines represent a global market of $32.0 billion, based on 2017 revenue, and grew at a CAGR of 4% from 2007 to 2017, according to Vetnosis. Management expects this trend to continue through at least 2023 based on industry projections. Functional nutritionals (specifically enzymes, probiotics and prebiotics) used in food animal production represent a global market of $2.3 billion, according to industry sources. Based on industry projections, management expects functional nutritionals to grow faster than the medicines and vaccines market. Food Animal. Food animal medicines and vaccines, including aquaculture, represented $21.2 billion of revenue in 2017 and grew at a CAGR of 4% from 2007 to 2017, according to Vetnosis. 2500 Innovation Way Greenfield, Indiana 46140 (877) 352-6261 (Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant's Principal Executive Offices) Table of Contents Factors influencing growth in demand for food animal medicines and vaccines include: one in three people needs improved nutrition; increased global demand for protein, particularly poultry and aquaculture; natural resource constraints, such as scarcity of arable land, fresh water and increased competition for cultivated land, driving the need for more efficient food production; loss of productivity due to food animal disease and death; increased focus on food safety and food security; and human population growth, increased standards of living, particularly in many emerging markets, and increased urbanization. Functional nutritionals used in food animal production represent an additional market estimated at $2.3 billion. Growth in functional nutritionals is influenced, among other factors, by demand for antibiotic alternatives that can promote animal health and increase productivity. Companion Animal. Companion animal medicines and vaccines represented $10.8 billion of revenue in 2017 and grew at a CAGR of 4% from 2007 to 2017, according to Vetnosis. Factors influencing growth in demand for companion animal medicines and vaccines include: increased pet ownership globally; pets living longer; and increased pet spending as pets are viewed as members of the family by owners. Key Structural Characteristics of the Animal Health Industry Brands often have long, sustainable value. Branded animal health products often retain significant, and occasionally increased, market share after many years on the market, even after the loss of patent protection. As an example, five of our top 10 products, based on 2017 revenue, have been on the market for over 25 years. In the food animal sector, the level of competition is influenced by macro-economic factors, brand loyalty, distribution models and the absence of governmental or third-party payer systems. In the companion animal sector, competition is influenced by brand loyalty, new innovation, relationships with veterinarians, channel expansion and the overall growth in pet ownership. Diversified product portfolios. Animal health companies often derive their revenue from dozens, if not hundreds, of products and are frequently not dependent on a select few flagship products. For example, our top 10 products accounted for only 41% of revenue in 2017. We believe companies with diversified global companion and food animal product portfolios can be more resilient to changing market dynamics and are structured to better balance potential geographic, product and species volatility. Deep customer relationships. Direct customer models allow animal health sales representatives and veterinary consultants to develop a deep understanding of customer needs, which often facilitate strong and impactful relationships. Representatives and consultants frequently partner with customers through product support and analytics, driving additional value for the customer. Fast and efficient R&D model. Product approvals typically require a limited number of targeted studies in animals, which moderates research expenses. The approval process is generally predictable given the number of studies required, leading to average timelines Michael-Bryant Hicks, Esq. 2500 Innovation Way Greenfield, Indiana 46140 (877) 352-6261 (Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent For Service) Table of Contents from initiation of development to approval of three to seven years at a cost of $50 million to $100 million. Self-pay market. Food animal producers, pet owners and veterinarians typically pay for products out of pocket, making them the primary decision makers. This results in manufacturers being able to price products based primarily on the end customer's realized value. Our Competitive Strengths We believe the following strengths create sustainable competitive advantages that will enable us to continue to grow as a leader in the animal health industry. Established leader with a global presence and diversified product portfolio. We are the fourth largest animal health company in the world, with revenue of $2.9 billion for the year ended December 31, 2017. Globally, we are #1 in medicinal feed additives, #2 in poultry and #3 in cattle, as measured by 2017 revenue, according to Vetnosis. We also have one of the broadest portfolios of pet parasiticides in the companion animal sector, based on indications, species and formulations. We have a top four presence in all four key geographic regions (NA, EMEA, LATAM and APAC), as measured by 2017 revenue, according to Vetnosis, including a strong presence in the emerging markets of Brazil, Thailand, China and Mexico. We have a comprehensive and diversified product portfolio, with more than 125 brands sold in more than 90 countries. In 2017, our top 10 products accounted for 41% of our revenue, with our top selling product accounting for approximately 10% of our revenue. Our global footprint includes a direct commercial presence in 62 countries, which we have plans to reduce to fewer than 50 countries, and third-party distribution relationships serving other relevant markets. Of our approximately 1,530 sales representatives as of June 30, 2018, two-thirds were based outside of North America. Strategically positioned to drive innovation and growth in our three targeted growth categories. Over the past 10 years, we have intentionally transformed Elanco from a food animal focused company into a diversified global company. In addition to our FA Ruminants & Swine category, we now have established positions in our three targeted growth categories: CA Disease Prevention, CA Therapeutics and FA Future Protein & Health. To achieve this, among other steps, we have made strategic acquisitions to expand our product portfolio, increase our sales presence globally and obtain R&D and manufacturing capabilities in these categories. Recent acquisitions include the animal health business of Janssen Pharmaceutica NV, a subsidiary of Johnson and Johnson Company ("Janssen Animal Health"), ChemGen Corp. ("ChemGen"), Lohmann SE ("Lohmann Animal Health"), the animal health business of Novartis AG ("Novartis Animal Health") and the U.S. feline and canine vaccines portfolio of Boehringer Ingelheim Vetmedica, Inc. (the "BI Vetmedica U.S. vaccines portfolio"). See "Business Company History." As a result of these acquisitions as well as organic growth, we have grown our companion animal categories, from a minimal presence in 2007 to more than $900 million in revenue in 2017. We believe that as a result of establishing a strong presence in our targeted growth categories, which feature favorable industry dynamics, we are strategically positioned to grow our revenue and increase profitability. Strength of brands and relationships in our FA Ruminants & Swine category. We provide a range of products for use in ruminant and swine production that we believe have created strong, long-standing customer relationships and provide an important revenue source for our business and for investment capital to support future growth. We have well-established Elanco brands in this category such as Rumensin, a leading cattle feed additive that has Corey R. Chivers, Esq. Weil, Gotshal & Manges LLP 767 Fifth Avenue New York, New York 10153 (212) 310-8000 (Phone) (212) 310-8007 (Fax) Patrick O'Brien Paul Kinsella Tara Fisher Ropes & Gray LLP Prudential Tower 800 Boylston Street Boston, Massachusetts 02199 (617) 951-7000 (Phone) (1)We suspended commercialization of Imrestor in the second quarter of 2018 and plan to pursue additional indications. Revenues from Imrestor were $6.5 million for the year ended December 31, 2017 and $1.0 million for the six months ended June 30, 2018. Three of these products were developed following the traditional in-house model, while the other products were obtained through an acquisition or venture capital investment. These launches are evidence of our ability to identify innovation from diverse sources and develop them into distinctive products in our targeted categories. They include: Credelio, for the treatment and elimination of fleas and ticks in dogs and puppies; Interceptor Plus, for the prevention of heartworm disease and treatment and control of other endoparasite infections Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act. Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company Emerging growth company If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided to Section 7(a)(2)(B) of the Securities Act. CALCULATION OF REGISTRATION FEE Title of Each Class of Securities Offered Amount to be Registered(1) Proposed maximum offering price per share Proposed maximum aggregate offering price(2) Amount of registration fees(3) Common stock, no par value 72,335,000 $23.00 $1,663,705,000 $207,132 (1)Includes shares of common stock that may be issuable upon exercise of an option to purchase additional shares granted to the underwriters. (2)Estimated solely for the purpose of calculating the registration fee in accordance with Rule 457(a) promulgated under the Securities Act of 1933, as amended. (3)Of this amount, $12,450 of the registration fee has previously been paid. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. Table of Contents in dogs and puppies; Galliprant, for the treatment of canine osteoarthritis pain and inflammation; Osurnia, for the treatment of otitis externa in dogs; Clynav, for the immunization of Atlantic salmon against pancreas disease; Imvixa, for the prevention and control of sea lice; Inteprity, for the prevention of mortality caused by necrotic enteritis in broiler chickens; Kavault, for the reduction of diarrhea in weaned pigs; and Imrestor, which we suspended commercialization of in the second quarter of 2018, for the reduction of incidence of clinical mastitis in periparturient dairy cows. In 2017, Clynav and Galliprant were named best food animal and companion animal products, respectively, by Animal Pharm. We currently have R&D projects relating to 36 potential new product innovations (which we define as new chemical entities, new combinations or significant line extensions), which we are investigating as candidates for potential new product launches through 2023. We believe our approach to innovation will enable us to create and maintain an attractive pipeline of novel products. Expertise in driving cost efficiencies and productivity. In the last 10 years, we have successfully integrated 10 businesses, including businesses acquired within the last four years with an aggregate of 4,500 full-time employees, 12 manufacturing sites and eight R&D sites. These acquisitions had a negative impact on operating margins and over the last three years, we have identified and executed a number of initiatives which improved our operational efficiency and positively impacted our operating margins. Through the reduction of manufacturing and R&D sites, headcount rationalization, focused procurement initiatives, sales force organizational design and the establishment of an integration center of excellence, we estimate that we delivered more than $500 million in annualized cost savings from the beginning of 2015 through the end of 2017. Since 2015, in manufacturing we have closed three sites, reduced headcount from approximately 3,500 to approximately 2,330 employees and eliminated over 2,600 stock keeping units, or SKUs (we currently supply approximately 4,400 SKUs). Drawing on these experiences, we are currently executing additional productivity initiatives throughout the organization that we believe will materially strengthen the margin profile of our business over time. Experienced management team and dedicated employees. Our executive management team is comprised of a group of leaders with diverse backgrounds and extensive experience across global animal health and related industries. We believe their experience has provided organizational capabilities to support our targeted growth strategies and helped us create a legacy of growth and transformation in a dynamic industry. Our executives have taken an active role in important initiatives shaping the animal health industry. We also believe we have a loyal, highly engaged, customer-focused and cause-oriented professional workforce. We have recently strengthened our management team by adding executive officers with extensive public company experience. Our Targeted Value-Generating Strategies We intend to continue to grow our business and create value for our shareholders through a targeted value-generating strategy with three key pillars: a Portfolio Strategy for our marketed Table of Contents The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. Subject to Completion, Dated September 6, 2018 62,900,000 Shares Elanco Animal Health Incorporated Common Stock This is an initial public offering of shares of common stock of Elanco Animal Health Incorporated. We are offering 62,900,000 shares of our common stock in this offering. Prior to this offering, there has been no public market for our common stock. It is currently estimated that the initial public offering price per share will be between $20.00 and $23.00. We have been authorized to list our common stock on the New York Stock Exchange ("NYSE") under the symbol "ELAN." Following this offering, we will be a "controlled company" within the meaning of the corporate governance rules of the NYSE. See "Management Director Independence and Controlled Company Exemption." See "Risk Factors" beginning on page 22 to read about factors you should consider before buying shares of our common stock. Table of Contents products, an Innovation Strategy for our R&D pipeline and a Productivity Strategy for our margin expansion initiatives. Portfolio Strategy Invest in categories with the greatest potential for growth. We are focusing the majority of our resources, including more than 75% of our R&D funding, on our three targeted growth categories: CA Disease Prevention, CA Therapeutics and FA Future Protein & Health, where we believe we are well positioned to grow faster than the market. These categories represented 54% of our revenue in 2017. CA Disease Prevention Parasiticides and vaccines are fundamental to preventing disease in companion animals. We have a strong vaccines portfolio as well as products that protect pets from a broad spectrum of parasites, such as fleas, ticks, heartworms, roundworms, hookworms, whipworms and tapeworms. We believe we are well positioned to drive additional growth through continued product innovation and sales channel expansion. CA Therapeutics Pets are living longer and owners increasingly seek treatments for chronic diseases in their pets. To capitalize on these trends, we are focused on driving growth in our CA Therapeutics category by building on our broad base of pain and osteoarthritis products. FA Future Protein & Health We expect to drive revenue growth through our poultry and aquaculture portfolios. Poultry and aquaculture are expected to be among the fastest growing animal health protein sources over the next 10 years. We also are focused on nutritional health products and antibiotic stewardship that address market trends in this category. Reinforce our strong presence in our FA Ruminants & Swine category. We plan to continue fortifying our long-standing FA Ruminants & Swine category to meet our customers' needs through targeted product investment and by continuing to strengthen our deep business-to-business relationships through sales force excellence and leadership in industry coalitions. We also plan to continue to utilize analytics, social media and other support to provide value to our customers beyond our products. Certain amounts and percentages may reflect rounding adjustments. (a)On June 30, 2018, we made the decision to exit an equine product not core to our business. Revenue from this product is reflected in Strategic Exits for the six months ended June 30, 2018 and 2017 and in CA Therapeutics for the years ended December 31, 2017, 2016 and 2015. Revenue from this product was $1.6 million and $1.5 million for the six months ended June 30, 2018 and 2017, respectively, and $3.4 million, $3.7 million and $3.4 million, for the years ended December 31, 2017, 2016 and 2015, respectively. In order to represent the underlying growth trend of our portfolio during the six months ended June 30, 2018 and 2017 and the years ended December 31, 2017, 2016 and 2015, we believe that it is important to also understand revenue growth excluding the impact of incremental revenue of recent significant acquisitions, Strategic Exits and foreign exchange rates. % Change in Revenue: increases/ (decreases) Reported Resulting from Revenue Growth excluding Acquisition, Strategic Exits and FX(1) Resulting from Acquisition(1) Resulting from Strategic Exits Resulting from FX First six months of 2018 vs. first six months of 2017 Total revenue 5 % 4 % (0 )% (2 )% 3 % CA Disease Prevention 10 % 8 % 0 % 0 % 2 % CA Therapeutics 10 % 5 % 0 % 0 % 5 % FA Future Protein & Health 16 % 12 % 0 % 0 % 5 % FA Ruminants & Swine 0 % (2 )% 0 % 0 % 2 % Subtotal 7 % 4 % 0 % 0 % 3 % Strategic Exits (42 )% 0 % (9 )% (33 )% 1 % 2017 vs. 2016 Total revenue (1 )% (8 )% 7 % (1 )% 0 % CA Disease Prevention 5 % (18 )% 22 % 0 % 1 % CA Therapeutics 2 % 2 % 0 % 0 % (0 )% FA Future Protein & Health 3 % 3 % 0 % 0 % 0 % FA Ruminants & Swine (10 )% (10 )% 0 % 0 % (0 )% Subtotal (3 )% (8 )% 5 % 0 % 0 % Strategic Exits 61 % (0 )% 83 % (22 )% 0 % 2016 vs. 2015 Total revenue 0 % 2 % 0 % 0 % (2 )% CA Disease Prevention 6 % 7 % 0 % 0 % (1 )% CA Therapeutics 4 % 5 % 0 % 0 % (1 )% FA Future Protein & Health (0 )% 4 % 0 % 0 % (5 )% FA Ruminants & Swine (3 )% (1 )% 0 % 0 % (2 )% Subtotal (0 )% 2 % 0 % 0 % (3 )% Strategic Exits 8 % 0 % 0 % Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense. Table of Contents Innovation Strategy Maximize opportunities to innovate within targeted platforms. Our R&D efforts focus on six areas across our companion and food animal categories where science and our capabilities best match market opportunities and meet customer needs. Companion Animal We are targeting therapeutics, vaccines and parasiticides. Therapeutics We are focused on continuing to discover and develop products in areas where we currently compete such as dermatology, otitis and pain. We are also pursuing novel targets to address unmet needs for chronic conditions in dogs and cats. Vaccines We have a competitive line of core canine, feline and rabies vaccines that we are developing for expansion into geographies outside the U.S. We are also developing novel delivery technologies for companion animal vaccines, building on the success of the formulation innovation of our current product line. Parasiticides We leverage proprietary active ingredients to develop and commercialize novel products with endoparasite and ectoparasite efficacy through combinations and novel formulations. We are also actively pursuing products with novel mechanisms of action to introduce innovation in this category. Food Animal We are targeting pharmaceuticals, vaccines and the emerging nutritional health space. Pharmaceuticals We focus efforts in discovery and development of novel pharmaceutical and biopharmaceutical products that could be effective alternatives to antibiotics or address other health challenges encountered in livestock production. Vaccines We have active vaccine R&D programs to discover and develop products to address bacterial and viral threats in poultry, swine, cattle and fish. Nutritional Health Building on our enzyme product platform and the success of Hemicell, we are targeting R&D efforts in nutritional health to deliver new products that improve gut health and performance in livestock. We focus on the role and composition of the microbiome on the health and digestive performance of the animal and look to introduce new products that are enzymes, probiotics or prebiotics. Inclusive approach to sourcing innovation. We have a build, buy or ally strategy to identify, attract and develop new ideas in our six R&D focus areas in a manner intended to reduce risk and sustain our pipeline. In addition to traditional corporate R&D, we pursue in-licensing and partnering activities, actively and selectively engaging in funding models that include venture capital, project financing and crowdsourced innovation. This strategy gives us access to a wider range of novel ideas and increases our ability to bring innovative products to market compared to an in-house only model. Productivity Strategy Leverage our productivity capabilities to improve operating margins. We estimate that from the beginning of 2015 through the end of 2017, we generated more than $500 million in annualized cost savings through our productivity initiatives, including the integration of three major acquisitions. Leveraging this track record of productivity improvements and cost Per Share Total Initial public offering price $ $ Underwriting discount(1) $ $ Proceeds, before expenses, to Elanco $ $ Table of Contents savings, we aim to significantly increase our operating margins over time through our initiatives in manufacturing and SG&A. Our productivity strategies include: Manufacturing efficiency and cost savings. We plan to continue to execute on initiatives we have identified to improve manufacturing processes, reduce our manufacturing footprint, advance lean initiatives, consolidate our contract manufacturing organization ("CMO") network, strategically insource projects and pursue cost savings opportunities for raw materials through a new procurement process. We also plan to leverage our extensive integration experience to continue identifying cost-savings and delivering on our margin expansion objectives. SG&A excellence. Our sales strategy is focused on achieving growth in our targeted product categories while increasing productivity within our sales force. We plan to utilize both our sales force's strong customer relationships and our strategic distributor partnerships to efficiently grow demand for our products. We also have a targeted procurement initiative and are in the process of implementing a G&A steady state organizational design to reduce overhead costs and simplify infrastructure following the termination of our transitional service agreement with Lilly. Risks Associated with Investing in Our Common Stock Investing in our common stock involves a number of risks. These risks include, but are not limited to, challenges related to the Separation (as defined below in " The Separation"), the successful implementation of our strategy and the ability to grow our business. Some of these risks are: Risks Related to the Separation We will incur significant charges in connection with this offering and the Separation and incremental costs as a standalone public company, including due to replicating or replacing certain functions, systems and infrastructure to which we will no longer have the same access after this offering. When we begin to operate these functions separately, if we do not have our own adequate systems and business functions in place, or are unable to obtain them from other providers, we may not be able to operate our business effectively or at comparable costs to the costs of services received under our transitional services agreement with Lilly. See "Certain Relationships and Related Party Transactions Transitional Services Agreement." Our historical combined financial data is not necessarily representative of the results we would have achieved as a standalone company and may not be a reliable indicator of our future results. For example, our historical combined financial data reflects expense allocations for certain support functions that are provided on a centralized basis within Lilly, such as expenses for executive oversight, treasury, legal, finance, human resources, tax, internal audit, financial reporting, information technology and investor relations that may be higher or lower than the comparable expenses we would have actually incurred, or will incur in the future, as a standalone company. We may not be able to replace the services provided by Lilly under the transitional services agreement or enter into appropriate third-party agreements on terms and conditions, including cost, comparable to those that we will receive from Lilly under our transitional services agreement. Additionally, after the transitional services agreement terminates, we may be unable to sustain the services at the same levels or obtain the same benefits as when we were receiving such services and benefits from Lilly. Due to the scope and complexity of the underlying projects relative to these efforts, the amount of total costs (1)We have agreed to reimburse the underwriters for certain expenses in connection with this offering. We refer you to "Underwriting," beginning on page 194 of this prospectus, for additional information regarding total underwriter compensation. To the extent that the underwriters sell more than 62,900,000 shares of common stock, the underwriters have the option to purchase up to an additional 9,435,000 shares from us at the initial price to the public less the underwriting discount. Table of Contents could be materially higher than our estimate, and the timing of the incurrence of these costs is subject to change. As a result of the Separation, we will lose Lilly's brand, reputation, capital base and other resources, and may experience difficulty operating as a standalone company. The loss of Lilly's scale, capital base and financial strength may prompt suppliers to reprice, modify or terminate their relationships with us, and Lilly's reduction of its ownership of our company could potentially cause some of our existing agreements and licenses to be terminated. We may not be able to achieve the full strategic and financial benefits expected to result from the Separation. Risks Related to Our Relationship with Lilly Following the completion of the offering, Lilly will continue to have significant control over us for a period of time, which could continue indefinitely, preventing you and other shareholders from influencing significant decisions. For so long as Lilly controls the majority of the voting power of our outstanding common stock, it will determine the outcome of all corporate actions requiring shareholder approval. Lilly's interests may differ from our interests and the interests of our public shareholders, and therefore actions Lilly takes with respect to us, as a controlling or significant shareholder, including under the master separation agreement, may not be favorable to us or our public shareholders. For so long as Lilly controls a majority of the voting power of our outstanding common stock, we will qualify for, and intend to rely on, exemptions from certain corporate governance requirements. You will not have the same protections afforded to shareholders of companies that are subject to such requirements. For example, we may not have a majority of independent directors or corporate governance and compensation committees consisting entirely of independent directors. Risks Related to Our Business and Industry The animal health industry is highly competitive. Our competitors include standalone animal health businesses, the animal health businesses of large pharmaceutical companies, specialty animal health businesses and companies that mainly produce generic products. These competitors may have access to greater financial, marketing, technical and other resources. As a result, they may be able to devote more resources to developing, manufacturing, marketing and selling their products, initiating or withstanding substantial price competition or more readily taking advantage of acquisitions or other opportunities. Disruptive innovations and advances in veterinary medical practices, animal health technologies and alternatives to animal-derived protein, could negatively affect the market for our products. For example, the market for our companion animal therapeutics has been particularly affected by innovation in new molecules and delivery formulations in recent years. Regulatory restrictions and bans on the use of antibiotics and productivity products in food animals, as well as changing market demand, may continue to negatively affect demand for certain of our food animal products. For example, in certain markets, including the U.S., sales of certain of our food animal products have been negatively affected by an increase in consumer sentiment for "clean" proteins and dairy products (i.e., proteins and dairy products produced without the use of antibiotics or other products intended to increase animal production). The underwriters expect to deliver the shares to investors against payment in New York, New York on , 2018. Table of Contents Generic products may be viewed as more cost-effective than our products. Generic competitors are becoming more aggressive in terms of launching products before patent rights expire, and, because of attractive pricing, sales of generic products are an increasing percentage of overall animal health sales in certain regions. We may not successfully implement our business strategies or achieve targeted cost efficiencies and gross margin improvements. Realizing the anticipated benefits from our strategic initiatives, if any benefits are achieved at all, may take several years. Additionally, we may have insufficient access to capital to fund investments in strategic initiatives, or our business strategy may change from time to time, which could delay our ability to implement initiatives that we believe are important to our business. Consolidation of our customers and distributors could negatively affect the pricing of our products. In recent years, there has been a trend towards the concentration of veterinarians in large clinics and hospitals. In addition, food animal producers, particularly swine and poultry producers, and our distributors have seen recent consolidation in their industries. Furthermore, we have seen the expansion of larger cross border corporate customers and an increase in the consolidation of buying groups (cooperatives of veterinary practices that leverage volume to pursue discounts from manufacturers). If these trends towards consolidation continue, our customers could attempt to improve their profitability by leveraging their buying power to obtain favorable pricing. An outbreak of infectious disease carried by food animals could negatively affect the demand for, and sale and production of, our food animal products. In recent years, outbreaks of various diseases, including avian influenza, foot and mouth disease, bovine spongiform encephalopathy (otherwise known as BSE or "mad cow" disease) and porcine epidemic diarrhea virus (otherwise known as PEDV), have negatively impacted sales of our animal health products. Our R&D, acquisition and licensing efforts may fail to generate new products or expand the use of our existing products. We may be unable to determine with accuracy when or whether any of our products now under development will be approved or launched, or we may be unable to develop, license or otherwise acquire product candidates or products. In addition, we cannot predict whether any products, once launched, will be commercially successful or will achieve sales and revenue that are consistent with our expectations. We had losses on an as-reported basis for the last three years, and we expect to continue to incur substantial expenditures to develop, manufacture and market our products and implement our business strategies. The foregoing is only a summary of some of our risks. For a more detailed discussion of these and other risks you should consider before making an investment in our common stock, see
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+Prospectus SummarY The following summary highlights certain of the information contained elsewhere in or incorporated by reference into this prospectus. Because this is only a summary, however, it does not contain all the information you should consider before investing in our Common Stock and it is qualified in its entirety by, and should be read in conjunction with, the more detailed information included elsewhere in or incorporated by reference into this prospectus. Before you make an investment decision, you should read this entire prospectus carefully, including the risks of investing in our securities discussed under the section of this prospectus entitled "Risk Factors" and similar headings in the other documents that are incorporated by reference into this prospectus. You should also carefully read the information incorporated by reference into this prospectus, including our financial statements, and the exhibits to the registration statement of which this prospectus is a part. References in this prospectus to "MYnd Analytics," the "Company," "we," "our" and "us" refer to MYnd Analytics, Inc. and our consolidated subsidiaries. Business Overview MYnd Analytics, Inc. ("MYnd," "CNS," "we," "us," "our," or the "Company"), formerly known as CNS Response Inc., is a predictive analytics company that has developed a decision support tool to help physicians reduce trial and error treatment in mental health and provide more personalized care to patients. The Company employs a clinically validated scalable technology platform to support personalized care for mental health patients. The Company utilizes its patented machine learning, artificial intelligence, data analytics platform for the delivery of telebehavioral health services and its PEER predictive analytics product offering. On November 13, 2017, the Company acquired Arcadian Telepsychiatry Services LLC ("Arcadian"), which manages the delivery of telepsychiatry and telebehavioral health services through a nationwide network of licensed and credentialed psychiatrists, psychologists and master s-level therapists. The Company is commercializing its PEER predictive analytics tool to help physicians reduce trial and error treatment in mental health. MYnd s patented, clinically validated technology platform ("PEER Online") utilizes complex algorithms to analyze electroencephalograms ("EEGs") to generate Psychiatric EEG Evaluation Registry ("PEER") Reports to predict individual responses to a range of medications prescribed for the treatment of behavioral disorders including depression, anxiety, bipolar disorder, post-traumatic stress disorder ("PTSD") and other non-psychotic disorders. The Market for Telebehavioral Health and Predictive Healthcare Telebehavioral health services involve the use of video conferencing equipment to conduct real time mental health consultations between a clinician and patient including individuals living in underserved areas or those with limited access to services. Over eighty-nine million Americans live in federally designated Mental Health Professional Shortage Areas. Two-thirds of U.S. primary care physicians report not having adequate access to psychiatric care for their patients. Arcadian facilitates on-demand telebehavioral health services to expedite assessment, diagnosis, treatment, and disposition of patients in a wide variety of settings. Analysts have identified predictive healthcare as one of the fastest-growing markets in healthcare, particularly, healthcare startups using advanced machine learning algorithms for medical imaging and diagnostics, remote patient monitoring, and risk prediction. The global healthcare analytics market is expected to reach USD $42.8 billion by 2024, according to a report by Grand View Research, Inc. Efforts to reduce the spiraling healthcare costs are facilitating the usage of healthcare analytics. Additionally, the benefits of healthcare analytics include the improvement of patient access to customized care, the furthering of transparent operations to enable better public oversight, and innovation in patient care delivery and services. Arcadian Telepsychiatry Services LLC Arcadian, our wholly owned subsidiary acquired in November 2017, manages the delivery of telebehavioral health services through a multi-state network of licensed and credentialed psychiatrists, psychologists and other behavioral health therapists ("Providers"). Although many companies provide broad telehealth services within the U.S., only a few companies have a primary focus on telepsychiatry and telebehavioral health. Arcadian s business model is unique, because it has access to a broad network of licensed behavioral health professionals exclusively focused on telepsychiatry and telebehavioral health. These Providers collectively offer a full suite of behavioral health and wellness services, including short- term (urgent), medium-term (rehabilitation) and long-term (management) behavioral care. The information in this prospectus is not complete and may be changed. The selling stockholder may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities, and the selling stockholder is not soliciting offers to buy these securities in any state where the offer or sale of these securities is not permitted. Subject to completion, dated December 14, 2018 PROSPECTUS 2,500,000 Shares Common Stock This prospectus relates to the sale of up to 2,500,000 shares of our Common Stock by Aspire Capital Fund, LLC (referred to in this prospectus as "Aspire Capital" or the "selling stockholder"), which we may issue at our option to Aspire Capital in the future, pursuant to a common stock purchase agreement entered into with Aspire Capital on May 15, 2018 (the "Purchase Agreement"). The prices at which Aspire Capital may sell the shares will be determined by the prevailing market price for the shares or in negotiated transactions. We will not receive proceeds from the sale of the shares by the Aspire Capital. However, we may receive proceeds of up to $10.0 million from the sale of our Common Stock to Aspire Capital pursuant to the Purchase Agreement, once the registration statement, of which this prospectus is a part, is declared effective (and pursuant to the prior registration statement under which 1,750,000 shares were registered on behalf of Aspire Capital under the Purchase Agreement). Aspire Capital is an "underwriter" within the meaning of the Securities Act of 1933, as amended. We will pay the expenses of registering these shares, but all selling and other expenses incurred by Aspire Capital will be paid by Aspire Capital. Our Common Stock is listed on the Nasdaq Capital Market under the ticker symbol "MYND." On December 13, 2018, the last reported sale price per share of our Common Stock was $1.27 per share. You should read this prospectus and any prospectus supplement, together with additional information described under the headings "Incorporation of Certain Documents by Reference" and "Where You Can Find More Information," carefully before you invest in any of our securities. Investing in our securities involves a high degree of risk. See "Risk Factors" on page 4 of this prospectus. You should also consider the risk factors described or referred to in any documents incorporated by reference in this prospectus, and in any applicable prospectus supplement, before investing in these securities. Neither the Securities and Exchange Commission (the "SEC") nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. The date of this prospectus is December 14, 2018. Arcadian s telehealth service delivery model is optimized to deliver behavioral health care anytime and anywhere, offering unprecedented access to behavioral health services. All technology for scheduling and videoconferencing is accessible through a secure portal, creating a seamless experience for the patient, referring physician, and Arcadian provider. The Providers services include initial and follow-up psychiatric evaluations and diagnoses, medication prescribing and monitoring, urgent on- call evaluations, forensic and legal evaluations, individual and family counseling (e.g., grief, behavior problems, job loss) and drug and alcohol abuse rehabilitation counseling. Arcadian also arranges for services through Employee Assistance Programs (teleEAP) that many employers include as part of their employee benefits packages. Arcadian contracts for most of its Providers services through contracts (each a "Service Agreement") with the Providers. Neither the Company nor Arcadian has an ownership interest in any Provider, nor any employment relationships with any Provider. All Providers are required to maintain proper state licensing, credentialing and malpractice insurance. In a typical Service Agreement, Arcadian provides certain management and administrative services in support of the Providers non-medical functions and the Providers provide telebehavioral health services. Arcadian and its Providers currently have contracts with 32 insurance companies, human capital management corporations (i.e., EAP benefits), outpatient diagnostic and treatment centers, drug and alcohol rehabilitation centers (outpatient and residential), community behavioral health clinics, treatment and rehabilitation centers, corrections facilities, and post-acute care centers. Arcadian is exploring expansion opportunities by providing services to emergency departments, schools (K-12 and college) and large employers. Arcadian s contracts span from Pennsylvania to California and North Dakota to Louisiana and Texas. PEER Report and PEER Online Database A PEER Report is a personalized report for a patient which is generated after the patient receives an EEG. An EEG is a painless, non-invasive test that records the brain s electrical activity and provides a basis for comparison against others within the PEER database. MYnd utilizes AI, machine learning and data analytics in order to inform therapeutic regimens, thereby improving patient outcomes and reducing healthcare costs. The PEER Reports use data from EEG tests, outcomes and machine learning to identify endophenotypic markers of drug response. This big data approach has allowed MYnd to generate a large clinical registry and database of predictive algorithms from more than 11,000 unique patients with psychiatric or addictive problems and 40,000 clinical outcomes. The PEER Outcomes Database consists of physician-provided assessments of the clinical long-term outcomes of patients and their associated medications. The clinical outcomes of patients are recorded using an industry-standard outcome rating scale, the Clinical Global Impression-Improvement scale ("CGI-I"). The CGI-I allows a clinician to rate how much the patient s illness has improved or worsened relative to a baseline state. A patient s illness is compared to change over time and rated as: very much improved, much improved, minimally improved, no change, minimally worse, much worse, or very much worse. The format of the data is standardized and that standard is enforced at the time of capture by a software application. Outcome data is input into the database by the treating physician or their office staff. Each physician has access to their patient data through the software tool that captures the clinical outcome data. We consider the information contained in the PEER Online database to be a valuable trade secret and are diligent about protecting such information. The PEER Online database is stored on a secure server to which only a limited number of employees have access. Marketing and Sales The Company will pursue aggressively the expansion of its Arcadian telebehavioral health network, by increasing the number of contracted payors and providers and its geographic reach. The Company will continue to focus marketing efforts on the geographies where there might be fewer available therapists as it continues to develop Arcadian s network. The Company will rely upon its in-house marketing staff to continue to market Arcadian services to insurance companies, EAPs and community behavioral health centers. TABLE OF CONTENTS PAGE Prospectus Summary 1 The Offering 4 Risk Factors 6 Cautionary Note Regarding Forward-Looking Statements 9 The Aspire Capital Transactions 11 Use of Proceeds 14 Selling Stockholder 14 Plan of Distribution 16 Legal Matters 17 Experts 17 Where You Can Find More Information 17 Incorporation of Certain Information by Reference 18 We have not, and the selling stockholder has not, authorized anyone to provide you with information different from that contained or incorporated by reference in this prospectus or in any applicable prospectus supplement or free writing prospectus prepared by or on behalf of us to which we have referred you. Neither we nor the selling stockholder takes any responsibility for any other information that others may give you. This prospectus is not an offer to sell, nor is it a solicitation of an offer to buy, the securities in any jurisdiction where the offer or sale is not permitted. You should not assume that the information contained in this prospectus or any prospectus supplement or free writing prospectus is accurate as of any date other than the date on the front cover of those documents, or that the information contained in any document incorporated by reference is accurate as of any date other than the date of the document incorporated by reference, regardless of the time of delivery of this prospectus or any sale of a security. Our business, financial condition, results of operations and prospects may have changed since those dates. Unless the context indicates otherwise, references in this prospectus to "MYnd Analytics," the "Company," "we," "our"and "us" refer to MYnd Analytics, Inc. and our consolidated subsidiaries. The MYnd Analytics logo is a trademark of MYnd Analytics, Inc. All rights reserved. Information contained in, and that can be accessed through, our web site www.myndanalytics.com shall not be deemed to be part of this prospectus or incorporated herein by reference and should not be relied upon by any prospective investors for the purposes of determining whether to purchase the shares offered hereunder. The Company will actively pursue cross sales of Arcadian managed care and health system clients. The Company will continue to market paid pilot programs such as the Horizon Blue Cross Blue Shield pilot, while it campaigns for coverage determinations from large health plans and health systems. The Company also plans to bring this platform to primary care providers, currently the main locus of treatment for behavioral disorders and a physician group that deals every day with the limited access to behavioral health specialists and the poor efficacy of current treatments. Acquisition of Arcadian Telepsychiatry Services LLC On November 13, 2017, the Company entered into an equity purchase agreement (the "Agreement") with Arcadian and Mr. Robert Plotkin, pursuant to which the Company acquired all of the issued and outstanding membership interests (the "Equity Interests") of Arcadian from Mr. Plotkin. In consideration for the Equity Interests, the Company entered into an employment agreement with Mr. Plotkin, pursuant to which the Company will continue to employ Mr. Plotkin as the CEO of Arcadian for an annual salary of $215,000 and granted him 35,000 options to purchase Common Stock of the Company. In addition, the Company entered into the Guaranty (as described below). In connection with the Agreement, Arcadian entered into the Side Agreement and Seed Capital Amendment with Ben Franklin Technology Partners of Southeastern Pennsylvania ("BFTP"), pursuant to which BFTP waived its rights (a) to an equity conversion contemplated by the existing funding agreements (as they may be amended, supplemented or otherwise modified from time to time, the "BFTP Loan Documents") between Arcadian and BFTP, under which BFTP has loaned Arcadian, as of August 31, 2017, the aggregate principal amount of $700,000 and upon which an aggregate of $85,496 of interest had then accrued (collectively, the "Loan Amount") and (b) to act as an observer to Arcadian s board. Under the Side Agreement and Seed Capital Amendment, Arcadian acknowledged and reaffirmed all of BFTP s claims, encumbrances granted by Arcadian to BFTP, and BFTP s other rights, interests and remedies pursuant to the BFTP Loan Documents and otherwise. The effectiveness of the Side Agreement and Seed Capital Amendment are conditioned upon (i) Arcadian making a one-time payment to BFTP of $175,000 as payment for the redemption and cancellation of two warrants to purchase equity interests in Arcadian and (ii) the Company entering into a guaranty with respect to Arcadian s obligations (including the Loan Amount) to BFTP under the BFTP Loan Documents, as amended by the Side Agreement and Seed Capital Amendment. Upon satisfaction of the foregoing conditions, the aforementioned BFTP rights will be waived and the BFTP warrants will be cancelled. The Side Agreement and Seed Capital Amendment further provide that following the closing of the transactions contemplated by the Agreement, the Company will be obligated to complete all financial reporting to BFTP required under the BFTP Loan Documents. In addition, the Company executed an absolute, unconditional, irrevocable and continuing guaranty and suretyship (the "Guaranty") in favor of BFTP, pursuant to which it unconditionally guaranteed the prompt payment and performance, when due, of all loans (including the Loan Amount), advances, debts, liabilities, obligations, covenants and duties owing by Arcadian to BFTP under the BFTP Loan Documents. Under the Guaranty, if Arcadian defaults under any obligation under the BFTP Loan Documents, the Company will be required to pay the amount then due to BFTP. The Guaranty contains representations, warranties, covenants, conditions, events of default and indemnities that are customary for agreements of this type. Corporate Information Our principal executive offices are located at 26522 La Alameda, Suite 290, Mission Viejo, CA 92691, our telephone number is (949) 420-4400 and we maintain a website at www.myndanalytics.com. We do not incorporate the information on, or accessible through, our website into this prospectus, and you should not consider any information on, or accessible through, our website as part of this prospectus. THE OFFERING Common Stock being offered by the selling stockholder 2,500,000 shares Common Stock outstanding 7,555,004 shares (as of December 13, 2018) Use of Proceeds The selling stockholder will receive all of the proceeds from the sale of the shares offered for sale by it under this prospectus. We will not receive proceeds from the sale of the shares by the selling stockholder. However, we may receive up to $10 million in proceeds from the sale of our Common Stock to the selling stockholder under the Purchase Agreement (of which we have received approximately $1.9 million in proceeds from the sale of 884,671 shares under the Purchase Agreement as of the date of this registration statement). Any proceeds from the selling stockholder that we receive under the Purchase Agreement are expected be used for working capital and general corporate purposes, including advancement of our PEER product. Risk Factors Investing in our securities involves a high degree of risk. For a discussion of factors to consider before deciding to invest in shares of our Common Stock, you should carefully review and consider the "Risk Factors" section of this prospectus, as well as the risk factors described or referred to in any documents incorporated by reference in this prospectus, and in any applicable prospectus supplement. NASDAQ symbol Our Common Stock is listed on The NASDAQ Capital Market, or NASDAQ, under the symbol "MYND." On May 15, 2018, we entered into a common stock purchase agreement (referred to in this prospectus as the "Purchase Agreement"), with Aspire Capital Fund, LLC, an Illinois limited liability company (referred to in this prospectus as "Aspire Capital" or the "selling stockholder"), which provides that, upon the terms and subject to the conditions and limitations set forth therein, Aspire Capital is committed to purchase up to an aggregate of $10.0 million of our shares of Common Stock over the approximately 30-month term of the Purchase Agreement. In consideration for entering into the Purchase Agreement, concurrently with the execution of the Purchase Agreement, we issued to Aspire Capital 250,000 shares of our common stock as a commitment fee (referred to in this prospectus as the "Commitment Shares"). Concurrently with entering into the Purchase Agreement, we also entered into a registration rights agreement with Aspire Capital (referred to in this prospectus as the "Registration Rights Agreement"), in which we agreed to file one or more registration statements, including the registration statement of which this prospectus is a part, as permissible and necessary to register under the Securities Act of 1933, as amended, or the Securities Act, the sale of the shares of our Common Stock that have been and may be issued to Aspire Capital under the Purchase Agreement. On May 18, 2018, we filed a registration statement for 1,750,000 shares of Common Stock of which 1,500,000 shares represented shares issuable to Aspire Capital under the Purchase Agreement. As of the date of filing of this registration statement, we had issued 884,671 shares of Common Stock to Aspire Capital under the Purchase Agreement for proceeds of approximately $1.9 million and there were 615,329 shares available under the May 18, 2018 registration statement for purchase under such registration statement. As of December 13, 2018, there were 7,555,004 shares of our Common Stock outstanding (of which 5,279,023 are held by non-affiliates), excluding the shares that may be issuable to Aspire Capital pursuant to the Purchase Agreement. If all of such 2,500,000 shares of our Common Stock offered hereby were issued and outstanding as of the date hereof, such shares would represent 24.9 % of the total Common Stock outstanding as of the date hereof or 32.1% of the non-affiliate shares of Common Stock (and when taken together with the 1,750,000 shares previously registered on the May 18, 2018 registration statement (assuming all such shares were sold) would represent 39.8% of the total Common Stock outstanding as of the date hereof or 50.6% of the non-affiliate shares of Common Stock). The number of shares of our Common Stock ultimately offered for sale by Aspire Capital is dependent upon the number of shares purchased by Aspire Capital under the Purchase Agreement. Pursuant to the Purchase Agreement and the Registration Rights Agreement, we are registering 2,500,000 shares of our Common Stock under the Securities Act, which includes the shares of Common Stock which we may issue to Aspire Capital after this registration statement is declared effective under the Securities Act. All 2,500,000 shares of Common Stock are being offered pursuant to this prospectus. After the Securities and Exchange Commission has declared effective the registration statement of which this prospectus is a part, on any trading day on which the closing sale price of our Common Stock exceeds $0.50, we have the right, in our sole discretion, to present Aspire Capital with a purchase notice (each, a "Purchase Notice"), directing Aspire Capital (as principal) to purchase up to 50,000 shares of our Common Stock per trading day, up to $10.0 million of our Common Stock in the aggregate at a per share price (the "Purchase Price") calculated by reference to the prevailing market price of our Common Stock (as more specifically described below). In addition, on any date on which we submit a Purchase Notice for 50,000 shares to Aspire Capital, we also have the right, in our sole discretion, to present Aspire Capital with a volume-weighted average price purchase notice (each, a "VWAP Purchase Notice") directing Aspire Capital to purchase an amount of stock equal to up to 30% of the aggregate shares of the Company s Common Stock traded on Nasdaq on the next trading day (the "VWAP Purchase Date"), subject to a maximum number of shares we may determine (the "VWAP Purchase Share Volume Maximum") and a minimum trading price (the "VWAP Minimum Price Threshold") (as more specifically described below). The purchase price per Purchase Share pursuant to such VWAP Purchase Notice (the "VWAP Purchase Price") is calculated by reference to the prevailing market price of our Common Stock (as more specifically described below). The Purchase Agreement provides that the Company and Aspire Capital shall not affect any sales under the Purchase Agreement on any purchase date where the closing sale price of our Common Stock is less than $0.50 per share (the "Floor Price"). This Floor Price and the respective prices and share numbers in the preceding paragraphs shall be appropriately adjusted for any reorganization, recapitalization, non-cash dividend, stock split, reverse stock split or other similar transaction. There are no trading volume requirements or restrictions under the Purchase Agreement, and we will control the timing and amount of any sales of our Common Stock to Aspire Capital. Aspire Capital has no right to require any sales by us, but is obligated to make purchases from us as we direct in accordance with the Purchase Agreement. There are no limitations on use of proceeds, financial or business covenants, restrictions on future fundings, rights of first refusal, participation rights, penalties or liquidated damages in the Purchase Agreement. Aspire Capital may not assign its rights or obligations under the Purchase Agreement. The Purchase Agreement may be terminated by us at any time, at our discretion, without any penalty or cost to us. Risk Factors Investing in MYnd Analytics involves a high degree of risk. You should consider carefully the risks and uncertainties described below, as well as the risks and uncertainties described in the section entitled "Risk Factors" contained in our Annual Report on Form 10-K for the year ended September 30, 2018, as updated in our Quarterly Report(s) on Form 10-Q, which descriptions are incorporated by reference in this prospectus in their entirety, as well as any risks and uncertainties described in any applicable prospectus supplement, before making an investment in our Common Stock. These risks and uncertainties are not the only risks and uncertainties we face. Additional risks and uncertainties that we are unaware of, or that we currently deem immaterial, also may become important factors that affect us. If any of the risks or uncertainties described below or in any of our other SEC filings or any additional risks and uncertainties actually arise or occur, our business, financial condition or results of operations could be materially and adversely affected. In that case, the trading price of our Common Stock could decline, and you may lose some or all of your investment. Risks Relating to the Company We need immediate additional funding to support our operations and capital expenditures, which may not be available to us. This lack of availability could result in the cessation of our business. Our recurring net losses and negative cash flows from operations raise substantial doubt about our ability to continue as a going concern. We have not generated significant revenues or become profitable, may never do so and may not generate sufficient working capital to cover costs of operations. Our recurring net losses and negative cash flows from operations raise substantial doubt about our ability to continue as a going concern. Historically, we have been unable to pay other obligations as they become due and have been in arrears on paying certain of our larger creditors. We have a history of insolvency that requires us to immediately secure additional funds to continue our operations. Until we can generate a sufficient amount of revenues to finance our operations and capital expenditures, we are required to finance our cash needs primarily through public or private equity offerings, debt financings, borrowings or strategic collaborations. As of September 30, 2018, we had approximately $3.3 million in cash and cash equivalents on hand. We will therefore need additional funds to continue our operations and will need substantial additional funds before we can increase demand for our telebehavioral health services and PEER solution offering. As of September 30, 2018, the Company has issued purchase notices to Aspire Capital under a common stock purchase agreement with Aspire Capital dated as December 6, 2016 (the "First Purchase Agreement") to purchase an aggregate of 1,180,000 shares of common stock, at a per share price of $2.00, resulting in gross cash proceeds of approximately $2.4 million. As of September 30, 2018, the Company has issued purchase notices to Aspire Capital under the Purchase Agreement to purchase an aggregate of 884,671 shares of common stock, resulting in gross cash proceeds of approximately $1.9 million. On November 26, 2018, the Company received shareholder approval to remove the exchange cap under the Purchase Agreement in compliance with the applicable listing rules of the Nasdaq Stock Market. Pursuant to Nasdaq Listing Rule 5635(d), shareholder approval is required prior to the issuance of securities in connection with a transaction other than a public offering involving the sale, issuance or potential issuance by the Company of common stock (or securities convertible into or exercisable common stock) equal to 20% or more of the common stock outstanding before the issuance for less than the greater of book or market value of the stock. Following receipt of shareholder approval, the Company may issue an additional $8.1 million, up to an aggregate of $10 million, of common stock to Aspire Capital under the Purchase Agreement. The issuance of shares of common stock that were issued from time to time to Aspire Capital under the First Purchase Agreement and the Purchase Agreement were exempt from registration under the Securities Act, pursuant to the exemption for transactions by an issuer not involving any public offering under Section 4(a)(2) of the Securities Act. When we elect to raise additional funds or additional funds are required, we may raise such funds from time to time through public or private equity offerings, debt financings, corporate collaboration and licensing arrangements or other financing alternatives, as well as through sales of common stock to Aspire Capital under the First Purchase Agreement or the Purchase Agreement. Additional equity or debt financing or corporate collaboration and licensing arrangements may not be available on acceptable terms, if at all. If we are unable to raise additional capital in sufficient amounts or on terms acceptable to us, we will be prevented from pursuing acquisition, licensing, development and commercialization efforts and our ability to generate revenues and achieve or sustain profitability will be substantially harmed. We are currently exploring additional sources of capital; however, we do not know whether additional funding will be available on acceptable terms, or at all, especially given the economic conditions that currently prevail. Furthermore, any additional equity funding will likely result in significant dilution to existing stockholders, and, if we incur additional debt financing in the future, a substantial portion of our operating cash flow may be dedicated to the payment of principal and interest on such indebtedness, thus limiting funds available for our business activities. If adequate funds are not available, it would have a material adverse effect on our business, financial condition and/or results of operations and could cause us to be required to cease operations. Our financial statements include an opinion of our auditors that our recurring net losses and negative cash flows from operations raise substantial doubt about our ability to continue as a going concern. Our independent registered public accounting firm has expressed substantial doubt about our ability to continue as a going concern. We have experienced significant net losses and sustained negative cash flows from operations. In the twelve months ended September 30, 2018, we incurred a net loss of $10.3 million and used cash for operating activities of $9.0 million. We had an accumulated deficit of $85.2 million as of September 30, 2018. We expect to experience further significant net losses in 2018 and the foreseeable future. These factors raise substantial doubt about our ability to continue as a going concern for at least the next twelve months from the date of the issuance of the financial statements. As of and for the year ended September 30, 2018, our independent registered public accounting firm has included an explanatory paragraph in their audit report raising substantial doubt about our ability to continue as a going concern. Our consolidated financial statements do not include any adjustments that may result from the outcome of this uncertainty. If we are unable to obtain adequate funding from this proposed offering or in the future, or if we are unable to grow our revenue substantially to achieve and sustain profitability, amongst other factors, we may not be able to continue as a going concern, and our shareholders may lose some or all of their investment in us. Risks Relating to this Offering We will need to raise substantial additional capital in the future to fund our operations and we may be unable to raise such funds when needed and on acceptable terms. We had approximately $3.3 million in cash and cash equivalents at September 30, 2018. Net cash used in operating activities was $9.0 million for the fiscal year ended September 30, 2018. There can be no assurance that we will be able to obtain additional capital after we exhaust our current cash. The extent to which we utilize the Purchase Agreement with Aspire Capital as a source of funding will depend on a number of factors, including the prevailing market price of our Common Stock, the volume of trading in our Common Stock and the extent to which we are able to secure funds from other sources. The number of shares that we may sell to Aspire Capital under the Purchase Agreement on any given day and during the term of the agreement is limited. See "The Aspire Capital Transactions" section of this prospectus for additional information. Additionally, we and Aspire Capital may not effect any sales of shares of our Common Stock under the Purchase Agreement during the continuance of an event of default or on any trading day that the closing sale price of our Common Stock is less than $0.50 per share. Even if we are able to access the full $10 million available in the aggregate under the Purchase Agreement, we will still need additional capital to fully implement our business, operating and development plans. When we elect to raise additional funds or additional funds are required, we may raise such funds from time to time through public or private equity offerings, debt financings, corporate collaboration and licensing arrangements or other financing alternatives, as well as through sales of Common Stock to Aspire Capital under the Purchase Agreement. Additional equity or debt financing or corporate collaboration and licensing arrangements may not be available on acceptable terms, if at all. If we are unable to raise additional capital in sufficient amounts or on terms acceptable to us, we will be prevented from pursuing acquisition, licensing, development and commercialization efforts and our ability to generate revenues and achieve or sustain profitability will be substantially harmed. If we raise additional funds by issuing equity securities, our stockholders will experience dilution. Debt financing, if available, would result in increased fixed payment obligations and may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. Any debt financing or additional equity that we raise may contain terms, such as liquidation and other preferences, which are not favorable to us or our stockholders. If we raise additional funds through collaboration and licensing arrangements with third parties, it may be necessary to relinquish valuable rights to our technologies, future revenue streams or product candidates or to grant licenses on terms that may not be favorable to us. Should the financing we require to sustain our working capital needs be unavailable or prohibitively expensive when we require it, our business, operating results, financial condition and prospects could be materially and adversely affected and we may be unable to continue our operations. The sale of our Common Stock to Aspire Capital may cause substantial dilution to our existing stockholders and the sale of the shares of Common Stock acquired by Aspire Capital could cause the price of our Common Stock to decline. We are registering for sale up to an additional 2,500,000 shares that we may sell to Aspire Capital under the Purchase Agreement (which is in addition to the 1,500,000 shares that were registered by us under the May 18, 2018 registration statement in respect of shares issuable to Aspire Capital under the Purchase Agreement). It is anticipated that shares registered in this offering will be sold by Aspire Capital over a period of up to approximately 30 months from the date of this prospectus. The number of shares of Common Stock that we may sell under the Purchase Agreement may exceed 2,500,000 shares, depending on the sales price. If we elect to sell more than the 2,500,000 shares of Common Stock offered hereby, we must first register under the Securities Act the sale by Aspire Capital of any additional shares we may elect to sell to Aspire Capital before we can put such additional shares to Aspire Capital under the Purchase Agreement. Additionally, the number of shares ultimately offered for sale by Aspire Capital under this prospectus is dependent upon the number of shares we elect to sell to Aspire Capital under the Purchase Agreement. Depending upon market liquidity at the time, sales of shares of our Common Stock under the Purchase Agreement may cause the trading price of our Common Stock to decline. Aspire Capital may ultimately purchase all, some or none of the remaining $10.0 million of Common Stock that is the subject of the Purchase Agreement (in addition to the 884,671 shares which have been purchased as of the date hereof for proceeds of approximately $1.9 million), including the shares that are the subject of this prospectus together with the shares previously registered under the Purchase Agreement and the Commitment Shares. Aspire Capital may sell all, some or none of our shares that it holds or comes to hold under the Purchase Agreement. Sales by Aspire Capital of shares acquired pursuant to the Purchase Agreement under the registration statement, of which this prospectus is a part, may result in dilution to the interests of other holders of our Common Stock. The sale of a substantial number of shares of our Common Stock by Aspire Capital in this offering, or anticipation of such sales, could cause the trading price of our Common Stock to decline or make it more difficult for us to sell equity or equity-related securities in the future at a time and at a price that we might otherwise desire. However, we have the right under the Purchase Agreement to control the timing and amount of sales of our shares to Aspire Capital, and the Purchase Agreement may be terminated by us at any time at our discretion, according to the terms and conditions set forth in the Purchase Agreement. If we cannot continue to satisfy NASDAQ s continuing listing criteria, NASDAQ may subsequently delist our Common Stock, particularity given recent notice that our stockholder equity is below the required level. NASDAQ requires us to meet certain financial, public float, bid price and liquidity standards on an ongoing basis in order to continue the listing of our Common Stock. Generally, we must maintain a minimum amount of stockholders equity (generally $2.5 million) and a minimum number of holders of our securities (generally 300 round lot holders). If we fail to meet any of the continuing listing requirements, our Common Stock may be subject to delisting. As of June 30, 2018, the Company had stockholders equity in excess of $2.5 million. The Company achieved compliance through a variety of factors, including through improved revenue, certain cost cutting measures and, primarily, through the sale of securities under the common stock purchase agreement with Aspire Capital. The Company regained compliance at June 30, 2018 and remained compliant through its fiscal year ending September 30, 2018. If our Common Stock is delisted and we are not able to list our Common Stock on another national securities exchange, we expect our securities would be quoted on an over-the-counter market. If this were to occur, our stockholders could face significant material adverse consequences, including limited availability of market quotations for our Common Stock and reduced liquidity for the trading of our securities. In addition, we could experience a decreased ability to issue additional securities and obtain additional financing in the future. There can be no assurance that an active trading market for our Common Stock will develop or be sustained. We may choose to raise additional capital in order to increase our stockholders equity in order to meet the NASDAQ continued listing standards. Any additional equity financings may be financially dilutive to, and will be dilutive from an ownership perspective to our stockholders, and such dilution may be significant based upon the size of such financing. Additionally, we cannot assure that such funding will be available on a timely basis, in needed quantities, or on terms favorable to us, if at all. On February 23, 2018, the Company received a letter from The Nasdaq Stock Market ("Nasdaq") indicating that the Company was not compliant with the minimum stockholders equity requirement under Nasdaq Listing Rule 5550(b)(1) for continued listing on The Nasdaq Capital Market because the Company s stockholders equity, as reported in the Company s Quarterly Report on Form 10-Q for the period ended December 31, 2017, was below the required minimum of $2.5 million. Further, as of February 22, 2018, the Company did not meet the alternative compliance standards relating to the market value of listed securities or net income from continuing operations. This notice of noncompliance has had no immediate impact on the continued listing or trading of the Company s common stock on The Nasdaq Capital Market. The Company did increase the stockholders equity in response to the above. On May 9, 2018, the Company received a letter from Nasdaq granting the Company an extension through August 22, 2018 to regain compliance with Listing Rule 5550(b). As of June 30, 2018, the Company had stockholders equity in excess of $2.5 million and believes that it continues to be in compliance through the current date. The Company achieved compliance through a variety of factors, including through improved revenue, certain cost cutting measures and, primarily, through the sale of securities under the common stock purchase agreement with Aspire Capital. The Company regained compliance at June 30, 2018 and remained compliant through its fiscal year ending September 30, 2018. Cautionary Note Regarding Forward-Looking Statements This prospectus and the documents incorporated by reference herein contain, in addition to historical information, certain "forward-looking statements" within the meaning of Section 27A of the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, that include information relating to future events, future financial performance, strategies, expectations, competitive environment, regulation and availability of resources. These forward-looking statements include, without limitation, statements regarding: proposed new products or services; our statements concerning litigation or other matters; statements concerning projections, predictions, expectations, estimates or forecasts for our business, financial and operating results and future economic performance; statements of management s goals and objectives; trends affecting our financial condition, results of operations or future prospects; our financing plans or growth strategies; and other similar expressions concerning matters that are not historical facts. Words such as "may," "will," "should," "could," "would," "predicts," "potential," "continue," "expects," "anticipates," "future," "intends," "plans," "believes" and "estimates," and similar expressions, as well as statements in future tense, identify forward-looking statements. Forward-looking statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of the times, or by which, that performance or those results will be achieved. Forward-looking statements are based on information available at the time they are made and/or management s good faith belief as of that time with respect to future events, and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Important factors that could cause these differences include, but are not limited to: our need for immediate additional funding to support our operations and capital expenditures; our ability to successfully maintain listing of our shares of common stock on the Nasdaq Capital Market; our history of operating losses; our inability to gain widespread acceptance of our PEER Reports; our inability to prevail in convincing the United States Food and Drug Administration (the "FDA"), that our rEEG or PEER Online service does not constitute a medical device and should, therefore, not be subject to regulations; the possible imposition of fines or penalties by the FDA for alleged violations of its rules and regulations; our subsidiary in telebehavioral health may be harmed by evolving governmental regulation; our telebehaviorial health subsidiary s business model requires work with affiliated professional entities not owned by the Company; our telebehaviorial health subsidiary may require an expanded and maintained network of certified professionals; our revenue and prospects for profitability may be harmed; our business may be subject to additional regulations in the future that could increase our compliance costs; our operating results may fluctuate significantly and our stock price could decline or fluctuate if our results do not meet the expectation of analysts or investors; our inability to achieve greater and broader market acceptance of our products and services in existing and new market segments; any negative or unfavorable media coverage; our inability to generate and commercialize additional products and services; our inability to comply with the substantial and evolving regulation by state and federal authorities, which could hinder, delay or prevent us from commercializing our products and services; our inability to successfully compete against existing and future competitors; delays or failure in clinical trials; any losses we may incur as a result of litigation; our inability to manage and maintain the growth of our business; our inability to protect our intellectual property rights; employee relations; possible security breaches; possible medical liability claims; possible personal injury claims in the future; and our limited trading volume. Additional risks, uncertainties and other factors that may cause our actual results, performance or achievements to be different from those expressed or implied in our written or oral forward-looking statements may be found in this prospectus under the heading "Risk Factors" and in our Annual Report on Form 10-K for the year ended September 30, 2018 under the headings "Risk Factors" and "Business," as updated in our Quarterly Report(s) on Form 10-Q. Forward-looking statements speak only as of the date they are made. You should not put undue reliance on any forward-looking statements. We assume no obligation to update forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information, except to the extent required by applicable securities laws. If we do update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements. The Aspire Capital TransactionS The Purchase Agreement General On May 15, 2018, we entered into the Purchase Agreement, which provides that, upon the terms and subject to the conditions and limitations set forth therein, Aspire Capital is committed to purchase up to an aggregate of $10.0 million of our shares of Common Stock over the term of the Purchase Agreement. In consideration for entering into the Purchase Agreement, concurrently with the execution of the Purchase Agreement, we issued to Aspire Capital 250,000 shares of our Common Stock as a commitment fee (the "Commitment Shares"). Concurrently with entering into the Purchase Agreement, we also entered into the Registration Rights Agreement, in which we agreed to file one or more registration statements as permissible and necessary to register under the Securities Act, the sale of the shares of our Common Stock that have been and may be issued to Aspire Capital under the Purchase Agreement. On May 18, 2018, we filed a registration statement for 1,750,000 shares of Common Stock, of which 1,500,000 represented shares issuable to Aspire Capital under the Purchase Agreement. As of the date of filing of this registration statement, we had issued 884,671 shares of Common Stock to Aspire Capital under the Purchase Agreement for proceeds of approximately $1.9 million (excluding the 250,000 commitment shares thereunder) and there were 615,329 shares available under the May 18, 2018 registration statement for purchase under such registration statement. As of December 13, 2018, there were 7,555,004 shares of our Common Stock outstanding (of which 5,279,023 are held by non-affiliates), excluding the shares that may be issuable to Aspire Capital pursuant to the Purchase Agreement. If all of such 2,500,000 shares of our Common Stock offered hereby were issued and outstanding as of the date hereof, such shares would represent 24.9% of the total Common Stock outstanding as of the date hereof or 32.1% of the non-affiliate shares of Common Stock (and when taken together with the 1,750,000 shares previously registered on the May 18, 2018 registration statement (assuming all shares were sold) would represent 39.8% of the total Common Stock outstanding as of the date hereof or 50.6% of the non-affiliate shares of Common Stock). Pursuant to the Purchase Agreement and the Registration Rights Agreement, we are registering 2,500,000 shares of our Common Stock under the Securities Act, which we may issue to Aspire Capital after this registration statement is declared effective under the Securities Act. All 2,500,000 shares of Common Stock are being offered pursuant to this prospectus. Under the Purchase Agreement, we have the right but not the obligation to issue more than the 2,500,000 shares of Common Stock included in this prospectus to Aspire Capital (in addition to the 1,500,000 shares registered under the May 18, 2018 registration statement, of which as of the date of this registration statement 884,671 shares have been sold to Aspire Capital for gross proceeds of approximately $1.9 million). As of the date hereof, we do not have any plans or intent to issue to Aspire Capital any shares of Common Stock in addition to the 2,500,000 shares of Common Stock offered hereby (or the remaining 615,329 shares available under the May 18, 2018 registration statement). After the Securities and Exchange Commission has declared effective the registration statement of which this prospectus is a part, on any trading day on which the closing sale price of our Common Stock is not less than $0.50 per share, we have the right, in our sole discretion, to present Aspire Capital with a Purchase Notice, directing Aspire Capital (as principal) to purchase up to 50,000 shares of our Common Stock per business day, up to $10.0 million of our Common Stock in the aggregate over the term of the Purchase Agreement, at a Purchase Price calculated by reference to the prevailing market price of our Common Stock over the preceding 12-business day period (as more specifically described below); however, no sale pursuant to a Purchase Notice may exceed $300,000 per trading day. In addition, on any date on which we submit a Purchase Notice to Aspire Capital for 50,000 Purchase Shares, we also have the right, in our sole discretion, to present Aspire Capital with a VWAP Purchase Notice directing Aspire Capital to purchase an amount of stock equal to up to 30% of the aggregate shares of the Company s Common Stock traded on the Nasdaq Capital Market on the next trading day, subject to the VWAP Purchase Share Volume Maximum and the VWAP Minimum Price Threshold. The VWAP Purchase Price is calculated by reference to the prevailing market price of our Common Stock (as more specifically described below). The Purchase Agreement provides that the Company and Aspire Capital shall not affect any sales under the Purchase Agreement on any purchase date where the closing sale price of our Common Stock is less than the Floor Price. There are no trading volume requirements or restrictions under the Purchase Agreement, and we will control the timing and amount of any sales of our Common Stock to Aspire Capital. Aspire Capital has no right to require any sales by us, but is obligated to make purchases from us as we direct in accordance with the Purchase Agreement. There are no limitations on use of proceeds, financial or business covenants, restrictions on future financings, rights of first refusal, participation rights, penalties or liquidated damages in the Purchase Agreement. Aspire Capital may not assign its rights or obligations under the Purchase Agreement. The Purchase Agreement may be terminated by us at any time, at our discretion, without any penalty or cost to us. Purchase Of Shares Under The Purchase Agreement Under the Purchase Agreement, on any trading day selected by us on which the closing sale price of our Common Stock exceeds $0.50 per share, we may direct Aspire Capital to purchase up to 50,000 shares of our Common Stock per trading day. The Purchase Price of such shares is equal to the lesser of: the lowest sale price of our Common Stock on the purchase date; or the arithmetic average of the three lowest closing sale prices for our Common Stock during the twelve consecutive trading days ending on the trading day immediately preceding the purchase date. In addition, on any date on which we submit a Purchase Notice to Aspire Capital for purchase of 50,000 shares, we also have the right to direct Aspire Capital to purchase an amount of stock equal to up to 30% of the aggregate shares of our Common Stock traded on the Nasdaq Capital Market on the next trading day, subject to the VWAP Purchase Share Volume Maximum and the VWAP Minimum Price Threshold, which is equal to the greater of (a) 80% of the closing price of the Company s Common Stock on the business day immediately preceding the VWAP Purchase Date or (b) such higher price as set forth by the Company in the VWAP Purchase Notice. The VWAP Purchase Price of such shares is the lower of: the Closing Sale Price on the VWAP Purchase Date; or 95% of the volume-weighted average price for our Common Stock traded on the Nasdaq Capital Market: on the VWAP Purchase Date, if the aggregate shares to be purchased on that date have not exceeded the VWAP Purchase Share Volume Maximum or during that portion of the VWAP Purchase Date until such time as the sooner to occur of (i) the time at which the aggregate shares traded on the Nasdaq Capital Market exceed the VWAP Purchase Share Volume Maximum or (ii) the time at which the sale price of the Company s Common Stock falls below the VWAP Minimum Price Threshold. The Purchase Price will be adjusted for any reorganization, recapitalization, non-cash dividend, stock split, or other similar transaction occurring during the trading day(s) used to compute the Purchase Price. We may deliver multiple Purchase Notices and VWAP Purchase Notices to Aspire Capital from time to time during the term of the Purchase Agreement, so long as the most recent purchase has been completed. As of the date of this registration statement, we have sold 884,671 shares to Aspire Capital under the Purchase Agreement for gross proceeds of approximately $1.9 million. Minimum Share Price Under the Purchase Agreement, we and Aspire Capital may not effect any sales of shares of our Common Stock under the Purchase Agreement on any trading day that the closing sale price of our Common Stock is less than $0.50 per share. Events of Default No sales are permitted to be made under the Purchase Agreement upon the occurrence of any of the following, among other, events of default: the effectiveness of any registration statement that is required to be maintained effective pursuant to the terms of the Registration Rights Agreement between us and Aspire Capital lapses for any reason (including, without limitation, the issuance of a stop order) or is unavailable to Aspire Capital for sale of our shares of Common Stock, and such lapse or unavailability continues for a period of ten consecutive business days or for more than an aggregate of thirty business days in any 365-day period, which is not in connection with a post-effective amendment to any such registration statement; in connection with any post-effective amendment to such registration statement that is required to be declared effective by the SEC such lapse or unavailability may continue for a period of no more than 30 consecutive business days; the suspension from trading or failure of our Common Stock to be listed on our principal market for a period of three consecutive business days; the delisting of our Common Stock from our principal market, provided our Common Stock is not immediately thereafter trading on the New York Stock Exchange, the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Select Market, the Nasdaq Global Market, the OTB Bulletin Board or the OTCQB marketplace or OTCQX marketplace of the OTC Markets Group; our transfer agent s failure to issue to Aspire Capital shares of our Common Stock which Aspire Capital is entitled to receive under the Purchase Agreement within five business days after an applicable purchase date; any breach by us of the representations or warranties or covenants contained in the Purchase Agreement or any related agreements which could have a material adverse effect on us, subject to a cure period of five business days; if we become insolvent or are generally unable to pay our debts as they become due; or any participation or threatened participation in insolvency or bankruptcy proceedings by or against us. The Purchase Agreement will be automatically terminated in the event of any participation in insolvency or bankruptcy proceedings by or against us. Our Termination Rights The Purchase Agreement may be terminated at any time after the Commencement Date (as defined in the Purchase Agreement) by the Company for any reason or for no reason without any liability of the Company except with respect to limited survival provisions set forth in in the Purchase Agreement, the Registration Rights Agreement and the Company s obligations with respect to pending purchases, each as set forth more fully in the Purchase Agreement. No Short-Selling or Hedging by Aspire Capital Aspire Capital has agreed that neither it nor any of its agents, representatives and affiliates shall engage in any direct or indirect short-selling or hedging of our Common Stock during any time prior to the termination of the Purchase Agreement. Effect of Performance of the Purchase Agreement on Our Stockholders The Purchase Agreement does not limit the ability of Aspire Capital to sell any or all of the 2,500,000 shares registered in this offering. It is anticipated that shares registered in this offering will be sold over a period of up to approximately thirty months from the date of this prospectus. The sale by Aspire Capital of a significant amount of shares registered in this offering at any given time could cause the market price of our Common Stock to decline and/or to be highly volatile. Aspire Capital may ultimately purchase all, some or none of the 2,500,000 shares of Common Stock not yet issued but registered in this offering. After it has acquired such shares, it may sell all, some or none of such shares. Therefore, sales to Aspire Capital by us pursuant to the Purchase Agreement also may result in substantial dilution to the interests of other holders of our Common Stock. However, we have the right to control the timing and amount of any sales of our shares to Aspire Capital and the Purchase Agreement may be terminated by us as given in "Our Termination Rights," above. Percentage of Outstanding Shares After Giving Effect to the Purchased Shares Issued to Aspire Capital In connection with entering into the Purchase Agreement, we authorized the sale to Aspire Capital of up to $10.0 million of our shares of Common Stock. Subject to any required approval by our board of directors, we have the right but not the obligation to issue more than the 2,500,000 shares included in this prospectus to Aspire Capital under the Purchase Agreement (which is in addition to the 1,500,000 shares included in the prospectus under the registration statement dated May 18, 2018 representing shares issuable to Aspire Capital under the Purchase Agreement). In the event we elect to issue more than 2,500,000 shares under the Purchase Agreement registered hereunder, we will be required to file a new registration statement and have it declared effective by the SEC. The number of shares ultimately offered for sale by Aspire Capital in this offering is dependent upon the number of shares purchased by Aspire Capital under the Purchase Agreement. The following table sets forth the number and percentage of outstanding shares to be held by Aspire Capital after giving effect to the sale of shares of Common Stock issued to Aspire Capital at varying purchase prices: Assumed Average Purchase Price Estimated Proceeds from Sale of Purchase Shares to Aspire Capital Under the Purchase Agreement Registered in this Offering(3) Estimated Number of Purchase Shares to be Issued in this Offering at the Assumed Average Purchase Price(1) (3) Estimated Percentage of Outstanding Shares After Giving Effect to the Purchase Shares Issued to Aspire Capital(2) $0.50 $1,250,000 2,500,000 24.9% $1.00 $2,500,000 2,500,000 24.9% $1.50 $3,750,000 2,500,000 24.9% $2.50 $6,250,000 2,500,000 24.9% $5.00 $8,100,000 1,620,000 17.7% (1) Excludes 250,000 Commitment Shares issued under the Purchase Agreement between the Company and Aspire Capital. Also excludes the 1,500,000 shares included in the prospectus dated May 18, 2018 for which 884,671 shares have been sold to Aspire Capital as of the date of this registration statement. (2) The denominator is based on 7,555,004 shares outstanding as of December 13, 2018, which includes the shares previously issued to Aspire Capital, and the number of shares set forth in the adjacent column which we would have sold to Aspire Capital. The numerator is based on the number of shares which we may issue to Aspire Capital under the Purchase Agreement (that are the subject of this offering) at the corresponding assumed purchase price set forth in the adjacent column. (3) Proceeds under this registration are capped at $8.1 million, as total proceeds are capped at $10.0 million, with approximately $1.9 million in proceeds received by the Company prior to the date hereof under the Purchase Agreement. The maximum proceeds under this registration statement will be reduced to reflect the sales of the 615,329 shares available under the May 18, 2018 registration statement which will be sold prior to any shares under this registration statement. Use of Proceeds This prospectus relates to shares of our Common Stock that may be offered and sold from time to time by Aspire Capital. We will not receive any proceeds upon the sale of shares by Aspire Capital. However, we may receive proceeds up to an aggregate of $10 million under the Purchase Agreement with Aspire Capital (of which we have received approximately $1.9 million in proceeds from the sale of 884,671 shares under the Purchase Agreement as of the date of this registration statement). The proceeds received from the sale of the shares under the Purchase Agreement are expected be used for working capital and general corporate purposes, including advancement of our PEER product. However, we cannot guarantee that we will receive any proceeds in connection with the Purchase Agreement because we may be unable or choose not to issue and sell any securities pursuant to the Purchase Agreement. This anticipated use of net proceeds from the sale of our Common Stock to Aspire Capital under the Purchase Agreement represents our intentions based upon our current plans and business conditions. Selling Stockholder The selling stockholder may from time to time offer and sell any or all of the shares of our Common Stock set forth below pursuant to this prospectus. When we refer to the "selling stockholder" in this prospectus, we mean the entity listed in the table below, and its respective pledgees, donees, permitted transferees, assignees, successors and others who later come to hold any of the selling stockholder s interests in shares of our Common Stock other than through a public sale. The following table sets forth, as of the date of this prospectus, the name of the selling stockholder for whom we are registering shares for sale to the public, the number of shares of Common Stock beneficially owned by the selling stockholder prior to this offering, the total number of shares of Common Stock that the selling stockholder may offer pursuant to this prospectus and the number of shares of Common Stock that the selling stockholder will beneficially own after this offering. Except as noted below, the selling stockholder does not have, or within the past three years has not had, any material relationship with us or any of our predecessors or affiliates and the selling stockholder is not or was not affiliated with registered broker-dealers. Based on the information provided to us by the selling stockholder, assuming that the selling stockholder sells all of the shares of our Common Stock beneficially owned by it that have been registered by us and does not acquire any additional shares during the offering, the selling stockholder will not own any shares other than those appearing in the column entitled "Beneficial Ownership After This Offering." We cannot advise you as to whether the selling stockholder will in fact sell any or all of such shares of Common Stock. In addition, the selling stockholder may have sold, transferred or otherwise disposed of, or may sell, transfer or otherwise dispose of, at any time and from time to time, the shares of our Common Stock in transactions exempt from the registration requirements of the Securities Act of 1933 after the date on which it provided the information set forth in the table below: Beneficial Ownership After this Offering(1) Name Shares of Common Stock Owned Prior to this Offering Shares of Common Stock Being Offered Number of Shares %(2) Aspire Capital Fund, LLC(3) 0 2,500,000 2,500,000 24.9 * Represents less than 1% of outstanding shares. (1) Assumes the sale of all shares of Common Stock registered pursuant to this prospectus, although the selling stockholder is under no obligation known to us to sell any shares of Common Stock at this time. (2) Based on 7,555,004 shares of Common Stock outstanding on December 7, 2018, and assumes the issuance and sale by the Company to Aspire Capital of all shares under the Purchase Agreement and the resale by Aspire of all shares being offered pursuant to this registration statement. (3) Aspire Capital Partners LLC ("Aspire Partners") is the Managing Member of Aspire Capital Fund LLC ("Aspire Fund"). SGM Holdings Corp ("SGM") is the Managing Member of Aspire Partners. Mr. Steven G. Martin ("Mr. Martin") is the president and sole shareholder of SGM, as well as a principal of Aspire Partners. Mr. Erik J. Brown ("Mr. Brown") is the president and sole shareholder of Red Cedar Capital Corp ("Red Cedar"), which is a principal of Aspire Partners. Mr. Christos Komissopoulos ("Mr. Komissopoulos") is president and sole shareholder of Chrisko Investors Inc. ("Chrisko"), which is a principal of Aspire Partners. Mr. William F. Blank, III ("Mr. Blank") is president and sole shareholder of WML Ventures Corp. ("WML Ventures"), which is a principal of Aspire Partners. Each of Aspire Partners, SGM, Red Cedar, Chrisko, WML Ventures, Mr. Martin, Mr. Brown, Mr. Komissopoulos and Mr. Blank may be deemed to be a beneficial owner of Common Stock held by Aspire Fund. Each of Aspire Partners, SGM, Red Cedar, Chrisko, WML Ventures, Mr. Martin, Mr. Brown, Mr. Komissopoulos and Mr. Blank disclaims beneficial ownership of the Common Stock held by Aspire Fund. PLAN OF DISTRIBUTION The Common Stock offered by this prospectus is being offered by Aspire Capital, the selling stockholder. The Common Stock may be sold or distributed from time to time by the selling stockholder directly to one or more purchasers or through brokers, dealers, or underwriters who may act solely as agents at market prices prevailing at the time of sale, at prices related to the prevailing market prices, at negotiated prices, or at fixed prices, which may be changed. The sale of the Common Stock offered by this prospectus may be affected in one or more of the following methods: ordinary brokers transactions; transactions involving cross or block trades; through brokers, dealers, or underwriters who may act solely as agents; "at the market" into an existing market for the Common Stock; in other ways not involving market makers or established business markets, including direct sales to purchasers or sales effected through agents; in privately negotiated transactions; or any combination of the foregoing. In order to comply with the securities laws of certain states, if applicable, the shares may be sold only through registered or licensed brokers or dealers. In addition, in certain states, the shares may not be sold unless they have been registered or qualified for sale in the state or an exemption from the registration or qualification requirement is available and complied with. The selling stockholder may transfer the shares of Common Stock by other means not described in this prospectus. Brokers, dealers, underwriters, or agents participating in the distribution of the shares as agents may receive compensation in the form of commissions, discounts, or concessions from the selling stockholder and/or purchasers of the Common Stock for whom the broker-dealers may act as agent. Aspire Capital has informed us that each such broker-dealer will receive commissions from Aspire Capital which will not exceed customary brokerage commissions. Aspire Capital is an "underwriter" within the meaning of the Securities Act. We have agreed to provide indemnification and contribution to the selling stockholder against certain civil liabilities, including liabilities under the Securities Act. Neither we nor Aspire Capital can presently estimate the amount of compensation that any agent will receive. We know of no existing arrangements between Aspire Capital, any other stockholder, broker, dealer, underwriter, or agent relating to the sale or distribution of the shares offered by this prospectus. At the time a particular offer of shares is made, a prospectus supplement, if required, will be distributed that will set forth the names of any agents, underwriters, or dealers and any compensation from the selling stockholder, and any other required information. We will pay all of the expenses incident to the registration, offering, and sale of the shares to the public other than commissions or discounts of underwriters, broker-dealers, or agents. We have agreed to indemnify Aspire Capital and certain other persons against certain liabilities in connection with the offering of shares of Common Stock offered hereby, including liabilities arising under the Securities Act or, if such indemnity is unavailable, to contribute amounts required to be paid in respect of such liabilities. Aspire Capital has agreed to indemnify us against liabilities under the Securities Act that may arise from certain written information furnished to us by Aspire Capital specifically for use in this prospectus or, if such indemnity is unavailable, to contribute amounts required to be paid in respect of such liabilities. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers, and controlling persons, we have been advised that in the opinion of the SEC this indemnification is against public policy as expressed in the Securities Act and is therefore, unenforceable. Aspire Capital and its affiliates have agreed not to engage in any direct or indirect short selling or hedging of our Common Stock during the term of the Purchase Agreement. We have advised Aspire Capital that while it is engaged in a distribution of the shares included in this prospectus it is required to comply with Regulation M promulgated under the Securities Exchange Act of 1934, as amended. With certain exceptions, Regulation M precludes the selling stockholder, any affiliated purchasers, and any broker-dealer or other person who participates in the distribution from bidding for or purchasing, or attempting to induce any person to bid for or purchase any security which is the subject of the distribution until the entire distribution is complete. Regulation M also prohibits any bids or purchases made in order to stabilize the price of a security in connection with the distribution of that security. All of the foregoing may affect the marketability of the shares offered hereby this prospectus. We may suspend the sale of shares by Aspire Capital pursuant to this prospectus for certain periods of time for certain reasons, including if the prospectus is required to be supplemented or amended to include additional material information. This offering will terminate on the date that all shares offered by this prospectus have been sold by Aspire Capital. Legal Matters The validity of the securities offered by this prospectus will be passed upon for us by Dentons US LLP, New York, New York. Experts Marcum, LLP, our independent registered public accounting firm, has audited our consolidated financial statements included in our Annual Report on Form 10-K for the years ended September 30, 2018 and 2017, which are incorporated by reference in this prospectus and elsewhere in the registration statement. Our consolidated financial statements are incorporated by reference in reliance on the report of Marcum, LLP given their authority as experts in accounting and auditing. Where You Can Find More Information We have filed with the SEC a registration statement on Form S-1 under the Securities Act with respect to the shares of Common Stock being offered by this prospectus. This prospectus does not contain all of the information in the registration statement of which this prospectus is a part and the exhibits to such registration statement. For further information with respect to us and the Common Stock offered by this prospectus, we refer you to the registration statement of which this prospectus is a part and the exhibits to such registration statement. Statements contained in this prospectus as to the contents of any contract or any other document are not necessarily complete, and in each instance, we refer you to the copy of the contract or other document filed as an exhibit to the registration statement of which this prospectus is a part. Each of these statements is qualified in all respects by this reference. You may read and copy the registration statement of which this prospectus is a part, as well as our reports, proxy statements and other information, at the SEC s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for more information about the operation of the Public Reference Room. The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, including MYnd Analytics, Inc. The SEC s Internet site can be found at http://www.sec.gov. You may also request a copy of these filings, at no cost, by writing us at 26522 La Alameda, Suite 290, Mission Viejo, California 92691 or telephoning us at (949) 420-4400. We are subject to the information and reporting requirements of the Securities Exchange Act of 1934, as amended, and, in accordance with this law, file periodic reports, proxy statements and other information with the SEC. These periodic reports, proxy statements and other information are available for inspection and copying at the SEC s public reference facilities and the website of the SEC referred to above. We also maintain a website at www.myndanalytics.com. You may access these materials free of charge as soon as reasonably practicable after they are electronically filed with, or furnished to, the SEC. Information contained on our website is not a part of this prospectus and the inclusion of our website address in this prospectus is an inactive textual reference only. Incorporation of Certain Information by Reference The SEC allows us to incorporate by reference the information and reports we file with it, which means that we can disclose important information to you by referring you to these documents. The information incorporated by reference is an important part of this prospectus. We are incorporating by reference the documents listed below (other than information furnished under Item 2.02 or Item 7.01 of Form 8-K and exhibits filed on such form that are related to such items unless such Form 8-K expressly provides to the contrary), which we have already filed with the SEC: our Annual Report on Form 10-K for the year ended September 30, 2018, filed on December 11, 2018; our Current Report on Form 8-K filed on December 12, 2018; the description of our Common Stock set forth in the Registrant s Registration Statement on Form 8-A (File No. 001-35527), filed with the SEC on April 26, 2012 and July 13, 2017, including any amendments or reports filed for the purpose of updating such description. We also incorporate by reference any future filings (other than current reports furnished under Item 2.02 or Item 7.01 of Form 8-K and exhibits filed on such form that are related to such items unless such Form 8-K expressly provides to the contrary) made with the SEC pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended, including those made after the date of the initial filing of the registration statement of which this prospectus is a part and prior to effectiveness of such registration statement, until we file a post-effective amendment that indicates the termination of the offering of the securities made by this prospectus and will become a part of this prospectus from the respective dates that such documents are filed with the SEC. Any statement contained herein or in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes hereof or of the related prospectus supplement to the extent that a statement contained herein or in any other subsequently filed document which is also incorporated or deemed to be incorporated herein modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this prospectus. Documents incorporated by reference are available from us, without charge. You may obtain documents incorporated by reference in this prospectus by requesting them in writing or by telephone at the following address: MYnd Analytics, Inc. 26522 La Alameda, Suite 290 Mission Viejo, California 92691 Telephone: (949) 420-4400 You also may access these filings on our Internet site at www.myndanalytics.com. Our web site and the information contained on that site, or connected to that site, are not incorporated into this prospectus or the registration statement of which this prospectus is a part. This prospectus is part of a registration statement we filed with the SEC. We have incorporated exhibits into the registration statement of which this prospectus is a part. You should read the exhibits carefully for provisions that may be important to you. Neither we nor the selling stockholder authorized anyone to provide any information or to make any representations other than those contained in this prospectus or in any free writing prospectus prepared by or on behalf of us or to which we have referred you. We take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. This prospectus is an offer to sell only the shares offered hereby, but only under the circumstances and in the jurisdictions where it is lawful to do so. The information contained in this prospectus or in any applicable free writing prospectus is current only as of its date, regardless of its time of delivery. 2,500,000 Shares Common Stock PROSPECTUS , 2018 PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 13. Other Expenses of Issuance and Distribution. The following table sets forth the costs and expenses, payable by the Company in connection with the registration and sale of the Common Stock being registered. All amounts are estimates except the SEC registration fee. Amount SEC registration fee $384.81 Printing and mailing expenses 5,000.00 Accounting fees and expenses 7,000.00 Legal fees and expenses 25,000.00 Transfer agent fees and expenses 5,000.00 Miscellaneous 2,000.00 Total expenses $44,384.81 ITEM 14. Indemnification of Directors and Officers. The Delaware General Corporation Law and certain provisions of our certificate of incorporation and bylaws under certain circumstances provide for indemnification of our officers, directors and controlling persons against liabilities which they may incur in such capacities. A summary of the circumstances in which such indemnification is provided for is contained herein, but this description is qualified in its entirety by reference to our certificate of incorporation, bylaws and to the statutory provisions. In general, any officer, director, employee or agent may be indemnified against expenses, fines, settlements or judgments arising in connection with a legal proceeding to which such person is a party, if that person s actions were in good faith, were believed to be in our best interest, and with respect to any criminal action or proceeding, such person had no reasonable cause to believe their actions were unlawful. Unless such person is successful upon the merits in such an action, indemnification may be awarded only after a determination by independent decision of the board of directors, by legal counsel, or by a vote of the stockholders, that the applicable standard of conduct was met by the person to be indemnified. The circumstances under which indemnification is granted in connection with an action brought on our behalf is generally the same as those set forth above; however, with respect to such actions, indemnification is granted only with respect to expenses actually incurred in connection with the defense or settlement of the action. In such actions, unless the court determines otherwise, the person to be indemnified must have acted in good faith and in a manner believed to have been in our best interest, and have not been adjudged liable to the corporation. Indemnification may also be granted pursuant to the terms of agreements which we are currently party to with each of our directors and executive officers, agreements which we may enter into in the future or pursuant to a vote of stockholders or directors. Delaware law and our certificate of incorporation also grant the power to us to purchase and maintain insurance which protects our officers and directors against any liabilities incurred in connection with their service in such a position, and such a policy may be obtained by us. A stockholder s investment may be adversely affected to the extent we pay the costs of settlement and damage awards against directors and officers as required by these indemnification provisions. There is no pending litigation or proceeding involving any of our directors, officers or employees regarding which indemnification by us is sought, nor are we aware of any threatened litigation that may result in claims for indemnification. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling us pursuant to the foregoing provisions, we have been informed that, in the opinion of the SEC, this indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable. ITEM 15. Recent Sales of Unregistered Securities. The Company has sold the securities described below within the past three years which were not registered under the Securities Act. All of the sales listed below were made pursuant to an exemption from registration afforded by Section 4(a)(2) of the Securities Act and Regulation D thereunder, as the securities were issued to accredited investors, without a view to distribution, and were not issued through any general solicitation or advertisement. Private Placement of Convertible Notes Between September 22, 2014, and July 20, 2015, the Company entered into a Note Purchase Agreement (the "Original Note Purchase Agreement") in connection with a bridge financing, with nine accredited investors, including lead investor RSJ Private Equity investi n fond s prom nn m z kladn m kapit lem ("RSJ PE"). Pursuant to the Original Note Purchase Agreement, the Company issued fifteen secured convertible promissory notes (each, a "September 2014 Note") in the aggregate principal amount of $2.29 million. Of this amount, RSJ PE purchased a September 2014 Note for $750,000. Michal Votruba, a Director for Life Sciences for the RSJ/Gradus Fund, subsequently joined our Board on July 30, 2015. The September 2014 Notes were also purchased by four additional affiliates of the Company (refer to the Note Issuance and Conversion Table below). The Original Note Purchase Agreement provided for the issuance and sale of September 2014 Notes in the aggregate principal amount of up to $2.5 million, in one or more closings to occur over a six-month period beginning September 22, 2014. The Original Note Purchase Agreement also provided that the Company and the holders of the September 2014 Notes enter into a registration rights agreement covering the registration of the resale of the shares of the Common Stock underlying the September 2014 Notes. On April 14, 2015, the Company entered into Amendment No. 1 to the Original Note Purchase Agreement with the majority of the noteholders in principal, dated as of April 14, 2015 ("Amendment No. 1"), pursuant to which: (i) the aggregate principal amount of notes provided for issuance was increased by $0.5 million to a total of $3.0 million, and (ii) the period to raise the $3.0 million was extended to September 30, 2015. The Company subsequently amended and restated the Original Note Purchase Agreement solely to update for the changes made pursuant to Amendment No. 1 (such amended and restated agreement, together with the Original Note Purchase Agreement, the "Note Purchase Agreement"). On September 14, 2015, the Company entered into an Omnibus Amendment (the "Omnibus Amendment") to the Note Purchase Agreement and the notes purchased and sold pursuant thereto, with the majority of the noteholders to fix the conversion price of all notes at $10.00 per share (as adjusted for stock splits, stock dividends, combinations or the like affecting the Common Stock) (the "Fixed Conversion Price") (i) automatically, in the event of a qualified financing of not less than $5 million, or (ii) voluntarily, within 15 days prior to the maturity date of the note. The Omnibus Amendment also amended the form of note attached to the Note Purchase Agreement to reflect the Fixed Conversion Price. Subsequently thereto, on September 14, 15 and 24, 2015, the Company entered into a Note Purchase Agreement, as amended by the Omnibus Amendment, with each of six accredited investors, in connection with a bridge financing. Pursuant to these Note Purchase Agreements, the Company issued an aggregate principal amount of $710,000 of secured convertible promissory notes (collectively, the "September 2015 Notes," and together with the September 2014 Notes and all other notes purchased and sold pursuant to the Note Purchase Agreement, the "Notes"), which amount also represents the gross proceeds to the Company from the September 2015 Notes. Four of the six September 2015 Notes were purchased by affiliates of the Company, or an entity under such affiliate s control (refer to the Note Issuance and Conversion Table below) Through December 23, 2015, and prior to further amendments to the Notes, all of the Notes were scheduled to mature on March 21, 2016, (subject to earlier conversion or prepayment), and earned interest at a rate of 5% per annum with interest payable at maturity. The Notes could not be prepaid without the prior written consent of the holder of such Notes. The Notes were secured by a security interest in the Company s intellectual property, as detailed in a security agreement. Upon a change of control of the Company, the holder of a Note had the option to have the Note repaid with a premium equal to 50% of the outstanding principal. On December 23, 2015, the Company entered into a Second Amended and Restated Note and Warrant Purchase Agreement (which further amended and restated the Note Purchase Agreement, as modified by the Omnibus Amendment) (the "Second Amended Note & Warrant Agreement") with each of 16 accredited investors, pursuant to which (i) the aggregate principal amount of Notes available for issuance was increased from $3.0 million to up to $6.0 million, (ii) the maturity date of the Notes outstanding prior to such amendment was extended from March 21, 2016 to December 31, 2017, (iii) the time during which Notes may be issued was extended and (iv) certain warrants were issued to holders of both previously issued and Notes issued under the Second Amended Note &Warrant Agreement. Pursuant to the Second Amended Note & Warrant Agreement, on December 23 and December 28, 2015, the Company issued to the two purchasers thereof, who are both affiliates (refer to the Note Issuance and Conversion Table below) of the Company, (i) an aggregate principal amount of $1,000,000 of secured convertible promissory notes (each, a "December 2015 Note"), which amount also represents the gross proceeds to the Company from the December 2015 Notes, and (ii) a Note Warrant to each holder of December 2015 Notes to purchase the Company s Common Stock, in an amount equal to 100% of the shares underlying their December 2015 Note (each, a "Note Warrant"). Each Note Warrant was exercisable, in whole or in part, during the period beginning on the date of its issuance, and ending on the earlier of (i) December 31, 2020 and (ii) the date that was forty-five (45) days following the date on which the daily closing price of shares of the Company s Common Stock quoted on the OTCQB Venture Marketplace (or other bulletin board or exchange on which the Company s Common Stock is traded or listed) exceeded $50.00 for at least ten (10) consecutive trading days. The Note Warrants were subsequently cancelled. For additional details on cancellation of the Note Warrants, see " Note Conversion and Warrant Cancellation" below. Between February 23, 2016 and June 30, 2016, the Company issued to seven accredited investor purchasers thereof (i) an aggregate principal amount of $1,100,000 in eight separate Notes and (ii) a warrant to each holder of such Notes to purchase the Company s Common Stock, in an amount equal to 100% of the shares underlying their respective Note (each, also a "Note Warrant"). A total of 110,000 shares of Common Stock in the aggregate were underlying these Note Warrants. Five of the purchasers were affiliates of the Company (refer to the Note Issuance and Conversion Table below). The Note Warrants were subsequently cancelled. For additional details on cancellation of the Note Warrants, see " Note Conversion and Warrant Cancellation" below. Also on December 23, 2015, in consideration for the agreement to extend the maturity date of the Notes, the Company issued to holders of all Notes outstanding prior to the date of the Second Amended Note & Warrant Agreement, warrants to purchase an aggregate of 300,000 shares of Common Stock (the "Extension Warrants", together with the Note Warrants, the "Warrants"). All Warrants had identical terms. Each such holder was issued an Extension Warrant to purchase Common Stock in an amount equal to 100% of the shares underlying each such holder s previously outstanding Notes. Extension Warrants were issued to affiliates (refer to the Note Issuance and Conversion Table below). All Note Warrants and Extension Warrants were subsequently cancelled upon conversion of the Notes. For additional details on cancellation of the Warrants, see " Note Conversion and Warrant Cancellation" below. On August 15, 2016, the Company entered into an Amendment No. 1 to the Second Amended Note and Warrant Agreement with the investors party thereto to extend the time during which the Notes and the Warrants could be issued under the Second Amended Note and Warrant Agreement from August 11, 2016 to September 1, 2016. On September 19, 2016, the Company entered into a Second Omnibus Amendment (the "Second Omnibus Amendment"), with a majority of over 80% of the noteholders, thereby amending: (i) the Notes, (ii) the Second Amended Note and Warrant Agreement, as amended and (iii) the Warrants. Pursuant to the Second Omnibus Amendment, the Company had the option, exercisable at any time after September 1, 2016, to mandatorily convert all Notes into shares of the Company s Common Stock at $5.00 per share (the "Mandatory Conversion"). Note Conversion and Warrant Cancellation On September 19, 2016, pursuant to the Second Omnibus Amendment, the Company exercised the Mandatory Conversion and, on September 21, 2016, (i) converted the entire outstanding principal balance of $6,000,000, plus accrued interest of $317,000 on all of the Notes into 1,263,406 shares of the Company s Common Stock at a conversion price of $5.00 per share and (ii) cancelled all Warrants. The below table sets forth details regarding the shares issued to certain related parties upon the Company s exercise of the Mandatory Conversion: Note Issuance and Conversion Table: Note Holder Principal Amount Accrued Interest at Conversion Shares issued on Conversion Original Note Purchase Agreement Note Date Range Sept 22, 2014 to July 20, 2015 RSJ Private Equity (1) $ 750,000 $ 76,200 165,246 John Pappajohn (2) 200,000 20,400 44,089 John Pappajohn (5) 200,000 14,200 42,820 Tierney Family Trust (3) 540,000 46,000 117,199 Follman Family Trust (4) 100,000 7,700 21,538 Oman Ventures (6) 200,000 20,400 44,089 4 Accredited Investors 300,000 30,600 66,112 Subtotal for First Round $ 2,290,000 Omnibus Amendment Sept 14, 2015 Note Date Range Sept 14, 2015 to September 24, 2015 RSJ (1) $ 350,000 17,300 73,462 Robin Smith (2) 60,000 3,100 12,611 John Pappajohn (2) 100,000 5,100 21,015 Follman Family Trust (4) 150,000 7,600 31,522 2 Accredited Investors 50,000 2,500 10,508 Subtotal for Second Round $ 710,000 Second Amended Note December 23 & 28, 2015 RSJ (1) $ 750,000 27,300 155,465 John Pappajohn (2) 250,000 9,300 51,856 Subtotal for Third Round $ 1,000,000 Note Date Range Feb 23, 2016 to August 16, 2016 RSJ (1) $ 250,000 1,400 50,281 Robin Smith (2) 40,000 800 8,165 John Pappajohn (2) 850,000 14,000 172,802 Tierney Family Trust (3) 100,000 600 20,129 Follman Family Trust (4) 300,000 5,100 61,014 Carpenter, George & Jill (7) 100,000 1,300 20,254 Harris, Geoffrey (2) 10,000 300 2,058 2 Accredited Investors 300,000 5,600 61,124 Brandt Ventures (8) 50,000 200 10,047 Subtotal for Final Round $ 2,000,000 Balances Converted September 19, 2016 $ 6,000,000 $ 317,000 1,263,406 (1) RSJ Investments SICAV a.s. acting in respect of its sub-fund (podfond) RSJ Gradus podfond, RSJ Investment SICAV a.s. ("RSJ") is a greater than 5% shareholder. Michal Votruba, a member of the Board of Directors of the Company and Director of Life Sciences for the European-based RSJ-Gradus fund, joined our Board on July 30, 2015. (2) Chairman of the Board. (3) Thomas Tierney is a trustee of the Tierney Family Trust and former member of the Board. The Tierney Family Trust was previously a greater than 5% shareholder of the Company. (4) Robert Follman is a trustee of the Follman Family Trust and former member of the Board. (5) John Pappajohn is a member of the Board. He purchased $200,000 of Notes, which on September 6, 2015, were assigned to four accredited investors. Approximately $10,400 of the total interest was attributable to such transferred Notes, resulting in an aggregate of 42,084 shares being issued upon the Mandatory Conversion of such transferred Notes. (6) Mark & Jill Oman are the beneficial owners of Oman Ventures and were previously greater than 5% shareholders of the Company. (7) George Carpenter is the CEO of the Company. (8) Brandt Ventures was issued this note as part of the Company s settlement of its litigation with Leonard Brandt (a former director of the Company) and Brandt Ventures. Private Placement of Common Stock On November 30, 2016, the Company entered into a subscription agreement with six accredited investors, pursuant to which it sold and issued an aggregate of 160,000 shares of its Common Stock in a private placement, at a per share price of $6.25, and received gross cash proceeds of $1,000,000. Aspire Capital purchased an aggregate of 40,000 shares of Common Stock for $250,000 as part of this private placement. Three of the six accredited investors who participated in the private placement were affiliates who represented 50% of the cash proceeds as follows: Dr. Robin Smith, our Chairman of the Board, purchased 16,000 shares for $100,000; John Pappajohn, a member of the Board, purchased 32,000 shares for $200,000; and the Tierney Family Trust, of which our Board member, Thomas Tierney is a trustee, purchased 32,000 shares for $200,000. In connection with this private placement, certain investors (comprised of our executive officers and current and former directors) agreed to a 180-day "lock-up", commencing on November 30, 2016, with respect to shares of Common Stock and other of our securities that they beneficially own, including securities that are convertible into shares of Common Stock and securities that are exchangeable or exercisable for shares of Common Stock. As a result, subject to certain exceptions, for a period of 180 days following November 30, 2016, such persons may not offer, sell, pledge or otherwise dispose of these securities without the Company s prior written consent. On December 21, 2016, the Company sold and issued a further 48,000 shares of its Common Stock, at a per share price of $6.25, in a private placement to four accredited investors who were new to the Company, for which it received gross cash proceeds of $300,000. On December 29, 2016, the Company sold and issued an additional 32,000 shares of its Common Stock, at a per share price of $6.25, in a private placement to two accredited investors, resulting in gross cash proceeds of $200,000, in which one investor, John Pappajohn, a member of the Board, purchased 16,000 shares for $100,000. From February 10, 2017 through March 21, 2017, the Company sold and issued an additional 237,000 shares of its Common Stock, at a per share price of $6.25, in private placements to four affiliated and accredited investors, resulting in gross cash proceeds to the Company of $1,481,300. The affiliated investors were as follows: RSJ, purchased 160,000 shares for $1,000,000; John Pappajohn, a member of the Board, purchased 72,000 shares for $450,000; Geoffrey Harris is a member of the Board purchased 5,000 shares for $31,300. RSJ is a greater than 10% stockholder of the Company and Michal Votruba, who serves as a Director for Life Sciences at the RSJ/Gradus Fund, has served as a member of our Board since July 30, 2015. The subscription agreement between the Company and RSJ provided for the grant to RSJ by the Company of a right of first refusal through June 30, 2018, to license or to have distribution rights in Europe with respect to any of the Company s technology and/or intellectual property. Investment in Arcadian Telepsychiatry LLC On April 1, 2017, the Company entered into a Master Purchase and Option Agreement with Arcadian Telepsychiatry LLC ("Arcadian PA"), a Pennsylvania based Limited Liability Company and Mr. Robert Plotkin. Consideration paid for a 10% equity interest in Arcadian PA was in the form of (i) a $100,000 capital contribution to Arcadian and (ii) the issuance of 1,000 shares of Common Stock to Mr. Plotkin. On June 19, 2017, the Company made an additional $20,000 capital contribution to Arcadian PA. From July 6, 2017 through September 30, 2017 the Company made an additional $70,000 capital contribution to Arcadian PA. As of September 30, 2017 the Company s cumulative equity interest in Arcadian PA is 19%. On November 13, 2017, Arcadian PA, MYnd and certain third-party physicians entered into a number of transactions to reorganize the operations of Arcadian PA and implement a new ownership and management structure. Accordingly, on November 13, 2017, Arcadian PA converted into a Pennsylvania professional corporation after the equity interests in Arcadian were transferred to a third-party physician. On that same date, Arcadian PA entered into a Management Services Agreement with Arcadian and transferred certain assets and liabilities including its debt obligations to Arcadian in connection therewith. MYnd subsequently acquired 100% of the equity interests in Arcadian. The purchase price, including the value of the indebtedness and payables of Arcadian, was $1,339,600 based upon a deemed acquisition of all of the assets and liabilities of Arcadian, including the equity interests in Arcadian. The aggregate purchase price consisted of (i) initial investment in Arcadian of $195,900; (ii) $317,000 of forgiveness of a note receivable with the primary member of Arcadian; (iii) assumption by Arcadian of subordinated debt ("Arcadian Notes") with a fair value of $555,000, plus accrued interest of $96,700; and (iv) $175,000 payment for the redemption and cancellation of two warrants to purchase equity interests in Arcadian. The Arcadian Notes bear interest at an annual rate of 8% and mature on September 30, 2021. Private Placement of Preferred Stock with Warrant On March 29, 2018, the Company sold an aggregate of 1,050,000 units for $2.00 per unit (the "Units"), each consisting of one share of newly-designated Series A Preferred Stock, par value $0.001 per share (the "Series A Preferred Stock") and one Warrant (the "Warrants") to purchase one share of Common Stock ("Common Stock"), par value $0.001 per share for $2.34 per share in a private placement to three affiliates of the Company, for gross proceeds of $2.1 million (the "Financing"). The private placement closed on March 29, 2018. The closing price per share of the Common Stock on the Nasdaq Stock Market on March 29, 2018 was $1.19 per share. Shares of the Company s Series A Preferred Stock will be entitled to receive cash dividends at the rate of five percent (5.00%) of the Original Series A Issue Price per annum, payable out of funds legally available therefor. The Warrants will be exercisable for a period of five years for an exercise price of $2.34. The exercise price is subject to adjustment for stock splits, stock dividends, combinations or similar events. The Warrants may not be exercised on a cashless basis. The liquidation preference associated with the Series A Preferred Stock was $1,968,750 as of September 30, 2018. In connection with the Financing, the Company also entered into a registration rights agreement (the "Registration Rights Agreement") with the investors, requiring the Company to register the resale of the shares of Common Stock underlying the preferred stock and the Warrants. Under the Registration Rights Agreement, holders of a majority of the registrable securities then outstanding (the "Majority Holders") may by written notice to the Company (a "Demand Notice") commencing six (6) months from the closing date, request the Company to effect the registration of all or part of the registrable securities owned by such Majority Holders and their respective affiliates on a Registration Statement on Form S-3. The Company has agreed to use its reasonable best efforts to cause such registration and/or qualification to be complete as soon as practicable, but in no event later than sixty (60) days, after receipt of the Demand Notice. The Series A Preferred Stock were offered and sold in reliance upon the exemption from the registration requirements of the Securities Act of 1933, as amended (the "Securities Act"), set forth under Section 4(a)(2) of the Securities Act and Rule 506 of Regulation D promulgated under the Securities Act, relating to sales by an issuer not involving any public offering and in reliance on similar exemptions under applicable state laws. Each purchaser represented that it is an accredited investor and that it acquired the Series A Preferred Stock and Warrants for investment purposes only and not with a view to any resale, distribution or other disposition of such securities in violation of the United States federal securities laws. On April 30, 2018, the Company entered into the First Amended Subscription Agreement for Shares of Series A Preferred Stock and Common Stock Purchase Warrants (the "Amended Agreement") with John Pappajohn and Mary Pappajohn (each an "Investor", and collectively the "Investors"), which provides for the issuance, as of the date of the Original Agreement, of an aggregate of 500,000 Shares of Series A-1 Convertible Preferred Stock, par value $0.001 per share ("Series A-1 Convertible Preferred Stock"), in lieu of the same number of Shares of Series A Convertible Preferred Stock that the Company had originally agreed to issue to the Investors. The Series A-1 Convertible Preferred Stock will have substantially the same rights and preferences as the Shares of Series A Preferred Stock, except that the Shares of Series A-1 Convertible Preferred Stock are non-voting and cannot be converted into Common Stock by an Investor if, as a result of such conversion, such Investor would beneficially own greater than 19.9% of the outstanding shares of Common Stock. Additionally, the Warrants were amended to provide that they would not be exercisable by an investor if, following any such exercise, such Investor would beneficially own greater than 19.9% of the outstanding shares of Common Stock. Shares of the Company s Series A and Series A-1 Preferred Stock will be entitled to receive cash dividends at the rate of five percent (5.00%) of the Original Series A and Series A-1 Issue Price per annum, payable out of funds legally available therefore. Dividends will only payable when and if declared or upon certain events. The Warrants will be exercisable for a period of five years for an exercise price of $2.34. The exercise price is subject to adjustment for stock splits, stock dividends, combinations or similar events. The Warrants may not be exercised on a cashless basis. In connection with the Amended Agreement, the Company also entered into the Registration Rights Agreement with the investors, requiring the Company to register the resale of the shares of Common Stock underlying the preferred stock and the Warrants. Under the Registration Rights Agreement, the Majority Holders may by a written Demand Notice to the Company commencing six (6) months from the closing date, request the Company to affect the registration of all or part of the registrable securities owned by such Majority Holders and their respective affiliates on a Registration Statement on Form S-3. The Company has agreed to use its reasonable best efforts to cause such registration and/or qualification to be complete as soon as practicable, but in no event later than sixty (60) days, after receipt of the Demand Notice. The shares of Series A and Series A-1 Preferred Stock were offered and sold in reliance upon the exemption from the registration requirements of the Securities Act, set forth under Section 4(a)(2) of the Securities Act and Rule 506 of Regulation D promulgated under the Securities Act, relating to sales by an issuer not involving any public offering and in reliance on similar exemptions under applicable state laws. Each purchaser represented that it is an accredited investor and that it acquired the Series A and Series A-1 Preferred Stock and Warrants for investment purposes only and not with a view to any resale, distribution or other disposition of such securities in violation of the United States federal securities laws. The Company used the proceeds of the Financing for general corporate purposes. These private placements were made pursuant to an exemption from registration afforded by Section 4(a)(2) of the Securities Act, and Regulation D thereunder. Private Placement of Common Stock with Warrant On September 21, 2018, the Company entered into definitive agreements with George C. Carpenter IV, President and Chief Executive Officer, Robin L. Smith, Chairman, John Pappajohn, and Peter Unanue, each a director of the Company, and an entity affiliated with Michal Votruba, a director of the Company, relating to a private placement of an aggregate of 459,458 units for $1.85 per unit, with each unit consisting of one share of common stock and one common stock purchase warrant to purchase one share of common stock for $2.00 per share. These private placements were made pursuant to an exemption from registration afforded by Section 4(a)(2) of the Securities Act, and Regulation D thereunder. Stock Dividend Warrants On July 13, 2017, the Company declared a special dividend of warrants to purchase shares of the Company s Common Stock to record holders of Common Stock as of such date. Warrants to purchase 2,539,061 shares of Common Stock were distributed pro rata to all holders of Common Stock on the record date. These warrants will be exercisable (in accordance with their terms) to purchase one share of Common Stock, at an exercise price of $5.25 per share. The warrants will become exercisable commencing not less than 12 months following their July 27, 2017 distribution date and will expire five years thereafter. The dividend warrant has an exercise price of $5.25 and expires on July 26, 2022. We estimated the fair value of the dividend warrant at issuance date to be $16,375,394 using the Black-Scholes option valuation model with the following assumptions: market price of the stock of $6.55 per share, time to maturity of five years, volatility of 211.6%, zero expected dividend rate and risk-free rate of 1.89%. These warrants qualify for equity treatment. The allocation of the fair value of these warrants was included in additional paid-in capital on the consolidated balance sheet. The Company also recognized a dividend related to the dividend warrants as every shareholder was entitled to receive one warrant for every share of Common Stock for no consideration given. Accordingly, the Company recognized a $16,375,394 dividend at closing. Private Placement to Aspire Capital--May 15, 2018 Purchase Agreement On May 15, 2018, the Company issued to Aspire Capital the 250,000 Commitment Shares at $2.25 per share, for gross proceeds of $562,500. On June 11, 2018, the Company issued to Aspire Capital 222,222 shares at an average price of $2.25 per share, for gross proceeds of approximately $500,000. On September 17, 2018, the Company issued to Aspire Capital 662,449 shares at an average price of $2.11 per share, for gross proceeds of approximately $1.4 million. Private Placement to Aspire Capital--December 6, 2016 Purchase Agreement On December 6, 2016, the Company issued to Aspire Capital 80,000 shares of its Common Stock as the commitment shares for a new financing of up to $10.0 million. On February 23, 2017, the Company issued to Aspire Capital 20,000 shares at an average price of $7.25 per share, for gross proceeds of approximately $145,000. On April 3, 2018, the Company issued to Aspire Capital 250,000 shares at an average price of $2.00 per share, for gross proceeds of approximately $500,000. On April 13, 2018, the Company issued to Aspire Capital 150,000 shares at an average price of $2.00 per share, for gross proceeds of approximately $300,000. On April 17, 2018, the Company issued to Aspire Capital 61,968 shares at an average price of $2.00 per share, for gross proceeds of approximately $123,936. On April 19, 2018, the Company issued to Aspire Capital 60,000 shares at an average price of $2.00 per share, for gross proceeds of approximately $120,000. On April 20, 2018, the Company issued to Aspire Capital 80,000 shares at an average price of $2.00 per share, for gross proceeds of approximately $160,000. On April 23, 2018, the Company issued to Aspire Capital 50,000 shares at an average price of $2.00 per share, for gross proceeds of approximately $100,000. On April 24, 2018, the Company issued to Aspire Capital 54,000 shares at an average price of $2.00 per share, for gross proceeds of approximately $108,000. On April 25, 2018, the Company issued to Aspire Capital 31,700 shares at an average price of $2.00 per share, for gross proceeds of approximately $63,400. On April 26, 2018, the Company issued to Aspire Capital 24,000 shares at an average price of $2.00 per share, for gross proceeds of approximately $48,000. On April 30, 2018, the Company issued to Aspire Capital 150,000 shares at an average price of $2.00 per share, for gross proceeds of approximately $300,000. On May 1, 2018, the Company issued to Aspire Capital 21,100 shares at an average price of $2.00 per share, for gross proceeds of approximately $42,200. On May 3, 2018, the Company issued to Aspire Capital 40,000 shares at an average price of $2.00 per share, for gross proceeds of approximately $80,000. On May 7, 2018, the Company issued to Aspire Capital 207,232 shares at an average price of $2.00 per share, for gross proceeds of approximately $414,464. ITEM 16. Exhibits and Financial Statement Schedules. (a) The exhibits listed under the caption "Exhibit Index" following the signature page are filed herewith or incorporated by reference herein. (b) Financial Statement Schedules No financial statement schedules are provided because the information required to be set forth therein is not applicable or is shown in the consolidated financial statements or notes thereto. ITEM 17. Undertakings. (a) The undersigned Registrant hereby undertakes: (1) to file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement: (i) to include any prospectus required by Section 10(a)(3) of the Securities Act; (ii) to reflect in the prospectus any facts or events arising after the effective date of the Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the Registration Statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective Registration Statement; and (iii) to include any material information with respect to the plan of distribution not previously disclosed in the Registration Statement or any material change to such information in the Registration Statement; provided, however, that paragraphs (a)(1)(i), (a)(1)(ii) and (a)(1)(iii) do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in reports filed with or furnished to the Commission by the Registrant pursuant to Section 13 or Section 15(d) of the Exchange Act that are incorporated by reference in the Registration Statement. (2) that, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) to remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold
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diff --git a/parsed_sections/prospectus_summary/2018/EOLS_evolus-inc_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/EOLS_evolus-inc_prospectus_summary.txt
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@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2018/ESTC_elastic-n_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/ESTC_elastic-n_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
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@@ -0,0 +1 @@
+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2018/ETON_eton_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/ETON_eton_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
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+++ b/parsed_sections/prospectus_summary/2018/ETON_eton_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2018/EYE_national_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/EYE_national_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
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@@ -0,0 +1 @@
+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2018/FVCB_fvcbankcor_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/FVCB_fvcbankcor_prospectus_summary.txt
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+PROSPECTUS SUMMARY This summary highlights selected information contained in this prospectus. This summary does not contain all the information that you should consider before investing in our common stock. You should read the entire prospectus carefully, including the "Risk Factors," "Cautionary Note Regarding Forward-Looking Statements" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections, and our historical financial statements and the accompanying notes included in this prospectus. Overview FVCBankcorp, Inc. is the registered bank holding company for FVCbank, our wholly-owned community bank subsidiary, headquartered in Fairfax, Virginia. We serve the banking needs of commercial businesses, nonprofit organizations, professional service entities, and their respective owners and employees located in the greater Washington, D.C. metropolitan and Northern Virginia area. We believe the size, growth and increasing economic diversity of the Washington, D.C. metropolitan and Northern Virginia area, when combined with our banking strategy, provides us with excellent opportunities for long-term, sustainable growth. We aim to capitalize on market opportunities while maintaining a disciplined and conservative credit underwriting culture. Our focus on providing high-touch, responsive relationship-based client service allows us to compete in the market, meeting and exceeding the needs of our customers. We have experienced significant organic growth since we began banking operations in 2007. As of June 30, 2018, we had total assets of $1.14 billion, total loans of $955.6 million, total deposits of $1.01 billion and total stockholders' equity of $104.0 million. We recently announced the proposed acquisition of Colombo Bank, or Colombo, a $191.5 million asset bank headquartered in Rockville, Maryland. We expect the proposed acquisition to close in the fourth quarter of 2018, following completion of this offering. We currently operate six full-service banking locations in the Washington, D.C. metropolitan and Northern Virginia area. We expect to continue to leverage our existing branches, and the branches resulting from the proposed merger with Colombo, and our technological resources, to increase our deposits and asset levels through expansion of our relationships with our existing customers, acquisition of new customers, acquisition of seasoned bankers with strong customer relationships, and through limited de novo branching. We are committed to being highly selective in our branching decisions, and we intend to continue to explore opportunities for establishing additional strategically located branches in the Washington-Arlington-Alexandria, DC-VA-MD-WV Metropolitan Statistical Area, or Washington MSA, based primarily on commercial deposit and loan potential and demographic support. We typically establish branches as necessary to provide support for established business development people and lenders with substantial books of business and customer relationships. Pre-Effective Amendment No. 1 to FORM S-1 REGISTRATION STATEMENT Under The Securities Act of 1933 Table of Contents and Results of Operations" section and provide less than five years of selected financial data in this prospectus; we are exempt from the requirement to provide an opinion from our auditors on the design and operating effectiveness of our internal control over financial reporting pursuant to the Sarbanes-Oxley Act of 2002, as amended, or the Sarbanes-Oxley Act; we may choose not to comply with any new requirements adopted by the Public Company Accounting Oversight Board, or PCAOB, requiring mandatory audit firm rotation or a supplement to the auditor's report providing additional information about the audit and our audited financial statements; we are permitted to provide less extensive disclosure regarding our executive compensation arrangements pursuant to the rules applicable to smaller reporting companies, which means we do not have to include a compensation discussion and analysis and other disclosure regarding our executive compensation in this prospectus and in our future annual reports and proxy materials; and we are not required to hold nonbinding advisory votes on executive compensation or golden parachute arrangements. We may take advantage of these provisions for up to five years unless we earlier cease to qualify as an emerging growth company. We will cease to qualify as an emerging growth company if we have more than $1.07 billion in annual gross revenues, as that amount may be periodically adjusted by the Securities and Exchange Commission, or SEC, we become a "large accelerated filer," including having more than $700.0 million in market value of our common stock held by non-affiliates, or we issue more than $1.0 billion of non-convertible debt in a three-year period. We have elected to adopt the reduced disclosure requirements described above regarding the number of periods for which we are providing audited financial statements and our executive compensation arrangements for purposes of the registration statement of which this prospectus is a part. In addition, we expect to take advantage of the reduced reporting and other requirements of the JOBS Act with respect to the periodic reports we will file with the SEC and proxy statements that we use to solicit proxies from our shareholders. Accordingly, the information contained herein may be different than the information you receive from other public companies in which you hold stock. We cannot predict if investors will find our common stock less attractive as a result of our election to rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile. The JOBS Act exempts emerging growth companies from compliance with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act of 1933, or Securities Act, registration statement declared effective or do not have a class of securities registered under the Securities Exchange Act of 1934, or Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of this extended transition period and comply with the requirements that apply to non-emerging growth companies, but any such election to opt out is irrevocable. We have elected to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, we will adopt the new or revised standard at the time public companies adopt the new or revised standard. Table of Contents Our Market Area We operate in one of the most economically dynamic and wealthy regions of the Washington MSA, focusing primarily on the Virginia counties of Arlington, Fairfax, Loudoun and Prince William and the independent cities located within those counties, as well as Washington, D.C. and its Maryland suburbs. As of June 30, 2017, the Washington MSA had total deposits of $198.7 billion, excluding deposits maintained by a national brokerage firm, ranking it as the eleventh largest metropolitan statistical area in the United States in total deposits, based on Federal Deposit Insurance Corporation, or FDIC, data. In addition to the presence of the federal government, the Washington MSA is defined by attractive market demographics, including strong household incomes, dense populations and the presence of a diverse group of large and small businesses. As of December 31, 2017, the Washington MSA had a median household income of $99,400, which ranks as fourth among all metropolitan statistical areas nationally, and a population of 6.2 million. The Virginia and Maryland markets in which we operate have higher median household incomes than the Washington MSA as a whole. The significant presence of national and international businesses make the Washington MSA one of the most economically vibrant and diverse markets in the country. The Washington MSA is currently home to 15 Fortune 500 companies, including nine based in Fairfax County, Virginia. Our History and Growth We commenced banking operations in November 2007. David Pijor, our Chairman and Chief Executive Officer has led us since inception. Mr. Pijor is an experienced banker who, in his previous community banking position as Chairman of the Board of Directors of James Monroe Bancorp, Inc., was very active in directing the development of that bank from its founding as an Arlington, Virginia-based de novo in 1998 to its acquisition by Mercantile Bankshares Corporation for $143.8 million in 2006. Since we began operations in November 2007, on the cusp of the most significant economic downturn since the Great Depression, we have expanded our footprint to six branch locations and developed a strong lending team of approximately 16 lenders. From December 31, 2007 to June 30, 2018, our common equity has increased from $22.8 million to $104.0 million through both strong earnings growth and capital raises with institutional and retail investors. Our net income and earnings per diluted share increased at a compounded annual growth rate, or CAGR, of 36% and 28%, respectively, between the year ended December 31, 2013 and the year ended December 31, 2017, while FVCBankcorp, Inc. (Exact name of registrant as specified in its charter) Table of Contents we maintained strong credit quality. As part of our continued growth, we intend to continue expanding our market position through organic growth and select acquisitions of other financial institutions, such as our pending acquisition of Colombo, while increasing profitability, and maintaining strong asset quality and a high level of customer service. Our Strategy Our strategy remains focused on strong organic asset growth and continued core deposit growth, organically and through select strategic acquisitions in and around the Washington, D.C. metropolitan and Northern Virginia area, and increased profitability. We position ourselves to be able to capitalize on market disruptions and opportunities as they arise, while maintaining a disciplined and conservative credit underwriting culture. By providing timely financial solutions to our customers, we endeavor to distinguish ourselves and compete effectively against other community banks and the larger regional and national banks that operate in our markets. High-touch banking strategy. We focus on establishing extensive, multifaceted relationships with customers through superior service provided through responsive decision-making and empowering personnel to respond quickly and strategically to customers' needs, and product offerings that meet customer needs and provide value to their operations. We focus on lending to and banking commercial businesses (including government contractors), nonprofit organizations, title and escrow companies, professional service entities, and their respective owners and employees located in our market. We believe our customers are attracted by, and require, our premium service and products, as well as ready access to decision makers, including senior management. We operate full-service branches and employ lenders with strong underwriting credentials, extensive connections in their markets and the ability to make decisions autonomously. We approach customer service with a team approach, which allows our lenders to focus on the loans, while experienced business development officers work with customers to provide deposit, cash management, technology and other services. Our directors, officers and employees are active in the communities we serve, which further enhances our responsiveness in developing products and services. This approach produces clear competitive advantages by delivering an extraordinary customer experience and fostering a culture dedicated to achieving superior external and internal results. We plan to continue to emphasize our high-touch banking strategy to organically grow our presence in the Washington, D.C. metropolitan and Northern Virginia area by: Supporting our existing bankers with a team approach to continue the Bank's growth trajectory, as measured by loans, deposits and loan fee income, while enhancing profitability by leveraging our existing operating platform; Attracting and retaining additional experienced lenders and business development officers, with established relationships with customers; and Using technology to improve efficiency and enhance customer experience, while preserving our commitment to responsive customer service and a strong risk management culture. Focus on Profitability. Since we achieved profitability on an annual basis in 2010, our earnings have increased steadily. For the five year period 2013 to 2017, our net income increased at a 36% CAGR, and diluted earnings per share have increased at a 28% CAGR. Our plans for growth are intended to further enhance our earnings and efficiency and increase shareholder value, and are not geared to growth solely for the sake of increasing our asset levels. We are selective in our lending and customer relationships, seeking quality loans that are reasonably priced for risk, and customers whose overall relationship will enable us to profitably grow, increase our earnings and increase shareholder value. Virginia (State or other jurisdiction of incorporation or organization) 6022 Primary Standard Industrial Classification Code Number 47-5020283 (I.R.S. Employer Identification Number) 11325 Random Hills Road Fairfax, Virginia 22030 (703) 436-3800 (Address, including ZIP Code and Telephone Number, including Area Code, of Registrant's Principal Executive Offices) (1)Our earnings for the year ended December 31, 2017 include one-time charges to reduce the carrying value of net deferred tax assets by $2.0 million, required as a result of the reduction in the maximum federal corporate income tax rate to 21% in the 2017 Tax Cuts and Jobs Act, or the 2017 Tax Act. As a result, earnings, and metrics and ratios based on earnings, were adversely affected. Absent these one-time charges, our net income and diluted earnings per share, or Diluted EPS, for the year ended December 31, 2017 would have been $9.7 million and $0.84 per share, respectively; our 2013 to 2017 net income CAGR and Diluted EPS CAGR would have been 45% and 35%, respectively; our return on average assets, or ROAA, and Return on Average Equity, or ROAE, for the year ended December 31, 2017 would have been 1.02% and 10.92%, respectively; and our 2013 to 2017 ROAA CAGR and ROAE CAGR would have been 20% and 27%, respectively. For a reconciliation of these ratios as adjusted to exclude the impact of the 2017 Tax Act, please refer to "Selected Historical Financial Data of FVCB Non-GAAP Financial Measures." Our earnings for the six months ended June 30, 2018 include expenses of approximately $397,000 associated with the proposed merger with Colombo. Excluding these merger-related expenses, our net income and diluted earnings per share for the six months ended June 30, 2018 would have been $6.4 million and $0.53, respectively, and our annualized ROAA and ROAE for the six months ended 2018 would have been 1.19% and 12.64%, respectively. For a reconciliation of these performance metrics as adjusted for the merger related expenses, please refer to "Selected Historical Financial Data of FVCB Non-GAAP Financial Measures." David W. Pijor Chairman & Chief Executive Officer FVCBankcorp, Inc. 11325 Random Hills Road Fairfax, Virginia 22030 (703) 436-3800 (Name, Address, including ZIP Code and Telephone Number, including Area Code, of Agent for Service) Table of Contents (2)Annualized. Capitalize on Market Disruption. We intend to continue to take advantage of the disruption in our market area, which we believe has created an environment of underbanked customers. Multiple acquisitions of prior competitors in our market provide opportunities to identify and hire additional seasoned bankers in our existing and target markets who we believe will thrive under our banking model, and to take advantage of customer dissatisfaction with, and runoff from, recently merged institutions. For example, we believe the acquisition of Cardinal Financial Corporation, or Cardinal, by United Bankshares, Inc., or UBSI, in April 2017, provides us with considerable competitive opportunities. We have capitalized on this merger by: Hiring 12 seasoned bankers to fill a range of positions, including our Chief Financial Officer, a senior lender, business development personnel for our Arlington, Virginia market, and several loan, compliance and deposit operational personnel; Appointing a former Cardinal director with significant government contractor connections and professional experience to our board of directors, enhancing our knowledge of, and ability to access, this niche market; Aggressively promoting our enhanced market presence in Arlington, growing deposits by approximately $18.1 million, or 22.8%, from June 30, 2017 to June 30, 2018. We believe that additional opportunities for hiring experienced banking professionals and developing new business relationships with underserved or dissatisfied customers of recently merged institutions remain to be capitalized upon, and that future consolidation among community banks in and around Washington, D.C. will provide further opportunities. The tables below reflect merger activity, and the amount of loans and deposits sold, in and around Washington, D.C. since 2012. 2012 2014 5/3/2012 WashingtonFirst Bankshares, Inc. acquires Alliance Bankshares Corporation 2/28/2014 Washington First Bankshares, Inc. acquires Millennium Bank (from FDIC) 6/13/2012 First Virginia Community Bank acquires 1st Commonwealth Bank of Virginia 6/9/2014 Eagle Bancorp, Inc. acquires Virginia Heritage Bank 2013 2016/2017 1/30/2013 United Bankshares, Inc. acquires Virginia Commerce Bancorp, Inc. 8/1/2016 United Bankshares, Inc. acquires Cardinal Financial Corporation 6/10/2013 Union Bankshares Corporation acquires StellarOne Corporation 5/16/2017 Sandy Spring Bancorp, Inc. acquires WashingtonFirst Bankshares, Inc. 9/9/2013 Cardinal Financial Corporation acquires United Financial Banking Companies, Inc. 5/22/2017 Union Bankshares Corporation acquires Xenith Bankshares, Inc. With copies to: Noel M. Gruber Buckley Sandler LLP 1250 24th Street, NW, Suite 700 Washington, D.C. 20037 (202) 349-8000 Scott H. Richter Williams Mullen Williams Mullen Center 200 South 10th Street, Suite 1600 Richmond, Virginia 23219 (804) 420-6000 Table of Contents We also believe that the significant reduction in the number of locally managed community banks provides opportunities for banks with superior reputations, such as FVCbank, the ability to provide sophisticated banking products and lending limits sufficient to service middle market companies, to expand their customer base, to increase assets and to enhance profitability. The following chart depicts the number of banks headquartered in Virginia with a presence in the Washington MSA since 2012. Selective strategic acquisitions. We intend to complement our strong organic growth by continuing to pursue a disciplined acquisition strategy in and around Washington, D.C. and its suburbs. We are active in our consideration of strategic acquisitions of customers and professionals that will support our business focus, enable us to build immediate scale, increase efficiency and profitability, drive fee income and enhance our capabilities. Pending Colombo Merger. We believe our proposed acquisition of Colombo will support our current business and allow us to expand into new markets and grow our presence in Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a nonaccelerated filer, a smaller reporting company or an emerging growth company. See definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company Emerging growth company If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. Table of Contents adjacent markets. We believe a number of factors will position us to achieve significant improvements in growth and earnings within Colombo's franchise: Colombo's growth was severely constrained for several years while it was subject to a regulatory consent order, including compliance with higher than standard capital requirements and a detailed business plan, until it was released from the order in August 2016. Colombo's current management spent years cleaning up legacy problem assets, improving internal processes and procedures and expending significant resources to comply with the order, rather than growing the bank. Relieved of the order and the need to expend significant efforts and resources on problem asset resolution and compliance with the order, Colombo's management can focus on developing Colombo's current customers and growing their customer base. They can, with the support of our lenders, business development officers, back office personnel and broader product offerings, "go on offense" for the first time after many years of "playing defense," and increase loans, deposits and profitability. Termination of the order also contributes to the potential for significant cost savings. Colombo has dealt with substantially all of its problem assets it has only $2.3 million of nonperforming assets as of June 30, 2018, $1.5 million of which relate to loans made prior to December 31, 2013. Colombo's branch locations strengthen our strategy as they enable us to add lenders and banking services in areas where we currently lend. As of June 30, 2018, 35% of FVCbank's loans outstanding were made to borrowers located in, or secured by collateral located in, Maryland or Washington, D.C. We expect that our strong infrastructure and wide range of products and services will allow us to develop deeper relationships with Colombo's current customers, as well as enhance our platform for generating new relationships. We believe that we will be able to efficiently integrate Colombo's operations, expand its business opportunities and enhance our profitability. Specifically, we believe the Colombo merger provides the following opportunities that support our strategic initiatives: Colombo's branches, all of which are currently profitable, provide us with the opportunity to leverage our ability to service customers in Maryland and Washington, D.C. Colombo's footprint provides branch support in Montgomery County, Maryland, one of the largest government contractor markets in the country. We believe our seasoned government contracting team can more effectively support government contractor companies in Maryland with a more extensive branch network. Colombo's seasoned executives who will join our team, including its President, and potentially its Chief Lending Officer, have substantial lending experience and can expand their lending targets with a higher loan to one borrower limit, a broader product platform and extensive back office support. Many of Colombo's current customers have greater borrowing needs than its capital can support, needs that our greater capital resources can satisfy, and our deposit and treasury management products are more sophisticated and provide greater customer utility than any product offered currently by Colombo. Market disruption resulting from recent acquisitions provides further opportunity to attract top talent in Colombo's footprint to further enhance market opportunities in Maryland and Washington, D.C. The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. Table of Contents Our Strengths We believe that we are well positioned to execute our banking strategy as a result of the following competitive strengths: Experienced senior management team. Our senior management team, comprised of executive officers and senior vice presidents of our lending groups and operational teams, has a proven track record of profitable organic growth, operating efficiencies, strong risk management culture and community and service focused approach to banking. Members of our executive management team have worked at financial institutions which are larger than FVCB, and bring depth of experience and knowledge of our market. Our board of directors has decades of combined experience in serving as directors and/or officers of financial institutions. Our directors have a wide array of business experience and participate in and support community activities, which significantly benefits our business development efforts. The interests of our executive officers and directors are aligned with our shareholders through meaningful ownership, with beneficial ownership by our executive officers and directors amounting to approximately 19.8% of our common stock as of June 30, 2018. Set forth below is information regarding the experience of our current senior executive team. Name Position Tenure at FVCB Years of Community Banking Experience Prior Banking Experience David W. Pijor Chairman and Chief Executive Officer of Company and Bank Since organization 19 Founder and Chairman of the Board of Directors of James Monroe Bank (sold in 2006 to Mercantile Bankshares Corporation for $143.6 million). Patricia A. Ferrick President of Company and Bank Since organization 31 Executive Vice President and Chief Financial Officer of Potomac Bank of Virginia (sold in 2006 to Sandy Spring Bancorp, Inc. for $64.7 million) and Southern Financial Bancorp (sold in 2004 to Provident Bankshares Corporation for $330 million). William G. Byers Chief Lending Officer and Executive Vice President of Company and Bank Since 2011 24 Commercial real estate lender Middleburg Bank, Wachovia Bank, Citibank. Jennifer L. Deacon Chief Financial Officer and Executive Vice President of Company and Bank Since 2017 21 Executive Vice President and Chief Accounting Officer of Cardinal (sold in 2017 to UBSI for $912.0 million). Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities or accept your offer to buy any of them until the registration statement filed with the Securities and Exchange Commission is declared effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state or jurisdiction where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED SEPTEMBER 7, 2018 PRELIMINARY PROSPECTUS 1,750,000 Shares Common Stock This is the initial public offering of shares of common stock of FVCBankcorp, Inc., the bank holding company for FVCbank, our principal subsidiary, which is a Virginia chartered commercial bank. We are offering 1,750,000 shares of our common stock. We currently expect the initial public offering price per share of our common stock to be between $19.00 and $21.00. Prior to this offering, our common stock has been quoted on the OTCQX marketplace under the symbol "FVCB." We have applied to list the common stock on the Nasdaq Capital Market under the symbol "FVCB." We are an "emerging growth company" as defined in the Jumpstart Our Business Startups Act of 2012 and, as a result, are subject to reduced public company disclosure standards. See "Implications of Being an Emerging Growth Company." Table of Contents Name Position Tenure at FVCB Years of Community Banking Experience Prior Banking Experience B. Todd Dempsey Chief Operating Officer and Executive Vice President of Company and Bank Since organization 37 Senior Vice President of UBSI. Sharon L. Jackson Chief Deposit Officer and Executive Vice President of Company and Bank Since 2016 32 Executive Vice President Business Development MainStreet Bank. Michael G. Nassy Chief Credit Officer and Executive Vice President of Company and Bank Since 2012 18 City First Bank of D.C., N.A., National Cooperative Bank, Wachovia Bank. After the merger, Gilbert Kennedy, the President and Chief Executive Officer of Colombo will join us as Market President for Washington, D.C./Maryland, and Gerald Muccioli, Colombo's Chief Lending Officer, may join us as a senior lender. Scalable banking and operational platform designed to foster and accommodate significant growth. Utilizing the significant prior experience of our management and employees, along with significant investments in technology and systems, we believe that we have developed an infrastructure that can service a larger organization, allowing for growth in customers and transactions. We have organized our lending team into specialized areas of expertise, both geographically and by lines of business, and reinforced our team approach to building customer relationships, which further fosters our ability to scale our business growth model. We believe that our strong capital and asset quality position will allow us to grow and that our scalable operating platform will allow us to manage that growth effectively, resulting in greater efficiency and enhanced profitability. For the six months ended June 30, 2018, our efficiency ratio was 58.74%. The underwriters have an option to purchase up to an additional 262,500 shares of our common stock at the initial public offering price less the underwriting discount, within 30 days of the date of this prospectus. See "Underwriting." Investing in our common stock involves risks. See "Risk Factors" to read about factors you should consider before investing in our common stock. Per Share Total Initial public offering price $ $ Underwriting discounts and commissions $ $ Proceeds before expenses $ $ Table of Contents Efficiency Ratio (%) Community-focused, full service relationships. We believe that our banking strategy facilitates strong relationships with our customers. We actively solicit the deposit business of our consumer and commercial loan customers and seek to further leverage these relationships by providing products and services that enhance their banking experience. We endeavor to understand each customer's needs and concerns to provide a customized product package. We offer a suite of technologically sophisticated cash and treasury management services at no cost to customers to help build and maintain these relationships. We have increased our profitability by growing our loan portfolio, funded predominantly by core deposits. We have increased net interest income while maintaining our net interest margin despite the flat interest rate environment in recent years. We provide a full range of banking services which become integral to our customers' business operations, which helps to enhance our ability to retain our relationships. We offer a better value proposition to our customers by providing high-touch service with few added fees. Our capabilities and reputation enable us to be selective in loan and customer selection, which contributes to our strong asset quality, and our ability to provide multiple services to customers. Loans We have developed a diversified, high quality and profitable loan portfolio. Our annualized average yield on loans was 4.79% for the six months ended June 30, 2018. Our lending expertise includes a successful commercial and industrial lending group, with a particular emphasis on government contractors. By focusing on government contracting, which we believe is a rapidly growing and underserved segment of the market, and providing timely decisions on loan requests, we have been able to win new relationships with competitive loan rates. While currently a relatively small percentage of outstanding loans, approximately $31.2 million, or 3.6% of loans at June 30, 2018, loan commitments to government contractors were $89.8 million. We believe our expertise in this area, sophisticated technology and high level of service, combined with an expanded footprint, will enable us to grow our government contractor business effectively. Our commercial real estate portfolio, while over 60% of total loans, is diversified by industry and geographic concentration. We believe we offer a value proposition to our borrowers and can price loans competitively because of our experienced and specialized lenders, our desire to understand the needs of our customers and our commitment to providing responsive service and ongoing support. We plan to continue our growth in a disciplined manner. We have implemented comprehensive policies to monitor, measure and mitigate our loan concentrations, including rigorous credit approval, review and administrative practices. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense. These securities are not deposits, savings accounts or other obligations of any bank or savings association and are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other governmental agency and are subject to investment risks, including the possible loss of the entire amount you invest. Table of Contents We have experienced significant organic growth in our loan portfolio, as a result of which $659.8 million of loans, or 69.7% of our loan portfolio as of June 30, 2018, were first originated during the past three years. We have experienced annual net loan growth of 16%, 23%, and 22%, for the years ended December 31, 2017, 2016 and 2015, respectively, and a compound annual growth rate over the past five years of 22%. During these years of significant loan growth, seasoned portions of our loan portfolio paid off and were replaced by newly originated loans. This growth reflects a number of factors, including the increase in our legal lending limit to $20.2 million, and the establishment of a new banking office in Loudoun County, one of the most prosperous and developing areas in the Washington MSA. In addition, we began originating loans in our construction portfolio which typically convert to permanent financing once the construction phase of the project has been completed. Further, consolidation in our market has allowed us to expand our customer base as a result of customer dissatisfaction with their merged institution and to hire seasoned bankers with established customer bases. Our focus on loans to commercial businesses, professional service entities, and their respective owners and employees results in a more diversified portfolio of granular loan relationships, thus reducing the risk that results from dependence on larger lending relationships. As of June 30, 2018, our average funded loan size was approximately $555 thousand. The following chart reflects our loan growth since 2013. Net Loan Growth ($M) The following table reflects the diversity of our loan portfolio, as of June 30, 2018. Our commercial real estate portfolio segment includes non-owner occupied real estate of $395.9 million, or 41.4% of our total loan portfolio at June 30, 2018. Loans secured by multifamily properties (which is included in non-owner occupied real estate) totaled $56.6 million, or 5.9% of our total loan portfolio at June 30, 2018. Owner-occupied nonresidential properties totaled $123.9 million, or 13.0% of our loan portfolio at June 30, 2018. The underwriters expect to deliver the shares of our common stock to purchasers on or about , 2018, subject to customary closing conditions. Joint Book-Running Managers Sandler O'Neill + Partners, L.P. Raymond James The date of this prospectus is , 2018. Table of Contents Deposits Our emphasis on establishing a full service relationship with our customers and incentivizing our employees to generate core funding has provided us with a strong base of core deposits. We offer our customers comprehensive arrays of products and services to meet their banking needs. We provide high level responsive and personalized service to our business customers at no added cost. Our strategy of relationship banking has enabled us to grow our core deposits while maintaining our net interest margin. Our focus on government contracting also enhances our funding efforts. Government contracting customers also provide a significant level of deposits relative to their borrowings. At June 30, 2018, government contractor deposits totaled $42.4 million, or 37.2% of total deposits derived from commercial and industrial customers, and 4.2% and 14.9% of total deposits and noninterest-bearing deposits, respectively. They also utilize our treasury management products as an integral part of their operations, strengthening our ties with them. Our proposed acquisition of Colombo provides us with an opportunity to expand our products and services to Colombo's existing customers and to new customers in their branch footprint. The following tables reflect the composition of our deposits, as of June 30, 2018, and the historical ratio of noninterest-bearing deposits/total deposits. Table of Contents FVCbank offices Main & Corporate Offices Manassas Office 11325 Random Hills 7900 Sudley Road Fairfax, Virginia 22030 Manassas, Virginia 20109 Arlington Office Reston Office 2500 Wilson Boulevard, Suite 100 11260 Roger Bacon Drive, Suite 101 Arlington, Virginia 22201 Reston, Virginia 20190 Ashburn Office Springfield Office 43800 Central Station Drive, Suite 150 6975 Springfield Boulevard Ashburn, Virginia 20147 Springfield, Virginia 22150 Colombo Bank offices Main & Corporate Offices District of Columbia Office 1600 East Gude Drive 1301 9th Street, NW Rockville, Maryland 20850 Washington, D.C. 20001 Baltimore Office Silver Spring Office 224 Albemarle Street 7901 Eastern Avenue Baltimore, Maryland 21202 Silver Spring, Maryland 20910 Bethesda Office 6929 Arlington Road Bethesda, Maryland 20814 Table of Contents Noninterest-bearing Deposits / Total Deposits (%) Treasury Management We provide a suite of technology products that are highly competitive among our peer banks and many larger competitor banks, which we believe allows us to attract and service larger and more sophisticated commercial and governmental customers more effectively than many of our competitors. Unlike many other banks in our market area, we provide online banking, remote deposit capture and mobile banking to our commercial and governmental customers free of charge, which provides our customers with a low cost avenue to begin banking with us and allows us to become highly integrated with such customers' operations. As of June 30, 2018, deposits made by our commercial customers using remote deposit capture represent, on average, more than half of our deposits on a daily basis. Reliance on this technology by our customers allows us to minimize branches and other physical facilities, and should allow us to remain an integral part of our customer's financial affairs, enhancing customer retention. We believe our treasury management functionality creates a competitive distinction between us and our competitors. We actively promote this product set by involving our treasury management team and business development officers, who are well trained in these products, to accompany our lenders to meetings with customers and potential customers. Focus on seasoned lenders. Our team of seasoned lenders has been a significant component of our organic growth. Our lenders have ties to the communities they serve and extensive experience in their areas of expertise. Our lending teams are organized by specialty lines of business or geographic centric teams to leverage their areas of expertise, streamlining the loan process and facilitating our ability to assess the credit risk, determine loan pricing and general terms expediently and effectively. Our officer compensation structure, which includes an incentive program and equity awards, motivates our lenders to increase the size of their loan and deposit portfolios and generate fee income, and also encourages maintaining strong credit quality. We believe that our officer compensation program combined with our quick responsiveness and open access to local decision-makers attracts talented lenders to us. Disciplined underwriting and credit administration. Our management, lending officers and credit administration team emphasize a strong risk management culture supported by comprehensive policies and procedures for credit underwriting, funding and administration that we believe has enabled us to maintain sound asset quality. Our underwriting methodology emphasizes establishing and monitoring debt and leverage covenants, strong overall cash flow throughout a customer's business operations, low loan-to-value ratios, strong full or partial guarantors when Table of Contents deemed necessary, and/or strong tertiary sources of repayment. Our tiered underwriting structure includes progressive levels of individual loan authority, concurrent authority and senior loan committee approval. Our loan review function performs regular internal loan reviews and identifies early warning indicators to proactively monitor the loan portfolio. We intend to continue to emphasize and adhere to these procedures and controls, which we believe have helped to minimize our level of loan charge-offs. We recorded net charge-offs to average loans for the six months ended June 30, 2018 of 0.01%. Risk Factors Our ability to implement our banking strategy and the success of our business is subject to numerous risks and uncertainties. You should carefully consider all of the information set forth in this prospectus and, in particular, the information under the headings "Risk Factors" and "Cautionary Note Regarding Forward-Looking Statements," prior to making an investment in our common stock. Recent Developments On May 3, 2018, FVCB and FVCbank entered into an Agreement and Plan of Merger, or merger agreement, with Colombo, a Maryland chartered commercial bank, providing for the merger of Colombo with and into FVCbank, with FVCbank as the surviving institution, in a cash and stock transaction valued at approximately $33.3 million. Colombo operates from five full service banking locations in Bethesda, Rockville, Silver Spring and Baltimore, Maryland and Washington, D.C. Following the consummation of the merger, we expect that we will continue to operate all of Colombo's existing offices, substantially expanding our footprint within the metropolitan Washington, D.C. area and increasing our office count to 11. We believe that the acquisition of Colombo will provide branch support for our efforts to expand our government contracting business in Maryland; enable us to capitalize on market disruption to attract additional talent and further enhance market opportunities in Maryland and Washington, D.C.; enable us to expand lending and deposit services to Colombo's existing customers; and leverage our investment in our infrastructure. As of June 30, 2018, Colombo had an aggregate of $191.5 million of assets, $152.6 million of loans, $141.8 million of deposits and $21.3 million of shareholders' equity. At June 30, 2018, Colombo's nonperforming assets (consisting of nonaccrual loans, troubled debt restructured loans, loans past due 90 days or more and still accruing interest and other real estate owned) were approximately Table of Contents $2.3 million, or 1.2% of total assets. A significant portion of these nonperforming assets, $1.5 million, or 65% of Colombo's nonperforming assets, relate to loans made prior to December 31, 2013. For the six months ended June 30, 2018 and the year ended December 31, 2017, Colombo had earnings of $346 thousand and $1.0 million, respectively. Colombo's net interest margin for the six months ended June 30, 2018 and year ended December 31, 2017 were 3.71% and 3.45%, for each period, and its return on average equity was 3.24% and 5.02%, respectively. Its efficiency ratio for the six months ended June 30, 2018 and the year ended December 31, 2017 was 96.06% and 99.14%, respectively. We expect that we will be able to achieve cost savings of approximately 35% of Colombo's noninterest expenses by early 2019. Colombo had a net operating loss carryforward of approximately $30.6 million at December 31, 2017, which will begin expiring during the year ended December 31, 2023, against which it had a valuation allowance of approximately $10.2 million. We expect that we will be able to utilize these carryforwards, subject to limitation under Section 382 of the Internal Revenue Code of 1986, or Code, to offset our income in future periods. Pursuant to the merger agreement, each of the 344,248,084 shares of Colombo's common stock outstanding, other than shares with respect to which dissenters' rights have been properly exercised, will be converted into the right to receive a combination of: (i) the number of shares of our common stock determined by dividing $0.043492 by the average of the closing price per share of our common stock for the five trading days ending on and including the second trading day immediately prior to the closing of the merger, rounded to six decimal places, and (ii) cash in an amount equal to $0.053157 per share of Colombo common stock. Any beneficial owner of Colombo common stock that would be entitled to receive fewer than 100 shares of our common stock will be entitled to elect to receive only cash, in an amount equal to $0.096649 per share of Colombo common stock. If the merger were completed as of June 30, 2018, and the average closing price for our common stock was $20.00 per share (the midpoint of the range set forth on the cover page of this prospectus), we expect that we would issue approximately 748,740 shares of common stock and cash consideration of approximately $18.3 million, assuming no shareholders elected to receive all cash consideration. In that event, former shareholders of Colombo would own approximately 5.52% of our common stock outstanding after the consummation of this offering and the merger, and Colombo's principal shareholder, Morton A. Bender and his spouse, who own an aggregate of 98.47% of Colombo's outstanding common stock, would own an aggregate of 5.43% of our common stock after the consummation of this offering and the merger. Mr. Bender has entered into a support agreement with us pursuant to which he has agreed, subject to limited exceptions, to vote all of the shares of Colombo common stock over which he has or shares voting power in favor of the merger, as a result of which, shareholder approval of the merger is assured. The merger is subject to customary conditions to closing, including the receipt of all required regulatory approvals and receipt of opinions of counsel as to the qualification of the merger as a reorganization for purposes of Section 368(a) of the Code. The merger is also subject to a financing condition, pursuant to which we must receive at least $10 million of gross proceeds from this offering or another financing transaction, including a private offering of common stock or debt financing. Upon completion of the merger, and subject to any required regulatory approvals, Mr. Bender will become a member of the boards of directors of FVCB and FVCbank. For additional discussion of the proposed merger and our rationale for the merger, please refer to "Business The Merger." Pro forma information. If the merger were completed as of June 30, 2018, on a pro forma basis, we would have had total assets of $1.35 billion, total loans of $1.11 billion, total deposits of Table of Contents $1.15 billion, and nonperforming assets of $7.1 million, or 0.53% of pro forma assets. On a pro forma basis as of June 30, 2018, our portfolio would be comprised of loans as set forth in the following tables: On a pro forma basis as of June 30, 2018, our deposits would be comprised as set forth in the following tables: ***** Our principal executive offices are located at 11325 Random Hills Road, Suite 240, Fairfax, Virginia, 22030, and our telephone number is (703) 436-3800. Table of Contents
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diff --git a/parsed_sections/prospectus_summary/2018/FXE_invesco_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/FXE_invesco_prospectus_summary.txt
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@@ -0,0 +1 @@
+Prospectus Summary This is a summary of the prospectus. You should read the entire prospectus, including Risk Factors beginning on page 6 and the information incorporated by reference in this prospectus, before making an investment decision about the Shares. See Glossary of Terms beginning on page 11 for a description of certain terms used in this prospectus. TRUST STRUCTURE The Trust is a grantor trust formed under the laws of the State of New York pursuant to the Depositary Trust Agreement. The Trust holds euro and from time to time issues Baskets in exchange for deposits of euro and distributes euro in connection with redemptions of Baskets. The investment objective of the Trust is for the Shares to reflect the price in USD of the euro. Earning income for Shareholders is not the objective of the Trust. Whether investors earn income primarily depends on the relative value of the euro and the USD. If the euro appreciates relative to the USD and a Shareholder sells Shares, the Shareholder will earn income. If the euro depreciates relative to the USD and a Shareholder sells Shares, the Shareholder will incur a loss. The Sponsor believes that, for many investors, the Shares represent a cost-effective investment in euro. The Shares represent units of fractional undivided beneficial interest in, and ownership of, the Trust. The Shares are listed and trade on NYSE Arca under the symbol FXE. The Shares may also trade in other markets, but the Sponsor has not sought to have the Shares listed by any other market. The Sponsor, Invesco Specialized Products, LLC, a Delaware limited liability company, established the Trust and is responsible for registering the Shares. The Sponsor generally oversees the performance of the Trustee and the Trust s principal service providers, but does not exercise day-to-day oversight over the Trustee or the Trust s service providers. The Sponsor may remove the Trustee if any of various events occur. See Description of the Depositary Trust Agreement The Trustee Resignation, discharge or removal of trustee; successor trustees for more information. The Sponsor maintains a public website on behalf of the Trust containing information about the Trust and the Shares. The internet address of the Trust s website is www.invesco.com/etfs. This internet address is provided here only as a convenience to you; the information contained on or connected to the Trust s website is not considered part of this prospectus. The general role and responsibilities of the Sponsor are discussed further under The Sponsor. The Trustee is The Bank of New York Mellon, a banking corporation formed under the laws of the State of New York with trust powers. The Trustee is generally responsible for the day-to-day administration of the Trust. This includes calculating the NAV of the Trust and the NAV per Share each business day, paying the Trust s expenses (which are accrued daily but paid monthly), including withdrawing the Trust s euro, if needed, receiving and processing orders from Authorized Participants to create and redeem Baskets and coordinating the processing of such orders with the Depository and DTC. The general role, responsibilities and regulation of the Trustee are further described under The Trustee. The Depository is JPMorgan Chase Bank, N.A., London Branch. The Depository and the Trustee have elected the laws of England to govern the Deposit Account Agreement between them. The Depository accepts euro deposited with it by Authorized Participants in connection with the creation of Baskets. The Depository facilitates the transfer of euro into and out of the Trust through the two deposit accounts maintained with it by the Trust. The Depository may pay interest on the primary deposit account but does not pay interest on the secondary deposit account. Interest on the primary deposit account, if any, accrues daily and is paid monthly. The material terms of the Depositary Trust Agreement are discussed in greater detail in Description of the Depositary Trust Agreement. The general role, responsibilities and regulation of the Depository and the two deposit accounts are further described under The Depository and Description of the Deposit Account Agreement. Detailed descriptions of certain specific rights and duties of the Trustee and the Depository are set forth under Description of the Shares, Description of the Depositary Trust Agreement and Description of the Deposit Account Agreement. The Distributor, Invesco Distributors, Inc., is a corporation formed under the laws of the State of Delaware. The Distributor assists the Sponsor in marketing the Shares. Specifically, the Distributor prepares marketing materials regarding the Shares, including the content of the Trust s website, executes the marketing plan for the Trust and provides strategic and tactical research on the foreign exchange markets, in each case in compliance with applicable laws and regulations. The Distributor and the Sponsor are affiliates of one another. There is no written agreement between them, and no compensation is paid by the Sponsor to the Distributor in connection with services performed by the Distributor for the Trust. See The Distributor for more information. Table of Contents The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and the Sponsor and the Trust are not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. Preliminary Prospectus Subject to Completion September 14, 2018 10,600,000 Shares Euro Shares The Invesco CurrencyShares Euro Trust (Trust) issues Euro Shares (Shares) that represent units of fractional undivided beneficial interest in, and ownership of, the Trust. Invesco Specialized Products, LLC is the sponsor of the Trust (Sponsor) and may be deemed the issuer of the Shares pursuant to Section 2(a)(4) of the Securities Act of 1933, as amended (the Securities Act). The Bank of New York Mellon is the trustee of the Trust (Trustee), JPMorgan Chase Bank, N.A., London Branch, is the depository for the Trust (Depository), and Invesco Distributors, Inc. is the distributor for the Trust (Distributor). The Trust intends to issue additional Shares on a continuous basis through the Trustee. The Shares may be purchased from the Trust only in one or more blocks of 50,000 Shares, as described in Creation and Redemption of Shares. A block of 50,000 Shares is called a Basket. The Trust issues Shares in Baskets on a continuous basis to certain authorized participants (Authorized Participants) as described in Plan of Distribution. Each Basket, when created, is offered and sold to an Authorized Participant at a price in euro equal to the net asset value (NAV) of 50,000 Shares on the day that the order to create the Basket is accepted by the Trustee. The Shares are offered and sold to the public by Authorized Participants at varying prices in U.S. Dollars (USD) determined by reference to, among other things, the market price of the euro and the trading price of the Shares on NYSE Arca, Inc. (NYSE Arca) at the time of each sale. Authorized Participants will not receive from the Trust, the Sponsor or any of their affiliates, any fee or other compensation in connection with the sale of Shares. Authorized Participants may receive commissions or fees from investors who purchase Shares through their commission- or fee-based brokerage accounts. The Shares are listed and trade on NYSE Arca under the symbol FXE. The Shares may also trade in other markets, but the Sponsor has not sought to have the Shares listed by any other market. Investing in the Shares involves significant risks. See Risk Factors, starting on page 6. Neither the Securities and Exchange Commission (SEC) nor any state securities commission has approved or disapproved of the securities offered in this prospectus, or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The Shares are neither interests in nor obligations of the Sponsor, the Trustee, the Depository or the Distributor. Neither the Shares nor the Trust s two deposit accounts maintained at the Depository and the euro deposited in them are deposits insured against loss by the Federal Deposit Insurance Corporation (FDIC), any other federal agency of the United States or the Financial Services Compensation Scheme of England. The date of this prospectus is , 2018. Table of Contents INVESTMENT ATTRIBUTES OF THE TRUST The investment objective of the Trust is for the Shares to reflect the price in USD of the euro. The Shares are intended to provide institutional and retail investors with a simple, cost-effective means of gaining investment benefits similar to those of holding euro. The costs of purchasing Shares should not exceed the costs associated with purchasing any other publicly-traded equity securities. The Shares are an investment that is: Easily Accessible. Investors are able to access the market for euro through a traditional brokerage account. The Shares are bought and sold on NYSE Arca like any other exchange-listed security. Exchange-Traded. Because they are traded on NYSE Arca, the Shares will provide investors with an efficient means of implementing investment tactics and strategies that involve euro. NYSE Arca-listed securities are eligible for margin accounts. Accordingly, investors are able to purchase and hold Shares with borrowed money to the extent permitted by law. Transparent. The Shares are backed by the assets of the Trust, which does not hold or use derivative products. The value of the holdings of the Trust is reported on the Trust s website, www.invesco.com/etfs, every business day. Investing in the Shares will not insulate the investor from price volatility or other risks. Further, the ratio of euro to Shares may decrease due to withdrawals made to pay Trust expenses in the event that the interest income of the Trust is not sufficient to cover the entirety of the Trust expenses. See Risk Factors and The Depository. PRINCIPAL OFFICES The principal offices of the Sponsor and the Trust are the offices of Invesco Specialized Products, LLC at 3500 Lacey Road, Suite 700, Downers Grove, Illinois 60515, and the principal offices of the Distributor are the offices of Invesco Distributors, Inc. at 11 Greenway Plaza, Suite 1000, Houston, Texas 77046. The telephone number of Invesco Specialized Products, LLC at its address is (800) 983-0903. None of the Sponsor, the Trust or the Distributor owns or leases any other real estate. The Trustee has an office at 2 Hanson Place, Brooklyn, New York 11217. The Depository is located at 125 London Wall, London, EC2Y 5AJ, United Kingdom.
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diff --git a/parsed_sections/prospectus_summary/2018/FXF_invesco_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/FXF_invesco_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..86edb9e8ac4f0ca2d4a8742df03a6b28df78e1a5
--- /dev/null
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@@ -0,0 +1 @@
+Prospectus Summary This is a summary of the prospectus. You should read the entire prospectus, including Risk Factors beginning on page 6 and the information incorporated by reference in this prospectus, before making an investment decision about the Shares. See Glossary of Terms beginning on page 11 for a description of certain terms used in this prospectus. TRUST STRUCTURE The Trust is a grantor trust formed under the laws of the State of New York pursuant to the Depositary Trust Agreement. The Trust holds Swiss Francs and from time to time issues Baskets in exchange for deposits of Swiss Francs and distributes Swiss Francs in connection with redemptions of Baskets. The investment objective of the Trust is for the Shares to reflect the price in USD of the Swiss Franc. Earning income for Shareholders is not the objective of the Trust. Whether investors earn income primarily depends on the relative value of the Swiss Franc and the USD. If the Swiss Franc appreciates relative to the USD and a Shareholder sells Shares, the Shareholder will earn income. If the Swiss Franc depreciates relative to the USD and a Shareholder sells Shares, the Shareholder will incur a loss. The Sponsor believes that, for many investors, the Shares represent a cost-effective investment in Swiss Francs. The Shares represent units of fractional undivided beneficial interest in, and ownership of, the Trust. The Shares are listed and trade on NYSE Arca under the symbol FXF. The Shares may also trade in other markets, but the Sponsor has not sought to have the Shares listed by any other market. The Sponsor, Invesco Specialized Products, LLC, a Delaware limited liability company, established the Trust and is responsible for registering the Shares. The Sponsor generally oversees the performance of the Trustee and the Trust s principal service providers, but does not exercise day-to-day oversight over the Trustee or the Trust s service providers. The Sponsor may remove the Trustee if any of various events occur. See Description of the Depositary Trust Agreement The Trustee Resignation, discharge or removal of trustee; successor trustees for more information. The Sponsor maintains a public website on behalf of the Trust containing information about the Trust and the Shares. The internet address of the Trust s website is www.invesco.com/etfs. This internet address is provided here only as a convenience to you; the information contained on or connected to the Trust s website is not considered part of this prospectus. The general role and responsibilities of the Sponsor are discussed further under The Sponsor. The Trustee is The Bank of New York Mellon, a banking corporation formed under the laws of the State of New York with trust powers. The Trustee is generally responsible for the day-to-day administration of the Trust. This includes calculating the NAV of the Trust and the NAV per Share each business day, paying the Trust s expenses (which are accrued daily but paid monthly), including withdrawing the Trust s Swiss Francs, if needed, receiving and processing orders from Authorized Participants to create and redeem Baskets and coordinating the processing of such orders with the Depository and DTC. The general role, responsibilities and regulation of the Trustee are further described under The Trustee. The Depository is JPMorgan Chase Bank, N.A., London Branch. The Depository and the Trustee have elected the laws of England to govern the Deposit Account Agreement between them. The Depository accepts Swiss Francs deposited with it by Authorized Participants in connection with the creation of Baskets. The Depository facilitates the transfer of Swiss Francs into and out of the Trust through the two deposit accounts maintained with it by the Trust. The Depository may pay interest on the primary deposit account but does not pay interest on the secondary deposit account. Interest on the primary deposit account, if any, accrues daily and is paid monthly. The material terms of the Depositary Trust Agreement are discussed in greater detail in Description of the Depositary Trust Agreement. The general role, responsibilities and regulation of the Depository and the two deposit accounts are further described under The Depository and Description of the Deposit Account Agreement. Detailed descriptions of certain specific rights and duties of the Trustee and the Depository are set forth under Description of the Shares, Description of the Depositary Trust Agreement and Description of the Deposit Account Agreement. The Distributor, Invesco Distributors, Inc., is a corporation formed under the laws of the State of Delaware. The Distributor assists the Sponsor in marketing the Shares. Specifically, the Distributor prepares marketing materials regarding the Shares, including the content of the Trust s website, executes the marketing plan for the Trust and Table of Contents The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and the Sponsor and the Trust are not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. Preliminary Prospectus Subject to Completion October 15, 2018 8,450,000 Shares Swiss Franc Shares The Invesco CurrencyShares Swiss Franc Trust (Trust) issues Swiss Franc Shares (Shares) that represent units of fractional undivided beneficial interest in, and ownership of, the Trust. Invesco Specialized Products, LLC is the sponsor of the Trust (Sponsor) and may be deemed the issuer of the Shares pursuant to Section 2(a)(4) of the Securities Act of 1933, as amended (the Securities Act). The Bank of New York Mellon is the trustee of the Trust (Trustee), JPMorgan Chase Bank, N.A., London Branch, is the depository for the Trust (Depository), and Invesco Distributors, Inc. is the distributor for the Trust (Distributor). The Trust intends to issue additional Shares on a continuous basis through the Trustee. The Shares may be purchased from the Trust only in one or more blocks of 50,000 Shares, as described in Creation and Redemption of Shares. A block of 50,000 Shares is called a Basket. The Trust issues Shares in Baskets on a continuous basis to certain authorized participants (Authorized Participants) as described in Plan of Distribution. Each Basket, when created, is offered and sold to an Authorized Participant at a price in Swiss Francs equal to the net asset value (NAV) of 50,000 Shares on the day that the order to create the Basket is accepted by the Trustee. The Shares are offered and sold to the public by Authorized Participants at varying prices in U.S. Dollars (USD) determined by reference to, among other things, the market price of the Swiss Franc and the trading price of the Shares on NYSE Arca, Inc. (NYSE Arca) at the time of each sale. Authorized Participants will not receive from the Trust, the Sponsor or any of their affiliates, any fee or other compensation in connection with the sale of Shares. Authorized Participants may receive commissions or fees from investors who purchase Shares through their commission- or fee-based brokerage accounts. The Shares are listed and trade on NYSE Arca under the symbol FXF. The Shares may also trade in other markets, but the Sponsor has not sought to have the Shares listed by any other market. Investing in the Shares involves significant risks. See Risk Factors, starting on page 6. Neither the Securities and Exchange Commission (SEC) nor any state securities commission has approved or disapproved of the securities offered in this prospectus, or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The Shares are neither interests in nor obligations of the Sponsor, the Trustee, the Depository or the Distributor. Neither the Shares nor the Trust s two deposit accounts maintained at the Depository and the Swiss Francs deposited in them are deposits insured against loss by the Federal Deposit Insurance Corporation (FDIC), any other federal agency of the United States or the Financial Services Compensation Scheme of England. The date of this prospectus is , 2018. Table of Contents provides strategic and tactical research on the foreign exchange markets, in each case in compliance with applicable laws and regulations. The Distributor and the Sponsor are affiliates of one another. There is no written agreement between them, and no compensation is paid by the Sponsor to the Distributor in connection with services performed by the Distributor for the Trust. See The Distributor for more information. INVESTMENT ATTRIBUTES OF THE TRUST The investment objective of the Trust is for the Shares to reflect the price in USD of the Swiss Franc. The Shares are intended to provide institutional and retail investors with a simple, cost-effective means of gaining investment benefits similar to those of holding Swiss Francs. The costs of purchasing Shares should not exceed the costs associated with purchasing any other publicly-traded equity securities. The Shares are an investment that is: Easily Accessible. Investors are able to access the market for Swiss Francs through a traditional brokerage account. The Shares are bought and sold on NYSE Arca like any other exchange-listed security. Exchange-Traded. Because they are traded on NYSE Arca, the Shares will provide investors with an efficient means of implementing investment tactics and strategies that involve Swiss Francs. NYSE Arca-listed securities are eligible for margin accounts. Accordingly, investors are able to purchase and hold Shares with borrowed money to the extent permitted by law. Transparent. The Shares are backed by the assets of the Trust, which does not hold or use derivative products. The value of the holdings of the Trust is reported on the Trust s website, www.invesco.com/etfs, every business day. Investing in the Shares will not insulate the investor from price volatility or other risks. Further, the ratio of Swiss Francs to Shares may decrease due to withdrawals made to pay Trust expenses in the event that the interest income of the Trust is not sufficient to cover the entirety of the Trust expenses. See Risk Factors and The Depository. PRINCIPAL OFFICES The principal offices of the Sponsor and the Trust are the offices of Invesco Specialized Products, LLC at 3500 Lacey Road, Suite 700, Downers Grove, Illinois 60515, and the principal offices of the Distributor are the offices of Invesco Distributors, Inc. at 11 Greenway Plaza, Suite 1000, Houston, Texas 77046. The telephone number of Invesco Specialized Products, LLC at its address is (800) 983-0903. None of the Sponsor, the Trust or the Distributor owns or leases any other real estate. The Trustee has an office at 2 Hanson Place, Brooklyn, New York 11217. The Depository is located at 125 London Wall, London, EC2Y 5AJ, United Kingdom.
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diff --git a/parsed_sections/prospectus_summary/2018/GHG_greentree_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/GHG_greentree_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/GHG_greentree_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2018/GSHD_goosehead_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/GSHD_goosehead_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..6fd1b31a26ec10bc1fd1e216e073634da63e7929
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/GSHD_goosehead_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus summary 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2018/HLNE_hamilton_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/HLNE_hamilton_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/HLNE_hamilton_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2018/HYPD_hyperion_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/HYPD_hyperion_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..5a2aade52d1499195543038bafa04179b850c0ba
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/HYPD_hyperion_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus, or incorporated by reference into this prospectus. It might not contain all the information that is important to you. You should read the entire prospectus carefully, including the section entitled Risk Factors and our financial statements and the related notes included elsewhere in this prospectus or incorporated by reference into this prospectus, before making an investment decision to purchase shares of our common stock. Our Business Overview We are a clinical stage ophthalmic biopharmaceutical company developing a pipeline of microdose therapeutics utilizing our patented piezo-print delivery technology, which we recently branded the OptejetTM. Eyenovia aims to achieve clinical microdosing of next-generation formulations of well-established ophthalmic pharmaceutical agents using its high-precision targeted ocular delivery system, which has the potential to replace conventional eyedropper delivery and improve safety, tolerability, patient compliance and topical delivery success for ophthalmic eye treatments. In the clinic, Optejet has demonstrated up to a 75% reduction in ocular drug and preservative exposure, with successful topical delivery that generally exceeded the efficacy of traditional eyedrop administration. Using our proprietary delivery technology, Eyenovia is developing the next generation of smart ophthalmic therapies while targeting new indications for which there are currently no drug therapies approved by the U.S. Food and Drug Administration (the FDA ). Eyenovia s microdose therapeutics follow the FDA-designated pharmaceutical registration and regulatory process. Our products are not classified by the FDA as medical devices or drug-device combination products. Eyenovia recently initiated Phase III trials for MicroStat. MicroStat is a fixed combination formulation of phenylephrine-tropicamide for mydriasis (pupil dilation), designed to be a novel approach for the estimated 80 million office-based comprehensive and diabetic eye exams performed every year in the United States. Additionally, we have received clear feedback from the FDA regarding the requirements for Phase III trials for our MicroPine and MicroProst programs. MicroPine is a first-in-class topical therapy for the treatment of progressive myopia, a back-of-the-eye ocular disease associated with pathologic axial elongation and sclero-retinal stretching affecting approximately 5 million people in the United States. MicroProst is a novel latanoprost formulation for lowering intraocular pressure ( IOP ) in patients with ocular hypertension ( OHT ), primary open angle glaucoma ( POAG ) and chronic angle closure glaucoma ( CACG ). MicroTears, our over-the-counter ( OTC ) product candidate for dry eye, will not require Phase III trials. We plan to proceed with registration activities for MicroTears in 2019. We have completed three Phase II trials, with results from two published in peer-reviewed literature and a third in press publication. In two studies evaluating mydriatic agents, the Optejet consistently delivered precision dosing at the volume of the eye s natural tear film capacity of 6 8 L, which reduced ocular and systemic drug and preservative exposure, while demonstrating pupil dilation comparable to conventional eyedrops with fewer side effects. In the third study, we evaluated usability, patient tolerability and intraocular pressure lowering of microdosed latanoprost administered with the Optejet. In this study, eyes receiving microdosed latanoprost achieved IOP reduction consistent with published literature on eyedrops and administration of the medication was successful in a single attempt in more than 90% of cases. Based on the results from these clinical trials, we have advanced MicroStat into Phase III utilizing the 505(b)(2) pathway and plan to do the same with MicroPine and MicroProst. Where possible, we also intend to use this pathway for future clinical trials in new indications with significant unmet needs. Our Solution Ophthalmic drugs delivered as eyedrops can fail to provide the prescribed dose more than 50% of the time and, even when the prescribed dose is delivered to the ocular surface, eyedrops can overdose the ocular surface by more than 300%. The average tear volume of the eye is 6 8 L, yet conventional eyedrops deliver fluid volume of approximately 30 50 L. Even among bottles of the same size and shape, eyedrop sizes vary significantly depending on the angle of the bottle and the amount of ophthalmic solution TABLE OF CONTENTS remaining. The large drop size can result in overflow from the eye into the nasolacrimal canal, where the active drug product becomes available systemically. Ocular drugs that are absorbed by the nasolacrimal mucosa mimic intravenous injection delivery insofar as they are not susceptible to first-pass hepatic metabolism. Additionally, ocular medication in swallowed nasolacrimal secretions is theoretically available for absorption in the gastrointestinal tract. As such, only a small fraction of the applied medication is actually absorbed directly into the eye, while there remain multiple opportunities for unintended local and systemic exposure. Additionally, excess drug (and preservative in some instances) in the eye is more likely to cause ocular surface toxicity and tolerability issues and spillage to the periorbital skin can cause dermatological changes. Instillation of eyedrops also stimulates lacrimation, and can increase tear turnover rate from 16% per minute to 30% per minute once eyedrops have been instilled, thereby diluting the drug product. If the eyedrop stings, the loss rate can be even higher. Approximately 80% of a medication instilled as an eyedrop is lost to drainage during the first 15 30 seconds after instillation. The Optejet The Optejet delivers doses of 6 8 L, directly coating the corneal surface where 80% of intraocular drug penetration occurs. We believe that microdosing may reduce drug and toxic preservative exposure by more than 75%, thus reducing ocular irritation, and resulting in potentially gentler treatments without compromising the desired clinical effect. Our approach could also reduce waste associated with conventional macrodose drops a problem that has been highlighted by recently introduced legislation in the U.S. Senate to address this specific concern. We believe that we are one of the only companies with clinical stage technology for targeted microdosing of ophthalmic investigational therapies. The Optejet is based on piezo-print technology, which is also used for pixel-sharp high-precision inkjet printing. The technology is optimized for and applied in TABLE OF CONTENTS ophthalmic delivery to achieve microdosing that can be many times more precise than conventional eyedroppers. In addition, our smart, electronic system provides the capability to track when patients administer their medications and deliver this information to patients and physicians via Bluetooth connectivity. Thus, physicians can make decisions regarding therapeutic regimens with knowledge of patient compliance. The FDA has provided written feedback that our clinical development activities will be treated as drug development programs, because only the drug comes into contact with the eye. Consequently, we do not anticipate needing separate FDA approval for the Optejet or being required to comply with FDA medical device regulations. Microdose administration of topical ophthalmic drugs with the Optejet has been tested in preclinical models and clinical trials and shown to provide many advantages over administrations of eyedrops. Key advantages include: Dose reduction: Our microdose delivery technology achieves precise volumetric control at the microliter level to deliver 6 8 L, which is the physiologic capacity of the tear film. This compares favorably to the volume of an eyedrop (30 50 L), which can result in overdosing, ocular toxicity and systemic leaching into the plasma. Targeted dose instillation: The Optejet allows for targeted delivery to the ocular surface and cornea, avoiding the conjunctival cul-de-sac. The micro-jet spray created by the piezo-electric vibrations is columnated and focused to provide precise delivery to the corneal surface where the majority of ocular penetration occurs. Additionally, the Optejet is designed with an LED targeting mechanism to facilitate proper positioning and objective alignment, thus increasing the likelihood of successful dose delivery. Speed of delivery: Our piezo-electric technology is similar to pixel-sharp precision ink jet printing. Unlike a simple aerosolized mechanism, our patented technology is designed with ejection control that creates a fast and targeted micro-jet delivery. Solution is delivered to the ocular surface in less than 80 milliseconds beating the typical eye s 100-millisecond blink reflex. Smart electronics: Our smart electronics and mobile e-health technology are designed to track when a patient administers treatment. This enables physicians to objectively monitor patient compliance. We believe this technology will improve compliance and chronic disease management by empowering patients and physicians with access to dynamic, real-time monitoring and compliance data for a more intelligent and personalized therapeutic paradigm. Our Pipeline The following summarizes our product pipeline and expected milestones: Product Candidate Indication Next Expected Milestones MicroStat Mydriasis (Pupil Dilation) Report Phase III Trial Results H1 2019 MicroPine Pediatric Myopia Progression (Near Sightedness) Initiate Phase III Trial H1 2019 MicroProst Chronic Angle Closure Glaucoma Initiate Phase III Trial H1 2019 MicroTears Dry Eye OTC Registration H1 2019 MicroStat MicroStat is the potentially first-in-class fixed combination micro-formulation product candidate for mydriasis (eye dilation) intended to facilitate the estimated 80 million office-based comprehensive and diabetic eye exams performed every year in the United States. Our fixed combination product has been developed to help achieve efficient pupil dilation while reducing unintended effects of conventionally administered mydriatic agents. We believe the market exceeds $150 million annually in the United States alone. TABLE OF CONTENTS Phase III Clinical Development Program Our New Drug Application ( NDA ) has been accepted by the FDA and we initiated Phase III clinical trials of fixed-combination microdosed phenylephrine 2.5% and tropicamide 1% administered for mydriasis in November 2018. The MicroStat program consists of two Phase III randomized, controlled, cross-over clinical studies evaluating pupil dilation with our fixed combination product in comparison with the individual drug components (phenylephrine 2.5% and tropicamide 1%, respectively), and with a placebo. The primary endpoint for each study is the mean change in pupil diameter at 35 minutes post-drug administration. If the primary objectives of our Phase III program are met, we plan to submit an NDA to the FDA for marketing approval in the United States. Outside of the United States, we have entered into a licensing partnership for MicroStat with one of our largest stockholders and a leading ophthalmology company in Japan, Senju Pharmaceuticals, Co. Ltd. ( Senju Pharmaceuticals ), for commercialization in Asia, including China, Japan and India. MicroPine A key therapeutic program for Eyenovia is our first-in-class topical treatment for progressive myopia, a back-of-the-eye disease. Progressive myopia is estimated to affect close to 5 million patients in the United States who suffer from uncontrolled axial elongation of the sclera leading to increasing levels of myopia and in some cases major pathologic changes such as retinal atrophy, macular staphylomas, retinal detachment and visual impairment. Progressive Myopia with Retinal Atrophy Changes Fundus photographs showing the progression of myopic maculopathy from (A) category 2 (diffuse atrophy) to (B) category 4 (macular atrophy) Ophthalmology 2018;-:1e11 Academic groups have demonstrated that high efficacy with low dose atropine reduces myopia progression 60 70%, with sustained effect through three years. A recent therapeutic evidence assessment and review by the American Academy of Ophthalmology, indicates Level 1 (highest) evidence of efficacy for the role of low dose atropine for progressive myopia (Ophthalmology 2017;124:1857-1866; Ophthalmology 2016; 123(2) 391:399). While atropine 1% ophthalmic solution is commercially available, we believe the significant side effects associated with its use in the pediatric population make its use undesirable for the treatment of progressive myopia. TABLE OF CONTENTS Ophthalmology 2012;119:347 354 Phase III Clinical Development Program MicroPine is Eyenovia s clinical development program involving the formulation and the Optejet microdose administration of low-dose atropine for reduction of progressive myopia. Based on FDA feedback, we anticipate initiation of the single required Phase III trial enrolling children and adolescents who will use MicroPine therapy daily. The primary assessment of efficacy is based on reduction in myopia progression at three years, at which point the data will be analyzed and submitted in an NDA for FDA review, with a follow-up in the fourth year required to assess any rebound effects associated with a change in the medication regimen. MicroProst MicroProst is our proprietary latanoprost formulation product candidate, which we are developing as a first-line treatment for reduction of IOP in patients with OHT, POAG and CACG. Currently, there are no FDA-approved therapies for CACG, even though it accounts for an estimated 10% and 50% of all glaucoma diagnoses in the United States and China, respectively. We believe that the market for MicroProst exceeds $700 million annually in the United States alone. Phase III Clinical Development Program Subsequent to the completion of early phase clinical trials, we met with the FDA to discuss our Phase III plans for MicroProst. The FDA outlined the necessary clinical trials for approval and we are preparing to initiate a Phase III registration program for MicroProst relying on the 505(b)(2) pathway in the first half of 2019. If approved, we believe MicroProst could have the widest indication of commercially available IOP-lowering therapies, including the first FDA-approved treatment for CACG. Based on the results of our earlier study of Optejet-administered latanoprost (PG-21), we believe MicroProst will achieve similar clinical efficacy without the adverse effects seen with conventional drops, which overdose the eye with potentially harmful preservatives and active pharmaceutical ingredient. We anticipate that the MicroProst clinical program will require a single Phase III randomized controlled clinical trial involving patients with OHT, POAG and/or CACG, with a three-month primary endpoint evaluating IOP reduction and follow-up through six months for safety. We plan to begin the clinical trial for MicroProst in the first half of 2019. We have entered into a licensing partnership for our MicroProst program with Senju Pharmaceuticals for Asia, including China where CACG accounts for up to 50% of all glaucoma. MicroTears MicroTears is a micro-droplet ocular surface tear replenishment product candidate for the estimated $2 billion-plus (200 million units) annual OTC artificial tear market. The Optejet can enable accurate TABLE OF CONTENTS delivery of MicroTears directly to the ocular surface, which we believe will enhance its effectiveness. The lower volume of MicroTears could also lower the incidents of droplet overflow. While no FDA studies are required for registration of a monograph formulation, we expect to conduct multiple Phase IV post-marketing studies to demonstrate the benefits of MicroTears. We plan to complete formulation and manufacturing scale-up activities for an expected market introduction in mid-to-late 2019. Our Strategy Our goal is to become a leading ophthalmic biopharmaceutical company focused on developing and commercializing a strong pipeline of first-in-class microdose therapeutics and a digital health platform for interactive patient care. The key elements of our strategy to achieve this goal are: Establish a portfolio of first-in-class piezo-print micro-therapeutic products for front-of-the-eye treatments through the 505(b)(2) pathway with the FDA. We are initially focused on integrating our next-generation technology with therapeutic compounds already well-established in the topical treatment of ophthalmic indications. We believe that the 505(b)(2) registration pathway, which reduces development risk compared to new molecular entity programs by working with known compounds with well-established safety and efficacy profiles, will be available for our initial development pipeline. We believe our pipeline of patented micro-therapeutic product candidates will be highly differentiated by our improved tolerability and enhanced compliance profile, and our late-stage development programs could lead to NDA submissions in novel indications where the products can have unique dosing and therapeutic profiles. We believe that this could lead to favorable pricing and reimbursement, and a reduced risk of generic substitution. Improve clinical outcomes and patient experiences while providing an improved tolerability profile with our micro-therapeutics. We believe the Optejet will allow for high-precision targeted microdosing for front-of-the-eye treatments, while eliminating ophthalmic over-dosing and reducing ocular exposure to toxic preservatives and pharmacologic ingredients compared to conventional eyedrop delivery mechanisms. Our clinical trials have demonstrated equivalent efficacy to eyedrops, improved side effect profile and enhanced patient experience with the Optejet as compared to conventional eyedrops. Leverage our electronic, smartphone-enabled e-health technology to introduce and develop patient-specific compliance monitoring program. The mobile e-health technology within the Optejet is designed to track when a patient administers treatments, allowing physicians to track patient compliance more accurately. We believe this may enhance patient compliance and improve compliance monitoring by empowering patients and physicians with access to dynamic, real-time monitoring and compliance data for a more intelligent, informed and personalized therapeutic paradigm. Develop microdose treatments for other ophthalmic diseases independently or in collaboration with third parties. The Optejet is also suitable for new molecular entities. Leveraging our existing platform technology, we plan to continue developing, either independently or through strategic relationships with third parties, other product candidates for front-of-the-eye diseases that can be administered using the Optejet. We have entered into an exclusive agreement with Senju Pharmaceuticals, one of our largest stockholders and a leading ophthalmology company in Japan, for the Asian development and commercial rights to our therapies and technology. Develop solutions for ophthalmic conditions with high unmet needs and no approved therapy. We plan to target chronic ophthalmic conditions with a high unmet medical need. By leveraging our piezo-print microdosing technology, we aim to reach conditions where there are no approved drug therapies. For example, our MicroPine program involves a proprietary formulation of low-dose atropine intended to slow myopia progression in the pediatric population. There are currently no commercially-available therapies in the United States to treat this indication. TABLE OF CONTENTS Risks Associated with our Business Our business is subject to numerous risks and uncertainties, including those highlighted and incorporated by reference in the section entitled Risk Factors immediately following this prospectus summary. These risks include, but are not limited to, the following: We have incurred operating losses since our inception. We expect to continue to incur losses for the foreseeable future and might never achieve or maintain profitability. We have incurred operating losses of approximately $30.3 million since inception, have not generated any product sales revenue and have not achieved profitable operations. Our net losses were $5.1 million for the year ended December 31, 2017 and $11.1 million for the nine months ended September 30, 2018. We expect to continue to incur substantial losses in future periods while we continue to test and prepare our product candidates for the market. It could be several years, if ever, before we have a commercialized product. Even if we are able to generate revenues from the sale of our potential products, we might not become profitable and may need to obtain additional funding to continue operations. Our relatively short operating history may make it difficult for investors to evaluate the success of our business to date and to assess our future viability. We are a clinical-stage company, having commenced active operations in 2014. Our operations to date have been limited to organizing and staffing our company, business planning, raising capital and developing our product candidates. We have not yet demonstrated our ability to successfully complete a Phase III program, obtain regulatory approval, develop an in-house manufacturing facility, manufacture a commercial scale product, or conduct sales and marketing activities necessary for successful product commercialization. We might not be able to develop marketable products utilizing our technology and we might not be able to identify and successfully implement an alternative product development strategy. The approach we have adopted to discover and develop product candidates is new and might never lead to marketable products. We have concentrated our efforts on developing therapeutic product candidates utilizing a new advanced technology for drug delivery. If we are unsuccessful in developing product candidates utilizing our technology, we might be required to change the scope and direction of our product development activities. If we are not able to identify and successfully implement an alternative product development strategy, our business may fail. Ophthalmic micro-therapeutic research and development is a highly uncertain undertaking. Our development efforts may be delayed for any number of reasons, in which case potential marketing approval or commercialization of our proprietary technology could be delayed or prevented. Our research and development activities to develop ophthalmic micro-therapeutics utilizing our proprietary technology may be impeded due to scientific or technological difficulties or our lack of complete understanding of the challenges. Our research and development activities might not give rise to a marketable product and we might not succeed in developing a marketable product in a timely manner or in accordance with our estimated budgets. Even if we are successful in developing such products, there is no certainty that our products, when developed, will be found to be sufficiently effective and safe for use to receive regulatory approval for marketing. Even if we complete the necessary preclinical studies and clinical trials, the marketing approval process is expensive, time-consuming and uncertain, and may prevent us from obtaining approvals for the commercialization of some or all of our product candidates. If we are not able to obtain, or if there are delays in obtaining, required regulatory approvals, we will not be able to commercialize our product candidates, and our ability to generate revenue would be materially impaired. Our business depends on the success of our lead research and development programs, which require significant additional clinical testing before we can seek regulatory approval and potentially launch commercial sales. In addition, we do not have any products that have gained regulatory approval. Our business and future success depends on our ability to obtain regulatory approval of and then successfully commercialize our lead product candidates. If we are unable to develop or receive marketing approval in a timely manner or at all, we could experience significant delays or an inability to commercialize the product. TABLE OF CONTENTS Our product candidates are based on a novel technology, which makes it difficult to predict the time and cost of development and of subsequently obtaining regulatory approval. Human clinical trials are expensive, time-consuming and difficult to design and implement, in part because they are subject to rigorous regulatory requirements. Because our product candidates are based on new technologies, we expect that such human clinical trials will require extensive research and development and have substantial manufacturing and processing costs. Accordingly, our clinical trial costs could be significantly higher than other conventional therapeutic technologies or drug products, which would increase our losses and our need for additional financing. If the market opportunities for our future product candidates are smaller than we believe they are, our product revenues may be adversely affected and our business may suffer. We are currently focusing our research and product development efforts on our pupil dilation, progressive myopia, glaucoma, and dry eye products. Our understanding of both the number of people who have these needs, as well as the subset of people who have the potential to benefit from our product candidates, are based on estimates in published literature. While we believe these estimates are reasonable, they may prove to be incorrect and new studies may reduce the estimated incidence or prevalence of glaucoma and dry eyes and the need for pupil dilation, which would reduce our total addressable market and therefore our revenue. The commercial success of our product candidates will depend on the degree of market acceptance among ophthalmologists and optometrists, patients, patient advocacy groups, third-party payors and the medical community. Even if we receive regulatory approval to market our product candidates, our product candidates might not gain market acceptance upon their commercial introduction. We may have difficulties convincing the medical community, third-party payors and consumers to accept and use any of our product candidates that may be approved for commercialization in the future, which could prevent us from becoming profitable. We have material weaknesses in our internal control over financial reporting. In addition, because of our status as an emerging growth company, our independent registered public accountant is not required to provide an attestation report as to our internal control over financial reporting for the foreseeable future. We are required, pursuant to Section 404 of the Sarbanes-Oxley Act, to furnish a report by our management on, among other things, the effectiveness of our internal control over financial reporting for each fiscal year beginning with the one ending on December 31, 2018. We have undertaken the costly and challenging process of compiling the system and processing the documentation necessary to perform the evaluation needed to comply with Section 404. During this process, we identified certain material weaknesses in our internal controls over financial reporting. As provided in our Quarterly Report on Form 10-Q for the period ended September 30, 2018, management believes that the additional controls implemented are sufficient to address the material weaknesses it identified and are testing these controls. The assessment management is required to provide in its Annual Report on Form 10-K for the year ending December 31, 2018 will need to include disclosures of any material weaknesses in our internal control over financial reporting that are not yet fully remediated. The resulting uncertainty and cost could negatively impact our stock price. Our Team Our management team is a critical component to the execution of our overall strategy and business model and is led by our Chief Executive Officer and Chief Medical Officer, Dr. Tsontcho Ianchulev. Dr. Ianchulev has over 15 years of experience in public health, life-science and medical technology. He is a physician-executive and public health expert who has been at the core of developing medical products and technologies that have transformed the ophthalmic field and impacted medical care for thousands of patients each year. His intellectual property was a core asset to WaveTec s (acquired by Alcon) technology for intraoperative aberrometry. He is currently a Professor of Ophthalmology at the New York Eye and Ear Infirmary and sits on the Boards of Iantech Medical, Kurobe Pharmaceuticals and The American Society of Cataract and Refractive Surgery Foundation. Dr. Ianchulev spent five years at Genentech, where he headed the ophthalmology research group and directed the development and FDA approval of Lucentis, a successful specialty biologic in the field of ophthalmology with more than $4 billion of annual sales in 2015. TABLE OF CONTENTS Most recently, he headed all clinical development of Transcend Medical s (acquired by Alcon) micro-stent for glaucoma. We believe Dr. Ianchulev s clinical experience, combined with development and commercial work in both biopharmaceuticals and medical devices make him well suited to lead Eyenovia. Dr. Ianchulev is a graduate of Harvard Medical School and has an MPH degree from the Harvard School of Public Health. In addition to Dr. Ianchulev, the management team includes professionals with significant experience in translational science, drug evaluation, clinical development, regulatory affairs, finance, marketing and business development. Our management team is supported by our Board of Directors, which has extensive professional experience in strategic development, executive, operational and financial leadership in the pharmaceutical and healthcare industries, including several successful ophthalmology companies. Corporate Information We were organized as a corporation under the laws of the State of Florida on March 12, 2014 under the name PGP Holdings V, Inc. On May 5, 2014, we changed our name to Eyenovia, Inc. On October 6, 2014, we reincorporated in the State of Delaware by merging into Eyenovia, Inc., a Delaware corporation. Our principal executive office is located at 295 Madison Avenue, Suite 2400, New York, NY 10017, and our phone number is 917-289-1117. Our website is http://www.eyenoviabio.com. Information contained on, or that can be accessed through, our website is not incorporated by reference into this prospectus, does not constitute part of this prospectus and should not be relied upon in connection with making any investment in our securities. Implications of Being an Emerging Growth Company We qualify as an emerging growth company as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. An emerging growth company may take advantage of relief from certain reporting requirements and other burdens that are otherwise applicable generally to public companies. These provisions include: reduced obligations with respect to financial data, including presenting only two years of audited financial statements and only two years of selected financial data in this prospectus; an exception from compliance with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act; reduced disclosure about our executive compensation arrangements in our periodic reports, proxy statements and registration statements; and exemptions from the requirements of holding non-binding advisory votes on executive compensation or golden parachute arrangements. We may take advantage of these provisions for up to five years or such earlier time that we no longer qualify as an emerging growth company. We would cease to be an emerging growth company if we have more than $1.07 billion in annual revenue, have more than $700 million in market value of our capital stock held by non-affiliates or issue more than $1.0 billion of non-convertible debt over a three-year period. We intend to take advantage of the reduced reporting requirements with respect to disclosure regarding our executive compensation arrangements, have presented only two years of audited financial statements and only two years of related Management s Discussion and Analysis of Financial Condition and Results of Operations disclosure in our filings with the Securities and Exchange Commission ( SEC ), and have taken advantage of the exemption from auditor attestation on the effectiveness of our internal control over financial reporting. To the extent that we take advantage of these reduced reporting burdens, the information that we provide stockholders may be different than you might obtain from other public companies in which you hold equity interests. In addition, under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards until such time as those standards apply to private companies. We have elected to avail ourselves of this exemption from new or revised accounting standards and, therefore, we will not be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies. TABLE OF CONTENTS
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+Prospectus summary This summary highlights information contained elsewhere in this prospectus. This summary may not contain all of the information that you should consider before deciding to invest in our common shares. You should read this entire prospectus carefully, including the "Risk factors" section and the consolidated financial statements and the related notes to those statements appearing at the end of this prospectus, before making an investment decision. Overview We are a clinical-stage biopharmaceutical company focused on applying our proprietary anti-C5a technology to discover and develop first-in-class, potent and specific inhibitors of C5a. C5a is a powerful inflammatory mediator involved in the progression of a wide variety of autoimmune and other inflammatory diseases. Our lead product candidate, IFX-1, is a novel intravenously delivered first-in-class anti-C5a monoclonal antibody that selectively binds to free C5a and has demonstrated disease-modifying clinical activity and tolerability in multiple clinical settings. We are developing IFX-1 for the treatment of Hidradenitis Suppurativa, or HS, a rare and chronic debilitating systemic inflammatory skin disease. Beyond HS, we intend to develop IFX-1 and other proprietary antibodies to address a wide array of complement-mediated diseases with significant unmet medical needs, including ANCA-associated vasculitis, or AAV, a rare and life-threatening autoimmune disease. In our Phase IIa trial of IFX-1 in patients with severe HS, 75% of HS patients demonstrated a therapeutic response after only eight weeks of treatment and 83% of HS patients demonstrated a therapeutic response at the end of the trial observation period, with no drug-related adverse events detected. The trial was open-label and enrolled 12 HS patients classified as Hurley stage 3, the most severe classification. All 12 patients had failed to respond to prior treatment attempts, including adalimumab, to which nine out of the 12 patients failed to respond. Adalimumab, an inhibitor of tumor necrosis factor-alpha, or TNF-alpha, is the only approved HS therapy in the United States and Europe. We initiated a Phase IIb clinical trial with IFX-1 for HS in the first quarter of 2018. C5a is a central part of the complement system and a critical component of the innate immune system. Its most prominent role is to help the body defend itself against invading microorganisms through several mechanisms, including the rapid creation of an inflammatory environment and the production of factors that directly kill pathogens and recruit immune cells to sites of infection. Activation of the complement system ultimately results in the cleavage of C5, which leads to the generation of C5a and C5b. C5a creates an inflammatory environment by attracting and strongly activating neutrophils as well as by causing many different cell types to generate pro-inflammatory molecules. Such inflammation normally benefits the body by helping to fight infection, but excessive or uncontrolled generation of C5a can cause severe damage to the body s own tissue, thereby contributing to the pathophysiology of many autoimmune and inflammatory diseases. While the mode of action of C5a in inflammation has been intensely researched and confirmed, developing a highly specific antibody with the ability to fully block C5a while preserving a critical innate defense mechanism, the formation of the Membrane Attack Complex, or MAC, has been challenging. Our discovery of a novel epitope, or binding site, on C5a allowed us to overcome this challenge. Our lead product candidate, IFX-1, delivers a complete inhibition of C5a-induced biological effects while leaving MAC formation intact. The figure below summarizes key information about our current pipeline of product candidates: Our proprietary anti-C5a technology Despite C5a s well-characterized role in promoting inflammation and related tissue and organ damage in different diseases, no marketed drug targeting C5a exists. We discovered a conformational epitope on the surface of C5a, which allows us to generate antibodies that specifically block free C5a while keeping MAC formation intact. We believe that this represents a breakthrough in the field of terminal complement C5a inhibition. This specificity may be particularly valuable when treating diseases that are driven by C5a, such as HS and AAV. A conformational epitope on the surface of the C5a molecule allows for generation of highly specific blocking antibodies directed against C5a. We believe that blocking C5 upstream of C5a may inadequately block C5a formation. Our research has shown that C5a can be cleaved off from C5 by naturally occurring enzymes that are not part of the complement system even in the presence of a C5 inhibitor. Additionally, C5 inhibitors block C5b, which disrupts MAC formation, leaving patients susceptible to life-threatening infections. We believe that with our proprietary anti-C5a technology, we block the complement system specifically at an advantageous focal point while preserving its other beneficial functions. Our programs IFX-1 for Hidradenitis Suppurativa Our lead product candidate, IFX-1, is a novel intravenously delivered anti-C5a monoclonal antibody in development for HS, a chronic debilitating systemic skin disease which results in painful inflammation of the hair follicles, most notably in the armpit, groin and genitalia regions. The disease is characterized by painful inflammatory nodules, boils and abscesses, as well as draining fistulas, often requiring the use of bandages and diapers to absorb the constant flow of pus, thus adversely affecting quality of life. The target patient population for IFX-1 is HS patients displaying a moderate to severe form of the disease. In the United States, this disease has orphan designation, where we estimate that moderate to severe HS has a prevalence of up to 200,000 patients. The standard of care for HS patients includes topical, oral and intravenous antibiotics, as well as surgery, which at best only provide symptomatic relief. Currently, the only approved drug to treat HS in the United States and in Europe is adalimumab, an inhibitor of TNF-alpha. Combined results from the two pivotal adalimumab trials, which enrolled a total of 633 patients, showed that approximately 50% of the 316 patients who were treated with adalimumab achieved a response in the HS clinical response score, or HiSCR, while approximately 27% of the 317 patients who received placebo achieved a HiSCR response, in each case at the end of a 12-week treatment period. The HiSCR is the primary endpoint that was used to support regulatory approval by the U.S. Food and Drug Administration, or FDA, and the European Medicines Agency, or EMA, of adalimumab for the treatment of HS patients. Patients are considered to be HiSCR responders when they achieve a 50% or higher reduction of the combined abscess and nodule, or AN, count from baseline, but at the same time show no increase of the abscess or draining fistula count from baseline. Despite having demonstrated a clinical benefit, approximately 50% or more of the patients with moderate to severe HS do not respond to adalimumab, thus a high unmet need remains. We have demonstrated that HS patients have significant complement activation, with C5a playing a key disease promoting role. Based on final results from our open-label Phase IIa clinical trial which showed responses based on the same HiSCR endpoint, IFX-1 may have the potential to provide significant clinical benefit to moderate to severe HS patients. In this trial, IFX-1 was evaluated in a single center open-label study in 12 patients who were diagnosed with Hurley stage 3 and had failed to respond to prior treatment attempts, including adalimumab, to which nine out of the 12 patients failed to respond. The Hurley system is a classification system used to characterize the disease from early and easier to treat forms of HS in Hurley stage 1 to the chronic and difficult to treat forms in Hurley stages 2 and 3. Patients received weekly intravenous injections of IFX-1 for eight consecutive weeks and were subject to follow-up for three months thereafter. Final results from the trial demonstrated a HiSCR response in 75% of patients at the end of eight weeks of treatment and in 83% of patients at the end of the 12-week trial observation period, demonstrating initial clinical evidence of the product candidate s disease-modifying effect. While IFX-1 is a novel antibody whose potential therapeutic benefit is unproven, we believe our results in these very ill, refractory HS patients highlight the novel mechanism of action and the commercial potential of IFX-1, if approved. In addition, the final results from the trial revealed that weekly injections of IFX-1 resulted in significantly reduced C5a levels at 22 days and 50 days following the start of treatment while leaving MAC formation intact. The final results also demonstrated that IFX-1 administration was well tolerated, with no drug-related adverse events detected. Based on these results, we are currently planning to submit an application for an orphan drug designation with the FDA. In January 2018, the FDA accepted our previously submitted IND application, which allowed us to commence a larger multi-center international Phase IIb study to determine the efficacy and safety of IFX-1 in HS patients, and we commenced enrolling patients in February 2018. IFX-1 for ANCA-associated Vasculitis We are also developing IFX-1 for AAV, a rare life-threatening autoimmune disease that affects approximately 40,000 and 75,000 patients in the United States and Europe, respectively. A recently conducted study of Chemocentryx, Inc. s CCX168, an antagonist to the C5a receptor, or C5aR, demonstrated a proof of concept for the role of the C5a/C5aR signaling axis in AAV patients, providing evidence that inhibition of the C5a pathway may be beneficial in treatment of the disease. See "Business—Additional indications for IFX-1—ANCA-associated Vasculitis." We intend to initiate Phase II clinical development with IFX-1 in AAV patients in the second or third quarter of 2018, and we plan to seek orphan drug designation in the United States and Europe. Our strategy Our goal is to maintain and further advance our leadership position within the anti-C5a complement space, delivering first-in-class therapies to market. To achieve our goal, we are executing on the following strategies: Advance our lead program IFX-1 for HS to commercialization. Commence Phase II clinical development of IFX-1 for AAV and other complement-mediated neutrophil driven autoimmune and inflammatory diseases as well as for other areas. Pursue the clinical development of our follow on anti-C5a monoclonal antibody IFX-2 and continue to expand the breadth of our anti-C5a technology. Commercialize IFX-1, if approved, either independently or in collaboration with a partner. Solidify our leadership position in the anti-C5a space by leveraging the full potential of our proprietary anti-C5a technology and expertise in complement and inflammation. Risk factors Our business is subject to a number of risks of which you should be aware before making an investment decision. These risks are discussed more fully in the "Risk factors" section of this prospectus immediately following this Prospectus summary. These risks include the following: we have a history of significant operating losses and expect to incur significant and increasing losses for the foreseeable future and we will need substantial additional funding and may never achieve or maintain profitability; clinical testing for any product candidate is expensive, difficult to design and implement, can take many years to complete, including due to timing of any submission of filings for regulatory approval, and is inherently uncertain as to outcome; clinical failure may occur at any stage of clinical development, success in preclinical testing and early clinical trials does not ensure that later clinical trials will be successful and the results of any of our clinical trials may not support our proposed indications for our product candidates; we are heavily dependent on the success of IFX-1, our lead product candidate, and if IFX-1 does not receive regulatory approval or is not successfully commercialized, our business will be harmed; we may be unable to leverage our proprietary anti-C5a technology to discover and develop therapies to treat autoimmune and inflammatory diseases; it is difficult and costly to protect our intellectual property and our proprietary anti-C5a technology and we may not be able to ensure their protection; we face substantial competition, which may result in others discovering, developing or commercializing products before or more successfully than we do, and reducing or eliminating our commercial opportunity; our product candidates may cause or be perceived to cause undesirable side effects or have other properties that could delay or prevent their regulatory approval, limit the commercial profile of an approved label, or result in significant negative consequences following marketing approval, if any; we may expend our limited resources to pursue a particular product candidate or indication and fail to capitalize on product candidates or indications that may be more profitable or for which there is a greater likelihood of success; and we have broad discretion in the use of the net proceeds from this offering and may invest or spend the proceeds in ways with which you do not agree and in ways that may not yield a return on your investment. Implications of being an emerging growth company and a foreign private issuer We qualify as an "emerging growth company" as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. An emerging growth company may take advantage of relief from certain reporting requirements and other burdens that are otherwise applicable generally to public companies. These provisions include: inclusion of only three years of audited financial statements with correspondingly reduced "Management s discussion and analysis of financial condition and results of operations" disclosure in this prospectus; an exception from compliance with the auditor attestation requirements of Section 404 of the Sarbanes Oxley Act of 2002, as amended, or the Sarbanes-Oxley Act; reduced disclosure about our executive compensation arrangements in our periodic reports and registration statements; and exemptions from the requirements of holding non-binding advisory votes on executive compensation and golden parachute arrangements. We may take advantage of these provisions for up to five years or such earlier time that we cease to qualify as an emerging growth company. We would cease to qualify as an emerging growth company (i) upon the last day of the fiscal year (A) in which we had more than $1.07 billion in annual revenue, or (B) we are deemed to be a "large accelerated filer" under the rules of the SEC, which means the market value of our common shares that is held by non-affiliates exceeds $700 million as of the prior June 30th, or (ii) we issue more than $1.0 billion of non-convertible debt over a three-year period. We may choose to take advantage of some but not all of these reduced reporting requirements. To the extent that we take advantage of these reduced reporting requirements, the information that we provide stockholders may be different than you might obtain from other public companies in which you hold equity interests. In addition, under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards until such time as those standards apply to private companies. Given that we currently report and expect to continue to report under IFRS as issued by the IASB, we will not be able to avail ourselves of this extended transition period and, as a result, we will adopt new or revised accounting standards on the relevant dates on which adoption of such standards is required by the IASB. We currently report under the Exchange Act as a non-U.S. company with foreign private issuer status. Even after we no longer qualify as an emerging growth company, as long as we qualify as a foreign private issuer under the Exchange Act we will continue to be exempt from certain provisions of the Exchange Act that are applicable to U.S. domestic public companies, including: the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act; the sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and liability for insiders who profit from trades made in a short period of time; and the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q containing unaudited financial and other specific information, or current reports on Form 8-K, upon the occurrence of specified significant events. Both foreign private issuers and emerging growth companies are also exempt from certain more stringent executive compensation disclosure rules. Thus, even if we no longer qualify as an emerging growth company but remain a foreign private issuer, we will continue to be exempt from the more stringent compensation disclosures required of companies that are not emerging growth companies and will continue to be permitted to follow our home country practice on such matters. Corporate information Our principal executive offices are located at Winzerlaer Str. 2, 07745 Jena, Germany and our telephone number is (+49) 3641 508180. Our website is www.inflarx.com. The information contained in, or accessible through, our website is not incorporated into this prospectus or the registration statement of which it forms a part.
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+This summary highlights certain information about us, this offering and the information appearing elsewhere in this prospectus. This summary is not complete and does not contain all of the information that you should consider before investing in our common stock. You should read this entire prospectus carefully, including the information referred to under the heading Risk Factors and the financial statements and other information included elsewhere in this prospectus, before making an investment decision. See also the section entitled Where You Can Find More Information. Overview International Money Express, Inc., a Delaware corporation, is a rapidly growing and leading money remittance services company focused on the United States to Latin America and the Caribbean ( LAC ) corridor, which includes Mexico, Central and South America and the Caribbean. We utilize our proprietary technology to deliver convenient, reliable and value added services to our customers through a broad network of sending and paying agents. Our remittance services, which include a comprehensive suite of ancillary financial processing solutions and payment services, allow customers to send money from the United States to beneficiaries in Mexico, Guatemala and 15 additional Latin American countries. Our services are accessible in person through our approximately 100,000 sending and paying agents and company-owned stores, as well as online and via Internet-enabled mobile devices. Risk Factors There are a number of risks related to our business and our common stock that you should consider before making an investment decision. You should carefully consider all the information presented in the section entitled Risk Factors beginning on page 9 of this prospectus and the other information contained in this prospectus. Company History Intermex was founded in 1994 and is a provider of money transfer services to Mexico, Guatemala and other countries in Latin America through a network of authorized agents located in retail establishments in the United States. FinTech was formed in May 2015 as a special purpose acquisition company for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or other similar business combination, with one or more businesses or assets (the initial business combination ). On July 26, 2018, FinTech acquired Intermex pursuant to the Merger and changed its name to International Money Express, Inc. in connection with the Merger. Prior to the Merger, FinTech s common stock, units and warrants traded on the Nasdaq Capital Market under the symbols FNTE, FNTEU and FNTEW, respectively. Upon closing of the Merger, International Money Express, Inc. continued the listing of its common stock and warrants on the Nasdaq Capital Market under the symbols IMXI and IMXIW, respectively, effective July 27, 2018. Presentation of Financial and Operating Data The Merger was accounted for as a reverse merger. Intermex is considered the acquirer and FinTech is treated as the acquired company for financial reporting purposes. The financial statements of Holdings are included in this prospectus. Intermex Holdings II, Inc. and International Money Express, Inc. had no operations of their own and no assets, other than their ownership of Holdings and International Money Express Sub 2, LLC, respectively. UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Table of Contents ABOUT THIS PROSPECTUS You should rely only on the information contained in this prospectus or contained in any prospectus supplement or free writing prospectus filed with the SEC. If any statement in one of these documents is inconsistent with a statement in another document having a later date for example, a subsequently filed document in this prospectus the statement in the document having the later date modifies or supersedes the earlier statement. Any statement so modified or superseded will not be deemed, except as so modified or superseded, to constitute a part of this prospectus. We have not authorized anyone to provide you with any different or additional information other than that contained in this prospectus and the accompanying prospectus. We take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may provide. If anyone provides you with additional, different, or inconsistent information, you should not rely on it. Offers to sell, and solicitations of offers to buy, our common stock are being made only in jurisdictions where offers and sales are permitted. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of our common stock. Our business, financial condition, operating results, and prospects may have changed since such date. This prospectus does not constitute an offer, or an invitation on our behalf, to subscribe for and purchase any of the securities, and may not be used for or in connection with an offer or solicitation by anyone, in any jurisdiction in which such an offer or solicitation is not authorized or to any person to whom it is unlawful to make such an offer or solicitation. The financial statements of Intermex Holdings, Inc., an indirect wholly-owned subsidiary of the registrant, and its subsidiaries (together, Holdings ), are included in this prospectus. Intermex Holdings II, Inc. and the registrant had no operations of their own and no assets, other than their ownership of Intermex Holdings, Inc. and International Money Express Sub 2, LLC, respectively. Table of Contents Corporate Information The mailing address of International Money Express, Inc. s principal executive office is 9480 South Dixie Highway, Miami, Florida 33156 and the telephone number is (305) 671-8000. The website address is www.intermexonline.com. The information found on the website is not part of, and is not incorporated into, this prospectus. Recent Developments Credit Facility Refinancing We recently commenced syndication of a new $125 million five year senior secured credit facility, comprised of a $90 million senior secured term loan and a $35 million senior secured revolving credit facility. We expect to use the net proceeds of our new senior secured credit facility to repay in full our existing senior secured credit facility, including related prepayment fees, fees and expenses, and to terminate all outstanding commitments thereunder (the Proposed Refinancing ). We expect to use any remaining net proceeds and revolving availability for working capital and general corporate purposes. We anticipate that the Proposed Refinancing will occur in the fourth quarter of 2018. The consummation and actual terms of the Proposed Refinancing are subject to a number of factors, including market conditions, negotiation and execution of definitive agreements and satisfaction of customary closing conditions. There can be no assurance that the Proposed Refinancing will occur, or, if it does, as to the terms or timing of the Proposed Refinancing. Nasdaq Notice On August 28, 2018, we received a notice from the Staff of the Listing Qualifications Department (the Staff ) of Nasdaq indicating that, based upon our non-compliance with the minimum number of round lot holders for the listing of our common stock and warrants on The Nasdaq Capital Market, as set forth in Nasdaq Listing Rules 5550(a)(3) and 5515(a)(4), respectively, our common stock and warrants may be subject to delisting from Nasdaq unless we timely request a hearing before a Nasdaq Hearings Panel (the Panel ). We have requested, and been granted, a hearing before the Panel. At the hearing, we will outline our plan to regain compliance with the minimum number of round lot holders only with respect to the listing of our common stock. We recently submitted to Nasdaq a report of round lot holders of our common stock as of a record date of September 18, 2018 and believe we now have over 300 round lot holders. We are currently working with Nasdaq to regain compliance with all applicable listing requirements. In the interim, our common stock and warrants will continue to trade on The Nasdaq Capital Market under the current trading symbols IMXI and IMXIW, respectively. Amendment No. 1 to FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Table of Contents
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. This summary does not contain all of the information you should consider before investing in our common stock. You should read this entire prospectus carefully, especially the "Risk Factors" section beginning on page 12 and our financial statements and the related notes appearing at the end of this prospectus, before making an investment decision. Unless the context requires otherwise, references to "Inspire," the "Company," "we," "us," and "our," refer to Inspire Medical Systems, Inc. Overview We are a medical technology company focused on the development and commercialization of innovative and minimally invasive solutions for patients with obstructive sleep apnea. Our proprietary Inspire system is the first and only FDA-approved neurostimulation technology that provides a safe and effective treatment for moderate to severe obstructive sleep apnea. We have developed a novel, closed-loop solution that continuously monitors a patient's breathing and delivers mild hypoglossal nerve stimulation to maintain an open airway. The safety and efficacy of our Inspire therapy is supported by a significant body of clinical data, which includes a publication in the New England Journal of Medicine and more than 70 peer-reviewed publications. Inspire therapy received premarket approval, or PMA, from the U.S. Food and Drug Administration, or FDA, in April 2014 and has been commercially available in certain European markets since November 2011. Inspire therapy is indicated for patients with moderate to severe obstructive sleep apnea who do not have significant central sleep apnea and do not have a complete concentric collapse of the airway at the soft palate level. In addition, patients in the United States must have been confirmed to fail or be unable to tolerate positive airway pressure treatments, such as CPAP, and be 22 years of age or older, though there are no similar requirements for patients in Europe. Physicians have treated more than 4,000 patients with Inspire therapy at over 220 medical centers across the United States and Europe. Sleep apnea is a serious and chronic disease that negatively impacts a patient's sleep, health and quality of life. According to the World Health Organization, sleep apnea affects more than 100 million people worldwide. Obstructive sleep apnea, or OSA, is the most common form of sleep apnea. OSA occurs when a person's breathing is interrupted during sleep by a partially or completely blocked airway and affects patients of all ages, sexes and body types. The severity of OSA is measured by the number of partial or complete airway blockages that a patient experiences in an hour, referred to as the apnea-hypopnea index, or AHI. Moderate OSA patients have an AHI of 15 to 30 events per hour, while severe OSA patients have an AHI of 30 or more events per hour. Left untreated, OSA increases the risk of high blood pressure, hypertension, heart failure, stroke, coronary artery disease and other life-threatening diseases. Continuous positive airway pressure, or CPAP, is the leading therapy for patients with moderate to severe OSA. CPAP is delivered through a face or nasal mask that connects through a hose to a bedside air pump. The effectiveness of CPAP has been limited by low patient compliance, as many patients find the mask or treatment cumbersome, uncomfortable and loud. According to published literature, only approximately 35% to 65% of patients prescribed a CPAP device are compliant with the therapy. When CPAP fails or cannot be tolerated, patients' remaining treatment options are limited and consist primarily of invasive surgical procedures. We believe that there is both an urgent clinical need and a strong market opportunity for an alternative to CPAP that is safe, effective and minimally invasive. FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Table of Contents Inspire therapy is an innovative, closed-loop, minimally invasive solution that provides comfort and convenience, resulting in high compliance for patients with moderate to severe OSA. Our Inspire system consists of a remote control and three implantable components, which include a pressure sensing lead, a neurostimulator and a stimulation lead. Once implanted, the Inspire system uses a proprietary algorithm to continuously monitor a patient's breathing and delivers electrical stimulation that causes a slight forward movement of the back of the tongue. This forward movement helps to maintain an open airway, enabling the patient to inhale freely and without interruption. The results from multiple clinical trials, which include four sponsored and 12 independent clinical studies, together with patient-reported outcomes, have shown that our Inspire therapy provides statistically significant and sustained reduction in the severity of patients' OSA, improvement in sleep-related quality of life and reduction in snoring, as well as high patient compliance rates and a strong safety profile. Our pivotal clinical trial, the Stimulation Therapy for Apnea Reduction, or STAR, trial, was designed to demonstrate longitudinal therapy efficacy and included a randomized controlled therapy withdrawal study. Patients in the longitudinal study experienced an approximately 70% reduction in the median AHI from a baseline of 29.3 events per hour to 9.0 events per hour at 12 months following initial treatment. Ongoing STAR trial follow-up has shown results similar to the initial data at 18 months, three years and five years. At five years, median AHI remained low at 6.2 events per hour. The effectiveness of Inspire therapy was further demonstrated by the results of the randomized controlled therapy withdrawal study, in which patients in the therapy withdrawal group regressed to near-baseline AHI levels while patients in the control group that continued Inspire therapy experienced sustained therapeutic benefits. We sell our Inspire system to hospitals and ambulatory surgery centers, or ASCs, in the United States and in select countries in Europe through a direct sales organization. We have 40 sales representatives in the United States and six in Europe. Our direct sales force engages in sales efforts and promotional activities focused on ear, nose and throat, or ENT, physicians and sleep centers. In addition, we highlight our compelling clinical data and value proposition to increase awareness and adoption amongst referring physicians. We build upon this top-down approach with strong direct-to-patient marketing initiatives to create awareness of the benefits of our Inspire system and drive demand through patient empowerment. This outreach has helped to educate thousands of patients on our Inspire therapy and frequently results in patient leads. Our customers are reimbursed the cost required to treat each patient through various third-party payors, such as commercial payors and government agencies. We are in active discussions with commercial payors to establish positive national coverage policies to support reimbursement of Inspire therapy. In July 2018, Aetna Inc., one of the leading health plans in the United States, began providing coverage for our Inspire therapy, bringing the number of our secured positive coverage policies to nine U.S. commercial payors. In parallel, our 15-person reimbursement team, which we refer to as our market access team, is focused on assisting patients and physicians in obtaining appropriate prior authorization approvals from commercial payors on a case-by-case basis in advance of treatment with our Inspire therapy. We have been successful in obtaining prior authorization approvals from approximately 300 commercial payors. In addition, Medicare may cover our procedure on a medical necessity basis. We also have a U.S. government contract for patients who are treated by the Veterans Health Administration. We generated revenue of $28.6 million, with a gross margin of 78.9% and a net loss of $17.5 million, for the year ended December 31, 2017, compared to revenue of $16.4 million, with a gross margin of 76.2% and a net loss of $18.5 million, for the year ended December 31, 2016, and revenue of $8.0 million, with a gross margin of 64.9% and a net loss of $21.3 million for the year ended December 31, 2015. For the nine months ended September 30, 2018, we generated revenue of $34.0 million with a gross margin of 79.8% and a net loss of $17.1 million compared to revenue of Table of Contents In connection with the issuance of the convertible promissory notes, we also issued to the holders thereof warrants to purchase an aggregate of 278,507 shares of our Series C convertible preferred stock at an exercise price of $1.07 per share. Warrants to purchase 19,627 shares of our Series C convertible preferred stock were exercised in 2014, and warrants to purchase the remaining 258,880 shares of Series C convertible preferred stock were exercised in 2016. Warrants to purchase shares of our Series C convertible preferred stock converted into warrants to purchase shares of our common stock immediately prior to the closing of our IPO in accordance with their terms, including adjustments in connection with the 1-for-6.650 reverse stock split of our common stock effected on April 20, 2018. The following table summarizes the issuance and repayment of the convertible promissory notes and the issuance of the related warrants to holders of more than 5% of our capital stock and an entity affiliated with a member of our board of directors. Convertible Promissory Notes Participants Principal Amount(2) Interest Paid(3) Series C Convertible Preferred Stock Warrants (in thousands) (in thousands) Greater than 5% Stockholders(1) U.S. Venture Partners IX, L.P.(4) $ 959 $ 9 89,639 Synergy Life Science Partners, LP(5) $ 851 $ 8 79,602 KPCB Holdings, Inc.(6) $ 959 $ 9 89,639 Director Affiliates GDN Holdings, LLC(7) $ 210 $ Inspire Medical Systems, Inc. (Exact name of registrant as specified in its charter) Delaware (State or other jurisdiction of incorporation or organization) 3841 (Primary Standard Industrial Classification Code Number) 26-1377674 (I.R.S. Employer Identification No.) 9700 63rd Ave. N., Suite 200 Maple Grove, MN 55369 (844) 672-4357 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) Timothy P. Herbert Chief Executive Officer 9700 63rd Ave. N., Suite 200 Maple Grove, MN 55369 (844) 672-4357 (Name, address, including zip code, and telephone number, including area code, of agent for service) Table of Contents $18.6 million with a gross margin of 77.8% and a net loss of $13.3 million for the nine months ended September 30, 2017. Our accumulated deficit as of September 30, 2018 was $142.1 million. Our Market Opportunity The market for OSA treatment is large and growing. We believe there is a significant population in the United States with moderate to severe OSA who are unable to use or get consistent benefit from CPAP and who are eligible for our Inspire therapy. Currently, there are approximately 17 million individuals in the United States with moderate to severe OSA. Based on industry sources, we estimate that approximately 2 million patients are prescribed a CPAP device annually in the United States. Further, based on published literature, we estimate that at least 35% of patients prescribed a CPAP device are not compliant with the therapy and approximately 70% of those non-compliant patients have an airway anatomy that would allow for effective treatment with Inspire therapy. As a result, we believe the annual total addressable market for our Inspire therapy in the United States to be approximately 500,000 patients, which, based on our average selling price per implantation, represents an estimated annual market opportunity of approximately $10 billion. We also believe there is a substantial market opportunity outside the United States. Current Treatments for OSA and their Limitations There are several treatment options for OSA patients depending on the level of severity of the disease, ranging from lifestyle changes to surgery. Some patients are prescribed an oral device designed to prevent the airway from collapsing by shifting the position of the jaw forward; however, these devices are not always effective and are used primarily in mild to slightly moderate cases. CPAP is the leading therapy for patients with moderate to severe OSA but faces significant limitations as a therapeutic option, primarily due to low patient compliance. Commonly cited reasons patients fail to use the CPAP device on a regular basis include mask discomfort, mask leakage, pressure intolerance, skin irritation, nasal congestion, nasal drying, nosebleeds, claustrophobia and lack of intimacy. Low patient compliance persists despite the development of various CPAP devices designed to improve patient comfort and treatment through a variety of methods. In cases of moderate to severe OSA where CPAP has failed or patients have discontinued treatment, surgery may be an alternate therapy. Two of the primary surgical procedures for treating OSA are uvulopalatopharyngoplasty, or UPPP, and maxillomandibular advancement, or MMA. Both of these are invasive in-patient procedures that irreversibly alter the patient's anatomy, require extended recovery periods which are often painful, and have limited or unpredictable clinical benefit. Our Solution for OSA Our proprietary Inspire system is the first and only FDA-approved closed-loop neurostimulation technology that provides a safe and effective treatment for moderate to severe OSA. Our Inspire system consists of a remote control and three implantable components: a pressure sensing lead, which detects when the patient is attempting to breathe; a neurostimulator, which houses the electronics and battery power for the device; and a stimulation lead, which delivers electrical stimulation to the hypoglossal nerve, which is the nerve that controls forward movement of the tongue. To receive the Inspire system, patients undergo a short, minimally invasive outpatient surgical procedure, typically lasting two hours, during which the neurostimulator, sensing lead and stimulation lead are implanted in a series of three small incisions. Patients typically recover quickly and are able to resume normal activities in just a few days. Once the Inspire system has been activated, patients are able to turn it on when they plan to go to sleep and turn it off when they awaken. The device has a programmed delay, typically 30 minutes, to allow patients to fall asleep naturally before the device activates. Copies to: B. Shayne Kennedy Nathan Ajiashvili Latham & Watkins LLP 650 Town Center Drive, 20th Floor Costa Mesa, CA 92626 (714) 540-1235 Ilir Mujalovic Shearman & Sterling LLP 599 Lexington Avenue New York, NY 10022 (212) 848-4000 Table of Contents We believe our Inspire therapy overcomes many of the limitations of CPAP and other current treatments of moderate to severe OSA by providing the following key benefits: Safe, effective and durable treatment supported by compelling clinical data, including long-term efficacy results out to five years from initial treatment. Closed-loop system that uses a proprietary algorithm to continuously monitor patients' breathing and provides electrical stimulation during the inspiratory phase. Comfortable and convenient therapy resulting in high patient satisfaction that was reported to be 94% at an average of 12 months from initial treatment in the first 508 patients in our ongoing global patient registry. Strong patient compliance, with 80% of patients reporting continued nightly use through five years from initial treatment in our pivotal trial. Minimally invasive outpatient procedure with short recovery time. Long-lasting solution with a battery designed to last approximately 11 years without charging or maintenance. Our Competitive Strengths We believe the continued growth of our company will be driven by the following competitive strengths: First to market with an innovative, closed-loop, minimally invasive solution. We have developed the first and only FDA-approved neurostimulation technology that provides a safe and effective treatment for patients with moderate to severe OSA. Unlike CPAP, our Inspire therapy has shown high patient compliance. We believe our high patient compliance rate is due to our innovative, closed-loop, minimally invasive solution that is designed to provide comfort and convenience. We believe we have a significant first mover advantage and momentum over future competitors, as physicians have treated more than 4,000 patients with Inspire therapy. Significant body of strong clinical data. We have developed a significant body of clinical data that demonstrates the safety and effectiveness, therapy adherence and long-term sustained benefits of our Inspire therapy. The benefits of treatment with Inspire therapy have been consistent across four sponsored and 12 independent clinical studies that evaluated approximately 980 patients, including more than 280 patients evaluated in independent clinical studies, and have been highlighted in more than 70 peer-reviewed publications. Data reported in these clinical studies also demonstrated a high level of overall patient satisfaction. We believe this favorable data provides us with a significant competitive advantage and will continue to support increased adoption of our Inspire therapy. Holistic and targeted approach to market development and patient engagement. We have established a methodical approach to market development that centers on active engagement with patients, physicians and sleep centers. Our sales force is focused on building long-lasting relationships with ENT physicians and sleep centers as we support physicians through all aspects of a case. In addition, we are highlighting our compelling clinical data and value proposition to increase awareness and adoption amongst referring physicians. We build upon this top-down approach with strong direct-to-patient marketing initiatives which helps to educate thousands of patients on our Inspire therapy and frequently results in patient leads. We are confident that our approach to engagement across multiple constituents will continue to drive increased awareness of and demand for our Inspire therapy. Table of Contents Notes. The Bridge Notes matured on December 30, 2016, and accrued interest at a rate of 10% per year, payable in cash or in kind upon repayment. The aggregate principal amount and accrued interest on the Bridge Notes automatically converted into shares of our Series F convertible preferred stock at a conversion price of $1.37 per share upon the closing of the initial tranche of our Series F convertible preferred stock financing in October 2016. The following table summarizes the Bridge Notes purchased by holders of more than 5% of our capital stock, a member of our board of directors and an entity affiliated with a member of our board of directors, and the conversion of such Bridge Notes and accrued interest thereon into shares of our Series F convertible preferred stock. Bridge Notes Participants Principal Amount(1) Interest(2) Shares of Series F Convertible Preferred Stock (in thousands) (in thousands) Greater than 5% Stockholders(3) U.S. Venture Partners IX, L.P.(4) $ 844 $ 18 629,658 Orbimed Private Investments V, L.P.(5) $ 743 $ 16 554,316 Synergy Life Science Partners, LP(6) $ 848 $ 18 632,597 KPCB Holdings, Inc.(7) $ 844 $ 18 629,658 Medtronic $ 159 $ 3 118,591 Directors and Affiliates GDN Holdings, LLC(8) $ 199 $ 4 148,468 Jerry Griffin, M.D. $ Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer", "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act. Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company Emerging growth company If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. Table of Contents Dedicated team focused on providing market access for patients and providers. We have a highly efficient approach to advance patients, once identified, to placement of the Inspire system. Our dedicated market access team helps patients and providers work with payors to secure the appropriate prior authorization approvals in advance of initial treatment. This highly leverageable team has been successful in securing reimbursement from approximately 300 commercial payors. In addition, this team continues to work with payors to establish positive coverage policies by highlighting the compelling clinical data and the economic benefits of our Inspire therapy, and has successfully secured positive coverage policies from nine U.S. commercial payors to date, including Aetna, Inc. Strong research and development capabilities and comprehensive intellectual property portfolio. Our commitment to driving innovation has allowed us to achieve continuous, significant improvements of our Inspire therapy. For example, in the United States, we launched in July 2017 the fourth generation of our Inspire system, which has several benefits including a significantly smaller size with an approximate 11-year battery life and allowing patients to undergo an MRI scan of the head or extremities. We launched our fourth generation Inspire system in Europe in the second quarter of 2018. We have a comprehensive patent portfolio to protect our intellectual property and technology, with rights as of September 30, 2018 to 20 issued U.S. patents, 22 issued foreign patents, 25 pending U.S. patent applications and 39 pending foreign patent applications that cover aspects of our Inspire system and future product concepts. Our Strategy Our goal is to be a global leader in providing clinically proven innovative solutions that improve sleep, quality of life and health of patients with moderate to severe OSA. We believe the following strategies will play a critical role in achieving this goal and our future growth: Promote awareness among patients, ENT physicians, sleep centers and referring physicians. We believe that many patients and physicians are unaware of our Inspire therapy. We intend to continue to promote awareness of our therapy through training and educating ENT physicians, sleep centers, referring physicians, key opinion leaders and various medical societies. We also plan to continue building patient awareness through our direct-to-patient marketing initiatives, which include paid search, radio, social media and online videos. Expand our U.S. sales and marketing organization to drive adoption of our Inspire therapy. We plan to expand our sales and marketing organization and seek to recruit and train exceptionally talented sales representatives in existing and new markets in the United States to help us broaden adoption of our Inspire therapy and drive revenue growth. Leverage our prior authorization model while we work with payors to broaden coverage. Our dedicated in-house market access team will continue to assist patients and physicians in obtaining prior authorization approvals from commercial payors for treatment with our Inspire therapy. In parallel, we plan to continue our active discussions with commercial payors to establish positive national coverage policies. Invest in research and development to drive innovation and expand indications. We are committed to ongoing research and development and intend to invest in our business to further improve our products and clinical outcomes, increase patient acceptance and comfort and broaden the patient population that can benefit from our Inspire therapy. For example, we are currently evaluating the use of Inspire therapy in pediatric patients with Down syndrome. CALCULATION OF REGISTRATION FEE Title of Each Class of Securities To Be Registered Proposed Maximum Aggregate Offering Price(1) Amount of Registration Fee(2) Common Stock, $0.001 par value per share $137,683,750 $16,688 (1)Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended. Includes 375,000 shares of common stock that the underwriters have an option to purchase. (2)Calculated pursuant to Rule 457(o) based on an estimate of the proposed maximum aggregate offering price. Table of Contents Further penetrate and expand into existing and new international markets. We plan to establish and strengthen our presence in existing international markets in Europe, including Germany and the Netherlands, and expand our reach to new international markets, such as Japan. Risks Associated with Our Business Our business is subject to a number of risks that you should be aware of before making an investment decision. You should carefully consider all of the information set forth in this prospectus and, in particular, should evaluate the specific factors set forth under "Risk Factors" in deciding whether to invest in our common stock. Among these important risks are the following: We have incurred significant operating losses since inception, we expect to incur operating losses in the future and we may not be able to achieve or sustain profitability. Our revenue is primarily generated from sales of our Inspire system and we are therefore highly dependent on it for our success. If we are unable to increase patient and physician awareness of our Inspire therapy, our ability to increase our revenue and grow our business will be impaired. If patients or physicians are not willing to change current practices to adopt our Inspire therapy to treat moderate to severe OSA, our Inspire therapy may fail to gain increased market acceptance, and our business will be adversely affected. If we are unable to achieve and maintain adequate levels of coverage or reimbursement for our Inspire system, or any future products we may seek to commercialize, our commercial success may be severely hindered. If we are unable to expand, manage and maintain our direct sales and marketing organization we may not be able to generate revenue growth. We rely on a limited number of third-party suppliers and contract manufacturers for the manufacture and assembly of our products, and a loss or degradation in performance of these suppliers and contract manufacturers could have a material adverse effect on our business, financial condition and results of operations. Our products and operations are subject to extensive government regulation and oversight both in the United States and abroad, and our failure to comply with applicable requirements could harm our business. If we are unable to adequately protect our intellectual property rights, or if we are accused of infringing on the intellectual property rights of others, our competitive position could be harmed or we could be required to incur significant expenses to enforce or defend our rights. Corporate Information We were incorporated in Delaware in November 2007 when our predecessor, Inspire Medical Systems, LLC, a Minnesota limited liability company, was spun-off from Medtronic Inc. (now Medtronic Public Limited Company), or Medtronic. Inspire Medical Systems, LLC merged with us in November 2007, and we continued as the surviving entity. Our offices are located at 9700 63rd Avenue North, Suite 200, Maple Grove, Minnesota 55369. Our telephone number is (844) 672-4357. Our corporate website is www.inspiresleep.com. The information contained on or that can be accessed through our website is not incorporated by reference into this prospectus, and you should not consider information on our website to be part of this prospectus or in deciding to purchase our common stock. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. Table of Contents Implications of Being an Emerging Growth Company We are an "emerging growth company" as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. As such, we may take advantage of certain exemptions from various reporting requirements that are applicable to other publicly-traded entities that are not emerging growth companies. These exemptions include: the option to present only two years of audited financial statements and only two years of related Management's Discussion and Analysis of Financial Condition and Results of Operations in this prospectus; not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002; not being required to comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor's report providing additional information about the audit and the financial statements (i.e., an auditor discussion and analysis); not being required to submit certain executive compensation matters to stockholder advisory votes, such as "say-on-pay," "say-on-frequency," and "say-on-golden parachutes;" and not being required to disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the chief executive officer's compensation to median employee compensation. As a result, we do not know if some investors will find our common stock less attractive. The result may be a less active trading market for our common stock, and the price of our common stock may become more volatile. Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 13(a) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to avail ourselves of this exemption and, as a result, our financial statements may not be comparable to the financial statements of issuers who are required to comply with the effective dates for new or revised accounting standards that are applicable to public companies. Section 107 of the JOBS Act provides that we can elect to opt out of the extended transition period at any time, which election is irrevocable. We will remain an emerging growth company until the earliest of: (i) the last day of the first fiscal year in which our annual gross revenues exceed $1.07 billion; (ii) the last day of 2023; (iii) the date that we become a "large accelerated filer" as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our common equity held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter; or (iv) the date on which we have issued more than $1.0 billion in non-convertible debt securities during any three-year period. Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. Subject to Completion Preliminary Prospectus dated December 4, 2018 PROSPECTUS 2,500,000 Shares Inspire Medical Systems, Inc. Common Stock Table of Contents The Offering Common stock offered by us 1,500,000 shares. Common stock offered by the selling stockholders 1,000,000 shares. Common stock to be outstanding after this offering 22,891,590 shares (or 23,266,590 if the underwriters exercise in full their option to purchase additional shares of common stock). Option to purchase additional shares We have granted the underwriters a 30-day option to purchase up to 375,000 additional shares of our common stock at the public offering price less the underwriting discounts and commissions. Use of proceeds We estimate that the net proceeds to us from this offering will be approximately $66.8 million (or approximately $83.7 million if the underwriters exercise in full their option to purchase additional shares of common stock), based on an assumed public offering price of $47.89 per share, the last reported sale price of our common stock on the New York Stock Exchange, or NYSE, on December 3, 2018, and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us. We intend to use the net proceeds from this offering to hire additional sales and marketing personnel and expand marketing programs in the United States, Europe and Japan, to fund product development and research and development activities and the remainder for working capital and general corporate purposes. We will not receive any proceeds from the sale of any shares of our common stock by the selling stockholders in this offering. See "Use of Proceeds."
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2018/IQ_iqiyi-inc_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/IQ_iqiyi-inc_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/IQ_iqiyi-inc_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2018/IR_ingersoll_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/IR_ingersoll_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/IR_ingersoll_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2018/JRSS_jrsis_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/JRSS_jrsis_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..4aa464e8d5c1d4c1ff974e9528aa81a512608001
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/JRSS_jrsis_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights certain information contained elsewhere in this prospectus. You should read the entire prospectus carefully, including our financial statements and related notes, and especially the risks described under "Risk Factors" beginning on page 6. All references to "we," "us," "our,", "Company" or similar terms used in this prospectus refer to JRSIS HEALTH CARE CORPORATION. Unless otherwise indicated, the term "fiscal year" refers to our fiscal year ending December 31. Unless otherwise indicated, the term "common stock" refers to shares of the Company s common stock. Overview Harbin Jiarun Hospital Company Limited ("Jiarun Hospital") was established in Harbin in the Province of Heilongjiang of the People s Republic of China ("PRC") by the owner Junsheng Zhang on February 17, 2006. Jiarun is a private hospital serving patients on a municipal and county level and providing both Western and Chinese medical practices to the residents of Harbin. Jiarun specializes in the areas of Pediatrics, Dermatology, ENT, Traditional Chinese Medicine (TCM), Ophthalmology, Internal Medicine Dentistry, General Surgery, Rehabilitation Science, Gynecology, General Medical Services, etc. On November 20, 2013, Junsheng Zhang, the officer of Jiarun Hospital established JRSIS HEALTH CARE CORPORATION, a Florida corporation ("JHCC" or the "Company"). On February 25, 2013, the officer of Jiarun Hospital established JRSIS HEALTH CARE LIMITED ("JHCL"), a wholly owned subsidiary of the Company, and On September 17, 2012, the officer of Jiarun Hospital established Runteng Medical Group Co., Ltd ("Runteng"), a wholly owned subsidiary of JHCL. Runteng, a Hong Kong registered Investment Company, holds a seventy percent (70%) ownership interest in Harbin Jiarun Hospital Company Ltd, a Heilongjiang registered company. On December 20, 2013, the Company acquired One Hundred Percent (100%) of the issued and outstanding capital stock of JRSIS Health Care Limited, a privately held Limited Liability Company registered in the British Virgin Islands ("JHCL") for Twelve Million (12,000,000) shares of our common stock. JHCL, through its wholly owned subsidiary, Runteng Medical Group Co., Ltd ("Runteng"), holds majority ownership in Harbin Jiarun Hospital Co., Ltd, a company duly incorporated, organized and validly existing under the laws of China ("Jiarun"). As the parent company, JHCC rely on Jiarun Hospital to conduct One Hundred Percent (100%) of our businesses and operations. We have two sources of patient revenues: in-patient service revenues and out-patient service revenues. In addition to provide services to our patients, we also sell pharmaceutical medicines to our patients. Revenues from such sales are included in either our in-patient service revenues or our out-patient service revenues. Our revenues come from individuals as well as third-party payers, including PRC government programs and insurance providers, under which the hospital is paid based upon local government established charges. Revenue from the sale of medicine is recognized when it is both earned and realized. The Company s policy is to recognize the sale of medicine when the title of the medicine, ownership and risk of loss have transferred to the purchasers, and collection of the sales proceeds is reasonably assured, all of which generally occur when the patient receives the medicine. Patient service revenue is recognized when it is both earned and realized. The Company s policy is to recognize patient service revenue when the medical service has been provided to the patient and collection of the revenue is reasonably assured. All of the shares covered by this prospectus are being offered for resale by the selling stockholder named in this prospectus. We will not receive any proceeds from the sale of the shares. An investment in our common stock is speculative and involves substantial risks. You should read the "Risk Factors" section of this prospectus for a discussion of certain factors to consider carefully before deciding to invest in shares of our common stock. Recent Developments We have incorporated by reference into this prospectus our annual report on Form 10-K for the fiscal year ended December 31, 2014 that was filed with the SEC on March 31, 2015, and quarterly report on Form 10-Q for the three, six and nine months ended September 30, 2015 that was filed with the SEC on November 16, 2015, and the Company s annual report on Form 10-K for the fiscal year ended December 31, 2015 that was filed with the SEC on March 29, 2016, and quarterly report on Form 10-Q for the three, six and nine months ended September 30, 2016 that was filed with the SEC on November 14, 2016, and the Company s annual report on Form 10-K for the fiscal year ended December 31, 2016 that was filed with the SEC on March 29, 2017, and quarterly report on Form 10-Q for the three, six and nine months ended September 30, 2017 was filed with the SEC on November 13, 2017, and the Company s annual report on Form 10-K for the fiscal year ended December 31, 2017 that was filed with the SEC on April 17, 2018, and quarterly report on Form 10-Q for the three months ended March 31, 2018 was filed with the SEC on May 14, 2018. Our common stock has been assigned the trading symbol "JRSS", and our common stock is trading on The OTCQB Market. Summary of the Offering Shares of common stock offered by us: None. Shares of common stock offered by Selling Stockholder: 2,226,000 shares of our common stock. Use of Proceeds: We will not receive any proceeds from the sale of common stock offering by the selling stockholders covered by this prospectus.
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diff --git a/parsed_sections/prospectus_summary/2018/KARX_karbon-x_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/KARX_karbon-x_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..4d0cb00f28d449f09c7bc2650fd24135c8f6fae8
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/KARX_karbon-x_prospectus_summary.txt
@@ -0,0 +1,77 @@
+PROSPECTUS SUMMARY
+ 
+ This summary provides an overview of selected information contained elsewhere in this prospectus. It does not contain all the information you should consider before making a decision to purchase the shares we are offering. You should very carefully and thoroughly read the more detailed information in this prospectus and review our financial statements contained herein. 
+ 
+ AS USED IN THIS PROSPECTUS, UNLESS THE CONTEXT OTHERWISE REQUIRES, WE, US, AND OUR REFERS TO COCOLUV INC. THE FOLLOWING SUMMARY IS NOT COMPLETE AND DOES NOT CONTAIN ALL OF THE INFORMATION THAT MAY BE IMPORTANT TO YOU. YOU SHOULD READ THE ENTIRE PROSPECTUS BEFORE MAKING AN INVESTMENT DECISION TO PURCHASE OUR COMMON STOCK. ALL FINANCIAL INFORMATION IS STATED IN UNITED STATES DOLLARS UNLESS OTHERWISE SPECIFIED. OUR FINANCIAL STATEMENTS ARE PREPARED IN ACCORDANCE WITH ACCOUNTING PRINCIPALS GENERALLY ACCEPTED IN THE UNITED STATES.
+ 
+ COCOLUV INC.
+ 
+ We are an emerging growth stage company which intends which intends to manufacture, market and sell a product line of five (5) haircare products derived from Virgin Coconut Oil. We currently have no product to sell, but we intend to create a haircare line of which will initially consist of five products; three for women and two for men. Our proposed products will be of superior quality in that they will have of base of Virgin Coconut oil. CocoLuv Inc. was incorporated in Nevada on September 13, 2017. We intend to use the net proceeds from this offering to operate our business only until Phase I of our Plan of Operation. Being a development stage company, we have no revenues or operating history. Our principal executive offices are located at 1390 Main Street, Suite 200, San Francisco, California 94102-5404. Our phone number is (800) 294-8513. 
+ 
+ From inception until the date of this filing, we have had no operating activities. Our financial statements from inception (September 13, 2017) through the year ended May 31, 2018 and for the period ending November 30, 2018 reports no revenues and a net loss of $9,798. Our independent registered public accountant has issued an audit opinion for CocoLuv Inc. which includes a statement expressing substantial doubt as to our ability to continue as a going concern.
+ 
+ CocoLuv Inc. anticipates that it will derive its income from the sale of its proposed line of haircare products. We do not anticipate earning revenues until such time as we enter into commercial operation, which is defined as activities which involves the buying and selling of our proposed haircare products in exchange for compensation. We anticipate being in commercial operations within 12 to 18 months of closing this Offering. Anticipated expenditures over the next twelve months is estimated to be $200,000. Since we are presently in the development stage of our business, we can provide no assurance that we will successfully assemble, manufacturer and sell any products or services related to our planned activities. Further we cannot provide investors with any assurance that we will be able to raise sufficient funds to proceed with any work or activities.
+ 
+ Our plan of operation has two Phases. In Phase I, we intend to complete this offering and source and develop our business relationship with a proposed manufacturer and supplier while seeking out additional companies to provide us the same services for redundancy and possible competitive price advantages. In Phase II, we plan to conduct social media marketing to support initial customer online sales and begin to market our complete product lines for sale and use in salons and spas. Within the next 12 to 24 months CocoLuv Inc. plans to begin manufacturing of the 5 different hair products and to be in commercial operations. Expected expenditure s over the next twelve months are estimated to be $200,000. If we do not raise the full amount to be raised in this offering will may not have sufficient funds for us to begin our proposed operations and may not cover the cost of the offering. We cannot provide investors with any assurance that we will be able to raise sufficient funds to proceed with any work or activities.
+ 
+ In Phase II we estimate raising an additional $250,000 and is anticipated to take approximately 12 to 15 months to complete. As with Phase I, we cannot provide investors with any assurance that we will be able to raise sufficient funds to proceed with any work or activities of Phase I of our proposed development program. We plan to raise the additional funding for Phase II by way of a private debt or equity financing but have not commenced any activities to raise such funds.
+ 
+ As with Phase I, we will require additional funding to proceed with Phase II, we have no current plans on how to raise the additional funding, and we cannot provide investors with any assurance that we will be able to raise sufficient funds to proceed with any work or activities on Phase II of the proposed development program. Please refer to our Plan of Operations on page 14 of this Offering.
+ 
+ Neither management nor the Company s shareholders have plans or intentions to be acquired. CocoLuv Inc. is not a blank check registrant as that term is defined in Rule 419(a)(2) of Regulation C of the Securities Act of 1933, since it has a specific business plan or purpose. 
+ 
+ As of the date of this prospectus, there is no public trading market for our common stock and no assurance that a trading market for our securities will ever develop.
+ 
+ 
+ 5
+ 
+ 
+ Table of Contents
+
+ 
+ THE OFFERING
+ 
+ CocoLuv Inc. has 4,000,000 of common stock issued and outstanding and is registering an additional 3,000,000 shares of common stock for offering to the public. The Company may endeavor to sell all 3,000,000 shares of common stock after the registration becomes effective. The price at which the Company offers these shares is fixed at $0.05 per share for the duration of the offering. There is no arrangement to address the possible effect of the offering on the price of the stock. CocoLuv Inc. will receive all proceeds from the sale of the common stock.
+ 
+ The Issuer:
+ CocoLuv Inc.
+
+ 
+
+ Securities Being Offered:
+ 3,000,000 shares of common stock
+
+ 
+
+ Offering Price:
+ $0.05 per common share
+
+ 
+
+ Minimum number of shares to be sold in this offering:
+ None
+
+ 
+
+ Termination of the Offering:
+ This offering will conclude at when all the securities offered are sold or within 140 days after the registration statement becomes effective with the Securities and Exchange Commission whichever occurs first. CocoLuv Inc. may at its discretion extend the offering for an additional 60 days. (see Plan of Distribution).
+
+ 
+
+ Net Proceeds:
+ $137,481 (one hundred and thirty-seven thousand four hundred and eighty-one). (The $137,481 is Net of the $12,519 registration costs.) 
+
+ 
+
+ Use of Proceeds:
+ See Use of Proceeds and the other information in this prospectus.
+
+ 
+
+ Outstanding Shares of Common Stock:
+ There are 4,000,000 shares of common stock issued and outstanding as November 30, 2018 held solely by our President and Chief Executive Officer, Reymund Guillermo 
+
+ 
+
+ Terms of the offering:
+ The Company s president and sole director will sell the common stock upon the effectiveness of this registration statement.
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diff --git a/parsed_sections/prospectus_summary/2018/KCRD_kindcard_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/KCRD_kindcard_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..0530309368a2a41ac89a313b6662de4635a6c3ea
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/KCRD_kindcard_prospectus_summary.txt
@@ -0,0 +1,1497 @@
+SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
+
+ 
+
+Basis of Presentation
+
+ 
+
+The financial statements present the balance sheet, statements of operations, stockholders deficit and cash flows of the Company. These financial statements are presented in the United States dollars and have been prepared in accordance with accounting principles generally accepted in the United States.
+
+ 
+
+Use of Estimates and Assumptions
+
+ 
+
+Preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Accordingly, actual results could differ from those estimates.
+
+ 
+
+Cash and Cash Equivalents
+
+ 
+
+For purposes of the statement of cash flows, the Company considers highly liquid financial instruments purchased with a maturity of three months or less to be cash equivalents.
+
+ 
+
+Fair Value of Financial Instruments
+
+ 
+
+The carrying amount of the Company s financial assets and liabilities approximates their fair values due to their short term maturities.
+
+ 
+
+Loss per Common Share
+
+ 
+
+The basic loss per share is calculated by dividing the Company s net loss available to common shareholders by the weighted average number of common shares during the year. The diluted loss per share is calculated by dividing the Company s net loss available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity. Diluted loss per share is the same as basic loss per share due to the lack of dilutive items in the Company. As of January 31, 2017, there were no common stock equivalents outstanding.
+
+ 
+
+ 
+
+F-7
+
+ 
+
+Table of Contents
+
+ 
+
+MWF GLOBAL INC.
+
+NOTES TO FINANCIAL STATEMENTS
+
+JANUARY 31, 2017
+
+ 
+
+Income Taxes
+
+ 
+
+The Company follows the liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax balances and tax loss carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to the taxable income in the years in which those differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the date of enactment. 
+
+ 
+
+Stock-based Compensation
+
+ 
+
+The Company follows ASC 718-10, "Stock Compensation", which addresses the accounting for transactions in which an entity exchanges its equity instruments for goods or services, with a primary focus on transactions in which an entity obtains employee services in share-based payment transactions. ASC 718-10 is a revision to SFAS No. 123, "Accounting for Stock-Based Compensation," and supersedes Accounting Principles Board ("APB") Opinion No. 25, "Accounting for Stock Issued to Employees," and its related implementation guidance. ASC 718-10 requires measurement of the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award (with limited exceptions). Incremental compensation costs arising from subsequent modifications of awards after the grant date must be recognized. The Company has not adopted a stock option plan and has not granted any stock options. As at January 31, 2017 the Company had not adopted a stock option plan nor had it granted any stock options. Accordingly no stock-based compensation has been recorded to date.
+ 
+
+Recent Accounting Pronouncements
+
+ 
+
+The Company does not expect the adoption of any recent accounting pronouncements to have a material impact on its financial statements.
+
+ 
+
+NOTE 3 COMMON STOCK
+
+ 
+
+The Company s capitalization is 200,000,000 common shares with a par value of $0.001 per share. No preferred shares have been authorized or issued.
+
+ 
+
+On January 20, 2017, the Company issued 6,500,000 common shares at $0.001 per share to the sole director and President of the Company. Subsequent to the period ended January 31, 2017, on March 6 and March 23, 2017, the Company received net proceeds of $6,500 in payment of the shares.
+
+ 
+
+NOTE 4 RELATED PARTY TRANSACTIONS
+
+ 
+
+During the period ended January 31, 2017, the Company received cash advances from its CEO of $200. Additionally, the CEO paid expenses of $1,706 on behalf of the Company. The total amount owed to the CEO as of January 31, 2017 was $1,906. The amounts due to related party are unsecured and non- interest-bearing with no set terms of repayment.
+
+ 
+
+ 
+
+F-8
+
+ 
+
+Table of Contents
+
+ 
+
+MWF GLOBAL INC.
+
+NOTES TO FINANCIAL STATEMENTS
+
+JANUARY 31, 2017
+
+ 
+
+NOTE 5 INCOME TAXES
+
+ 
+
+A reconciliation of the provision for income taxes at the United States federal statutory rate compared to the Company s income tax expense as reported is as follows:
+
+ 
+
+ 
+
+ 
+
+January 31,
+
+2017
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+Net loss before income taxes per financial statements
+
+ 
+
+$
+(1,746
+)
+
+Income tax rate
+
+ 
+
+ 
+
+34
+%
+
+Income tax recovery
+
+ 
+
+ 
+
+(594
+)
+
+Non-deductible
+
+ 
+
+ 
+
+--
+
+ 
+
+Valuation allowance change
+
+ 
+
+ 
+
+594
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+Provision for income taxes 
+
+ 
+
+$
+ 
+
+ 
+
+ 
+
+The significant component of deferred income tax assets at January 31, 2017, is as follows:
+
+ 
+
+ 
+
+ 
+
+January 31,
+
+2017
+
+ 
+
+Net operating loss carry-forward
+
+ 
+
+$
+594
+
+ 
+
+Valuation allowance
+
+ 
+
+ 
+
+(594
+
+)
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+Net deferred income tax asset
+
+ 
+
+$
+ 
+
+ 
+
+ 
+
+The amount taken into income as deferred income tax assets must reflect that portion of the income tax loss carry forwards that is more likely-than-not to be realized from future operations. The Company has chosen to provide a full valuation allowance against all available income tax loss carry forwards. The Company has recognized a valuation allowance for the deferred income tax asset since the Company cannot be assured that it is more likely than not that such benefit will be utilized in future years. The valuation allowance is reviewed annually. When circumstances change and which cause a change in management's judgment about the realizability of deferred income tax assets, the impact of the change on the valuation allowance is generally reflected in current income.
+
+ 
+
+As of January 31, 2017 the Company has no unrecognized income tax benefits. The Company s policy for classifying interest and penalties associated with unrecognized income tax benefits is to include such items as tax expense. No interest or penalties have been recorded during the year ended January 31, 2017 and no interest or penalties have been accrued as of January 31, 2017. As of January 31, 2017, the Company did not have any amounts recorded pertaining to uncertain tax positions.
+
+ 
+
+The tax years from 2017 and forward remain open to examination by federal and state authorities due to net operating loss and credit carryforwards. The Company is currently not under examination by the Internal Revenue Service or any other taxing authorities.
+
+ 
+
+NOTE 6 SUBSEQUENT EVENTS
+
+ 
+
+Subsequent to the period ended January 31, 2017, on March 6 and March 23, 2017, the Company received net proceeds of $6,500 in payment of the shares issued to the President of the Company.
+
+ 
+
+The Company has evaluated subsequent events through July 21, 2017 which is the date the financial statements were available to be issued.
+
+ 
+
+ 
+
+F-9
+
+ 
+
+Table of Contents
+
+ 
+
+ MWF GLOBAL INC. 
+
+ FINANCIAL STATEMENTS 
+
+ 
+
+ October 31, 2017 
+
+ 
+
+ CONDENSED BALANCE SHEETS 
+
+ 
+
+ F-11 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ CONDENSED STATEMENT OF OPERATIONS 
+
+ 
+
+ F-12 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ CONDENSED STATEMENT OF CASH FLOWS 
+
+ 
+
+ F-13 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ NOTES TO CONDENSED FINANCIAL STATEMENTS 
+
+ 
+
+ F-14 
+
+ 
+
+ 
+
+ 
+
+F-10
+
+ 
+
+ 
+
+ 
+
+ MWF GLOBAL INC. 
+
+ CONDENSED BALANCE SHEETS 
+
+ 
+
+ 
+
+ 
+
+ October 31, 
+
+ 2017 
+
+ 
+
+ 
+
+ January 31, 
+
+ 2017 
+
+ 
+
+ 
+
+ 
+
+ (UNAUDITED) 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ ASSETS 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ CURRENT ASSETS 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ Cash 
+
+ 
+
+ $ 
+ 1,262 
+
+ 
+
+ 
+
+ $ 
+ 160 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ TOTAL CURRENT ASSETS 
+
+ 
+
+ $ 
+ 1,262 
+
+ 
+
+ 
+
+ $ 
+ 160 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ LIABILITIES AND STOCKHOLDER S DEFICIT 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ CURRENT LIABILITIES 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ Accounts payable 
+
+ 
+
+ 
+
+ 282 
+
+ 
+
+ 
+
+ 
+
+ - 
+
+ 
+
+ Due to related party 
+
+ 
+
+ 
+
+ 12,106 
+
+ 
+
+ 
+
+ 
+
+ 1,906 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ TOTAL CURRENT LIABILITIES 
+
+ 
+
+ 
+
+ 12,388 
+
+ 
+
+ 
+
+ 
+
+ 1,906 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ COMMITMENTS AND CONTINGENCIES 
+
+ 
+
+ 
+
+ - 
+
+ 
+
+ 
+
+ 
+
+ - 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ STOCKHOLDER S DEFICIT 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ Common stock 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ Authorized 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 200,000,000 shares of common stock, $0.001 par value, 
+
+ 
+
+ 
+
+ - 
+
+ 
+
+ 
+
+ 
+
+ - 
+
+ 
+
+ Issued and outstanding 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 6,500,000 shares of common stock (January 31, 2017 6,500,000) 
+
+ 
+
+ 
+
+ 6,500 
+
+ 
+
+ 
+
+ 
+
+ 6,500 
+
+ 
+
+ Share subscription receivable 
+
+ 
+
+ 
+
+ - 
+
+ 
+
+ 
+
+ 
+
+ (6,500 
+ ) 
+
+ Accumulated deficit 
+
+ 
+
+ 
+
+ (17,626 
+ ) 
+
+ 
+
+ 
+
+ (1,746 
+ ) 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ TOTAL STOCKHOLDER S DEFICIT 
+
+ 
+
+ 
+
+ (11,126 
+ ) 
+
+ 
+
+ 
+
+ (1,746 
+ ) 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ TOTAL LIABILITIES AND STOCKHOLDER S DEFICIT 
+
+ 
+
+ $ 
+ 1,262 
+
+ 
+
+ 
+
+ $ 
+ 160 
+
+ 
+
+ 
+
+ The accompanying notes are an integral part of these condensed financial statements. 
+
+ 
+
+ 
+
+F-11
+
+ 
+
+Table of Contents
+
+ 
+
+ MWF GLOBAL INC. 
+
+ CONDENSED STATEMENT OF OPERATIONS 
+
+ (UNAUDITED) 
+
+ 
+
+ 
+
+ 
+
+ Three months ended October 31,
+2017 
+
+ 
+
+ 
+
+ Nine months ended October 31,
+2017 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ REVENUE 
+
+ 
+
+ $ 
+ - 
+
+ 
+
+ 
+
+ $ 
+ 53 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ OPERATING EXPENSES 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ General and administrative 
+
+ 
+
+ $ 
+ 3,408 
+
+ 
+
+ 
+
+ $ 
+ 15,933 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ TOTAL OPERATING EXPENSES 
+
+ 
+
+ 
+
+ (3,408 
+ ) 
+
+ 
+
+ 
+
+ (15,933 
+ ) 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ NET LOSS 
+
+ 
+
+ 
+
+ (3,408 
+ ) 
+
+ 
+
+ 
+
+ (15,880 
+ ) 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ NET LOSS PER COMMON SHARE BASIC AND DILUTED 
+
+ 
+
+ $ 
+ (0.00 
+ ) 
+
+ 
+
+ $ 
+ (0.00 
+ ) 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING BASIC AND DILUTED 
+
+ 
+
+ 
+
+ 6,500,000 
+
+ 
+
+ 
+
+ 
+
+ 6,500,000 
+
+ 
+
+ 
+
+ The accompanying notes are an integral part of these condensed financial statements. 
+
+ 
+
+ 
+
+F-12
+
+ 
+
+Table of Contents
+
+ 
+
+ MWF GLOBAL INC. 
+
+ CONDENSED STATEMENT OF CASH FLOWS 
+
+ (UNAUDITED) 
+
+ 
+
+ 
+
+ 
+
+ Nine months ended October 31, 
+
+ 2017 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ CASH FLOWS FROM OPERATING ACTIVITIES 
+
+ 
+
+ 
+
+ 
+
+ Net loss for the period 
+
+ 
+
+ $ 
+ (15,880 
+ ) 
+
+ Adjustments to reconcile net loss to net cash used in operating activities 
+
+ 
+
+ 
+
+ - 
+
+ 
+
+ Expenses paid by related party 
+
+ 
+
+ 
+
+ 4,200 
+
+ 
+
+ Changes in operating assets and liabilities 
+
+ 
+
+ 
+
+ - 
+
+ 
+
+ Accounts payable 
+
+ 
+
+ 
+
+ 282 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ NET CASH USED IN OPERATING ACTIVITIES 
+
+ 
+
+ 
+
+ (11,398 
+ ) 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ CASH FLOWS FROM INVESTING ACTIVITIES 
+
+ 
+
+ 
+
+ - 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ CASH FLOWS FROM FINANCING ACTIVITIES 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ Advances from related party 
+
+ 
+
+ 
+
+ 6,000 
+
+ 
+
+ Proceeds from sale of common stock subscription receivable 
+
+ 
+
+ 
+
+ 6,500 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ NET CASH PROVIDED BY FINANCING ACTIVITIES 
+
+ 
+
+ 
+
+ 12,500 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ NET INCREASE IN CASH 
+
+ 
+
+ 
+
+ 1,102 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ CASH, BEGINNING OF PERIOD 
+
+ 
+
+ 
+
+ 160 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ CASH, END OF PERIOD 
+
+ 
+
+ $ 
+ 1,262 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ SUPPLEMENTAL CASH FLOW INFORMATION AND NONCASH INVESTING AND FINANCING ACTIVITIES: 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ Cash paid during the period for: 
+
+ 
+
+ 
+
+ 
+
+ Interest 
+
+ 
+
+ $ 
+ - 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ Income taxes 
+
+ 
+
+ $ 
+ - 
+
+ 
+
+ 
+
+ The accompanying notes are an integral part of these condensed financial statements. 
+
+ 
+
+ 
+
+F-13
+
+ 
+
+Table of Contents
+
+ 
+
+ MWF GLOBAL INC. 
+
+ NOTES TO CONDENSED FINANCIAL STATEMENTS 
+
+ OCTOBER 31, 2017 (unaudited) 
+
+ 
+
+ NOTE 1 NATURE OF OPERATIONS AND BASIS OF PRESENTATION 
+
+ 
+
+ MWF Global Inc. was incorporated in the State of Nevada as a for-profit Company on November 18, 2016 and established a fiscal year end of January 31. The Company is organized to sell unique country specific handcrafted natural products with a focus on sourcing these products from South-East Asia and offering these products for sale through the Company s web site and to establish other distribution channels. 
+
+ 
+
+ Going concern 
+
+ 
+
+ To date the Company has generated minimum revenues from its business operations and has incurred operating losses since inception of $17,626. As at October 31, 2017, the Company has a working capital deficit of $11,126. These factors raise substantial doubt regarding the Company s ability to continue as a going concern. The Company will require additional funding to meet its ongoing obligations and to fund anticipated operating losses. The ability of the Company to continue as a going concern is dependent on raising capital to fund its initial business plan and ultimately to attain profitable operations. Accordingly, these factors raise substantial doubt as to the Company s ability to continue as a going concern. The Company intends to continue to fund its business by way of private placements and advances from related parties as may be required. As of October 31, 2017, the Company has issued 6,500,000 founders shares at $0.001 per share for net proceeds of $6,500 to the Company. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might result from this uncertainty. 
+ 
+
+ NOTE 2
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2018/KOD_kodiak_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/KOD_kodiak_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/KOD_kodiak_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2018/KPEA_kun-peng_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/KPEA_kun-peng_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..08434125f9efdb892c82593bd90226ef652d0111
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/KPEA_kun-peng_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus and does not contain all of the information that you should consider in making your investment decision. Before investing in our Common Stock, you should carefully read the entire prospectus, including our financial statements and the related notes included elsewhere in this prospectus. You should also consider, among other things, the matters described under "
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2018/KZR_kezar_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/KZR_kezar_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..2b1b0d21935d726bb41c0f18cb7a716f9846571b
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/KZR_kezar_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. This summary is not complete and does not contain all of the information you should consider in making your investment decision. Before investing in our common stock, you should carefully read this entire prospectus, especially the sections titled Risk Factors and Management s Discussion and Analysis of Financial Condition and Results of Operations and our consolidated financial statements and the related notes included elsewhere in this prospectus. Unless the context otherwise requires, the terms Kezar, Kezar Life Sciences, the company, we, us, our and similar references in this prospectus refer to Kezar Life Sciences, Inc. Overview We are a clinical-stage biotechnology company, discovering and developing novel small molecule therapeutics to treat unmet needs in autoimmunity and cancer. Our lead product candidate, KZR-616, a first-in-class selective immunoproteasome inhibitor, has completed testing in healthy volunteers and is now enrolling a Phase 1b/2 clinical trial in lupus and lupus nephritis. We believe that the immunoproteasome is a validated target for the treatment of a wide variety of autoimmune diseases given the compelling published activity seen with proteasome inhibitors administered to patients with severe autoimmune diseases. Our Phase 1a clinical trial results provide evidence that KZR-616 avoids the side effects caused by non-selective proteasome inhibitors, side effects that prevent them from being developed as a treatment in autoimmunity. Initial top-line results from the Phase 1b portion of our KZR-616 trial are expected in 2019, and we plan to initiate up to four additional trials in autoimmune diseases in 2019. We are also leveraging our protein secretion pathway platform to discover and develop small molecule therapies targeting cancer and immuno-oncology. We believe that KZR-616 has potential for the treatment of multiple autoimmune disease indications. In the last decade, research directed by our Chief Scientific Officer, along with work performed in multiple academic laboratories, has led to over 15 peer-reviewed publications showing that selective immunoproteasome inhibition results in a broad anti-inflammatory response, reducing autoimmune disease in animal models of lupus, lupus nephritis, rheumatoid arthritis, inflammatory bowel disease, multiple sclerosis, Type 1 diabetes and other indications. This immunomodulatory response was broadly seen across many cell types of the immune system, including both T-cells and B-cells, and was demonstrated in a safe and non-immunosuppressive manner. This is distinct from other agents currently used to treat autoimmunity, which typically target a single cytokine or immune cell type or are broadly immunosuppressive. We intend to develop KZR-616 to address underserved autoimmune diseases, including lupus nephritis and idiopathic inflammatory myopathies, where we have planned initial Phase 2 clinical trials, as well as other autoimmune indications. We estimate the addressable patient population in the United States for lupus, lupus nephritis and idiopathic inflammatory myopathies is 460,000, 100,000 and 70,000, respectively. Our first Phase 2 clinical trial is intended to evaluate KZR-616 for treatment of lupus nephritis, which currently has no FDA-approved drugs. In 2017, we completed a Phase 1a clinical trial of KZR-616 in 82 healthy volunteers. In this trial, KZR-616 was generally well tolerated and we observed positive pharmacokinetics, or PK, and pharmacodynamics, or PD. This trial also identified multiple dose levels that resulted in selective and potent inhibition of the immunoproteasome and demonstrated biologic activity in ex vivo assays. We acquired exclusive worldwide rights to KZR-616 and an accompanying library of similar molecules pursuant to a license agreement with Onyx Therapeutics, Inc., or Onyx, a wholly owned subsidiary of Amgen, Inc., in June 2015. Patent coverage for KZR-616 extends to at least 2034. Our discovery-stage platform, focused on the protein secretion pathway and the Sec61 translocon, builds upon research conducted by our co-founder Dr. Jack Taunton. We believe this platform has the potential to yield oral small molecule alternatives to currently marketed biologic therapeutics, to act as cytotoxic anti-cancer agents or to block the secretion of novel targets of interest in immuno-oncology or inflammation. Table of Contents We are led by a strong management team with deep experience in small molecule drug discovery and development, operations, corporate finance and strategic planning. To finance our operations, we have raised equity capital from investors, including Morningside Venture Investments Limited, Cormorant Asset Management, Cowen Healthcare Investments, EcoR1 Capital Fund, Omega Fund IV, L.P., Pappas Capital, Qiming U.S. Healthcare Fund L.P., Bay City Capital and AJU IB Investment. Autoimmunity and Selective Inhibition of the Immunoproteasome Autoimmune disease is an immune response directed against the body s own healthy cells and tissues. Approximately 50 million people in the United States suffer from more than 100 diagnosed autoimmune diseases according to the American Autoimmune Related Diseases Association, Inc. In indications large and small, there remain significant unmet medical needs and indications with no approved drugs beyond broadly prescribed steroids and similar immunosuppressive regimens. These result in high rates of infection, increased risk of malignancy and a wide variety of side effects arising from prolonged steroid use and, in diseases such as lupus nephritis, do not induce high rates of clinically meaningful responses. Found in all cells of the body, proteasomes regulate intracellular protein degradation and are essential for many cellular processes such as cell division, cell differentiation and cytokine production. There are two main forms of the proteasome: the constitutive proteasome and the immunoproteasome. In most tissues of the body, the constitutive proteasome is the predominant form. In cells of the immune system, the immunoproteasome is the predominant form. While both forms of the proteasome mediate protein degradation, the two forms of the proteasome accomplish this utilizing different active sites. These active sites are responsible for cleaving and degrading proteins. Selective inhibition of the immunoproteasome has the potential to reduce inflammation by targeting dysfunctional immune cells involved in autoimmunity, such as T-cells and B-cells, without causing widespread immunosuppression. Safety and Efficacy of Approved Proteasome Inhibitors The three proteasome inhibitors approved for the treatment of multiple myeloma, Velcade (bortezomib), Kyprolis (carfilzomib) and Ninlaro (ixazomib), are potent dual inhibitors of both the immunoproteasome and the constitutive proteasome. This dual-targeting profile is necessary to make them effective treatments for multiple myeloma. However, dual proteasome inhibition is associated with hematologic issues such as thrombocytopenia, neutropenia and anemia, as well as constitutional toxicities such as fatigue and myalgia. In addition, Velcade and Ninlaro are associated with risk of peripheral neuropathy, likely due to the off-target activity of these drugs against proteins found in peripheral neurons. Velcade has demonstrated clinical activity in several autoimmune diseases, including lupus, lupus nephritis, idiopathic thrombocytopenia purpura, autoimmune hemolytic anemia, primary Sj gren s syndrome and graft-versus-host disease. In preclinical models, proteasome inhibition blocked production of most inflammatory cytokines, including many of those targeted by current biologic drugs. However, long-term, chronic administration of Velcade in the setting of autoimmune diseases is not considered feasible due to its side effect profile, in particular hemologic toxicities and risk of peripheral neuropathy. As a result, this promising drug target has remained untapped for use in the treatment of autoimmune diseases. KZR-616 We believe we are the only company with a selective immunoproteasome inhibitor that has been nominated as a clinical candidate or is in clinical trials. In addition, we believe that KZR-616, if successfully developed and approved, may have the ability to become the standard of care across a broad range of autoimmune diseases based on the following expected key attributes: broad immunomodulatory activity that may allow it to outperform approved therapies and to work in indications where other drugs have failed; lack of immunosuppression, a key drawback to other approved therapies in autoimmunity; and Table of Contents TABLE OF CONTENTS PAGE PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2018/LASR_nlight-inc_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/LASR_nlight-inc_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..e755ff8933eb4672b80a963da9249a12a04b1e37
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/LASR_nlight-inc_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. This summary does not contain all of the information you should consider before investing in our common stock. Before you decide to invest in our common stock, you should read the entire prospectus carefully, including the section titled
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diff --git a/parsed_sections/prospectus_summary/2018/LBRT_liberty_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/LBRT_liberty_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/LBRT_liberty_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2018/LCHD_leader_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/LCHD_leader_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..33a5152cec6fa2c53cffe5fa0a2ecf3302f8681c
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/LCHD_leader_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 2 RISK FACTORS 5 SUMMARY OF FINANCIAL INFORMATION 13 MANAGEMENT S DISCUSSION AND ANALYSIS 14 INDUSTRY OVERVIEW 14 FORWARD-LOOKING STATEMENTS 15 DESCRIPTION OF BUSINESS 15 USE OF PROCEEDS 17 DETERMINATION OF OFFERING PRICE 17 DILUTION 18 SELLING SHAREHOLDERS 19 PLAN OF DISTRIBUTION 20 DESCRIPTION OF SECURITIES 21 INTERESTS OF NAMED EXPERTS AND COUNSEL 22 REPORTS TO SECURITIES HOLDERS 22 DESCRIPTION OF FACILITIES 22 LEGAL PROCEEDINGS 23 PATENTS AND TRADEMARKS 23 DIRECTORS AND EXECUTIVE OFFICERS 23 EXECUTIVE COMPENSATION 23 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 26 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 26 PRINCIPAL ACCOUNTING FEES AND SERVICES 26 MATERIAL CHANGES 26 FINANCIAL STATEMENTS F1-F16 PART II. INFORMATION NOT REQUIRED IN PROSPECTUS OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION 27 INDEMNIFICATION OF OFFICERS AND DIRECTORS 27 RECENT SALES OF UNREGISTERED SECURITIES 28 EXHIBITS TO FINANCIAL STATEMENTS 28 UNDERTAKINGS 29 SIGNATURES 30 You should rely only on the information contained in this prospectus or contained in any free writing prospectus filed with the Securities and Exchange Commission. We have not authorized anyone to provide you with additional information or information different from that contained in this prospectus filed with the Securities and Exchange Commission. We take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. We are offering to sell, and seeking offers to buy, our common stock only in jurisdictions where offers and sales are permitted. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or any sale of shares of our common stock. Our business, financial condition, results of operations and prospects may have changed since that date. Through October 31, 2018, all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers' obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions. The date of this prospectus is __________________. - 1 - Table of Contents PROSPECTUS SUMMARY In this Prospectus, "Leader Capital Holdings Corp.," "the "Company," "Leader Capital," , ' ': "we," , ' ': , ' ': us, and , ' ': , ' ': our, refer to Leader Capital Holdings Corp, unless the context otherwise requires. Unless otherwise indicated, the term , ' ': , ' ': fiscal year refers to our fiscal year ending August 31 st. Unless otherwise indicated, the term , ' ': , ' ': common stock refers to shares of the Company s common stock. This Prospectus, and any supplement to this Prospectus include "forward-looking statements". To the extent that the information presented in this Prospectus discusses financial projections, information or expectations about our business plans, results of operations, products or markets, or otherwise makes statements about future events, such statements are forward-looking. Such forward-looking statements can be identified by the use of words such as "intends", "anticipates", "believes", "estimates", "projects", "forecasts", "expects", "plans" and "proposes". Although we believe that the expectations reflected in these forward-looking statements are based on reasonable assumptions, there are a number of risks and uncertainties that could cause actual results to differ materially from such forward-looking statements. These include, among others, the cautionary statements in the "Risk Factors" section and the "Management s Discussion and Analysis of Financial Position and Results of Operations" section in this Prospectus. This summary only highlights selected information contained in greater detail elsewhere in this Prospectus. This summary may not contain all of the information that you should consider before investing in our common stock. You should carefully read the entire Prospectus, including "Risk Factors" beginning on Page 5, and the financial statements, before making an investment decision. The Company Leader Capital Holdings Corp, a Nevada corporation ("the Company") was incorporated under the laws of the State of Nevada on March 22, 2017. We, Leader Capital Holdings Corp ("the Company"), are an early stage FinTech company that, through our wholly owned subsidiary, acts as the service provider of the mobile application investment platform JFB. The Company s executive offices are located at Rm. 3, 9F., No.910, Sec. 2, Taiwan Blvd.,Xitun Dist., Taichung City 407, Taiwan (R.O.C.). We believe we need to raise $1,500,000 to execute our business plan over the next 12 months. The funds raised in this offering, even assuming we sell all the shares being offered, may be insufficient to carry out our intended business operations. We will receive proceeds from the sale of 3,000,000 shares of our common stock and intend to use the proceeds from this offering for APP software development, IT support, hiring additional staff, marketing, legal fees, and operating costs. There is uncertainty that we will be able to sell any of the 3,000,000 shares being offered herein by the Company. The expenses of this offering, including the preparation of this prospectus and the filing of this registration statement, estimated at approximately $37,500 are being paid for by the Company. The maximum proceeds to us from this offering ($1,500,000) will satisfy our basic subsistence level, cash requirements for up to 12 months. 75% of the possible proceeds from the offering by the company ($2,250,000) will satisfy our basic, subsistence level cash requirements for up to 9 months, while 50% of the proceeds ($750,000) will sustain us for up to 6 months, and 25% of the proceeds ($375,000) will sustain us for up to 3 months. Our budgetary allocations may vary, however, depending upon the percentage of proceeds that we obtain from this offering. For example, we may determine that it is more beneficial to allocate funds toward securing potential financing and business opportunities in the short terms rather than to conserve funds to satisfy continuous disclosure requirements for a longer period. During the 12 months following the completion of this offering, we intend to continue our current business plan and increase our current level of operations. - 2 - Table of Contents We believe that if we are not able to raise additional capital within 12 months of the effective date of this registration statement, we may be adversely effected and may have to curtail operations or continue operations at a limited level that is financially suitable for the Company. Our Offering We have authorized capital stock consisting of 600,000,000 shares of common stock, $0.0001 par value per share ("Common Stock") and 200,000,000 shares of preferred stock, $0.0001 par value per share ("Preferred Stock"). We have 102,275,395 shares of Common Stock and no shares of Preferred Stock issued and outstanding. Through this offering we will register a total of 7,015,395 shares. These shares represent 3,000,000 additional shares of common stock to be issued by us and 4,015,395 shares of common stock by our selling stockholders. We may endeavor to sell all 3,000,000 shares of common stock after this registration becomes effective. Upon effectiveness of this Registration Statement, the selling stockholders may also sell their own shares. The price at which we, the company, offer these shares is at a fixed price of $0.50 per share for the duration of the offering. The selling stockholders will also sell shares at a fixed price of $0.50 for the duration of the offering. There is no arrangement to address the possible effect of the offering on the price of the stock. We will receive all proceeds from the sale of our common stock but we will not receive any proceeds from the selling stockholders. *The primary offering on behalf of the company is separate from the secondary offering of the selling stockholders in that the proceeds from the shares of stock sold by the selling stockholder s will go directly to them, not the company. The same idea applies if the company approaches or is approached by investors who then subsequently decide to invest with the company. Those proceeds would then go to the company. Whomever the investors decide to purchase the shares from will be the beneficiary of the proceeds. None of the proceeds from the selling stockholder s will be utilized or given to the company. Our Chief Executive Officer, Lin Yi-Hsiu, owns and controls First Leader Capital Ltd., and CPN Investment Ltd. Collectively, amongst the aforementioned entities and himself, Mr. Lin, owns and controls approximately 86.14% of the voting power of our outstanding capital stock. After the offering, assuming all of the shares that are being registered herein of Lin Yi-Hsiu, First Leader Capital Ltd., and CPN Investment Ltd. and those shares being offered on behalf of the company are sold, the aforementioned parties will collectively own and control approximately 80.79% of our common stock. *We will notify investors by filing an information statement that will be available for public viewing on the SEC Edgar Database of any such extension of the offering. Securities being offered by the Company 3,000,000 shares of common stock, at a fixed price of $0.50 offered by us in a direct offering. Our offering will terminate upon the earliest of (i) such time as all of the common stock has been sold pursuant to the registration statement or (ii) 365 days from the effective date of this prospectus unless extended by our Board of Directors for an additional 90 days. We may however, at any time and for any reason terminate the offering. Securities being offered by the Selling Stockholders 4,015,395 shares of common stock, at a fixed price of $0.50 offered by selling stockholders in a resale offering. As previously mentioned this fixed price applies at all times for the duration of the offering. The offering will terminate upon the earliest of (i) such time as all of the common stock has been sold pursuant to the registration statement or (ii) 365 days from the effective date of this prospectus, unless extended by our Board of Directors for an additional 90 days. We may however, at any time and for any reason terminate the offering. Offering price per share We and the selling shareholders will sell the shares at a fixed price per share of $0.50 for the duration of this Offering. Number of shares of common stock outstanding before the offering of common stock 102,275,395 common shares are currently issued and outstanding. Number of shares of common stock outstanding after the offering of common stock 105,275,395 common shares will be issued and outstanding if we sell all of the shares we are offering. The minimum number of shares to be sold in this offering None. Market for the common shares There is no public market for the common shares. The price per share is $0.50. We may not be able to meet the requirement for a public listing or quotation of our common stock. Furthermore, even if our common stock is quoted or granted listing, a market for the common shares may not develop. The offering price for the shares will remain at $0.50 per share for the duration of the offering. - 3 - Table of Contents Use of Proceeds We intend to use the gross proceeds to us for APP software development, IT support, hiring employees, marketing expenses, operating costs and legal and audit fees. Termination of the Offering This offering will terminate upon the earlier to occur of (i) 365 days after this registration statement becomes effective with the Securities and Exchange Commission, or (ii) the date on which all 7,015,395 shares registered hereunder have been sold. We may, at our discretion, extend the offering for an additional 90 days. At any time and for any reason we may also terminate the offering. Terms of the Offering Our Chief Executive Officer, Lin Yi-Hsiu will sell the 3,000,000 shares of common stock on behalf of the company, upon effectiveness of this registration statement, on a BEST EFFORTS basis. Subscriptions: All subscriptions once accepted by us are irrevocable. Registration Costs We estimate our total offering registration costs to be approximately $37,500.
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diff --git a/parsed_sections/prospectus_summary/2018/MAGE_magellan_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/MAGE_magellan_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/MAGE_magellan_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2018/MESA_mesa-air_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/MESA_mesa-air_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..67b9f9d2d68a80c76079332f27c97b45ab346989
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/MESA_mesa-air_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. This summary sets forth the material terms of the offering, but does not contain all of the information that you should consider before investing in our common stock. You should read the entire prospectus carefully before making an investment decision, especially the risks of investing in our common stock described under Risk Factors. Unless the context otherwise requires, the terms we, us, our, the Company and Mesa refer to Mesa Air Group, Inc. and its predecessors, direct and indirect subsidiaries and affiliates. Our airline operations are conducted through our subsidiary, Mesa Airlines, Inc. ( Mesa Airlines ). Certain terms related to the airline industry are described under Glossary of Airline Terms at the end of this prospectus. Our Company Mesa Airlines is a regional air carrier providing scheduled passenger service to 110 cities in 38 states, the District of Columbia, Canada, Mexico, Cuba and the Bahamas. All of our flights are operated as either American Eagle or United Express flights pursuant to the terms of capacity purchase agreements we entered into with American Airlines, Inc. ( American ) and United Airlines, Inc. ( United ) (each, our major airline partner ). We have a significant presence in several of our major airline partners key domestic hubs and focus cities, including Dallas, Houston, Phoenix and Washington-Dulles. We have been the fastest growing regional airline in the United States over our last five fiscal years, based on fleet growth, with a cumulative increase in aircraft of 137%. As of March 31, 2018, we operated a fleet of 145 aircraft with approximately 610 daily departures. We operate 64 CRJ-900 aircraft under our capacity purchase agreement with American (our American Capacity Purchase Agreement ) and 20 CRJ-700 and 60 E-175 aircraft under our capacity purchase agreement with United (our United Capacity Purchase Agreement ). Over the last five calendar years, our share of the total regional airline fleet of American and United has increased from 7% to 11% and from 4% to 15%, respectively. Driven by this fleet growth, our total operating revenues have grown by 55% from $415.2 million in fiscal 2013 to $643.6 million in fiscal 2017, respectively. We believe we have expanded our share with our major airline partners because of our competitive cost structure, access to pilots under our labor agreements and track record of reliable performance. All of our operating revenue in our 2017 fiscal year and the six months ended March 31, 2018 was derived from operations associated with our American and United Capacity Purchase Agreements. Our long-term capacity purchase agreements provide us guaranteed monthly revenue for each aircraft under contract, a fixed fee for each block hour and flight flown, and reimbursement of certain direct operating expenses, in exchange for providing regional flying on behalf of our major airline partners. Our capacity purchase agreements shelter us from many of the elements that cause volatility in airline financial performance, including fuel prices, variations in ticket prices, and fluctuations in number of passengers. In providing regional flying under our capacity purchase agreements, we use the logos, service marks, flight crew uniforms and aircraft paint schemes of our major airline partners. Our major airline partners control route selection, pricing, seat inventories, marketing and scheduling, and provide us with ground support services, airport landing slots and gate access, allowing us to focus all of our efforts on delivering safe, reliable and cost-competitive regional flying. Regional aircraft are optimal for short and medium-haul scheduled flights that connect outlying communities with larger cities and act as feeders for domestic and international hubs. In addition, regional aircraft are well suited to serve larger city pairs during off-peak times when load factors on larger jets are low. The lower trip costs and operating efficiencies of regional aircraft, along with the Table of Contents The information in this prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED AUGUST 8, 2018. PRELIMINARY PROSPECTUS 10,700,000 Shares Mesa Air Group, Inc. Common Stock This is the initial public offering of our common stock. We are offering 10,700,000 shares. We estimate that the initial public offering price per share will be between $14.00 and $16.00. Currently, no public market exists for our common stock. Our common stock has been approved for listing on the Nasdaq Global Select Market under the symbol MESA. We are an emerging growth company as defined under the federal securities laws, and, as such, we are subject to reduced public company reporting requirements. See Prospectus Summary Implications of Being an Emerging Growth Company. Investing in our common stock involves risks. See Risk Factors beginning on page 19 to read about factors you should consider before buying shares of our common stock. Per Share Total Initial public offering price $ $ Underwriting discounts and commissions(1) $ $ Proceeds to us (before expenses) $ $ (1) See the Underwriting section beginning on page 151 for additional information regarding underwriting compensation. We and the selling shareholders identified in this prospectus have granted the underwriters the right to purchase up to an additional 1,605,000 shares of common stock at the initial public offering price, less underwriting discounts and commissions. The underwriters can exercise this option within 30 days from the date of this prospectus. If the overallotment option is exercised, an aggregate of up to 938,333 shares will be purchased directly from us, and an aggregate of up to 666,667 shares will be purchased directly from the selling shareholders. We will not receive any of the proceeds from the sale of any shares sold by the selling shareholders if the overallotment option is exercised. Neither the Securities and Exchange Commission, nor any state securities commission, nor any other regulatory body has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The underwriters expect to deliver the shares to the purchasers on or about , 2018. RAYMOND JAMES BofA Merrill Lynch Cowen Stifel Imperial Capital Prospectus dated , 2018. Table of Contents TABLE OF CONTENTS Page PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2018/MGTX_meiragtx_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/MGTX_meiragtx_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/MGTX_meiragtx_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2018/MODVQ_modivcare_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/MODVQ_modivcare_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..2227d1040e802617b3309b9ba8fa423272cedf3d
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/MODVQ_modivcare_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS Summary This summary highlights certain information contained elsewhere in this prospectus. Because this is only a summary, it does not contain all of the information that may be important to you. You should read the entire prospectus closely, including the section entitled "Risk Factors" included elsewhere in this prospectus and the documents incorporated by reference into this prospectus and in any applicable prospectus supplement. Unless otherwise indicated or the context otherwise requires, in this prospectus, references to "Providence," the "Company," "we," "us" and "our" mean The Providence Service Corporation and its consolidated subsidiaries. Overview The Providence Service Corporation owns subsidiaries and investments primarily engaged in the provision of healthcare services in the United States and workforce development services internationally. The subsidiaries and other investments in which we hold interests comprise the following segments: Non-Emergency Transportation Services – Nationwide manager of non-emergency medical transportation programs for state governments and managed care organizations. Workforce Development Services ("WD Services") – Global provider of employment preparation and placement services, legal offender rehabilitation services, youth community service programs and certain health related services to eligible participants of government sponsored programs. Matrix Investment – Minority interest in CCHN Group Holdings, Inc. and its subsidiaries ("Matrix"), a nationwide provider of in-home care optimization and management solutions, including comprehensive health assessments, to members of managed care organizations, accounted for as an equity method investment. On February 16, 2018, Matrix acquired HealthFair, expanding its service offerings to include mobile health assessments, advanced diagnostic testing, and additional care optimization services. In addition to its segments operations, the Corporate and Other segment includes the Company s activities at its corporate office that include executive, accounting, finance, internal audit, tax, legal, public reporting, certain strategic and corporate development functions and the results of the Company s captive insurance company. We are actively monitoring these activities as they relate to our capital allocation and acquisition strategy to ensure alignment with our overall strategic objectives and its goal of enhancing shareholder value. Recent Developments On April 11, 2018, Company announced an organizational consolidation plan to integrate substantially all activities and functions currently performed at the corporate holding company level into LogistiCare Solutions, LLC, the Company s largest subsidiary and the nation s leader in non-emergency medical transportation. The organizational consolidation will result in a more streamlined company structure with greater operational and strategic alignment and better able to pursue both organic and inorganic growth initiatives. This strategic process is expected to take approximately 12 months to complete, over which time implementation costs will negatively impact earnings. Once completed, the organizational consolidation is expected to generate annual savings of at least $10 million. Corporate Information We are a Delaware corporation with principal executive offices located at 700 Canal Street, Third Floor, Stamford, CT 06902. Our telephone number is (203) 307-2800 and our web site is www.prscholdings.com. The information contained in, and that which can be accessed through, our website is not incorporated into and does not form a part of this prospectus. OFFERING SUMMARY Issuer The Providence Service Corporation Selling Stockholders Coliseum Capital Partners, L.P., Coliseum Capital Partners II, L.P., Blackwell Partners, LLC – Series A and Coliseum Capital Co-Invest, L.P. See "Selling Stockholders". Common Stock to be offered by the selling stockholders Up to 1,259,591 shares of Common Stock and 1,920,545 shares of Common Stock initially issuable upon the conversion of shares of Preferred Stock, based on a liquidation preference of $100 divided by a conversion price of $39.88. See "Selling Stockholders". Common Stock outstanding 12,917,560 shares (as of May 31, 2018). Preferred Stock to be offered by the selling stockholders Up to 765,916 shares of Preferred Stock. See "Selling Stockholders". Preferred Stock outstanding 803,200 shares (as of May 31, 2018). Use of proceeds We will not receive any proceeds from the sale of our Common Stock or Preferred Stock by the selling stockholders pursuant to this prospectus. See "Use of Proceeds" and "Selling Stockholders". Listing Our Common Stock is listed on NASDAQ under the symbol "PRSC". Our Preferred Stock is not listed on any public market.
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diff --git a/parsed_sections/prospectus_summary/2018/MOGU_mogu-inc_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/MOGU_mogu-inc_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/MOGU_mogu-inc_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2018/MRNA_moderna_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/MRNA_moderna_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..c3590e431096f5dbd40d3d5366c8c29ff55e0435
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/MRNA_moderna_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus and does not contain all of the information that you should consider in making your investment decision. Before investing in our common stock, you should carefully read this entire prospectus, including our consolidated financial statements and the related notes included elsewhere in this prospectus. You should also consider, among other things, the matters described under Risk Factors and Management s Discussion and Analysis of Financial Condition and Results of Operations, in each case appearing elsewhere in this prospectus. Unless the context otherwise requires, the terms Moderna, the Company, we, us, and our in this prospectus refer to Moderna, Inc. and its consolidated subsidiaries. See Reorganization for further information regarding the Company s 2016 reorganization. Overview We are creating a new category of transformative medicines based on messenger RNA, or mRNA, to improve the lives of patients. From the beginning, we designed our strategy and operations to realize the full potential value and impact of mRNA over a long time horizon across a broad array of human diseases. We built and continue to invest in a platform to advance the technological frontier of mRNA medicines. We made and continue to make forward investments in scalable infrastructure and capabilities to pursue a pipeline of potential medicines that reflect the breadth of the mRNA opportunity. Since we nominated our first program in late 2014, we and our strategic collaborators have advanced in parallel a diverse development pipeline of 21 programs, of which 10 have entered clinical studies and another 3 have open INDs. Our therapeutic and vaccine development programs span infectious diseases, oncology, cardiovascular diseases, and rare genetic diseases. We have assembled an exceptional team of approximately 700 employees and have established strategic alliances with leading biopharmaceutical companies, including AstraZeneca, Merck & Co., and Vertex Pharmaceuticals, as well as government-sponsored and private organizations focused on global health initiatives, including Biomedical Advanced Research and Development Authority, or BARDA, Defense Advanced Research Projects Agency, or DARPA, and the Bill & Melinda Gates Foundation. As of September 30, 2018, we have raised over $2.6 billion in total funding from our strategic collaborators and investors, and have cash, cash equivalents, and investments of $1.2 billion. As we unlock the inherent advantages of mRNA, we aim to address as many diseases and impact as many patients as our technology, talent, and capital permit. mRNA, the software of life mRNA transfers the instructions stored in DNA to make the proteins required in every living cell. Our approach is to use mRNA medicines to instruct a patient s own cells to produce proteins that could prevent, treat, or cure disease. A schematic of the central role of mRNA in making proteins is shown in the figure below. Table of Contents The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED DECEMBER 4, 2018 21,739,131 Shares Common Stock This is the initial public offering of shares of our common stock. Prior to this offering, there has been no public market for our common stock. We are selling 21,739,131 shares of our common stock. The initial public offering price of our common stock is expected to be between $22.00 and $24.00 per share. We have applied to list our common stock on the Nasdaq Global Select Market under the symbol MRNA. We are an emerging growth company as that term is used in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act, and, as such, we have elected to comply with certain reduced public company reporting requirements for this prospectus and future filings. Investing in our common stock involves risks. See Risk Factors on page 17. Price to Public Underwriting Discounts and Commissions Proceeds to Company Per Share $ $ $ Total $ $ $ (1) See Underwriting beginning on page 340 of this prospectus for additional information regarding underwriting compensation. Delivery of the shares of common stock will be made on or about , 2018. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The underwriters have an option to purchase up to 3,260,869 additional shares of common stock from us. Morgan Stanley Goldman Sachs & Co. LLC J.P. Morgan BofA Merrill Lynch Barclays Piper Jaffray Oddo BHF Oppenheimer & Co. Needham & Company Chardan The date of this prospectus is , 2018. Table of Contents We believe mRNA s intrinsic properties could serve as a foundation for a new category of medicines for patients. Every cell in the human body utilizes mRNA in existing natural processes to produce all types of proteins, including secreted, membrane, and intracellular proteins, in varying quantities, in different locations, and in various combinations. mRNA has a pharmacological profile that we believe is consistent with the target profile of traditional therapeutics and has a simple molecular structure that comprises a sequence of four chemically similar nucleotides. To change a protein encoded by an mRNA molecule, only a change to the sequence within the mRNA is required. As a result, each mRNA molecule is highly chemically similar, yet mRNAs can encode proteins with divergent chemical properties and functions. mRNA medicines, we believe, represent an opportunity that could meaningfully exceed that of other classes of biopharmaceuticals. One such class, recombinant protein therapeutics, which focuses on secreted proteins, today generates over $200 billion in annual worldwide sales. Two other types of proteins, intracellular and membrane proteins, represent as much as two-thirds of all human proteins and are critical to human biology; however, delivery of these proteins is currently beyond the reach of recombinant protein technology. We believe that mRNA medicines could address all three protein types, including these areas untapped by recombinant protein therapeutics. The breadth of biology addressable using mRNA technology is reflected in our current development pipeline of 21 programs. These span 24 different proteins: ten different antigens (including complexes and virus-like particles, or VLPs) for infectious disease vaccines; two different types of neoantigen cancer vaccines, of which one is combined with an endoplasmic reticulum membrane protein; four different immuno-modulator targets (including membrane and systemically secreted proteins) for immuno-oncology programs; one secreted, local regenerative factor for a heart failure program; three secreted proteins of diverse biology (an antibody, an engineered protein hormone, and a lysosomal enzyme); and three intracellular enzymes for rare disease programs. The diversity of proteins made from mRNA within our development pipeline is shown in the figure below. Table of Contents Table of Contents Our pipeline and progress We dosed our first subject in a clinical trial in December 2015, five years after our inception. Since then, we or our strategic collaborators have achieved first-in-human dosing for a total of ten different mRNA investigational medicines. Phase 1 studies were conducted to assess safety and tolerability of these investigational medicines, which provided sufficient data for all ten clinical stage programs to warrant continued advancement within a trial or for further development. We have also observed activity in Phase 1 trials for six out of seven clinical programs, with an additional three programs yet to read out. The clinical activity readouts include: dose-dependent protein production in patients for VEGF-A (AZD8601), a secreted protein, along with pharmacologic activity in the form of changes in local blood flow, directly quantified after intradermal administration of AZD8601; protein production in tumor tissue from patients for OX40L (mRNA-2416), an immune co-stimulator, after intratumoral administration of mRNA-2416; and neutralizing antibody responses to pathogenic viral antigens in healthy volunteers for four viral vaccine programs: influenza H10N8 vaccine (mRNA-1440), influenza H7N9 vaccine (mRNA-1851), Chikungunya vaccine (mRNA-1388), and RSV vaccine (mRNA-1777). The one vaccine program that has not shown sufficient antibody response in a Phase 1 trial is mRNA-1325, a Zika virus vaccine. Although the Phase 1 safety and tolerability data generated would permit additional dose escalation of mRNA-1325, we have focused our development efforts on a follow-on candidate, mRNA-1893, that in preclinical studies has been observed to have significantly greater potency than mRNA-1325. Of the ten clinical programs, the Phase 1 trials for H10N8 vaccine and VEGF-A were conducted in Germany; the Phase 1 trial for RSV vaccine is being conducted in Australia; the Phase 1 trials for the remaining seven vaccines and oncology programs are being conducted in the United States; and the Phase 2a trial for VEGF-A is being conducted in Finland with plans to expand to the Netherlands. We have several programs that are in, or will start, Phase 1 clinical trials in which we expect to measure pharmacology in patients or healthy volunteers following administration of our mRNA investigational medicines, as well as direct or indirect evidence of protein production. In these trials, we aim to show: the induction of specific T cells to encoded neoantigens in our cancer vaccines; observable levels of proteins produced in our intratumoral and systemically administered therapeutics; and serum changes in metabolites resulting from restoration of active enzymes in metabolic pathways in our systemic secreted and systemic intracellular therapeutics. Approximately 760 subjects have been dosed with our mRNA vaccines or therapeutics in clinical trials. The following chart shows our current pipeline of 21 development candidates, grouped into modalities. A modality is a group of potential mRNA medicines with shared product features, and the associated combination of mRNA technologies, delivery technologies, and manufacturing processes. Table of Contents TABLE OF CONTENTS PROSPECTUS SUMMARY 1
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+The following summary explains material information regarding the conversion, the offering of common stock by Mid-Southern Bancorp, Inc. and the business of Mid-Southern Savings Bank, FSB. The summary may not contain all the information that is important to you. For additional information, you should read this entire prospectus carefully, including the consolidated financial statements and the notes to the consolidated financial statements of Mid-Southern Savings Bank, FSB. In certain circumstances, where appropriate, the terms "we, "us" and "our" refer collectively to Mid-Southern, M.H.C. Mid-Southern Bancorp and Mid-Southern Savings Bank or to any of those entities, depending on the context. In addition, we sometimes refer to Mid-Southern Bancorp, Inc. as "Mid-Southern Bancorp" and Mid-Southern Savings Bank, FSB as "Mid-Southern Savings Bank." The Companies Mid-Southern Bancorp, Inc. Mid-Southern Bancorp is a newly formed Indiana corporation that was incorporated on January 26, 2018 to be the successor corporation to Mid-Southern, M.H.C. upon completion of the conversion. Mid-Southern Bancorp will own all of the outstanding shares of common stock of Mid-Southern Savings Bank upon completion of the conversion. Mid-Southern Bancorp will be subject to regulation by the Board of Governors of the Federal Reserve System (the "Federal Reserve Board" or "Federal Reserve"). Mid-Southern Bancorp's executive offices are located at 300 North Water Street, Salem, Indiana 47167. Our telephone number at this address is (812) 883-2639. Mid-Southern, M.H.C. Mid-Southern, M.H.C. is the federally chartered mutual holding company of Mid-Southern Savings Bank. Mid-Southern, M.H.C.'s principal business activity is the ownership of 1,040,750 shares of common stock of Mid-Southern Savings Bank, or 71% of the issued and outstanding shares as of the date of this prospectus. After the completion of the conversion, Mid-Southern, M.H.C. will cease to exist. Mid-Southern Savings Bank, FSB. Mid-Southern Savings Bank is a federally chartered stock savings bank headquartered in Salem, Indiana. Mid-Southern Savings Bank was originally founded as a state chartered savings and loan association in 1886 and converted to a federal mutual (meaning no stockholders) savings bank in 1981. In 1998, Mid-Southern Savings Bank converted to stock form and became the wholly-owned subsidiary of Mid-Southern, M.H.C. as part of a mutual holding company reorganization and stock issuance. Mid-Southern Savings Bank reorganized into the mutual holding company form of ownership and completed a public stock offering on April 8, 1998. In conjunction with the public stock offering, Mid-Southern Savings Bank raised approximately $4.0 million of proceeds. Mid-Southern, M.H.C. has no significant assets other than its ownership of 71% of the outstanding shares of common stock of Mid-Southern Savings Bank and certain liquid assets. Mid-Southern Savings Bank's stock is quoted on the OTC Pink Marketplace under the symbol "MSVB". At December 31, 2017, Mid-Southern Savings Bank had consolidated assets of $176.7 million, deposits of $151.9 million and stockholders' equity of $24.2 million. As of the date of this prospectus, Mid-Southern Savings Bank had 1,469,280 shares of common stock issued and outstanding, of which 1,040,750 shares were owned by Mid-Southern, M.H.C. The remaining 428,530 shares of Mid-Southern Savings Bank common stock outstanding as of the date of this prospectus were held by the public. Our Business Our business activities are primarily conducted through Mid-Southern Savings Bank, a federally chartered savings bank headquartered in Salem, Indiana, which is located in Southern Indiana approximately 40 miles northwest of Louisville, Kentucky. Mid-Southern Savings Bank conducts business from its main office in Salem and through its branch offices located in Mitchell and Orleans, Indiana and a loan production office located in New Albany, Indiana. Mid-Southern Savings Bank's market area includes Washington, Lawrence, Orange and Floyd counties in Indiana, and, to a lesser extent, contiguous counties. Mid-Southern Savings Bank's principal business consists of originating one-to-four family residential real estate mortgage loans, including home equity lines of credit, and to a lesser extent, commercial and multifamily real QUESTIONS AND ANSWERS ABOUT THE PLAN OF CONVERSION AND REORGANIZATION AND THE ANNUAL MEETING You should read this document for more information about the conversion and reorganization, as well as the annual meeting of stockholders. The plan of conversion described in this document has been conditionally approved by our primary federal regulator, the Federal Reserve Board; however, such approval does not constitute a recommendation or endorsement of the plan of conversion by that agency. Q. WHAT AM I BEING ASKED TO APPROVE? A. Mid-Southern Savings Bank stockholders as of May 3 , 2018 are being asked to vote on the plan of conversion pursuant to which Mid-Southern, M.H.C. will convert from the mutual to the stock form of organization. As part of the conversion, a newly formed Indiana corporation, Mid-Southern Bancorp, is offering its common stock to eligible depositors of Mid-Southern Savings Bank, to stockholders of Mid-Southern Savings Bank as of May 3 , 2018 and to the public. The shares offered represent Mid-Southern, M.H.C.'s current 70.7% ownership interest in Mid-Southern Savings Bank. Voting for approval of the plan of conversion will also include approval of the exchange ratio and the articles of incorporation and bylaws of Mid-Southern Bancorp (including the anti-takeover provisions and provisions limiting shareholder rights). Your vote is important. Without sufficient votes "FOR" its adoption, we cannot implement the plan of conversion. Stockholders are also being asked to vote on the election of three director nominees, ratify the appointment of our independent registered public accounting firm and approve a proposal to adjourn the annual meeting if necessary to solicit additional proxies in the event that there are not sufficient votes at the time of the annual meeting to approve the plan of conversion. In addition, stockholders are being asked to vote on the following informational proposals with respect to the articles of incorporation of Mid-Southern Bancorp: Approval of a provision in Mid-Southern Bancorp's articles of incorporation requiring a super-majority vote to approve certain amendments to Mid-Southern Bancorp's articles of incorporation; and Approval of a provision in Mid-Southern Bancorp's articles of incorporation to limit the voting rights of shares beneficially owned in excess of 10% of Mid-Southern Bancorp's outstanding voting stock. The provisions of Mid-Southern Bancorp's articles of incorporation that are included as informational proposals were approved as part of the process in which our Board of Directors approved the plan of conversion. These proposals are informational in nature only, because the Federal Reserve Board's regulations governing mutual-to-stock conversions do not provide for a separate vote on these matters apart from the vote on the plan of conversion. While we are asking you to vote with respect to each of the informational proposals listed above, the proposed provisions for which an informational vote is requested will become effective if stockholders approve the plan of conversion, regardless of whether stockholders vote to approve any or all of the informational proposals. The provisions of Mid-Southern Bancorp's articles of incorporation which are summarized above as informational proposals may have the effect of deterring, or rendering more difficult, attempts by third parties to obtain control of Mid-Southern Bancorp if such attempts are not approved by the Board of Directors, or may make the removal of the Board of Directors or management, or the appointment of new directors, more difficult. Q. WHAT ARE THE REASONS FOR THE CONVERSION AND RELATED OFFERING? A. Our primary reasons for converting and raising additional capital through the offering are: Strengthen our regulatory capital position with the additional capital we will raise in the stock offering. A strong capital position is essential to achieving our long-term objectives of growing Mid-Southern Savings Bank and building stockholder value. While Mid-Southern Savings Bank exceeds all regulatory capital requirements, the proceeds from the offering will greatly strengthen our capital position and enable us to support our planned organic growth by increasing our lending in the communities we serve. UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 PRE-EFFECTIVE AMENDMENT NO. TWO TO FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 MID-SOUTHERN BANCORP, INC. (Exact name of registrant as specified in its charter) Indiana 6035 82-4821705 (State or other jurisdiction of incorporation or organization) (Primary Standard Industrial Classification Code Number) (I.R.S. Employer Identification No.) 300 North Water Street, Salem, Indiana 47167; (812) 883-2639 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) Alexander G. Babey, President and Chief Executive Officer 300 North Water Street, Salem, Indiana 47167; (812) 883-2639; (Name, address, including zip code, and telephone number, including area code, of agent for service) Copies to: John F. Breyer, Jr., Esq. Breyer & Associates PC 8180 Greensboro Drive, Suite 785 McLean, Virginia 22102 (703) 883-1100 (703) 883-2511 (fax) Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective. If any of the securities being registered on this Form are being offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box. [X] If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier registration statement for the same offering. [ ] If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier registration statement for the same offering. [ ] Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act. Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [ ] Smaller reporting company [X] Emerging growth company [X] (Do not check if a smaller reporting company) CALCULATION OF REGISTRATION FEE Title of Each Class of Securities to be Registered Amount to be Registered Proposed Maximum Offering Price Per Unit Proposed Maximum Aggregate Offering Price Amount of Registration Fee Common Stock, par value $.01 per share 3,570,750 $10.00 $ 35,707,500(1) $4,446* _______________________ *Previously paid. (1) Estimated solely for the purpose of calculating the registration fee. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. estate, and construction loans. We also offer commercial business and other consumer loans. We offer a variety of retail deposits to the general public in the areas surrounding our main office and our branch offices with interest rates that are competitive with those of similar products offered by other financial institutions in our market area. We also may utilize borrowings as a source of funds. Our revenues are derived primarily from interest on loans and, to a lesser extent, interest on investment securities and mortgage-backed securities. Our principal executive offices are located at 300 North Water Street, Salem, Indiana 47167 and our telephone number is (812) 883-2639. Our web site address is www.mid-southern.com. Information on our web site should not be considered a part of this prospectus. In this prospectus, the terms "we, "our," and "us" refer to Mid-Southern, M.H.C. and Mid-Southern Savings Bank unless the context indicates another meaning. Our Business Strategy Our current business strategy is to operate a well-capitalized and profitable community savings bank dedicated to providing high quality customer service and innovative new products. Highlights of our current business strategy are as follows: Continuing to emphasize the origination of one-to-four family mortgage loans, including investor-owned (e.g., non-owner occupied) one-to-four family mortgage loans; Aggressively marketing core deposits; Offering a broad range of financial products and services to both retail and commercial customers in our market area; Pursuing opportunities to increase commercial and multi-family real estate and commercial business loans in our market area; Implementing a stockholder-focused strategy for management of our capital; and Considering expansion into new market areas, in particular Floyd County and the Louisville, Kentucky area to grow our business through the addition of new branch locations, loan production offices and/or through possible acquisitions of other financial institutions or branches. These strategies are intended to guide our investment of the net proceeds of the offering. We intend to continue to pursue our business strategy after the conversion and the offering, subject to changes necessitated by future market conditions and other factors. See "Management's Discussion and Analysis of Financial Condition and Results of Operations -Business Strategy" for a further discussion of our business strategy. A full description of our products and services begins on page 71 of this prospectus under the heading "Business of Mid-Southern, M.H.C. and Mid-Southern Savings Bank. Our Current Organizational Structure In 1998, Mid-Southern, M.H.C. became the mutual holding company of Mid-Southern Savings Bank, owning 71% of its stock, and conducted an initial public offering by selling a minority of Mid-Southern Savings Bank's common stock to the public. Pursuant to the terms of the Plan of Conversion and Reorganization of Mid-Southern, M.H.C., which is referred to throughout this prospectus as the plan of conversion, Mid-Southern, M.H.C. will convert from the mutual holding company to the stock holding company corporate structure. As part of the conversion, we are offering for sale in a subscription offering, a community offering and possibly a syndicated community offering, the majority ownership interest of Mid-Southern Savings Bank that is currently owned by Mid-Southern, M.H.C. Upon completion of the conversion, Mid-Southern, M.H.C. will cease to exist, and we will complete the transition from partial to full public stock ownership. In addition, as part of the conversion, existing public stockholders of Mid-Southern Savings Bank will receive shares of common stock of Mid-Southern Bancorp in exchange for their shares of Mid-Southern Savings Bank common stock pursuant to an exchange ratio that maintains the same percentage ownership in Mid-Southern Bancorp (excluding any new shares purchased by them in the offering and their receipt Transition our organization to a more common and flexible stock holding company structure from our existing mutual holding company structure. The stock holding company structure is a more common and flexible form of organization and will give us greater flexibility to access the capital markets through possible equity and debt offerings to support our long-term growth. The stock holding company structure will also provide us greater flexibility to structure an acquisition of other financial businesses or institutions if opportunities arise. We do not currently have any understandings or agreements regarding any specific capital raising or acquisition transaction. In addition, although we intend to remain an independent financial institution, the stock holding company structure may make us a more attractive acquisition candidate to other institutions. Applicable regulations prohibit the acquisition of Mid-Southern Bancorp for three years following completion of the conversion, and also prohibit anyone from acquiring or offering to acquire more than 10% of our stock without prior regulatory approval. Enable our stock holding company the ability to pay dividends to our public stockholders without diluting their stock ownership interest. Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, or Dodd-Frank Act, the Federal Reserve Board became the federal regulator of all savings and loan holding companies and mutual holding companies, which resulted in changes in regulations with respect to the payment of dividends applicable to "grandfathered" mutual holding companies like Mid-Southern, M.H.C. Under the Dodd-Frank Act, Mid-Southern Savings Bank may not pay a dividend to its public stockholders without also paying a dividend to Mid-Southern, M.H.C. unless Mid-Southern, M.H.C. obtains an annual approval of its members to waive its right to receive dividends paid by Mid-Southern Savings Bank. However, any paid dividends increases Mid-Southern, M.H.C's ownership interest in Mid-Southern Savings Bank which, in turn, decreases the exchange ratio for public stockholders in the event, as in this case, of the subsequent conversion of Mid-Southern, M.H.C. from the mutual holding company to the stock holding company form of organization. As a result, any paid dividends dilute the relative ownership of public stockholders when the mutual holding company undertakes a full conversion. Among other things, these changes have adversely affected our ability to pay cash dividends to our public stockholders without diluting their stock ownership interest. The conversion will eliminate our mutual holding company structure and will enhance our ability to pay dividends to our public stockholders, subject to the customary legal, regulatory and financial considerations applicable to all financial institutions. See "Our Dividend Policy." Q. WHAT WILL STOCKHOLDERS RECEIVE FOR THEIR EXISTING MID-SOUTHERN SAVINGS BANK SHARES? A. As more fully described in "Proposal 1 Approval of the Plan of Conversion and Reorganization Share Exchange Ratio," depending on the number of shares sold in the offering, each share of common stock that you own at the time of the completion of the conversion will be exchanged for between 1.5079 shares at the minimum and 2.0402 shares at the maximum of the offering range (or 2.3462 shares at the adjusted maximum of the offering range) of Mid-Southern Bancorp common stock (cash will be paid in lieu of any fractional shares). For example, if you own 100 shares of Mid-Southern Savings Bank common stock, and the exchange ratio is 1.7440 (at the midpoint of the offering range), after the conversion you will receive 174 shares of Mid-Southern Bancorp common stock and $4.00 in cash, the value of the fractional share, based on the $10.00 per share purchase price of stock in the offering. Stockholders who hold shares in street-name at a brokerage firm or other nominee do not need to take any action to exchange their shares of common stock. Your shares will be automatically exchanged within your account. Stockholders with Mid-Southern Savings Bank stock certificates will receive a transmittal form from our exchange agent with instructions on how to surrender their existing stock certificates for new stock certificates after completion of the conversion. You should not submit a stock certificate until you receive a transmittal form. Q. WHY WILL THE SHARES THAT I RECEIVE BE BASED ON A PRICE OF $10.00 PER SHARE RATHER THAN THE TRADING PRICE OF THE COMMON STOCK PRIOR TO COMPLETION OF THE CONVERSION? A. The $10.00 per share price was selected primarily because it is a commonly selected per share price for mutual-to-stock conversion offerings. The amount of common stock Mid-Southern Bancorp will issue at $10.00 per share in the offering and the exchange is based on an independent appraisal of the estimated market value of Mid-Southern Bancorp and the number of shares sold in the offering, assuming the conversion and offering are Appendix A UNITED STATES CODE OF FEDERAL REGULATIONS TITLE 12. BANKS AND BANKING PART 5. RULES, POLICIES, AND PROCEDURES FOR CORPORATE ACTIVITIES SUBPART C. EXPANSION OF ACTIVITIES 12 C.F.R. 5.33. Business combinations involving a national bank or Federal savings association. (a) (g)(6) [Text Omitted] (g)(7) Consolidation or merger of a Federal savings association with a state bank, state savings bank, state savings association, state trust company, or credit union resulting in a state bank, state savings bank, state savings association, state trust company, or credit union (i) [Text Omitted] (ii) [Text Omitted] (iii) Dissenters' rights and appraisal procedures. (A) Federal savings association shareholders who dissent from a plan to merge or consolidate may receive in cash the value of their Federal savings association shares if they comply with the requirements of 12 U.S.C. 214a as if the Federal savings association were a national bank. The OCC conducts an appraisal or reappraisal of the value of the Federal savings association shares held by dissenting shareholders only if all parties agree that the determination will be final and binding. The parties shall also agree on how the total expenses of the OCC in making the appraisal will be divided among the parties and paid to the OCC. (B) The plan of merger or consolidation must provide the manner of disposing of the shares of the resulting state institution not taken by the dissenting shareholders of the Federal savings association. UNITED STATES CODE TITLE 12. BANKS AND BANKING CHAPTER 2. NATIONAL BANKS SUBCHAPTER XV. CONVERSION OF NATIONAL BANKS INTO STATE BANKS 12 U.S.C. 214a. Procedure for conversion, merger, or consolidation; vote of stockholders A national banking association may, by vote of the holders of at least two-thirds of each class of its capital stock, convert into, or merge or consolidate with, a State bank in the same State in which the national banking association is located, under a State charter, in the following manner: (a) [Text Omitted] SUBSCRIPTION AND COMMUNITY OFFERING PROSPECTUS (Proposed Holding Company for Mid-Southern Savings Bank, FSB) Up to 2,225,975 Shares of Common Stock (Subject to Increase to up to 2,559,871 Shares) $10.00 per Share ________________________________________________
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+PROSPECTUS SUMMARY This summary highlights information that we present more fully in the rest of this prospectus. This summary does not contain all of the information you should consider before buying common shares in this offering. This summary contains forward-looking statements that involve risks and uncertainties, such as statements about our plans, objectives, expectations, assumptions or future events. In some cases, you can identify forward-looking statements by terminology such as "anticipate," "estimate," "plan," "project," "continuing," "ongoing," "expect," "we believe," "we intend," "may," "should," "will," "could," and similar expressions denoting uncertainty or an action that may, will or is expected to occur in the future. These statements involve estimates, assumptions, known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from any future results, performances or achievements expressed or implied by the forward-looking statements. You should read the entire prospectus carefully, including the "Risk Factors" section and the financial statements and the notes to those statements. Our Company MMTEC, INC. ("MMTEC") was founded on January 4, 2018 under the laws of the British Virgin Islands (the "BVI"). Our main operations are conducted through and by the People s Republic of China ("PRC") based operating entity, Gujia (Beijing) Technology Co., Ltd. ("Gujia"), based in Beijing, China. On April 20, 2018, we incorporated MM Fund Services Limited ("MM Fund") for the purpose of providing administration services to the private equity funds industry. On May 28, 2018 and August 8, 2018, we incorporated MM Capital Management Limited ("MM Capital") and MM Fund SPC ("MM SPC"), respectively, for the purpose of providing assets management and investment services to clients. On March 19, 2018, MMTEC acquired a wholly owned subsidiary, MM Future Technology Limited ("MM Future"). MM Future was incorporated in Hong Kong on October 31, 2017 for the purpose of being a holding company for the equity interest in Gujia. In addition, our company holds 24.9% of the outstanding securities of MMBD Trading Ltd., a BVI company limited by shares, which owns 100% of a US-registered broker-dealer, MM iGlobal, Inc. ("MM Global"), located in New York, NY. We have developed and deployed a series of platforms which comprise a business chain that enables PRC-based hedge funds, mutual funds, registered investment advisors, proprietary trading groups, and brokerage firms to engage in securities market transactions and settlements globally. We conduct our business through and based on distinct yet integrated business systems designed to provide support for our (i) Securities Dealers Trading System (securities registration and clearing, account management, risk management, quick trading and execution, and third party access middleware), (ii) Private Fund Investment Management System (multi-account management, fund valuation, risk management, quantitative trading access, liquidation and requisition management) and (iii) Mobile Transaction Individual Client System and PC Client System (Apple IOS, Android, PC, Web). We assist PRC-based financial institutions taking part in the overseas securities trading markets by providing them comprehensive Internet-based securities solutions. These PRC financial institutions, along with Hong Kong broker-dealer customers, may "white label" our trading interface (i.e., put their logos on it, make our trading interface available to their customers without referencing our name, as if it was developed by them in-house), or they can select from among our modular functionalities, such as order routing, trade reporting or clearing on specific products or exchanges where they may not have up-to-date technology to offer their customers a comprehensive range of services and products. We also help PRC-based hedge funds, mutual funds, proprietary trading groups to speed up their integration into the overseas market and offer them additional services, such as fund establishment, issuance, custody, transaction and settlement. Securities Dealers Trading Support System The Electric Trading Network Counter Management System ("ETN") supports our institutional customers. The system consists of the following modules: Our account management system provides customers with a highly adaptable multi-account management system that systematically manages multiple accounts, realizes simultaneous transactions among the accounts and guarantees efficiency and fairness in transaction. Our risk control system conducts comprehensive monitoring in the transaction execution process from initial position, decision-making to execution by setting the warning line and open line. It evaluates dynamic control of risks presented by scanning all asset units every 30 minutes. The system provides one-click opening and one-click query functions to facilitate operations by the risk control personnel, so that risks are controlled in a more timely and efficient manner. It supports multi-dimensional risk control and eliminates the transaction of highly risky stocks by setting a stock pool in which such stocks are stored. Our fast transaction system features one-click booking, fast transaction and combined booking to rapidly and efficiently integrate the centralized transaction system to ensure efficiency and accuracy of transactions. Private Fund Investment Management System The Private Fund Trading Network Management System ("PTN") supports our institutional customers. The system consists of the following modules: Our account management system sets up account management functions such as risk control, clearing, accounting, reporting, and trading, etc. for fund operating and investment. Our fund valuation system provides a package of valuation services, including valuation validation, investment monitoring, and information disclosure, with general and grouped valuation options provided to the user depending on the need. Our fund risk management platform provides all-round risk control management for the user in the whole process from transaction, compliance to risk control on three dimensions: transaction risk control, process risk control and risk control setting. Our quantitative transaction access provides the user with efficient and fast quantitative transaction access modes, including the standardized API and customized H5, SDK, APP, PC, etc. to realize rapid development and operation. Table of Contents Item 8. Exhibits and Financial Statement Schedules (a) Exhibits The following exhibits are filed herewith or incorporated by reference in this prospectus: Exhibit Exhibit title 1.1 Form of Underwriting Agreement.* 3.1 Memorandum and Articles of Association.* 4.1 Specimen Share Certificate.* 5.1 Opinion of Ogier.* 5.2 Opinion of Deheng Law Offices.* 8.1 Opinion of Schiff Hardin LLP.* 10.1 Employment Agreement between the Registrant and its CEO.* 10.2 Employment Agreement between the Registrant and its CFO.* 10.3 Form lockup agreement (previously filed as Exhibit A to the Underwriting Agreement).* 10.4 Form of Independent Director Agreement.* 10.5 Individual Loan Contract with Zhen Fan.* 10.6 Individual Loan Contract with Xiangdong Wen.* 10.7 Indemnification Escrow Agreement.* 10.8 Lease Agreement.* 10.9 Share Repurchase Agreement.* 10.10 Lease Agreement.* 14.1 Code of Conduct and Ethics.* 21.1 List of Subsidiaries of the Registrant.* 23.1 Consent of MaloneBailey LLP.* 23.2 Consent of Ogier (included in Exhibit 5.1).* 23.3 Consent of DeHeng Law Offices (included in Exhibit 5.2).* 23.4 Consent of Schiff Hardin LLP (included in Exhibit 8.1).* 24.1 Power of Attorney (included on signature page)* 99.1 Charter of the Audit Committee.* 99.2 Charter of the Compensation Committee.* 99.3 Charter of the Nominating Committee.* * Previously filed. (b) Financial Statement Schedules None. Item 9. Undertakings The undersigned registrant hereby undertakes: To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: CALCULATION OF REGISTRATION FEE Title of Each Class of Securities to be Registered Amount to be Registered (2) Proposed Maximum Aggregate Price Per Share Proposed Maximum Aggregate Offering Price (1) Amount of Registration Fee 2,070,000 shares, $0.001 par value per share to be sold by Registrant 2,070,000 $4.50 $9,315,000 $1,128.98 (1) Estimated solely for the purpose of calculating the amount of the registration fee in accordance with Rule 457(a) under the Securities Act of 1933, as amended. (2) Includes 270,000 common shares which may be issued on exercise of a 30-day option granted to the underwriters to cover over-allotments, if any. Table of Contents Mobile Transaction Individual Client System and PC Client System Following our internal research and development efforts and upgrades, we have established a transaction-and-social mobile application for our broker-dealer customers, and an efficient and fast transaction-only PC client system for their individual investor customers. This system provides end users with real time all-market information (bid/ask price, volume, breaking news, etc.) access through dedicated cross-border lines. We utilize the Sino-US dedicated cross-border lines to provide end users with high-speed and stable market data, help them to apply for market licenses, and provide them with integrated market information-related solutions for which such users may choose to pay monthly or yearly. We also provide end users free testing and debugging services. Industry and Market Background According to June 2016 research report released by BCG, the percentage of wealth of Chinese residents held in overseas assets is much lower than that of residents in other countries. However, with an increased rate of globalization of private wealth, it is estimated that this percentage will double from 4.8% to around 9.4% by 2020; the new market is estimated at approximately RMB 13 trillion. In addition, there are several noteworthy industry wide trends: Chinese investors demand for securities investment is growing rapidly. According to the data from Securities Association of China, at the end of 2017, the total assets of China s 131 securities companies were RMB 6.14 trillion, and their net equities were RMB 1.85 trillion. Chinese investors assets available for investments are growing at a high rate. In 2006, 70% of China s personal investible assets were invested in cash and deposits. Of the remaining 30%, nearly half was invested in real estate, and only a small amount of investible assets was invested in the capital markets. By 2017, the percentage of China s personal investible assets invested in cash and deposits had fallen to 41%, while the percentage of assets invested in financial markets had risen significantly to 35%. There are two main channels which can currently be utilized by Chinese investors to invest in the U.S. securities markets: Investing from the PRC: Qualified Domestic Institutional Investor ("QDII"): this status allows domestic investors to invest in publicly trading securities on foreign securities markets (excluding venture capital and private equity funds securities) via certain fund management institutions, insurance companies, securities companies and other assets management institutions which have been approved by China Securities Regulatory Commission ("CSRC"). These entities, in turn, offer investment opportunities to individual investors to invest in overseas stocks and fixed return securities. Qualified Domestic Limited Partner: this status allows qualified domestic limited partners to invest in overseas private funds and private equities. Only a few companies have obtained this status to date. Qualified Domestic Investment Enterprise: this platform allows mainland PRC investors to tap into a wider variety of foreign asset classes compared to the QDII by accessing offshore private equity, hedge funds and real assets, in addition to listed equities and debt securities that are already covered by the existing QDII. This platform is generally viewed as broad in scope, administration and lacking regulatory clarity. Outbound Direct Investment Chinese companies headquartered in the Shanghai Free Trade Zone may conduct almost all equity investments via this platform as it is not subject to any investment quotas. However, this platform is ill-suited for small scale operations as it only contemplates investments by institutional/corporate investors, not individuals. Qualified Domestic Individual Investor is a new investment channel promoted by the Chinese government. It is expected to give PRC based individual investors who have at least RMB1 million of net assets more freedom to invest their money in overseas assets. It is expected that the PRC investors will be able to put money directly into overseas shares, bonds, mutual funds, insurance products, financial derivatives and property through this initiative. It is also expected to allow them to make direct investments in companies through mergers and acquisitions. No official date has been given for the launch of the scheme as of yet. Investing from outside of the PRC: Many Chinese investors already have their money in bank accounts outside China (for example, in Hong Kong, Singapore, Taiwan, U.S., or other countries). These investors may invest these funds in any investment. We beleive that these investors will benefit from a trading platform and service based in Mandarin. Table of Contents Our Strategies Our key market strategies are as follows: Minimize technical barriers to securities trading – We aim to bring first class technology solutions to traditional small to medium-sized introducing brokers who normally lack the know-how knowledge in setting up online trading platform, and to lower the participating threshold of online financial service companies who want to expand their traditional line of businesses to the securities trading business. Utilize cloud computing technologies - We help small- to medium-sized hedge funds, mutual funds, proprietary trading groups, and introducing brokers build their trading system on the cloud. We focus on providing backstage support for our institutional clients, and develop more technical and innovative financial product for them. Support PRC portfolio managers to participate in overseas markets – By providing a complete suite of turnkey solutions, we help PRC portfolio managers establish their hedge funds and trading accounts while minimizing expense. Our Competitive Strengths As more Chinese investors trade the U.S. and Hong Kong stock markets, the demand for trading navigation systems in Chinese increases which, in turn, creates additional pressure on traditional online trading systems. We distinguish ourselves from our competitors: Utilize our technological advantages and to offer one-stop securities dealers solutions. We strive to make overseas investment transactions more convenient and lower the threshold of global investment transactions, making it easier for Chinese investors to participate in global investment. We also provide a smoother user trading experience for Chinese customers, offering more localized trading experience, and easier invest in overseas markets. Provide more localized private fund services and more financial products support. We rely on MM Fund Services Limited and our PTN system s support to provide a more localized private fund administration service to our clients. Reduce the technical access threshold of the securities industry. We rely on cloud technology to help more brokerage firms minimize the costs of technology access. We adhere to an open technical environment and provide an open platform to all users who wish to access overseas investment transactions. We also provide customized product service for users. Offering localized, 24/7 full Chinese language customer service. From trading to technology support, we strive to create a more user friendly environment for our customers. Risks and Challenges Our prospects should be considered in light of the risks, uncertainties, expenses and difficulties frequently encountered by similar companies. Our ability to realize our business objectives and execute our strategies is subject to risks and uncertainties, including, among others, the following: Ability to attract and retain highly skilled personnel, Ability to identify and capitalize on new market opportunities, Difficult market conditions, economic conditions and geopolitical uncertainties, Significant regulation in our industry, Changes in regulatory environment affecting our operations, Risks inherent in doing business in the international markets, Ability to obtain additional financing, if needed, on terms that are acceptable, Technology failures while developing and enhancing our software, Seasonality of the financial markets in which we operate, Vulnerability to security risk, Market fluctuations and other economic factors, and Lack of liquidity or access to capital. In addition, we face other risks and uncertainties that may materially affect our business prospect, financial condition, and results of operations. You should consider the risks discussed in "Risk Factors" and elsewhere in this prospectus before investing in our common shares. TABLE OF CONTENTS Prospectus Summary 1 Risk Factors 8 Forward-Looking Statements 28 Use of Proceeds 28 Dividend Policy 29 Exchange Rate Information 29 Capitalization 29 Dilution 30 Post-Offering Ownership 31 Management s Discussion and Analysis of Financial Condition and Results of Operations 32 Qualitative and Quantitative Disclosures about Market Risk 43 Our Business 44 Management 54 Related Party Transactions 60 Principal Shareholders 61 Description of Share Capital 62 Shares Eligible for Future Sale 68 Tax Matters Applicable to U.S. Holders of Our Common Shares 69 Enforceability of Civil Liabilities 73 Determination of Offering Price 74 Underwriting 74 Legal Matters 78 Experts 78 Where You Can Find More Information 78 Financial Statements F-1 You should rely only on the information contained in this prospectus or in any free writing prospectus we may authorize to be delivered or made available to you. Neither we, nor the underwriters have authorized anyone to provide you with different information. The information in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus, or any free writing prospectus, as the case may be, or any sale of common shares in our company. For investors outside the United States: Neither we, nor the underwriters have done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. Persons outside the United States who come into possession of this prospectus must inform themselves about, and observe any restrictions relating to, the offering of the common shares and the distribution of this prospectus outside the United States. Table of Contents Corporate History and Information; Corporate Structure The following is a chronology and a list of few key milestones in our development and expansion: June 2015 - We established our company. August 2015 - We launched our mobile client system. October 2015 - We opened our Shanghai Branch and Technical Research and Development Center. December 2015 - We trial launched our ETN Counter Business System. August 2016 - We launched our PTN Private Fund Investment Management System. October 2016 - Together with People.cn, we sponsored The Summit Forum on China Concept Stock Revitalization, with nearly 30 China Concept Stock companies and 20 other institutions attending the event. December 2016 - We deployed the 4th version of the ETN Investment Management System. The following diagram illustrates our corporate structure as of the date of this prospectus: Our principal executive office is located at Room 608A, Air China Century Building, 40 Xiaoyun Road, Chaoyang District, Beijing, 100020 China. Our telephone number is +86 010 5617 2312. Our website is as follows http://www.51mm.com. The information on our website is not part of this prospectus. Emerging Growth Company Status As a company with less than $1.07 billion in revenue during our last fiscal year, we qualify as an "emerging growth company" as defined in the Jumpstart Our Business Startups Act, or JOBS Act, enacted in April 2012, and may take advantage of reduced reporting requirements that are otherwise applicable to public companies. These provisions include, but are not limited to: being permitted to present only two years of audited financial statements and only two years of related Management s Discussion and Analysis of Financial Condition and Results of Operations in our SEC filings, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in periodic reports, proxy statements and registration statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We may take advantage of these provisions until the last day of our fiscal year following the fifth anniversary of the date of the first sale of our common equity securities pursuant to an effective registration statement under the Securities Act of 1933, as amended (the "Securities Act"). However, if certain events occur before the end of such five-year period, including if we become a "large accelerated filer," our annual gross revenues exceed $1.07 billion or we issue more than $1.00 billion of non-convertible debt in any three-year period, we will cease to be an emerging growth company before the end of such five-year period. Table of Contents In addition, Section 107 of the JOBS Act provides that an "emerging growth company" can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. We have elected to take advantage of the extended transition period for complying with new or revised accounting standards and acknowledge such election is irrevocable pursuant to Section 107 of the JOBS Act. Foreign Private Issuer Status We are incorporated in the BVI, and more than 50% of our outstanding voting securities are not directly or indirectly held by residents of the United States. Therefore, we are a "foreign private issuer," as defined in Rule 405 under the Securities Act and Rule 3b-4(c) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). As a result, we are not subject to the same requirements as U.S. domestic issuers. Under the Exchange Act, we will be subject to reporting obligations that, to some extent, are more lenient and less frequent than those of U.S. domestic reporting companies. For example, we will not be required to issue quarterly reports or proxy statements. We will not be required to disclose detailed individual executive compensation information. Furthermore, our directors and executive officers will not be required to report equity holdings under Section 16 of the Exchange Act and will not be subject to the insider short-swing profit disclosure and recovery regime. Notes on Prospectus Presentation Numerical figures included in this prospectus have been subject to rounding adjustments. Accordingly, numerical figures shown as totals in various tables may not be arithmetic aggregations of the figures that precede them. Certain market data and other statistical information contained in this prospectus is based on information from independent industry organizations, publications, surveys and forecasts. Some market data and statistical information contained in this prospectus are also based on management s estimates and calculations, which are derived from our review and interpretation of the independent sources listed above, our internal research and our knowledge of the PRC information technology industry. While we believe such information is reliable, we have not independently verified any third-party information and our internal data has not been verified by any independent source. For the sake of clarity, this prospectus follows the English naming convention of first name followed by last name, regardless of whether an individual s name is Chinese or English. Except where the context otherwise requires and for purposes of this prospectus only: Depending on the context, the terms "we," "us," "our company," and "our" refer to MMTEC, INC., BVI company, and its consolidated subsidiaries: MM Future Technology Ltd. ("MM Future"), a Hong Kong incorporated limited company. MM Fund Services Limited ("MM Fund"), a Cayman Islands incorporated limited company. MM Capital Management Limited ("MM Capital"), a Cayman Islands incorporated limited company. MM Fund SPC ("MM SPC"), a Cayman Islands incorporated segregated portfolio company. Gujia (Beijing) Technology Co., Ltd ("Gujia"), a PRC incorporated limited company. Meimei Zhengtong (Beijing) Technology Co., Ltd., a PRC incorporated entity (dissolved effective as of June 8, 2018). "common shares" refer to our common shares, $0.001 par value per share, "China" and "PRC" refer to the People s Republic of China, excluding, for the purposes of this prospectus only, Macau, Taiwan and Hong Kong, and all references to "RMB," "yuan" and "Renminbi" are to the legal currency of China, and all references to "USD," "$", and "U.S. dollars" are to the legal currency of the United States. Unless otherwise noted, all currency figures in this filing are in U.S. dollars. This prospectus contains translations of certain RMB amounts into U.S. dollar amounts at a specified rate solely for the convenience of the reader. Unless otherwise noted, all translations made in this prospectus are based on a rate of RMB 6.6166 to $1.00, which was the exchange rate on June 30, 2018. Unless otherwise stated, we have translated balance sheet amounts, with the exception of equity, at June 30, 2018 at RMB 6.6166 to $1.00, December 31, 2017 at RMB 6.5342 to $1.00, and December 31, 2016 at RMB 6.9370 to $1.00, respectively. We have stated equity accounts at their historical rates. The average translation rates applied to income statement accounts for the six months ended June 30, 2018 and 2017 were RMB 6.3711 and RMB 6.8697, respectively, and the years ended December 31, 2017 and 2016 were RMB 6.7518 and RMB 6.6423, respectively. We make no representation that the RMB or U.S. dollar amounts referred to in this prospectus could have been or could be converted into U.S. dollars or RMB, as the case may be, at any particular rate or at all. On October 19, 2018, the exchange rate was RMB 6.9300 to $1.00. Any discrepancies in any table between the amounts identified as total amounts and the sum of the amounts listed therein are due to rounding. Table of Contents The Offering Common shares offered 1,800,000 common shares Over-allotment Option to purchase additional common shares from us We have granted the underwriters 30 days from the date of this prospectus, to purchase up to an additional 270,000 shares on the same terms as the other shares being purchased by the underwriters from us. Common shares outstanding before this offering 18,000,000 common shares. Common shares outstanding after this offering 19,800,000 common shares. Use of Proceeds We estimate that our net proceeds from this offering will be approximately $6.12 million (or approximately $7.18 million if the underwriters option to purchase additional common shares from us is exercised in full), based on an assumed initial public offering price of $4.25 per share, which is the midpoint of the range set forth on the cover page of this prospectus, and after deducting estimated underwriting discounts and commissions, non-accountable expense allowance, and estimated offering expenses payable by us. We intend to use the net proceeds from this offering as follows after we complete the remittance process: Approximately $3.13 million for research and development, Approximately $1.86 million for sales and marketing, and Balance of approximately $1.13 million for additional working capital. Indemnification Escrow Approximately $500,000 from the proceeds of this offering will be placed in escrow for indemnity claims of the underwriters, which could be returned to us after two years from the date of this offering. See "Use of Proceeds" for more information. Lockup Agreements Our executive officers, directors, and shareholders holding 1% or more of our common shares prior to the offering, collectively, have agreed with the underwriters not to sell, transfer or dispose of any common shares or similar securities for a period of 6 months following the closing of this offering. NASDAQ Trading symbol We intend to apply for listing of our common shares on the NASDAQ Capital Market under the symbol "MTC".
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+PROSPECTUS SUMMARY The following summary is qualified in its entirety by, and should be read together with, the more detailed information and our consolidated financial statements and related notes thereto appearing elsewhere or incorporated by reference in this prospectus. Before you decide to invest in our securities, you should read the entire prospectus carefully, including the risk factors and the financial statements and related notes included or incorporated by reference in this prospectus. Our Company Overview MicroVision, Inc. is a pioneer in laser beam scanning (LBS) technology that we market under our brand name PicoP . We have developed our proprietary PicoP scanning technology that can be adopted by our customers to create high-resolution miniature projection and three-dimensional sensing and image capture solutions. PicoP scanning technology is based on our patented expertise in micro-electrical mechanical systems (MEMS), laser diodes, opto-mechanics, and electronics and how those elements are packaged into a small form factor, low power scanning engine that can display, interact and sense, depending on the needs of the application. For display, the engine can project a high-quality image on any surface for use in pico projection and augmented or virtual reality. For sensing, we use infrared (IR) lasers to capture three-dimensional data in the form of a point cloud. Interactivity uses the 3D sensing function and the display function to project an image that the user could then interact with as one would a touch screen. Our strategy includes selling LBS engines to original design manufacturers (ODMs) and original equipment manufacturers (OEMs). We plan to offer three scanning engines to support a wide array of applications: a small form factor display engine for consumer products, an interactive scanning engine for smart Internet of Things (IoT) products, and a light detection and ranging (LiDAR) engine for consumer electronic applications. We also are developing LiDAR for automotive collision avoidance systems. In addition to selling modules, we have licensed our patented PicoP scanning technology to other companies for incorporation into their scanning engines for projection. We sell our licensees key components needed to produce their laser scanning engines and/or license our technology in exchange for a royalty fee for each scanning engine they sell. Companies to whom we license our PicoP scanning technology are typically ODMs or OEMs who are in the business of making components or products ready for sale to end users. To date, we have primarily focused on the consumer electronics market, however, we believe that our LBS technology creates a platform that could support multiple applications and markets including medical, industrial and automotive. While we are optimistic about our technology and the potential for future revenues, we have incurred substantial losses since inception and we expect to incur a significant loss during the fiscal year ending December 31, 2018. Recent Developments In May 2018, we signed a five-year license agreement with a customer granting them exclusive license to our LBS technology for display-only applications. As part of the agreement, we will receive $10 million in license fees in 2018. An initial payment of $5 million is scheduled to be paid in June 2018, and a second payment of $5 million is scheduled to be paid in October 2018. The contract includes requirements that must be met in order to maintain exclusivity. In addition to the up-front license fees, we expect payments for non-recurring engineering expenses associated with process and product transfer and qualification milestones, and component sales. Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is prohibited. SUBJECT TO COMPLETION, DATED JUNE 8, 2018 PROSPECTUS MicroVision, Inc. 12,500,000 Shares of Common Stock We are offering 12,500,000 shares of our common stock. We have granted the underwriters a 30-day option to purchase up to 1,875,000 additional shares of our common stock to cover over-allotments, if any. Our shares are traded on the Nasdaq Global Market under the symbol MVIS. On June 6, 2018, the last sale price of our common stock as reported on the Nasdaq Global Market was $1.44 per share. The public offering price per share of our common stock will be determined between us, the underwriters and investors based on market conditions at the time of pricing, and may be at a discount to the current market price of our common stock. Therefore, the recent market price used throughout this prospectus may not be indicative of the final offering price. Investing in our securities involves a high degree of risk. Please see the sections entitled Risk Factors on page 5 of this prospectus, as well as in our periodic reports filed with the Securities and Exchange Commission and incorporated by reference herein, for a discussion of important risks that you should consider before making an investment decision. Per Share Total Public offering price $ $ Underwriting discount(1) $ $ Proceeds, before expenses, to us $ $ (1) See Underwriting on page 9 of this prospectus for a description of the compensation payable to the underwriters. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities, or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. Delivery of the shares offered hereby is expected to be made on or about , 2018. Sole Book-Running Manager Ladenburg Thalmann Co-Managers H.C. Wainwright & Co. Northland Capital Markets The date of this prospectus is , 2018. Table of Contents Corporate Information We were founded in 1993 as a Washington corporation and reincorporated in 2003 under the laws of the State of Delaware. Our principal office is located at 6244 185th Ave NE, Suite 100, Redmond, WA 98052 and our telephone number is 425-936-6847. We maintain a website at www.microvision.com, where general information about us is available. We do not incorporate the information on our website into this prospectus and you should not consider it part of this prospectus. Table of Contents TABLE OF CONTENTS Page PROSPECTUS SUMMARY 1
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+PROSPECTUS SUMMARY
+ 
+ This summary highlights information contained elsewhere in this prospectus. This summary does not contain all the information you should consider before investing in the securities. However, you should read the entire prospectus carefully, including the Risk Factors, Management s Discussion and Analysis of Financial Condition and Results of Operations, and our financial statements, including the notes thereto, appearing elsewhere in this prospectus. 
+ 
+ Our Business
+ 
+ We are in the process of developing the business of selling computer equipment which can be used for the mining of cryptocurrency. The industry commonly refers to this computer equipment as mining rigs. We plan to develop and sell graphic processing unit (GPU)-based mining rigs based on our specifications. In July 2018, we introduced our first cryptocurrency miner, the Ai-1, which we designed and had manufactured to our specifications by GIGAIPC Co., Ltd., a Taiwan-based subsidiary of Gigabyte Technology Co., Ltd., a Taiwan-based company engaged in the production, processing and sales of information technology products. GPUs are logic chips that can be used to mine cryptocurrencies. The Ai-1 features advanced technologies that are designed to provide cryptocurrency mining companies with what we believe provides superior performance, including:
+ 
+ 
+ Ai-1 is equipped with a high performance GPU designed for cryptocurrency mining, the Ai-1 is designed to be compatible with most of the popular cryptocurrency algorithms including Ethash (Ethereum, Ethereum Classic), Equihash (Bitcoin Gold, ZCash), CryptoNightV7 (Monero), and Lyra2Rev2 (Vertcoin).
+ 
+ 
+ 
+ 
+ Ai-1 comes standard with a professional closed-system chassis and ten cooling fans to keep the GPUs operating at the optimal temperature and drive down air-conditioning cost.
+ 
+ 
+ 
+ 
+ Ai-1 requires minimum assembly and comes pre-installed with EthOS, an operating system specialized in mining.
+
+ 
+ We have ordered 43 units from GIGAIPC. Three of these units have been tested by GIGAIPC and the remaining units are scheduled for testing. The testing includes generating cryptocurrency, which GIGAIPC sold for its account.
+ 
+ The Cryptocurrency Industry
+ 
+ Cryptocurrency is a digital or virtual currency that uses cryptography for security. The first popular cryptocurrency was Bitcoin, which was launched in 2009. As of May 2018, there were reportedly more than 17 million bitcoins in circulation with a total market value of over $140 billion. Bitcoin s success has spawned a number of competing cryptocurrencies. Cryptocurrencies are based on a public ledger known as blockchain, which stores all past transactions. When a new transaction is initiated, a cryptocurrency miner needs to ensure that the information is accurate and add the transaction to the blockchain. Cryptocurrency miners receive a small amount of cryptocurrency as a reward for the service provided. Cryptocurrencies earned through mining can subsequently be sold on open exchanges and converted into fiat currency. Fiat currency is any money which is declared by a government to be legal tender, including state-issued currency. 
+ 
+ Blockchain technology has revolutionized the way that currencies are structured and created. The Ether currency is created by running hashing algorithms in a process called mining. Mining cryptocurrencies requires a computer to continuously run a cryptographic hash function, which is a way to reduce an arbitrarily large amount of data (in this case a block on the blockchain) to a datum of a fixed size (a string of so many numbers and letters). GPUs are logic chips that can be used to mine cryptocurrencies and are designed to solve complex 3D imaging algorithms in order to generate the particular cryptocurrency it is mining. GPUs have the ability to be able to mine multiple types of cryptocurrencies, unlike application specific integrated circuits, known as ASIC, which are designed specifically for mining Bitcoin. 
+ 
+ The Securities and Exchange Commission has issued warnings concerning cryptocurrencies and initial coin offering. Although claims have been made that cryptocurrencies are not securities, and therefore not subject to regulation by the SEC and the equivalent regulatory bodies of other countries, whether that claim proves correct with respect to any digital asset that is labeled as a cryptocurrency will depend on the characteristics and use of that particular asset. The SEC is focusing on cryptocurrencies and initial coin offerings.
+ 
+ Our Former Business
+ 
+ Prior to the March 2018, we were seeking to acquire and explore mineral properties. However, we were not successful in that business, which never generated any revenue, and we have discontinued that business. Our mineral operations, which are reflected on our financial statements which are included in this prospectus, is a discontinued operation. When the present management acquired control in March 2018, we anticipated that we would engage in cryptocurrency mining. We have changed our focus and we are now designing and planning to market cryptocurrency mining rigs.
+ 
+ 
+ - 3 -
+ 
+ 
+ Table of Contents
+
+ 
+ Organization
+ 
+ We are a Nevada corporation incorporated on October 19, 2019 under the name Oconn Industries. On February 16, 2012, we changed our corporate name to Oconn Industries Corp., and on April 1, 2014 we changed our corporate name to Diamante Minerals, Inc. On March 20, 2018, we changed our corporate name to iMine Corporation.
+ 
+ Our address is 8520 Allison Pointe Blvd Ste. 223 #87928, Indianapolis, Indiana 46250, telephone (877) 464-6388. Our corporate website is www.iminecorp.com. Information on our website or any other website does not constitute a part of this prospectus.
+ 
+ References to we, us, our and word of like import refer to iMine Corporation and its subsidiary.
+ 
+ Issuance of Securities to Selling Stockholder
+ 
+ On March 20, 2018, we entered into a loan and security agreement with Jose Maria Eduardo Gonzalez Romero, who is the selling stockholder. Pursuant to the agreement, Mr. Romero made loans to us of $500,000 during the period from March through June 2018, for which we issued to him our 5% two-year convertible secured promissory notes. The notes mature two years from the dates of the loan and are convertible into common stock at a conversion price of $0.02 per share. To the extent that the proceeds of the notes are used to purchase equipment for mining cryptocurrencies, we agreed to give Mr. Romero a security interest in the equipment. The notes provide that they cannot be converted to the extent that, after giving effect to conversion, the holder of the notes and his affiliates would beneficially own 4.99% of our common stock. See Selling Stockholder and Method of Distribution. 
+ 
+ The Offering
+ 
+ 
+ Common Stock Offered:
+ 25,000,000 shares 
+
+ 
+ 
+ 
+
+ 
+ Outstanding Shares of Common Stock:
+ Outstanding Shares as Adjusted:
+ 78,542,286 shares
+ 103,542,2861 shares
+
+ 
+ 
+ 
+
+ 
+ Use of Proceeds:
+ We will not receive any proceeds from the sale of the shares by the selling stockholder.
+
+ ___________ 
+ 1 As adjusted to reflect the issuance of 25,000,000 shares of common stock upon conversion of the notes held by the selling stockholder based on full conversion of the notes. Because of the conversion terms, the notes are not immediately convertible in full.
+ 
+ SUMMARY FINANCIAL INFORMATION
+ 
+ The following information as of July 31, 2017 and 2016 and for years in then ended have been derived from our audited financial statements which appear elsewhere in this prospectus. The information at April 30, 2018 and for the nine months ended April 30, 2018 and 2017 has been derived from our unaudited financial statements which appear elsewhere in this prospectus. Our financial statements through March 16, 2018, when we had a change in management, reflect the operation of our former business, which was seeking to acquire and explore mineral properties. We are no longer engaged in that business.
+ 
+ 
+ - 4 -
+ 
+ 
+ Table of Contents
+
+ 
+ Statement of Operations Information:
+ 
+ 
+ 
+ Nine Months Ended April 30,
+ 
+ 
+ Year Ended July 31,
+ 
+
+ 
+ 
+ 2018 
+ 
+ 
+ 2017 
+ 
+ 
+ 2017 
+ 
+ 
+ 2016 
+ 
+
+ Revenues
+ 
+ $ -- 
+ 
+ $ -- 
+ 
+ $ -- 
+ 
+ $ -- 
+
+ Operating expenses
+ 
+ 
+ 1,214,694 
+ 
+ 
+ (155,613 ) 
+ 
+ 53,802 
+ 
+ 
+ 778,653 
+
+ Write off of acquisition costs and investment
+ 
+ 
+ -- 
+ 
+ 
+ -- 
+ 
+ 
+ (8,022,222 ) 
+ 
+ -- 
+
+ Net income (loss) 
+ 
+ 
+ (1,214,694 ) 
+ 
+ 155,613 
+ 
+ 
+ (8,074,759 ) 
+ 
+ (993,653 )
+ Loss per share (basic and diluted)
+ 
+ $ (0.02 ) 
+ $ 0.00 
+ 
+ $ (0.16 ) 
+ $ (0.02 )
+ Weighted average shares of common stock outstanding (basic)
+ 
+ 
+ 56,084,411 
+ 
+ 
+ 52,042,286 
+ 
+ 
+ 52,042,286 
+ 
+ 
+ 52,042,286 
+
+ Weighted average shares of common stock outstanding (diluted)
+ 
+ 
+ 56,084,411 
+ 
+ 
+ 54,402,713 
+ 
+ 
+ 52,042,286 
+ 
+ 
+ 52,042,286 
+
+ 
+ Balance Sheet Information:
+ 
+ 
+ 
+ April 30,
+2018
+ 
+ 
+ July 31,
+2017
+ 
+
+ Current assets
+ 
+ $ 385,043 
+ 
+ $ 198,640 
+
+ Working capital (deficiency)
+ 
+ 
+ 110,301 
+ 
+ 
+ (509,005 )
+ Accumulated deficit
+ 
+ 
+ (10,730,010 ) 
+ 
+ (9,515,316 )
+ Stockholders equity (deficiency)
+ 
+ 
+ 110,301 
+ 
+ 
+ (509,005 )
+ 
+ RISK FACTORS
+ 
+ An investment in our common stock involves a high degree of risk. You should carefully consider the risks described below together with all of the other information included in this prospectus before making an investment decision with regard to our securities. The statements contained in this prospectus include forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in or implied by forward-looking statements. The risks set forth below are not the only risks facing us. Additional risks and uncertainties may exist that could also adversely affect our business, prospects or operations. If any of the following risks actually occurs, our business, financial condition or results of operations could be harmed. In that case, the trading price of our common stock could decline, and you may lose all or a significant part of your investment.
+ 
+ Risks Concerning our Business
+ 
+ We require funding for us to conduct our business.
+ 
+ We require significant funding for our operations. As of April 30, 2018, we had not generated any revenue from the sale of our mining rigs. At April 30, 2018, we had prepaid inventory of $331,600, representing inventory which had been paid for but had not yet been delivered. We financed the purchase of inventory from the sale of convertible notes in the total amount of $500,000, which were issued during the period from March through June 2018. We will require funds for the purchase of inventory, the establishment of a marketing organization and payment of our normal operations in the normal course of business, including our expenses relating to our status as a public company. We have no agreements or understandings with respect to any potential financing, and our failure to obtain necessary financing could impair our ability to operate profitable.
+ 
+ As a start-up company, you have no way to evaluate our ability to operate profitably, and we cannot assure you that we can or will operate profitably.
+ 
+ We are just commencing our operations. Because we have no history of operations in this design and sale of mining rigs for the cryptocurrency and our financial statements do not reflect our current business, you will have no way to evaluate our ability to generate revenue and profits. We are subject to risks common to start-up enterprises, including, among other factors, undercapitalization, cash shortages, limitations with respect to personnel, financial and other resources and lack of revenues. There is no assurance that we will be successful in achieving profitability and the likelihood of our success must be considered in light of our early stage of operations. There can be no assurance that we will be able to operate profitably or generate positive cash flow.
+ 
+ Our auditors report includes a going concern paragraph.
+ 
+ Our financial statements include a going-concern qualification. As of April 30, 2018 and July 31, 2017, we had accumulated deficits of approximately $10.7 million and $9.5 million, respectively. Our ability to operate profitable is dependent upon, among other things, obtaining additional financing for our operations and development of our business plan. Management intends to raise additional funds through private financing. These factors, among others, raise substantial doubt about our ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty and do not reflect our proposed cryptocurrency operations.
+ 
+ 
+ - 5 -
+ 
+ 
+ Table of Contents
+
+ 
+ Because we are dependent upon one equipment supplier, the failure or inability of this supplier to deliver the mining equipment could affect our operations.
+ 
+ We are presently purchasing cryptocurrency mining equipment from one supplier, GIGAIPC. In the event that GIGAIPC is unable to deliver the mining equipment based on our requirement, whether because of a shortage of GPU processors or because it, for other reason, cannot meet our requirements, we may have difficulty purchasing mining equipment from other suppliers in a timely manner, which could affect our ability to market and sell our equipment and therefore our ability to generate revenue and cash flow. 
+ 
+ We are dependent upon our chief executive officer.
+ 
+ We are dependent upon Daniel Tsai, our chief executive and financial officer and sole director, who is presently our only employee. Although Mr. Tsai has a one-year employment agreement commencing March 19, 2018, which requires him to devote such time as he deems necessary to our business, the employment agreement does not guarantee that he will continue with us. The loss of Mr. Tsai would materially impair our ability to conduct our business.
+ 
+ If we are unable to attract, train and retain technical and financial personnel, our business may be materially and adversely affected.
+ 
+ Our future success depends, to a significant extent, on our ability to attract, train and retain key management, technical and financial personnel. Recruiting and retaining capable personnel, particularly those with expertise in cryptocurrency mining are vital to our success. There is substantial competition for qualified personnel, and, to the extent that cryptocurrency becomes more popular, this competition will increase. We cannot assure you we will be able to attract or retain the technical and financial personnel we require. If we are unable to attract and retain qualified employees, our business may be materially and adversely affected.
+ 
+ We face competition in marketing equipment to the cryptocurrency industry.
+ 
+ In marketing mining rigs to the cryptocurrency industry, we compete with a number of domestic and foreign companies that are well known in the industry and are better capitalized than we are. Further, because we do not provide any warranty other than the warranty of the manufacturers of the various components, we may be at a competitive disadvantage. We cannot assure you that we will be able to compete successfully with these companies, and our failure to develop a market for our product would impair our ability to continue in business.
+ 
+ Our failure to offer customers a financing alternative may impair our ability to sell our mining rigs.
+ 
+ We do not offer any financing arrangements to potential customers looking to purchase our mining rigs. Our failure or inability to offer customers a financing option may impair our ability to market our mining rigs successfully.
+ 
+ Because our mining rigs are designed for the cryptocurrency market, any decline in the market for our products.
+ 
+ Our mining rigs are designed for only one purpose the mining of cryptocurrency. Any significant decline in the market for mining rigs generally or our mining rigs specifically could impair our ability to generate revenue and operate profitably. The recent decline in the value of cryptocurrencies may affect the market for cryptocurrency mining equipment. 
+ 
+ We may not be able to protect any intellectual property which we may develop.
+ 
+ We do not have any patents. To the extent that we develop proprietary intellectual property relating to our mining rigs, we may not be able to protect our intellectual property. Although the equipment we plan to sell was designed by us using computer equipment manufactured by our suppliers, we cannot assure you that the equipment we sell will not infringe upon the intellectual property rights of others. Any claim of violation of a third party s intellectual property, whether or not we ultimately prevail, could be very costly and could impair our operations.
+ 
+ 
+ - 6 -
+ 
+ 
+ Table of Contents
+
+ 
+ Risks Concerning the Cryptocurrency Industry
+ 
+ Our business is dependent upon the acceptance and growth of cryptocurrencies.
+ 
+ Although we do not expect to be engaged in the mining of cryptocurrencies, our computers are designed for use in the mining of cryptocurrencies and our business is dependent upon the increased growth of cryptocurrencies. As relatively new products and technologies, cryptocurrencies have not been widely accepted as a means for payment of goods and services by major retail and commercial outlets. A significant portion of the demand for cryptocurrencies is generated by speculators and investors seeking to profit from short-terms fluctuations in the price of cryptocurrencies. The growth of this industry in general is subject to a high degree of uncertainty. Factors affecting the further development of this industry, include, but are not limited to:
+ 
+ 
+ continued worldwide growth in the adoption and use of digital currencies;
+ 
+ 
+ 
+ 
+ government and quasi-government regulation of cryptocurrencies and other digital assets and their use, or restrictions on, or regulation of, access to and operation of the digital asset systems;
+ 
+ 
+ 
+ 
+ changes in consumer demographics and public tastes and preferences;
+ 
+ 
+ 
+ 
+ the maintenance and development of the open-source software protocol for the mining and transfer of cryptocurrencies;
+ 
+ 
+ 
+ 
+ the availability and popularity of other forms or methods of buying and selling goods and services, including new means of using fiat currencies;
+ 
+ 
+ 
+ 
+ regulatory or other issues relating to the cryptocurrency exchanges;
+ 
+ 
+ 
+ 
+ concerns about the security of cryptocurrencies and fraud;
+ 
+ 
+ 
+ 
+ the difficulty in recovering stolen cryptocurrency, whether such theft is though hacking a wallet or a network or physical robbery;
+ 
+ 
+ 
+ 
+ general economic conditions and the tax and regulatory environment relating to digital assets; and
+ 
+ 
+ 
+ 
+ a negative consumer perception of cryptocurrencies.
+
+ 
+ Our ability to operate profitably may be affected by fluctuations in the market price of cryptocurrency.
+ 
+ Our ability to operate profitably will be affected by the value of the cryptocurrencies. The market price and fluctuations in the market price of cryptocurrency may affect the willingness of potential miners to purchase mining equipment or to enter the business of cryptocurrency mining. Factors that may affect the price of cryptocurrency and consequently the market for mining rigs include: the total number of outstanding units of cryptocurrency, the demand for cryptocurrency; the global supply and demand for the cryptocurrency; investors expectations with respect to the rate of inflation or deflation of cryptocurrency and fiat currency; interest rates; currency exchange rates, including the rates at which any cryptocurrency may be exchanged for fiat currencies; the ability to exchange cryptocurrency for fiat currency; the liquidity of the exchanges on which the cryptocurrency can be purchased, sold or exchanged for fiat currency; interruptions in service from or failures of exchanges; cyber theft of cryptocurrency from online wallet providers, scams involving cryptocurrency, or news of such theft from such providers or from individuals wallets; investment and trading activities of large investors; monetary policies of governments, trade restrictions, currency devaluations and revaluations; regulatory measures, if any, that restrict the use of cryptocurrency as a form of payment or the trading or exchanging of cryptocurrency for fiat currency or the exchanges on which cryptocurrencies are traded; the availability and popularity of businesses that provide cryptocurrency-related services; the maintenance and development of the open-source software protocol of the mining and trading in cryptocurrencies; increased competition from other forms of cryptocurrency or payments services; global or regional political, economic or financial events and situations; expectations among cryptocurrency participants that the value of cryptocurrency will soon change; fees associated with processing a cryptocurrency transaction , as well as a discomfort with cryptocurrency not related to any specific factor. 
+ 
+ If miners cease or reduce operations or delay recording transactions, the market for the mining rigs may be adversely affected.
+ 
+ If miners cease expending processing power to solve blocks, confirmations of transactions on the blockchain could be slowed. A reduction in the processing power expended by miners could reduce the market for the cryptocurrency mining rigs, and, consequently the market for and price of our equipment.
+ 
+ 
+ - 7 -
+ 
+ 
+ Table of Contents
+
+ 
+ Any failure to keep pace with technological changes relating to blockchain products, may impair our ability to sell our cryptocurrency mining rigs.
+ 
+ The market for products based used with blockchain technology, such as cryptocurrencies, is characterized by rapid technological change, frequent product and service innovation and evolving industry standards. The success of our business depends on several factors, including our ability to develop next generation equipment to meet the anticipated needs of the users of blockchain technology. Failure in this regard may significantly impair our competitiveness and financial results. Further, our business plan is based on GPU-generated cryptocurrencies. To the extent that other technologies evolve to replace GPU-based mining result is a decline in the market for our mining rigs, we may incur a competitive disadvantage and we may incur significant costs in re-engineering our equipment to meet the most current developments. In the event that we develop new equipment based on anticipated technological developments and the market prefers a different technology developed by our competitors, our ability to sell our product may be impaired. Furthermore, uncertainties about the timing and nature of new technologies, or modifications to existing technologies, could increase our research and development expenses. 
+ 
+ Regulatory changes or actions may restrict the use of cryptocurrencies in a manner that adversely affects our business.
+ 
+ As cryptocurrencies have grown in both popularity and market size, governments around the world have reacted differently to cryptocurrencies with certain governments deeming them illegal while others have allowed their use and trade. On-going and future regulatory actions may alter, perhaps to a materially adverse extent, our ability to continue to operate. The effect of any future regulatory change on the market for our products is impossible to predict, but such change could be substantial and adverse to us. 
+ 
+ Risks Concerning our Common Stock
+ 
+ Because our common stock is a penny stock, you may have difficulty selling our common stock in the secondary trading market.
+ 
+ Our common stock is a penny stock, as defined by the SEC regulations, and therefore is subject to the rules adopted by the SEC regulating broker-dealer practices in connection with transactions in penny stocks. The SEC rules may have the effect of reducing trading activity in our common stock by making it more difficult for investors to purchase and sell their shares. The SEC s rules require a broker or dealer proposing to effect a transaction in a penny stock to deliver the customer a risk disclosure document that provides certain information prescribed by the SEC, including, but not limited to, the nature and level of risks in the penny stock market. The broker or dealer must also disclose the aggregate amount of any compensation received or receivable by him in connection with such transaction prior to consummating the transaction. In addition, the SEC s rules also require a broker or dealer to make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser s written agreement to the transaction before completion of the transaction. The existence of the SEC s rules may result in a lower trading volume of our common stock and lower trading prices. Further, some broker-dealers will not process transactions in penny stocks.
+ 
+ Our lack of internal controls over financial reporting may affect the market for and price of our common stock.
+ 
+ Our disclosure controls and our internal controls over financial reporting are not effective. We do not have the financial resources or personnel to develop or implement systems that would provide us with the necessary information on a timely basis so as to be able to implement financial controls. Our financial condition together with the fact that we presently have one part-time employee, who is both our chief executive officer and chief financial officer, makes it difficult for us to implement a system of internal controls over financial reporting, and we cannot assure you that we will be able to develop and implement the necessary controls. The absence of internal controls over financial reporting may inhibit investors from purchasing our shares and may make it more difficult for us to raise debt or equity financing.
+ 
+ Our lack of a full-time chief financial officer could affect our ability to develop financial controls, which could affect the market price for our common stock. 
+ 
+ We do not have a full-time chief financial officer. At present, our chief executive officer, who does not have an accounting background, is also acting as our chief financial officer. We do not anticipate that we will be able to hire a qualified chief financial officer unless our financial condition improves significantly. The lack of an experienced chief financial officer, together with our lack of internal controls, may impair our ability to raise money through a debt or equity financing as well as the market for and the market price of our common stock.
+ 
+ We do not have any independent directors.
+ 
+ At present, we do not have any independent directors. Our sole director is Daniel Tsai, who is our chief executive officer and chief financial officer. Because we have no independent director, we do not have any checks and balances on Mr. Tsai, which may make it difficult for us to develop internal controls and to raise money in the financial markets.
+ 
+ 
+ - 8 -
+ 
+ 
+ Table of Contents
+
+ 
+ Our stock price may be volatile and your investment in our common stock could suffer a decline in value.
+ 
+ The dollar volume trading in our stock is low and we cannot assure you that any significant market will develop. As a result, any reported prices may not reflect the price at which you would be able to sell shares if you want to sell any shares you own or buy shares if you wish to buy share. Further, stocks with a low trading volume may be more subject to manipulation than a stock that has a significant public float. The price of our stock may fluctuate significantly in response to a number of factors, many of which are beyond our control. These factors include, but are not limited to, the following, in addition to the risks described above and general market and economic conditions:
+ 
+ 
+ our low stock price, which may result in a modest dollar purchase or sale of our common stock having a disproportionately large effect on the stock price;
+ 
+ 
+ 
+ 
+ the market s perception as to our ability to generate positive cash flow or earnings;
+ 
+ 
+ 
+ 
+ changes in our or securities analysts estimate of our financial performance;
+ 
+ 
+ 
+ 
+ our ability or perceived ability to obtain necessary financing for our operations;
+ 
+ 
+ 
+ 
+ the perception of the market for our cryptocurrency and our ability to generate revenue and cash flow from the mining and sale of cryptocurrency;
+ 
+ 
+ 
+ 
+ the risks concerning cryptocurrency;
+ 
+ 
+ 
+ 
+ the anticipated or actual results of our operations;
+ 
+ 
+ 
+ 
+ changes in market valuations of other companies in the cryptocurrency industry;
+ 
+ 
+ 
+ 
+ litigation or changes in regulations affecting cryptocurrencies;
+ 
+ 
+ 
+ 
+ concern about our lack of internal controls;
+ 
+ 
+ 
+ 
+ any discrepancy between anticipated or projected results and actual results of our operations;
+ 
+ 
+ 
+ 
+ actions by third parties to either sell or purchase stock in quantities which would have a significant effect on our stock price; and
+ 
+ 
+ 
+ 
+ other factors not within our control.
+
+ 
+ Raising funds by issuing equity or convertible debt securities could dilute the net tangible book value of the common stock and impose restrictions on our working capital.
+ 
+ If we were to raise additional capital by issuing equity securities, either alone or in connection with a non-equity financing, the net tangible book value of the then outstanding common stock could decline. If the additional equity securities were issued at a per share price less than the market price, which is customary in the private placement of equity securities, the holders of the outstanding shares would suffer a dilution, which could be significant. We may have difficulty in raising funds through the sale of debt securities because of both our financial position, the lack of any collateral on which a lender may place a value, and the absence of any history of revenue or operations. If we are able to raise funds from the sale of debt securities, the lenders may impose restrictions on our operations and may impair our working capital as we service any such debt obligations.
+ 
+ We do not intend to pay any cash dividends in the foreseeable future.
+ 
+ We have not paid any cash dividends on our common stock and do not intend to pay cash dividends on our common stock in the foreseeable future. 
+ 
+ <a name="
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2018/MYFW_first_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/MYFW_first_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/MYFW_first_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2018/NINE_nine_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/NINE_nine_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..6fd1b31a26ec10bc1fd1e216e073634da63e7929
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/NINE_nine_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus summary 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2018/NIOIF_nio-inc_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/NIOIF_nio-inc_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/NIOIF_nio-inc_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2018/NIU_niu_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/NIU_niu_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..d0dc1898479a2cc7f605315a9da101cfcc96d311
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/NIU_niu_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY The following summary is qualified in its entirety by, and should be read in conjunction with, the more detailed information and financial statements appearing elsewhere in this prospectus. In addition to this summary, we urge you to read the entire prospectus carefully, especially the risks of investing in the ADSs discussed under "Risk Factors," before deciding whether to invest in the ADSs. This prospectus contains information from an industry report commissioned by us and prepared by China Insights Consultancy, or CIC, an independent research firm, to provide information regarding our industry and our market position. Our Mission Our mission is to redefine urban mobility and make life better. Our Vision Our vision is to become the number one brand for urban mobility, powered by design and technology. Overview We are the world's leading provider of smart urban mobility solutions, according to CIC. We have created a new market category smart electric two-wheeled vehicles to redefine urban mobility. Before NIU, smart electric two-wheeled vehicles did not exist in China, and two-wheeled vehicles were perceived low-end. We have changed that perception with our smart e-scooters and premium brand "NIU." We currently design, manufacture and sell high-performance smart e-scooters. We are the largest lithium-ion battery-powered e-scooters company in China and a leader in Europe in terms of sales volume in 2017, according to CIC. As of June 30, 2018, we had sold more than 431,500 smart e-scooters in China, Europe and other countries. According to CIC, in 2017, we led in China's lithium-ion battery-powered electric two-wheeled vehicles market with market shares of 26.0% and 39.5% in terms of sales volume and sales value, respectively, compared to 6.7% and 7.0% for the number two player, and we ranked third in the European medium-end e-motorcycle market with a market share of 11.1% in terms of sales volume. We have a streamlined product portfolio consisting of three series, N, M and U, with multiple models or specifications for each series. We have adopted an omnichannel retail model, integrating the offline and online channels, to sell our products and provide services. We sell and service our products through a unique "city partner" system in China, which consisted of 205 city partners with 571 franchised stores in over 150 cities in China, and 18 distributors in 23 countries overseas as of June 30, 2018, as well as on our own online store and third-party e-commerce platforms. We are the first lifestyle brand for urban mobility in China, according to CIC. Our award-winning smart e-scooters represent style, freedom and technology. Our brand "NIU" has inspired many followers and has enabled us to build a loyal user base. We offer the NIU app as an integral part of the user experience, and the app had over 457,000 registered users as of June 30, 2018. NIU fan clubs are established in over 50 cities in China, where fans actively organize NIU scooter-related events. The strong brand awareness and customer loyalty have given us exceptional pricing power. According to CIC, our volume-weighted average retail price is approximately 86% higher than that of our competitors in the industry in 2017. Capitalizing on our premium brand, we have also been able to sell lifestyle accessories, which are well received by customers. We have adopted a user-centric philosophy to design our smart e-scooters. We collect user feedback and product performance data to develop new products or functionalities to satisfy the unmet demand. All of our products are designed to embody the themes of style, freedom and technology, and share the same design language. Our smart e-scooters have amassed strong international recognition for AMENDMENT NO. 4 TO FORM F-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Table of Contents innovation and design. We have built our smart e-scooters based on our advanced and innovative technologies, including smart technologies, powertrain and battery technologies and automotive inspired functionalities. We integrate cutting-edge technologies from industry leaders such as BOSCH, and our own technologies into a proprietary system that delivers an excellent user experience and optimal performance. Our smart e-scooters are the first in the industry to provide updates to firmware regularly over-the-air (OTA) to fine-tune the performance, and such OTA function has only been seen in high-end electric cars. We provide connectivity solutions and value-added services to our users. Our NIU app synchronizes with the smart e-scooters and communicates with our cloud system. Through the app, our users receive real-time information relating to their smart e-scooters. We currently collect 462 types of data points covering 72 dimensions from our smart e-scooters in real-time for monitoring and diagnostic purposes, and had accumulated over 40 terabytes (TB) of data as of June 30, 2018. We use the data collected to provide smart maintenance and services, and guide the users on when and how to properly maintain our products to extend their service life and achieve better performance. We also analyze this data to help us improve our products and create new services. In addition, we collect and analyze user behavioral data from our NIU app and our website, from which we derive insights to further engage our customers and strengthen brand loyalty. We have grown rapidly while at the same time improving our margin. Our net revenues were RMB769.4 million (US$116.2 million) in 2017, representing an increase of 116.8% from RMB354.8 million in 2016. Our net revenues were RMB557.1 million (US$84.2 million) for the six months ended June 30, 2018, as compared to RMB285.1 million for the same period of 2017, representing an increase of 95.4%. We had a net loss of RMB184.7 million (US$27.9 million) in 2017 as compared to RMB232.7 million in 2016, with our net loss margin, defined as net loss as a percentage of net revenues, improving from 65.6% in 2016 to 24.0% in 2017. We recorded a net loss of RMB314.9 million (US$47.6 million) for the six months ended June 30, 2018, as compared to a net loss of RMB96.6 million for the same period of 2017, with our net loss margin increasing from 33.9% for the six months ended June 30, 2017 to 56.5% for the six months ended June 30, 2018. Our adjusted net loss, a non-GAAP financial measure defined as net loss excluding share-based compensation expenses and change in fair value of a convertible loan, was RMB79.1 million (US$12.0 million) in 2017 as compared to RMB154.4 million in 2016, with our adjusted net loss margin, defined as adjusted net loss as a percentage of net revenues, improving from 43.5% in 2016 to 10.3% in 2017. Our adjusted net loss was RMB46.5 million (US$7.0 million) for the six months ended June 30, 2018, as compared to RMB40.1 million for the same period of 2017, with our adjusted net loss margin improving from 14.0% for the six months ended June 30, 2017 to 8.3% for the six months ended June 30, 2018. See " Summary Consolidated Financial and Operating Data Non-GAAP Financial Measures." Our Industry Electric Two-Wheeled Vehicles Market in China Urban mobility is defined as two-wheeled vehicles, including scooters, bicycles and motorcycles, used for short-distance and intra-city travels. As of December 31, 2017, there were approximately 700 million two-wheeled vehicles in China, and on average, one out of every two persons owns one two-wheeled vehicle. According to CIC, China is the largest market for electric two-wheeled vehicles, where sales volume and retail sales value of electric two-wheeled vehicles reached 27.0 million units and US$8.0 billion in 2017, respectively. Sales volume and retail sales value of electric two-wheeled vehicles in China are expected to reach 34.9 million units and US$13.0 billion by 2022, respectively. Niu Technologies (Exact name of Registrant as specified in its charter) Not Applicable (Translation of Registrant's name into English) Table of Contents Transition from lead-acid batteries to lithium-ion batteries In the electric two-wheeled vehicles market, there is a transition from lead-acid batteries to lithium-ion batteries. According to CIC, the penetration rate of lithium-ion battery-powered electric two-wheeled vehicles, in terms of retail sales value, is expected to reach approximately 56.8% by 2022. In terms of retail sales volume, the lithium-ion battery-powered electric two-wheeled vehicles market in China grew rapidly from 0.1 million units in 2013 to 0.7 million units in 2017 and is expected to reach 15.2 million units by 2022, representing a CAGR of 49.9% from 2013 to 2017 and a CAGR of 84.4% from 2017 to 2022, respectively, according to CIC. The transition from lead-acid batteries to lithium-ion batteries is mainly driven by the cost-efficiency, convenience and environmental friendliness of lithium-ion batteries. Penetration of smart two-wheeled vehicles Smart two-wheeled vehicles are vehicles connected to the cloud that provide real-time communications between the users and vehicles. They are changing the way we use and interact with our vehicles. CIC estimates that connected automobiles penetration rate in terms of sales volume globally has increased from 10% in 2013 to 40% in 2017, and is expected to reach approximately 57% by 2022, driven by advancements in communication technologies. Smart two-wheeled vehicles collect telematics and driving behavior data, and that data are analyzed real-time to keep the vehicle's performance, battery, efficiency and safety in check. They provide data for vehicle makers to continually refine their existing products and come up with better designs. Smart vehicles have also accelerated the integration of information services into vehicles, which make them smarter with more features, enhancing the user experience. Smart two-wheeled vehicles are increasingly prevalent in both the Chinese and international markets. The penetration rate in terms of sales volume of smart two-wheeled vehicles is expected to grow faster than that of connected automobiles between 2017 and 2022, driven by higher electrification rate, affordability and shorter replacement cycle. Lifestyle brands and brand loyalty In China's electric two-wheeled vehicles market, lifestyle brands did not exist before NIU, as most electric two-wheeled vehicles were typically seen as affordable transportation means. The consumption upgrade trend has opened up opportunities for lifestyle branded electric two-wheeled vehicles, because there were no established lifestyle brands in this industry. Lifestyle branded two-wheeled vehicles command premium pricing, larger revenue from sales of accessories, customer loyalty and repeated purchases. Brand loyalty is important, as consumers who can relate to the brand image are more likely to make repeated purchases and recommend the product to others. Electric Two-Wheeled Vehicles Market in the European Union, Southeast Asia and India According to CIC, there is rapid growth of the two-wheeled electric vehicles market in the European Union, Southeast Asia and India as governments and consumers seek out environmentally-friendly and cost-effective vehicles. In the European Union, retail sales volume of electric two-wheeled vehicles grew from 0.9 million units to 2.1 million units from 2013 to 2017, while sales value of electric two-wheeled vehicles in the EU grew from EUR1.5 billion to EUR3.7 billion. CIC estimates that the electric two-wheeled vehicles market in the EU is expected to reach 3.7 million units in terms of sales volume and EUR7.5 billion in terms of sales value by 2022. In the EU, electric two-wheeled vehicles market can be divided into e-bike market and e-motorcycle market. The e-motorcycle market is still at its early stage of the industry life cycle with an expected annual growth rate of around 30% in the next five years in terms of sales volume. The e-motorcycle market can be further divided into low-end, Cayman Islands (State or other jurisdiction of incorporation or organization) 3711 (Primary Standard Industrial Classification Code Number) Not Applicable (I.R.S. Employer Identification Number) No. 10 Wangjing Street, Building A, 11/F, Chaoyang District Beijing 100102 People's Republic of China +86 10-6432-1899 (Address, including zip code, and telephone number, including area code, of Registrant's principal executive offices) Puglisi & Associates 850 Library Avenue, Suite 204 Newark, Delaware 19711 +1 302-738-6680 (Name, address, including zip code, and telephone number, including area code, of agent for service) Table of Contents medium-end, and high-end markets by retail price. The medium-end market refers to the market with a retail price per unit ranging from EUR2,000 to EUR5,000. In Southeast Asia, market penetration of electric two-wheeled vehicles in the two-wheeled vehicles market is lower than China, indicating huge market potential for electric two-wheeled vehicles in the region. The retail market for electric two-wheeled vehicles in Southeast Asia continued to grow steadily during the period from 2013 to 2017. Retail sales value rose from US$0.3 billion in 2013 to US$0.6 billion in 2017. Retail sales volume is expected to reach 6.9 million units and sales value is projected to reach US$2.5 billion by 2022. In India, the market for electric two-wheeled vehicles reached $17.5 million in 2017, and is projected to reach US$187.8 million by 2022. Our Competitive Strengths We believe that the following strengths contribute to our success and differentiate us from our competitors: pioneer in urban mobility solutions; lifestyle brand; well-designed smart e-scooters; user-centric product philosophy; big data capability; omnichannel retail model; and visionary and experienced management team. Our Growth Strategies We intend to grow our business by pursuing the following key strategies: strengthen our leadership in urban mobility; enhance our brand; continue our innovation; grow our product and service portfolio; expand our sales network in China; and drive our international strategy. Our Challenges Our business and successful execution of our strategies are subject to certain challenges, risks and uncertainties related to our business and our industry, regulation of our business and corporate structure and doing business in China. The challenges, risks and uncertainties we face include, but are not limited to, our ability to: maintain and enhance our "NIU" brand; innovate and successfully launch new products and services; maintain and expand our offline distribution network; satisfy the mandated safety standards relating to our e-scooters; Copies to: Z. Julie Gao, Esq. Skadden, Arps, Slate, Meagher & Flom LLP c/o 42/F, Edinburgh Tower, The Landmark 15 Queen's Road Central Hong Kong +852 3740-4700 David Zhang, Esq. Steve Lin, Esq. Kirkland & Ellis International LLP c/o 26/F, Gloucester Tower, The Landmark 15 Queen's Road Central Hong Kong +852 3761-3300 Table of Contents secure supply of components and raw materials used in our e-scooters; manufacture, launch and sell smart e-scooters meeting customer expectations; grow collaboration with our operation partners; control costs associated with our operation; and recruit and retain dedicated executive officers, key employees and qualified personnel. Please see "Risk Factors" and other information included in this prospectus for a discussion of these and other risks and uncertainties that we face. Corporate History and Structure We commenced operations in September 2014 through Beijing Niudian Technology Co., Ltd., or Beijing Niudian, and launched our N-Series smart e-scooters in June 2015. In November 2014, we incorporated Niu Technologies in the Cayman Islands as our offshore holding company to facilitate financing and offshore listing. Shortly following its incorporation, Niu Technologies established a wholly-owned subsidiary in Hong Kong, Niu Technologies Group Limited. In May 2015, Niu Technologies Group Limited established a wholly-owned subsidiary in China, Beijing Niudian Information Technology Co., Ltd., or Niudian Information. Due to the PRC legal restrictions on foreign ownership in companies that provide value-added telecommunications services in China, we operate our NIU app, our website www.niu.com and other related business through Beijing Niudian, a PRC company in which the equity interests are held by PRC citizens. In May 2015, we obtained control over Beijing Niudian and its subsidiaries through Niudian Information by entering into a series of contractual arrangements with Beijing Niudian and its shareholders. The contractual arrangements allow us to (i) exercise effective control over Beijing Niudian, (ii) receive substantially all of the economic benefits of Beijing Niudian, and (iii) have an exclusive call option to or designate any third party to purchase all or part of the equity interests in and assets of Beijing Niudian when and to the extent permitted by PRC law. As a result of our direct ownership in Niudian Information and the contractual arrangements with Beijing Niudian, we have effective control over, and are the primary beneficiary of, Beijing Niudian. Beijing Niudian is therefore our consolidated variable interest entity, which generally refers to an entity in which we do not have any equity interests but whose financial results are consolidated into our consolidated financial statements in accordance with the accounting principles generally accepted in the United States of America, or U.S. GAAP, because we have a controlling financial interest in, and thus are the primary beneficiary of, that entity. We have consolidated the financial results of Beijing Niudian and its subsidiaries into our consolidated financial statements in accordance with U.S. GAAP. We rely on contractual arrangements to control and operate the businesses and assets held by Beijing Niudian and its subsidiaries. The contractual arrangements may not be as effective in providing operational control as direct ownership. If Beijing Niudian or any of its shareholders fails to perform their respective obligations under the contractual arrangements, we could be limited in our ability to enforce the contractual arrangements that give us effective control over Beijing Niuidan. Furthermore, if we are unable to maintain effective control over Beijing Niuidan, we would not be able to continue to consolidate the financial results of Beijing Niuidan and its subsidiaries with ours. See "Risk Factors Risks Relating to Our Corporate Structure We rely on contractual arrangements with our VIE and its shareholders for a large portion of our business operations, which may not be as effective as direct ownership in providing operational control." and " Any failure by our VIE or its shareholders to perform their obligations under our contractual arrangements with them would have a material and adverse effect on our business." Approximate date of commencement of proposed sale to the public: as soon as practicable after the effective date of this registration statement. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933. Emerging growth company If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. (1)Token Yilin Hu, Mingming Huang, Yi'nan Li, Shichun Wu, Yuqin Zhang and Changlong Sheng each holds 79.21%, 6.32%, 5.0%, 4.21%, 2.63% and 2.63% of the equity interest in Beijing Niudian, respectively. All of the shareholders of Beijing Niudian are beneficial owners of the shares of our company. Mr. Token Yilin Hu is also a director and vice president of research and development of our company. (2)We plan to dissolve this entity in the near future as it does not engage in substantial business activities. Implication of Being an Emerging Growth Company As a company with less than US$1.07 billion in revenue for our last fiscal year, we qualify as an "emerging growth company" pursuant to the Jumpstart Our Business Startups Act of 2012, as amended, or the JOBS Act. An emerging growth company may take advantage of specified reduced reporting and other requirements compared to those that are otherwise applicable generally to public companies. These provisions include exemption from the auditor attestation requirement under Section 404 of the Sarbanes-Oxley Act of 2002 in the assessment of the emerging growth company's internal control over financial reporting. The JOBS Act also provides that an emerging growth company does not need to comply with any new or revised financial accounting standards until such CALCULATION OF REGISTRATION FEE Title of each class of securities to be registered Amount to be registered(2)(3) Proposed maximum offering price per share(3) Proposed maximum aggregate offering price(2)(3) Amount of registration fee(4) Class A Ordinary Shares par value US$0.0001 per share(1) 19,090,000 US$5.00 US$95,450,000 US$11,568.54 (1)American depositary shares issuable upon deposit of Class A ordinary shares registered hereby will be registered under a separate registration statement on Form F-6 (Registration No. 333-227702). Each American depositary share represents two Class A ordinary shares. (2)Includes Class A ordinary shares that are issuable upon the exercise of the underwriters' over-allotment option. Also includes Class A ordinary shares initially offered and sold outside the United States that may be resold from time to time in the United States either as part of their distribution or within 40 days after the later of the effective date of this registration statement and the date the shares are first bona fide offered to the public. These Class A ordinary shares are not being registered for the purpose of sales outside the United States. (3)Estimated solely for the purpose of determining the amount of registration fee in accordance with Rule 457(a) under the Securities Act of 1933. (4)Previously paid. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine. Table of Contents date that a private company is otherwise required to comply with such new or revised accounting standards and we do not plan to opt out of such exemptions afforded to an emerging growth company. We will remain an emerging growth company until the earliest of (a) the last day of the fiscal year during which we have total annual gross revenues of at least US$1.07 billion; (b) the last day of our fiscal year following the fifth anniversary of the completion of this offering; (c) the date on which we have, during the preceding three-year period, issued more than US$1.0 billion in non-convertible debt; or (d) the date on which we are deemed to be a "large accelerated filer" under the Securities Exchange Act of 1934, as amended, or the Exchange Act, which would occur if the market value of the ADSs that are held by non-affiliates is at least US$700 million as of the last business day of our most recently completed second fiscal quarter. Once we cease to be an emerging growth company, we will not be entitled to the exemptions provided in the JOBS Act discussed above. Corporate Information Our principal executive offices are located at No. 10 Wangjing Street, Building A, 11/F, Chaoyang District, Beijing 100102, People's Republic of China. Our telephone number at this address is +86 10 6432-1899. Our registered office in the Cayman Islands is located at the offices of Maples Corporate Services Limited at PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands. Investors should submit any inquiries to the address and telephone number of our principal executive offices. Our main website is www.niu.com. The information contained on our website is not a part of this prospectus. Our agent for service of process in the United States is Puglisi & Associates, located at 850 Library Avenue, Suite 204, Newark, Delaware 19711. Conventions that Apply to this Prospectus Unless otherwise indicated or the context otherwise requires, references in this prospectus to: "ADRs" are to the American depositary receipts that evidence the ADSs; "ADSs" are to the American depositary shares, each of which represents two Class A ordinary shares; "China" or the "PRC" are to the People's Republic of China, excluding, for the purposes of this prospectus only, Hong Kong, Macau and Taiwan; "Class A ordinary shares" are to our Class A ordinary shares, par value US$0.0001 per share; "Class B ordinary shares" are to our Class B ordinary shares, par value US$0.0001 per share; "NIU," "we," "us," "our company" and "our" are to Niu Technologies, our Cayman Islands holding company and its subsidiaries, its consolidated variable interest entity and the subsidiaries of the consolidated variable interest entity; "ordinary shares" prior to the completion of this offering are to our ordinary shares, par value US$0.0001 per share, and upon and after the completion of this offering are to our Class A and Class B ordinary shares, par value US$0.0001 per share; "our VIE" are to Beijing Niudian Technology Co., Ltd., or Beijing Niudian; "our WFOE" are to Beijing Niudian Information Technology Co., Ltd., or Niudian Information; "RMB" and "Renminbi" are to the legal currency of China; and "US$," "U.S. dollars," "$," and "dollars" are to the legal currency of the United States. Unless the context indicates otherwise, all information in this prospectus assumes no exercise by the underwriters of their over-allotment option. The term "new or revised financial accounting standard" refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012. Table of Contents The Offering Offering price We currently estimate that the initial public offering price will be between US$9.00 and US$10.00 per ADS. ADSs offered by us 8,300,000 ADSs (or 9,545,000 ADSs if the underwriters exercise their over-allotment option in full). ADSs outstanding immediately after this offering 8,300,000 ADSs (or 9,545,000 ADSs if the underwriters exercise their over-allotment option in full) Ordinary shares outstanding immediately after this offering 130,632,038 Class A Ordinary shares and 20,642,020 Class B ordinary shares (or 133,122,038 Class A Ordinary shares and 20,642,020 Class B ordinary shares if the underwriters exercise their over-allotment option in full). The ADSs Each ADS represents two Class A ordinary shares par value US$0.0001 per share. The depositary will hold Class A ordinary shares underlying your ADSs. You will have rights as provided in the deposit agreement among us, the depositary and holders and beneficial owners of ADSs from time to time. We do not expect to pay dividends in the foreseeable future. If, however, we declare dividends on our ordinary shares the depositary will pay you the cash dividends and other distributions it receives on our Class A ordinary shares after deducting its fees and expenses in accordance with the terms set forth in the deposit agreement. You may surrender your ADSs to the depositary in exchange for Class A ordinary shares. The depositary will charge you fees for any exchange. We may amend or terminate the deposit agreement without your consent. If you continue to hold your ADSs after an amendment to the deposit agreement, you agree to be bound by the deposit agreement as amended. To better understand the terms of the ADSs, you should carefully read the "Description of American Depositary Shares" section of this prospectus. You should also read the deposit agreement, which is filed as an exhibit to the registration statement that includes this prospectus. The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and we are not soliciting offers to buy these securities in any state where the offer or sale is not permitted. PROSPECTUS (Subject to Completion) Dated October 18, 2018. 8,300,000 American Depositary Shares Niu Technologies Representing 16,600,000 Class A Ordinary Shares Table of Contents Ordinary Shares Our ordinary shares will be divided into Class A ordinary shares and Class B ordinary shares immediately prior to the completion of this offering. Holders of Class A ordinary shares and Class B ordinary shares will have the same rights except for voting and conversion rights. In respect of all matters subject to a shareholder vote, each Class A ordinary share is entitled to one vote, and each Class B ordinary share is entitled to four votes, voting together as one class. Each Class B ordinary share is convertible into one Class A ordinary share at any time by the holder thereof. Class A ordinary shares are not convertible into Class B ordinary shares under any circumstances. Upon any transfer of Class B ordinary shares by a holder thereof to any person or entity that is not an affiliate of such holder, such Class B ordinary shares shall be automatically and immediately converted into the same number of Class A ordinary shares. See "Description of Share Capital" for more information. Over-allotment option We have granted the underwriters an option, exercisable within 30 days from the date of this prospectus, to purchase up to an aggregate of 1,245,000 additional ADSs. Use of proceeds We expect that we will receive net proceeds of approximately US$68.5 million from this offering or approximately US$79.5 million if the underwriters exercise their over-allotment option in full, assuming an initial public offering price of US$9.50 per ADS, which is the midpoint of the estimated range of the initial public offering price, after deducting underwriting discounts and commissions and estimated offering expenses payable by us. We intend to use the net proceeds from this offering for upgrade and expansion of manufacturing facilities, research and development, distribution network expansion and general corporate purposes. See "Use of Proceeds" for more information. Lock-up We, our directors, executive officers and shareholders have agreed with the underwriters not to sell, transfer or dispose of any ADSs, ordinary shares or similar securities for a period of 180 days after the date of this prospectus. See "Shares Eligible for Future Sale" and "Underwriting." Indication of Interest GGV Capital Select L.P., one of our principal shareholders, has indicated an interest in purchasing up to US$10.0 million worth of the ADSs being offered in this offering at the initial public offering price. Based on this indication of interest, assuming an initial public offering price of US$9.50 per ADS, which is the mid-point of the estimated offering price range, GGV would purchase 1,052,632 ADSs, representing approximately 12.7% of the ADSs being offered in this offering, assuming the underwriters do not exercise their over-allotment option. However, because the indication of interest is not a binding agreement or commitment to purchase, the underwriters could determine to sell more, fewer or no ADSs to GGV, and GGV could determine to purchase more, fewer or no ADSs in this offering. See "Underwriting." This is an initial public offering of American depositary shares, or ADSs, of Niu Technologies. Each ADS represents two of our Class A ordinary shares, par value US$0.0001 per share. We are offering 8,300,000 American depositary shares, or ADSs. We anticipate the initial public offering price per ADS will be between US$9.00 and US$10.00. Table of Contents Listing The ADSs have been approved for listing on the Nasdaq Global Market under the symbol "NIU." The ADSs and our Class A ordinary shares will not be listed on any other stock exchange or traded on any automated quotation system. Payment and settlement The underwriters expect to deliver the ADSs against payment therefor through the facilities of The Depository Trust Company on , 2018. Depositary Citibank, N.A. Table of Contents 2017 and the six months ended June 30, 2018 were as follows. Changes in these assumptions could significantly affect the fair value of stock options. Grant Date: 2016 2017 Six Months Ended June 30, 2018 Risk-free rate of return (per annum)(1) 1.52% - 1.95% 2.25% - 2.48% 2.78% - 2.97% Expected volatility(2) 54.8% - 56.5% 51.7% - 54.4% 50.7% - 50.9% Expected dividend yield(3) 0% 0% 0% Expected exercise multiple(4) 2.2 2.2 2.2 Expected term (in years)(5) 10 10 Prior to this offering, there has been no public market for the ADSs or our Class A ordinary shares. The ADSs have been approved for listing on the Nasdaq Global Market under the symbol "NIU." We are an "emerging growth company" under applicable U.S. federal securities laws and are eligible for reduced public company reporting requirements. Upon the completion of this offering, our outstanding share capital will consist of Class A ordinary shares and Class B ordinary shares. Messrs. Yan Li, Token Yilin Hu and Carl Chuankai Liu, each a director and/or officer of our company, will beneficially own all of our issued and outstanding Class B ordinary shares and collectively will be able to exercise 38.7% of our total voting power assuming the underwriters do not exercise their over-allotment option, or 38.3% of our total voting power if the underwriters exercise their over-allotment option in full. Holders of Class A ordinary shares and Class B ordinary shares have the same rights except for voting and conversion rights. Each Class A ordinary share is entitled to one vote, and each Class B ordinary share is entitled to four votes and is convertible into one Class A ordinary share. Class A ordinary shares are not convertible into Class B ordinary shares under any circumstances. GGV Capital Select L.P., one of our principal shareholders, has indicated an interest in purchasing up to US$10.0 million worth of the ADSs being offered in this offering at the initial public offering price. Assuming an initial public offering price of US$9.50 per ADS, which is the mid-point of the estimated offering price range, the number of ADSs to be purchased by GGV would be up to 1,052,632 ADSs, representing approximately 12.7% of the ADSs being offered in this offering, assuming the underwriters do not exercise their over-allotment option. However, because the indication of interest is not a binding agreement or commitment to purchase, the underwriters could determine to sell more, fewer or no ADSs to GGV, and GGV could determine to purchase more, fewer or no ADSs in this offering. For additional information, see "Underwriting." Investing in the ADSs involves risks. See "Risk Factors" beginning on page 15 for factors you should consider before buying the ADSs. (1)Share-based compensation expenses are allocated in cost of revenues and operating expenses items as follows: Table of Contents NIU TECHNOLOGIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued) 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) currencies. The value of the RMB is subject to changes of central government policies and international economic and political developments affecting supply and demand in the China foreign exchange trading system market. (bb) Concentration and risk Concentration of customers and suppliers No customers individually represent greater than 10% of total net revenues of the Group for the years ended December 31, 2016 and 2017. Suppliers from whom individually represent greater than 10% of total purchases of the Group for the years ended December 31, 2016 and 2017, are as follows: For the Year Ended December 31, 2016 2017 RMB % RMB % Supplier A 51,368,000 12 % 187,065,077 21 % Supplier B 61,900,615 14 % 152,966,930 18 % Supplier C 60,072,473 14 % * * Customers accounting for 10% or more of accounts receivable, net are as follows: As of December 31, 2016 2017 RMB % RMB % Customer X 12,654,671 61 % * * Customer Y * * 3,904,087 32 % Customer Z * * 1,471,144 12 % Customers accounting for 10% or more of advances from customers are as follows: As of December 31, 2016 2017 RMB % RMB % Customer V * * 9,021,739 19 % Customer W 2,139,309 16 % * * Suppliers accounting for 10% or more of accounts payable are as follows: As of December 31, 2016 2017 RMB % RMB % Supplier B 8,738,327 12 % 17,048,400 14 % Supplier C 12,582,709 18 % * * Supplier D 7,334,310 10 % 12,623,108 10 % Supplier E 7,618,084 PRICE US$ PER ADS Neither the United States Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense. Table of Contents For the Year Ended December 31, For the Six Months Ended June 30, 2016 2017 2017 2018 RMB RMB US$(2) RMB RMB US$ (in thousands) Cost of revenues 220 253 38 128 120 18 Selling and marketing expenses 1,378 1,611 244 769 1,024 155 Research and development expenses 13,530 13,879 2,097 7,058 40,118 6,063 General and administrative expenses 63,177 46,784 7,070 23,789 192,685 29,119 Total 78,305 62,527 9,449 31,744 233,947 35,355 (2)The US$ data is translation of Renminbi amounts into U.S. dollars at a rate of RMB6.6171 to US$1.00, the exchange rate in effect as of the end of June 2018, for the convenience of reader, which is not derived from our audited consolidated financial statements. (3)See " Non-GAAP Financial Measures." The following table presents our summary consolidated balance sheets data as of December 31, 2016 and 2017 and June 30, 2018: As of December 31, As of June 30, 2016 2017 2018 RMB RMB US$(2) RMB US$ (in thousands) Summary Consolidated Balance Sheets Data: Cash 91,121 111,996 16,925 156,819 23,699 Restricted cash (current and non-current) 110,992 169,889 25,675 172,624 26,088 Accounts receivable, net 20,598 10,382 1,569 43,871 6,630 Inventories 66,782 88,226 13,333 135,748 20,515 Total assets 388,535 503,632 76,112 823,223 124,408 Short-term bank borrowings 99,531 168,234 25,424 178,234 26,935 Convertible loan 116,729 151,558 22,904 Accounts payable 71,818 124,938 18,881 284,114 42,936 Total liabilities 349,223 591,023 89,318 641,424 96,934 Total mezzanine equity 252,506 237,845 35,944 598,907 90,509 Total shareholders' deficit (213,194 ) (325,236 ) (49,150 ) (417,108 ) (63,035 ) Per ADS Total Initial public offering price US$ US$ Underwriting discounts and commissions(1) US$ US$ Proceeds, before expenses, to us US$ US$ Table of Contents The following table presents our summary consolidated cash flow data for the years ended December 31, 2016 and 2017 and the six months ended June 30, 2017 and 2018: For the Year Ended December 31, For the Six Months Ended June 30, 2016 2017 2017 2018 RMB RMB US$(2) RMB RMB US$ (in thousands) Summary Consolidated Statements of Cash Flow Data: Net cash (used in)/provided by operating activities (123,054 ) 80,063 12,098 54,355 57,678 8,716 Net cash (used in)/provided by investing activities (59,950 ) (55,929 ) (8,452 ) 6,255 (180,535 ) (27,283 ) Net cash provided by/(used in) financing activities 225,012 2,415 365 (4,187 ) 166,877 25,219 Effect of foreign currency exchange rate changes on cash 2,062 (5,674 ) (857 ) (2,799 ) 803 122 Net increase in cash 44,070 20,875 3,154 53,624 44,823 6,774 Cash at the beginning of the year/period 47,051 91,121 13,771 91,121 111,996 16,925 Cash at the end of the year/period 91,121 111,996 16,925 144,745 156,819 23,699 The following table presents certain of our operating data as of December 31, 2016 and 2017 and June 30, 2017 and 2018: As of December 31, As of June 30, 2016 2017 2017 2018 Summary Operating Data: Number of franchised stores in China 19 440 242 571 The following table presents certain of our operating data for the years ended December 31, 2016 and 2017 and the six months ended June 30, 2017 and 2018: For the Year Ended December 31, For the Six Months Ended June 30, 2016 2017 2017 2018 Summary Operating Data: Number of smart e-scooters sold 84,879 189,467 68,256 125,013 (1)For a description of compensation payable to the underwriters, see "Underwriting." The underwriters have an over-allotment option to purchase up to an additional 1,245,000 ADSs from us at the initial public offering price, less the underwriting discounts and commissions, within 30 days from the date of prospectus. The underwriters expect to deliver the ADSs against payment in U.S. dollars in New York, NY to purchasers on or about , 2018. CREDIT SUISSE CITIGROUP Needham & Company Prospectus dated , 2018. Table of Contents Non-GAAP Financial Measures We use adjusted net loss and adjusted net loss margin, non-GAAP financial measures, in evaluating our operating results and for financial and operational decision-making purposes. Adjusted net loss represents net loss excluding share-based compensation expenses and change in fair value of a convertible loan. Adjusted net loss margin represents adjusted net loss as a percentage of the net revenues. There was no income tax impact on our non-GAAP adjustments because either the non-GAAP adjustments were recorded at entities located in tax free jurisdictions, such as the Cayman Islands or because the non-GAAP adjustments were recorded at operating entities located in the PRC for which the non-GAAP adjustments were not deductible for tax purposes. We believe that adjusted net loss and adjusted net loss margin help identify underlying trends in our business that could otherwise be distorted by the effect of certain expenses that we are included in net loss. We believe that adjusted net loss and adjusted net loss margin provide useful information about our operating results, enhance the overall understanding of our past performance and future prospects and allow for greater visibility with respect to key metrics used by our management uses in its financial and operational decision making. Adjusted net loss and adjusted net loss margin should not be considered in isolation or construed as an alternative to net loss, net margin or any other measure of performance or as an indicator of our operating performance. Investors are encouraged to review our historical non-GAAP financial measures to the most directly comparable GAAP measures. Adjusted net loss and adjusted net loss margin presented here may not be comparable to similarly titled measures presented by other companies. Other companies may calculate similarly titled measures differently, limiting their usefulness as comparative measures to our data. We encourage investors and others to review our financial information in its entirety and not rely on a single financial measure. The table below sets forth a reconciliation of our net loss to adjusted net loss for the periods indicated: For the Year Ended December 31, For the Six Months Ended June 30, 2016 2017 2017 2018 RMB RMB US$ RMB RMB US$ (in thousands) Net loss (232,721 ) (184,663 ) (27,906 ) (96,608 ) (314,870 ) (47,584 ) Add: Share-based compensation expenses 78,305 62,527 9,449 31,744 233,947 35,355 Change in fair value of a convertible loan 43,006 6,499 24,815 34,500 5,214 Adjusted net loss (154,416 ) (79,130 ) (11,958 ) (40,049 ) (46,423 ) (7,015 ) Table of Contents Table of Contents
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diff --git a/parsed_sections/prospectus_summary/2018/NI_nisource_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/NI_nisource_prospectus_summary.txt
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@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary description about us and our business highlights selected information contained elsewhere in this prospectus or incorporated by reference into this prospectus. It does not contain all the information you should consider before investing in our common stock. We urge you to read carefully the entire prospectus and the documents incorporated by reference in this prospectus, including the historical financial statements and notes to those financial statements incorporated by reference in this prospectus. You should read carefully the Risk Factors section on page 4 of this prospectus and the Risk Factors and Note Regarding Forward-Looking Statements sections in NiSource s Annual Report on Form 10-K for the year ended December 31, 2017 and in NiSource s Quarterly Report on Form 10-Q for the quarter ended March 31, 2018, each of which is incorporated by reference for more information about important risks that you should consider before investing in our common stock. Unless the context requires otherwise, we, us or our refer collectively to NiSource Inc. and its subsidiaries. NiSource Inc. Overview. NiSource is an energy holding company whose subsidiaries are fully regulated natural gas and electric utility companies serving approximately 3.9 million customers in seven states. We are one of the nation s largest natural gas distribution companies, as measured by number of customers. Our principal subsidiaries include NiSource Gas Distribution Group, Inc., a natural gas distribution company, and Northern Indiana Public Service Company, or NIPSCO, a gas and electric company. NiSource derives substantially all of its revenues and earnings from the operating results of these rate-regulated businesses. Our primary business segments are: Gas Distribution Operations; and Electric Operations. On July 1, 2015, we completed the spin-off of our former subsidiary Columbia Pipeline Group, Inc., which comprised all of our Columbia Pipeline Group Operations segment prior to that time. Business Strategy. We focus our business strategy on our core, rate-regulated asset-based businesses, with most of our operating income generated from the rate-regulated businesses. NiSource s utilities continue to move forward on core infrastructure and environmental investment programs supported by complementary regulatory and customer initiatives across all seven states in which we operate. Our goal is to develop strategies that benefit all stakeholders as we address changing customer conservation patterns, develop more contemporary pricing structures and embark on long-term investment programs. These strategies will help improve reliability and safety, enhance customer services and reduce emissions while generating sustainable returns. Gas Distribution Operations. Our natural gas distribution operations serve approximately 3.5 million customers in seven states and operate approximately 60,000 miles of pipeline. Through our wholly-owned subsidiary NiSource Gas Distribution Group, Inc., we own six distribution subsidiaries that provide natural gas to approximately 2.6 million residential, commercial and industrial customers in Ohio, Pennsylvania, Virginia, Kentucky, Maryland and Massachusetts. We also distribute natural gas to approximately 830,000 customers in northern Indiana through our wholly-owned subsidiary NIPSCO. Electric Operations. We generate, transmit and distribute electricity through our subsidiary NIPSCO to approximately 469,000 customers in 20 counties in the northern part of Indiana and engage in wholesale and transmission transactions. NIPSCO owns and operates three coal-fired electric generating stations. The three operating facilities have a net capability of 2,540 megawatts. NIPSCO also owns and operates Sugar Creek, a combined cycle gas turbine plant with a net capability of 535 megawatts, three gas-fired generating units located at NIPSCO s coal-fired electric generating stations with a net capability of 196 megawatts and two hydroelectric generating plants with a net capability of 10 megawatts. These facilities provide for a total system operating net capability of 3,281 megawatts. NIPSCO s transmission system, with voltages from 69,000 to 345,000 volts, consists of 2,843 circuit miles. NIPSCO is interconnected with five neighboring electric utilities. During the year ended December 31, 2017, NIPSCO generated 65.2% and purchased 34.8% of its electric requirements. NIPSCO plans to retire Bailly Generating Station (Units 7 and 8) by May 31, 2018. Our executive offices are located at 801 East 86th Avenue, Merrillville, Indiana 46410, telephone: (877) 647-5990. Table of Contents The information in this prospectus is not complete and may be changed. The securities described herein may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell such securities, and it is not soliciting an offer to buy such securities, in any state or jurisdiction where such offer or sale is not permitted. Subject to Completion, dated May 11, 2018 PROSPECTUS NiSource Inc. 24,964,163 Shares of Common Stock This prospectus relates to the resale of up to 24,964,163 shares of common stock, which may be offered for sale from time to time by the selling stockholders named in this prospectus. The selling stockholders acquired the shares of common stock offered hereby in a private placement that closed on May 4, 2018. We are registering the offer and sale of common stock to satisfy registration rights we granted to the selling stockholders in connection with the private placement. We have agreed to bear all of the expenses incurred in connection with the registration of the common stock. The selling stockholders will pay or assume underwriting fees, discounts and commissions or similar charges, if any, incurred in the sale of the common stock. We are not selling any shares of common stock under this prospectus and will not receive any proceeds from the sale of common stock by the selling stockholders. The common stock to which this prospectus relates may be offered and sold from time to time by the selling stockholders directly or through underwriters, broker dealers or agents. The selling stockholders will determine at what price they may sell shares of common stock offered by this prospectus, and such sales may be made at fixed prices, at prevailing market prices at the time of the sale, at varying prices determined at the time of sale, or at negotiated prices. For additional information on the methods of sale that may be used by the selling stockholders, see Plan of Distribution. For a list of the selling stockholders, see Selling Stockholders. We may amend or supplement this prospectus from time to time by filing amendments or supplements as required. You should carefully read this prospectus and any amendments or supplements before you invest. You also should read the documents described under Where You Can Find More Information and Incorporation by Reference in this prospectus for information about us and our financial statements. Our common stock is listed on the New York Stock Exchange under the symbol NI. On May 10, 2018, the last reported sale price of our common stock on the New York Stock Exchange was $24.91 per share. Investing in our common stock involves risks. See Risk Factors on page 4 of this prospectus. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. The date of this Prospectus is , 2018. Table of Contents The Offering Issuer: NiSource Inc. Common stock to be offered by the selling stockholders: 24,964,163 shares of common stock. Common stock outstanding as of May 4, 2018: 362,759,054 shares of common stock. Use of proceeds: We will not receive any of the proceeds from the sale of common stock by the selling stockholders. NYSE ticker symbol: NI Risk factors: See the Risk Factors section of this prospectus for more information. Table of Contents TABLE OF CONTENTS Page PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2018/NTRR_neutra_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/NTRR_neutra_prospectus_summary.txt
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+S-1/A 1 s-1.htm FORM S-1/A AMENDMENT NO. 2 TO REGISTRATION STATEMENT As filed with the Securities and Exchange Commission on August 13, 2018 Registration No. 333-225072 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Amendment No. 2 to FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 NEUTRA CORP. (Exact name of registrant in its charter) Nevada 2833 27-4505461 (State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer incorporation or organization) Classification Code Number) Identification Number) 400 South 4th Street, Suite 500 Las Vegas, Nevada 89101 702-793-4121 (Address, including zip code, and telephone number, including area code, of registrant s principal executive offices) Christopher Brown Chief Executive Officer 400 South 4th Street, Suite 500 Las Vegas, Nevada 89101 Telephone: 702-793-4121 Facsimile: 702-793-4001 Email: chrisbrown@neutracorp.com (Name, address, including zip code, and telephone number, including area code, of agent for service) Copies of communications to: Robert L. Sonfield, Jr., Esq. Sonfield & Sonfield 2500 Wilcrest Drive, Suite 300 Houston, Texas 77042 Telephone: (713)877-8333 Facsimile: (713)877-1547 Email: robert@sonfield.com Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. [X] If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act of 1933, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [_] If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act of 1933, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [_] If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act of 1933, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [_] Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act. Large accelerated filer [_] Accelerated filer [_] Non-accelerated filer [_] Smaller reporting company [X] Emerging growth company [X] If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. [_] The registrant hereby amends this Amended Registration Statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment that specifically states that this Amended Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. CALCULATION OF REGISTRATION FEE Proposed Proposed Maximum Maximum Amount of Title of Each Class of Securities Amount to be Offering Price Aggregate Registration to be Registered Registered (2) Per Share (3) Offering Price Fee (3) Common stock underlying convertible note(1) 2,000,000 $0.11 $220,000 $27.39 (1) We have issued a convertible promissory note in the amount of $73,940, dated July 31, 2015. The note has accrued interest in the amount of $9,217 as of March 26, 2018 for a total owing of $83,157. As of March 26, 2018, the principal and accrued interest note is convertible at the holder s option into approximately 8,315,700 shares of the registrant s common stock at a price of $0.01 per share. The convertible promissory note is subject to a conversion cap of 4.99% of the total outstanding. Therefore, the holder of the convertible note does not have the "right" to hold more than the amount of the cap as expressed by the Commission s amicus curiae brief in the case of Mark Levy v. Southbrook International Investments, Ltd. (2nd Cir. Mar 31, 2001). (2) This registration statement covers the number of shares issuable upon conversion of the promissory note equal to less than 30% of the outstanding shares held by nonaffiliated stockholders ("public float"). (3) The offering price has been estimated solely for the purpose of calculating the registration fee in accordance with Rule 457(c) under the Securities Act. The price per share and total offering price are based on the average of the high and low sales prices of the registrant s common stock on June 25, 2018, as reported on the OTC Market Group, Inc. s OTCQB tier. The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the commission, acting pursuant to said section 8(a), may determine. - ii - The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION, DATED AUGUST 13, 2018 2,000,000 Shares of Common Stock NEUTRA CORP. This prospectus relates to the sale or other disposition from time to time of 2,000,000 shares of our common stock, par value $0.001 per share, by our stockholder. The shares of our common stock issuable upon conversion of convertible promissory note issued by the Company July 31, 2015 and convertible at $0.01 per share. The selling stockholder may sell the shares of common stock described in this prospectus in several of different ways and at varying prices. See "Plan of Distribution" for more information about how the selling stockholder may sell the shares of common stock being registered pursuant to this prospectus. We will pay the expenses incurred in registering the shares, including legal and accounting fees. See "Plan of Distribution." Our common stock is quoted on the OTC Market Group, Inc. s OTCQB tier under the NTRR ticker symbol. On June 27, 2018, the closing price of our common stock was $0.101 per share. We qualify as an "emerging growth company" as defined in the Jumpstart our Business Startups Act of 2012, or JOBS Act. Please read the related disclosure contained on page 8 of this prospectus. Investing in our common stock involves a high degree of risk. See "Risk Factors" beginning on page 2 to read about factors you should consider before investing in shares of our common stock. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. The Date of this Prospectus is: August __, 2018 TABLE OF CONTENTS PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2018/OBK_origin_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/OBK_origin_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
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@@ -0,0 +1 @@
+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2018/OILU_bank-of_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/OILU_bank-of_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..1f040484eda3b7a629bc76cb2caf12ba621772a3
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/OILU_bank-of_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY The following is a summary of information pertaining to the Trust and does not contain all of the information about the Trust that may be important to you. Before making an investment decision about the Gold Deposit Receipts, you should read this entire prospectus carefully, including Risk Factors beginning on page 7 as well as our filings incorporated by reference herein to which we have referred you in the sections Where You Can Find Additional Information and Information Incorporated by Reference. Overview The Vaulted Gold Bullion Trust (the Trust ) was initially formed on December 10, 2013. The Trust is governed by the Second Amended and Restated Depositary Trust Agreement, dated May 11, 2017 by and among The Bank of New York Mellon, as trustee, BNY Trust of Delaware, as Delaware trustee, Bank of Montreal, as initial depositor, and BMO Capital Markets Corp., as underwriter, as amended from time to time (the Depositary Trust Agreement ). The Trust has no assets or liabilities. The Trust is not a registered investment company under the 1940 Act. At all times, the Trust holds a fixed quantity of unencumbered, allocated, physical gold bullion ( Gold Bullion ) that corresponds to the outstanding Gold Deposit Receipts. The Gold Bullion is held for the benefit of holders of Gold Deposit Receipts in an account operated by Bank of Montreal at the Royal Canadian Mint (the Mint ). One troy ounce of Gold Bullion corresponds to each Gold Deposit Receipt as specified under
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diff --git a/parsed_sections/prospectus_summary/2018/OPRA_opera-ltd_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/OPRA_opera-ltd_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/OPRA_opera-ltd_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2018/OPRX_optimizerx_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/OPRX_optimizerx_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..b23f349c16d53e1d1867e8f9fffdd420972d03e5
--- /dev/null
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@@ -0,0 +1 @@
+following summary highlights selected information contained elsewhere in this prospectus and in the documents incorporated by reference in this prospectus and does not contain all the information you will need in making your investment decision. You should read carefully this entire prospectus and the documents incorporated by reference in this prospectus before making an investment
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diff --git a/parsed_sections/prospectus_summary/2018/PACK_ranpak_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/PACK_ranpak_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..14b29824f3ac783c8e985b8a501d394875534379
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/PACK_ranpak_prospectus_summary.txt
@@ -0,0 +1 @@
+This summary only highlights the more detailed information appearing elsewhere in this prospectus. You should read this entire prospectus carefully, including the information under Risk Factors and our financial statements and the related notes included elsewhere in this prospectus, before investing. Unless otherwise stated in this prospectus or the context otherwise requires, references to: we, us, company or our company are to One Madison Corporation, a Cayman Islands exempted company; amended and restated memorandum and articles of association are to our memorandum and articles of association to be in effect upon completion of this offering; anchor investors are to the investors with whom we have entered into forward purchase agreements, including our founder and certain of our employees and/or their affiliates; BSOF Entities are to BSOF Master Fund L.P., a Cayman Islands exempted limited partnership, and BSOF Master Fund II L.P., a Cayman Islands exempted limited partnership, both affiliates of The Blackstone Group L.P.; Companies Law is to the Companies Law (2016 Revision) of the Cayman Islands as the same may be amended from time to time; forward purchase agreements are to agreements providing for the sale of forward purchase shares and forward purchase warrants to the anchor investors in a private placement to close concurrently with the closing of our initial business combination and the issuance of 3,750,000 founder shares to the anchor investors in a private placement prior to this offering; forward purchase shares are to an aggregate of 15,000,000 Class A ordinary shares and Class C ordinary shares to be issued to the anchor investors pursuant to the forward purchase agreements; forward purchase warrants are to an aggregate of 5,000,000 warrants to purchase Class A ordinary shares or Class C ordinary shares, as applicable, to be issued to the anchor investors pursuant to the forward purchase agreements; founder are to our Chairman of our Board of Directors and Chief Executive Officer, Omar M. Asali; founder shares are to our Class B ordinary shares initially issued to our sponsor and the anchor investors in private placements prior to this offering (which such shares may be transferred to permitted transferees from time to time, including the BSOF Entities) and the Class A ordinary shares (or Class C ordinary shares, at the election of the holder) that will be issued upon the automatic conversion of such Class B ordinary shares at the time of our initial business combination (for the avoidance of doubt, such Class A ordinary shares and Class C ordinary shares are not considered public shares for the purposes of this prospectus); initial shareholders are to holders of our founder shares prior to this offering, including the BSOF Entities; management or our management team are to our executive officers and directors; operating and advisory committee are to an advisory committee of our directors that will be formed for the purpose of assisting management with sourcing and evaluating business opportunities and devising plans and strategies to optimize any business that we acquire; ordinary shares are to our Class A ordinary shares, our Class B ordinary shares and our Class C ordinary shares; private placement warrants are to the warrants to be issued to the anchor investors and the BSOF Entities in a private placement simultaneously with the closing of this offering and upon conversion of working capital loans, if any; TABLE OF CONTENTS The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED JANUARY 5, 2018 PRELIMINARY PROSPECTUS $300,000,000 One Madison Corporation 30,000,000 Units One Madison Corporation is a newly incorporated blank check company incorporated for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses, which we refer to throughout this prospectus as our initial business combination. We are founded and controlled by Omar Asali, our Chairman and Chief Executive Officer. We have not identified any potential business combination target, and we have not, nor has anyone on our behalf, initiated any substantive discussions, directly or indirectly, with any potential business combination target. This is an initial public offering of our securities. Each unit has an offering price of $10.00 and consists of one Class A ordinary share and one-half of one redeemable warrant. Each whole warrant entitles the holder thereof to purchase one Class A ordinary share at a price of $11.50 per share, subject to adjustment, as described herein. Only whole warrants are exercisable. We have granted the underwriters a 45-day option from the date of this prospectus to purchase up to 4,500,000 additional units to cover over-allotments, if any. We will provide our public shareholders with the opportunity to redeem all or a portion of their Class A ordinary shares upon the completion of our initial business combination, subject to the limitations described herein. If we are unable to complete our initial business combination within 24 months from the closing of this offering, we will redeem 100% of the public shares for cash upon the expiration of such 24-month period, subject to applicable law and certain conditions as described herein. See Summary The Offering Redemption of public shares and distribution and liquidation if no initial business combination. Certain investors (including Mr. Asali and each of our other executive officers), whom we refer to collectively as anchor investors, together with the BSOF Entities (as defined below), have agreed to purchase 8,000,000 warrants (or 8,900,000 if the underwriters over-allotment option is exercised in full), each exercisable to purchase one Class A ordinary share or Class C ordinary share at $11.50 per share, at a price of $1.00 per warrant, in a private placement to close concurrently with the closing of this offering. One Madison Group LLC (our sponsor ), entities affiliated with The Blackstone Group L.P. (collectively, the BSOF Entities ), and the anchor investors own 12,375,000 Class B ordinary shares as of the date of this prospectus, which will automatically convert into Class A ordinary shares or Class C ordinary shares, as applicable, at the time of our initial business combination as described herein and in our amended and restated memorandum and articles of association. The Class C ordinary shares have identical terms as the Class A ordinary shares except the Class C ordinary shares do not grant their holders any voting rights. Class C ordinary shares are convertible into Class A ordinary shares as described under Summary The Offering Forward Purchase Agreements. The anchor investors have entered into forward purchase agreements with us which provide for the purchase by the anchor investors of an aggregate of 15,000,000 Class A ordinary shares and Class C ordinary shares, plus an aggregate of 5,000,000 redeemable warrants to purchase one Class A ordinary share or one Class C ordinary share at $11.50 per share, for an aggregate purchase price of $150,000,000, or $10.00 per Class A ordinary share or Class C ordinary share, as applicable, in a private placement to close concurrently with the closing of our initial business combination. The forward purchase agreements provide that prior to signing a definitive agreement with respect to a potential initial business combination, and prior to making any material amendment to such definitive agreement following signing, anchor investors representing over 50% of the forward purchase shares must approve such potential initial business combination or amendment, as applicable. The obligations under the forward purchase agreements do not depend on whether any Class A ordinary shares are redeemed by our public shareholders. In connection with these agreements, we issued the anchor investors an aggregate of 3,750,000 Class B ordinary shares, which represent 33.33% of the Class B ordinary shares issued and outstanding immediately after this offering (assuming no exercise of the underwriters over-allotment option). In addition, we and our sponsor have entered into a strategic partnership agreement with the BSOF Entities pursuant to which such entities have agreed to act as a strategic partner and may provide debt or equity financing in connection with our initial business combination. See Summary Strategic Partnership Agreement with the BSOF Entities. Currently, there is no public market for our units, Class A ordinary shares or warrants. We have applied to have our units listed on the New York Stock Exchange (the NYSE ) under the symbol OMAD.U on or promptly after the date of this prospectus. We cannot guarantee that our securities will be approved for listing. We expect the Class A ordinary shares and warrants comprising the units to begin separate trading on the NYSE under the symbols OMAD and OMAD.W, respectively, on the 52nd day following the date of this prospectus unless the representatives of the underwriters permit earlier separate trading and we have satisfied certain conditions. We are an emerging growth company under applicable federal securities laws and will be subject to reduced public company reporting requirements. Investing in our securities involves a high degree of risk. See Risk Factors beginning on page 32 for a discussion of information that should be considered in connection with an investment in our securities. Investors will not be entitled to protections normally afforded to investors in Rule 419 blank check offerings. Per Unit Total Public offering price $ 10.00 $ 300,000,000 Underwriting discounts and commissions(1) $ 0.55 $ 16,500,000 Proceeds, before expenses, to us $ 9.45 $ 283,500,000 (1) Includes $0.35 per unit, or $10,500,000 in the aggregate (or $12,075,000 in the aggregate if the underwriters over-allotment option is exercised in full), payable to the underwriters for deferred underwriting commissions to be placed in a trust account located in the United States as described herein and released to the underwriters only upon the completion of an initial business combination. See also Underwriting beginning on page 149 for a description of compensation and other items of value payable to the underwriters. Of the proceeds we receive from this offering and the sale of the private placement warrants described in this prospectus, $300.0 million, or $345.0 million if the underwriters over-allotment option is exercised in full ($10.00 per unit in either case), will be deposited into a trust account with Continental Stock Transfer & Trust Company acting as trustee. The underwriters are offering the units for sale on a firm commitment basis. The underwriters expect to deliver the units to the purchasers on or about , 2018. Neither the SEC nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. No offer or invitation to subscribe for units is being made to the public in the Cayman Islands. Joint Book-Running Managers Credit Suisse BofA Merrill Lynch Co-Manager I-Bankers Securities, Inc. , 2018 TABLE OF CONTENTS public shares are to our Class A ordinary shares offered as part of the units in this offering (whether they are purchased in this offering or thereafter in the open market); public warrants are to our warrants offered as part of the units in this offering (whether they are purchased in this offering or thereafter in the open market); public shareholders are to the holders of our public shares, including our initial shareholders and management team to the extent our initial shareholders and/or members of our management team subscribe for public shares, provided that each initial shareholder s and member of our management team s status as a public shareholder will only exist with respect to such public shares; sponsor are to One Madison Group LLC, a Delaware limited liability company, in which our founder, together with certain affiliates, holds a controlling 80% ownership interest; and sponsor-affiliate is to any director, officer or employee of the sponsor who also serves in any such role at the Company (including our founder), which term does not refer to any of the Company s non-executive directors. Any conversion of the Class B ordinary shares (or Class C ordinary shares) described in this prospectus will take effect as a redemption of Class B ordinary shares (or Class C ordinary shares) and an issuance of Class A ordinary shares or Class C ordinary shares, as applicable, (or Class A ordinary shares, in the case of conversion of Class C ordinary shares) as a matter of Cayman Islands law. Any forfeiture of ordinary shares described in this prospectus will take effect as a surrender for no consideration of such ordinary shares as a matter of Cayman Islands law. Any share dividends described in this prospectus will take effect as a share capitalization as a matter of Cayman Islands law. Unless we tell you otherwise, the information in this prospectus assumes that the underwriters will not exercise their over-allotment option. All references in this prospectus to the underwriters not exercising their over-allotment option assume that our sponsor will forfeit 1,125,000 of its founder shares following the closing of this offering, which shall take effect as surrenders of such shares for no consideration as a matter of Cayman Islands law. General We are a newly incorporated blank check company incorporated as a Cayman Islands exempted company and formed for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses, which we refer to throughout this prospectus as our initial business combination. We have not identified any potential business combination target and we have not, nor has anyone on our behalf, initiated any substantive discussions, directly or indirectly, with any potential business combination target. Our founder, Omar Asali, is Chairman and CEO of One Madison Group LLC, our sponsor, a privately owned investment company. Our sponsor seeks to build an industry leading sustainable operating business with high returns on invested capital and robust free cash flow generation. We intend to take a patient and disciplined approach to investing with an emphasis on compounding capital over the long-term. We intend to partner with excellent management teams and foster an ownership culture with strong alignment of incentives. Our management team has deep expertise across multiple industries and regions as well as an extensive network of industry and functional experts that can be valuable resources to our investments. We will be further supported by our operating and advisory committee comprised of four former senior executives from leading global consumer and industrial companies with experience in a wide range of sub-sectors and functional areas, who will provide us with access to their expertise and extensive industry networks from which we intend to source and evaluate targets as well as devise plans to optimize any business that we acquire. While we may pursue an acquisition opportunity in any industry or location, we intend to focus on the consumer sector and consumer-related businesses based predominantly in North America with global reach. We believe our management team has the skills and experience to identify, evaluate and consummate a business combination and is positioned to assist businesses we acquire in the following categories: (i) consumer products or services, (ii) food and beverage and (iii) adjacent manufacturing or industrial TABLE OF CONTENTS services businesses linked to a consumer end-user. We intend to target businesses that have stable cash flows, strong management teams, and attractive growth prospects over the long term. Our management and our operating and advisory committee have extensive experience not only identifying and executing the acquisition of private and public companies, but also the running and operating of businesses post-transaction. Successful companies in the consumer products sector traditionally have had several characteristics that make them unique and highly sought after, including their ability to generate strong free cash flow and operate throughout various economic cycles. Such companies typically had strong margin profiles, returns on invested capital greater than their cost of capital, strong demand for their products, proven product development capability, a diverse distribution network with deep retailer relationships as well as an efficient and robust supply chain that can meet evolving customer needs. These businesses also have been able to support strong cash flow generation and growth, both through increasing top line revenue from improved distribution and product development as well as a sharp focus on achieving greater operating efficiencies and process improvements. Effective management teams with a clear set of long-term goals and proper incentives are integral to building leading sustainable businesses in the space. Recent developments in e-commerce, social media, digital marketing, and direct-to-consumer distribution are rapidly altering the competitive landscape, primarily by reducing the barriers to entry and changing the way consumers learn about and interact with companies and their products. These changes have attracted a large number of entrepreneurs and venture investors in categories long-dominated by large established companies. Many traditional consumer companies are facing a range of unique market and industry dynamics that we believe will create attractive opportunities for our company to pursue. In particular, traditional consumer products companies are confronted with new and disruptive business models primarily driven by advancements in technology along with the growth of e-commerce and niche product lines, resulting in significant changes to consumer spending behavior and purchasing habits as well as retail and distribution networks. As a result, larger, global consumer products companies, under pressure by the marketplace, activist investors and competition from smaller and more nimble companies, have announced plans to divest certain brands and non-core businesses as a means to cut costs and re-focus on key products. In addition, other privately-owned businesses are seeking new long-term owners and capital providers in order to remain competitive in a rapidly evolving consumer landscape. Through Mr. Asali and our operating and advisory committee members, we believe we have assembled a team whose broad-based industry experience, deep network and extensive functional expertise in areas such as operations, manufacturing, supply chain optimization, financial management, capital markets, sales and marketing and e-commerce can significantly improve the outlook for the business we acquire. Our operating and advisory committee has in-depth knowledge and global experience in a variety of industries touching the consumer including: food and beverage, pet products, household products and appliances, tools and building products as well as garden and outdoor products. We believe we are uniquely positioned to take advantage of this disruption and capitalize on potential opportunities. We believe our collective experience and skillset will allow us to understand the impact of current disruption, identify attractive opportunities and develop an effective value creation strategy post-acquisition, including reshaping operating strategy and infrastructure to better address the challenges discussed above. We believe our sponsor and anchor investors, who share our long-term approach to capital allocation and strategic decision making, will assist us in implementing our objectives and are a key differentiator for our company. Our sponsor and anchor investors are focused on compounding equity value over the long-term. Our sponsor believes that it takes discipline, long-term perspective, strategic thinking, and proper resources to build a business with industry-leading operating efficiencies and that can serve as an attractive growth platform for future accretive acquisitions. We believe sellers of family-owned businesses would seek to transition ownership of a business they have built over many years and in some cases, generations, to a company focused on building and achieving a positive and sustainable outcome for all stakeholders. Our sponsor is focused on implementing a conservative capital structure that provides the business with the flexibility it needs to weather cycles and evolve in a dynamic competitive landscape. Our sponsor is focused on the preservation of capital and intends to implement a capital structure that reflects this mindset. TABLE OF CONTENTS Mr. Asali has an extensive background of relevant industry and public company experience. Most recently, he served as President and Chief Executive Officer of HRG Group, a publicly traded diversified holding company ( HRG ), from March 2015 until April 2017, as its President since October 2011 and a director from May 2011 to April 2017. In addition to HRG, Mr. Asali served as Vice Chairman of the board of directors of Spectrum Brands Holdings, Inc. ( Spectrum Brands ), HRG s majority owned and NYSE listed consumer products company with an $8.3 billion market capitalization at the time of Mr. Asali s departure from HRG, and as a member of the board of directors of Fidelity & Guaranty Life (formerly the US Life and Annuity business of Old Mutual PLC, FGL ), HRG s majority owned NYSE-listed insurance company, which had a $1.6 billion market capitalization at the time of Mr. Asali s departure from HRG. As Chief Executive Officer and President of HRG, Mr. Asali was responsible for overseeing its day-to-day activities, including M&A activity and overall business strategy for HRG and its subsidiaries as well as identifying performance metrics to better align management teams with meeting business objectives. During his time at HRG, Mr. Asali was directly involved in all of HRG s acquisitions across all sectors and was actively involved in HRG s management and investment activities. Under Mr. Asali s leadership, HRG achieved substantial shareholder value both organically and through strategic transactions. During this time: HRG grew from a public shell company with a market capitalization of $119 million in 2010 into a diversified holding company with a market capitalization of $3.9 billion as of April 14, 2017, the date of Mr. Asali s departure from HRG. HRG completed numerous successful financings over this time period and lowered its blended cost of debt from 10.625% to 7.8%. HRG shareholders achieved returns of 286% (or a compound annual growth rate of greater than 27%) from the time Mr. Asali became President in October 2011 until his departure in April of 2017 and HRG s key subsidiaries also achieved strong returns. Spectrum Brand s share price appreciated 497% in that timeframe while HRG s investment in FGL achieved a total rate of return of 399%. HRG acquired FGL in 2011 for $300 million (net of a $50 million purchase price adjustment). In December 2013, FGL completed a successful partial initial public offering of 11.2 million shares at $17.00, valuing HRG s remaining stake of approximately 80% at approximately $799 million and paying HRG a special dividend of $43 million from the offering proceeds. FGL recently undertook a strategic sale process that ultimately resulted in the announced sale to CF Corp. for $31.10 per share, valuing HRG s stake at $1.46 billion and resulting, assuming completion, in a total return of greater than 450% for HRG shareholders since inception. HRG acquired Spectrum Brands from Harbinger Capital Partners, LLC ( Harbinger Capital ) in January of 2011. Spectrum Brands acquired Stanley Black & Decker s Hardware & Home Improvement Group as well as Armored AutoGroup for $1.4 billion each and completed numerous tuck-in acquisitions as well as debt and equity financings. Shares in Spectrum Brands increased by 497% from October 2011 to April 14, 2017. In that time period Spectrum Brand s market capitalization increased from $1.2 billion to approximately $8.3 billion. Additionally, during the time Mr. Asali served as President, HRG held investments in various financing, asset management, re-insurance and oil and gas firms, including CorAmerica Capital, LLC, Salus Capital Partners, LLC, and Compass Production Partners, LP. See Proposed Business Our Management Team. Prior to becoming President of HRG, Mr. Asali was a Managing Director and Head of Global Strategy of Harbinger Capital where he was responsible for global portfolio strategy and business development. Before joining Harbinger Capital in 2009, Mr. Asali was the co-head of Goldman Sachs Hedge Fund Strategies ( Goldman Sachs HFS ) where he helped manage approximately $25 billion of capital allocated to external managers. Mr. Asali also served as co-chair of the Investment Committee at Goldman Sachs HFS. Before joining Goldman Sachs HFS in 2003, Mr. Asali worked in Goldman Sachs Investment Banking Division, providing M&A and strategic advisory services to clients in the High Technology Group. Mr. Asali previously worked at Capital Guidance, a boutique private equity firm. Mr. Asali began his career working for a public accounting firm. Mr. Asali received an MBA from Columbia Business School and a B.S. in Accounting from Virginia Tech. TABLE OF CONTENTS With respect to the foregoing experiences of Mr. Asali, past performance is not a guarantee (i) that we will be able to identify a suitable candidate for our initial business combination or (ii) of success with respect to any business combination we may consummate. You should not rely on the historical record of our management s performance as indicative of our future performance. None of our officers has any past experience with any blank check companies or special purpose acquisition companies. We believe our ability to complete an initial business combination will be enhanced by our having entered into forward purchase agreements pursuant to which the anchor investors have agreed to purchase an aggregate of 15,000,000 Class A ordinary shares and Class C ordinary shares, plus 5,000,000 redeemable warrants, for a purchase price of $10.00 per Class A ordinary share or Class C ordinary share, as applicable, or $150,000,000 in the aggregate, in a private placement to occur concurrently with the closing of our initial business combination. We believe this committed capital will provide us with greater certainty to complete a business combination with potential sellers. The forward purchase agreements provide that prior to signing a definitive agreement with respect to a potential initial business combination, and prior to making any material amendment to such definitive agreement following signing, anchor investors representing over 50% of the forward purchase shares must approve such potential initial business combination or amendment, as applicable. The proceeds from the sale of forward purchase shares may be used as part of the consideration to the sellers in our initial business combination, expenses in connection with our initial business combination or for working capital in the post-transaction company. These purchases will be made regardless of whether any Class A ordinary shares are redeemed by our public shareholders and are intended to provide us with a minimum funding level for our initial business combination. On December 15, 2017, we entered into a strategic partnership agreement with our sponsor and the BSOF Entities pursuant to which our sponsor transferred 525,000 founder shares and the BSOF Entities have agreed to act as our strategic partner and may provide debt or equity financing in connection with our initial business combination, but are not required to do so. The founder shares held by the BSOF Entities are subject to certain transfer restrictions, forfeiture and earnout provisions similar to those imposed upon our sponsor and the anchor investors. If we seek shareholder approval of our initial business combination, the BSOF Entities have agreed to vote any founder shares they may own in favor of such initial business combination. The BSOF Entities may designate one observer to our board of directors until the consummation of our initial business combination. The BSOF Entities have also separately agreed to purchase an aggregate of 560,000 private placement warrants, at a price of $1.00 per warrant, in a private placement to close concurrently with the closing of this offering. Such private placement warrants will have the same terms and conditions as those to be purchased by our anchor investors. The BSOF Entities will be entitled to registration rights with respect any ordinary shares and warrants held by them. We believe that the combination of capital provided by our anchor investors and a strategic partnership with the BSOF Entities will provide us with a material advantage in effecting an initial business combination. Business Strategy Our business strategy is to identify and complete our initial business combination with a company that complements the experience of Mr. Asali and our operating and advisory committee and can benefit from their collective experiences and expertise to build shareholder value over the long-term. Key aspects of our business strategy will include: Sourcing investment opportunities through the broad and deep industry relationships of Mr. Asali, our operating and advisory committee, and some of our anchor investors. Mr. Asali has developed a broad range of relationships with industry leaders, investments bankers, consultants, legal advisors, financial sponsors, family offices, institutional investors and capital providers. Our operating and advisory committee members will help our sponsor formulate a clear strategy for the acquired business once a business combination is consummated. This committee could also be a potential source of new management and advisors for the acquired company. Finally, our anchor investors are distinguished family offices that we believe can provide us with access to unique pools of capital and investment opportunities from within the family office community. Targeting consumer products companies with attractive brands, strong management teams and scalable platforms. Sub-sectors on which we plan to focus include, but are not limited to, tools and TABLE OF CONTENTS building products, food and beverage, household products, garden and outdoor, lifestyle and experience. We intend to source acquisition opportunities from a number of sources, such as family owners, financial sponsors and corporate carve-outs. Implementing a strategy aimed at operational improvements such as margin improvement, free cash flow conversion, distribution and supply chain efficiencies and SG&A efficiencies. We believe these steps will help us create shareholder value by improving returns on invested capital while lowering the cost of capital of the acquired business. In addition, we will plan to grow through strategic acquisitions in comparable as well as adjacent categories. We will pursue tuck-in acquisitions as well as larger transactions that we believe will improve the overall business profile and be accretive to shareholders. Generating long-term shareholder value, consistent with our management team s experience and capabilities and long-term investment horizons of our anchor investors. We believe this strategy will position us well to operate, adapt and grow any business that we acquire through multiple cycles. Furthermore, we believe that this approach differentiates and positions us well with current like-minded, long-term oriented owners of target businesses potentially making them more receptive to transact with us. Implementing a capital structure that reflects our focus on preservation of capital and maintaining operational flexibility while building a diversified platform. Implementing centralized capital allocation and decentralized operations with a cost-effective management team and a pay-for-performance culture. Acquisition Criteria Consistent with our business strategy, we have identified the following general criteria and guidelines that we believe are important in evaluating prospective target businesses. We will use these criteria and guidelines in evaluating acquisition opportunities, but we may decide to enter into our initial business combination with a target business that does not meet these criteria and guidelines. We intend to seek to acquire companies that we believe have: Strong Brands and Leading Market Positions: We intend to seek companies with strong brands and leading market positions that we believe are highly sought after by consumers and distributors, can perform through various cycles and withstand disruptive developments to the business. We intend to seek highly attractive brands that offer compelling value to consumers that we can distribute through a variety of channels. Product Development and Manufacturing Infrastructure: We intend to pursue a target with a proven track record of strong operational execution and that has control over a substantial amount of their manufacturing processes. While we are focused on companies with low capital intensity and limited required maintenance capital expenditures, we believe owning a solid manufacturing footprint would provide greater control over quality of products manufactured, cost management, and achieving operational efficiencies while also providing opportunity for expansion in product lines and geographies. We also intend to pursue a target with a culture of product development and innovation to maintain relevancy for existing products and build brands that resonate in households worldwide. Scalable Platform: We intend to acquire platforms that provide the infrastructure and capacity necessary to grow through new product launches and acquisitions while maintaining a competitive existing operating cost structure to enable management to pursue consolidation opportunities and realize synergies. We intend to focus on businesses that operate within a fragmented space where we can utilize our skill-sets to consolidate a number of attractive businesses over time. Experienced Management: While our management and our operating and advisory committee bring industry expertise that will assist in identifying acquisition opportunities and could serve as a source of management talent, we intend to focus on companies with strong existing management teams that are well positioned to continue running the business and will benefit from access to our expertise and experiences, networks and capital. TABLE OF CONTENTS Opportunities for Improved Strategic Planning and Incentive Structures: We intend to focus on identifying opportunities to improve existing business plans using our collective experience from different businesses. We further intend to focus on identifying metrics and developing incentive plans that will align managers with meeting near term business goals while building long-term shareholder value. Attractive Cash Flow: We intend to target companies with strong free cash flow generation from existing products, high profit margins (or a path to obtaining them) and revenue where we have strong visibility or that is recurring. Opportunity for Operational Improvement: We intend to target companies where we believe there is capacity to improve the penetration of the existing product line and optimize work flow processes and distribution networks to lower costs, adapt to a changing market environment and become more competitive. Attributes to Benefit as a Public Company: We intend to target companies that could benefit from access to the public equity markets with new holders and long-term investors that will support the company s growth objectives. We also expect to benefit from access to the term debt markets where our sponsor has a proven track record of successfully completing financings and protecting the principal of capital providers. We expect to develop a capital structure that is appropriate for the target company while lowering our cost of capital. Initial Business Combination NYSE rules require that our initial business combination must occur with one or more target businesses that together have an aggregate fair market value of at least 80% of the assets held in the trust account (excluding the deferred underwriting commissions and taxes payable on the interest earned on the trust account) at the time of our signing a definitive agreement in connection with our initial business combination. If our board of directors is not able to independently determine the fair market value of the target business or businesses, we will obtain an opinion from an independent investment banking firm which is a member of FINRA or a valuation or appraisal firm with respect to the satisfaction of such criteria. While we consider it unlikely that our board will not be able to make an independent determination of the fair market value of a target business or businesses, it may be unable to do so if the board is less familiar or experienced with the target company s business, there is a significant amount of uncertainty as to the value of the company s assets or prospects, including if such company is at an early stage of development, operations or growth, or if the anticipated transaction involves a complex financial analysis or other specialized skills and the board determines that outside expertise would be helpful or necessary in conducting such analysis. Since any opinion, if obtained, would merely state that the fair market value of the target business meets the 80% of assets threshold, unless such opinion includes material information regarding the valuation of a target business or the consideration to be provided, it is not anticipated that copies of such opinion would be distributed to our shareholders. However, if required under applicable law, any proxy statement that we deliver to shareholders and file with the SEC in connection with a proposed transaction will include such opinion. We anticipate structuring our initial business combination so that the post-transaction company in which our public shareholders own shares will own or acquire 100% of the equity interests or assets of the target business or businesses. We may, however, structure our initial business combination such that the post-transaction company owns or acquires less than 100% of such interests or assets of the target business in order to meet certain objectives of the target management team or shareholders or for other reasons, but we will only complete such business combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act of 1940, as amended, or the Investment Company Act. Even if the post-transaction company owns or acquires 50% or more of the voting securities of the target, our shareholders prior to the business combination may collectively own a minority interest in the post-transaction company, depending on valuations ascribed to the target and us in the business combination. For example, we could pursue a transaction in which we issue a substantial number of new shares in exchange for all of the outstanding TABLE OF CONTENTS capital stock of a target. In this case, we would acquire a 100% controlling interest in the target. However, as a result of the issuance of a substantial number of new shares, our shareholders immediately prior to our initial business combination could own less than a majority of our outstanding shares subsequent to our initial business combination. If less than 100% of the equity interests or assets of a target business or businesses are owned or acquired by the post-transaction company, the portion of such business or businesses that is owned or acquired is what will be valued for purposes of the 80% of net assets test. If the business combination involves more than one target business, the 80% of net assets test will be based on the aggregate value of all of the target businesses. Our Acquisition Process In evaluating a prospective target business, we expect to conduct a thorough due diligence review that will encompass, among other things, meetings with incumbent management and employees, document reviews and inspection of facilities, as well as a review of financial and other information that will be made available to us. We are not prohibited from pursuing an initial business combination with a company that is affiliated with our sponsor, officers or directors. In the event we seek to complete our initial business combination with a company that is affiliated with our sponsor, officers or directors, we, or a committee of independent directors, will obtain an opinion from an independent investment banking firm which is a member of FINRA or an independent accounting firm that our initial business combination is fair to our company from a financial point of view and follow such other procedures as set forth in our related party transaction policy (see Certain Relationships and Related Party Transactions Related Party Transaction Policy ). Each of our directors and officers will own founder shares and/or private placement warrants following this offering and, accordingly, may have a conflict of interest in determining whether a particular target business is an appropriate business with which to effectuate our initial business combination. Further, such officers and directors may have a conflict of interest with respect to evaluating a particular business combination if the retention or resignation of any such officers and directors was included by a target business as a condition to any agreement with respect to our initial business combination. Each of our officers and directors presently has, and any of them in the future may have additional, fiduciary or contractual obligations to another entity pursuant to which such officer or director is or will be required to present a business combination opportunity to such entity subject to his or her fiduciary duties under Cayman Islands law. Accordingly, if any of our officers or directors becomes aware of a business combination opportunity which is suitable for an entity to which he or she has then-current fiduciary or contractual obligations, he or she will honor his or her fiduciary or contractual obligations to present such business combination opportunity to such other entity, subject to their fiduciary duties under Cayman Islands law. We do not believe, however, that the fiduciary duties or contractual obligations of our officers or directors will materially affect our ability to complete our initial business combination. Our sponsor, officers and directors have agreed, pursuant to a written letter agreement, not to participate in the formation of, or become an officer or director of, any other blank check company until we have entered into a definitive agreement regarding our initial business combination or we have failed to complete our initial business combination within 24 months after the closing of this offering. Prior to the date of this prospectus, we will file a Registration Statement on Form 8-A with the SEC to voluntarily register our securities under Section 12 of the Securities Exchange Act of 1934, as amended, or the Exchange Act. As a result, we will be subject to the rules and regulations promulgated under the Exchange Act. We have no current intention of filing a Form 15 to suspend our reporting or other obligations under the Exchange Act prior or subsequent to the consummation of our initial business combination. Corporate Information Our executive offices are located at 3 East 28th Street, 8th Floor, New York, New York 10016, and our telephone number is 212-763-0930. We maintain a corporate website at www.onemadisongroup.com. The information contained on or accessible through our corporate website or any other website that we may maintain is not part of this prospectus or the registration statement of which this prospectus is a part. TABLE OF CONTENTS We are a Cayman Islands exempted company incorporated on July 13, 2017. Exempted companies are Cayman Islands companies conducting business mainly outside the Cayman Islands and, as such, are exempted from complying with certain provisions of the Companies Law. As an exempted company, we have applied for and expect to receive, after the effectiveness of the registration statement of which this prospectus forms a part, a tax exemption undertaking from the Cayman Islands government that, in accordance with Section 6 of the Tax Concessions Law (2011 Revision) of the Cayman Islands, for a period of 20 years from the date of the undertaking, no law which is enacted in the Cayman Islands imposing any tax to be levied on profits, income, gains or appreciations will apply to us or our operations and, in addition, that no tax to be levied on profits, income, gains or appreciations or which is in the nature of estate duty or inheritance tax will be payable (i) on or in respect of our shares, debentures or other obligations or (ii) by way of the withholding in whole or in part of a payment of dividend or other distribution of income or capital by us to our shareholders or a payment of principal or interest or other sums due under a debenture or other obligation of us. We are an emerging growth company, as defined in Section 2(a) of the Securities Act of 1933, as amended, or the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. As such, we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. If some investors find our securities less attractive as a result, there may be a less active trading market for our securities and the prices of our securities may be more volatile. In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We intend to take advantage of the benefits of this extended transition period. We will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of this offering, (b) in which we have total annual gross revenue of at least $1.07 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our ordinary shares that is held by non-affiliates exceeds $700 million as of the prior June 30th, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period. References herein to emerging growth company shall have the meaning associated with it in the JOBS Act. TABLE OF CONTENTS The Offering In deciding whether to invest in our securities, you should take into account not only the backgrounds of the members of our management team, but also the special risks we face as a blank check company and the fact that this offering is not being conducted in compliance with Rule 419 promulgated under the Securities Act. You will not be entitled to protections normally afforded to investors in Rule 419 blank check offerings. You should carefully consider these and the other risks set forth in the section below entitled Risk Factors beginning on page 32 of this prospectus. Securities offered 30,000,000 units, at $10.00 per unit, each unit consisting of: one Class A ordinary share; and one-half of one redeemable warrant. Proposed NYSE symbols Units: OMAD.U Class A Ordinary Shares: OMAD Warrants: OMAD.W Trading commencement and separation of Class A ordinary shares and warrants The units are expected to begin trading on or promptly after the date of this prospectus. The Class A ordinary shares and warrants comprising the units will begin separate trading on the 52nd day following the date of this prospectus unless Credit Suisse Securities (USA) LLC and Merrill Lynch, Pierce, Fenner & Smith Incorporated inform us of their decision to allow earlier separate trading, subject to our having filed the Current Report on Form 8-K described below and having issued a press release announcing when such separate trading will begin. Once the Class A ordinary shares and warrants commence separate trading, holders will have the option to continue to hold units or separate their units into the component securities. Holders will need to have their brokers contact our transfer agent in order to separate the units into Class A ordinary shares and warrants. No fractional warrants will be issued upon separation of the units and only whole warrants will trade. Accordingly, unless you purchase at least two units, you will not be able to receive or trade a whole warrant. Separate trading of the Class A ordinary shares and warrants is prohibited until we have filed a Current Report on Form 8-K In no event will the Class A ordinary shares and warrants be traded separately until we have filed with the SEC a Current Report on Form 8-K which includes an audited balance sheet reflecting our receipt of the gross proceeds at the closing of this offering. We anticipate filing such Current Report four business days from the closing of this offering. If the underwriters over-allotment option is exercised following the initial filing of such Current Report on Form 8-K, a second or amended Current Report on Form 8-K will be filed to provide updated financial information to reflect the exercise of the underwriters over-allotment option. TABLE OF CONTENTS Units: Number outstanding before this offering 0 Number outstanding after this offering 30,000,000(1) Ordinary shares: Number issued and outstanding before this offering 12,375,000(2)(3) Number issued and outstanding after this offering 41,250,000(1)(3)(4) Warrants: Number of private placement warrants to be sold in a private placement simultaneously with this offering 8,000,000(1) Number of warrants to be outstanding after this offering and the sale of private placement warrants 23,000,000(1) (1) Assumes no exercise of the underwriters over-allotment option. (2) Consists solely of founder shares outstanding as of the date of this prospectus and includes up to 1,125,000 founder shares that are subject to forfeiture by our sponsor depending on the extent to which the underwriters over-allotment option is exercised. (3) Founder shares are currently classified as Class B ordinary shares, which shares will automatically convert into Class A ordinary shares (or Class C ordinary shares, at the election of the holder) at the time of our initial business combination as described below adjacent to the caption Founder shares conversion and anti-dilution rights. (4) Includes 30,000,000 public shares and 11,250,000 founder shares. Exercisability Each whole warrant offered in this offering is exercisable to purchase one Class A ordinary share. Only whole warrants are exercisable. No fractional warrants will be issued upon separation of the units and only whole warrants will trade. We structured each unit to contain one-half of one warrant, with each whole warrant exercisable for one Class A ordinary share, as compared to units issued by some other similar blank check companies which contain whole warrants exercisable for one whole share, in order to reduce the dilutive effect of the warrants upon completion of a business combination as compared to units that each contain a warrant to purchase one whole share, thus making us, we believe, a more attractive business combination partner for target businesses. The private placement warrants and forward purchase warrants will be exercisable on the same terms as the warrants offered as part of the units, except that, pursuant to the applicable forward TABLE OF CONTENTS purchase agreement, one of the anchor investors will receive forward purchase warrants exercisable only for Class C ordinary shares. See Forward Purchase Agreements. Exercise price $11.50 per whole share, subject to adjustments as described herein. Exercise period The public warrants will become exercisable on the later of: 30 days after the completion of our initial business combination; and 12 months from the closing of this offering; provided in each case that we have an effective registration statement under the Securities Act covering the Class A ordinary shares issuable upon exercise of the warrants and a current prospectus relating to them is available and such shares are registered, qualified or exempt from registration under the securities, or blue sky, laws of the state of residence of the holder (or we permit holders to exercise their warrants on a cashless basis under the circumstances specified in the warrant agreement). If and when the public warrants become redeemable by us, we may exercise our redemption right even if we are unable to register or qualify the underlying securities for sale under all applicable state securities laws. We are not registering the Class A ordinary shares issuable upon exercise of the public warrants, forward purchase warrants or private placement warrants at this time. However, we have agreed that as soon as practicable, but in no event later than 30 business days after the closing of our initial business combination, we will use our best efforts to file with the SEC a registration statement covering the Class A ordinary shares and Class C ordinary shares, as applicable, issuable upon exercise of the public warrants, forward purchase warrants or private placement warrants. We will use our best efforts to cause the same to become effective and to maintain the effectiveness of such registration statement, and a current prospectus relating to those Class A ordinary shares and Class C ordinary shares until such warrants expire or are redeemed, as specified in the warrant agreement. If a registration statement covering the Class A ordinary shares and the Class C ordinary shares issuable upon exercise of such warrants is not effective by the 60th day after the closing of the initial business combination, warrant holders may, until such time as there is an effective registration statement and during any period when we will have failed to maintain an effective registration statement, exercise warrants on a cashless basis in accordance with Section 3(a)(9) of the Securities Act or another exemption. The warrants will expire at 5:00 p.m., New York City time, five years after the completion of our initial business combination or earlier upon redemption or liquidation. On the exercise of any warrant, the warrant exercise price will be paid directly to us and not placed in the trust account. TABLE OF CONTENTS Redemption of warrants Once the warrants become exercisable, we may redeem the outstanding warrants (except as described herein with respect to the private placement warrants): in whole and not in part; at a price of $0.01 per warrant; upon a minimum of 30 days prior written notice of redemption, which we refer to as the 30-day redemption period; and if, and only if, the last sales price of our Class A ordinary shares equals or exceeds $18.00 per share (as adjusted for share splits, dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which we send the notice of redemption to the warrant holders. We will not redeem the warrants unless an effective registration statement under the Securities Act covering the Class A ordinary shares issuable upon exercise of the warrants is effective and a current prospectus relating to those Class A ordinary shares is available throughout the 30-day redemption period, except if the warrants may be exercised on a cashless basis and such cashless exercise is exempt from registration under the Securities Act. If we call the warrants for redemption as described above, our management will have the option to require all holders that wish to exercise warrants to do so on a cashless basis. In determining whether to require all holders to exercise their warrants on a cashless basis, our management will consider, among other factors, our cash position, the number of warrants that are outstanding and the dilutive effect on our shareholders of issuing the maximum number of Class A ordinary shares issuable upon the exercise of our warrants. In such event, each holder would pay the exercise price by surrendering the warrants for that number of Class A ordinary shares equal to the quotient obtained by dividing (x) the product of the number of Class A ordinary shares underlying the warrants, multiplied by the difference between the exercise price of the warrants and the fair market value (defined below) by (y) the fair market value. The fair market value will mean the average reported closing price of the Class A ordinary shares for the 10 trading days ending on the third trading day prior to the date on which the notice of redemption is sent to the holders of warrants. Please see Description of Securities Warrants Public Shareholders Warrants for additional information. The forward purchase warrants will be redeemable on the same terms as the warrants offered as part of the units. None of the private placement warrants will be redeemable by us so long as they are held by the initial anchor investors or the BSOF Entities who purchased such warrants or their respective permitted transferees. TABLE OF CONTENTS Forward Purchase Agreements; Strategic Partnership Agreement Prior to this offering, we entered into forward purchase agreements pursuant to which the anchor investors agreed to subscribe for an aggregate of 15,000,000 ordinary shares (13,025,000 Class A ordinary shares and 1,975,000 Class C ordinary shares) plus 5,000,000 redeemable warrants (of which 4,341,667 will be exercisable for Class A ordinary shares and 658,333 will be exercisable for Class C ordinary shares) for a purchase price of $10.00 multiplied by the number of Class A ordinary shares and Class C ordinary shares purchased, or $150,000,000 in the aggregate, in a private placement to close concurrently with the closing of our initial business combination. The Class A ordinary shares, Class C ordinary shares and warrants to be purchased by the anchor investors are referred to herein as the forward purchase securities. In connection with these agreements, we also issued to the anchor investors an aggregate of 3,750,000 founder shares for $0.01 per share prior to this offering. In connection with the strategic partnership agreement, our sponsor transferred 525,000 founder shares to the BSOF Entities. Subject to certain exceptions to forfeiture, transfer and earnout provisions, the founder shares issued to the anchor investors and held by the BSOF Entities are subject to similar contractual conditions and restrictions as the founder shares issued to our sponsor. The forward purchase warrants will have the same terms as our public warrants except that one of the anchor investors will receive forward purchase warrants exercisable only for Class C ordinary shares, as described above. Upon execution of the forward purchase agreements, each anchor investor elected to receive a fixed number of Class A ordinary shares or Class C ordinary shares. The Class C ordinary shares have identical terms as the Class A ordinary shares, except the Class C ordinary shares do not grant their holders any voting rights. Our amended and restated memorandum and articles of association provide that the Class C ordinary shares may be converted into Class A ordinary shares on a one-for-one basis (i) at the election of the holder with 65 days written notice or (ii) upon the transfer of such Class C ordinary share to an unaffiliated third party. The forward purchase agreements and the strategic partnership agreement also provide that the anchor investors and the BSOF Entities are entitled to (i) a right of first refusal with respect to any proposed issuance of additional equity or equity-linked securities (including working capital loans from our founder that are convertible into private placement warrants) by us, including for capital raising purposes, or if we offer or seek commitments for any equity or equity-linked securities to backstop any such capital raise, in connection with the closing of our initial business combination (other than the units we are offering by this prospectus and their component public shares and warrants, the founder shares (and Class A ordinary shares and/or Class C ordinary shares for which such founder shares are convertible), the forward purchase shares, forward purchase warrants and the private placement warrants, and any securities issued by us as TABLE OF CONTENTS consideration to any seller in our initial business combination and warrants issued upon the conversion of working capital loans to us made by our founder that are convertible into private placement warrants) and (ii) registration rights with respect to (A) the forward purchase securities and Class A ordinary shares and Class C ordinary shares underlying the anchor investors forward purchase warrants and the anchor investors and the BSOF Entities founder shares, and (B) any other Class A ordinary shares or warrants acquired by the anchor investors and the BSOF Entities, including any time after we complete our initial business combination. The forward purchase agreements provide that prior to signing a definitive agreement with respect to a potential initial business combination, and prior to making any material amendment to such definitive agreement following signing, anchor investors representing over 50% of the forward purchase shares must approve such potential initial business combination or amendment, as applicable. In addition, the forward purchase agreements for two of our anchor investors provide each such anchor investor with (i) the right to designate (prior to the consummation of a business combination) and the right to request the designation of (following the consummation of a business combination) one observer to our board of directors and (ii) the right to acquire, at the same price paid by, directly or indirectly, and on the same terms and conditions as, our founder, a number of founder shares equal to its pro rata share, based on its allocation of forward purchase shares, of five percent of the founder shares of any special purpose acquisition company sponsored by our founder for 10 years following the closing of our initial business combination, which we refer to as the new acquisition company. Further, such forward purchase agreements for the same two anchor investors provide such investors with the right to purchase up to an aggregate of $63,000,000 in equity securities of the new acquisition company substantially similar to the forward purchase securities on the same or more favorable terms as new investors in such equity securities. The strategic partnership agreement provides that, so long as the Company remains a blank check company as such term is defined in Rule 419 under the Securities Act and prior to our initial business combination, the BSOF Entities have the right to designate one observer to our board of directors. In addition, on the date set for the shareholder vote to approve the initial business combination or on the business day immediately prior to the scheduled closing date of the initial business combination, if the BSOF Entities do not hold at least 4,000,000 Class A ordinary shares (which amount will be automatically reduced on a pro rata basis if we offer and sell fewer than 30,000,000 units in this offering, without regard to any exercise by the underwriters of the over-allotment option), the BSOF Entities will forfeit a pro rata number of their founder shares to our sponsor. The proceeds from the sale of the forward purchase shares may be used as part of the consideration to the sellers in the initial TABLE OF CONTENTS business combination, expenses in connection with our initial business combination or for working capital in the post-transaction company. These purchases will be required to be made regardless of whether any Class A ordinary shares are redeemed by our public shareholders and are intended to provide us with a minimum funding level for our initial business combination. Founder shares As of the date of this prospectus, our sponsor held an aggregate of 8,100,000 founder shares. Prior to the transfer of 525,000 founder shares to the BSOF Entities, our sponsor held an aggregate of 8,625,000 founder shares, which were issued in exchange for a capital contribution of $25,000, or approximately $0.003 per share. Prior to the initial investment in the company of $25,000 by the sponsor, the company had no assets, tangible or intangible. The per share price of the founder shares was determined by dividing the amount contributed to the company by the number of founder shares issued. In addition, in connection with the forward purchase agreements, we issued to the anchor investors an aggregate of 3,750,000 founder shares for $0.01 per share prior to this offering. If we decrease the size of this offering, or if the underwriters do not exercise their over-allotment option in full, our sponsor will forfeit an amount of Class B ordinary shares to maintain the ownership of our sponsor (together with any permitted transferees of our sponsor s founder shares), on an as-converted basis, at 20% of the sum of (i) the total number of public shares (including any such shares issued following the exercise of the over-allotment option) plus (ii) the number of founder shares held by our sponsor (together with any permitted transferees of such founder shares) following such forfeiture. Up to 1,125,000 founder shares are subject to forfeiture by our sponsor depending on the extent to which the underwriters over-allotment option is exercised. In addition, 30% of the number of founder shares held by our sponsor, the BSOF Entities and their permitted transferees immediately following the consummation of this offering (assuming no exercise of the over-allotment option), which we refer to as the earnout shares, will be subject to forfeiture on a pro rata basis by our sponsor and the BSOF Entities on the fifth anniversary of our initial business combination unless following our initial business combination, either (A) the closing price of our Class A ordinary shares (or any successor class of ordinary shares or common shares) equals or exceeds, in the case of our sponsor, $12.50 per share, and in the case of the BSOF Entities, $12.25 per share (in each case as adjusted for share splits, dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30 consecutive trading day period or (B) we complete a liquidation, merger, share exchange or other similar transaction that results in all of our ordinary shareholders having the right to exchange their ordinary shares for consideration in cash, securities or other property which equals or exceeds, in the case of our sponsor, $12.50 per share, and in the case of the BSOF Entities, $12.25 per share (in each case as adjusted for share splits, dividends, reorganizations, recapitalizations and the like) (each, an earnout condition ). The TABLE OF CONTENTS number of earnout shares subject to forfeiture will initially be 2,250,000 (of which 157,500 are initially held by the BSOF Entities and 2,092,500 are initially held by our sponsor). In connection with the foregoing, our sponsor and the BSOF Entities have also agreed to not transfer, assign or sell any of its earnout shares until the earlier of (i) the date on which one or more of the earnout conditions has been satisfied and (ii) the date on which our sponsor and the BSOF Entities forfeit the earnout shares. See Principal Shareholders Transfers of Founder Shares and Private Placement Warrants. The founder shares are identical to the Class A ordinary shares included in the units being sold in this offering, except that: only holders of the founder shares have the right to vote on the election of directors prior to our initial business combination; the founder shares are subject to certain transfer restrictions, as described in more detail below; our initial shareholders have entered into agreements with us, pursuant to which they have agreed to (i) waive their redemption rights with respect to their founder shares and, with respect to our initial shareholders other than the anchor investors and the BSOF Entities public shares in connection with the completion of our initial business combination, (ii) waive their redemption rights with respect to their founder shares and, with respect to our initial shareholders other than the anchor investors and the BSOF Entities public shares in connection with a shareholder vote to approve an amendment to our amended and restated memorandum and articles of association that would affect the substance or timing of our obligation to redeem 100% of our public shares if we have not consummated an initial business combination within 24 months from the closing of this offering and (iii) waive their rights to liquidating distributions from the trust account with respect to their founder shares if we fail to complete our initial business combination within 24 months from the closing of this offering (although they will be entitled to liquidating distributions from the trust account with respect to any public shares they hold if we fail to complete our initial business combination within the prescribed time frame). If we submit our initial business combination to our public shareholders for a vote, our initial shareholders have agreed to vote their founder shares and, other than the BSOF Entities, any public shares purchased during or after this offering in favor of our initial business combination. As a result, in addition to our initial shareholders founder shares (excluding 493,750 founder shares held by one of our anchor investors who is restricted from voting such shares as described below), we would need 9,621,876, or approximately 32.1%, of the 30,000,000 public shares sold in this offering to be voted in favor of an initial business combination in order to have our initial business combination approved (assuming TABLE OF CONTENTS all outstanding shares are voted and the over-allotment option is not exercised). The other members of our management team have entered into agreements similar to the one entered into by our sponsor with respect to any public shares acquired by them in or after this offering; and the founder shares are automatically convertible into our Class A ordinary shares or Class C ordinary shares at the time of our initial business combination as described below adjacent to the caption Founder shares conversion and anti-dilution rights. Pursuant to its forward purchase agreement, one of the anchor investors has waived its right to vote any of its 493,750 Class B ordinary shares on any matter for so long as such shares are held by such anchor investor or any of its controlled affiliates. In addition, our sponsor, officers and directors have agreed, pursuant to a written letter agreement, not to participate in the formation of, or become an officer or director of, any other blank check company until we have entered into a definitive agreement regarding our initial business combination or we have failed to complete our initial business combination within 24 months after the closing of this offering. In connection with such letter agreement, our sponsor has agreed to transfer 240,000 founder shares to four of our independent directors (each receiving 60,000 shares) prior to the consummation of this offering. The letter agreement further provides that if any such director voluntarily resigns from or departs the board of directors, such director automatically forfeits all of the founder shares then owned by the director back to our sponsor. Transfer restrictions on founder shares Our initial shareholders (other than our sponsor, its controlled affiliates and any sponsor-affiliate) have agreed not to transfer, assign or sell any of their founder shares and any Class A ordinary shares or Class C shares issued upon conversion thereof until the earlier to occur of: (i) one year after the closing of our initial business combination or (ii) the date on which we complete a liquidation, merger, share exchange or other similar transaction after our initial business combination that results in all of our ordinary shareholders having the right to exchange their ordinary shares for cash, securities or other property; and our sponsor, its controlled affiliates and any sponsor-affiliate have agreed not to transfer, assign or sell any of their founder shares and any Class A ordinary shares or Class C shares issued upon conversion thereof until the earlier of (i) the third anniversary of the consummation of our initial business combination or (ii) the waiver of the foregoing restriction by anchor investors representing over 50% of the forward purchase shares (in either case, except as described herein under Principal Shareholders Transfers of Founder Shares and Private Placement Warrants ). In addition, our sponsor and the BSOF Entities have agreed not to transfer, assign or sell any of their earnout shares until the earlier of (i) the date on which one or more of the earnout conditions has been satisfied TABLE OF CONTENTS and (ii) the date on which our sponsor and the BSOF Entities forfeit the earnout shares. Any permitted transferees will be subject to the same applicable restrictions and other agreements of our initial shareholders with respect to any founder shares. We refer to such transfer restrictions throughout this prospectus as the lock-up. Notwithstanding the foregoing, if the closing price of our Class A ordinary shares equals or exceeds $12.00 per share (as adjusted for share splits, share dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after our initial business combination, the founder shares held by our initial shareholders (other than the earnout shares) will be released from the lock-up. In addition, we, our sponsor and our officers and directors have agreed to certain transfer restrictions for 180 days after the date of this prospectus, subject to certain exceptions. See Underwriting. Founder shares conversion and anti-dilution rights The founder shares are designated as Class B ordinary shares, par value $0.0001 per share. The Class B ordinary shares will automatically convert into Class A ordinary shares (or Class C ordinary shares, at the election of the holder) on the first business day following the consummation of our initial business combination at a ratio such that the total number of Class A ordinary shares and Class C ordinary shares issuable upon conversion of all founder shares will equal, in the aggregate, on an as-converted basis, 20% of the sum of (i) the total number of public shares, plus (ii) the sum of (a) the total number of Class A ordinary shares and Class C ordinary shares issued or deemed issued or issuable upon conversion or exercise of any equity-linked securities or rights issued or deemed issued, by us in connection with or in relation to the consummation of our initial business combination (including the forward purchase shares, but not the forward purchase warrants), excluding any Class A ordinary shares or equity-linked securities exercisable for or convertible into Class A ordinary shares issued, or to be issued, to any seller in the initial business combination and any warrants issued in a private placement to our founder or an affiliate of our founder upon conversion of working capital loans, minus (b) the number of public shares redeemed by public shareholders in connection with our initial business combination. The Class C ordinary shares have identical terms as the Class A ordinary shares, except the Class C ordinary shares do not grant their holders any voting rights. Our amended and restated memorandum and articles of association provide that the Class C ordinary shares may be converted into Class A ordinary shares on a one-for-one basis (i) at the election of the holder with 65 days written notice or (ii) upon the transfer of such Class C ordinary shares to an unaffiliated third party. Any conversion of Class B ordinary shares (or Class C ordinary shares) described herein will take effect as a redemption of Class B ordinary shares (or Class C ordinary shares) and an issuance of Class A ordinary shares or Class C ordinary shares, as applicable, as a matter of Cayman Islands law. TABLE OF CONTENTS Election of Directors; Voting Rights Prior to our initial business combination, only holders of our founder shares will have the right to vote on the election of directors (subject to any contractual restrictions on voting). Holders of our public shares will not be entitled to vote on the election of directors during such time. These provisions of our amended and restated memorandum and articles of association may only be amended by a special resolution passed by a majority of at least 90% of our ordinary shares voting in a general meeting. With respect to any other matter submitted to a vote of our shareholders, including any vote in connection with our initial business combination, except as required by law, holders of our founder shares and holders of our public shares will vote together as a single class, with each share entitling the holder to one vote. Private placement warrants Our anchor investors and the BSOF Entities have committed, pursuant to separate written agreements, to purchase an aggregate of 8,000,000 private placement warrants (or 8,900,000 if the underwriters over-allotment option is exercised in full), of which our founder has committed to purchase 2,006,041 (assuming no exercise of the over-allotment option) and the BSOF Entities have committed to purchase 560,000 in the aggregate, each exercisable to purchase one Class A ordinary share or one Class C ordinary share at $11.50 per share, at a price of $1.00 per warrant ($8,000,000 in the aggregate or $8,900,000 if the underwriters over-allotment option is exercised in full), in a private placement that will close simultaneously with the closing of this offering. If we do not complete our initial business combination within 24 months from the closing of this offering, the private placement warrants will expire worthless. The private placement warrants will be nonredeemable and exercisable on a cashless basis so long as they are held by the anchor investors, the BSOF Entities or their respective permitted transferees (except as described below under Principal Shareholders Transfers of Founder Shares and Private Placement Warrants ). If the private placement warrants are held by holders other than the initial anchor investors and the BSOF Entities or their permitted transferees, the private placement warrants will be redeemable by us and exercisable by such holders on the same basis as the warrants included in the units being sold in this offering. Transfer restrictions on private placement warrants The private placement warrants (including the Class A ordinary shares or Class C ordinary shares issuable upon exercise of the private placement warrants) will not be transferable, assignable or salable until 30 days after the completion of our initial business combination, except as described herein under Principal Shareholders Transfers of Founder Shares and Private Placement Warrants. In addition, we, our sponsor and our officers and directors have agreed to certain transfer restrictions for 180 days after the date of this prospectus, subject to certain exceptions. See Underwriting. TABLE OF CONTENTS Proceeds to be held in trust account Of the proceeds we will receive from this offering and the sale of the private placement warrants described in this prospectus, $300,000,000, or $345,000,000 if the underwriters over-allotment option is exercised in full ($10.00 per unit in either case), will be deposited into a segregated trust account located in the United States at JP Morgan Chase Bank, N.A. with Continental Stock Transfer & Trust Company acting as trustee and $8,000,000 will be used to pay expenses in connection with the closing of this offering (including a portion of the underwriting commissions) and for working capital following this offering. The proceeds to be placed in the trust account include $10,500,000 (or $12,075,000 if the underwriters over-allotment option is exercised in full) in deferred underwriting commissions. Except for the withdrawal of interest to pay our income taxes, if any, our amended and restated memorandum and articles of association, as discussed below and subject to the requirements of law and regulation, provides that none of the funds held in the trust account will be released from the trust account until the earliest of (i) the completion of our initial business combination, (ii) the redemption of our public shares if we are unable to complete our initial business combination within 24 months from the closing of this offering, subject to applicable law, or (iii) the redemption of our public shares properly submitted in connection with a shareholder vote to approve an amendment to our amended and restated memorandum and articles of association that would affect the substance or timing of our obligation to redeem 100% of our public shares if we have not consummated an initial business combination within 24 months from the closing of this offering. The proceeds deposited in the trust account could become subject to the claims of our creditors, if any, which could have priority over the claims of our public shareholders. Anticipated expenses and funding sources Unless and until we complete our initial business combination, no proceeds held in the trust account will be available for our use, except for the withdrawal of interest to pay our income taxes, if any. The proceeds held in the trust account will be invested only in U.S. government treasury obligations with a maturity of 180 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act which invest only in direct U.S. government treasury obligations. We estimate the interest earned on the trust account will be approximately $600,000 per year, assuming an interest rate of 0.2% per year; however, we can provide no assurances regarding this amount. Unless and until we complete our initial business combination, we may pay our expenses only from: the net proceeds of this offering not held in the trust account, which will be approximately $1,000,000 in working capital after the payment of approximately $1,000,000 in expenses relating to this offering (other than underwriting commissions); and any loans or additional investments from our founder or an affiliate of our founder, although they are under no TABLE OF CONTENTS obligation to advance funds or invest in us, and provided any such loans will not have any claim on the proceeds held in the trust account unless such proceeds are released to us upon completion of our initial business combination. Conditions to completing our initial business combination NYSE rules require that our initial business combination must occur with one or more target businesses that together have an aggregate fair market value of at least 80% of our assets held in the trust account (excluding the deferred underwriting commissions and taxes payable on the interest earned on the trust account) at the time of our signing a definitive agreement in connection with our initial business combination. If our board of directors is not able to independently determine the fair market value of the target business or businesses, we will obtain an opinion from an independent investment banking firm which is a member of FINRA or a valuation or appraisal firm. While we consider it unlikely that our board of directors will not be able to make an independent determination of the fair market value of a target business or businesses, it may be unable to do so if the board of directors is less familiar or experienced with the target company s business, there is a significant amount of uncertainty as to the value of the company s assets or prospects, including if such company is at an early stage of development, operations or growth, or if the anticipated transaction involves a complex financial analysis or other specialized skills and the board of directors determines that outside expertise would be helpful or necessary in conducting such analysis. Since any opinion, if obtained, would merely state that the fair market value of the target business meets the 80% of assets threshold, unless such opinion includes material information regarding the valuation of a target business or the consideration to be provided, it is not anticipated that copies of such opinion would be distributed to our shareholders. However, if required under applicable law, any proxy statement that we deliver to shareholders and file with the SEC in connection with a proposed transaction will include such opinion. We will complete our initial business combination only if the post-transaction company in which our public shareholders own shares will own or acquire 50% or more of the outstanding voting securities of the target or is otherwise not required to register as an investment company under the Investment Company Act. Even if the post-transaction company owns or acquires 50% or more of the voting securities of the target, our shareholders prior to our initial business combination may collectively own a minority interest in the post-business combination company, depending on valuations ascribed to the target and us in the business combination transaction. If less than 100% of the equity interests or assets of a target business or businesses are owned or acquired by the post-transaction company, the portion of such business or businesses that is owned or acquired is what will be valued for purposes of the 80% of net assets test, provided that in the event that the business combination involves more than one target business, the 80% of net assets test will be based on the aggregate value of all of the target businesses and we will treat the TABLE OF CONTENTS target businesses together as the initial business combination for purposes of a tender offer or for seeking shareholder approval, as applicable. Permitted purchases of public shares and public warrants by our affiliates If we seek shareholder approval of our initial business combination and we do not conduct redemptions in connection with our initial business combination pursuant to the tender offer rules, our initial shareholders, directors, executive officers, advisors or any of their affiliates may purchase shares or public warrants in privately negotiated transactions or in the open market either prior to or following the completion of our initial business combination. However, they have no current commitments, plans or intentions to engage in such transactions and have not formulated any terms or conditions for any such transactions. None of the funds held in the trust account will be used to purchase shares or public warrants in such transactions. If they engage in such transactions, they will not make any such purchases when they are in possession of any material nonpublic information not disclosed to the seller or if such purchases are prohibited by Regulation M under the Securities Exchange Act of 1934, as amended, or the Exchange Act. We do not currently anticipate that such purchases, if any, would constitute a tender offer subject to the tender offer rules under the Exchange Act or a going-private transaction subject to the going-private rules under the Exchange Act; however, if the purchasers determine at the time of any such purchases that the purchases are subject to such rules, the purchasers will comply with such rules. Any such purchases will be reported pursuant to Section 13 and Section 16 of the Exchange Act to the extent such purchasers are subject to such reporting requirements. See Proposed Business Permitted purchases of our securities for a description of how our initial shareholders, directors, executive officers, advisors or any of their affiliates will select which shareholders to purchase securities from in any private transaction. The purpose of any such purchases of shares could be to vote such shares in favor of the business combination and thereby increase the likelihood of obtaining shareholder approval of the business combination or to satisfy a closing condition in an agreement with a target that requires us to have a minimum net worth or a certain amount of cash at the closing of our initial business combination, where it appears that such requirement would otherwise not be met. The purpose of any such purchases of public warrants could be to reduce the number of public warrants outstanding or to vote such warrants on any matters submitted to the warrantholders for approval in connection with our initial business combination. Any such purchases of our securities may result in the completion of our initial business combination that may not otherwise have been possible. In addition, if such purchases are made, the public float of our Class A ordinary shares or warrants may be reduced and the TABLE OF CONTENTS number of beneficial holders of our securities may be reduced, which may make it difficult to maintain or obtain the quotation, listing or trading of our securities on a national securities exchange. Redemption rights for public shareholders upon completion of our initial business combination We will provide our public shareholders with the opportunity to redeem all or a portion of their public shares upon the completion of our initial business combination at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account calculated as of two business days prior to the consummation of our initial business combination, including interest (net of taxes payable), divided by the number of then outstanding public shares, subject to the limitations described herein. The amount in the trust account is initially anticipated to be $10.00 per public share. The per share amount we will distribute to investors who properly redeem their shares will not be reduced by the deferred underwriting commissions we will pay to the underwriters. There will be no redemption rights upon the completion of our initial business combination with respect to our warrants. Our initial shareholders have entered into agreements with us, pursuant to which they have agreed to waive their redemption rights with respect to their founder shares and, with respect to our initial shareholders other than the anchor investors and the BSOF Entities, any public shares they may acquire during or after this offering in connection with the completion of our initial business combination. The other members of our management team have entered into agreements similar to the one entered into by our sponsor with respect to any public shares acquired by them in or after this offering. Limitations on redemptions Our amended and restated memorandum and articles of association provide that in no event will we redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001 (so that we are not subject to the SEC s penny stock rules). However, a greater net tangible asset or cash requirement may be contained in the agreement relating to our initial business combination. For example, the proposed business combination may require: (i) cash consideration to be paid to the target or its owners, (ii) cash to be transferred to the target for working capital or other general corporate purposes or (iii) the retention of cash to satisfy other conditions in accordance with the terms of the proposed business combination. In the event the aggregate cash consideration we would be required to pay for all Class A ordinary shares that are validly submitted for redemption plus any amount required to satisfy cash conditions pursuant to the terms of the proposed business combination exceed the aggregate amount of cash available to us, we will not complete the business combination or redeem any shares, and all Class A ordinary shares submitted for redemption will be returned to the holders thereof. TABLE OF CONTENTS Manner of conducting redemptions We will provide our public shareholders with the opportunity to redeem all or a portion of their public shares upon the completion of our initial business combination either (i) in connection with a shareholder meeting called to approve the business combination or (ii) by means of a tender offer. The decision as to whether we will seek shareholder approval of a proposed business combination or conduct a tender offer will be made by us, solely in our discretion, and will be based on a variety of factors such as the timing of the transaction and whether the terms of the transaction would require us to seek shareholder approval under applicable law or stock exchange listing requirement. Asset acquisitions and share purchases would not typically require shareholder approval, while direct mergers with our company where we do not survive and any transactions where we issue more than 20% of our outstanding Class A ordinary shares or seek to amend our amended and restated memorandum and articles of association would require shareholder approval. We currently intend to conduct redemptions in connection with a shareholder vote unless shareholder approval is not required by applicable law or stock exchange listing requirement and we choose to conduct redemptions pursuant to the tender offer rules of the SEC for business or other legal reasons. If we hold a shareholder vote to approve our initial business combination, we will: conduct the redemptions in conjunction with a proxy solicitation pursuant to Regulation 14A of the Exchange Act, which regulates the solicitation of proxies, and not pursuant to the tender offer rules; and file proxy materials with the SEC. If we seek shareholder approval, we will complete our initial business combination only if a majority of the ordinary shares voted are voted in favor of the business combination. In such case, our initial shareholders have agreed to vote their founder shares and, other than the BSOF Entities, any public shares purchased during or after this offering in favor of our initial business combination. As a result, in addition to our initial shareholders founder shares (excluding 493,750 founder shares held by one of our anchor investors who is restricted from voting such shares), we would need 9,621,876, or approximately 32.1%, of the 30,000,000 public shares sold in this offering to be voted in favor of an initial business combination in order to have our initial business combination approved (assuming all outstanding shares are voted and the over-allotment option is not exercised). The other members of our management team have entered into agreements similar to the one entered into by our sponsor with respect to any public shares acquired by them in or after this offering. Each public shareholder may elect to redeem their public shares irrespective of whether they vote for or against the proposed transaction or vote at all. Our amended and restated memorandum and articles of association require that at least five days notice will be given of any such shareholder meeting. We TABLE OF CONTENTS intend to give approximately 30 days, but not less than 10 days, nor more than 60 days, prior written notice of any such meeting, if required, at which a vote will be taken to approve our initial business combination. If we conduct redemptions pursuant to the tender offer rules of the SEC, we will, pursuant to our amended and restated memorandum and articles of association: conduct the redemptions pursuant to Rule 13e-4 and Regulation 14E of the Exchange Act, which regulate issuer tender offers; and file tender offer documents with the SEC prior to completing our initial business combination which contain substantially the same financial and other information about the initial business combination and the redemption rights as is required under Regulation 14A of the Exchange Act, which regulates the solicitation of proxies. Upon the public announcement of our initial business combination, if we elect to conduct redemption pursuant to the tender offer rules, we or our sponsor will terminate any plan established in accordance with Rule 10b5-1 to purchase our Class A ordinary shares in the open market, in order to comply with Rule 14e-5 under the Exchange Act. In the event we conduct redemptions pursuant to the tender offer rules, our offer to redeem will remain open for at least 20 business days, in accordance with Rule 14e-1(a) under the Exchange Act, and we will not be permitted to complete our initial business combination until the expiration of the tender offer period. In addition, the tender offer will be conditioned on public shareholders not tendering more than the number of public shares we are permitted to redeem. If public shareholders tender more shares than we have offered to purchase, we will withdraw the tender offer and not complete such initial business combination. Limitation on redemption rights of shareholders holding 20% or more of the public shares if we hold shareholder vote Notwithstanding the foregoing redemption rights, if we seek shareholder approval of our initial business combination and we do not conduct redemptions in connection with our initial business combination pursuant to the tender offer rules, our amended and restated memorandum and articles of association provide that a public shareholder, together with any affiliate of such shareholder or any other person with whom such shareholder is acting in concert or as a group (as defined under Section 13 of the Exchange Act), will be restricted from redeeming its shares with respect to more than an aggregate of 20% of the public shares, without our prior consent. We believe the restriction described above will discourage shareholders from accumulating large blocks of shares, and subsequent attempts by such holders to use their ability to redeem their shares as a means to force us or our management to purchase their shares at a TABLE OF CONTENTS significant premium to the then-current market price or on other undesirable terms. Absent this provision, a public shareholder holding more than an aggregate of 20% of the public shares could threaten to exercise its redemption rights against a business combination if such holder s shares are not purchased by us, our sponsor or our management at a premium to the then-current market price or on other undesirable terms. By limiting our shareholders ability to redeem to no more than 20% of the public shares, we believe we will limit the ability of a small group of shareholders to unreasonably attempt to block our ability to complete our initial business combination, particularly in connection with a business combination with a target that requires as a closing condition that we have a minimum net worth or a certain amount of cash. However, we would not be restricting our shareholders ability to vote all of their shares (including all shares held by those shareholders that hold more than 20% of the public shares) for or against our initial business combination. Release of funds in trust account on closing of our initial business combination On the completion of our initial business combination, the funds held in the trust account will be used to pay amounts due to any public shareholders who exercise their redemption rights as described above under Redemption rights for public shareholders upon completion of our initial business combination, to pay the underwriters their deferred underwriting commissions, to pay all or a portion of the consideration payable to the target or owners of the target of our initial business combination and to pay other expenses associated with our initial business combination. If our initial business combination is paid for using equity or debt securities or not all of the funds released from the trust account are used for payment of the consideration in connection with our initial business combination, we may apply the balance of the cash released to us from the trust account for general corporate purposes, including for maintenance or expansion of operations of post-transaction businesses, the payment of principal or interest due on indebtedness incurred in completing our initial business combination, to fund the purchase of other companies or for working capital. Redemption of public shares and distribution and liquidation if no initial business combination Our amended and restated memorandum and articles of association provide that we will have only 24 months from the closing of this offering to complete our initial business combination. If we are unable to complete our initial business combination within such 24-month period, we will: (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest (less up to $100,000 of interest to pay dissolution expenses and net of taxes payable), divided by the number of then outstanding public shares, which redemption will TABLE OF CONTENTS completely extinguish public shareholders rights as shareholders (including the right to receive further liquidation distributions, if any) and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining shareholders and our board of directors, liquidate and dissolve, subject in the case of clauses (ii) and (iii), to our obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law. There will be no redemption rights or liquidating distributions with respect to our warrants, which will expire worthless if we fail to complete our initial business combination within the 24-month time period. Our initial shareholders have entered into agreements with us, pursuant to which they have waived their rights to liquidating distributions from the trust account with respect to their founder shares if we fail to complete our initial business combination within 24 months from the closing of this offering. However, if our initial shareholders or management team acquire public shares in or after this offering, they will be entitled to liquidating distributions from the trust account with respect to such public shares if we fail to complete our initial business combination within the allotted 24-month time frame. The underwriters have agreed to waive their rights to their deferred underwriting commission held in the trust account in the event we do not complete our initial business combination within 24 months from the closing of this offering and, in such event, such amounts will be included with the funds held in the trust account that will be available to fund the redemption of our public shares. Our sponsor, executive officers and directors have agreed, pursuant to a written agreement with us, that they will not propose any amendment to our amended and restated memorandum and articles of association that would affect the substance or timing of our obligation to redeem 100% of our public shares if we do not complete our initial business combination within 24 months from the closing of this offering, unless we provide our public shareholders with the opportunity to redeem their Class A ordinary shares upon approval of any such amendment at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest (net of taxes payable), divided by the number of then outstanding public shares, subject to the limitations described above under Limitations on redemptions. For example, our board of directors may propose such an amendment if it determines that additional time is necessary to complete our initial business combination. In such event, we will conduct a proxy solicitation and distribute proxy materials pursuant to Regulation 14A of the Exchange Act seeking shareholder approval of such proposal and, in connection therewith, provide our public shareholders with the redemption rights described above upon shareholder approval of such amendment. Limited payments to insiders There will be no finder s fees, reimbursements or cash payments made by us to our sponsor, officers or directors, or our or their affiliates (including our founder), for services rendered to us prior TABLE OF CONTENTS to or in connection with the completion of our initial business combination, other than the following payments, none of which will be made from the proceeds of this offering held in the trust account prior to the completion of our initial business combination: Repayment of up to an aggregate of $200,000 in loans made to us by our sponsor to cover offering-related and organizational expenses; Reimbursement for office space, secretarial and administrative services provided to us by our sponsor or an affiliate of our sponsor, in an amount not to exceed $10,000 per month; Reimbursement for any out-of-pocket expenses related to identifying, investigating, negotiating and completing an initial business combination; and Repayment of loans which may be made by our founder or an affiliate of our founder to finance transaction costs in connection with an intended initial business combination. Up to $1,500,000 of such loans may be convertible into warrants of the post business combination entity at a price of $1.00 per warrant at the option of the lender. The warrants would be identical to the private placement warrants. Except for the foregoing, the terms of such loans, if any, have not been determined and no written agreements exist with respect to such loans. Audit Committee We will establish and maintain an audit committee, which will be composed entirely of independent directors. Among its responsibilities, the audit committee will review on a quarterly basis all payments that were made to our sponsor, officers or directors, or our or their affiliates and monitor compliance with the other terms relating to this offering. If any noncompliance is identified, then the audit committee will be charged with the responsibility to promptly take all action necessary to rectify such noncompliance or otherwise to cause compliance with the terms of this offering. For more information, see the section entitled Management Committees of the Board of Directors Audit Committee. Risks We are a newly formed company that has conducted no operations and has generated no revenues. Until we complete our initial business combination, we will have no operations and will generate no operating revenues. In making your decision whether to invest in our securities, you should take into account not only the background of our management team, but also the special risks we face as a blank check company. This offering is not being conducted in compliance with Rule 419 promulgated under the Securities Act. Accordingly, you will not be entitled to protections normally afforded to investors in Rule 419 blank check offerings. For additional information concerning how Rule 419 blank check offerings differ from this offering, please see Proposed Business Comparison of This Offering to Those of Blank Check Companies Subject to Rule 419. You should carefully consider these and the other risks set forth in the section entitled Risk Factors beginning on page 32 of this prospectus. TABLE OF CONTENTS SUMMARY FINANCIAL DATA The following table summarizes the relevant financial data for our business and should be read with our financial statements, which are included in this prospectus. We have not had any significant operations to date, so only balance sheet data is presented. September 30, 2017 Actual As Adjusted Balance Sheet Data: Working capital (deficiency)(1) $ (613,638) $ 290,554,037 Total assets(2) $ 677,442 $ 301,054,037 Total liabilities(3) $ 660,905 $ 10,500,000 Value of Class A ordinary shares that may be redeemed in connection with our initial business combination ($10.00 per share)(4) $ $ 285,554,030 Shareholders equity(5)(6) $ 16,537 $ 5,000,007 (1) The as adjusted calculation includes $300,000,000 cash held in trust from the proceeds of this offering and the sale of the private placement warrants, plus $1,000,000 in cash held outside the trust account, plus $16,537 of actual shareholder s equity as of September 30, 2017, plus $37,500 in proceeds from the issuance of 3,750,000 founder shares to the anchor investors in a private placement prior to this offering, less deferred underwriting fees of $10,500,000. (2) The as adjusted calculation equals $300,000,000 cash held in trust from the proceeds of this offering and the sale of the private placement warrants, plus $1,000,000 in cash held outside the trust account, plus $16,537 of actual shareholder s equity as of September 30, 2017, plus $37,500 in proceeds from the issuance of 3,750,000 founder shares to the anchor investors in a private placement prior to this offering. (3) The as adjusted calculation includes $10,500,000 of deferred underwriting commissions. As of September 30, 2017, we had borrowed $91,993 under the promissory note with our sponsor. (4) The as adjusted calculation equals the as adjusted total assets, less the as adjusted total liabilities, less the as adjusted shareholders equity, which is set to approximate the minimum net tangible assets threshold of at least $5,000,001. (5) Excludes 28,555,403 public shares which are subject to redemption in connection with our initial business combination. The as adjusted calculation equals the as adjusted total assets, less the as adjusted total liabilities, less the value of Class A ordinary shares that may be redeemed in connection with our initial business combination (initially $10.00 per share). (6) The actual calculation includes 8,625,000 founder shares held by our sponsor as of the date of this prospectus. The as adjusted calculation includes the 3,750,000 founder shares to be issued to the anchor investors in private placements prior to this offering in connection with the forward purchase agreements. The founder shares issued to the anchor investors are subject to similar contractual conditions and restrictions as the founder shares issued to our sponsor, including restrictions on the ability to redeem such shares. The as adjusted information gives effect to the sale of the units in this offering, the sale of the private placement warrants, repayment of up to an aggregate of $200,000 in loans made to us by our sponsor and the payment of the estimated expenses of this offering and assumes no exercise of the underwriters over-allotment option and the forfeiture by our sponsor of 1,125,000 founder shares. The as adjusted information excludes gross proceeds of approximately $150,000,000 from the sale of forward purchase shares to close concurrently with the consummation of our initial business combination. TABLE OF CONTENTS If no initial business combination is completed within 24 months from the closing of this offering, the proceeds then on deposit in the trust account, including interest (less up to $100,000 of interest to pay dissolution expenses and net of taxes payable), will be used to fund the redemption of our public shares. Our initial shareholders have entered into agreements with us in which they have agreed to waive their rights to liquidating distributions from the trust account with respect to their founder shares if we fail to complete our initial business combination within 24 months. TABLE OF CONTENTS Risk Factors An investment in our securities involves a high degree of risk. You should consider carefully all of the risks described below, together with the other information contained in this prospectus, before making a decision to invest in our units. If any of the following events occur, our business, financial condition and operating results may be materially adversely affected. In that event, the trading price of our securities could decline, and you could lose all or part of your investment. We are a recently formed company with no operating history and no revenues, and you have no basis on which to evaluate our ability to achieve our business objective. We are a recently formed company incorporated under the laws of the Cayman Islands with no operating results, and we will not commence operations until obtaining funding through this offering. Because we lack an operating history, you have no basis upon which to evaluate our ability to achieve our business objective of completing our initial business combination with one or more target businesses. We have no plans, arrangements or understandings with any prospective target business concerning a business combination and may be unable to complete our initial business combination. If we fail to complete our initial business combination, we will never generate any operating revenues. Our shareholders may not be afforded an opportunity to vote on our proposed initial business combination, which means we may complete our initial business combination even though a majority of our shareholders do not support such a combination. We may choose not to hold a shareholder vote before we complete our initial business combination if the business combination would not require shareholder approval under applicable law or stock exchange listing requirement. Except for as required by applicable law or stock exchange requirement, the decision as to whether we will seek shareholder approval of a proposed business combination or will allow shareholders to sell their shares to us in a tender offer will be made by us, solely in our discretion, and will be based on a variety of factors, such as the timing of the transaction and whether the terms of the transaction would otherwise require us to seek shareholder approval. Accordingly, we may complete our initial business combination even if holders of a majority of our ordinary shares do not approve of the business combination we complete. Please see the section entitled Proposed Business Shareholders May Not Have the Ability to Approve Our Initial Business Combination for additional information. Your only opportunity to affect the investment decision regarding a potential business combination may be limited to the exercise of your right to redeem your shares from us for cash. At the time of your investment in us, you will not be provided with an opportunity to evaluate the specific merits or risks of one or more target businesses. Since our board of directors may complete a business combination without seeking shareholder approval, public shareholders may not have the right or opportunity to vote on the business combination, unless we seek such shareholder vote. Accordingly, your only opportunity to affect the investment decision regarding a potential business combination may be limited to exercising your redemption rights within the period of time (which will be at least 20 business days) set forth in our tender offer documents mailed to our public shareholders in which we describe our initial business combination. If we seek shareholder approval of our initial business combination, our initial shareholders (other than the BSOF Entities with respect to any of their public shares, if any) and management team have agreed to vote in favor of such initial business combination, regardless of how our public shareholders vote. Our initial shareholders will own, on an as-converted basis, approximately 26.4% of our outstanding Class A ordinary shares immediately following the consummation of this offering (assuming they do not purchase any units in this offering and the underwriters do not exercise their over-allotment option and excluding 493,750 Class B ordinary shares held by one of our anchor investors who is expected to elect to convert such shares into Class C ordinary shares). Our initial shareholders and management team also may from time to time purchase Class A ordinary shares prior to our initial business combination; however, the BSOF Entities are not required to vote any of their public shares acquired from time to time in favor of our initial business combination. Our amended and restated memorandum and articles of association provides TABLE OF CONTENTS that, if we seek shareholder approval of an initial business combination, such initial business combination will be approved if we receive the affirmative vote of a majority of the shares voted at such meeting, including the founder shares. As a result, in addition to our initial shareholders founder shares (excluding 493,750 founder shares held by one of our anchor investors who is restricted from voting such shares), we would need 9,621,876, or approximately 32.1%, of the 30,000,000 public shares sold in this offering to be voted in favor of an initial business combination in order to have our initial business combination approved (assuming all outstanding shares are voted and the over-allotment option is not exercised). Accordingly, if we seek shareholder approval of our initial business combination, the agreement by our initial shareholders (other than the BSOF Entities with respect to any of their public shares, if any) and management team to vote in favor of our initial business combination will increase the likelihood that we will receive the requisite shareholder approval for such initial business combination. In evaluating a prospective target business for our initial business combination, our management will rely on the availability of all of the funds from the sale of the forward purchase shares to be used as part of the consideration to the sellers in the initial business combination. If the sale of some or all of the forward purchase shares fails to close, we may lack sufficient funds to consummate our initial business combination. We have entered into forward purchase agreements pursuant to which the anchor investors have agreed to purchase an aggregate of 15,000,000 forward purchase shares plus 5,000,000 redeemable warrants for a purchase price of $10.00 per forward purchase share, or $150,000,000 in the aggregate, in a private placement to close concurrently with our initial business combination. The funds from the sale of forward purchase shares may be used as part of the consideration to the sellers in our initial business combination, expenses in connection with our initial business combination or for working capital in the post-transaction company. The obligations under the forward purchase agreements do not depend on whether any public shareholders elect to redeem their shares and provide us with a minimum funding level for the initial business combination. However, if the sale of the forward purchase shares does not close for any reason, including by reason of the failure by some or all of the anchor investors to fund the purchase price for their forward purchase shares, for example, we may lack sufficient funds to consummate our initial business combination. Further, the forward purchase agreements provide that prior to signing a definitive agreement with respect to a potential initial business combination, and prior to making any material amendment to such definitive agreement following signing, anchor investors representing over 50% of the forward purchase shares must approve such potential initial business combination or amendment, as applicable. If we fail to obtain such approval, we may not be able to consummate our initial business combination. Additionally, the anchor investors obligations to purchase the forward purchase shares are subject to termination prior to the closing of the sale of the forward purchase shares by mutual written consent of the company and each anchor investor, or, automatically: (i) if this offering is not consummated on or prior to May 5, 2018; (ii) if the gross proceeds from this offering do not equal or exceed $200,000,000; (iii) if our initial business combination is not consummated within 24 months from the closing of this offering; (iv) upon the death of Mr. Asali; (v) if Mr. Asali, our sponsor or the Company becomes subject to any voluntary or involuntary petition under the United States federal bankruptcy laws or any state insolvency law, in each case which is not withdrawn within sixty (60) days after being filed, or a receiver, fiscal agent or similar officer is appointed by a court for business or property of Mr. Asali, our sponsor or the company, in each case which is not removed, withdrawn or terminated within sixty (60) days after such appointment; or (vi) if Mr. Asali is indicted and/or convicted in a criminal proceeding for a crime involving fraud or dishonesty. The anchor investors obligations to purchase their forward purchase shares are subject to fulfillment of customary closing conditions, including the following: (i) our initial business combination must be consummated substantially concurrently with, and immediately following, the purchase of forward purchase shares; and (ii) the company must have delivered to the anchor investors a certificate evidencing the company s good standing as a Cayman Islands exempted company, as of a date within ten (10) business days of the closing of the sale of forward purchase shares. In the event of any such failure to fund by an anchor investor, any obligation is so terminated or any such condition is not satisfied and not waived by an anchor investor, we may not be able to obtain additional funds to account for such shortfall on terms favorable to us or at all. Any such shortfall would also reduce the amount of funds that we have available for working capital of the post-business combination company. While each anchor investor has represented to us that it has sufficient funds to satisfy its obligations under the respective forward purchase agreements, we have not obligated the anchor investors to reserve funds for such obligations. TABLE OF CONTENTS If the anchor investors or the BSOF Entities purchase large amounts of public shares in the open market, they may attempt to leverage their redemption rights in order to affect the outcome of a potential initial business combination. The anchor investors and the BSOF Entities have redemption rights with respect to any public shares they own, subject to the limitation that under the Company s amended and restated memorandum and articles of association that a public shareholder, together with any affiliate of such shareholder or any other person with whom such shareholder is acting in concert or as a group (as defined under Section 13 of Exchange Act), is restricted from redeeming its shares with respect to more than an aggregate of 20% or more of the public shares, without the prior consent of the Company. If management proposes an initial business combination that some or all of the anchor investors or the BSOF Entities are not in favor, such anchor investors or BSOF Entities may decide to purchase public shares in the open market and seek to leverage their redemption rights to influence whether such business combination is consummated. This could result in our having to negotiate for more favorable terms for the anchor investors, which could jeopardize our ability to successfully consummate an initial business combination. See In evaluating a prospective target business for our initial business combination, our management will rely on the availability of all of the funds from the sale of the forward purchase shares to be used as part of the consideration to the sellers in the initial business combination. If the sale of some or all of the forward purchase shares fails to close, we may lack sufficient funds to consummate our initial business combination. The ability of our public shareholders to redeem their shares for cash may make our financial condition unattractive to potential business combination targets, which may make it difficult for us to enter into a business combination with a target. We may seek to enter into a business combination transaction agreement with a prospective target that requires as a closing condition that we have a minimum net worth or a certain amount of cash. If too many public shareholders exercise their redemption rights, we would not be able to meet such closing condition and, as a result, would not be able to proceed with the business combination. Furthermore, in no event will we redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001 (so that we are not subject to the SEC s penny stock rules). Consequently, if accepting all properly submitted redemption requests would cause our net tangible assets to be less than $5,000,001 or such greater amount necessary to satisfy a closing condition as described above, we would not proceed with such redemption and the related business combination and may instead search for an alternate business combination. Prospective targets will be aware of these risks and, thus, may be reluctant to enter into a business combination transaction with us. The ability of our public shareholders to exercise redemption rights with respect to a large number of our shares may not allow us to complete the most desirable business combination or optimize our capital structure. At the time we enter into an agreement for our initial business combination, we will not know how many shareholders may exercise their redemption rights, and therefore will need to structure the transaction based on our expectations as to the number of shares that will be submitted for redemption. If our initial business combination agreement requires us to use a portion of the cash in the trust account to pay the purchase price, or requires us to have a minimum amount of cash at closing, we will need to reserve a portion of the cash in the trust account to meet such requirements, or arrange for third party financing. In addition, if a larger number of shares are submitted for redemption than we initially expected, we may need to restructure the transaction to reserve a greater portion of the cash in the trust account or arrange for third party financing. Raising additional third party financing may involve dilutive equity issuances or the incurrence of indebtedness at higher than desirable levels. The above considerations may limit our ability to complete the most desirable business combination available to us or optimize our capital structure. The amount of the deferred underwriting commissions payable to the underwriters will not be adjusted for any shares that are redeemed in connection with an initial business combination. The per-share amount we will distribute to shareholders who properly exercise their redemption rights will not be reduced by the deferred underwriting commission and after such redemptions, the amount held in trust will continue to reflect our obligation to pay the entire deferred underwriting commissions. TABLE OF CONTENTS The ability of our public shareholders to exercise redemption rights with respect to a large number of our shares could increase the probability that our initial business combination would be unsuccessful and that you would have to wait for liquidation in order to redeem your shares. If our initial business combination agreement requires us to use a portion of the cash in the trust account to pay the purchase price, or requires us to have a minimum amount of cash at closing, the probability that our initial business combination would be unsuccessful is increased. If our initial business combination is unsuccessful, you would not receive your pro rata portion of the trust account until we liquidate the trust account. If you are in need of immediate liquidity, you could attempt to sell your shares in the open market; however, at such time our shares may trade at a discount to the pro rata amount per share in the trust account. In either situation, you may suffer a material loss on your investment or lose the benefit of funds expected in connection with our redemption until we liquidate or you are able to sell your shares in the open market. The requirement that we complete our initial business combination within 24 months after the closing of this offering may give potential target businesses leverage over us in negotiating a business combination and may limit the time we have in which to conduct due diligence on potential business combination targets as we approach our dissolution deadline, which could undermine our ability to complete our initial business combination on terms that would produce value for our shareholders. Any potential target business with which we enter into negotiations concerning a business combination will be aware that we must complete our initial business combination within 24 months from the closing of this offering. Consequently, such target business may obtain leverage over us in negotiating a business combination, knowing that if we do not complete our initial business combination with that particular target business, we may be unable to complete our initial business combination with any target business. This risk will increase as we get closer to the timeframe described above. In addition, we may have limited time to conduct due diligence and may enter into our initial business combination on terms that we would have rejected upon a more comprehensive investigation. We may not be able to complete our initial business combination within 24 months after the closing of this offering, in which case we would cease all operations except for the purpose of winding up and we would redeem our public shares and liquidate. We may not be able to find a suitable target business and complete our initial business combination within 24 months after the closing of this offering. Our ability to complete our initial business combination may be negatively impacted by general market conditions, volatility in the capital and debt markets and the other risks described herein. If we have not completed our initial business combination within such time period, we will: (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest (less up to $100,000 of interest to pay dissolution expenses and net of taxes payable), divided by the number of then outstanding public shares, which redemption will completely extinguish public shareholders rights as shareholders (including the right to receive further liquidation distributions, if any) and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining shareholders and our board of directors, liquidate and dissolve, subject in the case of clauses (ii) and (iii), to our obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law. If we seek shareholder approval of our initial business combination, our initial shareholders, sponsor, directors, executive officers, advisors and their affiliates may elect to purchase shares or public warrants from public shareholders, which may influence a vote on a proposed business combination and reduce the public float of our Class A ordinary shares. If we seek shareholder approval of our initial business combination and we do not conduct redemptions in connection with our initial business combination pursuant to the tender offer rules, our sponsor, directors, executive officers, advisors or their affiliates may purchase shares or public warrants in privately negotiated transactions or in the open market either prior to or following the completion of our initial business combination, although they are under no obligation to do so. However, other than as TABLE OF CONTENTS expressly stated herein, they have no current commitments, plans or intentions to engage in such transactions and have not formulated any terms or conditions for any such transactions. None of the funds in the trust account will be used to purchase shares or public warrants in such transactions. In the event that our sponsor, directors, executive officers, advisors or their affiliates purchase shares in privately negotiated transactions from public shareholders who have already elected to exercise their redemption rights, such selling shareholders would be required to revoke their prior elections to redeem their shares. The purpose of any such purchases of shares could be to vote such shares in favor of the business combination and thereby increase the likelihood of obtaining shareholder approval of the business combination or to satisfy a closing condition in an agreement with a target that requires us to have a minimum net worth or a certain amount of cash at the closing of our initial business combination, where it appears that such requirement would otherwise not be met. The purpose of any such purchases of public warrants could be to reduce the number of public warrants outstanding or to vote such warrants on any matters submitted to the warrantholders for approval in connection with our initial business combination. Any such purchases of our securities may result in the completion of our initial business combination that may not otherwise have been possible. Any such purchases will be reported pursuant to Section 13 and Section 16 of the Exchange Act to the extent such purchasers are subject to such reporting requirements. See Proposed Business Permitted purchases of our securities for a description of how our sponsor, directors, executive officers, advisors or any of their affiliates will select which shareholders to purchase securities from in any private transaction. In addition, if such purchases are made, the public float of our Class A ordinary shares or public warrants and the number of beneficial holders of our securities may be reduced, possibly making it difficult to maintain or obtain the quotation, listing or trading of our securities on a national securities exchange. If a shareholder fails to receive notice of our offer to redeem our public shares in connection with our initial business combination, or fails to comply with the procedures for tendering its shares, such shares may not be redeemed. We will comply with the proxy rules or tender offer rules, as applicable, when conducting redemptions in connection with our initial business combination. Despite our compliance with these rules, if a shareholder fails to receive our proxy solicitation or tender offer materials, as applicable, such shareholder may not become aware of the opportunity to redeem its shares. In addition, the proxy solicitation or tender offer materials, as applicable, that we will furnish to holders of our public shares in connection with our initial business combination will describe the various procedures that must be complied with in order to validly redeem or tender public shares. In the event that a shareholder fails to comply with these procedures, its shares may not be redeemed. See Proposed Business Business Strategy Tendering share certificates in connection with a tender offer or redemption rights. You will not have any rights or interests in funds from the trust account, except under certain limited circumstances. Therefore, to liquidate your investment, you may be forced to sell your public shares or warrants, potentially at a loss. Our public shareholders will be entitled to receive funds from the trust account only upon the earlier to occur of: (i) our completion of an initial business combination, and then only in connection with those Class A ordinary shares that such shareholder properly elected to redeem, subject to the limitations described herein, (ii) the redemption of any public shares properly tendered in connection with a shareholder vote to amend our amended and restated memorandum and articles of association to modify the substance or timing of our obligation to redeem 100% of our public shares if we do not complete our initial business combination within 24 months from the closing of this offering and (iii) the redemption of our public shares if we are unable to complete an initial business combination within 24 months from the closing of this offering, subject to applicable law and as further described herein. In no other circumstances will a public shareholder have any right or interest of any kind in the trust account. Holders of warrants will not have any right to the proceeds held in the trust account with respect to the warrants. Accordingly, to liquidate your investment, you may be forced to sell your public shares or warrants, potentially at a loss. TABLE OF CONTENTS The NYSE may delist our securities from trading on its exchange, which could limit investors ability to make transactions in our securities and subject us to additional trading restrictions. We have applied to have our units listed on the NYSE on or promptly after the date of this prospectus and our Class A ordinary shares and warrants on or promptly after their date of separation. We cannot guarantee that our securities will be approved for listing on the NYSE. Although after giving effect to this offering we expect to meet, on a pro forma basis, the minimum initial listing standards set forth in the NYSE listing standards, we cannot assure you that our securities will be, or will continue to be, listed on the NYSE in the future or prior to our initial business combination. In order to continue listing our securities on the NYSE prior to our initial business combination, we must maintain certain financial, distribution and share price levels. Generally, we must maintain a minimum average global market capitalization (generally $50,000,000) and a minimum number of holders of our securities (generally 300 shareholders and 100 public warrant holders). Additionally, in connection with our initial business combination, we will be required to demonstrate compliance with the NYSE s initial listing requirements, which are more rigorous than the NYSE s continued listing requirements, in order to continue to maintain the listing of our securities on the NYSE. For instance, our share price would generally be required to be at least $4.00 per share. We cannot assure you that we will be able to meet those initial listing requirements at that time. If the NYSE delists our securities from trading on its exchange and we are not able to list our securities on another national securities exchange, we expect our securities could be quoted on an over-the-counter market. If this were to occur, we could face significant material adverse consequences, including: a limited availability of market quotations for our securities; reduced liquidity for our securities; a determination that our Class A ordinary shares are a penny stock which will require brokers trading in our Class A ordinary shares to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our securities; a limited amount of news and analyst coverage; and a decreased ability to issue additional securities or obtain additional financing in the future. The National Securities Markets Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating the sale of certain securities, which are referred to as covered securities. Because we expect that our units and eventually our Class A ordinary shares and warrants will be listed on the NYSE, our units, Class A ordinary shares and warrants will qualify as covered securities under the statute. Although the states are preempted from regulating the sale of our securities, the federal statute does allow the states to investigate companies if there is a suspicion of fraud, and, if there is a finding of fraudulent activity, then the states can regulate or bar the sale of covered securities in a particular case. While we are not aware of a state having used these powers to prohibit or restrict the sale of securities issued by blank check companies, other than the State of Idaho, certain state securities regulators view blank check companies unfavorably and might use these powers, or threaten to use these powers, to hinder the sale of securities of blank check companies in their states. Further, if we were no longer listed on the NYSE, our securities would not qualify as covered securities under the statute and we would be subject to regulation in each state in which we offer our securities. You will not be entitled to protections normally afforded to investors of many other blank check companies. Since the net proceeds of this offering and the sale of the private placement warrants are intended to be used to complete an initial business combination with a target business that has not been identified, we may be deemed to be a blank check company under the United States securities laws. However, because we will have net tangible assets in excess of $5,000,000 upon the completion of this offering and the sale of the private placement warrants and will file a Current Report on Form 8-K, including an audited balance sheet demonstrating this fact, we are exempt from rules promulgated by the SEC to protect investors in blank check companies, such as Rule 419. Accordingly, investors will not be afforded the benefits or protections of those rules. Among other things, this means our units will be immediately tradable and we will have a TABLE OF CONTENTS longer period of time to complete our initial business combination than do companies subject to Rule 419. Moreover, if this offering were subject to Rule 419, that rule would prohibit the release of any interest earned on funds held in the trust account to us unless and until the funds in the trust account were released to us in connection with our completion of an initial business combination. For a more detailed comparison of our offering to offerings that comply with Rule 419, please see Proposed Business Comparison of This Offering to Those of Blank Check Companies Subject to Rule 419. If we seek shareholder approval of our initial business combination and we do not conduct redemptions pursuant to the tender offer rules, and if you or a group of shareholders are deemed to hold in excess of 20% of the public shares, you will lose the ability to redeem all such shares in excess of 20% of the public shares. If we seek shareholder approval of our initial business combination and we do not conduct redemptions in connection with our initial business combination pursuant to the tender offer rules, our amended and restated memorandum and articles of association provides that a public shareholder, together with any affiliate of such shareholder or any other person with whom such shareholder is acting in concert or as a group (as defined under Section 13 of the Exchange Act), will be restricted from seeking redemption rights with respect to more than an aggregate of 20% of the public shares without our prior consent, which we refer to as the Excess Shares. However, we would not be restricting our shareholders ability to vote all of their shares (including Excess Shares) for or against our initial business combination. Your inability to redeem the Excess Shares will reduce your influence over our ability to complete our initial business combination and you could suffer a material loss on your investment in us if you sell Excess Shares in open market transactions. Additionally, you will not receive redemption distributions with respect to the Excess Shares if we complete our initial business combination. And as a result, you will continue to hold the Excess Shares and, in order to dispose of such Excess Shares, would be required to sell your Excess Shares in open market transactions, potentially at a loss. Because of our limited resources and the significant competition for business combination opportunities, it may be more difficult for us to complete our initial business combination. If we are unable to complete our initial business combination, our public shareholders may receive only their pro rata portion of the funds in the trust account that are available for distribution to public shareholders, and our warrants will expire worthless. We expect to encounter intense competition from other entities having a business objective similar to ours, including private investors (which may be individuals or investment partnerships), other blank check companies and other entities, domestic and international, competing for the types of businesses we intend to acquire. Many of these individuals and entities are well-established and have extensive experience in identifying and effecting, directly or indirectly, acquisitions of companies operating in or providing services to various industries, including consumer products or services or food and beverage business, or adjacent manufacturing or industrial services businesses. Many of these competitors possess greater technical, human and other resources or more local industry knowledge than we do and our financial resources will be relatively limited when contrasted with those of many of these competitors. While we believe there are numerous target businesses we could potentially acquire with the net proceeds of this offering and the sale of the private placement warrants, our ability to compete with respect to the acquisition of certain target businesses that are sizable will be limited by our available financial resources. This inherent competitive limitation gives others an advantage in pursuing the acquisition of certain target businesses. Furthermore, we are obligated to offer holders of our public shares the right to redeem their shares for cash at the time of our initial business combination in conjunction with a shareholder vote or via a tender offer. Target companies will be aware that this may reduce the resources available to us for our initial business combination. Any of these obligations may place us at a competitive disadvantage in successfully negotiating a business combination. If we are unable to complete our initial business combination, our public shareholders may receive only their pro rata portion of the funds in the trust account that are available for distribution to public shareholders, and our warrants will expire worthless. If the net proceeds of this offering not being held in the trust account are insufficient to allow us to operate for at least the next 24 months, it could limit the amount available to fund our search for a target business or businesses and complete our initial business combination, and we will depend on loans from our founder or an affiliate of our founder to fund our search and to complete our initial business combination. Of the net proceeds of this offering, only $1,000,000 will be available to us initially outside the trust account to fund our working capital requirements. We believe that, upon closing of this offering, the funds TABLE OF CONTENTS available to us outside of the trust account will be sufficient to allow us to operate for at least the next 24 months; however, we cannot assure you that our estimate is accurate. Of the funds available to us, we could use a portion of the funds available to us to pay fees to consultants to assist us with our search for a target business. We could also use a portion of the funds as a down payment or to fund a no-shop provision (a provision in letters of intent designed to keep target businesses from shopping around for transactions with other companies or investors on terms more favorable to such target businesses) with respect to a particular proposed business combination, although we do not have any current intention to do so. If we entered into a letter of intent where we paid for the right to receive exclusivity from a target business and were subsequently required to forfeit such funds (whether as a result of our breach or otherwise), we might not have sufficient funds to continue searching for, or conduct due diligence with respect to, a target business. In the event that our offering expenses exceed our estimate of $1,000,000, we may fund such excess with funds not to be held in the trust account. In such case, the amount of funds we intend to be held outside the trust account would decrease by a corresponding amount. Conversely, in the event that the offering expenses are less than our estimate of $1,000,000, the amount of funds we intend to be held outside the trust account would increase by a corresponding amount. The amount held in the trust account will not be impacted as a result of such increase or decrease. If we are required to seek additional capital, we would need to borrow funds from our founder, his affiliates, our management team or other third parties to operate or may be forced to liquidate. Neither our sponsor, members of our management team nor any of their affiliates is under any obligation to advance funds to us in such circumstances. Any such advances would be repaid only from funds held outside the trust account or from funds released to us upon completion of our initial business combination. Up to $1,500,000 of such loans may be convertible into warrants of the post-business combination entity at a price of $1.00 per warrant at the option of the lender. The warrants would be identical to the private placement warrants. Prior to the completion of our initial business combination, we do not expect to seek loans from parties other than our founder or an affiliate of our founder as we do not believe third parties will be willing to loan such funds and provide a waiver against any and all rights to seek access to funds in our trust account. If we are unable to complete our initial business combination because we do not have sufficient funds available to us, we will be forced to cease operations and liquidate the trust account. Consequently, our public shareholders may only receive an estimated $10.00 per share, or possibly less, on our redemption of our public shares, and our warrants will expire worthless. Subsequent to our completion of our initial business combination, we may be required to take write-downs or write-offs, restructuring and impairment or other charges that could have a significant negative effect on our financial condition, results of operations and our share price, which could cause you to lose some or all of your investment. Even if we conduct due diligence on a target business with which we combine, we cannot assure you that this diligence will surface all material issues with a particular target business, that it would be possible to uncover all material issues through a customary amount of due diligence, or that factors outside of the target business and outside of our control will not later arise. As a result of these factors, we may be forced to later write-down or write-off assets, restructure our operations, or incur impairment or other charges that could result in our reporting losses. Even if our due diligence successfully identifies certain risks, unexpected risks may arise and previously known risks may materialize in a manner not consistent with our preliminary risk analysis. Even though these charges may be non-cash items and not have an immediate impact on our liquidity, the fact that we report charges of this nature could contribute to negative market perceptions about us or our securities. In addition, charges of this nature may cause us to violate net worth or other covenants to which we may be subject as a result of assuming pre-existing debt held by a target business or by virtue of our obtaining post-combination debt financing. Accordingly, any shareholders who choose to remain shareholders following the business combination could suffer a reduction in the value of their securities. Such shareholders are unlikely to have a remedy for such reduction in value unless they are able to successfully claim that the reduction was due to the breach by our officers or directors of a duty of care or other fiduciary duty owed to them, or if they are able to successfully bring a private claim under securities laws that the proxy solicitation or tender offer materials, as applicable, relating to the business combination contained an actionable material misstatement or material omission. TABLE OF CONTENTS If third parties bring claims against us, the proceeds held in the trust account could be reduced and the per-share redemption amount received by shareholders may be less than $10.00 per share. Our placing of funds in the trust account may not protect those funds from third party claims against us. Although we will seek to have all vendors, service providers, prospective target businesses and other entities with which we do business execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the trust account for the benefit of our public shareholders, such parties may not execute such agreements, or even if they execute such agreements, they may not be prevented from bringing claims against the trust account, including, but not limited to, fraudulent inducement, breach of fiduciary responsibility or other similar claims, as well as claims challenging the enforceability of the waiver, in each case in order to gain advantage with respect to a claim against our assets, including the funds held in the trust account. If any third party refuses to execute an agreement waiving such claims to the monies held in the trust account, our management will perform an analysis of the alternatives available to it and will only enter into an agreement with a third party that has not executed a waiver if management believes that such third party s engagement would be significantly more beneficial to us than any alternative. Examples of possible instances where we may engage a third party that refuses to execute a waiver include the engagement of a third party consultant whose particular expertise or skills are believed by management to be significantly superior to those of other consultants that would agree to execute a waiver or in cases where management is unable to find a service provider willing to execute a waiver. In addition, there is no guarantee that such entities will agree to waive any claims they may have in the future as a result of, or arising out of, any negotiations, contracts or agreements with us and will not seek recourse against the trust account for any reason. Upon redemption of our public shares, if we are unable to complete our initial business combination within the prescribed timeframe, or upon the exercise of a redemption right in connection with our initial business combination, we will be required to provide for payment of claims of creditors that were not waived that may be brought against us within the 10 years following redemption. Accordingly, the per-share redemption amount received by public shareholders could be less than the $10.00 per public share initially held in the trust account, due to claims of such creditors. Pursuant to the letter agreement the form of which is filed as Exhibit 10.1 to the registration statement of which this prospectus forms a part, our sponsor has agreed that it will be liable to us if and to the extent any claims by a vendor for services rendered or products sold to us, or a prospective target business with which we have entered into a transaction agreement, reduce the amounts in the trust account to below the lesser of (i) $10.00 per public share and (ii) the actual amount per share held in the trust account as of the date of the liquidation of the trust account if less than $10.00 per share due to reductions in the value of the trust assets, in each case less taxes payable, provided that such liability will not apply to any claims by a third party who executed a waiver of any and all rights to seek access to the trust account nor will it apply to any claims under our indemnity of the underwriters of this offering against certain liabilities, including liabilities under the Securities Act. Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party, our sponsor will not be responsible to the extent of any liability for such third-party claims. However, we have not asked our sponsor to reserve for such indemnification obligations, nor have we independently verified whether our sponsor has sufficient funds to satisfy its indemnity obligations and we believe that our sponsor s only assets are securities of our company. Therefore, we cannot assure you that our sponsor would be able to satisfy those obligations. None of our officers or directors will indemnify us for claims by third parties including, without limitation, claims by vendors and prospective target businesses. Our directors may decide not to enforce the indemnification obligations of our sponsor, resulting in a reduction in the amount of funds in the trust account available for distribution to our public shareholders. In the event that the proceeds in the trust account are reduced below the lesser of (i) $10.00 per share and (ii) the actual amount per share held in the trust account as of the date of the liquidation of the trust account if less than $10.00 per share due to reductions in the value of the trust assets, in each case less taxes payable, and our sponsor asserts that it is unable to satisfy its obligations or that it has no indemnification obligations related to a particular claim, our independent directors would determine whether to take legal action against our sponsor to enforce its indemnification obligations. While we currently expect that our independent directors would take legal action on our behalf against our sponsor to enforce its TABLE OF CONTENTS indemnification obligations to us, it is possible that our independent directors in exercising their business judgment and subject to their fiduciary duties may choose not to do so in any particular instance. If our independent directors choose not to enforce these indemnification obligations, the amount of funds in the trust account available for distribution to our public shareholders may be reduced below $10.00 per share. We may not have sufficient funds to satisfy indemnification claims of our directors and executive officers. We have agreed to indemnify our officers and directors to the fullest extent permitted by law. However, our officers and directors have agreed to waive any right, title, interest or claim of any kind in or to any monies in the trust account and to not seek recourse against the trust account for any reason whatsoever. Accordingly, any indemnification provided will be able to be satisfied by us only if (i) we have sufficient funds outside of the trust account or (ii) we consummate an initial business combination. Our obligation to indemnify our officers and directors may discourage shareholders from bringing a lawsuit against our officers or directors for breach of their fiduciary duty. These provisions also may have the effect of reducing the likelihood of derivative litigation against our officers and directors, even though such an action, if successful, might otherwise benefit us and our shareholders. Furthermore, a shareholder s investment may be adversely affected to the extent we pay the costs of settlement and damage awards against our officers and directors pursuant to these indemnification provisions. If, after we distribute the proceeds in the trust account to our public shareholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, a bankruptcy court may seek to recover such proceeds, and the members of our board of directors may be viewed as having breached their fiduciary duties to our creditors, thereby exposing the members of our board of directors and us to claims of punitive damages. If, after we distribute the proceeds in the trust account to our public shareholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, any distributions received by shareholders could be viewed under applicable debtor/creditor and/or bankruptcy laws as either a preferential transfer or a fraudulent conveyance. As a result, a bankruptcy court could seek to recover some or all amounts received by our shareholders. In addition, our board of directors may be viewed as having breached its fiduciary duty to our creditors and/or having acted in bad faith, thereby exposing itself and us to claims of punitive damages, by paying public shareholders from the trust account prior to addressing the claims of creditors. If, before distributing the proceeds in the trust account to our public shareholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, the claims of creditors in such proceeding may have priority over the claims of our shareholders and the per-share amount that would otherwise be received by our shareholders in connection with our liquidation may be reduced. If, before distributing the proceeds in the trust account to our public shareholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, the proceeds held in the trust account could be subject to applicable bankruptcy law, and may be included in our bankruptcy estate and subject to the claims of third parties with priority over the claims of our shareholders. To the extent any bankruptcy claims deplete the trust account, the per-share amount that would otherwise be received by our shareholders in connection with our liquidation may be reduced. If we are deemed to be an investment company under the Investment Company Act, we may be required to institute burdensome compliance requirements and our activities may be restricted, which may make it difficult for us to complete our initial business combination. If we are deemed to be an investment company under the Investment Company Act, our activities may be restricted, including: restrictions on the nature of our investments; and restrictions on the issuance of securities, each of which may make it difficult for us to complete our initial business combination. In addition, we may have imposed upon us burdensome requirements, including: TABLE OF CONTENTS registration as an investment company; adoption of a specific form of corporate structure; and reporting, record keeping, voting, proxy and disclosure requirements and other rules and regulations. In order not to be regulated as an investment company under the Investment Company Act, unless we can qualify for an exclusion, we must ensure that we are engaged primarily in a business other than investing, reinvesting or trading of securities and that our activities do not include investing, reinvesting, owning, holding or trading investment securities constituting more than 40% of our assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis. Our business will be to identify and complete a business combination and thereafter to operate the post-transaction business or assets for the long term. We do not plan to buy businesses or assets with a view to resale or profit from their resale. We do not plan to buy unrelated businesses or assets or to be a passive investor. We do not believe that our anticipated principal activities will subject us to the Investment Company Act. To this end, the proceeds held in the trust account may only be invested in United States government securities within the meaning of Section 2(a)(16) of the Investment Company Act having a maturity of 180 days or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act which invest only in direct U.S. government treasury obligations. Pursuant to the trust agreement, the trustee is not permitted to invest in other securities or assets. By restricting the investment of the proceeds to these instruments, and by having a business plan targeted at acquiring and growing businesses for the long term (rather than on buying and selling businesses in the manner of a merchant bank or private equity fund), we intend to avoid being deemed an investment company within the meaning of the Investment Company Act. This offering is not intended for persons who are seeking a return on investments in government securities or investment securities. The trust account is intended as a holding place for funds pending the earliest to occur of either: (i) the completion of our initial business combination; (ii) the redemption of any public shares properly tendered in connection with a shareholder vote to amend our amended and restated memorandum and articles of association to modify the substance or timing of our obligation to redeem 100% of our public shares if we do not complete our initial business combination within 24 months from the closing of this offering; or (iii) absent an initial business combination within 24 months from the closing of this offering, our return of the funds held in the trust account to our public shareholders as part of our redemption of the public shares. If we do not invest the proceeds as discussed above, we may be deemed to be subject to the Investment Company Act. If we were deemed to be subject to the Investment Company Act, compliance with these additional regulatory burdens would require additional expenses for which we have not allotted funds and may hinder our ability to complete a business combination. If we are unable to complete our initial business combination, our public shareholders may only receive their pro rata portion of the funds in the trust account that are available for distribution to public shareholders, and our warrants will expire worthless. Changes in laws or regulations, or a failure to comply with any laws and regulations, may adversely affect our business, including our ability to negotiate and complete our initial business combination, and results of operations. We are subject to laws and regulations enacted by national, regional and local governments. In particular, we will be required to comply with certain SEC and other legal requirements. Compliance with, and monitoring of, applicable laws and regulations may be difficult, time consuming and costly. Those laws and regulations and their interpretation and application may also change from time to time and those changes could have a material adverse effect on our business, investments and results of operations. In addition, a failure to comply with applicable laws or regulations, as interpreted and applied, could have a material adverse effect on our business, including our ability to negotiate and complete our initial business combination, and results of operations. If we are unable to consummate our initial business combination within 24 months from the closing of this offering, our public shareholders may be forced to wait beyond such 24 months before redemption from our trust account. If we are unable to consummate our initial business combination within 24 months from the closing of this offering, the proceeds then on deposit in the trust account, including interest (less up to $100,000 of TABLE OF CONTENTS interest to pay dissolution expenses and net of taxes payable), will be used to fund the redemption of our public shares, as further described herein. Any redemption of public shareholders from the trust account will be effected automatically by function of our amended and restated memorandum and articles of association prior to any voluntary winding up. If we are required to wind-up, liquidate the trust account and distribute such amount therein, pro rata, to our public shareholders, as part of any liquidation process, such winding up, liquidation and distribution must comply with the applicable provisions of the Companies Law. In that case, investors may be forced to wait beyond 24 months from the closing of this offering before the redemption proceeds of our trust account become available to them, and they receive the return of their pro rata portion of the proceeds from our trust account. We have no obligation to return funds to investors prior to the date of our redemption or liquidation unless we consummate our initial business combination prior thereto and only then in cases where investors have sought to redeem their Class A ordinary shares. Only upon our redemption or any liquidation will public shareholders be entitled to distributions if we are unable to complete our initial business combination. Our shareholders may be held liable for claims by third parties against us to the extent of distributions received by them upon redemption of their shares. If we are forced to enter into an insolvent liquidation, any distributions received by shareholders could be viewed as an unlawful payment if it was proved that immediately following the date on which the distribution was made, we were unable to pay our debts as they fall due in the ordinary course of business. As a result, a liquidator could seek to recover some or all amounts received by our shareholders. Furthermore, our directors may be viewed as having breached their fiduciary duties to us or our creditors and/or may have acted in bad faith, thereby exposing themselves and our company to claims, by paying public shareholders from the trust account prior to addressing the claims of creditors. We cannot assure you that claims will not be brought against us for these reasons. We and our directors and officers who knowingly and willfully authorized or permitted any distribution to be paid out of our share premium account while we were unable to pay our debts as they fall due in the ordinary course of business would be guilty of an offence and may be liable to a fine of $18,292.68 and to imprisonment for five years in the Cayman Islands. We may not hold an annual meeting of shareholders until after the consummation of our initial business combination. We will not hold our first annual meeting until after our first fiscal year. There is no requirement under the Companies Law for us to hold annual or general meetings to elect directors. Until we hold an annual meeting of shareholders, public shareholders may not be afforded the opportunity to elect directors and to discuss company affairs with management. Our board of directors is divided into three classes with only one class of directors being elected in each year and each class (except for those directors appointed prior to our first annual meeting of shareholders) serving a three-year term. We are not registering the Class A ordinary shares issuable upon exercise of the warrants under the Securities Act or any state securities laws at this time, and such registration may not be in place when an investor desires to exercise warrants, thus precluding such investor from being able to exercise its warrants and causing such warrants to expire worthless. We are not registering the Class A ordinary shares issuable upon exercise of the warrants under the Securities Act or any state securities laws at this time. However, under the terms of the warrant agreement, we have agreed to use our best efforts to file a registration statement under the Securities Act covering such shares and maintain a current prospectus relating to the Class A ordinary shares issuable upon exercise of the warrants until the expiration of the warrants in accordance with the provisions of the warrant agreement. We cannot assure you that we will be able to do so if, for example, any facts or events arise which represent a fundamental change in the information set forth in the registration statement or prospectus, the financial statements contained or incorporated by reference therein are not current or correct or the SEC issues a stop order. If the shares issuable upon exercise of the warrants are not registered under the Securities Act, we will be required to permit holders to exercise their warrants on a cashless basis. However, no warrant will be exercisable for cash or on a cashless basis, and we will not be obligated to issue any shares to holders seeking to exercise their warrants, unless the issuance of the shares upon such exercise TABLE OF CONTENTS is registered or qualified under the securities laws of the state of the exercising holder, unless an exemption is available. In no event will we be required to net cash settle any warrant, or issue securities or other compensation in exchange for the warrants in the event that we are unable to register or qualify the shares underlying the warrants under the Securities Act or applicable state securities laws. If the issuance of the shares upon exercise of the warrants is not so registered or qualified or exempt from registration or qualification, the holder of such warrant will not be entitled to exercise such warrant and such warrant may have no value and expire worthless. In such event, holders who acquired their warrants as part of a purchase of units will have paid the full unit purchase price solely for the Class A ordinary shares included in the units. If and when the warrants become redeemable by us, we may exercise our redemption right even if we are unable to register or qualify the underlying securities for sale under all applicable state securities laws. The grant of registration rights to our initial shareholders and holders of our private placement warrants may make it more difficult to complete our initial business combination, and the future exercise of such rights may adversely affect the market price of our Class A ordinary shares. Pursuant to a registration rights agreement to be entered into concurrently with the closing of this offering, the holders of the private placement warrants, the warrants that may be issued upon conversion of the working capital loans, and the founder shares will be entitled to registration rights with respect to such warrants and the ordinary shares underlying such warrants and founder shares. The registration rights will be exercisable with respect to the founder shares, the private placement warrants (including any Class A ordinary shares or Class C ordinary shares issuable upon exercise of such private placement warrants) and the warrants that may be issued upon conversion of working capital loans (including any Class A ordinary shares that may be issued upon the exercise of such warrants). Pursuant to the forward purchase agreements and the strategic partnership agreement, we have agreed that we will use our reasonable best efforts (i) to file within 30 days after the closing of the initial business combination (and, with respect to clause (B) below, within 30 days following announcement of the results of the shareholder vote relating to our initial business combination or the results of our offer to shareholders to redeem their Class A ordinary shares in connection with our initial business combination (whichever is later), which we refer to as the disclosure date ) a registration statement with the SEC for a secondary offering of (A) the forward purchase securities and Class A ordinary shares and Class C ordinary shares underlying the anchor investors forward purchase warrants and the anchor investors and the BSOF Entities founder shares, and (B) any other Class A ordinary shares or warrants acquired by the anchor investors and the BSOF Entities, including any time after we complete our initial business combination, (ii) to cause such registration statement to be declared effective promptly thereafter, but in no event later than 60 days after the closing of the initial business combination or the disclosure date, as the case may be and (iii) to maintain the effectiveness of such registration statement until the earliest of (A) the date on which the anchor investor or BSOF Entity ceases to hold the securities covered thereby and (B) the date all of the securities covered thereby can be sold publicly without restriction or limitation under Rule 144 under the Securities Act, and without the requirement to be in compliance with Rule 144(c)(1) under the Securities Act, subject to certain conditions and limitations set forth in the forward purchase agreements and the strategic partnership agreement. We will bear the cost of registering these securities. The registration and availability of such a significant number of securities for trading in the public market may have an adverse effect on the market price of our Class A ordinary shares. In addition, the existence of the registration rights may make our initial business combination more costly or difficult to conclude. This is because the shareholders of the target business may increase the equity stake they seek in the combined entity or ask for more cash consideration to offset the negative impact on the market price of our Class A ordinary shares that is expected when the securities owned by our initial shareholders or their respective permitted transferees are registered. Because we are neither limited to evaluating a target business in a particular industry sector nor have we identified any specific target businesses with which to pursue our initial business combination, you will be unable to ascertain the merits or risks of any particular target business s operations. We will seek to complete a business combination with an operating company in the consumer products or services or food and beverage industries, or adjacent manufacturing or industrial services industries, but may also pursue business combination opportunities in other sectors, except that we will not, under our TABLE OF CONTENTS amended and restated memorandum and articles of association, be permitted to effectuate our initial business combination with another blank check company or similar company with nominal operations. Because we have not yet identified or approached any specific target business with respect to a business combination, there is no basis to evaluate the possible merits or risks of any particular target business s operations, results of operations, cash flows, liquidity, financial condition or prospects. To the extent we complete our initial business combination, we may be affected by numerous risks inherent in the business operations with which we combine. For example, if we combine with a financially unstable business or an entity lacking an established record of sales or earnings, we may be affected by the risks inherent in the business and operations of a financially unstable or a development stage entity. Although our officers and directors will endeavor to evaluate the risks inherent in a particular target business, we cannot assure you that we will properly ascertain or assess all of the significant risk factors or that we will have adequate time to complete due diligence. Furthermore, some of these risks may be outside of our control and leave us with no ability to control or reduce the chances that those risks will adversely impact a target business. We also cannot assure you that an investment in our units will ultimately prove to be more favorable to investors than a direct investment, if such opportunity were available, in a business combination target. Accordingly, any shareholders who choose to remain shareholders following our initial business combination could suffer a reduction in the value of their securities. Such shareholders are unlikely to have a remedy for such reduction in value unless they are able to successfully claim that the reduction was due to the breach by our officers or directors of a duty of care or other fiduciary duty owed to them, or if they are able to successfully bring a private claim under securities laws that the proxy solicitation or tender offer materials, as applicable, relating to the business combination contained an actionable material misstatement or material omission. We may seek acquisition opportunities in industries outside of the consumer products or services or food and beverage industries, or adjacent manufacturing or industrial services industries (which industries may or may not be outside of our management s areas of expertise). Although we intend to focus on identifying business combination candidates in the consumer products or services or food and beverage sectors, or adjacent manufacturing or industrial services sectors, we will consider a business combination outside of these industries if a business combination candidate is presented to us and we determine that such candidate offers an attractive acquisition opportunity for our company or we are unable to identify a suitable candidate in the consumer products or services or food and beverage industries, or adjacent manufacturing or industrial services industries, after having expended a reasonable amount of time and effort in an attempt to do so. Although our management will endeavor to evaluate the risks inherent in any particular business combination candidate, we cannot assure you that we will adequately ascertain or assess all of the significant risk factors. We also cannot assure you that an investment in our units will not ultimately prove to be less favorable to investors in this offering than a direct investment, if an opportunity were available, in a business combination candidate. In the event we elect to pursue an investment outside of the consumer products or services or food and beverage industries, or adjacent manufacturing or industrial services industries, our management s expertise may not be directly applicable to its evaluation or operation, and the information contained herein regarding the consumer products or services or food and beverage industries, or adjacent manufacturing or industrial services industries, would not be relevant to an understanding of the business that we elect to acquire. Although we have identified general criteria and guidelines that we believe are important in evaluating prospective target businesses, we may enter into our initial business combination with a target that does not meet such criteria and guidelines, and as a result, the target business with which we enter into our initial business combination may not have attributes entirely consistent with our general criteria and guidelines. Although we have identified general criteria and guidelines for evaluating prospective target businesses, it is possible that a target business with which we enter into our initial business combination will not have all of these positive attributes. If we complete our initial business combination with a target that does not meet some or all of these guidelines, such combination may not be as successful as a combination with a business that does meet all of our general criteria and guidelines. In addition, if we announce a prospective business combination with a target that does not meet our general criteria and guidelines, a greater number of shareholders may exercise their redemption rights, which may make it difficult for us to meet any closing condition with a target business that requires us to have a minimum net worth or a certain amount of cash. TABLE OF CONTENTS In addition, if shareholder approval of the transaction is required by law, or we decide to obtain shareholder approval for business or other legal reasons, it may be more difficult for us to attain shareholder approval of our initial business combination if the target business does not meet our general criteria and guidelines. If we are unable to complete our initial business combination, our public shareholders may only receive their pro rata portion of the funds in the trust account that are available for distribution to public shareholders, and our warrants will expire worthless. We are not required to obtain an opinion from an independent accounting or investment banking firm, and consequently, you may have no assurance from an independent source that the price we are paying for the business is fair to our shareholders from a financial point of view. Unless we complete our initial business combination with an affiliated entity, we are not required to obtain an opinion from an independent accounting firm or independent investment banking firm which is a member of FINRA that the price we are paying is fair to our shareholders from a financial point of view. If no opinion is obtained, our shareholders will be relying on the judgment of our board of directors, who will determine fair market value based on standards generally accepted by the financial community. Such standards used will be disclosed in our proxy solicitation or tender offer materials, as applicable, related to our initial business combination. We will not be required to obtain a fairness opinion from an independent investment banking firm as to the fair market value of the target business if our board of directors is able to determine independently the fair market value of the target business. The fair market value of a target business or businesses will be determined by our board of directors based upon standards generally accepted by the financial community, such as actual and potential sales, the values of comparable businesses, earnings and cash flow, and book value. If, however, our board of directors is less familiar or experienced with the target company s business, there is a significant amount of uncertainty as to the value of the target company s assets or prospects, including if such company is at an early stage of development, operations or growth, or if the anticipated transaction involves a complex financial analysis or other specialized skills and the board determines that outside expertise would be helpful or necessary in conducting such analysis our board, and our board of directors is not able to determine independently that the target business has a sufficient fair market value to meet the threshold criterion, we will obtain an opinion from an unaffiliated, independent investment banking firm with respect to the satisfaction of such criterion. Since any opinion, if obtained, would merely state that the fair market value of the target business meets the 80% of assets threshold, unless such opinion includes material information regarding the valuation of a target business or the consideration to be provided, it is not anticipated that copies of such opinion would be distributed to you. However, if required under applicable law, any proxy statement that we deliver to shareholders and file with the SEC in connection with a proposed transaction will include such opinion. However, in all other instances, we will have no obligation to obtain a fairness opinion. As a result, if no opinion is obtained or an opinion is not delivered to you, our shareholders will be relying solely on the judgment of our board in effecting our initial business combination. We may issue additional Class A ordinary shares or preference shares to complete our initial business combination or under an employee incentive plan after completion of our initial business combination. We may also issue Class A ordinary shares and Class C ordinary shares upon the conversion of the founder shares at a ratio greater than one-to-one at the time of our initial business combination as a result of the anti-dilution provisions contained therein. Any such issuances would dilute the interest of our shareholders and likely present other risks. Our amended and restated memorandum and articles of association authorizes the issuance of up to 200,000,000 Class A ordinary shares, par value $0.0001 per share, 25,000,000 Class B ordinary shares, par value $0.0001 per share, 200,000,000 Class C ordinary shares, par value $0.0001, and 1,000,000 preference shares, $0.0001 per share. Immediately after this offering, there will be 170,000,000 and 13,750,000 (assuming in each case that the underwriters have not exercised their over-allotment option) authorized but unissued Class A ordinary shares and Class B ordinary shares, respectively, available for issuance which amount does not take into account shares reserved for issuance upon exercise of outstanding warrants and TABLE OF CONTENTS the forward purchase warrants, shares issuable upon conversion of the Class B ordinary shares or shares issued upon the sale of the forward purchase shares. The Class B ordinary shares are automatically convertible into Class A ordinary shares at the time of our initial business combination unless the holder elects to have such shares converted into Class C ordinary shares, as described herein. The Class C ordinary shares are convertible into Class A ordinary shares on a one-for-one basis (i) at the election of the holder with 65 days written notice or (ii) upon the transfer of such Class C ordinary share to an unaffiliated third party. Immediately after this offering, there will be no Class A ordinary shares or preference shares issued and outstanding. We may issue a substantial number of additional Class A ordinary shares or preference shares to complete our initial business combination or under an employee incentive plan after completion of our initial business combination. We may also issue Class A ordinary shares or Class C ordinary shares upon conversion of the Class B ordinary shares at a ratio greater than one-to-one at the time of our initial business combination as a result of the anti-dilution provisions as set forth herein. However, our amended and restated memorandum and articles of association provide, among other things, that prior to our initial business combination, we may not issue additional shares that would entitle the holders thereof to (i) receive funds from the trust account or (ii) vote on any initial business combination. These provisions of our amended and restated memorandum and articles of association, like all provisions of our amended and restated memorandum and articles of association, may be amended with a shareholder vote. The issuance of additional ordinary or preference shares: may significantly dilute the equity interest of investors in this offering; may subordinate the rights of holders of Class A ordinary shares if preference shares are issued with rights senior to those afforded our Class A ordinary shares; could cause a change in control if a substantial number of Class A ordinary shares are issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and could result in the resignation or removal of our present officers and directors; and may adversely affect prevailing market prices for our units, Class A ordinary shares and/or warrants. Unlike most other similarly structured blank check companies, our initial shareholders will receive additional Class A ordinary shares or Class C ordinary shares if we issue shares to consummate an initial business combination. The founder shares will automatically convert into Class A ordinary shares (or Class C ordinary shares, at the election of the holder) on the first business day following the consummation of our initial business combination at a ratio such that the number of Class A ordinary shares and Class C ordinary shares issuable upon conversion of all founder shares will equal, in the aggregate, on an as-converted basis, 20% of the sum of (i) the total number of public shares (including any such shares issued following the exercise of the over-allotment option), plus (ii) the sum of (a) the total number of Class A ordinary shares and Class C ordinary shares issued or deemed issued or issuable upon conversion or exercise of any equity-linked securities or rights issued or deemed issued, by us in connection with or in relation to the consummation of our initial business combination (including the forward purchase shares, but not the forward purchase warrants), excluding any Class A ordinary shares or equity-linked securities exercisable for or convertible into Class A ordinary shares issued, or to be issued, to any seller in the initial business combination and any warrants issued in a private placement to our founder or an affiliate of our founder upon conversion of working capital loans, minus (b) the number of public shares redeemed by public shareholders in connection with our initial business combination. This is different than most other similarly structured blank check companies in which the initial shareholders will only be issued an aggregate of 20% of the total number of shares to be outstanding prior to the initial business combination. TABLE OF CONTENTS Resources could be wasted in researching acquisitions that are not completed, which could materially adversely affect subsequent attempts to locate and acquire or merge with another business. If we are unable to complete our initial business combination, our public shareholders may only receive their pro rata portion of the funds in the trust account that are available for distribution to public shareholders, and our warrants will expire worthless. We anticipate that the investigation of each specific target business and the negotiation, drafting and execution of relevant agreements, disclosure documents and other instruments will require substantial management time and attention and substantial costs for accountants, attorneys and others. If we decide not to complete a specific initial business combination, the costs incurred up to that point for the proposed transaction likely would not be recoverable. Furthermore, if we reach an agreement relating to a specific target business, we may fail to complete our initial business combination for any number of reasons including those beyond our control. Any such event will result in a loss to us of the related costs incurred which could materially adversely affect subsequent attempts to locate and acquire or merge with another business. If we are unable to complete our initial business combination, our public shareholders may only receive their pro rata portion of the funds in the trust account that are available for distribution to public shareholders, and our warrants will expire worthless. We may be a passive foreign investment company, or PFIC, which could result in adverse United States federal income tax consequences to U.S. investors. If we are a PFIC for any taxable year (or portion thereof) that is included in the holding period of a U.S. Holder (as defined in the section of this prospectus captioned Taxation United States Federal Income Tax Considerations General ) of our Class A ordinary shares or warrants, the U.S. Holder may be subject to adverse U.S. federal income tax consequences and may be subject to additional reporting requirements. Our PFIC status for our current and subsequent taxable years may depend on whether we qualify for the PFIC start-up exception (see the section of this prospectus captioned Taxation United States Federal Income Tax Considerations U.S. Holders Passive Foreign Investment Company Rules ). Depending on the particular circumstances the application of the start-up exception may be subject to uncertainty, and there cannot be any assurance that we will qualify for the start-up exception. Accordingly, there can be no assurances with respect to our status as a PFIC for our current taxable year or any subsequent taxable year. Our actual PFIC status for any taxable year, however, will not be determinable until after the end of such taxable year. Moreover, if we determine we are a PFIC for any taxable year (of which there can be no assurance), we will endeavor to provide to a U.S. Holder such information as the Internal Revenue Service ( IRS ) may require, including a PFIC annual information statement, in order to enable the U.S. Holder to make and maintain a qualified electing fund election, but there can be no assurance that we will timely provide such required information, and such election would be unavailable with respect to our warrants in all cases. We urge U.S. investors to consult their own tax advisors regarding the possible application of the PFIC rules. For a more detailed explanation of the tax consequences of PFIC classification to U.S. Holders, see the section of this prospectus captioned Taxation United States Federal Income Tax Considerations U.S. Holders Passive Foreign Investment Company Rules. We may reincorporate in another jurisdiction in connection with our initial business combination and such reincorporation may result in taxes imposed on shareholders. We may, in connection with our initial business combination and subject to requisite shareholder approval under the Companies Law, reincorporate in the jurisdiction in which the target company or business is located or in another jurisdiction. The transaction may require a shareholder to recognize taxable income in the jurisdiction in which the shareholder is a tax resident or in which its members are resident if it is a tax transparent entity. We do not intend to make any cash distributions to shareholders to pay such taxes. Shareholders may be subject to withholding taxes or other taxes with respect to their ownership of us after the reincorporation. After our initial business combination, it is possible that a majority of our directors and officers will live outside the United States and all of our assets will be located outside the United States; therefore, investors may not be able to enforce federal securities laws or their other legal rights. It is possible that after our initial business combination, a majority of our directors and officers will reside outside of the United States and all of our assets will be located outside of the United States. As a TABLE OF CONTENTS result, it may be difficult, or in some cases not possible, for investors in the United States to enforce their legal rights, to effect service of process upon us or any of our directors or officers or to enforce judgments of United States courts predicated upon civil liabilities and criminal penalties on our directors and officers under United States laws, including federal securities laws. See Description of Securities Certain Differences in Corporate Law Enforcement of Civil Liabilities. We are dependent upon our executive officers and directors and their loss could adversely affect our ability to operate. Our operations are dependent upon a relatively small group of individuals and, in particular, our executive officers and directors. We believe that our success depends on the continued service of our officers and directors, at least until we have completed our initial business combination. In addition, our executive officers and directors are not required to commit any specified amount of time to our affairs and, accordingly, will have conflicts of interest in allocating their time among various business activities, including identifying potential business combinations and monitoring the related due diligence. Other than key-man insurance on the life of Mr. Asali that we are required to obtain under the terms of the forward purchase agreements, we do not have an employment agreement with, or key-man insurance on the life of, any of our directors or executive officers. The unexpected loss of the services of one or more of our directors or executive officers could have a detrimental effect on us. Our ability to successfully effect our initial business combination and to be successful thereafter will be totally dependent upon the efforts of our key personnel, some of whom may join us following our initial business combination. The loss of key personnel, and restrictions in the forward purchase agreements on hiring certain employees related to our sponsor, could negatively impact the operations and profitability of our post-combination business. Our ability to successfully effect our initial business combination is dependent upon the efforts of our key personnel. The role of our key personnel in the target business, however, cannot presently be ascertained. Although some of our key personnel may remain with the target business in senior management or advisory positions following our initial business combination, it is likely that some or all of the management of the target business will remain in place. While we intend to closely scrutinize any individuals we engage after our initial business combination, we cannot assure you that our assessment of these individuals will prove to be correct. These individuals may be unfamiliar with the requirements of operating a company regulated by the SEC, which could cause us to have to expend time and resources helping them become familiar with such requirements. In addition, certain terms of the forward purchase agreements may limit the hiring of individuals affiliated with our sponsor by us and/or the target business in connection with or following an initial business combination. For example, unless we obtain approval of anchor investors that have committed to purchase more than 50% of the total forward purchase shares we will not be permitted to pay any transaction, monitoring or similar fee to our sponsor or any of its employees, directors or controlled affiliates. We must also obtain approval from a majority of our anchor investors prior to hiring, employing or appointing to our board of directors any employee, officer or director of our sponsor. Our key personnel may negotiate employment or consulting agreements with a target business in connection with a particular business combination, and a particular business combination may be conditioned on the retention or resignation of such key personnel. These agreements may provide for them to receive compensation following our initial business combination and as a result, may cause them to have conflicts of interest in determining whether a particular business combination is the most advantageous. Our key personnel may be able to remain with our company after the completion of our initial business combination only if they are able to negotiate employment or consulting agreements in connection with the business combination. Such negotiations would take place simultaneously with the negotiation of the business combination and could provide for such individuals to receive compensation in the form of cash payments and/or our securities for services they would render to us after the completion of the business combination. Such negotiations also could make such key personnel s retention or resignation a condition to any such agreement. The personal and financial interests of such individuals may influence their motivation in identifying and selecting a target business. TABLE OF CONTENTS We may have a limited ability to assess the management of a prospective target business and, as a result, may effect our initial business combination with a target business whose management may not have the skills, qualifications or abilities to manage a public company. When evaluating the desirability of effecting our initial business combination with a prospective target business, our ability to assess the target business s management may be limited due to a lack of time, resources or information. Our assessment of the capabilities of the target business s management, therefore, may prove to be incorrect and such management may lack the skills, qualifications or abilities we suspected. Should the target business s management not possess the skills, qualifications or abilities necessary to manage a public company, the operations and profitability of the post-combination business may be negatively impacted. Accordingly, any shareholders who choose to remain shareholders following the business combination could suffer a reduction in the value of their shares. Such shareholders are unlikely to have a remedy for such reduction in value unless they are able to successfully claim that the reduction was due to the breach by our officers or directors of a duty of care or other fiduciary duty owed to them, or if they are able to successfully bring a private claim under securities laws that the proxy solicitation or tender offer materials, as applicable, relating to the business combination contained an actionable material misstatement or material omission. The officers and directors of an acquisition candidate may resign upon completion of our initial business combination. The loss of a business combination target s key personnel could negatively impact the operations and profitability of our post-combination business. The role of an acquisition candidate s key personnel upon the completion of our initial business combination cannot be ascertained at this time. Although we contemplate that certain members of an acquisition candidate s management team will remain associated with the acquisition candidate following our initial business combination, it is possible that members of the management of an acquisition candidate will not wish to remain in place. Our executive officers and directors will allocate their time to other businesses thereby causing conflicts of interest in their determination as to how much time to devote to our affairs. This conflict of interest could have a negative impact on our ability to complete our initial business combination. Our executive officers and directors are not required to, and will not, commit their full time to our affairs, which may result in a conflict of interest in allocating their time between our operations and our search for a business combination and their other businesses. Our executive officers are not obligated to contribute any specific number of hours per week to our affairs. Our independent directors also serve as officers and board members for other entities. If our executive officers and directors other business affairs require them to devote substantial amounts of time to such affairs in excess of their current commitment levels, it could limit their ability to devote time to our affairs which may have a negative impact on our ability to complete our initial business combination. For a complete discussion of our executive officers and directors other business affairs, please see Management Officers and Directors. Certain of our officers and directors presently have, and any of them in the future may have additional, fiduciary or contractual obligations to other entities and, accordingly, may have conflicts of interest in determining to which entity a particular business opportunity should be presented. Following the completion of this offering and until we consummate our initial business combination, we intend to engage in the business of identifying and combining with one or more businesses. Certain of our officers and directors presently has, and any of them in the future may have, additional fiduciary or contractual obligations to other entities pursuant to which such officer or director is or will be required to present a business combination opportunity to such entity, subject to his or her fiduciary duties under Cayman Islands law. Accordingly, they may have conflicts of interest in determining to which entity a particular business opportunity should be presented. These conflicts may not be resolved in our favor and a potential target business may be presented to another entity prior to its presentation to us, subject to their fiduciary duties under Cayman Islands law. For a complete discussion of our executive officers and directors business affiliations and the potential conflicts of interest that you should be aware of, please see Management Officers and Directors, Management Conflicts of Interest and Certain Relationships and Related Party Transactions. TABLE OF CONTENTS Our executive officers, directors, security holders and their respective affiliates may have competitive pecuniary interests that conflict with our interests. We have not adopted a policy that expressly prohibits our directors, executive officers, security holders or affiliates from having a direct or indirect pecuniary or financial interest in any investment to be acquired or disposed of by us or in any transaction to which we are a party or have an interest. In fact, we may enter into a business combination with a target business that is affiliated with our sponsor, our directors or our executive officers, although we do not intend to do so. Nor do we have a policy that expressly prohibits any such persons from engaging for their own account in business activities of the types conducted by us. Accordingly, such persons or entities may have a conflict between their interests and ours. The personal and financial interests of our directors and officers may influence their motivation in timely identifying and selecting a target business and completing a business combination. Consequently, our directors and officers discretion in identifying and selecting a suitable target business may result in a conflict of interest when determining whether the terms, conditions and timing of a particular business combination are appropriate and in our shareholders best interest. If this were the case, it would be a breach of their fiduciary duties to us as a matter of Cayman Islands law and we or our shareholders might have a claim against such individuals for infringing on our shareholders rights. See the section titled Description of Securities Certain Differences in Corporate Law Shareholder Suits for further information on the ability to bring such claims. However, we might not ultimately be successful in any claim we may make against them for such reason. We may engage in a business combination with one or more target businesses that have relationships with entities that may be affiliated with our sponsor, executive officers, directors or existing holders which may raise potential conflicts of interest. In light of the involvement of our sponsor, executive officers and directors with other entities, we may decide to acquire one or more businesses affiliated with our sponsor, executive officers, directors or existing holders. Our directors also serve as officers and board members for other entities, including, without limitation, those described under Management Conflicts of Interest. Such entities may compete with us for business combination opportunities. Our sponsor, officers and directors are not currently aware of any specific opportunities for us to complete our initial business combination with any entities with which they are affiliated, and there have been no substantive discussions concerning a business combination with any such entity or entities. Although we will not be specifically focusing on, or targeting, any transaction with any affiliated entities, we would pursue such a transaction if we determined that such affiliated entity met our criteria for a business combination as set forth in Proposed Business Effecting our initial business combination Selection of a target business and structuring of our initial business combination and such transaction was approved by a majority of our independent and disinterested directors. Despite our agreement to obtain an opinion from an independent investment banking firm which is a member of FINRA or an independent accounting firm regarding the fairness to our company from a financial point of view of a business combination with one or more domestic or international businesses affiliated with our sponsor, executive officers, directors or existing holders, potential conflicts of interest still may exist and, as a result, the terms of the business combination may not be as advantageous to our public shareholders as they would be absent any conflicts of interest. Since our sponsor, the anchor investors (including our founder and each of our other executive officers), the BSOF Entities and directors will lose their entire investment in us if our initial business combination is not completed (other than with respect to public shares they may acquire during or after this offering), a conflict of interest may arise in determining whether a particular business combination target is appropriate for our initial business combination. As of the date of this prospectus, our sponsor held an aggregate of 8,100,000 founder shares. Prior to the transfer of 525,000 founder shares to the BSOF Entities, our sponsor held an aggregate of 8,625,000 founder shares, which were issued in exchange for a capital contribution of $25,000, or approximately $0.003 per share. Prior to the initial investment in the company of $25,000 by the sponsor, the company had no assets, tangible or intangible. The per share price of the founder shares was determined by dividing the amount contributed to the company by the number of founder shares issued. Pursuant to a letter agreement, our sponsor has agreed to transfer an aggregate of 240,000 founder shares to our independent TABLE OF CONTENTS directors (each receiving 60,000 shares) prior to the consummation of this offering. In addition, in connection with the forward purchase agreements, we issued to the anchor investors (including our founder and each of our other executive officers) an aggregate of 3,750,000 founder shares for $0.01 per share prior to this offering. The founder shares will be worthless if we do not complete an initial business combination. In addition, such anchor investors and the BSOF Entities have committed, pursuant to separate written agreements, to purchase an aggregate of 8,000,000 private placement warrants (or 8,900,000 if the underwriters over-allotment option is exercised in full), of which our founder has committed to purchase 2,006,041 (assuming no exercise of the over-allotment option) and the BSOF Entities have committed to purchase 560,000 in the aggregate, each exercisable to purchase one Class A ordinary share or Class C ordinary share at $11.50 per share, at a price of $1.00 per warrant ($8,000,000 in the aggregate or $8,900,000 if the underwriters over-allotment option is exercised in full), in a private placement that will close simultaneously with the closing of this offering. If we do not complete our initial business combination within 24 months from the closing of this offering, the private placement warrants will expire worthless. Further, 2,250,000 founder shares, which constitute the earnout shares, will be subject to forfeiture by our sponsor (or its permitted transferees) and the BSOF Entities on the fifth anniversary of our initial business combination unless following our initial business combination, either (A) the closing price of our Class A ordinary shares (or any successor class of ordinary shares or common shares) equals or exceeds, in the case of our sponsor, $12.50 per share and, in the case of the BSOF Entities, $12.25 per share (in each case as adjusted for share splits, dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30 consecutive trading day period or (B) we complete a liquidation, merger, share exchange or other similar transaction that results in all of our ordinary shareholders having the right to exchange their ordinary shares for consideration in cash, securities or other property which equals or exceeds, in the case of our sponsor, $12.50 per share and, in the case of the BSOF Entities, $12.25 per share (in each case as adjusted for share splits, dividends, reorganizations, recapitalizations and the like). See Principal Shareholders Transfers of Founder Shares and Private Placement Warrants. The personal and financial interests of our executive officers and directors may influence their motivation in identifying and selecting a target business combination, completing an initial business combination and influencing the operation of the business following the initial business combination. This risk may become more acute as the 24-month anniversary of the closing of this offering nears, which is the deadline for our completion of an initial business combination. We may issue notes or other debt securities, or otherwise incur substantial debt, to complete a business combination, which may adversely affect our leverage and financial condition and thus negatively impact the value of our shareholders investment in us. Although we have no commitments as of the date of this prospectus to issue any notes or other debt securities, or to otherwise incur outstanding debt following this offering, we may choose to incur substantial debt to complete our initial business combination. We and our officers have agreed that we will not incur any indebtedness unless we have obtained from the lender a waiver of any right, title, interest or claim of any kind in or to the monies held in the trust account. As such, no issuance of debt will affect the per share amount available for redemption from the trust account. Nevertheless, the incurrence of debt could have a variety of negative effects, including: default and foreclosure on our assets if our operating revenues after an initial business combination are insufficient to repay our debt obligations; acceleration of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant; our immediate payment of all principal and accrued interest, if any, if the debt security is payable on demand; our inability to obtain necessary additional financing if the debt security contains covenants restricting our ability to obtain such financing while the debt security is outstanding; our inability to pay dividends on our Class A ordinary shares; TABLE OF CONTENTS using a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for dividends on our Class A ordinary shares if declared, expenses, capital expenditures, acquisitions and other general corporate purposes; limitations on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate; increased vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation; and limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, execution of our strategy and other purposes and other disadvantages compared to our competitors who have less debt. We may only be able to complete one business combination with the proceeds of this offering and the sale of the private placement warrants and forward purchase shares, which will cause us to be solely dependent on a single business which may have a limited number of products or services. This lack of diversification may negatively impact our operations and profitability. The net proceeds from this offering and the sale of the private placement warrants and forward purchase shares will provide us with $440,500,000 (or $483,925,000 if the underwriters over-allotment option is exercised in full) (after deducting payment of offering expenses of approximately $1,000,000 and underwriting commissions of $16,500,000, or $18,975,000 if the underwriters over-allotment option is exercised in full) that we may use to complete our initial business combination. We may effectuate our initial business combination with a single target business or multiple target businesses simultaneously or within a short period of time. However, we may not be able to effectuate our initial business combination with more than one target business because of various factors, including the existence of complex accounting issues and the requirement that we prepare and file pro forma financial statements with the SEC that present operating results and the financial condition of several target businesses as if they had been operated on a combined basis. By completing our initial business combination with only a single entity, our lack of diversification may subject us to numerous economic, competitive and regulatory risks. Further, we would not be able to diversify our operations or benefit from the possible spreading of risks or offsetting of losses, unlike other entities which may have the resources to complete several business combinations in different industries or different areas of a single industry. Accordingly, the prospects for our success may be: solely dependent upon the performance of a single business, property or asset; or dependent upon the development or market acceptance of a single or limited number of products, processes or services. This lack of diversification may subject us to numerous economic, competitive and regulatory risks, any or all of which may have a substantial adverse impact upon the particular industry in which we may operate subsequent to our initial business combination. We may attempt to simultaneously complete business combinations with multiple prospective targets, which may hinder our ability to complete our initial business combination and give rise to increased costs and risks that could negatively impact our operations and profitability. If we determine to simultaneously acquire several businesses that are owned by different sellers, we will need for each of such sellers to agree that our purchase of its business is contingent on the simultaneous closings of the other business combinations, which may make it more difficult for us, and delay our ability, to complete our initial business combination. With multiple business combinations, we could also face additional risks, including additional burdens and costs with respect to possible multiple negotiations and due diligence (if there are multiple sellers) and the additional risks associated with the subsequent assimilation of the operations and services or products of the acquired companies in a single operating business. If we are unable to adequately address these risks, it could negatively impact our profitability and results of operations. TABLE OF CONTENTS We may attempt to complete our initial business combination with a private company about which little information is available, which may result in a business combination with a company that is not as profitable as we suspected, if at all. In pursuing our acquisition strategy, we may seek to effectuate our initial business combination with a privately held company. By definition, very little public information generally exists about private companies, and we could be required to make our decision on whether to pursue a potential initial business combination on the basis of limited information, which may result in a business combination with a company that is not as profitable as we suspected, if at all. Our management may not be able to maintain control of a target business after our initial business combination. We cannot provide assurance that, upon loss of control of a target business, new management will possess the skills, qualifications or abilities necessary to profitably operate such business. We may structure our initial business combination so that the post-transaction company in which our public shareholders own shares will own less than 100% of the equity interests or assets of a target business, but we will only complete such business combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for us not to be required to register as an investment company under the Investment Company Act. We will not consider any transaction that does not meet such criteria. Even if the post-transaction company owns 50% or more of the voting securities of the target, our shareholders prior to our initial business combination may collectively own a minority interest in the post business combination company, depending on valuations ascribed to the target and us in the business combination. For example, we could pursue a transaction in which we issue a substantial number of new Class A ordinary shares in exchange for all of the outstanding capital stock of a target. In this case, we would acquire a 100% interest in the target. However, as a result of the issuance of a substantial number of new Class A ordinary shares, our shareholders immediately prior to such transaction could own less than a majority of our outstanding Class A ordinary shares subsequent to such transaction. In addition, other minority shareholders may subsequently combine their holdings resulting in a single person or group obtaining a larger share of the company s shares than we initially acquired. Accordingly, this may make it more likely that our management will not be able to maintain control of the target business. We do not have a specified maximum redemption threshold. The absence of such a redemption threshold may make it possible for us to complete our initial business combination with which a substantial majority of our shareholders do not agree. Our amended and restated memorandum and articles of association do not provide a specified maximum redemption threshold, except that in no event will we redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001 (such that we are not subject to the SEC s penny stock rules). As a result, we may be able to complete our initial business combination even though a substantial majority of our public shareholders do not agree with the transaction and have redeemed their shares or, if we seek shareholder approval of our initial business combination and do not conduct redemptions in connection with our initial business combination pursuant to the tender offer rules, have entered into privately negotiated agreements to sell their shares to our sponsor, officers, directors, advisors or any of their affiliates. In the event the aggregate cash consideration we would be required to pay for all Class A ordinary shares that are validly submitted for redemption plus any amount required to satisfy cash conditions pursuant to the terms of the proposed business combination exceed the aggregate amount of cash available to us, we will not complete the business combination or redeem any shares, all Class A ordinary shares submitted for redemption will be returned to the holders thereof, and we instead may search for an alternate business combination. In order to effectuate an initial business combination, blank check companies have, in the recent past, amended various provisions of their charters and other governing instruments, including their warrant agreements. We cannot assure you that we will not seek to amend our amended and restated memorandum and articles of association or governing instruments in a manner that will make it easier for us to complete our initial business combination that our shareholders may not support. In order to effectuate a business combination, blank check companies have, in the recent past, amended various provisions of their charters and governing instruments, including their warrant TABLE OF CONTENTS agreements. For example, blank check companies have amended the definition of business combination, increased redemption thresholds, changed industry focus and, with respect to their warrants, amended their warrant agreements to require the warrants to be exchanged for cash and/or other securities. Amending our amended and restated memorandum and articles of association will require a special resolution of our shareholders as a matter of Cayman Islands law, meaning the approval of holders of at least two-thirds of our ordinary shares who attend and vote at a general meeting of the company, and amending our warrant agreement will require a vote of holders of at least 65% of the public warrants. In addition, our amended and restated memorandum and articles of association requires us to provide our public shareholders with the opportunity to redeem their public shares for cash if we propose an amendment to our amended and restated memorandum and articles of association that would affect the substance or timing of our obligation to redeem 100% of our public shares if we do not complete an initial business combination within 24 months of the closing of this offering. To the extent any of such amendments would be deemed to fundamentally change the nature of any of the securities offered through this registration statement, we would register, or seek an exemption from registration for, the affected securities. The provisions of our amended and restated memorandum and articles of association that relate to our pre-business combination activity (and corresponding provisions of the agreement governing the release of funds from our trust account) may be amended with the approval of holders of not less than two-thirds of our ordinary shares who attend and vote at a general meeting of the company, which is a lower amendment threshold than that of some other blank check companies. It may be easier for us, therefore, to amend our amended and restated memorandum and articles of association to facilitate the completion of an initial business combination that some of our shareholders may not support. Some other blank check companies have a provision in their charter which prohibits the amendment of certain of its provisions, including those which relate to a company s pre-business combination activity, without approval by a certain percentage of the company s shareholders. In those companies, amendment of these provisions typically requires approval by between 90% and 100% of the company s public shareholders. Our amended and restated memorandum and articles of association provide that any of its provisions related to pre-business combination activity (including the requirement to deposit proceeds of this offering and the private placement of warrants into the trust account and not release such amounts except in specified circumstances, and to provide redemption rights to public shareholders as described herein) may be amended if approved by special resolution, meaning holders of not less than two-thirds of our ordinary shares who attend and vote at a general meeting of the company, and corresponding provisions of the trust agreement governing the release of funds from our trust account may be amended if approved by holders of 65% of our ordinary shares. Our initial shareholders, who will collectively beneficially own, on an as-converted basis, approximately 26.4% of our Class A ordinary shares upon the closing of this offering (assuming they do not purchase any units in this offering and the underwriters do not exercise their over-allotment option and excluding 493,750 Class B ordinary shares held by one of our anchor investors who is expected to elect to convert such shares into Class C ordinary shares), will participate in any vote to amend our amended and restated memorandum and articles of association and/or trust agreement and will have the discretion to vote in any manner they choose. As a result, we may be able to amend the provisions of our amended and restated memorandum and articles of association which govern our pre-business combination behavior more easily than some other blank check companies, and this may increase our ability to complete a business combination with which you do not agree. Our shareholders may pursue remedies against us for any breach of our amended and restated memorandum and articles of association. Our sponsor, executive officers and directors have agreed, pursuant to agreements with us, that they will not propose any amendment to our amended and restated memorandum and articles of association that would affect the substance or timing of our obligation to redeem 100% of our public shares if we do not complete our initial business combination within 24 months from the closing of this offering, unless we provide our public shareholders with the opportunity to redeem their Class A ordinary shares upon approval of any such amendment at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest (net of taxes payable), divided by the number of then outstanding public shares. Our shareholders are not parties to, or third-party beneficiaries of, these TABLE OF CONTENTS agreements and, as a result, will not have the ability to pursue remedies against our sponsor, executive officers or directors for any breach of these agreements. As a result, in the event of a breach, our shareholders would need to pursue a shareholder derivative action, subject to applicable law. We may be unable to obtain additional financing to complete our initial business combination or to fund the operations and growth of a target business, which could compel us to restructure or abandon a particular business combination. If we are unable to complete our initial business combination, our public shareholders may only receive their pro rata portion of the funds in the trust account that are available for distribution to public shareholders, and our warrants will expire worthless. Although we believe that the net proceeds of this offering and the sale of the private placement warrants and forward purchase shares will be sufficient to allow us to complete our initial business combination, because we have not yet identified any prospective target business we cannot ascertain the capital requirements for any particular transaction. If the net proceeds of this offering and the sale of the private placement warrants and forward purchase shares prove to be insufficient, either because of the size of our initial business combination, the depletion of the available net proceeds in search of a target business, the obligation to redeem for cash a significant number of shares from shareholders who elect redemption in connection with our initial business combination or the terms of negotiated transactions to purchase shares in connection with our initial business combination, we may be required to seek additional financing or to abandon the proposed business combination. We cannot assure you that such financing will be available on acceptable terms, if at all. The recent economic environment has made it difficult for companies to obtain acquisition financing. To the extent that additional financing proves to be unavailable when needed to complete our initial business combination, we would be compelled to either restructure the transaction or abandon that particular business combination and seek an alternative target business candidate. If we are unable to complete our initial business combination, our public shareholders may only receive their pro rata portion of the funds in the trust account that are available for distribution to public shareholders, and our warrants will expire worthless. In addition, even if we do not need additional financing to complete our initial business combination, we may require such financing to fund the operations or growth of the target business. The failure to secure additional financing could have a material adverse effect on the continued development or growth of the target business. None of our officers, directors or shareholders is required to provide any financing to us in connection with or after our initial business combination. Our initial shareholders control a substantial interest in us and thus may exert a substantial influence on actions requiring a shareholder vote, potentially in a manner that you do not support. Upon closing of this offering, our initial shareholders will own, on an as-converted basis, 26.4% of our issued and outstanding Class A ordinary shares (assuming they do not purchase any units in this offering and the underwriters do not exercise their over-allotment option and excluding 493,750 Class B ordinary shares held by one of our anchor investors who is expected to elect to convert such shares into Class C ordinary shares). Accordingly, they may exert a substantial influence on actions requiring a shareholder vote, potentially in a manner that you do not support, including amendments to our amended and restated memorandum and articles of association. If our initial shareholders purchase any units in this offering or if our initial shareholders purchase any additional Class A ordinary shares in the aftermarket or in privately negotiated transactions, this would increase their control. To our knowledge, none of our officers or directors, has any current intention to purchase additional securities, other than as disclosed in this prospectus. Factors that would be considered in making such additional purchases would include consideration of the current trading price of our Class A ordinary shares. Our sponsor contributed $25,000, or approximately $0.003 per founder share, and the anchor investors contributed $37,500, or approximately $0.01 per share, and, accordingly, you will experience immediate and substantial dilution from the purchase of our Class A ordinary shares. The difference between the public offering price per share (allocating all of the unit purchase price to the Class A ordinary share and none to the warrant included in the unit) and the pro forma net tangible book value per share of our Class A ordinary shares after this offering constitutes the dilution to you and the other investors in this offering. Our sponsor and the anchor investors acquired the founder shares at a TABLE OF CONTENTS nominal price, significantly contributing to this dilution. Upon closing of this offering, and assuming no value is ascribed to the warrants included in the units, you and the other public shareholders will incur an immediate and substantial dilution of approximately 96.1%, or $9.61 per share (assuming no exercise of the underwriters over-allotment option), the difference between the pro forma net tangible book value per share of $0.39 and the initial offering price of $10.00 per unit. This dilution would increase to the extent that the anti-dilution provisions of the founder shares result in the issuance of Class A ordinary shares on a greater than one-to-one basis upon conversion of the founder shares at the time of our initial business combination and would become exacerbated to the extent that public shareholders seek redemptions from the trust for their public shares. In addition, because of the anti-dilution protection in the founder shares, any equity or equity-linked securities issued in connection with our initial business combination would be disproportionately dilutive to our Class A ordinary shares. We may amend the terms of the warrants in a manner that may be adverse to holders of public warrants with the approval by the holders of at least 65% of the then outstanding public warrants and forward purchase warrants. As a result, the exercise price of your warrants could be increased, the exercise period could be shortened and the number of our Class A ordinary shares purchasable upon exercise of a warrant could be decreased, all without your approval. Our warrants will be issued in registered form under a warrant agreement between Continental Stock Transfer & Trust Company, as warrant agent, and us. The warrant agreement provides that the terms of the warrants may be amended without the consent of any holder to cure any ambiguity or correct any defective provision, but requires the approval by the holders of at least 65% of the then outstanding public warrants and forward purchase warrants to make any change that adversely affects the interests of the registered holders of public warrants. Accordingly, we may amend the terms of the public warrants in a manner adverse to a holder if holders of at least 65% of the then outstanding public warrants and forward purchase warrants approve of such amendment. Although our ability to amend the terms of the public warrants with the consent of at least 65% of the then outstanding public warrants and forward purchase warrants is unlimited, examples of such amendments could be amendments to, among other things, increase the exercise price of the warrants, convert the warrants into cash, shorten the exercise period or decrease the number of Class A ordinary shares purchasable upon exercise of a warrant. We may redeem your unexpired warrants prior to their exercise at a time that is disadvantageous to you, thereby making your warrants worthless. We have the ability to redeem outstanding warrants at any time after they become exercisable and prior to their expiration, at a price of $0.01 per warrant, provided that the closing price of our public shares equals or exceeds $18.00 per share (as adjusted for share splits, share dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30 trading-day period ending on the third trading day prior to proper notice of such redemption provided that on the date we give notice of redemption. If and when the warrants become redeemable by us, we may exercise our redemption right even if we are unable to register or qualify the underlying securities for sale under all applicable state securities laws. Redemption of the outstanding warrants could force you to (i) exercise your warrants and pay the exercise price therefor at a time when it may be disadvantageous for you to do so, (ii) sell your warrants at the then-current market price when you might otherwise wish to hold your warrants or (iii) accept the nominal redemption price which, at the time the outstanding warrants are called for redemption, is likely to be substantially less than the market value of your warrants. None of the private placement warrants will be redeemable by us so long as they are held by the anchor investors, the BSOF Entities or their respective permitted transferees. Our warrants may have an adverse effect on the market price of our Class A ordinary shares and make it more difficult to effectuate our initial business combination. We will be issuing warrants to purchase 15,000,000 of our Class A ordinary shares (or up to 17,250,000 Class A ordinary shares if the underwriters over-allotment option is exercised in full) as part of the units offered by this prospectus and, simultaneously with the closing of this offering, we will be issuing in a private placement an aggregate of 8,000,000 private placement warrants (or 8,900,000 if the underwriters over-allotment option is exercised in full), each exercisable to purchase one Class A ordinary share or one TABLE OF CONTENTS Class C ordinary share, as applicable, at $11.50 per share. We will also issue 5,000,000 forward purchase warrants concurrently with the closing of the sale of the forward purchase shares. In addition, if our founder or an affiliate of our founder makes any working capital loans, he or it may convert those loans into up to an additional 1,500,000 private placement warrants, at the price of $1.00 per warrant. To the extent we issue ordinary shares to effectuate a business transaction, the potential for the issuance of a substantial number of additional Class A ordinary shares or Class C ordinary shares (which are convertible into Class A ordinary shares) upon exercise of these warrants could make us a less attractive acquisition vehicle to a target business. Such warrants, when exercised, will increase the number of issued and outstanding Class A ordinary shares and reduce the value of the Class A ordinary shares issued to complete the business transaction. Therefore, our warrants may make it more difficult to effectuate a business transaction or increase the cost of acquiring the target business. Because each unit contains one-half of one warrant and only a whole warrant may be exercised, the units may be worth less than units of other blank check companies. Each unit contains one-half of one warrant. Pursuant to the warrant agreement, no fractional warrants will be issued upon separation of the units, and only whole units will trade. If, upon exercise of the warrants, a holder would be entitled to receive a fractional interest in a share, we will, upon exercise, round down to the nearest whole number the number of Class A ordinary shares to be issued to the warrant holder. This is different from other offerings similar to ours whose units include one ordinary share and one warrant to purchase one whole share. We have established the components of the units in this way in order to reduce the dilutive effect of the warrants upon completion of a business combination since the warrants will be exercisable in the aggregate for half of the number of shares compared to units that each contain a whole warrant to purchase one share, thus making us, we believe, a more attractive merger partner for target businesses. Nevertheless, this unit structure may cause our units to be worth less than if it included a warrant to purchase one whole share. The determination of the offering price of our units and the size of this offering is more arbitrary than the pricing of securities and size of an offering of an operating company in a particular industry. You may have less assurance, therefore, that the offering price of our units properly reflects the value of such units than you would have in a typical offering of an operating company. Prior to this offering there has been no public market for any of our securities. The public offering price of the units and the terms of the warrants were negotiated between us and the underwriters. In determining the size of this offering, management held customary organizational meetings with representatives of the underwriters, both prior to our inception and thereafter, with respect to the state of capital markets, generally, and the amount the underwriters believed they reasonably could raise on our behalf. Factors considered in determining the size of this offering, prices and terms of the units, including the Class A ordinary shares and warrants underlying the units, include: the history and prospects of companies whose principal business is the acquisition of other companies; prior offerings of those companies; our prospects for acquiring an operating business at attractive values; a review of debt to equity ratios in leveraged transactions; our capital structure; an assessment of our management and their experience in identifying operating companies; general conditions of the securities markets at the time of this offering; and other factors as were deemed relevant. Although these factors were considered, the determination of our offering price is more arbitrary than the pricing of securities of an operating company in a particular industry since we have no historical operations or financial results. TABLE OF CONTENTS There is currently no market for our securities and a market for our securities may not develop, which would adversely affect the liquidity and price of our securities. There is currently no market for our securities. Shareholders therefore have no access to information about prior market history on which to base their investment decision. Following this offering, the price of our securities may vary significantly due to one or more potential business combinations and general market or economic conditions. Furthermore, an active trading market for our securities may never develop or, if developed, it may not be sustained. You may be unable to sell your securities unless a market can be established and sustained. Because we must furnish our shareholders with target business financial statements, we may lose the ability to complete an otherwise advantageous initial business combination with some prospective target businesses. The federal proxy rules require that a proxy statement with respect to a vote on a business combination meeting certain financial significance tests include historical and/or pro forma financial statement disclosure in periodic reports. We will include the same financial statement disclosure in connection with our tender offer documents, whether or not they are required under the tender offer rules. These financial statements may be required to be prepared in accordance with, or be reconciled to, accounting principles generally accepted in the United States of America, or GAAP, or international financing reporting standards as issued by the International Accounting Standards Board, or IFRS, depending on the circumstances and the historical financial statements may be required to be audited in accordance with the standards of the Public Company Accounting Oversight Board (United States), or PCAOB. These financial statement requirements may limit the pool of potential target businesses we may acquire because some targets may be unable to provide such statements in time for us to disclose such statements in accordance with federal proxy rules and complete our initial business combination within the prescribed time frame. We are an emerging growth company within the meaning of the Securities Act, and if we take advantage of certain exemptions from disclosure requirements available to emerging growth companies, this could make our securities less attractive to investors and may make it more difficult to compare our performance with other public companies. We are an emerging growth company within the meaning of the Securities Act, as modified by the JOBS Act, and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. As a result, our shareholders may not have access to certain information they may deem important. We could be an emerging growth company for up to five years, although circumstances could cause us to lose that status earlier, including if the market value of our Class A ordinary shares held by non-affiliates exceeds $700 million as of any June 30 before that time, in which case we would no longer be an emerging growth company as of the following December 31. We cannot predict whether investors will find our securities less attractive because we will rely on these exemptions. If some investors find our securities less attractive as a result of our reliance on these exemptions, the trading prices of our securities may be lower than they otherwise would be, there may be a less active trading market for our securities and the trading prices of our securities may be more volatile. Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. We have elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, we, as an emerging growth company, can adopt the new or revised standard at the time private TABLE OF CONTENTS companies adopt the new or revised standard. This may make comparison of our financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accountant standards used. Compliance obligations under the Sarbanes-Oxley Act may make it more difficult for us to effectuate a business combination, require substantial financial and management resources, and increase the time and costs of completing an acquisition. Section 404 of the Sarbanes-Oxley Act requires that we evaluate and report on our system of internal controls beginning with our Annual Report on Form 10-K for the year ending December 31, 2018. Only in the event we are deemed to be a large accelerated filer or an accelerated filer will we be required to comply with the independent registered public accounting firm attestation requirement on our internal control over financial reporting. Further, for as long as we remain an emerging growth company, we will not be required to comply with the independent registered public accounting firm attestation requirement on our internal control over financial reporting. The fact that we are a blank check company makes compliance with the requirements of the Sarbanes-Oxley Act particularly burdensome on us as compared to other public companies because a target business with which we seek to complete our initial business combination may not be in compliance with the provisions of the Sarbanes-Oxley Act regarding adequacy of its internal controls. The development of the internal control of any such entity to achieve compliance with the Sarbanes-Oxley Act may increase the time and costs necessary to complete any such acquisition. Because we are incorporated under the laws of the Cayman Islands, you may face difficulties in protecting your interests, and your ability to protect your rights through the U.S. Federal courts may be limited. We are an exempted company incorporated under the laws of the Cayman Islands. As a result, it may be difficult for investors to effect service of process within the United States upon our directors or executive officers, or enforce judgments obtained in the United States courts against our directors or officers. Our corporate affairs will be governed by our amended and restated memorandum and articles of association, the Companies Law (as the same may be supplemented or amended from time to time) and the common law of the Cayman Islands. We will also be subject to the federal securities laws of the United States. The rights of shareholders to take action against the directors, actions by minority shareholders and the fiduciary responsibilities of our directors to us under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands as well as from English common law, the decisions of whose courts are of persuasive authority, but are not binding on a court in the Cayman Islands. The rights of our shareholders and the fiduciary responsibilities of our directors under Cayman Islands law are different from what they would be under statutes or judicial precedent in some jurisdictions in the United States. In particular, the Cayman Islands has a different body of securities laws as compared to the United States, and certain states, such as Delaware, may have more fully developed and judicially interpreted bodies of corporate law. In addition, Cayman Islands companies may not have standing to initiate a shareholders derivative action in a Federal court of the United States. We have been advised by our Cayman Islands legal counsel that the courts of the Cayman Islands are unlikely (i) to recognize or enforce against us judgments of courts of the United States predicated upon the civil liability provisions of the federal securities laws of the United States or any state; and (ii) in original actions brought in the Cayman Islands, to impose liabilities against us predicated upon the civil liability provisions of the federal securities laws of the United States or any state, so far as the liabilities imposed by those provisions are penal in nature. In those circumstances, although there is no statutory enforcement in the Cayman Islands of judgments obtained in the United States, the courts of the Cayman Islands will recognize and enforce a foreign money judgment of a foreign court of competent jurisdiction without retrial on the merits based on the principle that a judgment of a competent foreign court imposes upon the judgment debtor an obligation to pay the sum for which judgment has been given provided certain conditions are met. For a foreign judgment to be enforced in the Cayman Islands, such judgment must be final and conclusive and for a liquidated sum, and must not be (i) in respect of taxes, a fine or penalty, (ii) inconsistent with a Cayman Islands judgment in respect of the same matter, (iii) impeachable on the TABLE OF CONTENTS grounds of fraud or (iv) obtained in a manner, or be of a kind the enforcement of which is, contrary to natural justice or the public policy of the Cayman Islands (awards of punitive or multiple damages may well be held to be contrary to public policy). A Cayman Islands Court may stay enforcement proceedings if concurrent proceedings are being brought elsewhere. As a result of all of the above, public shareholders may have more difficulty in protecting their interests in the face of actions taken by management, members of the board of directors or controlling shareholders than they would as public shareholders of a United States company. Provisions in our amended and restated memorandum and articles of association may inhibit a takeover of us, which could limit the price investors might be willing to pay in the future for our Class A ordinary shares and could entrench management. Our amended and restated memorandum and articles of association contain provisions that may discourage unsolicited takeover proposals that shareholders may consider to be in their best interests. These provisions include the ability of the board of directors to designate the terms of and issue new series of preference shares, which may make more difficult the removal of management and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for our securities. In addition, public shareholders are restricted from redeeming their Class A ordinary shares with respect to more than an aggregate of 20% of the public shares. See If the anchor investors purchase large amounts of public shares in the open market, they may attempt to leverage their redemption rights in order to affect the outcome of a potential initial business combination. Cyber incidents or attacks directed at us could result in information theft, data corruption, operational disruption and/or financial loss. We depend on digital technologies, including information systems, infrastructure and cloud applications and services, including those of third parties with which we may deal. Sophisticated and deliberate attacks on, or security breaches in, our systems or infrastructure, or the systems or infrastructure of third parties or the cloud, could lead to corruption or misappropriation of our assets, proprietary information and sensitive or confidential data. As an early stage company without significant investments in data security protection, we may not be sufficiently protected against such occurrences. We may not have sufficient resources to adequately protect against, or to investigate and remediate any vulnerability to, cyber incidents. It is possible that any of these occurrences, or a combination of them, could have adverse consequences on our business and lead to financial loss. Risks Associated with Acquiring and Operating a Business in Foreign Countries If we pursue a target company with operations or opportunities outside of the United States for our initial business combination, we may face additional burdens in connection with investigating, agreeing to and completing such initial business combination, and if we effect such initial business combination, we would be subject to a variety of additional risks that may negatively impact our operations. If we pursue a target a company with operations or opportunities outside of the United States for our initial business combination, we would be subject to risks associated with cross-border business combinations, including in connection with investigating, agreeing to and completing our initial business combination, conducting due diligence in a foreign jurisdiction, having such transaction approved by any local governments, regulators or agencies and changes in the purchase price based on fluctuations in foreign exchange rates. If we effect our initial business combination with such a company, we would be subject to any special considerations or risks associated with companies operating in an international setting, including any of the following: costs and difficulties inherent in managing cross-border business operations; rules and regulations regarding currency redemption; complex corporate withholding taxes on individuals; TABLE OF CONTENTS laws governing the manner in which future business combinations may be effected; exchange listing and/or delisting requirements; tariffs and trade barriers; regulations related to customs and import/export matters; local or regional economic policies and market conditions; unexpected changes in regulatory requirements; longer payment cycles; tax issues, such as tax law changes and variations in tax laws as compared to the United States; currency fluctuations and exchange controls; rates of inflation; challenges in collecting accounts receivable; cultural and language differences; employment regulations; underdeveloped or unpredictable legal or regulatory systems; corruption; protection of intellectual property; social unrest, crime, strikes, riots and civil disturbances; regime changes and political upheaval; terrorist attacks and wars; and deterioration of political relations with the United States. We may not be able to adequately address these additional risks. If we were unable to do so, we may be unable to complete such initial business combination, or, if we complete such combination, our operations might suffer, either of which may adversely impact our business, financial condition and results of operations. If our management following our initial business combination is unfamiliar with United States securities laws, they may have to expend time and resources becoming familiar with such laws, which could lead to various regulatory issues. Following our initial business combination, our management may resign from their positions as officers or directors of the company and the management of the target business at the time of the business combination will remain in place. Management of the target business may not be familiar with United States securities laws. If new management is unfamiliar with United States securities laws, they may have to expend time and resources becoming familiar with such laws. This could be expensive and time-consuming and could lead to various regulatory issues which may adversely affect our operations. After our initial business combination, substantially all of our assets may be located in a foreign country and substantially all of our revenue will be derived from our operations in such country. Accordingly, our results of operations and prospects will be subject, to a significant extent, to the economic, political and legal policies, developments and conditions in the country in which we operate. The economic, political and social conditions, as well as government policies, of the country in which our operations are located could affect our business. Economic growth could be uneven, both geographically and among various sectors of the economy and such growth may not be sustained in the future. If in the future such country s economy experiences a downturn or grows at a slower rate than TABLE OF CONTENTS expected, there may be less demand for spending in certain industries. A decrease in demand for spending in certain industries could materially and adversely affect our ability to find an attractive target business with which to consummate our initial business combination and if we effect our initial business combination, the ability of that target business to become profitable. Exchange rate fluctuations and currency policies may cause a target business ability to succeed in the international markets to be diminished. In the event we acquire a non-U.S. target, all revenues and income would likely be received in a foreign currency, and the dollar equivalent of our net assets and distributions, if any, could be adversely affected by reductions in the value of the local currency. The value of the currencies in our target regions fluctuate and are affected by, among other things, changes in political and economic conditions. Any change in the relative value of such currency against our reporting currency may affect the attractiveness of any target business or, following consummation of our initial business combination, our financial condition and results of operations. Additionally, if a currency appreciates in value against the dollar prior to the consummation of our initial business combination, the cost of a target business as measured in dollars will increase, which may make it less likely that we are able to consummate such transaction. We may reincorporate in another jurisdiction in connection with our initial business combination, and the laws of such jurisdiction may govern some or all of our future material agreements and we may not be able to enforce our legal rights. In connection with our initial business combination, we may relocate the home jurisdiction of our business from the Cayman Islands to another jurisdiction. If we determine to do this, the laws of such jurisdiction may govern some or all of our future material agreements. The system of laws and the enforcement of existing laws in such jurisdiction may not be as certain in implementation and interpretation as in the United States. The inability to enforce or obtain a remedy under any of our future agreements could result in a significant loss of business, business opportunities or capital. TABLE OF CONTENTS CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS Some of the statements contained in this prospectus may constitute forward-looking statements for purposes of the federal securities laws. Our forward-looking statements include, but are not limited to, statements regarding our or our management team s expectations, hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words anticipate, believe, continue, could, estimate, expect, intends, may, might, plan, possible, potential, predict, project, should, would and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements in this prospectus may include, for example, statements about: our ability to complete our initial business combination; our success in retaining or recruiting, or changes required in, our officers, key employees or directors following our initial business combination; our officers and directors allocating their time to other businesses and potentially having conflicts of interest with our business or in approving our initial business combination; the proceeds of the forward purchase shares being available to us; our potential ability to obtain additional financing to complete our initial business combination; our pool of prospective target businesses; the ability of our officers and directors to generate a number of potential investment opportunities; our public securities potential liquidity and trading; the lack of a market for our securities; the use of proceeds not held in the trust account or available to us from interest income on the trust account balance; the trust account not being subject to claims of third parties; or our financial performance following this offering. The forward-looking statements contained in this prospectus are based on our current expectations and beliefs concerning future developments and their potential effects on us. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described under the heading Risk Factors beginning on page 32. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws. TABLE OF CONTENTS USE OF PROCEEDS We are offering 30,000,000 units at an offering price of $10.00 per unit. We estimate that the net proceeds of this offering, together with the funds we will receive from the sale of the private placement warrants, will be used as set forth in the following table. Without Over-Allotment Option Over-Allotment Option Exercised Gross proceeds Gross proceeds from units offered to public(1) $ 300,000,000 $ 345,000,000 Gross proceeds from private placement warrants offered in the private placement 8,000,000 8,900,000 Total gross proceeds $ 308,000,000 $ 353,900,000 Offering expenses(2) Underwriting commissions (2.0% of gross proceeds from units offered to public, excluding deferred portion)(3) $ 6,000,000 $ 6,900,000 Legal fees and expenses 500,000 500,000 Printing and engraving expenses 40,000 40,000 Accounting fees and expenses 29,500 29,500 SEC/FINRA Expenses 95,200 95,200 Travel and road show 50,000 50,000 NYSE listing and filing fees 85,000 85,000 Director & Officer liability insurance premiums 150,000 150,000 Miscellaneous 50,300 50,300 Total offering expenses (other than underwriting commissions) $ 1,000,000 $ 1,000,000 Proceeds after offering expenses $ 301,000,000 $ 346,000,000 Held in trust account(3) $ 300,000,000 $ 345,000,000 % of public offering size 100% 100% Not held in trust account $ 1,000,000 $ 1,000,000 The following table shows the use of the $1,000,000 of net proceeds not held in the trust account.(4) Amount % of Total Legal, accounting, due diligence, travel, and other expenses in connection with any business combination(5) $ 350,000 35.00% Legal and accounting fees related to regulatory reporting obligations 120,000 12.00% Payment for office space, administrative and support services 240,000 24.00% Consulting, travel and miscellaneous expenses incurred during search for initial business combination target 150,000 15.00% NYSE fees 85,000 8.50% Working capital to cover miscellaneous expenses 55,000 5.50% Total $ 1,000,000 100.0% (1) Includes amounts payable to public shareholders who properly redeem their shares in connection with our successful completion of our initial business combination. (2) In addition, a portion of the offering expenses have been paid from the proceeds of loans from our sponsor of up to $200,000 as described in this prospectus. These loans will be repaid upon completion TABLE OF CONTENTS of this offering out of the $1,000,000 of offering proceeds that have been allocated for the payment of offering expenses other than underwriting commissions. In the event that offering expenses are less than set forth in this table, any such amounts will be used for post-closing working capital expenses. (3) The underwriters have agreed to defer underwriting commissions of 3.5% of the gross proceeds of this offering. Upon and concurrently with the completion of our initial business combination, $10,500,000, which constitutes the underwriters deferred commissions (or $12,075,000 if the underwriters over-allotment option is exercised in full) will be paid to the underwriters from the funds held in the trust account. See Underwriting beginning on page 32. The remaining funds, less amounts released to the trustee to pay redeeming shareholders, will be released to us and can be used to pay all or a portion of the purchase price of the business or businesses with which our initial business combination occurs or for general corporate purposes, including payment of principal or interest on indebtedness incurred in connection with our initial business combination, to fund the purchases of other companies or for working capital. The underwriters will not be entitled to any interest accrued on the deferred underwriting discounts and commissions. (4) These expenses are estimates only. Our actual expenditures for some or all of these items may differ from the estimates set forth herein. For example, we may incur greater legal and accounting expenses than our current estimates in connection with negotiating and structuring our initial business combination based upon the level of complexity of such business combination. In the event we identify a business combination target in a specific industry subject to specific regulations, we may incur additional expenses associated with legal due diligence and the engagement of special legal counsel. In addition, our staffing needs may vary and as a result, we may engage a number of consultants to assist with legal and financial due diligence. We do not anticipate any change in our intended use of proceeds, other than fluctuations among the current categories of allocated expenses, which fluctuations, to the extent they exceed current estimates for any specific category of expenses, would not be available for our expenses. The amount in the table above does not include interest available to us from the trust account. (5) Includes estimated amounts that may also be used in connection with our initial business combination to fund a no shop provision and commitment fees for financing. Of the $308.0 million in proceeds we receive from this offering and the sale of the private placement warrants described in this prospectus, or $353.9 million if the underwriters over-allotment option is exercised in full, $300.0 million ($10.00 per unit), or $345.0 million if the underwriters over-allotment option is exercised in full ($10.00 per unit), will be deposited into a trust account with Continental Stock Transfer & Trust Company acting as trustee, and $8.0 million, or up to $8.9 million if the underwriters over-allotment option is exercised in full, will be used to pay expenses in connection with the closing of this offering and for working capital following this offering. The proceeds held in the trust account will be invested only in U.S. government treasury obligations with a maturity of 180 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act which invest only in direct U.S. government treasury obligations. Prior to such time, such proceeds will not be invested and will be held in a non-interest bearing trust account. We estimate the interest earned on the trust account following the investment of such funds will be approximately $600,000 per year, assuming an interest rate of 0.2% per year; however, we can provide no assurances regarding this amount. We will not be permitted to withdraw any of the principal or interest held in the trust account, except for the withdrawal of interest to pay our income taxes, if any, until the earliest of (i) the completion of our initial business combination, (ii) the redemption of our public shares if we are unable to complete our initial business combination within 24 months from the closing of this offering, subject to applicable law, or (iii) the redemption of our public shares properly submitted in connection with a shareholder vote to approve an amendment to our amended and restated memorandum and articles of association that would affect the substance or timing of our obligation to redeem 100% of our public shares if we have not consummated an initial business combination within 24 months from the closing of this offering. Based on current interest rates, we expect that interest earned on the trust account will be sufficient to pay income taxes. The net proceeds held in the trust account may be used as consideration to pay the sellers of a target business with which we ultimately complete our initial business combination. If our initial business combination is paid for using equity or debt securities, or not all of the funds released from the trust TABLE OF CONTENTS account are used for payment of the consideration in connection with our initial business combination, we may apply the balance of the cash released from the trust account for general corporate purposes, including for maintenance or expansion of operations of the post-transaction company, the payment of principal or interest due on indebtedness incurred in completing our initial business combination, to fund the purchase of other companies or for working capital. There is no limitation on our ability to raise funds privately or through loans in connection with our initial business combination. We believe that amounts not held in trust will be sufficient to pay the costs and expenses to which such proceeds are allocated. This belief is based on the fact that while we may begin preliminary due diligence of a target business in connection with an indication of interest, we intend to undertake in-depth due diligence, depending on the circumstances of the relevant prospective acquisition, only after we have negotiated and signed a letter of intent or other preliminary agreement that addresses the terms of a business combination. However, if our estimate of the costs of undertaking in-depth due diligence and negotiating a business combination is less than the actual amount necessary to do so, we may be required to raise additional capital, the amount, availability and cost of which is currently unascertainable. If we are required to seek additional capital, we could seek such additional capital through loans or additional investments from our founder or an affiliate of our founder, but such persons are not under any obligation to advance funds to, or invest in, us. We will reimburse our sponsor or an affiliate of our sponsor for office space, secretarial and administrative services provided to members of our management team, in an amount not to exceed $10,000 per month. Upon completion of our initial business combination or our liquidation, we will cease paying these monthly fees. Prior to the closing of this offering, our sponsor has agreed to loan us up to $200,000 to be used for a portion of the expenses of this offering. As of the date of this prospectus, we have borrowed $91,993 under the promissory note with our sponsor. These loans are non-interest bearing, unsecured and are due at the earlier of March 31, 2018 or the closing of this offering. The loans will be repaid upon the closing of this offering out of the $1,000,000 of offering proceeds that has been allocated to the payment of offering expenses. In addition, in order to finance transaction costs in connection with an intended initial business combination, our founder or an affiliate of our founder may, but is not obligated to, loan us funds as may be required. If we complete our initial business combination, we would repay such loaned amounts out of the proceeds of the trust account released to us. Otherwise, such loans would be repaid only out of funds held outside the trust account. In the event that our initial business combination does not close, we may use a portion of the working capital held outside the trust account to repay such loaned amounts but no proceeds from our trust account would be used to repay such loaned amounts. Up to $1,500,000 of such loans may be convertible into warrants of the post business combination entity at a price of $1.00 per warrant at the option of the lender. The warrants would be identical to the private placement warrants. Except as set forth above, the terms of such loans, if any, have not been determined and no written agreements exist with respect to such loans. Prior to the completion of our initial business combination, we do not expect to seek loans from parties other than our founder or an affiliate of our founder as we do not believe third parties will be willing to loan such funds and provide a waiver against any and all rights to seek access to funds in our trust account. Prior to this offering, we entered into forward purchase agreements pursuant to which the anchor investors agreed to purchase an aggregate of 15,000,000 Class A ordinary shares and Class C ordinary shares plus 5,000,000 redeemable warrants for a purchase price of $10.00 multiplied by the number of Class A ordinary shares and Class C ordinary shares purchased, or $150,000,000 in the aggregate, in a private placement to close concurrently with our initial business combination. The forward purchase agreements provide that prior to signing a definitive agreement with respect to a potential initial business combination, and prior to making any material amendment to such definitive agreement following signing, anchor investors representing over 50% of the forward purchase shares must approve such potential initial business combination or amendment, as applicable. In connection with these agreements, we also issued to the anchor investors an aggregate of 3,750,000 founder shares for $0.01 per share prior to this offering. The founder shares issued to the anchor investors are subject to similar contractual conditions and restrictions TABLE OF CONTENTS as the founder shares issued to our sponsor. The anchor investors will have redemption rights with respect to any public shares they own. The forward purchase warrants will have the same terms as our public warrants, except that, pursuant to the applicable forward purchase agreement, one of the anchor investors will receive forward purchase warrants exercisable only for Class C ordinary shares. The forward purchase agreements and the strategic partnership agreement also provide that the anchor investors and the BSOF Entities are entitled to (i) a right of first refusal with respect to any proposed issuance of additional equity or equity-linked securities (including working capital loans from our founder that are convertible into private placement warrants) by us, including for capital raising purposes, or if we offer or seek commitments for any equity or equity-linked security to backstop any such capital raise, in connection with the closing of our initial business combination (other than the units we are offering by this prospectus and their component public shares and warrants, the founder shares (and Class A ordinary shares and/or Class C ordinary shares for which such founder shares are convertible), the forward purchase shares, forward purchase warrants and the private placement warrants, and any securities issued by us as consideration to any seller in our initial business combination and warrants issued upon the conversion of working capital loans to us made by our founder that are convertible into private placement warrants) and (ii) registration rights with respect to (A) the forward purchase securities and Class A ordinary shares and Class C ordinary shares underlying the anchor investors forward purchase warrants and the anchor investors and BSOF Entities founder shares, and (B) any other Class A ordinary shares or warrants acquired by the anchor investors, including any time after we complete our initial business combination. In addition, the forward purchase agreements for two of our anchor investors provide each such anchor investor with (i) the right to designate (prior to the consummation of a Business Combination) and the right to request the designation of (following the consummation of a Business Combination) one observer to our board of directors and (ii) the right to acquire, at the same price paid by, directly or indirectly, and on the same terms and conditions as, our founder, a number of founder shares equal to its pro rata share, based on its allocation of forward purchase shares, of five percent of the founder shares of any special purpose acquisition company sponsored by our founder for 10 years following the closing of our initial business combination, which we refer to as the new acquisition company. Further, such forward purchase agreements for the same two anchor investors provide such investors with the right to purchase up to an aggregate of $63,000,000 in equity securities of the new acquisition company substantially similar to the forward purchase securities on the same or more favorable terms as new investors in such equity securities. The strategic partnership agreement provides that, so long as the Company remains a blank check company as such term is defined in Rule 419 under the Securities Act and prior to our initial business combination, the BSOF Entities have the right to designate one observer to our board of directors. The proceeds from the sale of the forward purchase shares may be used as part of the consideration to the sellers in the initial business combination, expenses in connection with our initial business combination or for working capital in the post-transaction company. These purchases will be required to be made regardless of whether any Class A ordinary shares are redeemed by our public shareholders and are intended to provide us with minimum funding level for our initial business combination. Our sponsor, officers and directors have agreed, pursuant to a written letter agreement, not to participate in the formation of, or become an officer or director of, any other blank check company until we have entered into a definitive agreement regarding our initial business combination or we have failed to complete our initial business combination within 24 months after the closing of this offering. TABLE OF CONTENTS DIVIDEND POLICY We have not paid any cash dividends on our ordinary shares to date and do not intend to pay cash dividends prior to the completion of our initial business combination. The payment of cash dividends in the future will be dependent upon our revenues and earnings, if any, capital requirements and general financial condition subsequent to completion of our initial business combination. The payment of any cash dividends subsequent to our initial business combination will be within the discretion of our board of directors at such time. If we decrease the size of this offering, or if the underwriters do not exercise their over-allotment option in full, our sponsor will forfeit an amount of Class B ordinary shares to maintain the ownership of our sponsor (together with any permitted transferees of our sponsor s founder shares), on an as-converted basis, at 20% of the sum of (i) the number of public shares (including any such shares issued following the exercise of the over-allotment option) plus (ii) the number of founder shares held by our sponsor (together with any permitted transferees of such founder shares) following such forfeiture. Further, if we incur any indebtedness in connection with a business combination, our ability to declare dividends may be limited by restrictive covenants we may agree to in connection therewith. TABLE OF CONTENTS
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diff --git a/parsed_sections/prospectus_summary/2018/PAGS_pagseguro_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/PAGS_pagseguro_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad
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@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2018/PAVM_pavmed-inc_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/PAVM_pavmed-inc_prospectus_summary.txt
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@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This Prospectus is part of a registration statement on Form S-1 that we filed with the SEC. From time to time, we may file one or more prospectus supplements to add, update or change information included in this Prospectus. You should read both this Prospectus and any applicable prospectus supplements, together with additional information described below under the caption "Where You Can Find Additional Information." You should also carefully consider, among other things, the matters discussed in the
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diff --git a/parsed_sections/prospectus_summary/2018/PNXP_pineapple_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/PNXP_pineapple_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..9a3dc1ef0778ab44c8091a35c9225b375dc501d5
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+++ b/parsed_sections/prospectus_summary/2018/PNXP_pineapple_prospectus_summary.txt
@@ -0,0 +1,13 @@
+PROSPECTUS SUMMARY
+ 
+ AS USED IN THIS PROSPECTUS, UNLESS THE CONTEXT OTHERWISE REQUIRES, WE, US, OUR, AND MINARO CORP. REFERS TO MINARO CORP. THE FOLLOWING SUMMARY DOES NOT CONTAIN ALL OF THE INFORMATION THAT MAY BE IMPORTANT TO YOU. YOU SHOULD READ THE ENTIRE PROSPECTUS BEFORE MAKING AN INVESTMENT DECISION TO PURCHASE OUR COMMON STOCK.
+ 
+ Minaro Corp.
+ 
+ We are a newly organized company and intend to commence operations in the 3D design production area. The 3D visualization can be presented in advertising, marketing, developing and presenting projects. We are offering full service in the area and are able to satisfy our future clients. Our sole officer and director Yulia Lazaridou has the experience and needed skills for such work and we believe it is the main tool of our business development in this area. She worked as an interior designer for a design company Gravity White Design, Inc. and got the needed skills for the current business of Minaro Corp. She oversaw the design projects and post service for the clients and was in direct connection with them. Ms. Lazaridou s only occupation at the moment is managing the business processes of Minaro Corp. 
+ 
+ Minaro Corp. was incorporated in Nevada on March 14, 2017. We intend to use the net proceeds from this offering to develop our business operations (See Description of Business and Use of Proceeds ). To implement our plan of operations we require a minimum of $40,000 for the next twelve months as described in our Plan of Operations. Our sole officer and director, Yulia Lazaridou, has verbally agreed to loan funds as needed to Minaro Corp. on business demand for the registration and production process (exhibit 10.1). There is no assurance that we will generate any revenue in the first twelve months after completion of our offering or ever generate any revenue. 
+ 
+ As of the date of this filing our cash balance is $1,197. We believe that this amount will allow us to pay our obligations and purchase needed equipment, if required for our business operations for at least two months. 
+ 
+ As of April 30
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diff --git a/parsed_sections/prospectus_summary/2018/PRT_permrock_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/PRT_permrock_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad
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@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2018/RCUS_arcus_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/RCUS_arcus_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
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+++ b/parsed_sections/prospectus_summary/2018/RCUS_arcus_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2018/RDGL_vivos-inc_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/RDGL_vivos-inc_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..4cb5ea53e13f20f9f21d7cf0415529b4000f1226
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@@ -0,0 +1 @@
+Prospectus Summary 1 Risk Factors 7 Special Note Regarding Forward-Looking Information 18 Use of Proceeds 19 Market for our Common Stock 20 Dividends 21 Dilution 22 Capitalization 23 Management s Discussion and Analysis of Financial Condition and Results of Operations 24 Business 34 Directors and Executive Officers 44 Security Ownership of Certain Beneficial Owners and Management 50 Certain Relationships and Related Party Transactions 52 Description of Securities 53 Underwriting 57 Determination of Offering Price 60 Shares Eligible for Future Sale 60 Changes In and Disagreements with Accountant on Accounting Issues and Financial Disclosure 61 Legal Matters 62 Experts 62 Where You Can Find More Information 62 Index to Financial Statements F-1 PROSPECTUS SUMMARY The following summary highlights information contained elsewhere in this prospectus and does not contain all of the information that you should consider in making your investment decision in our securities. Before investing in our securities, you should carefully read this entire prospectus, including our financial statements and the related notes included in this prospectus and the information set forth under the headings "Risk Factors" and "Management s Discussion and Analysis of Financial Condition and Results of Operations." Business Summary We are a development stage radiation oncology medical device company engaged in the development of our yttrium-90 based brachytherapy device, RadioGel , for the treatment of non-resectable tumors. A prominent team of radiochemists, scientists and engineers, collaborating with strategic partners, including national laboratories, universities and private corporations, lead our development efforts. Unless the context otherwise requires, the words "Vivos Inc," "Vivos," "we," "the Company," "us" and "our" refer to Vivos Inc, a Delaware corporation. Our current focus is on the development of our RadioGel device candidate, including obtaining approval from the Food and Drug Administration ("FDA") to market and sell RadioGel as a Class II medical device. RadioGel is an injectable particle-gel for brachytherapy radiation treatment of cancerous tumors in people and animals. RadioGel is comprised of a hydrogel, or a substance that is liquid at room temperature and then gels when reaching body temperature after injection into a tumor. In the gel are small, one micron, yttrium-90 phosphate particles ("Y-90"). Once injected, these inert particles are locked in place inside the tumor by the gel, delivering a very high local radiation dose. The radiation is beta, consisting of high-speed electrons. These electrons only travel a short distance so the device can deliver high radiation to the tumor with minimal dose to the surrounding tissue. Optimally, patients can go home immediately following treatment without the risk of radiation exposure to family members. Since Y-90 has a half-life of 2.7 days, the radioactively drops to 5% of its original value after ten days. RadioGel incorporates patented technology developed for Battelle Memorial Institute ("Battelle") at Pacific Northwest National Laboratory, a leading research institute for government and commercial customers. Battelle has granted us an exclusive license to patents covering the manufacturing, processing and applications of RadioGel (the "Battelle License"). Other intellectual property protection for RadioGel includes proprietary production processes and trademark protection in 17 countries. We plan to continue efforts to develop new refinements on the production process, and the product and application hardware, as a basis for future patents. We are working towards obtaining approval from the FDA to market and sell RadioGel as a Class II medical device. We first requested FDA approval of RadioGel in June 2013, at which time the FDA classified RadioGel as a medical device. The Company then followed with a 510(k) submission which the FDA responded, in turn, with a request for a physician letter of substantial equivalence and a reformatted 510(k) summary, which the Company provided in January 2014. In February 2014, the FDA ruled the device as not substantially equivalent due to a lack of a predicate device and it was therefore classified as a Class III device. Class III devices are generally the highest risk devices and are therefore subject to the highest level of regulatory review, control and oversight. Class III devices must typically be approved by FDA before they are marketed. Class II devices represent lower risk devices than Class III and require fewer regulatory controls to provide reasonable assurance of the device s safety and effectiveness. In contrast, Class I devices are deemed to be lower risk than Class II or III, and are therefore subject to the least regulatory controls. We are currently developing test plans to address issues raised by the FDA in connection with our previous submissions regarding RadioGel , including developing specific test plans and specific indication of use. We intend to request that the FDA grant approval to re-apply for de novo classification of RadioGel , which would reclassify the device from a Class III device to a Class II device, further simplifying the path to FDA approval. In the event the FDA denies our application and subsequently determines during the de novo review that RadioGel cannot be classified as a Class I or Class I1 device, we will then need to submit a pre-market approval application to obtain the necessary regulatory approval as a Class III device. See also Business – Regulatory History for a discussion regarding the Company s application for FDA approval of RadioGel . CALCULATION OF REGISTRATION FEE Title Of Each Class Of Securities To Be Registered Proposed Maximum Aggregate Offering Price (1) Amount Of Registration Fee Common stock, $0.001 par value per share $ 6,9000,000.00 $ 859.05 Warrants to purchase shares of common stock (2)( 3 ) - - Shares of common stock issuable upon exercise of warrants ( 4 ) $ 8,625,000.00 1,073.81 Underwriter unit purchase option Shares of common stock included in Underwriter unit purchase option $ 660,000 82.17 Shares of common stock issuable upon exercise of warrants included in Underwriter unit purchase option 825,000.00 102.71 Total $ 17,010,000.00 $ 2,117.75 (5) (1) Estimated solely for the purpose of computing the amount of the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended ("Securities Act"). (2) Represents warrants to purchase a number of shares of common stock equal to 100% of the common stock sold in this offering at an exercise price of 125% of the public offering price of the shares of common stock. (3) Pursuant to Rule 457(g) of the Securities Act, no separate registration fee is required for the warrants. (4) Pursuant to Rule 416, there is also being registered such indeterminable additional securities as may be issued to prevent dilution as a result of stock splits, stock dividends or similar transactions. (5) $1,159 previously paid. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. ABOUT THIS PROSPECTUS You should rely only on the information contained in this prospectus and any prospectus supplement or free writing prospectus authorized by us. To the extent the information contained in this prospectus differs or varies from the information contained in any document filed prior to the date of this prospectus and incorporated by reference, the information in this prospectus will control. We have not authorized any other person to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. The information in this prospectus is accurate only as of the date it is presented. You should read this prospectus, and any prospectus supplement or free writing prospectus that we have authorized for use in connection with this offering, in their entirety before investing in our securities. We are offering to sell, and seeking offers to buy, the securities offered by this prospectus only in jurisdictions where offers and sales are permitted. The distribution of this prospectus and the offering of the securities offered by this prospectus in certain jurisdictions may be restricted by law. This prospectus does not constitute, and may not be used in connection with, an offer to sell, or a solicitation of an offer to buy, any securities offered by this prospectus in any jurisdiction in which it is unlawful for such person to make such an offer or solicitation. This prospectus contains company names, product names, trade names, trademarks and service marks of Vivos Inc and other organizations, all of which are the property of their respective owners. We own or have rights to trademarks, service marks or trade names that we use in connection with the operation of our business. In addition, our name, logo and website names and addresses are our service marks or trademarks. Although we have applied for a trademark covering "Vivos Inc," the application is currently pending; to date, RadioGel is currently our only registered trademark. The other trademarks, trade names and service marks appearing in this prospectus are the property of their respective owners. Solely for convenience, the trademarks, service marks, tradenames and copyrights referred to in this prospectus are listed without the , and TM symbols, but we will assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensors to these trademarks, service marks and tradenames. We further note that the representations, warranties and covenants made by us in any agreement that is filed as an exhibit to the registration statement of which this prospectus forms a part were made solely for the benefit of the parties to such agreement, including, in some cases, for the purpose of allocating risk among the parties to such agreements, and should not be deemed to be a representation, warranty or covenant to you. Moreover, such representations, warranties or covenants were accurate only as of the date when made. Accordingly, such representations, warranties and covenants should not be relied on as accurately representing the current state of our affairs. We anticipate affecting a reverse split of our authorized, and issued and outstanding shares of common stock prior to consummation of the offering at a ratio of one-for-fifty (the "Reverse Split"), pending review and acceptance of the Reverse Split from the Financial Industry Regulatory Authority ("FINRA"). Unless otherwise specifically indicated, reference to shares of common stock in this prospectus is pre-Reverse Split, and does not reflect the one-for-fifty adjustment that will occur as a result of the Reverse Split. See also "Risk Factors" beginning on page 7. Our IsoPet Solutions division was established in May 2016 to focus on the veterinary oncology market, namely engagement of university veterinarian hospitals to develop the detailed therapy procedures to treat animal tumors and ultimately use of the technology in private clinics. In January 2018, we received notification from the FDA that the Center for Veterinary Medicine Product Classification Group ruled that RadioGel is classified as a device for animal therapy of feline sarcomas and canine soft tissue sarcomas, which is the most common type of cancer in animals. In addition, the FDA also reviewed and approved our label, which is a requirement for any device used in animals. We have worked with four different university veterinarian hospitals on RadioGel testing and therapy. Colorado State University demonstrated the procedures and the CT and PET-CT imaging of RadioGel. Washington State University treated four cats for feline sarcoma. They concluded that the product was safe and effective in killing cancer cells. A contract was signed with University of Missouri to treat canine sarcomas and equine sarcoids starting early in 2019. The safety review at UC Davis is almost completed. They will be treating prostate and liver cancer in dogs in 2019. These animal therapies will focus on creating labels that describe the procedures in detail as a guide to future veterinarians. The labels will be voluntarily submitted to the FDA for review. They will then be used as data for future FDA applications in the medical sector and as key intellectual property for licensing to private veterinary clinics. We anticipate that future profit will be derived from direct sales of RadioGel and related services, and from licensing to private medical and veterinary clinics in the U.S. and internationally. Exchange Listing and Reverse Stock Split On June 26, 2017, our board of directors (the "Board") approved the Reverse Split at an exchange ratio of between one-for-ten and one-for-fifty, with our Board retaining the discretion as to whether to implement the Reverse Split and which exchange ratio to implement. The Reverse Split is intended to allow us to meet the minimum share price requirement of a national securities exchange, such as the Nasdaq Capital Market or the NYSE American, LLC. On February 5, 2018, our Board determined that, following the effectiveness of the registration statement, of which this prospectus is a part, and prior to the closing of this offering, we will affect the Reverse Split at a ratio of one-for-fifty. Risk Factors Our business is subject to substantial risk. Please carefully consider the section titled "Risk Factors" on page 7 of this prospectus for a discussion of the factors you should carefully consider before deciding to purchase the securities offered by this prospectus. These risks include, among others: we are a development stage company with no current revenues, and limited experience developing medical devices, including those intended for use in the radiation oncology field, which makes it difficult to assess our future viability; we depend heavily on the success of RadioGel , and we cannot be certain that we will be able to obtain regulatory approval for, or successfully commercialize, RadioGel , or any other future product candidates; failures or delays in the commencement or business plan could delay, prevent or limit our ability to generate revenue and continue our business; we face significant competition, and if we are unable to compete effectively, we may not be able to achieve or maintain significant market penetration or improve our results of operations; if we are unable to adequately protect our proprietary technology, or obtain and maintain issued patents that are sufficient to protect our product candidates, others could compete against us more directly, which would have a material adverse impact on our business, results of operations, financial condition and prospects; and we have incurred significant net losses since inception and we will continue to incur substantial operating losses for the foreseeable future. The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state or other jurisdiction where the offer or sale is not permitted. Subject to completion, dated February 8 , 2018 PRELIMINARY PROSPECTUS VIVOS INC [______] Shares of Common Stock and Warrants to Purchase up to [_______] Shares of Common Stock We are offering (i) [____] shares of common stock and (ii) warrants to purchase up to [______] shares of common stock. Each share of common stock we sell will be accompanied by a warrant to purchase up to [__] share[s] of common stock. The warrants are exercisable immediately at an exercise price per share equal to 125% of the public offering price per share of common stock in this offering, and expire five years from the date of issuance. The common stock and warrants are immediately separable but can only be purchased together in this offering. Our common stock is quoted on the OTC PINK Marketplace under the symbol "RDGL." We intend to apply to list our common stock on a national securities exchange, such as the NASDAQ Capital Market or the NYSE American, LLC under the symbol "RDGL," although no assurances can be given that such listing will be achieved in a timely manner or at all. There is no established public trading market for the warrants, and we do not intend to apply to list the warrants on any securities exchange or automated quotation system. On February 8 , 2018, the closing price for our common stock, as quoted on the OTC Pink Marketplace, was $0.06 per share. Investing in our securities involves risks. See "Risk Factors" beginning on page 7 of this prospectus. Per Share Per Warrant Total Public Offering Price $ $ $ Underwriting discount (1)(2) $ $ $ Offering Proceeds, Before Expenses $ $ $ (1) The public offering price and underwriting discount correspond to an assumed public offering price per share of $[___] and an assumed public offering price per full warrant of $0.001. (2) We have also agreed to issue to the underwriter warrants to purchase common shares in an amount equal to 10% of the aggregate number of shares sold in this offering and to reimburse the underwriter for certain of their expenses. Please see "Underwriting" for a complete description of the compensation payable to the underwriter. We have granted the underwriter an option to purchase up to an additional [___] shares of common stock and/or warrants to purchase up to an aggregate of shares of common stock, in any combinations thereof, to cover over-allotments, if any. The underwriter can exercise this option at any time within 45 days after the date of this prospectus. The report of our independent auditors contains an explanatory paragraph as to our ability to continue as a going concern, which could prevent us from obtaining new financing on reasonable terms or at all. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved these securities, or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The underwriters expect to deliver the common stock and the warrants against payment on or about [______], 2018. VIEWTRADE SECURITIES, INC. The date of this prospectus is [______], 2018. Corporate Information Vivos Inc was incorporated under the laws of Delaware on December 23, 1994 as Savage Mountain Sports Corporation ("SMSC"). On September 6, 2006, we changed our corporate name to Advanced Medical Isotope Corporation, and on December 29, 2017, we changed our corporate name once again to Vivos Inc Our principal executive offices are located at 719 Jadwin Avenue, Richland, Washington 99352, and our telephone number is (509) 736-4000. Our website address is www.radiogel.com. The information contained on our website is not part of this prospectus. We have included our website address as a factual reference and do not intend it to be an active link to our website. The Offering Common stock we are offering [___] shares of our common stock. Common stock outstanding immediately after this offering [______] shares (assuming no exercise of the warrants offered hereby). Warrants we are offering Warrants to purchase up to [_______] shares of common stock. Each share of common stock sold in this offering will be accompanied by a warrant to purchase [__] share[s] of our common stock, at an exercise price per share equal to 125% of the public offering price of our common stock in this offering. The warrants will be immediately exercisable, and may be exercised for a period of five years following the date of issuance. Over-allotment option We have granted the underwriters an option for a period of up to 45 days from the date of this prospectus to purchase up to an additional [_____] shares of common stock and/or warrants to purchase up to an aggregate of shares of common stock, in any combinations thereof, solely to cover over-allotments, if any, at the public offering price less the underwriting discounts and commissions. Because the warrants are not listed on a national securities exchange or other nationally recognized trading market, the underwriters will be unable to satisfy any overallotment of shares and warrants without exercising the underwriters overallotment option with respect to the warrants. As a result, the underwriters will exercise their overallotment option for all of the warrants which are over-allotted, if any, at the time of the initial offering of the shares and the warrants. However, because our common stock is publicly traded, the underwriters may satisfy some or all of the overallotment of shares of our common stock, if any, by purchasing shares in the open market and will have no obligation to exercise the overallotment option with respect to our common stock. Use of proceeds We estimate that the net proceeds to us from this offering, after deducting the estimated offering expenses payable by us, will be approximately $[___] million, excluding any proceeds we may receive upon exercise of the warrants, if any. We intend to use the net proceeds of this offering for research and development, primarily related to obtaining FDA approval for RadioGel as a Class II medical device, ordinary course working capital needs and other general corporate purposes. See "Use of Proceeds" beginning on page 19 for a more complete description of the intended use of proceeds from this offering. Reverse Stock Split We intend to affect the Reverse Split of our authorized and issued and outstanding shares of common stock prior to consummation of the offering at a ratio of one-for-fifty, pending review and acceptance of the Reverse Split from the Financial Industry Regulatory Authority ("FINRA"). Unless otherwise specifically stated, each reference to shares of common stock in this prospectus is pre-Reverse Split, and does not reflect the one-for-fifty adjustment anticipated as a result of the Reverse Split. Risk factors You should read the "Risk Factors" section beginning on page 7 of this prospectus for a discussion of factors to consider carefully before deciding to invest in shares of our common stock. OTC PINK symbol "RDGL." Proposed Listing We intend to list our common stock on a national securities exchange, such as the NASDAQ Capital Market or the NYSE American, LLC, under the symbol "RDGL." No assurances can be given that we will be successful. The number of shares of our common stock to be outstanding after this offering is based on 65,695,213 shares of our common stock outstanding as of January 31, 2018, prior to giving effect to the Reverse Split. The number of shares outstanding excludes the following, in each case as of such date, before giving effect to the Reverse Split: 1,097,623 shares of common stock issuable upon the exercise of stock options outstanding as of January 31, 2018, at a weighted average exercise price of $1.14 per share; 304,201 shares of common stock issuable upon the exercise of warrants outstanding as of January 31, 2018, at a weighted average exercise price of $2.63 per share; 18,155,788 shares of common stock issuable upon conversion of convertible promissory notes outstanding as of January 31, 2018; 37,786,2 3 0 shares of common stock issuable upon the conversion of Series A Convertible Preferred Stock ("Series A Preferred") as of January 31, 2018; and [____] shares of common stock issuable upon exercise of warrants to be issued in connection with this offering, and [____] shares of common stock issuable to the underwriter in connection with this offering. Except as otherwise indicated, all information in this prospectus assumes: (i) no exercise of the outstanding options and warrants or the conversion of any outstanding convertible promissory notes or shares of Series A Preferred into common shares described above; and (ii) no exercise of the underwriters option to purchase additional shares of common stock and/or warrants. SUMMARY CONSOLIDATED FINANCIAL DATA The summary consolidated statements of operations data presented below is derived from our unaudited financial statements for the quarters ended September 30, 2017 and 2016 and our audited financial statements for the years ended December 31, 2016 and 2015 included elsewhere in this prospectus. The following summary consolidated financial data should be read with "Management s Discussion and Analysis of Financial Condition and Results of Operations" and our financial statements and related notes included elsewhere in this prospectus. Our historical results are not necessarily indicative of the results that may be expected in any future period. The summary financial data in this section are not intended to replace the financial statements and are qualified in their entirety by the financial statements and related notes included elsewhere in this prospectus. Three months ended September 30, Year ended December 31, 2017 2016 2016 2015 Consulting Revenues $ - $ 4,054 $8,108 $24,108 Operating expenses Cost of materials - - - 474 Sales and marketing expenses 52,620 65,995 284,138 - Depreciation and amortization expense - 738 2,947 5,672 Professional fees 211,954 265,497 2,068,796 741,375 Stock based compensation 24,283 27,427 675,324 80,635 Payroll expenses 436,319 160,500 652,877 679,259 Research and development - - 328,026 149,650 Loan fees - 8,664 - - General and administrative expenses 66,973 137,593 432,470 408,306 Total operating expenses 961,799 666,414 4,444,578 2,065,371 Operating loss (961,799 ) (666,414 ) (4,436,470) (2,041,263) Non-operating income (expense): Interest expense (527,188 ) (85,830 ) (6,259,467) (3,196,153) Net gain (loss) on settlement of debt - (111,328 ) 3,108,342 3,562,067 Loss on sale of stock - (54,561 ) Net gain (loss) on debt extinguishment (369,428 ) - Net gain (loss) on derivative liability 9 762,151 (2,244,353) 7,887,025 Grant income 21,010 21,010 Loss on impaired assets - - (43,957) - Non-operating income (expense), net (896,607 ) 510,432 ) (5,418,425) 8,273,949 Income (loss) before Income Taxes (1,858,406 ) (155,982 ) (9,854,895) 6,232,686 Income tax provision - - - - Net income (loss) $ (1,858,406 ) (155,982 ) $(9,854,895) $6,232,686 Earnings (loss) per common share $ (0.04 ) (0.01 ) $(0.46) $0.34 Weighted average number of common shares outstanding 52,471,896 19,999,985 21,497,069 18,505,467 (1) See Note 2 to our audited consolidated financial statements for an explanation of the method used to calculate basic and diluted net loss per common share and the weighted-average number of shares used in the computation of the per share amounts. Consolidated Balance Sheet Data(1): At September 30, 2017 At December 31, 2016 Actual Pro Forma (2) Cash and cash equivalents $ 22,110 $ 27,889 Total assets 29,546 41,996 Accounts payable and accrued expenses 794,627 1,137,086 Related party accounts payable 71,297 109,718 Accrued interest payable 319,372 114,755 Payroll liabilities payable 44,441 499,502 Convertible notes payable, net 1,959,276 544,508 Derivative liability - 324,532 Related party promissory note 383,771 332,195 Total stockholders equity (deficit) (3,543,238 ) (13,020,300 ) (1) The as adjusted balance sheet data gives effect to the assumed sale and issuance by us of [______] shares of common stock warrants to purchase up to [______] shares of our common stock in this offering, at an assumed public offering price of $[__] per share and assumed public offering price of $[__] per warrant, and after deducting the estimated underwriting discounts and estimated offering expenses payable by us assuming no value is attributed to the warrants, and the warrants are accounted for and classified as equity. (2) Each $0.10 increase (decrease) in the assumed public offering price of $[__ ] per share of common stock would increase (decrease) each of our as adjusted cash and cash equivalents, total assets and total stockholders equity (deficit) by approximately $[__], assuming the public offering price per warrant remains at $[__] and we sell the maximum amount of common stock and warrants set forth on the cover page of this prospectus and after deducting the estimated underwriting discounts and estimated offering expenses payable by us. RISK FACTORS Investing in our common stock involves a high degree of risk. You should carefully consider the risks described below, as well as the other information in this prospectus, including our consolidated financial statements and the related notes and "Management s Discussion and Analysis of Financial Condition and Results of Operations," before deciding whether to invest in our securities. The occurrence of any of the events or developments described below could harm our business, financial condition, operating results, and growth prospects. In such an event, the market price of our common stock could decline, and you may lose all or part of your investment. Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our business operations. RISKS ASSOCIATED WITH THE COMPANY S BUSINESS Our independent registered public accounting firms reports on its financial statements questions our ability to continue as a going concern. Our independent registered public accounting firms reports on our financial statements for the years ended December 31, 2016 and 2015 express doubt about our ability to continue as a going concern. The reports include an explanatory paragraph stating that we suffered recurring losses, used significant cash in support of our operating activities and, based on our current operating levels, require additional capital or significant restructuring to sustain our operation for the foreseeable future. There is no assurance that we will be able to obtain sufficient additional capital to continue our operations and to alleviate doubt about our ability to continue as a going concern. If we obtain additional financing, such funds may not be available on favorable terms and likely would entail considerable dilution to existing shareholders. Any debt financing, if available, may involve restrictive covenants that restrict our ability to conduct our business. It is extremely remote that we could obtain any financing on any basis that did not result in considerable dilution for shareholders. Inclusion of a "going concern qualification" in the report of our independent accountants or in any future report may have a negative impact on our ability to obtain debt or equity financing and may adversely impact its stock price. A combination of our current financial condition and the FDA s determinations to date regarding our brachytherapy products raise material concerns about ability to continue as a going concern. We will not be able to continue as a going concern unless we obtain financing. Depending upon the amount of financing, if any, we are able to obtain, we may not receive adequate funds to continue the approval process for RadioGelTM or other brachytherapy products with the FDA. We have generated operating losses since inception, which are expected to continue, and have increasing cash requirements, which we may be unable to satisfy. We have generated material operating losses since inception. We had an accumulated deficit of $61,663,407 as of September 30, 2017, including a net loss of $3,793,967 and $10,144,168 for the nine months ended September 30, 2017 and 2016, respectively, and an accumulated deficit of $57,869,440 as of December 31, 2016, including a net loss of $9,854,895 for the year ended December 31, 2016 and a net income of $6,232,686 for the year ended December 31, 2015. Historically, we have relied upon investor funds to maintain our operations and develop our business. We anticipate raising additional capital within the next twelve months from investors for working capital and to execute our business plans, although we can provide no assurance that additional investor funds will be available on terms acceptable to us. If we are unable to obtain additional financing to meet our working capital requirements, we may have to cease operations. We require at least $1.5 million per year to maintain current operating activities. Over the next 12-24 months, we believe it will cost approximately $5 million to $10 million to fund: (1) the FDA approval process and initial deployment of the brachytherapy products and (2) initiate regulatory approval processes outside of the United States. The continued deployment of the brachytherapy products and a worldwide regulatory approval effort will require additional resources and personnel. The principal variables in the timing and amount of spending for the brachytherapy products in the next 12-24 months will be the FDA s classification of our brachytherapy products as Class II or Class III devices (or otherwise) and any requirements for additional studies which may possibly include clinical studies. Thereafter, the principal variables in the amount of our spending and our financing requirements would be the timing of any approvals and the nature of our arrangements with third parties for manufacturing, sales, distribution and licensing of those products and the products success in the U.S. and elsewhere. We intend to fund our activities through strategic transactions such as licensing and partnership agreements or additional capital raises. The recent economic events, including the inherent instability and volatility in global capital markets, as well as the lack of liquidity in the capital markets, could impact our ability to obtain financing and our ability to execute our business plan. We have a limited operating history, which may make it difficult to evaluate our business and prospects. We have a limited operating history upon which one can base an evaluation of our business and prospects. As a company in the development stage, there are substantial risks, uncertainties, expenses and difficulties to which our business is subject. To address these risks and uncertainties, we must do the following: successfully develop and execute the business strategy; respond to competitive developments; and attract, integrate, retain and motivate qualified personnel. There is no assurance that we will achieve or maintain profitable operations or that we will obtain or maintain adequate working capital to meet our obligations as they become due. We cannot be certain that our business strategy will be successfully developed and implemented or that we will successfully address the risks that face our business. In the event that we do not successfully address these risks, our business, prospects, financial condition, and results of operations could be materially and adversely affected. Our new products are regulated and require appropriate clearances and approvals to be marketed in the U.S. and globally. There is no assurance the FDA or other global regulatory authorities will grant us permission to market our brachytherapy Y-90 RadioGelTM device. We have been working with the FDA to obtain clearance for our brachytherapy Y-90 RadioGelTM device, but no assurances have been received. On December 23, 2014, we announced that we submitted a de novo to the FDA for marketing clearance for our patented Y-90 RadioGelTM device pursuant to Section 513(f)(2) of the U.S. Food, Drug and Cosmetic Act (the "Act"). In June 2015, the FDA notified us that the de novo was not granted. In February 2014, the FDA found the same device under Section 510(k) of the Act not substantially equivalent, and concluded that the device is classified by statute as a Class III medical device, unless the device is reclassified. We are seeking reclassification of the product to Class II. If we are successful in seeking reconsideration of our de novo application, as a regulatory matter, the device could be on an easier and faster path to market in the United States. However, there would still be the requirements to complete the in vitro and in vivo testing, and then some human clinical trials. That testing date is submitted in a de novo pre-market application and if accepted we could then go to market. As a practical matter, we would still need to secure funding and commercial arrangements before marketing could commence. If the de novo is declined and if we obtain funding to permit us to continue operations, we will explore steps toward seeking approval for the device as a Class III medical device. Generally, the time period and cost of seeking approval as a Class III medical device is materially greater than the time period and cost of seeking approval as a Class II medical device. If we seek approval as a Class III device, human clinical trials will be necessary. Generally, human trials for Class III products are larger, of longer duration and costlier than those for Class II devices. If human clinical trials are necessary, there will be additional cost and time to reach marketing clearance or approval. Unless we obtain sufficient funding, we will be unable to do the foregoing activities. There can be no assurance that the product will be approved as either a Class II or Class III device by the FDA even if additional data is provided. There can be no assurance that we will receive FDA approval, or if we do , the timing thereof. If we are successful in increasing the size of our organization, we may experience difficulties in managing growth. We are a small organization with a minimal number of employees. If we are successful, we may experience a period of significant expansion in headcount, facilities, infrastructure and overhead and further expansion may be required to address potential growth and market opportunities. Any such future growth will impose significant added responsibilities on members of management, including the need to improve our operational and financial systems and to identify, recruit, maintain and integrate additional managers. Our future financial performance and our ability to compete effectively will depend, in part, on the ability to manage any future growth effectively. Our business is dependent upon the continued services of our Chief Executive Officer, Michael Korenko. Should we lose the services of Mr. Korenko, our operations will be negatively impacted. Our business is dependent upon the expertise of our Chief Executive Officer, Michael Korenko. Mr. Korenko is essential to our operations. Accordingly, an investor must rely on Mr. Korenko s management decisions and his willingness to continue as the Company s Chief Executive Officer. We do not maintain key man insurance on Mr. Korenko s life. The loss of the services of Mr. Korenko would have a material adverse effect upon our business. We are heavily dependent on consultants for many of the services necessary to continue operations. The loss of any of these consultants could have a material adverse effect on our business, results of operations and financial condition. Our success is heavily dependent on the continued active participation of certain consultants and collaborating scientists. Certain key employees and consultants have no written employment contracts. Loss of the services of any one or more of our consultants could have a material adverse effect upon our business, results of operations and financial condition. If we are unable to hire and retain additional qualified personnel, the business and financial condition may suffer. Our success and achievement of our growth plans depend on our ability to recruit, hire, train and retain highly qualified technical, scientific, regulatory and managerial employees, consultants and advisors. Competition for qualified personnel among pharmaceutical and biotechnology companies is intense, and an inability to attract and motivate additional highly skilled personnel required for the expansion of our activities, or the loss of any such persons, could have a material adverse effect on our business, results of operations and financial condition. Our revenues have historically been derived from sales made to a small number of customers. We have discontinued prior operations related to our core business. To succeed, we will need to recommence our operations and achieve sales to a materially larger number of customers. During 2014, we ceased all previous manufacturing and sales activities. Our sales for the nine months ended September 30, 2017 and year ended December 31, 2016 and 2015 consisted of consulting revenue only. Our consulting revenues for the nine months ended September 30, 2017 and years ended December 31, 2016 and 2015 were made to one customer, and those sales constituted 100% of total revenues for those years. At such time as we re-commence active operations, no assurances can be given that we will be successful in commercializing our products or expanding the number of customers purchasing our products and services. Many of our competitors have greater resources and experience than we have. Many of our competitors have greater financial resources, longer history, broader experience, greater name recognition, and more substantial operations than hawse have , and they represent substantial long-term competition for us. Our competitors may be able to devote more financial and human resources than we can towards research, new product development, regulatory approvals, and marketing and sales. Our competitors may develop or market products that are viewed by customers as more effective or more economical than our products. There is no assurance that we will be able to compete effectively against current and future competitors, and such competitive pressures may adversely affect our business and results of operations. Our future revenues depend upon acceptance of our current and future products in the markets in which we compete. Our future revenues depend upon receipt of financing, regulatory approval and the successful production, marketing, and sales of the various isotopes we might market in the future. The rate and level of market acceptance of each of these products, if any, may vary depending on the perception by physicians and other members of the healthcare community of their safety and efficacy as compared to that of any competing products; the clinical outcomes of any patients treated; the effectiveness of our sales and marketing efforts in the United States, Europe, Far East, Middle East, and Russia; any unfavorable publicity concerning our products or similar products; the price of our products relative to other products or competing treatments; any decrease in current reimbursement rates from the Centers for Medicare and Medicaid Services or third-party payers; regulatory developments related to the manufacture or continued use of our products; availability of sufficient supplies to either purchase or manufacture our products; our ability to produce sufficient quantities of our products; and the ability of physicians to properly utilize our products and avoid excessive levels of radiation to patients. Any material adverse developments with respect to the commercialization of any such products may adversely affect revenues and may cause us to continue to incur losses in the future. In the future, we will rely heavily on a limited number of suppliers. Some of the products we might market and components thereof are currently available only from a limited number of suppliers, several of which are international suppliers. Failure to obtain deliveries from these sources could have a material adverse effect on our ability to operate. We may incur material losses and costs as a result of product liability claims that may be brought against us. We face an inherent business risk of exposure to product liability claims in the event that products supplied by us fail to perform as expected or such products result, or are alleged to result, in bodily injury. Any such claims may also result in adverse publicity, which could damage our reputation by raising questions about the safety and efficacy of our products, and could interfere with our efforts to market our products. A successful product liability claim against us in excess of our available insurance coverage or established reserves may have a material adverse effect on our business. Although we currently maintain liability insurance in amounts we believes are commercially reasonable, any product liability we may incur may exceed our insurance coverage. We are subject to the risk that certain third parties may mishandle our products. If we market products, we will likely rely on third parties, such as commercial air courier companies, to deliver the products, and on other third parties to package the products in certain specialized packaging forms requested by customers. Thus, we would be subject to the risk that these third parties may mishandle our products , which could result in material adverse effects, particularly given the radioactive nature of some of the products. Our operations expose us to the risk of material environmental liabilities. We are subject to potentially material liabilities related to the remediation of environmental hazards and to personal injuries or property damages that may be caused by hazardous substance releases and exposures. We are subject to various federal, state, local and foreign government requirements regulating the discharge of materials into the environment or otherwise relating to the protection of the environment. These laws and regulations can impose substantial fines and criminal sanctions for violations, and can require installation of costly equipment or operational changes to limit emissions and/or decrease the likelihood of accidental hazardous substance releases. We expect to incur capital and operating costs to comply with these laws and regulations. In addition, changes in laws, regulations and enforcement of policies, the discovery of previously unknown contamination or new technology or information related to individual sites, or the imposition of new clean-up requirements or remedial techniques may require us to incur costs in the future that would have a negative effect on our financial condition or results of operations. Operational hazards could result in the spread of contamination within our facility and require additional funding to correct. We are subject to uncertainties regarding reimbursement for use of our products. Hospitals and freestanding clinics may be less likely to purchase our products if they cannot be assured of receiving favorable reimbursement for treatments using our products from third-party payers, such as Medicare and private health insurance plans. Third-party payers are increasingly challenging the pricing of certain medical services or devices, and there is no assurance that they will reimburse our customers at levels sufficient for us to maintain favorable sales and price levels for our products. There is no uniform policy on reimbursement among third-party payers, and there is no assurance that our products will continue to qualify for reimbursement from all third-party payers or that reimbursement rates will not be reduced. A reduction in or elimination of third-party reimbursement for treatments using our products would likely have a material adverse effect on our revenues. Our future growth is largely dependent upon our ability to develop new technologies that achieve market acceptance with appropriate margins. Our business operates in global markets that are characterized by rapidly changing technologies and evolving industry standards. Accordingly, future growth rates depend upon a number of factors, including our ability to (i) identify emerging technological trends in our target end-markets, (ii) develop and maintain competitive products, (iii) enhance our products by adding innovative features that differentiate our products from those of our competitors, and (iv) develop, manufacture and bring products to market quickly and cost-effectively. Our ability to develop new products based on technological innovation can affect our competitive position and requires the investment of significant resources. These development efforts divert resources from other potential investments in our business, and they may not lead to the development of new technologies or products on a timely basis or that meet the needs of our customers as fully as competitive offerings. In addition, the markets for our products may not develop or grow as we currently anticipate . The failure of our technologies or products to gain market acceptance due to more attractive offerings by our competitors could significantly reduce our revenues and adversely affect our competitive standing and prospects. We may rely on third parties to represent us locally in the marketing and sales of our products in international markets and our revenue may depend on the efforts and results of those third parties. Our future success may depend, in part, on our ability to enter into and maintain collaborative relationships with one or more third parties, the collaborator s strategic interest in our products and our products under development, and the collaborator s ability to successfully market and sell any such products. We intend to pursue collaborative arrangements regarding the marketing and sales of our products; however, we may not be able to establish or maintain such collaborative arrangements, or if we are able to do so, our collaborators may not be effective in marketing and selling our products. To the extent that we decide not to, or are unable to, enter into collaborative arrangements with respect to the sales and marketing of our products, significant capital expenditures, management resources and time will be required to establish and develop an in-house marketing and sales force with technical expertise. To the extent that we depend on third parties for marketing and distribution, any revenues received by us will depend upon the efforts and results of such third parties, which may or may not be successful. We may pursue strategic acquisitions that may have an adverse impact on our business. Executing our business strategy may involve pursuing and consummating strategic transactions to acquire complementary businesses or technologies. In pursuing these strategic transactions, even if we do not consummate them, or in consummating such transactions and integrating the acquired business or technology, we may expend significant financial and management resources and incur other significant costs and expenses. There is no assurance that any strategic transactions will result in additional revenues or other strategic benefits for our business. We may issue our stock as consideration for acquisitions, joint ventures or other strategic transactions, and the use of stock as purchase consideration could dilute the interests of our current stockholders. In addition, we may obtain debt financing in connection with an acquisition. Any such debt financing may involve restrictive covenants relating to capital-raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and pursue business opportunities, including potential acquisitions. In addition, such debt financing may impair our ability to obtain future additional financing for working capital, capital expenditures, acquisitions, general corporate or other purposes, and a substantial portion of cash flows, if any, from our operations may be dedicated to interest payments and debt repayment, thereby reducing the funds available to us for other purposes. We will need to hire additional qualified accounting personnel in order to remediate a material weakness in our internal control over financial accounting, and we will need to expend any additional resources and efforts that may be necessary to establish and to maintain the effectiveness of our internal control over financial reporting and our disclosure controls and procedures. As a public company, we are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the Sarbanes-Oxley Act of 2002. Our management is required to evaluate and disclose its assessment of the effectiveness of our internal control over financial reporting as of each year-end, including disclosing any "material weakness" in our internal control over financial reporting. A material weakness is a control deficiency, or combination of control deficiencies, that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected. As a result of its assessment, management has determined that there is a material weakness due to the lack of segregation of duties and, due to this material weakness, management concluded that, as of December 31, 2016 and 2015, our internal control over financial reporting was ineffective. This material weakness was first identified in our Form 10-K/A amended annual report for the year ended December 31, 2008. This material weakness has the potential of adversely impacting our financial reporting process and our financial reports. Because of this material weakness, management also concluded that our disclosure controls and procedures were ineffective as of December 31, 2016 and 2015. We need to hire additional qualified accounting personnel in order to resolve this material weakness. We will also need to expend any additional resources and efforts that may be necessary to establish and to maintain the effectiveness of our internal control over financial reporting and disclosure controls and procedures. We may be unable to make timely license and patent payments. Patent costs associated with existing and new technology are significant. Existing patent and license fees must be paid for us to maintain rights to certain technology. We would forfeit our exclusive rights to licensed technologies if we failed to pay patent and rights fees in a timely fashion. There is no assurance of sufficient capital to meet ongoing legal costs associated with the patent costs for our technology. Our patented or other technologies may infringe on other patents, which may expose us to costly litigation. It is possible that our patented or other technologies may infringe on patents or other rights owned by others. We may have to alter our products or processes, pay licensing fees, defend infringement actions or challenge the validity of the patents in court, or cease activities altogether because of patent rights of third parties, thereby causing additional unexpected costs and delays to us . Patent litigation is costly and time consuming, and we may not have sufficient resources to pursue such litigation. If we do not obtain a license under such patents, if we are found liable for infringement, or if we are not able to have such patents declared invalid, we may be liable for significant money damages, may encounter significant delays in bringing products to market or may be precluded from participating in the manufacture, use or sale of products or methods of treatment requiring such licenses. Protecting our intellectual property is critical to our innovation efforts. We own or have a license to use several U.S. and foreign patents and patent applications, trademarks and copyrights. Our intellectual property rights may be challenged, invalidated or infringed upon by third parties, or we may be unable to maintain, renew or enter into new licenses of third party proprietary intellectual property on commercially reasonable terms. In some non-U.S. countries, laws affecting intellectual property are uncertain in their application, which can adversely affect the scope or enforceability of our patents and other intellectual property rights. Any of these events or factors could diminish or cause us to lose the competitive advantages associated with our intellectual property, subject us to judgments, penalties and significant litigation costs, or temporarily or permanently disrupt our sales and marketing of the affected products or services. We may not be able to protect our trade secrets and other unpatented proprietary technology, which could give competitors an advantage. We rely upon trade secrets and other unpatented proprietary technology. We may not be able to adequately protect our rights with regard to such unpatented proprietary technology, or competitors may independently develop substantially equivalent technology. We seek to protect trade secrets and proprietary knowledge, in part through confidentiality agreements with our employees, consultants, advisors and collaborators. Nevertheless, these agreements may not effectively prevent disclosure of our confidential information and may not provide us with an adequate remedy in the event of unauthorized disclosure of such information, and as a result our competitors could gain a competitive advantage. General economic conditions in markets in which we do business can impact the demand for our goods and services. Decreased demand for our products and services could have a negative impact on our financial performance and cash flow. Demand for our products and services, in part, depends on the general economic conditions affecting the countries and industries in which we do business. A downturn in economic conditions in a country or industry that we serve may adversely affect the demand for our products and services, in turn negatively impacting our operations and financial results. Further, changes in demand for our products and services can magnify the impact of economic cycles on our businesses. Unanticipated contract terminations by current customers can negatively impact operations, financial results and cash flow. Our earnings, cash flow and financial position are exposed to financial market risks worldwide, including interest rate and currency exchange rate fluctuations and exchange rate controls. Fluctuations in domestic and world financial markets could adversely affect interest rates and impact our ability to obtain credit or attract investors. We are subject to extensive government regulation in jurisdictions around the world in which we do business. Regulations address, among other things, environmental compliance, import/export restrictions, healthcare services, taxes and financial reporting, and those regulations can significantly increase the cost of doing business, which in turn can negatively impact our operations, financial results and cash flow. If we are successful in developing manufacturing capability, we will be subject to extensive government regulation and intervention both in the U.S. and in all foreign jurisdictions in which we conduct business. Compliance with applicable laws and regulations will result in higher capital expenditures and operating costs, and changes to current regulations with which we comply can necessitate further capital expenditures and increases in operating costs to enable continued compliance. Additionally, from time to time, we may be involved in proceedings under certain of these laws and regulations. Foreign operations are subject to political instabilities, restrictions on funds transfers, import/export restrictions, and currency fluctuation. Volatility in raw material and energy costs, interruption in ordinary sources of supply, and an inability to recover from unanticipated increases in energy and raw material costs could result in lost sales or could significantly increase the cost of doing business. Market and economic conditions affecting the costs of raw materials, utilities, energy costs, and infrastructure required to provide for the delivery of our products and services are beyond our control. Any disruption or halt in supplies, or rapid escalations in costs, could adversely affect our ability to manufacture products or to competitively price our products in the marketplace. To date, the ultimate impact of energy costs increases has been mitigated through price increases or offset through improved process efficiencies; however, continuing escalation of energy costs could have a negative impact upon our business and financial performance. RISKS RELATED TO OUR COMMON STOCK Our common stock is currently quoted on the OTC Pink Marketplace . Failure to develop or maintain a more active trading market may negatively affect the value of our common stock, may deter some potential investors from purchasing our common stock or other equity securities, and may make it difficult or impossible for stockholders to sell their shares of common stock. Our average daily volume of shares traded was 223,500 for the period January 1, 2017 through December 31, 2017, and 113,034 and 403,927 for years ended December 31, 2016 and 2015, respectively. Failure to develop or maintain an active trading market may negatively affect the value of our common stock, may make some potential investors unwilling to purchase our common stock or equity securities that are convertible into or exercisable for our common stock, and may make it difficult or impossible for our stockholders to sell their shares of common stock and recover any part of their investment. Our outstanding securities, the stock or securities that we may become obligated to issue under existing agreements, and certain provisions of those securities, may cause immediate and substantial dilution to existing stockholders and may make it more difficult to raise additional equity capital. We had 65,695,213 shares of common stock issued and outstanding on January 31, 2018. We also had outstanding on that date derivative securities consisting of options, warrants, shares of preferred stock and convertible notes that if they had been exercised and/or converted in full on January 31, 2018, would have resulted in the issuance of up to 57,343,842 additional shares of common stock. The issuance of shares upon the exercise of options or the conversion of convertible notes may result in substantial dilution to each stockholder by reducing that stockholder s percentage ownership of our total outstanding common stock. Additionally, we have outstanding notes that if not prepaid by specific dates entitle the holder to convert the principal and accrued interest into common stock at 60% of the lowest trading price during the previous thirty-day trading period of our common stock prior to conversion as provided in the notes. See Note 11 of the footnotes to the Consolidated Financial Statements for the years ended December 31, 2016 and 2015 beginning on page F-34 of this prospectus regarding the equity issuable upon conversion. The issuance of some or all of those warrants and any exercise of those warrants will have the effect of further diluting the percentage ownership of our other stockholders. The existence and terms of these derivative securities and other obligations may make it more difficult for us to raise additional capital through the sale of stock or other equity securities. Future sales of our common stock, including sales following exercise or conversion of derivative securities, or the perception that such sales may occur, may depress the price of common stock and could encourage short sales. The sale or availability for sale of substantial amounts of our shares in the public market, including shares issuable upon exercise of options or warrants or upon the conversion of convertible securities, or the perception that such sales may occur, may adversely affect the market price of our common stock. Any decline in the price of our common stock may encourage short sales, which could place further downward pressure on the price of our common stock. Our stock price is likely to be volatile. For the year ended December 31, 2017, the reported low closing price for our common stock was $0.02, and the reported high closing price was $0.18. For the year ended December 31, 2016, the reported low closing price for our common stock was $0.07 per share, and the reported high closing price was $0.96 per share. For the year ended December 31, 2015, the reported low closing price for our common stock was $0.03 per share, and the reported high closing price was $0.49 per share. There is generally significant volatility in the market prices, as well as limited liquidity, of securities of early stage companies, particularly early stage medical product companies. Contributing to this volatility are various events that can affect our stock price in a positive or negative manner. These events include, but are not limited to: governmental approvals, refusals to approve, regulations or other actions; market acceptance and sales growth of our products; litigation involving us or our industry; developments or disputes concerning our patents or other proprietary rights; changes in the structure of healthcare payment systems; departure of key personnel; future sales of our securities; fluctuations in our financial results or those of companies that are perceived to be similar to us; investors general perception of us; and general economic, industry and market conditions. If any of these events occur, it could cause our stock price to fall, and any of these events may cause our stock price to be volatile. Our common stock is subject to the "Penny Stock" rules of the SEC and the trading market in our securities is limited, which makes transactions in our common stock cumbersome and may reduce the value of an investment in our stock. The Securities and Exchange Commission ( "SEC" ) has adopted Rule 3a51-1, which establishes the definition of a "penny stock," for the purposes relevant to us, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, Rule 15g-9 requires that a broker or dealer approve a person s account for transactions in penny stocks and that the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased. In order to approve a person s account for transactions in penny stocks, the broker or dealer must obtain financial information and investment experience and objectives of the person and must make a reasonable determination that the transactions in penny stocks are suitable for that person and that the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks. The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the SEC relating to the penny stock market, which sets forth the basis on which the broker or dealer made the suitability determination, and that the broker or dealer received a signed, written agreement from the investor prior to the transaction. Generally, brokers may be less willing to execute transactions in securities subject to the "penny stock" rules. This may make it more difficult for investors to dispose of our common stock and may cause a decline in the market value of our stock. Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks. As a result of us issuing preferred stock, the rights of holders of our common stock and the value of our common stock may be adversely affected. Our board of directors is authorized to issue classes or series of preferred stock, without any action on the part of the stockholders. Our board of directors also has the power, without stockholder approval, to set the terms of any such classes or series of preferred stock, including voting rights, dividend rights and preferences over the common stock with respect to dividends or upon the liquidation, dissolution or winding-up of its business, and other terms. We have issued preferred stock that has a preference over the common stock with respect to the payment of dividends or upon liquidation, dissolution or winding-up, and with respect to voting rights. In accordance with that and with the issuance of preferred stock, the common stockholders voting rights have been diluted and it is possible that the rights of holders of the common stock or the value of the common stock have been adversely affected. We do not expect to pay any dividends on common stock for the foreseeable future. We have not paid any cash dividends on our common stock to date and do not anticipate we will pay cash dividends on our common stock in the foreseeable future. Accordingly, stockholders must be prepared to rely on sales of their common stock after price appreciation to earn an investment return, which may never occur. Any determination to pay dividends in the future will be made at the discretion of our board of directors and will depend on our results of operations, financial conditions, contractual restrictions, restrictions imposed by applicable law, and other factors that our board deems relevant. FINRA sales practice requirements may also limit your ability to buy and sell our common stock, which could depress the price of our shares. FINRA rules require broker-dealers to have reasonable grounds for believing that an investment is suitable for a customer before recommending that investment to the customer. Prior to recommending speculative low-priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer s financial status, tax status and investment objectives, among other things. Under interpretations of these rules, FINRA believes that there is a high probability such speculative low-priced securities will not be suitable for at least some customers. Thus, FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our shares, have an adverse effect on the market for our shares, and thereby depress our share price. RISKS RELATED TO THIS OFFERING Purchasers in this offering will experience immediate and substantial dilution in the book value of their investment. Because the public offering price per share and related warrant is substantially higher than the book value per share of our common stock, you will incur immediate and substantial dilution in the net tangible book value of the common stock you purchase in this offering. After giving effect to the assumed sale by us of [___] shares of our common stock and warrants to purchase up to [_____] shares of common stock at an assumed public offering price of $[__] per share and assumed public offering price of $[__] per warrant, and after deducting the estimated underwriting discounts and estimated offering expenses payable by us, you will suffer immediate and substantial dilution of $[___] per share in the pro forma net tangible book value of the common stock you purchase in this offering, assuming no value is attributed to the warrants, and the warrants are accounted for and classified as equity. To the extent outstanding options, warrants or other derivative securities are ultimately exercised or converted, or if we issue restricted stock to our employees under our 2015 Omnibus Securities and Incentive Plan, there will be further dilution to investors who purchase shares in this offering. In addition, if we issue additional equity securities or derivative securities, investors purchasing shares in this offering will experience additional dilution. For a further description of the dilution that you will experience immediately after this offering, see "Dilution" on page 22. We may allocate the net proceeds from this offering in ways that differ from our estimates based on our current plans and assumptions discussed in the section titled "Use of Proceeds" and with which you may not agree. The allocation of net proceeds of the offering set forth in the "Use of Proceeds" section of this prospectus represents our estimates based upon our current plans and assumptions regarding industry and general economic conditions, our future revenues and expenditures. The amounts and timing of our actual expenditures will depend on numerous factors, including market conditions, cash generated by our operations, business developments and related rate of growth. We may find it necessary or advisable to use portions of the proceeds from this offering for other purposes. Circumstances that may give rise to a change in the use of proceeds and the alternate purposes for which the proceeds may be used are discussed in the section in this prospectus entitled "Use of Proceeds." You may not have an opportunity to evaluate the economic, financial or other information on which we base our decisions on how to use our proceeds. As a result, you and other stockholders may not agree with our decisions. See "Use of Proceeds" on page 19 for additional information. Sales of a substantial number of shares of our common stock, or the perception that such sales may occur, may adversely impact the price of our common stock. Sales of a substantial number of shares of our common stock in the public market could occur at any time. These sales, or the perception that such sales may occur, may adversely impact the price of our common stock, even if there is no relationship between such sales and the performance of our business. As of January 31, 2018, we had 65,695,213 shares of common stock outstanding, as well as outstanding options to purchase an aggregate of 1,097,623 shares of our common stock at a weighted average exercise price of $1.14 per share, up to 18,155,788 shares of common stock issuable upon exercise of outstanding convertible promissory notes, up to 37,786,230 shares of common stock issuable upon conversion of outstanding shares of our preferred stock, and outstanding warrants to purchase up to an aggregate of 304,201 shares of our common stock at a weighted average exercise price of $2.63 per share. The exercise of such outstanding derivative securities may result in further dilution of your investment. The market price for our shares may decline following the implementation of our Reverse Split. We plan to effect a reverse split (the "Reverse Split") of our authorized, and issued and outstanding shares of common stock prior to consummation of the Offering at a ratio of one-for-fifty, pending review and acceptance of the Stock Consolidation from FINRA. No assurances can be given that the Reverse Split will have a long-term positive effect on the market price of our common stock. The market price of our common stock is based on factors that may be unrelated to the number of shares outstanding. These factors include our performance, general economic and market conditions and other factors, many of which are beyond our control. The market price for our post-Reverse Split shares may not rise or remain constant in proportion to the reduction in the number of pre- Reverse Split shares outstanding before the Reverse Split. Accordingly, the total market capitalization of our common stock after the Reverse Split may be lower than the total market capitalization before the Reverse Split. There is no public market for the warrants being offered by this prospectus, and we do not anticipate such a market ever developing in the future. There is no established public trading market for the warrants being offered by this prospectus and we do not intend to have the warrants listed on a national securities exchange or any other recognized trading system in the future. Without an active market, the liquidity of any warrants sold by means of this prospectus will be limited . The warrants being offered by means of this prospectus may not have any value. The warrants offered by us in this offering do not confer any rights of ownership of shares of common stock on its holders, such as voting rights or the right to receive dividends, but rather only represent the right to acquire shares of common stock at a fixed price for a limited period of time. In the event that the market price of our common stock does not exceed the exercise price of the warrants sold in this offering during the period when the warrants are exercisable, the warrants may not have any value. SPECIAL NOTE REGARDING FORWARD-LOOKING INFORMATION This prospectus includes forward-looking statements. All statements, other than statements of historical fact, contained in this prospectus, including statements regarding our future operating results, financial position and cash flows, our business strategy and plans and our objectives for future operations, are forward-looking statements. In some cases, you can identify forward-looking statements by terms such as "believe," "may," "will," "estimate," "continue," "anticipate," "plan," "target," "project," "contemplate," "predict," "potential," "would," "could," "should," "intend" and "expect" or the negative of these terms or other similar expressions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, operating results, business strategy, short-term and long-term business operations and objectives. These forward-looking statements speak only as of the date of this prospectus and are subject to a number of risks, uncertainties and assumptions, including those described under sections in this prospectus entitled "Risk Factors" and "Management s Discussion and Analysis of Financial Condition and Results of Operations"
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+PROSPECTUS SUMMARY 1 RISK FACTORS 14 SPECIAL CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS 28 USE OF PROCEEDS 30 MARKET PRICE OF OUR COMMON STOCK AND RELATED STOCKHOLDER MATTERS 30 DIVIDEND POLICY 30 CAPITALIZATION 31 DILUTION 32 SELECTED CONSOLIDATED FINANCIAL DATA 34 MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 36 UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS 53 BUSINESS 60 MANAGEMENT, DIRECTORS AND OFFICERS 67 COMPENSATION OF NOVUME DIRECTORS 73 EXECUTIVE COMPENSATION 74 NOVUME SOLUTIONS, INC. 2017 EQUITY AWARD PLAN 78 LIMITATIONS ON LIABILITY AND INDEMNIFICATION MATTERS 86 CERTAIN RELATIONSHIPS AND RELATED-PARTY TRANSACTIONS 87 PRINCIPAL STOCKHOLDERS 88 DESCRIPTION OF CAPITAL STOCK 89 DESCRIPTION OF SECURITIES WE ARE OFFERING 95 UNDERWRITING 96 LEGAL MATTERS 101 EXPERTS 101 WHERE YOU CAN FIND ADDITIONAL INFORMATION 101 INDEX TO FINANCIAL STATEMENTS F-1 EXHIBIT INDEX We have not authorized anyone to provide any information or to make any representations other than those contained in this prospectus or in any free writing prospectuses we have prepared. We and the underwriters take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. This prospectus is an offer to sell only the securities offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of our securities. For investors outside of the United States: Neither we nor the underwriters have done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. You are required to inform yourself about, and to observe any restrictions relating to, this offering and the distribution of this prospectus outside of the United States. Unless otherwise indicated, information contained in this prospectus concerning our industry and the markets in which we operate, including our general expectations and market position, market opportunity and market size, is based on information from various sources, including independent industry publications. In presenting this information, we have also made assumptions based on such data and other similar sources, and on our knowledge of, and our experience to date in, the markets for our services. This information involves a number of assumptions and limitations, and you are cautioned not to give undue weight to such estimates. We believe that the information from these industry publications that is included in this prospectus is reliable. The industry in which we operate is subject to a high degree of uncertainty and risk due to a variety of factors, including those described in "Risk Factors." These and other factors could cause results to differ materially from those expressed in the estimates made by the independent parties and by us. Our name, our logo, and our other trademarks or service marks appearing in this prospectus are the property of Novume Solutions, Inc. and its subsidiaries. Solely for convenience, trademarks and trade names referred to in this prospectus, including logos, artwork and other visual displays, may appear without the or TM symbols, but such references are not intended to indicate, in any way, that their respective owners will not assert, to the fullest extent under applicable law, their rights thereto. We do not intend our use or display of other companies' trade names or trademarks to imply a relationship with, or endorsement or sponsorship of us by, any other companies. Industry Data We use industry and market data throughout this prospectus, which we have obtained from market research, independent industry publications, or other publicly available information. Although we believe that each such source is reliable as of its respective date, the information contained in such sources has not been independently verified. While we are not aware of any misstatements regarding any industry and market data presented herein, such data is subject to change based on various factors, including those discussed under the heading Risk Factors in this prospectus. We have not commissioned, nor are we affiliated with, any of the independent industry sources we cite. PROSPECTUS SUMMARY This summary highlights information presented in greater detail elsewhere in this prospectus. This summary is not complete and does not contain all the information you should consider before investing in our securities. You should read the entire prospectus carefully before making an investment decision, including the risks of investing in our securities described under Risk Factors, our Management s Discussion and Analysis of Financial Condition and Results of Operations, and our consolidated financial statements and related notes included elsewhere in this prospectus. Unless otherwise noted or the context indicates otherwise, as used in this prospectus, the terms Novume, the Company, we, us, and our refer to Novume Solutions, Inc., a Delaware corporation, and its subsidiaries taken as a whole. Overview We are a leading provider of support services to the government contracting market. Generally speaking, our clients are companies that serve the government. We: Capture business by helping our clients to win government contracts. Manage risk by being prepared for, and responding to, disruptive events and creating secure systems. Run client back-end services by providing accounting, HR, IT, and other managed services. Perform their contract requirements by providing specialized staffing services, primarily in the aerospace and aviation industry. We support the government contracting industry that: Represented over $439 billion of U.S. federal government spending in FY 2017 according to USASpending.gov. Has proven to be relatively recession resistant. According to the U.S. federal government s System for Award Management ( SAM ) database, as of January 2, 2018 there are over 528,000 government contractors of which over 52,000 are located in Washington, DC, Maryland and Virginia, many of which are located in an area commonly known as the Beltway which is in close proximity to our headquarters. We see the professional services support industry in which we operate as: Highly fragmented. Comprised of numerous small- and medium-sized businesses that are ripe for consolidation. We believe these factors provide tremendous growth opportunities for us. Description of Services Government Contracting Support Solutions Our solutions assist government contractors with critical aspects of their business. Our services include: Outsourced accounting and finance services Managed information technology solutions Cloud hosting and security 1 Market intelligence and opportunity identification Capture and strategic advisory Proposal strategy and development Teaming support Managed human capital services Our services also help commercially-focused firms gain entry into the government contracting market. Since 1983, we have assisted clients in winning over $160 billion of government contract awards. Risk Mitigation and Crisis Management We combine best practice consulting with proven crisis management expertise, empowering clients to both anticipate and evaluate risks and manage crises when they occur. We assess, audit, develop, train and test strategies and programs encompassing: Predictive intelligence Business continuity Risk assessment Crisis management and communications Emergency and cyber incident response Behavioral risk and threat assessment Workplace violence prevention We are focused on prevention in addition to planning and response initiatives. For example, our behavioral risk and threat assessment program, BERTHA , positions organizations to prevent violence from occurring. This program enables our clients to identify early warning signs that may be exhibited by an individual long before they are on a path to violence. By educating others on emerging threats and strategies to combat those threats, we increase awareness of our initiatives through no-fee webinars, stress tests, and social media and blog articles that include analyses by members of our highly-credentialed expert council. We partner with industry associations and aggregators to deliver meaningful risk mitigation strategies and education. We also serve clients ranging from some of the world s largest global companies to main street businesses, public and private and across all industry sectors. We offer services to clients that enhance their ability to manage risk and respond to adverse events, thereby minimizing people, brand, reputation, financial, legal and regulatory impacts. Specialty Staffing We provide the Department of Defense and the aerospace and aviation industry with experienced maintenance and modification specialists. We also provide quality specialized contract personnel, temp-to-hire professionals, direct hires, and temporary or seasonal hires to a diverse group of companies nationally. Furthermore, we have been instrumental in placing highly-skilled technical professionals in some of the world s most prestigious engineering firms and government facilities for over 20 years. Some of the professionals that we place in the aerospace industry include: FAA Certified Airframe & Power Plant Mechanics Avionics and Embedded Software Engineers, FCC Certified Avionic Technicians I.A. Licensed Aircraft Inspectors Flight Test Engineers Process/Repair Engineers Simulation Engineers 2 Industry We provide professional services that offer scalable and compliant outsourced support to companies that deliver services to government and commercial clients. The industry in which we operate is fragmented with a large number of small firms providing niche services. A unique characteristic of the government contracting industry is that many of these companies are concentrated in the Beltway. According to USASpending.gov, the U.S. federal government s contract spending in Virginia, Maryland and Washington, DC was in excess of $92 billion in FY 2017. This represents 21% of the $436 billion of total federal government contract spending in FY 2017. While our immediate goal is to improve our ability to serve this sector by pooling our subsidiaries resources and client contacts, our ultimate objective is to expand our ability to meet the unique needs of this sector by assembling, through organic growth and strategic acquisitions, a complementary suite of service and systems providers with demonstrated ability to satisfy the need for high value talent and support services. In addition to the benefits of shared costs and pooled resources, we expect to benefit from the increased client involvement that targeted expansion of our market segments can provide. Drawing on the insights and experience of our combined leadership team, we expect to both increase our contact with, and improve our understanding of, the needs of the enterprises we serve. We would like to be recognized as the best place to go for outsourced services when a government contractor has to meet an unusual need. Clients To be a government contractor, a company must be able to meet rigid standards, therefore, our clients are typically well-established, financially-stable businesses with a reputation for excellence and high standards and a demonstrated ability to survive and prosper through innovation and adaptation. The U.S. federal government spent an average of over $450 billion each year from FY 2013 through 2017 for goods and services, according to USASpending.gov, creating one of the largest and most stable markets in the world, and there are thousands of government contractors providing these goods and services. The U.S. federal government s SAM database includes over 528,000 government contractors as of January 2, 2018. Since 1983, we have served thousands of these entities. In 2017, we provided services to 14 of the Top 100 largest federal contractors (based on their fiscal 2016 prime contracts in IT, systems integration, professional services and telecommunications) as identified by Washington Technology (https://washingtontechnology.com/toplists/top-100-lists/2017.aspx). Marketing and Sales We strive to position ourselves as a preferred, single-source provider of specialized professional services to our clients. We obtain client engagements primarily through business development efforts, cross-selling of our services to existing clients, and maintaining client relationships, as well as referrals from existing and former clients. Our business development efforts emphasize lead generation, industry group networking, and corporate visibility. Most of our business development efforts are led by members of our professional teams, who are also responsible for managing projects. Our business development efforts are further supported by personnel located at our corporate headquarters. As our service offerings become more diverse, we anticipate increasing our cross-selling opportunities. Our goals are to offer a broader range of services to existing clients and to broaden our client base using our existing value-added solutions. 3 Competition We believe that the sectors in which we operate are highly fragmented and characterized by many smaller companies generally having fewer than ten employees. These companies tend to focus their operations on local customers or specialized niche activities. As a result, we compete with a large number of smaller, more specialized companies that concentrate their resources in particular areas of expertise. The extent of our competition varies according to sectors and geographic areas. We believe we compete on the quality of service, relevant experience, staffing capabilities, reputation, geographic presence, stability, and price. Price differentiation remains an important element in competitive tendering and is a significant factor in bidding for contracts. The importance of the foregoing factors varies widely based upon the nature, location, and scale of our clients needs. We believe that certain economies of scale can be realized by service providers that establish a national presence and reputation for providing high-quality and cost-effective services. Our ability to compete successfully will depend upon the effectiveness of our marketing efforts, the strength of our client relationships, our ability to accurately estimate costs and bid for work, the quality of the work we perform and our ability to hire and train qualified personnel. Competitive Strengths We believe we have the following competitive strengths: Experienced, talented, and motivated professionals We employ seasoned professionals with a broad array of specialties, a strong customer service orientation and in many cases, the required professional certifications and advanced degrees. Our executive officers have an average of more than 30 years of operating and management experience and have been involved in analyzing potential acquisition transactions. We place a high priority on attracting, motivating and retaining top professionals to serve our clients, and our compensation system emphasizes the use of performance-based incentives, including opportunities for stock ownership, to achieve this objective. Niche expertise The services that we provide are highly-specialized professional services that have high barriers to entry. While we have a cadre of professionals with the requisite skills, we also have access to numerous consultants who can provide subject matter expertise for unique projects and who can supplement our workforce based on client demand. Industry-recognized quality of service We believe that we have developed a strong reputation for quality service based upon our industry-recognized depth of experience, ability to attract and retain quality professionals, and expertise across multiple service sectors. Strong, long-term client relationships Our combination of niche market experience and professionals with requisite expertise has enabled us to develop strong relationships with our core clients. In the case of our outsourced accounting and finance services group, historically, our client retention has been over 90%. By serving our clients on a long-term basis, we are able to gain a deep understanding of their overall business needs as well as the unique technical requirements of their projects. This increased understanding gives us the opportunity to provide superior value to our clients by allowing us to more fully assess and better manage the risks inherent in their projects. One-stop shop The combination of services we offer allows our clients to focus on executing their contracts and getting more work by not being encumbered with administrative functions required when doing business with the government. Growth Strategies We intend to use the following growth strategies as we seek to expand our market share in our current areas of expertise and eventually position ourselves as a preferred provider of comprehensive specialized professional services to our clients: 4 Strategic Acquisitions We seek acquisitions that allow us to expand or enhance our capabilities in our existing service offerings. In analyzing new acquisitions, we pursue opportunities that function as profitable stand-alone operations or are complementary to our existing businesses. We believe that expanding our business through strategic acquisitions will enable us to exploit economies of scale in the areas of finance, human resources, marketing, administration, information technology, and legal, while also providing cross-selling opportunities among our vertical service offerings. Common Theme Most government contractors have the need for the services that we provide. Our companies sell to the same client pool allowing for one-stop-shop, cross selling opportunities. Geographic Expansion Parts of the country have substantial government presence that allow for easy expansion of our footprint, such as the U.S. Navy in San Diego and the U.S. Air Force in Denver. Business Development With additional resources we intend to grow our business by investing in a larger sales force and integrated client relationship management tools. Risks Our business and our ability to execute our business strategy are subject to a number of risks of which you should be aware before making an investment decision. These risks are discussed more fully in the "Risk Factors" section of this prospectus, and among these important risks are the following: We are currently not profitable and we may be unable to become profitable on a quarterly or annual basis. If we experience declining or flat revenues and fail to manage such declines effectively, we may be unable to execute our business plans and may experience future weaknesses in operating results. Our business has significant working capital needs and if we are unable to satisfy those needs from cash generated from our operations or borrowings under our revolving credit facility, our financial condition will be adversely affected. The success of our business will depend, in part, on the continued services of certain key personnel and our ability to attract and retain qualified personnel. Our strategy of growth through acquisitions could harm our business. Successful integration of newly acquired target companies may place a significant burden on our management and internal resources. We are subject to business uncertainties and contractual restrictions following the consummation of acquisitions that could adversely affect our businesses. Resources could be wasted in researching acquisitions that are not completed, which could materially adversely affect subsequent attempts to locate and acquire or merge with another business. We may be required to write-down certain assets after completing our required annual evaluations, which may affect our reported financial results. We may issue additional notes or other debt securities, or otherwise incur substantial additional debt, which may adversely affect our leverage and financial condition and thus negatively impact the value of our stockholders investment in the Company. Improper disclosure of confidential and personal data could result in liability and harm to our reputation. Our business could be negatively impacted by cyber and other security threats or disruptions. We are dependent upon technology services, and if we experience damage, service interruptions or failures in our computer and telecommunications systems, our customer and worker relationships and our ability to attract new customers may be adversely affected. If we do not keep pace with rapid technological changes and evolving industry standards, we will not be able to remain competitive, and the demand for our services will likely decline. Technology improvements and disruptions could diminish the need for our traditional services. 5 We operate in a highly-competitive industry with low barriers to entry, and may be unable to compete successfully against existing or new competitors. Our business is subject to risks associated with geographic market concentration. A downturn of the U.S. or global economy could result in our customers using fewer workforce solutions and services or becoming unable to pay us for our services on a timely basis or at all, which would materially adversely affect our business. We may be exposed to employment-related claims and losses, including class action lawsuits, which could have a material adverse effect on our business. We are dependent on workers compensation insurance coverage at commercially reasonable terms. The spending cuts imposed by the Budget Control Act of 2011 ( BCA ) could impact our operating results and profit. A delay in the completion of the budget process of the U.S. government could delay procurement of our services and have an adverse effect on our future revenue. If our contractors and subcontractors fail to satisfy their obligations to us or other parties, or if we are unable to maintain these relationships, our revenue, profitability, and growth prospects could be adversely affected. Due to the competitive process to obtain contracts and an increase in bid protests, we may be unable to achieve or sustain revenue growth and profitability. Our business is directly tied to the success of our government contracting clients, which are increasingly reliant on ID/IQ contracts. ID/IQ contracts are not firm orders for services, and we may generate limited or no revenue from these contracts which could adversely affect its operating performance. We incur increased costs as a result of operating as a public company and our management is required to devote substantial time to new compliance initiatives. We have identified material weaknesses in our internal control over financial reporting. If we fail to develop or maintain an effective system of internal controls, we may not be able to accurately report our financial results or prevent fraud. As a result, current and potential stockholders could lose confidence in our financial reporting, which would harm our business and the trading price of our securities. Our ability to use our net operating losses to offset future taxable income may be subject to certain limitations, which could subject our business to higher tax liability. We may need to raise additional capital in the future, which may not be available on acceptable terms, or at all. Our History We are a Delaware corporation that was formed in February 2017 to effectuate the mergers of, and become a holding company for KeyStone Solutions, Inc. ( KeyStone ) and Brekford Traffic Safety, Inc. ( Brekford ). Novume services are provided through six wholly owned subsidiaries: AOC Key Solutions, Inc. ( AOC Key Solutions ); Firestorm Solutions, LLC and Firestorm Franchising, LLC (collectively referred to as Firestorm ); Global Technical Services, Inc. and Global Contract Professionals, Inc. (collectively referred to as Global or the Global Entities ); and Novume Media, Inc. ( Novume Media ). We conduct core operations through our primary operating subsidiaries: Government Contracting Support Solutions AOC Key Solutions has been helping government contractors to win business since 1983. Risk Mitigation and Crisis Management Firestorm has been in business since 2005. 6 Specialty Staffing Global provides these services and has been supplying personnel to the aerospace/aviation industry since 1989. Recent Development Acquisition of NeoSystems On November 16, 2017, we entered into an Agreement and Plan of Merger by and among us, NeoSystems Holding, LLC, our wholly owned subsidiary, NeoSystems HoldCo, Inc., NeoSystems LLC, a wholly owned subsidiary of NeoSystems HoldCo ( NeoSystems ), Robert W. Wilson, Jr., in his personal capacity, Michael Tinsley, in his personal capacity and Michael Tinsley, in his capacity as the representative of each shareholder of NeoSystems that has not demanded and perfected appraisal rights under the Virginia Stock Corporation Act. Pursuant to the merger agreement, we will acquire NeoSystems through a forward merger. The consummation of the merger is subject to customary closing conditions, including the consummation of this offering, the subject of this prospectus. A description of the terms of the merger is included in this prospectus under "Acquisition of NeoSystems." Corporate Information Our principal executive offices are located at 14420 Albemarle Point Place, Suite 200, Chantilly, Virginia 20151 and our telephone number is (703) 953-3838. Our website address is www.novume.com. The information on, or accessible through, our website does not constitute a part of, and is not incorporated into, this prospectus. 7 The Offering Securities offered by us $12.5 million of units, each consisting of one share of our common stock and a warrant to purchase one share of our common stock. Offering price $ per unit. Common stock to be outstanding after this offering shares (assuming none of the warrants issued in this offering are exercised) Terms of warrants issued as part of a unit offered by us in this offering Each warrant will have an exercise price per share of not less than the last reported sale price of our common stock on the trading day immediately preceding the pricing of this offering, will be immediately exercisable and will expire on the fifth anniversary of the original issuance date. We may call the warrants for redemption as follows: (i) at a price of $0.01 for each warrant at any time while the warrants are exercisable, so long as a registration statement relating to the common stock issuable upon exercise of the warrants is effective and current: (ii) upon not less than 30 days prior written notice of redemption to each warrant holder; and (iii) if, and only if, the reported last sale price of the common stock equals or exceeds $ per share (175% of the public offering price per unit in this offering) for the 20-trading-day period ending on the third business day prior to the notice of redemption to warrant holders. If the foregoing conditions are satisfied and we call the warrants for redemption, each warrant holder will then be entitled to exercise his or her warrant prior to the date scheduled for redemption. However, there can be no assurance that the price of the common stock will exceed the call price or the warrant exercise price after the redemption call is made. This prospectus also relates to the offering of the shares of common stock issuable upon exercise of the warrants. Overallotment option We have granted the underwriters an option, exercisable one or more times in whole or in part, to purchase up to additional shares of common stock and/or warrants to purchase up to an aggregate of shares of common stock at an exercise price of $ per share, in any combinations thereof, from us at the public offering price per security, less the underwriting discounts and commissions, for 45 days after the date of this prospectus to cover over-allotments, if any. Use of proceeds We estimate that the net proceeds of this offering will be approximately $ million, assuming a public offering price of $ per unit or approximately $ million if the underwriters exercise their overallotment option in full, and after deducting the estimated underwriting discount and estimated offering expenses. We intend to use the net proceeds that we receive from this offering for purchase consideration for NeoSystems, the terms of which acquisition are described in this Prospectus under "Acquisition of NeoSystems", working capital and other general corporate purposes, including technology and development and marketing activities, general and administrative matters and capital expenditures. We may also use a portion of the net proceeds to invest in or acquire third-party businesses, products, services, technologies, or other assets. However, we do not currently have any definitive or preliminary plans with respect to the use of proceeds for such purposes. See Use of Proceeds.
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diff --git a/parsed_sections/prospectus_summary/2018/RYTM_rhythm_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/RYTM_rhythm_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..be77441ec7eb953f364eaf37c267952c530f7810
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/RYTM_rhythm_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus and does not contain all of the information that you should consider in making your investment decision. Before investing in our common stock, you should carefully read this entire prospectus, including our financial statements and the related notes included elsewhere in this prospectus. You should also consider, among other things, the matters described under "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations," in each case appearing elsewhere in this prospectus. Unless otherwise stated, all references to "us," "our," "RYTM," "we," the "Company" and similar designations refer to
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diff --git a/parsed_sections/prospectus_summary/2018/SAVA_cassava_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/SAVA_cassava_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..90e78df0497370e6fde92b7230164d18e0c61ffc
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/SAVA_cassava_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights certain information about us, this offering and the other information appearing elsewhere in this prospectus and in the documents we incorporate by reference herein. This summary is not complete and does not contain all of the information that you should consider before investing in our securities. To fully understand this offering and its consequences, you should read this entire prospectus carefully, including the information set forth under the caption Risk Factors in this prospectus and under similar captions in the documents incorporated by reference herein, before making an investment decision. Our Company Pain Therapeutics develops proprietary drugs that offer significant benefits to patients and healthcare professionals. We generally focus our drug development efforts on disorders of the nervous system. Our expertise consists of developing new drug candidates and guiding these drug candidates through various regulatory and development pathways in preparation for their potential commercialization. By necessity, the conduct of drug development is complex, lengthy, expensive and risky. The U.S. Food and Drug Administration (the FDA ) has not yet established the safety or efficacy of our drug candidates. The lead candidate in our pipeline has historically been REMOXY ER, a proprietary abuse-deterrent, extended-release form of oxycodone to treat severe chronic pain. On August 3, 2018, we received a Complete Response Letter ( CRL ) from the FDA for our New Drug Application ( NDA ) for REMOXY, stating that the data submitted in the NDA does not support the conclusion that the benefits of REMOXY outweigh the risks. Based on data, we disagree with the FDA s recent actions regarding REMOXY and consequently, a formal dispute may arise between ourselves and the FDA regarding the CRL issued on August 3, 2018. The FDA has in-place a structured administrative process to resolve complex scientific/medical disputes, which is called a Formal Dispute Resolution ( FDR ). Pending further discussions with the FDA, we may choose to appeal the REMOXY CRL through an FDR or take other measures. REMOXY has been the subject of four CRLs to date. If we proceed with an FDR, or take other measures, there can be no assurance that such measures will satisfactorily resolve any scientific/medical disputes between ourselves and the FDA. If we do not prevail in an FDR or other means of appeal, or if we chose not to pursue an FDR or other means of appeal, we may cease development of REMOXY. On November 12, 2018, we announced that we have petitioned the FDA regarding the CRL for REMOXY issued on August 3, 2018. The FDA and the Company have agreed to meet in-person on January 31, 2019 to discuss this matter. Following receipt of the CRL, we have initiated a strategic reorganization to align our resources on advancing our drug and diagnostic assets in Alzheimer s disease. PTI-125, the lead drug candidate in this portfolio, is a proprietary small molecule that has a unique mechanism of action for treating Alzheimer s disease. In 2017, PTI-125 completed a successful Phase I clinical-stage program, funded by a peer-reviewed research grant from the National Institutes of Health ( NIH ). Our other asset in Alzheimer s, PTI-125Dx, is a proprietary, blood-based diagnostic/biomarker to detect or confirm whether a person has Alzheimer s, potentially years before symptoms appear. An early diagnosis of Alzheimer's could allow treatment to start sooner, optimize treatment options for each individual and improve chances to slow or halt the disease. This early-stage program is substantially funded by a research grant award from the NIH. We have yet to generate any revenues from product sales. We have an accumulated deficit of $163.3 million at September 30, 2018. These losses have resulted principally from costs incurred in connection with research and development activities, salaries and other personnel-related costs and general corporate expenses, and we expect to continue to use significant cash resources in our operations for the next several years. Any product revenue will depend on our ability to receive regulatory approvals for, and successfully market, our drug candidates. Equity Offering On August 17, 2018 (the closing date ), we completed our offer and sale to certain accredited investors of (i) 8,860,778 shares of our common stock at a purchase price of $1.15 per share, which were sold in a registered direct offering, and (ii) unregistered warrants to purchase up to an aggregate of 8,860,778 shares of our common stock at a purchase price of $0.125 per warrant, which were sold in a concurrent private placement. These warrants had an initial exercise price of $1.25 per share (subject to adjustment as set forth therein), were immediately exercisable and expire on February 17, 2021. At the closing of the offerings, we also issued unregistered warrants to purchase up to an aggregate of 265,823 shares of our common stock to the placement agent for the offerings or its designees, which have an initial exercise price of $1.59 per share (subject to adjustment as set forth therein), were immediately exercisable and expire on February 17, 2021. All of the warrants described above contain certain ownership limitations that may restrict their exercise, as described under the caption Selling Stockholders in this prospectus. In addition, all such warrants are exercisable on a cashless basis if at any time after the six-month anniversary of the closing date of the of the private placement financing there is no effective registration statement registering, or no current prospectus available for, the resale of the shares of common stock underlying the warrants by the holder. The warrants also provide that holders will have the right to participate in any rights offering or distribution of assets together with the holders of common stock on an as-exercised basis. Corporate Information We were incorporated in Delaware in May 1998. Our principal executive offices are located at 7801 N Capital of Texas Highway, Suite 260, Austin, TX, 78731 and our telephone number at that address is (512) 501-2444.
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diff --git a/parsed_sections/prospectus_summary/2018/SDRL_seadrill_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/SDRL_seadrill_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..1c58bd859f0b1e0ed8d4b5d64141d1f278976e6b
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/SDRL_seadrill_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY The items in the following summary are described in more detail later in this prospectus. This summary provides an overview of selected information and does not contain all the information you should consider. Therefore, you should also read the more detailed information set out in this prospectus, including the financial statements and the corresponding notes to such financial statements and the risks set forth in this prospectus under Risk Factors. Some of the statements in this prospectus constitute forward-looking statements. See Forward-Looking Statements. Our Company Overview We are an offshore drilling contractor providing worldwide offshore drilling services to the oil and gas industry. Our primary business is the ownership and operation of drillships, semi-submersible rigs and jack-up rigs for operations in shallow-, mid-, deep- and ultra-deepwater areas, and in benign and harsh environments. We contract our drilling units primarily on a dayrate basis for periods between one and ten years to drill wells for our customers, typically oil super-majors and major integrated oil and gas companies, state-owned national oil companies and independent oil and gas companies. A dayrate drilling contract generally extends over a period of time covering either the drilling of a single well or group of wells or covering a stated term. We also provide management services to certain related party companies. Through a number of acquisitions of companies, secondhand units and contracts for newbuildings, we have developed into one of the world s largest international offshore drilling contractors, employing approximately 4,300 employees. As of March 31, 2018, we had a fleet of 35 offshore drilling units consisting of 12 semi-submersible rigs, 7 drillships and 16 jack-up rigs in operation, and contracts for the construction of 8 jack-up rigs and an option to acquire 1 semi-submersible rig. Of the total fleet, 16 are currently idle. Our Fleet We believe that we have one of the most modern fleets in the offshore drilling industry, which allows us to benefit from improved utilization and dayrates obtainable for our drilling units. For additional information on the types of drilling units we use, see Item 4.B Business Overview Market Overview The global fleet of drilling units in Seadrill Limited s 2017 Annual Report, which is incorporated by reference into this prospectus. Floaters Drillships. Drillships are self-propelled ships equipped for drilling offshore in water depths ranging from 1,000 to 12,000 feet and are positioned over the well through a computer-controlled thruster system similar to that used on semi-submersible rigs. Drillships are suitable for drilling in remote locations because of their mobility and large load-carrying capacity. Depending on country of operation, drillships operate with crews of 65 to 100 people. Semi-submersible drilling rigs. Semi-submersibles are self-propelled drilling rigs (which include cylindrical designed units) consisting of an upper working and living quarters deck connected to a lower hull consisting of columns and pontoons. Such rigs operate in a semi-submerged floating position, in which the lower hull is below the waterline and the upper deck protrudes above the surface. The rig is situated over a wellhead location and remains stable for drilling in the semi-submerged floating position, due in part to its wave transparency characteristics at the water line. Table of Contents The information in this prospectus is not complete and may be changed. Neither we nor the selling shareholders may sell these securities until the Securities and Exchange Commission declares the registration statement effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state or other jurisdiction where the offer or sale is not permitted. Subject to completion, dated August 7, 2018 PROSPECTUS 76,359,119 Common Shares SEADRILL LIMITED This prospectus relates to the resale, from time to time, of up to 76,359,119 common shares of Seadrill Limited, being offered by the selling shareholders identified herein. The selling shareholders may sell their shares, from time to time, in one or more offerings, at prevailing market prices at the time of sale, at prices related to the prevailing market price, at varying prices determined at the time of sale, or at negotiated prices. The selling shareholders may sell shares in a manner including, but not limited to, regular brokerage transactions, in transactions directly with market makers or investors, in privately negotiated transactions or through agents or underwriters they may select from time to time. See Plan of Distribution for more information on the methods of sale that may be used by the selling shareholders. We are not offering any common shares for sale under this prospectus, and we will not receive any proceeds from the sale of the common shares by the selling shareholders. Prior to the date of this prospectus, there has been no public market for our common shares. Our common shares are listed on the New York Stock Exchange under the symbol SDRL . We will also apply to have our common shares listed on the Oslo Stock Exchange under the symbol SDRL . Investing in our common shares involves risks. See Risk Factors beginning on page 7 of this prospectus and other
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diff --git a/parsed_sections/prospectus_summary/2018/SIBN_si-bone_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/SIBN_si-bone_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/SIBN_si-bone_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2018/SINC_sincerity_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/SINC_sincerity_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..e6c790c55234562c71179f78130f8dbbd933f6ca
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/SINC_sincerity_prospectus_summary.txt
@@ -0,0 +1,536 @@
+PROSPECTUS SUMMARY
+
+ 
+
+The following summary highlights selected information contained
+elsewhere in this prospectus. This summary is not complete and does
+not contain all the information that should be considered before
+investing in our common stock. Before making an investment
+decision, investors should carefully read the entire prospectus,
+paying particular attention to the risks referred to under the
+headings Risk Factors and Cautionary Statement
+Regarding Forward-Looking Statements and our financial
+statements and the notes to those financial
+statements.
+
+ 
+
+As used in this prospectus, unless the context requires otherwise,
+the terms Company, we, 
+ our and us refer to Sincerity Applied
+Materials Holdings Corp., and its wholly owned subsidiaries,
+Sincerity Australia Pty Ltd. and Prana Hong Kong Holdings
+Ltd.
+
+ 
+
+Overview
+
+ 
+
+We are
+a supplier of technologically advanced plastics and other solutions
+for the packaging industry and other industries primarily serving
+major end users and distributors in Australia, Asia and the Middle
+East. Our products have applications in the areas of packaging,
+agriculture, automotive and transportation, paint and coating,
+construction, personal care and hygiene, electronics,
+pharmaceutical, energy and natural resources, plastics and rubber
+and leather. Our principal products are high quality, breathable
+plastic film and modified atmosphere packaging used in the
+packaging of perishable foods. In addition to the plastic film
+business, we expect to increase our supply of extruded plastic
+pallets for aluminum cans.
+
+ 
+
+We were
+founded in Melbourne, Australia in 2005 by our Chairman and CEO,
+Zhang Yiwen, whose family developed one of China s leading
+plastics and applied materials manufacturers, Changzhou Sincerity
+Plastics and Chemicals Technology Ltd., which serves as the
+principal manufacturer and technological agent for our
+products.
+
+ 
+
+ 
+
+3
+
+ 
+
+ 
+
+Our Strategy
+
+ 
+
+Our
+objective is to be a leading distributor of high performance
+plastics and other products across multiple industries. Our
+business is based on the following principles:
+
+ 
+
+ 
+
+Supply best value
+products with high levels of quality, service and technological
+support;
+
+ 
+
+ 
+
+Maintain low
+production costs;
+
+ 
+
+ 
+
+Enhance the
+recycling efficiency of plastic packaging materials to maintain
+environmental integrity;
+
+ 
+
+ 
+
+Develop and expand
+strategic customer relationships; and
+
+ 
+
+ 
+
+Expand through
+strategic acquisitions and internal growth.
+
+ 
+
+Risks Associated with Our Business
+
+ 
+
+Our
+business is subject to a number of risks of which you should be
+aware before making an investment decision. These risks are
+discussed more fully in the Risk Factors section of
+this prospectus immediately following this prospectus summary.
+These risks include the following:
+
+ 
+
+ 
+
+the potential for
+changes in regional and local economic conditions, including local
+inflationary pressures;
+
+ 
+
+ 
+
+restrictive
+governmental actions such as those on transfer or repatriation of
+funds and trade protection matters, including antidumping duties,
+tariffs, embargoes and prohibitions or restrictions on acquisitions
+or joint ventures;
+
+ 
+
+ 
+
+changes in laws and
+regulations, including laws and policies affecting trade and
+foreign investment;
+
+ 
+
+ 
+
+the difficulty of
+enforcing agreements and collecting receivables through certain
+foreign legal systems;
+
+ 
+
+ 
+
+import and export
+delays caused, for example, by an extended strike at the port of
+entry, could cause a delay in our supply chain
+operations;
+
+ 
+
+ 
+
+quality or
+reliability defects in product components that are sourced from
+third-party suppliers;
+
+ 
+
+ 
+
+the inability of
+third party manufacturers to secure product components in a timely
+manner, in sufficient quantities or on commercially reasonable
+terms;
+
+ 
+
+ 
+
+the failure of
+third party manufacturers to increase production of products to
+meet demand;
+
+ 
+
+ 
+
+the inability of
+third party manufacturers to modify production lines to enable them
+to efficiently produce future products or implement changes in
+current products in response to regulatory
+requirements;
+
+ 
+
+ 
+
+difficulty
+identifying and qualifying alternative suppliers for components in
+a timely manner;
+
+ 
+
+ 
+
+risks associated
+with doing business in China;
+
+ 
+
+ 
+
+issues maintaining
+uniform standards, procedures, controls and policies;
+
+ 
+
+ 
+
+unanticipated costs
+associated with acquisitions;
+
+ 
+
+ 
+
+risks associated
+with entering new markets in which we have limited or no
+experience;
+
+ 
+
+ 
+
+increased costs
+associated with expanding our sales capabilities;
+
+ 
+
+ 
+
+the cost associated
+with developing and commercializing our proposed products or
+technologies;
+
+ 
+
+ 
+
+our reliance on a
+limited number of customers;
+
+ 
+
+ 
+
+the uncertainly of
+our future capital needs which may require us to seek future
+financing;
+
+ 
+
+ 
+
+4
+
+ 
+
+ 
+
+ 
+
+the cost of
+obtaining and maintaining regulatory clearance or approval for our
+current or future products;
+
+ 
+
+ 
+
+the lack of U.S.
+public company experience of our management team;
+
+ 
+
+ 
+
+the potential
+impact of our recent loan transactions in terms of share dilution
+and the market price for our common stock;
+
+ 
+
+ 
+
+the cost of ongoing
+compliance and regulatory requirements; and
+
+ 
+
+ 
+
+a lack of long-term
+supply arrangements for key components with suppliers.
+
+ 
+
+Reverse Acquisition, Private Placement Offerings and the Selling
+Stockholders
+
+ 
+
+We were
+incorporated as HapyKidz.com, Inc. in Nevada on July 28, 2011 with
+the intention to become an e-commerce marketplace that connects
+merchants to consumers by offering daily discounts on goods and
+services through a proprietary website. We were not successful in
+this endeavor.
+
+ 
+
+On
+September 4, 2013, we filed a Certificate of Amendment to our
+Articles of Incorporation with the Nevada Secretary of State to
+change our name from HapyKidz.com, Inc. to Symbid
+Corp.
+
+ 
+
+On
+December 6, 2013, we closed a share exchange (the Share
+Exchange ) pursuant to which the 19 shareholders of Symbid
+Holding B.V. sold all of their capital stock in Symbid Holding B.V.
+to us in exchange for 352,834 shares of our common stock, $0.001
+par value per share (the Common Stock ). As a result
+of the Share Exchange, Symbid Holding B.V. became a wholly owned
+subsidiary of ours.
+
+ 
+
+As the
+result of the Share Exchange, we were engaged in the business of
+creating and operating online, equity based crowdfunding platforms,
+through our wholly owned subsidiary, Symbid Holding B.V. Commencing
+in 2015, we expanded our operations to include an online platform
+for small and medium sized enterprise funding, connecting new and
+traditional sources of finance in one integrated network built
+around our technology.
+
+ 
+
+The
+Share Exchange was treated as a recapitalization of the Company for
+financial accounting purposes and Symbid Holding B.V. was
+considered the acquiror for accounting purposes.
+
+ 
+
+In
+accordance with reverse acquisition accounting
+treatment, our historical financial statements as of period ends,
+and for periods ended, prior to the Share Exchange were replaced
+with the historical financial statements of Symbid Holding B.V.
+prior to the Share Exchange in our post Share Exchange filings with
+the Securities and Exchange Commission (the
+ SEC ).
+
+ 
+
+Due to
+cash flow problems, during the fourth quarter of 2016, we were
+forced to restructure the Company, curtail certain business
+operations and change our focus from the operation of online
+funding platforms and the provision of software solutions for
+alternative financing in the small and medium enterprise market to
+the licensing of software packages for which we own or license the
+intellectual property.
+
+ 
+
+On June
+8, 2017, we dissolved our direct, wholly owned subsidiary, Symbid
+Holding B.V. and our indirect wholly owned subsidiaries, Symbid
+B.V. and FAC B.V. At the time of dissolution, none of these
+entities had any material assets or operations and none of these
+entities were generating revenues. Following such dissolutions, we
+had no subsidiaries.
+
+ 
+
+On June
+9, 2017, we filed a Certificate of Amendment to our Articles of
+Incorporation with the Nevada Secretary of State to change our name
+to Sincerity Applied Materials Holdings Corp. (the Name
+Change ) and effected a 60:1 reverse stock split (the
+ Reverse Split ) on our Common Stock. The Name Change
+and Revenue Stock Split took effect on the over-the-counter market
+at the open of business on June 14, 2017, at which time our Common
+Stock began to trade on a post-split basis under the symbol
+ SBIDD . Our Common Stock began trading under the
+Symbol SINC on July 13, 2017. The Reverse Split and
+the Name Change were approved by our board of directors on May 1,
+2017 and by stockholders holding 80% of our outstanding voting
+stock on May 1, 2017 as further described in our Definitive
+Information Statement on Schedule 14C which we filed with the
+Securities and Exchange Commission on May 4, 2017 and mailed to our
+stockholders of record as of the close of business on May 1,
+2017.
+
+ 
+
+ 
+
+5
+
+ 
+
+ 
+
+On September 19, 2017 we acquired Sincerity Australia Pty
+Ltd., an Australia corporation ( SAPL ) pursuant to the
+closing under a June 5, 2017 Acquisition Agreement as amended on
+July 7, 2017, July 21, 2017, August 15, 2017, August 23, 2017,
+September 1, 2017 and September 15, 2017 (the Acquisition
+Agreement ) among the Company, SAPL and the sole
+shareholder/member of SAPL (the SAPL Shareholder ).
+Pursuant to the Acquisition Agreement and the acquisition completed
+thereunder (the Acquisition ) we acquired all of the
+outstanding capital stock of SAPL consisting of 10,000 Ordinary
+Shares (the Ordinary Shares ) from the SAPL
+Shareholder in exchange for 45,211,047 shares (the
+ Acquisition Shares ) of our Common Stock making SAPL a
+wholly owned subsidiary of ours. At the time of the closing under
+the Acquisition Agreement, SAPL had no outstanding securities other
+than the Ordinary Shares.
+
+ 
+
+As a
+result of the Acquisition, we acquired the business of SAPL and
+will continue the existing business operations of SAPL as a
+publicly-traded company under the name Sincerity Applied Materials
+Holdings Corp.
+
+ 
+
+On
+September 19, 2017, in conjunction with the closing of the
+Acquisition, we sold 15 units of securities (the
+ Units ) in a private placement offering (the
+ September 2017 Offering ), at a purchase price of
+$10,000 per Unit (the Unit Offering Price ), each Unit
+consisting of (i) one 12% senior secured convertible promissory
+note (the Note ) in the face (principal) amount of
+$10,000 and (ii) one warrant (the Warrant )
+exercisable for a period of five years representing the right to
+purchase Thirty Three Thousand Three Hundred Thirty Four (33,334)
+shares of Common Stock.
+
+ 
+
+In
+accordance with reverse acquisition accounting
+treatment, our historical financial statements as of period ends,
+and for periods ended, prior to the Acquisition will be replaced
+with the historical financial statements of SAPL, prior to the
+Acquisition, in all future filings with the SEC.
+
+ 
+
+Unless
+otherwise indicated, references to share amounts in this report
+give retroactive effect to the 60:1 Reverse Split.
+
+ 
+
+Prior
+to the Acquisition, we were a shell company (as such
+term is defined in Rule 12b-2 under the Securities Exchange Act of
+1934, as amended, or the Exchange Act). As a result of the
+Acquisition, we ceased to be a shell
+company .
+
+ 
+
+The
+issuance of shares of our common stock in the Acquisition was
+exempt from registration under Section 4(a)(2) of the Securities
+Act of 1933, as amended, or the Securities Act.
+
+ 
+
+On
+November 9, 2017 we entered into a Securities Purchase Agreement
+with two persons, pursuant to which be sold (i) convertible
+promissory notes dated November 9, 2017 in the aggregate principal
+amount of $108,000 due on November 9, 2018, (ii) three-year Class A
+Warrants to purchase up to an aggregate of 102,858 shares of our
+common stock (subject to adjustment) at an initial exercise price
+of $6.00 per share (subject to adjustment), and (iii) three-year
+Class B Warrants to purchase up to an aggregate of 800,000 shares
+of our common stock (subject to adjustment) at an initial exercise
+price of $7.50 per share (subject to adjustment).
+
+ 
+
+On
+December 19, 2017 we entered into a Securities Purchase Agreement
+with one person pursuant to which we sold a convertible promissory
+note in the principal amount of $112,500 due on August 20,
+2018.
+
+ 
+
+On
+January 9, 2018 we entered into a Securities Purchase Agreement
+dated December 19, 2017 with one person pursuant to which we sold a
+convertible promissory note in the principal amount of $83,500 due
+on December 19,2018.
+
+ 
+
+The
+terms of the securities sold in our November 9, 2017, December 19,
+2017, and January 9, 2018, offerings, including the anti-dilution
+provisions applicable thereto, are described in greater detail
+under the headings Description of Capital Stock and
+ Description of the Acquisition,
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2018/SLDB_solid_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/SLDB_solid_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..6fd1b31a26ec10bc1fd1e216e073634da63e7929
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/SLDB_solid_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus summary 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2018/SONO_sonos-inc_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/SONO_sonos-inc_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..af05853d6bb04559901cd5ac47cd3433ffc495fa
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/SONO_sonos-inc_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights information contained in greater detail elsewhere in this prospectus. This summary is not complete and does not contain all of the information you should consider in making your investment decision. You should read the entire prospectus carefully before making an investment in our common stock. You should carefully consider, among other things, our consolidated financial statements and related notes and the sections titled Risk Factors and Management s Discussion and Analysis of Financial Condition and Results of Operations included elsewhere in this prospectus. SONOS, INC. Company Overview Sonos was founded with a clear mission to fill every home with music. This mission led us to invent wireless multi-room home audio. Sonos transforms the way people live and interact by restoring the shared experience of music throughout the home. Our home sound system provides an immersive listening experience created by our thoughtfully designed speakers and components, our proprietary software platform and the ability to wirelessly stream the content our customers love from the services they prefer. Sonos sits at the intersection of emerging trends driving the future of home entertainment. The proliferation of streaming services and the rapid adoption of voice assistants are significantly changing audio consumption habits and how consumers interact with the internet. As the leading home sound system for consumers, content partners and developers, Sonos is poised to capitalize on the large market opportunity created by these dynamics. We debuted the world s first wireless multi-room home sound system in 2005, and have since been a leading innovator in wireless home audio. Today, our products include wireless speakers, home theater speakers and components to address consumers evolving home audio needs. We launched our first voice-enabled wireless speaker, Sonos One, in October 2017, and our first voice-enabled home theater speaker, Sonos Beam, in July 2018. In addition to new product launches, we frequently introduce new features through software upgrades, providing our customers with enhanced functionality and improved sound in the home. We are committed to continuous technological innovation, as evidenced by our growing global patent portfolio of over 630 issued patents and 570 applications. We believe our patents comprise the foundational intellectual property for wireless multi-room audio technology. Our network of partners provides our customers with access to voice control, streaming music, internet radio, podcasts and audiobook content, enabling them to control and listen to an expansive range of home entertainment. Our platform has attracted a broad range of approximately 100 streaming content providers, such as Apple Music, Pandora, Spotify and TuneIn. These partners find value in our independent platform and access to our millions of desirable and engaged customers. As of March 31, 2018, our customers had registered over 19 million products in approximately 6.9 million households globally. Based on customer data, we estimate that, on average, our customers listen to approximately 70 hours of content per month and to approximately 80% more music after purchasing their first Sonos product. We also estimate that our customers listened to five billion hours of audio content using our products in fiscal 2017, which represents 33% growth from fiscal 2016. Our innovative products, seamless customer experience and expanding global footprint have driven 12 consecutive years of sustained revenue growth since our first product launch. We generate revenue from the sale of our wireless speakers, home theater speakers and component products, as new customers buy our products and existing customers continue to add products to their Sonos home sound systems. In fiscal 2017, existing customers accounted for approximately 38% of new product registrations. We sell our products primarily Table of Contents through over 10,000 third-party physical retail stores, including custom installers of home audio systems. We also sell through select e-commerce retailers and our website sonos.com. Our products are distributed in over 50 countries, with 55% of our revenue in fiscal 2017 generated outside the United States. We generated revenue of $655.7 million in the six months ended March 31, 2018, an 18% increase from $555.4 million in the six months ended April 1, 2017. For the six months ended March 31, 2018, our net income was $13.1 million and our adjusted EBITDA was $50.5 million. We generated revenue of $992.5 million in fiscal 2017, a 10% increase from $901.3 million in fiscal 2016. In fiscal 2017, our net loss was $14.2 million and our adjusted EBITDA was $56.0 million. See the section titled Selected Consolidated Financial Data Non-GAAP Financial Measures for information regarding our use of adjusted EBITDA. Market Opportunity The following trends are changing how people consume entertainment and interact with the internet in the home: Streaming Driving Transformation in Audio Consumption Streaming music is fueling the music industry s growth as it drives increasing music consumption and an expanding breadth of content available to consumers. Futuresource estimates that the number of global paid subscribers to streaming music services grew from 29 million in 2013 to approximately 176 million in 2017, and projects this number to grow to 293 million by 2021. Even with its rapid growth, the number of paid streaming music subscribers represents a fraction of the 858 million households worldwide with broadband internet today, as estimated by Kagan, a media research group within S&P Global Market Intelligence. Increased adoption of streaming music is accelerating consumption of audio content. According to Nielsen, the average number of hours spent listening to music per week in the United States increased 37% in two years to over 32 hours in 2017. Voice Assistants Disrupting Home Audio Voice assistants are disrupting the home audio industry by changing what consumers expect from a home speaker. Speakers are now expected to be voice-enabled, software-driven, Wi-Fi-connected computers that can fulfill requests for any audio content, answer questions or complete tasks by listening and responding. Industry research projects that by 2022, 50% of all web searches will be voice searches and 55% of U.S. households will have at least one voice-enabled speaker. These trends provide a glimpse into the opportunity for consumers to enjoy what we call the Sonic Internet where the internet s sound content, such as music, movies, TV shows, video games, podcasts and virtual and augmented reality, can be controlled by voice and played out loud in the home. Existing products from traditional home audio companies and diversified technology companies are not designed to capture the full potential of the Sonic Internet. We believe there is a significant opportunity to provide a seamless sound experience that brings connectivity, freedom of content choice, ease of use and high-fidelity sound to the connected home. Our Solution Since our founding, we have focused on creating and enhancing a reliable, wireless multi-room home sound system that simply works. The Sonos home sound system integrates our speakers, proprietary software platform and a robust partner ecosystem to enable an immersive sound experience throughout the home. We manage the complexity of delivering a seamless customer experience in a multi-user and open-platform environment. The Sonos home sound system is easy to set up, use and expand to bring the Sonic Internet to any room in the home. Table of Contents The Smart Home Sound System SONOS The Home Sound System Table of Contents Our Products Our portfolio of products encourages customers to uniquely tailor their Sonos sound systems to best meet their home sound and design preferences. Wireless Speakers. Our wireless speakers include PLAY:1, PLAY:3 and PLAY:5, as well as the recently released Sonos One, which includes native voice control. Home Theater Speakers. Our home theater products include speakers and a subwoofer designed to play audio content from TV/video. Our home theater products include PLAYBAR, PLAYBASE and SUB, as well as the recently released Sonos Beam, which includes native voice control. Components. Our CONNECT and CONNECT:AMP allow customers to convert third-party wired speakers, stereo systems or home theater setups into our easy-to-use, wirelessly controlled streaming music system. Our Software Our proprietary software is the foundation of the Sonos home sound system and further differentiates our products from those of our competitors. Our software provides the following key benefits: Multi-Room Experience. Our system enables our speakers to work individually or together in synchronized playback groups, powered by wireless mesh network capabilities to route and play audio optimally. Enhanced Functionality Through Software Upgrades. Our platform enables us to understand and enhance our customers listening and control experience, delivering feature updates and intelligent customization through remote software upgrades and cloud-based services. Intuitive and Flexible Control. Our customers can control their experiences through the Sonos app, voice control or an expanding number of third-party apps and smart devices. As our customers navigate across different controllers, our technology synchronizes the control experience across the Sonos platform to deliver the music and entertainment experience they desire. Advanced Acoustics. We have made significant investments in our engineering team and audio technology, which have enabled us to create speakers that produce high-fidelity sound. For example, we invented technology to allow two of our speakers to pair wirelessly and create multi-channel sound, thereby enabling a much broader sound field. In addition, our Trueplay technology utilizes the microphones on an iOS device to analyze room attributes, speaker placement and other acoustic factors in order to improve sound quality. Our Partner Ecosystem We have built a platform that attracts partners to enable our customers to play the content they love from the services they prefer. Our partners span across content, control and third-party applications: Content. We partner with a broad range of content providers, such as streaming music services, internet radio stations and podcast services, allowing our customers to enjoy their audio content from whichever source they desire. Control. We provide our customers with multiple options to control their home audio experiences, including voice control and direct control from within selected streaming music service apps. Third-Party Applications. We partner with third-party developers, including home automation integrators such as Crestron. These partners are building new applications and services on top of the Sonos platform, increasing customer engagement and creating new experiences for our customers. Table of Contents TV, movies and music. Sound that brings you together. The new Sonos Beam with Amazon Alexa SONS Table of Contents Our Competitive Strengths We believe the following combination of capabilities and features of our business model distinguish us from our competitors and position us well to capitalize on the opportunities created by the Sonic Internet: Leading Home Sound System. We have developed and refined our home sound system with a singular focus for over 15 years. Our effort has resulted in significant consumer awareness and market share among home audio professionals. For example, a 2018 product study by a leading home audio publication of the top 100 custom integrator professionals ranked Sonos as the leading brand in the wireless audio, soundbar and subwoofer categories. Our 84% share in the wireless audio category among these industry professionals significantly outpaces our competitors. Platform Enables Freedom of Choice for Consumers. Our broad and growing network of partners provides our customers with access to voice control, streaming music, internet radio, podcasts and audiobook content, enabling them to listen to the content they love from the services they prefer. Our platform attracts a broad set of content providers, including leading streaming music services, and third-party developers. Differentiated Consumer Experience Creates Engaged Households. We deliver a differentiated customer experience to millions of households every day, cultivating a passionate and engaged customer base. Based on customer data, we estimate that, on average, our customers listen to approximately 70 hours of content per month and to approximately 80% more music after purchasing their first Sonos product. Long-term engagement with our products and our ability to continuously improve the functionality of our existing products through software updates leads to attractive economics as customers add products to their Sonos home sound systems. Commitment to Innovation Drives Continuous Improvement. We have made significant investments in research and development for over 15 years, and believe that we own the foundational intellectual property of wireless multi-room audio. We have significantly expanded the size of our patent portfolio in recent years. In 2017, the strength of our patent portfolio placed us 2nd in Electronics and 19th overall in IEEE s Patent Power Report. Home Sound System Expansion Drives Attractive Financial Model. We generate significant revenue from customers purchasing additional products to expand their Sonos home sound systems, which has contributed to 12 consecutive years of sustained revenue growth. Existing households represented approximately 38% of new product registrations in fiscal 2017. We believe this aspect of our financial model will continue to be critical in sustaining our revenue growth over the long term. Our Growth Strategies Key elements of our growth strategy include: Consistently Introduce Innovative Products. To address our market opportunity, we have developed a long-term roadmap to deliver innovative products and software enhancements, and intend to increase the pace of product introductions across multiple categories. Executing on our roadmap will position us to acquire new customers, increase sales to existing customers and improve the customer experience. Invest in Geographic Expansion. Geographic expansion represents a significant growth opportunity in currently unserved countries. We intend to expand into new countries by employing country-specific marketing campaigns and distribution channels. Build Direct Relationships with Existing and Prospective Customers. We intend to continue to build direct relationships with current and prospective customers through sonos.com and the Sonos app to drive direct sales. Table of Contents Sonos One The smart speaker for music lovers. SONOS Table of Contents Expand Partner Ecosystem to Enhance Platform. We intend to deepen our relationships with our current partners and expand our partner ecosystem to provide our customers access to streaming music services, voice assistants, internet radio, podcasts and audiobook content. For example, we recently introduced voice control with Amazon s Alexa technology, and plan to incorporate Apple s Siri via Airplay 2 and Google Assistant in 2018. Increase Brand Awareness in Existing Geographic Markets. We intend to increase our household penetration rates in our existing geographic markets by investing in brand awareness, expanding our product offerings and growing our partner ecosystem. Risks Related to Our Business and Investment in Our Common Stock Investing in our common stock involves a high degree of risk. You should carefully consider the risks highlighted in the section titled Risk Factors beginning on page 16 before making an investment decision. We may be unable for many reasons, including those that are beyond our control, to implement our business strategy successfully. Some of these risks are that: we have a recent history of losses and expect to incur increased operating costs in the future, and we may not achieve or sustain profitability; the pace of our revenue growth has been volatile and we cannot assure you that we will continue to achieve consistent revenue growth; our operating results depend on a number of factors and are likely to fluctuate from quarter to quarter; the voice-enabled speaker market is in its early stages of development and may not continue to grow, and we may not be able to establish and maintain market share; we may not be able to successfully manage frequent new product introductions and transitions; we are dependent on a single contract manufacturer and on a limited number of suppliers, logistics providers and distributors, over which we have limited or no control; we operate in highly competitive markets and we are dependent on partners who offer products that compete with our own; we may not be able to accurately anticipate market demand for our products, and we may have difficulty managing our production and inventory as a result; our sales are subject to seasonality and our sales in high-demand periods may be below our forecasts; the imposition of tariffs and other trade barriers, as well as retaliatory trade measures, could require us to raise the prices of our products and harm our sales; and we may lose one or more of our key personnel, or fail to attract and retain other highly qualified personnel. If we are unable to adequately address these and other risks we face, our business, financial condition, operating results and prospects may be adversely affected. Recent Developments Recent Operating Results (Preliminary and Unaudited) Set forth below are preliminary estimates of selected unaudited financial and other information for the three months ended June 30, 2018 and actual unaudited financial results for the three months ended July 1, 2017. Our unaudited interim consolidated financial statements for the three months ended June 30, 2018 are not yet Table of Contents TABLE OF CONTENTS Page Prospectus Summary 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2018/SPOT_spotify_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/SPOT_spotify_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..b2c767e185b52fa92fee88153c3a484d61fb79e4
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/SPOT_spotify_prospectus_summary.txt
@@ -0,0 +1 @@
+prospectus summary highlights certain information appearing elsewhere in this prospectus. As this is a summary, you should read the entire prospectus carefully, including the information under Risk Factors, Management s Discussion and Analysis of Financial Condition and Results of Operations, and our consolidated financial statements and the related notes thereto included in this prospectus. This prospectus includes forward-looking statements that involve risks and uncertainties. See Note Regarding Forward-Looking Statements. Unless the context otherwise requires, references to Company, we, us, our, and Spotify refer to Spotify Technology S.A. and its direct and indirect subsidiaries on a consolidated basis. Overview Our mission is to unlock the potential of human creativity by giving a million creative artists the opportunity to live off their art and billions of fans the opportunity to enjoy and be inspired by these creators. When we launched our Service in 2008, music industry revenues had been in decline, with total global recorded music industry revenues falling from $23.8 billion in 1999 to $16.9 billion in 2008. Growth in piracy and digital distribution were disrupting the industry. People were listening to plenty of music, but the market needed a better way for artists to monetize their music and consumers needed a legal and simpler way to listen. We set out to reimagine the music industry and to provide a better way for both artists and consumers to benefit from the digital transformation of the music industry. Spotify was founded on the belief that music is universal and that streaming is a more robust and seamless access model that benefits both artists and music fans. We are the largest global music streaming subscription service. Our premium service ( Premium Service ) provides Premium Subscribers with unlimited online and offline high-quality streaming access to our catalog. The Premium Service offers a commercial-free music experience. Our ad-supported service ( Ad-Supported Service, and together with our Premium Service, our Service ) has no subscription fees and provides Ad-Supported Users with limited on-demand online access to our catalog. With a presence in 65 countries and territories and growing as of March 21, 2018, our platform includes 157 million MAUs and 71 million Premium Subscribers as of December 31, 2017, which we believe is nearly double the scale of our closest competitor, Apple Music. We define Premium Subscribers as the total count of users for accounts that have completed registration with Spotify and have activated a payment method for Premium Service. Monthly active users ( MAUs ) refers to the total count of Users of our Ad-Supported Service ( Ad-Supported Users, and together with Premium Subscribers, Users ) and Premium Subscribers that have consumed content for greater than zero milliseconds in the last thirty days from the period-end indicated. Our Users are highly engaged. We currently monetize our Service through both subscriptions and advertising. Our Premium Subscribers have grown 46% year-over-year as of December 31, 2017 to 71 million. Our 157 million MAUs have grown 28% year-over-year as of December 31, 2017. The Premium Service and Ad-Supported Service live independently, but thrive together. Our Ad-Supported Service serves as a funnel, driving more than 60% of our total gross added Premium Subscribers since we began tracking this data in February 2014. With a 51% increase in revenue from our Ad-Supported Service from 2015 to 2016 and a 41% increase in revenue from our Ad-Supported Service from 2016 to 2017, we believe our Ad-Supported Service is a strong and viable stand-alone product with considerable long-term opportunity for growth in Ad-Supported Users and revenue. However, we face intense competition in growing both our Ad-Supported Users and Premium Subscribers, as well as in keeping our Users highly engaged. If User engagement declines or if we fail to continue to grow our Ad-Supported User base or Premium Subscriber base, our revenue growth will be negatively impacted. See Risk Factors Risks Related to Our Business If our efforts to attract prospective Users and to retain existing Users are not successful, our growth prospects and revenue will be adversely affected. Table of Contents The information in this prospectus is not complete and may be changed. The securities may not be sold until the Registration Statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. Subject to Completion, dated March 23, 2018 SPOTIFY TECHNOLOGY S. A. ORDINARY SHARES This prospectus relates to the registration of the resale of up to 55,731,480 of our ordinary shares by the registered shareholders identified in this prospectus ( Registered Shareholders ). Unlike an initial public offering, the resale by the Registered Shareholders is not being underwritten by any investment bank. The Registered Shareholders may, or may not, elect to sell their ordinary shares covered by this prospectus, as and to the extent they may determine. Such sales, if any, will be made through brokerage transactions on the New York Stock Exchange (the NYSE ) or other public exchanges at prevailing market prices. See Plan of Distribution. If the Registered Shareholders choose to sell their ordinary shares, we will not receive any proceeds from the sale of ordinary shares by the Registered Shareholders. Each outstanding ordinary share entitles the holder thereof to one vote. In addition, we have issued ten beneficiary certificates per ordinary share held of record (excluding warrants, options, and RSUs, as applicable) to entities beneficially owned by our founders, Daniel Ek and Martin Lorentzon, for a total of 373,041,200 beneficiary certificates outstanding as of March 21, 2018. Each beneficiary certificate entitles its holder to one vote. Pursuant to our articles of association, our beneficiary certificates may be issued at a ratio of between one and 20 beneficiary certificates per ordinary share as determined by our board of directors or its delegate at the time of issuance. The beneficiary certificates carry no economic rights. The beneficiary certificates were issued to provide our founders with control of the Company through additional voting power. The beneficiary certificates are non-transferable and shall automatically be canceled for no consideration in the case of sale or transfer of the ordinary share to which they are linked, with exceptions permitted on a case-by-case basis as determined by the board of directors in its absolute discretion pursuant to our articles of association. See Description of Share Capital and Articles of Association. No public market for our ordinary shares currently exists. However, our ordinary shares have a history of trading in private transactions. Based on information available to us, the low and high sales price per ordinary share for such private transactions during the year ended December 31, 2017 was $37.50 and $125.00, respectively, and during the period from January 1, 2018 through March 14, 2018 was $48.93 and $132.50 respectively, in each case excluding the Tencent Transactions (as defined herein). For more information, see Sale Price History of Ordinary Shares. Our recent trading prices in private transactions may have little or no relation to the opening public price of our ordinary shares on the NYSE or the subsequent trading price of our ordinary shares on the NYSE. Further, the listing of our ordinary shares on the NYSE without underwriters is a novel method for commencing public trading in our ordinary shares, and consequently, the trading volume and price of our ordinary shares may be more volatile than if our ordinary shares were initially listed in connection with an underwritten initial public offering. Based on information provided by the NYSE, the opening public price of our ordinary shares on the NYSE will be determined by buy and sell orders collected by the NYSE from broker-dealers. Based on such orders, the designated market maker will determine an opening price for our ordinary shares in consultation with a financial advisor pursuant to applicable NYSE rules. For more information, see Plan of Distribution. We have applied to list our ordinary shares on the NYSE under the symbol SPOT. We expect our ordinary shares to begin trading on the NYSE on or about April 3, 2018. Investing in our ordinary shares involves risks. See Risk Factors beginning on page 15. The Securities and Exchange Commission and state securities regulators have not approved or disapproved these securities, or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. , 2018 Table of Contents ABOUT THIS PROSPECTUS This prospectus is a part of a registration statement on Form F-1 (the Registration Statement ) that we filed with the Securities and Exchange Commission (the SEC ) using a shelf registration or continuous offering process. Under this shelf process, the Registered Shareholders may from time to time sell the ordinary shares covered by this prospectus in the manner described in Plan of Distribution. Additionally, we may provide a prospectus supplement to add information to, or update or change information contained in this prospectus, including the Plan of Distribution. You should read this prospectus before deciding to invest in our ordinary shares. You may obtain this information without charge by following the instructions under Where You Can Find More Information appearing elsewhere in this prospectus. Table of Contents For the years ended December 31, 2015, 2016, and 2017, we generated 1,940 million, 2,952 million, and 4,090 million in revenue, respectively, representing a compound annual growth rate ( CAGR ) of 45%. For the years ended December 31, 2015, 2016, and 2017, we incurred net losses of 230 million, 539 million, and 1,235 million, respectively. For the years ended December 31, 2015, 2016, and 2017, our EBITDA was (205) million, (311) million, and (324) million, respectively. For the years ended December 31, 2015, 2016, and 2017, our net cash flow (used in)/from operating activities was (38) million, 101 million, and 179 million, respectively. For the years ended December 31, 2015, 2016, and 2017, our Free Cash Flow was (92) million, 73 million, and 109 million, respectively. EBITDA and Free Cash Flow are non-IFRS financial measures. For a discussion of EBITDA and Free Cash Flow and a reconciliation of each to their most closely comparable IFRS measures, see Summary Consolidated Financial and Other Data. Music Industry Returns to Growth Led by Streaming Global recorded music industry revenues declined by 40% from $23.8 billion in 1999 to $14.3 billion in 2014 following the launch of the first internet-based music download service. As Spotify s access model gained traction, however, that trend reversed itself in 2015 when global recorded music revenues grew more than 3% from the prior year. Growth accelerated in 2016, when global recorded music revenues reached $15.7 billion, an increase of 6% from 2015. This was the highest annual growth rate in 20 years, according to management estimates and industry reports. Return to Growth was Primarily Driven by Streaming. Streaming is the engine which has primarily restored the global recorded music industry to growth. Streaming revenues increased by 60% in 2016, reaching $4.6 billion, while physical sales and digital download revenues continued to decline at 8% and 21% respectively, according to management estimates and industry reports. Streaming is Growing Globally. According to management estimates and industry reports, the return to growth in the recorded music industry was seen in every region measured, namely North America, Europe, Asia, and Latin America. By transforming user behavior, streaming has become the dominant global format in the music industry, fueling growth in key music markets worldwide. The Streaming Market is Still in its Infancy. While streaming has changed the way many people access music, we believe there is an untapped global audience with significant growth potential. We believe the universality of music gives us the opportunity to reach many of the over 3.6 billion internet users globally, according to the International Telecom Union ICT Facts and Figures 2017 Report. Increasing Penetration of Established Markets. There is opportunity for growth, even in more established markets. According to Nielsen, the average American listens to more than 32 hours of music each week, and we believe there is significant room to capture additional share of these content hours. Research from MIDiA indicates that listeners who pay for streaming subscription services tend to consume more content hours on average than ad-supported users. Growth in Smartphone Penetration. In the 65 countries and territories where we are present, there were an estimated 1.3 billion payment-enabled smartphone users in 2017. According to research from Ovum, the number of payment-enabled smartphone users in the countries where we are present is forecast to grow by 29% to approximately 1.7 billion by 2021. As a mobile-first platform, we believe we are well-positioned to benefit from the growth in global smartphone users. Opportunity in the Ad-Supported Music Market. With our Ad-Supported Service, we believe there is a large opportunity to grow Users and gain market share from traditional terrestrial radio. In the United States alone, traditional terrestrial radio is a $14 billion market, according to BIA/Kelsey. The total global radio advertising market is approximately $28 billion in revenue, according to Magna Global. With a more robust offering, more on-demand capabilities, and access to personalized playlists, we believe Spotify offers Users a significantly better alternative to linear broadcasting. Table of Contents NOTE REGARDING FORWARD-LOOKING STATEMENTS This prospectus contains estimates and forward-looking statements. All statements other than statements of historical fact are forward-looking statements. The words may, might, will, could, would, should, expect, plan, anticipate, intend, seek, believe, estimate, predict, potential, continue, contemplate, possible, and similar words are intended to identify estimates and forward-looking statements. Our estimates and forward-looking statements are mainly based on our current expectations and estimates of future events and trends, which affect or may affect our businesses and operations. Although we believe that these estimates and forward-looking statements are based upon reasonable assumptions, they are subject to numerous risks and uncertainties and are made in light of information currently available to us. Many important factors may adversely affect our results as indicated in forward-looking statements. These factors include, but are not limited to: our ability to attract prospective Users (as defined herein) and to retain existing Users; our dependence upon third-party licenses for sound recordings and musical compositions; our ability to comply with the many complex license agreements to which we are a party; our ability to generate sufficient revenue to be profitable or to generate positive cash flow on a sustained basis; our lack of control over the providers of our content and their effect on our access to music and other content; our ability to accurately estimate the amounts payable under our license agreements; the limitations on our operating flexibility due to the minimum guarantees required under certain of our license agreements; our ability to obtain accurate and comprehensive information about music compositions in order to obtain necessary licenses or perform obligations under our existing license agreements; potential breaches of our security systems; assertions by third parties of infringement or other violations by us of their intellectual property rights; risk associated with our substantial indebtedness; risks related to our status as a foreign private issuer; dilution resulting from additional share issuances; and the concentration of voting power among our founders who have and will continue to have substantial control over our business. Other sections of this prospectus describe additional risk factors that could adversely impact our business and financial performance. Moreover, we operate in an evolving environment. New risk factors and uncertainties emerge from time to time, and it is not possible for our management to predict all risk factors and uncertainties, nor are we able to assess the impact of all of these risk factors on our business or the extent to which any risk factor, or combination of risk factors, may cause actual results to differ materially from those contained in any forward-looking statements. We qualify all of our forward-looking statements by these cautionary statements. See Risk Factors. You should read this prospectus and the documents that we have filed as exhibits to this prospectus completely and with the understanding that our actual future results may be materially different and worse from what we expect. Table of Contents Spotify is the Largest Global Music Streaming Subscription Service Spotify has transformed the way people access and enjoy music. Today, millions of people around the world have access to over 35 million tracks through Spotify, whenever and wherever they want. We are transforming the music industry by allowing Users to move from a transaction-based experience of buying and owning music to an access-based model which allows Users to stream music on demand. In contrast, traditional radio relies on a linear distribution model in which stations and channels are programmed to deliver a limited song selection with little freedom of choice. We are the largest global music streaming subscription service with 157 million MAUs and 71 million Premium Subscribers as of December 31, 2017. Based on management estimates and industry reports, Spotify s global streaming market share was approximately 42% in 2016 as determined by revenue, and we had market share of approximately 41%, 42%, and 59% in the U.S., Brazil, and United Kingdom, our three largest markets by MAUs, respectively. In addition, we accounted for greater than 95% of the streaming market in our home country of Sweden. We made up almost half of global revenues from paid streaming to record labels in 2016, according to MIDiA. Through December 31, 2017, we have paid more than 8 billion in royalties to artists, music labels, and publishers since our launch. Spotify is more than a music streaming service. We are in the discovery business. Every day, fans from around the world trust our brand to guide them to music and entertainment that they would never have discovered on their own. If discovery drives delight, and delight drives engagement, and engagement drives discovery, we believe Spotify wins and so do our Users. Our brand reflects culture and occasionally creates it by turning vast and intriguing listening data into compelling stories that remind people of the role music plays in their lives and encourages new fans to join Spotify each week. How is Spotify Different? Scale Provides Unique Data which Enables a Differentiated and Personalized Experience. Many music services have large catalogs, but we believe Spotify is differentiated from other services because we provide Users with a more personalized experience, driven by powerful music search and discovery engines. We have a large and growing base of Users that are highly engaged on Spotify, which enables us to continuously learn about their listening behaviors throughout the day. We use this information to create a more personalized and engaging experience for each incremental visit to our platform. We believe this personalized experience is a key competitive advantage as Users are more likely to engage with a platform that reflects their real-time moods and activities and captures a unique understanding of moments in their lives. Superior User Experience Drives Industry Leading User Engagement. We believe our superior User experience is what has enabled Spotify to become the largest global music streaming subscription service. Investing in the User experience has and will continue to generate significant benefits for our platform. As our personalization becomes more refined and music discovery becomes more seamless, we believe we will increase our current Users engagement and will attract new Users to our platform. On average, 25 Content Hours Per MAU were streamed in each month of the fourth quarter of 2017. Content Hours Per MAU is a monthly measure defined as the aggregate number of hours Users spent consuming audio and video content on Spotify in the quarter indicated divided by the average of the MAUs for each month in such quarter, which is then divided by three months. Our 157 million MAUs have grown 28% year-over-year as of December 31, 2017. Our Premium Subscribers have grown 46% year-over-year as of December 31, 2017 to 71 million. A portion of this Table of Contents PRESENTATION OF FINANCIAL AND OTHER INFORMATION Currency All references in this prospectus to (i) Euro, EUR, or are to the currency of the member states participating in the European Monetary Union, and (ii) U.S. dollar, USD, or $ are to the currency of the United States. Our reporting currency is the Euro. For the convenience of the reader, this prospectus contains translations of certain Euro amounts into U.S. dollars at specified rates. Unless otherwise indicated, the U.S. dollar equivalent for information in Euros is based on the exchange rates, as defined in Currencies and Exchange Rates. Presentation of Financial Information In accordance with International Financial Reporting Standards ( IFRS ) as issued by the International Accounting Standards Board ( IASB ), we prepare our consolidated financial statements on a historical cost basis, except for our securities, a long term investment, Convertible Notes (as defined herein), and derivative financial instruments, which have been measured at fair value. The financial information included in this prospectus for the years ended December 31, 2013 and 2014 have been presented without the retrospective application of IFRS 15, Revenue from Contracts with Customers ( IFRS 15 ) and may not be comparable to the years ended December 31, 2015, 2016, and 2017. Non-IFRS Financial Measures In this prospectus, we present certain financial measures that are not recognized by IFRS and that may not be permitted to appear on the face of IFRS-compliant financial statements or notes thereto. The non-IFRS financial measures used in this prospectus are EBITDA and Free Cash Flow. For a discussion of EBITDA and Free Cash Flow and a reconciliation of each to their most closely comparable IFRS measures, see Summary Consolidated Financial and Other Data and Selected Historical Financial Information and Other Data. Presentation of Ordinary Shares As of March 21, 2018, we had 178,112,840 ordinary shares outstanding. Except as otherwise indicated, the number of ordinary shares outstanding excludes (i) 14,977,569 ordinary shares issuable upon exercise of stock options outstanding at a weighted-average exercise price of $60.56 per ordinary share, (ii) 191,985 ordinary shares issuable upon the settlement of restricted stock units ( RSUs ) outstanding, and (iii) 6,720,000 ordinary shares issuable upon the exercise of warrants outstanding, at a weighted average exercise price of $59.92 per ordinary share. An aggregate of 3,918,680 ordinary shares are reserved for future issuances pursuant to the Terms and Conditions Governing Employee Stock Options 2018/2023 in the Company, the Terms and Conditions Governing Restricted Stock Units 2018/2023 in the Company, and, in each case, the appendices thereto. An aggregate of 60,000 ordinary shares are also reserved for future issuances pursuant to the Terms and Conditions Governing Director Restricted Stock Units 2018/2022 in the Company and the appendices thereto. Further, all information in this prospectus reflects on a retroactive basis a 40-to-one share split of our ordinary shares, beneficiary certificates, and any other outstanding securities, which we effectuated on March 14, 2018 (the Share Split ). The purpose of the Share Split was to reduce the per share price of our ordinary shares to a more customary level for a newly listed company on the NYSE. Rounding Certain monetary amounts, percentages, and other figures included in this prospectus have been subject to rounding adjustments. Accordingly, figures shown as totals in certain tables may not be the arithmetic aggregation of the figures that precede them, and figures expressed as percentages in the text may not total 100% or, as applicable, when aggregated may not be the arithmetic aggregation of the percentages that precede them. Table of Contents growth is due to the popularity of our Family Plan, which allows up to six Premium Subscribers in a household for one fixed monthly rate. Our Premium Subscribers include both the master Family Plan account as well as any sub-accounts associated with each household. Spotify Playlists are the Driving Force Behind Music Discovery and Demand Creation on our Service. As our Service has grown, our challenge has been to connect millions of Users all with distinct listening preferences with a large catalog of over 35 million tracks as of December 31, 2017. Spotify has become an essential partner to both aspiring and established artists by enabling their music to be discovered. Our playlists have become a key discovery tool for Users to find new artists and new music from their favorite artists. Given the success of our playlists in driving music discovery, they have become one of the primary tools that labels, artists, and managers use in order to boost artists and measure success. Many of our Users also rely on Spotify to help soundtrack their day, through editorially-curated playlists like RapCaviar or personalized machine-generated playlists like Discover Weekly, Daily Mix, or Release Radar. We now program approximately 31% of all listening on Spotify across these and other playlists, compared to less than 20% two years ago. Spotify Building a Two-Sided Marketplace We are building a two-sided music marketplace for Users and artists, which is powered by data, analytics, and software. Spotify provides fans with a way to discover and enjoy music, and artists with an additional avenue to showcase and be compensated for their creative works. For artists, Spotify provides a platform from which they can reach and interact with their fans, as well as analytics which provide a better and more thorough understanding of their fan base. Benefits for Users We are focused on enabling the discovery and curation of music for our Users through our range of products and services: Playlists and Personalization. Users benefit from our ability to help them navigate our more than 35 million tracks as of December 31, 2017. We do this by providing Users with editorially curated and machine-generated playlists. From the moment Users open the Spotify application, we serve them a personalized homepage with content that reflects our understanding of their music tastes, listening habits, musical moods, and daily activities. The homepage is a gateway to a universe of content, and we aim to make that universe accessible, dynamic, and engaging. We believe Users are more likely to engage with a platform that reflects their real-time moods and activities and captures a unique understanding of moments in their lives. Ad-Supported and Premium Listening. We provide a wide range of listening options that meet the varying needs of our rapidly growing User base and also address our Users real-time moods and activities and capture a unique understanding of the moments in their lives. Our listening options include our Ad-Supported Service, Family Plan, Student Plan, and individual Premium subscriptions. We created our student plan (the Student Plan ) to target the student population, because these Users tend to have high retention and tend to migrate to our Premium Service over time. Additionally, we created our family plan (the Family Plan ) to offer a better subscription experience for households so that every household member can have a unique individual account rather than share one account for music listening. Our Ad-Supported Service serves as both a Premium Subscriber acquisition channel and also a robust option for Users who are unable or unwilling to pay a monthly subscription fee but still want to enjoy access to a wide variety of high-quality music and other content. Cross-Platform Flexibility. We strive to reach Users wherever they are in the world, which means that Spotify is built to be functional across multiple platforms from smartphones to laptops to video game Table of Contents MARKET AND INDUSTRY DATA Information included in this prospectus relating to our industry, industry size, share of industry sales, industry position, industry capacities, industry demand, growth rates, penetration rates, and other industry data consists of estimates based on reports compiled by professional third-party organizations and analysts, data from external sources, our knowledge of our sales and the industry in which we operate, and our own calculations based on such information. While we have compiled, extracted, and reproduced industry data from external sources, including third-party, industry, or general publications, we have not independently verified the data. Similarly, while we believe our management estimates to be reasonable, they have not been verified by any independent sources. Forecasts and other forward-looking information with respect to industry and ranking are subject to the same qualifications and additional uncertainties regarding the other forward-looking statements in this prospectus. See Note Regarding Forward-Looking Statements. Among others, we refer to estimates compiled by the following industry sources: Nielsen Corporation ( Nielsen ), a global marketing research firm that measures media audiences; The Recording Industry Association of America ( RIAA ), an organization that conducts consumer, industry, and technical research; Equation Research, an independent panel brokerage that conducts brand tracking; Magna Global, a resource that publishes market insights and forecasts; Ovum, a global business intelligence firm that produces research for digital service providers; comScore, Inc. ( comScore ), an agency that measures audiences, advertising, and consumer behavior; BIA/Kelsey, an advisory firm focused on local advertising and marketing; International Telecom Union, a specialized agency for information and communication technologies; and MIDiA Research ( MIDiA ), a research service that provides comprehensive market insights and analysis. Table of Contents consoles to cars. The flexibility of our platform and the ability to access it via a single user ID across mobile, tablet, and other connected devices creates a seamless and integrated experience that is designed to fit a variety of lifestyles. As an independent service, we are uniquely positioned to work with the broadest set of partners in the ecosystem. Benefits for Creators Spotify provides a large stage for more than 3 million creators and artists to connect with existing fans and to be discovered by new fans. In addition to providing artists with access to 157 million MAUs, we also provide artists with a full stack of tools and services, enabling them to grow their businesses on a single platform. Monetization. Through December 31, 2017, we have paid more than 8 billion in royalties to artists, music labels, and publishers since our launch. In 2017, our expenses for rights holders grew by 27% year-over-year. We believe that our number of Premium Subscribers is nearly double the size of our nearest competitor, Apple Music. Discovery. We not only help artists connect with existing fans, but we also support artists in connecting with the Users who are most likely to become fans of their music. Nearly 10 billion times each month, an artist is streamed on Spotify by a User who has never heard their music before on the Service. From our curation algorithms and data assets that surface new music to Users in playlists, to physical billboards, branded events, and personalized campaigns, we offer artists the tools to connect with fans, new and old. Distribution. An artist who makes their music available on Spotify gains access to the largest global music streaming subscription service based on our 157 million MAUs as of December 31, 2017. We offer our Service in 65 countries and territories around the world. We enable artists to distribute entire albums and individual songs to this audience. We also place artists content on playlists, further amplifying their reach. Promotion. We empower artists and their managers to personalize and create unique artist profiles by providing them with tools to develop their artist image, including featuring songs on their artist profiles and creating artist playlists. On top of these standard services, we also offer artists specific promotional tools, designed to target specific Users and broad audiences in order to drive engagement. Analytics. We provide numerous analytics for artists through our Spotify for Artists service. Analytics that artists can access include the demographics of their listening audience, Users anonymized geographical locations, similar artists that their fans listen to, the number of real-time Users, song performance data, playlist data, and playlist notifications. Tools for Creation. Our Creator Technology Research Lab focuses on making tools to help artists in their creative process with a goal of helping artists at all career stages to realize their creative visions. Our Business Model We offer both Premium and Ad-Supported Services. Our Premium and Ad-Supported Services live independently, but thrive together. We believe this business model has allowed us to achieve scale with attractive unit economics and is a critical part of our success. We continue to invest heavily in developing our two-sided marketplace with new and better product features and functionality for Users and creators and believe our investments are leading to higher User engagement and enjoyment. We provide personalization that drives a unique and tailored experience to each User and the tools for artists to reach the widest fan base. Table of Contents Our Ad-Supported Users and Premium Subscribers are spending more time with the Service each year. From a content perspective, on average 25 Content Hours Per MAU were streamed in each month of the fourth quarter in 2017, up 13% from the fourth quarter in 2016 and up 26% from the fourth quarter in 2015. Historically, our Premium Subscribers have streamed more than three times the amount of content per month than Ad-Supported Users. With engagement increasing, Premium Churn has continued to trend lower. In the fourth quarter of 2017, Premium Churn was 5.1%, down from 6.0% in the fourth quarter of 2016 and down from 7.5% in the fourth quarter of 2015. Premium Churn is a monthly measure defined as Premium Subscriber cancellations in the quarter indicated divided by the average number of daily Premium Subscribers in such quarter, which is then divided by three months. As our User base matures, and with the growth in higher retention products such as our Family Plan and Student Plan, we believe Premium Churn will continue to trend lower over time. We are currently in 65 countries and territories and are growing in each of our four geographic regions. Europe is our largest region with 58 million MAUs, accounting for 37% of our total User base as of December 31, 2017, an increase of 25% from the prior year. In our North America region, MAUs increased by 21% from December 31, 2016 to December 31, 2017 and now account for 32% of our MAUs. Our two fastest growing regions are Latin America, with 21% of our MAUs, an increase of 35% from December 31, 2016 to December 31, 2017, and the rest of the world, with 10% of our MAUs, an increase of 49% from December 31, 2016 to December 31, 2017. Our Growth Strategies We believe we are still in the early stages of realizing our goal to connect artists and audiences around the world. Our growth strategies are focused on continuously improving our technology and attracting more Users in current and new markets in order to collect more behavioral data, which we use to offer our Users, advertisers, and artists an even better experience. The key elements of our growth strategy are: Continually Enhance our Platform in Order to Retain and Grow Our User Base. We will continue to (i) invest heavily in research and development, (ii) make strategic acquisitions in order to enhance our product capabilities, and (iii) make our offerings more attractive to existing and prospective Users. We will continue to invest in our artificial intelligence and machine learning capabilities to deepen the personalized experience that we offer to all of our Users. Further Penetrate our Existing Markets. In aggregate, only 12% of the payment-enabled smartphone users in the 65 countries and territories in which we have active Users use our platform, based on estimates from Ovum, as of December 31, 2017. This statistic is calculated as the number of our Users within a country divided by the total number of smartphone owners in that country. By pursuing initiatives that drive the continued growth of our User base within our existing markets, we hope to take advantage of this current low penetration rate. These initiatives include enhancing our Ad-Supported offering, continuing to improve our playlists, enhancing the personalization of our music delivery, bringing even more artists to our platform, and expanding our content offerings. Enter New Geographies. In the last two years, we launched Spotify in Japan, Indonesia, Israel, Romania, South Africa, Thailand, and Vietnam, and we expect to continue to expand geographically in order to provide Users around the world with full access to the Spotify music catalog. Before launching in a new market, we typically optimize the local Spotify experience for local music preferences. We seek to obtain the rights to popular local content and have local curators where it makes sense. Continue to Invest in our Advertising Business. We will continue to invest in our advertising products in order to create more value for advertisers and our Ad-Supported Users by enhancing our ability to make advertising content more relevant for our Ad-Supported Users. Offering advertisers additional ways to purchase advertising on a programmatic basis is one example of how we continue to expand Table of Contents our portfolio of advertising products. We also are focused on developing analytics and measurement tools to evaluate, demonstrate, and improve the effectiveness of advertising campaigns on our platform. Expand our Non-music Content and User Experience. We are an audio first platform and have begun expanding into non-music content like podcasts. We hope to expand this offering over time to include other non-music content, such as spoken word and short form interstitial video. Expand our Spotify for Artists Initiatives. We will continue to make investments in the artistic community, by providing artists with even more ways to connect with their fans. By investing in tools that will help further the creation of music, we hope to find more ways to help artists reach Users to grow their audiences. Risks Associated with our Business and of Owning Our Ordinary Shares Our business and owning our ordinary shares are subject to numerous risks and uncertainties, including those highlighted in Risk Factors. These risks include, but are not limited to, the following: your ability to sell your ordinary shares at or above the price you bought them for due to (i) our listing not having the same safeguards as an underwritten initial public offering, which may result in the public price of our ordinary shares being volatile and declining significantly upon listing, or (ii) the failure of an active, liquid, and orderly market for our ordinary shares to develop or be sustained; our ability to attract prospective Users and to retain existing Users; our dependence upon third-party licenses for sound recordings and musical compositions; our ability to comply with the many complex license agreements to which we are a party; our ability to generate sufficient revenue to be profitable or to generate positive cash flow on a sustained basis; our lack of control over the providers of our content and their effect on our access to music and other content; our ability to accurately estimate the amounts payable under our license agreements; the limitations on our operating flexibility due to the minimum guarantees required under certain of our license agreements; our ability to obtain accurate and comprehensive information about music compositions in order to obtain necessary licenses or perform obligations under our existing license agreements; potential breaches of our security systems; assertions by third parties of infringement or other violations by us of their intellectual property rights; the substantial control our founders have and will continue to have over our business due to the concentration of voting power among them; and risks related to our status as a foreign private issuer. Corporate Information We were organized under the laws of Luxembourg as a soci t anonyme and incorporated on December 27, 2006 with our registered office at 42-44, avenue de la Gare, L-1610 Luxembourg and registered with the Luxembourg Trade and Companies Register under number B. 123.052. Our principal operational office is located at Regeringsgatan 19, 111 53 Stockholm, Sweden. Our website is www.spotify.com. We do not have a phone number. The information contained on our website is not incorporated by reference in this prospectus and you should not consider information contained on our website to be a part of this prospectus. Table of Contents Recent Developments Tencent Transactions In December 2017, Spotify and Tencent Holdings Limited ( Tencent ) completed two separate equity investments. In the first transaction, (i) Tencent Music Entertainment Group ( TME ) issued shares of TME to Spotify, and (ii) Spotify issued ordinary shares of Spotify to an affiliate of TME. In the second transaction, an affiliate of Tencent purchased ordinary shares of Spotify through a secondary purchase. For accounting purposes, these transactions were treated as share exchanges. Following these transactions, Spotify holds a minority stake in TME, and both Tencent and TME indirectly hold minority stakes in Spotify. In connection with the transactions, affiliates of TME and Tencent agreed not to transfer ordinary shares of Spotify for a period of three years from December 15, 2017, subject to limited exceptions, including transfers with Spotify s prior consent; transfers to certain permitted transferees; transfers pursuant to a tender offer or exchange offer recommended by Spotify s board of directors for a majority of Spotify s issued and outstanding securities; transfers pursuant to mergers, consolidations, or other business combination transactions approved by Spotify s board of directors; transfers to Spotify or any of its subsidiaries; or transfers that are necessary to avoid regulation as an investment company under the U.S. Investment Company Act of 1940, as amended. The transactions described herein are collectively referred to as the Tencent Transactions. Tencent, which owns a majority stake in TME, is an operator of social networks in China. TME is an early mover in authorized digital music in China, and provides digital music services to users including streaming, online live broadcasts, and karaoke services. Spotify believes the Tencent Transactions allow Spotify to invest in the long term potential of the music market in China and, in turn, TME to invest in the long term potential of the music market outside of China. Exchange of Convertible Notes In connection with the Tencent Transactions, in December 2017, certain accredited investors holding a portion of our $1,000 million in aggregate principal amount of convertible senior unsecured notes due 2021 (the Convertible Notes ) exchanged $301 million of Convertible Notes, plus accrued interest, for 4,800,000 ordinary shares pursuant to an exchange agreement (the Tencent Exchange ) and subsequently sold such shares to an affiliate of Tencent as described above. In December 2017, we entered into an exchange agreement with accredited investors holding a portion of our Convertible Notes pursuant to which we exchanged an aggregate of $110 million of Convertible Notes, plus accrued interest, for an aggregate of 1,754,960 ordinary shares (the December Exchange ). In January 2018, we entered into an exchange agreement with accredited investors holding the remaining balance of our Convertible Notes pursuant to which the remaining $628 million of Convertible Notes, plus accrued interest, were exchanged for 9,431,960 ordinary shares (the January Exchange ). Pursuant to this exchange agreement, subject to certain conditions, if we fail to list our ordinary shares on or prior to July 2, 2018, we have agreed to offer to each noteholder the option to unwind the transaction such that we will purchase back the ordinary shares that were issued to such noteholder pursuant to the exchange and we will issue such noteholder a new note that is materially identical to such noteholder s note prior to the exchange. At December 31, 2017, pro forma for the January Exchange, we have no outstanding indebtedness. Unauthorized User Access On March 21, 2018, we detected instances of approximately two million users as of December 31, 2017, who have been suppressing advertisements without payment. We previously included such users in calculations Table of Contents for certain of our key performance indicators, including MAUs, Ad-Supported Users, Content Hours, and Content Hours per MAU. While we have excluded these users from these key performance indicators and other related metrics throughout this prospectus for the year ended December 31, 2017, we currently do not have, and may never have, the requisite data available to adjust such key performance indicators and other metrics prior to January 1, 2017, and as a result, such key performance indicators and other metrics for such periods may be overstated. For a discussion of these key performance indicators and the risks associated with an overstatement of such metrics, see Management s Discussion and Analysis of Financial Condition and Operating Results Key Performance Indicators, Risk Factors Risks Related to Our Business Our User metrics and other estimates are subject to inherent challenges in measurement, and real or perceived inaccuracies in those metrics may seriously harm and negatively affect our reputation and our business, We are at risk of artificial manipulation of stream counts and failure to effectively manage and remediate such fraudulent streams could have an adverse impact on our business, operating results, and financial condition. Fraudulent streams and potentially associated fraudulent User accounts or artists may cause us to overstate key performance indicators, which once discovered, corrected, and disclosed, could undermine investor confidence in the integrity of our key performance indicators and could cause our stock price to drop significantly, and We are at risk of attempts at unauthorized access to our Service, and failure to effectively prevent and remediate such attempts could have an adverse impact on our business, operating results, and financial condition. Unauthorized access to our Service may cause us to misstate key performance indicators, which once discovered, corrected, and disclosed, could undermine investor confidence in the integrity of our key performance indicators and could cause our stock price to drop significantly. Table of Contents The following diagram illustrates our current simplified corporate structure for Spotify and its significant subsidiaries (as defined in Rule 1-02 of Regulation S-X of the U.S. Securities Act of 1933, as amended (the Securities Act )): Table of Contents
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. Before investing in our common stock, you should carefully read this entire prospectus, including our consolidated financial statements and the related notes included elsewhere in this prospectus and the section titled "Risk Factors." As used in this prospectus, unless the context otherwise requires, references to the "company," "we," "us" and "our" refer to Scholar Rock Holding Corporation together with its consolidated subsidiaries. Overview We are a biopharmaceutical company focused on the discovery and development of innovative medicines for the treatment of serious diseases in which signaling by protein growth factors plays a fundamental role. Our newly elucidated understanding of the molecular mechanisms of growth factor activation enabled us to develop a proprietary platform for the discovery and development of monoclonal antibodies that locally and selectively target these signaling proteins at the cellular level. We believe this approach, acting in the disease microenvironment, avoids the historical challenges associated with inhibiting growth factors for therapeutic effect. We believe our focus on biologically validated growth factors may facilitate a more efficient development path. We are advancing our lead product candidate, SRK-015, a selective first-in-class inhibitor of the activation of the growth factor myostatin in skeletal muscle, into clinical development for the treatment of spinal muscular atrophy, or SMA. We plan to initiate our Phase 1 clinical trial in May 2018. Utilizing our proprietary platform, we are also creating a pipeline of novel product candidates with the potential to transform the lives of patients suffering from a wide range of serious diseases, including other neuromuscular disorders, cancer, fibrosis and anemia. Our Approach and Proprietary Platform Our proprietary platform is designed to discover and develop monoclonal antibodies that have a high degree of specificity to achieve selective modulation of growth factor signaling. Growth factors are naturally occurring proteins that typically act as signaling molecules between cells and play a fundamental role in regulating a variety of normal cellular processes, including cell growth and differentiation. Current therapeutic approaches to treating diseases in which growth factors play a fundamental role involve directly targeting an active growth factor or its receptor systemically throughout the body and have suffered from a variety of shortcomings: multiple growth factors often signal through the same or overlapping sets of related receptors, making it difficult to specifically modulate one pathway over another; members of the same growth factor superfamily share considerable structural similarities, making it difficult to achieve specific inhibition of the targeted growth factor; this can result in broad systemic inhibition that can cause undesirable, and in many cases toxic, side effects; and systemic and nonselective inhibition of a growth factor can block the growth factor's role in the disease process, but can also simultaneously interfere with its normal physiological roles. Our innovative approach is rooted in our structural biology insights into the mechanism by which certain growth factors are activated in close proximity to the cell surface, which we refer to as "supracellular activation." We integrate these insights with sophisticated protein expression, assay development and monoclonal antibody discovery capabilities. We believe our proprietary platform can address the challenges of current therapeutic approaches to treating diseases in which growth factors play a fundamental role by: targeting the natural activation mechanism to prevent activation of the growth factor rather than attempting to inhibit the growth factor after activation; achieving heightened specificity for the targeted growth factor while minimizing interactions with structurally similar and related growth factors, thereby reducing the risk of unintended systemic adverse events; and targeting the disease microenvironment, where we believe we can interfere with the disease process while minimizing the effects on the normal physiological processes mediated by the same growth factors. FORM S-1 AMENDMENT NO. 2 TO REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Table of Contents Unlike many other proteins that are produced and secreted by cells in a mature, or active, form, many growth factors are expressed by cells in a precursor, or latent, form. For example, TGFb1 is produced by cells as a single protein which is then enzymatically processed by the cells into two distinct and physically separated domains the mature growth factor and the remaining portion of the original protein, referred to as the prodomain which remain associated as part of a complex. This secreted complex is latent, or inactive, and must first be activated to carry out its normal function in a highly localized tissue or disease microenvironment. In a seminal peer-reviewed publication in 2011, Timothy A. Springer, Ph.D., one of our co-founders, elucidated a new understanding of the mechanism of supracellular activation as it applies to members of the TGFb superfamily, by solving a high resolution x-ray crystal structure of this latent form of TGFb1, as illustrated in the graphic below. Structural representation of the latent form of TGFb1 wherein the prodomain wraps around the active growth factor. This research explained at a molecular level why the secreted form of TGFb1 is inactive. The prodomain, though physically separated from the mature growth factor domain, forms a "cage" around the active form of TGFb1, blocking the growth factor from signaling through its receptor. Only when the cage is "unlocked" by a supracellular activation event can the growth factor be released and mediate its effects in the local microenvironment. Dr. Springer further hypothesized that this phenomenon likely holds true for most members of the TGFb superfamily, though the exact nature of the activation event, such as integrin binding or enzymatic cleavage, may differ among members of the superfamily. Importantly, while many growth factors are structurally very similar, their cages are structurally diverse, and this provides the basis for our approach to improved selectivity. Our Pipeline Programs Using our innovative approach and proprietary platform, we are creating a pipeline of novel product candidates that selectively inhibit the supracellular activation of growth factors believed to be important drivers in a variety of diseases, including neuromuscular disorders, cancer, fibrosis and anemia. Our proprietary platform includes (i) our know-how expressing and purifying latent protein growth factor complexes in quantity and quality sufficient to enable antibody discovery; (ii) strategies to identify rare antibodies that selectively bind targeted latent protein growth factor complexes; and (iii) assays developed by us in which to test the highly selective antibodies' ability to modulate the activation of specific latent SCHOLAR ROCK HOLDING CORPORATION (Exact name of registrant as specified in its charter) Table of Contents growth factors. In addition to such know-how, our proprietary platform is covered by two patent families, with issued patents projected to expire in 2034. We have worldwide rights to our proprietary platform and all of our product candidates, with the exception of certain early-stage antibodies that specifically inhibit the activation of TGFb1 in the context of regulatory T cells, which we licensed to Janssen Biotech, Inc., or Janssen, a subsidiary of Johnson & Johnson. Our Lead Product Candidate and Additional Programs SRK-015 We are advancing our lead antibody product candidate, SRK-015, a first-in-class inhibitor of the activation of myostatin, into clinical development for the treatment of SMA. Myostatin is a negative regulator of muscle mass expressed primarily in skeletal muscle tissue and a member of the transforming growth factor beta, or TGFb, superfamily, a group of more than 30 related growth factors that mediate diverse biological processes. Vertebrate animals that lack the myostatin gene display increased muscle mass and strength relative to their normal counterparts, but are otherwise healthy. We believe inhibition of the activation of myostatin may promote a clinically meaningful increase in muscle mass and strength. As a result, we have focused our initial development efforts for SRK-015 on the treatment of SMA. SMA is a rare, and often fatal, genetic disorder that typically manifests in young children, characterized by atrophy of the voluntary muscles of the limbs and trunk and dramatically reduced normal neuromuscular function. An estimated 30,000 to 35,000 patients suffer from SMA in the United States and Europe. In preclinical studies, we observed that SRK-015 promoted increased muscle mass and strength, while selectively avoiding interaction with other closely related growth factors that play distinctly different physiological roles. We believe that SRK-015 has the potential to be the first muscle-directed therapy to reverse or prevent muscle atrophy in SMA patients and could be used both as a monotherapy or in conjunction with the current standard of care. In March 2018, we filed an Investigational New Drug application, or IND, with the U.S. Food and Drug Administration, or FDA, for SRK-015, and in April 2018, the FDA notified us that our Phase 1 first-in-human clinical trial of SRK-015 may proceed. We plan to initiate our Phase 1 clinical trial in May 2018. The FDA has granted orphan drug designation for SRK-015 for the treatment of SMA. TGFb1 Our second antibody program is focused on the discovery and development of highly specific inhibitors of the activation of TGFb1. TGFb1 is also a member of the TGFb superfamily, and increased signaling by TGFb1 is a key driver of a number of disease-relevant processes, including tissue and organ fibrosis, immune system evasion by cancer cells, and bone marrow fibrosis associated with hematological disorders. Historically, selectively targeting TGFb1 has been challenging due to off-target inhibition of other, closely related growth factors, TGFb2 and TGFb3. Pan-TGFb inhibition has been associated with a range of toxicities, most notably cardiac toxicity. In preclinical studies of our antibodies, we have observed inhibition of TGFb1 activation in vitro and immunomodulatory and antifibrotic activity in multiple disease models in vivo. In addition, we have completed a 28-day pilot toxicology study of our leading antibody and, to date, we have not observed any drug-related toxicity. In the same study, we tested pan-TGFb inhibitors and observed the toxicities, including cardiac toxicity that have been observed by others. We are actively evaluating a limited number of our selective inhibitors of the activation of TGFb1 in multiple disease models, and we intend to nominate a clinical candidate to initially pursue in one or more of our currently targeted indications of oncology, immuno-oncology and fibrosis, by the first half of 2019. BMP6 Our third antibody program targets the signaling of bone morphogenetic protein 6, or BMP6, another member of the TGFb superfamily, which is involved in a diverse set of biological processes in various parts of the body. For example, in the liver, BMP6 signaling is a key controller of the body's ability to regulate iron levels. Given BMP6's important role in iron metabolism, we believe that targeting BMP6 signaling in a liver-selective fashion presents the potential to address both iron-restricted anemias and iron overload conditions. In preclinical studies of our antibodies targeting BMP6 signaling in the liver, we have observed Table of Contents increased iron levels in the bloodstream of healthy animals and we are now evaluating a limited number of these antibodies in disease models of iron restriction. Our Strategy Using our proprietary platform to unlock the therapeutic potential of targeting growth factor signaling in the disease microenvironment, our goal is to deliver novel therapies to underserved patients suffering from a wide range of serious diseases, including neuromuscular disorders, cancer, fibrosis and anemia. To achieve this goal we plan to: rapidly advance our lead product candidate, SRK-015, through clinical proof-of-concept; advance our TGFb1 program into clinical development; explore additional indications for our existing and emerging product candidates; continue to leverage our proprietary platform to expand our pipeline beyond current lead programs; selectively seek strategic collaborations to maximize the value of our proprietary platform and pipeline; and attract and retain people that share our commitment to scientific excellence and a focus on patients. We have worldwide rights to our proprietary platform and all of our product candidates and antibodies, with the exception of certain early-stage antibodies that specifically inhibit the activation of TGFb1 in the context of regulatory T cells, which we licensed to Janssen. We have assembled an experienced management team, board of directors, scientific founders and advisory board who bring extensive industry experience to our company. The members of our team have deep experience in discovering, developing and commercializing therapeutics with a particular focus on rare diseases, having worked at companies such as Alnylam Pharmaceuticals, Inc., Avila Therapeutics, Inc., Biogen, Inc. and Dyax Corp. We were founded by internationally respected scientists, Drs. Timothy A. Springer and Leonard I. Zon of Harvard Medical School and Boston Children's Hospital. Since our inception in 2012, we have raised over $100 million through convertible preferred stock financings. Our investors include ARCH Venture Partners, Cormorant Asset Management, EcoR1 Capital, Fidelity Management and Research Company, Invus, The Kraft Group, Polaris Partners, Redmile Group and Timothy A. Springer, Ph.D. Risks Affecting Our Business Our business is subject to a number of risks, including risks that may prevent us from achieving our business objectives or may adversely affect our business, financial condition, results of operations, cash flows and prospects that you should consider before making a decision to invest in our common stock. These risks are discussed more fully in the section titled "Risk Factors" beginning on page 13 of this prospectus, and include the following: We have limited operating history, have incurred net losses in every year since our inception and anticipate that we will continue to incur net losses in the future. We will require additional capital to fund our operations and if we fail to obtain necessary capital, we will not be able to complete the development and commercialization of SRK-015 and any future product candidates. Our business is highly dependent on the success of our lead product candidate, SRK-015, as well as any future clinical candidates that are generated from our other preclinical programs. All of our product candidates will require significant additional preclinical and clinical development before we may be able to seek regulatory approval for and launch a product commercially. Our approach to the discovery and development of innovative medicines for the treatment of serious diseases in which signaling by protein growth factors plays a fundamental role is based on our proprietary platform, which is unproven and may not result in marketable products. Total Minimum Lease Payments Year ending December 31, December 31, 2017 March 31, 2018 2018 $ 7 $ 4 Total minimum lease payments $ 7 $ 620 Memorial Drive, 2nd Floor Cambridge, MA 02139 (857) 259-3860 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) Table of Contents Clinical development involves a lengthy and expensive process, with an uncertain outcome. We may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of any product candidates. We face significant competition from other biotechnology and pharmaceutical companies, and our operating results will suffer if we fail to compete effectively. If we lose key management personnel, or if we fail to recruit additional highly skilled personnel, our ability to identify and develop new or next generation product candidates will be impaired, could result in loss of markets or market share and could make us less competitive. Our success depends in part on our ability to protect our intellectual property. It is difficult and costly to protect our proprietary rights and technology, and we may not be able to ensure their protection. We rely on third parties to conduct certain aspects of our preclinical studies and will rely on third parties to conduct our clinical trials. If these third parties do not successfully carry out their contractual duties or meet expected deadlines or comply with regulatory requirements, we may not be able to obtain regulatory approval of or commercialize any potential product candidates. Our future collaborations will be important to our business. If we are unable to enter into new collaborations, or if these collaborations are not successful, our business could be adversely affected. Corporate History We were incorporated in 2017 under the laws of the state of Delaware as the holding company for Scholar Rock, Inc., a wholly owned subsidiary of Scholar Rock, LLC. Pursuant to the terms of a corporate reorganization that was completed on December 22, 2017, all of the equity interests in Scholar Rock, LLC were exchanged for the same number and class of newly issued securities of Scholar Rock Holding Corporation and, as a result, Scholar Rock, LLC became a wholly owned subsidiary of Scholar Rock Holding Corporation. See the section titled "Restructuring" for additional information. Our principal executive offices are located at 620 Memorial Drive, 2nd Floor, Cambridge, MA 02139, and our phone number is (857) 259-3860. Our website address is http://www.scholarrock.com. The information contained in or accessible from our website is not incorporated into this prospectus, and you should not consider it part of this prospectus. We own various U.S. federal trademark applications and unregistered trademarks, including our company name and our logo. All other trademarks or trade names referred to in this prospectus are the property of their respective owners. Solely for convenience, the trademarks and trade names in this prospectus are referred to without the symbols and , but such references should not be construed as any indicator that their respective owners will not assert, to the fullest extent under applicable law, their rights thereto. Implications of Being an Emerging Growth Company We are an "emerging growth company," as defined in the Jumpstart Our Business Startups Act, or the JOBS Act, enacted in April 2012. For so long as we remain an emerging growth company, we are permitted and intend to rely on certain exemptions from various public company reporting requirements, including not being required to have our internal control over financial reporting audited by our independent registered public accounting firm pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and any golden parachute payments not previously approved. In particular, in this prospectus, we have provided only two years of audited financial statements and have not included all of the executive compensation related information that would be required if we were not an emerging growth company. Accordingly, the information contained herein may be different than the information you receive from other public companies in which you hold stock. Estimated Useful Life (in Years) Laboratory equipment 3 - 5 Machinery and equipment 3 - 5 Furniture and fixtures Nagesh K. Mahanthappa President and Chief Executive Officer 620 Memorial Drive, 2nd Floor Cambridge, MA 02139 (857) 259-3860 (Name, address, including zip code, and telephone number, including area code, of agent for service) Table of Contents We will remain an emerging growth company until the earlier to occur of (1) the last day of 2023, (2) the last day of the fiscal year in which we have total annual gross revenues of at least $1.07 billion, (3) the last day of the fiscal year in which we are deemed to be a "large accelerated filer," under the rules of the U.S. Securities and Exchange Commission, or SEC, which means the market value of our equity securities that is held by non-affiliates exceeds $700 million as of the prior June 30th, and (4) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period. In addition, the JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. This provision allows an emerging growth company to delay the adoption of some accounting standards until those standards would otherwise apply to private companies. We have irrevocably elected not to avail ourselves of delayed adoption of new or revised accounting standards and, therefore, we will be subject to the same requirements to adopt new or revised accounting standards as other public companies that are not emerging growth companies. Copies of all communications, including communications sent to agent for service, should be sent to: Kingsley L. Taft Laurie A. Burlingame Goodwin Procter LLP 100 Northern Ave. Boston, MA 02210 (617) 570-1000 Junlin Ho Scholar Rock Holding Corporation 620 Memorial Drive, 2nd Floor Cambridge, MA 02139 (857) 259-3860 Marc A. Recht Brent B. Siler Nicole C. Brookshire Alison A. Haggerty Cooley LLP 500 Boylston St. Boston, MA 02116 (617) 937-2300 Table of Contents THE OFFERING Common stock offered by us 5,360,000 shares Common stock to be outstanding immediately after this offering 24,440,536 shares Option to purchase additional shares offered by us 804,000 shares Use of proceeds We estimate that we will receive net proceeds from the sale of shares of our common stock in this offering of approximately $67.5 million, or $78.0 million if the underwriters exercise their option to purchase additional shares in full, assuming an initial public offering price of $14.00 per share, the midpoint of the price range set forth on the cover page of this prospectus, and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. We intend to use the net proceeds from this offering, together with our existing cash, cash equivalents and marketable securities, to fund research and development activities for SRK-015 through our planned Phase 2 clinical proof of concept trial; and to fund TGFb1, BMP6 and other preclinical research and development activities. We intend to use the remaining proceeds from this offering for working capital and other general corporate purposes. For a more complete description of our intended use of the proceeds from this offering, see "Use of Proceeds." Risk factors You should carefully read the "Risk Factors" section of this prospectus for a discussion of factors that you should consider before deciding to invest in our common stock. Proposed Nasdaq Global Market symbol "SRRK" The number of shares of our common stock to be outstanding after this offering is based on 19,080,536 shares of our common stock (which includes 1,114,089 shares of restricted common stock) outstanding as of March 31, 2018, giving effect to the conversion of all outstanding shares of our convertible preferred stock into an aggregate of 15,109,950 shares of our common stock upon the completion of this offering, and excludes: 7,614 shares of common stock issuable upon the exercise of a warrant outstanding as of March 31, 2018, at an exercise price of $3.94 per share; 660,319 shares of common stock issuable upon the exercise of stock options outstanding as of March 31, 2018 under our 2017 Stock Option and Incentive Plan at an exercise price of $5.77 per share; 355,539 shares of common stock issuable upon the exercise of stock options granted subsequent to March 31, 2018 under our 2017 Stock Option and Incentive Plan at an exercise price of $7.17 per share; 3,139,274 shares of our common stock that will become available for future issuance under our 2018 Stock Option and Incentive Plan upon the effectiveness of the registration statement of which Approximate date of commencement of proposed sale to the public: As soon as practicable after this registration statement becomes effective. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, as amended, check the following box. If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act. Large Accelerated Filer Accelerated Filer Non-Accelerated Filer (Do not check if a smaller reporting company) Smaller Reporting Company Emerging Growth Company If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided to Section 7(a)(2)(B) of the Securities Act. Table of Contents this prospectus forms a part, from which we have granted options to purchase 309,925 shares of common stock, subject to and effective upon the closing of this offering, at an exercise price equal to the public offering price per share in this offering; and 235,743 shares of our common stock that will become available for future issuance under our 2018 Employee Stock Purchase Plan upon the effectiveness of the registration statement of which this prospectus forms a part. Unless otherwise indicated, all information in this prospectus reflects or assumes the following: the filing of our amended and restated certificate of incorporation and the effectiveness of our amended and restated by-laws upon the completion of this offering; the conversion of all outstanding shares of convertible preferred stock into an aggregate of 15,109,950 shares of common stock upon the completion of this offering; the conversion of the outstanding warrant to purchase 21,739 shares of convertible preferred stock into a warrant to purchase 7,614 shares of common stock; no exercise of outstanding options or warrants after March 31, 2018; a 2.8548-to-one reverse split of our common stock effected on May 11, 2018; and no exercise by the underwriters of their option to purchase up to 804,000 additional shares of common stock in this offering. CALCULATION OF REGISTRATION FEE TITLE OF EACH CLASS OF SECURITIES TO BE REGISTERED AMOUNT TO BE REGISTERED(1) PROPOSED MAXIMUM OFFERING PRICE PER SHARE PROPOSED MAXIMUM AGGREGATE OFFERING PRICE(2) AMOUNT OF REGISTRATION FEE(3) Common Stock, par value $0.001 per share 6,164,000 $15.00 $92,460,000 $11,511.27 (1)Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(a) under the Securities Act of 1933, as amended. Includes 804,000 shares that the underwriters have an option to purchase. (2)Includes the offering price of shares that the underwriters have an option to purchase. (3)$9,337.50 of this registration fee was previously paid by the Registrant in connection with the filing of its Registration Statement on Form S-1 on April 27, 2018. (1)See Note 17 to our consolidated financial statements included elsewhere in this prospectus for further details on the calculation of basic and diluted net loss per unit and share and unaudited pro forma basic and diluted net loss per share. The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment that specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until this registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. (1)Pro forma amounts give effect to (1) the automatic conversion of all of our outstanding shares of convertible preferred stock into an aggregate of 15,109,950 shares of common stock upon completion of this offering, (2) the automatic conversion of the outstanding warrant to purchase 21,739 shares of convertible preferred stock into a warrant to purchase 7,614 shares of common stock, and the resulting reclassification of the warrant liability to additional paid-in capital, and (3) the vesting of a performance-based stock option award to purchase up to 8,757 shares of our common stock with vesting conditions contingent upon completion of this offering, and the resulting recognition of equity-based compensation expense. (2)Pro forma as adjusted amounts reflect pro forma adjustments described in footnote (1) as well as the sale of shares of our common stock in this offering at the assumed initial public offering price of $14.00 per share, the midpoint of the price range set forth on the cover page of this prospectus, after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us. A $1.00 increase (decrease) in the assumed initial public offering price of $14.00 per share, the midpoint of the price range set forth on the cover of this prospectus, would increase (decrease) the pro forma as adjusted amount of each of cash, cash equivalents and marketable securities, working capital, total assets and total stockholders' equity by $5.0 million, assuming that the number of shares offered by us, as set forth on the cover of this prospectus, remains the same and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. Similarly, each increase (decrease) of 1,000,000 in the number of shares offered by us in this offering would increase (decrease) the pro forma as adjusted amount of each of cash, cash equivalents and marketable securities, working capital, total assets and total stockholders' equity by $13.0 million, assuming the assumed initial public offering price remains the same and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. (3)We define working capital as current assets less current liabilities. See our consolidated financial statements and related notes appearing at the end of this prospectus for further details regarding our current assets and current liabilities. SCHOLAR ROCK HOLDING CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Year Ended December 31, Three Months Ended March 31, 2016 2017 2017 2018 (unaudited) Cash flows from operating activities: Net loss $ (16,207 ) $ (24,995 ) $ (4,730 ) $ (8,892 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 575 669 164 179 Equity-based compensation 556 1,482 257 482 Amortization of deferred rent (184 ) (209 ) (51 ) (32 ) Deferred payroll tax credit (250 ) (199 ) 42 Other 22 47 19 2 Change in operating assets and liabilities: Accounts receivable 380 Prepaid expenses and other current assets (141 ) (477 ) (265 ) (1,923 ) Accounts payable 91 636 523 1,529 Accrued expenses 17 1,309 (492 ) (1,271 ) Net cash used in operating activities (15,141 ) (21,737 ) (4,575 ) (9,884 ) Cash flows from investing activities: Purchase of property and equipment (794 ) (361 ) (132 ) (176 ) Purchases of marketable securities (19,525 ) (23,412 ) Maturities of marketable securities 18,026 1,500 Net cash (used in) provided by investing activities (20,319 ) 17,665 1,368 (23,588 ) Cash flows from financing activities: Proceeds from loan payable and warrants, net of issuance costs 1,318 Principal payments on loan payable (302 ) (667 ) (167 ) (167 ) Proceeds from issuance of Series B convertible preferred units 4,285 Proceeds from issuance of Series C convertible preferred shares, net of issuance costs 46,890 Principal payments on capital lease obligation and other (14 ) (8 ) Net cash (used in) provided by financing activities 1,002 50,500 (167 ) (167 ) Net (decrease) increase in cash and cash equivalents and restricted cash (34,458 ) 46,428 (3,374 ) (33,639 ) Cash and cash equivalents and restricted cash, beginning of period 44,696 10,238 10,238 56,666 Cash and cash equivalents and restricted cash, end of period $ 10,238 $ 56,666 $ 6,864 $ 23,027 Supplemental disclosure of non-cash items: Property and equipment purchases in accounts payable $ 98 $ 159 $ 64 $ 13 Deferred offering costs in accounts payable and accrued expenses $ $ $ $ 985 Supplemental cash flow information: Cash paid for interest $ 42 $ 53 $ 14 $ Table of Contents The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED MAY 14, 2018 PRELIMINARY PROSPECTUS 5,360,000 Shares Scholar Rock Holding Corporation Common Stock We are offering 5,360,000 shares of our common stock. This is our initial public offering and no public market currently exists for our common stock. We anticipate that the initial public offering price will be between $13.00 and $15.00 per share. We have applied to list our common stock on The Nasdaq Global Market under the symbol "SRRK." Table of Contents
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diff --git a/parsed_sections/prospectus_summary/2018/STKS_one-group_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/STKS_one-group_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..3c6aa921e8c177199d30487e1ae8dee6c756aa54
--- /dev/null
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@@ -0,0 +1 @@
+prospectus summary. Our Corporate Information Our principal office is located at 411 W. 14th Street, 2nd Floor, New York, New York 10014, and our telephone number is (646) 624-2400. Our website address is www.togrp.com. The information contained on, or that can be accessed through, our website is not a part of this prospectus. We have included our website address in this prospectus solely as an inactive textual reference. Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and all amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act are available free of charge through the investor relations page of our internet website as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. All brand names or trademarks appearing in this prospectus are the property of their respective holders. Use or display by us of other parties trademarks, trade dress, or products in this prospectus is not intended to, and does not, imply a relationship with, or endorsements or sponsorship of, us by the trademark or trade dress owners. We are a "smaller reporting company" as defined in Rule 12b-2 of the Exchange Act and have elected to take advantage of certain of the scaled disclosure available to smaller reporting companies. Offering of Common Stock and Warrants On November 15, 2017, we entered into a securities purchase agreement, or the Purchase Agreement, with certain investors, pursuant to which we agreed to issue (i) up to 1,750,000 shares of common stock, at a purchase price of $1.50 per share and (ii) warrants to purchase up to 875,000 shares of our common stock, or the Warrants (the "Offering"). The closing of the Offering occurred on November 17, 2017 for an aggregate purchase price of approximately $2.625 million. The issuance and sale of the Warrants was exempt from registration pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended, or the Securities Act. THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THE SECURITY HOLDERS IDENTIFIED IN THIS PROSPECTUS MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED. SUBJECT TO COMPLETION, DATED April 17, 2018 PRELIMINARY PROSPECTUS THE ONE GROUP HOSPITALITY, INC. 875,000 SHARES OF COMMON STOCK This prospectus relates to the resale of up to 875,000 shares of our common stock issuable upon exercise of certain outstanding warrants. These shares will be resold from time to time by the entities listed in the section titled "Selling Security Holders" beginning on page 4, which we refer to as the selling security holders, or Selling Stockholders. The shares of common stock offered under this prospectus by the selling security holders are issuable upon exercise of warrants issued pursuant to the Securities Purchase Agreement by and among The ONE Group Hospitality, Inc. and the selling security holders, dated as of November 15, 2017 (the "Purchase Agreement"). We are not selling any securities under this prospectus and will not receive any of the proceeds from the sale of securities by the selling security holders. The selling security holders may sell the shares of common stock described in this prospectus in a number of different ways and at varying prices. We provide more information about how a selling security holder may sell its shares of common stock in the section titled "Plan of Distribution" on page 6. We will pay the expenses incurred in registering the securities covered by the prospectus, including legal and accounting fees. Our common stock is traded on The NASDAQ Capital Market, or NASDAQ, under the symbol "STKS". On April 6, 2018, the last reported sale price of our common stock was $2.58 per share. AN INVESTMENT IN OUR COMMON STOCK INVOLVES RISKS. SEE THE SECTION ENTITLED "RISK FACTORS" BEGINNING ON PAGE 3. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The date of this prospectus is ______________, 2018 You should read this prospectus and any applicable prospectus supplement before making an investment in the securities of The ONE Group Hospitality, Inc. See "Where You Can Find More Information" for more information. You should rely only on the information contained in this prospectus or a prospectus supplement. The Company has not authorized anyone to provide you with different information. This document may be used only in jurisdictions where offers and sales of these securities are permitted. You should assume that information contained in this prospectus, or in any prospectus supplement, is accurate only as of any date on the front cover of the applicable document. Our business, financial condition, results of operations and prospects may have changed since that date. Unless otherwise noted in this prospectus, "The ONE Group Hospitality," "The ONE Group," "the Company," "we," "us," "our" and similar terms refer to The ONE Group Hospitality, Inc. and its consolidated subsidiaries. Smaller Reporting Company – Scaled Disclosure Pursuant to Item 10(f) of Regulation S-K promulgated under the Securities Act of 1933, as indicated herein, we have elected to comply with the scaled disclosure requirements applicable to "smaller reporting companies," including providing two years of audited financial statements. The Warrants to purchase an aggregate of 875,000 shares of common stock are exercisable at any time after six months from their issuance and expire five years from their initial exercise date. All of the Warrants have an exercise price of $1.63 per share. Shares of common stock underlying the aggregate of 875,000 Warrants are being registered for resale by the selling security holders pursuant to the Registration Statement of which this prospectus forms a part. THE OFFERING Common stock offered by the selling security holders Up to 875,000 shares issuable upon exercise of Warrants issued pursuant to the Purchase Agreement (which Warrants will become exercisable on May 15, 2018 at an exercise price of $1.63 per share and expire on May 15, 2023). Common stock to be outstanding after this offering, assuming exercise of all Warrants issued pursuant to the Purchase Agreement 28,027,101 shares
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diff --git a/parsed_sections/prospectus_summary/2018/STRO_sutro_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/STRO_sutro_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..d14f07e345209510ca346ac1bbb356ed6c69aab9
--- /dev/null
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@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights selected information contained elsewhere in this prospectus and does not contain all of the information that you should consider in making your investment decision. Before investing in our common stock, you should carefully read this entire prospectus, including our financial statements and the related notes thereto and the information set forth under the sections entitled Risk Factors, Selected Financial Data and Management s Discussion and Analysis of Financial Condition and Results of Operations, in each case included in this prospectus. Some of the statements in this prospectus constitute forward-looking statements that involve risks and uncertainties. See the section entitled Special Note Regarding Forward-Looking Statements. Unless the context otherwise requires, we use the terms Sutro, company, we, us and our in this prospectus to refer to Sutro Biopharma, Inc. Overview We are a clinical stage drug discovery, development and manufacturing company focused on leveraging our proprietary integrated cell-free protein synthesis platform, XpressCF, to create a broad variety of optimally designed, next-generation protein therapeutics for cancer and autoimmune disorders. We aim to design therapeutics using the most potent modalities, including cytokine-based immuno-oncology, or I/O, therapeutics, antibody-drug conjugates, or ADCs, and bispecific antibodies that are directed primarily against clinically validated targets where the current standard of care is suboptimal. We believe our platform allows us to accelerate the discovery and development of potential first-in-class and best-in-class molecules by enabling the rapid and systematic evaluation of protein structure-activity relationships to create optimized homogeneous product candidates. Our mission is to transform the lives of patients by using our XpressCF Platform to create medicines with improved therapeutic profiles for areas of unmet need. Our two most advanced product candidates are wholly owned: STRO-001, an ADC directed against CD74, for patients with multiple myeloma and non-Hodgkin lymphoma, or NHL, and STRO-002, an ADC directed against folate receptor-alpha, or FolR , for patients with ovarian and endometrial cancers. STRO-001 is currently enrolling patients in a Phase 1 trial, with initial safety data expected in mid-2019. We plan to submit an investigational new drug, or IND, application for STRO-002 to the U.S. Food and Drug Administration, or FDA, in the fourth quarter of 2018. Our Product Candidates Our first internally developed product candidate is STRO-001, which we believe has the potential to be a first-in-class and best-in-class ADC directed against CD74, an antigen that is highly expressed in many B cell malignancies. In multiple preclinical models, STRO-001 has demonstrated potent anti-tumor activity. In addition, the properties of STRO-001 suggest a low likelihood of off-target toxicity and potential for an improved therapeutic index. STRO-001 is currently enrolling patients in a Phase 1 trial for multiple myeloma and NHL and we expect initial safety data in mid-2019. We are also internally developing STRO-002, an ADC directed against FolR , initially targeted for the treatment of ovarian and endometrial cancers. Our experiments show that FolR expression can be detected in 90% or more of ovarian and endometrial cancers. In preclinical models, STRO-002 has demonstrated the potential for enhanced and selective activity against cells expressing FolR , superior inhibition of tumor growth and greater linker stability, in comparison to experiments we conducted with a benchmark FolR -targeting molecule. We expect to submit an IND for STRO-002 in the fourth quarter of 2018. Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities, and we are not soliciting offers to buy these securities in any jurisdiction where the offer or sale is not permitted. PROSPECTUS (Subject to Completion) September 17, 2018 5,000,000 Shares Common Stock This is an initial public offering of shares of common stock by Sutro Biopharma, Inc. We are offering 5,000,000 shares of our common stock. The initial public offering price is expected to be between $14.00 and $16.00 per share. Prior to this offering, there has been no market for our common stock. We have applied to list our common stock on the Nasdaq Global Market under the symbol STRO. We are an emerging growth company as that term is used in the Jumpstart Our Business Startups Act of 2012 and, as such, we have elected to comply with certain reduced public company reporting requirements for this prospectus and future filings. Per share Total Initial public offering price $ $ Underwriting discounts and commissions(1) $ $ Proceeds to Sutro, before expenses $ $ (1) See Underwriting for a description of the compensation payable to the underwriters. We have granted the underwriters an option for a period of 30 days to purchase up to 750,000 additional shares of common stock. Investing in our common stock involves a high degree of risk. See Risk Factors beginning on page 14. Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed on the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. Certain of our existing stockholders and their affiliated entities, including stockholders affiliated with our directors, have indicated an interest in purchasing shares of common stock in this offering with an aggregate value of up to approximately $30.0 million at the initial public offering price. However, because indications of interest are not binding agreements or commitments to purchase, the underwriters may determine to sell more, fewer or no shares in this offering to any of these parties, or any of these parties may determine to purchase more, fewer or no shares in this offering. The underwriters will receive the same underwriting discount on any shares purchased by these parties as they will on any other shares sold to the public in this offering. Merck Sharp & Dohme Corp., a subsidiary of Merck & Co., Inc., Kenilworth, NJ, USA, or Merck, a holder of approximately 12.5% of our outstanding common stock, has agreed to purchase from us, concurrently with this offering in a private placement, up to $10.0 million of shares of our common stock at a price per share equal to the initial public offering price, subject to a 17.5% ownership cap after giving effect to the concurrent private placement and this offering. The sale of shares in the concurrent private placement will not be registered under the Securities Act of 1933, as amended. The closing of this offering is not conditioned upon the closing of the concurrent private placement. The shares of common stock purchased in the concurrent private placement will not be subject to any underwriting discounts or commissions. The underwriters expect to deliver shares of common stock to purchasers on , 2018. Joint Book-running Managers Cowen Piper Jaffray Co-managers JMP Securities Wedbush PacGrow , 2018 Table of Contents Although we believe our product candidates have the potential to be first-in-class and/or best-in-class and to provide potent anti-tumor activity with reduced off-target toxicity, we will need to complete additional studies to determine the safety and efficacy of our product candidates. The results of these future studies may be different than the results of our earlier studies. We have not received regulatory approval for any of our product candidates, and in order to obtain regulatory approval and commercialize our product candidates, the FDA or foreign regulatory agencies will need to determine that our product candidates are safe and effective. We may not obtain regulatory approval on the timeline we currently expect, or at all, and competing therapies and products may ultimately reach the market faster or have more favorable safety and efficacy profiles than our products candidates. The benefits of our XpressCF Platform have resulted in collaborations with leaders in the field of oncology, including Merck Sharp & Dohme Corp., a subsidiary of Merck & Co., Inc., Kenilworth, NJ, USA, or Merck, Celgene and Merck KGaA, Darmstadt, Germany (operating in the United States and Canada under the name EMD Serono ). We have leveraged these strategic partnerships to extend our own capabilities and broaden the scope of our XpressCF Platform. To date, all of our collaborations have provided us with approximately $330.0 million in payments, which includes $43.7 million in investments in our stock. Our collaborations include: Merck Programs. We have granted Merck the right to jointly develop up to three research programs directed to cytokine derivatives for cancer and autoimmune disorders, including rights to certain prior cytokine-based research efforts. Celgene Programs. We have granted Celgene the right to jointly develop up to four anti-cancer bispecific antibodies and/or ADCs directed primarily to immuno-oncology targets. The lead candidate generated for this collaboration is a novel ADC therapeutic directed against the target BCMA for which an IND submission is expected in early 2019. EMD Serono Programs. We have granted EMD Serono the right to designate up to six cancer targets against which we will discover, develop and optimize up to three mono, bispecific or multi-specific ADC product candidates per target. EMD Serono has selected all six possible target antigens under the strategic research and development partnership. The most advanced candidate in this collaboration is a bispecific ADC, which is currently in preclinical development. We intend to selectively enter into additional collaborations with partners who are seeking efficient and effective drug discovery, preclinical development and manufacturing capabilities for the creation of novel therapeutics. Beyond these wholly owned programs and collaborations, we are developing a broader pipeline of next-generation protein therapeutics using our XpressCF Platform. Our protein engineering and chemistry efforts are focused on maximizing therapeutic indices, and our technology allows us to rapidly test our therapeutic hypothesis in significantly more product candidates than conventional protein synthesis allows in order to identify the best molecule to advance to the clinic. Our drug discovery teams are exploring novel immuno-oncology therapies, including cytokine-based therapies. We are also actively pursuing the discovery and development of other novel ADC and bispecifics and currently have four ADC and two bispecific T cell-engager discovery programs. Our Proprietary XpressCF Platform Our XpressCF Platform is the first and only current Good Manufacturing Practices, or cGMP, compliant scalable cell-free protein synthesis technology that has resulted in products in clinical development. Our XpressCF Platform is fundamentally different from the conventional cell-based Table of Contents TABLE OF CONTENTS Page Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2018/TCMEF_tencent_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/TCMEF_tencent_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/TCMEF_tencent_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2018/TDGMW_tidewater_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/TDGMW_tidewater_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..1f2fd9079acea238e599d8ad28c7eec4f67ff4f0
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/TDGMW_tidewater_prospectus_summary.txt
@@ -0,0 +1 @@
+This summary description about us and our business highlights selected information included elsewhere in, or incorporated by reference into, this prospectus. As this summary may not contain all of the information that may be important to you, we urge you to read the entirety of this document and the other documents to which we refer.
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diff --git a/parsed_sections/prospectus_summary/2018/TENB_tenable_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/TENB_tenable_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/TENB_tenable_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2018/TH_target_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/TH_target_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..a876cafafa1ba96a653a0fa0fb655bfaa42a5bc9
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/TH_target_prospectus_summary.txt
@@ -0,0 +1 @@
+TABLE OF CONTENTS In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We intend to take advantage of the benefits of this extended transition period. We will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of this offering, (b) in which we have total annual gross revenue of at least $1.07 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our Class A ordinary shares that are held by non-affiliates exceeds $700 million as of the prior June 30, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period. References herein to emerging growth company will have the meaning associated with it in the JOBS Act. TABLE OF CONTENTS
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diff --git a/parsed_sections/prospectus_summary/2018/TKLS_trutankles_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/TKLS_trutankles_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..d6f6431413efaef1b5019059c8908fb500c73462
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/TKLS_trutankles_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary contains basic information about us and the offering. Because it is a summary, it does not contain all the information that you should consider before investing. You should read the entire prospectus carefully, including the risk factors and our financial statements and the related notes to those statements included in this prospectus. Except as otherwise required by the context, references in this prospectus to "we," "our," "us" and TKLS refer to Trutankless Inc. Our Company Trutankless Inc. was incorporated in the state of Nevada on March 7, 2008. The Company is headquartered in Scottsdale, Arizona and currently operates through its wholly-owned subsidiary, Bollente, Inc., a Nevada corporation incorporated on December 3, 2009. We are involved in sales, marketing, research and development of a new high quality, whole-house, electric tankless water heater that is more energy efficient than conventional products. We manufacture and distribute trutankless water heaters, a line of new, high-quality, highly efficient electric tankless water heaters. Our trutankless water heaters are engineered to outperform and outlast both its tank and tankless predecessors in energy efficiency, output, and durability. It provides endless hot water on demand for a whole household and it also integrates with home automation systems. We have several features and design innovations which are new to the electric tankless water heater market that we believe will give our products a sustainable competitive advantage over our rivals in the market. Our trutankless water heaters are available through wholesale plumbing distributors, including Ferguson, Hajoca, Hughes Supply, WinSupply locations, Morrison Supply, and several regional distributors. A partial listing of wholesalers may be found on our website (www.trutankless.com). Our trutankless water heaters were officially launched in the first quarter of 2014 and is sold throughout the wholesale plumbing distribution channel. We began generating revenue in the first quarter of 2014. As of the fiscal year ended December 31, 2014, we generated $238,912 in revenue. As of the fiscal year ended December 31, 2015, we generated $265,504 in revenue. As of the fiscal year ended December 31, 2016, we generated $429,582 in revenue. As of the fiscal year ended December 31, 2017, we generated $695,857 in revenue. On August 13, 2015, we formed a wholly-owned subsidiary, Bollente International, Inc. ( Bollente International ), to begin international manufacturing and sales expansion for our trutankless line of water hearters. The Company no longer operates Bollente International and on July 30, 2018, the Company caused Bollente International to be dissolved. No member of our management or any of our affiliates have been previously involved in the management or ownership of a development stage company that has not implemented its business plan, engaged in a change of control or similar transaction or has generated no or minimal resources to date. As of the date of this prospectus we have two officers who also serve as our board of directors and who we anticipate will devote 30 to 40 hours a week to the company going forward. We currently have nine full-time employees, including our two officers and two part-time employees. Additionally, even with the sale of securities offered hereby, we will not have the financial resources needed to hire additional employees or meaningfully expand our business. It is possible we will sustain operating losses for at least the next 12 months. Even if we sell all the securities offered, a substantial portion of the proceeds of the offering will be spent for costs associated with the offering, fees associated with SEC reporting requirements, and working capital. Investors should realize that following this offering we will be required to raise additional capital to cover the costs associated with our business plan. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated file, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [ ] Smaller reporting company [X] (Do not check if a smaller reporting company) Emerging growth company [ ] If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. [ ] TKLS s address and phone number are: Trutankless, Inc. 15720 N. Greenway Hayden Loop Suite 2 Scottsdale, AZ 85260 (480) 275-7572
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diff --git a/parsed_sections/prospectus_summary/2018/TLRY_tilray_prospectus_summary.txt b/parsed_sections/prospectus_summary/2018/TLRY_tilray_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..f449885f172cfb5044c8e620219495c2654a731a
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2018/TLRY_tilray_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights information contained in other parts of this prospectus. Because it is only a summary, it does not contain all of the information that you should consider before investing in our Class 2 common stock and it is qualified in its entirety by, and should be read in conjunction with, the more detailed information appearing elsewhere in this prospectus. You should read the entire prospectus carefully, especially Risk Factors, Management s Discussion and Analysis of Financial Condition and Results of Operations and our consolidated financial statements and the related notes included elsewhere in this prospectus, before deciding to invest in our Class 2 common stock. Unless the context requires otherwise, references in this prospectus to (i) Tilray, the company, we, us and our refer to Tilray, Inc. and its wholly owned subsidiaries and (ii) references to Privateer Holdings refer to Privateer Holdings, Inc. and its subsidiaries, other than Tilray. Our Vision We are pioneering the future of medical cannabis research, cultivation, processing and distribution globally, and we intend to become a leader in the adult-use cannabis market in Canada. We aspire to lead, legitimize and define the future of our industry by building the world s most trusted cannabis company. Our Company We have supplied high-quality cannabis products to tens of thousands of patients in 10 countries spanning five continents through our subsidiaries in Australia, Canada and Germany and through agreements with established pharmaceutical distributors, and we produce medical cannabis in Canada and Europe. We have been an early leader in the development of the global medical cannabis market. We were one of the first companies to be licensed by Health Canada to cultivate and sell medical cannabis in Canada, and also one of the first companies to become a licensed dealer of medical cannabis in Canada. The cannabis industry is rapidly expanding in Canada, with more than 100 other companies that are currently licensed, though only a few were licensed earlier than us, and there are hundreds more applications for licenses that are being processed by Health Canada. Our products have been made available in Argentina, Australia, Canada, Chile, Croatia, Cyprus, the Czech Republic, Germany, New Zealand and South Africa. While there are others licensed to cultivate and sell medical cannabis operating in multiple countries, including some licensed in Canada, and other non-cannabis companies expanding into the cannabis market internationally, we were the first company to legally export medical cannabis from North America to Africa, Australia, Europe and South America, and we were among the first companies to be licensed to cultivate and process medical cannabis in two countries, Canada and Portugal. Our company is led by a team of visionary entrepreneurs, experienced operators and cannabis industry experts as well as PhD scientists, horticulturists and extraction specialists who apply the latest scientific knowledge and technology to deliver quality-controlled, rigorously tested cannabis products on a large scale. We believe that our strength as a medical brand is rooted in our commitment to research and development. Our research and development program focuses on developing innovative products, including novel delivery systems and precisely formulated cannabinoid products, and on the creation Table of Contents EXPLANATORY NOTE This Registration Statement contains two forms of prospectus. One form of prospectus, or the U.S. Prospectus, is to be used in connection with an offering in the United States and certain other countries except Canada, and one form of prospectus, or the Canadian Prospectus, is to be used in connection with a concurrent offering in Canada and certain other countries except the United States. The U.S. Prospectus and the Canadian Prospectus are identical except that (1) they contain different front and back cover pages, (2) they contain different descriptions of the plan of distribution (contained under the sections titled Underwriting and Plan of Distribution in the U.S. Prospectus and the Canadian Prospectus, respectively) and (3) the Canadian Prospectus includes additional information as required under applicable Canadian securities laws, including financial statements for the year ended December 31, 2015. Table of Contents and improvement of methods, processes and technologies that allow us to efficiently manufacture such products on a large scale. We also supply clinical trials and were the first cannabis company with a North American production facility to be Good Manufacturing Practices, or GMP, certified in accordance with European Medicines Agency, or EMA, standards. An internationally recognized standard, GMP certification is the primary quality standard that pharmaceutical manufacturers must meet in their production processes. We believe our growth to date is a result of our global strategy, our multinational supply chain and distribution network and our methodical commitment to research, innovation, quality and operational excellence. We believe that recognized and trusted brands distributed through multinational supply chains will be best positioned to become global market leaders. Our strategy is to build these brands by consistently producing high-quality, differentiated products on a large scale. We expect to have a competitive advantage in the Canadian adult-use market pending the implementation of federal legislation that is anticipated to legalize adult-use cannabis in Canada in October 2018. We were formed as a subsidiary of Privateer Holdings, one of the first institutionally backed private investment firms to focus exclusively on the cannabis industry. Privateer Holdings portfolio of brands also includes Leafly, Marley Natural and Goodship. Our Industry We believe we are witnessing a global paradigm shift transforming the multibillion dollar cannabis industry from a state of prohibition to a state of legalization, but the legal market is still in its early stages. Moreover, we expect the number of countries with legalized regimes to continue to increase, creating numerous and sizable opportunities for market participants, including us. According to the United Nations, the global cannabis market, including the illicit market, is estimated to be $150 billion, annually, and approximately 3.8% of the adult population, or over 180 million people, are estimated to be cannabis users. Global Medical Market. Although cannabis is still heavily regulated, medical use is now authorized at the national or federal level in 29 countries. The pace of regulatory change globally has been rapid, with more than 25 countries having introduced significant reforms to their cannabis use laws to broaden the scope of permitted use since 2015. Adult Use. In October 2018, Canada will become the first major industrialized nation to legalize adult-use cannabis at the federal level. With legalization, we expect most illicit cannabis consumption to transition to the legal market. In the 2016 publication by Deloitte, Insights and Opportunities, Recreational Marijuana, the projected size of the Canadian adult-use market ranged from C$4.9 billion to C$8.7 billion annually. In the 2018 publication by Deloitte, A Society in Transition, an Industry Ready to Bloom, the projected size of the Canadian adult-use market in 2019 ranged from C$1.8 billion to C$4.3 billion. Our Opportunity We are approaching our industry from a long-term, global perspective and see opportunities to: Build global brands that lead, legitimize and define the future of cannabis. Develop innovative products and form factors that change the way the world consumes cannabis. Expand the availability of pure, precise and predictable medical cannabis products for patients in need around the world. Foster mainstream acceptance of the therapeutic potential of medical cannabis and cannabinoid-based medicines. Table of Contents PRINCIPAL STOCKHOLDERS The following table sets forth information with respect to the beneficial ownership of our capital stock as of June 30, 2018, after giving effect to the conversion of all of our Series A preferred stock into Subordinate Voting Shares, by: each person, or group of affiliated persons, known by us to beneficially own more than 5% of our Multiple Voting Shares or Subordinate Voting Shares; each of our named executive officers; each of our directors; and all of our executive officers and directors as a group. The percentage of shares beneficially owned before the offering shown in the table is based on the Shares outstanding as of June 30, 2018, after giving effect to (i) the voluntary conversion of 58,333,333 Multiple Voting Shares into 58,333,333 Subordinate Voting Shares on or immediately prior to the date of this prospectus and (2) the conversion of all of our Series A preferred stock into Subordinate Voting Shares. The percentage of shares beneficially owned after this offering assumes the sale by us of 9,000,000 Subordinate Voting Shares in this offering. Beneficial ownership is determined according to the rules of the SEC and generally means that a person has beneficial ownership of a security if he, she or it possesses sole or shared voting or investment power of that security, including stock options that are exercisable within 60 days of June 30, 2018. Our Subordinate Voting Shares issuable pursuant to stock options are deemed outstanding for computing the percentage of the person holding such options and the percentage of any group of which the person is a member but are not deemed outstanding for computing the percentage of any other person. Except as indicated by the footnotes below, we believe, based on the information furnished to us, that the persons named in the table below have sole voting and investment power with respect to all Shares shown that they beneficially own, subject to community property laws where applicable. The information does not necessarily indicate beneficial ownership for any other purpose, including for purposes of Section 13(d) and 13(g) of the Securities Act. Unless otherwise indicated, the address of each beneficial owner listed in the table below is c/o Tilray, Inc., 2701 Eastlake Avenue E., Third Floor, Seattle, Washington 98102. Shares Beneficially Owned Prior to the Offering % of Total Voting Power+ Shares Beneficially Owned After the Offering % of Total Voting Power+ Multiple Voting Shares Subordinate Voting Shares Multiple Voting Shares Subordinate Voting Shares Name of Beneficial Owner Number Percent Number Percent Number Percent Number Percent Greater than 5% stockholders: Privateer Holdings, Inc. 16,666,667 100 % 58,333,333 88 % 97 % 16,666,667 100 % 58,333,333 78 % 93 % Directors and Named Executive Officers: Brendan Kennedy(1) 1,125,000 2 % * 1,125,000 2 % * Woody Pastorius Michael Auerbach(2) 296,741 * * 296,741 * * Rebekah Dopp Maryscott Greenwood Christine St.Clare All current executive officers and directors as a group (7 individuals) 1,421,741 (3) 2 % * 1,721,741 (4) Table of Contents The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. PROSPECTUS (Subject to Completion) Dated July 16, 2018 9,000,000 Shares Class 2 Common Stock This is our initial public offering. We are offering 9,000,000 shares of our Class 2 common stock. shares of our Class 2 common stock are being offered in the United States and certain other countries except Canada by a syndicate of U.S. underwriters, and shares of our Class 2 common stock are being offered in Canada and certain other countries except the United States by a syndicate of Canadian underwriters. When we refer to the underwriters in this prospectus, we are referring only to the U.S. underwriters. However, when we refer to the offering, and the expenses and proceeds of the offering, we are referring to offering of our Class 2 common stock by the U.S. underwriters and the Canadian underwriters on a combined basis. Prior to this offering, there has been no public market for our Class 2 common stock. We expect the initial public offering price of the shares being offered by the U.S. underwriters to be between $14.00 and $16.00 per share. The initial public offering price of the shares being offered by the Canadian underwriters will be the approximate equivalent in Canadian dollars. We have applied to list our Class 2 common stock on the Nasdaq Global Select Market under the symbol TLRY. We are an emerging growth company as defined in the Jumpstart Our Business Startups Act of 2012. See the section titled Prospectus Summary Emerging Growth Company Status. You should consider the risks we have described in
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+PROSPECTUS SUMMARY The following summary is qualified in its entirety by, and should be read in conjunction with, the more detailed information and financial statements included elsewhere in this prospectus. In addition to this summary, we urge you to read the entire prospectus carefully, especially the risks of investing in our Ordinary Shares, discussed under "Risk Factors," before deciding whether to buy our Ordinary Shares. Overview Our Company Through our variable interest entity ("VIE"), Tianjin Mingda Jiahe Real Estate Co. Ltd. ("Mingda Tianjin"), we are an emerging, integrated real estate services company in China. We primarily provide primary real estate agency services to our real estate developer clients, and provide, on an as-needed basis, real estate consulting services, and independent training services. Currently, our primary market is in the Tianjin Autonomous Municipality, one of the richest cities in the PRC, ranking fifth in 2017 in the PRC based upon GDP per capita, according to source at http://www.fengup.com/phb/cityphb/64644.html. Since 2014, we have expanded our market presence to other first and second tier cities in China including Chengdu of Sichuan province, and Suzhou and Yangzhou of Jiangsu province. Through our primary real estate agency services, we have sold an aggregate of approximately 0.88 million square meters of primary properties with transaction value totaling approximately RMB12.97 billion (approximately $2 billion) from 2014 to 2017 for real estate development projects in 4 cities in China, with Tianjin being our largest market. Our primary real estate agency services offerings include, integrated marketing planning; advertising planning and execution; and sales planning and execution. Typically, we will sign a marketing and sales agency agreement with property developers to undertake the marketing and sales activities of a specific project. The scope of service varies according to clients needs; it could be a full package of all the above services, a combination of any two of the above services or any single service. As of May 23, 2018, the Company has 84 real estate sales professionals employees and retains additional sales associates, as needed, through third-party staffing companies for specific real estate development projects, on behalf of the real estate developers. For our real estate consulting services, we provide integrated marketing planning; advertising planning and strategy; and sales planning strategy. Our clients include real estate developers, real estate design institutes and agencies, urban planning bureaus of various levels of governments, urban rail transportation companies, as well as urban infrastructure development companies. For our independent training services, we may be engaged by real estate developer clients to act as an independent third-party training services for the primary agency sales agents engaged by the developers. We delivered this service as a pilot project in 2016 in response to client s engagement, and began generating revenue in 2018 following our expansion into this service offering. We have experienced substantial growth since the inception of Mingda Tianjin in 2002. For the fiscal years ended December 31, 2017 and 2016, our revenues were primarily generated from commission-based, primary real estate agency services. Our commission fee is ranged from 0.5% to 1.7% based on final sales value of the properties that we have sold. Our revenue for the fiscal year ended December 31, 2017 was $5,532,244, an increase of 4% from $5,302,030 in 2016. We generated 99.92% and 99.73% of our total revenues through our primary agency sales services in 2017 and 2016, respectively. We generated 0.08% and 0.27% of our total revenues through our consulting services in 2017 and 2016, respectively. Industry Background The PRC economy has grown significantly since the PRC government introduced economic reforms in the late 1970s. This growth has accelerated since China entered the World Trade Organization in 2001. China s economic growth, together with an increase in disposable incomes, a rise in urbanization levels, the emergence of a mortgage lending market and government housing reforms, have driven the expansion of China s real estate market. The primary residential property market in China continues to grow as the large millennial population reaches the age where they buy their first real property, typically with the financial support of their parents, as well as the continued trend of the PRC citizens relying on new residential properties as a financial instrument to ensure the appreciation of their wealth and disposable income. The real estate services industry in China, which includes primary real estate agency services, secondary brokerage services, mortgage management services and leasing services, has become increasingly specialized as it has grown in size and complexity. The real estate services industry in China has thus far consisted primarily of the marketing and sale of new properties, which we refer to as primary real estate agency business, with the secondary real estate brokerage business currently representing a smaller but fast-growing portion of the industry. The primary and secondary real estate services markets in China are competitive and fragmented. Competition is based on a real estate services company s market reputation and its quality and range of services. The PRC government s macroeconomic policy and various real estate restrictive policy such as the proposed real estate tax during the 2017 National People's Congress and National Committee of the Chinese People's Political Consultative Conference will continue to affect both land acquisition for primary real estate development, as well as the financial cost for PRC citizens to purchase their primary residences and secondary residences used for financial instruments. These in turn will materially affect the primary real estate services markets. The primary residential real estate agency industry in China is highly fragmented. We believe that industry consolidation will become an increasingly prevalent trend. Competitive Advantages We believe that the following competitive strengths have contributed to our success and differentiated us from our competitors: systematic and effective training of sales associates and support staff; integrated provider of a full range of agency services; and an experienced and stable management team. Growth Strategies Our goal is to become a leading real estate primary real estate agency service company in China that provides an end-to-end full range of services to meet the diverse and evolving needs of the real estate industry, and with geographical coverage in major second-tier and third-tier cities on the eastern seaboard of the PRC market, and in central China. Our primary strategies to achieve our goal include: expand geographic reach and enhance brand recognition, further grow each existing line of business, selectively pursue strategic acquisitions and alliances, and expand service offerings and increase cross-selling opportunities. Corporate Information Our principal executive offices are located at Saidun Center [C-1505], Xikang Road, Heping District, Tianjin, People s Republic of China, and our phone number is + 86-2283520851. We maintain a corporate website at http://www.mdjhchina.com. The information contained in, or accessible from, our website or any other website does not constitute a part of this prospectus. Corporate Structure The following diagram illustrates our corporate structure as of the date of this prospectus. For more detail on our corporate history please refer to "Business – Corporate History and Structure". Implications of Our Being an "Emerging Growth Company" As a company with less than $1.07 billion in revenue during our last fiscal year, we qualify as an "emerging growth company" as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. An "emerging growth company" may take advantage of reduced reporting requirements that are otherwise generally applicable to public companies. In particular, as an emerging growth company, we: may present only two years of audited financial statements and only two years of related Management s Discussion and Analysis of Financial Condition and Results of Operations, or MD are not required to provide a detailed narrative disclosure discussing our compensation principles, objectives and elements and analyzing how those elements fit with our principles and objectives, which is commonly referred to as "compensation discussion and analysis"; are not required to obtain an attestation and report from our auditors on our management s assessment of our internal control over financial reporting pursuant to the Sarbanes-Oxley Act of 2002; are not required to obtain a non-binding advisory vote from our shareholders on executive compensation or golden parachute arrangements (commonly referred to as the "say-on-pay," "say-on frequency" and "say-on-golden-parachute" votes); are exempt from certain executive compensation disclosure provisions requiring a pay-for-performance graph and CEO pay ratio disclosure; are eligible to claim longer phase-in periods for the adoption of new or revised financial accounting standards under 107 of the JOBS Act; and will not be required to conduct an evaluation of our internal control over financial reporting until our second annual report on Form 20-F following the effectiveness of our initial public offering. We intend to take advantage of all of these reduced reporting requirements and exemptions, including the longer phase-in periods for the adoption of new or revised financial accounting standards under 107 of the JOBS Act. Our election to use the phase-in periods may make it difficult to compare our financial statements to those of non-emerging growth companies and other emerging growth companies that have opted out of the phase-in periods under 107 of the JOBS Act. Under the JOBS Act, we may take advantage of the above-described reduced reporting requirements and exemptions for up to five years after our initial sale of common equity pursuant to a registration statement declared effective under the Securities Act of 1933, as amended, herein referred to as the Securities Act, or such earlier time that we no longer meet the definition of an emerging growth company. The JOBS Act provides that we would cease to be an "emerging growth company" if we have more than $1.07 billion in annual revenues, have more than $700 million in market value of our Ordinary Share held by non-affiliates, or issue more than $1 billion in principal amount of non-convertible debt over a three-year period. THE OFFERING Ordinary Shares outstanding 10,380,000 Ordinary Shares Ordinary Shares offered by us A minimum of 1,200,000 Ordinary Shares and a maximum of 1,600,000 Ordinary Shares Best Efforts The underwriter is selling our Ordinary Shares on a "best efforts" basis. Accordingly, the underwriter has no obligation or commitment to purchase any securities. The underwriter is not required to sell any specific number of dollar amount of Ordinary Shares but will use its best efforts to sell the Ordinary Shares offered. Ordinary Shares to be outstanding immediately after completion of this offering: 11,580,000 Ordinary Shares if the Ordinary Shares are offered and sold at the minimum offering amount in this offering; or 11,980,000 Ordinary Shares if the Ordinary Shares are offered and sold at the maximum offering amount in this offering. Price per Ordinary Share We currently estimate that the initial public offering price will be $5 per share. Offering Period The Ordinary Shares are being offered for a period of 90 days commencing on the date of this prospectus. If the minimum offering amount is not raised within 90 days from the date of this prospectus, all subscription funds from the escrow account will be returned to investors promptly without interest or deduction of fees. The offering may close or terminate, as the case may be, on the earlier of (i) any time after the minimum offering amount of our Ordinary Shares is raised, or (ii) 90 days from the date of this prospectus although we retain the right to terminate the offering prior to the expiration of the 90-day period. If we raise the minimum offering amount within the offering period, the proceeds from the offering will be released to us. Escrow Account The gross proceeds from the sale of the Ordinary Shares in this offering will be deposited in a non-interest bearing escrow account maintained by the escrow agent, Continental Stock Transfer & Trust Company, at 1 State Street, 30th Floor, New York, New York 10004. All check will be deposited directly into the escrow account and all wire transfers will be wired directly to the escrow account. The funds will be held in escrow until the escrow bank, JP Morgan Chase, has advised us and the escrow agent that it has received a minimum of $6,000,000, the minimum offering, in cleared funds. If we do not receive the minimum of $6,000,000 by [ ], 2018, all funds will be returned to purchasers in this offering on the next business day after the termination of the offering, without charge, deduction or interest. Prior to [ ], 2018, in no event will funds be returned to you unless the offering is terminated. You will only be entitled to receive a refund of your subscription price if we do not raise a minimum of $6,000,000 by [ ], 2018. No interest will be paid either to us or to you. See "Underwriting—Deposit of Offering Proceeds." Listing We are in the process of applying to list our Ordinary Shares on the NASDAQ Capital Market under the symbol "MDJH.". Transfer Agent Island Stock Transfer Use of proceeds We intend to use the proceeds from this offering to for working capital and general corporate purposes, including the expansion of our business. See "Use of Proceeds" on page 38 for more information. Risk factors The Ordinary Shares offered hereby involve a high degree of risk. You should read "Risk Factors," beginning on page 13 for a discussion of factors to consider before deciding to invest in our Ordinary Shares.
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+The following summary highlights selected information contained elsewhere in this prospectus. This summary does not contain all the information you should consider before investing in our common stock. You should carefully read this prospectus in its entirety before investing in our common stock, including the sections titled Risk Factors, Management s Discussion and Analysis of Financial Condition and Results of Operations, and Special Note Regarding Forward-Looking Statements, and our consolidated financial statements and the accompanying notes included elsewhere in this prospectus. Our Mission Our mission is to create economic opportunities so people have better lives. Overview We are changing the way work gets done by connecting businesses with great talent to work without limits. We operate the largest online global marketplace that enables businesses to find and work with highly-skilled freelancers as measured by gross services volume, or GSV.1 Freelancers are an increasingly sought-after, critical, and expanding segment of the global workforce. In the twelve months ended June 30, 2018, our platform enabled $1.56 billion of GSV across 2.0 million projects between approximately 375,000 freelancers and 475,000 clients in over 180 countries. Our platform reduces inefficiencies associated with searching for, contracting and collaborating with, and paying highly-skilled freelancers for short-term and longer-term projects. As early innovators in this space, we have built an expansive and unique repository of data on our platform, which, when combined with our machine learning capabilities, enables us to better connect clients with the best freelancers for their projects. As a result, clients are able to obtain specialized talent in less time and at a lower cost compared to traditional channels. Knowledge is a key driver of today s global economy. As the pace of change accelerates and companies conceive and execute their digital transformation strategies, businesses increasingly need access to specialized, knowledge-based talent to compete. In addition, knowledge workers are now seeking more flexible work options, independence, and easier access to work opportunities. However, the traditional means by which businesses seek and hire talent have not kept pace with these changes. These factors ultimately have contributed to less efficient local economies as businesses struggle to find the right talent to meet their needs. We believe these inefficiencies in the labor market have created a significant opportunity for online global marketplaces for freelance work and that businesses globally will continue to adopt freelance work. We estimate that the total global GSV opportunity for our platform was approximately $560 billion in 2017. McKinsey Global Institute estimates that, by 2025, online talent platforms could add $2.7 trillion annually, or 2%, to the global gross domestic product, or GDP. We serve as a powerful marketing channel for freelancers to find rewarding, engaging, and flexible work. Freelancers using our platform benefit from access to quality clients and secure and timely payments while enjoying the freedom to run their own businesses, create their own schedules, and work from their preferred locations. Moreover, freelancers have real-time visibility into opportunities that are in high demand, so that they can invest their time and focus on developing sought-after skills. Our platform provides clients with fast, secure, and efficient access to high-quality talent with over 5,000 skills across over 70 categories, such as content marketing, customer service, data science and analytics, graphic design, mobile development, sales, and web development. We offer a direct-to-talent approach, reducing reliance on 1 GSV represents the total amount that clients spend on both our marketplace offerings and our managed services offering as well as additional fees we charge to users for other services. For additional information related to how we calculate GSV, see the section titled Management s Discussion and Analysis of Financial Condition and Results of Operations Key Financial and Operational Metrics. Table of Contents The information in this preliminary prospectus is not complete and may be changed. Neither we nor the selling stockholders may sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities, and neither we nor the selling stockholders are soliciting offers to buy these securities in any jurisdiction where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED OCTOBER 1, 2018 PRELIMINARY PROSPECTUS 12,300,000 Shares Upwork Inc. Common Stock $ per share This is the initial public offering of our common stock. We are selling 6,818,181 shares of our common stock and the selling stockholders named in this prospectus are selling 5,481,819 shares of our common stock. We will not receive any of the proceeds from the sale of the shares by the selling stockholders. We currently expect the initial public offering price will be between $12.00 and $14.00 per share of common stock. Prior to this offering, there has been no public market for our common stock. We have been approved to list our common stock on The Nasdaq Global Select Market under the symbol UPWK. We are an emerging growth company as defined under federal securities laws and, as such, have elected to comply with certain reduced public company reporting requirements. One or more funds affiliated with Dragoneer Investment Group, LLC have indicated an interest in purchasing shares of common stock with an aggregate purchase price of up to $32.0 million in this offering at the initial public offering price. Because this indication of interest is not a binding agreement or commitment to purchase, one or more funds affiliated with Dragoneer Investment Group, LLC could determine to purchase more, less, or no shares in this offering, or the underwriters could determine to sell more, less, or no shares to one or more funds affiliated with Dragoneer Investment Group, LLC. The underwriters will receive the same discount on any of our shares of common stock purchased by one or more funds affiliated with Dragoneer Investment Group, LLC as they will from any other shares of common stock sold to the public in this offering. Investing in our common stock involves risks. See the section titled Risk Factors beginning on page 15. Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. Per Share Total Public Offering Price $ $ Underwriting Discount(1) $ $ Proceeds to Upwork Inc. (before expenses) $ $ Proceeds to the Selling Stockholders (before expenses) $ $ (1) We have agreed to reimburse the underwriters for certain expenses. See the section titled Underwriting. We and the selling stockholders have granted the underwriters the option to purchase up to an additional 1,844,999 shares of common stock at the initial public offering price, less the underwriting discount. The underwriters expect to deliver the shares to purchasers on or about , 2018 through the book-entry facilities of The Depository Trust Company. Citigroup Jefferies RBC Capital Markets Stifel JMP Securities , 2018 Table of Contents intermediaries such as staffing firms, recruiters, and traditional agencies, while providing features that help instill trust in remote work. Our platform also enables clients to streamline workflows, such as talent sourcing, outreach, and contracting. In addition, our platform provides access to essential functionality for remote engagements with freelancers, including communication and collaboration, time tracking, invoicing, and payment. We believe that a key driver of our growth is our track record of creating trust and enabling freelancers and clients to successfully connect at scale on our platform. As the largest online global marketplace for highly-skilled freelancers as measured by GSV, we benefit from network effects that drive growth in both the number of clients posting jobs and the number of highly-skilled freelancers seeking work. We have rapidly grown our business. GSV on our platform was $1.15 billion and $1.37 billion in 2016 and 2017, respectively, representing an annual growth rate of 20%. For the six months ended June 30, 2017 and 2018, GSV on our platform was $643.2 million and $834.5 million, respectively, representing a period-over-period growth rate of 30%. For the twelve months ended June 30, 2018, GSV on our platform was $1.56 billion. In 2016 and 2017, our total revenue was $164.4 million and $202.6 million, respectively, representing an annual growth rate of 23%. For the six months ended June 30, 2017 and 2018, our total revenue was $95.5 million and $121.9 million, respectively, representing a period-over-period growth rate of 28%. For the twelve months ended June 30, 2018, our total revenue was $228.9 million. In 2016 and 2017, our marketplace revenue was $138.5 million and $178.0 million, respectively, representing an annual growth rate of 29%. For the six months ended June 30, 2017 and 2018, our marketplace revenue was $83.9 million and $107.4 million, respectively, representing a period-over-period growth rate of 28%. We have made significant investments to grow our business, including in sales and marketing, research and development, operations, and personnel. As a result, we generated net losses of $16.2 million and $4.1 million in 2016 and 2017, respectively, and generated net income of $1.4 million for the six months ended June 30, 2017 and a net loss of $7.2 million for the six months ended June 30, 2018. Our adjusted EBITDA was $1.3 million and $7.9 million in 2016 and 2017, respectively, and $7.0 million and $0.3 million for the six months ended June 30, 2017 and 2018, respectively. See the section titled Selected Consolidated Financial and Other Data Non-GAAP Financial Measures for information regarding our use of adjusted EBITDA and a reconciliation of net loss to adjusted EBITDA. Industry Background Labor is Undergoing a Revolution The online freelance economy represents a shift in how labor markets operate. We believe that we are still in the early stages of the online freelance economy, with a multi-industry and multi-decade global shift affecting how businesses find talent and how people want to work. In today s economy, knowledge is a key driver of productivity. The first and second industrial revolutions of the 18th and 19th centuries created the industrial economy and moved workers from farms to factories. The third industrial revolution of the 20th century created the knowledge economy and moved workers from factories to office buildings. The World Economic Forum believes that the global economy is now undergoing the fourth industrial revolution, fueled by rapid technological advances. One of the defining features of the fourth industrial revolution is the transformation of how and where work gets done, as work is increasingly no longer constrained by location. In the fourth industrial revolution, instead of the worker moving to the workplace, we are seeing that work is moving to the worker collaboration is less constrained than ever before by physical proximity and geographic borders, particularly for highly-skilled professionals. Jobs are Overly Concentrated in Large Cities Data from the Bureau of Economic Analysis shows that the top six U.S. metropolitan areas alone were responsible for 26% of total U.S. GDP in 2016. This has led to imbalances in labor markets, with jobs becoming Table of Contents 1.5B+ $225M+ Gross Services Volume Revenue 95K+ 180+ Core Clients Countries 70+ Categories of Work Get it done with a freelancer. Gross services volume, revenue, and core clients are for the last twelve months ended June 30, 2018. Countries and categories of work are as of June 30, 2018. Table of Contents increasingly concentrated in those cities. Despite this concentration of jobs in metropolitan areas, workers not only have become increasingly reluctant to move into large cities, but are also leaving large cities at higher rates due to continued rising costs of living and lengthy commutes. The Labor Market Remains Inefficient Labor markets remain fragmented and local, and the increasing specialization of work has further reduced availability of talent in local labor markets. As a result, hiring processes can last several months, which is costly to businesses, workers, and the economy. In the United States alone, employers made an average of approximately 178,800 hires per day in 2017, according to the U.S. Department of Labor. Despite this volume of hiring, as of April 2018, the average time taken to fill a job vacancy in the United States was over 31 working days, according to DHI Group. Increasing restrictions on immigration and insufficient availability of visas for skilled workers are expected to make it even harder to find specialized skills. Businesses Face a Skills Gap In addition to the increasing specialization of work, several other factors are exacerbating skills shortages. According to a 2014 study by the Federal Reserve Board of Governors, labor mobility has been trending downwards since the 1980s. Due to the costs of relocation, labor immobility can often result in a local skills gap or persistent regional supply-demand imbalances within skill categories. In 2018, the number of visas sought by U.S. employers for skilled workers was over twice as high as the number available, and additional restrictions on immigration may increase skills shortages. Moreover, population aging is occurring throughout the world, with many countries facing growing labor force shortages due to demographic changes. Illustrating these difficulties, according to a survey conducted by the NFIB Research Center, 88% of small businesses surveyed that were hiring, or trying to hire, reported few or no qualified applicants for the positions they were trying to fill as of April 2018. Businesses and Workers Desire Flexible Work In January 2018, 59% of hiring managers indicated they were leveraging flexible talent, which includes temporary, freelance, and agency workers, up 24% from January 2017, according to the 2018 Future Workforce Report, a study we commissioned from the independent research firm Inavero. According to the same report, hiring managers anticipated work performed by flexible talent will increase by 168% in the next 10 years. Simultaneously, knowledge workers are increasingly demanding flexible and independent work arrangements. According to economists Lawrence Katz of Harvard University and Alan Krueger of Princeton University, 94% of net job growth in the past decade was in the alternative work category, which they define as temporary help agency workers, on-call workers, contract company workers, and independent contractors or freelancers, and over 60% was due to the rise of independent contractors, freelancers, and contract company workers. The freelance workforce is one of the fastest-growing segments of the U.S. labor market. From millennials to retiring baby boomers, the number of people choosing to freelance is growing. Technology is Enabling Remote Work Rapid technological advancement and innovation in connectivity, communication, and collaboration solutions continue to enhance remote work capabilities and increase trust. Additionally, the global workforce is now able to access technologies and tools such as email, enterprise resource planning, and customer relationship management from anywhere with a laptop or mobile phone. With continued innovation in remote work capabilities, businesses are increasingly able to effectively connect and work with non-local talent, and the benefits of geographic proximity are diminishing. According to a McKinsey Global Institute report, an estimated 11% of service jobs worldwide could be performed remotely. Illustrating the increasing amount of remote work, the number of telecommuting workers grew 115% in a decade, from approximately 1.8 million in 2005 to approximately 3.9 million in 2015, according to the 2017 State of Telecommuting in the U.S. Employee Workforce report. Table of Contents In the Accenture Technology Vision 2017 report, Accenture forecasts that in the next five years, on-demand work platforms will emerge as a primary driver of economic growth in developed and emerging economies worldwide. We believe that prevailing conventional methods for sourcing talent, finding and completing work, hiring, and making and receiving payments will be increasingly inadequate. Our Marketplace We operate the largest online global marketplace that enables businesses to find and work with highly-skilled freelancers as measured by GSV. The freelancers on our platform include independent professionals and agencies of varying sizes. The clients on our platform range in size from small businesses to Fortune 500 companies. We have built a proprietary platform that reduces the friction associated with searching for, contracting and collaborating with, and paying highly-skilled freelancers for short-term and longer-term projects. As early innovators in this space, we have built an expansive and unique repository of data on our platform, which, when combined with our machine learning capabilities, enables us to better connect clients with available talent for their projects. For example, we use machine learning to predict the availability, interest, and skill relevance of specific freelancers for specific projects. Clients using our marketplace can find the right freelancers in less time and at a lower cost compared to traditional channels. In 2017 and in the six months ended June 30, 2018, we maintained high Net Promoter Scores, or NPS, of over 60 on average from both freelancers and clients. Scale and Liquidity In the twelve months ended June 30, 2018, our platform enabled $1.56 billion of GSV across 2.0 million projects between approximately 375,000 freelancers and 475,000 clients, including more than 30% of the Fortune 500 companies as of June 30, 2018. The size and scale of our platform provides clients with fast, secure, and efficient access to high-quality talent. Global Reach We help freelancers in over 180 countries connect with clients and enable freelancers to withdraw payments for their work in numerous currencies. Supported by strong network effects on our marketplace, we have been able to scale our business and our global community of users without the need for local physical presence and density. Multi-Category Our platform provides clients with access to highly-skilled freelancers with over 5,000 skills, across over 70 categories. In 2017, approximately 40% of clients engaged freelancers across multiple categories on our platform. Our platform had more than 20 categories that each generated over $20 million of GSV in 2017. Unique Data Assets Our proprietary database maintains detailed and dynamic information, including skills, feedback, and success indicators of freelancers and clients transacting on our platform. Moreover, our machine learning algorithms leverage our closed-loop transaction data on millions of completed projects. The large volume of transactions on our marketplace allows us to continually improve the effectiveness of our search algorithms and product features, providing a compelling and differentiated value proposition for both new and existing freelancers and clients. Benefits for Highly-Skilled Freelancers Access to Quality Clients and Work Our marketplace provides freelancers access to quality clients and rewarding projects. Our platform features both quick, discrete projects and longer-term projects. By reducing non-billable time, including time spent searching Table of Contents for new clients and projects, invoicing, and collecting payments for completed projects, our platform enables freelancers to be more productive, increase their earnings, and find clients outside of their local geography. Flexibility Our platform enables freelancers to obtain the flexibility they seek to run their own businesses, choose their own clients, determine their own pricing, create their own schedules, and work from their preferred locations. Secure and Timely Payments Freelancers conveniently receive payments from their clients through our platform. Funds are securely held and transferred through our escrow service, enabling trust and timely payment. Marketing and Reputation Building We serve as a powerful marketing channel for freelancers to increase demand for their specialized skills. Using our marketplace, freelancers receiving positive client feedback typically benefit from increased demand for their services. We also enable freelancers to be visible in search results globally and to build a business reputation and brand through their skill profiles and project history on our platform. Insights into High-Demand Skills We give freelancers real-time visibility into which skills are highest in demand and associated rates paid for those services. With this insight, freelancers can actively invest their time and focus on developing sought-after skills to grow their businesses and increase their earnings. Benefits for Clients Access to High-Quality Freelancers Every day, an average of approximately 10,000 independent professionals and agencies apply to join our platform. We leverage machine learning to automatically accept the registrations of high-quality, in-demand talent. As of February 2017, over 80% of freelancers using our platform held a college degree or advanced degree, with 34% holding a post-graduate degree, according to an internally-conducted survey. Based on information contained in comprehensive freelancer profiles, which include skill profiles and project history on our platform, we highlight the right freelancers to the right clients. Speed to Hire Clients often receive proposals within minutes of posting a job, and the median time to hire was 23 hours in 2017. Our marketplace streamlines the interviewing, screening, and contracting process through proprietary search algorithms incorporating freelancers availability, online status, and skill profiles. Cost Savings Our platform offers a direct-to-talent approach, reducing the reliance on intermediaries such as staffing firms, recruiters, and traditional agencies. Clients using our platform only pay for the specific work they need. Based on client feedback, we believe that clients realize significant cost savings compared to hiring locally or using staffing firms or other intermediaries. Streamlined Processes Our end-to-end software platform streamlines workflows, such as talent sourcing, outreach, and engagement. Our platform includes a proposal tracking system, collaboration and communication features, time tracking and invoicing, and two-way feedback and review systems to better manage the lifecycle of project engagements. Table of Contents Trust and Verification Our technology was built to help instill trust in remote service relationships. Our platform provides insight into freelancer billing, allowing clients to verify work activity reflected on their invoices, while our collaboration and communication features foster responsiveness and transparency between freelancers and clients. Funds are securely held and released through escrow, enabling mutual trust and timely payments. Our platform also provides tools to enable users to provide both public and private feedback once the work is completed. Unique Access to Specialized Skills Freelancers on our platform offer over 5,000 skills across over 70 categories. Within each category, there are multiple skills. For example, skills for the mobile development category include Objective C, Swift, and Android app development. Skills on our platform dynamically evolve with the labor market, which enables clients to find freelancers in current and emerging skill areas, such as augmented reality, robotics, and blockchain. By having access to freelancers with an extensive variety of skills, clients can meet their needs for highly-skilled talent on one platform. Our Strengths Largest Online Global Marketplace for Highly-Skilled Freelancers We operate the largest online global marketplace that enables businesses to find and work with highly-skilled freelancers as measured by GSV. Today, our platform provides clients with access to highly-skilled freelancers with over 5,000 skills across over 70 categories. In the twelve months ended June 30, 2018, our platform enabled $1.56 billion of GSV across 2.0 million projects between approximately 375,000 freelancers and 475,000 clients in over 180 countries. We had over 1,400 clients that each spent over $100,000 on our platform in 2017, and no single client accounted for more than two percent of total client spend.2 We believe our size and scale demonstrate the effectiveness of our platform in connecting businesses with global talent. Trusted Platform for Freelancers and Clients We believe our ability to foster trust and credibility on our platform drives growth and differentiates us. We use a combination of the latest technology, data science, product features, and our skilled team to make our platform a trusted online marketplace to get work done. We build and use software to highlight relevant freelancers, facilitate security and identity verification for account ownership, and flag suspicious posts to maintain a trusted marketplace. We provide clients with tools to validate work performed by freelancers and to provide both public and private feedback once the work is completed. Our feedback system enables freelancers to build their business reputation by establishing long-term credibility with project review and client feedback. We provide escrow services so clients on our platform only pay for work that has been completed and freelancers are paid by their clients in full and on time. Proprietary Data Drives Increasing Efficiencies We have built an expansive and dynamic repository of data on our platform, which allows us to better enable clients to connect with the best talent for their projects. We use this data in our machine learning algorithms on our platform to provide a trusted, convenient, and effective user experience for both new and existing freelancers and clients. Robust Platform Functionality Our platform includes a proposal tracking system, search engine and collaboration functionality, time tracking and invoicing systems, and payments services. The robust functionality of our platform enables 2 Client spend represents the total amount that clients spend on both our marketplace offerings and our managed services offering. For additional information related to how we calculate client spend, see the section titled Management s Discussion and Analysis of Financial Condition and Results of Operations Key Financial and Operational Metrics. Table of Contents freelancers to more easily run their businesses and clients to find and work with high-quality talent globally. As of June 30, 2018, we were actively working with approximately 400 engineers, including both our employees and freelancers, to innovate and improve our platform. Powerful Global Network Effects We have heavily invested in building a robust platform with features and functionalities that are necessary to connect freelancers and clients at scale. We believe our platform provides a strong value proposition for both sides of our marketplace and our scale creates powerful network effects that strengthen our competitive differentiation. Clients are attracted to our unique platform due to the availability of the more than 5,000 skills that freelancers offer in over 70 categories. In turn, as more clients use and post projects on our platform, we are able to attract more freelancers. As a result, we have been able to scale our business and our global community of users without the need for local physical presence and density. Business Model with Strong Retention Metrics The growth in our marketplace is driven by long-term and recurring use of our platform by freelancers and clients, which leads to increased revenue visibility for us. For example, for the quarterly period ended June 30, 2018, in addition to acquiring new clients, our client spend retention was 106%.3 Furthermore, the quality of our relationship with freelancers and clients that use our platform is reflected in our NPS, which exceeded 60 on average from both freelancers and clients throughout 2017 and the six months ended June 30, 2018. In addition, we believe the scale of our platform incentivizes freelancers to build their business reputations and continue to use our platform. Proven Management Team Our company was formed when two of the earliest innovators in the space, and the largest online talent marketplaces at the time, Elance and oDesk, combined in 2014. Our management team has a strong track record of scaling and running businesses with a focus on online marketplaces, business-to-business services and software, and global payments technologies. Our President and Chief Executive Officer, Stephane Kasriel, is an active thought leader in talent engagement and the future of work, and, from 2016 to 2018, served as the co-chair of the World Economic Forum s Global Future Council on Education, Gender and Work. Growth Strategies Increase Spend from Existing Clients We intend to expand our relationship with our existing clients and increase their spend on our platform by investing in building new products and premium features. Attract New Clients Through Marketing Efforts We intend to expand our marketing efforts to increase awareness of our platform and the benefits of using flexible and remote talent and, as a result, attract new clients. Remain a Preferred Platform for Freelancers We will continue to invest in new products and features to help freelancers grow their businesses by finding more work and increasing their earnings. Further Invest in Technology We plan to continue to improve our user experience by enhancing our software capabilities, data science, security, and technology infrastructure. 3 For the definition of client spend retention, see the section titled Management s Discussion and Analysis of Financial Condition and Results of Operations Key Financial and Operational Metrics. Table of Contents Invest in Domestic Marketplace Capabilities Internationally We plan to invest in building domestic-to-domestic marketplaces internationally by connecting local clients to local freelancers, similar to our U.S.-to-U.S. domestic offering, including customizing our platform to support additional languages and currencies. We believe that by tailoring our platform experience to the nuances of regional markets, we can further improve the experience of our users. Broaden and Deepen Categories We have successfully scaled over 20 different categories to over $20 million GSV in 2017. We intend to focus further on customizing experiences for categories through tailored features and functionalities, thus making it easier and more efficient for clients to connect with the right freelancers. Focus on Premium Offerings We plan to invest further in our direct sales team and expand our premium offerings. We believe there is a significant opportunity to expand existing client spend, add new enterprise clients, and cross-sell and upsell existing enterprise clients across various categories. Risks Affecting Us Our business is subject to numerous risks and uncertainties, including those in the section titled Risk Factors beginning on page 14 and elsewhere in this prospectus. These risks include the following: our growth depends on our ability to attract and retain a community of freelancers and clients, and the loss of our users, or failure to attract new users, could adversely impact our business; we have a history of net losses, anticipate increasing our operating expenses in the future, and may not achieve or sustain profitability; we have a limited operating history under our current platform and pricing model, which makes it difficult to evaluate our business and prospects and increases the risks associated with your investment; if the market for freelancers and the services they offer develops more slowly than we expect, our growth may slow or stall, and our operating results could be adversely affected; if we are not able to develop and release new products and services, or develop and release successful enhancements, new features, and modifications to our existing products and services, our business could be adversely affected; our operating results may fluctuate from quarter to quarter, which makes our future results difficult to predict; because we derive the substantial majority of our revenue from our marketplace offerings, with most of our marketplace revenue derived from our Upwork Standard offering, our inability to generate revenue from our marketplace offerings would adversely affect our business, operating results, financial condition, and growth prospects; we may be subject to new and existing laws and regulations, both in the United States and internationally; and we face intense competition and could lose market share to our competitors, which could adversely affect our business, financial condition, and operating results. Corporate Information We were incorporated in the State of Delaware in December 2013 prior to and in connection with the combination of Elance, Inc. and oDesk Corporation. In connection with the combination, we changed our name Table of Contents to Elance-oDesk, Inc. in March 2014, and then to Upwork Inc. in May 2015. Our principal executive offices are located at 441 Logue Avenue, Mountain View, California 94043. Our telephone number is (650) 316-7500. Our website address is www.upwork.com. The information contained on, or that can be accessed through, our website is not a part of this prospectus. Investors should not rely on any such information in deciding whether to purchase our common stock. Unless otherwise indicated, the terms Upwork, we, us, and our refer to Upwork Inc. and our consolidated subsidiaries. Upwork, the Upwork logo, Talent Cloud, Upwork Enterprise, Elance, oDesk, Elance-oDesk, Work Without Limits, and other registered or common law trade names, trademarks, or service marks of Upwork appearing in this prospectus are the property of Upwork. This prospectus contains additional trade names, trademarks, and service marks of ours and of other companies. We do not intend our use or display of other companies trade names, trademarks, or service marks to imply a relationship with these other companies, or endorsement or sponsorship of us by these other companies. Other trademarks appearing in this prospectus are the property of their respective holders. Solely for convenience, our trademarks and tradenames referred to in this prospectus appear without the and symbols, but those references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights, or the right of the applicable licensor, to these trademarks and tradenames. Implications of Being an Emerging Growth Company As a company with less than $1.07 billion in revenue during our most recently completed fiscal year, we qualify as an emerging growth company as defined in Section 2(a) of the Securities Act of 1933, as amended, or the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. As an emerging growth company, we may take advantage of specified reduced disclosure and other requirements that are otherwise applicable, in general, to public companies that are not emerging growth companies. These provisions include: an exemption from compliance with the auditor attestation requirement on the effectiveness of our internal control over financial reporting pursuant to the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act; an exemption from compliance with any requirement that the Public Company Accounting Oversight Board may adopt regarding mandatory audit firm rotation or a supplement to the auditor s report providing additional information about the audit and the financial statements; reduced disclosure about our executive compensation arrangements; exemptions from the requirements to obtain a non-binding advisory vote on executive compensation or a stockholder approval of any golden parachute arrangements; and extended transition periods for complying with new or revised accounting standards. We will remain an emerging growth company until the earliest to occur of: (i) the last day of the fiscal year in which we have more than $1.07 billion in annual revenue; (ii) the date we qualify as a large accelerated filer, with at least $700 million of equity securities held by non-affiliates; (iii) the date on which we have issued, in any three-year period, more than $1.0 billion in non-convertible debt securities; and (iv) the last day of the fiscal year ending after the fifth anniversary of the completion of this offering. We may take advantage of these exemptions until such time that we are no longer an emerging growth company. Accordingly, the information contained herein may be different than the information you receive from other public companies. Further, pursuant to Section 107 of the JOBS Act, as an emerging growth company, we have elected to take advantage of the extended transition period for complying with new or revised accounting standards until those standards would otherwise apply to private companies. As a result, our operating results and financial statements may not be comparable to the operating results and financial statements of other companies who have adopted the new or revised accounting standards. It is possible that some investors will find our common stock less attractive as a result, which may result in a less active trading market for our common stock and higher volatility in our stock price. Table of Contents THE OFFERING Common stock offered by us 6,818,181 shares Common stock offered by the selling stockholders 5,481,819 shares Total common stock to be outstanding after this offering 104,079,498 shares Option to purchase additional shares of common stock from us 1,022,727 shares Option to purchase additional shares of common stock from the selling stockholders 822,272 shares Indication of Interest One or more funds affiliated with Dragoneer Investment Group, LLC have indicated an interest in purchasing shares of common stock with an aggregate purchase price of up to $32.0 million in this offering at the initial public offering price. Because this indication of interest is not a binding agreement or commitment to purchase, one or more funds affiliated with Dragoneer Investment Group, LLC could determine to purchase more, less, or no shares in this offering or the underwriters could determine to sell more, less, or no shares to one or more funds affiliated with Dragoneer Investment Group, LLC. The underwriters will receive the same discount on any of our shares of common stock purchased by one or more funds affiliated with Dragoneer Investment Group, LLC as they will from any other shares of common stock sold to the public in this offering. Use of proceeds We estimate that the net proceeds from the sale of shares of our common stock that we are selling in this offering will be approximately $76.4 million, or approximately $88.8 million if the underwriters exercise their option to purchase additional shares in full, based upon an assumed initial public offering price of $13.00 per share, which is the midpoint of the price range set forth on the cover page of this prospectus, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. We will not receive any proceeds from the sale of shares of our common stock by the selling stockholders. We primarily intend to use the net proceeds that we receive from this offering for working capital and other general corporate purposes. We also intend to use a portion of the net proceeds we receive from this offering to repay approximately $10.0 million of indebtedness under our loan and security agreement with Silicon Valley Bank, or our Loan Agreement. We may also use a portion of the proceeds for the acquisition of, or investment in, technologies, solutions, or businesses that complement our business. However, we do not have agreements or commitments for any acquisitions or investments outside the ordinary course of business at this time. See the section titled Use of Proceeds for additional information. Table of Contents
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+PROSPECTUS SUMMARY The following summary is qualified in its entirety by, and should be read in conjunction with, the more detailed information and financial statements appearing elsewhere in this prospectus. In addition to this summary, we urge you to read the entire prospectus carefully, especially the risks of investing in our ADSs discussed under "Risk Factors," before deciding whether to invest in our ADSs. This prospectus contains information from an industry report commissioned by us and prepared by iResearch, an independent research firm, to provide information regarding our industry and our market position in China. We refer to this report as the "iResearch Report." Our Mission IoT @ Home: Redefining the future home. Overview We have developed a unique IoT @ Home platform, consisting of an ecosystem of innovative IoT-enabled smart home products, or IoT products, together with a suite of complementary consumable products and value-added businesses. This platform provides an attractive entry point into the consumer home, enabling consumers to intelligently interact with a broad portfolio of IoT products in an intuitive and human-like manner to make daily life more convenient, efficient and enjoyable, while allowing us to grow our household user base and capture various additional scenario-driven consumption events in the home environment. As of June 30, 2018, our IoT @ Home platform had over 1.2 million household users. Powered by advanced artificial intelligence, or AI, proprietary software and data analytics systems, our IoT @ Home platform generates extensive and deep consumer behavior data and insights, enabling us to continue to enhance our products and offer additional bespoke value-added businesses over time. Xiaomi is our strategic partner, shareholder and customer. Our strategic partnership with Xiaomi gives us access to Xiaomi's ecosystem users, market and data resources and related support. Meanwhile, our strong research and development capabilities and innovative products and services also enrich Xiaomi's suite of offerings, resulting in a mutually beneficial relationship between Xiaomi and us. Market Opportunity and Key Industry Trends Our addressable market consists of China's broader home appliances industry, which is large and relatively mature, though still growing at a steady pace. According to the iResearch Report, China's home appliances market reached approximately RMB800.5 billion (US$121.0 billion) in terms of retail sales in 2017, having grown at a CAGR of 6.2% from 2013 to 2017, and is estimated to grow at a CAGR of 7.8% from 2017 to 2022 to reach RMB1,167.9 billion (US$176.5 billion) by 2022. Enabled by the proliferation of mobile technology and advancements in AI, IoT-enabled smart home products are rapidly gaining popularity in China. According to the iResearch Report, the market for IoT-enabled smart home products in China, a subset of the broader home appliances market, reached RMB345.6 billion (US$52.2 billion) in terms of retail sales in 2017, having grown at a CAGR of 26.5% from 2013 to 2017. Despite this recent rapid growth, significant room for growth is expected in this market. According to the iResearch Report, this market is estimated to continue its robust growth at a CAGR of 20.1% from 2017 to 2022 to reach RMB865.2 billion by 2022 in terms of retail sales, with the household penetration rate for IoT-enabled smart home products, excluding other smart products, in China increasing from 35.8% in 2017 to 59.0% by 2022. There are powerful industry and consumer trends driving the increased adoption of IoT-enabled smart home products in China, including: increasing receptiveness towards and adoption of smart home AI and IoT technology; AMENDMENT NO. 2 TO FORM F-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Table of Contents product innovation and technological developments; aspiration-driven consumption upgrade; and busier lifestyles and demand for convenience. Our Business Model and Value Propositions We operate a highly scalable business model based on three key pillars: (i) our IoT products; (ii) complementary consumable products and value-added businesses ecosystem; and (iii) a factory-to-consumer, or F2C, new retail sales strategy. Our solutions offer consumers the following value propositions: intuitive easy-to-use experience; multi-interfaced, connected platform; intelligent and dynamic system; essential daily use; scenario-driven consumption events; and accessible and affordable. We have experienced significant growth since our inception, largely driven by increasing brand recognition, new product launches, strong product sales, and increasing receptiveness towards and adoption of smart home AI and IoT technology in China. Our number of household users increased by close to 10 times from approximately 113 thousand as of March 31, 2016 to over 1.2 million as of June 30, 2018, with the number of IoT products shipped increasing by 212.3% from approximately 382 thousand units in 2016 to approximately 1.2 million units in 2017. Our net revenues increased by 179.4% from RMB312.6 million in 2016 to RMB873.2 million (US$132.0 million) in 2017. Our net revenues increased by 284.4% from RMB270.6 million for the six months ended June 30, 2017 to RMB1,040.2 million (US$157.2 million) for the same period of 2018. For the years ended December 31, 2016 and 2017 and the six months ended June 30, 2018, revenues generated from our sales to Xiaomi were RMB299.8 million, RMB739.5 million (US$111.8 million) and RMB651.5 million (US$98.5 million), primarily consisting of sales of Xiaomi-branded IoT-enabled smart water purification systems as well as other complementary products such as water purifier filters, kettles and water quality meters, representing 95.9%, 84.7% and 62.6% of our total net revenues during such periods, respectively. In recent years, we have made significant efforts to ramp-up sales of Viomi-branded products, especially IoT products, through new product development and the introduction of new product categories. For the years ended December 31, 2016 and 2017 and the six months ended June 30, 2018, revenues generated from sales of Viomi-branded products and others were RMB32.1 million, RMB218.3 million (US$33.0 million) and RMB475.7 million (US$71.9 million), representing 10.3%, 25.0% and 45.7% of our total net revenues during such periods, respectively. Our net income increased by 473.5% from RMB16.3 million in 2016 to RMB93.2 million (US$14.1 million) in 2017. Our net income increased by 271.5% from RMB18.9 million for the six months ended June 30, 2017 to RMB70.3 million (US$10.6 million) for the same period of 2018. Our Strengths We believe the following competitive strengths contribute to our success and differ us from our competitors: multi-interfaced, connected and synergistic IoT @ Home platform; aspirational brand with a rapidly growing household user base; unique and highly scalable business model; Viomi Technology Co., Ltd (Exact name of Registrant as specified in its charter) Not Applicable (Translation of Registrant's name into English) Table of Contents powerful data analytics capabilities; proven research and development capabilities with commitment to innovation; and visionary and professional management team. Our Strategies We intend to achieve our mission and strengthen our market position through successful execution of the key elements of our growth strategies, which include: continue to introduce new and innovative products; enhance our technology, software and data insights; strengthen our brand recognition and expand our user base; enrich our value-added businesses ecosystem; expand and enhance our sales channels; and invest along our product value chain. Our Challenges Our business and the successful execution of our strategies are subject to various challenges, risks and uncertainties, including those related to our ability to: compete effectively; effectively manage our growth and the increased complexity of our business; continue to maintain our cooperation with, and sales to, Xiaomi; enhance brand recognition; develop and commercialize new products, services and technologies; grow and retain our users; adapt to technological changes and implement technological enhancements to our products and services; efficiently manage our contract manufacturers and suppliers; effectively manage our inventory; and protect our intellectual property and proprietary rights. Corporate History and Structure We commenced our operations in May 2014 through Foshan Yunmi Electric Appliances Technology Co., Ltd, or Foshan Viomi, a PRC domestic company, to develop, manufacture and sell IoT products including smart water purification systems. In January 2015, we incorporated Viomi Technology Co., Ltd as our offshore holding company in order to facilitate foreign investment in our company. Subsequently, we established Viomi HK Technology Co., Limited, or Viomi HK, as our intermediate holding company, which in turn established a wholly-owned PRC subsidiary, Lequan Technology (Beijing) Co., Ltd., or Lequan Technology or our WFOE, in April 2015. Cayman Islands (State or other jurisdiction of incorporation or organization) 3630 (Primary Standard Industrial Classification Code Number) Not Applicable (I.R.S. Employer Identification Number) Wansheng Square, Rm 1302 Tower C, Xingang East Road, Haizhu District Guangzhou, Guangdong, 510220 People's Republic of China +86 20 8930 9496 (Address, including zip code, and telephone number, including area code, of Registrant's principal executive offices) CT Corporation System 111 Eighth Avenue New York, New York 10011 (212) 590-9070 (Name, address, including zip code, and telephone number, including area code, of agent for service) Table of Contents In January 2015, we formed a PRC domestic company, Beijing Yunmi Technology Co., Ltd, or Beijing Viomi, to develop and manage our big data, software and product design. In July 2015, we obtained control over Foshan Viomi and Beijing Viomi by entering into a series of contractual arrangements with them and their respective shareholders. In September 2018, we entered into a series of contractual arrangements in substantially the same forms with Foshan Viomi and its current shareholder to reflect reduction in its registered capital and change in shareholding structure. We collectively refer to Foshan Viomi and Beijing Viomi as our VIEs in this prospectus. We use contractual arrangements with VIEs due to PRC restrictions or prohibitions on foreign ownership of internet and other related businesses in China. Although our provision of e-commerce services falls within the permitted category according to the Negative List (as defined elsewhere in this prospectus) that took effect on July 28, 2018, foreign investments in this business are still restricted by other qualifications and requirements under related regulations in China. In 2016 and 2017, we derived virtually all of our revenues from our VIEs. We rely on dividends and other distributions paid to us by our WFOE, which in turn depends on the service fees that our VIEs pay to our WFOE. Our WFOE has the sole discretion to receive from each of our VIEs an annual service fee at an amount up to 100% of the respective VIE's annual net income. In addition, our WFOE is entitled to receive certain fees for other technical services at the amount mutually agreed upon by our WFOE and the respective VIE. Our WFOE did not collect any service fees from our VIEs in the last two fiscal years, and will make discretionary determinations on the amount of fees to collect based on the performance of our VIEs and our business needs going forward. We do not have unfettered access to our WFOE and VIEs' revenues due to PRC legal restrictions on the payment of dividends by PRC companies, foreign exchange control restrictions, and the restrictions on foreign investment, among others. For more details and risks related to our variable interest entity structure, please see "Corporate History and Structure Contractual Arrangements with Our VIEs and Their Shareholders" and "Risk Factors Risks Related to Our Corporate Structure." As a result of our direct ownership in our WFOE and the contractual arrangements with the VIEs, we are regarded as the primary beneficiary of our VIEs, and we treat them as our consolidated affiliated entities under U.S. GAAP. We have consolidated the financial results of our VIEs in our consolidated financial statements in accordance with U.S. GAAP. Copies to: Z. Julie Gao, Esq. Skadden, Arps, Slate, Meagher & Flom LLP c/o 42/F, Edinburgh Tower, The Landmark 15 Queen's Road Central Hong Kong +852 3740-4700 Haiping Li, Esq. Skadden, Arps, Slate, Meagher & Flom LLP JingAn Kerry Centre, Tower II 46th Floor 1539 Nanjing West Road Shanghai, the People's Republic of China +86 21 6193-8200 Shuang Zhao, Esq. Cleary, Gottlieb, Steen & Hamilton LLP c/o 37th Floor, Hysan Place 500 Hennessy Road Causeway Bay, Hong Kong +852 2521-4122 Notes: (1)Mr. Xiaoping Chen, our founder, chairman of our board of directors, chief executive officer and a beneficial owner of the shares of our company, holds 100% equity interests in Foshan Viomi. (2)Mr. Chen holds 60% equity interests in Beijing Viomi. Two employees of our shareholders, Red Better Limited and Shunwei Talent Limited, each hold 20% equity interests in Beijing Viomi. Approximate date of commencement of proposed sale to the public: as soon as practicable after the effective date of this registration statement. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933. Emerging growth company If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. Notes: *Demonstrates the percentage of the ordinary shares beneficially owned by each person or entity to our total outstanding ordinary shares immediately after this offering. (1)Represents the shares Mr. Xiaoping Chen holds through his wholly-owned company, Viomi Limited, as well as the shares held by certain employees of which Mr. Chen can direct the disposition and voting power. Please see the section titled "Principal Shareholders" for more information on Mr. Xiaoping Chen's beneficial ownership in our company immediately after this offering. CALCULATION OF REGISTRATION FEE Title of each class of securities to be registered Amount to be registered(2)(3) Proposed maximum offering price per share(3) Proposed maximum aggregate offering price(3) Amount of registration fee(4) Class A ordinary shares, par value US$0.00001 per share(1) 39,330,000 US$3.67 US$144,210,000 US$17,954.15 (1)American depositary shares issuable upon deposit of ordinary shares registered hereby will be registered under a separate registration statement on Form F-6 (Registration No. 333-227276). Each American depositary share represents three Class A ordinary shares. (2)Includes Class A ordinary shares that are issuable upon the exercise of the underwriters' over-allotment option. Also includes Class A ordinary shares initially offered and sold outside the United States that may be resold from time to time in the United States either as part of their distribution or within 40 days after the later of the effective date of this registration statement and the date the shares are first bona fide offered to the public. These Class A ordinary shares are not being registered for the purpose of sales outside the United States. (3)Estimated solely for the purpose of determining the amount of registration fee in accordance with Rule 457(a) under the Securities Act of 1933. (4)Already paid. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine. Table of Contents (2)Represents the shares held by Xiaomi through Red Better Limited. Please see the section titled "Principal Shareholders" for more information on Red Better Limited's beneficial ownership in our Company immediately after this offering. (3)Mr. Xiaoping Chen, our founder, chairman of our board of directors, chief executive officer and a beneficial owner of the shares of our Company, holds 100% equity interests in Foshan Viomi. (4)Mr. Xiaoping Chen, our founder, chairman of our board of directors, chief executive officer and a beneficial owner of the shares of our Company, holds 60% equity interests in Beijing Viomi. Each of De Liu and Liping Cao, who are respectively employees of our shareholders: Red Better Limited and Shunwei Talent Limited, holds 20% equity interests in Beijing Viomi. Implication of Being an Emerging Growth Company As a company with less than US$1.07 billion in revenues for fiscal year 2017, we qualify as an "emerging growth company" pursuant to the Jumpstart Our Business Startups Act of 2012, as amended, or the JOBS Act. An emerging growth company may take advantage of specified reduced reporting and other requirements compared to those that are otherwise applicable generally to public companies. These provisions include exemption from the auditor attestation requirement under Section 404 of the Sarbanes-Oxley Act of 2002 in the assessment of the emerging growth company's internal control over financial reporting. The JOBS Act also provides that an emerging growth company does not need to comply with any new or revised financial accounting standards until such date that a private company is otherwise required to comply with such new or revised accounting standards. However, we have elected to "opt out" of this provision and, as a result, we will comply with new or revised accounting standards as required when they are adopted for public companies. This decision to opt out of the extended transition period under the JOBS Act is irrevocable. We will remain an emerging growth company until the earliest of (a) the last day of the fiscal year during which we have total annual gross revenues of at least US$1.07 billion; (b) the last day of our fiscal year following the fifth anniversary of the completion of this offering; (c) the date on which we have, during the preceding three-year period, issued more than US$1.0 billion in non-convertible debt; or (d) the date on which we are deemed to be a "large accelerated filer" under the Securities Exchange Act of 1934, as amended, or the Exchange Act, which would occur if the market value of our ADSs that are held by non-affiliates exceeds US$700 million as of the last business day of our most recently completed second fiscal quarter. Once we cease to be an emerging growth company, we will not be entitled to the exemptions provided in the JOBS Act discussed above. Corporate Information Our principal executive offices are located at Wansheng Square, Rm 1302 Tower C, Xingang East Road, Haizhu District, Guangzhou, Guangdong, 510220, People's Republic of China. Our telephone number at this address is +86 20 8930 9496. Our registered office in the Cayman Islands is located at offices of Maples Corporate Services Limited at PO Box 309 Ugland House, Grand Cayman, KY1-1104, Cayman Islands. Investors should submit any inquiries to the address and telephone number of our principal executive offices. Our main website is www.viomi.com.cn. The information contained on our website is not a part of this prospectus. Our agent for service of process in the United States is CT Corporation System, located at 111 Eighth Avenue, 13th Floor, New York, New York 10011. Conventions that Apply to this Prospectus Unless otherwise indicated or the context otherwise requires, references in this prospectus to: "ADSs" are to our American depositary shares, each of which represents three Class A ordinary shares; "ADRs" are to the American depositary receipts that evidence our ADSs; The term "new or revised financial accounting standard" refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012. Table of Contents "China" or the "PRC" are to the People's Republic of China, excluding, for the purposes of this prospectus only, Hong Kong, Macau and Taiwan; "Class A ordinary shares" refers to our Class A ordinary shares of par value US$0.00001 per share; "Class B ordinary shares" refers to our Class B ordinary shares of par value US$0.00001 per share; "household users" as of a specified date are to households where at least one of our IoT products was connected to the internet; "IoT" are to the Internet of Things, an interconnected network of devices, or "things," that can communicate with one another through the internet; our "IoT @ Home platform" are to our ecosystem of innovative IoT-enabled smart home products, together with a suite of complementary consumable products and value-added businesses, powered by advanced AI, proprietary software and data analytics systems; our "IoT-enabled smart home products" and our "IoT products" are to our portfolio of smart home products with internet or Bluetooth interconnectivity and communication capabilities, including our smart water purification systems, smart kitchen products and other smart products (such as smart water kettles); "ordinary shares" are to our ordinary shares, par value US$0.00001 per share, and upon and after the completion of this offering, are to our Class A and Class B ordinary shares, par value US$0.00001 per share; "our VIEs" are to Foshan Yunmi Electric Appliances Technology Co., Ltd, or Foshan Viomi, and Beijing Yunmi Technology Co., Ltd, or Beijing Viomi; "Viomi," "we," "us," "our Company" and "our" are to Viomi Technology Co., Ltd, our Cayman Islands holding company and its subsidiaries, its consolidated variable interest entities and the subsidiaries of the consolidated variable interest entities; "our WFOE" are to Lequan Technology (Beijing) Co., Ltd, or Lequan Technology; "RMB" and "Renminbi" are to the legal currency of China; "US$," "U.S. dollars," "$," and "dollars" are to the legal currency of the United States; and "Xiaomi" are to Xiaomi Corporation, an internet company and a 19.5% shareholder of our Company as of the date of this prospectus, and/or any of its affiliates. Unless the context indicates otherwise, all information in this prospectus assumes no exercise by the underwriters of their over-allotment option. Table of Contents The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and we are not soliciting offers to buy these securities in any state where the offer or sale is not permitted. PROSPECTUS (Subject to Completion) Issued September 21, 2018. 11,400,000 American Depositary Shares Viomi Technology Co., Ltd Representing 34,200,000 Class A Ordinary Shares Table of Contents The Offering Offering price We currently estimate that the initial public offering price will be between US$9.00 and US$11.00 per ADS. ADSs offered by us 11,400,000 ADSs (or 13,110,000 ADSs if the underwriters exercise their over-allotment option in full). ADSs outstanding immediately after this offering 11,400,000 ADSs (or 13,110,000 ADSs if the underwriters exercise their over-allotment option in full) Ordinary shares outstanding immediately after this offering 90,200,000 Class A ordinary shares and 117,600,000 Class B ordinary shares (or 95,330,000 Class A ordinary shares and 117,600,000 Class B ordinary shares if the underwriters exercise their over-allotment option in full). The ADSs Each ADS represents three Class A ordinary shares, par value US$0.00001 per share. The depositary will hold Class A ordinary shares underlying your ADSs. You will have rights as provided in the deposit agreement among us, the depositary and holders and beneficial owners of ADSs from time to time. We do not expect to pay dividends in the foreseeable future. If, however, we declare dividends on our Class A ordinary shares, the depositary will pay you the cash dividends and other distributions it receives on our Class A ordinary shares after deducting its fees and expenses in accordance with the terms set forth in the deposit agreement. You may surrender your ADSs to the depositary in exchange for Class A ordinary shares. The depositary will charge you fees for any exchange. We may amend or terminate the deposit agreement without your consent. If you continue to hold your ADSs after an amendment to the deposit agreement, you agree to be bound by the deposit agreement as amended. To better understand the terms of the ADSs, you should carefully read the "Description of American Depositary Shares" section of this prospectus. You should also read the deposit agreement, which is filed as an exhibit to the registration statement that includes this prospectus. Viomi Technology Co., Ltd is offering 11,400,000 American depositary shares, or ADSs. This is our initial public offering and no public market currently exists for our ADSs or Class A ordinary shares. Each ADS represents three of our Class A ordinary shares, par value US$0.00001 per share. It is currently estimated that the initial public offering price per ADS will be between US$9.00 and US$11.00. Table of Contents Ordinary Shares Immediately prior to this offering, our ordinary shares will comprise 56,000,000 Class A ordinary shares and 117,600,000 Class B ordinary shares. In respect of all matters subject to a shareholder vote, each Class A ordinary share is entitled to one vote, and each Class B ordinary share is entitled to ten (10) votes, voting together as one class. Each Class B ordinary share is convertible into one Class A ordinary share at any time by the holder thereof. Class A ordinary shares are not convertible into Class B ordinary shares under any circumstances. Upon any transfer of Class B ordinary shares by a holder to any person or entity other than holders of Class B ordinary shares or their affiliates, such Class B ordinary shares shall be automatically and immediately converted into the equivalent number of Class A ordinary shares. See "Description of Share Capital" for more information. Over-allotment option We have granted to the underwriters an option, exercisable within 30 days from the date of this prospectus, to purchase up to an aggregate of 1,710,000 additional ADSs at the initial public offering price, less underwriting discounts and commissions. Indication of interest Two of our existing shareholders, Xiaomi and Shunwei Talent Limited, have indicated to us their interest in subscribing up to a total of US$10 million worth of the ADSs in this offering at the initial public offering price and on the same terms as the other ADSs being offered in this offering. Assuming an initial public offering price of US$10.00 per ADS, which is the mid-point of the estimated offering price range, the number of ADSs to be purchased by Xiaomi and Shunwei Talent Limited would be up to 1,000,000 ADSs, or approximately 8.8% of the ADSs being offered in this offering. Such indications of interests are not binding agreements or commitments to purchase, and we and the underwriters are under no obligation to sell ADSs to them. Use of proceeds We expect that we will receive net proceeds of approximately US$102.2 million from this offering, assuming an initial public offering price of US$10.00 per ADS, which is the midpoint of the estimated range of the initial public offering price, after deducting underwriting discounts and commissions and estimated offering expenses payable by us. We intend to use the net proceeds from this offering for (i) research and development of products, services and technologies, (ii) selling and marketing initiatives, (iii) potential strategic investments and acquisitions along our product value chain, and (iv) general corporate purposes. See "Use of Proceeds" for more information. We have applied for the listing of our ADSs on the Nasdaq Stock Market under the symbol "VIOT." We are an "emerging growth company" under applicable U.S. federal securities laws and are eligible for reduced public company reporting requirements. Upon the completion of this offering, our outstanding share capital will consist of Class A ordinary shares and Class B ordinary shares, and different voting powers will be assigned to those shares. Holders of Class A ordinary shares and Class B ordinary shares have the same rights except for voting and conversion rights. Each Class A ordinary share is entitled to one vote, and each Class B ordinary share is entitled to ten votes and is convertible into one Class A ordinary share at any time by the holder thereof. Class A ordinary shares are not convertible into Class B ordinary shares under any circumstances. Our founder, Mr. Xiaoping Chen, certain of our employees and Xiaomi, will beneficially own all of our issued Class B ordinary shares. These Class B ordinary shares and the Class B ordinary shares beneficially owned by Mr. Xiaoping Chen will constitute approximately 56.6% and 40.3%, respectively, of our total issued and outstanding share capital immediately after the completion of this offering and 92.9% and 66.2%, respectively, of the aggregate voting power of our total issued and outstanding share capital immediately after the completion of this offering, assuming the underwriters do not exercise their over-allotment option. See "Principal Shareholders." Two of our existing shareholders, Xiaomi and Shunwei Talent Limited, have indicated to us their interest in subscribing up to a total of US$10 million worth of the ADSs in this offering at the initial public offering price and on the same terms as the other ADSs being offered in this offering. Assuming an initial public offering price of US$10.00 per ADS, which is the mid-point of the estimated offering price range, the number of ADSs to be purchased by Xiaomi and Shunwei Talent Limited would be up to 1,000,000 ADSs, or approximately 8.8% of the ADSs being offered in this offering. Such indications of interests are not binding agreements or commitments to purchase, and we and the underwriters are under no obligation to sell ADSs to them. Investing in our ADSs involves risks. See "Risk Factors" beginning on page 17. Table of Contents Lock-up We, our directors, executive officers, and all of our existing shareholders have agreed with the underwriters not to sell, transfer or dispose of any ADSs, ordinary shares or similar securities for a period of 180 days after the date of this prospectus, subject to certain exceptions. In addition, we have agreed to instruct the depositary not to accept any shares for deposit for the issuance of ADSs for 180 days after the date of this prospectus (other than in connection with this offering), without prior written consent from the representatives of the underwriters. See "Shares Eligible for Future Sale" and "Underwriting." Directed ADS Program At our request, the underwriters have reserved for sale, at the initial public offering price, up to an aggregate of 570,000 ADSs offered in this offering to some of our directors, officers, employees, business associates and related persons through a directed ADS program. Listing We have applied to have the ADSs listed on the Nasdaq Stock Market ("Nasdaq") under the symbol "VIOT." Our ADSs and shares will not be listed on any other stock exchange or traded on any automated quotation system. Payment and settlement The underwriters expect to deliver the ADSs against payment therefor through the facilities of the Depositary Trust Company on , 2018. Depositary Deutsche Bank Trust Company Americas PRICE US$ PER ADS Table of Contents Summary Consolidated Financial and Operating Data The following summary consolidated financial data for the years ended December 31, 2016 and 2017 and as of December 31, 2016 and 2017 are derived from our audited consolidated financial statements included elsewhere in this prospectus. The following summary consolidated financial data for the six months ended June 30, 2017, and 2018 and as of June 30, 2018 are derived from our unaudited interim condensed consolidated financial statements included elsewhere in this prospectus. Our consolidated financial statements are prepared and presented in accordance with accounting principles generally accepted in the United States of America, or U.S. GAAP. Our historical results are not necessarily indicative of results expected for future periods. You should read this Summary Consolidated Financial and Operating Data section together with our consolidated financial statements and the related notes and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included elsewhere in this prospectus. Notes: (1)Includes RMB299.8 million and RMB739.5 million (US$111.8 million) from sales to Xiaomi for the years ended December 31, 2016 and 2017, respectively, and RMB243.2 million and RMB651.5 million (US$98.5 million) from sales to Xiaomi for the six months ended June 30, 2017 and 2018, respectively. Table of Contents UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE SIX MONTHS ENDED JUNE 30, 2017 AND 2018 (Amounts in thousands except for number of shares and per share data) For the six months ended June 30, Note 2017 2018 2018 RMB RMB US$ (Note 2(b)) Net revenues: A related party 14 243,169 651,538 98,463 Third parties 27,456 388,641 58,733 Total net revenues 8 270,625 1,040,179 157,196 Cost of revenues: Purchase from a related party (8 ) (5,390 ) (815 ) Purchase from third parties (190,453 ) (745,240 ) (112,623 ) Total cost of revenues 8 (190,461 ) (750,630 ) (113,438 ) Gross profit 80,164 289,549 43,758 Operating expenses(1) Research and development expenses (22,177 ) (49,047 ) (7,412 ) Selling and marketing expenses (including RMB422 and RMB2,770 with related parties for the six months ended June 30, 2017 and 2018, respectively) (32,422 ) (146,589 ) (22,153 ) General and administrative expenses (5,869 ) (14,837 ) (2,242 ) Total operating expenses (60,468 ) (210,473 ) (31,807 ) Other income 1,866 148 22 Income from operations 21,562 79,224 11,973 Interest income (including net interest expense of RMB633 and RMB333 with related parties for the six months ended June 30, 2017 and 2018, respectively) 926 2,659 402 Income before income tax expenses 22,488 81,883 12,375 Income tax expenses 9 (3,569 ) (11,592 ) (1,753 ) Net income 18,919 70,291 10,622 Net income attributable to Viomi Technology Co., Ltd (the "Company") 18,919 70,291 10,622 Accretion of Series A Preferred Shares 11 (4,392 ) (4,318 ) (652 ) Cumulative dividend on Series A Preferred Shares (5,496 ) (5,097 ) (770 ) Cumulative dividend on Class B Ordinary Shares (446 ) (414 ) (62 ) Undistributed earnings allocated to Series A Preferred Shares (833 ) (6,482 ) (980 ) Undistributed earnings allocated to Class B Ordinary Shares (6,201 ) (48,224 ) (7,288 ) Undistributed earnings allocated to unvested Class A ordinary shares (775 ) (2,926 ) (442 ) Net income attributable to ordinary shareholders of the Company 776 2,830 428 Net income 18,919 70,291 10,622 Other comprehensive income (loss), net of tax Foreign currency translation adjustment 7,321 (3,020 ) (456 ) Total comprehensive income 26,240 67,271 10,166 Net income per share attributable to ordinary shareholders of the Company: Net income per ordinary share-basic 13 0.05 0.11 0.02 Net income per ordinary share-diluted 13 0.04 0.09 0.01 Weighted average number of ordinary shares used in calculating net income per share Ordinary share basic 13 16,909,090 24,919,286 24,919,286 Ordinary share diluted Table of Contents Table of Contents (2)Share-based compensation expenses were allocated as follows: For the year ended December 31, For the six months ended June 30, 2016 2017 2017 2018 RMB RMB US$ RMB RMB US$ (in thousands) General and administrative expenses 6,863 3,303 499 2,244 986 149 Research and development expenses 3,464 1,903 288 1,492 4,228 639 Selling and marketing expenses 251 615 93 333 2,560 387 The following table presents our summary consolidated balance sheet data as of December 31, 2016 and 2017 and June 30, 2018. As of December 31, As of June 30, 2016 2017 2018 RMB RMB US$ RMB US$ (in thousands) Summary Consolidated Balance Sheet Data: Current assets: Cash and cash equivalents 156,930 279,952 42,307 256,952 38,832 Amounts receivable from a related party, net 45,021 249,548 37,713 333,731 50,435 Total current assets 276,166 665,431 100,563 1,002,885 151,560 Total assets 281,945 671,565 101,490 1,016,855 153,671 Total current liabilities 136,886 432,385 65,345 697,287 105,376 Total liabilities 136,886 432,845 65,415 697,463 105,403 Total mezzanine equity 423,999 407,928 61,647 417,556 63,103 Total shareholders' deficit (278,940 ) (169,208 ) (25,572 ) (98,164 ) (14,835 ) Table of Contents VIOMI TECHNOLOGY CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (Amounts in thousands except for number of shares and per share data) Year ended December 31, Note 2016 2017 2017 RMB RMB US$ (Note 2(e)) Net revenues: A related party 15 299,827 739,464 111,750 Third parties 12,747 133,755 20,214 Total net revenues 9 312,574 873,219 131,964 Cost of revenues: Purchase from a related party (1,321 ) (1,296 ) (196 ) Purchase from third parties (231,223 ) (596,740 ) (90,181 ) Total cost of revenues 9 (232,544 ) (598,036 ) (90,377 ) Gross profit 80,030 275,183 41,587 Operating expenses(1): Research and development expenses (29,926 ) (60,749 ) (9,181 ) Selling and marketing expenses (including RMB166 and RMB3,327 with related parties for the years ended December 31, 2016 and 2017, respectively) (20,929 ) (95,296 ) (14,401 ) General and administrative expenses (14,386 ) (15,818 ) (2,390 ) Total operating expenses (65,241 ) (171,863 ) (25,972 ) Other (expenses) income (481 ) 2,236 338 Income from operations 14,308 105,556 15,953 Interest (expenses) income (including net interest expense of RMB1,489 and RMB1,271 with related parties for the years ended December 31, 2016 and 2017, respectively) (296 ) 2,402 363 Income before income tax benefit (expenses) 14,012 107,958 16,316 Income tax benefit (expenses) 10 2,247 (14,718 ) (2,224 ) Net income 16,259 93,240 14,092 Net income attributable to Viomi Technology Co., Ltd (the "Company") 16,259 93,240 14,092 Accretion of Series A Preferred Shares 12 (8,221 ) (8,834 ) (1,335 ) Cumulative dividend on Series A Preferred Shares 12 (10,628 ) (10,803 ) (1,633 ) Cumulative dividend on Class B Ordinary Shares 12 (863 ) (877 ) (133 ) Undistributed earnings allocated to Series A Preferred Shares 12 (7,061 ) (1,067 ) Undistributed earnings allocated to Class B Ordinary Shares 12 (52,533 ) (7,939 ) Undistributed earnings allocated to unvested Class A ordinary shares 12 (5,099 ) (771 ) Net (loss) income attributable to ordinary shareholders of the Company (3,453 ) 8,033 1,214 Net income 16,259 93,240 14,092 Other comprehensive (loss) income, net of tax Foreign currency translation adjustment (23,080 ) 19,102 2,887 Total comprehensive (loss) income (6,821 ) 112,342 16,979 Net (loss) income per share attributable to ordinary shareholders of the Company: Net (loss) income per ordinary share-basic 14 (0.28 ) 0.39 0.06 Net (loss) income per ordinary share-diluted 14 (0.28 ) 0.31 0.05 Weighted average number of ordinary shares used in computing net (loss) income per share Ordinary shares basic 14 12,230,136 20,684,681 20,684,681 Ordinary shares diluted Table of Contents Note: (1)Including sales of other products and rendering of services. See footnote (9) to the Consolidated Financial Statements and footnote (8) to the Unaudited Interim Condensed Consolidated Financial Statements for more details. Table of Contents Notes: (1)Represents the number of households where at least one of our IoT products was connected to the internet as of the respective dates, which can be used to evaluate the growth of our user base and forms a key part of our data analytics, brand building and monetization strategies. The more household users that we have, the more opportunities we will have to conduct data analytics, generate greater brand awareness and create monetization opportunities through the sale of additional complementary products and services. (2)Represents the volume of IoT products sold within the respective time periods. Sales of IoT products represents the sales volume of our products, which we believe is reflective of end-consumer demand, which in turn is a key driver in the growth in our scale and results of operations. 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+PROSPECTUS SUMMARY This summary highlights selected information that is presented in greater detail elsewhere in this prospectus. Because it is only a summary, it does not contain all of the information you should consider before investing in our Common Stock and it is qualified in its entirety by, and should be read in conjunction with, the more detailed information included elsewhere in this prospectus. Before you decide whether to purchase shares of our Common Stock, you should read this entire prospectus carefully, including the risks of investing in our securities discussed under the section of this prospectus entitled Risk Factors and similar headings in the other documents that are incorporated by reference into this prospectus. You should also carefully read the information incorporated by reference into this prospectus, including our financial statements, and the exhibits to the registration statement of which this prospectus is a part. The Company We are a clinical-stage biopharmaceutical company focused on the development of novel, first-in-class or best-in-class therapies for metabolic and endocrine disorders. We have exclusive worldwide rights to a portfolio of five drug candidates in clinical trials or preclinical studies, which are based on small molecules licensed from Ligand Pharmaceuticals Incorporated, or Ligand. Our lead clinical program is VK5211, an orally available drug candidate, currently in a Phase 2 clinical trial for acute rehabilitation following non-elective hip fracture surgery. VK5211 is a non-steroidal selective androgen receptor modulator, or SARM. A SARM is designed to selectively interact with a subset of receptors that have a normal physiologic role of interacting with naturally-occurring hormones called androgens. Broad activation of androgen receptors with drugs, such as exogenous testosterone, can stimulate muscle growth and improve bone mineral density, but often results in unwanted side effects such as prostate growth, hair growth and acne. VK5211 is expected to selectively produce the therapeutic benefits of testosterone in muscle and bone tissue, potentially accelerating rehabilitation and improving patient outcomes. VK5211 is also expected to have improved safety, tolerability and patient acceptance relative to testosterone. We believe that VK5211 may also have potential benefits to patients suffering from muscle loss in other settings, such as joint replacements or muscle wasting disorders. We reported positive top-line results from this Phase 2 trial in November 2017. See Recent Developments VK5211 Phase 2 Clinical Trial below. Our second clinical program is VK2809, an orally available, tissue and receptor-subtype selective agonist of the thyroid hormone receptor beta, or TR , that is in a Phase 2 clinical trial for the treatment of patients with hypercholesterolemia and fatty liver disease. Selective activation of the TR receptor in liver tissue is believed to favorably affect cholesterol and lipoprotein levels via multiple mechanisms, including increasing the expression of low-density lipoprotein receptors and increasing mitochondrial fatty acid oxidation. We are currently conducting a Phase 2 clinical trial of VK2809 in patients with hypercholesterolemia and fatty liver disease and expect to report initial results from this Phase 2 trial in the first half of 2018. In October 2017, we announced positive final results from an eight-week study of VK2809 in an in vivo model of non-alcoholic steatohepatitis (NASH). See Recent Developments VK2809 In Vivo Study of NASH below. In February 2017, we announced that we are commencing efforts to utilize VK2809 to potentially help patients who suffer from Glycogen Storage Disease type Ia, or GSD Ia. GSD Ia is a rare, orphan genetic disease caused by a deficiency of glucose-6-phosphatase (G6PC), an enzyme responsible for the liver s production of free glucose from glycogen and gluconeogenesis. Approximately 2,000 patients in the U.S. suffer from GSD Ia. We have conducted a proof-of-concept study utilizing VK2809 in an in vivo model of GSD Ia. Data demonstrated that treatment with VK2809 led to statistically significant reductions in key metabolic markers of GSD Ia. VK2809 s potential to rapidly reduce hepatic triglyceride levels, as demonstrated in this initial evaluation in a GSD Ia model, provides support for the continued investigation of the compound in this indication. We expect to file an Investigational New Drug Application, or IND, and then initiate a Phase 1 human proof-of-concept clinical trial to evaluate VK2809 in patients with GSD Ia in the first quarter of 2018 and to announce initial results from the trial in the second half of 2018. We are also developing VK0214 for X-linked adrenoleukodystrophy, or X-ALD, a rare X-linked, inherited neurological disorder characterized by a breakdown in the protective barriers surrounding brain and nerve cells. The disease, for which there is no approved treatment, is caused by mutations in a peroxisomal transporter of very long chain fatty acids, or VLCFA, known as ABCD1. As a result, transporter function is impaired and patients are unable to efficiently metabolize VLCFA. The TR receptor is known to regulate expression of an alternative VLCFA transporter, known as ABCD2. Various preclinical models have demonstrated that increased expression of ABCD2 can lead to normalization of VLCFA metabolism. Preliminary data suggest that VK0214 stimulates ABCD2 expression in an in vitro model and reduces VLCFA levels in an in vivo model of X-ALD. Pending completion of certain toxicology studies, we expect to file an IND and then initiate a proof-of-concept clinical trial in the second half of 2018. We were incorporated under the laws of the State of Delaware on September 24, 2012. Since our incorporation, we have devoted most of our efforts towards conducting certain clinical trials and preclinical studies related to our VK5211, VK2809 and VK0214 programs, as well as efforts towards raising capital and building infrastructure. We obtained worldwide rights to our VK5211, VK2809 and VK0214 programs and certain other assets pursuant to an exclusive license agreement with Ligand. The terms of this license agreement are detailed in the Master License Agreement, which we entered into on May 21, 2014 with Ligand, as amended, or the Master License Agreement. A summary of the Master License Agreement can be found in the section entitled Business Agreements with Ligand Master License Agreement in Part I, Item 1 of our Annual Report on Form 10-K filed with the SEC on March 21, 2017. For a complete description of our business, financial condition, results of operations and other important information, we refer you to our filings with the SEC that are incorporated by reference in this prospectus, including our Annual Report on Form 10-K for the year ended December 31, 2016, our Quarterly Report on Form 10-Q for the quarter ended March 31, 2017, our Quarterly Report on Form 10-Q for the quarter ended June 30, 2017 and our Quarterly Report on Form 10-Q for the quarter ended September 30, 2017. For instructions on how to find copies of these documents, see the section of this prospectus entitled Where You Can Find More Information . Recent Developments VK2809 In Vivo Study of NASH In October 2017, we announced positive final results from an eight-week study of VK2809 in an in vivo model of NASH. Treatment with VK2809 resulted in: (1) statistically significant reductions in several key measures of steatosis, including liver triglyceride content and total liver lipid content, (2) fibrotic activity, including total liver fibrosis, type I collagen and hydroxyproline, relative to vehicle controls, and (3) statistically significant changes in the expression of key genes associated with NASH development and progression, relative to vehicle control, suggesting improved lipid and cholesterol metabolism, improved lipid metabolism and insulin sensitivity and reduced fibrotic activity. VK5211 Phase 2 Clinical Trial On November 28, 2017, we announced positive top-line results from our 12-week, Phase 2 clinical trial of VK5211 in patients who recently suffered a hip fracture. Top-line data showed that the trial achieved its primary endpoint, demonstrating statistically significant, dose dependent increases in lean body mass, less head, following treatment with VK5211 as compared to placebo. The study also achieved certain secondary endpoints, demonstrating statistically significant increases in appendicular lean body mass and total lean body mass for all doses of VK5211, compared to placebo. VK5211 demonstrated encouraging safety and tolerability in this study, with no drug-related serious adverse events (SAEs) reported. The Phase 2 clinical trial was a randomized, double-blind, placebo-controlled, parallel group, international study designed to evaluate the efficacy, safety and tolerability of VK5211 in patients recovering from hip fracture surgery. A total of 108 patients were randomized to receive once-daily VK5211 doses of 0.5 mg, 1.0 mg, 2.0 mg, or placebo for 12 weeks. Top-line results include: All doses of VK5211 demonstrated statistically significant increases in total lean body mass, less head, the study s primary endpoint. Placebo-adjusted increases in lean body mass were 4.8% at 0.5 mg (p < 0.005), 7.2% at 1.0 mg (p < 0.001), and 9.1% at 2.0 mg (p < 0.001). These corresponded to placebo-adjusted increases of 1.6 kg at 0.5 mg (p < 0.005), 2.5 kg at 1.0 mg (p < 0.001), and 3.1 kg at 2.0 mg (p < 0.001). The proportion of patients experiencing at least a 5% increase in total lean body mass, less head, were 19% with placebo, 61% at 0.5 mg, 65% at 1.0 mg, and 75% at 2.0 mg (p < 0.01 for each). The proportion of patients demonstrating at least a 2.0 kg gain in total lean body mass, less head, were 14% with placebo, 57% at 0.5 mg, 65% at 1.0 mg, and 81% at 2.0 mg (p < 0.01 for each). All doses of VK5211 produced statistically significant increases in appendicular lean body mass, a secondary efficacy endpoint. Placebo-adjusted increases in appendicular lean body mass were 6.1% at 0.5 mg (p < 0.01), 9.0% at 1.0 mg (p < 0.001), and 10.2% at 2.0 mg (p < 0.001). These corresponded to placebo-adjusted increases of 0.8 kg at 0.5 mg (p < 0.05), 1.3 kg at 1.0 mg (p < 0.001), and 1.4 kg at 2.0 mg (p < 0.001). All doses of VK5211 produced statistically significant increases in total lean body mass, including head, a secondary efficacy endpoint. Increases in total lean body mass were 6.3% (p < 0.005), 8.2% (p < 0.001), and 9.9% (p < 0.001) from baseline, corresponding to placebo-adjusted increases of 4.7% at 0.5 mg (p < 0.005), 6.8% at 1.0 mg (p < 0.001), and 8.3% at 2.0 mg (p < 0.001). These corresponded to placebo-adjusted increases of 1.7 kg at 0.5 mg (p < 0.005), 2.6 kg at 1.0 mg (p < 0.001), and 3.1 kg at 2.0 mg (p < 0.001). Patients receiving VK5211 demonstrated numerical improvements in certain exploratory assessments of functional performance, including the 6-minute walk test and short physical performance battery, compared with placebo. These endpoints were not powered for significance. Further evaluation of exploratory functional endpoints is underway. There were no significant differences in the rates of adverse events reported among patients receiving VK5211 compared with placebo. There were no dose-related differences in reported adverse events among various VK5211 treatment groups. No drug-related SAEs were observed in patients receiving VK521. We expect to receive follow-up data for the Phase 2 clinical trial in the first half of 2018. Public Offering of Common Stock On December 11, 2017, we closed an underwritten public offering of shares of our common stock pursuant to which we sold an aggregate of 5,900,000 shares of our common stock at a public offering price of $2.50 per share, including 769,565 shares sold pursuant to the underwriters full exercise of their option to purchase additional shares to cover over-allotments. The gross proceeds to us from this offering are expected to be approximately $14.8 million, before deducting underwriting discounts and commissions and other estimated offering expenses. Corporate Information We were incorporated under the laws of the State of Delaware on September 24, 2012. Our principal executive offices are located at 12340 El Camino Real, Suite 250, San Diego, CA 92130, and our telephone number is (858) 704-4660. Our website address is www.vikingtherapeutics.com. We have included our website address in this prospectus solely as an inactive textual reference. We do not incorporate the information on, or accessible through, our website into this prospectus, and you should not consider any information on, or accessible through, our website as part of this prospectus. Emerging Growth Company Status We qualify as an emerging growth company, as that term is defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. For as long as we qualify as an emerging growth company, we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that do not qualify as emerging growth companies, including, without limitation, not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act of 2002, as amended, reduced disclosure obligations relating to executive compensation and exemptions from the requirements of holding advisory say-on-pay, say-when-on-pay and golden parachute executive compensation votes. Under the JOBS Act, we will remain an emerging growth company until the earliest of: the last day of the fiscal year during which we have total annual gross revenues of $1.07 billion or more; the last day of the fiscal year following the fifth anniversary of the completion of our initial public offering, or December 31, 2020; the date on which we have, during the previous three-year period, issued more than $1.0 billion in non-convertible debt; and the date on which we are deemed to be a large accelerated filer under the Securities Exchange Act of 1934, or the Exchange Act (i.e., the first day of the fiscal year after we have (1) more than $700.0 million in outstanding common equity held by our non-affiliates, measured each year on the last day of our second fiscal quarter, and (2) been public for at least 12 months). We have elected to take advantage of certain of the reduced disclosure obligations regarding executive compensation in this prospectus and may elect to take advantage of other reduced reporting requirements in future filings with the SEC. As a result, the information that we provide to our stockholders may be different than the information you receive from other public reporting companies.
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. This summary does not contain all of the information you should consider before investing in our common stock. You should read this entire prospectus carefully, especially the Risk Factors section beginning on page 12 and our financial statements and the related notes appearing at the end of this prospectus, before making an investment decision. As used in this prospectus, unless the context otherwise requires, references to we, us, our, the company and Verrica Pharmaceuticals refer to Verrica Pharmaceuticals Inc. Overview We are a clinical-stage medical dermatology company focused on identifying, developing and commercializing innovative pharmaceutical products for the treatment of skin diseases with significant unmet needs. Our lead product candidate, VP-102, is a proprietary drug-device combination of our novel topical solution of cantharidin, a widely recognized, naturally sourced agent to treat topical dermatological conditions, administered through our single-use precision applicator. We are initially developing VP-102 for the treatment of molluscum contagiosum, or molluscum, a highly contagious and primarily pediatric viral skin disease, and common warts. There are currently no products approved by the U.S. Food and Drug Administration, or FDA, nor is there an established standard of care for either of these diseases, resulting in significant undertreated populations in two of the largest unmet needs in dermatology. In addition to patent protection we are seeking, VP-102 has the potential to be the first FDA-approved product for molluscum and for its active pharmaceutical ingredient, or API, to be characterized as a new chemical entity, or NCE, with the five years of non-patent regulatory exclusivity associated with that designation. We also believe VP-102 has the potential to qualify for pediatric exclusivity, which would provide for an additional six months of non-patent exclusivity. We have recently initiated two randomized, double-blind, multicenter, placebo-controlled Phase 3 clinical trials of VP-102 for the treatment of molluscum, CAMP-1 and CAMP-2, and expect to report top-line results from these trials in the first half of 2019. If the results from these trials are favorable, we plan to submit a new drug application, or NDA, to the FDA for VP-102 for the treatment of molluscum in 2019. CAMP-1 is being conducted under a special protocol assessment, or SPA, with the FDA. We are also enrolling patients in a Phase 2 clinical trial of VP-102 for the treatment of common warts. We expect to report top-line results from this trial in the first half of 2019. We retain exclusive, royalty-free rights to our product candidates across all indications. Our management team has extensive pharmaceutical industry experience ranging from drug development through commercialization, having launched more than 50 products collectively. These products include dermatology products such as Lamisil, Elidel, Acticlate and Hemangeol, and products having multi-billion dollar peak annual sales such as Nexium, Seroquel, Crestor and Diovan. The members of our management team have held senior leadership positions at a number of pharmaceutical and biotechnology companies, including Novartis, Aqua Pharmaceuticals (acquired by Almirall), AstraZeneca and Pierre Fabre. We believe that the breadth of experience and successful track record of our management team, combined with our broad network of established relationships with leaders in the industry and medical community, provide us with unique insights into drug development and commercialization. Furthermore, we have been supported by a group of leading biotech investors, including PBM Capital, Perceptive and OrbiMed. We seek to protect our proprietary position by, among other methods, filing U.S. and foreign patent applications related to our product candidate and other proprietary technologies, inventions and improvements that are important to the development and implementation of our business. As of March 31, 2018, we have Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. Subject to Completion Preliminary Prospectus dated June 5, 2018 PROSPECTUS 5,000,000 Shares Common Stock This is Verrica Pharmaceuticals Inc. s initial public offering. We are selling 5,000,000 shares of our common stock. We expect the public offering price to be between $14.00 and $16.00 per share. Currently, no public market exists for the shares. We have applied to list our common stock on The Nasdaq Global Market under the symbol VRCA. We are an emerging growth company as defined under the federal securities laws and, as such, have elected to comply with certain reduced public company reporting requirements. Investing in the common stock involves risks that are described in the Risk Factors section beginning on page 12 of this prospectus. Per Share Total Public offering price $ $ Underwriting discount(1) $ $ Proceeds, before expenses, to us $ $ (1) We refer you to Underwriting beginning on page 151 for additional information regarding underwriting compensation. The underwriters may also exercise their option to purchase up to an additional 750,000 shares from us, at the public offering price, less the underwriting discount, for 30 days after the date of this prospectus. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. Certain of our existing stockholders, including entities affiliated with certain of our directors, have indicated an interest in purchasing an aggregate of approximately $30 million in shares of our common stock in this offering at the initial public offering price per share. However, because indications of interest are not binding agreements or commitments to purchase, the underwriters may determine to sell more, less or no shares in this offering to any of these persons or entities, or any of these persons or entities may determine to purchase more, less or no shares in this offering. The underwriters will receive the same underwriting discount on any shares purchased by these persons or entities as they will on any other shares sold to the public in this offering. The shares will be ready for delivery on or about , 2018. BofA Merrill Lynch Jefferies Cowen The date of this prospectus is , 2018. Table of Contents nationalized three patent applications for utility patents. In addition, we have four pending U.S. provisional applications and one patent application for a design patent. Excluding any patent term adjustment and patent term extension, utility patents to issue from these patent applications are projected to expire between 2034 and 2039. The design patent to issue from the design patent application will expire fifteen years from the date of issuance. Our Product Candidates VP-102 for the Treatment of Molluscum We are initially developing VP-102 for the treatment of molluscum. Molluscum is a highly contagious common skin disease caused by a pox virus that produces multiple raised flesh-colored papules, or skin lesions. Molluscum typically presents with 10 to 30 lesions and can present with over 100 lesions. If left untreated, molluscum lesions persist for an average of 13 months with some cases remaining unresolved for more than two years. The symptoms of molluscum tend to cause considerable anxiety, and parents frequently seek treatment due to its highly contagious nature and physical appearance. We estimate approximately 6 million people in the United States have molluscum. Molluscum has a 5% to 11% prevalence rate in children and the greatest incidence in individuals aged one to 14 years old. Accordingly, we estimate this represents a total addressable U.S. market of over $1 billion. We believe that the molluscum prevalence rate in the European Union is at least as high as in the United States. Compounded cantharidin has been used for many years by dermatologists to treat molluscum, but it has many limitations. Those limitations include that it is not FDA approved, could have highly variable purity, is not readily available and is often not produced in accordance with good manufacturing practices, or GMP. In addition, the formulation and administration of compounded cantharidin is not standardized and is poorly controlled. Other existing therapies, such as cryotherapy, curettage and laser surgery are also used, but are often painful and may lead to scarring. The potential for scarring and pain makes many of these treatments particularly unsuitable for children. As a result, a significant need exists for a clinically-proven and FDA-approved treatment for molluscum. We have designed VP-102 with the following benefits to address the shortcomings associated with current treatments for molluscum: Non-invasive and minimal to no pain upon application. VP-102 is designed to result in little to no pain upon application and to cause the clearance of the molluscum lesions generally without scarring. GMP-compliant product with improved stability and purity. VP-102 will be manufactured in accordance with GMP standards using an API that is greater than 99% pure. Furthermore, the API is packaged in a sealed glass ampule, which enhances product stability and improves consistency in product concentration since evaporation is minimized. Potential to increase physician efficiency. Our proprietary applicator in VP-102 enables more precise administration compared to traditional compounded cantharidin formulations, which are typically applied via the wooden stick part of a cotton-tipped swab. VP-102 also contains a visualization agent enabling practitioners to see which lesions have been treated. Potential to be the first FDA-approved product for the treatment of molluscum. In contrast to compounded cantharidin, VP-102, if approved, will be eligible for drug reimbursement. Table of Contents TABLE OF CONTENTS Page Prospectus Summary 1
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+THE COMPANY Overview We are a provider of health and wellness information principally targeted to people who are prediabetes or who have type 2 diabetes. Type 2 diabetes is a condition characterized by high blood glucose levels caused by either a lack of insulin or the body's inability to use insulin efficiently. Type 2 diabetes develops most often in middle-aged and older adults but can appear in children, teens, and young people. According to the American Diabetes Foundation, type 2 diabetes is the most common form of diabetes. While many people may need to take oral medications or insulin as prescribed by their physicians to help the person meet his or her targeted blood glucose levels, according to the American Diabetes Foundation some people with type 2 diabetes can control their blood glucose with healthy eating and being active. We do not offer products targeted to customers with type 1 diabetes, nor do we render medical advice. We provide information to our customers who are seeking to make healthy choices by providing clear, generic blueprints, education, resources, and support. Our core product is our proprietary Lifestyle Blueprint, a digital guide that provides dietary recommendations for a very low calorie eight week diet together with information focusing on what, how and how much a person eats, nutritional information and how a person s body does and does not use food to enable our customers to continue leading a more successful lifestyle. We also offer nutritional supplements and monthly subscriptions to our proprietary newsletter which covers a wide variety of healthy living-related topics. Our informational content, which is developed by our company based upon publicly available studies and other sources of information, is rooted in: Education and Action. Our goal is to help our audience understand the root of a healthy lifestyle, and give action-based blueprints that provide long-term commitment to their newfound education; Easy. Each aspect of our behavior change protocols is simple, and reasonably attainable; Avoid Guesswork. We give clear path guides to help real people, without confusion. In an information-overload world, we seek to do all of the groundwork in order to give our audience the right data and resources they need to succeed; and Support and Community. We provide a platform for our customers to ensure resilience and follow-through as they seek to achieve their healthy-living goals. The Lifestyle Blueprint and our other products Our Lifestyle Blueprint, titled The DWD Protocol: Success Blueprint, is a digital protocol which is designed to be an easy-to-follow guide especially for individuals who are prediabetes and type 2 diabetes sufferers. The Lifestyle Blueprint includes dietary recommendations for a very low calorie eight week diet together with information focusing on what, how and how much a person eats, nutritional information and how a person s body does and does not use food to enable our customers to continue leading a more successful lifestyle. The proprietary information provided in the Lifestyle Blueprint, which contains four modules including The Foundation, The Meal Plan Diabetes Free Lifestyle and Taking Control, together with recipe books, is based on publicly available information and studies which address how a healthy lifestyle can help individuals who are prediabetes and type 2 diabetes sufferers. Our DWD Protocol: Success Blueprint is designed to offer comprehensive information and support, including: Background information about type 2 diabetes; Individual action plans; Virtual messaging, coaching and support; Measurable milestones and targets; An eight-week hypocaloric diet; A detailed guide for transitioning back into healthy post-diet eating; and Recipe books focused on simple to prepare meals with detailed nutritional information. We sell the Lifestyle Blueprint for $49. In addition to the Lifestyle Blueprint, we also offer monthly subscriptions to our newsletters which cover a wide variety of health and lifestyle topics. Examples of recent newsletter titles are 7 Habits That Will Make You a Healthier Person, The Power of Positivity, Relaxation Practices Actually Changes Your Genes, and The Facebook Phenomenon Explained. These newsletters are written by our staff and are based upon content aggregated from a number of publicly available sources. Monthly subscription rates are $19.90. We also offer two nutritional supplements, including our DWDx3 Advanced Daily Supplement and our Premium-Grade Omega x3 supplement, which are manufactured for us in Vermont by Food Science Corporation. These nutritional supplements are made of all-natural, non-toxic, and non-GMO ingredients. We do not provide medical advice to our customers. The information and content which appears in our Lifestyle Blueprint and our newsletters are written by our staff and based upon a wide range of publicly available information and studies, including those published by Newcastle University and the National Institutes of Health. The content and information is also reviewed by our medical advisors prior to publication. Neither the Lifestyle Blueprint nor our newsletters are intended, however, as a substitute for medical advice provided by a physician or other health care provider. All information provided in the Lifestyle Blueprint and any other products we provide relating to specific medical conditions, health care preventive care, and healthy lifestyles, is presented for informational purposes only. We advise our customers that the information in the Lifestyle Blueprint should not be considered complete or exhaustive, and does not cover all disorders or conditions or their treatment, nor all health-related issues. We further advise our customers that they should consult with their physician or other health care provider when deciding on any health-related regimen, including diet or exercise, and for any specific individual medical advice. Markets for Lifestyle Blueprints Our model is highly scalable and we believe that we can enter new markets in a low cost and measured way. We expect to expand our product offerings in the future to include a Lifestyle Blueprint designed for adults who are overweight or obese. We also intend, over time, to expand our product offerings with additional Lifestyle Blueprints targeted to individuals with cardiovascular disease, memory loss and dementia, addiction, ADHD (attention deficit hyperactivity disorder), and the human papillomavirus virus (HPV). We have not, however, determine when we will be expand our product offerings and there are no assurances we will ever do so. Marketing and sales We sell products on our websites at www.constitutionalhealth.com and www.dwdprotocol.com. We utilize digital media, primarily paid search, paid social, affiliate marketing and display advertising to drive traffic to our web site. We also use social networking sites, including Facebook, Twitter and various blogs. In 2017 and 2016 we spent $1,366,064 and $1,205,005, respectively, on advertising. In addition, we spent $844,307 on advertising during the first nine months of 2018. We seek to market our products using direct to consumer online sales through multiple channels. Social media, search engines, and content platforms, principally Facebook, as well as Instagram, Google and YouTube, have historically been our principal sources for acquiring new customers. In the case of paid advertising, we use both internal (managed by us) and external (managed through affiliates or partner advertisers) advertising accounts. For internal accounts, we directly spend and manage all advertising dollars spent on a cost per click, or CPC, basis. Typically, we will spend approximately $60.00 on internal account advertising for each new customer. In the case of external accounts, we will work through third party affiliates or partner advertisers. These affiliate or partner advertisers typically use our product materials on their advertising accounts, spend their own advertising dollars, and are paid by us on a cost per acquisition, or CPA, basis. Historically our payments to these affiliate or partner advertisers on a CPA basis has been tied to a new customer sales. Depending on the products sold, the CPA payout can range from $30.00 to $80.00 for a new customer sale. This range, however, may change at any time, depending on the cost of revenue, and/or lifetime customer value we believe the campaign can achieve. We also use email advertising as a source of new customer generation. In the case of email advertising, we will pay for our advertisement link (picture or text) to be sent to a third party publisher s email list. We send our internally created advertisements to the third party publisher with a unique tracking link embedded, and the third party publisher manages the entire emailing process. We embed the unique tracking link to assist us to evaluate the sales performance from each email list. Utilizing this process, we neither participate in the transmission of the actual emails nor do we have access to the potential customer's email. We also utilize email lead generation to attract potential new customers. In this scenario, we may spend advertising dollars on a campaign that acquires new customer email leads. These leads typically review free articles or content online that we publish, and offer the opportunity for the reader to join our emailing list to receive more information. In the case of each of our advertising campaigns, since our campaigns historically have been digitally driven, we use various forms of multimedia, including video, audio, and imagery. Depending on the platform and placement (mobile/tablet/desktop), the advertising content will vary. For example, in the case of Facebook, we will use video with audio to present the product in a detailed and explanatory way. We recognize that our product is not generally known, and typically our customers must be educated on what the product does prior to acquiring a purchase from them. Our Lifestyle Blueprint is digitally delivered by us. We have engaged Argo Marketing Group, Inc. to provide customer relations services for us in connection with sales of our products. Under the terms of the agreement entered into in November 2015, Argo Marketing Group, Inc. is responsible for all customer service call handling, email management and chargeback management. We agreed to pay the company various initial and additional set up fees, customer services fees tiered to the weekly minutes, per transaction fees for email resolutions or return processing and chargeback management, among other fees. The initial term of the agreement was for one year, with automatic one year renewals unless either party provides 30 day written notice of non-renewal. The agreement may be terminated by Argo Marketing Group, Inc. for non-payment, in the event of our bankruptcy or insolvency and by either party upon a breach or without cause. Mr. Mannine, our chief executive officer, has personally guaranteed our obligations under this agreement. We do not manufacture the private label nutritional supplements we sell. These nutritional supplements are manufactured on a per order basis for us by Food Science Corporation, a 40- year old Vermont-based family owned company focused on nutritional research and product development. We utilize the services of a third-party fulfillment company to ship the nutritional supplements to our customers, and pay this provider an order and per item fee. We believe our relationships with our supplement supplier and the third party providers we utilize for fulfillment and customer service are good. However, while we believe we can replace the third party providers for fulfillment and customer service with comparable companies at similar costs to us, a disruption in the relationship with our supplement supplier would materially impact our business until such time as we were able to establish a relationship with an alternative supplier. Competitors We seek to compete with a number of larger, more established companies that provide health and wellness content and market nutritional supplements, including Nutrisystem, Inc. (NasdaqGS: NTRI), Medifast, Inc. (NYSE: MED) and Weight Watchers International, Inc. (NYSE: WTW), as well as privately held Virta Health Corp. and television and media personality Dr. Axe. In addition, while we do not offer products targeted to customers with type 1 diabetes, some of our competitors target customers with both type 1 and type 2 diabetes. All of these potential competitors have greater brand awareness and financial resources that we do. While we are seeking to compete by focusing on our niche proprietary content, we do not presently have the financial resources available to us to effectively market our company on a large scale or to develop new products to quickly respond to a marketplace dominated by well established, well capitalized companies. There are no assurances we will ever establish brand recognition at a sufficient level to permit us to generate any significant revenues or to effectively compete in our market. Information Systems Our ecommerce and websites and our tools and trackers, all of which are based primarily on third-party software customized to meet our business needs, are each hosted in top tier hosting facilities. These facilities provide redundant network connections, physical and fire security and generator power back up for the equipment upon which our websites rely and are intended to provide an uninterruptible power supply. Our servers and our network are monitored 24 hours a day, seven days a week. We use a variety of security techniques to protect our confidential customer data. When our customers place an order or access their account information, we secure that transaction by using encryption technologies, including transport layer security, or TLS. Our customer data is protected against unauthorized access by security measures and we engage a variety of industry leading technology providers including VeriSign, CyberSource and SecureWorks to further ensure the security of our credit card transactions and the safety of our customers personal information. Intellectual property We currently rely on a combination of trade secret laws and restrictions on disclosure to protect our intellectual property rights. Our success depends on the protection of our proprietary rights as well as our ability to operate without infringing on the proprietary rights of others. We utilized the unregistered brand name Constitutional Health in our business. We have been granted a limited non-transferrable, royalty-free license by NatureX Inc. to utilize the trademark Glucevia for so long as we continue to acquire its faxinus excelsior seed extract which is a component of our DWD 3 nutritional supplements. We also own the domain names www.vynleads.com, wearedwd.com, dwdprotocol.com, codexone.org and www.constitutionalhealth.com, together with a number of additional domain names which we may use in future periods. However, as with phone numbers, we do not have and cannot acquire any property rights in an Internet address. The regulation of domain names in the United States and in other countries is also subject to change. Regulatory bodies could establish additional top-level domains, appoint additional domain name registrars or modify the requirements for holding domain names. As a result, we might not be able to maintain our domain names or obtain comparable domain names, which could harm our business. Government regulation Our industry is subject to federal, state and other governmental regulation. Certain federal and state agencies, such as the FTC, regulate and enforce such laws relating to advertising, disclosures to consumers, privacy, consumer pricing and billing arrangements and other consumer protection matters. A determination by a federal or state agency, or a court, that any of our practices do not meet existing or new laws or regulations could result in liability, adverse publicity and restrictions on our business operations. The FTC has in the past instituted enforcement actions against dietary supplement and food companies for false and misleading advertising of some of their products. There are no assurances that the FTC will not question our advertising claims in the future. An enforcement action brought by a government agency, like the FTC in the United States, or a class action lawsuit, could adversely affect our reputation and potentially result in significant penalties and costs, either of which could have a material adverse effect on our results of operations and financial condition. Other aspects of our industry are also subject to government regulation. For example, the manufacturing, labeling and distribution of food products, including nutritional supplements, are subject to strict United States Department of Agriculture, or USDA, and United Stated Food and Drug Administration, or FDA, requirements and food manufacturers are subject to rigorous inspection and other requirements of the USDA and FDA, and companies operating in foreign markets must comply with those countries requirements for proper labeling, controls on hygiene, food preparation and other matters. We rely on our supplement supplier to follow all applicable government regulation. If our supplement supplier should fail to conform to all applicable regulations, or if federal, state, local or foreign regulation of our industry increases for any reason, then we may be required to modify or discontinue our supplement offerings which could harm our operating results. Additionally, remedies available in any potential administrative or regulatory actions may include product recalls and requiring us to refund amounts paid by all affected customers or pay other damages, which could be substantial. Aspects of our industry are also subject to state regulations. In 1986, California passed The Safe Drinking Water and Toxic Enforcement Act of 1986, which is commonly known as Proposition 65. This proposition seeks to prevent businesses from exposing consumers to certain toxins, including lead, arsenic and PCBs, without providing a warning. Because Proposition 65 did not set a safe harbor limit for reproductive health and PCBs, all products containing even trace amounts of PCBs require a specific warning label. In addition, for any food or nutritional supplements containing over 0.09 micrograms per day of PCBs, the state mandated warning label is expanded to include an additional cancer warning. While at this time, the supplements we marked and sell do not contain the ingredients to require Proposition 65 disclosure, it is possible in the future other supplements we may market and sell will require the warning labels. It is also possible at additional states will also enact legislation which could require us to change the type of nutritional supplements or other products we market, or discontinue offering certain products and services if the estimated cost of compliance outweighs the potential revenues. Laws and regulations directly applicable to communications, operations or commerce over the Internet such as those governing intellectual property, privacy, libel and taxation, are becoming more prevalent and some remain unsettled. If we are required to comply with new laws or regulations or new interpretations of existing laws or regulations, or if we are unable to comply with these laws, regulations or interpretations, our business could be adversely affected. Future laws or regulations, including laws or regulations affecting our marketing and advertising practices, relations with consumers, employees, service providers, or our services and products, may have an adverse impact on us. Employees At November 26, 2018 we had two employees including our two executive officers. Properties We rent executive office space on a month to month basis under a co-working agreement with an unrelated third party at a monthly fee of $200. Legal proceedings In 2016 we engaged a third party to provide certain promotional services to us in connection with our business, including the use of his name and appearance, under the terms of a five year agreement. As compensation, we agreed to use our commercially reasonable efforts to promote and sell a book authored by him, and to pay him, as a royalty, a percentage of the sales of the book, after deductions for all direct costs of fulfilling such sales. During 2017 the third party initiated a series of informal claims and filed unauthorized uniform commercial code (UCC) financing statements in several states against us and certain of our officers, directors, and founders, alleging non-payment of the royalty amounts. We dispute all claims by the third party, and believe that all royalty amounts due him have been paid in full. We are no longer selling the book authored by him. We have succeeded in removing certain of the UCC liens and we are pursuing actions to remove the remaining unauthorized UCC lien. History of our company Our corporation was formed in Delaware in July 2015. In January 2016 we acquired certain the assets of LibertySniper.com, including email and subscriber list databases, email service provider contracts and dedicated IP addresses, editorial content, lead generation campaigns, pen name and voice of publisher Michael Westan, email tripwire campaigns and welcome series content, and all account access related to LibertySniper.com, including hosting, Google Analytics, Adwords and content management system license. Under the terms of the sales agreement, we paid the seller $50,000. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS There is no market for our common stock. Dividend policy We have never paid cash dividends on our common stock. Under Delaware law, we are prohibited from paying cash dividends if the distribution would result in our company not being able to pay its debts as they become due in the usual course of business or if our total assets would be less than the sum of our total liabilities plus the amount that would be needed, we were to be dissolved at the time of distribution, to satisfy the preferential rights upon dissolution of stockholders whose preferential rights are superior to those receiving the distribution. Our board of directors has complete discretion on whether to pay dividends. Even if our board of directors decides to pay dividends, the form, frequency and amount will depend upon our future operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions and other factors that the board of directors may deem relevant. While our board of directors will make any future decisions regarding dividends as circumstances surrounding our company changes, presently it is not anticipated that we will pay any cash dividends in the foreseeable future. Intent to become a fully reporting company Immediately following the date of this prospectus, we expect to file a registration statement on Form 8-A with the SEC, which will register our common stock under Section 12(g) of the Exchange Act. This filing will require us to file annual, quarterly and other reports with the SEC, as well as proxy and information statements, among other filings. It will also obligate our officers, directors and principal stockholders to file reports under Section 16 of the Exchange Act. We will take this action to ensure that we are a fully reporting company and that financial and other information about out company is available to our stockholders and potential investors. Rule 144 At November 26,
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+PROSPECTUS SUMMARY This summary highlights information appearing elsewhere in this prospectus and does not contain all of the information that you should consider in making your investment decision. You should carefully read this entire prospectus, including the "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operation" sections and the financial statements and the related notes, before deciding whether to invest in the ADSs. This prospectus contains information derived from various public sources and certain information from an industry report commissioned by us and prepared by Oliver Wyman Consulting (Shanghai) Limited, or Oliver Wyman, a third-party industry research firm, to provide information regarding our industry and market position in China. We refer to this industry report as the Oliver Wyman Report. Such information involves a number of assumptions and limitations, and you are cautioned not to give undue weight to these estimates. We have not independently verified the accuracy or completeness of the data contained in these industry publications and reports. The industry in which we operate is subject to a high degree of uncertainty and risk due to variety of factors, including those described in the "Risk Factors" section. These and other factors could cause results to differ materially from those expressed in these publications and reports. Our Mission Our mission is to utilize internet technology to build the leading personal finance company in China. Overview We are a leading technology-driven personal finance company in China focused on serving China's underserved prime borrowers and mass affluent investors, according to the Oliver Wyman Report. Our platform, empowered by our risk management capabilities and technology, efficiently matches borrowers' loan requests with investors' investment demands and executes loan and investment transactions to provide borrowers with prompt funding, enabling us to satisfy the financing needs of borrowers and meet the investment demands of investors. The following table presents the key operating data of our business for the periods or at the end of the periods indicated. As of or for the Year Ended December 31, As of or for the Six Months Ended June 30, 2016 2017 2018 Loans Total loan facilitation amount (RMB in millions)(1) 18,996 34,400 19,879 Xiaoying Card Loan 179 12,634 13,834 Xiaoying Preferred Loan 1,509 7,777 4,331 Xiaoying Housing Loan 5,840 4,244 164 Loan facilitation services to other platforms 1,804 5,464 1,318 Others(2) 9,663 4,281 232 Total outstanding loan balance (RMB in millions)(3) 7,494 18,279 22,270 Xiaoying Card Loan 178 8,102 13,164 Xiaoying Preferred Loan 1,368 6,658 7,027 Xiaoying Housing Loan 2,921 1,919 586 Loan facilitation services to other platforms 915 1,048 1,468 Others(4) 2,111 551 25 AMENDMENT NO. 3 TO FORM F-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Notes: (1)Represents the total amount of loans we facilitated during the relevant period. (2)In 2016, 35.2% of others were bridge loans for mortgage payment, 7.5% of others were loans for corporates and most of the remaining others products were miscellaneous loans products that we have stopped facilitating. We completely ceased facilitating bridge loans for mortgage payment and loans for corporates in 2017. (3)Represents the total amount of loans outstanding for loans we facilitated at the end of the relevant period. Loans that are delinquent for more than 180 days are charged-off and are excluded in the calculation of delinquency rate by balance, except for Xiaoying Housing Loan. As Xiaoying Housing Loan is a secured loan product and we are entitled to payment by exercising our rights to the collaterals, we do not charge off the loans delinquent for more 180 days and such loans are included in the calculation of delinquency rate by balance. (4)As of December 31, 2016, 13.1% of others were bridge loans for mortgage payment and 1.9% of others were loans for corporates. We completely ceased facilitating these two products in 2017. (5)Represents the total number of transactions of loan facilitation during the relevant period. (6)Calculated by dividing the total loan facilitation amount by the number of loans facilitated during the relevant period. (7)The average loan amount per transaction for other loan products is not meaningful as others consisted of various types of products. (8)Refers to borrowers who made at least one transaction during that period on our platform. (9)Refers to borrowers who made at least one transaction during that period and have made at least two transactions in total on our platform. (10)Calculated by dividing our total costs incurred in connection with acquiring borrowers by the number of new borrowers during the relevant period. (11)Refers to individual investors who made at least one transaction during that period on our platform. (12)Refers to individual investors who made at least one transaction during that period and have made at least two transactions in total on our platform. (13)Calculated by dividing our total costs incurred in connection with acquiring individual investors by the number of the new individual investors during the relevant period. Table of Contents We offer a comprehensive suite of products specifically catered to the financing and investment needs of individuals in China. Our major loan products include Xiaoying Card Loan, primarily a credit card balance transfer product, and Xiaoying Preferred Loan, a high-credit-limit unsecured loan product, both offering borrowers a combination of large credit line, long term and attractive APR in China. We offer attractive and diversified investment opportunities to investors in China through our wealth management platform, Xiaoying Wealth Management, which is one of the very few platforms able to enhance investors' confidence in the investment products with insurance protection. According to the Oliver Wyman Report, as of December 31, 2017, there were approximately 1,900 online consumer finance marketplaces in operation in China and less than 3% of online consumer finance marketplaces in operation in China offer such insurance protection. The attractive features of our product offerings are the key for us to achieve top three market positions in all principal segments that we operate in. We are (i) the largest player offering credit card balance transfer loan products in China in terms of outstanding loan balance as of June 30, 2018, (ii) the third largest player amongst non-traditional financial institutions offering high-credit-limit unsecured loans in China in terms of outstanding loan balance as of June 30, 2018, and (iii) the second largest online consumer finance marketplace offering multiple types of investment products in China in terms of transaction volume for the six months ended June 30, 2018, according to the Oliver Wyman Report. The strong credit performance and underlying insurance protection of the loans that we facilitate and our proven risk management and credit assessment capabilities enable us to attract a diversified and low-cost funding base to support our growth. The loan products we facilitate are funded through the investments from our individual and corporate investors through Xiaoying Wealth Management platform and the funding arrangements with multiple institutions in China. As of December 31, 2017, 82.3% of the total outstanding funding balance for loans we facilitated were provided by individual investors, and 17.7% were provided by corporate investors and institutional funding partners. As of June 30, 2018, 84.2% of the total outstanding funding balance for loans we facilitated were provided by individual investors, and 15.8% were provided by corporate investors and institutional funding partners. In 2017 and for the six months ended June 30, 2018, the overall funding cost for the loans we facilitated was 7.60% and 7.97%, respectively. Our business model is light in capital and labor commitment, and we believe we manage our transaction and operating costs in an effective way. Benefiting from our superior loan product offerings, strong credit performance and underlying insurance protection of our investment products, we continue to expand our user base of both borrowers and investors, primarily through referrals without incurring significant sales and marketing expenses, resulting in relatively low user acquisition costs. Furthermore, our highly automated risk management system and technology infrastructure enable us to automatically facilitate a large number of transactions simultaneously. In 2016, 2017 and for the six months ended June 30, 2018, our net revenue per employee was approximately RMB579,000, RMB2,864,000 and RMB4,864,000 (annualized), respectively, and our general and administrative expenses as a percentage of our total net revenues was 26.8%, 5.5% and 4.5%, respectively. We utilize data-driven and technology-empowered credit analysis. Our proprietary risk control system, WinSAFE, builds risk profiles of our prospective borrowers upon data from reputable credit information providers employed by traditional financial institutions, augmented by a variety of social and behavioral data from internet and mobile platforms that are typically not utilized by traditional financial institutions. Leveraging data analysis and machine learning in analyzing a borrower's value, repayment capability and propensity, we have the capabilities to offer differentiated credit limits to borrowers based on individual credit assessment results. Our rigorous data-driven credit assessment methodology has helped us to achieve a strategic balance between borrower expansion and asset quality control. In 2016, 2017 and for the six months ended June 30, 2018, the total loans we facilitated amounted to RMB18,996 million, RMB34,400 million and RMB19,879 million, respectively, while the Cogency Global Inc. 10 East, 40th Street, 10th Floor New York, NY 10016 (800) 221-0102 (Name, address, including zip code, and telephone number, including area code, of agent for service) Table of Contents delinquency rate by balance for outstanding loans that were 91 to 180 days past due was 0.38% as of December 31, 2016, 1.34% as of December 31, 2017 and 3.26% as of June 30, 2018. We benefit from our strategic partnership with ZhongAn. The protection offered by ZhongAn's credit insurance on our investment products significantly enhances investor confidence. Our risk management system is also strengthened by ZhongAn's rigorous risk control of insurance decision opinion. ZhongAn's credit assessment model is based on information from various databases, including PBOC CRC which is only available to licensed financial institutions. ZhongAn's insurance opinion serves as one of the inputs of our comprehensive credit risk management system, along with other behaviour and credit information. As a result of our growing scale, we are ZhongAn's third largest ecosystem partner in terms of gross written premium of all insurance products for both 2016 and the three months ended March 31, 2017. Prior to new regulations promulgated in the PRC consumer finance industry in December 2017, the annualized fee rates for certain loans that we facilitated exceeded 36% and we also deducted service fees from a loan principal in advance for certain loans that we facilitated. To better comply with the applicable requirements under new regulations, we have taken rectification measures including: (i) adjusting the annualized fee rates of all new loans that we facilitated since December 7, 2017 not to exceed 36% and (ii) ceasing deduction of any service fees from a loan principal in advance since December 7, 2017. In addition, we have cooperated with institutional funding partners, including banking financial institution partners, as a supplemental funding source for our loan products. In light of the regulatory development since December 2017, we have reviewed and adjusted our cooperation with banking financial institution partners, such as suspending certain cooperations, to better comply with the applicable regulatory requirements. In addition, considering the regulatory developments in the PRC since December 2017, we are reviewing our loan facilitation services to other platforms and would cease providing loan facilitation services to other platforms if their products are suspended under recent PRC regulations. We generate revenues primarily from the fees we charge for our service of matching investors with borrowers (i.e., our loan facilitation service) and for other services we provide over the lifetime of the loan (i.e., our post-origination service and guarantee service). In 2016, our service fee rate (annualized based on original amount of loan principal) of our major loan products ranged from 0.2% to 21.0% and the service fees we charged for loan facilitation services, post-origination services and guarantee services accounted for 78.8%, 3.6% and 1.2%, respectively, of our total net revenues. In 2017, our service fee rate (annualized based on original amount of loan principal) of our major loan products ranged from 0.8% to 45.0% and the service fees we charged for loan facilitation services, post-origination services and guarantee services accounted for 85.8%, 2.8% and 2.7%, respectively, of our total net revenues. For the six months ended June 30, 2018, our service fee rate (annualized based on original amount of loan principal) of our major loan products ranged from 0.5% to 28.6% and the service fees we charged for loan facilitation services, post-origination services and guarantee services accounted for 91.3%, 2.1% and 1.2%, respectively, of our total net revenues. Copies to: Li He, Esq. Davis Polk & Wardwell LLP 2201 China World Office 2 No. 1 Jian Guo Men Wai Avenue Chaoyang District, Beijing 100004 People's Republic of China +86 10-8567-5000 James C. Lin, Esq. Davis Polk & Wardwell LLP c/o 18th Floor The Hong Kong Club Building 3A Chater Road, Central Hong Kong +852 2533-3300 Dan Ouyang, Esq. Weiheng Chen, Esq. Steven V. Bernard, Esq. Wilson Sonsini Goodrich & Rosati Suite 1509, 15F, Jardine House 1 Connaught Place, Central Hong Kong +852 3972-4955 Note: (1)Different from APR used to express the total borrowing cost for our loan products, the figures set forth in the table represent the service fee range we charge borrowers referred from other platforms for loans successfully allocated to investors. We have experienced rapid growth in 2016, 2017 and the six months ended June 30, 2018. Our total net revenue was RMB230.3 million in 2016 and RMB1,786.9 million (US$270.0 million) in 2017. For the six months ended June 30, 2018, our total net revenues reached RMB1,848.3 million (US$279.3 million), a significant increase from RMB604.9 million for the same period in 2017. We had a net income of RMB339.5 million (US$51.3 million) in 2017, compared to a net loss of RMB120.2 million in 2016. For the six months ended June 30, 2018, our net income reached RMB443.3 million (US$67.0 million), a significant increase from RMB80.7 million for the same period in 2017. Our Industry The low levels of consumption and leverage ratio indicate considerable room for further expansion of the consumer finance market in China. According to the Oliver Wyman Report, consumer finance market is defined to consist of personal consumption loans and credit card loans. Credit card loans primarily include installment loans and cash advances. Personal business operating loans are typically large ticket loans, a combination of both secured and unsecured loans. According to the Oliver Wyman Report, the outstanding balance of consumer finance market in China is expected to grow from RMB8.2 trillion in 2017 to RMB19.9 trillion in 2021 at a CAGR of 24.8% and the outstanding balance of personal business operating loans to grow from RMB10.7 trillion in 2017 to RMB15.6 trillion in 2021 at a CAGR of 9.9% during the same period. One distinctive product under the consumer finance market is the online credit card balance transfer loan. However, the Chinese credit card balance transfer loan market emerged due to very different reasons than that in the United States. Whereas the market emerged in the United States due to credit card holders not being able to repay full amount in time, the market in China emerged due to credit card holders not having sufficient credit lines from the card issuing banks, and need to repay in advance to free up their credit lines and therefore, in essence, credit card balance transfer loan is an additional credit facility for borrowers. According to the Oliver Wyman Report, the outstanding balance of credit card balance transfer loans is expected to grow rapidly from RMB46 billion in 2017 to RMB441 billion in 2021 at a CAGR of 76.0%. We are the largest player offering credit card balance transfer loan products in China in terms of outstanding loan balance as of June 30, 2018, according to the Oliver Wyman Report. Another distinctive product under the personal business operating loan market is the high-credit-limit unsecured loan, which is defined as a loan with ticket size ranging from RMB80,000 to RMB600,000. High-credit-limit unsecured loans are generally borrowed by small business owners whose Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933. Emerging growth company If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. The term "new or revised financial accounting standard" refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012. Table of Contents credit worthiness can be verified to support their business operational activities. As most banks focus on serving state-owned enterprises and large corporations, bank borrowings are not easily accessible to the majority of individual consumers and small-to-medium-sized enterprise, or SME, owners. According to the Oliver Wyman Report, the outstanding balance of the high-credit-limit unsecured loan market is expected to grow from RMB10.1 trillion in 2017 to RMB15.6 trillion in 2021 at a CAGR of 11.1%. We are the third largest player amongst non-traditional financial institutions offering high-credit-limit unsecured loans in China in terms of outstanding loan balance as of June 30, 2018, according to the Oliver Wyman Report. Along with the wealth management products offered by banks, Chinese investors now also tend to invest into products with higher yield and allocate funds to other high yield fixed income products. In light of recent regulatory developments, banks are restraining the business scale of their wealth management products providing growth opportunities for P2P platforms to develop wealth management products to satisfy investors' needs. According to the Oliver Wyman Report, the AUM of online non-traditional financial institutions in the wealth management primary market in China is expected to grow from RMB3.4 trillion in 2017 to RMB9.7 trillion in 2021 at a CAGR of 30.0%, among which, the AUM of quasi-fixed income products is expected to grow from approximately RMB2.0 trillion to approximately RMB6.1 trillion at a CAGR of 32.2% during the same period. We are the second largest online consumer finance marketplace offering multiple types of investment products in China in terms of transaction volume for the six months ended June 30, 2018, according to the Oliver Wyman Report. The following factors are key in successfully serving the online consumer finance market in China: comprehensive offerings of products and innovation; effective borrower acquisition; robust data analytics; effective data-enabled risk management; and diversified funding sources at favorable rates. Our Strengths We believe the following strengths contribute to our success and reinforce our market leading position: leading technology-driven personal finance company serving China's prime borrowers; comprehensive suite of products with attractive features; leading wealth management platform with a fast-growing and high-quality investor base; access to an ample supply of low-cost funding coupled with the ability to tap into diversified funding sources; low cost user acquisition and competitive operating efficiency; rigorous data-driven credit assessment methodology with proven results; strategic partnership with ZhongAn; and founded by a seasoned entrepreneur with proven track record and backed by strong team of financial and technology talent. CALCULATION OF REGISTRATION FEE Title of each class of securities to be registered Amount of securities to be registered(2)(3) Proposed maximum offering price per share(3) Proposed maximum aggregate offering price(3) Amount of registration fee(4) Class A ordinary shares, par value $0.0001 per share(1)(2) 25,300,000 US$5.50 US$139,150,000.00 US$17,324.17 (1)American depositary shares issuable upon deposit of the Class A ordinary shares registered hereby will be registered pursuant to a separate registration statement on Form F-6 (Registration No. 333-227070). Each American depositary share represents two Class A ordinary shares. (2)Includes Class A ordinary shares initially offered and sold outside the United States that may be resold from time to time in the United States either as part of their distribution or within 40 days after the later of the effective date of this registration statement and the date the shares are first bona fide offered to the public, and also includes shares that may be purchased by the underwriters pursuant to an over-allotment option. These Class A ordinary shares are not being registered for the purpose of sales outside the United States. (3)Estimated solely for the purpose of computing the amount of registration fee in accordance with Rule 457(a) under the Securities Act of 1933, as amended. (4)Previously paid. Table of Contents Our Strategies We plan to pursue the following strategies to achieve our goal: continue to broaden product offerings; increase brand awareness; expand user base and enhance user acquisition; continue to diversify and scale our funding sources; and further strengthen our risk management and technology capabilities. Risks and Uncertainties Investing in the ADSs involves a high degree of risk. You should carefully consider the risks and uncertainties summarized below, the risks described under the "Risk Factors" section beginning on page 24 of, and the other information contained in, this prospectus before you decide whether to purchase the ADSs: Our ability to achieve our mission and execute our strategies is subject to certain challenges, risks and uncertainties, including: uncertainties associated with the changing regulatory regime governing the online consumer finance industry in China; our limited operating history in a new and evolving market; failure of other online lending platforms or damage to the reputation of the online consumer finance industry; service fee that may decline in the future due to factors beyond our control; highly competitive environment in the online consumer finance industry; our ability to maintain or increase the amount of loans we facilitate; adequate funding and access to adequate lending capital on terms acceptable to us; the effectiveness of the provision of services by ZhongAn; our proprietary credit analysis and risk management system; our ability to maintain low delinquency rates; accuracy and advertency of data we collected; and risks associated with our control over our consolidated variable interest entities, or VIEs, in China, which is based on contractual arrangements rather than equity ownership. Recent Developments Business Developments in July and August 2018 The following sets forth our selected operating data reflecting certain material developments on our business after June 30, 2018. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. Notes: (1)Represents the total amount of loans we facilitated during the relevant period. (2)Represents the total amount of loans outstanding for loans we facilitated at the end of the relevant period. Loans that are delinquent for more than 180 days are charged-off and are excluded in the calculation of delinquency rate by balance, except for Xiaoying Housing Loan. As Xiaoying Housing Loan is a secured loan product and we are entitled to payment by exercising our rights to the collaterals, we do not charge off the loans delinquent for more 180 days and such loans are included in the calculation of delinquency rate by balance. (3)Represents the total number of transactions of loan facilitation during the relevant period. Table of Contents The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where such offer or sale is not permitted. SUBJECT TO COMPLETION PRELIMINARY PROSPECTUS DATED SEPTEMBER 12, 2018 American Depositary Shares X Financial Representing 22,000,000 Class A Ordinary Shares Table of Contents Delinquency rate. The following table provides the delinquency rates for all outstanding loans on our platform and by major products as of the respective dates indicated. Delinquent for 31 - 90 days 91 - 180 days December 31, 2016 All outstanding loans 0.36 % 0.38 % Xiaoying Card Loan Xiaoying Preferred Loan 0.23 % 0.26 % Xiaoying Housing Loan 0.33 % 0.28 % Loan facilitation services to other platforms 0.54 % 0.13 % December 31, 2017 All outstanding loans 1.46 % 1.34 % Xiaoying Card Loan 1.93 % 1.64 % Xiaoying Preferred Loan 0.81 % 0.67 % Xiaoying Housing Loan 1.95 % 2.19 % Loan facilitation services to other platforms 1.42 % 1.76 % June 30, 2018 All outstanding loans 1.98 % 3.26 % Xiaoying Card Loan 2.33 % 3.62 % Xiaoying Preferred Loan 1.45 % 2.31 % Xiaoying Housing Loan 4.81 % 13.16 % Loan facilitation services to other platforms 0.20 % 0.63 % July 31, 2018 All outstanding loans 2.45 % 3.28 % Xiaoying Card Loan 2.83 % 3.56 % Xiaoying Preferred Loan 1.58 % 2.41 % Xiaoying Housing Loan 9.82 % 14.81 % Loan facilitation services to other platforms 0.23 % 0.43 % August 31, 2018 All outstanding loans 3.03 % 3.04 % Xiaoying Card Loan 3.43 % 3.41 % Xiaoying Preferred Loan 2.41 % 2.27 % Xiaoying Housing Loan 7.04 % 9.76 % Loan facilitation services to other platforms 0.27 % 0.29 % Number of borrowers and investors. For the months ended July 31 and August 31, 2018, the number of active borrowers (who made at least one transaction during the relevant month on our platform) was 171,525 and 218,275, respectively, and the number of active individual investors (who made at least one transaction during the relevant month on our platform) was 81,625 and 74,325, respectively. In July 2018, certain troubled online lending platforms in China had gone out of business, which adversely affected investors' confidence in the online consumer finance industry, resulting in a reduction in the availability of funding from individual investors. See "Risk Factors Any damage to the reputation of the online consumer finance industry may materially and adversely affect our business and results of operations." Although these online platforms are not related to us, our business was also negatively affected by the market conditions in the following aspects: (i) in July 2018, the loan facilitation volume for our loan products decreased by 30.8% from the monthly average loan facilitation volume of RMB3,313 million for the six months ended June 30, 2018 to RMB2,291 million, among which, Xiaoying Card Loan decreased by 32.0% from the average monthly loan facilitation volume of This is the initial public offering of American depositary shares, or ADSs, representing Class A ordinary shares of X Financial. We are offering 11,000,000 ADSs. Each ADS represents two Class A ordinary shares, par value $0.0001 per share. Prior to this offering, there has been no public market for the ADSs or our Class A ordinary shares. We anticipate that the initial public offering price of the ADSs will be between $9.00 and $11.00 per ADS. We have applied to have the ADSs listed on the New York Stock Exchange, or NYSE, under the symbol "XYF." We are an "emerging growth company" as defined in the Jumpstart Our Business Startups Act of 2012 and upon the completion of this offering we will be a "controlled company" as defined in New York Stock Exchange Listed Company Manual. Table of Contents RMB2,306 million for the six months ended June 30, 2018 to RMB1,567 million in July 2018; (ii) the total loan balance as of July 31, 2018 decreased by 4.2% from RMB22,270 million as of June 30, 2018 to RMB21,341 million; (iii) the number of active borrowers decreased by 19.5% from the monthly average number of active borrowers of approximately 213,048 for the six months ended June 30, 2018 to 171,525 in July 2018; and (iv) the number of active individual investors, in particular, the acquisition of new individual investors, was adversely affected in July 2018. Since the beginning of August 2018, the amount of funding from individual investors on our platform has been recovering, and our business performance has started gradually improving, in particular in the following aspects: (i) in August 2018, the loan facilitation volume for our loan products increased by 9.3% from RMB2,291 million in July 2018 to RMB2,503 million, among which, Xiaoying Card Loan increased by 30.2% from RMB1,567 million in July 2018 to RMB2,041 million in August 2018; and (ii) the number of active borrowers increased by 27.3% from 171,525 in July 2018 to 218,275 in August 2018. Nevertheless, we believe it would take time for the Chinese investors to fully regain their confidence in the online consumer finance industry. For instance, the total loan balance as of August 31, 2018 is still relatively low, decreasing by 2.5% from RMB21,341 million as of July 31, 2018 to RMB20,804 million. In addition, the number of active individual investors has further decreased from July 2018 to August 2018. We also witnessed increase in delinquency rate that were 31-90 days past due attributable to tightening liquidity in China in July and August 2018. As a result of the above factors, our results of operations and profitability may be adversely affected for the full year ending December 31, 2018. Our selected operating data for the month ended July 31 and August 31, 2018 may not be indicative of our financial results for future interim periods or for the full year ending December 31, 2018. Please also refer to "Business" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included elsewhere in this prospectus for information regarding trends and other factors that may affect our business and results of operations. In addition, in August 2018, we introduced a new individual consumer financial product called "Xiaoying Wallet" with a pre-determined credit limit of up to RMB60,000. Users are able to use Xiaoying Wallet for online purchases and mobile payments and can repay the used amount at any time, enjoying an interest-free period of up to 36 days. Users are also able to apply for installment loans with terms of up to one year through Xiaoying Wallet. As of the date of this prospectus, Xiaoying Wallet is still in pilot phase and the volume of this product is immaterial. Latest Regulatory Developments In order to restore investors' confidence in the online consumer finance industry, various Chinese regulators and industry associations have taken action since the beginning of August 2018. For example, in August 2018, to reinforce the importance of repayment obligations to borrowers, the Head Office for Special Rectification of Online Finance Risk issued the Notice to File the Information of P2P Platform's Borrowers Who Declined to Repay Loans, requesting P2P platforms to provide such borrower information and proposing to include such default information on credit records. Also in August 2018, the Head Office for Special Rectification of Peer-to-Peer Online Lending promulgated the Notice on Conducting Compliance Inspections of Online Lending Intermediaries, or the Inspection Notice, and the Compliance Checklist of Online Lending Information Intermediaries, or the Compliance Checklist, to further regulate P2P online lending platforms, requiring the online lending information intermediaries to complete self-inspection, inspection conducted by local and national Internet Finance Associations, and verification conducted by the local online lending rectification office by the end of December 2018, after which the online lending information intermediaries that are in compliance with the applicable rules and regulations will be granted access to the information Table of Contents options for the six months ended June 30, 2017 and 2018 were RMB9.43 and RMB16.87 per share respectively. 25/01/2015 RMB 29/06/2015 RMB 03/05/2016 RMB 11/10/2017 RMB 30/04/2018 RMB Assumed forfeiture rate (annual %) 4.79 % 4.79 % 4.79% 4.79% 4.79 % Fair value of underlying ordinary shares 4.91 9.66 16.98 30.29 41.33 Exercise Price 0.27 0.27 0.27 - 10.71 0.27 - 27.02 25.42 Expected Volatility per annum ("p.a.")(1) 43.00 % 38.00 % 42.00% 38.60% 45.47 % Risk-Free Rate (p.a.)(2) 1.81 % 2.33 % 1.81% 2.35% 2.96 % Exercise Multiple 2.5 2.5 2.5 2.5 2.5 Dividend Yield (p.a.) NIL NIL NIL NIL NIL Time to Maturity (Years) 10 10 10 10 Investing in the ADSs involves risks. See "Risk Factors" beginning on page 24 of this prospectus. Table of Contents disclosure system and products registration system and will become eligible to apply for the registration as an online lending information intermediary, or the P2P registration. Prior to the promulgation of the Inspection Notice and Compliance Checklist, the Notice on the Special Rectification and Inspection of Risk of Online Lending Intermediaries, or Circular 57, requires the P2P registration with the local financial regulatory authority be completed by June 30, 2018. However, to our knowledge, the Shenzhen Financial Services Office had not approved any application for the P2P registration as of June 30, 2018. The Inspection Notice and Compliance Checklist have set an updated timetable for the P2P registration. Corporate History and Structure Shenzhen Ying Zhong Tong Financial Information Service Co., Ltd., or Shenzhen Ying Zhong Tong, was incorporated in March 2014 and controlled by Mr. Yue (Justin) Tang. In August 2014, we, through Shenzhen Ying Zhong Tong, began to facilitate investment products to individual investors in China with a variety of terms and rates of return to meet the demand from investors. In July 2015, Shenzhen Ying Zhong Tong commenced the loan facilitation business to facilitate loan products to borrowers who are underserved by the current traditional financial system in China. In October 2016, entities controlled by Mr. Yue (Justin) Tang, Mr. Baoguo Zhu and other investors incorporated Shenzhen Xiaoying Technology Co., Ltd., or Shenzhen Xiaoying. In December 2016, Shenzhen Xiaoying acquired all of the equity interest in Shenzhen Ying Zhong Tong. In December 2017, we underwent a restructuring in contemplation of this offering. After such restructuring, the shareholders of Shenzhen Xiaoying were changed to Mr. Yue (Justin) Tang, entities controlled by Mr. Yue (Justin) Tang and Mr. Baoguo Zhu. In March 2015, our co-founders, Mr. Yue (Justin) Tang and Mr. Baoguo Zhu, incorporated Beijing Ying Zhong Tong Rongxun Technology Service Co., Ltd, or Beijing Ying Zhong Tong, in China, which is controlled by Mr. Yue (Justin) Tang. In December 2016, Xi'an Bailu Enterprise Management Co., Ltd., or Xi'an Bailu, incorporated Shenzhen Tangren Financing Guarantee Co., Ltd., or Shenzhen Tangren, a company holding a financing guarantee license. Xi'an Bailu, which holds 100% equity interest in Shenzhen Tangren, is ultimately controlled by three individuals, Mr Yue (Justin) Tang and two other individuals who are his business partners, while the capital contribution of Shenzhen Tangren paid by Xi'an Bailu was borrowed from Shenzhen Xiaoying. In January 2015, we incorporated Winning Financial Service Inc. under the laws of the Cayman Islands as our offshore holding company, which later changed its name to X Financial in August 2017. Subsequently, we incorporated YZT (HK) Limited as X Financial's wholly-owned subsidiary and our intermediate holding company to facilitate financing. In October 2015, YZT (HK) Limited incorporated Xiaoying (Beijing) Information Technology Co., Ltd., or Beijing WFOE, as its wholly-owned PRC subsidiary, through which we obtained control over Shenzhen Tangren on a series of contractual arrangements entered into on December 16, 2016 when Shenzhen Tangren was formed and Beijing Ying Zhong Tong and Shenzhen Xiaoying (together with Shenzhen Tangren, the VIEs) on a series of contractual arrangements entered into on December 22, 2017. Such contractual arrangements consist of equity pledge agreements, shareholders' voting rights proxy agreement, spousal consent letter, exclusive business cooperation agreements, and exclusive call option agreements. See " Contractual Arrangements with Consolidated VIEs and their Shareholders" for details. We conduct our business in China through the VIEs and their subsidiaries. Shenzhen Xiaoying operates our website www.xiaoying.com. The following diagram illustrates our corporate structure as of the date of this prospectus. It omits certain entities that are immaterial to our results of operations, business and financial condition and also omits certain trusts we consolidate, or Consolidated Trusts (see " Critical Accounting Policies, Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities, or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. Per ADS Total Initial public offering price US$ US$ Underwriting discounts and commissions(1) US$ US$ Proceeds, before expenses, to the Issuer US$ US$ (1)In December 2017, Beijing WFOE acquired 100% of the equity interest held by Shenzhen Xiaoying in Shenzhen Xiaoying Puhui Technology Co., Ltd. and Shenzhen Xiaoying Information Technology Co., Ltd. (2)In December 2017, we established Shenzhen Weiying Information Technology Co., Ltd. (3)Mr. Yue (Justin) Tang, Mr. Baoguo Zhu and entities controlled by Mr. Yue (Justin) Tang, holds 42.9838%, 11.3381% and 45.6781% of equity interest in Shenzhen Xiaoying, respectively. (4)Xi'an Bailu holds 100% equity interest in Shenzhen Tangren. (5)Mr. Yue (Justin) Tang and Mr. Baoguo Zhu holds 88.6619% and 11.3381% of the equity interest in Beijing Ying Zhong Tong, respectively. (6)As of the date of this prospectus, Ying Zhong Tong Financial Leasing (Tianjin) Co., Ltd. is not engaged in any business. Corporate Information Our corporate headquarters is located at 7-8F, Block A, Aerospace Science and Technology Plaza, No. 168, Haide Third Avenue, Nanshan District, Shenzhen, 518067, the People's Republic of China. Our telephone number at this address is +86-0755-86282977. Our registered office in the Cayman Islands is located at the offices of Maples Corporate Services Limited at PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands. Our agent for service of process in the United States is Cogency Global Inc. located at 10 East, 40th Street, 10th Floor New York, New York 10016. Our website can be found at https://www.xiaoying.com/. The information contained on our website is not a part of this prospectus. We are an "emerging growth company" as the term is used in the Jumpstart Our Business Startups Act of 2012, or the "JOBS Act," and, as such, we are subject to certain reduced public company reporting requirements. We are also eligible for, and intend to rely upon, exemptions from certain listing requirements of NYSE as a "controlled company." See the applicable disclosure under the section captioned "Risk Factors Risks Relating to this Offering." (1)For a description of compensation payable to the underwriters, see "Underwriting." The underwriters have an option to purchase up to an aggregate of 1,650,000 additional ADSs from us at the initial public offering price, less underwriting discounts and commissions. Upon the completion of this offering, 204,487,342 Class A ordinary shares and 97,600,000 Class B ordinary shares will be issued and outstanding. Holders of Class A ordinary shares and Class B ordinary shares will have the same rights except for voting and conversion rights. Each Class A ordinary share will be entitled to one vote. Each Class B ordinary share will be entitled to 20 votes and will be convertible into one Class A ordinary share. Mr. Yue (Justin) Tang, our founder, Chairman of the board and Chief Executive Officer, will beneficially own all of the Class B ordinary shares issued and outstanding, representing 32.31% of our total issued and outstanding share capital and 90.52% of our aggregate voting power, assuming no exercise by the underwriters of options to purchase additional ADSs. Mr. Baoguo Zhu, beneficially owning all the interest in All Trade Base Investment Limited, one of our principal shareholders, has indicated an interest in purchasing up to US$30.0 million worth of the ADSs representing Class A ordinary shares in this offering at the initial public offering price and on the same terms as the other ADSs being offered. We and the underwriters are currently under no obligation to sell ADSs to Mr. Baoguo Zhu. Several investors have each indicated an interest in purchasing over 5% of the ADSs, or up to US$70.0 million worth of the ADSs in aggregate, in this offering at the initial public offering price and on the same terms as the other ADSs being offered. Such investors are not our existing shareholders, directors or officers. We and the underwriters are currently under no obligation to sell ADSs to any of these investors, and any of these investors could determine to purchase more, fewer or no ADSs in this offering. The underwriters will receive the same underwriting discounts and commissions on any ADSs purchased by these investors as they will on any other ADSs sold to the public in this offering. The underwriters expect to deliver the ADSs against payment in U.S. dollars on , 2018. Table of Contents Implications of Being an Emerging Growth Company As a company with less than US$1.07 billion in total annual gross revenue for our last fiscal year, we qualify as an "emerging growth company" pursuant to the JOBS Act. An emerging growth company may take advantage of specified reduced reporting and other requirements compared to those that are otherwise applicable generally to public companies. These provisions include exemption from the auditor attestation requirement under Section 404 of the Sarbanes-Oxley Act of 2002 in the assessment of the emerging growth company's internal control over financial reporting. The JOBS Act also provides that an emerging growth company does not need to comply with any new or revised financial accounting standards until such date that a private company is otherwise required to comply with such new or revised accounting standards. However, we have elected to "opt out" of this provision and, as a result, we will comply with new or revised accounting standards as required when they are adopted for public companies. This decision to opt out of the extended transition period under the JOBS Act is irrevocable. We will remain an emerging growth company until the earliest of (i) the last day of the fiscal year during which we have total annual gross revenues of at least US$1.07 billion; (ii) the last day of our fiscal year following the fifth anniversary of the completion of this offering; (iii) the date on which we have, during the preceding three year period, issued more than US$1.0 billion in non-convertible debt; or (iv) the date on which we are deemed to be a "large accelerated filer" under the Securities Exchange Act of 1934, as amended, or the Exchange Act, which could occur if the market value of the ADSs that are held by non-affiliates exceeds US$700 million as of the last business day of our most recently completed second fiscal quarter. Once we cease to be an emerging growth company, we will not be entitled to the exemptions provided in the JOBS Act discussed above. Conventions that Apply to this Prospectus Except where the context otherwise indicates and for the purpose of this prospectus only: "active borrowers" refers to, for a specified period, borrowers who made at least one transaction during that period on our platform; "active individual/corporate investors" refers to, for a specified period, individual/corporate investors who made at least one transaction during that period on our platform; and individual/corporate investors refers to individuals/corporates making investment transactions on Xiaoying Wealth Management; "ADSs" refers to American depositary shares, each of which represents two Class A ordinary shares, and "ADRs" refers to the American depositary receipts that may evidence ADSs; "APR" or "annual percentage rate" refers to the percentage number represents the actual annualized cost of borrowing over the term of a loan. The APR for a type of our loan product equals to the annualized actual amount of total interests, service fees and insurance premium divided by total amount of loans we facilitated. "AUM" or "assets under management" refers to the total market value of the assets that a financial institution manages on behalf of investors. "CAGR" refers to compound annual growth rate; "Cayman Companies Law" refers to the Companies Law (2018 Revision) of the Cayman Islands, as amended; "China" or "PRC" refers to the People's Republic of China, excluding, for purposes of this prospectus, Hong Kong, Macau and Taiwan; Deutsche Bank Securities Morgan Stanley EBS International China Merchants Securities (HK) AMTD Tiger Table of Contents "Class A ordinary shares" refers to our Class A ordinary shares, par value $0.0001 per share, carrying one vote per share, that will be designated effective upon completion of this offering; "Class B ordinary shares" refers to our Class B ordinary shares, par value $0.0001 per share, carrying 20 votes per share, that will be designated effective upon completion of this offering; "high-credit-limit" refers to ticket size of RMB80,000 to RMB600,000; "institutional funding partners" refers to our funding sources other than individual/corporate investors, including banks, trust companies and other institutions who funded the loans we facilitated to borrowers. "insurance protection" refers to credit insurance provided by insurance companies in partnership with P2P platforms against the default of both the principal and interest; "mass affluent investors" refers to investors who hold RMB600,000 to RMB6 million investable assets and their primary goal is to amplify their incomes through investments. Such investors often pursue investments with attractive returns and hold a diversified portfolio of investment products. They are usually receptive to refined and tailored products matching their investment needs; "New ZhongAn Model" refers to the revised arrangement with ZhongAn from September 2017 with respect to Xiaoying Card Loan and Xiaoying Preferred loan, which are the major products offered by us during the period from September 2017. "NPL" refers to non-performing loan(s); "Old ZhongAn Model" refers to the arrangement with ZhongAn prior to September 2017, under which ZhongAn initially reimbursed the loan principal and interest to the investor upon the borrower's default, where we at our own discretion compensated ZhongAn for substantially all the loan principal and interest default but have not been subsequently collected. "ordinary shares" refers to our Class A and Class B ordinary shares, par value US$0.0001 per share; "PBOC CRC" refers to the credit reference center of the People's Bank of China; "prime borrower" refers to an individual having sound credit history, who has credit records with PBOC CRC and usually no late payment record of over 60 days in the previous six months. Based on ZhongAn's insurance requirement, it provides insurance protection for borrowers who have credit records with PBOC CRC and meet its late payment standards (usually no late payment of more than 60 days in the past six months). In determining whether a prospective borrower is a prime borrower, we will review his or her credit card transaction history, along with our sophisticated risk management review system; "RMB" or "Renminbi" refers to the legal currency of China; "U.S. dollars," "US$," "$" or "dollars" refers to the legal currency of the United States; "variable interest entities" or "VIEs" refer to Beijing Ying Zhong Tong Rongxun Technology Service Co., Ltd, or Beijing Ying Zhong Tong, Shenzhen Xiaoying Technology Co., Ltd., or Shenzhen Xiaoying, and Shenzhen Tangren Financing Guarantee Co., Ltd. or Shenzhen Tangren, which are PRC companies in which we do not have equity interests but whose financial results have been consolidated into our consolidated financial statements in accordance with U.S. GAAP due to our having effective control over, and our being the primary beneficiary of, such entity; and "affiliated entities" are to our VIE, the VIE's direct subsidiaries under the PRC laws; Prospectus dated , 2018 Table of Contents "we," "us," "our company," "our," or "X Financial" refers to X Financial, a Cayman Islands company, and unless the context requires otherwise, includes its predecessor entities, consolidated subsidiaries and VIEs; and "ZhongAn" refers to ZhongAn Online P&C Insurance Co., Ltd., a joint stock limited company with limited liability incorporated in the People's Republic of China and listed on the Hong Kong Stock Exchange (stock code: 6060), carrying on business in Hong Kong as "ZA Online Fintech P&C." The translations from RMB to U.S. dollars and from U.S. dollars to RMB in this prospectus were made at a rate of RMB6.6171 to US$1.00, the exchange rates set forth in the H.10 statistical release of the Federal Reserve Board on June 29, 2018. We make no representation that the RMB or U.S. dollar amounts referred to in this prospectus could have been or could be converted into U.S. dollars or RMB, as the case may be, at any particular rate or at all. On September 7, 2018, the noon buying rate for RMB was RMB6.8419 to US$1.00. Table of Contents Table of Contents
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+PROSPECTUS SUMMARY The following summary highlights certain of the information contained elsewhere in or incorporated by reference into this prospectus. Because this is only a summary, however, it does not contain all the information you should consider before investing in our securities and it is qualified in its entirety by, and should be read in conjunction with, the more detailed information included elsewhere in or incorporated by reference into this prospectus. Before you make an investment decision, you should read this entire prospectus carefully, including the risks of investing in our securities discussed under the section of this prospectus entitled "Risk Factors" and similar headings in the other documents that are incorporated by reference into this prospectus. You should also carefully read the information incorporated by reference into this prospectus, including our financial statements, and the exhibits to the registration statement of which this prospectus is a part. Unless the context otherwise requires, references to "we," "our," "us," "CTI" or the "Company" in this prospectus mean CTI Industries Corporation on a consolidated basis with its wholly-owned subsidiary, as applicable. Our Company We have been engaged in the business of developing flexible film products for over 40 years and have grown to become a leading global provider of innovative consumer and commercial products which employ this technology. We are a leading designer, developer and producer of plastic, foil and latex balloons that we market and sell throughout the United States and in more than 30 countries worldwide. We have developed, produced and marketed consumer vacuum sealing systems for the home and we produce printed and laminated films for commercial packaging applications. Our principal lines of products include: Novelty Products consisting principally of foil and latex balloons and other consumer products. Vacuum Sealing Containers and Sealing Devices for home and consumer use to vacuum seal, store and preserve food and personal items. These products are sold under the Ziploc brand name, under license agreement and the Clever Fresh brand. Flexible Films for food and other commercial and packaging applications. In addition to these principal product lines we engage in (i) the assembly and sale of Candy Blossoms (small gift bouquets of arranged candy items often including ribbons and/or a small foil balloon), (ii) the distribution in Mexico of party goods products, and (iii) the sale and distribution of home containers and organizing products (some of which we produce) to and through a related entity which distributes these products through a network of independent distributors. We leverage our creative and technological expertise to design and develop proprietary products and introduce those new products each year. We have acquired significant technology and know-how since commencing operations. We currently hold several patents, related to flexible film products including specific films, zipper closures, valves and other features of these products. Our principal production processes include: Coating and laminating rolls of flexible film. Generally, we adhere polyethylene film to another film such as nylon or polyester. Printing film and latex balloons. We print both plastic and latex films, with a variety of graphics, for use as packaging film or for balloons. Converting printed film to balloons. Converting film to flexible containers. Producing latex balloons and other latex novelty items. Assembling and inflating of novelty products and balloons and Candy Blossoms. In 1978, we began manufacturing metalized balloons (often referred to as "foil" balloons), which are balloons made of a base material (usually nylon or polyester) often having vacuum deposited aluminum and polyethylene coatings. These balloons remain buoyant when filled with helium for much longer periods than latex balloons and permit the printing of graphic designs on the surface. In 1985, we began marketing latex balloons and, in 1988, we began manufacturing latex balloons. In 1999, we acquired extrusion coating and laminating machines and began production of coated, laminated and printed films, which we have produced since that time. These flexible films are used in the coating, laminating, and printing of flexible films for our container and novelty products and sold to other companies that use them in the production of flexible containers for the storage of liquids, food products, household goods, and other items. In 2012, we commenced the distribution of home container and organizing products, some of which we produce, to and through a related entity that distributes those products through a network of independent distributors in the United States. Table of Contents In 2014, we began assembling and producing Candy Blossoms which include candy inserted into a container, and at times, decorated with air-filled balloons. In 2015, we commenced the distribution of party goods in Mexico. We market and sell our foil and latex balloons and related novelty items throughout the United States, Canada and Mexico and in a number of other countries in Latin America and Europe. We supply directly to retail stores and chains and through distributors, who in turn sell to retail stores and chains. Our balloon and novelty products are sold to consumers through a wide variety of retail outlets including general merchandise, discount and drugstore chains, grocery chains, card and gift shops, and party goods stores, as well as through florists and balloon decorators. Most of our foil balloons contain printed characters, designs and social expression messages, such as "Happy Birthday," "Get Well" and similar items. For some of our balloon designs, we obtain licenses for well-known characters and print those characters and messages on our balloons. We produce pouches and rolls of film for use as flexible containers in a variety of applications, including (i) zippered pouches with valves for vacuum sealing of food and household products, and (ii) pouches and rolls of film for use with vacuum sealing machines to vacuum seal, store and protect food and household items. We market and sell flexible containers and rolls of film for consumer storage uses through retail chains and outlets throughout the United States, and we provide flexible containers to others for resale. We market and sell vacuum sealing machines for use with pouches and rolls of film for the vacuum storage of food and household products. We provide customized laminated films and printed films to customers who utilize the film to produce bags or pouches for the packaging of food, liquids and other items. In 2017, our revenues from our product lines, as a percent of total revenues were: Novelty Products 69% of revenues Vacuum Sealing Containers and Devices 14% of revenues Flexible Film Products 4% of revenues Other Products 13% of revenues We are an Illinois corporation with our principal offices and plant at 22160 N. Pepper Road, Lake Barrington, Illinois. Business Strategy and Developments Beginning in 2017, we implemented a series of initiatives that we believe have stabilized our operations and created a foundation for improved performance in 2018. These actions are expected to strengthen profitability, enhance efficiencies, improve product quality, catalyze business development, and expand our geographic and product footprints. As a result of these actions, and while acknowledging the existence of certain operational and general industry challenges, for the full year of 2018 we expect higher net sales, lower total operating expenses, and more profitable operations when compared to 2017. Our business strategy and recent developments related to our business include the following: New Management. Significant management changes occurred on or about December 1, 2017. John Schwan retired as CEO and continued as Chairman of the Board. Mr. Stephen Merrick, then President, assumed the role as CEO. Mr. Jeffrey Hyland joined CTI as President. Messrs. Merrick and Hyland both report directly to the Board of Directors. Mr. Frank Cesario joined as CFO, and Mr. Jeffrey Memenga joined as Plant Manager for our domestic locations. Finally, the Manager of our European operations (based in Germany), Mr. Manfred Jakobi, was promoted to be the Manager over both our European and U.K. operations. New management immediately developed and implemented an extensive 100-Day Action Plans to address immediate needs of the organization. Expense Reductions. In order to improve results, during 2017 and 2018, management has implemented approximately $3.0 million in annualized expense reductions. As part of our ongoing improved profitability and efficiency initiative, additional expense reductions are in process during 2018 that, if appropriate, will be implemented during late 2018 and 2019. Refinancing. During December 2017, we secured new financing from PNC Bank, National Association, and immediately repaid all tranches of our prior credit facility including senior debt, term debt, and mezzanine debt along with the related warrants. Manufacturing Capacity Expansion. In order to meet growing customer demand, during 2018, we installed two new foil balloon converting machines that, operating at full capacity, increases our foil balloon manufacturing volume by approximately 35%. While significantly increasing capacity, these new machines are also an important factor in another workstream, our quality improvement initiative. We plan additional capital investment with the proceeds of this offering to upgrade and maintain our production systems and to add new production capacity. Table of Contents Sales Initiative. We are transforming our business to focus on organic, profitable sales growth. In working with existing and new customers, we have developed a new Sales Pipeline report that represents substantial sales opportunities. In our vernacular, we include items on the Sales Pipeline report as specific opportunities that we are actively pursuing for new business. By definition, opportunities included on the Sales Pipeline report have not been awarded to us and we may not win as new business. The opportunities dramatically range in size and are across all our product lines and geographies. We intend on adding sales people and/or third-party distributors in the future. Our sales initiative is a critical driver of our strategic vision in order to aggressively take market share in the competitive markets that we compete. Continuous Profit Improvement. In 2018, as part of a continuous profit improvement initiative, we are challenging our business model and are in various stages of assessment. We are evaluating what we are manufacturing, where we are manufacturing, how we are manufacturing, and the suppliers we are using. We are also evaluating our strategic alternatives as they relate to investments. In response to the new U.S. tariffs implemented and potentially being implemented by the U.S. government on other countries, we are addressing the pricing of our products with our customers. Our senior management team is committed to continuously improving the Company s profitability and we have multiple workstreams with the objective to achieve that result. New Products. Given the competitive nature of our industries, we must continue to develop new products to stay at the forefront and provide fresh ideas to our customers. In 2018, we have presented and are presenting several new products to the marketplace. Our Creative Department has developed several new potential foil balloon products. We have also redesigned our Candy Blossom product, and as such, have enjoyed significant growth in that category with also a great deal of interest from potential customers. In our commercial films business, we are continually designing new products based on customer needs. Acquisitions. While there is no guarantee that we would ultimately be successful, we intend actively to pursue acquisitions in 2019. During 2018, we evaluated two potential acquisitions and passed on them due to strategic reasons. Potential acquisition targets would be in our existing product lines of balloons, commercial films, and party goods in order to achieve synergistic benefits from the acquisitions. The targets range in revenue size as compared to the Company from smaller to larger and vary across domestic and international geographies. Growth Strategy Our growth strategy entails pursuing organic opportunities with our existing customer base, developing new product lines, pursuing new customers, expanding our geographic presence and pursing strategic acquisitions. We are currently aggressively pursuing existing and new customers in our current markets and product lines. In order to achieve our growth plans, we are implementing the following tactics: Pursue domestic sales opportunities with existing customers. We see growth opportunities by expanding sales to existing domestic customers, which to some degree has been limited in the past by capacity constraints. This year our capital investment in equipment has increased our foil balloon manufacturing capacity by approximately 35% and we are continuing to add capacity. We intend to capitalize on this added capacity to capture more market share from our competitors. We have continued to increase capacity as a result of the demand of our products from our customers as well as capitalizing on other current opportunities across our other product lines that we offer. This growth will require our creative department to continue to create new and exciting balloon products. Develop and introduce new customer and end user-focused products. Given the growth we are experiencing and anticipate to experience with new products such as our small format vacuum sealing machine, U Fill , ' ': Ems/Fun Fills, balloon shapes, and the redesigned Candy Blossom line, our customers are coming to expect CTI to introduce creative new and redesigned products. We have an active new product and R&D initiative to stay at the forefront of consumer trends. Pursue new customers. We are actively pursuing multiple new customer opportunities. Historically, with our limited foil balloon manufacturing capacity, we were unable to pursue all new customer opportunities. With our increased balloon capacity, we are now aggressively approaching new customers or customers that we previously were unable to fully service. We believe we will grow our customer base which will enable us to capture new market share as a result of this new manufacturing capacity. In regards to our commercial films product line, we have a substantial opportunity to better utilize our existing equipment. Currently, our commercial films equipment is only utilized approximately 14%, whereas the equipment is designed to run continuously. We have active sales strategies and opportunities for both tolling and end-user applications to fill the available machine time. Expand our geographic presence. We have several current and potential international customers with whom we have opportunities to expand our relationship. Our international sales teams are establishing relationships and developing new relationships to grow their business. In certain situations, we are pursuing sales opportunities by utilizing a partnership with a separate party goods manufacturer that allows CTI to sell more products to our existing buyers and to become a one-stop-shop for party and balloon products. In other situations, we are opening doors utilizing our existing product line with customers that not are offering our products in their merchandising strategy. Table of Contents Pursue strategic acquisitions. We believe there are significant synergistic opportunities to acquire companies that operate in our existing product lines. Acquisitions in the commercial films industry would allow greater inroads into that growth segment and better utilize our equipment while reducing our current customer concentration and seasonality. Additionally, we believe we will be able to rationalize significant cost savings from potential acquisition targets as a result of our fully integrated operating and manufacturing platform. Acquisitions in balloons and party goods would provide the framework for a greater breadth of product offering, geographic footprint, and manufacturing expertise and capacity. We also believe that acquisitions in non-core vertical segments will allow us to better monetize our customer relationships. Products Foil Balloons. We have designed, produced and sold foil balloons since 1979 and, we believe we are the second largest manufacturer of foil balloons in the United States. Currently, we produce several hundred foil balloon designs in different shapes and sizes. In addition to size and shape, a principal element of the Company's foil balloon products is the printed design or message contained on the balloon. These designs may include figures and licensed characters many of which are well known. We recognize that consumer trends and preferences, and competing products, are constantly changing. In order to compete effectively in this product line, we must constantly innovate and develop new designs, shapes and products. Latex Balloons. Through our subsidiary in Guadalajara, Mexico, Flexo Universal, S. de R.L. de C.V. ("Flexo Universal"), we manufacture latex balloons in a wide variety of sizes and colors. Many of these balloons are marketed under the name Partyloons and other balloons are also marketed on a private label basis. We also manufacture toy balloon products including punch balls, water bombs and "Animal Twisties." Vacuum Sealing Pouches and Systems. We produce, market, and sell consumer vacuum storage pouches and systems for the vacuum storage of food and other household items. We produce (i) vacuum sealable bags and rolls of film for use with vacuum sealing devices for household storage, and (ii) valved, resealable bags also for vacuum storage uses. Our valved, resealable bags function with a small hand or battery-powered pump to evacuate air from the bag when it is sealed. Since 2012, we have produced and marketed vacuum sealable bags and rolls of film under the Ziploc brand. We also market vacuum sealing machines, produced for us, under the Ziploc Brand Vacuum Sealer System. We have produced and marketed a line of valved, resealable bags under our ZipVac line and a line of valved, resealable bags, including a line of vacuum sealing canisters sold under the brand Clever Fresh by our affiliate, Clever Container Company. Packaging Films and Custom Film Products. A large and increasing number of both consumer and commercial products are packaged in pouches or containers utilizing flexible films. Often such containers include printed labels and designs. We produce and sell films that may be utilized for the packaging of a wide variety of products and liquids. We laminate, extrusion coat, and adhesive coat flexible films for these purposes and we provide flexographic printing for the films we produce. We can produce a variety of customized film products, and provide printing services, to meet the specific packaging needs of a wide variety of customers. Other Products. We distribute, and to some degree produce, home organization and container products for Clever Container Company, an entity in which we have a 28.5% interest and which is consolidated with our company as a variable interest entity. Clever Container engages in the direct sale of such products through a network of independent distributors. In 2014, we began assembly and sale of our Candy Blossom product line. In 2015, we began to distribute party goods in Mexico. Markets Foil Balloons The foil balloon came into existence in the late 1970s. During the 1980s, the market for foil balloons grew rapidly. Initially, the product was sold principally to individual vendors, small retail outlets and at fairs, amusement parks, shopping centers and other outdoor facilities and functions. Foil balloons remain buoyant when filled with helium for extended periods of time and they permit the printing and display of graphics and messages. As a result, the product has significant appeal as a novelty and message item. Foil balloons became part of the "social expression" industry, carrying graphics designs, characters and messages like greeting cards. In the mid-1980s, we and other participants in the market began licensing character and cartoon images for printing on the balloons and directed marketing of the balloons to retail outlets including grocery, general merchandise, discount and drug store chains, card and gift shops, party goods stores as well as florists and balloon decorators. These outlets now represent the principal means for the sale of foil balloons throughout the United States and in a number of other countries, although individual "vendors" remain a means of distribution in a number of areas. Table of Contents Foil balloons are now sold in virtually every region of the world. The United States, however, remains the largest market for these products. Foil balloons are sold in the United States and foreign countries directly by producers to retail outlets and through distributors and wholesalers. Often the sale of foil balloons by the wholesalers/distributors is accompanied by related products including latex balloons, floral supplies, candy containers, mugs, plush toys, baskets and a variety of party goods. Latex Balloons For a number of years, latex balloons and related novelty/toy latex items have been marketed and sold throughout the United States and in many other countries. Latex balloons are sold as novelty/toy items, for decorative purposes, as part of floral designs and as party goods and favors. In addition to standard size and shape balloons, inflatable latex items include punch balls, water bombs, balloons to be twisted into shapes, and other specialty designs. Often, latex balloons include printed messages or designs. Latex balloons are sold principally in retail outlets, including party goods stores, general merchandise stores, discount chains, gift stores and drugstore chains. Latex balloons are also purchased by balloon decorators and floral outlets for use in decorative or floral designs. Printed latex balloons are sold both in retail outlets and for balloon decoration purposes including floral designs. Latex balloons are sold both through distributors and directly to retail outlets by the producers. Flexible Containers/Pouches The market for flexible containers and pouches is large and diverse. Many companies engaged in the production of food items package their products in flexible containers or pouches, and, therefore, represent a market for these containers. Flexible containers and pouches are sold and utilized in the consumer market in numerous forms. They include simple open-top plastic bags, resealable bags and zippered bags. The market also includes containers and pouches of special design or purpose, including vacuumable bags for storage of food or household items or commercial uses. We participate in a segment of the market for vacuum sealing and storage of food and household items. These products generally are sold in retail chain stores, and to some degree, in grocery stores, and, recently, in a direct sales channel. The product lines sold include (i) zippered, resealable bags, incorporating a valve through which air can be evacuated by a hand pump or other device, (ii) pouches or rolls of film which can be sealed by vacuum sealing devices and (iii) vacuum sealing devices. Printed and Specialty Films The industry and market for printed and specialty films are fragmented and include many participants. There are hundreds of manufacturers of printed and specialty film products in the United States and in other markets. In many cases, companies who provide food and other products in film packages also produce or process the films used for their packages. The market for the Company's film products consists principally of companies who utilize the films for the packaging of their products, including food products and other items, usually by converting the film to a flexible container. Marketing, Sales and Distribution Balloon Products We often work in collaboration with our customers on designs, promotions, and other elements of marketing and selling. Our customers are typically retailers who sell our products to ultimate customers. We do not have long term contracts or commitments with our balloon customers. Maintaining sales to our customers is dependent on our ability to develop and produce competitive marketable products of good quality and to perform to our customers expectations. We market and sell our foil balloon, latex balloon and related novelty products throughout the United States and in a number of other countries. We maintain marketing, sales and support staff and a customer service department in the United States. Sales in the United Kingdom are conducted by CTI Balloons Ltd. ("CTI Balloons"), the Company's subsidiary located in Rugby, England. Sales in Europe are conducted by CTI Europe GmbH ("CTI Europe"), the Company s subsidiary located in Heusenstamm, Germany. Flexo Universal, our subsidiary in Mexico, conducts sales and marketing activities for the sale of balloon products in Mexico, Latin America, and certain other markets. Sales in other foreign countries are made generally to distributors in those countries and are managed at the Company's principal offices. We sell and distribute our balloon products (i) by our employed staff of sales and customer service personnel in the United States, Mexico, the UK and Germany, (ii) through a network of distributors and wholesalers in the United States, Mexico, the UK and Europe, (iii) through several groups of independent sales representatives, and (iv) to retail chains. Our balloon products are generally sold through retail outlets including grocery, general merchandise and drug store chains, card and gift shops and party goods stores, as well as florists and balloon decorators. Table of Contents We engage in a variety of advertising and promotional activities to promote the sale of our balloon products. We produce a complete catalog of our balloon products, and also prepare various flyers and brochures for special or seasonal products which we disseminate to thousands of customers, potential customers and others. We participate in several trade shows for the gift, novelty, balloon and other industries and advertise in several trade and other publications. We maintain websites which show images of our products. Flexible Containers/Pouches We market several lines of flexible containers or pouches for household use to vacuum seal, store and preserve food and other household items. We developed and, for several years, we have produced and sold a line of pouches and rolls of film for use with vacuum sealing machines to vacuum seal food and household items. Initially, we marketed these products through various retail channels under our brand or on a private label basis. On December 14, 2011, the Company entered into a Trademark License Agreement with SC Johnson under which the Company is licensed to manufacture and sell a line of vacuum sealing machines and pouches under the Ziploc Brand Vacuum Sealer System. The agreement was initially for a three-year term expiring on December 31, 2014 and was extended to December 31, 2017 and then to December 31, 2019. The licensed product line includes vacuum sealing machines manufactured for the Company and pouches and rolls manufactured by the Company for use in the home to vacuum seal food items to preserve freshness and help prevent freezer burn. During 2007, we introduced a line of re-sealable pouches incorporating a valve permitting the evacuation of air from the sealed pouch by use of a hand pump supplied with the pouches. This line of products has been marketed under the brand name ZipVac . We now produce a line of resealable pouches under the brand Clever Fresh which we provide to our affiliate Clever Container Company for sale and distribution to its network of independent distributors. Printed and Specialty Films We market and sell printed and laminated films directly and through independent sales representatives throughout the United States. We sell laminated and printed films to companies that utilize these films to produce packaging for a variety of products, including food products, in both solid and liquid form, such as cola syrup, coffee, juices and other items. We seek to identify and maintain customer relationships in which we provide added value in the form of technology or systems. Other Products Other products are sold through both our internal sales force directly to customers and through independent sales representatives. These products are generally sold to retailers throughout the world. Production and Operations We conduct our operations at our facilities including: (i) our 68,000 square feet facility in Lake Barrington, Illinois, incorporating our headquarters office, production and warehouse space, (ii) our 118,000 square foot facility in Lake Zurich, Illinois consisting of warehouse, packaging and office space, (iii) a 73,000 square foot facility in Guadalajara, Mexico, consisting of office, warehouse and production space, (iv) a 9,000 square foot facility in Rugby, England consisting of office and warehouse/assembly space, and (v) a 13,000 square foot facility in Heusenstamm, Germany (near Frankfurt), consisting of office and warehouse/assembly space. Our production operations include (i) lamination and extrusion coating of films, (ii) slitting of film rolls, (iii) printing on film and on latex balloons, (iv) converting film to completed products including balloons, flexible containers and pouches, (v) producing latex balloon products, (vi) inflating of air-filled balloons, and (vii) assembling Candy Blossoms. We perform all of the lamination, extrusion coating and slitting activities in our Lake Barrington, Illinois plant and produce all of our latex balloon products at our Guadalajara, Mexico plant. We print on films in Lake Barrington, Illinois and we print on latex balloons in Guadalajara, Mexico. We complete air-filling and assembly of balloons in all our facilities except Lake Barrington, Illinois. We assemble Candy Blossoms in our Lake Zurich, Illinois facility. We warehouse raw materials at our plants in Lake Barrington, Illinois and Guadalajara, Mexico and we warehouse finished goods at all of our facilities. We maintain customer service and fulfillment operations at each of our warehouse locations. We conduct sales operations for the United States and for all other markets, except those handled by our Mexico, Germany and England facilities, at the Lake Barrington, Illinois facility. Sales for Mexico and Latin America are handled at our Guadalajara, Mexico facility; sales for the United Kingdom are handled at our Rugby, England facility; sales for Europe are conducted from our facilities in Heusenstamm, Germany. In addition to warehouse and sales activities at these locations, we engage in some assembly, balloon inflation and related activities. Table of Contents We maintain a graphic arts and development department at our Lake Barrington, Illinois facility which designs our balloon products and graphics. Our creative department operates a networked, computerized graphic arts system for the production of these designs and of printed materials including catalogues, advertisements and other promotional materials. As many of our products are custom designed or created to fulfill promotional schedules, we sometimes have excess inventory that must be sold at a discount or otherwise disposed of. Any such disposition will typically negatively impact our profit margin. We conduct administrative and accounting functions at our headquarters in Lake Barrington, Illinois and at our other facilities. Patents, Trademarks, Copyrights and Trade Secrets Patent Rights. We hold 9 issued patents in the United States and 7 corresponding issued patents in foreign countries, and have one patent application pending in the United States. Of these, one U.S. patent expires during 2018, while the other patents are not scheduled to expire until various times during the 2020s. These include (i) patents related to the design and structure of, and method of, inserting and affixing, zipper-closure systems in a bag, (ii) patents related to one-way valves for pouches, (iii) a patent related to methods of embossing film and utilizing such film to produce pouches with fitments, (iv) a patent related to vacuumable storage bags with fitments, and (vi) a patent application related to vacuum sealing equipment. Proprietary Designs and Copyright Licenses. We design the shapes and graphic designs of most of our foil balloon products and maintain thousands of proprietary designs. We also maintain licenses on certain characters and designs for our balloon products. Trademarks. We own six registered trademarks in the United States relating to our balloon products. Our trademark CTI is also registered in the United Kingdom. Trade Secrets. We develop, use and maintain confidential information and trade secrets relating to materials, sources, methods of production, formulas, and other information related to our operations. We protect such information by the use of confidentiality agreements with our employees and those with whom we do business. While these intellectual property rights are helpful, the degree of protection they afford is uncertain. Competitors may violate our intellectual property rights, forcing us to decide whether to challenge them. Such rights may or may not withstand challenge. Conversely, entities may charge us with violating their intellectual property rights. Failure to protect our rights, or conflict with the rights of one or more other entities, may negatively impact our financial and competitive position. Research and Development We maintain a product development and research group for the development or identification of new products, product designs, product components and sources of supply. Research and development includes (i) creative product development and design, (ii) creative marketing, and (iii) engineering development. During each of the fiscal years ended December 31, 2017 and 2016, we estimate that the total amount spent on research and development activities was approximately $344,000 and $496,000, respectively. Corporate Information We were incorporated in Illinois on August 15, 2001. Our principal executive offices are located at 22160 N. Pepper Road, Lake Barrington, Illinois 60010. Our telephone number is (847) 382-1000 and our website address is www.CTIIndustries.com. The information on our website is not a part of, and should not be construed as being incorporated by reference into, this prospectus supplement or the accompanying prospectus. Table of Contents
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